Exhibit 10.1
DUNE ENERGY, INC.
$300,000,000
10 1/2% Senior Secured Notes due 2012
180,000 Shares
10% Senior Redeemable Convertible Preferred Stock
(Liquidation Preference $1000 per share)
PURCHASE AGREEMENT
May 1, 2007
XXXXXXXXX & COMPANY, INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Dune Energy, Inc., a Delaware corporation ("Dune" or the "Company"), and
the guarantors signatory hereto (the "Guarantors"), jointly and severally,
hereby agree (this "Agreement") with you as follows:
1. Issuance of Notes. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell $300,000,000 aggregate
principal amount of its 10 1/2% Senior Secured Notes due 2012 (each a "Note"
and, collectively, the "Notes") to Xxxxxxxxx & Company, Inc. (the "Initial
Purchaser"). The Notes will be issued pursuant to an indenture (the
"Indenture"), to be dated as of May 15, 2007, by and among the Company, the
Guarantors and The Bank of New York, as trustee (the "Trustee") and collateral
agent (the "Collateral Agent"). Capitalized terms used but not defined herein
shall have the meanings set forth in the "Description of Notes--Certain
Definitions" section of the Offering Circulars (as defined below).
The Notes will be offered and sold to the Initial Purchaser pursuant to an
exemption from the registration requirements under the Securities Act of 1933,
as amended (the "Act"). Upon original issuance thereof, and until such time as
the same is no longer required under the applicable requirements of the Act, the
Notes shall bear the legend set forth in the final offering circular related to
the issuance of the Notes, dated the date hereof (the "Notes Final Offering
Circular"). The Company has prepared a preliminary offering circular related to
the issuance of the Notes, dated April 24, 2007 (the "Notes Initial Preliminary
Offering Circular") and a supplement to the Notes Initial Preliminary Offering
Circular, dated April 30, 2007 (the "Supplement" and together with the Notes
Initial Preliminary Offering Circular, the "Notes Preliminary Offering Circular"
and, Notes Preliminary Offering Circular, together with the Notes Final Offering
Circular, the "Notes Offering").
2. Issuance of Preferred Stock. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell 180,000 shares of its 10%
Senior Redeemable Convertible Preferred Stock (the "Preferred Stock") par value
$.001 per share, to the Initial Purchaser. In addition, the Company has granted
to the Initial Purchaser an option to purchaser up to 36,000 additional shares
of Preferred Stock (each an "Additional Share" and, collectively, the "Optional
Additional Shares"). The Preferred Stock and, if and to the extent issued, the
Optional Additional Shares, are collectively called the "Offered Shares". The
Offered Shares will be in certain circumstances convertible into shares (the
"Underlying Securities") of common stock of the Company, par value $.001 per
share (the "Common Stock").
The Offered Shares will be offered and sold to the Initial Purchaser
pursuant to an exemption from the registration requirements under the Act. Upon
original issuance thereof, and until such time as the same is no longer required
under the applicable requirements of the Act, the Offered Shares shall bear the
legend set forth in the final offering circular related to the issuance of the
Offered Shares, dated the date hereof (the "Offered Shares Final Offering
Circular" and, together with the Notes Final Offering Circular, the "Final
Offering Circulars"). The Company has prepared a preliminary offering circular
related to the issuance of the Offered Shares, dated April 24, 2007 (the
"Offered Shares Initial Preliminary Offering Circular") and a supplement to the
Offered Shares Initial Preliminary Offering Circular, dated April 30, 2007 (the
"Supplement" and, together with the Offered Shares Initial Preliminary Offering
Circular, the "Offered Shares Preliminary Offering Circular" and the Offered
Shares Preliminary Offering Circular, together with the Notes Preliminary
Offering Circular, the "Preliminary Offering Circulars"). The Offered Shares
Preliminary Offering Circular and the Offered Shares Final Offering Circular
considered together shall constitute the "Preferred Stock Offering," which
together with the Notes Offering shall constitute the "Offerings".
"Offering Circulars" means, as of any date or time referred to in this
Agreement, the most recent offering circulars (whether the Preliminary Offering
Circulars or the Final Offering Circulars, and any amendment or supplement to
such documents), including, without limitation, exhibits and schedules thereto.
3. Terms of Offering. The Initial Purchaser has advised the Company, and
the Company understands, that the Initial Purchaser will make offers to sell
(the "Exempt Resales") some or all of the Notes purchased by the Initial
Purchaser hereunder on the terms set forth in the Notes Time of Sale Circular
(as defined below), as amended or supplemented, to persons (the "Subsequent
Purchasers") (i) outside the United States in compliance with Regulation S of
the Act, or (ii) whom the Initial Purchaser (A) reasonably believes to be
"qualified institutional buyers" as defined in Rule 144A under the Act ("QIBs"),
as such Rule may be amended from time to time, or (B) reasonably believes (based
upon written representations made by such persons to the Initial Purchaser) to
be institutional "accredited investors" ("Accredited Investors") as defined in
Rule 501(a)(1), (2), (3) or (7) under the Act that make certain representations
and warranties to the Initial Purchaser and the Company, which representations
and warranties are set forth in the form of Accredited Investor Letter attached
as Annex A to the Notes Offering Circular.
The Initial Purchaser had advised the Company, and the Company
understands, that the Initial Purchaser will make Exempt Resales of some or all
of the Offered Shares purchased by the Initial Purchaser hereunder on the terms
set forth in the Offered Shares Time of Sale Circular (as defined below), as
amended or supplemented, to the Subsequent Purchasers whom the Initial Purchaser
reasonably believes to be QIBs.
Pursuant to the Indenture, all current Domestic Restricted Subsidiaries of
the Company as of the First Closing Date (as hereinafter defined) and future
Domestic Restricted Subsidiaries of the Company, jointly and severally, shall
fully and unconditionally guarantee, on a senior secured basis, to each holder
of the Notes and the Trustee, the payment and performance of the Company's
obligations under the Indenture and the Notes (each such guarantee being
referred to herein as a "Guarantee").
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Pursuant to the terms of the Indenture and the Collateral Agreements (as
defined in the Notes Preliminary Offering Circular), all of the Company's and
each Guarantor's obligations under the Indenture, the Notes and the Guarantees
will be secured by a Lien on substantially all existing and future property and
assets owned by the Company and the Guarantors, provided, however, that pursuant
to the terms of an Intercreditor Agreement, such lien will be contractually
subordinated to a lien thereon that secures the Company's new revolving credit
facility and certain other permitted indebtedness.
The Company intends to use the proceeds to acquire (the "Acquisition")
100% of the issued and outstanding stock of Goldking Energy Corporation, a
Delaware corporation ("Goldking"), and Goldking Energy Holdings L.P., a Texas
limited partnership, from the sole shareholder of Goldking ("Shareholder")
pursuant to that certain stock purchase and sale agreement, dated as of April
13, 2007 (the "SPSA"), between the Company and the Shareholder and to refinance
the Company's existing indebtedness and pay fees and expenses in connection
therewith.
Holders of the Notes (including Subsequent Purchasers) will have the
registration rights set forth in the registration rights agreement applicable to
the Notes (the "Notes Registration Rights Agreement"), to be executed on and
dated as of the First Closing Date (as hereinafter defined), in a form
reasonably acceptable to the Initial Purchaser in conformity in all material
respects with the description of such registration rights contained in the Notes
Preliminary Offering Circular. Pursuant to Notes Registration Rights Agreement,
the Company and the Guarantors will agree, among other things, to file with the
Securities and Exchange Commission (the "SEC") (i) a registration statement
under the Act (the "Notes Exchange Offer Registration Statement") relating to 10
1/2% Senior Second Secured Notes due 2012 (the "Exchange Notes"), which shall be
identical to the Notes (except that the Exchange Notes shall have been
registered pursuant to such registration statement and will not be subject to
restrictions on transfer or contain additional interest provisions) to be
offered in exchange for the Notes (such offer to exchange being referred to as
the "Exchange Notes Offer"), and/or (ii) under certain circumstances, a shelf
registration statement pursuant to Rule 415 under the Act (the "Notes Shelf
Registration Statement") relating to the resale by certain holders of the Notes.
If required under the Notes Registration Rights Agreement, the Company will
issue Exchange Notes and cause the Guarantors to issue exchange guarantees to
the Initial Purchaser (the "Private Exchange Notes" and "Private Exchange
Guarantees," respectively). If the Company fails to satisfy its obligations
under the Notes Registration Rights Agreement, it will be required to pay
additional interest to the holders of the Notes under certain circumstances in
accordance with the terms of the Notes Registration Rights Agreement.
Holders of the Offered Shares (including Subsequent Purchasers) will have
the registration rights set forth in the registration rights agreement
applicable to the Offered Shares (the "Offered Shares Registration Rights
Agreement" and, together with the Notes Registration Rights Agreement, the
"Registration Rights Agreements"), to be executed on and dated as of the First
Closing Date (as hereinafter defined), in a form reasonably acceptable to the
Initial Purchaser in conformity in all material respects with the description of
such registration rights contained in the Offered Shares Preliminary Offering
Circular. Pursuant to the Offered Shares Registration Rights Agreement, the
Company will agree, among other things, to file with the SEC (i) a registration
statement under the Act (the "Offered Shares Exchange Offer Registration
Statement" and, together with the Notes Exchange Offer Registration Statements,
the "Exchange Offer Registration Statements") relating to 10% Senior Redeemable
Convertible Preferred Stock (the "Exchange Preferred Stock"), which shall be
identical to the Offered Shares (except that the Exchange Preferred Stock shall
have been registered pursuant to such registration statements and will not be
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subject to restrictions on transfer) to be offered in exchange for the Offered
Shares (such offer to exchange being referred to as the "Exchange Preferred
Stock Offer" and, together with the Exchange Notes Offer, the "Exchange
Offers"), and/or (ii) under certain circumstances, a shelf registration
statement pursuant to Rule 415 under the Act (the "Offered Shares Shelf
Registration Statement" and, together with the Notes Shelf Registration
Statement, the "Shelf Registration Statements") relating to the resale by
certain holders of the Offered Shares. If the Company fails to satisfy its
obligations under the Offered Shares Registration Rights Agreement, it will be
required to pay additional dividends to the holders of the Offered Shares under
certain circumstances in accordance with the terms of the Offered Shares
Registration Rights Agreement.
This Agreement, the Indenture, the Collateral Agreements, the Registration
Rights Agreements, the Notes, the Guarantees, the Offered Shares, the Exchange
Preferred Stock, the Underlying Securities, the Exchange Notes, the Private
Exchange Notes, if any, and the Private Exchange Guarantees, if any, are
collectively referred to herein as the "Documents."
4. Purchase, Sale and Delivery.
(a) On the basis of the representations, warranties, agreements and
covenants herein contained and subject to the terms and conditions herein set
forth, the Company agrees to issue and sell to the Initial Purchaser, and the
Initial Purchaser agrees to purchase from the Company, (i) Notes at a purchase
price of $288.0 million and (ii) 180,000 shares of Preferred Stock at a purchase
price of $171.0 million. Delivery to such Initial Purchaser of, and payment for,
the Notes and Preferred Stock shall be made at a closing (the "Closing") to be
held at the New York offices of White & Case LLP, 0000 Xxxxxx xx xxx Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 on May 15, 2007 (the "First Closing Date") at 10:00
a.m.
(b) In addition, on the basis of the representations, warranties and
agreements herein contained, and upon the terms but subject to the conditions
herein set forth, the Company hereby grants an option to the Initial Purchaser
to purchase up to 36,000 of the Optional Additional Shares from the Company and
the Guarantors at the purchase price equal to $34.2 million, plus accrued
dividends if any, from the First Closing Date. The option granted hereunder may
be exercised at any time and from time to time in whole or in part upon notice
by the Initial Purchaser to the Company, which notice may be given at any time
within 30 days from the date of this Agreement. Such notice shall set forth (i)
the number of Optional Additional Shares as to which the Initial Purchaser is
exercising the option, (ii) the names and denominations in which the
certificates for the Optional Additional Shares are to be registered and (iii)
the time, date and place at which such certificates will be delivered (which
time and date may be simultaneous with, but not earlier than, the First Closing
Date; and in the event that such time and date are simultaneous with the First
Closing Date, the term "First Closing Date" shall refer to the time and date of
delivery of certificates for the Preferred Stock and such Optional Additional
Shares ). Any such time and date of delivery, if subsequent to the First Closing
Date, is called an "Option Closing Date" and shall be determined by the Initial
Purchaser and shall not be earlier than three nor later than five full business
days after delivery of such notice of exercise. The First Closing Date and the
Option Closing Date are each referred to herein as a "Closing Date." If any
Optional Additional Shares are to be purchased, the Company agrees to sell such
Optional Additional Shares to the Initial Purchaser. The Initial Purchaser may
cancel the option at any time prior to its expiration by giving written notice
of such cancellation to the Company.
(c) The Company will deliver to the Initial Purchaser against several
payment of the purchase price (A) the Notes to be offered and sold by the
Initial Purchaser (i) in reliance on Regulation S (the "Regulation S Notes") in
the form of one or more permanent global notes, in such denominations as the
Initial Purchaser shall request, in registered form without interest coupons
(the "Offered Regulation S Global Notes"), which will be deposited with the
Trustee as custodian for The Depository Trust Company ("DTC") for the respective
accounts of the DTC participants for Xxxxxx Guaranty Trust Company of New York,
Brussels office, as operator of the Euroclear System ("Euroclear"), and
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Clearstream Banking, societe anonyme, Luxembourg ("Clearstream, Luxembourg") and
registered in the name of Cede & Co., as nominee for DTC, (ii) in reliance on
Rule 144A under the Act (the "144A Notes") in the form of one or more permanent
global notes, in such denominations as the Initial Purchaser shall request,
without interest coupons which will be deposited with the Trustee as custodian
for DTC and registered in the name of Cede & Co., as nominee for DTC and (iii)
to Accredited Investors in the form of one or more permanent global notes, in
such denominations as the Initial Purchaser shall request, without interest
coupons (the "AI Notes" and, together with the 144A Notes, the "Restricted
Global Notes"), which will be deposited with the Trustee as custodian for DTC
and registered in the name of Cede & Co., as nominee for DTC and (B) the Offered
Shares to be offered and sold by the Initial Purchaser in reliance on Rule 144A
under the Securities Act (the "144A Preferred Stock") in the form of one or more
permanent global preferred stock certificates (the "Restricted Global Preferred
Stock"), which will be deposited with The Bank of New York as transfer agent
(the "Transfer Agent") as custodian for DTC and registered in the name of Cede &
Co., as nominee for DTC. The Offered Regulation S Global Notes, the Restricted
Global Notes and the Restricted Global Preferred Stock shall be assigned
separate CUSIP numbers.
(d) Payment for the Regulation S Notes, the AI Notes, the 144A Notes and
the 144A Preferred Stock shall be made by the Initial Purchaser in Federal (same
day) funds by wire transfer to one or more accounts as the Company shall
designate to the Initial Purchaser on the First Closing Date, against delivery
to the Trustee as custodian, for DTC of (i) the Offered Regulation S Global
Notes representing all of the Regulation S Notes for the respective accounts of
the DTC participants for Euroclear and Clearstream, Luxembourg, (ii) the
Restricted Global Notes representing all of the 144A Notes and AI Notes and
(iii) the Restricted Global Preferred Stock representing all of the 144A
Preferred Stock. The Offered Regulation S Global Notes and the Restricted Global
Notes will be made available for inspection at the above office of White & Case
LLP at least 24 hours prior to the First Closing Date and, with respect to the
Optional Additional Shares, each Option Closing Date.
5. Representations and Warranties of the Company. Dune and the Guarantors,
jointly and severally, represent and warrant to the Initial Purchaser that, as
of the date hereof, as of the First Closing Date and as of each Option Closing
Date. References to the Company in this Section 5 shall include Goldking and
Goldking Operating Company, a Texas corporation (the "Goldking Entities"):
(a) As of the Applicable Time (as defined below), neither (x) the
Preliminary Offering Circulars, as supplemented by the final pricing term sheets
in the form attached hereto as Exhibit A (the "Notes Pricing Supplement") and
Exhibit B (the "Offered Shares Pricing Supplement" and, together with the Notes
Pricing Supplement, the "Pricing Supplements"), the Notes Pricing Supplement and
the Notes Preliminary Offering Circular considered together (the "Notes Time of
Sale Circular") and the Offered Shares Pricing Supplement and the Offered Shares
Preliminary Offering Circular considered together (the "Offered Shares Time of
Sale Circular" and, together with the Notes Time of Sale Circular, the "Time of
Sale Circulars"), nor (y) any individual Supplemental Offering Materials (as
defined below), when considered together with the Time of Sale Circulars,
contain any untrue statement of a material fact, or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. "Applicable Time"
means 4:00 P.M. (Eastern Time) on May 1, 2007 or such other time as agreed by
the Company and the Initial Purchaser.
"Supplemental Offering Materials" means any "written communication" (within the
meaning of the Act and the rules and regulations thereunder) prepared by or on
behalf of the Company, or used or referred to by the Company, that constitutes
an offer to sell or a solicitation of an offer to buy the Notes or Offered
Shares other than the Offering Circulars or amendments or supplements thereto
(including the Pricing Supplements), including, without limitation, any road
show relating to the Notes or Offered Shares that constitutes such a written
communication.
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The Final Offering Circulars, as of their respective dates did not, and at the
First Closing Date and, with respect to the Optional Additional Shares, each
Option Closing Date will not, and the amendments or supplements thereto as of
their respective dates will not, contain any untrue statement of a material
fact, or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; provided, however, that neither Dune nor the Guarantors
makes any representation or warranty as to the Initial Purchaser Information (as
defined in Section 12). No injunction or order has been issued that either (i)
asserts that any of the transactions contemplated by the Documents is subject to
the registration requirements of the Act or (ii) would prevent or suspend the
issuance or sale of the Notes or the Offered Shares or the use of the Time of
Sale Circulars, the Final Offering Circulars or any amendments or supplements
thereto (including the Pricing Supplements), in any jurisdiction. The Time of
Sale Circulars and the Final Offering Circulars, as of their respective dates,
contained, and the Final Offering Circulars, as amended or supplemented as of
the First Closing Date and, with respect to the Optional Additional Shares, each
Option Closing Date, will contain, all the information specified in, and meet
the requirements of, Rule 144A(d)(4) under the Act.
(b) Immediately following the Closing, (i) the Guarantors will have no
subsidiaries and (ii) the only subsidiaries of Dune will be the Guarantors, and
the Capital Stock of the Guarantors are free and clear of all Liens (as
hereinafter defined) other than Permitted Liens.
(c) Each of the Company and the Guarantors (i) has been duly organized or
formed, as the case may be, is validly existing and is in good standing under
the laws of its jurisdiction of organization, (ii) has all requisite power and
authority to carry on its business and to own, lease and operate its properties
and assets, and (iii) is duly qualified or licensed to do business and is in
good standing as a foreign corporation, partnership or other entity, as the case
may be, authorized to do business in each jurisdiction in which the nature of
its business or the ownership or leasing of such properties requires such
qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a material adverse effect on (A) the
properties, business, prospects, operations, earnings, assets, liabilities or
condition (financial or otherwise) of the Company and the Guarantors, taken as a
whole, (B) the ability of Dune or the Guarantors to perform their respective
obligations in all material respects under any Document, (C) the enforceability
of any Collateral Agreement or the attachment, perfection or priority of any of
the Liens intended to be created thereby or (D) the validity of any of the
Documents or the consummation of any of the transactions contemplated therein
(each, a "Material Adverse Effect").
(d) All of the issued and outstanding shares of Capital Stock of the
Company have been duly authorized and validly issued, are fully paid and
nonassessable, and were not issued in violation of any preemptive or similar
rights. The table under the caption "Capitalization" in the Time of Sale
Circulars and in the Final Offering Circulars (including the footnotes thereto)
sets forth, as of the date of such table, (i) the actual cash and cash
equivalents and capitalization of (x) the Company and the Guarantors and (y) the
Goldking Entities on a consolidated basis and (ii) the pro forma cash and cash
equivalents and capitalization of Dune and the Guarantors on a consolidated
basis, after giving effect to the offer and sale of the Notes and the Offered
Shares and the application of the net proceeds therefrom as described in the
Time of Sale Circulars and in the Final Offering Circulars under the section
entitled "Use of Proceeds." After giving effect to the offer and sale of the
Notes and the Offered Shares, all of the outstanding shares of Capital Stock or
other equity interests of the Guarantors (other than as required by applicable
law or issuances of directors' qualifying shares) will be owned, directly or
indirectly, by Xxxx, free and clear of all liens, security interests, mortgages,
pledges, charges, equities, claims or restrictions on transferability or
encumbrances of any kind (collectively, "Liens"), other than those imposed by
the Act and the securities or "Blue Sky" laws of certain domestic or foreign
jurisdictions, requirements for regulatory approvals and Liens constituting
Permitted Liens. There are no outstanding options to purchase, or any rights or
warrants to subscribe for, or any securities or obligations convertible into, or
any contracts or commitments to issue or sell, any shares of Common Stock, any
shares of Capital Stock of any subsidiary, or any such warrants, convertible
securities or obligations, except as set forth in the Time of Sale Circulars and
the Final Offering Circulars and except for options granted under, or contracts
or commitments pursuant to, the Company's previous or currently existing stock
option and other similar officer, director or employee benefit plans; the
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description of the Company's stock, stock bonus and other stock plans or
arrangements and the options or other rights granted and exercised thereunder
set forth in the Time of Sale Circulars and the Final Offering Circulars
accurately presents in all material respects all material information with
respect to such plans, arrangements, options and rights; all the issued and
outstanding shares of Capital Stock or other equity interests of each subsidiary
of the Company have been duly authorized and validly issued, are fully paid and
nonassessable, are owned by the Company or a direct or indirect subsidiary of
the Company, have been issued in compliance with applicable federal and state
securities laws and were not issued in violation of or subject to any preemptive
rights or other rights to subscribe for or purchase securities, and there are no
outstanding options to purchase, or any preemptive rights or other rights to
subscribe for or to purchase, any securities or obligations convertible into, or
any contracts or commitments to issue or sell, shares of Capital Stock or other
equity interests of any subsidiary of the Company.
(e) No holder of securities of the Company or the Guarantors will be
entitled to have such securities registered under the registration statements
required to be filed by Dune and the Guarantors with respect to (i) the Exchange
Notes or Private Exchange Notes pursuant to the Notes Registration Rights
Agreement or (ii) the Offered Shares pursuant to the Offered Shares Registration
Rights Agreement.
(f) The Company and the Guarantors have all requisite corporate power and
authority to execute, deliver and perform their respective obligations under the
Documents to which they are a party and to consummate the transactions
contemplated thereby.
(g) This Agreement has been duly authorized and validly executed and
delivered by Xxxx and the Guarantors.
(h) Each of the Indenture and the Collateral Agreements have been duly
authorized by Dune and the Guarantors and upon its execution and delivery by the
Company and the Guarantors, will be validly executed and delivered by Xxxx and
the Guarantors, and will, assuming due authorization, execution and delivery by
the Trustee, constitute a legal, valid and binding obligation of each of Dune
and the Guarantors, enforceable against each of Dune and the Guarantors in
accordance with its terms, except that the enforcement thereof may be subject to
(i) bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity (whether
applied by a court of law or equity) and the discretion of the court before
which any proceeding therefor may be brought.
(i) The Registration Rights Agreements have each been duly authorized by
Dune and the Guarantors and, upon its execution and delivery by Xxxx and the
Guarantors, will be validly executed and delivered by the Company and the
Guarantors, and will (assuming due authorization, execution and delivery by you)
constitute a legal, valid and binding obligation of each of Dune and the
Guarantors, enforceable against Dune and the Guarantors in accordance with its
terms, except that (A) the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, receivership, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (whether applied by a court of
law or equity) and the discretion of the court before which any proceeding
therefor may be brought and (B) any rights to indemnity or contribution
thereunder may be limited by federal and state securities laws and public policy
considerations.
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(j) The Notes, when issued, will be in the form contemplated by the
Indenture. The Indenture meets the requirements for qualification under the
Trust Indenture Act of 1939, as amended (the "TIA") applicable to an indenture
required to be qualified thereunder. The Notes, Exchange Notes and Private
Exchange Notes have each been duly and validly authorized by Xxxx and, in the
case of the Notes, when executed and delivered to and paid for by the Initial
Purchaser in accordance with the terms of this Agreement and the Indenture,
assuming due authentication of the Notes by the Trustee, will have been duly
executed, issued and delivered and will be legal, valid and binding obligations
of Dune, entitled to the benefit of the Indenture, the Guarantees and the
Collateral Agreements, and enforceable against Dune in accordance with their
terms, except that the enforcement thereof may be subject to (i) bankruptcy,
insolvency, reorganization, receivership, moratorium, fraudulent conveyance or
other similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (whether applied by a court of
law or equity) and the discretion of the court before which any proceeding
therefor may be brought.
(k) The Guarantees and Private Exchange Guarantees have been duly and
validly authorized by the Guarantors and, in the case of the Guarantee, upon its
execution by the Guarantors, will be duly executed, issued and delivered by each
of the Guarantors. When the Notes have been issued, executed and authenticated
in accordance with the terms of the Indenture and delivered to and paid for by
the Initial Purchaser in accordance with the terms of this Agreement, the
Guarantee of each Guarantor endorsed on the Notes will be legal, valid and
binding obligations of the Guarantors, entitled to the benefit of the Indenture,
and enforceable against the Guarantors in accordance with their terms, except
that the enforcement thereof may be subject to (i) bankruptcy, insolvency,
reorganization, receivership, moratorium, fraudulent conveyance or other similar
laws now or hereafter in effect relating to creditors' rights generally and (ii)
general principles of equity (whether applied by a court of law or equity) and
the discretion of the court before which any proceeding therefor may be brought.
(l) The Offered Shares have been duly authorized by Xxxx, and when issued
and delivered as provided in this Agreement will be duly executed,
authenticated, issued and delivered and will constitute valid and legally
binding obligations of Dune.
(m) Upon issuance and delivery of the Offered Shares in accordance with
the Agreement, the Offered Shares will be convertible at the option of the
holder thereof into shares of the Underlying Securities in accordance with the
terms of the Offered Shares; the Underlying Securities reserved for issuance
upon conversion of the Offered Shares have been duly authorized and reserved
and, when issued upon conversion of the Offered Shares in accordance with the
terms of the Offered Shares, will be validly issued, fully paid and non
assessable, and the issuance of the Underlying Securities will not be subject to
any preemptive or similar rights.
(n) The statements set forth in the Time of Sale Circulars and the Final
Offering Circulars under the captions "Description of Notes," "Description of
Redeemable Convertible Preferred Stock," and "Material U.S. Federal Income Tax
Consequences," as the case may be, insofar as they constitute summaries of the
legal matters, documents or proceedings referred to therein, fairly present, in
all material respects, the information called for with respect to such legal
matters, documents or proceedings.
(o) The Offered Shares satisfy the requirements set forth in Rule
144A(d)(3) under the Act.
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(p) Neither the Company, nor the Guarantors, are in violation of their
certificate of incorporations, by-laws or any other of their organizational
documents (collectively with respect to such entity, its "Charter Documents").
Neither the Company nor the Guarantors is (i) in violation of any Federal,
state, local or foreign statute, law (including, without limitation, common law)
or ordinance, or any judgment, decree, rule, regulation or order (collectively,
"Applicable Law") of any federal, state, local and other governmental authority,
governmental or regulatory agency or body, court, arbitrator or self-regulatory
organization, domestic or foreign (each, a "Governmental Authority") or (ii) in
breach of or default under any bond, debenture, note or other evidence of
indebtedness, indenture, mortgage, deed of trust, lease or any other material
agreement or instrument to which any of them is a party or by which any of them
or their respective property is bound (collectively, "Applicable Agreements"),
other than, in the case of each of the immediately preceding clauses (i) and
(ii) violations, breaches or defaults that would not, individually or in the
aggregate, have a Material Adverse Effect. All material Applicable Agreements
are in full force and effect and with respect to the Company and the Guarantors,
are legal, valid and binding obligations of the Company or the Guarantors, as
applicable, except that the enforcement thereof may be subject to (i)
bankruptcy, insolvency, reorganization, receivership, moratorium, fraudulent
conveyance or other similar laws now or hereafter in effect relating to
creditors' rights generally and (ii) general principles of equity (whether
applied by a court of law or equity) and the discretion of the court before
which any proceeding therefore may be brought. There exists no condition that,
with the passage of time or otherwise, would constitute (a)(i) a violation of
such Charter Documents or (ii) Applicable Law, (b) a breach of or default under
any Applicable Agreement or (c) result in the imposition of any penalty or the
acceleration of any indebtedness other than in the case of clauses (a)(ii), (b)
and (c) as would reasonably be expected, individually or in the aggregate, not
to have a Material Adverse Effect.
(q) No transaction has occurred between or among the Company, any of its
subsidiaries and their affiliates, officers or directors or any affiliate or
affiliates of any such officer or director that is required to have been
described under applicable securities laws in Dune's Exchange Act filings and is
not so described in such filings.
(r) There is no transaction, arrangement or other relationship between the
Company and an unconsolidated or other off-balance sheet entity that is required
to be disclosed by Dune in its Exchange Act filings and is not so disclosed or
that otherwise would reasonably be expected to have a Material Adverse Effect.
(s) Dune is in compliance in all material respects with all requirements
of the American Stock Exchange, and has not received any notice from the
American Stock Exchange that the listing of its common stock is in any way
threatened. Dune shall comply with all requirements of the American Stock
Exchange with respect to the issuance of the Offered Shares. Dune will use its
reasonable best efforts to (i) permit the Offered Shares to be designated for
quotation on the Private Offerings, Resales and Trading Automated Linkages
("PORTAL") market in accordance with the rules and regulations adopted by the
National Association of Securities Dealers, Inc. relating to trading in the
PORTAL market and (ii) permit the Offered Shares to be eligible for clearance
and settlement through DTC.
(t) Dune covenants that it will not knowingly or recklessly, and that it
will use its reasonable best efforts to ensure that each director, officer,
agent or employee of the Company will not knowingly or recklessly, use any part
of the net proceeds from the sale of the Offered Shares for any payments to: (a)
any individual or entity listed on the Specially Designated Nationals and
Blocked Persons List administered by the United States Department of the
Treasury's Office of Foreign Assets Control ("OFAC") and/or any other similar
lists administered by OFAC pursuant to any authorizing statute, Executive Order
or regulation; (b) the government of any country subject to an OFAC Sanctions
Program; (c) any individual or entity included on any list of terrorists or
terrorist organizations maintained by the United Nations, the European Union and
or the countries in which the Company operates; or (d) any governmental official
or employee, political party, official of a political party, candidate for
political office, anyone else acting in an official capacity, or any agent of
any such individual or entity, in order to obtain, retain or direct business or
obtain any improper advantage, in violation of the FCPA (as defined below).
9
(u) Neither the Company nor any director, officer, agent or employee of
the Company has made, directly or indirectly, any payment or promise to pay, or
gift or promise to give, or authorized such a promise or gift, of any money or
anything of value, directly or indirectly, to (i) any foreign official (as such
term is defined in the United States Foreign Corrupt Practices Act of 1977 (as
amended, the "FCPA")) for the purpose of influencing any official act or
decision of such official or inducing him or her to use his or her influence to
affect any act or decision of a governmental authority, or (ii) any foreign
political party or official thereof or candidate for foreign political office
for the purpose of influencing any official act or decision of such party,
official or candidate or inducing such party, official or candidate to use his,
her or its influence to affect any act or decision of a foreign governmental
authority, in the case of both (i) and (ii) above, in order to assist the
Company to obtain or retain business for, or direct business, and under
circumstances which would subject the Company to liability under the FCPA or any
corresponding foreign laws. The Company has not made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment of funds or received or
retained any funds in violation of any law, rule or regulation.
(v) Neither the execution, delivery or performance of the Documents nor
the consummation of any transactions contemplated therein will conflict with,
violate, constitute a breach of or a default (with the passage of time or
otherwise) under, require the consent of any person (other than (i) consents
already obtained and in full force and effect, (ii) governmental and regulatory
approvals required to consummate the Acquisition or (iii) as of the date hereof,
governmental and regulatory approvals that are necessary for Dune and the
Guarantors to incur the Indebtedness evidenced by the Notes and Guarantees,
issuance of the Offered Shares, and to grant Liens on the Collateral) under,
result in the imposition of a Lien on any assets of the Company or the
Guarantors (except for Liens created pursuant to the Documents), or result in an
acceleration of indebtedness under or pursuant to (1) the Charter Documents, (2)
any material Applicable Agreement, or (3) any Applicable Law. After consummation
of the Offering and the transactions contemplated in the Documents, no Default
or Event of Default under the Indenture will exist.
(w) When executed and delivered, the Documents will conform in all
material respects to the descriptions thereof in the Time of Sale Circulars, as
the case may be.
(x) No consent, approval, authorization or order of any Governmental
Authority or third party is required for the issuance and sale by Dune of the
Notes or the Offered Shares to the Initial Purchaser or the consummation by Dune
and the Guarantors of the other transactions contemplated hereby, except such as
have been obtained (and are in full force and effect) and such as may be
required under state securities or "Blue Sky" laws in connection with the
purchase and resale of the Notes or the Offered Shares by such Initial
Purchaser.
(y) There is no action, claim, suit, demand, hearing, notice of violation
or deficiency, or proceeding, domestic or foreign (collectively, "Proceedings"),
pending or, to the knowledge of the Company or the Guarantors, threatened, that
either (i) seeks to restrain, enjoin, prevent the consummation of, or otherwise
challenge any of the Documents or any of the transactions contemplated therein,
or (ii) except as, would, individually or in the aggregate, have a Material
Adverse Effect. Except as disclosed in the Time of Sale Circulars, neither the
10
Company, nor the Guarantors are subject to any judgment, order, decree, rule or
regulation of any Governmental Authority that would reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect. No
injunction or order has been issued and no Proceeding is pending or, to the
knowledge of the Company or the Guarantors, threatened that (i) asserts that the
offer, sale and delivery of the Notes or the Offered Shares to the Initial
Purchaser pursuant to this Agreement or the initial resale of the Notes or the
Offered Shares by such Initial Purchaser in the manner contemplated by this
Agreement is subject to the registration requirements of the Act, or (ii) would
prevent or suspend the issuance or sale of the Notes or the Offered Shares,
including the Exempt Resales, or the use of the Preliminary Offering Circulars,
the Time of Sale Circulars, the Final Offering Circulars, or any amendments or
supplements thereto, in any jurisdiction.
(z) Each of the Company and the Guarantors possesses all licenses,
permits, certificates, consents, orders, approvals and other authorizations
from, and has made all declarations and filings with, all Governmental
Authorities, presently required or necessary to own or lease, as the case may
be, and to operate their respective properties and to carry on their respective
businesses as now or proposed to be conducted as set forth in the Preliminary
Offering Circulars ("Permits"), except where the failure to obtain such Permits
would not reasonably be expected, individually or in the aggregate, to have a
Material Adverse Effect; each of the Company and the Guarantors has fulfilled
and performed all of its material obligations with respect to such Permits and
no event has occurred which allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such Permit; and the neither the
Company nor the Guarantors have received any notice of any proceeding relating
to revocation or modification of any such Permit, except as disclosed in the
Time of Sale Circulars or the Final Offering Circulars or except where such
revocation or modification would not, individually or in the aggregate, have a
Material Adverse Effect.
(aa) Each of the Company and the Guarantors has good and marketable title
to all real property owned by it and good title to all personal property owned
by it and good and indefeasible title to all leasehold estates in real and
personal property being leased by it and, as of the First Closing Date and, with
respect to the Optional Additional Shares, each Option Closing Date, will be
free and clear of all Liens (other than Permitted Liens). The assets of the
Company and the Guarantors include all of the assets and properties necessary or
required in, or otherwise material to, the conduct of the businesses of each of
them as currently conducted (as described in the Final Offering Circulars and
the Time of Sale Circulars), and such assets are in good working condition,
except where the failure of such assets to be in working condition would not,
individually or in the aggregate, have a Material Adverse Effect.
(bb) Each of the Company and the Guarantors has good and defensible title
to its respective interests in its license and subsoil use contract relating to
the exploration, development and production on their respective oil fields, free
and clear of any Liens, except for those (i) created pursuant to their sub-soil
use contracts or operating agreements, unitization and pooling arrangements and
oil, condensate and gas sales contracts that secure payment of amounts not yet
due and payable and which are of a nature and scope customary in similar oil,
condensate and gas drilling and producing operations, (ii) described in the Time
of Sale Circulars and Final Offering Circulars or (ii) which neither
individually or in the aggregate would have a Material Adverse Effect. Except to
the extent described in the Time of Sale Circulars or Final Offering Circulars,
the licenses, subsoil use contracts or other arrangements held by each of the
Company and the Guarantors to explore, develop and exploit the oil fields, and
the manner in which the Company or the Guarantors acquired or otherwise procured
such licenses, subsoil use contracts or other arrangements, was generally
consistent with standard industry practices for acquiring or procuring rights to
explore, develop and exploit acreage for hydrocarbons. Each of the Company and
the Guarantors has complied in all respects with the terms of the licenses,
subsoil use contracts or other arrangements relating to the oil fields in which
11
each purports to own an interest, and no claim has been asserted by any person
or entity adverse to the rights of the Company or the Guarantors under any of
such licenses, subsoil use contracts or other arrangements or questioning its
rights to the continued use of the oil fields under any such licenses, subsoil
use contracts or other arrangements except for such noncompliance or claims as
would not individually or in the aggregate have a Material Adverse Effect. The
licenses, subsoil use contracts or other arrangements relating to the
exploration, development and production on the oil fields held by the Company
and the Guarantors are valid, existing and enforceable with such exceptions as
are described in the Time of Sale Circulars or Final Offering Circulars or which
in the aggregate would not have a Material Adverse Effect. Except as disclosed
in the Time of Sale Circulars or the Final Offering Circulars, the Company and
the Guarantors have the right to use or enjoy the benefits of the oil fields as
are necessary to their respective operations as now conducted.
(cc) All Tax returns required to be filed by the Company and the
Guarantors have been filed, or valid extensions have been granted, and all such
returns that have been filed are true, complete, and correct in all material
respects. Except as disclosed in the Offering Circular, all material Taxes that
are due from the Company and the Guarantors have been paid other than those (i)
currently payable without penalty or interest or (ii) being contested in good
faith and by appropriate proceedings and for which adequate reserves have been
established in accordance with generally accepted accounting principles of the
United States, consistently applied ("GAAP"). Except as disclosed in the
Offering Circular, there are no actual or proposed Tax assessments against the
Company or the Guarantors that would, individually or in the aggregate, have a
Material Adverse Effect. The accruals and reserves on the books and records of
the Company and the Guarantors in respect of any material Tax liability for any
taxable period not finally determined are adequate to meet any assessments of
Tax for any such period. For purposes of this Agreement, the term "Tax" and
"Taxes" shall mean all Federal, state, local and foreign taxes, and other
assessments of a similar nature (whether imposed directly or through
withholding), including, without limitation, any interest, additions to tax, or
penalties applicable thereto.
(dd) Each of the Company and the Guarantors owns, or is licensed under,
and has the right to use, all patents, patent rights, licenses, inventions,
copyrights, know-how (including, without limitation, trade secrets and other
unpatented and/or unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks and trade names (collectively,
"Intellectual Property") necessary for the conduct of its businesses and, as of
the First Closing Date and, with respect to the Optional Additional Shares, each
Option Closing Date, will be free and clear of all Liens, other than Permitted
Liens. Neither the Company nor the Guarantors have received any claims or
notices of any potential claim asserted by any person challenging the use of any
such Intellectual Property by the Company or the Guarantors or questioning the
validity or effectiveness of the Intellectual Property or any license or
agreement related thereto and neither the Company nor the Guarantors have any
knowledge of any facts or circumstances that would reasonably be expected to
result in any such claim or potential claim. To the knowledge of the Company,
there is no valid basis for any such claim, other than any claims that would
not, individually or in the aggregate, have a Material Adverse Effect. The
Company and the Guarantors have no reason to believe that the use of such
Intellectual Property by the Company or the Guarantors will infringe on the
Intellectual Property rights of any other person.
(ee) The Company maintains a system of internal accounting controls over
financial reporting (as such term is defined in Rule 13a-15(f) of the Exchange
Act) that complies with the Exchange Act and that is sufficient to provide
reasonable assurance that (i) material transactions are executed in accordance
with management's general or specific authorization, (ii) material transactions
are recorded as necessary to permit preparation of financial statements in
conformity with GAAP, and to maintain asset accountability, (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
the existing assets at reasonable intervals and appropriate action is taken with
respect to any material differences.
12
(ff) Since the date of the latest audited financial statements included in
the Time of Sale Circulars, there has been 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.
(gg) The Company maintains disclosure controls and procedures (as such
term is defined in Rule 13a-15(e) of the Exchange Act) that comply with the
requirements of the Exchange Act; such disclosure controls and procedures have
been designed to ensure that material information relating to the Company and
its subsidiaries is made known to the Company's principal executive officer and
principal financial executive officer by others within those entities; and such
disclosure controls and procedures are effective.
(hh) The audited consolidated financial statements and related notes of
the Company and the Guarantors contained in the Time of Sale Circulars and the
Final Offering Circulars (the "Financial Statements") present fairly the
financial position, results of operations and cash flows of Dune and its
consolidated Subsidiaries and the Goldking Entities, as of the respective dates
and for the respective periods to which they apply and have been prepared in
accordance with GAAP and the requirements of Regulation S-X of the Act. The
financial data set forth under "Summary Historical and Pro Forma Consolidated
Financial Information" and "Summary Reserve and Operating Data" included in the
Time of Sale Circulars and the Final Offering Circulars have been prepared on a
basis consistent with that of the Financial Statements and present fairly the
financial position and results of operations of Dune, the Guarantors and the
Goldking Entities consolidated, as applicable, as of the respective dates and
for the respective periods indicated. All other financial, statistical, and
market and industry-related data included in the Time of Sale Circulars and the
Final Offering Circulars are fairly and accurately presented and are based on or
derived from sources that Dune believes to be reliable and accurate.
(ii) The pro forma financial information and the related notes of the
Company set forth in the Time of Sale Circulars and the Final Offering Circulars
include assumptions that were made in good faith and provide a reasonable basis
for presenting the significant effects directly attributable to the transactions
and events described therein. The related pro forma adjustments give appropriate
effect to those assumptions and the pro forma adjustments reflect the proper
application of those adjustments and the pro forma adjustments reflect the
proper application of those adjustments to the historical financial statement
amounts in the pro forma financial data included in the Time of Sale Circulars
and the Final Offering Circulars. The pro forma financial data set forth under
"Summary Historical and Pro Forma Consolidated Financial Information,"
"Unaudited Pro Forma Condensed Consolidated Financial Information" and "Pro
Forma Supplemental Oil and Natural Gas Disclosures" in the Time of Sale
Circulars and the Final Offering Circulars comply as to form in all material
respects with the applicable accounting requirements of Regulation S-X under the
Act and the pro forma adjustments have been properly applied to the historical
amounts in the compilation of those statements.
(jj) Subsequent to the respective dates as of which information is given
in the Time of Sale Circulars and the Final Offering Circulars, except as
disclosed in the Time of Sale Circulars or the Final Offering Circulars, (i)
neither the Company nor the Guarantors have incurred any liabilities, direct or
contingent, that are material, individually or in the aggregate, to the Company
and the Guarantors, taken as a whole, or has entered into any transactions not
in the ordinary course of business and (ii) there has not been any material
decrease in the Capital Stock, shares or options issued pursuant to equity
incentive plans or purchase plans approved by the Company's Board of Directors
and repurchases of shares or options pursuant to repurchase plans already
approved by the Company's Board of Directors or any material increase in
13
long-term indebtedness or any material increase in short-term indebtedness of
the Company and the Guarantors, or any payment of or declaration to pay any
dividends or any other distribution with respect to the Company. There has not
been any material adverse change in the properties, business, prospects,
operations, earnings, assets, liabilities or condition (financial or otherwise)
of, the Company and the Guarantors (each of clauses (i) and (ii) in the
immediately preceding sentence and the events in this sentence, a "Material
Adverse Change"), since December 31, 2006. There is no event that is reasonably
likely to occur, which if it were to occur, would, individually or in the
aggregate, have a Material Adverse Effect, except such events that have been
adequately disclosed in the Time of Sale Circulars or the Final Offering
Circulars.
(kk) No "nationally recognized statistical rating organization" (as such
term is defined for purposes of Rule 436(g)(2) under the Act) (i) has imposed
(or has informed the Company that it is considering imposing) any condition
(financial or otherwise) on the Company relating to any rating assigned to the
Company or the Guarantors or to any securities of the Company or the Guarantors,
or (ii) has indicated to the Company that it is considering (A) the downgrading,
suspension, or withdrawal of, or any review for a possible change that does not
indicate the direction of the possible change in, any rating so assigned, or (B)
any change in the outlook for any rating of the Company or the Guarantors or any
securities of the Company or the Guarantors.
(ll) On the First Closing Date and, with respect to the Optional
Additional Shares, each Option Closing Date, each of the Company and the
Guarantors (i) will be solvent, (ii) will have sufficient capital with which to
conduct the business it is presently conducting and presently anticipates
conducting and (iii) will be able to pay its debts as they mature.
(mm) Dune shall use the proceeds of the Offerings in the manner described
in the Time of Sale Circulars and the Final Offering Circulars under the caption
"Use of Proceeds."
(nn) Except as disclosed in the Time of Sale Circulars or the Final
Offering Circulars and as it relates to the Initial Purchaser, neither Company
nor any affiliate (as defined in Rule 501(b)) has not and, to its knowledge
after due inquiry, no one acting on its behalf has, (i) taken, directly or
indirectly, any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of any of the Notes or the Offered Shares, (ii)
sold, bid for, purchased, or paid anyone any compensation for soliciting
purchases of, any of the Notes or the Offered Shares, or (iii) except as
disclosed in the Time of Sale Circulars or the Final Offering Circulars, paid or
agreed to pay to any person any compensation for soliciting another to purchase
any other securities of the Company.
(oo) Without limiting any provision herein, no registration under the Act
and no qualification of the Indenture under the TIA is required for the sale of
the Notes or the Offered Shares to the Initial Purchaser as contemplated hereby
or for the Exempt Resales, assuming (i) that the purchasers in the Exempt
Resales are QIBs or Accredited Investors or non-U.S. persons and (ii) the
accuracy of such Initial Purchaser's representations contained herein regarding
the absence of general solicitation in connection with the sale of the Notes or
the Offered Shares to the Initial Purchaser and in the Exempt Resales.
(pp) The Notes and the Offered Shares are eligible for resale pursuant to
Rule 144A under the Act and no other securities of Dune are of the same class
(within the meaning of Rule 144A under the Act) as the Notes or the Offered
Shares and listed on a national securities exchange registered under Section 6
of the Securities Exchange Act of 1934, as amended (the "Exchange Act"), or
quoted in a U.S. automated inter-dealer quotation system. No securities of Dune
of the same class as the Notes or the Offered Shares have been offered, issued
or sold by Dune or any of its Affiliates within the six-month period immediately
prior to the date hereof.
14
(qq) Dune is subject to the reporting requirements of the Exchange Act and
is eligible to register resales of the Offered Shares and the Underlying
Securities on a registration statement on Form S-3 under the Act. There exist no
facts or circumstances (including without limitation any required approvals or
waivers or any circumstances that may delay or prevent the obtaining of
accountant's consents) that reasonably would be expected to prohibit or delay
the preparation and filing of a registration statement on Form S-3 that will be
available to register resales of the Offered Shares or the Underlying Securities
under the Act.
(rr) Neither Dune nor any of its Affiliates or other persons acting on
behalf of the Company has offered or sold the Notes or the Offered Shares by
means of any general solicitation or general advertising within the meaning of
Rule 502(c) under the Act or, with respect to Notes sold outside the United
States to non-U.S. persons (as defined in Rule 902 under the Act), by means of
any directed selling efforts within the meaning of Rule 902 under the Act, and
Dune, each Affiliate of the Company and each other person acting on behalf of
the Company have complied with and will implement the "offering restrictions"
within the meaning of such Rule 902; provided, that no representation is made in
this subsection with respect to the actions of the Initial Purchaser.
(ss) Each of the Company, the Guarantors, and each ERISA Affiliate has
fulfilled its obligations, if any, under the minimum funding standards of
Section 302 of the Employee Retirement Income Security Act of 1974, as amended
("ERISA") with respect to each "pension plan" (as defined in Section 3(2) of
ERISA), subject to Section 302 of ERISA which the Company, the Guarantors, or
any ERISA Affiliate sponsors or maintains, or with respect to which it has (or
within the last three years had) any obligation to make contributions, and each
such plan is in compliance in all material respects with the presently
applicable provisions of ERISA and the Code (as defined below). Neither the
Company or the Guarantors, nor any ERISA Affiliate thereof has incurred any
material unpaid liability to any plan which is subject to ERISA (other than for
the payment of premiums in the ordinary course). "ERISA Affiliate" means a
corporation, trade or business that is, along with the Company or the
Guarantors, a member of a controlled group of corporations or a controlled group
of trades or businesses, as described in Section 414 of the Internal Revenue
Code of 1986, as amended (the "Code") or Section 4001 of ERISA.
(tt) (i) Except as disclosed in the Time of Sale Circulars or the Final
Offering Circulars, neither the Company nor the Guarantors are party to or bound
by any collective bargaining agreement with any labor organization; (ii) there
is no union representation question existing with respect to the employees of
the Company or the Guarantors, and, to the Company's knowledge, no union
organizing or decertification efforts are underway or threatened against the
Company or the Guarantors; (iii) no labor strike, work stoppage, slowdown, or
other material labor dispute is pending against the Company or the Guarantors,
or, to the knowledge of the Company or the Guarantors threatened against the
Company or the Guarantors; (iv) there is no worker's compensation liability,
experience or matter that could be reasonably expected to have a Material
Adverse Effect; (v) there is no threatened or pending liability against the
Company or the Guarantors pursuant to the Worker Adjustment Retraining and
Notification Act of 1988, as amended ("WARN"), or any similar state or local
law; (vi) there is no employment-related charge, complaint, grievance,
investigation, unfair labor practice claim, or inquiry of any kind, pending
against the Company or the Guarantors that could, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect; (vii) no
employee or agent of the Company or the Guarantors has committed any act or
omission giving rise to liability for any violation identified in subsection (v)
and (vi) above, other than such acts or omissions that would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect;
and (viii) no term or condition of employment exists through arbitration awards,
settlement agreements, or side agreements that is contrary to the express terms
of any applicable collective bargaining agreement.
15
(uu) None of the transactions contemplated in the Documents or the
application by Dune or the Guarantors of the proceeds of the Notes or the
Offered Shares will violate or result in a violation of Section 7 of the
Exchange Act, (including, without limitation, Regulation T (12 C.F.R. Part 220),
Regulation U (12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the
Board of Governors of the Federal Reserve System).
(vv) Neither Dune nor the Guarantors are an open-end investment company,
unit investment trust or face-amount certificate company that is or is required
to be registered under Section 8 of the Investment Company Act of 1940, as
amended (the "Investment Company Act"); and neither Dune nor the Guarantors are
or, after giving effect to the offering and sale of the Notes and the Offered
Shares and the application of the proceeds thereof as described in the Time of
Sale Circulars or the Final Offering Circulars, will be an "investment company"
as defined in the Investment Company Act.
(ww) Xxxx has not engaged any broker, finder, commission agent or other
person (other than the Initial Purchaser) in connection with the Offering or any
of the transactions contemplated in the Documents, and Dune is not under any
obligation to pay any broker's fee or commission in connection with such
transactions (other than commissions or fees to the Initial Purchaser).
(xx) Except as disclosed in the Time of Sale Circulars and the Final
Offering Circulars, each of the Company and the Guarantors (i) is in compliance
with all applicable foreign, Federal, state and local laws and regulations
relating to the protection of the environment or hazardous or toxic substances
of wastes, pollutants or contaminants ("Environmental Laws"), (ii) has received
and is in compliance with all permits, licenses or other approvals required of
it under applicable Environmental Laws to conduct their respective businesses
and (iii) has not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or toxic
substances or wastes, pollutants or contaminants, in each case except where such
non-compliance with Environmental Laws, failure to receive and comply with
required permits, licenses or other approvals, or liability would not,
individually or in the aggregate, have a Material Adverse Effect, whether or not
arising from transactions in the ordinary course of business. Except as
disclosed in the Time of Sale Circulars or the Final Offering Circulars, neither
the Company nor the Guarantors have been named as a "potentially responsible
party" under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended.
(yy) As of the First Closing Date and, with respect to the Optional
Additional Shares, each Option Closing Date other than as described in the Time
of Sale Circulars and the Final Offering Circulars, there will be no
encumbrances or restrictions on the ability of the Guarantors of the Company (x)
to pay dividends or make other distributions on the Guarantors' Capital Stock or
to pay any indebtedness to the Company or the Guarantors, (y) to make loans or
advances or pay any indebtedness to, or investments in, the Company or the
Guarantors or (z) to transfer any of its property or assets to the Company or
the Guarantors.
(zz) Each certificate signed by any officer of the Company or the
Guarantors delivered to the Initial Purchaser shall be deemed a representation
and warranty by the Company or the Guarantors (and not individually by such
officer) to the Initial Purchaser with respect to the matters covered thereby.
(aaa) Each of the Company and the Guarantors is insured by insurers of
recognized financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they are
engaged. All policies of insurance insuring the Company or the Guarantors or
their respective businesses, assets, employees, officers and directors are in
full force and effect. The Company and the Guarantors are in compliance with the
16
terms of such policies and instruments in all material respects, and there are
no claims by the Company or the Guarantors under any such policy or instrument
as to which any insurance company is denying liability (or defending under a
reservation of rights clause). Neither the Company nor the Guarantors have been
refused any insurance coverage sought or applied for, and neither the Company
nor the Guarantors have any reason to believe that it will not be able to renew
its existing insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue its
business at a cost that would not, individually or in the aggregate, reasonably
be expected to have a Material Adverse Effect.
(bbb) As of the First Closing Date and, with respect to the Optional
Additional Shares, each Option Closing Date, except with respect to Permitted
Liens, there will be no currently effective financing statement, security
agreement, chattel mortgage, real estate mortgage or other document filed or
recorded with any filing records, registry, or other public office, that
purports to cover, affect or give notice of any present or possible future Lien
on, or security interest in, any assets or property of the Company or any
Domestic Restricted Subsidiary or any rights thereunder.
(ccc) Xxxxxx & Xxxxxx P.C. and Xxxx and Associates LLP, the accountants
who have audited the financial statements of Dune and Goldking, respectively,
included as part of the Time of Sale Circulars and the Final Offering Circulars,
are independent certified public accountants with respect to the Company, under
Rule 101 of the AICPA's code of professional conduct and its interpretations and
rulings, during the periods covered by the financial statements on which they
reported included in the Time of Sale Circulars.
(ddd) The Company has all requisite corporate power and authority to
execute, deliver and perform its obligations under the Acquisition Agreement.
The Acquisition Agreement has been duly and validly authorized by the Company,
constitutes a legal, valid and binding obligation of the Company and is in full
force and effect. The representations and warranties contained in the
Acquisition Agreement are true as of the date made therein. The Acquisition
Agreement conforms in all material respects to the descriptions thereof in the
Time of Sale Circulars and the Final Offering Circulars.
6. Covenants of the Company. The Company, on behalf of itself and the
Guarantors, hereby agrees:
(a) To (i) advise the Initial Purchaser promptly after obtaining knowledge
(and, if requested by the Initial Purchaser, confirm such advice in writing) of
(A) the issuance by any state securities commission of any stop order suspending
the qualification or exemption from qualification of any of the Notes or the
Offered Shares for offer or sale in any jurisdiction, or the initiation of any
proceeding for such purpose by any state securities commission or other
regulatory authority, or (B) the happening of any event that makes any statement
of a material fact made in the Time of Sale Circulars, the Offering Circulars or
any Supplemental Offering Material untrue or that requires the making of any
additions to or changes in the Time of Sale Circulars or the Final Offering
Circulars in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, (ii) use its reasonable best efforts
to prevent the issuance of any stop order or order suspending the qualification
or exemption from qualification of any of the Notes or the Offered Shares under
any state securities or Blue Sky laws, and (iii) if at any time any state
securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption from qualification of any of the Notes
or the Offered Shares under any such laws, use its commercially reasonable best
efforts to obtain the withdrawal or lifting of such order at the earliest
possible time.
(b) Without the prior written consent of the Initial Purchaser, the
officers, directors or majority shareholder of the Company (including any
persons that become an officer or director of the Company following the
Acquisition) will not, during the period ending 90 days after the date of the
Final Offering Circulars (the "Lock-up Period"), (i) offer, pledge, sell,
17
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend, or
otherwise transfer or dispose of, directly or indirectly, any shares of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock, (ii) enter into any swap or other arrangement that transfers to
another, in whole or in part, any of the economic consequences of ownership of
such Common Stock or (iii) file with the Commission a registration statement
under the Act relating to any additional shares of the Common Stock or
securities convertible into, or exchangeable for, any shares of Common Stock, or
publicly disclose the intention to effect any transaction described in clause
(i), (ii) or (iii), whether any such transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise; provided, however, that the foregoing shall not apply to (A)
the sale of the Offered Shares under this Agreement or the issuance of the
Underlying Securities, (B) the grant by the Company of employee or director
stock options, restricted stock awards or restricted stock unit awards in the
ordinary course of business, the issuance by the Company of any shares of Common
Stock of the Company upon the exercise of an option or upon the sale by the
Company of shares of Common Stock pursuant to the Company's employee stock
purchase plan, (C) any transfer of shares of Common Stock pursuant to the
Company's 401(k) plan, if any, (D) the filing by the Company of any registration
statement with the Commission on Form S-8 relating to the offering of securities
pursuant to the terms of the Company's existing incentive plan or employee stock
purchase plan, (E) the conversion or exercise of a security outstanding on the
date hereof and (F) filing of any registration statement in respect of the
Offered Shares and the Underlying Securities.
(c) To (i) furnish the Initial Purchaser, without charge, as many copies
of the Final Offering Circulars, and any amendments or supplements thereto, as
the Initial Purchaser may reasonably request, (ii) promptly prepare the Pricing
Supplements, in form and substance reasonably satisfactory to the Initial
Purchaser, and to furnish to the Initial Purchaser as soon as practicable but no
later than one hour prior to the Time of Sale Circulars as many copies of the
Pricing Supplements as such Initial Purchaser may reasonably request and (iii)
promptly prepare, upon the Initial Purchaser's reasonable request, any amendment
or supplement to the Final Offering Circulars that the Initial Purchaser, upon
advise of legal counsel, determines may be necessary in connection with Exempt
Resales (and the Company hereby consents to the use of the Preliminary Offering
Circulars and the Final Offering Circulars, and any amendments and supplements
thereto, by the Initial Purchaser in connection with Exempt Resales.
(d) Not to amend or supplement the Final Offering Circulars prior to the
First Closing Date and, with respect to the Optional Additional Shares, each
Option Closing Date unless the Initial Purchaser shall previously have been
advised thereof and shall have provided a written consent thereto, which consent
shall not be unreasonably withheld. The Company represents and agrees that,
unless it obtains the prior consent of the Initial Purchaser, it has not made
and will not make any offer relating to the Notes or the Offered Shares by means
of any Supplemental Offering Materials.
(e) So long as the Initial Purchaser shall hold any of the Notes or the
Offered Shares, (i) if any event shall occur as a result of which, in the
reasonable judgment of the Company or the Initial Purchaser or White & Case LLP,
it becomes necessary or advisable to amend or supplement the Final Offering
Circulars in order to make the statements therein, in light of the circumstances
under which they were made, not misleading, or if it is necessary to amend or
supplement the Time of Sale Circulars or the Final Offering Circulars to comply
with Applicable Law, to prepare, at the expense of the Company, an appropriate
amendment or supplement to the Time of Sale Circulars or the Final Offering
Circulars (in form and substance reasonably satisfactory to such Initial
Purchaser, as evidenced by their written consent thereto, which consent shall
not be unreasonably withheld, conditioned or delayed) so that (A) as so amended
18
or supplemented, the Time of Sale Circulars or the Final Offering Circulars will
not include an untrue statement of 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, and (B) the Time of
Sale Circulars or the Final Offering Circulars will comply with Applicable Law
and (ii) if in the reasonable judgment of the Company or such Initial Purchaser
it becomes necessary or advisable to amend or supplement the Time of Sale
Circulars or the Final Offering Circulars so that the Time of Sale Circulars or
the Final Offering Circulars will contain all of the information specified in,
and meet the requirements of, Rule 144A(d)(4) of the Act, to promptly prepare an
appropriate amendment or supplement to the Time of Sale Circulars or the Final
Offering Circulars (in form and substance reasonably satisfactory to the Initial
Purchaser, as evidenced by their written consent thereto, which consent shall
not be unreasonably withheld, conditioned or delayed) so that the Final Offering
Circulars, as so amended or supplemented, will contain the information specified
in, and meet the requirements of, such Rule.
(f) To cooperate with the Initial Purchaser and White & Case LLP in
connection with the qualification of the Notes and the Offered Shares under the
securities or Blue Sky laws of such jurisdictions as the Initial Purchaser may
reasonably request and continue such qualification in effect so long as
reasonably required for Exempt Resales.
(g) Whether or not the Offerings or any of the transactions contemplated
under the Documents are consummated or this Agreement is terminated, to pay (i)
all costs, expenses, fees and taxes incidental to and in connection with: (A)
the preparation, printing and distribution of the Time of Sale Circulars, any
Offering Circulars and all amendments and supplements thereto (including,
without limitation, financial statements and exhibits), any Supplemental
Offering Materials and all other agreements, memoranda, correspondence and other
documents prepared and delivered in connection herewith, (B) the negotiation,
printing, processing and distribution (including, without limitation, word
processing and duplication costs) and delivery of, each of the Documents, (C)
the preparation, issuance and delivery of the Notes and the Offered Shares, (D)
the qualification of the Notes and the Offered Shares for offer and sale under
the securities or Blue Sky laws of the several states (including, without
limitation, the fees and disbursements to the Initial Purchaser's counsel
relating to such registration or qualification), (E) furnishing such copies of
the Time of Sale Circulars, any Offering Circulars and all amendments and
supplements thereto, as may reasonably be requested for use by the Initial
Purchaser, (F) the performance of the Company's obligations under the
Registration Rights Agreements, including but not limited to the Exchange
Offers, the Exchange Offer Registration Statements and any Shelf Registration
Statements, (G) the filing with the National Association of Securities Dealers,
Inc., (H) the listing of the Underlying Securities on the American Stock
Exchange and (I) a "road show" presentation to potential investors, (ii) all
fees and expenses of the counsel, accountants and any other experts or advisors
retained by the Company, (iii) all expenses and listing fees in connection with
the application for quotation of the Notes and the Offered Shares on the PORTAL
market, (iv) all fees and expenses (including fees and expenses of counsel) of
the Company in connection with approval of the Notes and the Offered Shares by
DTC for "book-entry" transfer, (v) all fees charged by rating agencies in
connection with the rating of the Notes or the Offered Shares, (vi) all fees and
expenses (including fees and expenses of counsel) of the Trustee, the Transfer
Agent and the Collateral Agent and trustees under any deed of trust, (vii) all
fees and expenses in connection with the creation and perfection of the security
interests under each of the Collateral Agreements (including, without
limitation, filing and recording fees, search fees, taxes and costs of title
policies), (viii) all fees, disbursements and out-of-pocket expenses incurred by
the Initial Purchaser in connection with its services to be rendered hereunder
including, without limitation, the fees and disbursements of White & Case LLP,
counsel to the Initial Purchaser, travel and lodging expenses, word processing
charges, messenger and duplicating services, facsimile expenses and other
customary expenditures and (ix) any other fees and expenses payable to the
Initial Purchaser under the engagement letter between the Company and the
Initial Purchaser. If the sale of the Notes or the Offered Shares provided for
19
herein is not consummated because any condition to the obligations of the
Initial Purchaser set forth in Section 8 hereof is not satisfied, because this
Agreement is terminated pursuant to Section 10 hereof or because of any failure,
refusal or inability on the part of the Company to perform all obligations and
satisfy all conditions on its part to be performed or satisfied hereunder (other
than in each such case solely by reason of a default by the Initial Purchaser on
its obligations hereunder after all conditions hereunder have been satisfied in
accordance herewith), the Company agrees to promptly reimburse the Initial
Purchaser in cash upon demand for all fees, disbursements and out-of-pocket
expenses (including the fees, disbursements and charges of White & Case LLP,
counsel to the Initial Purchaser) to be paid in cash that shall have been
incurred by the Initial Purchaser in connection with the proposed purchase and
sale of the Notes or the Offered Shares.
(h) To use the proceeds of the Offerings in the manner described in the
Time of Sale Circulars under the caption "Use of Proceeds."
(i) To do and perform all things required to be done and performed under
the Documents.
(j) Not to, and to ensure that no "affiliate" (as defined in Rule 501(b)
of the Act) of the Company will, sell, offer for sale or solicit offers to buy
or otherwise negotiate in respect of any "security" (as defined in the Act) that
would be integrated with the sale of the Notes or the Offered Shares in a manner
that would require the registration under the Act of the sale to the Initial
Purchaser or to the Subsequent Purchasers of the Notes or the Offered Shares.
(k) For so long as any of the Notes or the Offered Shares remain
outstanding, during any period in which the Company is not subject to Section 13
or 15(d) of the Exchange Act, to make available, upon request to any owner of
the Notes or the Offered Shares in connection with any sale thereof and any
prospective Subsequent Purchasers of such Notes or Offered Shares from such
owner, the information required by Rule 144A(d)(4) under the Act.
(l) To comply with the representation letter of the Company to DTC
relating to the approval of the Notes or the Offered Shares by DTC for "book
entry" transfer.
(m) To use its reasonable best efforts to effect the inclusion of the
Notes and the Offered Shares in PORTAL and to use its reasonable best efforts to
maintain the listing of the Notes and the Offered Shares on PORTAL for so long
as the Notes and the Offered Shares are outstanding.
(n) For so long as the Initial Purchaser shall hold any of the Notes and
the Offered Shares, if not otherwise publicly available, to furnish to such
Initial Purchaser copies of all reports and other communications (financial or
otherwise) furnished by the Company to the Trustee or to the holders of the
Notes and the Offered Shares and, as soon as available, copies of any reports or
financial statements furnished to or filed by the Company with the SEC or any
national securities exchange on which any class of securities of the Company may
be listed.
(o) Except in connection with the Exchange Offer or the filing of the
Shelf Registration Statements, not to, and not to authorize or permit any person
acting on its behalf to, (i) distribute any offering material in connection with
the offer and sale of the Notes or the Offered Shares other than the Time of
Sale Circulars, any Offering Circulars and any amendments and supplements to the
Final Offering Circulars prepared in compliance with this Agreement, or (ii)
solicit any offer to buy or offer to sell the Notes or the Offered Shares by
means of any form of general solicitation or general advertising (including,
without limitation, as such terms are used in Regulation D under the Act) or in
any manner involving a public offering within the meaning of Section 4(2) of the
Act.
20
(p) During the two year period after the First Closing Date and, with
respect to the Optional Additional Shares, each Option Closing Date (or such
shorter period as may be provided for in Rule 144(k) under the Act, as the same
may be in effect from time to time), to not, and to not permit any current or
future Subsidiaries of either the Company or any other "affiliates" (as defined
in Rule 144A under the Act) controlled by the Company to, resell any of the
Notes, the Offered Shares or the Underlying Securities which constitute
"restricted securities" under Rule 144 that have been reacquired by the Company,
any current or future Subsidiaries of the Company or any other "affiliates" (as
defined in Rule 144A under the Act) controlled by the Company, except pursuant
to an effective registration statement under the Act.
(q) To pay all stamp, documentary and transfer taxes and other duties, if
any, which may be imposed by the United States or any political subdivision
thereof or taxing authority thereof or therein with respect to the issuance of
either the Notes or the Offered Shares or the sale thereof to the Initial
Purchaser.
(r) To not take any action prohibited by Regulation M under the Exchange
Act, in connection with the distribution of the Notes or the Offered Shares
contemplated hereby.
(s) To reserve and keep available at all times, free of pre-emptive
rights, shares of Common Stock for the purpose of enabling the Company to
satisfy all obligations to issue the Underlying Securities upon conversion of
the Offered Shares.
(t) Except for such documents that are publicly available on the
Commission's Electronic Data Gathering, Analysis and Retrieval system ("XXXXX"),
to furnish to the holders of the Notes or the Offered Shares as soon as
practicable after the end of each fiscal year an annual report (including a
balance sheet and statements of income, stockholders' equity and cash flows of
the Company and its consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter ending
after the date of the Final Offering Circulars), to make available to its
security holders consolidated summary financial information of the Company and
its subsidiaries for such quarter in reasonable detail.
(u) To advise the Initial Purchaser promptly, and, if requested by the
Initial Purchaser, confirm such advice in writing, of the issuance by any state
securities commission of any stop order suspending the qualification or
exemption of any of the Notes or the Offered Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by any state
securities commission or other regulatory authority, and shall use its
reasonable best efforts to prevent the issuance of any stop order or order
suspending the qualification or exemption of any of the Notes or the Offered
Shares under any state securities or Blue Sky laws, and if, at any time, any
state securities commission or other regulatory authority shall issue an order
suspending the qualification or exemption of any of the Notes or the Offered
Shares under any state securities or Blue Sky laws, the Company shall use its
reasonable best efforts to obtain the withdrawal or lifting of such order at the
earliest possible time.
(v) Concurrent with the consummation of the Acquisition, to (x) cause
Goldking and the Goldking Entities to (i) become a party to this Agreement and
the Registration Rights Agreements as Guarantors by executing and delivering a
joinder agreement in the form of Exhibit C hereto to the Initial Purchaser and
(ii) become Guarantors under the Indenture and (y) cause any new officers and
directors of the Company to execute "lock-up" agreements, each substantially in
the form of Exhibit G-1.
7. Representations and Warranties of the Initial Purchaser; Resales by
Initial Purchaser. Each of the Initial Purchaser represents and warrants and
agrees with the Company that:
21
(a) It is a QIB and an Accredited Investor and it will offer the Notes or
the Offered Shares, as applicable for resale only upon the terms and conditions
set forth in this Agreement and in the Final Offering Circulars.
(b) It is not acquiring the Notes or Offered Shares, with a view to any
distribution thereof that would violate the Act or the securities laws of any
state of the United States or any other applicable jurisdiction. In connection
with the Exempt Resales, it will solicit offers to buy the Notes or Offered
Shares, as applicable only from, and will offer and sell the Notes or Offered
Shares, as applicable only to, (A) persons reasonably believed by such Initial
Purchaser to be QIBs or (B) persons reasonably believed by the Initial Purchaser
to be Accredited Investors or (C) non-U.S. persons reasonably believed by the
Initial Purchaser to be a purchaser referred to in Regulation S under the Act;
provided, however, that in purchasing such Notes or Offered Shares, as
applicable, such persons are deemed to have represented and agreed as provided
under the caption "Notice to Investors" contained in the Final Offering
Circulars. In connection with any offers or sales of the Notes to non-U.S.
persons:
(i) The Notes have not been registered under the Act and may not be
offered or sold within the United States or to, or for the account or
benefit of, U.S. persons except in accordance with Rule 144A or Regulation
S under the Act or pursuant to another exemption from the registration
requirements of the Act;
(ii) It has offered the Notes, and will offer and sell the Notes (A)
as part of its distribution at any time and (B) otherwise until 40 days
after the later of the commencement of the offering and the First Closing
Date and, with respect to the Optional Additional Shares, each Option
Closing Date (the "Distribution Compliance Period"), only in accordance
with Rule 903 of Regulation S under the Act or as otherwise permitted
under this Section 7. Accordingly, neither it, its affiliates nor any
persons acting on its or their behalf, has engaged or will engage in any
directed selling efforts (within the meaning of Regulation S) with respect
to the Notes, and it and they have complied and will comply with the
offering restrictions requirement of Regulation S. It agrees that at or
prior to confirmation of sale of Notes to persons outside the U.S., it
will send to each distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases Notes from it during
the Distribution Compliance Period a confirmation or notice stating that
such purchaser is subject to the same restrictions on offers or sales as
set forth in this Section 7;
(iii) It will not offer, sell or deliver any of the Notes in any
jurisdiction outside the United States except under circumstances that
will result in compliance with the applicable laws thereof, and that it
will take at its own expense whatever action is required to permit its
purchase and resale of the Notes in such jurisdictions; and
(iv) It understands that no action has been taken to permit a public
offering in any jurisdiction outside the United States where action would
be required for such purpose.
(c) No form of general solicitation or general advertising in violation of
the Act has been or will be used nor will any offers in any manner involving a
public offering within the meaning of Section 4(2) of the Act or, with respect
to Notes to be sold in reliance on Regulation S, by means of any directed
selling efforts be made by such Initial Purchaser or any of its representatives
in connection with the offer and sale of any of the Notes or the Offered Shares.
22
(d) The Initial Purchaser will deliver to each Subsequent Purchaser of the
Notes or the Offered Shares, in connection with its original distribution of the
Notes or the Offered Shares, a copy of the respective Final Offering Circular,
as amended and supplemented at the date of such delivery.
8. Conditions. The obligation of the Initial Purchaser to purchase the
Notes or the Offered Shares, under this Agreement is subject to the satisfaction
of each of the following conditions or waiver thereof by the Initial Purchaser:
(a) All the representations and warranties contained in this Agreement and
in each of the Documents shall be true and correct as of the date hereof and at
the First Closing Date as though then made and, with respect to the Optional
Additional Shares, as of each Option Closing date as though then made. On or
prior to the First Closing Date and, with respect to the Optional Additional
Shares, each Option Closing Date, the Company and each other party to the
Documents (other than the Initial Purchaser) shall have performed or complied in
all material respects with all of the agreements and satisfied all conditions on
their respective parts to be performed, complied with or satisfied pursuant to
the Documents (other than conditions to be satisfied by such other parties,
which the failure to so satisfy would not, individually or in the aggregate,
have a Material Adverse Effect).
(b) No injunction, restraining order or order of any nature by a
Governmental Authority shall have been issued as of the First Closing Date and,
with respect to the Optional Additional Shares, each Option Closing Date, that
would prevent or materially interfere with the consummation of the Offering or
any of the transactions contemplated under the Documents; and no stop order
suspending the qualification or exemption from qualification of any of the Notes
or the Offered Shares, in any jurisdiction shall have been issued and no
Proceeding for that purpose shall have been commenced or, to the knowledge of
the Company after due inquiry, be pending or contemplated as of the First
Closing Date and, with respect to the Optional Additional Shares, each Option
Closing Date.
(c) No action shall have been taken and no Applicable Law shall have been
enacted, adopted or issued that would, as of the First Closing Date and, with
respect to the Optional Additional Shares, each Option Closing Date, prevent the
consummation of the Offerings or any of the transactions contemplated under the
Documents. No Proceeding shall be pending or, to the knowledge of the Company
after due inquiry, threatened other than Proceedings that (A) if adversely
determined would not, individually or in the aggregate, adversely affect the
issuance or marketability of the Notes or the Offered Shares, and (B) would not,
individually or in the aggregate, have a Material Adverse Effect, except as
disclosed in the Final Offering Circulars.
(d) Subsequent to the respective dates as of which data and information is
given in the Time of Sale Circulars and the Final Offering Circulars, there
shall not have been any Material Adverse Change.
(e) The Notes and the Offered Shares shall have been designated PORTAL
securities in accordance with the rules and regulations adopted by the National
Association of Securities Dealers, Inc. relating to trading in the PORTAL
market.
(f) The Underlying Securities shall have been approved for listing on the
American Stock Exchange, to the extent required by such exchange, subject only
to notice of issuance.
(g) On or after the date hereof, (i) there shall not have occurred any
downgrading, suspension or withdrawal of, nor shall any notice have been given
of any potential or intended downgrading, suspension or withdrawal of, or of any
review (or of any potential or intended review) for a possible change that does
not indicate the direction of the possible change in, any rating of the Company
or the Goldking Entities or any securities of the Company or the Goldking
23
Entities (including, without limitation, the placing of any of the
foregoing ratings on credit watch with negative or developing implications or
under review with an uncertain direction) by any "nationally recognized
statistical rating organization" as such term is defined for purposes of Rule
436(g)(2) under the Act, (ii) there shall not have occurred any change, nor
shall any notice have been given of any potential or intended change, in the
outlook for any rating of the Company or the Goldking Entities or any securities
of the Company or the Goldking Entities by any such rating organization and
(iii) no such rating organization shall have given notice that it has assigned
(or is considering assigning) a lower rating to the Notes or the Offered Shares
than that on which the Notes or Offered Shares were marketed.
(h) The Initial Purchaser shall have received on the applicable Closing
Date:
(i) certificates dated the First Closing Date and, with respect to
the Optional Additional Shares, each Option Closing Date, signed by (1)
the Chief Executive Officer and (2) the principal financial or accounting
officer of the Company, on behalf of the Company, to the effect that (a)
the representations and warranties set forth in Section 5 hereof and in
each of the Documents, are true and correct in all respects, as of the
date hereof and at the First Closing Date and, with respect to the
Optional Additional Shares, each Option Closing Date, (b) the Company and
each other party to the Documents (other than the Initial Purchaser) have
performed or complied with all of the agreements and satisfied all
conditions on their respective parts to be performed, complied with or
satisfied pursuant to the Documents (other than conditions to be satisfied
by such other parties, which failure to satisfy would not, individually or
in the aggregate, have a Material Adverse Effect), (c) at First Closing
Date and, with respect to the Optional Additional Shares, each Option
Closing Date or since the date of the most recent financial statements in
the Final Offering Circulars (exclusive of any amendment or supplement
thereto after the date hereof), other than as disclosed in the Final
Offering Circulars or contemplated hereby, no event or events have
occurred, no information has become known nor does any condition exist
that, individually or in the aggregate, could reasonably be expected to
have a Material Adverse Effect, (d) since the date of the most recent
financial statements in the Final Offering Circulars (exclusive of any
amendment or supplement thereto after the date hereof), other than as
disclosed in the Final Offering Circulars or contemplated hereby, neither
the Company, the Goldking Entities nor the Guarantors have incurred any
liabilities or obligations, direct or contingent, not in the ordinary
course of business, that are material to the Company and the Guarantors,
taken as a whole, or the Goldking Entities or entered into any
transactions not in the ordinary course of business that are material to
the business, condition (financial or otherwise) or results of operations
of the Company and the Guarantors, taken as a whole, or the Goldking
Entities and there has not been any change in the Capital Stock or
long-term indebtedness of the Company or the Guarantors of the Company or
the Goldking Entities that is material to the business, condition
(financial or otherwise) or results of operations or prospects of the
Company and the Guarantors, taken as a whole, or the Goldking Entities and
(e) the sale of the Notes or the Offered Shares has not been enjoined
(temporarily or permanently).
(ii) a certificate, dated the First Closing Date and, with respect
to the Optional Additional Shares, each Option Closing Date, executed by
the Secretary of the Company and the Guarantors, certifying such matters
as the Initial Purchaser may reasonably request.
(iii) a certificate of solvency, dated the First Closing Date and,
with respect to the Optional Additional Shares, each Option Closing Date,
executed by the principal financial or accounting officer of the Company
substantially in a form reasonably satisfactory to the Initial Purchaser.
24
(iv) the opinion, dated the First Closing Date and, with respect to
the Optional Additional Shares, each Option Closing Date, of Xxxxx & Xxx
Xxxxxx LLP, counsel to the Company and the Guarantors substantially in the
form attached hereto as Exhibit D.
(v) the opinion, dated the First Closing Date and, with respect to
the Optional Additional Shares, each Option Closing Date, of Xxxxxxx
Xxxxxx L.L.P., counsel to the Company and the Guarantors substantially in
the form attached hereto as Exhibit E.
(vi) the opinion, dated the First Closing Date and, with respect to
the Optional Additional Shares, each Option Closing Date, of Xxxxxxxx &
Knight LLP, counsel to the Initial Purchaser, in form satisfactory to the
Initial Purchaser.
(vii) the opinion, dated the First Closing Date and, with respect to
the Optional Additional Shares, each Option Closing Date, of Louisiana
counsel to the Company and the Guarantors, substantially in the form
attached hereto as Exhibit F.
(viii) an opinion, dated the First Closing Date and, with respect to
the Optional Additional Shares, each Option Closing Date, of White & Case
LLP, counsel to the Initial Purchaser, in form satisfactory to the Initial
Purchaser covering such matters as are customarily covered in such
opinions.
(ix) The "lock-up" agreements, each substantially in the form of
Exhibit G-1 hereto, from the persons identified on Exhibit G-2 relating to
sales and certain other dispositions of shares of Common Stock or certain
other securities shall be in full force and effect on the First Closing
Date and, with respect to the Optional Additional Shares, each Option
Closing Date.
(i) The Initial Purchaser shall have received from each Xxxxxx & Xxxxxx
P.C. and Xxxx and Associates LLP, independent public accountants under the
standards established by the American Institute of Certified Public Accountants,
with respect to the Company and the Goldking entities, respectively, (A)
customary comfort letters, dated the date of this Agreement, in form and
substance reasonably satisfactory to the Initial Purchaser, with respect to the
financial statements and certain financial information contained in the
Preliminary Offering Circulars, (B) customary comfort letters, dated the date of
this Agreement, in form and substance reasonably satisfactory to the Initial
Purchaser, with respect to the financial statements and certain financial
information contained in the Final Offering Circulars and (C) customary "bring
down" comfort letters, dated the First Closing Date and, with respect to the
Optional Additional Shares, each Option Closing Date, in form and substance
reasonably satisfactory to the Initial Purchaser, to the effect that each of
Xxxxxx & Xxxxxx P.C. and Xxxx and Associates LLP reaffirms the statements made
in its respective letters furnished pursuant to clause (A) and (B).
(j) On the date hereof and also at the Closing Date, the Initial Purchaser
shall have received from the principal financial or accounting officer of the
Company a certificate in form and substance reasonably satisfactory to the
Initial Purchaser as to the accuracy of certain numbers contained or
incorporated by reference in the Time of Sale Circulars and the Offering
Circulars, which numbers shall be set forth in a schedule attached to such
certificate.
25
(k) Each of the Documents shall have been executed and delivered by all
parties thereto, and the Initial Purchaser shall have received a fully executed
original of each Document.
(l) The Initial Purchaser shall have received copies of all opinions,
certificates, letters and other documents delivered under or in connection with
the Offering or any transaction contemplated in the Documents.
(m) The Initial Purchaser shall have received the Final Offering
Circulars, and the terms of each Document shall conform in all material respects
to the description thereof in the Time of Sale Circulars.
(n) Prior to the First Closing Date and, with respect to the Optional
Additional Shares, each Option Closing Date, each of DeGloyer and XxxXxxxxxxx,
the Company's independent petroleum engineer and Xxxxxx, Xxxxxxxxx & Associates,
Goldking's independent petroleum engineer, shall have furnished to the Initial
Purchaser a letter or letters, dated the respective date of delivery thereof, in
form and substance satisfactory to the Initial Purchaser.
(o) None of the parties to any of the Documents are in breach or default
in any material respect under their respective obligations thereunder.
(p) The Collateral Agent shall have received on the applicable Closing
Date:
(i) appropriately completed copies of Uniform Commercial Code UCC-1
financing statements naming each of the Company and the Guarantors as the
debtor and the Collateral Agent as the secured party, or other similar
instruments or documents to be filed under the UCC of all jurisdictions as
may be necessary or, in the reasonable opinion of the Collateral Agent and
its counsel, desirable to perfect the Lien of the Collateral Agent
pursuant to the Security Agreement;
(ii) appropriately completed copies of Uniform Commercial Code Form
UCC-3 termination statements, if any, necessary to release all Liens
(other than Permitted Liens) of any Person in any collateral described in
any Security Agreement previously granted by any Person;
(iii) certified copies of Uniform Commercial Code Requests for
Information or Copies (Form UCC-11), or a similar search report certified
by a party acceptable to the Collateral Agent, dated a date reasonably
near to the First Closing Date and, with respect to the Optional
Additional Shares, each Option Closing Date, listing all effective
financing statements which name the Company (under its present name and
any previous names) as the debtor, together with copies of such financing
statements (none of which shall cover any collateral described in any
Collateral Agreement, other than such financing statements that evidence
Permitted Liens);
(iv) fully executed counterparts of a Deed of Trust, Assignment of
Leases and Rents, Security Agreement and Fixture Filing (the "Deed of
Trust"), in form and substance reasonably satisfactory to Collateral
Agent, which Deed of Trust shall cover the real and personal property
relating to the Obligors' facilities in the locations to be listed on
Schedule I to the Indenture; and
(v) such other approvals or documents as the Collateral Agent or the
Initial Purchaser may reasonably request in form and substance reasonably
satisfactory to the Collateral Agent or Initial Purchaser, as the case may
be.
26
(q) The Collateral Agent and its counsel shall be satisfied that,
concurrent with the purchase of the Notes or the Offered Shares hereunder by the
Initial Purchaser, (A) the Lien granted to the Collateral Agent, for the benefit
of the Secured Parties in the collateral described above is of the priority
described in the Final Offering Circulars; and (B) no Lien exists on any of the
collateral described above other than the Lien created in favor of the
Collateral Agent, for the benefit of the Secured Parties, pursuant to a
Collateral Agreement, in each case subject to the Permitted Liens.
(r) All steps, other than the payment of consideration, shall have been
completed in connection with the Acquisition. In the case of the Preferred
Stock, all steps, other than the release of (x) funds by the Initial Purchaser
and (y) shares of Preferred Stock to the Initial Purchaser shall have been
consummated in connection with the sale and purchase of the Preferred Stock. In
the case of the Notes, the offering of Preferred Stock shall have been
consummated.
9. Indemnification and Contribution.
(a) The Company and the Guarantors, jointly and severally, agree to
indemnify and hold harmless the Initial Purchaser, and each person, if any, who
controls such Initial Purchaser within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act, against any losses, claims, damages or
liabilities of any kind to which, jointly or severally, such Initial Purchaser
or such controlling person may become subject under the Act, the Exchange Act or
otherwise, insofar as any such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement of any material
fact contained in the Time of Sale Circulars, any Offering Circulars or
any amendment or supplement thereto or any Supplemental Offering
Materials; or
(ii) the omission or alleged omission to state, in the Time of Sale
Circulars, any Offering Circulars or any amendment or supplement thereto
or any Supplemental Offering Materials, a 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;
including any losses, claims, damages or liabilities arising out of or based
upon the Company's failure to perform its obligations under Sections 6(c) and
6(d), and, subject to the provisions hereof, will reimburse, as incurred, the
Initial Purchaser and each such controlling person for any legal or other
expenses reasonably incurred by such Initial Purchaser or such controlling
person in connection with investigating, defending against or appearing as a
third-party witness in connection with any such loss, claim, damage, liability
or action in respect thereof; provided, however, neither the Company nor the
Guarantors will be liable in any such case to the extent (but only to the
extent) that any such loss, claim, damage or liability is finally judicially
determined by a court of competent jurisdiction in a final, unappealable
judgment, to have resulted primarily from any untrue statement or alleged untrue
statement or omission or alleged omission made in any the Time of Sale
Circulars, any Offering Circulars or any amendment or supplement thereto or any
Supplemental Offering Materials in reliance upon and in conformity with the
Initial Purchaser Information. This indemnity agreement will be in addition to
any liability that the Company may otherwise have to the indemnified parties.
(b) Each Initial Purchaser, severally and not jointly, agrees to indemnify
and hold harmless each of the Company, the Guarantors, and their respective
directors, officers and each person, if any, who controls the Company or the
Guarantors within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act against any losses, claims, damages or liabilities of any kind to
which the Company or any such director, officer or controlling person may become
subject under the Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) are finally
judicially determined by a court of competent jurisdiction in a final,
27
unappealable judgment, to have resulted primarily from (i) any untrue statement
or alleged untrue statement of any material fact contained in the Time of Sale
Circulars, any Offering Circulars or any amendment or supplement thereto or any
Supplemental Offering Materials or (ii) the omission or the alleged omission to
state therein a material fact required to be stated in the Timing of Sale
Circulars, any Offering Circulars or any amendment or supplement thereto or any
Supplemental Offering Materials or necessary to make the statements therein not
misleading, in each case to the extent (but only to the extent) that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with the Initial Purchaser Information; and,
subject to the limitation set forth immediately preceding this clause, will
reimburse, as incurred, any legal or other expenses incurred by the Company or
the Guarantors or any of their respective directors, officers or controlling
persons in connection with any such loss, claim, damage, liability or action in
respect thereof. This indemnity agreement will be in addition to any liability
that such Initial Purchaser may otherwise have to such indemnified parties.
(c) As promptly as reasonably practical after receipt by an indemnified
party under this Section 9 of notice of the commencement of any action for which
such indemnified party is entitled to indemnification under this Section 9, such
indemnified party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 9, notify the indemnifying party of the
commencement thereof in writing; but the omission to so notify the indemnifying
party (i) will not relieve such indemnifying party from any liability under
paragraph (a) or (b) above unless and only to the extent it is materially
prejudiced as a result thereof and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraphs (a) and (b) above. In case any
such action is brought against any indemnified party, and it notifies the
indemnifying party of the commencement thereof, the indemnifying party will be
entitled to participate therein and, to the extent that it may determine,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified party;
provided, however, that if (i) the use of counsel chosen by the indemnifying
party to represent the indemnified party would present such counsel with a
conflict of interest, (ii) the defendants in any such action include both the
indemnified party and the indemnifying party, and the indemnified party shall
have been advised by counsel in writing that there may be one or more legal
defenses available to it and/or other indemnified parties that are different
from or additional to those available to the indemnifying party, or (iii) the
indemnifying party shall not have employed counsel reasonably satisfactory to
the indemnified party to represent the indemnified party within a reasonable
time after receipt by the indemnifying party of notice of the institution of
such action, then, in each such case, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties at the expense of the indemnifying party. After notice from the
indemnifying party to such indemnified party of its election so to assume the
defense thereof and approval by such indemnified party of counsel appointed to
defend such action, the indemnifying party will not be liable to such
indemnified party under this Section 9 for any legal or other expenses, other
than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the immediately preceding sentence (it being understood, however,
that in connection with such action the indemnifying party shall not be liable
for the expenses of more than one separate counsel (in addition to local
counsel) in any one action or separate but substantially similar actions in the
same jurisdiction arising out of the same general allegations or circumstances,
designated by the Initial Purchaser in the case of paragraph (a) of this Section
9 or the Company or the Guarantors in the case of paragraph (b) of this Section
28
9, representing the indemnified parties under such paragraph (a) or paragraph
(b), as the case may be, who are parties to such action or actions) or (ii) the
indemnifying party has authorized in writing the employment of counsel for the
indemnified party at the expense of the indemnifying party. After such notice
from the indemnifying party to such indemnified party, the indemnifying party
will not be liable for the costs and expenses of any settlement of such action
effected by such indemnified party without the prior written consent of the
indemnifying party (which consent shall not be unreasonably withheld,
conditioned or delayed), unless such indemnified party waived in writing its
rights under this Section 9, in which case the indemnified party may effect such
a settlement without such consent.
(d) No indemnifying party shall be liable under this Section 9 for any
settlement of any claim or action (or threatened claim or action) effected
without its written consent, which shall not be unreasonably withheld,
conditioned or delayed, but if a claim or action is settled with its written
consent, or if there be a final judgment for the plaintiff with respect to any
such claim or action, each indemnifying party, jointly and severally, agrees,
subject to the exceptions and limitations set forth above, to indemnify and hold
harmless each indemnified party from and against any and all losses, claims,
damages or liabilities (and legal and other expenses as set forth above)
incurred by reason of such settlement or judgment. No indemnifying party shall,
without the prior written consent of the indemnified party (which consent shall
not be unreasonably withheld), effect any settlement or compromise of any
pending or threatened proceeding in respect of which the indemnified party is or
could have been a party, or indemnity could have been sought hereunder by the
indemnified party, unless such settlement (A) includes an unconditional written
release of the indemnified party, in form and substance satisfactory to the
indemnified party, from all liability on claims that are the subject matter of
such proceeding and (B) does not include any statement as to an admission of
fault, culpability or failure to act by or on behalf of the indemnified party.
(e) In circumstances in which the indemnity agreement provided for in the
preceding paragraphs of this Section 9 is unavailable to, or insufficient to
hold harmless, an indemnified party in respect of any losses, claims, damages or
liabilities (or actions in respect thereof), each indemnifying party, in order
to provide for just and equitable contributions, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, claims,
damages or liabilities (or actions in respect thereof) in such proportion as is
appropriate to reflect (i) the relative benefits received by the indemnifying
party or parties, on the one hand, and the indemnified party, on the other, from
the Offering or (ii) if the allocation provided by the foregoing clause (i) is
not permitted by applicable law, not only such relative benefits but also the
relative fault of the indemnifying party or parties, on the one hand, and the
indemnified party, on the other, in connection with the statements or omissions
or alleged statements or omissions that resulted in such losses, claims, damages
or liabilities (or actions in respect thereof). The relative benefits received
by the Company or the Guarantors, on the one hand, and such Initial Purchaser,
on the other, shall be deemed to be in the same proportion as the net proceeds
from the Offering (before deducting expenses) received by the Company bear to
the total discounts, commissions and fees received by such Initial Purchaser.
The relative fault of the parties shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or the Guarantors, on the one hand, or such
Initial Purchaser, on the other, the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission
or alleged statement or omissions, and any other equitable considerations
appropriate in the circumstances.
(f) The Company, the Guarantors and the Initial Purchaser agree that it
would not be equitable if the amount of such contribution determined pursuant to
the immediately preceding paragraph (e) were determined by pro rata or per
capita allocation or by any other method of allocation that does not take into
account the equitable considerations referred to in the first sentence of the
immediately preceding paragraph (e). Notwithstanding any other provision of this
Section 9, the Initial Purchaser shall not be obligated to make contributions
29
hereunder that in the aggregate exceed the total discounts, commissions, fees
and other compensation received by such Initial Purchaser under this Agreement
less the aggregate amount of any damages that such Initial Purchaser has
otherwise been required to pay by reason of the untrue or alleged untrue
statements or the omissions or alleged omissions to state a material fact. No
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of the immediately
preceding paragraph (e), each person, if any, who controls the Initial Purchaser
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
shall have the same rights to contribution as such Initial Purchaser, and each
director and officer of the Company or the Guarantors and each person, if any,
who controls the Company or the Guarantors within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, shall have the same rights to
contribution as the Company and the Guarantors.
10. Termination. The Initial Purchaser may terminate this Agreement at any
time on or prior to the First Closing Date and, with respect to the Optional
Additional Shares, each Option Closing Date by written notice to the Company if
any of the following has occurred:
(a) since the date hereof, any Material Adverse Effect or development
involving or reasonably expected to result in a prospective Material Adverse
Effect that could, in such Initial Purchaser's reasonable judgment, be expected
to (i) make it impracticable or inadvisable to proceed with the offering or
delivery of the Notes or the Offered Shares on the terms and in the manner
contemplated in the Time of Sale Circulars or the Final Offering Circulars, or
(ii) materially impair the investment quality of any of the Notes;
(b) the failure of the Company to satisfy the conditions contained in
Section 8 hereof on or prior to the First Closing Date and, with respect to the
Optional Additional Shares, each Option Closing Date;
(c) any outbreak or escalation of hostilities or other national or
international calamity or crisis, including acts of terrorism, or material
adverse change or disruption in economic conditions in, or in the financial
markets of, the United States (it being understood that any such change or
disruption shall be relative to such conditions and markets as in effect on the
date hereof), if the effect of such outbreak, escalation, calamity, crisis, act
or material adverse change in the economic conditions in, or in the financial
markets of, the United States could be reasonably expected to make it, in such
Initial Purchaser's sole judgment, impracticable or inadvisable to market or
proceed with the offering or delivery of the Notes or the Offered Shares on the
terms and in the manner contemplated in Time of Sale Circulars or the Final
Offering Circulars or to enforce contracts for the sale of any of the Notes or
the Offered Shares;
(d) the suspension or limitation of trading generally in securities on the
New York Stock Exchange, the American Stock Exchange or the NASDAQ National
Market or any setting of limitations on prices for securities on any such
exchange or NASDAQ National Market;
(e) any securities of the Company shall have been downgraded or placed on
any "watch list" for possible downgrading by any "nationally recognized
statistical rating organization," as such term is defined for purposes of Rule
436(g)(2) under the Act; or
(f) the declaration of a banking moratorium by any Governmental Authority;
or the taking of any action by any Governmental Authority after the date hereof
in respect of its monetary or fiscal affairs that in such Initial Purchaser's
opinion could reasonably be expected to have a material adverse effect on the
financial markets in the United States or elsewhere.
30
11. Survival of Representations and Indemnities. The respective
representations and warranties, covenants, indemnities and contribution and
expense reimbursement provisions and other agreements, of the Company and the
Guarantors set forth in or made pursuant to this Agreement shall remain
operative and in full force and effect, and will survive, regardless of (i) any
investigation, or statement as to the results thereof, made by or on behalf of
the Initial Purchaser, (ii) acceptance of the Notes or the Offered Shares, and
payment for them hereunder, and (iii) any termination of this Agreement.
12. Information Supplied by the Initial Purchaser. The name of the Initial
Purchaser set forth on the front and back cover and under the heading "Plan of
Distribution" of the Preliminary Offering Circulars and the Final Offering
Circulars and the statements set forth in: (i) the seventh and eight full
paragraphs on pages 165 and 166 of the Notes Offering Circular and the fourth,
fifth and sixth full paragraphs on page 147 of the Offered Shares Final Offering
Circular regarding stabilization by such Initial Purchaser, (ii) the first and
second sentences of the third paragraph, the first, second, third, fourth and
sixth sentences of the ninth paragraph under the heading "Plan of Distribution"
in the Notes Offering Circular and the first, second, third, fourth and sixth
sentences of the tenth paragraph under the heading "Plan of Distribution" in the
Offered Shares Final Offering Circular (to the extent such statements relate to
such Initial Purchaser) (such statements as they relate to such Initial
Purchaser is referred to herein with respect to such Initial Purchaser as the
"Initial Purchaser Information") constitute the only information furnished by
such Initial Purchaser as to itself to the Company or the Guarantors for the
purposes of Sections 5(a) and 9 hereof.
13. Miscellaneous.
(a) The Company shall use its commercially reasonable best efforts to
cause to be delivered to the Collateral Agent, no later than 30 days after the
First Closing Date and, with respect to the Optional Additional Shares, each
Option Closing Date and at the Company's sole cost and expense, a lender's title
insurance policy issued by a nationally recognized title insurance company in an
insured amount reasonably satisfactory to the Collateral Agent and insuring the
Deed of Trust as a valid and enforceable first priority deed of trust lien on
the real and personal property relating to the Obligors' facilities in the
locations to be listed on Schedule I to the Indenture, free and clear of all
defects and encumbrances except Permitted Encumbrances (as defined in the Deed
of Trust), together with such endorsements, affirmative coverage, coinsurance
and reinsurance which Collateral Agent may reasonably request.
(b) Notices given pursuant to any provision of this Agreement shall be
addressed as follows: (i) if to the Company, to: Dune Energy, Inc., 0000 Xxxx
Xxx Xxxxxxxxx, Xxxxx 000 Xxxxxxx, Xxxxx, 00000, with a copy to: Xxxxx & Xxx
Xxxxxx LLP, 0 Xxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000, Attention: Xxxxxxx X.
Xxxxx, Esq. and (ii) if to the Initial Purchaser, to: Xxxxxxxxx & Company, Inc.,
000 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxx Xxxxxxx, Esq. (or
in any case to such other address as the person to be notified may have
requested in writing).
(c) This Agreement has been and is made solely for the benefit of and
shall be binding upon the Company, the Initial Purchaser and, to the extent
provided in Section 9 hereof, the controlling persons, officers, directors,
partners, employees, representatives and agents referred to in Section 9, and
their respective heirs, executors, administrators, successors and assigns, all
as and to the extent provided in this Agreement, and no other person shall
acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include a purchaser of any of the Notes or
the Offered Shares from an Initial Purchaser merely because of such purchase.
Notwithstanding the foregoing, it is expressly understood and agreed that each
purchaser who purchases Notes or Offered Shares from an Initial Purchaser is
intended to be a beneficiary of the Company's covenants contained in the
Registration Rights Agreement to the same extent as if the Notes or the Offered
Shares were sold and those covenants were made directly to such purchaser by the
Company, and each such purchaser shall have the right to take action against the
Company to enforce, and obtain damages for any breach of, those covenants.
31
(d) THE VALIDITY AND INTERPRETATION OF THIS AGREEMENT, AND THE TERMS AND
CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK APPLICABLE TO CONTRACTS MADE AND TO BE
PERFORMED WHOLLY THEREIN, WITHOUT REGARD TO PRINCIPLES OF CONFLICTS OF LAW.
(e) EACH OF THE COMPANY AND THE GUARANTORS HEREBY EXPRESSLY AND
IRREVOCABLY (I) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF THE FEDERAL AND
STATE COURTS SITTING IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN ANY
SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY; AND (II) WAIVES (A) ITS RIGHT TO A TRIAL BY
JURY IN ANY LEGAL ACTION OR PROCEEDING RELATING TO THIS AGREEMENT, THE
TRANSACTIONS CONTEMPLATED HEREBY, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN) OR ACTIONS OF THE INITIAL PURCHASER AND
FOR ANY COUNTERCLAIM RELATED TO ANY OF THE FOREGOING AND (B) ANY OBJECTION WHICH
IT MAY HAVE OR HEREAFTER MAY HAVE TO THE LAYING OF VENUE OF ANY SUCH LITIGATION
BROUGHT IN ANY SUCH COURT REFERRED TO ABOVE AND ANY CLAIM THAT ANY SUCH
LITIGATION HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
(f) This Agreement may be signed in various counterparts which together
shall constitute one and the same instrument.
(g) The headings in this Agreement are for convenience of reference only
and shall not limit or otherwise affect the meaning hereof.
(h) If any term, provision, covenant or restriction of this Agreement is
held by a court of competent jurisdiction to be invalid, illegal, void or
unenforceable, the remainder of the terms, provisions, covenants and
restrictions set forth herein shall remain in full force and effect and shall in
no way be affected, impaired or invalidated, and the parties hereto shall use
their best efforts to find and employ an alternative means to achieve the same
or substantially the same result as that contemplated by such term, provision,
covenant or restriction. It is hereby stipulated and declared to be the
intention of the parties that they would have executed the remaining terms,
provisions, covenants and restrictions without including any of such that may be
hereafter declared invalid, illegal, void or unenforceable.
(i) This Agreement may be amended, modified or supplemented, and waivers
or consents to departures from the provisions hereof may be given, provided that
the same are in writing and signed by all of the signatories hereto. This
Agreement and the Documents constitute the entire agreement of the parties
hereto with respect to the subject matter hereof. This Agreement supersedes in
full all previous oral or written agreements between the parties or their
affiliates. As a result, there are no oral or written collateral
representations, agreements, or understandings except as provided herein.
[Remainder of page intentionally left blank.]
32
Please confirm that the foregoing correctly sets forth the agreement
between the Company, the Guarantors and the Initial Purchaser.
Very truly yours,
DUNE ENERGY, INC.
By: /s/ Xxxxx X. Xxxxx, Xx.
--------------------------------
Name: Xxxxx X. Xxxxx, Xx.
Title: Senior Vice President/CFO
GUARANTORS:
VAQUERO PARTNERS LLC
DUNE OPERATING COMPANY
By: /s/ Xxxxx Xxxxx
--------------------------------
Name: Xxxxx Xxxxx
Title: President
Accepted and Agreed to:
XXXXXXXXX & COMPANY, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxxx
---------------------------
Name: Xxxxxxx X. Xxxxxxxxxx
Title: Managing Director
33
