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EXHIBIT 1
$150,000,000
KCS ENERGY, INC.
11% SENIOR NOTES DUE 2003, SERIES A
PURCHASE AGREEMENT
January 19, 1996
XXXXX XXXXXX INC.
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
NOMURA SECURITIES INTERNATIONAL, INC.
PAINEWEBBER INCORPORATED
c/o Xxxxx Xxxxxx Inc.
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
KCS Energy Corporation, a Delaware corporation (the "Company"),
proposes, upon the terms and conditions set forth herein, to issue and sell to
the initial purchasers listed on Schedule I hereto (the "Initial Purchasers"),
$150,000,000 aggregate principal amount of its 11% Senior Notes due 2003,
Series A (the "Notes"). The Notes will be issued pursuant to the provisions
of an Indenture, to be dated as of January 15, 1996 (the "Indenture"), among
the Company, the Guarantors (as defined herein) and Fleet National Bank of
Connecticut, as Trustee (the "Trustee").
Initially, the Notes will be guaranteed (the "Guarantees" and,
together with the Notes, the "Securities") on a senior unsecured basis by
Enercorp Gas Marketing, Inc., KCS Resources, Inc., KCS Michigan Resources,
Inc., KCS Pipeline Systems, Inc., KCS Energy Marketing, Inc., KCS Power
Marketing, Inc., KCS Energy Risk Management, Inc., National Enerdrill
Corporation and Proliq, Inc. (collectively, the "Guarantors" and, together with
the Company, the "Issuers").
The Issuers wish to confirm as follows their agreement with the
Initial Purchasers in connection with the purchase and resale of the
Securities.
1. Preliminary Offering Memorandum and Offering Memorandum. The
Securities will be offered and sold to the Initial Purchasers without
registration under the Securities Act of 1933, as amended (the "Act"), in
reliance on an exemption pursuant to Section 4(2) under the Act. The Company
has prepared a preliminary offering memorandum, dated December 20, 1995 (the
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"Preliminary Offering Memorandum"), and an offering memorandum, dated January
19, 1996 (the "Offering Memorandum"), setting forth information regarding the
Issuers and the Securities. Any references herein to the Preliminary Offering
Memorandum and the Offering Memorandum shall be deemed to include all
amendments and supplements thereto. The Issuers hereby confirm that they have
authorized the use of the Preliminary Offering Memorandum and the Offering
Memorandum in connection with the offering and resale of the Securities by the
Initial Purchasers.
The Issuers understand that the Initial Purchasers propose to make
offers and sales (the "Exempt Resales") of the Securities purchased by the
Initial Purchasers hereunder only on the terms and in the manner set forth in
the Offering Memorandum and Section 2 hereof, as soon as the Initial Purchasers
deem advisable after this Agreement has been executed and delivered, (i) to
persons whom the Initial Purchaser reasonably believes to be qualified
institutional buyers ("Qualified Institutional Buyers") as defined in Rule 144A
under the Act, as such rule may be amended from time to time ("Rule 144A"), in
transactions under Rule 144A and (ii) to a limited number of other
institutional "accredited investors" (as defined in Rule 501(a)(1), (2), (3) or
(7) under Regulation D of the Act) ("Accredited Investors") in private sales
exempt from registration under the Act (such persons specified in clauses (i)
and (ii) being referred to herein as the "Eligible Purchasers").
It is understood and acknowledged that upon original issuance thereof,
and until such time as the same is no longer required under the applicable
requirements of the Act, the Notes (and each security issued in exchange
therefor or in substitution thereof) shall bear the following legend:
THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"), AND, ACCORDINGLY, MAY NOT BE
OFFERED OR SOLD EXCEPT AS SET FORTH BELOW. BY ITS ACQUISITION HEREOF,
THE HOLDER (1) REPRESENTS THAT (A) IT IS A "QUALIFIED INSTITUTIONAL
BUYER" (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) OR (B) IT IS
AN INSTITUTIONAL "ACCREDITED INVESTOR" (AS DEFINED IN RULE 501(a)(1),
(2), (3) OR (7) UNDER THE SECURITIES ACT) (AN "ACCREDITED INVESTOR")
OR (C) IT IS NOT A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN
OFFSHORE TRANSACTION, (2) AGREES THAT IT WILL NOT WITHIN THREE YEARS
AFTER THE ORIGINAL ISSUANCE OF THIS SECURITY RESELL OR OTHERWISE
TRANSFER THIS SECURITY EXCEPT (A) TO THE ISSUER OR ANY SUBSIDIARY
THEREOF, (B) INSIDE THE UNITED STATES TO A QUALIFIED INSTITUTIONAL
BUYER IN COMPLIANCE WITH RULE 144A UNDER THE SECURITIES ACT, (C)
INSIDE THE UNITED STATES TO AN INSTITUTIONAL ACCREDITED INVESTOR THAT,
PRIOR TO SUCH TRANSFER, FURNISHES TO THE TRUSTEE A SIGNED LETTER
CONTAINING CERTAIN REPRESENTATIONS AND AGREEMENTS (THE FORM OF WHICH
LETTER CAN BE OBTAINED FROM THE TRUSTEE), (D) OUTSIDE THE UNITED
STATES TO PERSONS OTHER THAN U.S. PERSONS IN OFFSHORE TRANSACTIONS
MEETING THE REQUIREMENTS OF RULE 904 UNDER REGULATION S UNDER THE
SECURITIES ACT, (E) PURSUANT TO THE EXEMPTION FROM REGISTRATION
PROVIDED BY RULE 144 UNDER THE SECURITIES ACT (IF AVAILABLE), OR (F)
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT UNDER THE SECURITIES
ACT AND (3) AGREES THAT IT WILL GIVE TO EACH PERSON TO WHOM THIS
SECURITY IS TRANSFERRED A NOTICE SUBSTANTIALLY TO THE EFFECT OF THIS
LEGEND. AS USED HEREIN, THE TERMS "OFFSHORE TRANSACTION", "UNITED
STATES" AND "U.S. PERSON" HAVE THE RESPECTIVE MEANINGS GIVEN TO THEM
BY REGULATION S UNDER THE SECURITIES ACT.
It is also understood and acknowledged that holders (including
subsequent transferees) of the Securities will have the registration rights set
forth in the registration rights agreement (the
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"Registration Rights Agreement") substantially in the form attached hereto as
Exhibit A, to be dated the date hereof by and among the Issuers and the Initial
Purchasers.
Capitalized terms used herein without definition have the respective
meanings specified therefor in the Indenture or in the Offering Memorandum.
2. Agreements to Sell, Purchase and Resell. (a) The Issuers
hereby agree, subject to the terms and conditions set forth herein, to issue
and sell to the Initial Purchasers and, upon the basis of the representations,
warranties and agreements of the Issuers herein contained and subject to the
terms and conditions set forth herein, each Initial Purchaser agrees to
purchase from the Issuers severally and not jointly, at a purchase price of
97.25% of the principal amount thereof, the principal amount of Notes (together
with the Guarantees) set forth opposite the name of such Initial Purchaser in
Schedule I hereto.
(b) The Initial Purchasers have advised the Issuers that
they propose to offer the Securities for sale upon the terms and conditions set
forth in this Agreement and in the Offering Memorandum. The Initial Purchasers
hereby represent and warrant to, and agree with, the Issuers that the Initial
Purchasers (i) are purchasing the Securities pursuant to a private sale exempt
from registration under the Act, (ii) have not solicited and will not solicit
offers for, or offer or sell, the Securities by means of any form of general
solicitation or general advertising or in any manner involving a public
offering within the meaning of Section 4(2) of the Act, and (iii) will solicit
offers for the Securities only from, and will offer, sell or deliver the
Securities as part of their initial offering, only to (A) persons whom the
Initial Purchaser reasonably believes to be Qualified Institutional Buyers, or
if any such person is buying for one or more institutional accounts for which
such person is acting as fiduciary or agent, only when such person has
represented to the Initial Purchasers that each such account is a Qualified
Institutional Buyer, to whom notice has been given that such sale or delivery
is being made in reliance on Rule 144A, in each case, in transactions under
Rule 144A and (B) to a limited number of Accredited Investors that make the
representations to and agreements with the Company specified in Annex A to the
Offering Memorandum in private sales exempt from registration under the Act.
The Initial Purchasers have advised the Issuers that they will offer the
Securities to Eligible Purchasers at a price initially equal to 100% of the
principal amount thereof, plus accrued interest, if any, from the date of
issuance of the Securities. Such price may be changed by the Initial
Purchasers at any time thereafter without notice.
The Initial Purchasers understand that the Issuers and, for purposes
of the opinions to be delivered to the Initial Purchasers pursuant to Sections
7(d)(xiv) and 7(e) hereof, counsel to the Issuers and counsel to the Initial
Purchasers, will rely upon the accuracy and truth of the foregoing
representations and agreements and the Initial Purchasers hereby consent to
such reliance.
3. Delivery of the Securities and Payment Therefor. Delivery to
the Initial Purchasers of and payment for the Securities shall be made at the
office of Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at
10:00 a.m., New York City time, on January 25, 1996 (the "Closing Date"). The
place of closing for the Securities and the Closing Date may be varied by
agreement between the Initial Purchasers and the Issuers.
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The Securities will be delivered to the Initial Purchasers against
payment of the purchase price therefor by certified or official bank check
payable in New York Clearinghouse (next day) funds (or, if the Initial
Purchasers and the Issuers agree, by means of a wire transfer of same day funds
in accordance with written instructions from the Company pursuant to which the
Issuers will reimburse the Initial Purchasers for their costs of obtaining such
same day funds). The Securities will be evidenced by a single global security
in definitive form (the "Global Security") and/or by additional certificated
securities, and will be registered, in the case of a Global Security, in the
name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), and in
the other cases, in such names and in such denominations as the Initial
Purchasers shall request prior to 9:30 a.m., New York City time, on the second
business day preceding the Closing Date. The Securities to be delivered to the
Initial Purchasers shall be made available to the Initial Purchasers in New
York City for inspection and packaging not later than 9:30 a.m., New York City
time, on the business day next preceding the Closing Date.
4. Agreements of the Issuers. The Issuers agree with the Initial
Purchasers as follows:
(a) Until the completion of the distribution of the
Securities by the Initial Purchasers to Eligible Purchasers, the
Issuers will advise each of the Initial Purchasers promptly and, if
requested by any of them, will confirm such advice in writing, within
the period of time referred to in paragraph (e) below, of any change
in the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company and the
Subsidiaries (as defined herein), taken as a whole, or of the
happening of any event or the existence of any condition which
requires any amendment or supplement to the Offering Memorandum so
that the Offering Memorandum (x) will not contain any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading
or (y) will comply with applicable law.
(b) The Issuers will furnish to the Initial Purchasers,
without charge, as of the date of the Offering Memorandum, such number
of copies of the Offering Memorandum as it may then be amended or
supplemented as they may reasonably request.
(c) The Issuers will not make any amendment or supplement
to the Preliminary Offering Memorandum or to the Offering Memorandum
of which each of the Initial Purchasers shall not previously have been
advised or to which any of them shall reasonably object after being so
advised.
(d) Prior to the execution and delivery of this
Agreement, the Issuers have delivered or will deliver to the Initial
Purchasers, without charge, in such quantities as the Initial
Purchasers shall have requested or may hereafter reasonably request,
copies of the Preliminary Offering Memorandum. The Issuers consent to
the use, in accordance with the securities or Blue Sky laws of the
jurisdictions in which the Securities are offered by the Initial
Purchasers and by dealers, prior to the date of the Offering
Memorandum, of each Preliminary Offering Memorandum so furnished by
the Issuers. The Issuers consent to the use of the Offering
Memorandum in accordance with the securities or Blue Sky laws of the
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jurisdictions in which the Securities are offered by the Initial
Purchasers and by all dealers to whom Securities may be sold, in
connection with the offering and sale of the Securities.
(e) If, at any time prior to completion of the
distribution of the Securities by the Initial Purchasers to Eligible
Purchasers, any event shall occur or another shall exist that in the
judgment of the Issuers or in the reasonable opinion of the Initial
Purchasers should be set forth in the Offering Memorandum so that the
Offering Memorandum (x) will not contain any untrue statement of a
material fact required to be stated thereunder necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or (y) will comply with applicable law, the
Issuers will forthwith prepare an appropriate supplement or amendment
thereto, and will expeditiously furnish to the Initial Purchasers and
dealers that number of copies thereof as they shall reasonably
request.
(f) The Issuers will cooperate with the Initial
Purchasers and with the Initial Purchasers' counsel in connection with
the qualification of the Securities for offering and sale by the
Initial Purchasers and by dealers under the securities or Blue Sky
laws of such jurisdictions as the Initial Purchasers may designate and
will file such consents to service of process or other documents
necessary or appropriate in order to effect such qualification;
provided that in no event shall any of the Issuers be obligated to
qualify to do business in any jurisdiction where it is not now so
qualified or to take any action which would subject it to service of
process in suits, other than those arising out of the offering or sale
of the Securities, in any jurisdiction where they are not now so
subject.
(g) So long as any of the Securities are outstanding, the
Issuers will furnish to the Initial Purchasers (i) as soon as
available, a copy of each report of the Issuers mailed to stockholders
or filed with the Securities and Exchange Commission (the
"Commission") and (ii) from time to time such other information
concerning the Issuers as the Initial Purchasers may reasonably
request.
(h) The Issuers will apply the net proceeds from the sale
of the Securities substantially in accordance with the description set
forth under "Use of Proceeds" in the Offering Memorandum.
(i) Without the prior consent of the Initial Purchasers,
prior to the expiration of 180 days after the date of the Offering
Memorandum the Company will not offer, sell, contract to sell or
otherwise dispose of any fixed income obligation having a maturity of
more than one year.
(j) Except as stated in this Agreement and in the
Offering Memorandum, the Issuers have not taken, nor will they take,
directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or
manipulation of the price of the Securities to facilitate the sale or
resale of the Securities. Except as permitted by the Act, the Issuers
will not distribute any offering material in connection with the
Exempt Resales. The Issuers will not solicit any offers to buy and
will not offer to sell the Securities
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by means of any form of general solicitation or general advertising
(within the meaning of Regulation D).
(k) The Issuers will use their commercially reasonable
best efforts to cause the Securities to be eligible for trading on The
PORTAL Market.
(l) From and after the Closing Date, so long as any of
the Securities are outstanding and are "Restricted Securities" within
the meaning of the Rule 144(a)(3) under the Act or, if earlier, until
three years after the Closing Date, and during any period in which the
Company is not subject to Section 13 or 15(d) of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), the Company
will furnish to holders of the Securities and prospective purchasers
of Securities designated by such holders, upon request of such holders
or such prospective purchasers, the information required to be
delivered pursuant to Rule 144A(d)(4) under the Act to permit
compliance with Rule 144A in connection with resales of the
Securities.
(m) The Issuers have complied and will comply with all
provisions of Florida Statutes Section 517.075 relating to issuers
doing business with Cuba.
(n) The Issuers agree not to 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 Securities in a manner that would require the registration
under the Act of the sale by the Issuers to the Initial Purchasers or
by the Initial Purchasers to the Eligible Purchasers of the
Securities.
(o) The Issuers agree to comply with all of the terms and
conditions of the Registration Rights Agreement, and all agreements
set forth in the representation letters of the Issuers to DTC relating
to the approval of the Securities by DTC for "book entry" transfer.
(p) The Issuers agree that prior to the effective date of
any registration of the Securities pursuant to the Registration Rights
Agreement, or at such earlier time as may be so required, the
Indenture shall be qualified under the Trust Indenture Act of 1939
(the "1939 Act") and will cause to be entered into any necessary
supplemental indentures in connection therewith.
5. Representations and Warranties of the Issuers. The Issuers,
jointly and severally, represent and warrant to the Initial Purchasers that:
(a) The Preliminary Offering Memorandum and Offering
Memorandum with respect to the Securities have been prepared by the
Issuers for use by the Initial Purchasers in connection with the
Exempt Resales. No order or decree preventing the use of the
Preliminary Offering Memorandum or the Offering Memorandum, or any
order asserting that the transactions contemplated by this Agreement
are subject to the registration requirements
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of the Act, has been issued and no proceeding for that purpose has
commenced or is pending or, to the knowledge of the Issuers, is
contemplated.
(b) The Preliminary Offering Memorandum and the Offering
Memorandum as of their respective dates and the Offering Memorandum as
of the Closing Date, did not or will not contain an untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading, except that this representation and warranty does not
apply to statements in or omissions from the Preliminary Offering
Memorandum and Offering Memorandum made in reliance upon and in
conformity with information relating to any Initial Purchaser
furnished to the Issuers in writing by or on behalf of an Initial
Purchaser expressly for use therein.
(c) The Indenture has been duly and validly authorized by
each of the Issuers and, upon its execution, delivery and performance
by the each of the Issuers and assuming due authorization, execution,
delivery and performance by the Trustee, will be a valid and binding
agreement of each of the Issuers, enforceable in accordance with its
terms, except as enforcement thereof may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting creditors'
rights generally and subject to the applicability of general
principles of equity; the Indenture conforms in all material respects
to the description thereof in the Offering Memorandum; no
qualification of the Indenture under the 1939 Act is required in
connection with the offer and sale of the Securities contemplated
hereby or in connection with the Exempt Resales.
(d) The Notes and Guarantees have been duly authorized by
the Company and each of the Guarantors, respectively, and, when
executed by the Company and each of the Guarantors, respectively, and,
in the case of the Notes, authenticated by the Trustee in accordance
with the Indenture and delivered to the Initial Purchasers against
payment therefor in accordance with the terms hereof, will have been
validly issued and delivered, and will constitute valid and binding
obligations of the Company and each of the Guarantors, respectively,
entitled to the benefits of the Indenture and enforceable in
accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization or other similar
laws affecting the enforcement of creditors' rights generally and
subject to the applicability of general principles of equity; and the
Securities conform in all material respects to the description thereof
in the Offering Memorandum.
(e) All the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully
paid and nonassessable and were not issued in violation of any
preemptive or similar rights.
(f) The Company is a corporation duly organized, validly
existing and in good standing under the laws of the State of Delaware
with full corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the Offering
Memorandum, and is duly qualified to conduct its business and is in
good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such qualification,
except where the failure so to qualify does not have a material
adverse
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effect on the condition (financial or other), business, prospects,
properties, net worth or results of operations of the Company and the
Subsidiaries (as hereinafter defined) taken as a whole (a "Material
Adverse Effect").
(g) All the Company's subsidiaries (as defined in the
Act) are referred to herein individually as a "Subsidiary" and
collectively as the "Subsidiaries." Each Subsidiary is a corporation
duly organized, validly existing and in good standing in the
jurisdiction of its incorporation, with full corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum, and is duly
qualified to conduct its business and is in good standing in each
jurisdiction or place where the nature of its properties or the
conduct of its business requires such qualification, except where the
failure so to qualify or be in good standing does not have a Material
Adverse Effect. All of the outstanding shares of capital stock of
each of the Subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable, and are wholly owned by the Company
directly or indirectly through one of the other Subsidiaries, free and
clear of any lien, adverse claim, security interest, equity or other
encumbrance, except as described in the Offering Memorandum and except
for restrictions on transferability imposed by the Act or applicable
state securities or Blue Sky laws.
(h) There are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened, against the
Company or any of the Subsidiaries or to which the Company or any of
the Subsidiaries or to which any of their respective properties, is
subject, that are not disclosed in the Offering Memorandum and which,
if adversely decided, are reasonably likely to cause a Material
Adverse Effect or to materially affect the issuance of the Securities
or the consummation of the transactions contemplated by this
Agreement. There are no agreements, contracts, indentures, leases or
other instruments of the Company or any of the Subsidiaries that are
material to the Company and the Subsidiaries, taken as a whole, that
are not described in the Offering Memorandum. Neither the Company nor
any Subsidiary is involved in any strike, job action or labor dispute
with any group of employees except any action or dispute that would
not have a Material Adverse Effect, and, to the knowledge of the
Issuers, no such action or dispute is threatened.
(i) Neither the Company nor any of the Subsidiaries is
(1) in violation of its certificate or articles of incorporation or
by-laws or other organizational documents, or of any law, ordinance,
administrative or governmental rule or regulation applicable to the
Company or any of the Subsidiaries or of any decree of any court or
governmental agency or body having jurisdiction over the Company or
any of the Subsidiaries except where any such violation or violations
in the aggregate would not have a Material Adverse Effect or (2) in
default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of
indebtedness or in any agreement, indenture, lease or other instrument
to which the Company or any of the Subsidiaries is a party or by which
any of them or any of their respective properties may be bound, except
as may be disclosed in the Offering Memorandum or except where such
default would not have a Material Adverse Effect.
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(j) Neither the issuance, offer, sale or delivery of the
Securities, the execution, delivery or performance of this Agreement
or the Indenture by the Issuers or the consummation by the Issuers of
the transactions contemplated hereby or thereby (i) requires any
consent, approval, authorization or other order of, or registration or
filing with, any court, regulatory body, administrative agency or
other governmental body, agency or official (except such as may have
been obtained or may be required in connection with the Registration
under the Act of the Securities in accordance with the Registration
Rights Agreement, the qualification of the Indenture under the 1939
Act and except for compliance with the securities or Blue Sky laws of
various jurisdictions), or conflicts or will conflict with or
constitutes or will constitute a breach of, or a default under, the
certificate or articles of incorporation or bylaws, or other
organizational documents, of the Company or any of the Subsidiaries or
(ii) conflicts or will conflict with or constitutes or will constitute
a breach of, or a default under, any material agreement, indenture,
lease or other instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or any of their
respective properties may be bound, or (iii) violates or will violate
in any material respect any statute, law, regulation or filing or
judgment, injunction, order or decree applicable to the Company or any
of the Subsidiaries or any of their respective properties, or (iv)
will result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of any agreement or instrument to
which any of them is a party or by which any of them may be bound or
to which any of the property or assets of any of them is subject.
(k) The accountants, Xxxxxx Xxxxxxxx LLP and KPMG Peat
Marwick LLP, who have certified or shall certify the consolidated
financial statements included as part of the Offering Memorandum (or
any amendment or supplement thereto), each are independent public
accountants under Rule 101 of the AICPA's Code of Professional
Conduct, and its interpretation and rulings.
(l) The consolidated financial statements, together with
related schedules and notes forming part of the Offering Memorandum,
present fairly the consolidated financial position, results of
operations and changes in stockholders' equity and cash flows of the
Company and the Subsidiaries on the basis stated in the Offering
Memorandum at the respective dates or for the respective periods to
which they apply and have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved. The pro forma financial statements and other pro
forma financial information (including the notes thereto) included in
the Offering Memorandum (A) present fairly in all material respects
the information shown therein, (B) have been prepared in accordance
with the applicable requirements of Rule 11-02 of Regulations S-X
promulgated under the Act, (C) have been properly computed on the
basis described therein, and (D) the assumptions used in preparing the
pro forma financial statements and other pro forma financial data
included in the Offering Memorandum are reasonable; and the other
financial and statistical information and data set forth in the
Offering Memorandum is accurately presented and, to the extent such
information and data is derived from the financial books and records
of the Company, is prepared on a basis consistent with such financial
statements and the books and records of the Company.
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(m) The statements of revenues and direct operating
expenses for the Oil & Gas Properties of Natural Gas Processing Co.
(the "NGP Properties") sold to the Company, and the notes thereto,
forming part of the Offering Memorandum present fairly the revenues
and direct operating expenses of the NGP Properties on the basis
stated in the Offering Memorandum at the respective dates or for the
respective periods to which they apply and have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods involved.
(n) Each of the Issuers has all requisite corporate power
and authority to execute, deliver and perform its obligations under
this Agreement and the Registration Rights Agreement; the execution
and delivery of, and the performance by each of the Company and the
Guarantors of its obligations under this Agreement and the
Registration Rights Agreement have been duly and validly authorized by
each of the Company and the Guarantors, and each of this Agreement and
the Registration Rights Agreement has been duly executed and delivered
by the Company and the Guarantors, and constitutes the valid and
legally binding agreement of the Company and the Guarantors,
enforceable against each of the Company and the Guarantors in
accordance with its terms, except as the enforcement hereof and
thereof may be limited by bankruptcy, insolvency, reorganization or
other similar laws affecting the enforcement of creditors' rights
generally and subject to the applicability of general principles of
equity, and except as rights to indemnity and contribution hereunder
and thereunder may be limited by Federal or state securities laws or
principles of public policy.
(o) Except as disclosed in the Offering Memorandum,
subsequent to the date as of which such information is given in the
Offering Memorandum, neither the Company nor any of the Subsidiaries
has incurred any liability or obligation, direct or contingent, or
entered into any transaction, not in the ordinary course of business,
that is material to the Company and the Subsidiaries taken as a whole,
and there has not been any material change in the capital stock, or
material increase in the short-term or long-term debt, of the Company
or any of the Subsidiaries or any material adverse change, or any
development involving or which could reasonably be expected to involve
a prospective material adverse change, in the condition (financial or
other), business, properties, net worth or results of operations of
the Company and the Subsidiaries taken as a whole.
(p) Each of the Company and the Subsidiaries has good and
indefeasible title to all real property (and good and marketable title
to all personal property) described in the Offering Memorandum as
being owned by it, free and clear of all liens, claims, security
interests or other encumbrances except such as are described in the
Offering Memorandum, and all the property described in the Offering
Memorandum as being held under lease by each of the Company and the
Subsidiaries is held by it under valid, subsisting and enforceable
leases, with only such exceptions in the matters described herein that
in the aggregate are not materially burdensome and do not interfere in
any material respect with the conduct of the business of the Company
and the Subsidiaries taken as a whole.
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(q) Except as permitted by the Act, the Issuers have not
distributed and, prior to the later to occur of the Closing Date and
completion of the distribution of the Securities, will not distribute
any offering material in connection with the offering and sale of the
Securities other than the Preliminary Offering Memorandum and the
Offering Memorandum.
(r) Each of the Company and the Subsidiaries have such
permits, licenses, franchises, certificates of need and other
approvals or authorizations of governmental or regulatory authorities
("Permits") as are necessary under applicable law to own their
respective properties and to conduct their respective businesses in
the manner described in the Offering Memorandum, except to the extent
that the failure to have such Permits would not have a Material
Adverse Effect; the Company and each of the Subsidiaries have
fulfilled and performed, all their respective obligations with respect
to the Permits, except where the failure to fulfill or perform such
obligations would not have a Material Adverse Effect, 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, subject in
each case to such qualification as may be set forth in the Offering
Memorandum and except to the extent that any such revocation or
termination would not have a Material Adverse Effect; and, except as
described in the Offering Memorandum, none of the Permits contains any
restriction that is materially burdensome to the conduct of the
business of the Company and the Subsidiaries taken as a whole.
(s) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions of the Company and the Subsidiaries are executed in
accordance with management's general or specific authorization; (ii)
transactions of the Company and the Subsidiaries are recorded as
necessary to permit preparation of financial statements in conformity
with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets of the Company and
the Subsidiaries is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded
accountability for assets of the Company and the Subsidiaries is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(t) Neither the Company nor any of the Subsidiaries, nor
to the knowledge of the Issuers, any employee or agent of the Company
or any Subsidiary has made any payment of funds of the Company or any
Subsidiary or received or retained any funds in violation of any law,
rule or regulation, which violation would have a Material Adverse
Effect.
(u) Except as disclosed in the Offering Memorandum, the
Company and each of the Subsidiaries have filed all tax returns
required to be filed, which returns are true and correct in all
material respects, and neither the Company nor any Subsidiary is in
default in the payment of any taxes which were payable pursuant to
said returns or any assessments with respect thereto, except where the
failure to file such returns and make such payments would not have a
Material Adverse Effect.
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(v) Except for holders of the Securities, no holder of any
security of the Company has any right to request or demand
registration of shares of Common Stock or any other security of the
Company because of the consummation of the transactions contemplated
by this Agreement. Except as described in the Offering Memorandum and
except for options granted after September 30, 1995 pursuant to plans
or arrangements described in the Offering Memorandum, there are no
outstanding options, warrants or other rights calling for the issuance
of, and there are no commitments, plans or arrangements to issue, any
shares of capital stock of the Company or any of the Subsidiaries or
any security convertible into or exchangeable or exercisable for
capital stock of the Company or any of the Subsidiaries.
(w) The Issuers are not and, upon sale of the Securities
to be issued and sold thereby in accordance herewith and the
application of the net proceeds to the Issuers of such sale as
described in the Offering Memorandum under the caption "Use of
Proceeds," will not be an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "1940 Act").
(x) When the Securities are issued and delivered pursuant
to this Agreement, such Securities will not be of the same class
(within the meaning of Rule 144A(d)(3) under the Act) as any security
of the Issuers that is listed on a national securities exchange
registered under Section 6 of the Exchange Act or that is quoted in a
United States automated interdealer quotation system.
(y) Neither the Issuers nor any of their respective
affiliates (as defined in Rule 501(b) of Regulation D ("Regulation D")
under the Act) has directly, or through any agent (provided that no
representation is made as to the Initial Purchasers or any person
acting on any of their behalf), (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as
defined in the Act) which is or will be integrated with the offering
and sale of the Securities in a manner that would require the
registration of the Securities under the Act or (ii) engaged in any
form of general solicitation or general advertising (within the
meaning of Regulation D under the Act) in connection with the offering
of the Securities.
(z) The Issuers are not required to deliver the
information specified in Rule 144A(d)(4) in connection with the
offering and resale of the Securities by the Initial Purchasers.
(aa) Assuming (i) that the representations and warranties
of the Initial Purchasers in Section 2 hereof are true and correct,
(ii) the Initial Purchasers comply with the covenants set forth in
Section 2 hereof, (iii) compliance by the Initial Purchasers with the
offering and transfer procedures and restrictions described in the
Offering Memorandum, (iv) the accuracy of the representations and
warranties made in accordance with this Agreement and the Offering
Memorandum by Eligible Purchasers to whom the Initial Purchasers
initially resells Securities and (v) Eligible Purchasers to whom the
Initial Purchasers initially resell Securities receive a copy of the
Offering Memorandum prior to such sale, the purchase and sale of the
Securities pursuant hereto (including the Initial Purchasers' proposed
offering of
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the Securities on the terms and in the manner set forth in the
Offering Memorandum and Section 2 hereof) do not require registration
under the Act.
(bb) The Company and the Subsidiaries are in compliance
with, and not subject to any liability under, the common law and all
applicable federal, state, local and foreign laws, regulations, rules,
codes, ordinances, directives, and orders relating to pollution or to
protection of public or employee health or safety or to the
environment, including, without limitation, those that relate to any
Hazardous Material (as defined herein) ("Environmental Laws"), except,
in each case, where noncompliance or liability, individually or in the
aggregate, would not have a Material Adverse Effect. The term
"Hazardous Material" means any pollutant, contaminant or waste, or any
hazardous, dangerous, or toxic chemical, material, waste, substance or
constituent subject to regulation under any Environmental Law.
(cc) Neither the Company nor any of its Subsidiaries is a
"holding company" or a "subsidiary company" of a "holding company" or
an "affiliate" of a "holding company," within the meaning of the
Public Utility Holding Company Act of 1935, as amended ("PUHCA").
6. Indemnification and Contribution. (a) Each of the Issuers,
jointly and severally, agrees to indemnify and hold harmless the Initial
Purchasers and each person, if any, who controls any of the Initial Purchasers
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
from and against any and all losses, claims, damages, liabilities and expenses
(including reasonable costs of investigation) arising out of or based upon any
untrue statement or alleged untrue statement of a material fact contained in
the Preliminary Offering Memorandum or the Offering Memorandum, or arising out
of or based upon any omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the statements therein
not misleading, except insofar as such losses, claims, damages, liabilities or
expenses arise out of or are based upon any untrue statement or omission or
alleged untrue statement or omission which has been made therein or omitted
therefrom in reliance upon and in conformity with the information relating to
such Initial Purchaser furnished in writing to the Company by or on behalf of
such Initial Purchaser expressly for use in connection therewith; provided,
however, that the indemnification contained in this paragraph (a) with respect
to the Preliminary Offering Memorandum shall not inure to the benefit of an
Initial Purchaser (or to the benefit of any person controlling such Initial
Purchaser) on account of any such loss, claim, damage, liability or expense
arising from the sale of the Securities by such Initial Purchaser to any person
if the untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in the Preliminary Offering Memorandum
was corrected in the Offering Memorandum and such Initial Purchaser sold
Securities to that person without sending or giving at or prior to the written
confirmation of such sale, a copy of the Offering Memorandum if the Company has
previously furnished sufficient copies thereof to the Initial Purchaser on a
timely basis to permit such sending or giving. The foregoing indemnity
agreement shall be in addition to any liability which the Issuers may otherwise
have.
(b) If any action, suit or proceeding shall be brought
against any of the Initial Purchasers or any person controlling any of the
Initial Purchasers in respect of which indemnity may be sought against the
Issuers, any such Initial Purchaser or any such person who controls an Initial
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Purchaser shall promptly notify the parties against whom indemnification is
being sought (the "indemnifying parties"), and such indemnifying parties shall
assume the defense thereof, including the employment of counsel and payment of
all fees and expenses. Any of the Initial Purchasers or any such person who
controls an Initial Purchaser shall have the right to employ separate counsel
in any such action, suit or proceeding and to participate in the defense
thereof, but the fees and expenses of such counsel shall be at the expense of
such Initial Purchaser or any such person who controls an Initial Purchaser
unless (i) the indemnifying parties have agreed in writing to pay such fees and
expenses, (ii) the indemnifying parties have failed to assume the defense and
employ counsel, or (iii) the named parties to any such action, suit or
proceeding (including any impleaded parties) include both such Initial
Purchaser or any such person who controls an Initial Purchaser and any of the
indemnifying parties and such Initial Purchaser or any such person who controls
an Initial Purchaser shall have been advised by its counsel that representation
of such indemnified party and any indemnifying party by the same counsel would
be inappropriate under applicable standards of professional conduct (whether or
not such representation by the same counsel has been proposed) due to actual or
potential differing interests between them (in which case the indemnifying
party shall not have the right to assume the defense of such action, suit or
proceeding on behalf of such Initial Purchaser or any such person who controls
an Initial Purchaser). It is understood, however, that the indemnifying
parties shall, in connection with any one such action, suit or proceeding or
separate but substantially similar or related actions, suits or proceedings in
the same jurisdiction arising out of the same general allegations or
circumstances, be liable for the reasonable fees and expenses of only one
separate firm of attorneys (in addition to any local counsel) at any time for
any Initial Purchaser and any such person who controls an Initial Purchaser not
having actual or potential differing interests with such indemnifying parties
or another Initial Purchaser, which firm shall be designated in writing by
Xxxxx Xxxxxx Inc., and that all such fees and expenses shall be reimbursed on a
monthly basis as provided in paragraph (a) hereof. The indemnifying parties
shall not be liable for any settlement of any such action, suit or proceeding
effected without their written consent, but if settled with such written
consent, or if there be a final judgment for the plaintiff in any such action,
suit or proceeding, the indemnifying parties agree to indemnify and hold
harmless the Initial Purchasers, to the extent provided in paragraph (a), and
any person who controls an Initial Purchaser from and against any loss, claim,
damage, liability or expense by reason of such settlement or judgment.
(c) Each of the Initial Purchasers, severally and not
jointly, agree to indemnify and hold harmless the Issuers, and their respective
directors and officers, and any person who controls an Issuer within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act to the same
extent as the indemnity from an Issuer to the Initial Purchasers set forth in
paragraph (a) hereof, but only with respect to information relating to such
Initial Purchaser furnished in writing by or on behalf of such Initial
Purchaser expressly for use in the Preliminary Offering Memorandum or the
Offering Memorandum. If any action, suit or proceeding shall be brought
against any of the Issuers, any of their respective directors or officers, or
any such controlling person based on the Preliminary Offering Memorandum or
Offering Memorandum, and in respect of which indemnity may be sought against an
Initial Purchaser pursuant to this paragraph (c), such Initial Purchaser shall
have the rights and duties given to the Issuers by paragraph (b) above (except
that if the Issuers shall have assumed the defense thereof such Initial
Purchaser shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof, but the fees and expenses of
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such counsel shall be at the Initial Purchaser's expense), and the Issuers,
their respective directors and officers, and any such controlling person shall
have the rights and duties given to the Initial Purchasers by paragraph (b)
above. The foregoing indemnity agreement shall be in addition to any liability
which the Initial Purchasers may otherwise have.
(d) If the indemnification provided for in this Section 6
is unavailable to an indemnified party under paragraphs (a) or (c) hereof in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then an indemnifying party, in lieu of indemnifying such indemnified
party, shall contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages, liabilities or expenses (i) in
such proportion as is appropriate to reflect the relative benefits received by
the Issuers on the one hand and an Initial Purchaser on the other hand from the
offering of the Securities, or (ii) if the allocation provided by clause (i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i) above but
also the relative fault of the Issuers on the one hand and such Initial
Purchaser on the other in connection with the statements or omissions that
resulted in such losses, claims, damages, liabilities or expenses, as well as
any other relevant equitable considerations. The relative benefits received by
the Issuers on the one hand and an Initial Purchaser on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Issuers bear to the total
underwriting discounts and commissions received by such Initial Purchaser, in
each case as set forth in the table on the cover page of the Offering
Memorandum. The relative fault of the Issuers on the one hand and an Initial
Purchaser on the other hand 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 Issuers on the one hand or by such Initial
Purchaser on the other hand and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission.
(e) The Issuers and the Initial Purchasers agree that it
would not be just and equitable if contribution pursuant to this Section 6 were
determined by a pro rata allocation or by any other method of allocation that
does not take account of the equitable considerations referred to in paragraph
(d) above. The amount paid or payable by an indemnified party as a result of
the losses, claims, damages, liabilities and expenses referred to in paragraph
(d) above shall be deemed to include, subject to the limitations set forth
above, any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating any claim or defending any such action,
suit or proceeding. Notwithstanding the provisions of this Section 6, no
Initial Purchaser shall be required to contribute any amount in excess of the
amount by which the total price of the Securities underwritten by it and
distributed to the public exceeds the amount of any damages which such Initial
Purchaser has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. 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.
(f) Any losses, claims, damages, liabilities or expenses
for which an indemnified party is entitled to indemnification or contribution
under this Section 6 shall be paid by the indemnifying party to the indemnified
party as such losses, claims, damages, liabilities or expenses
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are incurred. The indemnity and contribution agreements contained in this
Section 6 and the representations and warranties of the Issuers set forth in
this Agreement shall remain operative and in full force and effect, regardless
of (i) any investigation made by or on behalf of an Initial Purchaser or any
person who controls an Initial Purchaser, the Issuers, their respective
directors or officers or any person controlling the Issuers, (ii) acceptance of
any Securities and payment therefor hereunder, and (iii) any termination of
this Agreement. A successor to an Initial Purchaser or any person who controls
an Initial Purchaser, or to an Issuer, their respective directors or officers
or any person controlling an Issuer, shall be entitled to the benefits of the
indemnity, contribution and reimbursement agreements contained in this Section
6.
(g) No indemnifying party shall, without the prior
written consent of the indemnified party, effect any settlement of any pending
or threatened action, suit or proceeding in respect of which any indemnified
party is or could have been a party and indemnity could have been sought
hereunder by such indemnified party, unless such settlement includes an
unconditional release of such indemnified party from all liability on claims
that are the subject matter of such action, suit or proceeding.
7. Conditions of the Initial Purchasers' Obligations. The
obligations of the Initial Purchasers to purchase the Securities on the Closing
Date hereunder is subject to the fulfillment, in the Initial Purchasers' sole
discretion, of the following conditions:
(a) At the time of execution of this Agreement and on the
Closing Date, no order or decree preventing the use of the Offering
Memorandum or any amendment or supplement thereto, or any order
asserting that the transactions contemplated by this Agreement are
subject to the registration requirements of the Act shall have been
issued and no proceedings for that purpose shall have been commenced
or shall be pending or, to the knowledge of the Issuers, be
contemplated. No order suspending the sale of the Securities in any
jurisdiction designated by the Initial Purchasers shall have been
issued and no proceedings for that purpose shall have been commenced
or shall be pending or, to the knowledge of the Issuers, shall be
contemplated.
(b) Subsequent to the date hereof, there shall not have
occurred any change, or any development involving a prospective
change, in or affecting the condition (financial or other), business,
prospects, properties, net worth, or results of operations of the
Company or the Subsidiaries, which in the opinion of the Initial
Purchasers, would materially adversely affect the market for the
Securities.
(c) The Initial Purchasers shall not have been advised by
the Issuers or shall not have concluded and disclosed to the Company
that the Offering Memorandum contains an untrue statement of a fact
which in the opinion of the Initial Purchasers or their counsel is
material or omits to state a fact which in the opinion of the Initial
Purchasers or their counsel, is material and is required to be stated
therein or necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
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(d) The Initial Purchasers shall have received on the
Closing Date an opinion of Mayor, Day, Xxxxxxxx & Xxxxxx, L.L.P.,
counsel for the Company, dated the Closing Date and addressed to the
Initial Purchasers, to the effect that:
(i) the Company is a corporation duly
incorporated and validly existing in good standing under the
laws of Delaware with full corporate power and authority to
own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum;
(ii) each Guarantor is a corporation duly
incorporated and validly existing and in good standing under
the laws of the jurisdiction of its organization, with full
corporate power and authority to own, lease, and operate its
properties and to conduct its business as described in the
Offering Memorandum; and all the outstanding shares of capital
stock of each of the Guarantors has been duly authorized and
validly issued, are fully paid and nonassessable, and to the
knowledge of such counsel, are wholly owned by the Company
directly, or indirectly through one of the other Subsidiaries,
free and clear of any security interest, lien, adverse claim,
equity or other encumbrance other than restrictions on
transferability imposed by the Act or applicable state
securities or Blue Sky laws;
(iii) the authorized capital stock of the Company
is as set forth under the caption "Capitalization" in the
Offering Memorandum;
(iv) the Company and the Guarantors each has the
corporate power and authority to enter into this Agreement and
to issue, sell and deliver the Notes and the Guaranties, as
the case may be, and each of this Agreement and the
Registration Rights Agreement has been duly authorized,
executed and delivered by the Company and each of the
Guarantors and is the valid, legal and binding agreement of
the Company and the Guarantors, enforceable against the
Company and the Guarantors in accordance with its terms,
except (A) as enforcement of rights to indemnity and
contribution hereunder and thereunder may be limited by
Federal or state securities laws or principles of public
policy and (B) subject to the qualification that the
enforceability of the Company's and the Guarantors'
obligations hereunder and thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors'
rights generally and by general equitable principles and the
discretion of any court before which any proceedings therefor
may be brought;
(v) the Indenture has been duly and validly
authorized, executed and delivered by the Issuers and,
assuming due authorization, execution and delivery by the
Trustee, is a valid and binding agreement of the Issuers,
enforceable in accordance with its terms, subject to the
qualification that the enforceability of the Issuers'
obligations thereunder may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium,
and other laws relating to or
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affecting creditors' rights generally and by general equitable
principles and the discretion of any court before which any
proceedings therefor may be brought;
(vi) the Notes have been duly and validly
authorized by the Company and when executed by the Company in
accordance with the Indenture and, assuming due authentication
of the Notes by the Trustee, upon delivery to the Initial
Purchasers against payment therefor in accordance with the
terms hereof, will have been validly issued and delivered, and
will constitute valid and binding obligations of the Company
entitled to the benefits of the Indenture, subject to the
qualification that the enforceability of the Company's
obligations thereunder may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium,
and other laws relating to or affecting creditors' rights
generally and by general equitable principles and the
discretion of any court before which any proceedings therefor
may be brought;
(vii) the Guaranties have been duly and validly
authorized by each of the Guarantors and when executed by the
Guarantors in accordance with the Indenture and upon delivery
to the Initial Purchasers against payment therefor in
accordance of the terms hereof, will have been validly issued
and delivered, and will constitute valid and binding
obligations of each of the Guarantors entitled to the benefits
of the Indenture, subject to the qualification that the
enforceability of each of the Guarantors' obligations
thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other
laws relating to or affecting creditor's rights generally and
by general equitable principles and the discretion of any
court before which any proceedings therefor may be brought;
(viii) neither the offer, sale or delivery of the
Securities, the execution, delivery or performance by the
Issuers of this Agreement, the Registration Rights Agreement
and the Indenture, compliance by the Issuers with the
provisions hereof or thereof nor consummation by the Issuers
of the transactions contemplated hereby or thereby conflicts
or will conflict with or constitutes or will constitute a
breach of, or a default under, the certificate or articles of
incorporation or bylaws or other organizational documents of
the Issuers or, to such counsel's knowledge, any material
agreement, indenture, lease or other instrument to which any
of the Issuers is a party or by which any of them or any of
their respective properties is bound, or will result in the
creation or imposition of any lien, charge or encumbrance upon
any property or assets of any of the Issuers pursuant to the
terms of any material agreement or instrument known to such
counsel to which any of them is a party or by which any of
them may be bound or to which any of the property or assets of
any of them is subject, nor (assuming compliance with all
applicable securities laws, rules and regulations) will any
such action result in any violation in any material respect of
any existing law, or any regulation, ruling judgment,
injunction, order or decree known to such counsel to be
applicable to the Issuers or any of their respective
properties;
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(ix) no consent, approval, authorization or other
order of, or registration or filing with, any court,
regulatory body, administrative agency or other governmental
body, agency, or official is required on the part of the
Issuers for the valid issuance and sale of the Securities to
the Initial Purchasers as contemplated by this Agreement
(except with respect to state securities or Blue Sky laws as
to which such counsel need not opine and except those that
have been previously obtained);
(x) to the knowledge of such counsel, other than
as described or contemplated in the Offering Memorandum (or
any supplement thereto), there are no legal or governmental
proceedings pending or threatened against the Issuers or to
which the Issuers or any of their properties, are subject,
which are not disclosed in the Offering Memorandum and which,
if adversely decided, are reasonably likely to cause a
Material Adverse Effect or materially affect the issuance of
the Securities or the transactions contemplated hereby;
(xi) the statements under "Business and Properties
-- Regulation," "Description of Existing Indebtedness,"
"Description of the Notes," "Certain Federal Income Tax
Considerations" and "Exchange Offer; Registration Rights
Agreement" in the Offering Memorandum, insofar as they are
descriptions of contracts, agreements or other legal
documents, or refer to statements of law or legal conclusions,
are accurate in all material respects;
(xii) except as described in the Offering
Memorandum, such counsel does not know of any person who has
the right, contractual or otherwise, to cause the Company to
sell or otherwise issue to them, or to permit them to
underwrite the sale of, any of the Securities or the right, as
a result of the consummation of the transactions contemplated
by this Agreement, to require registration under the Act of
any shares of Common Stock or other securities of the Company;
(xiii) when the Securities are issued and delivered
pursuant to this Agreement, such Securities will not be of the
same class (within the meaning of Rule 144A(d)(3) under the
Act) as any security of the Issuers that is listed on a
national securities exchange registered under Section 6 of the
Exchange Act or that is quoted in a United States automated
interdealer quotation system;
(xiv) no registration of the Securities under the
Act or qualification of the Indenture under the 1939 Act is
required for the sale of the Securities to the Initial
Purchasers as contemplated in this Agreement or for the Exempt
Resales (assuming (A) that any Eligible Purchaser who buys the
Notes in the Exempt Resales is a Qualified Institutional Buyer
or an Accredited Investor, (B) the accuracy of the Initial
Purchasers' representations contained in Section 2 of this
Agreement and those of the Issuers in this Agreement regarding
the absence of general solicitation in connection with the
sales to the Initial Purchasers and the Exempt Resales and (C)
the accuracy of the representations made by each Accredited
Investor who purchases Notes
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pursuant to an Exempt Resale as set forth in the letter of
representation executed by such Accredited Investor in the form of
Annex A to the Offering Memorandum);
(xv) the Issuers are not required to deliver the
information specified in Rule 144A(d)(4) in connection with
the offering and resale of the Securities by the Initial
Purchasers;
(xvi) neither the Company nor any of its
Subsidiaries is an "investment company," or a company
"controlled" by an "investment company," within the meaning of
the 1940 Act;
(xvii) neither the Company nor any of its
Subsidiaries is a "holding company" or a "subsidiary company"
of a "holding company" or an "affiliate" of a "holding
company," within the meaning of PUHCA; and
(xviii) although such counsel have not undertaken,
except as otherwise indicated in their opinion, to determine
independently, and do not assume any responsibility for, the
accuracy, completeness or fairness of the statements in the
Offering Memorandum, such counsel have participated in
conferences with officers and other representatives of the
Company, representatives of the Initial Purchasers,
representatives of the independent public accountants and
reservoir engineers of the Company and other outside counsel
to the Company, at which conferences the contents of the
Offering Memorandum and related matters were discussed and
relying as to materiality to a large extent upon the analyses,
judgments and opinion of officers and other representatives of
the Company, nothing has come to the attention of such counsel
that has caused them to believe that the Offering Memorandum,
as of its date and as of the Closing Date, contained an untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading or that any amendment or
supplement to the Offering Memorandum, as of its respective
date, and as of the Closing Date, contained any untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary in order to
make the statements therein, in light of the circumstances
under which they were made, not misleading (it being
understood that such counsel need express no opinion with
respect to the financial statements and the notes thereto and
the schedules and other financial and statistical data or
reserve information included or incorporated by reference in
the Offering Memorandum and information furnished by or on
behalf of the Initial Purchasers).
In rendering the foregoing opinion, Mayor, Day, Xxxxxxxx &
Xxxxxx, L.L.P. may state that such opinion is limited to the Federal
laws of the United States, the laws of the State of New York (but only
with respect to paragraphs (iv) through (vii) above), the laws of the
State of Texas and the General Corporation Law of the State of
Delaware, and that they are expressing no opinion as to the effect of
the laws of any other jurisdiction. In addition, such counsel may
state that they have relied (i) as to certain matters on information
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obtained from public officials, officers of the Issuers and other
sources believed by them to be responsible and (ii) as to matters of
New Jersey law and as to New York law in relation to clause (iv) above
on the opinion of Orloff, Lowenbach, Xxxxxxxxx & Xxxxxx.
(e) The Initial Purchasers shall have received on the
Closing Date an opinion of Xxxxxx & Xxxxxx L.L.P., counsel for the
Initial Purchasers, dated the Closing Date, and addressed to the
Initial Purchasers, with respect to such matters as the Initial
Purchasers may request.
(f) The Initial Purchaser shall have received letters
addressed to the Initial Purchasers, and dated the date hereof and the
Closing Date from Xxxxxx Xxxxxxxx LLP and KPMG Peat Marwick LLP, each
independent public accountants, substantially in the forms heretofore
approved by the Initial Purchasers.
(g) (i) There shall not have been any change in the
capital stock of the Company (other than options exercised pursuant to
plans or arrangements described in the Offering Memorandum) nor any
material increase in the short-term or long-term debt of the Company
(other than in the ordinary course of business) from that set forth or
contemplated in the Offering Memorandum (or any amendment or
supplement thereto); (ii) there shall not have been, since the
respective dates as of which information is given in the Offering
Memorandum, except as may otherwise be stated in the Offering
Memorandum, any material adverse change in the condition (financial or
other), business, prospects, properties, net worth or results of
operations of the Company and the Subsidiaries taken as a whole; (iii)
the Company and the Subsidiaries shall not have any liabilities or
obligations, direct or contingent (whether or not in the ordinary
course of business), that are material to the Company and the
Subsidiaries, taken as a whole, other than those reflected in the
Offering Memorandum (or any amendment or supplement thereto); and (iv)
all the representations and warranties of the Issuers contained in
this Agreement shall be true and correct in all material respects on
and as of the date hereof and on and as of the Closing Date as if made
on and as of the Closing Date, and the Initial Purchasers shall have
received a certificate, dated the Closing Date and signed by the chief
executive officer and the chief accounting officer of each of the
Issuers (or such other officers as are acceptable to the Initial
Purchasers), to the effect set forth in this Section 7(g) and in
Section 7(h) hereof.
(h) The Issuers shall not have failed at or prior to the
Closing Date to have performed or complied with any of their
respective agreements herein contained and required to be performed or
complied with by them hereunder at or prior to the Closing Date.
(i) The Securities shall have been approved for trading
on PORTAL.
(j) The Issuers shall have furnished or caused to be
furnished to the Initial Purchasers such further certificates and
documents as the Initial Purchasers shall have reasonably requested.
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All such opinions, certificates, letters and other documents will be
in compliance with the provisions hereof only if they are reasonably
satisfactory in form and substance to the Initial Purchasers and counsel for
the Initial Purchasers.
Any certificate or document signed by any officer of an Issuer and
delivered to the Initial Purchasers, or to counsel for the Initial Purchasers,
shall be deemed a representation and warranty by the Issuers to the Initial
Purchasers as to the statements made therein.
8. Expenses. (a) Whether or not the purchase and sale of the
Securities hereunder is consummated or this Agreement is terminated pursuant to
Section 9 hereof, the Issuers agree, jointly and severally, to pay the
following costs and expenses and all other costs and expenses incident to the
performance by it of its obligations hereunder: (i) the preparation, printing
or reproduction of the Preliminary Offering Memorandum and the Offering
Memorandum (including financial statements thereto), this Agreement, the
Registration Rights Agreement and the Indenture; (ii) the printing (or
reproduction) and delivery (including postage, air freight charges and charges
for counting and packaging) of such copies of the Offering Memorandum and the
Preliminary Offering Memorandum as may be reasonably requested for use in
connection with the offering and sale of the Securities; (iii) the preparation,
printing (or reproduction), authentication, issuance and delivery of
certificates for the Securities, including any stamp taxes in connection with
the original issuance and sale of the Securities; (iv) the printing (or
reproduction) and delivery of this Agreement, the preliminary and supplemental
Blue Sky Memoranda and all other agreements or documents printed (or
reproduced) and delivered in connection with the offering of the Securities;
(v) the application for quotation of the Securities on PORTAL; (vi) the
qualification of the Securities for offer and sale under the securities or Blue
Sky laws of the several states as provided in Section 4(f) hereof (including
the reasonable fees, expenses and disbursements of counsel for the Initial
Purchasers relating to the preparation, printing or reproduction, and delivery
of the preliminary and supplemental Blue Sky Memoranda and such qualification);
(vii) the performance by the Issuers of their obligations under the
Registration Rights Agreement, and (viii) the fees and expenses of the Issuers'
accountants and the fees and expenses of counsel (including local and special
counsel) for the Issuers. The Issuers hereby agree that they will pay in full
on the Closing Date the fees and expenses referred to in clause (vi) of this
Section 8 by delivering to counsel for the Initial Purchasers on such date a
check payable to such counsel in the requisite amount.
(b) If the purchase and sale of the Securities hereunder
is not consummated because any condition to the obligations of the Initial
Purchasers set forth in Section 7 hereof is not satisfied, because this
Agreement is terminated pursuant to Section 9 hereof or because of any failure,
refusal or inability on the part of the Issuers to perform all obligations and
satisfy all conditions on their part to be performed or satisfied hereunder
other than by reason of a default by the Initial Purchasers in payment for the
Securities on the Closing Date or a breach by the Initial Purchasers of any of
the representations in Section 2 hereof, the Issuers shall reimburse the
Initial Purchasers promptly upon demand for all out-of-pocket expenses
(including fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the Securities and
the other transactions contemplated hereby.
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9. Termination of Agreement. This Agreement shall be subject to
termination in the absolute discretion of the Initial Purchasers, without
liability on the part of the Initial Purchasers to the Issuers, by notice to
the Issuers, if prior to the Closing Date (i) trading in securities generally
on the New York Stock Exchange, American Stock Exchange or the Nasdaq National
Market shall have been suspended or materially limited, (ii) a general
moratorium on commercial banking activities in New York shall have been
declared by either Federal or state authorities, or (iii) there shall have
occurred any outbreak or escalation of hostilities or other U.S. or
international calamity, crisis or change in political, financial or economic
conditions, the effect of which on the financial markets of the United States
is such as to make it, in the judgment of the Initial Purchasers, impracticable
or inadvisable to commence or continue the offering of the Securities on the
terms set forth on the cover page of the Offering Memorandum or to enforce
contracts for the resale of the Securities by the Initial Purchasers. Notice
of such termination may be given to the Issuers by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.
10. Information Furnished by the Initial Purchasers. The
statements set forth in the stabilization legend on page 3 in the last
paragraph on the cover page and the last two sentences of the third paragraph
under the caption "Private Placement" in the Preliminary Offering Memorandum
and Offering Memorandum, constitute the only information furnished by or on
behalf of the Initial Purchasers as such information is referred to in Sections
5(b) and 6 hereof.
11. Miscellaneous. Except as otherwise provided in Sections 4 and
9 hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Issuers, at the office of the
Company at 000 Xxxxxxxx Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000, Attention: Xxxxx X.
Xxxxxx, Vice President, Treasurer and Secretary, or (ii) if to the Initial
Purchasers, to Xxxxx Xxxxxx Inc., 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, Attention: Manager, Investment Banking Division.
This Agreement has been and is made solely for the benefit of the
Initial Purchasers, and the Issuers and their respective directors, officers
and controlling persons referred to in Section 6 hereof and their respective
successors and assigns, to the extent provided herein, and no other person
shall acquire or have any right under or by virtue of this Agreement. Neither
the term "successor" nor the term "successors and assigns" as used in this
Agreement shall include a purchaser from the Initial Purchasers of any of the
Securities in his status as such purchaser.
12. Applicable Law; Counterparts . This Agreement 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 within the State of New York
and without regard to the conflicts of law principles thereof.
This Agreement may be signed in various counterparts which together
constitute one and the same instrument. If signed in counterparts, this
Agreement shall not become effective unless at least one counterpart hereof
shall have been executed and delivered on behalf of each party hereto.
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Please confirm that the foregoing correctly sets forth the agreement
among the Issuers and the Initial Purchasers.
Very truly yours,
KCS ENERGY, INC.
ENERCORP GAS MARKETING, INC.
KCS RESOURCES, INC.
KCS MICHIGAN RESOURCES, INC.
KCS PIPELINE SYSTEMS, INC.
KCS ENERGY MARKETING, INC.
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KCS POWER MARKETING, INC.
KCS ENERGY RISK MANAGEMENT, INC.
NATIONAL ENERDRILL CORPORATION
PROLIQ, INC.
By /s/ XXXXX X. XXXXXX
----------------------------
Xxxxx X. Xxxxxx
Vice President
Confirmed as of the date first
above mentioned.
XXXXX XXXXXX INC.
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
NOMURA SECURITIES INTERNATIONAL, INC.
PAINEWEBBER INCORPORATED
By: XXXXX XXXXXX INC.
By /s/ XXXXXX X. XxXXXXX, XX.
----------------------------------
Xxxxxx X. XxXxxxx, Xx.
Vice President
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SCHEDULE I
KCS ENERGY, INC.
PRINCIPAL
AMOUNT
INITIAL PURCHASER OF NOTES
----------------- --------------
Xxxxx Xxxxxx Inc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 67,500,000
Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation . . . . . . . . . . . . . . . . . . 37,500,000
Nomura Securities International, Inc. . . . . . . . . . . . . . . . . . . . . . . . . . 30,000,000
PaineWebber Incorporated . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15,000,000
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . $ 150,000,000
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