1
EXHIBIT 99.2
December 1, 1999
Carrizo Oil & Gas, Inc.
14811 St. Mary's Lane, Suite 148
Houston, Texas 77079
Attention: Chip Johnson
Carrizo Oil & Gas, Inc.
$30,000,000 Investment
Gentlemen:
You have advised Chase Capital Partners (together with one or
more of its affiliated investment funds, "CCP") that Carrizo Oil & Gas, Inc.
(the "Company") intends to purchase (the "Redemption") from Enron Corp. and its
affiliates (collectively, "Enron"), pursuant to a definitive purchase agreement
with Enron (the "Enron Purchase Agreement") with respect to the Redemption with
terms and conditions satisfactory to CCP, all of the Company's outstanding 9%
Series A Preferred Stock, par value $0.01 per share (liquidation amount of
approximately $34,000,000) and warrants to purchase 750,000 shares of the
Company's common stock (collectively, the "Enron Equity"), which to your
knowledge represents all of the securities of the Company held by Enron other
than warrants to purchase 250,000 shares of the Company's common stock which
will be retained by Enron (and the terms of which will be amended), for an
aggregate redemption price of up to $12,000,000 in cash. In connection
therewith, the Company intends to issue (a) $22,000,000 aggregate principal
amount of its senior subordinated notes (the "Notes"), together with warrants to
purchase common stock (the "Common Stock") of the Company (the "Warrants") and
(b) aggregate consideration of $8,000,000 in Common Stock.
CCP is pleased to advise you of its commitment to purchase up
to $22,000,000 aggregate principal amount of the Notes, the Warrants and up to
$8,000,000 of the Common Stock (collectively, the "Investment"), upon the terms
and subject to the conditions set forth or referred to in this letter
("Commitment Letter") and in the Term Sheet (the "Term Sheet") annexed hereto;
provided, however that the foregoing amounts will be reduced to the extent of
the investment by the non-management directors as described herein and in the
Term Sheet.
You agree promptly to prepare and provide to CCP all
information reasonably requested by CCP with respect to the Company, the
Redemption and the other transactions contemplated hereby, including all
financial information and projections (the "Projections"). You hereby represent
and covenant that (a) all information other than the Projections (the
"Information") that has been or will be made available to CCP by or on behalf of
you or any of
2
your authorized representatives, when taken as a whole, is or will be, when
furnished, complete and correct in all material respects and does not or will
not, when furnished, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements contained
therein not materially misleading in light of the circumstances under which such
statements are made and (b) the Projections that have been or will be made
available to CCP by or on behalf of you or any of your authorized
representatives have been or will be prepared in good faith based upon
assumptions that are reasonable at the time made and at the time the related
Projections are made available to CCP. You agree that if at any time from and
including the date hereof until the closing of the Investment, any of the
representations in the preceding sentence would be incorrect, then you will
promptly supplement the Information and the Projections so that such
representations will be correct. You agree that CCP will be entitled to use and
rely primarily on the Information and the Projections without responsibility for
independent verification thereof.
As consideration for CCP's commitment hereunder, you agree to
pay to CCP, conditioned upon the closing, a fee (the "Closing Fee") in an amount
equal to one and one-half percent (1 1/2%) of the aggregate amount of CCP's
portion of the total Investment. The Closing Fee shall be payable on the Closing
Date, shall be paid in immediately available funds and, once paid, shall not be
refundable under any circumstances. The Closing Fee shall be in addition to
reimbursement of the reasonable out-of-pocket fees and expenses of CCP.
CCP's commitment hereunder is subject to (a) CCP's not having
discovered or otherwise becoming aware of information not previously disclosed
to CCP that CCP believes to be materially inconsistent with its understanding,
based on information provided to CCP prior to the date hereof, of the business,
operations, properties, assets, liabilities, prospects or financial condition of
Company, (b) there not having occurred any event, condition or circumstance that
has had or is reasonably likely to have a material adverse effect on the
business, operations, properties, assets, liabilities, prospects or financial
condition of Company, (c) there not having occurred and being continuing a
material disruption of or material adverse change in financial, banking or
capital market conditions, (d) the negotiation, execution and delivery of
definitive documentation with respect to the Investment reasonably satisfactory
to CCP and its counsel, (e) the closing of the Redemption on the terms set forth
in the Enron Purchase Agreement and or other terms satisfactory to CCP
simultaneously with the closing of the Investment, (f) the negotiation,
execution and delivery of an amendment to your credit facility with Compass Bank
or a new credit facility with Shell Capital on terms reasonably satisfactory to
CCP, (g) evidence reasonably satisfactory to CCP that the transactions
contemplated by the Investment do not require shareholder approval under NASDAQ
rules and are not in violation of NASDAQ's voting rights policy and (h) the
other conditions set forth or referred to herein and in the Term Sheet. In
addition to the foregoing, certain non-management directors of the Company will
be required to purchase at least 10% of the total amount of the Investment as a
condition to closing. The terms and conditions of CCP's commitment hereunder and
of the Investment are not limited to the terms and conditions set forth herein
or in the Term Sheet. Those matters that are not covered by or made clear under
the provisions hereof or of the Term Sheet are subject to the reasonable
approval and reasonable agreement of CCP and you.
By executing this Commitment Letter, you agree (a) to
indemnify and hold harmless CCP, its affiliates and their respective officers,
partners, directors, managers,
2
3
employees, affiliates, agents and controlling persons from and against any and
all losses, claims, damages, liabilities and expenses, joint or several, to
which any such persons may become subject arising out of or in connection with
this Commitment Letter, the Term Sheet, the Redemption, the Investment or any
related transaction or any claim, litigation, investigation or proceeding
relating to any of the foregoing, regardless of whether any of such indemnified
parties is a party thereto, and to reimburse each of such indemnified parties
upon demand for any reasonable legal or other expenses incurred in connection
with investigating or defending any of the foregoing, provided that the
foregoing indemnity will not, as to any indemnified party, apply to losses,
claims, damages, liabilities or related expenses to the extent they are found in
a final judgment of a court to have resulted from the willful misconduct or
gross negligence of such indemnified party, and (b) to reimburse CCP and its
affiliates on demand for all reasonable out-of-pocket expenses (including but
not limited to expenses of CCP's due diligence investigation, consultants' fees,
syndication expenses, travel expenses and reasonable fees, disbursements and
other charges of counsel), in each case incurred in connection with the
Commitment Letter, the Term Sheet, the Redemption, the Investment and any
related documentation (whether or not the transactions contemplated hereby are
consummated) and the administration, enforcement, amendment, modification or
waiver thereof; provided, that CCP shall notify you when out-of pocket expenses
(other than fees, disbursements and other charges of counsel) exceeds $20,000.
Notwithstanding any other provision of this Commitment Letter, no indemnified
person shall be liable for any indirect or consequential damages in connection
with its activities related to the Investment.
In consideration of the substantial expenditure of time,
effort and expense to be undertaken by CCP immediately upon the execution and
delivery of this Commitment Letter, you hereby undertake and agree that in the
absence of CCP's prior written consent, for the period from the date hereof
until December 15, 1999 (the "Termination Date"), you will not, nor will you
permit any of your affiliates (or authorize or permit any of their respective
representatives) to take, directly or indirectly, any action to initiate,
assist, solicit, receive, negotiate, encourage or accept any offer or inquiry
from any person to (a) provide any debt or equity financing other than
financings under your credit agreement, arrangements relating to certain oil and
gas financings and other financings of the type not described herein (a
"Financing") or purchase all or substantially all of the assets or capital stock
of the Company (whether through a purchase of stock, merger, asset sale or
related transaction) (a "Sale of the Company"), (b) reach any agreement or
understanding (whether or not such agreement or understanding is absolute,
revocable, contingent or conditional) for, or otherwise attempt to consummate,
any Financing or Sale of the Company or (c) furnish or cause to be furnished any
information with respect to the Company or any of its affiliates to any person
(other than as contemplated by this Commitment Letter) who you, or any of your
representatives, know or have reason to believe is in the process of considering
any Financing or Sale of the Company, except in each case, solely with respect
to a Sale of the Company, to the extent that the foregoing restrictions are
inconsistent with the exercise of the fiduciary duties of your officers or
directors. The obligations under this paragraph shall terminate and be of no
further force and effect in the event that this Commitment Letter is terminated
by CCP in accordance with its terms.
This Commitment Letter is delivered to you on the
understanding that neither the existence of this Commitment Letter or the Term
Sheet nor any of their terms or substance shall be disclosed, directly or
indirectly, except (a) as may be compelled to be disclosed in a judicial
3
4
or administrative proceeding or as otherwise required by law, (b) on a
confidential and "need-to-know" basis, to your officers, directors, employees,
agents and advisors who are directly involved in the consideration of this
matter, (c) on a confidential basis to Nasdaq and its agents and (d) on a
confidential basis to Enron and its advisors and agents in connection with the
Redemption.
You acknowledge that CCP and its affiliates may be providing
debt financing, equity capital or other services (including financial advisory
services) to other companies in respect of which you may have conflicting
interests regarding the transactions described herein and otherwise. CCP will
not use confidential information obtained from you by virtue of the transactions
contemplated by this Commitment Letter or its other relationships with you in
connection with the performance by CCP or any of its affiliates of services for
other companies, and CCP will not furnish any such information to other
companies. You also acknowledge that CCP and its affiliates have no obligation
to use in connection with the transactions contemplated by this Commitment
Letter, or to furnish to you, confidential information obtained by CCP or any of
its affiliates from other companies.
This Commitment Letter and CCP's commitment hereunder shall
not be assignable by you without the prior written consent of CCP, and any
attempted assignment without such consent shall be void. This Commitment Letter
and CCP's commitment hereunder may be assigned in whole or in part by CCP to its
affiliates or other financial institutions acceptable to CCP and reasonably
acceptable to you. This Commitment Letter may not be amended or any provision
hereof waived or modified except by an instrument in writing signed by CCP and
you. This Commitment Letter may be executed in any number of counterparts, each
of which shall be an original and all of which, when taken together, shall
constitute one agreement. Delivery of an executed counterpart of a signature
page of this Commitment Letter by facsimile transmission shall be effective as
delivery of a manually executed counterpart of this Commitment Letter. This
Commitment Letter is intended to be solely for the benefit of the parties hereto
and is not intended to confer any benefits upon, or create any rights in favor
of, any person other than the parties hereto. This Commitment Letter shall be
governed by, and construed in accordance with, the laws of the State of New
York.
Please indicate your acceptance of the terms hereof and of the
Term Sheet by signing in the appropriate space below and returning to CCP the
enclosed duplicate originals (or facsimiles) of this Commitment Letter not later
than 5:00 p.m., New York City time, on December 3, 1999. CCP's commitment
hereunder will expire at such time in the event that CCP has not received such
executed duplicate originals (or facsimiles) in accordance with the immediately
preceding sentence. In the event that the closing in respect of the Investment
does not occur on or before the Termination Date, then this Commitment Letter
and CCP's commitment hereunder shall automatically terminate unless CCP shall,
in its discretion, agree to an extension. The compensation, reimbursement,
indemnification and confidentiality provisions contained herein shall remain in
full force and effect regardless of whether definitive documentation for the
Investment shall be executed and delivered and notwithstanding the termination
of this Commitment Letter or CCP's commitment hereunder.
4
5
CCP is pleased to have been given the opportunity to assist
you in connection with this transaction and we look forward to working with you
to complete this transaction.
Very truly yours,
CHASE CAPITAL PARTNERS
By: /s/ CHRIS BEHRENS
--------------------------------
Name: Chris Behrens
Title: General Partner
Accepted and agreed to as of
the date first above written:
CARRIZO OIL & GAS, INC.
By: /s/ S.P. JOHNSON IV
--------------------------------------
Name: S.P. Johnson IV
Title: President/CEO
5
6
CARRIZO OIL & GAS, INC.
$22,000,000 SENIOR SUBORDINATED NOTES WITH WARRANTS AND
$8,000,000 COMMON STOCK INVESTMENT
TERM SHEET
SENIOR SUBORDINATED NOTES
-------------------------
ISSUER: Carrizo Oil & Gas, Inc. (the "Issuer").
HOLDERS: Affiliates of Chase Capital Partners
(collectively, "CCP"), certain
non-management directors of the Issuer (as
described under "Conditions Precedent"
below) and, at the option of CCP, other
investors acceptable to CCP and reasonably
acceptable to the Issuer.
ISSUE: Senior Subordinated Notes (the "Notes") with
warrants to purchase 15.4% of the Issuer's
fully-diluted common stock.
PRINCIPAL AMOUNT: $22,000,000.
ISSUE PRICE: Par.
CLOSING DATE: To be no later than December 15, 1999.
CLOSING FEE: Payable in accordance with the Commitment
Letter to which this Term Sheet is attached.
SECURITY: The Notes will be unsecured.
RANKING: The Notes will be subordinated obligations
of the Issuer ranking junior in right of
payment to all Senior Indebtedness (to be
defined) of the Issuer and senior in right
of payment to all existing and future
subordinated indebtedness of the Issuer.
USE OF PROCEEDS: The proceeds of the Notes shall be used to
retire all of the Issuer's 9% Series A
Preferred Stock, par value $0.01
(liquidation amount of approximately
$34,000,000) and warrants to purchase
750,000 shares of the Issuer's common stock
held by affiliates of Enron Corp.
collectively, "Enron"), which to the
Issuer's knowledge represents all of the
securities of the Issuer held by Enron other
than warrants to purchase up to 250,000
shares of the Issuer's common stock which
Enron will retain (and the terms of which
will be amended), at an aggregate redemption
price equal to $12,000,000 in cash, to fund
the Issuer's ongoing drilling program, to
fund working capital and for general
corporate purposes.
7
COUPON: The Notes will bear interest at a fixed rate
of 9% per annum, payable quarterly in
arrears, calculated on the basis of a
360-day year. Until the fifth anniversary of
the Closing Date, interest on the Notes may,
at the option of the Issuer, be paid in
cash, or may accrue and be added to the
principal amount of the Notes, in each case,
pro rata among the Notes, provided, however,
that at least 40% of each such interest
payment shall be paid in cash. On and after
the fifth anniversary of the Closing Date,
all interest on the Notes shall be payable
in cash. During the existence of any event
of default under the definitive Note
documentation, the interest rate will be
2.0% p.a. above the stated coupon rate.
MATURITY DATE: The eighth anniversary of the Closing Date.
REDEMPTION PROVISIONS: MANDATORY:
The Notes shall be amortized in one annual
installment on the Maturity Date.
Upon the occurrence of a change of control
(to be defined, but to include a substantial
asset sale, merger and liquidation as well
as other customary change of control
events), each holder of the Notes may
require the Issuer to redeem the Notes at
the applicable Optional Redemption Price.
OPTIONAL:
The Notes may be prepaid in whole or in
part, at any time upon 30 days' notice, at
the following premium (expressed as a
percentage of the principal amount prepaid),
plus accrued and unpaid interest (the
"Optional Redemption Price"):
Year 1 109%
Year 2 107%
Year 3 105%
Year 4 104%
Year 5 103%
Year 6 102%
Year 7 101%
Thereafter 100%
Any offer to redeem or repurchase any Notes
shall be made to all holders of the Notes on
the same terms and conditions and any
redemption or repurchase shall be made on a
pro rata basis among the holders of the
Notes.
2
8
DOCUMENTATION: The issuance of the Notes and the related
warrants will be subject to the negotiation,
execution and delivery of definitive
documentation reasonably acceptable to all
parties, including warrant agreement,
shareholders' agreement and registration
rights agreement, and shall contain
representations, warranties, covenants and
events of default customary for a
transaction of this type and other terms
deemed appropriate by CCP (including but not
limited to those specified herein).
CONDITIONS PRECEDENT: Customary for a financing of this type,
including but not limited to (i) reasonably
satisfactory documentation, (ii) due
authorization, (iii) absence of default,
(iv) truth and accuracy of representations
and warranties, (v) requisite
authorizations, approvals and consents; (vi)
satisfactory legal opinions and (vii)
satisfactory evidence that the issuance of
the Notes, Warrants and Common Stock does
not require shareholder approval under
NASDAQ rules and is not in violation of
NASDAQ's voting rights policy. In addition
to the foregoing, certain non-management
directors of the Issuer will be required to
purchase, on a pro rata basis, at least 10%
of the total amount of the Notes, Warrants
and Common Stock as a condition to closing.
REPRESENTATIONS AND
WARRANTIES: Customary for a financing of this type.
AFFIRMATIVE COVENANTS: Customary for a financing of this type.
FINANCIAL COVENANTS: Customary for a financing of this type.
INFORMATION RIGHTS: Customary for a financing of this type,
subject to third-party confidentiality
provisions and attorney-client privilege
exceptions. The holders of the Notes will
agree to maintain the confidentiality of all
non-public information received from the
Issuer, subject to customary exceptions.
NEGATIVE COVENANTS: Customary for a financing of this type and
to be consistent with the Senior Facilities.
The definitive Note documentation will
contain certain restrictions on
modifications to the Senior Facilities
without the prior written consent of the
holders of the Notes.
EVENTS OF DEFAULT: Customary for a financing of this type,
which will include: nonpayment of principal;
nonpayment of interest, fees or other
amounts after a grace period to be agreed
upon; material inaccuracy of representations
and warranties; violation of covenants
(subject to grace periods to be agreed
upon); cross-acceleration; bankruptcy
events; and material judgments.
3
9
Upon the occurrence of an event of default,
the holders of a majority of the aggregate
principal amount of the Notes then
outstanding may, at their option, by written
notice to the Issuer, declare all the Notes
due and payable. The Notes shall become
automatically accelerated in the case of any
bankruptcy event of default of the Issuer.
EXPENSES AND INDEMNIFICATION: The Issuer shall pay (a) all reasonable
out-of-pocket expenses of CCP and its
affiliates associated with the provision of
the Notes and the preparation, negotiation,
execution and delivery of the definitive
Note documentation, whether or not the
transaction closes, and any amendment or
waiver with respect thereto (including the
reasonable fees, disbursements and other
charges of counsel) and (b) all reasonable
out-of-pocket expenses of the holders of the
Notes (including fees, disbursements and
other charges of counsel) in connection with
the enforcement of the Notes.
TRANSFER RESTRICTIONS: The Notes shall be freely transferable,
subject only to compliance with applicable
securities law; provided, however that no
Notes shall be transferred to a competitor
of the Issuer.
GOVERNING LAW: State of New York.
4
10
WARRANTS
--------
ISSUER: Carrizo Oil & Gas, Inc. (the "Issuer").
WARRANTS: Warrants to purchase 15.4% of the
fully-diluted common stock of the Issuer
(the "Warrant Stock").
EXERCISE PERIOD: Exercisable at any time prior to the eighth
anniversary of the Closing Date.
PURCHASE PRICE: The Warrants will be issued in conjunction
with the Notes for no additional
consideration and will be detachable.
EXERCISE PRICE: $2.20 per share.
PAYMENT OF EXERCISE PRICE: Cash or surrender of Warrants equal to the
Exercise Price.
METHOD OF EXERCISE: Full or partial.
LIQUIDITY OPPORTUNITY: From and after the fifth anniversary of the
Closing Date and for so long as CCP owns at
least 15% of the Issuer's fully-diluted
common equity and CCP has not been given a
liquidity opportunity (to be defined, but to
include (i) a sale of the Issuer which
includes the sale of CCP's equity or (ii)
the Issuer reaching a specified minimum
public float), then CCP shall have the right
to appoint two additional members to the
Issuer's Board of Directors and the Issuer
will increase the size of its Board of
Directors to provide for such additional
Board members.
TAG-ALONG RIGHTS: Each holder of Warrants or Warrant Stock
that is a Significant Holder shall have the
right to participate in any sale of common
stock by any principal shareholders to any
third party (other than (i) sales to other
principal shareholders with a value of less
than $3 million, (ii) sales in the public
market or (iii) sales pursuant to the
exercise of registration rights), such
participation to be pro rata with such
shareholders. A "Significant Holder" is a
holder of Warrants, Warrant Stock or Common
Stock representing not less than 10% of the
Issuer's fully-diluted common equity.
5
11
PREEMPTIVE RIGHTS: Each holder of Warrants or Warrant Stock
that is a Significant Holder will be
entitled to participate pro rata (assuming
exercise of all Warrants) as purchasers in
private equity offerings by the Issuer
(including appreciation rights and other
securities or rights having equity
features).
ANTI-DILUTION PROVISIONS: Customary weighted-average anti-dilution
provisions. The Issuer will not be permitted
to enter into any transaction that would
result in an adjustment under the
antidilution provisions that would cause
Warrants to become exercisable for at least
2,075,000 shares at a price less than $1.73
unless the Issuer has previously obtained
shareholder approval for the issuance of the
Warrants. The Issuer will submit the
issuance of the Warrants as a matter to be
approved by the shareholders at the Issuer's
next shareholders meeting and the principal
shareholders and CCP will agree in the
shareholders agreement to vote to approve
such issuance.
INFORMATION RIGHTS: The holders of the Warrants or Warrant Stock
will be entitled to receive the same
information as holders of the Notes. The
holders of the Warrants and Warrant Stock
will agree to maintain the confidentiality
of all non-public information received from
the Issuer, subject to customary exceptions.
REGISTRATION RIGHTS: The holders of Warrants, Warrant Stock
and/or Common Stock will have the following
registration rights:
(i) Three demand registrations at any time,
and
(ii) Unlimited piggyback rights.
The Issuer will pay the expenses of the
holders of Warrant Stock in all demand and
piggyback registrations (including the fees
and expenses of one counsel for such
holders, but excluding underwriting
discounts and selling commissions).
The Issuer will not grant other registration
rights inconsistent with the rights of the
holders of Warrants, Warrant Stock and
Common Stock.
6
12
If any other holder or group of holders of
the Issuer's equity exercises a demand
registration right and the holders of
Warrants, Warrant Stock and/or Common Stock,
promptly after receiving notice of such
exercise, exercise one of their demand
registration rights, then all such holders
shall be entitled to include shares in such
registration on a pro rata basis with
priority over any holder entitled to
piggyback registration rights with respect
to such demand registration. Any existing
registration rights granted by the Issuer
shall be amended to give effect to the
foregoing arrangement.
The Issuer, its principal shareholders
(including the holders of the Warrant Stock
and the Common Stock) and the holders of
Warrants will agree to customary holdback
restrictions with respect to any offering
which includes common stock issued upon
exercise of the Warrants.
DOCUMENTATION: The terms with respect to the Warrants will
be set forth in definitive documentation
reasonably acceptable to all parties and
containing other terms and provisions
customary for a transaction of this type,
including a shareholders agreement among the
holders of the Warrants and the Common
Stock, the Issuer and the principal
shareholders.
TRANSFERABILITY: The Warrants shall be freely transferable in
whole or in part to accredited investors,
subject only to compliance with applicable
securities laws; provided, however that no
Warrants shall be transferred to a
competitor of the Issuer.
7
13
COMMON STOCK
------------
ISSUER: Carrizo Oil & Gas, Inc. (the "Issuer").
TYPE OF SECURITY: Common Stock, par value $0.01 per share (the
"Common Stock").
NUMBER OF SHARES: 3,636,364 shares.
PURCHASE PRICE: $2.20 per share.
CLOSING FEE: Payable in accordance with the Commitment
Letter to which this Term Sheet is attached.
LIQUIDITY OPPORTUNITY: From and after the fifth anniversary of the
Closing Date and for so long as CCP owns at
least 15% of the Issuer's fully-diluted
common equity and CCP has not been given a
liquidity opportunity (to be defined, but to
include (i) a sale of the Issuer which
includes the sale of CCP's equity or (ii)
the Issuer reaching a specified minimum
public float), then CCP shall have the right
to appoint two additional members to the
Issuer's Board of Directors and the Issuer
will increase the size of its Board of
Directors to provide for such additional
Board members.
TAG-ALONG RIGHTS: Each holder of Common Stock that is a
Significant Holder shall have the right to
participate in any sale of common stock by
any principal shareholders to any third
party (other than (i) sales to other
principal shareholders with a value of less
than $3 million, (ii) sales in the public
market or (iii) sales pursuant to the
exercise of registration rights), such
participation to be pro rata with such
shareholders.
PREEMPTIVE RIGHTS: Each holder of Common Stock that is a
Significant Holder will be entitled to
participate pro rata as purchasers in
private equity offerings by the Issuer
(including appreciation rights and other
securities or rights having equity
features).
8
14
BOARD REPRESENTATION: For so long as CCP owns at least 15% of the
Issuer's fully-diluted equity, CCP will have
the right to appoint 2 members to the
Issuer's Board of Directors. For so long as
CCP owns at least 7 1/2% but less than 15%
of the Issuer's fully-diluted equity, CCP
will have the right to appoint 1 member to
the Issuer's Board of Directors. The Issuer
will increase the size of its Board of
Directors from 5 to 7 to provide for the
Board members to be appointed by CCP.
INFORMATION RIGHTS: The holders of the Common Stock will be
entitled to receive the same information as
holders of the Notes. The holders of the
Common Stock will agree to maintain the
confidentiality of all non-public
information received from the Issuer,
subject to customary exceptions.
9
15
REGISTRATION RIGHTS: The holders of the Common Stock, Warrants
and/or Warrant Stock will have the following
registration rights:
(i) Three demand registrations at any time,
and
(ii) Unlimited piggyback rights.
The Issuer will pay the expenses of the
holders of Common Stock in all demand and
piggyback registrations (including the fees
and expenses of one counsel for such
holders, but excluding underwriting
discounts and selling commissions).
The Issuer will not grant other registration
rights inconsistent with the rights of the
holders of Common Stock, Warrants and
Warrant Stock.
If any other holder or group of holders of
the Issuer's equity exercises a demand
registration right and the holders of
Warrants, Warrant Stock and/or Common Stock,
promptly after receiving notice of such
exercise, exercise one of their demand
registration rights, then all such holders
shall be entitled to include shares in such
registration on a pro rata basis with
priority over any holder entitled to
piggyback registration rights with respect
to such demand registration. Any existing
registration rights granted by the Issuer
shall be amended to give effect to the
foregoing arrangement.
The Issuer, its principal shareholders
(including the holders of the Warrant Stock
and the Common Stock) and the holders of
Warrants will agree to customary holdback
restrictions with respect to any offering
which includes any Common Stock.
DOCUMENTATION: The terms with respect to the purchase of
the Common Stock will be set forth in
definitive documentation reasonably
acceptable to all parties and containing
other terms and provisions customary for a
transaction of this type, including a
shareholders agreement among the holders of
the Common Stock and the Warrants, the
Issuer and the principal shareholders.
TRANSFERABILITY: The Common Stock shall be freely
transferable in whole or in part, subject
only to compliance with applicable
securities laws; provided, however that no
Common Stock shall be transferred to a
competitor of the Issuer.
10