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EXHIBIT 1.1
$55,000,000
6% CONVERTIBLE SUBORDINATED DEBENTURES DUE 2007
LOMAK PETROLEUM, INC.
PURCHASE AGREEMENT
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New York, New York
December 20, 1996
FORUM CAPITAL MARKETS X.X.
XxXXXXXX & COMPANY SECURITIES, INC.
XXXXXX XXXXXX & COMPANY, INC.
c\o Forum Capital Markets L.P.
00 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxxx 00000
Ladies and Gentlemen:
Lomak Petroleum, Inc., a Delaware corporation (the "Company"),
proposes to issue and sell to Forum Capital Markets L.P., XxXxxxxx & Company
Securities and Xxxxxx Xxxxxx & Company, Inc. (the "Initial Purchasers")
$55,000,000 aggregate principal amount of its 6% Convertible Subordinated
Debentures due 2007 (the "Debentures") to be issued pursuant to the provisions
of an indenture dated as of the date hereof (the "Indenture") between the
Company and Keycorp Shareholder Services, Inc., as trustee (the "Trustee"). The
shares of the Company's common stock, par value $.01 per share (the "Common
Stock"), issuable upon conversion of the Debentures are hereinafter referred to
as the "Conversion Shares." The Debentures and the Conversion Shares are
hereinafter referred to collectively as the "Securities." The Company hereby
confirms its agreement with the Initial Purchasers with respect to the sale by
the Company and the purchase by the Initial Purchasers of the Debentures, as set
forth herein.
The Debentures will be offered and sold to the Initial
Purchasers without being registered under the Securities Act of 1933, as amended
(the "Securities Act"), in reliance on an exemption therefrom. The Company has
prepared a preliminary offering memorandum dated December 11, 1996 (the
"Preliminary Offering Memorandum"), and a final offering memorandum dated
December 20, 1996 (the "Offering Memorandum"), setting forth information
regarding the Company and the Securities. The Company hereby confirms that it
has authorized the use of the Preliminary Offering Memorandum and the Offering
Memorandum in connection with the offering and sale of the Debentures (the
"Offering").
Holders (including subsequent transferees) of the Securities
will have the registration rights set forth in the Registration Rights Agreement
(the "Registration Rights Agreement") between the Initial Purchasers and the
Company, dated concurrently herewith. Pursuant to the Registration Rights
Agreement, the Company has agreed to file with the Securities and Exchange
Commission (the "Commission") a shelf registration statement pursuant to Rule
415 under the Securities Act (the "Shelf Registration Statement") to cover
public resales of the Securities by the holders thereof.
Capitalized terms used herein without definition have the
respective meanings specified therefor in the Offering Memorandum. For purposes
hereof, "Rules and Regulations" means the rules and regulations adopted by the
Commission under the Securities Act, the Securities Exchange Act of 1934, as
amended (the "Exchange Act") or the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), as applicable.
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to, and agrees with, the Initial Purchasers of the date
hereof, and as of the Closing Date, as follows:
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(a) The Offering Memorandum, as of its date, together with
each amendment or supplement thereto, as of its date, contains all the
information that, if requested by a prospective purchaser, would be required to
be provided pursuant to Rule 144A(d)(4) under the Securities Act. The Offering
Memorandum does not, and at the Closing Date will not, and any amendment or
supplement thereto, if any, as of its date, will not, contain any untrue
statement of a material fact or omit to state any material fact required to be
stated therein or necessary in order to make the statements therein, in light of
the circumstances under which they were made, not misleading. The preceding
sentence does not apply to information contained in or omitted from the
Preliminary Offering Memorandum or the Offering Memorandum (or any supplement or
amendment thereto) in reliance upon and in conformity with written information
furnished to the Company by or on behalf of either Initial Purchaser
specifically for use therein (the "Initial Purchasers' Information"). The
parties acknowledge and agree that the Initial Purchasers' Information consists
solely of the last paragraph at the bottom of the front cover page concerning
the terms of the offering by the Initial Purchasers, the legends concerning
over-allotment and trading activities of the Initial Purchasers and their
affiliates on the inside front cover page and the paragraphs under the caption
"Plan of Distribution" in the Offering Memorandum. No order suspending or
preventing the sale of the Securities in any jurisdiction has been issued or
threatened or, to the knowledge of the Company, is contemplated.
(b) The Company is subject to Section 13 or 15(d) of the
Exchange Act. The documents incorporated by reference into the Offering
Memorandum (the "Incorporated Documents"), when they were filed with the
Commission (or, if any amendment with respect to any such document was filed,
when such amendment was filed), complied in all material respects with the
requirements of the Exchange Act and did not contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading; and any
Incorporated Documents filed subsequent to the date of the Offering Memorandum
shall, when filed with the Commission, conform in all respects to the
requirements of the Securities Act, the Rules and Regulations and the Exchange
Act, as applicable. All reports and statements required to be filed by the
Company under the Securities Act and the Exchange Act have been filed, together
with all exhibits required to be filed therewith. The documents and agreements
so filed which are described in the Offering Memorandum are in full force and
effect on the date hereof and neither the Company nor any of its direct and
indirect subsidiaries identified on Annex I hereto (collectively, the
"Subsidiaries"), nor, to the knowledge of the Company, any other party thereto
is in breach of or default under a material provision of any such document or
agreement.
(c) The Company and each of the corporate Subsidiaries has
been duly organized and is validly existing as a corporation in good standing
under the laws of the state of its incorporation. Lomak Production I, L.P. (the
"Partnership") is a partnership duly organized under the laws of the State of
Texas. Lomak Resources L.L.C. (the " Limited Liability Company") is a limited
liability company duly organized under the laws of the State of Oklahoma. The
corporate Subsidiaries, the Partnership and the Limited Liabilty Company are all
of the Subsidiaries. Each of the Company and the Subsidiaries is duly qualified
and licensed and in good standing as a foreign corporation (or, with respect to
the Partnership, as a foreign partnership and with respect to the Limited
Liability Company, as a foreign limited liability company) in each jurisdiction
in which its ownership or leasing of any properties or the character of its
operations require such qualification or licensing (each of which jurisdictions
is designated on Annex I hereto), except where the failure to be so qualified or
licensed would not have a material adverse effect on the condition, financial or
otherwise, results of operations, business or prospects of the Company and the
Subsidiaries, taken as a whole (a "Material Adverse Effect"). Each Subsidiary
which accounted for more than 5% of the Company's consolidated assets at
September 30, 1996 or more than 10% of the Company's consolidated revenues
during the 12 months then ended or which is reasonably expected to exceed such
percentages with respect to the Company's next four fiscal quarters ending after
the date hereof are indicated on Annex I hereto, and all such Subsidiaries are
hereinafter referred to collectively as the "Significant Subsidiaries." The
Company does not own or control, directly or indirectly, any corporation,
association or other entity other than the Subsidiaries. Except as set forth on
Annex I, the Company owns, either directly or through other Subsidiaries, all
of the outstanding capital stock (capital stock for purposes of this Agreement
including partnership interests and membership interests, in addition to common
stock and preferred stock) of each Subsidiary, in each case free and clear of
all liens, charges, claims, encumbrances, pledges, security interests defects or
other restrictions or equities of any kind whatsoever; and all outstanding
capital stock of the Subsidiaries has been duly authorized and validly issued
and is fully paid and non-assessable and not issued in violation of any
preemptive rights or applicable securities laws. Each of the Company and the
Subsidiaries has all requisite power and authority (corporate, partnership and
other),
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and has obtained any and all necessary authorizations, approvals, orders,
licenses, certificates, franchises and permits of and from all governmental or
regulatory officials and bodies, to own or lease its properties and conduct its
business as described in the Offering Memorandum; each of the Company and the
Subsidiaries is and has been doing business in compliance with all such
authorizations, approvals, orders, licenses, certificates, franchises and
permits and all federal, foreign, state and local laws, rules and regulations;
and neither the Company nor any of the Subsidiaries has received any notice of
proceedings relating to the revocation or modification of any such
authorization, approval, order, license, certificate, franchise or permit which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect.
(d) The Company has an authorized capitalization as set forth
in the Offering Memorandum and will have the adjusted capitalization as of the
period indicated therein, based upon the assumptions set forth therein. Neither
the Company nor any of the Subsidiaries is a party to or bound by any
instrument, agreement or other arrangement, including, but not limited to, any
voting trust agreement, stockholders' agreement or other agreement or
instrument, affecting the securities or rights or obligations of securityholders
of the Company or any of the Subsidiaries or providing for any of them to issue,
sell, transfer or acquire any capital stock, rights, warrants, options or other
securities of the Company or any of the Subsidiaries, except for this Agreement,
the certificate of designations relating to the Company's $2.03 Convertible
Exchangeable Preferred Stock outstanding on the date hereof (the "Existing
Preferred") and the indenture related thereto, the Indenture and as set forth in
the Offering Memorandum (including the notes to the financial statements set
forth therein). The Company's capital stock and the Debentures conform in all
material respects to all statements with respect thereto contained in the
Offering Memorandum. All issued and outstanding securities of the Company and
the Subsidiaries have been duly authorized and validly issued and are fully paid
and non-assessable, as applicable; the holders thereof have no rights of
rescission with respect thereto and are not subject to personal liability by
reason of being such holders; and none of such securities were issued in
violation of the preemptive rights of any securityholder of the Company or any
of the Subsidiaries or similar contractual rights granted by the Company or any
of the Subsidiaries.
(e) The Debentures will be issued pursuant to the terms and
conditions of the Indenture, and the Indenture and the Registration Rights
Agreement each conform to the description thereof contained in the Offering
Memorandum. At the Closing Date, the Indenture will conform in all material
respects to the requirements of the Trust Indenture Act and the Rules and
Regulations applicable to an indenture which is qualified thereunder. The
Debentures have been duly authorized and, when validly authenticated, issued,
delivered and paid for in the manner contemplated by the Indenture, will be duly
authorized, validly issued and outstanding obligations of the Company entitled
to the benefits of the Indenture. The Conversion Shares issuable upon conversion
of the Debentures will, upon such issuance, be duly authorized, fully-paid and
non-assessable, and the Company has duly authorized and reserved the Conversion
Shares for issuance upon conversion of the Debentures. The Securities are not
and will not be subject to any preemptive or other similar rights of any
securityholder of the Company or any of the Subsidiaries; all corporate action
required to be taken for the authorization, issue and sale of the Securities has
been duly and validly taken; and the certificates representing the Securities
will be in due and proper form. Upon the issuance and delivery pursuant to the
terms of this Agreement and the Indenture of the Debentures, the Initial
Purchasers will acquire good and marketable title thereto free and clear of any
lien, charge, claim, encumbrance, pledge, security interest, defect or other
restriction or equity of any kind whatsoever.
(f) The consolidated financial statements of the Company and
the Subsidiaries together with the related notes thereto included in the
Preliminary Offering Memorandum and the Offering Memorandum fairly present the
financial position, income, changes in stockholders' equity, cash flow and
results of operations of the Company and the Subsidiaries at the respective
dates and for the respective periods to which they apply and such financial
statements have been prepared in conformity with generally accepted accounting
principles and the Rules and Regulations, consistently applied throughout the
periods involved; the pro forma financial information included in each
Preliminary Offering Memorandum and the Offering Memorandum presents fairly the
information shown therein in accordance with Article 11 of Regulation S-X.
Except as described in the Offering Memorandum, there has been no material
adverse change or development involving a material prospective change in the
condition, financial or otherwise, or in the earnings, business, prospects or
results of operations of the Company or any of the Subsidiaries, taken as a
whole, whether or not arising in the ordinary course of business, since the date
of the financial statements included in the Offering Memorandum and the
outstanding debt, the property, both tangible and intangible, and the businesses
of each of the Company and the
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Subsidiaries conform in all material respects to the descriptions thereof
contained in the Offering Memorandum. Financial information set forth in the
Offering Memorandum under the headings "Summary Financial, Operating and Reserve
Information," "Selected Historical and Pro Forma Financial Data,"
"Capitalization" and "Management's Discussion and Analysis of Financial
Condition and Results of Operations" fairly present, on the basis stated in the
Offering Memorandum, the information set forth therein and have been derived
from or compiled on a basis consistent with that of the audited financial
statements included in the Offering Memorandum.
(g) Each of the Company and the Subsidiaries has filed all
income and franchise tax returns required to be filed by it in any jurisdiction,
and has paid all taxes shown to be due on such returns or claimed to be due from
such entities, other than those being contested in good faith. All tax
liabilities, including those being contested by the Company or the Subsidiaries
are adequately reserved for in the Company's financial statements (in accordance
with generally accepted accounting principles). No tax deficiency has been
asserted and no tax proceedings are pending or is threatened against the Company
or any of the Subsidiaries, and to the knowledge of the Company, no such
deficiency or proceeding is contemplated.
(h) No transfer tax, stamp duty or other similar tax is
payable by or on behalf of the Initial Purchasers in connection with (i) the
issuance by the Company of the Securities, (ii) the purchase by the Initial
Purchaser of the Debentures from the Company or (iii) the consummation by the
Company of any of its obligations under this Agreement.
(i) Each of the Company and the Subsidiaries maintains
liability, casualty and other insurance (subject to customary deductions and
retentions) with responsible insurance companies against such risk of the types
and in the amounts customarily maintained by independent oil companies of
comparable size to the Company engaged in the acquisition, development and
exploration of oil and gas properties (which may include self-insurance in
comparable form to that maintained by such responsible companies), all of which
insurance is in full force and effect.
(j) There is no action, suit, proceeding, litigation or
governmental proceeding pending or threatened or, to the knowledge of the
Company, contemplated against (or circumstances that are reasonably likely to
give rise to the same), or involving the properties or businesses of, the
Company or any of the Subsidiaries which (i) questions the validity of the
capital stock of the Company or any of the Subsidiaries, this Agreement, the
Indenture, the Registration Rights Agreement or of any action taken or to be
taken by the Company or any of the Subsidiaries pursuant to or in connection
with this Agreement, the Indenture or the Registration Rights Agreement or (ii)
except as disclosed in the Offering Memorandum, would have a Material Adverse
Effect.
(k) The Company has full legal right, power and authority to
authorize, issue, deliver and sell the Debentures and the Conversion Shares upon
conversion of the Debentures, to enter into this Agreement, the Indenture and
the Registration Rights Agreement and to consummate the transactions provided
for in such agreements; and this Agreement has been duly and properly
authorized, executed and delivered by the Company and when the Company has duly
executed and delivered the Registration Rights Agreement (assuming the due
execution and delivery thereof by the Initial Purchasers) and the Indenture
(assuming the due execution and delivery thereof by the Trustee), this
Agreement, the Registration Rights Agreement and the Indenture each will
constitute a legal, valid and binding agreement of the Company enforceable
against the Company in accordance with its terms. None of the Company's issue
and sale of the Debentures and the Conversion Shares upon the conversion of the
Debentures, the execution or delivery of this Agreement, the Indenture and the
Registration Rights Agreement, its performance hereunder and thereunder, its
consummation of the transactions contemplated herein and therein or the conduct
by it and the Subsidiaries of their businesses as described in the Offering
Memorandum or any amendments or supplements thereto conflicts or will conflict
with or results or will result in any breach or violation of any of the terms or
provisions of, or constitutes or will constitute a default under, or results or
will result in the creation or imposition of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction or equity of
any kind whatsoever upon any property or assets of the Company or any of the
Subsidiaries pursuant to the terms of, (i) the certificate of incorporation or
by-laws of the Company or any of the Subsidiaries, (ii) any license, contract,
indenture, mortgage, deed of trust, voting trust agreement, stockholders'
agreement, note, loan or credit agreement or other agreement or instrument to
which the Company or any of the Subsidiaries is a party or by which it or any
Subsidiary is or may be bound or to which its or any of the Subsidiaries'
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properties or assets is or may be subject, or any indebtedness, or (iii) any
statute, judgment, decree, order, rule or regulation applicable to the Company
or any of the Subsidiaries of any arbitrator, court, regulatory body or
administrative agency or other governmental agency or body, having jurisdiction
over the Company or any of the Subsidiaries or any of their respective
activities or properties.
(l) Neither the Company nor any of the Subsidiaries (i) is in
violation of its certificate of incorporation or by-laws, (ii) is in default in
the performance of any obligation, agreement or condition contained in any
license, contract, indenture, mortgage, installment sale agreement, lease, deed
of trust, voting trust agreement, stockholders' agreement, note, loan or credit
agreement, purchase order, agreement or instrument evidencing an obligation for
borrowed money or other material agreement or instrument to which the Company or
any of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries may be bound or to which the property or assets of the Company or
any of the Subsidiaries is subject or affected or (iii) is in violation in any
respect of any law, ordinance, governmental rule, regulation or court decree to
which it or its property or assets may be subject, except any violation or
default under the foregoing clauses (ii) or (iii) as would not have a Material
Adverse Effect.
(m) No consent, approval, authorization or order of, and no
filing with, any court, arbitrator, regulatory body, government agency or other
body, domestic or foreign, is required for the execution, delivery or
performance of this Agreement, the Indenture, the Registration Rights Agreement
or the transactions contemplated hereby or thereby, except such as have been or
may be obtained under the Securities Act or may be required under state
securities or Blue Sky laws.
(n) Subsequent to the respective dates as of which information
is set forth in the Offering Memorandum, and except as may otherwise be
indicated or contemplated herein or therein, neither the Company nor any of the
Subsidiaries has (i) issued any securities (other than upon exercise of options
outstanding on the date hereof pursuant to the Company's Stock Option Plan, 1994
Outside Directors Stock Option Plan and 1994 Stock Purchase Plan or upon
conversion of the preferred stock of the Company or the exercise of warrants
outstanding on such respective dates, or incurred any material liability or
obligation, direct or contingent, for borrowed money not in the ordinary course
of business, (ii) entered into any material transaction other than in the
ordinary course of business or (iii) declared or paid any dividend or made any
other distribution on or in respect of its capital stock of any class and there
has not been any change in the capital stock (excluding changes contemplated by
clause (i) hereof) or long term debt of the Company and the Subsidiaries taken
as a whole or any material adverse change in or affecting the general affairs,
business, management, financial conditions, stockholders' equity or results of
operation of the Company or any of the Subsidiaries.
(o) The Company and the Subsidiaries is in compliance with all
federal, state, local and foreign laws and regulations respecting employment and
employment practices, terms and conditions of employment and wages and hours.
There are no pending investigations involving the Company or any of the
Subsidiaries by the U.S. Department of Labor or any other governmental agency
responsible for the enforcement of such federal, state, local or foreign laws
and regulations. There is no unfair labor practice charge or complaint against
the Company or any of the Subsidiaries pending before the National Labor
Relations Board or any strike, picketing, boycott, dispute, slowdown or stoppage
pending or threatened against or involving the Company or any of the
Subsidiaries. No representation question exists respecting the employees of the
Company or any of the Subsidiaries, and no collective bargaining agreement or
modification thereof is currently being negotiated by the Company or any of the
Subsidiaries. No grievance or arbitration proceeding is pending under any
expired or existing collective bargaining agreements of the Company or any of
the Subsidiaries. No material labor dispute with the employees of the Company or
any of the Subsidiaries exists or, to the knowledge of the Company, is imminent.
(p) Except as identified on Schedule II attached hereto,
neither the Company nor any of the Subsidiaries maintains, sponsors or
contributes to any program or arrangement that is an "employee pension benefit
plan" an "employee welfare benefit plan" or a "multi-employer plan" ("ERISA
Plans") as such terms are defined in Sections 3(2), 3(1) and 3(37),
respectively, of the Employee Retirement Income Security Act of 1974, as amended
("ERISA"). Except as identified on Schedule II attached hereto, neither the
Company nor any of the Subsidiaries maintains or contributes to, now or at any
time previously, a defined benefit plan as defined in Section 3(35) of ERISA. No
ERISA Plan (or any trust created thereunder) has engaged in a "prohibited
transaction" within the meaning of Section 406 of
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ERISA or Section 4975 of the Internal Revenue Code of 1986, as amended (the
"Code") which could subject the Company or any of the Subsidiaries to any tax
penalty on prohibited transactions and which has not adequately been corrected.
No "accumulated funding deficiency" (as defined in Section 302 of ERISA) or any
of the events set forth in Section 4043(b) of ERISA (other than events with
respect to which the 30-day notice under Section 4043 of ERISA has been waived)
has occurred with respect to any employee benefit plan which might reasonably be
expected to have a Material Adverse Effect. Each ERISA Plan is in compliance
with all material reporting, disclosure and other requirements of the Code and
ERISA as they relate to such ERISA Plan. Determination letters have been
received from the Internal Revenue Service with respect to each ERISA Plan which
is intended to comply with Code Section 401(a) stating that such ERISA Plan and
the attendant trust are qualified thereunder. Neither the Company nor any of the
Subsidiaries has ever completely or partially withdrawn from a "multi-employer
plan" as so defined.
(q) Neither the Company or any of the Subsidiaries, nor any of
its affiliates has taken or will take, directly or indirectly, any action
designed to or which has constituted or which might be expected to cause or
result in, under the Exchange Act or otherwise, stabilization or manipulation of
the price of any security of the Company to facilitate the sale or resale of the
Securities or otherwise.
(r) Each of the Company and the Subsidiaries (i) owns or has
the right to use, free and clear of all liens, claims, encumbrances, pledges,
security interests, and other adverse interests of any kind whatsoever, all
patents, trademarks, service marks, trade names, copyrights, technology, and all
licenses and rights with respect to the foregoing, used in the conduct of its
business as now conducted or proposed to be conducted without, to the best
knowledge of the Company and the Subsidiaries, infringing upon or otherwise
acting adversely to the right or claimed right of any person, corporation or
other entity, (ii) is not obligated or under any liability whatsoever to make
any payments by way of royalties, fees or otherwise to any owner or licensee of,
or other claimant to, any patent, trademark, service xxxx, trade name,
copyright, know-how, technology or other intangible asset, with respect to the
use thereof or in connection with the conduct of its business or otherwise and
(iii) has not received any notice of infringement of or conflict with asserted
rights of others with respect to any of the foregoing which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding, might
have a Material Adverse Effect.
(s) Except as to its interests in oil and gas leases, each of
the Company and the Subsidiaries has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal property which
are material to its business and/or reflected as owned by it in the financial
statements included in the Offering Memorandum, in each case free and clear of
all liens, charges, claims, encumbrances, pledges, security interests, defects
and other restrictions except those disclosed in the Offering Memorandum or
those which are not material in amount and do not materially adversely affect
the use made or proposed to be made of such property. Each of the Company and
the Subsidiaries has good and defensible title to its interests in oil and gas
leases, free and clear of any liens, charges, claims, encumbrances, pledges,
security interests, defects and other restrictions of any kind, and liens and
encumbrances under operating agreements, unitization and pooling arrangements
and gas sales contracts that secure payment of amounts not yet due and payable
and which are of a nature and scope customary in connection with similar oil and
gas drilling and producing operations, and except those which are not material
in amount and do not materially adversely affect the use made and proposed to be
made of such oil and gas leases. The Company and each of the Subsidiaries has
conducted such title investigations and has acquired its interest in oil and gas
leases in such manner as is customary in the oil and gas industry for the
respective regions in which the property subject to such leases is located. The
Company and each of the Subsidiaries has complied in all material respects with
the terms of oil and gas leases in which each purports to own an interest, and
no claim of any sort has been asserted by any person or entity adverse to the
rights of the Company or any of the Subsidiaries as lessee or sublessee under
any of such leases or questioning its rights to the continued possession of the
leased premises under any such lease, except with respect to claims which do not
materially adversely affect the use made and proposed to be made of such oil and
gas leases by the Company or any of the Subsidiaries. The concessions,
reservations, licenses, permits and rights to hydrocarbons held by the Company
and each of the Subsidiaries are valid, subsisting and enforceable with such
exceptions which do not materially adversely affect the use made and proposed to
be made of such oil and gas leases. Except as set forth in the Offering
Memorandum, neither the Company nor any of the Subsidiaries owns or leases any
material real or personal property, the loss of which would have a Material
Adverse Effect.
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(t) Ernst & Young LLP and Xxxxxx Xxxxxxxx LLP are independent
certified public accountants of the Company as required by the Securities Act
and the Rules and Regulations.
(u) The Debentures satisfy the eligibility requirements of
Rule 144A(d)(3) under the Securities Act. The Common Stock is registered
pursuant to Section 12(b) of the Exchange Act, and is approved for trading on
the New York Stock Exchange under the symbol "LOM". The Company has taken no
action that was designed to terminate, or that is likely to have the affect of
terminating, trading of the Common Stock on the New York Stock Exchange, nor has
the Company received any notification that the Commission or the New York Stock
Exchange is contemplating terminating such trading.
(v) The information provided by the Company or any of the
Subsidiaries to the Petroleum Consultants (as hereinafter defined) for the
preparation of the estimates or reserves in the reserve reports for the oil and
gas properties of the Company prepared by X.X. Xxxx & Associates, Xxxxxx &
Associates, Inc., Clay, Xxxx & Xxxxxxx, Long Consultants, Inc. and Xxxxxx &
Company, Inc., independent petroleum consultants (collectively the "Petroleum
Consultants"), were at the time of delivery thereof to the Petroleum Consultants
complete and accurate in all material respects. The Petroleum Consultants are
each independent petroleum consulting firms as required by the Securities Act
and the Rules and Regulations. Except as expressly stated in the Preliminary
Offering Memorandum and the Offering Memorandum, information in the Preliminary
Offering Memorandum and in the Offering Memorandum regarding estimates of
reserves, future net cash flows and present values of proved reserves comply in
all material respects with the applicable requirements of Rule 4-10 of
Regulation S-X and Industry Guide 2 under the Securities Act.
(w) Neither the Company nor any of the Subsidiaries has, nor
to the knowledge of the Company, has any officer, director or employee of the
Company or any of the Subsidiaries or any other person acting on behalf of the
Company or any of the Subsidiaries, for the benefit of the Company or any such
Subsidiaries at any time during the last five years, (i) made any unlawful gift
or contribution to any candidate for federal, state, local or foreign political
office, or failed to disclose fully any such gift or contribution in violation
of law, or (ii) made any payment to any federal, state, local or foreign
governmental officer or official, which would be reasonably likely to subject
the Company or any of the Subsidiaries to any damage or penalty in any civil,
criminal or governmental litigation or proceeding (domestic or foreign). Each of
the Company's and the Subsidiaries' internal accounting controls are sufficient
to cause the Company and the Subsidiaries to comply with the Foreign Corrupt
Practices Act of 1977, as amended.
(x) Except as set forth in the Offering Memorandum, no
officer, director or 5% or greater stockholder of the Company or any of the
Subsidiaries, or any "affiliate" or "associate" (as these terms are defined in
Rule 405 promulgated under the Rules and Regulations) of any of the foregoing
persons or entities, has or has had, either directly or indirectly, (i) a
material interest in any person or entity which (A) furnishes or sells services
or products which are furnished or sold or are proposed to be furnished or sold
by the Company or any of the Subsidiaries or (B) purchases from or sells or
furnishes to the Company or any of the Subsidiaries any goods or services or
(ii) a material beneficiary interest in any contract or agreement to which the
Company or any of the Subsidiaries is a party or by which the Company or any of
the Subsidiaries may be bound or affected. Except as set forth in the Offering
Memorandum under the caption "Certain Transactions," there are no existing
agreements, arrangements, understandings or transactions, or proposed
agreements, arrangements, understandings or transactions, between or among the
Company or any of the Subsidiaries and any such officer, director, 5% or greater
stockholder, "affiliate" or "associate." For the purpose of this subsection (y),
interests which may be excluded from disclosure pursuant to the instructions to
items of Regulation S-K shall be deemed to be per se not material.
(y) The minute books of each of the Company and the
Subsidiaries have been made available to the Initial Purchasers, contain a
complete summary of all meetings and actions of the directors and stockholders
of each of the Company and the Subsidiaries since the time of their respective
incorporation and reflect all transactions referred to in such minutes
accurately in all respects.
(z) Neither the Company nor any of the Subsidiaries has been
notified or is otherwise aware that it is liable with respect to obligations
under the Comprehensive Environmental Response, Compensation and Liability Act
of 1980, as amended, or any similar law ("Environmental Laws"), and it is not
aware of any facts or circumstances
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which could reasonably be expected to result in any such liability. The Company
and the Subsidiaries are in substantial compliance with all applicable existing
Environmental Laws, except for such instances of non-compliance which would not
have a Material Adverse Effect. The term "Hazardous Material" means (i) any
"hazardous substance" as defined by the Comprehensive Environmental Response,
Compensation and Liability Act of 1980, as amended, (ii) any "hazardous waste"
as defined by the Resource Conservation and Recovery Act, as amended, (iii) any
petroleum or petroleum product, (iv) any polychlorinated biphenyl and (v) any
pollutant or contaminant or hazardous, dangerous or toxic chemical, material,
waste or substance regulation under or within the meaning of any other
Environmental Law. To the best of the Company's knowledge, no disposal, release
or discharge of "Hazardous Material" has occurred on, in, at or about any of the
facilities or properties of the Company or any of the Subsidiaries. Except as
described in the Offering Memorandum, to the best of the Company's knowledge:
(i) there has been no storage, disposal, generation, transportation, handling or
treatment of hazardous substances or solid wastes by the Company or any of the
Subsidiaries (or to the knowledge of the Company, any of its predecessors in
interest) at, upon or from any of the property now or previously owned or leased
by the Company or any of the Subsidiaries in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or which would
require remedial action which has not been taken, under any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit, except for such
violations and failures to take remedial action which would not result in,
singularly or in the aggregate, a Material Adverse Effect; (ii) there has been
no material spill, discharge, leak, emission, injection, escape, dumping or
release of any kind onto such property or into the environment surrounding such
property by the Company or any of the Subsidiaries of any solid waste or
Hazardous Materials, except for such spills, discharges, leaks, emissions,
injections, escapes, dumping or releases which would not result in, singularly
or in the aggregate, a Material Adverse Effect.
(aa) The Company is not an "investment company," a
company controlled by an "investment company" or an "affiliated person" of, or
"promoter" or "principal underwriter" for, an "investment company" as such terms
are defined in the Investment Company Act of 1940, as amended.
(bb) Neither the Company nor any affiliate (as such
term is defined in Rule 501(b) under the Securities Act) of the Company has,
directly or through any agent, sold, offered for sale, solicited offers to buy
or otherwise negotiated in respect of, any "security" (as defined in the
Securities Act), which is or will be integrated with the sale of the Debentures
in a manner that would require the registration of the Debentures under the
Securities Act.
(cc) None of the Company, any affiliate (as such
term is defined in Rule 501(b) under the Securities Act) of the Company and any
other person acting on its or their behalf has engaged, in connection with the
Offering, in any form of general solicitation or general advertising within the
meaning of Rule 502(c) under the Securities Act.
(dd) Assuming the accuracy of the Initial
Purchasers' representations in Section 2(b) hereof and its compliance with the
agreements set forth therein, it is not necessary, in connection with the
issuance and sale of the Debentures and the offer, resale and delivery of the
Debentures in the manner contemplated by this Agreement and the Offering
Memorandum, to register the Debentures or the Conversion Shares under the
Securities Act or to qualify the Indenture under the Trust Indenture Act.
2. PURCHASE BY THE INITIAL PURCHASERS.
(A) On the basis of the representations, warranties
and agreements contained herein, and subject to the terms and conditions set
forth herein, the Company agrees to issue and sell to the Initial Purchasers,
and the Initial Purchasers agree, severally and not jointly, to purchase from
the Company, the aggregate principal amount of Debentures set forth across from
their respective names on Schedule A attached hereto at a purchase price equal
to 97% of the principal amount thereof.
(b) The Initial Purchasers have advised the Company
that it is their intention, as promptly as they deem appropriate after the
Company shall have furnished the Initial Purchasers with copies of the Offering
Memorandum, to resell the Debentures pursuant to the procedures and upon the
terms set forth in the Offering Memorandum, including not to solicit any offer
to buy or offer to sell the Debentures by means of any form of general
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solicitation or general advertising (within the meaning of Regulation D under
the Securities Act) or in any manner involving a public offering within the
meaning of Section 4(2) of the Securities Act. The Initial Purchasers warrant
and agree with the Company that they have solicited and will solicit offers (the
"Exempt Resales") for Debentures only from, and will offer Debentures only to,
persons that they reasonably believe to be (i) "qualified institutional buyers"
(as defined in Rule 144A under the Securities Act ("QIBs")) in transactions that
meet the requirements for an exemption from the registration requirements of the
Securities Act under Rule 144A or (ii) to a limited number of "institutional
accredited investors" (as defined in Regulation D under the Securities Act and
of the types described in the Offering Memorandum ("Institutional Accredited
Investors")) that execute and deliver a letter containing certain
representations and agreements in the form attached as Annex A of the Offering
Memorandum. The QIBs and the Institutional Accredited Investors are referred to
herein as "Eligible Purchasers." Each of the Initial Purchasers represents and
warrants that it is an Institutional Accredited Investor with such knowledge and
experience in financial and business matters as are necessary to evaluate the
merits and risks of an investment in the Debentures, and is acquiring its
interest in the Debentures not with a view to the distribution or resale
thereof, except resales in compliance with the registration requirements or
exemption provisions of the Securities Act and that neither it, nor anyone
acting on its behalf, will offer the Debentures so as to bring the issuance and
sale of the Debentures within the provisions of Section 5 of the Securities Act.
The Company acknowledges and agrees that the Initial Purchasers may sell
Debentures to any affiliate of any of the Initial Purchasers and any such
affiliate may sell Debentures purchased by it to the Initial Purchasers. Each of
the Initial Purchasers agrees that, prior to or simultaneously with the
confirmation of sale by it to any purchaser of any of the Debentures purchased
from the Company pursuant hereto, such Initial Purchaser shall furnish to that
purchaser a copy of the Offering Memorandum (and any amendment thereof or
supplement thereto that the Company shall have furnished to the Initial
Purchasers prior to the date of such confirmation of sale).
3. DELIVERY OF AND PAYMENT FOR THE DEBENTURES. Delivery of,
and payment for, the Debentures shall be made at 10:00 a.m., New York City time,
on December 27, 1996, or at such other date or time as shall be agreed by the
Initial Purchasers and the Company (such date and time being referred to herein
as the "Closing Date"). Delivery of, and payment for, the Debentures shall be
made at the offices of Xxxxxx Xxxx & Xxxxxx LLP, New York, New York, or any such
other place as shall be agreed by the Initial Purchasers and the Company. On the
Closing Date, the Company shall deliver or cause to be delivered to the Initial
Purchasers certificates for the Debentures against payment to or upon the order
of the Company of the purchase price by wire or book-entry transfer of
immediately available funds. Upon delivery, the Debentures shall be in global
form, in such denominations and registered in such names, or otherwise, as the
Initial Purchasers shall have requested in writing not less than two full
business days prior to the Closing Date. The Company shall make the certificates
for the Debentures available for inspection by the Initial Purchasers in New
York, New York, not later than one full business day prior to the Closing Date.
4. COVENANTS AND AGREEMENTS OF THE COMPANY. The Company
covenants and agrees with the Initial Purchasers as follows:
(a) during the period ending 90 days after the date hereof
to advise the Initial Purchasers promptly and, if requested, confirm such advice
in writing, of the happening of any event which makes any statement of a
material fact made in the Offering Memorandum untrue or that requires the making
of any additions to or changes in the Offering Memorandum (as amended or
supplemented from time to time) in order to make the statements therein, in
light of the circumstances under which they were made, not misleading; to advise
the Initial Purchasers promptly of any order preventing or suspending the use of
the Preliminary Offering Memorandum or the Offering Memorandum, of the
suspension of the qualification of the Debentures for offering or sale in any
jurisdiction and of the initiation or threatening of any proceeding for any such
purpose; and to use its reasonable best efforts to prevent the issuance of any
such order preventing or suspending the use of the Preliminary Offering
Memorandum or of the Offering Memorandum or suspending any such qualification
and, if any such suspension is issued, to use its reasonable best efforts to
obtain the lifting thereof at the earliest possible time;
(b) to furnish promptly to the Initial Purchasers and
counsel for the Initial Purchasers, without charge, as many copies of the
Preliminary Offering Memorandum and the Offering Memorandum (and of any
amendments or supplements thereto) as may be reasonably requested; to furnish to
the Initial Purchasers on the date hereof a copy of the independent accountants'
report included in the Offering Memorandum signed by the accountants rendering
such
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report; and the Company hereby consents to the use of the Preliminary Offering
Memorandum and the Offering Memorandum, and any amendments and supplements
thereto, in connection with Exempt Resales of the Debentures;
(c) if the delivery of the Offering Memorandum is
required at any time in connection with the sale of the Debentures and if at
such time any events shall have occurred as a result of which the Offering
Memorandum as then amended or supplemented would include an untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made when the Offering Memorandum is delivered, not misleading, or if for any
other reason it shall be necessary at such time to amend or supplement the
Offering Memorandum in order to comply with any law, to notify the Initial
Purchasers immediately thereof, and to promptly prepare and furnish to the
Initial Purchasers an amended Offering Memorandum or a supplement to the
Offering Memorandum so that statements in the Offering Memorandum, as so amended
or supplemented, will not, in light of the circumstances under which they were
made when it is so delivered, be misleading, or so that the Offering Memorandum
will comply with applicable law. The Initial Purchasers' delivery of any such
amendment or supplement shall not constitute a waiver of any of the conditions
set forth in Section 6 hereof;
(d) during the five-year period following the Closing
Date, provided any of the Debentures remain outstanding, to furnish to the
Initial Purchasers all public reports and all reports, documents, information
and financial statements furnished by the Company to the Commission pursuant to
the Trust Indenture Act, the Exchange Act or the Rules and Regulations;
(e) during the three-year period following the
Closing Date, for so long as and at any time that it is not subject to Section
13 or 15(d) of the Exchange Act, upon request of any holder of the Debentures,
to furnish to such holder, and to any prospective purchaser or purchasers of the
Debentures designated by such holder, information satisfying the requirements of
subsection (d)(4) of Rule 144(A) under the Securities Act. This covenant is
intended to be for the benefit of the holders from time to time of the
Debentures, and prospective purchasers of the Debentures designated by such
holders;
(f) to use the proceeds from the sale of the
Debentures in the manner described in the Offering Memorandum under the caption
"Use of Proceeds";
(g) in connection with the Offering, to make its
officers, employees, independent accountants and legal counsel reasonably
available upon request by the Initial Purchasers;
(h) to use its reasonable best efforts to do and
perform all things required to be done and performed under this Agreement by it
that are within its control prior to or after the Closing Date and to use
reasonable efforts to satisfy all conditions precedent on its part to the
delivery of the Securities;
(i) except following the effectiveness of the Shelf
Registration Statement, to not authorize or knowingly permit any person acting
on its or their behalf to, solicit any offer to buy or offer to sell the
Debentures by means of any form of general solicitation or general advertising
(as such terms are used in Regulation D under the Securities Act) or in any
manner involving a public offering within the meaning of Section 4(2) of the
Securities Act;
(j) to not, and to use its reasonable best efforts to
ensure that no affiliate (as such term is defined in Rule 501(b) under the
Securities Act) of the Company will, offer, sell or solicit offers to buy or
otherwise negotiate in respect of any "security" (as defined in the Securities
Act) which could be integrated with the sale of the Debentures in a manner that
would require the registration of the Debentures under the Securities Act;
(k) to not, so long as the Debentures are
outstanding, be or become, or be or become owned by, an open-end investment
company, unit investment trust or face-amount certificate company that is or is
required to be registered under Section 8 of the Investment Company Act, and to
not be or become, or be or become owned by, a closed-end investment company
required to be registered, but not registered thereunder;
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(l) to cooperate with the Initial Purchasers and
counsel for the Initial Purchasers to qualify the Debentures for offering and
sale under the securities laws of such jurisdictions as the Initial Purchasers
may reasonably request and to comply with such laws so as to permit the
continuance of sales and dealings therein in such jurisdictions for as long as
may be necessary to complete the distribution of the Debentures; provided,
however, that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process or to subject it to taxation in any jurisdiction where it is not so
qualified or so subject;
(m) to comply with the Registration Rights Agreement
and all agreements set forth in the representation letters of the Company to The
Depository Trust Company relating to the approval of the Debentures for
"book-entry" transfers;
(n) in connection with the Offering, until the
Initial Purchasers shall have notified the Company of the completion of the
resale of the Debentures, to not and use its reasonable best efforts to not
permit any affiliated purchasers (as defined in Rule 10b-6 under the Exchange
Act), either alone or with one or more other persons, to bid for or purchase,
for any account in which it or any of its affiliated purchasers has a beneficial
interest, any Debentures or Common Stock, or attempt to induce any person to
purchase any Debentures; and to not and use its reasonable best efforts to not
permit any of its affiliated purchasers to make bids or purchases for the
purpose of creating actual, or apparent, active trading in or of raising the
price of the Debentures;
(o) prior to the Closing Date, to not issue any press
release or other communication directly or indirectly or hold any press
conference with respect to the Company, its condition, financial or otherwise,
or earnings, business affairs or business prospects, without the prior consent
of the Initial Purchasers, unless in the judgment of the Company and its
counsel, and after notification to the Initial Purchasers, such press release or
communication is required by law;
(p) to not take any action prior to the execution and
delivery of the Indenture which, if taken after such execution and delivery,
would have violated any of the covenants contained in the Indenture;
(q) to not take any action prior to the Closing Date
which in the Company's reasonable judgment would require the Offering Memorandum
to be amended or supplemented pursuant to Section 4(c) hereof;
(r) to maintain a transfer agent and, if necessary
under the laws of the jurisdiction of incorporation of the Company, a registrar
(which may be the same entity as the transfer agent) for the Common Stock; and
(s) for a period of five (5) years from the date
hereof, to use its best efforts to maintain the Private Offerings, Resale and
Trading through Automated Linkages ("Portal") Market (or after the Shelf
Registration Statement, New York Stock Exchange (or other national securities
exchange or Nasdaq National Market listing, if the Company is then listed
thereon) listing of the Debentures, to the extent outstanding, and the New York
Stock Exchange (or other national securities exchange or Nasdaq Stock Market, if
the Common Stock is then listed thereon) listing of the Common Stock.
5. PAYMENT OF EXPENSES.
(a) The Company hereby agrees to pay all of the
following expenses and fees incident to the performance of the obligations of
the Company under this Agreement, the Indenture and the Registration Rights
Agreement, including, regardless of whether any sale of the Debentures to the
Initial Purchasers is consummated (subject to Section 5(b) below): (i) the fees
and expenses of accountants and counsel for the Company, (ii) all costs and
expenses incurred in connection with the preparation, duplication, printing
(including mailing and handling charges), delivery and mailing (including the
payment of postage with respect thereto) of each Preliminary Offering Memorandum
and the Offering Memorandum and any amendments and supplements thereto, in
quantities as hereinabove stated, (iii) the printing, engraving, issuance and
delivery of the certificates representing the Debentures, (iv) costs and
expenses of travel, food and lodging of Company personnel in connection with the
"road show," information meetings and
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presentations, (v) fees and expenses of the transfer agent and registrar, (vi)
fees and expenses of the Trustee, including the Trustee's counsel, in connection
with the Indenture and the Debentures and (vii) the fees payable to the NASD,
CUSIP Service Bureau and DTC incurred in connection with the listing of the
Debentures and the Conversion Shares for trading in the PORTAL Market, (viii)
the fees payable to the Commission and New York Stock Exchange in connection
with the filing of a registration statement with respect to the Debentures and
the Conversion Shares and the listing of the Conversion Shares on the New York
Stock Exchange and (ix) all other costs and expenses incident to the performance
of its obligations hereunder which are not specifically otherwise provided for
in this Section. The Company shall not be responsible for any promotional or
tombstone expenses, if any, related to the Offering, lodging and travel expenses
of the Initial Purchasers' personnel on the "road show" or expenses of counsel
for the Initial Purchasers.
(b) If this Agreement is terminated for any reason,
the Company shall reimburse and indemnify the Initial Purchasers for their
actual accountable out-of-pocket expenses.
6. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The
obligations of the Initial Purchasers hereunder shall be subject to the
continuing accuracy of the representations and warranties of the Company herein
as of the date hereof and as of the Closing Date as if they had been made on and
as of the Closing Date; and the performance by the Company on and as of the
Closing Date of its covenants and obligations hereunder and to the following
further conditions:
(a) The Initial Purchasers shall not have advised the
Company that the Offering Memorandum, or any supplement or amendment thereto,
contains an untrue statement of fact which, in the Initial Purchasers' opinion,
is material, or omits to state a fact which, in the Initial Purchasers' opinion,
is material and is required to be stated therein or is necessary to make the
statements, in light of the circumstances under which they were made, not
misleading. No order suspending the sale of the Securities in any jurisdiction
shall have been issued on the Closing Date and no proceedings for that purpose
shall have been instituted or shall be contemplated.
(b) On or prior to the Closing Date the Initial
Purchasers shall have received from Xxxxxx Xxxx & Xxxxxx LLP such opinion or
opinions with respect to the organization of the Company, the validity of the
Debentures, the Conversion Shares, the Offering Memorandum and other related
matters as the Initial Purchasers may request and Xxxxxx Xxxx & Xxxxxx LLP shall
have received such papers and information as they request to enable it to pass
upon such matters.
(c) On the Closing Date the Initial Purchasers shall
have received the favorable opinion of Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx,
counsel to the Company, dated the Closing Date, addressed to the Initial
Purchasers and in form and substance satisfactory to the Initial Purchasers and
Xxxxxx Xxxx & Xxxxxx LLP, to the effect that:
i) (A) the Company and each of the Subsidiaries has
been duly organized and the Company and each of the
Subsidiaries is validly existing as a corporation, partnership
or limited liability company, as the case may be, in good
standing under the laws of its jurisdiction of formation, (B)
the Company and each of the Significant Subsidiaries is duly
qualified and in good standing as a foreign corporation (or,
with respect to the Partnership, as a foreign partnership and
with respect to the Limited Liability Company, as a foreign
limited liability company) in each jurisdiction identified in
a schedule to such opinion and (C) the Company and each of the
Subsidiaries has all requisite power and authority to own or
lease its properties and conduct its business as described in
the Offering Memorandum;
ii) the Company's authorized capital stock is as set
forth under the heading "Capitalization" in the Offering
Memorandum, subject to such adjustments therein as are
expressly contemplated by the Offering Memorandum; all of the
outstanding shares of capital stock of each of the
Subsidiaries are owned by the Company, directly or through one
or more Subsidiaries, in each case free and clear of any
liens, charges, claims, pledges, security interests or
encumbrances of any kind whatsoever other than as disclosed in
the Offering Memorandum;
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iii) except as disclosed in the Offering Memorandum,
to the best of such counsel's knowledge, neither the Company
nor any of the Subsidiaries is a party to or bound by any
instrument, agreement or other arrangement providing for it to
issue any capital stock, rights, warrants, options or other
securities of the Company or any of the Subsidiaries, except
for this Agreement and as described in the Offering
Memorandum, the Indenture, the Securities and all other
securities issued or issuable by each of the Company or any of
the Subsidiaries which are described in the Offering
Memorandum conform, or when issued and paid for, will conform
in all material respects to the descriptions thereof contained
in the Offering Memorandum; all issued and outstanding capital
stock of the Company or any of the Subsidiaries has been duly
authorized and validly issued and is fully paid and
non-assessable; to the best of such counsel's knowledge, none
of such securities were issued in violation of the preemptive
rights of any securityholder of the Company or any of the
Subsidiaries or similar contractual rights granted by the
Company or any of the Subsidiaries or applicable securities
laws; the Debentures have been duly authorized and, when
validly authenticated, issued, delivered and paid for by the
Initial Purchasers in the manner contemplated by this
Agreement, will be duly authorized, validly issued and
outstanding obligations of the Company entitled to the
benefits of the Indenture and enforceable against the Company
in accordance with their terms, except to the extent that
enforceability thereof may be limited by (1) bankruptcy,
insolvency, reorganization, moratorium or similar laws now or
hereafter in effect relating to creditors' rights generally;
or (2) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity); the Indenture conforms in all material respects to
the description thereof set forth in the Offering Memorandum;
the shares of Common Stock issuable upon conversion of the
Debentures have been duly authorized and reserved for issuance
upon conversion and, when issued, delivered and paid for in
accordance with the terms of the Indenture, will be validly
issued, fully paid and nonassessable; and the holders of
outstanding securities of the Company are not entitled to any
preemptive rights with respect to the Securities; all
corporate action required to be taken for the authorization,
issue and sale of the Securities has been duly and validly
taken; and the certificates representing the Securities are in
due and proper form; upon the issuance and delivery pursuant
to this Agreement and the Indenture of the Debentures to be
sold by the Company hereunder, the Initial Purchasers will
acquire good and marketable title thereto free and clear of
any pledge, lien, charge, claim, encumbrance, pledge, security
interest or other restriction or equity of any kind
whatsoever;
iv) the descriptions in the Offering Memorandum of
agreements and documents to which the Company or any of the
Subsidiaries is a party or by which any of them or their
respective properties are bound, including any such agreement
or document incorporated by reference into the Offering
Memorandum, or of any statutes, are accurate in all material
respects and fairly present the subject matter thereof; to the
best of such counsel's knowledge, there is no action,
arbitration, suit, or other proceeding pending or threatened
in writing or any judgments outstanding against the Company or
any of the Subsidiaries or involving the properties or
business of the Company or any of the Subsidiaries which (A)
questions the validity of the capital stock of the Company or
any of the Subsidiaries or of this Agreement, the Indenture,
the Registration Rights Agreement or of any action taken or to
be taken by the Company or any of the Subsidiaries pursuant to
or in connection with any of the foregoing or (B) except as
disclosed in the Offering Memorandum, could have a Material
Adverse Effect;
v) the Company has the corporate power and authority
to execute, deliver and perform each of this Agreement,
Indenture and the Registration Rights Agreement and to
consummate the transactions provided for herein and therein;
the execution and delivery of this Agreement, the Indenture
and the Registration Rights Agreement have been duly
authorized by all requisite corporate action on the part of
the Company and each of this Agreement, the Indenture and the
Registration Rights Agreement has been duly executed and
delivered by the Company, and, assuming due authorization,
execution and delivery by each other party thereto,
constitutes a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its
terms; except to the extent that enforcement thereof may be
limited by (i) bankruptcy, insolvency, reorganization,
moratorium or other similar laws now or hereafter in effect
relating to creditors' rights generally and
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(ii) general principles of equity (regardless of whether
enforceability is considered in a proceeding at law or in
equity) and except to the extent that rights to
indemnification and contribution contained in this Agreement
and the Registration Rights Agreement may be limited by
federal or state securities laws or public policy relating
thereto;
vi) the execution and delivery by the Company of
this Agreement, the Indenture and the Registration Rights
Agreement, the performance by the Company hereunder or
thereunder, the compliance by the Company with the provisions
thereof and the consummation of the transactions contemplated
hereby and thereby, each in accordance with its terms, do not
and will not conflict with or result in any breach or
violation of, constitute a default under or result in the
creation or imposition of any lien, charge, claim, pledge,
security interest or other encumbrance upon any property or
assets of the Company or the Subsidiaries pursuant to the
terms of (A) the charter or by-laws of the Company or any of
the Subsidiaries, (B) any license, contract, indenture,
mortgage, deed of trust, voting trust agreement, stockholders'
agreement, note, loan or credit agreement or other agreement
or instrument known to such counsel to which the Company or
any of the Subsidiaries is a party or by which any of them is
or may be bound or to which any of their respective properties
or assets is or may be subject, except for such conflicts,
breaches, violations, defaults and creations or impositions
which in the aggregate would not have a Material Adverse
Effect, or (C) any statute, rule or regulation (other than
federal or state securities laws) or, to the best of such
counsel's knowledge, any judgment, decree or order applicable
to the Company or any of the Subsidiaries of any arbitrator,
court, regulatory body or administrative agency or other
governmental agency or body having jurisdiction over the
Company or any of the Subsidiaries or any of their respective
activities or properties, except with respect to this clause
(C) for such conflicts, breaches, violations, defaults and
creations or impositions which in the aggregate would not have
a Material Adverse Effect. Such counsel need express no
opinion in this paragraph (vi) as to (A) state securities or
Blue Sky laws or (B) with respect to matters of fact relating
to compliance with any financial covenants, ratios or tests or
any aspect of the financial condition or results of operations
of the Company;
vii) to the knowledge of such counsel, the Company
and the Subsidiaries are not in violation of their charters or
by-laws; neither the Company nor any of the Subsidiaries is in
breach of, or in default with respect to, any provisions of
any license, contract, indenture, mortgage, deed of trust,
voting trust agreement, stockholders' agreement, note, loan or
credit agreement or other agreement or instrument known to
such counsel to which the Company or any of the Subsidiaries
is a party or by which any of them is or may be bound or to
which any of their respective properties or assets is or may
be subject, except for such breaches or defaults as would not
have a Material Adverse Effect, and to the knowledge of such
counsel, the Company and the Subsidiaries are in material
compliance with all laws, rules and regulations and all
judgments, decrees and orders of any judicial or governmental
authority to which the Company or any of the Subsidiaries or
by which any of them is or may be bound or to which any of
their respective properties or assets is or may be subject,
except for such noncompliance as would not have a Material
Adverse Effect;
viii) no consent, approval, authorization or order
of, and no filing with, any court, regulatory body, government
agency or other body (other than such as may have been made or
obtained and such as may be required under state securities or
Blue Sky laws, as to which no opinion need be rendered) is
required in connection with the issuance of the Securities as
contemplated by the Offering Memorandum, the performance of
this Agreement, the Indenture and the Registration Rights
Agreement, and the transactions contemplated hereby and
thereby; to the knowledge of such counsel, the Company and
each of the Subsidiaries holds all licenses, certificates,
permits, franchises, consents, authorizations and approvals
from all state and federal regulatory authorities that are
required for the Company and the Subsidiaries to conduct their
business as described in the Offering Memorandum, except for
such licenses, certificates, permits, franchises, consents,
authorizations and approvals the loss of which or the failure
to maintain would not have a Material Adverse Effect;
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ix) the statements in the Offering Memorandum under
the caption "Federal Income Tax Considerations" have been
reviewed by such counsel, and insofar as they refer to
statements of law, or descriptions of statutes, licenses,
rules or regulations or legal conclusions, are correct in all
material respects;
x) assuming the (A) accuracy of the representations,
warranties and agreements of the Company contained in Sections
1(y) and (z) of this Agreement and of the Initial Purchasers
in Section 2 of this Agreement and in the Purchase Letter, if
any, and (B) the due performance by the Company of the
agreements set forth in Section 4 of this Agreement and of the
Initial Purchasers in Section 3 this Agreement, neither the
registration of the Securities under the Securities Act, nor
the qualification of the Indenture under the Trust Indenture
Act with respect thereto is required for the offer, sale and
initial resale of the Debentures in the manner contemplated by
this Agreement and the Offering Memorandum, it being
understood that such counsel need express no opinion as to any
subsequent resale of any of the Securities; and
xi) the Company is not an "investment company,"
within the meaning of, is not registered or otherwise required
to be registered under, and is not "controlled" by a company
which is required to be registered under, the Investment
Company Act of 1940, as amended;
xii) the Indenture conforms as to form in all
material respects with the requirements of the Trust Indenture
Act and the Rules and Regulations applicable to an Indenture
qualified under the Trust Indenture Act.
In rendering such opinion, such counsel may rely: (A) as to matters involving
the application of laws other than the laws of the United States and
jurisdictions in which they are admitted, to the extent such counsel deems
proper and to the extent specified in such opinion, if at all, upon an opinion
or opinions (in form and substance satisfactory to the Initial Purchasers and
Xxxxxx Xxxx & Xxxxxx LLP) of other counsel acceptable to the Initial Purchasers
and Xxxxxx Xxxx & Xxxxxx LLP, familiar with the applicable laws; and (B) as to
matters of fact, to the extent they deem proper, on certificates and written
statements of responsible officers of the Company and certificates or other
written statements of officers of departments of various jurisdictions having
custody of documents respecting the corporate existence or good standing of the
Company and the Subsidiaries, provided, that copies of any such statements or
certificates shall be delivered to the Initial Purchasers and Xxxxxx Xxxx &
Xxxxxx LLP, if requested. In addition, such counsel shall state in such opinion
that they have conducted such investigation as they deem reasonable in support
of the opinions referred to above and in satisfaction of their due diligence
obligations to the Company . The opinion of such counsel for the Company shall
state that the opinion of any such other counsel is in form satisfactory to such
counsel and that the Initial Purchasers and they are justified in relying
thereon.
(d) Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx shall state
in the opinion letter contemplated by Section 6(c) that such counsel has
participated in conferences with officers and other representatives of each of
the Company and the Subsidiaries and representatives of the independent public
accountants for the Company and the Subsidiaries and the Initial Purchasers, at
which conferences the contents of the Offering Memorandum and related matters
were discussed, and, although such counsel is not passing upon, and does not
assume any responsibility for, the accuracy, completeness or fairness of the
statements contained in the Offering Memorandum, on the basis of the foregoing,
no facts have come to the attention of such counsel which has lead them to
believe that the Offering Memorandum, as of its date contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein not misleading,
except that such counsel need express no opinion or belief with respect to the
financial statements and related notes, the pro forma financial information and
other financial, statistical or accounting data included in the Offering
Memorandum or excluded therefrom);
(e) On or prior to the Closing Date Xxxxxx Xxxx &
Xxxxxx LLP shall have been furnished such documents, certificates and opinions
as they may reasonably require for the purpose of enabling them to review or
pass upon the matters referred to in subsection (c) of this Section 6 or in
order to evidence the accuracy, completeness or satisfaction of any of the
representations, warranties or conditions of the Company herein contained.
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(f) On and as of the Closing Date: (i) there shall
have been no adverse change involving a prospective change in the condition,
financial or otherwise, prospects, stockholders' equity or the business
activities of the Company and the Subsidiaries taken as a whole, whether or not
in the ordinary course of business, from the latest dates as of which such
condition is set forth in the Offering Memorandum; (ii) there shall have been no
transaction, not in the ordinary course of business, entered into by the Company
or any of the Subsidiaries, from the latest date as of which the financial
condition of the Company and the Subsidiaries is set forth in the Offering
Memorandum which is materially adverse to the Company and the Subsidiaries taken
as a whole; (iii) neither the Company nor any of the Subsidiaries shall be in
default under any provision of any instrument relating to any material
outstanding indebtedness; (iv) no material amount of the assets of the Company
or any of the Subsidiaries shall have been pledged or mortgaged, except as set
forth in the Offering Memorandum; (v) no action, suit or proceeding, at law or
in equity, shall have been pending, threatened or, to the knowledge of the
Company, contemplated against the Company or any of the Subsidiaries, or
affecting any of their respective properties or businesses, before or by any
court or federal, state or foreign commission, board or other administrative
agency wherein an unfavorable decision, ruling or finding may have a Material
Adverse Effect, except as set forth in the Offering Memorandum; and (vi) no stop
order shall have been issued under the Securities Act and no proceedings
therefor shall have been initiated or threatened or, to the knowledge of the
Company, contemplated by the Commission or any state regulatory authority.
(g) On the Closing Date the Initial Purchasers shall
have received a certificate of the Company signed by the principal executive
officer and by the chief financial or chief accounting officer of the Company,
in their capacities as such, dated the Closing Date, to the effect that each of
such persons has carefully examined the Offering Memorandum, this Agreement, the
Indenture and the Registration Rights Agreement, and that:
i) the representations and warranties of the Company
in this Agreement, the Indenture and the Registration Rights
Agreement are true and correct, as if made on and as of the
Closing Date, and the Company has complied with all agreements
and covenants and satisfied all conditions contained in this
Agreement, the Indenture and the Registration Rights Agreement
on its part to be performed or satisfied at or prior to the
Closing Date;
ii) no stop order suspending the qualification or
exemption from qualification of the Securities shall have been
issued and no proceedings for that purpose shall have been
commenced or, to the knowledge of the Company, be
contemplated;
iii) since the date of the most recent financial
statements included in the Offering Memorandum, there has been
no material adverse change in the condition, financial or
otherwise, business, prospects or results of operation of the
Company and the Subsidiaries, taken as a whole, except as set
forth in the Offering Memorandum;
iv) none of the Offering Memorandum or any amendment
or supplement thereto includes any untrue statement of a
material fact or omits to state any material fact required to
be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not
misleading; and
v) subsequent to the respective dates as of which
information is given in the Offering Memorandum: (a) neither
the Company nor any of the Subsidiaries has incurred up to and
including the Closing Date other than in the ordinary course
of its business, any material liabilities or obligations,
direct or contingent, except as disclosed in the Offering
Memorandum; (b) neither the Company nor any of the
Subsidiaries has paid or declared any dividends or other
distributions on its capital stock; (c) neither the Company
nor any of the Subsidiaries has entered into any material
transactions not in the ordinary course of business, except as
disclosed in the Offering Memorandum; (d) there has not been
any change in the capital stock (other than pursuant to the
Company's Stock Option Plan, 1994 Outside Directors Stock
Option Plan or 1994 Stock Repurchase Plan or upon conversion
of the Existing Preferred or the exercise of warrants
outstanding on such respective dates) or the long term debt of
the Company or any of the Subsidiaries; (e) neither the
Company nor any of the Subsidiaries has sustained
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any material loss or damage to its property or assets, whether
or not insured; (f) there is no litigation which is pending,
threatened or, to the best of the Company's knowledge,
contemplated against the Company, any of the Subsidiaries or
any affiliated party of any of the foregoing which would have
a Material Adverse Effect and which is required to be set
forth in an amended or supplemented Offering Memorandum which
has not been set forth; and (g) there has occurred no event
which would be required to be set forth in an amended or
supplemented prospectus if the Offering Memorandum were a
prospectus included in a registration statement on Form S-3,
which has not been set forth in an amendment or supplement to
the Offering Memorandum.
(h) On or before the date hereof the Initial
Purchasers shall have received a letter, dated such date, addressed to the
Initial Purchasers in form and substance satisfactory in all respects to the
Initial Purchasers and Xxxxxx Xxxx & Xxxxxx LLP, from Xxxxxx Xxxxxxxx LLP:
i) confirming that they are independent certified
public accountants with respect to the Company within the
meaning of the Securities Act and the Exchange Act and the
applicable Rules and Regulations;
ii) stating that it is their opinion that the
consolidated financial statements and supporting schedules of
the Company and the Subsidiaries included in the Offering
Memorandum or incorporated by reference therein comply as to
form in all material respects with the applicable accounting
requirements of the Securities Act;
iii) stating that, on the basis of procedures which
included a reading of the latest available unaudited interim
consolidated financial statements of the Company and the
Subsidiaries (with an indication of the date of the latest
available unaudited interim consolidated financial statements
of the Company and the Subsidiaries), a reading of the latest
available minutes of the stockholders and board of directors
and the various committees of the board of directors of each
of the Company and the Subsidiaries, consultations with
officers and other employees of each of the Company and the
Subsidiaries responsible for financial and accounting matters
and other procedures specified by the American Institute of
Certified Public Accountants for a review of interim financial
information as described in SAS No. 71, Interim Financial
Information, nothing has come to their attention which would
lead them to believe that (A) at September 30, 1996, there has
been any change in the stockholder's equity or long-term debt
of the Company, or any decrease in the stockholders' equity or
net current assets or net assets of the Company, as compared
with amounts shown in the December 31, 1995 balance sheet
included in the Offering Memorandum, other than as set forth
in or contemplated by the Offering Memorandum, or, if there
was any change or decrease, setting forth the amount of such
change or decrease, (B) during the period from January 1, 1996
to September 30, 1996, there was any decrease in net revenues
or net earnings, or net earnings per common share of the
Company, in each case as compared with the corresponding
period beginning January 1, 1995, other than as set forth in
or contemplated by the Offering Memorandum, or, if there was
any such decrease, setting forth the amount of such decrease,
(C) at a specified date not more than five (5) days prior to
the later of the date of this Agreement or the Offering
Memorandum, there has been any change in the stockholders'
equity or long-term debt of the Company, or any decrease in
the stockholders' equity or net current assets or net assets
of the Company, as compared with amounts shown in the December
31, 1995 balance sheet included in the Offering Memorandum,
other than as set forth in or contemplated by the Offering
Memorandum, or, if there was any change or decrease, setting
forth the amount of such change or decrease, and (D) during
the period from January 1, 1996 to a specified date not more
than five (5) days prior to the later of the date of this
Agreement, there was any decrease in net revenues or net
earnings or net earnings per common share of the Company, in
each case as compared with the corresponding period beginning
January 1, 1995, other than as set forth in or contemplated by
the Offering Memorandum, or, if there was any such decrease,
setting forth the amount of such decrease;
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iv) stating that, (A) on the basis of a reading of
unaudited pro forma combined balance sheet as of December 31,
1995 and the unaudited pro forma combined statements of
operations for the year ended December 31, 1995 included in
the Offering Memorandum and consultations with officers and
other employees of the Company and the Subsidiaries who have
responsibility for financial and accounting matters about the
basis for such officers' and employees' determination of the
pro forma adjustments and whether such unaudited pro forma
combined financial statements comply as to form in all
material respects with the applicable accounting requirements
of Rule 11-02 of Regulation S-X, nothing has come to their
attention which would lead them to believe that the unaudited
pro forma combined financial statements do not comply as to
form in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X and that the pro
forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements and
(B) they have proved the arithmetic accuracy of the
application of the pro forma adjustments to the historical
amounts in such unaudited pro forma combined financial
statements;
v) stating that they have compared specific dollar
amounts, numbers of shares, percentages of revenues and
earnings, statements and/or other financial information
pertaining to the Company and the Subsidiaries set forth in
the Offering Memorandum in each case to the extent that such
amounts, numbers, percentages, statements and information may
be derived from the general accounting records, including work
sheets, of the Company and/or the Subsidiaries and excluding
any questions requiring an interpretation by legal counsel,
with the results obtained from the application of specified
readings, inquiries and other appropriate procedures (which
procedures need not constitute an examination in accordance
with generally accepted auditing standards) set forth in the
letter and found them to be in agreement; and
vi) statements as to such other matters incident to
the transaction contemplated hereby as the Initial Purchasers
may reasonably request.
(i) On the Closing Date the Initial Purchasers shall
have received from Xxxxxx Xxxxxxxx LLP a letter, dated as of the Closing Date to
the effect that they reaffirm that statements made in the letter furnished
pursuant to subsection (h) of this Section 6, except that the specified date
referred to shall be a date not more than five (5) days prior to the Closing
Date, to the further effect that they have carried out procedures as specified
in clause (iii) of subsection (h) of this Section 6 with respect to certain
amounts, percentages and financial information as specified by the Initial
Purchasers and deemed to be a part of the Offering Memorandum and have found
such amounts, percentages and financial information to be in agreement with the
records specified in such clause (iii).
(j) On the Closing Date there shall have been duly
tendered to the Initial Purchasers the appropriate principal amount of
Debentures.
(k) The Debentures shall have been approved by the
National Association of Securities Dealers, Inc. for trading in the PORTAL
market.
(l) Trading in the Common Stock shall not have been
suspended by the New York Stock Exchange at any time after November 30, 1996.
(m) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following: (i) trading in
securities generally on the New York Stock Exchange, the American Stock Exchange
or the over-the-counter market shall have been suspended or limited, or minimum
prices shall have been established on either of such exchanges or such market by
the Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, or trading in securities of the Company on any
exchange or in the over-the-counter market shall have been suspended or (ii) any
moratorium on commercial banking activities shall have been declared by Federal
or New York State authorities or (iii) an outbreak or escalation of hostilities
or a declaration by the United States of a national emergency or war or such a
material adverse change in general economic, political or financial conditions
(or the effect of international conditions on the financial markets in the
United States shall be such) as to make
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it, in the judgment of the Initial Purchasers, impracticable or inadvisable to
proceed with the offering or the delivery of the Debentures on the terms and in
the manner contemplated in the Offering Memorandum.
(n) The Company and the Initial Purchasers shall have
executed and delivered the Registration Rights Agreement on the date of this
Agreement.
(o) The Indenture shall have been duly executed and
delivered by the Company and the Trustee, and the Debentures shall have been
duly executed and delivered by the Company and authenticated by the Trustee.
(p) If any event shall have occurred that requires
the Company under Section 4(c) hereof to prepare an amendment or supplement to
the Offering Memorandum, such amendment or supplement shall have been prepared,
the Initial Purchasers shall have been given a reasonable opportunity to comment
thereon, and copies thereof delivered to the Initial Purchasers.
(q) There shall not have occurred any invalidation of
Rule 144A under the Securities Act by any court or any withdrawal or proposed
withdrawal of any rule or regulation under the Securities Act or the Exchange
Act by the Commission or any amendment or proposed amendment thereof by the
Commission which in the judgment of the Initial Purchasers would materially
impair the ability of the Initial Purchasers to purchase, hold or effect resales
of the Debentures as contemplated hereby.
(r) On or prior to the Closing Date the Initial
Purchasers shall have received a certificate signed by the secretary of the
Company, in his capacity as such, dated the Closing Date as to:
i) the absence of any contemplated proceeding for
the merger, consolidation, liquidation or dissolution of the
Company or any Subsidiary, as the case may be, or the sale of
all or substantially all of its assets;
ii) the due adoption and full force and effect of
the By-laws of the Company (with a copy of the By-laws
attached);
iii) resolutions adopted by the Board of Directors of
the Company and/or a committee thereof authorizing the
Offering and the consummation of the transactions contemplated
by this Agreement, the Indenture and the Registration Rights
Agreement (with copies of such resolutions attached); and
iv) the incumbency, authorization and signatures of
certain officers and directors of the company including all
those signing this Agreement, the Indenture, the Registration
Rights Agreement and/or any certificate delivered at Closing.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to the Initial Purchasers.
If any condition to the Initial Purchasers' obligations
hereunder to be fulfilled prior to or at the Closing Date is not so fulfilled,
the Initial Purchasers may terminate this Agreement or, if the Initial
Purchasers so elect, they may waive any such conditions which have not been
fulfilled or extend the time for their fulfillment.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless
the Initial Purchasers (for purposes of this Section 7, "Initial Purchasers"
shall include the officers, directors, partners, employees and agents, and each
person, if any, who controls either of the Initial Purchasers ("controlling
person") within the meaning of Section 15 of the Securities Act or Section 20(a)
of the Exchange Act, from and against any and all losses, claims, damages,
expenses
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or liabilities, joint or several (and actions, proceedings, suits and litigation
in respect thereof), whatsoever, as the same are incurred, to which the Initial
Purchasers or any such controlling person may become subject, under the
Securities Act, the Exchange Act or any other statute or at common law or
otherwise insofar as such losses, claims, damages, expenses or liabilities arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Offering Memorandum or the Offering
Memorandum (as from time to time amended and supplemented) or arise out of or
are based upon the omission or alleged omission therefrom of a material fact
required to be stated therein or necessary to make the statements therein in the
light of the circumstances under which they were made, not misleading; provided,
however, that the Company shall not be liable in any such case to the extent
that any such loss, claim, damage, expense or liability arises out of or is
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Memorandum or the Offering Memorandum
or any such amendment or supplement in reliance upon and in conformity with
Initial Purchasers Information and provided, further, that the Company shall not
be liable to the Initial Purchasers under the indemnity agreement in this
subsection (a) (i) with respect to any Preliminary Offering Memorandum to the
extent that any such loss, liability, claim, damage or expense of the Initial
Purchasers arises out of a sale of the Debentures by such Initial Purchaser to a
person to whom there was not sent or given, at or prior to the written
confirmation of such sale, a copy of the Offering Memorandum (or of the Offering
Memorandum as then amended or supplemented) if the Company has previously
furnished sufficient copies thereof to the Initial Purchasers a reasonable time
in advance and the loss, liability, claim, damage or expense of such Initial
Purchaser results from an untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in the Preliminary
Offering Memorandum which was corrected in the Offering Memorandum (or the
Offering Memorandum as amended or supplemented) or (ii) to the extent that any
such loss, claim, damage, expense or liability arises out of or is based upon
any action or failure to act by the Initial Purchasers, that is found in a final
judicial determination (or a settlement tantamount thereto) to constitute bad
faith, willful misconduct or gross negligence on the part of the Initial
Purchasers. The indemnity agreement in this subsection (a) shall be in addition
to any liability which the Company may have at common law or otherwise.
(b) The Initial Purchasers agree severally and not
jointly to indemnify and hold harmless the Company, each of its directors, each
of its officers, and each other person, if any, who controls the Company within
the meaning of the Securities Act, to the same extent as the foregoing indemnity
from the Company to the Initial Purchasers, but only with respect to statements
or omissions made in conformity with the Initial Purchasers Information in any
Preliminary Offering Memorandum or the Offering Memorandum or any amendment
thereof or supplement thereto.
(c) Promptly after receipt by an indemnified party
under this Section 7 of notice of the commencement of any action, suit or
proceeding, such indemnified party shall, if a claim in respect thereof is to be
made against one or more indemnifying parties under this Section 7, notify each
party against whom indemnification is to be sought in writing of the
commencement thereof (but the failure to notify an indemnifying party shall not
relieve it from any liability which it may have under Sections 7(a) or (b)
unless and to the extent that it has been prejudiced in a material respect by
such failure or from the forfeiture of substantial rights and defenses). In case
any such action, suit or proceeding is brought against any indemnified party,
and it notifies an indemnifying party or parties of the commencement thereof,
the indemnifying party or parties will be entitled to participate therein, and
to the extent it may elect by written notice delivered to the indemnified party
promptly after receiving the aforesaid notice from such indemnified party, to
assume the defense thereof with counsel reasonably satisfactory to such
indemnified party, which may be the same counsel as counsel to the indemnifying
party. Notwithstanding the foregoing, the indemnified party or parties shall
have the right to employ its or their own counsel in any such case but the fees
and expenses of such counsel shall be at the expense of such indemnified party
or parties unless (i) the employment of such counsel shall have been authorized
in writing by the indemnifying parties in connection with the defense of such
action at the expense of the indemnifying party, (ii) the indemnifying parties
shall not have employed counsel reasonably satisfactory to such indemnified
party to take charge of the defense of such action within a reasonable time
after notice of commencement of the action or (iii) such indemnified party or
parties shall have reasonably concluded that there may be defenses available to
it or them which are different from or additional to those available to one or
all of the indemnifying parties (in which case the indemnifying parties shall
not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and expenses of
one additional counsel shall be borne by the indemnifying parties. In no event
shall the indemnifying parties be liable for fees and expenses of more than one
counsel (in addition to any local counsel) separate from their own counsel for
all indemnified parties in connection with any one action or separate but
similar or related
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actions in the same jurisdiction arising out of the same general allegations or
circumstances. Anything in this Section 7 to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or action
effected without its written consent.
(d) In order to provide for just and equitable
contribution in any case in which (i) an indemnified party makes claim for
indemnification pursuant to this Section 7, but it is judicially determined (by
the entry of a final judgment or decree by a court of competent jurisdiction and
the expiration of time to appeal or the denial of the last right of appeal) that
such indemnification may not be enforced in such case notwithstanding the fact
that the express provisions of this Section 7 provide for indemnification in
such case, or (ii) contribution under the Securities Act may be required, then
each indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid as a result of such losses, claims, damages,
expenses or liabilities (or actions, suits, proceedings or litigation in respect
thereof) (A) in such proportion as is appropriate to reflect the relative
benefits received by each of the contributing parties, on the one hand, and the
party to be indemnified on the other hand, from the offering of the Securities
or (B) if the allocation provided by clause (A) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
each of the contributing parties, on the one hand, and the party to be
indemnified, on the other hand, in connection with the statements or omissions
that resulted in such losses, claims, damages, expenses or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company, on the one hand, and the Initial Purchasers, on the other, shall
be deemed to be in the same proportion as the total net proceeds from the
offering of the Debentures (before deducting expenses) bear to the total
discounts received by the Initial Purchasers hereunder, in each case as set
forth in the table on the Cover Page of the Offering Memorandum. Relative fault
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company or by
the Initial Purchasers, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such untrue statement or
omission. The amount paid or payable by an indemnified party as a result of the
losses, claims, damages, expenses or liabilities (or actions, suits, proceedings
or litigation in respect thereof) referred to above in this subsection (d) shall
be deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating, preparing or defending any
such action, claim, suit, proceeding or litigation. Notwithstanding the
provisions of this subsection (d), the Initial Purchasers shall not be required
to contribute any amount in excess of the discount applicable to the Debentures
purchased by the Initial Purchasers hereunder. No person guilty of fraudulent
misrepresentation (within the meaning of Section 12(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person, if
any, who controls the Company within the meaning of the Securities Act, each
executive officer of the Company and each director of the Company shall have the
same rights to contribution as the Company, subject in each case to this
subsection (d). Any party entitled to contribution will, promptly after receipt
of notice of commencement of any action, suit, proceeding or litigation against
such party in respect to which a claim for contribution may be made against
another party or parties under this subsection (d), notify such party or parties
from whom contribution may be sought, but the omission so to notify such party
or parties shall not relieve the party or parties from whom contribution may be
sought from any obligation it or they may have hereunder or otherwise than under
this subsection (d), or to the extent that such party or parties were not
adversely affected by such omission. The contribution agreement set forth above
shall be in addition to any liabilities which any indemnifying party may have at
common law or otherwise.
8. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto
shall be deemed to be representations, warranties and agreements at the Closing
Date, and the agreements of the Company and the provisions with respect to the
payment of expenses contained in Sections 5 and 9 and the respective indemnity
agreements contained in Section 7 hereof shall remain operative and in full
force and effect regardless of any investigation made by or on behalf of the
Initial Purchasers, the Company, any of the Subsidiaries or any controlling
person, and shall survive termination of this Agreement or the issuance and
delivery of the Debentures to the Initial Purchasers.
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9. TERMINATION.
(a) Subject to subsection (b) of this Section 9, the
Initial Purchasers shall have the right to terminate this Agreement (i) if any
domestic or international event or act or occurrence has disrupted, or in the
Initial Purchasers' opinion will in the immediate future disrupt the financial
markets, or (ii) if any material adverse change in the financial markets shall
have occurred or (iii) if trading on the New York Stock Exchange, the American
Stock Exchange or in the over-the-counter market shall have been suspended, or
minimum or maximum prices for trading shall have been fixed, or maximum ranges
for prices for securities shall have been required on the over-the-counter
market by the NASD or by order of the Commission or any other government
authority having jurisdiction; or (iv) if the United States shall have become
involved in a war or major hostilities, or there shall have been an escalation
in an existing war or major hostilities, or a national emergency shall have been
declared in the United States; or (v) if a banking moratorium has been declared
by a state or federal authority; or (vi) if a moratorium in foreign exchange
trading has been declared; or (vii) if the Company or any of the Subsidiaries
shall have sustained a loss material or substantial to the Company or any of the
Subsidiaries by fire, flood, accident, hurricane, earthquake, theft, sabotage or
other calamity or malicious act which, whether or not such loss shall have been
insured, will, in the Initial Purchasers' opinion, make it inadvisable to
proceed with the delivery of the Securities; or (viii) if there shall have been
such a material adverse change in the general market, political or economic
conditions in the United States or elsewhere, as in the Initial Purchasers'
judgment would make it inadvisable to proceed with the offering, sale and/or
delivery of the Debentures.
(b) If this Agreement is terminated by the Initial
Purchasers in accordance with the provisions of Section 9(a) due to any events
or circumstances specifically applicable to the Company (as opposed to events or
circumstances having a general effect upon market, political or economic
conditions) or if this Agreement shall not be carried out within the time
specified herein, or any extension thereof granted to the Initial Purchasers, by
reason of any failure on the part of the Company to perform any undertaking or
satisfy any condition of this Agreement by it to be performed or satisfied
(including, without limitation, pursuant to Section 6, 9 or 10 hereof), then the
Company shall promptly reimburse and indemnify the Initial Purchasers for all of
their out-of-pocket expenses, including the fees and disbursements of counsel
for the Initial Purchasers (less amounts previously paid pursuant to Section 5).
If the amount previously paid pursuant to Section 5(a) above exceeds the Initial
Purchasers' out-of-pocket expenses, the Initial Purchasers shall refund such
excess to the Company. Notwithstanding any contrary provision contained in this
Agreement, any election hereunder or any termination of this Agreement
(including, without limitation, pursuant to Sections 6, 9 and 10 hereof), and
whether or not this Agreement is otherwise carried out, the provisions of
Section 5 and Section 7 shall not be in any way affected by such election or
termination or failure to carry out the terms of this Agreement or any part
hereof.
10. DEFAULT BY THE COMPANY. If the Company shall fail at the
Closing Date to sell and deliver the number of Securities which it is obligated
to sell hereunder on such date, then this Agreement shall terminate without any
liability on the part of any non-defaulting party other than pursuant to
Sections 5, 7 and 9 hereof. No action taken pursuant to this Section 10 shall
relieve the Company from liability, if any, in respect of such default.
11. NOTICES. All notices and communications hereunder, except
as herein otherwise specifically provided, shall be given in writing and shall
be deemed to have been duly given if mailed or transmitted by any standard form
of telecommunication. Notices to the Initial Purchasers shall be directed to it
at Forum Capital Markets L.P., 00 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx, Xxxxxxxxxxx
00000, Attention: Mr. C. Xxxxx Xxxxxxx, with a copy to Xxxxxx Xxxx & Xxxxxx LLP,
Two Stamford Plaza, 000 Xxxxxxx Xxxxxxxxx, Xxxxxxxx, Xxxxxxxxxxx 00000,
Attention: Xxx X. Xxxxxxxxxx, Esq. Notices to the Company shall be directed to
the Company at 000 Xxxxxxxxxxxx Xxxxxx, Xxxx Xxxxx, Xxxxx 00000, Attention:
President, with a copy to Xxxxx Xxxx Xxxxx Constant & Xxxxxxxx, 00 Xxxxxxxxxxx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxx X. Xxxxxxx, Esq.
12. PARTIES. This Agreement shall inure solely to the benefit
of and shall be binding upon the Initial Purchasers, the Company and the
controlling persons, directors and officers referred to in Section 7 hereof, and
their respective successors, legal representatives and assigns, and no other
person shall have or be construed to have any legal or equitable right, remedy
or claim under or in respect of or by virtue of this Agreement or any provisions
herein
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contained. No purchaser of Debentures from the Initial Purchasers shall be
deemed to be a successor by reason merely of such purchase.
13. CONSTRUCTION. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of New York
without giving effect to choice of law or conflict of laws principles.
14. COUNTERPARTS. This Agreement may be executed in any number
of counterparts, each of which shall be deemed to be an original, and all of
which taken together shall be deemed to be one and the same instrument.
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15. ENTIRE AGREEMENT; AMENDMENTS. This Agreement constitutes
the entire agreement of the parties hereto and supersedes all prior written or
oral agreements, understandings and negotiations with respect to the subject
matter hereof. This Agreement may not be amended except in a writing signed by
the Initial Purchasers and the Company.
If the foregoing correctly sets forth the understanding
between the Initial Purchasers and the Company, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
Very truly yours,
LOMAK PETROLEUM, INC.
By:
-------------------------------
Name:
Title:
Confirmed and accepted as of
the date first above written.
FORUM CAPITAL MARKETS L.P.
By:
-----------------------------------
Name: Xxxxxxx X. XxXxxxx
Title: Managing Director
XXXXXXXX & COMPANY SECURITIES, INC.
By:
-----------------------------------
Name: Xxxxxxx X. XxXxxxx
Title: Attorney-in-fact
XXXXXX XXXXXX & COMPANY, INC.
By:
-----------------------------------
Name: Xxxxxxx X. XxXxxxx
Title: Attorney-in-fact
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SCHEDULE A
Name Principal Amount of Debentures
---- ------------------------------
Forum Capital Markets L.P. $36,800,000
XxXxxxxx & Company Securities, Inc. 9,100,000
Xxxxxx Xxxxxx & Company, Inc. 9,100,000
-----------
Total $55,000,000
26
ANNEX I
Subsidiaries
------------
Jurisdictions in
Ownership which Qualified to
Name State of Formation Percentage Conduct Business
----------------------------------------- ------------------- ---------- ------------------
Lomak Operating Company* Ohio 100% Alabama
Michigan
Mississippi
New York
Ohio
Pennsylvania
Utah
West Virginia
Lomak Resources Company* Delaware 100% Delaware
Ohio
Pennsylvania
Oklahoma
Lomak Production Company* Delaware 100% Alabama
Delaware
Louisiana
Michigan
Mississippi
Oklahoma
Texas
Utah
Buffalo Oilfield Services, Inc. Ohio 100% Ohio
Pennsylvania
Lomak Energy Services Company** Delaware 100% Delaware
Texas
Ohio
Oklahoma
Talon Trucking Company Oklahoma 100% Oklahoma
Lomak Resources, L.L.C.* Oklahoma 100% Oklahoma
Pennsylvania
Lomak Production I, L.P.* Texas 100% Texas
Lomak Energy Company Delaware 100% Delaware
Eastern Petroleum Company* Ohio 100% Ohio
Pennsylvania
LPI Operating Company Ohio 100% Ohio
LPI Acquisition Inc. Texas 100% Texas
Latoka Holdings Inc. Texas 100% Texas
--------
* Denotes the Significant Subsidiaries
** Formerly known as Border Resources Inc.
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ANNEX II
(1)
Plan Sponsor - Lomak Petroleum, Inc.
Name of Plan - Lomak Petroleum, Inc. 401(k) Plan
Type of Plan - Pension benefit plan
Employer identification number - 00-0000000
Plan year January 1 to December 31
(2)
Plan Sponsor - Lomak Petroleum, Inc.
Name of Plan - Profit Sharing 401(k) Plan
Type of Plan - Pension benefit plan
Employer identification number - 00-0000000
Plan year January 1 to December 31
(3)
Plan Sponsor - Lomak Petroleum, Inc.
Name of Plan - Welfare Plan
Type of Plan - Welfare benefit plan
Employer identification number - 00-0000000
Plan year July 1 to June 30
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