HAYNES AND BOONE, LLP
[HAYNES AND BOONE LETTERHEAD APPEARS HERE] EXHIBIT 5.1
April 8, 1996
Coda Energy, Inc.
Diamond Energy Operating Company
Taurus Energy Corp.
Electra Resources, Inc.
5735 Pineland Drive
Suite 300
Dallas, Texas 75231
Re: Registration Statement on Form S-4; File No. 333-_____; $110,000,000
Aggregate Principal Amount of 10 1/2% Series B Senior Subordinated Notes
due 2006 and the Guarantees thereof
Ladies and Gentlemen:
In connection with the registration of $110,000,000 aggregate principal amount
of 10 1/2% Series B Senior Subordinated Notes due 2006 (the "Notes") by Coda
Energy, Inc. (the "Company") and the guarantees thereof (the "Guarantees") by
Diamond Energy Operating Company, Taurus Energy Corp. and Electra Resources,
Inc. (the "Guarantors"), under the Securities Act of 1933, as amended (the
"Act"), on Form S-4 filed with the Securities and Exchange Commission (the
"Commission") on April 9, 1996 (File No. 333-_____; the "Registration
Statement"), you have requested our opinion with respect to the matters set
forth below. The Notes will be issued pursuant to an indenture (the
"Indenture"), dated March 18, 1996, among the Company, the Guarantors and Texas
Commerce Bank National Association, as Trustee (the "Trustee").
In our capacity as your special counsel in connection with such registration, we
are familiar with the proceedings taken and proposed to be taken by the Company
and the Guarantors in connection with the authorization and issuance of the
Notes and the Guarantees and, for the purposes of this opinion, have assumed
such proceedings will be timely completed in the manner presently proposed. In
addition, we have made such legal and factual examinations and inquiries,
including an examination of originals or copies certified or otherwise
identified to our satisfaction of such documents, corporate records and
instruments, as we have deemed necessary or appropriate for purposes of this
opinion.
HAYNES AND BOONE, LLP
Coda Energy, Inc.
Diamond Energy Operating Company
Taurus Energy Corp.
Electra Resources, Inc.
April 8, 1996
Page 2
In our examination, we have assumed the genuineness of all signatures, the
authenticity and accuracy of all documents submitted to us as originals, and the
conformity to authentic original documents of all documents submitted to us as
copies.
We are opining herein as to the effect on the subject transaction only of the
internal laws of the State of Texas. To the extent that the opinion expressed
herein involves considerations of the laws of the State of New York, we have
assumed, with your consent, that the laws of the State of New York are identical
in all respects to the laws of the State of Texas, other than as to usury (as to
which we express no opinion). We express no opinion with respect to the
applicability thereto, or the effect thereon, of the laws of any other
jurisdiction or as to any matters of municipal law or the laws of any other
local agencies within any state.
Subject to the foregoing and the other matters set forth herein, it is our
opinion that, as of the date hereof, when executed and delivered by or on behalf
of the Company and the Guarantors and authenticated by the Trustee in accordance
with the terms of the Indenture and the Registration Rights Agreement related to
the Notes, the Notes and the Guarantees will constitute valid and binding
obligations of the Company and the Guarantors, enforceable against the Company
and the Guarantors in accordance with their terms.
Specific Limitations and Qualifications on
Opinion Regarding Enforceability
--------------------------------------------
In connection with the opinion expressed above, the enforceability of the Notes,
the Guarantees and the Indenture (the "Transaction Documents") is subject to (a)
the effects of (i) applicable bankruptcy, insolvency, reorganization,
moratorium, rearrangement, liquidation, conservatorship or similar laws of
general application now or hereafter in effect relating to or affecting the
rights of creditors generally, (ii) general equity principles, (iii) statutory
provisions of the federal Bankruptcy Code as amended, and the Uniform Fraudulent
Transfer Act as adopted by the State
HAYNES AND BOONE, LLP
Coda Energy, Inc.
Diamond Energy Operating Company
Taurus Energy Corp.
Electra Resources, Inc.
April 8, 1996
Page 3
of Texas (and related court decisions) and (iv) as to rights of indemnification,
to principles of public policy or federal or state securities laws relating
thereto, and (b) the application of a standard of "good faith" such as that
defined in Section 1.203 of the Code (as used herein the term "Code" shall mean
the Uniform Commercial Code as currently in effect in the State of Texas). In
addition, certain other provisions of the Transaction Documents may be
unenforceable in whole or in part under the laws (including judicial decisions)
of the State of Texas or the United States of America; provided, however, that
(i) the inclusion of any such provisions and any limitations referred to in
clauses (a)(ii), (a)(iv) and (b) imposed by such laws on the enforceability of
the Transaction Documents will not affect the validity or enforceability as a
whole of any of the Transaction Documents and will not prevent the Trustee from
the ultimate realization of the practical rights and benefits afforded by such
documents, except for the economic consequences of any judicial, administrative
or other procedural delay which may result from the application of such law.
In rendering the opinion expressed above, we express no opinion as to the
enforceability of provisions of the Transaction Documents, to the extent that
such provisions (i) purport to waive or affect any rights to notices required by
law, (ii) state that the Trustee's failure or delay in exercising rights,
powers, privileges or remedies under the Transaction Documents shall not operate
as a waiver thereof, (iii) purport to sever unenforceable provisions from the
Transaction Documents, to the extent that the enforcement of remaining
provisions would frustrate the fundamental intent of the parties to such
documents, (iv) restrict access to legal or equitable remedies or (v) purport to
waive any rights of the Company or the Guarantors to the benefits or advantages
of any stay or extension law. In addition, we express no opinion as to whether
a court would grant specific performance or any other equitable remedy with
respect to enforcement of any provisions of the Transaction Documents, and with
respect to item (i) of this paragraph, we note that the courts of the State of
Texas have indicated that a guarantor is a "debtor" for the purposes of Article
9 of the Code. We advise you that the inclusion of such provisions in the
Transaction Documents does not render void or invalidate the obligations and
HAYNES AND BOONE, LLP
Coda Energy, Inc.
Diamond Energy Operating Company
Taurus Energy Corp.
Electra Resources, Inc.
April 8, 1996
Page 4
liabilities of the Company and the Guarantors under other provisions of such
documents.
In addition to the limitations specified above, the enforceability of the
Guarantees may be limited by the application of a standard of "good faith" such
as that defined in Section 1.203 of the Code. Additionally, we express no
opinion as to the enforceability of provisions of the Guarantees to the extent
that such provisions state that the failure or delay in exercising rights,
powers, privileges or remedies under the Guarantees shall not operate as a
waiver thereof. Further, in rendering the opinion expressed above, we express
no opinion as to the enforceability of those provisions thereof which (i) state
or mean that the Guarantees shall not be impaired, adversely affected, or
released by a legal determination that the obligations guaranteed are void as a
result of illegality or (ii) provide that the Guarantors have waived notices
which may be required and which are not subject to waiver under applicable law.
Specific Limitations and Qualifications
on Opinion Regarding Choice of Law
------------------------------------
The Transaction Documents provide that the laws of the State of New York shall
govern the interpretation and enforceability thereof. In order to determine the
validity and enforceability of such choice of law under the choice of law
principles of the State of Texas, it is necessary to evaluate certain facts and
assumptions of fact with respect to this transaction in light of the choice of
law principles of the State of Texas.
Section 35.51 of the Texas Business and Commerce Code (the "TBCC") provides that
if parties agree in writing that the law of a particular jurisdiction governs an
issue relating to the transaction (including the validity or enforceability of
an agreement relating to the transaction or a provision of the agreement) and
the transaction bears a "reasonable relation" to that jurisdiction, then the
law, other than conflict of law rules, of that jurisdiction governs the issue
regardless of whether the
HAYNES AND BOONE, LLP
Coda Energy, Inc.
Diamond Energy Operating Company
Taurus Energy Corp.
Electra Resources, Inc.
April 8, 1996
Page 5
application of that law is contrary to a fundamental or public policy of the
State of Texas or of any other jurisdiction. Section 35.51 of the TBCC provides
that a transaction bears a "reasonable relation" to a particular jurisdiction if
the transaction, the subject matter of the transaction, or a party to the
transaction is reasonably related to that jurisdiction. In addition, Section
35.51 of the TBCC contains specific factual criteria, the presence of any one of
which will satisfy the "reasonable relation" test.
Accordingly, for purposes of the opinion set forth above, and in light of the
factual criteria specified in Section 35.51 of the TBCC, we have, with your
consent, assumed the following facts:
(a) the terms of the Transaction Documents were primarily negotiated in
New York;
(b) certain of the Purchasers have their principal place of business in
New York;
(c) the Transaction Documents were delivered in New York and payment for
the Notes was delivered in New York; and
(d) the choice of governing law contained in the Transaction Documents
was willingly and knowingly agreed to by all parties thereto.
We note that the determination of applicable law as to specific issues may vary
from the choice of law expressed in the Transaction Documents where a statute of
the State of Texas or a statute of the United States provides that such issue is
governed by the law of a particular jurisdiction. For example, notwithstanding
the choice of law contained in the Indenture and the Notes, certain matters
pertaining to the power and authority of corporations will be governed by the
law of the jurisdiction of incorporation of each such corporation.
HAYNES AND BOONE, LLP
Coda Energy, Inc.
Diamond Energy Operating Company
Taurus Energy Corp.
Electra Resources, Inc.
April 8, 1996
Page 6
To the extent that the obligations of the Company or the Guarantors under the
Indenture may be dependent upon such matters, we assume for purposes of this
opinion that the Trustee is duly organized, validly existing and in good
standing under the laws of its jurisdiction of organization; that the Trustee is
duly qualified to engage in the activities contemplated by the Indenture; that
the Indenture has been duly authorized, executed and delivered by the Trustee
and constitutes the legally valid and binding obligation of the Trustee,
enforceable against the Trustee in accordance with its terms; that the Trustee
is in compliance, generally and with respect to acting as a trustee under the
Indenture, with all applicable laws and regulations; and that the Trustee has
the requisite organizational and legal power and authority to perform its
obligations under the Indenture.
This opinion letter is rendered as of the date hereof and we assume no
obligation to inform you (or any third party) of any changes of law or fact that
occur after the date hereof, even though such change may affect this opinion
letter.
The opinion and beliefs expressed herein are for the sole benefit of, and may
only be relied upon by, you in connection with this transaction. In no manner
is our opinion to be relied upon for any reason other than for the purpose for
which it is being furnished, or is our opinion to be relied upon by any other
person or persons other than to whom it is expressly intended.
We consent to your filing this opinion as an exhibit to the Registration
Statement and to the reference to our firm contained therein under the heading
"Legal Matters."
Very truly yours,
/s/ HAYNES AND BOONE, LLP
Haynes and Boone, LLP