EXHIBIT 1.3
ESCROW AGREEMENT
THIS ESCROW AGREEMENT, dated as of August 13, 2002 (this
"Agreement"), is by and among UBS WARBURG LLC, as representative of the several
underwriters under the Underwriting Agreement (collectively, the "Underwriters"
or the "Depositor"), WACHOVIA BANK, NATIONAL ASSOCIATION, a national banking
association, as trustee under the Indenture ("Trustee"), and WACHOVIA BANK,
NATIONAL ASSOCIATION , a national banking association, as Escrow Agent under
this Agreement ("Escrow Agent").
RECITALS
WHEREAS, this Agreement is being entered into in connection
with the Pricing Agreement dated August 8, 2002, between Newfield Exploration
Company, a Delaware corporation (the "Company"), and the Underwriters (the
"Underwriting Agreement"), and the Subordinated Indenture dated as of December
10, 2001 (the "Existing Indenture"), between the Company and Trustee, as
supplemented by the First Supplemental Indenture dated as of the date of this
Agreement (the "Supplemental Indenture", and together with the Existing
Indenture, the "Indenture") governing the Company's 8 3/8% Senior Subordinated
Notes due 2012 (the "Notes"); and
WHEREAS, the Escrow Funds (as defined herein) will be released
either to the Company or to the Paying Agent (as defined herein) for the Notes
as provided in Section 4 of this Agreement.
STATEMENT OF AGREEMENT
NOW THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties agree as
follows:
1. Definitions. The following terms have the following
meanings when used in this Agreement:
"Acquisition Certificate" means an officers' certificate
(which will be concurrently delivered to Trustee) substantially in the form
of Exhibit A to this Agreement, signed by any of the Chief Executive Officer,
President, Chief Financial Officer or Principal Accounting Officer of the
Company, certifying to Escrow Agent as to the matters specified in Exhibit
A, directing Escrow Agent to disburse the Escrow Funds in accordance with
the payment instructions contained in the certificate.
"Business Day" means any day other than a Saturday, a Sunday
or a day on which banking institutions are not required to be open in the State
of New York.
"Escrow Funds" means the net proceeds of the public offering
of the Notes, which will be deposited by the Depositor with Escrow Agent
under this Agreement, together with any interest and other income thereon, which
funds will include, without limitation, the initial sum to be deposited by the
Depositor of $242,295,000. The Escrow Funds are held for the benefit of holders
of the Notes and do not constitute property or an asset of the Company, and the
Company has only a
1
contingent right to receive payment of the Escrow Funds on the terms and subject
to the conditions set forth in this Agreement.
"Paying Agent" means Wachovia Bank, National Association, in
its capacity as paying agent for the Notes.
"Special Mandatory Redemption" means the special mandatory
redemption of the Notes pursuant to Section 1109 of the Supplemental Indenture.
"Special Mandatory Redemption Notice" means written notice
from the Company to Escrow Agent specifying (a) that the Special Mandatory
Redemption is required and (b) the date fixed for the Special Mandatory
Redemption.
2. Appointment of and Acceptance by Escrow Agent. Trustee
hereby appoints Escrow Agent to serve as escrow agent hereunder. Escrow Agent
hereby accepts such appointment and, upon receipt by wire transfer of the
initial Escrow Funds in accordance with Section 3 below, agrees to hold, invest
and disburse the Escrow Funds in accordance with this Agreement.
3. Creation of Escrow Funds. On August 13, 2002, the
Underwriters will transfer the sum of $242,295,000 to Escrow Agent, by wire
transfer of immediately available funds, to the following account:
Wachovia Bank, National Association
ABA # 000000000
Account #5000000016439
Account Name: Newfield 8 3/8% Senior Subordinated Notes
Attn: CT/Branch 4880
4. Disbursement of Escrow Funds.
a. Completion of EEX Acquisition. If, on or prior to
December 31, 2002, the Company delivers to Escrow Agent
an Acquisition Certificate, Escrow Agent will disburse
the Escrow Funds according to the payment instructions
contained in the Acquisition Certificate.
b. Special Mandatory Redemption. The Escrow Funds will be
disbursed directly to the Paying Agent to effect the
Special Mandatory Redemption if (i) the Company
furnishes Escrow Agent with a Special Mandatory
Redemption Notice or (ii) Escrow Agent has not received
an Acquisition Certificate or a Special Mandatory
Redemption Notice on or prior to December 31, 2002. If
Escrow Agent receives the Special Mandatory Redemption
Notice, then Escrow Agent will disburse all the Escrow
Funds directly to the Paying Agent on or before 11:00
a.m., New York City time, on the date fixed for the
Special Mandatory Redemption specified in such notice.
If Escrow Agent does not receive an Acquisition
Certificate
2
or a Special Mandatory Redemption Notice on or prior to
December 31, 2002, it will disburse all the Escrow Funds
directly to the Paying Agent no later than 11:00 a.m., New
York City time, on the first Business Day following
December 31, 2002.
5. Suspension of Performance; Disbursement Into Court. If, at
any time, there exists any dispute with respect to the holding or disposition of
any portion of the Escrow Funds or any other obligations of Escrow Agent
hereunder, or if at any time Escrow Agent is unable to determine, to Escrow
Agent's sole satisfaction, the proper disposition of any portion of the Escrow
Funds or Escrow Agent's proper actions with respect to its obligations
hereunder, or if the Trustee has not within 30 days of the furnishing by Escrow
Agent of a notice of resignation under Section 7 hereof, appointed a successor
Escrow Agent to act hereunder, then Escrow Agent may, in its sole discretion,
take either or both of the following actions:
a. suspend the performance of any of its obligations
(including without limitation any disbursement obligations) under this
Agreement until such dispute or uncertainty has been resolved to the
sole satisfaction of Escrow Agent or until a successor Escrow Agent has
been appointed (as the case may be); provided however, that Escrow
Agent will continue to invest the Escrow Funds in accordance with
Section 6 hereof; and/or
b. petition (by means of an interpleader action or any other
appropriate method) any court of competent jurisdiction, in any venue
convenient to Escrow Agent, for instructions with respect to such
dispute or uncertainty, and, to the extent required by law, pay into
such court, for holding and disposition in accordance with the
instructions of such court, all Escrow Funds held by it.
Escrow Agent will have no liability to the Depositor, the Company, the
Noteholders or any other person with respect to any such suspension of
performance or disbursement into court, specifically including any liability or
claimed liability that may arise, or be alleged to have arisen, out of or as a
result of any delay in the disbursement of Escrow Funds or any delay in or with
respect to any other action required or requested of Escrow Agent.
6. Investment of Funds. Escrow Agent will invest and reinvest
the Escrow Funds in the Evergreen Institutional Treasury Money Market Fund. The
foregoing investments will be made in the name of Escrow Agent on behalf of the
holders of the Notes. Notwithstanding anything to the contrary contained herein,
Escrow Agent may, without notice to any person, sell or liquidate any of the
foregoing investments at any time if the proceeds thereof are required for any
release of funds permitted or required hereunder, and Escrow Agent will not be
liable or responsible for any loss, cost or penalty resulting from any such sale
or liquidation.
7. Resignation of Escrow Agent. Escrow Agent may resign from
the performance of its duties hereunder at any time by giving ten days' prior
written notice to Trustee. Such resignation will take effect upon the
appointment of a successor Escrow Agent as provided herein below. Upon any such
notice of resignation, Trustee will appoint a successor Escrow Agent hereunder,
which shall be a commercial bank, trust company or other financial institution
with a combined capital and surplus in excess of $250,000,000. On the acceptance
in writing of any
3
appointment as Escrow Agent hereunder by a successor Escrow Agent, such
successor Escrow Agent will succeed to and become vested with all the rights,
powers, privileges and duties of the retiring Escrow Agent, and the retiring
Escrow Agent will be discharged from its duties and obligations under this
Agreement, but will not be discharged from any liability for actions taken as
Escrow Agent hereunder prior to such succession. After any retiring Escrow
Agent's resignation, the provisions of this Agreement will inure to its benefit
as to any actions taken or omitted to be taken by it while it was Escrow Agent
under this Agreement. The retiring Escrow Agent will transmit all records
pertaining to the Escrow Funds and will pay the Escrow Funds to the successor
Escrow Agent, after making copies of such records as the retiring Escrow Agent
deems advisable.
8. Liability of Escrow Agent.
(a) Escrow Agent will have no liability or obligation with
respect to the Escrow Funds except for Escrow Agent's willful misconduct or
gross negligence. Escrow Agent's sole responsibility will be for the
safekeeping, investment and disbursement of the Escrow Funds in accordance with
the terms of this Agreement. Escrow Agent will have no implied duties or
obligations and will not be charged with knowledge or notice of any fact or
circumstance not specifically set forth herein. Escrow Agent may rely upon any
instrument, not only as to its due execution, validity and effectiveness, but
also as to the truth and accuracy of any information contained therein, which
Escrow Agent shall in good faith believe to be genuine, to have been signed or
presented by the person or parties purporting to sign the same and to conform to
the provisions of this Agreement. In no event will Escrow Agent be liable for
incidental, indirect, special, consequential or punitive damages. Escrow Agent
will not be obligated to take any legal action or commence any proceeding in
connection with the Escrow Funds, any account in which Escrow Funds are
deposited, this Agreement, or to appear in, prosecute or defend any such legal
action or proceeding. Escrow Agent may consult legal counsel selected by it in
the event of any dispute or question as to the construction of any of the
provisions hereof or of any other agreement or of its duties hereunder, or
relating to any dispute involving any party hereto, and will incur no liability
in acting in accordance with the opinion or instruction of such counsel.
(b) Escrow Agent is authorized, in its sole discretion, to
comply with orders issued or process entered by any court with respect to the
Escrow Funds, without determination by Escrow Agent of such court's jurisdiction
in the matter. If any portion of the Escrow Funds is at any time attached,
garnished or levied upon under any court order, or in case the payment,
assignment, transfer, conveyance or delivery of any of the Escrow Funds shall be
stayed or enjoined by any court order, or in case any order, judgment or decree
shall be made or entered by any court affecting the Escrow Funds or any part
thereof, then and in any such event, Escrow Agent is authorized, in its sole
discretion, to rely upon and comply with any such order, writ, judgment or
decree which it is advised by legal counsel selected by it is binding upon it
without the need for appeal or other action; and if Escrow Agent complies with
any such order, writ, judgment or decree, it will not be liable to any of the
parties hereto or to any other person or entity by reason of such compliance
even though such order, writ, judgment or decree may be subsequently reversed,
modified, annulled, set aside or vacated.
4
9. Indemnification of Escrow Agent. The Company has agreed to
indemnify Escrow Agent under the terms of a Fee and Indemnification Agreement
dated as of the date of this Agreement (the "Fee Agreement").
10. Fees and Expenses of Escrow Agent. The Company has agreed
to pay the fees and expenses of Escrow Agent for its services hereunder in
accordance with the Fee Agreement.
11. Notice. All notices and other communications hereunder
shall be in writing and shall be deemed to have been validly served, given or
delivered three days after deposit in the United States mails, by certified mail
with return receipt requested and postage prepaid, when delivered personally,
one day after delivery to any overnight courier, or when transmitted by
facsimile transmission facilities, and addressed to the party to be notified as
follows:
If to Trustee, at:
Wachovia Bank, National Association,
as Trustee
Corporate Trust Bond Administration
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Corporate Trust Administration
Facsimile Number: (000) 000-0000
With a copy to:
UBS Warburg LLC
0000 Xxxxxxxxxx Xxxx.
Xxxxxxxx, XX 00000
Attention: Xx Xxxxxxx, Managing Director High Yield
Capital Markets
Facsimile Number: (000) 000-0000
And:
Newfield Exploration Company
000 X. Xxx Xxxxxxx Xxxxxxx X, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxxxxx
Facsimile: (000) 000-0000
5
And:
Xxxxxx & Xxxxxx L.L.P.
2300 First City Tower
0000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx
Facsimile Number: (000) 000-0000
If to Escrow Agent, at:
Wachovia Bank, National Association,
as Escrow Agent
Corporate Trust Bond Administration
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attention: Corporate Trust Administration
Facsimile Number: (000) 000-0000
or to such other address as each party may designate for itself by like notice.
12. Third-Party Beneficiary; Amendment or Waiver. The Company,
holders of the Notes and their respective successors are intended third-party
beneficiaries of this Agreement. This Agreement may be changed, waived,
discharged or terminated only by a writing signed by Trustee and Escrow Agent;
provided, that any amendment to Section 4 also will require the consent of
holders of record of all the then outstanding Notes and the consent of the
Company. No delay or omission by any party in exercising any right with respect
to this Agreement will operate as a waiver. A waiver on any one occasion will
not be construed as a bar to, or waiver of, any right or remedy on any future
occasion.
13. Severability. To the extent any provision of this
Agreement is prohibited by or invalid under applicable law, such provision shall
be ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Agreement.
14. Governing Law. This Agreement shall be construed and
interpreted in accordance with the internal laws of the State of Texas without
giving effect to the conflict of laws principles thereof.
15. Entire Agreement. This Agreement constitutes the entire
agreement between the parties relating to the holding, investment and
disbursement of the Escrow Funds and sets forth in their entirety the
obligations and duties of Escrow Agent with respect to the Escrow Funds.
16. Binding Effect. All of the terms of this Agreement, as
amended from time to time, shall be binding upon, inure to the benefit of and be
enforceable by the respective successors and assigns of Depositor and Escrow
Agent.
6
17. Execution in Counterparts. This Agreement may be executed
in two or more counterparts, which when so executed shall constitute one and the
same agreement or direction.
18. Termination. Upon the first to occur of the disbursement
of all amounts in the Escrow Funds under Section 4 of this Agreement or the
disbursement of all amounts in the Escrow Funds into court under Section 5 of
this Agreement, this Agreement will terminate and Escrow Agent will have no
further obligation or liability whatsoever with respect to this Agreement or the
Escrow Funds.
19. Dealings. Escrow Agent and any stockholder, director,
officer or employee of Escrow Agent may buy, sell, and deal in any of the
securities of the Company and become pecuniarily interested in any transaction
in which the Company may be interested, and contract and lend money to the
Company and otherwise act as fully and freely as though it were not Escrow Agent
under this Agreement. Nothing in this Agreement will preclude Escrow Agent from
acting in any other capacity for the Company or for any other entity.
20. No Depositor Liability or Further Obligation. Escrow Agent
and Trustee each acknowledges and agrees that depositing the Escrow Funds with
Escrow Agent is the only obligation of the Depositor under this Agreement.
Escrow Agent and Trustee each agrees to hold the Depositor harmless with respect
to any claim, liability or cause of action under this Agreement.
7
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed under seal as of the date first above written.
DEPOSITOR
UBS WARBURG LLC
By:
-------------------------------------
Title:
-------------------------------------
By:
-------------------------------------
Title:
----------------------------------
(On behalf of each of the Underwriters)
WACHOVIA BANK, NATIONAL ASSOCIATION,
AS TRUSTEE
By:
-------------------------------------
Title:
----------------------------------
WACHOVIA BANK, NATIONAL ASSOCIATION,
AS ESCROW AGENT
By:
-------------------------------------
Title:
----------------------------------
8
Exhibit A
Form of Officer's Certificate
of
Newfield Exploration Company
This Certificate is being delivered to Escrow Agent under
Section 4(a) of the Escrow Agreement, dated as of August 13, 2002 (the
"Agreement"), among UBS WARBURG LLC, as representative of the several
underwriters under the Underwriting Agreement, WACHOVIA BANK, NATIONAL
ASSOCIATION, as trustee under the Indenture ("Trustee"), and WACHOVIA BANK,
NATIONAL ASSOCIATION, as escrow agent ("Escrow Agent"). Concurrently, this
Certificate also is being delivered to Trustee. Capitalized terms used but not
defined in this Certificate have the respective meanings specified in the
Agreement. The undersigned officer of the Company hereby certifies that:
(1) The Company simultaneously with the release of the Escrow
Funds to the Company will fully complete the acquisition of EEX Corporation (the
"EEX Acquisition") in conformity in all material respects with the terms and
with satisfaction of all material conditions of the Amended and Restated
Agreement and Plan Merger dated as of May 29, 2002 among the Company, Newfield
Operating Company and EEX Corporation (after giving effect to any amendment,
waiver or modification to any term or condition, which amendment, waiver or
modification does not have a material adverse effect on holders of the Notes);
and
(2) The terms of the transactions entered into and the
operations and assets and liabilities acquired and assumed in the EEX
Acquisition conform in all material respects to the descriptions thereof
contained in the prospectus supplement for the public offering of the Notes
dated August 8, 2002, subject only to any changes provided for, discussed or
contemplated in such prospectus supplement; and
Escrow Agent is hereby directed to disburse immediately all
Escrow Funds to, or for the account of the Company, as follows:
[ ___________________ *insert payment instructions]
IN WITNESS WHEREOF, Newfield Exploration Company, through the
undersigned officer, has signed this Certificate this _____ day of
________________, 2002.
NEWFIELD EXPLORATION COMPANY
By:
-------------------------------------
Name:
Title:
A-1
