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CUSIP No. 383482106 Page 1 of 27 Pages
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D
Under the Securities Exchange Act of 1934
Gothic Energy Corporation
(Name of Issuer)
Common Stock
(Title of Class of Securities)
383482106
(CUSIP Number)
<TABLE>
<S> <C>
Michael H. de Havenon Othon A. Prounis, Esq.
Kulen Capital, L.P. Reboul, MacMurray, Hewitt,
45 Rockefeller Plaza Maynard & Kristol
9th Floor 45 Rockefeller Plaza
New York, New York 10111 New York, New York 10111
Tel. (212) 841-5700 Tel. (212) 841-5700
</TABLE>
(Name, Address and Telephone Number of Person
Authorized to Receive Notices and Communications)
January 2, 1997
(Date of Event Which Requires
Filing of This Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box [ ].
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CUSIP No. 383482106 Page 2 of 27 Pages
- --------------------------------------------------------------------------------
1) Name of Reporting Person Kulen Capital, L.P.
S.S. or I.R.S. Identification
No. of Above Person
- --------------------------------------------------------------------------------
2) Check the Appropriate Box (a) [ ]
if a Member of a Group (b) [ ]
- --------------------------------------------------------------------------------
3) SEC Use Only
- --------------------------------------------------------------------------------
4) Source of Funds WC
- --------------------------------------------------------------------------------
5) Check if Disclosure of
Legal Proceedings is Not Applicable
Required Pursuant to
Items 2(d) or 2(e)
- --------------------------------------------------------------------------------
6) Citizenship or Place
of Organization Delaware
- --------------------------------------------------------------------------------
Number of 7) Sole Voting 1,000,000 shares
Shares Beneficially Power of Common Stock
Owned by
Reporting Person: --------------------------------------------------
8) Shared Voting
Power -0-
--------------------------------------------------
9) Sole Disposi- 1,000,000 shares
tive Power of Common Stock
--------------------------------------------------
10) Shared Dis-
positive Power -0-
--------------------------------------------------
11) Aggregate Amount Beneficially 1,000,000 shares
Owned by Reporting Person: of Common Stock
- --------------------------------------------------------------------------------
12) Check if the Aggregate
Amount in Row (11)
Excludes Certain Shares
- --------------------------------------------------------------------------------
13) Percent of Class
Represented by 8.1%
Amount in Row (11)
- --------------------------------------------------------------------------------
14) Type of Reporting
Person PN
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CUSIP No. 383482106 Page 3 of 27 Pages
Schedule 13D
Item 1. Security and Issuer.
This statement relates to the common stock (the "Common Stock") of
Gothic Energy Corporation, a Delaware corporation (the "Issuer"). The principal
executive offices of the Issuer are located at 5727 South Lewis Avenue, Suite
700, Tulsa, Oklahoma 74105.
Item 2. Identity and Background.
(a) The undersigned hereby files this Schedule 13D on behalf of
Kulen Capital, L.P., a Delaware limited partnership ("Kulen" or the "Reporting
Person"). The sole general partner of Kulen is Kulen Associates, L.L.C., a
Delaware limited liability company ("KAL"). The sole members of KAL are Michael
H. de Havenon and Robert Everett.
(b) The principal business of Kulen is a private
investment partnership. The principal business of KAL is to act
as the general partner of Kulen. The principal occupations of
Messrs. de Havenon and Everett are to act as the members of KAL.
(c) The principal business address of Kulen, KAL and
Messrs. de Havenon and Everett is 45 Rockefeller Plaza, 9th
Floor, New York, New York 10111.
(d) Neither the Reporting Person nor any of the persons identified
in this Item 2 has, during the last five years, been convicted in a criminal
proceeding (excluding traffic violations or similar misdemeanors).
(e) Neither the Reporting Person nor any of the persons identified
in this Item 2 has, during the last five years, been a party to a civil
proceeding of a judicial or administrative body of competent jurisdiction and as
a result of such proceeding was or is subject to a judgment, decree or final
order enjoining future violations of, or prohibiting or mandating activities
subject to, federal or state securities laws or finding any violation with
respect to such laws.
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CUSIP No. 383482106 Page 4 of 27 Pages
Item 3. Source and Amount of Funds or Other Consideration.
On January 2, 1997 the Reporting Person acquired 1,000,000 shares of
Common Stock (the "Shares") pursuant to an Assignment and Assumption Agreement
dated as of December 27, 1996, among the Reporting Person, Merrill Lynch Capital
Corporation, a Delaware corporation, formerly called Merrill Lynch Interfunding
Inc. ("MLCC"), and Merrill Lynch Portfolio Management Inc. ("MLPM") (the
"Assignment Agreement"). A draft copy of the Assignment Agreement is attached
hereto as Exhibit A, and any description thereof is qualified in its entirety by
reference thereto. MLCC and MLPM may hereinafter be referred to collectively as
the "Sellers". Pursuant to the terms of the Assignment Agreement, the Sellers
agreed to sell, and the Reporting Person agreed to buy, the Sellers' right,
title and interest in, to and under certain equity and debt securities and
instruments (the "Transferred Securities") and certain related agreements (the
"Transferred Agreements"). The Reporting Person also agreed to assume certain
obligations and liabilities of the Sellers with respect to the Transferred
Securities and Transferred Agreements. The Shares were included among the
Transferred Securities. The aggregate purchase price paid by the Reporting
Person under the Assignment Agreement was $22,000,000, and the source of such
funds was the Reporting Person's funds available for investment.
Item 4. Purpose of Transaction.
The Reporting Person acquired the Shares in the transaction
described in Item 3 above for investment purposes.
Item 5. Interest in Securities of the Issuer.
(a) Based on a total of 12,358,928 shares of Common Stock
outstanding as of December 31, 1996, Kulen owns 1,000,000 shares of Common
Stock, or approximately 8.1% of the Common Stock outstanding. KAL, as the sole
general partner of Kulen, may be deemed to beneficially own the securities owned
by Kulen.
(b) The members of KAL may be deemed to share the power to vote or
direct the voting of and to dispose or to direct the disposition of the shares
of Common Stock referred to in paragraph (a) above. Each of the members of KAL
disclaims beneficial ownership of all shares other than any shares he owns
directly (if any) or by virtue of his indirect pro rata interest, as a member of
KAL, in the shares owned by Kulen.
(c) Except as described in this statement, neither the
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CUSIP No. 383482106 Page 5 of 27 Pages
Reporting Person nor any of the persons identified in Item 2 above has effected
any transaction in the Common Stock in the past 60 days.
(d) Except as described in this statement, no person has the power
to direct the receipt of dividends on or the proceeds from sales of the shares
of Common Stock owned by Kulen.
(e) Not Applicable.
Item 6. Contracts, Arrangements, Understandings
or Relationships with Respect to
Securities of the Issuer.
On November 13, 1995 the Issuer filed a Registration Statement on
Form SB-2 with the Securities and Exchange Commission in connection with its
public offering of units comprised of Common Stock and warrants to purchase
Common Stock (the "Public Offering"). On October 18, 1995 MLCC entered into an
agreement with the Issuer (the "Lock-Up and Registration Rights Agreement"),
pursuant to which MLCC agreed (i) to refrain from exercising certain
registration rights in connection with the Public Offering and (ii) not to sell
or otherwise dispose of any of the Shares for a period of thirteen months after
the effective date of the Public Offering, except in a private transaction in
which the proposed transferee agreed to be bound by the transfer and resale
restrictions imposed on MLCC by the Lock-Up and Registration Rights Agreement.
The Lock-Up and Registration Rights Agreement is incorporated herein as Exhibit
B hereto by reference to Exhibit A to Amendment No. 1 to the Schedule 13D of
MLCC with respect to the Issuer, as filed with the Securities and Exchange
Commission on December 21, 1995, and any description thereof is qualified in its
entirety by reference thereto. After the expiration of thirteen months after the
effective date of the Public Offering (or the termination of MLCC's transfer and
resale restrictions, as described in the Lock-Up and Registration Rights
Agreement), MLCC had the right to request that the Issuer effect the
registration under the Securities Act of 1933, as amended, of all of the Shares
then held by MLCC. The Lock-Up and Registration Rights Agreement is a
Transferred Agreement as defined in the Assignment Agreement, and the Reporting
Person has assumed MLCC's rights and obligations thereunder in accordance with
the provisions of the Assignment Agreement.
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CUSIP No. 383482106 Page 6 of 27 Pages
Item 7. Material to be Filed as Exhibits.
Exhibit A - Assignment Agreement (Appears at Page 8)
Exhibit B - Lock-Up and Registration Rights Agreement (Incorporated
by reference to Exhibit A to the Schedule 13D of MLCC with respect to the
Issuer, as filed with the Securities and Exchange Commission on December 21,
1995.)
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CUSIP No. 383482106 Page 7 of 27 Pages
Signature
After reasonable inquiry and to the best of my knowledge and belief,
I certify that the information set forth in this statement is true, complete and
correct.
Dated: January 7, 1997
KULEN CAPITAL, L.P.
By Kulen Associates, L.L.C.,
General Partner
By:/s/ Michael de Havenon
--------------------------------
Name: Michael de Havenon
Title: Member
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CUSIP No. 383482106 Page 8 of 27 Pages
EXHIBIT A
Draft of December 27, 1996
ASSIGNMENT AND ASSUMPTION AGREEMENT
ASSIGNMENT AND ASSUMPTION AGREEMENT, dated December 27, 1996, among
KULEN CAPITAL, L.P., a Delaware limited partnership (the "Purchaser"), MERRILL
LYNCH CAPITAL CORPORATION, a Delaware corporation, formerly called Merrill Lynch
Interfunding Inc. ("MLCC"), and MERRILL LYNCH PORTFOLIO MANAGEMENT INC., a
Delaware corporation ("MLPM"). MLCC and MLPM are sometimes hereinafter
collectively referred to as the "Sellers" and individually as a "Seller."
WHEREAS, MLCC holds legal title to the equity and debt securities
and instruments listed in Part A of Schedule I hereto (the "Transferred
Securities");
WHEREAS, MLCC is the beneficial owner of the debt securities and
instruments listed in Part A of Schedule I hereto;
WHEREAS, MLPM is the beneficial owner of the equity securities and
instruments listed in Part A of Schedule I hereto;
WHEREAS, in connection with the Sellers' acquisition, ownership
(legal or beneficial) and/or enjoyment of the Transferred Securities, MLCC has
entered into the agreements described in Part B of Schedule I hereto (the
"Transferred Agreements"); and
WHEREAS, the Sellers desire to sell and assign to the Purchaser, and
the Purchaser desires to purchase and assume from the Sellers, (i) the Assigned
Interest and (ii) the Assumed Obligations (as hereinafter defined), all on the
terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and the mutual
agreements herein contained the parties hereto agree as follows:
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CUSIP No. 383482106 Page 9 of 27 Pages
I.
DEFINITIONS
SECTION 1.01 Definitions. Capitalized terms used but not otherwise
defined have the following meanings:
Assigned Interest: All right, title and interest of the Sellers in,
to and under the Transferred Securities and Transferred Agreements, including
without limitation any and all rights, claims (including "claims" within the
meaning of Section 101(5) of Title 11 of the United States Code) and causes of
action of the Sellers (and their respective successors and assigns) against the
Portfolio Companies and their affiliates and any other person or entity that
arise under, from, or in the Transferred Securities and the Transferred
Agreements, including without limitation the claims of the Sellers in respect of
(i) all unpaid principal of and accrued and unpaid interest thereon, all unpaid
declared, accrued or accumulated dividends, and any and all other payments due
to the Sellers, in each case under the Transferred Securities or the Transferred
Agreements; (ii) all guarantees of, and all security of any kind, including
without limitation the Collateral, for or in respect of the foregoing; and (iii)
all proceeds of any kind with respect to such guaranties or security. The
Assigned Interest shall not include the Excluded Interest.
Assumed Obligations: The obligations and liabilities of the Sellers
under the Transferred Securities, if any, and under, or incurred in accordance
with, the Transferred Agreements, including without limitation the obligation to
pay, perform and discharge when due all such liabilities and obligations. The
Assumed Obligations shall not include the Retained Obligations.
Closing: Closing shall have the meaning specified in Section 2.02
hereof.
Closing Date: Closing Date shall have the meaning specified in
Section 2.02 hereof.
Code: Internal Revenue Code of 1986, as amended.
Collateral: All property of the Portfolio Companies and other
persons or entities which under the terms of the Transferred Securities or the
Transferred Agreements is collateral security for the payment or performance of
all or any
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CUSIP No. 383482106 Page 10 of 27 Pages
portion of the obligations of any Portfolio Company or other person or entity
under the Transferred Securities or Transferred Agreements.
Consents: Consents shall have the meaning specified in Section
2.01(b) hereof.
Excluded Interest: All rights, claims and causes of action of the
Sellers or their respective affiliates (i) for reimbursement of certain expenses
incurred by the Sellers prior to Closing, including and limited to the expenses
of the type listed on Schedule II hereto which the parties acknowledge is a
reasonable estimate of such expenses as of the date hereof and (ii) with respect
to the limited partnership interest of Merrill Lynch L.P. Holdings Inc. in GML
Limited Partnership.
Knowledge: For purposes of this Agreement, the Sellers shall be
deemed to have "knowledge" of a particular fact or matter if any of Messrs.
Jeffrey S. Martin or Neven Viducic shall have actual knowledge of such fact or
matter, or such person should reasonably be expected to become aware of such
fact without the necessity of conducting an investigation or inquiry of any
directors, officers, employees, agents or representatives of any of the
Portfolio Companies.
ML Liabilities: As used in Section 4.01(a) hereof, the amount, which
shall be deemed to have been incurred by the Purchaser only, and not by any
other Purchaser Indemnitee, of any liability imposed upon any Portfolio Company
(i) as a result of any Portfolio Company at any time becoming or being treated
as a person that, for purposes of Title IV of the Employee Retirement Income
Security Act of 1974, as amended, is a member of the Sellers' controlled group,
or under common control with the Sellers within the meaning of Section 414 of
the Code, (ii) pursuant to Treasury Regulation Section 1.1502-6 or any similar
rule under any state, local or foreign jurisdiction as a result of any Portfolio
Company at any time being included or required to be included, for purposes of
any foreign, federal, state or local tax laws, in a consolidated group that
includes either of the Sellers or any of their respective affiliates, including
any "affiliated group" as such term is defined in Section 1504 of the Code, but
only to the extent that any such liability exceeds the liability for the
applicable foreign, federal, state or local taxes that any such Portfolio
Company would have had on a separate company basis or (iii) as a result of any
Portfolio Company at any time assuming or incurring under any other applicable
law any liability for obligations of the Sellers or
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CUSIP No. 383482106 Page 11 of 27 Pages
any of their respective affiliates, except in the case of this clause (iii) for
the Assumed Obligations and as specifically assumed or incurred pursuant to the
Transferred Securities or Transferred Agreements.
Portfolio Companies: Pangborn Corporation ("Pangborn"), Florida
Leisure Holdings Corporation ("FLHC"), Florida Leisure Acquisition Corporation
("FLAC"), Biscayne Apparel, Inc. ("Biscayne"), SPD Technologies Inc. ("SPD"),
Brewster Wallpaper Corp. ("Brewster"), GML Trust ("GML") and Gothic Energy
Newco, Inc. ("Gothic").
Portfolio Company Files: Portfolio Company Files shall have the
meaning specified in Section 2.01(b).
Portfolio Company Liabilities: As used in Section 4.01(b) hereof,
any liability imposed upon any Seller Indemnitee (x) (i) as a result of any
Portfolio Company at any time becoming or being treated as a person that, for
purposes of Title IV of the Employee Retirement Income Security Act of 1974, as
amended, is a member of the Sellers' controlled group, or under common control
with the Sellers within the meaning of Section 414 of the Code or (ii) pursuant
to Treasury Regulation Section 1.1502-6 or any similar rule under any state,
local or foreign jurisdiction as a result of any Portfolio Company at any time
being included or required to be included, for purposes of any foreign, federal,
state or local tax laws, in a consolidated group that includes either of the
Sellers or any of their respective affiliates, including any "affiliated group"
as such term is defined in Section 1504 of the Code, but only to the extent that
any such liability exceeds the aggregate liability for the applicable foreign,
federal, state or local taxes that the Seller Indemnitees would have had if such
Portfolio Company were not included in such consolidated group, or (y) as a
result of the Seller Indemnitees at any time assuming or incurring under any
other applicable law any liability for obligations of the Portfolio Companies,
except in the case of this clause (y) for the Retained Obligations.
Purchaser Indemnitees: Purchaser Indemnitees shall have the meaning
specified in Section 4.01(a) hereof.
Purchase Price: Purchase Price shall have the meaning specified in
Section 2.01(c) hereof.
Retained Obligations: The obligations and liabilities of the Sellers
under the Transferred Securities, if any, and the
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CUSIP No. 383482106 Page 12 of 27 Pages
Transferred Agreements, including without limitation the obligation to pay,
perform and discharge when due all such liabilities and obligations, limited to
the extent that performance by the Sellers with respect to such obligations and
liabilities was required to have been made prior to the Closing Date and the
obligations giving rise to such performance did not result from the transactions
contemplated hereby.
Securities Act: The Securities Act of 1933, as amended.
Seller Indemnitees: Seller Indemnitees shall have the meaning
specified in Section 4.01(b) hereof.
II.
THE CLOSING
SECTION 2.01 Sale, Assignment and Assumption.
(a) On the Closing Date, the Sellers shall sell, assign and deliver
to the Purchaser the Assigned Interest, and the Purchaser shall purchase from
the Sellers the Assigned Interest and shall assume and agree to perform and
discharge the Assumed Obligations, all in accordance with the provisions of this
Section 2.01.
(b) On the Closing Date, the Sellers shall deliver to the Purchaser
(i) original stock certificates, warrants, notes and any other instruments
evidencing the Transferred Securities, (ii) stock powers and other appropriate
instruments of transfer as may be necessary to evidence the transfer of the
Transferred Securities, all duly executed by the Seller, (iii) original
counterparts of the Transferred Agreements, (iv) assignments or other
appropriate instruments of assignment evidencing the transfer of the Transferred
Agreements and the Collateral, all duly executed by the Sellers, (v) all
Collateral held by the Sellers subject to pledge or similar possessory security
arrangements, (vi) complete and accurate copies of all consents, notices,
filings, waivers, approvals or authorizations (collectively, "Consents")
referred to in Section 3.01(d), (vii) to the extent to be agreed between the
Sellers and the Purchaser, originals or complete and accurate copies of the
records, files, reports, correspondence, memoranda, and other information
(whether in tangible form, computer files or other media) relating to the
Portfolio Companies held by the Sellers or their
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CUSIP No. 383482106 Page 13 of 27 Pages
respective affiliates ("Portfolio Company Files"); provided, however, that
subsequent to the Closing Date, each party shall have access during regular
business hours, to the extent not disruptive to the other, to any Portfolio
Company Files in the possession of such other party after the Closing for the
purpose of reviewing and, as may be desired by such party, copying the same at
its expense, (viii) resignations of such Portfolio Company directors and
officers as both (1) the Sellers have the right to nominate, appoint, elect or
remove and (2) the Purchaser advises the Sellers it wishes to have removed as a
director or officer, as the case may be, effective as of the Closing Date, duly
executed by any such director or officer and (ix) an opinion of Reboul,
MacMurray, Hewitt, Maynard & Kristol, counsel to the Seller, substantially in
the form of Annex I hereto.
(c) As payment in full for the Assigned Interest on the Closing
Date, the Purchaser shall pay to the Sellers, by wire transfer of immediately
available funds to an account or accounts designated by the Sellers, the amount
of $22,000,000 (the "Purchase Price"). The allocation of the Purchase Price
between MLCC and MLPM will be on a basis consistent with the allocation set
forth in Schedule 4.02 hereto as in effect on December 27, 1996.
(d) On the Closing Date, the Purchaser shall execute and deliver to
the Sellers an instrument of assumption substantially in the form of Exhibit A
hereto providing for the assumption by the Purchaser of the Assumed Obligations.
(e) In connection with the Purchaser's status as a "venture capital
operating company" under the Employee Retirement Income Security Act of 1974, as
amended, and Department of Labor Regulation Section 2510.3-101 thereunder, on
the Closing Date, the Sellers will cause each of FLHC, Pangborn and SPD to enter
into a Management Rights Letter with the Purchaser substantially in the form of
Exhibit B hereto providing the Purchaser with rights to participate
substantially in the management of each such company.
(f) The transactions and deliveries described above in subsections
(a) through (e) shall be deemed to have taken place simultaneously, and no
transaction or delivery shall be deemed to have been completed until all of such
transactions and deliveries are completed.
(g) The parties hereto acknowledge and agree that their respective
obligations to close the transactions provided
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CUSIP No. 383482106 Page 14 of 27 Pages
for in this Section 2.01 shall be unconditional.
SECTION 2.02 Closing Date. The closing of the transactions provided
for in Section 2.01 hereof (the "Closing") shall take place at the offices of
Reboul, MacMurray, Hewitt, Maynard & Kristol, 45 Rockefeller Plaza, New York,
New York, at 10:00 a.m., New York time, on January 2, 1997, or at such other
date and time as may be mutually agreed upon between the Purchaser and the
Seller (such date and time of the Closing being herein called the "Closing
Date").
III.
REPRESENTATIONS AND WARRANTIES
SECTION 3.01 Representations and Warranties of the Seller. Each of
the Sellers as of the date hereof hereby represents and warrants, solely as to
itself, to the Purchaser and its successors and assigns as follows:
(a) Such Seller has full corporate power and authority to execute,
deliver and perform this Agreement and perform its obligations hereunder.
(b) The execution and delivery by such Seller of this Agreement and
the performance by such Seller of its obligations hereunder have been duly
authorized by all requisite corporate action and will not violate (i) any law or
regulation applicable to it or (ii) any agreement to which it is a party or by
which it is bound, except as may result under the Transferred Agreements.
(c) This Agreement has been duly executed and delivered by such
Seller and constitutes the legal, valid and binding obligation of such Seller,
enforceable against such Seller in accordance with its terms, subject, as to
enforcement of remedies, to applicable bankruptcy, insolvency, reorganization,
moratorium and similar laws from time to time in effect affecting the
enforcement of creditors' rights generally and to general equity principles.
(d) Except as set forth on Schedule 3.01(d) hereto or except as may
be required under any of the Transferred Agreements, no Consents with any
person, entity, or governmental body are required to be made or received by such
Seller for the sale and assignment hereunder or the consummation of the
transactions contemplated hereby. The Consents set forth on
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CUSIP No. 383482106 Page 15 of 27 Pages
Schedule 3.01(d) are, to the knowledge of such Seller, duly made and obtained,
have not been rescinded in whole or in part, and will be in full force and
effect on the Closing Date.
(e) Such Seller is the sole owner of the Assigned Interest being
transferred by it, including the Transferred Securities and the Transferred
Agreements, and such Seller has good and valid title thereto, free and clear of
all liens and security interests (other than liens, if any, for taxes,
assessments or other governmental charges not yet due and payable), and to the
knowledge of such Seller, free and clear of all other claims and encumbrances of
any kind, except as created by or resulting from the provisions of the
Transferred Securities or Transferred Agreements.
(f) There are no fees, commissions or compensation payable to any
party engaged or retained by, through or on behalf of such Seller in connection
with the consummation of the transactions contemplated hereby other than the
Sellers' legal counsel, whose fees and expenses shall be paid by the Sellers.
(g) No proceedings relating to the Assigned Interest, including the
Transferred Securities and the Transferred Agreements, are pending against such
Seller that seek to restrain, prohibit, or invalidate the sale and assignment
hereunder.
(h) The Assigned Interest represents the entire right, title and
interest of the Sellers, and any of their respective affiliates in and with
respect to the Portfolio Companies, other than the Excluded Interest.
(i) Upon delivery by such Seller of the instruments of transfer
referred to in Section 2.01(b)(i) - (iv), payment by the Purchaser in accordance
with Section 2.01(c) and delivery by the Purchaser of the instrument of
assumption referred to in Section 2.01(d), the Purchaser shall acquire good and
valid title to the Assigned Interest, free and clear of all liens and security
interests (other than liens, if any, for taxes, assessments or other
governmental charges not yet due and payable), and to the knowledge of such
Seller, free and clear of all other claims and encumbrances of any kind, except
as created by or resulting from the provisions of the Transferred Securities or
Transferred Agreements.
(j) Upon consummation of the transactions contemplated
hereby and the filing in the appropriate filing or recordation
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CUSIP No. 383482106 Page 16 of 27 Pages
offices of UCC Form-3 assignment statements and other appropriate instruments
with respect to the assignment of all mortgages included in the Assigned
Interest and the possession by the Purchaser of all Collateral requiring
possession by the pledgee for the creation or perfection of any lien thereon,
the Purchaser will succeed to such Seller's security interest in, mortgage on,
pledge of, or other lien on, all Collateral.
(k) Part A of Schedule I hereto sets forth (i) a complete and
accurate list of the Transferred Securities, (ii) for each Transferred Security
that represents indebtedness for borrowed money, the outstanding principal
amount thereof, and accrued and unpaid interest, fees or other amounts payable
on or in respect thereof, (iii) the book value of each Transferred Security as
reflected in such Seller's records and (iv) the tax basis of each Transferred
Security as reflected in such Seller's records.
(l) To the knowledge of such Seller, all documents delivered by such
Seller pursuant to this Agreement, including the Transferred Securities, the
Transferred Agreements, the Consents and the Portfolio Company Files, are true,
correct and complete originals or photocopies, as appropriate, of the
Transferred Securities, the Transferred Agreements and the Portfolio Company
Files, as the case may be.
SECTION 3.02. Representations and Warranties of the Purchaser. The
Purchaser represents and warrants to the Sellers as of the date hereof as
follows:
(a) The Purchaser has full partnership power and authority to
execute, deliver and perform this Agreement and perform its obligations
hereunder.
(b) The execution and delivery by the Purchaser of this Agreement
and the performance by the Purchaser of its obligations hereunder have been duly
authorized by all requisite action and (i) will not violate any law or
regulation applicable to it or (ii) any agreement to which it is a party or by
which it is bound.
(c) This Agreement has been duly executed and delivered by the
Purchaser and constitutes the legal, valid and binding obligation of the
Purchaser, enforceable against the Purchaser in accordance with its terms,
subject, as to enforcement of remedies, to applicable bankruptcy, insolvency,
reorganization, moratorium and similar laws from time to time in
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CUSIP No. 383482106 Page 17 of 27 Pages
effect affecting the enforcement of creditors' rights generally and to general
equity principles.
(d) Except as set forth in Schedule 3.02(d) hereto or except as may
be required under any of the Transferred Agreements, no Consents from any
person, entity, or governmental body are required to be made or received by the
Purchaser for the effectiveness of the sale and assignment hereunder or the
consummation of the transactions contemplated hereby, except for such Consents
as have been duly made and obtained, have not been rescinded, in whole or in
part, and will be in full force and effect on the Closing Date.
(e) Notwithstanding anything to the contrary contained herein, the
Purchaser acknowledges that the Sellers make no representation, express or
implied, as to present or future value of the Assigned Interest, including the
Transferred Securities and the Transferred Agreements, or the receipt by the
Purchaser of all or any amounts due from the Portfolio Companies in respect
thereof. The Purchaser acknowledges and understands that certain of the
Transferred Securities are subordinate in right of payment as described in the
Transaction Agreements.
(f) The Purchaser has independently, without reliance upon the
Sellers, made its own credit determination and analysis of the Portfolio
Companies and made its own decision to enter this Agreement, based upon such
information as the Purchaser deemed sufficient and not based on any statements
or representations by the Sellers, except as expressly set forth herein.
(g) The Purchaser is a sophisticated purchaser with respect to the
Assigned Interest, including the Transferred Securities and the Transferred
Agreements, and has adequate information concerning the business and financial
condition of the Portfolio Companies to make an informed decision regarding the
Transferred Securities and the Transferred Agreements. The Purchaser
acknowledges that by virtue of the participation on the board of directors of
certain of the Portfolio Companies by Messrs. Michael H. de Havenon and Robert
S. Everett, who are members of the limited liability company general partner of
the Purchaser, or otherwise, the Purchaser has had access and has had the
opportunity to obtain copies of such documents and information as it has deemed
pertinent to the Purchaser's decision to purchase the Assigned Interest. The
Purchaser recognizes and accepts that Mr. Jeffrey S. Martin is an officer of
MLCC, and that by virtue of his participation on the board of
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directors of certain of the Portfolio Companies, may have access to material
nonpublic information relating to such companies.
(h) The Purchaser is acquiring the Assigned Interest, including the
Transferred Securities and the Transferred Agreements, being purchased by it
hereunder for its own account, for the purpose of investment, and not with a
view toward the resale or distribution thereof, except for resales in compliance
with the registration requirements or exemption provisions of the Securities
Act.
(i) The Purchaser understands that the Transferred Securities were
originally issued in transactions which the Sellers believe were exempt from
registration under the Securities Act and that each Seller may be deemed to be
an "affiliate" of one or more of the Portfolio Companies as defined in Rule 144
of the Securities Act.
(j) There are no fees, commissions or compensation payable to any
party engaged or retained by, through or on behalf of the Purchaser in
connection with the transactions contemplated hereby other than the Purchaser's
legal counsel, whose fees and expenses shall be paid by the Purchaser.
(k) No proceedings relating to the Purchaser are pending against the
Purchaser that would adversely affect the sale and assignment hereunder.
(l) The Purchaser has been capitalized with at least $40,600,000 in
cash, which Purchaser will use to pay the Purchase Price to the Sellers pursuant
to Section 2.01(c).
Section 3.03. Survival of Agreements. All representations and
warranties made herein shall survive for a period of one year from the date
hereof, except for representations and warranties as to title to the Transferred
Securities which shall survive without limitation.
IV.
MISCELLANEOUS
SECTION 4.01. Indemnities.
(a) MLCC agrees to indemnify, defend and hold harmless
the Purchaser and its partners (including its general partner and
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CUSIP No. 383482106 Page 19 of 27 Pages
limited partner), and its and each such partners' employees, agents, and
controlling persons, including without limitation Messrs. Michael H. de Havenon
and Robert S. Everett, and their respective heirs, personal representatives,
successors and assigns (collectively, the "Purchaser Indemnitees") on an
after-tax basis from and against any and all expenses, losses, claims, damages
and liabilities that are incurred by the Purchaser Indemnitees or any of them,
including without limitation reasonable attorneys' fees and expenses caused by,
or in any way resulting from or relating to (i) a breach by either Seller of any
of the representations, warranties, covenants or agreements of such Seller set
forth in this Agreement, (ii) a third-party claim based on or involving an act
or omission by either Seller in connection with the Assigned Interest, including
any Transferred Securities or Transferred Agreements, where such act or omission
occurred prior to the Closing Date, it being understood that MLCC shall not be
obligated to indemnify the Purchaser Indemnitees for litigation expenses
(including fees and disbursements of counsel), awards, judgments or amounts paid
in settlement in respect of third party claims, regardless of the legal theory
or doctrine asserted in support of any such claim, to the extent that such claim
arises from or relates to (x) the execution and delivery this Agreement and the
transactions contemplated hereby, (y) any violation or breach of any Transferred
Agreement or (z) the failure to obtain the Consent of any person, entity or
governmental body required to be obtained for the sale and assignment hereunder
or the consummation of the transactions contemplated hereby, (iii) a failure by
either Seller to pay, perform or discharge when due any of the Retained
Obligations and (iv) any and all ML Liabilities (for the benefit of the
Purchaser only); provided, however, that the maximum liability of MLCC to the
Purchaser under this Section 4.01(a) shall in no event exceed the Purchase
Price; provided, further that MLCC's obligation to indemnify either Messrs.
Michael H. de Havenon or Robert S. Everett pursuant to this Section 4.01(a)
shall be without duplication of any expenses, losses, claims, damages or
liabilities for which he otherwise (i) has received indemnification or (ii) may
be entitled to receive indemnification from MLCC or any of its affiliates, to
the extent that he actually receives indemnification thereunder.
(b) The Purchaser agrees to indemnify, defend and hold harmless the
Sellers and their respective officers, directors, employees, agents, partners
and controlling persons, and each of the officers, directors and employees of
such controlling persons, and their respective heirs, personal representatives,
successors and assigns (collectively, the "Seller Indemnitees")
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CUSIP No. 383482106 Page 20 of 27 Pages
on an after-tax basis from and against any and all expenses, losses, claims,
damages and liabilities that are incurred by the Seller Indemnitees or any of
them, including without limitation reasonable attorneys' fees and expenses,
caused by, or in any way resulting from or relating to (i) the Purchaser's
breach of any of the representations, warranties, covenants or agreement of the
Purchaser set forth in this Agreement; (ii) a third-party claim based on or
involving an act or omission by the Purchaser in connection with or in any way
relating to the Assigned Interest, including any Transferred Securities or
Transferred Agreements, where such failure, act or omission occurred on or after
the Closing Date, it being understood that Purchaser shall not be obligated to
indemnify the Sellers for litigation expenses (including fees and disbursements
of counsel), awards, judgments or amounts paid in settlement in respect of third
party claims, regardless of the legal theory or doctrine asserted in support of
any such claim, to the extent that such claim arises from or relates to (x) the
execution and delivery of this Agreement and the transactions contemplated
hereby, (y) any violation or breach of any Transferred Agreement or (z) the
failure to obtain the Consent of any person, entity or governmental body
required to be obtained for the sale and assignment hereunder or the
consummation of the transactions contemplated hereby, (iii) the Purchaser's
failure to pay, perform or discharge when due any of the Assumed Obligations or
(iv) any and all Portfolio Company Liabilities (for the benefit of the Sellers
only).
(c) The respective obligations and liabilities of MLCC, on the one
hand, or the Purchaser, on the other hand, as the case may be, (herein sometimes
called the "indemnifying party") to the other (herein sometimes called the
"party or parties to be indemnified") under Sections 4.01(a) and (b) hereof with
respect to claims resulting from the assertion of liability by third parties
shall be subject to the following terms and conditions:
(i) Within 20 days after receipt of notice of commencement of any
action or the assertion of any claim by a third party, the party or
parties to be indemnified shall give the indemnifying party written notice
thereof together with a copy of such claim, process or other legal
pleading, and the indemnifying party shall have the right to undertake the
defense thereof by representatives of its own choosing; provided, however,
that the indemnifying party shall remain obligated under Section 4.01(a)
or (b), as the case may be, if the party or parties to be indemnified
shall give the indemnifying party such written notice after the 20 day
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CUSIP No. 383482106 Page 21 of 27 Pages
period referred to above and the defense of such action or
claim is not prejudiced thereby.
(ii) In the event that the indemnifying party, by the 30th day after
receipt of notice of any such claim (or, if earlier, by the tenth day
preceding the day on which an answer or other pleading must be served in
order to prevent judgment by default in favor of the person asserting such
claim), does not elect to defend against such claim, the party or parties
to be indemnified will (upon further notice to the indemnifying party)
have the right to undertake the defense, compromise or settlement of such
claim on behalf of and for the account and risk of the indemnifying party,
subject to the right of the indemnifying party to assume the defense of
such claim at any time prior to settlement, compromise or final
determination thereof. The indemnifying party shall not settle or
compromise any such claim or consent to the entry of any judgment which
does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the party or parties to be indemnified a
release from all liability with respect to such claim.
(iii) Anything in this Section 4.01(c) to the contrary
notwithstanding, (x) if there is a reasonable probability that a claim may
materially and adversely affect the indemnified party or parties other
than as a result of money damages or other money payments, the indemnified
party or parties shall have the right, at its own cost and expense, to
compromise or settle such claim, but (y) the indemnified party or parties
shall not, without the prior written consent of the indemnifying party,
settle or compromise any claim or consent to the entry of any judgment
which does not include as an unconditional term thereof the giving by the
claimant or the plaintiff to the indemnifying party a release from all
liability in respect of such claim.
(d) In connection with any such indemnification, the indemnified
party or parties will cooperate in all reasonable requests of the indemnifying
party or parties.
(e) It is understood and agreed that, whether or not MLCC, on the
one hand, or the Purchaser, on the other hand, is obligated to indemnify the
other pursuant to Sections 4.01(a) or (b) hereof, in the event that any claim by
a third party relating to the Assigned Interest or the Assumed Obligations names
(i) at least one of the Sellers and (ii) the Purchaser, the parties shall
cooperate in the defense of such claim to the extent that
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CUSIP No. 383482106 Page 22 of 27 Pages
the parties agree that such cooperation does not compromise the rights of any
party or present a conflict of interest between the parties with respect to the
defense of any such claim. It is understood and agreed that such cooperation
shall neither obligate nor preclude the parties from sharing the costs of one
counsel for both parties.
(f) Any payment made by any party under this Section 4.01 shall be
treated as an adjustment to the Purchase Price.
(g) It is understood and agreed that the remedies provided in
Section 4.01(a) and (b) hereof shall be exclusive and shall preclude assertion
by any party hereto of any other rights or the seeking of any other remedies
against another party hereto relating to the subject matter hereof.
SECTION 4.02. Allocation of Purchase Price. Each of the parties
hereto agrees to allocate the Purchase Price (and the Assumed Obligations) to
the Assigned Interest in the manner specified in Schedule 4.02 hereto. Each of
the parties hereto shall respect the allocation set forth in Schedule 4.02 for
all financial accounting and tax purposes and shall file all tax returns and
other documents with all taxing authorities on a basis consistent therewith.
SECTION 4.03. No Consolidation. The parties (i) hereby affirm their
understanding that for all taxable periods ending on or prior to the Closing
Date, none of the Portfolio Companies has been included or is required to be
included, for purposes of any foreign, federal, state or local tax laws, in a
consolidated group that includes the Sellers or any of their respective
affiliates, including any "affiliated group" as such term is defined in Section
1504 of the Code and (ii) agree (x) not to take any position inconsistent with
such understanding for any tax or financial accounting purpose and (y) to file
all tax returns and other documents with all taxing authorities on a basis
consistent with such understanding.
SECTION 4.04. Costs and Fees. Each party to this Agreement shall
bear its own costs and expenses, including without limitation attorneys' fees
and expenses, in connection with the transactions contemplated hereby.
SECTION 4.05. Filings and Further Assurances. Each of
the parties hereto agrees, at its own cost and expense, to
execute and deliver, or to cause to be executed and delivered,
all such instruments (including all necessary endorsements) and
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CUSIP No. 383482106 Page 23 of 27 Pages
to take all such action as the other party may reasonably request in order to
(i) effectuate the intent and purposes of, and to carry out the terms of this
Agreement, and (ii) further effect the transfer of legal, beneficial and record
ownership of the Assigned Interest, including the Transferred Securities, the
Transferred Agreements and the Collateral, to the Purchaser.
SECTION 4.06. Confidentiality. Each party agrees that, except as may
be required by law, legal process or by an order, judgment or decree of a court
or other governmental authority or self-regulatory body of competent
jurisdiction and except to the extent that any subject matter shall have entered
the public domain by no breach of these provisions on the part of such party, it
shall not disclose to any person or entity, other than its directors, officers,
the officers and directors of its affiliates, if any, attorneys, advisors and
accountants (i) the terms or conditions of this Agreement or any document
executed or delivered in connection herewith (including without limitation the
Purchase Price), (ii) the amount of any realized or unrealized appreciation or
depreciation of the Transferred Securities, or any of them, in the hands of the
Purchaser, or any indicia of any such appreciation or depreciation, including
without limitation, rate of return information or other statistical equivalents,
or (iii) the amount of any proceeds or consideration, gross or net, received by
the Purchaser, directly or indirectly, in connection with any transaction
involving any of the Transferred Securities, whether by tombstone advertisement,
release of statistical information regarding investment portfolio performance or
otherwise (all such information within the scope of items (i) through (iii)
being acknowledged by the parties as confidential, and being herein referred to
collectively in this Section 4.06 as the "Confidential Information"); provided,
however, that either Seller may disclose the existence of this Agreement to the
Portfolio Companies and the Purchaser may disclose (x) the existence of this
Agreement and the terms and conditions of any documents executed or delivered in
connection herewith to representative of LPNY Mezzanine Partners II, L.P., the
Purchaser's sole limited partner, subject to the condition that said limited
partner execute its agreement to be bound by the provisions of this Section 4.06
to the same extent as the Purchaser, by its signature in the place indicated at
the foot of this Agreement, (y) information, based on or extrapolated from the
Confidential Information, (1) to the Purchaser's limited partner regarding the
performance of the Purchaser's investment portfolio, as required by the
Purchaser's limited partnership agreement (it being understood that any such
performance information so disclosed may be further disclosed by the
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CUSIP No. 383482106 Page 24 of 27 Pages
Purchaser's limited partner as required by its limited partnership agreement or
as may otherwise be in furtherance of its purposes), and (2) in connection with
the establishment of any successor private equity/debt pooled investment fund by
the principals of the general partner or the limited partner of the Purchaser,
and (z) any Confidential Information, as may be necessary or advisable in
connection with the monitoring, holding or disposition by the Purchaser of any
of the Transferred Securities or Transferred Agreements, to consultants and,
actual or prospective coinvestors, participants, joint ventures, lenders and
purchasers.
SECTION 4.07. Entire Agreement; Amendment. This Agreement and the
documentation delivered pursuant to this Agreement constitutes the complete
agreement of the parties hereto with respect to the matters referred to herein
and supersedes all prior or contemporaneous negotiations, promises, covenants,
agreements or representations of every nature whatsoever with respect thereto,
all of which have become merged and finally integrated into this Agreement. This
Agreement cannot be amended, modified or supplemented except by an instrument in
writing executed by each party hereto.
SECTION 4.08. Notices. Notices shall be given or confirmed in
writing and shall be delivered by certified or registered mail, personally, by
courier or facsimile at the addresses, or facsimile numbers set forth below:
If to MLCC to it at:
Merrill Lynch Capital Corporation
World Financial Center
North Tower, 27th Floor
250 Vesey Street
New York, NY 10281
Attention: President
Telephone: 212-449-1000
Facsimile: 212-449-3976
with a copy to:
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, NY 10111
Attention: Othon A. Prounis, Esq.
Telephone: 212-841-5700
Facsimile: 212-841-5725
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CUSIP No. 383482106 Page 25 of 27 Pages
If to MLPM to it at:
Merrill Lynch Portfolio Management Inc.
World Financial Center
South Tower, 7th Floor
225 Liberty Street
New York, NY 10080-6107
Attention: Stanley Schaefer
Telephone: 212-236-6039
Facsimile: 212-236-0647
with a copy to:
Reboul, MacMurray, Hewitt, Maynard & Kristol
45 Rockefeller Plaza
New York, NY 10111
Attention: Othon A. Prounis, Esq.
Telephone: 212-841-5700
Facsimile: 212-841-5725
If to the Purchaser to it at:
Kulen Capital, L.P.
45 Rockefeller Plaza
10th floor
New York, NY 10111
Attention: Michael H. de Havenon
Telephone: 212-841-5700
Facsimile: 212-841-5725
with a copy to:
Chadbourne & Parke LLP
30 Rockefeller Plaza
New York, NY 10122
Attention: Charles E. Hord III, Esq.
Telephone: 212-408-5100
Facsimile: 212-541-5369
SECTION 4.09. Parties in Interest. All covenants and agreements
contained in this Agreement by or on behalf of any of the parties hereto shall
bind and inure to the benefit of the respective successors and assigns of the
parties hereto whether so expressed or not. All representations and warranties
made herein shall survive the Closing.
SECTION 4.10. Counterparts. This Agreement may be
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CUSIP No. 383482106 Page 26 of 27 Pages
executed in two or more counterparts, each of which shall be deemed an original,
but all of which together shall constitute one and the same instrument.
SECTION 4.11. Governing Law. This Agreement shall be governed by and
construed in accordance with the laws of the State of New York, without regard
to any conflicts of laws provisions thereof. Each party to this Agreement hereby
irrevocably consents to the jurisdiction of the United States Court for the
Southern District of New York and the courts of the State of New York located in
the City of New York in any action to enforce, interpret or construe any
provision of this Agreement or of any other agreement or document delivered in
connection with this Agreement, and also hereby irrevocably waives any defense
of improper venue, forum non conveniens or lack of personal jurisdiction to any
such action brought in those Courts. Each party further irrevocably agrees that
any action to enforce, interpret or construe any provision of this Agreement
will be brought only in one of those Courts.
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CUSIP No. 383482106 Page 27 of 27 Pages
IN WITNESS WHEREOF, the undersigned have executed and delivered this
Agreement as of the date first stated above.
MERRILL LYNCH CAPITAL CORPORATION
By:_______________________________________
Name:
Title:
MERRILL LYNCH PORTFOLIO MANAGEMENT INC.
By:_______________________________________
Name: Stanley Schaefer
Title: Vice President
KULEN CAPITAL, L.P.
By Kulen Associates, L.L.C.,
General Partner
By:______________________________________
Name:
Title:
Confirmed and Agreed as of the date
first above written, as to the obligation
of the undersigned set forth in
Section 4.06 of the foregoing Agreement.
LPNY MEZZANINE PARTNERS II, L.P.
By LPNY Partners II, L.P.
General Partner
By:_____________________________________
General Partner
