EXHIBIT 99.3
PUT AND CALL AGREEMENT
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THIS PUT AND CALL AGREEMENT (the "Agreement") dated as of September 15,
1999 is entered by and between Cross Timbers Oil Company, a Delaware corporation
(the "Company") and LB I Group Inc., a Delaware corporation ("▇▇▇▇▇▇") as
follows:
PRELIMINARY STATEMENTS
WHEREAS, ▇▇▇▇▇▇ and Cross Timbers Trading Company have entered into that
certain Stockholders Agreement dated September 15, 1999 (the "Stockholders
Agreement") pursuant to which ▇▇▇▇▇▇ and the Company have purchased certain
equity investments in Whitewine Holding Company, a Texas corporation
("Whitewine"), which in turn has purchased and holds all of the issued and
outstanding common stock of Summer Acquisition Company, a Texas corporation
("Summer"); which in turn has purchased and holds all of the issued and
outstanding common stock of Arkoma Holding Corporation, a Delaware corporation
("Arkoma");
WHEREAS, Whitewine, as purchaser, and the Company and Cross Timbers Trading
Company, a Texas corporation (together with the Company, the "Sellers"), as
sellers, have entered into that certain Stock Purchase Agreement dated as of
September 15, 1999 pursuant to which Whitewine purchased from the Sellers
certain securities listed on schedules 1 and 2 thereto (the "Scheduled
Securities");
WHEREAS, Whitewine and the Sellers have entered into that certain Call
Agreement dated September 15, 1999 (the "Call Agreement"), pursuant to which the
Sellers have a call option to purchase the Scheduled Securities (the "Scheduled
Securities Call Option");
WHEREAS, ▇▇▇▇▇▇ and the Company desire to enter into this Agreement for the
purposes, among others, of providing certain rights in favor of ▇▇▇▇▇▇ and the
Company; and
WHEREAS, this Agreement is being entered into as a condition to the
execution of the Stockholders Agreement.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, and for other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, ▇▇▇▇▇▇ and the Company hereby
agree as follows:
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ARTICLE I
Definitions and Interpretation
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Section 1.01. Certain Defined Terms. Capitalized terms used in this
Agreement shall have the respective meanings set forth herein. Capitalized
terms used but not specifically defined herein shall have the meaning prescribed
in the Amended and Restated Equity Commitment Letter between ▇▇▇▇▇▇ Brothers,
Inc. and the Company dated September 14, 1999 (the "Commitment Letter").
ARTICLE II
Put Rights
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Section 2.01. Grant of Put Option. The Company hereby grants to
▇▇▇▇▇▇ the right and option (the "Put Option") to sell to the Company and to
require the Company to purchase, and upon the exercise of such option the
Company shall purchase from ▇▇▇▇▇▇ all (and not less than all) of ▇▇▇▇▇▇'▇ then
remaining equity interest in Whitewine ("▇▇▇▇▇▇'▇ Equity Interest") in
accordance with the terms of this Agreement. This Put Option may be exercised
by ▇▇▇▇▇▇ on the Put Date (which shall be defined as the date or the next
Business Day (as defined in the Stockholders Agreement) if such date is not a
Business Day) which is one year after the closing of the acquisition by Summer
of all the outstanding capital stock of Arkoma ("Arkoma Closing").
Section 2.02. Exercise Price. In the event ▇▇▇▇▇▇ elects to
exercise the Put Option, the price (the "Put Price") payable by the Company for
the purchase of ▇▇▇▇▇▇'▇ Equity Interest shall be equal to (i) the aggregate
amount of ▇▇▇▇▇▇'▇ capital contributions to Whitewine, plus (ii) an amount equal
to an annualized return on such aggregate amount of capital contributions
(compounded semi-annually after the first year) (the "Annualized Return") of
20%. The Annualized Return shall be calculated from the dates of each of
▇▇▇▇▇▇'▇ capital contributions in Whitewine to the date of payment of such
Annualized Return and based upon a 360-day year. To the extent any
distributions are made on ▇▇▇▇▇▇'▇ Equity Interest, such distributions shall be
treated as a partial payment of the Put Price, and shall be applied
proportionately to repayment of ▇▇▇▇▇▇'▇ capital contributions and payment of
the then accrued Annualized Return.
Section 2.03. Method and Date of Payment. The Put Price shall be
payable in cash by the Company on or before the 30th day (or the next Business
Day if such date is not a Business Day) after the Put Date.
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Section 2.04. Put Notice Date. The Put Option may be exercised by
▇▇▇▇▇▇ on the Put Date by giving written notice on or before the Put Date to the
Company of its election to exercise the Put Option.
Section 2.05. Put Closing. The closing of the purchase of ▇▇▇▇▇▇'▇
Equity Interest shall occur on the date described in Section 2.03 and shall be
at such time and place as the parties shall mutually agree. At the closing,
▇▇▇▇▇▇ shall execute and deliver all instruments to evidence its assignment of
▇▇▇▇▇▇'▇ Equity Interest as may be necessary, in the opinion of the Company, to
transfer to the Company or a designee of the Company good and valid title to
▇▇▇▇▇▇'▇ Equity Interest free and clear of any liens, claims or encumbrances, to
the Company. In consideration therefor at closing, the Company shall make
payment to ▇▇▇▇▇▇ of the Put Price in immediately available funds.
ARTICLE III
Call Rights
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Section 3.01. Grant of Call Option. ▇▇▇▇▇▇ hereby grants to the
Company the right and option (the "Call Option"), at any time after December 31,
1999 and on or before the Put Date (the "Call Period"), to purchase from ▇▇▇▇▇▇
and to require ▇▇▇▇▇▇ to sell, and upon the exercise of such option ▇▇▇▇▇▇ shall
sell to the Company all (and not less than all) of ▇▇▇▇▇▇'▇ Equity Interest in
accordance with the terms of this Agreement.
Section 3.02. Exercise Price. In the event the Company elects to
exercise the Call Option, the price (the "Call Price") payable by the Company
for ▇▇▇▇▇▇'▇ Equity Interest shall be an amount of cash equal to the sum of (i)
the amount of ▇▇▇▇▇▇'▇ capital contributions in Whitewine, plus (ii) an amount
equal to a 20% Annualized Return; provided, however, that (A) the Annualized
Return shall be 30% if a Royalty Trust Monetization is completed within the
period ending on the later of (1) the date that is six months after the date of
closing of an exercised Call Option and (2) the thirtieth day following the Put
Date and (B) if a Royalty Trust Monetization is completed at a time after the
Company pays the initial Call Price to ▇▇▇▇▇▇ but prior to the later of (1) and
(2) described above in (A), the Company shall also pay ▇▇▇▇▇▇ an amount in
addition to the initial Call Price that will increase the Annualized Return to
30%. In each case, the Annualized Return shall be calculated from the dates of
each of ▇▇▇▇▇▇'▇ capital contributions in Whitewine to the date of payment of
such Annualized Return and based upon a 360-day year. To the extent any
distributions are made on ▇▇▇▇▇▇'▇ Equity Interest, such distributions shall be
treated as a partial payment of the Call Price and shall be applied
proportionately to repayment of ▇▇▇▇▇▇'▇ capital contributions and payment of
the then accrued Annualized Return.
Section 3.03. Call Notice Date. The Call Option may be exercised by
the Company at any time during the Call Period by the Company giving written
notice to ▇▇▇▇▇▇ of (i) its election to exercise the Call Option (the date of
such notice being hereinafter defined as the
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"Call Notice Date") and (ii) the date of the closing which shall be 30 days
after the Call Notice Date (or the next Business Day if such date is not a
Business Day).
Section 3.04. Call Closing. The closing of the purchase of ▇▇▇▇▇▇'▇
Equity Interest shall occur on the date described in Section 3.03 and shall be
at such time and place as the parties shall mutually agree. At the closing,
▇▇▇▇▇▇ shall execute and deliver all instruments to evidence its assignment of
▇▇▇▇▇▇'▇ Equity Interest as may be necessary, in the opinion of the Company, to
transfer to the Company good and valid title to such interest, free and clear of
any liens, claims or encumbrances. In consideration therefore, at the Closing
the Company shall deliver to ▇▇▇▇▇▇ the Call Price, in immediately available
funds.
ARTICLE IV
Miscellaneous
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Section 4.01. Notices. Any and all notices, requests or other
communications hereunder shall be given in writing and delivered by: (a)
regular, overnight or registered or certified mail (return receipt requested),
with first class postage prepaid; (b) hand delivery; (c) facsimile transmission;
or (d) overnight courier service, to the parties at the following addresses or
facsimile numbers:
(i) if the Company, to the address or fax telephone number set
forth below the Company's name on the signature pages hereof; and
(ii) if to ▇▇▇▇▇▇, to the address or fax telephone number set forth
below ▇▇▇▇▇▇'▇ name on the signature pages hereto,
or at such other address or number as shall be designated in a notice by the
Company or ▇▇▇▇▇▇, given in accordance with this Section 4.01. All such
communications shall be deemed to have been duly given (A) in the case of a
notice sent by regular mail, three business days after it is duly deposited in
the mails, (B) in the case of a notice sent by registered or certified mail, on
the date receipted for (or refused) on the return receipt, (C) in the case of a
notice delivered by hand, when personally delivered, (D) in the case of a notice
sent by facsimile, upon transmission subject to electronic confirmation of
sending to the appropriate telephone number, and (E) in the case of a notice
sent by overnight mail or overnight courier service, the date delivered at the
designated address.
Section 4.02. Dispute Resolution. Any claim, counterclaim, demand,
cause of action, dispute, and controversy arising out of or relating to this
Agreement or the relationship established by this Agreement, any provision
hereof, the alleged breach hereof, or in any way relating to the subject matter
of this Agreement, involving the parties and/or their respective representatives
(each a "Dispute"), even if a Dispute allegedly is extra-contractual in nature,
sounds in contract, tort, or otherwise, or arises under state or federal law,
shall be resolved by
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binding arbitration. Arbitration shall be conducted in accordance with the
rules of arbitration of the Federal Arbitration Act and, to the extent an issue
is not addressed by the federal law on arbitration, by the commercial
arbitration rules of the American Arbitration Association. The validity,
construction, and interpretation of this Agreement to arbitrate, and all
procedural aspects of the arbitration conducted pursuant hereto shall be decided
by the arbitrators. In deciding the substance of the Dispute, the arbitrators
shall refer to the governing law. The arbitrators shall have no authority to
award treble, exemplary, or punitive damages of any type under any circumstances
whether or not such damages may be available under state or federal law, or
under the Federal Arbitration Act, or under the commercial arbitration rules of
the American Arbitration Association, the parties hereby waiving their right, if
any, to recover any such damages. The arbitration proceeding shall be conducted
in Dallas, Texas. Within 30 days of the notice of initiation of the arbitration
procedure, each party shall select one arbitrator. The two arbitrators shall
select a third arbitrator. The third arbitrator shall be a person who has over
eight years professional experience in investment transactions and who has not
previously been employed by either party and does not have a direct or indirect
interest in either party or the subject matter of the arbitration. While the
third arbitrator shall be neutral, the two party-appointed arbitrators are not
required to be neutral, and it shall not be grounds for removal of either of the
two party-appointed arbitrators or for vacating the arbitrators" award that
either of such arbitrators has past or present minimal relationships with the
party that appointed such arbitrator. To the fullest extent permitted by law,
any arbitration proceeding and the arbitrators" award shall be maintained in
confidence by the parties.
Section 4.03. Benefit and Burden. This Agreement shall inure to the
benefit of and shall be binding upon, the Company, ▇▇▇▇▇▇ and their respective
executors, personal representatives, administrators, successors, heirs,
distributees, devisees, legatees and permitted assigns.
Section 4.04. No Third Party Rights. Nothing in this Agreement shall
be deemed to create any right in any creditor or other person other than the
Company, ▇▇▇▇▇▇ and their respective heirs, executors, administrators, personal
representatives and permitted assigns, and this Agreement shall not be construed
in any respect to be a contract in whole or in part for the benefit of any other
person.
Section 4.05. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed to be an original but all of
which together shall constitute one and the same document.
Section 4.06. Governing Law. THIS AGREEMENT AND THE RIGHTS OF THE
PARTIES HEREUNDER SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS
OF THE STATE OF NEW YORK.
Section 4.07. Entire Agreement. This Agreement sets forth all of the
promises, agreements, conditions, understandings, warranties and representations
between the parties with
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respect to the subject matter of this Agreement, and supersedes all prior
agreements, arrangements and understandings between the parties (whether
written, oral or otherwise) with respect to the subject matter hereof. There are
no promises, agreements, conditions, understandings, warranties or
representations, oral or written, express or implied, between the parties
concerning the subject matter hereof except as set forth herein.
Section 4.08. Compliance with Indenture. For so long as the Put
Option or the Call Option under this Agreement shall be exercisable, the Company
shall comply with all covenants of the Company set forth in Article IX of that
certain Indenture dated as of October 28, 1997 between the Company and The Bank
of New York, as Trustee relating to the Company's 8 3/4% Senior Subordinated
Notes due 2009 (Series A and Series B), as such Indenture is in effect as of the
date of this Agreement. In addition, the Company shall not make any Restricted
Payment or Investment if, immediately after such payment or investment, it could
not purchase ▇▇▇▇▇▇'▇ Equity Interest pursuant to the terms of the Put Option
without breaching the terms of such Indenture.
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IN WITNESS WHEREOF, the parties have executed this Agreement as of the
date first above written.
▇▇▇▇▇▇:
LBI GROUP INC.
By: /S/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
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Printed Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Title: Managing Director
Address:
3 World Financial Center
▇▇▇ ▇▇▇▇▇ ▇▇.
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Telephone Number: ▇▇▇-▇▇▇-▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
COMPANY:
CROSS TIMBERS OIL COMPANY
By: /s/ ▇▇▇▇ ▇. O'REAR
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Printed Name: ▇▇▇▇ ▇. O'Rear
Title: Vice President and
Treasurer
Address:
▇▇▇ ▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
Attention: General Counsel
Telephone Number: ▇▇▇-▇▇▇-▇▇▇▇
Fax Number: ▇▇▇-▇▇▇-▇▇▇▇
