$150,000,000
XXXXXXXX RESOURCES, INC.
11 1/4% SENIOR NOTES DUE 2007
PLACEMENT AGREEMENT
April 26, 1999
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April 26, 1999
Xxxxxx Xxxxxxx & Co. Incorporated
Banc One Capital Markets, Inc.
TD Securities (USA) Inc.
Paribas Corporation
c/o Morgan Xxxxxxx & Co. Incorporated
0000 Xxxxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs and Mesdames:
Xxxxxxxx Resources, Inc., a Nevada corporation (the "Company"), proposes to
issue and sell to the several purchasers named in Schedule I hereto (the
"Placement Agents") $150,000,000 principal amount of its 11 1/4% Senior Notes
due 2007 (the "Securities") to be issued pursuant to the provisions of an
Indenture to be dated as of April 29, 1999 (the "Indenture") among the Company,
the Guarantors (as defined below) and U.S. Trust Company of Texas, N.A., as
Trustee (the "Trustee"). The Securities will be guaranteed (the "Subsidiary
Guarantees") by each of the entities listed on Schedule II hereto (each, a
"Guarantor" and collectively the "Guarantors").
The Securities will be offered without being registered under the
Securities Act of 1933, as amended (the "Securities Act"), to qualified
institutional buyers in compliance with the exemption from registration provided
by Rule 144A under the Securities Act and in offshore transactions in reliance
on Regulation S under the Securities Act ("Regulation S").
The Placement Agents and their direct and indirect transferees will be
entitled to the benefits of a Registration Rights Agreement to be dated as of
April 29, 1999 between the Company, the Guarantors and the Placement Agents (the
"Registration Rights Agreement").
In connection with the sale of the Securities, the Company has prepared a
preliminary offering memorandum (the "Preliminary Memorandum") and will prepare
a final offering memorandum (the "Final Memorandum" and, with the Preliminary
Memorandum, each a "Memorandum") including or incorporating by reference a
description of the terms of the Securities, the terms of the offering and a
description of the Company. As used herein, the term "Memorandum" shall include
in each case the documents incorporated by reference therein. The terms
"supplement", "amendment" and "amend" as used herein with respect to a
Memorandum shall include all documents deemed to be incorporated by reference in
the Preliminary Memorandum or Final Memorandum that are filed subsequent to the
date of such Memorandum with the Securities and Exchange Commission (the
"Commission") pursuant to the Securities Exchange Act of 1934, as amended (the
"Exchange Act").
Concurrently with the issue and sale of the Securities to the Placement
Agents, the Company is selling to certain purchasers 1,948,001 shares of its
Series A 1999 Convertible Preferred Stock , par value $10.00 per share (the
"Series A Preferred Stock"), and 1,051,999 shares of its Series B 1999
NonConvertible Preferred Stock, par value $10.00 per share (the "Series B
Preferred Stock").
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1. Representations and Warranties. The Company and the Guarantors jointly
and severally represent and warrant to, and agree with, you that:
(a) (i) Each document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in either Memorandum complied or
will comply when so filed in all material respects with the Exchange Act
and the applicable rules and regulations of the Commission thereunder and
(ii) the Preliminary Memorandum does not contain and the Final Memorandum,
in the form used by the Placement Agents to confirm sales and on the
Closing Date (as defined in Section 4), will not contain any untrue
statement of a material fact or omit to state a material fact necessary to
make the statements therein, in the light of the circumstances under which
they were made, not misleading, except that the representations and
warranties set forth in this paragraph do not apply to statements or
omissions in either Memorandum based upon information relating to any
Placement Agent furnished to the Company in writing by such Placement Agent
through you expressly for use therein.
(b) The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property
and to conduct its business as described in each Memorandum and is duly
qualified to transact business and is in good standing in each jurisdiction
in which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the failure
to be so qualified or be in good standing would not have a material adverse
effect on the Company and its subsidiaries, taken as a whole.
(c) Each subsidiary of the Company has been duly organized, is validly
existing as a corporation or limited liability company in good standing
under the laws of the jurisdiction of its organization, has the corporate
power and authority to own its property and to conduct its business as
described in each Memorandum and is duly qualified to transact business and
is in good standing in each jurisdiction in which the conduct of its
business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or
be in good standing would not have a material adverse effect on the Company
and its subsidiaries, taken as a whole; all of the issued shares of capital
stock or other ownership interest of each subsidiary of the Company have
been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly, or indirectly through one of the
other subsidiaries, by the Company, free and clear of all liens,
encumbrances, equities or claims, except for pledges of such shares or
ownership interest pursuant to the Company's bank credit facility described
in the Memorandum.
(d) This Agreement has been duly authorized, executed and delivered by
the Company and each of the Guarantors.
(e) All of the shares of common stock, par value $.50 per share
("Common Stock"), of the Company that are outstanding have been duly
authorized and are validly issued, fully paid and non-assessable.
(f) The Securities have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Placement Agents in accordance with the
terms of this Agreement, will be valid and binding obligations of the
Company, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency or similar laws affecting creditors' rights
generally and general principles of equity, and will be entitled to the
benefits of the Indenture and the Registration Rights Agreement pursuant to
which such Securities are to be issued.
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(g) Each Subsidiary Guarantee to be endorsed on the Securities by each
Guarantor has been duly authorized by such Guarantor and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Placement Agents in accordance with the
terms of this Agreement, will be valid and binding obligations of the
Guarantors, enforceable in accordance with their terms, subject to
applicable bankruptcy, insolvency or similar laws affecting creditors'
rights generally and general principles of equity, and will be entitled to
the benefits of the Indenture and the Registration Rights Agreement
pursuant to which such Subsidiary Guarantees are to be issued.
(h) Each of the Indenture and the Registration Rights Agreement has
been duly authorized, executed and delivered by, and is a valid and binding
agreement of, the Company and each of the Guarantors, enforceable in
accordance with its terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles
of equity and except as rights to indemnification and contribution under
the Registration Rights Agreement may be limited under applicable law.
(i) The Securities, the Subsidiary Guarantees, the Indenture and the
Registration Rights Agreement will conform in all material respects to the
respective statements relating thereto contained in the Final Memorandum
and will be in substantially the respective forms previously delivered to
the Placement Agents.
(j) The execution and delivery by the Company and the Guarantors, as
the case may be, of, and the performance by the Company and the Guarantors,
as the case may be, of their obligations under, this Agreement, the
Indenture, the Registration Rights Agreement, the Securities and the
Subsidiary Guarantees will not contravene any provision of applicable law
or the certificate or articles of incorporation or by-laws or other
organizational documents of the Company or any of the Guarantors or any
agreement or other instrument binding upon the Company or any of its
subsidiaries that is material to the Company and its subsidiaries, taken as
a whole, or any judgment, order or decree of any governmental body, agency
or court having jurisdiction over the Company or any subsidiary, and no
consent, approval, authorization or order of, or qualification with, any
governmental body or agency is required for the performance by the Company
or any of the Guarantors of its obligations under this Agreement, the
Indenture, the Registration Rights Agreement, the Securities or the
Subsidiary Guarantors, except such as may be required by the securities or
Blue Sky laws of the various states in connection with the offer and sale
of the Securities and by Federal and state securities laws with respect to
the Company's obligations under the Registration Rights Agreement.
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from that
set forth in the Final Memorandum.
(l) Subsequent to the respective dates as of which information is
given in the Final Memorandum, (1) the Company and its subsidiaries have
not incurred any material liability or obligation, direct or contingent,
nor entered into any material transaction not in the ordinary course of
business; (2) the Company has not purchased any of its outstanding capital
stock, nor declared, paid or otherwise made any dividend or distribution of
any kind on its capital stock other than ordinary and customary dividends;
and (3) there has not been any material change in the capital stock,
short-term debt or long-term debt of the Company and its subsidiaries,
except in each case as described in the Final Memorandum.
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(m) There are no legal or governmental proceedings pending or, to the
Company's knowledge, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the Company or
any of its subsidiaries is subject other than proceedings accurately
described in all material respects in each Memorandum and proceedings that
would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole, or on the power or ability of the Company
and the Guarantors to perform their obligations under this Agreement, the
Indenture, the Registration Rights Agreement, the Securities or the
Subsidiary Guarantees or to consummate the transactions contemplated by the
Final Memorandum.
(n) Neither the Company nor any of its subsidiaries is 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 its
subsidiaries or of any judgement, order or decree of any governmental body,
agency or court having jurisdiction over the Company or any of its
subsidiaries, or in default in any material respect in the performance of
any obligation, agreement or condition contained in any bond, debenture,
note or any other evidence of indebtedness or in any material agreement,
indenture, lease or other instrument to which the Company or any of its
subsidiaries is a party or by which any of them or any of their respective
properties may be bound.
(o) The accountants, Xxxxxx Xxxxxxxx LLP, who have certified or shall
certify the financial statements included in each Memorandum, are
independent public accountants as required by the Securities Act.
(p) Xxx Xxxxxxx and Associates, Inc. are independent petroleum
consultants with respect to the Company and its subsidiaries.
(q) The consolidated historical financial statements, together with
related schedules and notes, included in each Memorandum comply as to form
in all material respects with the requirements applicable to registration
statements on Form S-1 under the Securities Act. Such historical financial
statements present fairly the consolidated financial position, results of
operations and changes in financial position of the Company and its
subsidiaries on the basis stated in each Memorandum at the respective dates
or for the respective periods to which they apply; such statements and
related schedules and notes have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the periods
involved, except as disclosed therein. The other financial and statistical
information and data included in each Memorandum are accurately presented
and prepared on a basis consistent with such financial statements and the
books and records of the Company and its subsidiaries.
(r) The Company and each of its subsidiaries has (1) generally
satisfactory title to all its interests in its oil and gas properties,
title investigations having been carried out by the Company and each of its
subsidiaries in accordance with the general practice in the oil and gas
industry, (2) good and marketable title in fee simple to all other real
property owned by it and (3) good and marketable title to all personal
property owned by it, in each case free and clear of all liens,
encumbrances, claims, security interests, subleases and defects except such
as are described in the Final Memorandum or such as do not materially
affect the value of such property and do not interfere with the use made
and proposed to be made of such property by the Company and its
subsidiaries; and any real property and buildings held under lease by the
Company and its subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not
interfere with the use made and proposed to be made of such property and
buildings of the Company and its subsidiaries.
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(s) None of the Company or its subsidiaries has violated any
environmental safety or similar law or regulation applicable to its
business relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), lacks any permits, licenses or other
approvals required of them under applicable Environmental Laws to own,
lease and operate their respective properties and to conduct their business
in the manner described in the Final Memorandum, is violating any terms and
conditions of any such permit, license or approval or has permitted to
occur any event that allows, or after notice or lapse of time would allow,
revocation or termination of any such permit, license or approval or result
in any other impairment of their rights thereunder, which in each case
would have a material adverse effect on the Company and its subsidiaries,
taken as a whole.
(t) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (1) transactions are executed in accordance with management's general
or specific authorizations; (2) transactions are recorded as necessary to
permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (3)
access to assets is permitted only in accordance with management's general
or specific authorization; and (4) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any differences.
(u) The Company and each of its subsidiaries have filed all material
tax returns required to be filed, which returns are complete and correct in
all material respects, and neither the Company nor any of its subsidiaries
is in default in the payment of any taxes which were payable pursuant to
said returns or any assessments with respect thereto.
(v) The Company and its subsidiaries own or possess all patents,
trademarks, trademark registration, service marks, service xxxx
registrations, trade names, copyrights, licenses, inventions, trade secrets
and rights described in the Final Memorandum as being owned by them or any
of them or necessary for the conduct of their respective businesses, and
the Company is not aware of any claim to the contrary or any challenge by
any other person to the rights of the Company and its subsidiaries with
respect to the foregoing.
(w) The Company and its subsidiaries are insured by the 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; neither the Company nor any of its subsidiaries has been
refused any insurance coverage sought or applied for; and neither the
Company nor any of its subsidiaries has 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 have a
material adverse effect on the Company and its subsidiaries, taken as a
whole, except as described in the Final Memorandum.
(x) The Company has reviewed its operations and that of its
subsidiaries to evaluate the extent to which the business or operations of
the Company or any of its subsidiaries will be affected by the Year 2000
Problem (that is, any significant risk that computer hardware or software
applications used by the Company and its subsidiaries will not, in the case
of dates or time periods occurring after December 31, 1999, function at
least as effectively as in the case of dates or time periods occurring
prior to January 1, 2000); as a result of such review, (1) the Company has
no reason to believe, and does not believe, that (A) there are any issues
related to the Company's preparedness to address the Year 2000 Problem that
are of a character required to be described or referred to in the Final
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Memorandum which have not been accurately described in the Final Memorandum
and (B) the Year 2000 Problem will have a material adverse effect on the
condition, financial or otherwise, or on the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, or result
in any material loss or interference with the business or operations of the
Company and its subsidiaries, taken as a whole; and (2) the Company
reasonably believes, after due inquiry, that the suppliers, vendors,
customers or other material third parties used or served by the Company and
such subsidiaries are addressing or will address the Year 2000 Problem in a
timely manner, except to the extent that a failure to address the Year 2000
Problem by any supplier, vendor, customer or material third party would not
have a material adverse effect on the condition, financial or otherwise, or
on the earnings, business or operations of the Company and its
subsidiaries, taken as a whole.
(y) All indebtedness of the Company and the Guarantors that will be
repaid with the proceeds of the issuance and sale of the Securities was
incurred, and the indebtedness represented by the Securities is being
incurred, for proper purposes and in good faith and each of the Company and
the Guarantors was, at the time of the incurrence of such indebtedness that
will be repaid with the proceeds of the issuance and sale of the
Securities, and will be on the Closing Date (after giving effect to the
application of the proceeds from the issuance of the Securities) solvent,
and had at the time of the incurrence of such indebtedness that will be
repaid with the proceeds of the issuance and sale of the Securities and
will have on the Closing Date (after giving effect to the application of
the proceeds from the issuance of the Securities) sufficient capital for
carrying on their respective business and were, at the time of the
incurrence of such indebtedness that will be repaid with the proceeds of
the issuance and sale of the Securities and will be on the Closing Date
(after giving effect to the application of the proceeds from the issuance
of the Securities), able to pay their respective debts as they mature.
(z) The Company is not, and after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof as
described in the Final Memorandum, will not be an "investment company" as
such term is defined in the Investment Company Act of 1940, as amended.
(aa) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D under the Securities Act, an "Affiliate") of the Company
has directly, or through any agent, (i) sold, offered for sale, solicited
offers to buy or otherwise negotiated in respect of, any security (as
defined in the Securities Act) which is or will be integrated with the sale
of the Securities in a manner that would require the registration under the
Securities Act of the Securities or (ii) engaged in any form of general
solicitation or general advertising in connection with the offering of the
Securities, (as those terms are used in Regulation D under the Securities
Act) or in any manner involving a public offering within the meaning of
Section 4(2) of the Securities Act.
(bb) None of the Company, its Affiliates or any person 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 Securities and the
Company and its Affiliates and any person acting on its or their behalf
have complied and will comply with the offering restrictions requirement of
Regulation S, except no representation, warranty or agreement is made by
the Company in this paragraph with respect to the Placement Agents.
(cc) It is not necessary in connection with the offer, sale and
delivery of the Securities to the Placement Agents in the manner
contemplated by this Agreement to register the Securities and the
Subsidiary Guarantees under the Securities Act or to qualify the Indenture
under the Trust Indenture Act of 1939, as amended.
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(dd) The Securities satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act.
(ee) The Series A Preferred Stock and the Series B Preferred Stock
will conform in all material respects to the respective statements relating
thereto contained in the Final Memorandum and will be in substantially the
respective forms previously delivered to the Placement Agents. The issuance
and sale of the Series A Preferred Stock and the Series B Preferred Stock
by the Company does not require registration under the Securities Act nor
does it require any consent, approval, authorization or order of, or
qualification with, any governmental body or agency. The issuance and sale
of the Series A Preferred Stock and the Series B Preferred Stock by the
Company does not require the consent, or approval or authorization of the
New York Stock Exchange or the shareholders of the Company.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell to
the several Placement Agents, and each Placement Agent, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective principal amount of Securities set forth in Schedule I
hereto opposite its name at a purchase price of 96.7453% of the principal amount
thereof (the "Purchase Price") plus accrued interest, if any, to the Closing
Date.
The Company hereby agrees that, without the prior written consent of Xxxxxx
Xxxxxxx & Co. Incorporated on behalf of the Placement Agents, it will not,
during the period beginning on the date hereof and continuing to and including
the Closing Date, offer, sell, contract to sell or otherwise dispose of any debt
of the Company or warrants to purchase debt of the Company substantially similar
to the Securities (other than the sale of the Securities under this Agreement).
3. Terms of Offering. You have advised the Company that the Placement
Agents will make an offering of the Securities purchased by the Placement Agents
hereunder on the terms to be set forth in the Final Memorandum, as soon as
practicable after this Agreement is entered into as in your judgment is
advisable.
4. Payment and Delivery. Payment for the Securities shall be made to the
Company in Federal or other funds immediately available in New York City against
delivery of such Securities for the respective accounts of the several Placement
Agents at 10:00 a.m., New York City time, on April 29, 1999, or at such other
time on the same or such other date, not later than May 6, 1999, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "Closing Date."
Certificates for the Securities shall be in definitive form or global form,
as specified by you, and registered in such names and in such denominations as
you shall request in writing not later than one full business day prior to the
Closing Date. The certificates evidencing the Securities shall be delivered to
you on the Closing Date for the respective accounts of the several Placement
Agents, with any transfer taxes payable in connection with the transfer of the
Securities to the Placement Agents duly paid, against payment of the Purchase
Price therefor plus accrued interest, if any, to the date of payment and
delivery.
5. Conditions to the Placement Agents' Obligations. The several obligations
of the Placement Agents to purchase and pay for the Securities on the Closing
Date are subject to the following conditions:
(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
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(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities or in the rating outlook for the Company by any "nationally
recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, from that set forth in the
Final Memorandum (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in your judgment, is
material and adverse and that makes it, in your judgment,
impracticable to market the Securities on the terms and in the manner
contemplated in the Final Memorandum.
(b) The Placement Agents shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company and each of the Guarantors, to the effect set forth in Section
5(a)(i) and to the effect that the representations and warranties of the
Company and the Guarantors contained in this Agreement are true and correct
as of the Closing Date and that the Company and the Guarantors have
complied with all of the agreements and satisfied all of the conditions on
their part to be performed or satisfied hereunder on or before the Closing
Date.
The officers signing and delivering such certificates may rely upon the
best of his or her knowledge as to proceedings threatened.
(c) The Placement Agents shall have received on the Closing Date an
opinion of Xxxxx Liddell & Xxxx LLP, outside counsel for the Company and
the Guarantors, dated the Closing Date, to the effect set forth in Exhibit
A. Such opinion shall be rendered to the Placement Agents at the request of
the Company and the Guarantors and shall so state therein.
(d) The Placement Agents shall have received on the Closing Date an
opinion of Xxxxx & Xxxxx, L.L.P., counsel for the Placement Agents, dated
the Closing Date, to the effect set forth in Exhibit B.
(e) The Placement Agents shall have received on each of the date
hereof and the Closing Date a letter, dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to the
Placement Agents, from Xxxxxx Xxxxxxxx LLP, independent public accountants,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into the Final Memorandum; provided that the
letter delivered on the Closing Date shall use a "cut-off date" not earlier
than the date hereof.
(f) The Placement Agents shall have received a counterpart, conformed
as executed, of the Indenture which shall have been entered into by the
Company, the Guarantors and the Trustee.
(g) The Company and the Guarantors shall have executed the
Registration Rights Agreement and the Placement Agents shall have received
an original copy thereof, duly executed by the Company and the Guarantors.
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(h) The sale by the Company of 1,948,001 shares of its Series A
preferred Stock and 1,051,999 shares of its Series B preferred Stock for an
aggregate purchase price of $30,000,000 shall have been consummated prior
to or concurrently with the sale by the Company of the Securities pursuant
to this Agreement.
6. Covenants of the Company. In further consideration of the agreements of
the Placement Agents contained in this Agreement, the Company and the Guarantors
covenant with each Placement Agent as follows:
(a) To furnish to you in New York City, without charge, prior to 10:00
a.m. New York City time on the business day next succeeding the date of
this Agreement and during the period mentioned in Section 6(c), as many
copies of the Final Memorandum, any documents incorporated by reference
therein and any supplements and amendments thereto as you may reasonably
request.
(b) Before amending or supplementing either Memorandum, to furnish to
you a copy of each such proposed amendment or supplement and not to use any
such proposed amendment or supplement to which you reasonably object.
(c) If, during such period after the date hereof and prior to the date
on which all of the Securities shall have been sold by the Placement
Agents, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Final Memorandum in order to make the
statements therein, in the light of the circumstances when the Final
Memorandum is delivered to a purchaser, not misleading, or if, in the
opinion of the Placement Agents, it is necessary to amend or supplement the
Final Memorandum to comply with applicable law, forthwith to prepare and
furnish, at its own expense, to the Placement Agents, either amendments or
supplements to the Final Memorandum so that the statements in the Final
Memorandum as so amended or supplemented will not, in the light of the
circumstances when the Final Memorandum is delivered to a purchaser, be
misleading or so that the Final Memorandum, as amended or supplemented,
will comply with applicable law.
(d) To endeavor to qualify the Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
request, provided that in no event shall the Company 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 it is not now so subject.
(e) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of their obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the
Company's and the Guarantors' counsel and the Company's and the Guarantors'
accountants in connection with the issuance and sale of the Securities and
all other fees or expenses in connection with the preparation of each
Memorandum and all amendments and supplements thereto, including all
printing costs associated therewith, and the delivering of copies thereof
to the Placement Agents, in the quantities herein above specified, (ii) all
costs and expenses related to the transfer and delivery of the Securities
to the Placement Agents, including any transfer or other taxes payable
thereon, (iii) the cost of printing or producing any Blue Sky or legal
investment memorandum in connection with the offer and sale of the
Securities under state securities laws and all expenses in connection with
the qualification of the Securities for offer and sale under state
securities laws as provided in Section 6(d) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Placement
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Agents in connection with such qualification and in connection with the
Blue Sky or legal investment memorandum, (iv) any fees charged by rating
agencies for the rating of the Securities, (v) all document production
charges and expenses of counsel to the Placement Agents (but not including
their fees for professional services) in connection with the preparation of
this Agreement, (vi) the fees and expenses, if any, incurred in connection
with the admission of the Securities for trading in PORTAL or any
appropriate market system, (vii) the costs and charges of the Trustee and
any transfer agent, registrar or depositary, (viii) the cost of the
preparation, issuance and delivery of the Securities, (ix) the costs and
expenses of the Company relating to investor presentations on any "road
show" undertaken in connection with the marketing of the offering of the
Securities, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, and
(x) all other cost and expenses incident to the performance of the
obligations of the Company and the Guarantors hereunder for which provision
is not otherwise made in this Section. It is understood, however, that
except as provided in this Section, Section 8, and the last paragraph of
Section 10, the Placement Agents will pay all of their costs and expenses,
including fees and disbursements of their counsel, travel and lodging
expenses of representatives of the Placement Agents, transfer taxes payable
on resale of any of the Securities by them and any advertising expenses
connected with any offers they may make.
(f) Neither the Company nor any Affiliate will sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the Securities Act) which could be integrated with the sale of
the Securities in a manner which would require the registration under the
Securities Act of the Securities.
(g) Not to solicit any offer to buy or offer or sell the Securities by
means of any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act.
(h) While any of the Securities remain "restricted securities" within
the meaning of the Securities Act, to make available, upon request, to any
seller of such Securities the information specified in Rule 144A(d)(4)
under the Securities Act, unless the Company is then subject to Section 13
or 15(d) of the Exchange Act.
(i) If requested by you, to use its best efforts to permit the
Securities to be 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.
(j) None of the Company, its Affiliates or any person acting on its or
their behalf (other than the Placement Agents) will engage in any directed
selling efforts (as that term is defined in Regulation S) with respect to
the Securities, and the Company and its Affiliates and each person acting
on its or their behalf (other than the Placement Agents) will comply with
the offering restrictions requirement of Regulation S.
(k) During the period of two years after the Closing Date, the Company
will not, and will not permit any of its affiliates (as defined in Rule 144
under the Securities Act) to resell any of the Securities which constitute
"restricted securities" under Rule 144 that have been reacquired by any of
them.
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7. Offering of Securities; Restrictions on Transfer. (a) Each Placement
Agent, severally and not jointly, represents and warrants that such Placement
Agent is a qualified institutional buyer as defined in Rule 144A under the
Securities Act (a "QIB"). Each Placement Agent, severally and not jointly,
agrees with the Company that (i) it will not solicit offers for, or offer or
sell, such Securities by any form of general solicitation or general advertising
(as those terms are used in Regulation D under the Securities Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (ii) it will solicit offers for such Securities only from,
and will offer such Securities only to, persons that it reasonably believes to
be (A) in the case of offers inside the United States, QIBs and (B) in the case
of offers outside the United States, to persons other than U.S. persons
("foreign purchasers," which term shall include dealers or other professional
fiduciaries in the United States acting on a discretionary basis for foreign
beneficial owners (other than an estate or trust)) in reliance upon Regulation S
under the Securities Act that, in each case, in purchasing such Securities are
deemed to have represented and agreed as provided in the Final Memorandum under
the caption "Transfer Restrictions".
(b) Each Placement Agent, severally and not jointly, represents, warrants,
and agrees with respect to offers and sales outside the United States that:
(i) such Placement Agent understands that no action has been or will
be taken in any jurisdiction by the Company that would permit a public
offering of the Securities, or possession or distribution of either
Memorandum or any other offering or publicity material relating to the
Securities, in any country or jurisdiction where action for that purpose is
required;
(ii) such Placement Agent will comply with all applicable laws and
regulations in each jurisdiction in which it acquires, offers, sells or
delivers Securities or has in its possession or distributes either
Memorandum or any such other material, in all cases at its own expense;
(iii) the Securities have not been registered under the Securities 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 Securities Act or pursuant to another exemption from
the registration requirements of the Securities Act;
(iv) such Placement Agent has offered the Securities and will offer
and sell the Securities (A) as part of their distribution at any time and
(B) otherwise until 40 days after the later of the commencement of the
offering and the Closing Date, only in accordance with Rule 903 of
Regulation S or as otherwise permitted in Section 7(a); accordingly,
neither such Placement Agent, its Affiliates nor any persons acting on its
or their behalf have engaged or will engage in any directed selling efforts
(within the meaning of Regulation S) with respect to the Securities, and
any such Placement Agent, its Affiliates and any such persons have complied
and will comply with the offering restrictions requirement of Regulation S;
(v) such Placement Agent has (A) not offered or sold and will not
offer or sell any Securities to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations
1995 or the Financial Services Xxx 0000; (B) complied and will comply with
all applicable provisions of the Financial Services Xxx 0000 with respect
to anything done by it in relation to the Securities in, from or otherwise
involving the United Kingdom; and (C) only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issue of the Securities to a person who is of a kind
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described in Article 11(3) of the Financial Services Xxx 0000 (Investment
Advertisements) (Exemptions) Order 1996 (as amended) or is a person to whom
such document may otherwise lawfully be issued or passed on;
(vi) such Placement Agent understands that the Securities have not
been and will not be registered under the Securities and Exchange Law of
Japan, and represents that it has not offered or sold, and agrees not to
offer or sell, directly or indirectly, any Securities in Japan or for the
account of any resident thereof except pursuant to any exemption from the
registration requirements of the Securities and Exchange Law of Japan and
otherwise in compliance with applicable provisions of Japanese law; and
(vii) such Placement Agent agrees that, at or prior to confirmation of
sales of the Securities, it will have sent to each distributor, dealer or
person receiving a selling concession, fee or other remuneration that
purchases Securities from it during the restricted period a confirmation or
notice to substantially the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered and
sold within the United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or (ii) otherwise
until 40 days after the later of the commencement of the offering and the
closing date, except in either case in accordance with Regulation S (or
Rule 144A if available) under the Securities Act. Terms used above have the
meaning given to them by Regulation S."
Terms used in this Section 7(b) have the meanings given to them by Regulation S.
8. Indemnity and Contribution. (a) The Company and the Guarantors, jointly
and severally, agree to indemnify and hold harmless each Placement Agent and
each person, if any, who controls any Placement Agent within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act from
and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
either Memorandum (as amended or supplemented if the Company shall have
furnished any amendments or supplements thereto), or caused by any omission or
alleged omission to state therein a material fact necessary to make the
statements therein in the light of the circumstances under which they were made
not misleading, except insofar as such losses, claims, damages or liabilities
are caused by any such untrue statement or omission or alleged untrue statement
or omission based upon information relating to any Placement Agent furnished to
the Company in writing by such Placement Agent through you expressly for use
therein.
(b) Each Placement Agent agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Guarantors, their directors, its officers and
each person, if any, who controls the Company or any Guarantor within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act to the same extent as the foregoing indemnity from the Company and the
Guarantors to such Placement Agent, but only with reference to information
relating to such Placement Agent furnished to the Company in writing by such
Placement Agent through you expressly for use in either Memorandum or any
amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to Section 8(a) or 8(b), such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
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indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by Xxxxxx Xxxxxxx & Co. Incorporated, in the case of
parties indemnified pursuant to Section 8(a), and by the Company, in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened 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 proceeding.
(d) To the extent the indemnification provided for in Section 8(a) or 8(b)
is unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Guarantors on the one hand and the Placement Agents on the other hand from the
offering of the Securities or (ii) if the allocation provided by clause 8(d)(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 8(d)(i) above
but also the relative fault of the Company and the Guarantors on the one hand
and of the Placement Agents on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Guarantors on the one hand and the Placement
Agents on the other hand in connection with the offering of the Securities shall
be deemed to be in the same respective proportions as the net proceeds from the
offering of the Securities (before deducting expenses) received by the Company
and the Guarantors and the total discounts and commissions received by the
Placement Agents, in each case as set forth in the Final Memorandum, bear to the
aggregate offering price of the Securities. The relative fault of the Company
and the Guarantors on the one hand and of the Placement Agents 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 Company and the
Guarantors or by the Placement Agents and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
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statement or omission. The Placement Agents' respective obligations to
contribute pursuant to this Section 8 are several in proportion to the
respective principal amount of Securities they have purchased hereunder, and not
joint.
(e) The Company, the Guarantors and the Placement Agents agree that it
would not be just or equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Placement Agents were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in Section 8(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in Section 8(d) 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
or defending any such action or claim. Notwithstanding the provisions of this
Section 8, no Placement Agent shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities resold by
it in the initial placement of such Securities were offered to investors exceeds
the amount of any damages that such Placement Agent 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 Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this Section 8
and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Placement Agent or any person controlling any Placement
Agent or by or on behalf of the Company, or any Guarantor, their officers or
directors or any person controlling the Company or any Guarantor and (iii)
acceptance of and payment for any of the Securities.
9. Termination. This Agreement shall be subject to termination by notice
given by you to the Company, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 9(a)(i) through 9(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Securities on the terms and in the manner contemplated in the Final
Memorandum.
10. Effectiveness; Defaulting Placement Agents. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date, any one or more of the Placement Agents shall fail
or refuse to purchase Securities that it or they have agreed to purchase
hereunder on such date, and the aggregate principal amount of Securities which
such defaulting Placement Agent or Placement Agents agreed but failed or refused
to purchase is not more than one-tenth of the aggregate principal amount of
Securities to be purchased on such date, the other Placement Agents shall be
obligated severally in the proportions that the principal amount of Securities
set forth opposite their respective names in Schedule I bears to the aggregate
principal amount of Securities set forth opposite the names of all such
non-defaulting Placement Agents, or in such other proportions as you may
specify, to purchase the Securities which such defaulting Placement Agent or
Placement Agents agreed but failed or refused to purchase on such date; provided
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that in no event shall the principal amount of Securities that any Placement
Agent has agreed to purchase pursuant to this Agreement be increased pursuant to
this Section 10 by an amount in excess of one-ninth of such principal amount of
Securities without the written consent of such Placement Agent. If, on the
Closing Date any Placement Agent or Placement Agents shall fail or refuse to
purchase Securities which it or they have agreed to purchase hereunder on such
date and the aggregate principal amount of Securities with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of
Securities to be purchased on such date, and arrangements satisfactory to you
and the Company for the purchase of such Securities are not made within 36 hours
after such default, this Agreement shall terminate without liability on the part
of any non-defaulting Placement Agent or of the Company and the Guarantors. In
any such case either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Final Memorandum or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Placement Agent from liability in respect of any default
of such Placement Agent under this Agreement.
If this Agreement shall be terminated by the Placement Agents, or any of
them, because of any failure or refusal on the part of the Company or any
Guarantor to comply with the terms or to fulfill any of the conditions of this
Agreement, or if for any reason the Company or any Guarantor shall be unable to
perform its obligations under this Agreement, the Company and the Guarantors
will reimburse the Placement Agents or such Placement Agents as have so
terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (including the fees and disbursements of their counsel)
reasonably incurred by such Placement Agents in connection with this Agreement
or the offering contemplated hereunder.
11. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
13. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
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Very truly yours,
XXXXXXXX RESOURCES, INC.
By: /s/ M. XXX XXXXXXX
----------------------
Name: M. Xxx Xxxxxxx
Title: Chairman of the Board, President
and Chief Executive Officer
XXXXXXXX OIL & GAS, INC.
By: /s/ M. XXX XXXXXXX
Name: M. Xxx Xxxxxxx
Title: Chairman of the Board, President
and Chief Executive Officer
XXXXXXXX OIL & GAS - LOUISIANA, INC.
By: /s/ M. XXX XXXXXXX
----------------------
Name: M. Xxx Xxxxxxx
Title: Chairman of the Board, President
and Chief Executive Officer
XXXXXXXX OFFSHORE LLC
By: /s/ M. XXX XXXXXXX
----------------------
Name: M. Xxx Xxxxxxx
Title: Chairman of the Board, President
and Chief Executive Officer
Accepted as of the date hereof.
Xxxxxx Xxxxxxx & Co. Incorporated
Banc One Capital Markets, Inc.
TD Securities (USA) Inc.
Paribas Corporation
Acting severally on behalf of themselves
and the several Placement Agents named
in Schedule I hereto.
By: Xxxxxx Xxxxxxx & Co. Incorporated
By: /s/ XXXXXX X. XXXXXXXX
----------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Vice President
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SCHEDULE I
Principal Amount of
Placement Agent Securities to be Purchased
--------------- --------------------------
Xxxxxx Xxxxxxx & Co. Incorporated........ $112,500,000
Banc One Capital Markets, Inc............ 25,005,000
TD Securities (USA) Inc.................. 7,500,000
Paribas Corporation...................... 4,995,000
------------
Total......................... $150,000,000
============
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