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EXHIBIT 10.2
$75,000,000 Principal Amount
TOREADOR RESOURCES CORPORATION
5.00% Convertible Senior Notes
due 2025
PURCHASE AGREEMENT
September 22, 2005
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PURCHASE AGREEMENT
September 22, 2005
UBS SECURITIES LLC
MORGAN KEEGAN & COMPANY, INC.
FIRST ALBANY CAPITAL INC.
STANFORD GROUP COMPANY
THE SHEMANO GROUP, INC.
as Initial
Purchasers
c/o UBS Securities LLC
299 Park Avenue
New York, New York 10171
Dear Sirs and Mesdames:
Toreador Resources Corporation, a Delaware corporation, (the
"Company"), proposes to issue and sell to
the initial purchasers named in
Schedule A hereto (the "Initial
Purchasers") $75,000,000 aggregate principal
amount of its 5.00% Convertible Senior
Notes due 2025 (the "Firm Notes"). In
addition, the Company proposes to grant to
the Initial Purchasers the option to
purchase from the Company up to an
additional $11,250,000 aggregate principal
amount of the Company's 5.00% Convertible
Senior Notes due 2025 (the "Additional
Notes"). The Firm Notes and the Additional
Notes are hereinafter collectively
sometimes referred to as the "Notes."
The Notes are to be issued pursuant to an indenture (the
"Indenture") to be dated as of September
27, 2005, between the Company and The
Bank of New York Trust Company, N.A, as
trustee (the "Trustee"). The Notes will
be convertible in accordance with their
terms and the terms of the Indenture
into shares of the common stock (the
"Common Stock") of the Company, par value
$0.15625 per share (the "Shares").
The Notes and the Shares will be offered without being
registered
under the Securities Act of 1933, as
amended (the "Securities Act"), to
"qualified institutional buyers" in
compliance with the exemption from
registration provided by Rule 144A under
the Securities Act ("Rule 144A").
The Initial Purchasers and their direct and indirect
transferees
will be entitled to the benefits of a
Registration Rights Agreement to be
entered into at or prior to the time of
purchase (as defined herein) between the
Company and the Initial Purchasers (the
"Registration Rights Agreement").
In connection with the sale of the Notes, the Company has prepared
a
preliminary offering memorandum (the
"Preliminary Memorandum") and will prepare
a final offering
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memorandum (the "Final Memorandum" and,
with the Preliminary Memorandum, each a
"Memorandum") including or incorporating by
reference a description of the terms
of the Notes and the Shares, the terms of
the offering and a description of the
Company. As used herein, the term
"Memorandum" shall include in each case the
documents incorporated by reference
therein, if any, and any amendment or
supplement thereto. The terms "supplement",
"amendment" and "amend" as used
herein with respect to a Memorandum shall
include all documents deemed to be
incorporated by reference in such
Memorandum, if any, that are filed subsequent
to the date of such Memorandum with the
Securities and Exchange Commission (the
"Commission") pursuant to the Securities
Exchange Act of 1934, as amended (the
"Exchange Act").
The Company and the Initial Purchasers agree as follows:
1. Sale and Purchase: Upon the basis of the warranties and
representations and subject to the other
terms and conditions herein set forth,
the Company agrees to sell to the Initial
Purchasers, and each of the Initial
Purchasers, severally and not jointly,
agrees to purchase from the Company, the
aggregate principal amount of Firm Notes
set forth opposite the name of such
Initial Purchaser in Schedule A hereto at a
purchase price of 96.5% of the
principal amount thereof.
In addition, the Company hereby grants to the several Initial
Purchasers the option to purchase from time
to time, and upon the basis of the
representations and warranties and subject
to the other terms and conditions
herein set forth, each Initial Purchaser
shall have the right to purchase from
time to time from the Company, at a
purchase price of 96.5% of the principal
amount thereof, plus accrued interest, if
any, from the time of purchase (as
hereinafter defined) to the additional time
of purchase (as hereinafter
defined), Additional Notes in an aggregate
principal amount proportional to the
aggregate principal amount of Firm Notes
set forth opposite such Initial
Purchaser's name on Schedule A hereto. This
option may be exercised by UBS
Securities, LLC ("UBS"), on behalf of the
Initial Purchasers, at any time on or
before the thirteenth day following the
date the Firm Notes are issued, by
written notice to the Company. Such notice
shall set forth the aggregate
principal amount of Additional Notes as to
which the option is being exercised,
and the date and time when the Additional
Notes are to be delivered (such date
and time being herein referred to as the
"additional time of purchase");
provided, however, that the additional time
of purchase shall not be earlier
than (i) the time of purchase or (ii) the
second business day(1) after the date
on which the option shall have been
exercised nor later than the tenth business
day after the date on which the option
shall have been exercised.
2. Payment and Delivery: Payment of the purchase price for the
Firm
Notes shall be made to the Company by
Federal (same day) funds, against delivery
of the Firm Notes to you, at the offices of
Haynes and Boone, LLP in Dallas,
Texas, or at such other place as may be
agreed upon by the parties hereto, for
the respective accounts of the Initial
Purchasers. Such
-------------
(1) As used herein, "business
day" shall mean a day on which the Nasdaq
National
Market is open for trading.
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payment and delivery shall be made at 10:00
A.M., eastern daylight time, on
September __, 2005 (unless another time
shall be agreed to by you and the
Company). The time at which such payment
and delivery are actually made is
herein sometimes called the "time of
purchase."
Payment of the purchase price for the Additional Notes shall be
made
at the additional time of purchase in the
same manner and at the same office and
time of day as the payment for the Firm
Notes.
One or more Notes in global form, and registered in the name of
Cede
& Co., as nominee for The Depository
Trust Company, and in such denominations as
you shall request in writing not later than
one full business day prior to the
time of purchase or the additional time of
purchase, as the case may be, shall
be delivered by the Company to the Initial
Purchasers (or as they may direct)
against payment therefor by wire transfer
of same day funds to the Company. For
the purpose of expediting the checking of
the certificates for the Notes by you,
the Company agrees to make such global note
available to UBS for inspection at
least one full business day preceding the
time of purchase or the additional
time of purchase, as the case may be.
3. Representations and Warranties of the Company: The Company
represents and warrants to each of the
Initial Purchasers that:
(a) (i) Each document, if any, filed or to be filed pursuant
to the
Exchange Act and incorporated by reference in any Memorandum
complied
or will comply when so filed in all material respects with the
Exchange
Act and the applicable rules and regulations of the Commission
thereunder
and (ii) the Preliminary Memorandum, as of its date did not and
as of the
time of execution of this Agreement does not, and the Final
Memorandum, as amended or supplemented, prior to the time of
purchase will
not,
contain any untrue statement of a material fact or omit to state
a
material
fact necessary to make the statements therein, in the light of
the
circumstances under which they were made, not misleading;
provided,
however,
that any representations and warranties set forth in this
paragraph
do not apply to statements or omissions in any Memorandum based
upon
information furnished to the Company in writing by or on behalf
of
such
Initial Purchaser expressly for use therein as provided in Section
11
below;
(b) As of June 30, 2005, the Company has an authorized and
outstanding capitalization as set forth under the column heading
entitled
"Actual"
in the section of the Final Memorandum entitled
"Capitalization"
and, as
adjusted to give effect to the offering of the Firm Notes and
the
application of the net proceeds therefrom as described in the "Use
of
Proceeds"
section of the Final Memorandum, the Company would, as of June
30, 2005,
have had an authorized and outstanding capitalization as set
forth
under the column heading entitled "As Adjusted" in the section
of
the Final
Memorandum entitled "Capitalization"; since June 30, 2005,
there
have been
no changes in the authorized and outstanding capital stock of
the
Company except as disclosed in the Memorandum; all of the issued
and
outstanding shares of capital stock, including the Common Stock, of
the
Company
have been duly
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authorized
and validly issued and are fully paid and non-assessable, have
been
issued in compliance in all material respects with all federal
and
state
securities laws and were not issued in violation of any statutory
or
contractual preemptive rights, resale rights, rights of first
refusal or
similar
rights;
(c) The Company has been duly incorporated and is validly
existing
as a corporation in good standing under the laws of the State
of
Delaware,
with full corporate power and authority to own, lease and
operate
its properties and to conduct its business as described in the
Memorandum;
(d) The Company is duly qualified to do business as a foreign
corporation and is in good standing in each jurisdiction where
the
ownership
or leasing of its properties or the conduct of its business
requires
such qualification, except where the failure to be so qualified
and in
good standing would not, individually or in the aggregate, have
a
material
adverse effect on the business, properties, financial
condition,
results of
operation or prospects of the Company and the Subsidiaries (as
hereinafter defined) taken as a whole (a "Material Adverse
Effect");
(e) Each U.S. subsidiary of the Company listed on Schedule B
hereto
(the "U.S. Subsidiaries", and together with the subsidiaries
listed
on
Schedule B-1, the "Subsidiaries") has been duly incorporated,
organized
or formed
and is validly existing as a corporation, limited liability
company or
limited partnership in good standing under the laws of the
jurisdiction of its incorporation, organization or formation,
with
requisite
power and authority to own, lease and operate its properties
and
to conduct
its business as described in the Memorandum; each U.S.
Subsidiary is
duly qualified to do business as a foreign corporation,
limited
liability company or limited partnership and is in good
standing
in each
jurisdiction where the ownership or leasing of its properties
or
the
conduct of its business requires such qualification, except where
the
failure to
be so qualified and in good standing would not, individually or
in the
aggregate, have a Material Adverse Effect; all of the issued
and
outstanding shares of capital stock, limited liability company
interests,
partnership interests or other equity interests of the U.S.
Subsidiaries
have been
duly and validly authorized and issued, are (to the extent
applicable) fully paid and non-assessable and are owned directly
or
indirectly
by the Company, free and clear of all liens, encumbrances,
equities
or claims except for pledges of capital stock or other equity
interests
in the U.S. Subsidiaries pursuant to credit agreements of the
Company or
the U.S. Subsidiaries as described in the Memorandum; the
Company
does not have any subsidiaries and does not own or control,
directly
or indirectly, any interest in any corporation or other entity
except as
set forth on Schedule B or Schedule B-1 and except for the
Company's
less than majority interests in USA Interlink, LLC (d/b/a
ePsolutions), EnergyNet.com, Inc. and Capstone Royalty, LLC
described in
the
Memorandum;
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(f) Each foreign subsidiary listed on Schedule B-1 hereto (the
"Foreign
Subsidiaries") of the Company has been duly organized or formed
and is
validly existing and in good standing (to the extent such
concept
is
applicable) under the laws of the jurisdiction of its
incorporation,
organization or formation and has all requisite power and authority
to
own, lease
and operate its properties and to conduct its business as
described
in the Memorandum. Each Foreign Subsidiary is duly qualified or
licensed
as a foreign entity to transact business and is in good
standing
(to the
extent such concept is applicable) in each jurisdiction in
which
the
ownership or lease of property or the conduct of its business
requires
such
qualification or license, except for such jurisdictions where
the
failure to
so qualify or to be in good standing would not, individually or
in the
aggregate, result in a Material Adverse Effect. All of the
issued
and
outstanding equity of each Foreign Subsidiary has been duly
authorized
and
validly issued (to the extent such concept is applicable) and is
owned
by the
Company, directly or through subsidiaries, free and clear of
any
security
interest, mortgage, pledge, lien, encumbrance or claim except
for
pledges of
capital stock or other equity interests in the Foreign
Subsidiaries pursuant to credit agreements of the Company or the
Foreign
Subsidiaries as described in the Memorandum;
(g) Neither the Company nor any of the Subsidiaries is in
breach or
violation of, or in default under (nor has any event occurred
which with
notice, lapse of time, or both would result in any breach or
violation
of, constitute a default under or give the holder of any
indebtedness (or person acting on such holder's behalf), the right
to
require
the repurchase, redemption or repayment of all or part of such
indebtedness under) (i) its respective charter, by-laws,
partnership
agreement,
operating agreement or similar organizational documents or (ii)
any
indenture, mortgage, deed of trust, bank loan or credit agreement
or
other
evidence of indebtedness, or any license, lease, contract or
other
agreement
or instrument to which the Company or any of the Subsidiaries
is
a party or
by which any of them or their respective properties may be
bound or
affected, or (iii) any federal, state, local or foreign law,
regulation or
rule or any decree, judgment or order applicable to the
Company or
any of the Subsidiaries, except in the case of clauses (ii) and
(iii) for
such breaches, violations and defaults as would not,
individually or in the aggregate, have a Material Adverse
Effect;
(h) The execution, delivery and performance of this Agreement,
the
Registration Rights Agreement, the Indenture and the Notes and
consummation of the transactions contemplated hereby and thereby
including
the
issuance of the Notes and the issuance of the Shares upon
conversion
of the
Notes, will not conflict with, result in any breach or violation
of
or
constitute a default under (nor constitute any event which with
notice,
lapse of
time or both would result in any breach or violation of or
constitute
a default under), (i) the charter, by-laws, partnership
agreement,
operating agreement or similar organizational documents of the
Company or
any of the Subsidiaries or (ii) any indenture, mortgage, deed
of trust,
bank loan or credit agreement or other evidence of
indebtedness,
or any
license, lease, contract or other
5
<PAGE>
agreement
or instrument to which the Company or any of the Subsidiaries
is
a party or
by which any of them or their respective properties may be
bound or
affected, or (iii) any federal, state, local or foreign law,
regulation
or rule or any decree, judgment or order applicable to the
Company or
any of the Subsidiaries, except in the case of clause (ii) for
such
breaches, violations and defaults as would not, individually or
in
the
aggregate, have a Material Adverse Effect;
(i) The
Indenture has been duly authorized by the Company and
when duly
executed and delivered by the Company, and assuming due
authorization, execution and delivery by the Trustee, will be a
legal,
valid and
binding agreement of the Company, enforceable against the
Company in
accordance with its terms, except as the enforceability thereof
may be
limited by bankruptcy, insolvency, reorganization, moratorium,
fraudulent
transfer or similar laws affecting creditors' rights generally
and
general principles of equity;
(j) The Registration Rights Agreement has been duly authorized
by the
Company, and when executed and delivered by the Company, and
assuming
due authorization, execution and delivery by the Initial
Purchasers, will be a legal, valid and binding agreement of the
Company,
enforceable against the Company in accordance with its terms,
except as
the
enforceability thereof may be limited by bankruptcy,
insolvency,
reorganization, moratorium, fraudulent transfer or similar laws
affecting
creditors'
rights generally and general principles of equity;
(k) The Notes have been duly authorized by the Company and
when
executed and delivered by the Company, and assuming due
authentication by the Trustee in accordance with the terms of
the
Indenture
and delivery to and payment for by the Initial Purchasers in
accordance
with the terms hereof, will constitute legal, valid and binding
obligations of the Company, enforceable against the Company in
accordance
with their
terms, except as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent
transfer or
similar laws
affecting creditors' rights generally and general principles
of equity,
and will be entitled to the benefits of the Indenture and the
Registration Rights Agreement; the Shares initially issuable
upon
conversion
of the Notes have been duly authorized and reserved for
issuance
upon conversion of the Notes, and are sufficient in number to
meet the
current conversion requirements, and such Shares, when so
issued
upon such
conversion in accordance with the terms of the Indenture, will
be duly
and validly issued and fully paid and non-assessable;
(l) This Agreement has been duly authorized, executed and
delivered
by the Company;
(m) The terms of the Notes, the Registration Rights Agreement,
the
Indenture and the capital stock of the Company, including the
Shares,
conform in
all material respects to the description thereof contained in
the Final
Memorandum;
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(n) No approval, authorization, consent or order of or filing
with any
federal, state, local or foreign governmental or regulatory
commission, board, body, authority or agency, or of or with the
rules of
the Nasdaq
National Market, or approval of stockholders of the Company, is
required
in connection with the issuance and sale by the Company of the
Notes or
the issuance of Shares upon conversion of the Notes or the
consummation of the transactions as contemplated hereby and by
the
Indenture,
the Registration Rights Agreement and the Notes other than (i)
as may be
required under the securities or blue sky laws of the various
jurisdictions in which the Notes and the Shares are being offered
by the
Initial
Purchasers and (ii) as may be required by federal and state
securities
laws with respect to the Company's obligations under the
Registration Rights Agreement and the listing of the Shares on the
Nasdaq
National
Market in connection therewith;
(o) The Company has obtained for the benefit of the Initial
Purchasers
the agreement (a "Lock-Up Agreement"), in the form set forth as
Exhibit B
hereto, of each of its executive officers and directors named
in
Exhibit
B-1 hereto;
(p) Except as described in the Memorandum, (i) no person has
any
preemptive rights or similar rights to purchase any shares of
Common
Stock or
shares of any other capital stock or other equity interests of
the
Company and (ii) no person has the right to act as an initial
purchaser
to the Company in connection with the offer and sale of the
Notes, in
the case of each of the foregoing clauses (i) and (ii), whether
as a
result of the sale of the Notes as contemplated hereby or
otherwise;
and except
as described in the Memorandum or as set forth on Exhibit B-2
hereto, no
person has the right, contractual or otherwise, to cause the
Company to
include any shares of Common Stock or shares of any other
capital
stock or other securities of the Company in the registration
statement
to be filed with the Commission pursuant to the Registration
Rights
Agreement, whether as a result of the sale of the Notes as
contemplated hereby or otherwise; it being understood that holders
of
Common
Stock that acquired such shares in a private placement dated
September
2005, may include their shares in any such registration
statement;
(q) Hein & Associates, L.L.P. and Ernst & Young LLP, who
have
expressed
their opinions on the consolidated financial statements,
including
notes thereto, of the Company and the Subsidiaries included in
the
Memorandum, are each independent public accountants with respect
to
the
Company as required by the Securities Act, and the applicable
published
rules and regulations thereunder;
(r) Each of the Company and the Subsidiaries has all necessary
licenses,
authorizations, consents and approvals (collectively,
"Consents") and has made all necessary filings required under any
federal,
state,
local or foreign law, regulation or rule and has obtained all
necessary
Consents from other persons, in order to conduct its respective
business
as currently conducted; neither the Company nor any of the
Subsidiaries received notice of any proceedings relating to
revocation or
modification of any such Consent or any federal, state, local or
foreign
law,
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regulation
or rule or any decree, order or judgment applicable to the
Company or
any of the Subsidiaries, except where such revocation or
modification would not,
individually or in the aggregate, have a Material
Adverse
Effect;
(s) Except as described in the Memorandum, there are no legal
actions,
suits, claims, investigations or proceedings pending or, to the
actual
awareness of any of the following persons of a fact or matter:
G.
Thomas
Graves III, Douglas W. Weir, Michael J. Fitzgerald or Charles
Campise
("Knowledge"), threatened or contemplated to which the Company
or
any of the
Subsidiaries is or would be a party or of which any of their
respective
properties is or would be subject at law or in equity, or
before or
by any federal, state, local or foreign governmental or
regulatory
commission, board, body, authority or agency, except any such
action
suit, claim, investigation or proceeding which, if determined
adversely,
would not either (A) have, individually or in the aggregate, a
Material
Adverse Effect or (B) prevent the consummation of the
transactions contemplated
hereby and by the Indenture, the Registration
Rights
Agreement and the Notes; this representation and warranty shall
not
apply to
environmental matters;
(t) All tax returns required to be filed by the Company and
each of
the Subsidiaries have been filed, and all taxes and other
assessments of a similar nature (whether imposed directly or
through
withholding) including any interest, additions to tax or
penalties
applicable
thereto due or claimed to be due from such entities have been
paid,
other than those being contested in good faith and for which
adequate
reserves have been provided and other than those in which the
failure to
file or pay would not result, individually or in the aggregate,
in a
Material Adverse Effect;
(u) Except as disclosed in the Memorandum, the Company and
each of
the Subsidiaries maintains insurance covering its properties,
operations, personnel and businesses as the Company deems adequate;
such
insurance
insures against such losses and risks to an extent that is in
accordance
with customary industry practices; all such insurance is in
full force
on the date hereof and will be in full force at the time of
purchase
and any additional time of purchase hereunder;
(v) Neither the Company nor any of the Subsidiaries has
sustained
since the date of the last audited financial statements
included
in the
Memorandum any loss or interference with its respective
business
from fire,
explosion, flood or other calamity, whether or not covered by
insurance,
or from any labor dispute or court or governmental action,
order or
decree;
(w)
The Company has not sent or received any termination of,
or
notification of intent not to renew, any of the contracts or
agreements
referred
to, described in the Memorandum the termination or non-renewal
of
which,
either individually or when aggregated with the termination or
non-renewal of all other such contracts or agreements as to which
any such
termination or notification has been sent or received, would have
a
Material
Adverse Effect, and no such termination or non-
8
<PAGE>
renewal
has been threatened by the Company or, to the Company's
Knowledge,
any other
party to any such contract or agreement;
(x) Neither the Company nor the Subsidiaries are engaged in
any unfair
labor practice; except for matters which would not,
individually or in the aggregate, have a Material Adverse Effect,
(i)
there is
(A) no unfair labor practice complaint pending or, to the
Company's
Knowledge, threatened against the Company or any of the
Subsidiaries before the National Labor Relations Board, and no
grievance
or
arbitration proceeding arising out of or under collective
bargaining
agreements
is pending or threatened, (B) no strike, labor dispute,
slowdown
or stoppage pending or, to the Company's Knowledge, threatened
against
the Company or any of the Subsidiaries and (C) no union
representation dispute currently existing concerning the employees
of the
Company or
any of the Subsidiaries and (ii) to the Company's Knowledge,
(A) no
union organizing activities are currently taking place
concerning
the
employees of the Company or any of the Subsidiaries and (B) there
has
been no
violation of any federal, state, local or foreign law relating
to
discrimination in the hiring, promotion or pay of employees,
any
applicable
wage or hour laws or any provision of the Employee Retirement
Income
Security Act of 1974 ("ERISA") or the rules and regulations
promulgated thereunder concerning the employees of the Company or
any of
the
Subsidiaries;
(y) The Company and its Subsidiaries own or possess sufficient
trademarks, trade names, patent rights, copyrights, domain
names,
licenses,
approvals, trade secrets and other similar rights
(collectively,
"Intellectual Property Rights") reasonably necessary to conduct
their
businesses
as described in the Memorandum; and the expected expiration of
any of
such Intellectual Property Rights if not renewed or replaced
would
not result
in a Material Adverse Effect. Neither the Company nor any of
its
Subsidiaries has received any notice of infringement or conflict
with
asserted
Intellectual Property Rights of others, which infringement or
conflict,
if the subject of an unfavorable decision, would result in a
Material
Adverse Effect. None of the technology employed by the Company
and/or any
of its Subsidiaries has been obtained or is being used by the
Company
and/or any of its Subsidiaries in violation of any contractual
obligation
binding on the Company or any of its Subsidiaries or otherwise
in
violation of the rights of any persons, except for such violations
as
would not,
individually or in the aggregate, have a Material Adverse
Effect;
(z) The audited and unaudited financial statements included in
the
Memorandum, together with the related notes and schedules,
present
fairly in
all material respects the consolidated financial position of
the
Company
and the Subsidiaries as of the dates indicated and the
consolidated results of operations and cash flows of the Company
and the
Subsidiaries for the periods specified and have been prepared
in
compliance
in all material respects with the requirements of the Exchange
Act and in
compliance with the requirements of generally accepted
accounting
principles applied on a consistent basis throughout the periods
involved,
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<PAGE>
except as
expressly stated in the related notes thereto; the other
financial
and statistical data set forth in the Memorandum are, in all
material
respects, accurately presented and prepared, in all material
respects,
on a basis consistent with the financial statements and books
and
records of the Company; any non-GAAP financial measures (as such
term
is defined
in Regulation G promulgated by the Commission ("Regulation G"))
included
in the Memorandum are presented in compliance, in all material
respects,
with Regulation G; and neither the Company nor the Subsidiaries
have any
material liabilities or obligations, direct or contingent
(including
any off-balance sheet obligations), not disclosed in the
Memorandum;
(aa) Subsequent to June 30, 2005, and except as may be
otherwise
disclosed in the Memorandum, there has not been (A) any
material
adverse
change, or any development involving a prospective material
adverse
change, in the business, properties, prospects, management,
financial
condition or results of operations of the Company and the
Subsidiaries, taken as a whole, (B) any transaction which is
material to
the
Company and the Subsidiaries, taken as a whole, (C) any
obligation,
direct or
contingent (including any off-balance sheet obligations),
incurred
by the Company or any of the Subsidiaries, which is material to
the
Company and the Subsidiaries, taken as a whole, (D) any change in
the
capital
stock of the Company or any material change in the capital
stock
of the
Subsidiaries or any material change in the outstanding
indebtedness
of the
Company or the Subsidiaries or (E) except for regular quarterly
dividends
in the Company's Series A and Series A-1 Preferred Stock, any
dividend
or distribution of any kind declared, paid or made on the
capital
stock of
the Company;
(bb) The Company and the Subsidiaries and their properties,
assets and
operations are in compliance with, and hold all permits,
authorizations and approvals required under, Environmental Laws
(as
defined
below), except to the extent that failure to so comply or to
hold
such
permits, authorizations or approvals would not, individually or
in
the
aggregate, have a Material Adverse Effect; there are no past,
present
or, to the
Company's Knowledge, reasonably anticipated future events,
conditions, circumstances, activities, practices, actions,
omissions or
plans that
would give rise to any material costs or liabilities to the
Company or
the Subsidiaries under, or to interfere with or prevent
compliance
by the Company or the Subsidiaries with, Environmental Laws;
except as
would not, individually or in the aggregate, have a Material
Adverse
Effect and except as disclosed in the Memorandum, the Company
and
each of
the Subsidiaries (i) is not the subject of any investigation,
(ii)
has not
received any notice or claim, (iii) is not a party to or
affected
by any
pending, or to the Company's Knowledge, threatened action, suit
or
proceeding, (iv) is not bound by any judgment, decree or order or
(v) has
not
entered into any material agreement, in each case relating to
any
alleged
violation of any Environmental Law or any actual or alleged
release or
threatened release or cleanup at any location of any Hazardous
Materials
(as defined below) (as used herein, "Environmental Law" means
any
federal, state, local or foreign law, statute, ordinance, rule,
regulation, order, decree, judgment, injunction, permit,
license,
authorization or other binding requirement,
10
<PAGE>
relating
to the pollution, protection, cleanup or restoration of the
environment or natural resources, including those relating to
the
distribution, processing, generation, treatment, storage,
disposal,
transportation, other handling or release of Hazardous Materials,
and
"Hazardous
Materials" means any material (including, without limitation,
pollutants, contaminants, hazardous or toxic substances or wastes)
that is
regulated
by or may give rise to liability under any Environmental Law);
(cc) When the Notes are issued pursuant to this Agreement, the
Notes will
not be of the same class (within the meaning of Rule 144A) as
securities
that are listed on a national securities exchange registered
pursuant
to Section 6 of the Exchange Act or quoted in a U.S. automated
inter-dealer quotation system;
(dd) Neither the Company nor any Affiliate (as defined in Rule
501(b) of
Regulation D under the Securities Act) (i) sold, offered for
sale,
solicited offers to buy or otherwise negotiated in respect of,
any
security
(as defined in the Securities Act) which is or would be
integrated
with the sale of the Notes in a manner that would require the
registration under the Securities Act of the Notes or (ii)
offered,
solicited
offers to buy or sold the Notes by any form of general
solicitation or general advertising (as those terms are used in
Regulation
D under
the Securities Act) or in any manner involving a public
offering
within the
meaning of Section 4(2) of the Securities Act;
(ee) It is not
necessary in connection with the offer, sale
and
delivery of the Notes to the Initial Purchasers pursuant to
this
Agreement
to register the Notes or the Shares deliverable upon conversion
of the
Notes under the Securities Act or to qualify the Indenture
under
the Trust
Indenture Act of 1939, as amended;
(ff) Neither the Company nor any of the Subsidiaries is, nor
after
giving effect to the offering and sale of the Notes and the
application of the proceeds thereof as described in the Final
Memorandum
will any
of them be, required to register as an "investment company" as
defined in
the Investment Company Act of 1940, as amended;
(gg) Except as disclosed in the Memorandum, the Company and/or
each of
the Subsidiaries have good and marketable title to all property
(real and
personal) described in the Memorandum as being owned by them,
free and
clear of all liens, claims, security interests or other
encumbrances except (i) such as would not materially and adversely
affect
the value
of such properties and would not materially interfere with the
current
use of such properties by the Company or such Subsidiary, as
the
case may
be, and (ii) for liens granted pursuant to credit agreements of
the
Company or the Subsidiaries as described in the Memorandum; all
the
property
described in the Memorandum as being held under lease by the
Company or
a Subsidiary is held thereby under valid and enforceable leases
with such
exceptions as would not materially interfere with the current
use of
such properties; as used herein,
11
<PAGE>
the term
"lease" shall not include any exploration, exploitation or
rehabilitation permit held by the Company and/or its
Subsidiaries;
(hh) The information underlying the estimates of the reserves
of the
Company and the Subsidiaries that was supplied by the Company
to
LaRoche
Petroleum Consultants, Ltd. ("LaRoche"), independent petroleum
engineers,
for purposes of preparing the reserve reports referenced in the
Memorandum
(the "Reserve Reports"), including, without limitation,
production, volumes, sales prices for production, contractual
pricing
provisions
under oil or gas sales or marketing contracts, costs of
operations
and development, and working interest and net revenue interest
information relating to the Company's or the Subsidiaries'
interests, was
true and
correct in all material respects on the dates of such Reserve
Reports;
the estimates of future capital expenditures and other future
exploration and development costs supplied to LaRoche were prepared
in
good faith
and with a reasonable basis; the information provided to
LaRoche
for purposes of preparing the Reserve Reports was prepared in
accordance
with customary industry practices; LaRoche was, as of the dates
of the
Reserve Reports, and is, as of the date hereof, independent
petroleum
engineers with respect to the Company; other than the decrease
in
reserves resulting from the sale of the Company's U.S. royalty
and
mineral
interests in January 2004 and normal production of the reserves
and
intervening spot market product price fluctuations disclosed in
the
Memorandum, there are not any facts or circumstances that would
adversely
effect the
reserves in the aggregate, or the aggregate present value of
future net
cash flows therefrom, as disclosed in the Memorandum and
reflected
in the Reserve Reports such as to cause a Material Adverse
Effect;
estimates of such reserves and the present value of the future
net
cash flows therefrom as disclosed
in the Memorandum and reflected in the
Reserve
Reports comply in all material respects to the applicable
requirements under the Securities Act;
(ii) The Company and each of the Subsidiaries maintains a
system of
internal accounting controls sufficient to provide reasonable
assurance
that (i) transactions are executed in accordance with
management's general or specific authorization; (ii) transactions
are
recorded
as necessary to permit preparation of financial statements in
conformity
with generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only
in
accordance
with management's general or specific authorization; and (iv)
the
recorded accountability for assets is compared with existing assets
at
reasonable
intervals and appropriate action is taken with respect to any
differences;
(jj) The Company has established and maintains disclosure
controls
and procedures (as such term is defined in Rule 13a-15(e) under
the
Exchange Act), which (i) are designed to ensure that material
information required to be disclosed by the Company in the reports
that it
files or
submits under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified by
the
Securities
and Exchange Commission, particularly during the periods in
which the
periodic reports required under the Exchange Act are being
prepared;
(ii) have been
12
<PAGE>
evaluated
for effectiveness as of June 30, 2005 and (iii) were effective
in all
material respects, to provide reasonable assurance regarding
the
functions
for which they were established. Based on the evaluation of its
disclosure
controls and procedures as of June 30, 2005, the Company is not
aware of
(i) any significant deficiency or material weakness in the
design
or
operation of internal controls which would adversely affect the
Company's
ability to record, process, summarize, and report financial
data; or
(ii) any fraud, whether or not material, that involves
management
or other
employees who have a significant role in the Company's internal
control
over financial reporting. Since June 30, 2005, the most recent
date as of
which the Company evaluated its disclosure controls and
procedures, there have been no significant changes in the
Company's
internal
control over financial reporting (as defined in Rule 13a-15) or
in other
factors that have materially affected, or are reasonably likely
to
materially affect, the Company's internal control over
financial
reporting,
including any corrective actions with regard to significant
deficiencies and material weaknesses in the Company's internal
controls.
(kk) Any statistical and market-related data (other than data
relating to oil and
natural gas reserves) included in the Memorandum are
based on
or derived from sources that the Company believes to be
reliable
and
accurate in all material respects;
(ll) Neither the Company nor any of the Subsidiaries nor, to
the
Company's Knowledge, any of their respective directors,
officers,
affiliates
or controlling persons has taken, directly or indirectly, any
action
designed, or which has constituted or might reasonably be
expected
to cause
or result in, under the Exchange Act or otherwise, the
stabilization or manipulation of the price of any security of the
Company
to
facilitate the sale or resale of the Notes or the Shares issued
upon
conversion
thereof;
(mm) There is and has been no failure on the part of the
Company
and the Subsidiaries or, to the Company's Knowledge, any of the
officers
and directors of the Company or any of the Subsidiaries, in
their
capacities
as such and as to matters relating solely to the Company, to
comply in
all material respects with the applicable provisions of the
Sarbanes-Oxley Act of 2002 and the rules and regulations in
connection
therewith,
including without limitation Section 402 related to loans and
Sections
302 and 906 related to certifications;
(nn) Neither the Company nor any of its Subsidiaries has made
any
contribution or other payment to any official of, or candidate
for,
any
federal, state or foreign office in violation of any applicable
law,
including
the Foreign Corrupt Practices Act of 1977, or of the character
required
to be disclosed in the Memorandum; and
(oo) Neither the Company nor any of the Subsidiaries is
currently
subject to any U.S. sanctions a
