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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(d) OF
THE SECURITIES EXCHANGE ACT OF 1934
Date of Report (Date of earliest event reported): OCTOBER 30, 1998
ALLIANCE RESOURCES PLC
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(Exact name of registrant as specified in its charter)
ENGLAND AND WALES 0-27750 NONE
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(State or other jurisdiction of (Commission (IRS Employer
incorporation) File Identification No.)
Number)
4200 EAST SKELLY DRIVE, SUITE 1000, TULSA, OKLAHOMA 74135
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(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 44 171 930 9337
(NOT APPLICABLE)
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(Former name or former address, if changed since last report)
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ITEM 2. ACQUISITION OR DISPOSITION OF ASSETS
Effective October 30, 1998, Alliance Resources PLC ("Alliance" or the
"Company"), completed its acquisition of (i) the whole of the issued share
capital of Difco Limited ("Difco"), and (ii) through Difco, an undivided 10
percent of the right, title and interest of Burlington Resources (Irish Sea)
Limited, in 13 blocks in the East Irish Sea and Liverpool Bay areas off the West
Coast of the United Kingdom (the "U.K. Interests") (together, with the
acquisition of Difco, the "Acquisitions"). Pursuant to the terms of the
Acquisitions, the former shareholders of Difco received an aggregate of
10,000,000 newly created convertible restricted voting shares ("Acquisition
Shares") and a contingent right to receive additional ordinary shares
("Shares"), subject to the sales production actually achieved from the U.K.
Interests. The Acquisition Shares are entitled to one-half vote per share on
all matters in which the Shares are entitled to vote and otherwise will have
rights identical to the Shares, except for certain restrictions on transfer.
In addition to the Acquisition Shares, the holders of Difco capital stock
received a contingent right to acquire up to 10,000,000 Shares over the next
five years. The number of Shares that are actually issued as a result of this
contingent right will depend on the sales production actually achieved from, or
the estimated value attributable to, the U.K. Interests, as set out in the table
below. The Difco shareholders will receive only 5,000,000 Shares if none of the
production targets is achieved, will receive 20,000,000 Shares if all the
production targets or reserve values are achieved and will receive a number of
Shares within this range if only some of the production targets or reserve
valuations are achieved.
If any Sustained Production Level (as defined below) is achieved, the Difco
holders will be entitled to exchange that number of Acquisition Shares, on a
one-for-one basis, equal to the number of Shares set forth below corresponding
to such Sustained Production Level. Once all Acquisition Shares have been
converted, then the Difco shareholders will receive a number of additional
Shares which, when aggregated with any Shares issuable on conversion of the
Acquisition Shares, equals the number of Shares set forth below corresponding to
the Sustained Production Level. "Sustained Production Level" means sales of
production attributable to the U.K. Interests for a period of at least 90
consecutive days at rates equal to or in excess of the levels described in the
table set out below.
If the first three Sustained Production Levels set out below are achieved,
but the fourth or fifth Sustained Production Levels set out below are not
achieved, and the Reserves Value (as defined below) is equal to or in excess of
that set out below with respect to such Sustained Production Level which has not
been achieved, then additional Shares shall be issued to the Difco holders so
that the total number of additional Shares issued to the Difco holders is equal
to the amount which would have been issued had the Sustained Production Level
been achieved which corresponds to such Reserves Value. "Reserves Value" means
the net present value of the following reserves, bearing interest or discounted
at the rate of 10%, as applicable, net of U.K. corporate tax, and determined in
accordance with generally accepted reservoir engineering standards: (i) the
proceeds previously received which are attributable to the total volume of
reserves produced and sold from the U.K. Interests from and after January 1,
1998, less the aggregate amount of all capital expenditures and operating costs
incurred since January 1, 1998 which are attributable to the U.K. Interests and
(ii) the proceeds estimated to be received attributable to the total volume of
hydrocarbon reserves that geological and engineering data demonstrate, with a
greater than 50% certainty, as determined by
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statistical means, to be recoverable from the U.K. Interests in the future from
known reservoirs under existing operating conditions based upon the most recent
reserve report prepared by Alliance's third-party engineering firm, which report
shall be prepared no less often than annually, less the aggregate amount of all
capital expenditures and operating costs attributable to such reserves.
<TABLE>
<CAPTION>
Sustained Production Base Number of Alliance Estimated Issuance
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Level Shares to be Issued Reserves Value (1) Date (2)
----- ------------------- ------------------ --------
<S> <C> <C> <C>
8 MMcf/day 8,000,000 N/A First Quarter, 2000
12 MMcf/day 3,000,000 N/A First Quarter, 2001
16 MMcf/day 3,000,000 N/A Second Quarter, 2001
20 MMcf/day 3,000,000 $ 34.15 million Third Quarter, 2001
24 MMcf/day 3,000,000 $ 37.5 million Not Applicable
</TABLE>
(1) These Reserves Values are not comparable to Pre-tax PV10 value or the
Standardized Measure of the reserves attributable to the Company's
properties or to the U.K. Interests described in other filings by the
Company because the calculation of "Reserves Value" is to be made in the
manner described in the paragraph preceding this table, which is different
than the manner in which the Pre-tax PV10 value and the Standardized
Measure are calculated.
(2) The Estimated Issuance Dates are based upon the reserve report prepared by
the Company's independent petroleum engineers. There can be no assurances,
however, as to the Sustained Production Levels or Reserves Values that will
ultimately be attributable to the U.K. Interests.
If, after five years after the completion of the Difco Acquisition, none of
the Sustained Production Levels set out above has been achieved, the Acquisition
Shares will automatically convert on that date into 5,000,000 Shares and
5,000,000 deferred shares having nominal value and no voting rights. If by that
date more than 5,000,000 but less than all of the Acquisition Shares have
converted into Shares, then any remaining Acquisition Shares shall automatically
convert into deferred shares. The Company shall be entitled to purchase all such
deferred shares for an aggregate consideration of 1p.
As a result of the issuance of the Acquisition Shares, the former
shareholders of Difco have the voting rights equivalent to approximately 8.7% of
the outstanding Shares, and upon conversion of the Acquisition Shares and
issuance of the contingent ordinary shares, could receive up to 28.3% of the
Shares of the Company then outstanding, based upon the production from, or
reserves attributable to, the U.K. Interests.
The Company acquired, through Difco, the U.K. Interests for cash
consideration of approximately $17,000,000.
In connection with the Acquisitions, the Company also entered into
agreements providing up to $65,750,000 in debt to the Company. The Company has
received this debt financing from two lenders.
Bank of America Debt. Bank of America National Trust & Savings Association
("BoA"), Alliance's principal lender, increased the Company's previous revolving
credit facility from approximately $23 million to $55 million. The revised
credit facility will consist of three tranches.
Tranche A will be a borrowing base facility initially capped at $30
million, of which $18.5 million will initially be available and drawn. The
borrowing base capacity of this tranche will be redetermined semi-annually. The
interest rate will be either (i) the greater of Bank of America's reference rate
and the federal funds rate plus 0.25 percent or (ii) the interbank rate plus 2
percent. While Tranche B is outstanding (see below) 0.5 percent will be added to
the interest margin. Principal will be due in equal quarterly installments
beginning in the first quarter of 2001 and ending five years after completion of
the Acquisitions.
Tranche B will be a $20 million term loan facility, all of which will
initially be available, that will mature in the first quarter of 2001, at which
point the outstanding balance will become due and payable. To enable repayment
of this tranche, the Directors envisage that the Company will enter into a
refinancing of its debt facilities at this time. The interest rate on this
tranche will be either (i) Bank of America's reference rate plus 2 percent or
(ii) the interbank rate plus 4 percent, payable quarterly. Interest will
increase by 0.5 percent semi-annually after completion of the Acquisitions.
Tranche C will consist of a $5 million facility, all of which will
initially be available and drawn. The interest rate on this tranche will be
either (i) Bank of America's reference rate plus 5 percent or (ii) the interbank
rate plus 7 percent, payable quarterly. Principal will be due in equal
quarterly installments beginning two years after and ending six years after
completion of the Acquisitions.
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The Company paid BoA a cash fee of $850,000 and granted BoA warrants to
purchase 3,275,000 ordinary shares at a price of 1p per share. In addition, BoA
received an overriding royalty interest in the U.K. Interests of 3.0% beginning
January 1, 2001. The overriding royalty interest will entitle BoA to receive a
payment equal to the specified percentage of the net revenues generated by the
U.K. Interests. The overriding royalty interest would have the effect of
reducing the Company's revenues from the U.K. Interests. In connection with
obtaining the debt financing from BoA, the Company agreed to enter into
commodity price risk management contracts on terms that are mutually agreeable
to BoA and the Company for a period not less than two years with respect to at
least 50% of the Company's estimated proved producing reserves at the date of
closing. BoA also required the Company to agree to enter into interest rate risk
management contracts providing for a maximum interest rate of 9.0% on the
notional amount projected to be outstanding on the revolving credit facility.
EnCap Debt. The Company issued to affiliates of EnCap Investments, L.C.
("EnCap") debt of $9,750,000, at an interest rate of 10% per year, and
15,000,000 Shares for an aggregate cash consideration of $10,000,000. Interest
on the EnCap debt is payable semiannually; principal is payable in full seven
years after completing the Acquisitions. For the first three years, the Company
has the option of increasing the amount of debt from EnCap in the amount of the
interest payments due, in lieu of paying the interest. The EnCap debt is
unsecured.
The Company also issued to EnCap 545,454 Shares in consideration of a fee
of $292,500. In addition, EnCap will have the right to designate one member of
the Company's board of directors.
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The Company also issued to EnCap 545,454 Shares in consideration of a fee
of $292,500. In addition, EnCap will have the right to designate one member of
the Company's board of directors.
Pursuant to the terms of the Acquisitions, the former Difco shareholders
also have the right to designate one member of the Company's board of directors.
Any such designation will be in accordance with the Company's Articles of
Association. Once an appointment has been made, the former Difco shareholders
will have no further right to appoint any directors of Alliance.
In addition, pursuant to the terms of the Acquisitions, 615,385 shares were
issued to NM Rothschild & Sons Ltd. in settlement of fees of (pounds)200,000,
and 115,895 shares were issued to NM Rothschild & Sons (Washington) LC in
settlement of a debt of $115,000.
The Alliance Shares resumed trading on the London Stock Exchange on
November 2, 1998, under the symbol "ARS." The consideration paid in the
Acquisition and related transactions was determined through arms-length
negotiations.
The Acquisitions and related transactions are intended to increase the
potential of the Company as an oil and gas exploration, development and
production company.
The Acquisitions and the related transactions related are described in
greater detail in the proxy statements of Alliance dated July 13,1998 and
October 7, 1998, which is incorporated by reference into this report.
ITEM 5. OTHER EVENTS
In connection with the Acquisitions, with shareholder approval, the Company
also effected certain other changes in its Articles of Association, as described
below.
Reduction of Par Value. Prior to the Acquisitions, the Company's Shares
had a par value of 40p each. At the Extraordinary General Meeting called to
consider the Acquisitions, the shareholders approved, and the Company's Articles
of Association were thereafter amended, to reduce the par value of the Shares.
This was achieved by sub-dividing each of the Shares into one new ordinary share
with a par value of 1p and 39 deferred shares with a par value of 1p each. The
resulting ordinary shares, for all practical purposes, have the same rights as
those previously attaching to the ordinary shares of 40p each. The deferred
shares effectively have no rights, are not represented by certificates issued to
shareholders and may be redeemed by the Company by the payment of a total of 1p
for all of the deferred shares. Therefore, certificates representing a specific
number of existing ordinary shares continue to represent the same number of
ordinary shares having the same rights after the change in par value. There was
no net change in the total shareholders' equity reflected on the Company's
balance sheet as a result of the reduction of par value.
Creation of Acquisition Shares. As the initial consideration for the Difco
Acquisition was paid in the form of 10,000,000 Acquisition Shares of 1p each,
shareholders also approved the creation of the Acquisition Shares. These shares
have rights identical to the Company's outstanding Shares, except that they have
only one-half vote per share and are subject to limited rights of transfer.
Authorization of the Issuance of Additional Securities. Unlike in the
U.S., the Board of Directors of a U.K. company has no general authority to issue
shares or other equity securities without first obtaining shareholder approval.
Therefore, it is customary for the shareholders to routinely approve resolutions
permitting the Board of Directors to issue up to a specified amount of
additional securities on such terms as the Board of Directors may determine for
a specified period of time after the authorization. At the Extraordinary
General Meeting, the shareholders adopted a resolution that permits the Board to
allot the Acquisition Shares and additional Shares issuable in accordance with
the terms of the revised Difco Acquisition Agreement or upon the exercise of any
warrants or loan notes and otherwise, to issue securities having a nominal value
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up to one-third of the aggregate nominal value of all Shares outstanding or
unconditionally allotted and fully paid following completion of the
Acquisitions. This authority will expire at the Annual General Meeting of the
Company to be held in 2003, except with respect to any securities the Company
had agreed to issue before that time.
Increase of Maximum Borrowing Authority. The Company's Articles of
Association limit the Company's ability to borrow money, as is customary for
U.K. companies. To permit the Company to obtain the financing necessary to
complete the Acquisitions and to have sufficient borrowing authority for
foreseeable future corporate purposes, the shareholders approved an increase in
the Company's borrowing authority to a multiple of ten (10) times adjusted
capital and reserves, which based on the Pro Forma Condensed Combined Balance
Sheet as of July 31, 1998, would be approximately $118.0 million.
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(A) FINANCIAL STATEMENTS OF BUSINESSES ACQUIRED.
Not applicable.
(B) PRO FORMA FINANCIAL INFORMATION.
Pro forma financial information with respect to the transactions
described in Item 2 above is included beginning on page 7 of the supplemental
proxy statement of the Company dated October 7, 1998, and is incorporated into
this filing by reference.
(C). EXHIBITS
The following exhibits are furnished in accordance with Item 601 of
Regulation S-K:
3.1 Articles of Association of the Company as revised October 30, 1998.
3.2 Memorandum of Association of the Company as revised October 30, 1998.
10.1 Purchase Agreement dated October 27, 1998, by and between Alliance
Resources PLC and EnCap Equity 1996 Limited Partnership and Energy
Capital Investment Company Plc.
10.2 Registration Rights Agreement dated as of October 30, 1998 by and
between Alliance Resources PLC, EnCap Equity 1996 Limited Partnership,
Energy Capital Investment Company Plc and EnCap Investments, L.C.
10.3 Third Amended and Restated Credit Agreement dated as of October 27,
1998, among Alliance Resources PLC and certain of its subsidiaries and
Bank of America National Trust and Savings Association.
10.4 Registration Rights Agreement dated as of October 30, 1998 between the
Company and LaSalle Street Natural Resources Corporation.
10.5 Registration Rights Agreement dated as of October 30, 1998, among
Alliance Resources PLC and F. Fox Benton and certain members of his
family.
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SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the
registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
ALLIANCE RESOURCES PLC
(Registrant)
Date: November 16, 1998 By: /s/John A. Keenan
---------------------------------
John A. Keenan
Chairman and Managing Director
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INDEX TO EXHIBITS
EXHIBIT SEQUENTIALLY
NO. EXHIBIT NUMBERED PAGE
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3.1 Articles of Association of the Company as revised
October 30, 1998
3.2 Memorandum of Association of the Company as revised
October 30, 1998.
10.1 Purchase Agreement dated October 27, 1998, by and
between Alliance Resources PLC and EnCap Equity 1996
Limited Partnership and Energy Capital Investment
Company Plc.
10.2 Registration Rights Agreement dated as of October 30,
1998 by and between Alliance Resources PLC, EnCap
Equity 1996 Limited Partnership, Energy Capital
Investment Company Plc and EnCap Investments, L.C.
10.3 Third Amended and Restated Credit Agreement dated as of
October 27, 1998, among Alliance Resources PLC and
certain of its subsidiaries and Bank of America National
Trust and Savings Association.
10.4 Registration Rights Agreement dated as of October 30,
1998 between the Company and LaSalle Street Natural
Resources Corporation.
10.5 Registration Rights Agreement dated as of October 30,
1998, among Alliance Resources PLC and F. Fox Benton
and certain members of his family.
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EXHIBIT 3.1
THE COMPANIES ACTS 1985 AND 1989
COMPANY LIMITED BY SHARES
ARTICLES OF ASSOCIATION
(adopted by special resolution passed on 30th April 1997
and amended by special resolutions passed on 30th October 1998)
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ALLIANCE RESOURCES PLC
PRELIMINARY
1. The regulations contained in Table A in the schedule to The Companies
(Tables A to F) Regulations 1985 and in any Table A applicable to the
Company under any former enactment relating to companies shall not apply to
the Company except in so far as they are repeated or contained in these
Articles.
2. In these Articles, unless the context otherwise requires:-
"STATUTES" means the Companies Act 1985 as amended by the Companies Act
1989, the Companies Act 1989 and every other statute or subordinate
legislation for the time being in force concerning companies and affecting
the Company including every amendment or re-enactment (with or without
amendment) thereof for the time being in force;
"ARTICLES" means these Articles of Association as altered from time to
time;
"AUDITORS" means the Auditors for the time being of the Company;
"CLEAR DAYS' NOTICE" means that the notice shall be exclusive of the day on
which it is served or deemed to be served and of the day for which it is
given or on which it is to take effect;
"DIRECTORS" means the Directors for the time being of the Company, or, as
the case may be, the board of directors for the time being of the Company
or the persons present at a duly convened meeting of the board of directors
or any duly authorised committee thereof at which a quorum is
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present;
"DIVIDEND" includes bonus;
"MONTH" means calendar month;
"OFFICE" means the registered office for the time being of the Company;
"PAID UP" includes credited as paid up;
"REGISTER" means the Register of Members of the Company required to be kept
by the Statutes;
"REGULATED ENTITY" means (i) any entity that is a "bank holding company"
(as defined in Section 2(a) of the U.S. Bank Holding Company Act of 1956,
as amended, (the "BHC Act")) or any non-bank subsidiary of such an entity
or (ii) any entity that, pursuant to Section 8(a) of the U.S. International
Banking Act of 1978, as amended, is subject to the provisions of the BHC
Act or any non-bank subsidiary of such an entity;
"SEAL" means the common seal of the Company;
"SECRETARY" includes a joint, deputy or assistant secretary, and any person
appointed by the Directors to perform the duties of the Secretary of the
Company;
"UNCERTIFICATED SECURITIES REGULATIONS" means the Uncertificated Securities
Regulations 1995, including any statutory modification or re-enactment for
the time being in force;
"UNITED KINGDOM" means Great Britain and Northern Ireland;
"IN WRITING" and "WRITTEN" includes printing, lithography, typewriting,
photography and other modes of representing or reproducing words in visible
form.
Words importing the singular number only shall include the plural, and vice
versa.
Words importing the masculine gender only shall include the feminine
gender.
Words importing individuals and words importing persons shall include
bodies corporate and unincorporated associations.
Any reference herein to the provisions of any Act or of any subordinate
legislation shall include any amendment or re-enactment (with or without
amendment) thereof for the time being in force.
Subject as aforesaid, and unless the context otherwise requires, words and
expressions defined in the Statutes shall bear the same meanings in these
Articles.
A Special or Extraordinary Resolution shall be effective for any purpose
for which an Ordinary Resolution is expressed to be required under any
provision of these Articles.
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SHARES
3.1 The authorised share capital of the Company at the date of the adoption of
this Article 3.1 is (Pounds)18,400,000 divided into 425,001,376 Ordinary
Shares of 1p each (hereinafter referred to as the "ORDINARY SHARES"), and
1,414,998,624 Deferred Shares of 1p each (hereinafter referred to as the
"DEFERRED SHARES")./1/
3.2 The holders of the Deferred Shares shall not, by virtue of or in respect of
their holdings of Deferred Shares, have the right to receive notice of any
General Meeting of the Company nor the right to attend, speak or vote at
any such General Meeting. The Deferred Shares shall not entitle their
holders to receive any dividend or other distribution. The Deferred Shares
shall on a return of capital on winding up or otherwise entitle the holder
only to the repayment of the amounts paid up on such shares after repayment
of the capital paid up on all other classes of share in the capital of the
Company. The Company shall have irrevocable authority at any time after
the adoption of this Article to appoint any person to execute on behalf of
the holders of the Deferred Shares a transfer therefore (and/or an
agreement to transfer the same) to such person as the Company may determine
as custodian thereof and/or to purchase the same (in accordance with the
provisions of the Statutes) in any case for not more than 1p for all of the
Deferred Shares without obtaining the sanction of the holder or holders
thereof and pending such transfer and/or purchase to retain the certificate
for the Deferred Shares.
4. Without prejudice to any special rights previously conferred on the holders
of any existing shares or class of shares, any share in the Company may be
issued with such rights (including preferred, deferred or other special
rights) or such restrictions, whether in regard to dividend, voting, return
of capital or otherwise as the Company may from time to time by Ordinary
Resolution determine (or, in the absence of any such determination, as the
Directors may determine).
5. Subject to the provisions of the Statutes:-
5.1 any shares may be issued which are to be redeemed or are liable to be
redeemed at the option of the Company or the shareholder on such terms and
in such manner as may be provided by these Articles; and
5.2 the Company may purchase any of its own shares (including any redeemable
shares).
6. The Company shall not give any financial assistance for the acquisition of
shares in the Company except and in so far as permitted by the Statutes.
7. The shares of the Company shall not be allotted at a discount and save as
permitted by the Statutes shall not be allotted except as paid up at least
as to one-quarter of their nominal value and the whole of any premium
thereon.
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/1/ Pursuant to a special resolution passed on 30 October 1998, 10,000,000
Ordinary Shares of 1 pence each that were authorised but not in issue were
converted into and re-designated as 10,000,000 convertible restricted
voting shares of 1 pence each.
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8. The Company may exercise the powers of paying commissions conferred by the
Statutes to the full extent thereby permitted. Such commission may be
satisfied by the payment of cash or the allotment of fully or partly paid
shares or partly in one way and partly in the other. The Company may also
on any issue of shares pay such brokerage as may be lawful.
9. Save as otherwise provided in the Statutes or in these Articles, all
unissued shares (whether forming part of the original or any increased
capital) shall be at the disposal of the Directors who may (subject to the
provisions of the Statutes) allot (with or without conferring a right of
renunciation), grant options over, offer or otherwise deal with or dispose
of them to such persons at such times and generally on such terms and
conditions as they may determine. The Directors may at any time after the
allotment of any share but before any person has been entered in the
Register as the holder, recognise a renunciation thereof by the allottee in
favour of some other person and may accord to any allottee of a share a
right to effect such renunciation upon and subject to such terms and
conditions as the Directors may think fit to impose.
10. Except as required by law or pursuant to the provisions of these Articles,
no person shall be recognised by the Company as holding any share upon any
trust, and (except only as by these Articles or by law otherwise provided
or under an order of a court of competent jurisdiction) the Company shall
not be bound by or be compelled in any way to recognise (even when having
notice thereof) any equitable, contingent, future or partial interest in
any share or any interest in any fractional part of a share or any other
rights in respect of any share except an absolute right to the entirety
thereof in the registered holder.
SHARE CERTIFICATES
11. Every share certificate shall specify the number and class and the
distinguishing number (if any) of the shares to which it relates and the
amount paid up thereon. No certificate shall be issued relating to shares
of more than one class.
12. Every person (other than a recognised clearing house (within the meaning of
the Financial Services Act 1986) or a nominee of a recognised clearing
house or of a recognised investment exchange (within the meaning of the
Financial Services Act 1986) in respect of whom the Company is not by law
required to complete and have ready for delivery a certificate) whose name
is entered as a Member on the Register shall be entitled without payment to
receive within two months after allotment or lodgement of transfer (or
within such other period as the conditions of issue shall provide) one
certificate for all the shares registered in his name or, in the case of
shares of more than one class being registered in his name, a separate
certificate for each class of shares so registered, and where a Member
(except such a clearing house or nominee) transfers part of the shares of
any class registered in his name he shall be entitled without payment to
one certificate for the balance of shares of that class retained by him.
If a Member shall require additional certificates he shall pay for each
additional certificate such reasonable sum (if any) as the Directors may
determine.
13. In respect of shares of one class held jointly by more than one person the
Company shall not be bound to issue more than one certificate, and delivery
of a certificate for such shares to one of the joint holders of such shares
shall be sufficient delivery to all such holders.
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14. If any certificate be defaced then upon delivery thereof to the Directors
they may order the same to be cancelled and may issue a new certificate in
lieu thereof; and if any certificate be worn out, lost or destroyed, then
upon proof thereof to the satisfaction of the Directors and on such
indemnity with or without security as the Directors deem adequate being
given, a new certificate in lieu thereof shall be given to the party
entitled to such worn out, lost or destroyed certificate.
15. Every certificate issued under the last preceding Article shall be issued
without payment, but there shall be paid to the Company such exceptional
out-of-pocket expenses of the Company in connection with the request
(including, without limiting the generality of the foregoing, the
investigation of such request and the preparation and execution of any such
indemnity or security) as the Directors think fit.
VARIATION OF RIGHTS
16. If at any time the share capital is divided into different classes of
shares, the rights attached to any class or any of such rights may,
subject to the provisions of the Statutes, whether or not the Company is
being wound up, be modified, abrogated or varied with the consent in
writing of the holders of three-fourths in nominal value of the issued
shares of that class, or with the sanction of an Extraordinary Resolution
passed at a separate General Meeting of the holders of the shares of that
class.
17. To every such separate General Meeting the provisions of sections 369, 370,
376 and 377 of the Companies Act 1985 and the provisions of these Articles
relating to General Meetings shall, mutatis mutandis, so far as applicable
apply, subject to the following provisions, namely:-
17.1 the necessary quorum at any such meeting, other than an adjourned meeting,
shall be two persons holding or representing by proxy at least one-third in
nominal value of the issued shares of the class in question and at an
adjourned meeting one person holding shares of the class in question or his
proxy;
17.2 any holder of shares of the class in question present in person or by proxy
may demand a poll; and
17.3 every holder of shares of the class in question present in person or by
proxy shall be entitled on a poll to one vote for every share of that class
held by him.
18. The rights attached to any class of shares shall, unless otherwise
expressly provided by the terms of issue of the shares of that class or by
the terms upon which such shares are for the time being held, be deemed not
to be modified, abrogated or varied by the creation or issue of further
shares ranking pari passu therewith.
CALLS ON SHARES
19. The Directors may, subject to the terms of allotment thereof, from time to
time make such calls upon the Members as they think fit in respect of any
moneys unpaid on their shares (whether on account of the nominal value of
the shares or by way of premium) and each Member shall (subject to the
Company serving on him at least 14 days' notice specifying the time or
times and place of payment) pay to the Company at the time or times and
place so specified the amount called on his shares. A
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call may be revoked or postponed, in whole or in part, as the Directors may
determine. A person upon whom a call is made shall remain liable for all
calls made upon him notwithstanding the subsequent transfer of the shares
in respect of which the call was made.
20. A call shall be deemed to have been made at the time when the resolution of
the Directors authorising the call was passed and may be required to be
paid by instalments.
21. The joint holders of a share shall be jointly and severally liable to pay
all calls in respect thereof.
22. If a sum payable in respect of any call or instalment is not paid on or
before the day appointed for payment thereof, the person from whom it is
due shall pay interest on the sum at such rate, not exceeding 15 per cent.
per annum, as the Directors may determine from the day appointed for the
payment thereof until the actual payment thereof, and all expenses that may
have been incurred by the Company by reason of such non-payment; but the
Directors may, if they shall think fit, waive the payment of such interest
and expenses or any part thereof.
23. Any sum which by the terms of issue of a share becomes payable on allotment
or at any fixed date, whether on account of the nominal value of the share
or by way of premium, shall for the purposes of these Articles be deemed to
be a call duly made and payable on the date on which by the terms of issue
the same becomes payable, and in case of non-payment all the relevant
provisions of these Articles as to payment of interest and expenses,
forfeiture or otherwise shall apply as if such sum had become payable by
virtue of a call duly made and notified.
24. The Directors may, on the issue of shares, make arrangements for a
difference between the holders of such shares in the amounts of calls to be
paid and in the times of payment of such calls.
25. The Directors may, if they think fit, receive from any Member willing to
advance the same all or any part of the moneys, whether on account of the
nominal value of the shares or by way of premium, uncalled and unpaid upon
any shares held by him; and upon all or any of the moneys so paid in
advance the Directors may (until the same would, but for such advance,
become presently payable) pay interest at such rate not exceeding (unless
the Company in General Meeting shall otherwise direct) 12 per cent. per
annum, as may be agreed upon between the Directors and the Member paying
such moneys in advance.
FORFEITURE AND LIEN
26. If any Member fails to pay any call or instalment in full on or before the
day appointed for payment thereof, the Directors may, at any time
thereafter, serve a notice on him requiring him to pay so much of the call
or instalment as is unpaid, together with any interest which may have
accrued and any expenses incurred by the Company by reason of such non-
payment.
27. The notice shall name a further day (not earlier than the expiration of 14
days from the date of service of the notice) on or before which, and the
place where, such call or instalment and such interest and expenses as
aforesaid are to be paid. The notice shall also state that in the event of
non-payment at or before the time and at the place appointed, the shares in
respect of which such call or instalment is payable will be liable to be
forfeited.
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28. If the requirements of any such notice as aforesaid are not complied with,
any share in respect of which such notice has been given may at any time
thereafter, before the payment required by the notice has been made, be
forfeited by a resolution of the Directors to that effect. Such forfeiture
shall extend to all dividends declared and other moneys payable in respect
of the shares so forfeited and not actually paid before such forfeiture.
Forfeiture shall be deemed to occur at the time of the passing of the said
resolution of the Directors. The Directors may accept a surrender of any
share liable to be forfeited hereunder upon such terms and conditions as
they think fit.
29. When any share has been forfeited notice of the forfeiture shall be served
upon the person who was before forfeiture the holder of the share, or any
person entitled to the share by transmission, and an entry of the
forfeiture or surrender, with the date thereof, shall forthwith be made in
the Register, but no forfeiture or surrender shall be invalidated by any
failure to give such notice or make such entry as aforesaid.
30. A share so forfeited or surrendered shall be deemed to be the property of
the Company, and may be sold, re-allotted or otherwise disposed of either
to the person who was, before forfeiture, the holder or to any other person
in such manner, either subject to or discharged from all calls made or
instalments due prior to the forfeiture or surrender, as the Directors
think fit: Provided that the Company shall not exercise any voting rights
in respect of such share and any such share not disposed of in accordance
with the foregoing within a period of three years from the date of its
forfeiture or surrender shall thereupon be cancelled in accordance with the
provisions of the Statutes. For the purpose of giving effect to any such
sale or other disposition the Directors may authorise some person to
transfer the share so sold or otherwise disposed of to, or in accordance
with the directions of, the purchaser thereof or other person becoming
entitled thereto.
31. The Directors may, at any time before any share so forfeited or surrendered
shall have been cancelled or sold, re-allotted or otherwise disposed of,
annul the forfeiture or surrender upon such terms as they think fit.
32. Any person whose shares have been forfeited or surrendered shall cease to
be a Member in respect of those shares and shall surrender to the Company
for cancellation the certificate for the forfeited or surrendered shares,
but shall, notwithstanding such forfeiture or surrender, remain liable to
pay to the Company all moneys which, at the date of the forfeiture or
surrender, were presently payable by him to the Company in respect of the
shares, together with interest thereon at such rate, not exceeding 15 per
cent. per annum, as the Directors may determine from the time of forfeiture
or surrender until the time of payment, but his liability shall cease if
and when the Company shall have received payment in full of all such moneys
in respect of the shares, together with interest as aforesaid. The
Directors may, if they shall think fit, waive the payment of such interest
or any part thereof. The Company may enforce payment of such moneys
without being under any obligation to make any allowance for the value of
the shares forfeited or surrendered or for any consideration received on
their disposal.
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33. The Company shall have a first and paramount lien on every share (not being
a fully paid share) for all moneys (whether presently payable or not)
called or payable at a fixed time in respect of such share; but the
Directors may at any time waive any lien which has arisen and may declare
any share to be wholly or in part exempt from the provisions of this
Article. The Company's lien, if any, on a share shall extend to all
amounts payable in respect of it.
34. The Company may sell, in such manner as the Directors think fit, any share
on which the Company has a lien, but no sale shall be made unless a sum in
respect of which the lien exists is presently payable, nor until the
expiration of 14 days after a notice in writing, (i) stating, and demanding
payment of, the sum presently payable, and (ii) giving notice of intention
to sell in default of such payment, has been given to the registered holder
for the time being of the share, or the person entitled thereto by reason
of his death or bankruptcy or otherwise by operation of law.
35. The net proceeds of such sale, after payment of the costs thereof, shall be
applied in or towards satisfaction of such part of the amount in respect of
which the lien exists as is presently payable. The residue, if any, shall
(subject to a like lien for sums not presently payable as existed upon the
shares before the sale) be paid to the person entitled to the shares at the
date of sale. For giving effect to any such sale the Directors may
authorise some person to transfer the shares sold to, or in accordance with
the directions of, the purchaser.
36. A statutory declaration in writing that the declarant is a Director or the
Secretary of the Company, and that a share has been duly forfeited or
surrendered or sold to satisfy a lien of the Company on a date stated in
the declaration, shall be conclusive evidence of the facts stated therein
against all persons claiming to be entitled to the share. Such declaration
and the receipt of the Company for the consideration (if any) given for the
share on the sale, re-allotment or disposal thereof, together with the
share certificate delivered to a purchaser or allottee thereof, shall
(subject to the execution of a transfer if the same be required) constitute
a good title to the share and the person to whom the share is sold, re-
allotted or disposed of shall be registered as the holder of the share and
shall not be bound to see to the application of the purchase money (if any)
nor shall his title to the share be affected by any irregularity or
invalidity in the proceedings in reference to the forfeiture, surrender,
sale, re-allotment or disposal of the share.
UNCERTIFICATED SHARES - GENERAL
37.1 Uncertificated shares are not to be regarded as forming a separate
class from certificated shares of that class.
37.2 In relation to any share which is for the time being held in uncertificated
form:
(a) the Company may utilise the relevant system in which it is held to
the fullest extent available from time to time in the exercise of any
of its powers of functions under the Statutes or these articles or
otherwise in effecting any action and the board may from time to time
determine the manner in which such powers, functions and actions
shall be so exercised or affected;
(b) any provision in these articles which is inconsistent with:
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(i) the holding or transfer of that share in the manner
prescribed or permitted by the statutes;
(ii) any other provision of the Statutes relating to shares held
in uncertificated form; or
(iii) the exercise of any powers or functions by the Company or the
effecting by the Company of any actions by means of a relevant
system,
shall not apply;
(c) the Company may, by notice in writing to the holder of any such
shares, require the holder to change the form of such shares to
certificated form within such period as may be specified in the
notice and if the holder does not comply, the Directors may authorise
a person to take such steps in the name of the holder as may be
required to change the form; and
(d) the Company shall not issue a certificate.
37.3 For the purpose of effecting any actions by the Company, the directors may
determine that holdings of the same member in uncertificated form and in
certificated form shall be treated as separate holdings.
37.4 A member may, in accordance with the Uncertificated Securities Regulations,
change a share of a class which is a participating security from
certificated form to uncertificated form, and from uncertificated form to
certificated form.
TRANSFER OF SHARES
38.1 The Company shall register the transfer of any shares held in
uncertificated form in accordance with the Statutes. Subject to the
requirements of the London Stock Exchange, the Directors may, in their
absolute discretion and without giving any reason for their decision,
refuse to register any transfer of an uncertificated share where permitted
by the Statutes.
38.2 All transfers of certificated shares shall be effected by instrument in
writing in any usual or common form or any other form which the Directors
may approve. The instrument of transfer of any certificated share in the
Company shall be signed by or on behalf of the transferor (and, in the case
of a share which is not fully paid, shall be signed by or on behalf of the
transferee). The transferor shall be deemed to remain the holder of the
share until the name of the transferee is entered in the Register in
respect thereof.
38.3 Subject to Article 75.3, the Directors may, in their absolute discretion
and without assigning any reason therefore, refuse to register any transfer
of any share which is not a fully paid share (whether certificated or
uncertificated) provided that, where any such shares are admitted to the
Official List of The London Stock Exchange, such discretion may not be
exercised in such a way as to prevent dealings in the shares of the
relevant class or classes from taking place on an open or proper basis.
The Directors may likewise refuse to register any transfer of a share
(whether certificated or
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uncertificated), whether fully paid or not, in favour of more than four
persons jointly.
39. For so long as any Regulated Entity holds more than 5.0% of the outstanding
Ordinary Shares, such Regulated Entity may transfer its Ordinary Shares
only under the following circumstances: (i) in a widely distributed public
offering; (ii) in a transfer pursuant to Rule 144 under the United States
of America ("U.S.") Securities Act 1933, as amended, or any similar rule
then in force; (iii) in a transfer constituting two percent or less of the
outstanding Ordinary Shares; (iv) in a transfer to a person if a person
already owns or has negotiated to purchase at least a majority of the
Ordinary Shares (not including the sale from the Regulated Entity); (v) in
a transfer to the Company; (vi) in a transfer to an affiliate of such
holder or any other Regulated Entity; or (vii) in any method of transfer
permitted by the Board of Governors of the Federal Reserve System of the
U.S. Once such Regulated Entity holds 5.0% or less of the outstanding
Ordinary Shares, the foregoing restrictions on transfer shall cease to
apply to such holder. For the purposes of this Article 39, the term
"affiliate" shall have the meaning ascribed to it in Section 225.2 of
Regulation Y promulgated by the Board of Governors of the US Federal
Reserve System.
40. The Directors:-
40.1 shall decline to register any instrument of transfer which, to their actual
knowledge, would be in breach of Article 39, but provided that no liability
shall attach to the Directors for registering a transfer in breach of the
provisions of Article 39 unless they have actual notice of such breach; and
40.2 may decline to recognise any instrument of transfer unless:-
(a) the instrument of transfer is left at the Office, or at such other
place as the Directors may from time to time determine, accompanied
by the certificate(s) of the shares to which it relates and such
other evidence as the Directors may reasonably require to show the
right of the transferor to make the transfer (and, if the instrument
of transfer is executed by some other person on his behalf, the
authority of that person so to do); and
(b) the instrument of transfer is in respect of only one class of share.
41. If the Directors refuse to register a transfer they shall, within two
months after the date on which the transfer was lodged with the Company,
send to the transferee notice of the refusal and (except in the case of
fraud) return to him the instrument of transfer. All instruments of
transfer which are registered may be retained by the Company.
42. No fee shall be charged by the Company on the registration of any
instrument of transfer, probate, letters of administration, certificate of
death or marriage, power of attorney, stop notice or other document or
instruction relating to or affecting the title to any shares or otherwise
for making any entry in the Register affecting the title to any shares.
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<PAGE>
43. The registration of transfers may be suspended at such times and for such
periods as the Directors may from time to time determine, and either
generally or in respect of any class of shares: Provided always that such
registration shall not be suspended, either generally or otherwise, for
more than 30 days in any year.
44. The Company shall be entitled to destroy:-
44.1 any instrument of transfer or other document which has been registered, or
on the basis of which registration was made, at any time after the
expiration of six years from the date of registration thereof;
44.2 any dividend mandate or any variation or cancellation thereof or any
notification of change of address, at any time after the expiration of two
years from the date of recording thereof; and
44.3 any share certificate which has been cancelled, at any time after the
expiration of one year from the date of such cancellation,
and it shall conclusively be presumed in favour of the Company that every entry
in the Register purporting to have been made on the basis of an instrument
of transfer or other document so destroyed was duly and properly made, that
every instrument of transfer so destroyed was a valid and effective
instrument duly and properly registered, that every share certificate so
destroyed was a valid certificate duly and properly cancelled and that
every other document destroyed hereunder was a valid and effective document
in accordance with the recorded particulars thereof in the books or records
of the Company: Provided always that:-
(a) the provisions aforesaid shall apply only to the destruction of a
document in good faith and without express notice to the Company that
the preservation of such document was relevant to any claim
(regardless of the parties thereto);
(b) nothing contained in this Article shall be construed as imposing upon
the Company any liability in respect of the destruction of any such
document earlier than as aforesaid or in any case where the
conditions of proviso (a) above are not fulfilled; and
(c) references in this Article to the destruction of any document include
references to its disposal in any manner.
TRANSMISSION OF SHARES
45. In case of the death of a Member the survivor or survivors where the
deceased was a joint holder, and the legal personal representatives of the
deceased where he was a sole or only surviving holder, shall be the only
persons recognised by the Company as having any title to his interest in
the shares; but nothing herein contained shall release the estate of a
deceased Member from any liability in respect of any share which had been
solely or jointly held by him.
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46. Any person becoming entitled to a share in consequence of the death or
bankruptcy of a Member or otherwise by operation of law may, upon such
evidence being produced as may from time to time properly be required by
the Directors and subject as hereinafter provided, elect either to be
registered himself as holder of the share or to have some person nominated
by him registered as the transferee thereof, but the Directors shall, in
either case, have the same right to decline or suspend registration as they
would have had in the case of a transfer of the share by the Member
registered as the holder of any such share before his death or bankruptcy
or other event, as the case may be.
47. If the person so becoming entitled shall elect to be registered himself, he
shall deliver or send to the Company a notice in writing signed by him
stating that he so elects. If he shall elect to have another person
registered he shall testify his election by executing to that person a
transfer of the share. All the limitations, restrictions and provisions of
these Articles relating to the right to transfer and the registration of
transfers of shares shall be applicable to any such notice or transfer as
aforesaid as if the death or bankruptcy of the Member or other event had
not occurred and the notice or transfer were a transfer signed by the
Member registered as the holder of any such share.
48. A person becoming entitled to a share by reason of the death or bankruptcy
of the holder or otherwise by operation of law shall, upon supplying to the
Company such evidence as the Directors may reasonably require to show his
title to the share, be entitled to the same dividends and other advantages
to which he would be entitled if he were the registered holder of the
share, except that he shall not, before being registered as a Member in
respect of the share, be entitled in respect of it to exercise any right
conferred by membership in relation to meetings of the Company (including
meetings of the holders of any class of shares in the Company): Provided
always that the Directors may at any time give notice requiring any such
person to elect either to be registered himself or to transfer the share,
and, if the notice is not complied with within 60 days, the Directors may
thereafter withhold payment of all dividends, bonuses or other moneys
payable in respect of the share until the requirements of the notice have
been complied with.
UNTRACED SHAREHOLDERS
49. The Company shall be entitled to sell, at the best price reasonably
obtainable at the time of sale, any share of a Member or any share to which
a person is entitled by transmission if and provided that:-
49.1 for a period of 12 years no cheque, warrant or order sent by the Company in
the manner authorised by these Articles in respect of the share in question
has been cashed and no communication has been received by the Company from
the Member or the person entitled by transmission; provided that, in such
period of 12 years, at least three dividends whether interim or final on or
in respect of the share in question have become payable and no such
dividend during that period has been claimed; and
49.2 the Company has, on or after expiration of the said period of 12 years, by
advertisement in both a national newspaper and a newspaper circulating in
the area in which the last known address of the member or the address at
which service of notices may be effected in the manner authorised in
accordance with the provisions of these Articles is located, given notice
of its intention to sell such share (but so that such advertisements need
not refer to the names of the holder(s) of the share or
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identify the share in question); and
49.3 the Company has not, during the further period of three months after the
publication of such advertisements and prior to the exercise of the power
of sale, received any communication from the Member or person entitled by
transmission; and
49.4 if the shares are listed or dealt in on the London Stock Exchange Limited,
the Company has given notice in writing to such Stock Exchange of its
intention to sell such share.
50. If, during any 12 year period or three month period referred to in
paragraphs 49.1 and 49.3 of the preceding Article, further shares have been
issued in respect of those held at the beginning of such 12 year period or
of any previously issued during such periods and all the other requirements
of such Article have been satisfied in respect of the further shares, the
Company may also sell such further shares.
51. To give effect to any sale pursuant to the previous two Articles, the
Directors may authorise any person to execute as transferor an instrument
of transfer of the said share and such instrument of transfer shall be as
effective as if it had been executed by the registered holder of or person
entitled by transmission to such share. The transferee shall not be bound
to see to the application of the purchase moneys and the title of the
transferee shall not be affected by any irregularity or invalidity in the
proceedings relating thereto. The net proceeds of sale shall belong to the
Company which shall be obliged to account to the former Member or other
person previously entitled as aforesaid for an amount equal to such
proceeds and shall enter the name of such former Member or other person in
the books of the Company as a creditor for such amount. No trust shall be
created in respect of the debt, no interest shall be payable in respect of
the same and the Company shall not be required to account for any money
earned on the net proceeds, which may be employed in the business of the
Company or invested in such investments (other than shares of the Company
or its holding company (if any)) as the Directors may from time to time
think fit.
52. If either (i) on two consecutive occasions cheques, warrants or orders in
payment of dividends or other moneys payable in respect of any share have
been sent through the post or otherwise in accordance with the provisions
of these Articles but have been returned undelivered or left uncashed
during the periods for which the same are valid or any transfer by bank or
other funds transfer system has not been satisfied; or (ii) following one
such occasion reasonable enquiries have failed to establish any new address
of the registered holder; the Company need not thereafter despatch further
cheques, warrants or orders and need not thereafter transfer any sum (as
the case may be) in payment of dividends or other moneys payable in respect
of the share in question until the Member or other person entitled thereto
shall have communicated with the Company and supplied in writing to the
Office an address for the purpose.
ALTERATION OF CAPITAL
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53. The Company may from time to time by Ordinary Resolution increase its share
capital by such sum, to be divided into shares of such amount, as the
resolution shall prescribe. All new shares shall be subject to the
provisions of these Articles with reference to allotment, payment of calls,
forfeiture, lien, transfer and transmission and otherwise.
54. The Company may by Ordinary Resolution:-
54.1 consolidate and divide all or any of its share capital into shares of
larger amount than its existing shares;
54.2 sub-divide its existing shares, or any of them, into shares of smaller
amount, provided that:-
(a) in the sub-division the proportion between the amount paid and the
amount, if any, unpaid on each reduced share shall be the same as it
was in the case of the share from which the reduced share is derived;
and
(b) the resolution whereby any share is sub-divided may determine that as
between the resulting shares one or more of such shares may be given
any preference or advantage or be subject to any restriction as
regards dividend, capital, voting or otherwise over the others or any
other of such shares;
54.3 cancel any shares which, at the date of the passing of the resolution, have
not been taken or agreed to be taken by any person, and diminish the amount
of its share capital by the amount of the shares so cancelled.
55. Subject to any direction by the Company in General Meeting, whenever as the
result of any consolidation or division of shares Members of the Company
are entitled to any issued shares of the Company in fractions, the
Directors may deal with such fractions as they shall determine and in
particular may sell the shares to which Members are so entitled in
fractions to any person (including, subject to the provisions of the
Statutes, the Company) and pay and distribute to and amongst the Members
entitled to such shares in due proportions the net proceeds of the sales
thereof. For the purpose of giving effect to any such sale the Directors
may nominate some person to execute a transfer of the shares sold on behalf
of the Members so entitled to, or in accordance with the directions of, the
purchaser thereof and may cause the name of the transferee(s) to be entered
in the Register as the holder(s) of the shares comprised in any such
transfer, and such transferee(s) shall not be bound to see to the
application of the purchase money nor shall such transferee(s) title to the
shares be affected by any irregularity or invalidity in the proceedings in
reference to the sale.
56. Subject to the provisions of the Statutes, the Company may by Special
Resolution reduce its share capital, any capital redemption reserve and any
share premium account in any way.
GENERAL MEETINGS
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57. The Company shall in each year hold a General Meeting as its Annual General
Meeting in addition to any other meetings in that year, and not more than
15 months shall elapse between the date of one Annual General Meeting of
the Company and that of the next. The Annual General Meeting shall be held
at such time and place as the Directors shall appoint.
58. All General Meetings other than Annual General Meetings shall be called
Extraordinary General Meetings.
59. The Directors may, whenever they think fit, convene an Extraordinary
General Meeting, and Extraordinary General Meetings shall also be convened
on such requisition, or, in default, may be convened by such
requisitionists, as provided by the Statutes. If at any time there are not
within the United Kingdom sufficient Directors capable of acting to form a
quorum the Directors in the United Kingdom capable of acting may convene an
Extraordinary General Meeting in the same manner as nearly as possible as
that in which meetings may be convened by the Directors.
NOTICE OF GENERAL MEETINGS
60. An Annual General Meeting and a meeting called for the passing of a Special
Resolution shall be called by not less than 21 clear days' notice in
writing, and a meeting of the Company other than an Annual General Meeting
or a meeting for the passing of a Special Resolution shall be called by not
less than 14 clear days' notice in writing. The notice shall specify the
place, the day and the time of meeting and, in the case of any special
business, the general nature of that business. It shall be given, in the
manner hereinafter mentioned or in such other manner, if any, as may be
prescribed by the Company in General Meeting, to such persons as are, under
these Articles, entitled to receive such notices from the Company and shall
comply with the provisions of the Statutes as to informing Members of their
right to appoint proxies. A notice calling an Annual General Meeting shall
specify the meeting as such and a notice convening a meeting to pass an
Extraordinary Resolution or a Special Resolution as the case may be shall
specify the intention to propose the resolution as such.
61. A meeting of the Company shall, notwithstanding that it is called by
shorter notice than that specified in the last preceding Article, be deemed
to have been duly called if it is so agreed:-
61.1 in the case of a meeting called as the Annual General Meeting, by all the
Members entitled to attend and vote thereat; and
61.2 in the case of any other meeting, by a majority in number of the Members
having a right to attend and vote at the meeting, being a majority together
holding not less than 95 per cent. in nominal value of the shares giving
that right.
62. The accidental omission to give notice of a meeting, or to send a form of
proxy with a notice where required by these Articles, to any person
entitled to receive notice, or the non-receipt of notice of a meeting or
form of proxy by any such person, shall not invalidate the proceedings at
that meeting.
PROCEEDINGS AT GENERAL MEETINGS
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63. All business shall be deemed special that is transacted at an Extraordinary
General Meeting, and also all that is transacted at an Annual General
Meeting, with the exception of declaring a dividend, the consideration of
the annual accounts and the reports of the Directors and Auditors on those
accounts, the appointment of Directors in place of those retiring, and the
appointment of (when special notice of the resolution for such appointment
is not required by the Statutes) and the fixing of the remuneration of the
Auditors or the determination of the manner in which such remuneration is
to be fixed.
64. No business shall be transacted at any General Meeting unless a quorum is
present at the time when the meeting proceeds to business; save as herein
otherwise provided, two Members present in person or by proxy and entitled
to vote shall be a quorum. The appointment of a Chairman in accordance
with the provisions of these Articles shall not be treated as part of the
business of the meeting.
65. If within five minutes (or such longer time as the Chairman may decide)
from the time appointed for the meeting a quorum is not present, the
meeting, if convened by or upon the requisition of Members, shall be
dissolved. In any other case it shall stand adjourned to such time (being
not less than 14 days nor more than 28 days later) and place as the
Chairman shall appoint. If at such adjourned meeting a quorum be not
present within five minutes from the time appointed therefor, the Member or
Members present in person or by proxy and entitled to vote shall have power
to decide upon all matters which could properly have been disposed of at
the meeting from which the adjournment took place. The Company shall give
not less than seven clear days' notice of any meeting adjourned for want of
a quorum, and the notice shall state that the Member or Members present as
aforesaid shall form a quorum and shall have the power aforesaid.
66. The Chairman, if any, of the board of directors shall preside as Chairman
at every General Meeting of the Company. If there be no such Chairman, or
if at any General Meeting he shall not be present within five minutes after
the time appointed for holding the meeting or is unwilling to act as
Chairman, the Directors present shall select one of their number to be
Chairman; or if no Director be present and willing to take the chair the
Members present and entitled to vote shall choose one of their number to be
Chairman of the meeting.
67. The Chairman may, with the consent of any meeting at which a quorum is
present (and shall if so directed by the meeting), adjourn the meeting from
time to time and from place to place; but no business shall be transacted
at any adjourned meeting other than the business left unfinished at the
meeting from which the adjournment took place. When a meeting is adjourned
for 30 days or more, not less than seven clear days' notice in writing of
the adjourned meeting shall be given specifying the day, the place and the
time of the meeting as in the case of an original meeting, but it shall not
be necessary to specify in such notice the nature of the business to be
transacted at the adjourned meeting. Save as aforesaid it shall not be
necessary to give any notice of an adjournment.
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68. If an amendment shall be proposed to any resolution under consideration but
shall in good faith be ruled out of order by the Chairman of the meeting
the proceedings on the substantive resolution shall not be invalidated by
any error in such ruling. In the case of a resolution duly proposed as a
Special or Extraordinary Resolution no amendment thereto (other than an
amendment to correct a patent error) may in any event be considered or
voted upon.
69. At any General Meeting a resolution put to the vote of the meeting shall be
decided on a show of hands unless a poll is (before or on the declaration
of the result of the show of hands) demanded:-
69.1 by the Chairman; or
69.2 by at least three Members present in person or by proxy and entitled to
vote; or
69.3 by any Member or Members present in person or by proxy and representing not
less than one-tenth of the total voting rights of all the Members having
the right to vote at the meeting; or
69.4 by a Member or Members present in person or by proxy holding shares in the
Company conferring a right to vote at the meeting being shares on which an
aggregate sum has been paid up equal to not less than one-tenth of the
total sum paid up on all shares conferring that right.
Unless a poll be so demanded a declaration by the Chairman that a resolution has
on a show of hands been carried or carried unanimously, or by a particular
majority, or lost and an entry to that effect in the book containing the
minutes of the proceedings of the Company shall be conclusive evidence of
the fact without proof of the number or proportion of the votes recorded in
favour of or against such resolution.
Except as provided in Article 71, if a poll is duly demanded it shall be taken
in such manner (including the use of ballot or voting papers or tickets) as
the Chairman of the meeting directs and he may appoint scrutineers and fix
a time and place for declaring the result of the poll. The result of the
poll shall be deemed to be the resolution of the meeting at which the poll
was demanded.
70. In the case of an equality of votes, whether on a show of hands or on a
poll, the Chairman of the meeting at which the show of hands takes place or
at which the poll is demanded, shall be entitled to a second or casting
vote.
71. A poll demanded on the election of a Chairman or on the question of an
adjournment shall be taken forthwith. A poll demanded on any other
question shall be taken either immediately or at such subsequent time (not
being more than 30 days after the date of the meeting or adjourned meeting
at which the poll is demanded) and place as the Chairman may direct. No
notice need be given of a poll not taken immediately. Any business other
than that upon which a poll has been demanded may be proceeded with pending
the taking of the poll. The demand for a poll may be withdrawn with the
consent of the Chairman at any time before the close of the meeting or the
taking of the poll, whichever is the earlier, and in that event shall not
invalidate the result of a show of hands declared before the demand was
made.
VOTES OF MEMBERS
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72.1 Subject to any rights or restrictions for the time being attached to any
class or classes of shares and to any other provisions of these Articles,
on a show of hands every Member present in person shall have one vote, and
on a poll every Member present in person or by proxy shall have one vote
for each share of which he is the holder.
72.2 For so long as any Regulated Entity is a member, its Ordinary Shares will
not entitle it to exercise more than 5.0% of the total votes exercisable by
Ordinary Shareholders, taking into account each 5.0% limitation described
above. Upon a transfer of any Ordinary Shares held by a Regulated Entity
to a non-Regulated Entity, the foregoing voting restriction shall cease to
apply to such Ordinary Shares.
73. In the case of joint holders of a share, the vote of the senior who tenders
a vote, whether in person or by proxy, shall be accepted to the exclusion
of the votes of the other joint holders; and for this purpose seniority
shall be determined by the order in which the names stand in the Register
in respect of the share.
74. A Member in respect of whom an order has been made by any court having
jurisdiction (in the United Kingdom or elsewhere) in matters concerning
mental disorder may vote, whether on a show of hands or on a poll, by his
receiver curator bonis or other person authorised in that behalf appointed
by that court, and such receiver curator bonis or other person may, on a
poll, vote by proxy, provided that evidence to the satisfaction of the
Directors of the authority of the person claiming to exercise the right to
vote has been delivered at the Office (or at such other place as may be
specified in accordance with these Articles for the delivery of instruments
appointing a proxy) not later than the last time at which an instrument of
proxy should have been delivered in order to be valid for use at that
meeting or on the holding of that poll.
75.1 No Member shall, unless the Directors otherwise determine, be entitled, in
respect of any share in the capital of the Company held by him, to be
present or to vote on any question, either in person or by proxy, at any
General Meeting, or separate General Meeting of the holders of any class of
shares of the Company, or to be reckoned in a quorum, if any call or other
sum presently payable by him to the Company in respect of such share
remains unpaid.
75.2 If any Member, or any other person appearing to the Directors to be
interested in any shares in the capital of the Company held by such Member,
has been duly served with a notice under section 212 of the Companies Act
1985 and is in default for the period of 14 days from the date of service
of the notice under the said section 212 in supplying to the Company the
information thereby required, then the Company may (at the absolute
discretion of the Directors) at any time thereafter by notice (a
"restriction notice") to such Member direct that, in respect of the shares
in relation to which the default occurred and any other shares held at the
date of the restriction notice by the Member, or such of them as the
Directors may determine from time to time, (the "restricted shares" which
expression shall include any further shares which are issued in respect of
any restricted shares), the Member shall not, nor shall any transferee to
which any of such shares are transferred other than pursuant to a permitted
transfer or pursuant to paragraph 75.3(c) below, be entitled to be present
or to vote on any question, either in person or by proxy, at any General
Meeting of the Company or separate General Meeting of the holders of any
class of shares of the Company, or to be reckoned in a quorum.
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75.3 Where the restricted shares represent at least 0.25 per cent. (in nominal
value) of the issued shares of the same class as the restricted shares,
then the restriction notice may also direct that:-
(a) any dividend or any part thereof or other moneys which would
otherwise be payable on or in respect of the restricted shares shall
be withheld by the Company; shall not bear interest against the
Company; and shall be payable (when the restriction notice ceases to
have effect) to the person who would but for the restriction notice
have been entitled to them; and/or
(b) where an offer of the right to elect to receive shares of the Company
instead of cash in respect of any dividend or part thereof is or has
been made by the Company, any election made thereunder by such Member
in respect of such restricted shares shall not be effective; and/or
(c) no transfer of any of the shares held by such Member shall be
recognised or registered by the Directors unless the transfer is a
permitted transfer or:-
(i) the Member is not himself in default as regards supplying
the information required; and
(ii) the transfer is of part only of the Member's holding and,
when presented for registration, is accompanied by a certificate by
the Member in a form satisfactory to the Directors to the effect that
after due and careful enquiry the Member is satisfied that none of the
shares the subject of the transfer are restricted shares.
Upon the giving of a restriction notice its terms shall apply accordingly.
75.4 The Company shall send a copy of the restriction notice to each other
person appearing to be interested in the shares the subject of such
notice, but the failure or omission by the Company to do so shall not
invalidate such notice.
75.5 Any restriction notice shall have effect in accordance with its terms until
7 days after the Directors are satisfied that the default in respect of
which the restriction notice was issued no longer continues but shall cease
to have effect in relation to any shares which are transferred by such
Member by means of a permitted transfer or in accordance with paragraph
75.3(c) above on receipt by the Company of notice that a transfer as
aforesaid has been made. The Company may (at the absolute discretion of the
Directors) at any time give notice to the Member cancelling, or suspending
for a stated period the operation of, a restriction notice in whole or in
part.
75.6 For the purposes of this Article:-
(a) a person shall be treated as appearing to be interested in any shares
if the Member holding such shares has given to the Company a
notification whether following service of a notice under the said
section 212 or otherwise which either (1) names such person as being
so interested or (2) (after taking into account the said notification
and any other relevant information in the possession of the Company)
the Company knows or has reasonable cause
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to believe that the person in question is or may be interested in the
shares; and
(b) a transfer of shares is a permitted transfer if but only if:-
(i) it is a transfer by way of, or in pursuance of, acceptance
of a takeover offer for the Company (as defined in section 428 of the
Companies Act 1985); or
(ii) the Directors are satisfied that the transfer is made
pursuant to a bona fide sale of the whole of the beneficial ownership
of the shares to a third party unconnected with the transferring
Member or with any other person appearing to the Directors to be
interested in such shares (and for the purposes of this paragraph
75.6(b)(ii) any associate (as that term is defined in section 435 of
the Insolvency Act 1986) of the Member or of any other person
appearing to the Directors to be interested in any of the restricted
shares shall be deemed to be connected with the transferring Member);
or
(iii) the transfer results from a sale made on or through the
London Stock Limited or any stock exchange outside the United Kingdom
on which the Company's shares of the same class as the restricted
shares are normally dealt in.
75.7 The provisions of this Article are in addition and without prejudice to the
provisions of the Statutes.
76. No objection shall be raised to the qualification of any voter except at
the meeting or adjourned meeting at which the vote objected to is given or
tendered, and every vote not disallowed at such meeting shall be valid for
all purposes. Any such objection made in due time shall be referred to the
Chairman of the meeting, whose decision shall be final and conclusive.
77. On a poll votes may be given personally or by proxy and a Member entitled
to more than one vote need not, if he votes, use all his votes or cast all
the votes he uses in the same way.
78. The instrument appointing a proxy shall be in writing in any usual or
common form, or any other form which the Directors may approve, under the
hand of the appointor or of his attorney duly authorised in writing, or if
the appointor is a corporation, either under seal, or under the hand of an
officer or attorney duly authorised. The signature on such instrument need
not be witnessed.
79. A proxy need not be a Member of the Company. A Member may appoint more
than one proxy to attend on the same occasion. Deposit of an instrument of
proxy shall not preclude a Member from attending and voting in person at
the meeting or any adjournment thereof.
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80. An instrument appointing a proxy and (failing previous registration with
the Company) the power of attorney or other authority, if any, under which
it is executed, or a notarially certified copy or a copy certified in
accordance with the Powers of Attorney Act 1971 of that power or authority,
or a copy certified in some other manner approved by the Directors, shall
be deposited at the Office or at such other place or one of such places (if
any) within the United Kingdom as is or are specified for that purpose in
or by way of note to the notice convening the meeting or any document
accompanying such notice, not less than 48 hours before the time for
holding the meeting or adjourned meeting at which the person named in the
instrument proposes to vote, or, in the case of a poll taken otherwise than
at or on the same day as the meeting or adjourned meeting, not less than 24
hours before the time appointed for the taking of the poll at which it is
to be used, and in default the instrument of proxy shall not be treated as
valid.
81. An instrument appointing a proxy shall, unless the contrary is stated
thereon, be valid as well for any adjournment of the meeting to which it
relates. No instrument of proxy shall be valid after the expiration of 12
months from the date of its execution except at an adjourned meeting or on
a poll demanded at a meeting or adjourned meeting in cases where the
meeting was originally held within 12 months from that date.
82. The instrument appointing a proxy shall be deemed to confer authority to
demand or join in demanding a poll.
83. A vote given or poll demanded in accordance with the terms of an instrument
of proxy or by the duly authorised representative of a corporation shall be
valid notwithstanding the previous death or insanity of the principal or
revocation of the proxy or determination of the authority of the person
voting or demanding a poll, provided that no intimation in writing of such
death, insanity, revocation or determination shall have been received by
the Company at the Office or such other place (if any) as is specified for
depositing the instrument of proxy before the commencement of the meeting
or adjourned meeting or the holding of a poll subsequently thereto at which
such vote is given.
84. Subject to the provisions of the Statutes, a resolution in writing signed
by all the Members for the time being entitled to receive notice of and to
attend and vote at General Meetings (or being corporations by their duly
authorised representatives) shall be as valid and effective as if the same
had been passed at a General Meeting of the Company duly convened and held,
and may consist of two or more documents in like form each signed by one or
more of the Members.
85. Any corporation which is a Member of the Company may by resolution of its
directors or other governing body authorise such person as it thinks fit to
act as its representative at any meeting of the Company or of any class of
Members of the Company, and the person so authorised shall be entitled to
exercise the same powers on behalf of the corporation which he represents
as that corporation could exercise if it were an individual Member of the
Company and such corporation shall for the purposes of these Articles be
deemed to be present in person at any such meeting if a person so
authorised is present thereat.
DIRECTORS
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86. Unless and until the Company in General Meeting shall otherwise determine,
the number of Directors shall be not more than 20 nor less than 2.
87. A Director shall not be required to hold any shares in the capital of the
Company. A Director who is not a Member shall nevertheless be entitled to
receive notice of and attend and speak at all General Meetings of the
Company and all separate General Meetings of the holders of any class of
shares in the capital of the Company.
88. The provisions of section 293 of the Companies Act 1985 (which regulate the
appointment and continuation in office of Directors who have attained the
age of 70) shall apply to the Company.
89. A Director of the Company may be or continue as or become a director or
other officer servant or member of, or otherwise interested in, any body
corporate promoted by the Company or in which the Company may be interested
as shareholder or otherwise, and no such Director shall be accountable to
the Company for any remuneration or other benefits received or receivable
by him as a director or other officer servant or member of, or from his
interest in, such other body corporate.
90.1 The Directors shall be paid out of the funds of the Company by way of fees
for their services as Directors such sums (if any) as the Directors may
from time to time determine (not exceeding in the aggregate an annual sum
(excluding amounts payable under any other provision of these Articles) of
(Pounds)100,000 or such larger amount as the Company may by Ordinary
Resolution determine) and such remuneration shall be divided between the
Directors as they shall agree or, failing agreement, equally. Such
remuneration shall be deemed to accrue from day to day.
90.2 The Directors may also be paid all reasonable travelling, hotel and other
expenses properly incurred by them in attending and returning from meetings
of the Directors or any committee of the Directors or General Meetings of
the Company or of the holders of any class of shares or debentures of the
Company or otherwise in connection with the business of the Company.
91. Any Director who is appointed to any executive office or who serves on any
committee or who devotes special attention to the business of the Company,
or who otherwise performs services which in the opinion of the Directors
are outside the scope of the ordinary duties of a Director, may be paid
such extra remuneration by way of salary, percentage of profits or
otherwise as the Directors may determine.
92. The Company shall in accordance with the provisions of the Statutes duly
keep a register showing, as respects each Director, interests of his in
shares in, or debentures of, the Company or associated companies.
ALTERNATE DIRECTORS
93.1 Each Director shall have the power at any time to appoint as an alternate
Director either (1) another Director or (2) any other person approved for
that purpose by a resolution of the Directors, and, at any time, to
terminate such appointment. Every appointment and removal of an alternate
Director shall be in writing signed by the appointor and (subject to any
approval required) shall (unless the Directors agree otherwise) only take
effect upon receipt of such written appointment or removal at
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the Office or at a meeting of the Directors. An alternate Director shall
not be required to hold any shares in the capital of the Company and shall
not be counted in reckoning the maximum and minimum numbers of Directors
allowed or required by Article 86.
93.2 An alternate Director so appointed shall not be entitled as such to receive
any remuneration from the Company except only such part (if any) of the
remuneration otherwise payable to his appointor as such appointor may by
notice in writing to the Company from time to time direct, but shall
otherwise be subject to the provisions of these Articles with respect to
Directors. An alternate Director shall during his appointment be an
officer of the Company and shall alone be responsible to the Company for
his own acts and defaults and shall not be deemed to be an agent of his
appointor.
93.3 An Alternate Director shall be entitled (subject to his giving to the
Company an address within the United Kingdom at which notices may be served
upon him) to receive notices of all meetings of the Directors and of any
committee of the Directors of which his appointor is a member, and shall be
entitled to attend and vote as a Director at any such meeting at which his
appointor is not personally present and generally in the absence of his
appointor to perform and exercise all functions, rights, powers and duties
as Director of his appointor.
93.4 The appointment of an alternate Director shall automatically determine on
the happening of any event which, if he were a Director, would cause him to
vacate such office or if his appointor shall cease for any reason to be a
Director otherwise than by retiring and being re-appointed at the same
meeting.
93.5 A Director or any other person may act as alternate Director to represent
more than one Director and an alternate Director shall be entitled at
meetings of the Directors or any committee of the Directors to one vote for
every Director whom he represents in addition to his own vote (if any) as a
Director, but he shall count as only one for the purpose of determining
whether a quorum is present.
BORROWING POWERS
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94.1 Subject as hereinafter provided the Directors may exercise all the powers
of the Company to borrow money, and to mortgage or charge its undertaking,
property and assets (present and future) and uncalled capital, or any part
thereof, and, subject to the provisions of the Statutes to issue
debentures, debenture stock, and other securities whether outright or as
security for any debt, liability or obligation of the Company or of any
third party.
94.2 The Directors shall restrict the borrowings of the Company and exercise all
voting and other rights or powers of control exercisable by the Company in
relation to its subsidiary undertakings (if any) so as to secure (so far,
as regards subsidiary undertakings, as by such exercise they can secure)
that the aggregate amount for the time being remaining outstanding of all
moneys borrowed by the Group (which expression in this Article means the
Company and its subsidiary undertakings for the time being) and for the
time being owing to persons outside the Group shall not at any time,
without the previous sanction of an Ordinary Resolution of the Company in
General Meeting, exceed a sum equal to two and a half times the aggregate
of:-
(a) the amount paid up on the issued share capital of the Company; and
(b) the total of the capital and revenue reserves of the Group (including
any share premium account, capital redemption reserve and credit
balance on the profit and loss account) in each case, whether or not
such amounts are available for distribution;
all as shown in the latest audited consolidated balance sheet of the Group but
after:-
(i) making such adjustments as may be appropriate in respect of
any variation in such amount paid up on the issued share capital or
share premium account or capital redemption reserve or merger reserve
since the date of such latest audited consolidated balance sheet and
so that for this purpose if any issue or proposed issue of shares for
cash or otherwise has been underwritten or otherwise agreed to be
subscribed (for cash or otherwise) then, at any time when the
underwriting of such shares or other agreement as aforesaid shall be
unconditional, such shares shall be deemed to have been issued and
the amount (including any premium) payable (or which would be
credited as payable) in respect thereof (not being moneys payable
later than six months after the date of allotment) shall be deemed to
have been paid up to the extent that the underwriters or other
persons are liable therefor;
(ii) deducting (to the extent included):-
(A) any amounts distributed or proposed to be distributed
(but not provided in such latest audited consolidated
balance sheet) other than distributions attributable to
the Company or any subsidiary undertaking;
(B) any amounts attributable to goodwill (other than goodwill
arising on consolidation);
(C) the aggregate amount of moneys borrowed for the purposes
of this Article 94.2 an amount equal to the aggregate for
the time being outstanding of all cash deposits with
banks (not being the Company or any subsidiary of the
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Company), certificates of deposit, securities of
governments, and securities of public companies traded on
a Recognised Investment Exchange or an overseas stock
exchange and similar instruments owned by the Company
and/or and subsidiary or subsidiary undertaking of the
Company net of a proportion of the total amount for the
time being outstanding of cash deposits and certificates
of deposit and securities of governments, or securities
of public companies traded on a Recognised Investment
Exchange or an overseas stock exchange and similar
instruments owned by any partly owned subsidiary or any
subsidiary undertaking which would otherwise fall to be
included, such proportion being that which the issued
equity share capital of such partly owned subsidiary or
such subsidiary undertaking which is not for the time
being beneficially owned directly or indirectly by the
Company bears to the whole of its issued equity share
capital; and
(D) moneys borrowed for the purpose of repaying the whole or
any part of any moneys previously borrowed and then
outstanding (including any premium payable on final
repayment) and to be applied for that purpose within 6
months of the borrowing shall not, pending such
application, be taken into account as moneys borrowed;
(iii) excluding:-
(A) any sums set aside for taxation;
(B) any amounts attributable to outside shareholders in
subsidiary undertakings of the Company;
(iv) deducting any debit balance on the profit and loss account;
and
(v) making such adjustments (if any) as the Auditors may consider
appropriate.
94.3 For the purpose of the foregoing limit "moneys borrowed" shall be deemed to
include the following except in so far as otherwise taken into account
(together in each case with any fixed or minimum premium payable on final
redemption or repayment):-
(a) the principal amount for the time being owing (other than to a member
of the Group) in respect of any loan capital, whether secured or
unsecured, issued by a member of the Group in whole or in part for
cash or otherwise;
(b) the principal amount raised by any member of the Group by acceptances
or under any acceptance credit opened on its behalf by any bank or
accepting house other than acceptances relating to the purchase of
goods in the ordinary course of trading and outstanding for not more
than 90 days;
(c) the nominal amount of any issued share capital, and the principal
amount of any moneys borrowed or other indebtedness, the redemption
or repayment of which is guaranteed or secured or is the subject of
an indemnity given by any member of the Group and the
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beneficial interest in the redemption or repayment of which is not
owned within the Group; and
(d) the nominal amount of any issued share capital (not being equity
share capital which as regards capital has rights no more favourable
than those attached to its ordinary share capital) of any subsidiary
undertaking of the Company owned otherwise than by other members of
the Group,
but "moneys borrowed" shall not include and shall be deemed not to
include:-
(i) amounts borrowed for the purpose of repaying the whole or
any part (with or without premium) of any moneys borrowed by any
member of the Group then outstanding and so to be applied within six
months of being so borrowed, pending their application for such
purpose within such period; and
(ii) the proportion of the excess outside borrowing of a partly
owned subsidiary undertaking which corresponds to the proportion of
its equity share capital which is not directly or indirectly
attributable to the Company and so that, for this purpose, the
expression "excess outside borrowing" shall mean so much of the
moneys borrowed by such partly owned subsidiary undertaking otherwise
than from members of the Group as exceeds the moneys borrowed (if
any) from and owing to it by other members of the Group.
When the aggregate amount of moneys borrowed required to be taken into
account for the purposes of this Article on any particular day is being
ascertained, any of such moneys denominated or repayable (or repayable at
the option of any person other than the Company or any subsidiary
undertaking) in a currency other than sterling shall be translated, for the
purpose of calculating the sterling equivalent, at the rate(s) of exchange
prevailing on that day in London, or on the last business day six months
before such day if thereby such aggregate amount would be less (and so that
for this purpose the rate of exchange prevailing shall be taken as the spot
rate in London quoted at or about 11.00 a.m. on the day in question by a
London clearing bank, approved by the Directors, as being the rate for the
purchase by the Company of the currency and amount in question for
sterling).
94.4 A certificate or report by the Auditors as to the amount of the limit in
paragraph 94.2 of this Article or the aggregate amount of moneys borrowed
falling to be taken into account under paragraph 94.3 of this Article or to
the effect that the limit imposed by this Article has not been or will not
be exceeded at any particular time or times or during any period shall be
conclusive evidence of such amount or fact for the purposes of this
Article.
No lender or other person dealing with the Company or any of its subsidiary
undertakings shall be concerned to see or inquire whether the said limit is
observed, and no debt incurred or security given in excess of such limit
shall be invalid or ineffectual, except in the case of express notice to
the lender or the recipient of the security at the time when the debt was
incurred or security given that the said limit has been or would thereby be
exceeded.
94.5 In this Article "subsidiary undertaking" means a subsidiary undertaking of
the Company which is
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required by the Statutes to be included in consolidated group accounts.
94.6 Notwithstanding any other provision of this Article, the Board may at any
time act in reliance on a bona fide estimate of the amount of the adjusted
capital and reserves and if in consequence the limit herein before
contained is inadvertently exceeded, an amount borrowed equal to the excess
may be disregarded until the expiration of 90 days after the date on which
by reason of a determination of the Auditors, the publication of group
accounts or an Interim Report or otherwise the Board became aware that such
a situation has or may have arisen.
POWERS AND DUTIES OF DIRECTORS
95. The business of the Company shall be managed by the Directors, who may
exercise all the powers of the Company subject, nevertheless, to the
provisions of these Articles and of the Statutes, and to such directions as
may be given by the Company in General Meeting by special resolution:
Provided that no alteration of the memorandum of association or these
Articles and no such direction shall invalidate any prior act of the
Directors which would have been valid if such alteration had not been made
or such direction had not been given. The general powers conferred upon
the Directors by this Article shall not be deemed to be abridged or
restricted by any specific power conferred upon the Directors by any other
Article.
96.1 The Directors may exercise all the powers of the Company to give or award
pensions, annuities, gratuities or other retirement, superannuation, death
or disability allowances or benefits (whether or not similar to the
foregoing) to (or to any person in respect of) any persons who are or have
at any time been Directors of or employed by or in the service of the
Company or of any body corporate which is or was a subsidiary undertaking
or a parent undertaking of the Company or another subsidiary undertaking of
a parent undertaking of the Company or otherwise associated with the
Company or any such body corporate, or a predecessor in business of the
Company or any such body corporate, and to the wives, widows, children and
other relatives and dependants of any such persons and may establish,
maintain, support, subscribe to and contribute to all kinds of schemes,
trusts and funds (whether contributory or non-contributory) for the benefit
of such persons as are hereinbefore referred to or any of them or any class
of them, and so that any Director or former Director shall be entitled to
receive and retain for his own benefit any such pension, annuity, gratuity,
allowance or other benefit (whether under any such trust, fund or scheme or
otherwise).
96.2 Without prejudice to any other provisions of these Articles, the Directors
may exercise all the powers of the Company to purchase and maintain
insurance for or for the benefit of any persons who are or were at any time
Directors, officers, employees or auditors of the Company, or of any other
body (whether or not incorporated) which is or was its parent undertaking
or subsidiary undertaking or another subsidiary undertaking of any such
parent undertaking (together "Group Companies") or otherwise associated
with the Company or any Group Company or in which the Company or any such
Group Company has or had any interest, whether direct or indirect, or of
any predecessor in business of any of the foregoing, or who are or were at
any time trustees of (or directors of trustees of) any pension,
superannuation or similar fund, trust or scheme or any employees' share
scheme or other scheme or arrangement in which any employees of the Company
or of any such other body are interested, including (without prejudice to
the generality of the foregoing) insurance against any costs, charges,
expenses, losses or liabilities suffered or incurred by such persons in
respect of any act or omission in the actual or purported execution and/or
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discharge of their duties and/or the exercise or purported exercise of
their powers and discretions and/or otherwise in relation to or in
connection with their duties, powers or offices in relation to the Company
or any such other body, fund, trust, scheme or arrangement.
97. The Directors may make such arrangements as they think fit for the
management and transaction of the Company's affairs in the United Kingdom
and elsewhere and may from time to time and at any time establish any
local boards or agencies for managing any of the affairs of the Company in
any specified locality, and may appoint any persons to be members of such
local board, or any managers or agents, and may fix their remuneration.
And the Directors from time to time, and at any time, may delegate to any
person so appointed any of the powers, authorities, and discretions for
the time being vested in the Directors (other than the powers of borrowing
and of making calls), with power to sub-delegate, and may authorise the
members for the time being of any such local board, or any of them, to
fill up any vacancies therein, and to act notwithstanding vacancies; and
any such appointment or delegation may be made on such terms and subject
to such conditions as the Directors may think fit, and the Directors may
at any time remove any person so appointed, and may annul or vary any such
delegation.
98. The Directors may from time to time and at any time by power of attorney
appoint any body corporate, firm or person or body of persons, whether
nominated directly or indirectly by the Directors, to be the attorney or
attorneys of the Company for such purposes and with such powers,
authorities and discretions (not exceeding those vested in or exercisable
by the Directors under these Articles) and for such period and subject to
such conditions as they may think fit, and any such powers of attorney may
contain such provisions for the protection and convenience of persons
dealing with any such attorney as the Directors may think fit and may also
authorise any such attorney to sub-delegate all or any of the powers,
authorities and discretions vested in him.
99. The Company may exercise the powers conferred by the Statutes with regard
to having an official seal for use abroad and the powers conferred by
section 40 of the Companies Act 1985 with regard to having an official
seal for sealing and evidencing securities, and such powers shall be
vested in the Directors.
100. The Company may exercise the powers conferred upon the Company by the
Statutes with regard to the keeping of an overseas branch register, and
the Directors may (subject to the provisions of the Statutes) make and
vary such regulations as they may think fit respecting the keeping of any
such register.
101.1 Subject to the provisions of the Statutes, a Director may hold any other
office or place of profit under the Company, except that of Auditor, in
conjunction with the office of Director and may act by himself or through
his firm in a professional capacity for the Company, and in any such case
on such terms as to remuneration and otherwise as the Directors may
arrange. Any such remuneration shall be in addition to any remuneration
provided for by any other Article. No Director or intending Director shall
be disqualified by his office from entering into any contract,
arrangement, transaction or proposal with the Company either with regard
to his tenure of any such other office or place of profit or any such
acting in a professional capacity or as a vendor, purchaser or otherwise.
Subject to the provisions of the Statutes and save as therein provided no
such contract, arrangement, transaction or proposal entered into by or on
behalf of the Company in which any Director or person connected with him
is in any way interested, whether directly or indirectly, shall be liable
to be
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avoided, nor shall any Director who enters into any such contract,
arrangement, transaction or proposal or who is so interested be liable to
account to the Company for any profit or other benefit realised by any
such contract, arrangement, transaction or proposal by reason of such
Director holding that office or of the fiduciary relationship thereby
established, but he shall declare the nature of his interest in accordance
with the Statutes.
101.2 Save as herein provided, a Director shall not vote in respect of any
contract, arrangement, transaction or any other proposal whatsoever in
which he has an interest which (together with any interest of any person
connected with him within the meaning of section 346 of the Companies Act
1985) is to his knowledge a material interest otherwise than by virtue of
interests in shares or debentures or other securities of or otherwise in
or through the Company. A Director shall not be counted in the quorum at a
meeting in relation to any resolution on which he is debarred from voting.
101.3 A Director shall (in the absence of some other material interest than is
indicated below) be entitled to vote (and be counted in the quorum) in
respect of any resolution concerning any of the following matters,
namely:-
(a) the giving of any guarantee, security or indemnity in respect of
money lent or obligations incurred by him or by any other person at
the request of or for the benefit of the Company or any of its
subsidiary undertakings;
(b) the giving of any guarantee, security or indemnity in respect of a
debt or obligation of the Company or any of its subsidiary
undertakings for which he himself has assumed responsibility in whole
or in part under a guarantee or indemnity or by the giving of
security;
(c) any proposal concerning an offer of shares or debentures or other
securities of or by the Company or any of its subsidiary undertakings
for subscription or purchase in which offer he is or may be entitled
to participate as a holder of securities or in the underwriting or
sub-underwriting of which he is to participate;
(d) any contract, arrangement, transaction or other proposal concerning
any other body corporate in which he or any person connected with him
(within the meaning of section 346 of the Companies Act 1985) is
interested, directly or indirectly and whether as an officer or
shareholder or otherwise howsoever, provided that he and any persons
so connected with him do not to his knowledge hold an interest
(within the meaning of sections 198-211 of the Companies Act 1985) in
one per cent. or more of any class of the equity share capital of
such body corporate or of the voting rights available to members of
the relevant body corporate;
(e) any contract, arrangement, transaction or other proposal concerning
the adoption, modification or operation of a pension, superannuation
or similar fund, trust or scheme or retirement, death or disability
benefit scheme under which he may benefit which has been approved by
the Inland Revenue or which is conditional upon such approval or
which does not accord to him any privilege or advantage not generally
accorded to the employees to whom such scheme, trust or fund relates;
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(f) any contract, arrangement, transaction or other proposal concerning
the adoption, modification or operation of any employees share scheme
(within the meaning of section 743 of the Companies Act 1985) which
has been approved by the Inland Revenue or which is conditional upon
such approval, or which does not accord to him any privilege or
advantage not generally accorded to the employees to whom the scheme
relates; and
(g) any proposal concerning any insurance which the Company is to
purchase and/or maintain for or for the benefit of any Directors or
for or for the benefit of persons who include Directors.
101.4 A Director shall not vote or be counted in the quorum on any resolution
concerning his own appointment as the holder of any office or place of
profit with the Company or any company in which the Company is interested
including fixing or varying the terms of his appointment or the
termination thereof.
101.5 Where proposals are under consideration concerning the appointment
(including fixing or varying the terms of appointment) of two or more
Directors to offices or employments with the Company or any body corporate
in which the Company is interested, such proposals may be divided and
considered in relation to each Director separately and in such cases each
of the Directors concerned (if not debarred from voting under paragraph
101.3(d) of this Article) shall be entitled to vote (and be counted in the
quorum) in respect of each resolution except that concerning his own
appointment.
101.6 If any question shall arise at any meeting as to the materiality of an
interest or as to the entitlement of any Director to vote and such
question is not resolved by his voluntarily agreeing to abstain from
voting, such question shall be referred to the Chairman of the meeting and
his ruling in relation to any Director other than himself shall be final
and conclusive except in a case where the nature or extent of the
interests of the Director concerned have not been fairly disclosed.
101.7 Subject to the provisions of the Statutes the Company may by Ordinary
Resolution suspend or relax the provisions of this Article to any extent
or ratify any contract, arrangement or transaction not duly authorised by
reason of a contravention of this Article.
102. The Directors may exercise or procure the exercise of the voting rights
conferred by the shares in any other body corporate held or owned by the
Company or any power of appointment in relation to any other body
corporate, and may exercise any voting rights or power of appointment to
which they are entitled as directors of such other body corporate, in such
manner as they shall in their absolute discretion think fit, including the
exercise thereof in favour of appointing themselves or any of them as
directors, officers or servants of such other body corporate, and fixing
their remuneration as such, and may vote as Directors of the Company in
connection with any of the matters aforesaid.
103. All cheques, promissory notes, drafts, bills of exchange and other
negotiable instruments, and all receipts for moneys paid to the Company,
shall be signed, drawn, accepted, endorsed, or otherwise executed, as the
case may be, in such manner as the Directors shall from time to time
determine.
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104. The Directors shall cause minutes to be made in books provided for the
purpose:-
104.1 of all appointments of officers made by the Directors;
104.2 of the names of the Directors present at each meeting of the Directors and
of any committee of the Directors;
104.3 of all resolutions and proceedings at all meetings of the Company, and of
the Directors, and of committees of Directors.
It shall not be necessary for Directors present at any meeting of
Directors or committee of Directors to sign their names in the Minute Book
or other book kept for recording attendance. Any such minute as aforesaid,
if purporting to be signed by the Chairman of the meeting at which the
proceedings were had, or by the Chairman of the next succeeding meeting,
shall be receivable as prima facie evidence of the matters stated in such
minutes without any further proof.
DISQUALIFICATION OF DIRECTORS
105. The office of a Director shall be vacated in any of the following events,
namely:-
105.1 if he ceases to be a Director by virtue of section 293 of the
Companies Act 1985;
105.2 if a bankruptcy order is made against him or he makes any arrangement
or composition with his creditors generally;
105.3 if he becomes prohibited by law from acting as a Director;
105.4 if, in England or elsewhere, an order is made by any court claiming
jurisdiction in that behalf on the ground (however formulated) of mental
disorder for his detention or for the appointment of a guardian or
receiver or other person to exercise powers with respect to his property
or affairs;
105.5 if he resigns his office by notice in writing under his hand to the
Company or offers in writing under his hand to resign and the Directors
resolve to accept such offer;
105.6 if, not having leave of absence from the Directors, he and his alternate
(if any) fail to attend the meetings of the Directors for six successive
months, unless prevented by illness, unavoidable accident or other cause
which may seem to the Directors to be sufficient, and the Directors
resolve that his office be vacated;
ROTATION OF DIRECTORS
106. At each Annual General Meeting of the Company one-third of the Directors
who are subject to retirement by rotation, or, if their number is not
three or a multiple of three, then the number nearest to but not exceeding
one-third, shall retire from office. A Director retiring at a meeting
shall, if he is not reappointed at such meeting, retain office until the
meeting appoints someone in his place, or if it does not do so, until the
dissolution of such meeting.
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107. The Directors to retire by rotation in each year shall be those who have
been longest in office since their last appointment or reappointment, but
as between persons who became or were last reappointed Directors on the
same day those to retire shall (unless they otherwise agree among
themselves) be determined by lot. A retiring Director shall be eligible
for reappointment. The Directors to retire on each occasion (both as to
number and identity) shall be determined by the composition of the
Directors at the start of business on the date of the notice convening the
Annual General Meeting and no Director shall be required to retire or be
relieved from retiring by reason of any change in the number or identity
of the Directors after that time on the date of the notice but before the
close of the meeting.
108. If at any General Meeting at which a Director retires by rotation, the
place of any Director retiring by rotation be not filled up, then such
retiring Director shall, if willing, be deemed to have been reappointed,
unless at the meeting it is resolved not to fill the vacancy or unless a
resolution for his reappointment shall have been put to the meeting and
lost.
109. A single resolution for the appointment of two or more persons as
Directors shall not be put at any General Meeting, unless a resolution
that it shall be so put has first been agreed to by the meeting without
any vote being given against it.
110. No person other than a Director retiring at the meeting shall, unless
recommended by the Directors, be eligible for appointment to the office of
Director at any General Meeting unless not less than seven nor more than
42 days before the date appointed for the meeting there shall have been
left at the Office notice in writing, signed by a Member duly qualified to
attend and vote at such meeting, of his intention to propose such person
for appointment, and also notice in writing signed by that person of his
willingness to be appointed.
111. Subject as aforesaid, the Company may from time to time by Ordinary
Resolution appoint a person who is willing to act to be a Director either
to fill a casual vacancy or as an additional director, and may also
determine the rotation in which any such appointed Directors are to
retire.
112. The Directors shall have power at any time, and from time to time, to
appoint any person to be a Director of the Company, either to fill a
casual vacancy or as an addition to the existing Directors, but so that
the total number of Directors shall not at any time exceed the maximum
number, if any, fixed by or pursuant to these Articles. Any Director so
appointed shall hold office only until the next following Annual General
Meeting, and shall then be eligible for reappointment but shall not be
taken into account in determining the Directors who are to retire by
rotation at such meeting. If not reappointed at such meeting, he shall
vacate office at the conclusion thereof.
113. The Company may by Ordinary Resolution, of which special notice has been
given in accordance with the provisions of the Statutes, remove any
Director before the expiration of his period of office notwithstanding
anything in these Articles or in any agreement between the Company and
such Director. Such removal shall be without prejudice to any claim such
Director may have for damages for breach of any contract of service
between him and the Company.
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114. Subject to Article 110, the Company may by Ordinary Resolution appoint
another person in place of a Director removed from office under the
immediately preceding Article. A person appointed in place of a Director
so removed shall be treated (for the purpose of determining the time at
which he or any other Director is to retire by rotation) as if he had
become a Director on the day on which the Director in whose place he is
appointed was last appointed or reappointed a Director.
PROCEEDINGS OF DIRECTORS
115. The Directors may meet for the despatch of business, adjourn and otherwise
regulate their meetings as they think fit. Without prejudice to the
foregoing, all or any of the Directors or of the members of any committee
of the Directors may participate in a meeting of the Directors or of that
committee by means of a conference telephone or any communication
equipment which allows all persons participating in the meeting to hear
each other. A person so participating shall be deemed to be present in
person at the meeting and shall be entitled to vote and be counted in the
quorum accordingly. Such a meeting shall be deemed to take place where the
largest group of those participating is assembled, or, if there is no such
group, where the Chairman of the meeting is then present. The word
"meeting" in these Articles shall be construed accordingly.
The Directors may determine the quorum necessary for the transaction of
business. Until otherwise determined two Directors shall constitute a
quorum. Questions arising at any meeting shall be decided by a majority of
votes. In case of an equality of votes, the Chairman shall have a second
or casting vote. A Director may, and the Secretary on the requisition of a
Director shall, at any time summon a meeting of the Directors. Any
Director may waive notice of any meeting and any such waiver may be
retrospective.
116. Notice of a meeting of the Directors shall be deemed to be duly given to a
Director if it is given to him personally or by word of mouth or sent in
writing to him at his last known address or any other address given by him
to the Company for this purpose. A Director absent or intending to be
absent from the United Kingdom may request the Directors that notices of
meetings of the Directors shall during his absence be sent in writing to
him at his last known address or any other address given by him to the
Company for this purpose, whether or not out of the United Kingdom.
117. The continuing Directors or sole continuing Director may act
notwithstanding any vacancy in their body, but, if and so long as their
number is reduced below the number fixed by or pursuant to these Articles
as the necessary quorum of Directors, the continuing Directors or Director
may act for the purpose of increasing the number of Directors to that
number, or of summoning a General Meeting of the Company, but for no other
purpose.
118. The Directors may elect one of their number as a Chairman of their
meetings, and one of their number to be the Deputy Chairman and may at any
time remove either of them from such office; but if no such Chairman or
Deputy Chairman be elected, or if at any meeting neither the Chairman nor
the Deputy Chairman is present within five minutes after the time
appointed for holding the meeting and willing to act, the Directors
present shall choose one of their number to be Chairman of such meeting.
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119. The Directors may delegate any of their powers or discretions (including
without prejudice to the generality of the foregoing all powers and
discretions whose exercise involves or may involve any payment to or the
conferring of any other benefit on all or any of the Directors) to
committees consisting of one or more members of their body and (if thought
fit) one or more other persons co-opted as hereinafter provided, provided
that Directors shall form a majority of such committee. Insofar as any
such power or discretion is delegated to a committee any reference in
these Articles to the exercise by the Directors of such power or
discretion shall be read and construed as if it were a reference to the
exercise of such power or discretion by such committee. Any committee so
formed shall in the exercise of the powers and discretions so delegated
conform to any regulations that may from time to time be imposed by the
Directors in default of which the meetings and proceedings of a committee
consisting of more than one member shall be governed mutatis mutandis by
the provisions of these Articles regulating the proceedings and meetings
of the Directors. Any such regulations may provide for or authorise the
co-option to the committee of persons other than Directors and for such
co-opted members to have voting rights as members of the committee.
120. All acts done by any meeting of the Directors or of a committee of the
Directors or by any person acting as a Director or as a member of a
committee shall, notwithstanding that it be afterwards discovered that
there was some defect in the appointment or continuance in office of any
of the persons acting as aforesaid, or that any of such persons were
disqualified from holding office or not entitled to vote, or had in any
way vacated office, be as valid as if every such person had been duly
appointed or had duly continued in office and was qualified and had
continued to be a Director or member of the committee and was entitled to
vote.
121. A resolution in writing, signed by all the Directors for the time being
entitled to receive notice of a meeting of the Directors or by all the
members of a committee for the time being, shall be as valid and effective
for all purposes as a resolution passed at a meeting duly convened and
held, and may consist of two or more documents in like form each signed by
one or more of the Directors or members of such committee. Provided that
such a resolution need not be signed by an alternate Director if it is
signed by the Director who appointed him.
MANAGING AND EXECUTIVE DIRECTORS
122. Subject to the provisions of the Statutes the Directors may from time to
time appoint one or more of their body to the office of Managing Director
or to hold such other Executive Office in relation to the management of
the business of the Company as they may decide, for such period and on
such terms as they think fit, and, subject to the terms of any service
contract entered into in any particular case and without prejudice to any
claim for damages such Director may have for breach of any such service
contract, may revoke such appointment. A Director so appointed shall not,
whilst holding such office, be subject to retirement by rotation or be
taken into account in determining the rotation of retirement of Directors
but, without prejudice to any claim for damages such Director may have for
breach of any service contract between him and the Company, his
appointment shall be automatically determined if he ceases from any cause
to be a Director.
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123. The salary or remuneration of any Managing Director or such Executive
Director of the Company shall, subject as provided in any contract, be
such as the Directors may from time to time determine, and may either be a
fixed sum of money, or may altogether or in part be governed by the
business done or profits made, and may include the making of provisions
for the payment to him, his widow or other dependants, of a pension on
retirement from the office or employment to which he is appointed and for
the participation in pension and life assurance and other benefits, or may
be upon such other terms as the Directors determine.
124. The Directors may entrust to and confer upon a Managing Director or such
Executive Director any of the powers and discretions exercisable by them
upon such terms and conditions and with such restrictions as they may
think fit, and either collaterally with or to the exclusion of their own
powers and discretions and may from time to time revoke, withdraw, alter
or vary all or any of such powers or discretions.
SECRETARY
125. Subject to the provisions of the Statutes the Secretary shall be appointed
by the Directors for such term, at such remuneration and upon such
conditions as they think fit; and any Secretary may be removed by them.
THE SEAL
126.1 The Directors shall provide for the safe custody of the Seal and any
official seal kept under section 40 of the Companies Act 1985, and neither
shall be used without the authority of the Directors or of a committee of
the Directors authorised by the Directors in that behalf. Every instrument
to which either shall be affixed shall be signed autographically by one
Director and the Secretary or by two Directors, save that as regards any
certificates for shares or debentures or other securities of the Company
the Directors may by resolution determine that such signatures or either
of them shall be dispensed with or affixed by some method or system of
mechanical signature.
126.2 Where the Statutes so permit, any instrument signed by one Director and
the Secretary or by two Directors and expressed to be executed by the
Company shall have the same effect as if executed under the Seal, provided
that no instrument shall be so signed which makes it clear on its face
that it is intended by the person or persons making it to be a deed
without the authority of the Directors or of a committee authorised by the
Directors in that behalf.
RESERVE
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127. The Directors may from time to time set aside out of the profits of the
Company such sums as they think proper as a reserve or reserves which
shall, at the discretion of the Directors, be applicable for any purpose
to which the profits of the Company may be properly applied, and pending
such application may, at the like discretion, either be employed in the
business of the Company or be invested in such investments as the
Directors think fit. The Directors may divide the reserve into such
special funds as they think fit, and may consolidate into one fund any
special funds or any parts of any special funds into which the reserve may
have been divided as they think fit. The Directors may also without
placing the same to reserve carry forward any profits which they may think
prudent not to divide.
DIVIDENDS
128. The Company in General Meeting may declare dividends, but no dividend
shall exceed the amount recommended by the Directors.
129. Subject to the provisions of the Statutes, the Directors:-
129.1 may from time to time pay such interim dividends as they think fit;
129.2 may also pay the fixed dividends payable on any shares of the Company
half-yearly or otherwise on fixed dates.
If the Directors act in good faith, they shall not incur any liability to
the holders of shares conferring preferred rights for any loss they may
suffer in consequence of the payment of an interim dividend on any shares
having non-preferred or deferred rights.
130. No dividend or interim dividend shall be paid otherwise than in accordance
with the provisions of the Statutes.
131. Subject to the rights of persons, if any, entitled to shares with any
priority, preference or special rights as to dividend, all dividends shall
be declared and paid according to the amounts paid up on the shares in
respect whereof the dividend is paid, but no amount paid up on a share in
advance of calls shall be treated for the purpose of this Article as paid
up on the share. All dividends shall be apportioned and paid
proportionately to the amounts paid up on the shares during any portion or
portions of the period in respect of which the dividend is paid; but if
any share is issued on terms providing that it shall rank for dividend as
if paid up in full or in part from a particular date, whether past or
future, such share shall rank for dividend accordingly.
132.1 The Directors may deduct from any dividend or other moneys payable to any
Member on or in respect of a share all sums of money (if any) presently
payable by him to the Company on account of calls or otherwise in relation
to shares of the Company.
132.2 The waiver in whole or in part of any dividend on any share by any
document (whether or not under seal) shall be effective only if such
document is signed by the shareholder (or the person entitled to the share
in consequence of the death or bankruptcy of the holder or otherwise by
operation of law) and delivered to the Company and if or to the extent
that the same is accepted as such or acted upon by the Company.
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133. Any General Meeting declaring a dividend may, upon the recommendation of
the Directors, direct payment of such dividend wholly or in part by the
distribution of specific assets and in particular of paid up shares or
debentures of any other body corporate, and the Directors shall give
effect to such direction. Where any difficulty arises in regard to such
distribution, the Directors may settle the same as they think expedient,
and in particular may issue fractional certificates and fix the value for
distribution of such specific assets or any part thereof and may determine
that cash payments shall be made to any Members upon the footing of the
value so fixed in order to adjust the rights of all parties, and may vest
any such specific assets in trustees as may seem expedient to the
Directors.
134. All dividends and other distributions shall be paid (subject to any lien
of the Company) to those Members whose names shall be on the Register at
the date at which such dividend shall be declared or at such other date as
the Company by Resolution or the Directors may determine.
The Company may pay any dividend or other moneys payable in cash in
respect of shares by direct debit, bank or other funds transfer system, or
by cheque, dividend warrant or money order and may remit the same by post
directed to the registered address of the holder or person entitled
thereto (or, in the case of joint holders or of two or more persons
entitled thereto, to the registered address of the person whose name
stands first in the Register), or to such person and to such address as
the holder or joint holders or person or persons may in writing direct,
and the Company shall not be responsible for any loss of any such cheque,
warrant or order nor for any loss in the course of any such transfer or
where it has acted on any such directions. Every such cheque, warrant or
order shall be made payable to, or to the order of, the person to whom it
is sent, or to, or to the order of, such person as the holder or joint
holders or person or persons entitled may in writing direct, and the
payment of such cheque, warrant or order shall be a good discharge to the
Company. Any one of two or more joint holders of any share, or any one of
two or more persons entitled jointly to a share in consequence of the
death or bankruptcy of the holder or otherwise by operation of law, may
give effectual receipts for any dividends or other moneys payable or
property distributable on or in respect of the share.
135. Subject to the rights attaching to, or the terms of issue of, any shares,
no dividend or other moneys payable on or in respect of a share shall bear
interest against the Company.
136. All dividends or other sums payable on or in respect of any share which
remain unclaimed may be invested or otherwise made use of by the Directors
for the benefit of the Company until claimed. All dividends unclaimed for
a period of 12 years or more after becoming due for payment shall be
forfeited and shall revert to the Company. The payment of any unclaimed
dividend or other sum payable by the Company on or in respect of any share
into a separate account shall not constitute the Company a trustee
thereof.
CAPITALISATION OF PROFITS AND SCRIP DIVIDENDS
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137. Subject to the provisions of Article 138, the Directors may capitalise any
part of the amount for the time being standing to the credit of any of the
Company's reserve accounts (including any share premium account and
capital redemption reserve) or to the credit of the profit and loss
account (in each case, whether or not such amounts are available for
distribution), and appropriate the sum resolved to be capitalised either:-
137.1 to the holders of Ordinary Shares (on the Register at the close of
business on such date as may be specified in, or determined as provided
in, the resolution of the General Meeting granting authority for such
capitalisation) who would have been entitled thereto if distributed by way
of dividend and in the same proportions; and the Directors shall apply
such sum on their behalf either in or towards paying up any amounts, if
any, for the time being unpaid on any shares held by such holders of
Ordinary Shares respectively or in paying up in full at par unissued
shares or debentures of the Company to be allotted credited as fully paid
up to such holders of Ordinary Shares in the proportions aforesaid, or
partly in the one way and partly in the other; or
137.2 to such holders of Ordinary Shares who may, in relation to any dividend or
dividends, validly accept an offer or offers on such terms and conditions
as the Directors may determine (and subject to such exclusions or other
arrangements as the Directors may consider necessary or expedient to deal
with legal or practical problems in respect of overseas shareholders or in
respect of shares represented by depositary receipts) to receive new
Ordinary Shares, credited as fully paid up, in lieu of the whole or any
part of any such dividend or dividends (any such offer being called a
"Scrip Dividend Offer"); and the Directors shall apply such sum on their
behalf in paying up in full at par unissued shares (in accordance with the
terms, conditions and exclusions or other arrangements of the Scrip
Dividend Offer) to be allotted credited as fully paid up to such holders
respectively.
138.1 The authority of the Company in General Meeting shall be required before
the Directors implement any Scrip Dividend Offer (which authority may
extend to one or more offers).
138.2 The authority of the Company in General Meeting shall be required for any
capitalisation pursuant to paragraph 137.1 above.
138.3 A share premium account and a capital redemption reserve and any other
amounts which are not available for distribution may only be applied in
the paying up of unissued shares to be allotted to holders of Ordinary
Shares of the Company credited as fully paid up.
139. Whenever a capitalisation requires to be effected, the Directors may do
all acts and things which they may consider necessary or expedient to give
effect thereto, with full power to the Directors to make such provision as
they think fit for the case of shares or debentures becoming distributable
in fractions (including provisions whereby fractional entitlements are
disregarded or the benefit thereof accrues to the Company rather than to
the Members concerned) and also to authorise any person to enter on behalf
of all Members concerned into an agreement with the Company providing for
any such capitalisation and matters incidental thereto and any agreement
made under such authority shall be effective and binding on all concerned.
ACCOUNTS
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<PAGE>
140. The Directors shall cause accounting records to be kept in accordance with
the provisions of the Statutes.
141. The accounting records shall be kept at the Office or, subject to the
provisions of the Statutes, at such other place or places as the Directors
think fit, and shall always be open to the inspection of the officers of
the Company.
142. The Directors shall from time to time determine whether and to what extent
and at what times and places and under what conditions or regulations the
accounting records of the Company or any of them shall be open to the
inspection of Members not being Directors, and no Member (not being a
Director) shall have any right of inspecting any account or book or
document of the Company except as conferred by statute or authorised by
the Directors or by the Company in General Meeting.
143. The Directors shall from time to time, in accordance with the provisions
of the Statutes, cause to be prepared and to be laid before the Company in
General Meeting copies of the Company's annual accounts, the Directors'
report and the Auditors' report on those accounts.
144. A copy of the Company's annual accounts, together with a copy of the
Auditors' report and Directors' report, which is to be laid before the
Company in General Meeting, shall not less than 21 days before the date of
the meeting be sent to every Member (whether or not he is entitled to
receive notices of General Meetings of the Company) and every holder of
debentures of the Company (whether or not he is so entitled) and to every
other person who is entitled to receive notices of meetings from the
Company under the provisions of the Statutes or these Articles. Provided
that this Article shall not require a copy of these documents to be sent
to any Member or holder of debentures to whom a summary financial
statement is sent in accordance with the Statutes and provided further
that this Article shall not require a copy of these documents to be sent
to any person of whose address the Company is not aware or to more than
one of the joint holders of any shares or debentures.
AUDIT
145. Auditors shall be appointed and their duties regulated in accordance with
the provisions of the Statutes.
NOTICES
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<PAGE>
146.1 A notice or other document (including a share certificate) may be given by
the Company to any Member either personally or by sending it by post
addressed to him at his registered address, or (if he has no registered
address within the United Kingdom) to the address, if any, within the
United Kingdom supplied by him to the Company for the giving of notice to
him.
146.2 If at any time by reason of the suspension or any curtailment of postal
services in the United Kingdom the Company is unable in the opinion of the
Directors effectively to convene a General Meeting by notices sent through
the post, a General Meeting may be convened by a notice advertised in at
least one national newspaper and such notice shall be deemed to have been
duly served on all Members and other persons entitled thereto at noon on
the day when the advertisement has appeared. In any such case the Company
shall send confirmatory copies of the notice by post if at least seven
days prior to the date of the Meeting the posting of notices to addresses
throughout the United Kingdom again becomes in the opinion of the
Directors practicable.
147. A Member who has no registered address within the United Kingdom, and has
not supplied an address within the United Kingdom as aforesaid, shall not
be entitled to receive any notice from the Company.
148. Where a notice or other document is sent by post, service of the notice or
other document shall be deemed to be effected by properly addressing,
prepaying, and posting a letter containing the notice or other document,
and to have been effected at the latest within 24 hours if prepaid as
first-class and within 72 hours if prepaid as second-class after the
letter containing the same is posted; and in proving such service it shall
be sufficient to prove that the letter containing the same was properly
addressed and stamped and put in the post.
149. A notice or other document may be given by the Company to the joint
holders of a share by giving the notice or other document to the joint
holder first named in the Register in respect of the share.
150. A notice or other document may be given by the Company to the persons
entitled to a share in consequence of the death or bankruptcy of a Member
or otherwise by operation of law by sending it through the post in a
prepaid letter addressed to them by name, or by the title of
representatives of the deceased, or trustee of the bankrupt, or by any
like description, at the address, if any, within the United Kingdom
supplied for the purpose by the persons claiming to be so entitled, or
(until such an address has been so supplied) by giving the notice or other
document in any manner in which the same might have been given if the
death or bankruptcy or other event had not occurred.
151. Subject to such restrictions affecting the right to receive notice as are
for the time being applicable to the holders of any class of shares,
notice of every General Meeting shall be given in any manner hereinbefore
authorised to:-
151.1 every Member except those Members who (having no registered address within
the United Kingdom) have not supplied to the Company an address within the
United Kingdom for the giving of notices to them;
151.2 the Auditors.
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<PAGE>
No other person shall be entitled to receive notices of General Meetings.
PROVISION FOR EMPLOYEES
152. The power conferred upon the Company by section 719 of the Companies Act
1985 to make provision for the benefit of persons employed or formerly
employed by the Company or any of its subsidiaries, in connection with the
cessation or the transfer to any person of the whole or part of the
undertaking of the Company or any subsidiary shall only be exercised by
the Company with the prior sanction of a Special Resolution. If at any
time the capital of the Company is divided into different classes of
shares, the exercise of such power as aforesaid shall be deemed to be a
variation of the rights attached to each class of shares in issue and
shall accordingly require either (i) the prior consent in writing of the
holders of three-fourths of the issued shares or (ii) the prior sanction
of an Extraordinary Resolution passed at a separate General Meeting of the
holders of the shares, of each class, in accordance with the provisions of
Article 16 hereof.
WINDING UP
153. If the Company shall be wound up the Liquidator may, with the sanction of
an Extraordinary Resolution of the Company and any other sanction required
by the Statutes, divide amongst the Members in specie or kind the whole or
any part of the assets of the Company (whether they shall consist of
property of the same kind or not) and may, for such purpose, set such
value as he deems fair upon any property to be divided as aforesaid and
may determine how such division shall be carried out as between the
Members or different classes of Members. The Liquidator may, with the like
sanction, vest the whole or any part of such assets in trustees upon such
trusts for the benefit of the contributories as the Liquidator, with the
like sanction, shall think fit, but so that no Member shall be compelled
to accept any shares or other securities or other assets whereon there is
any liability.
INDEMNITY
154. Subject to the provisions of the Statutes but without prejudice to any
indemnity to which the person concerned may otherwise be entitled, every
person who is or was at any time a Director or other officer or Auditor of
the Company shall be indemnified out of the assets of the Company against
all costs, charges, expenses, losses or liabilities which he may sustain
or incur in or about the actual or purported execution and/or discharge of
the duties of his office and/or the exercise or purported exercise of his
powers or discretions and/or otherwise in relation thereto or in
connection therewith, including (without prejudice to the generality of
the foregoing) any liability incurred by him in defending any proceedings,
whether civil or criminal, in which judgment is given in his favour or in
which he is acquitted or in connection with any application under section
144(3) or (4) or section 727 of the Companies Act 1985, in which relief is
granted to him by the Court.
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<PAGE>
EXHIBIT 3.2
THE COMPANIES ACTS 1985 AND 1989
A PUBLIC COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
- of -
ALLIANCE RESOURCES PLC
(AS AMENDED BY RESOLUTIONS PASSED ON 5/TH/
DECEMBER 1990, 23/RD/ JULY 1993,
30/TH/ APRIL 1997 AND 30/TH/ OCTOBER 1998)
ASHURST MORRIS CRISP
Broadwalk House
5 Appold Street
London EC2A 2HA
Tel: 0171-638-1111
Fax: 0171-972-7990
ASC/PDG/A90200030
<PAGE>
Company No: 2532955
THE COMPANIES ACTS 1985 AND 1989
A PUBLIC COMPANY LIMITED BY SHARES
MEMORANDUM OF ASSOCIATION
- of -
ALLIANCE RESOURCES PLC
(AS AMENDED BY RESOLUTIONS PASSED ON 5/TH/
DECEMBER 1990, 23/RD/ JULY 1993,
30/TH/ APRIL 1997 AND 30/TH/ OCTOBER 1998)
1. The name of the Company is "ALLIANCE RESOURCES PLC"/1/
2. The Company is to be a public company.
3. The registered office of the Company will be situated in England.
4. The objects for which the Company is established are/2/:-
4.1 to carry on business as a holding company and to acquire and hold shares,
stocks, debentures, debenture stocks, bonds, mortgages, obligations and
securities of any kind issued or guaranteed by any company, corporation or
undertaking of whatever nature and wherever constituted or carrying on
business, and shares, stocks, bonds, obligations and other securities
issued or guaranteed by any government, sovereign ruler, commissioners,
trust, local authority or other public body, whether at home or abroad, and
to vary, transpose, dispose of or otherwise deal with from time to time as
may be considered expedient any of the Company's investments for the time
being;
4.2 to carry on anywhere in the world all or any one or more of the following
businesses either in combination or separately:-
- ------------------
/1/ The name of the Company was changed from Mergeclaim plc to Alliance
Resources plc by special resolution passed on 5 December 1990.
/2/ Clause 4 was altered by special resolutions passed on 5 December 1990 and
23rd July 1993.
<PAGE>
(i) To drill, win, exploit, develop, process, mine and produce
oil, gas and other natural, resources beneath land and sea, whether
directly or through the medium of subsidiary companies.
(ii) To provide and to act as dealers and retailers of oil and gas
and as specialists and consultants in and agents for the provision of
all kinds of equipment, plant, machinery, vehicles, vessels, personnel
premises (whether commercial, industrial, recreational or residential)
and general services which may be required or used in connection with
the exploration, survey, development, exploitation or production of oil,
gas and other natural resources and to explore, survey, develop, exploit
and produce oil, gas or other natural resources in any part of the world
whether onshore or offshore.
(iii) To design, engineer, manufacture, construct, extend, demolish,
execute, carry out, equip, improve, work, purchase or otherwise acquire,
lease, develop, administer, manage or control works and conveniences of
all kinds including structures of concrete, steel or any other materials
for production, storage, exploitation or any other function for or in
connection with the oil or natural gas industries and all other works
and conveniences wheresoever situate.
(iv) To carry on the business of developers of land, estates,
buildings and property, whether heritable or moveable real or personal
and any rights or interests therein or connected therewith.
(v) To carry on business as shipowners and charterers, owners and
operators of machinery plant and equipment whether afloat or on land,
marine surveyors, adjusters, insurance brokers and agents, civil
engineers, shipping engineers and experts, ships husbands and managers,
shipping and forwarding agents, packers, hauliers and cartage
contractors, salvage, towage and dredging contractors, barge and boat
owners, lightermen, shipbuilders and repairers, dock and wharf
proprietors and operators, ferry owners and operators, electrical,
mechanical and general engineers and suppliers and installers of plant
apparatus, modules and equipment of all kinds.
(vi) to act as general carriers, road hauliers, transport
contractors, shippers, shipping and forwarding agents (whether by land,
sea or air) and customs agents and to convey, carry or transmit
passengers, mails, live and dead stock and goods and merchandise of
every description anywhere in the world, whether by land, sea or air.
4.3 to co-ordinate the administration, policies, management, supervision,
control, research, planning, trading and any and all other activities of
and to act as financial advisers and consultants to, and to re-organise,
finance and to aid and assist financially or otherwise, any Group Member,
namely any company, group of companies, partnership, joint venture,
consortium or any other business association of any kind now or hereafter
formed or incorporated or acquired which may be or be about to be or become
in any way, and whether directly or indirectly, related to or associated
with the Company and wherever situated; and in this clause 4 any reference
to a Group Member is a reference to such a company, group of companies,
partnership, joint venture, consortium or other business association;
4.4 to carry on business as a general commercial company;
4.5 to borrow or raise or secure the payment of money in such manner as the
Company shall think fit
<PAGE>
and whether for the benefit of the Company or of any Group Member, and in
particular by, but not limited to, the issue of debentures or debenture
stock (perpetual or otherwise) and to secure the repayment of any money
borrowed, raised or owing by mortgage, charge or lien upon all or any of
the Company's property (both present and future), including its uncalled
capital, and to purchase, redeem or pay off any such securities and also by
similar mortgage, charge or lien to secure and guarantee the performance by
the Company of any obligation or liability it may undertake;
4.6 to establish or acquire, whether in the United Kingdom or elsewhere, one or
more financing companies or other entities to assist in financing the
activities of the Company or of any Group Member;
4.7 to employ the funds of the Company in the development and expansion of the
business of the Company and all or any of the Group Members and in any
other company whether now existing or hereafter to be formed and engaged in
any like business of the Company or of any Group Member or of any other
business activity ancillary thereto or which can be conveniently carried on
in connection therewith;
4.8 to acquire any such shares, stocks and other securities and investments
before mentioned by subscription, syndicate participation, tender,
purchase, exchange or otherwise and to subscribe for the same, either
conditionally or otherwise, and to guarantee the subscription thereof and
to exercise and enforce all rights and powers conferred by or incident to
the ownership thereof;
4.9 to sell, assign, realise, vary, surrender, exchange or dispose of any
property of any kind or investments for the time being of the Company,
whether for consideration or no consideration, if from time to time it
shall be found necessary, desirable, expedient or advisable so to do;
4.10 to pay for any business or other property or any shares, stocks, securities
or rights of any kind acquired by the Company or any Group Member either in
cash or shares, with or without any preferred or deferred rights, or by any
securities which the Company has power to issue, or partly in one mode and
partly in another and generally on such terms as the Company may determine;
4.11 to acquire by purchase, lease, exchange or otherwise and hold by way of
investment land, buildings or other structures thereon, land covered by
water, and any estate, interest, easement, servitude or right in or over
such land, buildings or structures and any real or immovable property of
any tenure or description in the United Kingdom or elsewhere in any part of
the world;
4.12 to build, construct, maintain, alter, enlarge, pull down and remove or
replace any buildings, factories, mills, offices, works, wharves, roads,
railways, tramways, machinery, engines, walls, fences, banks, dams, sluices
or watercourses, and to clear sites for the same, or to join with any
person, firm or company in doing any of the things aforesaid, and to work,
manage and control the same, or join with others in so doing;
4.13 to carry on any commercial, industrial or financial business or undertaking
whether as investors, developers, dealers, promoters, manufacturers,
engineers, financiers, concessionaries, contractors, wholesalers,
retailers, factors, agents or otherwise in any manner;
4.14 to hold, acquire, undertake and carry on the whole or any part of the
business, property and liabilities of any company carrying on any business
which the Company is authorised to carry on or possess, or which may seem
to the Company capable of being conveniently carried on or calculated
directly or indirectly to enhance the value of or render profitable any of
the Company's
<PAGE>
investments, property or rights or any investments or property suitable for
the purposes of the Company or of any Group Member;
4.15 to enter into any arrangement with any governments or authorities (supreme,
municipal, local or otherwise) or any corporations, companies or persons
that may seem conducive to the Company's objects or any of them, and to
obtain from any such government, authority, corporation, company or person
any charters, contracts, decrees, rights, privileges and concessions which
the Company may think desirable, and to carry out, exercise and comply with
any such charters, contracts, decrees, rights, privileges and concessions;
4.16 to enter into partnership or into any arrangement for sharing profits,
union or interests, co-operation, joint venture, reciprocal concession or
otherwise with any company or person, or with any employees of the Company
or of any Group Member, including in such case if thought fit the
conferring of a participation in the management or its directorate, and to
give to any company or person special rights or privileges in connection
with or control over the Company or any Group Member, and in particular the
right to nominate one or more directors of this Company or any Group
Member;
4.17 to guarantee payment or performance of any debts, contracts or obligations,
or provide security, with or without consideration, whether by direct
obligation or covenant or by mortgaging or charging all or any part of the
undertaking, property and assets (present and future) and uncalled capital
of the Company or by both such methods or by any other manner, for any
Group Member and any other person, firm or company, and to give indemnities
for itself, any Group Member and any other person, firm or company, for any
purpose whatsoever;
4.18 to promote any other company for the purpose of acquiring all or any of the
property and liabilities of the Company or of any Group Member, or of any
undertaking, business or operations which may appear likely to assist or
benefit the Company or any Group Member or to enhance the value of any
property or business of the Company or of any Group Member and to place or
guarantee the placing of, underwrite, subscribe for or otherwise acquire
all or any part of the shares or securities or any such company aforesaid,
or for any other purpose which may seem directly or indirectly calculated
to benefit the Company or any Group Member;
4.19 to pay out of the funds of the Company all expenses which the Company may
lawfully pay for or incident to the formation, registration and advertising
of or raising money for the Company, and the issue of its capital or for
contributing to or assisting any issuing house or firm or person either
issuing or purchasing with a view to issue all or any part of the Company's
capital, in connection with the advertising of offering the same for sale
or subscription, including brokerage and commissions for obtaining
applications for or taking, placing or underwriting or procuring the
underwriting of shares, debentures or debenture stock, and to apply at the
cost of the Company to Parliament for any extension of the Company's power;
4.20 to receive money on deposit upon such terms as the Company may approve;
4.21 to invest and deal with the moneys of the Company in such manner as may
from time to time be determined;
4.22 to lend and advance money or to give credit to such persons and on such
terms as may seem expedient, and in particular to customers and others
having dealings with the Company or any Group Member, and to guarantee the
performance of contracts by any such persons;
<PAGE>
4.23 to remunerate any person, firm or company for services rendered or to be
rendered, in marketing selectively or otherwise, or assisting to market, or
guaranteeing the marketing or procuring the underwriting or any of the
shares, debentures or other securities of the Company or of any Group
Member or in or about the conduct of the business of the Company whether by
cash payment or by the allotment of shares or securities of the Company
credited as paid up in full or in part, or otherwise;
4.24 to purchase with a view to closing or re-selling or otherwise dealing with
in whole or in part any business or properties which may be deemed likely
to injure in any way any business or branch of business which the Company
or any Group Member is authorised to carry on;
4.25 to draw, make, accept, endorse, discount, execute and issue promissory
notes, bills of lading, warrants, debentures and other negotiable and
transferable instruments;
4.26 to sell or dispose of the undertaking of the Company, or any part thereof
either together or in portions, for such consideration (if any) as the
Company may think fit, and, in particular, for shares, whether fully or
partly paid up, debentures or securities of any other company;
4.27 to adopt such means of making known the assets, products and services of
the Company or any Group Member as may seem expedient, and in particular by
advertising in the press, by circulars, by purchase and exhibition of works
of art or interest, by publication of books and periodicals and by granting
prizes, rewards and donations;
4.28 to establish, support or subscribe to or aid in the establishment of any
charitable, political or public object or entity and any association,
institution, society, club, fund, trust or convenience which may be in the
interest of or for the benefit of the Company or any Group Member or its or
their employees or ex-employees, or the employees of its or their
predecessors in business, or may be connected with any town or place where
the Company or any Group Member carries on or intends to carry on business;
4.29 to grant pensions, gratuities, bonuses or charitable aid to any officers,
ex-officers, employees or ex-employees of the Company or any Group Member
or to any other person or persons who may have served the Company or any
Group Member or its or their predecessors in business, or to the wives,
children or other relatives or dependants of such persons; to make payments
towards insurance and to form and contribute for the benefit of any persons
employed by or ex-employees of the Company or any Group Member or their
wives, children or other dependants, or by its predecessors in business,
and to subsidise or assist any association of employers or employees, or
any trade association; and to establish and maintain or concur in
establishing and maintaining any share option or share incentive or profit
sharing schemes or trusts, funds or schemes (whether contributory or non-
contributory) for the benefit of any such persons as aforesaid, their
dependants or connections, and to support or subscribe to any charitable
funds or institutions, the support of which may, in the opinion of the
directors, be calculated directly to benefit in any way the Company or any
Group Member or its or their employees, and to institute and maintain any
club or other establishment or profit sharing scheme calculated to advance
the interests of the Company or any Group Member or its or their officers
or employees;
4.30 to obtain any provisional order or Act of Parliament for enabling the
Company or any Group Member to carry any of its objects into effect or for
effecting any modification of the Company's constitution or for any other
purpose which may seem expedient, and to oppose any proceedings or
<PAGE>
applications which may seem calculated directly or indirectly to prejudice
the Company's interests or the interests of any Group Member;
4.31 to establish, grant and take up agencies in any part of the world, and to
act as agents or brokers or trustees for any person, firm or company, and
to undertake and perform subcontracts and also to act in any of the
business of the Company or of any Group Member in any part of the world,
and as principals or through or by means of agents, brokers, subcontractors
or others, and to remunerate any person in connection with the
establishment or granting of such agencies;
4.32 to distribute among the members of the Company in specie any of the
property of the Company, and in particular any shares, debentures,
debenture stock or securities of other companies belonging to the Company
or of which the Company may have the power of disposing;
4.33 to amalgamate with any other company having objects altogether or in part
similar to those of this Company;
4.34 to apply for, or join in applying for, purchase or by other means acquire
and protect, prolong and renew, sell or otherwise dispose of, whether in
the United Kingdom or elsewhere, any patents, patent rights, brevets
d'invention, licences, trademarks, know how, protections and concessions
which may appear likely to be advantageous or useful to the Company or any
Group Member, and to use and turn to account and to manufacture under or
grant licences or privileges in respect of the same, and to expend money in
experimenting upon and testing and making researches, inventions or rights
which the Company or any Group Member may acquire or propose to acquire;
4.35 to make such arrangements for the housing of any of the employees of the
Company or any Group Member or of any of its or their tenants either by the
erection of dwellings or by entering into arrangements with any government
or public or local authorities or companies or persons for such erection
or otherwise as may seem expedient and upon such terms and conditions as
may be determined, and to construct, maintain, improve, develop, work,
control and manage any waterworks, gas works, electricity supply works,
public vehicles or tramways, restaurants, baths, places of worship, places
of amusement or instruction, pleasure grounds, parks, gardens, reading
rooms, stores, shops, dairies and other works and conveniences which the
Company may think advisable in connection with the housing of any of such
employees or tenants of or the development of its land and property;
4.36 to do all such things as are incidental to or conducive to the attainment
of the above objects, or any of them or to any of the objects of any Group
Member and to do all or any of the above in any part of the world.
And it is hereby declared that:-
(a) the word "company" in this clause shall be deemed to include any
person or partnership or business association or other body of
persons whether domiciled in the United Kingdom or elsewhere;
(b) words denoting the singular only shall include the plural and vice
versa; and
(c) the objects specified in each paragraph of this clause shall, except
where otherwise expressed in such paragraph, be regarded as
independent objects and in nowise limited or restricted by reference
to or inference from the terms of any other paragraph or the name of
the Company.
<PAGE>
5. The liability of the members is limited.
6. The share capital of the Company is (Pounds)18,400,000 divided into
415,001,376 ordinary shares of 1 pence each, 1,414,998,624 deferred shares
of 1 pence each and 10,000,000 convertible restricted voting shares of 1
pence each./3/
- ----------------
/3/ The Company was incorporated with a share capital of (Pounds)100,000
divided into 100,000 shares of (Pounds)1 each. Pursuant to a resolution
passed on 5th December 1990 the share capital of the Company was subdivided
into shares of 10 pence each and then increased to (Pounds)2,500,000.
Pursuant to a resolution passed on 23rd July 1993 the share capital of
the Company was further subdivided into ordinary shares of 1 pence each and
non-voting deferred shares of 9 pence each and then increased to
(Pounds)3,817,090.71 by the creation of 131,709,071 shares of 1 pence each.
On 6th October 1994 the Company's authorised share capital was reduced
from (Pounds)3,817,090.71 divided into 216,000,000 ordinary shares of 1
pence each and 18,412,119 non voting deferred shares of 9 pence each to
(Pounds)2,160,000 divided into 216,000,000 ordinary shares of 1 pence each.
Pursuant to a resolution passed on 4th May 1995 the authorised share
capital of the Company was increased to (Pounds)4,650,000 by the creation
of an additional 249,000,000 ordinary shares of 1 pence each.
Pursuant to a resolution passed on 30th April 1997 every 40 existing
ordinary shares in the share capital of the Company were consolidated into
1 ordinary share of 40 pence each and the authorised share capital was
increased from (Pounds)4,650,000 to (Pounds)18,400,000 by the creation of
34,375,000 new ordinary shares of 40 pence each.
Pursuant to a resolution passed on 30/th/ October 1998 each of the
Ordinary Shares of 40 pence each in the capital of the Company in issue,
and each of 5,072,608 Ordinary Shares of 40 pence each in the capital of
the Company authorised but not in issue, were sub-divided into and re-
designated as one Ordinary Share of 1 pence and 39 Deferred Shares of 1
pence each. Each of the remaining 9,717,984 Ordinary Shares of 40 pence
each in the capital of the Company, that were authorised but not in issue,
were sub-divided into 40 Ordinary Shares of 1 pence each.
Pursuant to a resolution passed on 30/th/ October 1998, 10,000,000
Ordinary Shares of 1 pence each that were authorised but not in issue were
converted into and re-designated as 10,000,000 convertible restricted
voting shares of 1 pence each.
<PAGE>
We, the subscribers to this Memorandum of Association, wish to be formed into a
Company pursuant to this Memorandum; and we agree to take the number of shares
shown opposite our respective names.
Names and addresses of Subscribers Number of shares taken
by each Subscriber
1. For and on behalf of One
Instant Companies Limited
2 Baches Street
London N1 6UB
2. For and on behalf of One
Swift Incorporations Limited
2 Baches Street
London N1 6UB
Total shares taken Two
Dated 10 August 1990
Witness to the above signatures:-
Terry Jayne
2 Baches Street
London N1 6UB
<PAGE>
EXHIBIT 10.1
- --------------------------------------------------------------------------------
PURCHASE AGREEMENT
by and between
ALLIANCE RESOURCES PLC
and
ENCAP EQUITY 1996 LIMITED PARTNERSHIP
AND
ENERGY CAPITAL INVESTMENT COMPANY PLC
October 27, 1998
- --------------------------------------------------------------------------------
<PAGE>
TABLE OF CONTENTS
Page
PURCHASE AGREEMENT........................................................... 1
ARTICLE I - DEFINITIONS...................................................... 1
1.1 Certain Defined Terms........................................... 1
1.2 Certain Additional Defined Terms................................ 8
1.3 References and Construction..................................... 8
ARTICLE II - TERMS OF THE TRANSACTION........................................ 9
2.1 Agreement to Sell and to Purchase the Securities................ 9
2.2 Purchase Price and Payment...................................... 10
2.3 Placement Fee................................................... 10
ARTICLE III - CLOSING........................................................ 10
3.1 Closing......................................................... 10
3.2 Deliveries by the Company....................................... 10
3.3 Deliveries by Buyer............................................. 11
ARTICLE IV - REPRESENTATIONS AND WARRANTIES OF SELLER........................ 12
4.1 Corporate Organization.......................................... 12
4.2 Qualification................................................... 12
4.3 Charter and Bylaws.............................................. 12
4.4 Capitalization of the Company................................... 12
4.5 Authority Relative to This Agreement............................ 13
4.6 No Conflict..................................................... 13
4.7 Consents and Approvals, Licenses, Etc........................... 13
4.8 Subsidiaries.................................................... 13
4.9 Shares.......................................................... 14
4.10 Financial Statements............................................ 15
4.11 SEC Filings..................................................... 15
4.12 Absence of Undisclosed Liabilities.............................. 16
4.13 Absence of Certain Changes...................................... 16
4.14 Tax Matters..................................................... 16
4.15 Environmental and Other Laws.................................... 17
4.16 Legal Proceedings............................................... 18
4.17 Title to Properties; Permits; Licenses; Condition of Assets..... 18
4.18 ERISA........................................................... 19
4.19 Agreements...................................................... 21
4.20 Labor Disputes and Acts of God.................................. 22
4.21 Registration Rights............................................. 22
4.22 Offering of Securities.......................................... 23
4.23 Government Regulation........................................... 23
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4.24 Brokerage Fees.................................................. 23
4.25 Solvency........................................................ 23
4.26 Full Disclosure................................................. 23
ARTICLE V - REPRESENTATIONS AND WARRANTIES OF BUYER.......................... 24
5.1 Corporate Organization.......................................... 24
5.2 Authority Relative to This Agreement............................ 24
5.3 Investment Intent; Investment Experience;
Restricted Securities........................................... 24
5.4 Brokerage Fees.................................................. 25
ARTICLE VI - CONDUCT OF COMPANY PENDING CLOSING.............................. 25
6.1 Conduct and Preservation of Business............................ 25
6.2 Restrictions on Certain Actions................................. 25
6.3 Certain Action.................................................. 27
ARTICLE VII - CONDITIONS TO OBLIGATIONS OF THE COMPANY....................... 27
7.1 Representations and Warranties True............................. 28
7.2 Covenants and Agreements Performed.............................. 28
7.3 HSR Act......................................................... 28
7.4 Legal Proceedings............................................... 28
ARTICLE VIII - CONDITIONS TO OBLIGATIONS OF BUYER............................ 28
8.1 Representations and Warranties True............................. 28
8.2 Covenants and Agreements Performed.............................. 29
8.3 HSR Act......................................................... 29
8.4 Legal Proceedings............................................... 29
8.5 Consents........................................................ 29
8.6 No Material Adverse Change...................................... 29
8.7 Senior Credit Facility.......................................... 29
8.8 Subordination Agreement......................................... 29
8.9 U.K. Opinion.................................................... 29
8.10 Closing of the Acquisitions and the Senior Credit Facility...... 30
ARTICLE IX - PRE-CLOSING TERMINATION......................................... 30
9.1 Termination..................................................... 30
9.2 Effect of Termination........................................... 30
ARTICLE X - AFFIRMATIVE COVENANTS OF THE COMPANY............................. 30
10.1 Payment and Performance......................................... 30
10.2 Books, Financial Statements and Reports......................... 31
10.3 Notice of Material Events and Change of Address................. 32
10.4 Maintenance of Properties....................................... 33
10.5 Maintenance of Existence and Qualifications..................... 33
10.6 Payment of Trade Liabilities, Taxes, etc........................ 33
10.7 Insurance....................................................... 33
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10.8 Compliance with Agreements and Law.............................. 33
10.9 Guaranties of Company's Subsidiaries............................ 33
ARTICLE XI - NEGATIVE COVENANTS OF THE COMPANY............................... 34
11.1 Indebtedness.................................................... 34
11.2 Limitation on Liens............................................. 34
11.3 Limitation on Mergers........................................... 34
11.4 Limitation on Sales of Property................................. 35
11.5 Limitation on Investments and New Businesses.................... 35
11.6 Transactions with Affiliates.................................... 35
11.7 Restricted Payments............................................. 35
11.8 Material Amendments............................................. 35
ARTICLE XII - PREPAYMENT OF THE NOTE......................................... 36
12.1 Optional Prepayment............................................. 36
ARTICLE XIII - EVENTS OF DEFAULT AND REMEDIES................................ 36
13.1 Events of Default............................................... 36
13.2 Remedies........................................................ 38
ARTICLE XIV - ADDITIONAL AGREEMENTS.......................................... 38
14.1 Third Party Consents............................................ 38
14.2 Access to Information........................................... 39
14.3 Listing of Shares............................................... 39
14.4 Use of Proceeds................................................. 39
14.5 Board Representation............................................ 39
14.6 Public Announcements............................................ 39
14.7 Fees and Expenses............................................... 40
14.8 Costs of Enforcement............................................ 40
14.9 Transfer Taxes.................................................. 40
14.10 Indemnification................................................. 40
ARTICLE XV - MISCELLANEOUS................................................... 40
15.1 Notices......................................................... 40
15.2 Waiver and Amendment............................................ 42
15.3 Survival........................................................ 42
15.4 Entire Agreement................................................ 42
15.5 Binding Effect; Assignment; No Third Party Benefit.............. 42
15.6 Severability.................................................... 42
15.7 GOVERNING LAW................................................... 43
15.8 Remedies Not Exclusive.......................................... 43
15.9 Further Assurances.............................................. 43
15.10 Counterparts.................................................... 43
15.11 Injunctive Relief............................................... 43
15.12 Consent to Jurisdiction......................................... 43
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15.13 Payments........................................................ 44
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PURCHASE AGREEMENT
PURCHASE AGREEMENT (this "Agreement"), dated as of October 27, 1998,
between Alliance Resources PLC, a public limited company organized under the
laws of England and Wales (the "Company"), and EnCap Equity 1996 Limited
Partnership, a Texas limited partnership ("EnCap LP"), and Energy Capital
Investment Company PLC, an English investment company ("ECIC") (with EnCap LP
and ECIC sometimes being herein collectively called "Buyer").
WHEREAS, the Company desires to issue and sell to Buyer, and Buyer desires
to purchase from the Company, (i) $9,750,000 aggregate principal amount of its
10% Subordinated Notes due 2005 (the "Notes") and (ii) 15,000,000 ordinary
shares of 1p each of the Company (the "Shares") (the Notes and the Shares are
referred to herein collectively as the "Securities");
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements herein contained, and intending to be legally bound hereby, the
Company and Buyer hereby agree as follows:
ARTICLE I
DEFINITIONS
1.1 Certain Defined Terms. As used in this Agreement, each of the
following terms has the meaning given it below:
"Acquisitions" means the acquisition by the Company of all of the
issued and outstanding shares of the capital stock of Difco Limited and the
acquisition by Difco Limited of certain oil and gas interests in the East
Irish Sea from Burlington Resources Limited (Irish Sea), each as described
in the Listing Particulars.
"affiliate" means, with respect to any Person, any other Person
that, directly or indirectly, through one or more intermediaries, controls,
is controlled by or is under common control with, such Person. For the
purposes of this definition, "control" when used with respect to any Person
means the possession, directly or indirectly, of the power to direct or
cause the direction of the management and policies of such Person, whether
through the ownership of voting securities, by contract, or otherwise; and
the terms "controlling" and "controlled" have meanings correlative to the
foregoing.
"Alliance Group" means Alliance Resources Group, Inc., a Delaware
corporation.
"Alliance USA" means Alliance Resources (USA), Inc., a Delaware
corporation.
"Ancillary Documents" means each agreement, certificate,
document, commitment and writing (other than this Agreement) executed or to
be executed by the Company or Buyer
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in connection with the transactions contemplated herein or therein,
including without limitation the Notes, the Subsidiary Guarantees and the
Registration Rights Agreement.
"Applicable Law" means any statute, law, rule or regulation, or
any judgment, order, writ, injunction or decree of, any Governmental Entity
to which a specified Person or property is subject.
"ARCOL" means ARCOL Inc., a Delaware corporation.
"ARNO" means ARNO Inc., a Delaware corporation.
"Burlington Agreement" means that certain Sale and Purchase
Agreement East Irish Sea dated June 29, 1998 by and between Difco Limited
and Burlington Resources (Irish Sea) Limited, as amended by letter
agreement dated October 5, 1998.
"Change of Control" means the occurrence of any of the following
events: (a) any Person or two or more Persons, other than Buyer or any
affiliate of Buyer, acting as a group shall acquire beneficial ownership
(within the meaning of Rule 13d-3 of the Securities and Exchange Commission
under the Exchange Act, and including holding proxies to vote for the
election of directors other than proxies held by the Company's management
or their designees to be voted in favor of persons nominated by the
Company's Board of Directors) of 33% or more of the outstanding voting
securities of the Company, measured by voting power (including both
ordinary shares and any preferred stock or other equity securities
entitling the holders thereof to vote with the holders of common stock in
elections for directors of the Company), exclusive of the issuance of
ordinary shares contemplated under this Agreement, (b) the Company shall
fail beneficially to own 100% of the outstanding shares of voting capital
stock of Alliance Group, Manx, LRI or Difco on a fully-diluted basis, (c)
LRI shall fail beneficially to own 100% of the outstanding shares of the
voting capital stock of LPC, GOCA, New GOC or Enpro, on a fully-diluted
basis, (d) Alliance Group shall fail beneficially to own 100% of the
outstanding shares of the voting capital stock of Source, ARNO, ARCOL or
Alliance USA, (e) one-third or more of the directors of the Company shall
consist of persons not nominated by the Company's Board of Directors (not
including as Board nominees any directors which the Board is obligated to
nominate pursuant to shareholders agreements, voting trust arrangements or
similar arrangements) or (f) within three years of the Closing Date, the
employment by the Company of John Keenan or Paul Fenemore terminates for
any reason.
"Companies Act" means the Companies Act 1985 as amended.
"Code" means the Internal Revenue Code of 1986, as amended.
"Default" shall mean an Event of Default and any default, event
or condition which would, with the giving of any requisite notices and the
passage of any requisite periods of time, constitute an Event of Default.
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"Difco" means Difco Limited, a private limited company
incorporated under the laws of England and Wales
"Difco Agreement" means that certain Amended and Restated Sale
and Purchase Agreement dated September 23, 1998, by and between the Company
and the shareholders of Difco Limited.
"Enpro" means ENPRO, INC., a Texas corporation.
"Environmental Laws" means any and all laws relating to the
environment or to emissions, discharges, releases or threatened releases of
pollutants, contaminants, chemicals, or industrial, toxic or hazardous
substances or wastes into the environment including ambient air, surface
water, ground water, or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport, or
handling of pollutants, contaminants, chemicals, or industrial, toxic or
hazardous substances or wastes.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended.
"Fiscal Quarter" shall mean a three-month period ending on July
31, October 31, January 31 or April 30 of any year.
"Fiscal Year" shall mean the twelve-month period ending on April
30 of any year.
"GOCA" means LaTex/GOC Acquisition, Inc., a Delaware corporation.
"Governmental Entity" means any court or tribunal in any
jurisdiction (domestic or foreign) or any federal, state, municipal or
other governmental body, agency, authority, department, commission, board,
bureau or instrumentality (domestic or foreign).
"Hazardous Materials" means any substance regulated under
Environmental Law, whether as pollutants, contaminants, or chemicals, or as
industrial, toxic or hazardous substances or wastes, or otherwise.
"HSR Act" means the Hart-Scott-Rodino Antitrust Improvements Act
of 1976, as amended.
"Indebtedness" of any Person means Liabilities in any of the
following categories: (a) Liabilities for borrowed money; (b) Liabilities
constituting an obligation to pay the deferred purchase price of property
or services; (c) Liabilities evidenced by a bond, debenture, note or
similar instrument; (d) Liabilities which would under U.S. GAAP be shown on
such Person's balance sheet as a liability, and is payable more than one
year from the date of creation thereof (other than reserves for taxes and
reserves for contingent obligations); (e) Liabilities arising under futures
contracts, forward contracts, swap, cap or collar contracts,
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option contracts, hedging contracts, other derivative contracts, or similar
agreements; (f) Liabilities constituting principal under leases capitalized
in accordance with U.S. GAAP; (g) Liabilities arising under conditional
sales or other title retention agreements; (h) Liabilities owing under
direct or indirect guaranties of Liabilities of any other Person or
constituting obligations to purchase or acquire or to otherwise protect or
insure a creditor against loss in respect of Liabilities of any other
Person (such as obligations under working capital maintenance agreements,
agreements to keep-well, or agreements to purchase Liabilities, assets,
goods, securities or services), but excluding endorsements in the ordinary
course of business of negotiable instruments in the course of collection;
(i) Liabilities (for example, repurchase agreements) consisting of an
obligation to purchase securities or other property, if such Liabilities
arises out of or in connection with the sale of the same or similar
securities or property; (j) Liabilities with respect to letters of credit
or applications or reimbursement agreements therefor; (k) Liabilities with
respect to payments received in consideration of oil, gas, or other
minerals yet to be acquired or produced at the time of payment (including
obligations under "take-or-pay" contracts to deliver gas in return for
payments already received and the undischarged balance of any production
payment created by such Person or for the creation of which such Person
directly or indirectly received payment); or (l) Liabilities with respect
to other obligations to deliver goods or services in consideration of
advance payments therefor; provided, however, that the "Indebtedness" of
any Person shall not include Liabilities that were incurred by such Person
on ordinary trade terms to vendors, suppliers, or other Persons providing
goods and services for use by such Person in the ordinary course of its
business, unless and until such Liabilities are outstanding more than 90
days past the original invoice or billing date therefor.
"IRS" means the Internal Revenue Service.
"Key Employment Agreements" means (i) that certain Executive
Service Agreement dated October 5, 1996 between the Company and John A.
Keenan, as amended by Supplemental Agreement dated October 15, 1996, (ii)
that certain Service Agreement dated September 20, 1996 between the Company
and Paul Raymond Fenemore, as amended by Supplemental Agreement dated
September 20, 1996 and (iii) that certain Executive Service Agreement dated
December 16, 1996 between the Company and Harry Brian Kerr Williams.
"Liabilities" shall mean, as to any Person, all indebtedness,
liabilities and obligations of such Person, whether matured or unmatured,
liquidated or unliquidated, primary or secondary, direct or absolute, fixed
or contingent, and whether or not required to be considered pursuant to
U.S. GAAP.
"Lien" shall mean, with respect to any property or assets, any
right or interest therein of a creditor to secure Liabilities owed to such
creditor or any other arrangement with such creditor which provides for the
payment of such Liabilities out of such property or assets or which allows
him to have such Liabilities satisfied out of such property or assets prior
to the general creditors of any owner thereof, including any lien,
mortgage, security interest, pledge, deposit, production payment, rights of
a vendor under any title retention or conditional sale agreement or lease
substantially equivalent thereto, tax lien, mechanic's or materialman's
lien,
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or any other charge or encumbrance for security purposes, whether arising
by law or agreement or otherwise, but excluding any right of offset which
arises without agreement in the ordinary course of business. "Lien" shall
also mean any filed financing statement, any registration of a pledge (such
as with an issuer of uncertificated securities), or any other arrangement
or action which would serve to perfect a Lien described in the preceding
sentence, regardless of whether such financing statement is filed, such
registration is made, or such arrangement or action is undertaken before or
after such Lien exists.
"Listing Particulars" means the Company's circular to
shareholders dated June 30, 1998, as supplemented by the Company's
supplementary listing particulars dated October 7, 1998.
"Listing Rules" means the listing rules of the London Stock
Exchange.
"London Stock Exchange" means the London Stock Exchange Limited.
"LPC" means LaTex Petroleum Corporation, an Oklahoma corporation.
"LRI" means LaTex Resources, Inc., a Delaware corporation.
"LRI Merger" means the merger of Alliance Resources (Delaware)
Inc. with and into LRI whereby the Company became the sole shareholder of
LRI.
"Majority of the Noteholders" means those holder(s) of Notes who
hold a majority in aggregate principal amount of the Notes at the time
outstanding, exclusive of any Notes held by the Company or any Subsidiary.
"Manx" means Manx Petroleum Plc, a company incorporated under the
laws of England and Wales.
"Material Adverse Effect" means a material adverse change in, or
a material adverse effect upon (i) the business, assets, results of
operations, condition (financial or otherwise) or prospects of the Company
and its Subsidiaries on a consolidated basis, (ii) the Company's or any
Subsidiary Guarantor's ability to timely pay the Obligations or to perform
on a timely basis any material obligation of the Company under this
Agreement or any agreement, instrument, or document entered into or
delivered in connection herewith or (iii) the enforceability of the
material terms of this Agreement or any Ancillary Document.
"New GOC" means Germany Oil Company, a Delaware corporation
formerly know as LRI Acquisition, Inc.
"Obligations" means all Liabilities owing Buyer or, if different,
the holder of the Notes, pursuant to the this Agreement, the Notes or any
of the other Ancillary Documents.
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"Old LaTex Payables" means those current accounts payable of the
Company or its consolidated Subsidiaries that meet one or more of the
following tests and have been certified to Buyer by the Company and
applicable Subsidiary as being an Old LaTex Payable:
(a) accounts payable the collection of which is barred by
the applicable statute of limitations;
(b) accounts payable the collection of which has been
compromised or forgiven in part, in either case to the extent of
the amount that has been compromised or forgiven; or
(c) accounts payable in respect of which the indebtedness
was incurred prior to the LRI Merger and where each of the
following is true: (i) no payment has been made on an individual
amount of indebtedness payable since the LRI Merger, (ii) no
contact has been received by the Company or applicable Subsidiary
from the applicable creditor since the LRI Merger pertaining to
such account or if contact has been received, such account is
being diligently contested in good faith, (iii) no promise to pay
such account has been made by the Company or applicable
Subsidiary since the LRI Merger and (iv) no judgment has been
obtained by, or settlement agreement entered into with, such
creditor with respect to such indebtedness.
"Ordinary Shares" means ordinary shares of 1p each of the Company
and any securities issued or issuable with respect to such shares by way of
a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization.
"Permits" means licenses, permits, franchises, consents,
approvals, variances, exemptions and other authorizations of or from
Governmental Entities.
"Permitted Investment" means any investment, loan, advance,
guaranty or capital contribution by the Company or any Subsidiary in any of
the following: (a) properties or assets to be used in the ordinary course
of business of the Company and its Subsidiaries; (b) current assets arising
from the sale of goods and services in the ordinary course of business of
the Company and its Subsidiaries; (c) investments in one or more of the
Company's Subsidiaries or in any Person that concurrently with such
investment becomes a Subsidiary; (d) any marketable obligation maturing not
later than one year after the date of acquisition therefor, issued or
guaranteed by the United States of America or by any agency of the United
States of America which has the full faith and credit of the United States
of America; (e) commercial paper which is given the highest rating by a
credit rating agency of recognized national standing and maturing not more
than 270 days from the date of creation thereof; and (f) any demand deposit
or time deposit (including certificates of deposit and money market or
sweep accounts) with a commercial bank or trust company organized and doing
business under the laws of the United States of America or any state
thereof which has capital, surplus and undivided profits of at least
$250,000,000, provided that such deposit must be either
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payable on demand or mature not more than twelve months from the date of
investment therein.
"Person" means any individual, corporation, partnership, joint
venture, association, joint-stock company, trust, enterprise,
unincorporated organization or Governmental Entity.
"Proceedings" means all proceedings, actions, claims, suits,
investigations and inquiries by or before any arbitrator or Governmental
Entity.
"reasonable best efforts" means a party's reasonable best efforts
in accordance with reasonable commercial practice and without the
incurrence of unreasonable expense.
"Restricted Payment" shall mean any Distribution (as defined
below) in respect of the Company or any Subsidiary thereof (other than on
account of capital stock or other equity interests of a Subsidiary owned
legally or beneficially by the Company or another Subsidiary), including
any Distribution resulting in the acquisition by the Company of securities
that would constitute treasury stock. As used in this definition,
"Distribution" shall mean, in respect of any corporation, partnership or
other business entity (a) dividends or other distributions or payments on
capital stock or other equity interest of such corporation, partnership or
other business entity (except distributions in such stock or other equity
interest) and (b) the redemption or acquisition of such stock or other
equity interests or of warrants, rights or other options to purchase such
stock or other equity interests (except when solely in exchange for such
stock or other equity interests).
"Securities Act" means the U.S. Securities Act of 1933, as
amended.
"Securities and Exchange Commission" means the U.S. Securities
and Exchange Commission.
"Senior Credit Facility" means that certain Third Amended and
Restated Credit Agreement dated even date herewith by and among the
Company, Alliance USA, GOCA, LPC, New GOC and Source and Bank of America
National Trust and Savings Association.
"Shareholder Approval" means the receipt of the requisite number
of votes of the shareholders of the Company at a duly convened
extraordinary general meeting of the Company to approve each of the five
resolutions proposed in the Notice of Extraordinary General Meeting dated
October 7, 1998 and contained in the Listing Particulars.
"Source" means Source Petroleum, Inc., a Louisiana corporation.
"Subsidiary" means any corporation more than 50% of whose
outstanding voting securities, or any general partnership, joint venture or
similar entity more than 50% of whose total equity interests, is owned,
directly or indirectly, by the Company, or any limited partnership of which
the Company or any Subsidiary is a general partner.
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"Subsidiary Guarantors" means Difco, Alliance Group, Alliance
USA, Source, LRI, LPC, GOCA, New GOC and Enpro.
"Taxes" means any income taxes or similar assessments or any
sales, excise, occupation, use, ad valorem, property, production,
severance, transportation, employment, payroll, franchise, transfer, stamp,
withholding or other tax imposed by any United States federal, state or
local (or any foreign or provincial) taxing authority, including any
interest, penalties or additions attributable thereto.
"Tax Return" means any return or report (including but not
limited to any related or supporting information, any amended return or
report or any information return or report) with respect to Taxes.
"Treasury Regulations" means one or more treasury regulations
promulgated under the Code by the Treasury Department of the United States.
"U.S. GAAP" means generally accepted accounting principles in the
United States of America from time to time.
1.2 Certain Additional Defined Terms. In addition to such terms as
are defined in the opening paragraph of and the recitals to this Agreement and
in Section 1.1, the following terms are used in this Agreement as defined in the
Sections set forth opposite such terms:
Defined Term Section Reference
------------ -----------------
agreements....................................... 4.19
Audited Financial Statements..................... 4.10
Closing.......................................... 3.1
Closing Date..................................... 3.1
Event of Default................................. 13.1
Latest Balance Sheet............................. 4.10
Notes............................................ preamble
Organic Documents................................ 4.3
Permitted Liens.................................. 11.2
Placement Fee Shares............................. 2.3
Purchase Price................................... 2.2
Registration Rights Agreement.................... 3.2(c)
SEC Filings...................................... 4.11
Shares........................................... preamble
Securities....................................... preamble
Subsidiary Guarantees............................ 3.2(c)
Unaudited Financials............................. 4.10
1.3 References and Construction.
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(a) All references in this Agreement to articles, sections,
subsections and other subdivisions refer to corresponding articles, sections,
subsections and other subdivisions of this Agreement unless expressly provided
otherwise.
(b) Titles appearing at the beginning of any of such subdivisions are
for convenience only and shall not constitute part of such subdivisions and
shall be disregarded in construing the language contained in such subdivisions.
(c) The words "this Agreement", "this instrument", "herein",
"hereof", "hereby", "hereunder" and words of similar import refer to this
Agreement as a whole and not to any particular subdivision unless expressly so
limited.
(d) Words in the singular form shall be construed to include the
plural and vice versa, unless the context otherwise requires. Pronouns in
masculine, feminine and neuter genders shall be construed to include any other
gender.
(e) Unless the context otherwise requires or unless otherwise
provided herein, the terms defined in this Agreement which refer to a particular
agreement, instrument or document also refer to and include all renewals,
extensions, modifications, amendments or restatements of such agreement,
instrument or document, provided that nothing contained in this subsection shall
be construed to authorize such renewal, extension, modification, amendment or
restatement.
(f) Examples shall not be construed to limit, expressly or by
implication, the matter they illustrate.
(g) The word "includes" and its derivatives means "includes, but is
not limited to" and corresponding derivative expressions.
(h) No consideration shall be given to the fact or presumption that
one party had a greater or lesser hand in drafting this Agreement.
(i) Unless otherwise indicated, all references herein to "$" or
"dollars" shall refer to U.S. Dollars.
ARTICLE II
TERMS OF THE TRANSACTION
2.1 Agreement to Sell and to Purchase the Securities. At the Closing,
and on the terms and subject to the conditions set forth in this Agreement, the
Company shall issue, allot, sell and deliver to EnCap LP and ECIC, and EnCap LP
and ECIC shall subscribe for, purchase and accept from the Company, the
Securities set forth opposite such Buyer's name below:
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EnCap LP (1) $7,312,500 principal amount
$7,500,000 of Notes; and
(2) 11,250,000 Ordinary Shares
ECIC (1) $2,437,500 principal amount
$2,500,000 of Notes; and
(2) 3,750,000 Ordinary Shares
2.2 Purchase Price and Payment. EnCap LP and ECIC, respectively,
shall pay to the Company at the Closing the aggregate amount set forth below
such Buyer's name in Section 2.1 (collectively, the "Purchase Price"). The
Purchase Price shall be allocated $250,000 to the Shares and $9,750,000 to the
Notes for all purposes, including the filing of any Tax Returns.
2.3 Placement Fee. At the Closing, the Company shall pay EnCap
Investments L.C. a placement fee, consisting of 545,454 ordinary shares of the
Company (the "Placement Fee Shares").
ARTICLE III
CLOSING
3.1 Closing. The closing of the transactions contemplated hereby (the
"Closing") shall take place (i) at the offices of Thompson & Knight, P.C., 1700
Chase Tower, 600 Travis, Houston, Texas, at 10 a.m., local time, on October 30,
1998, or at such other time or place or on such other date as the parties hereto
shall agree. The date on which the Closing is required to take place is herein
referred to as the "Closing Date." All Closing transactions shall be deemed to
have occurred simultaneously.
3.2 Deliveries by the Company. At the Closing, the Company will
deliver the following documents to Buyer:
(a) A certificate executed on behalf of the Company by an authorized
signatory of the Company, dated the Closing Date, representing and certifying,
in such detail as Buyer may reasonably request, that the conditions set forth in
Sections 8.1 and 8.2 have been fulfilled.
(b) Opinions of counsel, in form, scope and content reasonably
acceptable to Buyer, of Jenkens & Gilchrist, U.S. counsel to the Company, and
Ashurst Morris & Crisp, U.K. counsel to the Company, dated the Closing Date,
covering the matters set forth on Exhibit 3.2(b) and such other matters as Buyer
may reasonably request.
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(c) The certificates, instruments and documents listed below:
(i) Share certificates in definitive form representing the
Shares and the Placement Fee Shares, registered in the name of the
applicable Person and duly executed by the Company.
(ii) The Notes, substantially in the form of Exhibit 3.2(c)(ii)
in all material respects, duly executed by the Company.
(iii) Subsidiary guarantees substantially in the form of Exhibit
3.2(c)(iii) in all material respects (the "Subsidiary Guarantees") of each
of the Subsidiary Guarantors, duly executed by the Subsidiary Guarantors.
(iv) A counterpart of a registration rights agreement
substantially in the form of Exhibit 3.2(c)(iv) in all material respects
(the "Registration Rights Agreement"), duly executed by the Company.
(v) Certified copy of a written consent or resolutions of the
Board of Directors of the Company and the Subsidiary Guarantors authorizing
the execution, delivery and performance by the Company and the Subsidiary
Guarantors of this Agreement and the Ancillary Documents, as necessary.
(vi) Certificates of existence and, for non-U.K. entities, good
standing with respect to the Company and the Subsidiary Guarantors, dated
within a number of days prior to the Closing Date reasonably acceptable to
Buyer.
(vii) Such other certificates, instruments, and documents as may
be reasonably requested by Buyer prior to the Closing Date to carry out the
intent and purposes of this Agreement.
3.3 Deliveries by Buyer. At the Closing, each Buyer will deliver the
following to the Company:
(a) A certificate executed by an authorized signatory of such Buyer,
dated the Closing Date, representing and certifying, in such detail as the
Company may reasonably request, that the conditions set forth in Sections 7.1
and 7.2 have been fulfilled.
(b) The portion of the Purchase Price indicated for such Buyer in
Section 2.1, in immediately available funds by a confirmed wire transfer to a
bank account designated in writing by the Company to Buyer no later than two
business days prior to the Closing Date.
(d) The certificates, instruments and documents listed below:
(i) A counterpart of the Registration Rights Agreement, duly
executed by such Buyer.
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(ii) Such other certificates, instruments, and documents as may
be reasonably requested by the Company prior to the Closing Date to carry
out the intent and purposes of this Agreement.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES OF SELLER
The Company represents and warrants to Buyer that:
4.1 Corporate Organization. The Company is a public limited company
duly organized and validly existing under the laws of England and Wales.
4.2 Qualification. Each of the Company and the Subsidiaries is duly
qualified or licensed to do business and, with respect to non-U.K. entities, in
good standing in each of the jurisdictions in which it owns, leases or operates
property or in which such qualification or licensing is required for the conduct
of its business.
4.3 Charter and Bylaws. The Company has made available to Buyer
accurate and complete copies of the Company's certificate of incorporation,
bylaws, memorandum and articles of association or equivalent organizational
documents ("Organic Documents") as currently in effect, and stock records of the
Company. Neither the Company nor any Subsidiary is in violation of its Organic
Documents or its partnership agreement or similar governing document, as the
case may be.
4.4 Capitalization of the Company. The authorized capital stock of
the Company, the number of shares outstanding and the number of shares held in
the Company's treasury are set forth on Schedule 4.4 hereto. All outstanding
shares of capital stock of the Company have been validly issued and are fully
paid and nonassessable, and no shares of capital stock of the Company are
subject to, nor have any been issued in violation of, preemptive or similar
rights. Except as set forth on Schedule 4.4 hereto, there are (and as of the
Closing Date there will be) outstanding (i) no shares of capital stock or other
voting securities of the Company, (ii) no securities of the Company convertible
into or exchangeable for shares of capital stock or other voting securities of
the Company, (iii) no options or other rights to acquire from the Company, and
no obligation of the Company to issue or sell, any shares of capital stock or
other voting securities of the Company or any securities of the Company
convertible into or exchangeable for such capital stock or voting securities,
and (iv) no equity equivalents, interests in the ownership or earnings or other
similar rights of or with respect to the Company. There are (and as of the
Closing Date there will be) no outstanding obligations of the Company or any
Subsidiary to repurchase, redeem, or otherwise acquire any of the foregoing
shares, securities, options, equity equivalents, interests, or rights. Except as
set forth on Schedule 4.4, the Company is not a party to, and is not aware of,
any voting agreement, voting trust, or similar agreement or arrangement relating
to any class or series of its capital stock.
4.5 Authority Relative to This Agreement. The Company has full power
and authority to execute, deliver, and, upon Shareholder Approval, perform this
Agreement and the Ancillary
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Documents, including the Notes, to which it is a party and to consummate the
transactions contemplated hereby and thereby. The execution, delivery, and (upon
Shareholder Approval) performance by the Company of this Agreement and the
Ancillary Documents, including the Notes, to which it is a party, and the
consummation by it of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary action of the Company. This Agreement has
been duly executed and delivered by the Company and constitutes, and each
Ancillary Document, including the Notes, executed or to be executed by the
Company has been, or when executed will be, duly executed and delivered by the
Company and constitutes, or when executed and delivered will constitute, a valid
and legally binding obligation of the Company, enforceable against the Company
in accordance with their respective terms, except that such enforceability may
be limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium,
and similar laws affecting creditors' rights generally and (ii) equitable
principles which may limit the availability of certain equitable remedies (such
as specific performance) in certain instances.
4.6 No Conflict. Assuming all consents, approvals, authorizations and
other actions described in Section 4.7 have been obtained and all filings and
notifications listed on Schedule 4.7 have been made, and except as described on
Schedule 4.6 and for Shareholder Approval, the execution, delivery and
performance of this Agreement by the Company, the execution, delivery and
performance by each Subsidiary of the Ancillary Documents to which it is a
party, and the consummation by them of the transactions contemplated hereby and
thereby do not and will not (a) violate or conflict with the Organic Documents
of the Company or any Subsidiary, (b) conflict with or result in any violation
of any provision of, or constitute (with or without the giving of notice or the
passage of time or both) a default under, or give rise (with or without the
giving of notice or the passage of time or both) to any right of termination,
cancellation, or acceleration under, or require any consent, approval,
authorization or waiver of, or notice to, any party to, any bond, debenture,
note, mortgage, indenture, lease, contract, agreement, or other instrument or
obligation to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary or any of their respective properties may be bound or
any Permit held by the Company or any Subsidiary, (iii) result in the creation
or imposition of any Lien upon the properties of the Company or any Subsidiary
(other than as provided in the Senior Credit Facility) or (iv) violate any
Applicable Law binding upon the Company or any Subsidiary.
4.7 Consents and Approvals, Licenses, Etc. Except for Shareholder
Approval and as set forth on Schedule 4.7, no consent, approval, authorization,
license, order or permit of, or declaration, filing or registration with, or
notification to, any Governmental Entity, or any other Person or entity, is
required to be made or obtained by the Company or any Subsidiary in connection
with the execution, delivery and performance of this Agreement or any Ancillary
Document and the consummation of the transactions contemplated hereby and
thereby.
4.8 Subsidiaries
(a) The Company does not own, directly or indirectly, any capital
stock or equity securities of any corporation or have any direct or indirect
equity or ownership interest in any other Person, other than the Subsidiaries.
Schedule 4.8 lists each Subsidiary, the jurisdiction of incorporation or
formation of each Subsidiary and the authorized (in the case of capital stock)
and
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outstanding capital stock or other equity interests of each Subsidiary. Each
U.K. Subsidiary is a duly formed and validly existing under the laws of the
jurisdiction of its formation, and each other Subsidiary is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation. Each Subsidiary has all requisite corporate
or other, as applicable, power and authority to own, lease, and operate its
properties and to carry on its business as now being conducted. No actions or
proceedings to dissolve any Subsidiary are pending.
(b) Except as otherwise indicated on Schedule 4.8, all the
outstanding capital stock or other equity interests of each Subsidiary are owned
directly or indirectly by the Company, free and clear of all Liens. All
outstanding shares of capital stock of each corporate Subsidiary have been
validly issued and are fully paid and nonassessable. All equity interests of
each other Subsidiary have been validly issued and are fully paid (to the extent
required at such time). No shares of capital stock or other equity interests of
any Subsidiary are subject to, nor have any been issued in violation of,
preemptive or similar rights.
(c) Except as set forth on Schedule 4.8, there are (and as of the
Closing Date there will be) outstanding (i) no shares of capital stock or other
voting securities of any Subsidiary, (ii) no securities of the Company or any
Subsidiary convertible into or exchangeable for shares of capital stock or other
voting securities of any Subsidiary, (iii) no options or other rights to acquire
from the Company or any Subsidiary, and no obligation of the Company or any
Subsidiary to issue or sell, any shares of capital stock or other voting
securities of any Subsidiary or any securities convertible into or exchangeable
for such capital stock or voting securities and (iv) no equity equivalents,
interests in the ownership or earnings, or other similar rights of or with
respect to any Subsidiary. There are (and as of the Closing Date there will be)
no outstanding obligations of the Company or any Subsidiary to repurchase,
redeem or otherwise acquire any of the foregoing shares, securities, options,
equity equivalents, interests or rights.
(d) Each of the Subsidiary Guarantors has full power and authority to
execute, deliver, and, upon Shareholder Approval, perform the Subsidiary
Guarantee and other Ancillary Documents to which it is a party and to consummate
the transactions contemplated thereby. The execution, delivery, and (upon
Shareholder Approval) performance by each of the Subsidiary Guarantors of the
Subsidiary Guarantee and other Ancillary Documents to which it is a party, and
the consummation by it of the transactions contemplated thereby, have been duly
authorized by all necessary action of such Subsidiary Guarantor. The Subsidiary
Guarantees and each Ancillary Document executed or to be executed by the
Subsidiary Guarantors has been, or when executed will be, duly executed and
delivered by the Subsidiary Guarantors and constitutes, or when executed and
delivered will constitute, a valid and legally binding obligation of the
Subsidiary Guarantors, enforceable against the Subsidiary Guarantors in
accordance with their respective terms, except that such enforceability may be
limited by (i) applicable bankruptcy, insolvency, reorganization, moratorium,
and similar laws affecting creditors' rights generally and (ii) equitable
principles which may limit the availability of certain equitable remedies (such
as specific performance) in certain instances.
4.9 Shares. Upon Shareholder Approval, the Shares and the Placement
Fee Shares to be issued by the Company at the Closing will have been duly
authorized for such issuance and, when issued and delivered by the Company in
accordance with the provisions of this Agreement, will be
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validly issued, fully paid, and nonassessable. The issuance of the Shares and
the Placement Fee Shares under this Agreement is not subject to any preemptive
or similar rights. Upon fulfillment of the Company's obligations under Section
14.3 hereto and assuming compliance by Buyer with all applicable requirements of
Regulation S under the Exchange Act, the Shares and Placement Fee Shares will be
tradable on the London Stock Exchange.
4.10 Financial Statements. The Company has delivered to Buyer
accurate and complete copies of (i) the Company's audited consolidated balance
sheet as of April 30, 1998, and the related audited consolidated statements of
income, stockholders' equity and cash flows for the year then ended, and the
notes and schedules thereto, together with the unqualified report thereon of
KPMG Audit Plc, independent public accountants (the "Audited Financial
Statements") and (ii) the Company's unaudited consolidated balance sheet as of
July 31, 1998 (the "Latest Balance Sheet"), and the related unaudited
consolidated statements of income, stockholders' equity, and cash flows for the
three-month period then ended (the "Unaudited Financial Statements"), certified
by the Company's chief financial officer (collectively, the "Financial
Statements"). The Financial Statements (i) represent actual bona fide
transactions, (ii) have been prepared from the books and records of the Company
and its consolidated Subsidiaries in conformity with U.S. GAAP accounting
principles applied on a basis consistent with preceding years throughout the
periods involved and (iii) fairly present the Company's consolidated financial
position as of the respective dates thereof and its consolidated results of
operations and cash flows for the periods then ended. The statements of income
included in the Financial Statements do not contain any items of special or
nonrecurring income except as identified in the notes thereto, and the balance
sheets included in the Financial Statements do not reflect any write-up or
revaluation increasing the book value of any assets, nor have there been any
transactions since the date of the Latest Balance Sheet giving rise to special
or nonrecurring income or any such write-up or revaluation.
4.11 SEC Filings. The Company has filed with the Securities and
Exchange Commission, the London Stock Exchange and the Registrar of Companies
all forms, reports, schedules, statements and other documents required to be
filed by it since May 1, 1996 under the Companies Act and the Listing Rules and
since April 30, 1997 under the Securities Act, the Exchange Act and all other
federal securities laws. All final forms, reports, schedules, statements and
other documents (including all amendments thereto) filed by the Company with the
Securities and Exchange Commission and the London Stock Exchange since such date
are herein collectively referred to as the "SEC Filings". The Company has
delivered to Buyer accurate and complete copies of all the SEC Filings in the
form filed by the Company with the Securities and Exchange Commission and the
London Stock Exchange. The SEC Filings, at the time filed, complied in all
material respects with all applicable requirements of federal securities laws.
None of the SEC Filings, including, without limitation, any financial statements
or schedules included therein, at the time filed, contained any untrue statement
of a material fact or omitted to state any material fact required to be stated
therein or necessary in order to make the statements contained therein, in light
of the circumstances under which they were made, not misleading. All material
contracts of the Company and the Subsidiaries have been included in the SEC
Filings, except for those contracts not required to be filed pursuant to the
rules and regulations of the Securities and Exchange Commission and the London
Stock Exchange. The Company shall deliver to Buyer as soon as they become
available accurate and complete copies of all forms, reports, and other
documents furnished by it to its shareholders generally or filed by it with the
Securities and
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Exchange Commission and the London Stock Exchange subsequent to the date hereof
and prior to the Closing Date.
4.12 Absence of Undisclosed Liabilities. Neither the Company nor any
Subsidiary has any liability or obligation (whether accrued, absolute,
contingent, unliquidated, or otherwise, whether or not known to the Company or
any Subsidiary, and whether due or to become due), except (i) liabilities
reflected on the Latest Balance Sheet, (ii) liabilities which have arisen since
the date of the Latest Balance Sheet in the ordinary course of business (none of
which is a material liability for breach of contract, breach of warranty, tort,
or infringement), (iii) liabilities arising under executory contracts entered
into in the ordinary course of business (none of which is a material liability
for breach of contract) and (iv) liabilities specifically set forth on Schedule
4.12.
4.13 Absence of Certain Changes. Except as disclosed on Schedule
4.13, since the date of the Latest Balance Sheet, (i) there has not been any
material adverse change in, or any event or condition that might reasonably be
expected to result in a material adverse change in, the business assets, results
of operations, condition (financial or otherwise) or prospects of the Company
and the Subsidiaries considered as a whole; (ii) the businesses of the Company
and the Subsidiaries have been conducted only in the ordinary course consistent
with past practice; (iii) neither the Company nor any Subsidiary has incurred
any material liability, engaged in any material transaction or entered into any
material agreement outside the ordinary course of business consistent with past
practice; (iv) neither the Company nor any Subsidiary has suffered any material
loss, damage, destruction, or other casualty to any of its assets (whether or
not covered by insurance); and (v) neither the Company nor any Subsidiary has
taken any of the actions set forth in Section 6.2 except as permitted
thereunder.
4.14 Tax Matters. Except as disclosed on Schedule 4.14:
(a) The Company and each Subsidiary has filed, or has had filed on
its behalf, in a timely manner (within any applicable extension periods) with
the appropriate taxing authority all Tax Returns with respect to Taxes of the
Company and of each of the Subsidiaries, all of which Tax Returns are true,
correct and complete in all material respects;
(b) All Taxes due and payable (whether or not reflected in Tax
Returns as filed) with respect to all taxable periods of the Company and the
Subsidiaries have been paid in full or adequate reserves have been provided for
on the Financial Statements;
(c) There are no outstanding agreements or waivers extending the
statutory period of limitations applicable to any federal, state, local or
foreign income or other material Tax Returns required to be filed by or with
respect to the Company or any of the Subsidiaries;
(d) None of the Tax Returns of or with respect to the Company or any
of the Subsidiaries is currently being audited or examined by any taxing
authority;
(e) No material deficiency for any Taxes has been assessed with
respect the Company or to any of the Subsidiaries that has not either (i) been
abated or (ii) paid in full or for which adequate reserves have been provided;
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(f) No Tax litigation is currently pending;
(g) No waiver or extension of any statute of limitations to any
federal, state, local or foreign Tax matter has been given by or requested from
the Company or any Subsidiary; and
(h) Neither the Company nor any Subsidiary has filed a consent under
Section 341(f) of the Code.
(i) The Company and the Subsidiaries have complied with all
Applicable Laws relating to the withholding of Taxes and the payment thereof
(including, without limitation, withholding of Taxes under Sections 1441 and
1442 of the Code, or similar provisions under foreign laws), and has timely and
properly withheld from the appropriate party and paid over to the proper
Governmental Entity all amounts required to be withheld and be paid over under
Applicable Law.
(j) Neither the Company nor any Subsidiary is required to include in
income any adjustment under Section 481(a) of the Code by reason of a change in
accounting method, and neither the Company nor any Subsidiary, nor the Internal
Revenue Service, has proposed any such adjustment or change in accounting
method. The Company and the Subsidiaries do not have pending any private letter
ruling with the IRS.
(k) Other than as a result of this transaction, none of the Company's
or any Subsidiary's tax attributes is subject to the limitations of Section 382,
383 or 384 of the Code or Temporary Treasury Regulation Sections 1.1502-15T or
1.1502-21T(c).
(l) There are no liens for Taxes upon any assets of the Company or
any Subsidiary, except liens for Taxes not yet due and payable.
(m) The tax basis of each of the assets of the Company and the
Subsidiaries as set forth on the books, accounts and records of the Company and
the Subsidiaries is true, correct and complete in all material respects.
4.15 Environmental and Other Laws. Except as disclosed on Schedule
4.15 or in the SEC Filings filed prior to the date hereof, (a) the Company and
the Subsidiaries are conducting their businesses in compliance in all material
respects with all Applicable Laws, including all Environmental Laws, and are in
material compliance with all licenses and permits required under any such laws;
(b) to the best of the Company's knowledge, none of the operations or properties
of the Company or any Subsidiary is the subject of foreign, federal, state or
local investigation evaluating whether any material remedial action is needed to
respond to a release of any Hazardous Materials into the environment or to the
improper storage or disposal (including storage or disposal at offsite
locations) of any Hazardous Materials; (c) neither the Company nor any
Subsidiary has filed any notice under any Applicable Law indicating that it is
responsible for the improper release into the environment, or the improper
storage or disposal, of any material amount of any Hazardous Materials or that
any Hazardous Materials have been improperly released, or are improperly stored
or disposed of, upon any property of the Company or any Subsidiary; (d) neither
the Company nor any Subsidiary has transported or arranged for the
transportation of any Hazardous Material to any location which is (i)
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listed on the National Priorities List under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended, listed for
possible inclusion on such National Priorities List by the Environmental
Protection Agency in its Comprehensive Environmental Response, Compensation and
Liability Information System List, or listed on any similar state list or
foreign jurisdiction list or (ii) the subject of foreign, federal, state or
local enforcement actions or other investigations which may lead to material
claims against the Company or any Subsidiary for clean-up costs, remedial work,
damages to natural resources or for personal injury claims (whether under
Environmental Laws or otherwise); and (e) to the best of the Company's
knowledge, neither the Company or any Subsidiary has any material contingent
liability under any Environmental Laws or in connection with the release into
the environment, or the storage or disposal, of any Hazardous Materials.
4.16 Legal Proceedings. Except as disclosed on Schedule 4.16, there
are no Proceedings pending or, to the best knowledge of the Company, threatened
against or involving the Company or any Subsidiary (or any of their respective
directors or officers in connection with the business or affairs of the Company
or any Subsidiary) or any properties or rights of the Company or any Subsidiary
which, individually or in the aggregate, might reasonably be expected to have a
Material Adverse Effect. Neither the Company nor any Subsidiary is subject to
any judgment, order, writ, injunction, or decree of any Governmental Entity
which has had or is reasonably likely to have a Material Adverse Effect. There
are no Proceedings pending or, to the best knowledge of the Company, threatened
seeking to restrain, prohibit, or obtain damages or other relief in connection
with, or questioning the legality or validity of, this Agreement or any
Ancillary Document or the transactions contemplated hereby or thereby.
4.17 Title to Properties; Permits; Licenses; Condition of Assets.
(a) Each of the Company and the Subsidiaries has good and defensible
title to all of its material properties and assets, free and clear of all Liens
other than Permitted Liens and of all material impediments to the use of such
properties and assets in the businesses of the Company and the Subsidiaries.
(b) Each of the Company and the Subsidiaries holds all material
Permits necessary or required for the conduct of its business. Each of such
Permits is in full force and effect, the Company and the Subsidiaries are in
compliance with all of its material obligations with respect thereto, and, to
the best knowledge of the Company, no event has occurred which allows, or with
or without the giving of notice or the passage of time or both would allow, the
revocation or termination of any thereof. No notice has been issued by any
Governmental Entity and no proceeding is pending or, to the best knowledge of
the Company, threatened with respect to any alleged failure by the Company or
any Subsidiary to have any material Permit.
(c) The Company and the Subsidiaries possess all licenses, permits,
franchises, patents, copyrights, trademarks and trade names, and other
intellectual property (or otherwise possesses the right to use such intellectual
property without violation of the rights of any other Person) which are
necessary to carry out their businesses as presently conducted and as presently
proposed to be conducted hereafter, and neither the Company nor any Subsidiaries
is in violation in any
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material respect of the terms under which it possesses such intellectual
property or the right to use such intellectual property.
(d) The equipment and other tangible assets of the Company and the
Subsidiaries are in good operating condition (except for reasonable wear and
tear), and have been reasonably maintained.
(e) The Company has conducted a reasonable and prudent due diligence
investigation of the assets to be acquired pursuant to the Burlington Agreement,
and, to the best knowledge of the Company, the representations and warranties of
Burlington Resources (Irish Sea) Limited in the Burlington Agreement are true
and correct in all material respects.
4.18 ERISA.
(a) Set forth on Schedule 4.18 is a list identifying each "employee
benefit plan", as defined in Section 3(3) of ERISA, (i) which is subject to any
provision of ERISA, (ii) which is maintained, administered, or contributed to by
the Company or any affiliate of the Company, and (iii) which covers any employee
or former employee of the Company or any affiliate of the Company or under which
the Company or any affiliate of the Company has any liability. The Company has
delivered or made available to Buyer accurate and complete copies of such plans
(and, if applicable, the related trust agreements) and all amendments thereto
and written interpretations thereof, together with (i) the three most recent
annual reports (Form 5500 including, if applicable, Schedule B thereto) prepared
in connection with any such plan and (ii) the most recent actuarial valuation
report prepared in connection with any such plan. Such plans are referred to in
this Section as the "Employee Plans". For purposes of this Section only, an
"affiliate" of any person means any other person which, together with such
person, would be treated as a single employer under Section 414 of the Code. The
only Employee Plans which individually or collectively would constitute an
"employee pension benefit plan" as defined in Section 3(2) of ERISA are
identified as such on Schedule 4.18.
(b) Except as otherwise identified on Schedule 4.18, (i) no Employee
Plan constitutes a "multiemployer plan", as defined in Section 3(37) of ERISA
(for purposes of this Section, a "Multiemployer Plan"), (ii) no Employee Plan is
maintained in connection with any trust described in Section 501(c)(9) of the
Code, (iii) no Employee Plan is subject to Title IV of ERISA or to the minimum
funding standards of ERISA and the Code, and (iv) during the past five years,
neither the Company nor any of its affiliates have made or been required to make
contributions to any Multiemployer Plan. There are no accumulated funding
deficiencies as defined in Section 412 of the Code (whether or not waived) with
respect to any Employee Plan. The fair market value of the assets held with
respect to each Employee Plan which is an employee pension benefit plan, as
defined in Section 3(2) of ERISA, exceeds the actuarially determined present
value of all benefit liabilities accrued under such Employee Plan (whether or
not vested) determined using reasonable actuarial assumptions. Neither the
Company nor any affiliate of the Company has incurred any material liability
under Title IV of ERISA arising in connection with the termination of, or
complete or partial withdrawal from, any plan covered or previously covered by
Title IV of ERISA. The Company and all of the affiliates of the Company have
paid and discharged promptly when due all liabilities and obligations arising
under ERISA or the Code of a character which if unpaid or unperformed might
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result in the imposition of a lien against any of the assets of the Company or
any Subsidiary. Nothing done or omitted to be done and no transaction or holding
of any asset under or in connection with any Employee Plan has or will make the
Company or any Subsidiary or any director or officer of the Company or any
Subsidiary subject to any liability under Title I of ERISA or liable for any Tax
pursuant to Section 4975 of the Code that could have a Material Adverse Effect.
There are no threatened or pending claims by or on behalf of the Employee Plans,
or by any participant therein, alleging a breach or breaches of fiduciary duties
or violations of Applicable Laws which could result in liability on the part of
the Company, its officers or directors, or such Employee Plans, under ERISA or
any other Applicable Law and there is no basis for any such claim.
(c) Each Employee Plan which is intended to be qualified under
Section 401(a) of the Code is so qualified and has been so qualified since the
date of its adoption, and each trust forming a part thereof is exempt from Tax
pursuant to Section 501(a) of the Code. Set forth on Schedule 4.18 is a list of
the most recent IRS determination letters with respect to any such Plans,
accurate and complete copies of which letters have been delivered or made
available to Buyer. Each Employee Plan has been maintained in compliance with
its terms and with the requirements prescribed by all Applicable Laws, including
but not limited to ERISA and the Code, which are applicable to such Employee
Plans.
(d) Set forth on Schedule 4.18 is a list of each employment,
severance, or other similar contract, arrangement, or policy and each plan or
arrangement (written or oral) providing for insurance coverage (including any
self-insured arrangements), workers' compensation, disability benefits,
supplemental unemployment benefits, vacation benefits, retirement benefits,
deferred compensation, profit-sharing, bonuses, stock options, stock
appreciation rights, or other forms of incentive compensation or post-retirement
insurance, compensation, or benefits which (i) is not an Employee Plan, (ii) is
entered into, maintained, or contributed to, as the case may be, by the Company
or any affiliate of the Company, and (iii) covers any employee or former
employee of the Company or any affiliate of the Company or under which the
Company or any affiliate of the Company has any liability. Such contracts,
plans, and arrangements as are described in the preceding sentence are referred
to for purposes of this Section as the "Benefit Arrangements". Each Benefit
Arrangement has been maintained in substantial compliance with its terms and
with the requirements prescribed by Applicable Laws.
(e) Neither the Company nor any affiliate of the Company has
performed any act or failed to perform any act, and there is no contract,
agreement, plan, or arrangement covering any employee or former employee of the
Company or any affiliate of the Company, that, individually or collectively,
could give rise to the payment of any amount that would not be deductible
pursuant to the terms of Section 162(a)(1) or 280G of the Code, or could give
rise to any penalty or excise Tax pursuant to Section 4980B or 4999 of the Code.
4.19 Agreements.
(a) Set forth on Schedule 4.19 is a list of all the following
agreements, arrangements, and understandings (written or oral, formal or
informal) (collectively, for purposes of this Section, "agreements") to which
the Company or any Subsidiary is a party or by which the Company or any
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Subsidiary or any of their respective properties is otherwise bound:
(i) collective bargaining agreements and similar agreements
with employees as a group;
(ii) agreements with any current or former shareholder,
director, officer, employee, consultant or advisor or any affiliate of any
such Person;
(iii) agreements between or among the Company and any of the
Subsidiaries;
(iv) exclusive of those relating to the Senior Credit Facility,
indentures, mortgages, security agreements, notes, loan or credit
agreements, or other agreements relating to the borrowing of money by the
Company or any Subsidiary or to the direct or indirect guarantee or
assumption by the Company or any Subsidiary of any obligation of others,
including any agreement that has the economic effect although not the legal
form of any of the foregoing;
(v) agreements relating to the acquisition or disposition of
assets, other than those entered into in the ordinary course of business
consistent with past practice;
(vi) agreements relating to the acquisition or disposition of
any interest in any business enterprise;
(vii) exclusive of oil, gas and mineral leases, agreements with
respect to the lease of real or personal property;
(viii) exclusive of oil and gas operating or similar agreements,
agreements concerning the management or operation of any real property;
(ix) partnership, joint venture, and profit sharing agreements;
(x) agreements with any Governmental Entity;
(xi) agreements relating to the release or disposal of
Hazardous Material;
(xii) agreements containing any covenant limiting the freedom of
the Company or any Subsidiary to engage in any line of business or compete
with any other Person in any geographic area or during any period of time,
other than those that would not have a Material Adverse Effect;
(xiii) agreements not made in the ordinary course of business;
and
(xiv) other agreements, whether or not made in the ordinary
course of business, that are material to the business, assets, results of
operations, condition (financial or otherwise), or prospects of the Company
and the Subsidiaries considered as a whole.
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(b) The Company has delivered or made available to Buyer accurate and
complete copies of the agreements listed in Schedule 4.19. Each of such
agreements is a valid and binding agreement of the Company and the Subsidiaries
(to the extent each is a party thereto) and (to the best knowledge of the
Company) the other party or parties thereto, enforceable against the Company and
the Subsidiaries (to the extent each is a party thereto) and (to the best
knowledge of the Company) such other party or parties in accordance with its
terms. Neither the Company nor any Subsidiary is in breach of or in default
under, nor has any event occurred which (with or without the giving of notice or
the passage of time or both) would constitute a default by the Company or any
Subsidiary under, any of such agreements, and neither the Company nor any
Subsidiary has received any notice from, or given any notice to, any other party
indicating that the Company or any Subsidiary is in breach of or in default
under any of such agreements. To the best knowledge of the Company, no other
party to any of such agreements is in breach of or in default under such
agreements, nor has any assertion been made by the Company or any Subsidiary of
any such breach or default.
(c) Neither the Company nor any Subsidiary has received notice of any
plan or intention of any other party to any agreement to exercise any right of
offset with respect to, or any right to cancel or terminate, any agreement, and
neither the Company nor any Subsidiary knows of any fact or circumstance that
would justify the exercise by any such other party of such a right other than
the automatic termination of such agreement in accordance with its terms.
Neither the Company nor any Subsidiary currently contemplates, or has reason to
believe any other Person currently contemplates, any amendment or change to any
agreement, which amendment or change could have a Material Adverse Effect.
(d) Without limiting the generality of the other provisions in this
Section 4.19, the Key Employment Agreements are in full force and effect, and
each of John Keenan, Paul Fenemore and Harry Brian Kerr Williams is currently
employed by the Company pursuant to a renewal term under such agreements.
4.20 Labor Disputes and Acts of God. Neither the business nor the
properties of the Company nor any Subsidiary has been affected by any fire,
explosion, accident, strike, lockout or other labor dispute, drought, storm,
hail, earthquake, embargo, act of God or of the public enemy or other casualty
(whether or not covered by insurance), which, individually or in the aggregate,
could cause a Material Adverse Effect.
4.21 Registration Rights. As of the date hereof, the Company has no
obligation to register any of its securities (including debt securities) under
the Securities Act, the Listing Rules or applicable similar foreign laws or
regulations. As of the Closing Date, except pursuant to the Registration
Rights Agreement and as set forth on Schedule 4.21, the Company will have no
obligation to register any of its securities (including debt securities) under
the Securities Act, the Listing Rules or applicable similar foreign laws or
regulations.
4.22 Offering of Securities. All securities which have been offered
or sold by the Company have been registered pursuant to the Securities Act and
applicable foreign and state securities laws or were offered and sold pursuant
to valid exemptions therefrom.
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4.23 Government Regulation. The Company is not subject to regulation
under the Public Utility Holding Company Act of 1935. The Company is not an
"investment company" or a company "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, or an "investment
advisor" within the meaning of the Investment Advisers Act of 1940, as amended.
4.24 Brokerage Fees. Neither the Company nor any of its affiliates
has retained any financial advisor, broker, agent or finder or paid or agreed to
pay any financial advisor, broker, agent or finder on account of this Agreement
or any transaction contemplated hereby, which action would subject Buyer or any
of its affiliates to any liability. The Company shall indemnify and hold
harmless Buyer from and against any and all losses, claims, damages and
liabilities (including legal and other expenses reasonably incurred in
connection with investigating or defending any claims or actions) with respect
to any finder's fee, brokerage commission or similar payment in connection with
any transaction contemplated hereby asserted by any Person on the basis of any
act or statement made or alleged to have been made by the Company or any of its
affiliates.
4.25 Solvency.
(a) No order has been made or resolution passed for the winding up of
the Company and/or any of its Subsidiaries and there is not outstanding (i) any
petition or order for the winding up of the Company or any of its Subsidiaries;
(ii) any receivership of the whole or any part of the Company or any of its
Subsidiaries; (iii) any petition or order for the administration of the Company
or any of its Subsidiaries; or (iv) any voluntary arrangement between the
Company or any of its Subsidiaries.
(b) There are no circumstances which are known, or would on
reasonable inquiry be known, to the Company or any of its Subsidiaries which
would entitle any person to present a petition for the winding up or
administration of the Company or any of its Subsidiaries or to appoint a
receiver of the whole or any part of its undertaking or assets.
(c) Neither the Company nor any of its Subsidiaries is deemed unable
to pay its debts within the meaning of Section 1.23 of the Insolvency Act 1986.
(d) No event analogous to any of the matters set out in this Section
4.25 has occurred outside England and Wales.
4.26 Full Disclosure. No representation or warranty made by the
Company in this Agreement, and no statement of the Company contained in any
document, certificate or other writing furnished or to be furnished by the
Company or its representatives to Buyer pursuant hereto or in connection
herewith, contains or will contain, at the time of delivery, any untrue
statement of a material fact or omits or will omit, at the time of delivery, to
state any material fact (other than industry-wide risks normally associated with
the type of business conducted by the Company) necessary to make the statements
contained therein, in light of the circumstances in which they are made, not
misleading. There is no fact known to the Company (other than industry-wide
risks normally associated with the type of business conducted by the Company)
that
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has not been disclosed to Buyer in writing which the Company reasonably
anticipates would result in a Material Adverse Effect.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF BUYER
Each of EnCap LP and ECIC hereby severally and as to itself represents and
warrants to the Company that (as used in this Article V the term "Buyer" shall
be deemed to mean only the Person making such representation or warranty):
5.1 Corporate Organization. Buyer is duly organized and validly
existing under the laws of the jurisdiction of its formation.
5.2 Authority Relative to This Agreement. Buyer has full power and
authority to execute, deliver, and perform this Agreement and the Ancillary
Documents to which it is a party and to consummate the transactions contemplated
hereby and thereby. The execution, delivery, and performance by Buyer of this
Agreement and the Ancillary Documents to which it is a party, and the
consummation by it of the transactions contemplated hereby and thereby, have
been duly authorized by all necessary action of Buyer. This Agreement has been
duly executed and delivered by Buyer and constitutes, and each Ancillary
Document executed or to be executed by Buyer has been, or when executed will be,
duly executed and delivered by Buyer and constitutes, or when executed and
delivered will constitute, a valid and legally binding obligation of Buyer,
enforceable against Buyer in accordance with their respective terms, except that
such enforceability may be limited by (i) applicable bankruptcy, insolvency,
reorganization, moratorium, and similar laws affecting creditors' rights
generally and (ii) equitable principles which may limit the availability of
certain equitable remedies (such as specific performance) in certain instances.
5.3 Investment Intent; Investment Experience; Restricted Securities.
Buyer is acquiring the Securities for its own account for investment and not
with a view to, or for sale or other disposition in connection with, any
distribution of all or any part thereof. In acquiring the Securities, Buyer is
not offering or selling, and will not offer or sell, for the Company in
connection with any distribution of the Securities, and Buyer does not have a
participation and will not participate in any such undertaking or in any
underwriting of such an undertaking except in compliance with applicable federal
and state securities laws. Buyer acknowledges that it is able to fend for
itself, can bear the economic risk of its investment in the Securities, and has
such knowledge and experience in financial and business matters that it is
capable of evaluating the merits and risks of an investment in the Securities.
Buyer understands that the Securities will not have been registered pursuant to
the Securities Act or any applicable state securities laws, that the Securities
will be characterized as "restricted securities" under federal securities laws
and that under such laws and applicable regulations the Securities cannot be
sold or otherwise disposed of without registration under the Securities Act or
an exemption therefrom.
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5.4 Brokerage Fees. Neither Buyer nor any of its affiliates has
retained any financial advisor, broker, agent or finder or paid or agreed to pay
any financial advisor, broker, agent or finder on account of this Agreement or
any transaction contemplated hereby, which action would subject the Company or
any of its affiliates to any liability. Buyer shall indemnify and hold harmless
the Company from and against any and all losses, claims, damages and liabilities
(including legal and other expenses reasonably incurred in connection with
investigating or defending any claims or actions) with respect to any finder's
fee, brokerage commission or similar payment in connection with any transaction
contemplated hereby asserted by any Person on the basis of any act or statement
made or alleged to have been made by Buyer or any of its affiliates.
ARTICLE VI
CONDUCT OF COMPANY PENDING CLOSING
The Company hereby covenants and agrees with Buyer as follows:
6.1 Conduct and Preservation of Business. Except as expressly provided
in this Agreement, during the period from the date hereof to the Closing, the
Company and the Subsidiaries (i) shall each conduct its operations according to
its ordinary course of business consistent with past practice and in compliance
with all Applicable Laws; (ii) shall each use its reasonable best efforts to
preserve, maintain and protect its properties; and (iii) shall each use its
reasonable best efforts to preserve intact its business organization, to keep
available the services of its officers and employees, and to maintain existing
relationships with licensors, licensees, suppliers, contractors, distributors,
customers and others having business relationships with it.
6.2 Restrictions on Certain Actions. Without limiting the generality of
the foregoing, and except as otherwise expressly provided in this Agreement,
prior to the Closing, neither the Company nor any Subsidiary shall, without the
prior written consent of Buyer:
(a) except as provided in the Notice of Extraordinary Meeting
dated October 7, 1998 contained in the Listing Particulars, amend its
Organic Documents or other governing instruments;
(b) (i) except as provided (A) in the Notice of Extraordinary
Meeting dated October 7, 1998 contained in the Listing Particulars or (B)
in Section 6.3 hereof, issue, sell, or deliver (whether through the
issuance or granting of options, warrants, commitments, subscriptions,
rights to purchase, or otherwise) any shares of its capital stock of any
class or any other securities or equity equivalents; or (ii) amend in any
respect any of the terms of any such securities outstanding as of the date
hereof;
(c) (i) except as provided in the Notice of Extraordinary Meeting
dated October 7, 1998 contained in the Listing Particulars, split, combine,
or reclassify any shares of its capital stock; (ii) declare, set aside, or
pay any dividend or other distribution (whether in cash,
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stock, or property or any combination thereof) in respect of its capital
stock; (iii) repurchase, redeem, or otherwise acquire any of its securities
or any securities of any Subsidiary; or (iv) adopt a plan of complete or
partial liquidation or resolutions providing for or authorizing a
liquidation, dissolution, merger, consolidation, restructuring,
recapitalization, or other reorganization of the Company or any Subsidiary;
(d) (i) except in the ordinary course of business consistent with
past practice, create, incur, guarantee, or assume any indebtedness for
borrowed money or otherwise become liable or responsible for the
obligations of any other Person; (ii) make any loans, advances, or capital
contributions to, or investments in, any other Person (other than customary
loans or advances to employees in amounts not material to the maker of such
loan or advance); (iii) pledge or otherwise encumber shares of capital
stock of the Company or any Subsidiary; or (iv) except in the ordinary
course of business consistent with past practice, mortgage or pledge any of
its assets, tangible or intangible, or create or suffer to exist any lien
thereupon;
(e) (i) enter into, adopt, or (except as may be required by law)
amend or terminate any bonus, profit sharing, compensation, severance,
termination, stock option, stock appreciation right, restricted stock,
performance unit, stock equivalent, stock purchase, pension, retirement,
deferred compensation, employment, severance or other employee benefit
agreement, trust, plan, fund or other arrangement for the benefit or
welfare of any director, officer or employee; (ii) except for normal
increases in the ordinary course of business consistent with past practice
that, in the aggregate, do not result in a material increase in benefits or
compensation expense to the Company, increase in any manner the
compensation or fringe benefits of any director, officer or employee; or
(iii) pay to any director, officer or employee any benefit not required by
any employee benefit agreement, trust, plan, fund or other arrangement as
in effect on the date hereof;
(f) acquire, sell, lease, transfer, or otherwise dispose of,
directly or indirectly, any assets outside the ordinary course of business
consistent with past practice or any assets that in the aggregate are
material to the Company and the Subsidiaries considered as a whole;
(g) acquire (by merger, consolidation, or acquisition of stock or
assets or otherwise) any corporation, partnership or other business
organization or division thereof;
(h) make any capital expenditure or expenditures which,
individually, is in excess of $100,000 or, in the aggregate, are in excess
of $250,000;
(i) amend any Tax Return or make any Tax election or settle or
compromise any federal, state, local, or foreign Tax liability material to
the Company and the Subsidiaries considered as a whole;
(j) pay, discharge, or satisfy any claims, liabilities, or
obligations (whether accrued, absolute, contingent, unliquidated, or
otherwise, and whether asserted or unasserted), other than the payment,
discharge, or satisfaction in the ordinary course of
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business consistent with past practice, or in accordance with their terms,
of liabilities reflected or reserved against in the Financial Statements or
incurred since the date of the Latest Balance Sheet in the ordinary course
of business consistent with past practice; provided, however, that in no
event shall the Company or any Subsidiary repay any long-term indebtedness
except to the extent required by the terms thereof;
(k) enter into any lease, contract, agreement, commitment,
arrangement or transaction outside the ordinary course of business
consistent with past practice;
(l) amend the Difco Agreement, the Burlington Agreement or the
Senior Credit Facility;
(m) amend, modify, or change any existing lease, contract or
agreement (exclusive of the contracts described in subsection (l)), other
than in the ordinary course of business consistent with past practice;
(n) waive, release, grant or transfer any rights of value, other
than in the ordinary course of business consistent with past practice;
(o) change any of the accounting principles or practices used by
it;
(p) take any action which would or might make any of the
representations or warranties of the Company contained in this Agreement
untrue or inaccurate as of any time from the date of this Agreement to the
Closing or would or might result in any of the conditions set forth in this
Agreement not being satisfied; or
(q) authorize or propose, or agree in writing or otherwise to
take, any of the actions described in this Section.
6.3 Certain Action. Notwithstanding the foregoing provisions of this
Article VI, the Acquisitions and the transactions contemplated by the Senior
Credit Facility may be consummated as provided in this Agreement.
ARTICLE VII
CONDITIONS TO OBLIGATIONS OF THE COMPANY
The obligations of the Company to consummate the transactions contemplated
by this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
7.1 Representations and Warranties True. All the representations and
warranties of Buyer contained in this Agreement, and in any agreement,
instrument or document delivered pursuant hereto or in connection herewith on or
prior to the Closing Date, shall be true and correct in all material
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respects on and as of the Closing Date as if made on and as of such date, except
as affected by transactions permitted by this Agreement, including the
Acquisitions, the Senior Credit Facility and the receipt of Shareholder
Approval, and except to the extent that any such representation or warranty is
made as of a specified date, in which case such representation or warranty shall
have been true and correct in all material respects as of such specified date.
For the sole purpose of determining whether or not any of such representations
and warranties are true and correct as aforesaid on and as of the Closing Date,
no effect shall be given to any materiality qualification contained in such
representation or warranty.
7.2 Covenants and Agreements Performed. Buyer shall have performed and
complied with in all material respects all covenants and agreements required by
this Agreement to be performed or complied with by it on or prior to the Closing
Date, and all deliveries contemplated by Section 3.3 shall have been made.
7.3 HSR Act. All waiting periods (and any extensions thereof)
applicable to this Agreement and the transactions contemplated hereby under the
HSR Act shall have expired or been terminated.
7.4 Legal Proceedings. No preliminary or permanent injunction or other
order, decree or ruling issued by a Governmental Entity or any securities
exchange, and no statute, rule, regulation or executive order promulgated,
enacted or issued by a Governmental Entity or any securities exchange, shall be
in effect which restrains, enjoins, prohibits or otherwise makes illegal or
improper the consummation of the transactions contemplated hereby.
ARTICLE VIII
CONDITIONS TO OBLIGATIONS OF BUYER
The obligations of Buyer to consummate the transactions contemplated by
this Agreement shall be subject to the fulfillment on or prior to the Closing
Date of each of the following conditions:
8.1 Representations and Warranties True. All the representations and
warranties of the Company contained in this Agreement, and in any agreement,
instrument or document delivered pursuant hereto or in connection herewith on or
prior to the Closing Date, shall be true and correct in all material respects on
and as of the Closing Date as if made on and as of such date, except as affected
by transactions permitted by this Agreement, including the Acquisitions, the
Senior Credit Facility and the receipt of Shareholder Approval, and except to
the extent that any such representation or warranty is made as of a specified
date, in which case such representation or warranty shall have been true and
correct in all material respects as of such specified date. For the sole
purpose of determining whether or not any of such representations and warranties
are true and correct as aforesaid on and as of the Closing Date, no effect shall
be given to any materiality qualification contained in such representation or
warranty.
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8.2 Covenants and Agreements Performed. The Company shall have
performed and complied with in all material respects all covenants and
agreements required by this Agreement to be performed or complied with by it on
or prior to the Closing Date, and all deliveries contemplated by Section 3.2
shall have been made.
8.3 HSR Act. All waiting periods (and any extensions thereof)
applicable to this Agreement and the transactions contemplated hereby under the
HSR Act shall have expired or been terminated.
8.4 Legal Proceedings. No preliminary or permanent injunction or other
order, decree or ruling issued by a Governmental Entity or any securities
exchange, and no statute, rule, regulation or executive order promulgated,
enacted or issued by a Governmental Entity or any securities exchange, shall be
in effect which restrains, enjoins, prohibits or otherwise makes illegal the
consummation of the transactions contemplated hereby.
8.5 Consents. There shall have been obtained the Shareholder Approval
and any and all consents, approvals, authorizations, licenses, orders or permits
set forth on Schedule 4.7; and no other consent, approval, authorization,
license, order or permit of, or declaration, filing or registration with, or
notification to, any Governmental Entity, or any other Person or entity, the
failure to comply with which would have a Material Adverse Effect, shall be
required to be made or obtained by the Company or any Subsidiary in connection
with the execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated hereby.
8.6 No Material Adverse Change. Since the date of this Agreement, there
shall not have been any material adverse change in the business, assets, results
of operations, condition (financial or otherwise) or prospects of the Company
and the Subsidiaries considered as a whole.
8.7 Senior Credit Facility. The Company, Alliance USA, GOCA, LPC, New
GOC and Source shall have executed and delivered the Senior Credit Facility,
substantially in the form of the final draft furnished to Buyer in all material
respects.
8.8 Subordination Agreement. Buyer and the lender under the Senior
Credit Facility shall have executed and delivered a materially acceptable
subordination agreement.
8.9 U.K. Opinion. Buyer shall have received an opinion of Richards
Butler dated the Closing Date and in form and substance satisfactory to Buyer
concerning choice of law and such other matters as Buyer may request.
8.10 Closing of the Acquisitions and the Senior Credit Facility. All
conditions precedent to the closings of the Acquisitions and the Senior Credit
Facility (other than conditions with respect to the consummation, simultaneously
with such closings, of the transactions contemplated hereby) shall have been
satisfied at or prior to the Closing, and such closings shall have occurred
prior to or be occurring simultaneously with the Closing.
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ARTICLE IX
PRE-CLOSING TERMINATION
9.1 Termination. This Agreement may be terminated and the transactions
contemplated hereby abandoned at any time prior to the Closing in the following
manner:
(a) by mutual written consent of the Company and Buyer; or
(b) by either the Company or Buyer, if any Governmental Entity
with jurisdiction over such matters shall have issued an order or
injunction restraining, enjoining or otherwise prohibiting the sale of the
Securities or the Placement Fee Shares hereunder and such order, decree,
ruling or other action shall have become final and unappealable;
(c) by either Company or Buyer, if the Closing shall not have
occurred on or before October 30, 1998; provided, however, that the right
to terminate this Agreement under this Section 9.1(c) shall not be
available to any party whose failure to fulfill any obligation under this
Agreement shall have been the cause of, or shall have resulted in, the
failure of the Closing to occur prior to such date.
9.2 Effect of Termination. In the event of the termination of this
Agreement pursuant to Section 9.1 by the Company, on the one hand, or Buyer, on
the other, written notice thereof shall forthwith be given to the other party
specifying the provision hereof pursuant to which such termination is made, and
this Agreement shall become void and have no effect, except that the agreements
contained in this Section, in Sections 14.6 and 14.7 and in Article XV shall
survive the termination hereof. Nothing contained in this Section shall relieve
any party from liability for damages actually incurred as a result of any breach
of this Agreement.
ARTICLE X
AFFIRMATIVE COVENANTS OF THE COMPANY
To induce Buyer to enter into this Agreement, the Company warrants,
covenants and agrees that until the full and final payment of the Obligations:
10.1 Payment and Performance. The Company will pay all amounts due under
the Notes in accordance with the terms thereof and will observe, perform and
comply with every covenant, term and condition expressed or implied in this
Agreement. The Company will cause each of its Subsidiaries to observe, perform
and comply with every such term, covenant and condition to the extent applicable
to such Subsidiary.
10.2 Books, Financial Statements and Reports. The Company and each of
its Subsidiaries will at all times maintain full and accurate books of account
and records. The Company will maintain
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and will cause its Subsidiaries to maintain a standard system of accounting,
will maintain its Fiscal Year, and will furnish the following statements and
reports to Buyer at the Company's expense:
(a) As soon as available, and in any event within one hundred five
(105) days after the end of each Fiscal Year, complete consolidated financial
statements of the Company together with all notes thereto, prepared in
reasonable detail in accordance with U.S. GAAP, together with an unqualified
opinion, based on an audit using generally accepted auditing standards, by
independent certified public accountants selected by the Company and reasonably
acceptable to Buyer, stating that such consolidated financial statements have
been so prepared. These financial statements shall contain a consolidated
balance sheet as of the end of such Fiscal Year and consolidated statements of
earnings, of cash flows, and of changes in owners' equity for such Fiscal Year,
each setting forth in comparative form the corresponding figures for the
preceding Fiscal Year.
(b) As soon as available, and in any event within fifty (50) days after
the end of each Fiscal Quarter, the Company's consolidated balance sheet as of
the end of such Fiscal Quarter and consolidated statements of the Company's
earnings and cash flows for the period from the beginning of the then current
Fiscal Year to the end of such Fiscal Quarter, all in reasonable detail and
prepared in accordance with U.S. GAAP, subject to changes resulting from normal
year-end adjustments. In addition the Company will, together with each such set
of financial statements and each set of financial statements furnished under
subsection (a) of this section, furnish a certificate in a form reasonably
acceptable to Buyer signed by the chief financial officer of the Company stating
that such financial statements are accurate and complete (subject to normal
year-end adjustments) and stating that no Default exists at the end of such
Fiscal Quarter or at the time of such certificate or specifying the nature and
period of existence of any such Default.
(c) Promptly upon their becoming available, copies of all financial
statements, reports, notices and proxy statements sent by the Company to its
stockholders and all registration statements, periodic reports and other
statements and schedules filed by the Company with any securities exchange, the
Securities and Exchange Commission or any similar Governmental Entity.
(d) Annually within 60 days after the end of each Fiscal Year beginning
with the Fiscal Year ending April 30, 1999, a report containing (i) an
estimation of the oil and gas reserves, classified by appropriate categories, as
of the end of the preceding fiscal year attributable to the interest of the
Company therein, (ii) a projection of the rate of production of and net income
from such reserves with respect to each such interest, (iii) a calculation of
the present worth of such net income discounted at a rate of 10% and at any
other rates designated from time to time by a Majority of the Noteholders and
(iv) a schedule or complete description of all assumptions, estimates and
projections made or used in the preparation of such report. Each such report
shall be prepared in accordance with customary and generally accepted standards
and practices for petroleum engineers, and shall be based on (1) prices
determined by a Majority of the Noteholders, (2) lease operating expenses and
production taxes derived from and consistent with those actually incurred by the
Company, escalated at the same rate, if any, being applied to prices and (3)
such other assumptions as shall be designated by a Majority of the Noteholders.
In addition to the foregoing, a Majority of the Noteholders shall have the right
from time to time to cause the independent petroleum engineer referenced below
to prepare an additional report of the type described above, not to exceed one
additional report in any
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one calendar year, in which event all fees and expenses incurred in connection
with obtaining such additional report shall be paid by the Company. Each report
under this subsection shall be prepared by an independent petroleum engineer
designated by the Company and approved by a Majority of the Noteholders. Each
annual report referenced above shall also include an estimate of the Company's
proved oil and gas reserves (as defined in Regulation S-X promulgated by the
Securities and Exchange Commission) and a calculation of the "present value of
estimated future net revenues" from such proved oil and gas reserves, with such
present worth calculation to be made in accordance with Regulation S-X, as
promulgated by the Securities and Exchange Commission.
(e) Promptly, such other information with respect to the business and
operations of the Company and its Subsidiaries, as Buyer may reasonably request.
10.3 Notice of Material Events and Change of Address. The Company
will promptly notify Buyer in writing, stating that such notice is being given
pursuant to this Agreement, of:
(a) the occurrence of any Material Adverse Effect,
(b) the occurrence of any Default,
(c) the acceleration of the maturity of any indebtedness owed by
the Company or any Subsidiary thereof or of any default by any the Company
or any such Subsidiary under any indenture, mortgage, agreement, contract
or other instrument to which any of them is a party or by which any of them
or any of their properties is bound, if such acceleration or default could
reasonably be expected to have a Material Adverse Effect,
(d) any claim of $100,000 or more, any notice of potential
liability under any Environmental Laws which might exceed such amount, or
any other material adverse claim asserted against the Company or any
Subsidiary thereof or with respect to the Company or any of such
Subsidiary's properties, an d
(e) the filing of any suit or proceeding against the Company or
any Subsidiary thereof in which an adverse decision could cause a Material
Adverse Effect .
Upon the occurrence of any of the foregoing the Company and any Subsidiary
thereof will take all necessary or appropriate steps to remedy promptly any such
Material Adverse Effect, Default, acceleration or default, to protect against
any such adverse claim, to defend any such suit or proceeding, and to resolve
all controversies on account of any of the foregoing.
10.4 Maintenance of Properties. The Company and each of its
Subsidiaries will maintain, preserve, protect, and keep all property used or
useful in the conduct of its business in good condition and in compliance with
all Applicable Laws, and will from time to time make all repairs, renewals and
replacements needed to enable the business and operations carried on in
connection therewith to be promptly and advantageously conducted at all times.
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10.5 Maintenance of Existence and Qualifications. The Company and each
of its Subsidiaries will maintain and preserve its existence and its rights and
franchises in full force and effect and will qualify to do business in all
states or jurisdictions where required by Applicable Law, except where the
failure so to qualify will not cause a Material Adverse Effect.
10.6 Payment of Trade Liabilities, Taxes, etc. The Company and each of
its Subsidiaries will (a) timely file all required Tax Returns; (b) timely pay
all Taxes, assessments, and other governmental charges or levies imposed upon it
or upon its income, profits or property; (c) timely withhold and pay over to the
proper Governmental Entity all amounts required to be withheld and paid over
under Applicable Laws; (d) pay when due all Liabilities owed by it on ordinary
trade terms to vendors, suppliers and other Persons providing goods and services
used by it in the ordinary course of its business; (e) pay and discharge when
due all other Liabilities now or hereafter owed by it; and (f) maintain
appropriate accruals and reserves for all of the foregoing in accordance with
U.S. GAAP. The Company and each of its Subsidiaries may, however, delay paying
or discharging any of the foregoing so long as it is in good faith contesting
the validity thereof by appropriate proceedings and has set aside on its books
adequate reserves therefor.
10.7 Insurance. The Company and each of its Subsidiaries will keep or
cause to be kept insured by financially sound and reputable insurers its
properties in such forms and amounts and against such risks as are customary for
Persons engaged in the same or similar business of owning and operating similar
properties.
10.8 Compliance with Agreements and Law. The Company and each of its
Subsidiaries will perform all material obligations it is required to perform
under the terms of each indenture, mortgage, deed of trust, security agreement,
lease, franchise, agreement, contract or other instrument or obligation to which
it is a party or by which it or any of its properties is bound. The Company and
each of its Subsidiaries will conduct its business and affairs in compliance
with all Applicable Law.
10.9 Guaranties of Company's Subsidiaries. Each Subsidiary (other than
the Subsidiary Guarantors) of the Company now existing or created, acquired or
coming into existence after the date hereof shall, promptly upon request by
Buyer, execute and deliver to Buyer an absolute and unconditional guaranty of
the timely repayment of the Notes and the due and punctual performance of the
obligations of the Company hereunder, which guaranty shall be satisfactory to
Buyer in form and substance. The Company will cause each of its Subsidiaries to
deliver to Buyer, simultaneously with its delivery of such a guaranty, written
evidence satisfactory to Buyer and its counsel that such Subsidiary has taken
all corporate or partnership action necessary to duly approve and authorize its
execution, delivery and performance of such guaranty and any other documents
which it is required to execute.
ARTICLE XI
NEGATIVE COVENANTS OF THE COMPANY
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To induce Buyer to enter into this Agreement, the Company warrants,
covenants and agrees that until the full and final payment of the Obligations:
11.1 Indebtedness. Neither the Company nor any Subsidiary thereof will
in any manner owe or be liable for Indebtedness except:
(a) the Obligations;
(b) the Senior Credit Facility;
(c) Indebtedness owed by the Company or any Subsidiary thereof which is
subordinated to the Obligations upon terms and conditions satisfactory to EnCap
LP and ECIC in their sole and absolute discretion;
(d) purchase money Indebtedness and Indebtedness under leases of the
Company or such Subsidiary as lessee which are capitalized in accordance with
U.S. GAAP, in an aggregate principal amount not to exceed $100,000 at any time,
provided that such purchase money Indebtedness and Indebtedness under capital
leases do not in the aggregate exceed $250,000; and
(e) Old Latex Payables.
11.2 Limitation on Liens. Neither the Company nor any Subsidiary thereof
will create, assume or permit to exist any Lien upon any of the properties or
assets which it now owns or hereafter acquires, except the following ("Permitted
Liens"):
(a) Liens which secure Obligations only;
(b) Liens which secure the Senior Credit Facility; and
(c) Statutory Liens for taxes, statutory mechanics' and materialmen's
Liens incurred in the ordinary course of business, and other similar Liens
incurred in the ordinary course of business, provided such Liens do not secure
Indebtedness and secure only Indebtedness which is not delinquent or for which
adequate reserves have been set aside.
11.3 Limitation on Mergers. Except as expressly provided in this
Section, neither the Company nor any Subsidiary thereof will merge or
consolidate with or into any other business entity. Any Subsidiary of the
Company may, however, be merged into or consolidated with either the Company or
another Subsidiary which is wholly-owned by the Company, so long as the Company
or the Subsidiary wholly-owned by the Company is the surviving business entity.
The Company will not issue any securities other than (i) Ordinary Shares, (ii)
deferred shares having nominal value and no voting rights, (iii) the
"Convertible Shares," as defined in the Difco Agreement, or (iv) any options or
warrants giving the holders thereof only the right to acquire such shares. No
Subsidiary of the Company will issue any additional shares of its capital stock
or other securities or any options, warrants or other rights to acquire such
additional shares or other securities except to the Company or to another
Subsidiary. No Subsidiary of the Company
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which is a partnership will allow any diminution of the Company's interest
(direct or indirect) therein.
11.4 Limitation on Sales of Property. Neither the Company nor any
Subsidiary thereof will sell, transfer, lease, exchange, alienate or dispose of
any of its assets or properties except:
(a) equipment which is worthless or obsolete or which is replaced by
equipment of equal suitability and value;
(b) inventory (including oil and gas sold as produced and seismic data)
which is sold in the ordinary course of business on ordinary trade terms; or
(c) other property which is sold for fair consideration not in the
aggregate in excess of $500,000 in any Fiscal Year (commencing with Fiscal Year
1999).
11.5 Limitation on Investments and New Businesses. Neither the Company
nor any Subsidiary thereof will make any expenditure or commitment or incur any
obligation or enter into or engage in any transaction except in the ordinary
course of business (which ordinary course of business includes the acquisition,
directly or indirectly, of oil and gas properties), engage directly or
indirectly in any business or conduct any operations except in connection with
or incidental to its present businesses and operations, make any acquisitions of
or capital contributions to or other investments in any Person, other than
Permitted Investments, or make any significant acquisitions or investments in
any properties other than oil and gas properties.
11.6 Transactions with Affiliates. Neither the Company nor any of its
Subsidiaries will engage in any material transaction with any of its affiliates
on terms which are less favorable to it than those which would have been
obtainable at the time in arm's-length dealing with Persons other than such
affiliates.
11.7 Restricted Payments. The Company will not, and will not permit any
of its Subsidiaries to, declare or make, or incur any liability to declare or
make, any Restricted Payment.
11.8 Material Amendments. The Company will not, and will not permit any
of its Subsidiaries to, consent to any material amendment, supplement or other
modification to any of the terms and provisions of the Burlington Agreement or
the Difco Agreement.
ARTICLE XII
PREPAYMENT OF THE NOTE
12.1 Optional Prepayment. The Company may, upon not less than thirty
days' notice to the holders of the Notes, from time to time and without premium
or penalty prepay the Notes in cash, in whole or in part, so long as the
aggregate amount of each partial prepayment of principal on the Notes equals at
least $1,000,000 or any higher integral multiple of $1,000,000. Each
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prepayment of principal under this Section 12.1 shall be accompanied by all
interest then accrued and unpaid on the principal so prepaid. All principal and
interest prepaid pursuant to this Section 12.1 shall be in addition to, but not
in lieu of, all payments otherwise required to be paid under the Agreement or
the Ancillary Documents at the time of such prepayment.
ARTICLE XIII
EVENTS OF DEFAULT AND REMEDIES
13.1 Events of Default. Each of the following constitutes an "Event of
Default" for purposes of the Notes and this Agreement:
(a) a default in the payment of principal of any Note when and as the
same shall become due and payable;
(b) a default in the payment of any interest upon any Note when such
interest becomes due and payable;
(c) a default in the performance or observation of any covenant,
agreement or condition contained in either Article X or Article XI, which
default is not remedied within 30 days after the earlier of (i) the day on which
the Company first obtains knowledge of such default or (ii) the day on which
written notice thereof is given to the Company by the holder of any Note;
(d) any "default" or "event of default" occurs under any this Agreement
or any Ancillary Document which defines either such term, and the same is not
remedied within the applicable period of grace (if any) provided in this
Agreement or such Ancillary Document;
(e) any representation or warranty previously, presently or hereafter
made in writing by or on behalf of the Company or any Subsidiary thereof in
connection with this Agreement or any Ancillary Document shall prove to have
been false or incorrect in any material respect on any date on or as of which
made, which default is not remedied within 30 days after the earlier of (i) the
day on which the Company first obtains knowledge of such default or (ii) the day
on which written notice thereof is given to the Company by the holder of any
Note;
(f) the Company or any Subsidiary fails to duly observe, perform or
comply with any agreement with any Person or any term or condition of any loan
document relating to the Senior Credit Facility or any other agreement or
instrument, if such agreement or instrument is materially significant to the
Company or such Subsidiary, and such failure is not remedied within the
applicable period of grace (if any) provided in such agreement or instrument;
(g) the Company or any Subsidiary thereof fails to pay any portion,
when such portion is due, of any of its Indebtedness in excess of $100,000
(exclusive of the Old Latex Payables), or breaches or defaults in the
performance of any Agreement or instrument by which any such
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Indebtedness is issued, evidenced, governed, or secured, and any such failure,
breach or default continues beyond any applicable period of grace provided
therefor;
(h) the Company or any Subsidiary thereof:
(i) suffers the entry against it of a judgment, decree or order
for relief by a tribunal of competent jurisdiction in an involuntary
proceeding commenced under any applicable bankruptcy, insolvency or other
similar Applicable Law of any jurisdiction now or hereafter in effect,
including the United States federal Bankruptcy Code or similar foreign law,
as from time to time amended, or has any such proceeding commenced against
it which remains undismissed for a period of thirty days; or
(ii) commences a voluntary case under any applicable bankruptcy,
insolvency or similar Applicable Law now or hereafter in effect, including
the United States federal Bankruptcy Code or similar foreign law, as from
time to time amended; or applies for or consents to the entry of an order
for relief in an involuntary case under any such Applicable Law; or makes a
general assignment for the benefit of creditors; or fails generally to pay
(or admits in writing its inability to pay) its debts as such debts become
due; or takes corporate or other action to authorize any of the foregoing;
or
(iii) suffers the appointment of or taking possession by a
receiver, liquidator, assignee, custodian, trustee, sequestrator or similar
official of all or a substantial part of its assets in a proceeding brought
against or initiated by it, and such appointment or taking possession is
neither made ineffective nor discharged within thirty days after the making
thereof, or such appointment or taking possession is at any time consented
to, requested by, or acquiesced to by it; or
(iv) suffers the entry against it of a final judgment for the
payment of money in excess of $250,000 (not covered by insurance
satisfactory to the holders of the Notes in their discretion), unless the
same is discharged within thirty days after the date of entry thereof or an
appeal or appropriate proceeding for review thereof is taken within such
period and a stay of execution pending such appeal is obtained; or
(v) suffers a writ or warrant of attachment or any similar
process to be issued by any tribunal against all or any substantial part of
its assets, and such writ or warrant of attachment or any similar process
is not stayed or released within thirty days after the entry or levy
thereof or after any stay is vacated or set aside;
(i) Any Change in Control occurs; and
(j) Any Material Adverse Effect occurs.
Upon the occurrence of an Event of Default described in subsection (h)(i),
(h)(ii) or (h)(iii) of this section with respect to the Company or a Subsidiary
thereof, all of the Obligations shall thereupon be immediately due and payable,
without demand, presentment, notice of demand or of dishonor
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and nonpayment, protest, notice of protest, notice of intention to accelerate,
declaration or notice of acceleration, or any other notice or declaration of any
kind, all of which are hereby expressly waived by the Company and each such
Subsidiary. Upon the occurrence of an Event of Default described in subsection
(a) or subsection (b) of this section, any holder of a Note may during its
continuance, by written notice to the Company declare the Note held by it to be
due and payable, whereupon such Note shall forthwith mature and become due and
payable. Upon the occurrence of any other Event of Default, the Majority of
Noteholders may at any time during its continuance, declare all of the Notes to
be due and payable, whereupon all of the Notes shall forthwith mature and become
due and payable.
13.2 Remedies. If any Default shall occur and be continuing, the holder
of any Note may protect and enforce its rights under the this Agreement and the
Ancillary Documents by any appropriate proceedings, including proceedings for
specific performance of any covenant or agreement contained in this Agreement or
any Ancillary Document, and the holder of any Note may enforce the payment of
any Obligations due it or enforce any other legal or equitable right which it
may have. All rights, remedies and powers conferred upon the holders of the
Notes under this Agreement and the Ancillary Documents shall be deemed
cumulative and not exclusive of any other rights, remedies or powers available
under this Agreement or the Ancillary Documents or at law or in equity.
ARTICLE XIV
ADDITIONAL AGREEMENTS
14.1 Third Party Consents. The Company shall use its reasonable best
efforts to obtain all consents, approvals, orders, authorizations, and waivers
of, and to effect all declarations, filings, and registrations with, all third
parties (including Governmental Entities) that are necessary, required, or
deemed by Buyer to be desirable to enable the Company to issue the Securities to
Buyer and the Placement Fee Shares to an affiliate of Buyer as contemplated by
this Agreement and to otherwise consummate the transactions contemplated hereby.
All costs and expenses of obtaining or effecting any and all of the consents,
approvals, orders, authorizations, waivers, declarations, filings, and
registrations referred to in this Section shall be borne by the Company.
14.2 Access to Information. Between the date hereof and the Closing,
the Company (i) shall give Buyer and its authorized representatives reasonable
access, during regular business hours, to all employees, all plants, offices,
warehouses, and other facilities, and all books and records, including work
papers and other materials prepared by the Company's independent public
accountants, of the Company and the Subsidiaries, (ii) shall permit Buyer and
its authorized representatives to make such inspections as they may reasonably
require and (iii) shall cause the Company's officers and those of the
Subsidiaries to furnish Buyer and its authorized representatives with such
financial and operating data and other information with respect to the Company
and the Subsidiaries as Buyer may from time to time reasonably request;
provided, however, that the Company shall have the right to have a
representative present at all times of any such inspections, interviews and
examinations conducted at or on the offices or other facilities or properties of
the
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Company or its affiliates or representatives.
14.3 Listing of Shares. The Company shall use its reasonable best
efforts to cause the Shares and the Placement Fee Shares to be approved for
listing on each securities exchange, automated quotation system or over-the-
counter market upon which securities of the Company of the same class are listed
on the first business day following the Closing Date.
14.4 Use of Proceeds. The Company will use the Purchase Price to fund
the Acquisitions and for no other purpose, except as provided herein.
14.5 Board Representation. For up to as long as Buyer holds Ordinary
Shares of the Company that, together with any Ordinary Shares issuable upon
exercise or conversion of any other securities of the Company held by Buyer,
aggregate at least 1% of the issued and outstanding Ordinary Shares, (a) upon
request, the Company will use its reasonable best efforts to cause a designee of
Buyer to be elected as a member of the Board of Directors of the Company, (b) in
the event that any designee of Buyer elected to the Company's Board of Directors
shall cease to serve as a director for any reason, the Company will use its
reasonable best efforts to cause the vacancy resulting therefrom to be filled
with a designee of Buyer and (c) if, despite the Company's reasonable best
efforts, a designee of Buyer is not elected to the Company's Board of Directors,
the Company will use its reasonable best efforts to cause a designee of Buyer
(i) to be permitted to attend meetings of the Company's Board of Directors as a
non-voting observer, (ii) to receive information generally provided to the
Company's Board of Directors, including information with respect to various
corporate developments or transactions, and to have access to the books,
records, and properties of the Company and (iii) to meet with the executive
officers of the Company in order to provide advice and counsel with respect to
the management of the Company.
14.6 Public Announcements. Except as may be required by Applicable Law,
neither Buyer, on the one hand, nor the Company, on the other, shall issue any
press release or otherwise make any public statement with respect to this
Agreement or the transactions contemplated hereby without the prior written
consent of the other party (which consent shall not be unreasonably withheld).
Any such press release or public statement required by Applicable Law shall only
be made after reasonable notice to the other party, and in such case the party
proposing to make such a press release or public statement shall consult with
the other party.
14.7 Fees and Expenses. The Company shall bear its costs and expenses in
connection with the negotiation, preparation, execution and delivery of this
Agreement and the Ancillary Documents and the other documents and instruments
contemplated hereby and thereby, as well as the consummation of the transactions
contemplated hereby and thereby. The Company shall promptly (and in any event
within 30 days after any invoice or other statement or notice) pay the
reasonable costs and expenses incurred by or on behalf of Buyer, including
attorneys' fees, consultants' fees and engineering fees, travel costs and
miscellaneous expenses in connection with the negotiation, preparation,
execution and delivery of this Agreement and the Ancillary Documents and the
other documents and instruments contemplated hereby and thereby, as well as the
related due diligence and consummation of the transactions contemplated hereby
and thereby.
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14.8 Costs of Enforcement. If any party hereto is required to take
action to enforce its rights under this Agreement, the prevailing party shall be
entitled to its reasonable expenses, including attorneys' fees and expenses, in
connection with any such action.
14.9 Transfer Taxes. All sales, transfer, filing, recordation,
registration, stamp and similar Taxes and fees arising from or associated with
the issue and sale of the Securities and the Placement Fee Shares as
contemplated hereunder, whether levied on Buyer or the Company, shall be borne
by the Company, and the Company shall file all necessary documentation with
respect to, and make all payments of, such Taxes and fees on a timely basis.
14.10 Indemnification. The Company shall indemnify, defend and hold
harmless Buyer from and against any and all claims, actions, causes of action,
demands, assessments, losses, damages, liabilities, judgments, settlements,
penalties, costs and expenses (including reasonable attorneys' fees and
expenses), of any nature whatsoever, asserted against, resulting to, imposed
upon, or incurred by Buyer, directly or indirectly, by reason of or resulting
from any breach by the Company of any of its representations, warranties,
covenants or agreements contained in this Agreement or in any certificate,
instrument or document delivered pursuant hereto.
ARTICLE XV
MISCELLANEOUS
15.1 Notices.
(a) All notices, requests, demands, and other communications required
or permitted to be given or made hereunder by any party hereto shall be in
writing and shall be deemed to have been duly given or made if (i) delivered
personally, (ii) transmitted by first class registered or certified mail,
postage prepaid, return receipt requested, (iii) sent by prepaid overnight
courier service, or (iv) sent by telecopy or facsimile transmission, answer back
requested, to the parties at the following addresses (or at such other addresses
as shall be specified by the parties by like notice):
If to EnCap LP or ECIC:
Energy Capital Investment Company PLC
EnCap Equity 1996 Limited Partnership
c/o EnCap Investments L.C.
1100 Louisiana, Suite 3150
Houston, Texas 77002
Attention: Robert L. Zorich
Fax No.: 713-659-6130
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with a copy to:
Thompson & Knight, P.C.
1700 Chase Tower
600 Travis
Houston, TX 77002
Attention: Michael Pierce
Telefax: 713/217-2828
If to the Company or any Subsidiary:
Alliance Resources PLC
4200 East Skelly Drive, Suite 1000
Tulsa, Oklahoma 74135
Attention: John A. Keenan
Telefax: 918-494-4918
with a copy to:
Jenkens & Gilchrist, a Professional Corporation
1445 Ross Avenue, Suite 3200
Dallas, Texas 75202
Attention: W. Alan Kailer
Telefax: 214-855-4300
Such notices, requests, demands, and other communications shall be effective (i)
if delivered personally or sent by courier service, upon actual receipt by the
intended recipient, (ii) if mailed, upon the earlier of five days after deposit
in the mail or the date of delivery as shown by the return receipt therefor or
(iii) if sent by telecopy or facsimile transmission, when the answer back is
received.
(b) The Company covenants and agrees that it will give all notices
required or permitted to be given by the Company to EnCap LP or ECIC as a member
or shareholder of the Company in accordance with this Section 15.1 and that to
the extent that this Section 15.1 conflicts with the Organic Documents of the
Company, this Section 15.1 shall control.
15.2 Waiver and Amendment. No failure or delay (whether by course of
conduct or otherwise) by any party hereto in exercising any right, power or
remedy which such holder may have under the Agreement or any of the Ancillary
Documents shall operate as a waiver thereof or of any other right, power or
remedy, nor shall any single or partial exercise thereof preclude any other or
further exercise thereof or of any other right, power or remedy. No waiver of
any provision of this Agreement or any Ancillary Document and no consent to any
departure therefrom shall ever be effective unless it is in writing and signed
as provided below in this section, and then such waiver or consent shall be
effective only in the specific instances and for the purposes for which given
and to the extent specified in such writing. No waiver, consent, release,
modification or amendment of or supplement to this Agreement or any of the
Ancillary Documents shall be valid or effective against
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any party hereto unless the same is in writing and signed by such party.
15.3 Survival. The representations and warranties of the parties
hereto contained in this Agreement or in any certificate, instrument or document
delivered pursuant hereto shall survive the Closing, regardless of any
investigation made by or on behalf of any party without contractual limitation.
Except as otherwise provided herein or therein, all agreements and/or covenants
of the Company contained in this Agreement or in any of the Ancillary Documents
shall survive the execution and delivery of this Agreement and the Ancillary
Documents and the performance hereof and thereof, and shall further survive
until all of the Obligations are paid in full and all of Buyer's obligations to
the Company are terminated.
15.4 Entire Agreement. This Agreement, together with the Schedules
and other writings referred to herein or delivered pursuant hereto, constitute
the entire agreement between the parties hereto with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, between the parties with respect to the subject matter hereof.
15.5 Binding Effect; Assignment; No Third Party Benefit. This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns; provided, however, that prior to
Closing, neither party may assign its rights or delegate any of its duties and
obligations under this Agreement or the Ancillary Documents without the prior
written consent of the other; provided, further, that after the Closing, the
Company may not assign its rights or delegate any of its duties and obligations
under this Agreement and the Ancillary Documents without the prior written
consent of the holders of the Notes. Except as expressly provided herein,
nothing in this Agreement, express or implied, is intended to or shall confer
upon any Person other than the parties hereto, and their respective successors
and permitted assigns, any rights, benefits, or remedies of any nature
whatsoever under or by reason of this Agreement.
15.6 Severability. If any provision of this Agreement is held to be
unenforceable, this Agreement shall be considered divisible and such provision
shall be deemed inoperative to the extent it is deemed unenforceable, and in all
other respects this Agreement shall remain in full force and effect; provided,
however, that if any such provision may be made enforceable by limitation
thereof, then such provision shall be deemed to be so limited and shall be
enforceable to the maximum extent permitted by Applicable Law.
15.7 GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE LAWS OF ENGLAND AND WALES, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
15.8 Remedies Not Exclusive. The rights and remedies herein provided
shall be cumulative and not exclusive of any rights or remedies provided by law.
The rights and remedies of any party based upon, arising out of, or otherwise in
respect of any inaccuracy in or breach of any representation, warranty,
covenant, or agreement contained in this Agreement shall in no way be limited by
the fact that the act, omission, occurrence, or other state of facts upon which
any claim of any such inaccuracy or breach is based may also be the subject
matter of any other representation,
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warranty, covenant, or agreement contained in this Agreement (or in any other
agreement between the parties) as to which
there is no inaccuracy or breach.
15.9 Further Assurances. From time to time following the Closing, at
the request of any party hereto and without further consideration, the other
party or parties hereto shall execute and deliver to such requesting party such
instruments and documents and take such other action (but without incurring any
material financial obligation) as such requesting party may reasonably request
in order to consummate more fully and effectively the transactions contemplated
hereby.
15.10 Counterparts. This Agreement may be executed by the parties
hereto in any number of counterparts, each of which shall be deemed an original,
but all of which shall constitute one and the same agreement. Each counterpart
may consist of a number of copies hereof each signed by less than all, but
together signed by all, the parties hereto.
15.11 Injunctive Relief. The parties hereto acknowledge and agree that
irreparable damage would occur in the event any of the provisions of this
Agreement were not performed in accordance with their specific terms or were
otherwise breached. It is accordingly agreed that the parties shall be entitled
to an injunction or injunctions to prevent breaches of the provisions of this
Agreement, and shall be entitled to enforce specifically the provisions of this
Agreement, in any court of the United States or any state thereof having
jurisdiction, in addition to any other remedy to which the parties may be
entitled under this Agreement or at law or in equity.
15.12 Consent to Jurisdiction. The parties hereto hereby irrevocably
submit to the jurisdiction of the courts of the State of Texas and the federal
courts of the United States of America located in Harris County, Texas, and
appropriate appellate courts therefrom, over any dispute arising out of or
relating to this Agreement or any of the transactions contemplated hereby, and
each party hereby irrevocably agrees that all claims in respect of such dispute
or proceeding shall be heard and determined in such courts. The parties hereby
irrevocably waive, to the fullest extent permitted by Applicable Law, any
objection which they may now or hereafter have to the laying of venue of any
dispute arising out of or relating to this Agreement or any of the transactions
contemplated hereby brought in such court or any defense of inconvenient forum
for the maintenance of such dispute. Each of the parties hereto agrees that a
judgment in any such dispute may be enforced in other jurisdictions by suit on
the judgment or in any other manner provided by law. This consent to
jurisdiction is being given solely for purposes of this Agreement and is not
intended to, and shall not, confer consent to jurisdiction with respect to any
other dispute in which a party to this Agreement may become involved.
15.13 Payments. All payments to be made hereunder shall be in lawful
money of the United States of America.
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IN WITNESS WHEREOF, the parties have executed this Agreement, or caused
this Agreement to be executed by their duly authorized representatives, all as
of the day and year first above written.
ENCAP EQUITY 1996 LIMITED PARTNERSHIP
By: ENCAP INVESTMENTS L.C., General Partner
By:
---------------------------------------
Name:
-------------------------------
Title: Managing Director
ENERGY CAPITAL INVESTMENT COMPANY PLC
By:
---------------------------------------
Name: Gary R. Petersen
Title: Director
ALLIANCE RESOURCES PLC
By:
---------------------------------------
Name:
-------------------------------
Title:
-------------------------------
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EXHIBIT 10.2
ALLIANCE RESOURCES PLC
REGISTRATION RIGHTS AGREEMENT
This REGISTRATION RIGHTS AGREEMENT dated as of October 30, 1998 (this
"AGREEMENT") by and between ALLIANCE RESOURCES PLC, a public limited company
organized under the laws of England and Wales (the "COMPANY"), ENCAP EQUITY 1996
LIMITED PARTNERSHIP, a Texas limited partnership ("ENCAP LP"), ENERGY CAPITAL
INVESTMENT COMPANY PLC, an English investment company ("ECIC"), and ENCAP
INVESTMENTS L.C., a Texas limited liability company ("ENCAP LC") (with EnCap LP,
ECIC and EnCap LC being herein collectively called the "NEW SHAREHOLDERS");
RECITALS:
A. The Company and the New Shareholders are parties to that certain
Purchase Agreement dated as of October 27, 1998 (the "PURCHASE AGREEMENT").
B. The ability of the New Shareholders to freely trade the ordinary
shares, 1p per share, of the Company (the "Ordinary Shares") received by the New
Shareholders pursuant to the Purchase Agreement may be limited by applicable
federal securities laws.
C. In order to improve the transferability of the Ordinary Shares to be
received by the Stockholder pursuant to the Purchase Agreement, the New
Shareholders have requested the Company to provide to the New Shareholders
limited registration rights with respect to the Ordinary Shares to be received
by the New Shareholders pursuant to the Purchase Agreement, and the Company has
agreed to provide such rights on the terms and subject to the conditions herein.
D. The execution and delivery of this Agreement by the Company is a
condition to the obligation of the New Shareholders to consummate the
transactions contemplated by the Purchase Agreement.
AGREEMENT:
NOW, THEREFORE, in consideration of the premises and the mutual agreements
herein set forth and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto, intending to
be legally bound, hereby agree as follows:
ARTICLE I
REGISTRATION RIGHTS
The Company and the New Shareholders covenant and agree as follows:
<PAGE>
SECTION 1. DEFINITIONS AND REFERENCES.
(a) When used in this Agreement, the following terms shall have the
respective meanings assigned to them in this Section 1 or in the sections,
subsections or other subdivisions referred to below:
"AGREEMENT" shall mean this Agreement, as hereafter changed, modified or
amended in accordance with the terms hereof.
"COMMISSION" shall mean the Securities and Exchange Commission (or any
successor body thereto).
"COMPANY" shall have the meaning assigned to it in the introductory
paragraph hereof.
"CLOSING DATE" shall have the meaning assigned to in the Purchase
Agreement.
"DEMAND REGISTRATION" shall have the meaning assigned to it in Section
2(a).
"DIFCO AGREEMENT" shall mean that certain Registration Rights Agreement
dated as of October 30, 1998, among the Company and F. Fox Benton and certain
members of his family.
"DIFCO HOLDERS" shall mean those persons identified as Selling Shareholders
in the Difco Agreement.
"ECIC" shall have the meaning assigned to it in the introductory paragraph
hereof.
"ENCAP LP" shall have the meaning assigned to it in the introductory
paragraph hereof.
"ENCAP LC" shall have the meaning assigned to it in the introductory
paragraph hereof.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934, as amended,
and all rules and regulations promulgated under such Act.
"HOLDER" shall mean any Person that holds Registrable Securities.
"HOLDER INDEMNIFIED PARTIES" shall have the meaning assigned to it in
Section 9(a).
"LASALLE AGREEMENT" shall mean that certain Registration Rights Agreement
dated as of October 30, 1998, among the Company and LaSalle.
"LASALLE" shall mean LaSalle Street Natural Resources Corporation, as a
party to the LaSalle Agreement.
"NEW SHAREHOLDERS" shall have the meaning assigned to it in the
introductory paragraph hereof.
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"ORDINARY SHARES" shall have the meaning assigned to in Paragraph B of the
Recitals hereto.
"PERSON" shall mean any individual, corporation, partnership, joint
venture, limited partnership, limited liability company, trust, unincorporated
organization or government or any agency or political subdivision thereof.
"PIGGYBACK REGISTRATION" shall have the meaning assigned to it in Section
3.
"PURCHASE AGREEMENT" shall have the meaning assigned to in Paragraph A of
the Recitals hereto.
"REGISTRABLE SECURITIES" shall mean (i) the Ordinary Shares received by the
New Shareholders pursuant to the Purchase Agreement and (ii) any securities
issued or issuable with respect to the shares described in clause (i) above by
way of a stock dividend or stock split or in connection with a combination of
shares, recapitalization, merger, consolidation or other reorganization.
"REGISTRATION EXPENSES" shall mean all expenses incident to the Company's
performance of or compliance with the registration rights granted hereunder,
including (without limitation) all registration and filing fees, fees and
expenses of compliance with securities and blue sky laws, printing and engraving
expenses, messenger, telephone and delivery expenses, and fees and disbursements
of counsel for the Company, all independent certified public accountants and
underwriters (excluding discounts and commissions) and the reasonable fees and
expenses of one counsel to such New Shareholders as a group; provided, that
Registration Expenses shall not include any Selling Expenses.
"SECURITIES ACT" shall mean the Securities Act of 1933, as amended, and all
rules and regulations under such Act.
"SELLING EXPENSES" shall mean underwriting discounts or commissions, any
selling commissions and stock transfer taxes attributable to sales of
Registrable Securities.
(b) All references in this Agreement to sections, subsections and other
subdivisions refer to corresponding sections, subsections and other subdivisions
of this Agreement unless expressly provided otherwise. Titles appearing at the
beginning of any of such subdivisions are for convenience only and shall not
constitute part of such subdivisions and shall be disregarded in construing the
language contained herein. The words "this Agreement", "this instrument",
"herein", "hereof", "hereby", "hereunder" and words of similar import refer to
this Agreement as a whole and not to any particular subdivision unless expressly
so limited. Words in the singular form shall be construed to include the plural
and vice versa, unless the context otherwise requires. Pronouns in masculine,
feminine and neuter genders shall be construed to include any other gender.
SECTION 2. DEMAND REGISTRATION RIGHTS.
(a) At any time after the Closing Date, a Holder may request a
registration by the Company under the Securities Act of all or a part its
Registrable Securities (a "DEMAND REGISTRATION").
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(b) Notwithstanding subsection (a) above or anything else herein to the
contrary, the Company shall not be obligated to effect more than two
registrations pursuant to this Section 2; provided, however, that any
registration requested pursuant to this Section 2 will not be deemed to have
been effected (i) unless it has become effective and remained effective for the
lesser of either the period necessary to complete the sale or disposition of the
Registrable Securities covered by such registration statement or one year, (ii)
if, after it has become effective, such registration is terminated by a stop
order, injunction or other order of the Commission or other governmental agency
or court or (iii) is withdrawn at the request of the Holders after the
registration statement has been filed with the Commission.
(c) Notwithstanding subsection (a) above or anything else herein to the
contrary, it is hereby agreed that a Demand Registration must cover no less than
50% of the Registrable Securities held by the Holders then outstanding. In the
event a Demand Registration is requested pursuant to this Section 2, the Company
will (i) promptly give notice of the proposed registration to any other New
Shareholder not making the request, if any, and (ii) use its reasonable best
efforts to effect the registration of the Registrable Securities specified in
the request, together with the Registrable Securities of any other New
Shareholder joining in such request as are specified in a written request
received by the Company within 20 days after receipt of the notice referred to
in clause (i) above.
(d) A registration statement filed under this Section 2 pursuant to the
request of Holders of Registrable Securities may include other securities of the
Company, with respect to which "piggyback" registration rights have been
granted, and may include securities of the Company being sold for the account of
the Company; provided, however, that if the Company shall request inclusion in
any registration pursuant to this Section 2 of the securities being sold for its
own account, or if other persons shall request inclusion in any registration
pursuant to this Section 2, the New Shareholders shall offer to include such
securities in the offering and may condition such offer on their acceptance of
any other reasonable conditions (including, without limitation, if such offering
is underwritten, that such requesting holders agree in writing to enter into an
underwriting agreement with usual and customary terms). Notwithstanding any
other provisions of this Section 2, if the representative of the underwriters
advises the Holders of Registrable Securities in writing that marketing factors
require a limitation on the number of shares to be underwritten, the number of
shares to be included in the underwriting or registration shall be allocated
first to the Holders of Registrable Securities, the Difco Holders and LaSalle
(pro rata, based on the number of Registrable Securities requested by each such
holder to be included therein), second to the Company and thereafter to any
other holders requesting inclusion in the registration on the basis of the
number of shares each other requesting holder requests be included bears to the
total number of shares of all other requesting holders that have been requested
be included in such registration. If a person who has requested inclusion in
such registration as provided above does not agree to the terms of any such
underwriting, such person shall be excluded therefrom by written notice from the
Company, the underwriter, or the Holders of Registrable Securities. The
securities so excluded shall also be withdrawn from registration.
SECTION 3. PIGGYBACK REGISTRATION RIGHTS.
(A) If the Company proposes to register any of its securities under the
Securities Act other than (i) under employee compensation or benefit programs,
(ii) pursuant to an exchange offer or an offering of securities solely to the
existing stockholders or employees of the Company, or (iii)
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securities to be issued in connection with an acquisition or a transaction
described in Rule 145(a) promulgated under the Securities Act, and the
registration form to be used may be used for the registration of Registrable
Securities, the Company will give prompt written notice (which, in any event,
shall be given no less than 15 days prior to the filing of a registration
statement with respect to such offering) to Holders of Registrable Securities of
its intention to effect such a registration and, upon the written request of a
Holder of Registrable Securities sent within 15 days after the effective date of
any such notice, the Company will use its best efforts to cause all Registrable
Securities as to which any Holder shall have so requested registration to be
registered under the Securities Act, all to the extent necessary to permit the
sale in such offering of the Registrable Securities so registered on behalf of
such Holder in the same manner as the Company (or stockholder other than such
Holder, as the case may be) proposes to offer its securities (a "PIGGYBACK
REGISTRATION"). The Company shall use its best efforts to cause the managing
underwriter or underwriters of a proposed underwritten offering to permit the
Registrable Securities requested by a Holder to be included in the registration
for such offering on the same terms and conditions as any similar securities of
the Company included therein; provided, however, that (A) if, at any time after
giving written notice of its intention to register any of its securities and
before the effective date of the registration statement filed in connection with
the registration, the Company determines for any reason not to register its
securities, the Company may, at its election, give written notice of its
determination to the Holders of Registrable Securities and, thereupon, shall be
relieved of its obligation to register any Registrable Securities in connection
with that registration, without prejudice, however, to the future rights of the
Holders of Registrable Securities under this Section, (B) if the Company
determines in its discretion to delay the registration of its securities, the
Company shall be permitted to delay the registration of any Registrable
Securities for the same period as the delay in registering any other securities,
and (C) the Company is not required to effect any registration for a requesting
Holder of Registrable Securities pursuant to this Section 3 unless it receives
reasonable assurances that the requesting Holder of Registrable Securities will
pay any expenses required to be paid by it as provided in Section 5.
(b) If a Piggyback Registration is an underwritten registration and the
managing underwriter(s) for the offering advises the Company in writing that in
its opinion the number of shares of Registrable Securities requested or proposed
to be included in the registration exceeds the number that can be sold in the
offering without materially affecting the offering price of the securities
proposed to be included in the offering, then the number of securities to be
offered for the account of any participating Holder(s) shall be reduced pro rata
based upon the number of securities proposed to be sold by the Company, such
Holder(s) and other Persons to the extent necessary to reduce the total number
of securities to be included in such offering to the number of shares
recommended by such managing underwriter; provided, however, that if securities
of the Company are being offered for the account of other Persons as well as the
Company, such reduction shall first be made from the securities intended to be
offered by such Persons other than the participating Holder(s), the Difco
Holders and LaSalle.
(c) If any Piggyback Registration is an underwritten offering, the Company
will have the sole right to select the managing underwriter(s) thereof.
(d) The rights of the Holders with respect to Piggyback Registrations shall
be pari passu wit the piggyback registration rights of the Difco Holders and
LaSalle.
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<PAGE>
SECTION 4. REGISTRATION PROCEDURES.
(a) Whenever the Holders of Registrable Securities have requested that any
Registrable Securities be registered pursuant to Section 2 or Section 3, the
Company will as expeditiously as possible:
(i) prepare and file with the Commission a registration statement on
the appropriate form with respect to such Registrable Securities, and use
its reasonable best efforts to cause such registration statement to become
effective as soon as reasonably practicable after the filing thereof;
provided, however, that the Company may discontinue any registration of
securities that is being effected pursuant to Section 3 at any time prior
to the effective date of the registration statement relating thereto, and
provided further, that before filing a registration statement or prospectus
or any amendments or supplements thereto, including documents incorporated
by reference after the initial filing of any registration statement, as
soon as practicable, the Company will furnish to any Holder covered by such
Registration Statement copies of all such documents proposed to be filed,
which documents will be subject to the review of such Holder;
(ii) prepare and file with the Commission such amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement effective for a period of not less than the period set forth in
such section or such shorter period which will terminate when Registrable
Securities covered by such registration statement have been sold (but not
before the expiration of the applicable prospectus delivery period) and
comply with the provisions of the Securities Act with respect to the
disposition of all securities covered by such registration statement during
such period in accordance with the intended methods of disposition by the
sellers thereof set forth in such registration statement;
(iii) notify each seller of Registrable Securities requesting
registration, promptly after the Company shall receive notice thereof, of
the time when such registration statement has been filed;
(iv) furnish without charge to each seller of Registrable Securities
such number of copies of such registration statement, each amendment and
supplement thereto, including financial statements and schedules, all
documents incorporated therein by reference and all exhibits (including
those incorporated by reference); the prospectus included in such
registration statement (including, without limitation, each preliminary
prospectus); and such other documents as such seller may reasonably request
in order to facilitate the disposition of the Registrable Securities owned
by such seller;
(v) use its reasonable best efforts to register or qualify such
Registrable Securities under such other securities or blue sky laws of such
jurisdictions within the United States as any seller reasonably requests;
keep each such registration or qualification effective during the period
such registration statement is required to be kept effective; and do any
and all other acts and things which may be reasonably necessary or
advisable to enable such seller to consummate the disposition in such
jurisdictions of the Registrable Securities owned by such
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<PAGE>
seller (provided that the Company will not for any such purpose be required
to (1) qualify generally to do business as a foreign corporation in any
jurisdiction where it would not otherwise be required to qualify but for
the requirements of this subsection; (2) subject itself to taxation in any
such jurisdiction; (3) consent to general service of process in any such
jurisdiction; or (4) register or qualify Registrable Securities or take any
other action under the state securities or "Blue Sky" laws of any
jurisdiction if, in the reasonable good faith judgment of the Board of
Directors of the Company, the consequences of the registration,
qualification or other action would be unduly burdensome to the Company);
(vi) notify each seller of such Registrable Securities, at any time
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the happening of any event which requires the making of
any change in the prospectus included in such registration statement so
that such document will not contain an untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein not misleading, and, at the
request of any such seller, the Company will prepare a supplement or
amendment to such prospectus so that such prospectus will not contain an
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements therein
not misleading;
(vii) use its reasonable best efforts to cause all such Registrable
Securities to be listed on each securities exchange or exchanges, automated
quotation system or over-the-counter market upon which securities of the
Company of the same class are then listed;
(viii) enter into such customary agreements (including, without
limitation, underwriting agreements in customary form, substance and scope)
and take all such other action as the Holders of a majority of the
Registrable Securities being sold or the underwriters, if any, reasonably
request in order to expedite or facilitate the disposition of such
Registrable Securities;
(ix) otherwise use its reasonable best efforts to comply with all
applicable rules and regulations of the Commission;
(x) in the event of the issuance of any stop order suspending the
effectiveness of a registration statement, or of any order suspending or
preventing the use of any related prospectus or suspending the
qualification of any securities included in such registration statement for
sale in any jurisdiction, the Company will use its reasonable best efforts
promptly to obtain the withdrawal of such order;
(x) use its reasonable best efforts to cause such Registrable
Securities covered by such registration statement to be registered with or
approved by such other foreign and domestic governmental agencies or
authorities as may be necessary to enable the sellers thereof to consummate
the disposition of such Registrable Securities;
(xi) use its reasonable best efforts to obtain a comfort letter from
the Company's public accountants in customary form and covering such
matters of the type customarily
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<PAGE>
covered by comfort letters with respect to offerings of the type being made
pursuant to the registration statement as the Holders of the Registrable
Securities reasonably request; and
(xii) cooperate with each seller of such Registrable Securities to
facilitate the timely preparation and delivery of certificates representing
Registrable Securities to be sold and not bearing any restrictive legends.
(b) Whenever the Holders of Registrable Securities have requested that any
Registrable Securities be registered pursuant to Section 2 or Section 3, each
Holder of Registrable Securities (including Registrable Securities in any
registration statement filed pursuant to this Agreement) will be deemed to have
agreed as follows:
(i) upon receipt of any notice from the Company of the happening of
any event of the kind described in Section 4(a)(vi), the Holders of
Registrable Securities covered by such registration statement will
forthwith discontinue disposition of any such Registrable Securities until
the Holders of Registrable Securities receive copies of the supplemented or
amended prospectus contemplated by Section 4(a)(vi), or until they are
advised in writing by the Company that the use of the applicable prospectus
may be resumed, and they have received copies of any additional or
supplemental filings that are incorporated or deemed to be incorporated by
reference in such prospectus (it being the agreement of the parties hereto,
however, that the obligation of the Company with respect to maintaining the
subject registration statement current and effective shall be extended by a
period of days equal to the period the Holders of Registrable Securities
are required by this Section 4(b)(i) to discontinue disposition of such
Registrable Securities); and
(ii) furnish to the Company such information regarding each Holder,
the Registrable Securities held by such Holder, the intended method of
disposition thereof and such other information as the Company shall
reasonably request and as shall be reasonably required in connection with
the preparation of the applicable registration statement and other actions
taken by the Company under this Agreement.
(c) The Company may postpone the filing of any registration statement
required under Section 2 for a reasonable period of time, if (i) the Company has
been advised by legal counsel reasonably acceptable to the Holders of a majority
of the Registrable Securities that such filing would require the disclosure of a
material fact, and the Company determines reasonably and in good faith that such
disclosure would have a material adverse effect on the Company or (ii) (A) in
the good faith judgment of the Board of Directors of the Company, a required
registration under Section 2 would be seriously detrimental to the Company and
the Board of Directors of the Company concludes, as a result, that it is
essential to defer the filing of such registration statement at such time, and
(B) the Company shall furnish to the Holders of Registrable Securities a
certificate signed by the President of the Company stating that in the good
faith judgment of the Board of Directors of the Company, it would be seriously
detrimental to the Company for such registration statement to be filed in the
near future and that it is, therefore, essential to defer the filing of such
registration statement; provided, however, that under no circumstances shall one
or more delays pursuant to this Section 4(c) extend beyond the earlier to occur
of (x) the expiration of a period of ninety (90) days after receipt of the
request of a Holder of Registrable Securities and (y) that point in time at
which the
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conditions described above no longer exist; and, provided further, that the
Company shall not defer its obligation pursuant to this Section 4(c) more than
once in any twelve-month period.
SECTION 5. EXPENSES OF REGISTRATION. The Company shall pay all
Registration Expenses in connection with each registration effected pursuant to
Sections 2 and 3 and, in any event, shall pay its internal expenses (including,
without limitation, all salaries and expenses of its officers and employees
performing legal and accounting duties), the expense of any annual audit and the
fees and expenses incurred in connection with the listing of the securities to
be registered on each securities exchange or market on which similar securities
issued by the Company are then listed. All Selling Expenses incurred in
connection with a registration effected pursuant to the terms hereof shall be
borne by the seller or sellers of Registrable Securities.
SECTION 6. INDEMNIFICATION.
(a) The Company shall indemnify and hold harmless, with respect to any
registration statement filed by it, to the fullest extent permitted by law, each
Holder of Registrable Securities covered by such registration statement, and
each other Person, if any, who controls such Holder within the meaning of
Section 15 of the Securities Act (collectively, "HOLDER INDEMNIFIED PARTIES")
against all losses, claims, damages, liabilities and expenses, joint or several
to which any such Holder Indemnified Party may become subject under the
Securities Act, the Exchange Act, at common law or otherwise, insofar as such
losses, claims, damages, liabilities or expenses (or actions or proceedings,
whether commenced or threatened, in respect thereof) arise out of or are based
upon (i) any untrue statement or alleged untrue statement of a material fact
contained in any registration statement in which such Registrable Securities
were included as contemplated hereby, or any post-effective amendment thereof,
or any omission or alleged omission to state therein a material fact required to
be stated therein or necessary to make the statements therein not misleading,
(ii) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary, final or summary prospectus, together with the
documents incorporated by reference therein (as amended or supplemented if the
Company shall have filed with the Commission any amendment thereof or supplement
thereto), or any omission or alleged omission to state therein a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or (iii) any violation by the Company of any federal, state or
common law rule or regulation applicable to the Company and relating to action
of or inaction by the Company in connection with any such registration; and in
each such case, the Company shall reimburse each such Holder Indemnified Party
for any reasonable legal or other expenses incurred by any of them in connection
with investigating or defending any such loss, claim, damage, liability,
expense, action or proceeding; provided, however, that the Company shall not be
liable to any such Holder Indemnified Party in any such case to the extent that
any such loss, claim, damage, liability or expense (or action or proceeding,
whether commenced or threatened, in respect thereof) arises out
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of or is based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in such registration statement or amendment thereof or
supplement thereto or in any such preliminary, final or summary prospectus in
reliance upon and in conformity with written information furnished to the
Company by or on behalf of any such Holder Indemnified Party for use in the
preparation thereof; provided further that the Company shall not be liable to
any such Holder Indemnified Party in any such case to the extent that any such
loss, claim, damage, liability or expense (or action or proceeding, whether
commenced or threatened, in respect thereof) arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in any preliminary prospectus if (A) such holder failed to send or deliver
a copy of the prospectus with or prior to the delivery of written confirmation
of the sale of Registrable Securities and (B) the prospectus would have
completely corrected such untrue statement or omission; provided further that
the Company shall not be liable in any such case to the extent that any such
loss, claim, damage, liability or expense arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission in
the prospectus, if such untrue statement or alleged untrue statement, omission
or alleged omission is completely corrected in an amendment or supplement to the
prospectus and if, having previously been furnished by or on behalf of the
Company with copies of the prospectus as so amended or supplemented, such holder
thereafter fails to deliver such prospectus as so amended or supplemented, prior
to or concurrently with the sale of a Registrable Security to the person
asserting such loss, claim, damage, liability or expense who purchased such
Registrable Security which is the subject thereof from such holder. Such
indemnity and reimbursement of expenses and other obligations shall remain in
full force and effect regardless of any investigation made by or on behalf of
the Holder Indemnified Parties and shall survive the transfer of such securities
by such Holder Indemnified Parties.
(b) Each Holder of Registrable Securities participating in any registration
hereunder shall severally (and not jointly or jointly and severally) indemnify
and hold harmless, to the fullest extent permitted by law, the Company, its
directors, each of its officers who has signed the registration statement and
each Person who controls the Company (within the meaning of Section 15 of the
Securities Act) (collectively, "COMPANY INDEMNIFIED PARTIES") against all
losses, claims, damages, liabilities and expenses to which any Company
Indemnified Party may become subject under the Securities Act, the Exchange Act,
at common law or otherwise, and will reimburse each such Company Indemnified
Party for any reasonable legal or other expenses incurred by any of them in
connection with investigating or defending any such loss, claim, damage,
liability, expense, action or proceeding, but only insofar as such losses,
claims, damages, liabilities or expenses (or actions or proceedings, whether
commenced or threatened, in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact contained in
any registration statement in which such Holder's Registrable Securities were
included or the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, (ii) any untrue statement or alleged untrue statement of a material
fact contained in any preliminary, final or summary prospectus, together with
the documents incorporated by reference therein (as amended or supplemented if
the Company shall have filed with the Commission any amendment thereof or
supplement thereto), or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, in each case to the extent (and only to the extent) that
such untrue statement or omission or alleged untrue statement or omission was
made in reliance upon and in conformity with information furnished in writing by
or on behalf of such Holder specifically for use in connection with such
registration, (iii) any violation by the Holder of any federal, state or common
law, rule or regulation applicable to the Holder and relating to action of or
inaction by the Holder in connection with any registration statement and (iv)
with respect to any preliminary prospectus, the fact that the Holder sold
Registrable Securities to a person to whom there was not sent or given, at or
prior to the written confirmation of the sale, a copy of the prospectus
(excluding documents incorporated by
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reference) or of the prospectus as then amended or supplemented (excluding
documents incorporated by reference) if (a) the Company has previously furnished
copies thereof to the Holder in compliance with Section 4 and (b) the loss,
claim, damage, liability or expense of the Company Indemnified Party results
from an untrue statement or omission of a material fact contained in the
preliminary prospectus which was corrected in the prospectus (or the prospectus
as amended or supplemented). Such indemnity obligation shall remain in full
force and effect regardless of any investigation made by or on behalf of the
Company Indemnified Parties (except as provided above) and shall survive the
transfer of such securities by such Holder.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) of written notice of the commencement of any action, suit, proceeding,
investigation or threat thereof made in writing with respect to which a claim
for indemnification may be made pursuant to this Section 6, such indemnified
party shall, if a claim in respect thereof is to be made against an indemnifying
party, give prompt written notice to the indemnifying party of the threat or
commencement thereof; provided, however, that the failure to so promptly notify
the indemnifying party shall not relieve it from any liability which it may have
to any indemnified party except to the extent that the indemnifying party is
actually prejudiced by such failure to give prompt notice. If any such claim or
action referred to under subsection (a) or (b) is brought against any
indemnified party and it then notifies the indemnifying party of the threat or
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it wishes, jointly with any other indemnifying
party similarly notified, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party. After notice from the indemnifying
party to such indemnified party of its election so to assume the defense of any
such claim or action, the indemnifying party shall not be liable to such
indemnified party under this Section 6 for any legal expenses of counsel or any
other expenses subsequently incurred by such indemnified party in connection
with the defense thereof other than reasonable costs of investigation unless the
indemnifying party has failed to assume the defense of such claim or action or
to employ counsel reasonably satisfactory to such indemnified party. Under no
circumstances will the indemnifying party be obligated to pay the fees and
expenses of more than one law firm for all indemnified parties. The
indemnifying party shall not be required to indemnify the indemnified party with
respect to any amounts paid in settlement of any action, proceeding or
investigation entered into without the written consent of the indemnifying
party, which consent shall not be unreasonably withheld. No indemnifying party
shall consent to the entry of any judgment or enter into any settlement without
the consent of the indemnified party unless (i) such judgment or settlement does
not impose any obligation or liability upon the indemnified party other than the
execution, delivery or approval thereof, and (ii) such judgment or settlement
includes as an unconditional term thereof the giving by the claimant or
plaintiff to such indemnified party of a full release and discharge from all
liability in respect of such claim.
(d) Indemnification similar to that specified in the preceding subsections
of this Section 6 (with appropriate modifications) shall be given by the Company
and each seller of Registrable Securities with respect to any required
registration or qualification of securities under any state securities or blue
sky laws.
(e) If the indemnification provided for in this Section 6 is unavailable to
or insufficient to hold harmless an indemnified party under subsection (a) or
(b), then each indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of the losses, claims, damages,
liabilities or expenses (or actions or proceedings in respect thereof) referred
to in subsection
-11-
<PAGE>
(a) or (b) in such proportion as is appropriate to reflect the relative fault of
the indemnifying party on the one hand and the indemnified party on the other in
connection with the statements, omissions, actions or inactions which resulted
in such losses, claims, damages, liabilities or expenses as well as any other
relevant equitable considerations. The relative fault of the indemnifying party
and the indemnified party shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or the indemnified party, any action or
inaction by any such party, and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement, omission,
action or inaction. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses (or actions or
proceedings in respect thereof) pursuant to this subsection (e) shall be deemed
to include, without limitation, any reasonable legal or other expenses incurred
by such indemnified party in connection with investigating or defending any such
action or claim (which shall be limited as provided in subsection (c) if the
indemnifying party has assumed the defense of any such action in accordance with
the provisions thereof) which is the subject of this subsection (e). No person
guilty of fraudulent misrepresentation (within the meaning of Section 11(f) of
the Securities Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentation. Promptly after receipt by an
indemnified party under this subsection (e) of written notice of the
commencement of any action, suit, proceeding, investigation or threat thereof
made in writing with respect to which a claim for contribution may be made
against an indemnifying party under this subsection (e), such indemnified party
shall, if a claim for contribution in respect thereof is to be made against an
indemnifying party, give prompt written notice to the indemnifying party in
writing of the commencement thereof (if the notice specified in subsection (c)
has not been given with respect to such action); provided, however, that the
failure to so promptly notify the indemnifying party shall not relieve it from
any obligation to provide contribution which it may have to any indemnified
party under this subsection (e) except to the extent that the indemnifying party
is actually prejudiced by the failure to give prompt notice.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this paragraph were determined by pro rata allocation
or by any other method of allocation which does not take account the equitable
considerations referred to in the immediately preceding paragraph.
If indemnification is available under this Section 6, the indemnifying
parties shall indemnify each indemnified party to the fullest extent provided in
subsections (a) and (b), without regard to the relative fault of said
indemnifying party or any other equitable consideration provided for in this
subsection. The provisions of this subsection shall be in addition to any other
rights to indemnification or contribution which any indemnified party may have
pursuant to law or contract, shall remain in full force and effect regardless of
any investigation made by or on behalf of any indemnified party, and shall
survive the transfer of securities by any such party.
(f) In connection with any underwritten offering contemplated by this
Agreement which includes Registrable Securities, the Company and all sellers of
Registrable Securities included in any registration statement shall agree to
customary provisions for indemnification and contribution (consistent with the
other provisions of this Section 6) in respect of losses, claims, damages,
liabilities and expenses of the underwriters of such offering.
-12-
<PAGE>
SECTION 7. SELECTION OF UNDERWRITERS. If a registration effected
pursuant to Section 2 is an underwritten offering or a best efforts underwritten
offering, the investment bankers or investment bankers and manager or managers
that will administer the offering shall be selected by the Holders of a majority
of the Registrable Securities to be registered in such registration; provided,
however, that such investment bankers and managers must be reasonably
satisfactory to the Company.
SECTION 8. RULE 144. The Company covenants to each Holder that, to the
extent that the Company shall be required to do so under the Exchange Act, the
Company shall (a) timely file the reports required to be filed by it under the
Exchange Act or the Securities Act (including, but not limited to, the reports
under Section 13 and 15(d) of the Exchange Act referred to in subparagraph (c)
(1) of Rule 144 adopted by the Commission under the Securities Act) and the
rules and regulations adopted by the Commission thereunder, and (b) take such
further action as any Holder may reasonably request, all to the extent required
from time to time to enable such Holder to sell Registrable Securities without
registration under the Securities Act within the limitations of the exemption
provided by Rule 144 under the Securities Act, as such Rule may be amended from
time to time, or any similar rule or regulation hereafter adopted by the
Commission. Upon the reasonable request of any Holder, the Company shall
deliver to such Holder a written statement as to whether it has complied with
such requirements.
Section 9. Participation in Underwritten Registrations. In the case of
a registration hereunder, if the Company has determined to enter into an
underwriting agreement in connection therewith, all shares of Registrable
Securities to be included in such registration shall be subject to the
underwriting agreement, which shall be in customary form and contain such terms
as are customarily contained in such agreements, and the Holders may not
participate in any such registration unless the Holder (a) agrees to sell its
securities on the basis provided in any underwriting arrangements and (b)
completes and executes all questionnaires, power of attorney, indemnities,
underwriting agreements and other documents reasonably required under the terms
of the underwriting arrangements.
Section 10. Rights to Withdraw From Registration. If, as a result of
the proration provisions of Section 3(b) a Holder is not entitled to include all
Registrable Securities in a registration that the Holder has requested to be
included, the Holder may elect to withdraw its request to include Registrable
Securities in the registration (a "Withdrawal Election"); provided, however,
that a Withdrawal Election shall be irrevocable and, after making a Withdrawal
Election, the Holder shall no longer have any right to include Registrable
Securities in the registration as to which the Withdrawal Election was made.
SECTION 11. EXISTING REGISTRATION RIGHTS. The Company and each of the
Initial Shareholders represent and warrant to, and covenant with, the New
Shareholders as follows:
(a) As of the date hereof, the Company has not entered into any agreement,
written or oral, granting or otherwise affording to a third party registration
rights with respect to any securities held by such third party in the Company,
except for the Difco Agreement and the LaSalle Agreement.
SECTION 12. MISCELLANEOUS.
-13-
<PAGE>
(a) From and after the date of this Agreement, the Company will not enter
into any agreement with respect to its securities which is inconsistent with or
violates the rights granted to the Holders of Registrable Securities in this
Agreement.
(b) Each Holder of Registrable Securities (including Registrable Securities
in any registration statement filed pursuant to this Agreement) agrees as
follows:
(i) if any Registrable Securities are being registered in any
registration pursuant to this Agreement, the Holder thereof will comply
with all anti-stabilization, manipulation and similar provisions of Section
10 of the Exchange Act, as amended, and any rules promulgated thereunder by
the Commission and, at the request of the Company, will execute and deliver
to the Company and to any underwriter participating in such offering, an
appropriate agreement to such effect; and
(ii) at the end of any period during which the Company is obligated to
keep a registration statement current and effective as described herein,
the Holders of Registrable Securities included in the registration
statement shall discontinue sales thereof pursuant to such registration
statement.
(c) In order to facilitate the possibility of future public offerings of
Ordinary Shares, the Holders (and any subsequent Holder) agree that the
Registrable Securities will not be resold during a period commencing on the
filing by the Company of a registration statement under the Securities Act for
an underwritten public offering for cash by the Company of its Ordinary Shares
or securities convertible into or exercisable or exchangeable for its Ordinary
Shares and continuing until the earlier of the abandonment of the proposed
public offering or 120 days following the date of the last closing in the public
offering without the consent of the underwriters of such offering, except to the
extent such shares are included in such registration. Holders of such
Registrable Securities also agree that they will cooperate with the Company in
providing reasonable written assurances respecting the foregoing to the
underwriter of any such public offering. Holders agree that during the above
restricted period they will not directly or indirectly sell, offer to sell,
contract to sell (including without limitation any short sale), grant an option
to purchase or otherwise transfer or dispose of (other than to donees who agree
to be similarly bound) shares of Registrable Securities at any time during such
period except securities included in such registration. In order to enforce the
foregoing covenant, the Company may impose stop-order instructions with respect
to such shares of Registrable Securities held by each Holder, which shall be
binding upon any assignee or successor of such Holder (and the shares or
securities of every other person subject to the foregoing restriction), until
the end of the restricted period.
(d) All questions concerning the construction, validity and interpretation
of this Agreement shall be governed by the internal law, and not the law of
conflicts, of the State of Texas.
(e) All covenants and agreements in this Agreement by or on behalf of any
of the parties hereto will bind and inure to the benefit of the respective
successors and assigns of the parties hereto. In addition, the rights and
obligations under this Agreement shall automatically be transferred to and
binding on any transferee or assignee of the Registrable Securities; provided,
that (i) the Company is, within a reasonable time after such transfer, furnished
with written notice of the name and address
-14-
<PAGE>
of such transferee or assignee and the Registrable Securities with respect to
which such registration rights are being transferred or assigned, (ii) such
transferee or assignee agrees in writing to be bound by and subject to the terms
and conditions of this Agreement, (iii) the transfer and assignment of the
subject Registrable Securities is in compliance with (A) the Purchase Agreement
and (B) the Securities Act and applicable state securities laws or an exemption
from the registration requirements of the Securities Act and applicable state
securities laws, (iv) such assignment of rights and obligations under this
Agreement shall be effective only if immediately following such transfer the
further disposition of such Registrable Securities by the transferee or assignee
is restricted under the Securities Act and (v) the transferee acquires at least
10% of the Registrable Securities originally purchased by the New Shareholders
from the Company.
(f) This Agreement is intended by the parties as a final expression of
their agreement and intended to be a complete and exclusive statement of the
agreement and understanding of the parties hereto in respect of the subject
matter herein contained. There are no restrictions, promises, warranties or
undertakings, other than those set forth or referred to herein, with respect to
the registration rights granted by the Company to the Holders of the Registrable
Securities. This Agreement supersedes all prior agreements and understandings
between the parties with respect to such subject matter.
(g) All notices, demands or other communications to be given or delivered
under or by reason of the provisions of this Agreement shall be in writing and
shall be deemed to have been given when delivered personally or sent by
reputable express courier service (charges prepaid), or mailed to the recipient
by certified or registered mail, return receipt requested and postage prepaid,
or sent by telefax, to the parties at the following address (or to such other
address or to the attention of such other person as the recipient party has
specified by prior like notice to the sending party):
-15-
<PAGE>
If to the Company:
Alliance Resources PLC
4200 East Skelly Drive, Suite 1000
Tulsa, Oklahoma 74135
Attention: John A. Keenan
Fax No.: 918-494-4918
If to either EnCap LP
or ECIC:
Energy Capital Investment Company PLC
EnCap Equity 1996 Limited Partnership
c/o EnCap Investments L.C.
1100 Louisiana, Suite 3150
Houston, Texas 77002
Attention: Robert L. Zorich
Fax No.: 713-659-6130
If to EnCap LC:
EnCap Investments L.C.
1100 Louisiana, Suite 3150
Houston, Texas 77002
Attention: Robert L. Zorich
Fax No.: 713-659-6130
(h) If any provision of this Agreement is held to be unenforceable, this
Agreement shall be considered divisible and such provision shall be deemed
inoperative to the extent it is deemed unenforceable, and in all other respects
this Agreement shall remain in full force and effect; provided, however, that if
any such provision may be made enforceable by limitation thereof, then such
provision shall be deemed to be so limited and shall be enforceable to the
maximum extent permitted by applicable law.
(i) This Agreement may be executed by the parties hereto in any number of
counterparts, each of which shall be deemed an original, but all of which shall
constitute one and the same agreement. Each counterpart may consist of a number
of copies hereof each signed by less than all, but together signed by all, the
parties hereto.
(j) Each Holder of Registrable Securities, in addition to being entitled to
exercise all rights granted by law, including recovery of damages, will be
entitled to specific performance of its rights under this Agreement. Each party
agrees that monetary damages would not be adequate compensation for any loss
incurred by reason of breach by it of the provisions of this Agreement and
hereby agrees to waive (to the extent permitted by law) the defense in any
action for specific performance that a remedy of law would be adequate.
-16-
<PAGE>
(k) In any action or proceeding brought to enforce any provision of this
Agreement, or where any provision hereof is validly asserted as a defense, the
successful party shall be entitled to recover reasonable attorneys' fees in
addition to any other available remedy.
(l) The Company agrees to remove any legends on certificates representing
Registrable Securities describing transfer restrictions applicable to such
securities upon the sale of such securities (i) pursuant to an effective
Registration Statement under the Securities Act or (ii) in accordance with the
provisions of Rule 144 under the Securities Act.
[REMAINDER OF PAGE INTENTIONALLY BLANK]
-17-
<PAGE>
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly executed
as of the date first above written.
ENCAP EQUITY 1996 LIMITED PARTNERSHIP
By: ENCAP INVESTMENTS L.C., General Partner
By:
------------------------------------------------
Name: Robert L. Zorich
Title: Managing Director
ENERGY CAPITAL INVESTMENT COMPANY PLC
By:
------------------------------------------------
Name: Gary R. Petersen
Title: Director
ENCAP INVESTMENTS L.C.
By:
------------------------------------------------
Name: Robert L. Zorich
Title: Managing Director
ALLIANCE RESOURCES PLC
By:
------------------------------------------------
Name:
-------------------------------------------
Title:
------------------------------------------
-18-
<PAGE>
EXHIBIT 10.3
U.S. $55,000,000
THIRD AMENDED AND RESTATED CREDIT AGREEMENT
dated as of October 26, 1998,
among
LATEX PETROLEUM CORPORATION,
LATEX/GOC ACQUISITION, INC.,
GERMANY OIL COMPANY,
(formerly known as LRI ACQUISITION, INC.),
ALLIANCE RESOURCES (USA), INC.,
SOURCE PETROLEUM, INC. and
ALLIANCE RESOURCES PLC
as the Borrowers,
CERTAIN FINANCIAL INSTITUTIONS,
as the Lenders
and
BANK OF AMERICA
NATIONAL TRUST AND SAVINGS ASSOCIATION,
as Agent for the Lenders.
<PAGE>
TABLE OF CONTENTS
SECTION PAGE
----
ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS......................................... -3-
1.1. Defined Terms...................................................... -3-
1.2. Use of Defined Terms............................................... -31-
1.3. Cross-References................................................... -32-
1.4. Accounting and Financial Determinations............................ -32-
1.5. Interpretational Provisions........................................ -32-
ARTICLE II.
COMMITMENTS, BORROWING PROCEDURES AND NOTE............................... -33-
2.1. Commitments........................................................ -33-
2.1.1. Tranche A Commitment................................... -33-
2.1.2. Tranche B Commitment................................... -33-
2.1.3. Tranche C Commitment................................... -34-
2.1.4. Commitment to Issue Letters of Credit.................. -34-
2.1.5. Lenders Not Required To Make Loans Under Certain
Circumstances.......................................... -34-
2.1.6. Issuer Not Required To Issue Letters of Credit Under
Certain Circumstances.................................. -35-
2.2. Reduction of Commitment Amounts.................................... -35-
2.2.1. Optional............................................... -35-
2.2.2. Mandatory.............................................. -35-
2.3. Borrowing Procedure................................................ -36-
2.4. Continuation and Conversion Elections.............................. -36-
2.5. Loan Accounts and Notes............................................ -37-
2.6. Borrowing Base Redetermination and Collateral Value
Redetermination.................................................... -37-
2.7. Purposes........................................................... -38-
ARTICLE III.
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES............................... -39-
3.1. Repayments and Prepayments and Certain Borrowing Base Matters...... -39-
3.1.1. Repayments and Prepayments............................. -39-
3.1.2. Borrowing Base Deficiencies, Collateral Value
Deficiencies and Asset Sales........................... -41-
-i-
<PAGE>
TABLE OF CONTENTS
continued
PAGE
----
3.2. Interest Provisions................................................ -42-
3.2.1. Rate................................................... -43-
3.2.2. Post-Maturity Rates.................................... -43-
3.2.3. Payment Dates.......................................... -43-
3.2.4. Maximum Interest....................................... -44-
3.3. Fees............................................................... -45-
3.3.1. Unused Fee............................................. -45-
3.3.2. Letter of Credit Stated Amount Fee..................... -45-
3.3.3. Letter of Credit Issuance Fee.......................... -46-
3.3.4. Letter of Credit Administrative Fees................... -46-
3.4. Proceeds Account................................................... -46-
3.5. ORRI and Warrants Are Not Collateral Security...................... -46-
ARTICLE IV.
LETTERS OF CREDIT........................................................ -47-
4.1. Issuance Requests.................................................. -47-
4.2. Issuances and Extensions........................................... -48-
4.3. Disbursements...................................................... -49-
4.4. Reimbursement...................................................... -49-
4.5. Deemed Disbursements............................................... -50-
4.6. Nature of Reimbursement Obligations................................ -50-
4.7. Increased Costs; Indemnity......................................... -52-
ARTICLE V.
CERTAIN INTEREST RATE AND OTHER PROVISIONS............................... -53-
5.1. LIBO Rate Lending Unlawful......................................... -53-
5.2. Deposits Unavailable............................................... -53-
5.3. Increased Loan Costs, etc.......................................... -54-
5.4. Funding Losses..................................................... -55-
5.5. Increased Capital Costs............................................ -55-
5.6. Taxes.............................................................. -56-
5.7. Payments, Computations, etc........................................ -56-
5.8. Sharing of Payments................................................ -57-
5.9. Setoff............................................................. -58-
5.10. Use of Proceeds.................................................... -58-
-ii-
<PAGE>
TABLE OF CONTENTS
continued
PAGE
----
ARTICLE VI.
CONDITIONS PRECEDENT..................................................... -58-
6.1. Effectiveness of Agreement and Initial Borrowing.................... -58-
6.1.1. Resolutions, etc........................................ -58-
6.1.2. Delivery of Notes....................................... -59-
6.1.3. Environmental Report.................................... -59-
6.1.4. Guaranties.............................................. -59-
6.1.5. Pledge Agreements....................................... -59-
6.1.6. Mortgages............................................... -60-
6.1.7. Security Agreements..................................... -61-
6.1.8. Opinions of Counsel..................................... -61-
6.1.9. UCC-11s................................................. -61-
6.1.10. Evidence of Insurance................................... -62-
6.1.11. Assignment of Overriding Royalty Interest, etc.......... -62-
6.1.12. Warrant Documents....................................... -62-
6.1.13. Engineering Reports..................................... -62-
6.1.14. [Not Used.]............................................. -62-
6.1.15. [Not Used.]............................................. -62-
6.1.16. Closing of Difco Acquisition............................ -62-
6.1.17. Closing under Burlington Agreement...................... -62-
6.1.18. Closing of Subordinated Note Sale, etc.................. -62-
6.1.19. Subordination Agreement................................. -63-
6.1.20. Amended and Restated Security Documents................. -63-
6.1.21. Material Contracts, Difco Consents and Related
Consents................................................ -63-
6.1.22. Title Reports........................................... -63-
6.1.23. Closing Fees, Expenses, etc............................. -63-
6.2. Inclusion of Hydrocarbon Interests in the Borrowing Base and the
Collateral Value................................................. -63-
6.2.1. Environmental Report.................................... -63-
6.2.2. Mortgage................................................ -63-
6.2.3. UCC-11s................................................. -64-
6.2.4. Evidence of Insurance................................... -64-
6.2.5. Engineering Reports..................................... -64-
6.2.6. Material Contracts and Related Consents................. -64-
6.2.7. Guaranties.............................................. -65-
-iii-
<PAGE>
TABLE OF CONTENTS
continued
PAGE
----
6.2.8. Additional Stock Pledge................................. -65-
6.2.9. Other Documents......................................... -65-
6.3. All Credit Extensions............................................... -65-
6.3.1. Compliance with Warranties, No Default, etc............. -65-
6.3.2. Borrowing Request, etc.................................. -66-
6.3.3. Satisfactory Legal Form................................. -66-
ARTICLE VII.
REPRESENTATIONS AND WARRANTIES........................................... -66-
7.1. Organization, etc................................................ -66-
7.2. Due Authorization, Non-Contravention, etc........................ -67-
7.3. Government Approval, Regulation, etc............................. -67-
7.4. Investment Company Act........................................... -67-
7.5. Public Utility Holding Company Act............................... -68-
7.6. Validity, etc.................................................... -68-
7.7. Financial Information............................................ -68-
7.8. No Material Adverse Change....................................... -68-
7.9. Litigation, Labor Controversies, etc............................. -68-
7.10. Ownership of Properties.......................................... -69-
7.11. Taxes............................................................ -69-
7.12. Pension and Welfare Plans........................................ -69-
7.13. Compliance with Law.............................................. -69-
7.14. Claims and Liabilities........................................... -69-
7.15. No Prohibition on Perfection of Security Documents............... -70-
7.16. Solvency......................................................... -70-
7.17. Environmental Warranties......................................... -70-
7.18. Year 2000 Compliance............................................. -72-
7.19. Regulations G, U and X........................................... -72-
7.20. Accuracy of Information.......................................... -73-
ARTICLE VIII.
COVENANTS................................................................ -73-
8.1. Affirmative Covenants............................................... -73-
8.1.1. Financial Information, Reports, Notices, etc............. -73-
8.1.2. Compliance with Laws, etc................................ -76-
-iv-
<PAGE>
TABLE OF CONTENTS
continued
PAGE
----
8.1.3. Maintenance and Development of Properties................ -76-
8.1.4. Insurance................................................ -78-
8.1.5. Books and Records........................................ -78-
8.1.6. Environmental Covenant................................... -79-
8.1.7. Further Assurances....................................... -79-
8.1.8. Natural Gas and Crude Oil Hedging........................ -81-
8.1.9. Interest Rate Protection................................. -82-
8.1.10. Exchange Rate Protection................................ -82-
8.2. Negative Covenants.................................................. -82-
8.2.1. Business Activities...................................... -82-
8.2.2. Indebtedness............................................. -82-
8.2.3. Liens -84-
8.2.4. Financial Condition...................................... -85-
8.2.5. Investments.............................................. -85-
8.2.6. Restricted Payments, etc................................. -86-
8.2.7. Rental Obligations....................................... -86-
8.2.8. Consolidation, Merger, etc............................... -87-
8.2.9. Asset Dispositions, etc.................................. -87-
8.2.10. Modification of Certain Agreements...................... -87-
8.2.11. Transactions with Affiliates............................ -87-
8.2.12. Negative Pledges, Restrictive Agreements, etc........... -88-
8.2.13. Take or Pay Contracts................................... -88-
ARTICLE IX.
EVENTS OF DEFAULT........................................................ -88-
9.1. Listing of Events of Default........................................ -88-
9.1.1. Non-Payment of Obligations............................... -88-
9.1.2. Breach of Warranty....................................... -88-
9.1.3. Non-Performance of Certain Covenants and Obligations..... -89-
9.1.4. Non-Performance of Other Covenants and Obligations....... -89-
9.1.5. Default on Other Indebtedness............................ -89-
9.1.6. Judgments................................................ -89-
9.1.7. Pension Plans............................................ -90-
9.1.8. Control of the Borrowers................................. -90-
9.1.9. Bankruptcy, Insolvency, etc.............................. -90-
9.1.10. Impairment of Security, etc............................. -91-
9.1.11. Material Adverse Effect................................. -91-
-v-
<PAGE>
TABLE OF CONTENTS
continued
PAGE
----
9.2. Action if Bankruptcy............................................. -91-
9.3. Action if Other Event of Default................................. -91-
9.4. Rights Not Exclusive............................................. -91-
ARTICLE X.
THE AGENT................................................................ -92-
10.1. Actions.......................................................... -92-
10.2. Funding Reliance, etc............................................ -92-
10.3. Exculpation...................................................... -93-
10.4. Successor........................................................ -93-
10.5. Loans or Letters of Credit Issued by BankAmerica................. -94-
10.6. Credit Decisions................................................. -94-
10.7. Copies, etc...................................................... -94-
ARTICLE XI.
MISCELLANEOUS PROVISIONS................................................. -94-
11.1. Waivers, Amendments, etc......................................... -94-
11.2. Notices.......................................................... -96-
11.3. Payment of Costs and Expenses.................................... -96-
11.4. Indemnification.................................................. -97-
11.5. Survival......................................................... -98-
11.6. Severability..................................................... -98-
11.7. Headings......................................................... -98-
11.8. Execution in Counterparts, Effectiveness, etc.................... -99-
11.9. Governing Law; Entire Agreement.................................. -99-
11.10. Successors and Assigns........................................... -99-
11.11. Sale and Transfer of Loans and Note; Participations in Loans and
Note............................................................. -99-
11.11.1. Assignments............................................ -99-
11.11.2. Participations......................................... -100-
11.12. Forum Selection and Consent to Jurisdiction...................... -101-
11.13. Waiver of Jury Trial............................................. -102-
11.14. Joint and Several Liability...................................... -102-
11.15. Certain Consents and Waivers..................................... -102-
11.16. Other Transactions............................................... -104-
11.17. Controlling Document............................................. -104-
-vi-
<PAGE>
TABLE OF CONTENTS
continued
PAGE
----
11.18. Notice........................................................... -104-
-vii-
<PAGE>
SCHEDULE I Disclosure Schedule
SCHEDULE II Subsidiaries
SCHEDULE III Title Properties (East Irish Sea Assets)
SCHEDULE IV Existing Mortgages
SCHEDULE V Form of Approved Development Plan
EXHIBIT A - Form of Note
EXHIBIT B-1 - Borrowing Request
EXHIBIT B-2 - Continuation/Conversion Notice
EXHIBIT C-1 - Form of Security Agreement
EXHIBIT C-2 - Form of Ratification of Security Agreement
EXHIBIT D-1 - Form of Guaranty
EXHIBIT D-2 - Form of Ratification of Guaranty
EXHIBIT E-1 - Forms of U.S. Mortgage and Amendments Thereto
EXHIBIT E-2 - Form of U.K. Mortgage
EXHIBIT F-1 - Form of Pledge Agreement (Stock)
EXHIBIT F-2 - Form of Amended and Restated Pledge Agreement
EXHIBIT F-3 - Form of Ratification of Pledge Agreement
EXHIBIT G - Form of Lender Assignment Notice
EXHIBIT H-1 - Form of Opinions of U.S. Counsel to the Borrowers and
the other Obligors
EXHIBIT H-2 - Form of Opinions of U.K. Counsel to the Borrowers and
the other Obligors
EXHIBIT I - Form of Opinions of Special Title Counsel to the
Borrowers
EXHIBIT J - Form of Issuance Request
EXHIBIT K - Irrevocable Standby Letter of Credit
EXHIBIT L - Form of Consent
EXHIBIT M - Form of Deed of Assignment of Overriding Royalty
Interest
EXHIBIT M-2 - Certificate as to Overriding Royalty Interests
EXHIBIT M-3 - Agreement as to Certain Tax Matters
EXHIBIT N - Form of Subordination Agreement
EXHIBIT O-1 - Form of Registration Rights Agreement
EXHIBIT O-2 - Form of Warrant Agreement
EXHIBIT O-3 - Form of Warrant Instrument
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THIRD AMENDED AND RESTATED CREDIT AGREEMENT
THIS THIRD AMENDED AND RESTATED CREDIT AGREEMENT, dated as of October 26,
1998, among LATEX PETROLEUM CORPORATION, an Oklahoma corporation ("LPC"),
LATEX/GOC ACQUISITION, INC., a Delaware corporation ("GOCA"), GERMANY OIL
COMPANY, a Delaware corporation, formerly known as LRI Acquisition, Inc. ("New
GOC"), ALLIANCE RESOURCES (USA), INC., a Delaware corporation ("Alliance USA"),
SOURCE PETROLEUM, INC., a Louisiana corporation ("Source"; together with LPC,
GOCA, New GOC and Alliance USA, the "Original Borrowers"); and ALLIANCE
RESOURCES PLC, a public limited company incorporated under the laws of England
and Wales ("Alliance Plc") (the Original Borrowers and Alliance Plc,
collectively, the "Borrowers" and individually, a "Borrower"), the various
financial institutions as are now or may hereafter become parties hereto
(collectively, the "Lenders") and BANK OF AMERICA NATIONAL TRUST AND SAVINGS
ASSOCIATION, a national banking association ("BankAmerica"), for itself and as
agent for the Lenders (in such capacity, the "Agent"),
W I T N E S S E T H:
WHEREAS, the Borrowers are engaged in the business of oil and gas
exploration and production, and activities related or ancillary thereto; and
WHEREAS, the Original Borrowers and BankAmerica are parties to that certain
Second Amended and Restated Credit Agreement dated as of March 14, 1997 (the
"Prior Agreement") pursuant to which BankAmerica made commitments to make loans
to the Original Borrowers from time to time prior to the applicable commitment
termination date and to issue letters of credit in maximum aggregate principal
amount of Loans at any one time not to exceed in the aggregate the lesser of (x)
the Borrowing Base, or (y) $21,000,000; and
WHEREAS, the Original Borrowers and BankAmerica are also parties to that
certain Amendment No. 1 to Second Amended and Restated Credit Agreement dated as
of September 29, 1997, that certain Amendment No. 2 to Second Amended and
Restated Credit Agreement dated as of October 31, 1997, that certain Amendment
No. 3 to Second Amended and Restated Credit Agreement dated as of March 9, 1998,
that certain Amendment No. 4 to Second Amended and Restated Credit Agreement
dated as of June 4, 1998, that certain Amendment No. 5 to Second Amended and
Restated Credit Agreement dated as of June 10, 1998, that certain Amendment No.
6 to Second Amended and Restated Credit Agreement dated as of July 31, 1998 and
that certain Amendment No. 7 to Second Amended and Restated Credit Agreement
dated as of August 17, 1998, pursuant to which the Prior
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Agreement was amended (the Prior Agreement, as so amended, herein called the
"Existing Agreement"), and
WHEREAS, pursuant to the Commitments in the Existing Agreement, BankAmerica
made loans to the Original Borrowers and issued letters of credit at the request
of the Original Borrowers; and
WHEREAS, the Borrowers have requested that BankAmerica amend the Existing
Agreement and make Commitments to the Borrowers pursuant to which:
(a) Loans will be made to the Borrowers from time to time prior to the
applicable Commitment Termination Date; and
(b) Letters of Credit will be issued by the Issuer for the account of the
Borrowers from time to time prior to the Availability Termination Date;
in maximum aggregate principal amount of Loans and Letter of Credit Outstandings
at any one time not to exceed in the aggregate $55,000,000; and
WHEREAS, BankAmerica and the Lenders and the Issuer are willing, on the
terms and subject to the conditions hereinafter set forth (including Article
VI), to amend the Existing Agreement, to extend such Commitments, to make such
Loans to the Borrowers and to issue such Letters of Credit at the request of the
Borrowers; and
WHEREAS, the proceeds of such Loans have been and will be used
(a) to repay or refinance certain existing indebtedness;
(b) for working capital and general business purposes; and
(c) to finance the acquisition of the East Irish Sea Assets and
Approved Development Activities on the Oil and Gas Properties owned by the
Borrowers and their Subsidiaries; and
WHEREAS, the parties have agreed that it is in their respective best
interests to enter into this Agreement, amending, restating and superseding the
Existing Agreement,
NOW, THEREFORE, the parties hereto agree as follows:
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ARTICLE I.
DEFINITIONS AND ACCOUNTING TERMS
SECTION 1.1 DEFINED TERMS. The following terms (whether or not
underscored) when used in this Agreement, including its preamble and recitals,
shall, except where the context otherwise requires, have the following meanings
(such meanings to be equally applicable to the singular and plural forms
thereof):
"Affiliate" of any Person means any other Person which, directly or
indirectly, controls, is controlled by or is under common control with such
Person (excluding any trustee under, or any committee with responsibility for
administering, any Plan). A Person shall be deemed to be "controlled by" any
other Person if such other Person possesses, directly or indirectly, power
(a) to vote 10% or more of the securities (on a fully diluted basis)
having ordinary voting power for the election of directors or managing
general partners; or
(b) to direct or cause the direction of the management and policies
of such Person whether by contract or otherwise.
"Agent" is defined in the preamble and includes each other Person as shall
have subsequently been appointed as the successor Agent pursuant to Section
10.4.
"Agreement" means, on any date, this Third Amended and Restated Credit
Agreement as originally in effect on the Effective Date and as thereafter from
time to time amended, supplemented, amended and restated, or otherwise modified
and in effect on such date.
"Alliance Group" means Alliance Resources Group, Inc., a Delaware
corporation, a wholly-owned Subsidiary of Alliance Plc and the sole shareholder
of each of the Alliance US Subsidiaries.
"Alliance Plc" is defined in the Preamble and is the sole shareholder of
Alliance Group, Manx LRI and, after the Closing of the Difco Acquisition, will
be the sole shareholder of Difco.
"Alliance USA" is defined in the preamble.
"Alliance US Subsidiaries" means Alliance USA, Source, ARCOL and ARNO, each
a Subsidiary of Alliance Group.
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<PAGE>
"Alternate Base Rate" means, on any date and with respect to all Base Rate
Loans, a fluctuating rate of interest per annum equal to the higher of
(a) the rate of interest as announced from time to time by the Agent
as its "reference rate" at its Domestic Office; or
(b) the Federal Funds Rate most recently determined by the Agent plus
1/2%.
The Alternate Base Rate is not necessarily intended to be the lowest rate of
interest in connection with extensions of credit. Changes in the rate of
interest on that portion of any Loans maintained as Base Rate Loans will take
effect simultaneously with each change in the Alternate Base Rate. The Agent
will give notice to the Borrowers of changes in the Alternate Base Rate.
"Applicable Law" means with respect to any Person or matter, any federal,
state, regional, tribal or local statute, law, code, rule, treaty, convention,
application, order, decree, consent decree, injunction, directive, determination
or other requirement (whether or not having the force of law) relating to such
Person or matter and, where applicable, any interpretation thereof by an
Governmental Agency having jurisdiction with respect thereto or charged with the
administration or interpretation thereof.
"Applicable Margin" means, with respect to any Credit Extension of any type
and at any time of determination, a margin above the interest rate or fee
applicable to such type of Credit Extension determined as follows:
- ----------------------------------------------
Base Rate Loans LIBO Rate Loans
- ----------------------------------------------
Tranche A 0.00% 2.00%
- ----------------------------------------------
Tranche B 2.00% 4.00%
- ----------------------------------------------
Tranche C 5.00% 7.00%
- ----------------------------------------------
Notwithstanding the foregoing,
(a) after any Borrowing Base Deficiency or Collateral Value
Deficiency has existed for sixty (60) consecutive days, the Applicable
Margins set forth above shall increase by 3.00% until such Borrowing Base
Deficiency and/or Collateral Value Deficiency, as the case may be, have
been eliminated;
(b) while any Tranche B Loan is outstanding, the Applicable Margins
set forth above for all Tranche A Loans shall be increased by an additional
0.50%; and
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(c) while any Tranche B Loan is outstanding, the Applicable Margins
set forth above for all Tranche B Loans shall increase by 0.50% semi-
annually on April 26th and on October 26th of each year.
"Approvals" means each and every approval, authorization, license, permit,
consent, variance, land use entitlement, franchise, agreement, filing or
registration by or with any Government Agency or other Person necessary for all
stages of developing, operating, maintaining and abandoning Oil and Gas
Properties.
"Approved Development Activities" means the Borrowers' program of
additional development drilling, workover or recompletion work or any other
Capital Expenditures on the Mortgaged Properties, in each case as the Agent may
approve in the Approved Development Plan.
"Approved Development Plan" means the Borrower's plan, as approved by the
Agent, for conducting Approved Development Activities on the Mortgaged
Properties.
"ARCOL" means ARCOL Inc., a Delaware corporation, and one of the Alliance
US Subsidiaries.
"ARNO" means ARNO Inc., a Delaware corporation, and one of the Alliance US
Subsidiaries.
"Assignee Lender" is defined in Section 11.11.1.
"Assignment" means the Deed of Assignment of Overriding Royalty Interest
from Difco to the Designee, assigning to the Designee, as additional
consideration for the making of the Tranche B Commitments by the Lenders and not
as collateral security for the Loans, overriding royalty interests in certain of
its Hydrocarbon Interests.
"Authorized Officer" means, relative to any Obligor, those of its officers
or other authorized signatories whose signatures and incumbency shall have been
certified to the Agent and the Lenders pursuant to Section 6.1.1.
"Base Rate Loan" means a Loan bearing interest at a fluctuating rate
determined by reference to the Alternate Base Rate.
"Borrower" or "Borrowers" is defined in the preamble.
"Borrowing" means the Loans of the same type and, in the case of LIBO Rate
Loans, having the same Interest Period made by all Lenders on the same Business
Day and pursuant to the same Borrowing Request in accordance with Section 2.1.
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<PAGE>
"Borrowing Base" means, as at any date, (a) prior to the initial Borrowing
Base Redetermination described in Section 2.6(c), $18,500,000 and (b)
thereafter, that amount of Indebtedness for borrowed money under the Tranche A
Facility that the Agent determines can be supported by the Proven Reserves
attributable to Hydrocarbon Interests owned directly by the Borrowers or their
Subsidiaries which are a part of the Mortgaged Properties, after an engineering
and economic review of such reserves conducted by the Agent using its normal
procedures for oil and gas facilities of this type, taking into account, among
other things, (x) the value of all those proved developed producing oil and gas
reserves and certain portions of certain other categories of Proven Reserves
attributable to the Mortgaged Properties, and (y) historical averages of lease
operating expenses and workover expenses over the preceding 12 months with
respect to such Properties.
"Borrowing Base Deficiency" means the amount by which (a) the sum of the
aggregate outstanding principal amount of all Tranche A Loans plus Letter of
Credit Outstandings exceeds (b) the then current Borrowing Base.
"Borrowing Base Deficiency Notification Date" means the date on which any
notice of a Borrowing Base Deficiency is received by the Borrower.
"Borrowing Base Redetermination" is defined in Section 2.6.
"Borrowing Request" means a loan request and certificate duly executed by
an Authorized Officer of any Borrower, substantially in the form of Exhibit B-1
hereto.
"Burlington" means Burlington Resources (Irish Sea) Limited.
"Burlington Agreement" means that certain Sale and Purchase Agreement dated
as of June 29, 1998, as amended October 5, 1998, between Difco and Burlington,
pursuant to which Difco will acquire the East Irish Sea Assets.
"Business Day" means
(a) any day which is neither a Saturday or Sunday nor a legal holiday
nor any other day on which banks are authorized or required to be closed in
Chicago, Illinois; and
(b) relative to the making, continuing, prepaying or repaying of any
LIBO Rate Loans, any day on which dealings in Dollars are carried on in the
London interbank market.
"Capital Expenditures" means, for any period, (without duplication) the
aggregate amount of all expenditures of Alliance Plc and its consolidated
Subsidiaries for fixed or capital assets made during such period which, in
accordance with GAAP,
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<PAGE>
would be classified as capital expenditures including, with respect to any
period, payments made by Alliance Plc and its consolidated Subsidiaries with
respect to Capitalized Lease Liabilities incurred during such period.
"Capitalization" means, at any time, the sum of (a) the total Debt of
Alliance Plc and its consolidated Subsidiaries plus (b) the total equity of
Alliance Plc and its consolidated Subsidiaries.
"Capitalized Lease Liabilities" means all monetary obligations of Alliance
Plc or any of its consolidated Subsidiaries under any leasing or similar
arrangement which, in accordance with GAAP, would be classified as capitalized
leases, and, for purposes of this Agreement and each other Loan Document, the
amount of such obligations shall be the capitalized amount thereof, determined
in accordance with GAAP.
"Cash Equivalent Investment" means, at any time:
(a) any evidence of Indebtedness, maturing not more than one year
after the date such investment is made, issued or guaranteed by the United
States Government;
(b) commercial paper, maturing not more than twelve months from the
date of issue, which is issued by
(i) a corporation (other than an Affiliate of any Borrower)
organized under the laws of any state of the United States or of the
District of Columbia and rated at least A-1 by Standard & Poor's
Corporation or P-1 by Moody's Investors Service, Inc., or
(ii) a Lender;
(c) any certificate of deposit, eurodollar time deposit or bankers
acceptance, maturing not more than one year after such time, which is
issued by
(i) a commercial banking institution that is a member of the
Federal Reserve System, an authorized institution under the Banking
Act 1987 or is authorized under the Banking Act (United Kingdom) and
has a combined capital and surplus and undivided profits of not less
than $500,000,000, or
(ii) a Lender; or
(d) any repurchase agreement entered into with a Lender (or other
commercial banking institution of the stature referred to in clause (c))
which
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<PAGE>
(i) is secured by a fully perfected security interest in any
obligation of the type described in any of clauses (a) through (c);
and
(ii) has a market value at the time such repurchase agreement
is entered into of not less than 100% of the repurchase obligation of
a Lender (or other commercial banking institution) thereunder.
"Cash Interest Expense" means, at any time of determination, Interest
Expense less the amount of interest on the Subordinated Notes which is accrued
and is not then paid, but is added to principal; provided, that Cash Interest
Expense shall exclude amortization charges and fees and any other non-cash
interest charges which would otherwise be included in Interest Expense according
to GAAP.
"Celtic" means Celtic Basin Oil Exploration Ltd., a company incorporated
under the laws of England and Wales, and a wholly-owned Subsidiary of Manx.
"CERCLA" means the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended.
"CERCLIS" means the Comprehensive Environmental Response Compensation
Liability Information System List.
"Change in Control" means if (a) any Person or "group" (as defined in the
Securities Exchange Act of 1934) other than (i) John A. Keenan, (ii) Difco
Holders, (iii) any trust existing solely for the benefit of the above
individuals or the estate or any executor, administrator, conservator, or other
legal representative of any of the above individuals or (iv) EnCap shall own
directly or indirectly greater than 33 1/3% of the issued and outstanding voting
share capital of Alliance Plc, (b) Alliance Plc shall fail beneficially to own
100% of the outstanding shares of the voting capital stock of Alliance Group,
Manx, LRI, or, after the Difco Acquisition, Difco, on a fully-diluted basis, (c)
LRI shall fail beneficially to own 100% of the outstanding shares of the voting
capital stock of LPC, GOCA, New GOC or Enpro, on a fully diluted basis, (d)
Alliance Group shall fail beneficially to own 100% of the outstanding shares of
the voting capital stock of Source, ARNO, ARCOL or Alliance USA, on a fully
diluted basis, or (e) during the period from the date of one annual general
meeting of Alliance Plc to the next annual meeting, beginning with the 1998
annual general meeting (now scheduled for November 1998) individuals who at the
beginning of such period were members of the Board of Directors of Alliance Plc
shall cease for any reason to constitute a majority of the members of the Board
of Directors of Alliance Plc.
"Code" means the U.S. Internal Revenue Code of 1986, as amended, reformed
or otherwise modified from time to time, and the regulations promulgated
thereunder.
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"Collateral Value" shall mean, as at any date, (a) prior to the initial
Collateral Value Redetermination, $50,000,000 and (b) thereafter, the quotient
of (i) the projected net future cash flow, discounted at ten percent (10%) per
annum, from the anticipated production of Hydrocarbons from Proven Reserves
attributable to Hydrocarbon Interests owned directly by the Borrowers or one of
the Borrowers' Subsidiaries which are a part of the Mortgaged Properties, after
an engineering and economic review of such reserves conducted by the Lender
taking into account the value of all those proved developed producing oil and
gas reserves and all other categories of Proven Reserves attributable to the
Mortgaged Properties, divided by (ii) 1.5, for the period commencing with the
Effective Date and ending on December 31, 2001, and 1.65 at all times
thereafter; provided that if additional Oil and Gas Properties are acquired
totally or partly in consideration of the issuance by any Borrower to the
transferror of such Properties of equity interests in such Borrower, then such
amount shall be increased by the Agent to reflect the addition of such
Properties, in no event to exceed 1.65.
"Collateral Value Deficiency" means the amount by which (a) the sum of the
aggregate outstanding principal amount of all Tranche A Loans plus all Tranche B
Loans plus all Letter of Credit Outstandings exceeds (b) the then current
Collateral Value.
"Collateral Value Deficiency Notification Date" shall mean the date on
which any notice of a Collateral Value Deficiency is received by the Borrower.
"Collateral Value Redetermination" is defined in Section 2.6.
"Commitment" means, relative to any Lender, such Lender's obligation
pursuant to Section 2.1 to make Tranche A Loans, Tranche B Loans and/or Tranche
C Loans, as applicable, to the Borrower and to issue (in the case of an Issuer)
or participate in (in the case of BankAmerica) Letters of Credit pursuant to
Section 2.1.3.
"Commitment Amount" means, on any date, the Tranche A Commitment Amount
and/or the Tranche B Commitment Amount and/or the Tranche C Commitment Amount,
as the case may be, as such amounts may be reduced from time to time pursuant to
Section 2.2.
"Commitment Availability" means, on any date, the excess of
(a) the then applicable Commitment Amount,
over
(b) the sum of
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(i) the aggregate outstanding principal amount of all
applicable Loans on such date, plus
(ii) all Letter of Credit Outstandings on such date.
"Commitment Termination Date" means the earliest of
(a) the Stated Maturity Date;
(b) the date on which the Tranche A Commitment Amount and/or the
Tranche B Commitment Amount and/or the Tranche C Commitment Amount, as
applicable, is terminated in full or reduced to zero pursuant to Section
2.2; and
(c) the date on which any Commitment Termination Event occurs.
"Commitment Termination Event" means
(a) the occurrence of any Default described in clauses (a) through
(d) of Section 9.1.9 with respect to any Borrower or any Subsidiary; or
(b) the occurrence and continuance of any other Event of Default and
either
(i) the declaration of the Loans and other Obligations to be
due and payable pursuant to Section 9.3, or
(ii) in the absence of such declaration, the giving of notice
by the Agent to any Borrower that the Commitments have been
terminated.
"Consents" means a Consent to Assignment executed and delivered pursuant to
Section 6.1.6 and Section 6.2.6, substantially in the form of Exhibit L, or such
other form as may be appropriate in a jurisdiction other than the U.S. or a
state thereof, and in each case, as amended, supplemented, restated or otherwise
modified from time to time pursuant to which the Borrowers' (or the applicable
Subsidiaries') counterparty to each Material Contract (i) consents to the
assignment of each such Material Contract to the Agent as security for the
Obligations and (ii) provides the Agent an independent right to cure defaults
under such Material Contract.
"Consolidated Net Income" means, with respect to Alliance Plc and its
consolidated Subsidiaries for any period, the consolidated net income (or loss)
of Alliance Plc and its consolidated Subsidiaries for such period determined in
accordance with GAAP.
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"Contingent Liability" means as to any Person, any direct or indirect
liability of that Person, whether or not contingent, with or without recourse,
(a) with respect to any Indebtedness, lease, dividend, letter of credit or other
obligation (the "primary obligations") of another Person (the "primary
obligor"), including any obligation of that Person (i) to purchase, repurchase
or otherwise acquire such primary obligations or any security therefor, (ii) to
advance or provide funds for the payment or discharge of any such primary
obligation, or to maintain working capital or equity capital of the primary
obligor or otherwise to maintain the net worth or solvency or any balance sheet
item, level of income or financial condition of the primary obligor, (iii) to
purchase property, securities or services primarily for the purpose of assuring
the owner of any such primary obligation of the ability of the primary obligor
to make payment of such primary obligation, or (iv) otherwise to assure or hold
harmless the holder of any such primary obligation against loss in respect
thereof (each, a "Guaranty Obligation"); (b) with respect to any Surety
Instrument issued for the account of that Person or as to which that Person is
otherwise liable for reimbursement of drawings or payments; or (c) to purchase
any materials, supplies or other property from, or to obtain the services of,
another Person if the relevant contract or other related document or obligation
requires that payment for such materials, supplies or other property, or for
such services, shall be made regardless of whether delivery of such materials,
supplies or other property is ever made or tendered, or such services are ever
performed or tendered.
"Continuation/Conversion Notice" means a notice of continuation or
conversion and certificate duly executed by an Authorized Officer of any
Borrower, substantially in the form of Exhibit B-2 hereto.
"Controlled Group" means all members of a controlled group of corporations
and all members of a controlled group of trades or businesses (whether or not
incorporated) under common control which, together with any Borrower, are
treated as a single employer under Section 414(b) or 414(c) of the Code or
Section 4001 of ERISA.
"Convertible Loan Notes (1997)" means the (Pounds)873,281.25 nominal amount
of convertible non-interest bearing, subordinated, unsecured loan notes
1997/2007 of Alliance Plc consisting of 1,078,125 notes of 81p each issued to
the Designee pursuant to the Prior Agreement.
"Core Difco Assets" means the portion of the East Irish Sea Assets, as
shown on Schedule III under the heading "Core Difco Assets" consisting of six
(6) blocks.
"Credit Extension" means and includes:
(a) the advancing of any Loans by the Lenders in connection with a
Borrowing, and
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(b) any issuance by an Issuer or extension of the Stated Expiry Date
by an Issuer of a Letter of Credit.
"Current Ratio" means, as of the end of each Fiscal Quarter, the ratio of
(a) the current assets (including the unused portion of the
Commitment Amount) of Alliance Plc and its consolidated Subsidiaries
to
(b) the current liabilities (minus (i) the current portion of their
long term Debt and (ii) the Old LaTex Payables) of Alliance Plc and its
consolidated Subsidiaries.
"Debt" means the outstanding principal amount of all Indebtedness of
Alliance Plc and its consolidated Subsidiaries, of the nature referred to in
clauses (a) and (b) of the definition of "Indebtedness," but excluding the
Convertible Loan Notes (1997).
"Debt to EBITDA Ratio" means, for any four (4) consecutive Fiscal Quarters,
the ratio of (a) Debt of Alliance Plc and its consolidated Subsidiaries for such
four (4) Fiscal Quarters to (b) EBITDA of Alliance Plc and its consolidated
Subsidiaries for such four (4) Fiscal Quarters.
"Default" means any Event of Default or any condition, occurrence or event
which, after notice or lapse of time or both, would constitute an Event of
Default.
"Designee" is defined in Section 3.5.
"Difco" means, Difco Limited, a private limited company incorporated under
the laws of England and Wales. Pursuant to the Burlington Agreement, Difco will
acquire the East Irish Sea Assets. Pursuant to the Difco Agreement, Alliance
Plc will acquire all of the capital stock of Difco.
"Difco Acquisition" means the acquisition of all of the capital stock of
Difco by Alliance Plc pursuant to the Difco Agreement.
"Difco Agreement" means that certain Amended and Restated Sale and Purchase
Agreement dated as of September 23, 1998, between the Difco Holders and Alliance
Plc, pursuant to which Alliance Plc will purchase all of the capital stock of
Difco.
"Difco Consents" means all consents, waivers and approvals required in
order to permit (a) the transfer of the East Irish Sea Assets from Burlington to
Difco; (b) the granting of Liens encumbering the East Irish Sea Assets from
Difco to the Agent; and
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(c) the transfer of the Overriding Royalty Interests to the Designee by the
Assignment.
"Difco Holders" means F. Fox Benton, Jr., Lizinka M. Benton, F. Fox Benton
III, Lizinka C. Benton and Lucia T. Benton, being those parties owning all of
the capital stock of Difco, and who have agreed to sell such stock to Alliance
Plc pursuant to the Difco Agreement.
"Disbursement" means the amount disbursed by the Issuer on a Disbursement
Date.
"Disbursement Date" is defined in Section 4.3.
"Disclosure Schedule" means the Disclosure Schedule attached hereto as
Schedule I, as it may be amended, supplemented or otherwise modified from time
to time by the Borrowers with the written consent of the Agent.
"Distribution Payments" is defined in Section 8.2.6.
"Dollar" and the sign "$" mean lawful money of the United States.
"Domestic Office" means the office of any Lender designated as such on its
signature page hereto or designated in a Lender Assignment Notice or such other
office of such Lender (or any successor or assign of such Lender) within the
United States as may be designated from time to time by notice from such Lender,
as the case may be, to each other Person party hereto.
"East Irish Sea Assets" means those Oil and Gas Properties and related
assets to be acquired by Difco from Burlington pursuant to the Burlington
Agreement, including an undivided 10% of Burlington's interest in those
Hydrocarbon Interests described in Schedule III.
"EBITDA" means, for any period, the sum, without duplication, of the
following:
(a) Consolidated Net Income for such period, plus
(b) Interest Expense for such period, plus
(c) all depletion, depreciation and amortization of assets (including
goodwill and other intangible assets) of Alliance Plc and its consolidated
Subsidiaries deducted in determining Consolidated Net Income for such period,
plus (minus)
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(d) all federal, state, local and foreign income taxes of Alliance Plc and
its consolidated Subsidiaries deducted (or credits added) in determining
Consolidated Net Income for such period, plus (minus)
(e) other non-cash items deducted or added in determining Consolidated Net
Income for such period.
"Effective Date" means the date this Agreement becomes effective pursuant
to Section 11.8.
"EnCap" means EnCap 1996 and EnCap PLC.
"EnCap 1996" means EnCap Equity 1996 Limited Partnership.
"EnCap Investment" means Energy Capital Investment Company PLC.
"Engineering Report" means one or more reports, in form and substance
satisfactory to the Agent, prepared at the sole cost and expense of the
Borrowers by a petroleum engineer acceptable to the Agent in its reasonable
business judgment, which shall evaluate the Proven Reserves and probable
reserves attributable to the Hydrocarbon Interests owned directly by the
Borrowers and/or their Subsidiaries and constituting part of the Mortgaged
Properties, as of the immediately preceding May 1st or November 1st. Each
Engineering Report shall set forth volumes, a projection of the future rate of
production, Hydrocarbons prices, escalation rates, estimated costs of Remedial
Action, operating expenses, capital expenditures, discount rate assumptions and
the present value of the net proceeds of production, in each case based upon
updated economic assumptions reasonably acceptable to the Agent.
"Enpro" means ENPRO, INC., a Texas corporation and a wholly-owned
subsidiary of LRI.
"Environmental Laws" means all Applicable Laws relating to public health
and safety through protection of the environment.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended, and any successor statute of similar import, together with the
regulations thereunder, in each case as in effect from time to time. References
to sections of ERISA also refer to any successor sections.
"Event of Default" is defined in Section 9.1.
"Existing Agreement" is defined in the Third Recital.
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"Facility" means the Tranche A Facility and/or the Tranche B Facility
and/or the Tranche C Facility, as the case may be.
"Federal Funds Rate" means, for any period, a fluctuating interest rate per
annum equal for each day during such period to the rate set forth in the weekly
statistical release designated as H.15(519), or any successor publication,
published by the Federal Reserve Bank of New York (including any such successor,
"H.15(519)") on the preceding Business Day opposite the caption "Federal Funds
(Effective)"; or, if for any relevant day such rate is not so published on any
such preceding Business Day, the rate for such day will be the arithmetic mean
as determined by the Agent of the rates for the last transaction in overnight
Federal funds arranged prior to 9:00 a.m. (New York City time) on that day by
each of three leading brokers of Federal funds transactions in New York City
selected by the Agent.
"Fee Letter" means that certain letter dated October 26, 1998, between
Alliance Plc and the Agent.
"Fiscal Quarter" means any quarter ending on the last day of April, July,
October and January of a Fiscal Year.
"Fiscal Year" means any period of twelve consecutive calendar months ending
on April 30; references to a Fiscal Year with a number corresponding to any
calendar year (e.g., "Fiscal Year 1998") refer to the Fiscal Year ending on the
April 30 occurring during such calendar year.
"F.R.S. Board" means the Board of Governors of the Federal Reserve System
or any successor thereto.
"GAAP" is defined in Section 1.4.
"GOC" means Germany Oil Company, a Texas corporation, which has merged with
and into New GOC, which in turn has changed its name to "Germany Oil Company".
"GOCA" is defined in the preamble.
"Government Agency" means any federal, state, regional, tribal or local
government or governmental department or other entity charged with the
administration, interpretation or enforcement of any Applicable Law.
"Guaranties" means the guaranties of the Obligations, executed and
delivered pursuant to Sections 6.1.4 and 6.2.7, substantially in the form of
Exhibit D-2, given by each of LRI, Enpro and Alliance Group, and substantially
in the form of Exhibit D-1, given by Difco.
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"Guarantors" means Alliance Group, LRI, Enpro and Difco.
"Hazardous Material" means:
(a) any "hazardous substance", as defined by CERCLA;
(b) any "hazardous waste", as defined by the Resource Conservation
and Recovery Act, as amended;
(c) any petroleum, crude oil or fraction thereof;
(d) any hazardous, dangerous or toxic chemical, material, waste or
substance within the meaning of any Environmental Law;
(e) any radioactive material, including any naturally occurring
radioactive material, and any source, special or by-product material as
defined in 42 U.S.C. (S) 2011 et seq., and any amendments or
reauthorizations thereof;
(f) friable asbestos-containing materials; or
(g) polychlorinated biphenyls in concentrations above regulatory
limits.
"Hedging Agreements" means:
(a) interest rate swap agreements, basis swap agreements, interest
rate cap agreements, forward rate agreements, interest rate floor
agreements and interest rate collar agreements, and all other agreements or
arrangements designed to protect such Person against fluctuations in
interest rates or currency exchange rates, and
(b) forward contracts, options, futures contracts, futures options,
commodity swaps, commodity options, commodity collars, commodity caps,
commodity floors and all other agreements or arrangements designed to
protect such Person against fluctuations in the price of commodities.
"Hedging Obligations" means, with respect to any Person, all liabilities
(including but not limited to obligations and liabilities arising in connection
with or as a result of early or premature termination of a Hedging Agreement,
whether or not occurring as a result of a default thereunder) of such Person
under a Hedging Agreement.
"herein", "hereof", "hereto", "hereunder" and similar terms contained in
this Agreement or any other Loan
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Document refer to this Agreement or such other Loan Document, as the case may
be, as a whole and not to any particular Section, paragraph or provision of this
Agreement or such other Loan Document.
"Highest Lawful Rate" is defined in Section 3.2.4.
"Hydrocarbon Interests" means all rights, titles and interests in and to
oil and gas leases; oil, gas and mineral leases; other Hydrocarbon leases;
Hydrocarbon production licenses; mineral interests; mineral servitudes;
overriding royalty interests; royalty interests; net profits interests;
production payment interests; and other similar interests.
"Hydrocarbons" means, collectively, oil, gas, casinghead gas, drip
gasoline, natural gasoline, condensate, distillate and all other liquid or
gaseous hydrocarbons and related minerals and all products therefrom, in each
case whether in a natural or a processed state.
"Impermissible Qualification" means, relative to the opinion or
certification of any independent public accountant as to any financial statement
of any Borrower, any qualification or exception to such opinion or certification
(a) which is of a "going concern" or similar nature;
(b) which relates to the limited scope of examination of matters
relevant to such financial statement;
(c) which relates to the treatment or classification of any item in
such financial statement and which, as a condition to its removal, would
require an adjustment to such item the effect of which would be to cause
any Borrower to be in default of any of its obligations under Section
8.2.4; or
(d) which relates to possible errors generated by financial reporting
and related systems due the Year 2000 Problem.
"including" means including without limiting the generality of any
description preceding such term, and, for purposes of this Agreement and each
other Loan Document, the parties hereto agree that the rule of ejusdem generis
shall not be applicable to limit a general statement, which is followed by or
referable to an enumeration of specific matters, to matters similar to the
matters specifically mentioned.
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"Indebtedness" of any Person means, without duplication:
(a) all obligations of such Person for borrowed money and all
obligations of such Person evidenced by bonds, debentures, notes (including
the Subordinated Notes) or other similar instruments;
(b) all obligations, contingent or otherwise, relative to the face
amount of all letters of credit, whether or not drawn, and banker's
acceptances issued for the account of such Person;
(c) all other items which, in accordance with GAAP, would be included
as liabilities on the liability side of the balance sheet of such Person as
of the date at which Indebtedness is to be determined;
(d) net liabilities of such Person under all Hedging Obligations;
(e) all net monetary obligations of such Persons with respect to
Production Payments;
(f) all Capitalized Lease Liabilities;
(g) whether or not so included as liabilities in accordance with
GAAP, all obligations of such Person to pay the deferred purchase price of
property or services, and indebtedness (excluding prepaid interest thereon)
secured by a Lien on property owned or being purchased by such Person
(including indebtedness arising under conditional sales or other title
retention agreements), whether or not such indebtedness shall have been
assumed by such Person or is limited in recourse; and
(h) all Contingent Liabilities of such Person.
For all purposes of this Agreement, the Indebtedness of any Person shall include
the Indebtedness of any partnership or joint venture in which such Person is a
general partner or a joint venturer , unless such Indebtedness contains non-
recourse provisions acceptable to the Agent set forth in the agreements
regarding such Indebtedness.
"Indemnified Liabilities" is defined in Section 11.4.
"Indemnified Parties" is defined in Section 11.4.
"Interest Coverage Ratio" means, for any four (4) consecutive Fiscal
Quarters (or other period as set forth in Section 8.2.4), the ratio of (a)
EBITDA for such Fiscal Quarters to (b) Cash Interest Expense for such Fiscal
Quarters.
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"Interest Expense" means, for any period, the consolidated interest expense
of Alliance Plc and its consolidated Subsidiaries for such period (including all
imputed interest under Hedging Agreements, but excluding all fees paid under
Section 3.3) including the interest expense associated with any Capitalized
Lease Liabilities of Alliance Plc and its consolidated Subsidiaries.
"Interest Period" means, relative to any LIBO Rate Loan, the period
beginning on (and including) the date on which such LIBO Rate Loan is made or
continued as, or converted into, a LIBO Rate Loan pursuant to Section 2.3 or 2.4
and ending on (but excluding) the day which numerically corresponds to such date
one, three or six months thereafter (or, if for a period of less than one month
or if such month has no numerically corresponding day, on the last Business Day
of such month), in each case as the Borrowers may select in its relevant notice
pursuant to Section 2.3 or 2.4; provided, however, that:
(a) no more than five different Interest Periods may be in effect at
any time;
(b) Interest Periods commencing on the same date for Loans comprising
part of the same Borrowing shall be of the same duration;
(c) if such Interest Period would otherwise end on a day which is not
a Business Day, such Interest Period shall end on the next following
Business Day (unless, if such Interest Period applies to LIBO Rate Loans,
such next following Business Day is the first Business Day of another
calendar month, in which case such Interest Period shall end on the
Business Day next preceding such numerically corresponding day);
(d) no Interest Period may end later than the Stated Maturity Date;
and
(e) the Borrowers shall select each Interest Period for a particular
LIBO Rate Loan so as not to require (as reasonably foreseeable as possible)
a prepayment of such LIBO Rate Loan during such Interest Period.
"Investment" means, relative to any Person,
(a) any loan or advance made by such Person to any other Person
(excluding commission, travel and similar advances to officers and
employees made in the ordinary course of business and excluding prepaid
expenses incurred in the ordinary course of business);
(b) any Contingent Liability of such Person; and
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(c) any ownership or similar interest held by such Person in any
other Person; provided, however, that (i) Hedging Obligations and (ii)
Production Payments where a Borrower or its Subsidiary is the grantor or
transferror thereof shall not be considered Investments.
The amount of any Investment shall be the original principal or capital amount
thereof less all returns of principal or equity thereon (and without adjustment
by reason of the financial condition of such other Person) and shall, if made by
the transfer or exchange of property other than cash, be deemed to have been
made in an original principal or capital amount equal to the fair market value
of such property.
"Issuance Request" means a request for the issuance of a Letter of Credit
and certificate duly executed by the chief executive, accounting or financial
Authorized Officer of the Borrowers, in substantially the form of Exhibit J
attached hereto (with such changes thereto as may be agreed upon from time to
time by the Agent and the Borrowers).
"Issuer" means BankAmerica (or affiliate, unit or agency of BankAmerica),
in its capacity as the issuer of Letters of Credit at the request of Agent.
"Lender Assignment Notice" means a Lender Assignment Notice substantially
in the form of Exhibit G hereto.
"Lenders" is defined in the preamble.
"Letter of Credit" is defined in Section 4.1.
"Letter of Credit Availability" means, at any time, the lesser of:
(a) the excess of
(i) $1,000,000
over
(ii) the then Letter of Credit Outstandings,
or
(b) the Tranche A Commitment Amount at such time less the sum of (i)
any Tranche A Loans then outstanding at such time and (ii) any Letter of
Credit Outstandings at such time.
"Letter of Credit Outstandings" means, at any time, an amount equal to the
sum of:
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(a) the aggregate Stated Amount at such time of all Letters of Credit
then outstanding and undrawn (as such aggregate Stated Amount shall be
adjusted, from time to time, as a result of drawings, the issuance of
Letters of Credit, or otherwise),
plus
(b) the then aggregate amount of all unpaid and outstanding
Reimbursement Obligations.
"LIBO Rate" means, with respect to each Interest Period for a LIBO Rate
Loan, the rate of interest equal to the average (rounded upward, if necessary,
to the nearest 1/16th of 1%) of the rates per annum at which Dollar deposits in
immediately available funds are offered to the Agent's LIBOR Office in the
London interbank market as at or about 11:00 a.m. London time two (2) Business
Days prior to the beginning of such Interest Period for Dollar deposits of
amounts comparable to the outstanding principal amount of the LIBO Rate Loan for
which an interest rate is then being determined with maturities comparable to
the Interest Period to be applicable to such LIBO Rate Loan.
"LIBO Rate Loan" means a Loan bearing interest, at all times during an
Interest Period applicable to such Loan, at a fixed rate of interest determined
by reference to the LIBO Rate.
"LIBO Rate (Reserve Adjusted)" means, relative to any Loan to be made,
continued or maintained as, or converted into, a LIBO Rate Loan for any Interest
Period, a rate per annum (rounded upwards, if necessary, to the nearest 1/16 of
1%) determined pursuant to the following formula:
LIBO Rate = LIBO Rate
-------------------------------
(Reserve Adjusted) 1.00 - LIBOR Reserve Percentage
The LIBO Rate (Reserve Adjusted) for any Interest Period for LIBO Rate
Loans will be determined by the Agent on the basis of the LIBOR Reserve
Percentage in effect on, and the applicable rates furnished to and received by
the Agent, two Business Days before the first day of such Interest Period.
"LIBOR Office" means, relative to any Lender, the office of such Lender
designated as such on the signature page hereto or designated in a Lender
Assignment Notice or such other office of a Lender (or any successor or assign
of such Lender) as designated from time to time by notice from such Lender to
the Borrowers, whether or not outside the United States, which shall be making
or maintaining LIBO Rate Loans of the Lender hereunder.
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"LIBOR Reserve Percentage" means, relative to any Interest Period for LIBO
Rate Loans, the reserve percentage (expressed as a decimal) equal to the maximum
aggregate reserve requirements (including all basic, emergency, supplemental,
marginal and other reserves and taking into account any transitional adjustments
or other scheduled changes in reserve requirements) specified under regulations
issued from time to time by the F.R.S. Board and then applicable to assets or
liabilities consisting of and including "Eurocurrency Liabilities", as currently
defined in Regulation D of the F.R.S. Board, having a term approximately equal
or comparable to such Interest Period.
"Lien" means any security interest, mortgage, deed of trust, pledge,
hypothecation, assignment, charge or deposit arrangement, encumbrance, lien
(statutory or otherwise), charge against or interest in Property to secure (i)
the payment of a debt or (ii) the performance of an obligation or other priority
or preferential arrangement of any kind or nature whatsoever in respect of any
Property (including those created by, arising under or evidenced by any
conditional sale or other title retention agreement, the interest of a lessor
under a capital lease, any financing lease having substantially the same
economic effect as any of the foregoing, or the filing of any financing
statement naming the owner of the asset to which such lien relates as debtor,
under the Uniform Commercial Code or any comparable law) and any contingent or
other agreement to provide any of the foregoing.
"Loan" means each loan made by a Lender to the Borrowers from time to time
pursuant to its Commitment in accordance with Sections 2.1. and 2.3.
"Loan Documents" means this Agreement, the Notes, the Security Documents,
the Warrant Documents, the Assignment, all Letters of Credit, all Hedging
Agreements and all other agreements relating to this Agreement entered into from
time to time between any Borrower (or any Subsidiary or other Affiliate of any
Borrower) and the Agent or any Lender (or any Subsidiary or other Affiliate of
any Lender).
"LPC" is defined in the preamble.
"LRI" means LaTex Resources, Inc., a Delaware corporation and the sole
shareholder of LPC, GOCA, New GOC and Enpro.
"LRI Merger" means the merger of Alliance Resources (Delaware) Inc. with
and into LRI whereby Alliance Plc became the sole shareholder of LRI.
"MMBtu" means one million British Thermal Units.
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"Manx" means Manx Petroleum Plc, a company incorporated under the laws of
England and Wales, and a wholly-owned subsidiary of Alliance Plc.
"Material Adverse Effect" means (a) a material adverse change in, or a
material adverse effect upon, the operations, business, properties, condition
(financial or otherwise), prospects, or results of operations of Alliance Plc
and its Subsidiaries on a consolidated basis, or the value or condition of the
Properties of Alliance Plc and its Subsidiaries on a consolidated basis; or (b)
a material adverse effect upon (i) the legality, validity, binding effect or
enforceability against the Borrowers, their Subsidiaries or any other Obligor of
any Loan Document, or (ii) the perfection or priority of any Lien granted under
any of the Loan Documents to the extent such Lien pertains to any Property
having more than immaterial value.
"Material Contract" means each agreement for the acquisition of Oil and Gas
Properties entered into by an Obligor, Hydrocarbon purchase and sale agreement,
or similar material contract relating to any Hydrocarbon Interests included in
the Mortgaged Properties, including, without limitation, the Burlington
Agreement, in each case pertaining to Hydrocarbon Interests then included in the
calculation of the Borrowing Base or the Collateral Value (or proposed by the
Borrowers for inclusion) and as designated by the Agent to the Borrowers in
writing.
"Material Subsidiary" means at any particular time, any Subsidiary (i) that
has assets included in the Borrowing Base or the Collateral Value; or (ii) that,
together with its Subsidiaries,
(a) accounted for more than 5% of the consolidated revenues of
Alliance Plc and its Subsidiaries for the most recently completed Fiscal
Quarter (computed on a retroactive proforma basis with respect to acquired
Subsidiaries), or
(b) was the owner of more than 5% of the consolidated assets of
Alliance Plc and its Subsidiaries at the end of such Fiscal Quarter or,
with respect to acquired or newly formed Subsidiaries, on the date of
acquisition or formation of such acquired Subsidiary, all as shown in the
case of (a) and (b) on the consolidated financial statements of Alliance
Plc and its Subsidiaries for such Fiscal Quarter or on such acquisition or
formation date; or
(c) that is designated by the Borrowers in writing as a Material
Subsidiary, or
(d) is determined by the Agent in writing to be a Material
Subsidiary.
"Mortgage Consents" means all consents required under existing oil and gas
leases or other agreements and Approvals by Government Agencies to the granting
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of any Mortgage to the Agent, and as reasonably determined by the Agent with
respect to Properties that become Mortgaged Properties on or after the Effective
Date.
"Mortgaged Properties" is defined in Section 6.1.6.
"Mortgages" means the Mortgage, Deed of Trust, Assignment, Security
Agreement and Financing Statement, the Amended and Restated Mortgage, Deed of
Trust, Assignment, Security Agreement and Financing Statement, the First
Supplemental Mortgage, Deed of Trust, Assignment, Security Agreement, Financing
Statement and Fixture Filing, and any similar instruments, executed and
delivered pursuant to Sections 6.1.6 or 6.2.2, substantially in the form(s) of
Exhibit E hereto, together with any similar instruments which are governed by
the laws of a jurisdiction other than the United States or a state thereof, in
each case as amended, supplemented, restated or otherwise modified from time to
time.
"Net Proceeds of Production" means the difference between (a) the sum of
(w) all revenue received by or credited to the account of the Borrowers from the
sale of Hydrocarbons and other minerals in, under or produced after October 1,
1998, from their Oil and Gas Properties, (x) all net proceeds from Hedging
Agreements entered into pursuant to Section 8.1.8, and (y) all amounts received
by the Borrowers or any of them, in their respective capacities as operators of
certain Oil and Gas Properties, from other working interest owners pursuant to
"Article III - Overhead" of the COPAS form of Accounting Procedure (and similar
agreements or provisions) attached to operating agreements pertaining to such
Properties and (b) the sum of (i) royalties, overriding royalties, net profits
interests and other existing burdens payable out of production, (ii) actual
leasehold operating expenses, (iii) severance, ad valorem, excise and windfall
profit taxes or other government taxes or similar levies or impositions
hereinafter enacted or imposed, (iv) actual workover expenses (but not Capital
Expenditures) for the Mortgaged Properties which are necessary to maintain
production from existing completion intervals or zones in existing wells, and
from wells and intervals or zones which become producing wells, intervals or
zones, as the case may be, as a result of Approved Development Activities and
(v) all net payments made in respect of the Hedging Agreements entered into
pursuant to Section 8.1.8, in each case to the extent such deductions are
properly allocable to the Borrowers' Oil and Gas Properties.
"New GOC" is defined in the preamble.
"Non-Redeemable Stock" means stock issued by Alliance Plc, any other
Borrower or any of their Subsidiaries, provided that such stock is not
considered debt for GAAP, tax law or any other purpose and provided further that
none of Alliance Plc, the other Borrowers nor any of their Subsidiaries has any
obligation to redeem or purchase or pay dividends on such stock or to exchange
such stock for, or convert
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such stock to, any other security, whether such obligation arises pursuant to
the terms of such stock or any other agreement relating thereto or otherwise and
whether or not such obligation exists in all circumstances or only upon the
occurrence of a particular event or condition or upon the passage of time or
otherwise.
"Notes" means the secured promissory note or notes of the Borrowers payable
to the order of a Lender, in the form of Exhibit A hereto (as such promissory
note may be amended, endorsed or otherwise modified from time to time),
evidencing the aggregate Indebtedness of the Borrowers to such Lender resulting
from outstanding Loans, and also means all other promissory notes accepted from
time to time in substitution therefor or renewal thereof.
"Obligations" means all obligations (monetary or otherwise) of the
Borrowers and/or any other Obligor arising under or in connection with this
Agreement, the Notes and each other Loan Document, including without limitation,
all Hedging Obligations arising under Hedging Agreements between any Borrower
(or any Affiliate of any Borrower) and a Lender (or any Affiliate of a Lender).
"Obligor" means the Borrowers, LRI, Alliance Group, Enpro, Difco or any
other Person (other than the Agent, a Lender or any Affiliate of a Lender)
obligated under, or otherwise a party to, any Loan Document.
"Oil and Gas Properties" means Hydrocarbon Interests; the Properties now or
hereafter pooled or unitized with Hydrocarbon Interests; all presently existing
or future unitization, pooling agreements and declarations of pooled units and
the units created thereby (including without limitation all units created under
orders, regulations and rules of any Governmental Agency having jurisdiction)
which may affect all or any portion of the Hydrocarbon Interests; all operating
agreements, joint venture agreements, contracts and other agreements which
relate to any of the Hydrocarbon Interests or the production, sale, purchase,
exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon
Interests; all Hydrocarbons in and under and which may be produced and saved or
attributable to the Hydrocarbon Interests, the lands covered thereby and all oil
in tanks and all rents, issues, profits, proceeds, products, revenues and other
incomes from or attributable to the Hydrocarbon Interests; all tenements,
profits a prendre, hereditaments, appurtenances and Properties in any way
appertaining, belonging, affixed or incidental to the Hydrocarbon Interests,
Properties, rights, titles, interests and estates described or referred to
above, including any and all Property, real or personal, now owned or
hereinafter acquired and situated upon, used, held for use or useful in
connection with the operating, working or development of any of such Hydrocarbon
Interests or Property (excluding drilling rigs, automotive equipment or other
personal property which may be on such premises for the purpose of drilling a
well or for other similar temporary uses) and including any and all oil wells,
gas wells, water wells, injection wells or other wells, buildings, structures,
fuel separators, liquid extraction plants,
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<PAGE>
plant compressors, pumps, pumping units, field gathering systems, tanks and tank
batteries, fixtures, valves, fittings, machinery and parts, engines, boilers,
meters, apparatus, equipment, appliances, tools, implements, cables, wires,
towers, casing, tubing and rods, surface leases, rights-of-way, easements and
servitudes together with all additions, substitutions, replacements, accessions
and attachments to any and all of the foregoing.
"Old LaTex Payables" means those current accounts payable of the Borrowers
or their consolidated Subsidiaries that meet one or more of the following tests
and have been certified to the Agent by the Borrowers as being an Old LaTex
Payable:
(a) accounts payable the collection of which is barred by the
applicable statute of limitations;
(b) accounts payable the collection of which has been compromised or
forgiven in part, in either case to the extent of the amount that has been
compromised or forgiven; or
(c) accounts payable in respect of which the indebtedness was
incurred prior to the LRI Merger and where each of the following is true:
(i) no payment has been made on an individual amount of indebtedness
payable since the LRI Merger, (ii) no contact has been received by the
applicable Borrower or Subsidiary from the applicable creditor since the
LRI Merger pertaining to such payable due prior to the LRI Merger, or if
such contact has been received such account is being diligently contested
in good faith, (iii) no promise to pay such account has been made by the
applicable Borrower or Subsidiary since the LRI Merger and (iv) no judgment
has been obtained by, or settlement agreement entered into with, such
creditor with respect to such indebtedness.
"Organic Document" means, relative to any corporate Obligor, its
certificate of incorporation, its by-laws, its memorandum or articles of
association or other organizational documents and all shareholder agreements,
voting trusts and similar arrangements applicable to any of its authorized
shares of capital stock, and, relative to any partnership Obligor, its
partnership agreement.
"Original Borrowers" is defined in the preamble.
"Other Difco Assets" means the portion of the East Irish Sea Assets, as
shown on Schedule III under the heading "Other Difco Assets" consisting of seven
(7) blocks.
"Overriding Royalty Interest" means the interests conveyed and assigned by
the Assignment.
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"PBGC" means the Pension Benefit Guaranty Corporation and any entity
succeeding to any or all of its functions under ERISA.
"Participant" is defined in Section 11.11.2.
"Pension Plan" means a "pension plan", as such term is defined in section
3(2) of ERISA, which is subject to Title IV of ERISA (other than a multiemployer
plan as defined in section 4001(a)(3) of ERISA), and to which any Borrower or
any corporation, trade or business that is, along with any Borrower, a member of
a Controlled Group, may have liability, including any liability by reason of
having been a substantial employer within the meaning of section 4063 of ERISA
at any time during the preceding five years, or by reason of being deemed to be
a contributing sponsor under section 4069 of ERISA.
"Percentage" means, relative to any Lender, the percentage set forth on the
signature pages hereof, as such percentage may be adjusted from time to time
pursuant to Lender Assignment Notice(s) executed by the Lender and its Assignee
Lender(s) and delivered pursuant to Section 11.11.
"Person" means any natural person, corporation, partnership, joint venture,
limited liability company, firm, association, trust, Governmental Agency or any
other entity, whether acting in an individual, fiduciary or other capacity.
"Plan" means any Pension Plan or Welfare Plan.
"Pledge Agreements" means a Pledge Agreement executed and delivered
pursuant to Sections 6.1.5 and 6.2.8, substantially in the form of Exhibit F-3
given by each of LRI and Alliance Group, and substantially in the form of
Exhibit F-2 given by Alliance Plc, or such other form as may be appropriate in a
jurisdiction other than the U.S. or a state thereof, and in each case, as
amended, supplemented, restated or otherwise modified from time to time.
"Prior Agreement" is defined in the Second Recital.
"Proceeds Account" is defined in Section 3.4.
"Production Payments" means a production payment (whether volumetric or
dollar denominated) or similar royalty, overriding royalty, net profits interest
or other similar interest in Oil and Gas Properties, or the right to receive all
or a portion of the production or the proceeds from the sale of production
attributable to such Oil and Gas Properties where the holder of such interest
has recourse solely to such interest and the grantor or transferor thereof has
an express contractual obligation to produce and sell Hydrocarbons from such Oil
and Gas Properties, or to cause such Oil and Gas
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Properties to be so operated and maintained, in each case in a reasonably
prudent manner.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
"Proven Reserves" means collectively, "proved oil and gas reserves,"
"proved developed producing oil and gas reserves," "proved developed non-
producing oil and gas reserves" (consisting of proved developed behind pipe oil
and gas reserves and proved developed shut-in oil and gas reserves), and "proved
undeveloped oil and gas reserves," as such terms are defined by the U.S.
Securities and Exchange Commission in its standards and guidelines.
"Quarterly Payment Date" means, commencing January, 1999, the last Business
Day of each Fiscal Quarter.
"Registration Rights Agreement" means the Registration Rights Agreement,
substantially in the form of Exhibit O-1, between Alliance Plc and BankAmerica
or the Designee.
"Reimbursement Obligation" is defined in Section 4.4.
"Release" means a "release," as such term is defined in CERCLA.
"Remedial Action" means any action under Environmental Laws required to (a)
clean up, remove, treat, dispose of, abate, or in any other way remediate an
environmental condition involving Hazardous Materials, (b) prevent the Release
or threat of a Release or minimize the further Release of Hazardous Materials,
or (c) investigate and determine if a remedial response is needed to an
environmental condition involving Hazardous Materials and to design such a
response and any post-remedial investigation, monitoring, operation, and
maintenance and care.
"Required Lenders" means, at any time, Lenders having Percentages
aggregating at least 66-2/3%.
"Resource Conservation and Recovery Act" means the Resource Conservation
and Recovery Act, 42 U.S.C. Section 6901, et seq., as in effect from time to
time.
"Restricted Payment Tests" means compliance with each of the following
restrictions (both before and immediately after giving effect to the applicable
Distribution Payment):
(a) Tangible Net Worth shall not be less than the sum of (i)
$2,000,000 plus (ii) fifty percent (50%) of Consolidated net Income of
Alliance Plc and its consolidated Subsidiaries (excluding the effects of
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consolidated net losses), for all Fiscal Quarters beginning after the
Effective Date and treated as a single accounting period, plus (iii) one-
hundred percent (100%) of the net proceeds received by Alliance Plc or its
Subsidiaries from the sale of any Non-Redeemable Stock by Alliance Plc or
any of its Subsidiaries at any time after the Effective Date;
(b) the Current Ratio shall be not less than 1.0:1.0;
(c) the Debt to EBITDA Ratio shall not be greater than 4:1;
(d) the Interest Coverage Ratio shall not be less than 3.0:1.0;
(e) there shall exist no Borrowing Base Deficiency; and
(f) there shall exist no Collateral Value Deficiency; and
(g) no Default shall have occurred and be continuing.
"Security Agreement" means a security agreement and any similar instrument
or agreement, executed and delivered pursuant to Sections 6.1.7 and 6.2.6,
substantially in the form of Exhibit C-1 hereto, or such other form as may be
appropriate in a jurisdiction other than the U.S. or a state thereof, and in
each case, as amended, supplemented, restated or otherwise modified from time to
time.
"Security Documents" means, collectively, (a) the Guaranties, (b) the
Pledge Agreements, (c) the Mortgages, (d) the Security Agreements, (e) the
Consents and (f) the Mortgage Consents, together with any exhibits, schedules
and other attachments to such documents and any financing statements related
thereto, as such documents, exhibits, schedules, attachments or financing
statements may be, from time to time, amended, supplemented, restated or
otherwise modified.
"Source" is defined in the preamble.
"Stated Amount" of each Letter of Credit means the face amount or the
"Stated Amount" of such Letter of Credit (as defined therein).
"Stated Expiry Date" is defined in Section 4.1.
"Stated Maturity Date" means (i) with respect to the Tranche A Loans, that
date that is three (3) years after the Tranche A Availability Termination Date;
(ii) with respect to Tranche B Loans, January 31, 2001; and (iii) with respect
to Tranche C Loans, October 30, 2004.
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"Subordinated Notes" means the promissory notes issued pursuant to that
certain Purchase Agreement dated as of October 27, 1998 among Alliance Plc and
EnCap evidencing Subordinated Indebtedness of Alliance Plc to EnCap which has
been subordinated to the Obligations pursuant to the Subordination Agreement.
"Subordinated Indebtedness" means unsecured Indebtedness of Alliance Plc
and/or its consolidated Subsidiaries (including the Subordinated Notes) that is
postponed and subordinated, on terms and conditions satisfactory to the Agent,
to the Obligations, and has covenants and terms of default, repayment,
standstill and acceleration consented to, in each case, by the Agent.
"Subordination Agreement" means that certain Master Subordination Agreement
dated as of a date prior to the initial Credit Extension under this Agreement,
between the Agent and EnCap, substantially in the form of Exhibit N.
"Subsidiary" means, with respect to any Person, (a) any corporation of
which more than 50% of the outstanding capital stock having ordinary voting
power to elect a majority of the board of directors of such corporation
(irrespective of whether at the time capital stock of any other class or classes
of such corporation shall or might have voting power upon the occurrence of any
contingency) is at the time directly or indirectly owned by such Person, (b) any
partnership, limited liability company, joint venture, association, firm or
other business entity in which more than 50% of the equity interest or voting
power is at the time directly or indirectly owned by such Person, by such Person
and one or more other Subsidiaries of such Person, or by one or more other
Subsidiaries of such Person or (c) any partnership in which such Person is a
general partner.
"Surety Instrument" means all letters of credit (including commercial and
standby), banker's acceptances, bank guaranties, shipside bonds, surety bonds
and similar instruments.
"Tangible Net Worth" means the consolidated net worth of Alliance Plc and
its consolidated Subsidiaries after subtracting therefrom the aggregate amount
of any intangible assets of Alliance Plc and its consolidated Subsidiaries,
including goodwill, franchises, licenses, patents, trademarks, trade names,
copyrights, service marks and brand names.
"Taxes" is defined in Section 5.6.
"Tranche A Availability Termination Date" means October 30, 2000.
"Tranche A Commitment" means the Lenders' commitments pursuant to Section
2.1.1 to make Tranche A Loans to the Borrowers, and to issue Letters of Credit,
in accordance with the terms and provisions of this Agreement.
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"Tranche A Commitment Amount" means the lesser of (i) $30,000,000, as
reduced from time to time pursuant to the provisions of Section 2.2, and (ii)
the Borrowing Base.
"Tranche A Facility" means the Facility providing for the Tranche A
Commitment, the Tranche A Loans and the Letters of Credit.
"Tranche A Loan" means each loan made by a Lender to the Borrowers from
time to time pursuant to its Tranche A Commitment in accordance with Sections
2.1.1 and 2.3.
"Tranche B Availability Termination Date" means January 31, 2001.
"Tranche B Commitment" means the Lenders' commitments pursuant to Section
2.1.2 to make Tranche B Loans to the Borrowers in accordance with the terms and
provisions of this Agreement.
"Tranche B Commitment Amount" means $20,000,000, as reduced from time to
time pursuant to the provisions of Section 2.2.
"Tranche B Facility" means the Facility providing for the Tranche B
Commitment and the Tranche B Loans.
"Tranche B Loan" means each loan made by a Lender to the Borrowers from
time to time pursuant to its Tranche B Commitment in accordance with Sections
2.1.2 and 2.3.
"Tranche C Availability Termination Date" means the Business Day
immediately following the Unified Closing Date.
"Tranche C Commitment" means the Lenders' commitments pursuant to Section
2.1.3 to make Tranche C Loans to the Borrowers, in accordance with the terms and
provisions of this Agreement.
"Tranche C Commitment Amount" means $5,000,000, as reduced from time to
time pursuant to the provisions of Section 2.2.
"Tranche C Facility" means the Facility providing for the Tranche C
Commitment and the Tranche C Loans.
"Tranche C Loan" means each loan made by a Lender to the Borrowers from
time to time pursuant to its Tranche C Commitment in accordance with Sections
2.1.3 and 2.3.
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"type" means, relative to any Loan, the portion thereof, if any, being
maintained as a Base Rate Loan or a LIBO Rate Loan.
"Unified Closing Date"means the latest of the following dates: (a) the
Effective Date under this Agreement; (b) the Completion Date under (and as
defined in) the Difco Agreement; (c) the Completion Date under (and as defined
in) the Burlington Agreement, and (d) the sale and funding of the Subordinated
Notes.
"United States" or "U.S." means the United States of America, its fifty
States and the District of Columbia.
"Warrant Documents" means the Warrant Instrument, the Warrants and the
Registration Rights Agreement.
"Warrant Instrument" means the Warrant Instrument, substantially in the
form of Exhibit O-2, between Alliance Plc and BankAmerica or the Designee.
"Warrants" means the warrants, substantially in the form of Exhibit O-3,
from Alliance Plc to BankAmerica or the Designee.
"Welfare Plan" means a "welfare plan", as such term is defined in section
3(1) of ERISA.
"Year 2000 Compliant" is defined in Section 7.18.
"Year 2000 Problem" is defined in Section 7.18.
SECTION 1.2. USE OF DEFINED TERMS. Unless otherwise defined or the
context otherwise requires, terms for which meanings are provided in this
Agreement shall have such meanings when used in the Disclosure Schedule and in
each Note, Borrowing Request, Continuation/Conversion Notice, notice and other
communication or other Loan Document delivered from time to time in connection
with this Agreement or any other Loan Document.
SECTION 1.3. CROSS-REFERENCES. Unless otherwise specified, references in
this Agreement and in each other Loan Document to any Article or Section are
references to such Article or Section of this Agreement or such other Loan
Document, as the case may be, and, unless otherwise specified, references in any
Article, Section or definition to any clause are references to such clause of
such Article, Section or definition.
SECTION 1.4. ACCOUNTING AND FINANCIAL DETERMINATIONS. Unless otherwise
specified, all accounting terms used herein or in any other Loan Document shall
be interpreted, all accounting determinations and computations hereunder or
thereunder
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(including under Section 8.2.4) shall be made, and all financial statements
required to be delivered hereunder or thereunder shall be prepared in accordance
with, those United States generally accepted accounting principles ("GAAP")
applied in the preparation of the financial statements referred to in Section
7.7.
SECTION 1.5. INTERPRETATIONAL PROVISIONS.
(a) The meanings of defined terms are equally applicable to the
singular and plural forms of the defined terms.
(b) The words "hereof", "herein", "hereunder" and similar words refer
to this Agreement as a whole and not to any particular provision of this
Agreement; and subsection, Section, Schedule and Exhibit references are to
this Agreement unless otherwise specified.
(c) (i) The term "documents" includes any and all instruments,
documents, agreements, certificates, indentures, notices and other
writings, however evidenced.
(ii) The term "including" is not limiting and means "including
without limitation."
(iii) In the computation of periods of time from a specified
date to a later specified date, the word "from" means "from and including";
the words "to" and "until" each mean "to but excluding", and the word
"through" means "to and including."
(iv) The term "property" includes any kind of property or
asset, real, personal or mixed, tangible or intangible.
(d) Unless otherwise expressly provided herein, (i) references to
agreements (including this Agreement) and other contractual instruments
shall be deemed to include all subsequent amendments and other
modifications thereto, but only to the extent such amendments and other
modifications are not prohibited by the terms of any Loan Document, and
(ii) references to any statute or regulation are to be construed as
including all statutory and regulatory provisions consolidating, amending,
replacing, supplementing or interpreting the statute or regulation.
(e) This Agreement and other Loan Documents may use several different
limitations, tests or measurements to regulate the same or similar matters.
All such limitations, tests and measurements are cumulative and shall each
be performed in accordance with their terms. Unless otherwise expressly
provided, any reference to any action of the Lenders or the Agent by way of
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consent, approval or waiver shall be deemed modified by the phrase "in
their sole discretion" or "in its sole discretion," as applicable.
(f) This Agreement and the other Loan Documents are the result of
negotiations among and have been reviewed by counsel to the Lender, the
Borrowers and the other parties, and are the products of all parties.
Accordingly, they shall not be construed against the Lenders or the Agent
merely because of the Lenders' or the Agent's involvement in their
preparation.
ARTICLE II.
COMMITMENTS, BORROWING PROCEDURES AND NOTE
SECTION 2.1. COMMITMENTS. On the terms and subject to the conditions of
this Agreement (including Article V), each Lender agrees to make loans ("Loans")
to the Borrowers equal to the aggregate amount of the Borrowing of Loans
requested by the Borrowers to be made pursuant to the Commitments on such day
described in this Section 2.1. On the terms and subject to the conditions
hereof, the Borrowers may from time to time borrow and prepay Tranche A Loans
and Tranche B Loans but may not reborrow any amounts paid or pre-paid in respect
of Tranche C Loans.
SECTION 2.1.1. TRANCHE A COMMITMENT. From time to time on any Business
Day during the period from and after the Effective Date to the earlier to occur
of (x) Tranche A Availability Termination Date and (y) any Commitment
Termination Date relating to all Commitments or to the Tranche A Commitment,
each Lender will make Tranche A Loans to the Borrowers equal to the amount of
the Tranche A Loan requested by the Borrowers, subject to the limitations in
this Section 2.1, to be made on such day in the applicable Borrowing Request
therefor. The Borrowers acknowledge that, as of October 26, 1998, the aggregate
outstanding principal amount of all Loans (as defined under the Existing
Agreement) is $22,566,762.16.
SECTION 2.1.2. TRANCHE B COMMITMENT. From time to time on any Business
Day during the period from and after the Effective Date to the earlier to occur
of (x) Tranche B Availability Termination Date, and (y) any Commitment
Termination Date relating to all Commitments or to the Tranche B Commitment,
each Lender will make Tranche B Loans to the Borrowers equal to the aggregate
amount of the Tranche B Loan requested by the Borrowers, subject to the
limitations in this Section 2.1, to be made on such day in the applicable
Borrowing Request therefor.
SECTION 2.1.3. TRANCHE C COMMITMENT. From time to time on any Business
Day during the period from and after the Effective Date to the earlier to occur
of (x) Tranche C Availability Termination Date, and (y) any Commitment
Termination Date relating to all Commitments or to the Tranche C Commitment,
each Lender will
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make Tranche C Loans to the Borrowers equal to the aggregate amount of the
Tranche C Loan requested by the Borrowers to be made on such day in the
applicable Borrowing Request therefor. The Borrowers acknowledge that, on the
Unified Closing Date, and subject to the satisfaction of each of the conditions
precedent set forth in Section 6.1, the outstanding principal amount of all
Loans (as defined in the Existing Agreement) set forth in Section 2.1.1 plus
accrued and unpaid interest as well as certain fees and expenses, will be
divided into a single Tranche C Loan in the original principal amount of
$5,000,000.00 and a single Tranche A Loan in the original principal amount not
to exceed $18,500,000, and any excess balance of such existing Loans shall
become a Tranche B Loan.
SECTION 2.1.4. COMMITMENT TO ISSUE LETTERS OF CREDIT. From time to time
on any Business Day, the Issuer will issue Letters of Credit, in accordance with
Article IV. The Borrowers acknowledge that, as of October 26, 1998, the Stated
Amount of all Letters of Credit issued and outstanding under the Existing
Agreement is $100,000.
SECTION 2.1.5. LENDERS NOT REQUIRED TO MAKE LOANS UNDER CERTAIN
CIRCUMSTANCES. No Lender shall be required to make any Loan if, after giving
effect thereto
(a) the aggregate outstanding principal amount of all Tranche A Loans
would exceed the Tranche A Commitment Amount less the Letter of Credit
Outstandings, or
(b) the aggregate outstanding principal amount of all Tranche B Loans
would exceed the Tranche B Commitment Amount, or
(c) the aggregate outstanding principal amount of all Tranche C Loans
would exceed the Tranche C Commitment Amount, or
(d) the aggregate outstanding principal amount of all Loans of such
Lender, together with its Percentage of all Letter of Credit Outstandings,
would exceed such Lender's Percentage of the Commitment Amount, or
(e) a Borrowing Base Deficiency would exist, or
(f) a Collateral Value Deficiency would exist, or
(g) an Event of Default has occurred and is continuing.
SECTION 2.1.6. ISSUER NOT REQUIRED TO ISSUE LETTERS OF CREDIT UNDER
CERTAIN CIRCUMSTANCES. The Issuer shall not be required to issue any Letter of
Credit if, after giving effect thereto
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(a) the aggregate outstanding principal amount of all Tranche A Loans
would exceed the Tranche A Commitment Amount,
(b) a Borrowing Base Deficiency would exist,
(c) a Collateral Value Deficiency would exist,
(d) all Letter of Credit Outstandings would exceed $1,000,000, or
(e) an Event of Default has occurred and is continuing.
SECTION 2.2 REDUCTION OF COMMITMENT AMOUNTS. Any Commitment Amount is
subject to reduction from time to time pursuant to this Section 2.2.
SECTION 2.2.1. OPTIONAL. The Borrowers may, from time to time on any
Business Day, voluntarily reduce the Commitments in the following order: first,
the Tranche B Commitment Amount and, when the Tranche B Commitment has been
reduced to zero, then the Tranche C Commitment Amount and, when the Tranche C
Commitment has been reduced to zero, then the Tranche A Commitment Amount;
provided, however, that all such reductions shall require at least three (3)
Business Days' prior notice to the Agent and be permanent, and any partial
reduction of the Commitment Amount shall be in a minimum amount of $250,000 and
in an integral multiple of $50,000.
SECTION 2.2.2. MANDATORY.
(a) On the Tranche A Availability Termination Date, the unused portion
of the Tranche A Commitment Amount shall, without any further action,
automatically and permanently be canceled.
(b) On the Tranche B Availability Termination Date, the unused portion
of the Tranche B Commitment Amount shall, without any further action,
automatically and permanently be canceled.
(c) On the Tranche C Availability Termination Date, the unused portion
of the Tranche C Commitment Amount shall, without any further action,
automatically and permanently be canceled.
(d) On any Commitment Termination Date, the Commitment Amount of each
Facility shall be reduced to zero.
SECTION 2.3. BORROWING PROCEDURE.
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(a) By delivering a Borrowing Request to the Agent on or before 10:00
a.m. (Chicago time) on a Business Day, the Borrowers may from time to time
irrevocably request, on not less than three (3) nor more than five (5)
Business Days' notice, or, in the case of a Base Rate Borrowing, one (1)
Business Day's notice, that a Borrowing be made in a minimum amount of
$250,000 and an integral multiple of $50,000, or in the unused amount of
the applicable Commitment. On the terms and subject to the conditions of
this Agreement, each Borrowing shall be made on the Business Day specified
in such Borrowing Request. The Lenders shall make such funds available to
the Borrowers by wire transfer to the accounts the Borrowers shall have
specified in their Borrowing Request. On or before 11:00 a.m. (Chicago
time) on such Business Day each Lender shall deposit with the Agent same
day funds in an amount equal to such Lender's Percentage of the requested
Borrowing. Such deposit will be made to an account which the Agent shall
specify from time to time by notice to the Lenders. To the extent funds
are received from the Lenders, the Agent shall make such funds available to
the Borrowers by wire transfer to the accounts the Borrowers shall have
specified in their Borrowing Request. No Lender's obligation to make any
Loan shall be affected by any other Lender's failure to make any Loan.
(b) Each Lender may, if it so elects, fulfill its obligation to make,
continue or convert LIBO Rate Loans hereunder by causing one of its foreign
branches or Affiliates (or an international banking facility created by
such Lender) to make or maintain such LIBO Rate Loan; provided, however,
that such LIBO Rate Loan shall nonetheless be deemed to have been made and
to be held by such Lender, and the obligation of the Borrowers to repay
such LIBO Rate Loan shall nevertheless be to such Lender for the account of
such foreign branch, Affiliate or international banking facility. In
addition, the Borrowers hereby consent and agree that, for purposes of any
determination to be made for purposes of Section 5.1, 5.2, 5.3 or 5.4, it
shall be conclusively assumed that each Lender elected to fund all LIBO
Rate Loans by purchasing Dollar deposits in its LIBO Office's interbank
eurodollar market.
SECTION 2.4. CONTINUATION AND CONVERSION ELECTIONS. By delivering a
Continuation/Conversion Notice to the Agent on or before 10:00 a.m. (Chicago
time) on a Business Day, the Borrowers may from time to time irrevocably elect,
on not less than three (3) nor more than five (5) Business Days' notice that
all, or any portion in an aggregate minimum amount of $250,000 and an integral
multiple of $50,000, of any Loans, in the case of Base Rate Loans, be converted
into LIBO Rate Loans or, in the case of LIBO Rate Loans, be converted into a
Base Rate Loan or continued as a LIBO Rate Loan (in the absence of delivery of a
Continuation/Conversion Notice with respect to any LIBO Rate Loan at least three
(3) Business Days before the last day of the then current Interest Period with
respect thereto, such LIBO Rate Loan shall, on such last day, automatically
convert to a Base Rate Loan); provided, however, that
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no portion of the outstanding principal amount of any LIBO Rate Loan may be
continued as, and no portion of any Base Rate Loan may be converted into, LIBO
Rate Loans when any Default has occurred and is continuing.
SECTION 2.5. LOAN ACCOUNTS AND NOTES.
(a) The Loans made by each Lender shall be evidenced by one or more
loan accounts or records maintained by such Lender in the ordinary course
of business. The loan accounts or records maintained by such Lender shall
be conclusive absent manifest error of the amount of the Loans made by such
Lender to the Borrowers and the interest and payments thereon. Any failure
so to record or any error in doing so shall not, however, limit or
otherwise affect the obligations of the Borrowers hereunder to pay any
amount owing with respect to the Loans.
(b) Each Lender's Loans shall also be evidenced by a Note payable to
the order of such Lender in a maximum principal amount equal to the
Lender's Percentage of the original, aggregate Commitment Amount. The
Borrowers hereby irrevocably authorize each Lender to make (or cause to be
made) appropriate notations on the grid attached to the Note (or on any
continuation of such grid) or in other books and records maintained by such
Lender, which notations, if made, shall evidence, inter alia, the date of,
the outstanding principal of, and the interest rate applicable to the Loans
evidenced thereby (the Borrowers may from time to time reasonably request a
copy of such grid). Such notations shall be conclusive and binding on the
Borrowers absent manifest error; provided, however, that the failure of any
Lender to make any such notations shall not limit or otherwise affect any
Obligations of the Borrowers or any other Obligor.
(c) The Borrowers acknowledge that the Notes delivered to the Lenders
as of the Effective Date amend, restate and renew the promissory notes
given by the Original Borrowers under the Existing Agreement, which
amended, restated, consolidated and renewed certain promissory notes and
other evidence of indebtedness then outstanding.
SECTION 2.6. BORROWING BASE REDETERMINATION AND COLLATERAL VALUE
REDETERMINATION.
(a) Within thirty (30) days after receipt of the Engineering Report
required to be delivered semi-annually, commencing with the interim
Engineering Report described in Section 2.6(c), (and thereafter in
connection with the regular, semi-annual Engineering Report), the Agent
shall notify the Borrowers in writing of the Borrowing Base determined by
the Agent on the basis of such Engineering Report. After July 1, 1999, the
Borrowers or the
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Agent may request, and Agent will consider, one (1) additional
determination of the Borrowing Base at any time during each calendar year,
including 1999. Each such determination is herein called a "Borrowing Base
Redetermination". Contemporaneously with each Borrowing Base
Redetermination that shall occur at any time that any Tranche B Loan is
outstanding, the Agent shall notify the Borrowers in writing of the
Collateral Value determined by the Agent on the basis of such Engineering
Report. Each such determination is herein called a "Collateral Value
Redetermination". Each Borrowing Base Redetermination (and, as applicable,
Collateral Value Redetermination) shall be effective as of July 31st (with
respect to Engineering Reports effective May 1st), January 31st (with
respect to Engineering Reports effective November 1st) or upon notice from
the Agent (with respect to any requested Borrowing Base redetermination)
when the Borrowers are notified of the amount of the redetermined Borrowing
Base (and, as applicable, the amount of the redetermined Collateral Value)
by the Agent.
(b) The Borrowing Base and Collateral Value are also subject to
adjustment as provided for in Section 3.1.2.
(c) In addition to the semi-annual Engineering Reports referred to
above (and in lieu of a November 1 Report for 1998), an interim Reserve and
Economic Report shall be delivered to Agent by March 31, 1999, and shall
consist of independent engineering evaluations on all of Borrower's U.S.
Mortgaged Properties, and the East Irish Sea Assets, if significant changes
have occurred with respect to the East Irish Sea Assets since the Effective
Date. Such evaluation shall be prepared by independent consultants which
are acceptable to the Agent and shall form the basis for the initial
Borrowing Base Redetermination. The Agent shall give notice to the
Borrowers not later than June 1, 1999, of the Borrowing Base and Collateral
Value determined by the Agent, and such Borrowing Base Redetermination and
Collateral Value Redetermination shall be effective as of July 1, 1999.
SECTION 2.7. PURPOSES. The Borrowers shall apply the proceeds of each Loan
only in the following manner:
(a) in the case of Tranche A Loans, to refinance existing
indebtedness, for working capital purposes of the Borrowers and to finance
Approved Development Activities; and
(b) in the case of Tranche B Loans, as follows:
1. A portion of the purchase price of the East Irish Sea Assets,
in an amount not to exceed $8.0 million;
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2. Approved Development Activities in respect of the Mortgaged
Properties (other than the East Irish Sea Assets), in an
amount not to exceed $2.0 million;
3. Fees and expenses incurred in connection with the acquisition
and financing of the East Irish Sea Assets, in an amount not
to exceed in the aggregate $4 million (provided the Borrowers
have furnished to the Agent, along with the Borrowing Request
applicable thereto, a detailed schedule, satisfactory to the
Agent, of such fees and expenses);
4. Approved Development Activities in respect of the East Irish
Sea Assets; and
(c) in the case of Tranche C Loans, for general corporate and working
capital purposes.
ARTICLE III
REPAYMENTS, PREPAYMENTS, INTEREST AND FEES
SECTION 3.1. REPAYMENTS AND PREPAYMENTS AND CERTAIN BORROWING BASE MATTERS.
The Borrowers shall repay the unpaid principal amount of the Loans as set forth
in this Section 3.1.
SECTION 3.1.1. REPAYMENTS AND PREPAYMENTS. The Borrower shall repay in full
the unpaid principal amount of each Tranche A Loan, and each Tranche A Loan
shall mature and be due and payable, on the Tranche A Availability Termination
Date; provided, however, that if no Event of Default has occurred and is
continuing, the unpaid principal amount of the Tranche A Loans shall, on the
Tranche A Availability Termination Date and in response to a Borrowing Request
delivered to the Lender, not be due and payable but shall convert to term Loans.
The Borrowers shall repay in full the unpaid principal amount of each Loan upon
the applicable Stated Maturity Date. Prior thereto, the Borrowers
(a) may, from time to time on any Business Day, make a voluntary
prepayment, in whole or in part, of the outstanding principal amount of any
Loans; provided, however, that
(i) any such prepayment shall be made pro rata among Loans of the
same type and tranche;
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(ii) no such prepayment of any LIBO Rate Loan may be made on any
day other than the last day of the Interest Period for such Loan;
(iii) all such voluntary prepayments shall require at least three
(3) but no more than five (5) Business Days' prior written notice to
the Agent (which notice is irrevocable) stating the date and amount of
such prepayment and the type of Loan to be prepaid; and
(iv) all such voluntary partial prepayments shall be in an
aggregate minimum amount of $100,000 and an integral multiple of
$50,000;
(b) shall, on each date when any reduction in any Commitment Amount
shall become effective, including pursuant to Section 2.2, make a mandatory
prepayment (which shall be applied (or held for application, as the case
may be) by each Lender to the payment of the aggregate unpaid principal
amount of those Loans then outstanding and then to the payment of the then
Letter of Credit Outstandings) equal to the excess, if any, of the
aggregate outstanding principal amount of all Loans and Letter of Credit
Outstandings over such Commitment Amount as so reduced;
(c) shall make prepayments as specified in Section 3.1.2;
(d) shall, on each Quarterly Payment Date, make a payment in an amount
not less than the interest payment required pursuant to Section 3.2.3;
(e) shall, on each Quarterly Payment Date beginning January 31, 2001,
make a payment in an amount equal to that necessary to amortize the
principal of all Tranche C Loans equally over the remaining Quarterly
Payment Dates and the applicable Stated Maturity Date;
(f) shall, if Tranche A Loans have been converted to a term Loan
pursuant to the terms and conditions hereof, on each Quarterly Payment Date
after the Tranche A Availability Termination Date, make a payment in an
amount equal to that necessary to amortize the principal of all Tranche A
Loans equally over the remaining Quarterly Payment Dates and the applicable
Stated Maturity Date;
(g) shall, on the Tranche B Availability Termination Date, pay the
entire outstanding principal amount of all Tranche B Loans;
(h) shall, immediately upon any acceleration of the Loans pursuant to
Section 9.2 or Section 9.3, repay all Loans, unless, pursuant to Section
9.3, only a portion of all Loans is so accelerated.
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Each payment or prepayment of any Loans made pursuant to this Section shall be
without premium or penalty, except as may be required by Section 5.4, and shall
be applicable, to the extent of such prepayment, in the inverse order of
maturity. No voluntary prepayment of principal of any Loans or any prepayment
pursuant to the preceding clause (c) shall cause a reduction in any Commitment
Amount.
SECTION 3.1.2. BORROWING BASE DEFICIENCIES, COLLATERAL VALUE DEFICIENCIES
AND ASSET SALES.
(a) Upon the occurrence of a Borrowing Base Deficiency and/or a
Collateral Value Deficiency, the Agent may notify the Borrowers of such
Borrowing Base Deficiency and/or such Collateral Value Deficiency, as
applicable. Within ten (10) Business Days from and after the Borrowing
Base Deficiency Notification Date and/or such Collateral Value Deficiency
Notification Date, as applicable, the Borrowers shall notify the Agent and
the Lenders that they shall take one of the following actions:
(i) execute and deliver to the Agent supplemental or additional
Security Documents, in form and substance reasonably satisfactory to
the Agent and its counsel, securing payment of the Notes and the other
Obligations and covering additional Oil and Gas Properties directly
owned by the Borrowers or one or more of the Borrowers' Subsidiaries
which are not then covered by any Loan Document and which are of a
type and nature satisfactory to the Agent, and having a value, in
addition to other Oil and Gas Properties already subject to a Mortgage
(determined by the Lender using customary standards for oil and gas
lending), sufficient to eliminate the Borrowing Base Deficiency and/or
the Collateral Value Deficiency, as applicable, all as more
particularly described in Section 8.1.7(a) and (b); or
(ii) make a payment with respect to the Obligations (which shall
be applied (or held for application, as the case may be) by the
Lenders to the payment of the aggregate unpaid principal amount of
those Loans then outstanding and then to the payment of the then
Letter of Credit Outstandings) in an aggregate principal amount
sufficient to eliminate such Borrowing Base Deficiency and/or
Collateral Value Deficiency, as applicable, within sixty (60) days
after the Borrowing Base Deficiency Notification Date or Collateral
Value Deficiency Notification Date, as applicable.
If the Borrowers shall elect to execute and deliver (or cause one or more
of the Borrowers' Subsidiaries to execute and deliver) supplemental or
additional Security Documents to the Agent pursuant to clause (i), they
shall provide the Agent with descriptions of the additional assets to be
collaterally assigned
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(together with current valuations, Engineering Reports, Security Documents
described in clause (i) and title evidence applicable thereto, each of
which shall be in form and substance reasonably satisfactory to the Agent)
within sixty (60) days after the Borrowing Base Deficiency Notification
Date or Collateral Value Deficiency Notification Date, as applicable. Such
supplemental or additional Security Documents shall be subject to the terms
of Section 8.1.7. If the Borrowers fail to take any of the actions
described in clauses (i) or (ii) above within such ten (10) Business Day
period, then without any necessity for notice to the Borrowers or any other
person, the Borrowers shall become obligated immediately to pay Obligations
in an aggregate principal amount equal to the applicable Borrowing Base
Deficiency and/or Collateral Value Deficiency.
(b) If the Borrowers or any of their Subsidiaries sells, transfers or
otherwise disposes of Oil and Gas Properties included in the most recent
determination of the Borrowing Base and the Collateral Value and that have
a fair market value in the aggregate for the Borrowers and such
Subsidiaries in excess of $250,000 during the period from the effective
date of the most recent Borrowing Base Redetermination until the effective
date of the next Borrowing Base Redetermination, the Borrowing Base and the
Collateral Value shall be immediately reduced, until the effective date of
the next Borrowing Base Redetermination and Collateral Value
Redetermination, by an amount as reasonably determined by the Agent, or if
the value of the applicable Oil and Gas Properties cannot be readily
determined by the Agent, by the net sales proceeds realized from the sale,
transfer or other disposition of such assets.
If such reduction shall result in a Borrowing Base Deficiency and/or
Collateral Value Deficiency, then in lieu of the provisions of clause (a)
of Section 3.1.2, the Borrowers shall immediately make a payment with
respect to the Obligations in an amount equal to the greater of such
Borrowing Base Deficiency or such Collateral Value Deficiency. In addition
to and cumulative of the foregoing, if a Borrowing Base Deficiency and/or
Collateral Value Deficiency exists prior to such sale, transfer or other
disposition of assets, then in lieu of the provisions of clause (a) of
Section 3.1.2, the Borrower shall, with the written consent of the Agent,
immediately make a payment with respect to the Obligations (which shall be
applied (or held for application, as the case may be) by the Lenders first
to the payment of the aggregate unpaid principal amount of those Loans then
outstanding, and then to the payment of the then Letter of Credit
Outstandings) in an aggregate principal amount equal to the lesser of (i)
the greater of the amount of the Collateral Value Deficiency or the amount
of the Borrowing Base Deficiency (after giving effect to the applicable
sale, transfer or other disposition) or (ii) 100% of the net sales proceeds
realized from the applicable sale, transfer or other disposition.
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(c) In addition, if the Borrowers or any of their Subsidiaries raises
capital through the issuance of any type of equity or issues any
subordinated debt or senior unsecured debt, the proceeds of such issuance
will first be applied to cure any Borrowing Base Deficiency and/or
Collateral Value Deficiency, then as a prepayment of Tranche B Loans and a
permanent reduction of the Tranche B Commitment, and finally as a
prepayment of Tranche C Loans and a permanent reduction of the Tranche C
Commitment.
SECTION 3.2. INTEREST PROVISIONS. Interest on the outstanding principal
amount of Loans shall accrue and be payable in accordance with this Section 3.2.
SECTION 3.2.1. RATE. Pursuant to an appropriately delivered Borrowing
Request or Continuation/Conversion Notice, the Borrowers may elect that Loans
accrue interest at a rate per annum:
(a) on that portion maintained from time to time as a Base Rate Loan,
equal to the Alternate Base Rate plus the Applicable Margin from time to
time in effect; and
(b) on that portion maintained as a LIBO Rate Loan, during each
Interest Period applicable thereto, equal to the sum of the LIBO Rate
(Reserve Adjusted) for such Interest Period plus the Applicable Margin.
All LIBO Rate Loans shall bear interest from and including the first day of the
applicable Interest Period to (but not including) the last day of such Interest
Period at the interest rate determined as applicable to such LIBO Rate Loan.
SECTION 3.2.2. POST-MATURITY RATES. After (w) the date any principal amount
of any Loan shall have become due and payable (whether on the Stated Maturity
Date, upon acceleration or otherwise), (x) the date any other monetary
Obligation of the Borrowers shall have become due and payable, (y) the date any
other Event of Default shall have occurred (and so long as such Event of Default
shall be continuing), and (z) the date that is sixty (60) days after a Borrowing
Base Deficiency Notification Date or a Collateral Value Deficiency Notification
Date, if the applicable Borrowing Base Deficiency or Collateral Value Deficiency
has not been cured, the Borrowers shall pay, but only to the extent permitted by
Applicable Law, interest (after as well as before judgment) on all Obligations
at a rate per annum equal to
(a) with respect to LIBO Rate Loans for the period from the date such
Loan becomes due and payable to the end of the then current Interest
Period, the higher of (i) the sum of the LIBO Rate (Reserve Adjusted) for
such Interest Period plus the Applicable Margin plus a margin of 3%, or (ii
the sum of the Alternate Base Rate plus the Applicable Margin plus a margin
of 3%; or
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(b) in all other cases, the sum of the Alternate Base Rate plus the
Applicable Margin plus a margin of 3%.
SECTION 3.2.3. PAYMENT DATES. Interest accrued on each Loan shall be
payable, without duplication:
(a) on the Stated Maturity Date;
(b) on the date of any optional or required payment or prepayment, in
whole or in part, of principal outstanding on such Loan and on that portion
of such Loan so paid or prepaid;
(c) with respect to Base Rate Loans, on each Quarterly Payment Date
occurring after the Effective Date;
(d) with respect to LIBO Rate Loans, on the last day of each
applicable Interest Period (and, if such Interest Period shall exceed three
months, on the 90th day of such Interest Period); and
(e) on that portion of any Loans which is accelerated pursuant to
Section 9.2 or Section 9.3, immediately upon such acceleration.
Interest accrued on Loans or other monetary Obligations arising under this
Agreement or any other Loan Document after the date such amount shall have
become due and payable (whether on the Stated Maturity Date, upon acceleration
or otherwise) shall be payable upon demand.
SECTION 3.2.4. MAXIMUM INTEREST. It is the intention of the parties hereto
to conform strictly to applicable usury laws and, anything herein to the
contrary notwithstanding, the Obligations of the Borrowers to the Lenders under
this Agreement shall be subject to the limitation that payments of interest
shall not be required to the extent that receipt thereof would be contrary to
provisions of Applicable Law applicable to the Lenders limiting rates of
interest which may be charged or collected by the Lenders. Accordingly, if the
transactions contemplated hereby would be usurious under Applicable Law with
respect to the Lenders then, in that event, notwithstanding anything to the
contrary in this Agreement, it is agreed as follows:
(a) the provisions of this Section 3.2.4 shall govern and control;
(b) the aggregate of all consideration which constitutes interest
under Applicable Law that is contracted for, charged or received under this
Agreement, or under any of the other aforesaid agreements or otherwise in
connection with this Agreement by the Lenders shall under no circumstances
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exceed the maximum amount of interest allowed by Applicable Law (such
maximum lawful interest rate, if any, with respect to the Lenders herein
called the "Highest Lawful Rate"), and any excess shall be credited to the
Borrowers by the Lenders (or, if such consideration shall have been paid in
full, such excess refunded to the Borrowers);
(c) all sums paid, or agreed to be paid, to the Lenders for the use,
forbearance and detention of the indebtedness of the Borrowers to the
Lenders hereunder shall, to the extent permitted by Applicable Law, be
amortized, prorated, allocated and spread throughout the full term of such
indebtedness until payment in full so that the actual rate of interest is
uniform throughout the full term thereof; and
(d) if at any time the interest provided pursuant to Sections 3.2.1
and 3.2.2 together with any other fees payable pursuant to this Agreement
and deemed interest under Applicable Law, exceeds that amount which would
have accrued at the Highest Lawful Rate, the amount of interest and any
such fees to accrue to the Lenders pursuant to this Agreement shall be
limited, notwithstanding anything to the contrary in this Agreement, to
that amount which would have accrued at the Highest Lawful Rate, but any
subsequent reductions, as applicable, shall not reduce the interest to
accrue to such Lender pursuant to this Agreement below the Highest Lawful
Rate until the total amount of interest accrued pursuant to this Agreement
and such fees deemed to be interest equals the amount of interest which
would have accrued to such Lender if a varying rate per annum equal to the
interest provided pursuant to Sections 3.2.1 and 3.2.2 had at all times
been in effect, plus the amount of fees which would have been received but
for the effect of this Section 3.2.4.
SECTION 3.3. FEES. The Borrowers agree to pay the fees set forth in this
Section 3.3 and in the Fee Letter. All such fees shall be non-refundable.
SECTION 3.3.1. UNUSED FEE. The Borrowers shall pay to the Agent for the
account of the Lenders an unused fee, for the period from and including the
Effective Date to, but not including the earlier to occur of (x) the Tranche A
Availability Termination Date, and (y) the Commitment Termination Date, equal to
0.50 of 1% per annum of the average of the actual daily amount during the prior
Fiscal Quarter of (a) $55,000,000 minus (b) the sum of the aggregate outstanding
principal amount of all Loans and all Letter of Credit Outstandings, based on a
year comprised of three hundred sixty (360) days. Accrued unused fees shall be
payable in arrears on each Quarterly Payment Date and on the earlier of the
Commitment Termination Date or the Tranche A Availability Termination Date.
SECTION 3.3.2. LETTER OF CREDIT STATED AMOUNT FEE. The Borrowers agree to
pay to the Agent, for the account of the Issuer, a fee for each Letter of Credit
for the
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period from and including the date of the issuance of such Letter of
Credit to (but not including) the date upon which such Letter of Credit expires,
at a rate per annum equal to the Applicable Margin for Tranche A Loans
maintained as LIBO Rate Loans on the Stated Amount of such Letter of Credit,
based on a year comprised of three hundred and sixty (360) days. A prorated
portion of such fee shall be payable by the Borrowers in arrears on each
Quarterly Payment Date, and on the earlier of the Tranche A Availability
Termination Date and the Tranche A Commitment Termination Date for any period
then ending for which such fee shall not theretofore have been paid, commencing
on the first such date after the issuance of such Letter of Credit. After any
Borrowing Base Deficiency and/or Collateral Value Deficiency has or have existed
for sixty (60) consecutive days, the Stated Amount Fee on all Letters of Credit
shall increase by 3.00% until such Borrowing Base Deficiency and/or Collateral
Value Deficiency has or have been eliminated.
SECTION 3.3.3. LETTER OF CREDIT ISSUANCE FEE. The Borrowers agree to pay to
the Agent, for the account of the Issuer, an issuance fee for each Letter of
Credit issued by the Issuer for the period from and including the date of
issuance of such Letter of Credit to (but not including) the date upon which
such Letter of Credit expires, of the greater of 0.25 of 1% of the Stated Amount
of such Letter of Credit or $300.00. Such fee shall be payable on the date of
issuance of such Letter of Credit.
SECTION 3.3.4. LETTER OF CREDIT ADMINISTRATIVE FEES. The Borrowers agree to
pay to the Agent, for the account of the Issuer, all reasonable administrative
expenses of the Issuer in connection with the maintenance, modification (if any)
and administration of each Letter of Credit issued by the Issuer upon demand
from time to time pursuant to the Issuer's schedule of charges then in effect.
SECTION 3.4. PROCEEDS ACCOUNT. The Security Documents contain an assignment
to the Agent by the Borrowers and/or their Subsidiaries, as applicable, of all
production of Hydrocarbons and all proceeds attributable thereto properly
allocable to the Mortgaged Properties. Notwithstanding such assignment of
production, the Borrowers may, until the Agent shall give notice to the
contrary, which notice shall not be unreasonably given, receive such proceeds.
Thereafter, all such proceeds from the sale of such production shall be paid
directly into an account of the Borrowers maintained with the Agent (the
"Proceeds Account"). The Borrowers hereby grant to the Agent, subject to the
prior assignment in favor of the Agent of such production and its proceeds, a
security interest in the Proceeds Account and all proceeds thereof.
SECTION 3.5. ORRI AND WARRANTS ARE NOT COLLATERAL SECURITY.
(a) In addition to interest paid on the Loans, Alliance Plc shall
issue the Warrants and Difco shall grant the Overriding Royalty Interest to
the
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Agent's designee ("Designee"), as additional consideration payable to
the Agent to be retained in perpetuity and not as additional collateral
security for the Obligations.
(b) If all Tranche B Loans are paid in full and the Tranche B
Commitment is terminated on or before March 26, 2000, then the Borrowers
may purchase the Overriding Royalty Interest in consideration of the
payment of a mutually satisfactory purchase price. Such conveyance shall
be without recourse, representation or warranty of any kind, except that
the Designee shall warrant against liens created by, through or under the
Designee.
(c) The Overriding Royalty Interest described in the foregoing
subsections (a) and (b) shall not affect in any way the overriding royalty
interests previously acquired by the Designee pursuant to the Prior
Agreement (which was subsequently exchanged for warrants and other
obligations in respect of Alliance Plc). Similarly, the Warrants to be
issued pursuant to this Agreement shall not affect in any way the warrants
issued to the Designee pursuant to the Prior Agreement.
ARTICLE IV.
LETTERS OF CREDIT
SECTION 4.1. ISSUANCE REQUESTS. By delivering to the Agent an Issuance
Request on or before 12:00 noon (Chicago time), the Borrowers may request, from
time to time prior to the earlier to occur of (x) the Tranche A Availability
Termination Date and (y) any Commitment Termination Date relating to all
Commitments or to the Tranche A Commitment, and on not less than three (3) nor
more than ten (10) Business Days' notice, that the Issuer issue an irrevocable
standby letter of credit in substantially the form of Exhibit K hereto, or in
such other form as may be mutually agreed by the Borrowers and the Issuer (each
a "Letter of Credit"), in support of financial obligations of the Borrowers
incurred in the Borrowers' ordinary course of business and which are described
in such Issuance Request. Upon receipt of an Issuance Request, the Agent shall
promptly notify the Lenders and the Issuer thereof. Each Letter of Credit shall
by its terms:
(a) be issued in a Stated Amount which
(i) is at least $10,000;
(ii) does not exceed (or would not exceed) the then Letter of
Credit Availability;
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(b) be stated to expire on a date (its "Stated Expiry Date") no later
than the earlier of (i) one (1) year after its date of issuance and (ii the
Commitment Termination Date; and
(c) on or prior to its Stated Expiry Date
(i) terminate immediately upon notice to the Issuer from the
beneficiary thereunder that all obligations covered thereby have been
terminated, paid, or otherwise satisfied in full,
(ii) reduce in part immediately and to the extent the
beneficiary thereunder has notified the Issuer that the obligations
covered thereby have been paid or otherwise satisfied in part, or
(iii) terminate thirty (30) Business Days after notice to the
beneficiary thereunder from the Agent that an Event of Default has
occurred and is continuing.
So long as no Default has occurred and is continuing, by delivery to the Agent
and the Issuer of an Issuance Request at least three (3) but not more than ten
(10) Business Days prior to the Stated Expiry Date of any Letter of Credit, the
Borrowers may request the Issuer to extend the Stated Expiry Date of such Letter
of Credit for an additional period not to exceed the earlier of one (1) year
from its date of extension, the Availability Termination Date or the Commitment
Termination Date.
SECTION 4.2. ISSUANCES AND EXTENSIONS. On the terms and subject to the
conditions of this Agreement (including Article VI), the Issuer shall issue
Letters of Credit, and extend the Stated Expiry Dates of outstanding Letters of
Credit, in accordance with the Issuance Requests made therefor. The Issuer will
make available the original of each Letter of Credit which it issues in
accordance with the Issuance Request therefor to the beneficiary thereof (and
will promptly provide the Agent and each of the Lenders with a copy of such
Letter of Credit) and will notify the beneficiary under any Letter of Credit of
any extension of the Stated Expiry Date thereof.
The Issuer is under no obligation to issue any Letter of Credit if:
(i) any order, judgment or decree of any Governmental Agency or
arbitrator shall by its terms purport to enjoin or restrain the Issuer from
issuing such Letter of Credit, or any requirement of Applicable Law or any
request or directive (whether or not having the force of law) from any
Governmental Agency with jurisdiction over the Issuer shall prohibit, or
request that the Issuer refrain from, the issuance of letters of credit
generally or such Letter of Credit in particular or shall impose upon the
Issuer or the Lenders with respect
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to such Letter of Credit any restriction, reserve or capital requirement
(for which the Issuer is not otherwise compensated hereunder) not in effect
on the Effective Date, or shall impose upon the Issuer any unreimbursed
loss, cost or expense which was not applicable on the Effective Date and
which the Issuer in good faith deems material to it;
(ii) one or more of the applicable conditions contained in Article VI
is not then satisfied;
(iii) the expiry date of any requested Letter of Credit is prior to
the maturity date of any financial obligation to be supported by the
requested Letter of Credit;
(iv) any requested Letter of Credit does not provide for drafts, or
is not otherwise in form and substance acceptable to the Issuer, or the
issuance of a Letter of Credit shall violate any applicable policies of the
Issuer;
(v) any standby Letter of Credit is for the purpose of supporting
the issuance of any letter of credit by any other Person; or
(vi) such Letter of Credit is in a face amount denominated in a
currency other than Dollars.
The Uniform Customs and Practice for Documentary Credits as published by the
International Chamber of Commerce most recently at the time of issuance of any
Letter of Credit shall (unless otherwise expressly provided in the Letters of
Credit) apply to the Letters of Credit.
SECTION 4.3. DISBURSEMENTS. The Issuer will notify the Borrowers promptly
of the presentment for payment of any Letter of Credit, together with notice of
the date (the "Disbursement Date") such payment shall be made. Subject to the
terms and provisions of such Letter of Credit, the Issuer shall make such
payment to the beneficiary (or its designee) of such Letter of Credit. In paying
any drawing under a Letter of Credit, the Issuer shall not have any
responsibility to obtain any document (other than any sight draft and
certificates expressly required by the Letter of Credit) or to ascertain or
inquire as to the validity or accuracy of any such document or the authority of
the Person executing or delivering any such document. Prior to 12:00 noon
(Chicago time) on the Disbursement Date, the Borrowers will reimburse the Issuer
for all amounts which it has disbursed under the Letter of Credit. To the extent
the Issuer is not reimbursed in full in accordance with the preceding sentence,
the Borrowers' Reimbursement Obligation shall accrue interest at a fluctuating
rate equal to the lesser of (i) the Highest Lawful Rate or (ii) the Alternate
Base Rate, plus the Applicable Margin plus a margin of 2% per annum, payable on
demand. In the event the Issuer is not reimbursed by the Borrowers on the
Disbursement Date, or if Issuer
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must for any reason return or disgorge such reimbursement, BankAmerica shall, on
the terms and subject to the conditions of this Agreement, fund the
Reimbursement Obligation therefor by making, on the next Business Day, Tranche A
Loans which are Base Rate Loans as provided in Section 2.1.2 (the Borrowers
being deemed to have given a timely Borrowing Request therefor for such amount);
provided, however, for the purpose of determining the availability of the
Commitments to make Loans immediately prior to giving effect to the application
of the proceeds of such Loans, such Reimbursement Obligation shall be deemed not
to be outstanding at such time.
SECTION 4.4. REIMBURSEMENT. The Borrowers' obligation (a "Reimbursement
Obligation") under Section 4.3 to reimburse the Issuer with respect to each
Disbursement (including interest thereon) shall be absolute and unconditional
under any and all circumstances and irrespective of any setoff, counterclaim, or
defense to payment which the Borrowers may have or have had against the Lenders,
the Issuer or any beneficiary of a Letter of Credit, including any defense based
upon the occurrence of any Default, any draft, demand or certificate or other
document presented under a Letter of Credit proving to be forged, fraudulent,
invalid or insufficient, the failure of any Disbursement to conform to the terms
of the applicable Letter of Credit (if, in the Issuer's good faith opinion, such
Disbursement is determined to be appropriate) or any non-application or
misapplication by the beneficiary of the proceeds of such Disbursement, or the
legality, validity, form, regularity, or enforceability of such Letter of
Credit; provided, however, that nothing herein shall adversely affect the right
of the Borrowers to commence any proceeding against the Issuer for any wrongful
Disbursement made by the Issuer under a Letter of Credit as a result of acts or
omissions constituting gross negligence or wilful misconduct on the part of the
Issuer.
SECTION 4.5. DEEMED DISBURSEMENTS. Upon the occurrence and during the
continuation of any Event of Default or the occurrence of the Commitment
Termination Date, an amount equal to that portion of Letter of Credit
Outstandings attributable to outstanding and undrawn Letters of Credit shall, at
the election of the Issuer, acting on instructions from the Required Lenders,
and without demand upon or notice to the Borrowers, be deemed to have been paid
or disbursed by the Issuer under such Letters of Credit (notwithstanding that
such amount may not in fact have been so paid or disbursed), and, upon
notification by the Issuer to the Agent and to the Borrowers of its obligations
under this Section, the Borrowers shall be immediately obligated to reimburse
the Issuer the amount deemed to have been so paid or disbursed by the Issuer.
Any amounts so received by the Issuer from the Borrowers pursuant to this
Section shall be held as collateral security for the repayment of the Borrowers'
obligations in connection with the Letters of Credit issued by the Issuer. At
any time when such Letters of Credit shall terminate and all Obligations to the
Issuer are either terminated or paid or reimbursed to the Issuer in full, the
Obligations of the Borrowers under this Section shall be reduced accordingly
(subject, however, to reinstatement in the event any payment in respect of such
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Letters of Credit is recovered in any manner from the Issuer), and the Issuer
will return to the Borrowers the excess, if any, of
(a) the aggregate amount deposited by the Borrowers with the Issuer
and not theretofore applied by the Issuer to any Reimbursement Obligation
over
(b) the aggregate amount of all Reimbursement Obligations to the
Issuer pursuant to this Section, as so adjusted.
At such time when all Events of Default shall have been cured or waived, the
Issuer shall return to the Borrowers all amounts then on deposit with the Issuer
pursuant to this Section. All amounts on deposit pursuant to this Section
shall, until their application to any Reimbursement Obligation or their return
to the Borrowers, as the case may be, bear interest at the daily average Federal
Funds Rate from time to time in effect (net of the costs of any reserve
requirements, in respect of amounts on deposit pursuant to this Section,
pursuant to F.R.S. Board Regulation D), which interest shall be held by the
Issuer as additional collateral security for the repayment of the Borrowers'
Obligations in connection with the Letters of Credit issued by the Issuer.
SECTION 4.6. NATURE OF REIMBURSEMENT OBLIGATIONS. The Borrowers shall
assume all risks of the acts, omissions, or misuse of any Letter of Credit by
the beneficiary thereof. Neither the Lenders nor the Issuer (except to the
extent of its own gross negligence or wilful misconduct) shall be responsible
for:
(a) the form, validity, sufficiency, accuracy, genuineness, or legal
effect of any Letter of Credit or any document submitted by any party in
connection with the application for and issuance of a Letter of Credit,
even if it should in fact prove to be in any or all respects invalid,
insufficient, inaccurate, fraudulent, or forged;
(b) the form, validity, sufficiency, accuracy, genuineness, or legal
effect of any instrument transferring or assigning or purporting to
transfer or assign a Letter of Credit or the rights or benefits thereunder
or proceeds thereof in whole or in part, which may prove to be invalid or
ineffective for any reason;
(c) failure of the beneficiary to comply fully with conditions
required in order to demand payment under a Letter of Credit;
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(d) errors, omissions, interruptions, or delays in transmission or
delivery of any messages, by mail, cable, telegraph, telex, facsimile or
otherwise; or
(e) any loss or delay in the transmission or otherwise of any document
or draft required in order to make a Disbursement under a Letter of Credit
or of the proceeds thereof;
(f) any change in the time, manner or place of payment of, or in any
other term of, all or any of the obligations of the Borrowers in respect of
any Letter of Credit;
(g) the existence of any claim, set-off, defense or other right that
the Borrowers may have at any time against any beneficiary or any
transferee of any Letter of Credit (or any Person for whom any such
beneficiary or any such transferee may be acting), the Issuer, the Lenders
or any other Person, whether in connection with this Agreement, the
transactions contemplated hereby or by the Letters of Credit or any
unrelated transaction;
(h) any payment by the Issuer, or the Lenders under any Letter of
Credit against presentation of a draft or certificate that does not
strictly comply with the terms of any Letter of Credit; or any payment made
by the Issuer, or the Lenders under any Letter of Credit to any Person
purporting to be a trustee in bankruptcy, debtor-in-possession, assignee
for the benefit of creditors, liquidator, receiver or other representative
of or successor to any beneficiary or any transferee of any Letter of
Credit, including any arising in connection with any insolvency proceeding;
and
(i) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing, including any other circumstance that
might otherwise constitute a defense available to, or a discharge of, the
Borrowers or a guarantor.
None of the foregoing shall affect, impair, or prevent the vesting of any of the
rights or powers granted the Lenders or the Issuer hereunder. In furtherance
and extension, and not in limitation or derogation, of any of the foregoing, any
action taken or omitted to be taken by the Lenders or the Issuer in good faith
shall be binding upon the Borrowers and shall not put the Lenders or the Issuer
under any resulting liability to the Borrowers.
SECTION 4.7. INCREASED COSTS; INDEMNITY. If by reason of
(a) any change in Applicable Law or any change in the interpretation
or application by any judicial or regulatory authority of any Applicable
Law, or
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(b) compliance by the Agent, the Issuer or any Lender with any
direction, request or requirement (whether or not having the force of law)
of any Governmental Agency, including Regulation D of the F.R.S. Board:
(i) the Agent, the Issuer or Lender shall be subject to any tax
(other than taxes on net income and franchises), levy, charge or
withholding of any nature or to any variation thereof or to any
penalty with respect to the maintenance or fulfillment of its
obligations under this Article IV, whether directly or by such being
imposed on or suffered by the Agent, the Issuer or any Lender;
(ii) any reserve, deposit or similar requirement is or shall be
applicable, increased, imposed or modified in respect of any Letters
of Credit issued by any Issuer; or
(iii) there shall be imposed on a Lender any other condition
regarding this Article IV or any Letter of Credit,
and the result of the foregoing is directly or indirectly to increase the cost
to the Agent, the Issuer or any Lender of issuing or maintaining any Letter of
Credit or to reduce any amount receivable in respect thereof by the Agent, the
Issuer or any Lender, then and in any such case may, at any time after the
additional cost is incurred or the amount received is reduced, notify the
Borrowers thereof, and the Borrowers shall pay on demand such amounts as the
Agent, the Issuer or any Lender may specify to be necessary to compensate the
Agent, the Issuer or any Lender for such additional cost or reduced receipt,
together with interest on such amount from the date demanded until payment in
full thereof at a rate equal at all times to the Alternate Base Rate plus the
Applicable Margin plus 2% per annum. The determination by the Agent, the Issuer
or any Lender, as the case may be, of any amount due pursuant to this Section,
as set forth in a statement setting forth the calculation thereof in reasonable
detail, shall, in the absence of manifest error, be final and conclusive and
binding on all of the parties hereto.
In addition to amounts payable as elsewhere provided in this Article IV,
the Borrowers hereby indemnify, exonerate and hold the Agent, the Issuer or any
Lender harmless from and against any and all actions, causes of action, suits,
losses, costs, liabilities and damages, and expenses incurred in connection
therewith (irrespective of whether the Agent, the Issuer or any Lender is a
party to the action for which indemnification is sought), including reasonable
attorneys' fees and disbursements, which the Agent, the Issuer or any Lender may
incur or be subject to as a consequence, direct or indirect, of
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(c) the issuance of the Letters of Credit, other than as a result of
the gross negligence or wilful misconduct of the Issuer as determined by a
court of competent jurisdiction, or
(d) the failure of the Issuer to honor a drawing under any Letter of
Credit as a result of any act or omission, whether rightful or wrongful, of
any present or future de jure or de facto government or governmental
authority.
ARTICLE V.
CERTAIN INTEREST RATE AND OTHER PROVISIONS
SECTION 5.1. LIBO RATE LENDING UNLAWFUL. If any Lender shall determine
(which determination shall, upon notice thereof to the Borrowers, be conclusive
and binding on the Borrowers) that the introduction of or any change in or in
the interpretation of any Applicable Law makes it unlawful, or any central bank
or other Governmental Agency asserts that it is unlawful, for such Lender to
make, continue or maintain any Loan as, or to convert any Loan into, a LIBO Rate
Loan, the obligation of the Lender to make, continue, maintain or convert into
any such LIBO Rate Loans shall, upon such determination, forthwith be suspended
until such Lender shall notify the Agent and the Borrowers that the
circumstances causing such suspension no longer exist, and all LIBO Rate Loans
shall automatically convert into Base Rate Loans at the end of the then current
Interest Periods with respect thereto or sooner, if required by such law or
assertion.
SECTION 5.2. DEPOSITS UNAVAILABLE. If the Agent shall have determined that:
(a) Dollar deposits in the relevant amount are not available to the
Agent in its relevant market; or
(b) by reason of circumstances affecting the Agent's relevant market,
adequate means do not exist for ascertaining the interest rate applicable
hereunder to LIBO Rate Loans,
then, upon notice from the Agent to the Borrowers and the Lenders, the
obligations of all Lenders under Section 2.3 to make any Loans shall forthwith
be suspended until the Agent shall notify the Borrowers and the Lenders that the
circumstances causing such suspension no longer exist.
SECTION 5.3. INCREASED LOAN COSTS, ETC. If by reason of
(a) any change in Applicable Law or any change in the interpretation
or application by any judicial or regulatory authority of any Applicable
Law, or
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(b) compliance by any Lender with any direction, request or
requirement (whether or not having the force of law) of any Governmental
Agency, including Regulation D of the F.R.S. Board:
(i) any Lender shall be subject to any tax (other than taxes on
net income and franchises), levy, charge or withholding of any nature
or to any variation thereof or to any penalty with respect to any
payment due under any LIBO Rate Loan or other amounts due under this
Agreement, whether directly or by such being imposed on or suffered by
such Lender;
(ii) any reserve, deposit or similar requirement is or shall be
applicable, increased, imposed or modified in respect of any
extensions of credit or other assets of, or any deposits with or other
liabilities of, any Lender or Loans made by such Lender, or against
any other funds, obligations or other property owned or held by such
Lender and such Lender actually incurs such additional costs; or
(iii) there shall be imposed on any Lender any other condition
affecting this Agreement (or any of such extensions of credit or
liabilities),
and the result of the foregoing is directly or indirectly to increase the cost
to such Lender of making, continuing or maintaining (or of its obligation to
make, continue or maintain) any Loans as, or of converting (or of its obligation
to convert) any Loans into, LIBO Rate Loans, or to reduce any amount receivable
in respect thereof by such Lender, then and in any such case such Lender may, at
any time after the additional cost is incurred or the amount received is
reduced, notify the Borrowers thereof, and the Borrowers shall pay on demand
such amounts as such Lender may specify to be necessary to compensate such
Lender for such additional cost or reduced receipt, together with interest on
such amount from the date demanded until payment in full thereof at a rate equal
at all times to the Alternate Base Rate plus the Applicable Margin, plus 3% per
annum. The determination by such Lender of any amount due pursuant to this
Section, as set forth in a statement setting forth the calculation thereof in
reasonable detail, shall, in the absence of manifest error, be final and
conclusive and binding on all of the parties hereto.
SECTION 5.4. FUNDING LOSSES. In the event any Lender shall incur any loss
or expense (including any loss or expense incurred by reason of the liquidation
or reemployment of deposits or other funds acquired by such Lender to make,
continue or maintain any portion of the principal amount of any Loan as, or to
convert any portion of the principal amount of any Loan into, a LIBO Rate Loan)
as a result of
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(a) any conversion or repayment or prepayment of the principal amount
of any LIBO Rate Loans on a date other than the scheduled last day of the
Interest Period applicable thereto, whether pursuant to Section 3.1 or
otherwise;
(b) any Loans not being made as LIBO Rate Loans in accordance with the
Borrowing Request therefor by reason of any act or omission by the
Borrowers or failure of a condition precedent to be satisfied;
(c) any Loans not being continued as, or converted into, LIBO Rate
Loans in accordance with the Continuation/ Conversion Notice therefor by
reason of any act or omission by the Borrowers; or
(d) any repayment or prepayment of the principal amount of any Loans
on a date other than the scheduled Monthly Payment Dates;
then, upon the written notice of such Lender to the Borrowers (with a copy to
the Agent), the Borrowers shall, within five (5) days of its receipt thereof,
pay to such Lender such amount as will (in the reasonable determination of such
Lender) reimburse such Lender for such loss or expense. Such written notice
(which shall include calculations in reasonable detail) shall, in the absence of
manifest error, be conclusive and binding on the Borrowers.
SECTION 5.5. INCREASED CAPITAL COSTS. If any change in, or the
introduction, adoption, effectiveness, interpretation, reinterpretation or
phase-in of, any Applicable Law of any Governmental Agency affects or would
affect the amount of capital required or expected to be maintained by any Lender
or any Person controlling such Lender, and such Lender determines (in its sole
and absolute discretion) that the rate of return on its or such controlling
Person's capital as a consequence of its Commitments, issuance of Letters of
Credit or the Loans made by such Lender is reduced to a level below that which
such Lender or such controlling Person could have achieved but for the
occurrence of any such circumstance, then, in any such case upon notice from
time to time by such Lender to the Borrowers, the Borrowers shall immediately
pay directly to such Lender additional amounts sufficient to compensate such
Lender or such controlling Person for such reduction in rate of return. A
statement of such Lender as to any such additional amount or amounts (including
calculations thereof in reasonable detail) shall, in the absence of manifest
error, be conclusive and binding on the Borrowers. In determining such amount,
such Lender may use any method of averaging and attribution that it (in its
reasonable discretion) shall deem applicable.
SECTION 5.6. TAXES. All payments by the Borrowers of principal of, and
interest on, the Loans and all other amounts payable hereunder shall be made
free and clear of and without deduction for any present or future income,
excise, stamp
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or franchise taxes and other taxes, levies, assessments, imposts, deductions,
fees, duties, withholdings or other charges of any nature whatsoever imposed by
any taxing authority, but excluding franchise taxes and taxes imposed on or
measured by any Lender's net income or receipts (such non-excluded items being
called "Taxes"). In the event that any withholding or deduction from any payment
to be made by the Borrowers hereunder is required in respect of any Taxes
pursuant to any Applicable Law, then the Borrowers will
(a) pay directly to the relevant authority the full amount required to
be so withheld or deducted;
(b) promptly forward to the Agent an official receipt or other
documentation satisfactory to the Agent evidencing such payment to such
authority; and
(c) pay to the Agent for the account of the Lenders such additional
amount or amounts as is necessary to ensure that the net amount actually
received by the Lenders will equal the full amount the Lenders would have
received and retained had no such withholding or deduction been required.
Moreover, if any Taxes are directly asserted against any Lender with respect to
any payment received by such Lender hereunder, such Lender may pay such Taxes
and the Borrowers will promptly pay such additional amounts (including any
penalties, interest or expenses) as is necessary in order that the net amount
received by such person after the payment of such Taxes (including any Taxes on
such additional amount) shall equal the amount such person would have received
had not such Taxes been asserted.
If the Borrowers fail to pay any Taxes when due to the appropriate taxing
authority or fail to remit to any Lender the required receipts or other required
documentary evidence, the Borrowers shall indemnify such Lender for any
incremental Taxes, interest or penalties that may become payable by such Lender
as a result of any such failure.
SECTION 5.7. PAYMENTS, COMPUTATIONS, ETC. Unless otherwise expressly
provided, all payments by the Borrowers pursuant to this Agreement, the Notes or
any other Loan Document shall be made by the Borrowers to the Agent for the pro
rata account of the Lenders entitled to receive such payment. All such payments
shall be made without setoff, deduction or counterclaim, not later than 11:00
a.m. (Chicago time) on the date due, in same day or immediately available funds,
to such account with the Agent in Chicago, Illinois as the Agent shall specify
from time to time by notice to the Borrowers. Funds received after that time
shall be deemed to have been received by the Agent on the next succeeding
Business Day and any applicable interest or fee shall continue to accrue. The
Agent shall promptly remit in
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same day funds to each Lender its share, if any, of such payments received by
the Agent for the account of such Lender. All interest shall be computed on the
basis of the actual number of days (including the first day but excluding the
last day) occurring during the period for which such interest is payable over a
year comprised of 360 days (or, in the case of interest on a Base Rate Loan
(other than when calculated with respect to the Federal Funds Rate), 365 days
or, if appropriate, 366 days). Whenever any payment to be made shall otherwise
be due on a day which is not a Business Day, such payment shall (except as
otherwise required by clause (c) of the definition of the term "Interest Period"
with respect to LIBO Rate Loans) be made on the next succeeding Business Day and
such extension of time shall be included in computing interest and fees, if any,
in connection with such payment. Notwithstanding any prepayment of a Base Rate
Loan or any conversion of a Base Rate Loan to a LIBO Rate Loan, the Agent will
calculate and invoice the Borrowers for accrued interest thereon through the
date of such prepayment only at the next Quarterly Payment Date.
SECTION 5.8. SHARING OF PAYMENTS. If any Lender shall obtain any payment or
other recovery (whether voluntary, involuntary, by application of setoff or
otherwise) on account of any Loan (other than pursuant to the terms of Sections
5.3, 5.4 and 5.5) in excess of its pro rata share of payments then or therewith
obtained by all Lenders, such Lender shall purchase from the other Lenders such
participations in Loans made by them and/or Letters of Credit as shall be
necessary to cause such purchasing Lender to share the excess payment or other
recovery ratably with each of them; provided, however, that if all or any
portion of the excess payment or other recovery is thereafter recovered from
such purchasing Lender, the purchase shall be rescinded and each Lender which
has sold a participation to the purchasing Lender shall repay to the purchasing
Lender the purchase price to the ratable extent of such recovery together with
an amount equal to such selling Lender's ratable share (according to the
proportion of
(a) the amount of such selling Lender's required repayment to the
purchasing Lender
to
(b) the total amount so recovered from the purchasing Lender)
of any interest or other amount paid by the purchasing Lender in respect of the
total amount so recovered. The Borrower agrees that any Lender so purchasing a
participation from another Lender pursuant to this Section may, to the fullest
extent permitted by law, exercise all its rights of payment (including pursuant
to Section 5.9) with respect to such participation as fully as if such Lender
were the direct creditor of the Borrower in the amount of such participation.
If under any applicable bankruptcy, insolvency or other similar law, any Lender
receives a secured claim in
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lieu of a setoff to which this Section applies, such Lender shall, to the extent
practicable, exercise its rights in respect of such secured claim in a manner
consistent with the rights of the Lenders entitled under this Section to share
in the benefits of any recovery on such secured claim.
SECTION 5.9. SETOFF. Each Lender shall, upon the occurrence of any Default
described in clauses (a) through (d) of Section 9.1.9 or upon the occurrence of
any other Event of Default, have the right to appropriate and apply to the
payment of the Obligations owing to it (whether or not then due), and (as
security for such Obligations) the Borrowers hereby grant to the Agent and the
Lenders a continuing security interest in, any and all balances, credits,
deposits, accounts or moneys of the Borrowers then or thereafter maintained with
or otherwise held by the Lender, including without limitation, the Proceeds
Account. The Agent and the Lenders agree promptly to notify the Borrowers after
any such setoff and application made by the Lender; provided, however, that the
failure to give such notice shall not affect the validity of such setoff and
application. The rights of the Agent and each Lender under this Section 5.9 are
in addition to other rights and remedies (including other rights of setoff under
Applicable Law or otherwise) which the Agent and the Lenders may have.
SECTION 5.10. USE OF PROCEEDS. The Borrowers shall apply the proceeds of
each Borrowing in accordance with Section 2.7; without limiting the foregoing,
no proceeds of any Loan will be used to acquire any equity security of a class
which is registered pursuant to Section 12 of the Securities Exchange Act of
1934 or any "margin stock", as defined in F.R.S. Board Regulation U, X or G.
ARTICLE VI.
CONDITIONS PRECEDENT
SECTION 6.1. EFFECTIVENESS OF AGREEMENT AND INITIAL BORROWING. All loans
outstanding under the Existing Agreement will, on the Unified Closing Date and
upon the satisfaction of all of the conditions set forth in this Section 6.1,
be consolidated into a new Tranche A Loan and a new Tranche C Loan, and as
applicable, Tranche B Loan. The obligation of the Lenders to (i) consolidate
all outstanding loans into a new Tranche A Loan and a new Tranche C Loan, and,
as applicable, Tranche B Loan; (ii) make any new Credit Extension and (iii) to
amend and restate the Existing Agreement shall be subject to the prior or
concurrent satisfaction of each of the conditions precedent set forth in this
Section 6.1.
SECTION 6.1.1. RESOLUTIONS, ETC. The Agent shall have received from each
Borrower, LRI, Alliance Group, Alliance Plc, ENPRO, Difco and any other Obligor
a
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certificate, dated as of a date not later than the initial Credit Extension,
of the Secretary or Assistant Secretary of such Obligor as to
(a) resolutions of the Board of Directors of such Obligor then in full
force and effect authorizing the execution, delivery and performance of
this Agreement, the Notes and each other Loan Document, as applicable, to
be executed by it;
(b) the incumbency and signatures of those of its officers or Persons
authorized to act with respect to this Agreement, the Notes and each other
Loan Document, as applicable, executed by it;
(c) the Organic Documents of such Obligor; and
(d) evidence that such Obligor is in good standing under the
Applicable Laws of the jurisdiction of its organization (as to Obligors
organized under the laws of the U.S.) and, as to each Obligor under a
Mortgage, each of the jurisdictions where its Mortgaged Properties are
located,
upon which certificate the Agent may conclusively rely until it shall have
received a further certificate of the Secretary of such Obligor canceling or
amending such prior certificate.
SECTION 6.1.2. DELIVERY OF NOTES. The Agent shall have received, for the
account of each Lender, a Note duly executed and delivered by the Borrowers.
SECTION 6.1.3. ENVIRONMENTAL REPORT. The Agent shall have received the
environmental assessments, acceptable in all respects to the Agent, prepared by
Southern Environmental Company with respect to the Mortgaged Properties owned by
Alliance USA and Source, a completed environmental questionnaire and such other
information with respect to the ownership and past use of all of the Mortgaged
Properties (including the East Irish Sea Assets) as the Agent may reasonably
request, all of which shall be satisfactory in form, substance and scope to the
Agent.
SECTION 6.1.4. GUARANTIES. The Agent shall have received executed
counterparts of the Guaranties, or ratifications of Guaranties previously
delivered under the Existing Agreement, dated as of a date not later than the
Unified Closing Date, duly executed by each of Alliance Group, LRI, Enpro and
Difco.
SECTION 6.1.5. PLEDGE AGREEMENTS. The Agent shall have received executed
counterparts of Pledge Agreements or ratifications of Pledge Agreements
previously delivered under the Existing Agreement, dated as of a date not later
than the Unified Closing Date, duly executed by (i) LRI pledging its interests
in the capital stock in each of LPC, GOCA, New GOC and Enpro, (ii) Alliance Plc
pledging its interest in the
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capital stock of Alliance Group, Manx, LRI and Difco, and (iii) Alliance Group
pledging its interest in the capital stock of Alliance USA, ARNO, ARCOL and
Source, together with the certificates, evidencing all of the issued and
outstanding shares of capital stock pledged pursuant to the Pledge Agreements
(other than certificates evidencing the capital stock of Difco, which shall be
delivered pursuant to Section 8.1.7(d)), which certificates shall in each case
be accompanied by undated stock powers duly executed in blank, and or, if any
securities pledged pursuant to the Pledge Agreements are uncertificated
securities, confirmation and evidence satisfactory to the Agent that the
security interest in such uncertificated securities has been transferred to and
perfected by the Agent in accordance with Section 8-313 and Section 8-321 of the
Uniform Commercial Code, as in effect in the State of Illinois, and, as
applicable, with the evidence of completion (or satisfactory arrangement for the
completion) of all filings and recordings of the Pledge Agreements as may be
necessary, or in the reasonable opinion of the Agent, desirable, effectively to
create a valid, perfected first priority lien against and security interest in
the collateral covered thereby.
SECTION 6.1.6. MORTGAGES. The Agent shall have received counterparts of the
Mortgages, or amendments to Mortgages previously delivered under the Existing
Agreement, dated as of a date not later than the Unified Closing Date, duly
executed by Alliance USA, Source, LPC, New GOC and Difco, together with
(a) evidence of the completion (or satisfactory arrangements for the
completion) of all recordings and filings of the Mortgages as may be
necessary or, in the reasonable opinion of the Agent, desirable effectively
to create a valid, perfected first priority Lien against the Properties
purported to be covered thereby, which Properties shall include Proven
Reserves comprising not less than 90% of the Oil and Gas Properties
included in the initial determination of the Borrowing Base;
(b) favorable mortgagee's title opinions in favor of the Agent (in
form and substance and issued by title counsel satisfactory to the Agent),
with respect to the Property purporting to be covered by the Mortgages (or
such portion of such Properties as shall be acceptable to the Agent),
setting forth the working interest and net revenue interest of the
applicable mortgagor in such Properties and opining that the applicable
mortgagor's title to such property is good and defensible and valid and
that the interests created by the Mortgages constitute valid first Liens
thereon free and clear of all defects and encumbrances other than as
approved by the Agent;
(c) such Consents, Mortgage Consents, and such other approvals,
opinions, or documents as the Agent may reasonably request; and
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(d) evidence of the delivery of notices of assignment to Difco's
counterparty to each Material Contract, including the Hydrocarbon Interests
comprising the Core Difco Assets.
The Hydrocarbon Interests, Properties and interests described in and
secured by the Mortgages and in any other mortgages or supplemental mortgages
given pursuant to this Agreement, as such Properties and interests are from time
to time constituted, are herein collectively called the "Mortgaged Properties."
SECTION 6.1.7. SECURITY AGREEMENTS. The Agent shall have received from the
Borrowers, Alliance Group, LRI, Enpro and Difco duly executed, original
counterpart of Security Agreements, or ratifications of Security Agreements
previously delivered under the Existing Agreement, dated as of a date not later
than the Unified Closing Date, together with
(a) executed copies of Uniform Commercial Code financing statements
(Form UCC-1), in proper form for filing, naming the Borrowers (or their
Subsidiaries, as applicable) as the debtor and the Agent as the secured
party, or other similar instruments or documents, filed (or satisfactory
arrangements for the completion of all filings and recordings) under the
Uniform Commercial Code in all jurisdictions as may be necessary or, in the
opinion of the Agent, desirable, effectively to create valid, perfected
first priority liens against and security interests in the collateral
covered thereby; and
(b) executed copies of proper Uniform Commercial Code Form UCC-3
termination statements, if any, necessary to release all Liens and other
rights of any Person in any collateral described in such Security Agreement
previously granted by any Person together with such other Uniform
Commercial Code Form UCC-3 termination statements as the Lender may
reasonably request from the Borrower.
SECTION 6.1.8. OPINIONS OF COUNSEL. The Agent shall have received opinions
addressed to the Agent and the Lenders, from U.S. and U.K. counsel to the
Borrowers and Guarantors acceptable to the Agent, substantially in the form of
Exhibits H-1 and H-2 hereto, respectively, and dated as of a date not later than
the Unified Closing Date.
SECTION 6.1.9. UCC-11S. The Agent shall have received certified copies of
Uniform Commercial Code Requests for Information or Copies (Form UCC-11), or a
similar search report certified by a party acceptable to the Agent, dated a date
reasonably near to the Effective Date, listing all effective financing
statements which name the Borrowers, LRI, Alliance Plc, Alliance Group and
Enpro, (under their present names and any previous names) as the debtor and
which are filed in the jurisdictions in the following states: (1) Oklahoma and
Texas with respect to LRI, Enpro, New
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GOC and GOCA, (2) Alabama, Arkansas, Kansas, Louisiana, Michigan, Mississippi,
North Dakota, Oklahoma, Texas and Wyoming with respect to LPC, and (3)
Louisiana, Oklahoma and Delaware, with respect to Alliance Plc, Alliance Group,
Source and Alliance USA, in which jurisdictions filings are to be made pursuant
to clause (a) of Section 6.1.6, together with copies of such financing
statements (none of which shall cover any collateral described in the
Mortgages).
SECTION 6.1.10. EVIDENCE OF INSURANCE. The Agent shall have received
certificates of insurance satisfactory to it evidencing the existence of all
insurance required to be maintained by the Borrowers by this Agreement and the
other Loan Documents.
SECTION 6.1.11. ASSIGNMENT OF OVERRIDING ROYALTY INTEREST, ETC. BankAmerica
shall have received executed and acknowledged original counterparts of the
Assignment in favor of the Designee, as well as the Certificate as to Overriding
Royalty Interests, substantially in the forms of Exhibit M-1 (or such other form
of such instrument as is acceptable to the Agent) and Exhibit M-2, and Agreement
as to Certain Tax Matters, substantially in the form of Exhibit M-3.
SECTION 6.1.12. WARRANT DOCUMENTS. The Agent shall have received the
Warrant Documents, in each case executed and delivered by Alliance Plc.
SECTION 6.1.13. ENGINEERING REPORTS. The Agent shall have received (i)
Engineering Report, from Lee Keeling & Associates, Inc. effective as of April
30, 1998, as to the Mortgaged Properties owned by LPC, New GOC, Source and
Alliance USA and (ii) an Engineering Report from Gaffney, Cline & Associates,
Inc., effective as of January 1, 1998, as to the East Irish Sea Assets.
SECTION 6.1.14. [NOT USED.]
SECTION 6.1.15. [NOT USED.]
SECTION 6.1.16. CLOSING OF DIFCO ACQUISITION. The Agent shall have received
and approved a true, correct and complete copy of the fully executed Difco
Agreement, including all amendments and supplements thereto, and the closing
under the Difco Agreement shall have occurred such that Alliance Plc shall have
acquired all of the capital stock of Difco as contemplated by the Difco
Agreement.
SECTION 6.1.17. CLOSING UNDER BURLINGTON AGREEMENT. The Agent shall have
received and approved a true, correct and complete copy of the fully executed
Burlington Agreement, including all exhibits, schedules, amendments and
supplements thereto and all joint operating agreements pertaining to the East
Irish Sea Assets, the assignments and related conveyance and closing instruments
(as described in Section 6 of the Burlington Agreement) from Burlington to Difco
shall have been executed and
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delivered by Burlington to Difco, filed with the Department of Trade and
Industry to the extent required by Applicable Law, and the closing under the
Burlington Agreement shall have occurred such that Difco shall have acquired all
of the East Irish Sea Assets as contemplated by the Burlington Agreement.
SECTION 6.1.18. CLOSING OF SUBORDINATED NOTE SALE, ETC. The Agent shall
have received evidence of the closing and funding of the sale of the
Subordinated Notes, such that EnCap has transferred not less than $10,000,000 to
the Borrowers, in form, scope and detail reasonably satisfactory to the Agent.
SECTION 6.1.19. SUBORDINATION AGREEMENT . The Agent shall have received
from EnCap executed, original counterparts of the Subordination Agreement.
SECTION 6.1.20. AMENDED AND RESTATED SECURITY DOCUMENTS. The documents,
instruments and agreements comprising or evidencing the collateral security for
the Existing Agreement shall each have been ratified or amended and restated to
provide that such documents, instruments and agreements secure the Obligations,
in each case pursuant to instruments in form and substance satisfactory to the
Agent and its counsel.
SECTION 6.1.21. MATERIAL CONTRACTS, DIFCO CONSENTS AND RELATED CONSENTS.
The Lender shall have received true and correct copies, certified by the
Borrowers, and approved the form and substance of, each Material Contract, a
Consent and, as applicable, a Mortgage Consent, for each such Material Contract,
dated as of a recent date, and the Difco Consents pertaining to the Core Difco
Assets.
SECTION 6.1.22. TITLE REPORTS. The Agent shall have received title reports
with respect to the East Irish Sea Assets in form, scope and detail reasonably
satisfactory to the Agent, including, without limitation, a report supplementing
the "Project Antelope" Due Diligence Report dated June 29, 1998, confirming that
Burlington owns the East Irish Sea Assets.
SECTION 6.1.23. CLOSING FEES, EXPENSES, ETC. The Agent shall have received
all reasonable costs and expenses due and payable pursuant to Sections 3.3 and
10.3, if then invoiced.
SECTION 6.2. INCLUSION OF HYDROCARBON INTERESTS IN THE BORROWING BASE AND
THE COLLATERAL VALUE. The inclusion of any additional Hydrocarbon Interests in
the Borrowing Base and the Collateral Value is subject to the following
conditions having been satisfied and receipt by the Agent of the following
documents, in each case with respect to each Hydrocarbon Interest and related
Oil and Gas Properties which the Borrowers request be included in the Borrowing
Base and the Collateral Value and each of which conditions and documents shall
be satisfactory to the Agent in form and substance:
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SECTION 6.2.1. ENVIRONMENTAL REPORT. The Agent shall have received Phase I
environmental assessments as of a recent date prepared by an environmental
consulting firm as shall be acceptable to the Agent, a completed environmental
disclosure questionnaire and such other information with respect to the
ownership and past use of the Mortgaged Properties relating to such Hydrocarbon
Interests as the Agent may reasonably request, and such reports and
questionnaire shall be satisfactory in form, substance and scope to the Agent.
SECTION 6.2.2. MORTGAGE. The Agent shall have received counterparts of a
Mortgage relating to such Hydrocarbon Interests and related Oil and Gas
Properties, dated as of a recent date, duly executed by the Borrowers and/or
their Subsidiaries, as applicable, together with
(a) evidence of the completion (or satisfactory arrangements for the
completion) of all recordings and filings of the Mortgage as may be
necessary or, in the reasonable opinion of the Agent, desirable effectively
to create a valid, perfected first priority Lien against the Properties
purported to be covered thereby;
(b) favorable mortgagee's title opinions in favor of the Agent (in
form and substance and issued by title counsel reasonably satisfactory to
the Agent, substantially in the form of Exhibit I hereto), with respect to
the Property purporting to be covered by the Mortgage setting forth the
working interest and net revenue interest of a Borrower or its Subsidiaries
in such Properties and opining that the Borrower's or such Subsidiary's
title to such property is good and marketable and valid and that the
interests created by the Mortgage constitute valid first Liens thereon free
and clear of all defects and encumbrances other than as approved by the
Agent; and
(c) such other approvals, opinions, or documents as the Agent may
reasonably request.
SECTION 6.2.3. UCC-11S. The Agent shall have received certified copies of
Uniform Commercial Code Requests for Information or Copies (Form UCC-11), or a
similar search report certified by a party acceptable to the Agent, dated as of
a recent date, listing all effective financing statements which name the
Borrowers or their Subsidiaries (under their present names and any previous
names) as the debtor and which are filed in the jurisdictions in the State of
Oklahoma or the state in which such Oil and Gas Properties are located and in
which the Mortgage referenced in Section 6.2.2. is to be filed, together with
copies of such financing statements (none of which shall cover any collateral
described in any such Mortgage).
SECTION 6.2.4. EVIDENCE OF INSURANCE. The Agent shall have received
certificates of insurance satisfactory to it evidencing the existence of all
insurance
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required to be maintained by the Borrowers by this Agreement and the other Loan
Documents with respect to the Hydrocarbon Interests and related Oil and Gas
Properties being added to the Borrowing Base and the Collateral Value.
SECTION 6.2.5. ENGINEERING REPORTS. The Agent shall have received an
Engineering Report, dated as of a recent date from a petroleum engineer
reasonably acceptable to the Agent, as to the Hydrocarbon Interests being added
to the Borrowing Base and the Collateral Value.
SECTION 6.2.6. MATERIAL CONTRACTS AND RELATED CONSENTS. The Agent shall
have received true and correct copies, certified by the Borrowers, and approved
the form and substance of, each Material Contract related to the Hydrocarbon
Interests being added to the Borrowing Base and the Collateral Value. In
addition, the Agent shall have received duly executed counterparts of a Security
Agreement or, if applicable, amendments to an existing Security Agreement which
add any such Material Contract to the Collateral (as defined in the Security
Agreement), a Consent and, as applicable, a Mortgage Consent, for each such
Material Contract, dated as of a recent date.
SECTION 6.2.7. GUARANTIES. The Agent shall have received duly executed
counterparts of a Guaranty from any Subsidiary of a Borrower which is adding
Hydrocarbon Interests to the Borrowing Base and the Collateral Value, unless
such a Guaranty has already been delivered to the Agent in connection with a
previous addition to the Borrowing Base or on the Effective Date.
SECTION 6.2.8. ADDITIONAL STOCK PLEDGE. The Agent shall have received
executed counterparts of the Pledge Agreement (Stock), dated not later than the
date of such Loan, duly executed by the applicable Guarantor or Borrower
pledging its interest in the capital stock of any Subsidiary which is adding
Hydrocarbon Interests to the Borrowing Base and the Collateral Value, unless
such Pledge Agreement has already been delivered to the Agent, accompanied by
the original share certificate evidencing such capital stock and executed stock
powers (in blank) and the evidence of satisfactory arrangement for the
completion of all filings and recordings of the Pledge Agreement (Stock) as may
be necessary or, in the reasonable opinion of the Agent, desirable, effectively
to create a valid, perfected first priority lien against and security interest
in the collateral covered thereby.
SECTION 6.2.9. OTHER DOCUMENTS. The Agent shall have received such other
documents as it may reasonably request.
SECTION 6.3. ALL CREDIT EXTENSIONS. The obligation of the Agent to make any
Credit Extension shall be subject to the satisfaction of each of the conditions
precedent set forth in this Section 6.3.
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SECTION 6.3.1. COMPLIANCE WITH WARRANTIES, NO DEFAULT, ETC. Both before and
after giving effect to any Credit Extension (but, if any Default of the nature
referred to in Section 9.1.5 shall have occurred with respect to any other
Indebtedness, without giving effect to the application, directly or indirectly,
of the proceeds of any Borrowing) the following statements shall be true and
correct
(a) the representations and warranties set forth in Article VII
(excluding, however, those contained in Section 7.9) shall be true and
correct with the same effect as if then made (unless stated to relate
solely to an earlier date, in which case such representations and
warranties shall be true and correct as of such earlier date);
(b) except as disclosed by the Borrowers to the Agent pursuant to
Section 7.9
(i) no labor controversy, litigation, arbitration or
governmental investigation or proceeding shall be pending or, to the
knowledge of the Borrowers, threatened against the Borrowers or any of
their Subsidiaries which has or might reasonably be expected to have a
Material Adverse Effect; and
(ii) no development shall have occurred in any labor controversy,
litigation, arbitration or governmental investigation or proceeding
disclosed pursuant to Section 7.9 which has or might reasonably be
expected to have a Material Adverse Effect; and
(c) no Default shall have then occurred and be continuing, and neither
the Borrowers nor any other Obligor are in material violation of any
Applicable Law or governmental regulation or court order or decree if such
violation has or might reasonably be expected to have a Material Adverse
Effect.
SECTION 6.3.2. BORROWING REQUEST, ETC. The Agent shall have received a
Borrowing Request or Issuance Request, as the case may be, for such Credit
Extension. Each of the delivery of a Borrowing Request or an Issuance Request
and the acceptance by the Borrowers of the proceeds of the Borrowing or the
issuance of the Letter of Credit as applicable, shall constitute a
representation and warranty by the Borrowers that on the date of such Borrowing
(both immediately before and after giving effect to such Borrowing and the
application of the proceeds thereof) or the issuance of the Letter of Credit, as
applicable, the statements made in Section 6.3.1 are true and correct.
SECTION 6.3.3. SATISFACTORY LEGAL FORM. All documents executed or submitted
pursuant hereto by or on behalf of the Borrowers or any of their Subsidiaries
shall be reasonably satisfactory in form and substance to the Agent and
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its counsel; the Agent and its counsel shall have received all information,
approvals, opinions, documents or instruments as the Agent or its counsel may
reasonably request.
ARTICLE VII
REPRESENTATIONS AND WARRANTIES
In order to induce the Agent and each Lender to enter into this Agreement
and to make Loans and to issue Letters of Credit hereunder, the Borrowers
represent and warrant, as of the Unified Closing Date, unto the Agent and each
Lender as set forth in this Article VII.
SECTION 7.1. ORGANIZATION, ETC. LPC is an Oklahoma corporation, GOCA is a
Delaware corporation, New GOC is a Delaware corporation, GOC was a Texas
corporation, Alliance USA is a Delaware corporation, Source is a Louisiana
corporation, Alliance Group is a Delaware corporation, LRI is a Delaware
corporation and Alliance Plc is a public limited company incorporated under the
laws of England and Wales, and Difco is a private limited company incorporated
under the laws of England and Wales and each is validly incorporated and
existing and (as to the Obligors organized in the U.S.) in good standing under
the Applicable Laws of the jurisdiction of its organization, is duly qualified
to do business and is in good standing as a foreign corporation in each
jurisdiction where the nature of its business requires such qualification, and
has full power and authority and holds all requisite governmental licenses,
permits and other approvals to enter into and perform its Obligations under this
Agreement, the Note and each other Loan Document to which it is a party and to
own and hold under lease its property and to conduct its business substantially
as currently conducted by it. Except as set forth on Schedule II, the Borrowers
have no Subsidiaries.
SECTION 7.2. DUE AUTHORIZATION, NON-CONTRAVENTION, ETC. The execution,
delivery and performance by the Borrowers and each other Obligor of this
Agreement, the Note and each other Loan Document executed or to be executed by
it or them are within each Borrower's and each such Obligor's respective
corporate powers, have been duly authorized by all necessary corporate action,
and do not
(a) contravene such Borrower's or such other Obligor's Organic
Documents;
(b) contravene or result in any violation of or default under any
Applicable Law or any material contractual restriction, court decree or
order, in each case binding on or affecting any Borrower or any other
Obligor or any Properties, businesses, assets or revenues of any Borrower;
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(c) result in, or require the creation or imposition of, any Lien on
(except for the Liens of the Loan Documents) any of the Borrowers' or any
other Obligor's Properties, businesses, assets or revenues.
SECTION 7.3. GOVERNMENT APPROVAL, REGULATION, ETC. No authorization or
approval or other action by, and no notice to or filing with, any Governmental
Agency or other Person is required for the due execution, delivery or
performance by the Borrowers or any other Obligor of this Agreement, the Note or
any other Loan Document to which they are a party, except for Approvals, if any,
by the lessor under any government-issued oil and gas lease of the granting the
Mortgage, which Difco, Alliance USA, Source, LPC and New GOC expect to obtain in
the ordinary course of business and the Consents, each of which shall have been
obtained on or before the Unified Closing Date.
SECTION 7.4. INVESTMENT COMPANY ACT. None of the Borrowers or any of their
Affiliates is an "investment company" within the meaning of the Investment
Company Act of 1940, as amended.
SECTION 7.5. PUBLIC UTILITY HOLDING COMPANY ACT. None of the Borrowers or
any of their Subsidiaries is a "holding company" or a "subsidiary company" of a
"holding company", or an "affiliate" of a "holding company" or of a "subsidiary
company" of a "holding company", within the meaning of the Public Utility
Holding Company Act of 1935, as amended.
SECTION 7.6. VALIDITY, ETC. This Agreement constitutes, and the Note and
each other Loan Document executed by the Borrowers or any of their Subsidiaries
will, on the due execution and delivery thereof, constitute, the legal, valid
and binding obligations of the Borrowers or such Subsidiaries, as applicable or
enforceable in accordance with their respective terms, and each Loan Document
executed pursuant hereto by each other Obligor will, on the due execution and
delivery thereof by such, Obligor, be the legal valid and binding obligation of
such Obligor enforceable in accordance with its terms, in each case subject to
the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or similar laws affecting creditors' rights generally.
SECTION 7.7. FINANCIAL INFORMATION.
(a) The audited consolidated balance sheet of Alliance Plc as at April
30, 1998 and the related audited statements of operations and cash flow of
Alliance Plc, copies of which have been furnished to the Agent, have been
prepared in accordance with GAAP consistently applied, and present fairly
the consolidated financial condition of the corporations covered thereby as
at the date thereof and the results of their audited operations for the
period then ended.
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(b) The audited consolidated balance sheets of Alliance Plc as at
April 30, 1998, and the related audited statements of operations and cash
flow of Alliance Plc, copies of which have been furnished to the Agent,
have been prepared in accordance with United Kingdom GAAP consistently
applied, and present fairly the consolidated financial condition of the
corporations covered thereby as at the date thereof and the results of
their audited operations for the period then ended.
SECTION 7.8. NO MATERIAL ADVERSE CHANGE. Since the date of the audited
financial statements described in Section 7.7, there has been no change in the
financial condition, operations, assets, business, Properties or prospects of
Alliance Plc or any of its consolidated Subsidiaries that has or might
reasonably be expected to have a Material Adverse Effect, except as disclosed in
Item 7.8 of the Disclosure Schedule.
SECTION 7.9. LITIGATION, LABOR CONTROVERSIES, ETC. There is no pending
or, to the knowledge of the Borrowers, threatened litigation, action,
proceeding, or labor controversy affecting the Borrowers, or any of their
Subsidiaries, or any of their respective Properties, businesses, assets or
revenues, which has or might reasonably be expected to have a Material Adverse
Effect, except as disclosed in Item 7.9 ("Litigation") of the Disclosure
Schedule.
SECTION 7.10. OWNERSHIP OF PROPERTIES. Each of the Borrowers and its
Subsidiaries has good and defensible title to their Properties (including,
without limitation, all Hydrocarbon Interests), free and clear of all Liens
except (a) those referred to in the financial statements referred to in Section
7.7, (b) as disclosed to the Agent in the Disclosure Schedule or (c) as
permitted by Section 8.2.3. After giving full effect to all Liens permitted
under Section 8.2.3, each of the Borrowers or their Subsidiaries owns the net
interests in Hydrocarbons produced from the Oil and Gas Properties as reflected
in the most recent Engineering Report, and none of the Borrowers or their
Subsidiaries are obligated to bear costs or expenses in respect of the Oil and
Gas Properties in excess of their respective working interest percentage as
reflected in the most recent Engineering Report.
SECTION 7.11. TAXES. Each of the Borrowers and its Subsidiaries has filed
all Federal and other tax returns and reports required by Applicable Law to have
been filed by it and has paid all taxes, assessments, fees and other
governmental charges thereby shown to be owing, except as disclosed in Item 7.11
of the Disclosure Schedule and except any such taxes or charges which are being
diligently contested in good faith by appropriate proceedings and for which
adequate reserves in accordance with GAAP shall have been set aside on its
books.
SECTION 7.12. PENSION AND WELFARE PLANS. During the twelve-consecutive-
month period prior to the Effective Date and prior to the date of any Borrowing
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hereunder, no steps have been taken to terminate any Pension Plan in a distress
termination under Section 4041(c) of ERISA, and no contribution failure has
occurred with respect to any Pension Plan sufficient to give rise to a Lien
under section 302(f) of ERISA. No condition exists or event or transaction has
occurred with respect to any Pension Plan which might result in the incurrence
by the Borrowers or any member of the Controlled Group of any material
liability, fine or penalty. Except as disclosed in Item 7.12 ("Employee Benefit
Plans") of the Disclosure Schedule, neither the Borrowers nor any member of the
Controlled Group has any contingent liability with respect to any post-
retirement benefit under a Welfare Plan, other than liability for continuation
coverage described in Part 6 of Title I of ERISA.
SECTION 7.13. COMPLIANCE WITH LAW. None of the Borrowers nor any of their
Subsidiaries (a) is in violation of any Applicable Law of, or the terms of any
Approval, license or permit issued by, any Governmental Agency; or (b) has
failed to obtain any Approval necessary to ownership of any of its properties or
the conduct of its business (including without limitation any such authorization
from the Federal Energy Regulatory Commission or any state conservation
commission or similar body); which violation or failure could reasonably be
expected to have a Material Adverse Effect.
SECTION 7.14. CLAIMS AND LIABILITIES. Except as disclosed to the Lenders in
Item 7.14 ("Claims and Liabilities") in the Disclosure Schedule, none of the
Borrowers nor any of their Subsidiaries has accrued any liabilities under gas
purchase contracts for gas not taken, but for which it is liable to pay if not
made up and which, if not paid, would have a Material Adverse Effect. Except as
disclosed to the Lenders in Item 7.14 of the Disclosure Schedule, no claims
exist against the Borrowers or any of their Subsidiaries for gas imbalances
which claims if adversely determined would have a Material Adverse Effect. No
purchaser of product supplied by the Borrowers or any of their Subsidiaries has
any claim against the Borrowers or any of their Subsidiaries for product paid
for, but for which delivery was not taken as and when paid for, which claim if
adversely determined would have a Material Adverse Effect.
SECTION 7.15. NO PROHIBITION ON PERFECTION OF SECURITY DOCUMENTS. None of
the terms or provisions of any indenture, mortgage, deed of trust, agreement or
other instrument to which any Borrower or any of its Subsidiaries is a party or
by which any Borrower or any of its Subsidiaries or the property of any Borrower
or any of its Subsidiaries is bound prohibit the filing or recordation of any of
the Loan Documents or any other action which is necessary or appropriate in
connection with the perfection of the Liens evidenced and created by any of the
Loan Documents.
SECTION 7.16. SOLVENCY. None of the Borrowers nor any of their Subsidiaries
is "insolvent", as such term is used and defined in the United States Bankruptcy
Code, 11 U.S.C. (S) 101, et seq.
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SECTION 7.17. ENVIRONMENTAL WARRANTIES. As a reasonable and prudent
operator of oil and gas producing properties, in the ordinary course of their
business, the Borrowers have conducted, with respect to their existing Oil and
Gas Properties, and, on an ongoing basis, conducts a review of the effect of
Environmental Laws on the business, operations and Properties of each Borrower
and its Subsidiaries, in the course of which they identify and evaluate
associated liabilities and costs (including any capital or operating
expenditures required for Remedial Action or other clean-up or closure of
Properties presently owned or operated, any capital or operating expenditures
required for Remedial Action or otherwise to achieve or maintain compliance with
environmental protection standards imposed by any Environmental Law or as a
condition of any Approval, license, permit or contract, any related constraints
on operating activities, including any periodic or permanent shutdown of any
facility or reduction in the level of or change in the nature of operations
conducted thereat and any actual or potential liabilities to third parties,
including employees, and any related costs and expenses). On the basis of this
review, the Borrowers have reasonably concluded that, except as disclosed in
Item 7.17 ("Environmental Matters") of the Disclosure Schedule:
(a) all facilities and Property (including underlying groundwater)
owned, leased or operated by the Borrowers or any of their Subsidiaries
have been, and continue to be, owned, leased or operated by the Borrowers
or any of their Subsidiaries in material compliance with all Environmental
Laws;
(b) there have been no past, and there are no pending or threatened
(i) claims, complaints, notices or inquiries to, or requests for
information received by, the Borrowers or any of their Subsidiaries
with respect to any alleged violation of any Environmental Law, that,
singly or in the aggregate, have or may reasonably be expected to have
a Material Adverse Effect, or
(ii) claims, complaints, notices or inquiries to, or requests for
information received by, the Borrowers or any of their Subsidiaries
regarding potential liability under any Environmental Law or under any
common law theories relating to operations or the condition of any
facilities or Property (including underlying groundwater) owned,
leased or operated by the Borrowers or any of their Subsidiaries that,
singly or in the aggregate, have, or may reasonably be expected to
have a Material Adverse Effect;
(c) there have been no Releases of Hazardous Materials at, on or under
any Property now or, to the Borrowers' or a Subsidiary of the Borrowers'
knowledge, previously owned or leased by the Borrowers or their
Subsidiaries
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that, singly or in the aggregate, have, or may reasonably be expected to
have, a Material Adverse Effect;
(d) the Borrowers and their Subsidiaries have been issued and are in
material compliance with all permits, certificates, approvals, licenses and
other authorizations required under Environmental Laws and necessary for
its business;
(e) no Property now or, to the Borrowers' or a Subsidiary of the
Borrowers' knowledge, previously owned, leased or operated by the Borrowers
or their Subsidiaries is listed or proposed for listing on the National
Priorities List pursuant to CERCLA, or, to the extent that such listing
may, singly or in the aggregate, have, or may reasonably be expected to
have a Material Adverse Effect, on the CERCLIS or on any other published
federal or state list of sites requiring investigation or clean-up pursuant
to Environmental Laws;
(f) there are no underground storage tanks, active or abandoned,
including petroleum storage tanks, on or under any Property now or, to the
Borrowers' or a Subsidiary of the Borrowers' knowledge, previously owned,
leased or operated by the Borrowers or their Subsidiaries that, singly or
in the aggregate, have, or may reasonably be expected to have, a Material
Adverse Effect;
(g) none of the Borrowers or any of their Subsidiaries has directly
transported or directly arranged for the transportation of any Hazardous
Material to any location which is listed or proposed for listing on the
National Priorities List pursuant to CERCLA, or, to the extent that such
listing may, singly or in the aggregate, have, or may reasonably be
expected to have a Material Adverse Effect, on the CERCLIS or on any
published federal or state list of sites requiring investigation or clean-
up pursuant to Environmental Laws or which is the subject of federal, state
or local enforcement actions or other investigations which would reasonably
be expected to lead to claims against the Borrowers or any of their
Subsidiaries which would have a Material Adverse Effect for any remedial
work, damage to natural resources or personal injury, including claims
under CERCLA;
(h) there are no polychlorinated biphenyls, radioactive materials or
friable asbestos present at any Property now or, to the Borrowers' or a
Subsidiary of the Borrowers' knowledge, previously owned or leased by the
Borrowers or any of their Subsidiaries that, singly or in the aggregate,
have, or may reasonably be expected to have, a Material Adverse Effect; and
(i) no condition exists at, on or under any property now or, to the
Borrowers' or a Subsidiary of the Borrowers' knowledge, previously owned or
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leased by the Borrowers or any of their Subsidiaries which, with the
passage of time, or the giving of notice or both, would give rise to
material liability under any Environmental Law that, singly or in the
aggregate have, or may reasonably be expected to have a Material Adverse
Effect.
SECTION 7.18. YEAR 2000 COMPLIANCE.
(a) The Borrowers are: (i) developing a review and assessment program of
all areas with their and each of their Subsidiaries' businesses and operations
(including those affected by suppliers and vendors) that could be adversely
affected by the "Year 2000 Problem" (that is, the risk that computer
applications (as well as imbedded microchips) used by the Borrowers or any of
their Subsidiaries (or any of their suppliers and vendors) may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999); (ii) developing a plan and a
timetable for addressing the Year 2000 Problem on a timely basis; and (iii) to
date, implementing that plan in accordance with that timetable.
(b) The Borrowers reasonably believe that all computer applications
(including those of their suppliers and vendors) that are material to their or
their Subsidiaries' businesses and operations will, on a timely basis, be able
to perform properly date-sensitive functions for all dates before and after
January 1, 2000, (that is, be "Year 2000 Compliant"), except to the extent that
a failure to do so could not reasonably be expected to have a Material Adverse
Effect.
SECTION 7.19. REGULATIONS G, U AND X. None of the Borrowers or any of their
Subsidiaries is engaged in the business of extending credit for the purpose of
purchasing or carrying margin stock, and no proceeds of any Loans will be used
for a purpose which violates, or would be inconsistent with, F.R.S. Board
Regulation G, U or X. Terms for which meanings are provided in F.R.S. Board
Regulation G, U or X or any regulations substituted therefor, as from time to
time in effect, are used in this Section with such meanings.
SECTION 7.20. ACCURACY OF INFORMATION. All factual information heretofore
or contemporaneously furnished by or on behalf of the Borrowers or any of their
Subsidiaries in writing to the Agent or the Lenders for purposes of or in
connection with this Agreement or any transaction contemplated hereby (including
without limitation each Engineering Report) is, and all other such factual
information hereafter furnished by or on behalf of the Borrowers or any of their
Subsidiaries to the Agent or Lenders will be, true and accurate in every
material respect on the date as of which such information is dated or certified
and as of the date of execution and delivery of this Agreement by the Lenders,
and such information is not, or shall not be, as the case may be, incomplete by
omitting to state any material fact necessary to make such information not
misleading.
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ARTICLE VII
COVENANTS
SECTION 8.1. AFFIRMATIVE COVENANTS. The Borrowers agree with the Agent and
each Lender that, until all Commitments have terminated and all Obligations have
been paid and performed in full, the Borrowers and each of their Subsidiaries
will perform the obligations set forth in this Section 8.1.
SECTION 8.1.1. FINANCIAL INFORMATION, REPORTS, NOTICES, ETC. The Borrowers
will furnish, or will cause to be furnished, to the Agent and each Lender copies
of the following financial statements, reports, notices and information:
(a) as soon as available and in any event within sixty (60) days after
the end of each of the first three Fiscal Quarters of each Fiscal Year of
Alliance Plc, balance sheets of Alliance Plc and its consolidated
Subsidiaries as of the end of such Fiscal Quarter and statements of
operations and cash flow of Alliance Plc and its consolidated Subsidiaries
for such Fiscal Quarter and for the period commencing at the end of the
previous Fiscal Year and ending with the end of such Fiscal Quarter,
certified by the chief financial Authorized Officer of Alliance Plc;
(b) as soon as available and in any event within one-hundred and
twenty (120) days after the end of each Fiscal Year of Alliance Plc, a copy
of the annual audit report for such Fiscal Year for Alliance Plc and its
consolidated Subsidiaries, including therein the balance sheet of Alliance
Plc and its consolidated Subsidiaries as of the end of such Fiscal Year and
statements of operations and cash flow of Alliance Plc and its consolidated
Subsidiaries for such Fiscal Year, in each case certified (without any
Impermissible Qualification) in a manner reasonably acceptable to the Agent
by an independent public accountant acceptable to the Agent, together with
a report from such accountants containing a computation of, and showing
compliance with, each of the financial ratios and restrictions contained in
Section 8.2.4 and to the effect that, in making the examination necessary
for the signing of such annual report by such accountants, they have not
become aware of any Default that has occurred and is continuing, or, if
they have become aware of such Default, describing such Default and the
steps, if any, being taken to cure it;
(c) concurrently with the delivery of the financial statements
referred to is clauses (a) and (b), a certificate, executed by the chief
financial Authorized Officer of Alliance Plc, showing (in reasonable detail
and with appropriate calculations and computations in all respects
reasonably
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satisfactory to the Agent) compliance with the financial covenants set
forth in Section 8.2.4, showing, among other things, a comparison between
the actual results and the minimum requirements of this Agreement and also
certifying to such Authorized Officer's best knowledge, that no Default or
Event of Default has occurred and is then outstanding;
(d) on or prior to thirty (30) days before the beginning of each
Fiscal Year, a budget for Alliance Plc and its consolidated Subsidiaries
for the following Fiscal Year, in form, scope and detail reasonably
satisfactory to the Agent, showing, among other things, Approved
Development Activities for such period, which budget shall, each Fiscal
Quarter be updated and revised to cover the 12 month period following such
Fiscal Quarter;
(e) as soon as possible and in any event within three (3) days after
the occurrence of each Default and any event which has or is reasonably
likely to have a Material Adverse Effect, a statement of the chief
financial Authorized Officer of the Borrowers setting forth details of such
Default or event and the action which Alliance Plc and the Borrowers have
taken and propose to take with respect thereto;
(f) as soon as possible and in any event within three (3) days after
(x) the occurrence of any adverse development with respect to any
litigation, action, proceeding or labor controversy described in Section
7.9 or (y) the commencement of any litigation, action, proceeding or labor
controversy of the type described in Section 7.9, notice thereof and copies
of all documentation relating thereto;
(g) as soon as possible and in any event within ten (10) days after
any responsible officer of Alliance Plc or any Borrower has actual
knowledge thereof, notice of
(i) any claim by any Person against any Borrower or any of its
Subsidiaries of nonpayment of, or
(ii) any attempt by any Person to collect upon or enforce
any accounts payable of Alliance Plc or any of its consolidated
Subsidiaries, in the case of any single account payable in excess of
$100,000, or in the case of all accounts payable at any time outstanding in
excess of $250,000;
(h) as soon as available and in any event within sixty (60) days after
each of May 1st of each calendar year, an Engineering Report, from an
independent petroleum engineering firm acceptable to the Agent in its
reasonable judgment, and as soon as available and in any event within sixty
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(60) days after November 1st of each calendar year, an Engineering Report
from the Borrowers' internal reserve engineers, unless the Agent, at least
sixty (60) days before the required delivery date of such Engineering
Report, has requested that it be prepared by an independent petroleum
engineering firm reasonably acceptable to the Agent;
(i) promptly after (i) the sending or filing thereof, copies of all
reports which Alliance Plc, Alliance Group or the Borrowers send to any of
their security holders, (ii the sending or filing thereof, all reports and
registration statements which Alliance Plc, Alliance Group or the Borrowers
file with the Securities and Exchange Commission or any national securities
exchange, (ii the filing thereof, copies of all tariff and rate cases and
other material reports filed with any regulatory authority (other than
routine operating reports), and (iv receipt thereof, copies of all notices
received from any regulatory authority concerning noncompliance by any
Borrower with any Applicable Law;
(j) immediately upon becoming aware of the institution of any steps by
any Borrower or any other Person to terminate any Pension Plan, or the
failure to make a required contribution to any Pension Plan if such failure
is sufficient to give rise to a Lien under section 302(f) of ERISA, or the
taking of any action with respect to a Pension Plan which could result in
the requirement that such Borrower furnish a bond or other security to the
PBGC or such Pension Plan, or the occurrence of any event with respect to
any Pension Plan which could result in the incurrence by such Borrower of
any material liability, fine or penalty, or any material increase in the
contingent liability of such Borrower with respect to any post-retirement
Welfare Plan benefit, notice thereof and copies of all documentation
relating thereto;
(k) upon, but in no event later than ten (10) days after, becoming
aware of (i) any and all enforcement, cleanup, removal or other
governmental or regulatory actions instituted, completed or threatened
against the Borrowers or any of their Properties pursuant to any applicable
Environmental Laws, (ii) all other environmental claims, and (iii) any
environmental or similar condition on any real property adjoining or in the
vicinity of the property of the Borrowers that could reasonably be
anticipated to cause such Property or any part thereof to be subject to any
restrictions on the ownership, occupancy, transferability or use of such
property under any Environmental Laws;
(l) a monthly summary of production volumes, revenues, operating
costs, Net Proceeds of Production, general and administrative expenses,
Capital Expenditures, drilling and completion reports and well-test data;
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(m) such other information respecting the condition or operations,
financial or otherwise of Alliance Plc or any of its consolidated
Subsidiaries as the Agent may from time to time reasonably request; and
(n) promptly after any Borrower discovers or determines that any
computer application (including those of their suppliers or vendors) that
is material to the businesses or operations of the Borrowers and their
Subsidiaries taken as a whole will not be Year 2000 Compliant on a timely
basis, notice thereof and a copy of the Borrowers' plan for dealing with
such problem except to the extent such failure could not reasonably be
expected to have a Material Adverse Effect.
SECTION 8.1.2. COMPLIANCE WITH LAWS, ETC. The Borrowers will, and will
cause each of their Subsidiaries to, comply in all material respects with all
Applicable Laws, such compliance to include (without limitation):
(a) the maintenance and preservation of their corporate existence and
qualification as a foreign corporation; and
(b) the payment, before the same become delinquent, of all taxes,
assessments and governmental charges imposed upon it or upon its property
except to the extent being diligently contested in good faith by
appropriate proceedings and for which adequate reserves in accordance with
GAAP shall have been set aside on its books.
SECTION 8.1.3. MAINTENANCE AND DEVELOPMENT OF PROPERTIES.
(a) The Borrowers will, and will cause each of their Subsidiaries to,
maintain, preserve, protect and keep their Properties in good repair,
working order and condition (ordinary wear and tear excepted), and make
necessary and proper repairs, renewals and replacements so that their
business carried on in connection therewith may be properly conducted at
all times in accordance with standard industry practices. In particular,
the Borrowers will, and will cause each of their Subsidiaries to, operate
or cause to be operated their Oil and Gas Properties as reasonable and
prudent operators.
(b) The Borrowers will, and will cause each of their Subsidiaries to,
use their reasonable best efforts promptly to develop and bring into
production all developed non-producing Proven Reserves identified in the
Approved Development Plan and, after the period covered in the initial
Approved Development Plan, those reserves used in the calculation of
Borrowing Base and Collateral Value.
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(c) The Borrowers shall ensure that at all times they have available
to them, either through its employees or through independent contractors,
petroleum engineers with appropriate experience and expertise in the proper
operation and development of properties similar to the Mortgaged
Properties.
(d) From time-to-time, but not less than once each Fiscal Quarter
during the time any Tranche B Loan is outstanding, the Borrowers shall
propose to the Agent revisions to the Approved Development Plan then in
effect, showing, among other things, revised projections of Capital
Expenditures for the eighteen (18) month period following such revision,
which revisions shall in all respects satisfactory to the Agent. Once
approved in writing by the Agent, the then existing Approved Development
Plan shall be amended and shall thereafter replace and supersede the prior
Approved Development Plan.
(e) Promptly after the drilling and completion of each well drilled on
the Oil and Gas Properties that have been considered by the Agent in the
determination or redetermination of the Borrowing Base or the Collateral
Value, the applicable Borrower shall promptly request assignments of any
interests earned by virtue of such drilling and, within fifteen (15) days
after the earlier to occur of the receipt of such assignments or sixty (60)
days after first production from such well, shall deliver to the Agent:
(i) true and correct copies of any such assignments of record title
of the applicable Oil and Gas Properties into such Borrower or its
Subsidiary, as applicable,
(ii) true and correct copies of all required Consents, Mortgage
Consents and Approvals applicable to such assignments,
(iii) original, executed and acknowledged counterparts of a
supplemental Mortgage and related amendments to financing statements
and
(iv) a favorable mortgagee's title opinion showing that such Borrower
or its Subsidiary, as applicable, is vested with good and marketable
title to interests in the applicable Mortgaged Property consistent
with the working interests and net revenue interest for such property
shown in the most recent Engineering Report and showing that the
interests created by such supplemental Mortgage constitute valid first
Liens thereon, free and clear of all defects and encumbrances other
than as approved by the Lender,
in each case in form and substance reasonably satisfactory to the Agent.
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SECTION 8.1.4. INSURANCE. The Borrowers will, and will cause each of
their Subsidiaries to, maintain or cause to be maintained with responsible
insurance companies insurance with respect to their properties and business
against such casualties and contingencies and of such types and in such amounts
as is customary in the case of similar businesses (including, where appropriate,
well control, operator's extra expense and remediation insurance) and will
furnish to the Agent on or before March 1st each year a certificate of
Authorized Officers of the Borrowers and their Subsidiaries setting forth the
nature and extent of all insurance maintained by the Borrowers and their
Subsidiaries in accordance with this Section. The following shall apply to the
insurance required by this Section 8.1.4:
(a) Each policy for property insurance covering the Mortgaged Property
shall show the Agent as loss payee;
(b) Each policy for liability insurance covering the Mortgaged
Property shall show the Agent and the Lenders as additional insureds;
(c) Each insurance policy covering the Mortgaged Property shall
provide that at least thirty (30) days prior written notice of
cancellation, reduction in amount or other change in coverage, or of lapse
shall be given to the Agent by the insurer; and
(d) The Borrowers shall, if so requested by the Agent, deliver to the
Agent the original or a certified copy of each insurance policy covering
the Mortgaged Property.
SECTION 8.1.5. BOOKS AND RECORDS. The Borrowers will, and will cause
each of their Subsidiaries to, keep books and records which accurately reflect
all of their material business affairs and transactions and permit the Agent or
any of its respective representatives, at reasonable times (but in any event,
within three (3) Business Days after notice from the Agent and during all normal
business hours) and at reasonable intervals, to visit all of their offices, to
discuss their financial matters with their officers, directors and independent
public accountant (and each Borrower hereby authorizes such independent public
accountant to discuss such Borrower's financial matters with the Agent or its
representatives whether or not any representative of such Borrower is present)
and to examine (and, at the expense of such Borrower, photocopy extracts from)
any of its books or other corporate records. The Borrowers shall pay any
reasonable fees of such independent public accountant incurred in connection
with the Agent's exercise of its rights pursuant to this Section. Furthermore,
the Borrowers will permit the Agent, or its agents, at the cost and expense of
the Borrowers, to enter upon the Mortgaged Properties and all parts thereof, for
the purpose of investigating and inspecting the condition and operation thereof,
and shall permit reasonable access to the field offices and other offices,
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including the principal place of business, of the Borrower to inspect and
examine the Mortgaged Properties.
SECTION 8.1.6. ENVIRONMENTAL COVENANT. The Borrowers will, and will
cause each of their Subsidiaries to,
(a) use, operate and maintain all of their facilities and Properties
in material compliance with all Environmental Laws, keep all necessary
permits, approvals, certificates, licenses and other authorizations
relating to environmental matters in effect and remain in material
compliance therewith, and handle all Hazardous Materials in material
compliance with all applicable Environmental Laws;
(b) (i) immediately notify the Agent and provide copies upon receipt
of all written claims, complaints, notices or inquiries relating to the
condition of their facilities and Properties or compliance with
Environmental Laws to the extent that the same have, or could reasonably be
expected to have, a Material Adverse Effect, (ii) use all reasonable
efforts within a reasonable time to have dismissed with prejudice any
actions or proceedings relating to compliance with Environmental Laws which
would or could in the reasonable opinion of the Agent have a Material
Adverse Effect, and (iii) diligently pursue cure of any material underlying
environmental condition which forms the basis of any such claim, complaint,
notice or inquiry; and
(c) provide such information and certifications which the Agent may
reasonably request from time to time to evidence compliance with this
Section 8.1.6.
SECTION 8.1.7. FURTHER ASSURANCES.
(a) The Borrowers will, and will cause each of their subsidiaries to,
upon the request of the Agent, take such actions and execute and deliver
such documents and instruments as the Agent shall require to ensure that
the Agent shall, at all times, have received currently effective duly
executed Loan Documents encumbering Oil and Gas Properties of the Borrowers
and their Subsidiaries not included within the Mortgaged Properties
constituting at least 90% of the Proven Reserves of the Borrowers and their
Subsidiaries to which value is given in the determination of the then
current Borrowing Base and Collateral Value (with accompanying letters in
lieu of transfer orders) and satisfactory title evidence in form and
substance reasonably acceptable to the Agent in its reasonable business
judgment as to ownership of such Oil and Gas Properties; provided, that
upon thirty (30) days notice to the Borrowers, the Agent may require, and
the Borrowers and/or their Subsidiaries, as applicable, shall execute,
acknowledge and deliver to the Agent, Mortgages effectively
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encumbering 100% of the Oil and Gas Properties of the Borrowers and their
Subsidiaries to which value is given in the determination of the then
current Borrowing Base and Collateral Value.
(b) If the Agent shall determine that, as of the date of any Borrowing
Base Redetermination or Collateral Value Redetermination, the Borrowers or
any of their Subsidiaries shall have failed to comply with the preceding
sentence, the Agent may notify the Borrowers in writing of such failure
and, within thirty (30) days from and after receipt of such written notice
by the Borrowers, the Borrowers or any of their Subsidiaries shall execute
and deliver to the Agent supplemental or additional Loan Documents, in form
and substance satisfactory to the Agent and its counsel, securing payment
of the Note and the other Obligations and covering additional assets not
then encumbered by any Loan Documents (together with current valuations,
Engineering Reports, and title evidence applicable to the additional assets
collaterally assigned, each of which shall be in form and substance
satisfactory to the Agent) such that the Agent shall have received
currently effective duly executed Loan Documents encumbering Oil and Gas
Properties constituting at least 90% (or, as provided in Section 8.1.7(a),
100%) of the Proven Reserves of the Borrowers and their Subsidiaries to
which value is given in the determination of the then current Borrowing
Base and Collateral Value (with accompanying letters in lieu of transfer
orders) and satisfactory title evidence in form and substance acceptable to
the Agent in its reasonable business judgment as to ownership of such Oil
and Gas Properties.
(c) Promptly upon the determination that any Subsidiary has become a
Material Subsidiary, the Borrowers will cause such Material Subsidiary to
execute and deliver to the Agent a Guaranty and a Security Agreement and
(if such Material Subsidiary has Oil and Gas Properties included in the
Borrowing Base and Collateral Value) a Mortgage, and the Borrowers will
enter into such amendments to the applicable Pledge Agreement as are
necessary to cause the stock of such Material Subsidiary to become subject
to such Pledge Agreement.
(d) Within forty-five (45) days after the Unified Closing Date, the
Borrowers shall deliver to the Agent (i) to the extent not previously
delivered, Mortgages and the Difco Consents in respect of the Other Difco
Assets; (ii) a title report from counsel to the Borrowers confirming that
Difco has received good and marketable title to the East Irish Sea Assets
and confirming that the Agent has a first in priority, perfected Lien
thereon, subject only to such encumbrances as are permitted under Section
8.2.3; (iii) the share certificate representing the all of the capital
stock of Difco, together with evidence of the registration of Alliance Plc
as the sole shareholder of Difco; (iv) the initial Approved Development
Plan, in form, scope and detail reasonably satisfactory
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to the Agent; (v) the initial budget for the Borrowers and their
Subsidiaries for the twelve (12) months immediately following the Unified
Closing Date in form, scope and detail reasonably satisfactory to the
Agent.
(e) The Borrowers shall ensure that all written information, exhibits
and reports furnished by or on behalf of the Borrowers or any of their
Subsidiaries to the Agent do not and will not contain any untrue statement
of a material fact and do not and will not omit to state any material fact
or any fact necessary to make the statements contained therein not
misleading in light of the circumstances in which made, and will promptly
disclose to the Agent and correct any defect or error that may be
discovered therein or in any Loan Document or in the execution,
acknowledgment or recordation thereof.
SECTION 8.1.8. NATURAL GAS AND CRUDE OIL HEDGING.
(a) On or before February 28, 1999, LPC (or another Borrower as
approved by the Agent) will enter into Hydrocarbon Hedging Agreements
reasonably acceptable to the Agent that will enable Alliance USA, Source,
LPC, New GOC and Difco to obtain net realized prices with respect to
Mortgaged Properties located in the United States, during the time any
Tranche B Loan is outstanding of not less than (i) an agreed upon amount
per MMBtu of natural gas produced from its Hydrocarbon Interests on not
less than 50% nor more than 70% of the aggregate volumes projected to be
produced from proved developed producing reserves included in the Mortgaged
Properties as of the Effective Date, and (ii) an agreed upon amount per
barrel of crude oil produced from its Hydrocarbon Interests on not less
than 50% nor more than 70% of the aggregate volumes projected to be
produced from proved developed producing reserves included in the Mortgaged
Properties as of the Effective Date;
(b) On or before the date which is 120 days after the date on which
the Department of Trade and Industry approves the development plan for each
field in the East Irish Sea Assets, LPC (or another Borrower as approved by
the Agent) will enter into Hydrocarbon Hedging Agreements reasonably
acceptable to the Agent that will enable Alliance USA, Source, LPC, New GOC
and Difco to obtain net realized prices with respect to such portion of the
East Irish Sea Assets, during the time any Tranche B Loan is outstanding,
of not less than an agreed upon amount per MMBtu of natural gas produced
from such Hydrocarbon Interests on not less than 50% nor more than 70% of
the aggregate volumes projected to be produced from Proven Reserves
included in such portion of the East Irish Sea Assets. As an alternative
to such Hydrocarbon Hedging Agreements in respect of production from the
East Irish Sea Assets, Difco may enter into gas sales contracts for the
sale of production from the East Irish Sea Assets with price terms
acceptable to the Agent.
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Alliance USA, Source, GOCA, New GOC and Difco hereby acknowledge that LPC (or
such other Borrower) is entering into such Hydrocarbon Hedging Agreements not
only for its own benefit, but also for the benefit of Alliance USA, Source,
GOCA, New GOC and Difco. Alliance USA, Source, GOCA, New GOC and Difco further
acknowledge that LPC's (or such other Borrower's) Obligations under the Hedging
Agreements are Obligations of all the Borrowers as if they were parties
signatory thereto.
SECTION 8.1.9. INTEREST RATE PROTECTION. On or before February 28, 1999,
LPC (or another Borrower as approved by the Agent) shall enter into Hedging
Agreements, in form and substance satisfactory to the Agent, designed to ensure
a maximum interest rate of 8.5% on the notional amount projected by the Agent to
be outstanding as Tranche A Loans, 10.0% on the notional amount projected to be
outstanding as Tranche B Loans for a period not earlier than the Stated Maturity
Date for Tranche B Loans, and 12% on the notional amount projected to be
outstanding as Tranche C Loans for a period not less than the Stated Maturity
Date. Alliance USA, Source, GOCA, New GOC and Difco hereby acknowledge that LPC
(or such other Borrower) is entering into such Hedging Agreements not only for
its own benefit, but also for the benefit of Alliance USA, Source, GOCA, New GOC
and Difco. Alliance USA, Source, GOCA, New GOC and Difco further acknowledge
that LPC's (or such other Borrower's) Obligations under the Hedging Agreements
are Obligations of all the Borrowers as if they were parties signatory thereto.
SECTION 8.1.10. EXCHANGE RATE PROTECTION. On or before February 28, 1999,
LPC (or another Borrower as approved by the Agent) will enter exchange rate risk
management contracts or similar Hedging Agreements in respect of committed UK
Capital Expenditures included in the Approved Development Plan which will ensure
that at least 75% of the Sterling Capital Expenditures are covered by
Sterling/Dollar foreign exchange contracts to ensure that the Dollar Borrowings
are converted to Sterling within a band of $1.60/(Pounds)1.00 to
$1.80/(Pounds)1.00. In addition, the Borrowers will, within 30 days prior to the
start of each calendar quarter, ensure that, for all periods when any Tranche B
Loan is outstanding and unpaid, there are exchange rate risk management
contracts in place to ensure that the projected Dollar Loan repayments for that
forthcoming four calendar quarters are covered by the requisite proportion of
projected Sterling net revenues. Alliance USA, Source, GOCA, New GOC and Difco
hereby acknowledge that LPC (or such other Borrower) is entering into such
Hedging Agreements not only for its own benefit, but also for the benefit of
Alliance USA, Source, GOCA, New GOC and Difco. Alliance USA, Source, GOCA, New
GOC and Difco further acknowledge that LPC's (or such other Borrower's)
Obligations under the Hedging Agreements are Obligations of all the Borrowers as
if they were parties signatory thereto.
SECTION 8.2. NEGATIVE COVENANTS. The Borrowers agree with the Agent and
each Lender that, until all Commitments have terminated and all Obligations
have
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been paid and performed in full, the Borrowers will perform the obligations set
forth in this Section 8.2.
SECTION 8.2.1. BUSINESS ACTIVITIES. The Borrowers will not, and will not
permit any of their Subsidiaries to, engage in any business activity, except
those described in the first recital and such activities as may be incidental or
related thereto.
SECTION 8.2.2. INDEBTEDNESS. The Borrowers will not, and will not permit
any of their Subsidiaries to, create, incur, assume or suffer to exist or
otherwise become or be liable in respect of any Indebtedness, other than,
without duplication, the following:
(a) Indebtedness in respect of the Loans and other Obligations;
(b) Indebtedness in an aggregate principal amount not to exceed
$500,000 at any time outstanding which is incurred by the Borrowers or any
of their Subsidiaries to a vendor of any assets to finance its or their
acquisition of such assets;
(c) unsecured Indebtedness incurred in the ordinary course of business
(including (i) open accounts extended by suppliers on normal trade terms in
connection with purchases of goods and services, and (ii) gas balancing,
but excluding Indebtedness incurred through the borrowing of money or
Contingent Liabilities);
(d) Hedging Obligations incurred pursuant to the Hedging Agreements
approved by the Agent pursuant to Sections 8.1.8, 8.1.9 and 8.1.10; and
(e) Contingent Obligations incurred to satisfy bonding requirements
imposed by any Governmental Agency not to exceed, in the aggregate,
$500,000;
(f) Subordinated Indebtedness under the Subordinated Notes;
(g) the indebtedness of their Subsidiaries existing as of the
Effective Date which is identified in Item 8.2.2(h) of the Disclosure
Schedule;
(h) Indebtedness in respect of Capitalized Lease Obligations in an
amount not to exceed $500,000 at any time outstanding;
(i) any indebtedness owed by any Borrower to any of the Subsidiaries
or by any Subsidiary of any Borrower to any Borrower or any Subsidiary;
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(j) endorsements of negotiable instruments for collection in the
ordinary course of business;
(k) Indebtedness of the Borrower and its Subsidiaries which are
Investments to the extent permitted by Section 8.2.5(b); and
(l) Old LaTex Payables;
provided, however, that no Indebtedness otherwise permitted by clause (b) shall
be permitted if, after giving effect to the incurrence thereof, any Default
shall have occurred and be continuing.
SECTION 8.2.3. LIENS. The Borrowers will not, and will not permit any of
their Subsidiaries to, create, incur, assume or suffer to exist any Lien upon
any of their Property, revenues or assets, whether now owned or hereafter
acquired, except:
(a) Liens securing payment of the Obligations, granted pursuant to any
Loan Document;
(b) Liens granted to secure payment of Indebtedness of the type
permitted and described in clause (b) of Section 8.2.2 and covering only
those assets acquired with the proceeds of such Indebtedness;
(c) Hydrocarbon production sales contracts;
(d) Liens for taxes, assessments or other governmental charges or
levies not at the time delinquent or thereafter payable without penalty or
being diligently contested in good faith by appropriate proceedings and for
which adequate reserves in accordance with GAAP shall have been set aside
on its books; provided, that at no time shall such sums exceed in the
aggregate $250,000;
(e) Liens of carriers, warehousemen, mechanics, materialmen and
landlords incurred in the ordinary course of business for sums not overdue
or being diligently contested in good faith by appropriate proceedings and
for which adequate reserves in accordance with GAAP shall have been set
aside on its books; provided, that at no time shall such sums exceed in the
aggregate $100,000;
(f) Liens incurred in the ordinary course of business in connection
with worker's compensation, unemployment insurance or other forms of
governmental insurance or benefits, or to secure performance of tenders,
statutory obligations, leases and contracts (other than for borrowed money)
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entered into in the ordinary course of business or to secure obligations on
surety or appeal bonds;
(g) covenants, restrictions, easements, servitudes, permits,
conditions, exceptions, reservations, minor rights, minor encumbrances,
minor irregularities in title or conventional rights of reassignment prior
to abandonment which do not materially interfere with the occupation, use
and enjoyment by the Borrowers of their assets in the ordinary course of
business as presently conducted, or materially impair the value thereof for
the purpose of such business;
(h) judgment Liens in existence less than thirty (30) days after the
entry thereof or with respect to which execution has been stayed or the
payment of which is covered in full (subject to a customary deductible) by
insurance maintained with responsible insurance companies; and
(i) Liens in favor of operators and non-operators under joint
operating agreements or similar contractual arrangements arising in the
ordinary course of the business of the Borrowers to secure amounts owing,
which amounts are not yet due or are being contested in good faith by
appropriate proceedings, if such reserve as may be required by GAAP shall
have been made therefor.
SECTION 8.2.4. FINANCIAL CONDITION. The Borrowers will not permit:
(a) the Current Ratio at any time to be less than 1.0:1.0; or
(b) the Debt to EBITDA Ratio at any time to be greater than 4:1 on, or
at any time after, April 30, 2001; or
(c) the Interest Coverage Ratio to be less than (i) 0.25:1.0 at April
30, 1999 (as to the Fiscal Quarter then ending); (ii) 0.25:1.0 at any time
after April 30, 1999, through and including July 31, 1999 (as to the two
Fiscal Quarters immediately preceding such date); (iii) 0.40:1.0 at any
time after July 31, 1999, through and including October 31, 1999 (as to the
three Fiscal Quarters immediately preceding such date); (iv) 0.80:1.0 at
any time after October 31, 1999, through and including January 31, 2000;
(v) 1.25:1.0 at any time after January 31, 2000, through and including
April 30, 2000; (vi) 1.50:1.0 at any time after April 30, 2000, through and
including July 31, 2000; (vii) 1.75:1.0 at any time after July 31, 2000,
through and including January 31, 2001; (viii) 2.0:1.0 at any time after
January 31, 2001, through and including April 30, 2001; (ix) 2.5:1.0 at any
time after April 30, 2001, through and including October 31, 2001; and (x)
3.0:1.0 at any time after October 31, 2001.
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The Borrowers will not, and will not permit any of their Subsidiaries to, make
any significant change in accounting treatment or reporting practices, except as
required by GAAP, or change the Fiscal Year of any Borrower or any of their
Subsidiaries.
SECTION 8.2.5. INVESTMENTS. The Borrowers will not, and will not permit
any of their Subsidiaries to, make, incur, assume or suffer to exist any
Investment in any other Person, except:
(a) Cash Equivalent Investments;
(b) without duplication, Investments permitted as Indebtedness
pursuant to Section 8.2.2; and
(c) without duplication, Investments in the nature of Capital
Expenditures;
provided, however, that
(d) any Investment which when made complies with the requirements of
the definition of the term "Cash Equivalent Investment" may continue to be
held notwithstanding that such Investment if made thereafter would not
comply with such requirements; and
(e) no Investment otherwise permitted by clause (b) or (c) shall be
permitted to be made if, immediately before or after giving effect thereto,
any Default shall have occurred and be continuing.
SECTION 8.2.6. RESTRICTED PAYMENTS, ETC. On and at all times after the
Effective Date:
(a) the Borrowers will not, and will not permit any of their
Subsidiaries (other than a wholly-owned Subsidiary) to, declare, pay or
make any dividend or distribution (in cash, property or obligations) on any
class of equity (now or hereafter outstanding) of the Borrowers or on any
options or other rights with respect to any interest of any class of equity
(now or hereafter outstanding) of the Borrowers or apply any of its funds,
property or assets to the purchase, redemption, sinking fund or other
retirement of, any class of equity (now or hereafter outstanding) of the
Borrowers, or options or other rights with respect to any interest of or in
any class of equity (now or hereafter outstanding) of the Borrowers (such
dividends, distributions or applications being called "Distribution
Payments") other than Distribution Payments which do not cause the
Borrowers to be in violation of the Restricted Payment Tests; and
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(b) the Borrowers will not, and will not permit any of their
Subsidiaries to, make any Distribution Payments other than to a Borrower;
and
(c) the Borrowers will not, and will not permit any of their
Subsidiaries (other than a wholly-owned Subsidiary) to, make any deposit
for any of the foregoing purposes.
SECTION 8.2.7. RENTAL OBLIGATIONS. The Borrowers will not, and will not
permit any of their Subsidiaries to, enter into at any time any arrangement
(excluding oil and gas leases entered into in the ordinary course of business)
which involves the leasing by the Borrowers or any of their Subsidiaries from
any lessor of any real or personal property (or any interest therein), except
arrangements which, together with all other such arrangements which shall then
be in effect, will not require the payment of an aggregate amount of rentals by
the Borrowers or any of their Subsidiaries in excess of (excluding escalations
resulting from a rise in the consumer price or similar index) $750,000 for any
Fiscal Year or $1,500,000 during the full remaining term of such arrangements;
provided, however, that any calculation made for purposes of this Section shall
exclude (i) any amounts required to be expended for maintenance and repairs,
insurance, taxes, assessments, and other similar charges (ii) any amounts
relating to Capitalized Lease Obligations.
SECTION 8.2.8. CONSOLIDATION, MERGER, ETC. The Borrowers will not, and
will not permit any of their Subsidiaries to, liquidate or dissolve, consolidate
with, or merge into or with, any other partnership or corporation, or purchase
or otherwise acquire all or substantially all of the assets of any Person (or of
any division thereof). The Borrowers will not, and will not permit any of their
Subsidiaries to, create any Subsidiary except with the prior written consent of
the Agent.
SECTION 8.2.9. ASSET DISPOSITIONS, ETC. The Borrowers will not, and will
not permit any of their Subsidiaries to, sell, transfer, lease, contribute or
otherwise convey, or grant options, warrants or other rights with respect to,
all or substantially all of the assets of the Borrowers or any of their
Subsidiaries in any one transaction or in any series of transactions, whether or
not related; and the Borrowers will not, and will not permit any of their
Subsidiaries to, sell, transfer, lease, contribute or otherwise convey, or grant
options, warrants or other rights with respect to, less than all or any
substantial part of its assets (including accounts receivable) to any Person
other than
(a) farmouts under standard industry terms of Properties not holding
Proven Reserves,
(b) abandonment of Properties not capable of producing Hydrocarbons in
paying quantities after the expiration of their primary terms
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(c) as permitted by Section 2.7 of the Mortgages and
(d) if such assets are in the Borrowing Base and the Collateral Value,
the Borrowers comply with the terms of Section 3.1.2 and such sale,
transfer, lease, contribution or conveyance is for cash in an amount at
least equal to the fair market value of such assets.
SECTION 8.2.10. MODIFICATION OF CERTAIN AGREEMENTS. The Borrowers will
not, and will not permit any of their Subsidiaries to, consent to any amendment,
supplement or other modification of any of the terms or provisions contained in,
or applicable to, any Material Contracts, including the Burlington Agreement,
nor will Alliance Plc or Difco consent to any amendment, supplement or other
modification of any of the terms or provisions contained in, or applicable to,
the Difco Agreement.
SECTION 8.2.11. TRANSACTIONS WITH AFFILIATES. The Borrowers will not,
and will not permit any of their Subsidiaries to, enter into, or cause, suffer
or permit to exist any arrangement or contract with any of its or their other
Affiliates (other than an arrangement or contract with a Borrower) unless such
arrangement or contract is fair and equitable to such Borrower or such
Subsidiary and is an arrangement or contract of the kind which would be entered
into by a prudent Person in the position of such Borrower or such Subsidiary
with a Person which is not one of its Affiliates.
SECTION 8.2.12. NEGATIVE PLEDGES, RESTRICTIVE AGREEMENTS, ETC. The
Borrowers will not, and will not permit any of their Subsidiaries to, enter into
any agreement (excluding this Agreement, any other Loan Document and any
agreement governing any Indebtedness permitted by clause (b) of Section 8.2.2 as
in effect on the Effective Date as to the assets financed with the proceeds of
such Indebtedness) prohibiting
(a) the creation or assumption of any Lien upon its properties,
revenues or assets, whether now owned or hereafter acquired, or the ability
of such Borrower or any other Obligor to amend or otherwise modify this
Agreement or any other Loan Document; or
(b) the ability of any Subsidiary to make any payments, directly or
indirectly, to the Borrowers by way of dividends, advances, repayments of
loans or advances, reimbursements of management and other intercompany
charges, expenses and accruals or other returns on investments, or any
other agreement or arrangement which restricts the ability of any such
Subsidiary to make any payment, directly or indirectly, to the Borrowers.
SECTION 8.2.13. TAKE OR PAY CONTRACTS. No Borrower will enter into or be
a party to any arrangement for the purchase of materials, supplies, other
property (including without limitation Hydrocarbons), or services if such
arrangement requires
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that payment be made by such Borrower regardless of whether such materials,
supplies, other property, or services are delivered or furnished to it.
ARTICLE IX.
EVENTS OF DEFAULT
SECTION 9.1 LISTING OF EVENTS OF DEFAULT. Each of the following events
or occurrences described in this Section 9.1 shall constitute an "Event of
Default".
SECTION 9.1.1. NON-PAYMENT OF OBLIGATIONS. Any Borrower shall default in
the payment or prepayment when due of any principal of any Loan; any Borrower
shall default in the payment when due of any Reimbursement Obligation or Hedging
Obligation under a Hedging Agreement in effect between a Borrower and a Lender
or an Affiliate of a Lender; or any Borrower shall default (and such default
shall continue unremedied for a period of five (5) days) in the payment when due
of any interest on any Loan or any fee or of any other Obligation.
SECTION 9.1.2. BREACH OF WARRANTY. Any representation or warranty of the
Borrowers or any other Obligor made or deemed to be made hereunder or in any
other Loan Document executed by it or any other writing or certificate furnished
by or on behalf of the Borrowers or any other Obligor to the Agent, the Issuer
or any Lender for the purposes of or in connection with this Agreement or any
such other Loan Document (including any certificates delivered pursuant to
Article VI) is or shall be incorrect when made in any material respect.
SECTION 9.1.3. NON-PERFORMANCE OF CERTAIN COVENANTS AND OBLIGATIONS. Any
Borrower shall default in the due performance and observance of any of its
obligations under Section 8.1 or 8.2.
SECTION 9.1.4. NON-PERFORMANCE OF OTHER COVENANTS AND OBLIGATIONS. Any
Borrower or any other Obligor shall default in the due performance and
observance of any other agreement contained herein or in any other Loan Document
executed by it, and such default shall continue unremedied for a period of
fifteen (15) days after notice thereof shall have been given to the Borrowers by
the Agent.
SECTION 9.1.5. DEFAULT ON OTHER INDEBTEDNESS.
(a) A default shall occur in the payment when due (subject to any
applicable grace period), whether by acceleration or otherwise, of any
Indebtedness (including any Hedging Agreements in effect between the
Borrowers and the Agent, but excluding (x) Old LaTex Payables, and (y)
Indebtedness described in Section 9.1.1) of the Borrowers or any other
Obligor
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having a principal amount, individually or in the aggregate, in excess of
$250,000, or a default shall occur in the performance or observance of any
obligation or condition with respect to such Indebtedness if the effect of
such default is to accelerate the maturity of any such Indebtedness or such
default shall continue unremedied for any applicable period of time
sufficient to permit any holder of such Indebtedness, or any trustee or
agent for such holders, to cause such Indebtedness to become due and
payable prior to its expressed maturity; or
(b) A default shall occur in the payment when due of any royalty,
overriding royalty or similar interest burdening the Oil and Gas Properties
(other than the Old LaTex Payables) of any Borrower or any of its
Subsidiaries (including the Assignment) individually or in the aggregate,
in excess of $100,000.
SECTION 9.1.6. JUDGMENTS. Any judgment decree, arbitration award or
order for the payment of money in excess of $250,000 shall be rendered against
any Borrower or any other Obligor and either
(a) enforcement proceedings shall have been commenced by any creditor
upon such judgment or order; or
(b) there shall be any period of ten (10) consecutive days during
which a stay of enforcement of such judgment or order, by reason of a
pending appeal or otherwise, shall not be in effect.
SECTION 9.1.7. PENSION PLANS. Any of the following events shall occur
with respect to any Pension Plan
(a) the institution of any steps by any Borrower, any member of its
Controlled Group or any other Person to terminate a Pension Plan if, as a
result of such termination, such Borrower or any such member could be
required to make a contribution to such Pension Plan, or could reasonably
expect to incur a liability or obligation to such Pension Plan; or
(b) a contribution failure occurs with respect to any Pension Plan
sufficient to give rise to a Lien under Section 302(f) of ERISA.
SECTION 9.1.8. CONTROL OF THE BORROWERS. Any Change in Control shall
occur.
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SECTION 9.1.9. BANKRUPTCY, INSOLVENCY, ETC. Any Borrower or any other
Obligor shall
(a) become insolvent or generally fail to pay, or admit in writing its
inability or unwillingness to pay, debts as they become due;
(b) apply for, consent to, or acquiesce in, the appointment of a
trustee, receiver, sequestrator or other custodian for such Borrower or any
other Obligor or any property of any thereof, or make a general assignment
for the benefit of creditors;
(c) in the absence of such application, consent or acquiescence,
permit or suffer to exist the appointment of a trustee, receiver,
sequestrator or other custodian for such Borrower or any other Obligor or
for a substantial part of the property of any thereof, and such trustee,
receiver, sequestrator or other custodian shall not be discharged within
sixty (60) days, provided that the Borrowers and each other Obligor hereby
expressly authorizes the Agent and the Lenders to appear in any court
conducting any relevant proceeding during such 60-day period to preserve,
protect and defend its rights under the Loan Documents;
(d) permit or suffer to exist the commencement of any bankruptcy,
reorganization, debt arrangement or other case or proceeding under any
bankruptcy or insolvency law, or any dissolution, winding up or liquidation
proceeding, in respect of any Borrower or any other Obligor, and, if any
such case or proceeding is not commenced by such Borrower or such other
Obligor, such case or proceeding shall be consented to or acquiesced in by
such Borrower or such other Obligor or shall result in the entry of an
order for relief or shall remain for sixty (60) days undismissed, provided
that such Borrower and each other Obligor hereby expressly authorizes the
Agent and the Lenders to appear in any court conducting any such case or
proceeding during such 60-day period to preserve, protect and defend its
rights under the Loan Documents; or
(e) take any action authorizing, or in furtherance of, any of the
foregoing.
SECTION 9.1.10. IMPAIRMENT OF SECURITY, ETC. Any Loan Document, or any
Lien granted thereunder, shall (except in accordance with its terms), in whole
or in part, terminate, cease to be effective or cease to be the legally valid,
binding and enforceable obligation of any Obligor party thereto; any Borrower,
any other Obligor or any other party shall, directly or indirectly, contest in
any manner such effectiveness, validity, binding nature or enforceability; or
any Lien (pertaining to any Property having more than immaterial value) securing
any Obligation shall, in whole
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or in part, cease to be a perfected first priority Lien, subject only to those
exceptions expressly permitted by such Loan Document.
SECTION 9.1.11. MATERIAL ADVERSE EFFECT. Any Material Adverse Effect
shall occur.
SECTION 9.2. ACTION IF BANKRUPTCY. If any Event of Default described in
clauses (a) through (d) of Section 9.1.9 shall occur with respect to any
Borrower or any other Obligor, the Commitments (if not theretofore terminated)
shall automatically terminate and the outstanding principal amount of all
outstanding Loans and all other Obligations shall automatically be and become
immediately due and payable, without notice or demand.
SECTION 9.3. ACTION IF OTHER EVENT OF DEFAULT. If any Event of Default
(other than any Event of Default described in clauses (a) through (d) of
Section 9.1.9 with respect to any Borrower or any other Obligor) shall occur for
any reason, whether voluntary or involuntary, and be continuing, the Agent, may
by notice to the Borrowers declare all or any portion of the outstanding
principal amount of the Loans and other Obligations to be due and payable and/or
the Commitments (if not theretofore terminated) to be terminated, whereupon the
full unpaid amount of such Loans and other Obligations which shall be so
declared due and payable shall be and become immediately due and payable,
without further notice, demand or presentment, and/or, as the case may be, the
Commitments shall terminate.
SECTION 9.4. RIGHTS NOT EXCLUSIVE. The rights provided for in this
Agreement and the other Loan Documents are cumulative and are not exclusive of
any other rights, powers, privileges or remedies provided by Applicable Law or
in equity, or under any other instrument, document or agreement now existing or
hereafter arising.
ARTICLE X
THE AGENT
SECTION 10.1. ACTIONS. Each Lender hereby appoints BankAmerica as its
Agent under and for purposes of this Agreement, the Notes and each other Loan
Document, and BankAmerica hereby accepts such appointment. Each Lender
authorizes the Agent to act on behalf of such Lender under this Agreement, the
Notes and each other Loan Document and, in the absence of other written
instructions from the Required Lenders received from time to time by the Agent
(with respect to which the Agent agrees that it will comply, except as otherwise
provided in this Section and to the extent such instructions may reasonably be
expected to comply with applicable law), 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
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thereof, together with such powers as may be reasonably incidental thereto;
provided, however, that the Agent shall not take any action that requires the
consent of any Lender unless it receives such consent. Each Lender hereby
indemnifies (which indemnity shall survive any termination of this Agreement)
the Agent, pro rata according to such Lender's Percentage, from and against any
and all liabilities, obligations, losses, damages, claims, costs or expenses of
any kind or nature whatsoever which may at any time be imposed on, incurred by,
or asserted against, the Agent in any way relating to or arising out of this
Agreement, the Notes and any other Loan Document, including reasonable
attorneys' fees, and as to which the Agent is not reimbursed by the Borrowers;
provided, however, that no Lender shall be liable for the payment of any portion
of such liabilities, obligations, losses, damages, claims, costs or expenses
which are determined by a court of competent jurisdiction in a final proceeding
to have resulted solely from the Agent's gross negligence or wilful misconduct.
The Agent shall not be required to take any action hereunder, under the Notes or
under any other Loan Document, or to prosecute or defend any suit in respect of
this Agreement, the Notes or any other Loan Document, unless it is indemnified
hereunder to its satisfaction. If any indemnity in favor of the Agent shall be
or become, in the Agent's determination, inadequate, the Agent may call for
additional indemnification from the Lenders and cease to do the acts indemnified
against hereunder until such additional indemnity is given.
SECTION 10.2. FUNDING RELIANCE, ETC. Unless the Agent shall have been
notified by telephone, confirmed in writing, by any Lender by 5:00 p.m. (Chicago
time) on the day prior to a Borrowing that such Lender will not make available
the amount which would constitute its Percentage of such Borrowing on the date
specified therefor, the Agent may assume that such Lender has made such amount
available to the Agent and, in reliance upon such assumption, make available to
the Borrower a corresponding amount. If and to the extent that such Lender
shall not have made such amount available to the Agent, such Lender and the
Borrower severally agree to repay the Agent forthwith on demand such
corresponding amount together with interest thereon, for each day from the date
the Agent made such amount available to the Borrowers to the date such amount is
repaid to the Agent, at the interest rate applicable at the time to Loans
comprising such Borrowing.
SECTION 10.3. EXCULPATION. Neither the Agent nor any of its directors,
officers, employees or agents shall be liable to any Lender for any action taken
or omitted to be taken by it under this Agreement or any other Loan Document, or
in connection herewith or therewith, except for its own wilful misconduct or
gross negligence, nor responsible for any recitals or warranties herein or
therein, nor for the effectiveness, enforceability, validity or due execution of
this Agreement or any other Loan Document, nor for the creation, perfection or
priority of any Liens purported to be created by any of the Loan Documents, or
the validity, genuineness, enforceability, existence, value or sufficiency of
any collateral security, nor to make any inquiry respecting the performance by
the Borrowers of their obligations hereunder or under
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any other Loan Document. Any such inquiry which may be made by the Agent shall
not obligate it to make any further inquiry or to take any action. The Agent
shall be entitled to rely upon advice of counsel concerning legal matters and
upon any notice, consent, certificate, statement or writing which the Agent
believes to be genuine and to have been presented by a proper Person.
SECTION 10.4. SUCCESSOR. The Agent may resign as such at any time upon
at least thirty (30) days' prior notice to the Borrowers and all Lenders, and
the Agent may be removed with or without cause as such by the Required Lenders
upon at least thirty (30) days' prior notice to the Agent and the Borrowers. If
the Agent at any time shall resign or be removed, the Required Lenders may
appoint another Lender as a successor Agent with the consent of the Borrowers
(which consent shall not be unreasonably withheld) which shall Lender thereupon
become the Agent hereunder. If no successor Agent shall have been so appointed
by the Required Lenders, and shall have accepted such appointment, within thirty
(30) days after the giving of notice of resignation or removal, then the
retiring or removed Agent may with the consent of the Borrowers (which consent
shall not be unreasonably withheld), on behalf of the Lenders, appoint a
successor Agent, which shall be one of the Lenders and, if no Lender accepts
such appointment, a commercial banking institution organized under the laws of
the United States (or any State thereof) or a United States branch or agency of
a commercial banking institution, and having a combined capital and surplus of
at least $500,000,000. Upon the acceptance of any appointment as Agent hereunder
by a successor Agent, such successor Agent shall be entitled to receive from the
retiring or removed Agent such documents of transfer and assignment as such
successor Agent may reasonably request, and shall thereupon succeed to and
become vested with all rights, powers, privileges and duties of the retiring or
removed Agent, and the retiring or removed Agent shall be discharged from its
duties and obligations under this Agreement. After any retiring or removed
Agent's resignation or removal hereunder as the Agent, the provisions of
(a) this Article X shall inure to its benefit as to any actions taken
or omitted to be taken by it while it was the Agent under this Agreement;
and
(b) Section 11.3 and Section 11.4 shall continue to inure to its
benefit.
SECTION 10.5. LOANS OR LETTERS OF CREDIT ISSUED BY BANKAMERICA.
BankAmerica shall have the same rights and powers with respect to (x) the Loans
made by it or any of its Affiliates, (y) the Notes held by it or any of its
Affiliates, and (z) its participating interests in the Letters of Credit as any
other Lender and may exercise the same as if it were not the Agent. BankAmerica
and its Affiliates and each of the Lenders and their respective Affiliates may
accept deposits from, lend money to, and generally engage in any kind of
business with the Borrowers or any Subsidiary or Affiliate of the Borrowers as
if BankAmerica were not the Agent
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hereunder and in the case of each Lender, as if such Lender were not a Lender
hereunder.
SECTION 10.6. CREDIT DECISIONS. Each Lender acknowledges that it has,
independently of the Agent and each other Lender, and based on such Lender's
review of the financial information of the Borrowers, this Agreement, the other
Loan Documents (the terms and provisions of which being satisfactory to such
Lender) and such other documents, information and investigations as such Lender
has deemed appropriate, made its own credit decision to extend its Commitments.
Each Lender also acknowledges that it will, independently of the Agent and each
other Lender, and based on such other documents, information and investigations
as it shall deem appropriate at any time, continue to make its own credit
decisions as to exercising or not exercising from time to time any rights and
privileges available to it under this Agreement or any other Loan Document.
SECTION 10.7. COPIES, ETC. The Agent shall give prompt notice to each
Lender of each notice or request required or permitted to be given to the Agent
by the Borrowers pursuant to the terms of this Agreement (unless concurrently
delivered to the Lenders by the Borrowers). The Agent will distribute promptly
to each Lender each document or instrument received for its account and copies
of all other communications received by the Agent from the Borrowers for
distribution to the Lenders by the Agent in accordance with the terms of this
Agreement.
ARTICLE XI.
MISCELLANEOUS PROVISIONS
SECTION 11.1. WAIVERS, AMENDMENTS, ETC.
(a) The provisions of this Agreement and of each other Loan Document
may from time to time be amended, modified or waived, if such amendment,
modification or waiver is in writing and consented to by the Borrowers and
the Agent; provided, however, that no such amendment, modification or
waiver which would:
(i) modify any requirement hereunder that any particular action
be taken by all the Lenders or by the Required Lenders shall be
effective unless consented to by each Lender;
(ii) modify this Section 11.1, change the definitions of
"Required Lenders" or "Commitment Amount", increase the Percentage of
any Lender, reduce any fees described in Article III, change the
amortization schedule provided for in Section 3.1.1(e), (f) or (g),
release
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all or substantially all collateral security, except as otherwise
specifically provided in any Loan Document, or extend the Tranche A
Availability Termination Date, the Tranche B Availability Termination
Date, any Stated Maturity Date or the Commitment Termination Date,
shall be made without the consent of each Lender;
(iii) extend the due date for, or reduce the amount of, any
scheduled or mandatory repayment or prepayment of principal of or
interest on any Loan (or reduce the principal amount of or rate of
interest on any Loan) shall be made without the consent of each
Lender;
(iv) affect adversely the interests, rights or obligations of an
Issuer in its capacity as Issuer shall be made without the consent of
such Issuer; or
(v) affect adversely the interests, rights or obligations of
the Agent in its capacity as the Agent shall be made without consent
of the Agent.
No failure or delay on the part of the Agent or the Lenders in exercising
any power or right under this Agreement or any other Loan Document shall
operate as a waiver thereof, nor shall any single or partial exercise of
any such power or right preclude any other or further exercise thereof or
the exercise of any other power or right. No notice to or demand on the
Borrowers in any case shall entitle it to any notice or demand in similar
or other circumstances. No waiver or approval by the Agent under this
Agreement or any other Loan Document shall, except as may be otherwise
stated in such waiver or approval, be applicable to subsequent
transactions. No waiver or approval hereunder shall require any similar or
dissimilar waiver or approval thereafter to be granted hereunder.
(b) This Agreement is an amendment and restatement of, and replaces
and supersedes the Existing Agreement; provided, however, that no right,
interest, claim or cause of action of any kind of the Agent or any Lender
which may have existed under the Existing Agreement shall in any way be
released, modified, compromised or waived by virtue of this Existing
Agreement superseding and replacing the Existing Agreement.
SECTION 11.2. NOTICES.
(a) All notices, requests, consents, approvals, waivers and other
communications shall be in writing (including, unless the context expressly
otherwise provides, by facsimile transmission, provided that any matter
transmitted by the Borrowers by facsimile (i) shall be immediately
confirmed by
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a telephone call to the recipient at the number specified on the signature
pages, and (ii) shall be followed promptly by delivery of a hard copy
original thereof) and mailed, faxed or delivered, to the address or
facsimile number specified for notices on the signature pages hereof; or,
as directed to the Borrowers or the Lenders, to such other address as shall
be designated by such party in a written notice to the other parties, and
as directed to any other party, at such other address as shall be
designated by such party in a written notice to the Borrowers and the
Lenders.
(b) All such notices, requests and communications shall, when
transmitted by overnight delivery, or faxed, be effective when
delivered for overnight (next-day) delivery, or transmitted in legible form
by facsimile machine, respectively, or if mailed, upon the third Business
Day after the date deposited into the U.S. mail, or if delivered, upon
delivery.
(c) Any agreement of the Lenders herein to receive certain notices by
telephone or facsimile is solely for the convenience and at the request of
the Borrowers. The Agent and the Lenders shall be entitled to rely on the
authority of any Person purporting to be a Person authorized by the
Borrowers to give such notice and the Agent and the Lenders shall not have
any liability to the Borrowers or other Person on account of any action
taken or not taken by the Agent and the Lenders in reliance upon such
telephonic or facsimile notice. The obligation of the Borrowers to repay
the Loans shall not be affected in any way or to any extent by any failure
by a Lender to receive written confirmation of any telephonic or facsimile
notice or the receipt by the Agent and the Lenders of a confirmation which
is at variance with the terms understood by the Agent and the Lenders to be
contained in the telephonic or facsimile notice.
SECTION 11.3. PAYMENT OF COSTS AND EXPENSES. The Borrowers agree to pay
on demand all reasonable expenses of the Agent and each Lender (including the
fees and out-of-pocket expenses of internal and external counsel to the Agent
and each Lender and of local counsel, if any, who may be retained by counsel to
the Agent) in connection with
(a) the negotiation, preparation, execution and delivery of this
Agreement and of each other Loan Document, including schedules and
exhibits, and any amendments, waivers, consents, supplements or other
modifications to this Agreement or any other Loan Document as may from time
to time hereafter be required, whether or not the transactions contemplated
hereby are consummated,
(b) the filing, recording, refiling or rerecording of the Mortgages,
the Security Agreements, the Pledge Agreements and/or any Uniform
Commercial Code financing statements relating thereto and all amendments,
supplements,
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and modifications to, and all releases and terminations of, any thereof and
any and all other documents or instruments of further assurance required to
be filed or recorded or refiled or rerecorded by the terms hereof or of the
Mortgages, the Security Agreements and the Pledge Agreements, and
(c) the preparation and review of the form of any document or
instrument relevant to this Agreement or any other Loan Document.
The Borrowers further agree to pay, and to save the Agent and each Lender
harmless from all liability for, any stamp or other taxes which may be payable
in connection with the execution or delivery of this Agreement, the borrowings
hereunder, the issuance of the Notes, the issuance of the Letters of Credit, or
any other Loan Documents. The Borrowers also agree to reimburse the Agent and
each Lender upon demand for all reasonable out-of-pocket expenses (including
attorneys' fees and legal expenses of internal and external attorneys) incurred
by the Agent and each Lender in connection with (x) the negotiation of any
restructuring or "work-out", whether or not consummated, of any Obligations and
(y) the enforcement of any Obligations.
SECTION 11.4. INDEMNIFICATION. In consideration of the execution and
delivery of this Agreement by the Agent and each Lender and the extension of the
Commitments, the Borrowers hereby indemnify, exonerate and hold the Agent and
each Lender and each of its officers, directors, employees and agents
(collectively, the "Indemnified Parties") free and harmless from and against any
and all actions, causes of action, suits, losses, costs, liabilities and
damages, and expenses incurred in connection therewith (irrespective of whether
any such Indemnified Party is a party to the action for which indemnification
hereunder is sought), including reasonable attorneys' fees and disbursements
(collectively, the "Indemnified Liabilities"), incurred by the Indemnified
Parties or any of them as a result of, or arising out of, or relating to
(a) This Agreement, any Loan Document or any document contemplated
hereby or referred to herein;
(b) any transaction financed or to be financed in whole or in part,
directly or indirectly, with the proceeds of any Loan, including the
transactions contemplated by the Difco Agreement and the Burlington
Agreement, any Approved Development Activities, or the use of any Letter of
Credit;
(c) any investigation, litigation or proceeding related to any
acquisition or proposed acquisition by any Borrower or any of their
Subsidiaries of all or any portion of the stock or assets of any Person,
whether or not the Agent and each Lender is party thereto;
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(d) any investigation, litigation or proceeding related to any
environmental cleanup, audit, compliance or other matter relating to any
Environmental Law or the condition of any facility or Property owned,
leased or operated by any Borrower or any of their Subsidiaries;
(e) the presence on or under, or the escape, seepage, leakage,
spillage, discharge, emission, discharging or releases from, any facility
or Property owned, leased or operated by any Borrower or any of their
Subsidiaries thereof of any Hazardous Material (including any losses,
liabilities, damages, injuries, costs, expenses or claims asserted or
arising under any Environmental Law), regardless of whether caused by, or
within the control of, such Borrower or any of their Subsidiaries; or
(f) any misrepresentation, inaccuracy or breach in or of Section 7.17
or Section 8.1.6,
except for any such Indemnified Liabilities arising for the account of a
particular Indemnified Party by reason of the relevant Indemnified Party's gross
negligence or wilful misconduct. If and to the extent that the foregoing
undertaking may be unenforceable for any reason, the Borrowers hereby agree to
make the maximum contribution to the payment and satisfaction of each of the
Indemnified Liabilities which is permissible under Applicable Law. The
obligations in this Section 11.4 shall survive payment of all other Obligations.
At the election of any Indemnified Party, the Borrowers shall defend such
Indemnified Party using legal counsel satisfactory to such Indemnified Party in
such Person's sole discretion, at the sole cost and expense of the Borrowers.
All amounts owing under this Section 11.4 shall be paid within thirty (30) days
after demand.
SECTION 11.5. SURVIVAL. The obligations of the Borrowers under Sections
5.3, 5.4, 5.5, 5.6, 11.3 and 11.4 shall in each case survive any termination of
this Agreement, the payment in full of all Obligations and the termination of
all Commitments. The representations and warranties made by each Obligor in
this Agreement and in each other Loan Document shall survive the execution and
delivery of this Agreement and each such other Loan Document.
SECTION 11.6. SEVERABILITY. Any provision of this Agreement or any other
Loan Document which is prohibited or unenforceable in any jurisdiction shall, as
to such provision and such jurisdiction, be ineffective to the extent of such
prohibition or unenforceability without invalidating the remaining provisions of
this Agreement or such Loan Document or affecting the validity or enforceability
of such provision in any other jurisdiction.
SECTION 11.7. HEADINGS. The various headings of this Agreement and of
each other Loan Document are inserted for convenience only and shall not affect
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the meaning or interpretation of this Agreement or such other Loan Document or
any provisions hereof or thereof.
SECTION 11.8. EXECUTION IN COUNTERPARTS, EFFECTIVENESS, ETC. This
Agreement may be executed by the parties hereto in several counterparts, each of
which shall be executed by the Agent, the Borrowers and the Lenders and be
deemed to be an original and all of which shall constitute together but one and
the same agreement. This Agreement shall become effective when counterparts
hereof are executed on behalf of the Agent, the Borrowers and the Lenders. This
Agreement is made and entered into for the sole protection and legal benefit of
the Agent, the Borrowers and the Lenders and Persons indemnified hereunder, and
their permitted successors and assigns, and no other Person shall be a direct or
indirect legal beneficiary of, or have any direct or indirect cause of action or
claim in connection with, this Agreement or any of the other Loan Documents.
SECTION 11.9. GOVERNING LAW; ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTE
AND EACH OTHER LOAN DOCUMENT (OTHER THAN THE MORTGAGES OR AS EXPRESSLY PROVIDED
IN ANY SUCH DOCUMENT) SHALL EACH BE DEEMED TO BE A CONTRACT MADE UNDER AND
GOVERNED BY THE INTERNAL LAWS OF THE STATE OF ILLINOIS. This Agreement, the
Note and the other Loan Documents constitute the entire understanding among the
parties hereto with respect to the subject matter hereof and supersede any prior
agreements, written or oral, with respect thereto.
SECTION 11.10. SUCCESSORS AND ASSIGNS. This Agreement shall be binding
upon and shall inure to the benefit of the parties hereto and their respective
successors and assigns; provided, however, that:
(a) the Borrowers may not assign or transfer their rights or
obligations hereunder without the prior written consent of the Agent and
all Lenders; and
(b) the rights of sale, assignment and transfer of the Lenders are
subject to Section 11.11.
SECTION 11.11. SALE AND TRANSFER OF LOANS AND NOTE; PARTICIPATIONS IN
LOANS AND NOTE. Each Lender may assign, or sell participations in, its Loans
and Commitments to one or more other Persons in accordance with this Section
11.11.
SECTION 11.11.1. ASSIGNMENTS. A Lender may at any time assign and
delegate to one or more Persons, including without limitation, banks or other
financial institutions (each Person to whom such assignment and delegation is to
be made, being hereinafter referred to as an "Assignee Lender"), all or any
fraction of such Lender's total Loans and Commitments (which assignment and
delegation shall be of a constant, and not a varying, percentage of all such
Lender's Loans and Commitments) in a minimum aggregate amount of $1,000,000 (or
the entire remaining amount of such Lender's Loans and
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Commitments); provided, however, that such Lender is required at all times to
maintain Loans, Letter of Credit Outstandings and Commitments hereunder in an
aggregate amount of $1,000,000 (unless such Lender shall have reduced its Loans,
Letter of Credit Outstandings and Commitments to zero); provided, further,
however, that the Borrowers and each other Obligor shall be entitled to continue
to deal solely and directly with such Lender in connection with the interests so
assigned and delegated to an Assignee Lender until
(a) written notice of such assignment and delegation, together with
payment instructions, addresses and related information with respect to
such Assignee Lender, shall have been given to the Borrowers by such Lender
and such Assignee Lender,
(b) such Assignee Lender shall have executed and delivered to the
Borrowers the Agent and such Lender a Lender Assignment Notice, accepted by
such Lender and the Agent, and
(c) the processing fees described below shall have been paid.
From and after the date that the Assignee Lender delivers such Lender Assignment
Notice, (x) the Assignee Lender thereunder shall be deemed automatically to have
become a party hereto and to the extent that rights and obligations hereunder
have been assigned and delegated to such Assignee Lender in connection with such
Lender Assignment Notice, shall have the rights and obligations of a Lender
hereunder and under the other Loan Documents, and (y) the assignor Lender, to
the extent that rights and obligations hereunder have been assigned and
delegated by it in connection with such Lender Assignment Notice, shall be
released from its obligations hereunder and under the other Loan Documents.
Within five (5) Business Days after its receipt of notice that the Lender has
received an executed Lender Assignment Notice, the Borrowers shall execute and
deliver to the relevant Assignee Lender a new Note evidencing such Assignee
Lender's assigned Loans and Commitments and, if the assignor Lender has retained
Loans and Commitments hereunder, a replacement Note in the principal amount of
the Loans and Commitments retained by the assignor Lender hereunder (each such
Note to be in exchange for, but not in payment of, the corresponding Note then
held by such assignor Lender). The assignor Lender shall mark the predecessor
Note "exchanged" and deliver it to the Borrowers. Accrued interest on that part
of the predecessor Note evidenced by the new Notes, and accrued fees, shall be
paid as provided in the Lender Assignment Notice. Accrued interest on that part
of the predecessor Note evidenced by the replacement Notes shall be paid to the
assignor Lender. Accrued interest and accrued fees shall be paid at the same
time or times provided in the predecessor Notes and in this Agreement. Such
assignor Lender or such Assignee Lender must also pay a processing fee to the
Lender upon delivery of any Lender Assignment Notice in the amount of $2,500.
Any
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attempted assignment and delegation not made in accordance with this Section
11.11.1 shall be null and void. Nothing contained in this Agreement shall
prohibit any Lender from pledging or assigning any Note to any Federal Reserve
Bank in accordance with Applicable Law.
SECTION 11.11.2. PARTICIPATIONS. A Lender may at any time sell to one or
more Persons, including without limitation, commercial banks or other Persons
(each of such commercial banks and other Persons being herein called a
"Participant") participating interests in any of the Loans, Commitments, or
other interests of such Lender hereunder; provided, however, that
(a) no participation contemplated in this Section 11.11 shall relieve
such Lender from its Commitments or its other obligations hereunder or
under any other Loan Document,
(b) such Lender shall remain solely responsible for the performance of
its Commitments and such other obligations,
(c) the Borrowers and each other Obligor shall continue to deal solely
and directly with such Lender in connection with such Lender's rights and
obligations under this Agreement and each of the other Loan Documents, and
(d) the Borrowers shall not be required to pay any amount under
Section 4.6 that is greater than the amount which it would have been
required to pay had no participating interest been sold.
The Borrowers acknowledge and agree that each Participant, for purposes of
Sections 5.3, 5.4, 5.5 and 5.6 (except as provided in Section 11.11.2(d)), 5.8,
11.3 and 11.4, shall be considered a Lender.
SECTION 11.12. FORUM SELECTION AND CONSENT TO JURISDICTION. ANY
LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS
AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF
DEALING, STATEMENTS (WHETHER ORAL OR WRITTEN) OR ACTIONS OF THE LENDERS, THE
AGENT OR THE BORROWERS SHALL BE BROUGHT AND MAINTAINED IN THE COURTS OF THE
STATE OF ILLINOIS OR IN THE UNITED STATES DISTRICT COURT FOR THE NORTHERN
DISTRICT OF ILLINOIS; PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT THE AGENT'S OPTION,
IN THE COURTS OF ANY JURISDICTION WHERE SUCH COLLATERAL OR OTHER PROPERTY MAY BE
FOUND. THE BORROWERS HEREBY EXPRESSLY AND IRREVOCABLY SUBMIT TO THE JURISDICTION
OF THE COURTS OF THE STATE OF ILLINOIS AND OF THE UNITED STATES DISTRICT COURT
FOR THE NORTHERN DISTRICT OF ILLINOIS FOR THE PURPOSE OF ANY SUCH LITIGATION AS
SET
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FORTH ABOVE AND IRREVOCABLY AGREE TO BE BOUND BY ANY JUDGMENT RENDERED THEREBY
IN CONNECTION WITH SUCH LITIGATION. THE BORROWERS FURTHER IRREVOCABLY CONSENT
TO THE SERVICE OF PROCESS BY REGISTERED MAIL, POSTAGE PREPAID, OR BY PERSONAL
SERVICE WITHIN OR WITHOUT THE STATE OF ILLINOIS. THE BORROWERS HEREBY EXPRESSLY
AND IRREVOCABLY WAIVE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION
WHICH THEY MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH
LITIGATION BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY
SUCH LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. TO THE EXTENT THAT
THE BORROWERS HAVE OR HEREAFTER MAY ACQUIRE ANY IMMUNITY FROM JURISDICTION OF
ANY COURT OR FROM ANY LEGAL PROCESS (WHETHER THROUGH SERVICE OR NOTICE,
ATTACHMENT PRIOR TO JUDGMENT, ATTACHMENT IN AID OF EXECUTION OR OTHERWISE) WITH
RESPECT TO ITSELF OR ITS PROPERTY, THE BORROWERS HEREBY IRREVOCABLY WAIVE SUCH
IMMUNITY IN RESPECT OF ITS OBLIGATIONS UNDER THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS.
SECTION 11.13. WAIVER OF JURY TRIAL. THE AGENT, THE LENDERS AND THE
BORROWERS HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE ANY RIGHTS THEY
MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR
ARISING OUT OF, UNDER, OR IN CONNECTION WITH, THIS AGREEMENT OR ANY OTHER LOAN
DOCUMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING, STATEMENTS (WHETHER ORAL
OR WRITTEN) OR ACTIONS OF THE LENDERS, THE AGENT OR THE BORROWERS. THE
BORROWERS ACKNOWLEDGE AND AGREE THAT THEY HAVE RECEIVED FULL AND SUFFICIENT
CONSIDERATION FOR THIS PROVISION (AND EACH OTHER PROVISION OF EACH OTHER LOAN
DOCUMENT TO WHICH THEY ARE A PARTY) AND THAT THIS PROVISION IS A MATERIAL
INDUCEMENT FOR THE LENDERS ENTERING INTO THIS AGREEMENT AND EACH SUCH OTHER LOAN
DOCUMENT.
SECTION 11.14. JOINT AND SEVERAL LIABILITY. Each Borrower has determined
that it is in its best interest and in pursuit of its legitimate business
purposes to induce the Lenders to extend credit to the Borrowers pursuant to
this Agreement. Each Borrower acknowledges and represents that its business is
integrally related to the business of the other Borrowers, that the availability
of the Commitments to all of the Borrowers benefits each Borrower individually
and that the Loans made will be for and inure to the benefit of all of the
Borrowers individually and as a group. Accordingly, each Borrower shall be
jointly and severally liable (as a principal and not as a surety, guarantor or
other accommodation party) for each and every representation, warranty, covenant
and obligation to be performed by the Borrowers under this Agreement, the Notes
and the other Loan Documents, and each Borrower acknowledges that in extending
the credit provided herein the Lenders are relying upon the fact that the
obligations of each Borrower hereunder are the joint and several obligations of
a principal. The invalidity, unenforceability or illegality of this
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Agreement, the Note or any other Loan Document as to one Borrower or the release
by the Agent or any Lender of a Borrower hereunder or thereunder shall not
affect the obligations of the other Borrowers under this Agreement, the Note or
other Loan Documents, all of which shall otherwise remain valid and legally
binding obligations of the other Borrowers.
SECTION 11.15. CERTAIN CONSENTS AND WAIVERS.
(a) The Agent or any Lender may, at any time and from time to time,
without the consent of or notice to the Borrowers, except such notice as
may be required by applicable statute which cannot be waived, without
incurring responsibility to the Borrowers, and without impairing or
releasing the obligations of the Borrowers in whole or in part, (i)
exercise or refrain from exercising any rights against any Borrower, (ii)
sell, exchange, release, surrender, realize upon or otherwise deal with in
any manner or in any order any property pledged or mortgaged to secure or
in any manner securing the Obligations, (iii) take and hold any additional
security for any or all of the Obligations, (iv) apply any sums by
whomsoever paid or howsoever realized to any Obligations of the Borrowers
to the Lenders regardless of what Obligations remain unpaid.
(b) No invalidity, irregularity or unenforceability of the Obligations
of a Borrower under this Agreement or any other Loan Document shall affect,
impair or be a defense to the other Borrowers' Obligations. Each Borrower
hereby waives, to the extent permitted under Applicable Law, any and all
benefits and defenses under any statute, regulation, judicial decision or
other law which purports to exonerate or reduce the liability of a co-
borrower as a result of any disability or absence of liability of the other
co-borrower or any defense to liability or enforcement which the other co-
borrower may have and agrees that, by so doing, such Borrower's obligations
hereunder shall continue even if the other Borrowers had no liability at
the time of execution of this Agreement or thereafter ceased or cease to be
liable. Each Borrower also waives, to the extent permitted under
Applicable Law, any and all benefits and defenses under any statute,
regulation, judicial decision or other law which purports to limit the
liability of a co-borrower to that of the other co-borrower or to reduce
the liability of a co-borrower in proportion to any reduction in the
liability of the other co-borrower and agrees that, by so doing, such
Borrower's obligations hereunder may be more burdensome than that of the
other Borrowers.
(c) Each Borrower, to the extent permitted under Applicable Law,
hereby waives any right, whether arising under any statute, regulation,
judicial decision or otherwise, to require the Agent or any Lender to (i)
proceed against the other Borrowers, (ii) proceed against or exhaust any
security received from
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the other Borrowers, or (iii) pursue any other right or remedy in the
Agent's or any Lender's power whatsoever.
(d) Each Borrower further waives, to the extent permitted under
Applicable Law: (i) any defense resulting from the absence, impairment or
loss of any right of reimbursement, subrogation, contribution or other
right or remedy of such Borrower against the other Borrowers or any
security, whether resulting from an election by the Agent or any Lender to
foreclose upon security by judicial or nonjudicial sale or otherwise; (ii)
any setoff or counterclaim of such Borrower or any defense of any kind
(including defenses resulting from any disability) or the cessation or stay
of enforcement from any cause whatsoever of the liability of such Borrower
(including without limitation the lack of validity or enforceability of
this Agreement or any other Loan Document); (iii) any right to exoneration,
in whole or in part, of co-borrowers which would otherwise be applicable;
(iv) any benefits and defenses under Applicable Law, including without
limitation any right of subrogation or reimbursement, any right of
contribution, any right to enforce any remedy which any Lender now has or
may hereafter have against the other Borrowers, and any benefit of, and any
right to participate in, any security now or hereafter held or received by
any Lender; and (v) all valuation, appraisal, extension or redemption laws
now or hereafter in effect. Without limiting the generality of the
preceding clause (iv), each Borrower hereby waives any right to be
reimbursed by the other Borrowers for any payment of such obligations made
directly or indirectly by such Borrower or from any property of such
Borrower, whether arising by way of any statutory, contractual or other
right of subrogation, contribution, indemnification or otherwise.
(e) Each Borrower acknowledges that it has the ability, and hereby
assumes the obligation and responsibility, to keep informed of the
financial condition of the other Borrowers and of other matters or
circumstances affecting the ability of the other Borrowers to pay or
perform their obligations hereunder or the risk of nonpayment and
nonperformance. Each Borrower hereby waives, to extent permitted under
Applicable Law, any obligation on the part of the Lenders to inform such
Borrower of the financial condition, or any changes in financial condition,
of the other Borrowers or of any other matter or circumstance which might
affect the ability of the other Borrowers to pay and perform under this
Agreement or any other Loan Document, or the risk of nonpayment or
nonperformance.
SECTION 11.16. OTHER TRANSACTIONS. Nothing contained herein shall
preclude the Agent or any other Lender or any of their respective Affiliates
from engaging in any transaction, in addition to those contemplated by this
Agreement or any other Loan Document, with the Borrower or any of its Affiliates
in which the Borrower or such Affiliate is not restricted hereby from engaging
with any other Person.
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SECTION 11.17. CONTROLLING DOCUMENT. In the event of actual conflict
in the terms and provisions of this Agreement, the Notes and the other Loan
Documents, the terms and provisions of this Agreement will control.
SECTION 11.18. NOTICE. THIS WRITTEN AGREEMENT TOGETHER WITH THE OTHER
LOAN DOCUMENTS REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
executed by their respective officers thereunto duly authorized as of the day
and year first above written.
Borrowers:
LATEX PETROLEUM CORPORATION,
an Oklahoma corporation
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address: 4200 E. Skelly Drive
Suite 1000
Tulsa, OK 74135
Attn: President
Fax: (918) 494-4918
LATEX/GOC ACQUISITION, INC.,
a Delaware corporation
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address: 4200 E. Skelly Drive
Suite 1000
Tulsa, OK 74135
Attn: President
Fax: (918) 494-4918
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GERMANY OIL COMPANY, a Delaware
corporation, formerly known as LRI
ACQUISITION, INC.
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address: 4200 E. Skelly Drive
Suite 1000
Tulsa, OK 74135
Attn: President
Fax: (918) 494-4918
ALLIANCE RESOURCES (USA), INC.,
a Delaware corporation
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address: 4200 E. Skelly Drive
Suite 1000
Tulsa, OK 74135
Attn: President
Fax: (918) 494-4918
SOURCE PETROLEUM, INC., a Louisiana
corporation
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address: 4200 E. Skelly Drive
Suite 1000
Tulsa, OK 74135
Attn: President
Fax: (918) 494-4918
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ALLIANCE RESOURCES PLC, a
public limited company incorporated under
the laws of England and Wales
By:
--------------------------------------
Name:
------------------------------------
Title:
-----------------------------------
Address: 4200 E. Skelly Drive
Suite 1000
Tulsa, OK 74135
Attn: Managing Director
Fax: (918) 494-4918
Agent:
BANK OF AMERICA NATIONAL TRUST AND
SAVINGS ASSOCIATION, as Agent for the
Lenders
By:
--------------------------------------
Name: David E. Sisler
Title: Vice President
Address: 333 Clay Street
Suite 4450
Houston, TX 77002
Attn: Energy and
Minerals Dept.
Oil & Gas Group
Fax: (713) 651-4888
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Percentage: Lenders:
Tranche A - 100% BANK OF AMERICA NATIONAL TRUST
Tranche B - 100% AND SAVINGS ASSOCIATION
Tranche C - 100%
By:
---------------------------------------
Name: David E. Sisler
Title: Vice President
Address: 333 Clay Street
Suite 4450
Houston, TX 77002
Attn: Energy and
Minerals Dept.
Oil & Gas Group
Fax: (713) 651-4888
LIBOR OFFICE:
231 South LaSalle Street
Chicago, IL 60697
Attn: Energy and
Minerals Dept.
Oil & Gas Group
Fax: (312) 974-9626
DOMESTIC OFFICE:
231 South LaSalle Street
Chicago, IL 60697
Attn: Energy and
Minerals Dept.
Oil & Gas Group
Fax: (312) 974-9626
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EXHIBIT 10.4
REGISTRATION RIGHTS AGREEMENT
REGISTRATION RIGHTS AGREEMENT dated as of October 26, 1998, between
ALLIANCE RESOURCES PLC, a public limited company duly organized and validly
existing under the laws of England and Wales ("Alliance"), and LASALLE STREET
NATURAL RESOURCES CORPORATION, a Delaware corporation (the "Investor").
Alliance and the Investor are parties to a Warrant Agreement of even date
herewith (as modified and supplemented and in effect from time to time, the
"Warrant Agreement"), providing for the issuance by Alliance of Warrants (as
hereinafter defined) which entitle the Investor to purchase from Alliance
3,275,000 Ordinary Shares (as defined in the Warrants) on October 30, 1998 (the
"Date of Issuance") as provided in the Warrant Agreement and the Warrants. In
that connection, Alliance wishes to afford the Investor certain registration
rights in respect of the Ordinary Shares issued or issuable upon exercise of the
Warrants. Accordingly, the parties hereto agree as follows:
SECTION 1. Definitions.
Each capitalized term used herein without definition shall have the
meaning ascribed thereto in the Warrant Agreement. As used in this Agreement
the following terms have the following meanings:
"Alliance" shall have the meaning set forth in the preamble of this
Agreement.
"Commission" means the U.S. Securities and Exchange Commission (or any
successor or similar governmental agency or authority) administering the
Securities Act and/or the Exchange Act.
"Cutback Registration" means any registration in which the Managing
Underwriter advises Alliance, and Alliance in turn notifies the holders of
Registrable Securities requested to be included therein in accordance with
Section 5.02, that
<PAGE>
marketing factors require a limitation of the number of shares of Ordinary
Shares to be underwritten in such registration.
"Difco Holders" means F. Fox Benton, Jr., Lizinka M. Benton, F. Fox
Benton III, Lizinka C. Benton and Lucia T. Benton, in their capacities as
"Selling Shareholders" as that term is defined in that certain Registration
Rights Agreement, dated as of the 30th day of October, 1998, by and among the
preceding parties and Alliance.
"Effective Period" has the meaning set forth in Section 5.01(b).
"Electing Holders" means any Difco Holders or EnCap Holders who have
requested inclusion of shares of Ordinary Shares held by such holder in a
registration.
"EnCap Holders" means EnCap Investments L.C., EnCap Equity 1996 Limited
Partnership and Energy Capital Investment Company PLC, in their capacities as
"New Shareholders" as that term is defined in that certain Registration Rights
Agreement, dated as of the 30th day of October, 1998, by and among the preceding
parties and Alliance.
"Exchange Act" means the U.S. Securities Exchange Act of 1934, as
amended, or any similar Federal statute, and the rules and regulations of the
Commission thereunder, all as the same shall be in effect at the time.
"Indemnified Party" has the meaning set forth in Section 6.03.
"Indemnifying Party" has the meaning set forth in Section 6.03.
"Investor" shall have the meaning set forth in the preamble of this
Agreement.
"Long-Form Requested Registration" shall mean any Requested Registration
that is a registration on a Form S-1 under the Securities Act or any successor
form or similar long-form registration.
"Managing Underwriter" means, with respect to any registration, the
underwriter or underwriters managing such registration.
"NASDAQ" has the meaning set forth in Section 12.
"Ordinary Shares" has the meaning set forth in the Warrant Agreement.
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<PAGE>
"Original Requesting Holder" has the meaning set forth in Section
3.01(a).
"Other Requesting Holder" has the meaning set forth in Section 3.01(a).
"Person" means any individual, corporation, association, joint venture,
limited liability company, partnership, trust, business or other entity or
organization, and shall include any government or political subdivision, or any
agency or instrumentality thereof.
"Piggyback Registration" means any registration which is not a Requested
Registration, other than (a) any registration on a Form S-8 under the Securities
Act (or any successor thereto); (b) any registration relating to an offering to
be made solely to employees (including management or employee incentive plans);
(c) any registration relating to a an offering of securities made by Alliance
solely (except in respect of fractional shares in exchange for securities of
Alliance other than Ordinary Shares including, without limitation, notes or
other debt instruments of Alliance); or (d) any registration on a Form S-4 (or
any successor thereto or other comparable form).
"Public Offering" means any offering of Ordinary Shares to the public,
either on behalf of Alliance or any of its Stockholders, pursuant to an
effective registration statement under the Securities Act.
"register," "registered" and "registration" refer to a registration of
Ordinary Shares or other securities of Alliance effected by preparing and filing
a registration statement in compliance with the Securities Act and the
declaration or ordering of the effectiveness of such registration statement.
"Registrable Securities" means (i) shares of Ordinary Shares issued or
issuable upon exercise of any Warrants, including without limitation any
Ordinary Shares into which such Ordinary Shares may thereafter be changed or
converted, and (ii) any additional shares of Ordinary Shares or other securities
issued or distributed by way of a dividend, stock split or other distribution in
respect of the Ordinary Shares referred to in clause (i) above, or acquired by
way of any rights offering or similar offering made in respect of the Ordinary
Shares referred to in clause (i) above; provided, however, that, as to any such
shares of Ordinary Shares so issued or issuable, such shares will cease to be
Registrable Securities when such shares have been sold to the public pursuant to
a registration or pursuant to Rule 144.
"Registration Agreements" means the Agreements described in Exhibit A
hereto.
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"Requested Registration" means a registration requested by holders of
Registrable Securities pursuant to Section 3.
"Requesting Holder" means any of the original Requesting Holder and the
other Requesting Holders.
"Rule 144" means Rule 144 promulgated by the Commission under the
Securities Act (or any successor or similar rule then in force).
"Rule 144A" means Rule 144A promulgated by the Commission under the
Securities Act (or any successor or similar rule then in force).
"Securities Act" means the U.S. Securities Act of 1933, as amended, or
any similar Federal statute, and the rules and regulations of the Commission
thereunder, all as the same shall be in effect at the time.
"Short-Form Registration" means a registration of the Ordinary Shares of
Alliance on Form S-2 or Form S-3 under the Securities Act or any successor form
or similar short-form registration.
"Stockholder" has the meaning set forth in the Warrant Agreement.
"Warrant Agreement" has the meaning set forth in the preamble of this
Agreement.
"Warrants" has the meaning set forth in the Warrant Agreement.
"Withdrawing Holder" has the meaning set forth in Section 3.02.
SECTION 2. Piggyback Registration.
If at any time or from time to time after the date hereof Alliance
proposes to effect a Piggyback Registration for its account or for the account
of a security holder or holders (other than holders of Registrable Securities),
then Alliance shall:
(a) promptly give to each holder of Registrable Securities notice thereof
(which notice shall include a list of the jurisdictions in which Alliance
intends to attempt to qualify such securities under or otherwise comply with the
applicable blue sky or other state securities laws); and
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(b) include in such Piggyback Registration (and any related qualification
under or other compliance with blue sky or other state securities laws), and in
any underwriting involved therein, all the Registrable Securities specified in a
request, made within 15 days after receipt of such notice from Alliance, by any
holder of Registrable Securities; provided, however, that Alliance shall not be
required to include any securities of holders of Registrable Securities in such
registration unless such holders accept the terms of the underwriting as agreed
upon between Alliance and the underwriters selected by it; and provided,
further, that if such Piggyback Registration is a Cutback Registration, then the
number of shares of Ordinary Shares to be included in the underwriting or
registration shall be allocated first to Alliance, the holders of Registrable
Securities and the Electing Holders (pro rata, based on the total number of
shares of securities of Alliance, including Registrable Securities, requested by
Alliance and each such holder to be included therein); and thereafter to any
other holders requesting inclusion in the registration on the basis of the
number of shares each other requesting holder requests be included bears to the
total number of shares of all other holders of Ordinary Shares that have been
requested be included in such registration. If a person who has requested
inclusion in such registration as provided above does not agree to the terms of
any such underwriting, such person shall be excluded therefrom by written notice
from Alliance, the underwriter, or the holders of Registrable Securities. The
securities so excluded shall also be withdrawn from registration.
(c) (i) If, at any time after giving written notice of its intention to
register any of its Ordinary Shares and before the effective date of the
registration statement filed in connection with the registration, Alliance
determines for any reason not to register its Ordinary Shares, Alliance may, at
its election, give written notice of its determination to the holders of
Registrable Securities and the Electing Holders and, thereupon, shall be
relieved of its obligation to register any Registrable Securities in connection
with that registration, without prejudice, however, to the future rights of the
holders of Registrable Securities under this Section, (ii) if Alliance
determines in its discretion to delay the registration of its Ordinary Shares,
Alliance shall be permitted to delay the registration of any Registrable
Securities for the same period as the delay in registering any other Ordinary
Shares, and (iii) Alliance is not required to effect any registration for a
requesting holder of Registrable Securities pursuant to this Section 2 unless it
receives reasonable assurances that the requesting holder of Registrable
Securities will pay any expenses required to be paid by it as a provided in
Section 5.
(d) The rights of holders with respect to Piggyback Registrations shall
be pari passu with the piggyback registration rights of Difco Holders and the
EnCap Holders.
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SECTION 3. Requested Registration.
3.01 Request for Registration.
(a) If after the date Alliance shall receive a request from any holder
of Registrable Securities (including Warrants) that Alliance effect any
registration under the Securities Act to which such holder is entitled under
this Section 3 (including without limitation any related qualification under or
compliance with blue sky or other state securities laws) with respect to all or
a part of the Registrable Securities owned by such holder, then Alliance shall
promptly give notice of such request to each other holder of Registrable
Securities, and Alliance shall thereupon promptly use its best efforts
diligently to effect such Requested Registration and related qualifications and
compliances within 120 days after receiving such request for registration
(including without limitation the execution of an undertaking to file post-
effective amendments and appropriate qualifications under or other compliance
with the applicable blue sky or other state securities laws) as may be
reasonably requested by the holder of Registrable Securities who made the
original request (the "Original Requesting Holder") and by the holders of
Registrable Securities who make requests to Alliance within 15 days after the
giving of the aforesaid notice by Alliance (each of the foregoing an "Other
Requesting Holder") and as would permit or facilitate the sale and distribution
of all or such portion of the Registrable Securities as are specified in any
such request; provided, however, that Alliance shall not be obligated to take
any action to effect a Requested Registration or any related qualification or
compliance pursuant to this Section 3:
(i) if the Requesting Holders do not request to include in such
registration Registrable Securities (issued or issuable on exercise of
the Warrants) having an aggregate Current Adjustment Price (as defined in
the Warrant), determined as of the date of the notice from the Original
Requesting Holder under Section 3.01(a) of (A) at least $750,000 for the
holders' first Requested Registration or (B) at least $250,000 for the
holders' second Requested Registration;
(ii) if Alliance shall have already effected two Requested
Registrations on behalf of the holders of Registrable Securities pursuant
to this Section 3.01, each of which Requested Registrations (A) has been
declared or ordered effective (including without limitation qualification
under or other compliance with state blue sky or securities laws
requested) and which effectiveness has not been suspended or stopped by
any governmental or judicial authority, and (B) remains continuously
effective for a period of time not less than the Effective Period; or
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(iii) if, within 30 days after receipt of the initial request of
the Original Requesting Holder pursuant to this Section 3.01, Alliance
shall elect to include in such registration Ordinary Shares for its own
account, whereupon Alliance shall notify each Requesting Holder that
Alliance has elected to effect a Piggyback Registration and shall
thereafter diligently proceed to do so, including therein the Registrable
Securities as to which notice was given by the Requesting Holders
pursuant to this Section 3.01, but subject to the limitations set forth
in Section 2(b)(i) (it being understood, however, that such registration
shall not be deemed to be a Requested Registration for the purposes of
Sections 3.01(a)(ii) or 3.01(c)).
(iv) Notwithstanding the foregoing, (A) Alliance shall not be
obligated to effect a registration pursuant to this Section 3 during the
period starting with the date 60 days prior to Alliance's good faith
estimated date of filing of, and ending on a date 120 days following the
effective date of, a registration statement pertaining to an underwritten
public offering of securities for the account of Alliance, provided that
Alliance is at all times during such period diligently pursuing such
registration, (B) Alliance shall not be obligated to effect a
registration of Registrable Securities pursuant to this Section 3
pursuant to any request of Holders of Registrable Securities if such
request is received after the receipt by Alliance of a request for
registration pursuant to one of the Registration Agreements, and any such
registration pursuant to this Section 3 would likely result in a
registration statement being declared effective prior to the date that is
90 days after the effective date of any such registration effected
pursuant to the Registration Agreement, and (C) Alliance shall not be
obligated to effect a registration pursuant to this Section 3 and shall
have the right to defer such filing for a period of not more than 120
days after receipt of the request of holders of Registrable Securities,
if Alliance shall furnish to such holders a certificate signed by the
President of Alliance stating that in the good faith judgment of the
Board of Directors of Alliance, it would be seriously detrimental to
Alliance and its shareholders for such registration statement to be filed
and it is therefore essential to defer the filing of such registration
statement; provided, however, that, subject to the limitation set forth
in the proviso in Section 3.01(a)(ii), if Alliance shall no longer be
eligible to effect a Short-Form Requested Registration following the
deferral of registration pursuant to this paragraph, then the holders of
Registrable Securities shall, subject to Section 3.01(a)(ii), be entitled
to a Long-Form Requested Registration for each such deferral.
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(v) If at any time after the holders' initial Requested
Registration, a request of the holders of Registrable Securities for a
Requested Registration shall be denied by Alliance solely because the
aggregate Current Adjustment Price of such Registrable Securities sought
to be included in such registration is below the requisite dollar amount
specified in Section 3.01(a)(i)(B), then at the election of the holders
of a majority of the then outstanding Registrable Securities, and in
exchange for the right of the holders to request a second Requested
Registration under this Section 3, the holders shall be entitled to
convert their Registrable Securities represented by Warrants (having an
aggregate Current Adjustment Price for all holders of not more than
$250,000) pursuant to Section 12 of the Warrant.
(b) If a Requested Registration becomes a Cutback Registration and the
number of shares of Registrable Securities actually sold in such Requested
Registration is not at least a majority of the number of shares of Registrable
Securities requested to be included in such registration, then (A) such
Requested Registration shall not be deemed to be a Requested Registration for
the purposes of Section 3.01(a)(ii); and (B) notwithstanding that such Requested
Registration is a Cutback Registration, Alliance shall continue to use its best
efforts diligently to comply with all its obligations (including without
limitation payment of expenses) under this Agreement with respect to such
Requested Registration. The registration statement filed pursuant to the
request of holders of Registrable Securities may, subject to the provisions of
Section 3.01(c), include other shares of Ordinary Shares of Alliance, which are
held by persons who, by virtue of agreements with Alliance, are entitled to
include their securities in any such registration, and Alliance shall have the
right to include shares of Ordinary Shares in such registration for its own
account as provided therein.
(c) If a Requested Registration becomes a Cutback Registration, the
number of Ordinary Shares to be included in the underwriting or registration
shall be allocated first to the holders of Registrable Securities and the
Electing Holders (pro rata, based on the number of Registrable Securities
requested by each such holder to be included therein), second to Alliance and
thereafter to any other holders requesting inclusion in the registration on the
basis of the number of shares each other requesting holder requests be included
bears to the total number of shares of all other holders of Ordinary Shares that
have been requested be included in such registration. If a person who has
requested inclusion in such registration as provided above does not agree to the
terms of any such underwriting, such person shall be excluded therefrom by
written notice from Alliance, the underwriter, or the holders
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of Registrable Securities. The securities so excluded shall also be withdrawn
from registration.
3.02 Underwriting. If Requesting Holders intend to distribute the
Registrable Securities covered by such request by means of an underwriting, the
Requesting Holders shall so advise Alliance as a part of the request made
pursuant to this Section 3, and in such event, the Requesting Holders shall
negotiate in good faith with an underwriter or underwriters proposed by Alliance
to act as the Managing Underwriter in connection with the underwriting of the
Requested Registration; provided, however, that if those Requesting Holders who
hold at least a majority of the Registrable Securities to be included in such
Requested Registration have not agreed with such underwriter or underwriters as
to the terms and conditions of such underwriting within 20 days following
commencement of such negotiations, then the Requesting Holders may select an
underwriter or underwriters of their choice to be the Managing Underwriter,
which choice shall be subject to the approval of the Board of Directors of
Alliance (such approval not to be unreasonably withheld or delayed, taking into
account Alliance's agreements with underwriters then in effect). Alliance and
the Requesting Holders shall enter into an underwriting agreement in customary
form with the underwriter or underwriters selected for such underwriting (it
being understood that (i) all expenses customarily paid for by the issuer of
securities pursuant to such an underwriting agreement shall be paid for by
Alliance, and (ii) all indemnification obligations which are customarily those
of the issuer of securities under such underwriting agreement shall be the
obligations of Alliance). If a Requesting Holder disapproves of the terms of an
underwriting (the "Withdrawing Holder"), the Withdrawing Holder may elect to
withdraw therefrom by notice to Alliance and the Managing underwriter; and each
of the remaining Requesting Holders shall be entitled to increase the number of
shares of Registrable Securities being registered to the extent of the shares
withdrawn by the Withdrawing Holder in the proportion which the number of shares
of Registrable Securities being registered by such remaining Requesting Holder
bears to the total number of shares being registered by all such remaining
Requesting Holders; provided, however, that the requirements contained in
Section 3.01(a)(i) shall then be met and subject to Section 3.01(c).
SECTION 4. Expenses of Registration.
Except as otherwise provided herein, (a) in the case of Requested
Registrations pursuant to Section 3, all expenses incurred by Alliance or the
Holders in connection with any registration, qualification or compliance
effected pursuant to this Agreement, including without limitation all
registration, filing and qualification fees, printing expenses, fees and
disbursements of counsel for Alliance and for the
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holders of Registrable Securities, and the expenses of any audits required by
such registration, shall be borne by Alliance and (b) in the case of Piggyback
Registrations pursuant to Section 2 (other than a primary registration by
Alliance), all of the incremental expenses incurred by Alliance (and not
otherwise reimbursed) shall be borne by the holders of Registrable Securities
included in any registration pursuant to the terms hereof; provided, however,
that Alliance shall not be required to pay: (i) the underwriters' fees,
discounts or commissions relating to Registrable Securities; or (ii) the fees
and disbursements of more than a single law firm for all holders of Registrable
Securities to be selected by the holders of a majority of such Registrable
Securities participating in a Requested Registration pursuant to Section 3.
Notwithstanding the foregoing, Alliance shall not be required to pay for any
expenses of any registration proceeding begun pursuant to Section 3 if the
request for registration is subsequently withdrawn at the request of the holders
of a majority of the Registrable Securities to be registered therein (which
holders shall bear such expenses), unless the holders of a majority of the
Registrable Securities agree that such registration shall be deemed to
constitute a Requested Registration for purposes of the limitation set forth in
the proviso of Section 3.01(a)(ii); provided, however, that if (a) between the
date such request for registration is made and the date of such withdrawal,
there has occurred a material adverse change in the condition, business or
prospects of Alliance (or a material adverse change occurring prior to such
request is first publicly disclosed) and (b) such withdrawal shall have occurred
prior to the effective date of the applicable registration statement (it being
understood that the holders shall only have the right to withdraw a Requested
Registration prior to such effective date), then the holders shall not be
required to pay any of such expenses and no Requested Registration shall be
deemed to have occurred pursuant to Section 3.
SECTION 5. Registration Procedures.
5.01 In the case of each registration, qualification or compliance
effected by Alliance pursuant to this Agreement, Alliance shall, by notice to
each holder of Registrable Securities included in such registration, keep such
holder advised in writing as to the initiation, progress and effective date of
each registration, qualification and compliance, and, at the expense of
Alliance, Alliance will:
(a) prepare and file with the Commission a registration statement with
respect to such Registrable Securities and use its best efforts to cause such
registration statement to become effective as soon as reasonably practicable
thereafter; and before filing a registration statement or prospectus or any
amendments or supplements thereto, furnish to the Investor (provided Registrable
Securities held by the Investor are covered by such registration statement) and
the
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underwriter or underwriters, if any, copies of all such documents proposed to be
filed, including without limitation documents incorporated by reference in the
prospectus and, if requested by such holders of Registrable Securities, the
exhibits incorporated by reference, and such holders shall have the opportunity
to object to any information pertaining to such holders that is contained
therein and Alliance will make the corrections reasonably requested by an
underwriter or such holders with respect to such information prior to filing any
registration statement or amendment thereto or any prospectus or any supplement
thereto;
(b) prepare and file with the Commission such amendments and supplements
to such registration statement and the prospectus used in connection therewith
as may be necessary to keep such registration statement effective for a period
(the "Effective Period") of not less than 180 days, or such shorter period as is
necessary to complete the distribution of the securities covered by such
registration statement and comply with the provisions of the Securities Act with
respect to the disposition of all securities covered by such registration
statement during such period in accordance with the intended methods of
disposition by the seller thereof set forth in such registration statement;
(c) furnish to each seller of Registrable Securities such number of
copies of such registration statement, each amendment and supplement thereto,
the prospectus included in such registration statement (including without
limitation each preliminary prospectus) and such other documents as such seller
may reasonably request in order to facilitate the disposition of the Registrable
Securities owned by such seller;
(d) use its best efforts to register or qualify such Registrable
Securities under such other securities or blue sky laws of such jurisdictions as
any seller reasonably requests and take such other steps which may be necessary
or advisable in the reasonable judgment of the managing underwriter (and at the
reasonable request of such managing underwriter) to enable such seller to
consummate the disposition in such jurisdictions of the Registrable Securities
owned by such seller (provided that Alliance will not for any such purpose be
required to (1) qualify generally to do business as a foreign corporation in any
jurisdiction where it would not otherwise be required to qualify but for the
requirements of this subsection; (2) subject itself to taxation in any such
jurisdiction; (3) consent to general service of process in any such
jurisdiction; or (4) register or qualify Registrable Securities or take any
other action under the state securities or "Blue Sky" laws of any jurisdiction
if, in the judgment of the Board of Directors of Alliance, the consequences of
the registration, qualification or other action would be unduly burdensome to
Alliance).
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(e) notify the Investor and each seller of such Registrable Securities
when a prospectus relating thereto is required to be delivered under the
Securities Act, of the occurrence of any event as a result of which the
prospectus included in such registration statement contains an untrue statement
of a material fact or omits any fact necessary to make the statements therein
not misleading, and, at the request of any such seller, or at the request of any
seller upon the happening of any event of the kind described in Section 5.01(k),
Alliance shall prepare a supplement or amendment to such prospectus so that, as
thereafter delivered to the purchasers of such Registrable Securities, such
prospectus shall not contain an untrue statement of a material fact or omit to
state any fact necessary to make the statements therein not misleading or cures
the event of the kind described in Section 5.01(k);
(f) in the case of an underwritten offering, cause to be delivered to the
sellers of Registrable Securities and the underwriters, if any, opinions of
counsel to Alliance in customary form, covering such matters as are customarily
covered by opinions for an underwritten public offering as the underwriters may
reasonably request and addressed to the underwriters and such sellers;
(g) make available for inspection by any seller of Registrable Securities
that is a Significant Holder, any underwriter participating in any disposition
pursuant to such registration statement, and any attorney, accountant or other
agent retained by any seller or underwriter, all financial and other records,
pertinent corporate documents and properties of Alliance, and cause Alliance's
officers, directors, employees and independent accountants to supply all
information reasonably requested by any such seller, underwriter, attorney,
accountant or agent in connection with such registration statement;
(h) provide a transfer agent and registrar for all such Registrable
Securities not later than the effective date of such registration statement;
(i) cause to be delivered, immediately prior to the effectiveness of the
registration statement (and, in the case of an underwritten offering, at the
time of delivery of any Registrable Securities sold pursuant thereto), letters
from Alliance's independent certified public accountants addressed to each
seller that is a Significant Holder and each underwriter, if any, stating that
such accountants are independent public accountants within the meaning of the
Securities Act and the applicable published rules and regulations thereunder,
and otherwise in customary form and covering such financial and accounting
matters as are customarily covered by letters of the independent certified
public accountants delivered in connection with primary or secondary
underwritten public offerings, as the case may be;
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(j) make generally available to the holders of Registrable Securities a
consolidated earnings statement (which need not be audited) for the 12 months
beginning after the effective date of a registration statement as soon as
reasonably practicable after the end of such period, which earnings statement
shall satisfy Section 11(a) of the Securities Act and Rule 158 thereunder; and
(k) promptly notify the Investor and any Significant Holder selling
Registrable Securities in such registration and the underwriter or underwriters,
if any:
(i) when the registration statement, any preeffective amendment,
the prospectus or any prospectus supplement or post-effective amendment
to the registration statement has been filed and, with respect to the
registration statement or any post-effective amendment, when the same has
become effective;
(ii) of any written request by the Commission for post-effective
amendments or supplements to the registration statement or prospectus;
(iii) of the notification to Alliance by the Commission of its
initiation of any proceeding with respect to the issuance by the
Commission of, or the issuance by the Commission of, any stop order
suspending the effectiveness of the registration statement; and
(iv) of the receipt by Alliance of any notification with respect
to the suspension of the qualification of any Registrable Securities for
sale under the applicable securities or blue sky laws of any
jurisdiction.
5.02 As soon as possible following receipt of notice from the Managing
Underwriter that a particular registration is a Cutback Registration, Alliance
will notify the Investor and each of the holders of Registrable Securities that
is a Significant Holder requested to be included therein that such registration
is a Cutback Registration and of the effect thereof on the ability of such
holders to include their shares in such registration.
5.03 Alliance will use its best efforts to become (and thereafter to
remain) eligible to effect Short-Form Registrations.
5.04 Whenever the holders of Registrable Securities have requested that
any Registrable Securities be registered pursuant to Section 2 or Section 3,
each holder of Registrable Securities will be deemed to have agreed that, upon
receipt of
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any notice from Alliance of the happening of any event of the kind described in
Section 5.01(e) or Section 5.01(k)(ii) or (iii), the holders of Registrable
Securities covered by such registration statement will forthwith discontinue
disposition of any such Registrable Securities until the holders of Registrable
Securities receive copies of the supplemented or amended prospectus contemplated
by Section 5.01(e), or until they are advised in writing by Alliance that the
use of the applicable prospectus may be resumed, and they have received copies
of any additional or supplemental filings that are incorporated or deemed to be
incorporated by reference in such prospectus (it being the agreement of the
parties hereto, however, that the obligation of Alliance with respect to
maintaining the subject registration statement current and effective shall be
extended by a period of days equal to the period the holders of Registrable
Securities are required by this Section 5.04 to discontinue disposition of such
Registrable Securities.
SECTION 6. Indemnification; Contribution.
6.01 With respect to any registration, qualification or compliance
effected or to be effected pursuant to this Agreement, Alliance shall indemnify
each holder of Registrable Securities whose securities are included or are to be
included therein, each such holder's directors, officers, employees,
stockholders, Affiliates and agents, each underwriter (as defined in the
Securities Act) of the securities sold by such holder and each Person who
controls (within the meaning of the Securities Act) any such holder or
underwriter, from and against all claims, losses, damages and liabilities (or
actions in respect thereof) arising out of or based on:
(i) any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other
document (including without limitation any related registration
statement, notification or the like), or any amendment thereof or
supplement thereto, incident to any such registration, qualification or
compliance;
(ii) any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; or
(iii) any violation by Alliance of the Securities Act, the
Exchange Act or any rule or regulation promulgated thereunder applicable
to Alliance, or of any blue sky or other state securities laws or any
rule or regulation promulgated thereunder applicable to Alliance,
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and will reimburse each such Person entitled to indemnity under this Section
6.01 for all legal and other expenses reasonably incurred, as the same are
incurred, in connection with investigating or defending any such claim, loss,
damage, liability or action; provided, however, that the foregoing indemnity and
reimbursement obligation shall not be applicable to the extent that any such
claim, loss, damage or liability arises out of or is based on any untrue
statement (or alleged untrue statement) or omission (or alleged omission) or
violation made in reliance upon and in conformity with written information
furnished to Alliance by such holder specifically for use in such prospectus,
offering circular, other document, amendment or supplement; and provided further
that the foregoing indemnity and reimbursement obligation shall not be
applicable with respect to any preliminary prospectus to the extent that any
loss, claim, damage, liability or expense of the indemnitee results from the
fact that a holder of Registrable Securities sold Registrable Securities to a
person to whom there was not sent or given, at or prior to the written
confirmation of the sale, a copy of the prospectus (excluding documents
incorporated by reference) or of the prospectus as then amended or supplemented
(excluding documents incorporated by reference) if Alliance has previously
furnished copies thereof to the holder of Registrable Securities in compliance
with Section 5 of this Agreement and the loss, claim, damage, liability or
expense of the indemnitee results from an untrue statement or omission of a
material fact contained in such preliminary prospectus which was corrected in
the prospectus (or the prospectus as amended or supplemented).
6.02 With respect to any registration, qualification or compliance
effected or to be effected pursuant to this Agreement, each holder of
Registrable Securities which are included or are to be included in such
registration, qualification or compliance shall indemnify Alliance, its
directors, officers, employees, stockholders, Affiliates and agents, each
underwriter (as defined in the Securities Act) of the securities of such holder,
each Person who controls (within the meaning of the Securities Act) Alliance or
any such underwriter from and against all claims, losses, damages and
liabilities (or actions in respect thereof) arising out of or based on:
(i) any untrue statement (or alleged untrue statement) of a
material fact contained in any prospectus, offering circular or other
document (including without limitation any related registration
statement, notification or the like), or any amendment thereof or
supplement thereto, incident to any such registration, qualification or
compliance;
(ii) any omission (or alleged omission) to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading;
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(iii) any violation by such holder of the Securities Act, the
Exchange Act or any rule or regulation promulgated thereunder applicable
to such holder, or of any blue sky or other state securities law or any
rule or regulation promulgated thereunder applicable to such holder, and
will reimburse each such Person entitled to indemnity under this Section
6.02 for any legal and other expenses reasonably incurred in connection
with investigating or defending any such claim, loss, damage, expense,
liability or action; or
(iv) with respect to any preliminary prospectus, the fact that
any holder of Registrable Securities sold Registrable Securities to a
person to whom there was not sent or given, at or prior to the written
confirmation of the sale, a copy of the prospectus (excluding documents
incorporated by reference) or of the prospectus as then amended or
supplemented (excluding documents incorporated by reference) if (a)
Alliance has previously furnished copies thereof to the holder of
Registrable Securities in compliance with Section 5 of this Agreement and
(b) the loss, claim, damage, liability or expense of the indemnitee
results from an untrue statement or omission of a material fact contained
in the preliminary prospectus which was corrected in the prospectus (or
the prospectus as amended or supplemented);
but in each case of the preceding subsections (i), (ii), (iii) and (iv), only to
the extent that such untrue statement (or alleged untrue statement) or omission
(or alleged omission) or violation is made in such prospectus, offering
circular, other document, amendment or supplement in reliance upon and in
conformity with written information furnished to Alliance by such holder
specifically for use in such prospectus, offering circular, other document,
amendment or supplement.
6.03 Each Person entitled to indemnification under this Section 6 (an
"Indemnified Party") shall give notice to the party required to provide
indemnification (the "Indemnifying Party") promptly after the Indemnified Party
has actual knowledge of any claim as to which indemnity may be sought, and shall
permit the Indemnifying Party to assume the defense of any such claim or any
litigation resulting therefrom; provided, however, that:
(i) counsel for the Indemnifying Party who shall conduct the
defense of any such claim or any litigation shall be approved by the
Indemnified Party (which approval shall not be unreasonably withheld or
delayed);
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(ii) the Indemnified Party may participate in such defense at the
Indemnified Party's expense; provided, however, that the Indemnified
Party or Indemnified Parties shall have the right to employ a single law
firm and a single local counsel law firm to represent it or them if, in
the reasonable judgment of the Indemnified Party or Indemnified Parties,
it is advisable for it or them to be represented by separate counsel by
reason of having legal defenses which are different from or in addition
to those available to the Indemnifying Party, and in that event the
reasonable fees and expenses of one such law firm and one such local law
firm shall be paid by the Indemnifying Party; and
(iii) failure of any Indemnified Party to give notice as provided
herein shall not relieve the Indemnifying Party of its obligations under
this Section 6.
No Indemnifying Party, in the defense of any such claim or litigation, shall,
except with the consent of the Indemnified Party to which such claim or
litigation relates, consent to entry of any judgment or enter into any
settlement unless such settlement relieves the Indemnified Party of any and all
liability. Each Indemnified Party shall furnish such information regarding
itself for the claim in question as an Indemnifying Party may reasonably request
in writing and as shall be reasonably required in connection with defense of
such claim in litigation resulting therefrom.
6.04 If the indemnity and reimbursement obligation provided for in each
of Section 6.01 and Section 6.02 is unavailable or insufficient to hold harmless
an Indemnified Party in respect of any claims, losses, damages or liabilities
(or actions in respect thereof) referred to therein, then the Indemnifying Party
shall contribute to the amount paid or payable by the Indemnified Party as a
result of such claims, losses, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative fault of
the Indemnifying Party, on the one hand, and the Indemnified Party, on the other
hand, in connection with statements or omissions which resulted in such claims,
losses, damages or liabilities, as well as any other relevant equitable
considerations. The relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Indemnifying Party or the Indemnified Party and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The parties hereto agree
that it would not be just and equitable if contributions pursuant to this
Section 6.04 were to be determined by pro rata allocation or by any other method
of allocation which does not take account of the equitable considerations
referred to in the first sentence of this
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Section 6.04. The amount paid by an Indemnified Party as a result of the losses,
claims, damages or liabilities referred to in the first sentence of this Section
6.04 shall be deemed to include any legal and other expenses reasonably incurred
by such Indemnified Party in connection with investigating or defending any
claim, loss, damage, liability or action which is the subject of this Section
6.04.
No Indemnified Party guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from the Indemnifying Party if the Indemnifying Party was not
guilty of such fraudulent misrepresentation.
The provisions of this Section 6 shall be in addition to any other rights
to indemnification or contribution which an indemnified party may have pursuant
to law, equity, contract or otherwise and shall remain in full force and effect
regardless of any investigation made by or on behalf of an Indemnified Party and
shall survive the transfer of the shares of Ordinary Shares or other stock or
securities which may be issued upon exercise of the Warrants.
SECTION 7. Information by Holders.
If Registrable Securities owned by a holder are included in any
registration, such holder shall furnish to Alliance such information regarding
itself and the distribution proposed by such holder as Alliance may reasonably
request and as shall otherwise be required in connection with any registration,
qualification or compliance referred to in this Agreement.
SECTION 8. Rule 144 Reporting; Rule 144A Sales.
With a view to making available to each holder of Registrable Securities
the benefits of certain rules and regulations of the Commission which may permit
the sale of the Registrable Securities to the public without registration,
Alliance agrees that until the earlier of (a) the date on which no holder owns
any Registrable Securities or (b) the Expiration Date:
(a) Alliance shall, at any time after any of Alliance's securities
are registered under the Securities Act or the Exchange Act: (i) make and
keep available public information, as those terms are contemplated by
Rule 144; (ii) timely file with the Commission all reports and other
documents required to be filed under the Securities Act and the Exchange
Act; (iii) furnish to each holder of Registrable Securities forthwith
upon request a written statement by Alliance as to its compliance with
the reporting
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requirements of the Securities Act and the Exchange Act, and a copy of
the most recent annual or quarterly report of Alliance; and (iv) comply
with all rules and regulations of the Commission applicable in connection
with the use of Rule 144 and take such other actions and furnish such
holder with such other public information as such holder may reasonably
request in order to assist such holder in availing itself of any rule or
regulation of the Commission allowing such holder to sell any Registrable
Securities without registration; and
(b) each holder of Registrable Securities and each prospective
holder of Registrable Securities who may consider acquiring Registrable
Securities in reliance upon Rule 144A shall have the right to request
from Alliance, and Alliance will provide upon request, such public
information regarding Alliance and its business, assets and properties,
if any, as such holder may reasonably request so as to assist such holder
in the transfer of Registrable Securities to such prospective holder in
reliance upon Rule 144A.
SECTION 9. Other Registration Rights.
9.01 Alliance represents and warrants to the Investor that there is not
in effect on the date hereof any agreement by Alliance (other than this
Agreement and the other Registration Agreements) pursuant to which any holders
of securities of Alliance have a right to cause Alliance to register or qualify
such securities under the Securities Act or any applicable state securities
laws.
9.02 So long as any Registrable Securities shall be outstanding, (a)
Alliance shall not amend or permit the amendment of the Registration Agreements
in any manner that is inconsistent with this Registration Rights Agreement or
which adversely affect the rights of any holder of Registrable Securities
without the prior written consent of the holders of a majority of the then
outstanding Registrable Securities and (b) Alliance shall send any notice in
respect of a registration to be delivered by Alliance to any holder of any
rights under any of the Registration Agreements to the Investor and any
Significant Holders of Registrable Securities. So long as any Registrable
Securities shall be outstanding, prior to the Expiration Date (as defined in the
Warrant) Alliance shall not agree with the holders of any securities issued or
to be issued by Alliance to register or qualify such securities under the
Securities Act or any applicable state securities laws unless such agreement
(including any Registration Agreement) specifically provides that: (a) such
holder of such securities may not participate in any Piggyback Registration
except as provided in Section 2; and (b) the holder of such securities may not
participate in any Requested Registration except as provided in Section 3.
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SECTION 10. Holdback Agreements. In order to facilitate the possibility of
future public offerings of Ordinary Shares, the holders of Registrable
Securities agree that the Registrable Securities will not be resold during a
period commencing on the filing by Alliance of a registration statement under
the Securities Act for an underwritten public offering for cash by Alliance of
Ordinary Shares or securities convertible into or exercisable or exchangeable
for its Ordinary Shares and continuing until the earlier of the abandonment of
the proposed public offering or 120 days following the date of the last closing
in the public offering without the consent of the underwriters of such offering,
except to the extent such shares are included in such registration. Holders of
such Registrable Securities also agree that they will cooperate with Alliance in
providing reasonable written assurances respecting the foregoing to the
underwriter of any such public offering. Holders agree that during the above
restricted period they will not directly or indirectly sell, offer to sell,
contract to sell (including without limitation any short sale), grant an option
to purchase or otherwise transfer or dispose of (other than to donees who agree
to be similarly bound) shares of Registrable Securities at any time during such
period except securities included in such registration. In order to enforce the
foregoing covenant, Alliance may impose stop-order instructions with respect to
such shares of Registrable Securities held by each holder, which shall be
binding upon any assignee or successor of such holder (and the shares or
securities of every other person subject to the foregoing restriction), until
the end of the restricted period.
SECTION 11. Miscellaneous.
11.01 Successors and Assigns. Subject to the provisions of Section 13,
this Agreement shall inure to the benefit of and shall be binding upon the
parties hereto, all the holders of Registrable Securities and their respective
legal representatives, successors and assigns.
11.02 Severability. If any term or provision of this Agreement, or the
application thereof to any Person or circumstance, shall, to any extent, be
invalid or unenforceable, the remaining terms and provisions of this Agreement
or application to Persons and circumstances shall not be invalidated thereby,
and each term and provision hereof shall be construed with all other remaining
terms and provisions hereof to effect the intent of the parties hereto to the
fullest extent permitted by law.
11.03 Notices. All notices, requests and other communications provided
for herein (including without limitation any waivers or consents under this
Agreement) shall be sent in accordance with Section 7.02 of the Warrant
Agreement.
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11.04 Certain Terms. As used herein, the neuter gender shall also be
deemed to denote both the masculine and feminine genders. Unless the context
otherwise requires, the words "hereof", "herein", "hereto" 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 term or provision of this
Agreement. Whenever the context requires, the singular form of any noun,
pronoun or verb includes the comparable plural form thereof, and vice versa.
11.05 Counterparts. This Agreement may be executed with counterpart
signature pages or in several counterparts which, when executed and delivered by
all parties hereto, shall be binding on all parties hereto and shall constitute
one Agreement, notwithstanding that all parties have not signed the same
signature page or the same counterpart.
11.06 GOVERNING LAW. THIS AGREEMENT SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, AND SHALL BE GOVERNED BY, THE LAWS OF THE STATE OF ILLINOIS
APPLICABLE TO CONTRACTS EXECUTED IN AND TO BE FULLY PERFORMED IN SUCH STATE.
11.07 Captions. The headings in this Agreement are for purposes of
reference only and will not be considered in construing this Agreement.
11.08 Amendments, Waivers, etc. This Agreement may be amended only by a
written instrument (which may be executed in any number of counterparts) signed
by Alliance and the holders of a majority of the Registrable Securities voting
as a class; provided, however, that no such amendment, without the consent of
all holders of Registrable Securities at the time outstanding, shall amend this
Section 11.08. Subject to Section 11.09, no provision of this Agreement may be
waived except by a written instrument signed by the party hereto sought to be
bound. No failure or delay by any party hereto in exercising any right or
remedy hereunder or under applicable law will operate as a waiver thereof, and a
waiver of a particular right or remedy on one occasion will not be deemed a
waiver of any other right or remedy, or a waiver on any subsequent occasion.
11.09 Consents of Holders of Registrable Securities. Any consent of the
holders of Registrable Securities pursuant to this Agreement, and any waiver by
such holders of any provision of this Agreement, shall be in writing (which may
be executed in any number of counterparts) and may be given or taken by the
holders of a majority of the Registrable Securities voting as a class; provided,
however, that no such consent or waiver, without the consent of all holders of
Registrable Securities
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at the time outstanding, shall amend this Section 11.09; and any such consent or
waiver so given or taken will be binding on all the holders of Registrable
Securities.
11.10 Recapitalization, Exchanges, etc., Affecting Alliance's Capital
Stock. The provisions of this Agreement shall apply, to the full extent set
forth herein with respect to any and all shares of capital stock of Alliance or
any successor or assign of Alliance (whether by merger, consolidation, sale of
assets or otherwise) which may be issued in respect of, in exchange for or in
substitution of, the Registrable Securities and shall be appropriately adjusted
for any stock dividends, splits, reverse splits, combinations, recapitalizations
and the like occurring after the date hereof.
11.11 Delay of Registration. No holder of Registrable Securities shall
have any right to obtain or seek an injunction restraining or otherwise delaying
any such registration as the result of any controversy that might arise with
respect to the interpretation or implementation of this Agreement.
SECTION 12. Listing on Securities Exchanges, etc.
Alliance shall, promptly after the registration and sale thereof, use its
best efforts to cause any Registrable Securities (a) to be listed on a national
securities exchange and on each additional national securities exchange on which
similar securities of Alliance are listed, if the listing is then permitted
under the rules of such exchange, or (b) to be designated as National
Association of Securities Dealers Automated Quotation System ("NASDAQ")
"national market system securities" within the meaning of Rule llAa2-1 under the
Exchange Act if similar securities of Alliance are so designated.
SECTION 13. Limitation on Registration Rights.
Notwithstanding anything to the contrary contained herein, (a) the rights
of a holder of Registrable Securities under Section 3 hereof shall be terminated
on the tenth anniversary of the date hereof, (b) the rights of a holder of
Registrable Securities under Section 2 hereof shall be terminated on the tenth
anniversary of the date hereof, (c) prior to such time registration rights under
Sections 2 and 3 may be transferred only to transferees that, together with
their respective Affiliates, are Significant Holders (after giving effect to all
such transfers) and (d) no transfer of registration rights under Sections 2 and
3 may be made except in accordance with the terms and conditions set forth
herein, in the Warrant, and in the Warrant Agreement.
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In addition, the rights and obligations under this Agreement shall
automatically be transferred to and binding on any transferee or assignee of the
Registrable Securities, provided that, such transferee or assignee:
(i) notifies Alliance in writing, within a reasonable time after
such transfer, of the name and address of such transferee or assignee and
the Registrable Securities with respect to which such registration rights
are being transferred or assigned,
(ii) agrees in writing to be bound by and subject to the terms
and conditions of this Agreement,
(iii) receives the Registrable Securities in a transaction that is
in compliance with the requirements for an exemption from the
registration requirements of the Securities Act and applicable state
securities laws;
(iv) immediately following such transfer, is subject to
restrictions under the Securities Act on further disposition of such
Registrable Securities; and
(v) acquires at least 33% of the Registrable Securities the
Investor is entitled to acquire under the Warrant Agreement.
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IN WITNESS WHEREOF, the parties hereto have duly executed this
Registration Rights Agreement as of the date first written above.
ALLIANCE RESOURCES PLC
By:
------------------------------------
Name: Francis M. Munchinski
Title: Assistant Corporate Secretary
LASALLE STREET NATURAL RESOURCES
CORPORATION
By
------------------------------------
Name: John H. Homier
Title: President
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EXHIBIT A
to
Registration Rights Agreement
1. Registration Rights Agreement by and among Alliance Resources PLC, a
corporation formed under the laws of England and Wales, and F. Fox Benton, Jr.,
Lizinka M. Benton, F. Fox Benton III, Lizinka C. Benton and Lucia T. Benton,
dated as of the 30th day of October, 1998.
2. Registration Rights Agreement by and among ALLIANCE RESOURCES PLC, a
public limited company organized under the laws of England and Wales, ENCAP
EQUITY 1996 LIMITED PARTNERSHIP, a Texas limited partnership, and ENERGY CAPITAL
INVESTMENT COMPANY PLC, an English investment company, dated as of October 30,
1998.
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EXHIBIT 10.5
REGISTRATION RIGHTS AGREEMENT
This Registration Rights Agreement (this "Agreement") is made by and among
Alliance Resources PLC, a corporation formed under the laws of England and Wales
(the "Corporation"), and F. Fox Benton, Jr., Lizinka M. Benton, F. Fox Benton
III, Lizinka C. Benton and Lucia T. Benton (each a "Selling Shareholder"), who
hereby agree as follows:
1. Certain Definitions. As used in this Agreement:
(i) "Commission" means the Securities and Exchange Commission and
any successor agency.
(ii) "Common Equity Securities" means Ordinary Shares and any option,
warrant or right to subscribe for, acquire or purchase any Ordinary Shares,
whether or not currently exercisable, and any security redeemable into Ordinary
Shares, whether or not currently redeemable.
(iii) "Convertible Shares" means the unlisted convertible restricted
voting shares of the Corporation issued to the Selling Shareholders pursuant to
the Sale and Purchase Agreement.
(iv) "Exchange Act" means the Securities Exchange Act of 1934, as
amended.
(v) "Ordinary Shares" means any stock of any class of the
Corporation which has no preference in respect of dividends or of amounts
payable in the event of any voluntary or involuntary liquidation, dissolution or
winding up of the Corporation and which is not subject to redemption by the
Corporation (whether or not shares of such class have voting rights).
(vi) "Qualified Registrable Securities" means the Ordinary Shares
issued or that are issuable to the Selling Shareholders pursuant to the Sale and
Purchase Agreement upon conversion of any Convertible Shares. As to any
particular Qualified Registrable Securities, once issued, the securities shall
cease to be Qualified Registrable Securities when (a) a registration statement
with respect to the securities becomes effective under the Securities Act and
the securities have been disposed of in accordance with the registration
statement, (b) the securities have ceased to be outstanding, (c) the securities
have been sold pursuant to Rule 144 or Regulation S (or any successor
provisions) under the Securities Act or (d) at the time of determination of
whether the securities are Qualified Registrable Securities, the securities may
be sold by Selling Shareholder publicly without registration under the
Securities Act and free of contractual restrictions with the Corporation.
(vii) "Qualified Registration" means a registration statement of the
Corporation under the Securities Act on a form that permits the sale of
Qualified
<PAGE>
Registrable Securities (other than a registration statement (a) on Form S-4 or
S-8, or (b) filed in connection with any financing by the Corporation that is
principally debt or preferred stock financing).
(viii) "Sale and Purchase Agreement" means that certain Sale and
Purchase Agreement dated 23 September 1998 among the Selling Shareholders and
the Corporation.
(ix) "Securities Act" means the Securities Act of 1933, as amended.
2. Registrations.
2.1 Piggyback Registration. At any time during the term of this
Agreement, whenever the Corporation proposes to register any of its Common
Equity Securities in a Qualified Registration whether or not for sale for its
own account, the Corporation will give prompt written notice ("Piggyback
Notice") to each of the Selling Shareholders of its intention to effect a
registration. Upon the written request of any Selling Shareholder made within
20 days after delivery of any Piggyback Notice (which request shall specify the
Qualified Registrable Securities requested to be included in such Qualified
Registration by Selling Shareholder), the Corporation will, subject to
subsections 2.2 and 2.3 below, use its reasonable efforts to include in the
Qualified Registration all Qualified Registrable Securities of the requesting
Selling Shareholder to permit the disposition by that Selling Shareholder of
those securities; provided, however, that (i) if, at any time after giving
written notice of its intention to register any Common Equity Securities in a
Qualified Registration and before the effective date of the registration
statement filed in connection with the Qualified Registration, the Corporation
determines for any reason not to register its Common Equity Securities, the
Corporation may, at its election, give written notice of its determination to
the Selling Shareholders and, thereupon, shall be relieved of its obligation to
register any Qualified Registrable Securities in connection with that
registration, without prejudice, however, to the future rights of the Selling
Shareholders under this Section, (ii) if the Corporation determines in its
discretion to delay the registration of the Common Equity Securities, the
Corporation shall be permitted to delay the registration of any Qualified
Registrable Securities for the same period as the delay in registering any other
Common Equity Securities, and (iii) the Corporation is not required to effect
any registration for a requesting Selling Shareholder pursuant to this
subsection 2.1 unless it receives reasonable assurances that the requesting
Selling Shareholder will pay any expenses required to be paid by it as provided
in subsection 4.1. The registrations requested pursuant to this subsection 2.1
are referred to herein as the "Piggyback Registrations."
2.2 Priority on Piggyback Registrations. If a Piggyback Registration is
an underwritten registration and the managing underwriter(s) for the offering
advises the Corporation in writing that in its opinion the number of shares of
Qualified Registrable Securities requested or proposed to be included in the
registration exceeds the number that can be sold in the offering without
materially affecting the offering price of the securities proposed to be
included in the offering, the Corporation will include in such registration,
first, any Common Equity Securities proposed to be sold by the Corporation
pursuant to the registration, and second, to the extent the Qualified Equity
Securities of the Selling
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Shareholders and the Common Equity Securities of any other shareholders may be
included in the Qualified Registration without materially affecting the offering
price thereof, in the opinion of such managing underwriter(s), the Qualified
Registrable Securities requested by any Selling Shareholders to be included in
such Piggyback Registration pursuant to subsection 2.1 and any other securities
of the Corporation held by persons other than Selling Shareholder having rights
to participate in such Piggyback Registration, pro rata among all such holders
on the basis of the total number of shares of securities of the Corporation,
including Qualified Registrable Securities, requested by each such holder to be
included therein.
2.3 Selection of Underwriters. If any Piggyback Registration is an
underwritten offering, the Corporation will have the sole right to select the
managing underwriter(s) thereof.
2.4 Relative Rights With Other Holders. The rights of Selling Shareholder
with respect to Piggyback Registrations shall be pari passu with the piggyback
registration rights of other holders of Common Equity Securities.
3. Registration Procedures. If and whenever the Corporation is required by
the provisions of this Agreement to use its reasonable efforts to effect the
registration of any Qualified Registrable Securities:
3.1 Covenants by Corporation. The Corporation shall, as expeditiously as
reasonably practicable:
(i) Prepare and file with the Commission under the Securities Act a
registration statement with respect to the Qualified Registrable Securities, and
use its reasonable efforts to cause such registration statement to become
effective and to remain effective as provided in this Agreement; provided,
however, that the Corporation may discontinue any registration of securities
that is being effected pursuant to subsection 2.1 at any time prior to the
effective date of the registration statement relating thereto.
(ii) Prepare and file with the Commission such amendments and
supplements, if any, to the registration statement and the prospectus included
in the registration statement as may be necessary to (a) keep the registration
statement effective until the earlier of 90 days after its effectiveness or the
completion of the distribution under the registration statement, and (b) comply
with the provisions of the Securities Act applicable to it with respect to the
disposition of all Qualified Registrable Securities covered by the registration
statement during that period in accordance with the intended methods of
disposition by the Selling Shareholders.
(iii) Furnish to any Selling Shareholder participating in the
registration and the underwriter, if any, the number of copies of the
registration statement (including exhibits), each amendment and supplement
thereto, the prospectus included in the registration statement (including each
preliminary prospectus) and of each amendment and supplement thereto as the
Selling Shareholder and its underwriter may reasonably request in order to
facilitate the
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<PAGE>
public disposition of the Qualified Registrable Securities owned by the Selling
Shareholder and included in the registration statement.
(iv) Use its reasonable efforts to (a) register or qualify the
Qualified Registrable Securities under the securities or blue sky laws of any
jurisdictions as any Selling Shareholder participating in the registration or
the underwriter reasonably requests, (b) keep the registration and qualification
in effect for so long as the registration statement is in effect, and (c) do any
and all other acts and things that may be reasonably necessary or advisable to
enable the Selling Shareholder to complete the disposition in such jurisdictions
of the relevant Qualified Registrable Securities (provided that the Corporation
will not for any such purpose be required to (1) qualify generally to do
business as a foreign corporation in any jurisdiction where it would not
otherwise be required to qualify but for the requirements of this subsection;
(2) subject itself to taxation in any such jurisdiction; (3) consent to general
service of process in any such jurisdiction; or (4) register or qualify
Qualified Registrable Securities or take any other action under the state
securities or "Blue Sky" laws of any jurisdiction if, in the judgment of the
Board of Directors of the Corporation, the consequences of the registration,
qualification or other action would be unduly burdensome to the Corporation).
(v) At any time when a prospectus relating to the registration
statement is required to be delivered under the Securities Act, notify any
Selling Shareholder participating in the registration when it becomes aware of
the happening of any event as a result of which the prospectus (as then amended
or supplemented) contains any untrue statement of a material fact or omits any
fact necessary to make the statements therein in the light of the circumstances
under which they were made not misleading, and, at the request of the Selling
Shareholder, as promptly as practicable thereafter, prepare in sufficient
quantities and furnish to the Selling Shareholder and the underwriter a
reasonable number of copies of a prospectus supplemented or amended so that, as
thereafter delivered to the offerees or purchasers of the Qualified Registrable
Securities, the prospectus will not contain an untrue statement of a material
fact or omit to state any fact necessary to make the statements therein in light
of the circumstances then existing not misleading.
(vi) Comply with all applicable rules and regulations of the
Commission, and make generally available to its security holders, as soon as
reasonably practicable, an earnings statement covering the period of at least
twelve consecutive months beginning with the first day of the Corporation's
first calendar quarter after the effective date of the registration statement,
which earnings statement shall satisfy the provisions of Section 11(a) of the
Securities Act and Rule 158 thereunder.
(vii) Use its reasonable efforts to cause all Qualified Registrable
Securities covered by the registration statement to be listed on any securities
exchange, if any, on which similar securities issued by the Corporation are then
listed, if the listing of the Qualified Registrable Securities is then permitted
under the rules of the exchange.
(viii) Enter into customary agreements relating to the registration
(including an underwriting agreement in customary form if the registration is in
connection with an underwritten offering).
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(ix) Subject to the execution of confidentiality agreements in a
form satisfactory to the Corporation, make reasonably available for inspection
by the Selling Shareholder, any underwriter participating in any disposition
pursuant to the registration statement and any legal counsel, accountant or
other agent retained by any underwriter, all financial and other records,
pertinent corporate documents and properties of the Corporation, and cause the
Corporation's directors, officers, employees, counsel and independent public
accountants to supply all information reasonably requested by, and to respond to
inquiries from, the Selling Shareholder, any such underwriter, legal counsel,
attorney, accountant or agent in connection with such registration statement, in
each case, to the extent that information is reasonably necessary to satisfy any
of its obligations under applicable law.
(x) Use reasonable efforts to obtain an appropriate opinion from
counsel for the Corporation and a "cold comfort" letter from the Corporation's
independent public accountants, each in customary form and covering matters of
the type customarily covered by opinions of counsel and cold comfort letters in
similar registrations; provided, however, that failure to provide such opinion
or letter, or the provision of any such opinion or letter in a form not
satisfactory to the Selling Shareholders, notwithstanding the Corporation's
reasonable efforts, shall not give rise to any action, at law or in equity, for
damages or injunctive or other relief, but rather shall only entitle the Selling
Shareholders to withdraw its Qualified Registrable Securities from the
registration statement, pursuant to subsection 3.3 below.
(xi) Provide (a) any Selling Shareholder participating in the
registration, (b) the underwriter or underwriters (which term, for purposes of
this Agreement, shall include any person deemed to be an underwriter within the
meaning of Section 2(11) of the Securities Act), if any, of the securities being
sold, and (c) counsel for the underwriters the opportunity to participate in the
preparation of the registration statement, each prospectus included therein or
filed with the Commission, and each amendment or supplement thereto.
(xii) Promptly notify any Selling Shareholder participating in the
registration and the underwriter, if any, and (if requested by any such person)
confirm the advice in writing, (a) when the registration statement, the
prospectus or any prospectus supplement or post-effective amendment has been
filed, and, when the registration statement or any post-effective amendment
thereto has become effective, (b) of the issuance by the Commission of any stop
order suspending the effectiveness of the registration statement or the
initiation of any proceedings for that purpose, or (c) of the receipt by the
Corporation of any notification with respect to the suspension of the
qualification of the Qualified Registrable Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for that
purpose.
(xiii) Use its reasonable efforts to obtain the withdrawal of any
order suspending the effectiveness of a registration statement hereunder or any
post-effective amendment thereto at the earliest practicable date.
(xiv) Notify in writing the Selling Shareholders of any proposal by
the Corporation to amend or waive any provision of this Agreement pursuant to
subsections 8.2 and 8.3 and of any amendment or waiver effected pursuant to
those subsections, each of
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which notices shall contain the text of the amendment or waiver proposed or
effected, as the case may be.
3.2 Certain Agreements by the Selling Shareholders.
(i) Each of the Selling Shareholders agrees that upon receipt of any
notice from the Corporation of the happening of any event of the kind described
in subsection 3.1(v), the Selling Shareholder will immediately discontinue its
disposition of Qualified Registrable Securities pursuant to the registration
statement covering its Qualified Registrable Securities until its receipt of the
copies of the supplemented or amended prospectus contemplated by subsection
3.1(v) and, if so directed by the Corporation, will deliver to the Corporation
(at the Corporation's expense) all copies, other than permanent file copies,
then in its possession of the prospectus covering the Qualified Registrable
Securities that was in effect at the time of receipt of the notice. If the
Corporation gives any such notice, the period mentioned in subsection
3.1(ii)(a)(1) shall be extended by the number of days during the period from and
including the date of the giving of the notice to and including the date when
Selling Shareholder receives the copies of the supplemented or amended
prospectus contemplated by subsection 3.1(v).
(ii) Each of the Selling Shareholders agrees that upon receipt of a
notice from the Corporation that it has filed and caused to become effective a
registration statement that includes an offering of Common Equity Securities for
sale by the Corporation to the public in an underwritten public offering, if the
Selling Shareholder was given the opportunity to include its Qualified
Registrable Securities for sale in the public offering, the Selling Shareholder
shall enter into agreements with the underwriters of the public offering,
substantially in the same form as agreements entered into by the officers and
directors of the Corporation, precluding the sale of Ordinary Shares by the
Selling Shareholder for a period not to exceed 180 days following the notice.
3.3 Withdrawal. If any Selling Shareholder disapproves of the terms of
any offering, the Selling Shareholder's sole remedy shall be, at its sole
discretion, to withdraw its Qualified Registrable Securities and other
securities of the Corporation from the offering by written notice to the
Corporation and the underwriter (if any); and the Selling Shareholder's
Qualified Registrable Securities and other securities of the Corporation
withdrawn from the offering will also be withdrawn from registration.
3.4 Information. The Corporation may require each Selling Shareholder to
furnish the Corporation such information regarding the Selling Shareholder and
the distribution of its securities as the Corporation may from time to time
reasonably request in writing for purposes of preparation of the registration
statement, to the extent that the information is required to comply with
applicable legal requirements.
4. Registration Expenses.
4.1 Responsibility for Payment. Whether or not any registration pursuant
to this Agreement becomes effective, all expenses incident to the Corporation's
performance of or
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compliance with this Agreement, including without limitation all registration
and filing fees, National Association of Securities Dealers' fees, fees and
expenses of compliance with state securities or blue sky laws, printing and
engraving expenses and fees and disbursements of counsel for the Corporation and
the independent certified public accountants for the Corporation, underwriters
(excluding discounts, commissions and transfer taxes attributable to securities
offered by the Selling Shareholders and amounts to be borne by the underwriters)
and other persons retained by the Corporation (all such expenses being herein
called "Corporation Registration Expenses"), will be borne by the Corporation,
and all expenses incident to the Selling Shareholders' performance of or
compliance with this Agreement, including without limitation all fees and
disbursements of counsel for the Selling Shareholders and the discounts,
commissions and transfer taxes attributable to securities offered by the Selling
Shareholders, will be borne by the Selling Shareholders; provided, however, that
(i) if the Selling Shareholders are required to pay any Registration Expenses as
provided in subsection 4.2, then the Selling Shareholders shall pay the
Registration Expenses in the proportion to (a) the number of shares of Qualified
Registrable Securities requested to be registered by the Selling Shareholder in
the registration statement if the registration does not become effective, or (b)
the number of shares of Qualified Registrable Securities of the Selling
Shareholder included in the registration statement, if the registration
statement becomes effective, unless in either case another basis of sharing the
Registration Expenses is required under applicable laws, rules or regulations,
in which case such other method shall apply; and (ii) the Selling Shareholder
shall pay any underwriting discounts and selling commissions and transfer taxes
applicable to Qualified Registrable Securities sold by Selling Shareholder.
4.2 Legal Requirements. Notwithstanding anything herein to the contrary,
Selling Shareholder shall pay the Registration Expenses to the extent required
by applicable law.
5. Indemnification.
5.1 Indemnification by the Corporation. The Corporation agrees to
indemnify and hold harmless, to the full extent permitted by law, each Selling
Shareholder, its directors, officers, employees and agents (and the directors,
officers, employees and agents thereof) and each other person or entity who
controls the Selling Shareholder within the meaning of the Securities Act
(collectively, the "Selling Shareholder Indemnitees" and individually a "Selling
Shareholder Indemnitee") against all losses, claims, damages, liabilities and
expenses, joint or several (including reasonable fees of counsel and any amounts
paid in settlement effected with the Corporation's consent, which consent shall
not be unreasonably withheld), to which any such Selling Shareholder Indemnitee
may become subject under the Securities Act, at common law or otherwise, insofar
as such losses, claims, damages, liabilities or expenses (or actions or
proceedings, whether commenced or threatened, in respect thereof), are caused by
(i) any untrue statement or alleged untrue statement of a material fact
contained in any registration statement in which such Qualified Registrable
Securities were included or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, (ii) any untrue statement or alleged untrue statement of
a material fact contained in any preliminary, final or summary prospectus,
together with the documents incorporated by reference therein (as amended or
supplemented if the Corporation shall have filed with the Commission any
amendment or supplement), or
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the omission or alleged omission to state therein a material fact required to be
stated therein or necessary in order to make the statements therein in the light
of the circumstances under which they were made not misleading, or (iii) any
violation by the Corporation of any federal, state or common law rule or
regulation applicable to the Corporation and relating to action of or inaction
by the Corporation in connection with any registration statement; and in each
case the Corporation will reimburse each Selling Shareholder Indemnitee for any
reasonable legal or any other expenses incurred by any of them in connection
with investigating or defending any such loss, claim, damage, liability,
expense, action or proceeding; provided, that the Corporation shall not be
liable to any such Selling Shareholder Indemnitee in any case to the extent that
any loss, claim, damage, liability or expense (or action or proceeding, whether
commenced or threatened, in respect thereof) arises out of or is based upon any
untrue statement or alleged untrue statement or omission or alleged omission
made in the registration statement or amendment or supplement or in any such
preliminary, final or summary prospectus in reliance upon and in conformity with
written information furnished to the Corporation by or on behalf of any Selling
Shareholder relating to a Selling Shareholder for use in the preparation
thereof; and provided further that the Corporation shall not be liable to any
Selling Shareholder Indemnitee with respect to any preliminary prospectus to the
extent that any loss, claim, damage, liability or expense of the Selling
Shareholder Indemnitee results from the fact that a Selling Shareholder sold
Qualified Registrable Securities to a person to whom there was not sent or
given, at or prior to the written confirmation of the sale, a copy of the
prospectus (excluding documents incorporated by reference) or of the prospectus
as then amended or supplemented (excluding documents incorporated by reference)
if the Corporation has previously furnished copies thereof to the Selling
Shareholder in compliance with Section 3 of this Agreement and the loss, claim,
damage, liability or expense of the Selling Shareholder Indemnitee results from
an untrue statement or omission of a material fact contained in such preliminary
prospectus which was corrected in the prospectus (or the prospectus as amended
or supplemented). Such indemnity and reimbursement of expenses shall remain in
full force and effect regardless of any investigation made by or on behalf of
any Selling Shareholder and shall survive the transfer of such securities by any
Selling Shareholder.
5.2 Indemnification by the Selling Shareholders. Each Selling Shareholder
agrees, jointly and severally, to indemnify and hold harmless, to the fullest
extent permitted by law, the Corporation, its directors, officers, employees and
agents and each Person who controls the Corporation (within the meaning of the
Securities Act) (collectively, the "Corporation Indemnitees" and individually a
"Corporation Indemnitee") against all losses, claims, damages, liabilities and
expenses, joint or several (including reasonable fees of counsel and any amounts
paid in settlement effected with any Selling Shareholder's consent, which
consent shall not be unreasonably withheld) to which any Corporation Indemnitee
may become subject under the Securities Act, at common law or otherwise insofar
as such losses, claims, damages, liabilities or expenses (or actions or
proceedings, whether commenced or threatened, in respect thereof) are caused by
(i) any untrue statement or alleged untrue statement of a material fact
contained in any registration statement in which any of the Qualified
Registrable Securities were included or the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading, (ii) any untrue statement or alleged
untrue statement of a material fact contained in any preliminary, final or
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summary prospectus, together with the documents incorporated by reference
therein (as amended or supplemented if the Corporation shall have filed with the
Commission any amendment thereof or supplement thereto), or the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary in order to make the statements therein in the light of the
circumstances under which they were made not misleading to the extent, but only
to the extent, in the cases described in clauses (i) and (ii), that such untrue
statement or omission is contained in any information furnished in writing by
any Selling Shareholder relating to any Selling Shareholder for use in the
preparation thereof and if the Corporation does not know, at the time the
information is included in the registration statement, prospectus, preliminary
prospectus, amendment or supplement, that the information is false or
misleading, (iii) any violation by any Selling Shareholder of any federal, state
or common law, rule or regulation applicable to any Selling Shareholder and
relating to action of or inaction by any Selling Shareholder in connection with
any registration statement, and (iv) with respect to any preliminary prospectus,
the fact that any Selling Shareholder sold Qualified Registrable Securities to a
person to whom there was not sent or given, at or prior to the written
confirmation of the sale, a copy of the prospectus (excluding documents
incorporated by reference) or of the prospectus as then amended or supplemented
(excluding documents incorporated by reference) if (a) the Corporation has
previously furnished copies thereof to the Selling Shareholder in compliance
with Section 3 of this Agreement and (b) the loss, claim, damage, liability or
expense of the Corporation Indemnitee results from an untrue statement or
omission of a material fact contained in the preliminary prospectus which was
corrected in the prospectus (or the prospectus as amended or supplemented).
Such indemnity shall remain in full force and effect regardless of any
investigation made by or on behalf of the Corporation (except as provided above)
or any Selling Shareholder and shall survive the transfer of the securities by
any Selling Shareholder.
5.3 Conduct of Indemnification Proceedings. Promptly after receipt by an
indemnified party under subsection 5.1 or 5.2 above of written notice of the
commencement of any action, suit, proceeding, investigation or threat thereof
made in writing with respect to which a claim for indemnification may be made
pursuant to this Section 5, the indemnified party shall, if a claim in respect
thereto is to be made against an indemnifying party, give written notice to the
indemnifying party of the threat or commencement thereof; but the failure to
notify the indemnifying party shall not relieve it from any liability that it
may have to any indemnified party except to the extent that the indemnifying
party is actually prejudiced by the failure to give notice. In case any such
claim or action referred to under subsections 5.1 or 5.2 shall be brought
against any indemnified party and it shall notify the indemnifying party of the
threat or commencement thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it shall wish, jointly with any
other indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to the indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the indemnifying
party). After notice from the indemnifying party to such indemnified party of
its election so to assume the defense of any such claim or action, the
indemnifying party shall not be liable to such indemnified party under this
Section 5 for any legal expenses of counsel or any other expenses subsequently
incurred by such indemnified party in connection with the defense thereof other
than reasonable costs of investigation unless the indemnifying party has failed
to assume the defense of such claim or action or to employ
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counsel reasonably satisfactory to such indemnified party. The indemnifying
party shall not be required to indemnify the indemnified party with respect to
any amounts paid in settlement of any action, proceeding or investigation
entered into without the written consent of the indemnifying party which consent
shall not be unreasonably withheld. No indemnifying party will consent to the
entry of any judgment or enter into any settlement without the consent of the
indemnified party, unless (i) such judgment or settlement does not impose any
obligation or liability upon the indemnified party other than the execution,
delivery or approval thereof, and (ii) such judgment or settlement includes as
an unconditional term thereof the giving by the claimant or plaintiff to such
indemnified party of a release from all liability in respect of such claim for
all persons that may be entitled to or obligated to provide indemnification or
contribution under this Section 5.
5.4 Additional Indemnification. Indemnification similar to that specified
in the preceding subsections of this Section 5 (with appropriate modifications)
shall be given by the Corporation and the Selling Shareholders with respect to
any required registration or other qualification of securities under any state
securities or blue sky laws.
5.5 Contribution. If the indemnification provided for in this Section 5
is unavailable to or insufficient to hold harmless an indemnified party under
subsections 5.1 or 5.2 above, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of the losses,
claims, damages, liabilities or expenses (or actions in respect thereof)
referred to in subsections 5.1 or 5.2 in such proportion as is appropriate to
reflect the relative fault of the indemnifying party on the one hand and of the
indemnified party on the other in connection with the statements, omissions,
actions or inactions which resulted in such losses, claims, damages, liabilities
or expenses. The relative fault of the indemnifying party and of the
indemnified party shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the indemnifying party or by the indemnified party, any action or
inaction by any such party and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement, omission,
action or inaction. The amount paid or payable by an indemnified party as a
result of the losses, claims, damages, liabilities or expenses (or actions in
respect thereof) referred to above in this subsection 5.5 shall be deemed to
include any reasonable legal or other expenses incurred by such indemnified
party in connection with investigating or defending any such action or claim
(which shall be limited as provided in subsection 5.3 if the indemnifying party
has assumed the defense of any such action in accordance with the provisions
thereof) which is the subject of this subsection 5.5. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. Promptly after receipt by an
indemnified party under this subsection 5.5 of written notice of the
commencement of any action, suit, proceeding, investigation or threat thereof
made in writing with respect to which a claim for contribution may be made
against an indemnifying party under this subsection 5.5, such indemnified party
shall, if a claim for contribution in respect thereto is to be made against an
indemnifying party, give written notice to the indemnifying party in writing of
the commencement thereof (if the notice specified in subsection 5.3 has not been
given with respect to such action); but the failure to so to notify
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the indemnifying party shall not relieve it from any obligation to provide
contribution that it may have to any indemnified party under this subsection 5.5
except to the extent that the indemnifying party is actually prejudiced by the
failure to give notice. Notwithstanding anything in this subsection 5.5 to the
contrary, no indemnifying party (other than the Corporation) shall be required
pursuant to this subsection 5.5 to contribute any amount that exceeds the amount
by which the dollar amount of the proceeds received by such indemnifying party
from the sale of Qualified Registrable Securities and other securities of the
Corporation (after deducting any underwriting commissions, discounts and
transfer taxes applicable thereto) in the offering to which the losses, claims,
damages, liabilities or expenses of the indemnified parties relate exceeds the
amount of any losses, claims, damages, liabilities and expenses that the
indemnifying party has otherwise been required to pay as indemnity or
contribution hereunder by reason of such losses, claims, damages, liabilities or
expenses.
The parties hereto agree that it would not be just and equitable if
contribution pursuant to this subsection 5.5 were determined by pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph.
If indemnification is available under this Section 5, the indemnifying
parties shall indemnify each indemnified party to the full extent provided in
subsections 5.1 and 5.2 without regard to the relative fault of said
indemnifying party or indemnified party or any other equitable consideration
provided for in this subsection 5.5. The provisions of this subsection 5.5
shall be in addition to any other rights to indemnification or contribution that
any indemnified party may have pursuant to law or contract and shall remain in
full force and effect regardless of any investigation made by or on behalf of
any indemnified party and shall survive the transfer of securities by any such
party.
5.6 Indemnification and Contribution of Underwriters. In connection with
any underwritten offering contemplated by this Agreement which includes a
Selling Shareholder's Qualified Registrable Securities, the Corporation and the
Selling Shareholder will agree to customary provisions for indemnification and
contribution (consistent with the other provisions of this Section 5) in respect
of losses, claims, damages, liabilities and expenses of the underwriters of such
offering.
6. Participation in Underwritten Registrations. In the case of a registration
hereunder, if the Corporation has determined to enter into an underwriting
agreement in connection therewith, all shares of Qualified Registrable
Securities to be included in such registration shall be subject to the
underwriting agreement, which shall be in customary form and contain such terms
as are customarily contained in such agreements, and the Selling Shareholders
may not participate in any such registration unless the Selling Shareholder (a)
agrees to sell its securities on the basis provided in any underwriting
arrangements and (b) completes and executes all questionnaires, powers of
attorney, indemnities, underwriting agreements and other documents reasonably
required under the terms of the underwriting arrangements.
7. Rights to Withdraw From Registration. If, as a result of the proration
provisions of subsection 2.2, a Selling Shareholder is not entitled to include
all Qualified Registrable
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Securities in a registration that the Selling Shareholder has requested to be
included, the Selling Shareholder may elect to withdraw its request to include
Qualified Registrable Securities in the registration (a "Withdrawal Election");
provided, however, that a Withdrawal Election shall be irrevocable and, after
making a Withdrawal Election, the Selling Shareholder shall no longer have any
right to include Qualified Registrable Securities in the registration as to
which the Withdrawal Election was made.
8. Miscellaneous.
8.1 Termination. This Agreement and all rights and obligations hereunder
with respect to any Qualified Registrable Securities (except for the
indemnification and contribution rights provided in Section 5 which shall
survive forever) will terminate on the tenth anniversary of the date of this
Agreement.
8.2 Waivers. None of the rights of either party hereto may be waived
except in writing.
8.3 Amendments. Except as otherwise provided herein, this Agreement may
be amended only with the written consent of the Corporation and the Selling
Shareholders.
8.4 Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of and be enforceable by the respective permitted (as
provided in subsection 8.5(ii)) successors and assigns of the parties hereto,
whether so expressed or not.
8.5 Subsequent Holders; After-Acquired Qualified Registrable Securities.
(i) The terms "Qualified Registrable Securities" and "Common Equity
Securities" do not include any Common Equity Securities acquired by Selling
Shareholder otherwise than pursuant to the Sale and Purchase Agreement.
(ii) The Selling Shareholders' rights under this Agreement are not
assignable, except to other persons named as Selling Shareholders in this
Agreement.
8.6 Severability. Whenever possible, each provision of this Agreement
will be interpreted in such manner as to be effective and valid under applicable
law, but if any provision of this Agreement is held to be prohibited by or
invalid under applicable law, such provision will be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
this Agreement.
8.7 Counterparts. This Agreement may be executed in two or more
counterparts, any one of which need not contain the signatures of more than one
party, but all such counter parts taken together will constitute one and the
same Agreement.
8.8 Descriptive Headings. The descriptive headings of this Agreement are
inserted for convenience only and shall not limit or otherwise affect the
meaning hereof.
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8.9 GOVERNING LAW. ALL QUESTIONS CONCERNING THE CONSTRUCTION, VALIDITY
AND INTERPRETATION OF THIS AGREEMENT AND THE EXHIBITS AND SCHEDULES HERETO WILL
BE GOVERNED BY THE INTERNAL LAW, AND NOT THE LAW OF CONFLICTS, OF TEXAS.
8.10. Notices. All notices, demands or other communications to be given or
delivered under or by reason of the provisions of this Agreement will be in
writing and will be deemed to have been given when actually delivered to the
recipient by special courier or personal delivery, or by certified or
registered mail, return receipt requested and postage prepaid,. Such notices,
demands and other communications will be sent to the Selling Shareholders and
the Corporation at their respective addresses indicated below:
If to the Corporation:
Alliance Resources PLC
4200 East Skelly Drive
Suite 1000
Tulsa, Oklahoma 74135
Attn: John A. Keenan
with copies to:
Mr. W. Alan Kailer
Jenkens & Gilchrist, P.C.
3200 Fountain Place
1445 Ross Avenue
Dallas, Texas 75202
Telephone: (214) 855-4500
Facsimile: (214) 855-4300
If to the Selling Shareholders:
Mr. F. Fox Benton, Jr.
3395 Del Monte Drive
Houston, Texas 77019
Telephone: (713) 336-6521
Facsimile: (713) 336-6555
Lizinka M. Benton, Jr.
3395 Del Monte Drive
Houston, Texas 77019
Telephone: (713) 336-6521
Facsimile: (713) 336-6555
F. Fox Benton III
1012 Lakeview Way
Redwood City, California 94062
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Lizinka C. Benton
1726 Deloz
Los Angeles, California 90027
Lucia T. Benton
2830 Robinhood
Houston, Texas 77005
in each case with copies to:
Michael P. Finch, Esq.
Vinson & Elkins LLP
1001 Fannin, Suite 2300
Houston, Texas 77002
Telephone: (713) 758-2128
Facsimile: (713) 615-5282
or to such other address or to the attention of such other person as the
recipient party has specified by prior written notice to the sending party.
8.11. Benefit of Agreement. No person not a party to this Agreement shall
have rights under this Agreement as a third party beneficiary or otherwise.
8.12. Changes in Outstanding Securities. The provisions of this Agreement
regarding Common Equity Securities and Qualified Registrable Securities shall
apply to securities of the Corporation or any successor or assign of the
Corporation (whether by merger, consolidation, sale of assets or otherwise) that
may be issued in respect of, or by reason of any stock dividend, stock split,
stock issuance, reverse stock split, combination, recapitalization,
reclassification, merger, consolidation or otherwise. Upon the occurrence of
any of such events, the definitions of Common Equity Securities and Qualified
Registrable Securities shall be appropriately modified by the Board of Directors
of the Corporation.
8.13. Exchange Act Reports. The Corporation covenants that it will timely
file the reports required to be filed by it under the Securities Act or the
Exchange Act (including but not limited to the reports under Sections 13 and
15(d) of the Exchange Act referred to in subparagraph (c)(1) of Rule 144 under
the Securities Act) to the extent required from time to time to enable Selling
Shareholder to sell the Qualified Registrable Securities without registration
under the Securities Act within the limitation of the exemptions provided by
Rule 144 under the Securities Act. Upon the request of a Selling Shareholder,
the Corporation will deliver to the Selling Shareholder a written statement as
to whether it has complied with the requirements of this Section.
8.14. Entire Agreement. This Agreement sets forth the entire agreement of
the parties hereto as to the subject matter hereof and supersedes all previous
agreements among all or some of the parties hereto, whether written, oral or
otherwise.
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8.15. Specific Performance. The parties to this Agreement acknowledge that
there may be no adequate remedy at law if any party fails to perform any of its
obligations under this Agreement, and accordingly agree that each party in
addition to any other remedy to which it may be entitled at law or in equity,
shall be entitled to compel specific performance of the obligations of any other
party under this Agreement in accordance with the terms and conditions of this
Agreement, in any court of the United States or any State thereof having
jurisdiction.
8.16. Inspection. For so long as this Agreement shall be in effect, a
complete list of the names and addresses of all the holders who have
registration rights similar to those set forth in subsection 2.1 of this
Agreement shall be made available for inspection and copying on any business day
by the Selling Shareholder at the offices of the Corporation at the address
thereof set forth in subsection 8.10 above.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement
effective as of the ___ day of September, 1998.
ALLIANCE RESOURCES PLC
a corporation formed under the laws of England
and Wales
By:
-------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
----------------------------------------------
F. Fox Benton, Jr.
----------------------------------------------
Lizinka M. Benton
----------------------------------------------
F. Fox Benton III, either individually or by F.
Fox Benton, Jr. as Attorney-in-Fact
----------------------------------------------
Lizinka C. Benton, either individually or by F.
Fox Benton, Jr. as Attorney-in-Fact
----------------------------------------------
Lucia T. Benton, either individually or by F.
Fox Benton, Jr. as Attorney-in-Fact
16
