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EXHIBIT 10.3
STANDBY AGREEMENT
This STANDBY AGREEMENT, dated as of February 27, 1998 (the
"Agreement"), between ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (the "Stockholder"), DeepTech
International Inc., a Delaware corporation (the "Company"), ▇▇▇▇▇▇ Brothers,
LLC, a Delaware limited liability company ("▇▇▇▇▇▇ Brothers"), ▇▇▇▇▇▇ Offshore,
Inc., a Delaware corporation ("Offshore"), and El Paso Natural Gas Company, a
Delaware corporation ("Parent").
Parent, the Company and El Paso Acquisition Company, a
Delaware corporation ("Merger Sub"), are entering into an Agreement and Plan of
Merger (the "Merger Agreement") on the date of this Agreement pursuant to which
Parent proposes to acquire the entire equity interest in the Company pursuant
to the merger (the "Merger") of the Company with Parent or Merger Sub, as a
result of which each outstanding share of Common Stock, $.01 par value, of the
Company (the "Company Common Stock"), would be converted into the right to
receive Common Stock, $3.00 par value, of Parent (the "Parent Common Stock") or
cash as provided in the Merger Agreement.
As part of the transactions contemplated by the Merger
Agreement, the Company, Offshore, DeepFlex Production Services, Inc.
("DeepFlex") and Parent are entering into a Contribution and Distribution
Agreement (the "Contribution Agreement") on the date of this Agreement pursuant
to which the Company will contribute to Offshore the stock of DeepFlex in
exchange for the consideration stated in the Contribution Agreement.
Pursuant to the Contribution Agreement, the Company will
distribute on a pro rata basis to the holders of Company Common Stock rights
(the "Rights") to purchase all of the Offshore Shares (as defined in the
Contribution Agreement) (the "Rights Offering").
Parent and the Company desire to induce ▇▇▇▇▇▇ Brothers to
enter into this Agreement by entering into the Merger Agreement, and ▇▇▇▇▇▇
Brothers desires to induce Parent and the Company to enter into the Merger
Agreement by entering into this Agreement.
Capitalized terms used but not defined herein have the
meanings set forth in the Contribution Agreement.
Accordingly, in consideration of the mutual covenants and
agreements set forth herein and in consideration of $1.00 and such other
valuable consideration the receipt of which is hereby acknowledged, the parties
hereto agree as follows:
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1. Standby Commitment. (a) To the extent any Unsubscribed
Shares have not theretofore been subscribed and paid for in the Rights Offering
(the "Remaining Shares"), on the General Expiration Date, the Company will
provide ▇▇▇▇▇▇ Brothers with a notice in writing setting forth the number of
Remaining Shares and the aggregate subscription price therefor as provided in
Section 4.2 of the Contribution Agreement. No later than the Final Expiration
Date, ▇▇▇▇▇▇ Brothers shall purchase from the Company (and the Company shall
sell to ▇▇▇▇▇▇ Brothers), at the subscription price of $3.25 per Remaining
Share, that number of such Remaining Shares, if any, which is necessary to
provide the Company with net proceeds from the Rights Offering at least equal
to $75 million.
(b) At the closing of the purchase and sale of such Remaining Shares,
▇▇▇▇▇▇ Brothers shall make payment in cash to the Company of the subscription
price for the Remaining Shares purchased by ▇▇▇▇▇▇ Brothers and, except as
otherwise required by the Letter of Credit described in Section 3, the Company
shall deliver to ▇▇▇▇▇▇ Brothers stock certificates representing the Remaining
Shares purchased pursuant to this Agreement (the "Acquired Shares"), free and
clear of all liens, charges and encumbrances (other than those created by
▇▇▇▇▇▇ Brothers).
(c) In consideration for ▇▇▇▇▇▇ Brothers' commitment to purchase any
Remaining Shares, ▇▇▇▇▇▇ Brothers will receive from Offshore a fee pursuant to
the Purchase Commitment Agreement, dated as of even date herewith, between
▇▇▇▇▇▇ Brothers and Offshore.
2. Guarantee. (a) The Stockholder hereby absolutely and
unconditionally guarantees the performance by ▇▇▇▇▇▇ Brothers of its obligation
under Section 1 of this Agreement (the "Obligation"). To the extent that
▇▇▇▇▇▇ Brothers fails to tender payment of the Obligation on the Final
Expiration Date, the Stockholder shall immediately pay to the Company any
unpaid portion of the Obligation.
(b) The liability of the Stockholder under this guarantee shall be
primary and not as a surety, and shall not be affected by the bankruptcy of
▇▇▇▇▇▇ Brothers, the Company or Offshore or any failure or delay by the Company
or Parent in exercising any right or remedy against ▇▇▇▇▇▇ Brothers, or any
amendment or waiver of any provision of the Contribution Agreement, the Merger
Agreement or any other agreement executed and delivered in connection with the
foregoing. The Stockholder hereby waives notice or demand of performance in
the acceptance of its obligations hereunder.
3. Letter of Credit. The Stockholder has obtained from
NationsBank, N.A. ("NationsBank") an irrevocable letter of credit in the form
of Exhibit A hereto (the "Letter of Credit") in favor of the Company. The cost
of issuance of the Letter of Credit is being borne by Parent and Parent shall
pay all such costs related to the issuance of the Letter of Credit directly to
NationsBank (and Parent shall reimburse the Stockholder promptly if and to the
extent any payments of fees and costs (excluding in all cases any
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obligation to reimburse NationsBank for drawings under the Letter of Credit)
under the Letter of Credit shall have been made by the Stockholder).
4. Other Acts. The parties to this Agreement agree to, in a
prompt manner and using all commercially reasonable efforts, prepare, file or
draft such documents and perform such acts as required by the Letter of Credit,
including, without limitation, upon the termination of the Merger Agreement
pursuant to the terms thereof, the preparation and delivery of a signed
certificate to such effect or, upon the closing of the Merger, the preparation
of a signed certificate to such effect, and other certificates and documents
required by the Letter of Credit (including certificates for any Offshore
Shares) required to be delivered to NationsBank.
5. Representations and Warranties of ▇▇▇▇▇▇ Brothers. ▇▇▇▇▇▇
Brothers hereby represents and warrants to Parent that:
(a) ▇▇▇▇▇▇ Brothers is a limited liability
company duly organized, validly existing and in good standing under the laws of
the State of Delaware;
(b) ▇▇▇▇▇▇ Brothers has all requisite right,
power and authority to execute and deliver this Agreement and perform all its
obligations hereunder;
(c) the execution, delivery and performance of
this Agreement and the consummation of the transactions contemplated hereby
have been duly authorized by all necessary corporate or similar action on
▇▇▇▇▇▇ Brothers' part and does not constitute a violation of, conflict with or
result in a material default under (i) any contract or agreement to which
▇▇▇▇▇▇ Brothers is a party or by which ▇▇▇▇▇▇ Brothers is bound, (ii) any
judgment, decree or order applicable to ▇▇▇▇▇▇ Brothers or (iii) to ▇▇▇▇▇▇
Brothers' actual knowledge, any law, rule or regulation of any governmental
body applicable to ▇▇▇▇▇▇ Brothers, including, without limitation, any
securities laws exemptions, in the case of clauses (i) through (iii), except
for violations, conflicts or defaults which would not, or would not reasonably
be expected to, materially affect ▇▇▇▇▇▇ Brothers' ability to perform its
obligations under this Agreement;
(d) this Agreement has been duly executed and
delivered by ▇▇▇▇▇▇ Brothers; and
(e) this Agreement constitutes a valid and
binding agreement on ▇▇▇▇▇▇ Brothers' part, enforceable against ▇▇▇▇▇▇ Brothers
in accordance with its terms, subject to applicable bankruptcy, insolvency,
moratorium or other similar laws relating to creditors' rights and general
principles of equity.
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6. Miscellaneous.
6.1 Waiver and Amendment. Any agreement on the part of a
party hereto to any waiver shall be valid only if set forth in an instrument in
writing duly executed by such party. The failure of any party to assert any of
its rights under this Agreement or otherwise shall not constitute a waiver of
such rights. This Agreement may not be amended except by an instrument in
writing duly executed by each of the parties hereto.
6.2 Assignment. Any party to this Agreement may assign
its rights or interests hereunder without obtaining the written consent of any
other party. No such assignment shall relieve the assigning party of any of
its obligations under this Agreement and any non-assigning party shall have the
right to seek remedies directly from the assigning party without seeking the
same from the assignee. Subject to the preceding sentence, this Agreement will
be binding upon, inure to the benefit of, and be enforceable by, the parties
and their respective successors and permitted assigns. The parties hereto
acknowledge that NationsBank has been granted a security interest in all of the
right, title and interest of the Stockholder and ▇▇▇▇▇▇ Brothers in and to this
Agreement.
6.3 No Third-Party Beneficiaries. This Agreement is not
intended to confer upon any person other than the parties hereto any rights or
remedies hereunder, except that NationsBank is a third party beneficiary of
Section 1(b) and such section may not be amended or modified without the
express written consent of NationsBank.
6.4 Counterparts. This Agreement may be executed in
counterparts, all of which shall be considered one and the same agreement, and
shall be effective when one or more counterparts have been signed by each of
the parties and delivered to the other party.
6.5 Governing Law. This Agreement shall be governed by,
and construed in accordance with, the laws of the State of Delaware, without
regard to its rules of conflicts of laws thereof.
6.6 Headings. The headings contained in this Agreement
are for reference purposes only and shall not affect in any way the meaning or
interpretation of this Agreement.
6.7 Notices. All notices and other communications
hereunder shall be in writing and shall be deemed given when delivered
personally, one day after being delivered to a nationally recognized overnight
courier or when telecopied (with a confirmatory copy sent by such overnight
courier) to the parties at the following addresses (or at such other address
for a party as shall be specified by like notice):
(a) if to Parent or the Company, to
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El Paso Natural Gas Company
▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇.
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Fried, Frank, Harris, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(b) if to ▇▇▇▇▇▇ Brothers, the Stockholder or
Offshore, to
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
Akin, Gump, Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P.
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ - ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
6.8 Severability. If any term or other provision of this
Agreement is invalid, illegal or incapable of being enforced by any rule of law
or public policy, all other terms, conditions and provisions of this Agreement
shall nevertheless remain in full force and effect so long as the economic and
legal substance of the transactions contemplated hereby are not affected in any
manner materially adverse to any party. Upon such determination that any term
or other provision is invalid, illegal or incapable of being enforced, the
parties shall negotiate in good faith to modify this Agreement so as to effect
the original intent of the parties as closely as possible in a mutually
acceptable
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manner in order that the transactions contemplated by this Agreement may be
consummated as originally contemplated to the fullest extent possible.
6.9 Termination. This Agreement shall terminate upon
termination of the Merger Agreement if the Merger has not been consummated
prior thereto.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first written above.
EL PASO NATURAL GAS COMPANY
By:
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Name:
Title:
▇▇▇▇▇▇ OFFSHORE, INC.
By:
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Name:
Title:
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▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
DEEPTECH INTERNATIONAL INC.
By:
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Name:
Title:
▇▇▇▇▇▇ BROTHERS, L.L.C.
By:
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Name:
Title:
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