exv10w2



 





BANC OF AMERICA SECURITIES LLC




$550,000,000 AGGREGATE PRINCIPAL AMOUNT




HELIX ENERGY SOLUTIONS GROUP, INC.




THE GUARANTORS




9.5% SENIOR NOTES DUE 2016




Purchase Agreement




dated December 18, 2007










 



i


TABLE OF CONTENTS




	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	Section 1.	 	Representations and Warranties of the Company	 	 	3	 
	 

	 	(a)
	 	No Registration
	 	 	3	 
	 

	 	(b)
	 	No Integration
	 	 	3	 
	 

	 	(c)
	 	Rule 144A
	 	 	3	 
	 

	 	(d)
	 	Preliminary Offering Memorandum, Pricing Disclosure Package and Offering Memorandum
	 	 	3	 
	 

	 	(e)
	 	Company Additional Written Communications
	 	 	4	 
	 

	 	(f)
	 	Offering Materials Furnished to Initial Purchasers
	 	 	4	 
	 

	 	(g)
	 	Authorization of the Purchase Agreement
	 	 	4	 
	 

	 	(h)
	 	Authorization of the Indenture
	 	 	5	 
	 

	 	(i)
	 	Authorization of the Securities and the Exchange Securities
	 	 	5	 
	 

	 	(j)
	 	Authorization of the Registration Rights Agreement
	 	 	6	 
	 

	 	(k)
	 	No Material Adverse Change
	 	 	6	 
	 

	 	(l)
	 	Independent Accountants
	 	 	6	 
	 

	 	(m)
	 	Preparation of the Financial Statements
	 	 	6	 
	 

	 	(n)
	 	Incorporation and Good Standing of the Company and its Subsidiaries
	 	 	7	 
	 

	 	(o)
	 	No Stamp or Transfer Taxes
	 	 	7	 
	 

	 	(p)
	 	Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required
	 	 	7	 
	 

	 	(q)
	 	No Material Actions or Proceedings
	 	 	8	 
	 

	 	(r)
	 	Intellectual Property Rights
	 	 	9	 
	 

	 	(s)
	 	All Necessary Permits, Etc
	 	 	9	 
	 

	 	(t)
	 	Title to Properties
	 	 	9	 
	 

	 	(u)
	 	Tax Law Compliance
	 	 	10	 
	 

	 	(v)
	 	Company and Guarantors Not Required to Register as an “Investment Company”
	 	 	10	 
	 

	 	(w)
	 	Compliance with Reporting Requirements
	 	 	10	 
	 

	 	(x)
	 	Insurance
	 	 	10	 
	 

	 	(y)
	 	No Price Stabilization or Manipulation
	 	 	10	 
	 

	 	(z)
	 	Related Party Transactions
	 	 	11	 
	 

	 	(aa)
	 	No Restriction on Distributions
	 	 	11	 
	 

	 	(bb)
	 	Recent Sales
	 	 	11	 
	 

	 	(cc)
	 	No General Solicitation
	 	 	11	 
	 

	 	(dd)
	 	Sarbanes-Oxley Compliance
	 	 	11	 
	 

	 	(ee)
	 	Internal Controls and Procedures
	 	 	11	 
	 

	 	(ff)
	 	No Material Weakness in Internal Controls
	 	 	12	 
	 

	 	(gg)
	 	Compliance with Environmental Laws
	 	 	12	 
	 

	 	(hh)
	 	Periodic Review of Costs of Environmental Compliance
	 	 	13	 
	 

	 	(ii)
	 	ERISA Compliance
	 	 	13	 
	 

	 	(jj)
	 	No Outstanding Loans or Other Indebtedness
	 	 	14	 












 



ii


	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 

	 	(kk)
	 	Compliance with Laws
	 	 	14	 
	 

	 	(ll)
	 	No Unlawful Payments
	 	 	14	 
	 

	 	(mm)
	 	No Conflict with Money Laundering Laws
	 	 	14	 
	 

	 	(nn)
	 	No Conflict with OFAC Laws
	 	 	14	 
	 

	 	(oo)
	 	Reserves
	 	 	14	 
	 

	 	(pp)
	 	Registration Rights
	 	 	15	 
	 

	 	(qq)
	 	No Default in Senior Indebtedness
	 	 	15	 
	 

	 	(rr)
	 	Regulation S
	 	 	15	 
	Section 2.	 	Purchase, Sale and Delivery of the Securities	 	 	15	 
	 

	 	(a)
	 	The Securities
	 	 	16	 
	 

	 	(b)
	 	The Closing Date
	 	 	16	 
	 

	 	(c)
	 	Payment for the Securities
	 	 	16	 
	 

	 	(d)
	 	Delivery of the Securities
	 	 	16	 
	Section 3.	 	Additional Covenants of the Company	 	 	17	 
	 

	 	(a)
	 	Representative’s Review of Proposed Amendments and Supplements
	 	 	17	 
	 

	 	(b)
	 	Company Additional Written Communications
	 	 	17	 
	 

	 	(c)
	 	Amendments and Supplements to the Offering Memorandum and Other Securities Act Matters
	 	 	17	 
	 

	 	(d)
	 	Delivery of Copies
	 	 	18	 
	 

	 	(e)
	 	Blue Sky Compliance
	 	 	18	 
	 

	 	(f)
	 	Rule 144A Information
	 	 	19	 
	 

	 	(g)
	 	Legends
	 	 	19	 
	 

	 	(h)
	 	PORTAL
	 	 	19	 
	 

	 	(i)
	 	No General Solicitation
	 	 	19	 
	 

	 	(j)
	 	No Integration
	 	 	19	 
	 

	 	(k)
	 	Rule 144 Tolling
	 	 	19	 
	 

	 	(l)
	 	Use of Proceeds
	 	 	19	 
	 

	 	(m)
	 	Compliance with Securities Laws
	 	 	19	 
	 

	 	(n)
	 	Agreement Not To Offer or Sell Additional Securities
	 	 	20	 
	 

	 	(o)
	 	Future Reports to the Representative
	 	 	20	 
	 

	 	(p)
	 	Investment Limitation
	 	 	20	 
	 

	 	(q)
	 	No Manipulation of Price
	 	 	20	 
	 

	 	(r)
	 	Existing Lock-Up Agreements
	 	 	20	 
	Section 4.	 	Payment of Expenses	 	 	21	 
	Section 5.	 	Conditions of the Obligations of the Initial Purchaser	 	 	21	 
	 

	 	(a)
	 	Accountants’ Comfort Letter
	 	 	21	 
	 

	 	(b)
	 	Engineer’s Reserve Report
	 	 	22	 
	 

	 	(c)
	 	No Material Adverse Change or Rating Agency Change
	 	 	22	 
	 

	 	(d)
	 	Opinion of Counsel for the Company
	 	 	22	 
	 

	 	(e)
	 	Opinion of Counsel for the Initial Purchasers
	 	 	22	 
	 

	 	(f)
	 	Officers’ Certificate
	 	 	22	 
	 

	 	(g)
	 	Bring-Down Comfort Letter
	 	 	23	 
	 

	 	(h)
	 	Registration Rights Agreement
	 	 	23	 
	 

	 	(i)
	 	PORTAL Designation and DTC
	 	 	23	 
	 

	 	(j)
	 	Additional Documents
	 	 	23	 
	Section 6.	 	Representations, Warranties and Agreements of Initial Purchasers	 	 	24	 
	Section 7.	 	Reimbursement of Initial Purchasers’ Expenses	 	 	24	 
	Section 8.	 	Indemnification	 	 	25	 












 



iii


	 	 	 	 	 	 	 	 	 
	 	 	 	 	 	 	Page
	 
	 

	 	(a)
	 	Indemnification of the Initial Purchasers
	 	 	25	 
	 

	 	(b)
	 	Indemnification of the Company, each Guarantor, and each of their Directors and Officers
	 	 	25	 
	 

	 	(c)
	 	Notifications and Other Indemnification Procedures
	 	 	26	 
	 

	 	(d)
	 	Settlements
	 	 	27	 
	Section 9.	 	Contribution	 	 	27	 
	Section 10.	 	Default of One or More of the Several Initial Purchasers	 	 	29	 
	Section 11.	 	Termination of this Agreement	 	 	29	 
	Section 12.	 	Representations and Indemnities to Survive Delivery	 	 	30	 
	Section 13.	 	Notices	 	 	30	 
	Section 14.	 	Successors	 	 	31	 
	Section 15.	 	Partial Unenforceability	 	 	31	 
	Section 16.	 	Governing Law Provisions; Consent to Jurisdiction	 	 	32	 
	 

	 	(a)
	 	Governing Law Provisions
	 	 	32	 
	 

	 	(b)
	 	Consent to Jurisdiction
	 	 	32	 
	 

	 	(c)
	 	Waiver of Immunity
	 	 	32	 
	 

	 	(d)
	 	Judgment Currency
	 	 	33	 
	Section 17.	 	No Advisory or Fiduciary Responsibility	 	 	33	 
	Section 18.	 	General Provisions	 	 	34	 







 











 





Purchase Agreement




December 18, 2007




BANC OF AMERICA SECURITIES LLC

As Representative of the several Initial Purchasers

     c/o BANC OF AMERICA SECURITIES LLC

     9 West 57th Street

     New York, New York 10019




Ladies and Gentlemen:




     Helix Energy Solutions Group, Inc., a Minnesota corporation (the “Company”), proposes to issue
and sell to the several purchasers named in Schedule A (the “Initial Purchasers”) $550,000,000 in
aggregate principal amount of its 9.5% senior notes due 2016 (the “Notes”). Banc of America
Securities LLC (“BAS”) has agreed to act as representative of the several Initial Purchasers (in
such capacity, the “Representative”) in connection with the offering and sale of the Notes.



     The Notes will be issued pursuant to an indenture (the “Indenture”) to be dated as of the
Closing Date (as defined in Section 2), among the Company, the Guarantors (as defined below) and
Wells Fargo Bank, National Association, as trustee (the “Trustee”).



     The Notes will be offered and sold to the Initial Purchasers without being registered under
the Securities Act of 1933, as amended, and the rules and regulations promulgated thereunder (the
“Securities Act”), in reliance upon an exemption therefrom.



     Holders of the Notes (including the Initial Purchasers and their direct and indirect
transferees) will be entitled to the benefits of a Registration Rights Agreement, dated the Closing
Date, among the Company, the Guarantors, and the Initial Purchasers (the “Registration Rights
Agreement”), pursuant to which the Company and the Guarantors will agree to file with the
Securities and Exchange Commission (the “Commission”) under the circumstances set forth therein (i)
a registration statement under the Securities Act relating to another series of debt securities of
the Company with terms substantially identical to the Notes (the “Exchange Notes”) to be offered in
exchange for the Notes (the “Exchange Offer”) and (ii) to the extent required by the Registration
Rights Agreement, a shelf registration statement pursuant to Rule 415 of the Securities Act
relating to the resale by certain holders of the Notes and, in each case, to use its best efforts
to cause such registration statements to be declared effective.









 



2


     The payment of principal of, premium, if any, and interest on the Notes and the Exchange Notes
when and as the same becomes due and payable, will be fully and
unconditionally guaranteed, jointly and severally, on a senior unsecured basis by (i) each of
the Company’s existing direct and indirect domestic Restricted Subsidiaries (as defined in the
Indenture) other than the Non-Guarantor Restricted Subsidiary (as defined in the Indenture) and
(ii) any subsidiary of the Company formed or acquired after the Closing Date that executes
additional guarantees in accordance with the terms of the Indenture, and their respective
successors and assigns (collectively, the “Guarantors”), pursuant to their guarantees (the
“Guarantees”). The Notes and the Guarantees attached thereto are herein collectively referred to
as the “Securities” and the Exchange Notes and the Guarantees attached thereto are referred to
herein collectively as the “Exchange Securities.”



     This Agreement, the Indenture, the Securities, the Exchange Securities and the Registration
Rights Agreement are referred to herein collectively as the “Operative Documents.”



     Each of the Company and the Guarantors understands that the Initial Purchasers propose to make
an offering of the Securities on the terms and in the manner set forth herein and in the Pricing
Disclosure Package (as defined below) and agrees that the Initial Purchasers may resell, subject to
the conditions set forth herein, all or a portion of the Securities to purchasers (the “Subsequent
Purchasers”) on the terms set forth in the Pricing Disclosure Package (the first time when sales of
the Securities are made is referred to as the “Time of Sale”). The Securities are to be offered
and sold to or through the Initial Purchasers without being registered with the Commission under
the Securities Act in reliance upon exemptions therefrom. The terms of the Securities and the
Indenture will require that investors that acquire Securities expressly agree that Securities may
only be resold or otherwise transferred, after the date hereof, if such Securities are registered
for sale under the Securities Act or if an exemption from the registration requirements of the
Securities Act is available (including the exemption afforded by Rule 144A (“Rule 144A”) or
Regulation S (“Regulation S”) thereunder).



     The Company has prepared and delivered to each of the Initial Purchasers copies of the
preliminary offering memorandum dated as of December 7, 2007 (the “Preliminary Offering
Memorandum”) and copies of a pricing supplement, dated as of December 18, 2007 (the “Pricing
Supplement”) setting forth information concerning the Company, the Securities and the Registration
Rights Agreement (as defined below). The Preliminary Offering Memorandum and the Pricing
Supplement are herein referred to as the “Pricing Disclosure Package.” Promptly after this
Agreement is executed and delivered, the Company will prepare and deliver to each Initial Purchaser
copies of a final offering memorandum dated the date hereof (the “Offering Memorandum”).



     All references herein to the terms “Pricing Disclosure Package” and “Offering Memorandum”
shall be deemed to mean and include all information filed under the Securities Exchange Act of
1934, as amended, and the rules and regulations promulgated









 



3



thereunder (the “Exchange Act”) prior
to the Time of Sale and incorporated by reference in the Pricing Disclosure Package (including the
Preliminary Offering Memorandum) or the Offering Memorandum (as the case may be), and all
references herein to the terms “amend,” “amendment” or “supplement” with respect to the Offering
Memorandum shall
be deemed to mean and include all information filed under the Exchange Act after the Time of
Sale and incorporated by reference in the Offering Memorandum.



     The Company hereby confirms its agreements with the Initial Purchasers as follows:



     Section 1. Representations and Warranties of the Company.



     Each of the Company and the Guarantors, jointly and severally, hereby represents, warrants and
covenants to each Initial Purchaser as follows that, as of the date hereof and as of the Closing
Date:



     (a) No Registration. Assuming the accuracy of the representations and warranties of the Initial
Purchasers contained in Section 6 and their compliance with the agreements set forth therein, it is
not necessary, in connection with the issuance and sale of the Securities to the Initial
Purchasers, and the offer, resale and delivery of the Securities by the Initial Purchasers, in each
case in the manner contemplated by this Agreement, the Indenture, the Pricing Disclosure Package
and the Offering Memorandum, to register the Securities under the Securities Act or, until such
time as the Exchange Securities are issued pursuant to an effective registration statement, to
qualify the Indenture under the Trust Indenture Act of 1939, as amended, and the rules and
regulations promulgated thereunder (the “Trust Indenture Act”)



     (b) No Integration. Other than to the Initial Purchasers in connection with the transactions
contemplated by this Agreement, about which no representation is made by the Company, none of the
Company or any of its subsidiaries 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) that is or will be integrated with the sale of the Securities in a manner that
would require registration under the Securities Act of the Securities.



     (c) Rule 144A. No securities of the same class (within the meaning of Rule 144A(d)(3) under the
Securities Act) as the Securities are listed on any national securities exchange registered under
Section 6 of the Exchange Act, or quoted on an automated inter-dealer quotation system. The Company
is subject to and in full compliance with the reporting requirements of Section 13 or Section 15(d)
of the Exchange Act.



     (d) Preliminary Offering Memorandum, Pricing Disclosure Package and Offering Memorandum. Each
of the Company and the Guarantors hereby confirms that it has authorized the use of the Pricing
Disclosure Package and the Offering Memorandum in connection with the offer and sale of the
Securities by the Initial Purchasers. Each









 



4



document, if any, filed or to be filed pursuant to the
Exchange Act and incorporated by reference in the Pricing Disclosure Package and the Offering
Memorandum complied or will comply when it is filed in all material respects with the Exchange Act.
Neither the Pricing Disclosure Package, as of the Time of Sale, nor the Offering Memorandum, as of
its date or (as amended or supplemented in accordance with Section 3(a), as applicable) as of the
Closing Date, contain, any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the Company and the
Guarantors make no representation or warranty as to statements or omissions made in reliance upon
and in conformity with written information furnished to the Company by any Initial Purchaser
through the Representative specifically for inclusion therein. The Company has not distributed and
will not distribute, prior to the later of the Closing Date and the completion of the Initial
Purchasers’ distribution of the Securities, any offering material in connection with the offering
and sale of the Securities other than the Pricing Disclosure Package and the Offering Memorandum.



     (e) Company Additional Written Communications. The Company (including its agents and
representatives, other than the Initial Purchasers in their capacity as such) has not prepared,
made, used, authorized, approved or referred to and will not prepare, make, use, authorize, approve
or refer to any written communication that constitutes an offer to sell or solicitation of an offer
to buy the Securities (each such communication by the Company or its agents and representatives
(other than a communication referred to in clauses (i), (ii) and (iii) below) a “Company Additional
Written Communication”) other than (i) the Pricing Disclosure Package, (ii) the Offering Memorandum
and (iii) any electronic road show or other written communications, in each case used in accordance
with Section 3(a). Each such Company Additional Written Communication, when taken together with
the Pricing Disclosure Package, did not, and at the Closing Date will not, contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading;
provided that the Company and the Guarantors make no representation or warranty with respect to any
statements or omissions made in each such Company Additional Written Communication in reliance upon
and in conformity with information relating to any Initial Purchaser furnished to the Company by
any Initial Purchaser through the Representative expressly for inclusion therein.



     (f) Offering Materials Furnished to Initial Purchasers. The Company has delivered to the
Representative the Pricing Disclosure Package, the Company Additional Written Communications and
the Offering Memorandum, as amended or supplemented, in such quantities and at such places as the
Representative has reasonably requested for each of the Initial Purchasers.



     (g) Authorization of the Purchase Agreement. This Agreement has been duly authorized,
executed and delivered by the Company and the Guarantors.









 



5


     (h) Authorization of the Indenture. The Indenture has been duly authorized by the Company and the
Guarantors and, upon the effectiveness of the Registration Statement, will be qualified under the
Trust Indenture Act; on the Closing Date, the Indenture will have been duly executed and delivered
by the Company and the Guarantors and, assuming the due authorization, execution and delivery of
the Indenture by the Trustee, the Indenture will constitute a valid and binding obligation of the
Company and the Guarantors, enforceable against the Company and the Guarantors in accordance with
its terms, except (a) as such enforceability may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other laws
affecting creditors’ rights generally and (b) that the remedy of specific performance and
injunctive and other forms of equitable relief are subject to certain equitable defenses and to the
discretion of the court before which any proceeding therefor may be brought; and the Indenture will
conform in all material respects to the description thereof contained in each of the Pricing
Disclosure Package and the Offering Memorandum.



     (i) Authorization of the Securities and the Exchange Securities. The Notes have been duly
authorized for issuance and sale pursuant to this Agreement and the Indenture; on the Closing Date,
the Notes will be duly executed and issued by the Company and, when authenticated in accordance
with the terms of the Indenture and delivered to and paid for by the Initial Purchasers pursuant to
this Agreement (assuming due authentication of the Securities by the Trustee), will constitute
valid and binding obligations of the Company, enforceable against the Company in accordance with
their terms and entitled to the benefits provided by the Indenture, except (a) as such
enforceability may be limited by bankruptcy, insolvency, reorganization, fraudulent conveyance,
moratorium or other laws affecting creditors’ rights generally and (b) that the remedy of specific
performance and injunctive and other forms of equitable relief are subject to certain equitable
defenses and to the discretion of the court before which any proceeding therefor may be brought;
and the Securities will conform in all material respects to the description thereof contained in
each of the Pricing Disclosure Package and the Offering Memorandum. The Exchange Notes have been
duly and validly authorized for issuance by the Company pursuant to this Agreement, the Indenture,
the Registration Rights Agreement and the Exchange Offer; on the closing date of the Exchange
Offer, the Exchange Securities will be duly executed and issued by the Company and, when
authenticated in accordance with the terms of the Indenture (assuming due authentication of the
Securities by the Trustee), will constitute valid and binding obligations of the Company,
enforceable against the Company in accordance with their terms and entitled to the benefits
provided by the Indenture, except (a) as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other laws affecting creditors’
rights generally and (b) that the remedy of specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought; and the Exchange Securities will conform in
all material respects to the description thereof contained in each of the Pricing Disclosure
Package and the Offering Memorandum. The Guarantees of the Notes and the Exchange









 



6



Notes have been
duly authorized for issuance and sale pursuant to this Agreement and the Indenture; on the Closing
Date or, in the case of the Guarantees of the Exchange Notes, the closing date of the Exchange
Offer, the Guarantees will be duly executed by each of the Guarantors and, when the Securities have
been authenticated in accordance with the terms of the Indenture and delivered to and paid for by
the Initial Purchasers pursuant to this Agreement (assuming due authentication of the Securities by
the Trustee), will constitute valid and binding agreements of the Guarantors, enforceable in
accordance with their terms, except (a) as such enforceability may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other laws affecting creditors’
rights generally and (b) that the remedy of specific performance and injunctive and other forms of
equitable relief are subject to certain equitable defenses and to the discretion of the court
before which any proceeding therefor may be brought; and the
Exchange Securities will conform in all material respects to the description thereof contained in
each of the Pricing Disclosure Package and the Offering Memorandum.



     (j) Authorization of the Registration Rights Agreement. The Registration Rights Agreement has been
duly authorized and, on the Closing Date, will be duly executed and delivered by the Company and
the Guarantors.



     (k) No Material Adverse Change. Except as otherwise disclosed in each of the Pricing Disclosure
Package and the Offering Memorandum, subsequent to the date as of which information is given in the
Preliminary Offering Memorandum: (i) there has been no material adverse change, or any development
involving a prospective material adverse change that would reasonably be expected to result in a
material adverse change, in the condition, financial or otherwise, or in the earnings, business or
operations, whether or not arising from transactions in the ordinary course of business, of the
Company and its subsidiaries, considered as one entity (any such change is called a “Material
Adverse Change”); (ii) the Company and its subsidiaries, considered as one entity, have not
incurred any material liability or obligation, indirect, direct or contingent, nor entered into any
material transaction or agreement; and (iii) there has been no dividend or distribution of any kind
declared, paid or made by the Company or, except for dividends paid to the Company or other
subsidiaries, any of its subsidiaries on any class of capital stock or repurchase or redemption by
the Company or any of its subsidiaries of any class of capital stock.



     (l) Independent Accountants. Ernst & Young LLP, who have expressed their opinion with respect
to the financial statements (which term as used in this Agreement includes the related schedules
and notes thereto) filed with the Commission and included in or incorporated by reference in the
Pricing Disclosure Package and the Offering Memorandum, are independent public or certified public
accountants as required by the Securities Act and the Exchange Act.



     (m) Preparation of the Financial Statements. The financial statements included in or incorporated
by reference in each of the Pricing Disclosure Package and the Offering Memorandum present fairly
the consolidated financial position of the Company









 



7



and its consolidated subsidiaries as of and at
the dates indicated and the results of their operations and cash flows for the periods specified.
Such financial statements have been prepared in conformity with generally accepted accounting
principles as applied in the United States applied on a consistent basis throughout the periods
involved, except as may be expressly stated in the related notes thereto. The financial data set
forth in each of the Pricing Disclosure Package and the Offering Memorandum under the captions
“Summary—Summary Financial Data”, “Selected Consolidated Financial Data” and “Capitalization”
fairly present the information set forth therein on a basis consistent with that of the audited
financial statements contained in each of the Pricing Disclosure Package and the Offering
Memorandum.



     (n) Incorporation and Good Standing of the Company and its Subsidiaries. Each of the Company and
its subsidiaries has been duly organized and is validly existing and in good standing under the
laws of the jurisdiction in which it is organized and has
full power and authority to own, lease and operate its properties and to conduct its business as
described in each of the Pricing Disclosure Package and the Offering Memorandum and, in the case of
the Company and the Guarantors, to enter into and perform their obligations under this Agreement.
Each of the Company and each subsidiary is duly qualified to transact business and is in good
standing in each jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, 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 Change. All of the issued and outstanding capital stock or other
equity interests of each subsidiary has been duly authorized and validly issued, is fully paid and
non-assessable and is owned by the Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance or claim, except as disclosed in each of the
Pricing Disclosure Package and the Offering Memorandum. The Company does not own or control,
directly or indirectly, any corporation, association or other entity that would be considered a
“significant subsidiary” under the Exchange Act other than the subsidiaries listed in Exhibit 21.1
to the Company’s Annual Report on Form 10-K for the fiscal year ended December 31, 2006.



     (o) No Stamp or Transfer Taxes. To the knowledge of the Company, there are no stamp or other
issuance or transfer taxes or duties or other similar fees or charges required to be paid in
connection with the execution and delivery of this Agreement or the issuance or sale by the Company
of the Securities or the Exchange Securities.



     (p) Non-Contravention of Existing Instruments; No Further Authorizations or Approvals Required.
Neither the Company nor any of its subsidiaries is in violation of its respective charter or
by-laws or other organizational documents, or is in default (or, with the giving of notice or lapse
of time, would be in default) (“Default”) under any indenture, mortgage, loan or credit agreement,
note, contract, franchise, lease or other instrument to which the Company or any of its
subsidiaries is a party or by which it or any of them may be bound (including, without limitation,
the credit agreement dated as of









 



8



July 3, 2006 among the Company, Banc of America, N.A., as
administrative agent and as lender, and certain other lenders) or to which any of the property or
assets of the Company or any of its subsidiaries is subject (each, an “Existing Instrument”),
except for such Defaults as would not, individually or in the aggregate, result in a Material
Adverse Change.



          The Company’s execution, delivery and performance of the Operative Documents and consummation
of the transactions contemplated thereby and by each of the Pricing Disclosure Package and the
Offering Memorandum (i) have been duly authorized by all necessary action and will not result in
any violation of the provisions of the charter or by-laws or other organizational documents of the
Company or any subsidiary, (ii) will not conflict with or constitute a breach of, or Default or a
Debt Repayment Triggering Event (as defined below) under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company or any of its
subsidiaries pursuant to, or require the consent of any other party to, any Existing Instrument and
(iii) will not result in any violation of any law,
administrative regulation or administrative or court decree applicable to the Company or any
subsidiary. No consent, approval, authorization or other order of, or registration or filing with,
any court or other governmental or regulatory authority or agency, is required for the Company’s
execution, delivery and performance of the Operative Documents and consummation of the transactions
contemplated thereby and by each of the Pricing Disclosure Package and the Offering Memorandum,
except (i) with respect to the transactions contemplated by the Registration Rights Agreement, as
may be required under the Securities Act, the Trust Indenture Act and the rules and regulations
promulgated thereunder and (ii) such as have been obtained or made by the Company and are in full
force and effect under the Securities Act, applicable state securities or blue sky laws and from
the Financial Industry Regulatory Authority (“FINRA”). As used herein, a “Debt Repayment Triggering
Event” means any event or condition which gives, or with the giving of notice or lapse of time
would give, the holder of any note, debenture or other evidence of indebtedness (or any person
acting on such holder’s behalf) the right to require the repurchase, redemption or repayment of all
or a portion of such indebtedness by the Company or any of its subsidiaries.



     (q) No Material Actions or Proceedings. There are no legal or governmental actions, suits or
proceedings pending or, to the best of the Company’s knowledge, threatened (i) against or affecting
the Company or any of its subsidiaries, (ii) which has as the subject thereof any officer or
director of, or property owned or leased by, the Company or any of its subsidiaries or (iii)
relating to environmental or discrimination matters, where in any such case (A) there is a
reasonable possibility that such action, suit or proceeding might be determined adversely to the
Company or such subsidiary and (B) any such action, suit or proceeding, if so determined adversely,
would reasonably be expected to result in a Material Adverse Change or adversely affect the
consummation of the transactions contemplated by this Agreement. No material labor dispute with
the employees of the Company or any of its subsidiaries, or with the employees of any









 



9



principal
supplier of the Company, exists or, to the best of the Company’s knowledge, is threatened or
imminent.



     (r) Intellectual Property Rights. The Company and its subsidiaries own, possess, license or have
other rights to use, on reasonable terms, all trademarks, trade names, copyrights, domain names,
licenses, trade secrets and patent rights (collectively, “Intellectual Property Rights”) reasonably
necessary to conduct their businesses as now conducted; and the expected expiration of any of such
Intellectual Property Rights would not result in a Material Adverse Change. 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 Change. To the Company’s knowledge, there
is no material infringement by third parties of any Intellectual Property Rights owned by or
exclusively licensed to the Company. The Company is not a party to or bound by any options,
licenses or agreements with respect to the Intellectual Property Rights of any other person or
entity that are required to be set forth in the Preliminary Offering Memorandum or the Offering
Memorandum if it were a registration statement on Form S-3 (including through incorporation by
reference) and are not described in all material respects. None of the technology employed by the
Company has been obtained or is
being used by the Company in violation of any contractual obligation binding on the Company or, to
the Company’s knowledge, any of its officers, directors or employees or otherwise in violation of
the rights of any persons.



     (s) All Necessary Permits, Etc. The Company and each subsidiary possess such valid and current
certificates, authorizations or permits issued by the appropriate state, federal or foreign
regulatory agencies or bodies necessary to conduct their respective businesses, and neither the
Company nor any subsidiary has received any notice of proceedings relating to the revocation or
modification of, or non-compliance with, any such certificate, authorization or permit which,
singly or in the aggregate, if the subject of an unfavorable decision, ruling or finding, would
reasonably be expected to result in a Material Adverse Change.



     (t) Title to Properties. The Company and each of its subsidiaries has good and marketable title to
all the properties and assets reflected as owned by each of them in the financial statements
referred to in Section 1(m) hereof, in each case free and clear of any security interests,
mortgages, liens, encumbrances, equities, claims and other defects, except as otherwise disclosed
in each of the Pricing Disclosure Package and the Offering Memorandum or such as do not, singly or
in the aggregate, materially and adversely affect the value of such property and do not, singly or
in the aggregate, materially interfere with the use made or proposed to be made of such property by
the Company or such subsidiary. The real property, improvements, equipment and personal property
held under lease by the Company or any subsidiary are held under valid and enforceable leases, with
such exceptions as are not material and do not, singly or in the aggregate, materially interfere
with the use made or proposed to be made of such real property, improvements, equipment or personal
property by the Company or such subsidiary.









 



10


     (u) Tax Law Compliance. The Company and its consolidated subsidiaries have filed all material
federal, state and foreign income and franchise tax returns and have paid all taxes required to be
paid by any of them and, if due and payable, any related or similar assessment, fine or penalty
levied against any of them. The Company has made adequate charges, accruals and reserves in the
financial statements referred to in Section 1(m) hereof in respect of all federal, state and
foreign income and franchise taxes for all periods as to which the tax liability of the Company or
any of its consolidated subsidiaries has not been finally determined.



     (v) Company and Guarantors Not Required to Register as an “Investment Company". The Company and
the Guarantors have been advised of the rules and requirements under the Investment Company Act of
1940, as amended, and the rules and regulations promulgated thereunder (the “Investment Company
Act”). The Company and the Guarantors are not, and, after receipt of payment for the Securities
and application of the proceeds as described in each of the Pricing Disclosure Package and the
Offering Memorandum, will not be, required to register as an “investment company” within the
meaning of the Investment Company Act and will conduct its business in a manner so that they will
not become subject to the Investment Company Act.



     (w) Compliance with Reporting Requirements. The Company is subject to and in full compliance with
the reporting requirements of Section 13 or Section 15(d) of the Exchange Act.



     (x) Insurance. Each of the Company and its subsidiaries are insured by recognized, financially
sound and reputable institutions with policies in such amounts and with such deductibles and
covering such risks as are generally deemed adequate and customary for their businesses including,
but not limited to, policies covering real and personal property owned or leased by the Company and
its subsidiaries against theft, damage, destruction, acts of terrorism and vandalism. The Company
has no reason to believe that it or any subsidiary will not be able (i) to renew its existing
insurance coverage as and when such policies expire or (ii) to obtain comparable coverage from
similar institutions as may be necessary or appropriate to conduct its business as now conducted
and at a cost that would not result in a Material Adverse Change. Neither of the Company nor any
subsidiary has been denied any insurance coverage which it has sought or for which it has applied.



     (y) No Price Stabilization or Manipulation. None of the Company and the Guarantors has taken or
will take, directly or indirectly, any action designed to or that might be reasonably expected to
cause or result in stabilization or manipulation of the price of the Securities or any other
security of the Company to facilitate the sale or resale of the Securities. Each of the Company
and the Guarantors acknowledges that the Initial Purchasers may engage in stabilization
transactions as described in the Pricing Disclosure Package.









 



11


     (z) Related Party Transactions. There are no business relationships or related-party transactions
involving the Company or any subsidiary or any other person required to be described in the Pricing
Disclosure Package or the Offering Memorandum if they were registration statements on Form S-3
(including through incorporation by reference) which have not been described as required.



     (aa) No Restriction on Distributions. Other than Cal Dive International, Inc., no subsidiary of
the Company is currently prohibited, directly or indirectly, from paying any dividends to the
Company, from making any other distribution on such subsidiary’s capital stock, from repaying to
the Company any loans or advances to such subsidiary from the Company or from transferring any of
such subsidiary’s property or assets to the Company or any other subsidiary of the Company, except
as described in or contemplated by each of the Pricing Disclosure Package and the Offering
Memorandum.



     (bb) Recent Sales. Except as disclosed in each of the Pricing Disclosure Package and the Offering
Memorandum, the Company has not sold or issued any shares of Common Stock, any security convertible
into shares of Common Stock or any security of the same class as the Securities during the
six-month period preceding the date of the Offering Memorandum, including any sales pursuant to
Rule 144A or under Regulations D or S of the Securities Act, other than shares issued pursuant to
the Company’s stock plans or pursuant to outstanding options, rights or warrants, and within the
last six
months the Company has not offered or sold any such securities in a manner that would be integrated
with offering contemplated hereunder.



     (cc) No General Solicitation. None of the Company or any of its affiliates (as defined in Rule
501(b) of Regulation D under the Securities Act (“Regulation D”)), has, directly or through an
agent, engaged in any form of general solicitation or general advertising in connection with the
offering of the Securities (as those terms are used in Regulation D) under the Securities Act or in
any manner involving a public offering within the meaning of Section 4(2) of the Securities Act;
the Company has not entered into any contractual arrangement with respect to the distribution of
the Securities except for this Agreement, and the Company will not enter into any such arrangement
except for the Registration Rights Agreement and as may be contemplated thereby.



     (dd) Sarbanes-Oxley Compliance. There is and has been no failure on the part of the Company, the
Guarantors or any of their respective directors or officers, in their capacities as such, to comply
with any provision of the Sarbanes-Oxley Act of 2002 and the rules and regulations promulgated in
connection therewith (the “Sarbanes-Oxley Act”), including Section 402 related to loans and
Sections 302 and 906 related to certifications.



     (ee) Internal Controls and Procedures. The Company maintains effective disclosure controls and
procedures and internal control over financial reporting, each as defined in Rule 13a-15 under the
Exchange Act.









 



12


     (ff) No Material Weakness in Internal Controls. Except as disclosed in each of the Pricing
Disclosure Package and the Offering Memorandum, since the end of the Company’s most recent audited
fiscal year, there has been (i) no material weakness in the Company’s internal control over
financial reporting (whether or not remediated) and (ii) no change in the Company’s internal
control over financial reporting that has materially affected, or is reasonably likely to
materially affect, the Company’s internal control over financial reporting.



     (gg) Compliance with Environmental Laws. Except as would not, individually or in the aggregate,
result in a Material Adverse Change (i) neither the Company nor any of its subsidiaries is in
violation of any federal, state, local or foreign law or regulation relating to pollution or
protection of human health and safety, the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or wildlife, including without
limitation, laws and regulations relating to emissions, discharges, releases or threatened releases
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous substances, petroleum
and petroleum products (collectively, “Materials of Environmental Concern”), or otherwise relating
to the manufacture, processing, distribution, use, treatment, storage, disposal, transport or
handling of Materials of Environmental Concern (collectively, “Environmental Laws”), which
violation includes, but is not limited to, noncompliance with any permits or other governmental
authorizations required for the operation of the business of the Company or its subsidiaries under
applicable Environmental Laws, or noncompliance with the terms and conditions thereof, nor has the
Company or any of its subsidiaries received any
written communication, whether from a governmental authority, citizens group, employee or other
third party, that alleges that the Company or any of its subsidiaries is in violation of any
Environmental Law; (ii) there is (A) no claim, action or cause of action filed with a court or
governmental authority, (B) no investigation by any third party with respect to which the Company
has received written notice and (C) no written notice received by, or to the best of the Company’s
knowledge, threatened against the Company or any of its subsidiaries, in each case that alleges
potential liability for investigatory costs, cleanup costs, governmental responses costs, natural
resources damages, property damages, personal injuries, attorneys’ fees or penalties arising out
of, based on or resulting from the presence, or release into the environment, of any Material of
Environmental Concern at any location owned, leased or operated by the Company or any of its
subsidiaries, now or in the past (collectively, “Environmental Claims”), and in each case that is
pending or, to the best of the Company’s knowledge, threatened against the Company or any of its
subsidiaries or any person or entity whose liability for any Environmental Claim the Company or any
of its subsidiaries has retained or assumed either contractually or by operation of law; (iii) to
the best of the Company’s knowledge, there are no past, present or anticipated future actions,
activities, circumstances, conditions, events or incidents, including, without limitation, the
release, emission, discharge, presence or disposal of any Material of Environmental Concern, that
would reasonably be expected to result in a violation of any Environmental Law, require expenditure
to be incurred pursuant to Environmental Law or form the basis of a potential









 



13



Environmental Claim
against the Company or any of its subsidiaries or against any person or entity whose liability for
any Environmental Claim the Company or any of its subsidiaries has retained or assumed either
contractually or by operation of law; and (iv) neither the Company nor any of its subsidiaries is
subject to any pending or, to the best of the Company’s knowledge, threatened proceeding under
Environmental Law to which a governmental authority is a party and which is reasonably likely to
result in monetary sanctions of $100,000 or more.



     (hh) Periodic Review of Costs of Environmental Compliance. In the ordinary course of its business,
the Company conducts a periodic review of the effect of Environmental Laws on the business,
operations and properties of the Company and its subsidiaries, in the course of which it identifies
and evaluates associated costs and liabilities (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties). On the basis of such review and the
amount of its established environmental reserves, the Company has reasonably concluded that such
associated costs and liabilities would not, individually or in the aggregate, result in a Material
Adverse Change.



     (ii) ERISA Compliance. None of the following events has occurred or exists: (i) a failure to
fulfill the obligations, if any, under the minimum funding standards of Section 302 of the United
States Employee Retirement Income Security Act of 1974, as amended (“ERISA”), and the regulations
and published interpretations thereunder with respect to a Plan, determined without regard to any
waiver of such obligations or extension of any amortization period; (ii) an audit or investigation
by the Internal Revenue Service, the
U.S. Department of Labor, the Pension Benefit Guaranty Corporation or any other federal or state
governmental agency or any foreign regulatory agency with respect to the employment or compensation
of employees by the Company; or (iii) any breach of any contractual obligation, or any violation of
law or applicable qualification standards, with respect to the employment or compensation of
employees by the Company, in each case, that would reasonably be expected to result in a Material
Adverse Change. None of the following events has occurred or is reasonably likely to occur: (A) a
material increase in the aggregate amount of contributions required to be made to all Plans in the
current fiscal year of the Company compared to the amount of such contributions made in the
Company’s most recently completed fiscal year; (B) a material increase in the Company’s
“accumulated post-retirement benefit obligations” (within the meaning of Statement of Financial
Accounting Standards 106) compared to the amount of such obligations in the Company’s most recently
completed fiscal year; (C) any event or condition giving rise to a liability under Title IV of
ERISA; or (D) the filing of a claim by one or more employees or former employees of the Company
related to their employment, in each case, that would reasonably be expected to result in a
Material Adverse Change. For purposes of this paragraph, the term “Plan” means a plan (within the
meaning of Section 3(3) of ERISA) subject to Title IV of ERISA with respect to which the Company
may have any liability.









 



14


     (jj) No Outstanding Loans or Other Indebtedness. There are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business) or guarantees or
indebtedness by the Company to or for the benefit of any of the officers or directors of the
Company or any of the members of any of their families, except as disclosed in each of the Pricing
Disclosure Package and the Offering Memorandum.



     (kk) Compliance with Laws. The Company has not been advised, and has no reason to believe, that it
and each of its subsidiaries are not conducting business in compliance with all applicable laws,
rules and regulations of the jurisdictions in which it is conducting business, except where failure
to be so in compliance would not result in a Material Adverse Change.



     (ll) No Unlawful Payments. Neither the Company nor any of its subsidiaries nor, to the best
knowledge of the Company, any director, officer, agent, employee or other person associated with or
acting on behalf of the Company has (i) used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political activity; (ii) made any direct
or indirect unlawful payment to any foreign or domestic government official or employee from
corporate funds; or (iii) made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.



     (mm) No Conflict with Money Laundering Laws. The operations of the Company and its subsidiaries
are and have been conducted at all times in compliance with applicable financial recordkeeping and
reporting requirements of the Currency and Foreign Transactions Reporting Act of 1970, as amended,
the money laundering statutes of all applicable jurisdictions, the rules and regulations thereunder
and any related or similar rules, regulations or guidelines issued, administered or enforced by any
governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or proceeding
by or before any court or governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries with respect to the Money Laundering Laws is pending or, to the
best knowledge of the Company, threatened.



     (nn) No Conflict with OFAC Laws. Neither the Company nor any of its subsidiaries nor, to the
knowledge of the Company, any director, officer, agent, employee or affiliate of the Company or any
of its subsidiaries is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not directly
or indirectly use the proceeds of the offering, or lend, contribute or otherwise make available
such proceeds to any subsidiary, joint venture partner or other person or entity, for the purpose
of financing the activities of any person currently subject to any U.S. sanctions administered by
OFAC.



     (oo) Reserves. The Company’s estimates of oil and natural gas reserves included in or incorporated
by reference in the Pricing Disclosure Package and the Offering Memorandum were prepared in good
faith and with a reasonable basis; the information used to arrive at such estimates was prepared in
accordance with customary industry









 



15



practices; other than normal production of reserves and
intervening spot market product price fluctuations, and except as disclosed in each of the Pricing
Disclosure Package and the Offering Memorandum, the Company is not aware of any facts or
circumstances that would result in a materially adverse change in such estimates in the aggregate,
or the aggregate present value of future net cash flows therefrom, as described in each of the
Pricing Disclosure Package and the Offering Memorandum; and estimates of such reserves and the
present value of the future net cash flows therefrom, as described in the Pricing Disclosure
Package and the Offering Memorandum comply in all material respects with the Securities Act and the
applicable rules and regulations of the Commission thereunder. The information provided to
Huddleston & Co., Inc. (“Huddleston & Co.”) for purposes of reviewing the reserve report referenced
in or incorporated by reference in the Pricing Disclosure Package and the Offering Memorandum (the
“Reserve Report”) was prepared in accordance with customary industry practices; to the best of the
Company’s knowledge, Huddleston & Co. was, as of the date of the Reserve Report reviewed by it, and
are, as of the date hereof, independent petroleum engineers with respect to the Company.



     (pp) Registration Rights. Except as publicly disclosed, there are no contracts, agreements or
understandings between the Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with respect to any securities of
the Company.



     (qq) No Default in Senior Indebtedness. No event of default exists under any contract, indenture,
mortgage, loan agreement, note, lease or other agreement or instrument constituting Senior
Indebtedness (as defined in the Indenture).



     (rr) Regulation S. The Company, the Guarantors, and their respective affiliates and all persons
acting on their behalf have complied with and will comply with the offering restrictions
requirements of Regulation S in connection with the offering of the
Securities outside the United States and, in connection therewith, the Offering Memorandum will
contain the disclosure required by Rule 902. Each of the Company and the Guarantors is a
“reporting issuer” as defined in Rule 902 under the Securities Act.



          Any certificate signed by an officer of the Company or any Guarantor and delivered to the
Initial Purchasers, the Representative or the counsel for the Initial Purchasers shall be deemed to
be a representation and warranty by the Company or such Guarantor to each Initial Purchaser as to
the matters set forth therein.




          The Company acknowledges that the Initial Purchasers and, for purposes of the opinions to be
delivered pursuant to Section 5 hereof, counsel to the Company and counsel to the Initial
Purchasers, will rely upon the accuracy and truthfulness of the foregoing representations and
hereby consents to such reliance.




     Section 2. Purchase, Sale and Delivery of the Securities.









 



16


     (a) The Securities. Each of the Company and the Guarantors agrees to issue and sell to the several
Initial Purchasers the Securities upon the terms herein set forth. On the basis of the
representations, warranties and agreements herein contained, and upon the terms but subject to the
conditions herein set forth, the Initial Purchasers agree, severally and not jointly, to purchase
from the Company and the Guarantors the respective principal amount of Notes set forth opposite
their names under the heading “Aggregate Principal Amount of Notes to be Purchased” on Schedule A,
at the purchase price set forth opposite their names under the heading “Aggregate Purchase Price”
on Schedule A.



     (b) The Closing Date. Delivery of the Securities to be purchased by the Initial Purchasers and
payment therefor shall be made at the offices of Davis Polk & Wardwell, 450 Lexington Avenue, New
York, New York (or such other place as may be agreed to by the Company and the Initial Purchasers)
at 10:00 a.m. New York time, on December 21, 2007 (unless postponed in accordance with the
provisions of Section 10), or such other time and date as the Representative shall designate by
notice to the Company (the time and date of such closing are called the “Closing Date”). The
Company hereby acknowledges that circumstances under which the Representative may provide notice to
postpone the Closing Date as originally scheduled include, but are in no way limited to, any
determination by the Company or the Representative to recirculate copies of an amended or
supplemented offering memorandum or a delay as contemplated by the provisions of Section 10.



     (c) Payment for the Securities. Payment for the Securities shall be made at the Closing Date by
wire transfer of immediately available funds to a bank account designated by the Company.



     It is understood that the Representative has been authorized, for its own account and the
accounts of the several Initial Purchasers, to accept delivery of and receipt for, and make payment
of the purchase price for, the Securities. BAS, individually and not as the Representative of the
Initial Purchasers, may (but shall not be obligated to) make payment for any Securities to be
purchased by any Initial Purchaser whose funds shall not
have been received by the Representative by the Closing Date for the account of such Initial
Purchaser, but any such payment shall not relieve such Initial Purchaser from any of its
obligations under this Agreement.



     (d) Delivery of the Securities. The Company shall deliver, or cause to be delivered, to the
Representative for the accounts of the several Initial Purchasers the Securities in the form of two
or more permanent global securities in definitive form (the “Global Notes”), deposited with the
Trustee as custodian for DTC and registered in the name of Cede & Co., as nominee for DTC, at the
Closing Date, against the irrevocable release of a wire transfer of immediately available funds for
the amount of the purchase price therefor. The Securities shall be registered in such names and
denominations as the Initial Purchasers shall have requested at least two full business days prior
to the Closing Date and shall be made available for inspection on the business day preceding the
Closing Date at a location in New York City as the Initial Purchasers may designate.









 



17



Time shall be
of the essence, and delivery at the time and place specified in this Agreement is a further
condition to the obligations of the Initial Purchasers.



     Section 3. Additional Covenants of the Company.



     Each of the Company and the Guarantors further covenants and agrees with each Initial
Purchaser as follows:



     (a) Representative’s Review of Proposed Amendments and Supplements. As promptly as practicable
following the Time of Sale and in any event not later than the second business day following the
date hereof, the Company will prepare and deliver to the Initial Purchasers the Offering
Memorandum, which shall consist of the Preliminary Offering Memorandum as modified only by the
information contained in the Pricing Supplement. The Company will not amend or supplement the
Preliminary Offering Memorandum or the Pricing Supplement. The Company will not amend or
supplement the Offering Memorandum during the period beginning on the date hereof and ending on the
date which is the earlier of nine months after the date hereof and the completion of the resale of
the Securities by the Initial Purchasers (as notified by the Initial Purchasers to the Company)
unless the Initial Purchasers shall previously have been furnished a copy of the proposed amendment
or supplement at least two business days prior to the proposed use or filing, and shall not have
objected to such amendment or supplement.



     (b) Company Additional Written Communications. Before making, preparing, using, authorizing,
approving or referring to any Company Additional Written Communication, the Company will furnish to
the Representative and counsel for the Initial Purchasers a copy of such written communication for
review and will not use any such written communication to which the Representative reasonably
objects.



     (c) Amendments and Supplements to the Offering Memorandum and Other Securities Act Matters. If, at
any time prior to the earlier of nine months after the date hereof and the completion of the resale
of the Securities by the Initial Purchasers (as notified by the Initial Purchasers to the Company),
any event shall occur or condition exist as a result of which it is necessary to amend or
supplement the Offering
Memorandum in order that the Offering Memorandum will not include an untrue statement of a material
fact or omit to state a material fact necessary in order to make the statements therein, in the
light of the circumstances existing at the time it is delivered to a purchaser, not misleading, or
if in the opinion of the Representative or counsel for the Initial Purchasers it is otherwise
necessary to amend or supplement the Offering Memorandum to comply with law, the Company shall
promptly notify the Initial Purchasers, prepare and furnish to the Initial Purchasers (or file with
the Commission in case of documents incorporated by reference), subject to Section 3(a) hereof,
such amendment or supplement as may be necessary to correct such untrue statement or omission.









 



18


     Following the consummation of the Exchange Offer or the effectiveness of an applicable shelf
registration statement and for so long as the Securities are outstanding if, in the judgment of the
Initial Purchasers, the Initial Purchasers or any of their affiliates (as such term is defined in
the Securities Act) are required to deliver a prospectus in connection with sales of, or
market-making activities with respect to, the Securities, to periodically amend the applicable
registration statement so that the information contained therein complies with the requirements of
Section 10 of the Securities Act, to amend the applicable registration statement or supplement the
related prospectus or the documents incorporated therein when necessary to reflect any material
changes in the information provided therein so that the registration statement and the prospectus
will not contain any 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 existing as of
the date the prospectus is delivered to a purchaser, not misleading and to provide the Initial
Purchasers with copies of each amendment or supplement filed and such other documents as the
Initial Purchasers may reasonably request.



     The Company hereby expressly acknowledges that the indemnification and contribution provisions
of Sections 8 and 9 hereof are specifically applicable and relate to each offering memorandum,
registration statement, prospectus, amendment or supplement referred to in this Section 3.



     (d) Delivery of Copies. The Company agrees to furnish the Representative, without charge,
until the earlier of nine months after the date hereof or the completion of the resale of the
Securities by the Initial Purchasers (as notified by the Initial Purchasers to the Company) as many
copies of the Pricing Disclosure Package, any Company Additional Written Communication and the
Offering Memorandum and any amendments and supplements thereto as the Representative may request.



     (e) Blue Sky Compliance. Each of the Company and the Guarantors shall cooperate with the
Representative and counsel for the Initial Purchasers, as the Initial Purchasers may reasonably
request from time to time, to qualify or register the Securities for sale under (or obtain
exemptions from the application of) the state securities or blue sky laws of those jurisdictions
designated by the Representative, shall comply with such laws and shall continue such
qualifications, registrations and exemptions in effect so long as required for the distribution of
the Securities. None of the Company and the Guarantors shall be required to qualify as a foreign
corporation or to take any action that
would subject it to general service of process in any such jurisdiction where it is not presently
qualified or where it would be subject to taxation as a foreign corporation. The Company will
advise the Representative promptly of the suspension of the qualification or registration of (or
any such exemption relating to) the Securities for offering, sale or trading in any jurisdiction or
any initiation or threat of any proceeding for any such purpose, and in the event of the issuance
of any order suspending such qualification, registration or exemption, each of the Company and the
Guarantors shall use its best efforts to obtain the withdrawal thereof at the earliest possible
moment.









 



19


     (f) Rule 144A Information. For so long as any of the Securities are “restricted securities”
within the meaning of Rule 144(a)(3) under the Securities Act, the Company shall (i) file, on a
timely basis, with the Commission all reports and documents required to be filed under Section 13
or 15 of the Exchange Act, and (ii) provide to any holder of the Securities or to any prospective
purchaser of the Securities designated by any holder, upon request of such holder or prospective
purchaser, information required to be provided by Rule 144A(d)(4) of the Securities Act if, at the
time of such request, the Company is not subject to the reporting requirements under Section 13 or
15(d) of the Exchange Act.



     (g) Legends. Each of the Securities will bear, to the extent applicable, the legend contained in
“Notice to Investors” in the Pricing Disclosure Package for the time period and upon the other
terms stated therein.



     (h) PORTAL. The Company will use its best efforts to cause the Securities to be eligible for the
PORTAL Market.



     (i) No General Solicitation. Except following the effectiveness of the Registration Statement
(as defined in the Registration Rights Agreement), the Company will not, and will cause its
subsidiaries not to, solicit any offer to buy or offer to sell the Securities by means of any form
of general solicitation or general advertising (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the meaning of Section 4(2) of
the Securities Act.



     (j) No Integration. The Company will not, and will cause its subsidiaries not to, sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any “security” (as defined
in the Securities Act) in a transaction that could be integrated with the sale of the Securities in
a manner that would require the registration under the Securities Act of the Securities.



     (k) Rule 144 Tolling. During the period of two years after the last Closing Date, the Company
will not, and will not permit any of its “affiliates” (as defined in Rule 144 under the Securities
Act) to, resell any of the Securities which constitute “restricted securities” under Rule 144 that
have been reacquired by any of them.



     (l) Use of Proceeds. The Company shall apply the net proceeds from the sale of the Securities
sold by it in the manner described under the caption “Use of Proceeds” in the Pricing Disclosure
Package.



     (m) Compliance with Securities Laws. The Company will comply with all applicable securities and
other laws, rules and regulations, including, without limitation, the Sarbanes Oxley Act, and use
its best efforts to cause the Company’s directors and officers, in their capacities as such, to
comply with such laws, rules and regulations, including, without limitation, the provisions of the
Sarbanes-Oxley Act.









 



20


     (n) Agreement Not To Offer or Sell Additional Securities. During the period commencing on the date
hereof and ending on the 90th day following the date of the Final Offering Memorandum, the Company
will not, without the prior written consent of BAS (which consent may be withheld at the sole
discretion of BAS), directly or indirectly, sell, offer, contract or grant any option to sell,
pledge, transfer or establish an open “put equivalent position” within the meaning of Rule 16a-1
under the Exchange Act, or otherwise dispose of or transfer, or announce the offering of, or file
any registration statement under the Securities Act in respect of, any debt securities of the
Company or securities exchangeable for or convertible into debt securities of the Company (other
than as contemplated by this Agreement and to register the Exchange Securities).



     (o) Future Reports to the Representative. At any time when the Company is not subject to
Section 13 or 15 of the Exchange Act and any Securities or Exchange Securities remain outstanding,
the Company will furnish to the Representative (i) as soon as practicable after the end of each
fiscal year, copies of the Annual Report of the Company containing the balance sheet of the Company
as of the close of such fiscal year and statements of income, stockholders’ equity and cash flows
for the year then ended and the opinion thereon of the Company’s independent public or certified
public accountants, (ii) as soon as practicable after the filing thereof, copies of each proxy
statement, Annual Report on Form 10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or
other report filed by the Company with the Commission, the Financial Industry Regulatory Authority,
Inc. (“FINRA”) or any securities exchange, and (iii) as soon as available, copies of any report or
communication of the Company mailed generally to holders of its capital stock or debt securities
(including the holders of the Securities), if, in each case, such documents are not filed with the
Commission within the time periods specified by the Commission’s rules and regulations under
Section 13 or 15 of the Exchange Act. From time to time, the Company will furnish to the
Representative such other information concerning the Company and its subsidiaries as the Initial
Purchasers may reasonably request.



     (p) Investment Limitation. The Company shall not invest or otherwise use the proceeds
received by the Company from its sale of the Securities in such a manner as would require the
Company or any of its subsidiaries to register as an investment company under the Investment
Company Act.



     (q) No Manipulation of Price. The Company will not take, directly or indirectly, any action
designed to cause or result in, or that constitutes or might reasonably be expected to constitute,
the stabilization or manipulation of the price of any securities of the Company.



     (r) Existing Lock-Up Agreements. The Company will enforce all existing agreements between the
Company and any of its security holders that prohibit the sale, transfer, assignment, pledge or
hypothecation of any of the Company’s securities.









 



21


     Section 4. Payment of Expenses.



          Each of the Company and the Guarantors agrees to pay all reasonable costs, fees and expenses
incurred in connection with the performance of its obligations hereunder and in connection with the
transactions contemplated hereby, including without limitation (i) all expenses incident to the
issuance and delivery of the Securities (including all printing and engraving costs), (ii) all fees
and expenses of the Trustee under the Indenture (including the fees and disbursements of counsel
for the Trustee), (iii) all necessary issue, transfer and other stamp taxes in connection with the
issuance and sale of the Securities to the Initial Purchasers, (iv) all fees and expenses of the
Company’s and the Guarantors’ counsel, independent public or certified public accountants and other
advisors, (v) all costs and expenses incurred in connection with the preparation, printing,
shipping and distribution of the Pricing Disclosure Package, any Company Additional Written
Communication, the Offering Memorandum, all amendments and supplements thereto, and the Operative
Documents, (vi) all filing fees, attorneys’ fees and expenses incurred by the Company, the
Guarantors, or the Initial Purchasers in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the Securities for offer
and sale under the state securities or blue sky laws or the provincial securities laws of Canada
and, if requested by the Initial Purchasers, preparing and printing a “Blue Sky Survey” or
memorandum, and any supplements thereto, advising the Initial Purchasers of such qualifications,
registrations and exemptions, (vii) the expenses of the Company and the Initial Purchasers in
connection with the marketing and offering of the Securities, (viii) all expenses and fees in
connection with the rating of the Securities or the Exchange Securities with the rating agencies
and admitting the Securities for trading in the FINRA PORTAL Market (“PORTAL”), and (ix) all fees
and expenses (including all fees and expenses of counsel) of the Company and the Guarantors in
connection with approval of the Securities by The Depositary Trust Company for “book-entry”
transfer, and the performance by the Company and the Guarantors of their respective other
obligations under this Agreement. Except as provided in this Section 4, Section 7, Section 10 and
Section 11 hereof, the Initial Purchasers shall pay their own expenses, including the fees and
disbursements of their counsel.




     Section 5. Conditions of the Obligations of the Initial Purchaser.



     The obligations of the several Initial Purchasers to purchase and pay for the Securities as
provided herein on the Closing Date shall be subject to the accuracy of the representations and
warranties on the part of the Company and the Guarantors set forth in Section 1 hereof as of the
date hereof and as of the Closing Date as though then made to the timely performance by the Company
and the Guarantors of their respective covenants and other obligations hereunder, and to each of
the following additional conditions:



     (a) Accountants’ Comfort Letter. On the date hereof, the Representative shall have received from
Ernst & Young, LLP, independent public or certified public accountants for the Company, a letter
dated the date hereof addressed to the Initial









 



22



Purchasers, in form and substance satisfactory to
the Representative, containing statements and information of the type ordinarily included in
accountants’ “comfort letters” to Initial Purchasers, delivered according to Statement of Auditing
Standards No. 72 (or any successor bulletin), with respect to the audited and unaudited financial
statements and certain financial information contained in or incorporated by reference in each of
the Pricing Disclosure Package and the Offering Memorandum.



     (b) Engineer’s Reserve Report. The Initial Purchasers shall have received from Huddleston & Co. a
letter, dated as of the date hereof and as of the Closing Date, addressed to the Initial Purchasers
and in form and substance satisfactory to the Initial Purchasers and Initial Purchasers’ Counsel,
with respect to the estimated quantities of the Company’s reserves, the future net revenues from
those reserves and their present value as set forth in the each of the Pricing Disclosure Package
and the Offering Memorandum and such related matters as the Initial Purchasers shall reasonably
request (the “Report Letter”), which Report Letter will include a consent to the incorporation by
reference thereof into each of the Pricing Disclosure Package and the Offering Memorandum.



     (c) No Material Adverse Change or Rating Agency Change. For the period from and after the date of
this Agreement and prior to the Closing Date:




     (i) in the judgment of the Initial Purchasers there shall not have occurred any
Material Adverse Change; and




     (ii) there shall not have occurred any downgrading, nor shall any notice have been
given of any intended or potential downgrading or of any review for a possible change that
does not indicate the direction of the possible change, in the rating accorded any
securities of the Company or any of its subsidiaries or in the rating outlook for the
Company and its subsidiaries by any “nationally recognized statistical rating organization”
as such term is defined for purposes of Rule 436(g)(2) under the Securities Act.



     (d) Opinion of Counsel for the Company. On the Closing Date the Representative shall have received
the favorable opinions of (i) Alisa B. Johnson, the Company’s Senior Vice President and General
Counsel, and (ii) Fulbright & Jaworski L.L.P. counsel for the Company, each dated as of such
Closing Date, the forms of which are attached as Exhibits A-1 and A-2 respectively.



     (e) Opinion of Counsel for the Initial Purchasers. On the Closing Date the Representative
shall have received the favorable opinion of Davis Polk & Wardwell, counsel for the Initial
Purchasers, dated as of such Closing Date, in form and substance satisfactory to the
Representative.



     (f) Officers’ Certificate. On the Closing Date the Representative shall have received a
written certificate executed by the Executive Chairman or Chief Executive
Officer and President of the Company, and the Chief Financial Officer or Chief









 



23



Accounting
Officer of the Company, dated as of such Closing Date, to the effect set forth in subsection
(c)(ii) of this Section 5, and further to the effect that:




     (i) for the period from and after the date of this Agreement and prior to such Closing
Date, there has not occurred any Material Adverse Change;




     (ii) the representations, warranties and covenants of the Company and the Guarantors
set forth in Section 1 of this Agreement are true and correct with the same force and
effect as though expressly made on and as of such Closing Date; and




     (iii) each of the Company and the Guarantors has complied with all the agreements
hereunder and satisfied all the conditions on its part to be performed or satisfied
hereunder at or prior to such Closing Date.



     (g) Bring-Down Comfort Letter. On the Closing Date the Representative shall have received
from Ernst & Young LLP, independent public or certified public accountants for the Company, a
letter dated such date, in form and substance satisfactory to the Representative, to the effect
that they reaffirm the statements made in the letter furnished by them pursuant to subsection (a)
of this Section 5, except that the specified date referred to therein for the carrying out of
procedures shall be no more than three business days prior to the Closing Date.



     (h) Registration Rights Agreement. The Company, the Guarantors and the Initial Purchasers
shall have executed and delivered the Registration Rights Agreement (in form and substance
satisfactory to the Initial Purchasers), and the Registration Rights Agreement shall be in full
force and effect.



     (i) PORTAL Designation and DTC. The Securities shall have been designated PORTAL-eligible
securities in accordance with the rules and regulations of the FINRA and shall be eligible for
clearance and settlement through DTC.



     (j) Additional Documents. On or before the Closing Date, the Representative and counsel for
the Initial Purchasers shall have received such information, documents and opinions as they may
reasonably require for the purposes of enabling them to pass upon the issuance and sale of the
Securities as contemplated herein, or in order to evidence the accuracy of any of the
representations and warranties, or the satisfaction of any of the conditions or agreements, herein
contained.



     If any condition specified in this Section 5 is not satisfied when and as required to be
satisfied, this Agreement may be terminated by the Representative by notice to the Company at any
time on or prior to the Closing Date, which termination shall be without liability on the part of
any party to any other party, except that Section 4, Section 7, Section 8 and Section 9 shall at
all times be effective and shall survive such termination.









 



24


     Section 6. Representations, Warranties and Agreements of Initial Purchasers.



     Each of the Initial Purchasers represents and warrants that it is a “qualified institutional
buyer” (“QIB”), as defined in Rule 144A of the Securities Act, or an accredited investor within the
meaning of Rule 501(a)(1) under the Securities Act. The Initial Purchasers agree with the Company
that:



     (a) The Securities have not been and will not be registered under the Securities Act in
connection with the initial offering of the Securities.



     (b) The Initial Purchasers are purchasing the Securities pursuant to a private sale exemption
from registration under the Securities Act.



     (c) The Securities have not been and will not be offered or sold by such Initial Purchasers
or its affiliates acting on its behalf except in accordance with Rule 144A to persons whom the
offeror or seller reasonably believe to be Qualified Institutional Buyers or non-U.S. persons
outside the United States to whom the offeror or seller reasonably believes offers and sales of the
Securities may be made in reliance upon Regulation S upon the terms and conditions set forth in
Annex I hereto, which Annex I is hereby expressly made a part hereof.



     (d) The Initial Purchasers will not offer or sell the Securities in the United States by
means of any form of general solicitation or general advertising within the meaning of Rule 502(c)
of Regulation D, including (i) any advertisement, article, notice or other communication published
in any newspaper, magazine or similar medium or broadcast over television or radio, or (ii) any
seminar or meeting whose attendees have been invited by any general solicitation or general
advertising in the United States.



     (e) The Initial Purchasers have not offered or sold, and will not offer or sell, any
Securities except to persons whom they reasonably believe to be a QIB.



     Section 7. Reimbursement of Initial Purchasers’ Expenses.



     If this Agreement is terminated by the Representative pursuant to Section 5, Section 10 or
Section 11, or if the sale to the Initial Purchasers of the Securities on the Closing Date is not
consummated because of any refusal, inability or failure on the part of the Company to perform any
agreement herein or to comply with any provision hereof, the Company agrees to reimburse the
Representative and the other Initial Purchasers (or such Initial Purchasers as have terminated this
Agreement with respect to themselves), severally, upon demand for all out-of-pocket expenses that
shall have been reasonably incurred by the Representative and the Initial Purchasers in connection
with the proposed purchase and the offering and sale of the Securities, including but not limited
to fees and disbursements of counsel, printing expenses, travel expenses, postage, facsimile and
telephone charges.









 



25


     Section 8. Indemnification.



     (a) Indemnification of the Initial Purchasers. Each of the Company and the Guarantors,
jointly and severally, agrees to indemnify and hold harmless each Initial Purchaser, its officers
and employees, and each person, if any, who controls any Initial Purchaser within the meaning of
the Securities Act and the Exchange Act against any loss, claim, damage, liability or expense, as
incurred, to which such Initial Purchaser or such controlling person may become subject, under the
Securities Act, the Exchange Act or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such settlement is effected
with the written consent of the Company), insofar as such loss, claim, damage, liability or expense
(or actions in respect thereof as contemplated below) arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in the Pricing Disclosure
Package, any Company Additional Written Communication or the Offering Memorandum (or any amendment
or supplement thereto), or the omission or alleged omission therefrom of a material fact, in each
case, necessary to make the statements therein, in the light of the circumstances under which they
were made, not misleading, and to reimburse the Initial Purchasers and each such controlling person
for any and all expenses (including the fees and disbursements of counsel chosen by BAS) as such
expenses are reasonably incurred by such Initial Purchaser or such controlling person in connection
with investigating, defending, settling, compromising or paying any such loss, claim, damage,
liability, expense or action; provided, however, that the foregoing indemnity agreement shall not
apply to any loss, claim, damage, liability or expense to the extent, but only to the extent,
arising out of or based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written information furnished to the
Company by the Representative expressly for use therein.



     (b) Indemnification of the Company, each Guarantor, and each of their Directors and Officers.
Each Initial Purchaser agrees, severally and not jointly, to indemnify and hold harmless the
Company, each Guarantor, each of their directors, each of their officers and each person, if any,
who controls the Company or any Guarantor within the meaning of the Securities Act or the Exchange
Act, against any loss, claim, damage, liability or expense, as incurred, to which the Company, any
Guarantor, or any such each director, officer or controlling person may become subject, under the
Securities Act, the Exchange Act, or other federal or state statutory law or regulation, or at
common law or otherwise (including in settlement of any litigation, if such settlement is effected
with the written consent of such Initial Purchaser), insofar as such loss, claim, damage, liability
or expense (or actions in respect thereof as contemplated below) arises out of or is based upon any
untrue or alleged untrue statement of a material fact contained in the Pricing Disclosure Package,
any Company Additional Written Communication or the Offering Memorandum (or any amendment or
supplement thereto), or arises out of or is based upon the omission or alleged omission to state
therein a material fact necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, in each case to the extent, but only to the extent,
that such untrue









 



26



statement or alleged untrue statement or omission or alleged omission was made
therein in reliance upon and in conformity with written information furnished to the Company by the
Representative expressly for use therein; and to reimburse the Company, any Guarantor and each such
director, officer or controlling person for any legal and other
expense reasonably incurred by the Company, any Guarantor or such director, officer or
controlling person in connection with investigating, defending, settling, compromising or paying
any such loss, claim, damage, liability, expense or action. The Company and the Guarantors hereby
acknowledge that the only information that the Initial Purchasers have furnished to the Company
expressly for use in the Pricing Disclosure Package, any Company Additional Written Communication
and the Offering Memorandum (or any amendment or supplement thereto) are the statements set forth
in Schedule B; and the Initial Purchasers confirm that such statements are correct. The indemnity
agreement set forth in this Section 8(b) shall be in addition to any liabilities that each Initial
Purchaser may otherwise have.



     (c) Notifications and Other Indemnification Procedures. Promptly after receipt by an
indemnified party under this Section 8 of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof may be made against an indemnifying party
under this Section 8, notify the indemnifying party in writing of the commencement thereof, but the
failure to so notify the indemnifying party (i) will not relieve it from liability under paragraph
(a) or (b) above unless and to the extent it did not otherwise learn of such action and such
failure results in the forfeiture by the indemnifying party of substantial rights and defenses and
(ii) will not, in any event, relieve the indemnifying party from any liability which it may have
for contribution or any obligations to any indemnified party other than the indemnification
obligation provided in paragraph (a) or (b) above. In case any such action is brought against any
indemnified party and such indemnified party seeks or intends to seek indemnity from an
indemnifying party, the indemnifying party will be entitled to participate in, and, to the extent
that it shall elect, jointly with all other indemnifying parties similarly notified, 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; provided, however, if the defendants in any such action include both the
indemnified party and the indemnifying party and the indemnified party shall have reasonably
concluded that a conflict may arise between the positions of the indemnifying party and the
indemnified party in conducting the defense of any such action or that there may be legal defenses
available to it and/or other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnified party or parties shall have the right to
select separate counsel to assume such legal defenses and to otherwise participate in the defense
of such action on behalf of such indemnified party or parties. Upon receipt of notice from the
indemnifying party to such indemnified party of such indemnifying party’s election so to assume the
defense of such action and approval by the indemnified party of counsel, the indemnifying party
will not be liable to such indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in









 



27



connection with the defense thereof unless (i)
the indemnified party shall have employed separate counsel in accordance with the proviso to the
next preceding sentence (it being understood, however, that the indemnifying party shall not be
liable for the expenses of more than one separate counsel (together with local counsel), approved
by the indemnifying party (BAS in the case of Section 8(b) and Section 9), representing the
indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of commencement of the action, in each of which
cases the fees and expenses of counsel shall be at the expense of the indemnifying party.



     (d) Settlements. The indemnifying party under this Section 8 shall not be liable for any
settlement of any proceeding effected without its written consent, but if settled with such consent
or if there is a final judgment for the plaintiff, the indemnifying party agrees to indemnify the
indemnified party against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified party for fees and
expenses of counsel as contemplated by Section 8(c) hereof, the indemnifying party agrees that it
shall be liable for any settlement of any proceeding effected without its written consent if (i)
such settlement is entered into more than 30 days after receipt by such indemnifying party of the
aforesaid request and (ii) such indemnifying party shall not have reimbursed the indemnified party
in accordance with such request prior to the date of such settlement. No indemnifying party shall,
without the prior written consent of the indemnified party, effect any settlement, compromise or
consent to the entry of judgment in any pending or threatened action, suit or proceeding in respect
of which any indemnified party is or could have been a party and indemnity was or could have been
sought hereunder by such indemnified party, unless such settlement, compromise or consent (x)
includes an unconditional release of such indemnified party from all liability on claims that are
the subject matter of such action, suit or proceeding and (y) does not include a statement as to or
an admission of fault, culpability or a failure to act by or on behalf of any indemnified party.



     Section 9. Contribution.



     If the indemnification provided for in Section 8 is for any reason held to be unavailable to
or otherwise insufficient to hold harmless an indemnified party in respect of any losses, claims,
damages, liabilities or expenses referred to therein, then each indemnifying party shall contribute
to the aggregate amount paid or payable by such indemnified party, as incurred, as a result of any
losses, claims, damages, liabilities or expenses referred to therein (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company and the Guarantors, on the one
hand, and the Initial Purchasers, on the other hand, from the offering of the Securities pursuant
to this Agreement or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company and the









 



28



Guarantors, on
the one hand, and the Initial Purchasers, on the other hand, in connection with the statements or
omissions or inaccuracies in the representations and warranties herein which resulted in such
losses, claims, damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Guarantors, on the one hand,
and the Initial Purchasers, on the other hand, in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Securities pursuant to this Agreement (before deducting
expenses) received by the Company, and the total discount received by the Initial Purchasers bear
to
the aggregate initial offering price of the Securities. The relative fault of the Company and
the Guarantors, on the one hand, and the Initial Purchasers, on the other hand, shall be determined
by reference to, among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact or any such inaccurate or
alleged inaccurate representation or warranty relates to information supplied by the Company and
the Guarantors, on the one hand, or the Initial Purchasers, on the other hand, and the parties’
relative intent, knowledge, access to information and opportunity to correct or prevent such
statement or omission.



     The amount paid or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the limitations set forth in
Section 8(c), any legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim. The provisions set forth in Section 8(c) with
respect to notice of commencement of any action shall apply if a claim for contribution is to be
made under this Section 9; provided, however, that no additional notice shall be required with
respect to any action for which notice has been given under Section 8(c) for purposes of
indemnification.



     The Company, the Guarantors, and the Initial Purchasers agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata allocation (even
if the Initial Purchasers were treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations referred to in this Section
9.



     Notwithstanding the provisions of this Section 9, the Initial Purchasers shall not be required
to contribute any amount in excess of the amount by which the total price at which the Securities
purchased by it and distributed to investors were offered to investors exceeds the amount of any
damages which the Initial Purchasers have otherwise been required to pay by reason of such untrue
or alleged untrue statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent misrepresentation. The Initial
Purchasers’ obligations to contribute pursuant to this Section 9 are several, and not joint, in
proportion to their respective commitments as set forth opposite their names in Schedule A. For
purposes of this Section 9, each officer and employee of an Initial Purchaser and each person, if
any, who controls an Initial Purchaser within the meaning of the Securities




 











 



29


Act and the Exchange Act shall have the same rights to contribution as such Initial Purchaser, and
each director of the Company or any Guarantor, each officer of the Company or any Guarantor, and
each person, if any, who controls the Company or any Guarantor within the meaning of the Securities
Act and the Exchange Act shall have the same rights to contribution as the Company and the
Guarantors.




     Section 10. Default of One or More of the Several Initial Purchasers.



          If, on the Closing Date, any one or more of the several Initial Purchasers shall fail or
refuse to purchase Securities that it or they have agreed to purchase hereunder on such date, and
the aggregate principal amount of Securities which such defaulting Initial Purchaser or Initial
Purchasers agreed but failed or refused to purchase does not exceed 10% of the aggregate principal
amount of the Notes to be purchased on such date, the other Initial Purchasers shall be obligated,
severally, in the proportions that the principal amount of Notes set forth opposite their
respective names on Schedule A bears to the aggregate principal amount of Notes set forth opposite
the names of all such non-defaulting Initial Purchasers, or in such other proportions as may be
specified by the Representative with the consent of the non-defaulting Initial Purchasers, to
purchase the Notes which such defaulting Initial Purchaser or Initial Purchasers agreed but failed
or refused to purchase on such date. If, on the Closing Date, any one or more of the Initial
Purchasers shall fail or refuse to purchase the Notes and the aggregate principal amount of
Securities with respect to which such default occurs exceeds 10% of the aggregate principal amount
of Notes to be purchased on such date, and arrangements satisfactory to the Representative and the
Company for the purchase of such Notes are not made within 48 hours after such default, this
Agreement shall terminate without liability of any party (other than a defaulting Initial
Purchaser) to any other party except that the provisions of Section 4, Section 7, Section 8 and
Section 9 shall at all times be effective and shall survive such termination. In any such case
either the Representative or the Company shall have the right to postpone the Closing Date but in
no event for longer than seven days in order that the required changes, if any, to the Pricing
Disclosure Package, the Offering Memorandum or any other documents or arrangements may be effected.




          As used in this Agreement, the term “Initial Purchaser” shall be deemed to include any person
substituted for a defaulting Initial Purchaser under this Section 10. Any action taken under this
Section 10 shall not relieve any defaulting Initial Purchaser from liability in respect of any
default of such Initial Purchaser under this Agreement.




     Section 11. Termination of this Agreement.



     On or prior to the Closing Date this Agreement may be terminated by the Representative by
notice given to the Company if at any time (i) trading or quotation in any of the Company’s
securities shall have been suspended or limited by the Commission or by the Nasdaq National Market,
or trading in securities generally on either the Nasdaq National Market or the New York Stock
Exchange shall have been suspended or limited, or minimum or maximum prices shall have been
generally established on any of such












 





30


stock exchanges by the Commission or the FINRA; (ii) a general
banking moratorium shall have been declared by any federal or New York authority; (iii) there shall
have occurred any outbreak or escalation of national or international hostilities or any crisis or
calamity, or any change in the United States or international financial markets, or any substantial
change or development involving a prospective substantial change in United States’ or international
political, financial or economic conditions, as in the judgment of the Representative is material
and adverse and makes it impracticable to market the Securities in the manner and on the terms
described in the Pricing Disclosure Package and the Offering Memorandum or to enforce contracts for
the sale of securities; (iv) in the judgment of the Representative there shall have occurred any
Material Adverse Change; or (v) the Company shall have sustained a loss by strike, fire, flood,
earthquake, accident or other calamity of such character as in the judgment of the Representative
may, singly or in the aggregate, interfere materially with the conduct of the business and
operations of the Company regardless of whether or not such loss shall have been insured. Any
termination pursuant to this Section 10 shall be without liability on the part of (a) the Company
or any Guarantor to any Initial Purchaser, except that the Company and the Guarantors shall be
obligated to reimburse the expenses of the Representative and the Initial Purchasers pursuant to
Sections 4 and 7 hereof, (b) any Initial Purchaser to the Company, or (c) of any party hereto to
any other party except that the provisions of Sections 8 and 9 shall at all times be effective and
shall survive such termination.




     Section 12. Representations and Indemnities to Survive Delivery.



     The respective indemnities, contribution, agreements, representations, warranties and other
statements of the Company, the Guarantors, their respective officers, and the several Initial
Purchasers set forth in or made pursuant to this Agreement shall remain operative and in full force
and effect, regardless of (i) any investigation, or statement as to the result hereof, made by or
on behalf of the Initial Purchasers, the Company, any Guarantor or any of its or their respective
partners, officers or directors or any controlling person, as the case may be, (ii) acceptance of
the Securities and payment for them hereunder and (iii) any termination of this Agreement.



     Section 13. Notices.



     All communications hereunder shall be in writing and shall be mailed, hand delivered or
telecopied and confirmed to the parties hereto as follows:


If to the Representative:



Banc of America Securities LLC

9 West 57th Street

New York, New York 10019

Facsimile: (212) 901-7897

Attention: Legal Department













 





31


with a copy to:



Davis Polk & Wardwell

450 Lexington Avenue

New York, New York 10017

Facsimile: (212) 450-3674

Attention: Richard Truesdell, Esq.



If to the Company or any of the Guarantors:



Helix Energy Solutions Group, Inc.

400 N. Sam Houston Parkway E., Suite 400

Houston, Texas 77060

Facsimile: (281) 618-0505

Attention: General Counsel



with a copy to:



Fulbright & Jaworski L.L.P.

1301 McKinney, Suite 5100

Houston, Texas 77010

Facsimile: (713) 651-5246

Attention: Arthur H. Rogers, Esq.





Any party hereto may change the address for receipt of communications by giving written notice
to the others.



     Section 14. Successors.



     This Agreement will inure to the benefit of and be binding upon the parties hereto, including
any substitute Initial Purchasers pursuant to Section 10 hereof, and to the benefit of the
employees, officers and directors and controlling persons referred to in Section 8 and Section 9,
and in each case their respective successors, and no other person will have any right or obligation
hereunder. Nothing expressed or mentioned in this Agreement is intended or shall be construed to
give any person, firm or corporation, other than the Initial Purchasers and the Company and their
respective successors and the controlling persons and officers and directors referred to in
Sections 8 and 9 and their heirs and legal representatives, any legal or equitable right, remedy or
claim under or in respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and exclusive benefit of the
Initial Purchasers and the Company and their respective successors, and said controlling persons
and officers and directors and their heirs and legal representatives, and for the benefit of no
other person, firm or corporation. The term “successors” shall not include any purchaser of the
Securities as such from any of the Initial Purchasers merely by reason of such purchase.



     Section 15. Partial Unenforceability.












 




 32

     The invalidity or unenforceability of any Section, paragraph or provision of this Agreement
shall not affect the validity or enforceability of any other Section, paragraph or provision
hereof. If any Section, paragraph or provision of this Agreement is for any reason determined to
be invalid or unenforceable, there shall be deemed to be made such minor changes (and only such
minor changes) as are necessary to make it valid and enforceable.



     Section 16. Governing Law Provisions; Consent to Jurisdiction.



     (a) Governing Law Provisions



          THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK AND TO BE PERFORMED IN SUCH STATE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.




     (b) Consent to Jurisdiction



          Any legal suit, action or proceeding arising out of or based upon this Agreement or the
transactions contemplated hereby (“Related Proceedings”) may be instituted in the federal courts of
the United States of America located in the City and County of New York or the courts of the State
of New York in each case located in the City and County of New York (collectively, the “Specified
Courts”), and each party irrevocably submits to the exclusive jurisdiction (except for proceedings
instituted in regard to the enforcement of a judgment of any such court, as to which such
jurisdiction is non-exclusive) of such courts in any such suit, action or proceeding. Service of
any process, summons, notice or document by mail to such party’s address set forth above shall be
effective service of process for any suit, action or other proceeding brought in any such court.
The parties irrevocably and unconditionally waive any objection to the laying of venue of any suit,
action or other proceeding in the Specified Courts and irrevocably and unconditionally waive and
agree not to plead or claim in any such court that any such suit, action or other proceeding
brought in any such court has been brought in an inconvenient forum.




     (c) Waiver of Immunity.



          With respect to any Related Proceeding, each party irrevocably waives, to the fullest extent
permitted by applicable law, all immunity (whether on the basis of sovereignty or otherwise) from
jurisdiction, service of process, attachment (both before and after judgment) and execution to
which it might otherwise be entitled in the Specified Courts, and with respect to any Related
Judgment, each party waives any such immunity in the Specified Courts or any other court of
competent jurisdiction, and will not raise or claim or cause to be pleaded any such immunity at or
in respect of any such Related Proceeding or Related Judgment, including, without limitation, any
immunity pursuant to the United States Foreign Sovereign Immunities Act of 1976, as amended.













 





33


     (d) Judgment Currency.



          If for the purposes of obtaining judgment in any court it is necessary to convert a sum due
hereunder into any currency other than U.S. dollars, the parties hereto agree, to the fullest
extent that they may effectively do so, that the rate of exchange used shall be the rate at which
in accordance with normal banking procedures the Initial Purchasers could purchase U.S. dollars
with such other currency in The City of New York on the business day preceding that on which final
judgment is given. The obligations of the Company and each Guarantor in respect of any sum due
from them to any Initial Purchaser shall, notwithstanding any judgment in any currency other than
U.S. dollars, not be discharged until the first business day, following receipt by such Initial
Purchaser of any sum adjudged to be so due in such other currency, on which (and only to the extent
that) such Initial Purchaser may in accordance with normal banking procedures purchase U.S. dollars
with such other currency; if the U.S. dollars so purchased are less than the sum originally due to
such Initial Purchaser hereunder, the Company and each Guarantor agrees, as a separate obligation
and notwithstanding any such judgment, to indemnify such Initial Purchaser against such loss. If
the U.S. dollars so purchased are greater than the sum originally due to such Initial Purchaser
hereunder, such Initial Purchaser agrees to pay to the Company and the Guarantors (but without
duplication) an amount equal to the excess of the U.S. dollars so purchased over the sum originally
due to such Initial Purchaser hereunder.




     Section 17. No Advisory or Fiduciary Responsibility



          Each of the Company and the Guarantors acknowledges and agrees that: (i) the purchase and sale
of the Securities pursuant to this Agreement, including the determination of the offering price of
the Securities and any related discounts and commissions, is an arm’s-length commercial transaction
between the Company and the Guarantors, on the one hand, and the several Initial Purchasers, on the
other hand, and the Company and the Guarantors are capable of evaluating and understanding and
understand and accept the terms, risks and conditions of the transactions contemplated by this
Agreement, (ii) in connection with each transaction contemplated hereby and the process leading to
such transaction each Initial Purchaser is and has been acting solely as a principal and is not the
agent or fiduciary of the Company, Guarantors or their respective affiliates, stockholders,
creditors or employees or any other party, (iii) no Initial Purchaser has assumed or will assume an
advisory or fiduciary responsibility in favor of the Company or the Guarantors with respect to any
of the transactions contemplated hereby or the process leading thereto (irrespective of whether
such Initial Purchaser has advised or is currently advising the Company or the Guarantors on other
matters) or any other obligation to the Company and the Guarantors except the obligations expressly
set forth in this Agreement, (iv) the several Initial Purchasers and their respective affiliates
may be engaged in a broad range of transactions that involve interests that differ from those of
the Company and the Guarantors and that the several Initial Purchasers have no obligation to
disclose any of such interests by virtue of any fiduciary or advisory relationship and (v) the
Initial Purchasers have not provided any legal, accounting,













 





34


regulatory or tax advice with respect to the offering contemplated hereby and the Company and
the Guarantors have consulted their own legal, accounting, regulatory and tax advisors to the
extent they deemed appropriate.




     Section 18. General Provisions.



     This Agreement constitutes the entire agreement of the parties to this Agreement and
supersedes all prior written or oral and all contemporaneous oral agreements, understandings and
negotiations with respect to the subject matter hereof. This Agreement may be executed in two or
more counterparts, each one of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument. This Agreement may not be amended or
modified unless in writing by all of the parties hereto. The Table of Contents and the Section
headings herein are for the convenience of the parties only and shall not affect the construction
or interpretation of this Agreement.



     Each of the parties hereto acknowledges that it is a sophisticated business person who was
adequately represented by counsel during negotiations regarding the provisions hereof, including,
without limitation, the indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties hereto further
acknowledges that the provisions of Sections 8 and 9 hereto fairly allocate the risks in light of
the ability of the parties to investigate the Company, its affairs and its business in order to
assure that adequate disclosure has been made in the Pricing Disclosure Package, any Company
Additional Written Communication or the Offering Memorandum (and any amendments and supplements
thereto), as required by the Securities Act and the Exchange Act.












 





     If the foregoing is in accordance with your understanding of our agreement, kindly sign and
return to the Company the enclosed copies hereof, whereupon this instrument, along with all
counterparts hereof, shall become a binding agreement in accordance with its terms.



	 	 	 	 	 
	 	Very truly yours,




HELIX ENERGY SOLUTIONS GROUP, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	CANYON OFFSHORE, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	CANYON OFFSHORE INTERNATIONAL CORP

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	WELL OPS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	ENERGY RESOURCE TECHNOLOGY GOM, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	CKB PETROLEUM, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	CKB & ASSOCIATES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	BOX BROTHERS REALTY INVESTMENTS COMPANY

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	CB FARMS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	BOX RESOURCES, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HELIX VESSEL HOLDINGS LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	NEPTUNE VESSEL HOLDINGS LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	VULCAN MARINE HOLDINGS LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	VULCAN MARINE TECHNOLOGY LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 



	 	 	 	 	 
	 	HELIX INGLESIDE LLC

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 
	 
	 	HELIX OIL & GAS, INC.

 	 
	 	By:  	 	 
	 	 	Name:  	 	 
	 	 	Title:  	 	 



 









 






	 	 	 	 	 




     The foregoing Purchase Agreement is hereby confirmed and accepted by the Representative as of
the date first above written.



	 	 	 	 	 
	BANC OF AMERICA SECURITIES LLC

Acting as Representative of the several Initial

Purchasers named in the attached Schedule A

 	 	 
	By:  	 	 	 
	 	Name:  	 	 	 
	 	Title 	 	 
	 




 











 






	 	 	 	 	 



ANNEX I



Resale Pursuant to Regulation S or Rule 144A.



Each Initial Purchaser understands that:



Such Initial Purchaser agrees that it has not offered or sold and will not offer or sell the
Securities in the United States or to, or for the benefit or account of, a U.S. Person (other than
a distributor), in each case, as defined in Rule 902 of Regulation S (i) as part of its
distribution at any time and (ii) otherwise until 40 days after the later of the commencement of
the offering of the Securities pursuant hereto and the Closing Date, other than in accordance with
Regulation S or another exemption from the registration requirements of the Securities Act. Such
Initial Purchaser agrees that, during such 40-day restricted period, it will not cause any
advertisement with respect to the Securities (including any “tombstone” advertisement) to be
published in any newspaper or periodical or posted in any public place and will not issue any
circular relating to the Securities, except such advertisements as are permitted by and include the
statements required by Regulation S.



Such Initial Purchaser agrees that, at or prior to confirmation of a sale of Securities by it to
any distributor, dealer or person receiving a selling concession, fee or other remuneration during
the 40-day restricted period referred to in Rule 903 of Regulation S , it will send to such
distributor, dealer or person receiving a selling concession, fee or other remuneration a
confirmation or notice to substantially the following effect:






“The Securities covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the “Securities Act”),
and may not be offered and sold within the United States or to, or
for the account or benefit of, U.S. persons (i) as part of your
distribution at any time or (ii) otherwise until 40 days after the
later of the date the Securities were first offered to persons
other than distributors in reliance upon Regulation S and the
Closing Date, except in either case in accordance with Regulation
S under the Securities Act (or in accordance with Rule 144A under
the Securities Act or to accredited investors in transactions that
are exempt from the registration requirements of the Securities
Act), and in connection with any subsequent sale by you of the
Securities covered hereby in reliance on Regulation S under the
Securities Act during the period referred to above to any
distributor, dealer or person receiving a selling concession, fee
or other remuneration, you must deliver a notice to substantially
the foregoing effect. Terms used above have the meanings assigned
to them in Regulation S under the Securities Act.”




Annex I-1