ENERGY XXI GULF COAST, INC. Senior Notes due 2013 REGULATION D PURCHASE AGREEMENT
ENERGY
XXI GULF COAST, INC.
Senior
Notes due 2013
REGULATION
D PURCHASE AGREEMENT (the “Agreement”)
by and
among Energy XXI Gulf Coast, Inc., a Delaware corporation (the “Company”),
Energy XXI (Bermuda) Limited, a Bermuda company and the ultimate parent of
the
Company (“Parent”),
the
other guarantors under the indenture referred to below (the “Subsidiary
Guarantors,”
and
together with Parent, the “Guarantors”)
and
the Regulation D Purchasers listed on the signature page hereto (the
“Regulation
D Purchasers”).
WHEREAS:
A. The
Company proposes to issue and sell $750,000,000 in aggregate principal amount
of
its Senior Notes due 2013 (the “Notes”).
The
Notes will be offered and sold (i) outside the United States (the “Regulation
S Notes”)
to the
initial purchasers (the “Initial
Purchasers”)
in a
transaction (the “Regulation
S Offering”)
exempt
from the registration requirements of the Securities Act of 1933, as amended,
and the rules and regulations of the Securities and Exchange Commission (the
“Commission”)
thereunder (collectively, the “Securities
Act”)
in
reliance upon Regulation S of the Securities Act (“Regulation
S”),
and
(ii) within the United States (the “Regulation
D Notes”
and,
together with the Regulation S Notes, constitute the “Notes”) directly to the
Regulation D Purchasers in a private placement (the “Regulation
D Placement”)
without being registered under the Securities Act in reliance upon Section
4(2)
thereof and/or Regulation D thereunder (“Regulation
D”).
B. In
connection with the Regulation D Placement, the Company and Guarantors
(together, the “Company
Parties”)
have
entered into a placement agency agreement (the “Placement
Agency Agreement”)
with
the placement agents named therein (the “Placement
Agents”).
Each
of the Placement Agents have agreed to act as initial purchasers in connection
with the Regulation S Offering (in such capacity, each, an “Initial
Purchaser”
and,
collectively, the “Initial
Purchasers”)
subject to the terms and conditions and other provisions of a Regulation S
Purchase Agreement (the “Regulation
S Purchase Agreement”)
to be
entered into between the Initial Purchasers and the Company
Parties.
C. Prior
to
or concurrently with the closing of the Regulation S Offering and the Regulation
D Placement, the Company Parties will enter into an Amended and Restated First
Lien Credit Agreement with the Lenders party thereto and The Royal Bank of
Scotland plc, as Administrative Agent of the Lenders (such agreement and all
related loan documents, collectively, the “Credit
Agreement”).
Proceeds from the sale of the Notes, and borrowing under the Credit Agreement
will be used to finance the acquisition (the “Pogo
Acquisition”)
of
certain of the offshore Gulf of Mexico oil and natural gas properties (the
“Pogo
Assets”)
of
Pogo Producing Company (“Pogo”)
pursuant to the Purchase and Sale Agreement (the “Purchase
and Sale Agreement”)
dated
as of April 24, 2007 between Pogo and Energy XXI GOM, LLC, a wholly-owned
subsidiary of the Company (“Buyer”),
and
to repay certain debt and to pay fees and expenses of these transactions as
summarized in the Preliminary CIM (as defined below). The closing of the Pogo
Acquisition under the Purchase and Sale Agreement will occur concurrently with
the closing of the Regulation S Offering, the Regulation D Placement and the
borrowing under the Credit Agreement (the “Closing
Date”).
D. The
Notes
will be issued pursuant to an indenture (the “Indenture”),
to be
entered into between the Company, Parent, the other Guarantors and ▇▇▇▇▇ Fargo
Bank, National Association, as trustee (the “Trustee”).
Pursuant to the Indenture, the Guarantors shall fully and unconditionally
guarantee, on a senior basis, to each holder of the Notes and the Trustee,
the
payment and performance of the Company’s obligations under the Indenture and the
Notes (each such guarantee being referred to herein as a “Guarantee.”
E. Holders
of the Notes will be entitled to the benefits of a registration rights agreement
(the “Registration
Rights Agreement”)
to be
entered into among the Company Parties, the Initial Purchasers and the
Regulation D Purchasers pursuant to which the Company Parties will agree, among
other things to (i) file a registration statement (the “Registration
Statement")
with
the Commission for a registered offer (the “Exchange
Offer”)
to
exchange any and all of the Notes for a like aggregate principal amount of
notes
that are identical in all material respects to the Notes (the “Exchange
Notes”)
except
for that the Exchange Notes will not contain terms with respect to transfer
restrictions or liquidated damages, (ii) use their reasonable best efforts
to
cause the Registration Statement to be declared effective under the Securities
Act and (iii) use their reasonable best efforts to consummate the Exchange
Offer, in each case, within the timeframe, and subject to the provisions
contained therein.
F. The
Company, ▇▇▇▇▇▇▇▇▇ & Company, Inc., as closing agent (the “Closing
Agent”),
and
▇▇▇▇▇ Fargo Bank, National Association, as escrow agent, will enter into an
escrow agreement (the “Escrow
Agreement”)
to
provide for the escrow of the proceeds for the purchase of the Notes and the
payment of such proceeds on the Closing Date pursuant to the terms of the Escrow
Agreement and as set forth in this Agreement.
G. This
Agreement, the Credit Agreement, the Purchase and Sale Agreement, the Indenture,
the Registration Rights Agreement and the Escrow Agreement are referred to
herein collectively as the “Transaction
Documents,”
and
the transactions contemplated hereby and thereby are referred to herein
collectively as the “Transactions.”
This
Agreement, the Registration Rights Agreement and the Indenture are referred
herein collectively as the “Regulation
D Purchase Documents.”
Nothing in this Agreement should be read to limit or otherwise modify the terms
and other provisions of the Engagement Letter dated as of March 15, 2007 (the
“Engagement
Letter”)
between Parent and Jefferies, provided
that, in
the event any terms of the Engagement Letter are inconsistent with or contradict
any terms of this Agreement, this Agreement shall govern.
H. The
Company has prepared a preliminary confidential information memorandum, dated
May 12, 2007 (the “Preliminary
CIM”),
relating to the Regulation D Placement and the Regulation S Offering, (ii)
a
pricing term sheet attached hereto as Schedule I, which includes pricing terms
and other information with respect to the Notes (the “Pricing
Supplement”
and,
together with the Preliminary CIM, the “Time
of Sale Document”)
and
(iii) a final confidential information memorandum dated the date hereof relating
to the Regulation D Placement and the Regulation S Offering, as the same may
be
amended or supplemented (the “CIM”).
“CIM”
means, as of any date or time referred to in this Agreement, the most recent
information memorandum (whether the Time of Sale Document or the CIM, and any
amendment or supplement to either such document), including exhibits and
schedules thereto.
2
NOW,
THEREFORE, each of the Company Parties hereby agrees and, the Regulation D
Purchasers hereby severally agree as follows:
1. PURCHASE
AND SALE OF REGULATION D NOTES.
(a) Purchase
and Sale of Regulation D Notes.
(i) Closing.
Subject
to the satisfaction (or waiver) of the conditions set forth in Sections
5
and
6,
at the
closing of the Regulation D Placement (the “Closing”),
the
Company shall issue and sell to the several Regulation D Purchasers, and the
Regulation D Purchasers severally agree to purchase from the Company on the
Closing Date (as defined below), the principal amount of Regulation D Notes
set
forth in the confirmations of sale delivered to the Regulation D Purchasers
by
or on behalf of the Company on or about the date hereof. The Closing shall
occur
at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, First City Tower, ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
(ii) Determination
of Closing Date.
The
date and time of the Closing (the “Closing
Date”)
shall
be 10:00 a.m., New York City time, on June 8, 2007 (or such later date as is
mutually agreed to by the Company and the Closing Agent); provided,
however,
that if
the Closing has not taken place on the Closing Date because of a failure to
satisfy one or more of the conditions specified in Section
5
or
Section
6
hereof,
“Closing Date” shall mean 10:00 a.m., New York City time, on the first business
day following the satisfaction (or waiver) of all such conditions after
notification by the Company to the Closing Agent of the satisfaction (or waiver)
of such conditions, provided
further, that
if
the Closing has not occurred by June 13, 2007, each Regulation D Purchaser’s
payment of their respective portion of the Purchase Price that was deposited
into the escrow account will be returned to it promptly as set forth in the
Escrow Agreement.
(iii) Purchase
Price.
The
purchase price for the Regulation D Notes to be purchased by the several
Regulation D Purchasers at the Closing (in the aggregate, the “Purchase
Price”)
shall
be set forth in the confirmation of sale delivered to the Regulation D
Purchasers by or on behalf of the Company on or about the date hereof and the
payment of the Purchase Price shall be made by the Regulation D Purchasers
by
wire transfer of immediately available funds in accordance with the instructions
set forth in Section
1(b).
(b) Closing
Mechanics.
(i) Closing
Agent to Contact Regulation D Purchasers.
By the
fifth business day prior to the Closing, the Closing Agent, will contact the
Regulation D Purchasers to confirm the closing mechanics set forth
herein.
3
(ii) Company
to Deliver Executed Regulation D Notes to Closing Agent for Regulation D
Purchasers.
At
least three business days prior to the Closing Date, the Company will deliver
to
the Closing Agent duly executed certificates representing the Regulation D
Notes
in the form contemplated by the Indenture, registered in the names previously
provided by the Closing Agent to the Company, which certificates the Closing
Agent shall hold until the Closing Agent is directed to release such
certificates by the Company for sale to the Regulation D Purchasers as provided
in Section
1(b)(vi).
(iii) Regulation
D Purchasers to Fund Purchase Price.
On or
before 10:00 a.m., New York City time, on the second business day prior to
the
Closing Date, each of the Regulation D Purchasers will deliver their respective
portions of the Purchase Price to the Closing Agent by wire transfer in
immediately available funds according to the wire transfer instructions
previously delivered to each of such Regulation D Purchasers. Regulation D
Purchasers will receive from the Company interest on the amount they funded
according to the prior sentence at the initial interest rate to be borne by
the
Regulation D Notes for the number of days such funds remain deposited into
the
escrow account of the Escrow Agreement (computed on the basis of a 360-day
year), payable on the Closing Date, as set forth in the Escrow Agreement; if
there is no Closing, Regulation D Purchasers will receive from the Company
interest on the amount they funded according to the prior sentence based on
the
return on Permitted Investments (as defined in the Escrow Agreement) applicable
to such funded amounts, payable when such funds are returned to such Regulation
D Purchasers, as set forth in the Escrow Agreement. The delivery of funds from
a
Regulation D Purchaser to the Closing Agent shall be deemed to constitute
irrevocable instructions from such Regulation D Purchaser to the Closing Agent
that the Regulation D Purchasers’ conditions to the Closing, as set forth in
Section
6,
will be
deemed to be satisfied upon receipt by the Closing Agent of the Company Closing
Certificate (as defined below) and, in that event, such Regulation D Purchaser
agrees that the Closing Agent may instruct the Escrow Agent to release the
funds
as contemplated by, and subject to, Section
1(b)(vi).
Funds
received by the Closing Agent pursuant to this Section
1
(or
funded by the Closing Agent in its sole discretion pursuant to Section
1(b)(iv))
will be
held in trust and not as property or in the title of the Closing
Agent.
(iv) Closing
Agent Right to Fund for Late Regulation D Purchasers.
In the
event that any Regulation D Purchaser shall fail to deliver all or any of its
respective portion of the Purchase Price on or before 9:00 a.m., New York City
time, on the Closing Date:
(A) The
Closing Agent may, in its sole discretion, but shall not be obligated to, fund
the unfunded portion of the Purchase Price applicable to such Regulation D
Purchaser, on behalf of such Regulation D Purchaser. The funding of any portion
of the Purchase Price by the Closing Agent pursuant to this Section
1(b)(iv)
shall
not relieve a defaulting Regulation D Purchaser of any liability that it may
have to the Company or the Closing Agent pursuant to this Agreement or for
the
breach of its obligations under this Agreement.
(B) In
the
event that the Closing Agent shall have funded any such unfunded portion as
set
forth in the preceding clause (A), the Closing Agent may, in its sole
discretion, but shall not be obligated to, (I) retain, at and following the
Closing, beneficial ownership in the Regulation D Notes as such Regulation
D
Purchaser would have been entitled to had it timely funded, (II) direct the
disposition of such Regulation D Note to another party or (III) require such
Regulation D Purchaser, upon written notice, to purchase such Registration
D
Notes from the Closing Agent within two business days after the Closing Date
at
a price equal to the initial offering price of such Regulation D Notes plus
accrued and unpaid interest to the date of settlement.
4
(C) In
the
case of the preceding clause (B)(I) or (II), if so requested by the Closing
Agent, (I) such Regulation D Purchaser shall take any action reasonably
requested by the Closing Agent to effect the transfer of the applicable
Regulation D Notes to the Closing Agent or such other party, as the case may
be,
and shall be deemed to have consented to the Closing Agent retaining and taking
beneficial ownership, or directing the disposition, of such Regulation D Notes
and (II) the Company shall transfer registration of such Regulation D Notes
to,
or as directed by, the Closing Agent.
(v) Distribution
of Purchase Price Received by Closing Agent to Escrow Agent.
Upon
receipt of the Purchase Price from any Regulation D Purchaser, the Closing
Agent
will distribute such funds to the Escrow Agent for deposit into the escrow
account to be established pursuant to the Escrow Agreement (the “Escrow
Account”).
(vi) Release
of Purchase Price Funds; Delivery of Regulation D Notes.
On the
Closing Date:
(A) upon
receipt by the Closing Agent of a certificate from Chief Financial Officer
of
the Company (the “Company
Closing Certificate”)
certifying that the conditions to the Regulation D Purchasers’ obligations to
close as set forth in Section
6
have
been satisfied and in consideration for the sale of the Regulation D Notes
to
Regulation D Purchasers, the Closing Agent will instruct the Escrow Agent,
pursuant to the terms of the Escrow Agreement, to release the Purchase Price
as
set forth in the Escrow Agreement; and
(B) in
consideration for the receipt of the Purchase Price deposited in the Escrow
Account as specified above, the Company shall deliver, the Regulation D
Purchasers the Regulation D Notes to the applicable Regulation D Purchasers
in
accordance with the instructions contained in Annex
A
hereto.
2. REGULATION
D PURCHASERS’ REPRESENTATIONS AND WARRANTIES.
Each
Regulation D Purchaser represents and warrants, severally and not jointly,
that:
(a) No
Public Sale or Distribution.
The
Regulation D Purchaser is acquiring the Regulation D Notes for its own account
and not with a view towards, or for resale in connection with, the public sale
or distribution thereof in a manner that would violate the Securities Act;
provided,
however,
that by
making the representations herein, the Regulation D Purchaser does not agree
to
hold any of the Regulation D Notes for any minimum or other specific term and
reserves the right to dispose of the Regulation D Notes at any time in
accordance with or pursuant to a registration statement or an exemption under
the Securities Act and subject to the terms of the Regulation D Notes and the
Indenture. The Regulation D Purchaser is acquiring the Regulation D Notes
hereunder in the ordinary course of its business. The Regulation D Purchaser
does not presently have any agreement or understanding, directly or indirectly,
with any Person to distribute any of the Regulation D Notes. As used in this
Agreement, “Person”
means
an individual, a limited liability company, a partnership, a joint venture,
a
corporation, a trust, an unincorporated organization and a government or any
department or agency thereof.
5
(b) Regulation
D Purchaser Status.
Each of
the Regulation D Purchasers acknowledges that it is one of the following:
(i) an
institutional “accredited investor” as defined in Rule 501(a)(1), (2), (3) or
(7) of Regulation D under the Securities Act; or
(ii) a
“qualified institutional buyer” as defined in Rule 144A(a)(1) under the
Securities Act.
Such
Regulation D Purchaser also acknowledges that it has the knowledge and
experience in financial and business matters as are necessary in order to
evaluate the merits and risks of an investment in the Regulation D
Notes.
(c) Reliance
on Exemptions.
The
Regulation D Purchaser understands that the Regulation D Notes are being offered
and sold in reliance on specific exemptions from the registration requirements
of United States federal and state securities laws and that the Company is
relying in part upon the truth and accuracy of, and the Regulation D Purchasers’
compliance with, the representations, warranties, agreements, acknowledgments
and understandings of the Regulation D Purchasers set forth herein in order
to
determine the availability of such exemptions and the eligibility of the
Regulation D Purchasers to acquire the Regulation D Notes.
(d) No
General Solicitation or Advertising.
The
Regulation D Purchaser has not engaged, and will not engage, directly or
indirectly in any form of “general solicitation” or “general advertising” in
connection with the offering of the Regulation D Notes (as those terms are
used
in Regulation D under the Securities Act) or in any manner involving a public
offering within the meaning of Section 4(2) of the Securities Act.
(e) Independent
Evaluation.
The
Regulation D Purchaser confirms and agrees that (i) it has independently
evaluated the merits of its decision to purchase the Regulation D Notes,
(ii) it has not relied on the advice of, or any representations by,
Jefferies, Greenwich Capital Markets, Inc., BNP Paribas Securities Corp., BMO
Capital Markets Corp., Capital One Southcoast, Inc. and Natexis Bleichroeder
Inc. (each, a “Placement
Agent”
and,
collectively, the “Placement
Agents”)
or any
of their respective affiliates or any representative of the Placement Agents
or
their respective affiliates in making such decision, and (iii) neither the
Placement Agents nor any of their respective representatives has any
responsibility with respect to the completeness or accuracy of any information
or materials furnished to the Regulation D Purchaser in connection with the
transactions contemplated hereby, including the Preliminary CIM, Time of Sale
Document and CIM.
(f) Information.
The
Regulation D Purchaser acknowledges that the Company has offered the Regulation
D Purchaser materials relating to the business, finances and operations of
the
Company or relating to the offer and sale of the Regulation D Notes specifically
requested by the Regulation D Purchaser and that historical financial
information and pro forma financial information included in the Time of Sale
Document, including under the headings “Summary - Energy XXI Summary Historical
and Pro Forma Financial Data,” “Summary - Pogo Properties Summary Historical
Financial Data,” “Summary - Summary Unaudited Consolidated Pro Forma Financial
Statements” relating to the Pogo Assets, is unaudited and furthermore, that the
pro forma financial information has not been prepared in accordance with
Regulation S-X of the Commission. The Regulation D Purchaser and its advisors,
if any, have been afforded the opportunity to ask questions of the Company.
The
Regulation D Purchaser understands that its investment in the Regulation D
Notes
involves a high degree of risk and is able to bear the economic risk of such
investment. The Regulation D Purchaser has such knowledge and experience in
financial and business matters as to be capable of evaluating the merits and
risks of its investment in the Regulation D Notes and has sought such
accounting, legal and tax advice as it has considered necessary to make an
informed investment decision with respect to its acquisition of the Regulation
D
Notes.
6
(g) No
Governmental Review.
The
Regulation D Purchaser understands that no United States agency or any other
government or governmental agency has passed on or made any recommendation
or
endorsement of the Regulation D Notes or the fairness or suitability of the
investment in the Regulation D Notes nor have such authorities passed upon
or
endorsed the merits of the offering of the Regulation D Notes.
(h) Transfer
or Resale.
The
Regulation D Purchaser understands that: (i) the Notes have not been and will
not be registered under the Securities Act or any state securities laws; (ii)
the Regulation D Purchaser agrees that if it decides to offer, sell or otherwise
transfer any of the Regulation D Notes, such Regulation D Notes may be offered,
sold or otherwise transferred only: (A) pursuant to an effective registration
statement under the Securities Act; (B) to the Company; (C) outside the United
States in accordance with Regulation S under the Securities Act and in
compliance with local laws; or (D) within the United States (1) in accordance
with the exemption from registration under the Securities Act and in compliance
with any applicable state securities laws, or (2) in a transaction that does
not
require registration under the Securities Act or applicable state securities
laws.
(i) Legends.
The
Regulation D Purchaser understands that upon the original issuance thereof,
and
until such time as the same is no longer required under applicable requirements
of the Securities Act or applicable state securities laws, the certificates
or
other instruments representing the Regulation D Notes and all certificates
or
other instruments issued in exchange therefor or in substitution thereof, shall
bear the legend(s) set forth in the Indenture, and that the Company will make
a
notation on its records and give instructions to the Trustee in order to
implement the restrictions on transfer set forth and described
herein.
(j) Validity;
Enforcement.
This
Agreement has been duly and validly authorized, executed and delivered on behalf
of the Regulation D Purchaser and constitutes the legal, valid and binding
obligation of the Regulation D Purchasers enforceable against the Regulation
D
Purchaser in accordance with its terms, except as such enforceability may be
limited by general principles of equity or by applicable bankruptcy, insolvency,
reorganization, moratorium, liquidation and other similar laws relating to,
or
affecting generally, the enforcement of applicable creditors’ rights and
remedies.
7
(k) Residency.
For
purposes of U.S. securities laws, the Regulation D Purchaser is a resident
of
the jurisdiction specified with respect to such Regulation D Purchaser on
Annex A
hereto.
3. REPRESENTATIONS
AND WARRANTIES OF THE COMPANY PARTIES.
In
addition to the other representations, warranties and agreements contained
in
the Agreement, each of the Company Parties hereby represents, warrants and
agrees with, the Regulation D Purchasers as follows:
(a) No
Material Misstatement or Omission.
The CIM
did not, as of its date, contain any untrue statement of a material fact or
omit
to state a material fact necessary in order to make the statements therein,
in
the light of the circumstances under which they were made, not
misleading.
(b) The
Transaction Documents.
Each of
the Company Parties has all necessary power and authority to execute and deliver
the Transaction Documents to which they are a party and to perform its
respective obligations thereunder; each of the Transaction Documents has been
duly authorized by the Company Parties, as the case may be, and, when executed
and delivered by the Company Parties, as the case may be, will constitute a
valid and binding agreement of the Company Parties, as the case may be,
enforceable against the Company Parties, as the case may be, in accordance
with
its terms; and the Indenture, when executed and delivered by the Company Parties
will meet the requirements for qualification under the Trust Indenture Act
of
1939, as amended, and the rules and regulations of the Commission thereunder
(collectively, the “Trust
Indenture Act”).
(c) Acquisition
of Pogo Assets.
After
giving effect to the Transactions contemplated by the CIM, the Company will
have
acquired the Pogo Assets as contemplated by the CIM.
(d) The
Regulation D Notes.
The
Company has all necessary power and authority to execute, issue and deliver
the
Regulation D Notes; the Regulation D Notes have been duly authorized for
issuance and sale by the Company, will be in the form contemplated by the
Indenture and, when executed, authenticated and issued in accordance with the
terms of the Indenture and delivered to and paid for by the Regulation D
Purchasers pursuant to this Agreement, will constitute valid and binding
obligations of the Company, entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms. The Regulation
D
Notes and the Guarantees will conform, in all material respects to the
description thereof contained in the CIM.
(e) The
Guarantees.
Each of
the Guarantors has all necessary power and authority to execute, issue and
deliver its respective Guarantee; the Guarantees have been duly authorized
for
issuance and sale by each of the Guarantors, will be in the form contemplated
by
the Indenture and, when executed and the Guarantees issued in accordance with
the terms of the Indenture, will constitute valid and binding obligations of
each of the Guarantors, entitled to the benefits of the Indenture, enforceable
against each of the Guarantors in accordance with their terms.
8
(f) The
Exchange Notes and Related Guarantees.
Each of
the Company Parties has all necessary power and authority to execute, issue
and
deliver the Exchange Notes and the related Guarantees to which they are a party;
the Exchange Notes and the related Guarantees have been duly authorized for
issuance and sale by the Company Parties, as the case may be, will be in the
form contemplated by the Indenture and, when executed, authenticated and issued
in accordance with the terms of the Indenture and delivered to and exchanged
for
the Notes and the related Guarantees, as the case may be, will constitute valid
and binding obligations of the Company Parties, as the case may be, entitled
to
the benefits of the Indenture, enforceable against the Company Parties, as
the
case may be, in accordance with their terms.
(g) No
Material Adverse Change.
Except
as otherwise disclosed in the CIM, and for the period from and after the date
hereof and prior to the Closing Date, except as otherwise disclosed or to be
disclosed in the CIM: (i) there has been no material adverse change, or any
development that could reasonably be expected to result in a material adverse
change, in the condition, financial or otherwise, or in the earnings, business
or operations, whether or not arising from transactions in the ordinary course
of business, of the Company and its subsidiaries, considered as one entity,
Parent or the Pogo Assets (any such change is called a “Material
Adverse Change”);
(ii)
Parent, or the Company and its subsidiaries, considered as one entity, have
not
incurred any material liability or obligation (including any off-balance sheet
obligation), indirect, direct or contingent, not in the ordinary course of
business nor entered into any material transaction or agreement not in the
ordinary course of business; (iii) there has been no dividend or distribution
of
any kind declared, paid or made by the Company or Parent, except for dividends
paid to the Company or other subsidiaries, any of the Company’s subsidiaries on
any class of capital stock or repurchase or redemption by the Company or Parent
or any of its subsidiaries of any class of capital stock; and (iv) there has
not
occurred any downgrading from the Caa2 rating by ▇▇▇▇▇’▇ Investors Service, Inc.
and the CCC rating by Standard & Poor’s Rating Services accorded to any
securities of the Parent of the Company, nor has any notice been given of any
intended or potential downgrading or of any review for a possible change that
does not indicate the direction of the possible change, in the rating accorded
any securities of the Parent or the Company or any of its subsidiaries by any
“nationally recognized statistical rating organization” (as such term is defined
for purposes of Rule 436(g)(2) under the Securities Act).
(h) Going
Concern of Company.
On the
Closing Date, after giving effect to the offering and sale of the Notes and
the
application of the proceeds thereof as described in the CIM, (i) the fair value
and present fair saleable value of the assets of the Company and its
subsidiaries on a going concern basis will exceed the sum of its stated
liabilities and identified contingent liabilities; and (ii) each of the Company
and its subsidiaries will not be (a) left with unreasonably small capital with
which to carry on its business as it is proposed to be conducted, (b) unable
to
pay its debts (contingent or otherwise) as they mature or (c) otherwise
insolvent. In computing the amount of such contingent liabilities at any time,
such liabilities will be computed at the amount that, in the light of all the
facts and circumstances existing at such time, represent the amount that can
reasonably be expected to become an actual or matured liability.
9
(i) Independent
Accountants.
(i)
UHY, LLP, who have expressed their opinion with respect to the financial
statements of the Company and, the carve-out financial statements for Castex
Energy, Inc. (which, in each case, includes the related notes thereto) included
in the CIM and (ii) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have expressed their opinion with
respect to the financial statements of ▇▇▇▇▇▇ Energy Offshore L.L.C., ▇▇▇▇▇▇
Texas GP, L.L.C. and ▇▇▇▇▇▇ Texas L.L.C. (which term includes the related notes
thereto) to be included in the CIM, are each (i) independent public or certified
public accountants as required by the Securities Exchange Act of 1934 as amended
(the “Exchange
Act”),
(ii)
in compliance with the applicable requirements relating to the qualification
of
accountants under Rule 2-01 of Regulation S-X and (iii) a registered public
accounting firm as defined by the Public Company Accounting Oversight Board
whose registration has not been suspended or revoked and who has not requested
such registration to be withdrawn.
(j) Preparation
of the Financial Statements.
As of
the date hereof, the financial statements contained in the Preliminary CIM
and
the Time of Sale Document and to be contained in the CIM, present fairly in
all
material respects the consolidated financial position of (i) the Company and
its
subsidiaries, (ii) ▇▇▇▇▇▇ Energy Offshore L.L.C., ▇▇▇▇▇▇ Texas GP L.L.C., and
▇▇▇▇▇▇ Texas L.L.C., (iii) the assets acquired from Castex Energy, Inc., and
(iv) the Pogo Assets, in each case, as of and at the dates indicated and the
results of each of their respective operations and cash flows for the periods
specified. All such financial statements have been prepared in conformity in
all
material respects with generally accepted accounting principles applied on
a
consistent basis throughout the periods involved, except as contemplated by
the
CIM. As of the date hereof, the financial data set forth in the CIM, and the
financial data set forth or to be set forth in the CIM will as of its date,
fairly present the information set forth therein on a basis consistent with
that
of the audited and unaudited financial statements contained in the CIM.
(k) Pro
Forma Financial Information.
The pro
forma financial information of the Company and its subsidiaries and the related
notes thereto included under the captions Summary - Energy XXI Summary
Historical and Pro Forma Financial Data,” “Summary - Summary Unaudited
Consolidated Pro Forma Financial Statements” and “Capitalization” under the
column “As Adjusted” and elsewhere in the CIM, as of its date, presented fairly
the information contained therein, and the assumptions used in the preparation
thereof are reasonable and the adjustments used therein are appropriate to
give
effect to the Transactions and circumstances referred to therein.
(l) Engineer
Reports.
The
Company has heretofore delivered to the Placement Agents true, correct and
complete copies of the engineering reports of (i) Netherland, ▇▇▇▇▇▇ &
Associates, (ii) ▇▇▇▇▇▇ & ▇▇▇▇▇, Ltd., and (iii) ▇▇▇▇▇ ▇▇▇▇▇
Company LP (collectively, the “Engineer
Reports”).
There
have been no material adverse developments concerning the matters reported
in
such Engineering Reports since their respective dates.
10
(m) Incorporation
and Good Standing of the Company Parties.
Each of
the Company Parties has been duly incorporated or organized and is validly
existing as a corporation, partnership or limited liability company, as
applicable, in good standing under the laws of the jurisdiction of its
incorporation or organization and has the power and authority (corporate or
other) to own, lease and operate its properties and to conduct its business
as
described in the CIM as of its date, and to enter into and perform its
obligations under each of the Transaction Documents to which it is a party.
Each
of the Company Parties is duly qualified as a foreign corporation, partnership
or limited liability company, as applicable, to transact business and is in
good
standing in each jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of business,
except where the failure to be so qualified would not, individually or in the
aggregate, have a material adverse effect on the financial position,
stockholders’ equity, results of operations or business of the Company, Parent
or the Pogo Assets (a “Material
Adverse Effect”).
All
of the issued and outstanding capital stock or other equity or ownership
interest of each of the Subsidiary Guarantors has been duly authorized and
validly issued, is fully paid and nonassessable and is owned by the Company,
directly or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, charge, encumbrance or adverse claim, except as
disclosed in the CIM. Parent does not, directly or indirectly, own any
securities of any entity other than the Energy XXI (US Holdings) Limited, Energy
XXI USA, Inc., the Company and its subsidiaries. As of the date hereof, the
Company does not own or control, and as of the Closing Date, the Company will
not own or control, directly or indirectly, any corporation, association or
other entity other than (i) the subsidiaries listed on Annex
B
hereto
and (ii) such other entities omitted from Annex
B
hereto,
which, when such omitted entities are considered in the aggregate as a single
subsidiary, would not constitute a “significant subsidiary” within the meaning
of Rule 1-02(w) of Regulation S-X.
(n) Capitalization
and Other Capital Stock Matters.
As of
the date hereof, the capitalization of the Company and its subsidiaries
presented on a consolidated basis in the CIM under the caption “Capitalization”
under the column “Actual” is a fair summary of such capitalization in all
material respects.
(o) Non-Contravention
of Existing Instruments; No Further Authorizations or Approvals
Required.
None of
the Company Parties (i) is in violation of its charter or by laws, (ii) is
in
default (or, with the giving of notice or lapse of time, would be in default
or
constitute a default) (“Default”)
under
any indenture, mortgage, loan or credit agreement, note, contract, franchise,
lease or other instrument to which any of the Company Parties is a party or
by
which it or any of them may be bound, or to which any of the property or assets
of the Company Parties is subject (each, an “Existing
Instrument”),
or
(iii) is in violation of any law, administrative regulation or administrative
or
court decree applicable to any of the Company Parties except with respect to
clauses (ii) and (iii) of this sentence, for such Defaults or violations as
would not, individually or in the aggregate, result in a Material Adverse
Effect. The Company Parties’ execution, delivery and performance of the
Transaction Documents to which they are a party and the consummation of the
Transactions, including the issuance and sale of the Notes, (i) will not result
in any violation of the provisions of the charter or bylaws of any of the
Company Parties, (ii) will not conflict with or constitute a breach of, or
Default or a Debt Repayment Triggering Event (as defined below) under, or result
in the creation or imposition of any security interest, mortgage, pledge, lien,
charge, encumbrance or adverse claim upon any property or assets of any of
the
Company Parties pursuant to, or require the consent of any other party to any
Existing Instrument or other third party and (iii) will not result in any
violation of any law, administrative regulation or administrative or court
decree applicable to any of the Company Parties except with respect to clauses
(ii) and (iii) of this sentence, for such conflicts, breaches, Defaults, Debt
Repayment Triggering Events or violations as would not, individually or in
the
aggregate, result in a Material Adverse Effect. As used herein, a “Debt
Repayment Triggering Event”
means
any event or condition that gives, or with the giving of notice or lapse of
time
would give, the holder of any note, debenture or other evidence of indebtedness
(or any person acting on such holder’s behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such indebtedness
by
the Company Parties.
11
(p) Regulatory
Approval.
No
consent, approval, authorization or other order of, or registration or filing
with, any court or other governmental or regulatory authority or agency, is
required for each of the Company Parties’ execution, delivery and performance of
the Transaction Documents to which it is a party and consummation of the
Transactions, except (i) with respect to the transactions contemplated by the
Registration Rights Agreement or the filing of a Current Report on Form 8-K
with
the Commission as may be required under the Securities Act and the Exchange
Act,
as the case may be, (ii) as required by the state securities or “blue sky” laws,
and (iii) for such consents, approvals, authorizations, orders, filings or
registrations that have been obtained or made and are in full force and effect
except as would not have a Material Adverse Effect.
(q) No
Material Actions or Proceedings.
Except
as otherwise disclosed in the CIM, there are no legal or governmental actions,
suits or proceedings pending or, to the best of the Company’s knowledge, (i)
threatened against or affecting any of the Company Parties, (ii) which has
as
the subject thereof any officer or director of, or property owned or leased
by,
the Company Parties or (iii) relating to environmental or discrimination
matters, where in any such case (A) any such action, suit or proceeding, if
so
determined adversely, would reasonably be expected to result in a Material
Adverse Effect or adversely affect the consummation of the Transactions or
(B)
any such action, suit or proceeding is or would be material in the context
of
the offer and sale of Notes. No material labor dispute with the employees of
any
of the Company Parties, or with the employees of any principal supplier of
the
Company Parties, exists or, to the best of the Company’s knowledge, is
threatened or imminent.
(r) Intellectual
Property Rights.
Except
as otherwise disclosed in the CIM, the Company Parties own or possess, and
as of
the closing of the Transaction will own and possess, sufficient trademarks,
service marks, trade names, patents, patent rights, copyrights, domain names,
licenses, approvals, trade secrets, inventions, know-how (including unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures), licenses and other similar rights (collectively, “Intellectual
Property Rights”)
reasonably necessary to conduct their businesses as now conducted and as to
be
conducted as described in the CIM, except where the failure to own or possess
such Intellectual Property Rights would not have a Material Adverse
Effect.
(s) All
Necessary Permits, etc.
Except
as otherwise disclosed in the CIM, each of the Company Parties possess such
valid and current certificates, authorizations or permits issued by the
appropriate state, federal or other applicable regulatory agencies or bodies
and
such valid licenses or other rights to use all databases, geological data,
geophysical data, engineering data, seismic data, maps and other technical
information, in each case, necessary to conduct their respective businesses,
and
neither the Company nor any Guarantor has received, or has any reason to believe
that it has received or will receive, any notice of proceedings relating to
the
revocation or modification of, or non-compliance with, any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of
an
unfavorable decision, ruling or finding, would result in a Material Adverse
Effect.
12
(t) Title
to Properties.
Each of
the Company Parties has (i) generally satisfactory title to its oil and gas
properties, title investigations having been carried out by the Company Parties
in accordance with the practice in the oil and gas industry in the areas in
which the Company Parties operate except as, in each case, would not result
in a
Material Adverse Effect, (ii) good and marketable title to all other real
property owned by it to the extent necessary to carry on its business and (iii)
good and marketable title to all personal property owned by it, in each case
free and clear of all liens, encumbrances and defects except such as are
described in the CIM or such as do not materially affect the value of the
properties of the Company Parties, considered as one enterprise, and do not
interfere with the use made and proposed to be made of such properties, by
the
Company Parties, considered as one enterprise; and all of the leases and
subleases material to the business of the Company Parties, considered as one
enterprise, and under which the Company Parties hold properties described in
the
CIM, are in full force and effect, and none of the Company Parties has any
notice of any material claim of any sort that has been asserted by anyone
adverse to the rights of any of the Company Parties under any of the leases
or
subleases mentioned above, or affecting or questioning the rights of any of
the
Company Parties to the continued possession of the leased or subleased premises
under any such lease or sublease.
(u) Gas
Imbalances; Prepayments.
On a
net basis there are no gas imbalances, take-or-pay or other prepayments that
would require the Company or any of its subsidiaries to deliver Hydrocarbons
produced from the Oil and Gas Properties at some future time without then or
thereafter receiving full payment therefor exceeding one-half bcf of gas (on
an
mcf equivalent basis) in the aggregate, other than as disclosed in the CIM
or as
would not result in a Material Adverse Effect.
(v) Tax
Law Compliance.
Except
as disclosed in the CIM, the Company Parties have filed all necessary federal
and state income and franchise tax returns and have paid all taxes required
to
be paid by any of them and, if due and payable, any related or similar
assessment, fine or penalty levied against any of them except as may be being
contested in good faith and by appropriate proceedings, except as would not
result in a Material Adverse Effect. The Company has made adequate charges,
accruals and reserves in the applicable financial statements referred to in
Sections
3(j)
above in
respect of all federal and state and income and franchise taxes for all periods
as to which the tax liability of the Company or any of its subsidiaries has
not
been finally determined, other than as disclosed in the CIM or as would not
result in a Material Adverse Effect.
(w) Company’s
Accounting System.
The
Company makes and keeps accurate books and records and maintains a system of
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management’s general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles as applied in the United States and to maintain accountability for
assets; (iii) access to assets is permitted only in accordance with management’s
general or specific authorization; and (iv) the recorded accountability for
assets is compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences in each case, other than as
disclosed in the CIM or as would not result in a Material Adverse
Effect.
13
(x) Insurance.
Each of
the Company Parties is insured by recognized, financially sound and reputable
institutions with policies in such amounts and with such deductibles and
covering such risks as are generally deemed adequate and customary for their
businesses including, but not limited to, policies covering real and personal
property owned or leased by the Company Parties against theft, damage,
destruction, acts of vandalism, earthquakes and hurricanes, other than as
disclosed in the CIM or as would not result in a Material Adverse Effect. The
Company has no reason to believe that it or any Guarantor will not be able
(i)
to renew its existing insurance coverage as and when such policies expire or
(ii) to obtain comparable coverage from similar institutions as may be necessary
or appropriate to conduct its business as now conducted and at a cost that
would
not result in a Material Adverse Change. Except as described in the CIM and
except as would not result in a Material Adverse Effect, none of the Company
Parties has been denied any insurance coverage which it has sought or for which
it has applied.
(y) No
Unlawful Contributions or Other Payments.
Neither
the Company Parties nor, to the best of the Company’s knowledge, any employee or
agent of the Company Parties, has made any contribution or other payment to
any
official of, or candidate for, any federal, state or foreign office in violation
of any law.
(z) Disclosure
Controls and Procedures; Deficiencies in or Changes to Internal Control Over
Financial Reporting.
Parent
has established and maintains disclosure controls and procedures (as defined
in
Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as
amended), which (i) are designed to ensure that material information relating
to
the Parent, including its consolidated subsidiaries, is made known to the
Parent’s principal executive officer and its principal financial officer by
others within those entities and are effective in all material respects to
perform the functions for which they were established. Based on the most recent
evaluation of its disclosure controls and procedures, Parent is not aware of
(i)
any significant deficiencies or material weaknesses in the design or operation
of internal control over financial reporting which are reasonably likely to
adversely affect its ability to record, process, summarize and report financial
information or (ii) any fraud, whether or not material, that involves management
or other employees who have a significant role in Parent’s internal control over
financial reporting. Parent is not aware of any change in its internal control
over financial reporting that has occurred during its most recent fiscal quarter
that has materially affected, or is reasonably likely to materially affect,
its
internal control over financial reporting.
(aa) Compliance
with Environmental Laws.
Except
as described in the CIM or as would not, singly or in the aggregate, result
in a
Material Adverse Effect, (i) neither the Company nor any of its subsidiaries
is
in violation of any federal, state or local statute, law, rule, regulation,
ordinance, code, policy or rule of common law or any judicial or administrative
interpretation thereof, including any judicial or administrative order, consent,
decree or judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened release
of chemicals, pollutants, contaminants, wastes, toxic substances, hazardous
substances, petroleum or petroleum products (collectively, “Hazardous
Materials”)
or to
the manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, “Environmental
Laws”),
(ii)
the Company Parties have all permits, authorizations and approvals required
under any applicable Environmental Laws and are each in compliance with their
requirements, (iii) there are no pending or threatened administrative,
regulatory or judicial actions, suits, demands, demand letters, claims, liens,
notices of noncompliance or violation, investigation or proceedings relating
to
any Environmental Law against any of the Company Parties and (iv) there are
no
events or circumstances that might reasonably be expected to form the basis
of
an order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting any of the
Company Parties relating to Hazardous Materials or any Environmental
Laws.
14
(bb) Compliance
with Laws.
The
Company has not been advised, and has no reason to believe, that it and each
of
the Guarantors are not conducting business in compliance with all applicable
laws, rules and regulations of the jurisdictions in which it is conducting
business, except where failure to be so in compliance would not result in a
Material Adverse Effect.
(cc) Company
Parties Not an “Investment Company.”
Neither
the Company nor any Guarantor is, and after receipt of payment for the Notes,
will be, an “investment company” within the meaning of Investment Company Act of
1940, as amended, and the rules and regulations of the Commission
thereunder.
(dd) Brokers.
Except
for the Placement Agents, there is no broker, finder or other party that is
entitled to receive from the Company any brokerage or finder’s fee or other fee
or commission as a result of the Regulation D Placement or the transactions
contemplated thereby.
(ee) No
Registration Required Under the Securities Act.
Assuming the accuracy of the representations and warranties of the Placement
Agents contained in Section
1(B)
of the
Placement Agency Agreement and of the Regulation D Purchasers contained in
this
Agreement and the compliance of such parties with the agreements set forth
herein and therein, it is not necessary, in connection with the issuance and
sale of the Regulation D Notes, in the manner contemplated by the Transaction
Documents and the CIM, to register the Regulation D Notes under the Securities
Act or to qualify the Indenture under the Trust Indenture Act.
(ff) QIBs
and Accredited Investors.
The
Company will not offer or sell any of the Regulation D Notes to any person
whom
it reasonably believes is not (i) a “qualified institutional buyer” as defined
in Rule 144A (“QIBs”)
or
(ii) an institutional “accredited investor” (as defined in clauses (1), (2), (3)
and (7) of Rule 501(a) of Regulation D).
(gg) Regulation
D Purchasers; Compliance With Rule 502(d).
The
Company will exercise reasonable care to ensure that the Regulation D Purchasers
are not “underwriters” within the meaning of Section 2(a)(11) of the Securities
Act and, without limiting the foregoing, that such purchases will comply with
Rule 502(d) under the Securities Act.
15
(hh) No
General Solicitation.
To the
knowledge of the Company, none of the Company Parties or any of their respective
Affiliates have engaged, or will engage, directly or indirectly in any form
of
“general solicitation” or “general advertising” in connection with the offering
of the Regulation D Notes (as those terms are used in Regulation D under the
Securities Act) or in any manner involving a public offering within the meaning
of Section 4(2) of the Securities Act. To the knowledge of the Company, none
of
the Company Parties have entered, and will enter, into any arrangement or
agreement with respect to the distribution of the Regulation D Notes, except
for
this Agreement, the Placement Agency Agreement, the Indenture, the Escrow
Agreement, the Engagement Letter and the Registration Rights Agreement, and
the
Company agrees not to enter into any such arrangement or agreement.
(ii) No
Offer and Sale Within Six Months.
None of
the Company Parties nor any of their respective Affiliates have sold or issued
any security of the same or similar class or series as any of the Notes that
would be required to be integrated with the Notes in a manner that would require
registration under the Securities Act during the six-month period preceding
the
earlier of the date of this Agreement and the Closing Date, including any sales
pursuant to Rule 144A, Regulation D or Regulation S. None of Parent, the Company
nor any of its Affiliates have any intention of making, and will not make,
an
offer or sale of any securities that would be required to be integrated with
the
Notes in a manner that would require registration under the Securities Act,
for
a period of six months after the date of this Agreement, except for the offering
of Notes as contemplated by this Agreement, the Registration Rights Agreement
and the Regulation S Offering. As used in this paragraph, the terms “offer” and
“sale” have the meanings specified in Section 2(a)(3) of the Securities Act.
The
Company acknowledges that the Placement Agents and, for purposes of the opinion
to be delivered pursuant to Section
6
hereof,
counsel to the Company, will rely upon the accuracy and truthfulness of the
foregoing representations and hereby consents to such reliance.
4. COVENANTS.
(a) Reasonable
Best Efforts.
Each
party shall use its reasonable best efforts to timely satisfy each of the
conditions to be satisfied by it as provided in Sections
5
and
6
of this
Agreement.
(b) Form
D.
The
Company agrees to file a Form D with respect to the Regulation D Notes as
required under Regulation D and to comply with any applicable state securities
and “Blue Sky” laws in connection with the sale of the Regulation D
Notes.
(c) Use
of
Proceeds.
The net
proceeds from the sale of the Notes will be used by the Company in the manner
described in the Preliminary CIM and described or to be described in the CIM
under the caption titled “Use of Proceeds.”
(d) Fees
and Expenses.
Except
as otherwise set forth in the Regulation D Documents, each party to this
Agreement shall bear its own expenses in connection with the sale of the
Regulation D Notes to the Regulation D Purchasers.
(e) Publicity.
The
Regulation D Purchasers agree that they will not issue any press release or
otherwise make any public statement, filing or other communication regarding
the
offering or the business, operations or financial condition of Parent or the
Company without the prior consent of the Company, except to the extent required
by law or legal process, in which case such Regulation D Purchaser shall provide
the Company with prior notice of such disclosure. Parent and the Company agree
that they will not publicly disclose the names of the Regulation D Purchasers
or
include the names of the Regulation D Purchasers, without the prior written
consent of the Regulation D Purchasers, in any press release or other public
statement, filing or other communication, except (a) in any registration
statement in which such Regulation D Purchaser is identified as a selling
securityholder, or (b) to the extent required by law or legal process (including
but not limited to by the filing of one or more Form D’s with the Commission
regarding the Regulation D Placement).
16
(f) Withholding
Taxes.
The
Regulation D Purchasers shall deliver to the Company a properly completed and
duly executed applicable Internal Revenue Service Form W-8 or W-9 that
establishes a complete exemption from United States withholding tax. The
Regulation D Purchasers will provide replacement forms on the obsolescence
of
such forms or inaccuracy of any information thereon.
5. CONDITIONS
TO THE COMPANY’S OBLIGATION TO SELL.
The
obligation of the Company hereunder to issue and sell the Regulation D Notes
to
the Regulation D Purchasers at the Closing is subject to the satisfaction,
at or
before the Closing Date, of each of the following conditions, provided
that
these conditions are for the Company’s sole benefit and may be waived by the
Company at any time in its sole discretion by providing the Regulation D
Purchasers with prior written notice thereof.
(a) The
representations and warranties of the Regulation D Purchaser shall be true
and
correct in all material respects as of the date when made and as of the Closing
Date as though made at that time (except for representations and warranties
that
speak as of a specific date), and the Regulation D Purchaser shall have
performed, satisfied and complied in all material respects with the covenants,
agreements and conditions required by this Agreement to be performed, satisfied
or complied with by the Regulation D Purchaser at or prior to the Closing
Date.
(b) No
injunction, restraining order or order of any nature by a governmental authority
shall have been issued as of the Closing Date that would prevent or materially
interfere with the consummation of the Offering or any of the transactions
contemplated thereby; and no stop order suspending the qualification or
exemption from qualification of any of the Securities in any jurisdiction shall
have been issued and no proceeding for that purpose shall have been commenced
or, to the knowledge of the Regulation D Purchasers after reasonable inquiry,
be
pending or contemplated as of the Closing Date.
(c) At
least
$750.0 million in aggregate principal amount of Notes shall have been sold
by
the Company to the Regulation D Purchasers and the Initial Purchasers and an
amount shall have been borrowed by the Company under the Credit Agreement in
an
amount sufficient to repay all outstanding borrowings under the Amended and
Restated Second Lien Credit Agreement, dated as of July 28, 2006 among the
Company, various lenders named therein, BNP Paribas, and RBS Securities
Corporation (the “Second
Lien Facility”).
17
(d) No
action
shall have been taken and no statute, rule, regulation or order shall have
been
enacted, adopted or issued by any federal, state or foreign governmental or
regulatory authority of competent jurisdiction that would, as of the Closing
Date, render impossible the issuance or sale of the Regulation D Notes; and
no
injunction or order of any federal, state or foreign court shall have been
issued that would, as of the Closing Date, prevent the issuance or sale of
the
Notes.
6. CONDITIONS
TO THE REGULATION D PURCHASERS’ OBLIGATION TO PURCHASE.
The
several obligations of the Regulation D Purchasers hereunder to purchase the
Regulation D Notes at the Closing are subject to the satisfaction, at or before
the Closing Date, of each of the following conditions, provided
that (a)
these conditions are for the Regulation D Purchasers’ sole respective benefit
and may be waived by the Regulation D Purchasers at any time in their sole
discretion (each with respect to itself only) by providing the Company with
prior written notice thereof and (b) the Regulation D Purchasers acknowledge
that their respective portions of the Purchase Price may be released from the
Escrow Account pursuant to the terms of the Escrow Agreement upon receipt by
the
Closing Agent of the Company Closing Certificate as set forth in Section
1(b):
(a) Each
of
the Company Parties shall have executed and delivered, or caused to be
delivered, to the Regulation D Purchasers or the Closing Agent (i) each of
the Transaction Documents to which it is a party and (ii) the Regulation D
Notes
being purchased by the Regulation D Purchasers at the Closing pursuant to this
Agreement, in each case in form and substance reasonably satisfactory to the
Regulation D Purchasers or their agents.
(b) The
Transactions shall have been consummated in accordance with their terms and
in
accordance with the applicable Transaction Documents and as described in the
Preliminary CIM and as described or to be described in the CIM.
(c) At
least
$750.0 million in aggregate principal amount of Notes shall have been sold
by
the Company to the Regulation D Purchasers and the Initial Purchasers and an
amount shall have been borrowed by the Company under the Credit Agreement in
an
amount sufficient to repay all outstanding borrowings under the Second Lien
Facility.
(d) The
Regulation D Notes shall have been designated for trading on PORTAL, to the
extent so eligible.
(e) On
the
Closing Date, the Regulation D Purchasers or the Closing Agent (on behalf of
the
Regulation D Purchasers) shall have received the opinions of ▇▇▇▇▇▇ & ▇▇▇▇▇▇
LLP, U.S. counsel for Parent and the Company, and ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Bailhache,
Bermuda counsel for Parent, in each case dated as of the Closing Date,
substantially to the effect set forth on Annex
C.
(f) The
Company Parties shall have each delivered to the Regulation D Purchasers or
the
Closing Agent (on behalf of the Regulation D Purchasers) a certificate
evidencing qualification by such entity as a foreign corporation and good
standing issued by the Secretaries of State (or comparable office) of each
of
the jurisdictions in which the Company Parties operate as of a date within
30
days prior to the Closing Date.
18
(g) The
Company Parties shall have delivered to the Regulation D Purchasers or the
Closing Agent (on behalf of the Regulation D Purchasers) a certificate, executed
by the Secretary of each of the Company Parties, and dated as of the Closing
Date, as to (i) the resolutions consistent with Sections
3(b), 3(d),
3(e)
and
3(f)
as
adopted by Board of Directors of each such entity in a form reasonably
acceptable to the Regulation D Purchasers, and (ii) the memorandum of
association, the certificate of incorporation and bylaws, or other
organizational documents of each such entity.
(h) The
representations and warranties of the Company Parties contained herein shall
be
true and correct as of the date when made and as of the Closing Date as though
made at that time (except for representations and warranties that speak as
of a
specific date), and the Company shall have performed, satisfied and complied
in
all material respects with the covenants, agreements and conditions required
by
the Regulation D Purchase Documents to be performed, satisfied or complied
with
by the Company Parties, as applicable, at or prior to the Closing Date. The
Regulation D Purchasers or the Closing Agent (on behalf of the Regulation D
Purchasers) shall have received certificates, executed by an authorized officer
of each of the Parent and the Company, dated as of the Closing Date, to the
foregoing effect. The statements of the Company Parties and their respective
officers made in any certificates delivered pursuant to this Agreement may
be
made only in their official, rather than individual capacity, and shall be
true
and correct on and as of the Closing Date.
(i) No
action
shall have been taken and no statute, rule, regulation or order shall have
been
enacted, adopted or issued by any federal, state or foreign governmental or
regulatory authority of competent jurisdiction that would, as of the Closing
Date, render impossible the issuance or sale of the Regulation D Notes; and
no
injunction or order of any federal, state or foreign court shall have been
issued that would, as of the Closing Date, prevent the issuance or sale of
the
Regulation D Notes.
7. TERMINATION.
In
the
event that the Closing shall not have occurred due to the failure of the Company
Parties or the Regulation D Purchasers to satisfy the conditions set forth
in
Sections
5
and
6
above
(and the nonbreaching party’s failure to waive such unsatisfied condition(s)),
the nonbreaching party shall have the option to terminate this Agreement with
respect to such breaching party at the close of business on the third business
day following the date previously scheduled to be the Closing Date subject
to
Section
1(a)(ii).
8. INDEMNIFICATION.
(i) In
consideration of the Regulation D Purchasers’ execution and delivery of the
Regulation D Purchase Documents and the issuance of the Regulation D Notes
under
the Indenture, and acquiring the Regulation D Notes hereunder and in addition
to
all of the other obligations of the Company under this Agreement, the Company,
shall defend, protect, indemnify and hold harmless the Regulation D Purchasers
and the Regulation D Purchasers’ stockholders, partners, members, officers,
directors, employees and direct or indirect investors and any of the foregoing
Persons’ agents or other representatives, including, without limitation, those
retained in connection with the transactions contemplated by this Agreement
(each, an “Indemnitee”
and
collectively, the “Indemnitees”),
as
incurred, from and against any and all actions, causes of action, suits, claims,
losses, costs, penalties, fees, liabilities and damages, and expenses in
connection therewith (irrespective of whether any such Indemnitee is a party
to
the action for which indemnification hereunder is sought), and including
reasonable attorneys’ fees and disbursements (the “Indemnified
Liabilities”),
incurred by any Indemnitee as a result of, or arising out of, or relating to
any
misrepresentation or breach of any representation or warranty made by the
Company in the Note Purchase Documents or any other certificate, instrument
or
document contemplated hereby or thereby. To the extent that the foregoing
undertaking by each of the Parent and the Company may be unenforceable for
any
reason, each of the Parent and the Company shall make the maximum contribution
to the payment and satisfaction of each of the Indemnified Liabilities which
is
permissible under applicable law.
19
(ii) Promptly
after receipt by an Indemnitee under this Section
8
of
notice of any claim or the commencement of any action or proceeding (including
any governmental investigation), such Indemnitee will, if a claim for
indemnification in respect thereof is to be made against the Company, notify
the
Company in writing of the commencement thereof; but the omission to so notify
will not relieve it from any liability which the Company may have to any
Indemnitee to the extent it is not materially prejudiced as a result thereof.
In
case any such action or proceeding is brought against any Indemnitee, and it
notifies the Company of the commencement thereof, the Company will be entitled
to participate therein, and to the extent that it may elect, by written notice
delivered to such Indemnitee promptly after receiving the aforesaid notice
from
such Indemnitee, to assume the defense thereof, with counsel reasonably
satisfactory to such Indemnitee; provided,
however,
that if
the defendants (including any impleaded parties) in any such action include
both
the Indemnitee and the Company (as applicable) and the Indemnitee shall have
reasonably concluded that there may be legal defenses available to it and/or
other Indemnitees which are different from or additional to those available
to
the Company, the Indemnitee or Indemnitees shall have the right to select
separate counsel to defend such action on behalf of such Indemnitee or
Indemnitees. Upon receipt of notice from the Company to such Indemnitee of
its
election to so appoint counsel to defend such action and approval by the
Indemnitee of such counsel, the Company will not be liable to such Indemnitee
under this Section
8
for any
legal or other expenses subsequently incurred by such Indemnitee in connection
with the defense thereof unless: (A) the Indemnitee shall have employed separate
counsel in accordance with the proviso to the preceding sentence (it being
understood, however, that the Company shall not be liable for the expense of
more than one separate counsel (in addition to any local counsel), approved
by
the Indemnitee representing the Indemnitees who are parties to such action);
(B)
the Company shall not have employed counsel reasonably satisfactory to the
Indemnitee to represent the Indemnitee within a reasonable time after notice
or
commencement of the action; (C) the Company has authorized the employment of
counsel for the Indemnitee at the expense of the Company; or (D) the use of
counsel chosen by the Company to represent the Indemnitee would present such
counsel with a conflict of interest.
(iii) The
Company will not without the prior written consent of the Indemnitees, settle
or
compromise or consent to the entry of any judgment with respect to any pending
or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
Indemnitees are actual or potential parties to such claim or action) unless
such
settlement, compromise or consent includes an unconditional release of each
Indemnitee from all liability arising out of such claim, action, suit or
proceeding and does not include an admission of guilt of, or failure to act
by,
the Indemnitee, or include any injunctive relief against any Indemnitee. Neither
the Company nor the Parent shall be liable for any settlement, compromise or
the
consent to the entry of judgment in connection with any such action effected
without its written consent, but if settled with its written consent or if
there
be a final judgment for the plaintiff in any such action other than a judgment
entered with the consent of such Indemnitee, or the Company shall indemnify
and
hold harmless any Indemnitee from and against any loss or liability by reason
of
such settlement or judgment.
20
(iv) Each
Indemnitee shall furnish such information regarding itself or the claim in
question as the Company may reasonably request in writing and as shall be
reasonably required in connection with the defense of such claim and litigation
arising therefrom.
(v) Notwithstanding
anything to the contrary herein, the rights and remedies provided in this
Section
8
are the
sole rights with respect to the transactions contemplated by this Agreement
and
no party hereto shall make any other claim for costs, damages of expenses
(including fees and expenses of attorneys, consultants, experts or other
representatives) to any fine of or penalty on or any liability of any other
nature or otherwise, under, arising out of or relating to this Agreement, or
the
transactions contemplated hereby, whether based on contract, tort, strict
liability, other laws or otherwise.
(vi) Notwithstanding
anything to the contrary herein, the provisions of this Section
8
are
intended solely for the benefit of the Regulation D Purchasers and not for
the
benefit of, nor may any provision hereby be enforced by, any other
Person.
(vii) No
indemnification will or may be sought under this Section
8,
by any
Person who would have been entitled to indemnification under this Section
8
two
years after the date of this Agreement.
9. MISCELLANEOUS.
(a) Notices.
Any
notices, consents, waivers or other communications required or permitted to
be
given under the terms of this Agreement must be in writing and will be deemed
to
have been delivered: (i) upon receipt, when delivered personally; (ii) upon
receipt, when sent by facsimile (provided confirmation of transmission is
mechanically or electronically generated and kept on file by the sending party);
or (iii) one Business Day after deposit with an overnight courier service,
in
each case properly addressed to the party to receive the same. The addresses
and
facsimile numbers for such communications shall be:
If
to the
Company:
Energy
XXI Gulf Coast, Inc.
▇▇▇▇▇
▇▇▇▇
▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇
Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
Attn:
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇, Director
21
Copy
to:
▇▇▇▇▇▇
& ▇▇▇▇▇▇ LLP
First
City Tower
▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇
▇▇▇▇
▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Facsimile:
▇▇▇-▇▇▇-▇▇▇▇
Attn:
T.
▇▇▇▇ ▇▇▇▇▇, Esq.
and
if to
the Regulation D Purchasers, to the applicable address and facsimile number
set
forth on Annex
A
hereto,
or to such other address and/or facsimile number and/or to the attention of
such
other Person as the recipient party has specified by written notice given to
each other party prior to the effectiveness of such change. Written confirmation
of receipt (A) given by the recipient of such notice, consent, waiver or other
communication, (B) mechanically or electronically generated by the sender’s
facsimile machine containing the time, date, recipient facsimile number and
an
image of the first page of such transmission or (C) provided by an overnight
courier service shall be rebuttable evidence of personal service, receipt by
facsimile or receipt from an overnight courier service in accordance with
clause
(A),
(B)
or
(C)
above,
respectively.
(b) Governing
Law; Jurisdiction; Jury Trial.
This
Agreement shall be governed by, and construed in accordance with, the laws
of
the State of New York. Any legal suit, action or proceeding arising out of
or
based upon this Agreement or the transactions contemplated hereby may be
instituted in the federal courts of the United States of America located in
the
Borough of Manhattan in the City of New York or the courts of the State of
New
York in each case located in the Borough of Manhattan in the City of New York.
Each party hereby irrevocably waives, and agrees not to assert in any suit,
action or proceeding, any claim that it is not personally subject to the
jurisdiction of any such court, that such suit, action or proceeding is brought
in an inconvenient forum or that the venue of such suit, action or proceeding
is
improper. Each party hereby irrevocably waives personal service of process
and
consents to process being served in any such suit, action or proceeding by
mailing a copy thereof to such party at the address for such notices to it
under
this Agreement and agrees that such service shall constitute good and sufficient
service of process and notice thereof. Nothing contained herein shall be deemed
to limit in any way any right to serve process in any manner permitted by law.
Each party hereby irrevocably waives any right it may have, and agrees not
to
request, a jury trial for the adjudication of any dispute hereunder or in
connection with or arising out of this Agreement or any transaction contemplated
hereby.
22
(c) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties and
their respective successors and assigns; provided
that
no
party shall assign any of its rights or obligations hereunder without the prior
written consent of the other party.
(d) Survival.
Unless
this Agreement is terminated under Section
7,
the
representations and warranties of the parties hereto contained in Sections
2
and
3,
respectively, and the agreements and covenants set forth in Sections
4
and
8
shall
survive the Closing.
(e) Headings.
The
headings of this Agreement are for convenience of reference and shall not form
part of, or affect the interpretation of, this Agreement.
(f) Severability.
If any
term, provision, covenant or restriction of this Agreement is held by a court
of
competent jurisdiction to be invalid, illegal, void or unenforceable, the
remainder of the terms, provisions, covenants and restrictions set forth herein
shall remain in full force and effect and shall in no way be affected, impaired
or invalidated, and the parties hereto shall use their best efforts to find
and
employ an alternative means to achieve the same or substantially the same result
as that contemplated by such term, provision, covenant or restriction. It is
hereby stipulated and declared to be the intention of the parties that they
would have executed the remaining terms, provisions, covenants and restrictions
without including any of such that may be hereafter declared invalid, illegal,
void or unenforceable.
(g) Entire
Agreement.
This
Agreement and the Escrow 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.
(h) Amendment.
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 failure
by
any party to exercise any right or remedy under this Agreement or otherwise,
or
delay by a party in exercising such right or remedy, shall not operate as a
waiver thereof. Any amendment to this Agreement made in conformity with the
provisions of this Section
8(i)
shall be
binding on the Regulation D Purchasers and all holders of the Regulation D
Notes
purchased under this Agreement, as applicable.
(i) Counterparts.
This
Agreement may be executed in two or more identical counterparts, all of which
shall be considered one and the same agreement and shall become effective when
counterparts have been signed by each party and delivered to the other party;
provided,
that a
facsimile signature shall be considered due execution and shall be binding
upon
the signatory thereto with the same force and effect as if the signature were
an
original, not a facsimile signature.
(j) Further
Assurances.
Each
party shall do and perform, or cause to be done and performed, all such further
acts and things, and shall execute and deliver all such other agreements,
certificates, instruments and documents, as any other party may reasonably
request in order to carry out the intent and accomplish the purposes of this
Agreement and the consummation of the transactions contemplated
hereby.
23
(k) No
Third Party Beneficiaries.
This
Agreement is intended for the benefit of the parties hereto and their respective
permitted successors and assigns, and is not for the benefit of, nor may any
provision hereof be enforced by, any other Person; provided,
however,
that
each of the Placement Agents may rely upon Sections 1,
2,
3,
and
4
hereof
as if such representations, warranties, agreements and covenants, as applicable,
were made directly to the Placement Agents. The parties further agree that
the
Placement Agents may rely on or, if the Placement Agents so requests, be
specifically named as an addressee of, the legal opinions to be delivered
pursuant to Section
6(e)
of this
Agreement.
(l) Limitation
on Duties of Closing Agent and Placement Agents; Exculpation.
Each
party hereto agrees for the express benefit of each of the Closing Agent and
the
Placement Agents, their respective affiliates and their respective
representatives that:
(i) Neither
the Closing Agent, nor any of its respective affiliates or any of their
representatives has any duties or obligations other than those specifically
set
forth herein.
(ii) None
of
the Closing Agent, the Placement Agents nor any of their respective affiliates
or respective representatives (1) shall be liable for any improper payment
made
in accordance with the information provided by the Company; (2) makes any
representation or warranty, or has any responsibilities as to the validity,
accuracy, value or genuineness of any information, certificates or documentation
delivered by or on behalf of the Company pursuant to this Agreement, the
Placement Agency Agreement or the other Transaction Documents or in connection
with any of the transactions contemplated hereby or thereby, including any
information in the Preliminary CIM or the CIM or (3) shall be liable (x) for
any
action taken, suffered or omitted by any of them in good faith and reasonably
believed to be authorized or within the discretion or rights or powers conferred
upon it by this Agreement, the Placement Agency Agreement or any other
Transaction Document or (y) for anything that any of them may do or refrain
from
doing in connection with this Agreement, the Placement Agency Agreement or
any
other Transaction Document, except for such party’s own gross negligence,
willful misconduct or bad faith.
(iii) Each
of
the Closing Agent, the Placement Agents, their respective affiliates and their
respective representatives shall be entitled to (1) rely on, and shall be
protected in acting upon, any certificate, instrument, opinion, notice, letter
or any other document or security delivered to any of them by or on behalf
of
the Company, and (2) be indemnified by the Company for acting as Placement
Agent
and Closing Agent, respectively, hereunder pursuant the indemnification
provisions set forth in the Placement Agency Agreement, which hereby are
incorporated by reference herein.
[SIGNATURE
PAGE FOLLOWS]
24
IN
WITNESS WHEREOF, the parties hereto have caused their respective signature
page
to this Regulation D Purchase Agreement to be duly executed as
of , 2007.
| ENERGY XXI GULF COAST, INC. | ||
| |
|
|
| By: | /s/ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ III | |
|
Name:
▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ III
Title:
Vice President, Land
|
||
| ENERGY XXI (BERMUDA) LIMITED | ||
| |
|
|
| By: | /s/ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ | |
|
Name:
▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇
Title:
Chief Financial Officer
|
||
| ENERGY XXI TEXAS, LP | ||
| |
|
|
| By: | /s/ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ III | |
|
Name:
▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ III
Title:
Vice President, Land
|
||
| ENERGY XXI TEXAS GP, LLC | ||
| |
|
|
| By: | /s/ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ III | |
|
Name:
▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ III
Title:
Vice President, Land
|
||
| ENERGY XXI GOM, LLC | ||
| |
|
|
| By: | /s/ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ III | |
|
Name:
▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ III
Title:
Vice President, Land
|
||
| PURCHASER | ||
| |
|
|
|
Insert name of Purchaser |
||
| By: | ||
|
Name:
Title:
|
||
|
Address:
Telephone:
Fax:
|
||
Annex
A
Registration
Information
Legal
Name Of Regulation D Purchaser:
______________________________________________________________
Aggregate
principal amount of Regulation D Notes to be purchased by you: $______________
(if
special denominations required, please note)
Address
Of Regulation D Purchaser:
_________________________________________________________________
| Attention: | _________________________ | |
|
Telephone
Number:
Fax
Number:
|
__________________________________
__________________________________
__________________________________
|
|
Nominee
(Name in which the Regulation D Notes are to be registered, if different than
name of Regulation D Purchaser): ___________________________
|
Tax
I.D. Number:
|
__________________________________ | |
(If
Acquired in the name of a nominee, the taxpayer I.D. number of such
nominee)
Person
To
Receive Copies of Regulation D Purchase Documents
|
Name:
Telephone
Number:
Email:
|
__________________________________
__________________________________
__________________________________
|
|
Operations
Contacts
|
Primary:
Telephone
Number:
Email:
Secondary:
Telephone
Number:
Email:
|
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
__________________________________
|
|
Mail
Payment Notices (if different than mailing address):
| __________________________________ | ||
| Attention: | _________________________ |
|
Telephone
Number:
|
__________________________________
__________________________________
__________________________________
|
|
|
Fax
Number:
State
of Principal Place of Business:
|
__________________________________
__________________________________
|
|
|
Custodian
Information:
|
||
|
Name:
DTC
Participant No.
|
__________________________________
__________________________________
|
|
| Physical Delivery Instructions: | ||
| __________________________________ | ||
| Attention: | _________________________ | |
|
Telephone
Number:
|
__________________________________
__________________________________
|
|
|
Fax
Number:
|
__________________________________ | |
Tax
Withholding Form Attached (indicate type):
____________________________________________________
Wire
Transfer Instructions for Payments to Regulation D Purchaser under the Escrow
Agreement: ____________________
Annex
A-1
Annex
B
List
of Subsidiaries of the Company
Energy
XXI Texas, LP
Energy
XXI Texas GP, LLC
Energy
XXI GOM, LLC
Annex
B-1
Annex
C
Opinion
of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, as U.S. counsel for Parent and the Company, and ▇▇▇▇▇▇▇
▇▇▇▇▇▇ Bailhache, as Bermuda counsel for Parent, to be delivered pursuant to
Section
6(b)
of the Purchase Agreement.
[To
be
allocated among counsel]
References
to the Preliminary CIM in this Exhibit include any supplements thereto at the
Closing Date.
1. Each
of
the Company and the Guarantors is a corporation duly incorporated, validly
existing and in good standing under the laws of its jurisdiction of formation,
with limited liability power and corporate power, as the case may be, and
authority to own, lease and operate its properties and to conduct its business
as described in the CIM and to enter into and perform its respective obligations
under the Regulation D Purchase Agreement, Escrow Agreement, the Registration
Rights Agreement and the Indenture (collectively the “Note
Purchase Documents”),
as
the case may be.
2. Each
of
the Company and the Guarantors has all necessary corporate power and authority
to execute and deliver the Note Purchase Documents, to perform its obligations
thereunder to issue the Regulation D Notes.
3. The
Regulation D Purchase Agreement has been duly authorized, executed and delivered
by each of the Guarantors and the Company.
4. Each
of
the Indenture, Escrow Agreement, and the Registration Rights Agreement has
been
duly authorized, executed and delivered by the Company and each of the
Guarantors, as the case may be, and constitutes a valid and binding agreement
of
the Company and each of the Guarantors, as the case may be, enforceable against
the Company and each of the Guarantors, as the case may be, in accordance with
its terms. The Indenture is in sufficient form for qualification under the
Trust
Indenture Act.
5. The
Regulation D Notes, when executed, authenticated and issued in accordance with
the terms of the Indenture and delivered to and paid for by the Regulation
D
Purchasers pursuant to the Purchase Agreement, will constitute valid and binding
obligations of the Company, entitled to the benefits of the Indenture,
enforceable against the Company in accordance with their terms.
6. The
Guarantees, when the Regulation D Notes have been executed, authenticated and
issued in accordance with the terms of the Indenture and delivered to and paid
for by the Regulation D Purchasers pursuant to the Purchase Agreement, will
constitute valid and binding obligations of the Guarantors, entitled to the
benefits of the Indenture, enforceable against the Guarantors in accordance
with
their terms.
7. The
Exchange Notes and the related Guarantees have been duly authorized by the
Company and the Guarantors, as the case may be.
Annex
C-1
8. The
execution and delivery of the Note Purchase Documents by Parent, the Company
and
the subsidiaries of the Company, the performance by such companies of their
respective obligations thereunder, including the issuance and sale of the Notes
and the Guarantees, (i) will not result in any violation of the provisions
of
the charter, by-laws or equivalent constituent documents of Parent, the Company
or any Guarantor; (ii) will not constitute a breach of, or default or a Debt
Repayment Triggering Event under, or result in the creation or imposition of
any
security interest, mortgage, pledge, lien, charge, encumbrance or adverse claim
upon any property or assets of Parent, the Company or any Guarantor, pursuant
to
any material Existing Instrument listed on identified on the annexed schedule
furnished to us by the Company, and which the Company has represented lists
all
material agreements and instruments to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
is
bound or to which any of the property or assets of the Company or any of its
subsidiaries is subject; (iii) will not result in any violation of any federal,
Delaware or New York law or, to the best knowledge of such counsel any
administrative regulation or administrative or court decree, applicable to
Parent, the Company or any of the subsidiaries of the Company; or (v) will
not
require any consent, approval, authorization or other order of, or registration
(provided no opinion is given with respect to federal or state securities laws),
or filing with, any court or other governmental or regulatory authority or
agency, except (i) with respect to the transaction contemplated by the
Registration Rights Agreement and may be required under the Securities Act
and
the Exchange Act, (ii) as required by federal or state securities or “blue sky”
laws and (iii) for such consents, approvals, authorizations, orders, filings
or
registrations which have been obtained or made.
9. Assuming
the accuracy of the representations and warranties of Parent, the Company and
the Regulation D Purchasers contained in the Purchase Agreement and the
compliance of such parties with the agreements set forth herein and therein,
it
is not necessary, in connection with the issuance and sale of the Regulation
D
Notes to the Regulation D Purchasers, in the manner contemplated by Note
Purchase Documents and the CIM, to register the initial sale of the Regulation
D
Notes under the Securities Act or to qualify the Indenture under the Trust
Indenture Act it being understood no opinion is given with respect to subsequent
resales of the Regulation D Notes.
10. Neither
the Parent nor the Company is, and after receipt of payment for the Notes,
will
be, an “investment company” within the meaning of, and subject to registration
under, Investment Company Act.
Annex
C-2