EXHIBIT 4.1
MISSION RESOURCES CORPORATION
$130,000,000
9 7/8% SENIOR NOTES DUE 2011
PURCHASE AGREEMENT
April 1, 2004
Guggenheim Capital Markets, LLC
000 Xxxx 00xx Xxxxxx
0xx Xxxxx
Xxx Xxxx, XX 00000
Ladies and Gentlemen:
Mission Resources Corporation, a Delaware corporation, (the
"COMPANY"), proposes to issue and sell $130,000,000 aggregate principal amount
of its 9 7/8% Senior Notes due 2011 (the "NOTES" and, together with the
Guarantees (as defined below), the "SECURITIES"). The Securities will be issued
pursuant to an Indenture to be dated as of April 8, 2004 (the "INDENTURE")
between the Company, the subsidiaries of the Company listed on SCHEDULE 1 hereto
(each a "GUARANTOR" and together, the "GUARANTORS") and The Bank of New York, as
trustee (the "Trustee"). The Notes will be guaranteed by a guarantee (each, a
"GUARANTEE", and, collectively with the Guarantees of each of the other
Guarantors, the "GUARANTEES") of each of the Guarantors. The Company hereby
confirms its agreement with Guggenheim Capital Markets, LLC ("GUGGENHEIM") and
the other initial purchasers named on SCHEDULE 2 hereto, each an "INITIAL
PURCHASER" and collectively, the "INITIAL PURCHASERS") concerning the purchase
of the Securities from the Company by the Initial Purchasers. Capitalized terms
used but not defined herein shall have the meanings given to such terms in the
Offering Memorandum (as defined below).
The Securities 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 upon an exemption therefrom. The Company
will prepare a final offering memorandum dated the date hereof (the "OFFERING
MEMORANDUM") setting forth information concerning the Company and the
Securities. Copies of the Offering Memorandum will be delivered by the Company
to the Initial Purchasers pursuant to the terms of this Agreement. Any
references herein to the Offering Memorandum shall be deemed to include any
information incorporated by reference therein and all amendments and supplements
thereto, unless otherwise noted. The Company hereby confirms that it has
authorized the use of the Offering Memorandum in connection with the offering
and resale of the Securities by the Initial Purchasers in accordance with
Section 2.
Holders of the Securities (including the Initial Purchasers
and their direct and indirect transferees) will be entitled to the benefits of
an Exchange and Registration Rights Agreement, substantially in the form
attached hereto as ANNEX A (the "REGISTRATION RIGHTS
AGREEMENT"), pursuant to which the Company will agree to file with the
Securities and Exchange Commission (the "COMMISSION") a registration statement
under the Securities Act (the "EXCHANGE OFFER REGISTRATION STATEMENT")
registering an issue of 9 7/8% Senior Notes due 2011 (the "Exchange Notes") of
the Company and guarantees of such 9 7/8% Senior Notes due 2011 by each of the
Guarantors (the "Exchange Guarantees," and together with the Exchange Notes, the
"EXCHANGE SECURITIES") that are identical in all material respects to the
Securities (except that the Exchange Securities will not contain terms with
respect to transfer restrictions) and, under certain circumstances, a shelf
registration statement pursuant to Rule 415 under the Securities Act (the "SHELF
REGISTRATION STATEMENT").
1. Representations, Warranties and Agreements of the
Company and the Guarantors. The Company and the Guarantors jointly and severally
represent and warrant to, and agree with, the several Initial Purchasers on and
as of the date hereof and the Closing Date (as defined in Section 3) that:
(a) The Offering Memorandum, as of its date, did not, and on
the Closing Date the Offering Memorandum will not, contain any 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, in the light of the circumstances under which they were made,
not misleading; provided, however, that the Company and the Guarantors
make no representation or warranty as to information contained in or
omitted from the Offering Memorandum in reliance upon and in conformity
with written information relating to the Initial Purchasers furnished
to the Company by or on behalf of any Initial Purchaser specifically
for use therein as specified in Section 16 hereof (the "INITIAL
PURCHASERS' INFORMATION").
(b) The Offering Memorandum incorporates by reference the most
recent Annual Report of the Company on Form 10-K filed with the
Commission and each Quarterly Report of the Company on Form 10-Q and
each Current Report of the Company on Form 8-K filed with the
Commission since the end of the fiscal year to which such Annual Report
relates. The documents incorporated or deemed to be incorporated by
reference in the Offering Memorandum at the time they were or hereafter
are filed with the Commission complied and will comply in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the Commission thereunder (the "1934 ACT REGULATIONS"),
and when read together with the other information in the Offering
Memorandum, at the time the Offering Memorandum was issued and at
Closing Date, did not and will not include an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(c) The Offering Memorandum, as of its date, contains all of
the information that, if requested by a prospective purchaser of the
Securities, would be required to be provided to such prospective
purchaser pursuant to Rule 144A(d)(4) under the Securities Act.
(d) Assuming the accuracy of the representations and
warranties of the Initial Purchasers contained in Section 2 and their
compliance with the agreements set forth
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therein, it is not necessary, in connection with the issuance and sale
of the Securities to the Initial Purchasers and the offer, resale and
delivery of the Securities by the Initial Purchasers in the manner
contemplated by this Agreement and the Offering Memorandum, to register
the Securities under the Securities Act or to qualify the Indenture
under the Trust Indenture Act of 1939, as amended (the "TRUST INDENTURE
ACT").
(e) The Company has been duly organized and is a validly
existing corporation in good standing under the laws of the State of
Delaware, is duly qualified to do business and is in good standing as a
foreign entity in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification,
and has all power and authority necessary to own or hold its properties
and to conduct the business in which it is engaged, except where the
failure to so qualify or have such power or authority would not,
singularly or in the aggregate, have a material adverse effect on the
Company's or any Guarantor's ability to perform its obligations under
the Indenture, the Notes, the Guarantees or the Registration Rights
Agreement, as applicable, or on the condition, financial or otherwise,
or in the earnings, business affairs, management or business prospects
of the Company and its subsidiaries, considered as one enterprise,
whether or not arising in the ordinary course of business (a "MATERIAL
ADVERSE EFFECT"); all of the outstanding shares of capital stock of the
Company have been duly and validly authorized and issued and are fully
paid and non-assessable; and none of the outstanding shares of capital
stock of the Company was issued in violation of any preemptive or
similar rights of any securityholder of the Company.
(f) Each "significant subsidiary" of the Company (as such term
is defined in Rule 1-02 of Regulation S-X) and each Guarantor (each, a
"DESIGNATED SUBSIDIARY" and collectively, the "DESIGNATED
SUBSIDIARIES") has been duly organized and is validly existing in good
standing under the laws of the jurisdiction of its formation, has power
and authority to own, lease and operate its properties and to conduct
its business as described in the Offering Memorandum and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the
conduct of business, except where the failure so to qualify or to be in
good standing would not result in a Material Adverse Effect; except as
otherwise disclosed in the Offering Memorandum, all of the issued and
outstanding capital stock or member interests or partnership interests
of each Designated Subsidiary has been duly authorized and validly
issued, are fully paid and non-assessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim, equity,
restriction upon voting or transfer; none of the outstanding shares of
capital stock or member interests or partnership interests of the
Designated Subsidiaries was issued in violation of any preemptive or
similar rights of any securityholder of such Designated Subsidiary. The
other subsidiaries of the Company other than the Designated
Subsidiaries, considered in the aggregate as a single subsidiary, do
not constitute a "significant subsidiary" as defined in Rule 1-02 of
Regulation S-X.
(g) The Company will, on the Closing Date, have an authorized
capitalization of 65,000,000 shares, of which 60,000,000 are shares of
common stock, par value $0.01 per
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share, and 5,000,000 are shares of preferred stock, par value $0.01 per
share. As of March 30, 2004, 40,267,636 shares of common stock were
issued and outstanding, 389,000 shares of common stock were held as
treasury shares, and 7,225,000 shares of common stock were reserved for
issuance under our stock incentive plans. As of March 30, 2004, there
were no shares of our preferred stock outstanding.
(h) The Company and each of the Guarantors has full right,
power and authority to execute and deliver this Agreement, the
Indenture, the Registration Rights Agreement, the Escrow Agreement and
the Notes and Guarantees (collectively, the "TRANSACTION DOCUMENTS"),
as applicable, and to perform its obligations hereunder and thereunder;
and all corporate action required to be taken for the due and proper
authorization, execution and delivery of each of the Transaction
Documents and the consummation of the transactions contemplated thereby
will have been duly and validly taken by each of the Company and the
Guarantors, as applicable.
(i) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors and constitutes a
valid and legally binding agreement of the Company and each of the
Guarantors.
(j) The Registration Rights Agreement has been duly authorized
by the Company and each of the Guarantors and, when duly executed and
delivered in accordance with its terms by each of the parties thereto,
will constitute a valid and legally binding agreement of the Company
and each of the Guarantors enforceable against the Company and each of
the Guarantors in accordance with its terms, except to the extent that
such enforceability may be limited by applicable bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium and other
similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or
at law) and except as rights to indemnification and contribution set
forth therein may be limited by applicable law.
(k) The Indenture has been duly authorized by the Company and
each of the Guarantors and, when duly executed and delivered in
accordance with its terms by each of the parties thereto, will
constitute a valid and legally binding agreement of the Company and
each of the Guarantors enforceable against the Company and each of the
Guarantors in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at law). On
the Closing Date, the Indenture will conform in all material respects
to the requirements of the Trust Indenture Act and the rules and
regulations of the Commission applicable to an indenture which is
qualified thereunder.
(l) The Notes have been duly authorized by the Company and,
when duly executed, authenticated, issued and delivered as provided in
the Indenture (assuming the Indenture is the valid and legally binding
obligation of the Trustee and due authentication of the Securities by
the Trustee) and paid for as provided herein, will be duly and validly
issued and outstanding and will constitute valid and legally binding
obligations of the
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Company, entitled to the benefits of the Indenture and enforceable
against the Company, in accordance with their terms, except to the
extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and by general equitable principles (whether considered in a proceeding
in equity or at law).
(m) The Guarantees have been duly authorized by each of the
Guarantors and, when the Guarantees have been duly executed,
authenticated, issued and delivered as provided in the Indenture and
when the Securities have been paid for as provided herein (assuming due
authorization, execution and delivery of the Indenture by the Trustee
and due authentication of the Securities by the Trustee), will
constitute valid and legally binding obligations of the related
Guarantor, enforceable against each such Guarantor in accordance with
their terms, subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and to general equitable principles (whether
considered in a proceeding in equity or at law).
(n) The Exchange Notes have been duly authorized by the
Company and the related Exchange Guarantees have been duly authorized
by each of the Guarantors and, when duly executed, authenticated,
issued and delivered as provided in the Indenture and the Registration
Rights Agreement (assuming the Indenture is the valid and legally
binding obligation of the Trustee) the Exchange Securities will
constitute a valid and legally binding obligation of the Company, as
issuer of the Notes, and each of the Guarantors, as guarantors,
enforceable against the Company, as issuer of the Notes, and each of
the Guarantors, as guarantors, in accordance with its terms, except to
the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws affecting creditors' rights generally
and by general equitable principles (whether considered in a proceeding
in equity or at law).
(o) The Escrow Agreement has been duly authorized by the
Company and, when duly executed and delivered in accordance with its
terms by each of the parties thereto, will constitute a valid and
legally binding agreement of the Company enforceable against the
Company in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting creditors' rights generally and by general equitable
principles (whether considered in a proceeding in equity or at law) and
except as rights to indemnification and contribution set forth therein
may be limited by applicable law.
(p) Each Transaction Document conforms in all material
respects to the description thereof contained in the Offering
Memorandum.
(q) The execution, delivery and performance by the Company and
each of the Guarantors of each of the Transaction Documents to which it
is a party, the issuance, authentication, sale and delivery of the
Securities and performance the Company and each of the Guarantors with
the terms thereof and the consummation of the transactions
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contemplated by the Transaction Documents will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, any material indenture,
mortgage, deed of trust, loan agreement or other material agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries is bound or to which
any of the property or assets of the Company or any of its subsidiaries
is subject, nor will such actions result in any violation of the
provisions of the charter or by-laws of the Company or any of its
subsidiaries or any statute or any judgment, order, decree, rule or
regulation of any court or arbitrator or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any
of their properties or assets; and no consent, approval, authorization
or order of, or filing or registration with, any such court or
arbitrator or governmental agency or body under any such statute,
judgment, order, decree, rule or regulation is required for the
execution, delivery and performance by the Company and each of the
Guarantors of each of the Transaction Documents to which each is a
party, the issuance, authentication, sale and delivery of the
Securities and compliance by the Company and each of the Guarantors
with the terms thereof and the consummation of the transactions
contemplated by the Transaction Documents, except for such consents,
approvals, authorizations, filings, registrations or qualifications
which shall have been obtained or made prior to the Closing Date and as
may be required to be obtained or made under the Securities Act, the
Securities Exchange Act of 1934, as amended (the "EXCHANGE ACT"), and
applicable state securities laws as provided in the Registration Rights
Agreement.
(r) KPMG LLP is the independent certified public accountant
with respect to the Company and its subsidiaries (i) as required by the
Securities Act and the rules and regulations of the Commission
thereunder and (ii) within the meaning of Rule 101 of the Code of
Professional Conduct of the American Institute of Certified Public
Accountants ("AICPA") and its interpretations and rulings thereunder.
The historical financial statements (including the related notes)
contained in the Offering Memorandum comply as to form in all material
respects with the requirements applicable to a registration statement
on Form S-1 under the Securities Act (except that certain supporting
schedules are omitted); such financial statements have been prepared in
accordance with generally accepted accounting principles consistently
applied throughout the periods covered thereby (except as otherwise
stated therein), and fairly present in all material respects the
financial position of the entities purported to be covered thereby at
the respective dates indicated and the results of their operations and
their cash flows for the respective periods indicated; and the
financial information contained in or incorporated by reference into
the Offering Memorandum under the headings and "-Summary Historical
Financial Data", "--Ratio of Earnings to Fixed Charges" "--Summary
Operating Data" and "Capitalization", and in the most recent Annual
Report of the Company on Form 10-K, "Management's Discussion and
Analysis of Financial Condition and Results of Operations" are derived
from the accounting records of the Company and its subsidiaries and
fairly present in all material respects the information purported to be
shown thereby. The pro forma financial information contained in the
Offering Memorandum has been prepared on a basis consistent with the
historical financial statements contained in the Offering Memorandum
(except for the pro forma adjustments specified therein), includes
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all material adjustments to the historical financial information
required by Rule 11-02 of Regulation S-X under the Securities Act and
the Exchange Act to reflect the transactions described in the Offering
Memorandum, gives effect to assumptions made on a reasonable basis and
fairly presents in all material respects the historical and proposed
transactions contemplated by the Offering Memorandum and the
Transaction Documents. The other historical financial and statistical
information and data included in the Offering Memorandum are, in all
material respects, fairly presented.
(s) Except as otherwise disclosed in the Offering Memorandum,
there are no legal or governmental proceedings pending to which the
Company (including any predecessor entity) or any of its subsidiaries
is a party or of which any property or assets of the Company or any of
its subsidiaries is the subject which, singularly or in the aggregate,
if determined adversely to the Company or any of its subsidiaries,
could reasonably be expected to have a Material Adverse Effect, and to
the best knowledge of the Company and the Guarantors, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others.
(t) No action has been taken and no statute, rule, regulation
or order has been enacted, adopted or issued by any governmental agency
or body that prevents the issuance of the Securities or suspends the
sale of the Securities in any jurisdiction; no injunction, restraining
order or order of any nature by any federal or state court of competent
jurisdiction has been issued with respect to the Company or any of its
subsidiaries that would prevent or suspend the issuance or sale of the
Securities or the use of the Offering Memorandum in any jurisdiction;
no action, suit or proceeding is pending against or, to the best
knowledge of the Company, threatened against or affecting the Company
or any of its subsidiaries before any court or arbitrator or any
governmental agency, body or official, domestic or foreign, that could
reasonably be expected to interfere with or adversely affect the
issuance of the Securities or in any manner draw into question the
validity or enforceability of any of the Transaction Documents or any
action taken or to be taken pursuant thereto; and the Company has
complied with any and all requests by any securities authority in any
jurisdiction for additional information to be included in the Offering
Memorandum.
(u) Neither the Company nor any of its subsidiaries is (i) in
violation of its charter or bylaws (or other comparable organizational
documents), (ii) in default, and no event has occurred which, with
notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition
contained in any material indenture, mortgage, deed of trust, loan
agreement or other material agreement or instrument to which it is a
party or by which it is bound or to which any of its property or assets
is subject or (iii) in violation of any law, ordinance, governmental
rule, regulation or court decree to which it or its property or assets
may be subject, except in the case of items (ii) and (iii) where such
default, occurrence or violation would not have a Material Adverse
Effect.
(v) No filing with, or authorization, approval, consent,
license, order, registration, qualification or decree of, any court or
governmental authority or agency is necessary or required for the
performance by the Company or any Guarantor of its obligations
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hereunder, in connection with the offering, issuance or sale of the
Securities hereunder or the consummation of the transactions
contemplated by this Agreement or the Registration Rights Agreement or
for the due execution, delivery or performance of the Indenture by the
Company or any Guarantor, except (A) with respect to the performance by
the Company of the Registration Rights Agreement, the registration with
the Commission of the Securities under the Shelf Registration Statement
and/or the registration of the Exchange Offer with the Commission, and,
in each case, registration or qualification under applicable securities
or "Blue Sky" laws of the various states, (B) those required in
connection with the qualification of the Indenture under the 1939 Act,
(C) those required in connection with arranging for the Securities to
be designated eligible for trading in the Private Offerings, Resales
and Trading through Automated Linkages ("PORTAL") Market or for the
Securities to be eligible for clearance and settlement through The
Depository Trust Company ("DTC") and (D) such as have already been
obtained.
(w) The Company and each of its subsidiaries possess all
licenses, certificates, authorizations and permits issued by, and have
made all declarations and filings with, the appropriate federal, state
or foreign regulatory agencies or bodies that are necessary or
desirable for the ownership of their respective properties or the
conduct of their respective businesses as described in the Offering
Memorandum, except where the failure to possess or make the same would
not, singularly or in the aggregate, have a Material Adverse Effect,
and neither the Company nor any of its subsidiaries has received
notification of any revocation or modification of any such license,
certificate, authorization or permit or has any reason to believe that
any such license, certificate, authorization or permit will not be
renewed in the ordinary course.
(x) The Company and each of its subsidiaries have filed all
federal, state, local and foreign income and franchise tax returns
required to be filed through the date hereof and have paid all taxes
due thereon other than those being contested in good faith and for
which reserves have been provided in accordance with generally accepted
accounting principles and those currently payable without penalty or
interest or the nonpayment of which would not have a Material Adverse
Effect, and no tax deficiency has been determined adversely to the
Company or any of its subsidiaries that has had (nor does the Company
or any of its subsidiaries have any knowledge of any tax deficiency
that, if determined adversely to the Company or any of its
subsidiaries, could reasonably be expected to have) a Material Adverse
Effect.
(y) Neither the Company nor any of its subsidiaries is an
"investment company" or a company "controlled by" an investment company
within the meaning of the Investment Company Act of 1940, as amended
(the "INVESTMENT COMPANY ACT"), and the rules and regulations of the
Commission thereunder or a "holding company" or a "subsidiary company"
of a holding company or an "affiliate" thereof within the meaning of
the Public Utility Holding Company Act of 1935, as amended.
(z) The Company is subject to the reporting requirements of
Section 13 or Section 15(d) of the Exchange Act.
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(aa) The Company and each of its subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (iii) access to assets is permitted only
in accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(bb) Except as otherwise disclosed in the Offering Memorandum,
the Company and each of its subsidiaries have insurance covering their
respective properties, operations, personnel and businesses, which
insurance is in amounts and insures against such losses and risks as
are standard in the oil and gas industry for similarly situated
companies. Neither the Company nor any of its subsidiaries has received
notice from any insurer or agent of such insurer that capital
improvements or other expenditures are required or necessary to be made
in order to continue such insurance.
(cc) Neither the Company nor any affiliate of the Company has
taken, nor will the Company or any affiliate take, directly or
indirectly, any action which is designed to or which has constituted or
which would be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
(dd) The Company and each of its subsidiaries own or possess
adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations,
service xxxx registrations, copyrights, licenses and know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures)
necessary for the conduct of their respective businesses; and, to the
knowledge of the Company, the conduct of their respective businesses
will not conflict in any material respect with, and the Company and its
subsidiaries have not received any notice of any claim of conflict
with, any such rights of others.
(ee) Except as otherwise disclosed in the Offering Memorandum,
the Company and each of its subsidiaries have good and marketable title
in fee simple to, or have valid rights to lease or otherwise use, all
items of real and personal property which are material to the business
of the Company and its subsidiaries, in each case free and clear of all
liens, encumbrances, claims and defects and imperfections of title
except such as do not materially interfere with the use made and
proposed to be made of such property by the Company and its
subsidiaries or could not reasonably be expected to have a Material
Adverse Effect.
(ff) No labor disturbance by or dispute with the employees of
the Company or any of its subsidiaries exists or, to the knowledge of
the Company, is contemplated or threatened.
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(gg) No "prohibited transaction" (as defined in Section 406 of
the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
("ERISA"), or Section 4975 of the Internal Revenue Code of 1986, as
amended from time to time (the "CODE")) or "accumulated funding
deficiency" (as defined in Section 302 of ERISA) or any of the events
set forth in Section 4043(b) of ERISA (other than events with respect
to which the 30-day notice requirement under Section 4043 of ERISA has
been waived) has occurred with respect to any employee benefit plan of
the Company or any of its subsidiaries which could reasonably be
expected to have a Material Adverse Effect; each such employee benefit
plan is in compliance in all material respects with applicable law,
including ERISA and the Code; the Company and each of its subsidiaries
have not incurred and do not expect to incur liability under Title IV
of ERISA with respect to the termination of, or withdrawal from, any
pension plan for which the Company or any of its subsidiaries would
have any liability; and each such pension plan that is intended to be
qualified under Section 401(a) of the Code is so qualified in all
material respects and nothing has occurred, whether by action or by
failure to act, which could reasonably be expected to cause the loss of
such qualification.
(hh) The Company and its subsidiaries are (i) in material
compliance with any and all applicable foreign, federal, state and
local laws and regulations relating to the protection of human health
and safety, the environment or hazardous or toxic substances or wastes,
pollutants or contaminants ("ENVIRONMENTAL LAWS"), (ii) have received
and are in material compliance with all permits, licenses or other
approvals required of them under applicable Environmental Laws to
conduct their respective businesses and (iii) have not received notice
of any actual or potential liability for (x) any actual or alleged
violation of Environmental Laws, or (y) investigation or any other
action (including, but not limited to, remediation) in response to, or
personal injury (including death) or property damage in connection
with, any actual or alleged disposal or release of hazardous or toxic
substances or wastes, pollutants or contaminants, except where such
notice has been resolved or is no longer outstanding or except where
the actual or potential liability is not reasonably expected to have a
Material Adverse Effect. Neither the Company nor any of its
subsidiaries has been named as a "potentially responsible party" under
the Comprehensive Environmental Response, Compensation, and Liability
Act of 1980, 42 U.S.C. Sections 9601 et seq., as amended. The Company
and its subsidiaries have not entered into any agreement, and are not
subject to any order, pursuant to which they currently have any ongoing
obligations to investigate or take any other action (including, but not
limited to, remediation) in response to any disposal or release of
hazardous or toxic substances or wastes, pollutants or contaminants.
(ii) Neither the Company nor any of its subsidiaries nor, to
the best knowledge of the Company, any director, officer, agent,
employee or other person associated with or acting on behalf of the
Company or any of its subsidiaries, (A) has used any corporate funds
for any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity, made any direct or indirect
unlawful payment to any foreign or domestic government official or
employee from corporate funds, (B) violated or is in violation of any
provisions of the Foreign Corrupt Practices Act of 1977, or (C) made
any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.
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(jj) Neither the Company nor any of its respective
subsidiaries owns any "margin securities" as that term is defined in
Regulations T and U of the Board of Governors of the Federal Reserve
System (the "FEDERAL RESERVE BOARD"), and the offer, issuance, sale of
the Securities and the application of the net proceeds therefrom will
not violate Regulations T, U or X of the Federal Reserve Board.
(kk) Except as otherwise disclosed in the Offering Memorandum,
neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person that would give
rise to a valid claim against the Company or the Initial Purchasers for
a brokerage commission, finder's fee or like payment in connection with
the offering and sale of the Securities.
(ll) The Securities satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act.
(mm) Except with respect to the Initial Purchasers, neither
the Company nor any of its affiliates has, directly or through any
agent, sold, offered for sale, solicited offers to buy or otherwise
negotiated in respect of, any security (as such term is defined in the
Securities Act), which is or will be integrated with the sale of the
Securities in a manner that would require registration of the
Securities under the Securities Act.
(nn) Except with respect to the Initial Purchasers, neither
the Company nor any of its affiliates or any other person acting on its
or their behalf has engaged, in connection with the offering of the
Securities, in any form of general solicitation or general advertising
within the meaning of Rule 502(c) under the Securities Act.
(oo) Neither the Company nor any of its affiliates has taken
and none of them will take, directly or indirectly, any action
prohibited by Regulation M under the Exchange Act in connection with
the offering of the Securities.
(pp) Since the date as of which information is given in the
Offering Memorandum (exclusive of amendments or supplements thereto),
except as otherwise stated therein, (i) there has been no material
adverse change or any development involving a prospective material
adverse change in the condition, financial or otherwise, or in the
earnings, business affairs, management or business prospects of the
Company and its subsidiaries, considered as one enterprise, whether or
not arising in the ordinary course of business, (ii) neither the
Company nor any of its subsidiaries has incurred any material liability
or obligation, direct or contingent, other than in the ordinary course
of business, (iii) neither the Company nor any of its subsidiaries has
entered into any material transaction other than in the ordinary course
of business and (iv) there has not been any change in the capital stock
or long-term debt of the Company or any of its subsidiaries, or any
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock, or any redemption in respect
thereof.
(qq) Netherland Xxxxxx & Associates, Inc. is an independent
petroleum engineering firm with respect to the Company.
11
2. Purchase and Resale of the Securities. On the basis
of the representations, warranties and agreements contained herein, and subject
to the terms and conditions set forth herein, the Company and each of the
Guarantors agrees to issue and sell to each of the Initial Purchasers, severally
and not jointly, and each of the Initial Purchasers, severally and not jointly,
agrees to purchase from the Company and the Guarantors, the principal amount of
Securities set forth opposite the name of such Initial Purchaser on Schedule 2
hereto at a purchase price equal to 97.00% of the principal amount thereof. The
Company and the Guarantors shall not be obligated to deliver any of the
Securities except upon payment for all of the Securities to be purchased as
provided herein.
(a) The Initial Purchasers have advised the Company that they
propose to offer the Securities for resale upon the terms and subject
to the conditions set forth herein and in the Offering Memorandum. Each
Initial Purchaser, severally and not jointly, represents, warrants to
and agrees with the Company that: (i) it is purchasing the Securities
pursuant to a private sale exempt from registration under the
Securities Act, (ii) it has not solicited offers for, or offered or
sold, and will not solicit offers for, or offer or sell, the Securities
by means of any form of general solicitation or general advertising
within the meaning of Rule 502(c) of Regulation D under the Securities
Act ("REGULATION D") or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act, and (iii) it
has solicited and will solicit offers for the Securities only from, and
has offered or sold and will offer, sell or deliver the Securities, as
part of their initial offering, only to persons whom it reasonably
believes to be qualified institutional buyers ("QUALIFIED INSTITUTIONAL
BUYERS"), as defined in Rule 144A under the Securities Act ("RULE
144A"), or if any such person is buying for one or more institutional
accounts for which such person is acting as fiduciary or agent, only
when such person has represented to it that each such account is a
Qualified Institutional Buyer to whom notice has been given that such
sale or delivery is being made in reliance on Rule 144A and in each
case, in transactions in accordance with Rule 144A.
(b) Each Initial Purchaser will take reasonable steps to
inform persons acquiring Securities from such Initial Purchaser that
the Securities (i) have not been and will not be registered under the
Securities Act, (ii) are being sold to them without registration under
the Securities Act in reliance on Rule 144A or in accordance with
another exemption from registration under the Securities Act, as the
case may be, and (iii) may not be offered, sold or otherwise
transferred except (A) to the Company, or (B) in accordance with (x)
Rule 144A to a person whom the seller reasonably believes is a
Qualified Institutional Buyer that is purchasing such Securities for
its own account or for the account of a Qualified Institutional Buyer
to whom notice is given that the offer, sale or transfer is being made
in reliance on Rule 144A or (y) pursuant to another available exemption
from registration under the Securities Act.
(c) Each Initial Purchaser, severally and not jointly, agrees
that, prior to or simultaneously with the confirmation of sale by such
initial Purchaser to any purchaser of any of the securities purchased
by such Initial Purchaser from the Company pursuant hereto, such
Initial Purchaser shall furnish to that purchaser a copy of the
Offering Memorandum (and any amendment or supplement thereto that the
Company shall have furnished to such Initial Purchaser prior to the
date of such confirmation of sale). In
12
addition to the foregoing, each Initial Purchaser acknowledges and
agrees that the Company and, for purposes of the opinions to be
delivered to the Initial Purchasers pursuant to Section 5(d), (e) and
(f), counsel for the Company and for the Initial Purchasers,
respectively, may rely upon the accuracy of the representations and
warranties of the Initial Purchasers and their compliance with their
agreements contained in this Section 2, and each Initial Purchaser
hereby consents to such reliance.
(d) The Company acknowledges and agrees that the Initial
Purchasers may sell securities to any affiliate of an Initial Purchaser
and that any such affiliate may sell Securities purchased by it to an
Initial Purchaser.
3. Delivery of and Payment for the Securities. (a)
Delivery of and payment for the Securities shall be made at the offices of
Sidley Xxxxxx Xxxxx & Xxxx LLP, 787 Seventh Ave., New York, New York, or at such
other place as shall be agreed upon by the Initial Purchasers and the Company,
at 10:00 A.M., New York City time, on April 8, 2004, or at such other time or
date, not later than seven full business days thereafter, as shall be agreed
upon by the Initial Purchasers and the Company (such date and time of payment
and delivery being referred to herein as the "CLOSING DATE").
(b) On the Closing Date, payment of the purchase price for the
Securities shall be made to the Company by wire or book-entry transfer
of same-day funds to such account or accounts as the Company shall
specify prior to the Closing Date or by such other means as the parties
hereto shall agree prior to the Closing Date against delivery to the
Initial Purchasers of the certificates evidencing the Securities. Time
shall be of the essence, and delivery at the time and place specified
pursuant to this Agreement is a further condition of the obligations of
the Initial Purchasers hereunder. Upon delivery, the Securities shall
be in global form, registered in such names and in such denominations
as Guggenheim on behalf of the Initial Purchasers shall have requested
in writing not less than two full business days prior to the Closing
Date. The Company agrees to make one or more global certificates
evidencing the Securities available for inspection by Guggenheim on
behalf of the Initial Purchasers in New York, New York at least 24
hours prior to the Closing Date.
4. Further Agreements of the Company and the Guarantors.
The Company and each of the Guarantors agrees with each of the Initial
Purchasers:
(a) 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 which requires the making of any additions to or
changes in the Offering Memorandum (exclusive of any amendments or
supplements thereto) in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(b) to furnish promptly to each of the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many copies of
the Offering Memorandum (and any amendments or supplements thereto) as
may be reasonably requested;
13
(c) prior to making any amendment or supplement to the
Offering Memorandum, to furnish a copy thereof to each of the Initial
Purchasers and counsel for the Initial Purchasers and not to effect any
such amendment or supplement to which the Initial Purchasers shall
reasonably object by notice to the Company after a reasonable period to
review;
(d) if, at any time prior to completion of the resale of the
Securities by the Initial Purchasers, any event shall occur or
condition exist as a result of which it is necessary, in the reasonable
opinion of counsel for the Initial Purchasers or counsel for the
Company, to amend or supplement the Offering Memorandum in order that
the Offering Memorandum will not include an untrue statement of a
material fact or omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances existing
at the time it is delivered to a purchaser, not misleading, or if it is
necessary to amend or supplement the Offering Memorandum to comply with
applicable law, to promptly prepare such amendment or supplement as may
be necessary to correct such untrue statement or omission or so that
the Offering Memorandum, as so amended or supplemented, will comply
with applicable law;
(e) that it will not and will cause its affiliates not to,
directly or indirectly, solicit any offer to buy, sell or make any
offer or sale of, or otherwise negotiate in respect of, securities of
the Company of any class if, as a result of the doctrine of
"integration" referred to in Rule 502 under the Securities Act, such
offer or sale would render invalid (for the purpose of (i) the sale of
the offered Securities by the Company and the Guarantors to the Initial
Purchasers, (ii) the resale of the offered Securities by the Initial
Purchasers to subsequent purchasers or (iii) the resale of the offered
Securities by such subsequent purchasers to others) the exemption from
the registration requirements of the Securities Act provided by Section
4(2) thereof or by Rule 144A thereunder or otherwise;
(f) for so long as the Securities are outstanding and are
"restricted securities" within the meaning of Rule 144(a)(3) under the
Securities Act, to furnish to holders of the Securities and prospective
purchasers of the Securities designated by such holders, upon request
of such holders or such prospective purchasers, the information
required to be delivered pursuant to Rule 144A(d)(4) under the
Securities Act, unless the Company is then subject to and in compliance
with Section 13 or 15(d) of the Exchange Act (the foregoing agreement
being for the benefit of the holders from time to time of the
Securities and prospective purchasers of the Securities designated by
such holders);
(g) to promptly take from time to time such actions as the
Initial Purchasers may reasonably request to qualify the Securities for
offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Initial Purchasers may designate and to continue
such qualifications in effect for so long as required for the resale of
the Securities; and to arrange for the determination of the eligibility
for investment of the Securities under the laws of such jurisdictions
as the Initial Purchasers may reasonably request; provided, however,
that the Company and its subsidiaries shall not be obligated to qualify
as foreign corporations in any jurisdiction in which they are not so
qualified or to file a general consent to service of process in any
jurisdiction;
14
(h) to take all reasonable action necessary to enable Standard
& Poor's Ratings Services, a division of McGraw Hill, Inc. ("S&P"), and
Xxxxx'x Investors Service Inc. ("MOODY'S") to provide their respective
credit ratings of the Securities;
(i) to assist the Initial Purchasers in arranging for the
Securities to be designated PORTAL Market securities in accordance with
the rules and regulations adopted by the National Association of
Securities Dealers, Inc. ("NASD") relating to trading in the PORTAL
Market and for the Securities to be eligible for clearance and
settlement through DTC;
(j) until the offering of the Securities is complete, to file
all documents required to be filed with the Commission pursuant to the
Exchange Act within the time periods required by the Exchange Act and
the 1934 Act Regulations;
(k) except following the effectiveness of the Exchange Offer
Registration Statement or the Shelf Registration Statement, as the case
may be, not to, and to cause its affiliates not to, and not to
authorize or knowingly permit any person acting on their behalf to,
solicit any offer to buy or offer to sell the Securities by means of
any form of general solicitation or general advertising within the
meaning of Regulation D or in any manner involving a public offering
within the meaning of Section 4(2) of the Securities Act; and not to
offer, sell, contract to sell or otherwise dispose of, directly or
indirectly, any securities under circumstances where such offer, sale,
contract or disposition would cause the exemption afforded by Section
4(2) of the Securities Act to cease to be applicable to the offering
and sale of the Securities as contemplated by this Agreement and the
Offering Memorandum;
(l) except as otherwise disclosed in the Offering Memorandum,
for a period of 90 days from the date of the Offering Memorandum, not
to offer for sale, sell, contract to sell or otherwise dispose of,
directly or indirectly, or file a registration statement for, or
announce any offer, sale, contract for sale of or other disposition of
any debt securities issued or guaranteed by the Company or any of its
subsidiaries (other than the Securities) without the prior written
consent of the Initial Purchasers;
(m) until consummation of the Exchange Offer, without the
prior written consent of the Initial Purchasers, not to, and not permit
any of its affiliates (as defined in Rule 144 under the Securities Act)
to, resell any of the Securities that have been reacquired by them,
except for Securities purchased by the Company or any of its affiliates
and resold in a transaction in compliance with the Securities Act;
(n) in connection with the offering of the Securities, until
Guggenheim on behalf of the Initial Purchasers shall have notified the
Company (which Guggenheim shall do as soon as reasonably practicable)
of the completion of the distribution of the Securities, not to, and to
cause its affiliated purchasers (as defined in Regulation M under the
Exchange Act) not to, either alone or with one or more other persons,
bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest, any Securities, or
attempt to induce any person to purchase any Securities; and not to,
and to cause its affiliated purchasers not to, make bids or purchase
for the purpose of creating
15
actual, or apparent active trading in or of raising the price of the
Securities; provided, however, that notwithstanding any other provision
of this Agreement, the initial purchaser shall not be prohibited from
market-making, stabilization, covering or overallotment transactions as
contemplated by the Offering Memorandum;
(o) in connection with the offering of the Securities, to make
its officers, employees, independent accountants, independent petroleum
engineers and legal counsel reasonably available upon request by the
Initial Purchasers;
(p) to furnish to each of 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;
(q) to do and perform all things required to be done and
performed by it under this Agreement that are within its control prior
to or after the Closing Date, and to use its reasonable efforts to
satisfy all conditions precedent on its part to the delivery of the
Securities;
(r) 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;
(s) to not take any action prior to the Closing Date which
would require the Offering Memorandum to be amended or supplemented
pursuant to Section 4(d);
(t) prior to the Closing Date, not to issue any press release
or other communication directly or indirectly or hold any press
conference with respect to the Company, its condition, financial or
otherwise, or earnings, business affairs or business prospects (except
for routine oral marketing communications in the ordinary course of
business and consistent with the past practices of the Company and of
which the Initial Purchasers are notified), without consulting and
obtaining the consent of the Initial Purchasers (which consent shall
not be unreasonably withheld), 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; and
(u) to apply the net proceeds from the sale of the Securities
as set forth in the Offering Memorandum under the heading "Use of
Proceeds".
5. Conditions of Initial Purchasers Obligations. The
respective obligations of the several Initial Purchasers hereunder are subject
to the accuracy, on and as of the date hereof and the Closing Date, of the
representations and warranties of the Company and the Guarantors contained
herein, to the accuracy of the statements of the Company, the Guarantors and
their respective officers made in any certificates delivered pursuant hereto, to
the performance by the Company and the Guarantors of their obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Offering Memorandum (and any amendments or supplements
thereto) shall have been printed and copies distributed to the Initial
Purchasers as promptly as
16
practicable on or following the date of this Agreement or at such other
date and time as to which the Initial Purchasers may agree; and no stop
order suspending the sale of the Securities in any jurisdiction shall
have been issued and no proceedings for the purpose shall have been
commenced or shall be pending or threatened.
(b) None of the Initial Purchasers shall have either
discovered or disclosed to the Company on or prior to the Closing Date
that the Offering Memorandum or any amendment or supplement thereto
contains an untrue statement of a fact which, in the opinion of counsel
for the Initial Purchasers, is material or omits to state any fact
which, in the opinion of such counsel is material and is required to be
stated therein or is necessary to make the statements therein not
misleading.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of each of the Transaction
Documents and the Offering Memorandum, and all other legal matters
relating to the Transaction Documents and the transactions contemplated
thereby, shall be satisfactory in all material respects to the Initial
Purchasers, and the Company shall have furnished to the Initial
Purchasers all documents and information that they or their counsel may
reasonably request to enable them to pass upon such matters.
(d) Xxxxxx & Xxxxxx, L.L.P. shall have furnished to the
Initial Purchasers a written opinion, as counsel to the Company,
addressed to the Initial Purchasers and dated the Closing Date
substantially in the form set forth in ANNEX B.
(e) Xxxxx Peabody LLP, shall have furnished to the Initial
Purchasers a written opinion, as special New York counsel to the
Company, addressed to the Initial Purchasers and dated the Closing Date
substantially in the form set forth in ANNEX C.
(f) The Initial Purchasers shall have received from Sidley
Xxxxxx Xxxxx & Xxxx LLP, counsel for the Initial Purchasers, such
opinion or opinions, dated the Closing Date, with respect to such
matters as the Initial Purchasers may reasonably require, and the
Company shall have furnished to such counsel such documents and
information as they may request for the purpose of enabling them to
pass upon such matters.
(g) The Company shall have furnished to the Initial Purchasers
a letter (the "INITIAL COMFORT LETTER") of KPMG LLP, addressed to the
Initial Purchasers and dated the date hereof, in form and substance
satisfactory to the Initial Purchasers.
(h) The Company shall have furnished to the Initial Purchasers
a letter (the "BRING-DOWN COMFORT LETTER") of KPMG LLP, addressed to
the Initial Purchasers and dated the Closing Date in form and substance
satisfactory to the Initial Purchasers.
(i) The Company shall have furnished to the Initial Purchasers
a certificate, dated the Closing Date, of its chief executive officer
and its chief financial officer stating that (A) such officers have
carefully examined the Offering Memorandum, (B) in their opinion, the
Offering Memorandum, as of its date, did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under
17
which they were made, not misleading, and since the date of the
Offering Memorandum, no event has occurred that should have been set
forth in a supplement or amendment to the Offering Memorandum so that
the Offering Memorandum (as so amended or supplemented) would not
include any untrue statement of a material fact and would not omit to
state a material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading and (C) as of the Closing
Date, the representations and warranties of the Company and the
Guarantors in this Agreement are true and correct in all material
respects, the Company and the Guarantors have complied with all
agreements and satisfied all conditions on their part to be performed
or satisfied hereunder on or prior to the Closing Date in all material
respects, and subsequent to the date of the most recent financial
statements contained in the Offering Memorandum, there has been no
material adverse change, or any development including a prospective
change, in the condition, financial or otherwise, or in the earnings,
business affairs, management or business prospects of the Company and
its subsidiaries, considered as one enterprise, whether or not arising
in the ordinary course of business, except as set forth in the Offering
Memorandum (exclusive of any amendments or supplements thereto).
(j) The Initial Purchasers shall have received a counterpart
of the Registration Rights Agreement that shall have been executed and
delivered by a duly authorized officer of the Company and of each of
the Guarantors.
(k) The Indenture shall have been duly executed and delivered
by the Company, each of the Guarantors and the Trustee, and the
Securities shall have been duly executed and delivered by the Company,
each of the Guarantors and duly authenticated by the Trustee.
(l) The Securities shall have been approved by the NASD for
trading in the PORTAL Market.
(m) If any event shall have occurred that requires the Company
under Section 4(d) 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 shall have been
delivered to the Initial Purchasers reasonably in advance of the
Closing Date.
(n) 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 Securities
contemplated hereby.
(o) Subsequent to the execution and delivery of this Agreement
or, if earlier, the dates as of which information is given in the
Offering Memorandum (exclusive of any amendment or supplement thereto),
there shall not have been any change in the capital stock or long-term
debt or any change, or any development involving a prospective
18
change, in or affecting the condition, financial or otherwise, or in
the earnings, business affairs, management or business prospects of the
Company and its subsidiaries, considered as one enterprise, whether
arising in the ordinary course of business, the effect of which, in any
such case described above, is, in the judgment of the Initial
Purchasers, so material and adverse as to make it impracticable or
inadvisable to proceed with the sale or delivery of the Securities on
the terms and in the manner contemplated by this Agreement and the
Offering Memorandum (exclusive of any amendment or supplement thereto).
(p) No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any
governmental agency or body which would, as of the Closing Date,
prevent the issuance or sale of the Securities; and no injunction,
restraining order or order of any other nature by any federal or state
court of competent jurisdiction shall have been issued as of the
Closing Date which would prevent the issuance or sale of the
Securities.
(q) Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the
Securities or any of the Company's other debt securities or preferred
stock by a "nationally recognized statistical rating organization", as
such term is defined by the Commission for purposes of Rule 436(g)(2)
of the rules and regulations of the Commission under the Securities Act
and (ii) no such organization shall have publicly announced that it has
under surveillance or review (other than an announcement with positive
implications of a possible upgrading), its rating of the Securities or
any of the Company's or other debt securities or preferred stock.
(r) The Company shall have furnished to the Initial Purchasers
a letter (the "INITIAL XXXXX XXXXX LETTER") of Xxxxx Xxxxx Company
Petroleum Engineers, addressed to the Initial Purchasers and dated the
date hereof, in form and substance satisfactory to the Initial
Purchasers.
(s) The Company shall have furnished to the Initial Purchasers
a letter (the "INITIAL X.X. XXXXX LETTER") of X.X. Xxxxx & Company,
Inc., addressed to the Initial Purchasers and dated the date hereof, in
form and substance satisfactory to the Initial Purchasers.
(t) The Company shall have furnished to the Initial Purchasers
a letter (the "INITIAL NETHERLAND XXXXXX LETTER") of Netherland Xxxxxx
& Associates, Inc., addressed to the Initial Purchasers and dated the
date hereof, in form and substance satisfactory to the Initial
Purchasers.
(u) The Company shall have furnished to the Initial Purchasers
a letter (the "XXXXX XXXXX BRING-DOWN LETTER") of Xxxxx Xxxxx Company
Petroleum Engineers, addressed to the Initial Purchasers and dated the
Closing Date confirming in all material respects the conclusions and
findings set forth in the Initial Xxxxx Xxxxx Letter.
19
(v) The Company shall have furnished to the Initial Purchasers
a letter (the "X.X. XXXXX BRING-DOWN LETTER") of X.X. Xxxxx & Company,
Inc., addressed to the Initial Purchasers and dated the Closing Date
confirming in all material respects the conclusions and findings set
forth in the Initial X.X. Xxxxx Letter.
(w) The Company shall have furnished to the Initial Purchasers
a letter (the "NETHERLAND XXXXXX BRING-DOWN LETTER") of Netherland
Xxxxxx & Associates, Inc., addressed to the Initial Purchasers and
dated the Closing Date confirming in all material respects the
conclusions and findings set forth in the Initial Netherland Xxxxxx
Letter.
(x) The Company shall have, simultaneously with the execution
of the Indenture, executed a senior secured revolving credit facility
with a syndicate of lenders led by Xxxxx Fargo Bank, N.A. and a second
lien term loan with a syndicate of lenders arranged by Guggenheim
Corporate Funding, LLC.
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 Sidley Xxxxxx
Xxxxx & Xxxx LLP.
6. Termination.
(a) If any condition specified in Section 5 shall not have
been fulfilled when and as required to be fulfilled, this Agreement may
be terminated by Guggenheim on behalf of the Initial Purchasers by
notice to the Company at any time at or prior to Closing Date, and such
termination shall be without liability of any party to any other party
except as provided in Section 9 and 13 and except that certain
provisions of this Agreement shall survive any such termination and
remain in full force and effect in accordance with Section 14 hereof;
(b) Guggenheim on behalf of the Initial Purchasers may
terminate this Agreement, by notice to the Company, at any time at or
prior to the Closing Date (i) if there has been, since the time of
execution of this Agreement or since the respective dates as of which
information is given in the Offering Memorandum (exclusive of any
amendments or supplements thereto subsequent to the date of this
Agreement), any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects
of the Company and its subsidiaries considered as one enterprise,
whether or not arising in the ordinary course of business, or (ii) if
there has occurred any material adverse change in the financial markets
in the United States or the international financial markets, any
outbreak of hostilities or escalation thereof or other calamity or
crisis or any change or development involving a prospective change in
national or international political, financial or economic conditions,
in each case the effect of which is such as to make it, in the judgment
of Guggenheim, impracticable or inadvisable to market the Securities or
to enforce contracts for the sale of the Securities, or (iii) if
trading in any securities of the Company has been suspended or
materially limited by the Commission or the NASDAQ System, or if
trading generally on the American Stock Exchange or the New York Stock
Exchange or in the NASDAQ System has been suspended or materially
limited, or minimum or maximum prices for trading
20
have been fixed, or maximum ranges for prices have been required, by
any of said exchanges or by such system or by order of the Commission,
the National Association of Securities Dealers, Inc. or any other
governmental authority, or (iv) a material disruption has occurred in
commercial banking or securities settlement or clearance services in
the United States or (v) if a banking moratorium has been declared by
either Federal or New York authorities.
7. Defaulting Initial Purchasers.
(a) If, on the Closing Date, any Initial Purchaser defaults in
the performance of its obligations under this Agreement, the
non-defaulting Initial Purchasers may make arrangements for the
purchase of the Securities which such defaulting Initial Purchaser
agreed but failed to purchase by other persons satisfactory to the
Company and the non-defaulting Initial Purchasers, but if no such
arrangements are made within 24 hours after such default, this
Agreement shall terminate without liability on the part of the
non-defaulting Initial Purchasers, the Company and the Guarantors,
except that the Company and the Guarantors will continue to be liable
for the payment of expenses to the extent set forth in Sections 8 and
12 and except that the provisions of Sections 9 and 10 shall not
terminate and shall remain in effect. As used in this Agreement, the
term "Initial Purchasers" includes, for all purposes of this Agreement
unless the context otherwise requires, any party not listed in Schedule
2 hereto that, pursuant to this Section 7, purchases Securities which a
defaulting Initial Purchaser agreed but failed to purchase.
(b) Nothing contained herein shall relieve a defaulting
Initial Purchaser of any liability it may have to the Company, the
Guarantors or any non-defaulting Initial Purchaser for damages caused
by its default. If other persons are obligated or agree to purchase the
Securities of a defaulting Initial Purchaser, either the non-defaulting
Initial Purchasers or the Company may postpone the Closing Date for up
to seven full business days in order to effect any changes that in the
opinion of counsel for the Company or counsel for the Initial
Purchasers may be necessary in the Offering Memorandum or in any other
document or arrangement, and the Company agrees to promptly prepare any
amendment or supplement to the Offering Memorandum that effects any
such changes.
8. Reimbursement of Initial Purchasers, Expenses. If (a)
this Agreement shall have been terminated pursuant to Section 6, (b) the Company
shall fail to tender the Securities for delivery to the Initial Purchasers for
any reason permitted under this Agreement or (c) the Initial Purchasers shall
decline to purchase the Securities for any reason permitted under this
Agreement, the Company and each of the Guarantors shall reimburse the Initial
Purchasers for such out-of-pocket expenses (including reasonable fees and
disbursements of counsel) as shall have been reasonably incurred by the Initial
Purchasers in connection with this Agreement and the proposed purchase and
resale of the Securities; provided, however, if this Agreement is terminated
pursuant to Section 7 by reason of the default of an Initial Purchaser, the
Company and the Guarantors shall not be obligated to reimburse such Initial
Purchaser for such expenses.
9. Indemnification. (a) The Company and each of the
Guarantors shall jointly and severally indemnify and hold harmless each Initial
Purchaser, its affiliates, its officers, directors, employees, representatives
and agents, and each person, if any, who controls
21
such Initial Purchasers within the meaning of the Securities Act or the Exchange
Act (collectively referred to for purposes of this Section 9(a) and Section 10
as an Initial Purchaser), from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, without
limitation, any loss, claim, damage, liability or action relating to purchases
and sales of the Securities), to which the Initial Purchaser may become subject,
whether commenced or threatened, under the Securities Act, the Exchange Act, any
other federal or state statutory law or regulation, at common law or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (i) any untrue statement or alleged untrue statement of a material
fact contained in the Offering Memorandum or in any amendment or supplement
thereto or in any information provided by the Company or any Guarantor pursuant
to Section 4(f) or (ii) the omission or alleged omission to state therein a
material fact required to be stated therein or necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, and shall reimburse each Initial Purchaser promptly upon
demand for any legal or other expenses reasonably incurred by that Initial
Purchaser in connection with investigating or defending or preparing to defend
against or appearing as a third party witness in connection with any such loss,
claim, damage, liability or action as such expenses are incurred; provided,
however, that neither the Company nor any Guarantor shall be liable in any such
case to the extent that any such loss, claim, damage, liability or action arises
out of, or is based upon, an untrue statement or alleged untrue statement in or
omission or alleged omission from any of such documents in reliance upon and in
conformity with any Initial Purchasers' Information.
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company and each of the Guarantors and
their respective affiliates, their respective officers, directors,
employees, representatives and agents, and each person, if any, who
controls the Company within the meaning of the Securities Act or the
Exchange Act (collectively referred to for purposes of this Section
9(b) and Section 10 as the Company), from and against any loss, claim,
damage or liability, joint or several, or any action in respect
thereof, to which the Company may become subject, whether commenced or
threatened, under the Securities Act, the Exchange Act, any other
federal or state statutory law or regulation, at common law or
otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in the Offering
Memorandum or in any amendment or supplement thereto or (ii) the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, provided, however, in each case, only to the extent
that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with any
Initial Purchasers' Information provided by such Initial Purchaser, and
shall reimburse the Company for any legal or other expenses reasonably
incurred by the Company in connection with investigating or defending
or preparing to defend against or appearing as a third party witness in
connection with any such loss, claim, damage, liability or action as
such expenses are incurred.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party pursuant to Section 9(a) or
22
9(b), notify the indemnifying party in writing of the claim or the
commencement of that action; provided, however, that the failure to
notify the indemnifying party shall not relieve it from any liability
that it may have under this Section 9 except to the extent that it has
been materially prejudiced by such failure; and, provided, further,
that the failure to notify the indemnifying party shall not relieve it
from any liability which it may have to an indemnified party otherwise
than under this Section 9. If any such claim or action shall be brought
against an indemnified party, and it shall notify the indemnifying
party thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof
with counsel reasonably satisfactory to the indemnified party. After
notice from the indemnifying party to the indemnified party of its
election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under
this Section 9 for any legal or other expenses subsequently incurred by
the indemnified party in connection with the defense thereof other than
reasonable costs of investigation; provided, however, that an
indemnified party shall have the right to employ its own counsel in any
such action, but the fees, expenses and other charges of such counsel
for the indemnified party will be at the expense of such indemnified
party unless (1) the employment of counsel by the indemnified party has
been authorized in writing by the indemnifying party, (2) the
indemnified party has reasonably concluded (based upon written advice
of counsel to the indemnified party) that there may be legal defenses
available to it or other indemnified parties that are different from or
in addition to those available to the indemnifying party, (3) a
conflict or potential conflict exists (based upon written advice of
counsel to the indemnified party) between the indemnified party and the
indemnifying party (in which case the indemnifying party will not have
the right to direct the defense of such action on behalf of the
indemnified party) or (4) the indemnifying party has not in fact
employed counsel reasonably satisfactory to the indemnified party to
assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel
will be at the expense of the indemnifying party or parties. It is
understood that the indemnifying party or parties shall not, in
connection with any proceeding or related proceedings in the same
jurisdiction, be liable for the reasonable fees, disbursements and
other charges of more than one separate firm of attorneys (in addition
to any local counsel) at any one time for all such indemnified party or
parties. Each indemnified party, as a condition of the indemnity
agreements contained in Sections 9(a) and 9(b), shall use all
reasonable efforts to cooperate with the indemnifying party in the
defense of any such action or claim.
(d) Settlement without Consent if Failure to Reimburse. The
Company shall not be liable for any settlement of any proceedings
effected without its written consent (which consent shall not be
unreasonably withheld). Notwithstanding the immediately preceding
sentence, if at any time an indemnified party shall have requested the
Company to reimburse such indemnified party for legal or other expenses
in connection with investigating, responding to or defending any
proceedings as contemplated by Section 9(a), the Company shall be
liable for any settlement of any proceedings effected without its
written consent if (i) such settlement is entered into more than 45
days after receipt by the Company of such request for the
reimbursement, (ii) the Company shall
23
not have reimbursed such indemnified party in accordance with such
request prior to the date of such settlement and (iii) the Company
shall not have responded in writing to such request, specifying those
expenses that it has chosen not to reimburse and the reason for such
non-reimbursement, prior to the date of such settlement. The Company
shall not, without the prior written consent of an indemnified party
(which consent shall not be unreasonably withheld), effect any
settlement of any pending or threatened proceedings in respect of which
indemnity could have been sought hereunder by such indemnified party
unless such settlement (x) includes an unconditional release of such
indemnified party in form and substance satisfactory to such
indemnified party from all liability on claims that are the subject
matter of such proceedings and (y) does not include any statement as to
or any admission of fault, culpability or failure to act by or on
behalf of any indemnified party. In addition, except as otherwise set
forth in this paragraph, an indemnified party shall not, without the
prior written consent of the Company (which consent shall not be
unreasonably withheld), effect any settlement of any pending or
threatened proceedings in respect of which indemnity could have been
sought hereunder by such indemnified party unless such settlement (x)
includes an unconditional release of the Company in form and substance
satisfactory to the Company from all liability on claims that are the
subject matter of such proceedings and (y) does not include any
statement as to or any admission of fault, culpability or failure to
act by or on behalf of the Company.
The obligations of the Company, each of the Guarantors and
each of the Initial Purchasers in this Section 9 and in Section 10 are in
addition to any other liability that the Company, each of the Guarantors or any
Initial Purchaser, as the case may be, may otherwise have, including in respect
of any breaches of representations, warranties and agreements made herein by any
such party.
10. Contribution. If the indemnification provided for in
Section 9 is unavailable or insufficient to hold harmless an indemnified party
under Section 9(a) or 9(b), then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or payable by
such indemnified party as a result of such loss, claim, damage or liability, or
action in respect thereof, (i) in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and the Guarantors on the
one hand and the Initial Purchasers on the other from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to in clause (i) above but also the relative
fault of the Company and the Guarantors on the one hand and the Initial
Purchasers on the other with respect to the statements or omissions that
resulted in such loss, claim, damage or liability, or action in respect thereof,
as well as any other relevant equitable considerations. The relative benefits
received by the Company and the Guarantors on the one hand and the Initial
Purchasers on the other with respect to such offering shall be deemed to be in
the same proportion as the total net proceeds from the offering of the
Securities purchased under this Agreement (before deducting expenses) received
by or on behalf of the Company and the Guarantors, on the one hand, and the
total discounts and commissions received by the Initial Purchasers with respect
to the Securities purchased under this Agreement, on the other, bear to the
total gross proceeds from the sale of the Securities under this Agreement. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the
24
omission or alleged omission to state a material fact relates to the Company,
the Guarantors or information supplied by the Company and the Guarantors on the
one hand or to any Initial Purchasers' Information on the other, the intent of
the parties and their relative knowledge, access to information and opportunity
to correct or prevent such untrue statement or omissions. The Company, the
Guarantors and the Initial Purchasers agree that it would not be just and
equitable if contributions pursuant to this Section 10 were to be determined by
pro rata allocation (even if the Initial Purchasers were treated as one entity
for such purpose) or by any other method of allocation that does not take into
account the equitable considerations referred to herein. The amount paid or
payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 10
shall be deemed to include, for purposes of this Section 10, any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending or preparing to defend any such action or claim.
Notwithstanding the provisions of this Section 10, no Initial Purchaser shall be
required to contribute any amount in excess of the amount by which the total
discounts and commissions received by such Initial Purchaser with respect to the
Securities purchased by it under this Agreement exceeds the amount of any
damages which such Initial Purchaser has otherwise paid or become liable to pay
by reason of any untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Securities Act) shall be entitled to contribution from
any person who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers obligations to contribute as provided in this Section 10 are several
in proportion to their respective purchase obligations and not joint.
11. Persons Entitled to Benefit of Agreement. This
Agreement shall inure to the benefit of and be binding upon the Initial
Purchasers, the Company each of the Guarantors and their respective successors.
This Agreement and the terms and provisions hereof are for the sole benefit of
only those persons, except as provided in Sections 9 and 10 with respect to
affiliates, officers, directors, employees, representatives, agents and
controlling persons of the Company, each of the Guarantors and the Initial
Purchasers and in Section 4(f) with respect to holders and prospective
purchasers of the Securities. Nothing in this Agreement is intended or shall be
construed to give any person, other than the persons referred to in this Section
11, any legal or equitable right, remedy or claim under or in respect of this
Agreement or any provision contained herein.
12. Expenses. The Company and the Guarantors agree with
the Initial Purchasers to pay (a) the costs incident to the authorization,
issuance, sale, preparation and delivery of the Securities and any taxes payable
in that connection; (b) the costs incident to the preparation, printing and
distribution of the Offering Memorandum and any amendments or supplements
thereto; (c) the costs of reproducing and distributing each of the Transaction
Documents; (d) the costs incident to the preparation, printing and delivery of
the certificates evidencing the Securities, including stamp duties and transfer
taxes, if any, payable upon issuance of the Securities; (e) the fees and
expenses of the Company's counsel and independent accountants; (f) the fees and
expenses of qualifying the Securities under the securities laws of the several
jurisdictions as provided in Section 4(g) and of preparing, printing and
distributing Blue Sky Memoranda (including related fees and expenses of counsel
for the Initial Purchasers); (g) any fees charged by rating agencies for rating
the Securities; (h) the fees and expenses of the Trustee and any paying agent
(including related fees and expenses of any counsel to such
25
parties); (i) all expenses and application fees incurred in connection with the
application for the inclusion of the Securities on the PORTAL Market and the
approval of the Securities for book-entry transfer by DTC; (j) all travel
expenses of the Company's officers and employees and other expenses of the
Company in connection with attending or hosting meetings with prospective
purchasers of the Securities from the Initial Purchasers; and (k) all other
costs and expenses incident to the performance of the obligations of the Company
and the Guarantors under this Agreement that are not otherwise specifically
provided for in this Section 12; provided, however, that except as provided in
Sections 8, 9 and in this Section 12, the Initial Purchasers shall pay their own
costs and expenses.
13. Survival. The respective indemnities, rights of
contribution, representations, warranties and agreements of the Company, the
Guarantors and the Initial Purchasers contained in this Agreement or made by or
on behalf of the Company, the Guarantors or the Initial Purchasers pursuant to
this Agreement or any certificate delivered pursuant hereto shall survive the
delivery of and payment for the Securities and shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any of them or any of their respective
affiliates, officers, directors, employees, representatives, agents or
controlling persons.
14. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent
by mail or telecopy transmission to Guggenheim Capital Markets, LLC,
000 Xxxx 00xx Xxxxxx 0xx Xxxxx, Xxx Xxxx, XX 00000, Attention: Xxxx
Xxxxxx (facsimile no.: (000) 000-0000 ); or
(b) if to the Company or the Guarantors, shall be delivered or
sent by mail or telecopy transmission to the address of the Company set
forth in the Offering Memorandum, Attention: Xxxxxxx Xxxxxxxx
(facsimile no.: (000) 000-0000).
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof. The Company shall be entitled to act and rely upon any
request, consent, notice or agreement given or made on behalf of the Initial
Purchasers by Xxxxxxxxxx.
00. Definition of Terms. For purposes of this Agreement,
(a) the term "BUSINESS DAY" means any day on which the New York Stock Exchange,
Inc. is open for trading, (b) the term "SUBSIDIARY" has the meaning set forth in
Rule 405 under the Securities Act and, (c) except where otherwise expressly
provided, the term "AFFILIATE" has the meaning set forth in Rule 405 under the
Securities Act.
16. Initial Purchasers' Information. The parties hereto
acknowledge and agree that, for all purposes of this Agreement, the Initial
Purchasers' Information consists solely of the following information in the
Offering Memorandum: the statements concerning the Initial Purchasers contained
in fifth and sixth sentences of the seventh paragraph and first, second,
penultimate and last sentences of the eighth paragraph under the heading "Plan
of Distribution".
17. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York.
26
18. Counterparts. This Agreement may be executed in one
or more counterparts (which may include counterparts delivered by telecopier)
and, if executed in more than one counterpart, the executed agreement,
counterparts shall each be deemed to be an original, but all such counterparts
shall together constitute one and the same instrument.
19. Amendments. No amendment or waiver of any provision
of this Agreement, nor any consent or approval to any departure therefrom, shall
in any event be effective unless the same shall be in writing and signed by the
parties hereto.
20. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
27
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to us a counterpart hereof, whereupon this
instrument will become a binding agreement between the Company, the Guarantors
and the Initial Purchasers in accordance with its terms.
Very truly yours,
MISSION RESOURCES CORPORATION
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President and
Chief Financial Officer
BLACK HAWK OIL COMPANY
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President and
Chief Financial Officer
MISSION HOLDINGS LLC
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Manager
MISSION E&P LIMITED PARTNERSHIP
By: Black Hawk Oil Company
General Partner
By: /s/ Xxxxxxx X. Xxxxxxxx
-------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
Title: Executive Vice President and
Chief Financial Officer
28
Accepted:
GUGGENHEIM CAPITAL MARKETS, LLC
By: /s/ Xxxxxxx Xxxxx
------------------------------------
Name: Xxxxxxx Xxxxx
Title: Managing Director
29
SCHEDULE 1
GUARANTORS
BLACK HAWK OIL COMPANY
MISSION HOLDINGS LLC
MISSION E&P LIMITED PARTNERSHIP
1
SCHEDULE 2
INITIAL PURCHASERS
PRINCIPAL
AMOUNT OF
INITIAL PURCHASERS SECURITIES
------------------------------- ------------
Guggenheim Capital Markets, LLC $108,000,000
Xxxxxx Xxxxxxx & Co., Inc. 22,000,000
------------
Total $130,000,000
ANNEX A
[FORM OF EXCHANGE AND REGISTRATION RIGHTS AGREEMENT]
ANNEX B
FORM OF OPINION OF XXXXXX & XXXXXX, L.L.P.
Pursuant to
Section 5(d) of the Purchase Agreement
1. The Company has been duly incorporated and is a validly existing
corporation in good standing under the laws of the State of Delaware, is
duly qualified to do business and is in good standing as a foreign entity
in the jurisdictions on Exhibit A, and has all power and authority
necessary to own, lease and operate its properties and to conduct the
business in which it is engaged; no holder of securities of the Company has
any right which has not been fully exercised or waived to require the
Company to register the offer or sale of any securities owned by such
holder under the Securities Act under, or as a result of the filing of the
registration statement to be filed by the Company pursuant to the terms of
the Registration Rights Agreement.
2. Each Guarantor has been duly incorporated and is validly existing in good
standing under the laws of the jurisdiction of its formation, has power and
authority to own, lease and operate its properties and to conduct its
business as described in the Offering Memorandum and is duly qualified as a
foreign corporation to transact business and is in good standing in each
jurisdiction on Exhibit A; except as described in the Offering Memorandum,
all of the issued and outstanding capital stock or member interests or
partnership interests of each Guarantor has been duly authorized and
validly issued, are fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim, equity, restriction
upon voting or transfer; to our knowledge, none of the outstanding shares
of capital stock or member interests or partnership interests of the
Designated Subsidiaries was issued in violation of any preemptive or
similar rights of any securityholder of such Guarantor.
3. The Company has an authorized capitalization as set forth in the Offering
Memorandum under the heading "Capitalization". The Company has an
authorized capitalization of 65,000,000 shares, of which 60,000,000 are
shares of common stock, par value $0.01 per share, and 5,000,000 are shares
of preferred stock, par value $0.01 per share.
4. The statements in the Offering Memorandum under the heading "Certain United
States Federal Tax Consequences," and "Description of Other Indebtedness,"
and in the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2003 under "Business and Properties - Applicable Laws and
Regulations," "-Risk Factors--Compliance with environmental and other
government regulations is costly and could negatively impact production,"
"--Risk Factors--We may have claims asserted against us to plug and abandon
xxxxx and restore the surface," "--Risk Factors--We may have claims
asserted against us to plug and abandon xxxxx and restore the surface,"
"--Risk Factors--Our certificate of incorporation, bylaws, rights plan and
Delaware law have provisions that discourage corporate takeovers and could
prevent stockholders from realizing a premium on their investment," and
"Legal Proceedings," to the extent that such information summarizes legal
matters, legal proceedings, or legal conclusions, has been reviewed by us
and, insofar as such information purports to describe or summarize the
legal matters, documents, statutes,
B-1
regulations, proceedings or conclusions referred to therein, fairly
summarize or describe the matters described therein in all material
respects.
5. All descriptions in the Offering Memorandum of contracts and other
documents to which the Company or any of its subsidiaries are a party are
accurate in all material respects; to the best of our knowledge, there are
no franchises, contracts, indentures, mortgages, loan agreements, notes,
leases or other instruments that would be required to be described or
referred to in the Offering Memorandum that are not described or referred
to in the Offering Memorandum other than those described or referred to
therein or incorporated by reference thereto, and the descriptions thereof
or references thereto are correct in all material respects.
6. The documents incorporated by reference in the Offering Memorandum (other
than the financial statements and supporting schedules therein, as to which
no opinion need be rendered), when they were filed with the Commission
complied as to form in all material respects with the requirements of the
1934 Act and the rules and regulations of the Commission thereunder.
7. The Indenture conforms in all material respects with the requirements of
the Trust Indenture Act and the rules and regulations of the Commission
applicable to an indenture which is qualified thereunder.
8. The Purchase Agreement has been duly authorized, executed and delivered by
the Company and each of the Guarantors.
9. The Securities have been duly authorized, executed and delivered by the
Company and each of the Guarantors and, when paid for as provided in the
Purchase Agreement, will be duly and validly issued and outstanding. The
Exchange Securities have been duly authorized by the Company and each of
the Guarantors.
10. Each Transaction Document other than the Securities and the Exchange
Securities has been duly authorized, executed and delivered by the Company
and each of the Guarantors, as the case may be, and (assuming the due
authorization, execution and delivery thereof by the parties thereto)
constitutes a valid and legally binding obligation of the Company and each
of the Guarantors. Each of the Transaction Documents conforms in all
material respects to the description thereof contained in the Offering
Memorandum.
11. The execution, delivery and performance by the Company and each of the
Guarantors of each of the Transaction Documents to which it is a party, the
issuance, authentication, sale and delivery of the Securities and
performance the Company and each of the Guarantors with the terms thereof
and the consummation of the transactions contemplated by the Transaction
Documents will not conflict with or result in a breach or violation of any
of the terms or provisions of, or constitute a default under, or result in
the creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to,
any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its subsidiaries is a party or
by which the Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its subsidiaries is subject
that is filed as an exhibit to the Company's
B-2
most recent Annual Report on Form 10-K, nor will such actions result in any
violation of (A) the provisions of the charter or by-laws of the Company or
any of its subsidiaries or (B) any statute or any judgment, order, decree,
rule or regulation of any court or arbitrator or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries or any
of their properties or assets known by us to be generally applicable to
similar transactions.
12. No consent, approval, authorization or order of, or filing or registration
with, any such court or arbitrator or governmental agency or body under any
such statute, judgment, order, decree, rule or regulation is required for
the execution, delivery and performance by the Company and each of the
Guarantors of each of the Transaction Documents to which each is a party,
the issuance, authentication, sale and delivery of the Securities and
compliance by the Company and each of the Guarantors with the terms thereof
and the consummation of the transactions contemplated by the Transaction
Documents, except (A) with respect to the performance by the Company of the
Registration Rights Agreement, the registration with the Commission of the
Securities under the Shelf Registration Statement and/or the registration
of the Exchange Offer with the Commission, and, in each case, registration
or qualification under applicable securities or "Blue Sky" laws of the
various states, (B) those required in connection with the qualification of
the Indenture under the 1939 Act, (C) those required in connection with
arranging for the Securities to be designated eligible for trading in the
Private Offerings, Resales and Trading through Automated Linkages
("PORTAL") Market or for the Securities to be eligible for clearance and
settlement through The Depository Trust Company ("DTC"), and (D) such as
have already been obtained.
13. Neither the Company nor any of its subsidiaries is, and will not after
giving effect to the offering and sale of the Securities and the
application of the proceeds thereof as described in the Prospectus be (A)
an "investment company" or a company "controlled by" an investment company
within the meaning of the Investment Company Act of 1940, as amended, and
the rules and regulations of the Commission thereunder, without taking
account of any exemption thereunder arising out of the number of holders of
the Company's securities or (B) a "holding company" or a "subsidiary
company" of a holding company or an "affiliate" thereof within the meaning
of the Public Utility Holding Company Act of 1935, as amended.
14. Except as described in the Offering Memorandum, to our knowledge, there are
no legal or governmental proceedings pending to which the Company
(including any predecessor entity) or any of its subsidiaries is a party or
of which any property or assets of the Company or any of its subsidiaries
is the subject which, singularly or in the aggregate, if determined
adversely to the Company or any of its subsidiaries, could reasonably be
expected to have a material adverse effect on the Company's or any
Guarantor's ability to perform its obligations under the Indenture, the
Notes, the Guarantees, the Purchase Agreement, the Registration Rights
Agreement or the Escrow Agreement, as applicable, or on the condition,
financial or otherwise, or in the earnings, business affairs, management or
business prospects of the Company and its subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of business (a
"Material Adverse Effect"), and no such proceedings are threatened or
contemplated by governmental authorities or threatened by others.
B-3
15. Neither the consummation of the transactions contemplated by the Purchase
Agreement nor the sale, issuance, execution or delivery of the Securities
and the application of the proceeds as described in the Offering Memorandum
will violate Regulation T, U or X of the Federal Reserve Board.
16. Assuming the accuracy of the representations and warranties of the Company,
the Guarantors and the Initial Purchasers, and the performance of their
respective agreements and covenants contained in the Purchase Agreement, no
registration of the Securities under the Securities Act or qualification of
the Indenture under the Trust Indenture Act is required in connection with
the issuance and sale of the Securities by the Company to the Initial
Purchasers and the initial offer, resale and delivery of the Securities by
the Initial Purchasers in the manner contemplated by the Purchase Agreement
and the Offering Memorandum.
Nothing has come to our attention that would lead us to believe that
the Offering Memorandum (excluding any amendment or supplement thereto) or any
amendment or supplement thereto (except for (i) financial statements and the
notes and schedules thereto and (ii) any reserve, production, acreage,
productive well, title or other oil and gas data, or financial or statistical
data included or incorporated by reference therein or omitted therefrom as to
which we need make no statement), at the time the Offering Memorandum was
issued, at the time any such amended or supplemented Offering Memorandum was
issued or at Closing Date, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
In rendering such opinion, such counsel may rely, as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
B-4
ANNEX C
FORM OF OPINION OF XXXXX XXXXXXX LLP
Pursuant to
Section 5(e) of the Purchase Agreement
1. The Registration Rights Agreement (assuming the due authorization,
execution and delivery thereof by the Initial Purchasers) constitutes an
obligation of the Company and each of the Guarantors enforceable against
the Company and each of the Guarantors in accordance with its terms, except
to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law) and except as rights to indemnification and contribution set forth
therein may be limited by applicable law.
2. The Indenture(assuming the due authorization, execution and delivery
thereof by the Trustee) constitutes an obligation of the Company and each
of the Guarantors enforceable against the Company and each of the
Guarantors in accordance with its terms, except to the extent that such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar laws
affecting creditors' rights generally and by general equitable principles
(whether considered in a proceeding in equity or at law) and except as
rights to indemnification and contribution set forth therein may be limited
by applicable law.
3. The Notes (assuming the due authentication and delivery thereof by the
Trustee), when paid for as provided in the Purchase Agreement, constitute
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 such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law) and except as rights to indemnification and contribution set forth
therein may be limited by applicable law.
4. The Guarantees (assuming the due authorization, execution and delivery
thereof by the Trustee) will constitute obligations of the related
Guarantor, enforceable against each such Guarantor in accordance with their
terms, subject to bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium and other similar laws affecting creditors'
rights generally and to general equitable principles (whether considered in
a proceeding in equity or at law) and except as rights to indemnification
and contribution set forth therein may be limited by applicable law.
5. The Exchange Securities (assuming the due execution, authentication and
delivery, as the case may be, of the Exchange Notes by the Company and the
Trustee and the due execution and delivery of the Exchange Guarantees by
the Company and the Trustee, all in accordance with the terms of the
Indenture) will constitute obligations of the Company, as issuer of the
Notes, and each of the Guarantors, as guarantors, enforceable against the
Company, as issuer of the Notes, and each of the Guarantors, as guarantors,
in accordance with its terms, except
C-1
to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law) and except as rights to indemnification and contribution set forth
therein may be limited by applicable law.
6. The Escrow Agreement (assuming the due authorization, execution and
delivery thereof by the Escrow Agent) constitutes an obligation of the
Company enforceable against the Company in accordance with its terms,
except to the extent that such enforceability may be limited by applicable
bankruptcy, insolvency, fraudulent conveyance, reorganization, moratorium
and other similar laws affecting creditors' rights generally and by general
equitable principles (whether considered in a proceeding in equity or at
law) and except as rights to indemnification and contribution set forth
therein may be limited by applicable law.
Nothing has come to our attention that would lead us to believe that
the Offering Memorandum (excluding any amendment or supplement thereto) or any
amendment or supplement thereto (except for (i) financial statements and the
notes and schedules thereto and (ii) any reserve, production, acreage,
productive well, title or other oil and gas data, or financial or statistical
data included or incorporated by reference therein or omitted therefrom as to
which we need make no statement), at the time the Offering Memorandum was
issued, at the time any such amended or supplemented Offering Memorandum was
issued or at Closing Date, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
In rendering such opinion, such counsel may rely, as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
C-2
