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EXHIBIT 4.1
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PURCHASE AGREEMENT
by and between
ALLIANCE RESOURCES PLC
and
ENCAP EQUITY 1996 LIMITED PARTNERSHIP
AND
ENERGY CAPITAL INVESTMENT COMPANY PLC
October 27, 1998
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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
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 ▇▇▇▇ ▇▇▇▇▇▇
or ▇▇▇▇ ▇▇▇▇▇▇▇▇ terminates for any reason.
"Companies Act" means the Companies ▇▇▇ ▇▇▇▇ 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 ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ 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
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collar contracts, 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 ▇▇▇▇ ▇.
▇▇▇▇▇▇, as amended by Supplemental Agreement dated October 15, 1996,
(ii) that certain Service Agreement dated September 20, 1996 between
the Company and ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇, as amended by Supplemental
Agreement dated September 20, 1996 and (iii) that certain Executive
Service Agreement dated December 16, 1996 between the Company and ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇.
"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
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materialman's lien, 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
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capital, surplus and undivided profits of at least $250,000,000,
provided that such deposit must be either 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
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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
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1.3 References and Construction.
(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 ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, 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 & ▇▇▇▇▇▇▇▇▇, U.S. counsel to the Company, and
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ & 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.
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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 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
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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 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
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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 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
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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 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;
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(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;
(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
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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) 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,
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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 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
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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 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.
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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
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;
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(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.
(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 ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇ 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
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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.
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 ▇▇▇ ▇▇▇▇.
(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
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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 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
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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.
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
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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, 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;
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(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 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.
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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 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
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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.
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 ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ dated the Closing Date and in form and substance satisfactory to Buyer
concerning choice of law and such other matters as Buyer may request.
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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.
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,
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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 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
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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 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, and
(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.
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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.
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.
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ARTICLE XI
NEGATIVE 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:
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
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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 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.
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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 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;
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(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 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
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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 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.
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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 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.
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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.
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
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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.
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Fax No.: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇▇ & Knight, P.C.
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Telefax: 713/217-2828
If to the Company or any Subsidiary:
Alliance Resources PLC
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Telefax: ▇▇▇-▇▇▇-▇▇▇▇
with a copy to:
Jenkens & ▇▇▇▇▇▇▇▇▇, a Professional Corporation
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: W. ▇▇▇▇ ▇▇▇▇▇▇
Telefax: ▇▇▇-▇▇▇-▇▇▇▇
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.
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(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 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
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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, 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 ▇▇▇▇▇▇ 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
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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: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
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Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
ENERGY CAPITAL INVESTMENT COMPANY PLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
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Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Director
ALLIANCE RESOURCES PLC
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director