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Exhibit 2.4
VOTING AND STANDSTILL AGREEMENT
VOTING AND STANDSTILL AGREEMENT ("Agreement") dated May 12, 1998,
between Lomak Petroleum, Inc., a Delaware corporation ("Lomak"), and First
Reserve Fund VII, Limited Partnership, a Delaware limited partnership ("FRLP").
W I T N E S S E T H:
WHEREAS, FRLP beneficially owns, and has the right to vote, 7,820,718
shares (the "Shares") of common stock, par value $.01 per share ("Domain Common
Stock"), of Domain Energy Corporation, a Delaware corporation ("Domain"), which
represent at least a majority of the shares of Domain Common Stock outstanding
on the date hereof;
WHEREAS, Lomak is prepared to enter into an Agreement and Plan of
Merger with Domain (as amended from time to time, the "Merger Agreement")
providing for the merger of a wholly owned subsidiary of Lomak into Domain and
the conversion in such merger of each share of Domain Common Stock into the
number of shares of common stock, par value $.01 per share, of Lomak (the "Lomak
Common Stock") as set forth in the Merger Agreement (the "Merger");
WHEREAS, pursuant to the Merger, FRLP would receive a substantial block
of Lomak Common Stock;
WHEREAS, FRLP fully supports the Merger and, in order to encourage
Lomak to enter into the Merger Agreement with Domain, FRLP is willing to enter
into certain arrangements with respect to (i) the Shares (ii) the shares of
Lomak Common Stock to be beneficially owned by the FRLP Group as a result of the
Merger and (iii) any shares of Lomak Common Stock beneficially owned by any
member of the FRLP Group from time to time other than (x) the number of shares
of Lomak Common Stock representing the excess on the date hereof of 19.9% of the
outstanding shares of Lomak Common Stock over the number of shares of Lomak
Common Stock to be beneficially owned by the FRLP Group in the aggregate as a
result of the Merger and (y) any shares of Lomak Common Stock that may be
acquired by any member of the FRLP Group as a result of any acquisition
transaction, business combination or similar transaction other than the
transactions contemplated by the Merger Agreement after the consummation of the
Merger (the shares described in clauses (x) and (y) shall be collectively
referred to herein as the "Exempt Lomak Shares" and any shares of Lomak Common
Stock described in clauses (ii) and (iii) other than the Exempt Lomak Shares
shall be referred to herein as the Lomak Shares);
NOW THEREFORE, in consideration of the premises set forth above, the
mutual promises set forth below, and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereto
agree as follows:
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1. Term. Except as otherwise expressly provided herein, the respective
covenants and agreements of Lomak and FRLP contained in this Agreement will
continue in full force and effect until the second anniversary of the
consummation of the Merger (the "Termination Date"). This Agreement may be
terminated by the mutual written agreement of the parties.
2. FRLP's Support of the Merger. From the date hereof until April 30,
1999 or, if earlier, termination of this Agreement:
(a) FRLP will not, directly or indirectly, sell, transfer,
pledge or otherwise dispose of, or grant a proxy with respect to, any Shares to
any person other than Lomak or its designee, or grant an option with respect to
any of the foregoing, or enter into any other agreement or arrangement with
respect to any of the foregoing; provided, however, that if the Closing Date
Market Price (as defined in the Merger Agreement and calculated as if the date
of consummation of the Merger were the date of a proposed sale by FRLP) is
greater than $17.00 per share, then FRLP may sell pursuant to transactions
exempt under Rule 144 ("Rule 144") under the Securities Act of 1933, as amended
(the "Securities Act") a number of Shares in the aggregate not greater than 1%
of the number of outstanding shares of Domain Common Stock; provided further
that in no event shall FRLP execute any sale that would result in FRLP's
beneficially owning with power to vote less than an amount of Shares that, when
added to the shares sold under the Stock Purchase Agreement, will aggregate a
majority of the fully diluted shares of Domain Common Stock (assuming for such
purposes the full exercise and conversion of all outstanding options, warrants
and other rights to purchase shares of Domain Common Stock, regardless of
whether such options, warrants or rights are then exercisable or
"in-the-money").
(b) Neither FRLP nor any other member of the FRLP Group will,
and will cause their respective officers, directors, partners, employees or
other agents not to, directly or indirectly, (i) take any action to solicit,
initiate or encourage any offer or proposal for, or any indication of interest
in, a merger or other business combination directly or indirectly involving
Domain or any subsidiary of Domain or the acquisition of a substantial equity
interest in, or a substantial portion of the assets of, any third party, other
than the transactions contemplated by the Merger Agreement or this Agreement (a
"Domain Acquisition Proposal"), or (ii) engage in negotiations with, or disclose
any nonpublic information relating to Domain or its subsidiaries, respectively,
or afford access to Domain's or its subsidiaries' respective properties, books
or records to, any person that may be considering making, or has made, a Domain
Acquisition Proposal. FRLP shall promptly notify Lomak of all relevant terms of
any such inquiries or proposals received by FRLP or any other member of the FRLP
Group or by any such officer, director, partner, employee or other agent
relating to any of such matters and if such inquiry or proposal is in writing,
FRLP shall deliver or cause to be delivered to Lomak a copy of such inquiry or
proposal. For purposes of this Agreement, the term "FRLP Group" shall
collectively refer to FRLP, its general partner, First Reserve Corporation
("FRC"), managing directors and other senior officers of FRC and any affiliates
or associates of any of the foregoing controlled by any of the foregoing;
provided, however, that a person shall not be deemed a member of the FRLP Group
if the only reason that such person would be deemed an affiliate or associate of
FRLP is because it is a limited partner of FRLP.
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(c) FRLP agrees that FRLP will vote all Shares beneficially
owned by FRLP (i) in favor of the Merger and the Merger Agreement and (ii)
subject to the provisions of paragraph (d) below, against any combination
proposal or other matter that may interfere or be inconsistent with the Merger
(including without limitation a Domain Acquisition Proposal). Without limiting
the generality of the foregoing provisions of this paragraph (c), FRLP agrees to
execute and deliver a stockholder consent pursuant to Section 228 of the
Delaware General Corporation Law immediately following the execution of the
Merger Agreement in favor of the Merger and Merger Agreement in form reasonably
satisfactory to Domain, Lomak and their respective counsels.
(d) FRLP agrees that, if requested by Lomak, it will not, and
it will cause each member of the FRLP Group not to, attend or vote any Shares
beneficially owned by any such person at any annual or special meeting of
stockholders at which a Domain Acquisition Proposal is being considered, or
execute any written consent of stockholders relating directly or indirectly to a
Domain Acquisition Proposal, during such period.
(e) FRLP shall take all affirmative steps reasonably requested
by Lomak to indicate its full support for the Merger, and hereby consents to
Lomak's announcement in any press release, public filing, advertisement or other
document, that FRLP fully supports the Merger.
(f) Lomak and FRLP agree that they shall use all reasonable
efforts to seek the successful completion of the Merger in an expeditious manner
including the preparation and filing of any necessary reports under the
Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended.
(g) To the extent inconsistent with the provisions of this
Section 2, each member of the FRLP Group hereby revokes any and all proxies with
respect to such member's Shares or any other voting securities of Domain.
3. FRLP's Ownership of Lomak Voting Securities. Following the
consummation of the Merger and prior to the termination of this Agreement and
subject to the further provisions hereof, no member of the FRLP Group will,
directly or indirectly, acting alone or in concert with others, without the
prior written consent of Lomak's Board of Directors:
(a) sell, transfer, pledge, distribute or otherwise dispose
of, or grant a proxy with respect to, any Lomak Shares to any person other than
Lomak or its designee, or grant any option with respect to any of the foregoing,
or enter into any other agreement or arrangement with respect to any of the
foregoing, except as follows (and the parties acknowledge that, solely for the
purposes of this paragraph (a), "FRLP Group" will exclude managing directors and
officers of FRC and any of their family members and family trusts created by any
of such persons or family members, but will not exclude any other affiliates of
such persons controlled by such persons):
(i) after the consummation of the Merger, bona fide
sales of Lomak Shares may be (x) made pursuant to a bona fide public
offering otherwise satisfying the
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requirements of Section 4 of this Agreement registered under the
Securities Act or (y) sold pursuant to Rule 144; provided that no sales
of Lomak Shares shall be made under clause (y) to any person or related
group of persons who would immediately thereafter, to the knowledge of
any member of the FRLP Group, beneficially own or have the right to
acquire Lomak Voting Securities representing more than 1% of the total
combined voting power of all Lomak Voting Securities then outstanding;
provided further that in connection with any such proposed sales the
FRLP Group shall use all reasonable efforts to advise Lomak of such
proposed sales at least two business days prior to such sales; and
(ii) after the consummation of the Merger, FRLP may
distribute all or a portion of the Lomak Shares to its partners in a
pro rata distribution to the extent required by the current terms of
the limited partnership agreement for FRLP, a copy of which has been
provided to Lomak on or prior to the date hereof;
(b) in any manner acquire, or attempt, seek or propose to
acquire (or make any request for permission with respect thereto), beneficial
ownership of any Lomak Voting Securities (other than any Exempt Lomak Shares) or
any option with respect to the foregoing, or enter into any other agreement or
arrangement with respect to the foregoing; provided, however, that the foregoing
provisions of this paragraph (b) shall not restrict or prohibit any purchase or
acquisition by any member of the FRLP Group of any Exempt Lomak Shares (as same
may be adjusted or reconstituted by any stock splits, stock dividends. stock
combinations, recapitalizations or similar corporate changes);
(c) initiate, submit or otherwise solicit any stockholders of
Lomak with respect to any proposal, including, without limitation, to seek the
election or removal of one or more members of the Lomak Board of Directors, for
the vote of stockholders of Lomak;
(d) become a member of or in any way participate in a "group"
(other than the FRLP Group) within the meaning of Section 13(d)(3) of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), with respect
to any Lomak Voting Securities;
(e) initiate or engage in, or induce or attempt to induce, or
give encouragement to any other person to initiate or engage in, any acquisition
or business combination proposal relating to Lomak, or any tender or exchange
offer for Lomak Voting Securities, or any proxy contest or other proxy
solicitation or change of control of Lomak (provided that the foregoing shall
not restrict the FRLP Group's ability to sell Lomak Shares pursuant to the terms
of this Agreement) or to communicate with, seek to advise, encourage or
influence any person or entity, in any manner, with respect to the voting of any
Lomak Voting Securities, or to become a "participant" in any "election contest"
(as such terms are defined or used in Rule 14a-11 under the Exchange Act) with
respect to Lomak;
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(f) fail to be present in person or be represented by proxy at
any stockholder meeting of Lomak so that all Lomak Shares of which it is the
beneficial owner may be counted for the purpose of determining the presence of a
quorum at any such meeting;
(g) as a stockholder, vote or cause to be voted all Lomak
Shares of which any member of the FRLP Group is the beneficial owner with
respect to each matter submitted to Lomak's stockholders providing for,
involving, expected to facilitate or that could reasonably be expected to result
in a business combination or other change in control of Lomak that has not been
approved by the Lomak Board of Directors (including without limitation the
election or removal of one or more Lomak directors or one or more nominees for
director proposed by the Lomak Board of Directors), in the manner recommended by
the Lomak Board of Directors;
(h) deposit any Lomak Shares in a voting trust, execute any
written consent with respect to any such securities or subject any Lomak Shares
to any arrangement or agreement with respect to the voting of such Lomak Shares
(other than this Agreement); or
(i) disclose any intention, plan or arrangement, or make any
public announcement (or request permission to many any such announcement)
inconsistent with the foregoing.
4. Registration Rights.
(a) RIGHT TO REQUEST REGISTRATION. At any time following the
six-month anniversary of the consummation of the Merger and prior to the fourth
anniversary of the consummation of the Merger, upon the written request of any
member of the FRLP Group, Lomak will use all reasonable efforts promptly to file
(but in any event within 90 days of such request) with the Securities and
Exchange Commission ("Commission") a registration statement under the Securities
Act, on such appropriate form as Lomak shall select, covering the Lomak Shares
then proposed to be sold by such member of the FRLP Group and will use all
reasonable efforts to cause such registration statement to become effective as
soon as practicable following such request; provided, however, that Lomak will
not be required to file any such registration statement during any period of
time (not to exceed 60 days) when Lomak (i) is contemplating a public offering
of the securities of Lomak or any subsidiary thereof and, in the judgment of the
managing underwriter thereof (or Lomak, if such offering is not underwritten),
such filing would have a material adverse effect on the contemplated offering,
(ii) is in possession of material information that it deems advisable not to
then disclose in a registration statement, or (iii) is engaged in any program
for the repurchase of Lomak Voting Securities which program cannot be suspended
without material adverse financial effects to Lomak or without breaching any
contractual obligations to which Lomak is subject; provided, however, that such
suspension of the obligation to file such registration statement resulting from
the occurrence of an event in clause (i), (ii) or (iii) or a series of similar
or related events may not last in excess of 60 days without the consent of FRLP,
which consent shall not be unreasonably withheld. In addition, Lomak shall not
be required (i) to effect any registration pursuant to this Section 4(a) unless
Lomak Shares representing at least 33% of the initial number of Lomak Shares
(subject to adjustment for any stock splits, stock dividends. stock
combinations,
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recapitalizations or similar corporate changes) are to be sold by the FRLP Group
or if the sale of such Lomak Shares would violate Section 3(a)(ii) hereof, or
(ii) to consummate at the request of FRLP and/or any member of the FRLP Group
more than one registered offering under this Section 4(a). Notwithstanding the
foregoing, Lomak shall not be obligated to effect more than one registration
pursuant to this Section 4(a), but such obligation shall not be deemed to have
been satisfied until the sale of the registered shares is consummated.
(b) INCLUSION IN OTHER REGISTRATIONS. If Lomak shall at any
time after the six-month anniversary of the consummation of the Merger and prior
to the fourth anniversary of the consummation of the Merger propose the
registration under the Securities Act of an offering of Lomak Voting Securities
by Lomak solely for cash (regardless of whether for its own account, for the
account of other security holders, or both), Lomak shall give notice as promptly
as practicable of such proposed registration to FRLP, and Lomak will use all
reasonable efforts to cause the offering of such Lomak Shares beneficially owned
by the FRLP Group as FRLP shall request within 15 days after the receipt of such
notice to be included, upon the same terms (including the method of
distribution) in any such offering; provided, however, that (i) Lomak shall not
be required to give notice or include such Lomak Shares in any such registration
if the proposed registration is (A) a registration of a stock option or
compensation plan or of securities issued or issuable pursuant to any such plan
or (B) a registration of securities proposed to be issued in connection with a
merger or consolidation or other business combination with another corporation
or other person; (ii) Lomak shall not be required to include such number of
Lomak Shares in any such registration as to which Lomak and FRLP are advised in
writing by Lomak's investment banking firm that the inclusion of such Lomak
Shares would in the opinion of such firm materially and adversely affect the
successful marketing of the Lomak Voting Securities originally proposed to be
offered and sold in such offering (provided, however, that the number of shares
of Lomak Voting Securities to be sold by persons other than Lomak, including
members of the FRLP Group, shall be reduced proportionately, based upon the
number of shares proposed to be sold by such persons); and (iii) Lomak may,
without the consent of FRLP, withdraw such registration statement and abandon
the proposed offering in which FRLP has requested to participate, in which case
Lomak shall have no obligations under this Section 4(b) with respect to the
securities requested to be registered by FRLP.
(c) TERMS AND CONDITIONS. The registration rights of FRLP
pursuant to this Section 4 are subject to the following terms and conditions:
(i) The appropriate members of the FRLP Group shall
provide Lomak with such information with respect to the Lomak Shares to
be sold, the plans for the proposed disposition thereof and such other
information regarding such Lomak Shares and their proposed disposition
as shall, in the opinion of counsel for Lomak, be necessary to enable
Lomak to include in such registration statement all material facts
required to be disclosed with respect to the FRLP Group and the Lomak
Shares to be sold.
(ii) Lomak shall not be required to furnish any
audited financial statements at the request of FRLP other than those
statements customarily prepared at the end
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of its fiscal year, unless (A) FRLP shall agree to reimburse Lomak for
the out-of-pocket costs incurred by Lomak in the preparation of such
other audited financial statements or (B) such other audited financial
statements shall be required by the Commission as a condition to
declaring a registration statement effective under the Securities Act.
(iii) In connection with any registration pursuant to
Section 4(a) hereof, the appropriate members of the FRLP Group shall
select the managing underwriter, if any, for offering related to such
registration; provided, however, that the appropriate members of the
FRLP Group shall consult with Lomak in connection with such selection.
Nothing in this clause (iii) shall limit Lomak's ability to select any
underwriter in connection with any registration effected pursuant to
Section 4(b) hereof.
(iv) Lomak and FRLP each agrees in connection with
any registration of Lomak Shares contemplated by this Section 4 (i) to
enter into an appropriate underwriting agreement containing terms and
provisions in such agreements (including reasonable lock-up provisions
and, to the extent consistent with the provisions hereof,
indemnification and contribution provisions) and (ii) to provide the
FRLP Group and its representatives with reasonable opportunity for due
diligence.
(d) REGISTRATION PROCEDURES.
(i) If and whenever Lomak is required by the
provisions of Sections 4(a) or 4(b) to use all reasonable efforts to
effect the registration of any Lomak Shares under the Securities Act,
Lomak will, as expeditiously as possible:
(A) prepare and file with the Commission a
registration statement, on Form S-3 or such other appropriate
form as Lomak shall select, with respect to such securities
and use all reasonable efforts to cause such registration
statement to become and remain effective for a period of up to
six months from the date on which the Commission declares such
registration statement effective or such shorter period that
will terminate when all Lomak Shares covered by such
registration statement have been sold pursuant to such
registration statement;
(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
necessary to keep such registration statement effective for
the period specified in paragraph (A) above and comply with
the provisions of the Securities Act with respect to the
disposition of all Link Shares covered by such registration
statement in accordance with FRLP's intended method of
disposition set forth in such registration statement for such
period;
(C) furnish to FRLP and to each underwriter
such number of copies of the registration statement and each
such amendment and supplement
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thereto (in each case including all exhibits) and the
prospectus included therein (including each preliminary
prospectus) as such persons reasonably may request in order to
facilitate the public sale or other disposition of the Lomak
Shares covered by such registration statement;
(D) use all reasonable efforts to register
or qualify the Lomak Shares covered by such registration
statement under the securities or "blue sky" laws of such
jurisdictions as FRLP or, in the case of an underwritten
public offering, the managing underwriter reasonably shall
request; provided, however, that Lomak shall not for any such
purpose be required to qualify generally to transact business
as a foreign corporation in any jurisdiction where it is not
so qualified or to consent to general service of process in
any such jurisdiction;
(E) use all reasonable efforts to list the
Lomak Shares covered by such registration statement with any
securities exchange on which the Lomak Common Stock is then
listed;
(F) promptly notify FRLP and each
underwriter under such registration statement, at any time
when a prospectus relating thereto is required to be delivered
under the Securities Act, of the happening of any event of
which Lomak has knowledge as a result of which the prospectus
contained in such registration statement, as then in effect,
includes an untrue statement of a material fact or omits to
state a material fact required to be stated therein or
necessary to make the statements therein not misleading in
light of the circumstances then existing, and promptly prepare
and furnish to FRLP and each underwriter under such
registration statement a reasonable number of copies of a
prospectus supplemented or amended so that, as thereafter
delivered to the purchasers of such Lomak Shares, such
prospectus shall not include an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading in light of the circumstances then existing;
(G) if the offering is underwritten and at
the request of FRLP, use all reasonable efforts to furnish on
the date that Lomak Shares are delivered to the underwriters
for sale pursuant to such registration: (1) an opinion dated
such date of counsel representing Lomak for the purposes of
such registration, addressed to the underwriters and to FRLP,
to such effects as reasonably may be requested by counsel for
the underwriters or by FRLP or its counsel, and (2) a letter
dated such date from the independent public accountants
retained by Lomak, addressed to the underwriters and to FRLP
covering such matters as are customarily covered in
accountants' letters delivered to the underwriters in
underwritten public offerings and such other matters as such
underwriters reasonably may request; and
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(H) make available for inspection by FRLP,
any underwriter participating in any distribution pursuant to
such registration statement, and any attorney, accountant or
other agent retained by FRLP or underwriter, reasonable access
to all financial and other records, pertinent corporate
documents and properties of Lomak, as such parties may
reasonably request, and cause Lomak's officers, directors and
employees to supply all information reasonably requested by
FRLP or any such underwriter, attorney, accountant or agent in
connection with such registration statement.
(ii) In connection with each registration hereunder,
FRLP will furnish to Lomak in writing such information requested by
Lomak with respect to itself and the proposed distribution by it as
reasonably shall be necessary in order to assure compliance with
federal and applicable state securities laws.
(iii) Lomak will permit FRLP to participate in good
faith in the preparation of such registration or comparable statement
and to require the insertion therein of material, furnished to Lomak in
writing, which in the reasonable judgment of FRLP, its counsel and
Lomak should be included.
(iv) Lomak will otherwise cooperate in such manner as
may be reasonably requested by FRLP in the marketing of all Lomak
Shares to be sold, including, without limitation, participating in any
customary "road shows" and related presentations to prospective
purchasers in connection therewith.
(v) In connection with each registration pursuant to
Sections 4(a) or 4(b) covering an underwritten public offering, Lomak
and FRLP agree to enter into a written agreement with the managing
underwriter selected in the manner herein provided in such form and
containing such provisions as are customary in underwritten offerings.
(e) Expenses. Lomak shall pay for all expenses incurred by
Lomak in complying with Sections 4(a) and 4(b), including, without, limitation,
all registration and filing fees, printing expenses, fees and disbursements of
counsel and independent public accountants for Lomak, fees and expenses
(including counsel fees) incurred in connection with complying with state
securities or "blue sky" laws, fees of the securities exchange upon which the
common stock of Lomak is then listed, transfer taxes, fees of transfer agents
and registrars and the reasonable fees and disbursements of counsel to FRLP in
connection with such registration, but excluding any underwriting discounts and
selling commissions applicable to the sale of Lomak Shares (which discounts and
commissions shall be paid by FRLP).
(f) INDEMNIFICATION AND CONTRIBUTION.
(i) In the event of a registration of any of the
Lomak Shares under the Securities Act pursuant to Sections 4(a) or
4(b), Lomak will indemnify and hold harmless
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FRLP, its officers and directors, each underwriter of such Lomak Shares
thereunder and each other person, if any, who controls FRLP or such
underwriter within the meaning of the Securities Act, against any
losses, claims, damages or liabilities, joint or several, to which FRLP
or such officer, director, underwriter or controlling person may become
subject under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon (A) any untrue statement or alleged untrue
statement of any material fact contained in any registration statement
under which such Lomak Shares were registered under the Securities Act
pursuant to Sections 4(a) or 4(b), any preliminary prospectus or final
prospectus contained therein, or any amendment or supplement thereof,
(B) any blue sky application or other document executed by Lomak
specifically for that purpose or based upon written information
furnished by Lomak filed in any state or other jurisdiction in order to
qualify any or all of the Lomak Shares under the securities laws
thereof (any such application, document or information herein called a
"Blue Sky Application"), (C) the omission or alleged omission to state
therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, (D) any violation by Lomak
or its agents of any rule or regulation promulgated under the
Securities Act applicable to Lomak or its agents and relating to action
or inaction required of Lomak in connection with such registration, or
(E) any failure to register or qualify the Lomak Shares in any state
where Lomak or any of its agents has affirmatively undertaken or agreed
in writing that Lomak will undertake such registration or qualification
on FRLP's behalf (provided that in such instance Lomak shall not be so
liable if it has undertaken its reasonable efforts so to register or
qualify the Lomak Shares) and will reimburse FRLP and each such
officer, director, underwriter and controlling person for any legal or
other expenses reasonably incurred by them in connection with
investigating or defending any such loss, claim, damage, liability or
action; provided, however, that Lomak will not be liable in any such
case if and to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission so made in conformity
with information furnished by FRLP, any such underwriter or any such
controlling person in writing specifically for use in such registration
statement or prospectus, and provided further, that Lomak shall not be
liable to any person who participates as an underwriter, in the
offering or sale of Lomak Shares or any other person, if any, who
controls such underwriter within the meaning of the Securities Act, in
any such case to the extent that any such loss, claim, damage or
liability arises out of or is based on such person's failure to send or
give a copy of the final prospectus, as the same may be then
supplemented or amended, to the person asserting an untrue statement or
alleged untrue statement or omission or alleged omission at or prior to
the written confirmation of the sale of Lomak Shares to such person if
such statement or omission was corrected in such final prospectus. Such
indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of FRLP or any such director,
officer, underwriter or controlling person and shall survive the
transfer of such securities by FRLP.
(ii) In the event of a registration of any of the
Lomak Shares under the Securities Act pursuant to Sections 4(a) or
4(b), FRLP will indemnify and hold harmless
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Lomak, each person, if any, who control Lomak within the meaning of the
Securities Act, each officer and director of Lomak, each underwriter
and each person who controls any underwriter within the meaning of the
Securities Act, against any losses, claims, damages or liabilities,
joint or several, to which Lomak or such officer, director, underwriter
or controlling person may become subject under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (A) any
untrue statement or alleged untrue statement of any material fact
contained in any registration statement under which such Lomak Shares
were registered under the Securities Act pursuant to Sections 4(a) or
4(b), any preliminary prospectus or final prospectus contained therein,
or any amendment or supplement thereof, (B) any Blue Sky Application
and (C) the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse Lomak and each such officer,
director, underwriter and controlling person for any legal or other
expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action;
provided, however, that FRLP will be liable hereunder in any such case
if and only to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in reliance upon
and in conformity with information pertaining to FRLP, as such,
furnished in writing to Lomak by FRLP specifically for use in such
registration statement or prospectus, and provided further, that the
liability of FRLP hereunder shall be limited to the proportion of any
such loss, claim, damage, liability or expense which is equal to the
proportion that the public offering price of the Lomak Shares sold by
FRLP under such registration statement bears to the total public
offering price of all securities sold thereunder, but not in any event
to exceed the proceeds received by FRLP from the sale of Lomak Shares
covered by such registration statement. Not in limitation of the
foregoing, it is understood and agreed that the indemnification
obligations of FRLP hereunder pursuant to any underwriting agreement
entered into in connection herewith shall be limited to the obligations
contained in this Section 4(d)(ii).
(iii) Promptly after receipt by an indemnified party
hereunder of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party hereunder, notify the indemnifying party in writing
thereof, but the omission so to notify the indemnifying party shall not
relieve it from any liability which it may have to such indemnified
party other than under this Section 4(e) and shall only relieve it from
any liability which it may have to such indemnified party under this
Section 4(e) if and to the extent the indemnifying party is prejudiced
by such omission In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to
participate in and, to the extent it shall wish, to assume and
undertake the defense thereof with counsel satisfactory to such
indemnified party, and, after notice from the indemnifying party to
such indemnified party of its election so to assume and undertake the
defense thereof, the indemnifying party shall not be liable to such
indemnified party under this Section 4(e) for any legal expenses
subsequently incurred by such indemnified party in
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connection with the defense thereof other than reasonable costs of
investigation; provided, however, that, if the defendants in any such
action include both the indemnified party and the indemnifying party
and the indemnified party shall have reasonably concluded that there
may be reasonable defenses available to it which are different from or
additional to those available to the indemnifying party or if the
interests of the indemnified party reasonably may be deemed to conflict
with the interests of the indemnifying party, the indemnified party
shall have the right to select a separate counsel and to assume such
legal defenses and otherwise to participate in the defense of such
action, with the expenses and fees of such separate counsel and other
expenses related to such participation to be reimbursed by the
indemnifying party as incurred. No indemnifying party shall, without
the consent of the indemnified party, consent to entry of any judgment
or enter into any settlement which does not include as an unconditional
term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect to such
claim or litigation.
(iv) In order to provide for just and equitable
contribution to joint liability under the Securities Act in any case in
which either (A) any holder of Lomak Shares exercising rights under
this Agreement, or any controlling person of any such holder, makes a
claim for indemnification pursuant to this Section 4(e) but it is
judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or
the denial of the last right of appeal) that such indemnification may
not be enforced in such case notwithstanding the fact that this Section
4(e) provides for indemnification in such case, or (B) contribution
under the Securities Act may be required on the part of any such
selling holder or any such controlling person in circumstances for
which indemnification is provided under this Section 4(e), then, and in
each case, Lomak and such holder will contribute to the aggregate
losses, claims, damages or liabilities to which they may be subject
(after contribution from others) in such proportions so that FRLP is
responsible for the portion represented by the percentage that the
public offering price of its Lomak Shares offered by the registration
statement bears to the public offering price of all securities offered
by such registration statement, and Lomak is responsible for the
remaining portion; provided, however, that, in any such case, (A) FRLP
will not be required to contribute any amount in excess of the public
offering price of all such Lomak Shares offered by it pursuant to such
registration statement; and (B) no person or entity guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) will be entitled to contribution from any person or
entity who was not guilty of such fraudulent misrepresentation.
(f) RULE 144. Lomak will file the reports required to be filed
by it under the Securities Act and the Exchange Act and the rules and
regulations adopted by the Commission thereunder to the extent required from
time to time to enable FRLP to sell the Lomak Shares without registration under
the Securities Act within the limitation of the exemptions provided by (i) Rule
144 under the Securities Act, as such rule may be amended from time to time, or
(ii) any similar rule or regulation adopted by the Commission.
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(g) AVAILABILITY OF REGISTRATION RIGHTS TO FRLP GROUP. For
purposes of this Section 4, any reference to FRLP shall include members of the
FRLP Group, unless the context otherwise requires.
5. Legends, Stop Transfer Orders and Notice.
(a) FRLP agrees to the placement on the certificates
representing the Lomak Shares of the legends in substantially the following
forms as well as any other legends required by applicable state or federal
securities laws:
"The securities represented by this certificate are subject to
the provisions of a Voting and Standstill Agreement, dated May
11, 1998, between FRLP and Lomak, a copy of which is available
for inspection at the office of the Secretary of Lomak."
"These securities have not been registered under the
Securities Act of 1933 or applicable state securities laws.
They may not be sold, offered for sale, pledged or
hypothecated in the absence of a registration statement in
effect with respect to the securities under such Act or an
opinion of counsel satisfactory to Lomak that such
registration is not required or unless sold pursuant to Rule
144 of such Act."
(b) FRLP shall provide to Lomak (i) prior notice, as promptly
as reasonably practicable, of any planned acquisition by any member of the FRLP
Group pursuant to an open market buying program of more than 1% of any class of
Lomak Voting Securities in a two-week period, (ii) prior notice, as reasonably
practicable, of privately-negotiated purchases or proposed purchases of blocks
of 10,000 or more shares of Common Stock or equivalents of Lomak by any member
of the FRLP Group; (iii) prior notice, as reasonably practicable, of filings
under Sections 13(d), 13(e) and 14(d) of the Exchange Act by any member of the
FRLP Group with respect to any class of Lomak Voting Securities; and (iv) prompt
notice of purchases of every 1% of any class of Lomak Voting Securities by any
member of the FRLP Group for which notice was not previously given. FRLP shall
present promptly to Lomak all certificates representing Lomak Shares of which
any member of the FRLP Group is now, or hereafter becomes, the beneficial owner
for the placement thereon of the legend referred to in subsection (a) above; and
(c) FRLP agrees to the entry of stop transfer orders with the
transfer agent (or agents) and the registrar (or registrars) of Lomak Voting
Securities against the transfer other than in compliance with the requirements
of this Agreement of Lomak Shares.
6. Nomination of Director. Notwithstanding any other provision in this
Agreement with respect to the term of this Agreement, until the first date, if
any, that FRLP ceases to beneficially own Lomak Common Stock in an aggregate
amount equal or greater than 5% of the outstanding
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shares of Lomak Common Stock, Lomak will, in connection with each election of
directors to the Lomak Board of Directors at an annual meeting of shareholders,
nominate, as one of the director nominees proposed by Lomak, one individual
designated by FRLP for election as a director; provided, however, that if a
member of the FRLP Group already serves as a director of Lomak, then FRLP agrees
that such person shall be FRLP's nominee pursuant to the provisions of this
Section 6. Notwithstanding the foregoing, in no event shall more than one member
of the FRLP Group serve on the Lomak Board of Directors at any given time.
7. Miscellaneous
(a) NOTICES. All notices or communications hereunder shall be
in writing (including facsimile or similar writing) addressed as follows:
To Lomak:
Lomak Petroleum, Inc.
500 Throckmorton Street, Suite 1900
Fort Worth, Texas 76102
Attention: John H. Pinkerton
Facsimile No.: (817) 870-2316
With a copy to:
Vinson & Elkins L.L.P.
2300 First City Tower
1001 Fannin
Houston, Texas 77002-6760
Attention: J. Mark Metts
Facsimile No.: (713) 615-5605
To FRLP:
First Reserve Fund VII, Limited Partnership
c/o First Reserve Corporation
1801 California St., Suite 4110
Denver, Colorado 80202
Attention: Thomas R. Denison
Facsimile No.: (303) 382-1275
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With a copy to:
Gibson, Dunn & Crutcher LLP
1801 California St., Suite 4100
Denver, Colorado 80202
Attention: Richard M. Russo
Facsimile No.: (303) 296-5310
Any such notice or communication shall be deemed given (i) when made, if made by
hand delivery, and upon confirmation of receipt, if made by facsimile, (ii) one
Business Day after being deposited with a next-day courier, postage prepaid, or
(iii) three Business Days after being sent certified or registered mail, return
receipt requested, postage prepaid, in each case addressed as above (or to such
other address as such party may designate in writing from time to time).
(b) SEPARABILITY. If any provision of this Agreement shall be
declared to be invalid or unenforceable, in whole or in part, such invalidity or
unenforceability shall not affect the remaining provisions hereof which shall
remain in full force and effect.
(c) ASSIGNMENT. This Agreement shall be binding upon and inure
to the benefit of the parties hereto and their respective heirs, legal
representatives, successors, and assigns; provided, however, that neither this
Agreement nor any rights hereunder shall be assignable or otherwise subject to
hypothecation and any assignment in violation hereof shall be null and void.
(d) INTERPRETATION. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
(e) COUNTERPARTS. 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 such counterparts have been signed
by each of the parties and delivered to each party.
(f) ENTIRE AGREEMENT. This Agreement represents the entire
Agreement of the parties with respect to the subject matter hereof and shall
supersede any and all previous contracts, arrangements or understandings between
the parties hereto with respect to the subject matter hereof.
(g) GOVERNING LAW. This Agreement shall be construed,
interpreted, and governed in accordance with the laws of Delaware, without
reference to rules relating to conflicts of law.
(h) ATTORNEYS' FEES. If any action at law or equity, including
an action for declaratory relief, is brought to enforce or interpret any
provision of this Agreement, the prevailing party shall be entitled to recover
reasonable attorneys' fees and expenses from the other party, which fees and
expenses shall be in addition to any other relief which may be awarded.
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(i) AMENDMENTS, WAIVERS, ETC. This Agreement may not be
amended, changed, supplemented, waived or otherwise modified except by an
instrument in writing signed by all the parties hereto.
(j) NO WAIVER. The failure of any party hereto to exercise any
right, power or remedy provided under this Agreement or otherwise available in
respect hereof at law or in equity, or to insist upon compliance by any other
party hereto with its obligations hereunder, and any custom or practice of the
parties at variance with the terms hereof, shall not constitute a waiver by such
party of its right to exercise any such or other right, power or remedy or to
demand such compliance.
(k) DEFINITIONS. For purposes of this Agreement, the following
terms shall have the following meanings:
(i) AFFILIATE. "Affiliate" shall have the meaning
ascribed to it in Rule 12b-2 of the General Rules and Regulations under
the Exchange Act, as in effect on the date hereof.
(ii) BENEFICIAL OWNER. A person shall be deemed a
"beneficial owner" of or to have "beneficial ownership" of Lomak Voting
Securities or Shares, as the case may be, in accordance with the
interpretation of the term "beneficial ownership" as defined in Rule
13-d(3) under the Exchange Act, as in effect on the date hereof,
provided that a person shall be deemed to be the beneficial owner of,
and to have beneficial ownership of, Lomak Voting Securities and/or
Shares, as the case may be, that such person or any Affiliate of such
person has the right to acquire (whether such right is exercisable
immediately or only after the passage of time) pursuant to any
agreement, arrangement or understanding or upon the exercise of
conversion rights, exchange rights, warrant or options, or otherwise.
(iii) DAY. The term "day" shall mean a calendar day,
except that when a specified period shall terminate on a day other than
a Business Day (a "Business Day" being any day other than a day on
which banks are required or authorized to be closed in the City of New
York) such period shall be extended until the next Business Day.
(iv) LOMAK VOTING SECURITIES. "Lomak Voting
Securities" includes Common Stock and any other securities of Lomak
entitled to vote generally for the election of directors, and options
and rights to acquire any such securities and securities convertible
into, or exercisable or exchangeable for, such securities, in each case
now or hereafter outstanding.
(v) PERSON. A "person" shall mean any individual,
firm, corporation, partnership, trust, limited liability company or
other entity.
(l) DUE AUTHORIZATION; NO CONFLICTS. FRLP hereby represents
and warrants to Lomak as follows: FRLP has full power and authority to enter
into this Agreement. Neither the
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execution or delivery of this Agreement nor the consummation of the transactions
contemplated herein will (a) conflict with or result in a breach, default or
violation of (i) any of the terms, provisions or conditions of the Certificate
of Limited Partnership or limited partnership agreement or other organizational
documents of any member of the FRLP Group or (ii) any agreement, proxy,
document, instrument, judgment, decree, order, governmental permit, certificate,
license, law, statute, rule or regulation to which any member of the FRLP Group
is a party or to which it is subject, (b) except as expressly contemplated
herein, result in the creation of any lien, charge or other encumbrance on any
Shares or Lomak Shares or (c) require any member of the FRLP Group to obtain the
consent of any private nongovernmental third party. No consent, action, approval
or authorization of, or registration, declaration or filing with, any
governmental department, commission, agency or other instrumentality or any
other person or entity is required to authorize, or is otherwise required in
connection with, the execution and delivery of this Agreement or FRLP's
performance of the terms of this Agreement or the validity or enforceability of
this Agreement.
(m) SPECIFIC PERFORMANCE. Each party recognizes that its
failure to carry out the terms of this Agreement could result in financial
injury to the other party which would be substantial and not susceptible of
measurement. Accordingly, each party agrees that the other party shall be
entitled to (i) require such party specifically to perform its obligations under
this Agreement and (ii) sue in any court of competent jurisdiction to obtain
such specific performance.
(n) WAIVER OF JURY TRIAL. THE PARTIES HEREBY WAIVE THEIR
RIGHT TO A TRIAL BY JURY WITH RESPECT TO ANY LEGAL PROCEEDING RELATING TO THIS
AGREEMENT OR THE TRANSACTION CONTEMPLATED BY THIS AGREEMENT.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed on the date first above written.
LOMAK PETROLEUM, INC.
By:
---------------------------------
Name:
-------------------------------
Title:
------------------------------
FIRST RESERVE FUND VII,
LIMITED PARTNERSHIP
By: First Reserve Corporation,
its general partner
By:
---------------------------
Name:
--------------------------
Title:
------------------------
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