EXHIBIT 4.3
CODA ENERGY, INC.
10 1/2% SENIOR SUBORDINATED NOTES DUE 2006
UNCONDITIONALLY GUARANTEED, JOINTLY AND SEVERALLY, BY THE
SUBSIDIARY GUARANTORS LISTED ON SCHEDULE II HERETO
______________________________
NOTE PURCHASE AGREEMENT
March 12, 1996
Goldman, Sachs & Co.
As Representative of the several Purchasers
named in Schedule I hereto.
c/o Goldman, Sachs & Co.
85 Broad Street
New York, New York 10004
Ladies and Gentlemen:
Coda Energy, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to the
Purchasers named in Schedule I hereto (the "Purchasers"), for whom Goldman,
Sachs & Co. is acting as representative (in such capacity, the "Representative")
hereunder, an aggregate of $110 million principal amount of the 10 1/2% Senior
Subordinated Notes due 2006 specified above (the "Notes") of the Company, which
are to be offered for resale by the Purchasers to qualified institutional buyers
(within the meaning of Rule 144A ("Rule 144A") under the Securities Act of 1933,
as amended (the "Act")) ("Qualified Institutional Buyers") in reliance upon Rule
144A and to institutional accredited investors (within the meaning of Rule
501(a)(1), (2), (3) or (7) under the Act (Regulation D))("Institutional
Accredited Investors"). The Notes will be fully and unconditionally guaranteed
(the "Guarantees") as to payment of principal, interest, liquidated damages and
premium, if any, on an unsecured senior subordinated basis, jointly and
severally, by each of the subsidiaries of the Company listed on Schedule II
hereto and any other subsidiary of the Company (collectively, the "Guarantors")
that executes a Guarantee in accordance with the provisions of the Indenture to
be dated as of March 18, 1996 (the "Indenture") among
the Company, the Guarantors and Texas Commerce Bank National Association, as
Trustee (the "Trustee").
1. The Company and each of the Guarantors represent and warrant to,
and agree with, each of the Purchasers that:
(a) A preliminary offering circular, dated February 22, 1996 (the
"Preliminary Offering Circular") and an offering circular, dated March 12,
1996 (the "Offering Circular"), have been prepared in connection with the
offering of the Notes. Any reference to the Preliminary Offering Circular
or the Offering Circular shall be deemed to refer to and include any
Additional Issuer Information (as defined in Section 5(f)) furnished by the
Company prior to the completion of the distribution of the Notes. The
Preliminary Offering Circular and the Offering Circular and any amendments
or supplements thereto did not and will not, as of their respective dates,
contain an untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by a Purchaser through
Goldman, Sachs & Co. expressly for use therein. Each of the Preliminary
Offering Circular and the Offering Circular, as of its date, conforms in
all material respects to the requirements of Rule 144A(d)(4) under the Act;
(b) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in the
Offering Circular any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order or decree,
except for any such loss or interference individually or in the aggregate
that would not have a material adverse effect on the condition (financial
or other), business, properties, future financial outlook or results of
operations of the Company and its subsidiaries taken as a whole (a
"Material Adverse Effect") or except as set forth in the Offering Circular;
neither the Company nor any of its subsidiaries has incurred any
liabilities or obligations, direct or contingent, or entered into any
transactions, not in the ordinary course of business, that are material to
the Company and its subsidiaries taken as a whole; and, since the
respective dates as of which information is given in the Offering Circular,
there has not been any material change, on a consolidated basis, in the
capital stock, short-term debt or long-term debt of the Company and its
subsidiaries or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the
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Company and its subsidiaries on a consolidated basis, otherwise than as set
forth or contemplated in the Offering Circular;
(c) The Company has been duly incorporated and is validly existing as
a corporation in good standing under the laws of its jurisdiction of
incorporation, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Offering Circular,
and has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other jurisdiction
in which it owns or leases properties or conducts any business so as to
require such qualification, or is subject to no material liability or
disability by reason of the failure to be so qualified in any such
jurisdiction;
(d) Each subsidiary of the Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with power and authority (corporate and
other) to own its properties and conduct its business as described in the
Offering Circular, and has been duly qualified as a foreign corporation for
the transaction of business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, or is subject to no material
liability or disability by reason of the failure to be so qualified in any
such jurisdiction;
(e) The Company has an authorized capitalization as set forth in the
Offering Circular, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully paid
and non-assessable; all of the issued shares of capital stock of each
subsidiary of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and (except as otherwise stated in the
Offering Circular) are owned directly or indirectly by the Company, free
and clear of all liens, encumbrances, equities or claims; and except as set
forth in the Offering Circular, there are no outstanding subscriptions,
rights, warrants, options, calls, convertible securities, commitments of
sale or liens related to or entitling any person to purchase or otherwise
to acquire any shares of the capital stock of, or other ownership interest
in, the Company or any of its subsidiaries;
(f) The Company and each of its subsidiaries has (A) good and
defensible title to their respective interests in oil and gas leases, free
and clear of any liens, mortgages, pledges, charges, defects or
encumbrances of any kind (collectively, "Liens"), except for those (i)
created pursuant to operating agreements, unitization and pooling
arrangements and crude oil and gas sales contracts that secure payment of
amounts not yet due and payable and which are of a nature and scope
customary in similar oil and gas drilling and producing
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operations or (ii) which neither individually or in the aggregate would
have a Material Adverse Effect and (B) good and defensible title to all the
other properties and assets reflected as owned by it in the Offering
Circular, free and clear of any Liens, except for those (i) described in
the Offering Circular, if any, or (ii) which in the aggregate would not
have a Material Adverse Effect. Except to the extent described in the
Offering Circular, the leases, options to lease, drilling concessions or
other arrangements held by the Company and its subsidiaries reflect in all
material respects the right of the Company and its subsidiaries to develop
and exploit their properties, and the manner in which the Company and its
subsidiaries acquired or otherwise procured such leases, options to lease,
drilling concessions and other arrangements was generally consistent with
standard industry practices for acquiring or procuring leases to explore
acreage for hydrocarbons. The Company and each of its subsidiaries,
respectively, has complied in all respects with the terms of oil and gas
leases in which each purports to own an interest, and no claim has been
asserted by any person or entity adverse to the rights of the Company or
any of its subsidiaries as lessee or sublessee under any of such leases or
questioning its rights to the continued possession of the leased premises
under any such lease except for such noncompliance as would not
individually or in the aggregate have a Material Adverse Effect. The
concessions, reservations, licenses, permits and rights to hydrocarbons
held by the Company and each of its subsidiaries are valid, subsisting and
enforceable with such exceptions as are described in the Offering Circular
or which in the aggregate would not have a Material Adverse Effect. Except
as disclosed in the Offering Circular, the Company and each of its
subsidiaries own or lease or have the right to use or enjoy the benefits of
all such properties as are necessary to their respective operations as now
conducted.
(g) This Agreement has been duly authorized, executed and delivered
by the Company and the Guarantors and constitutes a valid and legally
binding agreement of the Company and the Guarantors, enforceable against
the Company and the Guarantors in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws of general applicability relating to or affecting creditor's
rights, to general principles of equity (whether considered in a proceeding
in equity or at law) and, as to rights of indemnification, to principles of
public policy or federal or state securities laws relating thereto;
(h) The Notes and the notes having terms identical to the Notes (the
"Exchange Notes") to be offered in exchange for the Notes (the "Exchange
Offer") have been duly authorized by the Company and, when issued and
delivered pursuant to this Agreement (and, as to the Exchange Notes and the
Registration Rights Agreement) and duly authenticated by the Trustee under
the Indenture, will have been duly executed, authenticated, issued and
delivered and will constitute
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valid and legally binding obligations of the Company entitled to the
benefits provided by the Indenture under which they are to be issued, which
Notes, Exchange Notes and Indenture will be substantially in the form
delivered to you on the date hereof; the Indenture has been duly authorized
by the Company and the Guarantors and will be in a form that would meet the
requirements for qualification under the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), and, when executed and delivered by
the Company, the Guarantors and the Trustee, the Indenture will constitute
a valid and legally binding instrument, enforceable against the Company and
the Guarantors in accordance with its terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors' rights and to
general principles of equity (whether considered in a proceeding in equity
or at law); and the Notes and the Indenture and the Exchange Notes, when
issued, will conform in all material respects to the descriptions thereof
in the Offering Circular;
(i) The registration rights agreement (the "Registration Rights
Agreement"), to be dated the Time of Delivery (as defined below), has been
duly authorized by the Company and the Guarantors and, when duly executed
and delivered by the Company and the Guarantors will be the valid and
legally binding obligation of the Company and the Guarantors, enforceable
against the Company and the Guarantors in accordance with its terms,
subject, as to enforcement, to bankruptcy, insolvency, reorganization,
moratorium and other laws of general applicability relating to or affecting
creditor's rights, to general principles of equity (whether considered in a
proceeding in equity or at law) and, as to rights of indemnification, to
principles of public policy or federal or state securities laws relating
thereto;
(j) The Credit Agreement (as defined in the Offering Circular) has
been duly and validly authorized by the Company and the Guarantors (except
for Electra Resources, Inc.) and is the valid and legally binding
obligation of the Company and the Guarantors (except for Electra Resources,
Inc.), enforceable against the Company and the Guarantors (except for
Electra Resources, Inc.) in accordance with its terms, subject, as to
enforcement, to bankruptcy, insolvency, reorganization, moratorium and
other laws of general applicability relating to or affecting creditor's
rights and to general principles of equity (whether considered in a
proceeding in equity or at law);
(k) The Guarantees of the Notes have been duly authorized by the
Guarantors, and, when executed and delivered in accordance with the terms
of the Indenture and when the Notes have been issued and authenticated in
accordance with the terms of the Indenture and delivered to and paid for by
the Purchasers in accordance with the terms of this Agreement, will be the
valid and
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legally binding obligation of the Guarantors, enforceable against the
Guarantors in accordance with their terms, subject, as to enforcement, to
bankruptcy, insolvency, reorganization, moratorium and other laws of
general applicability relating to or affecting creditors' rights and to
general principles of equity (whether considered in a proceeding in equity
or at law). The Guarantees of the Notes, when issued, will conform in all
material respects to the description thereof in the Offering Circular;
(l) The guarantees of the Exchange Notes (the "Exchange Note
Guarantees") have been duly authorized by the Guarantors, and, when
executed and delivered in accordance with the terms of the Indenture and
the Registration Rights Agreement, will be the valid and legally binding
obligation of the Guarantors, enforceable against the Guarantors in
accordance with their terms, subject, as to enforcement, to bankruptcy,
insolvency, reorganization, moratorium and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity (whether considered in a proceeding in equity or at
law). The Exchange Note Guarantees, when issued, will conform in all
material respects to the description thereof in the Offering Circular;
(m) The Company and the Guarantors have all requisite corporate power
and authority to execute, deliver and perform their obligations under this
Agreement, the Indenture, the Notes, the Guarantees, the Registration
Rights Agreement, the Exchange Notes and the Exchange Note Guarantees
(collectively, the "Operative Documents") to which they are a party and to
consummate the transactions contemplated hereby and thereby, including
without limitation the corporate power and authority to issue, sell and
deliver the Notes and the Exchange Notes and to issue the Guarantees and
the Exchange Note Guarantees, as applicable, as provided herein and
therein;
(n) None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Notes, the issuance of the
Guarantees, the application of the proceeds from the issuance and sale of
the Notes and the consummation of the transactions contemplated hereby and
thereby as set forth in the Offering Circular, will violate Section 7 of
the Exchange Act, or any regulation promulgated thereunder, including,
without limitation, Regulation G, T, U, or X promulgated by the Board of
Governors of the Federal Reserve System;
(o) Prior to the date hereof, none of the Company or any of the
Guarantors or any Person acting on behalf of any of them has taken any
action that is designed to or that has constituted or that might have been
expected to cause or result in stabilization or manipulation of the price
of the Notes;
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(p) The issuance and sale of the Notes and the issuance of the
Guarantees, the issuance of the Exchange Notes and the issuance of the
Exchange Note Guarantees in the Exchange Offer, and the compliance by the
Company and the Guarantors with all of the provisions of this Agreement and
the other Operative Documents and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach or violation of any of the terms and provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, sale/leaseback
agreement, loan agreement, or other similar financing agreement or
instrument or other agreement or instrument to which the Company or any of
its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject which conflict, breach,
violation or default would have a Material Adverse Effect or would have a
material adverse effect on the offering of the Notes, the Exchange Offer or
the consummation of the transactions contemplated hereby or by the other
Operative Documents; nor will such action result in any violation of the
provisions of the Certificate of Incorporation, Articles of Incorporation
or By-laws of the Company or any of its subsidiaries; nor will such action
result in any violation of the provisions of any statute or any order, rule
or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties, other than any such violation that would not have a Material
Adverse Effect; and no consent, approval, authorization, order,
registration, filing or qualification of or with any such court or
governmental agency or body is required for the issuance and sale of the
Notes or the issuance of the Guarantees or the issuance of the Exchange
Notes or the issuance of the Exchange Note Guarantees in the Exchange Offer
or the consummation by the Company or the Guarantors of the transactions
contemplated by this Agreement or the other Operative Documents, except for
(i) the filing of a registration statement by the Company with the
Securities and Exchange Commission (the "Commission") pursuant to the Act
pursuant to Section 5(g) hereof, (ii) the filing of a notice on Form D by
the Company with the Commission pursuant to Section 5(i) hereof, (iii) such
consents, approvals, authorizations, registrations or qualifications as may
be required under state securities or Blue Sky laws in connection with the
purchase and distribution of the Notes by the Purchasers, (iv) such
approvals, registrations and qualifications as may be required under the
Act, the Trust Indenture Act, and state securities or Blue Sky laws in
connection with the Exchange Offer or resale registration contemplated by
the Offering Circular and described in the Registration Rights Agreement,
and (v) such consents, approvals, authorizations, registrations, filings or
qualifications as have been obtained or made or of which the failure to
obtain would not have a Material Adverse Effect or a material adverse
effect on the offering of the Notes, the Exchange Offer or the consummation
of the transactions contemplated hereby or by the other Operative
Documents;
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(q) The Company and each of its subsidiaries have complied in all
respects with all laws, regulations and orders applicable to it or its
businesses other than violations which would not have a Material Adverse
Effect;
(r) Neither the Company nor any of its subsidiaries is in violation
of its respective Certificate of Incorporation, Articles of Incorporation
or By-laws; neither the Company nor any of its subsidiaries is in default
in the performance or observance of any obligation, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which it is a party or by which it or
any of its properties may be bound, other than any such default that would
not have a Material Adverse Effect, and no other party under any such
agreement or instrument to which either the Company or any of its
subsidiaries is a party is, to the knowledge of any executive officer of
the Company or any Guarantor after reasonable inquiry, in default in any
material respect thereunder, other than any such default that would not
have a Material Adverse Effect;
(s) Except as would not, individually or in the aggregate, have a
Material Adverse Effect, (i) the Company and each of its subsidiaries has
all certificates, consents, exemptions, orders, permits, licenses,
authorizations, or other approvals (each, an "Authorization") of and from,
and has made all declarations and filings with, all Federal, state, local
and other governmental authorities, all self-regulatory organizations and
all courts and other tribunals, necessary or required to engage in the
business currently conducted by it in the manner described in the Offering
Circular, (ii) all such Authorizations are valid and in full force and
effect and (iii) the Company and each of its subsidiaries is in compliance
in all material respects with the terms and conditions of all such
Authorizations and with the rules and regulations of the regulatory
authorities and governing bodies having jurisdiction with respect thereto;
(t) The statements set forth in the Offering Circular under the
caption "Description of Notes" insofar as they purport to constitute a
summary of the terms of the Notes and under the captions "Business--
Regulation," "Business--Environmental Matters" and "Description of Other
Indebtedness," insofar as they purport to describe the provisions of the
laws and documents referred to therein, are accurate and complete in all
material respects;
(u) Other than as set forth in the Offering Circular, there are no
legal or governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property of the Company or any
of its subsidiaries is the subject which could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect, to
interfere with or adversely affect the issuance and sale of the Notes or
the issuance of the Guarantees or
8
to affect the validity of any Operative Document or the Credit Agreement;
and, to the knowledge of any executive officer of the Company or any
Guarantor after reasonable inquiry, no such proceedings are threatened
overtly or contemplated by governmental authorities or threatened overtly
by others;
(v) When the Notes and the Guarantees are issued and delivered
pursuant to this Agreement, no Notes or Guarantees will be of the same
class (within the meaning of Rule 144A under the Act) as securities which
are listed on a national securities exchange registered under Section 6 of
the Exchange Act or quoted in a U.S. automated inter-dealer quotation
system;
(w) Neither the Company nor any of its subsidiaries is, and after
giving effect to the offering and sale of the Notes and the issuance of the
Guarantees, will be, an "investment company," or an entity "controlled" by
an "investment company," as such terms are defined in the United States
Investment Company Act of 1940, as amended (the "Investment Company Act");
(x) None of the Company or any of its subsidiaries or any person
acting on their behalf has sold, offered for sale, solicited offers to buy
or otherwise negotiated in respect of any security (as defined in the Act)
that is or will be integrated with the sale of the Notes in a manner that
would require registration under the Act of the Notes; and none of the
Company or any of its subsidiaries (other than the Purchasers) or any
person acting on their behalf (other than the Purchasers) has offered or
sold or will offer or sell any of the Notes by means of any general
solicitation or general advertising within the meaning of Rule 502(c) under
the Act;
(y) The Company and the Guarantors will take reasonable precautions
designed to insure that any offer or sale, direct or indirect, in the
United States or to any U.S. person (as defined in Rule 902 under the Act)
of any Notes, Guarantees or any substantially similar security issued by
the Company or any Guarantor, within six months subsequent to the date on
which the distribution of the Notes has been completed (as notified to the
Company by Goldman, Sachs & Co.), is made under restrictions and other
circumstances reasonably designed not to affect the status of the offer and
sale of the Notes in the United States and to U.S. persons contemplated by
this Agreement as transactions exempt from the registration provisions of
the Act;
(z) Neither the Company nor any of its affiliates does business with
the government of Cuba or with any person or affiliate located in Cuba
within the meaning of Section 517.075, Florida Statutes;
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(aa) The consolidated historical financial statements, together with
related schedules and notes, set forth in the Offering Circular fairly
present the consolidated financial position and condition of the Company
and its subsidiaries at the respective dates indicated and the results of
their operations and their cash flows for the respective periods indicated,
in accordance with generally accepted accounting principles consistently
applied throughout such periods. The pro forma financial statements
contained in the Offering Circular have been prepared on a basis consistent
with such historical statements, except as described in such pro forma
financial statements and except for the pro forma adjustments specified
therein, and give effect to assumptions made on a reasonable basis and
present fairly the historical and proposed transactions contemplated by
this Agreement, the other Operative Documents, the Credit Agreement and the
Agreement and Plan of Merger dated as of October 30, 1995, among the
Company, Coda Acquisition, Inc. and Joint Energy Development Investments
Limited Partnership, as amended. The other financial and statistical
information and data included in the Offering Circular, historical and pro
forma, are, in all material respects, accurately presented and prepared on
a basis consistent with such financial statements and the books and records
of the Company except as otherwise specifically stated in the Offering
Circular;
(ab) Except as set forth in the Offering Circular, neither the Company
nor any of its subsidiaries (i) has violated any applicable existing
federal, state, local or international laws and regulations relating to
protection of human health or the environment or imposing liability or
standards of conduct concerning any Hazardous Material ("Environmental
Laws"), lacks any permits, licenses or other approvals required of them
under applicable Environmental Laws or is violating any term or condition
of any such permit, license or approval, or (ii) owns or occupies any real
property on which Hazardous Substances have been released, or which may
reasonably be expected to be adversely affected by a release of Hazardous
Substances released at another location, except as to clauses (i) and (ii),
for such instances of noncompliance or releases of Hazardous substances
which, either singly or in the aggregate, would not have a Material Adverse
Effect. The term "Hazardous Material" means (A) any "hazardous substance"
as defined by the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended ("CERCLA"), (B) any "hazardous waste" as
defined by the Resource Conservation and Recovery Act, as amended, (C) any
petroleum or petroleum product, (D) any polychlorinated biphenyl, and (E)
any pollutant or contaminant or hazardous, dangerous or toxic chemical,
material, waste or substance regulated under or within the meaning of any
other law relating to protection of human health or the environment or
imposing liability or standards of conduct concerning any such chemical
material, waste or substance. The term "release" shall have the same
meaning given to it under CERCLA, 42 U.S.C. (S) 9601(22);
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(ac) The Company and each of its subsidiaries owns or possesses or has
the right to use the patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures), trademarks, service marks and trade names (collectively, the
"Intellectual Property") presently employed by it in connection with, and
material to, individually or in the aggregate, the operation of the
businesses now operated by it, and neither the Company nor any of its
subsidiaries has received any notice of infringement of or conflict with
asserted rights of others with respect to the foregoing which, individually
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would result in a Material Adverse Effect. The use of such
Intellectual Property in connection with the business and operations of the
Company and its subsidiaries does not infringe on the rights of any person,
except as would not, individually or in the aggregate, result in a Material
Adverse Effect;
(ad) All tax returns required to be filed by the Company or its
subsidiaries in all jurisdictions have been timely and duly filed, other
than those filings being contested in good faith or except where the
failure to so file any such returns could not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect. There
are no tax returns of the Company or its subsidiaries that are currently
being audited by state, local or federal taxing authorities or agencies
(and with respect to which the Company or its subsidiaries has received
notice), where the findings of such audit, if adversely determined, would
result in a Material Adverse Effect. All taxes, including withholding
taxes, penalties and interest, assessments, fees and other charges due or
claimed to be due from such entities have been paid, other than those being
contested in good faith and for which adequate reserves have been provided
or those currently payable without penalty or interest or except if the
failure to so pay could not reasonably be expected to have a Material
Adverse Effect;
(ae) The Company and each of its subsidiaries maintains insurance
covering its properties, operations, personnel and businesses which insures
against such losses and risks as are adequate in accordance with its
reasonable business judgment. Neither the Company nor any of its
subsidiaries has received notice from any insurer or agent of such insurer
that substantial capital improvements or other expenditures will have to be
made in order to continue such insurance. All such insurance is outstanding
and duly in force on the date hereof and will be outstanding and duly in
force at the Time of Delivery (as defined below);
(af) No general labor dispute with the employees of the Company or its
subsidiaries exists or, to the knowledge of any executive officer of the
Company or any Guarantor after reasonable inquiry, is imminent; and neither
the Company
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nor any Guarantor is aware of any existing or imminent general labor
disturbance by the employees of any of its principal suppliers,
manufacturers or contractors which could reasonably be expected to have a
Material Adverse Effect;
(ag) There are no holders of securities of the Company or any
Guarantor who, by reason of the execution of this Agreement or any other
Operative Document by the Company or the Guarantors, as the case may be, or
the consummation of the transactions contemplated hereby and thereby, have
the right to request or demand the Company or any Guarantor to register
under the Act or analogous foreign laws and regulations any securities held
by them (other than pursuant to the Registration Rights Agreement);
(ah) The Company and each of the Guarantors maintains a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for assets;
(iii) access to financial assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect thereto;
(ai) Ernst & Young LLP, who have audited certain financial statements
of the Company and its subsidiaries, are independent public accountants as
defined by the Act and the rules and regulations of the Commission
thereunder;
(aj) The present fair saleable value of the assets of the Company and
its subsidiaries, taken as a whole, exceeds the amount that will be
required to be paid on or in respect of the existing debts and other
liabilities (including the maximum amount of liability that may reasonably
be expected to result from contingent liabilities) of the Company and its
subsidiaries as they become absolute and matured. The assets of the Company
and its subsidiaries, taken as a whole, do not constitute unreasonably
small capital to carry out their business as conducted or as proposed to be
conducted. The Company does not intend to, or believe that it will, incur
debts beyond its ability to pay such debts as they mature. The Company does
not intend to permit any of its subsidiaries to incur debts beyond their
respective ability to pay such debts as they mature. Upon the issuance of
the Notes and the Guarantees, the present fair saleable value of the assets
of the Company and its subsidiaries, taken as a whole, will exceed the
amount that will be required to be paid on or in respect of their existing
debts and other liabilities (including the maximum amount of liability that
may reasonably be expected to result from contingent liabilities) as they
become absolute and
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matured, the assets of the Company and its subsidiaries, taken as a whole,
will not constitute unreasonably small capital to carry out their business
as now conducted or as proposed to be conducted, including the capital
needs of the Company and its subsidiaries, taking into account the
projected capital requirements and capital availability of the Company and
its subsidiaries;
(ak) Each certificate signed by any officer of the Company or any
Guarantor and delivered to the Purchasers or counsel for any of the
Purchasers shall be deemed to be a representation and warranty only by such
Company or such Guarantor, as the case may be, to the Purchasers as to the
matters covered thereby; and
(al) Lee Keeling and Associates, Inc. ("Keeling") is an independent
petroleum engineer; the Purchasers have received from Keeling a true and
correct copy of its reserve report with respect to the Company dated
January 1, 1996 (the "Reserve Report"); all information and production data
provided to Keeling for the preparation of the Reserve Report were true and
correct in all material respects as of the date provided and the
assumptions provided by the Company or any Guarantor to Keeling and used by
Keeling in the preparation of the Reserve Report were reasonable as of the
date provided; and the Reserve Report and the letter from Keeling to the
Company with respect thereto (the "Keeling Letter") has been reviewed, and
accepted as having a reasonable basis, by the Company and the Guarantors
and the Keeling Letter has been included in the Offering Circular in good
faith by the Company.
The Company and the Guarantors acknowledge that the Purchasers and, for purposes
of the opinions to be delivered to the Purchasers pursuant to Section 7 hereof,
counsel for the Company and the Guarantors and counsel for any of the
Purchasers, will rely upon the accuracy and truth of the foregoing
representations and hereby consent to such reliance.
2. Subject to the terms and conditions herein set forth, the Company
agrees to issue and sell to each of the Purchasers, and each of the Purchasers
agrees to purchase from the Company, at a purchase price of 97.5% of the
principal amount of the Notes, the principal amount of Notes set forth opposite
the name of such Purchaser in Schedule I hereto. Immediately following
consummation of the transactions contemplated hereby to occur at the Time of
Delivery, the Purchasers hereby agree, severally and not jointly, to reimburse
the Company an aggregate of $500,000, representing costs and expenses incurred
by the Company in connection with the transactions contemplated hereby and that
the Company shall not be required to submit documentation supporting the
incurrence by it of such $500,000 of expenses. The obligation of each of the
Purchasers under the preceding sentence will be in proportion
13
to the principal amount of Notes set forth opposite their respective names in
Schedule I hereto.
3. The several Purchasers propose to offer the Notes for sale upon the
terms and conditions set forth in this Agreement and the Offering Circular and
each Purchaser hereby represents and warrants to, and agrees with, the Company
that:
(a) It will offer and sell the Notes only to: (i) persons who it
reasonably believes are Qualified Institutional Buyers within the meaning of
Rule 144A under the Act in transactions meeting the requirements of Rule 144A or
(ii) institutions which it reasonably believes are Institutional Accredited
Investors within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Act
and who, as purchasers, have executed and delivered to the Purchasers copies of
the letter set forth in Annex A to the Offering Circular;
(b) It is an Institutional Accredited Investor; and
(c) It will not offer or sell the Notes by any form of general
solicitation or general advertising, including but not limited to the methods
described in Rule 502(c) under the Act.
Goldman, Sachs & Co. further agrees to inform the Company with respect
to the progress of the distribution of the Notes from time to time upon the
reasonable request of the Company.
4. (a) The Notes to be purchased by each Purchaser hereunder will be
represented by one Global Note in book-entry form which will be deposited by or
on behalf of the Company with The Depository Trust Company ("DTC") or its
designated custodian. The Company will deliver the Notes to Goldman, Sachs & Co.
against payment by or on behalf of each Purchaser of the purchase price therefor
by wire transfer to or at the direction of the Company of Federal (same day)
funds, by causing DTC to credit the Notes to the account of Goldman, Sachs & Co.
at DTC. The Company will cause the certificates representing the Notes to be
made available to Goldman, Sachs & Co. for checking at least twenty-four hours
prior to the Time of Delivery (as defined below) at the office of DTC or its
designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be 9:30 a.m., New York City time, on March 18, 1996
or such other time and date as Goldman, Sachs & Co. and the Company may agree
upon in writing. Such time and date are herein called the "Time of Delivery."
(b) The documents to be delivered at the Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the cross-
receipt for the Notes and any additional documents requested by the Purchasers
pursuant to
14
Section 7(k) hereof, will be delivered at such time and date at the offices of
Latham & Watkins, 885 Third Avenue, Suite 1000, New York, New York 10022 (the
"Closing Location"), and the Notes will be delivered at the Designated Office,
all at the Time of Delivery. A meeting will be held at the Closing Location at
1:00 p.m., New York City time, on the New York Business Day immediately
preceding the Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 4, "New York
Business Day" shall mean each Monday, Tuesday, Wednesday, Thursday and Friday
which is not a day on which banking institutions in New York are generally
authorized or obligated by law or executive order to close.
5. The Company and the Guarantors, jointly and severally, covenant and
agree with each of the Purchasers:
(a) To prepare the Offering Circular in a form reasonably approved by
you; to make no amendment or supplement to the Offering Circular which shall be
reasonably disapproved by you promptly after reasonable notice thereof and to
furnish you with such number of copies thereof as you may reasonably request and
to consent to the use of the Preliminary Offering Circular and the Offering
Circular, and any amendments or supplements thereto, by you in connection with
resales in accordance with Section 3 of this Agreement until such time as the
Exchange Offer is Consummated (as defined below). The Exchange Offer shall be
deemed Consummated for the purposes of this Agreement upon the occurrence of (i)
the filing and effectiveness of a registration statement under the Act relating
to the Exchange Notes to be issued in the Exchange Offer, (ii) the maintenance
of such registration statement continuously effective and the keeping of the
Exchange Offer open for a period not less than the minimum period required
pursuant to Section 3(b) of the Registration Rights Agreement and (iii) the
delivery by the Company to the Registrar under the Indenture of Exchange Notes
in the same aggregate principal amount as the aggregate principal amount of
Notes that were tendered by holders thereof pursuant to the Exchange Offer.
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Notes for offering and sale under the
securities or Blue Sky laws of such jurisdictions as you may reasonably request
and to comply with such laws so as to permit the continuance of sales and
dealings therein in such jurisdictions until the Exchange Offer is Consummated,
provided that in connection therewith neither the Company nor any Guarantor
shall be required to qualify as a foreign corporation, to file a general consent
to service of process or to subject itself to general taxation in any such
jurisdiction;
(c) Until such time as the Exchange Offer is Consummated, to furnish
the Purchasers with copies of the Offering Circular and each amendment or
supplement thereto, together with the independent accountants' report(s) in the
Offering Circular and
15
any amendment or supplement containing amendments to the financial statements
covered by such report(s), signed by the accountants, and additional copies
thereof in such quantities as you may from time to time reasonably request; and
if, at any time prior to the Consummation of the Exchange Offer, any event shall
have occurred as a result of which the Offering Circular as then amended or
supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such Offering
Circular is delivered, not misleading, or, if for any other reason it shall be
necessary or desirable during such same period to amend or supplement the
Offering Circular, to notify you as soon as reasonably possible; and upon your
request to prepare and furnish without charge to each of the Purchasers as many
copies as you may from time to time reasonably request of an amended Offering
Circular or a supplement to the Offering Circular which will correct such
statement or omission or effect such necessary or desirable change;
(d) During the period beginning from the date hereof and continuing
until the date 180 days after the Time of Delivery, not to offer, sell, contract
to sell or otherwise dispose of, except as provided hereunder, any securities of
the Company or any Guarantor that are substantially similar to the Notes or the
Guarantees, including but not limited to any securities that are convertible
into or exchangeable for, or that represent the right to receive, Notes,
Guarantees or any such substantially similar securities without your prior
written consent;
(e) Not to be or become, at any time prior to the expiration of the
earliest to occur of (i) three years after the Time of Delivery and (ii) such
time as the Notes are exchanged for registered Exchange Notes pursuant to the
Exchange Offer and the Notes are no longer outstanding, an open-end investment
company, unit investment trust, closed-end investment company or face-amount
certificate company that is or is required to be registered under Section 8 of
the Investment Company Act;
(f) To use its best efforts to file in a timely manner all reports
and other documents required to be filed by it pursuant to Section 13 or 15(d)
of the Exchange Act, and, at any time when the Company is not subject to Section
13 or 15(d) of the Exchange Act, for the benefit of holders and beneficial
owners from time to time of Notes, to furnish at the Company's expense, upon
request, to holders and beneficial owners of Notes and prospective purchasers of
Notes information (the "Additional Issuer Information") satisfying the
requirements of subsection (d)(4)(i) of Rule 144A under the Act (or any
successor provision thereto, in each case as may be amended from time to time);
(g) To execute and deliver the Registration Rights Agreement in the
form previously agreed upon, to comply with all provisions and obligations of,
and to cause the Exchange Offer to be made in the appropriate form as
contemplated by, the
16
Registration Rights Agreement, and to comply with all applicable federal and
state securities laws in connection with the Exchange Offer;
(h) If requested by you, the Company will use its best efforts to
cause the Notes to be eligible for the National Association of Securities
Dealers, Inc. Automated Quotation System - PORTAL ("PORTAL");
(i) To file with the Commission, not later than 15 days after the
Time of Delivery, five copies of a notice on Form D under the Act (one of which
will be manually signed by a person duly authorized by the Company); to
otherwise comply with the requirements of Rule 503 under the Act; and to furnish
promptly to you evidence of each such required timely filing (including a copy
thereof);
(j) During a period of five years from the date of the Offering
Circular, to furnish to you copies of all reports or other communications
(financial or other) generally furnished to holders of the Notes and to deliver
to you as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission under the Exchange Act or
any securities exchange on which the Notes, the Guarantees or any class of
securities of the Company or any Guarantor is listed;
(k) Prior to the expiration of the earlier to occur of (i) three
years after the Time of Delivery and (ii) such time as the Notes are exchanged
for registered Exchange Notes pursuant to the Exchange Offer and the Notes are
no longer outstanding, the Company and the Guarantors will not resell any of the
Notes which constitute "restricted securities" under Rule 144 that have been
reacquired by any of them;
(l) To comply with all agreements set forth in the representation
letter of the Company to DTC relating to the approval of the Notes by DTC for
"book-entry" transfer;
(m) To advise the Purchasers promptly, and, if requested by the
Purchasers, confirm such advice in writing, of the issuance by any state
securities commission of any stop order suspending the qualification or
exemption of any of the Notes or Guarantees for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by any state
securities commission or other regulatory authority, and to use its best efforts
to prevent the issuance of any stop order or order suspending the qualification
or exemption of any of the Notes or Guarantees under any state securities or
Blue Sky laws, and if, at any time, any state securities commission or other
regulatory authority shall issue an order suspending the qualification or
exemption of any of the Notes or Guarantees under any state securities or Blue
Sky laws, to use its best efforts to obtain the withdrawal or lifting of such
order at the earliest possible time;
17
(n) To use the net proceeds received by the Company from the sale of
the Notes pursuant to this Agreement in the manner specified in the Offering
Circular under the caption "Use of Proceeds"; and
(o) Upon original issuance thereof by the Company, and until such
time as the same is no longer required under the applicable requirements of the
Act, the Notes (and all securities issued in exchange therefor or in
substitution thereof) shall bear the following legend:
"THE NOTES EVIDENCED HEREBY WERE ORIGINALLY ISSUED IN A TRANSACTION
EXEMPT FROM REGISTRATION UNDER SECTION 5 OF THE UNITED STATES
SECURITIES ACT OF 1933 (THE "SECURITIES ACT") AND THE NOTES
EVIDENCED HEREBY MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE
TRANSFERRED IN THE ABSENCE OF SUCH REGISTRATION OR AN APPLICABLE
EXEMPTION THEREFROM. EACH PURCHASER OF THE NOTES EVIDENCED HEREBY IS
HEREBY NOTIFIED THAT THE SELLER MAY BE RELYING ON THE EXEMPTION FROM
THE PROVISIONS OF SECTION 5 OF THE SECURITIES ACT PROVIDED BY RULE
144A THEREUNDER. THE HOLDER OF THE NOTES EVIDENCED HEREBY AGREES FOR
THE BENEFIT OF THE COMPANY THAT SUCH NOTES MAY NOT BE REOFFERED,
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT (A) BY THE INITIAL
INVESTOR (1) TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A UNDER
THE SECURITIES ACT PURCHASING FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT
OF A QUALIFIED INSTITUTIONAL BUYER IN A TRANSACTION MEETING THE
REQUIREMENTS OF RULE 144A, (2) IN AN OFFSHORE TRANSACTION COMPLYING
WITH RULE 903 OR RULE 904 OR REGULATION S UNDER THE SECURITIES ACT,
(3) PURSUANT TO AN EXEMPTION FROM REGISTRATION UNDER THE SECURITIES
ACT PROVIDED BY RULE 144 THEREUNDER (IF AVAILABLE), (4) TO THE
COMPANY OR (5) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER
THE SECURITIES ACT, (B) BY SUBSEQUENT INVESTORS, AS SET FORTH IN (A)
ABOVE AND, IN ADDITION, TO AN INSTITUTIONAL ACCREDITED INVESTOR IN A
TRANSACTION EXEMPT FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT, AND IN EACH CASE, IN ACCORDANCE WITH ALL APPLICABLE
LAWS OF THE STATES OF THE UNITED STATES AND (C) THE HOLDER WILL, AND
EACH SUBSEQUENT HOLDER IS REQUIRED TO, NOTIFY ANY PURCHASER FROM IT
OF THE NOTES EVIDENCED HEREBY OF THE RESALE RESTRICTIONS SET FORTH
IN (A) AND (B) ABOVE."
18
6. Whether or not the transactions contemplated by this Agreement are
consummated or this Agreement becomes effective or is terminated, the Company
and the Guarantors covenant and agree with the several Purchasers to pay or
cause to be paid the following: (i) the fees, disbursements and expenses of the
Company's and the Guarantors' counsel and accountants in connection with the
issuance of the Notes, the Guarantees, the Exchange Notes and the Exchange Note
Guarantees and all other expenses in connection with the preparation, printing
and filing of the Preliminary Offering Circular, the Offering Circular and any
prospectus and registration statement filed pursuant to Section 5(g) hereof and
any amendments and supplements thereto, and the mailing and delivery of copies
thereof to each of the Purchasers and dealers, if any; (ii) all expenses in
connection with the qualification of the Notes for offering and sale under state
securities laws as provided in Section 5(b) hereof, including the reasonable
fees and disbursements of Latham & Watkins, counsel for each of the Purchasers
in connection with such qualification and in connection with the Blue Sky and
legal investment surveys, which fees and disbursements will aggregate $15,000;
(iii) any fees charged by securities rating services for rating the Notes; (iv)
the cost of preparing and delivering the Notes and the Exchange Notes; (v) the
fees and expenses of the Trustee and any agent of the Trustee and the fees and
disbursements of counsel for the Trustee in connection with the Indenture, the
Notes and the Exchange Notes; (vi) any cost incurred in connection with the
designation of the Notes for trading in PORTAL; (vii) all fees and expenses in
connection with approval of the Notes by DTC for "book-entry" transfer; and
(viii) all other costs and expenses incurred by the Company or the Guarantors
incident to the performance of its obligations hereunder which are not otherwise
specifically provided for in this Section. It is understood, however, that
except as provided in this Section and Sections 8 and 10 hereof, each of the
Purchasers will pay all of its own costs and expenses, including the fees of its
counsel and transfer taxes on resale of any of the Notes by it.
7. The obligations of each Purchaser hereunder shall be subject, in its
discretion, to the condition that all representations and warranties and other
statements of the Company and the Guarantors herein are, at and as of the Time
of Delivery, true and correct, the condition that the Company and the Guarantors
shall have performed all of their obligations hereunder theretofore to be
performed, and the following additional conditions:
(a) The Purchasers shall not have advised the Company that the
Offering Circular, or any amendment or supplement thereto, contains an untrue
statement of fact that in the Purchasers' reasonable opinion is material, or
omits to state a fact that in the Purchasers' opinion is material and is
required to make the statements therein not misleading in light of the
circumstances under which they are made;
(b) Latham & Watkins, counsel for the Purchasers, shall have
furnished to you such opinion or opinions, dated the Time of Delivery, with
respect to such matters
19
as you may reasonably request, and Latham & Watkins shall have received such
papers and information as they may reasonably request to enable them to pass
upon such matters;
(c) Haynes and Boone, L.L.P., counsel for the Company and the
Guarantors, shall have furnished to you their written opinion, dated the Time of
Delivery, in form and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to
own its properties and conduct its business as described in the Offering
Circular;
(ii) The Company has an authorized capitalization as set forth
in the Offering Circular, and all of the issued shares of capital stock of
the Company have been duly authorized and validly issued and are fully paid
and non-assessable;
(iii) This Agreement has been duly authorized, executed and
delivered by the Company and the Guarantors;
(iv) The Notes being delivered on the date hereof have been
duly authorized and, when (a) executed, authenticated and issued in
accordance with the terms of the Indenture and (b) delivered to and paid
for by the Purchasers in accordance with the terms of this Agreement, will
be the valid and legally binding obligations of the Company entitled to the
benefits of the Indenture, subject, as to enforcement, to bankruptcy,
fraudulent transfer, insolvency, reorganization and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity (whether considered in a proceeding in equity or at
law);
(v) The Indenture has been duly authorized, executed and
delivered by the Company and the Guarantors and constitutes a valid and
legally binding instrument, enforceable against the Company and the
Guarantors in accordance with its terms, subject, as to enforcement, to
bankruptcy, fraudulent transfer, insolvency, reorganization and other laws
of general applicability relating to or affecting creditors' rights and to
general principles of equity (whether considered in a proceeding in equity
or at law); the Indenture is in a form which would meet, in all material
respects, the requirements for qualification under the Trust Indenture Act;
(vi) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and the Guarantors and
constitutes a
20
valid and legally binding obligation of the Company and the Guarantors,
enforceable against the Company and the Guarantors in accordance with its
terms, subject, as to enforcement, to bankruptcy, fraudulent transfer,
insolvency, reorganization, moratorium and other laws of general
applicability relating to or affecting creditors' rights, to general
principles of equity (whether considered in a proceeding in equity or at
law) and, as to rights of indemnification, to principles of public policy
or federal or state securities laws relating thereto;
(vii) The Exchange Notes have been duly authorized for issuance
by the Company, and when executed, authenticated and issued in accordance
with the terms of the Indenture, the Registration Rights Agreement and the
Exchange Offer, will be the valid and legally binding obligations of the
Company entitled to the benefits of the Indenture subject, as to
enforcement, to bankruptcy, fraudulent transfer, insolvency, reorganization
and other laws of general applicability relating to or affecting creditors'
rights and to general principles of equity (whether considered in a
proceeding in equity or at law);
(viii) The Guarantees of the Notes have been duly authorized,
executed and delivered by the Guarantors in accordance with the terms of
the Indenture and when the Notes have been executed, authenticated and
issued in accordance with the terms of the Indenture and delivered to and
paid for by the Purchasers in accordance with the terms of this Agreement,
will be the valid and legally binding obligation of the Guarantors,
enforceable against the Guarantors in accordance with their terms, subject,
as to enforcement, to bankruptcy, fraudulent transfer, insolvency,
reorganization, moratorium and other laws of general applicability relating
to or affecting creditors' rights and to general principles of equity
(whether considered in a proceeding in equity or at law). The Guarantees of
the Notes conform in all material respects to the description thereof in
the Offering Circular;
(ix) The Exchange Note Guarantees have been duly authorized by
the Guarantors in accordance with the terms of the Indenture and when the
Exchange Notes have been executed, authenticated and issued in accordance
with the terms of the Indenture and delivered to and paid for by the
Purchasers in accordance with the terms of this Agreement, will be the
valid and legally binding obligation of the Guarantors, enforceable against
the Guarantors in accordance with their terms, subject, as to enforcement,
to bankruptcy, fraudulent transfer, insolvency, reorganization, moratorium
and other laws of general applicability relating to or affecting creditors'
rights and to general principles of equity (whether considered in a
proceeding in equity or at law).
(x) The Company and the Guarantors have all requisite
corporate power to execute, deliver and perform their obligations under
this Agreement and
21
the other Operative Documents to which they are a party and to consummate
the transactions contemplated hereby and thereby, including without
limitation the corporate power to issue, sell and deliver the Notes and the
Exchange Notes and to issue the Guarantees and the Exchange Note
Guarantees, as applicable, as provided herein and therein;
(xi) None of the execution, delivery and performance of this
Agreement, the issuance and sale of the Notes, the issuance of the
Guarantees, the application of the proceeds from the issuance and sale of
the Notes and the consummation of the transactions contemplated thereby as
set forth in the Offering Circular will violate Section 7 of the Exchange
Act, or any regulation promulgated thereunder, including, without
limitation, Regulation G, T, U, or X promulgated by the Board of Governors
of the Federal Reserve System.
(xii) No consent, approval, authorization, order, registration
or qualification of or with any court or governmental agency or body is
required for the issuance and sale of the Notes or the issuance of the
Guarantees of the Notes or the issuance of the Exchange Notes or the
issuance of the Exchange Note Guarantees in the Exchange Offer or the
consummation by the Company or the Guarantors of the transactions
contemplated by this Agreement or the other Operative Documents, except for
(i) the filing of a registration statement by the Company with the
Commission pursuant to the Act pursuant to Section 5(g) hereof, (ii) the
filing of a notice on Form D by the Company with the Commission pursuant to
Section 5(i) hereof, (iii) such consents, approvals, authorizations,
registrations or qualifications as may be required under state securities
or Blue Sky laws in connection with the purchase and distribution of the
Notes by the Purchasers, (iv) such approvals, registrations and
qualifications as may be required under the Act, the Trust Indenture Act,
and state securities or Blue Sky laws in connection with the Exchange Offer
or resale registration contemplated by the Offering Circular and described
in the Registration Rights Agreement, and (v) such consents, approvals
authorizations, registrations or qualifications as have been obtained or
made; such counsel may state that the opinions set forth in this paragraph
are based upon consideration only of those statutes, rules and regulations
that, in such counsel's experience are normally applicable to transactions
such as those contemplated by the issuance and sale of the Notes, the
issuance of the Guarantees of the Notes, the issuance of the Exchange Notes
or the issuance of the Exchange Note Guarantees in the Exchange Offer, or
the consummation by the Company or the Guarantors of the transactions
contemplated by this Agreement or the other Operative Documents;
(xiii) The statements set forth in the Offering Circular under
the caption "Description of Notes," insofar as they purport to summarize
the terms of the Notes and the Indenture, and under the caption
"Description of Other
22
Indebtedness," insofar as they purport to describe the provisions of the
documents referred to therein, are materially accurate and fairly present
such documents in all material respects;
(xiv) Neither the Company nor any of its subsidiaries is an
"investment company", or an entity "controlled" by an "investment company",
as such terms are defined in the Investment Company Act;
(xv) No registration of the Notes under the Act, and no
qualification of an indenture under the Trust Indenture Act with respect
thereto, is required for the offer, sale and initial resale of the Notes by
the Purchasers in the manner contemplated by this Agreement and the
Offering Circular, other than any registration or qualification that may be
required in connection with the Exchange Offer contemplated by the Offering
Circular or in connection with the Registration Rights Agreement; and
(xvi) Each of the Preliminary Offering Circular and the Offering
Circular, as of its date, and each amendment or supplement thereto, as of
its date (except for the reserve data, financial statements and related
schedules and other financial information included therein, as to which no
opinion need be expressed), complied as to form in all material respects
with the requirements of Rule 144A of the Act.
In addition, such counsel shall state that they have participated
in conferences with officers and representatives of the Company and the
Guarantors, accountants of the Company and the Guarantors and
representatives of the Purchasers at which the contents of the Offering
Circular and related matters were discussed and, subject to the fact that
such counsel shall not assume any responsibility for and cannot guarantee
the accuracy, completeness or fairness of the statements contained in the
Offering Circular and shall have made no independent check or verification
thereof, on the basis of the foregoing, such counsel shall state that it
has no reason to believe that the Offering Circular and any further
amendments or supplements thereto made by the Company prior to the Time of
Delivery (other than the reserve data, financial statements and related
schedules and other financial information contained in the Offering
Circular, as to which such counsel need express no opinion) contained as of
its date or contains as of the Time of Delivery an untrue statement of a
material fact or omitted or omits, as the case may be, to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
23
(d) Joe Callaway, counsel for the Company and the Guarantors, shall
have furnished to you his written opinion, dated the Time of Delivery, in form
and substance satisfactory to you, to the effect that:
(i) The Company has been duly qualified to transact business
as a foreign corporation and is in good standing under the laws of each
jurisdiction (other than its jurisdiction of incorporation) in which it
owns or leases material property or conducts material business so as to
require such qualification, except where failure to be so qualified in any
such jurisdiction would not have a material adverse effect on the financial
position of the Company and its subsidiaries, taken as a whole;
(ii) Each subsidiary of the Company has been duly incorporated
and is validly existing as a corporation in good standing under the laws of
its jurisdiction of incorporation, with full corporate power and authority
to own its properties and conduct its business as described in the Offering
Circular; and has been duly qualified to transact business as a foreign
corporation and is in good standing under the laws of each other
jurisdiction in which it owns or leases material property or conducts
material business so as to require such qualification, except where the
failure to be so qualified in any such jurisdiction would not have a
material adverse effect on the financial position of the Company and its
subsidiaries, taken as a whole;
(iii) All of the issued shares of capital stock of each
subsidiary of the Company have been duly authorized and validly issued, are
fully paid and non-assessable, and except as otherwise stated in the
Offering Circular are owned of record by the Company directly or
indirectly, and, to such counsel's actual knowledge, the Company has not
received notice of any adverse claim;
(iv) The issuance and sale of the Notes and the issuance of the
Guarantees and the issuance of the Exchange Notes and the issuance of the
Exchange Note Guarantees in the Exchange Offer and the compliance by the
Company and the Guarantors with all of the provisions of this Agreement and
the other Operative Documents and the consummation of the transactions
herein and therein contemplated will not conflict with, violate or result
in a breach of any of the terms and provisions of, or constitute a default
under, any indenture, mortgage, deed of trust, sale/leaseback agreement,
loan agreement or other agreement or instrument to which the Company or any
of its subsidiaries is a party or to which any of the property or assets of
the Company or any of its subsidiaries is subject and, in either case, that
is actually known to such counsel and that is material to the Company and
its subsidiaries, taken as a whole, nor will such action result in any
violation of the provisions of the respective Certificate of Incorporation,
Articles of Incorporation or By-laws of the Company
24
or any of its subsidiaries or any United States statute, rule or regulation
or the Delaware General Corporation Law or any order of any court or
governmental agency or body having jurisdiction over the Company or any of
its subsidiaries or any of their properties, provided, however, that this
opinion does not address the securities laws of the United States, the
states thereof, and any other applicable jurisdiction;
(v) The statements set forth in the Offering Circular under
the captions "Business--Regulation" and "Business--Environmental Matters,"
insofar as they purport to describe the provisions of the laws referred to
therein, are materially accurate and complete in all material respects;
(vi) Other than as disclosed in the Offering Circular, there
are no legal or governmental proceedings pending or, to such counsel's
actual knowledge, overtly threatened to which the Company or any of its
subsidiaries is a party or of which any property of the Company or any of
its subsidiaries is the subject which could reasonably be expected,
individually or in the aggregate, to have a material adverse effect on the
current or future financial position or results of operations of the
Company and its subsidiaries, taken as a whole, to materially adversely
affect the issuance and sale of the Notes or the issuance of the Guarantees
or to materially affect the validity of any Operative Document; and, to
such counsel's actual knowledge, no such proceedings are threatened overtly
or contemplated by governmental authorities or threatened overtly by
others;
(vii) To such counsel's actual knowledge, neither the Company
nor any of its subsidiaries is in violation of its Certificate of
Incorporation, Articles of Incorporation or By-laws; or is in default in
the performance or observance of any obligation, covenant or condition
contained in any indenture, mortgage, deed of trust, loan agreement, lease
or other agreement or instrument to which it is a party or by which any of
its properties may be bound, in each case where any such default has a
material adverse effect on the financial position of the Company and its
subsidiaries, taken as a whole.
(viii) To such counsel's actual knowledge, except as set forth in
the Offering Circular, there are no outstanding subscriptions, rights,
warrants, options, calls, convertible securities, commitments of sale or
liens related to or entitling any person to purchase or otherwise to
acquire any shares of the capital stock of, or other ownership interest in,
the Company or any of its subsidiaries.
(ix) The Credit Agreement has been duly authorized, executed
and delivered by the Company and the Guarantors (except for Electra
Resources, Inc.) and constitutes a valid and legally binding obligation of
the Company and the Guarantors (except for Electra Resources, Inc.),
enforceable against the Company
25
and the Guarantors (except for Electra Resources, Inc.) in accordance with
its terms, subject, as to enforcement, to bankruptcy, fraudulent transfer,
insolvency, reorganization, moratorium and other laws of general
applicability relating to or affecting creditors' rights and to general
principles of equity (whether considered in a proceeding in equity or at
law);
In addition, such counsel shall state that he has participated in
conferences with officers and representatives of the Company and the Guarantors,
accountants of the Company and the Guarantors and representatives of the
Purchasers at which the contents of the Offering Circular and related matters
were discussed and, subject to the fact that such counsel shall not assume any
responsibility for and cannot guarantee the accuracy, completeness or fairness
of the statements contained in the Offering Circular and shall have made no
independent check or verification thereof, on the basis of the foregoing, such
counsel shall state that it has no reason to believe that the Offering Circular
and any further amendments or supplements thereto made by the Company prior to
the Time of Delivery (other than the reserve data, financial statements and
related schedules and other financial information contained in the Offering
Circular, as to which such counsel need express no opinion) contained as of its
date or contains as of the Time of Delivery an untrue statement of a material
fact or omitted or omits, as the case may be, to state a material fact necessary
to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(e) On the date of the Offering Circular prior to the execution of
this Agreement, Ernst & Young LLP shall have furnished to you a letter or
letters, dated the respective dates of delivery thereof, in the form previously
agreed upon. At the time of Delivery, Ernst & Young LLP shall have delivered an
additional letter confirming the matters set forth in the prior letter as of the
date not more than three days prior to the Time of Delivery, in form and
substance satisfactory to you;
(f) On the date of the Offering Circular prior to the execution of
this Agreement and also at the Time of Delivery, Keeling shall have furnished to
you a letter or letters, dated the respective dates of delivery thereof, in form
and substance satisfactory to you;
(g) (i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included in
the Offering Circular any loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Offering Circular, and (ii) since the
respective dates as of which information is given in the Offering Circular,
there shall not have been any change, on a consolidated basis, in the capital
stock or short-term or long-term debt of the Company and its subsidiaries or any
change, or any development involving a prospective change in or affecting the
26
general affairs, management, financial position, stockholders' equity or results
of operations of the Company or any of its subsidiaries, on a consolidated
basis, otherwise than as set forth or contemplated in the Offering Circular, the
effect of which, in any such case described in clause (i) or (ii), is in the
judgment of the Purchasers so material and adverse as to make it impracticable
or inadvisable to proceed with the offering or the delivery of the Notes on the
terms and in the manner contemplated in this Agreement and in the Offering
Circular;
(h) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the debt securities of the Company or any
Guarantor by any "nationally recognized statistical rating organization," as
that term is defined by the Commission for purposes of Rule 436(g)(2) under the
Act, and (ii) no such organization shall have publicly announced that it has
under surveillance or review, with possible negative implications, its rating of
any debt securities of the Company or any Guarantor;
(i) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or on the NASDAQ National Market
System; (ii) a general moratorium on commercial banking activities declared by
either Federal or New York State authorities; (iii) the outbreak or escalation
of hostilities involving the United States or the declaration by the United
States of a national emergency or war, if the effect of any such event specified
in this clause (iii), in the judgment of the Purchasers, makes it impracticable
or inadvisable to proceed with the offering or the delivery of the Notes on the
terms and in the manner contemplated in the Offering Circular; or (iv) the
occurrence of any material adverse change in financial, political or economic
conditions in the United States or elsewhere which, in the judgment of the
Purchasers, would materially and adversely affect the financial markets or the
markets for the Notes and other debt securities;
(j) The Notes shall have been designated for trading in PORTAL;
(k) The Company and the Guarantors shall have furnished or caused to
be furnished to you at the Time of Delivery certificates of officers of the
Company and the Guarantors satisfactory to you as to the accuracy of the
representations and warranties of the Company and the Guarantors herein at and
as of the Time of Delivery, as to the performance by the Company and the
Guarantors of all of their obligations hereunder to be performed at or prior to
the Time of Delivery, as to the matters set forth in subsection (g) of this
Section and as to such other matters as you may reasonably request;
(l) No stop order suspending the qualification or exemption from
qualification of any of the Notes in any jurisdiction referred to in Section
5(b) shall have
27
been issued and no proceeding for that purpose shall have been commenced or
shall be pending or threatened;
(m) No action shall have been taken and no statute, rule, regulation
or order shall have been enacted, adopted or issued by any governmental agency
which would, as of the Time of Delivery, prevent the issuance of any of the
Notes or Guarantees; and no injunction, restraining order or order of any nature
by a federal or state court of competent jurisdiction shall have been issued as
of the Time of Delivery which would prevent the issuance of the Notes or the
Guarantees. No action, suit or proceeding shall be pending against or affecting
or, to the knowledge of any executive officer of the Company or any Guarantor
after reasonable inquiry, threatened against the Company or any of its
subsidiaries before any court or arbitrator or any governmental body, agency or
official that, if adversely determined, would prohibit, interfere with or
adversely affect the issuance or sale of the Notes or the issuance of the
Guarantees or would have a Material Adverse Effect, or in any manner draw into
question the validity of this Agreement or the other Operative Documents; and no
stop order preventing the use of the Offering Circular, or any amendment or
supplement thereto, or any order asserting that any of the transactions
contemplated by this Agreement are subject to the registration requirements of
the Act shall have been issued;
(n) The Company, the Guarantors and the Trustee shall have entered
into the Indenture and you shall have received executed counterparts thereof;
(o) The Company and the Guarantors shall have entered into the
Registration Rights Agreement and you shall have received executed counterparts
thereof;
(p) At the Time of Delivery, copies of all opinions and certificates
issued in connection with the Credit Agreement shall have been delivered to the
Purchasers;
(q) At the Time of Delivery, copies of all opinions and certificates
issued in connection with the Merger (as defined in the Offering Circular) shall
have been delivered to the Purchasers;
(r) The Offering Circular shall have been printed and copies
distributed to you no later than 12:00 p.m. (noon), New York City time on March
14, 1996, or at such later date and time as you may approve in writing; and
(s) The Company shall have furnished to the Purchasers a certificate
of the Company, signed by the Chairman and Chief Executive Officer and Principal
Accounting Officer of the Company, dated the Time of Delivery, certifying as to
the solvency of the Company, giving effect to the offering of the Notes as
contemplated
28
hereby and the transactions described in the Offering Circular under the caption
"Use of Proceeds."
All opinions, certificates, letters and other documents required to be
delivered by the Company and the Guarantors will be in compliance with the
provisions hereof only if they are reasonably satisfactory in form and substance
to the Purchasers. The Company and the Guarantors will furnish each of the
Purchasers with such conformed copies of such opinions, certificates, letters
and other documents as the Purchasers shall reasonably request.
8. (a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless each Purchaser against any losses, claims, damages
or liabilities to which such Purchaser may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Offering
Circular or the Offering Circular, or any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to state therein
a material fact necessary to make the statements therein not misleading, and
will reimburse each Purchaser for any legal or other expenses reasonably
incurred by such Purchaser in connection with investigating or defending any
such action or claim as such expenses are incurred; provided, however, that the
Company and the Guarantors shall not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or alleged omission
made in any Preliminary Offering Circular or the Offering Circular or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by any Purchaser through Goldman, Sachs &
Co. expressly for use therein.
(b) Each Purchaser will indemnify and hold harmless the Company and
the Guarantors against any losses, claims, damages or liabilities to which the
Company or any Guarantor may become subject, under the Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Offering Circular or the
Offering Circular, or any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a material fact
or necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary Offering
Circular or the Offering Circular or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by such Purchaser through Goldman, Sachs & Co. expressly for use
therein; and will reimburse the Company and the Guarantors for any legal or
other expenses
29
reasonably incurred by the Company and the Guarantors in connection with
investigating or defending any such action or claim as such expenses are
incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel for the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation.
Notwithstanding the foregoing, any indemnified party shall have the right to
employ separate counsel in any such action and participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
the indemnified party unless the indemnified party shall have been advised by
counsel that representation of the indemnified party by counsel provided by the
indemnifying party would be inappropriate due to actual or potential conflicting
interests between the indemnifying party and the indemnified party, including
situations in which there are one or more legal defenses available to the
indemnified party that are different from or additional to those available to
the indemnifying party; provided, however, that the indemnifying party shall
not, in connection with any one such action or proceeding or separate but
substantially similar actions or proceedings arising out of the same general
allegations, be liable for the fees and expenses of more than one separate firm
of attorneys at any time for all indemnified parties, except to the extent that
local counsel, in addition to its regular counsel, is required in order to
effectively defend against such action or proceeding. No indemnifying party
shall, without the written consent of the indemnified party, effect the
settlement or compromise of, or consent to the entry of any judgment with
respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to, or an admission of, fault,
culpability or a failure to act, by or on behalf of any indemnified party.
30
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Guarantors on the one hand and
the Purchasers on the other from the offering of the Notes. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Guarantors on the one hand and the Purchasers on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Guarantors on the one hand and the Purchasers on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company bear to
the total underwriting discounts received by the Purchasers, in each case as set
forth in the Offering Circular, provided that the total underwriting discounts
shall be deemed to be reduced, and the total net proceeds received by the
Company and the Guarantors shall be deemed to be increased, by the amount of
expenses of the Company reimbursed by the Purchasers pursuant to Section 2
hereof. The relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company and the Guarantors on the one hand or the Purchasers on
the other and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company, the
Guarantors and the Purchasers agree that it would not be just and equitable if
contribution pursuant to this subsection (d) were determined by pro rata
allocation (even if the Purchasers were treated as one entity for such purpose)
or by any other method of allocation which does not take account of the
equitable considerations referred to above in this subsection (d). The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages or liabilities (or actions in respect thereof) referred to above in this
subsection (d) shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or defending
any such action or claim. Notwithstanding the provisions of this subsection (d),
no Purchaser shall be required to contribute any amount in excess of the amount
by which the total discounts received by it under this Agreement exceeds the
amount of any damages which such Purchaser has otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. The Purchasers' obligations in this subsection (d) to
31
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company and the Guarantors under this
Section 8 shall be in addition to any liability which the Company and the
Guarantors may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Purchaser within the
meaning of the Act; and the obligations of the Purchasers under this Section 8
shall be in addition to any liability which the respective Purchasers may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company or any Guarantor and to each person, if any,
who controls the Company or any Guarantor within the meaning of the Act.
9. (a) If any Purchaser shall default in its obligation to purchase the
Notes which it has agreed to purchase hereunder, you may in your discretion
arrange for you or another party or other parties to purchase such Notes on the
terms contained herein. If within thirty-six hours after such default by any
Purchaser you do not arrange for the purchase of such Notes, then the Company
shall be entitled to a further period of thirty-six hours within which to
procure another party or other parties satisfactory to you to purchase such
Notes on such terms. In the event that, within the respective prescribed
periods, you notify the Company that you have so arranged for the purchase of
such Notes, or the Company notifies you that it has so arranged for the purchase
of such Notes, you or the Company shall have the right to postpone the Time of
Delivery for a period of not more than seven days, in order to effect whatever
changes may thereby be made necessary in the Offering Circular, or in any other
documents or arrangements, and the Company agrees to prepare promptly any
amendments to the Offering Circular which in your opinion may thereby be made
necessary. The term "Purchaser" as used in this Agreement shall include any
person substituted under this Section with like effect as if such person had
originally been a party to this Agreement with respect to such Notes.
(b) If, after giving effect to any arrangements for the purchase of the
Notes of a defaulting Purchaser or Purchasers by you and the Company as provided
in subsection (a) above, the aggregate principal amount of such Notes which
remains unpurchased does not exceed one-eleventh of the aggregate principal
amount of all the Notes, then the Company shall have the right to require each
non-defaulting Purchaser to purchase the principal amount of Notes which such
Purchaser agreed to purchase hereunder and, in addition, to require each non-
defaulting Purchaser to purchase its pro rata share (based on the principal
amount of Notes which such Purchaser agreed to purchase hereunder) of the Notes
of such defaulting Purchaser or Purchasers for which such arrangements have not
been made; but nothing herein shall relieve a defaulting Purchaser from
liability for its default.
32
(c) If, after giving effect to any arrangements for the purchase of the
Notes of a defaulting Purchaser or Purchasers by you and the Company as provided
in subsection (a) above, the aggregate principal amount of Notes which remains
unpurchased exceeds one-eleventh of the aggregate principal amount of all the
Notes, or if the Company shall not exercise the right described in subsection
(b) above to require non-defaulting Purchasers to purchase Notes of a defaulting
Purchaser or Purchasers, then this Agreement shall thereupon terminate, without
liability on the part of any non-defaulting Purchaser or the Company, except for
the expenses to be borne by the Company and the Purchasers as provided in
Section 6 hereof and the indemnity and contribution agreements in Section 8
hereof; but nothing herein shall relieve a defaulting Purchaser from liability
for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Guarantors and the several Purchasers,
as set forth in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall remain in full force and effect regardless of
any investigation (or any statement as to the results thereof) made by or on
behalf of any Purchaser or any controlling person of any Purchaser, or the
Company or any Guarantor or any officer or director or any controlling person of
the Company or any Guarantor and shall survive delivery of and payment for the
Notes.
11. If the Notes or the Guarantees are not delivered by or on behalf of
the Company and the Guarantors, as applicable, as provided herein, the Company
and the Guarantors will reimburse the Purchasers for all out-of-pocket expenses,
including fees and disbursements of counsel, reasonably incurred by the
Purchasers in making preparations for the purchase, sale and delivery of the
Notes, but the Company and the Guarantors shall then be under no further
liability to any Purchaser except as provided in Sections 6 and 8 hereof.
12. All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Purchasers shall be delivered or sent by mail, overnight
courier or facsimile transmission to you as the Representative, in care of
Goldman, Sachs & Co., 85 Broad Street, New York, New York 10004, Attention:
Registration Department (facsimile number, 212-902-3000); and if to the Company
or the Guarantors shall be delivered or sent by mail, overnight courier or
facsimile transmission to 5735 Pineland Drive, Dallas, Texas 75231, Attention:
President (facsimile number, 214-265-4777). Any such statements, requests,
notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the benefit
of, the Purchasers, the Company, the Guarantors and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company, any
Guarantor and any Purchaser and each person who controls the Company, any
Guarantor or any of the Purchasers, and their respective heirs, executors,
administrators, successors and
33
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement. No purchaser of any of the Notes from any Purchaser shall be
deemed a successor or assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement.
15. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE STATE OF NEW YORK.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such respective counterparts shall together constitute one and
the same instrument.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
34
If the foregoing correctly sets forth the understanding among the Company,
the Guarantors and the Purchasers, please so indicate in the space provided
below for that purpose, whereupon this letter shall constitute a binding
agreement among the Company, the Guarantors and the Purchasers.
Very truly yours,
CODA ENERGY, INC.
By: /s/ JOE CALLAWAY
__________________________________________
Name: Joe Callaway
Title: Vice President
DIAMOND ENERGY OPERATING COMPANY
By: /s/ JOE CALLAWAY
__________________________________________
Name: Joe Callaway
Title: Vice President
TAURUS ENERGY CORP.
By: /s/ JOE CALLAWAY
__________________________________________
Name: Joe Callaway
Title: Vice President
ELECTRA RESOURCES, INC.
By: /s/ JOE CALLAWAY
__________________________________________
Name: Joe Callaway
Title: Vice President
Accepted as of the date hereof:
GOLDMAN, SACHS & CO.
/s/ GOLDMAN, SACHS & CO.
________________________________________
(Goldman, Sachs & Co.)
CHEMICAL SECURITIES, INC.
By: /s/ THOMAS WALKER
_____________________________________
Name: Thomas Walker
Title: Managing Director
ECT SECURITIES CORP.
By: /s/ RICHARD B. BUY
_____________________________________
Name: Richard B. Buy
Title: President
NATIONSBANC CAPITAL MARKETS, INC.
By: /s/ GREGORY P. MEREDITH
_____________________________________
Name: Gregory P. Meredith
Title: Managing Director
SCHEDULE I
PURCHASERS
Goldman, Sachs & Co. $57,500,000
Chemical Securities, Inc. $12,500,000
ECT Securities Corp. $27,500,000
NationsBanc Capital Markets, Inc. $12,500,000
SCHEDULE II
GUARANTORS
Diamond Energy Operating Company
Taurus Energy Corp.
Electra Resources, Inc.
38