1
EXHIBIT 10.40
PURCHASE AGREEMENT
AMONG
HS RESOURCES, INC.,
ORION ACQUISITION, INC.,
HSRTW, INC.
SALOMON BROTHERS INC,
CHASE SECURITIES INC.,
XXXXXX BROTHERS INC.,
PRUDENTIAL SECURITIES INCORPORATED
DATED NOVEMBER 22, 1996
2
HS RESOURCES, INC.
$150,000,000
9 1/4% SENIOR SUBORDINATED NOTES DUE 2006
PURCHASE AGREEMENT
New York, New York
November 22, 1996
Salomon Brothers Inc
Chase Securities Inc.
Xxxxxx Brothers Inc.
Prudential Securities Incorporated
As Representatives of the Initial Purchasers
c/o Salomon Brothers Inc
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
HS Resources, Inc., a Delaware corporation (the "COMPANY"), proposes
to issue and sell to the parties named in SCHEDULE I hereto (the "INITIAL
PURCHASERS"), for whom you are acting as representatives (the
"REPRESENTATIVES"), $150,000,000 principal amount of its 9 1/4% Senior
Subordinated Notes Due 2006 (the "NOTES") to be guaranteed on a senior
subordinated basis (the "SUBSIDIARY GUARANTIES" and, together with the Notes,
the "SECURITIES") by Orion Acquisition, Inc., a Delaware corporation ("ORION
ACQUISITION"), and HSRTW, Inc., a Delaware corporation ("HSRTW" and together
with Orion Acquisition the "SUBSIDIARY GUARANTORS"). The Securities are to be
issued under an indenture (the "INDENTURE"), dated as of November 27, 1996,
between the Company and Xxxxxx Trust and Savings Bank, as trustee. If you are
the only Initial Purchasers, all references herein to the Representatives shall
be deemed to be to the Initial Purchasers.
The sale of the Securities to the Initial Purchasers will be made
without registration of the Securities under the Securities Act of 1933, as
amended (the "SECURITIES ACT"), in reliance upon exemptions from the
registration requirements of the Securities Act. You have advised the Company
that the Initial Purchasers will offer and sell the Securities purchased by
them hereunder in accordance with Section 4 hereof as soon as you deem
advisable.
In connection with the sale of the Securities, the Company has
prepared a preliminary offering memorandum, dated November 6, 1996 (including
any and all exhibits thereto and any information incorporated by reference
therein, the "PRELIMINARY MEMORANDUM") and a final offering memorandum, dated
November 22, 1996 (including any and all exhibits thereto and any information
incorporated by reference therein, the "FINAL MEMORANDUM"). Each of the
Preliminary Memorandum and the Final Memorandum sets forth certain information
concerning
1
3
the Company, the Subsidiary Guarantors and the Securities. The Company and the
Subsidiary Guarantors, jointly and severally, hereby confirm that they have
authorized the use of the Preliminary Memorandum and the Final Memorandum, and
any amendment or supplement thereto, in connection with the offer and sale of
the Securities by the Initial Purchasers. Unless stated to the contrary, all
references in this Purchase Agreement (this "AGREEMENT") to the Final
Memorandum are to the Final Memorandum at the Execution Time (as defined below)
and are not meant to include any amendment or supplement, or any information
incorporated by reference therein, subsequent to the Execution Time, and any
references herein to the terms "AMEND", "AMENDMENT" or "SUPPLEMENT" with
respect to the Final Memorandum shall be deemed to refer to and include any
information filed under the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), subsequent to the Execution Time which is incorporated by
reference therein.
1. Representations and Warranties of the Company and the
Subsidiary Guarantors. The Company and the Subsidiary Guarantors jointly and
severally represent and warrant to each Initial Purchaser as set forth below in
this Section 1.
(a) Each of the Company, the Subsidiary Guarantors and
their respective subsidiaries is a corporation or partnership, duly
incorporated or formed and is validly existing as a corporation or
partnership in good standing under the laws of the jurisdiction in
which it is chartered, organized or formed and is duly qualified to do
business as a foreign corporation or partnership and is in good
standing under the laws of each jurisdiction which requires such
qualification wherein it owns or leases material properties or
conducts material business, except in such jurisdictions in which the
failure to so qualify would not have a material adverse effect on the
Company, the Subsidiary Guarantors and their respective subsidiaries
taken as a whole.
(b) Each of the Company, the Subsidiary Guarantors and
their respective subsidiaries has full power (corporate and other) to
own or lease its properties and conduct its business as described in
the Final Memorandum; and each of the Company and the Subsidiary
Guarantors have full power (corporate and other) to enter into this
Agreement, the Indenture, the Notes and the Registration Agreement,
dated as of November 27, 1996, among the Company, the Subsidiary
Guarantors and the Initial Purchasers (the "REGISTRATION AGREEMENT")
(collectively, the "TRANSACTION DOCUMENTS") to which it is a party and
to carry out all the terms and provisions hereof and thereof to be
carried out by it, including, without limitation, the issuance, sale
and delivery of the Securities.
(c) The issued shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable and, except as otherwise set forth in
the Final Memorandum, are owned beneficially, directly or indirectly,
by the Company free and clear of any security interests, liens,
encumbrances, preemptive rights or claims.
(d) The Company has an authorized, issued and outstanding
equity capitalization as set forth in the Final Memorandum (except for
issuances, if any, subsequent to September 30, 1996 pursuant to the
Company's stock option plans). All
2
4
of the issued shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable.
No holders of outstanding shares of capital stock of the Company are
entitled as such to any preemptive or other rights to subscribe for
any of the Securities.
(e) The consolidated financial statements and schedules
of the Company and its consolidated subsidiaries included in the Final
Memorandum present fairly in all material respects the financial
position of the Company and its consolidated subsidiaries and the
results of operation and changes in financial condition as of the
dates and periods therein specified. Such financial statements and
schedules have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the period
involved (except as otherwise noted therein). The pro forma financial
statements of the Company and its subsidiaries and the related notes
thereto included in the Final Memorandum have been prepared in
accordance with the Securities and Exchange Commission's (the
"COMMISSION") rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the bases described
therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein. The
selected financial data set forth under the caption "Selected
Historical and Pro Forma Combined Financial Data" in the Final
Memorandum present fairly in all material respects, on the basis
stated in the Final Memorandum, the information included therein.
(f) Xxxxxx Xxxxxxxx LLP, who has certified certain
financial statements of the Company and its consolidated subsidiaries
and delivered their report with respect to the audited consolidated
financial statements and schedules included in the Final Memorandum,
are independent public accountants within the meaning of the
Securities Act and the applicable rules and regulations thereunder.
(g) The execution, delivery and performance of this
Agreement have been duly authorized by the Company and the Subsidiary
Guarantors, this Agreement has been duly executed and delivered by the
Company and the Subsidiary Guarantors and upon the due execution and
delivery by the other parties hereto, this Agreement will constitute
legal, valid and binding obligations of the Company and the Subsidiary
Guarantors, enforceable in accordance with its terms. This Agreement
conforms in all material respects to the description thereof contained
in the Final Memorandum.
(h) No legal or governmental proceedings are pending to
which the Company, the Subsidiary Guarantors or any of their
respective subsidiaries is a party or to which the property of the
Company, the Subsidiary Guarantors or any of their respective
subsidiaries is subject that are not described in the Final
Memorandum, and no such proceedings have been threatened against the
Company, the Subsidiary Guarantors or any of their respective
subsidiaries or with respect to any of their respective properties,
except in each case for such proceedings that, if the subject of an
unfavorable decision, ruling or finding, would not, individually or in
the aggregate, result in a material adverse effect on the condition
(financial or otherwise), business prospects, net worth or results of
operations of the Company, the Subsidiary Guarantors and their
respective
3
5
subsidiaries, taken as a whole (a "MATERIAL ADVERSE EFFECT"), or have
a material adverse effect on the ability of the Company to perform its
obligations under any of the Transaction Documents.
(i) The issuance, offering and sale of the Securities to
the Initial Purchasers by the Company and the Subsidiary Guarantors
pursuant to this Agreement, the compliance by the Company and the
Subsidiary Guarantors with the other provisions of this Agreement and
the authorization, execution and delivery by the Company and the
Subsidiary Guarantors of this Agreement and the other Transaction
Documents to which it is a party and the consummation of the other
transactions contemplated herein and therein do not (i) require the
consent, approval, authorization, registration or qualification of or
with any governmental authority, except such as have been obtained and
such as may be required under state securities or blue sky laws or,
with respect to the obligations under the Registration Agreement,
except such as may be required under the Trust Indenture Act of 1939,
as amended (the "TRUST INDENTURE ACT"), or as may be required to
register the Securities under the Securities Act or (ii) conflict with
or result in a breach or violation of any of the terms and provisions
of, or constitute a default under, any indenture, mortgage, deed of
trust, lease or other agreement or instrument to which the Company,
the Subsidiary Guarantors or any of their respective subsidiaries is a
party or by which the Company, the Subsidiary Guarantors or any of
their respective subsidiaries or any of their respective properties
are bound, except under the Chase Facility (as hereinafter defined) (a
consent with respect to which will be obtained prior to the Closing
Date) and except in each case for such conflicts, breaches or
violations that would not, individually or in the aggregate, result in
a Material Adverse Effect, or the charter documents or bylaws of the
Company, the Subsidiary Guarantors or any of their respective
subsidiaries, or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any
arbitrator applicable to the Company, the Subsidiary Guarantors or any
of their respective subsidiaries.
(j) Neither the Company nor any Subsidiary Guarantor has
(i) taken, directly or indirectly, any action designed to cause or to
result in, or that has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price
of any securities of the Company to facilitate the sale or resale of
the Securities or (ii) paid or agreed to pay to any person any
compensation for soliciting another to purchase the Securities (other
than compensation paid to the Initial Purchasers under this
Agreement).
(k) Subsequent to the respective dates as of which
information is given in the Final Memorandum, (i) the Company, the
Subsidiary Guarantors and their respective subsidiaries have not
incurred any material liability or obligation, direct or contingent,
nor entered into any material transaction not in the ordinary course
of business; (ii) the Company and the Subsidiary Guarantors have not
purchased any of their outstanding capital stock, nor declared, paid
or otherwise made any dividend or distribution of any kind on their
capital stock; and (iii) there has not been any material change in the
capital stock, short-term debt or long-term debt of the Company, the
Subsidiary Guarantors and their respective subsidiaries, except in
each case as described in or contemplated by the Final Memorandum.
4
6
(l) The Company, the Subsidiary Guarantors and each of
their respective subsidiaries have good and indefeasible title to all
items of real property and good title to all personal property owned
by each of them, in each case free and clear of any security
interests, liens, encumbrances, equities, claims and other defects,
except such as do not materially and adversely affect the value of
such property and do not interfere with the use made or proposed to be
made of such property by the Company, the Subsidiary Guarantors, or
their respective subsidiaries, and the Company, the Subsidiary
Guarantors and their respective subsidiaries have valid, subsisting
and enforceable leases for the properties described in the Final
Memorandum as leased by them, with exceptions in each case as are not
material and do not interfere with the business of the Company, the
Subsidiary Guarantors and their respective subsidiaries, taken as a
whole, in each case except as described in or contemplated by the
Final Memorandum.
(m) No labor dispute with the employees of the Company,
the Subsidiary Guarantors or any of their respective subsidiaries
exists or, to the knowledge of the Company, is threatened or imminent
that would result in a Material Adverse Effect, except as described in
or contemplated by the Final Memorandum.
(n) The Company, the Subsidiary Guarantors and each of
their respective subsidiaries are insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as are prudent and customary in the businesses in which they
are engaged; neither the Company, the Subsidiary Guarantors nor any of
their respective subsidiaries have been refused any insurance coverage
sought or applied for; and neither the Company, the Subsidiary
Guarantors nor any of their respective subsidiaries has any reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not result in a Material Adverse Effect,
except as described in or contemplated by the Final Memorandum.
(o) No subsidiary of the Company is currently prohibited,
directly or indirectly, from paying any dividends to the Company, from
making any other distribution on such subsidiary's capital stock, from
repaying to the Company any loans or advances to such subsidiary from
the Company or from transferring any of such subsidiary's property or
assets to the Company, except as described in or contemplated by the
Final Memorandum.
(p) The Company, the Subsidiary Guarantors and their
respective subsidiaries possess all certificates, authorizations and
permits issued by the appropriate federal, state or foreign regulatory
authorities required to conduct their respective businesses except for
those the failure of which to possess, individually or in the
aggregate, would not have a Material Adverse Effect, and neither the
Company, the Subsidiary Guarantors nor any of their respective
subsidiaries have received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material
Adverse Effect, except as described in or contemplated by the Final
Memorandum.
5
7
(q) The Company and the Subsidiary Guarantors have filed
all foreign, federal, state and local tax returns that are required to
be filed through the date hereof or have requested extensions thereof
and have paid all taxes (other than immaterial amounts of franchise
taxes with respect to immaterial subsidiaries and immaterial amounts
of severance taxes) required to be paid by them and any other
assessment, fine or penalty levied against them, to the extent that
any of the foregoing is due and payable, except for any such
assessment, fine or penalty that is currently being contested in good
faith or as described in or contemplated by the Final Memorandum.
(r) Neither the Company, the Subsidiary Guarantors nor
any of their respective subsidiaries is in violation of any federal or
state law or regulation relating to occupational safety and health or
to the storage, handling or transportation of hazardous or toxic
materials, and the Company, the Subsidiary Guarantors and their
respective subsidiaries have received all permits, licenses or other
approvals required of them under applicable federal and state
occupational safety and health and environmental laws and regulations
to conduct their respective businesses, and the Company, the
Subsidiary Guarantors and their respective subsidiaries are in
compliance with all terms and conditions of any such permit, license
or approval, except any such violation of law or regulation, failure
to receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals which would not, singly or in the aggregate, result in a
Material Adverse Effect, except as described in or contemplated by the
Final Memorandum.
(s) Each certificate signed by any officer of the Company
and the Subsidiary Guarantors and delivered to the Representatives or
counsel for the Initial Purchasers shall be deemed to be a
representation and warranty by the Company and the Subsidiary
Guarantors to the Initial Purchasers as to the matters covered
thereby.
(t) The Company, the Subsidiary Guarantors and each of
their respective 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.
(u) No default exists, and no event has occurred which,
with notice or lapse of time or both, would constitute a default in
the due performance and observance of any terms, covenant or condition
of any indenture, mortgage, deed of trust, lease or other agreement or
instrument to which the Company, the Subsidiary Guarantors or any of
their respective subsidiaries is a party or by which the Company, the
Subsidiary Guarantors or any of their respective subsidiaries or any
of their respective properties is bound or may be affected in any
material adverse respect with regard to property, business or
operations of the Company, the Subsidiary Guarantors and their
respective
6
8
subsidiaries, taken as a whole, except for such defaults that would
not result in a Material Adverse Effect.
(v) The Preliminary Memorandum, at the date thereof, did
not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
The Final Memorandum, at the date thereof, does not, and as of the
Closing Date (as defined below) will not (and any amendment or
supplement thereto, at the date thereof and at the Closing Date, will
not), contain any untrue statement of a material fact or omit to state
any material fact necessary 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 Subsidiary Guarantors make
no representation or warranty as to the information contained in or
omitted from the Preliminary Memorandum or the Final Memorandum, or
any amendment or supplement thereto, in reliance upon and in
conformity with information furnished in writing to the Company by or
on behalf of the Initial Purchasers through the Representatives
specifically for inclusion therein.
(w) None of the Company, the Subsidiary Guarantors or any
of their respective Affiliates (as defined in Rule 501(b) of
Regulation D under the Securities Act ("REGULATION D")), nor, assuming
that the representations and warranties made by the Initial Purchasers
pursuant to Section 4 herein are true and correct, any person acting
on its or their behalf has, directly or indirectly, made offers or
sales of any security, or solicited offers to buy any security, under
circumstances that would require the registration of the Securities
under the Securities Act.
(x) None of the Company, the Subsidiary Guarantors, or
any of their respective Affiliates, or, assuming that the
representations and warranties made by the Initial Purchasers pursuant
to Section 4 herein are true and correct, any person acting on its or
their behalf has engaged in any form of general solicitation or
general advertising (within the meaning of Regulation D) in connection
with any offer or sale of the Securities in the United States.
(y) The Securities satisfy the eligibility requirements
of Rule 144A(d)(3) under the Securities Act.
(z) None of the Company, the Subsidiary Guarantors, any
of their respective Affiliates, or, assuming that the representations
and warranties made by the Initial Purchasers pursuant to Section 4
herein are true and correct, any person acting on its or their behalf
has engaged in any directed selling efforts with respect to the
Securities, and each of them has complied with the offering
restrictions requirement of Regulation S ("REGULATION S") under the
Securities Act with respect to the Securities. Terms used in this
paragraph have the meanings given to them by Regulation S.
(aa) The Company has been advised by the National
Association of Securities Dealers, Inc. PORTAL Market that the
Securities have been designated PORTAL eligible securities in
accordance with the rules and regulations of the National Association
of Securities Dealers, Inc.
7
9
(bb) Neither the Company nor any of the Subsidiary
Guarantors is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "INVESTMENT COMPANY
ACT"), without taking account of any exemption arising out of the
number of holders of the Company's or such Subsidiary Guarantor's
securities.
(cc) The Company is subject to and in compliance in all
material respects with the reporting requirements of Section 13 or
Section 15(d) of the Exchange Act.
(dd) The information provided by the Company and the
Subsidiary Guarantors pursuant to Section 5(h) hereof will not, at the
date thereof, contain any untrue statement of a material fact or omit
to state any material fact necessary to make the statements therein,
in the light of the circumstances under which they were made, not
misleading.
(ee) The Indenture, the Registration Agreement and the
Securities have been duly and validly authorized and, in the case of
the Indenture and the Registration Agreement, when duly executed and
delivered by the parties thereto, and in the case of the Securities,
when duly issued, authenticated, and delivered in accordance with the
terms of the Indenture, endorsed by each Subsidiary Guarantor and paid
for in accordance with the terms of this Agreement, (A) the Notes will
be validly issued and outstanding and will constitute valid and
binding obligations of the Company enforceable against the Company in
accordance with their terms and entitled to the benefits of the
Indenture and the Registration Agreement and (B) the Subsidiary
Guaranties will constitute valid and binding obligations of the
Subsidiary Guarantors enforceable against the Subsidiary Guarantors in
accordance with their terms. The Securities, Indenture and the
Registration Agreement conform in all material respects to the
description thereof contained in the Final Memorandum.
(ff) The Company, the Subsidiary Guarantors and their
respective subsidiaries conduct their business in compliance with all
applicable laws, rules and regulations of the jurisdictions in which
they are conducting business, except where the failure to be so in
compliance would not have a Material Adverse Effect.
(gg) Except for consents (the "CHASE CONSENT") necessary
under the Company's credit facility (as amended, the "CHASE FACILITY")
with The Chase Manhattan Bank, which will be obtained prior to the
Closing Date, no circumstances exist as of the date hereof which, had
the Notes already been issued immediately prior to the execution of
this Agreement, would constitute a Default or an Event of Default (as
such terms are defined in the Indenture).
2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to each Initial Purchaser, and each Initial Purchaser agrees,
severally and not jointly, to purchase from the Company, at a purchase price of
96.732% of the principal amount thereof, plus accrued interest, if any, from
November 27, 1996 to the Closing Date, the principal amount of Notes set forth
opposite such Initial Purchaser's name in SCHEDULE I hereto.
8
10
3. Delivery and Payment. Delivery of and payment for the
Securities shall be made at 10:00 AM, New York City time, on November 27, 1996,
or such later date as the Representatives shall designate, which date and time
may be postponed by agreement between the Representatives and the Company or as
provided in Section 10 hereof (such date and time of delivery and payment for
the Securities being herein called the "CLOSING DATE"). Delivery of the
Securities shall be made to the Representatives for the respective accounts of
the Initial Purchasers against payment by the Initial Purchasers through the
Representatives of the purchase price thereof to or upon the order of the
Company by wire transfer payable in New York Clearing House funds or such other
manner of payment as may be agreed by the Company and the Representatives.
Delivery of the Securities shall be made at such location as the
Representatives shall reasonably designate at least one business day in advance
of the Closing Date and payment for the Securities shall be made at the office
of Xxxxx, Xxxxxx & Xxxxxx LLP, 000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, XX 00000.
Certificates for the Securities shall be registered in such names and in such
denominations as the Representatives may request not less than three full
business days in advance of the Closing Date.
The Company agrees to have the Securities available for inspection,
checking and packaging by the Representatives in New York, New York, not later
than 1:00 PM on the business day prior to the Closing Date.
4. Offering of Securities. Each Initial Purchaser, severally and
not jointly, represents and warrants to and agrees, with the Company and the
Subsidiary Guarantors that:
(a) It has not offered or sold, and will not offer or
sell, any Securities except (i) to those it reasonably believes to be
"QUALIFIED INSTITUTIONAL BUYERS" (as defined in Rule 144A under the
Securities Act) and that, in connection with each such sale, it has
taken or will take reasonable steps to ensure that the purchaser of
such Securities is aware that such sale is being made in reliance on
Rule 144A, (ii) to other institutional "ACCREDITED INVESTORS" (as
defined in Rule 501(a)(1), (2), (3) or (7) of Regulation D) who
provide to it and to the Company a letter in the form of EXHIBIT A
hereto or (iii) in accordance with the restrictions set forth in
EXHIBIT B hereto.
(b) Neither it nor any person acting on its behalf has
made or will make offers or sales of the Securities in the United
States by means of any form of general solicitation or general
advertising (within the meaning of Regulation D) in the United States.
5. Agreements. The Company and the Subsidiary Guarantors jointly
and severally agree with each Initial Purchaser that:
(a) The Company and the Subsidiary Guarantors will
furnish to each Initial Purchaser and to counsel for the Initial
Purchasers, during the period referred to in paragraph (c) below, as
many copies of the Final Memorandum and any amendments and supplements
thereto as it may reasonably request. The Initial Purchasers will pay
the expenses of printing, shipping and production of all documents
relating to the offering and all "roadshow" expenses incurred by the
Initial Purchasers or the Company.
9
11
(b) The Company and the Subsidiary Guarantors will not
amend or supplement the Final Memorandum, other than by filing
documents under the Exchange Act which are incorporated by reference
therein, without the prior written consent of the Representatives;
provided, however, that, prior to the completion of the distribution
of the Securities by the Initial Purchasers (as determined by the
Representatives), the Company and the Subsidiary Guarantors will not
file any document under the Exchange Act which is incorporated by
reference in the Final Memorandum unless, prior to such proposed
filing, the Company and the Subsidiary Guarantors have furnished the
Representatives with a copy of such document for their review and the
Representatives have not reasonably objected to the filing of such
document. The Company and the Subsidiary Guarantors will promptly
advise the Representatives when any document filed under the Exchange
Act which is incorporated by reference in the Final Memorandum shall
have been filed with the Commission.
(c) If at any time prior to the completion of the sale of
the Securities by the Initial Purchasers (as determined by the
Representatives), any event occurs as a result of which the Final
Memorandum, as then amended or supplemented, would include any untrue
statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, or if it
should be necessary to amend or supplement the Final Memorandum to
comply with the Securities Act or any applicable state securities or
blue sky laws, the Company and the Subsidiary Guarantors will promptly
notify the Representatives of the same and, subject to the
requirements of paragraph (b) of this Section 5, will prepare and
provide to the Representatives pursuant to paragraph (a) of this
Section 5 an amendment or supplement which will correct such statement
or omission or effect such compliance.
(d) The Company and the Subsidiary Guarantors will
arrange for the qualification of the Securities for sale by the
Initial Purchasers under the laws of such jurisdictions as the Initial
Purchasers may designate and will maintain such qualifications in
effect so long as required for the sale of the Securities, except that
in no event shall the Company be obligated in connection therewith to
qualify as a foreign corporation or to execute a general consent to
service of process. The Company and the Subsidiary Guarantors will
promptly advise the Representatives of the receipt by the Company or
any Subsidiary Guarantor of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose.
(e) The Company will not, and will not permit any of its
subsidiaries to, resell any Securities that have been acquired by any
of them.
(f) None of the Company, the Subsidiary Guarantors, any
of their respective Affiliates, or, assuming that the representations
and warranties made by the Initial Purchasers pursuant to Section 4
hereof are true and correct, any person acting on their behalf will,
directly or indirectly, make offers or sales of any security, or
solicit offers to buy any security, under circumstances that would
require the registration of the Securities under the Securities Act.
10
12
(g) None of the Company, the Subsidiary Guarantors, any
of their respective Affiliates, or, assuming that the representations
and warranties made by the Initial Purchasers pursuant to Section 4
hereof are true and correct, any person acting on their behalf will
engage in any form of general solicitation or general advertising
(within the meaning of Regulation D) in connection with any offer or
sale of the Securities in the United States, except in connection with
the Registration Agreement as permitted by the Securities Act.
(h) So long as any of the Securities or the Subsidiary
Guaranties are "RESTRICTED SECURITIES" within the meaning of Rule
144(a)(3) under the Securities Act, the Company and the Subsidiary
Guarantors will, during any period in which it is not subject to and
in compliance with Section 13 or 15(d) of the Exchange Act, provide to
each holder of such restricted securities and to each prospective
purchaser (as designated by such holder) of such restricted
securities, upon the request of such holder or prospective purchaser,
any information required to be provided by Rule 144A(d)(4) under the
Securities Act. This covenant is intended to be for the benefit of
the holders, and the prospective purchasers designated by such
holders, from time to time of such restricted securities.
(i) None of the Company, the Subsidiary Guarantors, any
of their respective Affiliates, or, assuming that the representations
and warranties made by the Initial Purchasers pursuant to Section 4
hereof are true and correct, any person acting on its or their behalf
will engage in any directed selling efforts with respect to the
Securities, and each of them will comply with the offering
restrictions requirement of Regulation S with respect to the
Securities. Terms used in this paragraph have the meanings given to
them by Regulation S.
(j) The Company and the Subsidiary Guarantors will
cooperate with the Representatives and use their best efforts to
permit the Securities to be eligible for clearance and settlement
through The Depository Trust Company.
(k) The Company will not, until 180 days following the
Closing Date, without the prior written consent of the
Representatives, offer, sell or contract to sell, or otherwise dispose
of, directly or indirectly, or announce the offering of, any debt
securities issued or guaranteed by the Company (other than the
Securities or in connection with the registered exchange offer
contemplated by the Registration Agreement).
(l) In connection with any disposition of Securities
pursuant to a transaction made in compliance with paragraph 6 of
EXHIBIT A, the Company will reissue certificates evidencing such
Securities without the legend referred to in paragraph 5 of EXHIBIT A
(provided, in the case of a transaction made in compliance with
paragraph 6(f) of EXHIBIT A, that the legal opinion referred to
therein so permits).
(m) The Company will use its best efforts to enable the
Securities to be designated PORTAL eligible in accordance with the
rules and regulations of the National Association of Securities
Dealers, Inc.
11
13
6. Conditions to the Obligations of the Initial Purchasers. The
obligations of the Initial Purchasers to purchase the Securities shall be
subject to the accuracy of the representations and warranties on the part of
the Company and the Subsidiary Guarantors contained herein at the date and time
that this Agreement is executed and delivered by the parties hereto (the
"EXECUTION TIME") and the Closing Date, to the accuracy of the statements of
the Company and the Subsidiary Guarantors made in any certificates provided to
the Representatives pursuant to the provisions hereof, to the performance by
the Company and the Subsidiary Guarantors of their obligations hereunder and to
the following additional conditions:
(a) The Company shall have furnished to the
Representatives the opinion of Xxxxx, Xxxxxx & Xxxxxx LLP, counsel for
the Company, dated the Closing Date, to the effect that:
(i) each of the Company and the Subsidiary
Guarantors has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the
jurisdiction in which it is chartered or organized, with full
corporate power and authority to own its properties and
conduct its business as described in the Final Memorandum, and
is duly qualified to do business as a foreign corporation and
is in good standing under the laws of each jurisdiction in
which the character of the business conducted by it or the
location of the properties owned or leased by it makes such
qualification necessary (except where the failure to so
qualify would not reasonably be expected to have a Material
Adverse Effect);
(ii) all the outstanding shares of capital stock
of the Company and the Subsidiary Guarantors have been duly
and validly authorized and issued and are fully paid and
nonassessable, and, except as otherwise set forth in the Final
Memorandum, all outstanding shares of capital stock of the
Subsidiary Guarantors are owned by the Company either directly
or through wholly owned subsidiaries free and clear of any
perfected security interest and, to the knowledge of such
counsel, any other security interests, claims, liens or
encumbrances;
(iii) each of the Company and the Subsidiary
Guarantors has full corporate power to enter into the
Transaction Documents to which it is a party and to carry out
all the terms and provisions thereof to be carried out by it,
including, without limitation, with respect to the Company,
the issuance, sale and delivery of the Notes, and, with
respect to the Subsidiary Guarantors, the issuance, sale and
delivery of the Subsidiary Guaranties;
(iv) the execution, delivery and performance of
this Agreement and the Registration Agreement have been duly
authorized by the Company and the Subsidiary Guarantors, this
Agreement and the Registration Agreement have been duly
executed and delivered by the Company and the Subsidiary
Guarantors and this Agreement and the
12
14
Registration Agreement constitute legal, valid and binding
obligations of the Company and the Subsidiary Guarantors,
enforceable in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy,
reorganization, insolvency, fraudulent conveyance, moratorium
or other similar laws relating to or affecting creditors'
rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law). This Agreement and the
Registration Agreement conform in all material respects to the
description thereof contained in the Final Memorandum;
(v) to the knowledge of such counsel, there are
no legal or governmental proceedings pending to which the
Company, the Subsidiary Guarantors or any of their respective
subsidiaries is a party or to which the property of the
Company, the Subsidiary Guarantors or any of their respective
subsidiaries is subject that are not described in the Final
Memorandum, and no such proceedings have been threatened
against the Company, the Subsidiary Guarantors or any of their
respective subsidiaries or with respect to any of their
respective properties, except in each case for such
proceedings that, if the subject of an unfavorable decision,
ruling or finding, would not, singly or in the aggregate,
result in a material adverse change in the condition
(financial or otherwise), business, net worth or results of
operations of the Company, the Subsidiary Guarantors and their
respective subsidiaries, taken as a whole, or have a material
adverse effect on the ability of the Company to perform its
obligations under any of the Transaction Documents;
(vi) the Company's authorized equity
capitalization is as set forth in the Final Memorandum;
(vii) the Indenture has been duly authorized,
executed and delivered, and, assuming due execution and
delivery by the Trustee, constitutes a legal, valid and
binding instrument enforceable against the Company and the
Subsidiary Guarantors in accordance with its terms, except as
enforcement thereof may be limited by bankruptcy,
reorganization, insolvency, fraudulent conveyance, moratorium
or other similar laws relating to or affecting creditors'
rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law); the Securities have been duly
and validly authorized and, when executed and authenticated in
accordance with the provisions of the Indenture and delivered
to and paid for by the Initial Purchasers pursuant to this
Agreement, the Notes will constitute legal, valid and binding
obligations of the Company and the Subsidiary Guarantors
entitled to the benefits of the Indenture and the Subsidiary
Guaranties will constitute valid and binding obligations of
the Subsidiary Guarantors enforceable against the Subsidiary
Guarantors in accordance with their terms, except as
enforcement thereof may be limited by bankruptcy,
reorganization, insolvency, fraudulent conveyance,
13
15
moratorium or other similar laws relating to or affecting
creditors' rights generally and by general equitable
principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law); and the
statements set forth under the heading "Description of the
Notes" in the Final Memorandum, insofar as such statements
purport to summarize certain provisions of the Securities and
the Indenture, provide a fair summary of such provisions;
(viii) the information set forth in the Final
Memorandum under the headings "Certain Federal Income Tax
Consequences" and "Risk Factors--Governmental and
Environmental Regulation" and in Item
1--Business--Regulation--Environmental Regulations and Item
3--Legal Proceedings and Environmental Issues of the Company's
Annual Report on Form 10-K for the year ended December 31,
1995, to the extent that it constitutes matters of law,
summaries of legal matters, the Company's charter and bylaws
or legal proceedings, or legal conclusions, is correct in all
material respects;
(ix) no consent, approval, authorization or order
of any court or governmental agency or body is required for
the consummation of the transactions contemplated herein,
except, with respect to the obligations under the Registration
Agreement, such as may be required under the Trust Indenture
Act or as may be required to register the Securities under the
Securities Act, and such as may be required under the blue sky
or securities laws of any jurisdiction in connection with the
purchase and sale of the Securities by the Initial Purchasers
and such other approvals (specified in such opinion) as have
been obtained;
(x) neither the issuance and sale of the
Securities, the execution and delivery of the Transaction
Documents, the consummation of any other of the transactions
herein or therein contemplated nor the fulfillment of the
terms hereof or thereof will conflict with, result in a breach
or violation of, or constitute a default under any law or the
charter or by-laws of the Company or the Subsidiary Guarantors
or the terms of any material indenture or other material
agreement or instrument known to such counsel and to which the
Company, the Subsidiary Guarantors or any of their
subsidiaries is a party or bound or any judgment, order or
decree known to such counsel to be applicable to the Company,
the Subsidiary Guarantors or any of their subsidiaries of any
court, regulatory body, administrative agency, governmental
body, arbitrator having jurisdiction over the Company, the
Subsidiary Guarantors or any of their subsidiaries;
(xi) assuming the accuracy of the representations
and warranties and compliance with the agreements contained
herein, no registration of the Securities under the Securities
Act is required, and no qualification of the Indenture under
the Trust Indenture Act is necessary, for the offer and
14
16
sale by the Initial Purchasers of the Securities in the manner
contemplated by this Agreement;
(xii) neither the Company nor any Subsidiary
Guarantor is an "investment company" within the meaning of the
Investment Company Act without taking account of any exemption
arising out of the number of holders of the Company's or the
Subsidiary Guarantor's securities; and
(xiii) a court applying Colorado conflict of laws
rules in a properly presented and argued case will give effect
to the express choice of law provisions contained in the
Transaction Documents.
Such counsel shall also state that, as of the Closing
Date, nothing has come to such counsel's attention that would lead it
to believe that the Final Memorandum (together with any amendment or
supplement thereto) contained an untrue statement of a material fact
or omitted 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. Notwithstanding the foregoing, such
counsel need express no belief with respect to the financial
statements, financial schedules, other financial or statistical data
(including any reserve, production and cost data) and any geologic
information included in or incorporated by reference in the Final
Memorandum and any amendment or supplement thereto.
In rendering such opinion, such counsel may rely (A)
as to matters involving the application of laws of any jurisdiction
other than the State of Colorado, the State of Delaware or the United
States, to the extent they deem proper and specified in such opinion,
upon the opinion of other counsel of good standing whom they believe
to be reliable and who are satisfactory to counsel for the Initial
Purchasers and (B) as to matters of fact, to the extent they deem
proper, on certificates of responsible officers of the Company and
public officials.
All references in this Section 6(a) to the Final
Memorandum shall be deemed to include any amendment or supplement
thereto at the Closing Date.
(b) The Representatives shall have received from counsel
for the Initial Purchasers such opinion or opinions, dated the Closing
Date, with respect to the issuance and sale of the Securities, the
Final Memorandum (as amended or supplemented at the Closing Date) and
other related matters as the Representatives may reasonably require,
and the Initial Purchasers, the Company and the Subsidiary Guarantors
shall have provided such counsel with access to such documents as they
reasonably request for the purpose of enabling them to pass upon such
matters.
(c) The Company and the Subsidiary Guarantors shall have
furnished to the Representatives a certificate of the Company, signed
by the Chairman of the Board, the Chief Executive Officer or the
President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of
such certificate
15
17
have carefully examined the Final Memorandum, any amendment or
supplement to the Final Memorandum and this Agreement and that:
(i) the representations and warranties of the
Company and the Subsidiary Guarantors made in this Agreement
are true and correct in all material respects on and as of the
Closing Date with the same effect as if made on the Closing
Date, and the Company and the Subsidiary Guarantors have
complied with all the agreements and satisfied all the
conditions on their part to be performed or satisfied
hereunder at or prior to the Closing Date; and
(ii) since the date of the most recent financial
statements included in the Final Memorandum, there has been no
material adverse change in the condition (financial or other),
earnings, business or properties of the Company and its
subsidiaries, taken as a whole, whether or not arising from
transactions in the ordinary course of business, except as set
forth in or contemplated by the Final Memorandum (exclusive of
any amendment or supplement thereto).
(d) At the Execution Time and at the Closing Date, Xxxxxx
Xxxxxxxx LLP shall have furnished to the Representatives a letter or
letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance reasonably satisfactory to the
Representatives, confirming that they are independent accountants
within the meaning of the Securities Act and the Exchange Act and the
applicable rules and regulations thereunder and Rule 101 of the Code
of Professional Conduct of the American Institute of Certified Public
Accountants (the "AICPA") and stating in effect that:
(i) in their opinion the audited financial
statements and financial statement schedules and pro forma
financial statements included or incorporated in the Final
Memorandum and reported on by them comply in form in all
material respects with the applicable accounting requirements
of the Exchange Act and the related published rules and
regulations thereunder;
(ii) on the basis of a reading of the latest
unaudited financial statements made available by the Company
and its subsidiaries; carrying out certain specified
procedures (but not an examination in accordance with
generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, board of directors and
committees of the Company and its subsidiaries; and inquiries
of certain officials of the Company who have responsibility
for financial and accounting matters of the Company and its
subsidiaries as to transactions and events subsequent to
December 31, 1995, nothing came to their attention which
caused them to believe that:
16
18
(1) any unaudited financial statements included
or incorporated in the Final Memorandum do not comply
in form in all material respects with applicable
accounting requirements and with the published rules
and regulations of the Commission with respect to
financial statements included or incorporated in
quarterly reports on Form 10-Q under the Exchange
Act; and said unaudited financial statements are not,
in all material respects, in conformity with
generally accepted accounting principles applied on a
basis substantially consistent with that of the
audited financial statements included or incorporated
in the Final Memorandum; or
(2) with respect to the period subsequent to
September 30, 1996, there were any changes, at a
specified date not more than five business days prior
to the date of the letter, in the long-term debt of
the Company and its subsidiaries or capital stock of
the Company or decreases in the stockholders' equity
of the Company or decreases in total assets or
working capital of the Company and its subsidiaries
as compared with the amounts shown on the September
30, 1996 consolidated balance sheet included or
incorporated in the Final Memorandum, or for the
period from October 1, 1996 to such specified date
there were any decreases, as compared with the
corresponding period in the preceding year in oil and
natural gas revenues or income (loss) before taxes or
in net income (loss) or net income (loss) per share
of the Company and its subsidiaries, except in all
instances for changes or decreases set forth in such
letter, in which case the letter shall be accompanied
by an explanation by the Company as to the
significance thereof unless said explanation is not
deemed necessary by the Representatives;
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries) set forth on the Final
Memorandum, including the information set forth on the Cover
Page and under the captions "Summary--The Offering," "Summary
Historical and Pro Forma Data," "Summary Operating and Reserve
Data," "Risk Factors," "Use of Proceeds," "Capitalization,"
"Selected Historical and Pro Forma Financial Data,"
"Management's Discussion and Analysis of Financial Condition
and Results of Operation," "Business and Properties" and
"Description of Other Indebtedness" in the Final Memorandum
agrees with the accounting records of the Company and its
subsidiaries, excluding any questions of legal interpretation;
and
(iv) on the basis of a reading of the unaudited
pro forma financial statements (the "PRO FORMA FINANCIAL
STATEMENTS") included or
17
19
incorporated in the Final Memorandum; carrying out certain
specified procedures; inquiries of certain officials of the
Company who have responsibility for financial and accounting
matters; and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical
amounts in the pro forma financial statements, nothing came to
their attention which caused them to believe that the pro
forma financial statements do not comply in form in all
material respects with the applicable accounting requirements
of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of such statements.
All references in this Section 6(d) to the Final Memorandum
shall be deemed to include any amendment or supplement thereto at the
date of the letter.
(e) Subsequent to the Execution Time or, if earlier, the
dates as of which information is given in the Final Memorandum, there
shall not have been (i) any change or decrease specified in the letter
or letters referred to in paragraph (d) of this Section 6 or (ii) any
change, or any development involving a prospective change, in or
affecting the business or properties of the Company and its
subsidiaries the effect of which, in any case referred to in clause
(i) or (ii) above, is, in the judgment of the Representatives, so
material and adverse as to make it impractical or inadvisable to
market the Securities as contemplated by the Final Memorandum.
(f) Subsequent to the Execution Time, there shall not
have been any decrease in the rating of any of the Company's debt
securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the
Securities Act) or any notices given of any intended or potential
decrease in any such rating or of a possible change in any such rating
that does not indicate the direction of the possible change.
(g) The Representatives, on behalf of the Initial
Purchasers, shall have received a fully executed original of the
Registration Agreement.
(h) The Company shall have delivered to the
Representatives copies of the Chase Consent in form and substance
acceptable to the Representatives.
(i) The Company shall have delivered to the
Representatives copies of the supplemental indenture to the Indenture
dated as of December 1, 1993 between the Company and Xxxxxx Trust and
Savings Bank relating to the Company's 9 7/8% Senior Subordinated
Notes due 2003 (the "9 7/8% INDENTURE"), which supplemental indenture
shall provide for a guaranty by the Subsidiary Guarantors of the notes
issued under the 9 7/8% Indenture and shall be in form and substance
acceptable to the Representatives.
(j) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information,
certificates and documents as the Representatives may reasonably
request.
18
20
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the Initial Purchasers,
this Agreement and all obligations of the Initial Purchasers hereunder may be
canceled at, or at any time prior to, the Closing Date by the Representatives.
Notice of such cancellation shall be given to the Company or any Subsidiary
Guarantor in writing or by telephone or telegraph confirmed in writing.
The documents required to be delivered by this Section 6 will be
delivered at the office of Xxxxx, Xxxxxx & Xxxxxx LLP, 000 00xx Xxxxxx, Xxxxx
0000, Xxxxxx, XX 00000, on the Closing Date.
7. Reimbursement of Expenses. If the sale of the Securities
provided for herein is not consummated because any condition to the obligations
of the Initial Purchasers set forth in Section 6 hereof is not satisfied,
because of any termination pursuant to Section 11 hereof or because of any
refusal, inability or failure on the part of the Company or any Subsidiary
Guarantor to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Initial Purchasers in payment
for the Securities on the Closing Date, the Company and the Subsidiary
Guarantors will reimburse the Initial Purchasers severally upon demand for all
out-of-pocket expenses (including reasonable fees and disbursements of counsel)
that shall have been incurred by them in connection with the proposed purchase
and sale of the Securities, except for any and all expenses relating to the
production, printing and shipping of the Preliminary Memorandum and the Final
Memorandum and any amendments or supplements thereof, and any "roadshow"
expenses incurred by the Initial Purchasers or the Company.
8. Indemnification and Contribution. (a) The Company and the
Subsidiary Guarantors, jointly and severally, agree to indemnify and hold
harmless each Initial Purchaser, the directors, officers, employees and agents
of each Initial Purchaser and each person who controls any Initial Purchaser
within the meaning of either the Securities Act or the Exchange Act against any
and all losses, claims, damages or liabilities, joint or several, to which they
or any of them may become subject under the Securities Act, the Exchange Act or
other federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon any untrue statement or alleged untrue
statement of a material fact contained in the Preliminary Memorandum, the Final
Memorandum or any information provided by the Company to any holder or
prospective purchaser of Securities pursuant to Section 5(h), or in any
amendment thereof or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and agrees to
reimburse each such indemnified party, as incurred, for any legal or other
expenses reasonably incurred by them in connection with investigating or
defending any such loss, claim, damage, liability or action; provided, however,
that the Company and the Subsidiary Guarantors will not be liable in any such
case to the extent that any such loss, claim, damage or liability arises out of
or is based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made in the Preliminary Memorandum or the Final
Memorandum, or in any
19
21
amendment thereof or supplement thereto, in reliance upon and in conformity
with written information furnished to the Company or a Subsidiary Guarantor by
or on behalf of any Initial Purchasers through the Representatives specifically
for inclusion therein. This indemnity agreement will be in addition to any
liability which the Company and the Subsidiary Guarantors may otherwise have.
(b) Each Initial Purchaser severally agrees to indemnify and hold
harmless the Company, its directors, officers, employees and agents and each
person who controls the Company within the meaning of either the Securities Act
or the Exchange Act, to the same extent as the foregoing indemnity from the
Company to each Initial Purchaser, but only with reference to written
information relating to such Initial Purchaser furnished to the Company by or
on behalf of such Initial Purchaser through the Representatives specifically
for inclusion in the Preliminary Memorandum or the Final Memorandum (or in any
amendment or supplement thereto). This indemnity agreement will be in addition
to any liability which any Initial Purchaser may otherwise have. The Company
and the Subsidiary Guarantors acknowledge that the statements set forth in the
last paragraph of the cover page and under the heading "Plan of Distribution"
in the Preliminary Memorandum and the Final Memorandum constitute the only
information furnished in writing by or on behalf of the Initial Purchasers for
inclusion in the Preliminary Memorandum or the Final Memorandum (or in any
amendment or supplement thereto).
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise timely learn of such action and such failure
results in the forfeiture by the indemnifying party of substantial rights and
defenses and (ii) will not, in any event, relieve the indemnifying party from
any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. The indemnifying party
shall be entitled to appoint counsel of the indemnifying party's choice at the
indemnifying party's expense to represent the indemnified party in any action
for which indemnification is sought (in which case the indemnifying party shall
not thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be reasonably satisfactory to the
indemnified party. Notwithstanding the indemnifying party's election to
appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including
local counsel), and the indemnifying party shall bear the reasonable fees,
costs and expenses of such separate counsel if (i) the use of counsel chosen by
the indemnifying party to represent the indemnified party would present such
counsel with a conflict of interest, (ii) the actual or potential defendants
in, or targets of, any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that there may be legal defenses available to it and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party, (iii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at
20
22
the expense of the indemnifying party. An indemnifying party will not, without
the prior written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties
are actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action, suit or
proceeding.
(d) In the event that the indemnity provided in paragraph (a) or
(b) of this Section 8 is unavailable to or insufficient to hold harmless an
indemnified party for any reason, the Company and the Initial Purchasers agree
to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively "LOSSES") to which the Company
and one or more of the Initial Purchasers may be subject in such proportion as
is appropriate to reflect the relative benefits received by the Company or by
the Initial Purchasers from the offering of the Securities; provided, however,
that in no case shall any Initial Purchaser (except as may be provided in any
agreement among the Initial Purchasers relating to the offering of the
Securities) be responsible for any amount in excess of the purchase discount or
commission applicable to the Securities purchased by such Initial Purchaser
hereunder. If the allocation provided by the immediately preceding sentence is
unavailable for any reason, the Company and the Initial Purchasers shall
contribute in such proportion as is appropriate to reflect not only such
relative benefits but also the relative fault of the Company or the Initial
Purchasers in connection with the statements or omissions which resulted in
such Losses as well as any other relevant equitable considerations. Benefits
received by the Company shall be deemed to be equal to the total net proceeds
from the offering of the Securities (before deducting expenses), and benefits
received by the Initial Purchasers shall be deemed to be equal to the total
purchase discounts and commissions received by the Initial Purchasers from the
Company in connection with the purchase of the Securities hereunder. Relative
fault shall be determined by reference to whether any alleged untrue statement
or omission relates to information provided by the Company or the Initial
Purchasers. The Company and the Initial Purchasers agree that it would not be
just and equitable if contribution were determined by pro rata allocation or
any other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), 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. For purposes of this Section 8, each person who controls
an Initial Purchaser within the meaning of either the Securities Act or the
Exchange Act and each director, officer, employee and agent of an Initial
Purchaser shall have the same rights to contribution as such Initial Purchaser,
and each person who controls the Company within the meaning of either the
Securities Act or the Exchange Act and each officer, director, employee and
agent of the Company shall have the same rights to contribution as the Company,
subject in each case to the applicable terms and conditions of this paragraph
(d).
9. Default by an Initial Purchaser. If any one or more Initial
Purchasers shall fail to purchase and pay for any of the Securities agreed to
be purchased by such Initial Purchaser hereunder and such failure to purchase
shall constitute a default in the performance of its or their obligations under
this Agreement, the remaining Initial Purchasers shall be obligated severally
to take up and pay for (in the respective proportions which the principal
amount of Securities
21
23
set forth opposite their names in SCHEDULE I hereto bears to the aggregate
principal amount of Securities set forth opposite the names of all the
remaining Initial Purchasers) the Securities which the defaulting Initial
Purchaser or Initial Purchasers agreed but failed to purchase; provided,
however, that in the event that the aggregate principal amount of Securities
which the defaulting Initial Purchaser or Initial Purchasers agreed but failed
to purchase shall exceed 10% of the aggregate principal amount of Securities
set forth in SCHEDULE I hereto, the remaining Initial Purchasers shall have the
right to purchase all, but shall not be under any obligation to purchase any,
of the Securities, and if such non-defaulting Initial Purchasers do not
purchase all the Securities, this Agreement will terminate without liability to
any non-defaulting Initial Purchaser or the Company. In the event of a default
by any Initial Purchaser as set forth in this Section 9, the Closing Date shall
be postponed for such period, not exceeding seven days, as the Representatives
shall determine in order that the required changes in the Final Memorandum or
in any other documents or arrangements may be effected. Nothing contained in
this Agreement shall relieve any defaulting Initial Purchaser of its liability,
if any, to the Company or any non-defaulting Initial Purchaser for damages
occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice given
to the Company prior to delivery of and payment for the Securities, if prior to
such time (i) trading in any of the Company's securities shall have been
suspended by the Commission or the New York Stock Exchange or trading in
securities generally on the New York Stock Exchange shall have been suspended
(excluding any coordinated trading halt triggered solely as a result of a
specified decrease in a market index) or limited or minimum prices shall have
been established on such exchange, (ii) a banking moratorium shall have been
declared either by Federal or New York State authorities or (iii) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States of a national emergency or war or other calamity or crisis the
effect of which on financial markets is such as to make it, in the judgment of
the Representatives, impracticable or inadvisable to proceed with the offering
or delivery of the Securities as contemplated by the Final Memorandum.
11. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of
the Company, the Subsidiary Guarantors, or their respective officers and of the
Initial Purchasers set forth in or made pursuant to this Agreement will remain
in full force and effect, regardless of any investigation made by or on behalf
of the Initial Purchasers or the Company or any of the officers, directors or
controlling persons referred to in Section 8 hereof, and will survive delivery
of and payment for the Securities. The provisions of Sections 7 and 8 hereof
shall survive the termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telegraphed and confirmed to them, care of Salomon Brothers Inc,
at Xxxxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000; or, if sent to the
Company, will be mailed, delivered or telegraphed and confirmed to it at Xxx
Xxxxxxxx Xxxxx, 00xx Xxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention: Chief
Financial Officer, with a copy to the Company at 0000 Xxxxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxxxxx 00000, Attention: General Counsel.
22
24
13. Successors. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8 hereof,
and, except as expressly set forth in Section 5(h) hereof, no other person will
have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by and
construed in accordance with the laws of the State of New York.
15. Business Day. For purposes of this Agreement, "business day"
means each Monday, Tuesday, Wednesday, Thursday and Friday that is not a day on
which banking institutions in the City of New York, New York are authorized or
obligated by law, executive order or regulation to close.
16. Counterparts. This Agreement may be executed in one or more
counterparts, each of which will be deemed to be an original, but all such
counterparts will together constitute one and the same instrument.
[The remainder of this page is intentionally left blank]
23
25
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this Agreement and your acceptance shall represent a binding
agreement between the Company, the Subsidiary Guarantors and the Initial
Purchasers.
Very truly yours,
HS Resources, Inc.
By: /s/ P. XXXXXXX XXXXXX
-------------------------------
Name: P. Xxxxxxx Xxxxxx
Title: President
Orion Acquisition, Inc.
By: /s/ P. XXXXXXX XXXXXX
-------------------------------
Name: P. Xxxxxxx Xxxxxx
Title: President
HSRTW, Inc.
By: /s/ P. XXXXXXX XXXXXX
-------------------------------
Name: P. Xxxxxxx Xxxxxx
Title: President
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc
Chase Securities Inc.
Xxxxxx Brothers Inc.
Prudential Securities Incorporated
By: Salomon Brothers Inc
By: /s/ XXXXX X. X. XXXXXX
----------------------------------
Name: Xxxxx X.X. Xxxxxx
Title: Vice President
[For themselves and the other
Initial Purchasers named in
Schedule I to the foregoing Agreement]
S-1
26
SCHEDULE I
Principal Amount
of Securities
Initial Purchasers to be Purchased
------------------ -----------------
Salomon Brothers Inc . . . . . . . . . . . . . . . . . . . . $ 75,000,000
Chase Securities Inc. . . . . . . . . . . . . . . . . . . . . $ 25,000,000
Xxxxxx Brothers Inc. . . . . . . . . . . . . . . . . . . . . $ 25,000,000
Prudential Securities Incorporated . . . . . . . . . . . . . $ 25,000,000
-------------
Total . . . . . . . . . $ 150,000,000
27
EXHIBIT A
Non-Distribution Letter for U.S. Purchasers
November 22, 1996
Salomon Brothers Inc
Chase Securities Inc.
Xxxxxx Brothers Inc.
Prudential Securities Incorporated
As Representatives of the Initial Purchasers
c/o Salomon Brothers Inc
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
HS Resources, Inc.
Xxx Xxxxxxxx Xxxxx
Xxxxxxxxx Xxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Re: Purchase of $150,000,000 principal amount of 9 1/4% Senior
Subordinated Notes due 2006 (the "Notes"), of HS Resources, Inc. (the
"Company") guaranteed on a senior subordinated basis (the "Subsidiary
Guaranties" and, together with the Notes, the "Securities") by Orion
Acquisition, Inc. and HSRTW, Inc. (collectively, the "Subsidiary
Guarantors")
Ladies and Gentlemen:
In connection with our purchase of the Securities we confirm that:
1. We understand that the Securities are not being and will not
be registered under the Securities Act of 1933, as amended (the "Securities
Act"), and are being sold to us in a transaction that is exempt from the
registration requirements of the Securities Act.
2. We acknowledge that (a) neither the Company, the Subsidiary
Guarantors, nor the Initial Purchasers (as defined in the Offering Memorandum
dated November 22, 1996, relating to the Securities (the "Final Memorandum"))
nor any person acting on behalf of the Company, the Subsidiary Guarantors or
the Initial Purchasers has made any representation to us with respect to the
Company or the Subsidiary Guarantors or the offer or sale of any Securities and
(b) any information we desire concerning the Company, the Subsidiary Guarantors
and the Securities or any other matter relevant to our decision to purchase the
Securities (including a copy of the Final Memorandum) is or has been made
available to us.
3. We have such knowledge and experience in financial and
business matters as to be capable of evaluating the merits and risks of an
investment in the Securities, and we are (or any account for which we are
purchasing under paragraph 4 below is) an institutional "accredited investor"
(within the meaning of Rule 501(a)(1), (2), (3) or (7) of Regulation D under
the Securities Act) able to bear the economic risk of investment in the
Securities.
4. We are acquiring the Securities for our own account (or for
accounts as to which we exercise sole investment discretion and have authority
to make, and do make, the statements
28
contained in this letter) and not with a view to any distribution of the
Securities, subject, nevertheless, to the understanding that the disposition of
our property will at all times be and remain within our control.
5. We understand that (a) the Securities will be in registered
form only and that any certificates delivered to us in respect of the
Securities will bear a legend substantially to the following effect:
"These Securities have not been registered under the
Securities Act of 1933. Further offers or sales of these
Securities are subject to certain restrictions, as set forth
in the Offering Memorandum dated November 22, 1996 relating to
these Securities."
and (b) the Company and the Subsidiary Guarantors have agreed to reissue such
certificates without the foregoing legend only in the event of a disposition of
the Securities in accordance with the provisions of paragraph 6 below
(provided, in the case of a disposition of the Securities in accordance with
paragraph 6(f) below, that the legal opinion referred to in such paragraph so
permits), or at our request at such time as we would be permitted to dispose of
them in accordance with paragraph 6(a) below.
6. We agree that in the event that at some future time we wish to
dispose of any of the Securities, we will not do so unless such disposition is
made in accordance with any applicable securities laws of any state of the
United States and:
(a) the Securities are sold in compliance with Rule 144(k) under
the Securities Act; or
(b) the Securities are sold in compliance with Rule 144A under the
Securities Act; or
(c) the Securities are sold in compliance with Rule 904 of
Regulation S under the Securities Act; or
(d) the Securities are sold pursuant to an effective registration
statement under the Securities Act; or
(e) the Securities are sold to the Company or an affiliate (as
defined in Rule 501(b) of Regulation D) of the Company; or
(f) the Securities are disposed of in any other transaction that
does not require registration under the Securities Act, and we
theretofore have furnished to the Company or its designee an opinion
of counsel experienced in securities law matters to such effect or
such other documentation as the Company or its designee may reasonably
request.
29
Very truly yours,
By:
------------------------------------
(Authorized Officer)
30
EXHIBIT B
SELLING RESTRICTIONS FOR OFFERS AND
SALES OUTSIDE THE UNITED STATES
(1)(a) The Securities have not been and will not be registered under
the Securities Act and may not be offered or sold within the United States or
to, or for the account or benefit of, U.S. persons except in accordance with
Regulation S under the Securities Act or pursuant to an exemption from the
registration requirements of the Securities Act. Each Initial Purchaser
represents and agrees that, except as otherwise permitted by section 4(a)(i) or
(ii) of the Agreement to which this is an exhibit, it has offered and sold the
Securities, and will offer and sell the Securities, (i) as part of their
distribution at any time and (ii) otherwise until 40 days after the later of
the commencement of the offering and the Closing Date, only in accordance with
Rule 903 of Regulation S under the Securities Act. Accordingly, each Initial
Purchaser represents and agrees that neither it, nor any of its affiliates nor
any person acting on its or their behalf has engaged or will engage in any
directed selling efforts with respect to the Securities, and that it and they
have complied and will comply with the offering restrictions requirement of
Regulation S. Each Initial Purchaser agrees that, at or prior to the
confirmation of sale of Securities (other than a sale of Securities pursuant to
Section 4(a)(i) or (ii) of the Agreement to which this is an exhibit), it shall
have sent to each distributor, dealer or person receiving a selling concession,
fee or other remuneration that purchases Securities from it during the
restricted period a confirmation or notice to substantially the following
effect:
"The Securities covered hereby have not been registered under
the U.S. Securities Act of 1933 (the "Securities Act") and may not be
offered or sold within the United States or to, or for the account or
benefit of, U.S. persons (i) as part of their distribution at any time
or (ii) otherwise until 40 days after the later of the commencement of
the offering and November 27, 1996, except in either case in
accordance with Regulation S or Rule 144A under the Securities Act.
Terms used above have the meanings given to them by Regulation S."
(b) Each Initial Purchaser also represents and agrees that it has
not entered and will not enter into any contractual arrangement with any
distributor with respect to the distribution of the Securities, except with its
affiliates or with the prior written consent of the Company.
(c) Terms used in this section have the meanings given to them by
Regulation S.
(2) Each Initial Purchaser represents and agrees that (i) it has
not offered or sold, and will not offer or sell any Securities in the United
Kingdom by means of any document other than to persons whose ordinary business
it is to buy, hold, manage or dispose of investments, whether as principal or
as agent, for purposes of their businesses or otherwise in circumstances that
do not constitute an offer to the public in the United Kingdom within the
meaning of the Public Offers of Securities Regulations 1995, (ii) it has
complied and will comply with all applicable provisions of the Financial
Services Xxx 0000 of the United Kingdom with respect to anything done by it in
relation to the Securities in, from or otherwise involving the United Kingdom,
and (iii) it has only issued or passed on and will only issue or pass on, to
any person in the United Kingdom, any document received by it in connection
with the issue of the Securities if that person is of a kind described in
Article 11(3) of the Financial Services Xxx 0000 (Investment Advertisements)
(Exemptions) Order 1995 or is a person to whom the document may otherwise
lawfully be issued or passed on.
31
(2) Each Initial Purchaser represents and agrees that:
(i) it has not offered or sold and will not offer or sell in the
United Kingdom, by means of any document, and Securities prior to application
for listing of the Securities being made in accordance with Part IV of the
Financial Services Xxx 0000 of the United Kingdom other than to persons whose
ordinary business it is to buy or sell shares or debentures, whether as
principal or agent (except in circumstances which do not constitute an offer to
the public within the meaning of the Companies Xxx 0000 of Great Britain);
(ii) it has complied and will comply with all applicable provisions
of the Financial Services Xxx 0000 of the United Kingdom with respect to
anything done by it in relation to the Securities in, from or otherwise
involving the United Kingdom; and
(iii) it has only issued or passed on and will only issue or pass on
in the United Kingdom any document received by it in connection with the issue
of the Securities, other than any document which consists of or any part of
listing particulars, supplementary listing particulars or any other document
required or permitted to be published by listing rules under Part IV of the
Financial Service Xxx 0000 of the United Kingdom, to a person who is of a kind
described in Article 11(3) of the Financial Services Xxx 0000 (Investment
Advertisements) (Exemptions) Order 1995 or is a person to whom the document may
otherwise lawfully be issued or passed on.
