<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D. C. 20549
Form 10-Q
X QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
--- SECURITIES EXCHANGE ACT OF 1934
For the quarterly period ended March 31, 1995
OR
___ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the transition period from ................. to ..................
Commission file number 1-8715
CRYSTAL OIL COMPANY
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(Exact name of registrant as specified in its charter)
Louisiana 72-0163810
------------------------------- ------------------
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
229 Milam Street, Shreveport, Louisiana 71101
---------------------------------------- ---------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code (318) 222-7791
--------------
NONE
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(Former name, former address and former fiscal year,
if changed since last report)
Indicate by check mark whether the registrant (1) has filed all reports
required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months (or for such shorter period
that the registrant was required to file such reports), and (2) has been
subject to such filing requirements for the past 90 days.
Yes X No
--- ----
Common Stock outstanding on May 10, 1995 2,609,792
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<PAGE>
CRYSTAL OIL COMPANY
INDEX
Page No.
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Part I
Item 1. Financial Statements
Consolidated Condensed Balance Sheets -
March 31, 1995 (Unaudited) and December 31, 1994 3
Consolidated Condensed Statements of Operations -
Three Months Ended March 31, 1995 and 1994 (Unaudited) 4
Consolidated Condensed Statements of Cash Flows -
Three Months Ended March 31, 1995 and 1994 (Unaudited) 5
Notes to Consolidated Condensed Financial Statements
(Unaudited) 7
Item 2. Management's Discussion and Analysis of Financial
Condition and Results of Operations 11
Part II
Item 6. Exhibits and Reports on Form 8-K 14
Signatures 17
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<PAGE>
CRYSTAL OIL COMPANY
CONSOLIDATED CONDENSED BALANCE SHEETS
($ in Thousands)
<TABLE>
<CAPTION>
March 31 December 31
ASSETS 1995 1994
---------- ----------
(Unaudited) (1)
<S> <C> <C>
CURRENT ASSETS
Cash and cash equivalents $ 15,603 $ 75,541
Marketable securities 66,682 -
Accounts receivable - net 1,787 5,278
Prepaid expenses and other current assets 1,214 376
---------- -----------
TOTAL CURRENT ASSETS 85,286 81,195
PROPERTY, PLANT AND EQUIPMENT - net 3,083 3,982
OTHER ASSETS
Restricted funds 1,890 6,563
Others 279 200
---------- ----------
2,169 6,763
---------- ----------
TOTAL ASSETS $ 90,538 $ 91,940
---------- ----------
---------- ----------
LIABILITIES AND STOCKHOLDERS' EQUITY
CURRENT LIABILITIES
Current portion of long-term obligations $ 56 $ 60
Accounts payable and accrued expenses 2,513 5,412
---------- ----------
TOTAL CURRENT LIABILITIES 2,569 5,472
LONG-TERM OBLIGATIONS 169 181
---------- ----------
TOTAL LIABILITIES 2,738 5,653
COMMITMENTS AND CONTINGENCIES
STOCKHOLDERS' EQUITY
Senior preferred stock 148 148
Common stock 26 26
Additional paid-in capital 75,030 74,045
Retained earnings - Since January 1, 1987 12,596 12,068
---------- ----------
TOTAL STOCKHOLDERS' EQUITY 87,800 86,287
---------- ----------
TOTAL LIABILITIES AND
STOCKHOLDERS' EQUITY $ 90,538 $ 91,940
---------- ----------
---------- ----------
<FN>
(1) The balance sheet at December 31, 1994, has been taken from the audited
financial statements at that date, and condensed.
See accompanying notes to consolidated condensed financial statements.
</TABLE>
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<PAGE>
CRYSTAL OIL COMPANY
CONSOLIDATED CONDENSED STATEMENTS OF OPERATIONS
($ in Thousands Except Shares and Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-------------------------
1995 1994
----------- -----------
<S> <C> <C>
NET REVENUES
Crude oil and natural gas $ - $ 7,361
Gain on sale of property, plant and equipment 827 15
Interest income 1,346 154
Other income 18 146
----------- -----------
2,191 7,676
COST AND EXPENSES
Operating expense and taxes 111 2,812
General and administrative expense 1,154 1,252
Interest and debt expense - 736
Exploration cost - 2,014
Depreciation, depletion and impairment 59 2,676
----------- -----------
1,324 9,490
----------- -----------
INCOME (LOSS) BEFORE PROVISION
IN LIEU OF INCOME TAXES 867 (1,814)
PROVISION IN LIEU OF INCOME TAXES (BENEFIT) 339 (712)
----------- -----------
NET INCOME (LOSS) $ 528 $ (1,102)
----------- -----------
----------- -----------
WEIGHTED AVERAGE NUMBER OF COMMON
AND COMMON EQUIVALENT
SHARES OUTSTANDING 2,676,247 2,529,614
----------- ----------
----------- ----------
NET INCOME (LOSS) PER COMMON
AND COMMON EQUIVALENT SHARE $ .20 $ (.44)
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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<PAGE>
CRYSTAL OIL COMPANY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
($ in Thousands)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
-------------------------
1995 1994
----------- -----------
<S> <C> <C>
Cash flows from operating activities:
Net income (loss) $ 528 $ (1,102)
Adjustments to reconcile net income (loss) to
net cash provided by operating activities:
Amortization of discount on notes and
deferred financing cost - 477
Net accretion of debt securities (699) -
Depreciation, depletion and impairment 59 2,676
Exploration expenses - 2,014
Provision in lieu of income taxes (benefit) 339 (712)
Gain on sale of property, plant
and equipment (827) (15)
Decrease in accounts receivable 3,791 226
Increase in prepaid expense and
other current assets (6) (40)
Decrease (increase) in other assets 24 (43)
Increase (decrease) in accounts payable
and accrued expenses (2,899) 354
----------- -----------
Net cash provided by operating activities 310 3,835
----------- -----------
Cash flows from investing activities:
Proceeds from sale of property, plant
and equipment 805 55
Capital expenditures (270) (1,471)
Purchases of marketable securities (65,983) -
Reduction of restricted funds 4,673 -
Investment in Russian joint venture (103) (296)
----------- -----------
Net cash used in investing activities (60,878) (1,712)
----------- -----------
Cash flows from financing activities:
Proceeds from issuance of common stock 646 -
Reduction of long-term obligations (16) (1,363)
----------- -----------
Net cash provided by (used in)
financing activities 630 (1,363)
----------- -----------
Net increase (decrease) in cash
and cash equivalents (59,938) 760
Cash and cash equivalents at
beginning of period 75,541 18,389
----------- -----------
Cash and cash equivalents at
end of period $ 15,603 $ 19,149
----------- -----------
----------- -----------
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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<PAGE>
CRYSTAL OIL COMPANY
CONSOLIDATED CONDENSED STATEMENTS OF CASH FLOWS
(Continued)
($ in Thousands)
(Unaudited)
Supplemental disclosures of cash flow information:
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------------------
1995 1994
--------- ---------
<S> <C> <C>
Cash paid during the period for:
Interest, net of amounts capitalized $ - $ 259
--------- ---------
--------- ---------
Income taxes $ 350 $ -
--------- ---------
--------- ---------
</TABLE>
See accompanying notes to consolidated condensed financial statements.
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<PAGE>
CRYSTAL OIL COMPANY
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
(Unaudited)
Note 1. CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
The consolidated condensed balance sheet of Crystal Oil Company and
its subsidiaries (the "Company") as of March 31, 1995, and the
consolidated condensed statements of operations and cash flows for the
three months ended March 31, 1995 and 1994, have been prepared by the
Company without audit. In the opinion of management, all adjustments
(which include only normal recurring adjustments) necessary to present
fairly the financial position, results of operations, and cash flows at
March 31, 1995, and for all periods presented have been made.
There have been no changes in the accounting policies from those set
forth in Note A of the Notes to Consolidated Financial Statements
included in the Company's 1994 Annual Report on Form 10-K except as
noted in Note 2 below.
Note 2. INVESTMENTS IN DEBT SECURITIES
Under the guidelines of Statement of Financial Accounting Standards
No. 115, "Accounting for Certain Investments in Debt and Equity
Securities", management determines the appropriate classification of its
investments in marketable debt securities at the time of the purchase
and reevaluates such determination at each balance sheet date. At
March 31, 1995, marketable debt securities have been categorized as
available for sale and as a result are stated at fair value. Unrealized
gains and losses are reported as an adjustment to shareholders' equity.
At March 31, 1995, the Company's investments in debt securities were
classified in the Company's balance sheet as cash equivalents,
marketable securities and restricted funds. These investments are all
highly liquid debt instruments with a maturity of less than three months
at the time of purchase for investments classified as cash equivalents
and less than one year but greater than three months at the time of
purchase for investments classified as marketable securities and
restricted funds.
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<PAGE>
The following is a summary of the estimated fair value of available
for sale securities by balance sheet classification at March 31, 1995:
<TABLE>
($ in thousands)
----------------
<S> <C>
Cash equivalents
U. S. Government agency securities $ 14,688
---------
---------
Marketable securities
U. S. Treasury $ 10,060
U. S. Government agency securities 14,696
Corporate investment grade debt securities 41,926
---------
$ 66,682
---------
---------
Restricted funds
U. S. Government agency securities $ 1,890
---------
---------
</TABLE>
The estimated fair value of each investment approximates the
amortized cost, and therefore, there are no unrealized gains or losses
as of March 31, 1995.
Note 3. PROVISION IN LIEU OF INCOME TAXES
As a result of the Company's quasi-reorganization accounting
treatment, the benefits of utilizing the net operating loss
carryforwards and income tax credits accumulated prior to the Company's
reorganization are credited to additional paid-in capital and are
reported as a provision in lieu of income taxes in the statement of
operations for financial reporting purposes.
Note 4. COMMITMENTS AND CONTINGENCIES
On March 31, 1995, the Company amended its credit facility (the
"Credit Agreement") with its banks relating to the standby letters of
credit previously issued by the banks on behalf of the Company and to
reduce the cash collateral requirements for the facility to 30% of the
outstanding letters of credit. As of March 31, 1995, approximately
$6.3 million of standby letters of credit were outstanding. Such
standby letters of credit primarily support the Company's obligations
with respect to certain tax benefits transferred pursuant to safe harbor
lease transactions. At March 31, 1995, approximately $1.9 million in
securities had been pledged to secure the letters of credit, which funds
have been classified as non-current assets in the Consolidated Condensed
Balance Sheet as of March 31, 1995.
In 1991, the Company was named, among others, as a potentially
responsible party for environmental cleanup and received an
informational request concerning a refinery located in Indiana, which
was constructed in 1946 and was owned by a now dissolved subsidiary of
the Company for a period of approximately four years during the 1970's.
The future environmental-related costs, if any, concerning this matter
are presently indeterminable.
In July 1979, a suit styled "ABG Oil Company et al vs. The Charter
Company, Charter Oak Company, and Crystal Exploration and Production
Company", was filed in the Circuit Court of the Eleventh Judicial
Circuit in and for Dade County, Florida. The Plaintiff alleges breach of
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<PAGE>
contract, breach of fiduciary duty, mismanagement and fraud in
connection with the operation of Caloosa 1974 Limited Partnership and
claims compensatory damages of $10 million, punitive damages in an
undetermined amount, interest and costs of litigation. In recent years,
the suit has been generally inactive and the Company believes that the
likelihood of a recovery, if any, by Plaintiff in a material amount is
remote.
Note 5. EARNINGS PER SHARE
Earnings (loss) per common share were computed by dividing net
income (loss) by the weighted average number of shares of Common Stock
and Common Stock equivalents outstanding during the periods presented.
The Senior Preferred Stock, all classes of the Company's warrants and
employee stock options have been considered to be the equivalent of
Common Stock for all periods presented. The Non-Interest Bearing
Convertible Notes due 1997 were considered a common stock equivalent in
the three months ended March 31, 1994, but were not assumed to be
converted and all the Common Stock equivalents were not assumed to be
converted in the three months ended March 31, 1994, because the result
thereof would be anti-dilutive. The Senior Preferred Stock and all
employee stock options were assumed converted in the three months ended
March 31, 1995. No warrants were assumed converted during the three
months ended March 31, 1995, because the effective exercise prices were
greater than the average market price of the Common Stock. Earnings per
common share, assuming full dilution, was determined on the same basis
as primary earnings per common share for each of the three months ended
March 31, 1995 and 1994 except for the ending market price of the Common
Stock was utilized with respect to the employee stock options in the
three months ended March 31, 1995.
Note 6. ASSET DISPOSITIONS
During the first quarter of 1995, the Company recognized a net gain
of approximately $477 thousand from its ownership interest in four crude
oil and natural gas drilling partnerships as a result of the sale of all
of the partnerships' crude oil and natural gas properties and related
assets to Apache Corporation. Pursuant to the partnership agreements,
the disposition transactions will cause the liquidation of the
partnerships and the Company received proceeds in the aggregate amount
of $832 thousand in April 1995. The Company's ownership interest in the
partnerships was reclassified from property, plant and equipment to
other current assets as of March 31, 1995.
During the first quarter of 1995, the Company sold its interest in
an exploratory project, a producing property in South Texas and surplus
equipment and inventory for an aggregate consideration of approximately
$1.1 million of which $.8 million was received during the first quarter
of 1995 and $300 thousand was accounted for as an account receivable as
of March 31, 1995. The sale of the exploratory project and producing
property resulted in a net gain of approximately $350 thousand. No gain
or loss was recognized on the surplus equipment and inventory sale.
Note 7. SUBSEQUENT EVENTS
On May 2, 1995, the Company entered into an agreement to purchase
First Reserve Gas Company ("FRGC"), a natural gas storage company
located in Hattiesburg, Mississippi, for cash consideration of
approximately $78 million subject to certain adjustments. The purchase
is expected to be funded with approximately $20 million of the Company's
available cash,
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<PAGE>
the remainder to be provided through either nonrecourse
debt or other nonrecourse financing. FRGC owns and operates a natural
gas storage facility consisting of three salt-dome caverns with a total
capacity of 5.5 billion cubic feet ("Bcf") of natural gas, comprised of
approximately 3.5 Bcf of working gas and approximately 2.0 Bcf of base
gas. FRGC's facility also interconnects with the Transco, Koch Gateway,
Tennessee Gas and AIM pipelines. FRGC's revenue and operating income
for 1994 was $11.8 million and $6.7 million, respectively. The
acquisition of FRGC is subject to various conditions, including
regulatory approval, and is expected to close by the end of the second
quarter of 1995.
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<PAGE>
Item 2. Management's Discussion and Analysis of Financial Condition and
Results of Operations
The following should assist in a further understanding of the
Company's financial condition as of March 31, 1995, as well as changes
in the Company's operating results. The notes to the Company's
Consolidated Condensed Financial Statements included in this report, as
well as the Company's Annual Report on Form 10-K for the year ended
December 31, 1994, should be read in conjunction with this discussion.
General
In the fourth quarter of 1994, the Company disposed of substantially
all of its domestic crude oil and natural gas properties for an
aggregate net cash consideration of approximately $95.0 million,
including $1.3 million received in April 1995 as a post-closing purchase
price adjustment. Although the Company retained various crude oil and
natural gas exploratory prospects and its interest in a crude oil
enhancement project being pursued in the former Soviet Union, the
disposition of the Company's producing crude oil and natural gas
properties resulted in an elimination of all its historic revenues from
the sale of crude oil and natural gas. Further, while the Company may
realize revenue and income in the future from crude oil and natural gas
production from its retained assets, the Company is currently focusing
its efforts for the redeployment of its assets in businesses outside the
exploration and development of crude oil and natural gas properties.
Accordingly, the results of operations of the Company for the periods
presented herein may not be comparable.
The Company is actively pursuing new opportunities for the
redeployment of its available cash. In this regard, on May 2, 1995, the
Company entered into an agreement to purchase First Reserve Gas Company
("FRGC"), a natural gas storage company located in Hattiesburg,
Mississippi, for cash consideration of approximately $78 million subject
to certain adjustments. The purchase is expected to be funded with
approximately $20 million of the Company's available cash, with the
remainder to be provided through either nonrecourse debt or other
nonrecourse financing. FRGC owns and operates a natural gas storage
facility consisting of three salt-dome caverns with a total capacity of
5.5 billion cubic feet ("Bcf") of natural gas, comprised of
approximately 3.5 Bcf of working gas and approximately 2.0 Bcf of base
gas. FRGC's facility also interconnects with the Transco, Koch Gateway,
Tennessee Gas and AIM pipelines. FRGC's revenue and operating income
for 1994 was $11.8 million and $6.7 million, respectively. The
acquisition of FRGC is subject to various conditions, including
regulatory approval, and is expected to close by the end of the second
quarter of 1995.
Upon the completion of the FRGC acquisition, the Company expects to
have available to it more than $65 million in cash and other liquid
assets for future acquisitions. Such acquisitions will be focused on
income generating businesses and assets without limitation on the type
of business or industry. Future acquisitions will likely involve a
combination of the use of a portion of the Company's available cash and
debt or other financing. To the extent possible, the Company will seek
to limit the recourse of any financing to the business and assets
acquired. The Company may also seek to finance future acquisitions with
additional equity if desirable.
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<PAGE>
Liquidity Capital Resources
At March 31, 1995, the Company had cash and cash equivalents of
approximately $15.6 million and marketable securities of approximately
$68.6 million, which included $1.9 million in restricted funds securing
the Company's contingent obligations with respect to outstanding letters
of credit. The Company also had no material outstanding indebtedness.
The Company's working capital position at March 31, 1995, increased
by $7.0 million to $82.7 million compared to $75.7 million at
December 31, 1994, primarily as a result of the reduction in the
collateral requirement for the standby letters of credit and the
corresponding reclassification of marketable securities with a value of
approximately $4.7 million from non-current assets. In addition, the
Company's working capital increased as a result of the disposition of
fixed assets during the first quarter of 1995 for an aggregate
consideration of approximately $1.1 million and the liquidation of the
Company's investment in four crude oil and natural gas drilling
partnerships in April 1995 causing a reclassification of approximately
$.8 million from property, plant and equipment to other current assets
as of March 31, 1995.
Pending the redeployment of the Company's available funds, the
Company is investing its cash primarily in short term United States
government and agency securities and investment grade commercial paper
having maturities of up to one year. The Company believes that these
securities do not present any material risks with respect to its
liquidity, operations or financial position.
Results of Operations
General
The Company recorded net income of approximately $528 thousand,
$.20 per share, for the three months ended March 31, 1995, compared to a
net loss of $1.1 million, $.44 per share, for the comparative period in
1994. First quarter 1995 results included a gain on sale of assets of
approximately $.8 million and interest income of approximately
$1.3 million. First quarter 1994 results included $7.7 million in
revenues and $51 thousand in operating income from crude oil and natural
gas exploration and production activities. The Company had no revenues
or operating income from crude oil and natural gas sales in the first
quarter of 1995 due to its disposition of its producing properties in
December 1994.
The first quarter of 1994 included breakeven operating results from
crude oil and natural gas exploration and production activities and
interest and debt expense of approximately $736 thousand, and the
comparative period in 1995 reflected the effect of the transactions in
the fourth quarter of 1994 through a limited level of crude oil and
natural gas exploration activities, elimination of interest expense and
an increase in interest income from the investment of net proceeds in
highly liquid debt instruments.
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<PAGE>
Interest Income
The Company's interest income for the three month period ended
March 31, 1995, was approximately $1.3 million compared to approximately
$154 thousand for the comparative period in 1994. The level of interest
income for the first quarter of 1995 reflects the average investment in
debt securities of approximately $81.6 million.
Depreciation, Depletion and Impairment
Depreciation, depletion and impairment declined substantially in the
first quarter of 1995 from $2.7 million in the first quarter of 1994, to
$59 thousand for the first quarter of 1995. This decline was
attributable to the Company's 1994 property disposition.
Interest and Debt Expense
The Company had no interest and debt expense in the first quarter of
1995 due to the repayment of substantially all of its outstanding debt
at year end 1994. Interest and debt expense in the first quarter of
1994 was $736 thousand.
General and Administrative Expense
The Company's general and administrative expense for the three month
period ended March 31, 1995, decreased approximately $98 thousand as
compared to the same period in 1994. During the first quarter of 1995
the Company began its reduction in work force and overhead previously
associated with its crude oil and natural gas exploration and
development activities. A portion of such staff, however, was required
during most of the first quarter of 1995 to assist the Company in the
closing of the sale of the Company's partnership assets to Apache
Corporation and to effect certain title curative matters related to the
post-closing adjustment with respect to the Company's December 1994
asset disposition to Apache Corporation. The Company currently expects
that substantially all of its staff reductions will be completed during
the second quarter of 1995. Such declines will be partially offset by
certain transitional expenses and costs relating to the Company's
Russian operations. General and administrative expense for the first
quarter of 1995 also included approximately $118 thousand for the
settlement of various lawsuits.
Taxes and Quasi-Reorganization Adjustment
The results for the three month period ended March 31, 1995,
included a provision in lieu of income taxes of $339 thousand. The
Company had an income tax benefit of $712 thousand for the three month
period ended March 31, 1994. The provision in lieu of income taxes is
an accounting charge required by virtue of the Company's
quasi-reorganization in 1986 and requires the Company to record a
non-cash charge in an amount equal to the deferred income taxes that the
Company would have recognized had it not been able to utilize its net
operating loss carryforwards against such income taxes. Because the
provision in lieu of income taxes primarily represents a charge that
will not be required to be paid by the Company in the future,
stockholders' equity is increased by the benefit realized by the Company
for the use of its net operating loss carryforwards against such assumed
income taxes. The provision in lieu of income taxes also includes
alternative minimum taxes.
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PART II: OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K
(a) Exhibits
<TABLE>
<C> <S>
2.1 Purchase and Sale Agreement dated November 6, 1994,
between Crystal Oil Company as Seller and Apache Corporation
as Buyer (Reference is made to Report of Form 10-Q filed
by the Company for the period ended September 30, 1994).
3.1 Amended and Restated Articles of Incorporation of the
Company, as amended. (Reference is made to Report on Form 10-K
filed by the Company for the period ended December 31, 1993).
3.2 By-laws of the Company, as amended through January 29,
1988 (Reference is made to Report on Form 10-K filed by
the Company for the period ended December 31, 1987).
*4.1 Credit Agreement dated March 31, 1995, (the
"Credit Agreement"), between the Company and Bankers Trust
Company, Morgan Guaranty Trust Company of New York and Texas
Commerce Bank, National Association.
4.2 Guarantee Agreement dated December 15, 1992, by Vermilion
Bay Land Company in favor of Bankers Trust Company,
individually and as Agent for the others Lenders as defined in the
Credit Agreement (Reference is made to Report on Form 10-K filed
by the Company for the period ended December 31, 1992).
4.3 Guarantee Agreement dated as of December 15, 1992, by
Crystal Exploration and Production Company in favor of Bankers
Trust Company, individually and as Agent for the other Lenders
as defined in the Credit Agreement. (Reference is made
to Report on Form 10-K filed by the Company for the
period ended December 31, 1992).
4.4 Security Agreement (contract rights) dated as of December
15, 1992, between Crystal Oil Company and Bankers Trust
Company, as Agent for itself and the other financial institutions
now or hereafter parties to the Credit Agreement (Reference
is made to Report on Form 10-K filed by the Company for
the period ended December 31, 1992).
4.5 Security Agreement (stock pledge) dated as of December 15,
1992, between Crystal Oil Company and Bankers Trust Company,
as Agent for itself and the other financial institutions now
or hereafter parties to the Credit Agreement (Reference is
made to Report on Form 10-K filed by the Company for the
period ended December 31, 1992).
4.6 Indenture of Mortgage, Deed of Trust, Assignment and Security
Agreement dated as of December 31, 1986, between the Company
and IBJ Schroder Bank & Trust Company (Reference is made to
Exhibit 2(a) to the Report on Form 8-A filed by the Company
on February 12, 1987).
4.7 First Supplemental Indenture of Mortgage, Deed of Trust,
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Assignment and Security Agreement dated as of October 10,
1988, between the Company and IBJ Schroder Bank & Trust
Company and George R. Sievers (Reference is made to Report
on Form 10-Q filed by the Company for the period ended
September 30, 1988).
4.8 Form of Non-Interest Bearing Convertible Note due 1997
(Reference is made to Report on Form 10-K filed by the
Company for the period ended December 31, 1989).
4.9 Article IV of the Amended and Restated Articles of
Incorporation of the Company (Reference is made to Exhibit
3.1 contained herein).
4.10 Amended and Restated Warrant Agreement dated as of January 1,
1987, between the Registrant and RepublicBank Dallas,
National Association relating to the $.075 Warrants
(Reference is made to Exhibit 2(c) to the Report on Form
8 filed by the Company on April 6, 1987).
4.11 Amended and Restated Warrant Agreement dated as of January 1,
1987, between the Registrant and RepublicBank Dallas,
National Association relating to the $.10 Warrants
(Reference is made to Exhibit 2(d) to the Report on Form
8 filed by the Company on April 6, 1987).
4.12 Amended and Restated Warrant Agreement dated as of January 1,
1987, between the Registrant and RepublicBank Dallas,
National Association relating to the $.125 Warrants
(Reference is made to Exhibit 2(e) to the Report on Form
8 filed by the Company on April 6, 1987).
4.13 Amended and Restated Warrant Agreement dated as of January 1,
1987, between the Registrant and RepublicBank Dallas,
National Association relating to the $.15 Warrants
(Reference is made to Exhibit 2(f) to the Report on Form
8 filed by the Company on April 6, 1987).
4.14 Amended and Restated Warrant Agreement dated as of January 1,
1987, between the Registrant and RepublicBank Dallas,
National Association relating to the $.25 Warrants
(Reference is made to Exhibit 2(g) to the Report on Form
8 filed by the Company on April 6, 1987).
10.1 Form of Indemnity Agreement between the Company and each of
its directors and executive officers (Reference is made to
Report on Form 10-K filed by the Company for the period
ended December 31, 1989).
(a) 10.2 Employment Agreement dated August 22, 1989, as amended between
the Company and J. N. Averett, Jr. (Reference is made to
Report on Form 10-K filed by the Company for the period
ended December 31, 1989).
(a) 10.3 Crystal Oil Company Employee Stock Option Plan and Form of
Option Agreement dated March 23, 1992, as amended through
May 27, 1993, between the Company and its executives.
(Reference is made to Report of Form 10-K filed by the
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Company for the period ended December 31, 1993).
(a) 10.4 Crystal Oil Company Employee Stock Ownership Plan dated
January 1, 1993, between the Company and its employees
(Reference is made to Report on Form 10-K filed by the
Company for the period ended December 31, 1992).
(a) 10.5 First Amendment to the Crystal Oil Company Employee Stock
Ownership Plan dated July 21, 1993. (Reference is made to
Report on Form 10-K filed by the Company for the period
ended December 31, 1993).
(a) 10.6 Form of Executive Compensation and Severance Agreement dated
November 10, 1994, between the Company and the Executives.
(Reference is made to Report on Form 10-Q filed by the
Company for the period ended September 30, 1994).
*10.7 Stock Purchase Agreement dated May 2, 1995, between the
Company as Purchaser and First Reserve Secured Energy
Assets Fund, Limited Partnership and First Reserves
Fund V, Limited Partnership as Sellers.
*11 Computation of Earnings Per Common Share.
27 Financial Data Schedule.
<FN>
(b) Reports on Form 8-K
None
- -------------------------
(a) Management Incentive Compensation Plans
* Filed herein
</TABLE>
-16-
<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, thereunto duly authorized, on the 10th day of May 1995.
CRYSTAL OIL COMPANY
BY: /S/ J. N. AVERETT, JR.
----------------------------------
J. N. Averett, Jr.
President
and Director
(Principal Executive Officer)
BY: /S/ J. A. BALLEW
-----------------------------------
J. A. Ballew
Senior Vice President,
Treasurer, and
Chief Financial Officer
BY: /S/ PAUL E. HOLMES
-----------------------------------
Paul E. Holmes
Vice President/Controller
(Principal Accounting Officer)
-17-
<PAGE>
CREDIT AGREEMENT
Among
CRYSTAL OIL COMPANY
as the Company
and
BANKERS TRUST COMPANY
Individually, as Issuing Bank and as Agent
and
MORGAN GUARANTY TRUST COMPANY OF NEW YORK,
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
and
FINANCIAL INSTITUTIONS
HEREAFTER PARTIES HERETO
$6,641,054.15 Letter of Credit Facility
March 31, 1995
<PAGE>
TABLE OF CONTENTS
ARTICLE I
DEFINITIONS; CONSTRUCTION
Section 1.01 DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.02 ACCOUNTING TERMS AND DETERMINATIONS . . . . . . . . . . 7
Section 1.03 OTHER DEFINITIONAL TERMS . . . . . . . . . . . . . . . 8
ARTICLE II
AMOUNT AND TERMS OF PURCHASE, RENEWAL AND REARRANGEMENT
Section 2.01 LETTER OF CREDIT COMMITMENTS . . . . . . . . . . . . . 8
Section 2.02 NOTES. . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.03 DEFAULT INTEREST . . . . . . . . . . . . . . . . . . . 8
Section 2.04 PREPAYMENTS . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.05 FEES . . . . . . . . . . . . . . . . . . . . . . . . . 8
Section 2.06 PAYMENTS, ETC . . . . . . . . . . . . . . . . . . . . . 8
Section 2.07 CAPITAL ADEQUACY . . . . . . . . . . . . . . . . . . . 9
Section 2.08 SHARING OF PAYMENTS, ETC . . . . . . . . . . . . . . . 9
Section 2.09 LETTERS OF CREDIT . . . . . . . . . . . . . . . . . . . 9
Section 2.10 ASSUMPTION OF RISKS . . . . . . . . . . . . . . . . . . 10
Section 2.11 L/C AGREEMENTS . . . . . . . . . . . . . . . . . . . . 10
Section 2.12 EXCLUDED LETTER OF CREDIT . . . . . . . . . . . . . . . 10
Section 2.13 TAXES . . . . . . . . . . . . . . . . . . . . . . . . . 11
ARTICLE III
EFFECTIVE DATE
Section 3.01 CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . 13
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 CORPORATE EXISTENCE . . . . . . . . . . . . . . . . . . 13
Section 4.02 CORPORATE POWER AND AUTHORIZATION . . . . . . . . . . . 13
Section 4.03 BINDING OBLIGATIONS . . . . . . . . . . . . . . . . . . 13
Section 4.04 NO LEGAL BAR OR RESULTANT LIEN . . . . . . . . . . . . 14
Section 4.05 NO CONSENT . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.06 FINANCIAL INFORMATION . . . . . . . . . . . . . . . . . 14
Section 4.07 LITIGATION . . . . . . . . . . . . . . . . . . . . . . 14
Section 4.08 COMPLIANCE WITH ERISA . . . . . . . . . . . . . . . . . 14
Section 4.09 TAXES; GOVERNMENTAL CHARGES . . . . . . . . . . . . . . 14
Section 4.10 DEFAULTS . . . . . . . . . . . . . . . . . . . . . . . 15
Section 4.11 COMPLIANCE WITH THE LAW . . . . . . . . . . . . . . . . 15
Section 4.12 NO MATERIAL MISSTATEMENTS . . . . . . . . . . . . . . . 15
Section 4.13 INVESTMENT COMPANY ACT . . . . . . . . . . . . . . . . 15
Section 4.14 PUBLIC UTILITY HOLDING COMPANY ACT . . . . . . . . . . 15
i
<PAGE>
ARTICLE V
COVENANTS
Section 5.01 CERTAIN AFFIRMATIVE COVENANTS . . . . . . . . . . . . . 15
(a) MAINTENANCE AND COMPLIANCE, ETC . . . . . . . . . . . . 15
(b) PAYMENT OF TAXES AND CLAIMS, ETC. . . . . . . . . . . . 16
(c) FURTHER ASSURANCES. . . . . . . . . . . . . . . . . . . 16
(d) PERFORMANCE OF OBLIGATIONS. . . . . . . . . . . . . . . 16
(e) ACCOUNTS AND RECORDS. . . . . . . . . . . . . . . . . . 16
(f) RIGHT OF INSPECTION . . . . . . . . . . . . . . . . . . 16
(g) TBT LEASES. . . . . . . . . . . . . . . . . . . . . . . 16
Section 5.02 REPORTING COVENANTS. . . . . . . . . . . . . . . . . . 17
(a) ANNUAL FINANCIAL STATEMENTS . . . . . . . . . . . . . 17
(b) QUARTERLY FINANCIAL STATEMENTS . . . . . . . . . . . . 17
(c) NO DEFAULT/COMPLIANCE CERTIFICATE . . . . . . . . . . 17
(d) TBT LEASE DEMANDS, ETC . . . . . . . . . . . . . . . . 18
(e) NOTICE OF CERTAIN EVENTS . . . . . . . . . . . . . . . 18
(f) SHAREHOLDER COMMUNICATIONS, FILINGS, ETC . . . . . . . 18
(g) LITIGATION . . . . . . . . . . . . . . . . . . . . . . 18
(h) ERISA . . . . . . . . . . . . . . . . . . . . . . . . 18
(i) SCHEDULE OF TBT LEASE PAYMENTS . . . . . . . . . . . . 18
(j) OTHER INFORMATION . . . . . . . . . . . . . . . . . . 19
Section 5.03 TANGIBLE NET WORTH COVENANT . . . . . . . . . . . . . . 19
Section 5.04 NEGATIVE COVENANT REGARDING ERISA COMPLIANCE . . . . . 19
ARTICLE VI
EVENTS OF DEFAULT
Section 6.01 PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . 20
Section 6.02 COVENANTS WITHOUT NOTICE . . . . . . . . . . . . . . . 20
Section 6.03 OTHER COVENANTS . . . . . . . . . . . . . . . . . . . . 20
Section 6.04 OTHER SECURITY INSTRUMENT OBLIGATIONS . . . . . . . . . 20
Section 6.05 REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . 20
Section 6.07 DEFAULTS UNDER OTHER AGREEMENTS . . . . . . . . . . . . 20
Section 6.08 BANKRUPTCY . . . . . . . . . . . . . . . . . . . . . . 21
Section 6.09 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 6.10 MONEY JUDGMENT . . . . . . . . . . . . . . . . . . . . 21
Section 6.11 SECURITY INSTRUMENTS . . . . . . . . . . . . . . . . . 21
Section 6.12 CHANGE OF CONTROL . . . . . . . . . . . . . . . . . . . 21
ARTICLE VII
THE AGENT
Section 7.01 APPOINTMENT OF AGENT . . . . . . . . . . . . . . . . . 22
Section 7.02 NATURE OF DUTIES OF AGENT . . . . . . . . . . . . . . . 22
Section 7.03 LACK OF RELIANCE ON THE AGENT . . . . . . . . . . . . . 22
Section 7.04 CERTAIN RIGHTS OF THE AGENT . . . . . . . . . . . . . . 22
Section 7.05 RELIANCE BY AGENT . . . . . . . . . . . . . . . . . . . 23
Section 7.06 INDEMNIFICATION OF AGENT . . . . . . . . . . . . . . . 23
ii
<PAGE>
Section 7.07 THE AGENT IN ITS INDIVIDUAL CAPACITY . . . . . . . . . 23
Section 7.08 SUCCESSOR AGENT . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VIII
MISCELLANEOUS
Section 8.01 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.02 AMENDMENTS, ETC . . . . . . . . . . . . . . . . . . . . 24
Section 8.03 NO WAIVER; REMEDIES CUMULATIVE . . . . . . . . . . . . 24
Section 8.04 PAYMENT OF EXPENSES, INDEMNITIES, ETC . . . . . . . . . 24
Section 8.05 SATISFACTION REQUIREMENT . . . . . . . . . . . . . . . 26
Section 8.06 BENEFIT OF AGREEMENT . . . . . . . . . . . . . . . . . 26
Section 8.07 ASSIGNMENTS AND PARTICIPATIONS. . . . . . . . . . . . . 26
Section 8.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF
JURY TRIAL; ETC . . . . . . . . . . . . . . . . . . . . 27
Section 8.09 INDEPENDENT NATURE OF LENDERS' RIGHTS . . . . . . . . . 29
Section 8.10 INVALIDITY . . . . . . . . . . . . . . . . . . . . . . 29
Section 8.11 SURVIVAL OF AGREEMENTS . . . . . . . . . . . . . . . . 29
Section 8.12 RENEWAL, EXTENSION OR REARRANGEMENT . . . . . . . . . . 29
Section 8.13 INTEREST . . . . . . . . . . . . . . . . . . . . . . . 29
Section 8.14 TAXES, ETC . . . . . . . . . . . . . . . . . . . . . . 29
Section 8.15 CONFIDENTIAL INFORMATION. . . . . . . . . . . . . . . . 29
Section 8.16 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . 30
Section 8.17 ATTACHMENTS . . . . . . . . . . . . . . . . . . . . . . 30
Section 8.18 COUNTERPARTS . . . . . . . . . . . . . . . . . . . . . 30
Section 8.19 EFFECTIVENESS; SURVIVAL OF INDEMNITIES . . . . . . . . 30
Section 8.20 HEADINGS DESCRIPTIVE . . . . . . . . . . . . . . . . . 31
Section 8.21 EFFECTIVENESS . . . . . . . . . . . . . . . . . . . . . 31
ANNEXES
Annex I - Letter of Credit Commitments
SCHEDULES
Schedule 1 - Letters of Credit
Schedule 2 - Disclosures
EXHIBITS
Exhibit A - Form of Opinion of Fulbright & Jaworski
Exhibit B - Form of Assignment and Acceptance
iii
<PAGE>
CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT is made and entered into as of
this 31st day of March, 1995, among CRYSTAL OIL COMPANY, a Louisiana corporation
(the "COMPANY"); BANKERS TRUST COMPANY, a New York state banking corporation,
individually, as Issuing Bank and as Agent (in such capacity, the "AGENT"),
MORGAN GUARANTY TRUST COMPANY OF NEW YORK, TEXAS COMMERCE BANK NATIONAL
ASSOCIATION and the financial institutions hereafter parties hereto
(collectively the "LENDERS").
RECITALS
WHEREAS, the Company, the Agent, the Issuing Bank and the Lenders entered
into a Credit Agreement dated as of December 15, 1992, as amended by the First
Amendment to Credit Agreement dated as of May 2, 1994, and the Second Amendment
to Credit Agreement and Consent and Waiver, dated as of October 31, 1994
(collectively, the "1992 CREDIT AGREEMENT") pursuant to which the Agent, the
Issuing Bank and the Lenders made loans to and issued letters of credit for the
account of the Company; and
WHEREAS, at the time and in consideration of the issuance of each Letter of
Credit the Company entered into an application and agreement for irrevocable
letter of credit (or similar agreement) with the Issuing Bank (each an "L/C
AGREEMENT"); and
WHEREAS, the Company sold certain properties (the "DIVESTMENT PROPERTIES")
pursuant to a Purchase and Sale Agreement dated as of November 6, 1994 between
the Company and Apache Corporation (the "PURCHASE AND SALE AGREEMENT"); and
WHEREAS, on December 30, 1994 and in connection with the sale of the
Divestment Properties, (i) the Company repaid in full the Revolving Credit
Loans, the Term Loans and all other Lender Indebtedness (excluding Letter of
Credit Liabilities and the L/C Note) outstanding under the 1992 Credit Agreement
and terminated the Commitments (other than the Letter of Credit Commitments)
under the 1992 Credit Agreement and (ii) the Agent and the Lenders released the
Liens on the Divestment Properties securing the Lender Indebtedness; and
WHEREAS, the Company has requested and the Agent, the Issuing Bank and the
Lenders have further agreed, upon the terms and conditions herein stated, to
amend and restate in its entirety the 1992 Credit Agreement;
NOW, THEREFORE, for and in consideration of the mutual covenants and
agreements herein contained, the Company, the Agent, the Issuing Bank and the
Lenders agree to amend and restate in its entirety the 1992 Credit Agreement and
all the terms and provisions thereof to read in their entirety as follows:
ARTICLE I
DEFINITIONS; CONSTRUCTION
Section 1.01 DEFINITIONS. As used herein, the following terms shall
have the meanings herein specified (to be equally applicable to both the
singular and plural forms of the terms defined):
"1992 CREDIT AGREEMENT" shall have the meaning assigned such term in
the opening recitals of this Agreement.
"AFFILIATE" of any Person shall mean any other Person directly or
indirectly controlling, controlled by, or under common control with, such
Person, whether through the ownership of voting securities, by contract or
otherwise.
<PAGE>
"AGENT" shall mean Bankers Trust Company, acting in the manner and to
the extent described in Article VII.
"AGREEMENT" shall mean this Amended and Restated Credit Agreement, as
amended, supplemented or modified from time to time.
"ASSIGNMENT AND ACCEPTANCE" shall have the meaning assigned such term
in Section 8.07(b).
"BANKRUPTCY CODE" shall have the meaning provided in Section 6.08.
"BASE RATE" shall mean the higher of (i) the Prime Lending Rate in
effect on such day or (ii) one-half of one percent (1/2%) plus the Federal
Funds Rate in effect for such day (rounded upwards, if necessary, to the
nearest 1/16th of 1%), but in no event to exceed the Highest Lawful Rate.
For purposes of this Agreement, any change in the Base Rate due to a change
in the Federal Funds Rate or the Prime Lending Rate shall be effective on
the effective date of such change in the Federal Funds Rate or the Prime
Lending Rate, as the case may be. If for any reason the Agent shall have
determined (which determination shall be conclusive and binding, absent
manifest error) that it is unable to ascertain the Federal Funds Rate for
any reason, including but not limited to the inability or failure of the
Agent to obtain sufficient bids or publications in accordance with the
terms hereof, the Base Rate shall be the Prime Lending Rate until the
circumstances giving rise to such inability no longer exists.
"BTC" shall mean Bankers Trust Company, a New York state banking
corporation, in its individual capacity and not as Agent.
"BUSINESS DAY" shall mean any day excluding Saturday, Sunday and any
other day on which banks are required or authorized to close in New York,
New York or Houston, Texas.
"CASH COLLATERAL ACCOUNT" shall have the meaning assigned to such term
in the Cash Collateral Account Agreement.
"CASH COLLATERAL ACCOUNT AGREEMENT" shall mean the Cash Collateral
Account Agreement dated as of the Closing Date among the Agent, the Issuing
Bank, the Lenders and the Company, as amended, supplemented or modified
from time to time.
"CHANGE OF CONTROL" shall mean a change resulting when any Unrelated
Person or any Unrelated Persons acting together which would constitute a
Group together with any Affiliates thereof (in each case also constituting
Unrelated Persons) other than Quantum Fund N.V. or George Soros (or any
Affiliate of either of them) shall at any time Beneficially Own more than
40% of the aggregate voting power of all classes of Voting Stock of the
Company. As used herein (a) "BENEFICIALLY OWN" means "beneficially own" as
defined in Rule 13d-3 of the Securities Exchange Act of 1934, as amended,
or any successor provision thereto; PROVIDED, HOWEVER, that, for purposes
of this definition, a Person shall not be deemed to Beneficially Own
securities tendered pursuant to a tender or exchange offer made by or on
behalf of such Person or any of such Person's Affiliates until such
tendered securities are accepted for purchase or exchange; (b) "GROUP"
means a "group" for purposes of Section 13(d) of the Securities Exchange
Act of 1934, as amended; (c) "UNRELATED PERSON" means at any time any
Person other than the Company or any Subsidiary and other than any trust
for any employee benefit plan of the Company or any Subsidiary of the
Company; and (d) "VOTING STOCK" of any Person shall mean capital stock of
such Person which ordinarily has voting power for the election of directors
(or persons performing similar functions) of such Person, whether at all
times or only so long as no senior class of securities has such voting
power by reason of any contingency.
"CLOSING DATE" shall mean the as of date set forth in the opening
paragraph of this Agreement.
"CODE" shall mean the Internal Revenue Code of 1986, as amended, and
any successor statute.
2
<PAGE>
"COMPANY" shall mean Crystal Oil Company, a Louisiana corporation.
"DEFAULT" shall mean any condition or event which, with notice or
lapse of time or both, would constitute an Event of Default.
"DOLLAR" and the sign "$" shall mean lawful money of the United States
of America.
"EFFECTIVE DATE" shall have the meaning provided in Section 8.19.
"ELIGIBLE TRANSFEREE" shall mean any financial institution which is a
Lender as of the Effective Date or which is a commercial bank, a financial
institution or an "accredited investor" (as defined in Regulation D) which
makes loans in the ordinary course of its business and that makes or
acquires loans for its own account in the ordinary course of its business
and which has capital, surplus and undivided profits aggregating at least
$250,000,000 (as of the date of its most recent financial statements).
"ENVIRONMENTAL LAWS" shall mean any and all laws, statutes,
ordinances, rules, regulations, orders, or determinations of any
Governmental Authority pertaining to health or the environment in effect in
any and all jurisdictions in which the Company or its Subsidiaries are
conducting or at any time have conducted business, or where any Property of
the Company or its Subsidiaries is located, or where any hazardous
substances generated by or disposed of by the Company or its Subsidiaries
are located, including but not limited to the Oil Pollution Act of 1990
("OPA"), the Clean Air Act, as amended, the Comprehensive Environmental,
Response, Compensation, and Liability Act of 1980 ("CERCLA"), as amended,
the Federal Water Pollution Control Act, as amended, the Occupational
Safety and Health Act of 1970, as amended, the Resource Conversation and
Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking Water Act, as
amended, the Toxic Substances Control Act, as amended, the Superfund
Amendments and Reauthorization Act of 1986, as amended, and other
environmental conservation or protection laws. The term "OIL" shall have
the meaning specified in OPA; the terms "HAZARDOUS SUBSTANCE," "RELEASE"
and "THREATENED RELEASE" have the meanings specified in CERCLA, and the
terms "SOLID WASTE" and "DISPOSAL" (or "DISPOSED") have the meanings
specified in RCRA; PROVIDED, HOWEVER, in the event either CERCLA or RCRA is
amended so as to broaden the meaning of any term defined thereby, such
broader meaning shall apply subsequent to the effective date of such
amendment, and PROVIDED, FURTHER, that, to the extent the laws of the state
in which any Property of the Company or its Subsidiaries is located
establish a meaning for "oil," "hazardous substance," "release," "solid
waste" or "disposal" which is broader than that specified in either OPA,
CERCLA or RCRA, such broader meaning shall apply.
"ERISA" shall mean the Employee Retirement Income Security Act of
1974, as amended, and any successor statute.
"ERISA AFFILIATE" shall mean each trade or business (whether or not
incorporated) which together with the Company or a Subsidiary of the
Company would be deemed to be a "SINGLE EMPLOYER" within the meaning of
Section 4001(b)(1) of ERISA or Subsections 414(b), (c), (m) or (o) of the
Code.
"ERISA TERMINATION EVENT" shall mean (i) a "REPORTABLE EVENT"
described in Section 4043 of ERISA and the regulations issued thereunder
(other than a "Reportable Event" not subject to the provision for 30-day
notice to the PBGC under Subsections .14, .18, .19 or .20 of Part 2615 of
the PBGC regulations), (ii) the withdrawal of the Company, a Subsidiary of
the Company or any ERISA Affiliate from a Plan during a plan year in which
it was a "SUBSTANTIAL EMPLOYER" as defined in Section 4001(a)(2) of ERISA,
(iii) the filing of a notice of intent to terminate a Plan or the treatment
of a Plan amendment as a termination under Section 4041 of ERISA, (iv) the
institution of proceedings to terminate a Plan by the PBGC, or (v) any
other event or condition which might constitute grounds under Section 4042
of ERISA for the termination of, or the appointment of a trustee to
administer, any Plan.
"EVENT OF DEFAULT" shall have the meaning provided in Article VI.
3
<PAGE>
"EXCLUDED LETTER OF CREDIT" shall mean that certain Irrevocable
Standby Letter of Credit No. W-82762-S issued by BTC for the benefit of
Fidelity and Deposit Company of Maryland and for the account of the Company
for an amount not exceeding Three Hundred Thousand and No/100 Dollars
($300,000.00).
"EXISTING TBT PROPERTIES" shall have the meaning assigned in
Subsection 5.01(g).
"FEDERAL FUNDS RATE" shall mean, for any period, a fluctuating
interest rate per annum equal for each day during such period to 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, 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 the
Agent from three Federal funds brokers of recognized standing selected by
it.
"FINAL MATURITY DATE" shall mean December 31, 1997.
"FINANCIAL STATEMENTS" shall mean the consolidated financial statement
or statements of the Company and its Subsidiaries described or referred to
in Section 4.06.
"FORM 1001 CERTIFICATION" shall have the meaning provided in
Section 2.13(f).
"FORM 4224 CERTIFICATION" shall have the meaning provided in
Section 2.13(f).
"GAAP" shall mean generally accepted accounting principles as applied
in accordance with Section 1.02.
"GOVERNMENTAL AUTHORITY" shall mean any (domestic or foreign) federal,
state, province, county, city, municipal or other political subdivision or
government, department, commission, board, bureau, court, agency or any
other instrumentality of any of them, which exercises jurisdiction over the
Company or any of its Property or any Subsidiary of the Company or any of
such Subsidiary's Property.
"GOVERNMENTAL REQUIREMENT" shall mean any law, statute, code,
ordinance, order, rule, regulation, judgment, decree, injunction,
franchise, permit, certificate, license, authorization or other direction
or requirement (including but not limited to any of the foregoing which
relate to Environmental Laws, energy regulations and occupational, safety
and health standards or controls) of any Governmental Authority.
"HIGHEST LAWFUL RATE" shall mean the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the L/C Note or on other Lender
Indebtedness, as the case may be, under the law of any jurisdiction whose
laws may be mandatorily applicable notwithstanding other provisions of this
Agreement, or law of the United States of America applicable to each
respective Lender and the Transactions which would permit such Lender to
contract for, charge, take, reserve or receive a greater amount of interest
than under such jurisdiction's law.
"INDEBTEDNESS" of any Person shall mean:
(i) all obligations of such Person which in accordance with GAAP
would be shown on the balance sheet of such Person as a liability
(including, but not limited to, obligations for borrowed money and for
the deferred purchase price of property or services, and obligations
evidenced by bonds, debentures, notes or other similar instruments);
(ii) all rental obligations under leases required to be
capitalized under GAAP;
4
<PAGE>
(iii) all guarantees (direct or indirect), all contingent
reimbursement obligations under undrawn letters of credit and other
contingent obligations of such Person in respect of, or obligations to
purchase or otherwise acquire or to assure payment of, Indebtedness of
others; and
(iv) Indebtedness of others secured by any Lien upon Property
owned by such Person, whether or not assumed.
"INTEREST RATE SWAP AGREEMENT" shall mean any rate swap, rate cap,
rate floor, rate collar, forward rate agreement or other rate protection
agreement or option with respect to any such transaction, designed to hedge
against fluctuations in interest rates.
"ISSUING BANK" shall mean, for each Letter of Credit, BTC as the
issuing bank for such Letter of Credit.
"L/C AGREEMENTS" shall have the meaning assigned such term in the
opening recitals of this Agreement.
"L/C NOTE" shall mean the promissory note of the Company dated
December 15, 1992 made by the Company and payable to the Issuing Bank and
being in the in the original principal amount of $10,000.00, together with
any and all renewals, extensions for any period, increases or
rearrangements thereof.
"LENDER INDEBTEDNESS" shall mean any and all amounts owing or to be
owing by the Company to the Agent, the Issuing Bank or the Lenders with
respect to or in connection with any Letter of Credit Liabilities, the L/C
Note, this Agreement, or any other Security Instrument.
"LENDER" shall have the meaning assigned such term in the opening
paragraph of this Agreement.
"LENDING OFFICE" shall mean for each Lender the office specified
opposite such Lender's name on the signature pages hereof, or in the
Assignment and Acceptance pursuant to which it became a Lender, or such
other office as such Lender may designate in writing from time to time to
the Company and the Agent.
"LETTER OF CREDIT" shall mean those certain letters of credit listed
on Schedule 1 issued by the Issuing Bank at the request and for the account
of the Company or its Subsidiaries, which letters of credit shall remain
outstanding pursuant to the terms and conditions set forth therein and in
this Agreement, together with any extensions hereafter granted on any such
letters of credit and any new letters of credit hereafter issued by the
Issuing Bank in renewal, replacement or extension of any such letters of
credit.
"LETTER OF CREDIT COMMITMENT" shall mean, with respect to each Lender,
the obligation of such Lender to reimburse the Issuing Bank, pursuant to
Section 2.09(b), such Lender's Percentage Share of each draw under a Letter
of Credit, as such amount may be reduced, subject to such renewals,
replacements and extensions of the Letters of Credit contemplated herein,
by scheduled and automatic reductions in the maximum amount payable under
the Letters of Credit.
"LETTER OF CREDIT LIABILITIES" shall mean, at any time and in respect
of any Letter of Credit, the sum of (i) the amount available for drawings
under such Letter of Credit plus (ii) the aggregate unpaid amount of all
Reimbursement Obligations at the time due and payable in respect of
previous drawings made under such Letter of Credit.
"LIEN" shall mean any interest in Property securing an obligation owed
to, or a claim by, a Person other than the owner of the Property, whether
such interest is based on the common law, statute or contract, and
including but not limited to the lien or security interest arising from a
mortgage, encumbrance, pledge, security agreement, conditional sale or
trust receipt or a lease, consignment or bailment for security purposes.
The term "LIEN" shall include reservations, exceptions, encroachments,
easements, rights of way, covenants, conditions, restrictions, leases and
other title exceptions and encumbrances affecting Property. For the
purposes of this Agreement, the Company or any Subsidiary of the Company
shall be deemed to be the owner of any
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Property which it has acquired or holds subject to a conditional sale
agreement, financing lease or other arrangement pursuant to which title to
the Property has been retained by or vested in some other Person for
security purposes.
"MATERIAL ADVERSE EFFECT" shall mean any material and adverse effect
on the business, financial condition, results of operations or prospects of
the Company and its Subsidiaries taken as a whole.
"OTHER TAXES" shall have the meaning provided in Subsection 2.13(b).
"PAYMENT OFFICE" shall mean the Agent's office located at One Bankers
Trust Plaza, 130 Liberty Street, Loan Division-14th Floor, New York, New
York 10006, Attention: Mary Rodwell.
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or any
successor thereto.
"PERCENTAGE SHARE" shall mean, as to any Lender, the fraction,
expressed as a percentage, the numerator of which is the amount of such
Lender's Letter of Credit Commitment and Letter of Credit Liabilities and
the denominator of which is the amount of the aggregate Letter of Credit
Commitments.
"PERSON" shall mean any individual, partnership, firm, corporation
(including, but not limited to, the Company), association, joint venture,
trust or other entity, or any government or political subdivision or
agency, department or instrumentality thereof; PROVIDED,HOWEVER, for the
purpose of the definition of "Change of Control," "PERSON" shall mean a
"person" or group of persons within the meaning of Sections 13(d) and 14(d)
of the Securities Exchange Act of 1934, as amended.
"PLAN" shall mean any employee pension benefit plan, as defined in
Section 3(2) of ERISA, which (i) is currently or hereafter sponsored,
maintained or contributed to by the Company, a Subsidiary or an ERISA
Affiliate, or (ii) was at any time during the six calendar years preceding
the date of this Agreement sponsored, maintained or contributed to by the
Company, a Subsidiary or an ERISA Affiliate; provided, however, that the
term "Plan" shall not include any Plan maintained by any Subsidiary of the
Company which was acquired after the Closing Date unless the inclusion of
such Plan would result in a Material Adverse Effect.
"PRIME LENDING RATE" shall mean the rate which BTC announces from time
to time as its prime lending rate, as in effect from time to time. The
Prime Lending Rate is a reference rate and does not necessarily represent
the lowest or best rate actually charged to any customer. BTC may make
commercial loans or other loans at rates of interest at, above or below the
Prime Lending Rate.
"PROPERTY" shall mean any interest in any kind of property or asset,
whether real, personal or mixed, or tangible or intangible.
"QUARTERLY DATES" shall mean the last day of each March, June,
September and December.
"REGISTER" shall mean the register maintained by the Agent at its
Payment Office showing the name and address of each Lender and its Letter
of Credit Commitment.
"REGULATION D" and "REGULATION U" shall mean Regulation D and
Regulation U, respectively, of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor thereto.
"REIMBURSEMENT OBLIGATIONS" shall mean, at any date, the obligations
of the Company then outstanding in respect of the Letters of Credit, to
reimburse the Agent for the account of the Issuing Bank for the amount paid
by the Issuing Bank in respect of any drawings under the Letters of Credit.
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"REQUIRED LENDERS" shall mean at any time, (a) Lenders holding at
least 66-2/3% of the sum of (i) the then unpaid Reimbursement Obligations,
plus (ii) the Letter of Credit Commitments, or, (b) if no such principal
amount is then outstanding, Lenders holding at least 66-2/3% of the Letter
of Credit Commitments.
"SECURITY INSTRUMENTS" shall mean this Agreement, the Cash Collateral
Account Agreement and any and all other agreements or instruments hereafter
executed and delivered by the Company, any Subsidiary of the Company or any
other Person (other than participation, agency or similar agreements among
the Lenders or between any Lender and any other bank or creditor with
respect to any indebtedness or obligations of the Company hereunder) in
connection with, or as security for the payment or performance of the
Lender Indebtedness, including, but not limited to, the L/C Note or this
Agreement, as such agreements may be amended or supplemented from time to
time.
"SUBSIDIARY" of any Person shall mean a corporation of which a
majority of the outstanding shares of stock of each class having ordinary
voting power is owned by such Person, by one or more Subsidiaries of such
Person, or by such Person and one or more of its Subsidiaries; provided
that no foreign subsidiary of the Company shall be considered a Subsidiary.
"TANGIBLE NET WORTH" shall mean as to the Company, at any time and
from time to time, the sum of preferred or common stock not subject to a
mandatory redemption obligation as of the date of determination, par value
of common stock, additional paid-in capital of common stock, and retained
earnings less treasury stock (if any), less good will, cost in excess of
net assets acquired and all other assets as are properly classified as
intangible assets.
"TAXES" shall have the meaning provided in Subsection 2.13(a).
"TAX LESSORS" shall have the meaning assigned such term in
Subsection 5.01(g).
"TBT LEASES" shall mean those certain safe harbor leases entered into
by the Company pursuant to the provisions of the Internal Revenue Code of
1954, as amended, in effect at the time such safe harbor leases were
entered into, in connection with which Letters of Credit were issued.
"TRANSACTIONS" shall mean the transactions provided for in and
contemplated by this Agreement, the other Security Instruments and the L/C
Note.
"TBT PROPERTIES" shall have the meaning assigned in Subsection
5.01(g).
"TRANSFERRED TBT PROPERTIES" shall have the meaning assigned in
Subsection 5.01(g).
Section 1.02 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
defined or specified herein, all accounting terms shall be construed herein, all
accounting determinations hereunder shall be made, all financial statements
required to be delivered hereunder shall be prepared and all financial records
shall be maintained in accordance with GAAP applied on a basis consistent with
the financial statements referred to in Subsection 4.06(a) except to the extent
that a different accounting treatment is required by GAAP then applicable to the
Company and its Subsidiaries and with which the Company's independent public
accountants shall have concurred.
Section 1.03 OTHER DEFINITIONAL TERMS. The words "hereof," "herein" and
"hereunder" and words of similar import when used in this Agreement shall refer
to this Agreement as a whole and not to any particular provision of this
Agreement, and article, section, schedule, exhibit and like references are to
this Agreement unless otherwise specified.
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ARTICLE II
AMOUNT AND TERMS OF PURCHASE, RENEWAL AND REARRANGEMENT
Section 2.01 LETTER OF CREDIT COMMITMENTS. Each Lender severally agrees
that it has heretofore purchased from the Issuing Bank and currently holds a
participation, to the extent of such Lender's Percentage Share and in the amount
of such Lender's Letter of Credit Commitment, in each Letter of Credit and the
related Letter of Credit Liabilities and all rights, titles, interests, liens,
security interests, equities and privileges existing and to exist in connection
with or as security for such Letters of Credit.
Section 2.02 NOTES. The L/C Note shall remain in full force and
effect.
Section 2.03 DEFAULT INTEREST. In all cases subject to Section 8.13,
overdue principal and, to the extent permitted by law, overdue interest in
respect of the L/C Note and all other amounts owing hereunder shall bear
interest for each day that such amounts are overdue at a rate per annum equal to
three percent (3%) in excess of the Base Rate in effect for each such day.
Section 2.04 PREPAYMENTS. The L/C Note may not be prepaid either in
whole or in part so long as any Letter of Credit remains outstanding.
Section 2.05 FEES. The Company shall pay to the Agent for the account
of and pro rata distribution to each Lender a letter of credit commission
(calculated separately for each Letter of Credit) computed at the rate of 3/4 of
1% per annum on the daily average of the amount of such Letter of Credit for the
period from the Effective Date to the earlier of (i) the expiry date thereof,
(ii) the date on which such Letter of Credit is returned to the Agent and
cancelled, or (iii) the date on which a draft drawn thereunder in the full
amount of the Letter of Credit is funded by the Issuing Bank. Such Letter of
Credit commission shall be payable on each Quarterly Date occurring while any
Letter of Credit remains issued and outstanding; provided, however, that, with
respect to any Letter of Credit, upon the occurrence of any event described in
(i), (ii) and (iii) of the preceding sentence, then such commission shall be
payable with respect to such Letter of Credit upon the occurrence of such event.
Section 2.06 PAYMENTS, ETC.
(a) Except as otherwise specifically provided herein, all payments
under this Agreement shall be made to the Agent on behalf of the Lenders
without defense, set-off or counterclaim to the Agent not later than 11:00
a.m. (New York time) on the date when due and shall be made in Dollars in
immediately available funds at the Payment Office. The Agent will promptly
thereafter distribute funds in the form received relating to the payment of
principal or interest or commitment fees ratably to the Lenders for the
account of their respective Lending Offices, and funds in the form received
relating to the payment of any other amount payable to any Lender to such
Lender for the account of its Lending Office.
(b) Whenever any payment to be made hereunder shall be stated to be
due on a day which is not a Business Day, the due date thereof shall be
extended to the next succeeding Business Day and, with respect to payments
of principal, interest thereon shall be payable at the applicable rate
during such extension.
(c) All computations of interest shall be made on the basis of a year
of 360 days for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest or
commitment fees are payable. Each determination by the Agent of an
interest rate or fee hereunder shall, except for manifest error, be final,
conclusive and binding for all purposes.
Section 2.07 CAPITAL ADEQUACY. If, by reason of (i) after the date
hereof, the introduction of or any change (including, but not limited to, any
change by way of imposition or increase of reserve requirements) in or in the
interpretation of any law or regulation, or (ii) the compliance with any
guideline or request from any central bank or other governmental authority or
quasi-governmental authority exercising control over banks or financial
institutions
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generally (whether or not having the force of law) that affects or would affect
the amount of capital required to be maintained by any Lender or the Issuing
Bank or any corporation controlling such Lender or Issuing Bank, and the amount
of such capital is increased by or based upon the existence of such Lender's
Letter of Credit Commitment hereunder or of the Letters of Credit (or similar
contingent obligations), then, within 30 days after written request therefor by
such Lender or Issuing Bank (with a copy of such request to the Agent), the
Company shall pay to the Agent for the account of such Lender or Issuing Bank,
from time to time as specified by such Lender or Issuing Bank, additional
amounts sufficient to compensate such Lender or Issuing Bank for the increased
cost of such additional capital in light of such circumstances, to the extent
that such Lender or Issuing Bank reasonably determines such increase in capital
to be allocable to the existence of such Lender's Letter of Credit Commitment
hereunder or to the issuance or maintenance of the Letters of Credit. A
certificate as to such amounts, submitted to the Company and the Agent by such
Lender or Issuing Bank, shall be conclusive and binding for all purposes, absent
manifest error.
Section 2.08 SHARING OF PAYMENTS, ETC. If any Lender shall obtain any
payment or reduction (including, but not limited to, any amounts received as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code) of any obligation of the Company hereunder (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its Percentage Share of payments or reductions on account of such
obligations obtained by all the Lenders, such Lender shall forthwith (i) notify
each of the other Lenders and the Agent of such receipt, and (ii) purchase from
the other Lenders such participations in the affected obligations as shall be
necessary to cause such purchasing Lender to share the excess payment or
reduction, net of costs incurred in connection therewith, ratably with each
Lender in accordance with such Lender's Percentage Share, provided that if all
or any portion of such excess payment or reduction is thereafter recovered from
such purchasing Lender or additional costs are incurred, the purchase shall be
rescinded and the purchase price restored to the extent of such recovery or such
additional costs, but without interest. The Company agrees that any Lender so
purchasing a participation from another Lender pursuant to this Section may, to
the fullest extent permitted by law, exercise all its rights of payment
(including the right of set-off) with respect to such participation as fully as
if such Lender were the direct creditor of the Company in the amount of such
participation.
Section 2.09 LETTERS OF CREDIT.
(a) Upon receipt from the beneficiary of any Letter of Credit of any
demand for payment thereunder, the Issuing Bank shall promptly notify the
Company and the Agent of such demand (provided that the failure of an
Issuing Bank to give such notice shall not affect the reimbursement
obligations of the Company hereunder) and the Company shall reimburse the
Issuing Bank for any amount paid by the Issuing Bank upon any drawing under
any Letter of Credit, without presentment, demand, protest or other
formalities of any kind in an amount, in same day funds, equal to the
amount of such drawing.
(b) If the Company fails to reimburse the Issuing Bank as provided in
Subsection 2.09(a) above, the Issuing Bank shall promptly notify the Agent
and the Agent shall notify each Lender of the unreimbursed amount of such
drawing and of such Lender's respective participation therein based on such
Lender's Percentage Share. Each Lender will pay to the Agent for the
account of the Issuing Bank on the date of such notice an amount equal to
such Lender's Percentage Share of such unreimbursed drawing (or, if such
notice is made after 11:00 a.m. New York time on such date, on the next
succeeding Business Day). If any Lender fails to make available to the
Issuing Bank the amount of such Lender's participation in such Letter of
Credit as provided in this Subsection 2.09(b), the Issuing Bank shall be
entitled to recover such amount on demand from such Lender together with
interest at the customary rate set by the Issuing Bank for the correction
of errors among banks for one Business Day and thereafter at the Base Rate.
Nothing in this Subsection 2.09(b) shall be deemed to prejudice the right
of any Lender to recover from the Issuing Bank any amounts made available
by such Lender to the Issuing Bank pursuant to this Subsection if it is
determined by a court of competent jurisdiction that the payment with
respect to a Letter of Credit by such Issuing Bank was wrongful and such
wrongful payment was the result of gross negligence or wilful misconduct on
the part of the Issuing Bank. The Issuing Bank shall pay to the Agent and
the Agent to each Lender such Lender's Percentage Share of all amounts
received from the Company for payment, in whole or in part, of the
Reimbursement Obligation
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in respect of any Letter of Credit, but only to the extent such Lender has
made payment to the Issuing Bank in respect of such Letter of Credit
pursuant to this Subsection.
Section 2.10 ASSUMPTION OF RISKS. The Company assumes all risks of the
acts or omissions of beneficiaries of any of the Letters of Credit with respect
to their use of the Letters of Credit. Except in the case of gross negligence
or willful misconduct on the part of the Agent, the Issuing Bank or any of their
respective employees, neither the Agent, the Issuing Bank nor their respective
correspondents shall be responsible for (i) the validity or genuineness of
certificates or other documents, even if such certificates or other documents
should in fact prove to be invalid, fraudulent or forged; (ii) errors,
omissions, interruptions or delays in transmissions or delivery of any messages
by mail, telex, or otherwise, whether or not they be in code; (iii) errors in
translation or for errors in interpretation of technical terms; or (iv) any
other consequences arising from causes beyond the Agent's or the Issuing Bank's
control or the control of the Agent's or the Issuing Bank's correspondents. In
addition, neither the Agent nor the Issuing Bank shall be responsible for any
error, neglect, or default of any of the Agent's or the Issuing Bank's
correspondents. None of the above shall affect, impair or prevent the vesting
of any of the Agent's or the Issuing Bank's rights or powers hereunder, which
rights shall be cumulative. The Agent and the Issuing Bank and the Agent's and
the Issuing Bank's correspondents may accept certificates or other documents
that appear on their face to be in order, without responsibility for further
investigation.
Section 2.11 L/C AGREEMENTS. To the extent that any of the terms
expressly provided in this Agreement conflict with terms expressly set forth in
the L/C Agreements, the terms of this Agreement shall control. To the extent
that terms set forth in the L/C Agreements supplement the terms of this
Agreement or are otherwise in addition to the terms expressly provided for in
this Agreement, the L/C Agreements shall control. It is agreed that the L/C
Agreements are owned severally by the Lenders in their respective Percentage
Shares and each such Lender, even though it may not be a party to such L/C
Agreement, shall be entitled to exercise, through the Issuing Bank and pursuant
to the terms of this Agreement, all rights, remedies and benefits provided for
in such L/C Agreements. The Company acknowledges that all terms and provisions
of the L/C Agreements are and shall remain in full force and effect and are
hereby ratified and confirmed in all respects and the execution, delivery and
effectiveness of this Agreement and the other Security Instruments shall not
operate as a waiver of any provision of the L/C Agreements except to the extent
expressly provided to the contrary.
Section 2.12 EXCLUDED LETTER OF CREDIT. It is understood and agreed by
and among the Issuing Bank, the Agent, the Lenders and the Company that none of
the Lenders other than BTC shall have any rights or obligations in respect to
the Excluded Letter of Credit or the repayment obligations of the Company
existing in connection therewith. Nonetheless, the Excluded Letter of Credit
reimbursement obligation shall constitute Lender Indebtedness payable in its
full amount to the Agent for the benefit of BTC and that in the event the
Excluded Letter of Credit is funded, BTC shall be entitled to keep 100% of any
principal, interests and other costs and expenses associated with the Excluded
Letter of Credit paid to the Agent by the Company and designated by the Company
as payment of the Company's reimbursement obligation existing in connection with
the Excluded Letter of Credit. In the event the Agent receives any payment
under this Agreement after any draw under the Excluded Letter of Credit has been
funded by BTC, which payment is not designated as a repayment of such Excluded
Letter of Credit reimbursement obligation, the Agent shall increase the pro rata
portion of any such payment paid to BTC to include such Excluded Letter of
Credit reimbursement obligation until such time as such reimbursement obligation
has been repaid in full.
Section 2.13 TAXES.
(a) Any and all payments by the Company hereunder shall be made, in
accordance with Section 2.06, free and clear of and without deduction for
any and all present or future taxes, levies, imposts, deductions, charges
or withholdings, and all liabilities with respect thereto imposed by the
United States of America or any state or other subdivision thereof,
EXCLUDING, in the case of each Lender, the Agent and the Issuing Banks,
taxes that would not be imposed but for a connection between such Lender,
such Agent or such Issuing Bank, as the case may be, and the jurisdiction
imposing such tax, other than a connection arising solely by virtue of the
activities of such Lender, such Agent or such Issuing Bank, as the case may
be, pursuant to or in respect of this Agreement or under any other Security
Instrument, including, without limitation, entering into, lending money,
extending credit or issuing Letters of Credit pursuant to, receiving
payments under, or
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enforcing, this Agreement or any other Security Instrument (all such
nonexcluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "TAXES"). If the Company shall
be required by law to deduct any Taxes from or in respect of any sum
payable hereunder to the Lenders, the Issuing Banks or the Agent (i) the
sum payable shall be increased by the amount necessary so that after making
all required deductions (including deductions applicable to additional sums
payable under this Section 2.13) such Lender, such Issuing Bank or the
Agent (as the case may be) shall receive an amount equal to the sum it
would have received had no such deductions been made, (ii) the Company
shall make such deductions and (iii) the Company shall pay the full amount
deducted to the relevant taxing authority or other Governmental Authority
in accordance with applicable law.
(b) In addition, the Company agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges
or similar levies that arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Agreement, any Assignment and Acceptance or any other Security Instrument
(hereinafter referred to as "OTHER TAXES").
(c) The Company will indemnify each Lender, the Issuing Bank, and the
Agent for the full amount of Taxes and Other Taxes (including, but not
limited to, any Taxes or Other Taxes imposed by any jurisdiction on amounts
payable under this Section 2.13) paid by such Lender or the Issuing Bank or
the Agent (on their behalf or on behalf of any Lender), as the case may be,
and any liability (including penalties, interest and expenses) arising
therefrom or with respect thereto, whether or not such Taxes or Other Taxes
were correctly or legally asserted. Any payment pursuant to such
indemnification shall be made within 30 days after the date any Lender, the
Issuing Bank or the Agent, as the case may be, makes written demand
therefor. If any Lender, the Issuing Bank or the Agent receives a refund
or credit in respect of any Taxes or Other Taxes for which such Lender, the
Issuing Bank or the Agent has received payment from the Company hereunder
it shall promptly notify the Company of such refund or credit and shall,
within 30 days after receipt of a request by the Company (or promptly upon
receipt, if the Company has requested application for such refund or credit
pursuant hereto), pay an amount equal to such refund or credit to the
Company without interest (but with any interest so refunded or credited),
provided that the Company, upon the request of such Lender, the Issuing
Bank or the Agent, agrees to return such refund or credit (plus penalties,
interest or other charges) to such Lender, the Issuing Bank or the Agent in
the event such Lender, the Issuing Bank or the Agent is required to repay
such refund or credit.
(d) Within 30 days after the date of any payment of Taxes or Other
Taxes withheld by the Company in respect of any payment to any Lender, the
Issuing Bank or the Agent, the Company will furnish to the Agent the
original or a certified copy of a receipt evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement
contained herein, the agreements and obligations contained in this
Section 2.13 shall survive the payment in full of principal and interest
hereunder.
(f) Each Lender represents that it is either (i) organized under the
laws of the United States of America or any state thereof or (ii) entitled
to complete exemption from United States withholding tax imposed on or with
respect to any payments, including fees, to be made to it pursuant to this
Agreement (A) under an applicable provision of a tax convention to which
the United States of America is a party or (B) because it is acting through
a branch, agency or office in the United States of America and any payment
to be received by it hereunder is effectively connected with a trade or
business in the United States of America. Each Lender that is organized
under the laws of the United States of America or any state thereof agrees
to provide to the Company and the Agent on the Effective Date, or on the
date of its delivery of the Assignment and Acceptance pursuant to which it
becomes a Lender, and at such other times as required by United States law
or as the Company or the Agent shall reasonably request, two accurate and
complete original signed copies of either (A) Internal Revenue Service Form
4224 (or successor form) certifying that all payments to be made to it
hereunder will be effectively connected to a United States trade or
business (the "FORM 4224 CERTIFICATION") or (B) Internal Revenue Service
Form 1001 (or successor form) certifying that it is entitled to the benefit
of a
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provision of a tax convention to which the United States of America is
a party which completely exempts from United States withholding tax all
payments to be made to it hereunder (the "FORM 1001 CERTIFICATION").
In addition, each Lender agrees that if it previously filed a Form 4224
Certification it will deliver to the Company and the Agent a new Form 4224
Certification prior to the first payment date occurring in each of its
subsequent taxable years; and if it previously filed a Form 1001
Certification, it will deliver to the Company and the Agent a new
certification prior to the first payment date falling in the third year
following the previous filing of such certification. Each Lender also
agrees to deliver to the Company and the Agent such other or supplemental
forms as may at any time be required as a result of changes in applicable
law or regulation in order to confirm or maintain in effect its entitlement
to exemption from United States withholding tax on any payments hereunder,
PROVIDED that the circumstances of the Lender at the relevant time and
applicable laws permit it to do so. If a Lender determines, as a result of
any change in either (i) applicable law, regulation or treaty, or in any
official application thereof or (ii) its circumstances, that it is unable
to submit any form or certificate that it is obligated to submit pursuant
to this Section, or that it is required to withdraw or cancel any such form
or certificate previously submitted, it shall promptly notify the Company
and the Agent of such fact. If a Lender is organized under the laws of a
jurisdiction outside the United States of America, unless the Company and
the Agent have received a Form 1001 Certification or Form 4224
Certification satisfactory to them indicating that all payments to be made
to such Lender hereunder are not subject to United States withholding tax,
the Company shall withhold taxes from such payments at the applicable
statutory rate. Each Lender agrees to indemnify and hold harmless from any
United States taxes, penalties, interest and other expenses, costs and
losses incurred or payable by (i) the Agent as a result of such Lender's
failure to submit any form or certificate that it is required to provide
pursuant to this Section or (ii) the Company or the Agent as a result of
their reliance on any such form or certificate which it has provided to
them pursuant to this Section.
(g) Any Lender claiming any additional amounts payable pursuant to
this Section 2.13 shall use reasonable efforts (consistent with legal and
regulatory restrictions) to file any certificate or document requested by
the Company or the Agent or to change the jurisdiction of its applicable
Lending Office or to contest any tax imposed if the making of such a filing
or change or contesting such tax would avoid the need for or reduce the
amount of any such additional amounts that may thereafter accrue and would
not, in the sole determination of such Lender, be otherwise materially
disadvantageous to such Lender.
(h) Notwithstanding any of the provisions of this Section 2.13, the
Company shall have no obligation or liability with respect to the payment
of any income taxes of any Lender.
ARTICLE III
EFFECTIVE DATE
Section 3.01 CONDITIONS PRECEDENT. As a condition precedent to the
effectiveness of this Agreement, the Company shall have delivered to the Agent
(unless waived by the Agent) at least three Business Days' advance written
notice of the proposed Effective Date, which shall be a Business Day, the
following, each dated as of the date of such date, in form and substance
satisfactory to the Agent, with an original thereof for the Agent and with
sufficient copies thereof for each Lender:
(a) RESOLUTIONS AND INCUMBENCY CERTIFICATES -
(i) certified copies of the resolutions of the Board of
Directors of the Company approving, as appropriate, this Agreement,
the L/C Note and the other Security Instruments, and all other
documents, if any, to which the Company is a party evidencing
corporate authorization with respect to such documents; and
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(ii) a certificate of the Secretary or an Assistant Secretary of
the Company certifying (x) the name, title and true signature of each
officer of the Company authorized to execute this Agreement, and the
other Security Instruments and (y) that attached thereto is a true and
complete copy of the articles of incorporation and bylaws of the
Company, as amended to date, and a recent good standing certificate.
(b) OPINIONS OF COUNSEL - The opinion of Fulbright & Jaworski,
counsel to the Company, substantially in the form of Exhibit A.
(c) THE SECURITY INSTRUMENTS - the Cash Collateral Account Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement, the Company
represents and warrants to the Lenders (which representations and warranties
will survive the execution and delivery of this Agreement) that:
Section 4.01 CORPORATE EXISTENCE. The Company is a corporation duly
organized, legally existing and in good standing under the laws of the State of
Louisiana and is duly qualified as a foreign corporation in all jurisdictions
wherein the Property owned or the business transacted by it makes such
qualification necessary, except where the failure to be so qualified would not
have a Material Adverse Effect.
Section 4.02 CORPORATE POWER AND AUTHORIZATION. The Company is duly
authorized and empowered to execute, deliver and perform the Security
Instruments, including this Agreement; and all corporate action on the Company's
part requisite for the due creation and issuance of the L/C Note and for the due
execution, delivery and performance of the Security Instruments, including this
Agreement has been duly and effectively taken.
Section 4.03 BINDING OBLIGATIONS. This Agreement does, and the L/C Note
and other Security Instruments upon their creation, issuance, execution and
delivery will, when issued and delivered under this Agreement, constitute valid
and binding obligations of the Company, and will be enforceable in accordance
with their respective terms (except that enforcement may be subject to any
applicable bankruptcy, insolvency or similar laws generally affecting the
enforcement of creditors' rights and subject to the availability of equitable
remedies).
Section 4.04 NO LEGAL BAR OR RESULTANT LIEN. The L/C Note and the
Security Instruments, including this Agreement do not and will not violate or
create a default under any provisions of the articles or certificate of
incorporation or bylaws of the Company or any Subsidiary of the Company, or any
contract, agreement, instrument or Governmental Requirement to which the Company
or any Subsidiary of the Company is subject, or result in the creation or
imposition of any Lien upon any Properties of the Company or any Subsidiary of
the Company, other than those violations and defaults that would not affect the
Company's use of such Properties or those permitted by this Agreement.
Section 4.05 NO CONSENT. The Company's execution, delivery and
performance of the L/C Note and the Security Instruments, including this
Agreement do not require notice to or filing or registration with, or the
authorization, consent or approval of or other action by any other Person,
including, but not limited to, any Governmental Authority.
Section 4.06 FINANCIAL INFORMATION.
(a) The consolidated balance sheet of the Company and its Subsidiaries
as at December 31, 1993, and the related consolidated statements of income,
retained earnings and statement of cash flows for the 12-month period then
ended, including in each case the related schedules and notes, reported on
by KPMG Peat Marwick, true copies of which have been previously delivered
to each of the Lenders, fairly present the consolidated financial condition
of the Company and its Subsidiaries as at the date thereof and the
consolidated results of
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operations and statement of cash flows for such period, in accordance with
generally accepted accounting principles applied on a consistent basis.
(b) The unaudited consolidated balance sheet of the Company and its
Subsidiaries as at September 30, 1994, and the related unaudited
consolidated statements of income, retained earnings and statement of cash
flows for the nine months then ended, certified by the chief financial
officer of the Company, true copies of which have been previously delivered
to the Lenders, fairly present the consolidated financial condition of the
Company and its Subsidiaries as at the date thereof and the consolidated
results of operations and statement of cash flows for such period in
conformity with generally accepted accounting principles applied on a basis
consistent with the financial statements referred to in Subsection 4.06(a),
subject to normal year-end audit adjustments.
Section 4.07 LITIGATION. There is no action, suit or proceeding, or any
governmental investigation or any arbitration, in each case pending or, to the
knowledge of the Company, threatened against the Company or any of its
Subsidiaries or any material Property of any thereof before any court or
arbitrator or any Governmental Authority which challenges the validity of this
Agreement, the L/C Note, the Reimbursement Obligations or any of the other
Security Instruments.
Section 4.08 COMPLIANCE WITH ERISA. Except as set forth in Schedule 2
hereto, neither the Company, the Subsidiaries of the Company nor any ERISA
Affiliate sponsors, maintains or contributes to, or has at any time in the six-
year period preceding the Closing Date sponsored, maintained or contributed to,
any Plan, including, but not limited to, any Plan which is a "multi-employer
plan" as such term is defined in Section 3(37) or 4001(a)(3) of ERISA. Except
as set forth in Schedule 2, each Plan described in such schedule has been
terminated with no resulting liability to the PBGC. No act, omission or
transaction has occurred which could result in imposition on the Company, any
Subsidiary of the Company or any ERISA Affiliate (whether directly or directly)
of (i) either a civil penalty assessed pursuant to Sections 502(c) or 502(i) of
ERISA or a tax imposed pursuant to Section 4975 of the Code, or (ii) breach of
fiduciary duty liability damages under Section 409 of ERISA, which in each case
would have a Material Adverse Effect.
Section 4.09 TAXES; GOVERNMENTAL CHARGES. The Company and its
Subsidiaries have filed all tax returns and reports required to be filed and
have paid all taxes, assessments, fees and other governmental charges levied
upon any of them or upon any of their respective Properties or income which are
due and payable, including interest and penalties, or have provided adequate
reserves for the payment thereof if required in accordance with generally
accepted accounting principles for the payment thereof, except such interest and
penalties as are being contested in good faith by appropriate actions or
proceedings and for which adequate reserves for the payment thereof as required
by general accepted accounting principles have been provided.
Section 4.10 DEFAULTS. Neither the Company nor any Subsidiary of the
Company is in default nor has any event or circumstance occurred which, but for
the passage of time or the giving of notice, or both, would constitute a default
(in any respect that would have a Material Adverse Effect) under any loan or
credit agreement, indenture, mortgage, deed of trust, security agreement or
other instrument or agreement evidencing or pertaining to any Indebtedness of
the Company or any Subsidiary of the Company, or under any material agreement or
instrument to which the Company or any Subsidiary of the Company is a party or
by which the Company or any Subsidiary of the Company is bound, except as
disclosed to the Lenders in Schedule 2 hereto. No Default hereunder has
occurred and is continuing.
Section 4.11 COMPLIANCE WITH THE LAW. Neither the Company nor any
Subsidiary of the Company:
(a) is in violation of any Governmental Requirement; or
(b) has failed to obtain any license, permit, franchise or other
governmental authorization necessary to the ownership of any of their
respective Properties or the conduct of their respective business;
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which violation or failure would have (in the event that such a violation or
failure were asserted by any Person through appropriate action) a Material
Adverse Effect.
Section 4.12 NO MATERIAL MISSTATEMENTS. No information, exhibit or
report furnished to the Agent or the Lenders by the Company or any Subsidiary of
the Company in connection with the negotiation of this Agreement contained any
material misstatement of fact or, when such statement is considered with all
other written statements furnished to the Lenders in that connection, omitted to
state a material fact or any fact necessary to make the statement contained
therein not misleading.
Section 4.13 INVESTMENT COMPANY ACT. The Company is not an "investment
company" or a company "controlled" by an "investment company" that is
incorporated in or organized under the laws of the United States or any "State,"
as those terms are defined in the Investment Company Act of 1940, as amended.
The execution and delivery by the Company and its Subsidiaries of this Agreement
and the other Security Instruments to which they respectively are parties and
their respective performance of the obligations provided for therein, will not
result in a violation of the Investment Company Act of 1940, as amended.
Section 4.14 PUBLIC UTILITY HOLDING COMPANY ACT. The Company is not 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," or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
ARTICLE V
COVENANTS
Section 5.01 CERTAIN AFFIRMATIVE COVENANTS. So long as any Lender has
any Letter of Credit Commitment hereunder or the L/C Note or the Reimbursement
Obligation shall remain unpaid, or any one or more of the Letters of Credit or
the Excluded Letter of Credit shall remain outstanding, the Company will at all
times comply with the following covenants:
(a) MAINTENANCE AND COMPLIANCE, ETC. The Company will preserve and
maintain its corporate existence, rights and franchises, and the Company
will and will cause each of its Subsidiaries to observe and comply in all
material respects with all Governmental Requirements, except where such
failure would not have a Material Adverse Effect.
(b) PAYMENT OF TAXES AND CLAIMS, ETC. The Company will pay, and
cause each of its Subsidiaries to pay, (i) all taxes, assessments and
governmental charges imposed upon it or upon its Property, and (ii) all
claims of $5,000,000 or more in the aggregate (including, but not limited
to, claims for labor, materials, supplies or services) which might, if
unpaid, become a Lien upon its Property, unless, in each case, the validity
or amount thereof is being contested in good faith by appropriate action or
proceedings for which adequate reserves for the payment thereof as required
by generally accepted accounting principles have been provided.
(c) FURTHER ASSURANCES. The Company will cure promptly any defects
in the creation and issuance of the L/C Note and the execution and delivery
of the Security Instruments, including this Agreement. The Company at its
expense will as promptly as practical execute and deliver to the Agent upon
request all such other and further documents, agreements and instruments
(or cause any of its Subsidiaries to take such action) in compliance with
or accomplishment of the covenants and agreements of the Company or any of
its Subsidiaries in the Security Instruments, including this Agreement, or
to further evidence and more fully describe the collateral intended as
security for the L/C Note or other Lender Indebtedness, or to correct any
omissions in the Security Instruments, or more fully to state the security
obligations set out herein or in any of the Security Instruments, or to
perfect, protect or preserve any Liens created pursuant to any of the
Security
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Instruments, or to make any recordings, to file any notices, or
obtain any consents, all as may be necessary or appropriate in connection
therewith.
(d) PERFORMANCE OF OBLIGATIONS. The Company will pay the L/C Note
according to the reading, tenor and effect thereof; and the Company will do
and perform every act and discharge all of the obligations provided to be
performed and discharged by the Company under the Security Instruments,
including this Agreement, at the time or times and in the manner specified.
(e) ACCOUNTS AND RECORDS. The Company will keep and will cause each
Subsidiary of the Company to keep proper books of record and account in
which full, true and correct entries will be made of all financial or
business dealings or transactions in relation to their respective business
and activities.
(f) RIGHT OF INSPECTION. The Company will permit and will cause each
Subsidiary to permit any officer, employee or agent of the Agent or any of
the Lenders to visit and inspect any of the Properties of the Company or
any Subsidiary of the Company, examine the Company's or any such
Subsidiary's books of record and accounts, take copies and extracts
therefrom, and discuss the affairs, finances and accounts of the Company or
any Subsidiary of the Company with the Company's or such Subsidiary's
officers, accountants and auditors, as often and all at such reasonable
times during normal business hours as may be reasonably requested by the
Agent or any of the Lenders may desire; provided that the Company shall not
be required to disclose to the Agent or any Lender any information which is
the subject of attorney-client privilege or attorney's work product
privilege properly asserted by the Company to prevent the loss of such
privilege in connection with such information.
(g) TBT LEASES. As a result of the TBT Leases, which cover certain
Properties of the Company (the "EXISTING TBT PROPERTIES") and certain
Properties which were sold or transferred by the Company prior to the
Closing Date (the "TRANSFERRED TBT PROPERTIES" and collectively with the
Existing TBT Properties, the "TBT PROPERTIES"), various parties other than
the Company (the "TAX LESSORS") have acquired ownership of the TBT
Properties for purposes of federal income tax only. The Company agrees
that during the term of the TBT Leases (i) its interest in the Existing TBT
Properties excludes any interest in the federal income tax ownership
thereof to the extent that any such interest is subject to the TBT Leases;
and (ii) upon any sale or other transfer of the TBT Properties to any
Person, including but not limited to any such transfer in foreclosure or in
lieu of foreclosure (other than a sale or other transfer described in
Treas. Reg. SECTION 5c.168(f)(8)(2)(a)(6)), the Company will (x) promptly
pay all penalty payments pursuant to the TBT Leases in connection with such
sale or transfer (other than those penalty payments paid by any purchaser
or transferee of the Transferred TBT Properties) or (y) with respect to the
Existing TBT Properties, cause such transferee to enter into an agreement
satisfactory to the Required Lenders to the effect that such transferee
will take, and will cause its successors and assigns to take, such steps as
may be necessary or appropriate under applicable Treasury Regulations to
assure that such transfer(s) does not terminate the TBT Leases with respect
to the Existing TBT Properties. An assignment substantially in the form of
the assignment used to sell and transfer the Transferred TBT Properties
shall be acceptable to the Lenders.
Section 5.02 REPORTING COVENANTS. So long as any Lender has any Letter
of Credit Commitment hereunder or the L/C Note or the Reimbursement Obligation
shall remain unpaid, or any one or more of the Letters of Credit or the Excluded
Letter of Credit shall remain outstanding, the Company will furnish to each
Lender:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available and in any
event within 120 days after the end of each calendar year of the Company, a
consolidated balance sheet of the Company and its Subsidiaries as at the
end of such year and the related consolidated statement of income, retained
earnings and statement of cash flows of the Company and its Subsidiaries
for such calendar year, setting forth in each case in comparative form the
figures for the previous calendar year, all in reasonable detail and
accompanied by a report thereon of KPMG Peat Marwick or other independent
public accountants of comparable recognized national standing, which such
report shall state that such consolidated financial statements present
fairly the consolidated financial condition as at the end of such calendar
year, and the consolidated results of operations and statement of cash
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flows for such calendar year, of the Company and its Subsidiaries in
accordance with generally accepted accounting standards consistently
applied, except for such changes in principles with which such independent
public accountants shall have concurred.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and in any
event within 60 days after the end of each of the first three calendar
quarters of the Company, a consolidated balance sheet of the Company and
its Subsidiaries as at the end of such quarter and the related consolidated
statement of income, retained earnings and statement of cash flows of the
Company and its Subsidiaries for such calendar quarter and for the portion
of the Company's calendar year ended at the end of such quarter, setting
forth in each case in comparative form the figures for the corresponding
quarter and the corresponding portion of the Company's previous calendar
year, all in reasonable detail and certified by the chief financial officer
of the Company that they are complete and correct and fairly present the
consolidated financial condition as at the end of such calendar quarter,
and the consolidated results of operations and statement of cash flows for
such calendar quarter and such portion of the Company's calendar year, of
the Company and its Subsidiaries in accordance with generally accepted
accounting standards consistently applied (subject to normal, year-end
audit adjustments).
(c) NO DEFAULT/COMPLIANCE CERTIFICATE. Together with the financial
statements required pursuant to subsections (a) and (b) above, a
certificate of the President or the chief financial officer of the Company
(i) stating that a review of such financial statements during the period
covered thereby and of the activities of the Company and its Subsidiaries
have been made under his supervision with a view to determining whether the
Company and its Subsidiaries have fulfilled all of their obligations under
this Agreement, the other Security Instruments, and the L/C Note;
(ii) stating that the Company and its Subsidiaries have fulfilled their
obligations under such instruments, or if there shall be a Default or Event
of Default, specifying the nature and status thereof and the Company's
proposed response thereto; (iii) demonstrating in reasonable detail
compliance (including, but not limited to, showing all material
calculations) as at the end of such calendar year or such calendar quarter
with Subsection 5.03; and (iv) containing or accompanied by such financial
or other details, information and material as the Agent may reasonably
request to evidence such compliance.
(d) TBT LEASE DEMANDS, ETC. Promptly after the Company learns of the
occurrence of any demand for payment by any Tax Lessor or any default, or
any notice of request for audit by the Internal Revenue Service or any Tax
Lessor with respect to any of the TBT Leases, written notice of such
demand, default or notice.
(e) NOTICE OF CERTAIN EVENTS. Promptly after the Company learns of
the receipt or occurrence of any of the following, a certificate of the
Chief Financial Officer of the Company specifying (i) any official notice
of any violation, possible violation, non-compliance or possible non-
compliance, or claim made by any Governmental Authority pertaining to all
or any part of the Properties of the Company or any of its Subsidiaries
which, if adversely determined, would have a Material Adverse Effect;
(ii) any event which constitutes a Default or Event of Default, together
with a detailed statement specifying the nature thereof and the steps being
taken to cure such Default or Event of Default; (iii) the receipt of any
notice from, or the taking of any other action by, the holder of any
promissory note, debenture or other evidence of indebtedness in excess of
$5,000,000 of the Company or any of its Subsidiaries with respect to a
claimed default, together with a detailed statement specifying the notice
given or other action taken by such holder and the nature of the claimed
default and what action the Company or its Subsidiary is taking or proposes
to take with respect thereto; (iv) any default or noncompliance of any
party to any of the Security Instruments with any of the terms and
conditions thereof or any notice of termination or other proceedings or
actions which might adversely affect any of the Security Instruments;
(v) any event or condition which violates any Environmental Law and which
could potentially have a Material Adverse Effect or which could potentially
result in remedial obligations having a Material Adverse Effect, assuming
disclosure to the applicable Governmental Authority of all relevant facts,
conditions and circumstances, if any, pertaining to such event or
condition; or (vi) any event or condition which may reasonably be expected
to have a Material Adverse Effect.
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(f) SHAREHOLDER COMMUNICATIONS, FILINGS, ETC. Upon request, copies
of all financial statements, reports and proxy statements mailed to the
Company's shareholders, and copies of all registration statements, periodic
reports and other documents (other than preliminary filings under
Section 14 of the Securities Exchange Act of 1934, as amended, and
transmittal letters) filed with or received by the Company in connection
therewith from the Securities and Exchange Commission (or any successor
thereto) or any national securities exchange.
(g) LITIGATION. Promptly after (i) the occurrence thereof, notice of
the institution of or any material adverse development in any action, suit
or proceeding or any governmental investigation or any arbitration, before
any court or arbitrator or any governmental or administrative body, agency
or official, against the Company, any Subsidiary thereof or any material
Property of any thereof; or (ii) actual knowledge thereof, notice of the
threat of any such action, suit, proceeding, investigation or arbitration,
in either case in which the amount involved is in excess of $5,000,000 and
is not covered by insurance or which, if adversely determined, would have a
Material Adverse Effect.
(h) ERISA. Promptly after (i) the Company's obtaining knowledge of
the occurrence thereof, notice that an ERISA Termination Event or a
"prohibited transaction," as such term is defined in Section 406 of ERISA
or Section 4975 of the Code, with respect to any Plan has occurred, which
such notice shall specify the nature thereof, the Company's proposed
response thereto and, where known, any action taken or proposed by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto, and (ii) the Company's obtaining knowledge thereof, copies of any
notice of the PBGC's intention to terminate or to have a trustee appointed
to administer any Plan.
(i) SCHEDULE OF TBT LEASE PAYMENTS. As of the end of any calendar
quarter and calendar year in which the Company or any of its Subsidiaries
makes one or more penalty payments pursuant to the TBT Leases in excess of
$50,000 to the Lenders, a schedule indicating the total amount of penalty
payments and detailing the amount of each penalty payment in excess of
$50,000 made during such quarter or year, as applicable, the Person to whom
such payment was made and the TBT Lease to which such payment relates.
(j) OTHER INFORMATION. With reasonable promptness, such other
information about the business and affairs and financial condition of the
Company or its Subsidiaries as any Lender may reasonably request from time
to time.
Section 5.03 TANGIBLE NET WORTH COVENANT. So long as any Lender has any
Letter of Credit Commitment hereunder or the L/C Note or the Reimbursement
Obligation shall remain unpaid, or any one or more of the Letters of Credit or
the Excluded Letter of Credit shall remain outstanding, the Company will
maintain Tangible Net Worth in an amount not less than $60,000,000.
Section 5.04 NEGATIVE COVENANT REGARDING ERISA COMPLIANCE. So long as
any Lender has any Letter of Credit Commitment hereunder or the L/C Note or the
Reimbursement Obligation shall remain unpaid, or any one or more of the Letters
of Credit or the Excluded Letter of Credit shall remain outstanding, the Company
shall not:
(i) Engage in, or permit any ERISA Affiliate to engage in, any
transaction in connection with which the Company, a Subsidiary of the
Company or any ERISA Affiliate could be subjected to either a civil penalty
assessed pursuant to Sections 502(c) or 502(i) of ERISA or a tax imposed by
Section 4975 of the Code, except where such assessment or imposition would
not have Material Adverse Effect;
(ii) Terminate, or permit any ERISA Affiliate to terminate, any Plan
in a manner, or take any other action with respect to any Plan, which could
result in any liability of the Company, a Subsidiary of the Company or any
ERISA Affiliate to the PBGC;
(iii) Fail to make, or permit any ERISA Affiliate to fail to make,
full payment when due of all amounts which, under the provisions of any
Plan, agreement relating thereto or applicable law, the Company,
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a Subsidiary of the Company or any ERISA Affiliate is required to pay as
contributions thereto, except where the failure to make such payments would
not have Material Adverse Effect;
(iv) Permit to exist, or allow any ERISA Affiliate to permit to exist,
any accumulated funding deficiency within the meaning of Section 302 of
ERISA or Section 412 of the Code, whether or not waived, with respect to
any Plan, except where the existence of such a deficiency would not have a
Material Adverse Effect;
(v) Contribute to or assume an obligation to contribute to, or permit
any ERISA Affiliate to contribute to or assume an obligation to contribute
to, any "multiemployer plan" as such term is defined in Section 3(37) or
4001(a)(3) of ERISA;
(vi) Acquire, or permit any ERISA Affiliate to acquire, an interest in
any Person that causes such Person to become an ERISA Affiliate with
respect to the Company or a Subsidiary of the Company or with respect to
any ERISA Affiliate of the Company or a Subsidiary of the Company if such
Person sponsors, maintains or contributes to, or at any time in the
six-year period preceding such acquisition has sponsored, maintained, or
contributed to, (1) any "multiemployer plan" as such term is defined in
Section 3(37) or 4001(a)(3) of ERISA, or (2) any other Plan that is subject
to Title IV of ERISA under which the actuarial present value of the benefit
liabilities under such Plan exceeds the current value of the assets
(computed on a plan termination basis in accordance with Title IV of ERISA)
of such Plan allocable to such benefit liabilities;
(vii) Fail to pay, or cause to be paid, to the PBGC in a timely
manner, without incurring any late payment or underpayment charge or
penalty, all premiums required pursuant to Sections 4006 and 4007 of ERISA,
except where such failure would not have a Material Adverse Effect; or
(viii) Amend, or permit any ERISA Affiliate to amend, a Plan
resulting in an increase in current liability such that the Company, a
Subsidiary of the Company or any ERISA Affiliate is required to provide
security to such Plan under Section 401(a)(29) of the Code.
ARTICLE VI
EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the following
specified events (each an "EVENT OF DEFAULT"):
Section 6.01 PAYMENTS. The Company shall fail to pay when due
(including, but not limited to, by mandatory prepayment) any principal of or
interest on the L/C Note, the Reimbursement Obligation or any fee or any other
amount payable hereunder;
Section 6.02 COVENANTS WITHOUT NOTICE. The Company shall fail to observe
or perform any covenant or agreement contained in Sections 5.03 or 5.04;
Section 6.03 OTHER COVENANTS. The Company shall fail to observe or
perform any covenant or agreement herein, other than those referred to in
Sections 6.01 and 6.02, and, if capable of being remedied, such failure shall
remain unremedied for 30 days after the earlier of (i) the Company's obtaining
knowledge thereof, or (ii) written notice thereof shall have been given to the
Company by any Lender or the Agent;
Section 6.04 OTHER SECURITY INSTRUMENT OBLIGATIONS. Default is made in
the due observance or performance by the Company of any of the covenants or
agreements contained in any Security Instrument other than this Agreement, and
such default continues unremedied beyond the expiration of any applicable grace
period which may be expressly allowed under such Security Instrument;
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Section 6.05 REPRESENTATIONS. Any representation, warranty or statement
made or deemed to be made by the Company or any Subsidiary of the Company or any
of such Company's, or Subsidiary's officers herein or in any other Security
Instrument, or in any certificate, request or other document furnished pursuant
to or under this Agreement or any other Security Instrument, shall have been
incorrect in any material respect as of the date when made or deemed to be made;
Section 6.06 NON-PAYMENTS OF OTHER INDEBTEDNESS. The Company or any of
its Subsidiaries shall fail to make any payment or payments of principal of or
interest on any Indebtedness of the Company or such Subsidiary in excess of
$5,000,000 in the aggregate (other than (i) the Lender Indebtedness and (ii) any
trade account subject to a bona fide dispute and the trade creditor has neither
filed a lawsuit nor caused a Lien to be placed upon any Property of the Company
or such Subsidiary) when due (whether at stated maturity, by acceleration, on
demand or otherwise) after giving effect to any applicable grace period;
Section 6.07 DEFAULTS UNDER OTHER AGREEMENTS. The Company or any of its
Subsidiaries shall fail to observe or perform any covenant or agreement
contained in any agreement(s) or instrument(s) relating to Indebtedness of
$5,000,000 or more in the aggregate within any applicable grace period, or any
other event shall occur if the effect of such failure or other event is to
accelerate, or to permit the holder of such Indebtedness or any other Person to
accelerate, the maturity of $5,000,000 or more in the aggregate of such
Indebtedness; or $5,000,000 or more in the aggregate of any such Indebtedness
shall be required to be prepaid (other than by a regularly scheduled required
prepayment) in whole or in part prior to its stated maturity;
Section 6.08 BANKRUPTCY. The Company or any of its Subsidiaries shall
commence a voluntary case concerning itself under Title 11 of the United States
Code entitled "Bankruptcy" as now or hereafter in effect, or any successor
thereto (the "BANKRUPTCY CODE"); or an involuntary case is commenced against the
Company or any of its Subsidiaries and the petition is not controverted within
10 days, or is not stayed or dismissed within 60 days, after commencement of the
case; or a custodian (as defined in the Bankruptcy Code) is appointed for, or
takes charge of, all or any substantial part of the property of the Company or
any of its Subsidiaries; or the Company or any of its Subsidiaries commences any
other proceeding under any reorganization, arrangement, adjustment of debt,
relief of debtors, dissolution, insolvency or liquidation or similar law of any
jurisdiction whether now or hereafter in effect relating to the Company or such
Subsidiary or there is commenced against the Company or any of its Subsidiaries
any such proceeding which remains unstayed or undismissed for a period of 60
days; or the Company or any of its Subsidiaries is adjudicated insolvent or
bankrupt; or any order of relief or other order approving any such case or
proceeding is entered; or the Company or any of its Subsidiaries suffers any
appointment of any custodian or the like for it or any substantial part of its
Property to continue undischarged or unstayed for a period of 60 days; or the
Company or any of its Subsidiaries makes a general assignment for the benefit of
creditors; or the Company or any of its Subsidiaries shall fail to pay, or shall
state that it is unable to pay, or shall be unable to pay, its debts generally
as they become due; or the Company or any of its Subsidiaries shall by any act
or failure to act indicate its consent to, approval of or acquiescence in any of
the foregoing; or any corporate action is taken by the Company or any of its
Subsidiaries for the purpose of effecting any of the foregoing;
Section 6.09 ERISA. A Plan shall fail to maintain the minimum funding
standard required by Section 412 of the Code for any plan year or a waiver of
such standard is sought or granted under Section 412(d), or a Plan is, shall
have been or is likely to be, terminated or the subject of termination
proceedings under ERISA, or the Company or an ERISA Affiliate has incurred or is
likely to incur a liability to or on account of a Plan under Section 515, 4062,
4063, 4064, 4201 or 4204 of ERISA, and there shall result from any such event or
events either a liability or a material risk of incurring a liability to the
PBGC or a Plan, which will have a Material Adverse Effect;
Section 6.10 MONEY JUDGMENT. A judgment or order for the payment of
money in excess of $5,000,000 or that would otherwise have a Material Adverse
Effect shall be rendered against the Company or any of it Subsidiaries and such
judgment or order shall continue unsatisfied in accordance with the terms of
such judgment or order (in the case of a money judgment) and in effect for a
period of 30 days during which execution shall not be effectively stayed or
deferred (whether by action of a court, by agreement or otherwise);
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Section 6.11 SECURITY INSTRUMENTS. The material terms of the Security
Instruments after delivery thereof shall for any reason, except to the extent
permitted by the terms thereof, cease to be in full force and effect and valid,
binding and enforceable (except as enforceability may be limited as stated in
Section 4.03) in accordance with their terms, or cease to create a valid and
perfected Lien of the priority contemplated thereby on any of the collateral
purported to be covered thereby, or the Company shall so state in writing; or
Section 6.12 CHANGE OF CONTROL. The occurrence of a Change of Control;
then, and in any such event, and at any time thereafter, if any Event of Default
shall occur, the Company shall deposit cash into the Cash Collateral Account in
an amount sufficient to cause the amount on deposit therein to equal not less
than 50% of the undrawn portion of the Letters of Credit outstanding at any
time. The Company, the Agent, the Issuing Bank and the Lenders will then have
30 days from the date of the occurrence of such Event of Default to negotiate an
agreement with regard to the amount on deposit in the Cash Collateral Account
that would provide adequate protection to the Agent, the Issuing Bank and the
Lenders to secure the Reimbursement Obligations and the L/C Note. If no such
agreement is reached within 30 days from the date of the occurrence of such
Event of Default, the Company shall deposit cash into the Cash Collateral
Account in an amount sufficient to cause the amount on deposit therein to equal
not less than 100% of the undrawn portion of the Letters of Credit outstanding
at any time. If the Company deposits in the Cash Collateral Account, the cash
required pursuant to the foregoing provisions all Events of Default and all
Defaults (in each case other than those specified in Sections 6.01 and 6.08)
then existing or that exist in the future with respect to such matters shall be
deemed cured, waived and no longer continuing.
ARTICLE VII
THE AGENT
Section 7.01 APPOINTMENT OF AGENT. Each Lender and the Issuing Bank
hereby designate Bankers Trust Company as Agent to act as herein specified.
Each Lender and the Issuing Bank hereby irrevocably authorizes the Agent to take
such action on its behalf under the provisions of this Agreement, the L/C Note
and the other Security Instruments and to exercise such powers and to perform
such duties hereunder and thereunder as are specifically delegated to or
required of the Agent by the terms hereof and thereof and such other powers as
are reasonably incidental thereto. The Agent may perform any of its duties
hereunder by or through its agents or employees.
Section 7.02 NATURE OF DUTIES OF AGENT. The Agent shall have no duties
or responsibilities except those expressly set forth in this Agreement. Neither
the Agent nor any of its officers, directors, employees or agents shall be
liable for any action taken or omitted by it as such hereunder or in connection
herewith, unless caused by its or their gross negligence or willful misconduct.
The duties of the Agent shall be mechanical and administrative in nature; the
Agent shall not have by reason of this Agreement a fiduciary relationship in
respect of any Lender; and nothing in this Agreement, expressed or implied, is
intended to or shall be so construed as to impose upon the Agent any obligations
in respect of this Agreement except as expressly set forth herein.
Section 7.03 LACK OF RELIANCE ON THE AGENT.
(a) Independently and without reliance upon the Agent, each Lender,
to the extent it deems appropriate, has made and shall continue to make
(i) its own independent investigation of the financial condition and
affairs of the Company in connection with the taking or not taking of any
action in connection herewith, and (ii) its own appraisal of the
creditworthiness of the Company, and, except as expressly provided in this
Agreement, the Agent shall have no duty or responsibility, either initially
or on a continuing basis, to provide any Lender with any credit or other
information with respect thereto, whether coming into its possession before
the consummation of the transactions contemplated herein or at any time or
times thereafter.
(b) The Agent shall not be responsible to any Lender or the Issuing
Bank for any recitals, statements, information, representations or
warranties herein or in any document, certificate or other writing
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delivered in connection herewith or for the execution, effectiveness,
genuineness, validity, enforceability, collectibility, priority or
sufficiency of this Agreement, the L/C Note, the Letters of Credit or the
other Security Instruments or the financial condition of the Company or be
required to make any inquiry concerning either the performance or
observance of any of the terms, provisions or conditions of this Agreement,
the L/C Note or the other Security Instruments, or the financial condition
of the Company, or the existence or possible existence of any Default or
Event of Default.
Section 7.04 CERTAIN RIGHTS OF THE AGENT. If the Agent shall request
instructions from the Required Lenders with respect to any act or action
(including the failure to act) in connection with this Agreement, the L/C Note
and the other Security Instruments, the Agent shall be entitled to refrain from
such act or taking such action unless and until the Agent shall have received
instructions from the Required Lenders; and the Agent shall not incur liability
to any Person by reason of so refraining. Without limiting the foregoing, no
Lender shall have any right of action whatsoever against the Agent as a result
of the Agent acting or refraining from acting under this Agreement, the L/C Note
and the other Security Instruments in accordance with the instructions of the
Required Lenders.
Section 7.05 RELIANCE BY AGENT. The Agent shall be entitled to rely, and
shall be fully protected in relying, upon any note, writing, resolution, notice,
statement, certificate, telex, teletype or telecopier message, cablegram,
radiogram, order or other documentary, teletransmission or telephone message
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person. The Agent may consult with legal counsel (including
counsel for the Company), independent public accountants and other experts
selected by it and shall not be liable for any action taken or omitted to be
taken by it in good faith in accordance with the advice of such counsel,
accountants or experts.
Section 7.06 INDEMNIFICATION OF AGENT. To the extent the Agent is not
reimbursed and indemnified by the Company, each Lender will reimburse and
indemnify the Agent, in proportion to its Percentage Share, for and against any
and all liabilities, obligations, losses, damages, penalties, actions,
judgments, suits, costs, expenses (including counsel fees and disbursements) or
disbursements of any kind or nature whatsoever which may be imposed on, incurred
by or asserted against the Agent in performing its duties hereunder, in any way
relating to or arising out of this Agreement; PROVIDED that no Lender shall be
liable to the Agent for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from the Agent's gross negligence or willful misconduct.
Section 7.07 THE AGENT IN ITS INDIVIDUAL CAPACITY. With respect to its
obligations under this Agreement and the L/C Note issued to it, the Agent shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not performing the duties specified herein; and the
terms "Lenders," "Required Lenders," or any similar terms shall, unless the
context clearly otherwise indicates, include the Agent in its individual
capacity. The Agent may accept deposits from, lend money to, and generally
engage in any kind of banking, trust, financial advisory or other business with
the Company or any affiliate of the Company as if it were not performing the
duties specified herein, and may accept fees and other consideration from the
Company for services in connection with this Agreement and otherwise without
having to account for the same to the Lenders.
Section 7.08 SUCCESSOR AGENT.
(a) The Agent may resign at any time by giving written notice thereof
to the Lenders, the Issuing Bank and the Company and may be removed at any
time with or without cause by the Required Lenders. Upon any such
resignation or removal, the Required Lenders shall have the right, upon
five days' notice to the Company, to appoint a successor Agent. 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 of notice of resignation or the Required Lenders' removal of
the retiring Agent, then, upon five days' notice to the Company, the
retiring Agent may, on behalf of the Lenders, appoint a successor Agent,
which shall be a bank which maintains an office in the United States, or a
commercial bank organized under the laws of the United States of America or
of any State thereof, or any Affiliate of such bank, having a combined
capital and surplus of at least $250,000,000.
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(b) If at any time the Agent shall hold less than twenty percent
(20%) of the total Letter of Credit Commitments, the Company or any Lender
may request by written notice to the Lenders that the Required Lenders
appoint a successor Agent. If the Company or any such Lender suggests a
successor Agent in such notice, the Required Lenders must vote to either
accept or reject such suggested successor Agent within thirty days from the
date such notice is given. The Required Lenders shall be under no
obligation to remove the Agent under this Section.
(c) Upon the acceptance of any appointment as Agent hereunder by a
successor Agent, such successor Agent shall thereupon succeed to and become
vested with all the 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
or removal hereunder as Agent, the provisions of this Article VII shall
inure to its benefit as to any actions taken or omitted to be taken by it
while it was Agent under this Agreement.
ARTICLE VIII
MISCELLANEOUS
Section 8.01 NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including, telecopy or similar
teletransmission or writing) and shall be given to such party at its address or
telecopy number set forth on the signature pages hereof or such other address or
telecopy number as such party may hereafter specify by notice to the Agent and
the Company; provided that a copy of all notices to the Agent shall also be sent
to BT Southwest, Inc., 3000 Two Houston Center, Houston, Texas 77010, Attention:
Stuart Murray. Each such notice, request or other communication shall be
effective (i) if given by mail, 72 hours after such communication is deposited
in the mails with first class postage prepaid, addressed as aforesaid, or
(ii) if given by any other means (including, but not limited to, by air
courier), when delivered at the address specified in this Section; provided that
notices to the Agent shall not be effective until received.
Section 8.02 AMENDMENTS, ETC. No amendment or waiver of any provision of
this Agreement, the L/C Note or the other Security Instruments, nor consent to
any departure by the Company therefrom, shall in any event be effective unless
the same shall be in writing and signed by the Required Lenders, and then such
waiver or consent shall be effective only in the specific instance and for the
specific purpose for which given; provided that no amendment, waiver or consent
shall, unless in writing and signed by all the Lenders, do any of the following:
(i) waive any of the conditions specified in Article III, (ii) increase the
Letter of Credit Commitment of the Lenders or subject the Lenders to any
additional obligations, (iii) reduce any fees hereunder, (iv) postpone any date
fixed for any payment in respect of any fees hereunder, (v) change the
Percentage Share of the Letter of Credit Commitment or of the aggregate unpaid
principal amount of the L/C Note, or the number or identity of the Lenders,
which shall be required for the Lenders or any of them to take any action
hereunder, (vi) amend this Section or Section 8.06, or (vii) amend, modify or
release the Cash Collateral Account Agreement; and provided further that no
amendment, waiver or consent shall, unless in writing and signed by the Agent in
addition to the Lenders required hereinabove to take such action, affect the
rights or duties of the Agent under this Agreement, the L/C Note or any other
Security Instrument. Notwithstanding anything in this Section to the contrary,
unless instructed to the contrary by the Required Lenders, the Agent shall
extend each Letter of Credit prior to any expiration date thereof pursuant to
the terms of such Letter of Credit or its related L/C Agreement if a failure to
so extend such Letter of Credit would result in entitling the beneficiary
thereof to draw thereon.
Section 8.03 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of the Company or the Agent or any Lender, any holder of the L/C Note in
exercising any right or remedy thereunder, or under this Agreement or any other
Security Instrument and no course of dealing between the Company and the Agent
or any Lender or any holder of the L/C Note shall operate as a waiver thereof,
nor shall any single or partial exercise of any right or remedy under the L/C
Note, this Agreement or any other Security Instrument preclude any other or
further exercise thereof or the exercise of any other right or remedy under the
L/C Note, this Agreement or any other Security Instrument. The rights and
remedies herein expressly provided are cumulative and not exclusive of any
rights or remedies which the
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Company, the Agent or any Lender would otherwise have. No notice to or demand
on the Company not required under the L/C Note, this Agreement or any other
Security Instrument in any case shall entitle the Company to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Agent or the Lenders to any other or further action
in any circumstances without notice or demand.
Section 8.04 PAYMENT OF EXPENSES, INDEMNITIES, ETC. The Company agrees
to (and shall be liable for):
(a) whether or not the transactions hereby contemplated are
consummated, pay all reasonable out-of-pocket costs and expenses of the
Agent and the Issuing Bank in the administration (both before and after the
execution hereof and including advice of counsel as to the rights and
duties of the Agent and the Lenders with respect thereto) of, and in
connection with the preparation, execution and delivery of, recording or
filing of, preservation of rights under, enforcement of, and, after a
Default, refinancing, renegotiation or restructuring of, this Agreement,
the L/C Note and the other Security Instruments and any amendment, waiver
or consent relating thereto (including, but not limited to, the reasonable
fees and disbursements of counsel for the Agent and in the case of
enforcement for any of the Lenders) and promptly reimburse the Agent for
all amounts expended, advanced, or incurred by the Agent or the Lenders to
satisfy any obligation of the Company under this Agreement or any other
Security Instrument;
(b) indemnify the Agent, the Issuing Bank and each Lender, each of
their respective officers, directors, employees, representatives, agents
and Affiliates from, hold each of them harmless against, and promptly upon
demand pay or reimburse each of them for, any and all actions, suits,
proceedings (including any investigations, litigation or inquiries),
claims, costs, losses, liabilities, damages or expenses of any kind or
nature whatsoever which may be incurred by or asserted against or involve
any of them (whether or not any of them is designated a party thereto) as a
result of, arising out of or in any way related to any aspect of this
Agreement and the other Security Instruments, including but not limited to
the reasonable fees and disbursements of counsel (including allocated costs
of internal counsel) and all other expenses incurred in connection with
investigating, defending or preparing to defend any such action, suit,
proceeding (including any investigations, litigation or inquiries) or
claim; PROVIDED, HOWEVER, the provisions of this Section 8.04(b) shall not
apply to any action, suits, proceedings, claims, costs, losses,
liabilities, damages, or expenses to the extent, but only to the extent,
caused by the gross negligence or willful misconduct of the party seeking
indemnification;
(c) indemnify and hold harmless from time to time the Agent and the
Lenders, each Person claiming by, through, under or on account of any of
the foregoing and the respective directors, officers, counsel, employees,
agents, successors and assigns of each of the foregoing from and against
any and all losses, claims, cost recovery actions, administrative orders or
proceedings, damages and liabilities (which relate to or arise as a result
of the Letters of Credit or any Security Instrument) to which any such
Person may become subject (1) under any Environmental Law applicable to the
Company or any of its Subsidiaries or any of their respective Properties,
including without limitation, the treatment or disposal of Hazardous
Substances on any of their respective Properties, (2) as a result of the
breach or non-compliance by the Company or any of its Subsidiaries with any
Environmental Law applicable to the Company or any of its Subsidiaries, (3)
due to past ownership by the Company or any of its Subsidiaries of any of
their respective Properties or past activity on any of their respective
Properties or past activity on any of their respective Properties which,
though lawful and fully permissible at the time, could result in present
liability, (4) the presence, use, release, storage, treatment or disposal
of Hazardous Substances on or at any of the Properties owned or operated by
the Company or any of its Subsidiaries, or (5) any other environmental,
health or safety condition in connection with this Agreement, or any other
Security Instrument; PROVIDED, HOWEVER, no indemnity shall be afforded
under this Section 8.04(c) in respect of any Property for any occurrence
arising solely and directly from the acts or omissions of the Agent or any
Lender during the period after which such Person, its successors or assigns
shall have obtained possession of such Property (whether by foreclosure or
deed in lieu of foreclosure, as mortgagee-in-possession or otherwise); and
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(d) without limiting the foregoing provisions, and hereby does waive,
release and covenant not to bring against any of the Persons identified in
this Section 8.04 any demand, claim, cost recovery action or lawsuit they
may now or hereafter have or accrue (which relate to or arise as a result
of the Letters of Credit or any Security Instrument) arising from (1) any
Environmental Law now or hereafter enacted (including those applicable to
the Company or any of its Subsidiaries) unless the acts or omissions of any
such person or their respective successors and assigns are the sole and
direct cause of the circumstances giving rise to such demand, cost recovery
action or lawsuit, (2) the presence, use, release, storage, treatment or
disposal of Hazardous Substances on or at any of the Properties owned or
operated by the Company or any of its Subsidiaries, or (3) the breach or
non-compliance by the Company with any Environmental Law or environmental
covenant applicable to the Company or any of its Subsidiaries, unless the
acts or omissions of such Person, its successors and assigns are the sole
and direct cause of the circumstances giving rise to such demand, claim,
cost recovery action or lawsuit.
If and to the extent that the obligations of the Company under this Section are
unenforceable for any reason, the Company hereby agrees to make the maximum
contribution to the payment and satisfaction of such obligations which is
permissible under applicable law. The Company's obligations under this Section
shall survive any termination of this Agreement and the payment of the L/C Note
and the Reimbursement Obligation.
Section 8.05 SATISFACTION REQUIREMENT. If any agreement, certificate,
instrument or other writing, or any action taken or to be taken, is by the terms
of this Agreement required to be satisfactory to any party, the determination of
such satisfaction shall be made by such party in its sole and exclusive judgment
exercised reasonably and in good faith.
Section 8.06 BENEFIT OF AGREEMENT. The L/C Note, this Agreement and the
other Security Instruments shall be binding upon and inure to the benefit of and
be enforceable by the respective successors and assigns of the parties hereto,
provided that the Company may not assign or transfer any of its interest
hereunder or thereunder without the prior written consent of the Lenders. In
the event that any Lender sells participations in the Lender Indebtedness of the
Company incurred or to be incurred pursuant to this Agreement, to other banks or
entities, each of such other banks or entities shall have the rights of set-off
against such Lender Indebtedness and similar rights or Liens to the same extent
as may be available to the Agent or the Lenders.
Section 8.07 ASSIGNMENTS AND PARTICIPATIONS.
(a) The Company may not assign its rights and obligations hereunder
or under the L/C Note.
(b) Each Lender may, upon the written consent of the Company (which
consent shall not be unreasonably withheld), assign to one or more Eligible
Transferees all or a portion of its rights and obligations under this
Agreement pursuant to an Assignment and Acceptance Agreement substantially
in the form of Exhibit B (an "ASSIGNMENT AND ACCEPTANCE") PROVIDED,
HOWEVER, that (i) any such assignment shall be in the aggregate amount of
at least $1,000,000 or such lesser amount to which the Company has
consented (or if the aggregate amount of any Lender's Letter of Credit
Commitment is less than $1,000,000, then the entire amount of such Lender's
Letter of Credit Commitment), and (ii) the assignee shall pay to the Agent
a processing and recordation fee of $2,500. Any such assignment will
become effective upon the recording by the Agent of such assignment in the
Register of the resultant effects thereof on the Letter of Credit
Commitment of the assignor and assignee, the risk participation in the
Letter of Credit Liabilities and the principal amount outstanding of the
Reimbursements Obligations, if any, owed to the assignor and assignee, the
Agent hereby agreeing to effect such recordation no later than five
Business Days after its receipt of an Assignment and Acceptance executed by
all parties thereto. Promptly after receipt of an Assignment and
Acceptance executed by all parties thereto, the Agent shall send to the
Company a copy of such executed Assignment and Acceptance. Upon the
effectiveness of any assignment pursuant to this subsection, the assignee
shall be deemed automatically to have become a party hereto, if not already
a party hereto, and shall become a "Lender," if not already a "Lender," for
all purposes of this Agreement and the other Security Instruments. The
assignor shall be relieved of its obligations hereunder to the extent of
such assignment (and if the assigning Lender no longer holds any rights or
obligations under this Agreement, such assigning Lender shall cease to be a
"Lender" hereunder). The Agent
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will prepare on the last Business Day of each month during which an
assignment has become effective pursuant to this subsection a new schedule
giving effect to all such assignments effected during such month, and will
promptly provide the same to the Company, the Issuing Banks and each of the
Lenders.
(c) Each Lender may transfer, grant or assign participations in all
or any part of such Lender's interests hereunder pursuant to this
subsection to any Person, PROVIDED that: (i) such Lender shall remain a
"Lender" for all purposes of this Agreement and the transferee of such
participation shall not constitute a "Lender" hereunder; and (ii) no
participant under any such participation shall have rights to approve any
amendment to or waiver of this Agreement or any Security Instrument except
to the extent such amendment or waiver would (x) extend the Final Maturity
Date of any of the Letter of Credit Commitments which such participant is
participating, (y) reduce the interest rate (other than as a result of
waiving the applicability of any post-default increases in interest rates)
or fees applicable to any of the Letter of Credit Commitments in which such
participant is participating, or postpone the payment thereof, or
(z) release all or substantially all of the collateral or guaranties
(except as expressly provided in the Security Instruments) supporting any
of the Letter of Credit Commitments in which such participant is
participating. In the case of any such participation, the participant
shall not have any rights under this Agreement or any of the Security
Instruments (the participant's rights against the granting Lender in
respect of such participation to be those set forth in the agreement with
such Lender creating such participation), and all amounts payable by the
Company hereunder shall be determined as if such Lender had not sold such
participation, PROVIDED that such participant shall be entitled to receive
additional amounts under Section 2.07 on the same basis as if it were a
Lender. In addition, each agreement creating any participation must
include an agreement by the participant to be bound by the provisions of
Section 8.15. Notwithstanding anything in this Section 8.07(c) to the
contrary, the purchase by each Lender of a participation in the Letters of
Credit on the Effective Date and any subsequent assignment of all or any
part of any such Lender's Letter of Credit Commitment pursuant to
Section 8.07(b) shall not be considered a participation pursuant to this
Section 8.07(c).
(d) Notwithstanding any other provisions of this Section 8.07, no
transfer or assignment of the interests or obligations of any Lender
hereunder or any grant of participations therein shall be permitted if such
transfer, assignment or grant would require the Company to file a
registration statement with the Securities and Exchange Commission.
(e) Each Lender initially party to this Agreement hereby represents,
and each Person that becomes a Lender pursuant to an assignment permitted
by subsection (b) above will, upon its becoming party to this Agreement,
represent that it is an Eligible Transferee, and that it will purchase a
risk participation in the Letter of Credit Liabilities only for its own
account in the ordinary course of its business.
(f) The entries in the Register shall be conclusive in the absence of
manifest error and the Company, the Agent, the Issuing Bank and the Lenders
may treat each person whose name is recorded in the Register pursuant to
the terms hereof as a Lender hereunder for all purposes of this Agreement
and the other Security Instruments. The Register shall be available for
inspection by the Company and any Lender, at any reasonable time and from
time to time upon reasonable prior notice.
Section 8.08 GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL; ETC.
(A) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND UNDER THE L/C NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND
BE GOVERNED BY THE LAW (WITHOUT GIVING EFFECT TO THE CONFLICT OF LAW
PRINCIPLES THEREOF) OF THE STATE OF NEW YORK.
(B) ANY LEGAL ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT,
THE L/C NOTE OR THE OTHER SECURITY INSTRUMENTS MAY BE BROUGHT IN THE COURTS
OF THE STATE OF NEW YORK OR OF THE UNITED STATES OF AMERICA FOR THE
SOUTHERN DISTRICT OF NEW YORK, AND, BY EXECUTION AND DELIVERY OF THIS
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AGREEMENT, THE COMPANY HEREBY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE AFORESAID
COURTS. THE COMPANY HEREBY IRREVOCABLY WAIVES ANY OBJECTION, INCLUDING,
BUT NOT LIMITED TO, ANY OBJECTION TO THE LAYING OF VENUE OR BASED ON THE
GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER HAVE TO THE
BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE JURISDICTIONS.
(c) The Company hereby irrevocably designates CT Corporation System
as the designee, appointee and agent of the Company to receive, for and on
behalf of the Company, service of process in such respective jurisdictions
in any legal action or proceeding with respect to this Agreement, the L/C
Note or the other Security Instruments. It is understood that a copy of
such process served on such agent will be promptly forwarded by mail to the
Company at its address set forth opposite its signature below, but the
failure of the Company to receive such copy shall not affect in any way the
service of such process. The Company further irrevocably consents to the
service of process of any of the aforementioned courts in any such action
or proceeding by the mailing of copies thereof by registered or certified
mail, postage prepaid, to the Company at its said address, such service to
become effective 30 days after such mailing.
(d) Nothing herein shall affect the right of the Agent or any Lender
or any holder of the L/C Note to serve process in any other manner
permitted by law or to commence legal proceedings or otherwise proceed
against the Company in any other jurisdiction.
(e) The parties hereto recognize that in matters related to this
Agreement and the other Security Instruments, they may be entitled to a
trial in which matters of fact are determined by a jury (as opposed to a
trial in which such matters are determined by a federal or state judge).
The parties hereto also recognize that one of the remedies available to
them in any trial may, under certain circumstances, be the right to receive
damages in excess of those actually sustained by it. In the past in some
instances, such damages have equalled or exceeded the amount of actual
damages. By signing below, the parties hereto will give up their rights to
trial by jury and to claim any damages other than actual damages. Each
Person who is asked to sign below should think carefully about the
consequences of signing and should consult their own attorney. WAIVER OF
JURY TRIAL. TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, EACH OF THE
UNDERSIGNED HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION DIRECTLY
OR INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH THIS
AGREEMENT OR THE SECURITY INSTRUMENTS, OR ANY TRANSACTION CONTEMPLATED
THEREBY, BEFORE OR AFTER MATURITY. WAIVER OF RIGHTS RELATED TO DAMAGES.
TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, EACH OF THE UNDERSIGNED HEREBY
KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVES ANY RIGHT IT MAY HAVE TO
CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR
CONSEQUENTIAL DAMAGES, OR ANY DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL
DAMAGES. CERTIFICATIONS. EACH OF THE UNDERSIGNED HEREBY CERTIFIES THAT
NEITHER ANY REPRESENTATIVE OR AGENT OF ANY LENDER NOR ANY LENDER'S COUNSEL
HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT ANY LENDER WOULD
NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVERS.
EACH OF THE UNDERSIGNED ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO
THIS TRANSACTION BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND
CERTIFICATIONS HEREIN. THE FOREGOING WAIVER OF RIGHTS RELATED TO DAMAGES
SHALL NOT APPLY IN ANY TRANSACTION SUBJECT TO THE TEXAS DECEPTIVE TRADE
PRACTICES ACT OR GOVERNED BY CHAPTER 6, 6A OR 7 OF THE TEXAS CONSUMER
CREDIT CODE. The parties hereto agree that if any of the foregoing
provisions shall be invalid, illegal or unenforceable in any respect, the
validity, legality and enforceability of the remaining provisions will not
be affected or impaired. The parties hereto by signing below certify that
they have read and understood the foregoing prior to signing; that they
have had the opportunity to obtain the advice and assistance of counsel
with respect to the foregoing; that they sign below with full knowledge and
understanding of the consequences
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of their act; and that they have received a counterpart original of this
document signed by all parties. KEEP THIS CONTRACT TO PROTECT YOUR LEGAL
RIGHTS.
Section 8.09 INDEPENDENT NATURE OF LENDERS' RIGHTS. The amounts payable
at any time hereunder to each Lender shall be a separate and independent debt,
and each Lender shall be entitled to protect and enforce its rights arising out
of this Agreement, and it shall not be necessary for any other Lender to be
joined as an additional party in any proceeding for such purpose.
Section 8.10 INVALIDITY. In the event that any one or more of the
provisions contained in the L/C Note, this Agreement or in any other Security
Instrument shall, for any reason, be held invalid, illegal or unenforceable in
any respect, such invalidity, illegality or unenforceability shall not affect
any other provision of the L/C Note, this Agreement or any other Security
Instrument.
Section 8.11 SURVIVAL OF AGREEMENTS. All representations and warranties
of the Company herein or in the other Security Instruments, and all covenants
and agreements herein not fully performed before the Closing Date, shall survive
the closing of the transactions contemplated thereby.
Section 8.12 RENEWAL, EXTENSION OR REARRANGEMENT. All provisions of this
Agreement and of any other Security Instruments relating to the L/C Note or
other Lender Indebtedness shall apply with equal force and effect to each and
all promissory notes hereafter executed which in whole or in part represent a
renewal, extension for any period, increase or rearrangement of any part of the
Lender Indebtedness originally represented by the L/C Note or of any part of
such other Lender Indebtedness.
Section 8.13 INTEREST. It is the intention of the parties hereto to
conform strictly to usury laws applicable to the Lenders and the Transactions.
Accordingly, if the Transactions would be usurious under applicable law, then,
notwithstanding anything to the contrary in the L/C Note, this Agreement or in
any other Security Instrument or agreement entered into in connection with the
Transactions or as security for the L/C Note, it is agreed as follows: (i) the
aggregate of all consideration which constitutes interest under applicable law
that is contracted for, taken, reserved, charged or received under the L/C Note,
this Agreement or under any of such other Security Instruments or agreements or
otherwise in connection with the Transactions shall under no circumstances
exceed the maximum amount allowed by such applicable law, (ii) in the event that
the maturity of the L/C Note is accelerated for any reason, or in the event of
any required or permitted prepayment, then such consideration that constitutes
interest under applicable law may never include more than the maximum amount
allowed by such applicable law, and (iii) excess interest, if any, provided for
in this Agreement or otherwise in connection with the Transactions shall be
cancelled automatically and, if theretofore paid, shall be credited by each
Lender on the principal amount of such Lender's Indebtedness (or, to the extent
that the principal amount of such Lender's Indebtedness shall have been or would
thereby be paid in full, refunded by such Lender to the Company). The right to
accelerate the maturity of the L/C Note does not include the right to accelerate
any interest which has not otherwise accrued on the date of such acceleration,
and the Lenders do not intend to collect any unearned interest in the event of
acceleration. All sums paid or agreed to be paid to the Lenders for the use,
forbearance or detention of sums included in the Lender Indebtedness shall, to
the extent permitted by applicable law, be amortized, prorated, allocated and
spread throughout the full term of the L/C Note, as the case may be, until
payment in full so that the rate or amount of interest on account of the Lender
Indebtedness does not exceed the applicable usury ceiling, if any. As used in
this Section, the term "APPLICABLE LAW" shall mean the law of any jurisdiction
whose laws may be mandatorily applicable notwithstanding other provisions of
this Agreement, or law of the United States of America applicable to each
respective Lender and the Transactions which would permit such Lender to
contract for, charge, take, reserve or receive a greater amount of interest than
under such jurisdiction's law.
Section 8.14 TAXES, ETC. Any taxes (excluding income taxes) payable or
ruled payable by federal or state authority in respect of the L/C Note, this
Agreement or the other Security Instruments shall be paid by the Company,
together with interest and penalties, if any.
Section 8.15 CONFIDENTIAL INFORMATION. The Agent and each Lender agrees
that all documentation and other information made available by the Company to
the Agent or such Lender under the terms of this Agreement shall (except
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<PAGE>
to the extent such documentation or other information is publicly available or
hereafter becomes publicly available other than by action of the Agent or such
Lender, or was theretofore known or hereinafter becomes known to the Agent or
such Lender independent of any disclosure thereto by the Company) be held in the
strictest confidence by the Agent or such Lender and used solely in the
administration and enforcement of the Letter of Credit Liabilities from time to
time outstanding and in the prosecution of defense of legal proceedings arising
in connection herewith; provided that (i) the Agent or such Lender may disclose
documentation and information to the Agent and/or to any other Lender which is a
party to this Agreement or any Affiliates thereof (including, in the case of the
Agent, BT Securities Corporation), and (ii) the Agent or such Lender may
disclose such documentation or other information to any other bank or other
Person to which such Lender sells or proposes to make an assignment or sell a
participation in its Letter of Credit Liabilities hereunder if such other bank
or Person, prior to such disclosure, agrees in writing to be bound by the terms
of the confidentiality statement customarily employed by the Agent in connection
with such potential transfers. Notwithstanding the foregoing, nothing contained
herein shall be construed to prevent the Agent or a Lender from (a) making
disclosure of any information (i) if required to do so by applicable law or
regulation or accepted banking practice, (ii) to any governmental agency or
regulatory body having or claiming to have authority to regulate or oversee any
aspect of such Lender's business or that of such Lender's corporate parent or
affiliates in connection with the exercise of such authority or claimed
authority, (iii) pursuant to any subpoena or if otherwise compelled in
connection with any litigation or administrative proceeding, (iv) to correct any
false or misleading information which may become public concerning such Person's
relationship to the Company, or (v) to the extent the Agent or such Lender or
its counsel deems necessary or appropriate to effect or preserve its security
for any Lender Indebtedness or to enforce any remedy provided in the Security
Instruments, the L/C Note or this Agreement or otherwise available by law; or
(b) making, on a confidential basis, such disclosures as such Lender reasonably
deems necessary or appropriate to its legal counsel or accountants (including
outside auditors). If the Agent or such Lender is compelled to disclose such
confidential information in a proceeding requesting such disclosure, the Agent
or such Lender shall seek to obtain assurance that such confidential treatment
will be accorded such information; provided, however, that the Lender shall have
no liability for the failure to obtain such treatment.
Section 8.16 ENTIRE AGREEMENT. THE L/C NOTE, THIS AGREEMENT AND THE
OTHER SECURITY INSTRUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN
THE AGENT, THE ISSUING BANK OR THE LENDERS AND THE OTHER RESPECTIVE PARTIES
HERETO AND THERETO AND SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS BETWEEN
SUCH PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT AGREEMENTS OF
THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section 8.17 ATTACHMENTS. The exhibits, schedules and annexes attached
to this Agreement are incorporated herein and shall be considered a part of this
Agreement for the purposes stated herein, except that in the event of any
conflict between any of the provisions of such exhibits and the provisions of
this Agreement, the provisions of this Agreement shall prevail.
Section 8.18 COUNTERPARTS. This Agreement may be executed in any number
of counterparts and by the different parties hereto on separate counterparts,
each of which when so executed and delivered shall be an original but all of
which shall together constitute one and the same instrument.
Section 8.19 EFFECTIVENESS; SURVIVAL OF INDEMNITIES. This Agreement
shall become effective on the date (the "EFFECTIVE DATE") on which all of the
parties hereto shall have signed a copy hereof (whether the same or different
copies) and shall have delivered the same to the Agent pursuant to Section 8.01
and 8.21 or, in the case of the Lenders, shall have given to the Agent written
or telecopied notice (actually received) at such office that the same has been
signed and mailed to it. The Company's obligations under Sections 2.07, 2.13
and 8.04 shall survive the payment in full of the Reimbursement Obligations and
the L/C Note.
29
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Section 8.20 HEADINGS DESCRIPTIVE. The headings of the several sections
and subsections of this Agreement, and the Table of Contents, are inserted for
convenience only and shall not in any way affect the meaning or construction of
any provision of this Agreement.
Section 8.21 EFFECTIVENESS. This Agreement shall not be effective until
delivered to the Agent in the State of New York and accepted by the Agent in
such state, and executed by the Agent in such State.
30
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed as of the date first above written.
COMPANY: CRYSTAL OIL COMPANY
By:
------------------------------------------
Address: J. A. Ballew
Senior Vice President
229 Milam Street
Shreveport, Louisiana 71101
Attention: Mr. J. A. Ballew
AGENT AND THE LENDERS: BANKERS TRUST COMPANY,
Individually, as Issuing Bank and as Agent
By:
-----------------------------------------
Address: Name:
Title:
280 Park Avenue
New York, New York 10015
Attention: Mr. Stuart Murray
31
<PAGE>
MORGAN GUARANTY TRUST COMPANY
OF NEW YORK
By:
------------------------------------------
Address: Name:
Title:
60 Wall Street
New York, New York 10260
Attention: Mr. Vernon Ford
32
<PAGE>
TEXAS COMMERCE BANK NATIONAL
ASSOCIATION
By:
------------------------------------------
Address: Name:
Title:
707 Travis Street
Houston, Texas 77002
Attention: Mr. Paul Nidoh
33
<PAGE>
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
STOCK PURCHASE AGREEMENT
DATED AS OF MAY 2, 1995
AMONG
FIRST RESERVE SECURED ENERGY
ASSETS FUND, LIMITED PARTNERSHIP,
FIRST RESERVE FUND V, LIMITED PARTNERSHIP
AND
CRYSTAL OIL COMPANY
- -------------------------------------------------------------------------------
- -------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
ARTICLE 1.
DEFINITIONS . . . . . . . . . . . . . . . 1
1.1 DEFINED TERMS . . . . . . . . . . . . . . . . . . . . . . . . 1
1.2 OTHER DEFINITIONAL PROVISIONS . . . . . . . . . . . . . . . . 5
ARTICLE 2.
DELIVERY AND PAYMENT FOR SHARES . . . . . . . . . . 6
2.1 PURCHASE AND SALE . . . . . . . . . . . . . . . . . . . . . . 6
2.2 CLOSING . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
2.3 PURCHASE PRICE. . . . . . . . . . . . . . . . . . . . . . . . 6
2.4 PAYMENT OF PURCHASE PRICE . . . . . . . . . . . . . . . . . . 6
2.5 ESTIMATE OF ADJUSTMENTS . . . . . . . . . . . . . . . . . . . 7
2.6 DELIVERY OF SHARES. . . . . . . . . . . . . . . . . . . . . . 7
2.7 CLOSING DATE BALANCE SHEET. . . . . . . . . . . . . . . . . . 7
ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS. . . . . . . 9
3.1 ORGANIZATION. . . . . . . . . . . . . . . . . . . . . . . . . 9
3.2 AUTHORITY; ENFORCEABILITY . . . . . . . . . . . . . . . . . . 9
3.3 NON-CONTRAVENTION . . . . . . . . . . . . . . . . . . . . . . 9
3.4 CONSENTS, ETC . . . . . . . . . . . . . . . . . . . . . . . . 10
3.5 CAPITAL STOCK . . . . . . . . . . . . . . . . . . . . . . . . 10
3.6 ORGANIZATION AND QUALIFICATION OF THE COMPANY, THE
SUBSIDIARY AND HGS. . . . . . . . . . . . . . . . . . . . . . 11
3.7 FINANCIAL STATEMENTS. . . . . . . . . . . . . . . . . . . . . 11
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. . . . . . . . . . . . . 12
3.9 LEGAL PROCEEDINGS . . . . . . . . . . . . . . . . . . . . . . 14
3.10 EMPLOYEE BENEFITS . . . . . . . . . . . . . . . . . . . . . . 14
3.11 PROPERTIES, CONTRACTS AND OTHER DATA. . . . . . . . . . . . . 15
3.12 CERTAIN TAX MATTERS . . . . . . . . . . . . . . . . . . . . . 16
3.13 COMPLIANCE WITH LAWS. . . . . . . . . . . . . . . . . . . . . 17
3.14 ENVIRONMENTAL LAWS. . . . . . . . . . . . . . . . . . . . . . 18
3.15 AFFILIATE TRANSACTIONS. . . . . . . . . . . . . . . . . . . . 20
3.16 LABOR AND EMPLOYMENT MATTERS. . . . . . . . . . . . . . . . . 20
3.17 INSURANCE . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.18 PUBLIC UTILITY HOLDING COMPANY ACT; OTHER REGULATIONS . . . . 21
3.19 FERC AND MPSC REGULATORY COMPLIANCE . . . . . . . . . . . . . 21
3.20 PERMITS . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER . . . . . . 22
4.1 ORGANIZATION. . . . . . . . . . . . . . . . . . . . . . . . . 22
4.2 AUTHORITY; ENFORCEABILITY . . . . . . . . . . . . . . . . . . 22
4.3 NON-CONTRAVENTION . . . . . . . . . . . . . . . . . . . . . . 22
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4.4 CONSENTS. . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.5 FINANCIAL ABILITY . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE 5.
COVENANTS. . . . . . . . . . . . . . . . 23
5.1 CONDUCT OF BUSINESS . . . . . . . . . . . . . . . . . . . . . 23
5.2 INVESTIGATION . . . . . . . . . . . . . . . . . . . . . . . . 24
5.3 BEST EFFORTS; TAKING OF NECESSARY ACTION. . . . . . . . . . . 25
5.4 TERMINATION OF INTEREST RATE HEDGE AGREEMENT;
DISCHARGE OF CERTAIN INDEBTEDNESS . . . . . . . . . . . . . . 25
5.5 EXPENSES. . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.6 POST-CLOSING ACCOUNTING COOPERATION . . . . . . . . . . . . . 26
5.7 ADDITIONAL AGREEMENTS . . . . . . . . . . . . . . . . . . . . 26
5.8 COMPANY DEBT. . . . . . . . . . . . . . . . . . . . . . . . . 26
5.9 TAX MATTERS . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.10 SPECIAL PROVISION WITH REGARD TO CERTAIN
REPRESENTATIONS . . . . . . . . . . . . . . . . . . . . . . . 27
ARTICLE 6.
CONDITIONS TO THE CLOSING. . . . . . . . . . . . 28
6.1 CONDITIONS OF OBLIGATION OF EACH PARTY. . . . . . . . . . . . 28
6.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THE
PURCHASER . . . . . . . . . . . . . . . . . . . . . . . . . . 28
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THE
SELLERS . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
ARTICLE 7.
TERMINATION, AMENDMENT AND WAIVER. . . . . . . . . . 31
7.1 TERMINATION . . . . . . . . . . . . . . . . . . . . . . . . . 31
7.2 EFFECT OF TERMINATION . . . . . . . . . . . . . . . . . . . . 31
ARTICLE 8.
MISCELLANEOUS. . . . . . . . . . . . . . . 32
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. . . . . . . . 32
8.2 NOTICES . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
8.3 INTERPRETATION. . . . . . . . . . . . . . . . . . . . . . . . 33
8.4 BROKERS AND FINANCIAL ADVISORS. . . . . . . . . . . . . . . . 33
8.5 AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.6 EXTENSION; WAIVER . . . . . . . . . . . . . . . . . . . . . . 33
8.7 ENTIRE AGREEMENT. . . . . . . . . . . . . . . . . . . . . . . 33
8.8 ASSIGNMENT. . . . . . . . . . . . . . . . . . . . . . . . . . 33
8.9 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . . 33
8.10 COUNTERPARTS. . . . . . . . . . . . . . . . . . . . . . . . . 33
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<PAGE>
STOCK PURCHASE AGREEMENT
STOCK PURCHASE AGREEMENT, dated as of May 2, 1995, among First Reserve
Secured Energy Assets Fund, Limited Partnership, a Delaware limited partnership,
First Reserve Fund V, Limited Partnership, a Delaware limited partnership (each
individually a "SELLER", and collectively the "SELLERS") and Crystal Oil
Company, a Louisiana corporation (the "PURCHASER").
WHEREAS
-------
The Sellers are the legal owners of 973.50 shares of common stock, par
value $0.01 per share (the "SHARES"), of First Reserve Gas Company, a Delaware
corporation (the "COMPANY"), constituting all of the issued and outstanding
capital stock of the Company, and the Company is the owner of 1,000 shares of
common stock, par value $1.00 per share (the "SUBSIDIARY SHARES"), of
Hattiesburg Industrial Gas Sales Company, a Delaware corporation (the
"SUBSIDIARY"), constituting all of the issued and outstanding shares of capital
stock of the Subsidiary; and
The Sellers desire to sell, and the Purchaser desires to purchase, the
Shares on the terms and subject to the conditions set forth in this Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements hereinafter set forth, the parties hereto agree as
follows:
ARTICLE 1.
DEFINITIONS
1.1 DEFINED TERMS. As used in this Agreement, the following terms
shall have the following designated meanings:
"ACCOUNTANTS": Ernst & Young LLP, the Sellers' auditors.
"AGREEMENT": this Stock Purchase Agreement, as amended, modified or
supplemented from time to time.
"BASE AMOUNT": as defined in Section 2.3(a).
"BASE GAS AMOUNT": the product of (a) the positive or negative
difference between 1,960,000 MMBtus and the MMBtus of natural gas owned by the
Company and the Subsidiary at the Closing and (b) $1.57 per MMBtu of natural
gas. The MMBtus of natural gas owned by the Company and the Subsidiary at the
Closing shall be determined using the results of the mechanical integrity test
described in the Purchaser's letter dated April 28, 1995, to the Company, a copy
of which is attached hereto as Schedule 1.1A, after deduction of the MMBtus of
gas stored for the account of customers.
<PAGE>
"BUSINESS DAY": any day during which banking institutions in New York
City are open for business.
"CLOSING": as defined in Section 2.2.
"CLOSING DATE": the date and time of the Closing.
"CLOSING DATE BALANCE SHEET": as defined in Section 2.7(a).
"CLOSING DATE WORKING CAPITAL": the Working Capital of the Company as
reflected on the Closing Date Balance Sheet.
"CODE": the Internal Revenue Code of 1986, as amended.
"COLLATERAL SECURITY AGREEMENT": a Collateral Security Agreement in
form and substance reasonably satisfactory to the Purchaser.
"COMPANY": as defined in the recitals of this Agreement.
"CONFIDENTIALITY AGREEMENT": the Confidentiality Agreement dated
February 2, 1995 between the Purchaser and the Sellers.
"DECEMBER 31 WORKING CAPITAL": $29,000.00.
"ENVIRONMENTAL REQUIREMENTS": all applicable statutes, regulations,
rules, ordinances, codes, licenses, permits, orders, approvals, plans with the
force of law, authorizations and similar items of all federal, state or local
governments or agencies, departments, commissions, boards, bureaus or
instrumentalities of any government, domestic or foreign, having jurisdiction
that relate to the generation, handling and disposal of waste materials or the
protection of health or the environment, including without limitation the
Hazardous Materials Transportation Act, as amended, the Resource Conservation
and Recovery Act of 1976, as amended, the Clean Air Act, as amended, the Federal
Water Pollution Control Act, as amended, the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, the Toxic
Substances Control Act, as amended, and all applicable judicial, administrative
and regulatory decrees, judgments or orders relating to the generation, handling
and disposal of waste materials or the protection of health or the environment,
and all applicable covenants running with the land relating to environmental
matters.
"ERISA": the Employee Retirement Income Security Act of 1974, as
amended.
"EXISTING POLICIES": as defined in Section 3.17.
"FERC": the Federal Energy Regulatory Commission.
"FINANCIAL STATEMENTS": as defined in Section 3.7(a).
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"GAS PURCHASE, TRANSPORTATION OR STORAGE CONTRACT": any contract for
the purchase, sale, transportation or storage of natural gas.
"GAAP": generally accepted accounting principles in the United States
of America in effect from time to time.
"GOOD AND INDEFEASIBLE TITLE": good and indefeasible record title in
fee simple free and clear of all liens, mortgages, security interests, pledges,
charges, restrictions, conditions, reservations, claims or other encumbrances,
defects or deficiencies other than Permitted Encumbrances.
"HAZARDOUS MATERIALS": any substance: (A) the presence of which
requires investigation or remediation under any applicable domestic or foreign
federal, state or local statute, regulation, ordinance, order, action or policy
or common law; (B) that is defined as a "hazardous waste," "hazardous
substance," or "regulated substance" under any applicable Environmental
Requirements; (C) that is toxic, explosive, corrosive, flammable, infectious,
radioactive, carcinogenic, mutagenic or otherwise hazardous and is regulated by
any applicable Environmental Requirements; (D) that contains petroleum,
gasoline, diesel fuel or other petroleum hydrocarbons; or (E) that contains PCBs
in excess of 50 parts per million, asbestos that is friable, or can be
reasonably expected to become friable or hazardous levels of urea formaldehyde
foam insulation.
"HEDGE PROVIDER": as defined in Section 5.4(a).
"HGS": Hattiesburg Gas Storage Company, a Delaware general
partnership.
"HSR ACT": the Hart-Scott-Rodino Antitrust Improvements Act of 1976,
as amended.
"INTEREST RATE HEDGE AGREEMENT": as defined in Section 5.4(a).
"LEASE": the Lease Agreement dated as of February 1, 1991 and the
First Supplemental Lease Agreement dated November 1, 1991, both as amended by
the First Amendment to Lease Agreement dated July 21, 1994, each between Forrest
County, Mississippi and HGS.
"LEASED PROPERTY": as defined in Section 3.14(a)(1).
"MATERIAL ADVERSE CHANGE": a change that has a Material Adverse
Effect.
"MATERIAL ADVERSE EFFECT": a material adverse effect on (a) the
assets, business, financial condition or results of operations of the Company,
the Subsidiary and HGS, taken as a whole or (b) the validity or enforceability
of this Agreement.
"MMBtu": million British thermal units.
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<PAGE>
"MPSC": the Mississippi Public Service Commission.
"NET DEBT": (a) the principal amount of all indebtedness for borrowed
money outstanding on the Closing Date and the amount of any prepayment penalty
that would be payable in respect of the prepayment thereof if such indebtedness
had been prepaid at the Closing, less (b) (i) all amounts (net of brokerage and
other costs associated with termination of the Interest Rate Hedge Agreement)
that would be received by HGS from the Hedge Provider upon termination of the
Interest Rate Hedge Agreement to the extent such Interest Rate Hedge Agreement
has not been terminated prior to Closing and to the extent such amounts are not
included in the Closing Date Working Capital and (ii) the amount of the current
portion of all long-term indebtedness included in the Closing Date Working
Capital.
"NGA": the Natural Gas Act of 1938, as amended.
"OPERATING PERIOD": the period in which the Sellers have owned,
directly or indirectly, a majority interest in the Company.
"PARTNERSHIP INTERESTS": the partnership interests of HGS.
"PERMITTED ENCUMBRANCES": (i) statutory liens for Taxes, labor or
materials where payment for such items is not yet delinquent; (ii) any defects
or imperfections of title, easements, surface leases or rights or plat
restrictions that are not material in character, amount or extent and do not
materially detract from the value, or materially interfere with the use, of the
properties of the Company, the Subsidiary or HGS, or materially prevent the
Company, the Subsidiary or HGS from receiving revenues from such properties or
otherwise materially impair, or increase the cost of, the business operations
being conducted thereon; and (iii) those set forth in Schedule 3.11(b);
provided, however, that the encumbrances set forth in paragraphs I, II, III and
IV of Schedule 3.11(b) shall not be Permitted Encumbrances at the Closing;
provided, further, that if the Purchaser requests that the indebtedness listed
on Schedule 5.8 not be repaid, the encumbrance in paragraph II of Schedule
3.11(b) shall be a Permitted Encumbrance.
"PRIME RATE": the rate of interest per annum publicly announced from
time to time by Chemical Bank as its prime rate in effect at its principal
office in New York City.
"PURCHASER": as defined in the opening paragraph of this Agreement.
"PURCHASER'S ACCOUNTANTS": KPMG Peat Marwick LLP, the Purchaser's
independent certified public accountant.
"REAL PROPERTY": as defined in Section 3.14(a)(1).
"SELLERS": as defined in the opening paragraph of this Agreement.
"SHARES": as defined in the recitals of this Agreement.
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"SUBSIDIARY": as defined in the recitals of this Agreement.
"SUBSIDIARY SHARES": as defined in the recitals of this Agreement.
"TAX AUDITS": as defined in Section 5.9.
"TAX CHALLENGE": as defined in Section 5.9.
"TAXES": all taxes, estimated taxes, charges, fees, levies or other
assessments including, without limitation, taxes relating to income, gross
receipts, excise, property, transfer, occupation, sales, use, service, license,
payroll, franchise, withholding, alternative or add-on minimum tax, ad valorem,
profits, severance, stamp, premiums, gross receipts, custom duty, windfall
profit, employment or other tax, governmental fee or like assessment or charge
of any kind whatsoever, together with any interest and any penalty, addition to
tax or additional amount imposed by the United States or any state, local or
foreign government or subdivision or agency thereof whether computed on a
separate, consolidated, unitary, combined or any other basis.
"TAX GROUP": the affiliated group (as defined in Section 1504 of the
Code) of corporations of which the Company is the common parent, any other
affiliated group of which the Company or the Subsidiary has at any time been a
member, and any similar group of corporations as determined for purposes of
filing combined, consolidated or other state, local and foreign income,
franchise or other tax returns.
"TAX INDEMNIFICATION DATE": as defined in Section 5.9.
"TAX RETURN": any report, statement, form, return or other document
or information filed with or required to be supplied to a taxing authority in
connection with Taxes.
"TREASURY REGULATIONS": the regulations promulgated by the Department
of the Treasury under the Code.
"UNDERGROUND STORAGE RIGHTS": as defined in Section 6.2(e)(ii).
"WORKING CAPITAL": as of a particular date, the total amount of
current assets as of such date less the total amount of current liabilities as
of such date of the Company, the Subsidiary and HGS on a consolidated basis;
provided, however, the parties hereto agree that no adjustments to Working
Capital of the Company, the Subsidiary and HGS on a consolidated basis need to
be made to reflect accruals for compliance with Clean Air Act matters,
compressor maintenance or maintenance or plugging of disposal wells.
1.2 OTHER DEFINITIONAL PROVISIONS.
(a) The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole
and not
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<PAGE>
to any particular provision of this Agreement, and Article, Section, Subsection,
Schedule and Exhibit references are to this Agreement unless otherwise
specified.
(b) The meanings given to terms defined herein shall be equally
applicable to both the singular and plural forms of such terms.
ARTICLE 2.
DELIVERY AND PAYMENT FOR SHARES
2.1 PURCHASE AND SALE. Upon the terms and subject to the conditions
of this Agreement, the Sellers agree to sell to the Purchaser, free and clear of
all liens, pledges, encumbrances, equities and claims whatsoever, and the
Purchaser agrees to purchase from the Sellers, the Shares at the Closing. The
purchase price for the Shares shall be paid as provided in Section 2.3.
2.2 CLOSING. Subject to the conditions of Article 6 hereof, unless
this Agreement shall have been terminated and the transactions herein
contemplated shall have been abandoned pursuant to the provisions of
Section 7.1, the closing (the "CLOSING") of the purchase and sale of the Shares
shall take place at the offices of Simpson Thacher & Bartlett, 425 Lexington
Avenue, New York, New York 10017, as soon as practicable after the satisfaction
or waiver of the conditions set forth in Article 6, or at such other place, time
and date as the parties may mutually agree.
2.3 PURCHASE PRICE.
(a) The aggregate purchase price for all of the Shares shall be
$77,963,044 (the "BASE AMOUNT"), subject to adjustment as provided in
Section 2.3(b) below.
(b) The Base Amount shall be adjusted as follows: (i) if the Closing
Date Working Capital shall exceed the December 31 Working Capital, then the
Base Amount shall be increased by the amount of such excess, (ii) if the
December 31 Working Capital shall exceed the Closing Date Working Capital,
then the Base Amount shall be decreased by the amount of such excess, (iii)
the Base Amount shall be decreased by the amount of Net Debt, (iv) the Base
Amount shall be decreased to the extent required by Section 5.10 and
(v) the Base Amount shall be increased or decreased, as applicable, by the
Base Gas Amount.
2.4 PAYMENT OF PURCHASE PRICE. The purchase price for the Shares
shall be paid as follows:
(a) At the Closing, and against delivery of certificates representing
the Shares as provided in Section 2.6, the Purchaser shall pay to the
Sellers, by wire transfer of immediately available funds to (i) such
accounts as the Sellers have designated in writing to the Purchaser at
least two Business Days prior to the Closing Date, an aggregate amount
equal to $76,463,044 plus (or minus) the estimated amount (determined in
accordance with Section 2.5) of the adjustment of the Base
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Amount pursuant to Section 2.3(b) and (ii) the collateral security account
set forth in the Collateral Security Agreement, $1,500,000.
(b) Not later than three days after the end of the 30-day period
during which the Purchaser may object pursuant to Section 2.7(b), either
the Purchaser shall pay to the Sellers (by wire transfer of immediately
available funds) the undisputed balance, if any, of the Base Amount as
adjusted pursuant to Section 2.3(b) that has not been paid, or the Sellers
shall pay to the Purchaser (by wire transfer of immediately available
funds) the undisputed amount by which the amount paid to the Sellers under
Section 2.4(a) exceeds the Base Amount as adjusted pursuant to
Section 2.3(b).
(c) Not later than three days after any disputed items are finally
determined in accordance with Section 2.7(b), either the Purchaser shall
pay to the Sellers (by wire transfer of immediately available funds) the
balance, if any, of the Base Amount as adjusted pursuant to Section 2.3(b)
that has not been paid, or the Sellers shall pay to the Purchaser (by wire
transfer of immediately available funds) the balance, if any, of the amount
by which the amount paid to the Sellers under Sections 2.4(a) and (b)
exceeds the Base Amount as adjusted pursuant to Section 2.3(b).
Any payment under Section 2.4(b) or (c) shall be accompanied by payment of an
amount of interest on the amount being paid, from the Closing Date to the date
of the payment, calculated at the Prime Rate. All payments under this
subsection shall be allocated among the Sellers in accordance with their
respective percentage holdings of the Shares.
2.5 ESTIMATE OF ADJUSTMENTS. The Sellers shall cause the chief
financial officer or other appropriate executive of the Company to prepare and
submit to the Purchaser, not later than two Business Days prior to the Closing
Date, a written estimate of the amount of the adjustment to the Base Amount
under Section 2.3(b). The amount payable at the Closing pursuant to
Section 2.4(a) shall be based upon that estimate. The estimate shall be based
upon the unaudited consolidated balance sheet of the Company as of the close of
business on the last day of the calendar month preceding the Closing Date for
which a balance sheet has been prepared (provided such balance sheet is as of a
date no earlier than 45 days before the Closing Date), adjusted to reflect the
state of facts expected to exist as of the close of business on the Closing
Date.
2.6 DELIVERY OF SHARES. At the Closing, the Sellers shall deliver or
cause to be delivered to the Purchaser certificates for the Shares, registered
in the name of the Purchaser or such other name as the Purchaser may specify by
notice to the Sellers at least two Business Days prior to the Closing, together
with evidence of the cancellation of the certificates for the Shares previously
registered in the name of the Sellers.
2.7 CLOSING DATE BALANCE SHEET.
(a) As promptly as practicable, but not more than 90 days, after the
Closing Date, the Sellers shall cause to be prepared and delivered to the
Purchaser
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a consolidated balance sheet of the Company, the Subsidiary and HGS as of
the Closing adjusted as provided herein (the "CLOSING DATE BALANCE SHEET").
The Closing Date Balance Sheet shall be prepared in accordance with GAAP
applied in a manner consistent with the application of those principles in
the Company's audited consolidated financial statements as of December 31,
1994. The Closing Date Balance Sheet shall be accompanied by a report of
the Accountants stating that they have conducted an audit of the Closing
Date Balance Sheet, that the Closing Date Balance Sheet has been prepared
in accordance with GAAP, that they are not aware of any material
modification that must be made for it to be in accordance with GAAP applied
in a manner consistent with the application of those principles in the
Company's audited consolidated financial statements as of December 31,
1994, and that the Closing Date Balance Sheet fairly presents the
consolidated financial position of the Company, the Subsidiary and HGS as
of the Closing Date. The Purchaser and its representatives shall be
entitled to review and obtain copies of all work papers relating to such
Closing Date Balance Sheet and shall be entitled to consult with the
Sellers and the Accountants regarding such review.
(b) Subject to the provisions of Section 2.4, the Closing Date
Balance Sheet shall be final and binding on the parties unless, within 30
days after it is received by the Purchaser, the Purchaser gives written
notice to the Sellers that it objects to any item on the Closing Date
Balance Sheet and the aggregate effect of all items objected to in such
notice affect the calculation of the amount of the Closing Date Working
Capital by an amount in excess of $75,000. To be effective, any written
notice of objection by the Purchaser must set forth in reasonable detail
the items objected to and the basis for such objection. Such notice shall
be accompanied by a certificate of the Purchaser's Accountants, supporting
the positions taken by the Purchaser in such notice. If the Purchaser
gives written notice of objection in accordance with this Section, the
Purchaser and the Sellers shall consult with respect to any item objected
to and their joint written determination with respect to the item or items
in dispute shall be final and binding. If they are unable to reach
agreement within 15 days after the notice of objection is given, the
dispute shall be resolved by Arthur Andersen LLP or such other firm of
independent certified public accountants of recognized national standing
acceptable to the Sellers and the Purchaser, and the determination by that
accounting firm shall be final and binding on the parties. Any third firm
of independent accountants so approved shall make a final determination as
to all disputed matters no later than 30 days after its appointment.
(c) The fees and expenses of the Accountants shall be borne by the
Sellers, the fees and expenses of the Purchaser's Accountants shall be
borne by the Purchaser, and the fees and expenses of any other independent
accountant who render services pursuant to Section 2.7(b) shall be borne
50% by the Purchaser and 50% by the Sellers.
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ARTICLE 3.
REPRESENTATIONS AND WARRANTIES OF THE SELLERS
Each Seller severally represents and warrants to the Purchaser as
follows:
3.1 ORGANIZATION. Such Seller (a) is a duly organized limited
partnership under the laws of Delaware and is validly existing and in good
standing under the laws of Delaware and (b) has full power and authority to own
all of its properties and assets and to carry on its business as it is now being
conducted.
3.2 AUTHORITY; ENFORCEABILITY. Such Seller has the partnership power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated on the part of such Seller hereby. The execution and
delivery by such Seller of this Agreement and the consummation by such Seller of
the transactions contemplated hereby have been duly authorized by the general
partner of such Seller. No other proceeding on the part of such Seller or its
partners is necessary to authorize the execution and delivery of this Agreement
and the consummation by such Seller of the transactions contemplated hereby or
the performance of its obligations hereunder. This Agreement has been duly
executed and delivered by such Seller and is a valid and binding agreement of
such Seller, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws
relating to or affecting creditors' rights generally and by general equity
principles.
3.3 NON-CONTRAVENTION. Except as set forth in Schedule 3.3, the
execution and delivery by such Seller of this Agreement does not, and the
consummation by it of the transactions contemplated hereby and the performance
by such Seller of the obligations which it is obligated to perform hereunder
will not, (a) violate any provision of its partnership agreement or the
corporate charter or by-laws or partnership agreement, as the case may be, of
the Company, the Subsidiary or HGS, (b) violate, or result in the violation of,
any provision of, or result in the termination of or the acceleration of, or
entitle any party to accelerate any obligation or indebtedness under, or result
in the imposition of any lien upon or the creation of a security interest in any
of the Shares, the Subsidiary Shares or the Partnership Interests, or result in
the loss of any material benefit of any mortgage, lien, lease, franchise,
license, permit, contract, agreement or other instrument to which any of the
Sellers, the Company, the Subsidiary or HGS is a party, or by which any of the
Sellers, the Company, the Subsidiary or HGS is bound, or to which the property
or assets of the Company, the Subsidiary or HGS are subject, and that could, in
any such event, have a Material Adverse Effect, or (c) subject to the approvals
required as set forth in Section 3.4, violate or conflict with any other
restriction of any kind or character to which any of the Sellers, the Company,
the Subsidiary or HGS, or any of their respective property or assets, is subject
which would prevent or materially restrict or delay the consummation of the
transactions contemplated hereby or result in any material limitation on the
ability of the Company, the Subsidiary or HGS to operate their respective
businesses in the manner heretofore operated.
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3.4 CONSENTS, ETC. Except for filings under the HSR Act, Section 721
of the Defense Production Act of 1950, as amended (commonly known as the
Exon-Florio Amendment) and as set forth in Schedule 3.4, no consent,
authorization, order or approval of, or filing or registration with, any court,
governmental agency or commission, board or other administrative or regulatory
body which has not been obtained or made is required (a) for or in connection
with the execution and delivery of this Agreement by the Sellers and the
consummation by the Sellers of the transactions contemplated hereby and the
performance by the Sellers of their obligations hereunder or (b) for the
Company, the Subsidiary or HGS to operate its business after the Closing Date in
substantially the manner in which it currently is operated.
3.5 CAPITAL STOCK AND PARTNERSHIP INTERESTS.
(a) The entire authorized capital stock of the Company consists of
10,000 shares of common stock, par value $.01 per share, 973.50 of which
are issued and outstanding as of the date hereof, and all of such Shares
are validly issued, fully paid and nonassessable. The Sellers are the
beneficial and record holders of all such issued and outstanding Shares,
and own such Shares free and clear of any liens, claims, charges, pledges,
equities or other encumbrances. There are no outstanding obligations,
warrants, options or other rights to subscribe for or otherwise acquire or
purchase, or other understandings, plans, contracts or commitments
providing for the issuance of, or the granting of rights to acquire, shares
of stock of any class of the Company or any securities or other instruments
convertible into or exchangeable for shares of stock of any class of the
Company or rights to acquire the same. The Shares are not subject to any
restriction on transferability, including grants of first refusal, other
than restrictions on transfer under applicable Federal and state securities
laws.
(b) The entire authorized capital stock of the Subsidiary consists of
1,000 shares of common stock, par value $1.00 per share, all of which are
issued and outstanding as of the date hereof, and all such Subsidiary
Shares are validly issued, fully paid and nonassessable. The Company is
the beneficial and record owner of all such issued and outstanding
Subsidiary Shares, and owns such Subsidiary Shares free and clear of any
liens, claims, charges, pledges, equities or other encumbrances. There are
no outstanding obligations, warrants, options or other understandings,
rights to subscribe for or otherwise acquire or purchase, or other
understandings, plans, contracts or commitments providing for the issuance
of, or the granting of rights to acquire, shares of stock of any class of
the Subsidiary or any securities or other instruments convertible into or
exchangeable for shares of stock of any class of the Subsidiary or rights
to acquire the same. No Subsidiary Shares are subject to any restriction
on transferability, other than restrictions on transfer, including grants
of first refusal, under applicable Federal and state securities laws.
(c) The Partnership Interests consists solely of general partnership
interests, of which the Company holds 50% of such Partnership Interests and
the Subsidiary holds the remaining 50% of such Partnership Interests. Such
Partnership Interests are
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held by the Company and the Subsidiary free and clear of all liens,
charges, pledges, equities and other encumbrances and represent all of the
outstanding Partnership Interests. There are no outstanding obligations,
warrants, options or other rights to subscribe for or otherwise acquire or
purchase, or other understandings, plans, contracts or commitments
providing for the issuance of, or the guaranty of rights to acquire,
interests of any nature or securities of HGS or any securities or other
interests convertible into or exchangeable for Partnership Interests or
rights to acquire the same. Except as set forth in the partnership
agreement relating to HGS, no Partnership Interests are subject to any
restriction or transferability, or any rights of first refusal.
(d) The Sellers have caused to be made available to the Purchaser the
minute books and stock transfer records of the Company and the Subsidiary,
which minute books are accurate and complete in all material respects and
contain the minutes of all meetings of the stockholders and the board of
directors and all committees thereof of the Company, and which transfer
records reflect all issuances and transfers of record of the capital stock
of the Company.
(e) The Sellers have caused to be made available to the Purchaser all
books and records relating to the partnership status of HGS.
3.6 ORGANIZATION AND QUALIFICATION OF THE COMPANY, THE SUBSIDIARY AND
HGS.
(a) The Company and the Subsidiary are each duly incorporated,
validly existing and in good standing under the laws of the jurisdiction of
its organization and each has full corporate power and authority to own all
of its properties and assets and to carry on its business as it is now
being conducted. The Company and the Subsidiary are each duly qualified or
licensed to do business as a foreign corporation and are in good standing
in each jurisdiction in which the nature of the business conducted by them
or the character or location of the properties owned or leased by them
makes such qualification or licensing necessary, except where the failure
to be so qualified or licensed would not have a Material Adverse Effect.
(b) HGS is a general partnership duly organized, validly existing and
in good standing under the laws of the State of Delaware and has full
partnership power and authority to own all of its properties and assets and
to carry on its business as it is now being conducted.
3.7 FINANCIAL STATEMENTS.
(a) Schedule 3.7 contains a copy of the audited consolidated balance
sheet of the Company as of December 31, 1994 and the related statements of
income and cash flows for the two years then ended (the "FINANCIAL
STATEMENTS"). The Financial Statements (including the notes thereto)
present fairly the consolidated financial position and results of
operations of the Company, the Subsidiary and HGS as of the
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date and for the periods specified therein set forth, and have been
prepared in accordance with GAAP consistently applied.
(b) Except for the matters referred to in written reports to the
Company, the Subsidiary or HGS, or their respective managements, from their
independent certified public accountants with respect to the periods
covered thereby, copies of which have been provided to the Purchaser, the
Company, the Subsidiary and HGS (i) keep books, records and accounts that,
in reasonable detail, accurately and fairly reflect the transactions and
dispositions of assets of the Company, the Subsidiary and HGS and
(ii) maintain a system of internal accounting controls sufficient to
provide reasonable assurance that all transactions are recorded as
necessary to permit preparation of financial statements in conformity with
GAAP and to maintain accountability for assets. None of the Company, the
Subsidiary or HGS, nor, to the knowledge of the Sellers, any employee or
agent of the Company, the Subsidiary or HGS, directly or indirectly, has
made any payment of funds of the Company, the Subsidiary or HGS or received
or retained any funds in violation of any applicable law, rule or
regulation.
(c) To the knowledge of Sellers, none of the Company, the Subsidiary
or HGS has any liability or obligation which is not reflected in the
Financial Statements and which is required in accordance with GAAP to be
reflected in the Financial Statements.
(d) The audited consolidated balance sheet of the Company as of
December 31, 1994, pro forma for the adjustments contemplated by this
Agreement, attached hereto as Schedule 1.1, is based on the consolidated
balance sheet of the Company contained in the Financial Statements and
reflects only those adjustments described in Schedule 1.1
3.8 ABSENCE OF CERTAIN CHANGES OR EVENTS. To the knowledge of such
Seller, since December 31, 1994, the Company, the Subsidiary and HGS have
preserved, in all material respects, the business organization of the Company,
the Subsidiary and HGS intact and the good will of the suppliers, customers and
others having business relations with the Company, the Subsidiary and HGS.
Except as contemplated by, or incurred in connection with, this Agreement or as
set forth on Schedule 3.8, since December 31, 1994, the Company, the Subsidiary
and HGS have conducted their respective businesses in the ordinary course and
consistent with past practice and have not:
(a) incurred any liability or obligation (accrued, absolute,
contingent or otherwise) except for liabilities or obligations incurred in
the ordinary course of business (none of which would have a Material
Adverse Effect) or as contemplated by this Agreement or reflected in the
Financial Statements; or entered into any lease of any property, real or
personal, whether as lessor or lessee, involving payments of more than
$10,000 in the aggregate;
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(b) discharged or satisfied any lien or encumbrance, or paid or
satisfied any obligation or liability (accrued, absolute, contingent or
otherwise), other than in the ordinary course of business and consistent
with past practice;
(c) mortgaged, pledged or subjected to any lien, charge or other
encumbrance any of the assets or properties of the Company, the Subsidiary
or HGS;
(d) sold, assigned or transferred any asset, property or business or
canceled any debt or claim or waived any right, except in the ordinary
course of business and consistent with past practice;
(e) made or authorized any capital expenditure for additions to plant
and equipment accounts of the Company, the Subsidiary or HGS of more than
$50,000;
(f) made any loan to any stockholder, partner or any affiliate of any
stockholder or partner, or declared, set aside or paid to any stockholder
or partner any dividend or other distribution in respect of its capital
stock or partnership units; or redeemed or repurchased any of its capital
stock, or agreed to take any such action, except for the dividend of the
common stock of Pajac Inc., a wholly-owned subsidiary of the Company, to
the Sellers;
(g) split, combined, reclassified, issued, sold, offered to sell,
transferred, pledged, encumbered or delivered or agreed to issue, sell,
offer for sale or transfer, pledge, encumber or deliver any stock, bond,
debenture or other security or interest of the Company, the Subsidiary or
HGS or any right of any kind to acquire any stock, bond, debenture or other
security of the Company, the Subsidiary or HGS;
(h) experienced damage, destruction or loss (whether or not covered
by insurance) which has had a Material Adverse Effect;
(i) experienced any Material Adverse Change;
(j) changed or amended its certificate or articles of incorporation
or bylaws or its partnership agreement, as applicable;
(k) except for changes, if any, contemplated by this Agreement or
required by GAAP and reflected in the Financial Statements, made any change
in accounting methods or practices, including without limitation the manner
of establishing reserves;
(l) modified or agreed to modify any Gas Purchase, Transportation or
Storage Contract, except as may have been consented to in writing by
Purchaser prior to such modification or agreement to modify; or
(m) entered into any agreement, commitment or understanding, whether
in writing or otherwise, with respect to any of the foregoing, except as
may have
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been consented to in writing by Purchaser prior to the entering into of any
such agreement, commitment or understanding.
3.9 LEGAL PROCEEDINGS. There is no action, suit, claim, proceeding,
inquiry or investigation pending or, to the knowledge of any of the Sellers,
threatened against or affecting the Company, the Subsidiary or HGS or any of the
assets, business or prospects of the Company, the Subsidiary or HGS, at law or
in equity, or before or by any arbitrator or any Federal, state, local or other
governmental department, commission, board, bureau, agency or instrumentality,
domestic or foreign, that could reasonably be expected to result in a liability
or loss to the Company, the Subsidiary or HGS of $25,000 or more or the effect
of which would be to prohibit, restrict, or affect, any business practice or the
acquisition of any property or the conduct of business in any area, and Sellers
know of no basis for any of the foregoing. None of the Company, the Subsidiary
or HGS is in default with respect to any order, writ, injunction or decree
served upon the Company, the Subsidiary or HGS of or by any court or any
arbitrator of any Federal, state, local or other governmental department,
commission, board, bureau, agency or instrumentality, domestic or foreign.
There is no pending action or suit brought by the Company, the Subsidiary or HGS
against any other party.
3.10 EMPLOYEE BENEFITS. Except as set forth in Schedule 3.10, none of
the Company, the Subsidiary or HGS is a party, nor in the past five years has
any of them ever been a party, to any employee pension benefit plans as defined
in Section 3(2) of ERISA, including but not limited to, any pension, retirement,
profit sharing, deferred compensation, stock or cash bonus, stock option or
purchase or other similar plan, policy, arrangement or understanding with
respect to the payment of money or other property or the provision of any
benefit to any current, former or prospective employee of the Company, the
Subsidiary or HGS. Schedule 3.10 includes a copy of all employee welfare
benefit plans as defined in Section 3(1) of ERISA, including but not limited to,
health, life insurance, disability, severance or other similar plan, policy,
arrangement or understanding with respect to the provision of any welfare
benefit to any current, former or prospective employee of the Company, the
Subsidiary or HGS. The Company, the Subsidiary or HGS have provided in
Schedule 3.10, as to each such plan, agreement or arrangement, as applicable, a
complete and accurate copy of (a) such plan, agreement or arrangement and,
(b) the trust, group annuity contract, insurance policy or other document which
provides funding for the plan, agreement or arrangement. None of the Company,
the Subsidiary or HGS has been required by applicable law to file a Form 5500,
990 or 1041 report nor has received or sent correspondence from the IRS or the
Department of Labor which relates to one or more of the plans, arrangements or
agreements concerning issues still pending. Each employee benefit plan
maintained by the Company, the Subsidiary or HGS is in compliance with all
applicable laws.
3.11 PROPERTIES, CONTRACTS AND OTHER DATA.
(a) Schedule 3.11 contains a list setting forth as of the date hereof
the following:
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(i) all the real property owned of record or beneficially by the
Company, the Subsidiary or HGS and all real property leased by the
Company or the Subsidiary as lessee or lessor (indicating ownership or
leasehold interest) or rights of way of the Company, the Subsidiary or
HGS;
(ii) all Gas Purchase, Transportation and Storage Contracts; and
(iii) (A) all mortgages, indentures, loan agreements and
other borrowing agreements to which the Company, the Subsidiary or HGS
is a party as obligor, or to which it or any of their respective
owned assets or properties is subject, which relate to indebtedness of
the Company, the Subsidiary or HGS for borrowed money or to
mortgaging, pledging or otherwise placing a lien on any of their
respective assets; (B) all guarantees and indemnification agreements
given or entered into by the Company, the Subsidiary or HGS with
respect to any obligations or indebtedness for borrowed money or in
support of any other obligations the principal obligor of which is not
the Company, the Subsidiary or HGS (other than letters of credit and
other instruments entered into in the ordinary course of business);
and (C) other than as separately disclosed to the Purchasers in a
schedule hereto, all other written contracts, written leases, written
understandings or written commitments, involving the payment by or to
the Company, the Subsidiary or HGS of more than $50,000 per annum with
respect to any one contract or commitment or $100,000 per annum with
respect to any related group of contracts or commitments.
None of the Company, the Subsidiary or HGS is in default under any of the
Gas Purchase, Transportation and Storage Contracts or other agreements
listed in Schedule 3.11 and the consummation of the transactions
contemplated by this Agreement will not result in any such default, or
right of acceleration or termination of any such agreements or a loss of
any material right under any of such agreements.
(b) The Company, the Subsidiary and HGS each have good and marketable
title to all of their respective properties and assets, real and personal,
free and clear of all liens, mortgages, security interests, pledges,
charges, restrictions, reservations, claims or other encumbrances except
for Permitted Encumbrances, including those set forth in Schedule 3.11(b);
provided, however, that the encumbrances set forth in paragraphs I, II, III
and IV of Schedule 3.11(b) shall not be Permitted Encumbrances at the
Closing; provided, further, that if the Purchaser requests that the
indebtedness listed on Schedule 5.8 not be repaid, the encumbrance in
paragraph II of Schedule 3.11(b) shall be a Permitted Encumbrance.
3.12 CERTAIN TAX MATTERS.
(a) Neither Seller is a "foreign person" within the meaning of
section 1445 of the Code.
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(b) (i) All Tax Returns required to be filed on or before the Closing
Date or by or on behalf of the Company, the Subsidiary, HGS and the Tax
Group have been or will be timely filed; (ii) the Tax Returns are, if
already filed, and, if not already filed will be, complete and accurate
representations (including, but not limited to, proper allocations of the
income of Company, the Subsidiary, HGS and other members of the Tax Group
for purposes of state or local income or franchise Tax Returns) of the
liabilities for Taxes to which such Tax Returns relate and accurately set
forth or will accurately set forth all items to the extent required to be
reflected or included in such returns; (iii) each of the Company, the
Subsidiary and HGS has paid (or adequate provision has been made on the
Financial Statements for the payment of) the Company's, the Subsidiary's
and HGS' liability for all Taxes shown due on such Tax Returns that have
been filed or will be filed; (iv) there are no liens for Taxes due and
payable upon any assets of the Company, the Subsidiary or HGS;
(v) Schedule 3.12 contains a complete list of all Tax Returns in respect of
the Company, the Subsidiary, HGS and the Tax Group that have been, are
being or, to the knowledge of Sellers, are proposed to be audited by the
Internal Revenue Service or any state, local or foreign governmental agency
charged with administering tax laws and with respect to which the statute
of limitations has not expired or has been extended, and all adjustments
currently pending in such audits have been reflected in the Financial
Statements; (vi) except as set forth in Schedule 3.12, there is no action,
suit, proceeding, investigation, audit or claim pending, or, to the
knowledge of Sellers, proposed against or with respect to the Company, the
Subsidiary, HGS or the Tax Group in respect of any Taxes; (vii) none of the
Tax Returns filed by or on behalf of the Company, the Subsidiary, HGS and
the Tax Group contains a disclosure statement under Section 6662 of the
Code (or Section 6661 of the Code for Tax Returns the due date for which,
not including extensions, was prior to January 1, 1990), or any comparable
provision of state, local or foreign law; (viii) each of the Company, the
Subsidiary and HGS has made timely payment to the proper governmental
authorities of all Taxes required to be withheld from wages paid to its
employees; (ix) no deficiencies for any Taxes of the Company, the
Subsidiary, HGS or the Tax Group have been claimed or proposed by any
governmental authority (whether orally or in writing, definitively or
tentatively); (x) no requests for waivers of the time to assess any
deficiency for any material amount of Taxes are pending with respect to the
Company, the Subsidiary, HGS or the Tax Group and (xi) except as set forth
in Schedule 3.12, there are no pending or, to the knowledge of Sellers,
threatened Tax audits, investigations or claims with respect to the
Company, the Subsidiary, HGS or the Tax Group for or relating to (A) the
assessment or collection of Taxes or (B) a claim for refund made with
respect to Taxes previously paid, and, to the knowledge of the Sellers,
there are no matters under discussion or dispute with any governmental
authorities with respect to Taxes of Company, the Subsidiary, HGS or the
Tax Group that are likely to result in a further liability for Taxes.
(c) Except as provided in Schedule 3.12, no extension of time has
been requested or granted with respect to the Tax Returns of the Company,
the Subsidiary,
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HGS or the Tax Group which will extend the due date for such Tax Returns
beyond the Closing Date.
(d) The consummation of this Agreement and the other transactions
contemplated in connection therewith will not result in any "excess
parachute payments" within the meaning of Section 280G of the Code.
(e) The Company, the Subsidiary, HGS and other members of the Tax
Group have not participated in or cooperated with an international boycott
within the meaning of Section 999 of the Code nor have the Company, the
Subsidiary, HGS and other members of the Tax Group had operations prior to
the Closing Date which are or may hereafter become reportable thereunder.
(f) Neither the Company, the Subsidiary nor HGS is required to
include in income any adjustment pursuant to Section 481(a) of the Code (or
similar provisions of other laws or regulations) by reason of a change in
accounting method, and the Internal Revenue Service (or other taxing
authority) has not proposed, and, to the knowledge of Sellers, is not
considering proposing, any such change in accounting method.
(g) Except as set forth in Schedule 3.12, no power of attorney
granted by Company, the Subsidiary, HGS or the Tax Group with respect to
the determination of Taxes is in force.
(h) Neither the Company nor the Subsidiary has consented to the
application of Section 341(f) of the Code.
(i) No excess loss account (as described in Section 1.1502-19 of the
Treasury Regulations) exists with respect to the Subsidiary.
3.13 COMPLIANCE WITH LAWS. Each of the Company, the Subsidiary and
HGS:
(a) is in compliance with all laws, regulations, reporting and
licensing requirements, and orders applicable to its business or employees
conducting its business, the breach or violation of which would have a
Material Adverse Effect;
(b) has received no written or, to Sellers' knowledge, oral
notification or communication from any agency or department of any federal,
state, local or foreign government or any regulatory authority or the staff
thereof (i) asserting that the Company, the Subsidiary or HGS is not in
compliance with any of the statutes, regulations or ordinances which such
governmental authority or regulatory authority enforces, or
(ii) threatening to revoke any license, franchise, permit, or governmental
authorization; and
(c) is not a party to any written order, decree, agreement or
memorandum of understanding with, or a commitment letter or similar
submission to, or a recipient
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of any extraordinary supervisory letter from, any federal or state
governmental agency or authority which restricts in any material respect
the conduct of business of the Company, the Subsidiary or HGS; nor has the
Company, the Subsidiary or HGS been advised by any such regulatory
authority that such authority is contemplating issuing or requesting any
such order, decree, agreement, memorandum of understanding, extraordinary
supervisory letter, commitment letter or similar submission.
3.14 ENVIRONMENTAL LAWS.
Except as set forth in the letter dated April 18, 1995, of Malcolm Pirnie,
Inc. to the Purchaser or as set forth in Schedule 3.14, during the Operating
Period and, to the knowledge of the Seller, prior to the Operating Period:
(a) (1) None of the Company, the Subsidiary or HGS has engaged in or
permitted any operation or activity upon, or any use or occupancy of any
real property or leased property owned, leased or operated by any of them
(the "REAL PROPERTY" and "LEASED PROPERTY" respectively) for the purpose of
or in any way involving the handling, manufacture, treatment, storage, use,
generation, release, discharge, refining, dumping or disposal (whether
legal or illegal, accidental or intentional) of any Hazardous Materials in
amounts or concentrations that would require remedial action under any
Environmental Requirement on, under, in or about any Real Property or
Leased Property. None of the Company, the Subsidiary or HGS has
transported or caused to be transported any Hazardous Materials from any
Real Property or Leased Property to any offsite location which could be the
subject of any Federal, state or local remedial action that could
reasonably be expected to have a Material Adverse Effect. No Hazardous
Materials have been produced, constructed, deposited, disposed of or stored
by the Company, the Subsidiary or HGS or, to the Sellers' knowledge, any
other person, on, under, in or about any Real Property or Leased Property
other than in accordance with Environmental Requirements, other than
noncompliances that would have no effect on the financial condition of the
Company, the Subsidiary or HGS or their respective operations. To the
Sellers' knowledge, no Hazardous Materials have migrated from any Real
Property or Leased Property upon, about or beneath other properties, and to
the Sellers' knowledge, no Hazardous Materials have migrated or threaten to
migrate from other properties upon, about or beneath any Real Property or
Leased Property, in either case in amounts or concentrations that would
require remedial or removal action on the part of the Company, the
Subsidiary or HGS to be in compliance with Environmental Requirements.
(2) No asbestos is present at or has been disposed of by the
Company, the Subsidiary or HGS or, to the Sellers' knowledge, any other
person, on or from any Real Property or Leased Property.
(3) No underground storage tank regulated by any Environmental
Requirement has been located on any Real Property or Leased Property by the
Company, the Subsidiary or HGS or, to the Sellers' knowledge, any other
person,
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unless such underground storage tank is in material compliance with all
Environmental Requirements.
(4) No polychlorinated biphenyls (PCBs), or transformer,
capacitor, ballast or other equipment that contains dielectric fluid
containing PCBs at levels in excess of 50 parts per million, and no
insulating material containing urea formaldehyde have been construed,
placed, deposited, stored or disposed of by the Company, the Subsidiary or
HGS or, to the Sellers' knowledge, any other person, on any Real Property
or Leased Property.
(5) All Real Property or Leased Property and all activities
thereon, including without limitation the use, maintenance and operation of
all Real Property or Leased Property and all activities and conduct of
business related thereto, have complied in all material respects with all
Environmental Requirements.
(6) None of the Company, the Subsidiary or HGS, or any officer
or employee thereof, has received any written or, to Sellers' knowledge,
oral notice or other communication concerning (A) any violation or alleged
or probable violation of Environmental Requirements, whether or not
corrected to the satisfaction of the appropriate authority or (B) any
alleged liability for environmental damages in connection with any Real
Property or Leased Property. No writ, injunction, decree, order or
judgment relating to the foregoing is outstanding. There has been no
lawsuit, claim, proceeding, citation, directive, summons or investigation
pending or, to the Sellers' knowledge, threatened relating to the
ownership, use, maintenance or operation of any Real Property or Leased
Property by any person, or relating to any alleged violation by the
Company, the Subsidiary or HGS of any applicable Environmental Requirements
or the alleged presence or use of any Hazardous Materials relating to the
Real Property or the Leased Property, and, to the Sellers' knowledge, no
reasonable basis exists for the institution or filing of any such lawsuit,
claim, proceeding, citation, directive, summons or investigation.
(b) To the knowledge of Sellers, none of the Company, the Subsidiary
or HGS has received any written or, to Sellers' knowledge, oral notice that
any such entity is not in compliance with all Environmental Requirements.
(c) The Sellers have furnished the Purchaser with copies of all
claims, complaints, reports, assessments, investigations or other material
documents in the files of Sellers concerning the Company, the Subsidiary or
HGS during the past three years which relate in any way to Environmental
Requirements.
(d) None of the Company, the Subsidiary or HGS, or any entity
previously owned or controlled, directly or indirectly, by the Company, the
Subsidiary or HGS, has leased, operated, used or owned any facilities as to
which, if deemed Real Property or Leased Property, would be in violation of
the representations and warranties in this Section 3.14 and would result in
liability on the part of the Company, the Subsidiary or HGS under any
Environmental Requirement.
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3.15 AFFILIATE TRANSACTIONS. Except as expressly contemplated by, or
incurred in connection with, this Agreement or as set forth in Schedule 3.15,
there is no material transaction and no material transaction is now proposed, to
which the Company, the Subsidiary or HGS is or is to be a party in which any
current director or officer or other affiliate of the Company, the Subsidiary or
HGS, other than intercompany transactions between the Company and the
Subsidiary, has a direct or indirect material interest, except for the dividend
of the common stock of Pajac, Inc., a wholly-owned subsidiary of the Company, to
the Sellers. The sole assets of Pajac, Inc. consist of a promissory note from
Wild Goose Gas Storage Company in the original principal amount of $1,203,565
and cash not in excess of $1,000.
3.16 LABOR AND EMPLOYMENT MATTERS.
(a) There is no collective bargaining agreement or other labor
agreement to which the Company, the Subsidiary or HGS is a party or by
which it is bound.
(b) No labor union or organization has been certified or recognized
as a representative of any employees of the Company, the Subsidiary or HGS.
To the knowledge of the Sellers, there are no current or threatened
organizational activities or demands for recognition by a labor
organization seeking to represent employees of the Company, the Subsidiary
or HGS, labor strike, material arbitration or material labor grievance of
difficulty and to the knowledge of the Sellers, no such activities have
occurred during the past 24 months.
3.17 INSURANCE. The Company, the Subsidiary and HGS are insured for
their respective benefits, in such amounts and against such risks customarily
insured against by persons operating similar properties or conducting similar
operations under valid and enforceable policies issued by insurers of recognized
responsibility. Set forth in Schedule 3.17 is a list of all policies of
insurance or administered programs of self-insurance paid for by or providing
coverage for the Company, the Subsidiary or HGS (the "EXISTING POLICIES")
together with the premiums currently payable thereon (or if different and known
to the Company, the Subsidiary or HGS payable with respect to any future
period), and an indication of the nature of the coverage. The Company, the
Subsidiary and HGS are in material compliance with all conditions contained in
each Existing Policy, except where the failure to be in compliance would not
affect coverage under such Existing Policy. All premiums required to be paid
for insurance coverage under all of the Existing Policies have been paid or
accrued.
3.18 PUBLIC UTILITY HOLDING COMPANY ACT; OTHER REGULATIONS. None of
the Company, the Subsidiary or HGS is subject to regulation under the Public
Utility Holding Company Act of 1935 (except for Section 9(a)(2) thereof), the
Federal Power Act of 1935 or any foreign, federal or local statute or regulation
limiting its ability to incur indebtedness for money borrowed or guarantee such
indebtedness.
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3.19 FERC AND MPSC REGULATORY COMPLIANCE.
(a) Except to the extent necessary to enforce the terms and
conditions of the certificates referenced below in subparagraph (b) of this
Section 3.19, the facilities and operations of the Subsidiary are not
subject to the jurisdiction of FERC under the NGA because the Subsidiary is
exempt from such jurisdiction pursuant to Section 1(c) of the NGA.
(b) FERC has issued a blanket certificate of public convenience and
necessity pursuant to 18 C.F.R. Section 284.224 authorizing the Subsidiary,
to the fullest extent permitted by the authorization described in 18 C.F.R.
Section 284.224(b)(3), to engage in the sale, transportation (including
storage) or assignment of natural gas that is subject to FERC's
jurisdiction under the NGA; and by operation of 18 C.F.R. Section
284.402(a), the Subsidiary has available to it a blanket certificate of
public convenience and necessity pursuant to Section 7 of the NGA
authorizing the Subsidiary to make sales for resale at negotiated rates in
interstate commerce of any category of natural gas that is subject to
FERC's jurisdiction under the NGA. To the extent the Subsidiary has engaged
in transactions under such certificates, the Subsidiary has complied with
all material FERC regulations applicable to such transactions.
(c) The MPSC has asserted jurisdiction over the facilities, services
and rates of the Subsidiary, and the MPSC is exercising such jurisdiction.
(d) The Subsidiary is not currently collecting any amounts for the
performance of any natural gas transportation service, natural gas storage
service or any other service involving natural gas which amounts are
subject to a refund condition imposed by the MPSC or any other regulatory
authority having jurisdiction. The Subsidiary does not have any actual or
potential obligation, arising from a refund condition imposed by the MPSC
or any other regulatory authority having jurisdiction, to refund any amount
paid to the Subsidiary for its performance in any past period of any
natural gas transportation service, natural gas storage service or any
other service involving natural gas.
(e) Neither the Company nor HGS is subject to the jurisdiction of
FERC.
(f) True and correct copies of all tariffs currently approved and in
effect with respect to the facilities and services of the Subsidiary have
been provided to the Purchaser, and no applications to modify or change
such tariffs or challenges to such tariffs are pending with any regulatory
or judicial authority having jurisdiction.
3.20 PERMITS. Except as set forth in Schedule 3.20, the Company, the
Subsidiary and HGS have all of the franchises, licenses, permits, certificates
and other authorizations from Federal, state, local or foreign governments or
governmental agencies, departments or bodies that are materially necessary for
the conduct of their respective businesses. No fact, error or omission relevant
to any such franchise, license, permit,
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certificate or other authorization exists that would permit the revocation or
withdrawal thereof. Subject to the receipt of the consents, waivers, approval
and authorizations referred to in Section 3.4, to the knowledge of Sellers, the
Company, the Subsidiary and HGS will continue to have the use and benefit
thereof and the rights granted thereby pursuant to their terms after the
transactions contemplated hereby have occurred.
ARTICLE 4.
REPRESENTATIONS AND WARRANTIES OF THE PURCHASER
The Purchaser represents and warrants to the Sellers as follows:
4.1 ORGANIZATION. The Purchaser (a) is a corporation duly
incorporated, validly existing and in good standing under the laws of the State
of Louisiana and (b) has full power and authority to own all of its properties
and assets and to carry on its business as it is now being conducted.
4.2 AUTHORITY; ENFORCEABILITY. The Purchaser has the corporate power
and authority to execute and deliver this Agreement and to consummate the
transactions contemplated on its part hereby. The execution and delivery by the
Purchaser of this Agreement and the consummation by it of the transactions
contemplated hereby have been duly authorized by the Board of Directors of the
Purchaser. No other corporate proceedings on the part of the Purchaser are
necessary to authorize the execution and delivery of this Agreement or the
consummation by the Purchaser of the transactions contemplated hereby or the
performance of its obligations hereunder. This Agreement has been duly executed
and delivered by the Purchaser and is a valid and binding agreement of the
Purchaser, enforceable in accordance with its terms, except as such
enforceability may be limited by bankruptcy, insolvency or other similar laws
relating to or affecting creditors rights generally and by general equity
principles.
4.3 NON-CONTRAVENTION. The execution and delivery by the Purchaser
of this Agreement do not, and the consummation by it of the transactions
contemplated hereby and the performance by it of the obligations which it is
obligated to perform hereunder will not, (a) violate any provision of the
Articles of Incorporation or Bylaws of the Purchaser, (b) violate, or result in
the violation of, any provision of, or result in the termination of or the
acceleration of, or entitle any part, to accelerate any obligation or
indebtedness under, or result in the loss of any material benefit of, any
mortgage, lien, lease, franchise, license, permit, contract, agreement or
instrument to which the Purchaser is a party or by which the Purchaser is bound
or to which the property or assets of the Purchaser are subject, or (c) subject
to the approvals required as set forth in Section 4.4, violate or conflict with
any other restriction of any kind or character to which the Purchaser or any of
its property or assets is or are subject, which would prevent, or materially
restrict or delay, the consummation of the transactions contemplated hereby.
4.4 CONSENTS. Except for filings under the HSR Act, Section 721 of
the Defense Production Act of 1950, as amended (commonly known as the Exon-
Florio Amendment) and as set forth in Schedule 4.4, no consent, authorization,
order or approval
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of, or filing or registration with, any court, governmental agency or
commission, board or other administrative or regulatory body which has not been
obtained or made is required (a) for or in connection with the execution and
delivery of this Agreement by the Purchaser, and the consummation by it of the
transactions contemplated hereby and the performance by it of its obligations
hereunder or (b) for the Purchaser to acquire and own the Shares.
4.5 FINANCIAL ABILITY. The Purchaser has on hand, or has delivered
to the Sellers definitive commitment letters from a reputable financial
institution or institutions to provide, all of the funds needed by the Purchaser
to purchase the Shares in accordance with Article 2 of this Agreement.
ARTICLE 5.
COVENANTS
5.1 CONDUCT OF BUSINESS. During the period from the date hereof to
the Closing Date, without the prior written consent of the Purchaser or except
as contemplated by this Agreement, the Sellers agree to cause:
(a) the business of the Company, the Subsidiary and HGS to be
operated in the ordinary course of business consistent with past practice;
(b) no change to be made in the corporate charter or by-laws or other
constituent documents of the Company, the Subsidiary or HGS;
(c) except as previously disclosed to the Purchaser, (i) no increase
in the compensation payable or to become payable by the Company, the
Subsidiary or HGS to any officers, employees or agents shall be made, and
(ii) no bonus or retirement or similar benefit or arrangement shall be made
or agreed to by the Company, the Subsidiary or HGS, other than as set forth
on Schedule 3.10;
(d) no expenditure in excess of $50,000 in the aggregate in respect
of the purchase or other acquisition of fixed or capital assets to be made,
except for any such asset acquired in connection with normal replacement
and maintenance programs properly charged to current operations; provided,
however, that Purchaser's consent shall not be unreasonably withheld with
respect to such expenditures;
(e) to the extent reasonably practicable, (i) the business
organization of the Company, the Subsidiary and HGS to remain intact and to
keep available to the Purchaser the opportunity to retain the services of
the present employees of the Company, the Subsidiary and HGS and (ii) the
goodwill of the customers of the Company, the Subsidiary and HGS and others
having business relations with the Company, the Subsidiary and HGS to be
preserved;
(f) the Company, the Subsidiary and HGS to comply with all material
legal and regulatory requirements applicable to them and to the conduct of
their respective businesses;
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(g) except as set forth in Schedule 5.2(g), the Company and the
Subsidiary not to (i) declare any dividend or make any distribution with
respect to their capital stock or any partnership interest, as the case may
be, (ii) sell, lease, transfer or dispose of any of their properties or
assets, otherwise than in the ordinary course of business consistent with
past practice, or (iii) issue any shares of capital stock or any additional
partnership interests, as the case may be;
(h) the Company, the Subsidiary or HGS to not enter into any joint
venture, partnership or other similar arrangement for the conduct of its
business;
(i) none of the Company, the Subsidiary or HGS to purchase or enter
into any contract to (i) purchase the capital stock of any company or
(ii) the assets of any company purchased as part of the acquisition of a
business;
(j) none of the Company, the Subsidiary or HGS to enter into any
material transaction with either Seller or any affiliate of either Seller,
except for the dividend of the common stock of Pajac Inc., a wholly-owned
subsidiary of the Company, to the Sellers;
(k) none of the Company, the Subsidiary or HGS to modify the terms of
any Gas Purchase, Transportation or Storage Contract, or enter into any new
Gas Purchase, Transportation or Storage Contract; and
(l) none of the Company, the Subsidiary or HGS to change or seek a
change in the rates on file with any regulatory body having jurisdiction
over HGS.
5.2 INVESTIGATION. The Purchaser may, prior to the Closing Date,
make or cause to be made such additional investigation of the business and
properties of the Company, the Subsidiary and HGS and their financial and legal
condition as the Purchaser deems necessary or advisable to further familiarize
itself therewith, provided that such investigation shall not interfere with
normal operations of the Company and the Subsidiary. The Sellers agree to
permit the Purchaser and its accountants, counsel and other representatives to
have, during the period from the date of this Agreement to the Closing Date,
access to the premises, books and records of the Company, the Subsidiary and HGS
that relate to their business during their normal business hours and upon
reasonable notice. The Sellers shall furnish the Purchaser with such financial
and operating data and other information with respect to the business and
properties of the Company, the Subsidiary and HGS as the Purchaser shall from
time to time reasonably request. Any information regarding the Company, the
Subsidiary and HGS heretofore obtained from the Sellers, the Company, the
Subsidiary or HGS by the Purchaser or its representatives or hereafter obtained
from the Sellers, the Company, the Subsidiary or HGS by the Purchaser or its
representatives shall be subject to the terms of the Confidentiality Agreement
and such information shall be held by the Purchaser and its representatives in
accordance with the terms of such Confidentiality Agreement.
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5.3 BEST EFFORTS; TAKING OF NECESSARY ACTION. Each of the parties
hereto agrees to use its best efforts promptly to take or cause to be taken all
action and promptly to do or cause to be done all things necessary, proper or
advisable under applicable laws and regulations to consummate and make effective
the transactions contemplated by this Agreement. Without limiting the
foregoing, the Purchaser and each of the Sellers agree to promptly prepare and
file all applications and other notices required in connection with, and to use
its best efforts to obtain promptly and comply with all conditions contained in
the regulatory approvals described in Schedules 3.4 or 4.4 and any other
consent, approval or other action by, or notice to or registration or filing
with, any governmental or administrative agency or authority required or
necessary to be made, obtained or complied with, as the case may be, by the
Purchaser or the Sellers in connection with the performance of this Agreement by
the Purchaser or the consummation of the transactions contemplated hereby;
provided, however, the foregoing shall not require the Purchaser to agree to
modifications to its business and operations or the business and operations of
the Company, the Subsidiary or HGS, any reduction in tariffs or charges by the
Subsidiary or HGS or any limitation on such business and operations that would,
in the reasonable judgment of the Purchaser, have a Material Adverse Effect on
or materially adversely affect the prospects of the Company, the Subsidiary or
HGS.
5.4 TERMINATION OF INTEREST RATE HEDGE AGREEMENT; DISCHARGE OF
CERTAIN INDEBTEDNESS.
(a) Prior to the Closing Date, the Sellers shall cause HGS to
terminate that certain Master Interest Rate Protection Agreement, dated as
of August 8, 1994 (the "INTEREST RATE HEDGE AGREEMENT"), between HGS and
Union Bank (the "HEDGE PROVIDER").
(b) At the Closing, the Sellers shall cause the Company, the
Subsidiary and HGS to discharge in full their indebtedness for money
borrowed under all credit facilities, including without limitation those
described in Schedule 5.4(b), except for the indebtedness described on
Schedule 5.8 to the extent Purchaser notifies the Sellers in writing not
more than 20 days after the date hereof (or such longer period as may be
agreed to by the parties) that such indebtedness not be prepaid, in which
case the Purchasers shall provide with such notice a written waiver by the
lender with respect to such indebtedness of any covenant that would be
breached as a result of such indebtedness remaining outstanding after the
Closing or any notice provision which cannot be complied with as a result
of such indebtedness continuing after the Closing.
5.5 EXPENSES. Whether or not the transactions contemplated hereby
are consummated, all costs and expenses incurred in connection with this
Agreement and the transactions contemplated hereby shall, except as otherwise
provided herein, be paid by the party incurring such expenses. The Sellers
shall pay and the Purchaser shall have no responsibility for any and all
severance and post-employee benefits for the employees employed at the Dallas,
Texas office of the Company, the Subsidiary or HGS that are identified to the
Sellers by the Purchaser prior to Closing.
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5.6 POST-CLOSING ACCOUNTING COOPERATION. Subject to the agreement to
maintain all such information in confidence, the Purchaser agrees that the
Sellers and/or its independent auditors shall have reasonable access, during
normal business hours in a manner that will not interfere with the business and
operations of the Company, the Subsidiary or HGS, to the books and records of
the Company, the Subsidiary and HGS as they relate to such entities and their
predecessors applicable to the period the Company, the Subsidiary and/or HGS or
their predecessors were directly or indirectly owned by the Sellers and have the
assistance and cooperation of the appropriate personnel of the Purchaser and its
Subsidiaries in the review of such books and records consistent with assistance
and cooperation furnished during the period the Company, the Subsidiary and HGS
or their predecessors were directly or indirectly owned by the Sellers.
5.7 ADDITIONAL AGREEMENTS. Subject to the terms and conditions
herein provided, each of the parties hereto agrees to use its best efforts to
take, or cause to be taken, all action and to do, or cause to be done, all
things necessary, proper or advisable under applicable laws and regulations to
consummate and make effective, as soon as reasonably practicable, the
transactions contemplated by this Agreement. In case at any time after the
Closing Date any further action is necessary, proper or advisable to carry out
the purposes of this Agreement, as soon as reasonably practicable each party to
this Agreement shall cause its proper officers and/or directors to take all such
necessary action.
5.8 COMPANY DEBT. The Company shall be free of all indebtedness for
borrowed money, including the indebtedness described in Schedule 5.4(b), as of
the date of Closing; provided, however, at the election of the Purchaser, as
described in Section 5.4, the indebtedness described on Schedule 5.8 hereto may
remain outstanding.
5.9 TAX MATTERS. The Sellers agree to indemnify, defend and hold the
Purchaser and its affiliates, officers, directors, employees and agents,
stockholders and controlling persons and their respective successors and assigns
(including the Company, the Subsidiary and HGS) harmless from and against and in
respect of any and all Taxes actually suffered, incurred or realized by such
party arising out or resulting from or relating to the currently outstanding
Internal Revenue Service audit of the Company and the Subsidiary or any other
tax audit of the Company, the Subsidiary or HGS for periods prior to the Closing
(the "TAX AUDITS") to the extent such audit is commenced on or before twelve
months from the date hereof (the "TAX INDEMNIFICATION DATE"), including
(a) Taxes as a result of an audit of HGS that is commenced prior to the Tax
Indemnification Date and (b) state and local Taxes that are payable as a result
of adjustments to any of the foregoing; provided, however, Sellers' total
liability under this Section 5.9 shall be no greater than $1,500,000 plus
accrued interest as provided in the Collateral Security Agreement, which amount
shall be retained and held in escrow in accordance with the terms of the
Collateral Security Agreement from and after the Closing until the later of (y)
the Tax Indemnification Date and (z) the date on which the Tax Audits of the
Company, the Subsidiary or HGS commenced prior to the Tax Indemnification Date
have concluded with a "no change" or similar letter from the Internal Revenue
Service and any applicable state taxing authority closing the applicable Tax
Audits or if any changes or additional Taxes are proposed in any Tax Audits
("TAX CHALLENGE"), any and all issues raised in respect of such Tax Audits are
finally resolved and not subject to
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appeal and any and all additional Taxes that may be due in respect thereof are
paid by the Sellers. The Sellers, through counsel of their own choosing, and at
Sellers' own expense, shall direct and have control over the Tax Audits and any
administrative or judicial proceeding involving any asserted liability with
respect thereto; provided, however, Purchaser and the Company shall (a) have the
right to participate in all meetings and conferences regarding the Tax Audits,
(b) be entitled to review and provide appropriate comment on all submissions,
briefs and other writings that may be filed on behalf of the Company and (c) be
apprised by Sellers in advance of the terms of any settlement offer that may be
made with respect to the Tax Audits and matters arising therefrom. The Sellers
agree to cooperate with the Purchaser and the Company with respect to the
foregoing matters. In addition, the Sellers shall not, and shall have no
authority to, settle or agree to settle any issue with respect to the Tax Audits
without the consent of Purchaser to the extent such settlement (a) exceeds the
amount Sellers have agreed to indemnify Purchaser under this Section 5.9 or
(b) would commit the Purchaser, the Company or the Subsidiary to follow a
methodology for the computation of future Taxes different than that which is
currently followed that would result in greater Taxes being due than would
otherwise be due absent such change in methodology. To the extent there is a
Tax Challenge and no other audits are pending at the Tax Indemnification Date
for which indemnification under this Section 5.9 is required, the amount
retained as collateral pursuant to this Section 5.9 shall be reduced to the
dollar amount of such Tax Challenge plus an amount of interest, penalties and
other charges which the Purchaser, in consultation with its accountants, may
reasonably determine may ultimately be payable with respect thereto.
5.10 SPECIAL PROVISION WITH REGARD TO CERTAIN REPRESENTATIONS. If
after the date of this Agreement and before the Closing, there occurs an event
or there is discovered a fact or circumstance that would result in any
representation or warranty in Section 3.9 or Section 3.14 being untrue on the
Closing Date and Sellers had no knowledge on the date of this Agreement that
such event would take place or that such representation or warranty was untrue,
such event or the existence of such fact or circumstance shall not be considered
a breach of Sellers' representations and warranties under this Agreement if
(i) such event or the existence of such fact or circumstance will not have a
Material Adverse Effect and (ii) the Sellers either (A) indemnify and assume,
with appropriate security, the Purchaser, the Company, the Subsidiary and HGS
for any liability or loss that any such party may incur or suffer as a result of
such event or the existence of such fact or circumstance or (B) reduce the Base
Amount by an amount equal to such liability or loss as may be agreed in good
faith by the Sellers and the Purchaser.
ARTICLE 6.
CONDITIONS TO THE CLOSING
6.1 CONDITIONS OF OBLIGATION OF EACH PARTY. The respective
obligations of each party to effect the Closing are subject to the fulfillment
at or prior to the Closing Date of each of the following conditions precedent:
(a) REGULATORY APPROVALS. All regulatory approvals necessary for the
consummation of the purchase of the Shares shall have been obtained and be
in full
-27-
<PAGE>
force and effect, and all required waiting periods shall have expired or
been terminated.
(b) LEGAL PROCEEDINGS. No claim, action, suit, proceeding or
investigation by any third party or government regulatory or administrative
agency or commission shall be pending or threatened before or by any court
or governmental body or agency, challenging the transactions contemplated
by this Agreement, or seeking to restrain or prevent the carrying out of
the transactions contemplated by this Agreement or to prohibit or limit in
any material respect the ability of the Purchaser to exercise full rights
of control of the Company or of ownership of the Shares or to operate or
control the assets, property and business of the Company after the Closing
Date.
6.2 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THE PURCHASER. The
obligations of the Purchaser are also subject to fulfillment (or waiver by the
Purchaser) at or prior to the Closing Date of each of the following conditions
precedent:
(a) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of the Sellers contained in Article 3 of this Agreement shall be
true and correct as of the Closing Date as though made at and as of the
Closing Date, except to the extent that they expressly refer to an earlier
time, in which case they shall be true and correct as of such time.
(b) PERFORMANCE OF COVENANTS. The Sellers shall have duly performed
and complied in all material respects with each covenant, agreement and
condition required by this Agreement to be performed or complied with by
them prior to or on the Closing Date.
(c) OFFICER'S CERTIFICATE. The Purchaser shall have received from a
duly authorized officer of each Seller a certificate as to the matters
described in Sections 6.2(a) and 6.2(b).
(d) LEGAL OPINION. The Purchaser shall have received from Simpson
Thacher & Bartlett, outside counsel to the Sellers, and Brunini, Grantham,
Grower & Hewes, special Mississippi counsel to the Sellers, opinion letters
as to the matters set forth in Schedule 6.2(d).
(e) TITLE OPINIONS AND OTHER MATTERS.
(i) Sellers shall have delivered or caused to be delivered to
Purchaser an original title opinion rendered by Brunini, Grantham,
Grower & Hewes, special Mississippi counsel to the Sellers, in form
and substance reasonably satisfactory to Purchaser and dated not more
than 5 days prior to Closing, to the effect that the Company, the
Subsidiary or HGS has Good and Indefeasible Title to all of the oil,
gas and other minerals in, on and under the
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<PAGE>
lands described in Schedule 6.2(e)(i), but specifically excluding the lands
described in Schedule 6.2(e)(ii).
(ii) HGS shall have Good and Indefeasible Title to the
Underground Storage Rights (as hereinafter defined) in the lands
described in Schedule 6.2(e)(ii), and Sellers shall have delivered or
caused to be delivered to Purchaser an original title opinion rendered
by Brunini, Grantham, Grower & Hewes or other legal counsel reasonably
satisfactory to Purchaser in form and substance reasonably
satisfactory to Purchaser and dated no more than five days prior to
the Closing Date, to the effect that HGS has Good and Indefeasible
Title to such Underground Storage Rights in such lands. The term
"Underground Storage Rights" as used herein shall mean the freely
assignable rights (i) to utilize the subsurface of such lands for the
underground storage of liquified petroleum gas, natural gas or oil,
(ii) to remove from such subsurface hydrocarbons injected into such
subsurface and salt, sulphur and other minerals extracted therefrom
and (iii) to construct, use or operate underground facilities in and
under such lands for such underground storage operations, without
interruption of or interference with such underground storage
operations or facilities, upon terms and conditions substantially as
set forth in the form of Consent of Owner of Oil, Gas and Other
Minerals to Underground Storage Use attached hereto as
Schedule 6.2(e)(ii). Such opinion shall also state that the
Underground Storage Rights are not executory contracts or subject to
unilateral termination by the owner of the mineral interests that
granted such rights or avoidance with respect to the Federal
bankruptcy laws or the laws of the State of Mississippi.
(f) PREPAYMENT OF DEBT. Except as provided in Section 5.4(b), all
indebtedness of the Company, the Subsidiary and HGS shall have been paid
pursuant to Section 5.4(b) and the Sellers shall have delivered to
Purchaser evidence of such payment and the release of all liens and
encumbrances existing in conjunction with such indebtedness (including
without limitation the liens and encumbrances described in paragraphs I,
II, III and IV of Schedule 3.11(b); provided, however, that if the
Purchaser requests that the indebtedness listed on Schedule 5.8 not be
repaid, the encumbrance in paragraph II of Schedule 3.11(b) shall not be
released).
(g) CONSENTS.
(i) The consents, releases and waivers referred to in
Section 3.4 shall have been obtained on terms reasonably satisfactory
to the Purchaser.
(ii) The Company, the Subsidiary, HGS and the Sellers shall have
complied with any notification requirements, and any statutory waiting
period during which consummation of the transactions contemplated
hereby is prohibited by law shall have expired or been terminated by
any governmental authority.
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<PAGE>
(h) GUARANTEE. The guarantee of the Company of the obligations of
Wild Goose Gas Storage, L.P. under the Amended and Restated Natural Gas
Storage Lease dated February 11, 1993 shall have been released and evidence
thereof provided to the Purchaser.
(i) TERMINATION OF LEASE. The Lease shall have been terminated and
title to the property described in the Lease shall have been transferred to
the Company, the Subsidiary or HGS, as appropriate, such that the
respective entity shall have Good and Indefeasible Title to such property.
(j) AD VALOREM TAXES. The ad valorem Taxes described on Schedule 3.8
shall have been fully paid.
6.3 ADDITIONAL CONDITIONS TO THE OBLIGATIONS OF THE SELLERS. The
obligations of the Sellers are also subject to fulfillment (or waiver by the
Sellers) at or prior to the Closing Date of each of the following conditions
precedent:
(a) REPRESENTATIONS AND WARRANTIES TRUE. The representations and
warranties of Purchaser contained in Article 4 of this Agreement shall be
true and correct as of the Closing Date as though made at or as of the
Closing Date, except to the extent they expressly refer to an earlier time,
in which case they shall be true and correct as of such time.
(b) PERFORMANCE OF COVENANTS. The Purchaser shall have duly
performed and complied in all material respects with each covenant,
agreement and condition required by this Agreement to be performed or
complied with by it prior to or on the Closing Date.
(c) OFFICER'S CERTIFICATE. The Sellers shall have received from a
duly authorized senior officer of the Purchaser a certificate as to the
matters described in Sections 6.3(a) and 6.3(b).
ARTICLE 7.
TERMINATION, AMENDMENT AND WAIVER
7.1 TERMINATION. This Agreement may be terminated at any time prior
to the Closing:
(a) by mutual agreement of the Sellers and the Purchaser;
(b) by the Purchaser, (i) if there is or occurs an inaccuracy in any
of the representations and warranties of the Sellers set forth in this
Agreement, which inaccuracy is not capable of being cured by the Closing
Date, (ii) if there has been a material breach of a covenant of the
Sellers, or a material failure on the part of the Sellers to comply with
their obligations to be performed prior to Closing hereunder, and such
breach or failure is not capable of being cured by the Closing Date, or
-30-
<PAGE>
(iii) if any of the conditions set forth in Sections 6.1 or 6.2 (other than
those set forth in Sections 6.2(a) or 6.2(b)) are not satisfied on or
before the Closing Date;
(c) by the Sellers, (i) if there is or occurs an inaccuracy in the
representations and warranties of the Purchaser set forth in this
Agreement, which inaccuracy is not capable of being cured by the Closing
Date, (ii) if there has been a material breach of a covenant of the
Purchaser, or material failure on the part of the Purchaser to comply with
its obligations to be performed prior to the Closing hereunder, and such
breach or failure is not capable of being cured by the Closing Date, or
(iii) if any of the conditions set forth in Sections 6.1 or 6.3 (other than
those set forth in Sections 6.3(a) or (b)) are not satisfied on or before
the Closing Date;
(d) by the Purchaser or the Sellers upon notice given to the other if
the Closing shall not have taken place on or before July 31, 1995; provided
that the failure of the Closing to occur on or before such date is not the
result of the breach of the covenants, agreements, representations or
warranties hereunder of the party seeking such termination;
(e) by the Sellers or the Purchaser upon written notice to the other
party if any court or governmental authority of competent jurisdiction
shall have issued a final permanent order, enjoining or otherwise
prohibiting the transactions contemplated by this Agreement; or
7.2 EFFECT OF TERMINATION. In the event of the termination of this
Agreement as provided in Section 7.1, this Agreement shall forthwith become
wholly void and of no further force and effect and, other than in the event of a
termination pursuant to Section 7.1(b), there shall be no liability on the part
of the Purchaser or the Sellers or their respective officers or directors
(except as set forth in this Section and Sections 5.2, 5.5 and 8.4). In the
event of the termination of this Agreement pursuant to Section 7.1(b) or 7.1(c),
the terminating party shall be indemnified by the other party for any or all
damages, costs and expenses sustained or incurred as a result of such
termination. The obligations of the parties to this Agreement under
Sections 5.2, 5.5 and 8.4 shall survive any such termination.
ARTICLE 8.
MISCELLANEOUS
8.1 NON-SURVIVAL OF REPRESENTATIONS AND WARRANTIES. The
representations and warranties set forth in Articles 3 and 4 hereof of this
Agreement shall not survive the Closing.
8.2 NOTICES. All notices and other communications hereunder shall be
in writing and shall be deemed given if delivered personally or transmitted by
facsimile or mailed by registered or certified mail (returned receipt requested)
to the parties at the following addresses and facsimile numbers (or at such
other address or facsimile number for a party as shall be specified by like
notice):
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<PAGE>
if to Purchaser, to:
Crystal Oil Company
229 Milam Street
Shreveport, Louisiana 71101
Facsimile No.: (318) 677-5504
Attn: J. N. Averett, Jr.
with a copy to:
Fulbright & Jaworski L.L.P.
1301 McKinney, Suite 5100
Houston, Texas 77010
Facsimile No.: (713) 651-5246
Attn: Curtis W. Huff
if to the Sellers, to:
c/o First Reserve Corporation
475 Steamboat Road
Greenwich, CT 06830
Facsimile No.: (203) 661-6729
Attn: Paul McDermott
with a copy to:
Simpson Thacher & Bartlett
425 Lexington Avenue
New York, NY 10017
Facsimile No.: (212) 455-2502
Attn: Robert L. Friedman
8.3 INTERPRETATION. The headings contained in this Agreement are for
reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
8.4 BROKERS AND FINANCIAL ADVISORS. The Purchaser represents and
warrants that no person is entitled to any brokerage or finder's fee, financial
advisory fee or other payment from the Purchaser or any of its affiliates based
on agreements, arrangements or undertakings made by the Purchaser in connection
with the transactions contemplated hereby. The Sellers represent and warrant
that, except for Merrill Lynch & Co. (for whose fees and expenses the Sellers
are solely responsible and against whose fees and expenses the Sellers hereby
indemnify the Purchaser), no person is entitled to any brokerage or finder's
fee, financial advisory fee or other payment from the Sellers or any of its
affiliates based on agreements, arrangements or undertakings made by the Sellers
or any of its Subsidiaries in connection with the transactions contemplated
hereby.
-32-
<PAGE>
8.5 AMENDMENT. This Agreement and the Schedules hereto may be
amended by the parties hereto, but may not be amended except by an instrument or
instruments in writing signed and delivered on behalf of each of the parties
hereto.
8.6 EXTENSION; WAIVER. At any time prior to the Closing Date, any
party hereto which is entitled to the benefits hereof may (a) extend the time
for the performance of any of the obligations or other acts of any of the other
parties hereto, (b) waive any inaccuracy in the representations and warranties
of any of the other parties hereto contained herein or in any Schedule hereto or
in any document delivered pursuant hereto, and (c) waive compliance with any of
the agreements of any of the other parties hereto or conditions contained
herein. Any agreement on the part of a party hereto to any such extension or
waiver shall be valid if set forth in an instrument in writing signed and
delivered on behalf of such party.
8.7 ENTIRE AGREEMENT. This Agreement (including the Schedules,
documents and instruments referred to herein) and the Confidentiality Agreement
constitute the entire agreement and supersede all other prior agreements and
understandings, both written and oral, among the parties, or any of them, with
respect to the subject matter hereof.
8.8 ASSIGNMENT. This Agreement shall not be assigned by operation of
law or otherwise, and any attempted assignment shall be void; provided however
that the Purchaser shall be permitted to assign its rights under this Agreement
to a direct or indirect subsidiary of the Purchaser so long as Purchaser retains
its obligations under this Agreement.
8.9 GOVERNING LAW. This Agreement shall be governed in all respects,
including validity, interpretation and effect, by the laws of the State of New
York.
8.10 COUNTERPARTS. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but which together
shall constitute a single agreement.
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<PAGE>
IN WITNESS WHEREOF, this Agreement has been duly executed by the
parties hereto as of the day and year first written above.
SELLERS:
FIRST RESERVE SECURED ENERGY
ASSETS FUND, LIMITED PARTNERSHIP
By: First Reserve Corporation,
its General Partner
By:
-------------------------------------
Paul G. McDermott
Managing Director
FIRST RESERVE FUND V, LIMITED
PARTNERSHIP
By: First Reserve Corporation,
its General Partner
By:
------------------------------------
Paul G. McDermott
Managing Director
PURCHASER:
CRYSTAL OIL COMPANY
By:
-----------------------------------------
J.N. Averett, Jr.
President
-34-
<PAGE> Exhibit 11
CRYSTAL OIL COMPANY
COMPUTATION OF INCOME (LOSS) PER COMMON SHARE
(In Thousands Except Share and Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
--------------------------
1995 1994
--------- ----------
<S> <C> <C>
Primary: (Including dilutive
Common Stock
equivalents)
Income (loss) from operation $ 528 $ (1,102)
Adjustments to income (loss)
(net of income tax):
Non-interest bearing
convertible notes
amortization of discount - -
----------- ------------
Adjusted net income (loss) $ 528 $ (1,102)
----------- ------------
----------- ------------
Weighted average of common
and common equivalent
shares:
Outstanding 2,609,792 2,529,614
Assuming conversion or exercise of:
Stock options, net of
treasury shares 33,181 -
Senior preferred stock
through the exercise
of warrants - -
Remaining senior
preferred stock 33,274 -
---------- -----------
2,676,247 2,529,614
---------- -----------
---------- -----------
Per share amount:
Net income (loss) $ .20 $ (.44)
---------- -----------
---------- -----------
</TABLE>
-18-
<PAGE>
Exhibit 11
(continued)
CRYSTAL OIL COMPANY
COMPUTATION OF INCOME (LOSS) PER COMMON SHARE
(In Thousands Except Share and Per Share Amounts)
(Unaudited)
<TABLE>
<CAPTION>
Three Months Ended
March 31
----------------------------
1995 1994
----------- ------------
<S> <C> <C>
Fully-diluted:
Income (loss) from operations $ 528 $ (1,102)
Adjustments to income (loss)
(net of income tax):
Non-interest bearing
convertible notes
amortization of discount - -
----------- ------------
Adjusted net income (loss) $ 528 $ (1,102)
----------- ------------
----------- ------------
Weighted average of
common shares:
Outstanding 2,609,792 2,529,614
Assuming conversion or exercise of:
Stock options, net of
treasury shares 35,642 -
Senior preferred stock
through the exercise
of warrants - -
Remaining senior
preferred stock 33,274 -
----------- ------------
2,678,708 2,529,614
----------- ------------
----------- ------------
Per share amount:
Net income (loss) $ .20 $ (.44)
----------- ------------
----------- ------------
</TABLE>
NOTE: See Note 5 of Notes to Consolidated Condensed Financial Statements.
-19-
<TABLE> <S> <C>
<PAGE>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AT MARCH 31, 1995 AND THE CONSOLIDATED STATEMENT OF
INCOME FOR THE THREE MONTHS ENDED MARCH 31, 1995 AND IS QUALIFIED IN ITS
ENTIRETY BY REFERENCE TO SUCH FINANCIAL STATEMENTS.
</LEGEND>
<MULTIPLIER> 1,000
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1995
<PERIOD-START> JAN-01-1995
<PERIOD-END> MAR-31-1995
<CASH> 15,603
<SECURITIES> 66,682
<RECEIVABLES> 2,854
<ALLOWANCES> 235
<INVENTORY> 0
<CURRENT-ASSETS> 85,286
<PP&E> 4,223
<DEPRECIATION> 1,140
<TOTAL-ASSETS> 90,538
<CURRENT-LIABILITIES> 2,569
<BONDS> 169
<COMMON> 26
0
148
<OTHER-SE> 87,626
<TOTAL-LIABILITY-AND-EQUITY> 90,538
<SALES> 0
<TOTAL-REVENUES> 845
<CGS> 0
<TOTAL-COSTS> 170
<OTHER-EXPENSES> 0
<LOSS-PROVISION> 36
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> 867
<INCOME-TAX> 339
<INCOME-CONTINUING> 528
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> 528
<EPS-PRIMARY> .20
<EPS-DILUTED> .20
</TABLE>
