32,000,000 Aggregate Principal Amount of 8.25% Senior Convertible Notes due 2013 HARVEST NATURAL RESOURCES, INC. PLACEMENT AGENT AGREEMENT
Exhibit 10.1
Execution Copy
$32,000,000 Aggregate Principal Amount of 8.25% Senior Convertible Notes due 2013
PLACEMENT AGENT AGREEMENT
February 10, 2010
LAZARD CAPITAL MARKETS LLC
XXXXXXX XXXXXXXX AND COMPANY, LLC
c/o Lazard Capital Markets LLC
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXXXXXX XXXXXXXX AND COMPANY, LLC
c/o Lazard Capital Markets LLC
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
1. Introduction. Harvest Natural Resources, Inc., a Delaware corporation (the
“Company”), proposes to issue and sell to the purchasers, pursuant to the terms and conditions of
this Placement Agent Agreement (this “Agreement”) and the Subscription Agreements in the form of
Exhibit A attached hereto (the “Subscription Agreements”) entered into with the purchasers
identified therein (each a “Purchaser” and, collectively, the “Purchasers”), an aggregate principal
amount of $32,000,000 of the Company’s 8.25% Senior Convertible Notes due 2013 (the “Notes”).
The Notes will be issued pursuant to an Indenture, as supplemented by a supplemental indenture to
be dated as of the Closing Date (defined in Section 5 below) (collectively, the
“Indenture”) between the Company and U.S. Bank National Association, as trustee (the “Trustee”).
Securities issued via Deposit/Withdrawal At Custodian will be issued to Cede & Co., as nominee of
The Depository Trust Company (“DTC”) pursuant to a letter of representations (the “DTC Agreement”),
between the Company and DTC. The Notes are convertible into shares (the “Conversion Shares”) of the
common stock, $0.01 par value per share (the “Common Stock”), of the Company, in accordance with
the terms of the Notes and the Indenture, at the initial conversion rate specified in the Indenture
and the Notes, under the circumstances and subject to adjustment as set forth in the Indenture.
The Notes and the Conversion Shares are collectively referred to herein as the “Securities.”
Lazard Capital Markets LLC (“LCM”) and Xxxxxxx Xxxxxxxx and Company, LLC (“MWC”, and together
with LCM, the “Placement Agents”) acted as the placement agents in accordance with the terms and
conditions hereof. LCM is acting as the representative of the Placement Agents and in such
capacity is hereinafter referred to as the “Representative.”
2. Agreement to Act as Placement Agents; Placement of Securities. On the basis of the
representations, warranties and agreements of the Company herein contained, and subject to all the
terms and conditions set forth in this Agreement:
2.1 The Company authorizes the Placement Agents to act as its exclusive agents to
solicit offers for the purchase of all or part of the Notes from the Company in connection
with the proposed offering of the Securities (the “Offering”). Until the
Closing Date (as
defined in Section 4 hereof), the Company shall not, without the prior written
consent of the Representative, solicit or accept offers to purchase the Notes otherwise than
through the Placement Agents. LCM may utilize the expertise of Lazard Frères & Co. LLC in
connection with LCM’s placement agent activities.
2.2 The Placement Agents, as agents of the Company, shall use their commercially
reasonable best efforts to solicit offers to purchase the Notes from the Company on the
terms and subject to the conditions set forth in the Prospectus (as defined below). The
Placement Agents shall use their commercially reasonable efforts to assist the Company in
obtaining performance by each Purchaser whose offer to purchase Stock was solicited by the
Placement Agents and accepted by the Company, but the Placement Agents shall not, except as
otherwise provided in this Agreement, be obligated to disclose the identity of any potential
purchaser or have any liability to the Company in the event any such purchase is not
consummated for any reason. Under no circumstances will the Placement Agents be obligated to
underwrite or purchase any Notes for their own account and, in soliciting purchases of the
Notes, the Placement Agents shall act solely as the Company’s agents and not as principals.
Notwithstanding the foregoing and except as otherwise provided in Section 2.3, it is
understood and agreed that the Placement Agents (or their affiliates) may, solely at its
discretion and without any obligation to do so, purchase Notes as principals.
2.3 Subject to the provisions of this Section 2, offers for the purchase of
Notes will be solicited by the Placement Agents as agents for the Company at such times and
in such amounts as the Placement Agents deem advisable. The Placement Agents will
communicate to the Company, orally or in writing, each reasonable offer to purchase Notes
received by them as agents of the Company. The Company shall have the sole right to accept
offers to purchase the Notes and may reject any such offer, in whole or in part, in its sole
discretion. The Placement Agents have the right, in their discretion reasonably exercised,
without notice to the Company, to reject any offer to purchase Notes received by them, in
whole or in part, and any such rejection shall not be deemed a breach of this Agreement.
2.4 The Notes are being sold to the Purchasers at a purchase price of 100% of the
aggregate principal amount of the Notes. The purchases of the Notes by the Purchasers shall
be evidenced by the execution of a Subscription Agreement by each of the Purchasers and the
Company.
2.5 As compensation for services rendered, on the Closing Date (as defined in
Section 4 hereof), the Company shall pay to the Representative on behalf of the
Placement Agents by wire transfer of immediately available funds to an account or accounts
designated by the Representative, an aggregate amount equal to six percent (6%)
of the gross proceeds received by the Company from the sale of the Notes on such Closing
Date (the “Placement Fee”).
2.6 No Notes which the Company has agreed to sell pursuant to this Agreement and the
Subscription Agreements shall be deemed to have been purchased and paid for, or sold by the
Company, until such Notes shall have been delivered to the
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Purchaser thereof against payment
by such Purchaser as described in this Agreement and such Purchaser’s Subscription
Agreement. If the Company shall default in its obligations to deliver any portion of the
Securities to a Purchaser whose offer it has accepted, the Company shall indemnify and hold
the Placement Agents harmless against any loss, claim, damage or expense arising from or as
a result of such default by the Company in accordance with the procedures set forth in
Section 8(c) herein.
3. Representations and Warranties of the Company. The Company represents and warrants
to, and agrees with, the Placement Agents and the Purchasers that:
(a) The Company has prepared and filed in conformity with the requirements of the
Securities Act of 1933, as amended (the “Securities Act”), and published rules and
regulations thereunder (the “Rules and Regulations”) adopted by the Securities and Exchange
Commission (the “Commission”) a “shelf” Registration Statement (as hereinafter defined) on
Form S-3 (File No. 333-162858), which became effective as of November 16, 2009 (the
“Effective Date”), including a base prospectus (the “Base Prospectus”), and such amendments
and supplements thereto relating to the Securities as may have been required to the date of
this Agreement. The term “Registration Statement” as used in this Agreement means the
registration statement (including all exhibits, financial schedules and all documents and
information deemed to be a part of the Registration Statement pursuant to Rule 430A of the
Rules and Regulations), as amended and/or supplemented to the date of this Agreement,
including the Base Prospectus. The Registration Statement is effective under the Securities
Act and no stop order preventing or suspending the effectiveness of the Registration
Statement or suspending or preventing the use of the Prospectus has been issued by the
Commission and no proceedings for that purpose have been instituted or, to the knowledge of
the Company, are threatened by the Commission. The Company, if required by the Rules and
Regulations of the Commission, will file the Prospectus (as defined below), with the
Commission pursuant to Rule 424(b) of the Rules and Regulations. The term “Prospectus” as
used in this Agreement means the Prospectus, in the form in which it is to be filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations, or, if the Prospectus is
not to be filed with the Commission pursuant to Rule 424(b), the Prospectus in the form
included as part of the Registration Statement as of the Effective Date, except that if any
revised prospectus or prospectus supplement shall be provided to the Representative by the
Company for use in connection with the offering and sale of the Securities which differs
from the Prospectus (whether or not such revised prospectus or prospectus supplement is
required to be filed by the Company pursuant to Rule 424(b) of the Rules and Regulations),
the term “Prospectus” shall refer to such revised prospectus or prospectus supplement, as
the case may be, from and after the time it is first provided to the Placement Agents for
such use (or in the form first made available to the Placement Agents by the Company to meet
the requests of prospective purchasers pursuant to Rule 173 under the Securities Act). Any
preliminary prospectus or prospectus subject to
completion included in the Registration Statement or filed with the Commission pursuant
to Rule 424 of the Rules and Regulations is hereafter called a “Preliminary Prospectus.”
Any reference herein to the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 which were filed under the Securities
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Exchange Act
of 1934, as amended (the “Exchange Act”), on or before the last to occur of the Effective
Date, the date of the Preliminary Prospectus, or the date of the Prospectus, and any
reference herein to the terms “amend,” “amendment,” or “supplement” with respect to the
Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include (i) the filing of any document under the Exchange Act after the
Effective Date, the date of such Preliminary Prospectus or the date of the Prospectus, as
the case may be, which is incorporated by reference and (ii) any such document so filed. If
the Company has filed an abbreviated registration statement to register additional
securities pursuant to Rule 462(b) under the Rules and Regulations (the “462(b) Registration
Statement”), then any reference herein to the Registration Statement shall also be deemed to
include such 462(b) Registration Statement.
(b) As of the Applicable Time (as defined below) and as of the Closing Date, neither
(i) any General Use Free Writing Prospectus (as defined below) issued at or prior to the
Applicable Time, and the Pricing Prospectus (as defined below) and the information included
on Schedule A hereto, all considered together (collectively, the “General Disclosure
Package”), (ii) any individual Limited Use Free Writing Prospectus (as defined below), nor
(iii) the bona fide electronic road show (as defined in Rule 433(h)(5) of the Rules and
Regulations), if any, that has been made available without restriction to any person, when
considered together with the General Disclosure Package, included or will include, any
untrue statement of a material fact or omitted or as of the Closing Date will omit, to state
a material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however, that the
Company makes no representations or warranties as to information contained in or omitted
from any Issuer Free Writing Prospectus, in reliance upon, and in conformity with, written
information furnished to the Company by the Representative by or on behalf of the Placement
Agents specifically for inclusion therein, which information the parties hereto agree is
limited to the Placement Agents’ Information (as defined in Section 18). As used in
this paragraph (b) and elsewhere in this Agreement:
“Applicable Time” means 5:00 P.M., New York time, on the date of this Agreement.
“General Use Free Writing Prospectus” means any Issuer Free Writing Prospectus that is
identified on Schedule A to this Agreement.
“Issuer Free Writing Prospectus” means any “issuer free writing prospectus,” as defined in
Rule 433 of the Rules and Regulations relating to the Securities in the form filed or
required to be filed with the Commission or, if not required to be filed, in the form
retained in the Company’s records pursuant to Rule 433(g) of the Rules and Regulations.
“Limited Use Free Writing Prospectuses” means any Issuer Free Writing Prospectus that is not
a General Use Free Writing Prospectus.
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“Pricing Prospectus” means the Preliminary Prospectus, if any, and the Base Prospectus, each
as amended and supplemented immediately prior to the Applicable Time, including any document
incorporated by reference therein and any prospectus supplement deemed to be a part thereof.
(c) No order preventing or suspending the use of any Preliminary Prospectus, any Issuer
Free Writing Prospectus or the Prospectus relating to the Offering has been issued by the
Commission, and no proceeding for that purpose or pursuant to Section 8A of the Securities
Act has been instituted or threatened by the Commission, and each Preliminary Prospectus (if
any), at the time of filing thereof, conformed in all material respects to the requirements
of the Securities Act and the Rules and Regulations, and did not contain an untrue statement
of a material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes no representations or
warranties as to information contained in or omitted from any Preliminary Prospectus, in
reliance upon, and in conformity with, written information furnished to the Company by the
Representative by or on behalf of the Placement Agents specifically for inclusion therein,
which information the parties hereto agree is limited to the Placement Agents’ Information
(as defined in Section 18).
(d) The information set forth in the Registration Statement, the Pricing Prospectus and
the Prospectus relating to oil and natural gas reserves, oil and natural gas xxxxx and any
other oil and natural gas related information required to be disclosed in such Registration
Statement, Pricing Prospectus and Prospectus pursuant to the Securities Act and the rules
and regulations thereunder has been prepared by the Company in accordance with methods
generally applied in the oil and natural gas industry and conforms, in all material
respects, to the requirements of the Securities Act and the rules and regulations
thereunder.
(e) The participation, joint development, joint operating, farm-out and other
agreements relating to rights of the Company and its subsidiaries, and to which the Company
and any of its subsidiaries is a party, with respect to the ownership, lease or operation of
oil and natural gas properties or the exploration for, development of or production of oil
and natural gas reserves thereon, constitute valid and binding agreements of and are
enforceable against the Company and its subsidiaries party thereto and, to the knowledge of
the Company, the other parties thereto.
(f) At the time the Registration Statement became effective, at the date of this
Agreement and on the Closing Date, the Registration Statement conformed and will conform in
all material respects to the requirements of the Securities Act and the Rules and
Regulations and did not and will not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make the statements
therein not misleading; the Prospectus, at the time the Prospectus was issued and on the
Closing Date, conformed and will conform in all material respects to the
requirements of the Securities Act and the Rules and Regulations and did not and will
not contain an untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in light of the circumstances under which
they were
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made, not misleading; provided, however, that the foregoing representations and
warranties in this paragraph (d) shall not apply to information contained in or
omitted from the Registration Statement or the Prospectus in reliance upon, and in
conformity with, written information furnished to the Company by the Representative by or on
behalf of the Placement Agents specifically for inclusion therein, which information the
parties hereto agree is limited to the Placement Agents’ Information (as defined in
Section 188).
(g) Each Issuer Free Writing Prospectus, if any, as of its issue date and at all
subsequent times through the completion of the public offer and sale of the Securities or
until any earlier date that the Company notified or notifies the Representative as described
in Section 5(e), did not, does not and will not include any information that
conflicted, conflicts or will conflict with the information contained in the Registration
Statement, Pricing Prospectus or the Prospectus, including any document incorporated by
reference therein and any prospectus supplement deemed to be a part thereof that has not
been superseded or modified, or includes an untrue statement of a material fact or omitted
or would omit to state a material fact required to be stated therein or necessary in order
to make the statements therein, in the light of the circumstances under which they were
made, not misleading. The foregoing sentence does not apply to statements in or omissions
from any Issuer Free Writing Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by the Representative by or on behalf of the Placement
Agents specifically for inclusion therein, which information the parties hereto agree is
limited to the Placement Agents’ Information (as defined in Section 18).
(h) The documents incorporated by reference in the Prospectus, when they became
effective or were filed with the Commission, as the case may be, conformed in all material
respects to the requirements of the Securities Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder and none of such documents contained
any untrue statement of a material fact or omitted to state any material fact required to be
stated therein or necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; and any further documents so filed and
incorporated by reference in the Prospectus, when such documents become effective or are
filed with the Commission, as the case may be, will conform in all material respects to the
requirements of the Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under which they were made,
not misleading.
(i) The Company is not an “ineligible issuer” in connection with the Offering pursuant
to Rules 164, 405 and 433 under the Securities Act. The Company has not, directly or
indirectly, distributed and will not distribute any offering material in connection with the
Offering other than any Preliminary Prospectus, the Prospectus and other materials, if any,
permitted under the Securities Act and consistent with Section 5(b) below. The
Company will file with the Commission all Issuer Free Writing
Prospectuses (other than (i) a term sheet pursuant to Rule 433(d)(5) of the Rules and
Regulations and (ii) a “road show,” as defined in Rule 433(d)(8) of the Rules and
6
Regulations), if any, in the time and manner required under Rules 163(b)(2) and 433(d) of
the Rules and Regulations.
(j) The Company and each of its subsidiaries (as defined in Section 16) have
been duly organized and are validly existing as corporations or other legal entities in good
standing (or the foreign equivalent thereof) under the laws of their respective
jurisdictions of organization. The Company and each of its subsidiaries are duly qualified
to do business and are in good standing as foreign corporations or other legal entities in
each jurisdiction in which their respective ownership or lease of property or the conduct of
their respective businesses requires such qualification and have all power and authority
(corporate or other) necessary to own or hold their respective properties and to conduct the
businesses in which they are engaged, except where the failure to so qualify or have such
power or authority would not (i) have, singularly or in the aggregate, a material adverse
effect on the condition (financial or otherwise), results of operations, assets, business or
prospects of the Company and its subsidiaries taken as a whole, or (ii) impair in any
material respect the ability of the Company to perform its obligations under this Agreement
or to consummate any transactions contemplated by this Agreement, the General Disclosure
Package or the Prospectus (any such effect as described in clauses (i) or (ii), a “Material
Adverse Effect”). The Company owns or controls, directly or indirectly, only the following
corporations, partnerships, limited liability partnerships, limited liability companies,
associations or other entities: (i) HNR Energia BV, a Netherlands company, (ii) HNR Malta
Limited, a Malta company, (iii) HNR Holding Malta Limited, a Malta company, (iv)
Harvest-Vinccler Dutch Holding B.V., a Netherlands company, (v) HNR Finance BV, a
Netherlands company, (vi) HNR Global Holding BV, a Netherlands company, (vii) Harvest Oman
BV, a Netherlands company, (viii) Harvest Dussafu, BV, a Netherlands company, (ix) Harvest
Far East Pte Ltd, a Singapore company, (x) Harvest (US) Holdings, Inc, a Delaware company,
(xi) Xxxxxx Offshore China Co., a Colorado company, (xii) HNR Sukuk Partner BV, a
Netherlands company, (xiii) Harvest Holding LLC, a Delaware limited liability company, (xiv)
Harvest Cayman Holding Ltd., a Cayman Islands company, (xv) HNR Finance Malta Limited, a
Malta company, (xvi) Harvest Vinccler Ltd., a Cayman Islands company, (xvii) HNR
International B.V., a Netherlands company, (xviii) Harvest Budong-Budong BV, a Netherlands
company, (xix) Xxxxxx Oil and Gas Co. of Venezuela, a British Virgin Islands company, (xx)
Harvest Natural Resources, Inc. (Russia), a Delaware corporation, (xxi) Harvest Senami-Behar
BV, a Netherlands company, (xxii) Harvest Natural Resources, Inc. (UK), a Delaware
corporation and (xxiii) Harvest Vinccler, SCA., a Venezuela company.
(k) The Company has the corporate power and authority to enter into this Agreement,
each of the Subscription Agreements, the Indenture and the Notes, and to perform and to
discharge its obligations hereunder and thereunder; including, without limitation, the full
right, power and authority to issue, sell and deliver the Notes and the Conversion Shares;
and each of this Agreement, and each of the Subscription Agreements has been duly
authorized, executed and delivered by the Company, and constitutes a valid and binding
obligation of the Company enforceable against the
Company in accordance with its terms; and the Indenture, when executed and delivered by
each of the Trustee and the Company, and the Notes when executed and delivered by
7
the
Company, will have been duly authorized, and will constitute a valid and binding obligation
of the Company enforceable against the Company in accordance with their terms.
(l) The Securities conform to all statements relating thereto contained or incorporated
by reference in the Registration Statement, the General Disclosure Package and the
Prospectus. Upon issuance and delivery of the Notes in accordance with this Agreement, the
Subscription Agreements and the Indenture, the Notes will be convertible at the option of
the holder thereof for the Conversion Shares in accordance with the terms of the Notes and
the Indenture; the Notes have been duly authorized, and, when executed and authenticated in
accordance with the provisions of the Indenture and delivered to and paid for by the
Purchasers, will have been duly executed and delivered by the Company and (assuming the due
authorization, execution and delivery of the Indenture by the Trustee) will constitute the
legal, valid and binding obligations of the Company entitled to the benefits of the
Indenture; the Conversion Shares issuable upon conversion of the Notes have been duly
authorized and reserved for issuance and, when issued upon conversion of the Notes in
accordance with the terms of the Notes and the Indenture, will be validly issued, fully paid
and non-assessable and will conform to the description thereof in the General Disclosure
Package and the Prospectus; and the issuance of any of the Securities will not be subject to
any pre-emptive or similar rights.
(m) The authorized capitalization of the Company is as set forth in the Pricing
Prospectus, and all of the issued and outstanding shares of capital stock of the Company
have been duly authorized and validly issued, are fully paid and non-assessable, have been
issued in compliance with federal and state securities laws, and conform in all material
respects to the description thereof contained in the General Disclosure Package and the
Prospectus. As of December 31, 2009, there were 33,281,385 shares of Common Stock outstanding and no shares of Preferred Stock, par value $0.01 of the Company issued and
outstanding, 3,722,900 shares of Common Stock are reserved for issuance upon the exercise
of all options, warrants and convertible securities outstanding as of such date, and
33,281,385 rights, which accompany the Common Stock, to purchase Series B Preferred Stock,
par value $.01 per share (the “Associated Rights”), outstanding as of such date, pursuant to
the Third Amended and Restated Rights Agreement dated as of August 23, 2007, between the
Company and Xxxxx Fargo Bank, N.A. Since December 31, 2009, the Company has not issued any
securities, other than Common Stock of the Company issued pursuant to the exercise of stock
options previously outstanding under the Company’s stock option plans or the issuance of
restricted Common Stock pursuant to employee stock purchase plans. All of the Company’s
options, warrants and other rights to purchase or exchange any securities for shares of the
Company’s capital stock have been duly authorized and validly issued and were issued in
compliance with US federal and state securities laws. None of the outstanding shares of
Common Stock was issued in violation of any preemptive rights, rights of first refusal or
other similar rights to subscribe for or purchase securities of the Company.
(n) All of the issued and outstanding shares of capital stock or other equity interests
of each subsidiary of the Company have been duly authorized and validly
8
issued, are fully
paid and non-assessable and, except to the extent set forth in the General Disclosure
Package or the Prospectus, are owned by the Company directly or indirectly through one or
more wholly-owned subsidiaries, free and clear of any claim, lien, encumbrance, security
interest, restriction upon voting or transfer or any other claim of any third party.
(o) The Indenture will be duly authorized by the Company and will be duly qualified
under the Trust Indenture Act of 1939, as amended (the “Trust Indenture Act”) on the Closing
Date and, when duly executed and delivered by the Company and the Trustee, will constitute a
valid and binding agreement of the Company, enforceable against the Company in accordance
with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent transfers), reorganization,
moratorium or similar laws affecting enforcement of creditors’ rights generally and except
as enforcement thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(p) The Notes and the Indenture will conform in all material respects to the respective
statements relating thereto contained in the Registration Statement, the General Disclosure
Package and the Prospectus and will be in substantially the respective forms filed or
incorporated by reference, as the case may be, as exhibits to the Registration Statement.
(q) The execution, delivery and performance of this Agreement, the Subscription
Agreements, the Indenture, the Securities and the DTC Agreement by the Company, the issuance
and sale of the Securities by the Company and the consummation of the transactions
contemplated hereby and thereby will not (with or without notice or lapse of time or both)
conflict with or result in a breach or violation of any of the terms or provisions of,
constitute a default or Debt Repayment Triggering Event (as defined below) under, give rise
to any right of termination or other right or the cancellation or acceleration of any right
or obligation or loss of a benefit under, or give rise to the creation or imposition of any
lien, encumbrance, security interest, claim or charge upon any property or assets of the
Company or any subsidiary pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any of its subsidiaries
is a party or by which the Company or any of its subsidiaries is bound or to which, to the
Company’s knowledge, any of the property or assets of the Company or any of its subsidiaries
is subject (except where such breach, violation, default, right or encumbrance would not,
individually or in the aggregate, reasonably be expected to have a Material Adverse Effect),
nor will such actions result in any violation of the provisions of the charter or by-laws
(or analogous governing instruments, as applicable) of the Company or any of its
subsidiaries or any law, statute, rule, regulation, judgment, order or decree of any court
or governmental agency or body, domestic or foreign, having jurisdiction over the Company or
any of its subsidiaries or any of their properties or assets. A “Debt Repayment Triggering
Event” means any event or condition that gives, or with the giving of notice or lapse of
time would give the
holder of any note, debenture or other evidence of indebtedness (or any person acting
on
9
such holder’s behalf) the right to require the repurchase, redemption or repayment of all
or a portion of such indebtedness by the Company or any of its subsidiaries.
(r) Except for the registration of the Securities under the Securities Act and such
consents, approvals, authorizations, registrations or qualifications as may be required
under the Exchange Act and applicable state or foreign securities laws, the Financial
Industry Regulatory Authority (“FINRA”) and the New York Stock Exchange (the “NYSE”) in
connection with the offering and sale of the Securities by the Company, no consent,
approval, authorization or order of, or filing, qualification or registration with, any
court or governmental agency or body, foreign or domestic, which has not been made, obtained
or taken and is not in full force and effect, is required for the execution, delivery and
performance of this Agreement, the Subscription Agreements, the Notes, the Indenture and the
DTC Agreement by the Company, the offer or sale of the Securities or the consummation of the
transactions contemplated hereby or thereby, or will be obtained and made under the
Securities Act, the Trust Indenture Act, and state securities or Blue Sky laws and
regulations, as applicable unless the failure to obtain any such consents, notices or
filings, individually or in the aggregate, would not reasonably be expected to have a
Material Adverse Effect.
(s) PricewaterhouseCoopers, LLP has certified certain financial statements and related
schedules included or incorporated by reference in the Registration Statement, the General
Disclosure Package and the Prospectus, has audited the Company’s internal control over
financial reporting and management’s assessment thereof, and is an independent registered
public accounting firm as required by the Securities Act and the Rules and Regulations and
the Public Company Accounting Oversight Board (United States) (the “PCAOB”). Except as
pre-approved in accordance with the requirements set forth in Section 10A of the Exchange
Act, PricewaterhouseCoopers, LLP has not been engaged by the Company to perform any
“prohibited activities” (as defined in Section 10A of the Exchange Act).
(t) The financial statements, together with the related notes and schedules, included
or incorporated by reference in the General Disclosure Package, the Prospectus and in the
Registration Statement fairly present the financial position and the results of operations
and changes in financial position of the Company and its consolidated subsidiaries and other
consolidated entities at the respective dates or for the respective periods therein
specified. Such statements and related notes and schedules have been prepared in accordance
with the generally accepted accounting principles in the United States (“GAAP”) applied on a
consistent basis throughout the periods involved except as may be set forth in the related
notes included or incorporated by reference in the General Disclosure Package. The
financial statements, together with the related notes and schedules, included or
incorporated by reference in the General Disclosure Package and the Prospectus comply in all
material respects with the Securities Act, the Exchange Act, and the Rules and Regulations
and the rules and regulations under the Exchange Act. No other financial statements or
supporting schedules or exhibits are required by the Securities Act or the Rules and
Regulations to be described, or included or incorporated
by reference in the Registration Statement, the General Disclosure Package or the
Prospectus.
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(u) Neither the Company nor any of its subsidiaries has sustained, since the date of
the latest audited financial statements included or incorporated by reference in the General
Disclosure Package, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set forth or
contemplated in the General Disclosure Package; and, since such date, there has not been any
change in the capital stock (other than the issuance of Common Stock pursuant to the
exercise of stock options under the Company’s stock plans and as otherwise disclosed in the
General Disclosure Package) or long-term debt of the Company or any of its subsidiaries, or
any material adverse changes, or any development involving a prospective material adverse
change, in or affecting the business, assets, general affairs, management, financial
position, prospects, stockholders’ equity or results of operations of the Company and its
subsidiaries taken as a whole, otherwise than as set forth or contemplated in the General
Disclosure Package.
(v) Except as set forth in the General Disclosure Package, there is no legal or
governmental action, suit, claim or proceeding pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the Company or any of its
subsidiaries is the subject which is required to be described in the Registration Statement,
the General Disclosure Package or the Prospectus or a document incorporated by reference
therein and is not described therein, or which, singularly or in the aggregate, if
determined adversely to the Company or any of its subsidiaries, could reasonably be expected
to have a Material Adverse Effect; and to the Company’s knowledge, no such proceedings are
threatened or contemplated by governmental authorities or threatened by others.
(w) Neither the Company nor any of its subsidiaries is in (i) violation of its charter
or by-laws (or analogous governing instrument, as applicable), (ii) default in any respect,
and no event has occurred which, with notice or lapse of time or both, would constitute such
a default, in the due performance or observance of any term, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement, lease or other agreement or
instrument to which it is a party or by which it is bound or to which any of its property or
assets is subject or (iii) violation in any respect of any law, ordinance, governmental
rule, regulation or court order, decree or judgment to which it or its property or assets
may be subject (other than laws and regulations related to taxes, environmental, labor,
employee benefits or intellectual property, which are addressed in Sections 3(cc),
3(ee), 3(gg), 3(hh), 3(ii)) except, in the case of clauses
(ii) and (iii) of this paragraph (w), for any violations or defaults which, singularly or in
the aggregate, would not have a Material Adverse Effect.
(x) The Company and each of its subsidiaries have all licenses, certificates,
authorizations and permits issued by, and have made all declarations and filings with, the
appropriate local, state, federal or foreign regulatory agencies or bodies which are
necessary or desirable for the ownership of their respective properties or the conduct of
their respective businesses as described in the General Disclosure Package and the
Prospectus (collectively, the “Governmental Permits”) except where any failure to do so,
singularly or in the aggregate, would not have a Material Adverse Effect. The
11
Company and
its subsidiaries are in material compliance with all such Governmental Permits; all such
Governmental Permits are valid and in full force and effect, except where the invalidity or
failure to be in full force and effect would not, singularly or in the aggregate, have a
Material Adverse Effect. All such Governmental Permits are free and clear of any
restriction or condition that are in addition to, or materially different from those
normally applicable to similar licenses, certificates, authorizations and permits. Neither
the Company nor any subsidiary has received written notification of any revocation or
modification (or proceedings related thereto) of any such Governmental Permit and to the
Company’s knowledge, any renewal of such Governmental Permit will be granted when requested.
(y) Neither the Company nor any of its subsidiaries is or, after giving effect to the
offering of any of the Securities and the application of the proceeds thereof as described
in the General Disclosure Package and the Prospectus, will become an “investment company”
within the meaning of the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder.
(z) Neither the Company, its subsidiaries nor, to the Company’s knowledge, any of the
Company’s or its subsidiaries’ officers, directors or affiliates has taken or will take,
directly or indirectly, any action designed or intended to stabilize or manipulate the price
of any security of the Company, or which caused or resulted in, or which might in the future
reasonably be expected to cause or result in, stabilization or manipulation of the price of
any security of the Company.
(aa) The Company and its subsidiaries own or have obtained valid and enforceable
licenses for, or other rights to use all patents, trademarks, trademark registrations,
service marks, service mark registrations, trade names, copyrights, licenses, inventions,
software, databases, know-how, Internet domain names, trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or procedures, and
other intellectual property (collectively, “Intellectual Property”) described in the General
Disclosure Package and the Prospectus as being owned by or licensed to them, except where
such failure to do so would have, individually or in the aggregate, a Material Adverse
Effect, and to the Company’s knowledge, the conduct of its current business as described in
the Registration Statement or the Pricing Prospectus does not infringe on any Intellectual
Property rights of others. The Intellectual Property licenses described in the General
Disclosure Package and the Prospectus are valid, binding upon, and enforceable against the
Company and, to the Company’s knowledge, the other parties thereto in accordance with the
terms of such licenses. The Company and each of its subsidiaries has complied in all
material respects with, and is not in breach nor has received any asserted or threatened
claim of breach of, any Intellectual Property license used in the conduct of its business as
currently conducted, and the Company has no knowledge of any breach or anticipated breach by
any other person to any such Intellectual Property license. Except as described in the
General Disclosure Package, the Company has not received written notice of any claim against
the Company or any of its
subsidiaries alleging the infringement by the Company or any of its subsidiaries of any
Intellectual Property rights of any person, and, to the Company’s knowledge, no such claim
is pending or threatened. The Company and each of its subsidiaries has taken all
12
reasonable
steps to protect, maintain and safeguard its rights in all Intellectual Property used in the
conduct of its business as currently conducted, including the execution of appropriate
nondisclosure and confidentiality agreements. The consummation of the transactions
contemplated by this Agreement will not result in the loss or impairment of or payment of
any additional amounts with respect to, nor require the consent of any other person in
respect of, the Company’s or any of its subsidiaries’ right to own, use, or hold for use any
of the Intellectual Property as owned, used or held for use in the conduct of the businesses
as currently conducted. With respect to the use of the software in the Company’s or any of
its subsidiaries’ businesses as they are currently conducted, the Company nor any of its
subsidiaries has experienced any material defects in such software including any material
error or omission in the processing of any transactions other than defects which have been
corrected, and to the knowledge of the Company, no such software contains any device or
feature designed to disrupt, disable, or otherwise impair the functioning of any software or
is subject to the terms of any “open source” or other similar license that provides for the
source code of the software to be publicly distributed or dedicated to the public. The
Company and each of its subsidiaries has at all times complied in all material respects with
all applicable laws relating to privacy, data protection, and the collection and use of
personal information collected, used, or held for use by the Company and any of its
subsidiaries in the conduct of the Company’s and its subsidiaries businesses. To the
Company’s knowledge, no claims have been asserted or threatened against the Company or any
of its subsidiaries alleging a violation of any person’s privacy or personal information or
data rights and the consummation of the transactions contemplated hereby will not breach or
otherwise cause any violation of any law related to privacy, data protection, or the
collection and use of personal information collected, used, or held for use by the Company
or any of its subsidiaries in the conduct of the Company’s or any of its subsidiaries’
businesses. The Company and each of its subsidiaries takes reasonable measures to ensure
that such information is protected against unauthorized access, use, modification, or other
misuse.
(bb) The Company and each of its subsidiaries have good and marketable title in fee
simple to, or have valid rights to lease or otherwise use, all items of real or personal
property which are material to the business of the Company and its subsidiaries taken as a
whole, in each case free and clear of all liens, encumbrances, security interests, claims
and defects that do not, singularly or in the aggregate, materially affect the value of such
property and do not interfere with the use made and proposed to be made of such property by
the Company or any of its subsidiaries; and all of the leases and subleases material to the
business of the Company and its subsidiaries, considered as one enterprise, and under which
the Company or any of its subsidiaries holds properties described in the General Disclosure
Package and the Prospectus, are in full force and effect, and neither the Company nor any
subsidiary has received any notice of any material claim of any sort that has been asserted
by anyone adverse to the rights of the Company or any subsidiary under any of the leases or
subleases mentioned above, or affecting or questioning the rights of the Company or such
subsidiary to the continued possession of the leased or subleased premises under any such
lease or sublease.
(cc) No labor disturbance by the employees of the Company or any of its subsidiaries
exists or, to the Company’s knowledge, is imminent, and the Company is not
13
aware of any
existing or imminent labor disturbance by the employees of any of its subsidiaries that
could reasonably be expected, singularly or in the aggregate, to have a Material Adverse
Effect.
(dd) No “prohibited transaction” (as defined in Section 406 of the Employee Retirement
Income Security Act of 1974, as amended, including the regulations and published
interpretations thereunder (“ERISA”), or Section 4975 of the Internal Revenue Code of 1986,
as amended from time to time (the “Code”)) or “accumulated funding deficiency” (as defined
in Section 302 of ERISA) or any of the events set forth in Section 4043(b) of ERISA (other
than events with respect to which the thirty (30)-day notice requirement under Section 4043
of ERISA has been waived) has occurred or could reasonably be expected to occur with respect
to any employee benefit plan of the Company or any of its subsidiaries which could,
singularly or in the aggregate, have a Material Adverse Effect. Each employee benefit plan
of the Company or any of its subsidiaries is in compliance in all material respects with
applicable law, including ERISA and the Code. The Company and its subsidiaries have not
incurred and are not reasonably expected to incur liability under Title IV of ERISA with
respect to the termination of, or withdrawal from, any pension plan (as defined in ERISA).
Each pension plan for which the Company or any of its subsidiaries would have any liability
that is intended to be qualified under Section 401(a) of the Code is so qualified, and no
facts have occurred, whether by action or by failure to act, which, if known to the Internal
Revenue Service, would, singularly or in the aggregate, reasonably be expected to cause the
loss of such qualification.
(ee) The Company and its subsidiaries are in compliance with all foreign, federal,
state and local rules, laws and regulations relating to the use, treatment, storage and
disposal of hazardous or toxic substances or waste and protection of health and safety or
the environment which are applicable to their businesses (“Environmental Laws”), except
where the failure to comply would not, singularly or in the aggregate, have a Material
Adverse Effect. There has been no storage, generation, transportation, handling, treatment,
disposal, discharge, emission, or other release of any kind of toxic or other wastes or
other hazardous substances by, due to, or caused by the Company or any of its subsidiaries
(or, to the Company’s knowledge, any other entity for whose acts or omissions the Company or
any of its subsidiaries is or may otherwise be liable) upon any of the property now or
previously owned or leased by the Company or any of its subsidiaries, or upon any other
property, in violation of any law, statute, ordinance, rule, regulation, order, judgment,
decree or permit or which would, under any law, statute, ordinance, rule (including rule of
common law), regulation, order, judgment, decree or permit, give rise to any liability,
except for any violation or liability which would not have, singularly or in the aggregate
with all such violations and liabilities, a Material Adverse Effect; and there has been no
disposal, discharge, emission or other release of any kind onto such property or into the
environment surrounding such property of any toxic or other wastes or other hazardous
substances with respect to which the Company has knowledge, except for any such disposal,
discharge, emission, or other release of any
kind which would not have, singularly or in the aggregate with all such discharges and
other releases, a Material Adverse Effect.
14
(ff) The Company and its subsidiaries are in compliance in all respects with all
applicable provisions of the Occupational Safety and Health Act of 1970, as amended,
including all applicable regulations thereunder, except for such noncompliance as would not,
individually or in the aggregate, have a Material Adverse Effect.
(gg) The Company and its subsidiaries, each (i) has timely filed all necessary federal,
state, local and foreign tax returns, and all such returns were true, complete and correct,
(ii) has paid all federal, state, local and foreign taxes, assessments, governmental or
other charges that are due and payable for which it is liable, including, without
limitation, all sales and use taxes and all taxes which the Company or any of its
subsidiaries is obligated to withhold from amounts owing to employees, creditors and third
parties, and (iii) does not have any tax deficiency or claims outstanding or assessed or, to
the Company’s knowledge, proposed against any of them (other than as disclosed in the
General Disclosure Package or the Prospectus), except those, in each of the cases described
in clauses (i), (ii) and (iii) of this paragraph (gg), that would not, singularly or
in the aggregate, have a Material Adverse Effect. The Company and its subsidiaries, each
has not engaged in any transaction which is a corporate tax shelter or which would
reasonably be expected to be characterized as such by the Internal Revenue Service or any
other taxing authority. The accruals and reserves on the books and records of the Company
and its subsidiaries in respect of tax liabilities for any taxable period not yet finally
determined are adequate to meet any assessments and related liabilities for any such period,
and since December 31, 2008 the Company and its subsidiaries each has not incurred any
liability for taxes other than in the ordinary course.
(hh) The Company and each of its subsidiaries carries, or is covered by, insurance
provided by recognized, financially sound and reputable institutions with policies in such
amounts and covering such risks as is adequate for the conduct of their respective
businesses and the value of their respective properties and as is customary for companies
engaged in similar businesses in similar industries. The Company has no reason to believe
that it or any subsidiary will not be able (i) to renew its existing insurance coverage as
and when such policies expire or (ii) to obtain comparable coverage from similar
institutions as may be necessary or appropriate to conduct its business as now conducted and
at a cost that would not result in a Material Adverse Effect. Neither the Company nor any
of its subsidiaries has been denied any insurance coverage that they have sought or for
which they have applied.
(ii) The Company and its subsidiaries each maintain a system of internal accounting and
other controls sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management’s general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation of financial statements in
conformity with GAAP and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management’s general or specific authorization; and (iv)
the recorded accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences. Except as described in the General Disclosure Package, since the end of
the Company’s most recent audited fiscal year, there has been (A) no material weakness in
the Company’s internal control over financial reporting (whether or not remediated) and
15
(B)
no change in the Company’s internal control over financial reporting that has materially
affected, or is reasonably likely to materially affect, the Company’s internal control over
financial reporting.
(jj) The minute books of the Company and each of its subsidiaries that would be a
“significant subsidiary” within the meaning of Rule 1-02(w) of Regulation S-X under the
Exchange Act (such a significant subsidiary of the Company, a “Significant Subsidiary”) have
been made available to the Placement Agents and counsel for the Placement Agents, and such
books (i) contain a complete summary of all meetings and actions of the board of directors
(including each board committee) and shareholders of the Company (or analogous governing
bodies and interest holders, as applicable), and each of its Significant Subsidiaries since
December 1, 2006 through the date of the latest meeting and action (except that the meeting
minutes dates as of December 10, 2009, January 20, 2010, January 28, 2010 and February 5,
2010, as well as the meeting minutes of the pricing committee of the board of directors
relating to the approval of this Offering, have been provided in draft form, but which are
each otherwise final in their substance), and (ii) accurately in all material respects
reflect all transactions referred to in such minutes.
(kk) There is no franchise, lease, contract, agreement or document required by the
Securities Act or by the Rules and Regulations to be described in the General Disclosure
Package and in the Prospectus or a document incorporated by reference therein or to be filed
as an exhibit to the Registration Statement or a document incorporated by reference therein
which is not described or filed therein as required; and all descriptions of any such
franchises, leases, contracts, agreements or documents contained in the Registration
Statement or in a document incorporated by reference therein are accurate and complete
descriptions of such documents in all material respects. Other than as described in the
General Disclosure Package, no such franchise, lease, contract or agreement has been
suspended or terminated for convenience or default by the Company or any of its subsidiaries
or any of the other parties thereto, and neither the Company nor any of its subsidiaries has
received notice nor does the Company have any other knowledge of any such pending or
threatened suspension or termination, except for such pending or threatened suspensions or
terminations that would not reasonably be expected to, singularly or in the aggregate, have
a Material Adverse Effect.
(ll) No person or entity has the right to require registration of the Notes or any
securities convertible into or exercisable or exchangeable for Common Stock of the Company
or any of its subsidiaries because of the filing or effectiveness of the Registration
Statement or otherwise, except for persons and entities who have expressly waived such right
in writing or who have been given timely and proper written notice and have failed to
exercise such right within the time or times required under the terms and conditions of such
right. Except as described in the General Disclosure Package, there are no persons with
registration rights or similar rights to have any securities of the
Company registered or to include such securities with the Notes or Conversion Shares
registered by the Company or any of its subsidiaries under the Securities Act.
16
(mm) Neither the Company nor any of its subsidiaries owns any “margin securities” as
that term is defined in Regulation U of the Board of Governors of the Federal Reserve System
(the “Federal Reserve Board”), and none of the proceeds of the sale of any of the Securities
will be used, directly or indirectly, for the purpose of purchasing or carrying any margin
security, for the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which might cause
any of the Notes or Conversion Shares to be considered a “purpose credit” within the
meanings of Regulation T, U or X of the Federal Reserve Board.
(nn) Neither the Company nor any of its subsidiaries is a party to any contract,
agreement or understanding (other than this Agreement) with any person that would give rise
to a valid claim against the Company or the Placement Agents for a brokerage commission,
finder’s fee or like payment in connection with the offering and sale of any of the
Securities or any transaction contemplated by this Agreement, the Registration Statement,
the General Disclosure Package or the Prospectus.
(oo) No forward-looking statement (within the meaning of Section 27A of the Securities
Act and Section 21E of the Exchange Act) contained in either the General Disclosure Package
or the Prospectus has been made or reaffirmed without a reasonable basis or has been
disclosed other than in good faith.
(pp) The Company is subject to and in compliance in all material respects with the
reporting requirements of Section 13 or Section 15(d) of the Exchange Act. The Common Stock
is registered pursuant to Section 12(g) of the Exchange Act and is listed on the NYSE, and
the Company has taken no action designed to, or reasonably likely to have the effect of,
terminating the registration of the Common Stock under the Exchange Act or delisting the
Common Stock from the NYSE, nor has the Company received any notification that either the
Commission, FINRA or the NYSE is contemplating terminating such registration or listing. No
consent, approval, authorization or order of, or filing, notification or registration with,
the NYSE is required for the listing and trading of the Common Stock on the NYSE, except for
a Subsequent Listing Application.
(qq) The Company is in material compliance with all applicable provisions of the
Xxxxxxxx-Xxxxx Act of 2002 and all rules and regulations promulgated thereunder or
implementing the provisions thereof (the “Xxxxxxxx-Xxxxx Act”).
(rr) The Company is in material compliance with all applicable corporate governance
requirements set forth in the NYSE Rules.
(ss) Neither the Company nor any of its subsidiaries nor, to the Company’s knowledge,
any employee or agent of the Company or any subsidiary, has made any contribution or other
payment to any official of, or candidate for, any federal, state, local or foreign office in
violation of any law (including the Foreign Corrupt Practices Act of
1977, as amended) or of the character required to be disclosed in the Registration
Statement, the General Disclosure Package or the Prospectus or a document incorporated by
reference therein.
17
(tt) The statistical and market related data included in the Registration Statement,
the General Disclosure Package and the Prospectus are based on or derived from sources that
the Company believes to be reliable and accurate, and such data agree with the sources from
which they are derived.
(uu) The operations of the Company and its subsidiaries are and have been conducted at
all times in compliance with applicable financial recordkeeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as amended, applicable money
laundering statutes and applicable rules and regulations thereunder (collectively, the
“Money Laundering Laws”), and no action, suit or proceeding by or before any court or
governmental agency, authority or body or any arbitrator involving the Company or any of its
subsidiaries with respect to the Money Laundering Laws is pending, or to the knowledge of
the Company, threatened.
(vv) Neither the Company nor any of its subsidiaries nor, to the knowledge of the
Company, any director, officer, agent, employee or affiliate of the Company or any of its
subsidiaries is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture partner or other person or
entity, for the purpose of financing the activities of any person currently subject to any
U.S. sanctions administered by OFAC.
(ww) Neither the Company nor any subsidiary nor any of their affiliates (within the
meaning of FINRA Conduct Rule 2720(b)(1)(a)) directly or indirectly controls, is are
controlled by, or is under common control with, or is an associated person (within the
meaning of Article I, Section 1(ee) of the By-laws of FINRA) of, any member firm of FINRA.
(xx) The Company satisfies the pre-1992 eligibility requirements for the use of a
registration statement on Form S-3 in connection with the Offering contemplated thereby (the
pre-1992 eligibility requirements for the use of the registration statement on Form S-3
include (i) having a non-affiliate, public common equity float of at least $150 million or a
non-affiliate, public common equity float of at least $100 million and annual trading volume
of at least three million shares and (ii) having been subject to the Exchange Act reporting
requirements for a period of 36 months).
(yy) No approval of the shareholders of the Company under the rules and regulations of
the NYSE is required for the Company to issue and deliver to the Purchaser any of the
Securities.
(zz) The oil and gas reserve estimates of the Company contained or incorporated by
reference in the General Disclosure Package and the Prospectus are
derived from reports that have been prepared by the petroleum consulting firm as set
forth therein, such reserve estimates fairly reflect, in all material respects, the oil and
gas reserves of the Company and its subsidiaries at the dates indicated therein and are in
accordance with the guidelines applicable thereto.
18
(aaa) Xxxxx Xxxxx Company, L.P., an oil and gas consulting firm (“RSC”), whose summary
letter from its report as of August 31, 2009 appears in the Company’s current report filed
with the Commission on October 23, 2009, which is incorporated by reference into the General
Disclosure Package and the Prospectus, whose reserve estimates from its reports are included
therein and who has delivered the letter referred to in Section 7(h) hereof, was, as
of the date of such report, and is, as of the date hereof, an independent petroleum engineer
with respect to the Company. The written engineering reports prepared by RSC dated February
12, 2009, setting forth the proved reserves attributed to the oil and gas properties of the
Company and its subsidiaries accurately reflects in all material respects the ownership
interests of the Company and its subsidiaries in the properties therein; the information
furnished by the Company to RSC for purposes of preparing its reports, including, without
limitation, production, costs of operation and development, current prices for production,
agreements relating to current and future operations and sales of production, was true,
correct and complete in all material respects on the date supplied and was prepared in
accordance with customary industry practices.
(bbb) The Company is not subject to regulation as a “public utility”, “public service
company”, “holding company” or similar designation by any governmental or regulatory
authority, including under the Federal Power Act, as amended or any applicable state utility
laws; and the Company is not required to file with any applicable state or local
commissions, governmental authorities or regulatory bodies that regulate utilities any
forms, statements, reports, registrations or documents required to be filed by the Company
under such applicable state or local laws to which the Company is subject.
Any certificate signed by or on behalf of the Company and delivered to the
Representative or to counsel for the Placement Agents shall be deemed to be a representation
and warranty by the Company to the Placement Agents and the Purchasers as to the matters
covered thereby.
4. The Closing. The time and date of closing and delivery of the documents required to
be delivered to the Placement Agents pursuant to Sections 5 and 7 hereof shall be
at 10:00 A.M., New York time, on February 17, 2010 (the “Closing Date”) at the office of
Fulbright & Xxxxxxxx L.L.P., 0000 XxXxxxxx, Xxxxx 0000, Xxxxxxx, XX 00000.
5. Further Agreements of the Company. The Company agrees with the Placement Agents and
the Purchasers:
(a) To prepare the Rule 462(b) Registration Statement, if necessary, in a form approved
by the Representative and file such Rule 462(b) Registration Statement with the
Commission on the date hereof; to prepare the Prospectus in a form approved by the
Representative containing information previously omitted at the time of effectiveness of the
Registration Statement in reliance on rules 430A, 430B and 430C and to file such Prospectus
pursuant to Rule 424(b) of the Rules and Regulations not later than the second
(2nd) business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A of the Rules and Regulations;
to notify the Representative immediately of the Company’s intention to file
19
or prepare any
supplement or amendment to the Registration Statement or to the Prospectus and to make no
amendment or supplement to the Registration Statement, the General Disclosure Package or to
the Prospectus to which the Representative shall reasonably object by notice to the Company
after a reasonable period to review; to advise the Representative, promptly after it
receives notice thereof, of the time when any amendment to the Registration Statement has
been filed or becomes effective or any supplement to the General Disclosure Package or the
Prospectus or any amended Prospectus has been filed and to furnish the Representative copies
thereof; to file promptly all material required to be filed by the Company with the
Commission pursuant to Rule 433(d) or 163(b)(2), as the case may be; to file promptly all
reports and any definitive proxy or information statements required to be filed by the
Company with the Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date of the Prospectus and for so long as the delivery of a prospectus
(or in lieu thereof, the notice referred to in Rule 173(a) of the Rules and Regulations) is
required in connection with the offering or sale of any of the Securities; to advise the
Representative, promptly after it receives notice thereof, of the issuance by the Commission
of any stop order or of any order preventing or suspending the use of any Preliminary
Prospectus, any Issuer Free Writing Prospectus or the Prospectus, of the suspension of the
qualification of any of the Securities for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the Registration Statement, the General
Disclosure Package or the Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending the use of any
Preliminary Prospectus, any Issuer Free Writing Prospectus or the Prospectus or suspending
any such qualification, and promptly to use its reasonable best efforts to obtain the
withdrawal of such order.
(b) The Company represents and agrees that, unless it obtains the prior consent of the
Representative (which consent shall not be unreasonably withheld or delayed), it has not
made and will not, make any offer relating to any of the Securities that would constitute a
“free writing prospectus” as defined in Rule 405 of the Rules and Regulations (each, a
“Permitted Free Writing Prospectus”); provided that the prior written consent of the
Representative hereto shall be deemed to have been given in respect of the Issuer Free
Writing Prospectus(es) included in Schedule A hereto. The Company represents that
it has treated and agrees that it will treat each Permitted Free Writing Prospectus as an
Issuer Free Writing Prospectus, comply with the requirements of Rules 164 and 433 of the
Rules and Regulations applicable to any Issuer Free Writing Prospectus, including the
requirements relating to timely filing with the Commission, legending and record keeping and
will not take any action that would result in any Placement Agent or the Company being
required to file with the Commission pursuant to
Rule 433(d) of the Rules and Regulations a free writing prospectus prepared by or on
behalf of such Placement Agent that such Placement Agent otherwise would not have been
required to file thereunder.
(c) If at any time when a Prospectus relating to the Securities are required to be
delivered under the Securities Act, any event occurs or condition exists as a result of
which the Prospectus, as then amended or supplemented, would include any untrue
20
statement of
a material fact or omit to state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made, not misleading, or the
Registration Statement, 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
not misleading, or if for any other reason it is necessary at any time to amend or
supplement any Registration Statement or the Prospectus to comply with the Securities Act or
the Exchange Act, the Company will promptly notify the Representative, and upon the
Representative’s request, the Company will promptly prepare and file with the Commission, at
the Company’s expense, an amendment to the Registration Statement or an amendment or
supplement to the Prospectus that corrects such statement or omission or effects such
compliance and will deliver to the Placement Agents, without charge, such number of copies
thereof as the Placement Agents may reasonably request. The Company consents to the use of
the Prospectus or any amendment or supplement thereto by the Placement Agents.
(d) If the General Disclosure Package is being used to solicit offers to buy any of the
Securities at a time when the Prospectus is not yet available to prospective purchasers and
any event shall occur as a result of which, in the judgment of the Company or in the
reasonable opinion of the Representative, it becomes necessary to amend or supplement the
General Disclosure Package in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or to make the statements therein
not conflict with the information contained or incorporated by reference in the Registration
Statement then on file and not superseded or modified, or if it is necessary at any time to
amend or supplement the General Disclosure Package to comply with any law, the Company
promptly will either (i) prepare, file with the Commission (if required) and furnish to the
Placement Agents and any dealers an appropriate amendment or supplement to the General
Disclosure Package or (ii) prepare and file with the Commission an appropriate filing under
the Exchange Act which shall be incorporated by reference in the General Disclosure Package
so that the General Disclosure Package as so amended or supplemented will not, in the light
of the circumstances under which they were made, be misleading or conflict with the
Registration Statement then on file, or so that the General Disclosure Package will comply
with law.
(e) If at any time following issuance of an Issuer Free Writing Prospectus there
occurred or occurs an event or development as a result of which such Issuer Free Writing
Prospectus conflicted or will conflict with the information contained in the Registration
Statement, Pricing Prospectus or Prospectus, including any document incorporated by
reference therein and any prospectus supplement deemed to be a part thereof and not
superseded or modified or included or would include an untrue statement
of a material fact or omitted or would omit to state a material fact required to be
stated therein or necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, the Company has promptly notified
or will promptly notify the Representative so that any use of the Issuer Free Writing
Prospectus may cease until it is amended or supplemented and has promptly amended or will
promptly amend or supplement, at its own expense, such Issuer Free Writing Prospectus to
eliminate or correct such conflict, untrue statement or omission.
21
The foregoing sentence
does not apply to statements in or omissions from any Issuer Free Writing Prospectus in
reliance upon, and in conformity with, written information furnished to the Company by the
Representative by or on behalf of the Placement Agents specifically for inclusion therein,
which information the parties hereto agree is limited to the Placement Agents’ Information
(as defined in Section 18).
(f) To the extent not available on the Commission’s XXXXX system or any successor
system, to furnish promptly to the Placement Agents and to counsel for the Placement Agents
a signed copy of the Registration Statement as originally filed with the Commission, and of
each amendment thereto filed with the Commission, including all consents and exhibits filed
therewith.
(g) To the extent not available on the Commission’s XXXXX system or any successor
system, to deliver promptly to the Representative in New York City such number of the
following documents as the Representative shall reasonably request: (i) conformed copies of
the Registration Statement as originally filed with the Commission (in each case excluding
exhibits), (ii) each Preliminary Prospectus, (iii) any Issuer Free Writing Prospectus, (iv)
the Prospectus (the delivery of the documents referred to in clauses (i), (ii), (iii) and
(iv) of this paragraph (g) to be made not later than 10:00 A.M., New York time, on
the business day following the execution and delivery of this Agreement), (v) conformed
copies of any amendment to the Registration Statement (excluding exhibits), (vi) any
amendment or supplement to the General Disclosure Package or the Prospectus (the delivery of
the documents referred to in clauses (v) and (vi) of this paragraph (g) to be made
not later than 10:00 A.M., New York City time, on the business day following the date of
such amendment or supplement) and (vii) any document incorporated by reference in the
General Disclosure Package or the Prospectus (excluding exhibits thereto) (the delivery of
the documents referred to in clause (vi) of this paragraph (g) to be made not later
than 10:00 A.M., New York City time, on the business day following the date of such
document).
(h) To make generally available to its shareholders as soon as practicable, but in any
event not later than eighteen (18) months after the effective date of each Registration
Statement (as defined in Rule 158(c) of the Rules and Regulations), an earnings statement of
the Company and its subsidiaries (which need not be audited) complying with Section 11(a) of
the Securities Act and the Rules and Regulations (including, at the option of the Company,
Rule 158); and to furnish to its shareholders as soon as practicable after the end of each
fiscal year an annual report (including a balance sheet and statements of income,
shareholders’ equity and cash flows of the Company and its consolidated subsidiaries
certified by independent public accountants) and as soon as possible after each of the first
three fiscal quarters of each fiscal year (beginning with the
first fiscal quarter after the effective date of such Registration Statement),
consolidated summary financial information of the Company and its subsidiaries for such
quarter in reasonable detail.
(i) To take promptly from time to time such actions as the Representative may
reasonably request to qualify the Securities for offering and sale under the securities or
Blue Sky laws of such jurisdictions (domestic or foreign) as the Representative may
22
designate and to continue such qualifications in effect, and to comply with such laws, for
so long as required to permit the offer and sale of the Securities in such jurisdictions;
provided that the Company and its subsidiaries shall not be obligated to qualify as foreign
corporations in any jurisdiction in which they are not so qualified or to file a general
consent to service of process in any jurisdiction.
(j) Upon request, during the period of five (5) years from the date hereof, to the
extent not available on the Commission’s XXXXX system or any successor system, to deliver to
the Placement Agents, (i) as soon as they are available, copies of all reports or other
communications furnished to shareholders, and (ii) as soon as they are available, copies of
any reports and financial statements furnished or filed with the Commission or any national
securities exchange or automatic quotation system on which the Common Stock is listed or
quoted.
(k) That the Company will not, for a period of ninety (90) days from the date of the
Prospectus, (the “Lock-Up Period”) without the prior written consent of LCM, directly or
indirectly offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of,
any shares of Common Stock or any securities convertible into or exercisable or exchangeable
for Common Stock, other than the Company’s sale of the Notes and Conversion Shares hereunder
and the issuance of restricted Common Stock or options to acquire Common Stock pursuant to
the Company’s employee benefit plans, qualified stock option plans or other employee
compensation plans as such plans are in existence on the date hereof and described in the
Prospectus and the issuance of Common Stock pursuant to the valid exercises of options,
warrants or rights outstanding on the date hereof. The Company will cause each executive
officer, director, shareholder, optionholder and warrantholder listed in Schedule B
to furnish to the Representative, prior to the Closing Date, a letter, substantially in the
form of Exhibit B hereto, pursuant to which each such person shall agree, among
other things, not to directly or indirectly offer, sell, assign, transfer, pledge, contract
to sell, or otherwise dispose of, any shares of Common Stock or any securities convertible
into or exercisable or exchangeable for Common Stock, not to engage in any swap or other
agreement or arrangement that transfers, in whole or in part, directly or indirectly, the
economic risk of ownership of Common Stock or any such securities and not to engage in any
short selling of any Common Stock or any such securities, during the Lock-Up Period, without
the prior written consent of LCM. The Company also agrees that during such period, the
Company will not file any registration statement, preliminary prospectus or prospectus, or
any amendment or supplement thereto, under the Securities Act for any such transaction or
which registers, or offers for sale, Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, except for a registration statement on Form
S-8 relating to employee benefit plans. The Company
hereby agrees that (i) if it issues an earnings release or material news, or if a
material event relating to the Company occurs, during the last seventeen (17) days of the
Lock-Up Period, or (ii) if prior to the expiration of the Lock-Up Period, the Company
announces that it will release earnings results during the sixteen (16)-day period beginning
on the last day of the Lock-Up Period, the restrictions imposed by this paragraph
(k) or the letter shall continue to apply until the expiration of the eighteen (18)-day
period beginning on
23
the issuance of the earnings release or the occurrence of the material
news or material event.
(l) To supply the Representative with copies of all correspondence to and from, and all
documents issued to and by, the Commission in connection with the registration of the Notes
and Conversion Shares under the Securities Act or the Registration Statement, any
Preliminary Prospectus or the Prospectus, or any amendment or supplement thereto or document
incorporated by reference therein.
(m) The Company will reserve and keep available at all times, free of pre-emptive or
other similar rights, a sufficient number of shares of Common Stock, for the purposes of
enabling the Company to satisfy any obligations to issue Conversion Shares upon conversion
of the Notes and to issue any other shares of Common Stock issuable under the terms of the
Notes.
(n) Prior to the Closing Date, to furnish to the Representative, as soon as they have
been prepared, copies of any unaudited interim consolidated financial statements of the
Company for any periods subsequent to the periods covered by the financial statements
appearing in the Registration Statement and the Prospectus.
(o) Prior to the Closing Date, not to issue any press release or other communication
directly or indirectly or hold any press conference with respect to the Company, its
condition, financial or otherwise, or earnings, business affairs or business prospects
(except for routine oral marketing communications in the ordinary course of business and
consistent with the past practices of the Company and of which the Representative is
notified), without the prior written consent of the Representative, unless in the judgment
of the Company and its counsel, and after notification to the Representative, such press
release or communication is required by law.
(p) Until the Representative shall have notified the Company of the completion of the
offering of the Notes, that the Company will not, and will cause its affiliated purchasers
(as defined in Regulation M under the Exchange Act) not to, either alone or with one or more
other persons, bid for or purchase, for any account in which it or any of its affiliated
purchasers has a beneficial interest, any Notes, or attempt to induce any person to purchase
any Notes; and not to, and to cause its affiliated purchasers not to, make bids or purchases
for the purpose of creating actual, or apparent, active trading in or of raising the price
of the Notes.
(q) Not to take any action prior to the Closing Date which would require the Prospectus
to be amended or supplemented pursuant to Section 5.
(r) To at all times comply with all applicable provisions of the Xxxxxxxx-Xxxxx Act in
effect from time to time.
(s) To apply the net proceeds from the sale of the Notes as set forth in the
Registration Statement, the General Disclosure Package and the Prospectus under the heading
“Use of Proceeds.”
24
(t) To use its reasonable best efforts to list, subject to notice of issuance, effect
and maintain the listing of the Common Stock (including the Conversion Shares) on the NYSE.
(u) To use its reasonable best efforts to assist the Representative with any filings
with FINRA and obtaining clearance from FINRA as to the amount of compensation allowable or
payable to the Placement Agents.
(v) To use its reasonable best efforts to do and perform all things required to be done
or performed under this Agreement by the Company prior to the Closing Date and to satisfy
all conditions precedent to the delivery of the Securities.
6. Payment of Expenses. The Company agrees to pay, or reimburse if paid by the
Placement Agents, upon consummation of the transactions contemplated hereby: (a) the costs
incident to the authorization, issuance, sale, preparation and delivery of the Notes to the
Purchasers and any taxes payable in that connection; (b) the costs incident to the registration of
the Notes under the Securities Act; (c) the costs incident to the preparation, printing and
distribution of the Registration Statement, the Base Prospectus, any Preliminary Prospectus, any
Issuer Free Writing Prospectus, the General Disclosure Package, the Prospectus, any amendments,
supplements and exhibits thereto or any document incorporated by reference therein and the costs of
printing, reproducing and distributing any transaction document by mail, telex or other means of
communications; (d) the fees and expenses (including related reasonable fees and expenses of
counsel for the Placement Agents not to exceed $10,000 in the aggregate) incurred in connection
with securing any required review by FINRA of the terms of the sale of the Notes and any filings
made with FINRA; (e) any applicable listing, quotation or other fees; (f) the fees and expenses
(including related fees and expenses of counsel to the Placement Agents) of qualifying the Notes
under the securities laws of the several jurisdictions as provided in Section 5(i) and of
preparing, printing and distributing wrappers, blue sky memoranda and legal investment surveys; (g)
the cost of preparing and printing stock certificates; (h) all fees and expenses of the registrar
and transfer agent of the Notes and Conversion Shares; (i) the fees, disbursements and expenses of
counsel to the Placement Agents, not to exceed $200,000 in the aggregate, inclusive of expenses
incurred in connection with Section 6(d) and (f); (j) the fees and expenses of the
Trustee, including the fees and disbursements of counsel for the Trustee in connection with the
Indenture and the Securities; and (k) all other costs and expenses incident to the offering of the
Securities or the performance of the obligations of the Company under this Agreement and under the
Indenture (including, without limitation, the fees and expenses of the Company’s counsel and the
Company’s independent accountants and the travel and other expenses incurred by Company’s and
Placement Agents’ personnel in connection with any “road show” including, without limitation, any expenses advanced by the Placement Agents on the
Company’s behalf (which will be promptly reimbursed)). Notwithstanding the forgoing, in no event
will the payment of expenses under this Section 6 and the Placement Fee result in
underwriter’s compensation (as defined in FINRA Rule 5110) in excess of 8%.
7. Conditions to the Obligations of the Placement Agents and the Purchasers, and the Sale of
the Notes. The respective obligations of the Placement Agents hereunder and the Purchasers
under the Subscription Agreements, and the Closing of the sale of the Notes, are subject to the
accuracy, when made and as of the Applicable Time and on the
25
Closing Date, of the representations
and warranties of the Company contained herein, to the accuracy of the statements of the Company
made in any certificates pursuant to the provisions hereof, to the performance by the Company of
its obligations hereunder, and to each of the following additional terms and conditions:
(a) No stop order suspending the effectiveness of the Registration Statement or any
part thereof, preventing or suspending the use of any Base Prospectus, any Preliminary
Prospectus, the Prospectus or any Permitted Free Writing Prospectus or any part thereof
shall have been issued and no proceedings for that purpose or pursuant to Section 8A under
the Securities Act shall have been initiated or threatened by the Commission, and all
requests for additional information on the part of the Commission (to be included or
incorporated by reference in the Registration Statement or the Prospectus or otherwise)
shall have been complied with to the reasonable satisfaction of the Representative; the Rule
462(b) Registration Statement, if any, each Issuer Free Writing Prospectus, if any, and the
Prospectus shall have been filed with the Commission within the applicable time period
prescribed for such filing by, and in compliance with, the Rules and Regulations and in
accordance with Section 5(a), and the Rule 462(b) Registration Statement, if any,
shall have become effective immediately upon its filing with the Commission; and FINRA shall
have raised no objection to the fairness and reasonableness of the terms of this Agreement
or the transactions contemplated hereby.
(b) The Representative shall not have discovered and disclosed to the Company on or
prior to the Closing Date that the Registration Statement or any amendment or supplement
thereto contains an untrue statement of a fact which, in the opinion of counsel for the
Placement Agents, is material or omits to state any fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary to make the
statements therein not misleading, or that the General Disclosure Package, any Issuer Free
Writing Prospectus or the Prospectus or any amendment or supplement thereto contains an
untrue statement of fact which, in the opinion of such counsel, is material or omits to
state any fact which, in the opinion of such counsel, is material and is necessary in order
to make the statements, in the light of the circumstances in which they were made, not
misleading.
(c) All corporate proceedings and other legal matters incident to the authorization,
form and validity of each of this Agreement, the Subscription Agreements, the Notes, the
Registration Statement, the Indenture, the General Disclosure Package,
each Issuer Free Writing Prospectus, if any, and the Prospectus and all other legal
matters relating to this Agreement and the transactions contemplated hereby shall be
reasonably satisfactory in all material respects to counsel for the Placement Agents, and
the Company shall have furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) (i) Xxxxxxxxx & Xxxxxxxx L.L.P. shall have furnished to the Representative such
counsel’s written opinion and negative assurances statement, as counsel to the Company,
addressed to the Placement Agents, dated the Closing Date, in the form and substance
reasonably satisfactory to the Representative, and (ii) Skadden, Arps, Slate,
26
Xxxxxxx & Xxxx
LLP shall have delivered an opinion with respect to the Notes to the Representative, in the
form and substance reasonably satisfactory to the Representative.
(e) Counsel to the Company shall have delivered to the Trustee such counsel’s written
opinion, in the form and substance as the Trustee shall have requested in connection with
this Offering.
(f) The Placement Agents shall have received from Proskauer Rose LLP, counsel for the
Placement Agents, such opinion or opinions and negative assurances statement, dated the
Closing Date, with respect to such matters as the Representative may reasonably require, and
the Company shall have furnished to such counsel such documents as they request for enabling
them to pass upon such matters.
(g) At the time of the execution of this Agreement, the Representative shall have
received from PricewaterhouseCoopers LLP a letter, addressed to the Placement Agents,
executed and dated such date, in form and substance satisfactory to the Representative (i)
confirming that they are an independent registered accounting firm with respect to the
Company and its subsidiaries within the meaning of the Securities Act and the Rules and
Regulations and PCAOB and (ii) stating the conclusions and findings of such firm, of the
type ordinarily included in accountants’ “comfort letters” to underwriters, with respect to
the financial statements and certain financial information contained or incorporated by
reference in the Registration Statement, the General Disclosure Package and the Prospectus.
(h) On the effective date of any post-effective amendment to any Registration Statement
and on the Closing Date, the Representative shall have received a letter (the “Bring-Down
Letter”) from PricewaterhouseCoopers LLP addressed to the Placement Agents and dated the
Closing Date confirming, as of the date of the Bring-Down Letter (or, with respect to
matters involving changes or developments since the respective dates as of which specified
financial information is given in the General Disclosure Package and the Prospectus, as the
case may be, as of a date not more than three (3) business days prior to the date of the
Bring-Down Letter), the conclusions and findings of such firm, of the type ordinarily
included in accountants’ “comfort letters” to underwriters, with respect to the financial
information and other matters covered by its letter delivered to the Placement Agents
concurrently with the execution of this Agreement pursuant to paragraph (g) of this
Section 7.
(i) On or before the execution of this Agreement, the Representative shall have
received from RSC a letter addressed to and in the form and substance reasonably
satisfactory to the Representative containing statements and information with respect to the
oil and gas reserves of the Company as reported in the General Disclosure Package and the
Prospectus and, as of the Closing Date, such letter shall not have been withdrawn by RSC or
amended by RSC in any material respect.
(j) The Company shall have furnished to the Representative a certificate, dated the
Closing Date, of its Chairman of the Board or its Chief Executive Officer and its Chief
Financial Officer, its President or a Vice President of Finance, each in his
27
capacity as an
officer of the Company stating that (i) such officers have carefully examined the
Registration Statement, the General Disclosure Package, any Permitted Free Writing
Prospectus and the Prospectus and, in their opinion, the Registration Statement and each
amendment thereto, at the Applicable Time and as of the date of this Agreement and as of the
Closing Date did not include any untrue statement of a material fact and did not omit to
state a material fact required to be stated therein or necessary to make the statements
therein not misleading, and the General Disclosure Package, as of the Applicable Time and as
of the Closing Date, any Permitted Free Writing Prospectus as of its date and as of the
Closing Date, the Prospectus and each amendment or supplement thereto, as of the respective
date thereof and as of the Closing Date, did not include any untrue statement of a material
fact and did not omit to state a material fact necessary in order to make the statements
therein, in the light of the circumstances in which they were made, not misleading, (ii)
since the effective date of the initial Registration Statement, no event has occurred which
should have been set forth in a supplement or amendment to the Registration Statement, the
General Disclosure Package or the Prospectus, (iii) to their knowledge after reasonable
investigation, as of the Closing Date, the representations and warranties of the Company in
this Agreement are true and correct and the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder at or prior to
the Closing Date, and (iv) there has not been, subsequent to the date of the most recent
audited financial statements included or incorporated by reference in the General Disclosure
Package, any material adverse change in the financial position or results of operations of
the Company and its subsidiaries taken as a whole, or any change or development that,
singularly or in the aggregate, would involve a material adverse change or a prospective
material adverse change, in or affecting the condition (financial or otherwise), results of
operations, business, assets or prospects of the Company and its subsidiaries taken as a
whole, except as set forth in the Prospectus.
(k) Since the date of the latest audited financial statements included in the General
Disclosure Package or incorporated by reference in the General Disclosure Package as of the
date hereof, (i) neither the Company nor any of its subsidiaries shall have sustained any
loss or interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth in the General Disclosure Package, and
(ii) there shall not have been any change in the capital stock (other than the issuance of
Common Stock pursuant to the exercise of stock options under the Company’s stock plans and
as otherwise disclosed in the General Disclosure
Package) or long-term debt of the Company nor any of its subsidiaries, or any change,
or any development involving a prospective change, in or affecting the business, general
affairs, management, financial position, stockholders’ equity or results of operations of
the Company and its subsidiaries, otherwise than as set forth in the General Disclosure
Package, the effect of which, in any such case described in clause (i) or (ii) of this
paragraph (k), is, in the judgment of the Representative, so material and adverse as
to make it impracticable or inadvisable to proceed with the sale or delivery of the Notes or
Conversion Shares on the terms and in the manner contemplated in the General Disclosure
Package.
28
(l) No action shall have been taken and no law, statute, rule, regulation or order
shall have been enacted, adopted or issued by any governmental agency or body which would
prevent the issuance or sale of the Notes or the Conversion Shares or materially and
adversely affect or potentially materially and adversely affect the business or operations
of the Company or its subsidiaries taken as a whole; and no injunction, restraining order or
order of any other nature by any federal or state court of competent jurisdiction shall have
been issued which would prevent the issuance or sale of the Notes or the Conversion Shares
or materially and adversely affect or potentially materially and adversely affect the
business or operations of the Company or its subsidiaries taken as a whole.
(m) Subsequent to the execution and delivery of this Agreement there shall not have
occurred any of the following: (i) trading in securities generally on the New York Stock
Exchange, the Nasdaq or the American Stock Exchange or in the over-the-counter market, or
trading in any securities of the Company on any exchange or in the over-the-counter market,
shall have been suspended or materially limited, or minimum or maximum prices or maximum
range for prices shall have been established on any such exchange or such market by the
Commission, by such exchange or market or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been declared by Federal
or state authorities or a material disruption has occurred in commercial banking or
securities settlement or clearance services in the United States, (iii) the United States
shall have become engaged in hostilities, or the subject of an act of terrorism, or there
shall have been an outbreak of or escalation in hostilities involving the United States, or
there shall have been a declaration of a national emergency or war by the United States or
(iv) there shall have occurred such a material adverse change in general economic, political
or financial conditions (or the effect of international conditions on the financial markets
in the United States shall be such) as to make it, in the judgment of the Representative,
impracticable or inadvisable to proceed with the sale or delivery of the Notes on the terms
and in the manner contemplated in the General Disclosure Package and the Prospectus.
(n) The Company shall have filed a Subsequent Listing Application in connection with
this Offering with the NYSE and shall have received no objection thereto from the NYSE.
(o) The Representative shall have received the written agreements, substantially in the
form of Exhibit B hereto, of the executive officers and directors of the Company
listed in Schedule B to this Agreement.
(p) The Company shall have entered into Subscription Agreements with each of the
Purchasers and such agreements shall be in full force and effect.
(q) The Company shall have received a conditional no objections letter from FINRA, and
FINRA shall not have raised any objection to the Offering or the Placement Agents’
compensation as described in the Pricing Prospectus.
29
(r) The Company shall have entered into the Indenture, and any other supplemental
indenture, as applicable, and such agreement shall be in full force and effect.
(s) The Company shall have obtained a cusip number for the Notes, and shall have
arranged for the Notes to be issued at closing via the Depository Trust Company’s
Deposit/Withdrawal At Custodian system through its Trustee.
(t) Prior to the Closing Date, the Company shall have furnished to the Representative
such further information, opinions, certificates, letters or documents as the Representative
shall have reasonably requested.
All opinions, letters, evidence and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Placement Agents.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each of the Placement Agents, each of
their respective affiliates and each of its and their respective directors, officers,
members, employees, representatives and agents (including, without limitation Lazard Frères
& Co. LLC, (which will provide services to LCM) and its affiliates, and each of its and
their respective directors, officers, members, employees, representatives and agents and
each person, if any, who controls Lazard Frères & Co. LLC within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange Act) and each person, if any, who
controls such Placement Agent within the meaning of Section 15 of the Securities Act of or
Section 20 of the Exchange Act (collectively, the “Placement Agent Indemnified Parties,” and
each a “Placement Agent Indemnified Party”) against any loss, claim, damage, expense or
liability whatsoever (or any action, investigation or proceeding in respect thereof), joint
or several, to which such Placement Agent Indemnified Party may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage, expense, liability,
action, investigation or proceeding arises out of or is based upon (A) any untrue statement
or alleged untrue statement of a material fact contained in any Preliminary Prospectus, any
Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed
pursuant to Rule 433(d)
of the Rules and Regulations, any Registration Statement or the Prospectus, or in any
amendment or supplement thereto or document incorporated by reference therein, (B) the
omission or alleged omission to state in any Preliminary Prospectus, any Issuer Free Writing
Prospectus, any “issuer information” filed or required to be filed pursuant to Rule 433(d)
of the Rules and Regulations, any Registration Statement or the Prospectus, or in any
amendment or supplement thereto or document incorporated by reference therein, a material
fact required to be stated therein or necessary to make the statements therein not
misleading or (C) any breach of the representations and warranties of the Company contained
herein or the failure of the Company to perform its obligations hereunder, under the
Indenture or the Notes or pursuant to any law, and shall reimburse the Placement Agent
Indemnified Party promptly upon demand for any legal fees or other expenses reasonably
incurred by that Placement Agent Indemnified Party in connection
30
with investigating,
preparing to defend, or defending against, settling, compromising, appearing as a third
party witness in respect of, or otherwise incurred in connection with, any such loss, claim,
damage, expense, liability, action, investigation or proceeding, as such fees and expenses
are incurred; provided, however, that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage, expense or liability arises out of or is based
upon an untrue statement or alleged untrue statement in, or omission or alleged omission
from any Preliminary Prospectus, any Registration Statement or the Prospectus, or any such
amendment or supplement thereto, or any Issuer Free Writing Prospectus made in reliance upon
and in conformity with written information furnished to the Company by the Representative by
or on behalf of the Placement Agents specifically for use therein, which information the
parties hereto agree is limited to the Placement Agents’ Information (as defined in
Section 188). This indemnity agreement is not exclusive and will be in addition to
any liability, which the Company might otherwise have and shall not limit any rights or
remedies which may otherwise be available at law or in equity to each Placement Agent
Indemnified Party.
(b) Each Placement Agent, severally and not jointly, shall indemnify and hold harmless
the Company and its directors, its officers who signed the Registration Statement and each
person, if any, who controls the Company within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act (collectively, the “Company Indemnified Parties,” and
each a “Company Indemnified Party”) against any loss, claim, damage, expense or liability
whatsoever (or any action, investigation or proceeding in respect thereof), joint or
several, to which such Company Indemnified Party may become subject, under the Securities
Act or otherwise, insofar as such loss, claim, damage, expense, liability, action,
investigation or proceeding arises out of or is based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary Prospectus, any
Issuer Free Writing Prospectus, any “issuer information” filed or required to be filed
pursuant to Rule 433(d) of the Rules and Regulations, any Registration Statement or the
Prospectus, or in any amendment or supplement thereto, or (ii) the omission or alleged
omission to state in any Preliminary Prospectus, any Issuer Free Writing Prospectus, any
“issuer information” filed or required to be filed pursuant to Rule 433(d) of the Rules and
Regulations, any Registration Statement or the Prospectus, or in any amendment or supplement
thereto, a material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue statement or
alleged untrue
statement or omission or alleged omission was made in reliance upon and in conformity
with written information furnished to the Company by the Representative by or on behalf of
the Placement Agents specifically for use therein, which information the parties hereto
agree is limited to the Placement Agents’ Information as defined in Section 188, and
shall reimburse the Company Indemnified Party for any legal or other expenses reasonably
incurred by such party in connection with investigating or preparing to defend or defending
against or appearing as third party witness in connection with any such loss, claim, damage,
liability, action, investigation or proceeding, as such fees and expenses are incurred.
This indemnity agreement is not exclusive and will be in addition to any liability, which
any Placement Agent might otherwise have and shall not limit any rights or remedies which
may otherwise be available at law or in equity to each Company Indemnified Party.
Notwithstanding the provisions of this Section 8(b), in no event shall
31
any indemnity
by any Placement Agent under this Section 8(b) exceed the total compensation
received by such Placement Agent in accordance with Section 2.5.
(c) Promptly after receipt by an indemnified party under this Section 8 of
notice of the commencement of any action, the indemnified party shall, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
such indemnifying party in writing of the commencement of that action; provided, however,
that the failure to notify the indemnifying party shall not relieve it from any liability
which it may have under this Section 8 except to the extent it has been materially
prejudiced by such failure; and, provided, further, that the failure to notify an
indemnifying party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 8. If any such action shall be
brought against an indemnified party, and it shall notify the indemnifying party thereof,
the indemnifying party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume the defense
of such action with counsel reasonably satisfactory to the indemnified party (which counsel
shall not, except with the written consent of the indemnified party, be counsel to the
indemnifying party). After notice from the indemnifying party to the indemnified party of
its election to assume the defense of such action, except as provided herein, the
indemnifying party shall not be liable to the indemnified party under Section 8 for
any legal or other expenses subsequently incurred by the indemnified party in connection
with the defense of such action other than reasonable costs of investigation; provided,
however, that any indemnified party shall have the right to employ separate counsel in any
such action and to participate in the defense of such action but the fees and expenses of
such counsel (other than reasonable costs of investigation) shall be at the expense of such
indemnified party unless (i) the employment thereof has been specifically authorized in
writing by the Company in the case of a claim for indemnification under Section 8(a)
or Section 2.6 or LCM in the case of a claim for indemnification under Section
8(b), (ii) such indemnified party shall have been advised by its counsel that there may
be one or more legal defenses available to it which are different from or additional to
those available to the indemnifying party, or (iii) the indemnifying party has failed to
assume the defense of such action and employ counsel reasonably satisfactory to the
indemnified party within a reasonable period of time after notice of the commencement of the
action or the indemnifying party does not diligently defend the action after assumption of
the defense, in which case, if such indemnified party notifies the indemnifying party in writing that it elects to employ separate
counsel at the expense of the indemnifying party, the indemnifying party shall not have the
right to assume the defense of (or, in the case of a failure to diligently defend the action
after assumption of the defense, to continue to defend) such action on behalf of such
indemnified party and the indemnifying party shall be responsible for legal or other
expenses subsequently incurred by such indemnified party in connection with the defense of
such action; provided, however, that the indemnifying party shall not, in connection with
any one such action or separate but substantially similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances, be liable for the
reasonable fees and expenses of more than one separate firm of attorneys at any time for all
such indemnified parties (in addition to any local counsel), which firm shall be designated
in writing by LCM if the indemnified parties under this Section 8 consist of
32
any
Placement Agent Indemnified Party or by the Company if the indemnified parties under this
Section 8 consist of any Company Indemnified Parties. Subject to this Section
8(c), the amount payable by an indemnifying party under Section 8 shall include,
but not be limited to, (x) reasonable legal fees and expenses of counsel to the indemnified
party and any other expenses in investigating, or preparing to defend or defending against,
or appearing as a third party witness in respect of, or otherwise incurred in connection
with, any action, investigation, proceeding or claim, and (y) all amounts paid in settlement
of any of the foregoing. No indemnifying party shall, without the prior written consent of
the indemnified parties, settle or compromise or consent to the entry of judgment with
respect to any pending or threatened action or any claim whatsoever, in respect of which
indemnification or contribution could be sought under this Section 8 (whether or not
the indemnified parties are actual or potential parties thereto), unless such settlement,
compromise or consent (i) includes an unconditional release of each indemnified party in
form and substance reasonably satisfactory to such indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of any indemnified
party. Subject to the provisions of the following sentence, no indemnifying party shall be
liable for settlement of any pending or threatened action or any claim whatsoever that is
effected without its written consent (which consent shall not be unreasonably withheld or
delayed), but if settled with its written consent, if its consent has been unreasonably
withheld or delayed or if there be a judgment for the plaintiff in any such matter, the
indemnifying party agrees to indemnify and hold harmless any indemnified party from and
against any loss or liability by reason of such settlement or judgment. In addition, if at
any time an indemnified party shall have requested that an indemnifying party reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party agrees that it
shall be liable for any settlement of the nature contemplated herein effected without its
written consent if (i) such settlement is entered into more than forty-five (45) days after
receipt by such indemnifying party of the request for reimbursement, (ii) such indemnifying
party shall have received notice of the terms of such settlement at least thirty (30) days
prior to such settlement being entered into and (iii) such indemnifying party shall not have
reimbursed such indemnified party in accordance with such request prior to the date of such
settlement.
(d) If the indemnification provided for in this Section 8 is unavailable or
insufficient to hold harmless an indemnified party under Section 8(a) or Section
8(b),
then each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid, payable or otherwise incurred by such indemnified party as a
result of such loss, claim, damage, expense or liability (or any action, investigation or
proceeding in respect thereof), as incurred, (i) in such proportion as shall be appropriate
to reflect the relative benefits received by the Company on the one hand and the Placement
Agents on the other hand from the offering of the Securities, or (ii) if the allocation
provided by clause (i) of this Section 8(d) is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits referred to in
clause (i) of this Section 8(d) but also the relative fault of the Company on the
one hand and the Placement Agents on the other with respect to the statements, omissions,
acts or failures to act which resulted in such loss, claim, damage, expense or liability (or
any action, investigation or proceeding in respect thereof) as well as any other relevant
33
equitable considerations. The relative benefits received by the Company on the one hand and
the Placement Agents on the other with respect to such offering shall be deemed to be in the
same proportion as the total net proceeds from the offering of the Securities purchased
under this Agreement (before deducting expenses) received by the Company bear to the total
Placement Fee received by the Placement Agents in connection with the Offering, in each case
as set forth in the table on the cover page of the Prospectus. The relative fault of the
Company on the one hand and the Placement Agents on the other 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 on the one hand or the Placement Agents on the other,
the intent of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such untrue statement, omission, act or failure to act;
provided that the parties hereto agree that the written information furnished to the Company
by the Representative by or on behalf of the Placement Agents for use in any Preliminary
Prospectus, any Registration Statement or the Prospectus, or in any amendment or supplement
thereto, consists solely of the Placement Agents’ Information as defined in Section
188. The Company and the Placement Agents agree that it would not be just and equitable
if contributions pursuant to this Section 8(d) were to be determined by pro rata
allocation or by any other method of allocation that does not take into account the
equitable considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, damage, expense, liability, action, investigation or
proceeding referred to above in this Section 8(d) shall be deemed to include, for
purposes of this Section 8(d), any legal or other expenses reasonably incurred by
such indemnified party in connection with investigating, preparing to defend or defending
against or appearing as a third party witness in respect of, or otherwise incurred in
connection with, any such loss, claim, damage, expense, liability, action, investigation or
proceeding. Notwithstanding the provisions of this Section 8(d), no Placement Agent
shall be required to contribute any amount in excess of the total compensation received by
such Placement Agent in accordance with Section 2.5 less the amount of any damages
which such Placement Agent has otherwise paid or become liable to pay by reason of any
untrue or alleged untrue statement, omission or alleged omission, act or alleged act or
failure to act or alleged failure to act. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation.
9. Termination. The obligations of the Placement Agents and the Purchasers hereunder
and under the Subscription Agreements may be terminated by the Representative, in its absolute
discretion by notice given to the Company prior to delivery of and payment for the Notes if, prior
to that time, any of the events described in Sections 7(k), 7(l) or 7(m)
have occurred or if the Purchasers shall decline to purchase the Notes for any reason permitted
under this Agreement or the Subscription Agreements.
10. Reimbursement of Placement Agents’ Expenses. Notwithstanding anything to the
contrary in this Agreement, if (a) this Agreement shall have been terminated pursuant to
Section 9, (b) the Company shall fail to tender the Notes for delivery to the Purchasers
for any reason not permitted under this Agreement, (c) the Purchasers shall decline to purchase the
Notes
34
for any reason permitted under this Agreement or (d) the sale of the Notes are not
consummated because any condition to the obligations of the Purchasers or the Placement Agents set
forth herein is not satisfied or because of the refusal, inability or failure on the part of the
Company to perform any agreement herein or to satisfy any condition or to comply with the
provisions hereof, then, in addition to the payment of out-of-pocket expenses in accordance with
Section 6 (but not in duplication thereof), the Company shall reimburse the Placement
Agents for the fees and expenses of the Placement Agents’ counsel and for such other accountable
out-of-pocket expenses as shall have been reasonably incurred by them in connection with this
Agreement and the proposed purchase of the Notes, and upon demand the Company shall pay the full
amount thereof to the Representative by or on behalf of the Placement Agents
11. Authority of the representative. MWC consents and agrees that LCM will act as
Representative of the Placement Agents under this Agreement and with respect to the sale of the
Securities. Accordingly, MWC authorizes LCM to manage the Offering and the sale of the Securities
and to take such action in connection therewith as LCM in its sole discretion deems appropriate or
desirable, consistent with the provisions of each Agreement Among Underwriters previously entered
into between LCM and MWC, respectively, taking into account that the Offering of the Securities
will be in the form of a best efforts placement and not a firm commitment underwriting. MWC agrees
to comply with such Agreement Among Underwriters and that any action taken under this Agreement by
the Representative shall be binding upon all of the Placement Agents.
12.
Absence of Fiduciary Relationship The Company acknowledges and agrees that:
(a) each Placement Agent’s responsibility to the Company is solely contractual in
nature, each Placement Agent has been retained solely to act as placement agent in
connection with the Offering and no fiduciary, advisory or agency relationship between the
Company and such Placement Agent has been created in respect of any of
the transactions contemplated by this Agreement, irrespective of whether the LCM, MWC
or Lazard Frères & Co. LLC has advised or is advising the Company on other matters;
(b) the price and other terms of the Notes set forth in this Agreement were established
by the Company following discussions and arms-length negotiations with the Representative,
and the Company is capable of evaluating and understanding, and understands and accepts, the
terms, risks and conditions of the transactions contemplated by this Agreement;
(c) it has been advised that LCM, MWC and Lazard Frères & Co. LLC and each of their
affiliates are engaged in a broad range of transactions which may involve interests that
differ from those of the Company and that the Placement Agents have no obligation to
disclose such interests and transactions to the Company by virtue of any fiduciary, advisory
or agency relationship; and
(d) it waives, to the fullest extent permitted by law, any claims it may have against
the Placement Agents for breach of fiduciary duty or alleged breach of fiduciary
35
duty and
agrees that the Placement Agents shall have no liability (whether direct or indirect) to the
Company in respect of such a fiduciary duty claim or to any person asserting a fiduciary
duty claim on behalf of or in right of the Company, including stockholders, employees or
creditors of the Company.
13. Successors; Persons Entitled to Benefit of Agreement. This Agreement shall inure to
the benefit of and be binding upon the several Placement Agents, the Company, and their respective
successors and assigns. This Agreement shall also inure to the benefit of Lazard Frères & Co. LLC,
the Purchasers, and each of their respective successors and assigns, which shall be third party
beneficiaries hereof. Notwithstanding the foregoing, as provided in the Subscription Agreements,
the determination as to whether any condition in Section 7 hereof shall have been
satisfied, and the waiver of any condition in Section 7 hereof, may be made by the
Representative in its sole discretion, and any such determination or waiver shall be binding on
each of the Purchasers and shall not require the consent of any Purchaser. Nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any person, other than the
persons mentioned in the preceding sentences, 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 the representations,
warranties, covenants, agreements and indemnities of the Company contained in this Agreement shall
also be for the benefit of the Placement Agent Indemnified Parties and the several indemnities of
the Placement Agents shall be for the benefit of the Company Indemnified Parties. It is understood
that the Placement Agents’ responsibility to the Company is solely contractual in nature and the
Placement Agents do not owe the Company, or any other party, any fiduciary duty as a result of this
Agreement.
14. Survival of Indemnities, Representations, Warranties, etc. The respective indemnities, covenants, agreements, representations, warranties and other
statements of the Company and the several Placement Agents, as set forth in this Agreement or made
by them respectively, pursuant to this Agreement, shall remain in full force and effect, regardless
of any investigation made by or on behalf of any Placement Agent, the Company, the Purchasers or
any person controlling any of them and shall survive delivery of and payment for the Notes.
Notwithstanding any termination of this Agreement, including without limitation any termination
pursuant to Sections 9, the indemnity and contribution and reimbursement agreements
contained in Sections 8 and 10 and the covenants, representations, warranties set
forth in this Agreement shall not terminate and shall remain in full force and effect at all times.
15. Notices. All statements, requests, notices and agreements hereunder shall be in
writing, and:
(a) if to the Representative, shall be delivered or sent by mail, telex, facsimile
transmission or email to Lazard Capital Markets LLC, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx
Xxxx 00000, Attention: General Counsel, Fax: 000-000-0000; and
(b) if to the Company, shall be delivered or sent by mail, telex, facsimile
transmission or email to: Harvest Natural Resources, Inc., 0000 Xxxxxxx Xxxxxxx, Xxxxx
36
300,
Houston, Texas, Attention: Xxxxx X. Xxxx, Vice President, General Counsel and Corporate and
Secretary, Fax: (000) 000-0000.
provided, however, that any notice to the Placement Agents pursuant to Section 8 shall be
delivered or sent by mail, telex or facsimile transmission to the Representative at its address set
forth in its acceptance telex to the Representative, which address will be supplied to any other
party hereto by the Representative upon request. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof, except that any such statement,
request, notice or agreement delivered or sent by email shall take effect at the time of
confirmation of receipt thereof by the recipient thereof.
16. Definition of Certain Terms. For purposes of this Agreement, (a) “business day”
means any day on which the New York Stock Exchange, Inc. is open for trading, (b) “knowledge” means
the knowledge of the directors and officers of the Company after reasonable inquiry and (c)
“subsidiary” has the meaning set forth in Rule 405 of the Rules and Regulations, but excluding any
inactive or immaterial subsidiaries and any subsidiaries in which the Company has less than a 50%
ownership or control interest.
17. Governing Law, Agent for Service and Jurisdiction. This Agreement shall be governed
by and construed in accordance with the laws of the State of New York, including without limitation
Section 5-1401 of the New York General Obligations Law. No legal proceeding may be commenced,
prosecuted or continued in any court other than the courts of the State of New York located in the
City and County of New York or in the United States District Court for the Southern District of New
York, which courts shall have jurisdiction over the adjudication of such matters, and the Company and the
Placement Agents each hereby consent to the jurisdiction of such courts and personal service with
respect thereto. The Company and the Placement Agents each hereby waive all right to trial by jury
in any legal proceeding (whether based upon contract, tort or otherwise) in any way arising out of
or relating to this Agreement. The Company agrees that a final judgment in any such legal
proceeding brought in any such court shall be conclusive and binding upon the Company and the
Placement Agents and may be enforced in any other courts in the jurisdiction of which the Company
is or may be subject, by suit upon such judgment.
18. Placement Agents’ Information. The parties hereto acknowledge and agree that, for
all purposes of this Agreement, the “Placement Agents’ Information” consists solely of the
following information in the Prospectus: (i) the last paragraph on the front cover page concerning
the terms of the offering; and (ii) the statements concerning the Placement Agents contained in the
first paragraph under the heading “Plan of Distribution.”
19. Partial Unenforceability. The invalidity or unenforceability of any section,
paragraph, clause or provision of this Agreement shall not affect the validity or enforceability of
any other section, paragraph, clause or provision hereof. If any section, paragraph, clause or
provision of this Agreement is for any reason determined to be invalid or unenforceable, there
shall be deemed to be made such minor changes (and only such minor changes) as are necessary to
make it valid and enforceable.
37
20. General. This Agreement constitutes the entire agreement of the parties to this
Agreement and supersedes all prior written or oral and all contemporaneous oral agreements,
understandings and negotiations with respect to the subject matter hereof. In this Agreement, the
masculine, feminine and neuter genders and the singular and the plural include one another. The
section headings in this Agreement are for the convenience of the parties only and will not affect
the construction or interpretation of this Agreement. This Agreement may be amended or modified,
and the observance of any term of this Agreement may be waived, only by a writing signed by the
Company and the Representative.
21. Counterparts. This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto and hereto were upon
the same instrument and such signatures may be delivered by facsimile.
38
If the foregoing is in accordance with your understanding of the agreement between the Company
and the Placement Agents, kindly indicate your acceptance in the space provided for that purpose
below.
| Very truly yours, HARVEST NATURAL RESOURCES, INC. |
||||
| By: | /s/ Xxxxx X. Xxxxxxxx | |||
| Name: | Xxxxx X. Xxxxxxxx | |||
| Title: | President and Chief Executive Officer | |||
| Accepted as of the date first above written: LAZARD CAPITAL MARKETS LLC |
||||
| By: | /s/ Xxxxx X. XxXxxxxx, Xx. | |||
| Name: | Xxxxx X. XxXxxxxx, Xx. | |||
| Title: | Managing Director | |||
| XXXXXXX XXXXXXXX AND COMPANY LLC |
||||
| By: | /s/ Xxxxxx Xxxxxx | |||
| Name: | Xxxxxx Xxxxxx | |||
| Title: | Director | |||
39
SCHEDULE A
General Use Free Writing Prospectuses
None.
SCHEDULE B
List of officers, directors and shareholders subject to Section 5
Xxxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
X. X. Xxxxxx
Xxxxxxx X. Xxxxxx
J. Xxxxxxx Xxxxxxx
Xx. Xxxx Xxxxxxxx
Xxxxxx X. Xxxxxx
Xxxxx X. Xxxx
Xxxx X. Xxxxxxxxxx
Xxxxxx Xxxxxx
Xxxxxxx X. Xxxxxx
G. Xxxxxxx Xxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxxx X. Xxxxxxxx
X. X. Xxxxxx
Xxxxxxx X. Xxxxxx
J. Xxxxxxx Xxxxxxx
Xx. Xxxx Xxxxxxxx
Xxxxxx X. Xxxxxx
Xxxxx X. Xxxx
Xxxx X. Xxxxxxxxxx
Xxxxxx Xxxxxx
Xxxxxxx X. Xxxxxx
G. Xxxxxxx Xxxxxx
Xxxxxxx X. Xxxxxxxx
EXHIBIT A
Form of Subscription Agreement
Execution copy
SUBSCRIPTION AGREEMENT
Gentlemen:
The undersigned (the “Investor”) hereby confirms its agreement with Harvest Natural Resources,
Inc., a Delaware corporation (the “Company”), as follows:
1. This Subscription Agreement, including the Terms and Conditions for Purchase of Securities
attached hereto as Annex I (collectively, this “Agreement”) is made as of the date set
forth below between the Company and the Investor.
2. The Company has authorized the sale and issuance to certain investors of up to an aggregate
of $32,000,000 principal amount of the Company’s 8.25% Senior Convertible Notes due 2013 (the
“Notes”), which are convertible (at the initial conversion rate specified in the Indenture and the
Notes, under the circumstances and subject to adjustment as set forth in the Indenture, into shares
(the “Conversion Shares”) of common stock, par value $0.01 per share (the “Common Stock”) of the
Company in accordance with the terms of the Notes and the Indenture to be dated as of the Closing
Date (the “Indenture”) between the Company and U.S. Bank National Association, as trustee (the
“Trustee”), as supplemented by a supplemental indenture to be dated the Closing Date. The Notes
and the Conversion Shares are collectively referred to herein as the “Securities.”
3. The offering and sale of the Securities (the “Offering”) are being made pursuant to (a) an
effective Registration Statement on Form S-3, No. 333-162858 (the “Registration Statement”) filed
by the Company with the Securities and Exchange Commission (the “Commission”), including the
Prospectus contained therein (the “Base Prospectus”), (b) if applicable, certain “free writing
prospectuses” (as that term is defined in Rule 405 under the Securities Act of 1933, as amended
(the “Act”)), that have been or will be filed with the Commission and delivered to the Investor on
or prior to the date hereof (the “Issuer Free Writing Prospectus”), containing certain
supplemental information regarding the Securities, the terms of the Offering and the Company, (c)
if applicable, a Preliminary Prospectus Supplement (the “Preliminary Prospectus Supplement”)
containing certain supplemental information regarding the Securities, the terms of the Offering and
the Company and (d) a Prospectus Supplement (the “Prospectus Supplement” and, together with the
Base Prospectus, the “Prospectus”) containing certain supplemental information regarding the
Securities and terms of the Offering that has been or will be filed with the Commission and
delivered to the Investor (or made available to the Investor by the filing by the Company of an
electronic version thereof with the Commission).
4. The Company and the Investor agree that the Investor will purchase from the Company and the
Company will issue and sell to the Investor the principal amount of the Notes set forth below for
the aggregate purchase price set forth below. The Notes shall be purchased pursuant to the Terms
and Conditions for Purchase of Notes attached hereto as Annex I and incorporated herein by
this reference as if fully set forth herein. The Investor acknowledges that the Offering is not
being
underwritten by the placement agents (the “Placement Agents”) named in the Prospectus
Supplement and that there is no minimum offering amount.
5. The manner of settlement of the Notes:
The notes will be issued in fully registered book-entry form and will be represented by
one or more permanent global notes without coupons. The global notes will be deposited
with a custodian for and registered in the name of Cede & Co. as The Depository Trust
Company (“DTC”) nominee. Delivery versus payment (“DVP”) through DTC (i.e., on
the Closing Date, the Company shall deliver Notes registered in the Investor’s name and
address as set forth below and released by the Trustee to the Investor through DTC at the
Closing directly to the account(s) at Lazard Capital Markets LLC (“LCM”) identified by
the Investor; upon receipt of such Notes, LCM shall promptly electronically deliver such
Notes to the Investor, and simultaneously therewith payment shall be made by LCM by wire
transfer to the Company). NO LATER THAN ONE (1) BUSINESS DAY AFTER THE EXECUTION OF THIS
AGREEMENT BY THE INVESTOR AND THE COMPANY, THE INVESTOR SHALL:
| (I) | NOTIFY LCM OF THE ACCOUNT OR ACCOUNTS AT LCM TO BE CREDITED WITH THE NOTES BEING PURCHASED BY SUCH INVESTOR, AND | ||
| (II) | CONFIRM THAT THE ACCOUNT OR ACCOUNTS AT LCM TO BE CREDITED WITH THE NOTES BEING PURCHASED BY THE INVESTOR HAVE A MINIMUM BALANCE EQUAL TO THE AGGREGATE PURCHASE PRICE FOR THE SECURITIES BEING PURCHASED BY THE INVESTOR. |
IT IS THE INVESTOR’S RESPONSIBILITY TO (A) MAKE THE NECESSARY WIRE TRANSFER OR CONFIRM THE
PROPER ACCOUNT BALANCE IN A TIMELY MANNER AND (B) ARRANGE FOR SETTLEMENT BY WAY OF DVP IN A TIMELY
MANNER. IF THE INVESTOR DOES NOT DELIVER THE AGGREGATE PURCHASE PRICE FOR THE NOTES OR DOES NOT
MAKE PROPER ARRANGEMENTS FOR SETTLEMENT IN A TIMELY MANNER, THE NOTES MAY NOT BE DELIVERED AT
CLOSING TO THE INVESTOR OR THE INVESTOR MAY BE EXCLUDED FROM THE CLOSING ALTOGETHER.
6. The Notes shall be delivered in accordance with the terms thereof.
7. The Investor represents that, except as set forth below, (a) it has had no position, office
or other material relationship within the past three years with the Company or persons known to it
to be affiliates of the Company, (b) it is not a Financial Industry Regulatory Authority member or
an Associated Person (as such term is defined under the NASD Membership and Registration Rules
Section 1011) as of the Closing, and (c) neither the Investor nor any group of Investors (as
identified in a public filing made with the Commission) of which the Investor is a part in
connection with the Offering of the Securities, has acquired, or obtained the right to acquire, 20%
or more of the Common Stock (or securities convertible into or exercisable for Common Stock) or the
voting power of the Company on a post-transaction basis. Exceptions:
-2-
(If no exceptions, write “none.” If left blank, response will be deemed to be “none.”)
8. The Investor represents that it has received (or otherwise had made available to it by the
filing by the Company of an electronic version thereof with the Commission), the Preliminary
Prospectus Supplement, including the Base Prospectus which is a part of the Company’s Registration
Statement, the documents incorporated by reference therein and any free writing prospectus
(collectively, the “Disclosure Package”), prior to or in connection with the receipt of this
Agreement. The Investor acknowledges that, prior to the delivery of this Agreement to the Company,
the Investor will receive certain additional information regarding the Offering, including the
pricing information (the “Offering Information”). Such information may be provided to the Investor
by any means permitted under the Act, including the Prospectus Supplement, a free writing
prospectus and oral communications.
9. No offer by the Investor to buy the Notes will be accepted and no part of the Purchase
Price will be delivered to the Company until the Investor has received the Offering Information and
the Company has accepted such offer by countersigning a copy of this Agreement, and any such offer
may be withdrawn or revoked, without obligation or commitment of any kind, at any time prior to the
Company (or Placement Agents on behalf of the Company) sending (orally, in writing or by electronic
mail) notice of its acceptance of such offer. An indication of interest will involve no obligation
or commitment of any kind until the Investor has been delivered the Offering Information and this
Agreement is accepted and countersigned by or on behalf of the Company.
10. The Company acknowledges that the only material, non-public information relating to the
Company it has provided to the Investor in connection with the Offering prior to the date hereof is
the existence of the Offering and the Preliminary Prospectus Supplement, which will be filed with
the Commission prior to the opening of the New York Stock Exchange on February 11, 2010.
-3-
Principal Dollar Amount of Notes: $
Please confirm that the foregoing correctly sets forth the agreement between us by signing in
the space provided below for that purpose.
| Dated as of: February ___, 2010 |
| INVESTOR |
| By: | ||||
| Print Name: | ||||
| Title: | ||||
| Address: | ||||||
Xxxxxx and Accepted
this day of February, 2010:
this day of February, 2010:
| By: | ||||
| Title: | ||||
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ANNEX I
TERMS AND CONDITIONS FOR PURCHASE OF SECURITIES
1. Authorization and Sale of the Securities. Subject to the terms and conditions of this
Agreement, the Company has authorized the sale of the Notes.
2. Agreement to Sell and Purchase the Securities; Placement Agents.
2.1 At the Closing (as defined in Section 3.1), the Company will sell to the Investor,
and the Investor will purchase from the Company, upon the terms and conditions set forth herein,
the principal amount of Notes set forth on the signature page of the Agreement to which these Terms
and Conditions for Purchase of Securities are attached as Annex I (the “Signature Page”)
for the aggregate purchase price therefor set forth on the Signature Page.
2.2 The Company proposes to enter into substantially this same form of Subscription Agreement
with certain other investors (the “Other Investors”) and expects to complete sales of Notes to
them. The Investor and the Other Investors are hereinafter sometimes collectively referred to as
the “Investors,” and this Agreement and the Subscription Agreements executed by the Other Investors
are hereinafter sometimes collectively referred to as the “Agreements.”
2.3 The Investor acknowledges that the Company has agreed to pay Lazard Capital Markets LLC
(“LCM”) and Xxxxxxx Xxxxxxxx and Company, LLC (“MWC”, and together with LCM, the “Placement
Agents”) a fee (the “Placement Fee”) in respect of the sale of Notes to the Investor.
2.4 The Company has entered into a Placement Agent Agreement, dated the date hereof (the
“Placement Agreement”), with the Placement Agents that contains certain representations,
warranties, covenants and agreements of the Company that may be relied upon by the Investor, which
shall be a third party beneficiary thereof.
2.5 The Company will enter into an Indenture to be dated as of the Closing Date between the
Company and U.S. Bank, N.A., as Trustee, as supplemented by the supplemental indenture to be dated
as of the Closing Date, pursuant to which the Notes will be issued.
3. Closing and Delivery of the Notes and Funds.
3.1 Closing. The completion of the purchase and sale of the Notes (the “Closing”)
shall occur at a place and time (the “Closing Date”) to be specified by the Company and the
Placement Agents, and of which the Investors will be notified in advance by the Placement Agents,
in accordance with Rule 15c6-1 promulgated under the Securities Exchange Act of 1934, as amended
(the “Exchange Act”). At the Closing, (a) the Company shall cause the Trustee to deliver to the
account of the Investor a Note for the principal amount set forth on the Signature Page registered
in the name of the Investor or, if so indicated on the Investor Questionnaire attached hereto as
Exhibit A, in the name of a nominee designated by the Investor and (b) the aggregate
purchase price for the Notes being purchased by the Investor will be delivered by or on behalf of
the Investor to the Company.
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3.2 Conditions to the Obligations of the Parties.
(a) Conditions to the Company’s Obligations. The Company’s obligation to issue and
sell the Notes to the Investor shall be subject to: (i) the receipt by the Company of the purchase
price for the Notes being purchased hereunder as set forth on the Signature Page and (ii) the
accuracy of the representations and warranties made by the Investor and the fulfillment of those
undertakings of the Investor to be fulfilled prior to the Closing Date.
(b) Conditions to the Investor’s Obligations. The Investor’s obligation to purchase
the Notes will be subject to the accuracy of the representations and warranties made by the Company
and the fulfillment of those undertakings of the Company to be fulfilled prior to the Closing Date,
including without limitation, those contained in the Placement Agreement, and to the condition that
LCM, on behalf of the Placement Agents, shall not have: (i) terminated the Placement Agreement
pursuant to the terms thereof or (ii) determined that the conditions to the closing in the
Placement Agreement have not been satisfied. The Investor’s obligations are expressly not
conditioned on the purchase by any or all of the Other Investors of the Notes that they have agreed
to purchase from the Company. The Investor understands and agrees that, in the event that LCM, in
behalf of the Placement Agents, in its sole discretion determines that the conditions to closing in
the Placement Agreement have not been satisfied or if the Placement Agreement may be terminated for
any other reason permitted by the Placement Agreement, then LCM may, but shall not be obligated to,
terminate the Placement Agreement, which shall have the effect of terminating this Subscription
Agreement pursuant to Section 14 below.
3.3 Delivery of Funds.
Delivery Versus Payment through The Depository Trust Company. No later than one
(1) business day after the execution of this Agreement by the Investor and the Company, the
Investor shall confirm that the account or accounts at LCM to be credited with the Notes being
purchased by the Investor have a minimum balance equal to the aggregate purchase price for the
Notes being purchased by the Investor.
3.4 Delivery of Notes.
Delivery Versus Payment through The Depository Trust Company. No later than one
(1) business day after the execution of this Agreement by the Investor and the Company, the
Investor shall notify LCM of the account or accounts at LCM to be credited with the Notes being
purchased by such Investor. On the Closing Date, the Company shall deliver the Notes to the
Investor through DTC directly to the account(s) at LCM identified by Investor and simultaneously
therewith payment shall be made by LCM by wire transfer to the Company.
4. Representations, Warranties and Covenants of the Investor.
The Investor acknowledges, represents and warrants to, and agrees with, the Company and the
Placement Agents that:
4.1 The Investor (a) is knowledgeable, sophisticated and experienced in making, and is
qualified to make decisions with respect to, investments in shares presenting an investment
decision like that involved in the purchase of the Notes, including investments in securities
issued by the
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Company and investments in comparable companies, (b) has provided all information on the
Signature Page and the Investor Questionnaire and the answers thereto are true and correct as of
the date hereof and will be true and correct as of the Closing Date and (c) in connection with its
decision to purchase the principal amount of Notes set forth on the Signature Page, has received
and is relying only upon the Disclosure Package and the documents incorporated by reference therein
and the Offering Information.
4.2 (a) No action has been or will be taken in any jurisdiction outside the United States by
the Company or the Placement Agents that would permit an offering of the Securities, or possession
or distribution of offering materials in connection with the issue of the Securities in any
jurisdiction outside the United States where action for that purpose is required, (b) if the
Investor is outside the United States, it will comply with all applicable laws and regulations in
each foreign jurisdiction in which it purchases, offers, sells or delivers Securities or has in its
possession or distributes any offering material, in all cases at its own expense and (c) the
Placement Agents are not authorized to make and has not made any representation, disclosure or use
of any information in connection with the issue, placement, purchase and sale of the Securities,
except as set forth or incorporated by reference in the Base Prospectus or the Prospectus or any
free writing prospectus.
4.3 (a) The Investor has full right, power, authority and capacity to enter into this
Agreement and to consummate the transactions contemplated hereby and has taken all necessary action
to authorize the execution, delivery and performance of this Agreement, and (b) this Agreement
constitutes a valid and binding obligation of the Investor enforceable against the Investor in
accordance with its terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or similar laws affecting creditors’ and contracting
parties’ rights generally and except as enforceability may be subject to general principles of
equity (regardless of whether such enforceability is considered in a proceeding in equity or at
law) and except as to the enforceability of any rights to indemnification or contribution that may
be violative of the public policy underlying any law, rule or regulation (including any federal or
state securities law, rule or regulation).
4.4 The Investor understands that nothing in this Agreement, the Prospectus, the Disclosure
Package, the Offering Information or any other materials presented to the Investor in connection
with the purchase and sale of the Securities constitutes legal, tax or investment advice. The
Investor has consulted such legal, tax and investment advisors and made such investigation as it,
in its sole discretion, has deemed necessary or appropriate in connection with its purchase of
Securities. The Investor also understands that there is no established public trading market
for the Notes being offered in the Offering, and that the Company does not expect such a market to
develop. In addition, the Company does not intend to apply for listing the Notes on any securities
exchange. Without an active market, the liquidity of the Notes will be limited.
4.5 Since the date on which the Placement Agents first contacted the Investor about the
Offering, the Investor has not disclosed any information regarding the Offering to any third
parties (other than its legal, accounting and other advisors) and has not engaged in any purchases
or sales involving the securities of the Company (including, without limitation, any Short Sales
involving the Company’s securities). The Investor covenants that it will not engage in any
purchases or sales involving the securities of the Company (including Short Sales) prior to the
time that the transactions contemplated by this Agreement are publicly disclosed. The Investor
agrees that it will not use any of the Securities acquired pursuant to this Agreement to cover any
short position in the Common Stock if doing so would be in violation of applicable securities laws.
For purposes hereof, “Short Sales”
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include, without limitation, all “short sales” as defined in Rule 200 promulgated under
Regulation SHO under the Exchange Act, whether or not against the box, and all types of direct and
indirect stock pledges, forward sales contracts, options, puts, calls, short sales, swaps, “put
equivalent positions” (as defined in Rule 16a-1(h) under the Exchange Act) and similar arrangements
(including on a total return basis), and sales and other transactions through non-US broker dealers
or foreign regulated brokers.
5. Survival of Representations, Warranties and Agreements; Third Party Beneficiary.
Notwithstanding any investigation made by any party to this Agreement or by the Placement Agents,
all covenants, agreements, representations and warranties made by the Company and the Investor
herein will survive the execution of this Agreement, the delivery to the Investor of the Securities
being purchased and the payment therefor. The Placement Agents and Xxxxxx Xxxxxx & Co. shall be
third party beneficiaries with respect to the representations, warranties and agreements of the
Investor in Section 4 hereof.
6. Notices. All notices, requests, consents and other communications hereunder will be in
writing, will be mailed (a) if within the domestic United States by first-class registered or
certified airmail, or nationally recognized overnight express courier, postage prepaid, or by
facsimile or (b) if delivered from outside the United States, by International Federal Express or
facsimile, and (c) will be deemed given (i) if delivered by first-class registered or certified
mail domestic, three business days after so mailed, (ii) if delivered by nationally recognized
overnight carrier, one business day after so mailed, (iii) if delivered by International Federal
Express, two business days after so mailed and (iv) if delivered by facsimile, upon electronic
confirmation of receipt and will be delivered and addressed as follows:
(a) if to the Company, to:
Harvest Natural Resources, Inc.
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxx, Vice President and General Counsel
Facsimile: (000) 000-0000
0000 Xxxxxxx Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxx, Vice President and General Counsel
Facsimile: (000) 000-0000
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with copies to:
Xxxxxxxxx & Xxxxxxxx L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
0000 Xxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxxx
Facsimile: (000) 000-0000
(b) if to the Investor, at its address on the Signature Page hereto, or at such
other address or addresses as may have been furnished to the Company in writing.
7. Changes. This Agreement may not be modified or amended except pursuant to an instrument
in writing signed by the Company and the Investor.
8. Headings. The headings of the various sections of this Agreement have been inserted for
convenience of reference only and will not be deemed to be part of this Agreement.
9. Severability. In case any provision contained in this Agreement should be invalid,
illegal or unenforceable in any respect, the validity, legality and enforceability of the
remaining provisions contained herein will not in any way be affected or impaired thereby.
10. Governing Law. This Agreement will be governed by, and construed in accordance with,
the internal laws of the State of New York, without giving effect to the principles of
conflicts of law that would require the application of the laws of any other jurisdiction.
11. Counterparts. This Agreement may be executed in two or more counterparts, each of which
will constitute an original, but all of which, when taken together, will constitute but one
instrument, and will become effective when one or more counterparts have been signed by each
party hereto and delivered to the other parties. The Company and the Investor acknowledge
and agree that the Company shall deliver its counterpart to the Investor along with the
Prospectus Supplement (or the filing by the Company of an electronic version thereof with
the Commission).
12. Confirmation of Sale. The Investor acknowledges and agrees that such Investor’s receipt
of the Company’s signed counterpart to this Agreement, together with the Prospectus
Supplement (or the filing by the Company of an electronic version thereof with the
Commission), shall constitute written confirmation of the Company’s sale of Notes to such
Investor.
13. Press Release. The Company and the Investor agree that the Company shall, prior to the
opening of the financial markets in New York City on the business day immediately after the
date hereof, (a) issue a press release announcing the Offering and disclosing all material
information regarding the Offering and (b) file a Current Report on Form 8-K with the
Securities and Exchange Commission including a form of this Agreement, form of Note and
supplemental indenture as exhibits thereto.
14. Termination. In the event that the Placement Agreement is terminated by the Placement
Agents pursuant to the terms thereof, this Agreement shall terminate without any further
action on the part of the parties hereto.
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Exhibit A
HARVEST NATURAL RESOURCES, INC.
INVESTOR QUESTIONNAIRE
Pursuant to Section 3 of Annex I to the Agreement, please provide us with the
following information:
1.
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The exact name that your Notes are to be registered in. You may use a nominee name if appropriate: | |||
2.
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The relationship between the Investor and the registered holder listed in response to item 1 above: | |||
3.
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The mailing address of the registered holder listed in response to item 1 above: | |||
4.
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The Social Security Number or Tax Identification Number of the registered holder listed in the response to item 1 above: | |||
5.
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Name of DTC Participant (broker-dealer at which the account or accounts to be credited with the Notes are maintained): | |||
6.
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DTC Participant Number: | |||
7.
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Name of Account at DTC Participant being credited with the Notes: | |||
8.
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Account Number at DTC Participant being credited with the Notes: |
EXHIBIT B
Form of Lock Up Agreement
February 10, 2010
LAZARD CAPITAL MARKETS LLC
XXXXXXX XXXXXXXX AND COMPANY, LLC
c/o Lazard Capital Markets LLC
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
XXXXXXX XXXXXXXX AND COMPANY, LLC
c/o Lazard Capital Markets LLC
00 Xxxxxxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
| Re: | Harvest Natural Resources, Inc. offering of $32,000,000 of the Company’s 8.25% Senior Convertible Notes due 2013 |
Dear Sirs:
In order to induce Lazard Capital Markets LLC (“Lazard”), to enter in to a certain Placement
Agent Agreement with Harvest Natural Resources, Inc., a Delaware corporation (the “Company”), with
respect to the public offering of an aggregate of $32,000,000 of the Company’s 8.25% Senior
Convertible Notes due 2013 (the “Notes”), the undersigned hereby agrees that for a period (the
“Lock-up Period”) of ninety (90) days following the date of the final prospectus filed by the
Company with the Securities and Exchange Commission in connection with such public offering, the
undersigned will not, without the prior written consent of Lazard, directly or indirectly, (i)
offer, sell, assign, transfer, pledge, contract to sell, or otherwise dispose of, any shares of
Common Stock or securities convertible into or exercisable or exchangeable for Common Stock
(including, without limitation, shares of Common Stock or any such securities which may be deemed
to be beneficially owned by the undersigned in accordance with the rules and regulations
promulgated under the Securities Act of 1933, as the same may be amended or supplemented from time
to time (such shares or securities, the “Beneficially Owned Shares”)), (ii) enter into any swap,
hedge or other agreement or arrangement that transfers in whole or in part, the economic risk of
ownership of any Beneficially Owned Shares, Common Stock or securities convertible into or
exercisable or exchangeable for Common Stock, or (iii) engage in any short selling of any
Beneficially Owned Shares, Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock.
If (i) the Company issues an earnings release or material news or a material event relating to
the Company occurs during the last seventeen (17) days of the Lock-up Period, or (ii) prior to the
expiration of the Lock-up Period, the Company announces that it will release earnings results
during the sixteen (16)-day period beginning on the last day of the Lock-up Period, the
restrictions imposed by this Agreement shall continue to apply until the expiration of the eighteen
(18)-day period beginning on the issuance of the earnings release or the occurrence of the material
news or material event.
Anything contained herein to the contrary notwithstanding, any person to whom shares of Common
Stock, securities convertible into or exercisable or exchangeable for Common Stock or
Beneficially Owned Shares are transferred from the undersigned shall be bound by the terms of
this Agreement.
In addition, the undersigned hereby waives, from the date hereof until the expiration of the
ninetieth (90th) day following the date of the Company’s final prospectus, any and all
rights, if any, to request or demand registration pursuant to the Securities Act of 1933, as
amended, of any shares of Common Stock or securities convertible into or exercisable or
exchangeable for Common Stock that are registered in the name of the undersigned or that are
Beneficially Owned Shares. In order to enable the aforesaid covenants to be enforced, the
undersigned hereby consents to the placing of legends and/or stop transfer orders with the transfer
agent of the Common Stock with respect to any shares of Common Stock, securities convertible into
or exercisable or exchangeable for Common Stock or Beneficially Owned Shares.
| [Signatory] |
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| By: | ||||
| Name: | ||||
| Title: | ||||
