RESTRUCTURING AGREEMENT
This Restructuring Agreement is dated as of September 22, 1997 by and between DeepTech International Inc. ("DeepTech"), a Delaware corporation, and Tatham Offshore, Inc. ("Tatham Offshore"), a Delaware corporation. DeepTech and Tatham Offshore may be referred to herein collectively as the "Parties" or individually as a "Party."
RECITALS
WHEREAS, Tatham Offshore issued to DeepTech the Notes (defined herein) under which Tatham Offshore makes periodic interest payments;
WHEREAS, Tatham Offshore has proposed, and DeepTech has accepted, an arrangement whereby DeepTech will forgive the next two scheduled payments under the Notes and, on or before January 31, 1998, return the Notes to Tatham Offshore in consideration for the right to exercise one of three options; and
WHEREAS, under such options, DeepTech has the right to receive (i) common stock of Tatham Offshore, (ii) all of the capital stock of TODI (defined herein), certain rights under the Drilling Order (defined herein) and cash, or (iii) preferred stock of Tatham Offshore and cash;
NOW, THEREFORE, for and in consideration of the premises and the mutual covenants and agreements contained herein and other good and valuable consideration (the receipt and sufficiency of which are hereby confirmed and acknowledged), the Parties hereto hereby stipulate and agree as follows:
ARTICLE I.
DEFINITIONS
1.1 SPECIFIC DEFINITIONS. The following capitalized terms shall have the meanings ascribed to them in this Section 1.1.
"Acquired Stock" means any Common Stock or Senior Preferred Stock acquired by DeepTech pursuant to Article II.
"Affiliate" means, with respect to any relevant Person, or any other Person that directly or indirectly controls, is controlled by or is under common control with, such relevant Person in question. For purposes of this definition, the term "control" (including its derivatives and similar terms) means the direct or indirect ability to direct the management and policy of the relevant Person, whether by ownership or control of voting interests, contract or otherwise. 2
"Agreement" means this Restructuring Agreement (including any exhibits, supplements and other attachments), as amended, restated, supplemented or otherwise modified from time to time.
"Applicable Interest Payments" means all future interest payments due to DeepTech from Tatham Offshore pursuant to Section 2.3 of the First Note and the Second Note, including the payments due on October 1, 1997, and January 1, 1997.
"Cash Equivalents" means cash, cash equivalents or unrestricted, freely tradable marketable securities issued by an "investment grade" company listed on the New York Stock Exchange, the American Stock Exchange or the NASDAQ.
"Commission" means the Securities and Exchange Commission or any other federal agency then administering the Securities Act, the Exchange Act, and other federal securities laws.
"Common Stock" means common stock, $0.01 par value per share, with one vote per share, issued by Tatham Offshore, as adjusted from time to time to reflect any reorganization or recapitalization, including, without limitation, the issuance or cancellation of shares in connection with a stock split or stock dividend.
"DeepTech" shall have the meaning ascribed to it in the preamble to this Agreement.
"DeepTech Holder" means either DeepTech or, if DeepTech is not a Holder, any Affiliate of DeepTech which is a Holder.
"Demand Registration" shall have the meaning ascribed to it in Section 1.(a) of Exhibit "B".
"Drilling Order" means that certain drilling order dated September 19, 1996 by and between Tatham Offshore and Sedco, as further modified by that certain letter agreement dated August 14, 1997 and executed August 29, 1997 between Tatham Offshore and Sedco.
"Exchange Act" means the Securities Exchange Act of 1934, as amended from time to time.
"Farm-Out" means an agreement or other arrangement in which the owner of a working interest in an oil and gas lease or similar instrument delivers the contractual right to earn an interest in such oil and gas lease or similar instrument to another party in exchange for such other party (i) satisfying certain obligations, (ii) performing or causing the performance of certain actions and/or (iii) satisfying certain conditions.
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"First Note" means that certain 11 3/4 % Subordinated Convertible Promissory Note dated February 14, 1994 in the amount of $34,000,000 issued by Tatham Offshore to DeepTech, as amended, restated, supplemented or otherwise modified from time to time.
"Holder" means any holder of any Acquired Stock.
"Inspectors" shall have the meaning ascribed to it in Section 3.a.(vi) of Exhibit B.
"Laws" means the laws, rules, regulations, decrees and orders of the United States of America and all other governmental authorities having jurisdiction, whether such Laws now exist or hereafter come into effect.
"Lien" means mortgages, deeds of trust, liens, pledges, security interests, leases, conditional sale contracts, claims, rights of first refusal, options, charges, liabilities, obligations, agreements, privileges, liberties, easements, rights-of-way, limitations, reservations, restrictions and other defects or encumbrances of any kind.
"Market Price" means (i) if there shall then be a public market for the Common Stock, the average of the closing prices for the ten (10) trading days immediately preceding the date on which DeepTech delivers or is deemed to have delivered the notice contemplated by Section 2.6, or (ii) if there shall then be no public market for the Common Stock, the value as of the date on which DeepTech delivers or is deemed to have delivered the notice contemplated by Section 2.6 as determined by an appraisal of the Common Stock conducted by a nationally-reputable qualified independent appraiser.
"Note Purchase Agreement" means that certain Subordinated Convertible Note Purchase Agreement dated as of February 14, 1994 by and between Tatham Offshore and DeepTech, as amended, restated, supplemented or otherwise modified from time to time.
"Notes" means, collectively, the First Note and the Second Note.
"Option" shall have the meaning ascribed to it in Section 2.2.
"Option Exercise Period" shall have the meaning ascribed to it in Section 2.5.
"Option Expiration Time" shall have the meaning ascribed to it in Section 2.5.
"Party" or "Parties" shall have the meaning ascribed to it in the preamble to this Agreement.
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"Permitted Transaction" means any transaction, or series of related transactions, (i) providing fair value and (ii) the terms of which are no less favorable than could be obtained from a non-Affiliated Person in an arms-length transaction.
"Person" means any individual or entity, including, without limitation, any corporation, limited liability company, partnership (general or limited), joint venture, association, joint stock company, trust, unincorporated organization or government (including any board, agency, political subdivision or other body thereof).
"Records" shall have the meaning ascribed to it in Section 3.a.(vi) of Exhibit B.
"Registered Security Holders" shall have the meaning ascribed to it in Section 2 of Exhibit B.
"Registrable Securities" means each share evidenced by any Acquired Stock from the date of issuance pursuant to this Agreement until the earlier to occur of (i) the date on which such share of Acquired Stock ceases to be a Restricted Security or (ii) the date on which a Demand Registration is effected pursuant to Exhibit B.
"Registration Expenses" shall have the meaning ascribed to it in Section 4 of Exhibit B.
"Restricted Security" means each share evidenced by any Acquired Stock until the earlier to occur of the date on which (i) a registration statement covering such share has been declared effective and it has been disposed of pursuant to such effective registration statement, (ii) it is sold pursuant to Rule 144 (or any similar provisions then in force) under the Securities Act, or (iii) it has been otherwise transferred and Tatham Offshore has delivered new certificates or other evidences of ownership for them not subject to any legal or other restriction on transfer under the Securities Act or under state securities laws and not bearing the legend specified in Section 3.1.
"Second Note" means that certain 11 3/4% Subordinated Convertible Promissory Note dated June 30, 1994 in the amount of $26,000,000 issued by Tatham Offshore to DeepTech, as amended, restated, supplemented or otherwise modified from time to time.
"Securities Act" means the Securities Act of 1933, as amended from time to time.
"Sedco" means Schlumberger Technology Corporation - Sedco Forex Division.
"Senior Preferred Stock" means the 6% Senior Preferred Stock having a liquidation preference value equal to $60 million with the designated rights and preferences set forth in that certain Certificate of Designation of Preferences and Rights of 6% Senior Preferred Stock of Tatham Offshore attached hereto as Exhibit "A."
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"Sunday Silence" means (i) the oil and gas property located in the Outer Continental Shelf in the Gulf of Mexico and comprised of Ewing Bank Blocks 958, 959, 1002 and 1003, which together constitute a field that is comprised of 20,160 gross acres located approximately six miles south of Ewing Bank Blocks 914 and 915 in water depths ranging from 1,400 to 1,600 feet and in which Tatham Offshore has a 100% working interest, (ii) equipment, facilities, wells or assets located thereon, used in connection therewith or related thereto and owned by Tatham Offshore or TODI and (iii) any agreements, rights or other arrangements related thereto and owned by Tatham Offshore or TODI (but excluding the Drilling Order).
"Tatham Offshore" shall have the meaning ascribed to it in the preamble to this Agreement.
"TODI" means Tatham Offshore Development, Inc., a Delaware corporation which is wholly owned by Tatham Offshore.
"TODI Interest" shall have the meaning ascribed to it in Section 4.3(a).
"Transfer" or "Transferred" means a voluntary or involuntary sale, assignment, transfer, conveyance, exchange, bequest, devise, gift or any other alienation (in each case, with or without consideration) of any rights, interests or obligations in the subject property.
1.2 TERMS DEFINED IN THE NOTE PURCHASE AGREEMENT. Capitalized terms used in this Agreement, but not defined herein, shall have the meanings ascribed to such terms in the Note Purchase Agreement.
1.3 GENERAL DEFINITIONS. Capitalized terms used in this Agreement and not defined in Section 1.1 or the Note Purchase Agreement shall have the meanings ascribed to them elsewhere in this Agreement.
ARTICLE II.
RESTRUCTURING ARRANGEMENT
2.1 FORBEARANCE. DeepTech hereby relinquishes and forfeits its right to receive, and forgives Tatham Offshore's obligation to pay, the Applicable Interest Payments.
2.2 RESTRUCTURING OPTION. At any time during the Option Exercise Period, DeepTech shall have the option (the "Option") to consummate any one of the following transactions:
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(a) Conversion. DeepTech may convert all or, to the
extent provided in Section 2.3(b)(i), a portion of the principal
amount outstanding under the Notes into shares of Common Stock at the
Market Price; or
(b) Sale of TODI. Subject to Section 2.3, Tatham
Offshore shall sell for $60 million to DeepTech or an Affiliate of
DeepTech (i) all of the outstanding capital stock of TODI and (ii) all
of the right, title and interest of Tatham Offshore under the Drilling
Order as it relates to the substitute rig in such agreement. Tatham
Offshore shall contemporaneously apply the proceeds from such sale to
the prepayment in full of the Notes; or
(c) Purchase of Senior Preferred Stock. Tatham Offshore
shall issue 6,000,000 shares of Senior Preferred Stock to DeepTech for
$60 million payable in cash. Tatham Offshore shall contemporaneously
apply all of the proceeds from such issuance to the prepayment in full
of the Notes.
2.3 PRIOR TO EXERCISE OF OPTION.
(a) Except to the extent expressly permitted in Section
2.3(b) below, Tatham Offshore may not Transfer any interest in TODI or
the Drilling Order or allow TODI to Transfer any interest in Sunday
Silence prior to exercise or deemed exercise of the Option.
(b) Prior to the exercise of the Option by DeepTech,
Tatham Offshore may:
(i) Sell all (but not a portion) of its interest
in TODI or allow TODI to sell all (but not a portion) of TODI's
interest in Sunday Silence. In either case, such sale must be a
Permitted Transaction for Cash Equivalents, without reserving any
rights, title or interest (including, without limitation, any
reversionary, back-in, overriding royalty, or working interest) of any
kind. Fifty percent (50%) of the proceeds of such sale shall be paid
directly by the purchaser into an escrow account to which DeepTech is
a party and held in escrow until DeepTech exercises or is deemed to
have exercised the Option. If such sale takes place, then in lieu of
the transaction described in Section 2.2(b) above, DeepTech shall have
the right to (i) require the escrow agent to apply the proceeds in
escrow to the prepayment of the Notes and (ii) convert the remaining
outstanding principal balance of the Notes into Common Stock at the
Market Price pursuant to Section 2.2(a) above; or
(ii) Permit TODI to enter into a Farm-Out in a
Permitted Transaction with respect to Sunday Silence, provided that
(A) any consideration paid in connection with such Farm-Out shall be
paid directly into escrow and held in escrow until DeepTech exercises
or is deemed to have exercised the Option, and (B) both the
creditworthiness of the farmee and the development
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program contemplated by the Farmout are acceptable to DeepTech;
provided, further, that DeepTech shall not unreasonably delay or
withhold its consent with respect thereto.
2.4 DEEMED EXERCISE. If DeepTech fails to timely deliver written notice of its exercise of the Option as provided in Section 2.6, DeepTech will be deemed to have exercised Section 2.2(b) of the Option effective as of the Option Expiration Time.
2.5 OPTION PERIOD. The period during which the Option may be exercised by DeepTech (the "Option Exercise Period") shall commence as of the date hereof and terminate at midnight (the "Option Expiration Time") on December 31, 1997, unless extended prior to such time by written request of the board of Directors of DeepTech for a maximum of thirty (30) days.
2.6 MANNER OF EXERCISE. During the term of this Agreement, DeepTech may exercise the Option by (i) delivering at any time prior to the Option Exercise Time to Tatham Offshore written notice of the transaction in Section 2.2 that it elects to consummate and (ii) in the case of the transactions specified in Section 2.2(b) or 2.2(c), tender the purchase price in immediately available funds to Tatham Offshore. Tatham Offshore shall immediately apply any funds paid to it pursuant to (ii) to the prepayment in full of the Notes. The Option shall also be deemed exercised if DeepTech fails to deliver such notice and the election in Section 2.4 above is made. The transaction contemplated by Section 2.2 shall be effective as of the exercise or deemed exercise date thereof and shall be closed as soon as reasonably practicable thereafter.
2.7 ESCROW. Prior to the time that DeepTech exercises or is deemed to have exercised the Option, none of the proceeds deposited into escrow pursuant to Sections 2.3(b)(i) or 2.3(b)(ii) shall be distributed without the consent of DeepTech. If DeepTech exercises the Option, then the escrow agent shall apply the proceeds to the outstanding principal and interest on the Notes. If DeepTech is deemed to have exercised the Option, then the escrow agent shall distribute the proceeds in any manner Tatham Offshore desires.
2.8 GOVERNMENTAL CONSENT OR APPROVAL. If any governmental consent or approval is required in connection with the exercise of any of the Options, DeepTech shall have a reasonable amount of time to obtain such consent or approval. Tatham Offshore shall use reasonable, good faith efforts to cooperate with DeepTech and to assist in timely obtaining such consent or approval.
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ARTICLE III
SECURITIES
3.1 RESTRICTIVE LEGEND. All Acquired Stock shall be Restricted Securities and each certificate representing the Acquired Stock shall be stamped or otherwise imprinted with a legend in substantially the following form:
THE SECURITIES REPRESENTED BY THIS CERTIFICATE HAVE NOT BEEN
REGISTERED UNDER THE SECURITIES ACT OF 1933, AS AMENDED, OR THE
SECURITIES LAWS OF ANY STATE. WITHOUT SUCH REGISTRATION, SUCH
SECURITIES MAY NOT BE SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE
TRANSFERRED, EXCEPT UPON DELIVERY TO THE CORPORATION OF AN OPINION OF
COUNSEL SATISFACTORY TO THE CORPORATION THAT REGISTRATION IS NOT
REQUIRED FOR SUCH TRANSFER OR THE SUBMISSION TO THE CORPORATION OF
SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE CORPORATION TO THE
EFFECT THAT ANY SUCH TRANSFER SHALL NOT BE IN VIOLATION OF THE
SECURITIES ACT OF 1933, AS AMENDED, OR APPLICABLE STATE SECURITIES
LAWS OR ANY RULE OR REGULATION PROMULGATED THEREUNDER.
3.2 REGISTRATION RIGHTS. The Holder of the Acquired Stock shall have the right to require Tatham Offshore to register the Acquired Stock in accordance with the terms and conditions set forth in Exhibit B attached hereto.
ARTICLE IV.
REPRESENTATIONS AND WARRANTIES
4.1 REPRESENTATIONS AND WARRANTIES BY BOTH DEEPTECH AND TATHAM OFFSHORE. Each of the Parties, with respect to itself and its property, hereby represents and warrants to the other as follows:
(a) It is duly formed and validly existing and in good
standing under the laws of the state of formation, with power and
authority to carry on the business in which it is engaged and to
perform its obligations under this Agreement.
(b) The execution and delivery of this Agreement have
been duly authorized and approved by all requisite corporate,
partnership, limited liability company or other applicable action.
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(c) It has all the requisite corporate, partnership,
limited liability company or other applicable power and authority to
enter into this Agreement and perform its respective obligations
hereunder and thereunder.
(d) The execution and delivery of this Agreement do not,
and consummation of the transactions contemplated herein will not,
violate any of the provisions of its organizational documents or any
agreement pursuant to which it is bound or, to its knowledge, any
applicable Laws.
(e) There are no pending suits or, to its knowledge,
actions or other proceedings or suits which have been threatened to be
instituted against it, in which it is a party and which affect the
consummation of the transactions contemplated hereby or, in any
material respect, its business or prospects. It does not believe, in
good faith, that any circumstances, events or conditions have occurred
which reasonably could be expected (based on its knowledge and
experience) to form the basis for a suit, action or other proceeding
against it which, if adversely determined, reasonably could be
expected to materially and adversely affect it.
(f) This Agreement is, and will be, valid, binding and
enforceable against it in accordance with its terms, subject to
bankruptcy, moratorium, insolvency and other Laws generally affecting
creditors' rights and general principles of equity (whether applied in
a proceeding in a court of law or equity).
4.2 REPRESENTATION AND WARRANTIES BY DEEPTECH. DeepTech warrants to Tatham Offshore as follows:
(a) It has been furnished with such information about
Tatham Offshore and the Common Stock and Preferred Stock as it has
requested and with such information as necessary to comply with any
and all applicable securities laws.
(b) It has made its own independent inquiry and
investigation into, and based thereon, has formed an independent
judgment concerning Tatham Offshore and the Common Stock and Senior
Preferred Stock.
(c) It has adequate means of providing for its current
needs and possible individual contingencies and is able to bear the
economic risks of this investment and has a sufficient net worth to
sustain a loss of its entire investment in Tatham Offshore in the
event such loss should occur.
(d) It has such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks
of an investment in Tatham Offshore.
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(e) It is an "accredited" investor within the meaning of
"accredited investor" under Regulation D of the Securities Act (as
amended, "Regulation D").
(f) It is not an issuer or an affiliate thereof, an
underwriter or dealer.
(g) It understands and agrees that the following
restrictions and limitations may be applicable to its purchase and
resales, pledges, hypothecation or other transfers of the Common Stock
and the Senior Preferred Stock pursuant to any applicable securities
rule or regulation (which may include Rule 144 or Regulation D and/or
the regulations promulgated thereunder):
(i) It agrees that the Shares shall not be sold,
pledged, hypothecated or otherwise transferred unless it is
registered under the Securities Act of 1933 and applicable
state securities laws or an exemption from such registration
is available; and
(ii) A legend will be placed on any certificate(s)
or other document(s) evidencing the investment in
substantially the following form:
THE SECURITIES REPRESENTED BY THIS INVESTMENT OR
DOCUMENT HAVE BEEN ACQUIRED FOR INVESTMENT AND HAVE
NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR THE SECURITIES LAWS OF ANY STATE.
WITHOUT SUCH REGISTRATION, SUCH SECURITIES MAY NOT BE
SOLD, PLEDGED, HYPOTHECATED, OR OTHERWISE
TRANSFERRED, EXCEPT UPON DELIVERY TO THE CORPORATION
OF AN OPINION OF COUNSEL SATISFACTORY TO THE
CORPORATION THAT REGISTRATION IS NOT REQUIRED FOR
SUCH TRANSFER OR THE SUBMISSION TO THE CORPORATION OF
SUCH OTHER EVIDENCE AS MAY BE SATISFACTORY TO THE
CORPORATION TO THE EFFECT THAT ANY SUCH TRANSFER
SHALL NOT BE IN VIOLATION OF THE SECURITIES ACT OF
1933, AS AMENDED, OR APPLICABLE STATE SECURITIES LAWS
OR ANY RULE OR REGULATION PROMULGATED THEREUNDER.
4.3 REPRESENTATIONS AND WARRANTIES BY TATHAM OFFSHORE. Tatham Offshore warrants to DeepTech as follows:
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(a) It is the rightful owner of 100% of the common stock
of TODI (the "TODI Interest"), free and clear of all liens and
encumbrances.
(b) The TODI Interest constitutes all of the ownership
interest in TODI.
ARTICLE V.
MISCELLANEOUS
5.1 ENTIRE AGREEMENT. This Agreement constitutes the entire agreement and supersedes all prior (oral or written) or oral contemporaneous proposals or agreements, all previous negotiations and all other communications or understandings between the Parties with respect to the subject matter hereof.
5.2 AMENDMENT AND MODIFICATION. All amendments, supplements and modifications to this Agreement shall be in writing and signed by each of the Parties.
5.3 COUNTERPARTS. This Agreement may be executed in multiple counterparts, each of which, when executed, shall be deemed an original, and all of which shall constitute but one and the same instrument.
5.4 PARTIES BOUND BY AGREEMENT. This Agreement shall be binding upon and shall inure to the benefit of the Parties and their respective successors and assigns.
5.5 TERMINOLOGY. All personal pronouns used in this Agreement, whether used in the masculine, feminine or neuter gender, shall include all other genders; the singular shall include the plural, and vice versa. Articles and other titles or headings are for convenience only, and neither limit nor amplify the provisions of the Agreement itself, and all references herein to articles, sections or subdivisions thereof shall refer to the corresponding article, section or subdivision thereof of this Agreement unless specific reference is made to such articles, sections or subdivisions of another document or instrument.
5.6 LAWS AND REGULATIONS. This Agreement and all of the terms and conditions contained herein, and the respective obligations of the Parties, are subject to all valid and applicable Laws.
5.7 GOVER ...
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