Exhibit 10.6
FIRST AMENDMENT TO PURCHASE AGREEMENT
THIS FIRST AMENDMENT TO PURCHASE AGREEMENT (this "Amendment") is made as of
the 30/th/ day of July, 1999 among 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").
W I T N E S S E T H:
WHEREAS, the Company, EnCap LP and ECIC entered into that certain Purchase
Agreement dated as of October 27, 1998 (the "Original Agreement") for the
purposes and consideration therein expressed, pursuant to which Buyer purchased
the Securities; and
WHEREAS, the Company, EnCap LP and ECIC desire to amend the Original
Agreement to reflect certain changes in the ownership of the capital stock of
certain Subsidiaries of the Company, with the result being that Difco is the
owner of all of the outstanding capital stock of Alliance Resources (Delaware),
Inc., a newly formed Delaware corporation, which in turn is the owner of all of
the outstanding capital stock of Alliance Group and LRI;
NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Original Agreement, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I. -- Definitions and References
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(S) 1.1. Terms Defined in the Original Agreement. Unless the context
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otherwise requires or unless otherwise expressly defined herein, the terms
defined in the Original Agreement shall have the same meanings whenever used in
this Amendment.
(S) 1.2. Other Defined Terms. Unless the context otherwise requires, the
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following terms when used in this Amendment shall have the meanings assigned to
them in this (S) 1.2.
"Amendment" means this First Amendment to Purchase Agreement.
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"Amendment Documents" means this Amendment, the Consent and Agreement
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of Subsidiary Guarantors attached hereto, the Subsidiary Guaranty of even
date herewith by Alliance Resources (Delaware), Inc. in favor of EnCap LP
and ECIC and the other documents to be delivered pursuant to Section
3.1(c).
"Purchase Agreement" means the Original Agreement as amended hereby.
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ARTICLE II. -- Amendments to Original Agreement
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(S) 2.1. Defined Terms. The definitions of "Change of Control", "Key
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Employment Agreements", "Senior Credit Facility" and "Subsidiary Guarantors" set
forth in Section 1.1 of the Original Agreement are hereby amended in their
entirety to read as follows:
"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 Manx or Difco on a fully-diluted basis, (c) Difco shall fail
beneficially to own 100% of the outstanding shares of voting capital stock
of Alliance Delaware on a fully-diluted basis, (d) Alliance Delaware shall
fail beneficially to own 100 % of the outstanding shares of voting capital
stock of Alliance Group and LRI on a fully-diluted basis, (e) 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, (f)
Alliance Group shall fail beneficially to own 100% of the outstanding
shares of the voting capital stock of Source, ARNO, ARCOL or Alliance USA,
(g) 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 (h) within three years of the Closing Date, the employment
by the Company of John Keenan or Paul Fenemore terminates for any reason.
"Key Employment Agreements" means (i) that certain Executive Service
Agreement dated October 5, 1996 between the Company and John A. Keenan, as
amended by Supplemental Agreement dated October 15, 1996 and Second
Supplemental Agreement dated December 1, 1998, and (ii) that certain
Service Agreement dated September 20, 1996 between the Company and Paul
Raymond Fenemore, as amended by Supplemental Agreement dated September 20,
1996 and Second Supplemental Agreement dated December 1, 1998.
"Senior Credit Facility" means that certain Third Amended and Restated
Credit Agreement dated October 27, 1998 by and among the Company, Alliance
USA, GOCA, LPC, New GOC and Source and Bank of America National Trust and
Savings Association, as amended by that certain First Amendment to Third
Amended and Restated Credit Agreement dated July 30, 1999.
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"Subsidiary Guarantors" means Difco, Alliance Delaware, Alliance
Group, Alliance USA, Source, LRI, LPC, GOCA, New GOC and Enpro.
Section 1.1 of the Original Agreement is hereby amended by adding a new
definition of "Alliance Delaware" immediately following the definition of
"affiliate", to read as follows:
"Alliance Delaware" means Alliance Resources (Delaware), Inc., a
Delaware corporation.
(S) 2.2 Consent to Changes in Stock Ownership. Buyer hereby consents to
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the changes in stock ownership among the Company and certain of its
Subsidiaries, whereby Difco became the owner of all of the outstanding capital
stock of Alliance Resources (Delaware), Inc., a newly formed Delaware
corporation, which in turn became the owner of all of the outstanding capital
stock of Alliance Group and LRI, and waives any Default or Event of Default
under Sections 10.9, 11.3, 11.5 or 11.6 of the Purchase Agreement caused
thereby.
(S) 2.3 Consent to Amendment of Senior Credit Facility. Buyer hereby
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consents to an amendment to the Senior Credit Facility of even date herewith,
substantially in the form of the final draft furnished to Buyer.
(S) 2.4 Waiver re: Untimely Delivery of Financial Information. The
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Company previously failed to timely deliver certain financial information in
respect of the Fiscal Quarters ended October 31, 1998 and January 31, 1999, as
required in Section 10.2 (b) of the Purchase Agreement. Buyer hereby confirms
that such information, for such periods, was subsequently delivered to Buyer,
and Buyer hereby waives such failure to timely deliver such information and any
Default related thereto.
(S) 2.5 Buyer Acknowledgment and Agreement re: East Irish Sea Asset Write
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Down. As a result of an SEC ceiling test calculation, the Company is required
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to write down the cost of the East Irish Sea Assets to approximately $2.5
million for U.S. financial reporting purposes, with such write down being
recognized in the Fiscal Year ended April 30, 1999 (the "Required Write Down").
Buyer hereby acknowledges and agrees that the Required Write Down does not, in
and of itself, constitute a Material Adverse Effect.
ARTICLE III. -- Conditions of Effectiveness
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(S) 3.1. Effective Date. This Amendment shall become effective as of the
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date first above written when and only when the Company will deliver the
following documents to Buyer:
(a) This Amendment, duly executed by the Company and each Subsidiary
Guarantor.
(b) The Subsidiary Guarantee of Alliance Delaware, duly executed by
Alliance Delaware.
(c) 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
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performance by the Company and the Subsidiary Guarantors of this Amendment
and the Amendment Documents, as necessary.
(d) An Omnibus Certificate, substantially in the form of the omnibus
certificates delivered by the Company and Subsidiary Guarantors at Closing,
with respect to Alliance Delaware, with attached accurate and complete
copies of Alliance Delaware's Organic Documents, the consent or resolutions
described in clause (c) above, and indicating the incumbency and specimen
signatures of officers executing the Amendment and Ancillary Documents on
behalf of Alliance Delaware.
(e) Certificate of existence and good standing with respect to
Alliance Delaware, dated within a number of days prior to the date hereof
reasonably acceptable to Buyer.
(f) Such other certificates, instruments, and documents as may be
reasonably requested by Buyer prior to the date hereof to carry out the
intent and purposes of this Amendment.
ARTICLE IV. -- Representations and Warranties
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(S) 4.1. Representations and Warranties of the Company. To confirm
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Buyer's understanding concerning the Company's and its Subsidiaries' businesses,
properties and obligations, and to induce Buyer to enter into this Amendment,
the Company represents and warrants to Buyer that:
(a) (i) All the representations and warranties of the Company and its
Subsidiaries contained in the Purchase Agreement and Ancillary Documents
are true and correct in all material respects on and as of the date hereof
as if made on and as of such date, except as affected by transactions
permitted thereby, 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 date hereof, no effect shall be given to any materiality
qualification contained in such representation or warranty), (ii) the
Company and its Subsidiaries have performed and complied with in all
material respects all covenants and agreements contained in the Purchase
Agreement and Ancillary Documents, and (iii) no Default or Event of Default
has occurred.
(b) The Company and each Subsidiary Guarantor has full power and
authority to execute and deliver the Amendment Documents and to perform
their obligations thereunder, to the extent a party thereto, and to
consummate the transactions contemplated hereby and thereby. The
execution, delivery, and performance by the Company and each Subsidiary
Guarantor of the Amendment Documents, to the extent a party thereto, and
the consummation by it of the transactions contemplated hereby and thereby,
have been duly authorized by all necessary actions of the Company and each
Subsidiary Guarantor. The Amendment Documents have been duly executed and
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delivered by the Company and each Subsidiary Guarantor, to the extent a
party thereto, and constitute, a valid and legally binding obligation of
the Company and each Subsidiary Guarantor, enforceable against the Company
and each Subsidiary Guarantor 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.
(c) The execution, delivery and performance of the Amendment Documents
by the Company and each Subsidiary Guarantor, to the extent a party
thereto, 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.
(d) 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 the Amendment Documents and the
consummation of the transactions contemplated hereby and thereby.
ARTICLE V. -- Miscellaneous
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(S) 5.1. Ratification of Agreements. The Original Agreement as hereby
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amended is hereby ratified and confirmed in all respects. The Purchase
Agreement and Ancillary Documents, as they may be amended or affected by the
various Amendment Documents, are hereby ratified and confirmed in all respects.
Any reference to the Purchase Agreement in any Ancillary Document shall be
deemed to refer to this Amendment also, and any reference in the Purchase
Agreement or any Ancillary Document to any other document or instrument amended,
renewed, extended or otherwise affected by any Amendment Document shall also
refer to such Amendment Document. The execution, delivery and effectiveness of
this Amendment and the other Amendment Documents shall not, except as expressly
provided herein or therein, operate as a waiver of any right, power or remedy of
Buyer under the Purchase Agreement or any Ancillary Document nor constitute a
waiver of any provision of the Purchase Agreement or any Ancillary Document.
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(S) 5.2. Survival of Agreements. All representations, warranties,
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covenants and agreements of the Company herein shall survive the execution and
delivery of this Amendment and the performance hereof, and shall further survive
until all of the Obligations are paid in full. All statements and agreements
contained in any certificate or instrument delivered by the Company or any
Subsidiary Guarantor hereunder or under the Purchase Agreement to Buyer shall be
deemed to constitute representations and warranties by, or agreements and
covenants of, the Company under this Amendment and under the Purchase Agreement.
(S) 5.3. Ancillary Documents. This Amendment and the other Amendment
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Documents are each an Ancillary Document, and all provisions in the Purchase
Agreement pertaining to Ancillary Documents apply hereto and thereto.
(S) 5.4. Governing Law. THIS AMENDMENT SHALL BE GOVERNED BY AND CONSTRUED
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AND ENFORCED IN ACCORDANCE WITH THE LAWS OF ENGLAND AND WALES, WITHOUT REGARD TO
THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
(S) 5.5. Entire Agreement. This Agreement, together with the Schedules and
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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.
(S) 5.6. Counterparts. This Amendment may be separately executed in
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counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to constitute one and the same
Amendment.
IN WITNESS WHEREOF, this Amendment is executed as of the date first above
written.
ENCAP EQUITY 1996 LIMITED PARTNERSHIP
By: ENCAP INVESTMENTS L.C., General Partner
By: -----------------------------------------------
Gary R. Peterson, Managing Director
ENERGY CAPITAL INVESTMENT COMPANY PLC
By: -----------------------------------------------
Gary R. Peterson, Director
ALLIANCE RESOURCES PLC
By: -----------------------------------------------
Francis M. Munchinski, Authorized Signatory
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CONSENT AND AGREEMENT
The undersigned hereby (i) consents to the execution and delivery of (a)
that certain First Amendment to Purchase Agreement (the "Amendment") by and
among 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"), amending the Purchase Agreement (as
defined in the Amendment), and (b) the other documents and instruments executed
in connection therewith, including without limitation the execution and delivery
of the other Amendment Documents, and to the provisions and transactions
contemplated therein, and (ii) ratifies and confirms that its Subsidiary
Guarantee and any other security or other documents, agreements or instruments
(collectively, the "Security Documents") delivered by it to Buyer in connection
with the Purchase Agreement or any transaction contemplated therein and agree
that all of its respective obligations and covenants thereunder (to the extent
it is a party thereto) shall remain unimpaired by the execution and delivery of
the Amendment and the other documents and instruments executed in connection
therewith and that the Security Documents to which it is a party shall remain in
full force and effect.
IN WITNESS WHEREOF, this Consent and Agreement is executed by the
undersigned as of July 30, 1999.
DIFCO LIMITED
By:---------------------------------------------
Francis M. Munchinski
Authorized Signatory
ALLIANCE RESOURCES GROUP, INC.
ALLIANCE RESOURCES (USA), INC.
SOURCE PETROLEUM, INC.
LATEX RESOURCES, INC.
LATEX PETROLEUM CORPORATION
LATEX/GOC ACQUISITION, INC.
GERMANY OIL COMPANY
ENPRO, INC.
ALLIANCE RESOURCES (DELAWARE), INC.
By:---------------------------------------------
Francis M. Munchinski, Vice President
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