1
EXHIBIT 1.1
1,150,000 SHARES
$2.03 CONVERTIBLE EXCHANGEABLE PREFERRED STOCK
LOMAK PETROLEUM, INC.
PURCHASE AGREEMENT
------------------
New York, New York
October 31, 1995
FORUM CAPITAL MARKETS L.P.
00 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxxx 00000
XXXXXXX, XXXXXX INC.
0000 00xx Xxxxxx
Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Lomak Petroleum, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to Forum Capital Markets L.P. and Xxxxxxx, Xxxxxx
Inc. (the "Initial Purchasers") 1,000,000 shares of its $2.03 Convertible
Exchangeable Preferred Stock, par value $1.00 per share (the "Preferred
Stock"). Such 1,000,000 shares of Preferred Stock are hereafter referred to as
the "Firm Shares." Upon the request of the Initial Purchasers, as provided in
Section 2(b) of this Agreement, the Company shall also issue and sell to the
Initial Purchasers up to an additional 150,000 shares of Preferred Stock for
the purpose of covering over-allotments, if any. Such 150,000 shares of
Preferred Stock are hereinafter referred to as the "Option Shares," and the
Firm Shares and the Option Shares are hereinafter collectively referred to as
the "Shares." The Shares will be convertible into shares of the Company's
common stock, par value $.01 per share (the "Common Stock"), and are
exchangeable at the option of the Company for the Company's 8.125% Convertible
Subordinated Notes due 2005 (the "Notes"). The Notes will be issued pursuant
to an indenture to be entered into between the Company and Keycorp Shareholder
Services, Inc. or an equivalent trustee selected by the Company, as trustee
(the "Trustee"), substantially in the form of, and having the terms and
conditions contained in, the form of indenture (the "Indenture") attached to
the Certificate of Designations referred to below. The Shares, the Notes and
the shares of Common Stock issuable upon conversion of the Shares or Notes (the
"Conversion Shares") are hereinafter referred to sometimes collectively as the
"Securities." The Company hereby confirms its agreement with the Initial
Purchasers with respect to the sale by the Company and the purchase by the
Initial Purchasers of the Shares, as set forth herein.
The Shares will be offered and sold to the Initial Purchasers
without being registered under the Securities Act of 1933, as amended (the
"Securities Act"), in reliance on an exemption therefrom. The Company has
prepared a preliminary offering memorandum dated October 17, 1995 as
supplemented by Supplement No. 1 thereto dated October 26, 1995 (such
preliminary offering memorandum, as so supplemented, being hereinafter referred
to as the "Preliminary Offering Memorandum"), and a final offering memorandum
dated October 31, 1995 (such offering memorandum being hereinafter referred to
as the "Offering Memorandum"), setting forth information regarding the Company
and the Securities. The Company hereby confirms that it has authorized the use
of the Preliminary Offering Memorandum and the Offering Memorandum in
connection with the offering and sale of the Shares (the "Offering").
Holders (including subsequent transferees) of the Securities
will have the registration rights set forth in the Registration Rights
Agreement (the "Registration Rights Agreement") between the Initial Purchasers
and the Company, dated concurrently herewith. Pursuant to the Registration
Rights Agreement, the Company has
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agreed to file with the Securities and Exchange Commission (the "Commission") a
shelf registration statement pursuant to Rule 415 under the Securities Act (the
"Shelf Registration Statement") to cover public resales of the Securities by
the holders thereof.
Capitalized terms used herein without definition have the
respective meanings specified therefor in the Offering Memorandum. For
purposes hereof, "Rules and Regulations" means the rules and regulations
adopted by the Commission under the Securities Act, the Securities Exchange Act
of 1934, as amended (the "Exchange Act") or the Trust Indenture Act of 1939, as
amended (the "Trust Indenture Act"), as applicable.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to, and agrees with, the Initial Purchasers of
the date hereof, and as of the Closing Date and each Option Closing Date (as
defined in Section 2(b) hereof), if any, as follows:
(a) The Offering Memorandum, as of its date,
together with each amendment or supplement thereto, as of its date, contains
all the information that, if requested by a prospective purchaser, would be
required to be provided pursuant to Rule 144A(d)(4) under the Securities Act.
The Offering Memorandum does not, and at the Closing Date and any Option
Closing Date will not, and any amendment or supplement thereto, if any, as of
its date, will not, contain any untrue statement of a material fact or omit to
state any 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. The preceding sentence does not apply to
information contained in or omitted from the Preliminary Offering Memorandum or
the Offering Memorandum (or any supplement or amendment thereto) in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of either Initial Purchaser specifically for use therein (the
"Initial Purchasers' Information"). The parties acknowledge and agree that the
Initial Purchasers' Information consists solely of the last paragraph at the
bottom of the front cover page concerning the terms of the offering by the
Initial Purchasers, the legends concerning over-allotment and trading
activities of the Initial Purchasers and their affiliates on the inside front
cover page and the paragraphs under the caption "Plan of Distribution" in the
Offering Memorandum. No order suspending or preventing the sale of the
Securities in any jurisdiction has been issued or threatened or, to the
knowledge of the Company, is contemplated.
(b) The Company is subject to Section 13 or 15(d) of
the Exchange Act. The documents incorporated by reference into the Offering
Memorandum (the "Incorporated Documents"), when they were filed with the
Securities and Exchange Commission (the "Commission") (or, if any amendment
with respect to any such document was filed, when such amendment was filed),
complied in all material respects with the requirements of the Exchange Act and
did not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading; and any Incorporated Documents filed
subsequent to the date of the Offering Memorandum shall, when filed with the
Commission, conform in all respects to the requirements of the Securities Act,
the Rules and Regulations and the Exchange Act, as applicable. All reports and
statements required to be filed by the Company under the Securities Act and the
Exchange Act have been filed, together with all exhibits required to be filed
therewith. The documents and agreements so filed which are described in the
Offering Memorandum are in full force and effect on the date hereof and neither
the Company nor any of the Subsidiaries nor, to the knowledge of the Company,
any other party thereto is in breach of or default under a material provision
of any such document or agreement.
(c) The Company and each of its direct and indirect
subsidiaries identified on Annex I hereto (collectively, the "Subsidiaries"),
has been duly organized and is validly existing as a corporation in good
standing under the laws of the state of its incorporation. Each of the Company
and the Subsidiaries is duly qualified and licensed and in good standing as a
foreign corporation in each jurisdiction in which its ownership or leasing of
any properties or the character of its operations require such qualification or
licensing (each of which jurisdictions is designated on Annex I hereto), except
where the failure to be so qualified or licensed would not have a material
adverse effect on the condition, financial or otherwise, results of operations,
business or prospects of the Company and the Subsidiaries, taken as a whole (a
"Material Adverse Effect"). Each Subsidiary which accounted for more than 5%
of the Company's consolidated assets at June 30, 1995 or more than 10% of the
Company's consolidated revenues during the 12 months then ended or which is
reasonably expected to exceed such percentages with respect
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to the Company's next four fiscal quarters ending after the date hereof are
indicated on Annex I hereto, and all such Subsidiaries are hereinafter referred
to collectively as the "Significant Subsidiaries." The Company does not own or
control, directly or indirectly, any corporation, association or other entity
other than the Subsidiaries. None of the Subsidiaries owns or controls
directly or indirectly, any corporation, association or other entity. Except
as set forth on Annex I, the Company owns, either directly or through other
Subsidiaries, all of the outstanding capital stock of each Subsidiary, in each
case free and clear of all liens, charges, claims, encumbrances, pledges,
security interests defects or other restrictions or equities of any kind
whatsoever other than those created pursuant to that certain Amended and
Restated Revolving Credit and Term Loan Agreement, dated as of July 6, 1994,
among the Company and certain of its subsidiaries as borrowers, Bank One,
Texas, N.A. as agent and Bank One, Texas N.A. and Texas Commerce Bank National
Association as lenders (the "Bank One Loan Agreement"), and the instruments,
documents and agreements executed in connection therewith; and all outstanding
capital stock of the Subsidiaries has been duly authorized and validly issued
and is fully paid and non-assessable and not issued in violation of any
preemptive rights or applicable securities laws. Each of the Company and the
Subsidiaries has all requisite power and authority (corporate, partnership and
other), and has obtained any and all necessary authorizations, approvals,
orders, licenses, certificates, franchises and permits of and from all
governmental or regulatory officials and bodies, to own or lease its properties
and conduct its business as described in the Offering Memorandum; each of the
Company and the Subsidiaries is and has been doing business in compliance with
all such authorizations, approvals, orders, licenses, certificates, franchises
and permits and all federal, foreign, state and local laws, rules and
regulations; and neither the Company nor any of the Subsidiaries has received
any notice of proceedings relating to the revocation or modification of any
such authorization, approval, order, license, certificate, franchise or permit
which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, would have a Material Adverse Effect.
(d) The Company has an authorized capitalization as
set forth in the Offering Memorandum and will have the adjusted capitalization
as of the period indicated therein, based upon the assumptions set forth
therein. Neither the Company nor any of the Subsidiaries is a party to or
bound by any instrument, agreement or other arrangement, including, but not
limited to, any voting trust agreement, stockholders' agreement or other
agreement or instrument, affecting the securities or rights or obligations of
securityholders of the Company or any of the Subsidiaries or providing for any
of them to issue, sell, transfer or acquire any capital stock, rights,
warrants, options or other securities of the Company or any of the
Subsidiaries, except for this Agreement, the certificate of designations
relating to the Company's 7 1/2% Convertible Exchangeable Preferred Stock
outstanding on the date hereof (the "Existing Preferred") and the indenture
related thereto, the certificate of designations relating to the Preferred
Stock (the "Certificate of Designations"), the Indenture and as set forth in
the Offering Memorandum (including the notes to the financial statements set
forth therein). The Company's capital stock and the Notes conform in all
material respects to all statements with respect thereto contained in the
Offering Memorandum. All issued and outstanding securities of each of the
Company or any of the Subsidiaries have been duly authorized and validly issued
and are fully paid and non-assessable, as applicable; the holders thereof have
no rights of rescission with respect thereto and are not subject to personal
liability by reason of being such holders; and none of such securities were
issued in violation of the preemptive rights of any securityholder of the
Company or any of the Subsidiaries or similar contractual rights granted by the
Company or any of the Subsidiaries.
(e) The Preferred Stock has been duly authorized
and, when validly issued, delivered and paid for in the manner contemplated by
this Agreement, will be duly authorized, validly issued, fully paid and
non-assessable. The shares of Common Stock issuable upon conversion of the
Preferred Stock or the Notes will, upon such issuance, be duly authorized,
validly issued, fully paid and non-assessable, and the Company has duly
authorized and reserved for issuance upon conversion of the Preferred Stock or
the Notes the shares of Common Stock issuable upon such conversion. The
Preferred Stock and the Conversion Shares are not and will not be subject to
any preemptive or other similar rights of any securityholder of the Company or
any of the Subsidiaries; all corporate action required to be taken for the
authorization, issue and sale of the Preferred Stock and the Conversion Shares
has been duly and validly taken; and the certificates representing the
Preferred Stock and the Conversion Shares will be in due and proper form. Upon
the issuance and delivery pursuant to the terms of this Agreement of the
Preferred Stock to be sold by the Company hereunder, the Initial Purchasers
will acquire good and marketable title thereto free and clear of any lien,
charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever.
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(f) The Notes, if issued, will be issued pursuant to
the terms and conditions of the Indenture, and the Indenture and the
Registration Rights Agreement each conform to the description thereof contained
in the Offering Memorandum. At the Closing Date, the Indenture will conform in
all material respects to the requirements of the Trust Indenture Act and the
Rules and Regulations applicable to an indenture which is qualified thereunder.
The Notes have been duly authorized and, when validly authenticated, issued,
delivered and paid for in the manner contemplated by the Indenture, will be
duly authorized, validly issued and outstanding obligations of the Company
entitled to the benefits of the Indenture. The Notes are not and will not be
subject to any preemptive or other similar rights of any securityholder of the
Company or any of the Subsidiaries; all corporate action required to be taken
for the authorization and issue of the Notes has been duly and validly taken;
and the certificates representing the Notes will be in due and proper form.
(g) The consolidated historical financial statements
of the Company and the Subsidiaries together with the related notes thereto
included in the Preliminary Offering Memorandum and the Offering Memorandum
fairly present the financial position, income, changes in stockholders' equity,
cash flow and results of operations of the Company and the Subsidiaries at the
respective dates and for the respective periods to which they apply and such
historical financial statements have been prepared in conformity with generally
accepted accounting principles and the Rules and Regulations, consistently
applied throughout the periods involved; the pro forma financial information
included in each Preliminary Offering Memorandum and the Offering Memorandum
presents fairly the information shown therein in accordance with Article 11 of
Regulation S-X. Except as described in the Offering Memorandum, there has been
no material adverse change or development involving a material prospective
change in the condition, financial or otherwise, or in the earnings, business
prospects, or results of operations of the Company or any of the Subsidiaries,
whether or not arising in the ordinary course of business, since the date of
the financial statements included in the Offering Memorandum and the
outstanding debt, the property, both tangible and intangible, and the
businesses of each of the Company and the Subsidiaries conform in all material
respects to the descriptions thereof contained in the Offering Memorandum.
Financial information set forth in the Offering Memorandum under the headings
"Summary Financial, Operating and Reserve Information," "Selected Historical
and Pro Forma Financial Data," "Capitalization" and "Management's Discussion
and Analysis of Financial Condition and Results of Operations" fairly present,
on the basis stated in the Offering Memorandum, the information set forth
therein and have been derived from or compiled on a basis consistent with that
of the audited financial statements included in the Offering Memorandum.
(h) Each of the Company and the Subsidiaries has
filed all income and franchise tax returns required to be filed by it in any
jurisdiction, and has paid all taxes shown to be due on such returns or claimed
to be due from such entities, other than those being contested in good faith.
All tax liabilities, including those being contested by the Company or the
Subsidiaries are adequately reserved for in the Company's financial statements
(in accordance with generally accepted accounting principles). No tax
deficiency has been asserted and no tax proceedings are pending or is
threatened against the Company or any of the Subsidiaries, and to the knowledge
of the Company, no such deficiency or proceeding is contemplated.
(i) No transfer tax, stamp duty or other similar tax
is payable by or on behalf of the Initial Purchasers in connection with (i) the
issuance by the Company of the Securities, (ii) the purchase by the Initial
Purchaser of the Preferred Stock from the Company or (iii) the consummation by
the Company of any of its obligations under this Agreement.
(j) Each of the Company and the Subsidiaries
maintains liability, casualty and other insurance (subject to customary
deductions and retentions) with responsible insurance companies against such
risk of the types and in the amounts customarily maintained by independent oil
companies of comparable size to the Company engaged in the acquisition,
development and exploration of oil and gas properties (which may include
self-insurance in comparable form to that maintained by such responsible
companies), all of which insurance is in full force and effect.
(k) There is no action, suit, proceeding, litigation
or governmental proceeding pending or threatened or, to the knowledge of the
Company, contemplated against (or circumstances that are reasonably likely to
give rise to the same), or involving the properties or businesses of, the
Company or any of the Subsidiaries
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which (i) questions the validity of the capital stock of the Company or any of
the Subsidiaries, this Agreement, the Indenture, the Registration Rights
Agreement or of any action taken or to be taken by the Company or any of the
Subsidiaries pursuant to or in connection with this Agreement, the Indenture or
the Registration Rights Agreement or (ii) except as disclosed in the Offering
Memorandum, would have a Material Adverse Effect.
(l) The Company has full legal right, power and
authority to authorize, issue, deliver and sell the Preferred Stock, the Notes
upon exchange of the Preferred Stock and the Conversion Shares upon conversion
of the Preferred Stock or the Notes, as applicable, to enter into this
Agreement, the Indenture and the Registration Rights Agreement and to
consummate the transactions provided for in such agreements; and this Agreement
has been duly and properly authorized, executed and delivered by the Company
and when the Company has duly executed and delivered the Registration Rights
Agreement (assuming the due execution and delivery thereof by the Initial
Purchasers) and the Indenture (assuming the due execution and delivery thereof
by the Trustee), this Agreement, the Registration Rights Agreement and the
Indenture each will constitute a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its terms. None of
the Company's issue and sale of the Preferred Stock, the Notes upon exchange of
the Preferred Stock and the Conversion Shares upon the conversion of the
Preferred Stock or the Notes, as applicable, the execution or delivery of this
Agreement, the Indenture and the Registration Rights Agreement, its performance
hereunder and thereunder, its consummation of the transactions contemplated
herein and therein or the conduct by it and the Subsidiaries of their
businesses as described in the Offering Memorandum or any amendments or
supplements thereto conflicts or will conflict with or results or will result
in any breach or violation of any of the terms or provisions of, or constitutes
or will constitute a default under, or results or will result in the creation
or imposition of any lien, charge, claim, encumbrance, pledge, security
interest, defect or other restriction or equity of any kind whatsoever upon any
property or assets of the Company or any of the Subsidiaries pursuant to the
terms of, (i) the certificate of incorporation or by-laws of the Company or any
of the Subsidiaries, (ii) any license, contract, indenture, mortgage, deed of
trust, voting trust agreement, stockholders' agreement, note, loan or credit
agreement or other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which it or any Subsidiary is or may be bound or
to which its or any of the Subsidiaries' properties or assets is or may be
subject, or any indebtedness, or (iii) any statute, judgment, decree, order,
rule or regulation applicable to the Company or any of the Subsidiaries of any
arbitrator, court, regulatory body or administrative agency or other
governmental agency or body, having jurisdiction over the Company or any of the
Subsidiaries or any of their respective activities or properties.
(m) Neither the Company nor any of the Subsidiaries
(i) is in violation of its certificate of incorporation or by-laws, (ii) is in
default in the performance of any obligation, agreement or condition contained
in any license, contract, indenture, mortgage, installment sale agreement,
lease, deed of trust, voting trust agreement, stockholders' agreement, note,
loan or credit agreement, purchase order, agreement or instrument evidencing an
obligation for borrowed money or other material agreement or instrument to
which the Company or any of the Subsidiaries is a party or by which the Company
or any of the Subsidiaries may be bound or to which the property or assets of
the Company or any of the Subsidiaries is subject or affected or (iii) is in
violation in any respect of any law, ordinance, governmental rule, regulation
or court decree to which it or its property or assets may be subject, except
any violation or default under the foregoing clauses (ii) or (iii) as would not
have a Material Adverse Effect.
(n) No consent, approval, authorization or order of,
and no filing with, any court, arbitrator, regulatory body, government agency
or other body, domestic or foreign, is required for the execution, delivery or
performance of this Agreement, the Indenture, the Registration Rights Agreement
or the transactions contemplated hereby or thereby, except such as have been or
may be obtained under the Securities Act or may be required under state
securities or Blue Sky laws.
(o) Subsequent to the respective dates as of which
information is set forth in the Offering Memorandum, and except as may
otherwise be indicated or contemplated herein or therein, neither the Company
nor any of the Subsidiaries has (i) issued any securities (other than upon
exercise of options outstanding on the date hereof pursuant to the Company's
Stock Option Plan, 1994 Outside Directors Stock Option Plan and 1994 Stock
Purchase Plan or upon conversion of the Existing Preferred or the exercise of
warrants outstanding on such respective dates, or incurred any material
liability or obligation, direct or contingent, for borrowed money not in
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the ordinary course of business, (ii) entered into any material transaction
other than in the ordinary course of business or (iii) declared or paid any
dividend or made any other distribution on or in respect of its capital stock
of any class and there has not been any change in the capital stock (excluding
changes contemplated by clause (i) hereof) or long term debt of the Company and
the Subsidiaries taken as a whole or any material adverse change in or
affecting the general affairs, business management, financial conditions,
stockholders' equity or results of operation of the Company or any of the
Subsidiaries.
(p) The Company and the Subsidiaries is in
compliance with all federal, state, local and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours. There are no pending investigations involving
the Company or any of the Subsidiaries by the U.S. Department of Labor or any
other governmental agency responsible for the enforcement of such federal,
state, local or foreign laws and regulations. There is no unfair labor
practice charge or complaint against the Company or any of the Subsidiaries
pending before the National Labor Relations Board or any strike, picketing,
boycott, dispute, slowdown or stoppage pending or threatened against or
involving the Company or any of the Subsidiaries. No representation question
exists respecting the employees of the Company or any of the Subsidiaries, and
no collective bargaining agreement or modification thereof is currently being
negotiated by the Company or any of the Subsidiaries. No grievance or
arbitration proceeding is pending under any expired or existing collective
bargaining agreements of the Company or any of the Subsidiaries. No material
labor dispute with the employees of the Company or any of the Subsidiaries
exists or, to the knowledge of the Company, is imminent.
(q) Except as identified on Schedule II attached
hereto, neither the Company nor any of the Subsidiaries maintains, sponsors or
contributes to any program or arrangement that is an "employee pension benefit
plan" an "employee welfare benefit plan" or a "multi-employer plan" ("ERISA
Plans") as such terms are defined in Sections 3(2), 3(1) and 3(37),
respectively, of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"). Except as identified on Schedule II attached hereto,
neither the Company nor any of the Subsidiaries maintains or contributes to,
now or at any time previously, a defined benefit plan as defined in Section
3(35) of ERISA. No ERISA Plan (or any trust created thereunder) has engaged in
a "prohibited transaction" within the meaning of Section 406 of ERISA or
Section 4975 of the Code which could subject the Company or any of the
Subsidiaries to any tax penalty on prohibited transactions and which has not
adequately been corrected. No "accumulated funding deficiency" (as defined in
Section 302 of ERISA) or any of the events set forth in Section 4043(b) of
ERISA (other than events with respect to which the 30-day notice under Section
4043 of ERISA has been waived) has occurred with respect to any employee
benefit plan which might reasonably be expected to have a Material Adverse
Effect. Each ERISA Plan is in compliance with all material reporting,
disclosure and other requirements of the Code and ERISA as they relate to such
ERISA Plan. Determination letters have been received from the Internal Revenue
Service with respect to each ERISA Plan which is intended to comply with Code
Section 401(a) stating that such ERISA Plan and the attendant trust are
qualified thereunder. Neither the Company nor any of the Subsidiaries has ever
completely or partially withdrawn from a "multi-employer plan" as so defined.
(r) Neither the Company or any of the Subsidiaries,
nor any of its affiliates has taken or will take, directly or indirectly, any
action designed to or which has constituted or which might be expected to cause
or result in, under the Exchange Act or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Preferred Stock or otherwise.
(s) Each of the Company and the Subsidiaries (i)
owns or has the right to use, free and clear of all liens, claims,
encumbrances, pledges, security interests, and other adverse interests of any
kind whatsoever, all patents, trademarks, service marks, trade names,
copyrights, technology, and all licenses and rights with respect to the
foregoing, used in the conduct of its business as now conducted or proposed to
be conducted without, to the best knowledge of the Company and the
Subsidiaries, infringing upon or otherwise acting adversely to the right or
claimed right of any person, corporation or other entity, (ii) is not obligated
or under any liability whatsoever to make any payments by way of royalties,
fees or otherwise to any owner or licensee of, or other claimant to, any
patent, trademark, service xxxx, trade name, copyright, know-how, technology or
other intangible asset, with respect to the use thereof or in connection with
the conduct of its business or otherwise and (iii) has not received any notice
of infringement of or conflict with asserted rights of others with respect to
any of the foregoing
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which, singly or in the aggregate, if the subject of an unfavorable decision,
ruling or finding, might have a Material Adverse Effect.
(t) Except as to its interests in oil and gas
leases, each of the Company and the Subsidiaries has good and marketable title
to, or valid and enforceable leasehold estates in, all items of real and
personal property which are material to its business and/or reflected as owned
by it in the financial statements included in the Offering Memorandum, in each
case free and clear of all liens, charges, claims, encumbrances, pledges,
security interests, defects and other restrictions except those disclosed in
the Offering Memorandum or those which are not material in amount and do not
materially adversely affect the use made or proposed to be made of such
property. Each of the Company and the Subsidiaries has good and defensible
title to its interests in oil and gas leases, free and clear of any liens,
charges, claims, encumbrances, pledges, security interests, defects and other
restrictions of any kind, other than those created pursuant to the Bank One
Loan Agreement and the instruments, documents and agreements executed in
connection therewith, and liens and encumbrances under operating agreements,
unitization and pooling arrangements and gas sales contracts that secure
payment of amounts not yet due and payable and which are of a nature and scope
customary in connection with similar oil and gas drilling and producing
operations, and except those which are not material in amount and do not
materially adversely affect the use made and proposed to be made of such oil
and gas leases. The Company and each of the Subsidiaries has conducted such
title investigations and has acquired its interest in oil and gas leases in
such manner as is customary in the oil and gas industry for the respective
regions in which the property subject to such leases is located. The Company
and each of the Subsidiaries has complied in all material respects with the
terms of oil and gas leases in which each purports to own an interest, and no
claim of any sort has been asserted by any person or entity adverse to the
rights of the Company or any of the Subsidiaries as lessee or sublessee under
any of such leases or questioning its rights to the continued possession of the
leased premises under any such lease, except with respect to claims which do
not materially adversely affect the use made and proposed to be made of such
oil and gas leases by the Company or any of the Subsidiaries. The concessions,
reservations, licenses, permits and rights to hydrocarbons held by the Company
and each of the Subsidiaries are valid, subsisting and enforceable with such
exceptions which do not materially adversely affect the use made and proposed
to be made of such oil and gas leases. Except as set forth in the Offering
Memorandum, neither the Company nor any of the Subsidiaries owns or leases any
material real or personal property, the loss of which would have a Material
Adverse Effect.
(u) Ernst & Young LLP and Xxxxxx Xxxxxxxx LLP are
independent certified public accountants of the Company as required by the
Securities Act and the Rules and Regulations.
(v) The Preferred Stock and the Notes satisfy the
eligibility requirements of Rule 144A(d)(3) under the Securities Act. The
Common Stock of the Company is registered pursuant to Section 12(g) of the
Exchange Act, and is approved for trading on the Nasdaq National Market
("Nasdaq") under the symbol "LOMK". The Company has taken no action that was
designed to terminate, or that is likely to have the affect of terminating,
trading of the Common Stock on the Nasdaq, nor has the Company received any
notification that the Commission or Nasdaq is contemplating terminating such
trading.
(w) The information provided by the Company or any
of the Subsidiaries to the Petroleum Consultants (as hereinafter defined) for
the preparation of the estimates or reserves in the reserve reports for the oil
and gas properties of the Company prepared by X.X. Xxxx & Associates, Xxxxxx &
Associates, Inc., Clay, Xxxx & Xxxxxxx, Long Consultants, Inc. and Xxxxxx &
Company, Inc., independent petroleum consultants (collectively the "Petroleum
Consultants"), were at the time of delivery thereof to the Petroleum
Consultants complete and accurate in all material respects. The Petroleum
Consultants are each independent petroleum consulting firms as required by the
Securities Act and the Rules and Regulations. Except as expressly stated in
the Preliminary Offering Memorandum and the Offering Memorandum, information in
the Preliminary Offering Memorandum and in the Offering Memorandum regarding
estimates of reserves, future net cash flows and present values of proved
reserves comply in all material respects with the applicable requirements of
Rule 4-10 of Regulation S-X and Industry Guide 2 under the Securities Act.
(x) Neither the Company nor any of the Subsidiaries
has, nor to the knowledge of the Company, has any officer, director or employee
of the Company or any of the Subsidiaries or any other person
## CT01/SCHIJ/68169.34
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acting on behalf of the Company or any of the Subsidiaries, for the benefit of
the Company or any such Subsidiaries at any time during the last five years,
(i) made any unlawful gift or contribution to any candidate for federal, state,
local or foreign political office, or failed to disclose fully any such gift or
contribution in violation of law, or (ii) made any payment to any federal,
state, local or foreign governmental officer or official, which would be
reasonably likely to subject the Company or any of the Subsidiaries to any
damage or penalty in any civil, criminal or governmental litigation or
proceeding (domestic or foreign). Each of the Company's and the Subsidiaries'
internal accounting controls are sufficient to cause the Company and the
Subsidiaries to comply with the Foreign Corrupt Practices Act of 1977, as
amended.
(y) Except as set forth in the Offering Memorandum,
no officer, director or 5% or greater stockholder of the Company or any of the
Subsidiaries, or any "affiliate" or "associate" (as these terms are defined in
Rule 405 promulgated under the Rules and Regulations) of any of the foregoing
persons or entities, has or has had, either directly or indirectly, (i) a
material interest in any person or entity which (A) furnishes or sells services
or products which are furnished or sold or are proposed to be furnished or sold
by the Company or any of the Subsidiaries or (B) purchases from or sells or
furnishes to the Company or any of the Subsidiaries any goods or services or
(ii) a material beneficiary interest in any contract or agreement to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries may be bound or affected. Except as set forth in the Offering
Memorandum under the caption "Certain Transactions," there are no existing
agreements, arrangements, understandings or transactions, or proposed
agreements, arrangements, understandings or transactions, between or among the
Company or any of the Subsidiaries and any such officer, director, 5% or
greater stockholder, "affiliate" or "associate." For the purpose of this
subsection (y), interests which may be excluded from disclosure pursuant to the
instructions to items of Regulation S-K shall be deemed to be per se not
material.
(z) The minute books of each of the Company and the
Subsidiaries have been made available to the Initial Purchasers, contain a
complete summary of all meetings and actions of the directors and stockholders
of each of the Company and the Subsidiaries since the time of their respective
incorporation and reflect all transactions referred to in such minutes
accurately in all respects.
(aa) Neither the Company nor any of the Subsidiaries
has been notified or is otherwise aware that it is liable with respect to
obligations under the Comprehensive Environmental Response, Compensation and
Liability Act of 1980, as amended, or any similar law ("Environmental Laws"),
and it is not aware of any facts or circumstances which could reasonably be
expected to result in any such liability. The Company and the Subsidiaries are
in substantial compliance with all applicable existing Environmental Laws,
except for such instances of non-compliance which would not have a Material
Adverse Effect. The term "Hazardous Material" means (i) any "hazardous
substance" as defined by the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, (ii) any "hazardous waste" as defined by
the Resource Conservation and Recovery Act, as amended, (iii) any petroleum or
petroleum product, (iv) any polychlorinated biphenyl and (v) any pollutant or
contaminant or hazardous, dangerous or toxic chemical, material, waste or
substance regulation under or within the meaning of any other Environmental
Law. To the best of the Company's knowledge, no disposal, release or discharge
of "Hazardous Material" has occurred on, in, at or about any of the facilities
or properties of the Company or any of the Subsidiaries. Except as described
in the Offering Memorandum, to the best of the Company's knowledge: (i) there
has been no storage, disposal, generation, transportation, handling or
treatment of hazardous substances or solid wastes by the Company or any of the
Subsidiaries (or to the knowledge of the Company, any of its predecessors in
interest) at, upon or from any of the property now or previously owned or
leased by the Company or any of the Subsidiaries in violation of any applicable
law, ordinance, rule, regulation, order, judgment, decree or permit or which
would require remedial action which has not been taken, under any applicable
law, ordinance, rule, regulation, order, judgment, decree or permit, except for
such violations and failures to take remedial action which would not result in,
singularly or in the aggregate, a Material Adverse Effect; (ii) there has been
no material spill, discharge, leak, emission, injection, escape, dumping or
release of any kind onto such property or into the environment surrounding such
property by the Company or any of the Subsidiaries of any solid waste or
Hazardous Materials, except for such spills, discharges, leaks, emissions,
injections, escapes, dumping or releases which would not result in, singularly
or in the aggregate, a Material Adverse Effect.
## CT01/SCHIJ/68169.34
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(bb) The Company is not an "investment company," a
company controlled by an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" as such
terms are defined in the Investment Company Act of 1940, as amended.
(cc) Neither the Company nor any affiliate (as such
term is defined in Rule 501(b) under the Securities Act) of the Company has,
directly or through any agent, 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 Preferred
Stock in a manner that would require the registration of the Preferred Stock
under the Securities Act.
(dd) None of the Company, any affiliate (as such
term is defined in Rule 501(b) under the Securities Act) of the Company and any
other person acting on its or their behalf has engaged, in connection with the
Offering, in any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act.
(ee) Assuming the accuracy of the Initial
Purchasers' representations in Section 2(c) hereof and its compliance with the
agreements set forth therein, it is not necessary, in connection with the
issuance and sale of the Preferred Stock and the offer, resale and delivery of
the Preferred Stock in the manner contemplated by this Agreement and the
Offering Memorandum, to register the Preferred Stock, the Notes or the
Conversion Shares under the Securities Act or to qualify the Indenture under
the Trust Indenture Act.
2. Purchase by the Initial Purchasers.
-----------------------------------
(a) On the basis of the representations, warranties
and agreements contained herein, and subject to the terms and conditions set
forth herein, the Company agrees to issue and sell to the Initial Purchasers,
and the Initial Purchasers agree to purchase from the Company, the Firm Shares
at a purchase price equal to $24.15625 per share.
(b) In addition, on the basis of the
representations, warranties and agreements contained herein, and subject to the
terms and conditions set forth herein, the Company hereby grants an option to
the Initial Purchasers to purchase any or all of the Option Shares at a price
equal to $24.15625 per share. Such option will expire 30 days after the date
hereof, and may be exercised in whole or in part from time to time only for the
purpose of covering over-allotments which may be made in connection with the
offering and distribution of the Firm Shares upon notice by the Initial
Purchasers to the Company setting forth the aggregate principal amount of
Option Shares as to which the Initial Purchasers are then exercising the option
and the time and date of delivery and payment therefor. Any such time and date
of delivery and payment (an "Option Closing Date") shall be determined by the
Initial Purchasers, but shall not be later than five full business days after
the exercise of such option unless otherwise agreed by the Company and the
Initial Purchasers.
(c) The Initial Purchasers have advised the Company
that it is their intention, as promptly as they deem appropriate after the
Company shall have furnished the Initial Purchasers with copies of the Offering
Memorandum, to resell the Preferred Stock pursuant to the procedures and upon
the terms set forth in the Offering Memorandum, including not to solicit any
offer to buy or offer to sell the Preferred Stock by means of any form of
general solicitation or general advertising (within the meaning of 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. The Initial Purchasers
warrant and agree with the Company that they have solicited and will solicit
offers (the "Exempt Resales") for Preferred Stock only from, and will offer
Preferred Stock only to, persons that they reasonably believe to be (i) QIBs in
transactions that meet the requirements for an exemption from the registration
requirements of the Securities Act under Rule 144A or (ii) to a limited number
of Institutional Accredited Investors that execute and deliver a letter
containing certain representations and agreements in the form attached as Annex
A of the Offering Memorandum. The QIBs and the Institutional Accredited
Investors are referred to herein as "Eligible Purchasers." Each of the Initial
Purchasers represents and warrants that it is an Institutional Accredited
Investor with such knowledge and experience in financial and business matters
as are necessary to evaluate the merits and risks of an investment in the
Preferred Stock, and is acquiring its interest in the Preferred Stock not with
a view to the
## CT01/SCHIJ/68169.34
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distribution or resale thereof, except resales in compliance with the
registration requirements or exemption provisions of the Securities Act and
that neither it, nor anyone acting on its behalf, will offer the Preferred
Stock so as to bring the issuance and sale of the Preferred Stock within the
provisions of Section 5 of the Securities Act. The Company acknowledges and
agrees that the Initial Purchasers may sell Preferred Stock to any affiliate of
either of the Initial Purchasers and any such affiliate may sell Preferred
Stock purchased by it to the Initial Purchasers. Each of the Initial
Purchasers agrees that, prior to or simultaneously with the confirmation of
sale by it to any purchaser of any of the Preferred Stock purchased from the
Company pursuant hereto, such Initial Purchaser shall furnish to that purchaser
a copy of the Offering Memorandum (and any amendment thereof or supplement
thereto that the Company shall have furnished to the Initial Purchasers prior
to the date of such confirmation of sale).
3. DELIVERY OF AND PAYMENT FOR THE PREFERRED STOCK.
Delivery of, and payment for, the Firm Shares shall be made at 10:00 A.M., New
York City time, on November 3, 1995, or at such other date or time as shall be
agreed by the Initial Purchasers and the Company (such date and time being
referred to herein as the "Closing Date"). Delivery of, and payment for, the
Firm Shares and the Option Shares shall be made at the offices of Xxxxxx Xxxx &
Xxxxxx, New York, New York, or any such other place as shall be agreed by the
Initial Purchasers and the Company. On the Closing Date, the Company shall
deliver or cause to be delivered to the Initial Purchasers certificates for the
Firm Shares against payment to or upon the order of the Company of the purchase
price by wire or book-entry transfer of immediately available funds. On each
Option Closing Date, the Company shall deliver or cause to be delivered to the
Initial Purchasers certificates for the Option Shares purchased thereat against
payment to or upon the order of the Company of the purchase price by wire or
book-entry transfer of immediately available funds. Upon delivery, the
Preferred Stock shall be in global form, in such denominations and registered
in such names, or otherwise, as the Initial Purchasers shall have requested in
writing not less than two full business days prior to the Closing Date. The
Company shall make the certificates for the Preferred Stock available for
inspection by the Initial Purchasers in New York, New York, not later than one
full business day prior to the Closing Date.
4. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company
covenants and agrees with the Initial Purchasers as follows:
(a) during the period ending 90 days after the date
hereof to advise the Initial Purchasers promptly and, if requested, confirm
such advice in writing, of the happening of any event which makes any statement
of a material fact made in the Offering Memorandum untrue or that requires the
making of any additions to or changes in the Offering Memorandum (as amended or
supplemented from time to time) in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; to
advise the Initial Purchasers promptly of any order preventing or suspending
the use of the Preliminary Offering Memorandum or the Offering Memorandum, of
the suspension of the qualification of the Preferred Stock for offering or sale
in any jurisdiction and of the initiation or threatening of any proceeding for
any such purpose; and to use its reasonable best efforts to prevent the
issuance of any such order preventing or suspending the use of the Preliminary
Offering Memorandum or of the Offering Memorandum or suspending any such
qualification and, if any such suspension is issued, to use its reasonable best
effort to obtain the lifting thereof at the earliest possible time;
(b) to furnish promptly to the Initial Purchasers
and counsel for the Initial Purchasers, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and of any
amendments or supplements thereto) as may be reasonably requested; to furnish
to the Initial Purchasers on the date hereof a copy of the independent
accountants' report included in the Offering Memorandum signed by the
accountants rendering such report; and the Company hereby consents to the use
of the Preliminary Offering Memorandum and the Offering Memorandum, and any
amendments and supplements thereto, in connection with Exempt Resales of the
Preferred Stock;
(c) if the delivery of the Offering Memorandum is
required at any time in connection with the sale of the Preferred Stock and if
at such time any events shall have occurred as a result of which the Offering
Memorandum as then amended or supplemented would include an untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made when the Offering Memorandum is delivered, not misleading, or if for any
other
## CT01/SCHIJ/68169.34
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reason it shall be necessary at such time to amend or supplement the Offering
Memorandum in order to comply with any law, to notify the Initial Purchasers
immediately thereof, and to promptly prepare and furnish to the Initial
Purchasers an amended Offering Memorandum or a supplement to the Offering
Memorandum so that statements in the Offering Memorandum, as so amended or
supplemented, will not, in light of the circumstances under which they were
made when it is so delivered, be misleading, or so that the Offering Memorandum
will comply with applicable law. The Initial Purchasers' delivery of any such
amendment or supplement shall not constitute a waiver of any of the conditions
set forth in Section 5 hereof;
(d) during the five-year period following the
Closing Date, provided any of the Preferred Stock or the Notes remain
outstanding, to furnish to the Initial Purchasers all public reports and all
reports, documents, information and financial statements furnished by the
Company to the Commission pursuant to the Trust Indenture Act, the Exchange Act
or the Rules and Regulations;
(e) during the three-year period following the
Closing Date, for so long as and at any time that it is not subject to Section
13 or 15(d) of the Exchange Act, upon request of any holder of the Preferred
Stock or the Notes, to furnish to such holder, and to any prospective purchaser
or purchasers of the Preferred Stock or the Notes designated by such holder,
information satisfying the requirements of subsection (d)(4) of Rule 144(A)
under the Securities Act. This covenant is intended to be for the benefit of
the holders from time to time of the Preferred Stock and the Notes, and
prospective purchasers of the Preferred Stock or the Notes designated by such
holders;
(f) to use the proceeds from the sale of the
Preferred Stock in the manner described in the Offering Memorandum under the
caption "Use of Proceeds";
(g) in connection with the Offering, to make its
officers, employees, independent accountants and legal counsel reasonably
available upon request by the Initial Purchasers;
(h) to use its reasonable best efforts to do and
perform all things required to be done and performed under this Agreement by it
that are within its control prior to or after the Closing Date and to use
reasonable efforts to satisfy all conditions precedent on its part to the
delivery of the Securities;
(i) except following the effectiveness of the Shelf
Registration Statement, to not authorize or knowingly permit any person acting
on its or their behalf to, solicit any offer to buy or offer to sell the
Preferred Stock by means of any form of general solicitation or general
advertising (as such 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;
(j) to not, and to use its reasonable best efforts
to ensure that no affiliate (as such term is defined in Rule 501(b) under the
Securities Act) of the Company will, offer, sell 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 Preferred Stock in a manner
that would require the registration of the Preferred Stock under the Securities
Act;
(k) to not, so long as the Preferred Stock or the
Notes are outstanding, be or become, or be or become owned by, an open-end
investment company, unit investment trust or face-amount certificate company
that is or is required to be registered under Section 8 of the Investment
Company Act, and to not be or become, or be or become owned by, a closed-end
investment company required to be registered, but not registered thereunder;
(l) to cooperate with the Initial Purchasers and
counsel for the Initial Purchasers to qualify the Preferred Stock for offering
and sale under the securities laws of such jurisdictions as the Initial
Purchasers may reasonably request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for as long
as may be necessary to complete the distribution of the Preferred Stock;
provided, however, that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to
## CT01/SCHIJ/68169.34
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file a general consent to service of process or to subject it to taxation in
any jurisdiction where it is not so qualified or so subject;
(m) to comply with the Registration Rights Agreement
and all agreements set forth in the representation letters of the Company to
The Depository Trust Company relating to the approval of the Preferred Stock
and/or the Notes for "book-entry" transfers;
(n) in connection with the Offering, until the
Initial Purchasers shall have notified the Company of the completion of the
resale of the Preferred Stock, to not and use its reasonable best efforts to
not permit any affiliated purchasers (as defined in Rule 10b-6 under the
Exchange Act), either alone or with one or more other persons, to bid for or
purchase, for any account in which it or any of its affiliated purchasers has a
beneficial interest, any Preferred Stock, or attempt to induce any person to
purchase any Preferred Stock; and to not and use its reasonable best efforts to
not permit any of its affiliated purchasers to make bids or purchases for the
purpose of creating actual, or apparent, active trading in or of raising the
price of the Preferred Stock;
(o) prior to the Closing Date, to not issue any
press release or other communication directly or indirectly or hold any press
conference with respect to the Company, its condition, financial or otherwise,
or earnings, business affairs or business prospects, without the prior consent
of the Initial Purchasers, unless in the judgment of the Company and its
counsel, and after notification to the Initial Purchasers, such press release
or communication is required by law;
(p) to not take any action prior to the execution
and delivery of the Indenture which, if taken after such execution and
delivery, would have violated any of the covenants contained in the Indenture;
(q) to not take any action prior to the Closing Date
which in the Company's reasonable judgment would require the Offering
Memorandum to be amended or supplemented pursuant to Section 4(c) hereof;
(r) to maintain a transfer agent and, if necessary
under the laws of the jurisdiction of incorporation of the Company, a registrar
(which may be the same entity as the transfer agent) for the Common Stock; and
(s) for a period of five (5) years from the date
hereof, to use its best efforts to maintain the Private Offerings, Resale and
Trading through Automated Linkages ("Portal") Market (or after the Shelf
Registration Statement, Nasdaq Stock Market or national securities exchange
listing) listing of the Preferred Stock or the Notes, to the extent
outstanding, and the Nasdaq Stock Market (or national securities exchange)
listing of the Common Stock.
5. Payment of Expenses.
--------------------
(a) The Company hereby agrees to pay all of the
following expenses and fees incident to the performance of the obligations of
the Company under this Agreement, the Indenture and the Registration Rights
Agreement, including, regardless of whether any sale of the Preferred Stock to
the Initial Purchasers is consummated (subject to paragraph (b) below): (i) the
fees and expenses of accountants and counsel for the Company (subject to the
limitation set forth in Section 6(i) hereof), (ii) all costs and expenses
incurred in connection with the preparation, duplication, printing (including
mailing and handling charges), delivery and mailing (including the payment of
postage with respect thereto) of each Preliminary Offering Memorandum and the
Offering Memorandum and any amendments and supplements thereto, in quantities
as hereinabove stated, (iii) the printing, engraving, issuance and delivery of
the certificates representing the Preferred Stock and the Notes, (iv) costs and
expenses of travel, food and lodging of Company personnel in connection with
the "road show," information meetings and presentations, (v) fees and expenses
of the transfer agent and registrar, (vi) fees and expenses of the Trustee,
including the Trustee's counsel, in connection with the Indenture and the Notes
and (vii) the fees payable to the NASD, CUSIP Service Bureau and DTC incurred
in connection with the listing of the Preferred Stock, the Notes and the
Conversion Shares for trading in the PORTAL Market, (viii) the fees payable to
the Securities and Exchange Commission and Nasdaq in connection with the filing
of a registration statement with respect to the
## CT01/SCHIJ/68169.34
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Preferred Stock, the Notes and the Underlying Shares and the listing of the
same on Nasdaq and (ix) all other costs and expenses incident to the
performance of its obligations hereunder which are not specifically otherwise
provided for in this Section. In addition, no later than at the Closing the
Company will pay or reimburse up to $25,000 of the Initial Purchasers'
reasonable and accountable out-of-pocket due diligence expenses, including but
not limited to travel and lodging expenses in connection with the Offering, in
connection with the offering, purchase and sale of the Preferred Stock. The
Company shall not be responsible for any promotional or tombstone expenses, if
any, related to the Offering, lodging and travel expenses of the Initial
Purchasers' personnel on the "road show" or expenses of counsel for the Initial
Purchasers.
(b) If this Agreement is terminated for any reason,
the Company shall reimburse and indemnify the Initial Purchasers for their
actual accountable out-of-pocket expenses, less any amounts already paid
pursuant to Section 5(a) hereof.
6. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS.
The obligations of the Initial Purchasers hereunder shall be subject to the
continuing accuracy of the representations and warranties of the Company herein
as of the date hereof and as of the Closing Date and each Option Closing Date,
if any, as if they had been made on and as of the Closing Date or each Option
Closing Date, as the case may be; and the performance by the Company on and as
of the Closing Date and each Option Closing Date, if any, of its covenants and
obligations hereunder and to the following further conditions:
(a) The Initial Purchasers shall not have advised
the Company that the Offering Memorandum, or any supplement or amendment
thereto, contains an untrue statement of fact which, in the Initial Purchasers'
opinion, is material, or omits to state a fact which, in the Initial
Purchasers' opinion, is material and is required to be stated therein or is
necessary to make the statements, in light of the circumstances under which
they were made, not misleading. No order suspending the sale of the Securities
in any jurisdiction shall have been issued on either the Closing Date or the
relevant Option Closing Date, if any, and no proceedings for that purpose shall
have been instituted or shall be contemplated.
(b) On or prior to the Closing Date, the Initial
Purchasers shall have received from Xxxxxx Xxxx & Xxxxxx such opinion or
opinions with respect to the organization of the Company, the validity of the
Preferred Stock, the Notes, the Conversion Shares, the Offering Memorandum and
other related matters as the Initial Purchasers may request and Xxxxxx Xxxx &
Xxxxxx shall have received such papers and information as they request to
enable it to pass upon such matters.
(c) At Closing Date, the Initial Purchasers shall
have received the favorable opinion of Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx,
counsel to the Company, dated the Closing Date, addressed to the Initial
Purchasers and in form and substance satisfactory to the Initial Purchasers and
Xxxxxx Xxxx & Xxxxxx, to the effect that:
i) (A) the Company and each of the Subsidiaries has
been duly organized and the Company and each of the
Subsidiaries is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation,
(B) the Company and each of the Significant Subsidiaries is
duly qualified and in good standing as a foreign corporation
in each jurisdiction identified in a schedule to such opinion
and (C) the Company and each of the Subsidiaries has all
requisite power and authority to own or lease its properties
and conduct its business as described in the Offering
Memorandum;
ii) the Company's authorized capital stock is as set
forth under the heading "Capitalization" in the Offering
Memorandum, subject to such adjustments therein as are
expressly contemplated by the Offering Memorandum; all of the
outstanding shares of capital stock of each of the
Subsidiaries are owned by the Company, directly or through one
or more Subsidiaries, in each case free and clear of any
liens, charges, claims, pledges, security interests or
encumbrances of any kind whatsoever other than as disclosed in
the Offering Memorandum;
## CT01/SCHIJ/68169.34
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iii) except as disclosed in the Offering Memorandum,
to the best of such counsel's knowledge, neither the Company
nor any of the Subsidiaries is a party to or bound by any
instrument, agreement or other arrangement providing for it to
issue any capital stock, rights, warrants, options or other
securities of the Company or any of the Subsidiaries, except
for this Agreement and as described in the Offering
Memorandum; the Certificate of Designations, the Indenture,
the Securities and all other securities issued or issuable by
each of the Company or any of the Subsidiaries which are
described in the Offering Memorandum conform, or when issued
and paid for, will conform in all material respects to the
descriptions thereof contained in the Offering Memorandum; all
issued and outstanding capital stock of the Company or any of
the Subsidiaries has been duly authorized and validly issued
and is fully paid and non-assessable; to the best of such
counsel's knowledge, none of such securities were issued in
violation of the preemptive rights of any securityholder of
the Company or any of the Subsidiaries or similar contractual
rights granted by the Company or any of the Subsidiaries or
applicable securities laws; the Preferred Stock has been duly
authorized and, when paid for by the Initial Purchasers in the
manner contemplated by this Agreement, will be validly issued,
fully paid and nonassessable; the Notes issuable upon exchange
of the Preferred Stock in accordance with the Certificate of
Designations have been duly authorized and, when executed and
authenticated in the manner contemplated by the Indenture,
will be valid and binding obligations of the Company entitled
to the benefits of the Indenture and enforceable against the
Company in accordance with their terms, except to the extent
that enforceability thereof may be limited by (1) bankruptcy,
insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally;
or (2) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity); the shares of Common Stock issuable upon conversion
of the Preferred Stock or the Notes have been duly authorized
and reserved for issuance upon conversion and, when issued,
delivered and paid for in accordance with the terms of the
Indenture, will be validly issued, fully paid and
nonassessable; and the holders of outstanding securities of
the Company are not entitled to any preemptive rights with
respect to the Securities; all corporate action required to be
taken for the authorization, issue and sale of the Securities
has been duly and validly taken; and the certificates
representing the Securities are in due and proper form; upon
the issuance and delivery pursuant to this Agreement of the
Preferred Stock to be sold by the Company hereunder, the
Initial Purchasers will acquire good and marketable title
thereto free and clear of any pledge, lien, charge, claim,
encumbrance, pledge, security interest or other restriction or
equity of any kind whatsoever;
iv) the descriptions in the Offering Memorandum of
agreements and documents to which the Company or any of the
Subsidiaries is a party or by which any of them or their
respective properties are bound, including any such agreement
or document incorporated by reference into the Offering
Memorandum, or of any statutes, are accurate in all material
respects and fairly present the subject matter thereof; to the
best of such counsel's knowledge, there is no action, suit, or
other proceeding pending or threatened in writing or any
judgments outstanding against the Company or any of the
Subsidiaries which (A) questions the validity of the capital
stock of the Company or any of the Subsidiaries or of this
Agreement, the Certificate of Designations, the Indenture, the
Registration Rights Agreement or of any action taken or to be
taken by the Company or any of the Subsidiaries pursuant to or
in connection with any of the foregoing or (B) except as
disclosed in the Offering Memorandum, could have a Material
Adverse Effect;
v) the Company has the corporate power and authority
to execute, deliver and perform each of this Agreement, the
Certificate of Designations, the Indenture and the
Registration Rights Agreement and to consummate the
transactions provided for herein and therein; the execution
and delivery of this Agreement, the Indenture (if and when
executed) and the Registration Rights Agreement have been duly
authorized by all requisite corporate action on the part of
the Company and each of this Agreement and the Registration
Rights Agreement has been duly executed and delivered by the
Company, and assuming due authorization, execution and
delivery by each other party thereto, constitutes a valid and
binding agreement of the Company enforceable against the
## CT01/SCHIJ/68169.34
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Company in accordance with its terms; except to the extent
that enforcement thereof may be limited by (i) bankruptcy,
insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or
in equity) and except to the extent that rights to
indemnification and contribution contained in this Agreement
and the Registration Rights Agreement may be limited by
federal or state securities laws or public policy relating
thereto; the Certificate of Designations has been filed with
the Secretary of State of the State of Delaware;
vi) the execution and delivery by the Company of the
Purchase Agreement, the Indenture (if and when executed) and
the Registration Rights Agreement, the performance by the
Company thereunder, the compliance by the Company with the
provisions thereof and the consummation of the transactions
contemplated thereby, each in accordance with its terms, do
not and will not conflict with or result in any breach or
violation of, constitute a default under or result in the
creation or imposition of any lien, charge, claim, pledge,
security interest or other encumbrance upon any property or
assets of the Company or the Subsidiaries pursuant to the
terms of (A) the charter or by-laws of the Company or any of
the Subsidiaries, (B) any license, contract, indenture,
mortgage, deed of trust, voting trust agreement, stockholders'
agreement, note, loan or credit agreement or other agreement
or instrument known to such counsel to which the Company or
any of the Subsidiaries is a party or by which any of them is
or may be bound or to which any of their respective properties
or assets is or may be subject, except for such conflicts,
breaches, violations, defaults and creations or impositions
which in the aggregate would not have a Material Adverse
Effect, or (C) any statute, rule or regulation (other than
federal or state securities laws) or, to the best of such
counsel's knowledge, any judgment, decree or order applicable
to the Company or any of the Subsidiaries of any arbitrator,
court, regulatory body or administrative agency or other
governmental agency or body having jurisdiction over the
Company or any of the Subsidiaries or any of their respective
activities or properties, except with respect to this clause
(C) for such conflicts, breaches, violations, defaults and
creations or impositions which in the aggregate would not have
a Material Adverse Effect. Such counsel need express no
opinion in this paragraph (vi) as to (A) state securities or
Blue Sky laws or (B) with respect to matters of fact relating
to compliance with any financial covenants, ratios or tests or
any aspect of the financial condition or results of operations
of the Company;
vii) to the knowledge of such counsel, the Company
and the Subsidiaries are not in violation of their charters or
by- laws; neither the Company nor any of the Subsidiaries is
in breach of, or in default with respect to, any provisions of
any license, contract, indenture, mortgage, deed of trust,
voting trust agreement, stockholders' agreement, note, loan or
credit agreement or other agreement or instrument known to
such counsel to which the Company or any of the Subsidiaries
is a party or by which any of them is or may be bound or to
which any of their respective properties or assets is or may
be subject, except for such breaches or defaults as would not
have a Material Adverse Effect, and to the knowledge of such
counsel, the Company and the Subsidiaries are in material
compliance with all judgments, decrees and orders of any
judicial or governmental authority to which the Company or any
of the Subsidiaries or by which any of them is or may be bound
or to which any of their respective properties or assets is or
may be subject, except for such noncompliance as would not
have a Material Adverse Effect;
viii) no consent, approval, authorization or order
of, and no filing with, any court, regulatory body, government
agency or other body (other than such as may have been made or
obtained and such as may be required under state securities or
Blue Sky laws, as to which no opinion need be rendered) is
required in connection with the issuance of the Securities as
contemplated by the Offering Memorandum, the performance of
this Agreement, the Certificate of Designations, the Indenture
and the Registration Rights Agreement, and the transactions
contemplated hereby and thereby; to the knowledge of such
counsel, the Company and each of the Subsidiaries holds all
licenses, certificates, permits, franchises, consents,
authorizations and
## CT01/SCHIJ/68169.34
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approvals from all state and federal regulatory authorities
that are required for the Company and the Subsidiaries to
conduct their business as described in the Offering
Memorandum, except for such licenses, certificates, permits,
franchises, consents, authorizations and approvals the loss of
which or the failure to maintain would not have a Material
Adverse Effect;
ix) the statements in the Offering Memorandum under
the caption "Federal Income Tax Considerations" have been
reviewed by such counsel, and insofar as they refer to
statements of law, or descriptions of statutes, licenses,
rules or regulations or legal conclusions, are correct in all
material respects;
x) assuming the (A) accuracy of the representations,
warranties and agreements of the Company contained in Section
1(z) and (aa) of this Agreement and of the Initial Purchasers
in Section 2 of this Agreement and in the Purchase Letter, if
any, and (B) the due performance by the Company of the
agreements set forth in Section 4 of this Agreement and of the
Initial Purchasers in Section 3 this Agreement, neither the
registration of the Securities under the Securities Act, nor
the qualification of the Indenture under the Trust Indenture
Act with respect thereto is required for the offer, sale and
initial resale of the Preferred Stock in the manner
contemplated by this Agreement and the Offering Memorandum, it
being understood that such counsel need express no opinion as
to any subsequent resale of any of the Securities; and
xi) the Company is not an "investment company,"
within the meaning of, is not registered or otherwise required
to be registered under, and is not "controlled" by a company
which is required to be registered under, the Investment
Company Act of 1940, as amended.
In rendering such opinion, such counsel may rely: (A) as to matters involving
the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to the Initial Purchasers and
Xxxxxx Xxxx & Xxxxxx) of other counsel acceptable to the Initial Purchasers and
Xxxxxx Xxxx & Xxxxxx, familiar with the applicable laws; and (B) as to matters
of fact, to the extent they deem proper, on certificates and written statements
of responsible officers of the Company and certificates or other written
statements of officers of departments of various jurisdictions having custody
of documents respecting the corporate existence or good standing of the Company
and the Subsidiaries, provided, that copies of any such statements or
certificates shall be delivered to the Initial Purchasers and Xxxxxx Xxxx &
Xxxxxx, if requested. In addition, such counsel shall state in such opinion
that they have conducted such investigation as they deem reasonable in support
of the opinions referred to above and in satisfaction of their due diligence
obligations to the Company . The opinion of such counsel for the Company shall
state that the opinion of any such other counsel is in form satisfactory to
such counsel and that the Initial Purchasers and they are justified in relying
thereon.
(d) Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx shall state
in the opinion letter contemplated by Section 6(c) that such counsel has
participated in conferences with officers and other representatives of each of
the Company and the Subsidiaries and representatives of the independent public
accountants for the Company and the Subsidiaries and the Initial Purchasers, at
which conferences the contents of the Offering Memorandum and related matters
were discussed, and, although such counsel is not passing upon, and does not
assume any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Offering Memorandum, on the basis of the foregoing,
no facts have come to the attention of such counsel which has lead them to
believe that the Offering Memorandum, as of its 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 not misleading,
except that such counsel express no opinion or belief with respect to the
financial statements and related notes, the pro forma financial information and
other financial, statistical or accounting data included in the Offering
Memorandum or excluded therefrom);
(e) On or prior to the Closing Date, Xxxxxx Xxxx &
Xxxxxx shall have been furnished such documents, certificates and opinions as
they may reasonably require for the purpose of enabling them to review
## CT01/SCHIJ/68169.34
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or pass upon the matters referred to in subsection (c) of this Section 6 or in
order to evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions of the Company herein contained.
(f) Prior to the Closing Date: (i) there shall have
been no adverse change involving a prospective change in the condition,
financial or otherwise, prospects, stockholders' equity or the business
activities of the Company and the Subsidiaries taken as a whole, whether or not
in the ordinary course of business, from the latest dates as of which such
condition is set forth in the Offering Memorandum; (ii) there shall have been
no transaction, not in the ordinary course of business, entered into by the
Company or any of the Subsidiaries, from the latest date as of which the
financial condition of the Company and the Subsidiaries is set forth in the
Offering Memorandum which is materially adverse to the Company and the
Subsidiaries taken as a whole; (iii) neither the Company nor any of the
Subsidiaries shall be in default under any provision of any instrument relating
to any material outstanding indebtedness; (iv) no material amount of the assets
of the Company or any of the Subsidiaries shall have been pledged or mortgaged,
except as set forth in the Offering Memorandum; (v) no action, suit or
proceeding, at law or in equity, shall have been pending, threatened or, to the
knowledge of the Company, contemplated against the Company or any of the
Subsidiaries, or affecting any of their respective properties or businesses,
before or by any court or federal, state or foreign commission, board or other
administrative agency wherein an unfavorable decision, ruling or finding may
have a Material Adverse Effect, except as set forth in the Offering Memorandum;
and (vi) no stop order shall have been issued under the Securities Act and no
proceedings therefor shall have been initiated or threatened or, to the
knowledge of the Company, contemplated by the Commission or any state
regulatory authority.
(g) At the Closing Date, the Initial Purchasers
shall have received a certificate of the Company signed by the principal
executive officer and by the chief financial or chief accounting officer of the
Company, in their capacities as such, dated the Closing Date, to the effect
that each of such persons has carefully examined the Offering Memorandum, this
Agreement and the Indenture, and that:
i) the representations and warranties of the Company
in this Agreement, the Indenture and the Registration Rights
Agreement are true and correct, as if made on and as of the
Closing Date or such Option Closing Date, as the case may be,
and the Company has complied with all agreements and covenants
and satisfied all conditions contained in this Agreement, the
Indenture and the Registration Rights Agreement on its part to
be performed or satisfied at or prior to the Closing Date;
ii) no stop order suspending the qualification or
exemption from qualification of the Securities shall have been
issued and no proceedings for that purpose shall have been
commenced or, to the knowledge of the Company, be
contemplated;
iii) since the date of the most recent financial
statements included in the Offering Memorandum, there has been
no material adverse change in the condition, financial or
otherwise, business, prospects or results of operation of the
Company and the Subsidiaries, taken as a whole, except as set
forth in the Offering Memorandum;
iv) none of the Offering Memorandum or any amendment
or supplement thereto includes any untrue statement of a
material fact or omits to state any material fact required to
be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading; and
v) subsequent to the respective dates as of which
information is given in the Offering Memorandum: (a) neither
the Company nor any of the Subsidiaries has incurred up to and
including the Closing Date or the Option Closing Date, as the
case may be, other than in the ordinary course of its
business, any material liabilities or obligations, direct or
contingent, except as disclosed in the Offering Memorandum;
(b) neither the Company nor any of the Subsidiaries has paid
or declared any dividends or other distributions on its
capital stock; (c) neither the Company nor any of the
Subsidiaries has entered into any material transactions not in
the ordinary
## CT01/SCHIJ/68169.34
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course of business, except as disclosed in the Offering
Memorandum; (d) there has not been any change in the capital
stock (other than pursuant to the Company's Stock Option Plan,
1994 Outside Directors Stock Option Plan or 1994 Stock
Repurchase Plan or upon conversion of the Existing Preferred
or the exercise of Warrants outstanding on such respective
dates) or the long term debt of the Company or any of the
Subsidiaries; (e) neither the Company nor any of the
Subsidiaries has sustained any material loss or damage to its
property or assets, whether or not insured; (f) there is no
litigation which is pending, threatened or, to the best of the
Company's knowledge, contemplated against the Company, any of
the Subsidiaries or any affiliated party of any of the
foregoing which would have a Material Adverse Effect and which
is required to be set forth in an amended or supplemented
Offering Memorandum which has not been set forth; and (g)
there has occurred no event which would be required to be set
forth in an amended or supplemented prospectus if the Offering
Memorandum were a prospectus included in a registration
statement on Form S-3, which has not been set forth in an
amendment or supplement to the Offering Memorandum.
(h) On or before the date hereof the Initial
Purchasers shall have received a letter, dated such date, addressed to the
Initial Purchasers in form and substance satisfactory in all respects to the
Initial Purchasers and Xxxxxx Xxxx & Xxxxxx, from Xxxxxx Xxxxxxxx LLP:
i) confirming that they are independent certified
public accountants with respect to the Company within the
meaning of the Securities Act and the Exchange Act and the
applicable Rules and Regulations;
ii) stating that it is their opinion that the
consolidated financial statements and supporting schedules of
the Company and the Subsidiaries included in the Offering
Memorandum or incorporated by reference therein comply as to
form in all material respects with the applicable accounting
requirements of the Securities Act;
iii) stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and
earnings, statements and/or other financial information
pertaining to the Company and the Subsidiaries set forth in
the Offering Memorandum in each case to the extent that such
amounts, numbers, percentages, statements and information may
be derived from the general accounting records, including work
sheets, of the Company and/or the Subsidiaries and excluding
any questions requiring an interpretation by legal counsel,
with the results obtained from the application of specified
readings, inquiries and other appropriate procedures (which
procedures need not constitute an examination in accordance
with generally accepted auditing standards) set forth in the
letter and found them to be in agreement; and
iv) statements as to such other matters incident to
the transaction contemplated hereby as the Initial Purchasers
may reasonably request.
(i) At the Closing Date and each Option Closing
Date, if any, the Initial Purchasers shall have received from Xxxxxx Xxxxxxxx
LLP a letter, dated as of the Closing Date or such Option Closing Date, as the
case may be, to the effect that they reaffirm that statements made in the
letter furnished pursuant to subsection (h) of this Section 6, except that the
specified date referred to shall be a date not more than five (5) days prior to
the Closing Date or such Option Closing Date, as the case may be, to the
further effect that they have carried out procedures as specified in clause
(iii) of subsection (h) of this Section 6 with respect to certain amounts,
percentages and financial information as specified by the Initial Purchasers
and deemed to be a part of the Offering Memorandum and have found such amounts,
percentages and financial information to be in agreement with the records
specified in such clause (iii). If there is more than one Option Closing, the
obligations of the Company pursuant to this Section 6(i) shall be conditioned
upon the payment by the Initial Purchasers of the fees and expenses of Xxxxxx
Xxxxxxxx LLP incurred to provide the foregoing letter at any Option Closing
after the initial Option Closing.
## CT01/SCHIJ/68169.34
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(j) On each of the Closing Date and each Option
Closing Date, if any, there shall have been duly tendered to the Initial
Purchasers the appropriate number of shares of Preferred Stock.
(k) The Preferred Stock and the Notes shall have
been approved by the National Association of Securities Dealers, Inc. for
trading in the PORTAL market.
(l) Trading in the Common Stock shall not have been
suspended by Nasdaq at any time after October 1, 1995.
(m) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange, the American Stock
Exchange or the over-the-counter market shall have been suspended or limited,
or minimum prices shall have been established on either of such exchanges or
such market by the Commission, by such exchange or by any other regulatory body
or governmental authority having jurisdiction, or trading in securities of the
Company on any exchange or in the over-the-counter market shall have been
suspended or (ii) any moratorium on commercial banking activities shall have
been declared by Federal or New York State authorities or (iii) an outbreak or
escalation of hostilities or a declaration by the United States of a national
emergency or war or such a material adverse change in general economic,
political or financial conditions (or the effect of international conditions on
the financial markets in the United States shall be such) as to make it, in the
judgment of the Initial Purchasers, impracticable or inadvisable to proceed
with the offering or the delivery of the Preferred Stock on the terms and in
the manner contemplated in the Offering Memorandum.
(n) The Company and the Initial Purchasers shall
have executed and delivered the Registration Rights Agreement on the date of
this Agreement.
(o) The Certificate of Designations shall have been
duly executed and filed by the Company with the Secretary of State of the State
of Delaware.
(p) If any event shall have occurred that requires
the Company under Section 4(c) hereof to prepare an amendment or supplement to
the Offering Memorandum, such amendment or supplement shall have been prepared,
the Initial Purchasers shall have been given a reasonable opportunity to
comment thereon, and copies thereof delivered to the Initial Purchasers.
(q) There shall not have occurred any invalidation
of Rule 144A under the Securities Act by any court or any withdrawal or
proposed withdrawal of any rule or regulation under the Securities Act or the
Exchange Act by the Commission or any amendment or proposed amendment thereof
by the Commission which in the judgment of the Initial Purchasers would
materially impair the ability of the Initial Purchasers to purchase, hold or
effect resales of the Preferred Stock as contemplated hereby.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to the Initial Purchasers.
If any condition to the Initial Purchasers' obligations
hereunder to be fulfilled prior to or at the Closing Date or the relevant
Option Closing Date, as the case may be, is not so fulfilled, the Initial
Purchasers may terminate this Agreement or, if the Initial Purchasers so elect,
they may waive any such conditions which have not been fulfilled or extend the
time for their fulfillment.
7. Indemnification.
----------------
(a) The Company agrees to indemnify and hold
harmless the Initial Purchasers (for purposes of this Section 7, "Initial
Purchasers" shall include the officers, directors, partners, employees and
agents, and each person, if any, who controls either of the Initial Purchasers
("controlling person") within the meaning of Section 15 of the Securities Act
or Section 20(a) of the Exchange Act, from and against any and all losses,
claims,
## CT01/SCHIJ/68169.34
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damages, expenses or liabilities, joint or several (and actions, proceedings,
suits and litigation in respect thereof), whatsoever, as the same are incurred,
to which the Initial Purchasers or any such controlling person may become
subject, under the Securities Act, the Exchange Act or any other statute or at
common law or otherwise insofar as such losses, claims, damages, expenses or
liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Offering
Memorandum or the Offering Memorandum (as from time to time amended and
supplemented) or arise out of or are based upon the omission or alleged
omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, expense or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Memorandum or the Offering Memorandum or any such amendment or
supplement in reliance upon and in conformity with Initial Purchasers
Information and provided, further, that the Company shall not be liable to the
Initial Purchasers under the indemnity agreement in this subsection (a) (i)
with respect to any Preliminary Offering Memorandum to the extent that any such
loss, liability, claim, damage or expense of the Initial Purchasers arises out
of a sale of the Preferred Stock by such Initial Purchaser to a person to whom
there was not sent or given, at or prior to the written confirmation of such
sale, a copy of the Offering Memorandum (or of the Offering Memorandum as then
amended or supplemented) if the Company has previously furnished sufficient
copies thereof to the Initial Purchasers a reasonable time in advance and the
loss, liability, claim, damage or expense of such Initial Purchaser results
from an untrue statement or alleged untrue statement or omission or alleged
omission of a material fact contained in the Preliminary Offering Memorandum
which was corrected in the Offering Memorandum (or the Offering Memorandum as
amended or supplemented) or (ii) to the extent that any such loss, claim,
damage, expense or liability arises out of or is based upon any action or
failure to act by the Initial Purchasers, that is found in a final judicial
determination (or a settlement tantamount thereto) to constitute bad faith,
willful misconduct or gross negligence on the part of the Initial Purchasers.
The indemnity agreement in this subsection (a) shall be in addition to any
liability which the Company may have at common law or otherwise.
(b) The Initial Purchasers agree severally and not
jointly to indemnify and hold harmless the Company, each of its directors, each
of its officers, and each other person, if any, who controls the Company within
the meaning of the Securities Act, to the same extent as the foregoing
indemnity from the Company to the Initial Purchasers, but only with respect to
statements or omissions made in conformity with the Initial Purchasers
Information in any Preliminary Offering Memorandum or the Offering Memorandum
or any amendment thereof or supplement thereto.
(c) Promptly after receipt by an indemnified party
under this Section 7 of notice of the commencement of any action, suit or
proceeding, such indemnified party shall, if a claim in respect thereof is to
be made against one or more indemnifying parties under this Section 7, notify
each party against whom indemnification is to be sought in writing of the
commencement thereof (but the failure to notify an indemnifying party shall not
relieve it from any liability which it may have under this paragraph (a) or (b)
of Section 7 unless and to the extent that it has been prejudiced in a material
respect by such failure or from the forfeiture of substantial rights and
defenses). In case any such action, suit or proceeding is brought against any
indemnified party, and it notifies an indemnifying party or parties of the
commencement thereof, the indemnifying party or parties will be entitled to
participate therein, and to the extent it may elect by written notice delivered
to the indemnified party promptly after receiving the aforesaid notice from
such indemnified party, to assume the defense thereof with counsel reasonably
satisfactory to such indemnified party, which may be the same counsel as
counsel to the indemnifying party. Notwithstanding the foregoing, the
indemnified party or parties shall have the right to employ its or their own
counsel in any such case but the fees and expenses of such counsel shall be at
the expense of such indemnified party or parties unless (i) the employment of
such counsel shall have been authorized in writing by the indemnifying parties
in connection with the defense of such action at the expense of the
indemnifying party, (ii) the indemnifying parties shall not have employed
counsel reasonably satisfactory to such indemnified party to take charge of the
defense of such action within a reasonable time after notice of commencement of
the action or (iii) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are
different from or additional to those available to one or all of the
indemnifying parties (in which case the indemnifying parties shall not have the
right to direct the defense of such action on behalf of the indemnified party
or parties), in any of which events such fees and expenses of one additional
counsel shall be borne by the
## CT01/SCHIJ/68169.34
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indemnifying parties. In no event shall the indemnifying parties be liable for
fees and expenses of more than one counsel (in addition to any local counsel)
separate from their own counsel for all indemnified parties in connection with
any one action or separate but similar or related actions in the same
jurisdiction arising out of the same general allegations or circumstances.
Anything in this Section 7 to the contrary notwithstanding, an indemnifying
party shall not be liable for any settlement of any claim or action effected
without its written consent.
(d) In order to provide for just and equitable
contribution in any case in which (i) an indemnified party makes claim for
indemnification pursuant to this Section 7, but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction
and the expiration of time to appeal or the denial of the last right of appeal)
that such indemnification may not be enforced in such case notwithstanding the
fact that the express provisions of this Section 7 provide for indemnification
in such case, or (ii) contribution under the Securities Act may be required,
then each indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid as a result of such losses, claims,
damages, expenses or liabilities (or actions, suits, proceedings or litigation
in respect thereof) (A) in such proportion as is appropriate to reflect the
relative benefits received by each of the contributing parties, on the one
hand, and the party to be indemnified on the other hand, from the offering of
the Securities or (B) if the allocation provided by clause (A) 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 each of the contributing parties, on the one hand, and the
party to be indemnified, on the other hand, in connection with the statements
or omissions that resulted in such losses, claims, damages, expenses or
liabilities, as well as any other relevant equitable considerations. The
relative benefits received by the Company, on the one hand, and the Initial
Purchasers, on the other, shall be deemed to be in the same proportion as the
total net proceeds from the offering of the Preferred Stock (before deducting
expenses) bear to the total discounts received by the Initial Purchasers
hereunder, in each case as set forth in the table on the Cover Page of the
Offering Memorandum. Relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by the Company or by the Initial Purchasers, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
expenses or liabilities (or actions, suits, proceedings or litigation in
respect thereof) referred to above in this subsection (d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating, preparing or defending any such action,
claim, suit, proceeding or litigation. Notwithstanding the provisions of this
subsection (d), the Initial Purchasers shall not be required to contribute any
amount in excess of the discount applicable to the Preferred Stock purchased by
the Initial Purchasers hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 12(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person, if
any, who controls the Company within the meaning of the Securities Act, each
executive officer of the Company and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to this
subsection (d). Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit, proceeding or litigation
against such party in respect to which a claim for contribution may be made
against another party or parties under this subsection (d), notify such party
or parties from whom contribution may be sought, but the omission so to notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have hereunder or
otherwise than under this subsection (d), or to the extent that such party or
parties were not adversely affected by such omission. The contribution
agreement set forth above shall be in addition to any liabilities which any
indemnifying party may have at common law or otherwise.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto
shall be deemed to be representations, warranties and agreements at the Closing
Date and each Option Closing Date, as the case may be, and the agreements of
the Company and the provisions with respect to the payment of expenses
contained in Sections 5 and 9 and the respective indemnity agreements contained
in Section 7 hereof shall remain operative and in full force and effect
regardless of any investigation made by or on behalf of the Initial Purchasers,
the Company, any of the Subsidiaries or any controlling person, and shall
survive termination of this Agreement or the issuance and delivery of the
Preferred Stock to the Initial Purchasers.
## CT01/SCHIJ/68169.34
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9. TERMINATION.
(a) Subject to subsection (b) of this Section 9, the
Initial Purchasers shall have the right to terminate this Agreement (i) if any
domestic or international event or act or occurrence has disrupted, or in the
Initial Purchasers' opinion will in the immediate future disrupt the financial
markets, or (ii) if any material adverse change in the financial markets shall
have occurred or (iii) if trading on the New York Stock Exchange, the American
Stock Exchange or in the over-the-counter market shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required on the over-the-counter
market by the NASD or by order of the Commission or any other government
authority having jurisdiction; or (iv) if the United States shall have become
involved in a war or major hostilities, or there shall have been an escalation
in an existing war or major hostilities, or a national emergency shall have
been declared in the United States; or (v) if a banking moratorium has been
declared by a state or federal authority; or (vi) if a moratorium in foreign
exchange trading has been declared; or (vii) if the Company or any of the
Subsidiaries shall have sustained a loss material or substantial to the Company
or any of the Subsidiaries by fire, flood, accident, hurricane, earthquake,
theft, sabotage or other calamity or malicious act which, whether or not such
loss shall have been insured, will, in the Initial Purchasers' opinion, make it
inadvisable to proceed with the delivery of the Securities; or (viii) if there
shall have been such a material adverse change in the general market, political
or economic conditions in the United States or elsewhere, as in the Initial
Purchasers' judgment would make it inadvisable to proceed with the offering,
sale and/or delivery of the Preferred Stock.
(b) If this Agreement is terminated by the Initial
Purchasers in accordance with the provisions of Section 9(a) due to any events
or circumstances specifically applicable to the Company (as opposed to events
or circumstances having a general effect upon market, politcal or economic
conditions) or if this Agreement shall not be carried out within the time
specified herein, or any extension thereof granted to the Initial Purchasers,
by reason of any failure on the part of the Company to perform any undertaking
or satisfy any condition of this Agreement by it to be performed or satisfied
(including, without limitation, pursuant to Section 6, 9 or 10 hereof), then
the Company shall promptly reimburse and indemnify the Initial Purchasers for
all of their out-of-pocket expenses, including the fees and disbursements of
counsel for the Initial Purchasers (less amounts previously paid pursuant to
Section 5). If the amount previously paid pursuant to Section 5(a) above
exceeds the Initial Purchasers' out-of-pocket expenses, the Initial Purchasers
shall refund such excess to the Company. Notwithstanding any contrary
provision contained in this Agreement, any election hereunder or any
termination of this Agreement (including, without limitation, pursuant to
Sections 6, 9 and 10 hereof), and whether or not this Agreement is otherwise
carried out, the provisions of Section 5 and Section 7 shall not be in any way
affected by such election or termination or failure to carry out the terms of
this Agreement or any part hereof.
10. DEFAULT BY THE COMPANY. If the Company shall fail at
the Closing Date or any Option Closing Date, as applicable, to sell and deliver
the number of Securities which it is obligated to sell hereunder on such date,
then this Agreement shall terminate (or, if such default shall occur with
respect to any Option Securities to be purchased on an Option Closing Date, the
Initial Purchasers may, at its option, by notice from the Initial Purchasers to
the Company, terminate the Initial Purchasers' obligation to purchase Option
Preferred Stock from the Company on such date) without any liability on the
part of any non-defaulting party other than pursuant to Sections 5, 7 and 9
hereof. No action taken pursuant to this Section 10 shall relieve the Company
from liability, if any, in respect of such default.
11. NOTICES. All notices and communications hereunder,
except as herein otherwise specifically provided, shall be given in writing and
shall be deemed to have been duly given if mailed or transmitted by any
standard form of telecommunication. Notices to the Initial Purchasers shall be
directed to it at Forum Capital Markets L.P., 00 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxxx 00000, Attention: Mr. Xxxxx Xxxxxxx, with a copy to Xxxxxxx,
Xxxxxx Inc., 0000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, Attention:
General Counsel, and with an additional copy to Xxxxxx Xxxx & Xxxxxx, Two
Stamford Plaza, Stamford, Connecticut 06901, Attention: Xxx X. Xxxxxxxxxx, Esq.
Notices to the Company shall be directed to the Company at 000 Xxxxxxxxxxxx
Xxxxxx, Xxxx Xxxxx, Xxxxx 00000, Attention: President, with a copy to Xxxxx
Xxxx Xxxxx Constant & Xxxxxxxx, 00 Xxxxxxxxxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Xxxxxx X. Xxxxxxx, Esq.
## CT01/SCHIJ/68169.34
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12. PARTIES. This Agreement shall inure solely to the
benefit of and shall be binding upon the Initial Purchasers, the Company and
the controlling persons, directors and officers referred to in Section 7
hereof, and their respective successors, legal representatives and assigns, and
no other person shall have or be construed to have any legal or equitable
right, remedy or claim under or in respect of or by virtue of this Agreement or
any provisions herein contained. No purchaser of Preferred Stock from the
Initial Purchasers shall be deemed to be a successor by reason merely of such
purchase.
13. CONSTRUCTION. This Agreement shall be governed by
and construed and enforced in accordance with the laws of the State of New York
without giving effect to choice of law or conflict of laws principles.
14. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, and
all of which taken together shall be deemed to be one and the same instrument.
15. ENTIRE AGREEMENT; AMENDMENTS. This Agreement
constitutes the entire agreement of the parties hereto and supersedes all prior
written or oral agreements, understandings and negotiations with respect to the
subject matter hereof. This Agreement may not be amended except in a writing
signed by the Initial Purchasers and the Company.
If the foregoing correctly sets forth the understanding
between the Initial Purchasers and the Company, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
Very truly yours,
LOMAK PETROLEUM, INC.
By:_____________________________________________
Name:
Title:
Confirmed and accepted as of
the date first above written.
FORUM CAPITAL MARKETS L.P.
By:______________________________________________
Name:
Title:
XXXXXXX, XXXXXX INC.
By:______________________________________________
Name:
Title:
## CT01/SCHIJ/68169.34
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ANNEX I
Subsidiaries
------------
Jurisdictions in
State of Ownership which Qualified to
Name Incorporation Percentage Conduct Business
---- ------------- ---------- ----------------
## CT01/SCHIJ/68169.34
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25
ANNEX II
ERISA Plans
-----------
## CT01/SCHIJ/68169.34
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