$75,000,000
▇▇▇▇▇▇▇▇ RESOURCES, INC.
11 1/4% SENIOR NOTES DUE 2007
PLACEMENT AGREEMENT
February 28, 2002
February 28, 2002
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
TD Securities (USA) Inc.
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Corp.
c/o Morgan ▇▇▇▇▇▇▇ & Co. Incorporated
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs and Mesdames:
▇▇▇▇▇▇▇▇ Resources, Inc., a Nevada corporation (the "Company"), proposes to
issue and sell to the several purchasers named in Schedule I hereto (the
"Placement Agents") $75,000,000 principal amount of its 11 1/4% Senior Notes due
2007 (the "Securities") to be issued pursuant to the provisions of a
Supplemental Indenture to be dated as of March 7, 2002 (the "Supplemental
Indenture") among the Company, the Guarantors (as defined below) and U.S. Trust
Company of Texas, N.A., as Trustee (the "Trustee"), to the Indenture dated as of
April 29, 1999 (the "Indenture") among the Company, the Guarantors and Trustee.
The Securities will be guaranteed (the "Subsidiary Guarantees") by each of the
entities listed on Schedule II hereto (each, a "Guarantor" and collectively the
"Guarantors").
The Securities will be offered without being registered under the Securities Act
of 1933, as amended (the "Securities Act"), to qualified institutional buyers in
compliance with the exemption from registration provided by Rule 144A under the
Securities Act and in offshore transactions in reliance on Regulation S under
the Securities Act ("Regulation S").
The Placement Agents and their direct and indirect transferees will be entitled
to the benefits of a Registration Rights Agreement to be dated as of March 7,
2002 between the Company, the Guarantors and the Placement Agents (the
"Registration Rights Agreement").
In connection with the sale of the Securities, the Company has prepared an
offering memorandum (the "Memorandum") including or incorporating by reference a
description of the terms of the Securities, the terms of the offering and a
description of the Company. As used herein, the term "Memorandum" shall include
in each case the documents incorporated by reference therein. The terms
"supplement", "amendment" and "amend" as used herein with respect to the
Memorandum shall include all documents deemed to be incorporated by reference in
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the Memorandum that are filed subsequent to the date of such Memorandum with the
Securities and Exchange Commission (the "Commission") pursuant to the Securities
Exchange Act of 1934, as amended (the "Exchange Act").
1. Representations and Warranties. The Company and the Guarantors
jointly and severally represent and warrant to, and agree with, you that:
(a) (i) Each document, if any, filed or to be filed pursuant to
the Exchange Act and incorporated by reference in the Memorandum
complied or will comply when so filed in all material respects with
the Exchange Act and the applicable rules and regulations of the
Commission thereunder and (ii) the Memorandum, in the form used by the
Placement Agents to confirm sales and on the Closing Date (as defined
in Section 4), will not contain any untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading, except that the representations and warranties set
forth in this paragraph do not apply to statements or omissions in the
Memorandum based upon information relating to any Placement Agent
furnished to the Company in writing by such Placement Agent through
you expressly for use therein.
(b) The Company has been duly incorporated, is validly existing
as a corporation in good standing under the laws of the jurisdiction
of its incorporation, has the corporate power and authority to own its
property and to conduct its business as described in the Memorandum
and is duly qualified to transact business and is in good standing in
each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except
to the extent that the failure to be so qualified or be in good
standing would not have a material adverse effect on the Company and
its subsidiaries, taken as a whole.
(c) Each subsidiary of the Company has been duly organized, is
validly existing as a corporation or limited liability company in good
standing under the laws of the jurisdiction of its organization, has
the corporate power and authority to own its property and to conduct
its business as described in the Memorandum and is duly qualified to
transact business and is in good standing in each jurisdiction in
which the conduct of its business or its ownership or leasing of
property requires such qualification, except to the extent that the
failure to be so qualified or be in good standing would not have a
material adverse effect on the Company and its subsidiaries, taken as
a whole; all of the issued shares of capital stock or other ownership
interest of each subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly, or indirectly through one of the other subsidiaries, by the
Company, free and clear of all liens, encumbrances, equities or
claims, except for pledges of such shares or ownership interest
pursuant to the Company's bank credit facility described in the
Memorandum.
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(d) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors.
(e) All of the shares of common stock, par value $.50 per share
("Common Stock"), of the Company that are outstanding have been duly
authorized and are validly issued, fully paid and non-assessable.
(f) The Securities have been duly authorized and, when executed
and authenticated in accordance with the provisions of the Indenture
and the Supplemental Indenture and delivered to and paid for by the
Placement Agents in accordance with the terms of this Agreement, will
be valid and binding obligations of the Company, enforceable in
accordance with their terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and
general principles of equity, and will be entitled to the benefits of
the Indenture, the Supplemental Indenture and the Registration Rights
Agreement pursuant to which such Securities are to be issued.
(g) Each Subsidiary Guarantee to be endorsed on the Securities by
each Guarantor has been duly authorized by such Guarantor and, when
executed and authenticated in accordance with the provisions of the
Indenture and delivered to and paid for by the Placement Agents in
accordance with the terms of this Agreement, will be valid and binding
obligations of the Guarantors, enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency or similar laws
affecting creditors' rights generally and general principles of
equity, and will be entitled to the benefits of the Indenture, the
Supplemental Indenture and the Registration Rights Agreement pursuant
to which such Subsidiary Guarantees are to be issued.
(h) Each of the Indenture, the Supplemental Indenture and the
Registration Rights Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company and
each of the Guarantors, enforceable in accordance with its terms,
subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity and
except as rights to indemnification and contribution under the
Registration Rights Agreement may be limited under applicable law.
(i) The Securities, the Subsidiary Guarantees, the Indenture, the
Supplemental Indenture and the Registration Rights Agreement will
conform in all material respects to the respective statements relating
thereto contained in the Memorandum and will be in substantially the
respective forms previously delivered to the Placement Agents.
(j) The execution and delivery by the Company and the Guarantors,
as the case may be, of, and the performance by the Company and the
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Guarantors, as the case may be, of their obligations under, this
Agreement, the Indenture, the Supplemental Indenture, the Registration
Rights Agreement, the Securities and the Subsidiary Guarantees will
not contravene any provision of applicable law or the certificate or
articles of incorporation or by-laws or other organizational documents
of the Company or any of the Guarantors or any agreement or other
instrument binding upon the Company or any of its subsidiaries that is
material to the Company and its subsidiaries, taken as a whole, or any
judgment, order or decree of any governmental body, agency or court
having jurisdiction over the Company or any subsidiary, and no
consent, approval, authorization or order of, or qualification with,
any governmental body or agency is required for the performance by the
Company or any of the Guarantors of its obligations under this
Agreement, the Indenture, the Supplemental Indenture, the Registration
Rights Agreement, the Securities or the Subsidiary Guarantors, except
such as may be required by the securities or Blue Sky laws of the
various states in connection with the offer and sale of the Securities
and by Federal and state securities laws with respect to the Company's
obligations under the Registration Rights Agreement.
(k) There has not occurred any material adverse change, or any
development involving a prospective material adverse change, in the
condition, financial or otherwise, or in the earnings, business or
operations of the Company and its subsidiaries, taken as a whole, from
that set forth in the Memorandum.
(l) Subsequent to the respective dates as of which information is
given in the Memorandum, (1) the Company and its subsidiaries have not
incurred any material liability or obligation, direct or contingent,
nor entered into any material transaction not in the ordinary course
of business; (2) the Company has not purchased any of its outstanding
capital stock, nor declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock other than ordinary and
customary dividends; and (3) there has not been any material change in
the capital stock, short-term debt or long-term debt of the Company
and its subsidiaries, except in each case as described in the
Memorandum.
(m) There are no legal or governmental proceedings pending or, to
the Company's knowledge, threatened to which the Company or any of its
subsidiaries is a party or to which any of the properties of the
Company or any of its subsidiaries is subject other than proceedings
accurately described in all material respects in the Memorandum and
proceedings that would not have a material adverse effect on the
Company and its subsidiaries, taken as a whole, or on the power or
ability of the Company and the Guarantors to perform their obligations
under this Agreement, the Indenture, the Supplemental Indenture, the
Registration Rights Agreement, the Securities or the Subsidiary
Guarantees or to consummate the transactions contemplated by the
Memorandum.
(n) Neither the Company nor any of its subsidiaries is in
violation of its certificate or articles of incorporation or by-laws,
or other organizational documents, or of any law, ordinance,
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administrative or governmental rule or regulation applicable to the
Company or any of its subsidiaries or of any judgement, order or
decree of any governmental body, agency or court having jurisdiction
over the Company or any of its subsidiaries, or in default in any
material respect in the performance of any obligation, agreement or
condition contained in any bond, debenture, note or any other evidence
of indebtedness or in any material agreement, indenture, lease or
other instrument to which the Company or any of its subsidiaries is a
party or by which any of them or any of their respective properties
may be bound.
(o) The accountants, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have certified or
shall certify the financial statements included in the Memorandum, are
independent public accountants as required by the Securities Act.
(p) ▇▇▇ ▇▇▇▇▇▇▇ and Associates, Inc. are independent petroleum
consultants with respect to the Company and its subsidiaries.
(q) The consolidated historical financial statements, together
with related schedules and notes, included in the Memorandum comply as
to form in all material respects with the requirements applicable to
registration statements on Form S-1 under the Securities Act. Such
historical financial statements present fairly the consolidated
financial position, results of operations and changes in financial
position of the Company and its subsidiaries on the basis stated in
the Memorandum at the respective dates or for the respective periods
to which they apply; such statements and related schedules and notes
have been prepared in accordance with generally accepted accounting
principles consistently applied throughout the periods involved,
except as disclosed therein. The other financial and statistical
information and data included in the Memorandum are accurately
presented and prepared on a basis consistent with such financial
statements and the books and records of the Company and its
subsidiaries.
(r) The pro forma financial statements included or incorporated
by reference in the Memorandum have been prepared on a basis
consistent with the historical financial statements of the Company and
its subsidiaries and give effect to assumptions used in the
preparation thereof on a reasonable basis and in good faith and
present fairly the transactions described therein; and such pro forma
financial statements comply as to form in all material respects with
the requirements applicable to pro forma financial statements included
in registration statements on Form S-1 under the Securities Act. The
other pro forma financial and statistical information and data
included or incorporated by reference in the Memorandum are, in all
material respects, accurately presented and prepared on a basis
consistent with the pro forma financial statements.
(s) The Company and each of its subsidiaries has (1) generally
satisfactory title to all its interests in its oil and gas properties,
title investigations having been carried out by the Company and each
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of its subsidiaries in accordance with the general practice in the oil
and gas industry, (2) good and marketable title in fee simple to all
other real property owned by it and (3) good and marketable title to
all personal property owned by it, in each case free and clear of all
liens, encumbrances, claims, security interests, subleases and defects
except such as are described in the Memorandum or such as do not
materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company
and its subsidiaries; and any real property and buildings held under
lease by the Company and its subsidiaries are held by them under
valid, subsisting and enforceable leases with such exceptions as are
not material and do not interfere with the use made and proposed to be
made of such property and buildings of the Company and its
subsidiaries.
(t) None of the Company or its subsidiaries has violated any
environmental safety or similar law or regulation applicable to its
business relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), lacks any permits, licenses or
other approvals required of them under applicable Environmental Laws
to own, lease and operate their respective properties and to conduct
their business in the manner described in the Memorandum, is violating
any terms and conditions of any such permit, license or approval or
has permitted to occur any event that allows, or after notice or lapse
of time would allow, revocation or termination of any such permit,
license or approval or result in any other impairment of their rights
thereunder, which in each case would have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
(u) The Company and each of its subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable
assurance that (1) transactions are executed in accordance with
management's general or specific authorizations; (2) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability; (3) access to assets is permitted only
in accordance with management's general or specific authorization; and
(4) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(v) The Company and each of its subsidiaries have filed all
material tax returns required to be filed, which returns are complete
and correct in all material respects, and neither the Company nor any
of its subsidiaries is in default in the payment of any taxes which
were payable pursuant to said returns or any assessments with respect
thereto.
(w) The Company and its subsidiaries own or possess all patents,
trademarks, trademark registration, service marks, service ▇▇▇▇
registrations, trade names, copyrights, licenses, inventions, trade
secrets and rights described in the Memorandum as being owned by them
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or any of them or necessary for the conduct of their respective
businesses, and the Company is not aware of any claim to the contrary
or any challenge by any other person to the rights of the Company and
its subsidiaries with respect to the foregoing.
(x) The Company and its subsidiaries are insured by the insurers
of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in
which they are engaged; neither the Company nor any of its
subsidiaries has been refused any insurance coverage sought or applied
for; and neither the Company nor any of its subsidiaries has any
reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that would not have a material adverse effect
on the Company and its subsidiaries, taken as a whole, except as
described in the Memorandum.
(y) The Company is not, and after giving effect to the offering
and sale of the Securities and the application of the proceeds thereof
as described in the Memorandum, will not be an "investment company" as
such term is defined in the Investment Company Act of 1940, as
amended.
(z) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D under the Securities Act, an "Affiliate") of
the Company has directly, or through any agent, (i) sold, offered for
sale, solicited offers to buy or otherwise negotiated in respect of,
any security (as defined in the Securities Act) which is or will be
integrated with the sale of the Securities in a manner that would
require the registration under the Securities Act of the Securities or
(ii) engaged in any form of general solicitation or general
advertising in connection with the offering of the Securities, (as
those terms are used in Regulation D under the Securities Act) or in
any manner involving a public offering within the meaning of Section
4(2) of the Securities Act.
(aa) None of the Company, its Affiliates or any person acting on
its or their behalf has engaged or will engage in any directed selling
efforts (within the meaning of Regulation S) with respect to the
Securities and the Company and its Affiliates and any person acting on
its or their behalf have complied and will comply with the offering
restrictions requirement of Regulation S, except no representation,
warranty or agreement is made by the Company in this paragraph with
respect to the Placement Agents.
(bb) It is not necessary in connection with the offer, sale and
delivery of the Securities to the Placement Agents in the manner
contemplated by this Agreement to register the Securities and the
Subsidiary Guarantees under the Securities Act or to qualify the
Supplemental Indenture or the Indenture under the Trust Indenture Act
of 1939, as amended.
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(cc) The Securities satisfy the requirements set forth in Rule
144A(d)(3) under the Securities Act.
2. Agreements to Sell and Purchase. The Company hereby agrees to sell to
the several Placement Agents, and each Placement Agent, upon the basis of the
representations and warranties herein contained, but subject to the conditions
hereinafter stated, agrees, severally and not jointly, to purchase from the
Company the respective principal amount of Securities set forth in Schedule I
hereto opposite its name at a purchase price of 97.25 % of the principal amount
thereof (the "Purchase Price") plus accrued interest, if any, to the Closing
Date.
The Company hereby agrees that, without the prior written consent of ▇▇▇▇▇▇
▇▇▇▇▇▇▇ & Co. Incorporated on behalf of the Placement Agents, it will not,
during the period beginning on the date hereof and continuing to and including
the Closing Date, offer, sell, contract to sell or otherwise dispose of any debt
of the Company or warrants to purchase debt of the Company substantially similar
to the Securities (other than the sale of the Securities under this Agreement).
3. Terms of Offering. You have advised the Company that the Placement
Agents will make an offering of the Securities purchased by the Placement Agents
hereunder on the terms to be set forth in the Memorandum, as soon as practicable
after this Agreement is entered into as in your judgment is advisable.
4. Payment and Delivery. Payment for the Securities shall be made to the
Company in Federal or other funds immediately available in New York City against
delivery of such Securities for the respective accounts of the several Placement
Agents at 10:00 a.m., New York City time, on March 7, 2002, or at such other
time on the same or such other date, not later than March 14, 2002, as shall be
designated in writing by you. The time and date of such payment are hereinafter
referred to as the "Closing Date."
Certificates for the Securities shall be in definitive form or global form, as
specified by you, and registered in such names and in such denominations as you
shall request in writing not later than one full business day prior to the
Closing Date. The certificates evidencing the Securities shall be delivered to
you on the Closing Date for the respective accounts of the several Placement
Agents, with any transfer taxes payable in connection with the transfer of the
Securities to the Placement Agents duly paid, against payment of the Purchase
Price therefor plus accrued interest, if any, to the date of payment and
delivery.
5. Conditions to the Placement Agents' Obligations. The several obligations
of the Placement Agents to purchase and pay for the Securities on the Closing
Date are subject to the following conditions:
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(a) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date:
(i) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of
any review for a possible change that does not indicate the direction
of the possible change, in the rating accorded any of the Company's
securities or in the rating outlook for the Company by any "nationally
recognized statistical rating organization," as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act; and
(ii) there shall not have occurred any change, or any development
involving a prospective change, in the condition, financial or
otherwise, or in the earnings, business or operations of the Company
and its subsidiaries, taken as a whole, from that set forth in the
Memorandum (exclusive of any amendments or supplements thereto
subsequent to the date of this Agreement) that, in your judgment, is
material and adverse and that makes it, in your judgment,
impracticable to market the Securities on the terms and in the manner
contemplated in the Memorandum.
(b) The Placement Agents shall have received on the Closing Date a
certificate, dated the Closing Date and signed by an executive officer of
the Company and each of the Guarantors, to the effect set forth in Section
5(a)(i) and to the effect that the representations and warranties of the
Company and the Guarantors contained in this Agreement are true and correct
as of the Closing Date and that the Company and the Guarantors have
complied with all of the agreements and satisfied all of the conditions on
their part to be performed or satisfied hereunder on or before the Closing
Date.
The officers signing and delivering such certificates may rely upon
the best of his or her knowledge as to proceedings threatened.
(c) The Placement Agents shall have received on the Closing Date an
opinion of ▇▇▇▇▇ Liddell & ▇▇▇▇ LLP, outside counsel for the Company and
the Guarantors, dated the Closing Date, to the effect set forth in Exhibit
A. Such opinion shall be rendered to the Placement Agents at the request of
the Company and the Guarantors and shall so state therein.
(d) The Placement Agents shall have received on the Closing Date an
opinion of ▇▇▇▇▇ ▇▇▇▇▇ L.L.P., counsel for the Placement Agents, dated the
Closing Date, to the effect set forth in Exhibit B.
(e) The Placement Agents shall have received on each of the date
hereof and the Closing Date a letter, dated the date hereof or the Closing
Date, as the case may be, in form and substance satisfactory to the
Placement Agents, from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, independent public accountants,
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containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in or
incorporated by reference into the Memorandum; provided that the letter
delivered on the Closing Date shall use a "cut-off date" not earlier than
the date hereof.
(f) The Placement Agents shall have received a counterpart, conformed
as executed, of the Supplemental Indenture which shall have been entered
into by the Company, the Guarantors and the Trustee.
(g) The Company and the Guarantors shall have executed the
Registration Rights Agreement and the Placement Agents shall have received
an original copy thereof, duly executed by the Company and the Guarantors.
6. Covenants of the Company. In further consideration of the agreements of
the Placement Agents contained in this Agreement, the Company and the Guarantors
covenant with each Placement Agent as follows:
(a) To furnish to you in New York City, without charge, prior to 10:00
a.m. New York City time on the business day next succeeding the date of
this Agreement and during the period mentioned in Section 6(c), as many
copies of the Memorandum, any documents incorporated by reference therein
and any supplements and amendments thereto as you may reasonably request.
(b) Before amending or supplementing the Memorandum, to furnish to you
a copy of each such proposed amendment or supplement and not to use any
such proposed amendment or supplement to which you reasonably object.
(c) If, during such period after the date hereof and prior to the date
on which all of the Securities shall have been sold by the Placement
Agents, any event shall occur or condition exist as a result of which it is
necessary to amend or supplement the Memorandum in order to make the
statements therein, in the light of the circumstances when the Memorandum
is delivered to a purchaser, not misleading, or if, in the opinion of the
Placement Agents, it is necessary to amend or supplement the Memorandum to
comply with applicable law, forthwith to prepare and furnish, at its own
expense, to the Placement Agents, either amendments or supplements to the
Memorandum so that the statements in the Memorandum as so amended or
supplemented will not, in the light of the circumstances when the
Memorandum is delivered to a purchaser, be misleading or so that the
Memorandum, as amended or supplemented, will comply with applicable law.
(d) To endeavor to qualify the Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as you shall reasonably
10
request, provided that in no event shall the Company be obligated to
qualify to do business in any jurisdiction where it is not now so qualified
or to take any action which would subject it to service of process in
suits, other than those arising out of the offering or sale of the
Securities, in any jurisdiction where it is not now so subject.
(e) Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, to pay or cause to be paid all
expenses incident to the performance of their obligations under this
Agreement, including: (i) the fees, disbursements and expenses of the
Company's and the Guarantors' counsel and the Company's and the Guarantors'
accountants in connection with the issuance and sale of the Securities and
all other fees or expenses in connection with the preparation of each
Memorandum and all amendments and supplements thereto, including all
printing costs associated therewith, and the delivering of copies thereof
to the Placement Agents, in the quantities herein above specified, (ii) all
costs and expenses related to the transfer and delivery of the Securities
to the Placement Agents, including any transfer or other taxes payable
thereon, (iii) the cost of printing or producing any Blue Sky or legal
investment memorandum in connection with the offer and sale of the
Securities under state securities laws and all expenses in connection with
the qualification of the Securities for offer and sale under state
securities laws as provided in Section 6(d) hereof, including filing fees
and the reasonable fees and disbursements of counsel for the Placement
Agents in connection with such qualification and in connection with the
Blue Sky or legal investment memorandum, (iv) any fees charged by rating
agencies for the rating of the Securities, (v) all document production
charges and expenses of counsel to the Placement Agents (but not including
their fees for professional services) in connection with the preparation of
this Agreement, (vi) the fees and expenses, if any, incurred in connection
with the admission of the Securities for trading in PORTAL or any
appropriate market system, (vii) the costs and charges of the Trustee and
any transfer agent, registrar or depositary, (viii) the cost of the
preparation, issuance and delivery of the Securities, (ix) the costs and
expenses of the Company relating to investor presentations on any "road
show" undertaken in connection with the marketing of the offering of the
Securities, including, without limitation, expenses associated with the
production of road show slides and graphics, fees and expenses of any
consultants engaged in connection with the road show presentations with the
prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
the cost of any aircraft chartered in connection with the road show, and
(x) all other cost and expenses incident to the performance of the
obligations of the Company and the Guarantors hereunder for which provision
is not otherwise made in this Section. It is understood, however, that
except as provided in this Section, Section 8, and the last paragraph of
Section 10, the Placement Agents will pay all of their costs and expenses,
including fees and disbursements of their counsel, travel and lodging
11
expenses of representatives of the Placement Agents, transfer taxes payable
on resale of any of the Securities by them and any advertising expenses
connected with any offers they may make.
(f) Neither the Company nor any Affiliate will sell, offer for sale or
solicit offers to buy or otherwise negotiate in respect of any security (as
defined in the Securities Act) which could be integrated with the sale of
the Securities in a manner which would require the registration under the
Securities Act of the Securities.
(g) Not to solicit any offer to buy or offer or sell the Securities by
means of any form of general solicitation or general advertising (as those
terms are used in Regulation D under the Securities Act) or in any manner
involving a public offering within the meaning of Section 4(2) of the
Securities Act.
(h) While any of the Securities remain "restricted securities" within
the meaning of the Securities Act, to make available, upon request, to any
seller of such Securities the information specified in Rule 144A(d)(4)
under the Securities Act, unless the Company is then subject to Section 13
or 15(d) of the Exchange Act.
(i) If requested by you, to use its best efforts to permit the
Securities to be designated PORTAL securities in accordance with the rules
and regulations adopted by the National Association of Securities Dealers,
Inc. relating to trading in the PORTAL Market.
(j) None of the Company, its Affiliates or any person acting on its or
their behalf (other than the Placement Agents) will engage in any directed
selling efforts (as that term is defined in Regulation S) with respect to
the Securities, and the Company and its Affiliates and each person acting
on its or their behalf (other than the Placement Agents) will comply with
the offering restrictions requirement of Regulation S.
(k) During the period of two years after the Closing Date, the Company
will not, and will not permit any of its affiliates (as defined in Rule 144
under the Securities Act) to resell any of the Securities which constitute
"restricted securities" under Rule 144 that have been reacquired by any of
them.
7. Offering of Securities; Restrictions on Transfer. (a) Each Placement
Agent, severally and not jointly, represents and warrants that such Placement
Agent is a qualified institutional buyer as defined in Rule 144A under the
Securities Act (a "QIB"). Each Placement Agent, severally and not jointly,
agrees with the Company that (i) it will not solicit offers for, or offer or
sell, such Securities by any form of general solicitation or general advertising
(as those terms are used in Regulation D under the Securities Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act and (ii) it will solicit offers for such Securities only from,
12
and will offer such Securities only to, persons that it reasonably believes to
be (A) in the case of offers inside the United States, QIBs and (B) in the case
of offers outside the United States, to persons other than U.S. persons
("foreign purchasers," which term shall include dealers or other professional
fiduciaries in the United States acting on a discretionary basis for foreign
beneficial owners (other than an estate or trust)) in reliance upon Regulation S
under the Securities Act that, in each case, in purchasing such Securities are
deemed to have represented and agreed as provided in the Memorandum under the
caption "Transfer Restrictions".
(b) Each Placement Agent, severally and not jointly, represents, warrants,
and agrees with respect to offers and sales outside the United States that:
(i) such Placement Agent understands that no action has been or will
be taken in any jurisdiction by the Company that would permit a public
offering of the Securities, or possession or distribution of either
Memorandum or any other offering or publicity material relating to the
Securities, in any country or jurisdiction where action for that purpose is
required;
(ii) such Placement Agent will comply with all applicable laws and
regulations in each jurisdiction in which it acquires, offers, sells or
delivers Securities or has in its possession or distributes either
Memorandum or any such other material, in all cases at its own expense;
(iii) the Securities have not been registered under the Securities Act
and may not be offered or sold within the United States or to, or for the
account or benefit of, U.S. persons except in accordance with Rule 144A or
Regulation S under the Securities Act or pursuant to another exemption from
the registration requirements of the Securities Act;
(iv) such Placement Agent has offered the Securities and will offer
and sell the Securities (A) as part of their distribution at any time and
(B) otherwise until 40 days after the later of the commencement of the
offering and the Closing Date, only in accordance with Rule 903 of
Regulation S or as otherwise permitted in Section 7(a); accordingly,
neither such Placement Agent, its Affiliates nor any persons acting on its
or their behalf have engaged or will engage in any directed selling efforts
(within the meaning of Regulation S) with respect to the Securities, and
any such Placement Agent, its Affiliates and any such persons have complied
and will comply with the offering restrictions requirement of Regulation S;
(v) such Placement Agent has (A) not offered or sold and will not
offer or sell any Securities to persons in the United Kingdom except to
persons whose ordinary activities involve them in acquiring, holding,
managing or disposing of investments (as principal or agent) for the
purposes of their businesses or otherwise in circumstances which have not
resulted and will not result in an offer to the public in the United
Kingdom within the meaning of the Public Offers of Securities Regulations
1995 or the Financial Services ▇▇▇ ▇▇▇▇; (B) complied and will comply with
all applicable provisions of the Financial Services ▇▇▇ ▇▇▇▇ with respect
13
to anything done by it in relation to the Securities in, from or otherwise
involving the United Kingdom; and (C) only issued or passed on and will
only issue or pass on in the United Kingdom any document received by it in
connection with the issue of the Securities to a person who is of a kind
described in Article 11(3) of the Financial Services ▇▇▇ ▇▇▇▇ (Investment
Advertisements) (Exemptions) Order 1996 (as amended) or is a person to whom
such document may otherwise lawfully be issued or passed on;
(vi) such Placement Agent understands that the Securities have not
been and will not be registered under the Securities and Exchange Law of
Japan, and represents that it has not offered or sold, and agrees not to
offer or sell, directly or indirectly, any Securities in Japan or for the
account of any resident thereof except pursuant to any exemption from the
registration requirements of the Securities and Exchange Law of Japan and
otherwise in compliance with applicable provisions of Japanese law; and
(vii) such Placement Agent agrees that, at or prior to confirmation of
sales of the Securities, it will have sent to each distributor, dealer or
person receiving a selling concession, fee or other remuneration that
purchases Securities from it during the restricted period a confirmation or
notice to substantially the following effect:
"The Securities covered hereby have not been registered under the U.S.
Securities Act of 1933 (the "Securities Act") and may not be offered and
sold within the United States or to, or for the account or benefit of, U.S.
persons (i) as part of their distribution at any time or (ii) otherwise
until 40 days after the later of the commencement of the offering and the
closing date, except in either case in accordance with Regulation S (or
Rule 144A if available) under the Securities Act. Terms used above have the
meaning given to them by Regulation S."
Terms used in this Section 7(b) have the meanings given to them by Regulation S.
8. Indemnity and Contribution. (a) The Company and the Guarantors, jointly
and severally, agree to indemnify and hold harmless each Placement Agent and
each person, if any, who controls any Placement Agent within the meaning of
either Section 15 of the Securities Act or Section 20 of the Exchange Act from
and against any and all losses, claims, damages and liabilities (including,
without limitation, any legal or other expenses reasonably incurred in
connection with defending or investigating any such action or claim) caused by
any untrue statement or alleged untrue statement of a material fact contained in
the Memorandum (as amended or supplemented if the Company shall have furnished
any amendments or supplements thereto), or caused by any omission or alleged
omission to state therein a material fact necessary to make the statements
therein in the light of the circumstances under which they were made not
misleading, except insofar as such losses, claims, damages or liabilities are
14
caused by any such untrue statement or omission or alleged untrue statement or
omission based upon information relating to any Placement Agent furnished to the
Company in writing by such Placement Agent through you expressly for use
therein.
(b) Each Placement Agent agrees, severally and not jointly, to indemnify
and hold harmless the Company, the Guarantors, their directors, its officers and
each person, if any, who controls the Company or any Guarantor within the
meaning of either Section 15 of the Securities Act or Section 20 of the Exchange
Act to the same extent as the foregoing indemnity from the Company and the
Guarantors to such Placement Agent, but only with reference to information
relating to such Placement Agent furnished to the Company in writing by such
Placement Agent through you expressly for use in the Memorandum or any
amendments or supplements thereto.
(c) In case any proceeding (including any governmental investigation) shall
be instituted involving any person in respect of which indemnity may be sought
pursuant to Section 8(a) or 8(b), such person (the "indemnified party") shall
promptly notify the person against whom such indemnity may be sought (the
"indemnifying party") in writing and the indemnifying party, upon request of the
indemnified party, shall retain counsel reasonably satisfactory to the
indemnified party to represent the indemnified party and any others the
indemnifying party may designate in such proceeding and shall pay the fees and
disbursements of such counsel related to such proceeding. In any such
proceeding, any indemnified party shall have the right to retain its own
counsel, but the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel or (ii) the
named parties to any such proceeding (including any impleaded parties) include
both the indemnifying party and the indemnified party and representation of both
parties by the same counsel would be inappropriate due to actual or potential
differing interests between them. It is understood that the indemnifying party
shall not, in respect of the legal expenses of any indemnified party in
connection with any proceeding or related proceedings in the same jurisdiction,
be liable for the fees and expenses of more than one separate firm (in addition
to any local counsel) for all such indemnified parties and that all such fees
and expenses shall be reimbursed as they are incurred. Such firm shall be
designated in writing by ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated, in the case of
parties indemnified pursuant to Section 8(a), and by the Company, in the case of
parties indemnified pursuant to Section 8(b). The indemnifying party shall not
be liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
from and against any loss or liability by reason of such settlement or judgment.
Notwithstanding the foregoing sentence, if at any time an indemnified party
shall have requested an indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by the second and third
sentences of this paragraph, the indemnifying party agrees that it shall be
liable for any settlement of any proceeding effected without its written consent
if (i) such settlement is entered into more than 30 days after receipt by such
indemnifying party of the aforesaid request and (ii) such indemnifying party
15
shall not have reimbursed the indemnified party in accordance with such request
prior to the date of such settlement. No indemnifying party shall, without the
prior written consent of the indemnified party, effect any settlement of any
pending or threatened proceeding in respect of which any indemnified party is or
could have been a party and indemnity could have been sought hereunder by such
indemnified party, unless such settlement includes an unconditional release of
such indemnified party from all liability on claims that are the subject matter
of such proceeding.
(d) To the extent the indemnification provided for in Section 8(a) or 8(b)
is unavailable to an indemnified party or insufficient in respect of any losses,
claims, damages or liabilities referred to therein, then each indemnifying party
under such paragraph, in lieu of indemnifying such indemnified party thereunder,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company and the
Guarantors on the one hand and the Placement Agents on the other hand from the
offering of the Securities or (ii) if the allocation provided by clause 8(d)(i)
above is not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause 8(d)(i) above
but also the relative fault of the Company and the Guarantors on the one hand
and of the Placement Agents on the other hand in connection with the statements
or omissions that resulted in such losses, claims, damages or liabilities, as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Guarantors on the one hand and the Placement
Agents on the other hand in connection with the offering of the Securities shall
be deemed to be in the same respective proportions as the net proceeds from the
offering of the Securities (before deducting expenses) received by the Company
and the Guarantors and the total discounts and commissions received by the
Placement Agents, in each case as set forth in the Memorandum, bear to the
aggregate offering price of the Securities. The relative fault of the Company
and the Guarantors on the one hand and of the Placement Agents on the other hand
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company and the
Guarantors or by the Placement Agents and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Placement Agents' respective obligations to
contribute pursuant to this Section 8 are several in proportion to the
respective principal amount of Securities they have purchased hereunder, and not
joint.
(e) The Company, the Guarantors and the Placement Agents agree that it
would not be just or equitable if contribution pursuant to this Section 8 were
determined by pro rata allocation (even if the Placement Agents were treated as
one entity for such purpose) or by any other method of allocation that does not
take account of the equitable considerations referred to in Section 8(d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages and liabilities referred to in Section 8(d) shall be deemed to
include, subject to the limitations set forth above, any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
16
or defending any such action or claim. Notwithstanding the provisions of this
Section 8, no Placement Agent shall be required to contribute any amount in
excess of the amount by which the total price at which the Securities resold by
it in the initial placement of such Securities were offered to investors exceeds
the amount of any damages that such Placement Agent has otherwise been required
to pay by reason of such untrue or alleged untrue statement or omission or
alleged omission. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The remedies provided for in this Section 8 are not exclusive
and shall not limit any rights or remedies which may otherwise be available to
any indemnified party at law or in equity.
(f) The indemnity and contribution provisions contained in this Section 8
and the representations, warranties and other statements of the Company
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any termination of this Agreement, (ii) any investigation made
by or on behalf of any Placement Agent or any person controlling any Placement
Agent or by or on behalf of the Company, or any Guarantor, their officers or
directors or any person controlling the Company or any Guarantor and (iii)
acceptance of and payment for any of the Securities.
9. Termination. This Agreement shall be subject to termination by notice
given by you to the Company, if (a) after the execution and delivery of this
Agreement and prior to the Closing Date (i) trading generally shall have been
suspended or materially limited on or by, as the case may be, any of the New
York Stock Exchange, the American Stock Exchange, the National Association of
Securities Dealers, Inc., the Chicago Board of Options Exchange, the Chicago
Mercantile Exchange or the Chicago Board of Trade, (ii) trading of any
securities of the Company shall have been suspended on any exchange or in any
over-the-counter market, (iii) a general moratorium on commercial banking
activities in New York shall have been declared by either Federal or New York
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses 9(a)(i) through 9(a)(iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable to
market the Securities on the terms and in the manner contemplated in the
Memorandum.
10. Effectiveness; Defaulting Placement Agents. This Agreement shall become
effective upon the execution and delivery hereof by the parties hereto.
If, on the Closing Date, any one or more of the Placement Agents shall fail
or refuse to purchase Securities that it or they have agreed to purchase
hereunder on such date, and the aggregate principal amount of Securities which
such defaulting Placement Agent or Placement Agents agreed but failed or refused
to purchase is not more than one-tenth of the aggregate principal amount of
17
Securities to be purchased on such date, the other Placement Agents shall be
obligated severally in the proportions that the principal amount of Securities
set forth opposite their respective names in Schedule I bears to the aggregate
principal amount of Securities set forth opposite the names of all such
non-defaulting Placement Agents, or in such other proportions as you may
specify, to purchase the Securities which such defaulting Placement Agent or
Placement Agents agreed but failed or refused to purchase on such date; provided
that in no event shall the principal amount of Securities that any Placement
Agent has agreed to purchase pursuant to this Agreement be increased pursuant to
this Section 10 by an amount in excess of one-ninth of such principal amount of
Securities without the written consent of such Placement Agent. If, on the
Closing Date any Placement Agent or Placement Agents shall fail or refuse to
purchase Securities which it or they have agreed to purchase hereunder on such
date and the aggregate principal amount of Securities with respect to which such
default occurs is more than one-tenth of the aggregate principal amount of
Securities to be purchased on such date, and arrangements satisfactory to you
and the Company for the purchase of such Securities are not made within 36 hours
after such default, this Agreement shall terminate without liability on the part
of any non-defaulting Placement Agent or of the Company and the Guarantors. In
any such case either you or the Company shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Memorandum or in any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Placement Agent from liability in respect of any default
of such Placement Agent under this Agreement.
If this Agreement shall be terminated by the Placement Agents, or any of them,
because of any failure or refusal on the part of the Company or any Guarantor to
comply with the terms or to fulfill any of the conditions of this Agreement, or
if for any reason the Company or any Guarantor shall be unable to perform its
obligations under this Agreement, the Company and the Guarantors will reimburse
the Placement Agents or such Placement Agents as have so terminated this
Agreement with respect to themselves, severally, for all out-of-pocket expenses
(including the fees and disbursements of their counsel) reasonably incurred by
such Placement Agents in connection with this Agreement or the offering
contemplated hereunder.
11. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
12. Applicable Law. This Agreement shall be governed by and construed in
accordance with the internal laws of the State of New York.
13. Headings. The headings of the sections of this Agreement have been
inserted for convenience of reference only and shall not be deemed a part of
this Agreement.
18
Very truly yours,
▇▇▇▇▇▇▇▇ RESOURCES, INC.
By: /s/ M. ▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: M. ▇▇▇ ▇▇▇▇▇▇▇
----------------------
Title: President and CEO
---------------------
▇▇▇▇▇▇▇▇ OIL & GAS, INC.
By: /s/ M. ▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: M. ▇▇▇ ▇▇▇▇▇▇▇
----------------------
Title: President and CEO
---------------------
▇▇▇▇▇▇▇▇ OIL & GAS HOLDINGS, INC.
By: /s/ M. ▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: M. ▇▇▇ ▇▇▇▇▇▇▇
----------------------
Title: President and CEO
---------------------
▇▇▇▇▇▇▇▇ OIL & GAS-LOUISIANA, LLC
By: /s/ M. ▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: M. ▇▇▇ ▇▇▇▇▇▇▇
----------------------
Title: President, CEO and Manager
------------------------------
▇▇▇▇▇▇▇▇ OFFSHORE, LLC
By: /s/ M. ▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: M. ▇▇▇ ▇▇▇▇▇▇▇
----------------------
Title: Manager
------------------------------
DEVX ENERGY, INC. (DELAWARE)
By: /s/ M. ▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: M. ▇▇▇ ▇▇▇▇▇▇▇
----------------------
Title: President and CEO
---------------------
19
DEVX ENERGY, INC. (NEVADA)
By: /s/ M. ▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: M. ▇▇▇ ▇▇▇▇▇▇▇
----------------------
Title: President and CEO
---------------------
DEVX OPERATING COMPANY
By: /s/ M. ▇▇▇ ▇▇▇▇▇▇▇
------------------------
Name: M. ▇▇▇ ▇▇▇▇▇▇▇
----------------------
Title: President and CEO
---------------------
20
Accepted as of the date hereof.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
TD Securities (USA) Inc.
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Corp.
Acting severally on behalf of themselves and
the several Placement Agents named in
Schedule I hereto.
By: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇
------------------
Title: E.D.
-----------------
21
SCHEDULE I
Principal Amount
of Securities to
Placement Agents ........................................... be Purchased
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co. Incorporated.............................$ 60,000.000
TD Securities (USA) Inc. ..................................... 11,250,000
BMO ▇▇▇▇▇▇▇ ▇▇▇▇▇ Corp. ...................................... 3,750,000
-------------
Total ................................................$ 75,000,000
=============
SCHEDULE II
Guarantors
▇▇▇▇▇▇▇▇ Oil & Gas, Inc.
▇▇▇▇▇▇▇▇ Oil & Gas Holdings, Inc.
▇▇▇▇▇▇▇▇ Oil & Gas - Louisiana, LLC
▇▇▇▇▇▇▇▇ Offshore, LLC
DevX Energy, Inc., a Delaware corporation
DevX Energy, Inc., a Nevada corporation
DevX Operating Company
EXHIBIT A
OPINION OF ▇▇▇▇▇ LIDDELL & ▇▇▇▇ LLP
The opinion of the counsel for the Company and the Guarantors, to be
delivered pursuant to Section 5(c) of the Placement Agreement shall be to the
effect that:
A. The Company has been duly incorporated, is validly existing as a
corporation in good standing under the laws of the jurisdiction of its
incorporation, has the corporate power and authority to own its property and to
conduct its business as described in the Memorandum and is duly qualified to
transact business and is in good standing in each jurisdiction in which the
conduct of its business or its ownership or leasing of property requires such
qualification, except to the extent that the failure to be so qualified or be in
good standing would not have a material adverse effect on the Company and its
subsidiaries, taken as a whole.
B. Each Guarantor has been duly incorporated, is validly existing as a
corporation or limited liability company, as the case may be, in good standing
under the laws of the jurisdiction of its organization, has the corporate power
and authority to own its property and to conduct its business as described in
the Memorandum and is duly qualified to transact business and is in good
standing in each jurisdiction in which the conduct of its business or its
ownership or leasing of property requires such qualification, except to the
extent that the failure to be so qualified or be in good standing would not have
a material adverse effect on the Company and its subsidiaries, taken as a whole;
all of the issued shares of capital stock or other ownership interest of each of
the Guarantors have been duly and validly authorized and issued, are fully paid
and non-assessable, and are owned by the Company directly, or indirectly through
one of the other subsidiaries of the Company, to the best knowledge of such
counsel free and clear of all liens, encumbrances, equities or claims, except
for pledges of such shares or ownership interest pursuant to the Company's bank
credit facility described in the Memorandum.
C. The Placement Agreement has been duly authorized, executed and delivered
by the Company and each of the Guarantors.
D. The authorized and outstanding capital stock of the Company is as set
forth under the caption "Capitalization" in the Memorandum and all outstanding
shares of capital stock of the Company have been duly authorized and validly
issued, and are fully paid and nonassessable.
E. The Securities have been duly authorized by the Company and, when
executed and authenticated in accordance with the provisions of the Indenture
and delivered to and paid for by the Placement Agents in accordance with the
A-1
terms of the Placement Agreement, will be valid and binding obligations of the
Company, enforceable in accordance with their terms, subject to applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally and
general principles of equity, and will be entitled to the benefits of the
Indenture, the Supplemental Indenture and the Registration Rights Agreement
pursuant to which such Securities are to be issued.
F. The Subsidiary Guarantees have been duly authorized by the Guarantors
and, when the Securities are executed and authenticated in accordance with the
provisions of the Indenture and the Supplemental Indenture and delivered to and
paid for by the Placement Agents in accordance with the terms of the Placement
Agreement, will be valid and binding obligations of the Guarantors, enforceable
in accordance with their terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles of
equity, and will be entitled to the benefits of the Indenture, the Supplemental
Indenture and the Registration Rights Agreement pursuant to which such
Subsidiary Guarantees are to be issued.
G. Each of the Indenture, the Supplemental Indenture and the Registration
Rights Agreement has been duly authorized, executed and delivered by, and is a
valid and binding agreement of, the Company and each of the Guarantors,
enforceable in accordance with its terms, subject to applicable bankruptcy,
insolvency or similar laws affecting creditors' rights generally and general
principles of equity and except as rights to indemnification and contribution
under the Registration Rights Agreement may be limited under applicable law.
H. The execution and delivery by the Company and the Guarantors of, and the
performance by the Company and the Guarantors of their obligations under, the
Placement Agreement, the Indenture, the Supplemental Indenture, the Registration
Rights Agreement, the Securities and the Subsidiary Guarantees will not
contravene any provision of applicable law or the certificate of incorporation
or by-laws of the Company or the Guarantors or, to the best of such counsel's
knowledge, any agreement or other instrument binding upon the Company or any of
its subsidiaries that is material to the Company and its subsidiaries, taken as
a whole, or, to the best of such counsel's knowledge, any judgment, order or
decree of any governmental body, agency or court having jurisdiction over the
Company or any of its subsidiaries, and no consent, approval, authorization or
order of, or qualification with, any governmental body or agency is required for
the performance by the Company or the Guarantors of their obligations under the
Placement Agreement, the Indenture, the Supplemental Indenture, the Registration
Rights Agreement, the Securities, or the Subsidiary Guarantees except such as
may be required by the securities or Blue Sky laws of the various states in
connection with the offer and sale of the Securities and by Federal and state
securities laws with respect to the Company's obligations under the Registration
Rights Agreement.
I. To the best knowledge of such counsel, there are no legal or
governmental proceedings pending or threatened to which the Company or any of
its subsidiaries is a party or to which any of the properties of the Company or
A-2
any of its subsidiaries is subject other than proceedings fairly summarized in
all material respects in the Memorandum and proceedings which such counsel
believes are not likely to have a material adverse effect on the Company and its
subsidiaries, taken as a whole, or on the power or ability of the Company and
the Guarantors to perform their obligations under the Placement Agreement, the
Indenture, the Supplemental Indenture, the Registration Rights Agreement, the
Securities or the Subsidiary Guarantees or to consummate the transactions
contemplated by the Memorandum.
J. To the best of such counsel's knowledge, neither the Company nor any of
its subsidiaries is in violation of its respective certificate of incorporation
or by-laws, or other organizational documents, or is in default in the
performance of any material obligation, agreement or condition contained in any
bond, debenture, note or other evidence of indebtedness, except as may be
disclosed in the Memorandum.
K. To the best knowledge of such counsel, neither the Company nor any of
its subsidiaries is in violation of any law (including, without limitation, any
Environmental Laws), ordinance, administrative or governmental rule or
regulation applicable to the Company or any of its subsidiaries or of any
judgment, order or decree of any governmental body, agency or court having
jurisdiction over the Company or any of its subsidiaries except for such
violations which in the aggregate would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
L. The Company is not, and after giving effect to the offering and sale of
the Securities and the application of the proceeds thereof as described in the
Memorandum, will not be an "investment company" as such term is defined in the
Investment Company Act of 1940, as amended.
M. The statements in the Memorandum under the captions "Risk Factors -
Risks Related to Our Business - We are subject to extensive governmental
regulation," "Description of Notes", and "Transfer Restrictions", insofar as
such statements constitute summaries of the legal matters, documents or
proceedings referred to therein, fairly summarize the matters referred to
therein.
N. The statements in the Memorandum under the caption "Certain United
States Federal Tax Considerations," insofar as such statements constitute a
summary of the United States federal tax laws referred to therein, are accurate
and fairly summarize in all material respects the United States federal tax laws
referred to therein.
O. Such counsel (i) is of the opinion that each document incorporated by
reference in the Memorandum (except for financial statements and schedules, pro
forma and other financial and statistical data included therein as to which such
counsel need not express any opinion), complied as to form when filed with the
Commission in all material respects with the Exchange Act and the rules and
regulations of the Commission thereunder and (ii) has no reason to believe that
(except for financial statements and schedules, pro forma and other financial
A-3
and statistical data as to which such counsel need not express any belief) the
Memorandum when issued contained, or as of the date such opinion is delivered
contains, any untrue statement of a material fact or omitted or omits to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading.
P. Based upon the representations, warranties and agreements of the Company
in Sections 1(z), 1(aa), 1(bb), 1(cc), 6(f), 6(g) and 6(j) of the Placement
Agreement and of the Placement Agents in Section 7 of the Placement Agreement,
it is not necessary in connection with the offer, sale and delivery of the
Securities to the Placement Agents under the Placement Agreement or in
connection with the initial resale of such Securities by the Placement Agents in
accordance with Section 7 of the Placement Agreement to register the Securities
under the Securities Act of 1933 or to qualify the Indenture or the Supplemental
Indenture under the Trust Indenture Act of 1939, it being understood that no
opinion is expressed as to any subsequent resale of any Security.
With respect to paragraph O(ii) above, counsel may state that his or her
opinion and belief are based upon his or her participation in the preparation of
the Memorandum (and any amendments or supplements thereto) and review and
discussion of the contents thereof and review of the documents incorporated by
reference therein, but are without independent check or verification except as
specified.
A-4
EXHIBIT B
OPINION OF ▇▇▇▇▇ ▇▇▇▇▇ L.L.P.
The opinion of ▇▇▇▇▇ ▇▇▇▇▇ L.L.P. to be delivered pursuant to Section 5(d)
of the Purchase Agreement shall be to the effect that:
A. The Purchase Agreement has been duly authorized, executed and delivered
by the Company and each of the Guarantors.
B. The Securities have been duly authorized by the Company and, when
executed and authenticated in accordance with the provisions of the Indenture
and the Supplemental Indenture and delivered to and paid for by the Placement
Agents in accordance with the terms of the Placement Agreement, will be valid
and binding obligations of the Company, enforceable in accordance with their
terms, subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity, and will be
entitled to the benefits of the Indenture and the Registration Rights Agreement
pursuant to which such Securities are to be issued.
C. The Subsidiary Guarantees have been duly authorized by the Guarantors
and, when the Securities are executed and authenticated in accordance with the
provisions of the Indenture and the Supplemental Indenture and delivered to and
paid for by the Placement Agents in accordance with the terms of the Placement
Agreement, will be valid and binding obligations of the Guarantors, enforceable
in accordance with their terms, subject to applicable bankruptcy, insolvency or
similar laws affecting creditors' rights generally and general principles of
equity, and will be entitled to the benefits of the Indenture, the Supplemental
Indenture and the Registration Rights Agreement pursuant to which such
Subsidiary Guarantees are to be issued.
D. Each of the Indenture, the Supplemental Indenture and the Registration
Rights Agreement has been duly authorized, executed and delivered by, and is a
valid and binding agreement of, the Company, enforceable in accordance with its
terms, subject to applicable bankruptcy, insolvency or similar laws affecting
creditors' rights generally and general principles of equity and except as
rights to indemnification and contribution under the Registration Rights
Agreement may be limited under applicable law.
E. The statements in the Memorandum under the captions "Description of
Notes" and "Transfer Restrictions", insofar as such statements constitute
summaries of the legal matters and documents referred to therein, fairly
summarize the matters referred to therein.
F. Such counsel has no reason to believe that (except for financial
statements and schedules, pro forma and other financial and statistical data as
to which such counsel need not express any belief) the Memorandum when issued
contained, or as of the date such opinion is delivered contains, any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
B-1
G. Based upon the representations, warranties and agreements of the Company
in Sections 1(z), 1(aa), 1(cc), 6(f), 6(g) and 6(j) of the Placement Agreement
and of the Placement Agents in Section 7 of the Placement Agreement, it is not
necessary in connection with the offer, sale and delivery of the Securities to
the Placement Agents under the Placement Agreement or in connection with the
initial resale of such Securities by the Placement Agents in accordance with
Section 7 of the Placement Agreement to register the Securities under the
Securities Act of 1933, it being understood that no opinion is expressed as to
any subsequent resale of any Security.
With respect to paragraph F above, ▇▇▇▇▇ ▇▇▇▇▇ L.L.P. may state that their
opinion and belief are based upon their participation in the preparation of the
Memorandum (and any amendments or supplements thereto) and review and discussion
of the contents thereof (including the review of, but not participation in the
preparation of, the incorporated documents), but are without independent check
or verification except as specified.
B-2
