Document:

Exhibit 10.1

 

[*] Confidential Treatment Requested
by Limoneira Company.

Execution Version

 

CADIZ – LIMONEIRA AMENDED AND RESTATED
LEASE

 

	1.  Parties	
        Cadiz Real Estate LLC (“Cadiz”),
        a wholly-owned subsidiary of Cadiz Inc., is the owner of approximately 45,000 acres of land and the subsurface strata, inclusive
        of the unsaturated soils and appurtenant water rights (the “Cadiz Property”).

         

        Limoneira Company (“Limoneira”)
is a publicly traded agribusiness and real estate development company.

	2.  Leased Property	
        A minimum of 320 acres to a maximum of 1,480 acres located within
        9,600 zoned agricultural acres within the Cadiz Property, with the exact location(s) to be mutually agreed to by the parties, on
        terms set forth in this Lease (“Leased Property”). Within thirty (30) days following the Effective Date,
        Cadiz will provide Limoneira a title report that identifies any and all liens recorded against the Leased Property, and a non-disturbance
        letter with regard to the Leased Property.

         

        Further, as the parties may mutually agree from time
to time during the Term, housing and other dwelling structures located adjacent to or near the Leased Property may be included
within the “Leased Property” for purposes of housing Limoneira’s agricultural employees working on the Leased
Property. Terms associated with such temporary housing facilities shall be agreed to in writing by the parties.

	
        3. Initial Lease; Option to Lease Additional Acreage 

         
	
        Cadiz leases to Limoneira, and Limoneira leases from Cadiz,
        Three Hundred Twenty (320) acres (the “Initial Acreage”), plus an additional Two Hundred (200) acres
        (the “Added Acreage”), the location to be mutually agreed to by the parties, and subject to the planting
        schedule described in Section 5 hereof. Further, Cadiz hereby grants to Limoneira the right to exercise an option to lease (beyond
        the Initial Acreage) up to Six Hundred Forty (640) acres (“Option 1”), and up to Three Hundred Twenty
        (320) acres (“Option 2”) (the two options together are collectively referred to as the “Option”);
        provided that (a) notice of Limoneira’s exercise of the Option must be in writing and received by Cadiz no later than December
        31, 2016 (for Option 1), and December 31, 2018 (for Option 2), and the physical planting of the lemon trees has occurred no later
        than December 31, 2017 (for Option 1) and December 31, 2019 (for Option 2).

         

        Excepting any water or soil contamination that may
exist on the Leased Property as of the Effective Date, Limoneira accepts the Leased Property in its “AS-IS” condition
as of the Effective Date, and in respect to the acreage leased under the timely exercise of the Option, as of the date of the
exercise of the applicable Option.

 

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[*] Confidential Treatment Requested
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Execution Version

 

	4.  Effective Date; Lease Term 	
        This Lease shall be effective as of last date this
Lease is executed by the parties hereto as set forth on the signature page (the “Effective Date”), and
shall expire with respect to actual planted acreage twenty (20) years following the initial planting on such acreage, and no later
than December 31, 2039, or as earlier terminated pursuant to this Lease (the “Term”), with no automatic
renewals, provided, however, that the parties may mutually agree (to be exercised in each party’s sole discretion) to extend
the Term.

	5.  Use of Leased Property 	
        The Leased Property is leased to Limoneira for the following
        purpose and for no other purpose except with the prior written consent of Cadiz, which shall be exercised by Cadiz in its sole
        and absolute discretion:

         

        §
        The planting, growing, and harvesting of lemon trees.

         

        Cadiz hereby represents that a conditional use permit from the
        County of San Bernardino is not required for the above-described use of the Leased Property.

         

        The parties agree that the intent of the parties is for Limoneira
        to plant, grow and harvest lemon trees on all of the Leased Property (that is, all 1,480 acres) by 2019. Although Limoneira is
        not obligated to exercise all or any part of the Option, Limoneira agrees that the Initial Acreage shall be planted with lemon
        trees no later than December 31, 2014.

         

        Limoneira shall carry on all activities permitted herein
in accordance with the best husbandry and best farming practices and sound management in accordance with sustainable farming practices
and in such a manner that does not degrade the aquifer underlying the Leased Property. Limoneira shall not use or permit the use
of the Leased Property for any unlawful purpose or in any way that will interfere with Cadiz’s use of the portion of its
property not included in the Leased Property.

 

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[*] Confidential Treatment Requested
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Execution Version

 

	6.  Lease Payment	
        In consideration for the Lease, Limoneira shall pay
to Cadiz or its assignee an annual amount equal to the sum of (a) $200 per acre planted, prorated for partial acreages planted
during the relevant period (“Base Rent”) and (b) 20% of the “Net Cash Flow”
(“Lease Payment”). The Lease Payment shall be due and payable semi-annually on June 30 and December
31 of each year, and shall not exceed $1,200 per acre per year. For purposes of this Lease, “Net Cash Flow”
shall mean gross revenues from the sale of the harvested lemons less operating expenses (including Base Rent but excluding
depreciation or other non-cash expenses). “Operating expenses” shall include, but not be limited to, expenditures
incurred by Limoneira for farming and growing, frost prevention, soil treatments, irrigation, harvesting, packing and freight.
Further, the parties may mutually agree (each exercised in its sole discretion) upon a characterization that extraordinary non-cash
expenses be “operating expenses” for purposes of calculating Net Cash Flow.

	7.  Water Infrastructure and Supply	
        In consultation with Limoneira, Cadiz shall design, develop
        and construct the necessary infrastructure in order to supply water to Limoneira for its irrigation purposes on the Leased Property.
        Cadiz shall be responsible for well maintenance and the delivery of water to the planted acreage through all subsurface infrastructure,
        including mains and laterals. Limoneira shall be responsible for any deep ripping to the land prior to any planting, if necessary,
        and the costs associated with the surface distribution of such water to the trees through selected drip irrigation.

         

        The water supply source for the Leased Property shall be from
        the Cadiz Property, and shall be provided by Cadiz to Limoneira for use on the Leased Property consistent with this Lease at a
        cost equal to $[*] (in July 2013 dollars) per acre-foot as increased (but not decreased) by an escalation equal to the percentage
        change (year over year) of the Consumer Price Index for All Urban Consumers, Los Angeles-Riverside-Orange County, CA, All Items,
        not seasonally adjusted (1982-1984=100) (“CPI”) (“Water Cost”), which shall
        be invoiced by Cadiz and paid by Limoneira to Cadiz on a quarterly basis. The maximum water supply to which Limoneira is entitled
        shall be 5 acre-feet per acre of the Leased Property (the “Total Water Allowance,” with actual entitlement
        based on the number of acres actually planted being “Planted Water Allowance”). For illustration purposes
        only, if Limoneira has 1,280 acres planted, its Planted Water Allowance shall be 6,400 acre-feet, at a total cost of $[*] + CPI.

         

        Any and all water rights initiated or preserved as
a result of Limoneira’s use of water on the Leased Property shall accrue to the benefit of Cadiz. Cadiz will be responsible
to provide water in quantity and suitability for the purposes set forth in this Lease.

 

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[*] Confidential Treatment Requested
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Execution Version

 

	8.  Taxes and Assessments	
        Cadiz shall pay, when due, all real property, personal
property and/or any other type of tax or assessment relating to the Leased Property, except that Limoneira shall pay any taxes
or assessments attributable to any alterations, additions or improvements made to the Leased Property by Limoneira or attributable
to Limoneira’s personal property or fixtures.

	9.  Maintenance and Repairs; Utilities	
        All farming operations on the Leased Property shall be done
        at the sole cost and expense of Limoneira, and Limoneira agrees to keep the Leased Property free and clear of all liens or claims
        of any kind for labor or material, and agrees to keep the Leased Property and the crops thereon free of any labor claims of any
        kind or nature.

         

        Limoneira agrees that it will not commit any waste or suffer
        any waste to be committed on the Leased Property and that at all times during the Term, it will keep and maintain all improvements
        now on the Leased Property, or that shall be constructed on the Leased Property during the Term with the approval of Cadiz, in
        as good order, condition and repair as reasonable use and wear thereof will permit, damage by the elements not traceable to the
        negligence of Limoneira or its agents or employees excepted.

         

        Limoneira will observe, comply and conform to all laws of the
        State of California and all ordinance of the County of San Bernardino, affecting the use or occupation of the Leased Property,
        including without limitation all laws and ordinances relating to the transportation and use of fertilizer and other chemicals.
        Limoneira agrees not to apply pesticides, herbicides, insecticides, fungicides or other chemical treatments on the Leased Property
        that may have a residual effect beyond the Term of the Lease.

         

        During the Term, Limoneira will keep and maintain in
good order, condition and repair all subsurface irrigation pipelines, valves and headgates, and other subsurface structures and
pipelines on the Leased Property used for the purposes of controlling the flow of water within the Leased Property.

 

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[*] Confidential Treatment Requested
by Limoneira Company.

Execution Version

 

	10.  Insurance	
        Limoneira agrees to obtain and keep in force during
the Term workers’ compensation, general liability and such other insurance coverages as deemed reasonably necessary by Cadiz
to protect against any liability for personal injury or property damage to the public incident to Limoneira’s use of or
resulting from any accident occurring on or about the Leased Property. Such policies shall insure any contingent liability of
Cadiz and shall name Cadiz as an additional insured. Such policies shall also provide for at least twenty (20) days written notice
by the insurer to Cadiz prior to any cancellation or modification thereof.

	11.  Cadiz’s Right of Entry and Inspection	
        Cadiz, its agents or attorneys, shall have the right
at all times to enter upon the Leased Property to inspect, to determine if Limoneira is complying with the terms of this Lease,
and for any other purpose.

	12.  Cadiz Buy-Out Right	
        At any time during the Term, Cadiz shall have the right,
exercised at any time and in its sole and absolute discretion, to divert the Total Water Allowance (or any portion thereof) by
paying to Limoneira an amount equal to the sum of (a) all unamortized capital costs incurred by Limoneira pursuant to its permitted
use of the Leased Property (based on a 20- year amortization schedule) and (b) 30% of such unamortized capital costs (“Cadiz
Buy-Out Right”). In the event Cadiz exercises the Cadiz Buy-Out Right, Cadiz agrees that it shall not, directly
or allow any third party to, harvest the then-planted lemon trees for profit on such portion of the Leased Property associated
with the Total Water Allowance (or portion thereof) diverted.

	13.  Limoneira Tag Right	
        During the Term, Limoneira shall have the right to convert up
        to 578 acre-feet of the Total Water Allowance (proportionately reduced if the Planted Water Allowance is less than the Total Water
        Allowance) (the “Tag Right”) to obtain rights within the permitted 50,000 acre feet of that certain Cadiz
        Valley Water Conservation, Recovery, and Storage Project located on the Cadiz Property overlying the Fenner Valley Aquifer System
        (the “Project”).

         

        Cadiz shall provide Limoneira written notice of any “firm
        contract” (that is, a non-contingent contract to sell Project water) within seven (7) days of the execution of the firm contract.
        Limoneira shall have sixty (60) days to exercise its Tag Right by providing written notice to Cadiz. See Exhibit A attached
        hereto and incorporated herein for an illustration of the Tag Right.

         

        Limoneira agrees that if it exercises its Tag Right
pursuant to this Section 13, it shall curtail use of any of the Total Water Allowance on one-fourth (1/4th) of the
acres planted. For illustration purposes, if 320 acres are planted, Limoneira’s Tag Right is 125 acre-feet, and if exercised,
it is precluded from using any of the Total Water Allowance on 80 acres, unless other water is deemed available by Cadiz through
the implementation of its Project and an agreement is reached between Cadiz and Limoneira as to the source and cost of such new
water supply.

 

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[*] Confidential Treatment Requested
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Execution Version

 

	14.  Default	
        The occurrence of any one or more of the following events shall
        constitute a material default and breach of this Lease by Limoneira (each, a “Limoneira Default”):

         

        §
          The failure by Limoneira to make any Lease Payment or any other payment, including the Water Cost, required to be made by
        Limoneira under this Lease as and when due, where such failure shall continue for a period of ten (10) days after written notice
        of such failure from Cadiz to Limoneira;

         

        §
          The failure by Limoneira to observe any of the material covenants, conditions or provisions of this Lease, other than the
        payment of money, where such failure shall continue for a period of twenty (20) days after written notice of such failure from
        Cadiz to Limoneira, provided, however, that if the nature of Limoneira’s default is such that more than twenty (20) days
        are reasonably required for its cure, Limoneira continually and diligently prosecutes such cure to completion.

         

        The failure by Cadiz to observe any of the material
covenants, conditions or provisions of this Lease, where such failure shall continue for a period of twenty (20) days after written
notice of such failure from Limoneira to Cadiz, provided, however, that if the nature of Cadiz’s default is such that more
than twenty (20) days are reasonably required for its cure, Cadiz continually and diligently prosecutes such cure to completion
(“Cadiz Default”).

 

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[*] Confidential Treatment Requested
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Execution Version

 

	15.  Termination	
        This Lease shall terminate upon the earliest of the following:

         

        §
          The expiration of the Term (as to the particular acreage then expiring);

         

        §
          Upon mutual agreement of the parties for any reason, including, but not limited to, a determination that the intended use
        of the Leased Property (that is, to plant, grow and harvest lemon trees for profit) is or becomes “economically unviable,”
        which shall include, without limitation, market or weather conditions that render the lemon operation unprofitable, the existence
        or occurrence of water or soil contamination or pollution, pest infestation, litigation and injunctions prohibiting or precluding
        the intended use of the Leased Property.

         

        §
          At the option of Cadiz, the occurrence of a Limoneira Default;

         

        §
          At the option of Limoneira, the occurrence of a Cadiz Default;

         

        §
          At the option of either party, the occurrence of a “Force Majeure” event, which for purposes of
        this Lease shall be defined as the failure of a party to perform its obligations hereunder by reason of any fire, earthquake, flood,
        epidemic, explosion, riot, civil disturbance, act of public enemy or terrorism, war, act of God or similar event beyond such party’s
        control, and specifically with respect to Cadiz’s supply of water pursuant to the terms of this Lease, any governmental or
        judicial order to reduce the water volume or flow rate to the Leased Property;

         

        §
          Exercise by Cadiz of the Cadiz Buy-Out Right.

         

        Upon termination of this Lease, Limoneira shall quit and surrender
        the Leased Property to Cadiz in at least as good order, condition and repair as when received, reasonable use, damage by act of
        God or by natural causes excepted, remove all of Limoneira’s personal property and fixtures from the Leased Property (excepting
        planted lemon trees), and repair any damage caused by such removal. Limoneira shall promptly execute, acknowledge and deliver to
        Cadiz such instruments of further assurance as in the reasonable opinion of Cadiz are necessary or desirable to confirm or perfect
        Cadiz’s rights, title and interest in and to the Leased Property. The provisions of this paragraph shall survive the expiration
        or termination of this Lease. Upon termination, Limoneira shall have no further right or interest in or to the Leased Property
        or any part thereof.

         

        In the event the Lease is terminated due to Cadiz’s
exercise of the Cadiz Buy-Out Right or the occurrence of a Cadiz Default, Cadiz hereby agrees that it shall not, directly or allow
any third party to, harvest the then-planted lemon trees for profit.

 

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[*] Confidential Treatment Requested
by Limoneira Company.

Execution Version

 

	16.  Indemnification	
        Cadiz shall not be liable in any manner for any loss, damage
        or injury to any person or the property of Limoneira or that of its agents or employees, or to any other person(s) or the property
        of such person(s) invited or permitted by Limoneira to come upon or about the Leased Property, or to any other person(s) who enters
        upon or about the Leased Property whether invitees, by trespass or otherwise, by reason of anything done, permitted to be done
        or suffered or admitted to be done, by Limoneira or its agents or employees or otherwise. Limoneira agrees to indemnify and save
        harmless Cadiz, its officers, directors, agents, employees, successors and assigns from any and all such liability, damage, cost
        and expense, to protect Cadiz against any claim that may be made, or action that may be brought against Cadiz, and pay all reasonable
        costs and expenses of such protection and defense.

         

        Cadiz agrees to indemnify and save harmless Limoneira,
its officers, directors, agents, employees, successors and assigns from any and all liability, damage, cost and expense suffered
by Limoneira directly resulting from contamination of the Leased Property or the water supplied by Cadiz hereunder, provided that
such contamination is caused by an agent or employee of Cadiz. Cadiz further agrees to indemnify and save harmless Limoneira,
its officers, directors, agents, employees, successors and assigns from any and all liability, damage, cost and expense suffered
by Limoneira (including reasonable attorneys’ fees and costs) directly resulting from actions or causes of actions against
Cadiz and Limoneira that seek to prevent, enjoin or otherwise prohibit Limoneira from its intended use of the Leased Property.

 

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[*] Confidential Treatment Requested
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Execution Version

 

	17.  Attorneys’ Fees	
        If either Limoneira or Cadiz has to institute legal
proceedings of any kind or character to compel performance of any of the covenants or conditions to be paid, kept or performed
under this Lease, the party recovering judgment shall have and recover all attorneys’ fees and costs incurred in connection
with any such legal proceedings.

	
        18. Binding Nature; General Provisions

         
	
        Upon execution of this Lease, the parties modify, amend and
        restate that certain Cadiz-Limoneira Lease dated July 1, 2013.

         

        The provisions of this Lease shall be binding upon the parties
        and their successors and permitted assigns commencing on the date last set forth the parties’ signatures. Limoneira shall
        not assign this Lease or sublet the Leased Property without the prior written consent of Cadiz which shall be exercised in Cadiz’s
        sole and absolute discretion.

         

        The validity and interpretation of this Lease shall be governed
        by the laws of the State of California.

         

        All individuals executing this Lease on behalf of the respective
        parties represent and warrant that they have the capacity and have been duly authorized to so execute the same. Each signatory
        shall indemnify each other party, and hold them harmless, from all damages, costs, attorneys’ fees and other expenses if
        not so authorized.

         

        Any and all notices shall be given by a party to the other party
        in writing by delivery of such notice to such party personally or by certified or registered mail addressed to the party as set
        forth on the signature page of this Lease or such other address as delivered to the other party pursuant to this paragraph. In
        the case of notices by mail, notice shall be deemed to have been received forty-eight (48) hours after the date of deposit in the
        United States mail.

         

        No waiver of any breach of any of the covenants, agreements,
        restrictions and conditions of this Lease shall be construed to be a waiver of any succeeding breach of the same or other covenants,
        agreements, restrictions or conditions.

         

        No remedy shall be exclusive but shall, wherever possible, be
        deemed cumulative with all other remedies at law or in equity.

         

        Time is of the essence in respect to the terms and provisions
        of this Lease.

         

        Neither party will issue any public statement with respect to
        the existence of this Lease or its contemplated transactions, nor will either party use the other party’s names or trademarks,
        without the other party’s prior written consent.

         

        Each party agrees to cooperate in the performance of this Lease
        and to execute and deliver any and all documents and perform any and all acts necessary to carry out its purpose and intent.

         

        Nothing contained in this Lease shall create a partnership,
joint venture or employment relationship between Cadiz and Limoneira. Neither party shall be liable, except as otherwise expressly
provided for in this Lease, for any obligations or liabilities incurred by the other party.

 

[signatures contained on next page]

 

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[*] Confidential Treatment Requested
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Execution Version

 

IN WITNESS WHEREOF, the parties hereto
have executed this Lease as of the date set forth below.

 

	Dated:  February 3, 2015	CADIZ REAL ESTATE LLC
	 	 	 
	 	By:	/s/Tim Shaheen
	 	 	 
	 	Its: 	Manager
	 	 	 
	 	Address:
	 	550 S. Hope Street, Suite 2850
	 	Los Angeles, CA  90071
	 	 	 
	Dated:  February 3, 2015	LIMONEIRA COMPANY
	 	 	 
	 	By: 	/s/ Joseph D. Rumley
	 	 	 
	 	Its: 	CFO
	 	 	 
	 	Address:
	 	1141 Cummings Road
	 	Santa Paula, CA  93060

 

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[*] Confidential Treatment Requested
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Execution Version 

Exhibit A

Sample Calculation of Tag-A-Long Price Provision

 

Valuation: $10,962,398 (2015)

Assumptions

		·	Price in 2013: $500 per acre foot

		·	Annual rate of increase of MWD’s Untreated Full Service Tier 1 Water Rate: 6.2% (based on
cumulative annual increase from 2003-2012)

		·	Interest Rate: 6.5%

		o	Yield on 10-Year Treasury Note: 4.5% (long-term real
interest rate of 2% plus expected inflation of 2.5% based on differential between nominal yield on 10-Year Treasury Note and yield
on 10-Year Treasury Inflation Protected Securities, “TIPS”)

		o	Risk premium: 2.0% (expected life 50 years)

 

50-Year Projections

 

	Year	 	Price	 	 	Quantity	 	 	Revenues	 	 	Year	 	 	Price	 	 	Quantity	 	 	Revenues	 
	2015	 	$	500.00	 	 	 	500	 	 	$	250,000	 	 	 	2040	 	 	$	2,249.48	 	 	 	500	 	 	$	1,124,740	 
	2016	 	$	531.00	 	 	 	500	 	 	$	265,500	 	 	 	2041	 	 	$	2,388.95	 	 	 	500	 	 	$	1,194,475	 
	2017	 	$	563.92	 	 	 	500	 	 	$	281,960	 	 	 	2042	 	 	$	2,537.07	 	 	 	500	 	 	$	1,268,535	 
	2018	 	$	598.89	 	 	 	500	 	 	$	299,445	 	 	 	2043	 	 	$	2,694.37	 	 	 	500	 	 	$	1,347,185	 
	2019	 	$	636.02	 	 	 	500	 	 	$	318,010	 	 	 	2044	 	 	$	2,861.42	 	 	 	500	 	 	$	1,430,710	 
	2020	 	$	675.45	 	 	 	500	 	 	$	337,725	 	 	 	2045	 	 	$	3,038.82	 	 	 	500	 	 	$	1,519,410	 
	2021	 	$	717.33	 	 	 	500	 	 	$	358,665	 	 	 	2046	 	 	$	3,227.23	 	 	 	500	 	 	$	1,613,615	 
	2022	 	$	761.80	 	 	 	500	 	 	$	380,900	 	 	 	2047	 	 	$	3,427.32	 	 	 	500	 	 	$	1,713,660	 
	2023	 	$	809.03	 	 	 	500	 	 	$	404,515	 	 	 	2048	 	 	$	3,639.81	 	 	 	500	 	 	$	1,819,905	 
	2024	 	$	859.19	 	 	 	500	 	 	$	429,595	 	 	 	2049	 	 	$	3,865.48	 	 	 	500	 	 	$	1,932,740	 
	2025	 	$	912.46	 	 	 	500	 	 	$	456,230	 	 	 	2050	 	 	$	4,105.14	 	 	 	500	 	 	$	2,052,570	 
	2026	 	$	969.04	 	 	 	500	 	 	$	484,520	 	 	 	2051	 	 	$	4,359.66	 	 	 	500	 	 	$	2,179,830	 
	2027	 	$	1,029.12	 	 	 	500	 	 	$	514,560	 	 	 	2052	 	 	$	4,629.96	 	 	 	500	 	 	$	2,314,980	 
	2028	 	$	1,092.92	 	 	 	500	 	 	$	546,460	 	 	 	2053	 	 	$	4,917.02	 	 	 	500	 	 	$	2,458,510	 
	2029	 	$	1,160.68	 	 	 	500	 	 	$	580,340	 	 	 	2054	 	 	$	5,221.87	 	 	 	500	 	 	$	2,610,935	 
	2030	 	$	1,232.64	 	 	 	500	 	 	$	616,320	 	 	 	2055	 	 	$	5,545.63	 	 	 	500	 	 	$	2,772,815	 
	2031	 	$	1,309.07	 	 	 	500	 	 	$	654,535	 	 	 	2056	 	 	$	5,889.46	 	 	 	500	 	 	$	2,944,730	 
	2032	 	$	1,390.23	 	 	 	500	 	 	$	695,115	 	 	 	2057	 	 	$	6,254.60	 	 	 	500	 	 	$	3,127,300	 
	2033	 	$	1,476.42	 	 	 	500	 	 	$	738,210	 	 	 	2058	 	 	$	6,642.39	 	 	 	500	 	 	$	3,321,195	 
	2034	 	$	1,567.96	 	 	 	500	 	 	$	783,980	 	 	 	2059	 	 	$	7,054.22	 	 	 	500	 	 	$	3,527,110	 
	2035	 	$	1,665.18	 	 	 	500	 	 	$	832,590	 	 	 	2060	 	 	$	7,491.58	 	 	 	500	 	 	$	3,745,790	 
	2036	 	$	1,768.42	 	 	 	500	 	 	$	884,210	 	 	 	2061	 	 	$	7,956.05	 	 	 	500	 	 	$	3,978,025	 
	2037	 	$	1,878.06	 	 	 	500	 	 	$	939,030	 	 	 	2062	 	 	$	8,449.33	 	 	 	500	 	 	$	4,224,665	 
	2038	 	$	1,994.50	 	 	 	500	 	 	$	997,250	 	 	 	2063	 	 	$	8,973.19	 	 	 	500	 	 	$	4,486,595	 
	2039	 	$	2,118.16	 	 	 	500	 	 	$	1,059,080	 	 	 	2064	 	 	$	9,529.53	 	 	 	500	 	 	$	4,764,765	 

 

    	11exhibit10pnt1.htm

Exhibit 10.1

 

Execution Version

 

PURCHASE AGREEMENT

 

March 4, 2015

 

Merrill Lynch, Pierce, Fenner & Smith

Incorporated     

    As Representative of the Initial Purchasers

One Bryant Park

New York, New York  10036

 

Ladies and Gentlemen:

 

Introductory.  Comstock Resources, Inc., a Nevada corporation (the “Company”), proposes to issue and sell to Merrill Lynch, Pierce, Fenner & Smith Incorporated (“Merrill Lynch”) and the other several Initial Purchasers named in Schedule A (the “Initial Purchasers”), acting severally and not jointly, the respective amounts set forth in such Schedule A of $700,000,000 aggregate principal amount of the Company’s 10.0% Senior Secured Notes due 2020 (the “Notes”).  Merrill Lynch has agreed to act as the representative of the several Initial Purchasers (the “Representative”) in connection with the offering and sale of the Securities (as defined below).

 

The Securities will be issued pursuant to an indenture, to be dated as of March 13, 2015 (the “Indenture”), among the Company, the Guarantors (as defined below) and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”).  Notes will be issued only in book-entry form in the name of Cede & Co., as nominee of The Depository Trust Company (the “Depositary”) pursuant to a letter of representations, to be dated on or before the Closing Date (as defined in Section 2 hereof) (the “DTC Agreement”), between the Company and the Depositary.

 

The payment of principal of, premium, if any, and interest on the Notes will be fully and unconditionally guaranteed, jointly and severally by (i) the entities listed on the signature pages hereof as “Guarantors” and (ii) any subsidiary of the Company formed or acquired after the Closing Date that executes an additional guarantee 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 related Guarantees are herein collectively referred to as the “Securities.”

 

The issuance and sale of the Notes by the Company, the Guarantees by the Guarantors, the granting of security interests in and liens on the Collateral (as defined below) by the Company and the Guarantors, the entry by the Company into a new revolving credit agreement (the “Credit Facility”) as described in the Pricing Disclosure Package (as defined below), the entry by the Company and the Guarantors into any other agreements required in connection with the Securities or the Credit Facility, the repayment of all borrowings under the Company’s existing credit facilities as described in the Pricing Disclosure Package and the payment of transaction costs are referred to herein collectively, as the “Transactions.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

  

  

The Notes will be secured, on an equal and ratable, first priority basis with the obligations under the Credit Facility, subject to payment priorities in favor of the lenders under the Credit Facility pursuant to the terms of the Intercreditor Agreement (as defined below) and Permitted Collateral Liens (as defined in the Indenture), by security interests and liens on the assets (the “Collateral”) of the Company and the Guarantors that have been pledged as collateral securing the Credit Facility, as more particularly described in the Pricing Disclosure Package and documented by a security agreement dated as of the Closing Date (the “Security Agreement”), and other instruments evidencing or creating a security interest, including the mortgages required to be delivered pursuant to the Credit Facility and the Indenture, which shall be dated within 60 days of the Closing Date  (collectively, with the Intercreditor Agreement referred to below, the “Security Documents”) in favor of Bank of Montreal, as collateral agent (in such capacity, the “Collateral Agent”), for its benefit, for the benefit of the lenders under the Credit Facility and the benefit of the Trustee and the holders of the Notes.

 

The liens on the Collateral securing the Securities will be subject to an Intercreditor Agreement, dated as of the Closing Date (the “Intercreditor Agreement”), by and among the Collateral Agent, the Trustee and Bank of Montreal, as administrative agent under the Credit Facility, and agreed to and acknowledged by the Company and the Guarantors.

 

This Agreement, the DTC Agreement, the Notes, the Security Documents, the Credit Facility and the Indenture are referred to herein as the “Transaction Documents.”

 

The Company 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 Securities and Exchange Commission (the “Commission”) under the Securities Act of 1933 (as amended, the “Securities Act,” which term, as used herein, includes the rules and regulations of the Commission promulgated thereunder), in reliance upon exemptions therefrom.  Pursuant to the terms of the Securities and the Indenture, investors who acquire Securities shall be deemed to have agreed 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 exemptions afforded by Rule 144A under the Securities Act (“Rule 144A”) or Regulation S under the Securities Act (“Regulation S”)).

 

The Company has prepared and delivered to each Initial Purchaser copies of a Preliminary Offering Memorandum, dated February 25, 2015 (the “Preliminary Offering Memorandum”), and has prepared and delivered to each Initial Purchaser copies of a Pricing Supplement, dated March 4, 2015 (the “Pricing Supplement”), describing the terms of the Securities, each for use by such Initial Purchaser in connection with its solicitation of offers to purchase the Securities.  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 a final offering memorandum dated the date hereof (the “Final Offering Memorandum”).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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All references herein to the terms “Pricing Disclosure Package” and “Final Offering Memorandum” shall be deemed to mean and include all information filed under the Securities Exchange Act of 1934 (as amended, the “Exchange Act,” which term, as used herein, includes the rules and regulations of the Commission promulgated thereunder) prior to the Time of Sale and incorporated by reference in the Pricing Disclosure Package (including the Preliminary Offering Memorandum) or the Final Offering Memorandum (as the case may be), and all references herein to the terms “amend,” “amendment” or “supplement” with respect to the Final 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 Final Offering Memorandum.

 

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

 

SECTION 1. Representations and Warranties.  Each of the Company and the Guarantors, jointly and severally, hereby represents, warrants and covenants to each Initial Purchaser that:

 

    (a)    No Registration Required.  Subject to compliance by the Initial Purchasers with the representations and warranties set forth in Section 2 hereof and with the procedures set forth in Section 7 hereof, it is not necessary in connection with the offer, sale and delivery of the Securities to the Initial Purchasers and to each Subsequent Purchaser in the manner contemplated by this Agreement, the Pricing Disclosure Package and the Final Offering Memorandum to register the Securities under the Securities Act or to qualify the Indenture under the Trust Indenture Act of 1939 (the “Trust Indenture Act,” which term, as used herein, includes the rules and regulations of the Commission promulgated thereunder).

 

    (b)    No Integration of Offerings or General Solicitation.  None of the Company, its affiliates (as such term is defined in Rule 501 under the Securities Act) (each, an “Affiliate”), or any person acting on its or any of their behalf (other than the Initial Purchasers, as to whom the Company and the Guarantors make no representation or warranty) has, directly or indirectly, solicited any offer to buy or offered to sell, or will, directly or indirectly, solicit any offer to buy or offer to sell, in the United States or to any United States citizen or resident, any security which is or would be integrated with the sale of the Securities in a manner that would require the Securities to be registered under the Securities Act.  None of the Company, its Affiliates, or any person acting on its or any of their behalf (other than the Initial Purchasers, as to whom the Company and the Guarantors make no representation or warranty) has engaged or will engage, in connection with the offering of the Securities, in any form of general solicitation or general advertising within the meaning of Rule 502 under the Securities Act.  With respect to those Securities sold in reliance upon Regulation S, (i) none of the Company, its Affiliates or any person acting on its or their behalf (other than the Initial Purchasers, as to whom the Company and the Guarantors make no representation or warranty) has engaged or will engage in any directed selling efforts within the meaning of Regulation S and (ii) each of the Company and its Affiliates and any person acting on its or their behalf (other than the Initial Purchasers, as to whom the Company and the Guarantors make no representation or warranty) has complied and will comply with the offering restrictions set forth in Regulation S.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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    (c)    Eligibility for Resale under Rule 144A.  The Securities are eligible for resale pursuant to Rule 144A and will not be, at the Closing Date, of the same class as securities listed on a national securities exchange registered under Section 6 of the Exchange Act or quoted in a U.S. automated interdealer quotation system.

 

    (d)    The Pricing Disclosure Package and Offering Memorandum. Neither the Pricing Disclosure Package, as of the Time of Sale, nor the Final Offering Memorandum, as of its date or (as amended or supplemented in accordance with Section 3(a), as applicable) as of the Closing Date, contains or represents an untrue statement of a material fact or omits to state a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; provided that this representation, warranty and agreement shall not apply to statements in or omissions from the Pricing Disclosure Package, the Final Offering Memorandum or any amendment or supplement thereto made in reliance upon and in conformity with information furnished to the Company in writing by any Initial Purchaser expressly for use in the Pricing Disclosure Package, the Final Offering Memorandum or amendment or supplement thereto, as the case may be.  The Pricing Disclosure Package contains, and the Final Offering Memorandum will contain, all the information specified in, and meeting the requirements of, Rule 144A.  The Company and the Guarantors have 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 Final Offering Memorandum.

 

    (e)    Company Additional Written Communications.  The Company has not prepared, made, used, authorized, approved or distributed and will not prepare, make, use, authorize, approve or distribute any written communication that constitutes an offer to sell or solicitation of an offer to buy the Securities other than (i) the Pricing Disclosure Package, (ii) the Final Offering Memorandum and (iii) any electronic road show or other written communications, in each case used in accordance with Section 3(a).  Each such communication by the Company or its agents and representatives pursuant to clause (iii) of the preceding sentence (each, a “Company Additional Written Communication”), when taken together with the Pricing Disclosure Package, did not as of the Time of Sale, 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 this representation, warranty and agreement shall not apply to statements in or omissions from each such Company Additional Written Communication made in reliance upon and in conformity with information furnished to the Company in writing by any Initial Purchaser through the Representative expressly for use in such Company Additional Written Communication.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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    (f)    Incorporated Documents.  The documents incorporated or deemed to be incorporated by reference in the Offering Memorandum at the time they were or hereafter are filed with the Commission (collectively, the “Incorporated Documents”) complied and will comply in all material respects with the requirements of the Exchange Act.  Each such Incorporated Document, when taken together with the Pricing Disclosure Package, did not as of the Time of Sale, 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.

 

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

 

    (h)    DTC Agreement.  The DTC Agreement has been duly authorized and, on the Closing Date, will have been duly executed and delivered by, and will constitute a valid and binding agreement of, the Company, enforceable in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.

 

    (i)    Authorization of the Notes and the Guarantees.  The Notes to be purchased by the Initial Purchasers from the Company will on the Closing Date be in the form contemplated by the Indenture, have been duly authorized for issuance and sale pursuant to this Agreement and the Indenture and, at the Closing Date, will have been duly executed by the Company and, when authenticated in the manner provided for in the Indenture and delivered against payment of the purchase price therefor, will constitute valid and binding obligations of the Company, enforceable in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles, and will be entitled to the benefits of the Indenture.  The Guarantees of the Notes on the Closing Date will have been duly authorized for issuance pursuant to this Agreement and the Indenture.  When the Notes have been authenticated in the manner provided for in the Indenture and issued and delivered against payment of the purchase price therefor, the Guarantees of the Notes will constitute valid and binding agreements of the Guarantors,  enforceable in accordance with their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles, and will be entitled to the benefits of the Indenture.

 

    (j)    Authorization of the Indenture.  The Indenture has been duly authorized by the Company and the Guarantors and, at the Closing Date, will have been duly executed and delivered by the Company and the Guarantors and will constitute a valid and binding agreement of the Company and the Guarantors, enforceable against the Company and the Guarantors in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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    (k)    Authorization of the Intercreditor Agreement.  The Intercreditor Agreement has been duly authorized by the Company and each Guarantor and, at the Closing Date, will have been duly executed and delivered by the Company and each Guarantor and will constitute a valid and binding agreement of the Company and each Guarantor, enforceable against the Company and each Guarantor in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.

 

    (l)    Security Documents.  Each of the Security Documents has been duly authorized by the Company and/or the applicable Guarantor, as appropriate, and, when executed and delivered by the Company and/or the applicable Guarantor, will constitute a legal and binding agreement of the Company and/or the applicable Guarantor in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.  The Security Documents, when executed and delivered in connection with the sale of the Securities, will create in favor of the Collateral Agent for the benefit of itself, the Trustee and the holders of the Notes, valid and enforceable security interests in and liens on the Collateral and, upon the filing of appropriate Uniform Commercial Code financing statements in United States jurisdictions as set forth on Schedule B hereto and the taking of the other actions, in each case as further described in the Security Documents, the security interests in and liens on the rights of the Company or the applicable Guarantor in such Collateral will be perfected security interests and liens, superior to and prior to the liens of all third persons other than Permitted Collateral Liens.

 

   (m)    Credit Facility.  The Credit Facility has been duly authorized by the Company and, when duly executed and delivered by the Company, will be the valid and legally binding obligation of the Company, enforceable in accordance with its terms, except as the enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights and remedies of creditors or by general equitable principles.

 

    (n)    Description of the Transaction Documents.  The Transaction Documents will conform in all material respects to the respective statements relating thereto contained in the Pricing Disclosure Package and the Final Offering Memorandum.

 

    (o)    No Material Adverse Change.  There has not occurred any material adverse change, or any development that can reasonably be expected to involve a material adverse change, in the condition, financial or otherwise, or in the earnings, business or operations of the Company and its subsidiaries, taken as a whole, from that set forth in the Pricing Disclosure Package and the Final Offering Memorandum (exclusive of any amendment or supplement thereto) (any such change is called a “Material Adverse Change”).  Subsequent to the respective dates as of which information is given in the Pricing Disclosure Package and the Final Offering Memorandum, (1) the Company and its subsidiaries have not incurred any material liability or obligation, direct or contingent, nor entered into any material transaction not in the ordinary course of business; (2) the Company has not purchased any of its outstanding capital stock, nor declared, paid or otherwise made any dividend or distribution of any kind on its capital stock other than ordinary and customary dividends; and (3) there has not been any material change in the capital stock, short-term debt or long-term debt of the Company and its subsidiaries, except in each case as described in the Pricing Disclosure Package and the Final Offering Memorandum.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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    (p)     Independent Accountants.  The accountants, Ernst & Young LLP, who have certified or shall certify the financial statements included in the Disclosure Package and the Prospectus, are independent public accountants as required by the Securities Act.

 

    (q)    Independent Petroleum Consultants. Lee Keeling and Associates, Inc. are independent petroleum consultants with respect to the Company and its subsidiaries.

 

    (r)    Preparation of the Financial Statements.  The consolidated historical financial statements, together with related schedules and notes, included in the Pricing Disclosure Package and the Final Offering Memorandum comply as to form in all material respects with the applicable requirements of the Securities Act and the Exchange Act, as applicable.  Such historical financial statements present fairly the consolidated financial position, results of operations and changes in financial position of the Company and its subsidiaries on the basis stated in the Pricing Disclosure Package and the Final Offering Memorandum at the respective dates or for the respective periods to which they apply; such statements and related schedules and notes have been prepared in accordance with generally accepted accounting principles consistently applied throughout the periods involved, except as disclosed therein, and the supporting schedules included or incorporated by reference in the Pricing Disclosure Package and the Final Offering Memorandum present fairly the information required to be stated therein.  The other financial and statistical information and data included in the Pricing Disclosure Package and the Final Offering Memorandum are accurately presented and prepared on a basis consistent with such financial statements and the books and records of the Company and its subsidiaries.  The pro forma financial statements, if any, included or incorporated by reference in the Pricing Disclosure Package and the Final Offering Memorandum have been prepared on a basis consistent with the historical financial statements of the Company and its subsidiaries and give effect to assumptions used in the preparation thereof on a reasonable basis and in good faith and present fairly the transactions described therein; and such pro forma financial statements comply as to form in all material respects with the Commission’s rules and guidance with respect to pro forma financial statements.  The other pro forma financial and statistical information and data , if any, included or incorporated by reference in the Pricing Disclosure Package and the Final Offering Memorandum are, in all material respects, accurately presented and prepared on a basis consistent with the pro forma financial statements.  The interactive data in eXtensible Business Reporting Language incorporated by reference in the Pricing Disclosure Package and the Final Offering Memorandum fairly presents in all material respects the information contained therein and has been prepared in accordance with the Commission’s rules and guidance applicable thereto in all material respects.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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    (s)    Incorporation and Good Standing of the Company.  The Company has been duly incorporated, is validly existing as a corporation in good standing under the laws of the jurisdiction of its incorporation, has the corporate power and authority to own or lease, as the case may be, its property and to conduct its business as described in the Pricing Disclosure Package and the Final Offering Memorandum and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole.

 

    (t)    Incorporation and Good Standing of the subsidiaries of the Company. Each subsidiary of the Company has been duly organized, is validly existing as a corporation, limited partnership or limited liability company in good standing under the laws of the jurisdiction of its organization, has the corporate, partnership or limited liability company power and authority to own or lease, as the case may be, its property and to conduct its business as described in the Pricing Disclosure Package and the Final Offering Memorandum and is duly qualified to transact business and is in good standing in each jurisdiction in which the conduct of its business or its ownership or leasing of property requires such qualification, except to the extent that the failure to be so qualified or be in good standing would not have a material adverse effect on the Company and its subsidiaries, taken as a whole; all of the issued shares of capital stock or other ownership interest of each subsidiary of the Company have been duly and validly authorized and issued, are fully paid and non-assessable and are owned directly, or indirectly through one of the other subsidiaries, by the Company, free and clear of all liens, encumbrances, equities or claims, except for pledges of such shares or ownership interest pursuant to the Company’s current bank credit facility (which will be released on the Closing Date) and which will be subject to a pledge pursuant to the Credit Facility or are otherwise described in the Pricing Disclosure Package and the Final Offering Memorandum.

 

    (u)    Capitalization.  All of the shares of common stock, par value $0.50 per share, of the Company that are outstanding have been duly authorized and are validly issued, fully paid and non-assessable.

 

    (v)    No Conflict.  The execution and delivery by the Company and the Guarantors, as the case may be, of, and the performance by the Company and the Guarantors, as the case may be, of their obligations under, the Transaction Documents and with respect to the Guarantees will not contravene any provision of applicable law or the certificate or articles of incorporation or by-laws or other organizational documents of the Company or any of its subsidiaries or any agreement or other instrument binding upon the Company or any of its subsidiaries that is material to the Company and its subsidiaries, taken as a whole, or any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any subsidiary, and no consent, approval, authorization or order of, or qualification with, any governmental body or agency is required for the performance by the Company or any of the Guarantors of its obligations under this the Transaction Documents and with respect to the Guarantees, except such as may be required by the securities or Blue Sky laws of the various states in connection with the offer and sale of the Securities.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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   (w)    No Violation.  Neither the Company nor any of its subsidiaries is in violation of its certificate or articles of incorporation or by-laws, or other organizational documents, or of any law, ordinance, administrative or governmental rule or regulation applicable to the Company or any of its subsidiaries or of any judgment, order or decree of any governmental body, agency or court having jurisdiction over the Company or any of its subsidiaries, or in default in any material respect in the performance of any obligation, agreement or condition contained in any bond, debenture, note or any other evidence of indebtedness or in any material agreement, indenture, lease or other instrument to which the Company or any of its subsidiaries is a party or by which any of them or any of their respective properties may be bound.

 

    (x)    No Material Actions or Proceedings.  There are no legal or governmental proceedings pending or, to the knowledge of the Company and the Guarantors, threatened to which the Company or any of its subsidiaries is a party or to which any of the properties of the Company or any of its subsidiaries is subject other than proceedings accurately described in all material respects in the Pricing Disclosure Package and the Final Offering Memorandum and proceedings that would not reasonably be expected to have a material adverse effect on the Company and its subsidiaries, taken as a whole, or on the power or ability of the Company and the Guarantors to perform their obligations under the Transaction Documents and with respect to the Guarantees or to consummate the transactions contemplated by the Pricing Disclosure Package, the Final Offering Memorandum and this Agreement.

 

    (y)    Intellectual Property Rights.  The Company and its subsidiaries own or possess all patents, trademarks, trademark registration, service marks, service mark registrations, trade names, copyrights, licenses, inventions, trade secrets and rights described in the Pricing Disclosure Package and the Final Offering Memorandum as being owned by them or any of them or necessary for the conduct of their respective businesses, and the Company and the Guarantors are not aware of any claim to the contrary or any challenge by any other person to the rights of the Company and its subsidiaries with respect to the foregoing.

 

    (z)    Title to Properties.  The Company and each of its subsidiaries has (1) generally satisfactory title to all its interests in its oil and gas properties, title investigations having been carried out by the Company and each of its subsidiaries in accordance with the general practice in the oil and gas industry, (2) good and marketable title in fee simple to all other real property owned by it and (3) good and marketable title to all personal property owned by it, in each case free and clear of all liens, encumbrances, claims, security interests, subleases and defects except (i) for liens pursuant to the Company’s current bank credit facility (which will be released on the Closing Date) and (ii) such as are described in the Pricing Disclosure Package and the Final Offering Memorandum or such as do not materially affect the value of such property and do not interfere with the use made and proposed to be made of such property by the Company and its subsidiaries; and any real property and buildings held under lease by the Company and its subsidiaries are held by them under valid, subsisting and enforceable leases with such exceptions as are not material and do not interfere with the use made and proposed to be made of such property and buildings of the Company and its subsidiaries.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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    (aa)    Tax Law Compliance.  The Company and each of its subsidiaries have filed all material tax returns required to be filed, which returns are complete and correct in all material respects, and neither the Company nor any of its subsidiaries is in default in the payment of any taxes which were payable pursuant to said returns or any assessments with respect thereto.

 

    (bb)    Company and the Guarantors Not an “Investment Company.”  Neither the Company nor any Guarantor is,  or after giving effect to the offering and sale of the Securities and the application of the proceeds thereof as described in the Pricing Disclosure Package and the Final Offering Memorandum will be, an “investment company” as such term is defined in the Investment Company Act of 1940, as amended (the “Investment Company Act”).

 

    (cc)    Insurance.  The Company and its subsidiaries are insured by the insurers of recognized financial responsibility against such losses and risks and in such amounts as are prudent and customary in the businesses in which they are engaged; neither the Company nor any of its subsidiaries has been refused any insurance coverage sought or applied for; and neither the Company nor any of its subsidiaries has any reason to believe that it will not be able to renew its existing insurance coverage as and when such coverage expires or to obtain similar coverage from similar insurers as may be necessary to continue its business at a cost that would not have a material adverse effect on the Company and its subsidiaries, taken as a whole, except as described in the Pricing Disclosure Package and the Final Offering Memorandum.

 

    (dd)    No Price Stabilization or Manipulation.  None of the Company or any of the Guarantors has taken and 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 any security of the Company to facilitate the sale or resale of the Securities.

 

    (ee)    Solvency.  Each of the Company and the Guarantors is, and immediately after the Closing Date will be, Solvent.  As used herein, the term “Solvent” means, with respect to any person on a particular date, that on such date (i) the fair market value of the assets of such person is greater than the total amount of liabilities (including contingent liabilities) of such person, (ii) the present fair salable value of the assets of such person is greater than the amount that will be required to pay the probable liabilities of such person on its debts as they become absolute and matured, (iii) such person is able to realize upon its assets and pay its debts and other liabilities, including contingent obligations, as they mature and (iv) such person does not have unreasonably small capital.

 

    (ff)    Compliance with Sarbanes-Oxley.  The Company and its directors and officers, in their capacities as such, are in compliance in all material respects with the applicable provisions 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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    (gg)    Company’s Accounting System.  The Company and each of its subsidiaries maintain a system of internal accounting controls sufficient to provide reasonable assurance that (i) transactions are executed in accordance with management’s general or specific authorizations; (ii) transactions are recorded as necessary to permit preparation of financial statements in conformity with generally accepted accounting principles and to maintain asset accountability; (iii) access to assets is permitted only in accordance with management’s general or specific authorization; (iv) the recorded accountability for assets is compared with the existing assets at reasonable intervals and appropriate action is taken with respect to any differences; and (v) the interactive data in eXtensible Business Reporting Language incorporated by reference in the Pricing Disclosure Package and the Final Offering Memorandum fairly presents in all material respects the information contained therein and has been prepared in accordance with the Commission’s rules and guidance applicable thereto in all material respects.  Except as disclosed in the Pricing Disclosure Package and the Final Offering Memorandum, there are no material weaknesses in the Company’s internal controls.

 

    (hh)    Disclosure Controls and Procedures.  The Company and its subsidiaries maintain an effective system of “disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act) that is designed to ensure that information required to be disclosed by the Company in reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Commission’s rules and forms, including controls and procedures designed to ensure that such information is accumulated and communicated to the Company’s management as appropriate to allow timely decisions regarding required disclosure; and the Company and its subsidiaries have carried out evaluations of the effectiveness of their disclosure controls and procedures as required by Rule 13a-15e of the Exchange Act.

 

    (ii)    Compliance with and Liability Under Environmental Laws. None of the Company or its subsidiaries has violated any environmental safety or similar law or regulation applicable to its business relating to the protection of human health and safety, the environment or hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental Laws”), lacks any permits, licenses or other approvals required of them under applicable Environmental Laws to own, lease and operate their respective properties and to conduct their business in the manner described in the Pricing Disclosure Package and the Final Offering Memorandum, is violating any terms and conditions of any such permit, license or approval or has permitted to occur any event that allows, or after notice or lapse of time would allow, revocation or termination of any such permit, license or approval or result in any other impairment of their rights thereunder, which in each case would reasonably be expected to have a material adverse effect on the Company and its subsidiaries, taken as a whole.

 

    (jj)    No Unlawful Contributions or Other Payments.  Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company and the Guarantors, any director, officer, agent, employee or affiliate of the Company or any of its subsidiaries is aware of or has taken any action, directly or indirectly, that would result in a violation by such persons of the FCPA, including, without limitation, making use of the mails or any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment, promise to pay or authorization of the payment of any money, or other property, gift, promise to give, or authorization of the giving of anything of value to any “foreign official” (as such term is defined in the FCPA) or any foreign political party or official thereof or any candidate for foreign political office, in contravention of the FCPA, and the Company, its subsidiaries and, to the knowledge of the Company and the Guarantors, its Affiliates have conducted their businesses in compliance with the FCPA and have instituted and maintain policies and procedures designed to ensure, and which are reasonably expected to continue to ensure, continued compliance therewith.  “FCPA” means the Foreign Corrupt Practices Act of 1977, as amended, and the rules and regulations thereunder.

 

 

 

 

 

 

 

 

 

 

 

 

  

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    (kk)    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 knowledge of the Company and the Guarantors, threatened.

 

    (ll)    No Conflict with Sanctions Laws.  Neither the Company nor any of its subsidiaries nor, to the knowledge of the Company and the Guarantors, 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, the U.S. Department of Commerce, the U.S. Department of State (collectively, “Sanctions”), nor is the Company or any of its subsidiaries located, organized or resident in a country or territory that is the subject of Sanctions. 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, (i) to fund any activities of or business with any person that, at the time of such funding, is the subject of Sanctions, or is in Burma/Myanmar, Iran, Libya, North Korea, Sudan or in any other country or territory, that, at the time of such funding, is the subject of Sanctions, or (ii) in any other manner that will result in a violation by any person (including any person participating in the offering, whether as underwriter, advisor, investor or otherwise) of Sanctions.

 

    (mm)    Regulation S.  The Company, the Guarantors and their respective affiliates and all persons acting on their behalf (other than the Initial Purchasers, as to whom the Company and the Guarantors make no representation) 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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Any certificate signed by an officer of the Company or any Guarantor and delivered to the Initial Purchasers or to 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.

 

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

 

(a)    The Securities.  Each of the Company and the Guarantors agrees to issue and sell to the Initial Purchasers, severally and not jointly, all of the Securities, and, subject to the conditions set forth herein, the Initial Purchasers agree, severally and not jointly, to purchase from the Company and the Guarantors the aggregate principal amount of Securities set forth opposite their names on Schedule A, at a purchase price of 98.0% of the principal amount thereof payable on the Closing Date, in each case, on the basis of the representations, warranties and agreements herein contained, and upon the terms herein set forth.

 

(b)    The Closing Date.  Delivery of certificates for the Securities in global form to be purchased by the Initial Purchasers and payment therefor shall be made at the offices of Baker Botts L.L.P., 2001 Ross Avenue, Dallas, Texas 75201 (or such other place as may be agreed to by the Company and Merrill Lynch) at 9:00 a.m. New York City time, on March 13, 2015, or such other time and date not later than the third business day thereafter (the time and date of such closing are called the “Closing Date”).

 

(c)    Delivery of the Securities. The Company shall deliver, or cause to be delivered, to Merrill Lynch for the accounts of the several Initial Purchasers the Securities through the facilities of the Depositary on 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 in such denominations as Merrill Lynch may designate and shall be registered in the name of Cede & Co., as nominee of the Depositary, pursuant to the DTC Agreement, and shall be delivered on the Closing Date to the Trustee, as the Depositary’s custodian.  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.

 

(d)    Initial Purchasers as Qualified Institutional Buyers.  Each Initial Purchaser severally and not jointly represents and warrants to, and agrees with, the Company that:

 

(i)      it will offer and sell Securities only to (a) persons who it reasonably believes are “qualified institutional buyers” within the meaning of Rule 144A (“Qualified Institutional Buyers”) in transactions meeting the requirements of Rule 144A or (b) upon the terms and conditions set forth in Annex I to this Agreement;

 

(ii)     it is an institutional “accredited investor” within the meaning of Rule 501(a)(1), (2), (3) or (7) under the Securities Act; and

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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(iii)    it will not offer or sell Securities by, any form of general solicitation or general advertising, including but not limited to the methods described in Rule 502(c) under the Securities Act.

 

SECTION 3. Additional Covenants.  Each of the Company and the Guarantors further covenants and agrees with each Initial Purchaser as follows:

 

    (a)   Preparation of Final Offering Memorandum; Initial Purchasers’ Review of Proposed Amendments and Supplements and Company Additional Written Communications.  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 Final 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 Final Offering Memorandum prior to the Closing Date unless the Representative 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.  Before making, preparing, using, authorizing, approving or distributing any Company Additional Written Communication, the Company will furnish to the Representative a copy of such written communication for review and will not make, prepare, use, authorize, approve or distribute any such written communication to which the Representative reasonably objects.

 

    (b)   Amendments and Supplements to the Final Offering Memorandum and Other Securities Act Matters.  If at any time prior to the Closing Date (i) any event shall occur or condition shall exist as a result of which any of the Pricing Disclosure Package as then amended or supplemented would include 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 under which they were made, not misleading or (ii) it is necessary to amend or supplement any of the Pricing Disclosure Package to comply with law, the Company and the Guarantors will immediately notify the Initial Purchasers thereof and forthwith prepare (subject to Section 3(a) hereof), file with the Commission and furnish to the Initial Purchasers such amendments or supplements to any of the Pricing Disclosure Package as may be necessary so that the statements in any of the Pricing Disclosure Package as so amended or supplemented will not, in the light of the circumstances under which they were made, be misleading or so that any of the Pricing Disclosure Package will comply with all applicable law.  If, prior to the completion of the placement of the Securities by the Initial Purchasers with the Subsequent Purchasers, any event shall occur or condition exist as a result of which it is necessary to amend or supplement the Final Offering Memorandum, as then amended or supplemented, in order to make the statements therein, in the light of the circumstances when the Final Offering Memorandum is delivered to a Subsequent Purchaser, not misleading, or if in the judgment of the Representative or counsel for the Initial Purchasers it is otherwise necessary to amend or supplement the Final Offering Memorandum to comply with law, the Company and the Guarantors agree to promptly prepare (subject to Section 3(a) hereof) and furnish at its own expense to the Initial Purchasers, amendments or supplements to the Final Offering Memorandum so that the statements in the Final Offering Memorandum as so amended or supplemented will not, in the light of the circumstances at the Closing Date and at the time of sale of Securities, be misleading or so that the Final Offering Memorandum, as amended or supplemented, will comply with all applicable law.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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

 

    (c)           Copies of the Offering Memorandum.  The Company agrees to furnish the Initial Purchasers, without charge, as many copies of the Pricing Disclosure Package and the Final Offering Memorandum and any amendments and supplements thereto as they shall reasonably request.

 

    (d)           Blue Sky Compliance.  Each of the Company and the Guarantors shall cooperate with the Representative and counsel for the Initial Purchasers to qualify or register (or to obtain exemptions from qualifying or registering) all or any part of the Securities for offer and sale under the securities laws of the several states of the United States, the provinces of Canada or any other jurisdictions designated by the Representative, shall comply in all material respects 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 or any of 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.

 

    (e)           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.

 

    (f)           The Depositary.  The Company will cooperate with the Initial Purchasers and use its best efforts to permit the Securities to be eligible for clearance and settlement through the facilities of the Depositary.

 

    (g)           Additional Issuer Information.  Prior to the completion of the placement of the Securities by the Initial Purchasers with the Subsequent Purchasers, the Company shall file, on a timely basis, with the Commission and the New York Stock Exchange (the “NYSE”) all reports and documents required to be filed under Section 13 or 15 of the Exchange Act.  Additionally, at any time when the Company is not subject to Section 13 or 15 of the Exchange Act, for the benefit of holders and beneficial owners from time to time of the Securities, the Company shall furnish, at its expense, upon request, to holders and beneficial owners of Securities and prospective purchasers of Securities information (“Additional Issuer Information”) satisfying the requirements of Rule 144A(d).

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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(h)           Agreement Not To Offer or Sell Additional Securities.  During the period of 60 days following the date hereof, the Company will not, without the prior written consent of Merrill Lynch (which consent may be withheld at the sole discretion of Merrill Lynch), 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).

 

(i)           Future Reports to the Initial Purchasers.  At any time when the Company is not subject to Section 13 or 15 of the Exchange Act and any Securities remain outstanding, the Company will furnish to the Representative and, upon request, to each of the other Initial Purchasers:  (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 (“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.

 

(j)           No Integration.  The Company agrees that it will not and will cause its Affiliates not to make any offer or sale of securities of the Company of any class if, as a result of the doctrine of “integration” referred to in Rule 502 under the Securities Act, such offer or sale would render invalid (for the purpose of (i) the sale of the Securities by the Company and the Guarantors to the Initial Purchasers, (ii) the resale of the Securities by the Initial Purchasers to Subsequent Purchasers or (iii) the resale of the Securities by such Subsequent Purchasers to others) the exemption from the registration requirements of the Securities Act provided by Section 4(a)(2) thereof or by Rule 144A or by Regulation S thereunder or otherwise.

 

(k)           No General Solicitation or Directed Selling Efforts.  The Company agrees that it will not and will not permit any of its Affiliates or any other person acting on its or their behalf (other than the Initial Purchasers, as to which no covenant is given) to (i) solicit offers for, or offer or sell, the Securities by means of any form of general solicitation or general advertising within the meaning of Rule 502(c) of Regulation D or in any manner involving a public offering within the meaning of Section 4(a)(2) of the Securities Act or (ii) engage in any directed selling efforts with respect to the Securities within the meaning of Regulation S, and the Company will and will cause all such persons to comply with the offering restrictions requirement of Regulation S with respect to the Securities.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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(l)           No Restricted Resales.  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 Notes that have been reacquired by any of them.

 

(m)           Legended Securities.  Each certificate for a Note will bear the legend contained in “Transfer Restrictions” in the Preliminary Offering Memorandum for the time period and upon the other terms stated in the Preliminary Offering Memorandum.

 

(n)           Certain Opinions.  The Company shall cause to be provided to the Representative, within 60 days of the Closing Date, the opinion of Locke Lord LLP, counsel for the Company, the form of which is attached hereto as Exhibit A, as to certain matters concerning the Mortgages.

 

The Representative, on behalf of the several Initial Purchasers, may, in its sole discretion, waive in writing the performance by the Company or any Guarantor of any one or more of the foregoing covenants or extend the time for their performance.

 

SECTION 4. Payment of Expenses.  Each of the Company and the Guarantors, jointly and severally, agree to pay all 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 necessary issue, transfer and other stamp taxes in connection with the issuance and sale of the Securities to the Initial Purchasers, (iii) all fees and expenses of the Company’s and the Guarantors’ counsel, independent public or certified public accountants, independent petroleum consultants and other advisors, (iv) all costs and expenses incurred in connection with the preparation, printing, filing, shipping and distribution of the Pricing Disclosure Package and the Final Offering Memorandum (including financial statements and exhibits), and all amendments and supplements thereto, and the Transaction Documents, (v) 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 securities laws of the several states of the United States, the  provinces of Canada or other jurisdictions designated by the Initial Purchasers (including, without limitation, the cost of preparing, printing and mailing preliminary and final blue sky or legal investment memoranda and any related supplements to the Pricing Disclosure Package or the Final Offering Memorandum), (vi) the fees and expenses of the Trustee, including the fees and disbursements of counsel for the Trustee in connection with the Indenture, the Security Documents and the Securities, (vii) any fees payable in connection with the rating of the Securities with the ratings agencies, (viii) any filing fees incident to, and any reasonable fees and disbursements of counsel to the Initial Purchasers in connection with the review by FINRA, if any, of the terms of the sale of the Securities, (ix) all fees and expenses (including reasonable fees and expenses of counsel) of the Company and the Guarantors in connection with approval of the Securities by the Depositary for “book-entry” transfer, and the performance by the Company and the Guarantors of their respective other obligations under this Agreement, (x) the Initial Purchasers’ fees and disbursements of counsel relating to the Collateral and (xi) all expenses incident to the “road show” for the offering of the Securities, including the cost of any private or chartered airplane or other transportation.  Except as provided in this Section 4 and Sections 6, 8 and 9 hereof, the Initial Purchasers shall pay their own expenses, including the fees and disbursements of their counsel.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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SECTION 5. Conditions of the Obligations of the Initial Purchasers.  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 and to the timely performance by the Company and the Guarantors of their covenants and other obligations hereunder, and to each of the following additional conditions:

 

    (a)   Accountants’ Comfort Letter.  On the date hereof, the Initial Purchasers shall have received from Ernst & Young LLP, the independent registered public accounting firm for the Company, a “comfort letter” dated the date hereof addressed to the Initial Purchasers, in form and substance satisfactory to the Representative, covering the financial information in the Pricing Disclosure Package and other customary matters.  In addition, on the Closing Date, the Initial Purchasers shall have received from such accountants a “bring-down comfort letter” dated the Closing Date addressed to the Initial Purchasers, in form and substance reasonably satisfactory to the Representative, in the form of the “comfort letter” delivered on the date hereof, except that (i) it shall cover the financial information in the Final Offering Memorandum and any amendment or supplement thereto and (ii) procedures shall be brought down to a date no more than 3 days prior to the Closing Date.

 

    (b)   Reserve Engineer’s Comfort Letter.  On the date hereof, the  Initial Purchasers shall have received from Lee Keeling & Associates, Inc., independent petroleum consultants with respect to the Company and its subsidiaries, a letter dated the date hereof addressed to the Initial Purchasers, in form and substance satisfactory to the Representative, covering the reserve information included in or incorporated by reference in the Pricing Disclosure Package and other customary information.  In addition, on the Closing Date, the Initial Purchasers shall have received from such petroleum consultants a “bring-down comfort letter” dated the Closing Date addressed to the Initial Purchasers, in form and substance reasonably satisfactory to the Representative, in the form of the “comfort letter” delivered on the date hereof, except that it shall cover the reserve information included in or incorporated by reference into the Final Offering Memorandum.

 

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

 

    (i)   in the reasonable judgment of the Representative 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 the Company or any of its subsidiaries or any of their securities or indebtedness by any “nationally recognized statistical rating organization” registered under Section15E of the Exchange Act.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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    (d)   Opinion of Counsel for the Company.  On the Closing Date the Initial Purchasers shall have received the favorable opinion of Locke Lord LLP, counsel for the Company, dated as of such Closing Date, the form of which is attached as Exhibit B.

 

    (e)   Opinion of Counsel for the Initial Purchasers.  On the Closing Date the Initial Purchasers shall have received the favorable opinion of Baker Botts L.L.P., counsel for the Initial Purchasers, dated as of such Closing Date, with respect to such matters as may be reasonably requested by the Initial Purchasers.

 

    (f)   Officers’ Certificate.  On the Closing Date the Initial Purchasers shall have received a written certificate executed by the Chief Executive Officer of the Company and each Guarantor and the President, Chief Financial Officer or Chief Accounting Officer of the Company and each Guarantor, dated as of the Closing Date, to the effect set forth in Section 5(c)(ii) hereof, and further to the effect that:

 

    (i)   for the period from and after the date of this Agreement and prior to the 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 hereof were true and correct as of the date hereof and are true and correct as of the Closing Date with the same force and effect as though expressly made on and as of the Closing Date; and

 

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

 

    (g)   Indenture.  The Company and the Guarantors shall have executed and delivered the Indenture, in form and substance reasonably satisfactory to the Initial Purchasers, and the Initial Purchasers shall have received executed copies thereof.

 

    (h)   Security Documents and Intercreditor Agreement.  The Company and the Guarantors shall have executed and delivered a perfection certificate dated as of the Closing Date (the “Perfection Certificate”) in form and substance reasonably satisfactory to the Initial Purchasers.  Except as otherwise provided for in the Security Documents, the Indenture or the other documents entered into pursuant to the Transactions, the Representative and the Collateral Agent shall have received each of the Security Documents, in form and substance reasonably satisfactory to the Initial Purchasers, and all other certificates, agreements or instruments necessary to perfect the Collateral Agent’s security interest in all of the Collateral, including but not limited to, stock certificates accompanied by instruments of transfer and stock powers undated and endorsed in blank, Uniform Commercial Code financing statements in appropriate form for filing and filings with the United States Patent and Trademark Office and United States Copyright Office in appropriate form for filing; each such document executed by the Company and each other party thereto, and each such document shall be in full force and effect and evidence that all of the liens on the Collateral other than Permitted Collateral Liens have been released.  The Representative shall also have received (i) certified copies of Uniform Commercial Code, tax and judgment lien searches or equivalent reports or searches, and a copy of searches at the United States Patent and Trademark Office each of a recent date listing all effective financing statements, lien notices or comparable documents that name the Company or any Guarantor as debtor and that are required by the Perfection Certificate or that the Representative deems necessary or appropriate, none of which encumber the Collateral covered or intended to be covered by the Security Documents (other than Permitted Collateral Liens or liens that will be released at the Closing Date) and (ii) acceptable evidence of payment or arrangements for payment by the Company and the Guarantors of all applicable recording taxes, fees, charges, costs and expenses required for the recording of the Security Documents.

 

 

 

 

 

 

 

 

 

 

 

  

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    (i)   Credit Facility.  The Credit Facility shall have been executed and delivered by the Company and the other parties thereto, and there are no conditions to funding such facility that will not be met on or before the Closing Date.

 

    (j)   Additional Documents.  On or before the Closing Date, the Initial Purchasers 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 Sections 4, 6, 8 and 9 hereof shall at all times be effective and shall survive such termination.

 

SECTION 6.   Reimbursement of Initial Purchasers’ Expenses.  If this Agreement is terminated by the Representative pursuant to Section 5 or 10 hereof, including 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 or any Guarantor to perform any agreement herein or to comply with any provision hereof, the Company and the Guarantors, jointly and severally, agree to reimburse the Initial Purchasers, severally, upon demand for all out-of-pocket expenses that shall have been reasonably incurred by the Initial Purchasers in connection with the proposed purchase and the offering and sale of the Securities, including, without limitation, reasonable fees and disbursements of counsel, printing expenses, travel expenses, postage, facsimile and telephone charges.

 

SECTION 7.   Offer, Sale and Resale Procedures.  Each of the Initial Purchasers, on the one hand, and the Company and each of the Guarantors, on the other hand, hereby agree to observe the following procedures in connection with the offer and sale of the Securities:

 

         (a)   Offers and sales of the Securities will be made only by the Initial Purchasers or Affiliates thereof qualified to do so in the jurisdictions in which such offers or sales are made.  Each such offer or sale shall only be made to persons whom the offeror or seller reasonably believes 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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     (b)   No general solicitation or general advertising (within the meaning of Rule 502 under the Securities Act) will be used in the United States in connection with the offering of the Securities.

 

     (c)   Upon original issuance by the Company, and until such time as the same is no longer required under the applicable requirements of the Securities Act, the Notes (and all securities issued in exchange therefor or in substitution thereof) shall bear the following legend:

 

“THIS SECURITY HAS NOT BEEN REGISTERED UNDER THE U.S. SECURITIES ACT OR THE SECURITIES LAWS OF ANY STATE OR OTHER JURISDICTION. NEITHER THIS SECURITY NOR ANY INTEREST OR PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED, PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT SUBJECT TO, SUCH REGISTRATION. THE HOLDER OF THIS SECURITY, BY ITS ACCEPTANCE HEREOF, AGREES ON ITS OWN BEHALF AND ON BEHALF OF ANY INVESTOR ACCOUNT FOR WHICH IT HAS PURCHASED SECURITIES, TO OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE (THE “RESALE RESTRICTION TERMINATION DATE”) THAT IS, IN THE CASE OF RULE 144A NOTES: ONE YEAR AND IN THE CASE OF REGULATION S NOTES: 40 DAYS, AFTER THE LATER OF THE ORIGINAL ISSUE DATE HEREOF AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR OF SUCH SECURITY), ONLY (A) TO THE COMPANY, (B) PURSUANT TO A REGISTRATION STATEMENT THAT HAS BEEN DECLARED EFFECTIVE UNDER THE U.S. SECURITIES ACT, (C) FOR SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE 144A UNDER THE U.S. SECURITIES ACT, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A UNDER THE U.S. SECURITIES ACT THAT PURCHASES FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES THAT OCCUR OUTSIDE THE UNITED STATES IN COMPLIANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT, OR (E) PURSUANT TO ANOTHER AVAILABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT, SUBJECT TO THE COMPANY’S AND THE TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER PURSUANT TO CLAUSE (E) TO REQUIRE THE DELIVERY OF AN OPINION OF COUNSEL, CERTIFICATION AND/ OR OTHER INFORMATION SATISFACTORY TO EACH OF THEM. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER AFTER THE RESALE RESTRICTION TERMINATION DATE. IN THE CASE OF REGULATION S NOTES: BY ITS ACQUISITION HEREOF, THE HOLDER HEREOF REPRESENTS THAT IT IS NOT A U.S. PERSON NOR IS IT PURCHASING FOR THE ACCOUNT OF A U.S. PERSON AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE TRANSACTION IN ACCORDANCE WITH REGULATION S UNDER THE U.S. SECURITIES ACT.”

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

21

  

Following the sale of the Securities by the Initial Purchasers to Subsequent Purchasers pursuant to the terms hereof, the Initial Purchasers shall not be liable or responsible to the Company for any losses, damages or liabilities suffered or incurred by the Company, including any losses, damages or liabilities under the Securities Act, arising from or relating to any resale or transfer of any Security.

 

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 affiliates, directors, 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, affiliate, director, officer, employee 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 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:  (i) upon any untrue statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum, the Pricing Supplement, any Company Additional Written Communication or the Final Offering Memorandum (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order to make the statements therein, in the light of the circumstances under which they were made, not misleading; or (ii) any act or failure to act or any alleged act or failure to act by any Initial Purchaser in connection with, or relating in any manner to, the offering contemplated hereby, and which is included as part of or referred to in any loss, claim, damage, liability or action arising out of or based upon any matter covered by clause (i) above, provided that the Company shall not be liable under this clause (ii) to the extent that a court of competent jurisdiction shall have determined by a final judgment that such loss, claim, damage, liability or action resulted directly from any such acts or failures to act undertaken or omitted to be taken by such Initial Purchaser through its gross negligence or willful misconduct; and to reimburse each Initial Purchaser and each such affiliate, director, officer, employee or controlling person for any and all expenses (including the fees and disbursements of counsel chosen by Merrill Lynch) as such expenses are reasonably incurred by such Initial Purchaser or such affiliate, director, officer, employee or 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, with respect to an Initial Purchaser, 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 such Initial Purchaser expressly for use in the Preliminary Offering Memorandum, the Pricing Supplement, any Company Additional Written Communication or the Final Offering Memorandum (or any amendment or supplement thereto).  The indemnity agreement set forth in this Section 8(a) shall be in addition to any liabilities that the Company may otherwise have.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

22

  

(b)    Indemnification of the Company and the Guarantors. Each Initial Purchaser agrees, severally and not jointly, to indemnify and hold harmless the Company, each Guarantor, each of their respective directors 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 director 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 statement or alleged untrue statement of a material fact contained in the Preliminary Offering Memorandum, the Pricing Supplement, any Company Additional Written Communication or the Final Offering Memorandum (or any amendment or supplement thereto), or the omission or alleged omission therefrom of a material fact necessary in order 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 statement or alleged untrue statement or omission or alleged omission was made in the Preliminary Offering Memorandum, the Pricing Supplement, any Company Additional Written Communication or the Final Offering Memorandum (or any amendment or supplement thereto), in reliance upon and in conformity with written information furnished to the Company by such Initial Purchaser through the Representative expressly for use therein; and to reimburse the Company, any Guarantor and each such director or controlling person for any and all expenses (including the fees and disbursements of counsel) as such expenses are reasonably incurred by the Company, any Guarantor or such director or controlling person in connection with investigating, defending, settling, compromising or paying any such loss, claim, damage, liability, expense or action.  Each of the Company and the Guarantors hereby acknowledges that the only information that the Initial Purchasers through the Representative have furnished to the Company expressly for use in the Preliminary Offering Memorandum, the Pricing Supplement, any Company Additional Written Communication or the Final Offering Memorandum (or any amendment or supplement thereto) are the statements set forth in the fourth, ninth, tenth and eleventh paragraphs under the caption “Plan of Distribution” in the Preliminary Offering Memorandum and the Final Offering Memorandum.  The indemnity agreement set forth in this Section 8(b) shall be in addition to any liabilities that each Initial Purchaser may otherwise have.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

23

  

(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 is to be made against an indemnifying party under this Section 8, notify the indemnifying party in writing of the commencement thereof; provided that the failure to so notify the indemnifying party will not relieve it from any liability which it may have to any indemnified party under this Section 8 except to the extent that it has been materially prejudiced by such failure (through the forfeiture of substantive rights and defenses) and shall not relieve the indemnifying party from any liability that the indemnifying party may have to an indemnified party other than under this Section 8.  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 connection with the defense thereof unless (i) the indemnified party shall have employed separate counsel in accordance with the proviso to the immediately 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 (in each jurisdiction)), which shall be selected by Merrill Lynch (in the case of counsel representing the Initial Purchasers or their related persons), 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, which will not be unreasonably withheld, but if settled with such consent or if there be a final judgment for the plaintiff, the indemnifying party agrees to indemnify the indemnified party 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 this Section 8, 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 or disputed in good faith the indemnified party’s entitlement to such reimbursement 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 (i) 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 (ii) does not include any statements as to or any findings of fault, culpability or failure to act by or on behalf of any indemnified party.

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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SECTION 9.   Contribution.  If the indemnification provided for in Section 8 hereof 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 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 or inaccuracy.

 

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 hereof, 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 hereof 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 hereof for purposes of indemnification.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

25

  

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, no Initial Purchaser shall be required to contribute any amount in excess of the discount received by such Initial Purchaser in connection with the Securities distributed by it.  No person guilty of fraudulent misrepresentation (within the meaning of Section 11 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 director, officer and employee of an Initial Purchaser and each person, if any, who controls an Initial Purchaser within the meaning of the Securities 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, and each person, if any, who controls the Company or any Guarantor with 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.  Termination of this Agreement.  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 NYSE , or trading in securities generally on either the Nasdaq Stock Market or the NYSE shall have been suspended or limited, or minimum or maximum prices shall have been generally established on any of such quotation system or stock exchange by the Commission or FINRA; (ii) a general banking moratorium shall have been declared by federal or New York authorities; (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 or inadvisable to proceed with the offering sale or delivery of the Securities in the manner and on the terms described in the Pricing Disclosure Package 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 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 (i) 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 Initial Purchasers pursuant to Sections 4 and 6 hereof, (ii) any Initial Purchaser to the Company, or (iii) any party hereto to any other party except that the provisions of Sections 8 and 9 hereof shall at all times be effective and shall survive such termination.

 

SECTION 11.  Representations and Indemnities to Survive Delivery.  The respective indemnities, 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 will remain in full force and effect, regardless of any investigation made by or on behalf of any Initial Purchaser, the Company, any Guarantor or any of their respective partners, officers or directors or any controlling person, as the case may be, and will survive delivery of and payment for the Securities sold hereunder and any termination of this Agreement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

26

  

SECTION 12. Notices.  All communications hereunder shall be in writing and shall be mailed, hand delivered, couriered or facsimiled and confirmed to the parties hereto as follows:

 

If to the Initial Purchasers:

 

	
  

	
Merrill Lynch, Pierce, Fenner & Smith Incorporated

One Bryant Park

	
  

	
New York, New York  10036

	
  

	
Facsimile:  (212) 901-7897

	
  

	
Attention:  Legal Department

 

 with a copy to (which copy shall not constitute notice):

 

	
  

	
Baker Botts L.L.P.

	
  

	
2001 Ross Avenue

	
  

	
Suite 600

	
  

	
Dallas, Texas  75201

	
  

	
Facsimile:  (214) 953-6503

	
  

	
Attention:  Doug Rayburn

 

 If to the Company or the Guarantors:

 

	
  

	
Comstock Resources, Inc.

	
  

	
5300 Town and Country Blvd.

	
  

	
Suite 500

	
  

	
Frisco, Texas  75034

	
  

	
Facsimile:  (972) 668-8812

	
  

	
Attention:  Roland O. Burns, President

 

 with a copy to (which copy shall not constitute notice):

 

Locke Lord LLP

2200 Ross Avenue

Suite 2200

Dallas, Texas  75201

Facsimile:  (214) 756-8553

Attention:  Jack Jacobsen

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

27

  

SECTION 13. Successors.  This Agreement will inure to the benefit of and be binding upon the parties hereto, and to the benefit of the indemnified parties referred to in Sections 8 and 9 hereof, and in each case their respective successors, and no other person will have any right or obligation hereunder.  The term “successors” shall not include any Subsequent Purchaser or other purchaser of the Securities as such from any of the Initial Purchasers merely by reason of such purchase.

 

SECTION 14. Authority of the Representative.  Any action by the Initial Purchasers hereunder may be taken by Merrill Lynch on behalf of the Initial Purchasers, and any such action taken by Merrill Lynch shall be binding upon the Initial Purchasers.

 

SECTION 15. Partial Unenforceability.  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.  THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK APPLICABLE TO AGREEMENTS MADE AND TO BE PERFORMED IN SUCH STATE WITHOUT REGARD TO CONFLICTS OF LAW PRINCIPLES THEREOF.

 

(a)   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 suits, actions, or proceedings instituted in regard to the enforcement of a judgment of any Specified Court in a Related Proceeding (a “Related Judgment”), as to which such jurisdiction is non-exclusive) of the Specified Courts in any Related 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 Related Proceeding brought in any Specified Court.  The parties irrevocably and unconditionally waive any objection to the laying of venue of any Related Proceeding in the Specified Courts and irrevocably and unconditionally waive and agree not to plead or claim in any Specified Court that any Related Proceeding brought in any Specified Court has been brought in an inconvenient forum.

 

(b)   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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

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SECTION 17. Default of One or More of the Several Initial Purchasers.  If 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 the Closing Date, and the aggregate number of Securities which such defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase does not exceed 10% of the aggregate number of the Securities to be purchased on such date, the other Initial Purchasers shall be obligated, severally, in the proportions that the number of Securities set forth opposite their respective names on Schedule A bears to the aggregate number of Securities set forth opposite the names of all such non-defaulting Initial Purchasers, or in such other proportions as may be specified by the Initial Purchasers with the consent of the non-defaulting Initial Purchasers, to purchase the Securities which such defaulting Initial Purchaser or Initial Purchasers agreed but failed or refused to purchase on the Closing Date.  If any one or more of the Initial Purchasers shall fail or refuse to purchase Securities and the aggregate number of Securities with respect to which such default occurs exceeds 10% of the aggregate number of Securities to be purchased on the Closing Date, and arrangements satisfactory to the Initial Purchasers and the Company for the purchase of such Securities are not made within 48 hours after such default, this Agreement shall terminate without liability of any party to any other party except that the provisions of Sections 4, 6, 8 and 9 hereof shall at all times be effective and shall survive such termination.  In any such case either the Initial Purchasers or the Company shall have the right to postpone the Closing Date, as the case may be, but in no event for longer than seven days in order that the required changes, if any, to the Final 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 17.  Any action taken under this Section 17 shall not relieve any defaulting Initial Purchaser from liability in respect of any default of such Initial Purchaser under this Agreement.

 

SECTION 18. 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, the 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 and 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 and 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 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, 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.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

29

  

This Agreement supersedes all prior agreements and understandings (whether written or oral) between the Company, the Guarantors and the several Initial Purchasers, or any of them, with respect to the subject matter hereof.  The Company and the Guarantors hereby waive and release, to the fullest extent permitted by law, any claims that the Company and the Guarantors may have against the several Initial Purchasers with respect to any breach or alleged breach of fiduciary duty.

 

SECTION 19. 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.  Delivery of an executed counterpart of a signature page to this Agreement by telecopier, facsimile or other electronic transmission (i.e., a “pdf” or “tif”) shall be effective as delivery of a manually executed counterpart thereof.  This Agreement may not be amended or modified unless in writing by all of the parties hereto, and no condition herein (express or implied) may be waived unless waived in writing by each party whom the condition is meant to benefit.  The section headings herein are for the convenience of the parties only and shall not affect the construction or interpretation of this Agreement.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

  

30

 

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,

 

COMSTOCK RESOURCES, INC.

 

By: /s/ ROLAND O. BURNS 

Name: Roland O. Burns

Title: President

 

GUARANTORS

 

COMSTOCK OIL & GAS, LP

 

  By: Comstock Oil & Gas GP, LLC

 

   

By: /s/ ROLAND O. BURNS 

Name: Roland O. Burns

Title: President/Manager

 

COMSTOCK OIL & GAS GP, LLC

 

  

By: /s/ ROLAND O. BURNS 

Name: Roland O. Burns

Title: President/Manager

 

 

COMSTOCK OIL & GAS – LOUISIANA, LLC

 

  

By: /s/ ROLAND O. BURNS 

Name: Roland O. Burns

Title: President/Manager

      

 

COMSTOCK OIL & GAS INVESTMENTS, LLC

 

  

By: /s/ ROLAND O. BURNS 

Name: Roland O. Burns

Title: President/Manager

          

 

COMSTOCK OIL & GAS HOLDINGS, INC.

 

  

By: /s/ ROLAND O. BURNS 

Name: Roland O. Burns

Title: President

 

[Signature Page to Purchase Agreement]

  

  

  

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

 

Merrill Lynch, Pierce, Fenner & Smith Incorporated

Acting on behalf of itself

and as the Representative of

the several Initial Purchasers

 

By:         Merrill Lynch, Pierce, Fenner & Smith Incorporated

 

By:        /s/ LEX MAULTSBY

 Managing Director

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

[Signature Page to Purchase Agreement]

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