1
HarCor Energy, Inc.
65,000 Units
Consisting of
$65,000,000
14 7/8% Senior Secured Notes due 2002
and
1,430,000 Warrants to Purchase
Shares of Common Stock
PURCHASE AGREEMENT
July 17, 1995
BT SECURITIES CORPORATION
INTERNATIONALE NEDERLANDEN
(U.S.) SECURITIES CORPORATION
c/o BT Securities Corporation
Bankers Trust Plaza
130 Liberty Street
New York, New York 10006
Ladies and Gentlemen:
HarCor Energy, Inc., a Delaware corporation (the "Company"), and the
Subsidiary Guarantors (as defined below) hereby confirm their agreement with you
(the "Initial Purchasers"), as set forth below.
1. The Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Initial Purchasers
65,000 Units (as defined below) consisting of an aggregate of $65,000,000
aggregate principal amount of its 14 7/8% Senior Secured Notes due 2002, Series
A (the "Senior Notes") and 1,430,000 warrants (the "Warrants") to purchase
initially an equal number of shares of the Company's Common Stock, par value
$0.10 per share (the "Common Stock"). The Senior Notes are to be issued under an
indenture (the "Indenture") to be dated as of July 24, 1995 by and among the
Company, the Subsidiary Guarantors (as defined below) and Texas Commerce Bank
National Association, as Trustee (the "Trustee"). The Senior Notes will be
unconditionally guaranteed, jointly
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and severally, by Warrior, Inc., a Texas corporation and HTAC Investments, Inc.,
a California corporation (collectively, the "Subsidiary Guarantors"), pursuant
to the terms of the Indenture (the "Guarantees"). The Senior Notes will be
secured by a second priority lien on and security interest in the Collateral (as
defined in the Indenture) pursuant to Security Documents (as defined in the
Indenture) entered into by the Company and Warrior, Inc. for the benefit of the
Trustee and the holders of the Senior Notes. The Warrants are to be issued under
a Warrant Agreement to be dated as of July 24, 1995 (the "Warrant Agreement")
between the Company and Texas Commerce Bank National Association, as Warrant
Agent (the "Warrant Agent"). The shares of Common Stock issuable upon exercise
of the Warrants are herein referred to as the "Warrant Shares." The Senior Notes
and the Warrants will initially be represented by 65,000 units ("Units"), each
Unit consisting of $1,000 principal amount of Senior Notes and 22 Warrants, each
to purchase 1 (one) Warrant Share at an initial exercise price of $3.85 per
Warrant Share. The Senior Notes, the Guarantees, the Warrants and the Units are
collectively referred to herein as the "Securities."
The Securities will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Act"), in reliance on exemptions therefrom.
In connection with the sale of the Securities, the Company and the
Subsidiary Guarantors have prepared a preliminary offering memorandum dated July
17, 1995 (the "Preliminary Memorandum"), and a final offering memorandum dated
July 17, 1995 (the "Final Memorandum"; the Preliminary Memorandum and the Final
Memorandum each herein being referred to as a "Memorandum") setting forth or
including a description of the terms of the Securities, the terms of the
offering of the Securities, and a description of the Company and the Subsidiary
Guarantors.
The Initial Purchasers and their direct and indirect transferees of
the Securities will be entitled to the benefits of (i) the Registration Rights
Agreement, substantially in the form attached hereto as Exhibit A (the
"Registration Rights Agreement"), pursuant to which the Company and the
Subsidiary Guarantors have agreed, among other things, to file a registration
statement (the "Registration Statement") with the Securities and Exchange
Commission (the "Commission") registering the Senior Notes or the Exchange Notes
(as defined in the Registration Rights Agreement) under the Act, and (ii) the
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Securityholders' and Registration Rights Agreement, substantially in the form
attached hereto as Exhibit B (the "Securityholders' Agreement" and, together
with the Registration Rights Agreement, the "Rights Agreements").
2. Representations and Warranties. The Company and the Subsidiary
Guarantors, jointly and severally, represent and warrant to and agree with each
of the Initial Purchasers that:
(a) Neither the Final Memorandum nor any amendment or supplement
thereto as of the date thereof and at all times subsequent thereto up to the
Closing Date (as defined in Section 3 below) contained or contains any untrue
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, except that the representations and
warranties set forth in this Section 2(a) do not apply to statements or
omissions made in reliance upon and in conformity with information relating to
either of the Initial Purchasers furnished to the Company or the Subsidiary
Guarantors in writing by the Initial Purchasers expressly for use in the Final
Memorandum or any amendment or supplement thereto.
(b) As of the Closing Date, the Company will have the authorized,
issued and outstanding capitalization set forth in the Final Memorandum; all of
the outstanding shares of capital stock of the Company and the Subsidiary
Guarantors have been, and as of the Closing Date will be, duly authorized and
validly issued, are fully paid and nonassessable and were not issued in
violation of any preemptive or similar rights; except as set forth in the Final
Memorandum (or, if the Final Memorandum is not in existence, the most recent
Memorandum), all of the outstanding shares of capital stock of the Subsidiary
Guarantors are, and as of the Closing Date will be, owned, directly or
indirectly, by the Company, free and clear of all liens, encumbrances, equities
and claims or restrictions on transferability (other than those imposed by the
Act and the securities or "Blue Sky" laws of certain jurisdictions) or voting;
except as set forth in the Final Memorandum (or, if the Final Memorandum is not
in existence, the most recent Memorandum), there are no (i) options, warrants or
other rights to purchase from the Company or any Subsidiary Guarantor, (ii)
agreements or other obligations of the Company or any Subsidiary Guarantor to
issue or (iii) other rights to convert any obligation into, or exchange any
securities for, in the case of each clause (i)-(iii) shares of capital stock of
or ownership interests in
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the Company or any Subsidiary Guarantor outstanding. The Company does not have
any Subsidiaries except for the Subsidiary Guarantors; except for the capital
stock of the Subsidiary Guarantors and as otherwise disclosed in the Final
Memorandum (or, if the Final Memorandum is not in existence, the most recent
Memorandum), the Company does not own, directly or indirectly, any shares of
capital stock or any other equity or long-term debt securities or have any
equity interest in any firm, partnership, joint venture or other entity.
(c) Each of the Company and the Subsidiary Guarantors has been duly
incorporated, is validly existing and is in good standing as a corporation under
the laws of its jurisdiction of incorporation, with all requisite corporate
power and authority to own its properties and conduct its business as now
conducted, and as described in the Preliminary Memorandum and the Final
Memorandum; each of the Company and the Subsidiary Guarantors is duly qualified
to do business as a foreign corporation in good standing in all other
jurisdictions where the ownership or leasing of its properties or the conduct of
its business requires such qualification, except where the failure to be so
qualified would not, individually or in the aggregate, have a material adverse
effect on the general affairs, management, business, condition (financial or
otherwise), prospects or results of operations of the Company and the Subsidiary
Guarantors, taken as a whole (any such event, a "Material Adverse Effect").
(d) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under the Senior Notes, the
Exchange Notes and the Private Exchange Notes (as defined in the Registration
Rights Agreement). The Senior Notes, the Exchange Notes and the Private Exchange
Notes have each been duly and validly authorized by the Company and, when
executed by the Company and authenticated by the Trustee in accordance with the
provisions of the Indenture and, in the case of the Senior Notes, when delivered
to and paid for by the Initial Purchasers in accordance with the terms of this
Agreement, will have been duly executed, issued and delivered and will
constitute valid and legally binding obligations of the Company, entitled to the
benefits of the Indenture and enforceable against the Company in accordance with
their terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally, and (ii) general
principles of
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equity and the discretion of the court before which any proceeding therefor may
be brought.
(e) Each of the Subsidiary Guarantors has all requisite corporate
power and authority to execute, deliver and perform each of its obligations
under the Guarantees. The Guarantees endorsed on the Senior Notes, the Exchange
Notes and the Private Exchange Notes have each been duly and validly authorized
by each of the Subsidiary Guarantors and, when the Senior Notes, the Exchange
Notes and the Private Exchange Notes are executed by the Company and
authenticated by the Trustee in accordance with the provisions of the Indenture
and, in the case of the Senior Notes, delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, will constitute valid
and legally binding obligations of each of the Subsidiary Guarantors, entitled
to the benefits of the Indenture and enforceable against the Subsidiary
Guarantors in accordance with their terms, except that the enforcement thereof
may be subject to (i) bankruptcy, insolvency, reorganization, moratorium or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought.
(f) The Company and each of the Subsidiary Guarantors have all
requisite corporate power and authority to execute, deliver and perform each of
their obligations under the Indenture and each Security Document to which it is
a party. The Indenture meets the requirements for qualification under the Trust
Indenture Act of 1939, as amended (the "TIA"). The Indenture and each Security
Document to which it is a party have been duly and validly authorized by the
Company and each of the Subsidiary Guarantors and, when executed and delivered
by the Company and each of the Subsidiary Guarantors a party thereto (assuming
the due authorization, execution and delivery by the Trustee if the Trustee is
required to execute any such document), each will constitute a valid and legally
binding agreement of the Company and each of the Subsidiary Guarantors a party
thereto, enforceable against the Company and each of the Subsidiary Guarantors
in accordance with its terms, except that the enforcement thereof may be subject
to (i) bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which any
proceeding therefor may be brought.
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(g) The Company and each of the Subsidiary Guarantors have all
requisite corporate power and authority to execute, deliver and perform each of
their obligations under the Rights Agreements to which they are a party. Each of
the Rights Agreements has been duly and validly authorized by the Company and
each of the Subsidiary Guarantors to the extent it is a party thereto and, when
executed and delivered by the Company and each of the Subsidiary Guarantors a
party thereto (assuming the due authorization, execution and delivery by the
Initial Purchasers), will constitute a valid and legally binding agreement of
the Company and each such Subsidiary Guarantor enforceable against the Company
and each such Subsidiary Guarantor in accordance with its terms, except that (A)
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor may be
brought and (B) any rights to indemnity or contribution thereunder may be
limited by federal and state securities laws and public policy considerations.
(h) The Company and each of the Subsidiary Guarantors a party
thereto have all requisite corporate power and authority to execute, deliver and
perform each of their obligations under the credit facility to be entered into
among the Company, the Subsidiary Guarantors a party thereto, Internationale
Nederlanden (U.S.) Capital Corporation ("ING Capital"), as Agent and the lenders
named therein (the "Credit Facility"). The Credit Facility has been duly and
validly authorized by the Company and each of the Subsidiary Guarantors a party
thereto and, when executed and delivered by the Company and each of the
Subsidiary Guarantors a party thereto (assuming the due authorization, execution
and delivery by ING Capital and the other lenders party thereto), will
constitute a valid and legally binding agreement of the Company and each such
Subsidiary Guarantor enforceable against the Company and each such Subsidiary
Guarantor in accordance with its terms, except that the enforcement thereof may
be subject to (a) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights generally
and (b) general principles of equity and the discretion of any court before
which any proceeding therefor may be brought.
(i) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under the Warrant Agreement
and the Preferred Stock
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Warrant Agreement (as defined in Section 3 hereof). Each of the Warrant
Agreement and the Preferred Stock Warrant Agreement has been duly and validly
authorized by the Company and, when executed and delivered by the Company
(assuming the due authorization, execution and delivery by the Warrant Agent and
the Preferred Stock Warrant Agent (as defined in Section 3 hereof), as the case
may be), will constitute a valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and (ii) general principles of equity
and the discretion of the court before which any proceeding therefor may be
brought.
(j) The Company has all requisite corporate power and authority to
execute, deliver and perform each of its obligations under the Warrants and the
Additional Warrants (as defined in Section 3 below). The Warrants and the
Additional Warrants have been duly and validly authorized by the Company and,
when executed by the Company and countersigned by the Warrant Agent in
accordance with the provisions of the Warrant Agreement (and, in the case of the
Preferred Stock Warrants (as defined in Section 3), countersigned by the
Preferred Stock Warrant Agent in accordance with the provisions of the Preferred
Stock Warrant Agreement) and when delivered to and paid for by the Initial
Purchasers in accordance with the terms of this Agreement, will have been duly
executed, issued and delivered and will constitute valid and legally binding
obligations of the Company, entitled to the benefits of the Warrant Agreement or
the Preferred Stock Warrant Agreement, as the case may be, and enforceable
against the Company in accordance with their terms, except that the enforcement
thereof may be subject to (i) bankruptcy, insolvency, reorganization, moratorium
or other similar laws now or hereafter in effect relating to creditors' rights
generally, and (ii) general principles of equity and the discretion of the court
before which any proceeding therefor may be brought.
(k) The Warrant Shares and the Additional Warrant Shares (as defined
in Section 3 below) have been duly and validly authorized for issuance by the
Company and when issued in accordance with the terms and conditions contained in
the Warrant Agreement (or the Preferred Stock Warrant Agreement, as the case may
be) upon exercise of the Warrants and upon exercise of the Additional Warrants,
the Warrant Shares and the Additional Warrant Shares, as the case may be, will
be duly
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authorized, validly issued, fully paid and non-assessable and will not be
subject to any preemptive or similar rights. The Warrant Shares and the
Additional Warrant Shares, as the case may be, have been duly reserved for
issuance in accordance with the terms of the Warrants, the Warrant Agreement,
the Additional Warrants, and the Preferred Stock Warrant Agreement, as the case
may be.
(l) The Company and each of the Subsidiary Guarantors have all
requisite corporate power and authority to execute, deliver and perform each of
their obligations under this Agreement and to consummate the transactions
contemplated hereby. This Agreement has been duly and validly authorized,
executed and delivered by the Company and each of the Subsidiary Guarantors. No
consent, approval, authorization or order of any court or governmental agency or
body, or third party is required for the performance of this Agreement by the
Company or the Subsidiary Guarantors or the consummation by the Company or the
Subsidiary Guarantors of the transactions contemplated hereby, except such as
have been obtained and other than such as may be required under state securities
or "Blue Sky" laws in connection with the purchase and resale of the Securities
by the Initial Purchasers. None of the Company or the Subsidiary Guarantors is
(i) in violation of its certificate of incorporation or bylaws (or similar
organizational document), (ii) in breach or violation of any statute, judgment,
decree, order, rule or regulation applicable to any of them or any of their
respective properties or assets, except for any such breach or violation which
would not, individually or in the aggregate, have a Material Adverse Effect, or
(iii) in breach of or default under (nor has any event occurred which, with
notice or passage of time or both, would constitute a default under) or in
violation of any of the terms or provisions of any indenture, mortgage, deed of
trust, loan agreement, note, lease, license, franchise agreement, permit,
certificate, contract or other agreement or instrument to which any of them is a
party or to which any of them or their respective properties or assets is
subject, except for any such breach, default, violation or event which would
not, individually or in the aggregate, have a Material Adverse Effect.
(m) The execution, delivery and performance by the Company and each
of the Subsidiary Guarantors of this Agreement and the consummation by the
Company and each of the Subsidiary Guarantors of the transactions contemplated
hereby, and the fulfillment of the terms hereof, will not conflict with or
constitute or result in a breach of or a default under (or an
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event which with notice or passage of time or both would constitute a a default
under) or violation of any of (i) the terms or provisions of any indenture,
mortgage, deed of trust, loan agreement, note, lease, license, franchise
agreement, permit, certificate, contract or other agreement or instrument to
which the Company or any of the Subsidiary Guarantors is a party or to which any
of them or their respective properties or assets is subject, except for any such
conflict, breach, violation, default or event which would not, individually or
in the aggregate, have a Material Adverse Effect, (ii) the certificate of
incorporation or bylaws (or similar organizational document) of the Company or
any of the Subsidiary Guarantors, or (iii) (assuming compliance with all
applicable state securities or "Blue Sky" laws and assuming the accuracy of the
representations and warranties of the Initial Purchasers in Section 8 hereof)
any statute, judgment, decree, order, rule or regulation applicable to the
Company or any of the Subsidiary Guarantors or any of their respective
properties or assets, except for any such conflict, breach or violation which
would not, individually or in the aggregate, have a Material Adverse Effect.
(n) The audited consolidated financial statements of the Company and
its subsidiaries included in the Final Memorandum (or, if the Final Memorandum
is not in existence, the most recent Memorandum) present fairly in all material
respects the financial position, results of operations and cash flows of the
Company and its subsidiaries at the dates and for the periods to which they
relate and have been prepared in accordance with generally accepted accounting
principles applied on a consistent basis, except as otherwise stated therein.
The summary and selected financial and statistical data in the Final Memorandum
(or, if the Final Memorandum is not in existence, the most recent Memorandum)
present fairly in all material respects the financial information shown therein
and have been prepared and compiled on a basis consistent with the audited
financial statements included therein, except as otherwise stated therein.
Arthur Andersen LLP (the "Independent Accountants") is an independent public
accounting firm within the meaning of the Act and the rules and regulations
promulgated thereunder.
(o) The pro forma financial statements (including the notes thereto)
and the other pro forma financial information included in the Final Memorandum
(or, if the Final Memorandum is not in existence, the most recent Memorandum)
(i) comply as to form in all material respects with the applicable requirements
of Regulation S-X promulgated under the
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Securities Exchange Act of 1934, as amended (the "Exchange Act"), (ii) have been
prepared in accordance with the Commission's rules and guidelines with respect
to pro forma financial statements, and (iii) have been properly computed on the
bases described therein; the assumptions used in the preparation of the pro
forma financial data and other pro forma financial information included in the
Final Memorandum (or, if the Final Memorandum is not in existence, the most
recent Memorandum) are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred to
therein.
(p) Except as described in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Memorandum), there is not
pending or, to the best knowledge of the Company or any Subsidiary Guarantor,
threatened, any action, suit, proceeding, inquiry or investigation to which the
Company or any of the Subsidiary Guarantors is a party, or to which the property
or assets of the Company or any of the Subsidiary Guarantors are subject, before
or brought by any court or governmental agency or body which, if determined
adversely to the Company or the Subsidiary Guarantors, would result,
individually or in the aggregate, in any material adverse change in the general
affairs, management, business, condition (financial or otherwise), prospects or
results of operations of the Company and the Subsidiary Guarantors, taken as a
whole (any such event, a "Material Adverse Change"), or which seeks to restrain,
enjoin, prevent the consummation of or otherwise challenge the issuance or sale
of the Securities to be sold hereunder or the consummation of the other
transactions described in the Final Memorandum (or, if the Final Memorandum is
not in existence, the most recent Memorandum).
(q) Each of the Company and the Subsidiary Guarantors owns or
possesses adequate licenses or other rights to use all trademarks, service
marks, trade names and know-how necessary to conduct the businesses now or
proposed to be operated by it as described in the Final Memorandum (or, if the
Final Memorandum is not in existence, the most recent Memorandum), and none of
the Company or the Subsidiary Guarantors has received any notice of conflict
with (or knows of any such conflict with) asserted rights of others with respect
to any trademarks, service marks, trade names or know-how which, if such
assertion of conflict were sustained, would, individually or in the aggregate,
have a Material Adverse Effect.
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(r) Each of the Company and the Subsidiary Guarantors possesses all
licenses, permits, certificates, consents, orders, approvals and other
authorizations 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, presently required or
necessary to own or lease, as the case may be, and to operate its respective
properties and to carry on its respective businesses as now or proposed to be
conducted as set forth in the Final Memorandum (or, if the Final Memorandum is
not in existence, the most recent Memorandum), except where the failure to
obtain such licenses, permits, certificates, consents, orders, approvals and
other authorizations, or to make all declarations and filings, would not,
individually or in the aggregate, have a Material Adverse Effect, and none of
the Company or the Subsidiary Guarantors has received any notice of any
proceeding relating to revocation or modification of any such license, permit,
certificate, consent, order, approval or other authorization, except as
described in the Final Memorandum (or, if the Final Memorandum is not in
existence, the most recent Memorandum) and except where such revocation or
modification would not, individually or in the aggregate, have a Material
Adverse Effect.
(s) Since the respective dates as of which information is given in
the Final Memorandum (or, if the Final Memorandum is not in existence, the most
recent Memorandum), except as described therein, (i) none of the Company or any
of the Subsidiary Guarantors has incurred any liabilities or obligations, direct
or contingent, or entered into or agreed to enter into any transactions or
contracts (written or oral) not in the ordinary course of business and (ii) none
of the Company or any of the Subsidiary Guarantors has purchased any of its
outstanding capital stock, nor declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock (other than with respect to any
such Subsidiary Guarantor, the purchase of, or dividend or distribution on,
capital stock owned by the Company).
(t) Each of the Company and the Subsidiary Guarantors has filed all
necessary federal, state and foreign income and franchise tax returns, except
where the failure to so file such returns would not, individually or in the
aggregate, have a Material Adverse Effect, and has paid all taxes shown as due
thereon; and other than tax deficiencies which the Company or any Subsidiary
Guarantor is contesting in good faith and for which the Company or such
Subsidiary Guarantor has provided
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adequate reserves, there is no tax deficiency that has been asserted against the
Company or any of the Subsidiary Guarantors that would have, individually or in
the aggregate, a Material Adverse Effect.
(u) The statistical and market-related data included in the Final
Memorandum (or, if the Final Memorandum is not in existence, the most recent
Memorandum) are based on or derived from sources which the Company and the
Subsidiary Guarantors believe to be reliable and accurate.
(v) None of the Company, the Subsidiary Guarantors or any agent
acting on their behalf has taken or will take any action that might cause this
Agreement or the sale of the Securities to violate Regulation G, T, U or X of
the Board of Governors of the Federal Reserve System, in each case as in effect,
or as the same may hereafter be in effect, on the Closing Date.
(w) Each of the Company and the Subsidiary Guarantors has good and
defensible title to all real property and good title to all personal property
described in the Final Memorandum (or, if the Final Memorandum is not in
existence, the most recent Memorandum) as being owned by it and good and
defensible title to a leasehold estate in the real and personal property
described in the Final Memorandum (or, if the Final Memorandum is not in
existence, the most recent Memorandum) as being leased by it free and clear of
all liens, charges, encumbrances or restrictions, except as described in the
Final Memorandum (or, if the Final Memorandum is not in existence, the most
recent Memorandum) or to the extent the failure to have such title or the
existence of such liens, charges, encumbrances or restrictions would not,
individually or in the aggregate, have a Material Adverse Effect.
(x) There are no legal or governmental proceedings involving or
affecting the Company or any Subsidiary Guarantor or any of their respective
properties or assets which would be required to be described in a prospectus
pursuant to the Act that are not described in the Final Memorandum (or, if the
Final Memorandum is not in existence, the most recent Memorandum), nor are there
any material contracts or other documents which would be required to be
described in a prospectus pursuant to the Act that are not described in the
Final Memorandum (or, if the Final Memorandum is not in existence, the most
recent Memorandum).
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(y) Except as described in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Memorandum), each of the Company
and the Subsidiary Guarantors is in compliance in all respects with all laws,
rules or regulations relating to pollution or protection of public or employee
health or the environment ("Environmental Law") and with the terms and
conditions of any permit, license or approval required thereunder in connection
with the ownership, operation or use of its business, property and assets except
where the failure to be in such compliance would not, individually or in the
aggregate, have a Material Adverse Effect; except as disclosed in the Final
Memorandum (or, if the Final Memorandum is not in existence, the most recent
Memorandum), none of the Company or the Subsidiary Guarantors is subject to any
known liability, absolute or contingent, under any Environmental Law except for
any such liability which would not, individually or in the aggregate, have a
Material Adverse Effect; except as disclosed in the Final Memorandum (or, if the
Final Memorandum is not in existence, the most recent Memorandum), there is no
civil, criminal or administrative action, suit, demand, hearing, notice of
violation or deficiency, investigation, proceeding or notice of potential
responsibility or demand letter or request for information pending or, to their
knowledge, threatened against the Company or any of the Subsidiary Guarantors
under any Environmental Law which, if determined adversely to the Company
or any such Subsidiary Guarantors would, individually or in the aggregate,
result in a Material Adverse Effect.
(z) There is no strike, labor dispute, slowdown or work stoppage
with the employees of the Company or any of the Subsidiary Guarantors which is
pending or, to the best knowledge of the Company or any Subsidiary Guarantor,
threatened.
(aa) Each of the Company and the Subsidiary Guarantors carries
insurance (including self insurance) in such amounts and covering such risks as
in its reasonable determination is adequate for the conduct of its business and
the value of its properties.
(bb) None of the Company or the Subsidiary Guarantors has any
liability for any prohibited transaction or funding deficiency or any complete
or partial withdrawal liability with respect to any pension, profit sharing or
other plan which is subject to the Employee Retirement Income Security Act of
1974, as amended ("ERISA"), to which the Company or any Subsidiary Guarantor
makes or ever has made a contribution and in
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which any employee of the Company or any Subsidiary Guarantor is or has ever
been a participant. With respect to such plans, the Company and each Subsidiary
Guarantor is in compliance in all material respects with all applicable
provisions of ERISA.
(cc) None of the Company or the Subsidiary Guarantors will be an
"investment company" or "promoter" or "principal underwriter" for an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
(dd) The Senior Notes, the Exchange Notes, the Warrants, the Warrant
Shares, the Common Stock, the Units, the Indenture, the Security Documents, the
Warrant Agreement, the Additional Warrants, the Rights Agreements and the Credit
Facility will, and this Agreement does, conform in all material respects to the
descriptions thereof in the Final Memorandum (or, if the Final Memorandum is not
in existence, the most recent Memorandum).
(ee) Except as disclosed in the Final Memorandum (or, if the Final
Memorandum is not in existence, the most recent Memorandum), no holder of
securities of the Company or any Subsidiary Guarantor will be entitled to have
such securities registered under the registration statements required to be
filed by the Company pursuant to the Rights Agreements or other than as
expressly permitted thereby.
(ff) Immediately after the consummation of the transactions
contemplated by this Agreement, the fair value and present fair saleable value
of the assets of each of the Company and the Subsidiary Guarantors (each on a
consolidated basis) will exceed the sum of its stated liabilities and identified
contingent liabilities; none of the Company or the Subsidiary Guarantors (each
on a consolidated basis) is, nor will any of the Company or the Subsidiary
Guarantors (each on a consolidated basis) be, after giving effect to the
execution, delivery and performance of this Agreement, and the consummation of
the transactions contemplated hereby, (a) left with unreasonably small capital
with which to carry on its business as it is proposed to be conducted, (b)
unable to pay its debts (contingent or otherwise) as they mature or (c)
otherwise insolvent.
(gg) None of the Company or any of its Affiliates (as defined in
Rule 501(b) of Regulation D under the Act) has directly, or through any agent,
(i) sold, offered for sale,
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solicited offers to buy or otherwise negotiated in respect of, any "security"
(as defined in the Act) which is or will be integrated with the sale of the
Securities in a manner that would require the registration under the Act of the
Securities or (ii) engaged in any form of general solicitation or general
advertising in connection with the offering of the Securities (as those terms
are used in Regulation D under the Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Act.
(hh) Assuming the accuracy of the representations and warranties of
the Initial Purchasers in Section 8 hereof, it is not necessary in connection
with the offer, sale and delivery of the Securities to the Initial Purchasers in
the manner contemplated by this Agreement to register any of the Securities
under the Act or to qualify the Indenture under the TIA.
(ii) No securities of the Company or any Subsidiary Guarantor are of
the same class (within the meaning of Rule 144A under the Act) as the Securities
and 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.
(jj) None of the Company or the Subsidiary Guarantors has taken, nor
will any of them take, directly or indirectly, any action designed to, or that
might be reasonably expected to, cause or result in stabilization or
manipulation of the price of the Securities.
(kk) Upon execution and delivery by the Company and the Subsidiary
Guarantors on the Closing Date and assuming due recording, each Mortgage (as
defined in the Indenture) will create and constitute (A) a valid and enforceable
mortgage lien on the real property and fixtures described therein (the "Real
Property") and (B) a valid and enforceable security interest in such of the
Property (as defined in each Mortgage), other than the Real Property, in which a
security interest can be created under Article 9 (the "UCC Property") of the
Uniform Commercial Code (the "UCC") as in effect in the state in which such
Property is located. Each Mortgage will be in proper form, under the laws of the
state in which the Property encumbered thereby is located, to be accepted for
recording in the county where such Property is located.
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(ll) Upon the filing of the financing statements (the "Financing
Statements") relating to each Mortgage with the Office of the Secretary of State
in the state in which the Property encumbered by each Mortgage is located, and
with the recorder in the county where real property on which fixtures are
present is located, the security interest, lien or pledge created by each
Mortgage in UCC Property will be a perfected security interest with respect to
that portion of the UCC Property in which a security interest can be perfected
by filing a financing statement, prior to all other security interests therein
which may be perfected by filing a Financing Statement or by possession, except
for prior liens and encumbrances permitted by the Mortgages.
(mm) The representations and warranties of the Company and Warrior,
Inc. contained in Section 2.1(h) of each of the Mortgages are true and correct
and are hereby incorporated herein mutatis mutandis as representations and
warranties of the Company and Warrior, Inc., respectively.
Any certificate signed by any officer of the Company or any
Subsidiary Guarantor and delivered to any Initial Purchaser or to counsel for
the Initial Purchasers shall be deemed a joint and several representation and
warranty by the Company and each of the Subsidiary Guarantors to each Initial
Purchaser as to the matters covered thereby.
3. Purchase, Sale and Delivery of the Securities. On the basis of
the representations, warranties, agreements and covenants herein contained and
subject to the terms and conditions herein set forth, the Company and the
Subsidiary Guarantors agree to issue and sell to the Initial Purchasers, and the
Initial Purchasers, acting severally and not jointly, agree to purchase in the
respective amounts set forth on Schedule 1 hereto from the Company and the
Subsidiary Guarantors 65,000 Units at a purchase price of $959.58 per Unit. One
or more certificates in definitive form for the Securities that the Initial
Purchasers have agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Initial Purchasers
request upon notice to the Company at least 24 hours prior to the Closing Date,
shall be delivered by or on behalf of the Company and the Subsidiary Guarantors
to the Initial Purchasers, against payment by or on behalf of the Initial
Purchasers of the purchase price therefor by wire transfer (same day funds), net
of the overnight cost of such funds, to such account or accounts as the Company
shall specify prior to the Closing Date, or by such means as the
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parties hereto shall agree prior to the Closing Date. Such delivery of and
payment for the Securities shall be made at the offices of Cahill Gordon &
Reindel, 80 Pine Street, New York, New York at 10:00 A.M., New York time, on
July 24, 1995, or at such other place, time or date as the Initial Purchasers,
on the one hand, and the Company, on the other hand, may agree upon, such time
and date of delivery against payment being herein referred to as the "Closing
Date." The Company has requested that the Closing Date be scheduled to occur
five business days after the date of this Agreement in order to provide
sufficient time to satisfy the conditions for closing set forth in Section 7
below. The Company and the Subsidiary Guarantors will make such certificate or
certificates for the Securities available for checking and packaging by the
Initial Purchasers at the offices of BT Securities Corporation in New York, New
York, or at such other place as BT Securities Corporation may designate, at
least 24 hours prior to the Closing Date. As additional compensation to the
Initial Purchasers, the Company agrees to issue to the Initial Purchasers (in
such denomination or denominations and registered in such name or names as each
of the Initial Purchasers requests upon notice to the Company at least 24 hours
prior to the Closing Date) at the Closing Date, for no additional consideration,
(i) warrants to purchase initially 350,000 shares of Common Stock at an initial
exercise price of $3.85 per share of Common Stock (of which warrants to purchase
125,000 shares of Common Stock will be issued to Internationale Nederlanden
(U.S.) Securities Corporation and warrants to purchase 225,000 shares of Common
Stock will be issued to BT Securities Corporation) (the "Additional Common Stock
Warrants") and (ii) warrants to purchase initially 150,000 shares of the
Company's Series F Preferred Stock at an initial exercise price of $3.85 per
share of Series F Preferred Stock (which warrant will be issued to BT Securities
Corporation) (the "Additional Preferred Stock Warrants" and, together with the
Additional Common Stock Warrants, the "Additional Warrants"). The shares of
Common Stock and shares of Series F Preferred Stock issuable upon exercise of
the Additional Warrants are herein referred to together as the "Additional
Warrant Shares". The Additional Common Stock Warrants will be issued under the
Warrant Agreement. The Additional Preferred Stock Warrants will be issued under
a warrant agreement, to be dated as of July 24, 1995 (the "Preferred Stock
Warrant Agreement") between the Company and BT Securities Corporation (or its
designee) as Warrant Agent (the "Preferred Stock Warrant Agent").
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4. Offering by the Initial Purchasers. The Initial Purchasers
propose to make an offering of the Securities at the price and upon the terms
set forth in the Final Memorandum, as soon as practicable after this Agreement
is entered into and as in the judgment of the Initial Purchasers is advisable.
5. Covenants of the Company and the Subsidiary Guarantors. Each of
the Company and the Subsidiary Guarantors jointly and severally covenants and
agrees with each of the Initial Purchasers that:
(a) The Company and the Subsidiary Guarantors will not amend or
supplement the Final Memorandum or any amendment or supplement thereto of which
the Initial Purchasers shall not previously have been advised and furnished a
copy for a reasonable period of time prior to the proposed amendment or
supplement and as to which the Initial Purchasers shall not have given their
consent. The Company and the Subsidiary Guarantors will promptly, upon the
reasonable request of the Initial Purchasers or counsel for the Initial
Purchasers, make any amendments or supplements to the Preliminary Memorandum or
the Final Memorandum that may be necessary or advisable in connection with the
resale of the Securities by the Initial Purchasers.
(b) The Company and the Subsidiary Guarantors will cooperate with
the Initial Purchasers in arranging for the qualification of the Securities for
offering and sale under the securities or "Blue Sky" laws of such jurisdictions
as the Initial Purchasers may designate and will continue such qualifications in
effect for as long as may be necessary to complete the resale of the Securities;
provided, however, that in connection therewith, neither of the Company nor any
Subsidiary Guarantor shall be required to qualify as a foreign corporation or to
execute a general consent to service of process in any jurisdiction or subject
itself to taxation in excess of a nominal dollar amount in any such jurisdiction
where it is not then so subject.
(c) If, at any time prior to the completion of the initial resale by
the Initial Purchasers of the Securities to persons other than affiliates of the
Initial Purchasers (as determined by the Initial Purchasers), any event occurs
as a result of which the Final Memorandum as then amended or supplemented would
include any untrue statement of a material fact, or omit to state a material
fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if for any other reason it
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is necessary at any time to amend or supplement the Final Memorandum to comply
with applicable law, the Company and the Subsidiary Guarantors will promptly
notify the Initial Purchasers thereof and will prepare, at the expense of the
Company and the Subsidiary Guarantors, an amendment or supplement to the Final
Memorandum that corrects such statement or omission or effects such compliance.
(d) The Company will, without charge, provide to the Initial
Purchasers and to counsel for the Initial Purchasers as many copies of the
Preliminary Memorandum and the Final Memorandum or any amendment or supplement
thereto as the Initial Purchasers may reasonably request.
(e) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Final Memorandum.
(f) For and during the period ending on the date no Securities are
outstanding, the Company will furnish to the Initial Purchasers copies of all
reports and other communications (financial or otherwise) furnished by the
Company or the Subsidiary Guarantors to the Trustee, Warrant Agent or the
holders of the Securities and, as soon as available, copies of any reports or
financial statements furnished to or filed by the Company or the Subsidiary
Guarantors with the Commission or any national securities exchange on which any
class of securities of the Company or the Subsidiary Guarantors may be listed.
(g) Prior to the Closing Date, the Company will furnish to the
Initial Purchasers, as soon as they have been prepared, if at all, a copy of any
unaudited interim financial statements of the Company for any period subsequent
to the period covered by the most recent financial statements appearing in the
Final Memorandum.
(h) None of the Company or any of its Affiliates will sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
"security" (as defined in the Act) which could be integrated with the sale of
the Securities in a manner which would require the registration under the Act of
the Securities.
(i) The Company and the Subsidiary Guarantors will not solicit any
offer to buy or offer to sell the Securities by means of any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Act) or
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in any manner involving a public offering within the meaning of Section 4(2) of
the Act.
(j) For so long as any of the Securities remain outstanding, the
Company and the Subsidiary Guarantors will make available, upon request, to any
seller of such Securities the information specified in Rule 144A(d)(4) under the
Act, unless the Company and the Subsidiary Guarantors are then subject to
Section 13 or 15(d) of the Exchange Act.
(k) Each of the Company and the Subsidiary Guarantors will use its
best efforts to (i) permit the Securities to be designated PORTAL securities in
accordance with the rules and regulations adopted by the NASD relating to
trading in the Private Offerings, Resales and Trading through Automated Linkages
market (the "PORTAL Market") and (ii) permit the Securities to be eligible for
clearance and settlement through The Depository Trust Company.
6. Expenses. The Company and the Subsidiary Guarantors agree,
jointly and severally, to pay all costs and expenses incident to the performance
of their obligations under this Agreement, whether or not the transactions
contemplated herein are consummated or this Agreement is terminated pursuant to
Section 11 hereof, including all costs and expenses incident to (i) the
printing, word processing or other production of documents with respect to the
transactions contemplated hereby, including any costs of printing the
Preliminary Memorandum and the Final Memorandum and any amendment or supplement
thereto, and any "Blue Sky" memoranda, (ii) all arrangements relating to the
delivery to the Initial Purchasers of copies of the foregoing documents, (iii)
the fees and disbursements of the counsel, the accountants and any other experts
or advisors retained by the Company, (iv) preparation (including printing),
issuance and delivery to the Initial Purchasers of the Securities, (v) the
qualification of the Securities under state securities and "Blue Sky" laws,
including filing fees and fees and disbursements of counsel for the Initial
Purchasers relating thereto, (vi) the fees and disbursements of counsel to the
Initial Purchasers in connection with the transactions contemplated hereby,
(vii) expenses in connection with any meetings with prospective investors in the
Securities, (viii) fees and expenses of the Trustee, the Warrant Agent and the
transfer agent for the Common Stock including fees and expenses of their
respective counsel, (ix) all expenses and listing fees incurred in connection
with the application for quotation of the Securities on the PORTAL Market and
(x) any fees charged by
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investment rating agencies for the rating of the Securities. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Initial Purchasers set forth in Section 7 hereof is not
satisfied, because this Agreement is terminated or because of any failure,
refusal or inability on the part of the Company or any Subsidiary Guarantor to
perform all obligations and satisfy all conditions on their part to be performed
or satisfied hereunder (other than solely by reason of a default by the Initial
Purchasers of their obligations hereunder after all conditions hereunder have
been satisfied in accordance herewith), the Company and the Subsidiary
Guarantors jointly and severally agree to promptly reimburse the Initial
Purchasers upon demand for all out-of-pocket expenses (including reasonable
fees, disbursements and charges of Cahill Gordon & Reindel, counsel for the
Initial Purchasers) that shall have been incurred by the Initial Purchasers in
connection with the proposed purchase and sale of the Securities. The Company
and the Subsidiary Guarantors shall not be liable to the Initial Purchasers for
loss of contemplated profits from the transactions covered by this Agreement.
7. Conditions of the Initial Purchasers' Obligations. The obligation
of the Initial Purchasers to purchase and pay for the Securities shall, in their
sole discretion, be subject to the satisfaction or waiver of the following
conditions on or prior to the Closing Date:
(a) On the Closing Date, the Initial Purchasers shall have received
the opinion, dated as of the Closing Date and addressed to the Initial
Purchasers, of Vinson & Elkins L.L.P., counsel for the Company and the
Subsidiary Guarantors, in form and substance satisfactory to counsel for the
Initial Purchasers, to the effect that:
(i) Each of the Company and the Subsidiary Guarantors is duly
incorporated, validly existing and in good standing under the laws of its
respective jurisdiction of incorporation and has all requisite corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Final Memorandum. Each of the
Company and the Subsidiary Guarantors is duly qualified as a foreign
corporation and in good standing in each jurisdiction where the ownership
or leasing of its properties or the conduct of its business requires such
qualification, except where the failure to be so qualified
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would not, individually or in the aggregate, have a Material Adverse
Effect.
(ii) As of the date hereof, the Company has the authorized, issued
and outstanding capitalization set forth in the Final Memorandum; except
as set forth in the Final Memorandum, all of the outstanding shares of
capital stock of the Subsidiary Guarantors are owned, directly or
indirectly, by the Company, and, to the best knowledge of such counsel,
free and clear of all liens, encumbrances, equities and claims or
restrictions on transferability or voting.
(iii) Except as set forth in the Final Memorandum, to the knowledge of
such counsel (A) no options, warrants or other rights to purchase from the
Company or any Subsidiary Guarantor shares of capital stock or ownership
interests in the Company or any Subsidiary Guarantor are outstanding, (B)
no agreements or other obligations of the Company or any Subsidiary
Guarantor to issue, or other rights to cause the Company or any Subsidiary
Guarantor to convert, any obligation into, or exchange any securities for,
shares of capital stock or ownership interests in the Company or any
Subsidiary Guarantor are outstanding and (C) no holder of securities of
the Company or any Subsidiary Guarantor is entitled to have such
securities registered under a registration statement filed by the Company
or any Subsidiary Guarantor under the Act with respect to the Securities
or the Warrant Shares.
(iv) The Senior Notes are in the form contemplated by the Indenture.
The Senior Notes have each been duly and validly authorized by the Company
and when executed (and assuming the due authorization, execution and
delivery of the Indenture by the Trustee and the execution, delivery and
authentication of the Senior Notes by the Trustee in accordance with the
Indenture) and delivered by the Company and, in the case of the Senior
Notes, paid for by the Initial Purchasers in accordance with the terms of
this Agreement, will constitute the valid and legally binding obligations
of the Company enforceable against the Company in accordance with their
terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity and the
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discretion of the court before which any proceeding therefor may be
brought.
(v) The Guarantees are in the form contemplated by the Indenture.
Each of the Subsidiary Guarantors has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Guarantees. The Guarantees endorsed on the Senior Notes have each been
duly and validly authorized by each of the Subsidiary Guarantors and, when
the Senior Notes are executed by the Company and each of the Subsidiary
Guarantors and authenticated by the Trustee in accordance with the
provisions of the Indenture and, in the case of the Senior Notes,
delivered to and paid for by the Initial Purchasers in accordance with the
terms of this Agreement, will constitute the valid and legally binding
obligations of each of the Subsidiary Guarantors, enforceable against each
of the Subsidiary Guarantors in accordance with their terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought.
(vi) Each of the Company and each of the Subsidiary Guarantors has
all requisite corporate power and authority to execute, deliver and
perform its respective obligations under the Indenture, the Senior Notes
and each Security Document to which it is a party; the Indenture is in
sufficient form for qualification under the TIA; the Indenture and each
Security Document to which it is a party have been duly and validly
authorized by each of the Company and each of the Subsidiary Guarantors
and, when duly executed and delivered by the Company and each of the
Subsidiary Guarantors a party thereto (assuming the due authorization,
execution and delivery thereof by the Trustee if the Trustee is required
to execute any such document), each will constitute the valid and legally
binding agreement of each of the Company and each of the Subsidiary
Guarantors a party thereto, enforceable against each of the Company and
each of the Subsidiary Guarantors in accordance with its terms, except
that the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights
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generally and (ii) general principles of equity and the discretion of the
court before which any proceeding therefor may be brought.
(vii) Each of the Company and the Subsidiary Guarantors has all
requisite corporate power and authority to execute, deliver and perform
its obligations under the Rights Agreements to which it is a party; each
of the Rights Agreements has been duly and validly authorized by the
Company and each of the Subsidiary Guarantors a party thereto and when
duly executed and delivered by the Company and each such Subsidiary
Guarantor (assuming the due authorization, execution and delivery thereof
by the Initial Purchasers), will constitute the valid and legally binding
agreement of the Company and each such Subsidiary Guarantor, enforceable
against the Company and each such Subsidiary Guarantor in accordance with
its terms, except that (A) the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights generally and
(ii) general principles of equity and the discretion of the court before
which any proceeding therefor may be brought and (B) any rights to
indemnity or contribution thereunder may be limited by federal and state
securities laws and public policy considerations.
(viii) Each of the Company and the Subsidiary Guarantors has all
requisite corporate power and authority to execute, deliver and perform
its obligations under the Credit Facility; the Credit Facility has been
duly and validly authorized by the Company and each of the Subsidiary
Guarantors a party thereto and, when duly executed and delivered by the
Company and each such Subsidiary Guarantor (assuming the due
authorization, execution and delivery thereof by ING Capital and the other
lenders party thereto), will constitute the valid and legally binding
agreement of the Company and each such Subsidiary Guarantor, enforceable
against the Company and each such Subsidiary Guarantor in accordance with
its terms, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, fraudulent conveyance, moratorium
or other similar laws now or hereafter in effect relating to creditors'
rights generally and (ii) general principles of equity and the discretion
of the court before which any proceeding therefor may be brought.
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(ix) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Warrant Agreement
and the Preferred Stock Warrant Agreement. Each of the Warrant Agreement
and the Preferred Stock Warrant Agreement has been duly and validly
authorized by the Company and, when duly executed and delivered by the
Company (assuming the due authorization, execution and delivery by the
Warrant Agent and the Preferred Stock Warrant Agent, as the case may be),
will constitute the valid and legally binding agreement of the Company,
enforceable against the Company in accordance with its terms, except that
the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally and (ii) general principles
of equity and the discretion of the court before which any proceeding
therefor may be brought.
(x) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Warrants and the
Additional Warrants. The Warrants and the Additional Warrants have been
duly and validly authorized by the Company and, when executed by the
Company and countersigned by the Warrant Agent in accordance with the
provisions of the Warrant Agreement (and, in the case of the Preferred
Stock Warrants, countersigned by the Preferred Stock Warrant Agent in
accordance with the provisions of the Preferred Stock Warrant Agreement)
and when delivered to and paid for by the Initial Purchasers in accordance
with the terms of this Agreement, will have been duly executed, issued and
delivered and will constitute the valid and legally binding obligations of
the Company, entitled to the benefits of the Warrant Agreement or the
Preferred Stock Warrant Agreement, as the case may be, and enforceable
against the Company in accordance with their terms, except that the
enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, moratorium or other similar laws now or hereafter in
effect relating to creditors' rights generally, and (ii) general
principles of equity and the discretion of the court before which any
proceeding therefor may be brought.
(xi) When issued in accordance with the terms and conditions
contained in the Warrant Agreement (or the Preferred Stock Warrant
Agreement, as the case may be) upon
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exercise of the Warrants and upon exercise of the Additional Warrants, the
Warrant Shares and the Additional Warrant Shares, as the case may be, will
be duly authorized, validly issued, fully paid and non-assessable and will
not be subject to any preemptive or similar rights. The Warrant Shares and
the Additional Warrant Shares, as the case may be, have been duly reserved
for issuance in accordance with the terms of the Warrants, the Warrant
Agreement, the Additional Warrants and the Preferred Stock Warrant
Agreement, as the case may be.
(xii) Each of the Company and the Subsidiary Guarantors has all
requisite corporate power and authority to execute, deliver and perform
its obligations under this Agreement and to consummate the transactions
contemplated hereby; the execution, delivery and performance of this
Agreement by the Company and the Subsidiary Guarantors and the
consummation by the Company and the Subsidiary Guarantors of the
transactions contemplated hereby have been duly and validly authorized by
all necessary corporate action on the part of the Company and each of the
Subsidiary Guarantors. This Agreement has been duly executed and delivered
by the Company and each of the Subsidiary Guarantors.
(xiii) The Indenture, the Senior Notes, the Guarantees, the Security
Documents, the Warrants, the Additional Warrants, the Warrant Shares, the
Common Stock, the Rights Agreements, the Warrant Agreement and the Credit
Facility conform in all material respects to the descriptions thereof
contained in the Final Memorandum.
(xiv) To the knowledge of such counsel, no legal or governmental
proceedings are pending or threatened to which any of the Company or the
Subsidiary Guarantors is a party or to which the property or assets of the
Company or any Subsidiary Guarantor is subject which, if determined
adversely to the Company or the Subsidiary Guarantors, would result,
individually or in the aggregate, in a Material Adverse Effect, or which
seeks to restrain, enjoin, prevent the consummation of or otherwise
challenge the issuance or sale of the Securities to be sold hereunder or
the consummation of the other transactions described in the Final
Memorandum under the caption "Use of Proceeds".
(xv) The execution and delivery of the Exchange Notes and the Private
Exchange Notes by the Company has been
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duly authorized by all necessary corporate action of the Company, and when
the Exchange Notes and the Private Exchange Notes have been duly executed
and delivered by the Company in accordance with the terms of the
Registration Rights Agreement and the Indenture, and assuming due
authentication by the Trustee, the Exchange Notes and the Private Exchange
Notes will constitute the legal, valid, binding and enforceable
obligations of the Company, entitled to the benefits of the Indenture,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which
any proceeding therefor may be brought.
(xvi) The Guarantees endorsed on the Exchange Notes and the Private
Exchange Notes by the Subsidiary Guarantors have been duly authorized by
all necessary corporate action of the Subsidiary Guarantors, and when the
Exchange Notes and the Private Exchange Notes have been duly executed and
delivered by the Company and the Subsidiary Guarantors in accordance with
the terms of the Registration Rights Agreement and the Indenture, and
assuming due authentication by the Trustee, will constitute the legal,
valid, binding and enforceable obligations of the Subsidiary Guarantors,
except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws now or
hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity and the discretion of the court before which
any proceeding therefor may be brought.
(xvii) The execution and delivery of this Agreement, the Indenture, the
Security Documents, the Warrant Agreement, the Preferred Stock Warrant
Agreement, the Rights Agreements, the Credit Facility and the consummation
of the transactions contemplated hereby and thereby (including, without
limitation, the issuance and sale of the Securities to the Initial
Purchasers) will not conflict with or constitute or result in a breach or
violation of or a default under (or an event which with notice or passage
of time or both would constitute a a default under) or violation of any of
(i) the terms or provisions of any indenture, mortgage, deed of trust,
loan agreement, note, lease, license, franchise agreement, permit,
certificate,
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contract or other agreement or instrument known to such counsel (including
in any event any of the foregoing which have been filed by the Company
with the Commission) to which the Company or any of the Subsidiary
Guarantors is a party or to which any of them or their respective
properties or assets is subject, except for any such conflict, breach,
violation, default or event which would not, individually or in the
aggregate, have a Material Adverse Effect, (ii) the certificate of
incorporation or bylaws (or similar organizational document) of the
Company or any of the Subsidiary Guarantors, or (iii) (assuming compliance
with all applicable state securities or "Blue Sky" laws and assuming the
accuracy of the representations and warranties of the Initial Purchasers
in Section 8 hereof) any statute, judgment, decree, order, rule or
regulation known to such counsel to be applicable to the Company or any of
the Subsidiary Guarantors or any of their respective properties or assets,
except for any such conflict, breach or violation which would not,
individually or in the aggregate, have a Material Adverse Effect.
(xviii) To the knowledge of such counsel, no consent, approval,
authorization or order of any governmental authority is required for the
issuance and sale by the Company and the Subsidiary Guarantors of the
Securities to the Initial Purchasers or the other transactions
contemplated hereby, except such as may be required under Blue Sky laws,
as to which such counsel need express no opinion, and those which have
previously been obtained.
(xix) None of the Company or the Subsidiary Guarantors is, or
immediately after the sale of the Securities to be sold hereunder and the
application of the proceeds from such sale (as described in the Final
Memorandum under the caption "Use of Proceeds") will be, an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended.
(xx) No registration under the Act of the Securities is required in
connection with the sale of the Securities to the Initial Purchasers as
contemplated by this Agreement and the Final Memorandum or in connection
with the initial resale of the Securities by the Initial Purchasers in
accordance with Section 8 of this Agreement, and prior to the commencement
of the Exchange Offer (as defined in the Registration Rights Agreement) or
the effectiveness of the Shelf Registration Statement (as defined in the
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Registration Rights Agreement), the Indenture is not required to be
qualified under the TIA, in each case assuming (i) that the purchasers who
buy such Securities in the initial resale thereof are qualified
institutional buyers as defined in Rule 144A promulgated under the Act
("QIBs" or "Qualified Institutional Buyers"), accredited investors as
defined in Rule 501(a) (1), (2), (3) or (7) promulgated under the Act
("Accredited Investors"), (ii) the accuracy of the Initial Purchasers'
representations in Section 8 and those of the Company and the Subsidiary
Guarantors contained in this Agreement regarding the absence of a general
solicitation in connection with the sale of such Securities to the Initial
Purchasers and the initial resale thereof and (iii) the due performance by
the Initial Purchasers of the agreements set forth in Section 8 hereof.
(xxi) Neither the consummation of the transactions contemplated by
this Agreement nor the sale, issuance, execution or delivery of the
Securities will violate Regulation G, T, U or X of the Board of Governors
of the Federal Reserve System.
At the time the foregoing opinion is delivered, Vinson & Elkins
L.L.P. shall additionally state that it has participated in conferences with
officers and other representatives of the Company and the Subsidiary Guarantors,
representatives of the independent public accountants for the Company,
representatives of the Initial Purchasers and counsel for the Initial
Purchasers, at which conferences the contents of the Final Memorandum and
related matters were discussed, and, although it has not independently verified
and is not passing upon and assumes no responsibility for the accuracy,
completeness or fairness of the statements contained in the Final Memorandum
(except to the extent specified in subsection 7(a)(xiii)), no facts have come to
its attention which lead it to believe that the Final Memorandum, on the date
thereof or at the Closing Date, contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or necessary
to make the statements contained therein, in light of the circumstances under
which they were made, not misleading (it being understood that such firm need
express no opinion with respect to the financial statements and related notes
thereto and the other financial, statistical, numerical and accounting data
included in the Final Memorandum). The opinion of Vinson & Elkins L.L.P.
described in this Section shall be rendered to the Initial Purchasers at the
request of
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the Company and the Subsidiary Guarantors and shall so state therein.
References to the Final Memorandum in this subsection (a) shall
include any amendment or supplement thereto prepared in accordance with the
provisions of this Agreement at the Closing Date.
(b) On the Closing Date, the Initial Purchasers shall have received
the opinion, in form and substance satisfactory to the Initial Purchasers, dated
as of the Closing Date and addressed to the Initial Purchasers, of Cahill Gordon
& Reindel, counsel for the Initial Purchasers, with respect to certain legal
matters relating to this Agreement and such other related matters as the Initial
Purchasers may require. In rendering such opinion, Cahill Gordon & Reindel shall
have received and may rely upon such certificates and other documents and
information as it may reasonably request to pass upon such matters.
(c) The Initial Purchasers shall have received from the Independent
Accountants a comfort letter or letters dated the date hereof and the Closing
Date, in form and substance satisfactory to counsel for the Initial Purchasers.
(d) The representations and warranties of each of the Company and
the Subsidiary Guarantors contained in this Agreement shall be true and correct
in all material respects on and as of the date hereof and on and as of the
Closing Date as if made on and as of the Closing Date; the statements of the
Company's and the Subsidiary Guarantors' officers made pursuant to any
certificate delivered in accordance with the provisions hereof shall be true and
correct in all material respects on and as of the date made and on and as of the
Closing Date; the Company and the Subsidiary Guarantors shall have complied in
all material respects with all agreements and satisfied all conditions on their
part to be performed or satisfied hereunder at or prior to the Closing Date;
and, except as described in the Final Memorandum (exclusive of any amendment or
supplement thereto after the date hereof), subsequent to the date of the most
recent financial statements in such Final Memorandum, there shall have been no
Material Adverse Change or any development that, singly or in the aggregate, is
reasonably likely to cause a Material Adverse Change.
(e) The sale of the Securities hereunder shall not be enjoined
(temporarily or permanently) on the Closing Date.
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(f) Subsequent to the date of the most recent financial statements
in the Final Memorandum (exclusive of any amendment or supplement thereto after
the date hereof), other than as described in such Final Memorandum, none of the
Company or the Subsidiary Guarantors shall have incurred any liabilities or
obligations, direct or contingent (other than in the ordinary course of
business), that are material to the Company or the Subsidiary Guarantors, taken
as a whole, or entered into any transactions not in the ordinary course of
business that are material to the business, condition (financial or other) or
results of operations or prospects of the Company or the Subsidiary Guarantors,
taken as a whole, and there shall not have been any adverse change in the
capital stock or long-term indebtedness of the Company or the Subsidiary
Guarantors that is material to the business, condition (financial or other) or
results of operations or prospects of the Company and the Subsidiary Guarantors,
taken as a whole.
(g) Subsequent to the date of the most recent financial statements
in the Final Memorandum (exclusive of any amendment or supplement thereto after
the date hereof), the conduct of the business and operations of the Company or
the Subsidiary Guarantors shall not have been interfered with by strike, fire,
flood, hurricane, accident or other calamity (whether or not insured) or by any
court or governmental action, order or decree, and, except as otherwise stated
therein, the properties of the Company or the Subsidiary Guarantors shall not
have sustained any loss or damage (whether or not insured) as a result of any
such occurrence, except any such interference, loss or damage which would not,
individually or in the aggregate, have a Material Adverse Effect.
(h) The Initial Purchasers shall have received certificates of the
Company and each of the Subsidiary Guarantors, dated the Closing Date, signed on
behalf of the Company and each of the Subsidiary Guarantors by their respective
Chairman of the Board, President or any Senior Vice President and the Chief
Financial Officer, to the effect that:
(i) The representations and warranties of the Company and each of
the Subsidiary Guarantors contained in this Agreement are true and correct
in all material respects as of the date hereof and as of the Closing Date,
and the Company and each of the Subsidiary Guarantors have performed all
covenants and agreements and satisfied hereunder all conditions on their
part to be performed or satisfied hereunder at or prior to the Closing
Date;
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(ii) At the Closing Date, since the date hereof or since the date of
the most recent financial statements in the Final Memorandum (exclusive of
any amendment or supplement thereto after the date hereof), no event or
events have occurred, no information has become known nor does any
condition exist that, individually or in the aggregate, would have a
Material Adverse Effect;
(iii) Since the date hereof or since the date of the most recent
financial statements in the Final Memorandum (exclusive of any amendment
or supplement thereto after the date hereof), none of the Company or any
of the Subsidiary Guarantors has incurred any liabilities or obligations,
direct or contingent (other than in the ordinary course of business), that
are material to the Company or the Subsidiary Guarantors, or entered into
any transactions not in the ordinary course of business that are material
to the business, condition (financial or other) or results of operations
or prospects of the Company or the Subsidiary Guarantors, taken as a
whole, and there has not been any change in the capital stock or long-term
indebtedness of the Company or the Subsidiary Guarantors that is material
to the business, condition (financial or other) or results of operations
or prospects of the Company or the Subsidiary Guarantors, taken as a
whole, except as described in such Final Memorandum; and
(iv) The sale of the Securities hereunder has not been enjoined
(temporarily or permanently).
(i) On the Closing Date, the Initial Purchasers shall have received
the Rights Agreements executed by the Company and the Subsidiary Guarantors a
party thereto, and BT Securities Corporation shall have received the Preferred
Stock Warrant Agreement and the Additional Warrants executed by the Company, and
such agreements shall be in full force and effect at all times from and after
the Closing Date.
(j) All of the conditions contained in the Credit Facility to be
fulfilled or complied with prior to any borrowing under such agreement shall
have been complied with (other than the sale of the Securities as set forth
herein and the application of the proceeds therefrom) and the Credit Facility
shall be in full force and effect.
(k) The Initial Purchasers shall have received from Ryder Scott
Company letters dated the date hereof and the
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Closing Date, in form and substance satisfactory to the Initial Purchasers and
their counsel, with respect to an estimate of the reserves, future production
and income attributable to certain leasehold and royalty interests of the
Company and the Subsidiary Guarantors and such other matters as the Initial
Purchasers shall reasonably request.
(l) The holders of the Series D Preferred Stock of the Company shall
have exchanged their warrants to purchase an aggregate of 3,424,666 shares of
Common Stock for 1,100,000 shares of Common Stock, all on terms and conditions
and pursuant to documentation satisfactory to the Initial Purchasers.
(m) At least one full business day prior to the Closing Date, the
Initial Purchasers shall have received from the Company an executed Deed of
Trust, Mortgage, Line of Credit Mortgage, Assignment, Security Agreement,
Fixture Filing and Financing Statement relating to certain real property in Kern
County, California, in form and substance satisfactory to the Initial Purchasers
and their counsel.
(n) At least one full business day prior to the Closing Date, the
Initial Purchasers shall have received from the Company an executed Deed of
Trust, Mortgage, Line of Credit Mortgage, Assignment, Security Agreement and
Financing Statement relating to certain real property in New Mexico and
Texas, in form and substance satisfactory to the Initial Purchasers and their
counsel.
(o) At least one full business day prior to the Closing Date, the
Initial Purchasers shall have received from the Company an executed Deed of
Trust, Mortgage, Line of Credit Mortgage, Assignment, Security Agreement and
Financing Statement relating to certain real property in Louisiana, in form and
substance satisfactory to the Initial Purchasers and their counsel.
(p) At least one full business day prior to the Closing Date, the
Initial Purchasers shall have received from Warrior, Inc. an executed Mortgage,
Line of Credit Mortgage, Assignment, Security Agreement and Financing Statement
relating to certain real property in New Mexico, in form and substance
satisfactory to the Initial Purchasers and their counsel.
(q) At least one full business day prior to the Closing Date, the
Initial Purchasers shall have received from the Company financing statements to
be filed in California,
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Louisiana, New Mexico and Texas, in form and substance satisfactory to the
Initial Purchasers and their counsel.
(r) At least one full business day prior to the Closing Date, the
Initial Purchasers shall have received from Warrior, Inc. financing statements
to be filed in New Mexico and Texas, in form and substance satisfactory to the
Initial Purchasers and their counsel.
(s) At least one full business day prior to the Closing Date, the
Initial Purchasers shall have received from Chicago Title Insurance Company a
policy (or commitment to issue a policy) of title insurance insuring (or
committing to insure) the lien of the document referred to in Section 7(m)
above, in form and substance and with such endorsements satisfactory to the
Initial Purchasers and their counsel.
(t) The Initial Purchasers shall have received from local counsel to
the Company in each of California, Louisiana, New Mexico and Texas an opinion,
in form and substance satisfactory to the Initial Purchasers and their counsel,
dated as of the Closing Date and addressed to the Initial Purchasers, with
respect to certain legal matters relating to the document referred to in Section
7(m) above and such other related matters as the Initial Purchasers may require.
(u) At least one full business day prior to the Closing Date, the
Initial Purchasers shall have received UCC, judgment and tax lien search reports
from (i) the states of California, Louisiana, New Mexico and Texas and each
county therein in which the Company owns Collateral (as defined in the
Indenture) in such states and (ii) the state of New Mexico and each county
therein in which Warrior, Inc. owns Collateral, which reports and the results
thereof shall in all respects be satisfactory to the Initial Purchasers and
their counsel.
(v) At least one full business day prior to the Closing Date, the
Initial Purchasers shall have received from the Company and Warrior, Inc.
policies or certificates of insurance naming the Trustee as additional insured
or loss payee in respect of insurance coverages maintained in respect of
Collateral.
(w) The Initial Purchasers shall have received an executed
Intercreditor Agreement between Internationale Nederlanden (U.S.) Capital
Corporation, as agent, and the Trustee, and acknowledged by the Company and
Warrior, Inc., in form
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and substance satisfactory to the Initial Purchasers and their counsel.
(x) The Initial Purchasers shall have received all other documents,
agreements, certificates, instruments and opinions as the Initial Purchasers and
their counsel may in their sole discretion require or deem necessary to perfect
the liens created, or purported or intended to be created, by the Security
Documents.
(y) A certificate of designation covering the Series F Preferred
Stock in form and substance satisfactory to BT Securities Corporation and its
counsel shall have been filed and accepted for filing with the Secretary of
State of the State of Delaware.
On or before the Closing Date, the Initial Purchasers and counsel
for the Initial Purchasers shall have received such further documents, opinions,
certificates, letters and schedules or instruments relating to the business,
corporate, legal and financial affairs of the Company and the Subsidiary
Guarantors as they shall have heretofore reasonably requested from the Company
and the Subsidiary Guarantors.
All such documents, opinions, certificates, letters, schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Initial Purchasers and counsel for the Initial Purchasers. The Company and the
Subsidiary Guarantors shall furnish to the Initial Purchasers such conformed
copies of such documents, opinions, certificates, letters, schedules and
instruments in such quantities as the Initial Purchasers shall reasonably
request.
8. Offering of Securities; Restrictions on Transfer. Each of the
Initial Purchasers represents and warrants (as to itself only) that it is a
qualified institutional buyer as defined in Rule 144A promulgated under the Act
(a "QIB"). Each of the Initial Purchasers agrees with the Company and the
Subsidiary Guarantors (as to itself only) that (a) it has not and will not
solicit offers for, or offer or sell, the Securities by any form of general
solicitation or general advertising (as those terms are used in Regulation D
under the Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Act; and (b) it has and will solicit offers for the
Securities only from, and will offer the Securities only to (A) in the case of
offers inside the United States,
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(i) persons whom the Initial Purchasers reasonably believe to be QIBs or, if any
such person is buying for one or more institutional accounts for which such
person is acting as fiduciary or agent, only when such person has represented to
the Initial Purchasers that each such account is a QIB, to whom notice has been
given that such sale or delivery is being made in reliance on Rule 144A under
the Act ("Rule 144A"), and, in each case, in transactions under Rule 144A or
(ii) a limited number of other institutional investors reasonably believed by
the Initial Purchasers to be Accredited Investors that, prior to their purchase
of the Securities, deliver to the Initial Purchasers a letter containing the
representations and agreements set forth in Exhibit A to the Final Memorandum
(or, if the Final Memorandum is not in existence, in the most recent Memorandum)
and (B) in the case of offers outside the United States, to persons other than
U.S. persons ("foreign purchasers," which term shall include dealers or other
professional fiduciaries in the United States acting on a discretionary basis
for foreign beneficial owners (other than an estate or trust)); provided,
however, that, in the case of this clause (b), in purchasing such Securities
such persons are deemed to have represented and agreed as provided under the
caption "Transfer Restrictions" contained in the Final Memorandum (or, if the
Final Memorandum is not in existence, in the most recent Memorandum).
9. Indemnification and Contribution. (a) The Company and the
Subsidiary Guarantors, jointly and severally, agree to indemnify and hold
harmless the Initial Purchasers, and each person, if any, who controls any
Initial Purchaser within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act, against any losses, claims, damages or liabilities to which
any Initial Purchaser or such controlling person may become subject under the
Act, the Exchange Act or otherwise, insofar as any such losses, claims, damages
or liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in any Memorandum or any amendment or supplement thereto or
any application or other document, or any amendment or supplement thereto,
executed by the Company or any Subsidiary Guarantor or based upon written
information furnished by or on behalf of the Company or any Subsidiary
Guarantor filed in any jurisdiction in order to qualify the Securities
under the securities or "Blue Sky" laws thereof or filed with any
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securities association or securities exchange (each an "Application"); or
(ii) the omission or alleged omission to state, in any Memorandum or
any amendment or supplement thereto or any Application, a material fact
required to be stated therein or necessary to make the statements therein
not misleading,
and will reimburse, as incurred, the Initial Purchasers and each such
controlling person for any legal or other expenses incurred by the Initial
Purchasers or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action in respect thereof; provided,
however, the Company and the Subsidiary Guarantors will 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 any untrue statement or alleged untrue statement or
omission or alleged omission made in any Memorandum or any amendment or
supplement thereto or any Application in reliance upon and in conformity with
written information concerning the Initial Purchasers furnished to the Company
or the Subsidiary Guarantors by the Initial Purchasers specifically for use
therein. This indemnity agreement will be in addition to any liability that the
Company or the Subsidiary Guarantors may otherwise have to the indemnified
parties. Neither the Company nor the Subsidiary Guarantors shall be liable under
this Section 9 for any settlement of any claim or action effected without their
prior written consent, which shall not be unreasonably withheld.
(b) The Initial Purchasers agree to indemnify and hold harmless each
of the Company, the Subsidiary Guarantors, their directors, their officers and
each person, if any, who controls the Company or any such Subsidiary Guarantor
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
against any losses, claims, damages or liabilities to which the Company or the
Subsidiary Guarantors or any such director, officer or controlling person may
become subject under the Act, the Exchange Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in any Memorandum or any amendment or supplement thereto
or any Application, or (ii) the omission or the alleged omission to state
therein a material fact required to be stated in any
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Memorandum or any amendment or supplement thereto or any Application, 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 reliance upon and in
conformity with written information concerning such Initial Purchaser, furnished
to the Company by the Initial Purchasers specifically for use therein; and
subject to the limitation set forth immediately preceding this clause, will
reimburse, as incurred, any legal or other expenses incurred by the Company or
any Subsidiary Guarantor or any such director, officer or controlling person in
connection with investigating or defending against or appearing as a third party
witness in connection with any such loss, claim, damage, liability or action in
respect thereof. This indemnity agreement will be in addition to any liability
that the Initial Purchasers may otherwise have to the indemnified parties. The
Initial Purchasers shall not be liable under this Section 9 for any settlement
of any claim or action effected without their consent, which shall not be
unreasonably withheld. Neither the Company nor any Subsidiary Guarantor shall,
without the prior written consent of the Initial Purchasers, effect any
settlement or compromise of any pending or threatened proceeding in respect of
which any Initial Purchaser is or could have been a party, or indemnity could
have been sought hereunder by any Initial Purchaser, unless such settlement (A)
includes an unconditional written release of the Initial Purchasers, in form and
substance reasonably satisfactory to the Initial Purchasers, from all liability
on claims that are the subject matter of such proceeding and (B) does not
include any statement as to an admission of fault, culpability or failure to act
by or on behalf of any Initial Purchaser.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 9, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party of the commencement
thereof in writing; but the omission to so notify the indemnifying party (i)
will not relieve it from any liability under paragraph (a) or (b) above unless
and to the extent such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraphs (a) and (b)
above. In case
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any such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if (i) the use of counsel chosen by the indemnifying
party to represent the indemnified party would present such counsel with a
conflict of interest, (ii) the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. After notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and approval by such indemnified
party of counsel appointed to defend such action, the indemnifying party will
not be liable to such indemnified party under this Section 9 for any legal or
other expenses, other than reasonable costs of investigation, subsequently
incurred by such indemnified party in connection with the defense thereof,
unless (i) the indemnified party shall have employed separate counsel in
accordance with the proviso to the immediately preceding sentence (it being
understood, however, that in connection with such action the indemnifying party
shall not be liable for the expenses of more than one separate counsel (in
addition to local counsel) in any one action or separate but substantially
similar actions in the same jurisdiction arising out of the same general
allegations or circumstances, designated by the Initial Purchasers in the case
of paragraph (a) of this Section 9 or the Company or the Subsidiary Guarantors
in the case of paragraph (b) of this Section 9, representing the indemnified
parties under such paragraph (a) or paragraph (b), as the case may be, who are
parties to such action or actions) or (ii) the indemnifying party has authorized
in writing the employment of counsel for the indemnified party at the expense of
the indemnifying party. After such
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notice from the indemnifying party to such indemnified party, the indemnifying
party will not be liable for the costs and expenses of any settlement of such
action effected by such indemnified party without the prior written consent of
the indemnifying party (which consent shall not be unreasonably withheld),
unless such indemnified party waived in writing its rights under this Section 9,
in which case the indemnified party may effect such a settlement without such
consent.
(d) In circumstances in which the indemnity agreement provided for
in the preceding paragraphs of this Section 9 is unavailable to, or insufficient
to hold harmless, an indemnified party in respect of any losses, claims, damages
or liabilities (or actions in respect thereof), each indemnifying party, in
order to provide for just and equitable contribution, 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 (i) the relative benefits received by
the indemnifying party or parties on the one hand and the indemnified party on
the other from the offering of the Securities or (ii) if the allocation provided
by the foregoing clause (i) is not permitted by applicable law, not only such
relative benefits but also the relative fault of the indemnifying party or
parties on the one hand and the indemnified party on the other in connection
with the statements or omissions or alleged statements or omissions that
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof). The relative benefits received by the Company and the Subsidiary
Guarantors on the one hand and any Initial Purchaser on the other shall be
deemed to be in the same proportion as the total proceeds from the offering
(before deducting expenses) received by the Company and the Subsidiary
Guarantors bear to the total discounts and commissions received by such Initial
Purchaser. The relative fault of the parties 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 or the Subsidiary Guarantors on
the one hand, or such Initial Purchaser on the other, the parties' relative
intent, knowledge, access to information and opportunity to correct or prevent
such statement or omission or alleged statement or omission, and any other
equitable considerations appropriate in the circumstances.
(e) The Company, the Subsidiary Guarantors and the Initial
Purchasers agree that it would not be equitable if the
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amount of such contribution were determined by pro rata or per capita allocation
or by any other method of allocation that does not take into account the
equitable considerations referred to in the first sentence of the immediately
preceding paragraph (d). Notwithstanding any other provision of the immediately
preceding paragraph (d), no Initial Purchaser shall be obligated to make
contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by such Initial Purchaser under this
Agreement, less the aggregate amount of any damages that such Initial Purchaser
has otherwise been required to pay by reason of the untrue or alleged untrue
statements or the omissions or alleged omissions to state a material fact, and
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of the immediately
preceding paragraph (d), each person, if any, who controls an Initial Purchaser
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
shall have the same rights to contribution as the Initial Purchasers, and each
director of the Company and the Subsidiary Guarantors, each officer of the
Company and the Subsidiary Guarantors and each person, if any, who controls the
Company or the Subsidiary Guarantors within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, shall have the same rights to contribution as
the Company and the Subsidiary Guarantors.
10. Survival Clause. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company and the
Subsidiary Guarantors, their respective officers and the Initial Purchasers set
forth in this Agreement or made by or on behalf of them pursuant to this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company and the Subsidiary Guarantors,
any of their respective officers or directors, the Initial Purchasers or any
controlling person referred to in Section 9 hereof and (ii) delivery of and
payment for the Securities. The respective agreements, covenants, indemnities
and other statements set forth in Sections 6, 9 and 16 hereof shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement.
11. Termination. (a) This Agreement may be terminated in the sole
discretion of the Initial Purchasers by notice to the Company given prior to the
Closing Date in the event that the Company or any of the Subsidiary Guarantors
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shall have failed, refused or been unable to perform all obligations and satisfy
all conditions on their respective part to be performed or satisfied hereunder
at or prior thereto or, if at or prior to the Closing Date:
(i) any of the Company or the Subsidiary Guarantors shall have
sustained any loss or interference with respect to its businesses or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any strike, labor dispute,
slow down or work stoppage or any legal or governmental proceeding, which
loss or interference, in the sole judgment of the Initial Purchasers, has
had or has a Material Adverse Effect, or there shall have been, in the
sole judgment of the Initial Purchasers, any Material Adverse Change, or
any event or development involving or reasonably likely to cause or result
in a Material Adverse Change (including without limitation a change in
management or control of the Company or the Subsidiary Guarantors), except
in each case as described in the Final Memorandum (exclusive of any
amendment or supplement thereto);
(ii) trading in securities of the Company or in securities generally
on the New York Stock Exchange, American Stock Exchange or the NASDAQ
National Market shall have been suspended or minimum or maximum prices
shall have been established on any such exchange or market;
(iii) a banking moratorium shall have been declared by
New York or United States authorities;
(iv) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, or (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or any other national or international
calamity or emergency, or (C) any material change in the financial markets
of the United States which, in the case of (A), (B) or (C) above and in
the sole judgment of the Initial Purchasers, makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Final Memorandum; or
(v) any securities of the Company shall have been downgraded or
placed on any "watch list" for possible downgrading by any nationally
recognized statistical rating organization.
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(b) Termination of this Agreement pursuant to this Section 11 shall
be without liability of any party to any other party except as provided in
Section 10 hereof.
12. Information Supplied by the Initial Purchasers. The statements
set forth in the last paragraph on the front cover page and in the second and
third sentences of the third paragraph under the heading "Private Placement" in
the Final Memorandum (to the extent such statements relate to the Initial
Purchasers) constitute the only information furnished by the Initial Purchasers
to the Company for the purposes of Sections 2(a) and 9 hereof.
13. Notices. All communications hereunder shall be in writing and,
if sent to the Initial Purchasers, shall be mailed or delivered or telecopied
and confirmed in writing to (i) BT Securities Corporation, 130 Liberty Street,
New York, New York 10006, Attention: Corporate Finance Department, Telecopy No.:
(212) 250-7200; if sent to the Company or any Subsidiary Guarantor, shall be
mailed or delivered or telecopied and confirmed in writing to the Company at
Five Post Oak Park, 4400 Post Oak Parkway, Suite 2200, Houston, Texas 77027,
Attention: Chief Financial Officer, Telecopy No.: (713) 961-9773; with a copy to
Vinson & Elkins L.L.P., 1001 Fannin, Suite 2300, Houston, Texas 77002,
Attention: John S. Watson, Esq., Telecopy No. (713) 758-2346.
All such notices and communications shall be deemed to have been
duly given: when delivered by hand, if personally delivered; five business days
after being deposited in the mail, postage prepaid, if mailed; one business day
after being timely delivered to a next-day air courier; and when receipt is
acknowledged by the addressee, if telecopied.
14. Successors. This Agreement shall inure to the benefit of and be
binding upon the Initial Purchasers, the Company and the Subsidiary Guarantors
and their respective successors and legal representatives, and nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
other person any legal or equitable right, remedy or claim under or in respect
of this Agreement, or any provisions herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole and
exclusive benefit of such persons and for the benefit of no other person except
that (i) the indemnities of the Company and the Subsidiary Guarantors contained
in Section 9 of this Agreement shall also be for the benefit of any person or
persons who
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control the Initial Purchasers within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act and (ii) the indemnities of the Initial
Purchasers contained in Section 9 of this Agreement shall also be for the
benefit of the directors of the Company and the Subsidiary Guarantors, their
respective officers and any person or persons who control the Company or the
Subsidiary Guarantors within the meaning of Section 15 of the Act or Section 20
of the Exchange Act. No purchaser of Securities from the Initial Purchasers will
be deemed a successor because of such purchase.
15. Miscellaneous. If, on the Closing Date, either of the Initial
Purchasers shall fail or refuse to purchase Securities that it has agreed to
purchase hereunder on such date, and the aggregate amount of Securities which
such defaulting Initial Purchaser agreed but failed or refused to purchase is
not more than one-tenth of the aggregate amount of Securities to be purchased on
such date, the other Initial Purchaser shall be obligated to purchase the
Securities which such defaulting Initial Purchaser agreed but failed or refused
to purchase on such date. If, on the Closing Date any Initial Purchaser shall
fail or refuse to purchase Securities which it agreed to purchase hereunder on
such date and the aggregate amount of Securities with respect to which such
default occurs is more than one-tenth of the aggregate amount of Securities to
be purchased on such date and arrangements satisfactory to the nondefaulting
Initial Purchaser and the Company for the purchase of such Securities are not
made within 36 hours after such default, this Agreement shall terminate without
liability on the part of any nondefaulting Purchaser or of the Company, except
as provided in Section 10. In any such case either the nondefaulting Initial
Purchaser or the Company shall have the right to postpone the Closing Date, but
in no event for longer than seven days, in order that the required changes, if
any, in the Final Memorandum or in any other documents or arrangements may be
effected. Any action taken under this paragraph shall not relieve any defaulting
Initial Purchaser from liability in respect of any default of such Initial
Purchaser under this Agreement.
16. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO
CONTRACTS MADE AND TO BE PERFORMED WHOLLY THEREIN, WITHOUT GIVING EFFECT TO ANY
PROVISIONS THEREOF RELATING TO CONFLICTS OF LAW.
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17. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
46
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement among the Company,
the Subsidiary Guarantors and the Initial Purchasers.
Very truly yours,
HARCOR ENERGY, INC.
By:
---------------------------
Name:
Title:
WARRIOR, INC.
By:
---------------------------
Name:
Title:
HTAC INVESTMENTS, INC.
By:
---------------------------
The foregoing Agreement is
hereby confirmed and accepted
as of the date first above
written.
BT SECURITIES CORPORATION
By:
--------------------------
Name:
Title:
INTERNATIONALE NEDERLANDEN
(U.S.) SECURITIES CORPORATION
By:
--------------------------
Name:
Title:
47
SCHEDULE 1
Number
Initial Purchaser of Units
- ----------------- --------
BT Securities Corporation................. 48,750
Internationale Nederlanden (U.S.)
Securities Corporation.................. 16,250
------
Total............................... 65,000
======