Exhibit 4.2
XXXXX XXXXXXX NATURAL GAS CORP.
6.875% Senior Notes Due 2007
PURCHASE AGREEMENT
New York, New York
December 4, 1997
Xxxxxxx Xxxxx Xxxxxx
Xxxxxxx Brothers Inc
Chase Securities Inc.
Xxxxxx Xxxxxxx & Co. Incorporated
NationsBanc Xxxxxxxxxx Securities, Inc.
Xxxxxxx Xxxxx Securities Inc.
In care of Salomon Brothers Inc
000 Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Xxxxx Xxxxxxx Natural Gas Corp., an Oklahoma corporation (the "Company"),
proposes to issue and sell to you (the "Purchasers"), $200,000,000 aggregate
principal amount of its 6.875% Senior Notes Due December 1, 2007 (the
"Securities"). The Securities are to be issued under an indenture (the
"Indenture") to be dated as of December 11, 1997, between the Company and
LaSalle National Bank, as trustee (the "Trustee").
The sale of the Securities to you 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 you will make an offering
of the Securities purchased by you hereunder in accordance with Section 4
hereof as soon as you deem advisable after the execution and delivery of this
Agreement.
In connection with the sale of the Securities, the Company has prepared a
preliminary offering memorandum, dated October 16, 1997 (the "Preliminary
Memorandum"), and a final offering memorandum, dated December 4, 1997 (the
"Final Memorandum"). Each of the Preliminary Memorandum and the Final
Memorandum sets forth certain information concerning the Company and the
Securities. The Company hereby confirms that it has 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 Purchasers. Any references herein to the Preliminary Memorandum or the
Final Memorandum shall be deemed to include all exhibits thereto and all
documents incorporated by reference therein which were filed under the
Securities Act or the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), on or before the Execution Time (as defined below); and any
reference herein to the terms "amend", "amendment" or "supplement" with
respect to the Final Memorandum shall be deemed to refer to and include the
filing of any document under the Exchange Act after the Execution Time which
is incorporated by reference therein.
Holders (including subsequent transferees) of the Securities will have
the registration rights set forth in the Registration Agreement dated as of
the Closing Date (the "Registration Agreement") to be entered into between the
Company and the Purchasers. Pursuant to the Registration Agreement, the
Company has agreed to file with the Securities and Exchange Commission (the
"Commission") an exchange offer registration statement or a shelf registration
statement (each, a "Registration Statement") pursuant to the Securities Act,
to register sales, or resales, of the Securities following the sale of the
Securities contemplated hereby. "Execution Time" shall mean the date and time
that this Agreement is executed and delivered by the parties hereto.
1. Representations and Warranties. The Company represents and warrants
to, and agrees with, each Purchaser as set forth below in this Section 1:
(a) The Preliminary Memorandum and the Final Memorandum and any
amendments or supplements thereto did not and will not, as of their
respective dates, contain 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 under which they were made,
not misleading. The preceding sentence does not apply to statements in
or omissions from the Final Memorandum based upon written information
furnished to the Company by any Purchaser specifically for use therein,
it being understood and agreed that the only such information is that
described as such in Section 8(b) hereof. The Company's Annual Report on
Form 10-K most recently filed with the Commission, as amended, and all
subsequent reports (as originally filed, and as amended), on the
respective dates filed by the Company (collectively, the "Exchange Act
Reports") which have been filed by the Company with the Commission or
sent to stockholders pursuant to the Exchange Act do not include any
untrue statement of a material fact or omit to state any material fact
necessary to make the
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statements therein, in the light of the circumstances under which they
were made, not misleading. Such Exchange Act Reports, when they were
filed with the Commission, conformed in all material respects to the
requirements of the Exchange Act and the rules and regulations of the
Commission thereunder.
(b) The offer and sale of the Securities in the manner contemplated
by this Agreement will be exempt from the registration requirements of
the Securities Act by reason of Section 4(2) thereof, and Rule 144A
("Rule 144A") and Regulation S ("Regulation S") thereunder.
(c) Neither the Company nor any affiliate (as defined in Rule 501(b)
of Regulation D under the Securities Act ("Regulation D")), nor any
person acting on behalf of the Company or any affiliate has directly, or
indirectly, (i) 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 or (ii) engaged
in any form of general solicitation or general advertising (within the
meaning of Regulation D) in connection with the offering of the
Securities.
(d) Neither the Company nor any affiliate nor any person acting on
behalf of the Company or any affiliate has engaged in any directed
selling efforts (as that term is defined in Regulation S) with respect to
the Securities, and the Company and its affiliates and any person acting
on its or their behalf have complied with the offering restrictions
requirement of Regulation S.
(e) The Securities satisfy the eligibility requirements set forth
in Rule 144A(d)(3) under the Securities Act.
(f) The Company has full corporate power and authority to enter
into this Agreement, the Registration Agreement, the Indenture and the
Securities and to perform the transactions contemplated hereby and
thereby (the "Transactions"). (i) This Agreement has been duly
authorized, executed and delivered by the Company and constitutes a valid
and binding obligation of the Company and (ii) the execution and delivery
of the Registration Agreement, the Indenture and the Securities have been
duly authorized by the Company and, when duly executed and delivered by
the parties thereto, will constitute valid and binding obligations of the
Company, enforceable against the Company in accordance with their
respective terms, subject to applicable bankruptcy, insolvency,
reorgani-zation, moratorium and similar laws affecting creditors' rights
and remedies generally and to general principles of equity (regardless of
whether enforcement is sought in a proceeding at law or in equity).
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(g) Upon execution and delivery of the Indenture, and when the
Securities are issued, authenticated and delivered in accordance with the
Inden-ture and paid for in accordance with the terms of this Agreement,
the Securities 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, subject to applicable
bankruptcy, insolvency, reorganization, morato-rium and similar laws
affecting creditors' rights and remedies generally and to general
principles of equity (regardless of whether enforcement is sought in a
proceeding at law or in equity).
(h) The execution, delivery and performance of this Agreement, the
Registration Agreement, the Indenture and the Securities by the Company
and the consummation of the Transactions will not result in a breach or
violation of any of the terms and provisions of, or constitute a default
under (i) the articles of incorporation, by-laws or other organizational
documents of the Company or any of its subsidiaries, (ii) any material
statute, rule or regulation applicable to the Company or any subsidiary
or any order of any governmental agency or body or any court having
jurisdiction over the Company or any subsidiary or any of their
respective properties, (iii) any agreement or instrument relating to
borrowed money to which the Company or any subsidiary is a party or by
which the Company or any subsidiary is bound or to which any of their
respective properties is subject, or (iv) any 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 their respective properties is subject. No consent, approval,
authorization or other order of any court, regulatory body,
administrative agency or other governmental body which has not already
been obtained is required for the execution and delivery of this
Agreement, the Registration Agreement, the Indenture, the Securities or
the consummation of the Transactions, except for compliance with the
Securities Act, state securities or blue sky laws and the clearance of
such offering with the National Association of Securities Dealers, Inc.
The term "subsidiary" means each person of which a majority of the voting
equity securities or other interests is owned, directly or indirectly, by
the Company.
(i) It is not necessary in connection with the offer, sale and
delivery of the Securities in the manner contemplated by this Agreement
and the Final Memorandum to qualify the Indenture under the Trust
Indenture Act of 1939, as amended (the "Trust Indenture Act").
(j) The Company is not an open-end investment company, unit
investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the United States Investment
Company Act of 1940 (the "Investment Company Act"), nor is it a closed
end investment company required to be registered, but not registered
thereunder; and the Company is not and, after giving effect to the
offering and sale of the Securities and
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the application of the proceeds thereof as described in the Final
Memorandum, will not be an "investment company" as defined in the
Investment Company Act.
(k) The Company is subject to the reporting requirements of Section
13 or 15(d) under the Exchange Act.
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 Purchaser, and each Purchaser agrees, severally and not
jointly, to purchase from the Company, at a purchase price of 98.642% of the
principal amount thereof, plus accrued interest, if any, from December 11,
1997 to the Closing Date (as hereinafter defined), the respective principal
amounts of the Securities set forth opposite such Purchaser's name in Schedule
I hereto.
3. Delivery and Payment. Delivery of and payment for the Securities
shall be made at 10:00 AM, New York City time, on December 11, 1997, or such
later date as the Purchasers may agree or as provided in Section 9 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
Purchasers against payment by the Purchasers of the purchase price thereof to
or upon the order of the Company by wire transfer of immediately available
funds to a U.S. dollar account designated by the Company or such other manner
of payment as may be designated by the Company and agreed to by the Purchasers
not less than two business days prior to the Closing Date. Delivery of the
Securities shall be made through the facilities of the Depository Trust
Company and payment for the Securities shall be made at the offices of
Cravath, Swaine & Xxxxx, Xxxxxxxxx Xxxxx, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx. Certificates for the Securities shall be registered in such names and
in such denominations as the Purchasers 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 Purchasers in New York, New York, not later than
1:00 p.m. on the business day prior to the Closing Date.
4. Offering of Securities. Each Purchaser (i) acknowledges that the
Securities have not been registered under the Securities Act and may not be
offered or sold except pursuant to an exemption from, or in a transaction not
subject to, the registration requirements of the Securities Act or pursuant to
an effective registration statement under the Securities Act and (ii)
severally and not jointly, represents and warrants to and agrees, with the
Company 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
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reasonable steps to ensure that the purchaser of such Securities is aware
that such sale is being made in reliance on Rule 144A or (ii) in
accordance with the restrictions set forth in Exhibit A 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, except pursuant to a
registered public offering as provided in the Registration Agreement.
5. AGREEMENTS. The Company agrees with the several Purchasers that:
(a) The Company will furnish to the Purchasers, without charge, as
many copies of the Final Memorandum and any supplements and amendments
thereof or thereto as the Purchasers may reasonably request. The Company
will pay the expenses of printing or other production of all documents
relating to the offering.
(b) The Company will not amend or supplement the Final Memorandum
at any time prior to the completion of the sale of the Securities by the
Purchasers if the Purchasers reasonably object to such amendment or
supplement within two business days after receiving a copy thereof.
(c) If at any time prior to the completion of the sale of the
Securities by the Purchasers, 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 state-ments therein in the light of the circumstances under
which they were made not misleading, or if it shall be necessary to amend
or supplement the Final Memorandum to comply with applicable law, the
Company will promptly notify the Purchasers of the same and will prepare
and provide to the Purchasers the proposed amendment or supplement which
will correct such statement or omission or effect such compliance and
will not publish such amendment or supplement if the Purchasers
reasonably object to such amendment or supplement within two business
days after receiving a copy thereof.
(d) Except as provided in Exhibit A, the Company will arrange for
the qualification of the Securities for sale by the Purchasers under the
laws of such jurisdictions as the Purchasers may designate and will
maintain such qualifications in effect so long as required for the sale
of the Securities; provided, however, the Company shall not be required
to do business in any jurisdiction where it is not now so qualified or to
take any action which would subject it to general or unlimited service of
process or taxation in any jurisdiction where it is not now so subject.
The Company will promptly advise the Purchasers of the
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receipt by it 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) Neither the Company nor any of its Affiliates, nor any person
acting on behalf of the Company or any of its affiliates, 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 pursuant to a registered public
offering as provided in the Registration Agreement.
(f) So long as any of the Securities are "restricted securities"
within the meaning of Rule 144(a)(3) under the Securities Act, the
Company will, for so long as and at any time that it is not subject to
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.
(g) Neither the Company nor any of its affiliates, nor any person
acting on behalf of the Company or any of its affiliates, will engage in
any directed selling efforts with respect to the Securities except
pursuant to a registered public offering as provided in the Registration
Agreement, and each of them will comply with the offering restrictions
requirement of Regulation S. Terms used in this paragraph have the
meanings given to them by Regulation S.
(h) Neither the Company nor any of its affiliates, nor any person
acting on behalf of the Company or any of its affiliates, will sell,
offer for sale or solicit offers to buy or otherwise negotiate in respect
of any security (as defined in the Securities Act) the offering of which
security will be integrated with the sale of the Securities in a manner
which would require the registration of the Securities under the
Securities Act (except as provided in the Registration Agreement).
(i) The Company shall include information substantially in the form
set forth in Exhibit B in each Final Memorandum.
(j) The Company shall use its best efforts in cooperation with the
Purchasers to permit the Securities to be eligible for clearance and
settlement through The Depository Trust Company.
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(k) The Company will not, until 180 days following the Closing
Date, without the prior written consent of the Purchasers, offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly, or
announce the offering of, or file a registration statement for, any debt
securities issued or guaranteed by the Company (other than (i) the
Securities or (ii) pursuant to a registered public offering as provided
in the Registration Agreement). The Company will not at any time 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 or the safe harbor of Regulation S thereunder to cease to
be applicable to the offer and sale of the Securities as contemplated by
this Agreement and the Final Memorandum.
(l) In connection with the offering, until the Purchasers shall
have notified the Company of the completion of the resale of the
Securities, neither the Company nor any of its affiliates has or will,
either alone or with one or more other persons, bid for or purchased for
any account in which it or any of its affiliates has a beneficial
interest any Securities or attempt to induce any person to purchase any
Securities; and neither it nor any of its affiliates will make bids or
purchases for the purpose of creating actual, or apparent, active trading
in, or of raising the price of, the Securities.
6. Conditions to the Obligations of the Purchasers. The obligations of
the Purchasers to purchase the Securities, shall be subject to the accuracy of
the representations and warranties on the part of the Company contained herein
as of the Execution Time, the Closing Date and any settlement date pursuant to
Section 3 hereof, to the accuracy of the statements of the Company made in any
certificates pursuant to the provisions hereof, to the performance by the
Company of its obligations hereunder and to the following additional conditions
precedent:
(a) The Company shall have furnished to the Purchasers the opinion
of Xxxxx & Xxxxxxx, counsel for the Company, dated the Closing Date, to
the effect that:
(i) each of the Company and its subsidiary, Xxxxx Xxxxxxx Gas
Marketing Corp. (the "Subsidiary"), 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 which requires such
qualification wherein it owns or leases material properties or
conducts material business;
(ii) all the outstanding shares of capital stock of the
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except
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as otherwise set forth in the Final Memorandum, all outstanding
shares of capital stock of the Subsidiary 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, after due inquiry, any other security interests, claims,
liens or encumbrances;
(iii) the Company's authorized equity capitalization is as set
forth in the Final Memorandum; and the Securities conform to the
description thereof contained in the Final Memorandum;
(iv) the Indenture has been duly authorized, executed and
delivered, and constitutes a legal, valid and binding instrument
enforceable against the Company in accordance with its terms
(subject, as to enforcement of remedies, to applicable bankruptcy,
reorganization, insolvency, moratorium or other laws affecting
creditors' rights generally from time to time in effect); and the
Securities have been duly authorized and, when executed and
authenticated in accordance with the provisions of the Indenture and
delivered to and paid for by the Purchasers pursuant to this
Agreement, will constitute legal, valid and binding obligations of
the Company entitled to the benefits of the Indenture;
(v) the statements in the Final Memorandum under the heading
"Certain Federal Income Tax Consequences" fairly summarize the
matters therein described;
(vi) such counsel has no reason to believe that as of the
Execution Time the Final Memorandum (other than the financial
statements and other financial information contained therein, as to
which such counsel need express no opinion) contained any untrue
statement of a material fact or omitted to state any material fact
required to be stated therein or necessary to make the state-ments
therein not misleading or that the Final Memorandum includes any
untrue statement of a material fact or omits to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(vii) this Agreement has been duly authorized, executed and
delivered by the Company;
(viii) 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 (A) such as may be
required under the blue sky laws of any jurisdiction in connection
with the purchase and distribution of the Securities by the
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Purchasers, (B) with respect to the Exchange Offer (as defined in
the Final Memorandum) and the Shelf Registration Statement (as
defined in the Final Memorandum), filings or registration under the
Securities Act or the Exchange Act and (C) such other approvals
(specified in such opinion) as have been obtained;
(ix) the Indenture conforms as to form 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;
(x) neither the issue and sale of the Securities, the execution
and delivery of the Indenture, the consummation of any other of the
transactions herein contemplated nor the fulfillment of the terms
hereof 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 terms of any indenture or other agreement or
instrument known to such counsel and to which the Company or any of
its subsidiaries is a party or bound or any judgment, order or
decree known to such counsel to be applicable to the Company or any
of its subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over the
Company or any of its subsidiaries; and
(xi) it is not necessary in connection with the offer, sale and
delivery of the Securities in the manner contemplated by this
Agreement to register the Securities under the Securities Act or to
qualify the Indenture under the Trust Indenture Act.
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 Oklahoma 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 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. References to the Final Memorandum in this
paragraph (a) include any amendments or supplements thereof or thereto at
the Closing Date.
(b) The Purchasers shall have received from Cravath, Swaine &
Xxxxx, counsel for the Purchasers, such opinion or opinions, dated the
Closing Date, with respect to the issuance and sale of the Securities,
the Final Memorandum (other than the financial statements and related
schedules therein, as to which such counsel need express no view) and
other related matters as the Purchasers may reasonably require, and the
Company shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
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(c) The Company shall have furnished to the Purchasers a
certificate of the Company, signed by the Chairman of the Board 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 have carefully examined the Final Memorandum together with
any supplements thereto and this Agreement and that:
(i) the representations and warranties of the Company 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 has complied with all the agreements and satisfied
all the conditions on its part to be performed or satisfied at or
prior to the Closing Date; and
(ii) since the date of the most recent financial statements
incorporated by reference 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 in the Final Memorandum (exclusive of any
amendment or supplement thereof or thereto).
(d) At the Closing Date, Ernst & Young LLP shall have furnished to
the Purchasers a letter or letters, dated as of the Closing Date, in form
and substance satisfactory to the Purchasers, confirming that they are
independent accountants within the meaning of the Securities Act and the
applicable published rules and regulations thereunder and that they have
performed a review of the unaudited interim financial information for the
nine-month period ending September 30, 1997, in accordance with Statement
of Auditing Standards No. 71 and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules reported on by them and the pro forma
financial statements included or incorporated in the Final
Memorandum comply in form in all material respects with the
applicable accounting requirements of the Securities Act and the
Exchange Act and the related published rules and regulations
thereunder that would apply to the Final Memorandum if the Final
Memorandum were a prospectus included in a registration statement on
Form S-3 under the Securities Act;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by the Company and its subsidiaries; their
limited review in accordance with standards established by the
American Institute of Certified Public Accountants under Statement
of Auditing Standards No. 71 of the unaudited interim financial
information for the nine-month period ended September 30, 1997, and
as at
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September 30, 1997; 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,
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, 1996, nothing came to their attention which caused them
to believe that:
(1) any unaudited financial statements included 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 conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements
included in the Final Memorandum; and
(2) with respect to the period subsequent to September 30,
1997, there were any changes, at a specified date not more than
three 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 working capital of the Company
and its subsidiaries as compared with the amounts shown on the
September 30, 1997, consolidated balance sheet included or
incorporated by reference in the Final Memorandum, or for the
period from October 1, 1997, to such specified date there were
any decreases, as compared with the corresponding period in the
preceding year in operating income, net revenues or income
before income taxes or in total or per share amounts of net
income 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 Purchasers;
(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 in the Final Memorandum and the documents incorporated by
reference therein,
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including the information set forth under the captions "Summary",
"Use of Proceeds" and "Capitalization", and certain other specified
information incorporated by reference 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 incorporated by reference in the Final
Memorandum (the "pro forma financial statements"); 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.
References to the Final Memorandum in this paragraph (d) include any
supplement thereto at the date of the letter.
(e) At the Execution Time, Xxxxxx Xxxxxxxx LLP shall have furnished
to the Purchasers a letter, dated as of November 20, 1997, in form and
substance satisfactory to the Purchasers, confirming that they are
independent accountants with respect to the Company within the meaning of
Rule 101 of the American Institute of Certified Public Accountants' Code
of Professional Conduct and its interpretations and rulings and stating
in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules incorporated in the Final Memorandum
and reported on by them comply in form in all material respects with
the applicable accounting requirements of the Securities Act and the
Exchange Act and the related published rules and regulations
thereunder that would apply to the Final Memorandum if the Final
Memorandum were a prospectus included in a registration statement on
Form S-3 under the Securities Act;
(ii) on the basis of a reading of the latest unaudited financial
statements made available by American Exploration Company
("American") and its subsidiaries; their limited review in
accordance with standards established by the American Institute of
Certified Public Accountants under Statement of Auditing Standards
No. 71 of the unaudited interim financial information for the
six-month period ended June 30, 1997, and as at June 30, 1997;
carrying out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which would
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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, directors and committees of American
and its subsidiaries; and inquiries of certain officials of American
who have responsibility for financial and accounting matters of
American and its subsidiaries as to transactions and events
subsequent to December 31, 1996, nothing came to their attention
which caused them to believe that any unaudited financial statements
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 conformity with generally accepted
accounting principles applied on a basis substantially consistent
with that of the audited financial statements included in the Final
Memorandum; and
(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)
incorporated by reference in the Final Memorandum agrees with the
accounting records of American and its subsidiaries, excluding any
questions of legal interpretation;
References to the Final Memorandum in this paragraph (e) include any
supplement thereto at the date of the letter.
(f) Subsequent to the Execution Time or, if earlier, the dates as
of which information is given in the Final Memorandum (exclusive of any
supplement thereto), 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 Purchasers, so material and
adverse as to make it impractical or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Final
Memorandum (exclusive of any supplement thereto).
(g) As of the Closing Date, the Securities shall be rated not lower
than BBB- by Standard & Poor's Ratings Services and Ba1 by Xxxxx'x
Investors Service. Subsequent to the Execution Time, there shall not
have been (i) 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 (ii)
any notice given of any
14
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.
(h) Prior to the Closing Date, the Company shall have furnished to
the Purchasers such further information, certificates and documents as
the Purchasers may reasonably request.
(i) The Registration Agreement shall have been duly executed and
delivered by the Company.
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 Purchasers and counsel for the Purchasers, this
Agreement and all obligations of the Purchasers hereunder may be canceled at,
or at any time prior to, the Closing Date by the Purchasers. Notice of such
cancelation shall be given to the Company in writing or by telephone or
telegraph confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Cravath, Swaine & Xxxxx, counsel for the
Purchasers, at Worldwide Plaza, 000 Xxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, xx the
Closing Date.
7. REIMBURSEMENT OF PURCHASERS' EXPENSES. If the sale of the Securities
provided for herein is not consummated because any condition to the
obligations of the Purchasers set forth in Section 6 hereof is not satisfied
or because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or comply with any provision hereof other than by
reason of a default by any of the Purchasers, the Company will reimburse the
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.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Purchaser, the directors, officers, employees and agents of each
Purchaser and each person who controls any 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 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 any material fact contained in
the Preliminary Memorandum or the Final Memorandum or any amendment or
15
supplement thereto, or the incorporated Exchange Act Reports, 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 in
order to make the statements therein not misleading, and, subject to
Section 8(c), will reimburse each Purchaser, promptly after the receipt
of demand therefor accompanied by an invoice in reasonable detail, 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 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 therein in reliance
upon and in conformity with written information furnished to the Company
by or on behalf of any Purchaser through Xxxxxxx Xxxxx Barney
specifically for inclusion therein, it being understood and agreed that
the only such information consists of the information described as such
in subsection (b) below; and PROVIDED, FURTHER, that with respect to any
untrue statement or alleged untrue statement in or omission or alleged
omission from the Preliminary Memorandum, the indemnity agreement
contained in this subsection (a) shall not inure to the benefit of any
Purchaser that sold the Securities concerned to the person asserting any
such losses, claims, damages or liabilities, to the extent that such sale
was an initial resale by such Purchaser and any such loss, claim, damage
or liability of such Purchaser results from the fact that there was not
sent or given to such person, at or prior to the written confirmation of
the sale of such Securities to such person, a copy of the Final
Memorandum (exclusive of any material included therein but not attached
thereto) if the Company had previously furnished copies thereof to such
Purchaser. This indemnity agreement will be in addition to any liability
which the Company may otherwise have.
(b) Each Purchaser will severally and not jointly indemnify and
hold harmless the Company, each of its directors, each of its officers,
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 Purchaser, but only with reference to
written information relating to such Purchaser furnished to the Company
by or on behalf of such Purchaser through Xxxxxxx Xxxxx Xxxxxx
specifically for inclusion in the documents referred to in the foregoing
indemnity, it being understood and agreed that the only such information
furnished by any Purchaser consists of the following information in the
Final Memorandum furnished on behalf of each Purchaser: The last
paragraph at the bottom of the cover page concerning the terms of the
offering by the Purchasers, the legend concerning stabilizing on page
three of the Final Memorandum, the second sentence of the fourth
paragraph and the seventh paragraph, each under the caption "Plan of
Distribution." This indemnity agreement will be in addition to any
liability which any Purchaser may otherwise have.
16
(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 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 (including the cost of any investigation) 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 one firm of such separate counsel
plus one firm of counsel in each local jurisdiction where the employment
of separate local counsel is necessary or material to the defense of an
action by the indemnified party 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 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 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 Purchasers agree
to contribute to the aggregate losses, claims, damages and
17
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 Purchasers may be subject in
such proportion as is appropriate to reflect the relative benefits
received by the Company and by the Purchasers, respectively, from the
offering of the Securities; PROVIDED, HOWEVER, that in no case shall any
Purchaser be responsible for any amount in excess of the purchase
discount or commission applicable to the Securities purchased by such
Purchaser hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company and the
Purchasers shall contribute in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of
the Company and of the Purchasers, respectively, in connection with the
statements or omissions which resulted in such Losses as well as any
other relevant equitable considerations. For the purpose of this
paragraph 8(d), benefits received by the Company shall be deemed to be
equal to the total net proceeds from the offering (before deducting
expenses) received by each of them, and benefits received by the
Purchasers shall be deemed to be equal to the total purchase discounts
and commissions, in each case as set forth on the cover page of the Final
Memorandum. Relative fault shall be determined by reference to whether
any alleged untrue statement or omission relates to information provided
by the Company or the Purchasers and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent
such untrue statement or omission. The Company and the 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. The Purchasers'
respective obligations to contribute pursuant to this paragraph 8(d)
shall be several in proportion to their respective purchase obligations
and not joint. For purposes of this Section 8, each person who controls
a Purchaser within the meaning of either the Securities Act or the
Exchange Act and each director, officer, employee and agent of a
Purchaser shall have the same rights to contribution as such Purchaser,
and each person who controls the Company within the meaning of either the
Securities Act or the Exchange Act, each officer of the Company and each
director of the Company shall have the same rights to contribution as the
Company, subject in each case to the applicable terms and conditions of
this paragraph (d).
9. DEFAULT BY A PURCHASER. If any one or more Purchasers shall fail to
purchase and pay for any of the Securities agreed to be purchased by such
Purchaser or Purchasers hereunder on the Closing Date and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Purchasers shall be obligated
severally to take up and pay for (in the respective proportions which the
amount of Securities set forth opposite their names in Schedule I hereto bears
to the aggregate amount of Securities set forth opposite the names
18
of all the remaining Purchasers) the Securities which the defaulting Purchaser
or Purchasers agreed but failed to purchase; PROVIDED, HOWEVER, that in the
event that the aggregate amount of Securities which the defaulting Purchaser
or Purchasers agreed but failed to purchase shall exceed 10% of the total
principal amount of Securities that the Purchasers are obligated to purchase
on such Closing Date, the remaining Purchasers shall have the right to
purchase all, but shall not be under any obligation to purchase any, of the
Securities, and if such nondefaulting Purchasers do not purchase all the
Securities to be purchased on such Closing Date, this Agreement will terminate
without liability to any nondefaulting Purchaser or the Company. In the event
of a default by any Purchaser as set forth in this Section 9, such Closing
Date shall be postponed for such period, not exceeding seven days, as the
Purchasers 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 Purchaser of its
liability, if any, to the Company and any nondefaulting Purchaser for damages
occasioned by its default hereunder. As used in this Agreement, the term
"Purchaser" includes any person substituted for a Purchaser under this Section.
10. TERMINATION. This Agreement shall be subject to termination in the
absolute discretion of the Purchasers, by notice given to the Company prior to
delivery of and payment for the Securities, if prior to such time (i) trading
in the Company's common stock 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 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 Purchasers, impracticable or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Final Memorandum
(exclusive of any amendment or supplement thereof or thereto).
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of
the Company or its officers and of the 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 any Purchaser 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
cancelation of this Agreement.
12. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Purchasers, will be mailed,
delivered or telegraphed and confirmed to them, care of Xxxxxxx Xxxxx Barney,
at 000 Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000, Attention: Legal
Department; or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to
19
it at 00000 Xxxxx Xxxxxxx Xxxxxxx, Xxxxx 000, Xxxxxxxx Xxxx, Xxxxxxxx 00000,
Attention: President.
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 no other person will have any right or obligation hereunder.
14. REPRESENTATION OF PURCHASERS. Salomon Brothers Inc will act for the
several Purchasers in connection with the transactions contemplated by this
Agreement, and any action under this Agreement taken by the Purchasers jointly
or by Salomon Brothers Inc will be binding upon all the Purchasers.
15. APPLICABLE LAW. This Agreement shall be governed by and construed
in accordance with the laws of the State of New York without regard to
principle of conflicts of laws.
The Company hereby submits to the non-exclusive jurisdiction of the
Federal and state courts in the Borough of Manhattan in The City of New York
in any suit or proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby.
16. COUNTERPARTS. This Agreement may be executed by any one or more of
the parties hereto in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same instrument.
17. DEFINITIONS. The terms which follow, when used in this Agreement,
shall have the meanings indicated.
"Xxxxxxx Xxxxx Xxxxxx" shall mean Xxxxx Xxxxxx Inc. or Salomon Brothers Inc
to the extent that any such party is a signatory to this Agreement.
20
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several Purchasers.
Very truly yours,
XXXXX XXXXXXX NATURAL GAS CORP.
By: /s/ Xxxxxxx X. Xxxxxx
----------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Executive Vice President and
Chief Financial Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
SALOMON BROTHERS INC
CHASE SECURITIES INC.
XXXXXX XXXXXXX & CO. INCORPORATED
NATIONSBANC XXXXXXXXXX SECURITIES, INC.
XXXXXXX XXXXX SECURITIES INC.
By: SALOMON BROTHERS INC
By: /s/ Xxxxx X.X. Xxxxxx
--------------------------------
Name: Xxxxx X.X. Xxxxxx
Title: Director
21
Schedule I
Purchasers
Principal
Purchasers Amount
---------- ------------
Salomon Brothers Inc $ 60,000,000
Chase Securities Inc. 50,000,000
Xxxxxx Xxxxxxx & Co. Incorporated 50,000,000
NationsBanc Xxxxxxxxxx Securities, Inc. 20,000,000
Xxxxxxx Xxxxx Securities Inc. 20,000,000
------------
TOTAL $200,000,000
EXHIBIT A
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
Purchaser represents and agrees that, except as otherwise permitted by
Section 4(a)(i) 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 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 Purchaser agrees that, at or prior to the confirmation of a sale of
Securities (other than a sale of Securities pursuant to Section 4(a)(i)
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 December 11, 1997,
except in either case in accordance with Regulation S, Rule 144A or
other exemption from registration under the Securities Act. Terms
used above have the meanings given to them by Regulation S."
(b) Each 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 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, any Securities other than to persons whose ordinary business it is
to buy or sell shares or debentures, whether as principal or as 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 Act of
1986 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 to a person who is of a kind described in Article 9(3) of the
Financial Services Xxx 0000 (Investment Advertisements) (Exemptions) Order
1988 or is a person to whom the document may otherwise lawfully be issued or
passed on.
(3) No action has been or will be taken by the Company or any other
person that would permit the offer or sale of the Securities or the
distribution of the Final Memorandum or any other offering material relating
to the Securities in any jurisdiction where action for that purpose is
required. The Company shall have no responsibility with respect to the right
of any person to offer or sell Securities or to distribute the Final
Memorandum or any other offering material relating to the Securities in any
jurisdiction. Accordingly, no Purchaser shall offer or sell any Securities,
or distribute the Final Memorandum or any other offering material relating to
the Securities, in any jurisdiction except in compliance with applicable law.
Each Purchaser shall obtain any consent, approval or authorization required
for it to offer or sell Securities, or to distribute the Final Memorandum or
any other offering material relating to the Securities under the laws or
regulations of any jurisdiction where it proposes to make offers or sales of
Securities, or to distribute the Final Memorandum or any other offering
material relating to the Securities.
A-2
EXHIBIT B
NOTICE TO INVESTORS
OFFERS AND SALES BY THE INITIAL PURCHASERS
The Notes have not been registered under the Securities Act and may not
be offered or sold in the United States or to, or for the account or benefit
of, U.S. persons except in accordance with an applicable exemption from the
registration requirements thereof. Accordingly, the Notes are being offered
and sold only (i) in the United States to QIBs under Rule 144A under the
Securities Act and (ii) outside the United States to non-U.S. persons
("foreign purchasers") in reliance upon Regulation S under the Securities Act.
Each foreign purchaser that is a purchaser of Notes from the Initial
Purchasers (an "Initial Foreign Purchaser") will be required to sign a
certificate in the form provided by the Initial Purchasers.
INVESTOR REPRESENTATIONS AND RESTRICTIONS ON RESALE
Each purchaser of the Notes will be deemed to have represented and agreed
as follows:
(1) it is acquiring the Notes for its own account or for an account with
respect to which it exercises sole investment discretion, and that it or such
account is a QIB or a foreign purchaser outside the United States;
(2) it acknowledges that the Notes have not been registered under the
Securities Act and may not be sold except as permitted below;
(3) it understands and agrees (x) that such Notes are being offered only
in a transaction not involving any public offering within the meaning of the
Securities Act, and (y) that (A) if within two years after the date of
original issuance of the Notes or if within three months after it ceases to be
an affiliate (within the meaning of Rule 144 under the Securities Act) of the
Company, it decides to resell, pledge or otherwise transfer such Notes on
which the legend set forth below appears, such Notes may be resold, pledged or
transferred only (i) to the Company, (ii) so long as such security is eligible
for resale pursuant to Rule 144A, to a person whom the seller reasonably
believes is a QIB that purchases for its own account or for the account of a
QIB to whom notice is given that the resale, pledge or transfer is being made
in reliance on Rule 144A (as indicated by the box checked by the transferor on
the Certificate of Transfer on the reverse of the Note if such Note is not in
book-entry form), (iii) in an offshore transaction in accordance with
Regulation S (as indicated by the box checked by the transferor on the
Certificate of Transfer on the reverse of the Note if such Note is not in
book-entry form), (iv) to an Institutional Accredited Investor, as defined in
Rule 501(a)(1), (2), (3) or (7) under the Securities Act (as indicated by the
box checked by the transferor on the Certificate of Transfer on the reverse of
the Note if such Note is not in book-entry form), that is acquiring the Notes
for investment purposes and not for distribution, and a certificate which may
be obtained from the Company or the Trustee is delivered by the transferee to
the Company and the Trustee, (v) pursuant to an exemption from registration
under the Securities Act provided by
Rule 144 (if applicable) under the Securities Act or (vi) pursuant to an
effective registration statement under the Securities Act, in each case in
accordance with any applicable securities laws of any state of the United
States, (B) the purchaser will, and each subsequent holder is required to,
notify any purchaser of Notes from it of the resale restrictions referred to
in (A) above, if then applicable, and (C) with respect to any transfer of
Notes by an Institutional Accredited Investor, such holder will deliver to the
Company and the Trustee such certificates and other information as they may
reasonably require to confirm that the transfer by it complies with the
foregoing restrictions;
(4) it understands that the notification requirement referred to in (3)
above will be satisfied, in the case only of transfers by physical delivery of
certificated Notes other than a Global Note, by virtue of the fact that the
following legend will be placed on the Notes unless otherwise agreed by the
Company:
"THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED (THE "SECURITIES ACT"). THE HOLDER HEREOF, BY
PURCHASING THIS SECURITY, AGREES FOR THE BENEFIT OF THE COMPANY THAT THIS
SECURITY MAY NOT BE RESOLD, PLEDGED OR OTHERWISE TRANSFERRED (X) PRIOR TO
THE SECOND ANNIVERSARY OF THE ISSUANCE HEREOF (OR A PREDECESSOR SECURITY
HERETO) OR (Y) BY ANY HOLDER THAT WAS AN AFFILIATE OF THE COMPANY AT ANY
TIME DURING THE THREE MONTHS PRECEDING THE DATE OF SUCH TRANSFER, IN
EITHER CASE OTHER THAN (1) TO THE COMPANY, (2) SO LONG AS THIS SECURITY
IS ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE SECURITIES ACT
("RULE 144A"), TO A PERSON WHOM THE SELLER REASONABLY BELIEVES IS A
QUALIFIED INSTITUTIONAL BUYER WITHIN THE MEANING OF RULE 144A PURCHASING
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER
TO WHOM NOTICE IS GIVEN THAT THE RESALE, PLEDGE OR OTHER TRANSFER IS
BEING MADE IN RELIANCE ON RULE 144A (AS INDICATED BY THE BOX CHECKED BY
THE TRANSFERROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (3) IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S
UNDER THE SECURITIES ACT (AS INDICATED BY THE BOX CHECKED BY THE
TRANSFEROR ON THE CERTIFICATE OF TRANSFER ON THE REVERSE OF THIS
SECURITY), (4) TO AN INSTITUTION THAT IS AN "ACCREDITED INVESTOR" AS
DEFINED IN RULE 501(a)(1), (2), (3), or (7) UNDER THE SECURITIES ACT (AS
INDICATED BY THE BOX CHECKED BY THE TRANSFEROR ON THE CERTIFICATE OF
TRANSFER ON THE REVERSE OF THIS SECURITY) THAT IS ACQUIRING THIS SECURITY
FOR INVESTMENT PURPOSES AND NOT FOR DISTRIBUTION, AND A CERTIFICATE WHICH
MAY BE OBTAINED FROM THE COMPANY OR THE TRUSTEE IS DELIVERED BY THE
TRANSFEREE
B-2
TO THE COMPANY AND THE TRUSTEE, (5) PURSUANT TO AN EXEMPTION FROM
REGISTRATION UNDER THE SECURITIES ACT PROVIDED BY RULE 144 (IF
APPLICABLE) UNDER THE SECURITIES ACT OR (6) PURSUANT TO AN EFFECTIVE
REGISTRATION STATEMENT UNDER THE SECURITIES ACT, IN EACH CASE IN
ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE UNITED
STATES. AN INSTITUTIONAL ACCREDITED INVESTOR HOLDING THIS SECURITY
AGREES IT WILL FURNISH TO THE COMPANY AND THE TRUSTEE SUCH CERTIFICATES
AND OTHER INFORMATION AS THEY MAY REASONABLY REQUIRE TO CONFIRM THAT ANY
TRANSFER BY IT OF THIS SECURITY COMPLIES WITH THE FOREGOING RESTRICTIONS.
THE HOLDER HEREOF, BY PURCHASING THIS SECURITY, REPRESENTS AND AGREES
FOR THE BENEFIT OF THE COMPANY THAT IT IS (1) A QUALIFIED INSTITUTIONAL
BUYER WITHIN THE MEANING OF RULE 144A OR (2) AN INSTITUTION THAT IS AN
"ACCREDITED INVESTOR" AS DEFINED IN RULE 501(a)(1), (2), (3) or (7) UNDER
THE SECURITIES ACT AND THAT IT IS HOLDING THIS SECURITY FOR INVESTMENT
PURPOSES AND NOT FOR DISTRIBUTION OR (3) A NON-US PERSON OUTSIDE THE
UNITED STATES WITHIN THE MEANING OF (OR AN ACCOUNT SATISFYING THE
REQUIREMENTS OF PARAGRAPH (o)(2) of RULE 902 UNDER) REGULATION S UNDER
THE SECURITIES ACT."
(5) it (i) is able to fend for itself in the transactions contemplated by
this Offering Memorandum; (ii) has such knowledge and experience in financial
and business matters as to be capable of evaluating the merits and risks of
its prospective investment in the Notes; and (iii) has the ability to bear the
economic risks of its prospective investment and can afford the complete loss
of such investment.
(6) it has received a copy of the Offering Memorandum relating to the
offering of the Notes and acknowledged that it has had access to such
financial and other information, and has been afforded the opportunity to ask
questions of the Company and receive answers thereto, as it deems necessary in
connection with its decision to purchase Notes; and
(7) it understands that the Company, the Initial Purchasers and others
will rely upon the truth and accuracy of the foregoing acknowledgments,
representations and agreements and agrees that if any of the acknowledgments,
representations and warranties deemed to have been made by it by its purchase
of the Notes are no longer accurate, it shall promptly notify the Company and
the Initial Purchasers. If it is acquiring the Notes as a fiduciary or agent
for one or more investor accounts, it represents that it has sole investment
discretion with respect to each such account and it has full power to make the
foregoing acknowledgments, representations and agreements on behalf of such
account.
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