<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported):
JULY 31, 1996
NOBLE AFFILIATES, INC.
(Exact name of registrant as specified in its charter)
Delaware 0-7062 73-0785597
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
110 West Broadway, Ardmore, Oklahoma 73401
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code:
(405) 223-4110
<PAGE>
Item 2. ACQUISITION OR DISPOSITION OF ASSETS.
On July 31, 1996, Samedan Oil Corporation ("Samedan"), a Delaware
corporation and a wholly owned subsidiary of Noble Affiliates, Inc. (the
"Company"), acquired all the outstanding common stock of Energy Development
Corporation, a New Jersey corporation ("EDC"), pursuant to the terms of a
Stock Purchase Agreement (the "Stock Purchase Agreement") dated as of July 1,
1996 between Samedan and Enterprise Diversified Holdings Incorporated
("EDHI"), a New Jersey corporation and the sole stockholder of EDC.
EDC is a large independent gas and oil exploration and production
company headquartered in the United States. EDC has grown substantially
since 1988, primarily through strategic acquisitions and the exploitation of
its acquired properties.
The purchase price paid by Samedan at closing as determined under the
Stock Purchase Agreement was approximately $768,000,000 in cash. As
previously disclosed by the Company in a press release, the Company's
personnel have evaluated and estimated the proved reserves of EDC, as of
January 1, 1996, at approximately 37.7 million barrels of oil and 454.5
billion cubic feet of gas. Current daily production levels of EDC's
properties are approximately 11,000 barrels of oil and 211 million cubic feet
of gas. EDC's major properties are located in the Gulf of Mexico, onshore
gulf coast of Louisiana and Texas, and internationally in Argentina and the
United Kingdom Sector of the North Sea. In determining the amount of
consideration to be paid for the stock of EDC, the Company conducted a due
diligence review of EDC and its subsidiaries and their assets and
liabilities, including, without limitation, their holdings of proved reserves
of oil and gas. The purchase price was the result of arm's-length
negotiations with EDHI.
In connection with the acquisition, the Company entered into a new
$800,000,000 bank credit facility pursuant to a Credit Agreement (the "Credit
Agreement") (the terms of which are further described below) dated as of July
31, 1996 among the Company, as borrower, certain commercial lending
institutions which are or may become a party thereto, as lenders (the
"Lenders"), and Union Bank of Switzerland, Houston Agency, as agent (the
"Agent") for the Lenders. The borrowings of $800,000,000 under the Credit
Agreement were used to fund the purchase price for EDC and, together with
funds on hand, to repay $48,000,000 of outstanding indebtedness under the
Company's then existing credit agreement (the "old credit agreement") with
certain banks. The Company's old credit agreement was cancelled in
connection with the repayment.
The Credit Agreement provides for a $400,000,000 term loan, which has
certain scheduled prepayments and a final maturity of July 31, 2001, and a
$400,000,000 revolving credit facility with a final maturity of July 31,
2001. Borrowings under the Credit Agreement bear interest at a fluctuating
rate based on the Agent's base rate, or, at the Company's option, at a fixed
rate of interest for selected interest periods based upon a variable margin
over the Agent's Eurodollar rate.
The Credit Agreement contains covenants which limit, among other things,
the creation of liens on the assets of the Company and its subsidiaries, the
incurrence of additional indebtedness by the Company's subsidiaries, certain
mergers and acquisition of assets and certain
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<PAGE>
transactions with affiliates. The Credit Agreement also restricts, during a
period of default under the Credit Agreement, the payment of dividends and
other distributions in respect of the capital stock of the Company. The
Credit Agreement also contains certain financial covenants relating to the
consolidated financial condition of the Company and its subsidiaries,
including covenants relating to the ratio of its earnings to its interest
expense and the ratio of its indebtedness to its total capitalization.
The Credit Agreement specifies a number of events of default including,
among others, the failure to make timely payments of principal, fees and
interest, the failure of representations and warranties to be true, the
failure to perform the covenants contained therein, the occurrence of a
"change of control" (as defined in the Credit Agreement to include, among
other things, the ownership by any person or group of more than thirty
percent (30%) of the outstanding shares of voting stock of the Company) and
the termination or other impairment of any guaranty of the Company's
indebtedness under the Credit Agreement. The Credit Agreement also contains
a cross-default to other indebtedness of the Company aggregating more than
$25,000,000 and certain customary bankruptcy, insolvency and similar defaults.
The Credit Agreement generally permits the Company to prepay at its
option, in whole or in part and without premium or penalty, the indebtedness
under the Credit Agreement.
Pursuant to the terms of the Credit Agreement, the Company generally
must make mandatory prepayments on the term loan in amounts equal to (i) the
net cash proceeds in excess of $1,000,000 in the aggregate in any calendar
year from the sale of any of the Company's or its subsidiaries' oil and gas
assets or properties, (ii) the net cash proceeds from the issuance by the
Company or any of its subsidiaries of any common stock or preferred stock
(other than stock issued by a subsidiary of the Company to the Company or
another subsidiary of the Company or issuances of stock to officers,
directors or employees pursuant to a stock option plan or otherwise) and
(iii) the net cash proceeds from any additional indebtedness incurred by the
Company to the extent that the proceeds of such additional indebtedness is
not used to refinance or repay any indebtedness in existence prior to the
date of the Credit Agreement.
Additionally, the Credit Agreement provides that the Company shall
prepay $50,000,000 of principal under the term loan on each of December 31,
1996, June 30, 1997 and December 31, 1997. In the event, however, that on or
before December 31, 1996 the holders of at least $200,000,000 in principal
amount of the Company's 4 1/4% Convertible Subordinated Notes due 2003 convert
their notes into common stock of the Company, then the date of each of the
mandatory prepayments described above in this paragraph will be extended by
six months. The amounts of the mandatory prepayments described above in this
paragraph are subject to reduction by the amount of any prepayments made
prior to the respective prepayment dates as a result of any voluntary
prepayments or mandatory prepayments resulting from sales of stock.
Samedan and EDC have guaranteed all of the Company's obligations under
the Credit Agreement pursuant to guaranty agreements given in favor of the
Lenders. A form of the guaranty agreement is attached as an exhibit to the
Credit Agreement.
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<PAGE>
The foregoing statements are subject to the detailed provisions of the
Stock Purchase Agreement and the Credit Agreement and are qualified in their
entirety by reference to the Stock Purchase Agreement and the Credit
Agreement, copies of which are filed as exhibits to this report.
This report includes "forward-looking statements" within the meaning of
Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended. All statements other than
statements of historical fact included in this report, including, without
limitation, statements regarding estimates of proved reserves of oil and gas,
are forward-looking statements. Although the Company believes that the
expectations reflected in such forward-looking statements are reasonable, it
can give no assurance that such expectations will prove to have been correct.
Certain risks and uncertainties inherent in the Company's business are set
forth in other filings of the Company with the Securities and Exchange
Commission.
Item 7. FINANCIAL STATEMENTS AND EXHIBITS.
(a) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
It is impracticable to provide at this time the financial statements
required by Item 7(a) of Form 8-K. Pursuant to Item 7(a)(4) of Form 8-K,
such financial statements will be filed as soon as they are available and on
or before October 14, 1996.
(b) PRO FORMA FINANCIAL INFORMATION.
It is impracticable to provide at this time the pro forma financial
information required by Item 7(b) of Form 8-K. Pursuant to Item 7(b)(2) of
Form 8-K, such pro forma financial information will be filed as soon as it is
available and on or before October 14, 1996.
(c) EXHIBITS.
Exhibit 2.1 - Stock Purchase Agreement dated as of July 1, 1996
between Samedan Oil Corporation and Enterprise
Diversified Holdings Incorporated. (The Exhibits and
Schedules have been omitted pursuant to Item 601(b)(2)
of Regulation S-K. The Company hereby undertakes to
furnish to the Commission a copy of any omitted Exhibit
or Schedule upon request.)
Exhibit 10.1 - Credit Agreement dated as of July 31, 1996 among the
Company, as borrower, certain commercial lending
institutions which are or may become a party thereto, as
lenders, and Union Bank of Switzerland, Houston
Agency, as agent for the lenders.
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<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
Date: August 13, 1996 NOBLE AFFILIATES, INC.
By: /s/ WILLIAM D. DICKSON
----------------------------------
William D. Dickson,
Vice President-Finance and Treasurer
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<PAGE>
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---------------------------------
STOCK PURCHASE AGREEMENT
---------------------------------
dated as of July 1, 1996
between
ENTERPRISE DIVERSIFIED
HOLDINGS INCORPORATED
and
SAMEDAN OIL CORPORATION
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<PAGE>
I DEFINITIONS
1.01. Certain Defined Terms. . . . . . . . . . . . . . . 1
1.02. Other Defined Terms. . . . . . . . . . . . . . . . 7
II PURCHASE AND SALE
2.01. Purchase and Sale. . . . . . . . . . . . . . . . . 9
2.02. Purchase Price . . . . . . . . . . . . . . . . . . 9
2.03. Purchase Price Adjustments . . . . . . . . . . . . 9
2.04. Closing. . . . . . . . . . . . . . . . . . . . . . 11
III REPRESENTATIONS AND WARRANTIES OF THE SELLER
3.01. Incorporation and Authority of the Seller. . . . . 12
3.02. Incorporation and Qualification of the Company and the Subsidiaries;
Capital Stock of the Subsidiaries. . . . . . . . . . 12
3.03. Capital Stock of the Company . . . . . . . . . . . 13
3.04. No Conflict. . . . . . . . . . . . . . . . . . . . 14
3.05. Financial Statements . . . . . . . . . . . . . . . 14
3.06. Labor Matters. . . . . . . . . . . . . . . . . . . 15
3.07. Absence of Undisclosed Liabilities . . . . . . . . 15
3.08. Absence of Litigation. . . . . . . . . . . . . . . 16
3.09. Compliance with Laws . . . . . . . . . . . . . . . 16
3.10. Consents, Approvals, Licenses, Etc.. . . . . . . . 16
3.11. Personal Property. . . . . . . . . . . . . . . . . 17
3.12. Title to Properties. . . . . . . . . . . . . . . . 17
3.13. Employee Benefit Matters . . . . . . . . . . . . . 18
3.14. Insurance. . . . . . . . . . . . . . . . . . . . . 19
3.15. Taxes. . . . . . . . . . . . . . . . . . . . . . . 19
3.16. Material Contracts . . . . . . . . . . . . . . . . 20
3.17. Condition of Equipment . . . . . . . . . . . . . . 21
3.18. Environmental Matters. . . . . . . . . . . . . . . 21
3.19. Affiliate Agreements . . . . . . . . . . . . . . . 23
3.20. Brokers. . . . . . . . . . . . . . . . . . . . . . 23
3.21. Absence of Certain Changes . . . . . . . . . . . . 23
3.22. Outstanding Monetary Commitments . . . . . . . . . 24
3.23. Payments and Operations. . . . . . . . . . . . . . 24
3.24. Prepayments; Gas Imbalances. . . . . . . . . . . . 24
3.25. Intellectual Property. . . . . . . . . . . . . . . 25
3.26. Oil and Gas Operations . . . . . . . . . . . . . . 25
3.27. Governmental Regulations . . . . . . . . . . . . . 25
3.28. Foreign Properties . . . . . . . . . . . . . . . . 26
<PAGE>
3.29. 1996 Exploration Activities. . . . . . . . . . . . 26
3.30. Entech Agreement . . . . . . . . . . . . . . . . . 27
3.31. Disclosure . . . . . . . . . . . . . . . . . . . . 27
3.32. Indemnification Claims . . . . . . . . . . . . . . 27
3.33. Financial Statements of Seller . . . . . . . . . . 27
IV REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
4.01. Incorporation and Authority of the Purchaser . . . 28
4.02. No Conflict. . . . . . . . . . . . . . . . . . . . 29
4.03. Consents and Approvals . . . . . . . . . . . . . . 29
4.04. Absence of Litigation. . . . . . . . . . . . . . . 29
4.05. Investment Purpose . . . . . . . . . . . . . . . . 30
4.06. Financing. . . . . . . . . . . . . . . . . . . . . 30
4.07. Brokers. . . . . . . . . . . . . . . . . . . . . . 30
4.08. Reserve Data . . . . . . . . . . . . . . . . . . . 30
V ADDITIONAL AGREEMENTS
5.01. Conduct of Business Prior to the Closing . . . . . 30
5.02. Access to Information. . . . . . . . . . . . . . . 33
5.03. Confidentiality. . . . . . . . . . . . . . . . . . 33
5.04. Regulatory and Other Authorizations; Consents. . . 34
5.05. Independent Investigation. . . . . . . . . . . . . 35
5.06. Notice of Events . . . . . . . . . . . . . . . . . 35
5.07. Further Action . . . . . . . . . . . . . . . . . . 35
5.08. Acquisition Proposals. . . . . . . . . . . . . . . 35
5.09. Employee Termination Costs . . . . . . . . . . . . 36
5.10. Termination of Certain Agreements. . . . . . . . . 37
5.11. Updated Financial Statements . . . . . . . . . . . 37
VI TAX MATTERS
6.01. Tax Indemnities. . . . . . . . . . . . . . . . . . 38
6.02. Refunds and Tax Benefits . . . . . . . . . . . . . 39
6.03. Contests . . . . . . . . . . . . . . . . . . . . . 40
6.04. Preparation of Tax Returns . . . . . . . . . . . . 41
6.05. Section 338(h)(10) Election. . . . . . . . . . . . 41
6.06. Cooperation and Exchange of Information. . . . . . 42
6.07. Conveyance Taxes . . . . . . . . . . . . . . . . . 43
6.08. Safe Harbor Lease Consents/Filings . . . . . . . . 43
6.09. Extinguishment of Tax Allocation Agreements. . . . 43
6.10. Miscellaneous. . . . . . . . . . . . . . . . . . . 43
<PAGE>
VII CONDITIONS TO CLOSING
7.01. Conditions to Obligations of the Seller. . . . . . 44
7.02. Conditions to Obligations of the Purchaser . . . . 45
VIII INDEMNIFICATION
8.01. Survival . . . . . . . . . . . . . . . . . . . . . 45
8.02. Indemnification by the Purchaser . . . . . . . . . 46
8.03. Indemnification by the Seller. . . . . . . . . . . 48
IX TERMINATION, AMENDMENT AND WAIVER
9.01. Termination. . . . . . . . . . . . . . . . . . . . 51
9.02. Effect of Termination. . . . . . . . . . . . . . . 52
9.03. Waiver . . . . . . . . . . . . . . . . . . . . . . 52
X GENERAL PROVISIONS
10.01. Expenses. . . . . . . . . . . . . . . . . . . . . 52
10.02. Notices . . . . . . . . . . . . . . . . . . . . . 53
10.03. Public Announcements. . . . . . . . . . . . . . . 54
10.04. Headings. . . . . . . . . . . . . . . . . . . . . 54
10.05. Severability. . . . . . . . . . . . . . . . . . . 54
10.06. Entire Agreement. . . . . . . . . . . . . . . . . 54
10.07. Assignment. . . . . . . . . . . . . . . . . . . . 55
10.08. No Third-Party Beneficiaries. . . . . . . . . . . 55
10.09. Waivers and Amendments. . . . . . . . . . . . . . 55
10.10. Specific Performance. . . . . . . . . . . . . . . 55
10.11. Governing Law . . . . . . . . . . . . . . . . . . 56
10.12. Counterparts. . . . . . . . . . . . . . . . . . . 56
EXHIBIT A - Opinions of Counsel of Seller and the Company
<PAGE>
STOCK PURCHASE AGREEMENT, dated as of July 1, 1996, between
ENTERPRISE DIVERSIFIED HOLDINGS INCORPORATED, a New Jersey corporation (the
"Seller"), and SAMEDAN OIL CORPORATION, a Delaware corporation (the
"Purchaser").
W I T N E S S E T H :
WHEREAS, the Seller owns all the issued and outstanding shares of
common stock, without par value (the "SHARES"), of Energy Development
Corporation, a New Jersey corporation (the "COMPANY"); and
WHEREAS, the Seller wishes to sell to the Purchaser, and the
Purchaser wishes to purchase from the Seller, the Shares, upon the terms and
subject to the conditions set forth herein;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements and covenants hereinafter set forth, the Purchaser and the Seller
hereby agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.01. CERTAIN DEFINED TERMS. As used in this Agreement,
the following terms have the following meanings:
"ACTION" means any claim, action, suit, arbitration or proceeding
by or before any Governmental Authority or arbitrator.
"AFFILIATE" means, when used with respect to a specified Person,
another Person that, either directly or indirectly through one or more
intermediaries, controls or is controlled by or is under common control with
the Person specified.
"AGREEMENT" means this Stock Purchase Agreement, dated as of July
1, 1996, between the Seller and the Purchaser (including the Disclosure
Schedule, the Property Schedule and the Allocation Schedule) and all
amendments hereto made in accordance with Section 10.09.
"ALLOCATION SCHEDULE" means the schedule agreed to by the parties
which sets forth the allocated value of the Properties listed on the
Allocation Schedule.
<PAGE>
2
"BEST EFFORTS" means a party's best efforts in accordance with
reasonable commercial practice and without the incurrence of unreasonable
expense.
"BOOKS AND RECORDS" means all books of account and other financial
records pertaining to the Company and the Subsidiaries.
"BUSINESS" means the business of oil and gas exploration,
development, production and marketing, as conducted as of the date of this
Agreement by the Company and the Subsidiaries.
"BUSINESS DAY" means any day that is not a Saturday, a Sunday or
other day on which banks are required or authorized by law to be closed in
The City of New York.
"CONFIDENTIALITY AGREEMENT" means the letter agreement dated as of
February 16, 1996 between the Company and the Purchaser.
"DEFENSIBLE TITLE" means, as of the date set forth in the Property
Schedule and as to each Minor Property, such title that:
(i) Is defensible by the Company or the Subsidiaries, as
applicable, against any claim of superior title by any other Person; and
(ii) Entitles the Company or the Subsidiaries, as
applicable, to receive not less than the percentage Net Revenue Interest
for such Minor Property as described in the Property Schedule as the
"Net Revenue Interest" with respect to such Minor Property; and
(iii) Obligates the Company or the Subsidiaries, as
applicable, to pay costs and expenses relating to such Minor Property in
an amount not greater than the percentage Working Interest as described
in the Property Schedule as the "Working Interest" with respect to such
Minor Property; and
(iv) Except for Permitted Encumbrances, is free and clear
of any Encumbrance.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule delivered to
the Purchaser by the Seller pursuant to this Agreement.
"ECUADOR AGREEMENT" means an agreement and related work program
substantially as set forth in Exhibit B which may be entered into between the
Company and Petroecuador whereby the Company has been granted exploration,
production and commercial rights with respect to hydrocarbons in Block III.
<PAGE>
3
"ENCUMBRANCE" means any security interest, pledge, mortgage, lien,
charge, adverse claim of ownership or use, or other encumbrance of any kind.
"ENVIRONMENTAL LAW" means any applicable Law relating to public
health and safety or protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"GAAP" means United States generally accepted accounting
principles in effect from time to time applied consistently throughout the
period involved.
"GOVERNMENTAL AUTHORITY" means any government, any governmental
entity, department, commission, board, agency or instrumentality, and any
court, tribunal, or judicial or arbitral, body, whether federal, state, local
or foreign.
"GOVERNMENTAL ORDER" means any order, judgment, injunction,
decree, stipulation, determination or award entered by or with any
Governmental Authority.
"HSR ACT" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended, and the rules and regulations thereunder.
"INTELLECTUAL PROPERTY RIGHTS" means all (i) registrations of
trademarks, service marks, logos, corporate names, trade names or other trade
rights of the Company or any Subsidiary, (ii) pending applications by the
Company or any Subsidiary for any such registrations, (iii) rights in or to
patents and copyrights and pending applications therefor of the Company or
any Subsidiary, (iv) rights of the Company of any Subsidiary in, to or under
all, software, databases, geological data, geophysical data, engineering
data, maps, interpretations and other technical information (including rights
under leases and joint operating agreements pertaining to geological,
geophysical and technical information) used in the Business and (v) the
Company's and each Subsidiary's rights to other trademarks, service marks,
logos, corporate names, trade names and other trade rights and all other
trade secrets, designs, plans, specifications, technology, know-how, methods,
designs, concepts and other proprietary rights, whether or not registered.
"INTERCOMPANY ACCOUNTS" mean all Intercompany Receivables and all
Intercompany Payables, including, without limitation, all intercompany notes
receivable, intercompany notes payable, intercompany accounts receivable and
intercompany accounts payable.
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4
"INTERCOMPANY PAYABLES" means all amounts owed by the Company or
the Subsidiaries to the Seller or any of its Affiliates (other than the
Company or any Subsidiary), including, without limitation, all intercompany
notes payable (whether short or long term) and intercompany accounts payable.
"INTERCOMPANY RECEIVABLES" means all amounts due from the Seller
or any of its Affiliates (other than the Company or any Subsidiary) to the
Company or any Subsidiary, including, without limitation, all intercompany
notes receivable (whether short or long term) and intercompany accounts
receivable.
"INTERIM PERIOD" means the period beginning on the Effective Date
and ending on the Closing Date.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986,
as amended.
"IRS" means the United States Internal Revenue Service.
"KNOWLEDGE" or "KNOWN" means, with respect to any matter in
question, if any of the officers or other management employees of the Seller
or the Purchaser, as the case may be, who have authority over such matters
has actual knowledge of such matter following reasonable inquiry.
"LAW" means any federal, state, local or foreign statute, law,
ordinance, regulation, rule, code, order or rule of common law.
"LIABILITIES" means any and all debts, liabilities and
obligations, whether accrued or fixed, absolute or contingent, matured or
unmatured or determined or determinable.
"LICENSES" means all of the licenses, permits, franchises and
other governmental authorizations required for the operation of the Business.
"LOSSES" of a Person means any and all losses, liabilities,
damages, claims, awards, judgments, costs and expenses (including, without
limitation, reasonable attorney's fees) actually suffered or incurred by such
Person.
"MAJOR PROPERTIES" means those Properties included in the largest
wells, units or fields, as applicable, measured by the estimated future net
revenues attributable to the proved reserves for such wells, units or fields,
which comprise approximately 80% of the estimated future net revenues from
the Properties, which Major Properties are listed on Part I of the Property
Schedule.
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5
"MARKETABLE TITLE" means, as of the date set forth in the Property
Schedule and as to each Major Property, such title that:
(i) Is deducible of record (either, in the case of state
leases, from the records of the applicable county or parish or other
applicable state land office, in the case of federal leases, from the
records of the applicable office of the Bureau of Land Management or
Minerals Management Service, as applicable, in the case of Indian
leases, from the applicable office of the Bureau of Indian Affairs, and,
in the case of foreign interests, from the records of the appropriate
foreign agency) and free from reasonable doubt to the end that a willing
buyer engaged in the business of the ownership, development and
operation of the producing oil and gas properties with knowledge of all
of the facts and their legal bearing would be willing to accept the
same; and
(ii) Entitles the Company or the Subsidiaries, as applicable,
to receive not less than the percentage Net Revenue Interest for such
Major Property as described in the Property Schedule as the "Net Revenue
Interest" with respect to such Major Property; and
(iii) Obligates the Company or the Subsidiaries, as applicable,
to pay costs and expenses relating to such Major Property in an amount
not greater than the percentage Working Interest as described in the
Property Schedule with respect to such Major Property; and
(iv) Except for Permitted Encumbrances, is free and clear of
any Encumbrances.
"MATERIAL ADVERSE EFFECT" means any change or effect that is
materially adverse to the consolidated results of operations or the
consolidated financial condition of the Company and the Subsidiaries, taken
as a whole, except for any such changes or effects resulting from (i) changes
in general economic, regulatory or political conditions or changes that
affect the oil and gas industry in general and (ii) the announcement of the
transactions contemplated hereby or the performance of the covenants set
forth in Article V hereof.
"MINOR PROPERTIES" means the Properties listed on Part II of the
Property Schedule.
"NET REVENUE INTEREST" means the interest percentage of the
Company and/or any Subsidiary, as applicable, in and to all oil, gas and
liquid hydrocarbons produced, saved and marketed from the applicable well or
unit, after taking into account any applicable net profits interest,
production payment, reversionary interest or similar interest.
<PAGE>
6
"1995 BALANCE SHEET" means the audited consolidated balance sheet
of the Company and the Subsidiaries as of December 31, 1995, together with
the notes thereon.
"1995 FINANCIAL STATEMENTS" means the 1995 Balance Sheet and the
audited consolidated statements of income and retained earnings of the
Company and the Subsidiaries for the 12-month period ended on the 1995
Balance Sheet Date, together with the notes thereon.
"PERMITTED ENCUMBRANCES" means (i) Encumbrances for inchoate
mechanics' and materialmen's liens for construction in progress and
workmen's, repairmen's, warehousemen's and carriers' liens arising in the
ordinary course of the Business, (ii) requirements for consent to assignment
and other encumbrances of a similar nature which are part of contracts
customarily used in the oil and gas industry, (iii) Encumbrances for Taxes
not yet payable and for Taxes being contested in good faith for which
appropriate reserves are reflected in the 1995 Financial Statements, (iv)
Encumbrances and imperfections of title, including servitudes, permits,
surface leases and other rights in respect to surface operations, pipelines,
grazing, logging, canals, ditches, reservoirs or the like; conditions,
covenants or other restrictions; easements for streets, alleys, highways,
pipelines, power lines, telephone lines and railways, and other assessments
and rights-of-way, and all other liens, in each case listed in this
subsection (iv) that (A) do not arise in connection with or secure
indebtedness for money borrowed or owed or the extension of credit, (B) do
not materially detract from the value of the Property subject thereto or
affected thereby or otherwise materially impair the Property or operations
being conducted thereon or therewith, so a reasonably prudent operator
engaged in the oil and gas industry with knowledge of the facts and
circumstances and the legal effect thereon would accept title to such
Property subject to such detractions, interferences or impairments or (C) do
not reduce the percentage Net Revenue Interest or increase the percentage
Working Interest shown for the affected Property on the Property Schedule,
and (v) any other Encumbrances to the extent expressly set forth on the
Disclosure Schedule.
"PERSON" means any individual, partnership, firm, corporation,
association, trust, limited liability company, unincorporated organization, a
Governmental Authority or other entity, as well as any syndicate or group
that would be deemed to be a person under Section 13(d)(3) of the Exchange
Act.
"PROPERTIES" mean the Company's and the Subsidiaries' interests in
oil and gas leases, mineral rights, fee rights, licenses and concessions and
other tangible assets and properties relating to the operation of the
Business.
"PROPERTY SCHEDULE" means the Property Schedule attached to this
Agreement.
<PAGE>
7
"RETURN" means any report, return, declaration or other filing
(including schedules attached thereto) required to be supplied to any taxing
authority or jurisdiction with respect to Taxes including any amendments
thereto.
"SAFE HARBOR LEASES" are those agreements identified in Section
6.08 of the Disclosure Schedule, between The Louisiana Land and Exploration
Company, a Maryland corporation ("LL&E"), Inexco Oil Company, a Delaware
corporation ("INEXCO"), or Wilson Brothers Drilling Company, a Delaware
corporation ("WILSON"), as Lessee, and another qualified person, as Lessor,
entered into prior to January 1, 1984, and relating to a transfer of federal
income tax benefits pursuant to Section 168(f)(8) of the Internal Revenue
Code of 1954, as amended.
"SUBSIDIARIES" means those corporations and partnerships
identified on Section 3.04(a) of the Disclosure Schedule (each of which is
individually referred to as a "SUBSIDIARY") which consist of those
corporations and partnerships (or equivalent legal entity under foreign law)
of which the Company owns directly or indirectly more than 50% of the stock,
the holders of which are ordinarily and generally, in the absence of
contingencies or understandings, entitled to vote for the election of
directors and any partnership (or equivalent legal entity under foreign law)
in which the Company owns directly or indirectly more than a 50% interest.
"TAX" or "TAXES" means all income, gross receipts, sales, use,
employment, franchise, profits, property, stamp or other taxes, fees, duties,
assessments or charges of any kind whatsoever (whether payable directly or by
withholding), together with any interest and any penalties, additions to tax
or additional amounts imposed by any domestic or foreign taxing authority
with respect thereto.
"TAX LESSOR" is each of the parties identified as Lessor in the
Safe Harbor Leases.
"WORKING INTEREST" means the interest percentage of the costs and
expenses relating to operations on and development of the applicable well or
unit that the Company and/or any Subsidiary, as applicable, is obligated to
bear.
SECTION 1.02. OTHER DEFINED TERMS. The following terms have the
meanings defined for such terms in the Sections set forth below:
<PAGE>
8
TERM SECTION
- ---- -------
Acquisition Proposal 5.08
Argentina Licenses 3.28(b)
Audited Financial Statements 3.05
Benefit Plans 3.13(a)
CERCLA 3.18(b)(i)
Closing 2.04(a)
Closing Date 2.04(a)
Company Recitals
Contest 6.03(b)
Controlled Group Plans 3.13(b)
Effective Date 2.03(a)
Elections 6.01(a)
Entech 3.30
Entech Agreement 3.30
Environmental Law 3.18(b)(i)
Final Settlement Date 2.03(d)
Final Settlement Statement 2.03(d)
Financial Statements 3.05
Forms 8023-A 6.05(b)
Government Antitrust Authority 5.04(b)(i)
Hazardous Material 3.18(b)(i)
IPO Agreements 5.10
Latest Balance Sheet 3.05
Major Properties 3.12
Material Contracts 3.16(a)
Minor Properties 3.12
Purchaser Tax Benefit 6.02(b)
PUHCA 3.27
Purchase Price 2.02
Purchaser Preamble
Purchaser's Threshold Amount 8.02(b)
RCRA 3.18(b)(i)
<PAGE>
9
TERM SECTION
- ---- -------
Seller Preamble
Seller's Financial Statements 3.33
Seller's Threshold Amount 8.03(b)
Shares Recitals
Solid Waste 3.18(b)(i)
Straddle Period 6.01(c)
Subsidiary Shares 3.02(c)
Tax Liability Threshold Amount 6.01(d)
Termination Costs 5.09
Title Arbitrator 8.03(g)(v)
Title Defect 8.03(h)
UK Licenses 3.28(a)
Unaudited Financial Statements 3.05
ARTICLE II
PURCHASE AND SALE
SECTION 2.01. PURCHASE AND SALE. Upon the terms and subject to
the conditions set forth in this Agreement, the Seller agrees to sell to the
Purchaser, and the Purchaser agrees to purchase from the Seller, the Shares.
SECTION 2.02. PURCHASE PRICE. The aggregate purchase price for
the Shares shall be the sum of (i) $775 million in cash plus (ii) $4 million
in cash if the Company enters into the Ecuador Agreement prior to the
Closing, subject to adjustment as provided in Section 2.03 (as adjusted, the
"PURCHASE PRICE"). The Purchase Price shall be payable as provided in
Section 2.04(c).
SECTION 2.03. PURCHASE PRICE ADJUSTMENTS. (a) The Purchaser and
the Seller agree that for purposes of determining the Purchase Price, all
Intercompany Accounts as shown on the 1995 Balance Sheet shall be deemed
forgiven and charged or credited to capital as of January 1, 1996 (the
"EFFECTIVE DATE"). On the Closing Date, the Seller and the Company shall
execute and deliver such agreements and instruments as may be necessary or
appropriate to satisfy the Purchaser that all Intercompany Accounts existing
immediately prior to the Closing have been forgiven and charged or credited,
as appropriate, to capital.
<PAGE>
10
(b) The Purchaser and the Seller agree to adjust the Purchase Price
in the following manner:
(i) The Purchase Price shall be decreased (or increased), as
applicable, by an amount equal to the net increase (or decrease) in
Intercompany Receivables during the Interim Period.
(ii) The Purchase Price shall be increased (or decreased), as
applicable, by an amount equal to the net increase (or decrease) in
Intercompany Payables during the Interim Period.
(iii) The Purchase Price shall be decreased by the aggregate
amount of all dividends and the aggregate fair market value of other
distributions of property made by the Company during the Interim Period
to the extent such other distributions are effected at less than fair
market value.
(iv) The Purchase Price shall be increased for payments in respect
of Taxes made by the Seller to the Company or its Subsidiaries during
the Interim Period, and shall be decreased for payments in respect of
Taxes made by the Company or its Subsidiaries to the Seller during the
Interim Period. Notwithstanding Section 2.03(b)(i)-(ii), no adjustment to
the Purchase Price shall be made to reflect changes to the Intercompany
Accounts for Taxes in respect of periods after December 31, 1995.
(c) The Seller shall deliver to the Purchaser at least five
Business Days prior to Closing a statement as of the end of the month
preceding the month in which the Closing Date occurs setting forth (A) a
preliminary estimate of each adjustment amount to the Purchase Price in
accordance with SECTION 2.03(b)(i) THROUGH (iv) and (B) the activity in the
Intercompany Accounts during the month of Closing. If the parties are in
dispute with respect to any portion of an adjustment amount to be made to the
Purchase Price at the time of Closing, then no adjustment to the Purchase
Price shall be made at Closing related to the disputed portion of the
adjustment amount, and the disputed portion of the adjustment amount shall be
deferred for further consideration in connection with the post-Closing
adjustment referred to in Section 2.03(d).
(d) Within 60 days after the Closing, the Seller shall prepare, in
accordance with this Agreement, and provide to the Purchaser a statement (the
"FINAL SETTLEMENT STATEMENT") setting forth each Purchase Price adjustment to
be made pursuant to SECTION 2.03(b)(i) THROUGH (iv), including any revisions
to the Purchase Price adjustments made at Closing, and showing the
calculation of each such Purchase Price adjustment. Within 30 days after
receipt of the Final Settlement Statement, the Purchaser shall deliver to
<PAGE>
11
the Seller a written report containing any changes which the Purchaser
proposes be made to the Final Settlement Statement. The parties shall
undertake to agree with respect to the Final Settlement Statement no later
than 120 days after the Closing Date. In the event of any dispute with
respect to the Final Settlement Statement, the parties shall jointly retain
Price Waterhouse, or if such firm is not available or declines to so serve,
another independent accounting firm acceptable to both the Seller and the
Purchaser to settle such dispute. Such firm shall be instructed to calculate
the Purchase Price adjustments in accordance with this Agreement as soon as
practicable and in any event within 30 days after its engagement by the
parties. Such firm's determination shall be final and conclusive and binding
upon the parties. The date upon which such agreement is reached or upon
which the adjusted Purchase Price is established shall herein be referred to
as the "FINAL SETTLEMENT DATE". If (i) the adjusted Purchase Price
determined in accordance with this Section 2.03(d) is more than the adjusted
Purchase Price paid to the Seller at Closing, then the Purchaser shall pay to
the Seller in immediately available funds the amount of such difference, or
(ii) the adjusted Purchase Price determined in accordance with this Section
2.03(d) is less than adjusted Purchase Price paid to the Seller at Closing,
then the Seller shall pay to the Purchaser in immediately available funds the
amount of such difference. Payment by the Seller or the Purchaser shall be
made within five days after the Final Settlement Date.
SECTION 2.04. CLOSING. (a) Subject to the terms and conditions
of this Agreement, the sale and purchase of the Shares contemplated hereby
shall take place at a closing (the "CLOSING") to be held at 11:00 a.m.,
Houston time, on the later to occur of (a) July 31, 1996 or (b) the third
Business Day following the later to occur of (i) the expiration or
termination of the applicable waiting periods under the HSR Act and (ii) the
satisfaction or waiver of all other conditions to the obligations of the
parties set forth in Article VII, at the offices of the Company, 1000
Louisiana Street, Suite 2900, Houston, Texas, or at such other time or on
such other date or at such other place as the Seller and the Purchaser may
mutually agree upon in writing (the day on which the Closing takes place
being the "Closing Date").
(b) At the Closing, the Seller shall deliver or cause to be delivered
to the Purchaser: (i) stock certificates evidencing the Shares duly endorsed
in blank or accompanied by stock powers duly executed in blank; (ii) the
certificate required to be delivered pursuant to Section 7.02; (iii) the
written resignations of such directors and officers of the Company and the
Subsidiaries as the Purchaser shall, at least ten (10) days prior to the
Closing Date, specify in writing to the Seller, such resignations to be
effective at the Closing Date; (iv) a copy of the resolutions of the Board of
Directors of the Seller authorizing the execution, delivery and performance
by the Seller of this Agreement, certified by the Secretary or an Assistant
Secretary of the Seller; (v) certificates from appropriate officials
certifying as to the corporate existence and good standing of the Seller, the
Company and its
<PAGE>
12
Subsidiaries; and (vi) opinions of counsel for the Seller and the Company,
respectively, addressed to the Purchaser and together covering the matters
set forth in Exhibit A.
(c) At the Closing, the Purchaser shall deliver to the Seller: (i) the
Purchase Price, by wire transfer in immediately available funds, to an
account or accounts designated at least two Business Days prior to the
Closing Date by the Seller in a written notice to the Purchaser; and (ii) the
certificate required to be delivered pursuant to Section 7.01.
ARTICLE III
REPRESENTATIONS AND WARRANTIES OF THE SELLER
The Seller represents and warrants to the Purchaser as set forth in this
Article III. The representations and warranties in this Article III are
deemed to be material and the Purchaser is entering into this Agreement
relying on such representations and warranties.
SECTION 3.01. INCORPORATION AND AUTHORITY OF THE SELLER. The Seller is
a corporation duly incorporated, validly existing and in good standing under
the laws of the State of New Jersey and has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by the Seller, the performance by
the Seller of its obligations hereunder and the consummation by the Seller of
the transactions contemplated hereby have been duly authorized by all
requisite corporate action on the part of the Seller. This Agreement has
been duly executed and delivered by the Seller, and (assuming due
authorization, execution and delivery by the Purchaser) this Agreement
constitutes a legal, valid and binding obligation of the Seller enforceable
against the Seller in accordance with its terms.
SECTION 3.02. INCORPORATION AND QUALIFICATION OF THE COMPANY AND THE
SUBSIDIARIES; CAPITAL STOCK OF THE SUBSIDIARIES. (a) The Company and each
Subsidiary is a corporation duly incorporated, validly existing and in good
standing under the laws of its jurisdiction of incorporation and has the
requisite power and authority to own, operate or lease the properties and
assets now owned, operated or leased by it and to carry on that portion of
the Business as currently conducted by the Company or such Subsidiary in all
material respects. No actions or proceedings to dissolve the Company or any
Subsidiary are pending. The Company and each Subsidiary is duly qualified as
a foreign corporation to do business, and is in good standing, in each
jurisdiction where the character of its properties
<PAGE>
13
owned, operated or leased or the nature of its activities makes such
qualification necessary, except for such failures which, when taken together
with all other such failures, would not have a Material Adverse Effect. True
and complete copies of the Company's and each Subsidiary's certificate of
incorporation and bylaws (or equivalent organization documents), each of the
foregoing as amended to the date of this Agreement, stock records and minutes
of all meetings of the respective boards of directors, any committees of such
boards and stockholders (and all consents in lieu of such meetings) have been
made available for review by the Purchaser.
(b) The Company has no subsidiaries, equity investments or joint
ventures except those Subsidiaries, equity investments or joint ventures
which are identified in Section 3.02(b) of the Disclosure Schedule. No
proceedings are pending relating to the dissolution or liquidation of any
subsidiary (direct or indirect) of the Company or other entity owned
(directly or indirectly) by the Company.
(c) Section 3.02(c) of the Disclosure Schedule sets forth the
jurisdiction of incorporation of each Subsidiary, its authorized capital
stock and the number and type of its issued and outstanding shares of capital
stock (collectively, the "SUBSIDIARY SHARES"). The Subsidiary Shares
constitute all the issued and outstanding shares of capital stock of the
respective Subsidiaries. The Subsidiary Shares have been duly authorized and
validly issued and are fully paid and nonassessable and were not issued in
violation of any pre-emptive or similar rights. There are no outstanding (i)
options, warrants or rights of conversion or exchange or other rights,
agreements, arrangements or commitments relating to the capital stock of any
Subsidiary obligating any Subsidiary to issue or sell any of its shares of
capital stock or any securities of such Subsidiary convertible into or
exchangeable for such capital stock or (ii) equity equivalents, interests in
the ownership or earnings or other similar rights of or with respect to any
Subsidiary. The Company owns the Subsidiary Shares issued by the respective
Subsidiaries, free and clear of all Encumbrances, except as set forth on
Section 3.02(c) of the Disclosure Schedule.
SECTION 3.03. CAPITAL STOCK OF THE COMPANY. The Shares constitute
all the issued and outstanding shares of capital stock of the Company. The
Shares have been duly authorized and validly issued and are fully paid and
non-assessable and were not issued in violation of any preemptive or similar
rights. There are no outstanding (i) options, warrants or rights of
conversion or exchange or other rights, agreements, arrangements or
commitments relating to the capital stock of the Company obligating the
Company to issue, sell, repurchase, redeem or otherwise acquire any of its
shares of capital stock or any securities of the Company convertible into or
exchangeable for such capital stock or (ii) equity equivalents, interests in
the ownership or earnings or other similar rights of or with respect to the
Company. The Seller is the record and beneficial owner of the Shares,
<PAGE>
14
free and clear of all Encumbrances, except as set forth on Section 3.03 of
the Disclosure Schedule, and except as a result of the Seller's obligation to
transfer the Shares to the Purchaser pursuant to this Agreement and any
restriction on transfer to others arising out of this Agreement. On the
Closing Date, Seller will transfer and deliver to Buyer valid title to all
the Shares, free and clear of all Encumbrances.
SECTION 3.04. NO CONFLICT. Assuming all consents, approvals,
authorizations and other actions described in Section 3.10 have been obtained
and all filings and notifications listed in Section 3.10 of the Disclosure
Schedule have been made, and except as may result from any facts or
circumstances relating solely to the Purchaser or as described in Section
3.04 of the Disclosure Schedule, the execution, delivery and performance of
this Agreement by the Seller and the consummation of the transactions
contemplated hereby do not and will not (a) violate or conflict with the
Certificate of Incorporation or By-laws of the Seller, (b) conflict with or
violate any Law or Governmental Order applicable to the Seller, the Company
or any Subsidiary, except as would not, individually or in the aggregate,
have a Material Adverse Effect or (c) result in any breach of, or constitute
a default (or event which with the giving of notice or lapse of time, or
both, would become a default) under, or give to others any rights of
termination, amendment, acceleration or cancellation of, or result in the
creation of any Encumbrance on any of the assets or properties of the Company
or any Subsidiary pursuant to, any note, bond, mortgage, indenture, contract,
agreement, lease, license, permit, franchise or other instrument relating to
such assets or properties to which the Seller, the Company or any Subsidiary
is a party or by which any of such assets or properties is bound or affected,
except as would not, individually or in the aggregate, have a Material
Adverse Effect.
SECTION 3.05. FINANCIAL STATEMENTS. The Seller has caused to be
prepared and delivered to the Purchaser accurate and complete copies of (i)
the Company's audited consolidated balance sheets as of December 31, 1994 and
1995 as included in the Company's Registration Statement on Form S-1 (No.
33-2326), and the related audited consolidated statements of income,
stockholders' equity and cash flows for the years ended December 31, 1993,
1994 and 1995, and the notes and schedules thereto, together with the
unqualified report thereon of Deloitte & Touche LLP, independent public
accountants (the "AUDITED FINANCIAL STATEMENTS"), and (ii) the Company's
unaudited consolidated balance sheet as of March 31, 1996 (the "Latest
Balance Sheet"), and the related unaudited consolidated statements of income,
stockholders' equity and cash flows for the three-month period then ended
(the "Unaudited Financial Statements" and, together with the Audited
Financial Statements, the "Financial Statements"), certified by the Company's
chief financial officer. The Financial Statements (i) have been prepared in
accordance with GAAP, the Company's book and records and Regulation S-X
promulgated under the Securities Act of 1933 applied on a basis consistent
with preceding years throughout the periods involved, except that the
<PAGE>
15
Unaudited Financial Statements are not accompanied by notes or other textual
disclosure required by generally accepted accounting principles, and (ii)
fairly present in all material respects the Company's consolidated financial
position as of the respective dates thereof and its consolidated results of
operations and cash flows for the respective periods then ended, except that
the Unaudited Financial Statements are subject to normal year-end
adjustments, and except in each case for changes that may be necessary or
appropriate in connection with the reserve data referred to in Section 4.08.
SECTION 3.06. LABOR MATTERS . Neither the Company nor any Subsidiary
(i) is a party to any labor agreement with respect to its employees with any
labor organization, group or association, (ii) has any employees represented
by any labor organization, collective bargaining representative or group of
employees, (iii) has been the subject of any representational campaign by any
union or other organization or group seeking to become the collective
bargaining representative of any of its employees or been subject to or, to
the knowledge of the Company, threatened with any strike or other concerted
labor activity or dispute or (iv) is obligated to bargain collectively with
respect to wages, hours and other terms and conditions of employment with any
recognized or certified labor organization, collective bargaining
representative or group of employees. Except as set forth in Section 3.06
of the Disclosure Schedule or where the failure to comply would not,
individually or in the aggregate, have a Material Adverse Effect, the Company
and each Subsidiary is in compliance with all applicable Laws respecting
employment practices, terms and conditions of employment and wages and hours.
Except as set forth in Section 3.06 of the Disclosure Schedule or as would
not, individually or in the aggregate, have a Material Adverse Effect, as of
the date of this Agreement, (a) there is no unfair labor practice charge or
complaint against the Company or any Subsidiary pending or, to the knowledge
of Seller, threatened before the National Labor Relations Board or any
comparable domestic or foreign agency and (b) there is no labor strike, labor
disturbance or work stoppage pending or, to the knowledge of Seller,
threatened against the Company or any Subsidiary.
SECTION 3.07. ABSENCE OF UNDISCLOSED LIABILITIES. As of the Closing
Date, to the knowledge of the Seller there shall be no Liabilities of the
Company or any Subsidiary, except Liabilities (i) set forth in Section 3.07
of the Disclosure Schedule, (ii) as, and to the extent, reflected or reserved
against in the 1995 Financial Statements, (iii) fully covered by insurance
(except for deductible amounts as listed in Section 3.14 of the Disclosure
Schedule), (iv) with respect to the matters addressed in Section 3.15 and
Article VI (which shall be governed solely by the terms of such Section 3.15
and Article VI), (v) incurred in the ordinary course of business after the
date hereof and prior to the Closing Date (none of which is a liability for
breach of contract, tort or infringement of intellectual property), or (vi)
which would not, individually or in the aggregate, have a Material Adverse
Effect.
<PAGE>
16
SECTION 3.08. ABSENCE OF LITIGATION. Except as set forth in Section
3.08 of the Disclosure Schedule, as of the date of this Agreement (a) there
are no Actions pending or, to the knowledge of Seller, threatened against the
Seller, the Company or any Subsidiary or any of the assets or properties of
the Company or any Subsidiary that, individually or in the aggregate, would
have a Material Adverse Effect or would prevent the Seller from consummating
the transactions contemplated hereby and (b) the Company, the Subsidiaries
and their respective assets and properties are not subject to any
Governmental Order that has or is reasonably likely to have, individually or
in the aggregate, a Material Adverse Effect.
SECTION 3.09. COMPLIANCE WITH LAWS. The Company, the Subsidiaries, the
conduct of the Business and the operation of the properties of the Company
and the Subsidiaries are in compliance with all applicable Laws and
Governmental Orders (excluding Environmental Laws, as to which the Seller's
sole representations or warranties are set forth in Section 3.18, but
including, without limitation, the Foreign Corrupt Practices Act), except (a)
as set forth on Section 3.09 of the Disclosure Schedule or (b) where the
failure to comply would not have, individually or in the aggregate, a
Material Adverse Effect (provided that such materiality standard shall not be
applicable to any failure to comply with the Foreign Corrupt Practices Act).
Neither the Seller, the Company, any Subsidiary nor, to the knowledge of the
Seller, any third party operator of any of the Properties has received any
written notice to the effect that any of them are not in compliance with any
applicable Laws and Governmental Orders except (i) as set forth on Section
3.09 of the Disclosure Schedule or (ii) where the failure to comply would not
have, individually or in the aggregate, a Material Adverse Effect. No oil or
gas well in which the Company or any Subsidiary holds an interest is
presently, or may in the future become, subject to restraints under
applicable Laws and Governmental Orders on the production otherwise
producible therefrom as a result of such well having previously (prior to the
date hereof) produced in excess of its authorized or allowable rate of
production.
SECTION 3.10. CONSENTS, APPROVALS, LICENSES, ETC. No consent,
approval, authorization, license, order or permit of, or declaration, filing
or registration with, or notification to, any Governmental Authority, or any
other Person or entity, is required to be made or obtained by the Seller, the
Company, the Subsidiaries or any of their respective Affiliates in connection
with the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby, except: (a) as set
forth on Section 3.10 of the Disclosure Schedule; (b) applicable
requirements, if any, of the New Jersey Business Corporation Act and the HSR
Act; (c) where the failure to obtain such consents, approvals,
authorizations, licenses, orders or permits of, or to make such declarations,
filings or registrations or notifications, either individually or in the
aggregate, (i) would not prevent the Seller from performing its obligations
under this Agreement and (ii) would have a Material Adverse Effect and (d) as
may be necessary as a result of any facts or
<PAGE>
17
circumstances relating solely to the Purchaser. The Company, the
Subsidiaries and, to the knowledge of the Company, all third party operators
of any of the Properties hold all Licenses necessary or required for the
conduct of the Business. As of the date of this Agreement, all of such
Licenses are in full force and effect and the Company, the respective
Subsidiary or, to the knowledge of the Seller, each such third party operator
is in compliance with each such License, except as would not have,
individually or in the aggregate, a Material Adverse Effect. No notice has
been issued by any Governmental Authority and no Action is pending or, to the
knowledge of the Seller, threatened with respect to any alleged failure by
the Company, any Subsidiary or, to the knowledge of the Seller, any third
party operator of any of the Properties to have any such License revoked or
not to be in compliance therewith. To the knowledge of the Seller, no event
has occurred and is continuing which permits, or after notice or lapse of
time or both would permit, any modification or termination of any such
License. Except as set forth in Section 3.10 of the Disclosure Schedule, no
Property is subject to a preferential right to purchase that is applicable to
the transactions contemplated by this Agreement.
SECTION 3.11. PERSONAL PROPERTY; BANK ACCOUNTS. (a) Except as
disclosed in Section 3.11(a) of the Disclosure Schedule or as would not,
individually or in the aggregate, have a Material Adverse Effect: (i) the
Company and the Subsidiaries collectively own, have a valid leasehold
interest in or have the legal right to use all of the tangible personal
property necessary to carry on the Business, free and clear of all
Encumbrances, except Permitted Encumbrances and Encumbrances reflected on the
1995 Financial Statements; and (ii) the Company and the Subsidiaries
collectively own or have a valid license or sublicense to use all
Intellectual Property Rights that are necessary to carry on the Business,
free and clear of all Encumbrances, except Permitted Encumbrances.
(b) Section 3.11(b) of the Disclosure Schedule is a true and complete
list of (i) the names of each bank, savings and loan association, securities
or commodities broker or other financial institution in which the Company or
any Subsidiary has an account, including cash contribution accounts, and the
names of all Persons authorized to draw thereon or have access thereto, and
(ii) the location of all lockboxes and safe deposit boxes of the Company and
each Subsidiary and the names of all Persons authorized to draw thereon or
have access thereto.
SECTION 3.12. TITLE TO PROPERTIES. (a) Except (i) for
Encumbrances (A) disclosed in Part II of Section 3.12(a) of the Disclosure
Schedule (with respect to owned properties) and (B) as disclosed in Part II
of Section 3.12(b) of the Disclosure Schedule (with respect to leased
property), or (ii) for Permitted Encumbrances, the Company and the
Subsidiaries (1) have good and marketable title to the properties listed in
Part I of Section 3.12(a) of the Disclosure Schedule identified as being
owned in fee, in whole or in part, by the Company or the Subsidiaries and to
all of the buildings, structures and other improvements located thereon used
in the conduct of the Business and (2) have good and marketable title to the
leasehold estate under, and good and valid interest in, the properties listed
in Part I of Section 3.12(b) of the Disclosure Schedule identified as being
leased lands
<PAGE>
18
and to all of the buildings, structures, fixtures and other
improvements located thereon used in the conduct of the Business.
(b) Notwithstanding anything in Section 3.12(a) to the contrary, except
as identified on the Property Schedule, the title of the Company to each of
the (i) Major Properties is Marketable Title and (ii) Minor Properties is
Defensible Title.
SECTION 3.13. EMPLOYEE BENEFIT MATTERS. (a) With respect to each
employee benefit plan, program, arrangement or contract (including, without
limitation, any "employee benefit plan" as defined in Section 3(3) of ERISA)
maintained or contributed to by the Company or any Subsidiary (the "BENEFIT
PLANS"), the Seller has made available to the Purchaser a copy of (i) the
most recent annual report (Form 5500) filed with the IRS, (ii) such Benefit
Plan, (iii) if applicable, each trust agreement relating to such Benefit
Plan, (iv) the most recent summary plan description for each Benefit Plan for
which a summary plan description is required, (v) the most recent actuarial
valuation report prepared for any Benefit Plan which is a defined benefit
plan and (vi) the most recent determination letter, if any, issued by the IRS
with respect to any Benefit Plan qualified under Section 401(a) of the
Internal Revenue Code.
(b) With respect to the Benefit Plans and each employee benefit
plan, program, arrangement or contract (including, without limitation, any
"employee benefit plan" as defined in Section 3(3) of ERISA) maintained or
contributed to by any employer which along with the Company or any Subsidiary
would be treated as a single employer under Section 414 of the Internal
Revenue Code (together with the Benefit Plans, the "CONTROLLED GROUP PLANS"),
except as set forth in Section 3.13(b) of the Disclosure Schedule, no event
has occurred and, to the knowledge of the Seller, there exists no condition
or set of circumstances, in connection with which the Company or any
Subsidiary could be subject to any liability under the terms of the
Controlled Group Plans, ERISA, the Internal Revenue Code or any other
applicable Law which would have, individually or in the aggregate, a Material
Adverse Effect. There is no "accumulated funding deficiency" as defined in
Section 412 of the Internal Revenue Code (whether or not waived) with respect
to any of the Controlled Group Plans, and during the past five years neither
the Company nor any Subsidiary or other employer which along with the Company
or any Subsidiary would be treated as a single employer under Section 414 of
the Internal Revenue Code has made or been required to make contributions to
a "multiemployer plan" as defined in Section 3(37) of ERISA.
(c) The Seller has made available to the Purchaser (i) copies of
all employment agreements with officers of the Company and the Subsidiaries,
(ii) copies of all severance agreements, programs and policies of the Company
and the Subsidiaries with or relating to their employees, and (iii) copies of
all plans, programs, agreements and other arrangements of the Company and the
Subsidiaries with or relating to its employees which contain change in
control provisions. Except as set forth in Schedule 3.13(c) of the
Disclosure Schedule, no event has occurred and there exists no condition or
set of circumstances in connection with which the Company or any Subsidiary
could be subject to
<PAGE>
19
any liability under the terms of the agreements, programs, policies, plans
and arrangements described in this Section 3.13(c) which would have,
individually or in the aggregate, a Material Adverse Effect.
(d) Except as provided in Section 3.13(d) of the Disclosure Schedule or
as otherwise required by Law, no Benefit Plan of the Company or any
Subsidiary provides retiree medical or retiree life insurance benefits to any
Person at a cost to the Company or any Subsidiary.
SECTION 3.14. INSURANCE. All material properties and risks of the
Company and the Subsidiaries are covered by valid and currently effective
insurance policies or binders of insurance or programs of self-insurance in
such types and amounts and with such deductible amounts as are consistent
with customary practices and standards of companies engaged in businesses and
operations similar to those of the Company and the Subsidiaries. Set forth
on Section 3.14 to the Disclosure Schedule is a list of all (i) policies of
fire, liability, casualty, life and other insurance currently in force, (ii)
all pending claims against the Company and the Subsidiaries and (iii) the
termination dates for each such policy. To the Seller's knowledge, the
Company or one of the Subsidiaries, as applicable, has given timely notice to
the appropriate insurance carrier with respect to each such claim.
SECTION 3.15. TAXES. Except as set forth in Section 3.15 of the
Disclosure Schedule: (a) The Company and each Subsidiary has timely filed,
or has had filed on its behalf, in a timely manner (within any applicable
extension periods) with the appropriate taxing authority all Returns with
respect to Taxes of the Company and each of the Subsidiaries other than those
Returns on which an immaterial amount of Taxes would properly be shown the
failure of which to file would not have, individually or in the aggregate, a
Material Adverse Effect.
(b) All Taxes due and payable on all filed Returns of or with respect
to the Company and the Subsidiaries have been paid in full or have been
provided for on the 1995 Balance Sheet in accordance with GAAP;
(c) There are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any federal, state, local or
foreign income or other material Returns required to be filed by or with
respect to the Company or any of the Subsidiaries;
(d) None of the Returns of or with respect to the Company or any of the
Subsidiaries is currently being audited or examined by any taxing authority;
and
(e) No deficiency for any income Taxes has been assessed with respect
to the Company or any of the Subsidiaries that has not been abated or paid in
full.
SECTION 3.16. MATERIAL CONTRACTS. (a) Section 3.16(a) of the
Disclosure Schedule lists the following contracts (collectively, with the
leases listed in Part I of
<PAGE>
20
Section 3.12(b) of the Disclosure Schedule, the "MATERIAL CONTRACTS") in
effect as of the date of this Agreement to which the Company or any
Subsidiary is a party:
(i) any commitment, contract, agreement, note, loan, evidence of
indebtedness, purchase order, letter of credit (other than in respect of
the leases listed in Section 3.12(b) of the Disclosure Schedule) or
guarantee of the indebtedness of others that the Seller reasonably
anticipates will, in accordance with its terms, involve aggregate
payments by the Company or any Subsidiary of more than $100,000 within the
remaining term of such agreement;
(ii) any lease of personal property involving aggregate payments by
the Company or any Subsidiary in excess of $100,000;
(iii) any contracts or agreements containing covenants limiting
the freedom of the Company or any Subsidiary to engage in any line of
business or compete with any Person;
(iv) any employment agreements involving annual payments by the
Company or any Subsidiary in excess of $100,000;
(v) any contracts or agreements relating to exploration,
production, transportation and treatment of hydrocarbons involving the
annual payment to or by the Company or any Subsidiary in excess of
$100,000, or the creation of joint ventures for such purposes;
(vi) any farmins, farmouts or similar agreements providing for the
acquisition, sale or disposition of any interest in a property;
(vii) any contracts which provide for the sale of hydrocarbons
for a period of three months or more;
(viii) any sale or lease of real or personal property in excess
of $100,000; and
(ix) any contract requiring a capital expenditure or a commitment
for a capital expenditure in excess of $100,000.
(x) any obligation to make future payments, contingent or
otherwise, arising out of or relating to the acquisition or disposition
of any business, assets or stock of other companies by the Company or
any Subsidiary;
(xi) any agreements or arrangements relating to the release or
disposal of Hazardous Materials;
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21
(xii) any agreements with any Governmental Authority that currently
are binding on, or restrict the actions of, the Company or any
Subsidiary, other than leases or Licenses;
(xiii) any hedge, swap, futures, options or other derivatives
contract and similar contracts; and
(xiv) any contracts (other than existing production sales
contracts) containing calls on production or options to purchase
production in favor of a third party.
(b) Neither the Company nor any Subsidiary is (and, to the knowledge of
the Seller, no other party is), as of the date of this Agreement, in breach
or violation of, or default under, any of the Material Contracts, where such
breaches or violations or defaults would have, individually or in the
aggregate, a Material Adverse Effect or result in the creation of any
Encumbrance on any asset of the Company or any Subsidiary. Each Material
Contract is, as of the date of this Agreement, a valid agreement, arrangement
or commitment of the Company or the Subsidiary which is a party thereto,
enforceable against the Company or such Subsidiary in accordance with its
terms and, to the knowledge of the Seller, is a valid agreement, arrangement
or commitment of each other party thereto, enforceable against such party in
accordance with its terms, except in each case where enforceability may be
limited by bankruptcy, insolvency or other similar laws affecting creditors'
rights generally and except where enforceability is subject to the
application of equitable principles or remedies or as would not have,
individually or in the aggregate, a Material Adverse Effect. True and
complete copies of all written Material Contracts have heretofore been made
available to the Purchaser, and the Seller has provided the Purchaser with
written summaries of all such Material Contracts (if any) that are unwritten.
Each Material Contract is in full force and effect and no notices of
termination or cancellation thereof have been given or received by the
Company or any Subsidiary. Except as disclosed in Section 3.16 of the
Disclosure Schedule, there are no material unresolved disputes involving the
Company or any Subsidiary under the Material Contracts.
SECTION 3.17. CONDITION OF EQUIPMENT. Except as disclosed in Section
3.17 of the Disclosure Schedule, to the knowledge of the Seller, all
platforms, pipelines, wells, gas processing plants and other equipment and
machinery currently in use and material to the operation of the Business are
in reasonable repair, ordinary wear and tear excepted.
SECTION 3.18. ENVIRONMENTAL MATTERS. (a) Except as disclosed in Section
3.18 of the Disclosure Schedule, the Company and each Subsidiary currently
hold all the environmental, health and safety permits, licenses and approvals
of Governmental Authorities necessary for the current use, occupancy or
operation of that portion of the Business conducted by it, except for such
permits, licenses and approvals the absence of which would not, individually
or in the aggregate, have a Material Adverse Effect. To the knowledge of the
Seller, the Seller has provided the Purchaser with copies of or access to any
reports in the possession of the Seller, the Company or any Subsidiary of any
environmental
<PAGE>
22
assessment, audit investigation or study with respect to the real property
owned or leased by the Company or any Subsidiary.
(b) Except as set forth in Section 3.18 of the Disclosure Schedule:
(i) The Company and each Subsidiary is conducting the Business and
operating the Properties and since January 1, 1994 has conducted the
Business and operated the Properties in material compliance with all
applicable Environmental Laws and all Governmental Orders relating to
health, safety, the environment, Hazardous Materials (as such term is
defined in the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("CERCLA")), or Solid Wastes (as such term is
defined in the Resource Conservation and Recovery Act of 1976, as
amended by the Used Oil Recycling Act of 1980, the Solid Waste Disposal
Act Amendments of 1980, and the Hazardous and Solid Waste Amendments of
1984 ("RCRA"));
(ii) Neither the Company nor any Subsidiary has been notified by any
Governmental Authority that any of the Properties is the subject of any
investigation or inquiry by any Governmental Authority evaluating whether
any material remedial action is needed to respond to a release of any
Hazardous Material or to the improper storage or disposal (including
storage or disposal of offsite locations)of any Hazardous Material;
(iii) Neither the Company nor any Subsidiary has filed any
notice under any Environmental Law indicating that (A) the Company, any
Subsidiary or any former subsidiary of the Company is responsible for
the improper release into the environment, or the improper storage or
disposal, of any Hazardous Material, or (B) any Hazardous Material is
improperly stored or disposed of upon any Property;
(iv) Neither the Company nor any Subsidiary has any liability in
connection with (A) the release into the environment at or on any
property now or previously owned or leased by the Company, any
Subsidiary or any former subsidiary of the Company, or (B) storage or
disposal of any Hazardous Material that in either case would, individually
or in the aggregate, have a Material Adverse Effect;
(v) Neither the Company nor any Subsidiary has received any claim,
complaint, notice, inquiry or request for information which remains
unresolved as of the date hereof with respect to any alleged violation
of any Environmental Law or regarding potential liability under any
Environmental Law relating to operations or conditions or any facilities
or property owned, leased or operated by the Company, any Subsidiary or
any former subsidiary of the Company;
(vi) No property now or, to the knowledge of the Seller, previously
owned, leased or operated by the Company, any Subsidiary or any former
subsidiary of the
<PAGE>
23
Company is listed on the National Priorities List pursuant to CERCLA
or, to the knowledge of the Seller, on any other federal or state list as
sites requiring investigation or cleanup;
(vii) Neither the Company nor any Subsidiary is transporting, has
directly transported, is arranging for the transportation of, or has
transported, any Hazardous Material to any location which is listed on
the National Priorities List pursuant to CERCLA or on any similar
federal or state list or which is the subject of federal, state or local
enforcement actions or other investigations that may lead to claims against
any of them for remedial work, damage to natural resources or personal
injury, including claims under CERCLA which would, individually or in
the aggregate, have a Material Adverse Effect;
(viii) There are no sites, locations or operations at which the
Company or any Subsidiary is currently undertaking, any material
remedial or response action relating to any such disposal or release, as
required by Environmental Laws; and
(ix) All underground storage tanks and solid waste disposal
facilities owned or operated by the Company or any Subsidiary are used
and operated in material compliance with Environmental Laws.
(c) Notwithstanding anything in this Agreement to the contrary, the
representations and warranties made by the Seller in this Section 3.18 are
the exclusive representations and warranties made by the Seller with respect
to matters relating to the protection of health, safety and the environment
and no other representations or warranties made by the Seller in this
Agreement shall be deemed to cover or relate to such matters.
SECTION 3.19. AFFILIATE AGREEMENTS. Section 3.19 of the Disclosure
Schedule sets forth a list of all contracts existing as of the date of this
Agreement which relate to (a) the sale, provision or sharing of products or
services to the Company and the Subsidiaries by any other division, unit or
Affiliate of the Seller or (b) the sale, provision or sharing of products or
services by the Company and the Subsidiary to any other division, unit or
Affiliate of the Seller.
SECTION 3.20. BROKERS. Except for Morgan Stanley & Co., Incorporated,
no broker, finder or investment banker is entitled to any brokerage, finder's
or other fee or commission in connection with the transactions contemplated
by this Agreement based upon arrangements made by or on behalf of the Seller.
The Seller is solely responsible for the fees and expenses of Morgan Stanley.
SECTION 3.21. ABSENCE OF CERTAIN CHANGES. Except as disclosed on
Section 3.21 of the Disclosure Schedule, since March 31, 1996, (i) there has
not been any matter, fact or circumstance resulting, individually or in the
aggregate, in a Material Adverse Effect in, or any event or condition that
might reasonably be expected to result in any Material Adverse Effect in, the
business, assets, results of operations or condition (financial
<PAGE>
24
or otherwise) of the Company or the Subsidiaries, (ii) the Business has been
conducted only in the ordinary course consistent with past practice, (iii)
neither the Company nor any Subsidiary has incurred any material liability,
engaged in any material transaction or entered into any material agreement
outside the ordinary course of business consistent with past practice, and
(iv) neither the Company nor any Subsidiary has paid or committed to pay any
bonus or similar payment to any director, officer or employee thereof.
SECTION 3.22. OUTSTANDING MONETARY COMMITMENTS. Set forth in Section
3.22 of the Disclosure Schedule is a listing, as of May 31, 1996, of all
outstanding authorizations for expenditures relating to the Properties and
exceeding $100,000 individually. Except as set forth in Section 3.22 of the
Disclosure Schedule, there are no operations on the Properties in which the
Company's or any Subsidiary's commitment would have exceeded $100,000, being
conducted as of May 31, 1996, or any time thereafter, in which the Company or
any Subsidiary has elected not to participate since May 31, 1996.
SECTION 3.23. PAYMENTS AND OPERATIONS. Except as disclosed in Section
3.23 of the Disclosure Schedule, there are no royalties, shut-in royalties,
lease rental payments, deposits or other payments for which the Company or
any Subsidiary has any responsibility or liability that are payable (except
as accrued in the Financial Statements) or delinquent, and all such payments
that are due have been timely and properly paid (including, without
limitation, any royalties due in respect of (i) amounts received in
settlement of take or pay or similar contracts or (ii) amounts received for
the sale of oil in excess of posted prices), except any amount of royalties,
shut-in royalties, lease rental payments or other payments held in suspense
for title reasons and with respect to which the Company or such Subsidiary
has set aside appropriate reserves. The methods used by the Company and each
Subsidiary to calculate royalty payments comply with the terms of the leases,
Licenses and other agreements pertaining to the Properties and applicable
Laws and Governmental Orders. The Company and each Subsidiary have complied
with, performed and observed, and satisfied all of the material terms,
conditions, obligations and liabilities under any of the provisions of the
documents of title to the Properties, or any other agreements, instruments,
Laws and Governmental Orders relating to the Properties.
SECTION 3.24. PREPAYMENTS; GAS IMBALANCES. Neither the Company nor
any Subsidiary is obligated, by virtue of a prepayment arrangement, make-up
right under a production sales contract containing a "take or pay" or similar
provision, production payment or any other arrangement, to deliver
hydrocarbons, or proceeds from the sale thereof, attributable to any of its
Properties at some future time without then or thereafter being entitled to
receive payment of the contract price therefor. Except as set forth in
Section 3.24 of the Disclosure Schedule, at April 30, 1996, neither the
Company nor any Subsidiary had under any agreement, arrangement or past event
(i) any obligation to deliver gas from the Properties (or cash in lieu
thereof) to other owners of interests in those Properties as a result of past
production by the Company, any Subsidiary or any of their predecessors in
excess of the share to which they were entitled, or (ii) any right to receive
deliveries of gas from the Properties (or cash in lieu thereof) from other
owners of interests in those Properties as a result of past production by the
Company, any Subsidiary or any of their predecessors of less
<PAGE>
25
than the share to which they were entitled. Except as set forth in Section
3.24 of the Disclosure Schedule, at April 30, 1996, neither the Company nor
any Subsidiary had any other gas imbalances or make-up obligations (whether
arising at the wellhead, pipeline, gathering system or other level) under any
agreement, arrangement or past event.
SECTION 3.25. INTELLECTUAL PROPERTY. The Company and each
Subsidiary either owns or has valid agreements or Licenses granting them the
right to use all Intellectual Property Rights used in the Business. Except
as set forth in Section 3.25 of the Disclosure Schedule and except for
agreements giving the Company and the Subsidiaries the right to use certain
geological and geophysical data (which may contain limitations customary for
companies engaged in the business of the exploration and production of oil,
gas, condensate and other hydrocarbons), there are no limitations contained
in such agreements or Licenses which, upon consummation of the transactions
contemplated by this Agreement, will alter or impair any Intellectual
Property Rights, breach any agreement or License pertaining thereto with any
third-party vendor, or require payments or additional sums under such
agreements or Licenses. The Company and each Subsidiary is in compliance in
all material respects with all agreements and Licenses pertaining to
Intellectual Property Rights and there are no pending or, to the knowledge of
the Company, threatened Actions challenging or questioning the validity or
effectiveness of any such agreement or License or the right of the Company or
any Subsidiary to use, copy, modify or distribute the same.
SECTION 3.26. OIL AND GAS OPERATIONS. The Company and the
Subsidiaries have drilled and (if completed) completed, operated and produced
all of those wells for which any of the Company and the Subsidiaries serve as
operator in accordance with generally accepted oil and gas field practices
and in compliance in all material respects with applicable oil and gas leases
and all applicable Laws and Governmental Orders, except where any failures or
violations do not or would not have, individually or in the aggregate, a
Material Adverse Effect. All proceeds from the sale of oil, gas and other
hydrocarbons produced by the Company and the Subsidiaries are being received
by the Company and the Subsidiaries in a timely manner and are not being held
in suspense for any reason (except for amounts, individually or in the
aggregate, not in excess of $100,000 and held in suspense in the ordinary
course of business).
SECTION 3.27. GOVERNMENTAL REGULATIONS. Neither the Company nor any
Subsidiary is an "investment company," or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of
1940, as amended. Neither the Company nor any Subsidiary is a "holding
company" within the meaning of the Public Utility Holding Company Act of
1935, as amended ("PUHCA"). Neither the Company nor any Subsidiary has a
similar status under any similar state laws or regulations of the type
regulating public utilities. No consent or approval of, or other action by,
the Securities and Exchange Commission under PUHCA and the rules and
regulations promulgated thereunder is required in connection with the
execution, delivery and performance by the Seller of this Agreement.
Assuming the Purchaser is not a "holding company" within the meaning of
PUHCA, following the consummation of the transactions contemplated by this
Agreement neither the Company nor any Subsidiary will be a
<PAGE>
26
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or a "subsidiary company" of a "holding company" within the meaning
of PUHCA.
SECTION 3.28. FOREIGN PROPERTIES. (a) Brabant Petroleum Ltd. has not
(i) committed any material breach of any of the exploration and production
licenses covering Properties located in the U.K. Sector of the North Sea (the
"UK LICENSES"), or (ii) received notice that any of the parties to the UK
Licenses has committed any material breach of, or is in material default
under, any of the UK Licenses. The UK Licenses and all rights and interests
of Brabant Petroleum Ltd. thereunder or deriving therefrom are in full force
and effect and no act or omission of Brabant Petroleum Ltd. or, to the
knowledge of Seller, of any other Person has occurred that would entitle the
Department of Trade and Industry to revoke the UK Licenses. No notice has
been given to Brabant Petroleum Ltd. or, to the knowledge of Seller, to any
other Person by the Department of Trade and Industry of any intention to
revoke the UK Licenses or require further work to be conducted (whether in
relation to exploration or development), to call for the submission of or to
impose of development program.
(b) Energy Development Corporation (Argentina), Inc. has not (i)
committed any material breach of any of the exploration and production
licenses covering Properties located in Argentina (the "ARGENTINA LICENSES"),
or (ii) received notice that any of the parties to the Argentina Licenses has
committed any material breach of, or is in material default under, any of the
Argentina Licenses. The Argentina Licenses and all rights and interests of
Energy Development Corporation (Argentina), Inc. thereunder or deriving
therefrom are in full force and effect and no act or omission of Energy
Development Corporation (Argentina), Inc. or, to the knowledge of Seller, of
any other Person has occurred that would entitle the Secretary of Energy to
revoke the Argentina Licenses. No notice has been given to Energy
Development Corporation (Argentina), Inc. or, to the knowledge of Seller, to
any other Person by the Secretary of Energy of any intention to revoke the
Argentina Licenses or to require further work to be conducted (whether in
relation to exploration or development), to call for the submission of or to
impose a development program.
SECTION 3.29. 1996 EXPLORATION ACTIVITIES. Section 3.29 of the
Disclosure Schedule sets forth a listing of all exploration and development
activities in which the Company or any Subsidiary has elected to participate
since September 30, 1995 and with respect to which the Company or any
Subsidiary has expended or committed to expend $100,000 or more. The Seller
has provided the Purchaser with true and complete information (to the extent
the Company or any Subsidiary has such information in its possession or has
access to such information) regarding the status and results of all such
activities, including, without limitation, well logs, results of drill stem
tests, production information and other pertinent information.
SECTION 3.30. ENTECH AGREEMENT. Set forth on Section 3.30 of the
Disclosure Schedule is a true and correct listing, in all material respects,
of (i) all the Properties of a type described in clauses (i) and (ii) of
Section 2.13 of the Entech Agreement
<PAGE>
27
(as hereafter defined) that constitute "New Properties" under that certain
Amended and Restated Participation Agreement (the "ENTECH AGREEMENT") dated
December 27, 1993, between the Company and Entech Enterprises, Inc.
("ENTECH"), as agreed to between the Company and Entech, (ii) Entech's agreed
percentage net revenue interest and working interest in such New Properties
and (iii) those additional Properties which, to the knowledge of the Seller
and the Company, Entech claims to constitute "New Properties". No additional
properties or interests that may be acquired by the Company after the date
hereof, other than pursuant to agreements entered into by the Company prior
to December 31, 1994 will constitute "New Properties" under the Entech
Agreement.
SECTION 3.31. DISCLOSURE. To the Seller's knowledge, all well logs,
well pressures and other well test data furnished by the Seller to the
Purchaser for purposes of or in connection with the transactions contemplated
by this Agreement are true and accurate in all material respects.
SECTION 3.32. INDEMNIFICATION CLAIMS. There are no pending claims for
indemnification from the Company or any Subsidiary by any director, officer
or employee thereof and, to the Seller's knowledge, there are no facts or
circumstances that would reasonably be expected to form the basis for any
such claim.
SECTION 3.33. FINANCIAL STATEMENTS OF SELLER. The Seller has
delivered to the Purchaser accurate and complete copies of the Seller's
audited consolidated balance sheet as of December 31, 1995, and the related
audited consolidated statements of income, stockholders' equity and cash
flows for the year then ended, and the notes and schedules thereto, together
with the unqualified report thereon of Deloitte & Touche LLP, independent
public accountants (the "SELLER'S FINANCIAL STATEMENTS"). The Seller's
Financial Statements (i) have been prepared in accordance with GAAP and the
Seller's book and records and (ii) fairly present in all material respects
the Seller's consolidated financial position as of the date thereof and its
consolidated results of operations and cash flows for the period then ended,
except for changes that may be necessary or appropriate in connection with
the reserve data referred to in Section 4.08. Since December 31, 1995, there
has not been any material adverse change in the assets, results of operations
or financial condition of the Seller, except for changes in connection with
the reserve data referred to in Section 4.08.
THE EXPRESS REPRESENTATIONS AND WARRANTIES OF THE SELLER
CONTAINED IN THIS AGREEMENT ARE EXCLUSIVE AND ARE IN LIEU OF ANY
OTHER REPRESENTATION OR WARRANTY WITH RESPECT TO THE
ENVIRONMENTAL CONDITION, BOTH SURFACE AND SUBSURFACE, OR OTHER
CONDITION OF THE ASSETS OF THE COMPANY AND THE SUBSIDIARIES OR
THE OWNERSHIP OR OPERATION OF ANY OF SUCH ASSETS OF THE
COMPANY, OR ANY PART THEREOF.
EXCEPT AS SET FORTH IN ARTICLE III, ALL OF THE PERSONAL PROPERTY,
EQUIPMENT, IMPROVEMENTS AND FIXTURES RELATED TO THE PROPERTIES
SHALL BE ACQUIRED BY THE PURCHASER (THROUGH ITS
<PAGE>
28
ACQUISITION OF THE SHARES) "AS IS, WHERE IS". WITHOUT LIMITATION OF THE
GENERALITY OF THE IMMEDIATELY PRECEDING SENTENCE, THE SELLER EXPRESSLY
DISCLAIMS AND NEGATES AS TO PERSONAL PROPERTY, EQUIPMENT, IMPROVEMENTS AND
FIXTURES (a) ANY IMPLIED OR EXPRESS WARRANTY OF MERCHANTABILITY, (b) ANY
IMPLIED OR EXPRESS WARRANTY OF FITNESS FOR A PARTICULAR PURPOSE, (c) ANY
IMPLIED OR EXPRESS WARRANTY AS TO CONDITION, (d) ANY IMPLIED OR EXPRESS
WARRANTY OF CONFORMITY TO MODELS OR SAMPLES OF MATERIALS AND (e) ANY GUARANTY
OR WARRANTY AGAINST HIDDEN OR LATENT REDHIBITORY VICES UNDER LOUISIANA LAW,
INCLUDING LOUISIANA CIVIL CODE ARTICLES 2520 THROUGH 2548 AND THE WARRANTY
IMPOSED BY LOUISIANA CIVIL CODE ARTICLE 2476.
THE SELLER EXPRESSLY DISCLAIMS AND NEGATES, AND THE PURCHASER
HEREBY WAIVES, ANY REPRESENTATIONS OR WARRANTY WITH RESPECT TO
THE QUALITY, QUANTITY OR VOLUME OF THE RESERVES, IF ANY, OF OIL,
GAS OR OTHER HYDROCARBONS IN OR UNDER THE OIL AND GAS
PROPERTIES.
THERE ARE NO WARRANTIES, EXPRESS OR IMPLIED, THAT EXTEND BEYOND
THE FACE OF THIS AGREEMENT.
THE PURCHASER ACKNOWLEDGES THAT THE WAIVERS IN THIS SECTION
ARE CONSPICUOUS.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Seller as set forth in
this Article IV. The representations and warranties in this Article IV are
deemed to be material and the Seller is entering into this Agreement relying
on such representations and warranties:
SECTION 4.01. INCORPORATION AND AUTHORITY OF THE PURCHASER. The
Purchaser is a corporation duly incorporated, validly existing and in good
standing under the laws of Delaware and has all necessary corporate power and
authority to enter into this Agreement, to carry out its obligations
hereunder and to consummate the transactions contemplated hereby. The
execution and delivery of this Agreement by the Purchaser, the performance by
the Purchaser of its obligations hereunder and the consummation by the
Purchaser of the transactions contemplated hereby have been duly authorized
by all requisite corporate action on the part of the Purchaser. This
Agreement has been duly executed and delivered by the Purchaser, and
(assuming due authorization, execution and delivery by the Seller)
constitutes a legal, valid and binding obligation of the Purchaser
enforceable against the Purchaser in accordance with its terms, subject to
the effect of any applicable
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29
bankruptcy, reorganization, insolvency, moratorium or similar laws affecting
creditors' rights generally and subject, as to enforceability, to the effect
of general principles of equity (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
SECTION 4.02. NO CONFLICT. Assuming all consents, approvals,
authorizations and other actions described in Section 4.03 have been obtained
and all filings and notifications listed in Section 4.03 have been made, and
except as may result from any facts or circumstances relating solely to the
Seller, the execution, delivery and performance of this Agreement by the
Purchaser do not and will not (a) violate or conflict with the Certificate of
Incorporation or By-laws of the Purchaser, (b) conflict with or violate any
Law or Governmental Order applicable to the Purchaser, except as would not,
individually or in the aggregate, delay the consummation of the transaction
contemplated by this Agreement or have a material adverse effect on the
ability of the Purchaser to consummate the transactions contemplated by this
Agreement or (c) result in any breach of, or constitute a default (or event
which with the giving of notice or lapse of time, or both, would become a
default) under, or give to others any rights of termination, amendment,
acceleration or cancellation of, or result in the creation of any Encumbrance
on any of the assets or properties of the Purchaser pursuant to, any note,
bond, mortgage, indenture, contract, agreement, lease, license, permit,
franchise or other instrument relating to such assets or properties to which
the Purchaser is a party or by which any of such assets or properties is
bound or affected, except as would not, individually or in the aggregate,
delay the consummation of the transactions contemplated by this Agreement or
have a material adverse effect on the ability of the Purchaser to consummate
the transactions contemplated by this Agreement.
SECTION 4.03. CONSENTS AND APPROVALS. No consent, approval,
authorization, license, order or permit of, or declaration, filing or
registration with, or notification to, any Governmental Authority, or any
other Person or entity, is required to be made or obtained by the Purchaser
or any of its Affiliates in connection with the execution, delivery and
performance of this Agreement and the consummation of the transactions
contemplated hereby, except (a) applicable requirements, if any, of the
Delaware General Corporation Law and the HSR Act, (b) where failure to obtain
such consent, approval, authorization or action, or to make such filing or
notification, either individually or in conjunction with other such failures,
would not delay the consummation of the transactions contemplated by this
Agreement or not have a material adverse effect on the ability of the
Purchaser to consummate the transactions contemplated by this Agreement and
(c) as may be necessary as a result of any facts or circumstances relating
solely to the Seller.
SECTION 4.04. ABSENCE OF LITIGATION. No Action is pending or, to the
knowledge of the Purchaser, threatened against the Purchaser which would,
individually or in the aggregate, delay the consummation of the transactions
contemplated by this Agreement or have a material adverse effect on the
ability of the Purchaser to consummate the transactions contemplated by this
Agreement.
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30
SECTION 4.05. INVESTMENT PURPOSE. The Purchaser is acquiring the
Shares solely for the purpose of investment and not with a view to, or for
offer or sale in connection with, any distribution thereof.
SECTION 4.06. FINANCING. The Purchaser has all funds necessary to
consummate the transactions contemplated by this Agreement.
SECTION 4.07. BROKERS. No broker, finder or investment banker is
entitled to any brokerage, finder's or other fee or commission in connection
with the transactions contemplated by this Agreement based upon arrangements
made by or on behalf of the Purchaser.
SECTION 4.08. RESERVE DATA. The Purchaser acknowledges receipt of the
revised data as to the Company's reserves included in Section 4.08 of the
Disclosure Schedule.
ARTICLE V
ADDITIONAL AGREEMENTS
SECTION 5.01. CONDUCT OF BUSINESS PRIOR TO THE CLOSING. (a) Subject
to Section 5.01(d), the Seller covenants and agrees that, between the date
hereof and the Closing Date, it shall not permit the Company and the
Subsidiaries to conduct the Business other than in the ordinary course and
consistent with their prior practice except as described in Section 5.01(a)
of the Disclosure Schedule, without the prior written consent of the
Purchaser.
(b) The Seller covenants and agrees that, prior to the Closing, it
will cause the Company and the Subsidiaries to use all reasonable efforts to
preserve, maintain and protect the Properties, to preserve substantially
intact the business organization of the Business, to keep available to the
Purchaser the services of the employees of the Company and the Subsidiaries,
to keep in full force and effect the insurance coverage specified in Section
3.14 of the Disclosure Schedule and to preserve the current relationships of
the Company and the Subsidiaries with their respective customers, suppliers
and other Persons with which they have significant business relationships.
(c) The Seller covenants and agrees that, prior to the Closing, it will
not permit either the Company or any Subsidiary to amend its Certificate of
Incorporation or By-laws (or equivalent organization documents), merge or
consolidate, or obligate itself to do so, with or into any other entity or
authorize a liquidation, dissolution, reorganization or recapitalization,
without the prior written consent of the Purchaser.
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31
(d) The Seller covenants and agrees that, without the prior written
consent of the Purchaser, it will not permit either the Company or any
Subsidiary, prior to the Closing,
(i) to change its accounting methods, principles or practices, other
than such changes required by GAAP;
(ii) to declare, set aside or pay any dividend or other distribution
(whether in cash, stock, property or any combination thereof) in respect
of the Shares or Subsidiary Shares or redeem, repurchase or otherwise
acquire any equity securities issued by the Company or any Subsidiary;
(iii) to revalue any of its assets, including, without limitation,
writing down the value of inventory or writing off notes or accounts
receivable, other than in the ordinary course of business;
(iv) to establish or increase any bonus, insurance, severance,
deferred compensation, pension, retirement, profit sharing, stock option
(including, without limitation, the granting of stock options, stock
appreciation rights, performance awards, or restricted awards), stock
purchase or other employee benefit plan, or otherwise increase the
compensation payable or to become payable to any of their respective
officers or employees, except as may be required by Law;
(v) to enter into any employment or severance agreement with any of
their respective employees or establish, adopt, or enter into any
collective bargaining agreement;
(vi) to issue or sell any shares of capital stock of, or other equity
interests in, the Company or any Subsidiary, or securities convertible
into or exchangeable for such shares or equity interests;
(vii) to discontinue or modify any existing policy or binder of insurance
currently maintained in respect of the Company, any Subsidiary or the
Business;
(viii) to acquire, sell, lease, transfer or otherwise dispose of
(including farmouts), directly or indirectly, any assets, other than sales
of product produced in the ordinary course of business and sales of other
assets in the ordinary course of business having a fair market value in
the aggregate of not more than $50,000;
(ix) to incur, guarantee or assume any indebtedness for borrowed money;
(x) to mortgage or pledge any of their respective assets or create any
Encumbrance thereon;
(xi) to enter into or amend, modify or terminate any Material Contract;
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32
(xii) to make any elections regarding any operation with
respect to a Property;
(xiii) to make any loans, advances or capital contributions to,
or investments in, any other Person other than as required pursuant to
any contract or agreement to which the Company or a Subsidiary is a
party existing on the date hereof or entered into after the date hereof
without violation of this Agreement;
(xiv) to pay to any director, officer or employee any benefit
not required by any employee benefit agreement, trust, plan, fund or
other arrangement as in effect on the date hereof;
(xv) to make any capital expenditure or expenditures other than as
required pursuant to any contract or agreement to which the Company or a
Subsidiary is a party existing on the date hereof or entered into after
the date hereof without violation of this Agreement;
(xvi) except for (A) payroll expenditures, (B) royalty
payments, (C) payments of Taxes (other than any U.S. Federal corporate
income Tax unless liability for such Tax is included in amounts reserved
under the 1995 Balance Sheet) and (D) scheduled payments under any
contract or agreement to which the Company or a Subsidiary is a party
existing on the date hereof or entered into after the date hereof
without violation of this Agreement, to pay, discharge or satisfy any
claims, liabilities or obligations (whether accrued, absolute,
contingent, unliquidated or otherwise, and whether asserted or
unasserted).
(xvii) to enter into any transaction with any Person that is an
Affiliate of the Seller;
(xviii) to use funds from the Company or any Subsidiary to pay
any U.S. Federal corporate income Tax liability other than such a tax
liability included in amounts reserved on the 1995 Balance Sheet;
(xix) to take any action which would make any of the
representations or warranties of the Seller contained in this Agreement
untrue or inaccurate as of any time from the date of this Agreement to
the Closing or would or might result in any of the conditions set forth
in this Agreement not being satisfied; or
(xx) to authorize, propose or agree to take any of the foregoing
actions.
(e) Between the date hereof and the Closing Date, the Purchaser
shall be entitled to have representatives present at the corporate
headquarters of the Company. The Seller shall cause the Company and the
Subsidiaries to give such representatives prior notice of, and to include
such representatives in, all discussions and meetings concerning any matter
that may require approval of the Purchaser under Section 5.01(d) or that
would otherwise
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33
involve operational or administrative decisions. In addition, the Seller
shall cause to be delivered to such representatives at least five (5)
Business Days prior to the making of any disbursements, a list of the
Company's and each Subsidiary's planned disbursements with respect to the
Company's and each Subsidiary's accounts payable (other than payroll and
royalties).
SECTION 5.02. ACCESS TO INFORMATION. (a) From the date of this
Agreement until the Closing the Seller shall, and shall cause the officers,
employees, auditors and agents of the Seller, the Company and the
Subsidiaries, (i) to afford the officers, employees and authorized agents and
representatives of the Purchaser full and complete access, during normal
business hours or upon reasonable notice during non-business hours, to the
offices, properties, books and records of the Company and the Subsidiaries
(including such access as may be appropriate to permit the Purchaser to
conduct such an examination of title to the Properties as it deems necessary
or proper) and (ii) furnish to the officers, employees and authorized agents
and representatives of the Purchaser such additional financial and operating
data and other information regarding the Shares and the assets, properties,
goodwill and Business of the Company and the Subsidiaries as the Purchaser
may from time to time reasonably request in order to assist the Purchaser in
fulfilling its obligations under this Agreement and to facilitate the
consummation of the transfers contemplated hereby.
(b) The Purchaser agrees that it shall preserve and keep all Books
and Records relating to the business or operations of the Company and the
Subsidiaries on or before the Closing Date in the Purchaser's possession for
a period of at least eight years from the Closing Date. After such
eight-year period, before the Purchaser shall dispose of any of such Books
and Records, at least 90 calendar days' prior written notice to such effect
shall be given by the Purchaser to the Seller, and the Seller shall be given
an opportunity, at its cost and expense, to remove and retain all or any part
of such Books and Records as the Seller may select.
(c) Each party agrees that it will cooperate with and make
available to the other party, during normal business hours, all Books and
Records, information and employees (without substantial disruption of
employment) retained and remaining in existence after the Closing Date which
are necessary or useful in connection with any Tax inquiry, audit,
investigation or dispute, any litigation or investigation or any other matter
requiring any such Books and Records, information or employees for any
reasonable business purpose. The party requesting any such Books and
Records, information or employees shall bear all of the out-of-pocket costs
and expenses (including, without limitation, attorneys' fees and
reimbursement for the reasonable salaries and employee benefits for those
employees who are made available) reasonably incurred in connection with
providing such Books and Records, information or employees. The Seller may
require certain financial information relating to the Business for periods
prior to the Closing Date for the purpose of filing federal, state, local and
foreign Tax returns and other governmental reports, and the Purchaser agrees
to furnish such information to the Seller at the Seller's request and expense.
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34
SECTION 5.03. CONFIDENTIALITY. The terms of the Confidentiality
Agreement are hereby incorporated herein by reference and shall continue in
full force and effect until the Closing, at which time such Confidentiality
Agreement and the obligations of the Purchaser under this Section 5.03 shall
terminate; PROVIDED, HOWEVER, that the Confidentiality Agreement shall
terminate only in respect of that portion of the Proprietary Information (as
defined in the Confidentiality Agreement) exclusively relating to the
transactions contemplated by this Agreement. If this Agreement is, for any
reason, terminated prior to the Closing, the Confidentiality Agreement shall
continue in full force and effect in accordance with its terms.
SECTION 5.04. REGULATORY AND OTHER AUTHORIZATIONS; CONSENTS. (a)
Each party hereto shall use all reasonable efforts to obtain all
authorizations, consents, orders and approvals of, and to give all notices to
and make all filings with, all Governmental Authorities and other third
parties that may be or become necessary for its execution and delivery of,
and the performance of its obligations pursuant to, this Agreement and will
cooperate fully with the other party in promptly seeking to obtain all such
authorizations, consents, orders and approvals, giving such notices, and
making such filings. The Purchaser acknowledges that it shall be solely
responsible for obtaining the Licenses and all other consents, approvals and
authorizations referred to in Section 4.03 and the Seller agrees to assist
the Purchaser in its efforts with respect thereto. Each party hereto agrees
to make an appropriate filing of a Notification and Report Form pursuant to
the HSR Act with respect to the transactions contemplated hereby within five
Business Days of the date hereof and to supply promptly any additional
information and documentary material that may be requested pursuant to the
HSR Act. The parties hereto acknowledge that time shall be of the essence in
this Agreement and agree not to take any action that will have the effect of
unreasonably delaying, impairing or impeding the receipt of any required
authorizations, consents, orders or approvals.
(b) Without limiting the generality of the Purchaser's
undertakings pursuant to Section 5.04(a), the Purchaser shall:
(i) take promptly any or all of the following actions to the
extent necessary to eliminate any concerns on the part of any
Governmental Authority with jurisdiction over the enforcement of any
applicable antitrust laws ("GOVERNMENT ANTITRUST AUTHORITY") regarding
the legality under any antitrust law of the Purchaser's acquisition of
the Shares: entering into negotiations, providing information, making
proposals, entering into and performing agreements or submitting to
judicial or administrative orders, or holding separate (through the
establishment of a trust or otherwise), particular assets or categories
of assets, or Businesses, of the Company or any Subsidiary;
(ii) use its Best Efforts to prevent the entry in a judicial or
administrative proceeding brought under any antitrust law by any
Government Antitrust Authority or any other party of any permanent or
preliminary injunction or other order that would make consummation of
the acquisition of the Shares in accordance with the terms of
<PAGE>
35
this Agreement unlawful or that would prevent or delay such consummation,
including, without limitation, taking the steps contemplated by Section
5.04(b)(i);
(iii) take promptly, in the event that such an injunction or
order has been issued in such a proceeding, any and all reasonable
steps, including, without limitation, the appeal thereof, the posting of
a bond or the steps contemplated by Section 5.04(b)(i), necessary to
vacate, modify or suspend such injunction or order so as to permit such
consummation on a schedule as close as possible to that contemplated by
this Agreement; and
(iv) take promptly all other reasonable actions and do all other
things reasonably necessary and proper to avoid or eliminate each and
every impediment under any antitrust law that may be asserted by any
Government Antitrust Authority or any other party to the consummation of
the acquisition of the Shares by the Purchaser in accordance with the
terms of this Agreement.
(c) The Purchaser will use its Best Efforts to assist the Seller
in obtaining any consents of third parties necessary or advisable in
connection with the transactions contemplated by this Agreement, including,
without limitation, providing to such third parties such financial statements
and other publicly available financial information with respect to Noble
Affiliates, Inc., the parent corporation of the Purchaser, as such third
parties may reasonably request.
SECTION 5.05. INDEPENDENT INVESTIGATION. (a) The Purchaser
acknowledges and agrees that it (i) has made its own independent inquiry and
investigation into, and, based upon the information supplied to the Purchaser
by the Seller, has formed an independent judgment concerning, the Company,
the Subsidiaries and the Business and (ii) has been furnished with or given
adequate access to such information about the Company, the Subsidiaries and
the Business as it has requested. The Seller does not make, and has not
made, any representations or warranties relating to the Seller, the Company
or any Subsidiary other than those expressly set out herein which are made by
the Seller.
(b) Certain information set forth in the Disclosure Schedules is
included solely for informational purposes and may not be required to be
disclosed pursuant to this Agreement. The disclosure of any information
shall not be deemed to constitute an acknowledgement that such information is
required to be disclosed in connection with the representations and
warranties made by the Seller in this Agreement, nor shall such information
be deemed to establish a standard of materiality.
SECTION 5.06. NOTICE OF EVENTS. The Seller and the Purchaser
shall promptly notify each other of any event or circumstance which shall
occur prior to the Closing which shall constitute a breach of a
representation or warranty or a covenant or agreement of either the Seller or
the Purchaser.
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36
SECTION 5.07. FURTHER ACTION. Subject to the terms and conditions
herein provided, each of the parties hereto covenants and agrees to use its
Best Efforts to deliver or cause to be delivered such documents and other
papers and to take or cause to be taken such further reasonable actions as
may be necessary, proper or advisable under applicable Laws to consummate and
make effective the transactions contemplated hereby.
SECTION 5.08. ACQUISITION PROPOSALS. From the date hereof, none
of the Seller, the Company, any Subsidiary or any Affiliate, director,
officer, employee or representative of any of them shall, directly or
indirectly (i) solicit or initiate any Acquisition Proposal or (ii) engage in
discussions or negotiations with, enter into any agreements or understandings
with or disclose any nonpublic information relating to, the Company or any
Subsidiary, or afford access to the properties, books or records of the
Company or any Subsidiary to, any Person that is considering making or has
made an Acquisition Proposal. Seller shall immediately cease and cause to be
terminated any existing activities, discussions or negotiations with any
Persons conducted heretofore with respect to any Acquisition Proposal and
shall promptly request each such Person who has heretofore entered into a
confidentiality agreement in connection with an Acquisition Proposal to
return to Seller all confidential information heretofore furnished to such
Person by or on behalf of Seller, the Company or any Subsidiary. The Seller
and the Company will notify the Purchaser promptly by telephone, and
thereafter confirm in writing, if it receives any Acquisition Proposal after
the date hereof and advise the Purchaser of the terms thereof. The term
"ACQUISITION PROPOSAL", as used herein, means any offer or proposal for, or
any indication of interest in, a merger or other business combination
involving the Company or any Subsidiary or the acquisition of any equity
interest in, or a substantial portion of the assets of, the Company or any
Subsidiary, other than the transactions contemplated by this Agreement.
SECTION 5.09. EMPLOYEE TERMINATION COSTS. (a) The Seller hereby
agrees to indemnify the Purchaser, the Company and the Subsidiaries against
and hold each of them harmless from, and to reimburse the Company and the
Subsidiaries for, all costs and expenses relating to severance or termination
benefits (including amounts related to or paid pursuant to any incentive
plan, bonus pool or deferred compensation plan or arrangement), retention
payments, continuation of benefits, accrued vacation, outplacement and all
other similar costs, expenses and Losses related to the termination of an
employee's employment with the Company or any Subsidiary or the termination
of any incentive plan, bonus pool or deferred compensation plan or
arrangement or an employee's participation thereunder, either (i) triggered
by the consummation of the transactions contemplated by this Agreement or
(ii) related to the voluntary or involuntary termination of any employee's
employment with the Company or any Subsidiary or the termination of any
incentive plan, bonus pool or deferred compensation plan or arrangement or an
employee's participation thereunder prior to or within six months in the case
of involuntary terminations or one (1) year in the case of voluntary
terminations, in each case following the Closing (collectively, "TERMINATION
COSTS"), to the extent such Termination Costs relate to or are paid pursuant
to any plan, program, agreement, arrangement, policy or practice entered into
or adopted at any time prior to the Closing. The reimbursement of the
Termination Costs shall be made from time to time by the delivery of
immediately available funds by the Seller to either the Purchaser,
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37
the Company or any Subsidiary (as specified by the Purchaser) within five (5)
Business Days of the Purchaser's written notice to the Seller of the
incurrence of any Termination Costs. The Purchaser shall cause the Company
to make available to the Seller such Books and Records as may be reasonably
necessary to allow the Seller to verify the amount of Termination Costs.
Nothing contained in this Agreement shall be deemed to require the Purchaser,
the Company or any Subsidiary to take or omit to take any action that might
mitigate or reduce the amount of Termination Costs.
(b) The Seller hereby agrees to indemnify the Purchaser, the
Company and the Subsidiaries against and hold each of them harmless from, and
to reimburse the Company and the Subsidiaries for, any contributions,
premiums or other payments the Company or any Subsidiary is required to make
or pay after the Closing to or with respect to any of the Controlled Group
Plans as in effect at any time prior to the Effective Date to fund benefits
or provide coverage for employees of the Company or any Subsidiary with
respect to periods of employment prior to the Effective Date (collectively,
"Plan Costs"). The reimbursement of the Plan Costs shall be made from time
to time by the delivery of immediately available funds by the Seller to
either the Purchaser, the Company or any Subsidiary (as specified by the
Purchaser) within five (5) Business Days of the Purchaser's written notice to
the Seller of the incurrence of any Plan Costs. The Purchaser shall cause
the Company to make available to the Seller such Books and Records as may be
reasonably necessary to allow the Seller to verify the amount of Plan Costs.
Nothing contained in this Agreement shall be deemed to require the Purchaser,
the Company or any Subsidiary to take or omit to take any action that might
mitigate or reduce the amount of Plan Costs.
SECTION 5.10. TERMINATION OF CERTAIN AGREEMENTS. Prior to the
Closing, the Seller shall, or shall cause its Affiliates to, (i) terminate
and cancel all agreements and arrangements (collectively, the "IPO
AGREEMENTS") entered into between the Company and the Seller or any of its
Affiliates in contemplation of the proposed initial public offering by the
Company contemplated by the Company's Registration Statement on Form S-1 (No.
33-2326), including, without limitation, the Tax Allocation Agreement,
Administrative Services Agreement, Indemnification Agreement, Cash Management
Agreement and Stock Restriction, Registration and Option Agreement referred
to under "Certain Transactions" in such Form S-1, (ii) return to the Company
the aggregate amounts paid by the Company or any Subsidiary to the Seller or
any of its Affiliates under the IPO Agreements and (iii) execute releases
satisfactory to the Purchaser releasing the Company from any liability or
obligation under the IPO Agreements. Promptly following the execution of this
Agreement, the Seller shall cause the Company to withdraw such Registration
Statement in accordance with the rules and regulations promulgated under the
Securities Act of 1933.
SECTION 5.11. UPDATED FINANCIAL STATEMENTS. On or before July 31,
1996, the Seller shall cause the Company to prepare and deliver to the
Purchaser (i) the Company's unaudited consolidated balance sheet as of June
30, 1995 and 1996, and the related unaudited consolidated statements of
income, stockholders' equity and cash flows for each of the six-month periods
then ended, all of which shall be prepared on the same basis as the Unaudited
Financial Statements and (ii) reissued Audited Financial Statements as of
December 31, 1995
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38
revised as necessary or appropriate to reflect the revised estimated reserves
of the Company as previously discussed by the parties and substantially in
accordance with the data referred to in Section 4.08.
ARTICLE VI
TAX MATTERS
SECTION 6.01. TAX INDEMNITIES. (a) Subject to Section 6.01(d),
the Seller shall indemnify the Purchaser and its Affiliates and the Company
and its Subsidiaries, and hold them harmless from and against (i) any
liability for Taxes (other than conveyance taxes, which are allocated to the
Purchaser pursuant to Section 6.07) of the Company and the Subsidiaries due
in respect of all taxable periods ending before the Effective Date, the
portion of any Straddle Period (as defined below) ending on the Effective
Date, and in respect of U.S. Federal corporate income Tax, the portion of
1996 ending on the Closing Date, but Seller shall not be liable for any Tax
(other than a Tax resulting from the Elections) which is included in amounts
reserved on the 1995 Balance Sheet (including the trial balance sheet
relating thereto)), (ii) any liability that may be imposed on the Company or
any Subsidiary pursuant to Section 1.1502-6 of the Treasury Regulations
promulgated under the Internal Revenue Code or pursuant to any analogous
provision of state or local law, as a result of the affiliation of the
Company or such Subsidiary with the Seller or an Affiliate of the Seller or
predecessor-in-interest, (iii) any liability for Taxes resulting from
elections (the "ELECTIONS") under Section 338(g) and 338(h)(10) of the
Internal Revenue Code with respect to the Company and the Subsidiaries, and
any comparable elections under state or local tax laws, PROVIDED, HOWEVER,
that no indemnity shall be provided under this Agreement for any Taxes
resulting from (1) a breach by the Purchaser of its obligations under this
Agreement, (2) a reduction in any net operating loss, capital loss or tax
credit carryover allocable to the Company or any Subsidiary, or (3) any
transaction of the Company or any Subsidiary occurring after the Closing on
the Closing Date (other than the Elections and other than transactions that
are in the ordinary course of business).
(b) From and after the Closing Date, except as provided in
Section 6.01(a) above, the Purchaser and the Company shall indemnify the
Seller and its Affiliates and hold them harmless from and against (i) Taxes
due pursuant to Section 6.07 herein, (ii) Taxes due in respect of all taxable
periods commencing on or after the Effective Date (other than U.S. Federal
corporate income Taxes due in respect of the portion of 1996 ending on the
Closing Date, except to the extent attributable to a transaction after the
Closing on the Closing Date (other than the Elections and other than
transactions that are in the ordinary course of business)), and (iii) the
portion of any Straddle Period (as defined below) beginning on the Effective
Date imposed on or with respect to the Company or its Subsidiaries.
(c) Any Taxes for a tax period beginning before the Effective Date
and ending after the Effective Date (a "STRADDLE PERIOD") shall be
apportioned between the Seller and the Purchaser, in the case of real and
personal property taxes and franchise taxes not
<PAGE>
39
based on gross or net income, on a per diem basis and, in the case of other
Taxes (including sales and transfer Taxes), shall be determined based on the
actual operation of the Company and the Subsidiaries during the portion of
such period ending on the day before the Effective Date and the portion of
such period beginning on the Effective Date. Each such portion of such
period shall be deemed to be a tax period subject to the provisions of
Section 6.01(a) and 6.01(b) above. Notwithstanding the foregoing, in the case
of any Tax based upon or measured by capital (including net worth or
long-term debt) or intangibles, the amount of such Tax allocated to the
period ending on the day before the Effective Date shall be computed by
reference to the level of such items on such Date.
(d) The respective indemnification obligations of the Purchaser
and the Seller pursuant to this Section 6.01 resulting from any Contest (as
defined in Section 6.03(b)) shall not be effective until the aggregate dollar
amount of all Taxes which would otherwise be payable pursuant to this Article
VI by such party exceeds $100,000 (the "TAX LIABILITY THRESHOLD AMOUNT"). It
being agreed and understood that, if such amount is exceeded, the Seller or
the Purchaser, as the case may be, shall be liable to the full extent of such
Losses, including those not in excess of the Tax Liability Threshold Amount.
(e) Payment by an indemnitor of any amount due under this Section
6.01 shall be made within 30 days following written notice by the indemnitee
that payment of such amounts to the appropriate tax authority is due,
provided that the indemnitor shall not be required to make any payment
earlier than two days before it is due to the appropriate tax authority. If
the Seller receives an assessment or other notice of Taxes due with respect
to the Company or any of its Subsidiaries for any period ending on or before
the Closing Date for which the Seller is not responsible, in whole or in
part, pursuant to paragraph (a) of this Section 6.01 because all or part of
such Tax was included in an amounts reserved on the 1995 Balance Sheet
(including the trial balance sheet relating thereto), and the Seller pays
such Tax, then the Purchaser or the Company shall pay to the Seller, in
accordance with the first sentence of this Section 6.01(e), the amount of
such Tax for which Seller is not responsible under Section 6.01(a). In the
case of a Tax that is contested in accordance with the provisions of Section
6.03, payment of such Tax to the appropriate tax authority will not be
considered to be due earlier than the date a final determination to such
effect is made by the appropriate taxing authority or a court.
SECTION 6.02. REFUNDS AND TAX BENEFITS. (a) The Purchaser shall
promptly pay to the Seller any refund or credit (including any interest paid
or credited with respect thereto) received by the Purchaser, the Company or
any Subsidiary of Taxes (i) relating to taxable periods or portions thereof
ending before the Effective Date (but for U.S. Federal corporate income Taxes
relating to taxable periods or portions thereof ending on or before the
Closing Date) or (ii) attributable to an amount paid by or on behalf of the
Seller under Section 6.01 hereof. The Purchaser shall, if the Seller so
requests and at the Seller's expense, cause the relevant entity to file for
and obtain any refund to which the Seller is entitled under this Section
6.02. The Purchaser shall permit the Seller to control (at the Seller's
expense) the prosecution of any such refund claim, and shall cause the
relevant
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40
entity to authorize by appropriate power of attorney such persons as the
Seller shall designate to represent such entity with respect to such refund
claim.
(b) Any amount otherwise payable by the Seller under Section 6.01
shall be reduced by any net Tax benefit (as reduced by any related Tax
detriment) realized by the Purchaser, the Company, any Subsidiary or any of
their Affiliates in a period or portion thereof ending after the Effective
Date or, in the case of U.S. Federal corporate income Tax, after the Closing
Date (a "PURCHASER TAX BENEFIT") as a result of either an adjustment to Taxes
for which the Seller is responsible under Section 6.01 (such as a timing
adjustment resulting in an accelerated Tax deduction for the Company or any
Subsidiary for a period after the relevant Date) or a Tax deduction resulting
from an indemnifiable payment of Taxes. If a payment is made by the Seller
in accordance with Section 6.01, and if in a subsequent taxable year a
Purchaser Tax Benefit that was not previously taken into account pursuant to
the preceding sentence to reduce an amount otherwise payable by the Seller
under Section 6.01 is realized by the Purchaser, the Company, any Subsidiary
or any of their Affiliates, the Purchaser, the Company, any such Subsidiary
or any such Affiliate shall pay to the Seller at the time of such realization
the amount of such Purchaser Tax Benefit to the extent that the Purchaser Tax
Benefit would have resulted in a reduction in the amount paid by the Seller
under Section 6.01 if the Purchaser Tax Benefit had been obtained in the year
of such payment. Tax benefits and detriments used in computing a Purchaser
Tax Benefit will be considered to be realized for purposes of this Section
6.02 and Section 8.03 at the time that they are reflected on a Tax return of
the Purchaser, the Company, any Subsidiary or any of their Affiliates.
(c) Neither the Seller nor any Affiliate thereof shall be required
to pay to the Purchaser or the Company any refund or credit of Taxes that
results from the carryback to any taxable period beginning prior to the
Effective Date of any net operating loss, capital loss or tax credit
attributable to the Company or any of its Subsidiaries in any taxable period
beginning on or after the Effective Date.
SECTION 6.03. CONTESTS. (a) After the Closing Date, the
Purchaser shall notify the Seller in writing promptly and in any event within
60 days of the commencement of any Tax audit or administrative or judicial
proceeding or of any demand or claim on the Purchaser or the Company or a
Subsidiary which, if determined adversely to the taxpayer or after the lapse
of time would be grounds for indemnification under Section 6.01. Such notice
shall contain factual information (to the extent known to the Purchaser or
the Company or a Subsidiary) describing the asserted Tax liability in
reasonable detail and shall include copies of any notice or other document
received from any taxing authority in respect thereof. If the Purchaser
fails to give the Seller notice within 60 days as required by this Section
6.03 (or not later than 20 days if necessary for the Seller to adequately
contest an asserted Tax liability), then the Seller shall not have any
obligation to indemnify for any loss arising out of such asserted Tax
liability.
(b) The Seller may elect to direct, through counsel of its own
choosing and at its own expense, any audit, claim for refund and
administrative or judicial proceeding
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41
involving any asserted liability with respect to which indemnity may be
sought from the Seller under Section 6.01, or, if indemnity may be sought
from the Seller only in respect of a portion of any such audit, claim for
refund or administrative or judicial proceeding, and if such portion may be
severed from the balance thereof, then the Seller's right to direct shall
relate only to such portion thereof (any such audit, claim for refund or
proceeding or, if applicable, any such portion thereof is referred to herein
as a "CONTEST"). If the Seller elects to direct a Contest, it shall within
30 calendar days of receipt of the notice of asserted Tax liability notify
the Purchaser of its intent to do so, and the Purchaser shall cooperate and
shall cause the Company and/or the appropriate Subsidiaries to cooperate
(with the Seller bearing the reasonable cost of outside professional fees and
outside disbursements), in each phase of such Contest. If the Seller elects
not to direct the Contest, fails to notify the Purchaser of its election as
herein provided or contests its obligation to indemnify under Section 6.01,
the Purchaser or the Company and/or the appropriate Subsidiary shall take
such reasonable steps as may be prudent and within its capacity (with due
allowance being given to the circumstances) to preserve the right of the
relevant entity to contest such asserted Tax liability, may pay, compromise
or contest, such asserted Tax liability and shall be reimbursed by the Seller
for the reasonable cost of outside professionals and outside disbursements
incurred pursuant to this sentence to the extent attributable to a Tax
liability indemnifiable by the Seller hereunder. However, in each such case,
neither the Purchaser nor the Company nor the Subsidiary may settle or
compromise any asserted Tax liability over the objection of the Seller;
PROVIDED, HOWEVER, that consent to settlement or compromise shall not be
unreasonably withheld. If the Purchaser or any Company or Subsidiary assumes
control of a Contest with respect to Taxes pursuant to the foregoing,
provided that the Seller has acted in good faith, the Seller shall retain the
right, at any time thereafter and immediately upon notice to the entity that
shall have assumed control of such Contest, itself to assume, at the Seller's
expense, sole direction and control of such Contest. In such event, each of
the Purchaser (or any Company or Subsidiary) and the Seller may participate,
at its own expense, in the Contest. If the Seller chooses to direct the
Contest, the Purchaser shall promptly empower and shall cause the Company
and/or the appropriate Subsidiaries promptly to empower (by power of attorney
and such other documentation as may be necessary and appropriate) such
representatives of the Seller as it may designate to represent the Purchaser
or the Company and/or the Subsidiaries in the Contest insofar as the Contest
involves an asserted Tax liability for which the Seller could be liable under
Section 6.01.
SECTION 6.04. PREPARATION OF TAX RETURNS. The Seller shall
prepare and timely file all Returns relating to the Company and the
Subsidiaries for any period ending on or before the Closing Date. The
Purchaser shall prepare or cause the Company to prepare and timely file all
Returns relating to the Company or any of its Subsidiaries for any period
ending after the Closing Date (but excluding any 1996 combined, unitary or
consolidated Return of which Seller is a member). Returns in respect of a
Straddle Period shall be prepared on a basis consistent with those prepared
for prior tax years unless a different treatment of any item is required by
an intervening change in law. The Purchaser shall furnish the Seller with a
copy of any Straddle Period Return at least 20 days before the anticipated
filing date thereof and shall consider all comments made by the Seller with
respect thereto in good faith.
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42
SECTION 6.05. SECTION 338(H)(10) ELECTION. (a) The Seller and
the Purchaser shall jointly and timely make the Elections and any elections
under state or local tax law comparable to the Elections with respect to the
Company and the Subsidiaries. The Seller and the Purchaser shall cooperate
with each other to take all other actions necessary and appropriate
(including filing such forms, returns, elections, schedules and other
documents as may be required) to effect and preserve timely Elections in
accordance with the provisions of Treasury Regulation Sections 1.338-1 and
1.338(h)(10)-1 (or any comparable provisions of state or local tax law) or
any successor provisions. The Seller and the Purchaser shall report the sale
and acquisition, respectively, of the stock of the Company and the
Subsidiaries pursuant to this Agreement consistently with the Elections (and
any comparable elections under state or local tax law).
(b) On or prior to the last day of the seventh month beginning
after the month that includes the Closing Date, (i) the Seller and the
Purchaser shall agree on the form and content of the IRS Forms 8023-A (the
"FORMS 8023-A") on which the Elections shall be made, (ii) the Purchaser
shall provide to the Seller a proposed determination of the Modified
Aggregate Deemed Sale Price (as defined under applicable Treasury
Regulations) with respect to the Company and each of the Domestic
Subsidiaries, and the Aggregate Deemed Sales Price (as defined under
applicable Treasury Regulations) with respect to each of the Foreign
Subsidiaries, and (iii) the Purchaser shall provide to the Seller a proposed
allocation of each such Modified Aggregate Deemed Sales Price among the
assets of the Company and the Domestic Subsidiaries, and of each such
Aggregate Deemed Sales Price among the assets of the Foreign Subsidiaries,
which allocations shall be made in accordance with Section 338(b) of the Code
and any applicable Treasury Regulations. Within 10 days thereafter, the
Purchaser and the Seller, respectively, shall have the right to object to any
such determination or allocation. If a party objects to any such
determination or allocation, the parties shall resolve their dispute by
jointly designating a mutually agreeable law firm or accounting firm, which
shall make the determination. The Seller and the Purchaser (i) shall be
bound by the allocations determined pursuant to this paragraph for purposes
of determining any Taxes; (ii) shall prepare and file all Returns to be filed
with any taxing authority in a manner consistent with such allocations; and
(iii) shall take no position inconsistent with such allocations in any
Return, any proceeding before any taxing authority or otherwise. In the
event that any such allocation is disputed by any taxing authority, the party
receiving notice of such dispute shall promptly notify and consult with the
other party hereto concerning resolution of such dispute.
SECTION 6.06. COOPERATION AND EXCHANGE OF INFORMATION. Following
the Closing, the Seller and the Purchaser shall provide each other, and the
Purchaser shall cause the Company to provide the Seller, with such
cooperation and information as reasonably may be requested in filing any Tax
return, amended return or claim for refund, determining a liability for Taxes
or a right to a refund of Taxes or participating in or conducting any audit
or other proceeding in respect of Taxes. Such cooperation and information
shall include providing copies of relevant Tax returns or portions thereof,
together with accompanying schedules and related work papers and documents
relating to rulings or other determinations by taxing authorities. Each of
the Seller, the Purchaser and the Company shall make its
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43
employees available on a mutually convenient basis to provide explanations of
any documents or information provided hereunder. The Seller, on the one
hand, and the Purchaser and the Company, on the other, shall retain all
returns, schedules and work papers and all material records or other
documents that are in its possession immediately following the Closing, or
created by or on behalf of it thereafter, relating to Tax matters of the
Company and the Subsidiaries for the taxable period of each relevant
jurisdiction first ending after the Closing Date and for all prior taxable
periods until the later of (i) the expiration of the statute of limitations
of the taxable periods to which such returns and other documents relate,
without regard to extensions except to the extent notified by the other party
in writing of such extensions for the respective Tax periods, or (ii) eight
years following the due date (without extension) for such returns. Any
information obtained under this Section 6.06 shall be kept confidential,
except as may be otherwise necessary in connection with the filing of returns
or claims for refund or in conducting an audit or other proceeding.
SECTION 6.07. CONVEYANCE TAXES. Notwithstanding any provision
herein to the contrary, the Purchaser agrees to assume liability for and to
pay all sales, transfer, stamp, stock transfer, real property transfer or
gains and similar Taxes incurred as a result of the sale of the Shares
contemplated hereby (but expressly excluding any such Tax resulting from the
Elections). Prior to the filing of any Returns for such Taxes, the Seller and
the Purchaser shall agree upon the portion of the Modified Aggregate Deemed
Sales Price or Aggregate Deemed Sales Price, as the case may be, to be
allocated to the assets that are the subject of such Returns, which
allocation shall be binding for purposes of Section 6.05 herein.
SECTION 6.08. SAFE HARBOR LEASE CONSENTS/FILINGS. The Purchaser
agrees that, as to any of the properties which is subject to a Safe Harbor
Lease, transfer of the Seller's interest in such properties to Purchaser will
be subject to, and Purchaser shall take subject to, the applicable Safe
Harbor Lease. Purchaser agrees to assume all obligations of Seller under
said Safe Harbor Leases, to execute such documents as requested by the Tax
Lessors evidencing Purchaser's agreement to take subject to and assume said
Safe Harbor Leases, and agrees to make such filings with, and furnish such
information to, the Tax Lessor and the IRS, respectively, as may be required
or appropriate with respect to the Safe Harbor Leases.
SECTION 6.09. EXTINGUISHMENT OF TAX ALLOCATION AGREEMENTS. Any
and all existing agreements relating to the allocation of sharing of Taxes
between the Company or any of the Subsidiaries and any member of the
affiliated group, within the meaning of Section 1504(a) of the Internal
Revenue Code, of which the Seller is a member shall be terminated as of
December 31, 1995 (or any later date prior to the Closing Date), with none of
the Company, the Subsidiaries or any member of such affiliated group having
any further rights or obligations under any such tax sharing agreement
thereafter.
SECTION 6.10. MISCELLANEOUS. (a) The parties agree to treat all
payments made under this Article VI, under any other indemnity provision
contained in this Agreement, and for any misrepresentations or breach of
warranties or covenants as
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44
adjustments to the Purchase Price for Tax purposes and such treatment shall
govern for purposes hereof.
(b) Except as expressly provided otherwise and except for the
representations contained in Section 3.15 of this Agreement, this Article VI
shall be the sole provision governing Tax matters and indemnities therefor
under this Agreement.
(c) For purposes of this Article VI, all references to the
Purchaser, the Seller, the Company or the Subsidiaries include successors.
(d) The covenants and agreements of the parties hereto contained
in this Article VI shall survive the Closing and shall remain in full force
and effect until the expiration of all statutes of limitations with respect
to any Taxes that would be indemnifiable by the Seller under Section 6.01(a)
of this Agreement or by the Purchaser under Section 6.01(b) of this Agreement.
ARTICLE VII
CONDITIONS TO CLOSING
SECTION 7.01. CONDITIONS TO OBLIGATIONS OF THE SELLER. The
obligations of the Seller to consummate the transactions contemplated by this
Agreement shall be subject to the fulfillment or waiver, at or prior to the
Closing, of each of the following conditions:
(a) HSR ACT. Any waiting period (and any extension thereof) under
the HSR Act applicable to the purchase of the Shares contemplated hereby
shall have expired or shall have been terminated;
(b) NO ORDER. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any Governmental Order which is
in effect and has the effect of making the transactions contemplated by
this Agreement illegal or otherwise prohibiting consummation of such
transactions;
(c) CONSENTS. The bank consent referred to in Section 3.10 of the
Disclosure Schedule shall have been obtained or made, and shall be in
full force and effect at the time of Closing; PROVIDED, HOWEVER, that if
this condition is not satisfied by September 30, 1996 it shall be deemed
to have been irrevocably waived by the Seller; and
(d) COVENANTS. The Purchaser shall have performed and complied
with all of its covenants and agreements under this Agreement required
to be performed or complied with by it prior to or at the Closing;
provided that the noncompliance with a covenant or agreement shall not
constitute a failure of the condition contained in this Section 7.01(d)
if such failure, both alone and in conjunction with all other such
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45
failures, would not have a material adverse effect on the ability of the
Purchaser to consummate the transactions contemplated by this Agreement
and the Seller shall have received a certificate signed by a duly
authorized officer of the Purchaser to such effect.
SECTION 7.02. CONDITIONS TO OBLIGATIONS OF THE PURCHASER. The
obligations of the Purchaser to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment or waiver, at or prior to
the Closing, of each of the following conditions:
(a) HSR ACT. Any waiting period (and any extension thereof) under
the HSR Act applicable to the purchase of the Shares contemplated hereby
shall have expired or shall have been terminated;
(b) NO ORDER. No Governmental Authority shall have enacted,
issued, promulgated, enforced or entered any statute, rule, regulation,
injunction or other Governmental Order which is in effect and has the
effect of making the transactions contemplated by this Agreement illegal
or otherwise prohibiting consummation of such transactions;
(c) CONSENTS. All consents, approvals, orders, authorizations and
waivers of, and all declarations, filings and registrations with, third
parties (including Governmental Authorities) required to be obtained or
made by or on the part of the Seller, the Company or any Subsidiary, or
otherwise reasonably necessary on the part of the Seller, the Company or
any Subsidiary for the consummation of the transactions contemplated
hereby, shall have been obtained or made, and all of the foregoing shall
be in full force and effect at the time of Closing, provided, that the
failure to obtain or make any of the foregoing shall not constitute a
failure of the condition contained in this Section 7.02(c) if such
failure, both alone and in conjunction with all other such failures,
would not have a Material Adverse Effect; and
(d) COVENANTS. The Seller shall have performed and complied with
all of its covenants and agreements under this Agreement required to be
performed or complied with by it prior to or at the Closing; provided
that the noncompliance with a covenant or agreement shall not constitute
a failure of the condition contained in this Section 7.02(d) if such
failure, both alone and in conjunction with all other such failures,
would not have a Material Adverse Effect and the Purchaser shall have
received a certificate signed by a duly authorized officer of the Seller
to such effect.
ARTICLE VIII
INDEMNIFICATION
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46
SECTION 8.01. SURVIVAL. Subject to the limitations and other
provisions of this Agreement, the representations, warranties, covenants and
agreements of the parties hereto contained herein shall survive the Closing
and shall remain in full force and effect, until December 31, 1997,
regardless of (i) any investigation made at any time by or on behalf of the
Seller or the Purchaser or (ii) the discovery by a party (whether through its
own investigation, the disclosure by the other party (other than pursuant to
the Disclosure Schedule) or otherwise) prior to the Closing of any event,
occurrence, condition or circumstances that might constitute a breach of or
inaccuracy in the representations and warranties made by the other party,
PROVIDED, HOWEVER, that the covenants and agreements set forth in Sections
5.02(b), 5.02(c), 5.03, 5.05, 5.07 and 5.09 and Articles VI, VIII and X shall
remain in full force and effect for the applicable periods specified in the
respective Sections or Articles or, if no such period is specified,
indefinitely.
SECTION 8.02. INDEMNIFICATION BY THE PURCHASER. (a) The
Purchaser agrees, subject to the other terms and conditions of this Agreement
and without gross-up for Taxes, to indemnify the Seller against and hold the
Seller harmless from all Losses to the Seller arising out of (i) the breach
of any representation, warranty, covenant or agreement of the Purchaser
herein (other than Article VI, it being understood that the sole remedy for
breach thereof shall be pursuant to Article VI) and (ii) the conduct of the
Business by the Purchaser following the Closing. Anything in Section 8.01 to
the contrary notwithstanding, no claim may be asserted nor may any action be
commenced against the Purchaser for breach of any representation, warranty,
covenant or agreement contained herein, unless written notice of such claim
or action (or facts which may be reasonably expected to form the basis for
any claim or action) is received by the Purchaser describing in detail the
facts and circumstances with respect to the subject matter of such claim or
action (or potential claim or action) on or prior to the date on which the
representation, warranty, covenant or agreement on which such claim or action
(or potential claim or action) is based ceases to survive as set forth in
Section 8.01.
(b) The indemnification obligations of the Purchaser pursuant to
Section 8.02(a)(i) shall not be effective until the aggregate dollar amount
of all Losses which would otherwise be indemnifiable pursuant to Section
8.02(a)(i) exceeds $10,000,000 (the "PURCHASER'S THRESHOLD AMOUNT") it being
agreed and understood that, if such amount is exceeded, the Purchaser shall
be liable to the full extent of such Losses, including those not in excess.
In addition, no claim may be made against the Purchaser for indemnification
pursuant to Section 8.02(a)(i) with respect to any individual item of Loss,
unless such item exceeds $50,000, nor shall any such item be applied to or
considered part of the Purchaser's Threshold Amount. The indemnification
obligations of the Purchaser pursuant to Section 8.02(a)(i) shall be
effective only until the dollar amount paid in respect of the Losses
indemnified against aggregate to an amount equal to ten percent (10%) of the
Purchase Price. For the purposes of this Section 8.02(b), in computing such
individual or aggregate amounts of claims, the amount of each claim shall be
deemed to be an amount (i) net of any Tax benefit (as reduced by any related
Tax detriment) to the Seller or any Affiliate thereof, and (ii) net of any
insurance proceeds and any indemnity, contribution or other similar payment
actually recovered by the Seller or any Affiliate from any third party with
respect thereto.
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47
(c) If a payment is made by the Purchaser in accordance with this
Section 8.02, and if in a subsequent taxable year a Tax benefit (net of any
related Tax detriment) is realized by the Seller or any Affiliate of the
Seller with which the Seller files a consolidated, combined or unitary Tax
return (that was not previously taken into account to reduce an amount
otherwise payable by the Purchaser under Section 8.02), the Seller shall pay
to the Purchaser at the time of such realization the amount of such net Tax
benefit to the extent that the net Tax benefit would have resulted in a
reduction in the amount paid by the Purchaser under Section 8.02 if the Tax
benefit had been obtained in the year of such payment. A Tax benefit (or
detriment) will be considered to be realized for purposes of this Section
8.02 at the time that it is reflected on a Tax return of the Seller or any
Affiliate of the Seller with which the Seller files a consolidated, combined
or unitary Tax return.
(d) The Seller agrees to give the Purchaser written notice of any
claim, assertion, event or proceeding by or in respect of a third party as to
which it may request indemnification hereunder or as to which the Purchaser's
Threshold Amount may be applied as soon as is practicable and in any event
within 30 days of the time that the Seller learns of such claim, assertion,
event or proceeding; PROVIDED, HOWEVER, that the failure to so notify the
Purchaser shall not affect rights to indemnification hereunder except to the
extent that the Purchaser is actually prejudiced by such failure. The
Purchaser shall have the right to direct, through counsel of its own
choosing, the defense or settlement of any such claim or proceeding at its
own expense. If the Purchaser elects to assume the defense of any such claim
or proceeding, the Seller may participate in such defense, but in such case
the expenses of the Seller shall be paid by the Seller. The Seller shall
provide the Purchaser with access to its records and personnel relating to
any such claim, assertion, event or proceeding during normal business hours
and shall otherwise cooperate with the Purchaser in the defense or settlement
thereof, and the Purchaser shall reimburse the Seller for all its reasonable
out-of-pocket expenses in connection therewith. If the Purchaser elects to
direct the defense of any such claim or proceeding, the Seller shall not pay,
or permit to be paid, any part of any claim or demand arising from such
asserted liability, unless the Purchaser consents in writing to such payment,
which consent shall not be unreasonably withheld, or unless the Purchaser,
subject to the last sentence of this Section 8.02(d), withdraws from the
defense of such asserted liability, or unless a final judgment from which no
appeal may be taken by or on behalf of the Purchaser is entered against the
Seller for such liability. If the Purchaser shall fail to defend, or if,
after commencing or undertaking any such defense, the Purchaser fails to
prosecute or withdraws from such defense, the Seller shall have the right to
undertake the defense or settlement thereof, at the Purchaser's expense. If
the Seller assumes the defense of any such claim or proceeding pursuant to
this Section 8.02(d) and proposes to settle such claim or proceeding prior to
a final judgment thereon or to forego appeal with respect thereto, then the
Seller shall give the Purchaser prompt written notice thereof and the
Purchaser shall have the right to participate in the settlement or assume or
reassume the defense of such claim or proceeding.
(e) The Seller hereby acknowledges and agrees that, from and after
the Closing, its sole and exclusive remedy with respect to any and all claims
relating to the subject matter of this Agreement (other than Sections 2.03,
5.02(b) and (c), 5.07, 10.01 and
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48
10.10) shall be pursuant to the indemnification provisions set forth in this
Article VIII and in Article VI. In furtherance of the foregoing, the Seller
hereby waives, to the fullest extent permitted under applicable law, any and
all other rights, claims and causes of action it may have, from and after the
Closing, against the Purchaser or its officers, directors, employees, agents,
representatives and Affiliates relating to the subject matter of this
Agreement.
(f) Except as set forth in this Agreement, the Purchaser is not
making any representation, warranty, covenant or agreement with respect to
the matters contained herein. Notwithstanding anything to the contrary
contained in this Agreement, no breach of any representation, warranty,
covenant or agreement contained herein shall give rise to any right on the
part of the Seller, after the consummation of the purchase and sale of the
Shares contemplated by this Agreement, to rescind this Agreement or any of
the transactions contemplated hereby.
(g) Notwithstanding anything to the contrary contained in this
Agreement, the Purchaser shall have no liability under any provision of this
Agreement for and in no event shall the Purchaser's Threshold Amount be
applied to any special, consequential or punitive damages (except to the
extent recovered from the Seller by a third party). The Seller shall take
all reasonable steps to mitigate its Losses upon and after becoming aware of
any event which could reasonably be expected to give rise to any Losses.
SECTION 8.03. INDEMNIFICATION BY THE SELLER. (a) The Seller
agrees, subject to the other terms and conditions of this Agreement and
without gross-up for Taxes, to indemnify the Purchaser against and hold it
harmless from (i) all Losses to the Purchaser arising out of the breach of
any representation, warranty, covenant or agreement of the Seller herein
(other than Section 3.15 and Article VI, it being understood that the sole
remedy for breach of such provisions shall be pursuant to Article VI) and
(ii) all Losses up to a maximum of $4 million with respect to any claim or
action commenced on or prior to December 31, 1998, based on the method of
payment of royalties or proceeds of sales on behalf of other working interest
owners by the Company or any Subsidiary prior to the Closing based on
"posted" prices (it being understood that this Section 8.03(a)(ii) is the
exclusive remedy with respect to any such Losses). Anything in Section 8.01
to the contrary notwithstanding, no claim may be asserted nor any action
commenced against the Seller for breach of any representation, warranty,
covenant or agreement contained herein, unless written notice of such claim
or action (or the facts which may be reasonably expected to form the basis
for any claim or action) is received by the Seller describing in detail the
facts and circumstances with respect to the subject matter of such claim or
action (or potential claim or action) on or prior to the date on which the
representation, warranty, covenant or agreement on which such claim or action
(or potential claim or action) is based ceases to survive as set forth in
Section 8.01.
(b) The indemnification obligations of the Seller pursuant to
Section 8.03(a)(i) shall not be effective until the aggregate dollar amount
of all Losses which would otherwise be indemnifiable pursuant to Section
8.03(a)(i) exceeds $10,000,000 (the "SELLER'S THRESHOLD AMOUNT"), it being
agreed and understood that, if such amount is exceeded, the
<PAGE>
49
Seller shall be liable to the full extent of such Losses, including those not
in excess of the Seller's Threshold Amount. In addition, no claim may be
made against the Seller for indemnification pursuant to Section 8.03(a)(i)
with respect to any individual item of Loss, unless such item exceeds
$50,000, nor shall any such item be applied to or considered part of the
Seller's Threshold Amount. The indemnification obligations of the Seller
pursuant to Section 8.03(a)(i) and (ii) shall be effective only until the
dollar amount paid in respect of the Losses indemnified against thereunder
aggregates to an amount equal to ten percent (10%) of the Purchase Price. The
Purchaser covenants and agrees with the Seller that none of the Purchaser,
the Company nor any of their respective Affiliates will attempt to induce or
persuade a third party or Governmental Authority to bring, or disclose or
notify a third party or Governmental Authority of, any claim that such third
party or Governmental Authority may have against the Purchaser, the Company
or any Subsidiary if such claim would be subject to indemnification by the
Seller under Section 8.03(a)(ii) under this Agreement. For the purposes of
this Section 8.03(b), in computing such individual or aggregate amounts of
claims, the amount of each claim shall be deemed to be an amount (i) net of
any Purchaser Tax Benefit and (ii) net of any insurance proceeds and any
indemnity, contribution or other similar payment actually recovered by the
Purchaser or any Affiliate from any third party with respect thereto.
(c) If a payment is made by the Seller in accordance with this
Section 8.03, and if in a subsequent taxable year a Purchaser Tax Benefit is
realized by the Purchaser, the Company, or any Subsidiary or any Affiliate of
the Purchaser, the Company or any Subsidiary with which the Company or any
Subsidiary files a consolidated, combined or unitary Tax return (that was not
previously taken into account to reduce an amount otherwise payable by the
Seller under Section 8.03), the Purchaser, the Company, any such Subsidiary
or any Affiliate of the Purchaser, the Company or any Subsidiary with which
the Company or any Subsidiary files a consolidated, combined or unitary Tax
return shall pay to the Seller at the time of such realization the amount of
such Purchaser Tax Benefit to the extent that the Purchaser Tax Benefit would
have resulted in a reduction in the amount paid by the Seller under this
Section 8.03 if the Purchaser Tax Benefit had been obtained in the year of
such payment.
(d) (i) The Purchaser agrees to give the Seller written notice of
any claim, assertion, event or proceeding by or in respect of a third party
as to which it may request indemnification hereunder or as to which the
Seller's Threshold Amount may be applied as soon as is practicable and in any
event within 30 days of the time that the Purchaser learns of such claim,
assertion, event or proceeding; PROVIDED, HOWEVER, that the failure to so
notify the Seller shall not affect rights to indemnification hereunder except
to the extent that the Seller is actually prejudiced by such failure. The
Seller shall have the right to direct, through counsel of its own choosing,
the defense or settlement of any such claim or proceeding at its own expense,
except for any claim pursuant to Section 8.03(a)(ii) which Purchaser shall
have the right to so direct. If the Seller elects to assume the defense of
any such claim or proceeding, the Purchaser may participate in such defense,
but in such case the expenses of the Purchaser shall be paid by the
Purchaser. The Purchaser shall provide the Seller with access to its records
and personnel relating to any such claim, assertion, event or
<PAGE>
50
proceeding during normal business hours and shall otherwise cooperate with
the Seller in the defense or settlement thereof, and the Seller shall
reimburse the Purchaser for all its reasonable out-of-pocket expenses in
connection therewith. If the Seller elects to direct the defense of any such
claim or proceeding, the Purchaser shall not pay, or permit to be paid, any
part of any claim or demand arising from such asserted liability unless the
Seller consents in writing to such payment, which consent shall not be
unreasonably withheld, or unless the Seller, subject to the last sentence of
this Section 8.03(d)(i), withdraws from the defense of such asserted
liability or unless a final judgment from which no appeal may be taken by or
on behalf of the Seller is entered against the Purchaser for such liability.
If the Seller shall fail to defend, or if after commencing or undertaking any
such defense, fail to prosecute or withdraws from such defense, the Purchaser
shall have the right to undertake the defense or settlement thereof, at the
Seller's expense. If the Purchaser assumes the defense of any such claim or
proceeding pursuant to this Section 8.03(d)(i) and proposes to settle such
claim or proceeding prior to a final judgment thereon or to forego any appeal
with respect thereto, then the Purchaser shall give the Seller prompt written
notice thereof and the Seller shall have the right to participate in the
settlement or assume or reassume the defense of such claim or proceeding.
(ii) The Purchaser agrees to give the Seller written notice of any
claim, assertion, event or proceeding by or in respect of a third party as to
which it may request indemnification pursuant to Section 8.03(a)(ii) as soon
as is practicable and in any event within 30 days of the time that the
Purchaser learns of such claim, assertion, event or proceeding; PROVIDED,
HOWEVER, that the failure to so notify the Seller shall not affect rights to
indemnification hereunder except to the extent that the Seller is actually
prejudiced by such failure. The Purchaser shall have the right to direct,
through counsel of its own choosing, the defense or settlement of any claim
pursuant to Section 8.03(a)(ii). If the Purchaser elects to assume the
defense of any such claim or proceeding, the Seller may participate in such
defense at its own expense.
(e) The Purchaser hereby acknowledges and agrees that, from and
after the Closing, its sole and exclusive remedy with respect to any and all
claims relating to the subject matter of this Agreement (other than Sections
2.03, 5.02(b) and (c), 5.07, 5.09, 5.10, 10.01 and 10.10) shall be pursuant
to the indemnification provisions set forth in this Article VIII and in
Article VI. In furtherance of the foregoing, the Purchaser hereby waives on
its behalf and on behalf of its Affiliates and their successors, from and
after the Closing, to the fullest extent permitted under applicable law, any
and all other rights, claims and causes of action it (or, after the Closing,
the Company or any Subsidiary) may have against the Seller or its officers,
directors, employees, agents, representatives and Affiliates relating to the
subject matter of this Agreement, the Company or the Company's operations,
including without limitation, under the Comprehensive Environmental Response,
Compensation and Liability Act and any similar federal or state laws whether
or not in existence on the date hereof.
(f) Except as set forth in this Agreement, the Seller is not
making any representation, warranty, covenant or agreement with respect to
the matters contained herein.
<PAGE>
51
Anything herein to the contrary notwithstanding, no breach of any
representation, warranty, covenant or agreement contained herein shall give
rise to any right on the part of the Purchaser, after the consummation of the
purchase and sale of the Shares contemplated hereby, to rescind this
Agreement or any of the transactions contemplated hereby.
(g) Notwithstanding anything to the contrary contained in this
Agreement, the Seller shall have no liability under any provision of this
Agreement for and in no event shall the Seller's Threshold Amount be applied
to: any special, consequential or punitive damages (except to the extent
recovered from the Purchaser, the Company, any Subsidiary, or their
respective Affiliates after the Closing Date by a third party). The
Purchaser shall take and shall cause the Company and the Subsidiaries to take
all reasonable steps to mitigate their Losses upon and after becoming aware
of any event which could reasonably be expected to give rise to any Losses.
(h) For the purposes of this Agreement, the Loss associated with
any breach of or inaccuracy in the representation and warranty set forth in
Section 3.12(b) (any such breach or inaccuracy being called a "TITLE DEFECT")
shall be computed as follows:
(i) If, because of the Title Defect, title to any particular
Property fails completely with the effect that the Company or any
Subsidiary has no ownership interest in the Property to which an
individual value is assigned, the value of the Title Defect shall be the
allocated value for that Property set forth in the Allocation Schedule.
(ii) If the Title Defect consists of a lien, encumbrance or other
charge upon a Property that is liquidated in amount, the value of the
Title Defect shall be the amount necessary to pay the obligee to remove
such Title Defect.
(iii) If the Company's or any Subsidiary's actual percentage
Net Revenue Interest is less than the percentage Net Revenue Interest
set forth in the Property Schedule for a Property, the value of the
Title Defect shall be an amount equal to (A) the ratio of (1) the
difference between the percentage Net Revenue Interest on the Property
Schedule and the actual percentage Net Revenue Interest to (2) the
percentage Net Revenue Interest on the Property Schedule multiplied by
(B) the allocated value for such Property set forth in the Allocation
Schedule.
(iv) If the Company's or any Subsidiary's actual percentage Working
Interest is greater than the percentage Working Interest set forth in
the Property Schedule for a Property (without a corresponding increase
in the Net Review Interest for such Property), the value of the Title
Defect shall be an amount equal to (A) the ratio of (1) the difference
between the actual percentage Working Interest and the percentage
Working Interest on the Property Schedule to (2) the percentage Working
Interest on the Property Schedule multiplied by (B) the allocated value
for such Property set forth in the Allocation Schedule
<PAGE>
52
(v) If (A) there are any Title Defects (other than those described
in Section 8.03(h)(i) through (iv)), (B) any Property does not have an
allocated value set forth in the Allocation Schedule or (C) the Seller
and the Purchaser cannot agree as to whether the fact or circumstance
constitutes a Title Defect, then the value of such other Title Defects
(if any) shall be computed as follows. The Seller and the Purchaser
shall meet for the purpose of negotiating in good faith in an attempt to
agree upon the value, if any, of any such other Title Defects. In the
event that the Seller and the Purchaser are not able to agree on such
value, they shall mutually select and engage an independent third party
knowledgeable with respect to the issues involved (the "TITLE
ARBITRATOR") for the purpose of (1) determining the validity of such
other alleged Title Defects and (2) determining the aggregate value of
such other Title Defects. The Title Arbitrator shall have the authority
to retain any experts that are, in its discretion, necessary to assist
it in performing its duties. The costs and expenses of the Title
Arbitrator, including any costs and expenses incurred to retain any
experts, shall be borne equally by the Seller and the Purchaser.
ARTICLE IX
TERMINATION, AMENDMENT AND WAIVER
SECTION 9.01. TERMINATION. This Agreement may be terminated at
any time prior to the Closing:
(a) by the mutual written consent of the Seller and the Purchaser;
(b) by either the Seller or the Purchaser, if any Governmental
Authority with jurisdiction over such matters shall have issued a
Governmental Order restraining, enjoining or otherwise prohibiting the
sale of the Shares hereunder and such order, decree, ruling or other
action shall have become final and unappealable, other than any
Governmental Order that would not have been issued, or would cease to
prevent the sale of the Shares, if the Purchaser had complied with its
obligations under Section 5.04(b); PROVIDED, HOWEVER, that the
provisions of this Section 9.01(b) shall not be available to any party
unless such party shall have used its Best Efforts to oppose any such
Governmental Order or to have such Governmental Order vacated or made
inapplicable to the transactions contemplated by this Agreement; or
(c) by either the Seller or the Purchaser, if the Closing shall
not have occurred prior to October 31, 1996; PROVIDED, HOWEVER, that the
right to terminate this Agreement under this Section 9.01(c) shall not
be available to any party whose failure to fulfill any obligation under
this Agreement shall have been the cause of, or shall have resulted in,
the failure of the Closing to occur prior to such date.
Time shall be of the essence in this Agreement.
<PAGE>
53
SECTION 9.02. EFFECT OF TERMINATION. In the event of termination
of this Agreement as provided in Section 9.01, this Agreement shall forthwith
become void and there shall be no liability on the part of any party hereto
except (a) as set forth in Sections 3.20, 4.07, 5.03 and 10.01 and (b) that
nothing herein shall relieve either party from liability for any willful
breach hereof.
SECTION 9.03. WAIVER. At any time prior to the Closing, either
party hereto may (a) extend the time for the performance of any of the
obligations or other acts of the other party hereto, (b) waive any
inaccuracies in the representations and warranties contained herein or in any
document delivered pursuant hereto or (c) waive compliance with any of the
agreements or conditions contained herein. Any such extension or waiver
shall be valid only if set forth in an instrument in writing signed by the
party to be bound thereby.
ARTICLE X
GENERAL PROVISIONS
SECTION 10.01. EXPENSES. All costs and expenses incurred by the
Seller and its Affiliates (including the Company and any Subsidiary),
including, without limitation, fees and disbursements of counsel, financial
advisors and accountants, incurred in connection with this Agreement and the
transactions contemplated hereby shall be paid by the Seller, whether or not
the Closing shall have occurred. All costs and expenses incurred by the
Purchaser, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with this
Agreement and the transactions contemplated hereby shall be paid by the
Purchaser, whether or not the Closing shall have occurred. All costs and
expenses, including, without limitation, fees and disbursements of counsel,
financial advisors and accountants, incurred in connection with the
preparation and filing with the Securities and Exchange Commission on March
13, 1996 of the Registration Statement on Form S-1 (No. 33-2326) of the
Company shall be borne and paid by Seller.
SECTION 10.02. NOTICES. All notices, requests, claims, demands
and other communications hereunder shall be in writing and shall be given or
made (and shall be deemed to have been duly given or made upon receipt) by
delivery in person, by courier service, by cable, by telecopy, by telegram,
by telex or by registered or certified mail (postage prepaid, return receipt
requested) to the respective parties at the following addresses (or at such
other address for a party as shall be specified in a notice given in
accordance with this Section 10.02):
<PAGE>
54
(a) if to the Seller:
Enterprise Diversified Holdings Incorporated
1 Riverfront Plaza, 9th Floor
Newark, New Jersey 07102
Attention: Madeleine W. Ludlow, Vice President
and Treasurer
Telecopier: (201) 596-6705
Telephone: (201) 596-6726
with copies to:
Public Service Enterprise Group Incorporated
80 Park Plaza, T5A
Newark, New Jersey 07101
Attention: R. Edwin Selover, Esq., Vice President
and General Counsel
Telecopier: (201) 639-0741
Telephone: (201) 430-6450
Shearman & Sterling
599 Lexington Avenue
New York, New York 10022
Attention: David W. Heleniak, Esq.
Telecopier: (212) 848-7179
Telephone: (212) 848-7049
(b) if to the Purchaser:
Samedan Oil Corporation
110 West Broadway
P.O. Box 909
Ardmore, Oklahoma 73402
Attention: Orville Walraven
Telecopier: (405) 221-1364
Telephone: (405) 223-4110
with a copy to:
Thompson & Knight, P.C.
1700 Pacific Avenue
Suite 3300
Dallas, Texas 75201
Attention: Harold F. Kleinman, Esq. and Michael L. Bengtson, Esq.
<PAGE>
55
Telecopier: (214) 969-1751
Telephone: (214) 969-1351
SECTION 10.03. PUBLIC ANNOUNCEMENTS. Unless otherwise required
by applicable Law or any obligations pursuant to any listing agreement with a
National Securities Exchange, no party to this Agreement shall make any
public announcements in respect of this Agreement or the transactions
contemplated hereby or otherwise communicate with any news media without
prior notification to the other party, and the parties shall cooperate as to
the timing and contents of any such announcement.
SECTION 10.04. HEADINGS. 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.
SECTION 10.05. SEVERABILITY. If any term or other provision of
this Agreement is invalid, illegal or incapable of being enforced by any rule
of law or public policy, all other conditions and provisions of this
Agreement shall nevertheless remain in full force and effect so long as the
economic or legal substance of the transactions contemplated hereby is not
affected in any manner adverse to any party. Upon such determination that
any term or other provision is invalid, illegal or incapable of being
enforced, the parties hereto shall negotiate in good faith to modify this
Agreement so as to effect the original intent of the parties as closely as
possible in a mutually acceptable manner in order that the transactions
contemplated hereby be consummated as originally contemplated to the greatest
extent possible.
SECTION 10.06. ENTIRE AGREEMENT. This Agreement (including
Schedules hereto) constitutes the entire agreement of the parties hereto with
respect to the subject matter hereof and supersedes all prior agreements and
undertakings, both written and oral, other than the Confidentiality
Agreement, between the Seller and the Purchaser with respect to the subject
matter hereof and except as otherwise expressly provided herein.
SECTION 10.07. ASSIGNMENT. Neither this Agreement nor any of the
rights and obligations of the parties hereunder may be assigned by either of
the parties hereto without the prior consent of the other party hereto,
except that the Purchaser may assign any or all of its rights and/or
obligations hereunder to any of its direct or indirect wholly-owned
subsidiaries and any such subsidiary may assign such rights and/or
obligations to another direct or indirect wholly-owned subsidiary of the
Purchaser or to the Purchaser. Notwithstanding the foregoing, the Purchaser
shall remain liable for all of its obligations under this Agreement. Subject
to the first sentence of this Section 10.07, this Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns and no other Person shall have any right, obligation
or benefit hereunder.
<PAGE>
56
SECTION 10.08. NO THIRD-PARTY BENEFICIARIES. This Agreement is
for the sole benefit of the parties hereto and their permitted assigns and
nothing herein, express or implied, is intended to or shall confer upon any
other Person or entity any legal or equitable right, benefit or remedy of any
nature whatsoever under or by reason of this Agreement.
SECTION 10.09. WAIVERS AND AMENDMENTS. This Agreement may be
amended or modified, and the terms and conditions hereof may be waived, only
by a written instrument signed by the parties hereto or, in the case of a
waiver, by the party waiving compliance. No delay on the part of any party
in exercising any right, power or privilege hereunder shall operate as a
waiver thereof, nor shall any waiver on the part of any party of any right,
power or privilege hereunder, nor any single or partial exercise of any other
right, power or privilege hereunder, preclude any other or further exercise
thereof or the exercise of any other right, power or privilege hereunder.
The rights and remedies herein provided are cumulative and are not exclusive
of any rights or remedies which any party may otherwise have at Law or in
equity.
SECTION 10.10. SPECIFIC PERFORMANCE. The parties hereto agree
that irreparable damage would occur in the event that any of the provisions
of this Agreement required to be performed prior to the Closing were not
performed in accordance with their specific terms or conditions or were
otherwise breached, and that money damages are an inadequate remedy for any
breaches thereof because of the difficulty of ascertaining and quantifying
the amount of damage that will be suffered by the parties hereto in the event
that such provisions are not performed in accordance with their terms or are
otherwise breached. It is accordingly hereby agreed that the parties hereto
shall be entitled to an injunction or injunctions to restrain, enjoin and
prevent breaches and violations of any of the provisions
<PAGE>
57
contained in this Agreement by the other party and to enforce specifically
the terms and provisions hereof in any court of the United States or any
state having competent jurisdiction, such remedy being in addition to and not
in lieu of, any other rights and remedies to which the other parties are
entitled to at law or in equity.
SECTION 10.11. GOVERNING LAW. This Agreement shall be governed
by, and construed in accordance with, the laws of the State of Texas
applicable to contracts executed in and to be performed in that State. All
actions and proceedings arising out of or relating to this Agreement shall be
heard and determined in a Texas state or federal court sitting in Harris
County, and the parties hereto hereby irrevocable submit to the exclusive
jurisdiction of such courts in any such action or proceeding and irrevocably
waive the defense of an inconvenient forum to the maintenance of any such
action or proceeding.
SECTION 10.12. COUNTERPARTS. This Agreement may be executed in
one or more counterparts, and by the different parties hereto in separate
counterparts, each of which when executed shall be deemed to be an original
but all of which taken together shall constitute one and the same agreement. <PAGE>
<PAGE>
58
IN WITNESS WHEREOF, the Seller and the Purchaser have caused this
Agreement to be executed as of the date first written above by their
respective officers thereunto duly authorized.
ENTERPRISE DIVERSIFIED HOLDINGS
INCORPORATED
By /s/ E. James Ferland
---------------------------------
Name: E. James Ferland
Title: Chairman of the Board and
Chief Executive Officer
SAMEDAN OIL CORPORATION
By /s/ Robert Kelley
---------------------------------
Name: Robert Kelley
Title: President and
Chief Executive Officer
<PAGE>
EXHIBIT 10.1
U.S. $800,000,000
CREDIT AGREEMENT,
dated as of July 31, 1996
among
NOBLE AFFILIATES, INC.,
as the Borrower,
and
CERTAIN COMMERCIAL LENDING INSTITUTIONS,
as the Lenders,
and
UNION BANK OF SWITZERLAND
Houston Agency,
as the Agent for the Lenders
<PAGE>
TABLE OF CONTENTS
PAGE
----
I DEFINITIONS AND ACCOUNTING TERMS. . . . . . . . . . . . . . . . . . . . 1
1.1 Defined Terms . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 Use of Defined Terms. . . . . . . . . . . . . . . . . . . . . 19
1.3 Cross-References. . . . . . . . . . . . . . . . . . . . . . . 19
1.4 Accounting and Financial Determinations . . . . . . . . . . . 19
II THE FACILITIES, BORROWING PROCEDURES AND NOTES. . . . . . . . . . . . . 19
2.1 The Facilities. . . . . . . . . . . . . . . . . . . . . . . . 19
2.1.1 Description of the Revolving Facility . . . . . . . . . . . . 19
2.1.2 Availability of Revolving Facility. . . . . . . . . . . . . . 20
2.1.3 Description of Term Facility. . . . . . . . . . . . . . . . . 20
2.1.4 Availability of Term Facility . . . . . . . . . . . . . . . . 20
2.2 Competitive Bid Advances. . . . . . . . . . . . . . . . . . . 20
2.2.1 Competitive Bid Option. . . . . . . . . . . . . . . . . . . . 20
2.2.2 Competitive Bid Quote Request . . . . . . . . . . . . . . . . 20
2.2.3 Invitation for Competitive Bid Quotes . . . . . . . . . . . . 21
2.2.4 Submission and Contents of Competitive Bid Quotes . . . . . . 21
2.2.5 Notice to the Borrower. . . . . . . . . . . . . . . . . . . . 22
2.2.6 Acceptance and Notice by the Borrower . . . . . . . . . . . . 22
2.2.7 Allocation by the Agent . . . . . . . . . . . . . . . . . . . 23
2.2.8 Administration Fees . . . . . . . . . . . . . . . . . . . . . 23
2.2.9 Reduction . . . . . . . . . . . . . . . . . . . . . . . . . . 23
2.3 Reduction of Commitment Amounts . . . . . . . . . . . . . . . 23
2.4 Base Rate Loans and Eurodollar Loans. . . . . . . . . . . . . 23
2.5 Borrowing Procedures for Loans. . . . . . . . . . . . . . . . 24
2.5.1 Domestic Loans. . . . . . . . . . . . . . . . . . . . . . . . 24
2.5.2 Eurodollar Loans. . . . . . . . . . . . . . . . . . . . . . . 24
2.6 Continuation and Conversion Elections . . . . . . . . . . . . 24
2.7 Funding . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
2.8 Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
III REPAYMENTS, PREPAYMENTS, INTEREST AND FEES. . . . . . . . . . . . . . . 25
3.1 Repayments and Prepayments. . . . . . . . . . . . . . . . . . 25
3.2 Interest Provisions . . . . . . . . . . . . . . . . . . . . . 27
3.2.1 Rates . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
3.2.2 Post-Maturity Rates . . . . . . . . . . . . . . . . . . . . . 27
3.2.3 Payment Dates . . . . . . . . . . . . . . . . . . . . . . . . 28
3.3 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.3.1 Facility Fee. . . . . . . . . . . . . . . . . . . . . . . . . 28
3.3.2 Agent's Fee . . . . . . . . . . . . . . . . . . . . . . . . . 28
3.3.3 Payment Office. . . . . . . . . . . . . . . . . . . . . . . . 28
i
<PAGE>
TABLE OF CONTENTS
(continued)
PAGE
----
IV CERTAIN EURODOLLAR AND OTHER PROVISIONS . . . . . . . . . . . . . . . . 28
4.1 Eurodollar Lending Unlawful . . . . . . . . . . . . . . . . . 28
4.2 Deposits Unavailable or Eurodollar Interest Rate
Unascertainable . . . . . . . . . . . . . . . . . . . . . . . 29
4.3 Increased Eurodollar Borrowing Costs, etc.. . . . . . . . . . 29
4.4 Funding Losses. . . . . . . . . . . . . . . . . . . . . . . . 29
4.5 Increased Capital Costs . . . . . . . . . . . . . . . . . . . 30
4.6 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
4.7 Special Fees in Respect of Reserve Requirements . . . . . . . 32
4.8 Payments, Computations, etc.. . . . . . . . . . . . . . . . . 32
4.9 Sharing of Payments . . . . . . . . . . . . . . . . . . . . . 33
4.10 [Intentionally Omitted. . . . . . . . . . . . . . . . . . . . 33
4.11 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 33
4.12 Replacement of Lender on Account of Increased Costs,
Eurodollar Lending Unlawful, Reserve Requirements, Taxes,
Certain Dissents, etc.. . . . . . . . . . . . . . . . . . . . 33
4.13 Maximum Interest. . . . . . . . . . . . . . . . . . . . . . . 34
V CONDITIONS TO BORROWING . . . . . . . . . . . . . . . . . . . . . . . . 35
5.1 Initial Borrowing . . . . . . . . . . . . . . . . . . . . . . 35
5.1.1 Resolutions, etc. . . . . . . . . . . . . . . . . . . . . . . 35
5.1.2 Delivery of Notes . . . . . . . . . . . . . . . . . . . . . . 35
5.1.3 Guaranties. . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.1.4 Opinions of Counsel . . . . . . . . . . . . . . . . . . . . . 35
5.1.5 Fee Letters, Closing Fees, Expenses, etc. . . . . . . . . . . 35
5.1.6 Material Adverse Change . . . . . . . . . . . . . . . . . . . 36
5.1.7 Regulatory Filings. . . . . . . . . . . . . . . . . . . . . . 36
5.1.8 Engineering Report. . . . . . . . . . . . . . . . . . . . . . 36
5.1.9 Certificate Relating to Consummation of Acquisition . . . . . 36
5.1.10 Other Documents . . . . . . . . . . . . . . . . . . . . . . . 36
5.2 All Borrowings. . . . . . . . . . . . . . . . . . . . . . . . 36
5.2.1 Compliance with Warranties, No Default, etc.. . . . . . . . . 36
5.2.2 Borrowing Request and Competitive Bid Quote Request . . . . . 37
5.2.3 Satisfactory Legal Form . . . . . . . . . . . . . . . . . . . 37
5.3 Additional Conditions . . . . . . . . . . . . . . . . . . . . 37
5.3.1 Guaranty from EDC . . . . . . . . . . . . . . . . . . . . . . 37
5.3.2 Certificate Relating to Stock Purchase. . . . . . . . . . . . 37
5.3.3 Payment of Outstanding Indebtedness, etc. . . . . . . . . . . 38
VI REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . . . . . . 38
6.1 Organization, etc.. . . . . . . . . . . . . . . . . . . . . . 38
6.2 Due Authorization, Non-Contravention, etc.. . . . . . . . . . 38
ii
<PAGE>
TABLE OF CONTENTS
(continued)
PAGE
----
6.3 Government Approval, Regulation, etc. . . . . . . . . . . . . 39
6.4 Validity, etc.. . . . . . . . . . . . . . . . . . . . . . . . 39
6.5 Financial Information . . . . . . . . . . . . . . . . . . . . 39
6.6 No Material Adverse Change. . . . . . . . . . . . . . . . . . 39
6.7 Litigation, Labor Controversies, etc. . . . . . . . . . . . . 39
6.8 Subsidiaries. . . . . . . . . . . . . . . . . . . . . . . . . 40
6.9 Ownership of Properties . . . . . . . . . . . . . . . . . . . 40
6.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . 40
6.11 Pension and Welfare Plans . . . . . . . . . . . . . . . . . . 40
6.12 Environmental Warranties. . . . . . . . . . . . . . . . . . . 40
6.13 Regulations G, T, U and X . . . . . . . . . . . . . . . . . . 41
6.14 Validity of Stock Purchase Agreement. . . . . . . . . . . . . 41
6.15 Accuracy of Information . . . . . . . . . . . . . . . . . . . 42
6.16 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . 42
6.17 Existing Liens. . . . . . . . . . . . . . . . . . . . . . . . 42
6.18 Solvency. . . . . . . . . . . . . . . . . . . . . . . . . . . 42
6.19 No Default. . . . . . . . . . . . . . . . . . . . . . . . . . 42
VII COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 42
7.1 Affirmative Covenants . . . . . . . . . . . . . . . . . . . . 42
7.1.1 Financial Information, Reports, Notices, etc. . . . . . . . . 42
7.1.2 Compliance with Laws, etc.. . . . . . . . . . . . . . . . . . 44
7.1.3 Maintenance of Properties . . . . . . . . . . . . . . . . . . 44
7.1.4 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . 44
7.1.5 Books and Records . . . . . . . . . . . . . . . . . . . . . . 44
7.1.6 Conduct of Business . . . . . . . . . . . . . . . . . . . . . 44
7.1.7 Maintenance of Employee Benefit Plans . . . . . . . . . . . . 45
7.1.8 Resolutions . . . . . . . . . . . . . . . . . . . . . . . . . 45
7.1.9 New Significant Subsidiaries. . . . . . . . . . . . . . . . . 45
7.2 Negative Covenants. . . . . . . . . . . . . . . . . . . . . . 45
7.2.1 Business Activities . . . . . . . . . . . . . . . . . . . . . 45
7.2.2 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . 46
7.2.3 Financial Covenants . . . . . . . . . . . . . . . . . . . . . 46
7.2.4 Restricted Payments, etc. . . . . . . . . . . . . . . . . . . 47
7.2.6 Consolidation, Merger, etc. . . . . . . . . . . . . . . . . . 47
7.2.7 Transactions with Affiliates. . . . . . . . . . . . . . . . . 48
7.2.8 Negative Pledges, Restrictive Agreements, etc.. . . . . . . . 48
VIII EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . 48
8.1 Listing of Events of Default. . . . . . . . . . . . . . . . . 48
8.1.1 Non-Payment of Obligations. . . . . . . . . . . . . . . . . . 48
8.1.2 Breach of Warranty. . . . . . . . . . . . . . . . . . . . . . 48
iii
<PAGE>
TABLE OF CONTENTS
(continued)
PAGE
----
8.1.3 Non-Performance of Certain Covenants and Obligations. . . . . 49
8.1.4 Non-Performance of Other Covenants and Obligations. . . . . . 49
8.1.5 Default on Other Indebtedness . . . . . . . . . . . . . . . . 49
8.1.6 Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . 49
8.1.7 Pension Plans . . . . . . . . . . . . . . . . . . . . . . . . 49
8.1.8 Change of Control . . . . . . . . . . . . . . . . . . . . . . 49
8.1.9 Bankruptcy, Insolvency, etc.. . . . . . . . . . . . . . . . . 49
8.1.10 Impairment of Guaranty. . . . . . . . . . . . . . . . . . . . 50
8.2 Action if Bankruptcy. . . . . . . . . . . . . . . . . . . . . 50
8.3 Action if Other Event of Default. . . . . . . . . . . . . . . 50
IX THE AGENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.1 Actions . . . . . . . . . . . . . . . . . . . . . . . . . . . 51
9.2 Funding Reliance, etc.. . . . . . . . . . . . . . . . . . . . 51
9.3 Exculpation . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.4 Successor . . . . . . . . . . . . . . . . . . . . . . . . . . 52
9.5 Loans by UBS. . . . . . . . . . . . . . . . . . . . . . . . . 52
9.6 Credit Decisions. . . . . . . . . . . . . . . . . . . . . . . 52
9.7 Copies, etc.. . . . . . . . . . . . . . . . . . . . . . . . . 53
X MISCELLANEOUS PROVISIONS. . . . . . . . . . . . . . . . . . . . . . . . 53
10.1 Waivers, Amendments, etc. . . . . . . . . . . . . . . . . . . 53
10.2 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . 53
10.3 Payment of Costs, Expenses and Taxes. . . . . . . . . . . . . 54
10.4 Indemnification . . . . . . . . . . . . . . . . . . . . . . . 54
10.5 Survival. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.6 Severability. . . . . . . . . . . . . . . . . . . . . . . . . 55
10.7 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . . 55
10.8 Execution in Counterparts, Effectiveness, etc.. . . . . . . . 55
10.9 Governing Law; Entire Agreement . . . . . . . . . . . . . . . 55
10.10 Successors and Assigns. . . . . . . . . . . . . . . . . . . . 56
10.11 Sale and Transfer of Loans and Notes; Participations in
Loans and Notes . . . . . . . . . . . . . . . . . . . . . . . 56
10.11.1 Assignments . . . . . . . . . . . . . . . . . . . . . . . . . 56
10.11.2 Participations. . . . . . . . . . . . . . . . . . . . . . . . 57
10.12 Other Transactions. . . . . . . . . . . . . . . . . . . . . . 57
10.13 Forum Selection and Consent to Jurisdiction . . . . . . . . . 57
10.14 Waiver of Jury Trial. . . . . . . . . . . . . . . . . . . . . 58
iv
<PAGE>
SCHEDULE I - Disclosure Schedule
EXHIBIT 2.2.1 - Form of Competitive Bid Note
EXHIBIT 2.2.2 - Form of Competitive Bid Quote Request
EXHIBIT 2.2.3 - Form of Invitation for Competitive Bid Quotes
EXHIBIT 2.2.4 - Form of Competitive Bid Quote
EXHIBIT 2.5 - Form of Borrowing Request
EXHIBIT 2.6 - Form of Continuation/Conversion Notice
EXHIBIT 2.8A - Form of Revolving Note
EXHIBIT 2.8B - Form of Term Note
EXHIBIT 5.1.3 - Form of Guaranty
EXHIBIT 5.1.4 - Form of Opinion of Counsel to the Borrower
EXHIBIT 10.11 - Form of Lender Assignment Agreement
v
<PAGE>
CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of July 31, 1996, among NOBLE AFFILIATES,
INC., a Delaware corporation (the "BORROWER"), the various financial
institutions as are or may become parties hereto (collectively, the "LENDERS"),
and UNION BANK OF SWITZERLAND, Houston Agency ("UBS"), as agent (the "AGENT")
for the Lenders,
W I T N E S S E T H:
WHEREAS, the Borrower is engaged through its various Subsidiaries in the
business of oil, gas and energy exploration, production, marketing and
development; and
WHEREAS, pursuant to that certain Stock Purchase Agreement dated as of July
1, 1996 (as may be amended, supplemented, restated or otherwise modified from
time to time, the "STOCK PURCHASE AGREEMENT") between Energy Diversified
Holdings Incorporated, a New Jersey corporation ("EDHI"), as seller, and Samedan
Oil Corporation, a Delaware corporation and a wholly-owned Subsidiary of the
Borrower ("SOC"), as buyer, SOC intends to purchase all of the issued and
outstanding common shares of Energy Development Corporation, a New Jersey
corporation ("EDC") (the purchase of all issued and outstanding shares of EDC by
SOC referred to herein as the "ACQUISITION"); and
WHEREAS, the Lenders are willing, on the terms and conditions hereinafter
set forth in this Agreement (including ARTICLE V), to make available to the
Borrower a term loan facility and a revolving credit facility with a competitive
bid subfacility; and
WHEREAS, the proceeds of the Term Loans, Revolving Loans and the
Competitive Bid Loans will be used to (a) fund an intercompany loan from the
Borrower to SOC in an amount up to $800,000,000 for the purpose of making the
Acquisition, (b) make payment of the Indebtedness to be Paid (as herein defined)
of the Borrower and its Subsidiaries (including payment of those amounts
described in SECTION 5.1.11), and (c) in the case of the Revolving Facility, for
general corporate purposes of the Borrower and its Subsidiaries;
NOW, THEREFORE, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 DEFINED TERMS. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
<PAGE>
"ABSOLUTE RATE" means, with respect to a Competitive Bid Loan made by a
particular Lender for the relevant Absolute Rate Interest Period, the rate of
interest per annum (rounded to the nearest 1/100 of 1%) offered by such Lender
and accepted by the Borrower pursuant to SECTION 2.2.6(ii).
"ABSOLUTE RATE ADVANCE" means a borrowing hereunder consisting of the
aggregate amount of the several Absolute Rate Loans made by some or all of the
Lenders to the Borrower at the same time and for the same Absolute Rate Interest
Period.
"ABSOLUTE RATE AUCTION" means a solicitation of Competitive Bid Quotes
setting forth Absolute Rates pursuant to SECTION 2.2.
"ABSOLUTE RATE INTEREST PERIOD" means, with respect to an Absolute Rate
Advance or an Absolute Rate Loan, a period of not less than 14 and not more than
90 days commencing on a Business Day selected by the Borrower pursuant to this
Agreement. If such Absolute Rate Interest Period would end on a day which is
not a Business Day, such Absolute Rate Interest Period shall end on the next
succeeding Business Day.
"ABSOLUTE RATE LOAN" means a Loan which bears interest at an Absolute Rate.
"ACQUISITION" is defined in the second recital.
"ACQUISITION DOCUMENTS" means the Stock Purchase Agreement, all other
agreements or documents executed or filed by the Borrower or any of its
Subsidiaries in connection with the Stock Purchase Agreement or the Acquisition,
all consents and waivers granted by any party to the Stock Purchase Agreement to
another party thereto, and any notice of breach under the Stock Purchase
Agreement given by a party thereto to another party thereto.
"AFFILIATE" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully diluted basis) having
ordinary voting power for the election of directors or managing general
partners; or (b) to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
"AGENT" is defined in the PREAMBLE and includes each other Person as shall
have subsequently been appointed as the successor Agent pursuant to SECTION 9.4.
"AGENT FEE LETTER" means that fee letter dated as of July 12, 1996 between
the Borrower and the Agent as described in SECTION 3.3.2.
2
<PAGE>
"AGREEMENT" means, on any date, this Credit Agreement as originally in
effect on the Effective Date and as thereafter from time to time amended,
supplemented, amended and restated, or otherwise modified and in effect on such
date.
"APPLICABLE FACILITY FEE RATE" means the number of basis points per annum
(based on a year of 360 days) set forth below based on the Applicable Rating
Level and the Total Debt to Capitalization Ratio on such date:
Debt/Cap 50% Less than Debt/Cap
Applicable Greater than Debt/Cap Less than
Rating Level or Equal to 60% Less than 60% or Equal to 50%
- ------------ --------------- ------------- ---------------
Level I 15.0 12.5 12.5
Level II 15.0 15.0 12.5
Level III 20.0 20.0 20.0
Level IV 25.0 25.0 25.0
; PROVIDED, HOWEVER, that at any time that Moody's and S&P have split ratings of
two or more rating differentials, then the Applicable Facility Fee Rate will be
determined using the following formula:
M + S
----- = R
2
where (i) "M" is the number of basis points per annum determined in accordance
with the above chart using an Applicable Rating Level equal to the Moody's
Rating Level at the time of such determination and the Total Debt to
Capitalization Ratio at the time of such determination, (ii) "S" is the number
of basis points per annum determined in accordance with the above chart using an
Applicable Rating Level equal to the S&P's Rating Level at the time of such
determination and the Total Debt to Capitalization Ratio at the time of such
determination and (iii) "R" is the Applicable Facility Fee Rate. Changes in the
Facility Fee Rate will occur automatically without prior notice. The Agent will
give notice promptly to the Borrower and the Lenders of changes in the Facility
Fee Rate.
"APPLICABLE MARGIN" means on any date and with respect to each Eurodollar
Loan or Eurodollar Bid Rate Advance the number of basis points per annum set
forth below based on the Applicable Rating Level and the Total Debt to
Capitalization Ratio on such date:
3
<PAGE>
Debt/Cap 50% Less than Debt/Cap
Applicable Greater than Debt/Cap Less than
Rating Level or Equal to 60% Less than 60% or Equal to 50%
- ------------ --------------- ------------- ---------------
Level I 35 22.5 17.5
Level II 45 35 22.5
Level III 55 42.5 30
Level IV 62.5 50 37.5
; PROVIDED, HOWEVER, that if Moody's and S&P have split ratings of two or more
rating differentials, then the Applicable Margin will be determined using the
following formula:
M + S
----- = A
2
where (i) "M" is the number of basis points per annum determined in accordance
with the above chart using an Applicable Rating Level equal to the Moody's
Rating Level at the time of such determination and the Total Debt to
Capitalization Ratio at the time of such determination, (ii) "S" is the number
of basis points per annum determined in accordance with the above chart using an
Applicable Rating Level equal to the S&P's Rating Level at the time of such
determination and the Total Debt to Capitalization Ratio at the time of such
determination and (iii) "A" is the Applicable Margin.
Changes in the Applicable Margin will occur automatically without prior notice.
The Agent will give notice promptly to the Borrower and the Lenders of changes
in the Applicable Margins.
"APPLICABLE RATING LEVEL" means at any time that Moody's and S&P have the
equivalent rating or split ratings of not more than one rating differential, of
the Borrower's senior unsecured long-term debt, the level set forth in the chart
below under the heading "Applicable Rating Level" opposite the rating under the
heading "Moody's" or "S&P" which is the higher of the two if split ratings or
opposite the ratings under the headings "Moody's" and "S&P" if equivalent;
provided that at any time that Moody's and S&P have split ratings of more than
one rating differential, there shall be no Applicable Rating Level for purposes
of this Agreement.
Applicable Rating Level Moody's S&P
- ----------------------- ------- ---
Level I Greater than or Greater than or
equal to Baa1 equal to BBB+
Level II Baa2 BBB
Level III Baa3 BBB-
Level IV Less than or Less than or
equal to Ba1 equal to BB+
For example, if the Moody's rating is Baa1 and the S&P rating is BBB, Level I
shall apply.
4
<PAGE>
For purposes of the foregoing, (i) "Greater than or Equal to" means a
rating equal to or more favorable than; "Less than or Equal to" means a
rating equal to or less favorable than; "Greater than" means a rating greater
than; "Less than" means a rating less than; (ii) if ratings for the
Borrower's senior unsecured long-term debt shall not be available from S&P or
Moody's, Level IV shall be deemed applicable; (iii) if determinative ratings
shall change (other than as a result of a change in the rating system used by
any applicable Rating Agency) such that a change in Applicable Rating Level
would result, such change shall effect a change in Applicable Rating Level as
of the day on which it is first announced by the applicable Rating Agency,
and any change in the Applicable Margin or percentage used in calculating
fees due hereunder shall apply commencing on the effective date of such
change and ending on the date immediately preceding the effective date of the
next such change; and (iv) if the rating system of any of the Rating Agencies
shall change prior to the date all obligations hereunder have been paid and
the Commitments cancelled, the Borrower and the Lenders shall negotiate in
good faith to amend the references to specific ratings in this definition to
reflect such changed rating system, and pending such amendment, if no
Applicable Rating Level is otherwise determinable based upon the foregoing,
Level IV shall apply.
"ASSIGNEE LENDER" is defined in SECTION 10.11.1.
"AUTHORIZED OFFICER" means, relative to the Borrower or any other Obligor,
those of its officers whose signatures and incumbency shall have been certified
to the Agent and the Lenders pursuant to SECTION 5.1.1.
"BASE RATE" means, on any date and with respect to all Base Rate Loans, a
fluctuating rate of interest per annum equal to the higher of (a) the rate of
interest most recently announced by UBS at its Domestic Office as its base rate
for Dollar loans; and (b) the Federal Funds Rate most recently determined by the
Agent plus 1/2%. The Base Rate is not necessarily intended to be the lowest
rate of interest determined by the UBS in connection with extensions of credit.
Changes in the rate of interest on that portion of any Loans maintained as Base
Rate Loans will take effect simultaneously with each change in the Base Rate.
The Agent will give notice promptly to the Borrower and the Lenders of changes
in the Base Rate.
"BASE RATE LOAN" means a Loan bearing interest at a fluctuating rate
determined by reference to the Base Rate.
"BORROWER" is defined in the PREAMBLE, and includes its permitted
successors and assigns.
"BORROWING" means any extension of credit (as opposed to any continuation
or conversion thereof) made by the Lenders by way of Competitive Bid Advances
and Loans.
"BORROWING DATE" means a date on which a Borrowing is made hereunder.
"BORROWING REQUEST" means a loan request and certificate duly executed by
an Authorized Officer of the Borrower, substantially in the form of EXHIBIT 2.5
hereto.
5
<PAGE>
"BUSINESS DAY" means (a) any day which is neither a Saturday or Sunday nor
a legal holiday on which banks are authorized or required to be closed in New
York, New York; and (b) relative to the making, continuing, prepaying or
repaying of any Eurodollar Borrowing, any day on which dealings in Dollars are
carried on in the Eurodollar interbank market.
"CAPITAL EXPENDITURES" means, for any period, the sum of (a) the aggregate
amount of all expenditures of the Borrower and its Subsidiaries for fixed or
capital assets made during such period which, in accordance with GAAP, would be
classified as capital expenditures; and (b) the aggregate amount of all
Capitalized Lease Liabilities incurred during such period.
"CAPITALIZATION" means the sum, at any time outstanding and without
duplication, of (i) Debt plus (ii) Stockholders' Equity.
"CAPITALIZED LEASE LIABILITIES" means all monetary obligations of the
Borrower or any of its Subsidiaries under any leasing or similar arrangement
which, in accordance with GAAP, would be classified as capitalized leases, and,
for purposes of this Agreement and each other Loan Document, the amount of such
obligations shall be the capitalized amount thereof, determined in accordance
with GAAP, and the stated maturity thereof shall be the date of the last payment
of rent or any other amount due under such lease prior to the first date upon
which such lease may be terminated by the lessee without payment of a penalty.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"CHANGE IN CONTROL" means (a) the acquisition by any Person, or two or more
Persons acting in concert, of beneficial ownership (within the meaning of Rule
13d-3 of the Securities and Exchange Commission under the Securities Exchange
Act of 1934) of 30% or more of the outstanding shares of voting stock of the
Borrower; or (b) the failure of the Borrower to own, free and clear of all Liens
or encumbrances (other than non-consensual Liens or encumbrances which are not
material or which are fully discharged or with respect to obligations which are
fully bonded, in either case within thirty (30) days after the imposition of
such Lien or encumbrance) at least 100% of the outstanding shares of voting
stock of SOC on a fully diluted basis.
"CODE" means the Internal Revenue Code of 1986, as amended, reformed or
otherwise modified from time to time.
"COMMITMENT" means, as the context may require, a Lender's Revolving Loan
Commitment or Term Loan Commitment.
6
<PAGE>
"COMMITMENT AMOUNT" means, as the context may require, either the Revolving
Loan Commitment Amount or the Term Loan Commitment Amount.
"COMMITMENT TERMINATION DATE" means, as the context may require, either the
Revolving Loan Commitment Termination Date or the Term Loan Commitment
Termination Date.
"COMMITMENT TERMINATION EVENT" means (a) the occurrence of any Default
described in CLAUSES (a) through (d) of SECTION 8.1.9 with respect to the
Borrower or any Significant Subsidiary; or (b) the occurrence and continuance of
any other Event of Default and either (i) the declaration of the Loans to be due
and payable pursuant to SECTION 8.3, or (ii) in the absence of such declaration,
the giving of notice by the Agent, acting at the direction of the Required
Lenders, to the Borrower that the Commitments have been terminated.
"COMPETITIVE BID ADVANCE" means a borrowing hereunder consisting of the
aggregate amount of the (i) several Eurodollar Bid Rate Advances or (ii) several
Absolute Rate Advances, made by some or all of the Lenders to the Borrower at
the same time, at the same interest basis, and for the same Interest Period.
"COMPETITIVE BID BORROWING NOTICE" is defined in SECTION 2.2.6.
"COMPETITIVE BID FEE LETTER" means that fee letter dated on or before
the Effective Date, Borrower and the Agent as described in SECTION 2.2.8.
"COMPETITIVE BID LOAN" means a Eurodollar Bid Rate Loan or an Absolute Rate
Loan, as the case may be.
"COMPETITIVE BID MARGIN" means the margin above, at or below the applicable
Eurodollar Rate offered for a Eurodollar Bid Rate Loan, expressed as a
percentage (rounded to the nearest 1/100 of 1%) to be added or subtracted from
such Eurodollar Rate.
"COMPETITIVE BID NOTE" means a promissory note in substantially the form of
EXHIBIT 2.2.1 hereto, with appropriate insertions, duly executed and delivered
to the Agent by the Borrower for the account of a Lender and payable to the
order of such Lender, including any amendment, modification, renewal or
replacement of such promissory note.
"COMPETITIVE BID QUOTE" means a Competitive Bid Quote substantially in the
form of EXHIBIT 2.2.4 hereto completed and delivered by a Lender to the Agent in
accordance with SECTION 2.2.4.
"COMPETITIVE BID QUOTE REQUEST" means a Competitive Bid Quote Request
substantially in the form of EXHIBIT 2.2.2 hereto completed and delivered by the
Borrower to the Agent in accordance with SECTION 2.2.2.
7
<PAGE>
"CONTINUATION/CONVERSION NOTICE" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of the
Borrower, substantially in the form of EXHIBIT 2.6 hereto.
"CONTROLLED GROUP" means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with the Borrower, are
treated as a single employer under Section 414(b) or 414(c) of the Code or
Section 4001 of ERISA.
"DEBT" means the consolidated Indebtedness of the Borrower and its
Subsidiaries.
"DEFAULT" means any Event of Default or any Unmatured Event of Default.
"DEFAULT MARGIN" means 2%.
"DISCLOSURE SCHEDULE" means the Disclosure Schedule attached hereto as
SCHEDULE I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrower with the written consent of the Agent and the Required
Lenders.
"DOLLAR" and the sign "$" mean lawful money of the United States.
"DOMESTIC OFFICE" means, relative to any Lender, the office of such Lender
designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender (or any successor or
assign of such Lender) within the United States as may be designated from time
to time by notice from such Lender, as the case may be, to each other Person
party hereto. A Lender may have separate Domestic Offices for purposes of
making, maintaining or continuing, as the case may be, Base Rate Loans.
"EBITDA" means, for any period, the sum of (i) the consolidated net income
of the Borrower and its Subsidiaries for such period before non-cash non-
recurring items, gains or losses on dispositions of assets and the cumulative
effect of changes in accounting principles PLUS (ii) to the extent included in
the determination of such income, the consolidated charges for such period for
interest, depreciation, depletion and amortization PLUS (or, if there is a
benefit from income taxes, MINUS) (iii) to the extent included in the
determination of such income, the amount of the provision for or benefit from
income taxes; PROVIDED that in determining such consolidated net income, such
consolidated charges and such provision for or benefit from income taxes, there
shall be excluded therefrom (to the extent otherwise included therein) the net
income (but not loss) of, charges for interest, depreciation, depletion and
amortization of, and such provision for (but not benefit from) income taxes of,
any Person which is subject to any contractual restriction which prevents the
payment of dividends or the making of distributions on the capital stock or
other ownership interests of such Person to the extent of such contractual
restrictions.
"EDC" is defined in the second recital, and includes its permitted
successors and assigns.
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"EDHI" is defined in the second recital, and includes its permitted
successors and assigns.
"EFFECTIVE DATE" means the date this Agreement becomes effective pursuant
to SECTION 10.8.
"ENVIRONMENTAL LAW" means any federal, state, or local statute, or rule or
regulation promulgated thereunder, any judicial or administrative order or
judgment to which the Borrower or any Subsidiary is party or which are
applicable to the Borrower or any Subsidiary (whether or not by consent), and
any provision or condition of any governmental permit, license or other
operating authorization, relating to protection of the environment, persons or
the public welfare from actual or potential exposure for the effects of exposure
to any actual or potential release, discharge, spill or emission (whether past
or present) of, or regarding the manufacture, processing, production, gathering,
transportation, importation, use, treatment, storage or disposal of, any
chemical, raw material, pollutant, contaminant or toxic, corrosive, hazardous,
or non-hazardous substance or waste, including petroleum.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"EURODOLLAR AUCTION" means a solicitation of Competitive Bid Quotes setting
forth Competitive Bid Margins pursuant to SECTION 2.2.
"EURODOLLAR BID RATE" means, with respect to a Loan made by a given Lender
for the relevant Eurodollar Interest Period, the sum of (i) the Eurodollar Rate
and (ii) the Competitive Bid Margin offered by such Lender and accepted by the
Borrower pursuant to SECTION 2.2.6(i).
"EURODOLLAR BID RATE ADVANCE" means a Competitive Bid Advance which bears
interest at a Eurodollar Bid Rate.
"EURODOLLAR BID RATE LOAN" means a Competitive Bid Loan which bears
interest at a Eurodollar Bid Rate.
"EURODOLLAR BORROWING" means a borrowing hereunder consisting of the
aggregate amount of the (i) several Eurodollar Loans or (ii) several Eurodollar
Bid Rate Loans, made by all or some of the Lenders to the Borrower, at the same
time, at the same interest rate and for the same Interest Period.
"EURODOLLAR LOAN" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the Eurodollar Rate.
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"EURODOLLAR OFFICE" means, relative to any Lender, the office of such
Lender designated as such below its signature hereto or designated in the Lender
Assignment Agreement or such other office of a Lender as designated from time to
time by notice from such Lender to the Borrower and the Agent, whether or not
outside the United States, which shall be making or maintaining Eurodollar Loans
of such Lender hereunder.
"EURODOLLAR RATE" means, relative to any Interest Period for Eurodollar
Loans, the rate of interest equal to the average (rounded upwards, if necessary,
to the nearest 1/100 of 1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered to the Agent's Eurodollar Office in New
York, New York as at or about 10:00 a.m. New York time two Business Days prior
to the beginning of such Interest Period for delivery on the first day of such
Interest Period, and in an amount approximately equal to the amount of the
Agent's Eurodollar Loan and for a period approximately equal to such Interest
Period.
"EXISTING INDEBTEDNESS" is defined in SECTION 3.1(b)(iii).
"EVENT OF DEFAULT" is defined in SECTION 8.1.
"FACILITY" means the Revolving Facility or the Term Facility, as the case
may be.
"FEDERAL FUNDS RATE" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to (a) the weighted average of the
rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day (or,
if such day is not a Business Day, for the next preceding Business Day) by the
Federal Reserve Bank of New York; or (b) if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by UBS from two federal funds brokers of recognized
standing selected by it.
"FEE LETTER" means the Agent Fee Letter or the Competitive Bid Fee Letter,
as the case may be.
"FISCAL QUARTER" means any quarter of a Fiscal Year.
"FISCAL YEAR" means any period of twelve consecutive calendar months ending
on December 31; references to a Fiscal Year with a number corresponding to any
calendar year (E.G., the "1988 Fiscal Year") refer to the Fiscal Year ending on
December 31 occurring during such calendar year.
"FIXED RATE BORROWING" means a borrowing hereunder consisting of the
aggregate amount of the (i) several Eurodollar Bid Rate Loans, or (ii) several
Absolute Rate Loans, or (iii) several Eurodollar Loans, made by all or some of
the Lenders to the Borrower at the same time and for the same Interest Period.
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"F.R.S. BOARD" means the Board of Governors of the Federal Reserve System
or any successor thereto.
"GAAP" is defined in SECTION 1.4.
"GUARANTEED LIABILITY" means any agreement, undertaking or arrangement by
which any Person guarantees, endorses or otherwise becomes or is contingently
liable upon (by direct or indirect agreement, contingent or otherwise, to
provide funds for payment, to supply funds to, or otherwise to invest in, a
debtor, or otherwise to assure a creditor against loss) the indebtedness,
obligation or any other liability (other than guaranties of trade payables and
guaranties of performance obligations) of any other Person (other than by
endorsements of instruments in the course of collection), or guarantees the
payment of dividends or other distributions upon the shares of any other Person.
The amount of any Person's obligation under any Guaranteed Liability shall
(subject to any limitation set forth therein) be deemed to be the outstanding
principal amount (or maximum principal amount, if larger) of the debt,
obligation or other liability (other than guaranties of trade payables and
guaranties of performance obligations) guaranteed thereby.
"GUARANTOR" means SOC and each of the Significant Subsidiaries that
executes a Guaranty pursuant to SECTION 5.1.3 or SECTION 7.1.10, and their
permitted successors and assigns.
"GUARANTY" means any Guaranty executed and delivered pursuant to SECTION
5.1.3, substantially in the form of EXHIBIT 5.1.3 hereto, as amended,
supplemented, restated or otherwise modified from time to time.
"HAZARDOUS MATERIAL" means: i) any "hazardous substance", as defined by
CERCLA; ii) any "hazardous waste", as defined by the Resource Conservation and
Recovery Act, as amended; iii) any petroleum, crude oil or any fraction thereof;
iv) any hazardous, dangerous or toxic chemical, material, waste or substance
within the meaning of any Environmental Law; v) any radioactive material,
including any naturally occurring radioactive material, and any source, special
or by-product material as defined in 42 U.S.C. Section 2011 et. seq., and any
amendments or reauthorizations thereof; vi) asbestos-containing materials in any
form or condition; or vii) polychlorinated biphenyls in any form or condition.
"HEDGING OBLIGATIONS" means, with respect to any Person, all liabilities of
such Person under derivative contracts, including interest rate or commodity
swap agreements, interest rate or commodity cap agreements and interest rate or
commodity collar agreements, and all similar agreements or arrangements.
"HEREIN", "HEREOF", "HERETO", "HEREUNDER" and similar terms contained in
this Agreement or any other Loan Document refer to this Agreement or such other
Loan Document, as the case may be, as a whole and not to any particular Section,
paragraph or provision of this Agreement or such other Loan Document.
"IMPERMISSIBLE QUALIFICATION" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of the Borrower or any other
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Obligor, any qualification or exception to such opinion or certification (a)
which is of a "going concern" or similar nature; (b) which relates to the
limited scope of examination of matters relevant to such financial statement;
or (c) which relates to the treatment or classification of any item in such
financial statement and which, as a condition to its removal, would require
an adjustment to such item the effect of which would be to cause the Borrower
such Obligor to be in default of any of its obligations under SECTION 7.2.4.
"INCLUDING" means including without limiting the generality of any
description preceding such term.
"INDEBTEDNESS" of any Person means, without duplication: (a) all
obligations of such Person for borrowed money and all obligations of such Person
evidenced by bonds, debentures, notes or other similar instruments; (b) all
obligations, contingent or otherwise, relative to (i) banker's acceptances
issued for the account of such Person and (ii) the face amount of all letters of
credit, whether or not drawn, to the extent that such letters of credit support
the payment of financial obligations; (c) all obligations of such Person as
lessee under leases which have been or should be, in accordance with GAAP,
recorded as Capitalized Lease Liabilities; (d) whether or not so included as
liabilities in accordance with GAAP, all obligations of such Person to pay the
deferred purchase price of property or services (except accounts payable arising
in the ordinary course of business), and indebtedness (excluding prepaid
interest thereon) secured by a Lien on property owned or being purchased by such
Person (including indebtedness arising under conditional sales or other title
retention agreements), whether or not such indebtedness shall have been assumed
by such Person or is limited in recourse; and (e) all Guaranteed Liabilities of
such Person in respect of any of the foregoing. For all purposes of this
Agreement, the Indebtedness of any Person shall include the Indebtedness of any
partnership or joint venture in which such Person is a general partner or a
joint venturer unless such Indebtedness by its terms is expressly non-recourse
to such general partner or joint venturer.
"INDEBTEDNESS TO BE PAID" is defined in SECTION 5.3.3.
"INDEMNIFIED LIABILITIES" is defined in SECTION 10.4.
"INDEMNIFIED PARTIES" is defined in SECTION 10.4.
"INTEREST PERIOD" means, relative to any Fixed Rate Borrowings, (a) with
respect to Eurodollar Borrowings, the period beginning on (and including) the
date on which such Eurodollar Borrowing is made or continued as, or converted
into, a Eurodollar Borrowing pursuant to SECTION 2.5 or 2.6 and shall end on
(but exclude) the day which numerically corresponds to such date one, two, three
or six months thereafter (or, if such month has no numerically corresponding
day, on the last Business Day of such month), as the Borrower may select in its
relevant notice pursuant to SECTION 2.5, or (b) with respect to Absolute Rate
Advances, as the period as the Borrower may select pursuant to SECTION 2.2;
PROVIDED, HOWEVER, that (a) the Borrower shall not be permitted to select
Interest Periods to be in effect at any one time which have expiration dates
occurring on more than five different dates; (b) Interest Periods commencing on
the same date for Loans or Competitive Bid Advances comprising part of the same
Borrowing shall be of the same duration; (c) if such Interest Period would
otherwise end
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on a day which is not a Business Day, such Interest Period shall end on the
next following Business Day (unless, if such Interest Period applies to
Eurodollar Loans, such next following Business Day is the first Business Day
of a calendar month, in which case such Interest Period shall end on the
Business Day next preceding such numerically corresponding day); and (d) no
Interest Period may end later than the date set forth in CLAUSE (a) of the
definition of "REVOLVING LOAN COMMITMENT TERMINATION DATE", in the case of
Interest Periods for Revolving Loans, or the date set forth in CLAUSE (a) of
the definition of "TERM LOAN COMMITMENT TERMINATION DATE", in the case of
Interest Periods for Term Loans.
"INVITATION FOR COMPETITIVE BID QUOTES" is defined in SECTION 2.2.3.
"LENDER ASSIGNMENT AGREEMENT" means a Lender Assignment Agreement
substantially in the form of EXHIBIT 10.11 hereto.
"LENDERS" is defined in the PREAMBLE.
"LIEN" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority arrangement of any kind or nature
whatsoever.
"LOAN" means, as the context may require, either a Revolving Loan or a Term
Loan.
"LOAN ADVANCES" means the Loans of the same Type and, in the case of Fixed
Rate Loans, having the same Interest Period made by all Lenders on the same
Business Day and pursuant to the same Borrowing Request in accordance with
SECTION 2.1.
"LOAN DOCUMENTS" means this Agreement, each of the Notes, each of the
Guaranties, each Competitive Bid Quote Request, each Borrowing Request, each
Committed Borrowing Notice, Fee Letter, together in each case with all exhibits,
schedules and attachments thereto, and all other agreements and instruments from
time to time executed and delivered by the Borrower or any of its Subsidiaries
pursuant to or in connection with any of the foregoing.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on (i) the
business, property, financial condition or results of operations of the Borrower
and its Subsidiaries (taken as a whole) or (ii) the ability of the Borrower or
SOC, as the case may be, to perform its payment obligations under any of the
Loan Documents or (iii) during the period commencing on the date of the initial
Borrowing and ending on the date the Term Loans are paid in full, the ability of
EDC to perform its payment obligations under any of the Loan Documents.
"MOODY'S" means Moody's Investors Service, Inc. and any successor thereto
that is a nationally-recognized rating agency.
"MOODY'S RATING LEVEL" means at any time a determination thereof is to be
made, the level shown under the heading "Applicable Rating Level" opposite the
Borrower's then rating of its senior unsecured long-term debt shown in the
column "Moody's" in the definition of
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Applicable Rating Level; provided that at any time that the Borrower does not
have a rating of its senior unsecured long-term debt by Moody's, the Moody's
Rating Level shall be deemed to be Level IV.
"NEW INDEBTEDNESS" is defined in SECTION 3.2(b)(iii).
"NOBLE GAS" means Noble Gas Marketing, Inc., a Delaware corporation, and
its permitted successors and assigns.
"NOBLE TRADING" means Noble Trading, Inc., a Delaware corporation, and its
permitted successors and assigns.
"NOTE" means, as the context may require, either a Revolving Note or a Term
Note or a Competitive Bid Note; and "Notes" means some or all of the foregoing.
"OBLIGATIONS" means all obligations (monetary or otherwise) of the Borrower
and each other Obligor arising under or in connection with this Agreement, the
Notes and each other Loan Document.
"OBLIGOR" means the Borrower, each of the Guarantors or any other Person
(other than the Agent or any Lender) obligated under any Loan Document, and
their permitted successors and assigns.
"ORGANIC DOCUMENT" means, relative to the Borrower or any other Obligor,
its certificate of incorporation, its by-laws and all shareholder agreements,
voting trusts and similar arrangements applicable to any of its authorized
shares of capital stock.
"PARTICIPANT" is defined in SECTION 10.11.
"PAYMENT OFFICE" means:
Union Bank of Switzerland, New York Branch
299 Park Avenue
New York, New York 10171
Attention: James Broadus
Phone: (212) 821-3227
Facsimile: (212) 821-3259
Payment instructions: via Fed Wire to ABA 0260 0843 9 (UBS, New
York Branch Att: Loan Servicing)
Reference: NOBLE AFFILIATES
"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
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"PENSION PLAN" means a "pension plan", as such term is defined in section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer
plan as defined in section 4001(a)(3) of ERISA), and to which the Borrower or
any corporation, trade or business that is, along with the Borrower, a member of
a Controlled Group, may have liability, including any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five years, or by reason of being deemed to be
a contributing sponsor under section 4069 of ERISA.
"PERCENTAGE" means, relative to any Lender, the percentage set forth
opposite its signature hereto or set forth in the Lender Assignment Agreement,
as such percentage may be adjusted from time to time pursuant to Lender
Assignment Agreement(s) executed by such Lender and its Assignee Lender(s) and
delivered pursuant to SECTION 10.11.
"PERSON" means any natural person, corporation, partnership, firm,
association, trust, government, governmental agency or any other entity, whether
acting in an individual, fiduciary or other capacity.
"PLAN" means any Pension Plan or Welfare Plan.
"QUARTERLY PAYMENT DATE" means the last day of each March, June, September,
and December or, if any such day is not a Business Day, the next succeeding
Business Day.
"RATING AGENCY" means either of S&P or Moody's.
"RELEASE" means a "release", as such term is defined in CERCLA.
"REQUIRED LENDERS" means Lenders in the aggregate holding at least 67% of
the aggregate unpaid principal amount of the outstanding Borrowings (other than
Competitive Bid Loans) and if no Borrowings (other than Competitive Bid Loans)
are outstanding, Lenders having at least 67% of the then Total Commitment.
"RESOURCE CONSERVATION AND RECOVERY ACT" means the Resource Conservation
and Recovery Act, 42 U.S.C. Section 690, ET SEQ., as in effect from time to
time.
"RESTRICTED INDEBTEDNESS" means, at the time of determination and after
giving effect to any Indebtedness incurred or to be incurred in connection with
such determination and to any substantially contemporaneous use of the proceeds
thereof to repay other Indebtedness, the sum of (i) the aggregate principal
amount of the Indebtedness of the Borrower and its Significant Subsidiaries then
secured (or to be secured in connection with such determination) by Liens
permitted under SECTION 7.2.2(n) plus (ii) the aggregate principal amount of the
Indebtedness of the Significant Subsidiaries then outstanding (or to be incurred
in connection with such determination) other than Indebtedness of the
Significant Subsidiaries permitted by SECTION 7.2.5(i).
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"RESTRICTED INDEBTEDNESS BASKET" means, at the time of determination, an
amount equal to 5% of the Borrower's consolidated tangible net worth as reported
in the Borrower's consolidated financial statements most recently delivered to
the Lenders.
"REVOLVING FACILITY" is defined in SECTION 2.1.1.
"REVOLVING LOAN" is defined in SECTION 2.1.1.
"REVOLVING LOAN COMMITMENT" means, relative to any Lender, such Lender's
obligation to make Revolving Loans pursuant to SECTION 2.1.1.
"REVOLVING LOAN COMMITMENT AMOUNT" means, on any date, $400,000,000, as
such amount may be reduced from time to time pursuant to SECTION 2.2.
"REVOLVING LOAN COMMITMENT TERMINATION DATE" means the earliest of (a) the
fifth anniversary of the Effective Date; (b) the date on which the Revolving
Loan Commitment Amount is terminated in full or reduced to zero pursuant to
SECTION 2.3; and (c) the date on which any Commitment Termination Event occurs.
Upon the occurrence of any event described in CLAUSE (b) or (c), the Revolving
Loan Commitments shall terminate automatically and without any further action.
"REVOLVING NOTE" means a promissory note of the Borrower payable to any
Lender, in the form of EXHIBIT 2.8A hereto (as such promissory note may be
amended, endorsed or otherwise modified from time to time), evidencing the
aggregate Indebtedness of the Borrower to such Lender resulting from outstanding
Revolving Loans, and also means all other promissory notes accepted from time to
time in substitution therefor or renewal thereof.
"S&P" means Standard & Poor's Ratings Group and any successor thereto that
is a nationally-recognized rating agency.
"S&P RATING LEVEL" means at any time a determination thereof is to be made,
the level shown under the heading "Applicable Rating Level" opposite the
Borrower's then rating of its senior unsecured long-term debt shown in the
column "S&P's" in the definition of Applicable Rating Level; provided that at
any time that the Borrower does not have a rating of its senior unsecured long-
term debt by S&P, the S&P Rating Level shall be deemed to be Level IV.
"SIGNIFICANT SUBSIDIARY" means (a) SOC, EDC (after consummation of the
Acquisition) and each other Subsidiary of the Borrower (other than Noble Gas or
Noble Trading) that (i) accounts for at least 5% of the consolidated revenues of
the Borrower and its Subsidiaries for any consecutive four quarter period ending
on the last day of a fiscal quarter, or (ii) has assets which represent at least
5% of the consolidated assets of the Borrower and its Subsidiaries as of the
last day of any fiscal quarter of the Borrower immediately preceding the date as
of which any such determination is made, all of which, with respect to clauses
(a)(i) and (ii), shall be as reflected on the financial statements of the
Borrower and its Subsidiaries for such period, or as of such date, as the case
may be; or (b) Noble Gas or Noble Trading, or both, as the case may be, to the
extent that Noble Gas or Noble Trading or both, as the case may be, (i) has
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consolidated net income of at least 10% of the consolidated net income of the
Borrower and its Subsidiaries for any consecutive four quarter period ending on
the last day of a fiscal quarter, or (ii) has consolidated tangible net worth of
at least 5% of the consolidated tangible net worth of the Borrower and its
Subsidiaries as of the last day of any fiscal quarter of the Borrower
immediately preceding the date as of which any such determination is made, all
of which, with respect to clauses (b)(i) and (ii), shall be as reflected on the
financial statements of the Borrower and its Subsidiaries for such period, or as
of such date.
"SOC" is defined in the second recital, and includes its permitted
successors and assigns.
"SOLVENT" means, with respect to any Person at any time, a condition under
which: a) the fair saleable value of such Person's assets is, on the date of
determination, greater than the total amount of such Person's liabilities
(including contingent and unliquidated liabilities) at such time; b) such Person
is able to pay all of its liabilities as such liabilities mature; and c) such
Person does not have unreasonably small capital with which to conduct its
business, provided, that the foregoing determination shall be made without
giving effect to such Person's Guaranty to the extent and only to the extent
such Guaranty would otherwise render such Person unable to satisfy the
conditions in the foregoing clauses (a), (b) and (c). For purposes of this
definition (i) the amount of a Person's contingent or unliquidated liabilities
at any time shall be that amount which, in light of all the facts and
circumstances then existing, represents the amount which can reasonably be
expected to become an actual or matured liability; (ii) the "fair saleable
value" of an asset shall be the amount which may be realized within a reasonable
time either through collection or sale of such asset at its regular market
value; and (iii) the "regular market value" of an asset shall be the amount
which a capable and diligent business person could obtain for such asset from an
interested buyer who is willing to purchase such asset under ordinary selling
conditions.
"STATED MATURITY DATE" means the fifth anniversary of the Effective Date.
"STOCK PURCHASE AGREEMENT" is defined in the second recital.
"STOCKHOLDERS' EQUITY" means, as of the time of any determination thereof
is to be made, the sum of the Borrower's capital stock (which shall exclude
treasury stock and any capital stock subject to mandatory redemption by the
issuer at the option of the holder thereof) and additional paid-in capital, PLUS
retained earnings (MINUS accumulated deficit), all as shown on the consolidated
balance sheet of the Borrower and its Subsidiaries and based on GAAP.
"SUBSIDIARY" means, with respect to any Person, (a) any corporation of
which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, by such
Person and one or more other Subsidiaries of such Person, or by one or more
other Subsidiaries of such Person, (b) any partnership of which such Person,
such Person and one or more other Subsidiaries of such Person, or one or more
other Subsidiaries of such Person is a general partner and (c) any limited
liability company in which such Person, such Person and one or
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more other Subsidiaries of such Person, or one or more other Subsidiaries of
such Person is a member or manager.
"TAXES" is defined in SECTION 4.6.
"TERM FACILITY" is defined in SECTION 2.1.3.
"TERM LOAN" is defined in SECTION 2.1.2.
"TERM LOAN COMMITMENT" means, relative to any Lender, such Lender's
obligation to make Term Loans pursuant to SECTION 2.1.2.
"TERM LOAN COMMITMENT AMOUNT" means, on any date, $400,000,000, as such
amount may be reduced from time to time pursuant to SECTION 2.3 or as a result
of payments or prepayments pursuant to SECTION 3.1.
"TERM LOAN COMMITMENT TERMINATION DATE" means the earliest of (a) the fifth
anniversary of the Effective Date; (b) the date on which the Term Loan
Commitment Amount is terminated in full or reduced to zero pursuant to SECTION
2.3; and (c) the date on which any Commitment Termination Event occurs. Upon
the occurrence of any event described in CLAUSE (b) or (c), the Term Loan
Commitments shall terminate automatically and without any further action.
"TERM NOTE" means a promissory note of the Borrower payable to any Lender,
in the form of EXHIBIT 2.8B hereto (as such promissory note may be amended,
endorsed or otherwise modified from time to time), evidencing the aggregate
Indebtedness of the Borrower to such Lender resulting from outstanding Term
Loans, and also means all other promissory notes accepted from time to time in
substitution therefor or renewal thereof.
"TOTAL COMMITMENT" means, relative to any Lender, such Lender's obligation
to make Revolving Loans or Term Loans pursuant to SECTION 2.1.1 and SECTION
2.1.2, respectively.
"TOTAL COMMITMENT AMOUNT" means $800,000,000, as such amount may be reduced
from time to time pursuant to SECTION 2.3.
"TOTAL DEBT TO CAPITALIZATION RATIO" means the ratio of (a) total Debt TO
(b) total Capitalization.
"TOTAL INTEREST EXPENSE" means with respect to any period for which a
determination thereof is to be made, the sum, without duplication, of (i) the
aggregate amount of all interest accrued (whether or not paid) on all
Indebtedness of the Borrower and its Subsidiaries on a consolidated basis PLUS
(ii) the portion of any Capitalized Lease Liabilities allocable to interest
expense in accordance with GAAP.
"TYPE" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a Eurodollar Loan.
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"UBS" is defined in the PREAMBLE, and includes its successors and assigns.
"UNITED STATES" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"UNMATURED EVENT OF DEFAULT" means any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.
"WELFARE PLAN" means a "welfare plan", as such term is defined in section
3(1) of ERISA.
SECTION 1.2 USE OF DEFINED TERMS. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Note, Borrowing Request, Competitive Bid Quote Request, Competitive Bid
Borrowing Notice, Continuation/Conversion Notice, Loan Document, notice and
other communication delivered from time to time in connection with this
Agreement or any other Loan Document.
SECTION 1.3 CROSS-REFERENCES. Unless otherwise specified, references in
this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION 1.4 ACCOUNTING AND FINANCIAL DETERMINATIONS. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder (including under SECTION 7.2.4) shall be made, and all financial
statements required to be delivered hereunder or thereunder shall be prepared in
accordance with, those generally accepted accounting principles ("GAAP") applied
in the preparation of the financial statements referred to in SECTION 6.5.
ARTICLE II
THE FACILITIES, BORROWING PROCEDURES AND NOTES
SECTION 2.1 THE FACILITIES.
SECTION 2.1.1 DESCRIPTION OF THE REVOLVING FACILITY. The Lenders grant to
the Borrower a revolving credit facility (the "REVOLVING FACILITY") pursuant to
which, and upon the terms and subject to the conditions herein set out and
provided that no Default or Unmatured Default has occurred and is continuing
from time to time on any Business Day occurring prior to the Revolving Loan
Commitment Termination Date, each Lender severally agrees to make Loans in U.S.
Dollars (relative to such Lender, its "REVOLVING LOANS") to the Borrower equal
to such Lender's Percentage of the aggregate amount of Revolving Loans requested
by the Borrower to be made on such day (the commitment of each Lender described
in this SECTION
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2.1.1(a) is herein referred to as its "REVOLVING LOAN COMMITMENT"). In
addition, each Lender may, in its sole discretion, make bids to make
Competitive Bid Loans in U.S. Dollars to the Borrower in accordance with
SECTION 2.2. No Lender shall be permitted or required to make (i) any
Revolving Loan or Competitive Bid Loan if, after giving effect thereto, the
aggregate outstanding principal amount of all Revolving Loans plus
Competitive Bid Loans of all Lenders would exceed the Revolving Loan
Commitment Amount, and (ii) any Revolving Loan if, after giving effect
thereto, the aggregate amount of all Revolving Loans of such Lender would
exceed the Lender's Percentage of the Revolving Loan Commitment Amount.
Subject to clause (i) in the immediately preceding sentence, any Lender may
make Competitive Bid Loans in excess of such Lender's Percentage of the
Revolving Loan Commitment.
SECTION 2.1.2 AVAILABILITY OF REVOLVING FACILITY. Subject to the terms of
this Agreement, the Revolving Facility is available to the Borrower from the
date of this Agreement to the Revolving Loan Commitment Termination Date, and
the Borrower may borrow, repay and reborrow under the Revolving Facility at any
time prior to the Revolving Loan Commitment Termination Date.
SECTION 2.1.3 DESCRIPTION OF TERM FACILITY. The Lenders grant to the
Borrower a term credit facility (the "TERM FACILITY") pursuant to which, and
upon the terms and subject to the conditions herein set out each Lender
severally agrees to make Term Loans in U.S. Dollars (relative to such Lender,
its "TERM LOANS") to the Borrower equal to such Lender's Percentage of the
aggregate amount of Term Loans requested by the Borrower to be made on such day
(the commitment of each Lender described in this SECTION 2.1.3(a) is herein
referred to as its "TERM LOAN COMMITMENT"). No Lender shall be permitted or
required to make any Term Loans if, after giving effect thereto, the aggregate
amount of all Term Loans of all Lenders made since the Effective Date would
exceed the Term Loan Commitment.
SECTION 2.1.4 AVAILABILITY OF TERM FACILITY. Subject to the terms of this
Agreement, the Term Facility is available for borrowing from the date of this
Agreement to the Effective Date. Amounts repaid on the Term Facility may not be
reborrowed.
SECTION 2.2 COMPETITIVE BID ADVANCES.
SECTION 2.2.1 COMPETITIVE BID OPTION. In addition to Loans pursuant to
SECTION 2.1, but subject to the terms and conditions of this Agreement
(including, without limitation, the limitation set forth in SECTION 2.1.1 as to
the maximum aggregate principal amount of all outstanding Loans hereunder), the
Borrower may, as set forth in this SECTION 2.2, request the Lenders, prior to
the Revolving Facility Termination Date, to make offers to make Competitive Bid
Advances to the Borrower. Each Lender may, but shall have no obligation to,
make such offers and the Borrower may, but shall have no obligation to, accept
any such offers in the manner set forth in this SECTION 2.2.
SECTION 2.2.2 COMPETITIVE BID QUOTE REQUEST. The Borrower may request
offers to make Competitive Bid Loans under SECTION 2.2 by transmitting to the
Agent by telex or telecopy a Competitive Bid Quote Request so as to be received
no later than (i) 10:00 a.m. (New York time) at least four Business Days prior
to the Borrowing Date proposed therein, in the case
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of a Eurodollar Auction or (ii) 10:00 a.m. (New York time) at least one
Business Day prior to the Borrowing Date proposed therein, in the case of an
Absolute Rate Auction. The Competitive Bid Quote Request shall specify (i)
the proposed Borrowing Date, which shall be a Business Day, for the proposed
Competitive Bid Advance; (ii) the aggregate principal amount of such
Competitive Bid Advance; (iii) whether the Competitive Bid Quotes requested
are to set forth a Competitive Bid Margin or an Absolute Rate, or both; and
(iv) the Interest Period applicable thereto (which may not end after the
Revolving Loan Commitment Termination Date).
The Borrower may request offers to make Competitive Bid Loans for more than one
Interest Period and for a Eurodollar Auction and an Absolute Rate Auction in a
single Competitive Bid Quote Request. No Competitive Bid Quote Request shall be
given within three Business Days (or upon reasonable prior notice to the
Lenders, such other number of days as the Borrower and the Agent may agree) of
any other Competitive Bid Quote Request. Each Competitive Bid Quote Request
shall be in a minimum amount of $10,000,000 (and in integral multiples of
$1,000,000 in excess thereof). A Competitive Bid Quote Request that does not
conform substantially to the format of EXHIBIT 2.2.2 hereto shall be rejected,
and the Agent shall promptly notify the Borrower of such rejection by telex or
telecopy.
SECTION 2.2.3 INVITATION FOR COMPETITIVE BID QUOTES. Promptly and in any
event before 1:00 p.m. (New York time) on the same Business Day of receipt of a
Competitive Bid Quote Request that is not rejected pursuant to SECTION 2.2.2,
the Agent shall send to each of the Lenders by telex or telecopy an Invitation
for Competitive Bid Quotes, substantially in the form of EXHIBIT 2.2.3 attached
hereto, which shall constitute an invitation by the Borrower to each Lender to
submit Competitive Bid Quotes offering to make the Competitive Bid Loans to
which such Competitive Bid Quote Request relates in accordance with SECTION
2.2.4.
SECTION 2.2.4 SUBMISSION AND CONTENTS OF COMPETITIVE BID QUOTES. (a) Each
Lender may, in its sole discretion, but is under no obligation to, submit a
Competitive Bid Quote containing an offer or offers to make Competitive Bid
Loans in response to any Invitation for Competitive Bid Quotes. Each
Competitive Bid Quote must comply with the requirements of this SECTION 2.2.4
and must be submitted to the Agent by telecopy at its offices specified in
SECTION 10.2 not later than (a) 1:00 p.m. (New York time), at least three
Business Days prior to the proposed Borrowing Date, in the case of a Eurodollar
Auction or (b) 10:00 a.m. (New York time) on the proposed Borrowing Date, in the
case of an Absolute Rate Auction (or, in either case upon reasonable prior
notice to the Lenders, such other time and date as the Borrower and the Agent
may agree). Subject to Articles V and VIII, any Competitive Bid Quote so made
shall be irrevocable except with the written consent of the Agent given on the
instructions of the Borrower.
(b) Each Competitive Bid Quote shall in any case specify: (i) the proposed
Borrowing Date, which shall be the same as that set forth in the applicable
Invitation for Competitive Bid Quotes; (ii) the principal amount of the
Competitive Bid Loan for which each such offer is being made, which principal
amount (1) may be greater than, less than or equal to the Commitment of the
quoting Lender, (2) must be at least $10,000,000 and an integral multiple of
$1,000,000, and (3) may not exceed the principal amount of Competitive Bid Loans
for which offers were requested; (iii) in the case of a Eurodollar Auction, the
Competitive Bid Margin offered for each
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such Competitive Bid Loan; (iv) the minimum or maximum amount, if any, of any
Competitive Bid Loan which may be accepted by the Borrower and/or the limit,
if any, as to the aggregate principal amount of Competitive Bid Loans from
such Lender which may be accepted by the Borrower; (v) in the case of an
Absolute Rate Auction, the Absolute Rate offered for each such Competitive
Bid Loan; (vi) the applicable Interest Period; and (vii) the identity of the
quoting Lender.
(c) The Agent shall reject any Competitive Bid Quote that (i) is not
substantially in the form of EXHIBIT 2.2.4 hereto or does not specify all of the
information required by SECTION 2.2.4(ii); (ii) contains qualifying, conditional
or similar language, other than any such language contained in EXHIBIT 2.2.4
hereto; (iii) proposes terms other than or in addition to those set forth in the
applicable Invitation for Competitive Bid Quotes; or (iv) arrives after the time
set forth in SECTION 2.2.4(i). If any Competitive Bid Quote shall be rejected
pursuant to this SECTION 2.2.4(iii), then the Agent shall notify the relevant
Lender of such rejection as soon as practical.
SECTION 2.2.5 NOTICE TO THE BORROWER. The Agent shall promptly notify the
Borrower of the terms (i) of any Competitive Bid Quote submitted by a Lender
that is in accordance with SECTION 2.2.4 and (ii) of any Competitive Bid Quote
that is in accordance with SECTION 2.2.4 and amends, modifies or is otherwise
inconsistent with a previous Competitive Bid Quote submitted by such Lender with
respect to the same Competitive Bid Quote Request. Any such subsequent
Competitive Bid Quote shall be disregarded by the Agent unless such subsequent
Competitive Bid Quote specifically states that it is submitted solely to correct
a manifest error in such former Competitive Bid Quote. The Agent's notice to
the Borrower shall specify the aggregate principal amount of Competitive Bid
Loans for which offers have been received for each Interest Period specified in
the related Competitive Bid Quote Request and the respective principal amounts
and Competitive Bid Margins or Absolute Rates, as the case may be, so offered.
SECTION 2.2.6 ACCEPTANCE AND NOTICE BY THE BORROWER. Subject to the
receipt of the notice from the Agent referred to in SECTION 2.2.5, not later
than (i) 3:00 p.m. (New York time) at least three Business Days prior to the
proposed Borrowing Date, in the case of a Eurodollar Auction or (ii) 11:00 a.m.
(New York time) on the proposed Borrowing Date, in the case of an Absolute Rate
Auction, the Borrower shall notify the Agent of its acceptance or rejection of
the offers so notified to it pursuant to SECTION 2.2.5; PROVIDED, HOWEVER, that
the failure by the Borrower to give such notice to the Agent shall be deemed to
be a rejection of all such offers. In the case of acceptance, such notice (a
"COMPETITIVE BID BORROWING NOTICE") shall be irrevocable and shall specify the
aggregate principal amount of offers for each Interest Period that are accepted.
The Borrower may accept or reject any Competitive Bid Quote in whole or in part
(subject to the terms of SECTION 2.2.4(b)(iv)); PROVIDED that (a) the aggregate
principal amount of each Competitive Bid Advance may not exceed the applicable
amount set forth in the related Competitive Bid Quote Request; (b) acceptance of
offers for any Competitive Bid Advance with otherwise identical terms may only
be made on the basis of ascending Competitive Bid Margins or Absolute Rates, as
the case may be; (c) the Borrower may not accept any offer of the type described
in SECTION 2.2.4(c) or that otherwise fails to comply with the requirements of
this Agreement for the purpose of obtaining a Competitive Bid Loan under this
Agreement; and (d) after giving effect to such Competitive Bid Advance, the sum
of
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the aggregate principal amount of all outstanding Revolving Loans plus all
Competitive Bid Advances shall not exceed the Revolving Loan Commitment
Amount.
SECTION 2.2.7 ALLOCATION BY THE AGENT. If offers are made by two or more
Lenders with the same Competitive Bid Margins or Absolute Rates, as the case may
be, for a greater aggregate principal amount than the amount in respect of which
offers are permitted to be accepted for the related Interest Period, the
principal amount of Competitive Bid Loans in respect of which such offers are
accepted shall be allocated by the Agent among such Lenders as nearly as
possible (in such multiples, not greater than $1,000,000, as the Agent may deem
appropriate) in proportion to the aggregate principal amount of such offers;
PROVIDED, HOWEVER, that no Lender shall be allocated a portion of any
Competitive Bid Advance which is less than the minimum amount which such Lender
has indicated that it is willing to accept. Allocations by the Agent of the
amounts of Competitive Bid Loans shall be conclusive in the absence of manifest
error. The Agent shall promptly, but in any event on the same Business Day in
the case of Eurodollar Bid Rate Advances, and by 12:00 p.m. (New York time) in
the case of Absolute Rate Advances, notify each Lender of its receipt of a
Competitive Bid Borrowing Notice and the aggregate principal amount of such
Competitive Bid Advance allocated to each participating Lender.
SECTION 2.2.8 ADMINISTRATION FEES. The Borrower hereby agrees to pay to
the Agent for its sole account administration fees for Competitive Bid Quote
Requests in such amounts as heretofore agreed upon by the Borrower and the Agent
in a fee letter dated July 31, 1996, as amended from time to time (the
"COMPETITIVE BID FEE LETTER").
SECTION 2.2.9 REDUCTION. While any Competitive Bid Advances are
outstanding, each Lender's Revolving Loan Commitment shall be reduced by, and
deemed used in the amount of its pro rata share (based on its respective
Percentage of the Revolving Loan Commitment Amount) of the outstanding amount of
such Competitive Bid Advances.
SECTION 2.3 REDUCTION OF COMMITMENT AMOUNTS. The Borrower may, from
time to time on any Business Day occurring after the time of the initial
Borrowing hereunder, voluntarily reduce the amount of either Commitment Amount;
PROVIDED, HOWEVER, that all such reductions shall require at least three
Business Days' prior notice to the Agent and be permanent, and any partial
reduction of any Commitment Amount shall be in a minimum amount of $25,000,000
and in an integral multiple of $5,000,000.
SECTION 2.4 BASE RATE LOANS AND EURODOLLAR LOANS. Subject to the terms
and conditions set forth in ARTICLE V, each Loan shall be either a Eurodollar
Loan or a Base Rate Loan as the Borrower may request, it being understood that
Loans made to the Borrower on any date may be either Eurodollar Loans or Base
Rate Loans or a combination thereof. As to any Eurodollar Loan, each Lender
may, if it so elects, fulfill its commitment to make such Eurodollar Loan by
causing its Eurodollar Office to make such Eurodollar Loan; PROVIDED, HOWEVER,
that in such event the obligation of the Borrower to repay such Eurodollar Loan
nevertheless shall be to such Lender and shall be deemed to be held by such
Lender for the account of such Eurodollar Office.
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SECTION 2.5 BORROWING PROCEDURES FOR LOANS. The Borrower shall give the
Agent prior written or telegraphic notice pursuant to a Borrowing Request (in
substantially the form of EXHIBIT 2.5 hereto) of each proposed Borrowing or
continuation, and as to whether such Borrowing or continuation is to be of Base
Rate Loans or Eurodollar Loans, as follows:
SECTION 2.5.1 DOMESTIC LOANS. The Agent shall receive written or
telegraphic notice from the Borrower on or before 2:00 p.m. New York time one
day prior to the date of such Borrowing and amount of such Borrowing (which
shall be in a minimum amount of $10,000,000 and an integral multiple of
$1,000,000), and the Agent shall advise each Lender thereof promptly thereafter.
Not later than 10:00 a.m., New York time, on the date specified in such notice
for such Borrowing, each Lender shall provide to the Agent at the Payment
Office, same day or immediately available funds covering such Lender's
Percentage of the requested Base Rate Loan. Upon fulfillment of the applicable
conditions set forth in ARTICLE V with respect to such Base Rate Loan, the Agent
shall make available to the Borrower the proceeds of each Base Rate Loan (to the
extent received from the Lenders) by wire transfer of such proceeds to such
account(s) as the Borrower shall have specified in the Borrowing Request.
SECTION 2.5.2 EURODOLLAR LOANS. The Agent shall receive written or
telegraphic notice pursuant to a Borrowing Request from the Borrower on or
before 10:00 a.m. New York time, at least three (3) Business Days prior to the
date requested for each proposed Borrowing or continuation of a Eurodollar Loan,
of the date of such Borrowing or continuation, as the case may be, the amount of
such Borrowing or continuation, as the case may be (which shall be in a minimum
amount of $10,000,000 and an integral multiple of $1,000,000), and the duration
of the initial Eurodollar Interest Period with respect thereto, and the Agent
shall advise each Lender thereof promptly thereafter. Not later than 10:00
a.m., New York time, on the date specified in such notice for such Borrowing,
each Lender shall provide to the Agent at the Payment Office, same day or
immediately available funds covering such Lender's Percentage of the requested
Eurodollar Loan. Upon fulfillment of the applicable conditions set forth in
ARTICLE V with respect to such Eurodollar Loan, the Agent shall make available
to the Borrower the proceeds of each Eurodollar Loan (to the extent received
from the Lenders) by wire transfer of such proceeds to such account(s) as the
Borrower shall have specified in the Borrowing Request.
SECTION 2.6 CONTINUATION AND CONVERSION ELECTIONS. By delivering a
Continuation/Conversion Notice to the Agent on or before 10:00 a.m., New York
time, on a Business Day, the Borrower may from time to time irrevocably elect,
on not less than three nor more than five Business Days' notice that all, or any
portion in an aggregate minimum amount of $10,000,000 and an integral multiple
of $1,000,000 of any Borrowings be, (i) in the case of Base Rate Loans,
converted into Eurodollar Loans, or (ii) in the case of Eurodollar Loans, be
converted into a Base Rate Loan or continued as a Eurodollar Loan of such Type
(in the absence of delivery of a Continuation/Conversion Notice with respect to
any Eurodollar Loan at least three Business Days before the last day of the then
current Interest Period with respect thereto, such Eurodollar Loan shall, on
such last day, automatically convert to a Base Rate Loan); PROVIDED, HOWEVER,
that (i) each such conversion or continuation shall be pro rated among the
applicable outstanding Loans of all Lenders, and (ii) no portion of the
outstanding principal
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amount of any Loans may be continued as, or be converted
into, Eurodollar Loans when any Default has occurred and is continuing.
SECTION 2.7 FUNDING. Each Lender may, if it so elects, fulfill its
obligation to make, continue or convert Eurodollar Loans hereunder by causing
one of its foreign branches or Affiliates (or an international banking facility
created by such Lender) to make or maintain such Eurodollar Loan; PROVIDED,
HOWEVER, that such Eurodollar Loan shall nonetheless be deemed to have been made
and to be held by such Lender, and the obligation of the Borrower to repay such
Eurodollar Loan shall nevertheless be to such Lender for the account of such
foreign branch, Affiliate or international banking facility. In addition, the
Borrower hereby consents and agrees that, for purposes of any determination to
be made for purposes of SECTIONS 4.1, 4.2, 4.3 or 4.4, it shall be conclusively
assumed that each Lender elected to fund all Eurodollar Loans by purchasing, as
the case may be, Dollar deposits in its Eurodollar Office's interbank eurodollar
market.
SECTION 2.8 NOTES. Each Lender's Loans shall be evidenced by a
Revolving Note and a Term Note, each payable to the order of such Lender in a
maximum principal amount equal to such Lender's Percentage of the original
applicable Commitment Amount. Each Lender's Competitive Bid Loans shall be
evidenced by a Competitive Bid Note, each payable to the order of such Lender in
a maximum principal amount of $400,000,000. The Borrower hereby irrevocably
authorizes each Lender to make (or cause to be made) appropriate notations on
the grid attached to such Lender's Notes (or on any continuation of such grid),
which notations, if made, shall evidence, INTER ALIA, the date of, the
outstanding principal of, and the interest rate and Interest Period applicable
to the Loans or Competitive Bid Loans evidenced thereby. Such notations shall
be conclusive and binding on the Borrower absent manifest error; PROVIDED,
HOWEVER, that the failure of any Lender to make any such notations shall not
limit or otherwise affect any Obligations of the Borrower or any other Obligor.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1 REPAYMENTS AND PREPAYMENTS. The Borrower shall repay in
full the unpaid principal amount of each Loan upon the Stated Maturity Date or
of each Competitive Bid Loan on the last day of its applicable Interest Period.
Prior thereto, the Borrower
(a) may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of any
Loans; PROVIDED, HOWEVER, that (i) any such prepayment shall be applied to the
Lenders among Loans having the same Type and, if applicable, having the same
Interest Period; (ii) no such prepayment of any Competitive Bid Loan may be made
on any day other than the last day of the Interest Period for such Loan;
(iii) all such voluntary prepayments shall require at least three Business Days'
prior written notice to the Agent; and (iv) all such voluntary partial
prepayments shall be in an minimum amount of $25,000,000 and an integral
multiple of $5,000,000.
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(b) shall make mandatory prepayments on the Term Facility, as soon as
practicable, but in any event within three Business Days, in an amount equal to:
(i) the net cash proceeds in excess of $1,000,000 in the aggregate in
any calendar year for all such net cash proceeds from the sale of any of
the Borrower's or any Significant Subsidiary's oil and gas assets or
properties after the Effective Date (other than the sale of severed
hydrocarbons in the ordinary course of business); PROVIDED, HOWEVER, that
in the event that the Borrower or any of its Subsidiaries receives any
common stock, preferred stock, note, bond, debenture or other similar
instrument evidencing Indebtedness in lieu of cash in connection with the
sale of any oil and gas assets or properties, then for purposes of this
clause (b)(i), the Borrower or its Subsidiary, as the case may be, shall be
deemed to have received net cash proceeds in respect of such sale on the
date it receives any cash payment (whether sales proceeds, principal,
interest or otherwise) with respect to such common stock, preferred stock,
note, bond, debenture or other similar instrument evidencing Indebtedness;
(ii) the net cash proceeds from the issuance by the Borrower or any of
its Subsidiaries of any common stock or preferred stock (other than stock
issued by a Subsidiary of the Borrower to the Borrower or a wholly-owned
Subsidiary of the Borrower and other than sales of stock to officers,
directors or employees pursuant to a stock option plan or otherwise); and
(iii) the net cash proceeds from any Indebtedness incurred
subsequent to the Effective Date (such Indebtedness herein "NEW
INDEBTEDNESS"), to the extent that the proceeds of such New Indebtedness
are not used to refinance or repay any Indebtedness in existence prior to
the Effective Date (such existing Indebtedness herein "EXISTING
INDEBTEDNESS"); provided that if such proceeds of such New Indebtedness are
used to refinance or repay all or any portion of the Borrower's 4 1/4%
Convertible Subordinated Notes, such New Indebtedness shall be subordinated
to the Obligations on terms and conditions at least as favorable to the
Lenders and the Agent as the terms and conditions of the 4 1/4% Convertible
Subordinated Notes due 2003 (as determined by the Required Lenders in their
sole discretion).
(c) shall, in addition to any mandatory prepayments pursuant to clause
(b), make mandatory prepayments on the Term Facility on the following dates in
the following amounts:
(i) on December 31, 1996, the positive difference, if any, of
$50,000,000 MINUS the sum of all prepayments made on or prior to such date
pursuant to the foregoing clauses (a) and (b)(ii);
(ii) on June 30, 1997, the positive difference, if any, of
$100,000,000 MINUS the sum of (A) all prepayments made on or prior to such
date pursuant to the foregoing clauses (a) and (b)(ii) PLUS (B) the
mandatory prepayment, if any, made pursuant to the foregoing clause (c)(i);
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(iii) on December 31, 1997, the positive difference, if any, of
$150,000,000 MINUS the sum of (A) all prepayments made on or prior to such
date pursuant to the foregoing clauses (a) and (b)(ii) PLUS (B) the
mandatory prepayments, if any, made pursuant to the foregoing clauses
(c)(i) and (ii);
PROVIDED, HOWEVER, that if on or before December 31, 1996, the holders of at
least $200,000,000 in principal amount of the Borrower's 4 1/4% Convertible
Subordinated Notes due 2003 shall have converted their notes into stock, then
(1) the amounts in the foregoing clauses (c)(i),(ii) and (iii) shall be replaced
with $0, $50,000,000 and $100,000,000 respectively, and (2) as of June 30, 1998,
the Borrower shall in addition to any prepayments pursuant to clause (b), make a
prepayment on the Term Facility in an amount equal to the positive difference,
if any, of $150,000,000 MINUS the sum of (A) all prepayments made on or prior to
such date pursuant to the foregoing clauses (a) and (b)(ii) PLUS (B) the
mandatory prepayments, if any, made pursuant to the foregoing clauses (c)(i),
(ii) and (iii).
(d) shall, immediately upon any acceleration of the Stated Maturity Date
of any Loans pursuant to SECTION 8.2 or SECTION 8.3, repay all Loans, unless,
pursuant to SECTION 8.3, only a portion of all Loans is so accelerated.
Each prepayment of Term Loans made pursuant to CLAUSE (a) or (b) shall be
applied, to the extent of such prepayment, in the inverse order of maturity.
Each prepayment of any Loans made pursuant to this Section shall be without
premium or penalty, except as may be required by SECTION 4.4. No voluntary
prepayment of principal of any Revolving Loans shall cause a reduction in the
Revolving Loan Commitment Amount.
SECTION 3.2 INTEREST PROVISIONS. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this SECTION 3.2.
SECTION 3.2.1 RATES. Pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice, the Borrower may elect that Loans
comprising a Borrowing accrue interest at a rate per annum: (a) on that portion
maintained from time to time as a Base Rate Loan, equal to the sum of the Base
Rate from time to time in effect; and (b) on that portion maintained as a
Eurodollar Loan, during each Interest Period applicable thereto, equal to the
sum of the Eurodollar Rate for such Interest Period plus the Applicable Margin.
All Eurodollar Borrowings shall bear interest from and including the first day
of the applicable Interest Period to (but not including) the last day of such
Interest Period at the interest rate determined as applicable to such Eurodollar
Borrowing.
SECTION 3.2.2 POST-MATURITY RATES. After the date any principal amount of
any Loan is due and payable (whether on the Stated Maturity Date, upon
acceleration or otherwise), or after any other monetary Obligation of the
Borrower shall have become due and payable, the Borrower shall pay, but only to
the extent permitted by law, interest (after as well as before judgment) on such
amounts at a rate per annum equal to the Base Rate plus the Default Margin.
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SECTION 3.2.3 PAYMENT DATES. Interest accrued on each Borrowing shall be
payable, without duplication: (a) on the Stated Maturity Date therefor; (b) on
the date of any payment or prepayment, in whole or in part, of principal
outstanding on such Loan on the amount of such principal prepaid or repaid;
(c) with respect to Base Rate Loans, on each Quarterly Payment Date occurring
after the Effective Date; (d) with respect to Eurodollar Borrowings, on the last
day of each applicable Interest Period (and, if such Interest Period shall
exceed 90 days, on the 90th day of such Interest Period); (e) with respect to
any portion of Base Rate Loans converted into Eurodollar Loans on a day when
interest would not otherwise have been payable pursuant to CLAUSE (c), on the
date of such conversion; and (f) on that portion of any Borrowings the Stated
Maturity Date of which is accelerated pursuant to SECTION 8.2 or SECTION 8.3,
immediately upon such acceleration; and (g) with respect to Competitive Bid
Loans, as otherwise provided by the relevant Competitive Bid Quote Request.
Interest accrued on Borrowings or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount is due and
payable (whether on the Stated Maturity Date, upon acceleration or otherwise)
shall be payable upon demand.
SECTION 3.3 FEES. The Borrower agrees to pay the fees set forth in this
SECTION 3.3. All such fees shall be non-refundable.
SECTION 3.3.1 FACILITY FEE. The Borrower agrees to pay to the Agent for
the account of each Lender, a facility fee in an amount equal to the product of
the Applicable Facility Fee Rate times such Lender's Percentage times the Total
Commitment Amount as it may be reduced from time to time, in the case of the
Revolving Commitment, pursuant to reductions under SECTION 2.3, and in the case
of the Term Commitment, as a result of payments and prepayments thereon, payable
in arrears on each Quarterly Payment Date occurring after the Effective Date.
SECTION 3.3.2 AGENT'S FEE. The Borrower agrees to pay to the Agent for
its own account, all fees (including any fees pursuant to SECTION 2.2.8)
pursuant to that certain fee letter agreement dated the date hereof between the
Borrower and the Agent, as amended from time to time (the "AGENT FEE LETTER").
SECTION 3.3.3 PAYMENT OFFICE. The Borrower shall make all payments to the
Agent at the Payment Office.
ARTICLE IV
CERTAIN EURODOLLAR AND OTHER PROVISIONS
SECTION 4.1 EURODOLLAR LENDING UNLAWFUL. If any Lender shall determine
(which determination shall, upon notice thereof to the Borrower and the Lenders,
be conclusive and binding on the Borrower) that the introduction of or any
change in or in the interpretation of any law makes it unlawful, or any central
bank or other governmental authority asserts that it is unlawful, for such
Lender to make, continue or maintain any Borrowing as, or to convert any
Borrowing into, a Eurodollar Borrowing, the obligations of such Lender to make,
continue,
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maintain or convert any such Borrowings shall, upon such determination,
forthwith be suspended until such Lender shall notify the Agent that the
circumstances causing such suspension no longer exist, and all Eurodollar
Borrowings shall automatically convert into Base Rate Loans at the end of the
then current Interest Periods with respect thereto or sooner, if required by
such law or assertion; PROVIDED, HOWEVER, that the obligation of such Lender
to make, continue, maintain or convert any such Eurodollar Borrowings shall
remain unaffected if such Lender can designate a different Eurodollar Office
for the making, continuance, maintenance or conversion of Eurodollar
Borrowings and such designation will not, in the sole discretion of such
Lender, be otherwise disadvantageous to such Lender.
SECTION 4.2 DEPOSITS UNAVAILABLE OR EURODOLLAR INTEREST RATE
UNASCERTAINABLE. If the Agent shall have determined that, by reason of
circumstances affecting the Agent's relevant market, adequate means do not exist
for ascertaining the interest rate applicable hereunder to Eurodollar
Borrowings, then, upon notice from the Agent to the Borrower and the Lenders,
the obligations of all Lenders under SECTION 2.6 and SECTION 2.8 to make or
continue any Borrowings as, or to convert any Borrowings into, Eurodollar
Borrowings shall forthwith be suspended until the Agent shall notify the
Borrower and the Lenders that the circumstances causing such suspension no
longer exist.
SECTION 4.3 INCREASED EURODOLLAR BORROWING COSTS, ETC. The Borrower
agrees to reimburse each Lender for any increase in the cost to such Lender of,
or any reduction in the amount of any sum receivable by such Lender in respect
of, making, continuing or maintaining (or of its obligation to make, continue or
maintain) any Borrowings as, or of converting (or of its obligation to convert)
any Borrowings into, Eurodollar Borrowings. Such Lender shall promptly notify
the Agent and the Borrower in writing of the occurrence of any such event, such
notice to state, in reasonable detail, the reasons therefor and the additional
amount required fully to compensate such Lender for such increased cost or
reduced amount; PROVIDED, HOWEVER, that such Lender shall designate a different
Eurodollar Office if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the sole discretion of such
Lender, be otherwise disadvantageous to such Lender. Such additional amounts
shall be payable by the Borrower directly to such Lender within fifteen days of
its receipt of such notice, and such notice shall be rebuttable presumptive
evidence of the amount payable by the Borrower.
SECTION 4.4 FUNDING LOSSES. In the event any Lender shall incur any
loss or expense (including any loss or expense incurred by reason of the
liquidation or reemployment of deposits or other funds acquired by such Lender
to make, continue or maintain any portion of the principal amount of any
Borrowing as, or to convert any portion of the principal amount of any Borrowing
into, a Eurodollar Borrowing) as a result of (a) any conversion or repayment or
prepayment of the principal amount of any Eurodollar Borrowings on a date other
than the scheduled last day of the Interest Period applicable thereto, whether
pursuant to SECTION 3.1 or otherwise, (b) any Borrowings not being made as
Eurodollar Borrowings in accordance with the Borrowing Request or Competitive
Bid Quote Request, as the case may be, therefor, or (c) any Borrowings not being
continued as, or converted into, Eurodollar Borrowings in accordance with the
Continuation/Conversion Notice therefor, then, upon the written notice of such
Lender to the Borrower (with a copy to the Agent), the Borrower shall, within
fifteen days of its receipt
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thereof, pay directly to such Lender such amount as will (in the reasonable
determination of such Lender) reimburse such Lender for such loss or expense.
Such written notice (which shall include calculations in reasonable detail)
shall be rebuttable presumptive evidence of the amount payable by the
Borrower.
SECTION 4.5 INCREASED CAPITAL COSTS. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any law or regulation, directive, guideline, decision or request
(whether or not having the force of law) of any court, central bank, regulator
or other governmental authority affects or would affect the amount of capital
required or expected to be maintained by any Lender or any Person controlling
such Lender, and such Lender determines (in its sole discretion) that the rate
of return on its or such controlling Person's capital as a consequence of its
Commitments or the Borrowings made by such Lender is reduced to a level below
that which such Lender or such controlling Person could have achieved but for
the occurrence of any such circumstance, then, in any such case upon notice from
time to time by such Lender to the Borrower, the Borrower shall pay directly to
such Lender, within fifteen days, additional amounts sufficient to compensate
such Lender or such controlling Person for such reduction in rate of return;
PROVIDED, HOWEVER, that such Lender shall designate a different Domestic or
Eurodollar Office if such designation will avoid the need for, or reduce the
amount of, such compensation and will not, in the sole discretion of such
Lender, be otherwise disadvantageous to such Lender. A statement of such Lender
as to any such additional amount or amounts (including calculations thereof in
reasonable detail) shall be rebuttable presumptive evidence of the amount
payable by the Borrower. In determining such amount, such Lender may use any
reasonable method of averaging and attribution that it (in its sole discretion)
shall deem applicable.
SECTION 4.6 TAXES. All payments by the Borrower of principal of, and
interest on, the Borrowings and all other amounts payable hereunder shall be
made free and clear of and without deduction for any present or future income,
excise, stamp or franchise taxes and other taxes, fees, duties, withholdings or
other charges of any nature whatsoever imposed by any taxing authority, but
excluding franchise taxes and taxes imposed on or measured by any Lender's net
income or receipts (such non-excluded items being called "TAXES"). In the event
that any withholding or deduction from any payment to be made by the Borrower
hereunder is required in respect of any Taxes pursuant to any applicable law,
rule or regulation, then the Borrower will, within fifteen days (a) pay directly
to the relevant authority the full amount required to be so withheld or
deducted; (b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and (c) pay to the Agent for the account of the Lenders such
additional amount or amounts as is necessary to ensure that the net amount
actually received by each Lender will equal the full amount such Lender would
have received had no such withholding or deduction been required.
If any Taxes are directly asserted against the Agent or any Lender with
respect to any payment received by the Agent or such Lender hereunder, the Agent
or such Lender may pay such Taxes and the Borrower will promptly pay such
additional amounts (including any penalties, interest or expenses) as is
necessary in order that the net amount received by such person after the payment
of such Taxes (including any Taxes on such additional amount) shall
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equal the amount such person would have received had not such Taxes been
asserted; provided that the Borrower will not be obligated to pay such
additional amounts to the Agent or such Lender to the extent that such
additional amounts shall have been incurred as a consequence of the Agent's
or such Lender's gross negligence or willful misconduct, as the case may be.
If the Borrower fails to pay any Taxes when due to the appropriate taxing
authority or fails to remit to the Agent, for the account of the respective
Lenders, the required receipts or other required documentary evidence, the
Borrower shall indemnify the Lenders for any incremental Taxes, interest or
penalties that may become payable by any Lender as a result of any such failure.
For purposes of this SECTION 4.6, a distribution hereunder by the Agent or any
Lender to or for the account of any Lender shall be deemed a payment by the
Borrower.
Each Lender that is organized under the laws of a jurisdiction other than
the United States shall, prior to the due date of any payments under the Notes,
execute and deliver to the Borrower and the Agent, on or about the first
scheduled payment date in each Fiscal Year, one or more (as the Borrower or the
Agent may reasonably request) United States Internal Revenue Service Forms 4224
or Forms 1001 or such other forms or documents (or successor forms or
documents), appropriately completed, as may be applicable to establish the
extent, if any, to which a payment to such Lender is exempt from withholding or
deduction of Taxes, and shall (but only so long as such Lender remains lawfully
able to do so) deliver to the Borrower and the Agent additional copies of such
forms on or before the date that such forms expire or become obsolete or after
the occurrence of an event requiring a change in the most recent form so
delivered by it and such amendments thereto as may be reasonably requested by
the Borrower or the Agent, in each case certifying that such Lender is entitled
to benefits under an income tax treaty to which the United States is a party
which reduces the rate of withholding tax on payments of interest or fees or
certifying that the income receivable pursuant to this Agreement is effectively
connected with the conduct of a trade or business in the United States. If the
form provided by a Lender at the time such Lender first becomes a party to this
Agreement indicates a United States withholding tax rate in excess of zero,
withholding tax at such rate shall be considered excluded from the definition of
"Taxes". For any period with respect to which a Lender has failed to provide
the Borrower and the Agent with the forms required pursuant to this paragraph,
if any (other than if such failure is due to a change in treaty, law or
regulation occurring subsequent to the date on which a form originally was
required to be provided), such Lender shall not be entitled to indemnification
under this SECTION 4.6 with respect to Taxes imposed by the United States which
Taxes would not have been imposed but for such failure to provide such form;
provided, however, that should a Lender, which is otherwise exempt from or
subject to a reduced rate of withholding tax, become subject to Taxes because of
its failure to deliver a form required hereunder, the Borrower shall take such
steps as the Lender shall reasonably request to assist the Lender to recover
such Taxes.
If the Borrower is required to pay additional amounts to or for the account
of any Lender pursuant to this SECTION 4.6, then such Lender will change the
jurisdiction of its applicable Eurodollar or Domestic Office so as to eliminate
or reduce any such additional payment which may thereafter accrue if such
change, in the sole discretion of such Lender, is not otherwise disadvantageous
to such Lender. No Lender shall be entitled to receive any greater payment
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under this SECTION 4.6 as a result of the designation by such Lender of a
different applicable Eurodollar or Domestic Office after the date hereof, unless
such designation is made with the Borrower's prior written consent or by reason
of the provisions of SECTIONS 4.1, 4.3 or 4.5 requiring such Lender to designate
a different applicable Eurodollar or Domestic Office under certain circumstances
or at a time when the circumstances giving rise to such greater payment did not
exist.
SECTION 4.7 SPECIAL FEES IN RESPECT OF RESERVE REQUIREMENTS. With
respect to Eurodollar Borrowings, the Borrower agrees to pay to each Lender on
appropriate Payment Dates, as additional interest, such amounts as will
compensate such Lender for any cost to such Lender, from time to time, of any
reserve, special deposit, special assessment or similar capital requirements
against assets of, deposits with or for the account of, or credit extended by,
such Lender which are imposed on, or deemed applicable by, such Lender, from
time to time, under or pursuant to (i) any Law, treaty, regulation or directive
now or hereafter in effect (including, without limitation, Regulation D of the
Board of Governors of the Federal Reserve System but excluding any reserve
requirement included in the definition of Eurodollar Rate in SECTION 1.1),
(ii) any interpretation or application thereof by any governmental authority,
agency or instrumentality charged with the administration thereof or by any
court, central bank or other fiscal, monetary or other authority having
jurisdiction over the Eurodollar Borrowings or the office of such Lender where
its Eurodollar Borrowings are lodged, or (iii) any requirement imposed or
requested by any court, governmental authority, agency or instrumentality or
central bank, fiscal, monetary or other authority, whether or not having the
force of law. A written notice as to the amount of any such cost or any change
therein (including calculations, in reasonable detail, showing how such Lender
computed such cost or change) shall be promptly furnished by such Lender to the
Borrower and shall be rebuttable presumptive evidence of such cost or change.
The Borrower will not be responsible for paying any amounts pursuant to this
SECTION 4.7 accruing prior to 180 days prior to the receipt by the Borrower of
the written notice referred to in the preceding sentence. Within fifteen (15)
days after such certificate is furnished to the Borrower, the Borrower will pay
directly to such Lender such additional amount or amounts as will compensate
such Lender for such cost or change.
SECTION 4.8 PAYMENTS, COMPUTATIONS, ETC. Unless otherwise expressly
provided, all payments by the Borrower pursuant to this Agreement, the Notes or
any other Loan Document shall be made by the Borrower to the Agent for the PRO
rata account of the Lenders entitled to receive such payment. All such payments
required to be made to the Agent shall be made, without setoff, deduction or
counterclaim, not later than 11:00 a.m., New York time, on the date due, in same
day or immediately available funds, to such account as the Agent shall specify
from time to time by notice to the Borrower. Funds received after that time
shall be deemed to have been received by the Agent on the next succeeding
Business Day. The Agent shall promptly remit in same day funds to each Lender
its share, if any, of such payments received by the Agent for the account of
such Lender. All interest and fees shall be computed on the basis of the actual
number of days (including the first day but excluding the last day) occurring
during the period for which such interest or fee is payable over a year
comprised of 360 days (or, in the case of interest on a Base Rate Loan, 365 days
or, if appropriate, 366 days). Whenever any payment to be made shall otherwise
be due on a day which is not a
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Business Day, such payment shall (except as otherwise required by CLAUSE (C)
of the definition of the term "INTEREST PERIOD" with respect to Eurodollar
Loans) be made on the next succeeding Business Day and such extension of time
shall be included in computing interest and fees, if any, in connection with
such payment.
SECTION 4.9 SHARING OF PAYMENTS. If any Lender shall obtain any payment
or other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Loan (other than pursuant to the terms of SECTIONS
4.3, 4.4 and 4.5) in excess of its PRO RATA share of payments then or therewith
obtained by all Lenders, such Lender shall purchase from the other Lenders such
participations in Loans made by them as shall be necessary to cause such
purchasing Lender to share the excess payment or other recovery ratably with
each of them; PROVIDED, HOWEVER, that if all or any portion of the excess
payment or other recovery is thereafter recovered from such purchasing Lender,
the purchase shall be rescinded and each Lender which has sold a participation
to the purchasing Lender shall repay to the purchasing Lender the purchase price
to the ratable extent of such recovery together with an amount equal to such
selling Lender's ratable share (according to the proportion of (a) the amount of
such selling Lender's required repayment to the purchasing Lender TO (b) the
total amount so recovered from the purchasing Lender) of any interest or other
amount paid or payable by the purchasing Lender in respect of the total amount
so recovered. The Borrower agrees that any Lender so purchasing a participation
from another Lender pursuant to this SECTION 4.8 may, to the fullest extent
permitted by law, exercise all its rights of payment (including pursuant to
SECTION 4.9) with respect to such participation as fully as if such Lender were
the direct creditor of the Borrower in the amount of such participation. If
under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in lieu of a setoff to which this SECTION 4.8 applies,
such Lender shall, to the extent practicable, exercise its rights in respect of
such secured claim in a manner consistent with the rights of the Lenders
entitled under this Section to share in the benefits of any recovery on such
secured claim.
SECTION 4.10 [INTENTIONALLY OMITTED.]
SECTION 4.11 USE OF PROCEEDS. The Borrower shall apply the proceeds of
each Borrowing in accordance with the FOURTH RECITAL; without limiting the
foregoing, no proceeds of any Borrowing will be used to acquire any equity
security of a class which is registered pursuant to Section 12 of the Securities
Exchange Act of 1934 or any "margin stock", as defined in F.R.S. Board
Regulation U.
SECTION 4.12 REPLACEMENT OF LENDER ON ACCOUNT OF INCREASED COSTS,
EURODOLLAR LENDING UNLAWFUL, RESERVE REQUIREMENTS, TAXES, CERTAIN DISSENTS, ETC.
If any Lender shall claim the inability to make or maintain Eurodollar
Borrowings pursuant to SECTION 4.1 above, if any Lender is owed increased costs
under SECTION 4.5 above, if any payment to any Lender by the Borrower is subject
to any withholding tax pursuant to SECTION 4.6 above, or if any Lender is owed
any cost or expense pursuant to SECTION 4.7 above, the Borrower shall have the
right, if no Event of Default or Unmatured Event of Default then exists, to
replace such Lender with another bank or financial institution PROVIDED that (i)
if it is not a Lender or an Affiliate thereof, such bank or financial
institution shall be reasonably acceptable to the Agent and
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(ii) such bank or financial institution shall unconditionally purchase, in
accordance with SECTION 10.11 hereof, all of such Lender's rights and
obligations under this Agreement and the Notes and the appropriate pro rata
share of such Lender's Notes and Commitments, without recourse or expense to,
or warranty by, such Lender being replaced for a purchase price equal to the
aggregate outstanding principal amount of the Notes payable to such Lender,
PLUS any accrued but unpaid interest on such Notes PLUS accrued but unpaid
fees in respect of such Lender's Borrowings and Percentage of the Commitments
hereunder to the date of such purchase on a date therein specified. The
Borrower shall be obligated to pay, simultaneously with such purchase and
sale, the increased costs, amounts, expenses and taxes under SECTIONS 4.1,
4.5, 4.6, and 4.7 above, all breakage fees payable under SECTION 4.4 and all
other costs, fees and expenses payable to such Lender hereunder and under the
Loan Documents, to the date of such purchase as well as all other Obligations
due and payable to or for the benefit of such Lender; PROVIDED, that if such
bank or financial institution fails to purchase such rights and obligations,
the Borrower shall continue to be obligated to pay the increased costs,
amounts, expenses and taxes under SECTIONS 4.1, 4.5, 4.6, and 4.7 above to
such Lender.
SECTION 4.13 MAXIMUM INTEREST. It is the intention of the parties hereto
to conform strictly to applicable usury laws and, anything herein to the
contrary notwithstanding, the obligations of the Borrower to each Lender under
this Agreement shall be subject to the limitation that payments of interest
shall not be required to the extent that receipt thereof would be contrary to
provisions of law applicable to such Lender limiting rates of interest which may
be charged or collected by such Lender. Accordingly, if the transactions
contemplated hereby would be usurious under applicable law (including the
Federal and state laws of the United States of America, or of any other
jurisdiction whose laws may be mandatorily applicable) with respect to a Lender
then, in that event, notwithstanding anything to the contrary in this Agreement,
it is agreed as follows: (a) the provisions of this SECTION 4.13 shall govern
and control; (b) the aggregate of all consideration which constitutes interest
under applicable law that is contracted for, charged or received under this
Agreement, or under any of the other aforesaid agreements or otherwise in
connection with this Agreement by such Lender shall under no circumstances
exceed the maximum amount of interest allowed by applicable law (such maximum
lawful interest rate, if any, with respect to such Lender herein called the
"HIGHEST LAWFUL RATE"), and any excess shall be credited to the Borrower by such
Lender (or, if such consideration shall have been paid in full, such excess
refunded to the Borrower); (c) all sums paid, or agreed to be paid, to such
Lender for the use, forbearance and detention of the indebtedness of the
Borrower to such Lender hereunder shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full term of
such indebtedness until payment in full so that the actual rate of interest is
uniform throughout the full term thereof; and (d) if at any time the interest
provided pursuant to SECTION 4.1 together with any other fees payable pursuant
to this Agreement and deemed interest under applicable law, exceeds that amount
which would have accrued at the Highest Lawful Rate, the amount of interest and
any such fees to accrue to such Lender pursuant to this Agreement shall be
limited, notwithstanding anything to the contrary in this Agreement to that
amount which would have accrued at the Highest Lawful Rate, but any subsequent
reductions, as applicable, shall not reduce the interest to accrue to such
Lender pursuant to this Agreement below the Highest Lawful Rate until the total
amount of interest accrued pursuant to this Agreement and such fees deemed to be
interest equals the amount of
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interest which would have accrued to such Lender if a varying rate per annum
equal to the interest provided pursuant to SECTION 3.2 had at all times been
in effect, PLUS the amount of fees which would have been received but for the
effect of this SECTION 4.13. For purposes of Article 5069-1.04, Vernon's
Texas Civil Statutes, as amended, to the extent, if any, applicable to a
Lender, the Borrower agrees that the Highest Lawful Rate shall be the
"indicated (weekly) rate ceiling" as defined in said Article, provided that
such Lender may also rely, to the extent permitted by applicable laws, on
alternative maximum rates of interest under other laws applicable to such
Lender if greater. Tex. Rev. Civ. Stat. Ann. Art. 5069, Ch. 15 (which
regulates certain revolving credit loan accounts and revolving tri-party
accounts) shall not apply to this Agreement or the Notes.
ARTICLE V
CONDITIONS TO BORROWING
SECTION 5.1 INITIAL BORROWING. The obligations of the Lenders to fund
the initial Borrowing shall be subject to the prior satisfaction, or waiver
in writing by the Agent (with the consent of Required Lenders) of each of the
conditions precedent set forth in this SECTION 5.1.
SECTION 5.1.1 RESOLUTIONS, ETC. The Agent shall have received from the
Borrower and each Guarantor a certificate, dated the date of the initial
Borrowing, of its Secretary or Assistant Secretary as to (a) resolutions of
its Board of Directors then in full force and effect authorizing the
execution, delivery and performance of this Agreement, the Notes and each
other Loan Document to be executed by it; and (b) the incumbency and
signatures of those of its officers authorized to act with respect to this
Agreement, the Notes and each other Loan Document executed by it, upon which
certificate each Lender may conclusively rely until it shall have received a
further certificate of the Secretary of the Borrower and each Guarantor
canceling or amending such prior certificate.
SECTION 5.1.2 DELIVERY OF NOTES. The Agent shall have received, for
the account of each Lender, its Notes duly executed and delivered by the
Borrower.
SECTION 5.1.3 GUARANTIES. The Agent shall have received a Guaranty
dated the Effective Date and duly executed by SOC.
SECTION 5.1.4 OPINIONS OF COUNSEL. The Agent shall have received
opinions, dated the date of the initial Borrowing and addressed to the Agent
and all Lenders, from Thompson & Knight, P.C., counsel to the Borrower,
substantially in the form of EXHIBIT 5.1.4 hereto.
SECTION 5.1.5 FEE LETTERS, CLOSING FEES, EXPENSES, ETC. The Agent
shall have received each of the Fee Letters described in SECTIONS 2.2.8 and
3.3.2, duly executed by the Borrower. The Agent shall also have received for
its own account, or for the account of each
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Lender, as the case may be, all fees, costs and expenses due and payable
pursuant to SECTIONS 3.3.2 and 10.3, if then invoiced.
SECTION 5.1.6 MATERIAL ADVERSE CHANGE. There shall have been no
material adverse change in the consolidated business, condition (financial or
otherwise), operations, performance or properties of any of the Borrower, any
Guarantor, EDC and their respective consolidated Subsidiaries taken as a
whole from March 31, 1996 except as disclosed in Item 5.1.6 of the Disclosure
Schedule.
SECTION 5.1.7 REGULATORY FILINGS. All actions and proceedings required
by applicable law or regulation (including, without limitation, compliance
with the Hart-Scott-Rodino Antitrust Improvements Act of 1976, as amended)
shall have been taken, all waiting periods thereunder shall have expired or
terminated, and all consents, waivers, and approvals necessary for the
Acquisition or any other transactions contemplated hereby (including, without
limitation, those of any governmental authority or regulatory body) shall
have been given or obtained.
SECTION 5.1.8 ENGINEERING REPORT. The Agent shall have received
engineering reports covering EDC's reserves (including, without limitation, a
report by Miller and Lents Ltd.) in form and substance reasonably
satisfactory to the Agent.
SECTION 5.1.9 CERTIFICATE RELATING TO CONSUMMATION OF ACQUISITION. A
certificate signed by an Authorized Officer of the Borrower, in form and
substance reasonably satisfactory to the Agent and each Lender, representing
and warranting that on and as of the Effective Date, there does not exist any
judgment, order, injunction or other restraint issued or filed with respect
to the making of Borrowings or which could reasonably be expected to impair
materially the right or ability of SOC to consummate the Acquisition.
SECTION 5.1.10 OTHER DOCUMENTS. Such other documents as the Agent or
any Lender may have reasonably requested.
SECTION 5.2 ALL BORROWINGS. The obligation of each Lender to fund
any Borrowing (including the initial Borrowing) shall be subject to the
satisfaction of each of the conditions precedent set forth in this SECTION
5.2.
SECTION 5.2.1 COMPLIANCE WITH WARRANTIES, NO DEFAULT, ETC. Both before
and after giving effect to any Borrowing (but, if any Default of the nature
referred to in SECTION 8.1.5 shall have occurred with respect to any other
Indebtedness, without giving effect to the application, directly or
indirectly, of the proceeds thereof) the following statements shall be true
and correct (a) the representations and warranties set forth in ARTICLE VI
(excluding, however, except in the case of the initial Borrowing, those
contained in SECTION 6.6 and SECTION 6.7) and the representations and
warranties made by any Guarantor in any Guaranty shall be true and correct
with the same effect as if then made (unless stated to relate solely to an
early date, in which case such representations and warranties shall be true
and correct as of such earlier date); and (b) no Default shall have then
occurred and be continuing, and neither the Borrower nor any
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of its Subsidiaries are in material violation of any law or governmental
regulation or court order or decree.
SECTION 5.2.2 BORROWING REQUEST AND COMPETITIVE BID QUOTE REQUEST. The
Agent shall have received a Borrowing Request or a Competitive Bid Quote
Request for such Borrowing. Each of the delivery of a Borrowing Request or a
Competitive Bid Borrowing Notice and the acceptance by the Borrower of the
proceeds of such Borrowing shall constitute a representation and warranty by
the Borrower that on the date of such Borrowing (both immediately before and
after giving effect to such Borrowing and the application of the proceeds
thereof) the statements made in SECTION 5.2.1 are true and correct.
SECTION 5.2.3 SATISFACTORY LEGAL FORM. All documents executed or
submitted pursuant hereto by or on behalf of the Borrower or any of its
Subsidiaries or any other Obligors shall be satisfactory in form and
substance to the Agent and its counsel; the Agent and its counsel shall have
received all information, approvals, opinions, documents or instruments as
the Agent or its counsel may reasonably request.
SECTION 5.3 ADDITIONAL CONDITIONS. The obligation of each Lender to
fund the initial Borrowing and any subsequent Borrowing shall also be subject
to the condition that (i) as of the time of the initial Borrowing the Agent
shall be reasonably satisfied that the Borrower will promptly, and in no
event later than one Business Day subsequent to the initial Borrowing,
satisfy and (ii) that prior to any Borrowing other than the initial
Borrowing, the Borrower shall have satisfied, each of the conditions set
forth in this SECTION 5.3.
SECTION 5.3.1 GUARANTY FROM EDC. The Agent and each Lender shall have
received a Guaranty, dated the date of the initial Borrowing and duly
executed by EDC.
SECTION 5.3.2 CERTIFICATE RELATING TO STOCK PURCHASE. The Agent and
each Lender shall have received a certificate signed by an Authorized Officer
of the Borrower, in form and substance reasonably satisfactory to the Agent
and each Lender, representing and warranting that:
(a) on and as of the date of the initial Borrowing, (w) the Acquisition
has been consummated through the use of the Borrowings in accordance with the
terms and conditions of the Stock Purchase Agreement and in compliance with
all material requirements of Law and attaching thereto a true and correct
copy of the Stock Purchase Agreement and all amendments thereto, if any, (x)
all corporate approvals required for consummation of the Acquisition have
been obtained, and (y) all third party approvals required for consummation of
the Acquisition have been obtained, except such approvals the failure of
which to obtain would not have a Material Adverse Effect; and
(b) the Stock Purchase Agreement has not been amended, except as
consented to by the Required Lenders; all material conditions precedent
described in the Stock Purchase Agreement have been fulfilled in all material
respects in accordance with the terms and provisions thereof, and all
amendments to the Stock Purchase Agreement, and waivers to any
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conditions precedent described in the Stock Purchase Agreement, have been
consented to by the Required Lenders, and the Borrower and SOC have complied
with the Stock Purchase Agreement in all material respects.
SECTION 5.3.3 PAYMENT OF OUTSTANDING INDEBTEDNESS, ETC. All
Indebtedness identified in ITEM 5.3.3 ("Indebtedness to be Paid") of the
Disclosure Schedule, together with all interest, all prepayment premiums and
other amounts due and payable with respect thereto, shall have been paid in
full (including, to the extent necessary, from proceeds of the initial
Borrowing); and all Liens securing payment of any such Indebtedness have been
released and the Agent shall have received all Uniform Commercial Code Form
UCC-3 termination statements or other instruments as may be suitable or
appropriate in connection therewith.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders and the Agent to enter into this
Agreement and to make Loans hereunder, the Borrower represents and warrants
unto the Agent and each Lender as set forth in this ARTICLE VI.
SECTION 6.1 ORGANIZATION, ETC. The Borrower and each of its
Subsidiaries is a corporation validly organized and existing and in good
standing under the laws of the State of its incorporation, is duly qualified
to do business and is in good standing as a foreign corporation in each
jurisdiction where the nature of its business requires such qualification,
and has full power and authority and holds all requisite governmental
licenses, permits and other approvals to enter into and perform its
Obligations under this Agreement, the Notes and each other Loan Document to
which it is a party and to conduct its business substantially as currently
conducted by it (except where the failure to be so qualified to do business
or be in good standing or to hold any such licenses, permits and other
approvals will not have a Material Adverse Effect.
SECTION 6.2 DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. The
execution, delivery and performance by the Borrower of this Agreement, the
Notes and each other Loan Document executed or to be executed by it, and the
execution, delivery and performance by each other Obligor of each Loan
Document executed or to be executed by it and the Borrower's and each such
other Obligor's participation in the acquisition of EDC or any other
transaction contemplated herein or in the Stock Purchase Agreement are within
the Borrower's and each such Obligor's corporate powers, have been duly
authorized by all necessary corporate action, and do not (a) contravene the
Borrower's or any such Obligor's Organic Documents; (b) contravene any
contractual restriction, law or governmental regulation or court decree or
order binding on or affecting the Borrower or any such other Obligor; or (c)
result in, or require the creation or imposition of, any Lien on any of the
Borrower's or any other Obligor's properties.
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SECTION 6.3 GOVERNMENT APPROVAL, REGULATION, ETC. No authorization
or approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body or other Person is required for the
due execution, delivery or performance by the Borrower or any other Obligor
of this Agreement, the Notes or any other Loan Document to which it is a
party, or for the Borrower's and each such other Obligor's participation in
the acquisition of EDC or any other transaction contemplated herein, except
as have been obtained. Neither the Borrower nor any of its Subsidiaries is an
"investment company" within the meaning of the Investment Company Act of
1940, as amended, or a "holding company", or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a
"subsidiary company" of a "holding company", within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
SECTION 6.4 VALIDITY, ETC. This Agreement constitutes, and the Notes
and each other Loan Document executed by the Borrower will, on the due
execution and delivery thereof, constitute, the legal, valid and binding
obligations of the Borrower enforceable in accordance with their respective
terms; and each Guaranty executed pursuant hereto by each other Obligor will,
on the due execution and delivery thereof by such Obligor, be the legal,
valid and binding obligation of such Obligor enforceable in accordance with
its terms, except as (i) enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditor's rights generally and (ii)
rights of acceleration and the availability of equitable remedies may be
limited by equitable principles of general applicability.
SECTION 6.5 FINANCIAL INFORMATION. The balance sheets of the
Borrower and each of its Subsidiaries as at March 31, 1996, and the balance
sheets of EDC and its Subsidiaries as at March 31, 1996, and the related
statements of earnings and cash flow, copies of which have been furnished to
the Agent and each Lender, have been prepared in accordance with GAAP
consistently applied, and present fairly the consolidated financial condition
of the corporations covered thereby as at the dates thereof and the results
of their operations for the periods then ended except as disclosed in ITEM
6.5 of the Disclosure Schedule.
SECTION 6.6 NO MATERIAL ADVERSE CHANGE. As of the Effective Date,
since the date of the financial statements described in SECTION 6.5, there
has been no material adverse change in the financial condition, operations,
assets, business or properties of the Borrower and its Subsidiaries (on a
consolidated basis) or EDC and its Subsidiaries (on a consolidated basis),
except as disclosed in ITEM 6.5 of the Disclosure Schedule.
SECTION 6.7 LITIGATION, LABOR CONTROVERSIES, ETC. As of the
Effective Date, there is no pending or, to the knowledge of the Borrower,
threatened litigation, action, proceeding, or labor controversy affecting the
Borrower, EDC or any of their Subsidiaries, or any of their respective
properties, businesses, assets or revenues, which could reasonably be
expected to have a Material Adverse Effect or which purports to affect the
legality, validity or enforceability of, and the rights and remedies of the
Agent and the Lenders under, this Agreement, the Notes or any other Loan
Document, except as disclosed in ITEM 6.7 ("Litigation") of the Disclosure
Schedule.
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SECTION 6.8 SUBSIDIARIES. As of the Effective Date, the Borrower has
no Subsidiaries, except those Subsidiaries which are identified in ITEM 6.8
of the Disclosure Schedule.
SECTION 6.9 OWNERSHIP OF PROPERTIES. The Borrower and each of its
Subsidiaries owns title (consistent with customary practice in the oil and
gas industry for the type and location of the relevant properties and assets)
to all of its properties and assets, real and personal, tangible and
intangible, of any nature whatsoever, free and clear of all Liens, charges or
claims except (a) such title defects which in the aggregate would not have a
Material Adverse Effect, and (b) as permitted pursuant to SECTION 7.2.2.
SECTION 6.10 TAXES. The Borrower and each of its Subsidiaries has
filed all tax returns and reports required by law to have been filed by it
and has paid all taxes and governmental charges thereby shown to be owing,
except any such taxes or charges which are being diligently contested in good
faith by appropriate proceedings and for which adequate reserves in
accordance with GAAP shall have been set aside on its books except such
returns and taxes for jurisdictions other than the United States with respect
to which the failure to file and pay such taxes would not have a Material
Adverse Effect.
SECTION 6.11 PENSION AND WELFARE PLANS. During the
twelve-consecutive-month period prior to the date of the execution and
delivery of this Agreement and prior to the date of any Borrowing hereunder,
no steps have been taken to terminate any Pension Plan, and no contribution
failure has occurred with respect to any Pension Plan sufficient to give rise
to a Lien securing an amount in excess of $1,000,000 under section 302(f) of
ERISA. No condition exists or event or transaction has occurred with respect
to any Pension Plan which might result in the incurrence by the Borrower or
any member of the Controlled Group of any material liability, fine or
penalty. Except as disclosed in ITEM 6.11 ("Employee Benefit Plans") of the
Disclosure Schedule, neither the Borrower nor any member of the Controlled
Group has any contingent liability with respect to any post-retirement
benefit under a Welfare Plan, other than liability for continuation coverage
described in Part 6 of Title I of ERISA.
SECTION 6.12 ENVIRONMENTAL WARRANTIES. The Borrower has reasonably
concluded that, except as disclosed in writing by the Borrower to the Lenders
and the Agents, to the best of its knowledge after due inquiry: (a) all
facilities and property (including underlying groundwater) owned, leased or
operated by the Borrower or any Subsidiary have been, and continue to be,
owned, leased or operated by the Borrower or any Subsidiary in compliance
with all Environmental Laws except where such lack of compliance would not
have or be reasonably expected to have a Material Adverse Effect; (b) there
are no pending or threatened: (i) claims, complaints, notices or inquiries
to, or requests for information received by, the Borrower or any Subsidiary
with respect to any alleged violation of any Environmental Law, that, singly
or in the aggregate, have or may reasonably be expected to have a Material
Adverse Effect, or (ii) claims, complaints, notices or inquiries to, or
requests for information received by, the Borrower or any Subsidiary
regarding potential liability under any Environmental Law or under any common
law theories relating to operations or the condition of any facilities or
property (including underlying groundwater) owned, leased or operated by the
Borrower or any
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Subsidiary that, singly or in the aggregate, have, or may reasonably be
expected to have a Material Adverse Effect; (c) there have been no Releases
of Hazardous Materials at, on or under any property now or previously owned
or leased by the Borrower or any Subsidiary that, singly or in the aggregate,
have, or may reasonably be expected to have, a Material Adverse Effect; (d)
the Borrower and each Subsidiary have been issued and are in compliance with
all permits, certificates, approvals, licenses and other authorizations
relating to environmental matters and necessary for their businesses, except
where the absence of or failure to comply with such permits, certificates,
approvals, licenses and other authorizations would not have or be reasonably
expected to have a Material Adverse Effect; (e) no property now or previously
owned, leased or operated by the Borrower or any Subsidiary is listed or
proposed for listing on the National Priorities List pursuant to CERCLA, or,
to the extent that such listing may, singly or in the aggregate, have, or may
reasonably be expected to have a Material Adverse Effect, on the CERCLIS or
on any other federal or state list of sites requiring investigation or
clean-up; (f) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any property now or previously
owned, leased or operated by the Borrower or any Subsidiary that, singly or
in the aggregate, have, or may reasonably be expected to have, a Material
Adverse Effect; (g) none of the Borrower or any Subsidiary has directly
transported or directly arranged for the transportation of any Hazardous
Material to any location which is listed or proposed for listing on the
National Priorities List pursuant to CERCLA, or, to the extent that such
listing may, singly or in the aggregate, have, or may reasonably be expected
to have, a Material Adverse Effect, on the CERCLIS or on any federal or state
list or which is the subject of federal, state or local enforcement actions
or other investigations which may lead to material claims against the
Borrower or such Subsidiary for any remedial work, damage to natural
resources or personal injury, including claims under CERCLA; (h) there are no
polychlorinated biphenyls, radioactive materials or friable asbestos present
at any property now or previously owned or leased by the Borrower or any
Subsidiary that, singly or in the aggregate, have, or may reasonably be
expected to have, a Material Adverse Effect; and (i) no condition exists at,
on or under any property now or previously owned or leased by the Borrower or
any Subsidiary which, with the passage of time, or the giving of notice or
both, would give rise to material liability under any Environmental Law that,
singly or in the aggregate have, or may reasonably be expected to have a
Material Adverse Effect.
SECTION 6.13. REGULATIONS G, T, U AND X. None of the Borrower and its
Subsidiaries are engaged in the business of extending credit for the purpose
of purchasing or carrying margin stock, and no proceeds of any Loans will be
used for a purpose which violates, or would be inconsistent with, F.R.S.
Board Regulation G, T, U or X. Terms for which meanings are provided in
F.R.S. Board Regulation G, T, U or X or any regulations substituted therefor,
as from time to time in effect, are used in this Section with such meanings.
SECTION 6.14 VALIDITY OF STOCK PURCHASE AGREEMENT. At all times prior
to the consummation of the Acquisition, the Stock Purchase Agreement shall
constitute a legal, valid and binding obligation of SOC enforceable against
SOC in accordance with its terms.
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SECTION 6.15 ACCURACY OF INFORMATION. All factual information
heretofore or contemporaneously furnished by or on behalf of the Borrower in
writing to the Agent or any Lender for purposes of or in connection with this
Agreement or any transaction contemplated hereby is, and all other such
factual information hereafter furnished by or on behalf of the Borrower in
writing to the Agent or any Lender will be, true and accurate in every
material respect on the date as of which such information is dated or
certified and as of the date of execution and delivery of this Agreement by
the Agent and such Lender, and such information is not, or shall not be, as
the case may be, incomplete by omitting to state any material fact necessary
to make such information not misleading.
SECTION 6.16 USE OF PROCEEDS. The proceeds of each Borrowing have
been applied in accordance with the FOURTH RECITAL; without limiting the
foregoing, no proceeds of any Borrowing will be used to acquire any equity
security of a class which is registered pursuant to Section 12 of the
Securities Exchange Act of 1934 or any "margin stock", as defined in F.R.S.
Board Regulation U.
SECTION 6.17 EXISTING LIENS. None of the assets of the Borrower or
any Subsidiary of the Borrower is subject to any Lien except the Liens
permitted under SECTION 7.2.2.
SECTION 6.18 SOLVENCY. As of the date of the initial Borrowing, after
giving effect to any Loans, Competitive Bid Loans, Guaranties and the
Acquisition: (a) the Borrower and its Subsidiaries on a consolidated basis
is Solvent; (b) SOC and its Subsidiaries on a consolidated basis is Solvent;
and (c) during the period commencing on the date of the initial Borrowing and
ending on the date the Term Loans are paid in full, EDC and its Subsidiaries
on a consolidated basis is Solvent.
SECTION 6.19 NO DEFAULT. No Default shall have occurred or be
continuing, and except for matters which could not reasonably be expected to
result in a Material Adverse Effect, neither the Borrower nor any of its
Subsidiaries are in material violation of any law or governmental regulation
or court order or decree.
ARTICLE VII
COVENANTS
SECTION 7.1 AFFIRMATIVE COVENANTS. The Borrower agrees with the
Agent and each Lender that, until all Commitments have terminated and all
Obligations have been paid and performed in full, the Borrower will perform
the obligations set forth in this SECTION 7.1.
SECTION 7.1.1 FINANCIAL INFORMATION, REPORTS, NOTICES, ETC. The
Borrower will furnish, or will cause to be furnished, to each Lender and the
Agent copies of the following financial statements, reports, notices and
information:
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(a) as soon as available and in any event within 45 days after the end
of each of the first three Fiscal Quarters of each Fiscal Year of the
Borrower, consolidated balance sheets of the Borrower and its Subsidiaries as
of the end of such Fiscal Quarter and consolidated statements of earnings and
cash flow of the Borrower and its Subsidiaries for such Fiscal Quarter and
for the period commencing at the end of the previous Fiscal Year and ending
with the end of such Fiscal Quarter, certified by the chief financial
Authorized Officer of the Borrower;
(b) as soon as available and in any event within 90 days after the end
of each Fiscal Year of the Borrower, a copy of the annual audit report for
such Fiscal Year for the Borrower and its Subsidiaries, including therein
consolidated balance sheets of the Borrower and its Subsidiaries as of the
end of such Fiscal Year and consolidated statements of earnings and cash flow
of the Borrower and its Subsidiaries for such Fiscal Year, in each case
certified (without any Impermissible Qualification) in a manner acceptable to
the Agent and the Required Lenders by independent public accountants of
recognized national standing;
(c) as soon as available and in any event within 60 days after the end
of each Fiscal Quarter, a certificate, executed by the chief financial
Authorized Officer of the Borrower, showing (in reasonable detail and with
appropriate calculations and computations in all respects satisfactory to the
Agent) compliance with the financial covenants set forth in SECTION 7.2.3;
(d) promptly, and in any event within three Business Days after an
officer of the Borrower or any of its Subsidiaries becomes aware of the
existence of the occurrence of each Default, a statement of the chief
executive officer or the most senior financial officer of the Borrower
setting forth details of such Default and the action which the Borrower has
taken and proposes to take with respect thereto;
(e) promptly, and in any event within three Business Days after an
officer of the Borrower or any of its Subsidiaries becomes aware of (x) the
occurrence of any adverse development with respect to any litigation, action,
proceeding, or labor controversy described in SECTION 6.7 which would have or
reasonably be expected to have a Material Adverse Effect, or (y) the
commencement of any material labor controversy, litigation, action,
proceeding of the type described in SECTION 6.7 which would have or
reasonably be expected to have a Material Adverse Effect, notice thereof and
copies of all documentation relating thereto requested by the Agent or any
Lender;
(f) promptly after the sending or filing thereof, copies of all reports
and registration statements which the Borrower or any of its Subsidiaries
files with the Securities and Exchange Commission or any national securities
exchange;
(g) immediately upon becoming aware of the institution of any steps by
the Borrower or any other Person to terminate any Pension Plan, or the
failure to make a required contribution to any Pension Plan if such failure
is sufficient to give rise to a Lien under section 302(f) of ERISA, or the
taking of any action with respect to a Pension Plan which could result in the
requirement that the Borrower furnish a bond or other security to the PBGC or
such Pension Plan, or the occurrence of any event with respect to any Pension
Plan which could result in the
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incurrence by the Borrower of any liability, fine or penalty, or any increase
in the contingent liability of the Borrower with respect to any
post-retirement Welfare Plan benefit which would have or could reasonably be
expected to have a Material Adverse Effect, notice thereof and copies of all
documentation relating thereto; and
(h) such other information respecting the condition or operations,
financial or otherwise, of the Borrower or any of its Subsidiaries as any
Lender through the Agent may from time to time reasonably request.
SECTION 7.1.2 COMPLIANCE WITH LAWS, ETC. The Borrower will, and will
cause each of its Subsidiaries to, comply in all material respects with all
applicable laws, rules, regulations and orders, such compliance to include
(without limitation): (a) the maintenance and preservation of its corporate
existence and qualification as a foreign corporation, (b) the payment, before
the same become delinquent, of all taxes, assessments and governmental
charges imposed upon it or upon its property except to the extent being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books and (c) all Environmental Laws; except; in each case, where the failure
to so comply would not have or would not reasonably be expected to have a
Material Adverse Effect.
SECTION 7.1.3 MAINTENANCE OF PROPERTIES. The Borrower will, and will
cause each of its Subsidiaries to, maintain, preserve, protect and keep its
properties in good repair, working order and condition, and make necessary
and proper repairs, renewals and replacements so that its business carried on
in connection therewith may be properly conducted at all times unless the
Borrower determines in good faith that the continued maintenance of any of
its properties is no longer economically desirable or unless failure to so
preserve, maintain, protect or keep its properties would not reasonably be
expected to have a Material Adverse Effect.
SECTION 7.1.4 INSURANCE. The Borrower will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained with responsible
insurance companies insurance with respect to its properties and business
against such casualties and contingencies and of such types and in such
amounts as is customary in the case of similar businesses in similar
locations.
SECTION 7.1.5 BOOKS AND RECORDS. The Borrower will, and will cause
each of its Subsidiaries to, keep books and records which accurately reflect,
in accordance with GAAP, all of its business affairs and transactions and
permit the Agent or its representatives, at reasonable times and intervals
and upon reasonable prior notice to the Borrower, to visit all of its
offices, to discuss its financial matters with its officers and employees and
to examine any of its books or other corporate records; PROVIDED, HOWEVER,
that prior notice to the Borrower shall not be required if an Event of
Default has occurred or is continuing.
SECTION 7.1.6 CONDUCT OF BUSINESS. The Borrower will, and will cause
each Subsidiary of the Borrower to, carry on and conduct its business in
substantially the same manner and in substantially the same fields of
enterprise as it is presently conducted or
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contemplated and to do all things reasonably necessary to remain duly
incorporated, validly existing and in good standing as a domestic corporation
in its jurisdiction of incorporation or as a partnership in its jurisdiction
of organization, as the case may be, to maintain all requisite authority to
conduct its business in each jurisdiction in which its business is conducted
(except where the failure to do so would not have a Material Adverse Effect)
and to keep in full force and effect its respective existence, rights,
leases, patents, and all other licenses or rights necessary to comply with
all Laws (except where the failure to do so would not have a Material Adverse
Effect); PROVIDED, HOWEVER, that nothing in this SECTION 6.1.4 shall prevent
the abandonment and retirement of property used or useful in the conduct of
the business of the Borrower or any of its Subsidiaries, if, in the
reasonable opinion of the Borrower or the applicable Subsidiary of the
Borrower, such abandonment or retirement of property is in the interest of
the Borrower or such Subsidiary and not prejudicial to the Lenders.
SECTION 7.1.7 MAINTENANCE OF EMPLOYEE BENEFIT PLANS. The Borrower will,
and will cause each of its Subsidiaries to, maintain each employee benefit plan
as to which the Borrower or any of its Subsidiaries may have any liability, in
compliance in all material respects with all applicable requirements of law and
regulations.
SECTION 7.1.8 RESOLUTIONS. The Borrower will, and will cause its
Subsidiaries to, keep all of the director's resolutions described in
SECTION 5.1.1 in full force and effect and not permit any amendment or other
modification to such resolutions without the consent of the Required Lenders.
SECTION 7.1.9 NEW SIGNIFICANT SUBSIDIARIES. The Borrower will, and will
cause each of its Subsidiaries to, cause any Subsidiary of the Borrower which
Subsidiary (a) is a Significant Subsidiary that is formed or acquired after the
date hereof or (b) becomes a Significant Subsidiary after the date hereof, to
become a Guarantor with respect to, and jointly and severally liable with all
other Guarantors for, all the obligations under this Agreement and the Notes by
executing and delivering to the Lenders (a) a guaranty substantially in the form
of the Guaranty attached hereto as EXHIBIT 5.1.3, (b) if reasonably requested by
the Agent, a favorable opinion of counsel to the effect that such Guaranty has
been duly authorized, executed and delivered and constitutes the legal, valid
and binding obligation of such Significant Subsidiary, enforceable in accordance
with its terms, and (c) a certificate and such other items as required pursuant
to SECTION 5.1.1 with respect to such new Significant Subsidiary.
SECTION 7.2 NEGATIVE COVENANTS. The Borrower agrees with the Agent and
each Lender that, until all Commitments have terminated and all Obligations have
been paid and performed in full, the Borrower will perform the obligations set
forth in this SECTION 7.2.
SECTION 7.2.1 BUSINESS ACTIVITIES. The Borrower will not, and will not
permit any of its Subsidiaries to, engage in any business activity if, as a
result thereof, the Borrower and its Subsidiaries taken as a whole would no
longer be principally engaged in those business activities described in the
FIRST RECITAL and such activities as may be incidental or related thereto.
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SECTION 7.2.2 LIENS. The Borrower will not, and will not permit any of
its Subsidiaries to, create, incur, assume or suffer to exist any Lien upon any
of its property, revenues or assets, whether now owned or hereafter acquired,
except: (a) Liens securing payment of the Obligations, granted pursuant to any
Loan Document; (b) Liens granted prior to the Effective Date to secure payment
of Indebtedness; (c) Liens for taxes, assessments or other governmental charges
or levies not at the time delinquent or thereafter payable without penalty or
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside on its
books; (d) Liens of carriers, warehousemen, mechanics, materialmen and landlords
incurred in the ordinary course of business for sums not overdue or being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books; (e) Liens incurred in the ordinary course of business in connection with
workmen's compensation, unemployment insurance or other forms of governmental
insurance or benefits, or to secure performance of tenders, statutory
obligations, leases and contracts (other than for borrowed money) entered into
in the ordinary course of business or to secure obligations on surety or appeal
bonds; (f) judgment Liens in existence less than 30 days after the entry thereof
or with respect to which execution has been stayed or the payment of which is
covered in full (subject to a customary deductible) by insurance maintained with
responsible insurance companies and (g) Liens on cash or cash-equivalents
securing Hedging Obligations of the Borrower or any of its Subsidiaries not in
excess in the aggregate of $5,000,000 for all such cash and cash equivalents;
(h) any Lien existing on any asset of any Person at the time such Person becomes
a Subsidiary and not created in contemplation of such event; (i) any Lien
existing on any asset prior to the acquisition thereof by the Borrower or a
Subsidiary and not created in contemplation of such acquisition; (j) Liens in
favor of the United States of America or any state thereof or any department,
agency, instrumentality or political subdivision of any such jurisdiction to
secure partial, progress, advance or other payments pursuant to any contract or
statute; (k) Liens required by any contract or statute in order to permit the
Borrower or a Subsidiary to perform any contract or subcontract made by it with
or at the request of the United States of America, any state or any department,
agency or instrumentality or political subdivision of either; (l) Liens securing
Debt owing by any Subsidiary to the Borrower or any Guarantor; (m) Liens under
operating agreements, unitization agreements, pooling orders, and similar
arrangements; (n) in addition to those Liens permitted above, Liens securing
Indebtedness which do not encumber or attach to any equity interest in a
Significant Subsidiary so long as the time each such Lien attaches, Restricted
Indebtedness does not exceed the Restricted Indebtedness Basket; and (o) any
extension, renewal or replacement (or successive extensions, renewals or
replacements), in whole or in part, of any Lien referred to in the foregoing
clauses of this Section or of any Debt secured thereby; PROVIDED that the
principal amount of Debt secured thereby shall not exceed the principal amount
of Debt so secured at the time of such extension, renewal or replacement and
that such extension, renewal or replacement Lien shall be limited to all or part
of substantially the same property subject of the Lien extended, renewed or
replaced (plus improvements on such property).
SECTION 7.2.3 FINANCIAL COVENANTS. The Borrower will not and will not
permit any of its Subsidiaries to:
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(a) EBITDA TO TOTAL INTEREST EXPENSE. Permit the ratio of EBITDA to Total
Interest Expense for any consecutive period of four fiscal quarters ending on
the last day of a fiscal quarter to be less than 7.0:1.0.
(b) TOTAL DEBT TO CAPITALIZATION. Permit the Total Debt to Capitalization
Ratio, expressed as a percentage, to exceed at any time during the following
periods the percentage specified: (a) for the period commencing on the
Effective Date and ending on June 30, 1997, 75%, (b) for the period commencing
on July 1, 1997 and ending on March 31, 1998, 65% and (c) for the period
commencing April 1, 1998 and thereafter, 55%.
SECTION 7.2.4 RESTRICTED PAYMENTS, ETC. On and at all times after the
Effective Date, the Borrower will not declare, pay or make any dividend or
distribution (in cash, property or obligations) on any shares of any class of
capital stock (now or hereafter outstanding) of the Borrower or on any warrants,
options or other rights with respect to any shares of any class of capital stock
(now or hereafter outstanding) of the Borrower (other than dividends or
distributions payable in its common stock or warrants to purchase its common
stock or splitups or reclassifications of its stock into additional or other
shares of its common stock) or apply, or permit any of its Subsidiaries to
apply, any of its funds, property or assets to the purchase, redemption, sinking
fund or other retirement of, or agree or permit any of its Subsidiaries to
purchase or redeem, any shares of any class of capital stock (now or hereafter
outstanding) of the Borrower, or warrants, options or other rights with respect
to any shares of any class of capital stock (now or hereafter outstanding) of
the Borrower, if, after giving effect thereto, a Default or Event of Default
shall have occurred and be continuing.
SECTION 7.2.5 INDEBTEDNESS. The Borrower will not permit any of its
Significant Subsidiaries to contract, create, incur or assume any Indebtedness,
except (i) (A) Indebtedness of a Significant Subsidiary owed to the Borrower or
one of the Borrower's other Significant Subsidiaries and (B) provided that such
Indebtedness is subordinated to such Significant Subsidiary's Obligations upon
terms and conditions satisfactory to the Required Lenders, Indebtedness of a
Significant Subsidiary owed to a Subsidiary of the Borrower (other than a
Significant Subsidiary) or (ii) other Indebtedness if at the time of incurrence
thereof, and after giving effect thereto Restricted Indebtedness does not exceed
the Restricted Indebtedness Basket.
SECTION 7.2.6 CONSOLIDATION, MERGER, ETC. The Borrower will not, and will
not permit any of its Subsidiaries to, liquidate or dissolve, consolidate with,
or merge into or with, any other corporation, or purchase or otherwise acquire
all or substantially all of the assets of any Person (or of any division
thereof) except (a) any such Subsidiary may liquidate or dissolve voluntarily
into, and may merge with and into, the Borrower or any other Subsidiary, and the
assets or stock of any Subsidiary may be purchased or otherwise acquired by the
Borrower or any other Subsidiary; and (b) so long as no Default has occurred and
is continuing or would occur after giving effect thereto, the Borrower or any of
its Subsidiaries may purchase all or substantially all of the assets of any
Person, or acquire such Person by merger (as long as the Borrower or such
Subsidiary is the surviving entity).
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SECTION 7.2.7 TRANSACTIONS WITH AFFILIATES. The Borrower will not, and
will not permit any of its Subsidiaries to, enter into, or cause, suffer or
permit to exist any arrangement or contract with any of its other Affiliates
unless such arrangement or contract is on an "arms length" basis and is an
arrangement or contract of the kind which would be entered into by a prudent
Person in the position of the Borrower or such Subsidiary with a Person which is
not one of its Affiliates.
SECTION 7.2.8 NEGATIVE PLEDGES, RESTRICTIVE AGREEMENTS, ETC. The Borrower
will not, and will not permit any of its Subsidiaries to, enter into any
agreement (excluding this Agreement, any other Loan Document and any agreement
governing any Indebtedness not prohibited under this Agreement) prohibiting the
creation or assumption of any Lien upon its properties, revenues or assets,
whether now owned or hereafter acquired, or the ability of the Borrower or any
other Obligor to amend or otherwise modify this Agreement or any other Loan
Document. The Borrower will not and will not permit any of its Subsidiaries to
enter into any agreement prohibiting the ability of any Subsidiary to make any
payments, directly or indirectly, to the Borrower by way of dividends, advances,
repayments of loans or advances, reimbursements of management and other
intercompany charges, expenses and accruals or other returns on investments, or
any other agreement or arrangement which restricts the ability of any such
Subsidiary to make any payment, directly or indirectly, to the Borrower.
ARTICLE VIII
EVENTS OF DEFAULT
SECTION 8.1 LISTING OF EVENTS OF DEFAULT. Each of the following events
or occurrences described in this SECTION 8.1 shall constitute an "EVENT OF
DEFAULT".
SECTION 8.1.1 NON-PAYMENT OF OBLIGATIONS. The Borrower shall default in
the payment or prepayment when due of any principal of or interest on any Loan
or Competitive Bid Loan, or the Borrower shall default (and such default shall
continue unremedied for a period of five days) in the payment when due of any
fee or of any other Obligation.
SECTION 8.1.2 BREACH OF WARRANTY. Any representation or warranty of the
Borrower or any other Obligor made or deemed to be made hereunder or in any
other Loan Document executed by it or any certificates delivered pursuant to
ARTICLE V is or shall be incorrect in any material respect when made or deemed
made; PROVIDED, HOWEVER, that in the event that any representation or warranty
made by the Borrower with respect to EDC pursuant to SECTION 6.5 shall be
incorrect in any material respect, no Event of Default shall be deemed to have
occurred under this SECTION 8.1.2 so long as (a) the Borrower shall have an
indemnity pursuant to the Stock Purchase Agreement from Enterprise Diversified
Holdings Incorporated ("Enterprise") with respect to such misrepresentation or
incorrectness, and (b) either (i) the Borrower shall be diligently pursuing with
appropriate proceedings the enforcement of its rights in respect of such
indemnity or (ii) Enterprise shall have acknowledged and agreed to pay its
liability in respect of such matter in a manner reasonable acceptable to the
Required Lenders.
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SECTION 8.1.3 NON-PERFORMANCE OF CERTAIN COVENANTS AND OBLIGATIONS. The
Borrower shall default in the due performance and observance of any of its
obligations under SECTION 5.3, 7.2.2, 7.2.3, 7.2.6 or 7.2.8; PROVIDED that the
imposition of any non-consensual Lien that is not permitted to exist pursuant to
SECTION 7.2.2 shall not be deemed to constitute an Event of Default hereunder
until thirty (30) days after the date of such imposition.
SECTION 8.1.4 NON-PERFORMANCE OF OTHER COVENANTS AND OBLIGATIONS. The
Borrower or any other Obligor shall default in the due performance and
observance of any other provision contained herein (not constituting an Event of
Default under the preceding provisions of this SECTION 8.1) or in any Guaranty
or any other Loan Document executed by it, and such default shall continue
unremedied for a period of 30 days after notice thereof shall have been given to
the Borrower by the Agent or any Lender.
SECTION 8.1.5 DEFAULT ON OTHER INDEBTEDNESS. A default shall occur in the
payment when due (subject to any applicable grace period), whether by
acceleration or otherwise, of any Indebtedness (other than Indebtedness
described in SECTION 8.1.1) of the Borrower or any of its Subsidiaries or any
other Obligor having a principal amount, individually or in the aggregate, in
excess of $25,000,000, or a default shall occur in the performance or observance
of any obligation or condition with respect to such Indebtedness if the effect
of such default is to accelerate the maturity of any such Indebtedness or such
default shall continue unremedied for any applicable period of time sufficient
to permit the holder or holders of such Indebtedness, or any trustee or agent
for such holders, to cause such Indebtedness to become due and payable prior to
its expressed maturity.
SECTION 8.1.6 JUDGMENTS. Any judgment or order for the payment of money
in excess of $25,000,000 shall be rendered against the Borrower or any of its
Significant Subsidiaries or any other Obligor if such excess is not fully
covered by valid and collectible insurance in respect thereof, the payment of
which is not being disputed or contested by the insurer or the insurers, and
(b) either (i) proper or valid enforcement or levying proceedings shall have
been commenced by any creditor upon such judgment or order or (ii) such judgment
or order shall continue unsatisfied and unstayed for a period of thirty (30)
consecutive days.
SECTION 8.1.7 PENSION PLANS. Any of the following events shall occur with
respect to any Pension Plan (a) the institution of any steps by the Borrower,
any member of its Controlled Group or any other Person to terminate a Pension
Plan if, as a result of such termination, the Borrower or any such member could
be required to make a contribution to such Pension Plan, or could reasonably
expect to incur a liability or obligation to such Pension Plan, in excess of
$25,000,000; or (b) a contribution failure occurs with respect to any Pension
Plan sufficient to give rise to a Lien securing an amount in excess of
$1,000,000 under section 302(f) of ERISA.
SECTION 8.1.8 CHANGE OF CONTROL. Any Change in Control shall occur.
SECTION 8.1.9 BANKRUPTCY, INSOLVENCY, ETC. The Borrower or any of its
Significant Subsidiaries or any other Obligor shall (a) become insolvent or
generally fail to pay,
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or admit in writing its inability or unwillingness to pay, debts as they
become due; (b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other custodian for the Borrower or any of
its Significant Subsidiaries or any other Obligor or any substantial portion
of the property of any thereof, or make a general assignment for the benefit
of creditors; (c) in the absence of such application, consent or
acquiescence, permit or suffer to exist the appointment of a trustee,
receiver, sequestrator or other custodian for the Borrower or any of its
Significant Subsidiaries or any other Obligor or for a substantial part of
the property of any thereof, and such trustee, receiver, sequestrator or
other custodian shall not be discharged within 60 days, provided that the
Borrower, each Significant Subsidiary and each other Obligor hereby expressly
authorizes the Agent and each Lender to appear in any court conducting any
relevant proceeding during such 60-day period to preserve, protect and defend
their rights under the Loan Documents; (d) permit or suffer to exist the
commencement of any bankruptcy, reorganization, debt arrangement or other
case or proceeding under any bankruptcy or insolvency law, or any
dissolution, winding up or liquidation proceeding, in respect of the Borrower
or any of its Significant Subsidiaries or any other Obligor, and, if any such
case or proceeding is not commenced by the Borrower or such Subsidiary or
such other Obligor, such case or proceeding shall be consented to or
acquiesced in by the Borrower or such Significant Subsidiary or such other
Obligor or shall result in the entry of an order for relief or shall remain
for 60 days undismissed, provided that the Borrower, each Significant
Subsidiary and each other Obligor hereby expressly authorizes the Agent and
each Lender to appear in any court conducting any such case or proceeding
during such 60-day period to preserve, protect and defend their rights under
the Loan Documents; or (e) take any corporate action authorizing, or in
furtherance of, any of the foregoing.
SECTION 8.1.10 IMPAIRMENT OF GUARANTY. (a) Any Guaranty shall (except in
accordance with its terms), in whole or in part, terminate, cease to be
effective or cease to be the legally valid, binding and enforceable obligation
of any Obligor party thereto; or (b) the Borrower, any other Obligor or any
other party shall, directly or indirectly, contest in any manner such
effectiveness, validity, binding nature or enforceability.
SECTION 8.2 ACTION IF BANKRUPTCY. If any Event of Default described in
SECTION 8.1.9 shall occur with respect to the Borrower or any Significant
Subsidiary or any other Obligor, the Commitments (if not theretofore terminated)
shall automatically terminate and the outstanding principal amount of all
outstanding Borrowings and all other Obligations shall automatically be and
become immediately due and payable, without notice or demand.
SECTION 8.3 ACTION IF OTHER EVENT OF DEFAULT. If any Event of Default
(other than any Event of Default described in SECTION 8.1.9 with respect to the
Borrower or any Significant Subsidiary or any other Obligor) shall occur for any
reason, whether voluntary or involuntary, and be continuing, the Agent, upon the
direction of the Required Lenders, shall by notice to the Borrower declare all
or any portion of the outstanding principal amount of the Borrowings and other
Obligations to be due and payable and/or the Commitments (if not theretofore
terminated) to be terminated, whereupon the full unpaid amount of such Loans and
other Obligations which shall be so declared due and payable shall be and become
immediately
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due and payable, without further notice, demand or presentment, and/or, as
the case may be, the Commitments shall terminate.
ARTICLE IX
THE AGENT
SECTION 9.1 ACTIONS. Each Lender hereby appoints UBS as its Agent under
and for purposes of this Agreement, the Notes and each other Loan Document.
Each Lender authorizes the Agent to act on behalf of such Lender under this
Agreement, the Notes and each other Loan Document and, in the absence of other
written instructions from the Required Lenders received from time to time by the
Agent (with respect to which the Agent agrees that it will comply, except as
otherwise provided in this Section or as otherwise advised by counsel), to
exercise such powers hereunder and thereunder as are specifically delegated to
or required of the Agent by the terms hereof and thereof, together with such
powers as may be reasonably incidental thereto. Each Lender hereby indemnifies
(which indemnity shall survive any termination of this Agreement) the Agent, PRO
RATA according to such Lender's Percentage, whether or not related to any
negligence of the Agent, from and against any and all liabilities, obligations,
losses, damages, claims, costs or expenses of any kind or nature whatsoever
which may at any time be imposed on, incurred by, or asserted against, the Agent
in any way relating to or arising out of this Agreement, the Notes and any other
Loan Document, including reasonable attorneys' fees, and as to which the Agent
is not reimbursed by the Borrower; PROVIDED, HOWEVER, that no Lender shall be
liable for the payment of any portion of such liabilities, obligations, losses,
damages, claims, costs or expenses which are determined by a court of competent
jurisdiction in a final proceeding to have resulted solely from the Agent's
gross negligence or wilful misconduct. The Agent shall not be required to take
any action hereunder, under the Notes or under any other Loan Document, or to
prosecute or defend any suit in respect of this Agreement, the Notes or any
other Loan Document, unless it is indemnified hereunder to its satisfaction. If
any indemnity in favor of the Agent shall be or become, in the Agent's
determination, inadequate, the Agent may call for additional indemnification
from the Lenders and cease to do the acts indemnified against hereunder until
such additional indemnity is given.
SECTION 9.2 FUNDING RELIANCE, ETC. Unless the Agent shall have been
notified by telephone, confirmed in writing, by any Lender by 5:00 p.m., New
York time, on the day prior to a Borrowing that such Lender will not make
available the amount which would constitute its Percentage of such Borrowing on
the date specified therefor, the Agent may assume that such Lender has made such
amount available to the Agent and, in reliance upon such assumption, make
available to the Borrower a corresponding amount. If and to the extent that
such Lender shall not have made such amount available to the Agent, such Lender
and the Borrower severally agree to repay the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
the Agent made such amount available to the Borrower to the date such amount is
repaid to the Agent, at the Federal Funds Rate.
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SECTION 9.3 EXCULPATION. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable to any Lender for any action taken
or omitted to be taken by it under this Agreement or any other Loan Document, or
in connection herewith or therewith, except for its own wilful misconduct or
gross negligence, nor responsible for any recitals or warranties herein or
therein, nor for the effectiveness, enforceability, validity or due execution of
this Agreement or any other Loan Document, nor to make any inquiry respecting
the performance by the Borrower of its obligations hereunder or under any other
Loan Document. Any such inquiry which may be made by the Agent shall not
obligate it to make any further inquiry or to take any action. The Agent shall
be entitled to rely upon advice of counsel concerning legal matters and upon any
notice, consent, certificate, statement or writing which the Agent believes to
be genuine and to have been presented by a proper Person.
SECTION 9.4 SUCCESSOR. The Agent may resign as such at any time upon at
least 30 days' prior notice to the Borrower and all Lenders. If the Agent at
any time shall resign, the Required Lenders may appoint another Lender as a
successor Agent which shall thereupon become the Agent hereunder. If no
successor Agent shall have been so appointed by the Required Lenders, and shall
have accepted such appointment, within 30 days after the retiring Agent's giving
notice of resignation, then the retiring Agent may, on behalf of the Lenders,
appoint a successor Agent, which shall be one of the Lenders or a commercial
banking institution organized under the laws of the U.S. (or any State thereof)
or a U.S. branch or agency of a commercial banking institution, and having a
combined capital and surplus of at least $500,000,000. Upon the acceptance of
any appointment as Agent hereunder by a successor Agent, such successor Agent
shall be entitled to receive from the retiring Agent such documents of transfer
and assignment as such successor Agent may reasonably request, and shall
thereupon succeed to and become vested with all rights, powers, privileges and
duties of the retiring Agent, and the retiring Agent shall be discharged from
its duties and obligations under this Agreement. After any retiring Agent's
resignation hereunder as the Agent, the provisions of (a) this ARTICLE IX shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was the Agent under this Agreement, and (b) SECTION 10.3 and SECTION 10.4
shall continue to inure to its benefit.
SECTION 9.5 LOANS BY UBS. UBS shall have the same rights and powers
with respect to (x) the Loans made by it or any of its Affiliates, and (y) the
Notes held by it or any of its Affiliates as any other Lender and may exercise
the same as if it were not the Agent. UBS and its Affiliates may accept
deposits from, lend money to, and generally engage in any kind of business with
the Borrower or any Subsidiary or Affiliate of the Borrower as if UBS were not
the Agent hereunder.
SECTION 9.6 CREDIT DECISIONS. Each Lender acknowledges that it has,
independently of the Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrower, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Commitments.
Each Lender also acknowledges that it will, independently of the Agent and each
other Lender, and based on such other documents, information and
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investigations as it shall deem appropriate at any time, continue to make its
own credit decisions as to exercising or not exercising from time to time any
rights and privileges available to it under this Agreement or any other Loan
Document.
SECTION 9.7 COPIES, ETC. The Agent shall give prompt notice to each
Lender of each notice or request required or permitted to be given to the Agent
by the Borrower pursuant to the terms of this Agreement (unless concurrently
delivered to the Lenders by the Borrower). The Agent will distribute to each
Lender each document or instrument received for its account and copies of all
other communications received by the Agent from the Borrower for distribution to
the Lenders by the Agent in accordance with the terms of this Agreement.
ARTICLE X
MISCELLANEOUS PROVISIONS
SECTION 10.1 WAIVERS, AMENDMENTS, ETC. The provisions of this Agreement
and of each other Loan Document may from time to time be amended, modified or
waived, if such amendment, modification or waiver is in writing and consented to
by the Borrower and the Required Lenders; PROVIDED, HOWEVER, that no such
amendment, modification or waiver which would: (a) modify any requirement
hereunder that any particular action be taken by all the Lenders or by the
Required Lenders shall be effective unless consented to by each Lender;
(b) modify this SECTION 10.1, change the definition of "REQUIRED LENDERS",
increase any Commitment Amount or the Percentage of any Lender, reduce any fees
described in ARTICLE III, change the schedule of reductions to the Commitments
provided for in SECTION 2.2.2, release any collateral security except as
otherwise specifically provided in any Loan Document or extend any Commitment
Termination Date, shall be made without the consent of each Lender; (c) extend
the due date for, or reduce the amount of, any scheduled repayment or prepayment
of principal of or interest on any Loan (or reduce the principal amount of or
rate of interest on any Loan) shall be made without the consent of the holder of
that Note evidencing such Loan; or (d) affect adversely the interests, rights or
obligations of the Agent QUA the Agent shall be made without consent of the
Agent.
No failure or delay on the part of the Agent, any Lender or the holder of any
Note in exercising any power or right under this Agreement or any other Loan
Document shall operate as a waiver thereof, nor shall any single or partial
exercise of any such power or right preclude any other or further exercise
thereof or the exercise of any other power or right. No notice to or demand on
the Borrower in any case shall entitle it to any notice or demand in similar or
other circumstances. No waiver or approval by the Agent, any Lender or the
holder of any Note under this Agreement or any other Loan Document shall, except
as may be otherwise stated in such waiver or approval, be applicable to
subsequent transactions. No waiver or approval hereunder shall require any
similar or dissimilar waiver or approval thereafter to be granted hereunder.
SECTION 10.2 NOTICES. All notices and other communications provided to
any party hereto under this Agreement or any other Loan Document shall be in
writing or by
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facsimile and addressed, delivered or transmitted to such party at its
address or facsimile number set forth below its signature hereto or set forth
in the Lender Assignment Agreement or at such other address or facsimile
number as may be designated by such party in a notice to the other parties.
Any notice, if mailed and properly addressed with postage prepaid or if
properly addressed and sent by pre-paid courier service, shall be deemed
given when received; any notice, if transmitted by facsimile, shall be deemed
given when transmitted and receipt is confirmed.
SECTION 10.3 PAYMENT OF COSTS, EXPENSES AND TAXES. The Borrower agrees
to pay on demand all reasonable out-of-pocket costs and expenses of the Agent
(including, without limitation, the reasonable fees and out-of-pocket expenses
of Messrs. Mayer, Brown & Platt and of local counsel, if any, who may be
retained by said counsel) in connection with (i) the preparation, negotiation,
execution, delivery, syndication and administration of this Agreement and of
each other Loan Document, including schedules and exhibits, and any amendments,
waivers, consents, supplements or other modification to this Agreement or any
other Loan Document and (ii) the enforcement by the Lenders or the Agent of, or
the protection of rights under, this Agreement, the Notes and each other Loan
Document. The Agent and each Lender agree to the extent feasible, and to the
extent a conflict of interest does not exist in the reasonable opinion of the
Agent or any Lender, to use one law firm in each jurisdiction in connection with
the foregoing, to the extent they seek reimbursement for the expenses thereof
from the Borrower. Each Lender agrees to reimburse the Agent on demand for such
Lender's PRO RATA share (based upon its respective Percentage) of any such costs
or expenses not paid by the Borrower. In addition, the Borrower agrees to pay,
and to save the Agent and the Lenders harmless from all liability for, any stamp
or other taxes which may be payable in connection with the execution or delivery
of this Agreement, the Borrowings hereunder, or the issuance of the Notes, or of
any other instruments or documents provided for herein or delivered or to be
delivered hereunder or in connection herewith.
SECTION 10.4 INDEMNIFICATION. In consideration of the execution and
delivery of this Agreement by each Lender and the extension of the Commitments,
the Borrower hereby indemnifies, exonerates and holds the Agent and each Lender
and each of their respective officers, directors, employees and agents
(collectively, the "INDEMNIFIED PARTIES"), whether or not related to any
negligence of the Indemnified Parties, free and harmless from and against any
and all actions, causes of action, suits, losses, costs, liabilities and
damages, and expenses incurred in connection therewith (irrespective of whether
any such Indemnified Party is a party to the action for which indemnification
hereunder is sought), including reasonable attorneys' fees and disbursements
(collectively, the "INDEMNIFIED LIABILITIES"), incurred by the Indemnified
Parties or any of them as a result of, or arising out of, or relating to (a) any
transaction financed or to be financed in whole or in part, directly or
indirectly, with the proceeds of any Loan; (b) the entering into and performance
of this Agreement and any other Loan Document by any of the Indemnified Parties;
(c) any investigation, litigation or proceeding related to any acquisition or
proposed acquisition by the Borrower or any of its Significant Subsidiaries of
all or any portion of the stock or assets of any Person, whether or not the
Agent or such Lender is party thereto; (d) any investigation, litigation or
proceeding related to any environmental cleanup, audit, compliance or other
matter relating to the protection of the environment or the
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Release by the Borrower or any of its Significant Subsidiaries of any
Hazardous Material; or (e) the presence on or under, or the escape, seepage,
leakage, spillage, discharge, emission, discharging or releases from, any
real property owned or operated by the Borrower or any Subsidiary thereof of
any Hazardous Material (including any losses, liabilities, damages, injuries,
costs, expenses or claims asserted or arising under any Environmental Law),
regardless of whether caused by, or within the control of, the Borrower or
such Subsidiary, except for any such Indemnified Liabilities arising for the
account of a particular Indemnified Party by reason of the relevant
Indemnified Party's gross negligence or wilful misconduct. If and to the
extent that the foregoing undertaking may be unenforceable for any reason,
the Borrower hereby agrees to make the maximum contribution to the payment
and satisfaction of each of the Indemnified Liabilities which is permissible
under applicable law.
SECTION 10.5 SURVIVAL. The obligations of the Borrower under SECTIONS
4.3, 4.4, 4.5, 4.6, 10.3 and 10.4, and the obligations of the Lenders under
SECTION 9.1, shall in each case survive any termination of this Agreement, the
payment in full of all Obligations and the termination of all Commitments. The
representations and warranties made by each Obligor in this Agreement and in
each other Loan Document shall survive the execution and delivery of this
Agreement and each such other Loan Document.
SECTION 10.6 SEVERABILITY. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
SECTION 10.7 HEADINGS. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION 10.8 EXECUTION IN COUNTERPARTS, EFFECTIVENESS, ETC. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be executed by the Borrower and the Agent and be deemed to be an
original and all of which shall constitute together but one and the same
agreement. This Agreement shall become effective when counterparts hereof
executed on behalf of the Borrower and each Lender (or notice thereof
satisfactory to the Agent) shall have been received by the Agent and notice
thereof shall have been given by the Agent to the Borrower and each Lender.
SECTION 10.9 GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES
AND EACH OTHER LOAN DOCUMENT SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER
AND GOVERNED BY THE INTERNAL LAWS OF THE STATE OF NEW YORK. This Agreement, the
Notes and the other Loan Documents constitute the entire understanding among the
parties hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto.
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SECTION 10.10 SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; PROVIDED, HOWEVER, that: (a) the Borrower may not assign
or transfer its rights or obligations hereunder without the prior written
consent of the Agent and all Lenders; and (b) the rights of sale, assignment and
transfer of the Lenders are subject to SECTION 10.11.
SECTION 10.11 SALE AND TRANSFER OF LOANS AND NOTES; PARTICIPATIONS IN
LOANS AND NOTES. Each Lender may assign, or sell participations in, its Loans
and Commitments to one or more other Persons in accordance with this SECTION
10.11.
SECTION 10.11.1 ASSIGNMENTS. Any Lender, (a) with the written consents
of the Borrower and the Agent (which consents shall not be unreasonably delayed
or withheld, may at any time assign and delegate to one or more commercial banks
or other financial institutions, and (b) with notice to the Borrower and the
Agent, but without the consent of the Borrower or the Agent, may assign and
delegate to any of its Affiliates or to any other Lender (each Person described
in either of the foregoing clauses as being the Person to whom such assignment
and delegation is to be made, being hereinafter referred to as an "ASSIGNEE
LENDER"), all or any fraction of such Lender's total Loans and Commitments
(which assignment and delegation shall be of a constant, and not a varying,
percentage of all the assigning Lender's Loans and Commitments and which shall
be of equal PRO RATA shares of the Revolving Facility and the Term Facility) in
a minimum aggregate amount of $10,000,000; PROVIDED, HOWEVER, that any such
Assignee Lender will comply, if applicable, with the provisions contained in the
last sentence of SECTION 4.6 and FURTHER, PROVIDED, HOWEVER, that, the Borrower,
each other Obligor and the Agent shall be entitled to continue to deal solely
and directly with such Lender in connection with the interests so assigned and
delegated to an Assignee Lender until (c) written notice of such assignment and
delegation, together with payment instructions, addresses and related
information with respect to such Assignee Lender, shall have been given to the
Borrower and the Agent by such Lender and such Assignee Lender, (d) such
Assignee Lender shall have executed and delivered to the Borrower and the Agent
a Lender Assignment Agreement, accepted by the Agent, and (e) the processing
fees described below shall have been paid.
From and after the date that the Agent accepts such Lender Assignment
Agreement, (x) the Assignee Lender thereunder shall be deemed automatically to
have become a party hereto and to the extent that rights and obligations
hereunder have been assigned and delegated to such Assignee Lender in connection
with such Lender Assignment Agreement, shall have the rights and obligations of
a Lender hereunder and under the other Loan Documents, and (y) the assignor
Lender, to the extent that rights and obligations hereunder have been assigned
and delegated by it in connection with such Lender Assignment Agreement, shall
be released from its obligations hereunder and under the other Loan Documents.
Within five Business Days after its receipt of notice that the Agent has
received an executed Lender Assignment Agreement, the Borrower shall execute and
deliver to the Agent (for delivery to the relevant Assignee Lender) new Notes
evidencing such Assignee Lender's assigned Loans and Commitments and, if the
assignor Lender has retained Loans and Commitments hereunder, replacement Notes
in the principal amount of the Loans and Commitments retained by the assignor
Lender hereunder (such Notes to be in exchange for, but not in payment of, those
Notes then held by such assignor Lender). Each such
56
<PAGE>
Note shall be dated the date of the predecessor Notes. The assignor Lender
shall mark the predecessor Notes "exchanged" and deliver them to the
Borrower. Accrued interest on that part of the predecessor Notes evidenced
by the new Notes, and accrued fees, shall be paid as provided in the Lender
Assignment Agreement. Accrued interest on that part of the predecessor Notes
evidenced by the replacement Notes shall be paid to the assignor Lender.
Accrued interest and accrued fees shall be paid at the same time or times
provided in the predecessor Notes and in this Agreement. Such assignor
Lender or such Assignee Lender must also pay a processing fee to the Agent
upon delivery of any Lender Assignment Agreement in the amount of $2,000.
Any attempted assignment and delegation not made in accordance with this
SECTION 10.11.1 shall be null and void.
SECTION 10.11.2 PARTICIPATIONS. Any Lender may at any time sell to one
or more commercial banks or other Persons (each of such commercial banks and
other Persons being herein called a "PARTICIPANT") participating interests in
any of the Loans, Commitments, or other interests of such Lender hereunder;
PROVIDED, HOWEVER, that (a) no participation contemplated in this SECTION 10.11
shall relieve such Lender from its Commitments or its other obligations
hereunder or under any other Loan Document, (b) such Lender shall remain solely
responsible for the performance of its Commitments and such other obligations,
(c) the Borrower and each other Obligor and the Agent shall continue to deal
solely and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and each of the other Loan Documents, (d) no
Participant, unless such Participant is an Affiliate of such Lender, or is
itself a Lender, shall be entitled to require such Lender to take or refrain
from taking any action hereunder or under any other Loan Document, except that
such Lender may agree with any Participant that such Lender will not, without
such Participant's consent, take any actions of the type described in CLAUSE (B)
or (C) of SECTION 10.1, and (e) the Borrower shall not be required to pay any
amount under SECTION 4.6 that is greater than the amount which it would have
been required to pay had no participating interest been sold. The Borrower
acknowledges and agrees that each Participant, for purposes of SECTIONS 4.3,
4.4, 4.5, 4.6, 4.8, 4.9 and 10.4, shall be considered a Lender; provided that
this sentence shall not obligate Borrower to pay more under such Sections that
it would be obligated to pay had no such participation been granted.
SECTION 10.12 OTHER TRANSACTIONS. Nothing contained herein shall preclude
the Agent or any other Lender from engaging in any transaction, in addition to
those contemplated by this Agreement or any other Loan Document, with the
Borrower or any of its Affiliates in which the Borrower or such Affiliate is not
restricted hereby from engaging with any other Person.
SECTION 10.13 FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS
(WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWER
SHALL BE BROUGHT AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW
YORK OR IN THE UNITED STATES DISTRICT COURT FOR THE
57
<PAGE>
SOUTHERN DISTRICT OF NEW YORK; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING
ENFORCEMENT AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR
OTHER PROPERTY MAY BE FOUND. THE BORROWER, THE AGENT, AND EACH LENDER HEREBY
EXPRESSLY AND IRREVOCABLY SUBMIT TO THE JURISDICTION OF THE COURTS OF THE
STATE OF NEW YORK AND OF THE UNITED STATES DISTRICT COURT FOR THE SOUTHERN
DISTRICT OF NEW YORK FOR THE PURPOSE OF ANY SUCH LITIGATION AS SET FORTH
ABOVE AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN
CONNECTION WITH SUCH LITIGATION. THE BORROWER, THE AGENT, AND EACH LENDER
FURTHER IRREVOCABLY CONSENT TO THE SERVICE OF PROCESS BY REGISTERED MAIL,
POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT THE STATE OF NEW
YORK. THE BORROWER, THE AGENT, AND EACH LENDER HEREBY EXPRESSLY AND
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT
THAT THE BORROWER HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION
OF ANY COURT OF FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE)
WITH RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWER HEREBY IRREVOCABLY
WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS.
SECTION 10.14 WAIVER OF JURY TRIAL. THE AGENT, THE LENDERS AND THE
BORROWER HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER
VERBAL OR WRITTEN) OR ACTIONS OF THE AGENT, THE LENDERS OR THE BORROWER. THE
BORROWER ACKNOWLEDGES AND AGREES THAT IT HAS RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN
DOCUMENT TO WHICH IT IS A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE AGENT AND THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH
SUCH OTHER LOAN DOCUMENT.
58
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
NOBLE AFFILIATES, INC.
By:
----------------------------------------
Name: William D. Dickson
Title: Vice President Finance and Treasurer
Address: 110 West Broadway
Ardmore, Oklahoma 73401
Facsimile No.: 405/221-1386
Telephone No.: 405/223-4110
Attention: William D. Dickson
UNION BANK OF SWITZERLAND,
Houston Agency, as Agent
By:
----------------------------------------
Name: Finley Biggerstaff
Title: Assistant Treasurer
By:
----------------------------------------
Name: Evans Swann
Title: Managing Director
Address: 1100 Louisiana, Suite 4500
Houston, TX 77002
Facsimile No.: (713) 655-6555
Attention: Finley Biggerstaff
Telephone: (713) 655-6500
59
<PAGE>
LENDERS
PERCENTAGE UNION BANK OF SWITZERLAND,
Houston Agency
100% By:
----------------------------------------
Name: Finley Biggerstaff
Title: Assistant Treasurer
By:
----------------------------------------
Name: Evans Swann
Title: Managing Director
Domestic
Office: 1100 Louisiana, Suite 4500
Houston, Texas 77002
Facsimile No.: (713) 655-6555
Attention: Finley Biggerstaff
Telephone: (713) 655-6500
Eurodollar
Office: 1100 Louisiana, Suite 4500
Houston, Texas 77002
Facsimile No.: (713) 655-6555
Attention: Finley Biggerstaff
Telephone: (713) 655-6500
100%
----
----
60
<PAGE>
SCHEDULE I
DISCLOSURE SCHEDULE
ITEM 5.1.6 MATERIAL ADVERSE CHANGE. The financial statements of EDC will be
supplemented to reflect a downward revision to the estimated value of the oil
and gas reserves of EDC.
ITEM 5.3.3 INDEBTEDNESS TO BE PAID. Indebtedness outstanding under that
Credit Agreement dated May 27, 1994 among Noble Affiliates, Inc., the Banks
party thereto and Texas Commerce Bank National Association, as Agent.
ITEM 6.5 FINANCIAL CONDITION. The financial statements of EDC will be
supplemented to reflect a downward revision to the estimated value of the oil
and gas reserves of EDC.
ITEM 6.7 LITIGATION. See below.
ITEM 6.8 EXISTING SUBSIDIARIES.
Name State of Jurisdiction or Ownership %
---- ---------------------------- -----------
Organization
------------
Samedan Oil Corporation Delaware 100% owned by Noble
Affiliates, Inc.
Samedan Oil of Canada, Delaware 100% owned by Samedan
Inc. Oil Corporation
Samedan of North Africa, Delaware 100% owned by Samedan
Inc. Oil Corporation
Samedan North Sea, Delaware 100% owned by Samedan
Inc. Oil Corporation
Samedan Oil of Indonesia, Delaware 100% owned by Samedan
Inc. Oil Corporation
Samedan Pipe Line Delaware 100% owned by Samedan
Corporation Oil Corporation
Samedan Royalty Delaware 100% owned by Samedan
Corporation Oil Corporation
Samedan of Tunisia, Delaware 100% owned by Samedan
Inc. Oil Corporation
<PAGE>
Name State of Jurisdiction or Ownership %
---- ------------------------ -----------
Organization
------------
Samedan - NEEI Oklahoma 50% general partnership
Exploration Company interest owned by Samedan
Oil Corporation
Temin 1987 Partnership Oklahoma 50% general partnership
interest owned by Samedan
Oil Corporation
Comin 1989 Partnership Oklahoma 50% general partnership
interest owned by Samedan
Royalty Corporation
Shipride Partnership Oklahoma 50% general partnership
interest owned by Samedan
Royalty Corporation
Samedan of Papua New Delaware 100% owned by Samedan
Guinea, Inc. Oil Corporation
Noble Gas Marketing, Inc. Delaware 100% owned by Noble
Affiliates, Inc.
Noble Gas Pipeline, Inc. Delaware 100% owned by Noble Gas
Marketing, Inc.
Noble Trading, Inc. Delaware 100% owned by Noble
Affiliates, Inc.
NPM, Inc. Delaware 100% owned by Noble
Affiliates, Inc.
Samedan LPG Cayman Islands 100% owned by Samedan of
North Africa, Inc.
ITEM 6.11 EMPLOYEE BENEFIT PLANS. Noble Affiliates, Inc. and Samedan Oil
Corporation provide subsidized health care and life insurance benefits to their
early retirees (retirees who have completed at least twenty years of service or
retirees who have attained age 55 and completed at least five years of service)
for the period of their retirement prior to attaining age 65.
62
<PAGE>
ITEM 6.12 ENVIRONMENTAL MATTERS. Samedan Oil Corporation is named as a
Potentially Responsible Party in the McBay Superfund oilfield dumpsite in
Houston County, Texas, with an approximate share of 0.001147% of this superfund
site and is not materially exposed financially even though insurance will not be
available to cover our liability of an estimated $25,000 or less.
Each Item is qualified by those matters disclosed in the Management's Discussion
and Analysis of Financial Condition and Results of Operations and the Notes to
Financial Statements made a part of the annual report for 1995 and the quarterly
report for the quarter ended March 31, 1996 of Noble Affiliates, Inc.
Each Item is qualified by those matters disclosed in the Stock Purchase
Agreement.
63
<PAGE>
EXHIBIT 2.2.1
COMPETITIVE BID NOTE
$400,000,000 ________________
FOR VALUE RECEIVED, the undersigned, NOBLE AFFILIATES, INC., a Delaware
corporation (the "BORROWER"), promises to pay to the order of _________________
(the "LENDER") on _________________, the aggregate unpaid principal amount of
all Competitive Bid Loans shown on the schedule attached hereto (and any
continuation thereof) made by the Lender to the Borrower pursuant to SECTION
2.2 of the Credit Agreement dated as of July 31, 1996 (together with all
amendments and other modifications, if any, the "CREDIT AGREEMENT"), among
the Borrower, UNION BANK OF SWITZERLAND, HOUSTON AGENCY, as Agent, and the
various financial institutions (including the Lender) as are, or may from
time to time become, parties.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Agent pursuant to the Credit Agreement.
This Competitive Bid Note is one of the Notes referred to in, and evidences
Indebtedness under, the Credit Agreement, to which reference is made for a
description of the security for this Competitive Bid Note and for a statement of
the terms and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness evidenced by this
Note and on which such Indebtedness may be declared to be immediately due and
payable. Unless otherwise defined, terms used herein have the meanings provided
in the Credit Agreement.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
THIS NOTE SHALL BE DEEMED A CONTRACT TO BE MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
NOBLE AFFILIATES, INC.
By:
------------------------------------
Title:
<PAGE>
<TABLE>
<CAPTION>
COMPETITIVE BID LOANS AND PRINCIPAL PAYMENTS
- -----------------------------------------------------------------------------------------------------
Amount of Amount of Unpaid
Competitive Principal Principal
Bid Loan Made Repaid Balance
-------------------- Interest -------------------- --------------------
Absolute Eurodollar Period (if Absolute Eurodollar Absolute Eurodollar Notation
Date Rate Rate applicable) Rate Rate Rate Rate Total Made By
- ---- -------- ---------- ----------- -------- ---------- -------- ---------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 2.2.2
COMPETITIVE BID QUOTE REQUEST
, 19
----------- ----
To: Union Bank of Switzerland, Houston Agency, (the "Agent")
From: Noble Affiliates, Inc. (the "BORROWER")
Re: Credit Agreement (the "CREDIT AGREEMENT") dated as of July 31, 1996, among
the Borrower, Union Bank of Switzerland, individually and as Agent, and
the Lenders listed on the signature pages thereof
We hereby give notice pursuant to SECTION 2.2.2 of the Credit Agreement
that we request Competitive Bid Quotes for the following proposed Competitive
Bid Advance(s):
Borrowing Date: , 19
------------------ ----
PRINCIPAL AMOUNT(1) INTEREST PERIOD(2)
- ------------------- ------------------
$
Such Competitive Bid Quotes should offer [a Competitive Bid Margin] [an
Absolute Rate].
Upon acceptance by the undersigned of any or all of the Competitive Bid
Advances offered by Lenders in response to this request, the undersigned shall
be deemed to affirm as of the Borrowing Date thereof the representations and
warranties made in the Credit Agreement to the extent specified in Article V
thereof. Capitalized terms used herein have the meanings assigned to them in
the Credit Agreement.
NOBLE AFFILIATES, INC.
By:
--------------------------------------
Title:
-----------------------------------
_____________________
(1) Amount must be at least $10,000,000 and an integral multiple of $1,000,000.
(2) One, two, three or six months (Eurodollar Auction) or at least 14 and up to
90 days (Absolute Rate Auction), subject to the provisions of the
definition of Interest Period.
<PAGE>
EXHIBIT 2.2.3
INVITATION FOR COMPETITIVE BID QUOTES
, 19
----------- ----
To: [Name of Lender]
Re: Invitation for Competitive Bid Quotes to
Noble Affiliates, Inc. (the "Borrower")
Pursuant to SECTION 2.2.3 of the Credit Agreement dated as of July 31, 1996
(the "CREDIT AGREEMENT") among the Borrower, the Lenders parties thereto and the
undersigned, as Agent, we are pleased on behalf of the Borrower to invite you to
submit Competitive Bid Quotes to the Borrower for the following proposed
Competitive Bid Advance(s):
Borrowing Date: , 19
----------- ----
Principal Amount Interest Period
- ---------------- ---------------
$
Such Competitive Bid Quotes should offer [a Competitive Bid Margin] [an
Absolute Rate]. Your Competitive Bid Quote must comply with SECTION 2.2.4 of
the Credit Agreement and the foregoing. Capitalized terms used herein have the
meanings assigned to them in the Credit Agreement.
Please respond to this invitation by no later than [10:00 a.m.] [1:00
p.m,.] New York time on , 19
----------- ----
UNION BANK OF SWITZERLAND,
HOUSTON AGENCY, as Agent
By:
--------------------------------------
Authorized Officer
<PAGE>
EXHIBIT 2.2.4
COMPETITIVE BID QUOTE
, 19
----------- ----
To: Union Bank of Switzerland, Houston Agency, as Agent
Attn:
-----------------------
Re: Competitive Bid Quote to Noble Affiliates, Inc. (the "Borrower")
In response to your invitation on behalf of the Borrower dated ___________,
199_, we hereby make the following Competitive Bid Quote pursuant to SECTION
2.2.4 of the Credit Agreement hereinafter referred to and on the following
terms:
1. Quoting Lender:
-----------------------------------------------------
2. Person to contact at Quoting Lender:
--------------------------------
3. Borrowing Date: , 19 (1)
----------- ----
4. We hereby offer to make Competitive Bid Loan(s) in the following principal
amounts, for the following Interest Periods and at the following rates:
Principal Interest [Competitive [Absolute Minimum
Amount(2) Period(3) Bid Margin(4)] Rate(5)] Amount(6)
- --------- --------- -------------- --------- ---------
$
_____________________________
(1) As specified in the related Invitation For Competitive Bid Quotes.
(2) Principal amount bid for each Interest Period may not exceed the principal
amount requested. Bids must be made for at least $10,000,000 and an
integral multiple of $1,000,000.
(3) One, two, three or six months or at least 14 and up to 90 days, as
specified in the related Invitation For Competitive Bid Quotes.
(4) Competitive Bid Margin over or under the Eurodollar Rate determined for the
applicable Interest Period. Specify percentage (rounded to the nearest
1/100 of 1%) and specify whether "PLUS" or "MINUS".
(5) Specify rate of interest per annum (rounded to the nearest 1/100 of 1%).
(6) Specify minimum or maximum amount, if any, which the Borrower may accept
and/or the limit, if any, as to the aggregate principal amount of the
Competitive Bid Loans of the quoting Lender which the Borrower may accept
(see SECTION 2.2.4(b)(iv)).
<PAGE>
We understand and agree that the offer(s) set forth above, subject to the
satisfaction of the applicable conditions set forth in the Credit Agreement
dated as of July 31, 1996 among the Borrower, the Lenders listed on the
signature pages thereof and yourselves, as Agent (the "Credit Agreement"),
irrevocably obligates us to make the Competitive Bid Loan(s) for which any
offer(s) are accepted, in whole or in part. Capitalized terms used herein and
not otherwise defined herein shall have their meanings as defined in the Credit
Agreement.
Very truly yours,
[NAME OF BANK]
Dated: , 19 By:
----------- ---- ----------------------------------
Authorized Officer
2
<PAGE>
EXHIBIT 2.5
BORROWING REQUEST
Union Bank of Switzerland, Houston Agency
1100 Louisiana St., Suite 4500
Houston, Texas 77002
Attention: [Name]
[Title]
NOBLE AFFILIATES, INC.
Gentlemen and Ladies:
This Borrowing Request is delivered to you pursuant to SECTION 2.5 of the
Credit Agreement, dated as of July 31, 1996 (together with all amendments, if
any, from time to time made thereto, the "CREDIT AGREEMENT"), among Noble
Affiliates, Inc., a Delaware corporation (the "BORROWER"), certain financial
institutions and Union Bank of Switzerland (the "AGENT"). Unless otherwise
defined herein or the context otherwise requires, terms used herein have the
meanings provided in the Credit Agreement.
The Borrower hereby requests that a [Revolving Loan] [Term Loan] be made in
the aggregate principal amount of $__________ on __________, 19___ as a
[Eurodollar Loan having an Interest Period of _______ months] [Base Rate Loan].
The Borrower hereby acknowledges that, pursuant to SECTION 5.2.2 of the
Credit Agreement, each of the delivery of this Borrowing Request and the
acceptance by the Borrower of the proceeds of the Loans requested hereby
constitute a representation and warranty by the Borrower that, on the date of
such Loans, and before and after giving effect thereto and to the application of
the proceeds therefrom, all statements set forth in SECTION 5.2.1 are true and
correct in all material respects.
The Borrower agrees that if prior to the time of the Borrowing requested
hereby any matter certified to herein by it will not be true and correct at such
time as if then made, it will immediately so notify the Agent. Except to the
extent, if any, that prior to the time of the Borrowing requested hereby the
Agent shall receive written notice to the contrary from the Borrower, each
matter certified to herein shall be deemed once again to be certified as true
and correct at the date of such Borrowing as if then made.
Please wire transfer the proceeds of the Borrowing to the accounts of the
following persons at the financial institutions indicated respectively:
Person to be Paid
Amount to be ------------------------- Name, Address, etc.
Transferred Name Account No. of Transferee Lender
- ------------ ---- ----------- ---------------------
$
---------- --------------- --------- ---------------------
<PAGE>
---------------------
Attention:
-----------
$
---------- --------------- --------- ---------------------
---------------------
Attention:
-----------
Balance of The Borrower --------- ---------------------
such proceeds
---------------------
Attention:
-----------
The Borrower has caused this Borrowing Request to be executed and
delivered, and the certification and warranties contained herein to be made, by
its duly Authorized Officer this ___ day of ___________, 19___.
NOBLE AFFILIATES, INC.
By
----------------------------------------
Title:
2
<PAGE>
EXHIBIT 2.6
CONTINUATION/CONVERSION NOTICE
Union Bank of Switzerland, Houston Agency
1100 Louisiana St., Suite 4500
Houston, Texas 77002
Attention: [Name]
[Title]
NOBLE AFFILIATES, INC.
Gentlemen and Ladies:
This Continuation/Conversion Notice is delivered to you pursuant to SECTION
2.6 of the Credit Agreement, dated as of July 31, 1996 (together with all
amendments, if any, from time to time made thereto, the "CREDIT AGREEMENT"),
among Noble Affiliates, Inc., a Delaware corporation (the "BORROWER"), certain
financial institutions and Union Bank of Switzerland, Houston Agency, (the
"AGENT"). Unless otherwise defined herein or the context otherwise requires,
terms used herein have the meanings provided in the Credit Agreement.
The Borrower hereby requests that on ____________, 19___,
(1) $___________ of the presently outstanding principal amount of the
[Term Loans] [Revolving Loans] originally made on __________, 19___ [and
$__________ of the presently outstanding principal amount of the [Term
Loans] [Revolving Loans] originally made on __________, 19___],
(2) and all presently being maintained as *[Base Rate Loans]
[Eurodollar Loans],
(3) be [converted into] [continued as],
(4) **[Eurodollar Loans having an Interest Period of ______
months] [Base Rate Loans].
______________________________
* Select appropriate interest rate option.
** Insert appropriate interest rate option.
<PAGE>
The Borrower hereby:
(a) certifies and warrants that no Default or Event of Default has
occurred and is continuing; and
(b) agrees that if prior to the time of such continuation or
conversion any matter certified to herein by it will not be true and
correct at such time as if then made, it will immediately so notify the
Agent.
Except to the extent, if any, that prior to the time of the continuation or
conversion requested hereby the Agent shall receive written notice to the
contrary from the Borrower, each matter certified to herein shall be deemed to
be certified at the date of such continuation or conversion as if then made.
The Borrower has caused this Continuation/Conversion Notice to be executed
and delivered, and the certification and warranties contained herein to be made,
by its Authorized Officer this ___ day of _________, 19___.
NOBLE AFFILIATES, INC.
By
------------------------------------------
Title:
2
<PAGE>
EXHIBIT 2.8A
REVOLVING NOTE
$___________ ________________
FOR VALUE RECEIVED, the undersigned, NOBLE AFFILIATES, INC., a Delaware
corporation (the "BORROWER"), promises to pay to the order of
______________________ (the "LENDER") on _________, 19__ the principal sum of
__________________ DOLLARS ($___________) or, if less, the aggregate unpaid
principal amount of all Revolving Loans shown on the schedule attached hereto
(and any continuation thereof) made by the Lender pursuant to that certain
Credit Agreement, dated as of July 31, 1996 (together with all amendments and
other modifications, if any, from time to time thereafter made thereto, the
"CREDIT AGREEMENT"), among the Borrower, UNION BANK OF SWITZERLAND, HOUSTON
AGENCY, as Agent, and the various financial institutions (including the Lender)
as are, or may from time to time become, parties thereto.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Agent pursuant to the Credit Agreement.
This Note is one of the Revolving Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a description of the security for this Note and for a statement of the terms
and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness evidenced by this
Note and on which such Indebtedness may be declared to be immediately due and
payable. Unless otherwise defined, terms used herein have the meanings provided
in the Credit Agreement.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
NOBLE AFFILIATES, INC.
By
-------------------------------------------
Title:
<PAGE>
REVOLVING LOANS AND PRINCIPAL PAYMENTS
<TABLE>
- -------------------------------------------------------------------------------------------------
Amount of Amount of Unpaid
Revolving Principal Principal
Loan Made Repaid Balance
----------------- Interest ----------------- -----------------
Base Eurodollar Period (if Base Eurodollar Base Eurodollar Notation
Date Rate Rate applicable) Rate Rate Rate Rate Total Made By
- ---- ---- ---------- ----------- ---- ---------- ---- ---------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
2
<PAGE>
EXHIBIT 2.8B
TERM NOTE
$_____________ __________________
FOR VALUE RECEIVED, the undersigned, NOBLE AFFILIATES, INC., a Delaware
corporation (the "BORROWER"), promises to pay to the order of _________________
_______________________ (the "LENDER") the principal sum of ___________________
DOLLARS ($____________) or, if less, the aggregate unpaid principal amount of
all Term Loans shown on the schedule attached hereto (and any continuation
thereof) made by the Lender pursuant to that certain Credit Agreement, dated as
of July 31, 1996 (together with all amendments and other modifications, if any,
from time to time thereafter made thereto, the "CREDIT AGREEMENT"), among the
Borrower, UNION BANK OF SWITZERLAND, HOUSTON AGENCY, as Agent, the various
financial institutions (including the Lender) as are, or may from time to time
become, parties thereto, payable in installments as set forth in the Credit
Agreement, with a final installment (in the amount necessary to pay in full this
Note) due and payable on _____________, 19___.
The Borrower also promises to pay interest on the unpaid principal amount
hereof from time to time outstanding from the date hereof until maturity
(whether by acceleration or otherwise) and, after maturity, until paid, at the
rates per annum and on the dates specified in the Credit Agreement.
Payments of both principal and interest are to be made in lawful money of
the United States of America in same day or immediately available funds to the
account designated by the Agent pursuant to the Credit Agreement.
This Note is one of the Term Notes referred to in, and evidences
Indebtedness incurred under, the Credit Agreement, to which reference is made
for a description of the security for this Note and for a statement of the terms
and conditions on which the Borrower is permitted and required to make
prepayments and repayments of principal of the Indebtedness evidenced by this
Note and on which such Indebtedness maybe declared to be immediately due and
payable. Unless otherwise defined, terms used herein have the meanings provided
in the Credit Agreement.
All parties hereto, whether as makers, endorsers, or otherwise, severally
waive presentment for payment, demand, protest and notice of dishonor.
<PAGE>
THIS NOTE SHALL BE DEEMED TO BE A CONTRACT MADE UNDER AND GOVERNED BY THE
INTERNAL LAWS OF THE STATE OF NEW YORK.
NOBLE AFFILIATES, INC.
By
--------------------------
Title:
2
<PAGE>
TERM LOANS AND PRINCIPAL PAYMENTS
<TABLE>
- -------------------------------------------------------------------------------------------------
Amount of Amount of Unpaid
Term Principal Principal
Loan Made Repaid Balance
----------------- Interest ----------------- -----------------
Base Eurodollar Period (if Base Eurodollar Base Eurodollar Notation
Date Rate Rate applicable) Rate Rate Rate Rate Total Made By
- ---- ---- ---------- ----------- ---- ---------- ---- ---------- ----- --------
<S> <C> <C> <C> <C> <C> <C> <C> <C> <C>
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
- -------------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
EXHIBIT 5.1.4
[Opinion of Counsel to the Borrower]
<PAGE>
EXHIBIT 5.1.3
FORM OF GUARANTY
THIS GUARANTY (this "GUARANTY"), dated as of [July 31, 1996], made by ____
________________, a ___________________ corporation (the "GUARANTOR"), in favor
of each of the Lender Parties (as defined below).
W I T N E S S E T H:
WHEREAS, pursuant to a Credit Agreement, dated as of July 31, 1996
(together with all amendments and other modifications, if any, from time to time
thereafter made thereto, the "CREDIT AGREEMENT"), among Noble Affiliates, Inc.,
a Delaware corporation (the "BORROWER"), the various commercial lending
institutions (individually a "LENDER" and collectively the "LENDERS") as are, or
may from time to time become, parties thereto and Union Bank of Switzerland,
Houston Agency, as agent (together with any successor(s) thereto in such
capacity, the "AGENT") for the Lenders, the Lenders have extended agreed to
extend Loans and Competitive Bid Loans to the Borrower; and
WHEREAS, as a condition to the Credit Agreement, the Guarantor is required
to execute and deliver this Guaranty; and
WHEREAS, the Guarantor has duly authorized the execution, delivery and
performance of this Guaranty; and
WHEREAS, it is in the best interests of the Guarantor to execute this
Guaranty inasmuch as the Guarantor will derive substantial direct and indirect
benefits from the Loans and Competitive Bid Advances made from time to time to
the Borrower by the Lenders pursuant to the Credit Agreement;
NOW THEREFORE, for good and valuable consideration the receipt of which is
hereby acknowledged, and in order to induce the Lenders to make Loans (including
the initial Borrowing) and Competitive Bid Advances to the Borrower pursuant to
the Credit Agreement, the Guarantor agrees, for the benefit of each Lender
Party, as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1. CERTAIN TERMS. The following terms (whether or not
underscored) when used in this Guaranty, including its preamble and recitals,
shall have the
<PAGE>
following meanings (such definitions to be equally applicable to the singular
and plural forms thereof):
"AGENT" is defined in the FIRST RECITAL.
"BORROWER" is defined in the FIRST RECITAL.
"CREDIT AGREEMENT" is defined in the FIRST RECITAL.
"GUARANTOR" is defined in the PREAMBLE.
"GUARANTY" is defined in the PREAMBLE.
"LENDER" is defined in the FIRST RECITAL.
"LENDER PARTY" means, as the context may require, any Lender or the Agent
and each of their respective successors, transferees and assigns.
"LENDERS" is defined in the FIRST RECITAL.
"TAXES" is defined in CLAUSE (a) of SECTION 2.8.
"U.C.C." means the Uniform Commercial Code as in effect in the State of New
York.
SECTION 1.2. CREDIT AGREEMENT DEFINITIONS. Unless otherwise defined
herein or the context otherwise requires, terms used in this Guaranty, including
its preamble and recitals, have the meanings provided in the Credit Agreement.
SECTION 1.3. U.C.C. DEFINITIONS. Unless otherwise defined herein or
the context otherwise requires, terms for which meanings are provided in the
U.C.C. are used in this Guaranty, including its preamble and recitals, with such
meanings.
ARTICLE II
GUARANTY PROVISIONS
SECTION 2.1. GUARANTY. The Guarantor hereby absolutely,
unconditionally and irrevocably (a) guarantees the full and punctual payment
when due, whether at stated maturity, by required prepayment, declaration,
acceleration, demand or otherwise, of all Obligations of the Borrower and each
other Obligor now or hereafter existing under the Credit Agreement, the Notes
and each other Loan Document to which the Borrower or such other Obligor is or
may become a party, whether for principal, interest, fees, expenses or otherwise
(including all such amounts which would become due but for the operation of the
automatic stay under Section
2
<PAGE>
362(a) of the United States Bankruptcy Code, 11 U.S.C. Section 362(a), and
the operation of Sections 502(b) and 506(b) of the United States Bankruptcy
Code, 11 U.S.C. Section 502(b) and Section 506(b)), and (b) indemnifies and
holds harmless each Lender Party and each holder of a Note for any and all
costs and expenses (including reasonable attorney's fees and expenses)
incurred by such Lender Party or such holder, as the case may be, in
enforcing any rights under this Guaranty; PROVIDED, HOWEVER, that the
Guarantor shall be liable under this Guaranty for the maximum amount of such
liability that can be hereby incurred without rendering this Guaranty, as it
relates to the Guarantor, voidable under applicable law relating to
fraudulent conveyance or fraudulent transfer, and not for any greater amount.
This Guaranty constitutes a guaranty of payment when due and not of
collection, and the Guarantor specifically agrees that it shall not be
necessary or required that any Lender Party or any holder of any Note
exercise any right, assert any claim or demand or enforce any remedy
whatsoever against the Borrower or any other Obligor before or as a condition
to the obligations of the Guarantor hereunder.
SECTION 2.2. ACCELERATION OF GUARANTY. The Guarantor agrees that, in
the event of the dissolution or insolvency of the Borrower, any other Obligor or
the Guarantor, or the inability or failure of the Borrower, any other Obligor or
the Guarantor to pay debts as they become due, or an assignment by the Borrower,
any other Obligor or the Guarantor for the benefit of creditors, or the
commencement of any case or proceeding in respect of the Borrower, any other
Obligor or the Guarantor under any bankruptcy, insolvency or similar laws, and
if such event shall occur at a time when any of the Obligations of the Borrower
and each other Obligor may not then be due and payable, the Guarantor will pay
to the Lenders forthwith the full amount which would be payable hereunder by the
Guarantor if all such Obligations were then due and payable.
SECTION 2.3. GUARANTY ABSOLUTE, ETC. This Guaranty shall in all
respects be a continuing, absolute, unconditional and irrevocable guaranty of
payment, and shall remain in full force and effect until all Obligations of the
Borrower and each other Obligor have been paid in full, all obligations of the
Guarantor hereunder shall have been paid in full and all Commitments shall have
terminated. The Guarantor guarantees that the Obligations of the Borrower and
each other Obligor will be paid strictly in accordance with the terms of the
Credit Agreement and each other Loan Document under which they arise, regardless
of any law, regulation or order now or hereafter in effect in any jurisdiction
affecting any of such terms or the rights of any Lender Party or any holder of
any Note with respect thereto. The liability of the Guarantor under this
Guaranty shall be absolute, unconditional and irrevocable irrespective of:
(a) any lack of validity, legality or enforceability of the Credit
Agreement, any Note or any other Loan Document;
(b) the failure of any Lender Party or any holder of any Note (i) to
assert any claim or demand or to enforce any right or remedy against the
Borrower, any other Obligor or any other Person (including any other guarantor)
under the provisions of the Credit Agreement, any Note, any other Loan Document
or otherwise, or (ii) to exercise any right or remedy against any
3
<PAGE>
other guarantor of, or collateral securing, any Obligations of the Borrower
or any other Obligor;
(c) any change in the time, manner or place of payment of, or in any other
term of, all or any of the Obligations of the Borrower or any other Obligor, or
any other extension, compromise or renewal of any Obligation of the Borrower or
any other Obligor;
(d) any reduction, limitation, impairment or termination of any
Obligations of the Borrower or any other Obligor for any reason, including any
claim of waiver, release, surrender, alteration or compromise, and shall not be
subject to (and the Guarantor hereby waives any right to or claim of) any
defense or setoff, counterclaim, recoupment or termination whatsoever by reason
of the invalidity, illegality, nongenuineness, irregularity, compromise,
unenforceability of, or any other event or occurrence affecting, any Obligations
of the Borrower, any other Obligor or otherwise;
(e) any amendment to, rescission, waiver, or other modification of, or any
consent to departure from, any of the terms of the Credit Agreement, any Note or
any other Loan Document;
(f) any addition, exchange, release, surrender or non-perfection of any
collateral, or any amendment to or waiver or release or addition of, or consent
to departure from, any other guaranty, held by any Lender Party or any holder of
any Note securing any of the Obligations of the Borrower or any other Obligor;
or
(g) any other circumstance which might otherwise constitute a defense
available to, or a legal or equitable discharge of, the Borrower, any other
Obligor, any surety or any guarantor.
SECTION 2.4. REINSTATEMENT, ETC. The Guarantor agrees that this
Guaranty shall continue to be effective or be reinstated, as the case may be, if
at any time any payment (in whole or in part) of any of the Obligations is
rescinded or must otherwise be restored by any Lender Party or any holder of any
Note, upon the insolvency, bankruptcy or reorganization of the Borrower, any
other Obligor or otherwise, all as though such payment had not been made.
SECTION 2.5. WAIVER, ETC. The Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Obligations of the Borrower or any other Obligor and this Guaranty and any
requirement that the Agent, any other Lender Party or any holder of any Note
protect, secure, perfect or insure any security interest or Lien, or any
property subject thereto, or exhaust any right or take any action against the
Borrower, any other Obligor or any other Person (including any other guarantor)
or entity or any collateral securing the Obligations of the Borrower or any
other Obligor, as the case may be.
4
<PAGE>
SECTION 2.6. WAIVER OF SUBROGATION. The Guarantor hereby irrevocably
waives any claim or other rights which it may now or hereafter acquire against
the Borrower or any other Obligor that arise from the existence, payment,
performance or enforcement of the Guarantor's obligations under this Guaranty or
any other Loan Document, including any right of subrogation, reimbursement,
exoneration, or indemnification, any right to participate in any claim or remedy
of the Lender Parties against the Borrower or any other Obligor or any
collateral which the Agent now has or hereafter acquires, whether or not such
claim, remedy or right arises in equity, or under contract, statute or common
law, including the right to take or receive from the Borrower or any other
Obligor, directly or indirectly, in cash or other property or by set-off or in
any manner, payment or security on account of such claim or other rights. If
any amount shall be paid to the Guarantor in violation of the preceding sentence
and the Obligations shall not have been paid in cash in full and the Commitments
have not been terminated, such amount shall be deemed to have been paid to the
Guarantor for the benefit of, and held in trust for, the Lender Parties, and
shall forthwith be paid to the Lender Parties to be credited and applied upon
the Obligations, whether matured or unmatured. The Guarantor acknowledges that
it will receive direct and indirect benefits from the financing arrangements
contemplated by the Credit Agreement and that the waiver set forth in this
Section is knowingly made in contemplation of such benefits.
SECTION 2.7. SUCCESSORS, TRANSFEREES AND ASSIGNS; TRANSFERS OF NOTES,
ETC. This Guaranty shall: (a) be binding upon the Guarantor, and its
successors, transferees and assigns; and (b) inure to the benefit of and be
enforceable by the Agent and each other Lender Party. Without limiting the
generality of the foregoing CLAUSE (b), any Lender may assign or otherwise
transfer (in whole or in part) any Note or Loan held by it to any other Person
or entity, and such other Person or entity shall thereupon become vested with
all rights and benefits in respect thereof granted to such Lender under any Loan
Document (including this Guaranty) or otherwise, subject, however, to any
contrary provisions in such assignment or transfer, and to the provisions of
Section 10.11 and Article IX of the Credit Agreement.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3.1. ORGANIZATION, ETC. Guarantor is a [corporation] validly
organized and existing and in good standing under the laws of the State of its
incorporation, is duly qualified to do business and is in good standing as a
foreign [corporation] in each jurisdiction where the nature of its business
requires such qualification, and has full power and authority and holds all
requisite governmental licenses, permits and other approvals to enter into and
perform its Obligations under this Agreement and each other Loan Document to
which it is a party and to conduct its business substantially as currently
conducted by it (except where the failure to be qualified to do business or be
in good standing or to hold any such licenses, permits and other approvals will
not have a Material Adverse Effect).
5
<PAGE>
SECTION 3.2. DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. The execution,
delivery and performance by the Guarantor of this Guaranty and each other Loan
Document executed or to be executed by it, and the Guarantor's participation in
the acquisition of EDC or any other transaction contemplated herein are within
the Guarantor's [corporate] powers, have been duly authorized by all necessary
corporate action, and do not (a) contravene the Guarantor's Organic Documents;
(b) contravene any contractual restriction, law or governmental regulation or
court decree or order binding on or affecting the Guarantor; or (c) result in,
or require the creation or imposition of, any Lien on any of the Guarantor's
properties.
SECTION 3.3. GOVERNMENT APPROVAL, REGULATION, ETC. No authorization or
approval or other action by, and no notice to or filing with, any governmental
authority or regulatory body or other Person is required for the due execution,
delivery or performance by the Guarantor of this Agreement or any other Loan
Document to which it is a party, [or for the Guarantor's participation in the
acquisition of EDC], except as have been obtained. Neither the Guarantor nor
any of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended, or a "holding company", or a
"subsidiary company" of a "holding company", or an "affiliate" of a "holding
company" or of a "subsidiary company" of a "holding company", within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
SECTION 3.4. VALIDITY, ETC. This Agreement constitutes, and each other
Loan Document executed by the Guarantor will, on the due execution and delivery
thereof, constitute, the legal, valid and binding obligations of the Guarantor
enforceable in accordance with their respective terms except as
(i) enforceability thereof may be limited by bankruptcy, insolvency or similar
laws affecting creditor's rights generally and (ii) rights of acceleration and
the availability of equitable remedies may be limited by equitable principles of
general applicability.
ARTICLE IV
COVENANTS, ETC.
SECTION 4.1. AFFIRMATIVE COVENANTS. The Guarantor covenants and agrees
that, so long as any portion of the Obligations shall remain unpaid or any
Lender Party shall have any outstanding Commitment, the Guarantor will, unless
the Required Lenders shall otherwise consent in writing, perform, comply with,
observe and fulfill, for the benefit of the Lender Parties, each of the
covenants, agreements and obligations contained in Article VII of the Credit
Agreement pertaining or otherwise applicable to the Guarantor, but after giving
effect to any applicable materiality standards in said Article VII. The
Guarantor hereby irrevocably and unconditionally agrees to be bound by and
comply with such covenants, agreements and obligations as if the Guarantor were
a party to the Credit Agreement and such covenants, agreements and obligations
are hereby reaffirmed by the Guarantor and are, together with all related
definitions and ancillary provisions incorporated herein by reference hereby and
made a part hereof for all purposes as if set out in full herein.
6
<PAGE>
SECTION 4.2. NEGATIVE COVENANTS. The Guarantor covenants and agrees
that, so long as any portion of the Obligations shall remain unpaid or any
Lender Party shall have any outstanding Commitment, the Guarantor will not,
without the prior written consent of the Required Lenders, do anything
prohibited in Article VII of the Credit Agreement to the extent such
prohibitions pertain or otherwise relate to the Guarantor, but after giving
effect to any applicable materiality standards in said Article VII. The
Guarantor hereby unconditionally and irrevocably agrees to be bound by, comply
with, such covenants, agreements and obligations as if the Guarantor were a
party to the Credit Agreement to the extent such provisions pertain to the
Guarantor and such covenants, agreements and obligations are hereby reaffirmed
by the Guarantor and, together with all related definitions and ancillary
provisions are incorporated herein by reference hereby made a part hereof for
all purposes as if set out in full herein.
ARTICLE V
MISCELLANEOUS PROVISIONS
SECTION 5.1. LOAN DOCUMENT. This Guaranty is a Loan Document executed
pursuant to the Credit Agreement and shall (unless otherwise expressly
indicated herein) be construed, administered and applied in accordance with
the terms and provisions thereof.
SECTION 5.2. BINDING ON SUCCESSORS, TRANSFEREES AND ASSIGNS; ASSIGNMENT.
In addition to, and not in limitation of, SECTION 2.7, this Guaranty shall be
binding upon the Guarantor and its successors, transferees and assigns and
shall inure to the benefit of and be enforceable by each Lender Party and
each holder of a Note and their respective successors, transferees and
assigns (to the full extent provided pursuant to SECTION 2.7); PROVIDED,
HOWEVER, that the Guarantor may not assign any of its obligations hereunder
without the prior written consent of the Required Lenders.
SECTION 5.3. AMENDMENTS, ETC. No amendment to or waiver of any provision
of this Guaranty, nor consent to any departure by the Guarantor herefrom, shall
in any event be effective unless the same shall be in writing and signed by the
Agent, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
SECTION 5.4. ADDRESSES FOR NOTICES TO THE GUARANTOR. All notices and
other communications hereunder to the Guarantor shall be in writing (including
telegraphic communication) and mailed or telegraphed or delivered to it,
addressed to it at the address set forth below its signature hereto or at such
other address as shall be designated by the Guarantor in a written notice to the
Agent at the address specified in the Credit Agreement complying as to delivery
with the terms of this Section. All such notices and other communications
shall, when mailed or telegraphed, respectively, be effective when deposited in
the mails or delivered to the telegraph company, respectively, addressed as
aforesaid.
7
<PAGE>
SECTION 5.5. NO WAIVER; REMEDIES. In addition to, and not in limitation
of, SECTION 2.3 and SECTION 2.5, no failure on the part of any Lender Party or
any holder of a Note to exercise, and no delay in exercising, any right
hereunder shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further exercise thereof
or the exercise of any other right. The remedies herein provided are cumulative
and not exclusive of any remedies provided by law.
SECTION 5.6. SECTION CAPTIONS. Section captions used in this Guaranty
are for convenience of reference only, and shall not affect the construction
of this Guaranty.
SECTION 5.7. SEVERABILITY. Wherever possible each provision of this
Guaranty shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Guaranty shall be
prohibited by or invalid under such law, such provision shall be ineffective
to the extent of such prohibition or invalidity, without invalidating the
remainder of such provision or the remaining provisions of this Guaranty.
SECTION 5.8. GOVERNING LAW, ENTIRE AGREEMENT, ETC. THIS GUARANTY SHALL
BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE
STATE OF NEW YORK. THIS GUARANTY AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE
ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH
RESPECT THERETO.
SECTION 5.9. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY LITIGATION
BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS GUARANTY,
OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER VERBAL OR
WRITTEN) OR ACTIONS OF THE LENDER PARTIES OR THE GUARANTOR SHALL BE BROUGHT
AND MAINTAINED EXCLUSIVELY IN THE COURTS OF THE STATE OF NEW YORK OR IN THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK; PROVIDED,
HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT AGAINST ANY PROPERTY MAY BE
BROUGHT, AT THE AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE SUCH
PROPERTY MAY BE FOUND. THE GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY
SUBMITS TO THE JURISDICTION OF THE COURTS OF THE STATE OF NEW YORK AND OF THE
UNITED STATES DISTRICT COURT FOR THE SOUTHERN DISTRICT OF NEW YORK FOR THE
PURPOSE OF ANY SUCH LITIGATION AS SET FORTH ABOVE AND IRREVOCABLY AGREES TO
BE BOUND BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH SUCH LITIGATION.
THE GUARANTOR FURTHER IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS BY
REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL SERVICE WITHIN OR WITHOUT
THE STATE OF NEW YORK. THE GUARANTOR HEREBY EXPRESSLY AND IRREVOCABLY WAIVES,
TO THE FULLEST EXTENT PERMITTED BY LAW,
8
<PAGE>
ANY OBJECTION WHICH IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE
OF ANY SUCH LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY
CLAIM THAT ANY SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO
THE EXTENT THAT THE GUARANTOR HAS OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM
JURISDICTION OF ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE
OR NOTICE, ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR
OTHERWISE) WITH RESPECT TO ITSELF OR ITS PROPERTY, THE GUARANTOR HEREBY
IRREVOCABLY WAIVES SUCH IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS
GUARANTY AND THE OTHER LOAN DOCUMENTS.
SECTION 5.10. WAIVER OF JURY TRIAL. THE GUARANTOR HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHTS IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR
IN CONNECTION WITH, THIS GUARANTY, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE LENDER
PARTIES OR THE GUARANTOR. THE GUARANTOR ACKNOWLEDGES AND AGREES THAT IT HAS
RECEIVED FULL AND SUFFICIENT CONSIDERATION FOR THIS PROVISION AND THAT THIS
PROVISION IS A MATERIAL INDUCEMENT FOR THE LENDERS ENTERING INTO THE CREDIT
AGREEMENT.
IN WITNESS WHEREOF, the Guarantor has caused this Guaranty to be duly
executed and delivered by its officer thereunto duly authorized as of the
date first above written.
[NAME OF GUARANTOR]
By
-------------------------------------------
Title:
Address:
-----------------------------------
-----------------------------------
Attention:
-----------------------------------
Telex:
-----------------------------------
Telecopy:
-----------------------------------
9
<PAGE>
EXHIBIT 10.11
LENDER ASSIGNMENT AGREEMENT
To: Noble Affiliates, Inc.,
as Borrower
To: Union Bank of Switzerland, Houston Agency,
as Agent
NOBLE AFFILIATES, INC.
Gentlemen and Ladies:
We refer to CLAUSE (d) of SECTION 10.11.1 of the Credit Agreement, dated as
of July 31, 1996 (together with all amendments and other modifications, if any,
from time to time thereafter made thereto, the "CREDIT AGREEMENT"), among Noble
Affiliates, Inc., a Delaware corporation (the "BORROWER"), the various financial
institutions (the "LENDERS") as are, or shall from time to time become, parties
thereto, and Union Bank of Switzerland, Houston Agency, as agent (the "AGENT")
for the Lenders. Unless otherwise defined herein or the context otherwise
requires, terms used herein have the meanings provided in the Credit Agreement.
This agreement is delivered to you pursuant to CLAUSE (d) of SECTION
10.11.1 of the Credit Agreement and also constitutes notice to each of you,
pursuant to CLAUSE (c) of SECTION 10.11.1 of the Credit Agreement, of the
assignment and delegation to _______________ (the "ASSIGNEE") of ___% of the
Loans and Commitments of _____________ (the "ASSIGNOR") outstanding under the
Credit Agreement on the date hereof. After giving effect to the foregoing
assignment and delegation, the Assignor's and the Assignee's Percentages for the
purposes of the Credit Agreement are set forth opposite such Person's name on
the signature pages hereof.
[Add paragraph dealing with accrued interest and fees with respect to Loans
assigned, if applicable.]
The Assignee hereby acknowledges and confirms that it has received a copy
of the Credit Agreement and the exhibits related thereto, together with copies
of the documents which were required to be delivered under the Credit Agreement
as a condition to the making of the Loans thereunder. The Assignee further
confirms and agrees that in becoming a Lender and in making its Commitments and
Loans under the Credit Agreement, such actions have and will be made without
recourse to, or representation or warranty by the Agent.
<PAGE>
Except as otherwise provided in the Credit Agreement, effective as of the
date of acceptance hereof by the Agent
(a) the Assignee (i) shall be deemed automatically to have become a party
to the Credit Agreement, have all the rights and obligations of a "Lender" under
the Credit Agreement and the other Loan Documents as if it were an original
signatory thereto to the extent specified in the second paragraph hereof; and
(ii) agrees to be bound by the terms and conditions set forth in the Credit
Agreement and the other Loan Documents as if it were an original signatory
thereto; and
(b) the Assignor shall be released from its obligations under the Credit
Agreement and the other Loan Documents to the extent specified in the second
paragraph hereof.
The Assignor and the Assignee hereby agree that the [Assignor] [Assignee]
will pay to the Agent the processing fee referred to in SECTION 10.11.1 of the
Credit Agreement upon the delivery hereof.
The Assignee hereby advises each of you of the following administrative
details with respect to the assigned Loans and Commitments and requests the
Agent to acknowledge receipt of this document:
(A) Address for Notices:
Institution Name:
Attention:
Domestic Office:
Telephone:
Facsimile:
Telex (Answerback):
LIBOR Office:
Telephone:
Facsimile:
Telex (Answerback):
(B) Payment Instructions:
The Assignee agrees to furnish the tax form required by SECTION 4.6 (if so
required) of the Credit Agreement no later than the date of acceptance hereof by
the Agent.
2
<PAGE>
This Agreement may be executed by the Assignor and Assignee in separate
counterparts, each of which when so executed and delivered shall be deemed to be
an original and all of which taken together shall constitute one and the same
agreement.
ADJUSTED PERCENTAGE [ASSIGNOR]
- -------------------
Term Loan Commitment
and
Term Loans: __%
Revolving Loan
Commitment
and
Revolving Loans: __%
By:
-----------------------------
Title:
PERCENTAGE [ASSIGNEE]
- ----------
Term Loan Commitment
and
Term Loans: __%
Revolving Loan
Commitment
and
Revolving Loans: __%
By:
-----------------------------
Title:
Accepted and Acknowledged
this __ day of _______, 19__
- -----------------------------
as Agent
By:
--------------------------
Title:
3
