(g) “COBRA” means the Consolidated Omnibus Budget Reconciliation Act, as amended, and the rules and regulations promulgated thereunder.
(h) “Company Common Stock Warrant Agreement” means that certain Amended and Restated Warrant Agreement dated as of August 22, 2002, by and between Ascent Energy Inc. and the Warrant Agent, as amended by that certain Amendment to Amended and Restated Warrant Agreement dated as of July 27, 2004, between the Company and the Warrant Agent, as further amended, including by the Company Common Stock Warrant Agreement Amendment upon execution and delivery thereof by the parties thereto.
(i) “Company Common Stock Warrant Agreement Amendment” means that certain amendment to the Company Common Stock Warrant Agreement defined in the Note Holder Payoff and Recapitalization Agreement as the “Common Stock Warrant Agreement Amendment.”
(j) “Company Warrant” means a warrant to purchase 191.943 shares of Company Common Stock at the Company Warrant Exercise Price issued pursuant to the Company Common Stock Warrant Agreement.
(k) “Company Warrant Exercise Price” means $5.21 per share of Company Common Stock, subject to adjustment as provided in the Company Common Stock Warrant Agreement.
(l) “Company Warrantholder” means a holder of Company Warrants issued pursuant to the Company Common Stock Warrant Agreement.
(m) “Confidentiality Agreement” means, collectively (i) that certain confidentiality agreement dated as of May 22, 2007, by and between the Company and Parent, and (ii) that certain confidentiality agreement dated June 27, 2007, by and between the Company and Parent.
(o) “ERISA Affiliate” means any business or entity which is a member of the same “controlled group of corporations,” under “common control” or an “affiliated service group” with an entity within the meanings of Sections 414(b), (c) or (m) of the Code, or required to be aggregated with the entity under Section 414(o) of the Code, or is under “common control” with the entity, within the meaning of Section 4001(a)(14) of ERISA, or any regulations promulgated or proposed under any of the foregoing Sections.
| (p) | “Escrow Agent” means JPMorgan Chase, N.A. |
(q) “Governmental Entity” means any nation or government, any state, regional, local or other political subdivision thereof, and any entity or official exercising executive, legislative, judicial, regulatory or administrative functions of or pertaining to government, including any court, administrative agency, commission, or any other governmental or regulatory authority.
(r) “Intellectual Property” shall mean the following intellectual property rights, including both statutory and common law rights, as applicable: (i) copyrights; (ii) trademarks, service marks, trade names, slogans, domain names, logos, and trade dress, and registrations and applications for registrations thereof; (iii) patents and patent applications (including all reissues, divisions, continuations, continuations in part, renewals and extensions of the foregoing); (iv) trade secrets and confidential information, including ideas, designs, concepts, compilations of information, methods, techniques, procedures, processes and other know how, whether or not patentable; and (v) registrations for any of the foregoing.
(s) “Jefferies Investors” means, collectively, Jefferies & Company, Inc., Jefferies High Yield Trading, L.L.C., ING Furman Selz Investors III L.P., ING Barings U.S. Leveraged Equity Plan LLC and ING Barings Global Leveraged Equity Plan Ltd.
(t) “Knowledge” when used with respect to (i) the Company, means the actual knowledge or awareness as to a specified fact or event of Terry Carter, Eddie LeBlanc, David McCabe, Mark Haney or Vicky Lindsey, or (ii) Parent or Merger Sub, means the actual knowledge or awareness as to a specified fact or event of Larry E. Lee, John M. Longmire, Larry G. Rampey or Drake N. Smiley.
(u) “Legal Requirement” means any federal, state, local, municipal, foreign or other law, statute, constitution, principle of common law, resolution, ordinance, code, edict, decree, rule, regulation, ruling or requirement issued, enacted, adopted, promulgated, implemented or otherwise put into effect by or under the authority of any Governmental Entity.
(v) “Lien” means any mortgage, pledge, security interest, encumbrance, lien, restriction or charge of any kind.
(w) “Material Adverse Effect” when used in connection with an entity means any change, event, violation, inaccuracy, circumstance or effect, individually or when aggregated with other changes, events, violations, inaccuracies, circumstances or effects, that is materially adverse to the business, assets (including intangible assets), revenues, financial condition or results of operations of such entity and its subsidiaries taken as a whole, it being understood that none of the following alone or in combination shall be deemed, in and of itself, to constitute a Material Adverse Effect: (i) changes attributable to the public announcement or pendency of the transactions contemplated by the
88
Transaction Documents, (ii) changes in general national or regional economic conditions, (iii) changes in economic conditions in the oil and gas industry generally, including changes in current sale and future prices for oil and gas, (iv) the outbreak or escalation of hostilities involving the United States, the declaration by the United States of a national emergency or war or the occurrence of any other calamity or crisis, including acts of terrorism, (v) any change in accounting requirements or principles imposed on the entity or its business by GAAP or any change in Legal Requirements after the date hereof, or (vi) the compliance with the terms of, or taking of any action required by, this Agreement. For purposes of ascertaining whether a particular change, event, violation, inaccuracy, circumstance or effect is “materially adverse” to an entity, no formulaic or analogical approach to a determination of materiality shall be considered (for example, a percentage of the value of the aggregate Merger Consideration, the amount of any “basket,” claim threshold or other dollar amount used in this Agreement, or the applicable measure of materiality under GAAP); rather, the nature of each change, event, violation, inaccuracy, circumstance or effect shall be considered along with the detrimental financial and operational impact on the affected entity and its subsidiaries, taken as a whole, of such change, event, violation, inaccuracy, circumstance or effect.
(x) “Note Holders” means, collectively, the holders of the Senior Notes and the holders of the Senior Subordinated Notes.
(y) “Person” shall mean any individual, corporation (including any non-profit corporation), general partnership, limited partnership, limited liability partnership, joint venture, estate, trust, company (including any limited liability company or joint stock company), firm or other enterprise, association, organization, entity or Governmental Entity; provided, however, that the term “Person” shall not include an area of mutual interest.
(z) “PIK Notes” has the meaning ascribed to such term in the Note Holder Payoff and Recapitalization Agreement.
(aa) “Representative Agreement” means that certain representative agreement of even date herewith by and among the Representative and certain security holders of the Company.
(bb) “Retention Bonus Program” means the Ascent Energy Inc. Retention Bonus Program adopted by the Company’s Board of Directors in April 2007.
(cc) “Senior Notes” means the Company’s 16% Senior Notes due February 1, 2010 (or such later maturity date as automatically extended in accordance with Section 7 thereof (but in no event later than February 1, 2015)), including any PIK Notes executed and delivered by the Company in connection therewith.
(dd) “Senior Subordinated Notes” means the Company’s 11 3/4% Senior Subordinated Notes due May 1, 2010 (or such later maturity date as automatically extended in accordance with Section 7 thereof (but in no event later than May 1, 2015)),
89
including any PIK Notes executed and delivered by the Company in connection therewith.
(ee) “SLPH Merger” means the merger of a subsidiary of the Company with and into South Louisiana Property Holdings, Inc. pursuant to that certain Agreement and Plan of Merger dated as of June 30, 2006, as amended.
(ff) “Transaction Documents” means this Agreement, the Note Holder Payoff and Recapitalization Agreement, the Escrow Agreement, the Registration Rights Agreement, the Voting Agreement, the Lock-Up Letter and the other documents and instruments to be delivered at the Closing and any other document or instrument expressly agreed by Parent and Company to constitute a Transaction Document for purposes of this Agreement.
(gg) “Warrant Agent” means Mellon Investor Services LLC, the warrant agent under the Company Common Stock Warrant Agreement.
11.2 Reference to Terms Defined in Text. The following provides a reference for the definitions of the following terms, all of which are defined in the text of this Agreement:
| “Accessing Party” | Section 6.2(d) |
| “Accrued Dividends Paid in Stock Number” | Section 1.5(d)(i) |
| “Accrued Dividends Paid in Warrants Number” | Section 1.5(d)(ii) |
| “Additional Per Share Common Merger Consideration” | Section 1.5(d)(iii) |
| “Additional Per Share Preferred Merger Consideration” | Section 1.5(d)(iv) |
| “Adjusted Cash Number” | Section 1.5(v) |
| “Adjusted Parent Common Stock Number” | Section 1.5(d)(vi) |
| “Adjustments” | Section 11.1(a) |
| “Affiliate” | Section 11.1(b) |
| “Aggregate Additional Common Merger Consideration” | Section 1.5(d)(vii) |
| “Aggregate Additional Preferred Cash Merger Consideration” | Section 1.5(d)(viii) |
| “Aggregate Base Common Merger Consideration” | Section 1.5(d)(ix) |
| “Aggregate Base Preferred Merger Consideration” | Section 1.5(d)(x) |
| “Aggregate Closing Value” | Section 1.5(d)(xi) |
| “Aggregate Common Merger Consideration” | Section 1.5(d)(xii) |
| “Aggregate Company Warrant Consideration” | Section 1.5(g)(iii) |
| “Aggregate Company Warrant Exercise Price” | Section 11.1(c) |
| “Aggregate Minimum Common Merger Consideration” | Section 1.5(d)(xiii) |
| “Aggregate Minimum Preferred Merger Consideration” | Section 1.5(d)(xiv) |
| “Applicable Environmental Law” | Section 2.16(f) |
| “Approved Capital Expenditures” | Section 11.1(d) |
| “Base Per Share Common Merger Consideration” | Section 1.5(d)(xv) |
| “Base Per Share Preferred Merger Consideration” | Section 1.5(c) |
90
| “Business Day” | Section 11.1(e) |
| “Certificate of Designations” | Section 2.4 |
| “Certificate of Merger” | Section 1.2 |
| “Charter Documents” | Section 11.1(f) |
| “Closing Date” | Section 1.2 |
| “Closing Date Balance Sheet” | Section 5.2 |
| “Closing Date Hedge Asset” | Section 5.3(b) |
| “Closing Date Hedge Liability” | Section 5.3(b) |
| “Common Stockholder List” | Section 1.7 |
| “Company Audited Financial Statements” | Section 2.7(a) |
| “Company Board” | Section 2.4 |
| “Company Closing Certificate” | Section 7.3(a) |
| “Company Common Stock” | Section 1.5(b) |
| “Company Common Stock Warrant Agreement” | Section 11.1(h) |
| “Company Common Stock Warrant Agreement Amendment” | Section 11.1(i) |
| “Company Warrant” | Section 11.1(j) |
| “Company Warrant Exercise Price” | Section 11.1(k) |
| “Company Warrantholder” | Section 11.1(l) |
| “Company Contracts” | Section 2.19(b)(i) |
| “Company Disclosure Schedule” | Article II Preamble |
| “Company Financial Statements” | Section 2.7(c) |
| “Company Person” | Section 12.15 |
| “Company Preferred Stock” | Section 1.5(c) |
| “Company Recent Financial Statements” | Section 2.7(b) |
| “Company Reserve Report” | Section 2.33 |
| “Company Stock” | Section 1.5(e) |
| “Company Stockholder Consent” | Section 2.4 |
| “Company Stockholder List” | Section 7.3(m) |
| “Company Subsidiary” | Section 2.2(a) |
| “Confidentiality Agreement” | Section 11.1(m) |
| “Continuing Employees” | Section 6.7(a) |
| “Corporate Records” | Section 2.1(c) |
| “Credit Facilities” | Section 11.1(n) |
| “Current Assets” | Section 5.2 |
| “Current Liabilities” | Section 5.2 |
| “D&O Indemnified Parties” | Section 6.11(a) |
| “Defensible Title” | Section 2.14(b), (c), (d), (e) |
91
| “Direct Claim” | Section 10.11 |
| “Disclosure Schedules” | Section 6.4 |
| “Dissenting Shares” | Section 1.13 |
| “Dissenting Stockholder” | Section 1.13 |
| “Distribution Rights” | Section 12.5 |
| “Effective Time” | Section 1.2 |
| “Eligible Employees” | Section 6.7(a) |
| “ERISA Affiliate” | Section 11.1(o) |
| “Escrow Agent” | Section 11.1(p) |
| “Escrow Agreement” | Section 1.5(d)(xvi) |
| “Escrow Fund” | Section 1.6(e) |
| “Estimated Adjusted Working Capital” | Section 5.2 |
| “Exchange Act” | Section 3.5(b) |
| “Exchange Agent” | Section 1.6(a) |
| “Execution Date Hedge Liability” | Section 5.3(a) |
| “Existing Wells” | Section 2.14(a) |
| “Final Adjusted Working Capital” | Section 9.1(a) |
| “Future Completions” | Section 2.14(a) |
| “Future Operations” | Section 2.14(a) |
| “Future Wells” | Section 2.14(a) |
| “Governmental Entity” | Section 11.1(q) |
| “Governmental Filings/Permits” | Section 2.21 |
| “Hedge Contract Adjustment” | Section 5.3(g) |
| “Hedge Contracts” | Section 2.36 |
| “Hydrocarbon Hedge Contracts” | Section 5.3 |
| “Indebtedness” | Section 5.1(b) |
| “Indemnified Losses” | Section 10.2 |
| “Information Statement” | Section 6.5 |
| “Initial Cash Number” | Section 1.5(d)(xvii) |
| “Initial Parent Common Stock Number” | Section 1.5(d)(xviii) |
| “Insurance Policies” | Section 2.20 |
| “Intellectual Property” | Section 11.1(r) |
| “Jefferies Investors” | Section 11.1(s) |
| “Knowledge” | Section 11.1(t) |
| “Leased Real Property” | Section 2.14(i) |
| “Legal Requirement” | Section 11.1(u) |
| “Lock-Up Letter” | Section 6.10 |
| “Losses” | Section 10.2, 10.9 |
| “Material Adverse Effect” | Section 11.1(w) |
| “Material Company Contracts” | Section 2.19(b)(ii) |
92
“Material Parent Contracts” | Section 3.19(a)(ii) |
| “Merger Consideration” | Section 1.5(d)(xix) |
| “Merger Sub Common Stock” | Section 1.5(a) |
| “Merger Sub Stockholder Consent” | Section 3.4 |
| “Mineral Properties/Mineral Property” | Section 2.14(a) |
| “Minimum Per Share Common Merger Consideration” | Section 1.5(d)(xx) |
| “Minimum Per Share Preferred Merger Consideration” | Section 1.5(d)(xxi) |
| “Non-Certifying Holder” | Section 6.18 |
| “Non-Foreign Affidavit” | Section 6.18 |
| “Note Holder Payoff and Recapitalization Agreement” | Section 1.5(d)(xxii) |
| “Note Holder Stock Number” | Section 1.5(d)(xxiii) |
| “Note Holder Warrant Number” | Section 1.5(d)(xxiv) |
| “Note Holders” | Section 11.1(x) |
| “Notice of Direct Claim” | Section 10.4 |
| “Notice of Third-Party Claim” | Section 10.3 |
| “Objective Formation” | Section 2.14(c)(ii), (d)(iii), |
| “Operating Equipment” | Section 2.14(g) |
| “Outstanding Accrued Preferred Stock Dividend Amount” | Section 1.5(d)(xxv) |
| “Outstanding Company Common Stock Number | Section 1.5(d)(xxvi) |
| “Outstanding Company Preferred Stock Number” | Section 1.5(d)(xxvii) |
| “Outstanding Preferred Stock Face Amount” | Section 1.5(d)(xxviii) |
| “Outstanding Senior Note Indebtedness” | Section 1.5(d)(xxix) |
| “Outstanding Senior Subordinated Note Indebtedness” | Section 1.5(d)(xxx) |
| “Owned Real Property” | Section 2.14(h) |
| “Parent Board” | Section 3.4 |
| “Parent Closing Certificate” | Section 7.2(a) |
| “Parent Common Stock” | Section 1.5(c) |
| “Parent Contracts” | Section 3.19(a)(i) |
| “Parent Disclosure Schedule” | Article III, Preamble |
| “Parent Financial Statements” | Section 3.7(b) |
| “Parent Indemnified Parties” | Section 10.2 |
| “Parent Merger Stock” | Section 1.5(d)(xxxi) |
| “Parent Merger Stock Number” | Section 1.5(d)(xxxi) |
| “Parent Permitted Encumbrances” | Section 3.14(b) |
| “Parent Person” | Section 12.15 |
| “Parent Plans” | Section 3.11(a) |
| “Parent Property” | Section 3.14(a) |
| “Parent Reserve Reports” | Section 3.22 |
93
“Parent SEC Documents | Section 3.7(a) |
| “Parent Stockholder Consent” | Section 3.4 |
| “Parent Subsidiary” | Section 3.2(a) |
| “Pending Litigation” | Section 10.2 |
| “Permitted Encumbrances” | Section 2.14(f) |
| “Personal Property” | Section 2.14(g) |
| “PIK Notes” | Section 11.1(z) |
| “Positive Value” | Section 1.5(g)(ii) |
| “Prior Month Balance Sheet” | Section 5.2 |
| “Projected Closing Date Balance Sheet” | Section 5.2 |
| “Projected Subsurface Location” | Section 2.14(d)(ii), (e)(ii) |
| “Properties” | Section 2.16(a) |
| “Proposed True-Up Balance Sheet” | Section 9.1(a) |
| “Proved Developed Non-Producing Reserves” | Section 2.14(c)(iii) |
| “Proved Undeveloped Reserves” | Section 2.14(d)(iv), (e)(iv) |
| “PV-10 Value” | Section 2.33 |
| “Recent Reserve Report” | Section 2.33 |
| “Recorded Liens” | Section 2.14(b) |
| “Registration Rights Agreement” | Section 6.9 |
| “Representative” | Section 1.14 |
| “Representative Fund” | Section 1.6(f) |
| “Representative Agreement” | Section 11.1(aa) |
| “Retention Bonus Program” | Section 11.1(bb) |
| “Securities Act” | Section 1.15 |
| “Senior Notes” | Section 11.1(cc) |
| “Senior Subordinated Notes” | Section 11.1(dd) |
| “Settlement Benefit” | Section 5.3(b) |
| “Settlement Cost” | Section 5.3(b) |
| “Settlement Date Parent Common Stock Value” | Section 1.5(d)(xxxii) |
| “Settlement Date Warrant Value” | Section 1.5(d)(xxxiii) |
| “SLPH Merger” | Section 11.1(ee) |
| “SLPH Reverse Stock Split” | Section 6.12 |
| “Subject Properties” | Section 2.14(a) |
| “Survival Period” | Section 10.1 |
| “Surviving Corporation” | Section 1.1 |
| “Tax/Taxes” | Section 2.15(a) |
| “Termination Date” | Section 8.2(a) |
| “Third-Party Action” | Section 10.3 |
| “Transaction Documents” | Section 11.1(ff) |
| “Voting Agreement” | Section 6.8 |
| “Warrant” | Section 1.5(d)(xxxiv) |
94
“Warrant Agent” | Section 11.1(gg) |
| “Warrant Merger Number” | Section 1.5(d)(xxxv) |
| “Warrant Number” | Section 1.5(d)(xxxvi) |
| “Warrant Share” | Section 1.5(g)(i) |
| “Working Capital Adjustment” | Section 5.2 |
| “W/C Review Period” | Section 9.1(a) |
| “Work Plan” | Section 4.2(a) |
ARTICLE XII
GENERAL PROVISIONS
12.1 Notices. All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery service, or sent via telecopy (receipt confirmed) to the parties at the following addresses or telecopy numbers (or at such other address or telecopy numbers for a party as shall be specified by like notice):
If to Parent:
RAM Energy Resources, Inc.
Meridian Tower, Suite 650
5100 E. Skelly Drive
Tulsa, OK 74135
Attention: Larry E. Lee, Chairman and CEO
| Telephone: (918) 663-2800 |
Telecopy: (918) 663-9214
with a copy to:
C. David Stinson, Esq.
McAfee & Taft A Professional Corporation
10th Floor, Two Leadership Square
211 North Robinson
Oklahoma City, OK 73102-7103
Telephone: (405) 552-2266
Telecopy: (405) 235-0439
If to the Company prior to the Effective Time:
Ascent Energy Inc.
4965 Preston Park Blvd., Suite 800
Plano, TX 75093
Attention: Eddie LeBlanc
Telephone: (972) 543-3905
Telecopy: (972) 543-3904
95
with a copy to:
Caroline B. Blitzer, Esq.
Vinson & Elkins L.L.P.
2500 First City Tower
1001 Fannin
Houston, TX 77002-6760
Telephone: (713) 758-4680
Telecopy: (713) 615-5871
If to the Representative:
Stuart B. Katz
FS Private Investments III LLC
c/o Jefferies Capital Partners
520 Madison Avenue, New York, NY 10022
Telephone: (212) 284-1719
Telecopy: (212) 284-1717
with a copy to:
Melvin Epstein, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
Telephone: (212) 806-5864
Telecopy: (212) 806-6006
and to:
Caroline B. Blitzer, Esq.
Vinson & Elkins L.L.P.
2500 First City Tower
1001 Fannin
Houston, TX 77002-6760
Telephone: (713) 758-4680
Telecopy: (713) 615-5871
12.2 Interpretation. When a reference is made in this Agreement to an Exhibit or Schedule, such reference shall be to an Exhibit or Schedule to this Agreement unless otherwise indicated. When a reference is made in this Agreement to Sections or subsections, such reference shall be to a Section or subsection of this Agreement. Unless otherwise indicated the words “include,” “includes” and “including” when used herein shall be deemed in each case to be followed by the words “without limitation.” The headings contained in this Agreement are for reference purposes only and shall not affect in any way the meaning or interpretation of this
96
Agreement. When reference is made herein to “the business of” an entity, such reference shall be deemed to include the business of all direct and indirect subsidiaries of such entity. Reference to the subsidiaries of an entity shall be deemed to include all direct and indirect subsidiaries of such entity.
12.3 Counterparts; Facsimile Signatures. This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart. Delivery by facsimile to the other party, or to counsel for such other party, of a counterpart executed by a party shall be deemed to meet the requirements of the previous sentence.
12.4 Entire Agreement; Third Party Beneficiaries. This Agreement and the other Transaction Documents, including the Exhibits and Schedules hereto (i) constitute the entire agreement among the parties with respect to the subject matter hereof and supersede all prior agreements and understandings, both written and oral, among the parties with respect to the subject matter hereof, and (ii) are not intended to confer upon any other Person any rights or remedies hereunder (except as specifically provided in this Agreement).
12.5 Adjustment of Merger Consideration; Distributions from Escrow Fund. The return of any portion of the Escrow Fund to Parent pursuant to Article IX or Article X of this Agreement, or pursuant to the Escrow Agreement, that otherwise would have been paid to the former holders of Company Stock as Merger Consideration shall constitute an adjustment to the Merger Consideration in the same manner as if effected at the Closing. Any funds distributable to the former holders of Company Stock from the Escrow Fund or the Representative Fund shall constitute a portion of the Merger Consideration to which such holders are entitled by virtue of the Merger. All distributions from the Escrow Fund and the Representative Fund (i) to the former holders of Company Common Stock shall be made by the Exchange Agent to the same former holders of Company Common Stock and in the same manner as the Aggregate Base Common Merger Consideration paid at Closing is distributed to such former holders pursuant to Section 1.6 and 1.7, and (ii) to the former holders of Company Preferred Stock shall be made as directed by the Representative in accordance with the Note Holder Payoff and Recapitalization Agreement. The right of the former holders of Company Stock to receive distributions from the Escrow Fund and the Representative Fund (“Distribution Rights”) shall be personal to such Company stockholders and shall not attach to or in any manner follow any shares of Parent Common Stock received by such former holders in the Merger. Neither Parent, the Exchange Agent nor the Representative shall be bound by or obligated to honor any notice of assignment of Distribution Rights and shall be entitled, without liability or recourse, to remit any distributions from the Escrow Fund and the Representative Fund as provided in this Section 12.5.
12.6 The Representative. The parties acknowledge that the Representative’s rights, duties and obligations under this Agreement, the Note Holder Payoff and Recapitalization Agreement, the Representative Agreement and the Escrow Agreement are solely as a representative of the holders of Company Stock and the Note Holders and that to the full extent permitted by applicable law, the Representative shall have no personal liability to the holders of
97
Company Stock or the Note Holders for actions taken by the Representative in good faith in such capacity. All reasonable out-of-pocket expenses incurred by the Representative that are directly related to the performance or discharge of the Representative’s duties and obligations under this Agreement shall be paid out of the Representative Fund until such fund is exhausted, after which time such expenses shall be paid or reimbursed by Parent, and Parent shall have an immediate claim against the Escrow Fund for the amount of the Representative’s expenses so paid or reimbursed by Parent.
12.7 Severability. In the event that any provision of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other Persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.
12.8 Other Remedies; Specific Performance. Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy. The parties hereto agree that irreparable damage would occur in the event that any of the provisions of this Agreement were not performed in accordance with their specific terms or were otherwise breached. It is accordingly agreed that the parties shall be entitled to seek an injunction or injunctions to prevent breaches of this Agreement and to enforce specifically the terms and provisions hereof in any court of the United States or any state having jurisdiction, this being in addition to any other remedy to which they are entitled at law or in equity.
12.9 Governing Law. This Agreement shall be governed by and construed in accordance with the law of the State of Delaware regardless of the law that might otherwise govern under applicable principles of conflicts of law.
| 12.10 | Rules of Construction. |
(a) Each of the parties hereto agrees that it has been represented by independent counsel of its choice during the negotiation and execution of this Agreement and that it has executed the same upon the advice of such independent counsel. Each party and its counsel cooperated in the drafting and preparation of this Agreement and the documents referred to herein, and any and all drafts relating thereto shall be deemed the work product of the parties and may not be construed against any party by reason of its preparation. Therefore, the parties hereto waive the application of any law, regulation, holding or rule of construction providing that ambiguities in an agreement or other document will be construed against the party drafting such agreement or document.
(b) The inclusion of any information in the Disclosure Schedules shall not be deemed an admission or acknowledgment, in and of itself and solely by virtue of the
98
inclusion of such information in the Disclosure Schedules, that such information is required to be listed in the Disclosure Schedules or that such items are material to the Company, Parent or Merger Sub, as the case may be. The headings, if any, of the individual sections of each of the Disclosure Schedules are inserted for convenience only and shall not be deemed to constitute a part thereof or a part of this Agreement. The Disclosure Schedules are arranged in sections corresponding to those contained in Article II and Article III merely for convenience. This parties acknowledge that this Agreement requires the inclusion in each separate section of the Company Disclosure Schedule the disclosure of all information called for by the corresponding section of Article II, without regard for the fact that the same information may be called for in two or more sections of Article II and therefore should be disclosed on two or more sections of the Company Disclosure Schedule. Notwithstanding the foregoing, if despite the Company’s reasonable good faith efforts to comply with such requirement, the Company includes disclosure of certain information in one or more but less than all sections of the Company Disclosure Schedule that call for the disclosure of such information, and the relevance of the information to the section(s) in which it is not disclosed is reasonably apparent on the face of the disclosure in the section(s) where such information is disclosed, then the Company shall be deemed to have disclosed such information in the sections of the Company Disclosure Schedule where such information is not disclosed and the failure of the Company to include such information in the appropriate section(s) of the Company Disclosure Schedule shall not constitute an inaccuracy of representation or breach of warranty. Disclosure Schedules (i) include matters set forth in documents referenced in the Schedules and (ii) do not purport to disclose any agreements, contracts or instruments entered into pursuant to the terms of this Agreement.
(c) The specification of any dollar amount in the representations and warranties or otherwise in this Agreement or in the Disclosure Schedules is not intended and shall not be deemed to be an admission or acknowledgment of the materiality of such amounts or items, nor shall the same be used in any dispute or controversy between the parties to determine whether any obligation, item or matter (whether or not described herein or included in any schedule) is or is not material for purposes of this Agreement.
(d) Notwithstanding anything contained in this Agreement to the contrary, except as otherwise expressly provided in this Agreement, the parties hereto covenant and agree that no amount shall be (or is intended to be) included, in whole or in part (either as an increase or a reduction), more than once in the calculation of (including any component of) the Merger Consideration or any of the Adjustments, or any other calculated amount pursuant to this Agreement if the effect of such additional inclusion (either as an increase or a reduction) would be to cause such amount to be over or under counted for purposes of the transactions contemplated by this Agreement.
12.11 Assignment. No party may assign either this Agreement or any of its rights, interests or obligations hereunder without the prior written approval of the other parties. Subject to the first sentence of this Section 12.11, this Agreement shall be binding upon and shall inure to the benefit of the parties hereto and their respective successors and permitted assigns.
99
12.12 Amendment. This Agreement may be amended at any time prior to the Effective Time by written agreement approved by the Company Board, the Merger Sub Board and the Parent Board, subject to the provisions of Section 251(d) of the DGCL. This Agreement may not be amended except by an instrument executed in writing by each of the parties hereto.
12.13 Extension; Waiver. At any time prior to the Closing, any party hereto may, to the extent legally allowed: (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto; (ii) waive any inaccuracies in the representations and warranties made to such party contained herein or in any document delivered pursuant hereto; and (iii) waive compliance with any of the agreements or conditions for the benefit of such party contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. Delay in exercising any right under this Agreement shall not constitute a waiver of such right.
12.14 Joint Liability. Each representation, warranty, covenant and agreement made by Parent or Merger Sub in this Agreement shall be deemed a joint representation, warranty, covenant and agreement made by Parent and Merger Sub jointly and all liability and obligations relating thereto shall be deemed a joint liability and obligation of Parent and Merger Sub.
12.15 Exclusive Remedy; Affiliate Liability. Each of the following is herein referred to as a “Company Person”: (i) any direct or indirect holder of equity interests or securities in the Company (whether limited or general partners, members, stockholders or otherwise) and (ii) any director, officer, employee, representative or agent of (A) the Company, (B) any Company Subsidiary or (C) any Person who controls the Company or is specified in clause (i). No Company Person shall have any liability or obligation to Parent or Merger Sub with respect to any claim arising under this Agreement or any of the Transaction Documents, except to the extent any such Company Person is a party to any Transaction Document and then only with respect to the express obligations of such Company Person under such Transaction Document. Each director, officer, employee, representative or agent of Parent or of any Parent Subsidiary is herein referred to as a “Parent Person.” No Parent Person shall have any liability or obligation to the Company or to any Company Person with respect to any claim arising under this Agreement or any of the Transaction Documents. The parties acknowledge and agree that the sole and exclusive remedy of the Parent Indemnified Parties for any and all Losses for which a claim for indemnification could be asserted under Section 10.2 shall be pursuant to the indemnification provisions in Article X. Notwithstanding anything to contrary contained in this Section 12.15 or elsewhere in this Agreement, any party to this Agreement or any of the Transaction Documents shall have the right to assert claims against any Person based on such Person’s actual fraud.
12.16 Consequential Damages. No party hereto shall be entitled to recover from another party or its Affiliates or any Indemnified Parties, any indirect, consequential, punitive or exemplary damages or damages for lost profits of any kind arising under or in connection with this Agreement or the transactions contemplated hereby. Subject to the preceding sentence, each party on its own behalf and on behalf of its Affiliates and its Indemnified Parties waives any right to recover punitive, special, exemplary and consequential damages, including damages for lost profits, arising in connection with or with respect to this Agreement or the transactions contemplated hereby; provided, however, that nothing contained in this Section 12.16 is intended
100
to limit or otherwise affect Parent’s right to seek indemnification under Article X with respect to Indemnified Losses constituting indirect, consequential, punitive or exemplary damages, or damages for lost profits, assessed against Parent or the Surviving Corporation in any Third-Party Action.
12.17 Anti-Dilution Adjustments. Wherever in this Agreement there is a reference to a specific number of shares of Parent Common Stock or Warrants, or a price per share or consideration received in respect of such shares or Warrants, then, upon the occurrence of any subdivision, combination or dividend of such shares or Warrants, the specific number of shares or Warrants or the price so referenced in this Agreement shall automatically be proportionately adjusted to reflect the effect on the outstanding shares or Warrants of such subdivision, combination or dividend.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
101
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed as of the date first written above.
RAM ENERGY RESOURCES, INC.
| Larry E. Lee, Chairman and CEO |
ASCENT ACQUISITION CORP.
| Larry E. Lee, Chairman and CEO |
ASCENT ENERGY INC.
102
The Representative is executing this Agreement solely for purposes of (i) acknowledging its appointment as Representative hereunder, (ii) acknowledging its rights as Representative hereunder, and (iii) acknowledging and agreeing to perform its duties and obligations hereunder, and for no other purpose.
FS PRIVATE INVESTMENTS III LLC
| James L. Luikart, Managing Member |
103
EXHIBITS AND SCHEDULES
Exhibits
Exhibit A | - | Certificate of Incorporation of the Company at the Effective Time |
Exhibit B | - | By-Laws of the Company at the Effective Time |
Exhibit C | - | Form of Escrow Agreement |
Exhibit D | - | Note Holder Payoff and Recapitalization Agreement |
Exhibit E | - | Form of Voting Agreement |
Exhibit F | - | Form of Registration Rights Agreement |
Exhibit G | - | Form of Lock-Up Letter |
Exhibit H | - | Form of Opinion of McAfee & Taft A Professional Corporation |
Exhibit I | - | Form of Opinion of Vinson & Elkins L.L.P. |
Exhibit J | - Form of Opinion of Jones, Walker, Waechter, Poitevent, Carrère & Denègre, L.L.P. |
Schedules
Schedule 2 | - | Company Disclosure Schedule |
Schedule 3 | - | Parent Disclosure Schedule |
Schedule 4.2(a) | - | Work Plan |
Schedule 4.2(b) | - | Approved Capital Expenditures |
Schedule 5.2 | - | Calculation of Adjusted Working Capital |
Schedule 6.8 | - | Company Affiliates Executing Voting Agreement |
Schedule 6.10 | - | Company Affiliates Executing Lock-Up Letter |
Schedule 6.12(a) | - | SLPH Merger Agreement |
Schedule 6.12(b) | - | SLPH Stockholders and Reverse Split Description |
Schedule 6.14 | - | Holders of Parent Common Stock Delivering Support Agreement |
104
EXHIBIT A
AMENDED AND RESTATED
CERTIFICATE OF INCORPORATION
OF
ASCENT ENERGY INC.
FIRST: The name of the corporation (the “Corporation”) is:
Ascent Energy Inc.
SECOND: The Corporation’s registered office in the State of Delaware is located at 1209 Orange Street, in the City of Wilmington, County of New Castle 19801. The name of the Corporation’s registered agent in charge thereof is The Corporation Trust Company.
THIRD: The purpose of the Corporation is to engage in any lawful act or activity for which corporations may be organized under the Delaware General Corporation Law (“DGCL”).
FOURTH: The Corporation shall be authorized to issue one class of stock to be designated as Common Stock. The total number of shares which the corporation shall be authorized to issue is 5,000 having a par value of $.0001 per share.
FIFTH: The number of directors that will constitute the whole board of directors (the “Board”) shall be no more than three nor less than one. A director’s term of office shall be from the date such director is elected until the next annual meeting of the Corporation at which time such director’s successor will be elected and qualified; subject, however, to the prior death, resignation, retirement, disqualification or removal of such director from office. Election of directors need not be by written ballot unless the bylaws of the Corporation so provide.
SIXTH: In furtherance of, and not in limitation of, the powers conferred by statute, the Board is expressly authorized to adopt, amend or repeal the bylaws of the Corporation.
SEVENTH: A director of the Corporation shall not be personally liable to the Corporation or its stockholders for monetary damages for breach of fiduciary duty as a director, except for liability (i) for any breach of the director’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the DGCL, or (iv) for any transaction from which the director derived any improper personal benefit. If the DGCL is amended after approval by the stockholders of this article to authorize corporate action further eliminating or limiting the personal liability of directors, then the liability of a director of the Corporation shall be eliminated or limited to the fullest extent permitted by the DGCL, as so amended.
EIGHTH: The Corporation shall indemnify the following persons in the following manner:
(a) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or investigation, whether civil, criminal or administrative, and whether external or internal to the
Corporation (other than a judicial action or suit brought by or in the right of the Corporation), by reason of the fact that such person is or was a director, officer, employee, trustee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, trustee or agent of another corporation, partnership, joint venture, trust or other enterprise (all such persons being referred to hereafter as an “Agent”), against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the Agent in connection with such action, suit or proceeding if the Agent acted in good faith and in a manner the Agent reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe the Agent’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that (i) the Agent did not act in good faith and in a manner which the Agent reasonably believed to be in or not opposed to the best interests of the Corporation, or (ii) with respect to any criminal action or proceeding, that the Agent had reasonable cause to believe that the Agent’s conduct was unlawful.
(b) The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed judicial action or suit brought by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was an Agent (as defined above) against expenses (including attorneys’ fees), actually and reasonably incurred by the Agent in connection with the defense or settlement of such action or suit if the Agent acted in good faith and in a manner the Agent reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which the Agent shall have been adjudged to be liable for gross negligence or misconduct in the performance of the Agent’s duty to the Corporation, unless and only to the extent that the Court of Chancery, or the court in which such action or suit was brought, shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the Agent is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or other such court shall deem proper.
(c) Any indemnification under Subsection (a) or (b) of this Section (unless ordered by a court) shall be made by the Corporation unless a determination is reasonably and promptly made (i) by the Board by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders, that either (y) the Agent did not act in good faith and in a manner which the Agent reasonably believed to be in or not opposed to the best interests of the Corporation, or (z) with respect to any criminal action or proceeding, that the Agent had reasonable cause to believe that the Agent’s conduct was unlawful.
(d) Notwithstanding the other provisions of this Section, to the extent that an Agent has been successful on the merits or otherwise, including the dismissal of an action without prejudice or the settlement of an action without admission of liability, in defense of any proceeding or in defense of any claim, issue or matter therein, such Agent shall be indemnified against all expenses incurred in connection therewith.
-2-
(e) Except as limited by this Subsection (e), expenses incurred in any action, suit, proceeding or investigation shall be paid by the Corporation in advance of the final disposition of such matter, if the Agent shall undertake to repay such amount in the event that it is ultimately determined, as provided herein, that the Agent is not entitled to indemnification. Notwithstanding the foregoing, no advance shall be made by the Corporation if a determination is reasonably and promptly made by the Board by a majority vote of a quorum of disinterested directors, or (if such a quorum is not obtainable or, even if obtainable, a quorum of disinterested-directors so directs) by independent legal counsel in a written opinion, that, based upon the facts known to the Board or counsel at the time such determination is made, the Agent acted in bad faith and in a manner that the Agent did not believe to be in or not opposed to the best interest of the Corporation, or, with respect to any criminal proceeding, that Agent believed or had reasonable cause to believe the Agent’s conduct was unlawful. In no event shall any advance be made in instances where the Board or independent legal counsel reasonably determines that the Agent deliberately breached the Agent’s duty to the Corporation or its shareholders.
(f) Any indemnification or advance under Subsections (a), (b), (c), (d) or (e) of this Section shall be made promptly, and in any event within ninety (90) days, upon the written request of the Agent, unless with respect to applications under Subsections (a), (b), (c) or (e) of this Section, a determination is reasonably and promptly made by the Board by a majority vote of a quorum of disinterested directors that such Agent acted in a manner set forth in such Subsections as to justify the Corporation in not indemnifying or making an advance to the Agent. In the event no quorum of disinterested directors is obtainable, the Board shall promptly direct that independent legal counsel shall decide whether the Agent acted in the manner set forth in such Subsections as to justify the Corporation not indemnifying or making an advance to the Agent. The right to indemnification or advances as granted by this Section shall be enforceable by the Agent in any court of competent jurisdiction, if the Board or independent legal counsel denies the claim, in whole or in part, or if no disposition of such claim is made within ninety (90) days. The Agent’s expenses incurred in connection with successfully establishing the Agent’s right to indemnification, in whole or in part, in any such proceeding shall also be indemnified by the Corporation.
(g) The indemnification provided by this Section shall not be deemed exclusive of any other rights to which an Agent seeking indemnification may be entitled under any bylaws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in the Agent’s official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be an Agent and shall inure to the benefit of the heirs, executors and administrators of such a person. All rights to indemnification under this Section shall be deemed to be provided by a contract between the Corporation and the Agent who serves in such capacity at any time while this Certificate of Incorporation and the relevant provisions of the DGCL and other applicable law, if any, are in effect, and to the extent the relevant provisions of the DGCL are hereafter amended to permit more expansive indemnification, an Agent shall be entitled to the benefit of the more expansive indemnification so permitted. Any repeal or modification thereof shall not affect any rights or obligations then existing.
(h) Upon resolution passed by the Board, the Corporation may purchase and maintain insurance on behalf of any person who is or was an Agent against any liability asserted against such Agent and incurred by such Agent in any such capacity, or arising out of the Agent’s
-3-
status as such, whether or not the Corporation would have the power to indemnify the Agent against such liability under the provisions of this Section.
(i) For the purposes of this Section, references to “the Corporation” include all constituent corporations absorbed in a consolidation or merger as well as the resulting or surviving corporation, so that any person who is or was a director, officer, employee, trustee or agent of such a constituent corporation or is or was serving at the request of such constituent corporation as a director, officer, employee, trustee or agent of another corporation, partnership, joint venture, trust or other enterprise shall stand in the same position under the provisions of this Section with respect to the resulting or surviving corporation as such person would if such person had served the resulting or surviving corporation in the same capacity.
(j) For purposes of this Section, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee, trustee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee, trustee or agent with respect to any employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner such person reasonable believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Section.
(k) If this Section or any portion thereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Agent as to expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any action, suit, proceeding or investigation, whether civil, criminal or administrative, and whether internal or external, including a grand jury proceeding and an action or suit brought by or in the right of the Corporation, to the full extent permitted by any applicable portion of this Section that shall not have been invalidated, or by any other applicable agreement or law.
(l) The rights of indemnity created by this Section are and shall be at all times subordinate to the right of prior payment of all obligations of the Corporation for borrowed money to the extent they are due and payable at the time any payment under this Section shall be due and payable.
NINTH. Whenever a compromise or arrangement is proposed between this Corporation and its creditors or any class of them and/or between this Corporation and its stockholders or any class of them, any court of equitable jurisdiction within the State of Delaware may, on the application in a summary way of this Corporation or of any creditor or stockholder thereof or on the application of any receiver or receivers appointed for this Corporation under the provisions of Section 291 of Title 8 of the Delaware Code, or on the application of trustees in dissolution or of any receiver or receivers appointed for this Corporation under the provisions of Section 279 of Title 8 of the Delaware Code, order a meeting of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this Corporation, as the case may be, to be summoned in such manner as the said court directs. If a majority in number representing three-fourths in value of the creditors or class of creditors, and/or of the stockholders or class of stockholders of this
-4-
Corporation, as the case may be, agree to any compromise or arrangement and to any reorganization of this Corporation as a consequence of such compromise or arrangement, the said compromise or arrangement and the said reorganization shall, if sanctioned by the court to which the said application has been made, be binding on all the creditors or class of creditors, and/or on all the stockholders or class of stockholders, of this Corporation, as the case may be, and also on this Corporation.
TENTH: The Corporation reserves the right to amend, alter, change or repeal any provision contained in this Certificate of Incorporation in the manner now or hereinafter prescribed by statute, and all rights conferred on stockholders herein are granted subject to this reservation.
ELEVENTH: The power to adopt, amend or repeal the bylaws is hereby conferred upon the board of directors.
-5-
EXHIBIT B
As of __, 2007
AMENDED AND RESTATED
BY LAWS
OF
ASCENT ENERGY INC.
ARTICLE I
OFFICES
1.1 Registered Office. The registered office of Ascent Energy Inc. (the “Corporation”) in the State of Delaware shall be established and maintained at The Corporation Trust Center, 1209 Orange Street, Wilmington, Delaware 19801, and The Corporation Trust Company.
1.2 Other Offices. The Corporation may also have offices at such other places both within and without the State of Delaware as the board of directors of the Corporation (the “Board of Directors”) may from time to time determine or the business of the Corporation may require.
ARTICLE II
MEETINGS OF STOCKHOLDERS
2.1 Place of Meetings. All meetings of the stockholders shall be held at such time and place, either within or without the State of Delaware, as shall be designated from time to time by the Board of Directors and stated in the notice of the meeting or in a duly executed waiver of notice thereof.
2.2 Annual Meetings. The annual meeting of stockholders shall be held on such date and at such time as may be fixed by the Board of Directors and stated in the notice of the meeting, for the purpose of electing directors and for the transaction of only such other business as is properly brought before the meeting in accordance with these Bylaws (the “Bylaws”). Written notice of an annual meeting stating the place, date and hour of the meeting, shall be given to each stockholder entitled to vote at such meeting not less than ten (10) nor more than sixty (60) days before the date of the annual meeting. To be properly brought before the annual meeting, business must be either (i) specified in the notice of annual meeting (or any supplement or amendment thereto) given by or at the direction of the Board of Directors, (ii) otherwise brought before the annual meeting by or at the direction of the Board of Directors, or (iii) otherwise properly brought before the annual meeting by a stockholder. In addition to any other applicable requirements, for business to be properly brought before an annual meeting by a stockholder, the stockholder must have given timely notice thereof in writing to the Secretary of the Corporation. To be timely, a stockholder’s notice must be delivered to or mailed and received at the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the meeting; provided, however, that in the event that less than seventy (70) days notice or prior public disclosure of the date of the annual meeting is given or made to stockholders, notice by a stockholder, to be timely, must be received no later than the close of business on the tenth (10th) day following the day on which such notice of the date of
the annual meeting was mailed or such public disclosure was made, whichever first occurs. A stockholder’s notice to the Secretary shall set forth (a) as to each matter the stockholder proposes to bring before the annual meeting (i) a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting, and (ii) any material interest of the stockholder in such business, and (b) as to the stockholder giving the notice (i) the name and record address of the stockholder and (ii) the class, series and number of shares of capital stock of the Corporation which are beneficially owned by the stockholder. Notwithstanding anything in these Bylaws to the contrary, no business shall be conducted at the annual meeting except in accordance with the procedures set forth in this Article II, Section 2. The officer of the Corporation presiding at an annual meeting shall, if the facts warrant, determine and declare to the annual meeting that business was not properly brought before the annual meeting in accordance with the provisions of this Article II, Section 2, and if such officer should so determine, such officer shall so declare to the annual meeting and any such business not properly brought before the meeting shall not be transacted.
2.3 Special Meetings. Special meetings of the stockholders, for any purpose or purposes, unless otherwise prescribed by statute or by the Certificate of Incorporation of the Corporation (the “Certificate of Incorporation”), may only be called by a majority of the entire Board of Directors, or the Chief Executive Officer, and shall be called by the Secretary at the request in writing of stockholders owning a majority in amount of the entire capital stock of the corporation issued and outstanding and entitled to vote. Such request shall state the purpose or purposes of the proposed meeting. Unless otherwise provided by law, written notice of a special meeting of stockholders, stating the time, place and purpose or purposes thereof, shall be given to each stockholder entitled to vote at such meeting, not less than ten (10) or more than sixty (60) days before the date fixed for the meeting. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.
2.4 Quorum. The holders of a majority of the capital stock issued and outstanding and entitled to vote thereat, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Certificate of Incorporation. If, however, such quorum shall not be present or represented at any meeting of the stockholders, the holders of a majority of the votes entitled to be cast by the stockholders entitled to vote thereat, present in person or represented by proxy, shall have power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally noticed. If the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder entitled to vote at the meeting.
2.5 Organization. The Chairman of the Board of Directors shall act as chairman of meetings of the stockholders. The Board of Directors may designate any other officer or director of the Corporation to act as chairman of any meeting in the absence of the Chairman of the Board of Directors, and the Board of Directors may further provide for determining who shall act as chairman of any stockholders meeting in the absence of the Chairman of the Board of Directors and such designee. The Secretary of the Corporation shall act as secretary of all
2
meetings of the stockholders, but in the absence of the Secretary the presiding officer may appoint any other person to act as secretary of any meeting.
2.6 Voting. Unless otherwise required by law, the Certificate of Incorporation or these Bylaws, any question (other than the election of directors) brought before any meeting of stockholders shall be decided by the vote of the holders of a majority of the stock represented and entitled to vote thereat. At all meetings of stockholders for the election of directors, a plurality of the votes cast shall be sufficient to elect. Each stockholder represented at a meeting of stockholders shall be entitled to cast one vote for each share of the capital stock entitled to vote thereat held by such stockholder, unless otherwise provided by the Certificate of Incorporation. Each stockholder entitled to vote at a meeting of stockholders or to express consent or dissent to corporate action in writing without a meeting may authorize any person or persons to act for him by proxy. All proxies shall be executed in writing and shall be filed with the Secretary of the Corporation not later than the day on which exercised. No proxy shall be voted or acted upon after three (3) years from its date, unless the proxy provides for a longer period. The Board of Directors, in its discretion, or the officer of the Corporation presiding at a meeting of stockholders, in his discretion, may require that any votes cast at such meeting shall be cast by written ballot.
2.7 Action of Shareholders Without Meeting. Unless otherwise provided by the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if a consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of votes that would be necessary to authorize or take such action at a meeting at which all shares entitled to vote thereon were present and voted, and shall be delivered to the Corporation by delivery to its registered office in the State of Delaware, its principal place of business, or an officer or agent of the Corporation having custody of the book in which proceedings of meetings of stockholders are recorded. Delivery made to the Corporation’s registered office shall be by hand or by certified or registered mail, return receipt requested. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent shall be given to those stockholders who have not consented in writing.
2.8 Voting List. The officer who has charge of the stock ledger of the corporation shall prepare and make, at least ten (10) days before every meeting of stockholders, a complete list of the stockholders entitled to vote at the meeting, arranged in alphabetical order, showing the address of each stockholder and the number of shares registered in the name of each stockholder. Such list shall be open to the examination of any stockholder, for any purpose germane to the meeting, during ordinary business hours, for a period of at least ten (10) days prior to the election, either at a place within the city, town or village where the election is to be held, which place shall be specified in the notice of the meeting, or, if not specified, at the place where said meeting is to be held. The list shall be produced and kept at the time and place of election during the whole time thereof, and may be inspected by any stockholder of the Corporation who is present.
3
2.9 Stock Ledger. The stock ledger of the Corporation shall be the only evidence as to who are the stockholders entitled to examine the stock ledger, the list required by Section 2.8 of these Bylaws or the books of the Corporation, or to vote in person or by proxy at any meeting of stockholders.
2.10 Adjournment. Any meeting of the stockholders, including one at which directors are to be elected, may be adjourned for such periods as the presiding officer of the meeting or the stockholders present in person or by proxy and entitled to vote shall direct.
2.11 Ratification. Any transaction questioned in any stockholders’ derivative suit, or any other suit to enforce alleged rights of the Corporation or any of its stockholders, on the ground of lack of authority, defective or irregular execution, adverse interest of any director, officer or stockholder, nondisclosure, miscomputation or the application of improper principles or practices of accounting may be approved, ratified and confirmed before or after judgment by the Board of Directors or by the holders of common stock and, if so approved, ratified or confirmed, shall have the same force and effect as if the questioned transaction had been originally duly authorized, and said approval, ratification or confirmation shall be binding upon the Corporation and all of its stockholders and shall constitute a bar to any claim or execution of any judgment in respect of such questioned transaction.
2.12 Judges. All votes by ballot at any meeting of stockholders shall be conducted by two judges appointed for the purpose either by the directors or by the meeting. The judges shall decide upon the qualifications of voters, count the votes and declare the result.
ARTICLE III
DIRECTORS
3.1 Powers; Number; Qualifications. The business and affairs of the Corporation shall be managed by or under the direction of the Board of Directors, except as may be otherwise provided by law or in the Certificate of Incorporation. The number of directors which shall constitute the Board of Directors shall be not less than one (1) nor more than three (3). The exact number of directors shall be fixed from time to time, within the limits specified in this Section 3.1 or in the Certificate of Incorporation, by the Board of Directors. Directors need not be stockholders of the Corporation.
3.2 Election; Term of Office; Resignation; Removal; Vacancies. Each director shall hold office until the next annual meeting of stockholders at which time such director’s successor will be elected and qualified; subject, however, to the prior death, resignation, retirement, disqualification or removal of such director from office. Unless otherwise provided in the Certificate of Incorporation, vacancies and newly created directorships resulting from any increase in the authorized number of directors or from any other cause may be filled by a majority of the directors then in office, although less than a quorum, or by a sole remaining director and each director so chosen shall hold office until the next annual meeting and until such director’s successor shall be duly elected and shall qualify, or until such director’s earlier death, resignation, retirement, disqualification or removal from office.
4
3.3 Nominations. Nominations of persons for election to the Board of Directors of the Corporation at a meeting of stockholders of the Corporation may be made at such meeting by or at the direction of the Board of Directors, by any committee or persons appointed by the Board of Directors or by any stockholder of the Corporation entitled to vote for the election of directors at the meeting who complies with the notice procedures set forth in this Section 3.3. Such nominations by any stockholder shall be made pursuant to timely notice in writing to the Secretary of the Corporation. To be timely, a stockholder’s notice shall be delivered to or mailed and received at the principal executive offices of the Corporation not less than sixty (60) days nor more than ninety (90) days prior to the meeting; provided however, that in the event that less than seventy (70) days notice or prior public disclosure of the date of the meeting is given or made to stockholders, notice by the stockholder, to be timely, must be received no later than the close of business on the tenth (10th) day following the day on which such notice of the date of the meeting was mailed or such public disclosure was made, whichever first occurs. Such stockholder’s notice to the Secretary shall set forth (i) as to each person whom the stockholder proposes to nominate for election or reelection as a director, (a) the name, age, business address and residence address of the person, (b) the principal occupation or employment of the person, (c) the class and number of shares of capital stock of the Corporation which are beneficially owned by the person, and (d) any other information relating to the person that is required to be disclosed in solicitations for proxies for election of directors pursuant to the Rules and Regulations of the Securities and Exchange Commission under Section 14 of the Securities Exchange Act of 1934, as amended, and (ii) as to the stockholder giving the notice (a) the name and record address of the stockholder and (b) the class and number of shares of capital stock of the Corporation which are beneficially owned by the stockholder. The Corporation may require any proposed nominee to furnish such other information as may reasonably be required by the Corporation to determine the eligibility of such proposed nominee to serve as a director of the Corporation. No person shall be eligible for election as a director of the Corporation unless nominated in accordance with the procedures set forth herein. The officer of the Corporation presiding at an annual meeting shall, if the facts warrant, determine and declare to the meeting that a nomination was not made in accordance with the foregoing procedure, and if he should so determine, he shall so declare to the meeting and the defective nomination shall be disregarded.
3.4 Meetings. The Board of Directors of the Corporation may hold meetings, both regular and special, either within or without the State of Delaware. The first meeting of each newly elected Board of Directors shall be held immediately after and at the same place as the meeting of the stockholders at which it is elected and no notice of such meeting shall be necessary to the newly elected directors in order to legally constitute the meeting, provided a quorum shall be present. Regular meetings of the Board of Directors may be held without notice at such time and place as shall from time to time be determined by the Board of Directors. Special meetings of the Board of Directors may be called by the Chief Executive Officer or a majority of the entire Board of Directors. Notice thereof stating the place, date and hour of the meeting shall be given to each director either by mail not less than forty-eight (48) hours before the date of the meeting, by telephone, facsimile or telegram on twenty-four (24) hours notice, or on such shorter notice as the person or persons calling such meeting may deem necessary or appropriate in the circumstances.
3.5 Quorum. Except as may be otherwise specifically provided by law, the Certificate of Incorporation or these Bylaws, at all meetings of the Board of Directors or any
5
committee thereof, a majority of the entire Board of Directors or such committee, as the case may be, shall constitute a quorum for the transaction of business and the act of a majority of the directors present at any meeting at which there is a quorum shall be the act of the Board of Directors. If a quorum shall not be present at any meeting of the Board of Directors or of any committee thereof, a majority of the directors present thereat may adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present.
3.6 Organization of Meetings. The Board of Directors shall elect one of its members to be Chairman of the Board of Directors. The Chairman of the Board of Directors shall lead the Board of Directors in fulfilling its responsibilities as set forth in these Bylaws, including its responsibility to oversee the performance of the Corporation, and shall determine the agenda and perform all other duties and exercise all other powers which are or from time to time may be delegated to him or her by the Board of Directors. Meetings of the Board of Directors shall be presided over by the Chairman of the Board of Directors, or in his or her absence, by the Chief Executive Officer, or in the absence of the Chairman of the Board of Directors and the Chief Executive Officer by such other person as the Board of Directors may designate or the members present may select.
3.7 Actions of Board of Directors Without Meeting. Unless otherwise restricted by the Certificate of Incorporation or these Bylaws, any action required or permitted to be taken at any meeting of the Board of Directors or of any committee thereof may be taken without a meeting, if all members of the Board of Directors or of such committee, as the case may be, consent thereto in writing, and the writing or writings are filled with the minutes of proceedings of the Board of Directors or committee.
3.8 Removal of Directors by Stockholders. The entire Board of Directors or any individual Director may be removed from office with or without cause by a majority vote of the holders of the outstanding shares then entitled to vote at an election of directors. In case the Board of Directors or any one or more Directors be so removed, new Directors may be elected at the same time for the unexpired portion of the full term of the Director or Directors so removed.
3.9 Resignations. Any Director may resign at any time by submitting his written resignation to the Board of Directors or Secretary of the Corporation. Such resignation shall take effect at the time of its receipt by the Corporation unless another time be fixed in the resignation, in which case it shall become effective at the time so fixed. The acceptance of a resignation shall not be required to make it effective.
3.10 Committees. The Board of Directors may designate one or more committees, each committee to consist of one or more of the directors of the Corporation. In the absence or disqualification of a member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member. Any such committee, to the extent provided by law and in the resolution of the Board of Directors establishing such committee, shall have and may exercise all the powers and authority of the Board of Directors in the management of the business and affairs of the Corporation, and may authorize the seal of the Corporation to be affixed to all papers which may require it; but no such committee shall have the power or
6
authority in reference to amending the Certificate of Incorporation, adopting an agreement of merger or consolidation, recommending to the stockholders the sale, lease or exchange of all or substantially all of the Corporation’s property and assets, recommending to the stockholders a dissolution of the Corporation or a revocation of a dissolution or amending the Bylaws of the Corporation; and, unless the resolution expressly so provides, no such committee shall have the power or authority to declare a dividend or to authorize the issuance of stock or to adopt a certificate of ownership and merger. Each committee shall keep regular minutes of its meetings and report the same to the Board of Directors when required.
3.11 Compensation. The directors may be paid their expenses, if any, of attendance at each meeting of the Board of Directors and may be paid a fixed amount (in cash or other form of consideration) for attendance at each meeting of the Board of Directors or a stated salary as director. No such payment shall preclude any director from serving the Corporation in any other capacity and receiving compensation therefor. Members of special or standing committees may be allowed like compensation for attending committee meetings.
3.12 Interested Directors. No contract or transaction between the Corporation and one or more of its directors or officers, or between the Corporation and any other corporation, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because his or their votes are counted for such purpose, if (i) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (ii) the material facts as to his or their relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (iii) the contract or transaction is fair as to the Corporation as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the stockholders. Common or interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.
3.13 Meetings by Means of Conference Telephone. Members of the Board of Directors or any committee designed by the Board of Directors may participate in a meeting of the Board of Directors or of a committee of the Board of Directors by means of conference telephone or similar communications equipment by means of which all persons participating in the meeting can hear each other, and participation in a meeting pursuant to this subsection shall constitute presence in person at such meeting.
3.14 Related Party Transactions. No contract or other transaction shall be made or entered into between the Corporation and any “related party” (as hereinafter defined) unless such contract or other transaction (i) is on terms no less favorable to the Corporation than may reasonably be available to the Corporation from an unaffiliated third party, and (ii) if material in amount, is approved by vote of a majority of the Corporation’s disinterested (in such contract or transaction)
7
directors. For purposes of this provision, the term “related party” means: (x) any director or executive officer of the Corporation; (y) any person known by the Corporation to be the beneficial owner of more than five percent (5%) of any class of the Corporation’s voting securities; or (z) any immediate family member of any director or executive officer, or of any person known by the Corporation to be the beneficial owner of more than five percent (5%) of any class of the Corporation’s voting securities.
ARTICLE IV
OFFICERS
4.1 General. The officers of the Corporation shall be elected by the Board of Directors and may consist of: a Chairman of the Board, Vice Chairman of the Board, Chief Executive Officer, Chief Financial Officer, President, Secretary and Treasurer. The Board of Directors, in its discretion, may also elect one or more Vice Presidents (including Executive Vice Presidents and Senior Vice Presidents), Assistant Secretaries, Assistant Treasurers, a Controller and such other officers as in the judgment of the Board of Directors may be necessary or desirable. Any number of offices may be held by the same person and more than one person may hold the same office, unless otherwise prohibited by law, the Certificate of Incorporation or these Bylaws. The officers of the Corporation need not be stockholders of the Corporation, nor need such officers be directors of the Corporation.
4.2 Election. The Board of Directors at its first meeting held after each annual meeting of stockholders shall elect the officers of the Corporation who shall hold their offices for such terms and shall exercise such powers and perform such duties as shall be determined from time to time by the Board of Directors; and all officers of the Corporation shall hold office until their successors are chosen and qualified, or until their earlier resignation or removal. Except as otherwise provided in this Article IV and subject to the provisions of any employment agreement approved by the Board of Directors, any officer elected by the Board of Directors may be removed at any time by the affirmative vote of a majority of the Board of Directors. Any vacancy occurring in any office of the Corporation shall be filled by the Board of Directors. The salaries of all officers who are directors of the Corporation shall be fixed by the Board of Directors.
4.3 Voting Securities Owned by the Corporation. Powers of attorney, proxies, waivers of notice of meeting, consents and other instruments relating to securities owned by the Corporation may be executed in the name of and on behalf of the Corporation by the Chief Executive Officer or any Vice President, and any such officer may, in the name and on behalf of the Corporation, take all such action as any such officer may deem advisable to vote in person or by proxy at any meeting of security holders of any corporation in which the Corporation may own securities and at any such meeting shall possess and may exercise any and all rights and powers incident to the ownership of such securities and which, as the owner thereof, the Corporation might have exercised and possessed if present. The Board of Directors may, by resolution, from time to time confer like powers upon any other person or persons.
4.4 Chief Executive Officer. Subject to the provisions of these Bylaws and to the direction of the Board of Directors, the Chief Executive Officer shall have ultimate authority for decisions relating to the general management and control of the affairs and business of the
8
Corporation and shall perform such other duties and exercise such other powers which are or from time to time may be delegated to him or her by the Board of Directors or these Bylaws, all in accordance with basic policies as established by and subject to the oversight of the Board of Directors.
4.5 Chief Financial Officer. The Chief Financial Officer shall have general supervision, direction and control of the financial affairs of the Corporation and shall perform such other duties and exercise such other powers which are or from time to time may be delegated to him or her by the Board of Directors or these Bylaws, all in accordance with basic policies as established by and subject to the oversight of the Board of Directors. In the absence of a named Treasurer, the Chief Financial Officer shall also have the powers and duties of the Treasurer as hereinafter set forth and shall be authorized and empowered to sign as Treasurer in any case where such officer’s signature is required.
4.6 Vice Presidents. At the request of the Chief Executive Officer or in the absence of the Chief Executive Officer, or in the event of his or her inability or refusal to act, the Vice President or the Vice Presidents if there is more than one (in the order designated by the Board of Directors) shall perform the duties of the Chief Executive Officer, and when so acting, shall have all the powers of and be subject to all the restrictions upon such office. Each Vice President shall perform such other duties and have such other powers as the Board of Directors from time to time may prescribe. If there be no Vice President, the Board of Directors shall designate the officer of the Corporation who, in the absence of the Chief Executive Officer or in the event of the inability or refusal of such officer to act, shall perform the duties of such office, and when so acting, shall have all the powers of and be subject to all the restrictions upon such office.
4.7 Secretary. The Secretary shall attend all meetings of the stockholders and record all the proceedings thereat in a book or books to be kept for that purpose. The Secretary shall also maintain all minutes and records of the proceedings of the Board of Directors and committees of the Board in a book or books for such purpose. The Secretary shall give, or cause to be given, notice of all meetings of the stockholders and special meetings of the Board of Directors, and shall perform such other duties as may be prescribed by the Board of Directors or the Chief Executive Officer, under whose supervision the Secretary shall be. If the Secretary shall be unable or shall refuse to cause to be given notice of all meetings of the stockholders and special meetings of the Board of Directors, then the Chief Executive Officer or any Assistant Secretary shall perform such actions. If there be no Assistant Secretary, then the Board of Directors or the Chief Executive Officer may choose another officer to cause such notice to be given. The Secretary shall have custody of the seal of the Corporation and the Secretary or any Assistant Secretary, if there be one, shall have authority to affix the same to any instrument requiring it and when so affixed, it may be attested by the signature of the Secretary or by the signature of any such Assistant Secretary. The Board of Directors may give general authority to any other officer to affix the seal of the Corporation and to attest the affixing by his signature. The Secretary shall see that all books, reports, statements, certificates and other documents and records required by law to be kept or filed are properly kept or filed, as the case may be.
4.8 Treasurer. The Treasurer shall have the custody of the corporate funds and securities and shall keep full and accurate accounts of receipts and disbursements in books belonging to the Corporation and shall deposit all moneys and other valuable effects in the name
9
and to the credit of the Corporation in such depositories as may be designated by the Board of Directors. The Treasurer shall disburse the funds of the Corporation as may be ordered by the Board of Directors, taking proper vouchers for such disbursements, and shall render to the Chief Executive Officer and the Board of Directors, at its regular meetings, or when the Board of Directors so requires, an account of all his transactions as Treasurer and of the financial condition of the Corporation. If required by the Board of Directors, the Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation.
4.9 Assistant Secretaries. Except as may be otherwise provided in these Bylaws, Assistant Secretaries, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the Chief Executive Officer, any Vice President, if there be one, or the Secretary, and in the absence of the Secretary or in the event of his disability or refusal to act, shall perform the duties of the Secretary, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Secretary.
4.10 Assistant Treasurers. Assistant Treasurers, if there be any, shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors, the Chief Executive Officer, any Vice President, if there be one, or the Treasurer, and in the absence of the Treasurer or in the event of his disability or refusal to act, shall perform the duties of the Treasurer, and when so acting, shall have all the powers of and be subject to all the restrictions upon the Treasurer. If required by the Board of Directors, an Assistant Treasurer shall give the Corporation a bond in such sum and with such surety or sureties as shall be satisfactory to the Board of Directors for the faithful performance of the duties of his office and for the restoration to the Corporation, in case of his death, resignation, retirement or removal from office, of all books, papers, vouchers, money and other property of whatever kind in his possession or under his control belonging to the Corporation.
4.11 Controller. The Controller shall establish and maintain the accounting records of the Corporation in accordance with generally accepted accounting principles applied on a consistent basis, maintain proper internal control of the assets of the Corporation and shall perform such other duties as the Board of Directors, the Chief Executive Officer or any Vice President of the Corporation may prescribe.
4.12 Other Officers. Such other officers as the Board of Directors may choose shall perform such duties and have such powers as from time to time may be assigned to them by the Board of Directors. The Board of Directors may delegate to any other officer of the Corporation the power to choose such other officers and to prescribe their respective duties and powers.
4.13 Vacancies. The Board of Directors shall have the power to fill any vacancies in any office occurring from whatever reason.
4.14 Resignations. Any officer may resign at any time by submitting his written resignation to the Corporation. Such resignation shall take effect at the time of its receipt by the
10
Corporation, unless another time be fixed in the resignation, in which case it shall become effective at the time so fixed. The acceptance of a resignation shall not be required to make it effective.
4.15 Removal. Subject to the provisions of any employment agreement approved by the Board of Directors, any officer of the Corporation may be removed at any time, with or without cause, by the Board of Directors.
ARTICLE V
CAPITAL STOCK
5.1 Form of Certificates. Every holder of stock in the Corporation shall be entitled to have a certificate signed, in the name of the Corporation (i) by the Chief Executive Officer or a Vice President and (ii) by the Treasurer or an Assistant Treasurer, or the Secretary or an Assistant Secretary of the Corporation, certifying the number of shares owned by him in the Corporation.
5.2 Signatures. Any or all of the signatures on the certificate may be a facsimile, including, but not limited to, signatures of officers of the Corporation and countersignatures of a transfer agent or registrar. In case an officer, transfer agent or registrar who has signed or whose facsimile signature has been placed upon a certificate shall have ceased to be such officer, transfer agent or registrar before such certificate is issued, it may be issued by the Corporation with the same effect as if he were such officer, transfer agent or registrar at the date of issue.
5.3 Lost Certificates. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the Corporation alleged to have been lost, stolen or destroyed, upon the making of an affidavit of that fact by the person claiming the certificate of stock to be lost, stolen or destroyed. When authorizing such issue of a new certificate, the Board of Directors may, in its discretion and as a condition precedent to the issuance thereof, require the owner of such lost, stolen or destroyed certificate, or his legal representative, to advertise the same in such manner as the Board of Directors shall require and/or to give the Corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the Corporation with respect to the certificate alleged to have been lost, stolen or destroyed.
5.4 Transfers. Stock of the Corporation shall be transferable in the manner prescribed by law and in these Bylaws. Transfers of stock shall be made on the books of the Corporation only by the person named in the certificate or by his attorney lawfully constituted in writing and upon the surrender of the certificate therefor, which shall be canceled before a new certificate shall be issued. Upon surrender to the Corporation or the transfer agent of the Corporation of a certificate for shares duly endorsed or accompanied by proper evidence of succession, assignment or authority to transfer, it shall be the duty of the Corporation to issue a new certificate to the person entitled thereto, cancel the old certificate and record the transactions upon its books, unless the Corporation has a duty to inquire as to adverse claims with respect to such transfer which has not been discharged. The Corporation shall have no duty to inquire into adverse claims with respect to such transfer unless (a) the Corporation has received a written notification of an adverse claim at a time and in a manner which affords the Corporation a
11
reasonable opportunity to act on it prior to the issuance of a new, reissued or re-registered share certificate and the notification identifies the claimant, the registered owner and the issue of which the share or shares is a part and provides an address for communications directed to the claimant; or (b) the Corporation has required and obtained, with respect to a fiduciary, a copy of a will, trust, indenture, articles of co-partnership, Bylaws or other controlling instruments, for a purpose other than to obtain appropriate evidence of the appointment or incumbency of the fiduciary, and such documents indicate, upon reasonable inspection, the existence of an adverse claim. The Corporation may discharge any duty of inquiry by any reasonable means, including notifying an adverse claimant by registered or certified mail at the address furnished by him or, if there be no such address, at his residence or regular place of business that the security has been presented for registration of transfer by a named person, and that the transfer will be registered unless within thirty days from the date of mailing the notification, either (a) an appropriate restraining order, injunction or other process issues from a court of competent jurisdiction; or (b) an indemnity bond, sufficient in the Corporation’s judgment to protect the Corporation and any transfer agent, registrar or other agent of the Corporation involved from any loss which it or they may suffer by complying with the adverse claim, is filed with the Corporation.
5.5 Fixing Record Date. In order that the Corporation may determine the stockholders entitled to notice or to vote at any meeting of stockholders or any adjournment thereof, or to express consent to corporate action in writing without a meeting, or entitled to receive payment of any dividend or other distribution or allotment of any rights, or entitled to exercise any rights in respect of any change, conversion or exchange of stock or for the purpose of any other lawful action, the Board of Directors may fix a record date, which record date shall not precede the date upon which the resolution fixing the record is adopted by the Board of Directors, and which record date shall not be more than sixty (60) nor less than ten (10) days before the date of such meeting, nor more than ten (10) days after the date upon which the resolution fixing the record date of action with a meeting is adopted by the Board of Directors, nor more than sixty (60) days prior to any other action. If no record date is fixed:
(a) The record date for determining stockholders entitled to notice of or to vote at a meeting of stockholders shall be at the close of business on the day next preceding the day on which notice is given, or, if notice is waived, at the close of business on the day next preceding the day on which the meeting is held.
(b) The record date for determining stockholders entitled to express consent to corporate action in writing without a meeting, when no prior action by the Board of Directors is necessary, shall be the first date on which a signed written consent is delivered to the Corporation.
(c) The record date for determining stockholders for any other purpose shall be at the close of business on the day on which the Board of Directors adopts the resolution relating thereto.
A determination of stockholders of record entitled to notice of or to vote at a meeting of stockholders shall apply to any adjournment of the meeting; provided, however, that the Board of Directors may fix a new record date for the adjourned meeting.
12
5.6 Registered Stockholders. Prior to due presentment for transfer of any share or shares, the Corporation shall treat the registered owner thereof as the person exclusively entitled to vote, to receive notifications and to all other benefits of ownership with respect to such share or shares, and shall not be bound to recognize any equitable or other claim to or interest in such share or shares on the part of any other person, whether or not it shall have express or other notice thereof, except as otherwise provided by the laws of the State Delaware.
ARTICLE VI
NOTICES
6.1 Form of Notice. Notices to directors and stockholders other than notices to directors of special meetings of the board of Directors which may be given by any means stated in Article III, Section 4, shall be in writing and delivered personally or mailed to the directors or stockholders at their addresses appearing on the books of the corporation. Notice by mail shall be deemed to be given at the time when the same shall be mailed. Notice to directors may also be given by facsimile or by email in accordance with instructions received from each director.
6.2 Waiver of Notice. Whenever any notice is required to be given under the provisions of law or the Certificate of Incorporation or by these Bylaws of the Corporation, a written waiver, signed by the person or persons entitled to notice, whether before or after the time stated therein, shall be deemed equivalent to notice. Attendance of a person at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened. Neither the business to be transacted at, nor the purpose of, any regular, or special meeting of the stockholders, Directors, or members of a committee of Directors need be specified in any written waiver of notice unless so required by the Certificate of Incorporation.
ARTICLE VII
INDEMNIFICATION OF DIRECTORS AND OFFICERS
7.1 Third Party Actions. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit, proceeding or investigation, whether civil, criminal or administrative, and whether external or internal to the Corporation (other than a judicial action or suit brought by or in the right of the Corporation), by reason of the fact that such person is or was a director, officer, employee, trustee or agent of the Corporation, or is or was serving at the request of the Corporation as a director, officer, employee, trustee or agent of another corporation, partnership, joint venture, trust or other enterprise (all such persons being referred to hereafter as an “Agent”), against expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement actually and reasonably incurred by the Agent in connection with such action, suit or proceeding if the Agent acted in good faith and in a manner the Agent reasonably believed to be in or not opposed to the best interests of the Corporation, and with respect to any criminal action or proceeding, had no reasonable cause to believe the Agent’s conduct was unlawful. The termination of any action, suit or proceeding by judgment, order, settlement, conviction, or upon a plea of nolo contendere or its equivalent, shall not, of itself, create a presumption that (i) the Agent did not act in good faith and in a manner which the Agent reasonably believed to be in or not opposed to the best interests of the Corporation, or (ii)
13
with respect to any criminal action or proceeding, that the Agent had reasonable cause to believe that the Agent’s conduct was unlawful.
7.2 Actions by the Corporation. The Corporation shall indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed judicial action or suit brought by or in the right of the Corporation to procure a judgment in its favor by reason of the fact that such person is or was an Agent (as defined above) against expenses (including attorneys’ fees), actually and reasonably incurred by the Agent in connection with the defense or settlement of such action or suit if the Agent acted in good faith and in a manner the Agent reasonably believed to be in or not opposed to the best interests of the Corporation, except that no indemnification shall be made in respect of any claim, issue or matter as to which the Agent shall have been adjudged to be liable for gross negligence or misconduct in the performance of the Agent’s duty to the Corporation, unless and only to the extent that the Court of Chancery, or the court in which such action or suit was brought, shall determine upon application that, despite the adjudication of liability but in view of all the circumstances of the case, the Agent is fairly and reasonably entitled to indemnity for such expenses which the Court of Chancery or other such court shall deem proper.
7.3 Determination of Entitlement. Any indemnification under Sections 7.1 or 7.2 (unless ordered by a court) shall be made by the Corporation unless a determination is reasonably and promptly made (i) by the Board by a majority vote of a quorum consisting of directors who were not parties to such action, suit or proceeding, or (ii) if such a quorum is not obtainable or, even if obtainable, if a quorum of disinterested directors so directs, by independent legal counsel in a written opinion, or (iii) by the stockholders, that either (y) the Agent did not act in good faith and in a manner which the Agent reasonably believed to be in or not opposed to the best interests of the Corporation, or (z) with respect to any criminal action or proceeding, that the Agent had reasonable cause to believe that the Agent’s conduct was unlawful.
7.4 Expenses. Notwithstanding the other provisions of this Section, to the extent that an Agent has been successful on the merits or otherwise, including the dismissal of an action without prejudice or the settlement of an action without admission of liability, in defense of any proceeding or in defense of any claim, issue or matter therein, such Agent shall be indemnified against all expenses incurred in connection therewith.
7.5 Advancement of Expenses. Except as limited by this Section 7.5, expenses incurred in any action, suit, proceeding or investigation shall be paid by the Corporation in advance of the final disposition of such matter, if the Agent shall undertake to repay such amount in the event that it is ultimately determined, as provided herein, that the Agent is not entitled to indemnification. Notwithstanding the foregoing, no advance shall be made by the Corporation if a determination is reasonably and promptly made by the Board by a majority vote of a quorum of disinterested directors, or (if such a quorum is not obtainable or, even if obtainable, a quorum of disinterested directors so directs) by independent legal counsel in a written opinion, that, based upon the facts known to the Board or counsel at the time such determination is made, the Agent acted in bad faith and in a manner that the Agent did not believe to be in or not opposed to the best interest of the Corporation, or, with respect to any criminal proceeding, that Agent believed or had reasonable cause to believe the Agent’s conduct was unlawful. In no event shall any advance be
14
made in instances where the Board or independent legal counsel reasonably determines that the Agent deliberately breached the Agent’s duty to the Corporation or its shareholders.
7.6 Payment. Any indemnification or advance under this Article 7 shall be made promptly, and in any event within ninety (90) days, upon the written request of the Agent, unless with respect to applications under Sections 7.1, 7.2, 7.4 or 7.5, a determination is reasonably and promptly made by the Board by a majority vote of a quorum of disinterested directors that such Agent acted in a manner set forth in such Sections as to justify the Corporation in not indemnifying or making an advance to the Agent. In the event no quorum of disinterested directors is obtainable, the Board shall promptly direct that independent legal counsel shall decide whether the Agent acted in the manner set forth in such Sections as to justify the Corporation not indemnifying or making an advance to the Agent. The right to indemnification or advances as granted by this Article shall be enforceable by the Agent in any court of competent jurisdiction, if the Board or independent legal counsel denies the claim, in whole or in part, or if no disposition of such claim is made within ninety (90) days. The Agent’s expenses incurred in connection with successfully establishing the Agent’s right to indemnification, in whole or in part, in any such proceeding shall also be indemnified by the Corporation.
7.7 Non-Exclusive. The indemnification provided by this Article shall not be deemed exclusive of any other rights to which an Agent seeking indemnification may be entitled under any bylaws, agreement, vote of stockholders or disinterested directors or otherwise, both as to action in the Agent’s official capacity and as to action in another capacity while holding such office, and shall continue as to a person who has ceased to be an Agent and shall inure to the benefit of the heirs, executors and administrators of such a person. All rights to indemnification under this Article shall be deemed to be provided by a contract between the Corporation and the Agent who serves in such capacity at any time while this Certificate of Incorporation and the relevant provisions of the General Corporation Law of Delaware and other applicable law, if any, are in effect, and to the extent the relevant provisions of the General Corporation Law of Delaware are hereafter amended to permit more expansive indemnification, an Agent shall be entitled to the benefit of the more expansive indemnification so permitted. Any repeal or modification thereof shall not affect any rights or obligations then existing.
7.8 Insurance. Upon resolution passed by the Board, the Corporation may purchase and maintain insurance on behalf of any person who is or was an Agent against any liability asserted against such Agent and incurred by such Agent in any such capacity, or arising out of the Agent’s status as such, whether or not the Corporation would have the power to indemnify the Agent against such liability under the provisions of this Article.
| 7.9 | Definitions and Other Matters. |
(i) For the purposes of this Article, references to “the Corporation” include all constituent corporations absorbed in a consolidation or merger as well as the resulting or surviving corporation, so that any person who is or was a director, officer, employee, trustee or agent of such a constituent corporation or is or was serving at the request of such constituent corporation as a director, officer, employee, trustee or agent of another corporation, partnership, joint venture, trust or other enterprise shall stand in the same
15
position under the provisions of this Article respect to the resulting or surviving corporation as such person would if such person had served the resulting or surviving corporation in the same capacity.
(ii) For purposes of this Article, references to “other enterprises” shall include employee benefit plans; references to “fines” shall include any excise taxes assessed on a person with respect to any employee benefit plan; and references to “serving at the request of the Corporation” shall include any service as a director, officer, employee, trustee or agent of the Corporation which imposes duties on, or involves services by, such director, officer, employee, trustee or agent with respect to any employee benefit plan, its participants, or beneficiaries; and a person who acted in good faith and in a manner such person reasonable believed to be in the interest of the participants and beneficiaries of an employee benefit plan shall be deemed to have acted in a manner “not opposed to the best interests of the Corporation” as referred to in this Article.
(iii) If this Article or any portion thereof shall be invalidated on any ground by any court of competent jurisdiction, then the Corporation shall nevertheless indemnify each Agent as to expenses (including attorneys’ fees), judgments, fines and amounts paid in settlement with respect to any action, suit, proceeding or investigation, whether civil, criminal or administrative, and whether internal or external, including a grand jury proceeding and an action or suit brought by or in the right of the Corporation, to the full extent permitted by any applicable portion of this Article that shall not have been invalidated, or by any other applicable agreement or law.
(iv) The rights of indemnity created by this Article are and shall be at all times subordinate to the right of prior payment of all obligations of the Corporation for borrowed money to the extent they are due and payable at the time any payment under this Article shall be due and payable.
7.10 Continuation. The indemnification and advancement of expenses provided by, or granted pursuant to, this Article shall, unless otherwise provided when authorized or ratified, continue as to a person who has ceased to be a director, officer, employee or agent and shall inure to the benefit of the heirs, executors and administrators of such a person.
7.11 Exclusions. No director or officer of the Corporation shall be personally liable to the Corporation or to any stockholder of the Corporation for monetary damages for breach of fiduciary duty as a director or officer, provided that this provision shall not limit the liability of a director or officer (i) for any breach of the director’s or the officer’s duty of loyalty to the Corporation or its stockholders, (ii) for acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, (iii) under Section 174 of the General Corporation Law of Delaware, or (iv) for any transaction from which the director or officer derived an improper personal benefit. If the General Corporation Law of Delaware is amended to authorize corporate action further eliminating or limiting the personal liability of directors or officers, then the liability of a director or officer of the Corporation shall be eliminated or limited to the fullest extent permitted by the General Corporation Law of Delaware, as so amended.
16
ARTICLE VIII
GENERAL PROVISIONS
8.1 Reliance on Books and Records. Each Director, each member of any committee designated by the Board of Directors, and each officer of the Corporation, shall, in the performance of his duties, be fully protected in relying in good faith upon the books of account or other records of the Corporation, including reports made to the Corporation by any of its officers, by an independent certified public accountant, or by an appraiser selected with reasonable care.
8.2 Dividends. Subject to the provisions of the Certificate of Incorporation, if any, dividends upon the capital stock of the Corporation may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock, subject to the provisions of the Certificate of Incorporation. Before payment of any dividend, there may be set aside out of any funds of the Corporation available for dividends such sum or sums as the Directors from time to time, in their absolute discretion, believe to be proper as a reserve or reserves to meet contingencies, or for equalizing dividends, or for repairing or maintaining any property of the Corporation, or for such other purpose as the Directors shall believe conducive to the interest of the Corporation, and the Directors may modify or abolish any such reserve in the manner in which it was created.
8.3 Annual Statement. The Board of Directors shall present at each annual meeting, and at any special meeting of the stockholders when called for by vote of the stockholders, a full and clear statement of the business and condition of the Corporation.
8.4 Checks. All checks or demands for money and notes of the Corporation shall be signed by such officer or officers or such other persons as the Board of Directors may from time to time designate.
| 8.5 | Fiscal Year. The fiscal year of the Corporation shall be the calendar year. |
8.6 Seal. The corporate seal shall have inscribed thereon the name of the Corporation, the year of its organization and the words “Corporate Seal, Delaware”. The seal may be used by causing it or a facsimile thereof to be impressed or affixed or in any manner reproduced.
8.7 Amendments. These Bylaws may be adopted, amended or repealed by the stockholders entitled to vote thereon at any regular or special meeting or, if the Certificate of Incorporation so provides, by the Board of Directors. The fact that such power has been so conferred upon the Board of Directors shall not divest the stockholders of the power nor limit their power to adopt, amend or repeal Bylaws.
8.8 Interpretation of Bylaws. All words, terms and provisions of these Bylaws shall be interpreted and defined by and in accordance with the General Corporation Law of the State of Delaware, as amended, and as amended from time to time hereafter.
17
EXHIBIT C
ESCROW AGREEMENT
This Escrow Agreement (this “Agreement”), dated [Closing Date] is executed and delivered by and among RAM Energy Resources, Inc., a Delaware corporation (“RAM”), FS Private Investments III LLC, a Delaware limited liability company (the “Representative”), as the representative of the parties listed in Exhibit A, attached hereto (the “Owners”), and JPMorgan Chase Bank, N.A., as escrow agent (the “Escrow Agent”).
A. RAM, Ascent Acquisition Corp., a Delaware corporation and wholly owned subsidiary of RAM (“Merger Subsidiary”), and Ascent Energy Inc., a Delaware corporation (“Ascent”), are parties to an Agreement and Plan of Merger dated as of October ___, 2007 (the “Merger Agreement”), pursuant to which Merger Subsidiary has merged with and into Ascent so that Ascent has become a wholly-owned subsidiary of RAM. The Escrow Agent is not a party to, has not received and will not be responsible for the Merger Agreement.
B. Capitalized terms used herein which are not otherwise defined herein shall have the meanings ascribed to them in the Merger Agreement.
C. Pursuant to the terms of the Merger Agreement (i) the Escrow Fund is to be funded at the Closing by the delivery by RAM to the Escrow Agent of the sum of $20,000,000 out of funds that otherwise would be paid to the Owners, either in payment of Indebtedness or as Merger Consideration, and (ii) the Escrow Agent is to hold, administer and distribute the Escrow Fund in accordance with the terms of this Agreement.
D. The Representative has been designated pursuant to the Merger Agreement, the Note Holder Payoff and Recapitalization Agreement and the Representative Agreement to represent the Owners and to act on their behalf for all purposes under this Agreement.
In consideration of the premises and the mutual covenants of the parties contained herein and in the Merger Agreement, the parties agree as follows:
1. | Deposit in Escrow; Escrow Fund; Investment. |
(a) Concurrently with the execution of this Agreement, RAM will deliver to the Escrow Agent, by wire transfer of immediately available funds, to be held in escrow pursuant to the terms of this Agreement, the sum of $20,000,000 (together with any additional payment made by RAM to the Escrow Agent under Section 9.1(b)(i) of the Merger Agreement, the “Escrow Fund”). The period during which the Escrow Agent holds any portion of the Escrow Fund in escrow pursuant to this Agreement is referred to herein as the “Escrow Period.”
(b) The Escrow Agent hereby agrees to act as escrow agent hereunder and to hold, safeguard and disburse the Escrow Fund pursuant to the terms and conditions
hereof. The Escrow Agent’s duties hereunder shall terminate upon its distribution of the entire Escrow Fund in accordance with this Agreement.
(c) Until disposed of in accordance with the terms of this Agreement, the Escrow Fund shall be held and invested by the Escrow Agent in a JPMorgan Chase Bank, N.A. money market account, unless otherwise instructed in a joint written notice to the Escrow Agent executed by both RAM and the Representative (a “Joint Notice”). Interest earned from time to time on the Escrow Fund shall become part of and be included in the Escrow Fund for all purposes. The Escrow Agent shall have the right to liquidate any investments held in order to provide funds necessary to make required payments under this Agreement. The Escrow Agent shall have no liability for any loss sustained as a result of any investment in an investment made pursuant to the terms of this contract or as a result of any liquidation of any investment prior to its maturity or for the failure of the parties to give the Escrow Agent instructions to invest or reinvest the Escrow Fund.
2. Authority and Responsibility of Representative to Allocate and Make Distributions to Owners. The Representative hereby represents and warrants to RAM and to the Escrow Agent that the Owners have granted to the Representative the authority, pursuant to the terms of the Representative Agreement, the Note Holder Payoff and Recapitalization Agreement and the Merger Agreement (i) to represent the Owners in all matters arising under this Agreement, (ii) to receive directly from the Escrow Agent all amounts distributed out of the Escrow Fund for the benefit of the Owners, (iii) to allocate among the Owners in accordance with their entitlement thereto, determined pursuant to the terms of the Note Holder Payoff and Recapitalization Agreement and, with respect to those Owners who are holders of Company Preferred Stock just prior to the Merger, the Merger Agreement, all amounts distributed to the Representative for the benefit of the Owners out of the Escrow Fund, and (iv) to make distributions to the Owners of all amounts distributed out of the Escrow Fund to the Representative for the benefit of the Owners. Neither RAM (in executing and delivering to the Escrow Agent any Joint Notice that is also signed by the Representative), nor the Escrow Agent (in making any payment pursuant to the instructions set out in any Joint Notice signed by both RAM and the Representative) shall assume or incur any liability of any nature whatsoever to the Owners (or any of them) with respect to (y) the allocation among the Owners of amounts distributed out of the Escrow Fund for the benefit of the Owners (or any of them), or (z) the making of any payments to the Owners (or any of them) of any amounts distributed to the Representative for the benefit of the Owners out of the Escrow Fund. Notwithstanding the foregoing, the Representative shall deposit, or direct the Escrow Agent to deposit, with RAM’s transfer agent, all amounts distributable out of the Escrow Fund pursuant to the Note Holder Payoff and Recapitalization Agreement and the Merger Agreement to those Persons who, immediately prior to the Merger, were holders of Company Common Stock, which amounts shall be distributed by such transfer agent to such Persons pro rata based on the number of shares of Company Common Stock held by such Persons immediately prior to the Merger.
3. | Claims Against the Escrow Fund. |
(a) RAM may make claims against the Escrow Fund (a “Claim”) under any of the following provisions: (i) Section 9.1(d) of the Merger Agreement (a “Working
2
Capital Claim”); (ii) Section 12.6 of the Merger Agreement (each an “Expense Claim”); or (iii) Article X of the Merger Agreement (each an “Indemnity Claim”); provided, however, that any such claim pursuant to clause (ii) or (iii) shall be made on or prior to 5:00 p.m. Central Time on [first Business Day that is 18 months after the Closing Date].
(b) A Claim shall be initiated by RAM giving written notice of such Claim (a “Notice”) within the time periods specified in Section 3(a) to the Representative and to the Escrow Agent specifying (i) the nature of the Claim (whether a Working Capital Claim, an Expense Claim or an Indemnity Claim), (ii) the basis for such Claim, in reasonable detail, together with any invoices or other documentary evidence in support of such Claim, (iii) the amount of such Claim, estimated in good faith, and (iv) with respect to each Indemnity Claim (A) the covenant, representation, warranty, agreement, undertaking or obligation contained in the Merger Agreement which RAM asserts has been breached or otherwise entitles RAM to indemnification, (B) whether the Indemnity Claim results from a Third Party Claim, and (C) whether any portion of such claim is reasonably likely to be covered by insurance policy (in which event the provisions of Section 10.6 of the Merger Agreement shall be applicable with respect to such Claim). Each Claim described in a Notice shall constitute a “Pending Claim” until such time as RAM and the Representative deliver to the Escrow Agent a Joint Notice advising the Escrow Agent of the final disposition of such Claim. RAM and the Representative shall cooperate in good faith in promptly delivering a Joint Notice describing the disposition of each Pending Claim promptly after such disposition occurs. If at any time after a Claim is initiated, RAM determines in good faith that the amount of such Claim as estimated in the Notice is greater than or less than the amount RAM reasonably believes will be necessary to dispose of such Claim, RAM (y) may (in the event the estimated amount of the Claim as set out in the Notice is believed to be significantly understated), or (z) shall promptly (in the event the estimated amount of the Claim as set out in the Notice is believed to be significantly overstated or payment is received under an insurance policy with respect to such Claim), amend the Notice by providing an Amended Notice to the Representative and the Escrow Agent, in which event the amended estimated amount of the Claim shall constitute the amount of the Pending Claim.
(c) In the event the Claim is a timely made Working Capital Claim and the Notice includes as documentary evidence in support thereof an award of an arbitrator certified by RAM and the Representative as being a final award under Section 9.1(c) of the Merger Agreement, then such Claim shall be deemed to be an Established Claim (as hereinafter defined) and shall not be subject to a Counter Notice (as hereinafter defined).
(d) Except as otherwise provided in Section 3(c), if the Representative shall give written notice (a “Counter Notice”) to RAM within 20 days following the date of receipt by the Representative of a timely delivered Notice, disputing the Claim or whether the Claim is payable out of the Escrow Fund under the terms of the Merger Agreement, RAM and the Representative shall attempt to resolve such dispute by voluntary settlement as provided in Section 3(e) below. If no Counter Notice with respect to a Claim is received by RAM within such 20-day period, the Claim shall be deemed to be an Established Claim.
3
(e) If the Representative timely delivers a Counter Notice to RAM, RAM and the Representative shall, during the 20-day period following the delivery of such Counter Notice or such greater period of time as the parties may agree to in writing, attempt to resolve the dispute with respect to which the Counter Notice was given. If RAM and the Representative shall reach a settlement with respect to any such dispute, then such Claim shall be deemed to be an Established Claim for the agreed amount. If RAM and the Representative shall be unable to reach a settlement with respect to a dispute regarding a Claim, such dispute shall be resolved by subsequent agreement or by litigation pursuant to Section 3(f) below.
(f) If RAM and the Representative cannot resolve a dispute prior to expiration of the 20-day period referred to in Section 3(e) above (or such longer period as the parties may have agreed to in writing), then either party may, upon five (5) business days’ prior written notice to the other party, file a declaratory judgment action or such other action as the filing party shall deem appropriate to obtain judicial determination of such dispute, which lawsuit shall be filed in a court specified in Section 8(b) hereof. Within two (2) business days after the expiration of such 20-day period (as so extended), the parties shall exchange in writing final settlement offers stating the amount each such party believes is the appropriate amount, if any, of the disputed Claim. Each such final settlement offer must be in the form of an offer to settle the disputed matter and must remain open and subject to acceptance by the other party for a period of two (2) business days after receipt by the such other party. Neither such final settlement offers nor the existence thereof shall be admissible in the trial of the matter; however, such final settlement offers shall be admissible to determine the identity of the prevailing party after final judgment has been rendered. The prevailing party in any litigation filed to determine the validity or amount of any Claim under this Agreement shall be entitled to reimbursement from the non-prevailing party of all costs and expenses, including reasonable attorneys’ fees, incurred by the prevailing party in connection with such litigation. In making such determination, the prevailing party shall be the party whose pre-trial final settlement offer exchanged with the other party is the closest to the amount of the Claim determined by judgment of the Court in such action, without regard to any award in such judgment of costs, attorneys’ fees or interest from and after the date the action is filed.
(g) As used in this Agreement (and subject to the final sentence of Section 4(c) hereof), “Established Claim” means: (i) any timely made Working Capital Claim determined in accordance with the Merger Agreement and deemed established pursuant to Section 3(c); (ii) any timely made Claim deemed established pursuant to the last sentence of Section 3(d); (iii) any timely made Claim resolved by agreement pursuant to Section 3(e) resulting in an agreed amount payable to RAM; (iv) any timely made Claim established by a final, unappealable judgment of a court of competent jurisdiction pursuant to Section 3(f); or (v) any other timely made Claim that RAM and the Representative agree upon in accordance with the provisions of the Merger Agreement.
(h) For purposes of avoiding doubt, the parties expressly acknowledge and agree that the Escrow Agent shall not be involved in or have any obligation or
4
responsibility with respect to the procedures described herein for asserting, determining, resolving and establishing Claims, or otherwise with respect to the Claim process, other than the payment of Claims pursuant to and in accordance with the terms of a Joint Notice.
| 4. | Payment of Established Claims to RAM. |
(a) Promptly after a Working Capital Claim or an Expense Claim becomes an Established Claim, RAM and the Representative shall deliver a Joint Notice to the Escrow Agent directing the Escrow Agent to pay to RAM, and the Escrow Agent promptly shall pay to RAM out of the Escrow Fund, an amount equal to the aggregate dollar amount of the Claim described in the Joint Notice (or, if at such time there remains in the Escrow Fund less than the full amount so payable, the full amount remaining in the Escrow Fund).
(b) Promptly after an Indemnity Claim based on the incurrence by Parent Indemnified Parties of Indemnified Losses resulting from (i) breach of covenant by the Company under the Merger Agreement, as provided in Section 10.2(i) of the Merger Agreement, (ii) a claim asserted against the Surviving Corporation or any Company Subsidiary by a Note Holder or holder of Company Preferred Stock, as provided in Section 10.2(ii) of the Merger Agreement, (iii) a claim asserted against the Surviving Corporation or any Company Subsidiary arising out of or relating to the SLPH Stock Split, as provided in Section 10.2(iii) of the Merger Agreement, or (iv) breach of representation or warranty by the Company under Section 2.15 of the Merger Agreement, becomes an Established Claim, RAM and the Representative shall deliver a Joint Notice to the Escrow Agent directing the Escrow Agent to pay to RAM, and the Escrow Agent promptly shall pay to RAM out of the Escrow Fund, an amount equal to the aggregate dollar amount of the Claim described in the Joint Notice (or, if at such time there remains in the Escrow Fund less than the full amount so payable, the full amount remaining in the Escrow Fund).
(c) If, after any Indemnity Claim based on the incurrence by Parent Indemnified Parties of Indemnified Losses resulting from breach of representation or warranty by the Company under the Merger Agreement (except claims for inaccuracy of representation or breach of warranty under Section 2.15 of the Merger Agreement) becomes an Established Claim, the sum of such Established Claim and all other such Indemnity Claims that have become Established Claims exceeds $2,000,000, then RAM and the Representative promptly shall deliver a Joint Notice directing the Escrow Agent to pay to RAM, and the Escrow Agent promptly shall pay to RAM out of the Escrow Fund, an amount equal to the aggregate amount of such Established Claims, less the $2,000,000 Basket (or, if at such time there remains in the Escrow Fund less than the full amount so payable, the full amount remaining in the Escrow Fund). If, subsequent to any payment out of the Escrow Fund pursuant to the preceding sentence, any other such Indemnity Claim becomes an Established Claim, then RAM and the Representative promptly shall deliver a Joint Notice directing the Escrow Agent to pay to RAM, and the Escrow Agent promptly shall pay to RAM out of the Escrow Fund, an amount equal to
5
the amount of such Established Claim (or, if at such time there remains in the Escrow Fund less than the full amount so payable, the full amount remaining in the Escrow Fund). If, after all Indemnity Claims based on inaccuracy of representation or breach of warranty by the Company under the Merger Agreement (except claims for inaccuracy of representation or breach of warranty under Section 2.15 of the Merger Agreement) are resolved by agreement or litigation (pursuant to Section 3(f) of this Agreement), the sum of all such Claims that have become Established Claims is $2,000,000 or less, then RAM shall have no claim against the Escrow Fund with respect to such Indemnity Claims and any such claims that theretofore have become Established Claims shall not thereafter constitute Established Claims.
| 5. | Distributions to the Representative. |
(a) In the event RAM does not, prior to 12:00 noon (Central Standard or Daylight Time, whichever is applicable) on [the day that is the first business day after the day that is 90 days after the Closing Date] (the “True-Up Date”), deliver to the Representative and the Escrow Agent a Notice of a Working Capital Claim, then on such date RAM and the Representative shall furnish to the Escrow Agent a Joint Notice directing the Escrow Agent to pay to the Representative on behalf of the Owners out of the Escrow Fund the sum of (i) $5,000,000, plus (ii) the amount of any additional payment made by RAM into the Escrow Fund pursuant to Section 9(b)(i) of the Merger Agreement (or, if at such time there remains in the Escrow Fund less than the sum of the amounts described at (i) and (ii), the full amount remaining in the Escrow Fund).
(b) In the event RAM delivers to the Representative and the Escrow Agent a Notice of a Working Capital Claim at any time prior to 12:00 noon (Central Standard or Daylight Time, whichever is applicable) on the True-Up Date, then promptly (but in no event more than two Business Days) after such Claim is resolved (whether by agreement or arbitration), RAM and the Representative shall furnish to the Escrow Agent a Joint Notice advising the Escrow Agent to pay out of the Escrow Fund (i) to RAM, the amount of any Established Claim resulting from such resolution (or, if at such time there remains in the Escrow Fund less than the amount of such Established Claim, the full amount remaining in the Escrow Fund), and (ii) to the Representative for the benefit of the Owners, an amount equal to the positive difference, if any, between (A) $5,000,000, and (B) the amount of such Established Claim paid by the Escrow Agent to RAM pursuant to clause (i) (or, if after payment of such Established Claim there remains in the Escrow Fund less than the amount that otherwise would be paid to the Representative for the benefit of the Owners, the full amount remaining in the Escrow Fund).
(c) On [the first business day that is 18 months after the Closing Date] (the “Termination Date”), RAM and the Representative shall furnish to the Escrow Agent a Joint Notice directing the Escrow Agent to pay to the Representative for the benefit of the Owners the full amount of the balance then remaining in the Escrow Fund, less the sum of (i) the amount of any Established Claims that remain unpaid, and (ii) the amount of all Pending Claims.
6
(d) If, on the first Business Day of each calendar quarter after the Termination Date, the balance remaining in the Escrow Fund exceeds the sum of (i) the amount of any Established Claims that remain unpaid, and (ii) the amount of all Pending Claims, then promptly after such determination is made, RAM and the Representative shall furnish to the Escrow Agent a Joint Notice directing the Escrow Agent to pay to the Representative for the benefit of the Owners out of the Escrow Fund the amount of such excess, which procedure shall continue until the full amount of the Escrow Fund is paid to RAM or distributed to the Representative for the benefit of the Owners. As used herein, the term “Business Day” shall mean any day other than a Saturday, Sunday or any other day on which the Escrow Agent located at the notice address set forth in Section 8 hereof is authorized or required by law or executive order to remain closed.
(e) Notwithstanding the provisions of Section 5(d), if at any time after the Termination Date all Established Claims have been paid and there are no Pending Claims outstanding, RAM and the Representative promptly shall furnish to the Escrow Agent a Joint Notice directing the Escrow Agent to pay to the Representative for the benefit of the Owners the balance remaining in the Escrow Fund.
(f) Notwithstanding the provisions of this Section 5, the Representative shall direct the Escrow Agent to distribute to RAM’s transfer agent any amounts distributable to the Representative pursuant to this Section 5 that are payable to the former holders of Company Common Stock pursuant to the Note Holder Payoff and Recapitalization Agreement and the Merger Agreement, which amounts shall be distributed by such transfer agent to such Persons pro rata based on the number of shares of Company Common Stock held by such Persons immediately prior to the Merger.
| 6. | Effect of Merger Agreement; Cooperation. |
(a) As between RAM and the Representative, acting for and on behalf of the Owners, the purpose of this Agreement is to effect the agreement of the parties to the Merger Agreement with respect to the matters contemplated hereby. This Agreement is not intended to contradict or be in conflict with the Merger Agreement, and in the event of any such conflict, the terms of the Merger Agreement shall control.
(b) RAM and the Representative shall cooperate with one another in good faith in the calculation of any amounts determined to be payable to RAM or the Representative for the benefit of the Owners out of the Escrow Fund in accordance with this Agreement and the Merger Agreement and in implementing the procedures necessary to effect such payments.
| 7. | Escrow Agent; Rights, Powers and Duties. |
(a) The Escrow Agent undertakes to perform under this Agreement only such duties as are expressly set forth herein.
7
(b) Subject to the provisions of Section 7(j), Escrow Agent shall not be liable for any action taken or omitted by it in good faith and in the exercise of its own best judgment, and may rely conclusively and shall be protected in acting upon any order, notice, demand, certificate, opinion or advice of counsel (including counsel chosen by the Escrow Agent), statement, instrument, report or other paper or document (not only as to its due execution and the validity and effectiveness of its provisions, but also as to the truth and acceptability of any information therein contained) which is believed by the Escrow Agent to be genuine and to be signed or presented by the proper person or persons. The Escrow Agent shall not be bound by any notice or demand, or any waiver, modification, termination or rescission of this Agreement unless evidenced by a writing delivered to the Escrow Agent signed by the proper party or parties and, if the duties or rights of the Escrow Agent are affected, unless it shall have given its prior written consent thereto. The Escrow Agent shall not be liable to RAM or the Representative for losses due to the Escrow Agent’s inability to perform its obligations under the terms of this Agreement in a timely manner because of, acts of God, fire, war, terrorism, floods, strikes, electrical outages, equipment or transmission failure, or other causes reasonably beyond its control. The parties hereto other than the Escrow Agent agree to pursue any redress or recourse in connection with any dispute without making the Escrow Agent a party to the same. Anything in this Agreement to the contrary notwithstanding, in no event shall the Escrow Agent be liable for special, indirect or consequential loss or damage of any kind whatsoever (including but not limited to lost profits), even if the Escrow Agent has been advised of the likelihood of such loss or damage and regardless of the form of action. For the avoidance of doubt, the Escrow Agent shall have no liability with respect to any provisions of this Agreement which set forth obligations or limitations of liability that the other parties to this Agreement have to each other, without regard to any action to be taken by or refrained from by the Escrow Agent, subject to Section 7(j). The Escrow Agent shall have no obligation to investigate, inquire, examine or assist in any manner whatsoever the other parties’ compliance with the terms of this Agreement that incorporate by reference provisions of the Merger Agreement or that apply to the other parties’ obligations or limitations of liability to each other and that do not relate to obligations of the Escrow Agent under this Agreement. The Escrow Agent may execute any of its powers and perform any of its duties hereunder directly or through agents or attorneys (and shall be liable only for the careful selection of any such agent or attorney) and may consult with counsel, accountants and other skilled persons to be selected and retained by it. The Escrow Agent shall not be liable for anything done, suffered or omitted in good faith by it in accordance with the advice or opinion of any such counsel, accountants or other skilled persons.
(c) The Escrow Agent’s sole responsibility with respect to payments out of the Escrow Fund shall be to make such payments in accordance with the instructions set out in any Joint Notice or, if applicable, as directed by a court order reasonably believed by the Escrow Agent to be a final, unappealable order of a court of competent jurisdiction with respect to the subject matter thereof.
(d) Each Joint Notice directing payment by the Escrow Agent out of the Escrow Fund (i) to RAM shall include the amount of the payment to be made to RAM
8
and wire transfer instructions for the making of such payment, or (ii) to the Representative for the benefit of the Owners (or, at the direction of the Representative, to RAM’s transfer agent for the benefit of the former holders of Company Common Stock) shall include the amount of the payment to be made to the Representative (or the transfer agent) and wire transfer instructions for the making of such payment.
(e) The Escrow Agent may resign at any time and be discharged from its duties as escrow agent hereunder (subject to Section 7(j)) by its giving the other parties hereto written notice of resignation and such resignation shall become effective as hereinafter provided. Such resignation shall become effective at such time that the Escrow Agent shall turn over the Escrow Fund to a successor escrow agent appointed jointly by RAM and the Representative. The Escrow Agent shall have the right to withhold an amount equal to any amount due and owing to the Escrow Agent, plus any costs and expenses the Escrow Agent shall reasonably believe may be incurred by the Escrow Agent in connection with such resignation. If no new escrow agent is so appointed within the 60-day period following the giving of such notice of resignation, the Escrow Agent may commence an action in the nature of interpleader in an appropriate state or federal court situated in Dallas County, Texas, to determine the ownership or disposition of the Escrow Fund and shall, upon depositing the Escrow Fund with the clerk of such court and giving of notice of such action to RAM and the Representative, be relieved of any further liability with respect to the Escrow Fund or otherwise hereunder.
(f) In the event of a dispute between RAM and the Representative as to the proper disposition of the Escrow Fund, the Escrow Agent shall be entitled (but not required) to commence an action in the nature of interpleader in an appropriate state or federal court situated in Dallas County, Texas, to determine the ownership or disposition of the Escrow Fund and shall, upon depositing the Escrow Fund with the clerk of such court and giving of notice of such action to RAM and the Representative, be relieved of any further liability with respect to the Escrow Fund or otherwise hereunder.
(g) RAM and Representative shall jointly and severally indemnify, defend and save harmless the Escrow Agent and its directors, officers, agents and employees (the “indemnitees”) from and against any and all loss, liability or expense (including the fees and expenses of in house or outside counsel and experts and their staffs and all expense of document location, duplication and shipment) arising out of or relating to (i) any claim against any indemnitee arising out of or relating to the Escrow Agent’s execution and performance of this Agreement, except in the case of any indemnitee to the extent that such loss, liability or expense is finally adjudicated to have been primarily caused by the bad faith, gross negligence or willful misconduct of the Escrow Agent or other indemnitee, or (ii) the performance by the Escrow Agent of the action specified in any Joint Notice; provided, however, that solely as between RAM and the Representative, the foregoing joint and several indemnification obligation shall in no way modify, supersede or amend the provisions of Section 2 hereof with respect to the Representative’s sole responsibility (except as qualified by the last sentence of Section 2) for (y) the allocation among the Owners of amounts distributed out of the Escrow Fund for the benefit of the Owners (or any of them), or (z) the making of any payments to the Owners (or any of
9
them) of any amounts distributed to the Representative for the benefit of the Owners out of the Escrow Fund. RAM and Representative hereto acknowledge that the foregoing indemnities shall survive the resignation or removal of the Escrow Agent or the termination of this Agreement. RAM and Representative hereby grant the Escrow Agent a lien on, right of set-off against and security interest in the Escrow Fund for the payment of any amount due the Escrow Agent hereunder for indemnification, compensation, expenses and otherwise.
(h) The Escrow Agent shall be entitled to reasonable compensation for all services rendered by it hereunder (“Fees”) as noted on Exhibit B hereto, together with reimbursement for all expenses paid or incurred by it in the administration of its duties hereunder including, but not limited to, all reasonable counsel, advisors’ and agents’ fees and other disbursements (“Expenses”). RAM and the Representative hereby expressly authorize the Escrow Agent to withdraw from the Escrow Fund from time to time such amounts as may be necessary to pay such Fees and reimburse such Expenses.
(i) From time to time on and after the date hereof, RAM and the Representative shall deliver or cause to be delivered to the Escrow Agent such further documents and instruments and shall do or cause to be done such further acts as the Escrow Agent shall reasonably request to carry out more effectively the provisions and purposes of this Agreement, to evidence compliance herewith or to assure itself that it is protected in acting hereunder.
(j) Notwithstanding anything herein to the contrary, the Escrow Agent shall not be relieved from liability hereunder for its own bad faith, its own gross negligence or its own willful misconduct.
(k) This Agreement expressly sets forth all the duties of the Escrow Agent with respect to any and all matters pertinent hereto. No implied duties or obligations shall be read into this Agreement against the Escrow Agent. The Escrow Agent shall not be bound by the provisions of any agreement among the parties hereto except this Agreement and shall have no duty to inquire into the terms and conditions of any agreement made or entered into in connection with this Agreement, including, without limitation, the Merger Agreement.
(a) Neither this Agreement nor any of the rights, interests or obligations hereunder may be assigned by any party hereto without the prior written consent of the other parties, except that RAM may assign this Agreement or any of its rights hereunder without the consent of the other parties hereto to a subsidiary of RAM so long as RAM remains responsible for the performance of its obligations hereunder. This Agreement shall inure to the benefit of and be binding upon the parties and their respective heirs, successors, permitted assigns and legal representatives, shall be governed by and construed in accordance with the laws of the State of Texas applicable to contracts made and to be performed therein.
10
(b) RAM and the Representative each hereby consents to the exclusive jurisdiction of the state courts of the State of Texas sitting in Dallas County, Texas, or the United States District Court for the Northern District of Texas sitting in Dallas, Texas, with respect to any claim or controversy arising out of this Agreement. Service of process in any action or proceeding brought against RAM or the Representative in respect of any such claim or controversy may be made upon RAM or the Representative by registered mail, postage prepaid, return receipt requested, at the address specified in Section 8(c). EACH OF THE PARTIES HERETO HEREBY WAIVES ANY RIGHT SUCH PARTY MAY HAVE TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF THIS AGREEMENT.
(c) All notices and other communications hereunder shall be in writing and shall be deemed given if delivered personally or by commercial delivery service, or sent via telecopy (receipt confirmed) to the parties at the following addresses or telecopy numbers (or at such other address or telecopy numbers for a party as shall be specified by like notice):
If to RAM:
RAM Energy Resources, Inc.
Meridian Tower, Suite 650
5100 E. Skelly Drive
Tulsa, OK 74135
Attention: Larry E. Lee, Chairman and CEO
| Telephone: (918) 663-2800 |
Telecopy: (918) 663-9214
with a copy to:
C. David Stinson, Esq.
McAfee & Taft A Professional Corporation
10th Floor, Two Leadership Square
211 North Robinson
Oklahoma City, Oklahoma 73102-7103
Telephone: (405) 552-2266
Telecopy: (405) 235-0439
If to the Representative:
Stuart B. Katz
FS Private Investments III LLC
c/o Jefferies Capital Partners
520 Madison Avenue, New York, NY 10022
Telephone: (212) 284-1719
Telecopy: (212) 284-1717
11
with a copy to:
Melvin Epstein, Esq.
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
Telephone: (212) 806-5864
Telecopy: (212) 806-6006
and to:
Caroline B. Blitzer, Esq.
Vinson & Elkins L.L.P.
2500 First City Tower
1001 Fannin
Houston, TX 77002-6760
Telephone: (713) 758-4680
Telecopy: (713) 615-5871
If to the Escrow Agent:
JPMorgan Chase Bank, N.A.
Attn: Paul Gilliam, Escrow Services
712 Main Street, 5th Floor, TX2 S037
Houston, TX 77002
Telephone: (713) 216-3985
Telecopy: (713) – 216-6927
or to such other person or address as any of the parties hereto shall specify by notice in writing to all the other parties hereto.
(d) This Agreement may be executed in one or more counterparts, all of which shall be considered one and the same agreement and shall become effective when one or more counterparts have been signed by each of the parties and delivered to the other party, it being understood that all parties need not sign the same counterpart. Delivery by facsimile to counsel for the other party of a counterpart executed by a party shall be deemed to meet the requirements of the previous sentence.
(e) As between RAM and the Representative on the one hand, and the Escrow Agent on the other hand, this Agreement constitutes the entire agreement among the parties with respect to the subject matter hereof and is not intended to confer upon any other Person any rights or remedies hereunder.
12
(f) In the event that any provision of this Agreement, or the application thereof, becomes or is declared by a court of competent jurisdiction to be illegal, void or unenforceable, the remainder of this Agreement will continue in full force and effect and the application of such provision to other Persons or circumstances will be interpreted so as reasonably to effect the intent of the parties hereto. The parties further agree to replace such void or unenforceable provision of this Agreement with a valid and enforceable provision that will achieve, to the extent possible, the economic, business and other purposes of such void or unenforceable provision.
(g) Except as otherwise provided herein, any and all remedies herein expressly conferred upon a party will be deemed cumulative with and not exclusive of any other remedy conferred hereby, or by law or equity upon such party, and the exercise by a party of any one remedy will not preclude the exercise of any other remedy.
(h) Any party hereto may, to the extent legally allowed (i) extend the time for the performance of any of the obligations or other acts of the other parties hereto, and (ii) waive compliance with any of the agreements or conditions for the benefit of such party contained herein. Any agreement on the part of a party hereto to any such extension or waiver shall be valid only if set forth in an instrument in writing signed on behalf of such party. Delay in exercising any right under this Agreement shall not constitute a waiver of such right.
(i) All notices delivered to the Escrow Agent shall refer to the provision of this Agreement under which such notice is being delivered and, if applicable, shall clearly specify the aggregate dollar amount due and payable hereunder.
(j) Funds transfer instructions to the Escrow Agent under this Agreement shall be given by Joint Notice executed by both RAM and the Representative. Each time a Joint Notice is given, the Escrow Agent shall be authorized to seek confirmation of such Joint Notice by telephone call-back to the person or persons designated by each of RAM and the Representative on Exhibit C hereto, and in the case of each of RAM and the Representative, the Escrow Agent may rely upon the confirmation of anyone purporting to be the person or persons so designated by such party. Each Joint Notice shall be signed on behalf of RAM by an authorized signatory of RAM, and on behalf of the Representative by an authorized signatory of the Representative, in each case as set forth on Exhibit C. Each of RAM and the Representative represents to the Escrow Agent that the Person executing this Agreement on its behalf is authorized to certify that the signatories on Exhibit C are authorized signatories with respect to it. The persons and telephone numbers for call-backs may be changed only in a writing actually received and acknowledged by the Escrow Agent. If the Escrow Agent is unable to contact any of the authorized representatives of a party as identified in Exhibit C, the Escrow Agent is hereby authorized to seek confirmation of such party’s execution of the Joint Notice, or of any of the instructions contained therein, by telephone call-back to any one or more of such party’s executive officers (“Executive Officers,” which shall include the titles (i) President, Chief Financial Officer or Senior Vice President, with respect to RAM, and (ii) Managing Member, President or Chief Financial Officer, with respect to the
13
Representative) as the Escrow Agent may select. Each such Executive Officer shall deliver to the Escrow Agent, upon request, a fully executed incumbency certificate certifying that such Person holds the office such Person purports to hold, and the Escrow Agent may rely upon the confirmation of anyone purporting to be any such Executive Officer. The Escrow Agent and the receiving party’s bank in any funds transfer may rely solely upon any account numbers or similar identifying numbers provided by RAM and the Representative in the Joint Notice to identify (i) the receiving party, (ii) the receiving party’s bank, or (iii) an intermediary bank. The Escrow Agent may make payment out of the Escrow Fund using such identifying numbers, even when its use may result in a person other than one of the receiving parties hereto being paid, or the transfer of funds to a bank other than RAM’s, RAM’s transfer agent’s or the Representative’s bank or an intermediary bank so designated. The parties to this Escrow Agreement acknowledge that these security procedures are commercially reasonable. RAM and Representative agree that repetitive or standing settlement instructions will be effective as the funds transfer instructions of RAM and Representative, whether or not authorized, if such settlement instructions are verified pursuant to the security procedure provided herein or such other security procedure to which the Escrow Agent, RAM and Representative may agree.
(k) In the event portion of the Escrow Fund shall be attached, garnished or levied upon by any court order, or the delivery thereof shall be stayed or enjoined by an order of a court, or any order, judgment or decree shall be made or entered by any court order affecting the Escrow Fund, the Escrow Agent is hereby expressly authorized, in its sole discretion, to obey and comply with all writs, orders or decrees so entered or issued, which it is advised by legal counsel of its own choosing to be final and binding upon the Escrow Agent, and in the event that the Escrow Agent obeys or complies with any such writ, order or decree it shall not be liable to any of the parties hereto or to any other person, firm or corporation, by reason of such compliance with such writ, order or decree.
(l) RAM and the Representative hereby acknowledge that in order to assist the federal government in stopping the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person who opens an account. Accordingly, upon creating the account to be maintained under this Agreement, the Escrow Agent will ask for, and RAM and the Representative agree to provide, information that will allow the Escrow Agent to identify the relevant parties.
(a) For federal and state income tax purposes, RAM shall be treated as the owner of the Escrow Fund held by the Escrow Agent pursuant to this Escrow Agreement, and thus shall take into account in filing its income tax returns all items of income, gain, loss and deduction with respect to the Escrow Fund, in accordance with Proposed Treasury Regulation Section 1.468B-8(c). The Escrow Agent shall report the income on the Escrow Fund on Internal Revenue Service Form 1099 or any other required information return or reporting form showing the Escrow Agent as payor and RAM as payee, in accordance with Proposed Treasury Regulation Section 1.468B-8(g).
14
Neither RAM nor the Representative shall take any position for federal or state income tax purposes that is inconsistent with the provisions of this Section 9.
(b) RAM and Representative have provided the Escrow Agent with their respective fully executed Internal Revenue Service (“IRS”) Form W-8, or W-9 and/or other required documentation. RAM and Representative each represent that its correct TIN assigned by the IRS, or any other taxing authority, is set forth in the delivered forms, as well as in the Substitute IRS Form W-9 set forth on the signature page of this Agreement.
(c) RAM and the Representative will provide to the Escrow Agent prior to each disbursement from the Escrow Fund a schedule setting forth the allocation of the disbursement amount between (i) principal to be reported on IRS Form 1099-B (ii) imputed interest to be reported on IRS Form 1099-INT or 1042S or (iii) Original Issue Discount (“OID) to be reported on IRS Form 1099 – OID along with the relevant payee tax information, documentation and appropriate interest thereof. Escrow Agent shall be entitled to rely on such schedule and shall not be responsible for and shall be indemnified by Ram and Representative for any additional tax, interest or penalty arising from the inaccuracy or late receipt of such schedule. RAM and Representative shall calculate imputed interest based on the short-term applicable federal rate, as prescribed by Section 1274 of the Code, effective for the Closing Date.
(d) All tax returns relating to interest paid or income earned on the Escrow Fund required by applicable law to be filed by RAM or the Representative will be prepared and filed by RAM or the Representative with the IRS and any other taxing authority, including but not limited to any applicable reporting or withholding pursuant to the Foreign Investment in Real Property Tax Act (“FIRPTA”). RAM and the Representative acknowledge and agree that Escrow Agent shall have no responsibility for the preparation and/or filing of any tax return or any applicable FIRPTA reporting or withholding with respect to the Escrow Fund or any income earned by the Escrow Fund. In the absence of written direction from the RAM and Representative, all proceeds of the Escrow Fund shall be retained in the Escrow Fund and reinvested from time to time by the Escrow Agent as provided in this Agreement. Escrow Agent shall withhold any taxes it deems appropriate, including but not limited to amounts required to be withheld in the absence of proper tax documentation, and shall remit such taxes to the appropriate authorities.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
15
IN WITNESS WHEREOF, each of the parties hereto has duly executed this Agreement on the date first above written.
Tax Certification: Taxpayer Identification Number (TIN): 20-0700684 Date:
Name and Address: RAM Energy Resources, Inc.
5100 E. Skelly Drive, Suite 650
Tulsa, OK 74135
Customer is a (check one):
X Corporation | Partnership | | | |
Individual/sole proprietor | Trust | Other | |
Taxpayer is (check if applicable):
X Exempt from backup withholding
Under the penalties of Perjury, the undersigned certifies that:
(1) the number shown above is its correct Taxpayer Identification Number (or it is waiting for a number to be issued to it);
(2) it is not subject to backup withholding because: (a) it is exempt from backup withholding or (b) it has not been notified by the Internal Revenue Service (IRS) that it is subject to backup withholding as a result of failure to report all interest or dividends, or (c) the IRS has notified it that it is no longer subject to backup withholding; and
(3) the entity is a U.S. person (including a U.S. resident alien).
(If the entity is subject to backup withholding, cross out the words after the (2) above.)
Investors who do not supply a tax identification number will be subject to backup withholding in accordance with IRS regulations.
Note: The IRS does not require your consent to any provision of this document other than the certifications required to avoid backup withholding.
"RAM"
RAM ENERGY RESOURCES, INC.
By_____________________________________
| Larry E. Lee, President and CEO |
16
Tax Certification: Taxpayer Identification Number (TIN): 13-4127833 | Date: |
Name and Address: FS PRIVATE INVESTMENTS III LLC.
c/o Jefferies Capital Partners
520 Madison Avenue
New York, NY 10022
Customer is a (check one):
Corporation | X Partnership | | | |
Individual/sole proprietor | Trust | Other | |
Taxpayer is (check if applicable):
X Exempt from backup withholding
Under the penalties of Perjury, the undersigned certifies that:
(1) the number shown above is its correct Taxpayer Identification Number (or it is waiting for a number to be issued to it);
(2) it is not subject to backup withholding because: (a) it is exempt from backup withholding or (b) it has not been notified by the Internal Revenue Service (IRS) that it is subject to backup withholding as a result of failure to report all interest or dividends, or (c) the IRS has notified it that it is no longer subject to backup withholding; and
(3) the entity is a U.S. person (including a U.S. resident alien).
(If the entity is subject to backup withholding, cross out the words after the (2) above.)
Investors who do not supply a tax identification number will be subject to backup withholding in accordance with IRS regulations.
Note: The IRS does not require your consent to any provision of this document other than the certifications required to avoid backup withholding.
“REPRESENTATIVE”
FS PRIVATE INVESTMENTS III LLC
By______________________________________
| Stuart B. Katz, Managing Director |
“ESCROW AGENT”
17
JPMorgan Chase Bank, N.A.
By______________________________________
18
EXHIBIT A
Owners
Owner Name
19
EXHIBIT B
Escrow Fee Schedule
Schedule of Fees for Escrow Agent Services
Based upon our current understanding of your proposed transaction, our fee proposal is as follows:
New Account Acceptance Fee . . . . . . . . . . . . . . . . . . . . . . . . . .$750.00 Waived
Encompassing review, negotiation and execution of governing documentation, opening of the account, and completion of all due diligence documentation. Payable upon closing.
Minimum Administrative Fee . . . . . . . . . . . . . . . . . . . . . . . . . . $3,000.00
The Administration Fee covers our usual and customary ministerial duties, including record keeping, document compliance and such other duties and responsibilities expressly set forth in the governing documents for each transaction. Payable upon closing and annually in advance thereafter, without pro-ration for partial years.
ACTIVITY FEES: Activity fees will not be assessed for any month in which fewer than five transactions occur.
Disbursements
Receipts
Investments
Per directed buy/sell | . | $ | 75.00 |
The Investments fee will be waived if a JPMorgan Chase Bank compensating trust account provided by JPMorgan's Escrow Services group is selected.
There will be no legal expense for JPMorgan Chase if our standard form escrow agreement is employed without substantive amendments. Should another form of agreement be used, external legal counsel would be retained only after advising the client of our intent to do so.
20
Extraordinary Services and Out-of Pocket Expenses
Any additional services beyond our standard services as specified above, and all reasonable out-of-pocket expenses including attorney's or accountant’s fees and expenses will be considered extraordinary services for which related costs, transaction charges, and additional fees will be billed at the Bank's then standard rate.
Modification of Fees
Circumstances may arise necessitating a change in the foregoing fee schedule. The Bank will attempt at all times, however, to maintain the fees at a level that is fair and reasonable in relation to the responsibilities assumed and the duties performed.
Disclosure & Assumptions
• | Please note that any proposed fees quoted herein are indicative and not intended to be binding or to form an agreement between ourselves. This fee quote is subject to a review of the transaction documents and completion of an internal due diligence review. JPMorgan reserves the right to revise, modify, change and supplement the fees quoted herein. All fee arrangements are subject to a definitive and binding agreement between parties. |
• | The escrow deposit shall be continuously invested in a JPMorgan Chase Bank trust account or a JPMorgan Money Market Account. The Minimum Administrative Fee would include a supplemental charge up to 25 basis points on the escrow deposit amount if another investment option were chosen. |
• | The Parties acknowledge and agree that they are permitted by U.S. law to make up to six (6) pre-authorized withdrawals or telephonic transfers from an MMDA per calendar month or statement cycle or similar period. If the MMDA can be accessed by checks, drafts, bills of exchange, notes and other financial instruments (“Items”), then no more than three (3) of these six (6) transfers may be made by an Item. The Escrow Agent is required by U.S. law to reserve the right to require at least seven (7) days notice prior to a withdrawal from a money market deposit account. |
• | Payment of the invoice is due upon receipt. |
Compliance
• | To help the government fight the funding of terrorism and money laundering activities, Federal law requires all financial institutions to obtain, verify, and record information that identifies each person or entity that opens an account. We may ask for information that will enable us to meet the requirements of the Act. |
21
EXHIBIT C
Telephone Number(s) and signature(s) for
Person(s) Designated to give and confirm Funds Transfer Instructions
If to RAM:
| Name | Telephone Number | Signature |
1. | John M. Longmire | (918) 663-2800/632-0652 | ______________________ |
2. | John L. Cox | (918) 663-2800/632-0602 | ______________________ |
3. | Sabrina Gicaletto | (918) 663-2800/632-0646 | _______________________ |
If to Representative/Owners:
| Name | Telephone Number | Signature |
1. | Stuart B. Katz | (212) 284-1719 | _______________________ |
2. | James L. Luikart | (212) 284-1703 | _______________________ |
3. | Mindy Luxenberg-Grant | (212) 284-1708 | _______________________ |
Telephone call backs shall be made to both RAM and Representative if joint instructions are required pursuant to the Agreement. All funds transfer instructions must include the signature of the person(s) authorizing said funds transfer.
22
EXHIBIT D
Note Holder Payoff and Recapitalization Agreement
dated as of October 16, 2007
relating to
Ascent Energy Inc.
and
South Louisiana Property Holdings, Inc.
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
This Note Holder Payoff and Recapitalization Agreement (this “Agreement”), dated as of October 16, 2007, is entered into by and among Ascent Energy Inc., a Delaware corporation (the “Company”); South Louisiana Property Holdings, Inc., a Louisiana corporation (“SLPH”); the holders of the Company’s outstanding 16% Senior Notes (including any PIK Notes executed and delivered by the Company in connection therewith, the “Senior Notes”) due February 1, 2010 (or such later maturity date as automatically extended in accordance with Section 7 thereof (but in no event later than February 1, 2015)) listed on Exhibit A hereto (collectively, the “Senior Note Holders”); the holders of the Company’s outstanding 11¾% Senior Subordinated Notes due May 1, 2010 (or such later maturity date as automatically extended in accordance with Section 7 thereof (but in no event later than May 1, 2015)) (including any PIK Notes executed and delivered by the Company in connection therewith, the “Senior Subordinated Notes”) listed on Exhibit B hereto (collectively, the “Senior Subordinated Note Holders”); the holders of outstanding shares of the Company’s 8% Series A Preferred Stock, $0.001 par value per share (the “Preferred Stock”), listed on the signatures pages hereto (collectively, the “Preferred Stockholders”); and the holders of outstanding warrants to purchase shares of common stock, $0.001 par value per share, of the Company (the “Common Stock”) listed on the signatures pages hereto (collectively, the “Common Warrantholders”). The Senior Note Holders, the Senior Subordinated Note Holders, the Preferred Stockholders and the Common Warrantholders are referred to collectively as the “Investor Parties.” The Company and SLPH are referred to collectively as the “Company Parties.” The Investor Parties and the Company are referred to collectively as the “Parties.”
RECITALS:
A. The Company and the Senior Note Holders are parties to that certain Amended and Restated Securities Purchase Agreement dated as of November 9, 2005 (the “Senior Note Purchase Agreement”). The Senior Note Holders hold all of the outstanding Senior Notes as of the date of this Agreement. Exhibit A is a list of the holders of all of the outstanding Senior Notes as of the date of this Agreement.
B. The Company, certain of its subsidiaries and U.S. Bank National Association (the “Trustee”), are parties to that certain Indenture dated as of September 28, 2001, as supplemented by that certain First Supplemental Indenture dated as of July 27, 2004 by and among the Company, certain of its subsidiaries and the Trustee, as further supplemented by that certain Second Supplemental Indenture dated as of November 9, 2005 by and between the Company and the Trustee (as so supplemented, the “Indenture”). Exhibit B is a list of the holders of all of the outstanding Senior Subordinated Notes as of the date of this Agreement.
C. The Company has previously issued 43,097 units, each consisting of one share of Preferred Stock and one warrant to purchase 191.943 shares of Common Stock at an exercise price of $5.21 per share (collectively, the “Common Stock Warrants”), all of which shares of Preferred Stock and Common Stock Warrants are outstanding as of the date of this Agreement. The relative rights, preferences and limitations of the Preferred Stock are set forth in the Amendment to the Certificate of Designations of Preferred Stock filed with the Secretary of State of the State of Delaware on December 22, 2004 (the “Certificate of Designations”). The
Common Stock Warrants were issued pursuant to that certain Amended and Restated Warrant Agreement dated as of August 22, 2002 by and between the Company and Mellon Investor Services LLC, as warrant agent (the “Warrant Agent”), as amended by that certain Amendment to Amended and Restated Warrant Agreement dated as of July 27, 2004 by and between the Company and the Warrant Agent (as so amended, the “Common Stock Warrant Agreement”). Exhibit C is a list of the holders of all of the outstanding shares of Preferred Stock and all of the outstanding Common Stock Warrants as of the date of this Agreement. Exhibit D is a list of the holders of outstanding shares of Preferred Stock and Common Stock Warrants as of the date of this Agreement who are not Investor Parties (“Non-Investor Party Securityholders”).
D. On the date hereof, the Company, RAM Energy Resources, Inc., a Delaware corporation (“RAME”), and Ascent Acquisition Corp., a Delaware corporation and wholly owned subsidiary of RAME (“Merger Sub”), entered into that certain Agreement and Plan of Merger (the “Merger Agreement”) pursuant to which RAME and the Company intend to enter into a business combination transaction by means of a merger (the “Merger”) between Merger Sub and the Company in which Merger Sub will merge with and into the Company and the Company will be the surviving entity and a wholly owned subsidiary of RAME, through an exchange of all the issued and outstanding shares of capital stock of the Company and all of the outstanding Common Stock Warrants for $185,000,000 in cash (the “Cash Number”), $107,000,000 of value in shares of common stock, par value $0.0001 per share, of RAME (the “RAME Common Stock”) based on the weighted average closing price per share of RAME Common Stock for the 10-trading day period ending on the third Business Day prior to the closing of the Merger, but in no event less than 20,000,000 shares or greater than 20,500,000 shares (the “Initial RAME Common Stock Number”) and 6,200,000 warrants (the “Warrant Number”), each of which entitles the holder thereof to purchase one share of RAME Common Stock at an exercise price of $5.00 per share, exercisable on or before May 11, 2008, the terms of which shall be identical in all material respects with RAME’s publicly traded warrants outstanding on the date hereof (the “RAME Warrants”).
E. The Cash Number and the Initial RAME Common Stock Number are each subject to adjustment by the Adjustments (as defined below) pursuant to the terms and conditions set forth in the Merger Agreement.
F. In connection with the Merger, the Parties desire to effect a recapitalization (the “Recapitalization”) of the Company pursuant to the terms and conditions of this Agreement.
G. To implement certain of the transactions contemplated by the Recapitalization, pursuant to the terms and conditions of this Agreement and the Merger Agreement: (i) RAME will deliver to the Senior Note Holders the amount in cash, and deliver to such holders the number of shares of RAME Common Stock, if any, that such holders are entitled to receive pursuant to this Agreement in payment of all Outstanding Senior Note Indebtedness, on the terms and conditions set forth in this Agreement and the Merger Agreement; (ii) RAME will deliver to the Senior Subordinated Note Holders the amount in cash, if any, and deliver to such holders the number of shares of RAME Common Stock and RAME Warrants, if any, that such holders are entitled to receive pursuant to this Agreement in payment of all Outstanding Senior Subordinated Note Indebtedness, on the terms and conditions set forth in this Agreement and the Merger Agreement, (iii) RAME will deliver to the Preferred Stockholders and the Non-Investor
Party Securityholders the number of shares of RAME Common Stock and RAME Warrants, if any, that such holders are entitled to receive pursuant to this Agreement in payment of the Outstanding Accrued Preferred Stock Dividend Amount, on the terms and conditions set forth in this Agreement and the Merger Agreement, (iv) the Common Warrantholders will surrender all outstanding Common Stock Warrants held by such Common Warrantholders to the Company for cancellation, (v) the Preferred Stockholders will agree that the RAME Common Stock and RAME Warrants, if any, payable to such holders under this Agreement together with the Merger Consideration payable to such holders under the Merger Agreement constitute full satisfaction of all of the Company’s obligations with respect to the Preferred Stock under the Certificate of Designations or otherwise, and (vi) each of the Preferred Stockholders and SLPH, in its capacity as a holder of Common Stock, will agree to execute and deliver, promptly following execution and delivery of the Merger Agreement by the parties thereto, a written consent approving the Merger Agreement and the transactions contemplated thereby. In addition, in connection with the Merger and the Recapitalization, the Company will merge (the “SLPH Merger”) South Louisiana Property Holdings Acquisition Company, Inc., a Louisiana corporation and wholly owned subsidiary of the Company (the “SLPH Merger Sub”), with and into SLPH with SLPH surviving the merger as a wholly owned subsidiary of the Company pursuant to the terms and conditions of that certain Agreement and Plan of Merger dated as of June 30, 2006 (the “SLPH Merger Agreement”) by and among the Company, SLPH and Merger Sub. Prior to the consummation of the SLPH Merger, the stockholders of SLPH intend to approve a reverse stock split of the common stock of SLPH and a corresponding repurchase in cash of fractional shares of such common stock (the “SLPH Reverse Stock Split”).
AGREEMENT:
Now, therefore, in consideration of the mutual covenants and agreements set forth herein and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Parties hereto agree as follows:
ARTICLE I
DEFNITIONS
1.1 Definitions. Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to such terms in the Merger Agreement (as defined below). For purposes of this Agreement the following terms shall be defined as follows:
(a) “Adjusted Cash Number” means the Cash Number, as adjusted by the Adjustments pursuant to the Merger Agreement.
(b) “Adjusted RAME Common Stock Number” means the Initial RAME Common Stock Number, as adjusted by the Adjustments pursuant to the Merger Agreement.
(c) “Adjustments” means the Working Capital Adjustment, the Hedge Contract Adjustment and the Tax Burden Adjustment..
(d) “Aggregate Closing Uses” means an amount (expressed in dollars) equal to the sum of (i) all Indebtedness to be paid or repaid by RAME in connection with the Merger pursuant to Section 1.6 of the Merger Agreement (whether payable in cash, shares of RAME
Common Stock or RAME Warrants), (ii) the Outstanding Preferred Stock Face Amount, (iii) the amount of the Escrow Fund, and (iv) the amount of the Representative Fund. For the avoidance of doubt, the Indebtedness referred to in clause (i) shall include the Outstanding Senior Note Indebtedness, the Outstanding Senior Subordinated Note Indebtedness and the Outstanding Accrued Preferred Stock Dividend Amount.
(e) “Aggregate Closing Value” means an amount (expressed in dollars) equal to the sum of (i) the Adjusted Cash Number, (ii) the product of the Adjusted RAME Common Stock Number and the RAME Stock Price and (iii) the product of the Warrant Number and the RAME Warrant Price.
(f) “Aggregate Common Merger Consideration” means an amount of cash equal to the greater of (i) the positive difference, if any, between the Aggregate Closing Value and the Aggregate Closing Uses and (ii) the product of $0.01 and the Outstanding Company Common Stock Number.
(g) “Available Security Holder Cash Amount” means the positive difference between the Adjusted Cash Number and the sum of (i) the Aggregate Common Merger Consideration (including, for the avoidance of doubt, the Aggregate Company Warrant Consideration (as defined in the Merger Agreement), if any), (ii) the amount of the Escrow Fund, (iii) the amount of the Representative Fund, (iv) the sum of the Indebtedness payable in cash by RAME pursuant to the Merger Agreement (other than any Indebtedness payable to the Senior Note Holders, the Senior Subordinated Note Holders or the Preferred Stockholders in their capacities as such), and (v) the Aggregate Minimum Preferred Merger Consideration, if applicable.
(h) “Business Day” means any day other than a Saturday, Sunday or legal holiday on which banks in New York, New York are authorized or obligated by law to close.
(i) “Outstanding Accrued Preferred Stock Dividend Amount” means the amount of all accrued but unpaid dividends outstanding as of the date immediately preceding the Recapitalization Closing on the shares of Preferred Stock outstanding immediately prior to the Recapitalization Closing.
(j) “Outstanding Preferred Stock Face Amount” means an amount equal to the product of (A) the positive difference between the Preferred Liquidation Amount (as defined in the Certificate of Designations) and the Outstanding Accrued Preferred Stock Dividend Amount and (B) the number of shares of Preferred Stock outstanding immediately prior to the Recapitalization Closing.
(k) “Outstanding Senior Note Indebtedness” means the outstanding principal amount of all Senior Notes immediately prior to the Recapitalization Closing plus all accrued but unpaid interest thereon as of the date immediately preceding the Recapitalization Closing.
(l) “Outstanding Senior Subordinated Note Indebtedness” means the outstanding principal amount of all Senior Subordinated Notes immediately prior to the Recapitalization Closing plus all accrued but unpaid interest thereon as of the date immediately preceding the Recapitalization Closing.
(m) “PIK Notes” means (A) when used with respect to the Senior Notes, the PIK Notes as defined in the Senior Note Purchase Agreement, and (B) when used with respect to the Senior Subordinated Notes, the PIK Notes as defined in the Indenture.
(n) “Preferred Stock Accrued Dividend Payoff Amount” means, (i) a number of shares of RAME Common Stock, deliverable out of the Adjusted RAME Common Stock Number, that is equal to the quotient obtained by dividing the amount of the Outstanding Accrued Preferred Stock Dividend Amount by the RAME Stock Price; provided, however, that such number of shares of RAME Common Stock shall not exceed the positive difference between (A) the Adjusted RAME Common Stock Number and (B) the sum of the Senior Note Holder Stock Number and the Senior Subordinated Note Holder Stock Number, and (ii) a number of RAME Warrants, deliverable out of the Warrant Number, that is equal to the quotient obtained by dividing (x) the amount of the Outstanding Accrued Preferred Stock Dividend Amount that is not satisfied in shares of RAME Common Stock pursuant to clause (i) by (y) the RAME Warrant Price; provided, however, that such number of RAME Warrants shall not exceed the positive difference between (A) the Warrant Number and (B) the Senior Subordinated Note Holder Warrant Number.
(o) “Pro Rata Share” means, (i) with respect to a holder of Senior Notes, the quotient (expressed as a percentage) obtained by dividing (A) the outstanding principal of all Senior Notes held by such holder immediately prior to the Recapitalization Closing plus all accrued but unpaid interest thereon as of the date immediately preceding the Recapitalization Closing by (B) the Outstanding Senior Note Indebtedness; (ii) with respect to a holder of Senior Subordinated Notes, the quotient (expressed as a percentage) obtained by dividing (A) the outstanding principal of all Senior Subordinated Notes held by such holder immediately prior to the Recapitalization Closing plus all accrued but unpaid interest thereon as of the date immediately preceding the Recapitalization Closing by (B) the Outstanding Senior Subordinated Note Indebtedness, and (iii) with respect to a Preferred Stockholder, the quotient (expressed as a percentage) obtained by dividing (A) the accrued but unpaid dividends outstanding as of the date immediately preceding the Recapitalization Closing on all shares of Preferred Stock held by such holder immediately prior to the Recapitalization Closing divided by (B) the Outstanding Accrued Preferred Stock Dividend Amount.
(p) “Publicly Traded RAME Warrants” means the warrants to purchase shares of RAME Common Stock at a purchase price of $5.00 per share which are quoted for trading on the Nasdaq Capital Market under the symbol “RAMEW.”
(q) “RAME Stock Price” means the weighted (based on daily trading volume) average closing price per share of RAME Common Stock as reported by the Nasdaq Capital Market for the 10 trading day period ending on the third Business Day preceding the date of the Recapitalization Closing; provided, however, that if the sum of (i) the product of the Adjusted RAME Common Stock Number and the RAME Stock Price and (ii) the product of the Warrant Number and the RAME Warrant Price exceeds the sum of (A) the Outstanding Senior Note Indebtedness, (B) the Outstanding Senior Subordinated Note Indebtedness, (C) the Outstanding Accrued Preferred Stock Dividend Amount and (D) the Outstanding Preferred Stock Face Amount, then the RAME Stock Price shall be reduced such that the sum of (i) the product of the Adjusted RAME Common Stock Number and the RAME Stock Price and (ii) the product of the
Warrant Number and the RAME Warrant Price equals the sum of (A) the Outstanding Senior Note Indebtedness, (B) the Outstanding Senior Subordinated Note Indebtedness, (C) the Outstanding Accrued Preferred Stock Dividend Amount and (D) the Outstanding Preferred Stock Face Amount.
(r) “RAME Warrant Price” means the weighted (based on daily trading volume) average closing price per Publicly Traded RAME Warrant as reported by the Nasdaq Capital Market for the 10 trading day period ending on the third Business Day preceding the date of the Recapitalization Closing.
(s) “Senior Note Holder Stock Number” means the number of shares of RAME Common Stock, if any, deliverable to the Senior Note Holders pursuant to this Agreement.
(t) “Senior Note Payoff Amount” means, (i) if the Available Security Holder Cash Amount is equal to or exceeds the Outstanding Senior Note Indebtedness, an amount in cash, payable out of the Available Security Holder Cash Amount, that is equal to the Outstanding Senior Note Indebtedness; and (ii) if the Available Security Holder Cash Amount is less than the Outstanding Senior Note Indebtedness, (A) an amount in cash, payable out of the Available Security Holder Cash Amount, that is equal to the Available Security Holder Cash Amount, and (B) a number of shares of RAME Common Stock, deliverable out of the Adjusted RAME Common Stock Number, that is equal to the quotient obtained by dividing (x) the amount of the Outstanding Senior Note Indebtedness that is not satisfied in cash pursuant to clause (ii)(A) by (y) the RAME Stock Price; provided, however, that such number of shares of RAME Common Stock shall not exceed the Adjusted RAME Common Stock Number.
(u) “Senior Subordinated Note Holder Stock Number” means the number of shares of RAME Common Stock deliverable to the Senior Subordinated Note Holders pursuant to this Agreement.
(v) “Senior Subordinated Note Holder Warrant Number” means the number of RAME Warrants, if any, deliverable to the Senior Subordinated Note Holders pursuant to this Agreement.
(w) “Senior Subordinated Note Payoff Amount” means, (i) an amount in cash, payable out of the Available Security Holder Cash Amount, that is equal to the positive difference, if any, between the Available Security Holder Cash Amount and the amount of cash payable to the Senior Note Holders pursuant to this Agreement, (ii) a number of shares of RAME Common Stock, deliverable out of the Adjusted RAME Common Stock Number, that is equal to the quotient obtained by dividing the amount of the Outstanding Senior Subordinated Note Indebtedness that is not satisfied in cash pursuant to clause (i) by the RAME Stock Price; provided, however, that such number of shares of RAME Common Stock shall not exceed the positive difference between the Adjusted RAME Common Stock Number and the Senior Note Holder Stock Number, and (C) a number of RAME Warrants, deliverable out of the Warrant Number, that is equal to the quotient obtained by dividing (x) the amount of the Outstanding Senior Subordinated Note Indebtedness that is not satisfied in cash or shares of RAME Common
Stock pursuant to clause (i) or (ii) by (y) the RAME Warrant Price; provided, however, that such number of RAME Warrants shall not exceed the Warrant Number.
(x) “Tax Burden Adjustment” means the tax burden adjustment described in Section 5.4 of the Merger Agreement.
ARTICLE II
RECAPITALIZATION
(a) At or prior to the Recapitalization Closing, notwithstanding anything to the contrary in the Senior Note Purchase Agreement, each Senior Note Holder will deliver to the Company all Senior Notes then held by such Senior Note Holder in exchange for such holder’s Pro Rata Share of the cash and RAME Common Stock (if any) included in the Senior Note Holder Payoff Amount. The Senior Note Payoff Amount will be paid and delivered to the Senior Note Holders pursuant to the terms and conditions of the Merger Agreement.
(b) Each Senior Note Holder hereby waives compliance by the Company with any term, covenant, default, event of default, provision or condition of the Senior Note Purchase Agreement that would conflict with, be violated by or occur by reason of the consummation of the Merger, the SLPH Merger, the Recapitalization or the transactions contemplated by this Agreement or the Merger Agreement.
(c) As soon as practicable after the execution and delivery of this Agreement, the Company will deliver to each record holder of Senior Notes a letter of transmittal and instructions for effecting the surrender of such Senior Notes pursuant to this Agreement and the Merger Agreement. Notwithstanding anything to the contrary in the Senior Note Purchase Agreement, interest will cease to accrue on the Senior Subordinated Notes as of the date immediately preceding the Recapitalization Closing if the transactions contemplated by this Agreement are consummated.
(d) The Senior Notes were issued with an aggregate of 3,000 warrants to purchase shares of Preferred Stock (the “Preferred Warrants”), all of which warrants were exercised on a cashless, net-exercise basis prior to their expiration. If the transactions contemplated by this Agreement are consummated, then effective as of the Recapitalization Closing, each Senior Note Holder hereby waives any cash payment in lieu of fractional shares that may be then due and owing to such Senior Note Holder by the Company pursuant to the exercise by such Senior Note Holder of the Preferred Warrants held by such Senior Note Holder prior to the expiration date thereof.
| 2.2 | Senior Subordinated Notes. |
(a) At or prior to the Recapitalization Closing, notwithstanding anything to the contrary in the Indenture, each Senior Subordinated Note Holder will deliver all Senior Subordinated Notes then held by such Senior Subordinated Note Holder in exchange for such holder’s Pro Rata Share of the cash (if any), RAME Common Stock and RAME Warrants (if any) comprising the Senior Subordinated Note Holder Payoff Amount to either (i) the designated
depositary through the facilities of DTC by instructing its DTC participant or participants not later than the close of business on the second Business Day prior to the Recapitalization Closing to tender such Senior Subordinated Notes electronically through the Automated Tender Offer Program instituted by DTC or (ii) the Company (but only if the Senior Subordinated Notes are represented by Definitive Notes (as defined in the Indenture)). The Senior Subordinated Note Payoff Amount will be paid and delivered to the Senior Subordinated Note Holders pursuant to the terms and conditions of the Merger Agreement.
(b) Each Senior Subordinated Note Holder hereby waives compliance by the Company with any term, covenant, default, event of default, provision or condition of the Indenture that would conflict with, be violated by or occur by reason of the consummation of the Merger, the SLPH Merger, the Recapitalization or the transactions contemplated by this Agreement or the Merger Agreement.
(c) As soon as practicable after the execution and delivery of this Agreement, the Company will deliver to each record holder of Senior Subordinated Notes instructions for effecting the surrender of such Senior Subordinated Notes pursuant to this Agreement and the Merger Agreement. Notwithstanding anything to the contrary in the Indenture, interest will cease to accrue on the Senior Subordinated Notes as of the date immediately preceding the Recapitalization Closing if the transactions contemplated by this Agreement are consummated.
(d) The Senior Subordinated Note Holders hereby agree that at any time prior to the Recapitalization Closing, the Company shall be entitled, upon delivery of an authentication order in accordance with Section 2.02 of the Indenture to the trustee under the Indenture (the “Trustee”), to exchange all Global Notes (as defined in the Indenture) representing all then outstanding principal plus accrued but unpaid interest on the Senior Subordinated Notes for Definitive Notes (as defined in the Indenture) in an aggregate amount equal to such outstanding principal plus accrued but unpaid interest. Definitive Notes issued in exchange for beneficial interests in Global Notes shall be registered in such names and in such denominations as the Senior Subordinated Note Holders shall instruct the Company shall be delivered to the persons in whose names such Definitive Notes are registered. As soon as practicable after any such exchange, the Company will deliver to the holders of such Definitive Notes a letter of transmittal and instructions for effecting the surrender of such Definitive Notes pursuant to this Agreement and the Merger Agreement. In addition, the Company shall be entitled, upon delivery of an authentication order in accordance with Section 2.02 of the Indenture to the Trustee, to issue any PIK Notes required to be issued prior to the Recapitalization Closing in the form of Definitive Notes.
2.3 Preferred Stock; Consent of Preferred Stockholders and SLPH; Common Stock Warrants.
(a) At or prior to the Recapitalization Closing, notwithstanding anything to the contrary in the Certificate of Designations, each Preferred Stockholder will tender to the Company all shares of Preferred Stock then held by such Preferred Stockholder in exchange for (i) such holder’s Pro Rata Share of the RAME Common Stock (if any) and RAME Warrants (if any) included in the Preferred Stock Accrued Dividend Payoff Amount and (ii) the Merger Consideration payable to such holder pursuant to the Merger Agreement. Each Non-Investor
Party Securityholder shall be entitled to receive in exchange for its shares of Preferred Stock (i) such holder’s Pro Rata Share of the RAME Common Stock (if any) and RAME Warrants (if any) and (ii) the Merger Consideration payable to such holder pursuant to the Merger Agreement, all in accordance with the Merger Agreement. The Preferred Stock Accrued Dividend Payoff Amount and the Merger Consideration payable to the Preferred Stockholders and the Non-Investor Party Securityholders pursuant to the Merger Agreement will be paid and delivered to the Preferred Stockholders and the Non-Investor Party Securityholders pursuant to the terms and conditions of the Merger Agreement.
(b) Each Preferred Stockholder hereby agrees that the Preferred Stock Accrued Dividend Payoff Amount, together with the Merger Consideration payable to the holders of Preferred Stock pursuant to the Merger Agreement, shall constitute full satisfaction by the Company of all obligations of the Company with respect to all shares of Preferred Stock outstanding and owned of record by such holder immediately prior to the Effective Time of the Merger, whether pursuant to the Certificate of Designations or otherwise. Each Preferred Stockholder hereby waives compliance by the Company with any term, covenant, default, event of default, provision or condition of the Certificate of Designations that would conflict with, be violated by or occur by reason of the consummation of the Merger, the SLPH Merger, the Recapitalization or the transactions contemplated by this Agreement or the Merger Agreement. Each Preferred Stockholder further agrees that each share of Company Preferred Stock redeemed by the Company after the date hereof and prior to the Recapitalization Closing shall be entitled to receive only the Preferred Stock Accrued Dividend Payoff Amount and the Merger Consideration, in each case payable with respect to such share of Company Preferred Stock.
(c) As soon as practicable after the execution and delivery of this Agreement, the Company will deliver to each record holder of Preferred Stock a letter of transmittal and instructions for effecting the surrender of such shares of Preferred Stock pursuant to this Agreement and the Merger Agreement and a certification of non-foreign status which meets the requirements of Treasury Regulation Section 1.1445-2(b)(2) (a “Non-Foreign Affidavit”). Notwithstanding anything to the contrary in the Certificate of Designations, dividends will cease to accrue on the Preferred Stock as of the date immediately preceding the Recapitalization Closing if the transactions contemplated by this Agreement are consummated.
(d) The Company and each Common Warrantholder hereby agrees to execute and deliver to the Company, promptly following the execution and delivery of the Merger Agreement by the parties thereto, an amendment to the Common Stock Warrant Agreement in the form attached hereto as Exhibit E providing for the conversion of the Common Stock Warrants and the termination of the Common Stock Warrant Agreement in connection with the Merger (the “Common Stock Warrant Agreement Amendment”). The Company and the Common Warrantholders agree to seek the consent of the Warrant Agent to the Common Stock Warrant Agreement Amendment. Each Common Warrantholder hereby waives compliance by the Company with any term, covenant, default, event of default, provision or condition of the Common Stock Warrant Agreement that would conflict with, be violated by or occur by reason of the consummation of the Merger, the SLPH Merger, the Recapitalization or the transactions contemplated by this Agreement or the Merger Agreement.
(e) Each Preferred Stockholder hereby agrees to execute and deliver to the Company, promptly following the execution and delivery of the Merger Agreement by the parties thereto, a written consent of Preferred Stockholders, in accordance with Section 228 of the Delaware General Corporation Law, (i) adopting the Merger Agreement and (ii) adopting an amendment to the Certificate of Designations in the form attached hereto as Exhibit F providing that, among other things, the provisions of Section 8 and Section 9 of the Certificate of Designations do not apply to the transactions contemplated by this Agreement or the Merger Agreement (the “Certificate Amendment”).
(f) SLPH, in its capacity as the holder of not less than a majority of the outstanding shares of Common Stock, hereby agrees to execute and deliver to the Company, promptly following the execution and delivery of the Merger Agreement by the parties thereto, a written consent of the holders of Common Stock, in accordance with Section 228 of the Delaware General Corporation Law, adopting the Merger Agreement and the Certificate Amendment.
(g) In furtherance of the foregoing, each of the Preferred Stockholders, each of the Common Warrantholders and SLPH irrevocably makes, constitutes and appoints Terry W. Carter and Stuart B. Katz, acting individually or collectively, as its true and lawful agent and attorney-in-fact, with full power of substitution and full power and authority in its name, place and stead, to make, execute, sign, acknowledge, swear to and record the stockholder consents described in this Section 2.3 and the Common Stock Warrant Agreement Amendment, as applicable. With respect to each of the Preferred Stockholders, each of the Common Warrantholders and SLPH, the foregoing power of attorney (i) is coupled with an interest, shall be irrevocable and shall survive the incapacity or bankruptcy of such Preferred Stockholder, Common Warrantholder or SLPH and (ii) shall survive the disposition by such Preferred Stockholder, Common Warrantholder or SLPH of all or any portion of the equity securities of the Company held by such Preferred Stockholder, Common Warrantholder or SLPH, as the case may be.
(h) Each Preferred Stockholder that is also a Senior Note Holder or a Senior Subordinated Note Holder will, if such holder so qualifies, furnish to RAME at or prior to the Recapitalization Closing a Non-Foreign Affidavit. With respect to any such Preferred Stockholder that does not furnish to RAME a Non-Foreign Affidavit at or prior to the Recapitalization Closing (a “Non-Certifying Holder”), at the Closing under the Merger Agreement RAME will withhold for Federal income tax purposes an amount of cash equal to 10% of the sum of (i) any cash, and (ii) the value (determined pursuant to the terms of this Agreement) of the RAME Common Stock and RAME Warrants to be received by such Non-Certifying Holder with respect to Preferred Stock pursuant to the terms of this Agreement or the Merger Agreement. The amount so withheld may be deducted from any cash payment due such Non-Certifying Holder, whether as payment under the Senior Notes, the Senior Subordinated Notes or with respect to Preferred Stock. Notwithstanding the foregoing, RAME may treat as a Non-Certifying Holder any holder who furnishes a Non-Foreign Affidavit which RAME knows or reasonably believes, based upon receipt of notice pursuant to Treasury Regulation Section 1.1445-4, to be false.
2.4 Restrictions on Transfer. Prior to any proposed transfer (whether by sale, assignment, pledge or otherwise) of debt or equity securities of the Company at any time prior to the Recapitalization Closing and as long as this Agreement has not been terminated, the proposed transferor (the “Transferor”) will give written notice to the Company of its intention to effect such transfer. Each such notice shall describe the manner and circumstances of the proposed transfer in sufficient detail and shall be accompanied by a written opinion of legal counsel who shall be reasonably satisfactory to the Company, addressed to the Company, to the effect that the proposed transfer of the securities in question may be effected without registration under the Securities Act. Any such legal opinion must be reasonably satisfactory to the Company and must state that it may also be relied upon by the Company and any transfer agent or stock exchange. As a condition to the transfer, the Company may also require a certificate of the Transferor that certifies as to matters that assist the Company in establishing compliance with securities laws at the time of the proposed transfer and at the Recapitalization Closing. Upon compliance with the terms of this Section 2.4 to the satisfaction of the Company, the Transferor shall be entitled to transfer such securities in accordance with the terms of the notice delivered by the Transferor to the Company; provided, however, that the Transferor shall, prior to any transfer, cause any transferee of the Company’s debt or equity securities to enter into an agreement with the Company that the transferee will take and hold such securities subject to the provisions and upon the conditions specified in this Agreement. Each certificate or book-entry notation evidencing the Company’s debt or equity securities so transferred shall bear or be subject to an appropriate restrictive legend reasonably deemed appropriate by the Company, including any appropriate legend relating to the restrictions and obligations hereunder. Without limiting the generality of any other provision hereof, the provisions of this Section 2.4 and Section 2.6 shall be binding on successive transferees. Any sale or transfer, or purported sale or transfer, of the Company’s debt or equity securities shall be null and void, and the Company shall have no obligation to effect any transfer, unless the terms, conditions and provisions of this Section 2.4 are strictly observed and followed or are waived by the Company. The Company may issue stop transfer instructions to any transfer agent or registrar for the Company’s debt or equity securities in order to implement any restriction on transfer contemplated hereby.
2.5 Support of the Recapitalization and Merger. As long as the Merger Agreement has not been terminated, no Party hereto will (i) object to or otherwise commence any proceeding to oppose or alter any of the documents to be executed or implemented in connection with the Recapitalization in any way inconsistent with this Agreement, or (ii) take any other action not required by law that is inconsistent with, or that would materially delay the commencement or consummation of the Merger or any of the transactions contemplated by the Merger Agreement or consummation of any portion of the Recapitalization; provided, however, that nothing in this Section 2.5 shall prevent any Party from exercising its rights under any provision of this Agreement.
2.6 Appointment of Nominees. Effective immediately prior to the record date of the SLPH Reverse Stock Split, each Investor Party that owns beneficially or of record shares of common stock, $.001 par value per share, of SLPH (“SLPH Common Stock”) hereby appoints, and agrees to cause its affiliates that own shares of SLPH Common Stock beneficially or of record to appoint, a single nominee as the record holder of all shares of SLPH Common Stock held beneficially or of record by such Investor Party and its affiliates in accordance with this Section 2.6. SLPH and the Company shall be entitled to recognize for all purposes, including,
without limitation, the SLPH Reverse Stock Split and the SLPH Merger, each such nominee as the record holder of the shares of SLPH Common Stock designated by the Investor Parties to be held of record by such nominees. Pursuant to this Section 2.6, (i) Jefferies & Company, Inc. and Jefferies High Yield Trading, L.L.C. (collectively, “JEFCO”) hereby appoint Jefferies & Company, Inc. as the nominee for such persons and their respective affiliates pursuant to this Section 2.6, (ii) Shared Opportunity Fund IIB, L.L.C. and TCW Shared Opportunity Fund III, L.P. (collectively, “The TCW Funds”) hereby appoint Shared Opportunity Fund IIB, L.L.C. as the nominee for such persons and their respective affiliates pursuant to this Section 2.6; (iii) ING Furman Selz Investors III L.P., ING Barings U.S. Leveraged Equity Plan LLC and ING Barings Global Leveraged Equity Plan Ltd. (collectively “Jefferies Capital Partners”) hereby appoint ING Furman Selz Investors III, L.P. as the nominee for such persons and their respective affiliates pursuant to this Section 2.6; and (iv) W Capital Partners West LLC hereby appoints W Capital Partners West LLC as the nominee for it and its affiliates pursuant to this Section 2.6.
2.7 Registration Rights. At the Recapitalization Closing, RAME will enter into a registration rights agreement with certain of the holders of the RAME Common Stock and RAME Warrants issued pursuant to this Agreement and the Merger Agreement in the form attached as an exhibit to the Merger Agreement.
| 2.8 | Termination of Agreements. |
(a) Concurrently with the execution and delivery of this Agreement by the Parties hereto, that certain Recapitalization Agreement dated as of September 20, 2006 by and among SLPH, the Company and the other parties thereto, as amended by that certain Amendment No. 1 dated as of February 5, 2007, shall automatically terminate and thereafter be of no further force or effect.
(b) If the transactions contemplated by this Agreement are consummated, the Parties hereby agree that the following agreements shall automatically terminate at the Recapitalization Closing and shall thereafter be of no further force or effect: (i) that certain Shareholders’ Agreement dated as of August 22, 2002 by and among the Company, SLPH and the shareholders of the Company party thereto, (ii) that certain Registration Rights Agreement dated as of July 27, 2001 by and among the Company and the other parties thereto, as amended by that certain First Amendment dated as of August 22, 2002 by and among the Company and the other parties thereto, (iii) that certain Stockholders Agreement dated as of January 14, 2000 by and among SLPH and the shareholders of SLPH party thereto, (iv) that certain Registration Rights Agreement dated as of January 14, 2000 by and among SLPH and the other parties thereto, (v) the Senior Note Purchase Agreement, (vi) subject to obtaining the consent of the Warrant Agent to the Common Stock Warrant Agreement Amendment (which consent will be requested by the applicable parties thereto), the Common Stock Warrant Agreement, and (vii) subject to obtaining the consent of the Trustee (which consent will be requested by the applicable parties thereto), the Indenture.
2.9 Representative. By virtue of the execution and delivery of this Agreement by the Senior Subordinated Note Holders, FS Private Investments III LLC shall be deemed approved and appointed by such holders as the “Representative” under this Agreement, the Merger Agreement and the Escrow Agreement (the “Representative”), shall be constituted and appointed
as agent and attorney-in-fact for and on behalf of each such holder and shall be deemed to be bound by the terms and conditions of the Representative Agreement. The Representative shall have full power and authority to represent such holders and their successors with respect to all matters arising under the Escrow Agreement, the Merger Agreement and, after the Recapitalization Closing, this Agreement in accordance with the Representative Agreement, and all actions taken by the Representative under such agreements shall be binding upon all such holders and their successors as if expressly confirmed and ratified in writing by each of them, including resolving all claims relating to the Escrow Fund.
2.10 Settlement Statement. Not later than 12:00 p.m. on the second Business Day preceding the Recapitalization Closing Date, each of the Investor Parties shall execute and deliver to such other Investor Parties, the Company and RAME a settlement statement (the “Settlement Statement”) setting forth (i) the agreed upon amount of cash (if any), number of shares of RAME Common Stock (if any) and number of RAME Warrants (if any) to be received by each such Investor Party (and each Non-Investor Party Securityholder) at the Recapitalization Closing and in connection with the Closing under the Merger Agreement pursuant to this Agreement and the Merger Agreement, and (ii) a description and the amount of all expenses, fees and costs to which such Investor Party is entitled to receive reimbursement in accordance with Section 6.5(a), which amounts shall constitute Indebtedness for purposes of this Agreement and the Merger Agreement. Illustrative examples of the allocations of cash, RAME Common Stock and RAME Warrants to be received by the Investor Parties pursuant to this Agreement and the Merger Agreement, based on the various assumptions set forth therein, are attached to this Agreement as Schedule 2.10. The Parties agree that such examples are not binding on the Parties but are merely intended to illustrate the application of the provisions of this Agreement and the Merger Agreement, in each case based on the assumed amounts of outstanding securities of the Company, the assumed amount of outstanding Indebtedness, an assumed RAME Stock Price and RAME Warrant Price and the assumed date of the Recapitalization Closing, all as set forth in such examples.
2.11 Cross Receipts. Upon receipt by each Investor Party of the cash (if any) RAME Common Stock (if any) and RAME Warrants (if any) such Investor Party is entitled to receive at the Recapitalization Closing from RAME pursuant to this Agreement (as set forth on the Settlement Statement) and at the Closing under the Merger Agreement (including, if applicable, the depositing by RAME into the Escrow Fund or the Representative Fund of a portion of the cash such Investor Party otherwise would receive at such closings), such Investor Party shall execute and deliver to the Company and RAME at the Recapitalization Closing an acknowledgement and cross-receipt (each, a “Cross-Receipt”) stating that (i) such Investor Party has received payment in full of such Investor Party’s Pro Rata Share, if any, of the Senior Note Holder Payoff Amount, the Senior Subordinated Note Holder Payoff Amount and the Preferred Stock Accrued Dividend Payoff Amount, as applicable, (ii) such Investor Party has received payment in full of all other Indebtedness (as set forth on the Settlement Statement) owed to such Investor Party by the Company and the Company Subsidiaries, (iii) in the case of an Investor Party that is a Senior Note Holder, all obligations of the Company to such Investor Party of every nature whatsoever arising under or relating to the Senior Notes, the Senior Note Purchase Agreement or otherwise have been paid and discharged in full and that all rights of such Investor Party of every nature whatsoever arising under or relating to the Senior Notes and the Senior Note Purchase Agreement are released and relinquished in full, except as otherwise expressly
provided in this Agreement, the Merger Agreement or the Escrow Agreement, (iv) in the case of an Investor Party that is a Senior Subordinated Note Holder, all obligations of the Company to such Investor Party of every nature whatsoever arising under or relating to the Senior Subordinated Notes, the Indenture or otherwise have been paid and discharged in full and that all rights of such Investor Party of every nature whatsoever arising under or relating to the Senior Subordinated Notes and the Indenture are released and relinquished in full, except as otherwise expressly provided in this Agreement, the Merger Agreement or the Escrow Agreement, and (v) in the case of an Investor Party that is a Preferred Stockholder, all obligations of the Company to such Investor Party of every nature whatsoever arising under or relating to the Preferred Stock, the Certificate of Designations or otherwise have been paid and discharged in full and that all rights of such Investor Party of every nature whatsoever arising under or relating to the Preferred Stock and the Certificate of Designations are released and relinquished in full, except as otherwise expressly provided in this Agreement, the Merger Agreement or the Escrow Agreement. Upon receipt of such Cross-Receipts by the Company, the Company shall mark all Senior Notes and all Senior Subordinated Notes “paid” and “cancelled.”
2.12 Escrow. Notwithstanding anything to the contrary in this Agreement, if the sum of the cash, the RAME Common Stock (valued at the RAME Stock Price) and the RAME Warrants (valued at the RAME Warrant Price) delivered to the Senior Subordinated Note Holders at the Recapitalization Closing pursuant to this Agreement and the Merger Agreement is less than the Outstanding Senior Subordinated Note Indebtedness (such difference, the “Senior Subordinated Note Holder Shortfall Amount”), then each Person that was a Senior Subordinated Note Holder as of the Recapitalization Closing shall be entitled to its Pro Rata Share of all distributions, if any, from the Escrow Fund and the Representative Fund until such Persons have received an aggregate amount of distributions equal to the Senior Subordinated Note Holder Shortfall Amount. Notwithstanding anything to the contrary in this Agreement, if the sum of the RAME Common Stock (valued at the RAME Stock Price) and the RAME Warrants (valued at the RAME Warrant Price) delivered to the Preferred Stockholders at the Recapitalization Closing pursuant to this Agreement and the Merger Agreement is less than the sum of the Preferred Stock Accrued Dividend Payoff Amount (such difference, the “Preferred Stock Accrued Dividend Shortfall Amount”), then, after the Senior Subordinated Note Holder Shortfall Amount has been satisfied in full, each Person that was a Preferred Stockholder as of the Recapitalization Closing shall be entitled to its Pro Rata Share of all distributions, if any, from the Escrow Fund and the Representative Fund until such Persons have received an aggregate amount of distributions equal to the Preferred Stock Accrued Dividend Shortfall Amount. Notwithstanding anything to the contrary in this Agreement, if the sum of the cash, the RAME Common Stock (valued at the RAME Stock Price) and the RAME Warrants (valued at the RAME Warrant Price) delivered to the Preferred Stockholders in connection with the Merger pursuant to the Merger Agreement is less than the Outstanding Preferred Stock Face Amount (such difference, the “Preferred Stock Face Shortfall Amount”), then, after the Senior Subordinated Note Holder Shortfall Amount and the Preferred Stock Accrued Dividend Shortfall Amount have been satisfied in full, each Person that was a Preferred Stockholder immediately prior to the Effective Time of the Merger shall be entitled to all distributions, if any, from the Escrow Fund and the Representative Fund, pro rata based on the number of shares of Preferred Stock held by such Persons immediately prior to the Effective Time of the Merger, until such Persons have received an aggregate amount of distributions equal to the Preferred Stock Face Shortfall Amount. All distributions, if any, from the Escrow Fund and the Representative Fund after the satisfaction in full of the Senior
Subordinated Note Holder Shortfall Amount, the Preferred Stock Accrued Dividend Shortfall Amount and the Preferred Stock Face Shortfall Amount, shall be made to the Persons that were the holders of Common Stock immediately prior to the Effective Time of the Merger (including holders of Common Stock deemed to be outstanding immediately prior to the Effective Time of the Merger pursuant to Section 1.5(g)(iii) of the Merger Agreement), pro rata based on the number of shares of Common Stock held by such Persons immediately prior to the Effective Time of the Merger. For the avoidance of doubt, any amounts delivered to the Representative or the Representative Fund pursuant to Section 6.7(d) of the Merger Agreement (relating to forfeited retention bonuses) shall be distributed in accordance with this Section 2.12.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
3.1 Representations and Warranties of the Company Parties. Each Company Party hereby represents and warrants to the Investor Parties as follows:
(a) Such Company Party is duly incorporated, validly existing and in good standing under the laws of its jurisdiction of incorporation. Such Company Party has all requisite corporate power and authority to execute and deliver this Agreement. The execution and delivery by such Company Party of this Agreement and the performance by such Company Party of its obligations hereunder have been duly authorized by all necessary corporate action on the part of such Company Party and do not and will not contravene any provision of law, statute, rule or regulation to which the Company is subject or such Company Party’s organizational documents, as amended.
(b) This Agreement constitutes valid and binding obligations of such Company Party, enforceable against such Company Party in accordance with its terms, except as the enforceability hereof may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles.
(c) Each Company Party acknowledges and agrees that the foregoing representations are true as of the date hereof and as of the time of the Recapitalization Closing.
3.2 Representations and Warranties of the Investor Parties. Each Investor Party hereby represents and warrants, as to itself, to each other Party and for the benefit of RAME under the Merger Agreement as follows:
(a) If not an individual, the Investor Party is an entity duly organized, validly existing and in good standing under the laws of the state of its organization and has all requisite power and authority to execute and deliver this Agreement. If an individual, the Investor Party has all requisite right, capacity, power and authority to execute and deliver this Agreement. The execution and delivery by the Investor Party of this Agreement and the performance by the Investor Party of its obligations hereunder have been duly authorized by all necessary action on the part of the Investor Party.
(b) This Agreement constitutes valid and binding obligations of the Investor Party, enforceable against the Investor Party in accordance with its terms, except as the
enforceability hereof may be limited by bankruptcy, insolvency, reorganization, moratorium and similar laws affecting the enforcement of creditors’ rights generally and by general equitable principles.
(c) The Investor Party has experience in analyzing and investing in companies like RAME and is capable of evaluating the merits and risks of the Investor Party’s investment in RAME as a corporation. To the extent necessary, the Investor Party has retained and relied upon appropriate professional advice regarding the investment, tax and legal merits and consequences of the Recapitalization and the Merger, or any part thereof, and owning the shares of RAME Common Stock and the RAME Warrants, if any (collectively, the “RAME Securities”), the Investor Party will receive pursuant to the Recapitalization and the Merger, it being understood that the Company has not retained legal or financial advisors on behalf of the Investor Party.
(d) If acquiring RAME Securities, the Investor Party is an “accredited investor” as defined in Rule 501 promulgated under the Securities Act, is able to bear the economic risk of such Investor Party’s investment in the RAME Securities for an indefinite period of time and has sufficient net worth to sustain a loss of such Investor Party’s entire investment in the RAME Securities without economic hardship if such loss should occur.
(e) If acquiring RAME Securities, the Investor Party is not participating in the Recapitalization or the Merger as a result of or after any advertisement, article, notice or other communication published in any newspaper, magazine or similar media or broadcast over television or radio or presented at any seminar or meeting.
(f) If acquiring RAME Securities, the Investor Party has had an opportunity to discuss RAME’s business, management and financial affairs with the members of RAME management and has had the opportunity to review RAME’s facilities. Such Investor Party has also had an opportunity to ask questions of the officers of RAME, which questions were answered to such Investor Party’s satisfaction. Such Investor Party acknowledges that such Investor Party is familiar with all aspects of RAME’s business.
(g) Except as set forth in this Agreement or the Merger Agreement, the Investor Party has received no representations or warranties from RAME or the Company or any of their respective employees, affiliates, attorneys, accountants or agents with respect to the Merger and the transactions contemplated by this Agreement. Such Investor Party acknowledges that the Merger Agreement has been provided to such Investor Party as an exhibit hereto.
(h) If acquiring RAME Securities, the Investor Party is acquiring the RAME Securities to be issued in the Recapitalization and/or the Merger solely for investment for such Investor Party’s own account, not as a nominee or agent, and not with the view to, or for resale in connection with, any distribution thereof. Such Investor Party understands that the shares of RAME Securities to be issued in the Recapitalization and the Merger have not been registered under the Securities Act or applicable state and other securities laws by reason of the exemptions from the registration provided by Section 4(2) of the Securities Act and applicable state and other securities laws.
(i) If acquiring RAME Securities, the Investor Party acknowledges and understands that such Investor Party must bear the economic risk of such Investor Party’s investment in the RAME Securities for an indefinite period of time because the RAME Securities must be held indefinitely unless the offering thereof is subsequently registered under the Securities Act and applicable state and other securities laws or unless an exemption from such registration is available.
(j) If acquiring RAME Securities, the Investor Party is aware of the current provisions of Rule 144 promulgated under the Securities Act which permit limited resale of securities purchased in a private placement subject to the satisfaction of certain conditions, including, among other things, the existence of a public market for the securities, the availability of certain current public information about the issuer of the securities, the resale occurring not less than one year after a party has purchased from an issuer or its affiliate and paid the full purchase price for the securities to be sold, the sale being effected through a “broker’s transaction” or in transactions directly with a “market maker” and the number of securities being sold during any three-month period not exceeding specified limitations. Such Investor Party understands that any transfer agent or registrar of RAME will be issued stop-transfer instructions with respect to the RAME Securities unless such transfer is subsequently registered under the Securities Act and applicable state and other securities laws or unless an exemption from such registration is available.
(k) Each Investor Party is the beneficial owner of the securities of the Company set forth below its name on the signature pages of this Agreement, free and clear of any restrictions on transfer (other than any restrictions under the Securities Act and any applicable state securities laws) and any Liens which would interfere with the consummation of the Recapitalization or the Merger (it being acknowledged and agreed that a permitted transfer made pursuant to Section 2.4 shall not be deemed to be a restriction on transfer with respect to the representations and warranties made by an Investor Party in this Section 3.2(k)).
(l) The Investor Party acknowledges and agrees that the foregoing representations are true as of the date hereof and as of the time of the Recapitalization Closing and as of the Effective Time.
ARTICLE IV
CONDITIONS
4.1 Conditions to Each Party’s Obligations. The respective obligations of each Party to consummate the Recapitalization is subject to the satisfaction or waiver on or prior to the Recapitalization Closing Date (as defined below) of the following conditions:
(a) The consummation of the Merger and the other transactions contemplated by the Merger Agreement shall occur concurrently with the consummation of the Recapitalization.
(b) The SLPH Merger shall have occurred or shall occur concurrently with the consummation of the Recapitalization.
(c) All of the outstanding Senior Notes shall have been validly tendered to the Company in accordance with the terms of this Agreement.
(d) All of the outstanding Senior Subordinated Notes shall have been validly tendered to the designated depositary through the facilities of DTC or to the Company in accordance with the terms of this Agreement.
(e) All of the certificates representing outstanding shares of Preferred Stock held by the Preferred Stockholders shall have been validly tendered to the Company in accordance with the terms of this Agreement.
(f) The Common Stock Warrant Agreement Amendment shall have been executed and delivered by the Company, the Common Warrantholders and the Warrant Agent.
(g) Each of the Parties hereto shall have complied in all material respects with each of the covenants and agreements contained in this Agreement to be fulfilled or performed by it on or before the Recapitalization Closing Date.
(h) The representations and warranties made by each of the Parties hereto in this Agreement shall be true and correct as if made on and as of the Recapitalization Closing Date.
Any waiver of a condition under this Section 4.1 must be in writing and executed by the Company, the holders of not less than a majority of the outstanding Senior Subordinated Notes held by JEFCO and the holders of not less than a majority of the outstanding Senior Subordinated Notes held by Senior Subordinated Note Holders other than JEFCO. If the Recapitalization Closing occurs, each Party will be deemed to have waived any other Party’s failure to comply with the conditions to be performed by that Party.
ARTICLE V
CLOSING
5.1 Time and Place. The closing of the Recapitalization (the “Recapitalization Closing”) will take place at the offices of Vinson & Elkins L.L.P., 2500 First City Tower, 1001 Fannin Street, Houston, Texas 77002, immediately prior to or contemporaneously with the Closing under the Merger Agreement.
5.2 Deliveries by Investor Parties. At the Recapitalization Closing, each Investor Party will, as applicable:
(a) deliver to the Company the Senior Notes and letter of transmittal required to be delivered by it pursuant to Section 2.1 of this Agreement;
(b) deliver to the Trustee or the Company the Senior Subordinated Notes and letter of transmittal required to be delivered by it pursuant to Section 2.2 of this Agreement;
(c) deliver to the Company the certificates representing the Preferred Stock required to be delivered by it pursuant to Section 2.3(a) of this Agreement;
(d) deliver to the Company the Common Stock Warrant Agreement Amendment required to be delivered by it pursuant to Section 2.3(d) of this Agreement;
(e) deliver to the Company the Cross-Receipt required to be delivered by it pursuant to Section 2.11 of this Agreement;
(f) deliver to the Company or SLPH any documentation reasonably requested to be delivered in connection with the Recapitalization; and
(g) deliver to the Company and RAME a Non-Foreign Affidavit if such Investor Party is a Preferred Stockholder and a non-foreign person.
5.3 Deliveries by the Company. At the Recapitalization Closing, the Company will deliver to each Investor Party the Common Stock Warrant Agreement Amendment and any other documentation reasonably requested to be delivered in connection with the Recapitalization.
ARTICLE VI
MISCELLANEOUS
6.1 No Securities Transactions. From and after the date hereof until the earlier of the Effective Time or the termination of the Merger Agreement pursuant to Article VIII thereof, each of the Senior Note Holders and the Senior Subordinated Note Holders shall not, directly or indirectly, engage in any transactions involving the securities of RAME solely for its own account as principal.
| 6.2 | Termination; Continued Effectiveness of Certain Provisions. |
(a) This Agreement shall terminate upon the earlier to occur of (i) the consummation of the Merger and (ii) the termination of the Merger Agreement. Upon termination of this Agreement pursuant to Section 6.2(a)(ii), the waivers set forth in Article II shall be of no further force or effect.
(b) Notwithstanding any termination of this Agreement, the provisions of Sections 6.2 through 6.13, Section 6.15 and Section 6.18 shall survive such termination without limitation.
6.3 Notices. All notices, requests and other communications required or permitted hereunder to be given to or made upon any Party hereto shall be in writing addressed as set forth in Annex I and shall be considered properly given (a) if delivered in person; (b) if sent by an express courier delivery service which provides signed acknowledgments of receipt; (c) if deposited in the US. certified or registered first class mail, postage prepaid, return receipt requested or (d) if transmitted by telecopier (upon receipt by sender thereof of evidence that a complete transmission of such telecopy was made to the recipient thereof) and, in the case of telecopier transmission, confirmed by (i) telephone contemporaneously to the person entitled to receive such notice or to such person’s secretary, and (ii) dispatching a copy of such notice by the methods described in clause (a), (b) and (c) above. All notices shall be effective upon receipt. For the purposes of notice, the addresses of the Parties shall be as set forth in Annex I; provided, however, that any Party shall have the right to change its address for notice hereunder to any
other location by giving not less than 30 days’ notice to the other Parties in the manner set forth above.
| 6.4 | Amendments and Waivers. |
(a) Any provision of this Agreement may be amended or waived if, but only if, such amendment or waiver is in writing and is signed by the Company, the holders of not less than a majority of the outstanding Senior Notes and the holders of not less than a majority of the outstanding Senior Subordinated Notes; provided, however, that any amendment or waiver that adversely affects in any material respect the economic rights of the Investor Parties set forth in this Agreement shall not be effective without the prior written consent of the Company, the holders of not less than a majority of the outstanding Senior Subordinated Notes held by JEFCO and the holders of not less than a majority of the outstanding Senior Subordinated Notes held by Senior Subordinated Note Holders other than JEFCO.
(b) No failure or delay by any Party in exercising any right, power or privilege hereunder will operate as a waiver thereof nor will any single or partial exercise thereof preclude any other or further exercise thereof or the exercise of any other right, power or privilege. The rights and remedies herein provided will be cumulative and not exclusive of any rights or remedies provided by law.
(a) Each Party will assume and bear all expenses, costs and fees incurred or assumed by it in the preparation and execution of this Agreement and compliance with the agreements and covenants contained in this Agreement, whether or not the transactions contemplated hereby are consummated; provided, however, subject to the provisions of Section 6.5(b), the Company will assume and bear all such expenses, costs and fees (including all reasonable attorneys’ fees of counsel to the Investor Parties) incurred or assumed by the Investor Parties (unless the failure to consummate such transactions results from the breach by an Investor Party or Investor Parties of the covenants and agreements contained herein, in which event the breaching Party or Parties will assume and bear all such expenses, costs and fees).
(b) Notwithstanding the provisions of Section 6.5(a), in the event the Recapitalization Closing occurs, neither the Company (which for this purpose shall include the Surviving Corporation) nor any Company Subsidiary shall have any obligation to bear, pay or reimburse any costs or expenses of any nature whatsoever incurred by the Investor Parties under this Agreement, the Senior Notes, the Senior Note Purchase Agreement, the Senior Subordinated Notes, the Indenture or under any other agreement between any of the Parties hereto (including any agreement between the Investor Parties or any of them and the Company Subsidiaries or any of them) except to the extent set out in the Settlement Statement.
(c) Without duplication, the Company (or any paying agent authorized by either of them) shall be entitled to deduct and withhold from the consideration otherwise payable pursuant to this Agreement to any holder of the Company’s securities such amounts as may be required to be deducted and withheld with respect to the making of such payment under the Code, or any provision of state, local or foreign tax law or any other applicable legal
requirement. To the extent that amounts are so withheld and paid over to the appropriate taxing authority, such withheld amounts shall be treated for all purposes of this Agreement as having been paid to the former holder of the Company’s securities in respect of which such deduction and withholding was made.
(d) In the event of any litigation brought to enforce or interpret this Agreement, or arising out of its negotiation, performance or subject matter, the Party to this contract who prevails shall be entitled to recover its attorneys’ fees and costs, including those incurred at trial, in any bankruptcy or other proceeding, on appeal and in enforcing any judgment.
6.6 Successors and Assigns. The provisions of this Agreement will be binding upon and inure to the benefit of the Parties hereto and their respective successors and permitted assigns; provided that, except as otherwise expressly provided in this Agreement, no Party may assign, delegate or otherwise transfer any of its rights or obligations under this Agreement without the prior written consent the Company.
6.7 No Third-Party Beneficiaries. Except for the representations and warranties of the Investor Parties pursuant to Section 3.2, which are made in part for the benefit of RAME, this Agreement is for the sole benefit of the Parties hereto and their permitted assigns, and nothing herein expressed or implied will give or be construed to give to any person or entity, other than the Parties hereto and such permitted assigns any legal or equitable rights hereunder.
6.8 Governing Law. This Agreement will be governed by, and construed in accordance with, the law of the State of New York, without regard to the conflict of laws rules of that State.
6.9 Jurisdiction. Except as otherwise expressly provided in this Agreement, any suit, action or proceeding seeking to enforce any provision of, or based on any matter arising out of or in connection with, this Agreement or the transactions contemplated hereby may be brought in any court of competent jurisdiction in the County of New York (including the Federal District Court for the Southern District of New York) and each of the Parties hereby consents to the jurisdiction of such courts (and of the appropriate appellate courts therefrom) in any such suit, action or proceeding and irrevocably waives, to the fullest extent permitted by law, any objection which it may now or hereafter have to the laying of the venue of any such suit, action or proceeding in any such court or that any such suit, action or proceeding which is brought in any such court has been brought in an inconvenient forum. Process in any such suit, action or proceeding may be served on any Party anywhere in the world, whether within or without the jurisdiction of any such court. Without limiting the foregoing, each Party agrees that service of process on such Party as provided in Section 6.3 will be deemed effective service of process on such Party.
6.10 Counterparts. This Agreement may be signed in any number of counterparts, each of which will be an original, with the same effect as if the signatures thereto and hereto were upon the same instrument. One or more counterparts of this Agreement may be delivered by facsimile with the intent that delivery by such means shall have the same effect as delivery of an original counterpart of this Agreement.
6.11 Headings. The headings in this Agreement are for convenience of reference only and will not control or affect the meaning or construction of any provisions hereof.
6.12 Entire Agreement. This Agreement (including the Schedules, Annexes and Exhibits hereto) constitute the entire agreement among the Parties with respect to the subject matter of this Agreement, it being understood and agreed by the Parties that the payment of cash and the delivery of RAME Common Stock and RAME Warrants contemplated hereby will be effected pursuant to the Merger Agreement. This Agreement (including the Schedules, Annexes and Exhibits hereto) supersede all prior agreements and understandings, both oral and written, among the Parties hereto with respect to the subject matter of this Agreement.
6.13 Severability. If any provision of this Agreement or the application of any such provision to any person, entity or circumstance is held invalid, illegal or unenforceable in any respect by a court of competent jurisdiction, such invalidity, illegality or unenforceability will not affect any other provision of this Agreement, and this Agreement shall be reformed, construed and enforced in such jurisdiction as if such invalid, illegal or unenforceable provision or portion of any provision had never been contained herein and there had been contained herein instead such valid, legal and enforceable provisions as would most nearly accomplish the intent and purpose of such invalid, illegal or unenforceable provision.
6.14 Further Assurances. The Parties will take such further action and deliver or cause to be delivered to each other on the Recapitalization Closing Date and at such other times thereafter as will be reasonably agreed such additional agreements, instruments or other documents as any of them may reasonably request for the purpose of carrying out this Agreement. Each of the Parties hereto will use its reasonable efforts to cause each of the conditions contained in this Agreement to the obligations of the Parties hereto to be satisfied.
6.15 Representation by Counsel; Strict Construction. Each Party hereto acknowledges that it has been represented by counsel, to the extent such Party deemed necessary, in connection with this Agreement and the transactions contemplated by this Agreement and that the Company has not retained legal or financial advisors on behalf of any Investor Party and that Vinson & Elkins L.L.P. has acted as counsel solely to the Company and SLPH and not to any of the Investor Parties in their capacities as securityholders. Accordingly, any rule of law or any legal decision that would provide any Party hereto with a defense to the enforcement of the terms of this Agreement against such Party based upon lack of legal counsel, shall have no application and is expressly waived. The language used in this Agreement will be deemed to be the language chosen by the Parties to express their mutual intent, and no rule of strict construction will be applied against any Party.
6.16 Specific Performance. It is understood and agreed by each of the Parties hereto that monetary damages would not be a sufficient remedy for any breach of this Agreement by any Party and each non-breaching Party shall be entitled, in addition to any other remedies, to the remedy of specific performance and injunctive or other equitable relief as a remedy for any such breach, without the necessity of securing or posting a bond or other security in connection with such equitable relief.
6.17 Adjustments for Stock Splits, etc. Wherever in this Agreement there is a reference or implication to a specific number or percentage of shares of capital stock, or a price per share of such capital stock, or consideration received in respect of such capital stock, then, upon the occurrence of any subdivision, combination, stock split or stock dividend of such capital stock, the specific number or percentage of shares or the price so referenced in or implicated by this Agreement shall automatically be proportionally adjusted to reflect the effect on the outstanding shares of such capital stock by such subdivision, combination, stock split or stock dividend.
[Signature pages follow]
IN WITNESS WHEREOF, the Parties hereto have caused this Note Holder Payoff and Recapitalization Agreement to be duly executed by their respective authorized representatives, if applicable, as of the day and year first above written.
COMPANY:
ASCENT ENERGY INC.
Name: Terry W. Carter
Title: Chief Executive Officer
SLPH:
SOUTH LOUISIANA PROPERTY HOLDINGS, INC.
Name: Terry W. Carter
Title: Chief Executive Officer
SIGNATURE PAGE
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have caused this Note Holder Payoff and Recapitalization Agreement to be duly executed by their respective authorized representatives, if applicable, as of the day and year first above written.
SENIOR NOTEHOLDERS:
JEFFERIES & COMPANY, INC.
Name:
Title:
Principal Amount of Senior Notes Held as of: |
4/30/07 | | $3,089,601 |
11/08/05 | | $10,263,997 |
Allocate to Jefferies High Yield Trading, L.L.C. | | |
Total | | $2,461,955 |
JEFFERIES HIGH YIELD TRADING, L.L.C.
Name:
Title:
Principal Amount of Senior Notes Held as of: |
4/30/07 | | $27,215,727 |
11/08/05 | | |
Jefferies Partners Opportunity Fund, LLC | | $7,153,173 |
Jefferies Partners Opportunity Fund II, LLC | | $5,202,131 |
Jefferies Employee Opportunity Fund, LLC | | $1,517,508 |
Allocation from Jefferies & Company, Inc. | | |
Total | | $21,674,854 |
SIGNATURE PAGE
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have caused this Note Holder Payoff and Recapitalization Agreement to be duly executed by their respective authorized representatives, if applicable, as of the day and year first above written.
SENIOR NOTEHOLDERS:
SHARED OPPORTUNITY FUND IIB, L.L.C.
| By: | TCW Asset Management Company, |
| as its Investment Advisor |
Name:
Title:
Name:
Title:
Principal Amount of Senior Notes Held as of: |
4/30/07 | | $315,824 |
11/08/05 | | $251,540 |
TCW SHARED OPPORTUNITY FUND III, L.P.
| By: | TCW Asset Management Company, |
| as its Investment Advisor |
Name:
Title:
Name:
Title:
Principal Amount of Senior Notes Held as of: |
4/30/07 | | $1,790,668 |
11/08/05 | | $1,426,185 |
SIGNATURE PAGE
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have caused this Note Holder Payoff and Recapitalization Agreement to be duly executed by their respective authorized representatives, if applicable, as of the day and year first above written.
SENIOR NOTEHOLDERS:
ING FURMAN SELZ INVESTORS III L.P.
By: FS Private Investments III LLC, Manager
Name:
Title:
Principal Amount of Senior Notes Held as of: |
4/30/07 | | $6,716,975 |
11/08/05 | | $5,349,763 |
ING BARINGS U.S. LEVERAGED EQUITY PLAN LLC
By: FS Private Investments III LLC, Manager
Name:
Title:
Principal Amount of Senior Notes Held as of: |
4/30/07 | | $2,378,169 |
11/08/05 | | $1,894,102 |
ING BARINGS GLOBAL LEVERAGED EQUITY PLAN LTD.
By: FS Private Investments III LLC, Manager
Name:
Title:
Principal Amount of Senior Notes Held as of: |
4/30/07 | | $544,674 |
11/08/05 | | $433,808 |
SIGNATURE PAGE
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
SIGNATURE PAGE
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have caused this Note Holder Payoff and Recapitalization Agreement to be duly executed by their respective authorized representatives, if applicable, as of the day and year first above written.
SENIOR SUBORDINATED NOTEHOLDERS:
JEFFERIES & COMPANY, INC.
Name:
Title:
Principal Amount of Senior Subordinated Notes Held as of: |
4/30/07 | | $9,094,366 |
11/08/05 | | $31,242,469.78 |
Allocate to Jefferies High Yield Trading, L.L.C. | | |
Remaining Balance | | $7,678,626.24 |
Name of DTC Participant Through
Which the Notes Are Held: Jefferies & Company, Inc.
Chris M. Kanoff
Principal Amount of Senior Subordinated Notes Held as of: |
4/30/07 | | $157,143.52 |
11/08/05 | | $132,735.96 |
Name of DTC Participant Through
Which the Notes Are Held: Jefferies & Company, Inc.
SIGNATURE PAGE
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have caused this Note Holder Payoff and Recapitalization Agreement to be duly executed by their respective authorized representatives, if applicable, as of the day and year first above written.
SENIOR SUBORDINATED NOTEHOLDERS:
JEFFERIES HIGH YIELD TRADING, L.L.C.
Name:
Title:
Principal Amount of Senior Subordinated Notes Held as of: |
4/30/07 | | $77,482,549 |
11/08/05 | | |
Jefferies Partners Opportunity Fund, LLC | | $21,598,169.79 |
Jefferies Partners Opportunity Fund II, LLC | | $15,706,377.70 |
Jefferies Employee Opportunity Fund, LLC | | $4,582,756.71 |
Allocation from Jefferies & Company, Inc. | | |
Total | | $65,451,147.74 |
Name of DTC Participant Through
Which the Notes Are Held: Bank of New York
SIGNATURE PAGE
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have caused this Note Holder Payoff and Recapitalization Agreement to be duly executed by their respective authorized representatives, if applicable, as of the day and year first above written.
SENIOR SUBORDINATED NOTEHOLDERS:
SHARED OPPORTUNITY FUND IIB, L.L.C.
| By: | TCW Asset Management Company, |
| as its Investment Advisor |
Name:
Title:
Name:
Title:
Principal Amount of Senior Subordinated Notes Held as of: | |
4/30/07 | | $2,407,564.38 |
11/08/05 | | $2,033,621.06 |
| | | |
Name of DTC Participant Through
Which the Notes Are Held: Bank of New York
SIGNATURE PAGE
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have caused this Note Holder Payoff and Recapitalization Agreement to be duly executed by their respective authorized representatives, if applicable, as of the day and year first above written.
TCW SHARED OPPORTUNITY FUND III, L.P.
| By: | TCW Asset Management Company, |
| as its Investment Advisor |
Name:
Title:
Name:
Title:
Principal Amount of Senior Subordinated Notes Held as of: |
4/30/07 | | $13,642,989.49 |
11/08/05 | | $11,523,957.95 |
Name of DTC Participant Through
Which the Notes Are Held: Bank of New York
SIGNATURE PAGE
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have caused this Note Holder Payoff and Recapitalization Agreement to be duly executed by their respective authorized representatives, if applicable, as of the day and year first above written.
SENIOR SUBORDINATED NOTEHOLDERS:
W CAPITAL PARTNERS WEST LLC
Name:
Title:
Principal Amount of Senior Subordinated Notes Held as of: |
4/30/07 | | $6,420,165.92 |
11/08/05 as Allocated from TCW Funds (transferred 9/27/06) | | $5,422,984.61 |
Name of DTC Participant Through
Which the Notes Are Held: Morgan Stanley
SIGNATURE PAGE
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have caused this Note Holder Payoff and Recapitalization Agreement to be duly executed by their respective authorized representatives, if applicable, as of the day and year first above written.
SENIOR SUBORDINATED NOTEHOLDERS:
ING FURMAN SELZ INVESTORS III L.P.
By: FS Private Investments III LLC, Manager
Name:
Title:
Principal Amount of Senior Subordinated Notes Held as of: |
4/30/07 | | $6,029,268.28 |
11/08/05 | | $5,092,801.26 |
Name of DTC Participant Through
Which the Notes Are Held: Jefferies & Company, Inc.
ING BARINGS U.S. LEVERAGED EQUITY PLAN LLC
By: FS Private Investments III LLC, Manager
Name:
Title:
Principal Amount of Senior Subordinated Notes Held as of: |
4/30/07 | | $1,833,559.97 |
11/08/05 | | $1,548,771.11 |
Name of DTC Participant Through
Which the Notes Are Held: Jefferies & Company, Inc.
SIGNATURE PAGE
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have caused this Note Holder Payoff and Recapitalization Agreement to be duly executed by their respective authorized representatives, if applicable, as of the day and year first above written.
SENIOR SUBORDINATED NOTEHOLDERS:
ING BARINGS GLOBAL LEVERAGED EQUITY PLAN LTD.
By: FS Private Investments III LLC, Manager
Name:
Title:
Principal Amount of Senior Subordinated Notes Held as of: |
4/30/07 | | $790,029.60 |
11/08/05 | | $667,322.06 |
Name of DTC Participant Through
Which the Notes Are Held: Jefferies & Company, Inc.
SIGNATURE PAGE
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have caused this Note Holder Payoff and Recapitalization Agreement to be duly executed by their respective authorized representatives, if applicable, as of the day and year first above written.
PREFERRED STOCKHOLDERS AND COMMON WARRANTHOLDERS:
JEFFERIES & COMPANY, INC.
Name:
Title:
Number of Shares of Series A Preferred Stock Held:
Number of Warrants to purchase shares of Common Stock held: 22,500
JEFFERIES HIGH YIELD TRADING, L.L.C.
Name:
Title:
Number of Shares of Series A Preferred Stock Held:
Number of Warrants to purchase shares of Common Stock held: 1,294
SIGNATURE PAGE
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have caused this Note Holder Payoff and Recapitalization Agreement to be duly executed by their respective authorized representatives, if applicable, as of the day and year first above written.
PREFERRED STOCKHOLDERS AND COMMON WARRANTHOLDERS:
SHARED OPPORTUNITY FUND IIB, L.L.C.
| By: | TCW Asset Management Company, |
| as its Investment Advisor |
Name:
Title:
Name:
Title:
Number of Shares of Series A Preferred Stock Held:
Number of Warrants to purchase shares of Common Stock held: 694
SIGNATURE PAGE
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have caused this Note Holder Payoff and Recapitalization Agreement to be duly executed by their respective authorized representatives, if applicable, as of the day and year first above written.
PREFERRED STOCKHOLDERS AND COMMON WARRANTHOLDERS:
TCW SHARED OPPORTUNITY FUND III, L.P.
| By: | TCW Asset Management Company, |
| as its Investment Advisor |
Name:
Title:
Name:
Title:
Number of Shares of Series A Preferred Stock Held:
Number of Warrants to purchase shares of Common Stock held: 3,942
SIGNATURE PAGE
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have caused this Note Holder Payoff and Recapitalization Agreement to be duly executed by their respective authorized representatives, if applicable, as of the day and year first above written.
PREFERRED STOCKHOLDERS AND COMMON WARRANTHOLDERS:
W CAPITAL PARTNERS WEST LLC
Name:
Title:
Number of Shares of Series A Preferred Stock Held:
Number of Warrants to purchase shares of Common Stock held: 1,814
SIGNATURE PAGE
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have caused this Note Holder Payoff and Recapitalization Agreement to be duly executed by their respective authorized representatives, if applicable, as of the day and year first above written.
PREFERRED STOCKHOLDERS AND COMMON WARRANTHOLDERS:
ING FURMAN SELZ INVESTORS III L.P.
By: FS Private Investments III LLC, Manager
Name:
Title:
Number of Shares of Series A Preferred Stock Held:
Number of Warrants to purchase shares of Common Stock held: 8,354
ING BARINGS U.S. LEVERAGED EQUITY PLAN LLC
By: FS Private Investments III LLC, Manager
Name:
Title:
Number of Shares of Series A Preferred Stock Held:
Number of Warrants to purchase shares of Common Stock held: 2,557
SIGNATURE PAGE
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
IN WITNESS WHEREOF, the Parties hereto have caused this Note Holder Payoff and Recapitalization Agreement to be duly executed by their respective authorized representatives, if applicable, as of the day and year first above written.
PREFERRED STOCKHOLDERS AND COMMON WARRANTHOLDERS:
ING BARINGS GLOBAL LEVERAGED EQUITY PLAN LTD.
By: FS Private Investments III LLC, Manager
Name:
Title:
Number of Shares of Series A Preferred Stock Held:
Number of Warrants to purchase shares of Common Stock held: 1,079
SIGNATURE PAGE
NOTE HOLDER PAYOFF AND RECAPITALIZATION AGREEMENT
ANNEX 1
NOTICE ADDRESSES
Ascent Energy Inc.
South Louisiana Property Holdings, Inc.
4965 Preston Park Blvd. – Suite 800
Plano, TX 75093
Facsimile: (972) 543-3904 | | ING Furman Selz Investors III L.P.
c/o FS Private Investments III LLC
520 Madison Avenue - 12th Floor
New York, NY 10022
Attn: James Luikart
Facsimile: (212) 284-1717 |
| | |
Jefferies & Company, Inc.
The Metro Center
One Station Place, Three North
Stamford, CT 06902
Attn: Robert J. Welch
Facsimile: (203) 708-5820 | | ING Barings U.S. Leveraged Equity Plan LLC
c/o FS Private Investments III LLC
520 Madison Avenue - 12th Floor
New York, NY 10022
Attn: James Luikart
Facsimile: (212) 284-1717 |
| | |
Jefferies High Yield Trading, L.L.C.
The Metro Center
One Station Place, Three North
Stamford, CT 06902
Attn: Robert J. Welch
Facsimile: (203) 708-5820 | | ING Barings Global Leveraged Equity Plan Ltd.
c/o FS Private Investments III LLC
520 Madison Avenue - 12th Floor
New York, NY 10022
Attn: James Luikart
Facsimile: (212) 284-1717 |
| | |
Chris Kanoff
c/o Jefferies & Company, Inc.
The Metro Center
One Station Place, Three North
Stamford, CT 06902
Facsimile: (310) 575-5209 | | TCW Shared Opportunity Fund III, L.P.
c/o Trust Company of the West
11100 Santa Monica Blvd.
Suite 2000
Los Angeles, CA 90025
Attn: Andrew Park
Facsimile: (310) 235-5965 |
| | |
Shared Opportunity Fund IIB, L.L.C.
c/o Trust Company of the West
11100 Santa Monica Blvd.
Suite 2000
Los Angeles, CA 90025
Attn: Andrew Park
Facsimile: (310) 235-5965 | | W Capital Partners West LLC
One East 52nd Street
New York, New York 10022
Attn: Stephen Wertheimer
Facsimile: (212) 561-5241 |
EXHIBIT A
SENIOR NOTEHOLDERS
Jefferies & Company, Inc.
Jefferies High Yield Trading, L.L.C.
Shared Opportunity Fund IIB, L.L.C.
TCW Shared Opportunity Fund III, L.P.
ING Furman Selz Investors III L.P.
ING Barings U.S. Leveraged Equity Plan LLC
ING Barings Global Leveraged Equity Plan Ltd.
EXHIBIT B
SENIOR SUBORDINATED NOTEHOLDERS
Jefferies & Company, Inc.
Jefferies High Yield Trading, L.L.C.
Shared Opportunity Fund IIB, L.L.C.
TCW Shared Opportunity Fund III, L.P.
ING Furman Selz Investors III L.P.
ING Barings U.S. Leveraged Equity Plan LLC
ING Barings Global Leveraged Equity Plan Ltd.
Chris M. Kanoff
W Capital Partners West LLC
EXHIBIT C
PREFERRED STOCKHOLDERS AND COMMON WARRANTHOLDERS
Jefferies & Company, Inc.
Jefferies High Yield Trading, L.L.C.
Shared Opportunity Fund IIB, L.L.C.
TCW Shared Opportunity Fund III, L.P.
ING Furman Selz Investors III L.P.
ING Barings U.S. Leveraged Equity Plan LLC
ING Barings Global Leveraged Equity Plan Ltd.
W Capital Partners West LLC
Duetsche Banc Alex Brown TR FBO Jeffrey Clarke
Jeffrey Clarke
DB Securities Inc. R-IRA UA Feb 07 02 Custodian FBO Keri Clarke
Keri Clarke
Larry Keller
DB Securities Inc. Custodian FBO Larry L. Keller IRA
DB Alex Brown LLC Custodian FBO Robert N. Marshall R-IRA
EXHIBIT D
NON-INVESTOR PARTY SECURITYHOLDERS
Duetsche Banc Alex Brown TR FBO Jeffrey Clarke
Jeffrey Clarke
DB Securities Inc. R-IRA UA Feb 07 02 Custodian FBO Keri Clarke
Keri Clarke
Larry Keller
DB Securities Inc. Custodian FBO Larry L. Keller IRA
DB Alex Brown LLC Custodian FBO Robert N. Marshall R-IRA
EXHIBIT E
COMMON STOCK WARRANT AGREEMENT AMENDMENT
EXHIBIT F
CERTIFICATE AMENDMENT
SCHEDULE 2.10
ILLUSTRATIVE EXAMPLES OF ALLOCATION OF CONSIDERATION
EXHIBIT E
VOTING AGREEMENT
This Voting Agreement, dated as of this ____ day of ___________, 2007 (the “Agreement”), is executed and delivered by and between RAM Energy Resources, Inc., a Delaware corporation (“RAM”) and the undersigned.
A. RAM, Ascent Acquisition Corp. (“Merger Sub”), a Delaware corporation, and Ascent Energy Inc., (the “Company”), a Delaware corporation, have entered into that certain Agreement and Plan of Merger (the “Merger Agreement”) dated as of August __, 2007, pursuant to which Merger Sub will merge with and into the Company, with the Company surviving and becoming a wholly owned subsidiary of RAM (the “Merger”).
B. The undersigned has entered into that certain Note Payoff and Recapitalization Agreement of even date with the Merger Agreement (the “Recapitalization Agreement”) among the Company, South Louisiana Property Holdings, Inc., a Louisiana corporation, and the “Investor Parties” (as defined therein).
C. At the Effective Time, the undersigned, pursuant to the Merger Agreement and the Recapitalization Agreement, will be entitled to receive shares of the common stock of RAM, par value $0.0001 per share (the “RAM Common Stock”).
D. All shares of RAM Common Stock received by the undersigned pursuant to the Merger Agreement and the Recapitalization Agreement, together with any and all other shares of RAM Common Stock which are owned of record by the undersigned on the record date for voting on any action described herein, or with respect to which the undersigned has the power to vote on such record date, are referred to herein as the “Shares.”
E. This Agreement is being entered into as a condition to the consummation of the Merger.
In consideration of the premises and of the mutual agreements and covenants set forth herein and in the Merger Agreement, and intending to be legally bound hereby, the parties hereto hereby agree as follows:
1. Vote in Favor of the Directors. During the term of this Agreement, the undersigned agrees to vote all of the Shares owned by the undersigned (or with respect to which the undersigned has the power to vote) on the record date applicable to any vote for the election of directors of RAM, for the directors recommended by RAM’s Board of Directors.
2. Term of Agreement. The obligations of the undersigned pursuant to this Agreement shall terminate immediately following the election of directors at the annual meeting of RAM’s stockholders that will be held in 2009.
3. Transfer of Shares. This Agreement shall not restrict in any manner the transfer of Shares during the term hereof; provided, however, that any such transfer of Shares, other than
for valuable consideration to an unaffiliated third party, shall be made expressly subject to this Agreement and shall be binding upon the transferee.
4. ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS VOTING AGREEMENT SHALL BE BROUGHT IN ANY DELAWARE STATE COURT HAVING JURISDICTION OR IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE. BY EXECUTION AND DELIVERY OF THIS VOTING AGREEMENT, EACH OF RAM AND THE UNDERSIGNED IRREVOCABLY ACCEPTS AND SUBMITS ITSELF TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN THE COURTS REFERENCED ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
5. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware without regard to the law that might otherwise govern under applicable principles of conflicts of law.
IN WITNESS WHEREOF, the parties have executed this Agreement as of the date first written above.
RAM ENERGY RESOURCES, INC. |
|
|
By: | |
| Name: Larry E. Lee |
| Title: Chairman and CEO |
|
|
|
Name: |
2
EXHIBIT F
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT, dated ________, 2007 (this “Agreement”), among (a) RAM Energy Resources, Inc., a Delaware corporation (the “Company”), (b) the Designated Holders named on the signature pages hereto and (c) FS Private Investments III LLC, solely in its capacity as the “Holder Representative” appointed pursuant to Section 9.16 hereof. Unless otherwise provided in this Agreement, capitalized terms used herein have the respective meanings given to them in Section 1.1 hereof.
WHEREAS, each of the Company, Ascent Acquisition Corp., a Delaware corporation (“Merger Sub”), and Ascent Energy Inc., a Delaware corporation (“Ascent”), have entered into an Agreement and Plan of Merger, dated ___________, 2007 (the “Merger Agreement”), pursuant to which Merger Sub will merge with and into Ascent, with Ascent surviving and becoming a wholly owned subsidiary of the Company (the “Merger”);
WHEREAS, at the effective time of the Merger, the Company Preferred Stock (as defined in the Merger Agreement), the Senior Notes (as defined in the Note Holder Payoff and Recapitalization Agreement (as defined in the Merger Agreement)) and the Senior Subordinated Notes (as defined in the Note Holder Payoff and Recapitalization Agreement) beneficially owned by the Designated Holders shall be converted as described in the Merger Agreement (in the case of the Company Preferred Stock) and paid in full as described in the Note Holder Payoff and Recapitalization Agreement (in the case of the Senior Notes and the Senior Subordinated Notes), for cash, shares of Company common stock, par value $0.0001 per share (the “Common Stock”), and Warrants (as defined in the Merger Agreement); and
WHEREAS, in connection with the Merger, the Company has agreed to grant certain registration rights with respect to the Registrable Securities as set forth in this Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and agreements set forth herein and for good and valuable consideration, the receipt and adequacy of which are hereby acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.1 Definitions. As used in this Agreement, and unless the context requires a different meaning, the following terms have the meanings indicated:
“Accession Agreement” has the meaning set forth in Section 9.5.
“Affiliate” means with respect to any specified Person, an “affiliate,” as defined in Rule 144 under the Securities Act, of such Person.
“Agreement” means this Agreement as the same may be amended, supplemented or modified in accordance with the terms hereof.
“Approved Underwriter” means an investment banking firm of national reputation to act as the managing underwriter of an offering under Articles III or IV.
“Board of Directors” means the Board of Directors of the Company.
“Business Day” means any day other than a Saturday, Sunday or other day on which commercial banks in the State of New York are authorized or required by law or executive order to close.
“Charter Documents” means the Certificate of Incorporation and the By-laws of the Company, as amended from time to time.
“Common Stock” has the meaning set forth in the recitals to this Agreement.
“Common Shares” means the [_________] shares of Common Stock issued pursuant to the Merger, adjusted for any stock dividends, splits, reverse splits, combinations, recapitalizations and the like occurring after the date hereof.
“Commission” means the United States Securities and Exchange Commission or any similar agency then having jurisdiction to enforce the Securities Act.
“Company” has the meaning set forth in the preamble to this Agreement.
“Company Underwriter” has the meaning set forth in Section 5.1.
“Demand Registration” has the meaning set forth in Section 4.1.
“Designated Holders” means (a) Jefferies & Company, Inc., Jefferies High Yield Trading, L.L.C., Chris Kanoff Shared Opportunity Fund IIB, L.L.C., TCW Shared Opportunity Fund III, L.P., ING Furman Selz Investors III L.P., ING Barings U.S. Leveraged Equity Plan LLC, ING Barings Global Leveraged Equity Plan Ltd. and W Capital Partners West LLC, and any fund, investment vehicle or account managed, advised or controlled by any of them or any of their respective Affiliates and (b) any transferee of any of them to whom Registrable Securities have been transferred in accordance with Section 9.5 of this Agreement, other than a transferee to whom Registrable Securities have been transferred pursuant to a Registration Statement under the Securities Act or Rule 144 under the Securities Act (or any successor rule thereto), but in each case solely for so long as such holder or transferee continues to be a holder of Registrable Securities.
“Effectiveness Period” means the period commencing with the date of this Agreement and ending on the date that there are no longer any Holders of Registrable Securities.
“Exchange Act” means the Securities Exchange Act of 1934, as amended, and the rules and regulations of the Commission thereunder.
“Holder Representative” has the meaning set forth in Section 9.16(a).
-2-
“Holders” means each holder of Registrable Securities, other than a transferee to whom Registrable Securities have been transferred pursuant to a Registration Statement under the Securities Act or Rule 144 under the Securities Act (or any successor rule thereto), but in each case solely for so long as such holder or transferee continues to be a holder of Registrable Securities.
“Holders’ Counsel” means a single counsel that shall be counsel selected by the Designated Holders holding a majority of the Registrable Securities held by all of the Designated Holders (in the case of the Shelf Registration Statement) or the Designated Holders holding a majority of the Registrable Securities held by all of the Designated Holders offering Registrable Securities in any such Demand Registration or Incidental Registration (in the case of a Demand Registration or Incidental Registration).
“Incidental Registration” has the meaning set forth in Section 5.1.
“Indemnified Party” has the meaning set forth in Section 7.3.
“Indemnifying Party” has the meaning set forth in Section 7.3.
“Initiating Holders” has the meaning set forth in Section 4.1.
“Inspector” has the meaning set forth in Section 6.1(h).
“Issuer Free Writing Prospectus” has the meaning set forth in Section 6.1.
“Knowledge” means the knowledge of any executive officer of the Company.
“Liability” or “Liabilities” has the meaning set forth in Section 7.1.
“Merger Effective Date” means the date on which the Merger shall become effective.
“Maximum Number of Shares (Demand Registration)” has the meaning set forth in Section 4.6.
“Maximum Number of Shares (Incidental Registration)” has the meaning set forth in Section 5.1.
“NASD” means the National Association of Securities Dealers, Inc.
“Person” means any individual, firm, corporation, partnership, limited liability company, trust, incorporated or unincorporated association, joint venture, joint stock company, limited liability company, government (or an agency or political subdivision thereof) or other entity of any kind, and shall include any successor (by merger or otherwise) of such entity.
“Records” has the meaning set forth in Section 6.1(h).
-3-
“Registrable Securities” means, subject to Section 2.2 below, the Common Shares, the Warrant Shares, the Warrants (so long as they are outstanding) and any other securities of the Company or any successor or assign of the Company referred to in clause (iv) of Section 9.1 hereof.
“Registration Default” has the meaning set forth in Section 3.3(a).
“Registration Expenses” has the meaning set forth in Section 6.4.
“Registration Penalties” has the meaning set forth in Section 3.3(a).
“Registration Statement” means a Registration Statement filed pursuant to the Securities Act.
“Reimbursable Expenses” means the reasonable documented out-of-pocket costs and expenses incurred by the Company (a) in connection with marketing efforts relating to the sale of Registrable Securities to be registered in a Demand Registration, (b) after the date of notice (which may be written or oral) to the Company by the Initiating Holders holding a majority of the Registrable Securities held by all of the Initiating Holders (or the Approved Underwriter of the Demand Registration on behalf of such Initiating Holders) of their intent to cause the Approved Underwriter and/or the Company to begin marketing efforts to sell the Registrable Securities to be registered in the Demand Registration and (c) prior to the date on which the Initiating Holders holding a majority of the Registrable Securities held by all of the Initiating Holders request the Company to withdraw the Demand Registration pursuant to clause (y) or (z) of Section 4.4 hereof (which request may be made by notice (written or oral) to the Company by such Initiating Holders).
“Securities Act” means the Securities Act of 1933, as amended, and the rules and regulations of the Commission promulgated thereunder.
“Shelf Registration Period” has the meaning set forth in Section 3.2.
“Shelf Registration Statement” has the meaning set forth in Section 3.1.
“2006 Registration Statement” has the meaning set forth in Section 3.1.
“Valid Business Reason” has the meaning set forth in Section 4.1.
“Warrants” has the meaning set forth in the recitals to this Agreement.
“Warrant Shares” means the 6,200,000 shares of Common Stock issuable upon exercise of the Warrants, adjusted for any stock dividends, splits, reverse splits, combinations, recapitalizations, other antidilution adjustments as provided in the Warrants and the like occurring after the date hereof.
-4-
ARTICLE II
GENERAL; SECURITIES SUBJECT TO THIS AGREEMENT
2.1 Grant of Rights. The Company hereby grants registration rights to the Holders upon the terms and conditions set forth in this Agreement.
2.2 Registrable Securities. For the purposes of this Agreement, Registrable Securities will cease to be Registrable Securities, when (i) a Registration Statement covering such Registrable Securities has been declared effective under the Securities Act by the Commission and such Registrable Securities have been disposed of pursuant to such effective Registration Statement or, (ii) in the case of any Holder, the entire amount of the Registrable Securities owned by such Holder may be sold in the open market in a single transaction, in the opinion of counsel reasonably satisfactory to the Company and such Holder, without any limitation as to volume pursuant to Rule 144 (or any successor provisions then in effect) under the Securities Act or any state securities and blue sky laws.
2.3 Holders of Registrable Securities. A Person is deemed to be a holder of Registrable Securities whenever such Person is the record or beneficial owner of Registrable Securities. If the Company receives conflicting instructions, notices or elections from two or more Persons with respect to the same Registrable Securities, the Company may act upon the basis of the instructions, notice or election received from the record owner of such Registrable Securities.
ARTICLE III
SHELF REGISTRATION STATEMENT
3.1 Shelf Registration Statement. Promptly, and in any event within ninety (90) days after the Merger Effective Date, the Company shall file with the Commission a shelf registration statement pursuant to Rule 415 of the Securities Act (the “Shelf Registration Statement”) on Form S-3 (or any successor form thereto, or, if unavailable, any other form available for use by the Company to register the Registrable Securities), with respect to the resale, from time to time, of all of the Registrable Securities issued or issuable to the Holders. At the election of the Company, and in its sole discretion, the Warrants and/or the Warrant Shares may be registered either in the Shelf Registration Statement required by this Section 3.1 or as a post-effective amendment to that certain Registration Statement filed with the Commission (File No. 333-113583) (the “2006 Registration Statement”).
3.2 Effective Shelf Registration Statement. The Company shall promptly cause the Shelf Registration Statement to become effective (but in any event not later than one hundred fifty (150) days after the Merger Effective Date), and shall use its reasonable best efforts to keep the Shelf Registration Statement continuously effective under the Securities Act, subject to the provisions of Section 6.3, until the later of (i) the date on which no Holder is an Affiliate of the Company or (ii) the first anniversary of the Merger Effective Date (the “Shelf Registration Period”). Notwithstanding the foregoing, the Company shall have the right, in its sole discretion, to keep the Shelf Registration Statement effective for such longer period as it deems appropriate.
-5-
The Company shall be deemed not to have used its reasonable best efforts to keep the Shelf Registration Statement effective during the Shelf Registration Period (as it may be extended pursuant to the preceding sentence) if it voluntarily takes any action that would result in the Holders of Registrable Securities covered thereby not being able to offer and sell such Registrable Securities pursuant to such effective Shelf Registration Statement during the Shelf Registration Period, unless such action is required by applicable law, provided that, in the event that such action is required, the Shelf Registration Period shall be automatically extended for a number of days equal to the number of days during which such Holders were not so able to offer and sell such Registrable Securities. Following the first anniversary of the Merger Effective Date, the Company’s obligations under clause (i) of this Section 3.2 shall only apply if (x) the Shelf Registration Statement is on a Form S-3 or (y) the Company then qualifies to file with the Commission a registration statement on Form S-3 (or any successor form thereto).
(a) Cash payments (“Registration Penalties”) shall accrue as follows if any of the following events occur (each such event in clauses (i) through (iv) below being herein called a “Registration Default”):
(i) the Shelf Registration Statement required by this Agreement is not filed with the Commission on or prior to ninety (90) days after the Merger Effective Date;
(ii) the Shelf Registration Statement required by this Agreement is not declared effective by the Commission on or prior to one hundred fifty (150) days after the Merger Effective Date;
(iii) if not registered by the Shelf Registration Statement, the Warrants and/or Warrant Shares are not registered under the 2006 Registration Statement, and any post-effective amendment thereto is not effective, within the time periods set forth in (i) and (ii) above; or
(iv) if after the Shelf Registration Statement (or the post-effective amendment to the 2006 Registration Statement, if the Warrants and/or Warrant Shares are registered thereunder) required by this Agreement has been declared effective by the Commission but (A) such Shelf Registration Statement (or the post-effective amendment to the 2006 Registration Statement, if the Warrants and/or Warrant Shares are registered thereunder) thereafter ceases to be effective or (B) the Shelf Registration Statement (or the post-effective amendment to the 2006 Registration Statement, if the Warrants and/or Warrant Shares are registered thereunder) or the related prospectus ceases to be usable in connection with resales of Registrable Securities during the period ending on the first anniversary of the Merger Effective Date (including, without limitation, because of a failure to keep such Shelf Registration Statement (or the post-effective amendment to the 2006 Registration Statement, if the Warrants and/or Warrant Shares are registered thereunder) effective, a failure to disclose such information as is necessary for sales to be made pursuant to such Shelf Registration Statement (or the post-effective amendment to the 2006 Registration Statement, if the Warrants and/or Warrant Shares are registered thereunder) or a failure to register sufficient Registrable Securities).
-6-
Each of the foregoing will constitute a Registration Default whatever the reason for any such event and whether it is voluntary or involuntary or is beyond the control of the Company or pursuant to operation of law or as a result of any action or inaction by the Commission.
Registration Penalties shall accrue from and including the date on which any such Registration Default shall occur to but excluding the date on which all such Registration Defaults have been cured, at a rate of $0.0025 per Registrable Security which is the subject of the Registration Default.
A Registration Default referred to in Section 3.3(a)(iv) hereof shall be deemed not to have occurred and be continuing in relation to the Shelf Registration Statement (or the post-effective amendment to the 2006 Registration Statement, if the Warrants and/or Warrant Shares are registered thereunder) or the related prospectus if such Registration Default has occurred solely as a result of the filing of a post-effective amendment to the Shelf Registration Statement (or the post-effective amendment to the 2006 Registration Statement, if the Warrants and/or Warrant Shares are registered thereunder) to incorporate annual audited financial information with respect to the Company where such post-effective amendment is not yet effective and needs to be declared effective to permit Holders to use the related prospectus; provided, however, that in any case if the Shelf Registration Statement (or the post-effective amendment to the 2006 Registration Statement, if the Warrants and/or Warrant Shares are registered thereunder) or the related prospectus shall not be usable for a continuous period in excess of 30 days, a Registration Default shall be deemed to have occurred effective as of the first day the Shelf Registration Statement (or the post-effective amendment to the 2006 Registration Statement, if the Warrants and/or Warrant Shares are registered thereunder) or the related prospectus shall cease to be usable and the Registration Penalties shall be payable in accordance with the above paragraph from such day that the Registration Default shall be deemed to have occurred until such Registration Default is cured.
(b) Any accrued and unpaid amounts of Registration Penalties due pursuant to Section 3.3(a) will be payable on the due date of the Company’s next following quarterly or annual report (whichever may first occur) to the Commission pursuant to the Exchange Act. The amount of the Registration Penalties will be determined by multiplying $0.0025 by the number of outstanding Registrable Securities subject to the Registration Default, and further multiplied by a fraction, the numerator of which is the number of days such Registration Default was applicable during such period, and the denominator of which is 90.
3.4 Expenses. The Company shall pay all Registration Expenses in connection with a Shelf Registration Statement (or the post-effective amendment to the 2006 Registration Statement, if the Warrants and/or Warrant Shares are registered thereunder) , whether or not such Shelf Registration Statement becomes effective.
3.5 Selection of Underwriters. At the election of a Designated Holder or Designated Holders who individually or collectively (as applicable) hold more than 50% of all Registrable Securities at such time, any distribution of Registrable Securities under the Shelf Registration Statement may be in the form of an underwritten offering. The Designated Holders engaging in any such underwritten offering holding a majority of the Registrable Securities subject to the underwritten offering shall select and obtain an Approved Underwriter; provided, however, that
-7-
the Approved Underwriter shall, in any case, also be approved by the Company, such approval not to be unreasonably withheld, delayed or conditioned.
ARTICLE IV
DEMAND REGISTRATION
4.1 Request for Demand Registration. Subject to Section 4.2, at any time and from time to time commencing after the Merger Effective Date, any Designated Holder or Designated Holders who individually or collectively (as applicable) hold more than 50% of all Registrable Securities at such time may request to the Company to register, and the Company shall use its reasonable best efforts to register, under the Securities Act (other than pursuant to a Registration Statement on Form S-4 or S-8 or any successor thereto) (a “Demand Registration”), the number of Registrable Securities stated in such request (any such Designated Holder, an “Initiating Holder”). The Designated Holders will not be entitled to require the Company to effect more than a total of two (2) Demand Registrations; provided, however, that no Demand Registration may be requested after the day that is twenty-four (24) months after the Merger Effective Date.
Notwithstanding anything to the contrary set forth herein, the Company shall have the right to postpone the filing of a Registration Statement and to suspend the use of any such Registration Statement for a reasonable period of time (not exceeding sixty (60) days) if the Company furnishes to the Designated Holders a certificate signed by the Chairman of the Board or the President of the Company stating that the Company has determined in good faith that filing such Registration Statement or the use of such Registration Statement, as the case may be, at such time would materially adversely affect a material financing, acquisition, disposition of assets or stock, merger or other comparable transaction or would require the Company to make public disclosure of information, the public disclosure of which would have a material adverse effect on the Company (a “Valid Business Reason”). The Company shall give written notice of its determination to postpone or suspend the use of a Registration Statement (and the Valid Business Reason for such postponement or suspension) and of the fact that the Valid Business Reason for such postponement or suspension no longer exists, in each case, promptly after the occurrence thereof. Notwithstanding anything to the contrary contained herein, the Company may not postpone or withdraw a filing due to a Valid Business Reason under this Section 4.1 or Section 5.3 more than twice in any twelve (12) month period. In addition, the Company shall not be required to file any Registration Statement pursuant to this Article IV within ninety (90) days after the effective date of any other Registration Statement of the Company if (i) the other Registration Statement was not for the account of the Initiating Holders but the Initiating Holders had the opportunity to include all of the Registrable Securities they requested to include in such registration pursuant to Article V or (ii) the Registration Statement was filed pursuant to this Article IV. Each request for a Demand Registration by the Initiating Holders shall state the amount of the Registrable Securities proposed to be sold and the intended method of disposition thereof.
4.2 Minimum Number of Registrable Securities. Notwithstanding the provisions of Section 4.1, the Company may elect not to effect a Demand Registration if the amount of the estimated offering price of Registrable Securities stated in the Demand Registration is less than $10.0 million.
-8-
4.3 Incidental or “Piggy-Back” Rights with Respect to a Demand Registration. Each of the Designated Holders (other than the Initiating Holders) may offer its or his Registrable Securities under any Demand Registration pursuant to this Section 4.3. Within five (5) Business Days after the receipt of a request for a Demand Registration from an Initiating Holder, the Company shall (i) give written notice thereof to all of the Designated Holders (other than the Initiating Holders) and (ii) subject to Section 4.6, include in such registration all of the Registrable Securities held by such Designated Holders from whom the Company has received a written request for inclusion therein within ten (10) Business Days of the giving by the Company of the written notice referred to in clause (i) above. Each such request by such Designated Holders shall specify the number of Registrable Securities proposed to be registered. The failure of any such Designated Holder to respond within such 10-Business Day period referred to in clause (ii) above shall be deemed to be a waiver of such Designated Holder’s rights under this Article IV with respect to such Demand Registration. Any such Designated Holder may waive its rights under this Article IV prior to the expiration of such 10-Business Day period by giving written notice to the Company, with a copy to the Initiating Holders.
4.4 Effective Demand Registration. The Company shall use its reasonable best efforts to cause any such Demand Registration to become and remain effective not later than seventy-five (75) days after it receives a request under Section 4.1 hereof. A registration shall not constitute a Demand Registration until it has become effective and remains continuously effective for the lesser of, subject to the provisions of Section 6.3, (i) the period during which all Registrable Securities registered in the Demand Registration are sold or otherwise disposed of (but not before the Warrants so registered shall have been exercised or shall have expired) and (ii) one hundred eighty (180) days; provided, however, that a registration shall not constitute a Demand Registration if (w) after such Demand Registration has become effective, such registration or the related offer, sale or distribution of Registrable Securities thereunder 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 not attributable to the Initiating Holders and such interference is not eliminated within thirty (30) days after such interference first occurs, (x) the conditions specified in the underwriting agreement, if any, entered into in connection with such Demand Registration are not satisfied or waived, other than by reason of a failure by the Initiating Holders, (y) such Demand Registration does not become effective within the seventy-five (75) day period referred to in the first sentence of this Section 4.4 and the Initiating Holders holding a majority of the Registrable Securities held by all of the Initiating Holders request the Company to withdraw such Demand Registration, or (z) the Initiating Holders holding a majority of the Registrable Securities held by all of the Initiating Holders request the Company to withdraw such Demand Registration prior to the effectiveness of such Demand Registration for marketing reasons or because of a material adverse change in the business, financial condition or prospects of the Company; provided, however, that a Demand Registration that is requested to be withdrawn under clause (y) or clause (z) above shall constitute a Demand Registration if the Designated Holders shall not have paid to the Company the Reimbursable Expenses within sixty (60) days after receipt by the Holder Representative of a certificate of an executive officer of the Company specifying in reasonable detail such Reimbursable Expenses, together with reasonable documentation to support such Reimbursable Expenses.
-9-
4.5 Expenses. Subject to Section 4.4, the Company shall pay all Registration Expenses in connection with a Demand Registration, whether or not such Demand Registration becomes effective.
4.6 Underwriting Procedures. If the Initiating Holders holding a majority of the Registrable Securities held by all of the Initiating Holders so elect, the Company shall use its reasonable best efforts to cause such Demand Registration to be, subject to Section 4.7, in the form of a firm commitment underwritten offering and the managing underwriter or underwriters selected for such offering shall be the Approved Underwriter selected in accordance with Section 4.7. In connection with any Demand Registration under this Article IV involving an underwritten offering, none of the Registrable Securities held by any Designated Holder making a request for inclusion of such Registrable Securities pursuant to Section 4.3 hereof shall be included in such underwritten offering unless such Designated Holder accepts the terms of the offering as agreed upon by the Company (subject to Section 6.1(g)), the Initiating Holders and the Approved Underwriter, and then only in such quantity as will not, in the opinion of the Approved Underwriter, jeopardize the success of such offering by the Initiating Holders. If the Approved Underwriter advises the Company and the Holders of the Registrable Securities to be registered in writing that in its opinion the number of Registrable Securities proposed to be sold in any registration under this Article IV and any other securities of the Company requested or proposed to be included in such registration exceeds the number (the “Maximum Number of Shares (Demand Registration)”) that can be sold in such registration without (A) creating a substantial risk that the proceeds or price per share that will be derived from such registration will be materially reduced or that the number of Registrable Securities to be registered is too large a number to be reasonably sold, or (B) materially and adversely affecting such registration in any other respect, then the Company will include in such registration (x) first, such number of Registrable Securities of the Initiating Holders and any Designated Holder participating in the offering pursuant to this Article IV, which Registrable Securities shall be allocated among such Initiating Holders and Designated Holders as they may agree or, failing such agreement, pro rata among them based on the number of Registrable Securities requested to be included in such offering by each such Initiating Holder and Designated Holder regardless of the number of Registrable Securities actually held by such Initiating Holder and such Designated Holder, (y) second, to the extent that the Maximum Number of Shares (Demand Registration) has not been reached under the foregoing clause (x), the shares of Common Stock or other securities that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares (Demand Registration), and (z) third, to the extent that the Maximum Number of Shares (Demand Registration) has not been reached under the foregoing clauses (x) and (y), the shares of Common Stock, if any, as to which registration has been requested pursuant to written contractual piggy-back registration rights of security holders. Notwithstanding the foregoing, no employee of the Company or any subsidiary thereof will be entitled to participate in any such registration to the extent the Approved Underwriter determines in good faith that the participation of such employee in such registration would materially adversely affect the marketability or offering price of the Registrable Securities subject to such registration.
4.7 Selection of Underwriters. If any Demand Registration of Registrable Securities is in the form of an underwritten offering, the Initiating Holders holding a majority of the Registrable Securities held by all of the Initiating Holders shall select and obtain an Approved Underwriter; provided, however, that the Approved Underwriter shall, in any case, also be
-10-
approved by the Company, such approval not to be unreasonably withheld, delayed or conditioned.
ARTICLE V
INCIDENTAL OR “PIGGY-BACK” REGISTRATION
5.1 Request for Incidental Registration. At any time commencing after the date hereof, but prior to the day that is twenty-four (24) months after the Merger Effective Date, if the Company proposes to file a Registration Statement with respect to an offering by the Company for its own account (other than a Registration Statement on Form S-4 or S-8 or any successor thereto) or for the account of any stockholder of the Company other than any Designated Holders, then the Company shall give written notice of such proposed filing to each of the Designated Holders at least twenty (20) days before the anticipated filing date, and such notice shall describe the proposed registration and distribution and offer such Designated Holders the opportunity to register the number of Registrable Securities as each such Designated Holder may request (an “Incidental Registration”). The Company, subject to the remaining provisions of this Section 5.1, shall use its reasonable best efforts (within twenty (20) days of the notice by the Designated Holders provided for below in this sentence) to cause the managing underwriter or underwriters in the case of a proposed underwritten offering (the “Company Underwriter”) to permit each of the Designated Holders that have requested the Company in writing within ten (10) Business Days of the giving of the notice by the Company to participate in the Incidental Registration to include its, his or her Registrable Securities in such offering on the same terms and conditions as the securities of the Company or such other stockholder, as the case may be, included therein. In connection with any Incidental Registration under this Section 5.1 involving an underwritten offering, the Company shall not be required to include any Registrable Securities in such underwritten offering unless the Designated Holders thereof accept the terms of the underwritten offering as agreed upon between the Company, such other stockholders, if any, and the Company Underwriter. If the Company Underwriter advises the Company and the Designated Holders in writing that in its opinion the number of Registrable Securities proposed to be sold in any registration under this Article V and any other securities of the Company requested or proposed to be included in such registration exceeds the number (the “Maximum Number of Shares (Incidental Registration)”) that can be sold in such registration without (A) creating a substantial risk that the proceeds or price per share that will be derived from such registration will be materially reduced or that the number of Registrable Securities to be registered is too large a number to be reasonably sold, or (B) materially and adversely affecting such registration in any other respect, then the Company shall be required to include in such Incidental Registration: (i) if the Incidental Registration is an underwritten registration on behalf of the Company, (x) first, all of the securities to be offered for the account of the Company, that can be sold without exceeding the Maximum Number of Shares (Incidental Registration) and (y) second, to the extent that the Maximum Number of Shares (Incidental Registration) has not been reached under the foregoing clause (x), the shares of Common Stock and other securities of the Company, if any, including the Registrable Securities, as to which registration has been requested pursuant to written contractual piggy-back registration rights of security holders (pro rata in accordance with the number of shares of Common Stock or other securities (determined on an as-converted to Common Stock basis) which each requesting Person has actually requested to be included in such Incidental Registration, regardless of the number of shares of Common
-11-
Stock or other securities with respect to which such Person has the right to request such inclusion that can be sold without exceeding the Maximum Number of Shares (Incidental Registration), or (ii) if the Incidental Registration does not include an underwritten registration on behalf of the Company, but does include an underwritten registration demanded by any Person (other than a Designated Holder) that has the right to demand such registration pursuant to any contractual right granted by the Company, (I) first, the shares of Common Stock or other securities of the Company for the account of the demanding Person(s) that can be sold without exceeding the Maximum Number of Shares (Incidental Registration), (II) second, to the extent that the Maximum Number of Shares (Incidental Registration) has not been reached under the foregoing clause (I), the shares of Common Stock or other securities of the Company that the Company desires to sell that can be sold without exceeding the Maximum Number of Shares (Incidental Registration), and (III) third, to the extent that the Maximum Number of Shares (Incidental Registration) has not been reached under the foregoing clauses (I) and (II), the shares of Common Stock and other securities of the Company, if any, including the Registrable Securities, as to which registration has been requested pursuant to written contractual piggy-back registration rights of security holders (pro rata in accordance with the number of shares of Common Stock or other securities (determined on an as-converted to Common Stock basis) which each requesting Person has actually requested to be included in such Incidental Registration, regardless of the number of shares of Common Stock or other securities with respect to which such Person has the right to request such inclusion) that can be sold without exceeding the Maximum Number of Shares (Incidental Registration).
5.2 Right to Terminate Registration. The Company shall have the right to terminate or withdraw any registration initiated by it under Section 5.1 prior to the effectiveness of such registration whether or not any Designated Holder has elected to include Registrable Securities in such registration.
5.3 Expenses. The Company shall bear all Registration Expenses in connection with any Incidental Registration pursuant to this Article V, whether or not such Incidental Registration becomes effective.
ARTICLE VI
REGISTRATION PROCEDURES
6.1 Obligations of the Company. Whenever registration of Registrable Securities has been requested pursuant to Article III, Article IV or Article V of this Agreement, the Company shall use its reasonable best efforts to effect the registration and sale of such Registrable Securities in accordance with the intended method of distribution thereof as quickly as practicable, and in connection with any such request, the Company shall, as expeditiously as possible:
(a) prepare and file with the Commission a Registration Statement on any form for which the Company then qualifies or which counsel for the Company shall deem appropriate and which form shall be available for the sale of such Registrable Securities in accordance with the intended method of distribution thereof, and use all reasonable best efforts to cause such Registration Statement to become effective; provided, however, that (x) before
-12-
filing a Registration Statement or prospectus or any amendments or supplements thereto, the Company shall provide Holders’ Counsel with an adequate and appropriate opportunity to review and comment on such Registration Statement and each prospectus included therein (and each amendment or supplement thereto) to be filed with the Commission, subject to such documents being under the Company’s control, and (y) the Company shall notify the Holders’ Counsel and each seller of Registrable Securities of any stop order issued or threatened by the Commission and use all reasonable efforts to prevent the entry of such stop order or to remove it if entered; provided that, in the case of this Section 6.1(a) and Section 6.1(b) below, the Company will not file any Registration Statement or amendment or supplement thereto to which the Holders’ Counsel has reasonably objected in writing on the grounds that such proposed filing does not comply in all material respects with the requirements of the Securities Act.
(b) prepare and file with the Commission such amendments and supplements to such Registration Statement and the prospectus used in connection therewith as may be reasonably necessary to keep such Registration Statement effective for the period specified in such Article, or if not so specified, the lesser of (x) one hundred eighty (180) days and (y) such shorter period which will terminate when all Registrable Securities covered by such Registration Statement have been sold (but not before the Warrants covered thereby shall have been exercised or shall have expired) and shall comply with the provisions of the Securities Act with respect to the disposition of all securities covered by such Registration Statement during such period in accordance with the intended methods of disposition by the sellers thereof set forth in such Registration Statement;
(c) furnish to each seller of Registrable Securities, prior to filing a Registration Statement, at least one copy of such Registration Statement as is proposed to be filed, and thereafter such number of copies of such Registration Statement, each amendment and supplement thereto (in each case including all exhibits thereto), the prospectus included in such Registration Statement (including each preliminary prospectus) and any prospectus filed under Rule 424 under the Securities Act as each such seller may reasonably request in order to facilitate the disposition of the Registrable Securities owned by such seller;
(d) register or qualify such Registrable Securities under such other securities or “blue sky” laws of such jurisdictions as any seller of Registrable Securities may reasonably request, and continue such registration or qualification in effect in such jurisdiction for as long as permissible pursuant to the laws of such jurisdiction, or for as long as any such seller reasonably requests or until all of such Registrable Securities are sold (but not before the Warrants included in such Registrable Securities shall have been exercised or shall have expired), whichever is shortest, and do any and all other acts and things which may be reasonably necessary or advisable to enable any such seller to consummate the disposition in such jurisdictions of the Registrable Securities owned by such seller; provided, however, that the Company shall not be required to (x) qualify generally to do business in any jurisdiction where it would not otherwise be required to qualify but for this Section 6.1(d), (y) subject itself to taxation in any such jurisdiction or (z) consent to general service of process in any such jurisdiction;
(e) notify each seller of Registrable Securities (and, in the case of clauses (iii), (iv) and (v) below, the Approved Underwriter, if any, and the Holders’ Counsel): (i) when a prospectus, any prospectus supplement, a Registration Statement or a post-effective amendment
-13-
to a Registration Statement has been filed with the Commission, and, with respect to a Registration Statement or any post-effective amendment, when the same has become effective; (ii) of any request by the Commission or any other federal or state governmental authority for amendments or supplements to a Registration Statement or related prospectus or for additional information; (iii) of the issuance by the Commission or any other federal or state governmental authority of any stop order suspending the effectiveness of a Registration Statement or the initiation or threatening of any proceedings for that purpose; (iv) of the receipt by the Company of any notification with respect to the suspension of the qualification or exemption from qualification of any of the Registrable Securities for sale in any jurisdiction or the initiation or threatening of any proceedings for such purpose; (v) of the existence of any fact or happening of any event of which the Company has Knowledge which makes any statement of a material fact in such Registration Statement or related prospectus or any document incorporated or deemed to be incorporated therein by reference untrue or which would require the making of any changes in the Registration Statement or prospectus in order that, in the case of the Registration Statement, it 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 that in the case of such prospectus, it 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, in light of the circumstances under which they were made, not misleading; and (vi) determination by counsel of the Company that a post-effective amendment to a Registration Statement is advisable;
(f) upon the occurrence of any event contemplated by Section 6.1(e)(v), as promptly as practicable, prepare a supplement or amendment to such Registration Statement or related prospectus and furnish to each seller of Registrable Securities a reasonable number of copies of such supplement to or amendment of such Registration Statement or prospectus as may be necessary so that, as thereafter delivered to the purchasers of such Registrable Securities, in the case of the Registration Statement, it 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 that in the case of such prospectus, it 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, in light of the circumstances under which they were made, not misleading;
(g) enter into and perform customary agreements (including an underwriting agreement in customary form with the Approved Underwriter or Company Underwriter, if any, selected as provided in Articles III, IV or V, as the case may be) and take such other actions as are prudent and reasonably required in order to expedite or facilitate the disposition of such Registrable Securities, including causing its officers to participate in no more than a total of two (2) “road shows” related to underwritten offerings pursuant to Article III (but only if such an underwritten offering is commenced prior to the first anniversary of the Merger Effective Date) or Article IV and other information meetings organized by the Approved Underwriter or Company Underwriter, if applicable;
(h) make available at reasonable times for inspection by any seller of Registrable Securities, any managing underwriter participating in any disposition of such Registrable Securities pursuant to a Registration Statement, Holders’ Counsel and any attorney,
-14-
accountant or other agent retained by any such seller or any managing underwriter (each, an “Inspector” and collectively, the “Inspectors”), all financial and other records, pertinent corporate documents and properties of the Company and its subsidiaries (collectively, the “Records”) as shall be reasonably necessary to enable them to exercise their due diligence responsibility, and cause the Company’s and its subsidiaries’ officers, directors and employees, and the independent public accountants of the Company, to supply all information reasonably requested by any such Inspector in connection with such Registration Statement. Notwithstanding the foregoing, Records and other information that the Company determines, in good faith, to be confidential and which it notifies the Inspectors are confidential shall not be disclosed by the Inspectors or used for any purpose other than as necessary or appropriate for the purpose of such inspection (and the Inspectors shall confirm their agreement in writing in advance to the Company if the Company shall so request) unless (x) the disclosure of such Records is necessary, in the Company’s reasonable judgment, to avoid or correct a misstatement or omission in the Registration Statement, (y) the release of such Records is ordered pursuant to a subpoena or other order from a court of competent jurisdiction after exhaustion of all appeals therefrom or (z) the information in such Records was known to the Inspectors on a non-confidential basis prior to its disclosure by the Company or has been made generally available to the public. Each seller of Registrable Securities agrees that it shall, upon learning that disclosure of such Records is sought in a court of competent jurisdiction, give notice to the Company and allow the Company, at the Company’s expense, to undertake appropriate action to prevent disclosure of the Records deemed confidential;
(i) if such sale is pursuant to an underwritten offering, obtain “comfort” letters dated the effective date of the Registration Statement and the date of the closing under the underwriting agreement from the Company’s independent public accountants in customary form and covering such matters of the type customarily covered by “comfort” letters as Holders’ Counsel or the managing underwriter reasonably requests;
(j) furnish, at the request of any seller of Registrable Securities on the date such securities are delivered to the underwriters for sale pursuant to such registration or, if such securities are not being sold through underwriters, on the date the Registration Statement with respect to such securities becomes effective, an opinion and negative assurance letter, each dated such date, of counsel representing the Company for the purposes of such registration, addressed to the underwriters, if any, and to the seller making such request, covering such legal matters with respect to the registration in respect of which such opinion and letter is being given as the underwriters, if any, and such seller may reasonably request and are customarily included in such opinions and letters;
(k) comply with all applicable rules and regulations of the Commission, and make generally available to its security holders, as soon as reasonably practicable but no later than fifteen (15) months after the effective date of the Registration Statement, an earnings statement covering a period of twelve (12) months beginning after the effective date of the Registration Statement, in a manner which satisfies the provisions of Section 11(a) of the Securities Act and Rule 158 thereunder;
(l) cause all such Registrable Securities to be listed on the Nasdaq Stock Market and such other securities exchange or automated quotation system on which similar
-15-
securities issued by the Company are then listed or traded; provided, that the applicable listing requirements are satisfied;
(m) keep Holders’ Counsel advised in writing as to the initiation and progress of any registration under Article III, Article IV or Article V hereunder; provided, that the Company shall provide Holders’ Counsel with all correspondence with the Commission in connection with any Registration Statement filed hereunder to the extent that such Registration Statement has not been declared effective on or prior to the date required hereunder;
(n) provide reasonable cooperation to each seller of Registrable Securities and each underwriter participating in the disposition of such Registrable Securities and their respective counsel in connection with any filings required to be made with the NASD;
(o) furnish to each seller of Registrable Securities and the Approved Underwriter, if any, without charge, at least one manually-signed copy of the Registration Statement and any post-effective amendments thereto, including financial statements and schedules, all documents incorporated therein by reference and all exhibits (including those deemed to be incorporated by reference);
(p) cooperate with the sellers of Registrable Securities and the Approved Underwriter, if any, to facilitate the timely preparation and delivery of certificates not bearing any restrictive legends representing the Registrable Securities to be sold, and cause such Registrable Securities to be issued in such denominations and registered in such names in accordance with the underwriting agreement prior to any sale of Registrable Securities to the underwriters or, if not an underwritten offering, in accordance with the instructions of the seller of Registrable Securities at least three Business Days prior to any sale of Registrable Securities; and
(q) take all other steps reasonably necessary to effect the registration of the Registrable Securities contemplated hereby.
The Company agrees not to file or make any amendment to any Registration Statement with respect to any Registrable Securities, or any amendment of or supplement to the prospectus used in connection therewith, that refers to any Holder covered thereby by name, or otherwise identifies such Holder as the holder of any securities of the Company, without the consent of such Holder, such consent not to be unreasonably withheld, unless and to the extent such disclosure is required by law. If any Registration Statement or comparable statement under “blue sky” laws refers to any Holder by name or otherwise as the holder of any securities of the Company, then such Holder shall have the right to require the insertion therein of language, in form and substance satisfactory to such Holder and the Company, to the effect that the holding by such Holder of such securities is not to be construed as a recommendation by such Holder of the investment quality of the Company’s securities covered thereby and that such holding does not imply that such Holder will assist in meeting any future financial requirements of the Company.
The Company represents and agrees that, unless it obtains the prior consent of the Designated Holders of a majority of the Registrable Securities included by them in a Registration Statement,
-16-
it will not make any offer relating to Registrable Securities that would constitute a “free writing prospectus” as defined in Rule 433 under the Securities Act (an “Issuer Free Writing Prospectus”), or that would otherwise constitute a “free writing prospectus,” as defined in Rule 405 under the Securities Act, required to be filed with the Commission. The Company may require a comparable agreement from each Holder as a condition to permitting such Holder to include Registrable Securities in such Registration Statement. The Company represents that any Issuer Free Writing Prospectus will not include any information that conflicts with the information contained in the Registration Statement or prospectus and that any Issuer Free Writing Prospectus, when taken together with the information in the Registration Statement and the prospectus, will not include any untrue statement of a material fact or omit to state any material fact necessary in order to make the statements therein, in light of the circumstances under which they were made, not misleading.
6.2 Seller Information. The Company may require each seller of Registrable Securities as to which any registration is being effected to furnish, and such seller shall furnish, to the Company such information regarding the distribution of such securities as the Company may from time to time reasonably request in writing. The furnishing of such information shall be a condition to the inclusion of the seller’s shares in such registration.
6.3 Notice to Discontinue. Each Holder agrees that, upon receipt of any notice from the Company of the happening of any event of the kind described in Section 6.1(e)(v), such Holder shall forthwith discontinue disposition of Registrable Securities pursuant to the Registration Statement covering such Registrable Securities until such Holder’s receipt of the copies of the supplemented or amended prospectus contemplated by Section 6.1(f) and, if so directed by the Company, such Holder shall deliver to the Company (at the Company’s expense) all copies, other than permanent file copies then in such Holder’s possession, of the prospectus covering such Registrable Securities which is current at the time of receipt of such notice. If the Company shall give any such notice, the Company shall extend the period during which such Registration Statement shall be maintained effective pursuant to this Agreement (including, without limitation, the period referred to in Section 6.1(b)) by the number of days during the period from and including the date of the giving of such notice pursuant to Section 6.1(e)(v) to and including the date when sellers of such Registrable Securities under such Registration Statement shall have received the copies of the supplemented or amended prospectus contemplated by, and meeting the requirements of, Section 6.1(f).
6.4 Registration Expenses. Subject to Section 4.4, the Company shall pay all expenses arising from or incident to its performance of, or compliance with, this Agreement, including, without limitation, (i) Commission, Nasdaq Stock Market and other stock exchange and automated quotation system and NASD registration and filing fees, (ii) all fees and expenses incurred in complying with securities or “blue sky” laws (including reasonable fees, charges and disbursements of counsel to any underwriter incurred in connection with “blue sky” qualifications of the Registrable Securities as may be set forth in any underwriting agreement), (iii) all printing (including printing certificates and printing of prospectuses), messenger, delivery and telephone expenses, (iv) the fees, charges and expenses of counsel to the Company and of its independent public accountants and any other accounting fees, charges and expenses incurred by the Company (including, without limitation, any expenses arising from any “cold comfort” letters or any special audits incident to or required by any registration or qualification) and any
-17-
reasonable legal fees, charges and expenses of Holders’ Counsel, (v) all application and filing fees in connection with listing on a national securities exchange or automated quotation system pursuant to the requirements hereof, (vi) all internal expenses of the Company (including without limitation, all salaries and expenses of its officers and employees performing legal or accounting duties), the expenses of any annual audit and the fees and expenses of any person, including special experts, retained by the Company and (vii) the fees and disbursements of underwriters (excluding discounts and commissions). All of the expenses described in the preceding sentence of this Section 6.4 are referred to herein as “Registration Expenses.” The Holders of Registrable Securities sold pursuant to a Registration Statement shall bear the expense of any broker’s commission or underwriter’s discount or commission relating to registration and sale of such Holders’ Registrable Securities and, subject to clause (iv) above, shall bear the fees and expenses of their own counsel.
ARTICLE VII
INDEMNIFICATION; CONTRIBUTION
7.1 Indemnification by the Company. The Company agrees to indemnify and hold harmless each Holder, its general or limited partners, members, shareholders, managers, directors, officers, Affiliates and each Person who controls (within the meaning of Section 15 of the Securities Act) any of the foregoing from and against any and all losses, claims, damages, liabilities and expenses (including reasonable costs of investigation) (each, a “Liability” and collectively, “Liabilities”), (i) arising out of or based upon any untrue, or allegedly untrue, statement of a material fact contained in any Registration Statement, prospectus or preliminary, final or summary prospectus, Issuer Free Writing Prospectus, or notification or application (as amended or supplemented if the Company shall have furnished any amendments or supplements thereto) or a document incorporated by reference into any of the foregoing, (ii) arising out of or based upon any omission or alleged omission to state therein 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 were made, except insofar as such Liability arises out of or is based upon any untrue statement or alleged untrue statement or omission or alleged omission contained in such Registration Statement, preliminary prospectus, final prospectus, Issuer Free Writing Prospectus, notification or application or incorporated document in reliance and in conformity with information concerning such Holder furnished in writing to the Company by such Holder specifically for use therein; provided, however, that the foregoing indemnity with respect to any preliminary prospectus shall not inure to the benefit of any Indemnified Person from whom the Person asserting such losses, claims, damages, liabilities, expenses and judgments purchased securities if such untrue statement or omission or alleged untrue statement or omission made in such preliminary prospectus is eliminated or remedied in the prospectus and a copy of the prospectus shall not have been furnished to such Person in a timely manner due to the action or inaction of such Indemnified Person, whether as a result of negligence or otherwise, or (iii) any violation by the Company of any rule or regulation promulgated under the Securities Act or any state securities laws applicable to the Company and relating to action or inaction required of the Company in connection with any such registration, and the Company will pay and reimburse such Holder and each such other Indemnified Party (as defined below) for any legal or any other reasonable expenses actually and reasonably incurred by them in connection with investigating, defending or settling any such loss, claim, liability, action or proceeding. The Company shall
-18-
also provide customary indemnities to any underwriters of the Registrable Securities, their officers, directors and employees and each Person who controls such underwriters (within the meaning of Section 15 of the Securities Act) to the same extent as provided above with respect to the indemnification of the Holders.
7.2 Indemnification by Holders. In connection with any Registration Statement in which a Holder is participating pursuant to Article III, Article IV or Article V hereof, each such Holder shall promptly furnish to the Company in writing such information with respect to such Holder as the Company may reasonably request or as may be required by law for use in connection with any such Registration Statement or prospectus and all information required to be disclosed in order to make the information previously furnished to the Company by such Holder not materially misleading or necessary to cause such Registration Statement or prospectus not to omit a material fact with respect to such Holder necessary in order to make the statements therein not misleading. Each Holder agrees, severally and not jointly, to indemnify and hold harmless the Company, its directors, officers, Affiliates, any underwriter retained by the Company and each Person who controls the Company or such underwriter (within the meaning of Section 15 of the Securities Act) to the same extent as the foregoing indemnity from the Company to the Holders, but only if such untrue statement or alleged untrue statement or omission or alleged omission was made in reliance upon and in conformity with information with respect to such Holder furnished in writing to the Company by such Holder specifically for use in such Registration Statement or preliminary, final or summary prospectus or amendment or supplement, or a document incorporated by reference into any of the foregoing; provided, however, that the total amount to be indemnified by such Holder pursuant to this Section 7.2 shall be limited to the net proceeds (after deducting the underwriters’ discounts and commissions) received by such Holder from the sale of Registrable Securities in the offering to which the Registration Statement or prospectus relates.
7.3 Conduct of Indemnification Proceedings. Any Person entitled to indemnification hereunder (the “Indemnified Party”) agrees to give prompt written notice to the indemnifying party (the “Indemnifying Party”) after the receipt by the Indemnified Party of any written notice of the commencement of any action, suit, proceeding or investigation or threat thereof made in writing for which the Indemnified Party intends to claim indemnification or contribution pursuant to this Agreement; provided, however, that the failure to so notify the Indemnifying Party shall not relieve the Indemnifying Party of any Liability that it may have to the Indemnified Party hereunder (except to the extent that the Indemnifying Party is materially prejudiced or otherwise forfeits substantive rights or defenses by reason of such failure). If notice of commencement of any such action is given to the Indemnifying Party as above provided, the Indemnifying Party shall be entitled to participate in and, to the extent it may wish, jointly with any other Indemnifying Party similarly notified, to assume the defense of such action at its own expense, with counsel chosen by it and reasonably satisfactory to such Indemnified Party. The Indemnified Party shall have the right to employ separate counsel in any such action and participate in the defense thereof, but the fees and expenses of such counsel shall be paid by the Indemnified Party unless (i) the Indemnifying Party agrees to pay the same, (ii) the Indemnifying Party fails to assume the defense of such action with counsel reasonably satisfactory to the Indemnified Party or (iii) the named parties to any such action (including any impleaded parties) include both the Indemnifying Party and the Indemnified Party and the Indemnified Party has been advised by such counsel that either (x) representation of such
-19-
Indemnified Party and the Indemnifying Party by the same counsel would be inappropriate under applicable standards of professional conduct or (y) there may be one or more legal defenses available to the Indemnified Party which are different from or additional to those available to the Indemnifying Party. In any of such cases, the Indemnifying Party shall not have the right to assume the defense of such action on behalf of such Indemnified Party, it being understood, however, that the Indemnifying Party shall not be liable for the fees and expenses of more than one separate firm of attorneys (in addition to any local counsel) for all Indemnified Parties. No Indemnifying Party shall be liable for any settlement entered into without its written consent, which consent shall not be unreasonably withheld, delayed or conditioned. No Indemnifying Party shall, without the consent of such Indemnified Party, effect any settlement of any pending or threatened proceeding in respect of which such Indemnified Party is a party and indemnity has been sought hereunder by such Indemnified Party, unless such settlement includes an unconditional release of such Indemnified Party from all liability for claims that are the subject matter of such proceeding.
(a) If the indemnification provided for in this Article VII from the Indemnifying Party is unavailable to an Indemnified Party hereunder in respect of any Liabilities referred to herein, then the Indemnifying Party, in lieu of indemnifying such Indemnified Party, shall contribute to the amount paid or payable by such Indemnified Party as a result of such Liabilities in such proportion as is appropriate to reflect the relative fault of the Indemnifying Party and Indemnified Party in connection with the actions which resulted in such Liabilities, as well as any other relevant equitable considerations. The relative faults of such Indemnifying Party and Indemnified Party shall be determined by reference to, among other things, whether any action in question, including any untrue or alleged untrue statement of a material fact or omission or alleged omission to state a material fact, has been made by, or relates to information supplied by, such Indemnifying Party or Indemnified Party, and the parties’ relative intent, knowledge, access to information and opportunity to correct or prevent such action. The amount paid or payable by a party as a result of the Liabilities referred to above shall be deemed to include, subject to the limitations set forth in Sections 7.1 and 7.2, any legal or other fees, charges or expenses reasonably incurred by such party in connection with any investigation or proceeding; provided, that the total amount to be contributed by a Holder shall be limited to the net proceeds (after deducting the underwriters’ discounts and commissions and less the aggregate amount which such Holder has otherwise been required to pay in respect of such Liabilities) received by such Holder from the sale of Registrable Securities in the offering.(b) The parties hereto agree that it would not be just and equitable if contribution pursuant to this Section 7.4 were determined by pro rata allocation or by any other method of allocation which does not take account of the equitable considerations referred to in Section 7.4(a). No Person guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to contribution from any Person who was not guilty of such fraudulent misrepresentation.
-20-
ARTICLE VIII
COVENANTS
8.1 Rule 144. The Company shall use its best efforts to file the reports required to be filed by it under the Securities Act and the Exchange Act in a timely manner and, if at any time the Company is not required to file such reports, it will, upon the request of any Holder of Registrable Securities, make publicly available other information so long as necessary to permit sales of their securities pursuant to Rule 144 under the Securities Act, as such rule may be amended from time to time. The Company covenants that it will take such further action as any Holder of Registrable Securities may reasonably request (including providing any information necessary to comply with Rule 144 under the Securities Act), all to the extent required from time to time to enable such Holder to sell Registrable Securities without registration under the Securities Act within the limitation of the exemptions provided by Rule 144 under the Securities Act, as such rule may be amended from time to time, or any similar rules or regulations hereafter adopted by the Commission. The Company will provide a copy of this Agreement to prospective purchasers of Registrable Securities identified to the Company by the Holders upon request. Upon the request of any Holder of Registrable Securities, the Company shall deliver to such Holder a written statement as to whether it has complied with such requirements. Notwithstanding the foregoing, nothing in this Section 8.1 shall be deemed to require the Company to register any of its securities pursuant to the Exchange Act.
ARTICLE IX
MISCELLANEOUS
9.1 Recapitalizations, Exchanges, etc. The provisions of this Agreement shall apply to the full extent set forth herein with respect to (i) the Common Shares, (ii) the Warrants, (iii) the Warrant Shares, and (iv) any and all equity securities of the Company or any successor or assign of the Company (whether by merger, consolidation, sale of assets or otherwise) which may be issued in respect of, in conversion of, in exchange for or in substitution of, the Common Shares, the Warrants or the Warrant Shares. The Company shall cause any successor or assign (whether by merger, consolidation, sale of assets or otherwise) to enter into a new registration rights agreement with the Designated Holders on terms substantially the same as this Agreement as a condition of any such transaction.
9.2 No Inconsistent Agreements. Except as set forth on Schedule 9.2, the Company represents and warrants that it has not granted to any Person the right to request or require the Company to register any securities issued by the Company, other than the rights granted to the Holders herein.
9.3 Remedies. The Holders, in addition to being entitled to exercise all rights granted under this Agreement or by law, including recovery of damages, shall be entitled to specific performance of their rights under this Agreement. The Company agrees that monetary damages would not be adequate compensation for any loss incurred by reason of a breach by it of the provisions of this Agreement and hereby agrees to waive in any action for specific performance the defense that a remedy at law would be adequate.
-21-
9.4 Notices. All notices, requests and other communications hereunder must be in writing and will be deemed to have been duly given only if delivered personally or by facsimile transmission or mailed (first class postage prepaid) to the parties at the following addresses or facsimile numbers:
If to the Holder Representative:
FS Private Investments III LLC
c/o Jefferies Capital Partners
520 Madison Avenue
New York, NY 10022
Facsimile: (212) 284-1717
Attn: Stuart B. Katz
with a copy to:
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
Facsimile: (212) 806-5864
Attn: Melvin Epstein, Esq.
and to:
Vinson & Elkins L.L.P.
2500 First City Tower
1001 Fannin
Houston, TX 77002-6760
Facsimile: (713) 615-5871
Attn: Caroline B. Blitzer, Esq.
If to the Designated Holders:
as specified on the signature page hereto
with a copy to:
Stroock & Stroock & Lavan LLP
180 Maiden Lane
New York, NY 10038
Facsimile: (212) 806-5864
Attn: Melvin Epstein, Esq.
and to:
Vinson & Elkins L.L.P.
2500 First City Tower
-22-
1001 Fannin
Houston, TX 77002-6760
Facsimile: (713) 615-5871
Attn: Caroline B. Blitzer, Esq.
If to the Company, to:
RAM Energy Resources, Inc.
5100 E. Skelly Drive, Suite 650
Tulsa, Oklahoma 74195
Facsimile No.: (918) 663-9540
Attn: Larry E. Lee
with a copy to:
McAfee & Taft
10th Floor, Two Leadership Square
211 North Robinson
Oklahoma City, OK 73102-7103
Facsimile No.: (405) 235-0439
Attn: David J. Ketelsleger
All such notices, requests and other communications will (i) if delivered personally to the address as provided in this Section, be deemed given upon delivery, (ii) if delivered by facsimile transmission to the facsimile number as provided in this Section, be deemed given upon receipt, and (iii) if delivered by mail in the manner described above to the address as provided in this Section, be deemed given upon receipt (in each case regardless of whether such notice, request or other communication is received by any other person to whom a copy of such notice, request or other communication is to be delivered pursuant to this Section). Any party from time to time may change its address, facsimile number or other information for the purpose of notices to that party by giving notice specifying such change to the other parties hereto.
Anything to the contrary notwithstanding, any notice or other communication required to be given by the Company to any Designated Holder pursuant to Section 4.3 or Section 5.1 hereof may be given to the Holder Representative (in the manner set forth in this Section 9.4) in lieu of giving such notice or other communication to such Designated Holder, and delivery of any such notice or other communication to the Holder Representative shall be deemed to be effective delivery thereof to the applicable Designated Holder; provided, however, that for purposes of the ten (10) Business Day period referred to in Sections 4.3 and 5.1 hereof, such notice or other communication shall be deemed given based on the time and manner of delivery thereof provided by the Holder Representative to such Designated Holder, which shall be no later than fifteen (15) Business Days after the giving by the Company of the written notice referred to in Section 4.3 or Section 5.1 to the Holder Representative.
9.5 Successors and Assigns; Third Party Beneficiaries. This Agreement shall inure to the benefit of and be binding upon the successors and permitted assigns of the parties hereto as
-23-
hereinafter provided. Subject to the provisions of Section 9.16 hereof, the rights of the Designated Holders contained in this Agreement shall be automatically transferred to any transferee to whom a Designated Holder has transferred its Registrable Securities, provided, that such transferee agrees to become a party to this Agreement and be fully bound by, and subject to, all of the terms and conditions of this Agreement as though an original party hereto pursuant to a written agreement to such effect (an “Accession Agreement”). Each Accession Agreement executed by a transferee of Registrable Securities of a Designated Holder shall set forth the address and facsimile number for such transferee for purposes of delivery of all notices, requests and other communications to be delivered hereunder to such transferee. Each Accession Agreement shall be delivered by the transferee of Registrable Securities of a Designated Holder to the Holder Representative concurrently with the consummation of the transfer of such Registrable Securities. All of the obligations of the Company hereunder shall survive any such transfer. Each Holder shall be a third party beneficiary to the agreements made hereunder between the Company, on the one hand, and the Designated Holders, on the other hand, and shall have the right to enforce such agreements directly to the extent that it deems such enforcement necessary or advisable to protect its rights or the rights of the Holders hereunder. Except for the Holders or as provided in Article VII, no Person other than the parties hereto and their successors and permitted assigns are intended to be a beneficiary of this Agreement.
9.6 Amendments and Waivers. Except as otherwise provided herein, the provisions of this Agreement may not be amended, modified or supplemented, and waivers or consents to departures from the provisions hereof may not be given unless consented to in writing by (i) the Company and (ii) the Designated Holders holding a majority of the Registrable Securities held by all of the Designated Holders; provided, that if any such amendment, modification, supplement, waiver, consent or departure would adversely affect the rights, preferences or privileges of any Designated Holder disproportionately with respect to the rights, preferences and privileges of the other Designated Holders, such Designated Holder’s consent in writing shall be required.
9.7 Counterparts. This Agreement may be executed in any number of counterparts and by the parties hereto in separate counterparts, each of which when so executed shall be deemed to be an original and all of which taken together shall constitute one and the same agreement. The parties hereto confirm that any facsimile copy of another party’s executed counterpart of this Agreement (or its signature page thereof) will be deemed to be an executed original thereof.
9.8 Headings. The headings in this Agreement are for convenience of reference only and shall not limit or otherwise affect the meaning hereof.
9.9 Governing Law and Jurisdiction. This Agreement shall be governed by and construed in accordance with the laws of the State of Delaware applicable to a contract executed and performed in such State, without giving effect to the conflicts of laws principles thereof. By its execution and delivery of this Agreement, each of the parties hereto hereby irrevocably and unconditionally agrees for itself that any legal action, suit or proceeding against it with respect to any matter under or arising out of or in connection with this Agreement or for recognition or enforcement of any judgment rendered in any such action, suit or proceeding, may be brought in a United States District Court in Delaware.
-24-
9.10 Severability. If any one or more of the provisions contained herein, or the application thereof in any circumstance, is held invalid, illegal or unenforceable in any respect for any reason, the validity, legality and enforceability of any such provision in every other respect and of the remaining provisions hereof shall not be in any way impaired, unless the provisions held invalid, illegal or unenforceable shall substantially impair the benefits of the remaining provisions hereof.
9.11 Rules of Construction. Unless the context otherwise requires, references to sections or subsections refer to sections or subsections of this Agreement.
9.12 Entire Agreement. This Agreement is intended by the parties as a final expression of their agreement and intended to be a complete and exclusive statement of the agreement and understanding of the parties hereto with respect to the subject matter contained herein. There are no restrictions, promises, representations, warranties or undertakings with respect to the subject matter contained herein, other than those set forth or referred to herein. This Agreement supersedes all prior agreements and understandings among the parties with respect to such subject matter.
9.13 Further Assurances. Each of the parties shall execute such documents and perform such further acts (including, without limitation, obtaining any consents, exemptions, authorizations or other actions by, or giving any notices to, or making any filings with, any governmental authority or any other Person) as may be reasonably required or desirable to carry out or to perform the provisions of this Agreement.
9.14 Other Agreements. Nothing contained in this Agreement shall be deemed to be a waiver of, or release from, any obligations any party hereto may have under, or any restrictions on the transfer of Registrable Securities or other securities of the Company imposed by, any other agreement including, but not limited to, the Charter Documents and the Merger Agreement.
9.15 Termination. This Agreement and the obligations of the parties hereunder shall terminate upon the end of the Effectiveness Period (as it may be extended in accordance with this Agreement), except for liabilities or obligations under Section 6.4, Article VII or Section 9.16, all of which shall remain in effect in accordance with their terms.
| 9.16 | Holder Representative. |
(a) Each Designated Holder hereby irrevocably appoints FS Private Investments III LLC as its representative and agent (together with any successor appointed pursuant to the terms hereof, the “Holder Representative”) to receive all notices and other communications to be given by the Company to such Designated Holder pursuant to Section 4.3 or Section 5.1 hereof. In the event that the Holder Representative receives any notice or other communication referred to in the immediately preceding sentence, the Holder Representative shall give notice thereof to the applicable Designated Holder as soon as reasonably practicable after such receipt. Anything in this Section 9.16 or elsewhere in this Agreement to the contrary notwithstanding, the Holder Representative shall not have any duty or responsibility except those expressly set forth in the immediately two preceding sentences of this Section 9.16(a), nor shall the Holder Representative have or be deemed to have any fiduciary relationship with any
-25-
Designated Holder or the Company, and no implied covenants, functions, responsibilities, duties, obligations or liabilities shall be read into this Agreement or otherwise exist against the Holder Representative.
(b) In connection with the discharge of its duties as set forth in Section 9.16(a), the Holder Representative shall be entitled to rely on the notice information for any Designated Holder that is set forth on such Designated Holder’s signature page hereto or that is contained in an Accession Agreement delivered to the Holder Representative pursuant to Section 9.5 hereof (as applicable), or any other notice information for such Designated Holder provided to the Holder Representative in compliance with Section 9.4 hereof. The Holder Representative shall not be under any obligation to ascertain or inquire as to the accuracy of any such notice information or the power or authority of any Person providing the Holder Representative with any such notice information, and may rely conclusively upon and shall be fully protected in acting upon such information.
(c) Neither the Holder Representative nor any of its officers, directors, employees, agents or affiliates shall be liable to any Designated Holder or the Company for any loss, damage, liability or expense that any Designated Holder or the Company may suffer or incur in any way relating to or arising out of the duties or responsibilities of the Holder Representative hereunder, or the performance or non-performance thereof, except to the extent that any such loss, damage, liability or expense results from the applicable Person’s gross negligence, willful misconduct or bad faith, as determined by a non-appealable decision by a court of competent jurisdiction.
(d) Each of the Designated Holders agrees to indemnify and hold harmless the Holder Representative and its officers, directors, employees, agents and affiliates, pro rata (based on each such Designated Holder’s ownership percentage of the Registrable Securities as of the time indemnification is demanded), from and against any and all liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements of any kind whatsoever (including reasonable attorneys’ fees) which may at any time be imposed on, incurred by or asserted against the Holder Representative or any of its officers, directors, employees, agents or affiliates in any way relating to or arising out of the duties or responsibilities of the Holder Representative hereunder, or the performance or non-performance thereof, except to the extent that any thereof result from the applicable Person’s gross negligence, willful misconduct or bad faith, as determined by a non-appealable decision by a court of competent jurisdiction.
(e) The Holder Representative may be replaced at any time for any reason with a successor selected by the Designated Holders holding a majority of the Registrable Securities held by all of the Designated Holders as of such time. Any successor Holder Representative so selected shall become the Holder Representative hereunder by signing a counterpart signature page to this Agreement. In addition, the Holder Representative may resign from its position as Holder Representative at any time by giving notice of such resignation to the Company and the Designated Holders. Upon any such notice of resignation of the Holder Representative, the Designated Holders holding a majority of the Registrable Securities held by all of the Designated Holders shall appoint a successor Holder Representative. Any resignation of a Holder Representative shall take effect upon the acceptance by a successor Holder
-26-
Representative appointed as hereinabove provided. After a Holder Representative has been replaced or resigned, the provisions of this Section 9.16 shall continue to inure to its benefit as to any matters relating to the time it was the Holder Representative under this Agreement.
[Remainder of page intentionally left blank]
-27-
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Registration Rights Agreement on the date first written above.
HOLDER REPRESENTATIVE: |
|
|
FS Private Investments III LLC |
|
|
By: | |
| Name: Stuart B. Katz |
| Title: Managing Director |
|
|
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Registration Rights Agreement on the date first written above.
DESIGNATED HOLDERS: |
|
|
JEFFERIES & COMPANY, INC. |
|
|
By: | |
| Name: |
| Title: |
|
|
Address for Notice: |
|
Jefferies & Company, Inc.
The Metro Center
One Station Place, Three North
Stamford, CT 06902
Facsimile: (203) 708-5820
Attn: Robert J. Welch |
|
|
JEFFERIES HIGH YIELD TRADING, L.L.C. |
|
|
By: | |
| Name: |
| Title: |
|
|
Address for Notice: |
|
Jefferies High Yield Trading, L.L.C.
The Metro Center
One Station Place, Three North
Stamford, CT 06902
Facsimile: (203) 708-5820
Attn: Robert J. Welch |
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Registration Rights Agreement on the date first written above.
DESIGNATED HOLDERS: |
|
|
Chris Kanoff |
|
Address for Notice: |
|
Chris Kanoff
c/o Jefferies & Company, Inc.
The Metro Center
One Station Place, Three North
Stamford, CT 06902
Facsimile: (310) 575-5209 |
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Registration Rights Agreement on the date first written above.
DESIGNATED HOLDERS: |
|
|
SHARED OPPORTUNITY FUND IIB, L.L.C. |
|
By: TCW Asset Management Company, |
as its Investment Advisor |
|
|
By: | |
| Name: |
| Title: |
|
|
Address for Notice: |
|
Shared Opportunity Fund IIB, L.L.C.
c/o Trust Company of the West
11100 Santa Monica Blvd.
Suite 2000
Los Angeles, CA 90025
Facsimile: (310) 235-5965
Attn: Andrew Park |
|
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Registration Rights Agreement on the date first written above.
DESIGNATED HOLDERS: |
|
|
TCW SHARED OPPORTUNITY FUND III, L.P. |
|
By: TCW Asset Management Company, |
as its Investment Advisor |
|
|
By: | |
| Name: |
| Title: |
|
|
Address for Notice: |
|
TCW Shared Opportunity Fund III, L.P.
c/o Trust Company of the West
11100 Santa Monica Blvd.
Suite 2000
Los Angeles, CA 90025
Facsimile: (310) 235-5965
Attn: Andrew Park |
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Registration Rights Agreement on the date first written above.
DESIGNATED HOLDERS: |
|
|
ING FURMAN SELZ INVESTORS III L.P. |
|
By: FS Private Investments III LLC, Manager |
|
|
By: | |
| Name: |
| Title: |
|
|
Address for Notice: |
|
ING Furman Selz Investors III L.P.
c/o FS Private Investments III LLC
520 Madison Avenue - 12th Floor
New York, NY 10022
Facsimile: (212) 284-1717
Attn: James Luikart |
|
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Registration Rights Agreement on the date first written above.
DESIGNATED HOLDERS: |
|
|
ING BARINGS U.S. LEVERAGED EQUITY PLAN LLC |
|
By: FS Private Investments III LLC, Manager |
|
|
By: | |
| Name: |
| Title: |
|
|
Address for Notice: |
|
ING Barings U.S. Leveraged Equity Plan LLC
c/o FS Private Investments III LLC
520 Madison Avenue - 12th Floor
New York, NY 10022
Facsimile: (212) 284-1717
Attn: James Luikart |
|
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Registration Rights Agreement on the date first written above.
DESIGNATED HOLDERS: |
|
|
ING BARINGS GLOBAL LEVERAGED EQUITY PLAN LTD. |
|
By: FS Private Investments III LLC, Manager |
|
|
By: | |
| Name: |
| Title: |
|
|
Address for Notice: |
|
ING Barings Global Leveraged Equity Plan Ltd.
c/o FS Private Investments III LLC
520 Madison Avenue - 12th Floor
New York, NY 10022
Facsimile: (212) 284-1717
Attn: James Luikart |
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Registration Rights Agreement on the date first written above.
DESIGNATED HOLDERS: |
|
|
W CAPITAL PARTNERS WEST LLC |
|
|
|
By: | |
| Name: |
| Title: |
|
|
Address for Notice: |
|
W Capital Partners West LLC
One East 52nd Street
New York, New York 10022
Facsimile: (212) 561-5241
Attn: Stephen Wertheimer |
IN WITNESS WHEREOF, the undersigned have executed, or have caused to be executed, this Registration Rights Agreement on the date first written above.
RAM ENERGY RESOURCES, INC. |
|
|
By: | |
| Name: |
| Title: |
|
|
SCHEDULE 9.2
1. | Registration Rights Agreement dated as of May 8, 2006 providing registration rights to certain of the former stockholders of RAM Energy, Inc. |
2. | Registration Rights Agreement dated April 27, 2004, as amended as of May 8, 2006, providing registration rights to certain of the former stockholders of Tremisis Energy Acquisition Corporation (now RAM Energy Resources, Inc.). |
3. | Unit Purchase Options dated February 7, 2007, by and between RAM Energy Resources, Inc. and the Holders of options to purchase 275,000 Units (consisting of one share of RAM common stock and two warrants), executed in substitution for Unit Purchase Options dated May 12, 2004, between Tremisis Energy Acquisition Corporation and the same Holders. |
EXHIBIT G
[Form of Lock-Up Letter]
RAM Energy Resources, Inc.,
5100 E. Skelly Drive, Suite 650
Tulsa, OK 74135
Ladies and Gentlemen:
The undersigned understands that RAM Energy Resources, Inc. (“RAM”) has entered into an Agreement and Plan of Merger dated October __, 2007 (the “Merger Agreement”) providing for the merger of RAM’s wholly owned subsidiary Ascent Acquisition Corp. with and into Ascent Energy Inc. (the “Company”) with the Company surviving as a wholly owned subsidiary of RAM (the “Merger”). The undersigned will receive shares of the common stock of RAM, par value $0.0001 (the “Common Stock”), as part of the consideration delivered pursuant to the terms and conditions set forth in the Merger Agreement and the Note Payoff and Recapitalization Agreement. Capitalized terms used herein but not otherwise defined herein shall have the meanings ascribed to such terms in the Merger Agreement.
In consideration of, and as a condition to, the closing of the Merger Agreement and the consummation of the Merger by RAM, and for other good and valuable consideration, the undersigned hereby irrevocably agrees that, without the prior written consent of RAM, the undersigned will not, during the period commencing at the Effective Time and ending 180 days thereafter (the “Lock-Up Period”), directly or indirectly sell, offer or contract to sell or offer, grant any option or warrant for the sale of, assign, transfer or otherwise dispose of (or enter into any transaction or device that is designed to, or could be expected to, result in the disposition by any person at any time in the future of), more than 50% of the total shares of Common Stock issued to the undersigned at the Closing pursuant to the Merger Agreement and the Note Payoff and Recapitalization Agreement (the “Restricted Securities”); provided, however, that nothing contained herein shall prohibit (i) the exercise of warrants for the purchase of Common Stock (including the Warrants) or other acquisitions of Common Stock, and (ii) the disposition of Restricted Securities (A) by way of bona fide gifts, (B) to the direct and indirect partners, members or stockholders of the undersigned in a manner that does not constitute a “distribution” within the meaning of the Securities Act, or (C) to immediate family members of the undersigned or a trust, partnership or limited liability company for the benefit of the undersigned and/or such family members; provided, however, that in each such case in this clause (ii) it shall be a condition to such disposition that the transferee or transferees execute an agreement stating that it or they are receiving and holding such Restricted Securities subject to the provisions of this Lock-Up Letter Agreement. Notwithstanding anything to the contrary herein, the foregoing restrictions on disposition shall not apply to the Warrants or to any shares of Common Stock held or acquired by the undersigned, including shares of Common Stock issuable upon exercise of the Warrants, other than the Restricted Securities. The certificates evidencing the Restricted Securities shall bear an appropriate legend indicating that the transfer of the Restricted Securities is restricted pursuant to the terms of this Lock-Up Letter Agreement. The restrictions and obligations contained in this Lock-Up Letter Agreement shall remain applicable to any Restricted Securities that are transferred pursuant to RAM’s written consent.
In furtherance of the foregoing, RAM and its transfer agent are hereby authorized to decline to make any transfer of Restricted Securities if such transfer would constitute a violation or breach of this Lock-Up Letter Agreement.
ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS LOCK-UP LETTER AGREEMENT SHALL BE BROUGHT IN ANY DELAWARE STATE COURT HAVING JURISDICTION OR IN THE UNITED STATES DISTRICT COURT FOR THE DISTRICT OF DELAWARE. EACH OF RAM (BY ACCEPTING THIS LOCK-UP LETTER AGREEMENT) AND THE UNDERSIGNED (BY EXECUTION AND DELIVERY OF THIS LOCK-UP LETTER AGREEMENT) IRREVOCABLY ACCEPTS AND SUBMITS ITSELF TO THE EXCLUSIVE JURISDICTION OF SUCH COURTS AND IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION THAT IT MAY NOW OR HEREAFTER HAVE TO THE JURISDICTION OR LAYING OF VENUE OF ANY SUCH LITIGATION BROUGHT IN THE COURTS REFERENCED ABOVE AND ANY CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
The undersigned understands that RAM will proceed with the Merger in reliance on this Lock-Up Letter Agreement. This Lock-Up Letter Agreement will terminate upon any valid termination of the Merger Agreement prior to the Effective Time.
The undersigned hereby represents and warrants that the undersigned has full power and authority to enter into this Lock-Up Letter Agreement and that, upon request, the undersigned will execute any additional documents reasonably necessary in connection with the enforcement hereof. Any obligations of the undersigned shall be binding upon the heirs, personal representatives, successors and assigns of the undersigned.
This Lock-Up Letter Agreement shall be governed by and construed in accordance with laws of the State of Delaware without regard to the law that might otherwise govern under applicable principles of conflicts of law.
__________________________________ |
2
EXHIBIT H
[M&T Letterhead and M&T Form]
[Closing Date]
1. Parent is validly existing and in good standing under the laws of the State of Delaware.
2. Each Parent Subsidiary that is a corporation is validly existing and in good standing under the laws of its state of incorporation. Each Parent Subsidiary that is a limited liability company is validly existing and in good standing under the laws of its state of organization.
3. Parent (i) has the corporate power to enter into and perform its obligations under the Merger Agreement, the Escrow Agreement and the Registration Rights Agreement, and (ii) has taken all necessary corporate action to authorize the execution, delivery and performance of the Merger Agreement, the Escrow Agreement and the Registration Rights Agreement. The Merger Agreement, the Escrow Agreement and the Registration Rights Agreement have been duly executed and delivered by Parent.
4. Merger Sub (i) has the corporate power to enter into and perform its obligations under the Merger Agreement, and (ii) has taken all necessary corporate action to authorize the execution, delivery and performance of the Merger Agreement. The Merger Agreement has been duly executed and delivered by Merger Sub.
5. Upon the filing with the Delaware Secretary of State of the Certificate of Merger, the Merger will be effective in accordance with the terms of the Merger Agreement.
[In rendering such opinion, counsel may (i) state that its opinion is limited to matters governed by the laws of the State of Oklahoma, the Delaware General Corporation Law and the Texas Business Organizations Code and that such counsel is not admitted in the States of Delaware or Texas, (ii) assume that all documents submitted to them as originals are authentic, that all copies submitted to them conform to the originals thereof, and that the signatures on all documents examined by them are genuine, (iii) state that opinions regarding existence and good standing are based upon certificates provided by the Secretaries of State of the States of Oklahoma, Delaware and Texas, and (iv) make such other qualifications, conditions and assumptions as such counsel believes appropriate or necessary to render such opinions.]
EXHIBIT I
[V&E Letterhead and V&E Form]
[Closing Date]
1. | Ascent is validly existing and in good standing under the laws of the State of Delaware. |
2. The Company Subsidiaries whose jurisdictions of incorporation or formation are Delaware or Texas are validly existing and in good standing under the laws of their respective states of incorporation or formation.
3. Ascent has the corporate power to enter into and perform its obligations under the Merger Agreement and the Recap Agreement.
4. Ascent has taken all necessary corporate action under the DGCL and its Charter Documents to authorize the execution, delivery and performance of the Merger Agreement and the Recap Agreement.
5. The Merger Agreement and the Recap Agreement have been duly executed and delivered by Ascent.
6. All necessary corporate action on the part of Ascent has been taken under the DGCL and its Charter Documents to authorize the execution, delivery and performance of the SLPH Merger Agreement by Ascent.
7. | The SLPH Merger Agreement has been duly executed and delivered by Ascent. |
In rendering such opinion, such counsel may (i) state that its opinion is limited to matters governed by the DGCL, the Delaware Limited Liability Company Act, the Delaware Revised Uniform Limited Partnership Act and the Texas Business Organizations Code and that such counsel is not admitted in the State of Delaware, (ii) rely in respect of matters of fact upon certificates of officers and employees of the Company and the Company Subsidiaries and upon information obtained from public officials, (iii) assume that all documents submitted to them as originals are authentic, that all copies submitted to them conform to the originals thereof, and that the signatures on all documents examined by them are genuine, (iv) state that certain opinions are based upon certificates provided by the Secretary of the States of Delaware and Texas and (v) take or make such other qualifications, conditions and assumptions as such counsel believes appropriate or necessary to render such opinions.
EXHIBIT J
[Jones Walker Letterhead and Jones Walker Form]
[Closing Date]
1. | The SLPH Reverse Stock Split has occurred and is effective. |
2. All necessary corporate action on the part of SLPH and SLPH Acquisition Corp. has been taken under the Louisiana Business Corporation Law (“LBCL”) and their respective Charter Documents to authorize the execution, delivery and performance of the SLPH Merger Agreement.
3. The SLPH Merger Agreement has been duly executed and delivered by SLPH and SLPH Acquisition Corp.
4 Upon the filing with the Louisiana Secretary of State of the SLPH Certificate of Merger, the SLPH Merger will be effective in accordance with the terms of the SLPH Merger Agreement.
In rendering such opinion, such counsel may (i) state that its opinion is limited to matters governed by the Louisiana Business Corporation Law, (ii) rely in respect of matters of fact upon certificates of officers and employees of the Company and the Company Subsidiaries and upon information obtained from public officials, (iii) assume that all documents submitted to them as originals are authentic, that all copies submitted to them conform to the originals thereof, and that the signatures on all documents examined by them are genuine, (iv) state that certain opinions are based upon certificates provided by the Secretary of the States of Louisiana and (v) take or make such other qualifications, conditions and assumptions as such counsel believes appropriate or necessary to render such opinions.
