<PAGE> 1
AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON FEBRUARY 8, 1994
REGISTRATION NO. 33-51059
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
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AMENDMENT NO. 3
TO
FORM S-3
REGISTRATION STATEMENT
UNDER
THE SECURITIES ACT OF 1933
<TABLE>
<S> <C>
SANTA FE ENERGY RESOURCES, INC.* SANTA FE ENERGY TRUST
</TABLE>
(EXACT NAME OF REGISTRANTS AS SPECIFIED IN CHARTER)
<TABLE>
<S> <C>
DELAWARE TEXAS
</TABLE>
(STATES OR OTHER JURISDICTIONS OF INCORPORATION OR ORGANIZATION)
<TABLE>
<S> <C>
36-2722169 76-6081498
</TABLE>
(I.R.S. EMPLOYER IDENTIFICATION NUMBERS)
<TABLE>
<S> <C>
1616 SOUTH VOSS ROAD, SUITE 1000 TEXAS COMMERCE BANK NATIONAL ASSOCIATION
HOUSTON, TEXAS 77057 CORPORATE TRUST DIVISION
(713) 783-2401 600 TRAVIS, SUITE 1150
HOUSTON, TEXAS 77002
(713) 216-5100
</TABLE>
(ADDRESSES, INCLUDING ZIP CODES, AND TELEPHONE NUMBERS, INCLUDING
AREA CODES, OF REGISTRANTS' PRINCIPAL EXECUTIVE OFFICES)
DAVID L. HICKS
1616 SOUTH VOSS ROAD, SUITE 1000
HOUSTON, TEXAS 77057
(713) 783-2401
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER,
INCLUDING AREA CODE, OF AGENT FOR SERVICE)
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* On its own behalf and as sponsor of Santa Fe Energy Trust, a grantor trust
formed under the laws of the State of Texas.
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Copies to:
<TABLE>
<S> <C>
ANDREWS & KURTH L.L.P. SIMPSON THACHER & BARTLETT
4200 TEXAS COMMERCE TOWER 425 LEXINGTON AVENUE
HOUSTON, TEXAS 77002 NEW YORK, NEW YORK 10017
(713) 220-4200 (212) 455-2000
ATTENTION: JAMES M. PRINCE ATTENTION: VINCENT PAGANO, JR.
</TABLE>
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon as
practicable after the effective date of this Registration Statement.
If the only securities being registered on this Form are being offered
pursuant to dividend or interest reinvestment plans, please check the following
box. / /
If any of the securities being registered on this form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933, other than securities offered only in connection with dividend or interest
reinvestment plans, check the following box. / /
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE> 2
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
All capitalized terms used and not defined in Part II of this Registration
Statement shall have the meanings assigned to them in the Prospectus which forms
a part of this Registration Statement.
ITEM 14. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated expenses payable by Santa Fe in connection with the
registration of the Depositary Units (including the underlying Trust Units)
offered hereby, other than underwriting discounts and commissions, are as
follows:
<TABLE>
<CAPTION>
DESCRIPTION AMOUNT
-------------------------------------------------------------------------- --------
<S> <C>
Securities Act registration fee........................................... $ 4,375
NASD filing fee........................................................... 1,769
Blue Sky qualification fees and expenses.................................. 15,000
Legal fees and expenses................................................... 90,000
Accounting fees and expenses.............................................. 80,000
Engineering fees and expenses............................................. 1,000
Printing costs............................................................ 125,000
Miscellaneous............................................................. 7,856
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Total........................................................... $325,000
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--------
</TABLE>
ITEM 15. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
Subsection (a) of Section 145 of the General Corporation Law of the State
of Delaware empowers a corporation to indemnify any person who was or is a party
or is threatened to be made a party to any threatened, pending or completed
action, suit or proceeding, whether civil, criminal, administrative or
investigative (other than an action by or in the right of the corporation) by
reason of the fact that he is or was a director, officer, employee or agent of
the corporation, or is or was serving at the request of the corporation as a
director, officer, employee or agent of another corporation, partnership, joint
venture, trust or other enterprise, against expenses (including attorneys'
fees), judgments, fines and amounts paid in settlement actually and reasonably
incurred by him in connection with such action, suit or proceeding if he acted
in good faith and in a manner he reasonably believed to be in or not opposed to
the best interests of the corporation, and, with respect to any criminal action
or proceeding, had no reasonable cause to believe his conduct was unlawful.
Subsection (b) of Section 145 empowers a corporation to indemnify any
person who was or is a party or is threatened to be made a party to any
threatened, pending or completed action or suit by or in the right of the
corporation to procure a judgment in its favor by reason of the fact that such
person acted in any of the capacities set forth above, against expenses
(including attorneys' fees) actually and reasonably incurred by him in
connection with the defense or settlement of such action or suit if he acted in
good faith and in a manner he reasonably believed to be in or not opposed to the
best interests of the corporation, except that no indemnification may be made in
respect of any claim, issue or matter as to which such person shall have been
adjudged to be liable to the corporation unless and only to the extent that the
Court of Chancery or the court in which such action or suit was brought shall
determine upon application that, despite the adjudication of liability but in
view of all the circumstances of the case, such person is fairly and reasonably
entitled to indemnity for such expenses which the Court of Chancery or such
other court shall deem proper.
Section 145 further provides that to the extent a director or officer of a
corporation has been successful on the merits or otherwise in the defense of any
action, suit or proceeding referred to in subsections (a) and (b) of Section 145
or in the defense of any claim, issue or matter therein, he shall be indemnified
against expenses (including attorneys' fees) actually and reasonably incurred by
him in connection therewith; that indemnification provided for by Section 145
shall not be deemed exclusive of any other rights to which the indemnified
II-1
<PAGE> 3
party may be entitled; that indemnification provided by Section 145 shall,
unless otherwise provided when authorized or ratified, continue as to a person
who has ceased to be a director, officer, employee or agent and shall inure to
the benefit of such person's heirs, executors and administrators; and empowers
the corporation to purchase and maintain insurance on behalf of a director or
officer of the corporation against any liability asserted against him and
incurred by him in any such capacity, or arising out of his status as such,
whether or not the corporation would have the power to indemnify him against
such liabilities under Section 145.
Section 102(b)(7) of the General Corporation Law of the State of Delaware
provides that a certificate of incorporation may contain a provision eliminating
or limiting the personal liability of a director to the corporation or its
stockholders for monetary damages for breach of fiduciary duty as a director,
provided that such provision shall not eliminate or limit the liability of a
director (i) for any breach of the director's duty of loyalty to the corporation
or its stockholders, (ii) for acts or omissions not in good faith or which
involve intentional misconduct or a knowing violation of law, (iii) under
Section 174 of the Delaware General Corporation Law, or (iv) for any transaction
from which the director derived an improper personal benefit.
Article NINTH of Santa Fe's Restated Certificate of Incorporation states
that:
"No director of the Corporation shall be personally liable to the
Corporation or its stockholders for monetary damages from breach of
fiduciary duty by such director as a director; provided, however, that this
Article NINTH shall not eliminate or limit the liability of a director to
the extent provided by applicable law (i) for any breach of the director's
duty of loyalty to the Corporation or its stockholders, (ii) for acts or
omissions not in good faith or which involve intentional misconduct or a
knowing violation of law, (iii) under Section 174 of the General
Corporation Law of the State of Delaware, or (iv) for any transaction from
which the director derived an improper personal benefit. No amendment to or
repeal of this Article NINTH shall apply to, or have any effect on, the
liability or alleged liability of any director of the Corporation for or
with respect to any facts or omissions of such director occurring prior to
such amendment or repeal. If the General Corporation Law of the State of
Delaware is amended to authorize corporate action further eliminating or
limiting the personal liability of directors, then the liability of a
director of the Corporation shall be eliminated or limited to the fullest
extent permitted by the General Corporation Law of the State of Delaware,
as so amended."
Article VI of Santa Fe's Bylaws further provides that Santa Fe shall
indemnify its officers, directors and employees to the fullest extent permitted
by law. Pursuant to such provision, Santa Fe has entered into agreements with
various of its officers, directors and employees which provide for
indemnification of such persons.
Pursuant to the Underwriting Agreement filed as Exhibit 1.1 hereto, the
Underwriter agrees to indemnify, under certain conditions, Santa Fe, its
officers and directors and persons who control Santa Fe within the meaning of
the Securities Act against certain liabilities.
Santa Fe maintains a $25,000,000 policy of officers and directors liability
insurance.
Section 6.02 of the Trust Agreement provides that the Trustee and its
officers, directors, employees and agents will be indemnified by the Trust
estate against and from any and all liabilities, expenses, claims, damages or
losses incurred by it individually or as trustee in the administration of the
Trust and the Trust estate, or in the doing of any act done or performed or
omission occurring on account of it being trustee, except for such liabilities,
expenses, claims, damages or losses arising from fraud or acts or omissions in
bad faith or which constitute gross negligence.
Section 6.03(a) of the Trust Agreement provides that Santa Fe will
indemnify the Trustee against any losses, claims, damages or liabilities arising
out of or based upon this Registration Statement, the Prospectus contained
herein, any amendment or supplement hereto, any other filing, report or other
action taken in respect of the Securities Act of 1933, the Securities Exchange
Act of 1934 or any other federal or state securities law, or the listing of the
Depositary Units on the New York Stock Exchange.
Section 6.03(b) of the Trust Agreement provides that Santa Fe will
indemnify the Trustee (but not the Trust estate) against any losses, claims,
damages or liabilities to which the Trustee may become subject as a
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<PAGE> 4
result of its being trustee, under or with respect to any environmental law (as
defined) insofar as such losses, claims, damages or liabilities arise out of,
are based upon or connected with the Royalty Properties.
ITEM 16. EXHIBITS
<TABLE>
<C> <S>
1.1 -- Form of Underwriting Agreement
3.1 -- Trust Agreement of Santa Fe Energy Trust*
4.1 -- Deposit Agreement (including form of SPER attached as Exhibit A)*
5.1 -- Opinion of Andrews & Kurth L.L.P.*
8.1 -- Opinion of Andrews & Kurth L.L.P. regarding tax matters (included as
part of Exhibit 5.1)*
23.1 -- Consent of Price Waterhouse*
23.2 -- Consent of Andrews & Kurth L.L.P. (included in their opinion filed as
Exhibit 5.1)*
23.3 -- Consent of Ryder Scott Company, independent petroleum engineers*
24.1 -- A power of attorney, pursuant to which amendments to this Registration
Statement may be filed, is included on the signature page contained in
Part II of this Registration Statement*
99.1 -- Form of Net Profits Conveyance (Multi-State)*
99.2 -- Form of Wasson Conveyance*
99.3 -- Form of Louisiana Mortgage*
</TABLE>
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* Previously filed
ITEM 17. UNDERTAKINGS
The undersigned registrant hereby undertakes that, for purposes of
determining any liability under the Securities Act of 1933, each filing of the
registrant's annual reports pursuant to Section 13(a) or Section 15(d) of the
Securities Exchange Act of 1934 (and, where applicable, each filing of an
employee benefit plan's annual report pursuant to Section 15(d) of the
Securities Exchange Act of 1934) that is incorporated by reference in the
registration statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of such securities
at that time shall be deemed to be the initial bona fide offering thereof.
Insofar as indemnification for liabilities arising under the Securities Act
of 1933 may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Securities and Exchange Commission
such indemnification is against public policy as expressed in the Act and is,
therefore, unenforceable. In the event that a claim for indemnification against
such liabilities (other than the payment by the registrant of expenses incurred
or paid by a director, officer or controlling person of the registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
The undersigned registrant hereby undertakes that:
(1) For purposes of determining any liability under the Securities Act
of 1933, the information omitted from the form of prospectus filed as part
of this registration statement in reliance upon Rule 430A and contained in
a form of prospectus filed by the registrant pursuant to Rule 424(b)(1) or
(4) or 497(h) under the Securities Act shall be deemed to be part of this
registration statement as of the time it was declared effective.
(2) For the purpose of determining any liability under the Securities
Act of 1933, each post-effective amendment that contains a form of
prospectus shall be deemed to be a new registration statement relating to
the securities offered therein, and the offering of such securities at that
time shall be deemed to be the initial bona fide offering thereof.
II-3
<PAGE> 5
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, SANTA FE ENERGY
RESOURCES, INC. CERTIFIES THAT IT HAS REASONABLE GROUNDS TO BELIEVE THAT IT
MEETS ALL OF THE REQUIREMENTS FOR FILING ON FORM S-3 AND HAS DULY CAUSED THIS
REGISTRATION STATEMENT TO BE SIGNED ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO
DULY AUTHORIZED IN THE CITY OF HOUSTON, STATE OF TEXAS, ON FEBRUARY 8, 1994.
SANTA FE ENERGY RESOURCES, INC.
By: /s/ DAVID L. HICKS
David L. Hicks,
Vice President and General Counsel
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS
REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN THE
CAPACITIES AND ON THE DATES INDICATED.
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
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<C> <S> <C>
*JAMES L. PAYNE Chairman of the Board, February 8, 1994
James L. Payne President and Chief
Executive Officer and
Director (Principal
Executive Officer)
*MICHAEL J. ROSINSKI Vice President and Chief February 8, 1994
Michael J. Rosinski Financial Officer
(Principal Financial and
Accounting Officer)
*ROD F. DAMMEYER Director February 8, 1994
Rod F. Dammeyer
*WILLIAM E. GREEHEY Director February 8, 1994
William E. Greehey
*ROBERT D. KREBS Director February 8, 1994
Robert D. Krebs
</TABLE>
<TABLE>
<C> <S> <C>
*ALLAN V. MARTINI Director February 8, 1994
Allan V. Martini
*MICHAEL A. MORPHY Director February 8, 1994
Michael A. Morphy
*REUBEN F. RICHARDS Director February 8, 1994
Reuben F. Richards
</TABLE>
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<PAGE> 6
<TABLE>
<CAPTION>
SIGNATURE TITLE DATE
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<C> <S> <C>
*MARC J. SHAPIRO Director February 8 , 1994
Marc J. Shapiro
*ROBERT F. VAGT Director February 8 , 1994
Robert F. Vagt
*KATHRYN D. WRISTON Director February 8 , 1994
Kathryn D. Wriston
*MELVYN N. KLEIN Director February 8 , 1994
Melvyn N. Klein
*By: /s/ DAVID L. HICKS
Attorney-in-fact
</TABLE>
II-5
<PAGE> 7
EXHIBIT INDEX
<TABLE>
<C> <S>
1.1 -- Form of Underwriting Agreement
3.1 -- Trust Agreement of Santa Fe Energy Trust*
4.1 -- Deposit Agreement (including form of SPER attached as Exhibit A)*
5.1 -- Opinion of Andrews & Kurth L.L.P.*
8.1 -- Opinion of Andrews & Kurth L.L.P. regarding tax matters (included as
part of Exhibit 5.1)*
23.1 -- Consent of Price Waterhouse*
23.2 -- Consent of Andrews & Kurth L.L.P. (included in their opinion filed as
Exhibit 5.1)*
23.3 -- Consent of Ryder Scott Company, independent petroleum engineers*
24.1 -- A power of attorney, pursuant to which amendments to this
Registration Statement may be filed, is included on the signature
page contained in Part II of this Registration Statement*
99.1 -- Form of Net Profits Conveyance (Multi-State)*
99.2 -- Form of Wasson Conveyance*
99.3 -- Form of Louisiana Mortgage*
</TABLE>
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* Previously filed
<PAGE> 1
575,000 SECURE PRINCIPAL ENERGY RECEIPTS
DEPOSITARY UNITS CONSISTING OF INTERESTS IN
SANTA FE ENERGY TRUST
AND
U.S. TREASURY OBLIGATIONS
UNDERWRITING AGREEMENT
February __, 1994
LEHMAN BROTHERS INC.
3 World Financial Center
200 Vesey Street
New York, New York 10285
Dear Sirs:
Santa Fe Energy Resources, Inc., a Delaware corporation (the
"Company"), proposes to sell 575,000 Secure Principal Energy Receipts (the
"Depositary Units") to Lehman Brothers Inc. (the "Underwriter"). Each
Depositary Unit consists of beneficial ownership of one unit of undivided
beneficial interest (a "Trust Unit") in Santa Fe Energy Trust, a grantor trust
formed by the Company under the laws of Texas (the "Trust") to hold royalty
interests in certain oil and gas properties owned by the Company (the "Royalty
Properties") and a beneficial ownership interest in a zero coupon United States
Treasury obligation maturing on February 15, 2008 (the "Treasury Obligation")
in a face amount equal to $20 per Depositary Unit. The Depositary Units will
be evidenced by Secure Principal Energy Receipts (the "Certificates"). The
Certificates will be issued and transferable only in denominations of 50
Depositary Units or integral multiples thereof. The Trust Units and Treasury
Obligations together have been deposited with Texas Commerce Bank National
Association, as depositary (the "Depositary"), and will be represented by the
Certificates.
This is to confirm the agreement concerning the purchase of
the Depositary Units from the Company by the Underwriter.
1. Representations, Warranties and Agreements of the Company.
The Company represents, warrants and agrees that:
<PAGE> 2
2
(a) A registration statement on Form S-3 with
respect to the Depositary Units has (i) been prepared by the
Company and the Trust in conformity with the requirements of
the Securities Act of 1933 (the "Securities Act") and the
rules and regulations (the "Rule and Regulations") of the
Securities and Exchange Commission (the "Commission")
thereunder, (ii) been filed with the Commission under the
Securities Act and (iii) become effective under the Securities
Act. Copies of such registration statement have been
delivered by the Company to you as the Underwriter. As used
in this Agreement, "Effective Time" means the date and the
time as of which such registration statement, or the most
recent post-effective amendment thereto, if any, was declared
effective by the Commission; "Effective Date" means the date
of the Effective Time; "Preliminary Prospectus" means each
prospectus included in such registration statement, or
amendments thereof, before it became effective under the
Securities Act and any prospectus filed with the Commission by
the Company with the consent of the Underwriter pursuant to
Rule 424(a) of the Rules and Regulations; "Registration
Statement" means such registration statement, as amended at
the Effective Time, including any documents incorporated by
reference therein at such time and all information contained
in the final prospectus filed with the Commission pursuant to
Rule 424(b) of the Rules and Regulations in accordance with
Section 5(a) hereof and deemed to be a part of the
registration statement as of the Effective Time pursuant to
paragraph (b) of Rule 430A of the Rules and Regulations; and
"Prospectus" means such final prospectus, as first filed with
the Commission pursuant to paragraph (1) or (4) of Rule 424(b)
of the Rules and Regulations. Reference made herein to any
Preliminary Prospectus or to the Prospectus shall be deemed to
refer to and include any documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities
Act, as of the date of such Preliminary Prospectus or the
Prospectus, as the case may be, and any reference to any
amendment or supplement to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any
document filed under the Securities Exchange Act of 1934 (the
"Exchange Act") after the date of such Preliminary Prospectus
or the Prospectus, as the case may be, and incorporated by
reference in such Preliminary Prospectus or the Prospectus, as
the case may be; and any reference to any amendment to the
Registration Statement shall be deemed to include any annual
report of the Company filed with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange Act after the Effective
Time that is incorporated by reference in the Registration
Statement. The Commission has not issued any order preventing
or suspending the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus will, when they
become effective or are filed with the Commission, as the case
may be, conform in all material respects to the requirements
of the Securities Act and the Rules and Regulations and do not
and will not, as
<PAGE> 3
3
of the applicable effective date (as to the Registration
Statement and any amendment thereto) and as of the applicable
filing date (as to the Prospectus and any amendment or
supplement thereto), contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided that no representation or warranty is
made as to information contained in or omitted from the
Registration Statement or the Prospectus in reliance upon and
in conformity with written information furnished to the
Company by the Underwriter specifically for inclusion therein.
(c) The documents incorporated by reference in the
Prospectus, when they were filed with the Commission,
conformed in all material respects to the requirements of the
Exchange Act and the rules and regulations of the Commission
thereunder, and none of such documents contained an untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading; and any further documents
so filed and incorporated by reference in the Prospectus, when
such documents are filed with Commission will conform in all
material respects to the requirements of the Exchange Act and
the rules and regulations of the Commission thereunder and
will not contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading.
(d) The Company and each of its subsidiaries that
have conveyed any of the Royalty Properties to the Trust
(collectively, the "Significant Subsidiaries") have been duly
incorporated and are validly existing as corporations in good
standing under the laws of their respective jurisdictions of
incorporation, are duly qualified to do business and are in
good standing as foreign corporations in each jurisdiction in
which their respective ownership or lease of property or the
conduct of their respective businesses requires such
qualification, and have all power and authority necessary to
own or hold their respective properties and to conduct the
businesses in which they are engaged; none of the domestic
subsidiaries of the Company is a "significant subsidiary", as
such term is defined in Rule 405 of the Rules and Regulations.
(e) The Trust has been duly formed and is validly
existing as a grantor trust under the laws of the State of
Texas for the purpose of holding the Royalty Interests (as
defined in the Prospectus), with full trust power and
authority to own its properties as described in the
Prospectus.
(f) Each of the trust agreement (the "Trust
Agreement"), between the Company and Texas Commerce Bank
National Association, as trustee (the "Trustee") and the
deposit agreement (the "Deposit Agreement"), among the
Company, the Depositary and the Trustee has been duly
authorized, executed and delivered by the Company and
constitutes a valid and binding agreement of the Company
enforceable against the Company in accordance with its
<PAGE> 4
4
terms, except as the enforceability of each may be limited by
bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights
generally, by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in
equity or at law) or by an implied covenant of good faith and
fair dealing; the Trust Units have been duly authorized by
the Trust and are duly and validly issued and outstanding,
fully paid and non-assessable, and constitute valid and
binding obligations of the Trust entitled to the benefits of
the Trust Agreement and enforceable in accordance with their
terms, except as the enforceability of each may be limited by
bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights
generally, by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in
equity or at law) or by an implied covenant of good faith and
fair dealing; and the Depositary Units have been duly
authorized and are duly and validly issued and outstanding and
constitute valid and binding obligations of the Depositary
entitled to the benefits of the Deposit Agreement and
enforceable in accordance with its terms, except as the
enforceability of each may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws
relating to or affecting creditors' rights generally, by
general equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law) or by an implied covenant of good faith and fair dealing.
The Trust Units and the Depositary Units, conform in all
material respects to the descriptions thereof contained in
the Prospectus.
(g) The execution, delivery and performance of this
Agreement, by the Company and the consummation of the
transactions contemplated hereby will not conflict with or
result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any material
indenture, mortgage, deed of trust, loan agreement, the Trust
Agreement, the Deposit Agreement or other agreement or
instrument to which the Company or any of its Significant
Subsidiaries is a party or by which the Company or any of its
Significan Subsidiaries is bound or to which any of the
property or assets of the Company or any of its Significant
Subsidiaries is subject, nor will such actions result in any
violation of the provisions of the charter or by- laws of the
Company or any of its Significant Subsidiaries or any statute
or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of
it Significant Subsidiaries or any of their properties or
assets; and except for the registration of the Trust Units and
the Depositary Units under the Securities Act and such
consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and
applicable state securities laws in connection with the
purchase and distribution of the Depositary Units by the
Underwriter, no consent, approval, authorization or order of,
or filing or registration with, any such court or governmental
agency or body is required
<PAGE> 5
5
for the execution, delivery and performance of this Agreement
by the Company and the consummation of the transactions
contemplated hereby.
(h) Except to the extent described in the Prospectus
or the documents incorporated by reference therein, there are
no contracts, agreements or understandings between the Company
and any person granting such person the right to require the
Company to file a registration statement under the Securities
Act with respect to any securities of the Company owned or to
be owned by such person or to require the Company to include
such securities in the securities registered pursuant to the
Registration Statement or in any securities being registered
pursuant to any other registration statement filed by the
Company under the Securities Act.
(i) The Company and its Significant Subsidiaries
taken as a whole, have not sustained since the date of the
latest audited financial statements included or incorporated
by reference in the Prospectus, any material loss or
interference with their business from fire, explosion, flood
or other calamity, whether or not covered by insurance, or
from any labor dispute or court or governmental action, order
or decree; and, except to the extent described in the
Prospectus or the documents incorporated by reference therein,
since such date, there has not been any material adverse
change, or any development involving a prospective material
adverse change, in or affecting the Royalty Properties, taken
as a whole, or the general affairs, management, financial
position, stockholders' equity or results of operations of
the Company and its Significant Subsidiaries, taken as a whole.
(j) The financial statements (including the related
notes and supporting schedules) filed as part of the
Registration Statement or included or incorporated by
reference in the Prospectus present fairly the financial
condition and results of operations of the entities purported
to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis
throughout the periods involved.
(k) Price Waterhouse, who have certified certain
financial statements of the Company and the Trust and whose
reports appear in the Prospectus or are incorporated by
reference therein, is an independent public accountants as
required by the Securities Act and the Rules and Regulations,
and was an independent accountant as required by the
Securities Act and the Rules and Regulations during the
periods covered by the financial statements on which they
reported contained or incorporated in the Prospectus.
(l) The information supplied by the Company to Ryder
Scott Company ("Ryder Scott"), independent petroleum
engineers, for purposes of preparing the reserve reports and
estimates of Ryder Scott included in the Registration
Statement, including, without limitation, production, costs of
operation and development, current prices for production,
agreements relating to current and future operations and sales
of production, was true and correct in all
<PAGE> 6
6
material respects on the date supplied and was prepared in
accordance with customary industry practices; Ryder Scott,
whose report on reserves is attached as Appendix A to the
Prospectus were, as of the date of such report, and are, as of
the date hereof, independent petroleum engineers with respect
to the Trust and the Company.
(m) (i) The Company and or its Significant
Subsidiaries, as the case may be, have good and defensible
title to the Royalty Properties free and clear of all liens,
encumbrances and defects except (A) those described in the
Prospectus or in the information incorporated by reference
therein; (B) royalties and other burdens and obligations,
expressed and implied, under oil and gas leases; (C) the
Royalty Interests; (D) contractual obligations arising under
operating agreements, farmout agreements and production sales
contracts; (E) liens that arise in the normal course of
operations that are not yet due, such as those for unpaid
taxes, statutory liens securing unpaid suppliers and
contractors and contractual liens under operating agreements;
(F) pooling, unitization and communitization agreements,
declarations and orders; and (G) liens, encumbrances and
defects, none of which in the aggregate materially affect the
value of the Royalty Properties and do not materially
interfere with the Royalty Interests or the use made and
proposed to be made of such property by the Company and its
Significant Subsidiaries; all contracts, agreements or
underlying leases, which comprise a portion of the Royalty
Properties and which individually or in the aggregate are
material to the Royalty Properties taken as a whole, are in
full force and effect, the Company has paid all rents and
other charges to the extent due and payable thereunder, is not
in default under any of such underlying contracts, agreements
or leases, has received no notice of default from any other
party thereto and knows of no material default by any other
party thereto; (ii) the working interests in oil, gas and
mineral leases or mineral interests that constitute a portion
of the Royalty Properties held by the Company reflect in all
materials respects the right of the Company to explore or
receive production from such Royalty Properties and the care
taken by the Company and its subsidiaries with respect to
acquiring or otherwise procuring such leases or mineral
interests was generally consistent with standard industry
practices for acquiring or procuring leases and interests
therein to explore such for hydrocarbons; and (iii), the Trust
has good and defensible title to the Royalty Interests (as
defined in the Prospectus), free and clear of all liens,
encumbrances and defects, except liens securing taxes and
other governmental charges and liens not yet due, encumbrances
and defects that do not in the aggregate materially affect the
value of the Royalty Interests.
(n) Each of the Conveyances (as defined in the
Prospectus) has been duly authorized, executed and delivered
by the Company to the Trust, and (assuming due execution and
delivery by the Trustee) constitute valid and binding
agreements of the Company enforceable against the Company in
accordance with its terms, except as the enforceability of
each may be limited
<PAGE> 7
7
by bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally, by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in
equity or at law) or by an implied covenant of good faith and
fair dealing; the form of each of the Conveyances complied,
at the time such Conveyance was recorded or filed with the
laws of the state in which such Conveyance was recorded or
filed, including all applicable recording, filing and
registration laws and regulations, and is adequate and
sufficient to transfer title to the Royalty Interests to the
Trust; the recording of the Conveyances (other than the
Louisiana Conveyance, as defined in the Prospectus) in the
real property records in each county where the Royalty
Properties are located is sufficient to impart notice of the
contents thereof, and all subsequent purchasers or creditors
of the Company will be deemed to purchase with notice of and
subject to such Royalty Interests; the registration of the
Louisiana Conveyance under the Louisiana registry records and
the recordation of a mortgage on the underlying leaseholds or
royalty interests of the Company in the Royalty Properties
recorded in each parish in Louisiana where Royalty Properties
are located, which mortgage secures the Louisiana Conveyance,
are sufficient to impart notice of the contents thereof, and
all subsequent purchasers or creditors of the Company will be
deemed to purchase with notice of and subject to such Royalty
Interests; the Company has made all necessary recordings and
filings of the Conveyances; the Conveyances conform in all
material respects to the descriptions thereof in the
Prospectus; all Royalty Interests which the Company was
required to convey to the Trust have been completely and
accurately described in the exhibits attached to the
Conveyances.
(o) Except as described in the Prospectus or in the
information incorporated by reference therein, the Company and
each of its Significant Subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is
adequate for the conduct of their respective businesses and
the value of their respective properties and as is customary
for companies engaged in similar businesses in similar
industries.
(p) Except as described in the Prospectus or in the
information incorporated by reference therein, there are no
legal or governmental proceedings pending to which the Company
or any of its Significant Subsidiaries is a party or of which
any property (including, but not limited to, the Royalty
Properties) or assets of the Company or any of its Significant
Subsidiaries or the Royalty Interests is the subject which, if
determined adversely to the Company, any of its Significant
Subsidiaries or the Royalty Interests, would have a material
adverse effect on the Royalty Interests or the consolidated
financial position, stockholders' equity, results of
operations, business or prospects of the Company and its
Significant Subsidiaries, taken as a whole; and to the
Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by
others.
<PAGE> 8
8
(q) The conditions for use of Form S-3, as set forth
in the General Instructions thereto, have been satisfied.
(r) There are no contracts or other documents which
are required to be described in the Prospectus or filed as
exhibits to the Registration Statement by the Securities Act
or by the Rules and Regulations which have not been described
in the Prospectus or filed as exhibits to the Registration
Statement or incorporated therein by reference as permitted by
the Rules and Regulations.
(s) Since the date the Trust was formed through the
date hereof, and except as may otherwise be disclosed in the
Prospectus, the Trust has not (i) issued or granted any Trust
Units, except for the original issuance of 6,300,000 Trust
Units in November 1992 (ii) incurred any liability or
obligation, direct or contingent, except as permitted by the
Trust Agreement or, (iii) entered into any transaction not in
the ordinary course of business.
(t) Neither the Company nor any of its Significant
Subsidiaries (i) is in violation of its charter or by-laws,
(ii) is in default in any material respect, and no event has
occurred which, with notice or lapse of time or both, would
constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any
material indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which it is a party or by
which it is bound or to which any of its properties or assets
is subject or (iii) is in violation in any material respect of
any law, ordinance, governmental rule, regulation or court
decree to which it or its property or assets may be subject or
has failed to obtain any material license, permit,
certificate, franchise or other governmental authorization or
permit necessary to the ownership of its property (including,
without limitation, the Royalty Properties) or to the conduct
of its business.
(u) Other than as set forth in the Prospectus or as
incorporated by reference therein, there has been no storage,
disposal, generation, transportation, handling or treatment of
medical wastes, hazardous wastes or hazardous substances by
the Company or any of its Significant Subsidiaries (or, to the
knowledge of the Company, any of their predecessors in
interest) at, upon or from any of the property now owned or
leased by the Company or its Significant Subsidiaries in
violation of any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit or which requires remedial
action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or
remedial action which would not have, or in the reasonable
judgment or belief of the Company is not likely to have,
singularly or in the aggregate with all such violations and
remedial actions, a material adverse effect on the Royalty
Properties, taken as a whole, or the general affairs,
management, financial position, stockholders' equity or
results of operations of the Company and its Significant
Subsidiaries, taken as
<PAGE> 9
9
a whole; except as described in the Prospectus or the
documents incorporated therein by reference, there has been no
material spill, discharge, leak, emission, injection, escape,
dumping or release onto any of the property now owned or
leased by the Company or its Significant Subsidiaries or into
the environment surrounding such property of any medical
wastes, solid wastes, hazardous wastes or hazardous substances
by the Company or any of its Significant Subsidiaries in
violation of applicable law, except for any such spill,
discharge, leak, emission, injection, escape, dumping or
release which in the reasonable judgment or belief of the
Company is not likely to have, singularly or in the aggregate
with any such spills, discharges, leaks, emissions,
injections, escapes, dumpings and releases, a material adverse
effect on the Royalty Properties taken as a whole or the
general affairs, management, financial position, stockholders'
equity or results of operations of the Company and its
Significant Subsidiaries taken as a whole; and the terms
"hazardous wastes", "solid wastes", "hazardous substances"
and "medical wastes" shall have the meanings specified in the
Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended, and the Resource
Conservation and Recovery Act of 1976, as amended, and any
similar applicable local or state laws or regulations with
respect to environmental protection.
(v) None of the Company, any of its Significant
Subsidiaries, the Trust or the Depositary is an "investment
company" within the meaning of such term under the Investment
Company Act of 1940 and the rules and regulations of the
Commission thereunder.
(w) Except for liens and encumbrances described in
clauses (A), (B), (D), (E), (F) and (G) of paragraph (m)
above, any and all liens or encumbrances on the Royalty
Properties will be subordinated to the Royalty Interests and
all future liens or encumbrances on the Royalty Properties
shall be subordinate and inferior to the Royalty Interests.
(x) The Depositary Units are listed on the New York
Stock Exchange in integral multiples of 50 Depositary Units.
(y) The Trustee is a national banking association
duly authorized and empowered to act as trustee of the Trust
pursuant to the Trust Agreement.
2. Purchase of the Depositary Units by the Underwriter.
On the basis of the representations and warranties contained
in, and subject to the terms and conditions of, this Agreement, the Company
agrees to deliver to the Underwriter the Depositary Units and the Underwriter
agrees to purchase the Depositary Units.
<PAGE> 10
10
The price of the Depositary Units to be paid by the
Underwriter to the Company shall be $ per Depositary Unit.
The Company shall not be obligated to deliver any of
the Depositary Units to be delivered on the Delivery Date (as hereinafter
defined), except upon payment for all the Depositary Units as provided herein.
3. Offering of Depositary Units by the Underwriter.
The Underwriter proposes to offer the Depositary Units for
sale upon the terms and conditions set forth in the Prospectus.
4. Delivery of and Payment for the Depositary Units.
Delivery of and payment for the Depositary Units shall be made
at the office of Lehman Brothers Inc., 388 Greenwich Street (Cashier's Window,
Main Level), New York, New York 10013, at 10:00 A.M., New York City time, on
the fifth full business day following the date of this Agreement or at such
other date or place as shall be determined by agreement between the Underwriter
and the Company. This date and time are sometimes referred to as the "Delivery
Date." On the Delivery Date, the Company shall deliver the Certificates
representing the Depositary Units duly endorsed for transfer to the
Underwriter against payment to the Company of the purchase price by certified
or official bank check or checks payable in New York Clearing House (next-day)
funds. Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the obligation
of the Underwriter hereunder. Upon delivery, the Depositary Units shall be
registered in such names and in such denominations as the Underwriter shall
request in writing not less than two full business days prior to the Delivery
Date. For the purpose of expediting the checking and packaging of the
Certificates for the Depositary Units, the Company shall make the Certificates
representing the Depositary Units available for inspection by the Underwriter
in New York, New York, not later than 2:00 P.M., New York City time, on the
business day prior to the Delivery Date.
5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus in a form approved by
the Underwriter and to file such Prospectus pursuant to Rule
424(b) under the Securities Act not later than Commission's
close of business on the second business day following the
execution and delivery of this Agreement or, if applicable,
such earlier time as may be required by Rule 430A(a)(3) under
the Securities Act; to make no further amendment or any
supplement to the Registration Statement or to the Prospectus
prior to the Delivery Date except as permitted herein; to
advise the Underwriter, promptly after it receives notice
thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has
been filed and to furnish the Underwriter with copies thereof;
to file promptly and use its reasonable efforts to cause
the Trust to file promptly
<PAGE> 11
11
all reports and any definitive proxy or information statements
required to be filed by the Company or the Trust, as the case
may be, with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of the
Prospectus and for so long as the delivery of a prospectus is
required in connection with the offering or sale of the
Depositary Units; to advise the Underwriter, promptly after it
receives notice thereof, of the issuance by the Commission of
any stop order or of any order preventing or suspending the
use of any Preliminary Prospectus or the Prospectus, of the
suspension of the qualification of the Depositary Units for
offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of
the Registration Statement or the Prospectus or for additional
information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any
such qualification, to use promptly its reasonable best
efforts to obtain its withdrawal;
(b) To furnish promptly to the Underwriter and to
counsel for the Underwriter a signed copy of the Registration
Statement as originally filed with the Commission, and each
amendment thereto filed with the Commission, including all
consents and exhibits filed therewith;
(c) To deliver promptly to the Underwriter such
number of the following documents as the Underwriter shall
reasonably request: (i) conformed copies of the Registration
Statement as originally filed with the Commission and each
amendment thereto (in each case excluding exhibits other than
this Agreement), (ii) each Preliminary Prospectus, the
Prospectus and any amended or supplemented Prospectus and
(iii) any document incorporated by reference in the Prospectus
(excluding exhibits thereto); and, if the delivery of a
prospectus is required at any time prior to the expiration of
nine months after the Effective Time in connection with the
offering or sale of the Depositary Units and if at such time
any events shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements
therein, in the light of the circumstances under which they
were made when such Prospectus is delivered, not misleading,
or, if for any other reason it shall be necessary during such
same period to amend or supplement the Prospectus or to file
under the Exchange Act any document incorporated by reference
in the Prospectus in order to comply with the Securities Act
or the Exchange Act, to notify the Underwriter and, upon its
request, to file such document and to prepare and furnish
without charge to the Underwriter and to any dealer in
securities as many copies as the Underwriter may from time to
time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement
or omission or effect such compliance, and in case the
Underwriter is required to deliver a prospectus
<PAGE> 12
12
in connection with sales of any of the Depositary Units at any
time nine months or more after the Effective Time, upon the
request of the Underwriter but at the expense of the
Underwriter, to prepare and deliver to the Underwriter as many
copies as they may reasonably request of an amended or
supplemented Prospectus complying with Section 10(a)(3) of the
Securities Act;
(d) To file promptly with the Commission any
amendment to the Registration Statement or the Prospectus or
any supplement to the Prospectus that may, in the judgment of
the Company or the Underwriter, be required by the Securities
Act or requested by the Commission;
(e) Prior to filing with the Commission any (i)
amendment to the Registration Statement or supplement to the
Prospectus, any document incorporated by reference in the
Prospectus or (ii) any Prospectus pursuant to Rule 424 of the
Rules and Regulations, to furnish a copy thereof to the
Underwriter and counsel for the Underwriter and obtain the
consent of the Underwriter to the filing, which consent will
not be unreasonably withheld;
(f) As soon as practicable after the Effective Date,
to make generally available to the holders of the Depositary
Units and to deliver to the Underwriter earnings statements of
both the Company and the Trust (which need not be audited)
complying with Section 11(a) of the Securities Act and the
Rules and Regulations (including, at the option of the
Company, Rule 158);
(g) For a period of five years following the
Effective Date, to furnish to the Underwriter copies of all
materials furnished by the Company or the Trust to holders of
the Depositary Units and all public reports and all reports
and financial statements furnished by the Company relating to
the Depositary Units to the principal national securities
exchange upon which the Depositary Units are listed pursuant
to requirements of or agreements with such exchange or to the
Commission pursuant to the Exchange Act or any rule or
regulation of the Commission thereunder;
(h) Promptly from time to time to take such action
as the Underwriter may reasonably request to qualify the
Depositary Units for offering and sale under the securities
laws of such jurisdictions as the Underwriter may request and
to comply with such laws so as to permit the continuance of
sales and dealings therein in such jurisdictions for as long
as may be necessary to complete the distribution of the
Depositary Units; provided that in connection therewith the
Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process
in any jurisdiction; and
<PAGE> 13
13
(i) To take such steps as the Company determines to
be reasonably necessary to ensure that the Company, its
Significant Subsidiaries, the Trust and the Depositary shall
not become an "investment company" within the meaning of such
term under the Investment Company Act of 1940 and the rules
and regulations of the Commission thereunder.
6. Expenses. The Company agrees to pay (a) the costs
incident to the sale and delivery of the Depositary Units and any taxes payable
in that connection; (b) the costs incident to the preparation, printing and
filing under the Securities Act of the Registration Statement and any
amendments, supplements and exhibits thereto; (c) the costs of distributing the
Registration Statement as originally filed and each amendment thereto and any
post-effective amendments thereof (including, in each case, exhibits), any
Preliminary Prospectus, the Prospectus and any amendment or supplement to the
Prospectus or any document incorporated by reference therein, all as provided
in this Agreement; (d) the costs of reproducing and distributing this
Agreement; (e) the costs of distributing the terms of agreement relating to the
organization of the underwriting syndicate and selling group to the members
thereof by mail, telex or other means of communication; (f) the filing fees
incident to securing any required review by the National Association of
Securities Dealers, Inc. of the terms of sale of the Depositary Units; (g) any
applicable listing or other fees; (h) the fees and expenses of qualifying the
Trust Units and the Depositary Units under the securities laws of the several
jurisdictions as provided in Section 5(h) hereof and of preparing, printing and
distributing a Blue Sky Memorandum (including related fees and expenses of
counsel to the Underwriter); and (i) all other costs and expenses incident to
the performance of the obligations of the Company under this Agreement;
provided that, except as provided in this Section 6 and in Section 10, the
Underwriter shall pay its own costs and expenses, including the costs and
expenses of its counsel, any transfer taxes on the Depositary Units which it
may sell and the expenses of advertising any offering of the Depositary Units
made by the Underwriter.
7. Conditions of Underwriter's Obligations. The obligations
of the Underwriter hereunder are subject to the accuracy, when made and on the
Delivery Date, of the representations and warranties of the Company contained
herein, to the performance by the Company of its obligations hereunder, and to
each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with
the Commission in accordance with Section 5(a) hereof; no stop
order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no
proceeding for that purpose shall have been initiated or
threatened by the Commission; and any request of the
Commission for inclusion of additional information in the
Registration Statement or the Prospectus or otherwise shall
have been complied with.
(b) The Underwriter shall not have discovered and
disclosed to the Company on or prior to the Delivery Date
that the Registration Statement or the Prospectus or any
amendment or supplement thereto contains an
<PAGE> 14
14
untrue statement of a fact which, in the opinion of Simpson
Thacher & Bartlett, counsel for the Underwriter, is material
or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein or
is necessary to made the statements therein not misleading.
(c) All corporate proceedings and other legal
matters incident to the authorization, form and validity of
this Agreement, the Trust Units, the Depositary Units, the
Registration Statement and the Prospectus, and all other legal
matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Underwriter, and the
Company shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to
pass upon such matters.
(d) Andrews & Kurth L.L.P. shall have furnished to
the Underwriter its written opinion, as counsel to the
Company, addressed to the Underwriter and dated the Delivery
Date, in form and substance reasonably satisfactory to the
Underwriter, to the effect that:
(i) The Company and each of the
Significant Subsidiaries have been duly incorporated
and are validly existing as corporations in good
standing under the laws of their respective
jurisdictions of incorporation, and have all
corporate power and authority necessary to own or
hold their respective properties and conduct the
businesses in which they are engaged;
(ii) The Trust has been duly formed and is
validly existing as a grantor trust under the laws of
the State of Texas, with full trust power and
authority to own its properties as described in the
Prospectus;
(iii) This Agreement has been duly
authorized, executed and delivered by the Company;
each of the Trust Agreement and the Deposit Agreement
has been duly authorized, executed and delivered by
the Company and (assuming due execution and delivery
by the Trustee and the Depositary, respectively)
constitute a valid and binding agreement of the
Company enforceable against the Company in accordance
with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or
affecting creditors' rights generally, by
<PAGE> 15
15
general equitable principles (regardless of whether
such enforceability is considered in a proceeding in
equity or at law) or by an implied covenant of good
faith and fair dealing; the Trust Units have been
duly authorized by the Trust and are duly and validly
issued and outstanding, fully paid and
non-assessable, and constitute valid and binding
obligations of the Trust entitled to the benefits of
the Trust Agreement and enforceable in accordance
with their terms, except as such enforceability may
be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or
affecting creditors' rights generally, by general
equitable principles (regardless of whether such
enforceability is considered in a proceeding in
equity or at law) or by an implied covenant of good
faith and fair dealing; and the Depositary Units have
been duly authorized and are duly and validly issued
and outstanding and constitute valid and binding
obligations of the Depositary entitled to the
benefits of the Deposit Agreement and enforceable in
accordance with their terms, except as such
enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors'
rights generally, by general equitable principles
(regardless of whether such enforceability is
considered in a proceeding in equity or at law) or by
an implied covenant of good faith and fair dealing.
The Trust Units and the Depositary Units conform in
all material respects to the descriptions thereof
contained in the Prospectus;
(iv) Each of the Conveyances have been duly
authorized, executed and delivered by the Company to
the Trust and (assuming due execution and delivery by
the Trustee) constitute valid and binding agreements
of the Company enforceable against the Company in
accordance with its terms, except as such
enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors'
rights generally, by general equitable principles
(regardless of whether such enforceability is
considered in a proceeding in equity or at law) or by
an implied covenant of good faith and fair dealing;
the form of each of the Conveyances filed in Texas
was adequate and sufficient at the time such
Conveyance was executed and delivered by the Company
in Texas under the laws of Texas to transfer title to
the Royalty Interests to the Trust and complied, at
the time such Conveyance was filed, with all laws and
regulations of Texas relating to recording, filing
and registration; the recording of the Conveyances in
the appropriate real property records in each county
in Texas where the Royalty Properties are located is
sufficient to provide the Trust the maximum
protections afforded under the recordation laws of
Texas against purchasers or creditors of the Company
and the Significant Subsidiaries subsequently
acquiring interests in the Royalty Properties, and
such purchasers and creditors of the Company will be
deemed to purchase with notice of, and subject to,
such Royalty Interests; the
<PAGE> 16
16
Company has made all necessary recordings and filings
of the Conveyances in Texas; the Conveyances conform
in all material respects to the descriptions thereof
in the Prospectus;
(v) The Registration Statement was
declared effective under the Securities Act as of the
date and time specified in such opinion, the
Prospectus was filed with the Commission pursuant to
the subparagraph of Rule 424(b) of the Rules and
Regulations specified in such opinion on the date
specified therein and no stop order suspending the
effectiveness of the Registration Statement has been
issued and, to the knowledge of such counsel, no
proceeding for that purpose is pending or threatened
by the Commission;
(vi) The Registration Statement and the
Prospectus and any further amendments or supplements
thereto made by the Company prior to the Delivery
Date (other than the financial statements and related
schedules, other financial data, and information
pertaining to natural resource reserves that is
referred to, included in or incorporated by
reference therein, as to which such counsel need
express no opinion) comply as to form in all material
respects with the requirements of the Securities Act
and the Rules and Regulations, the documents
incorporated by reference in the Prospectus and any
further amendment or supplement to any such
incorporated document made by the Company prior to
the Delivery Date (other than the financial
statements and related schedules, other financial
data, and information pertaining to natural resource
reserves that is referred to, included in or
incorporated by reference therein, as to which such
counsel need express no opinion), when they became
effective or were filed with the Commission, as the
case may be, complied as to form in all material
respects with the requirements of the Exchange Act
and the rules and regulations of the Commission
thereunder;
(vii) The statements contained in the
Prospectus under the caption "Federal Income Tax
Consequences", insofar as they describe federal
statutes, rules and regulations, constitute a fair
summary thereof;
(viii) To such counsel's knowledge, there are
no contracts or other documents which are required to
be described in the Prospectus or filed as exhibits
to the Registration Statement by the Securities Act
or by the Rules and Regulations which have not been
described or filed as exhibits to the Registration
Statement or incorporated therein by reference as
permitted by the Rules and Regulations;
(ix) The sale of the Depositary Units being
delivered on the Delivery Date by the Company and the
compliance by the Company with all of the provisions
of this Agreement and the consummation of
<PAGE> 17
17
the transactions contemplated hereby will not
result in a breach or violation of any of the terms
or provisions of, or constitute a default under, the
Trust Agreement, the Deposit Agreement, or any
indenture, mortgage, deed of trust or loan agreement
(collectively, the "Santa Fe Instruments") to which
the Company or any of its Significant Subsidiaries is
a party or by which the Company or any of its
Significant Subsidiaries is bound or to which any of
the property (including, without limitation, the
Royalty Properties) or assets of the Company or any
of its Significant Subsidiaries is subject (such
counsel being entitled to rely in respect of matters
of fact upon certificates of officers of the Company
or its Significant Subsidiaries, copies of which
shall be forwarded to you, provided that such counsel
shall state that they believe that both the
Underwriter and they are justified in relying upon
such certificates), nor will such actions result in
any violation of the provisions of the charter or by-
laws of the Company or any of its Significant
Subsidiaries, nor will such actions result in any
violation of any statute or any rule or regulation
known to such counsel of any court or governmental
agency or body having jurisdiction over the Company
or any of its Significant Subsidiaries or any of
their properties or assets; and, except for the
registration of the Trust Units and the Depositary
Units under the Securities Act and such consents,
approvals, authorizations, registrations or
qualifications as may be required under the Exchange
Act and applicable state securities laws in
connection with the purchase and distribution of the
Trust Units and the Depositary Units by the
Underwriter, no consent, approval, authorization or
order of, or filing or registration with, any such
court or governmental agency or body is required for
the execution, delivery and performance of this
Agreement by the Company and the consummation of the
transactions contemplated hereby;
(x) To such counsel's knowledge and except
as described or incorporated by reference in the
Prospectus, there are no contracts, agreements or
understandings between the Company and any person
granting such person the right to require the Company
to file a registration statement under the Securities
Act with respect to any securities of the Company
owned or to be owned by such person or to require
the Company to include such securities in the
securities registered pursuant to the Registration
Statement or in any securities being registered
pursuant to any other registration statement filed
by the Company under the Securities Act (such counsel
being entitled to rely in respect of matters of fact
upon certificates of officers of the Company or its
Significant Subsidiaries, copies of which shall be
forwarded to you, provided that such counsel shall
state that they believe that both the Underwriter and
they are justified in relying upon such
certificates), and
(xi) Neither the Depositary, the Trust nor
the depositary arrangement is required to register as
an investment company within the meaning of the
Investment Company Act of 1940.
In rendering such opinion, such counsel may state that its
opinion is limited to matters governed by the Federal laws of
the United States of America, the laws of the States of Texas,
New York and the General Corporation Law of the State of
Delaware. Such counsel shall also have furnished to the
Underwriter a written statement, addressed to the Underwriter
and dated the Delivery Date, in form and substance
satisfactory to the Underwriter, to the effect that (x) such
counsel has acted as counsel to the Company on a regular basis
(although the Company is also represented by its General
Counsel and, on certain other matters, by other counsel), has
acted as counsel to the Company in connection with certain
previous financing transactions and has acted as counsel to
the Company in connection with the preparation of the
Registration Statement, and (y) based on the foregoing, no
facts have come to the attention of such counsel which lead
it to believe that (I) the Registration Statement, as of the
Effective Date, contained any untrue statement of a material
fact or omitted to state a material fact required to be
stated therein or necessary in order to make the statements
therein not misleading, or that the Prospectus contains any
untrue statement of a material fact or omits to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading or
(II) any document incorporated by reference in the Prospectus
or any further amendment or supplement to any such
incorporated document made by the Company prior to the
Delivery Date, when they were filed with the Commission
contained an untrue statement of a material fact or omitted
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. The foregoing opinion
and statement may be qualified by a statement to the effect
that such counsel does not assume any responsibility for the
accuracy, completeness or fairness of (i) the financial
statements and related schedules or other financial data
included or incorporated by reference therein and information
included or incorporated by reference therein that pertains
or relates to estimated natural resource
<PAGE> 18
18
reserves, the estimated future net revenues therefrom or the discounted
present value of such estimated future net revenues and (ii) the
statements contained in the Registration Statement or the Prospectus except
for the statements (a) made in the Prospectus under the captions "The
Royalty Properties--Regulation of Oil and Gas" and "--Environmental
Regulation", "Federal Income Tax Consequences", "ERISA Considerations",
"State Tax Considerations", "Description of the Trust and the Trust
Agreement" and "Description of the Depositary Units" insofar as such
statements relate to the Depositary Units and concern legal matters.
(e) Andrews & Kurth L.L.P. shall have furnished to the Underwriter
its written opinion, as tax counsel to the Company, addressed to the
Underwriter and dated the Delivery date, in form and substance reasonably
satisfactory to the Underwriter, relating to matters set forth in the
Prospectus under the caption "Federal Income Tax Consequences".
(f) David L. Hicks, Esq., shall have furnished to the Underwriter a
written opinion, as General Counsel to the Company, addressed to the
Underwriter and dated the Delivery Date, in form and substance reasonably
satisfactory to the Underwriter, to the effect that:
(i) To such counsel's knowledge and other than as set forth or
incorporated by reference in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
Significant Subsidiaries is a party or of which any property
(including, without limitation, the Royalty Properties) or assets of
the Company or any of its Significant Subsidiaries is the subject
which, if determined adversely to the Company or any of its
Significant Subsidiaries, would have a material adverse effect on the
Royalty Properties, taken as a whole, or the consolidated financial
position, stockholders' equity, results of operations or business of
the Company and its Significant Subsidiaries, taken as a whole; and,
to such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(ii) The Company and each of the Significant Subsidiaries are
duly qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective ownership
or lease of property or the conduct of their respective businesses
requires such qualification (other than those jurisdictions in which
the failure to so qualify would not have a material adverse effect on
the Company or the Company and its Significant Subsidiaries taken as
a whole);
(iii) The sale of the Depositary Units being delivered on the
Delivery Date by the Company and the compliance by the Company with
all of the provisions of this Agreement and the consummation of the
transactions contemplated hereby will not result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any material agreement or instrument other than the
Santa Fe Instruments known to such counsel to which the Company or
any of its Significant Subsidiaries is a party or by which the
Company or any of its Significant Subsidiaries is bound or to which
any of the property (including, without limitation, the Royalty
Properties) or assets of the Company or any of its Significant
Subsidiaries is subject, nor will such actions result in any
violation of any order, known to such counsel of any court or
governmental agency or body having jurisdiction over the Company or
any of its Significant Subsidiaries or any of their properties or
assets; and
[/R]
<PAGE> 19
(iv) Neither the Company nor any of
its Significant Subsidiaries (a) is in violation of
its charter or by-laws, (b) is in default in any
material respect, and to such counsel's knowledge no
event has occurred which, with notice or lapse of
time or both, would constitute such a default, in the
due performance or observance of any term, covenant
or condition contained in any material indenture,
mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to
which it is a party or by which it is bound or to
which any of its properties or assets is subject or
(c) to such counsel's knowledge and except as
described or incorporated by reference in the
Prospectus is in violation in any material respect of
any law, ordinance, governmental rule, regulation or
court decree to which it or its property or assets
may be subject or has failed to obtain any material
license, permit, certificate, franchise or other
governmental authorization or permit necessary to the
ownership of its property (including, without
limitation, the Royalty Properties) or to the conduct
of its business;
(g) The Company shall have furnished to the
Underwriter a letter (as used in this paragraph, the
"bring-down letter") of Price Waterhouse, addressed to the
Underwriter and dated the Delivery Date (i) confirming that
they are independent public accountants within the meaning of
the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants
under Rule 2-01 of Regulation S-X of the Commission, (ii)
stating, as of the date of the bring-down letter (or, with
respect to matters involving changes or developments since the
respective dates as of which specified financial information
is given in the Prospectus, as of a date not more than five
days prior to the date of the bring-down letter),
<PAGE> 20
20
the conclusions and findings of such firm with respect to the
financial information and other matters covered by its letter
(as used in this paragraph, the "initial letter"), delivered
to the Underwriter concurrently with the execution of this
Agreement and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
(h) The Company shall have furnished to the
Underwriter a letter of Ryder Scott, addressed to the
Underwriter and dated, the Delivery Date confirming that they
are independent petroleum engineers with respect to the
Company, and stating, as of the date of such letter, the
conclusions and findings of such firm with respect to the
information and other matters covered by their letter
delivered to the Underwriters concurrently with the execution
of this Agreement and confirming in all material respects the
conclusions and findings set forth in such prior letter.
(i) The Company shall have furnished to the
Underwriter a certificate, dated the Delivery Date, of its
President or a Vice President and its chief financial officer
stating that:
(i) The representations, warranties and
agreements of the Company in Section 1 are true and
correct as of such Delivery Date; the Company has
complied with all its agreements contained herein;
and the conditions set forth in Sections 7(a) and
7(j) have been fulfilled; and
(ii) They have carefully examined the
Registration Statement and the Prospectus and, in
their opinion (A) as of the Effective Date, the
Registration Statement and Prospectus did not include
any untrue statement of a material fact and did not
omit to state a material fact required to be stated
therein or necessary, in light of the circumstances
under which made, to make the statements therein not
misleading, and (B) since the Effective Date no event
has occurred which should have been set forth in a
supplement or amendment to the Registration Statement
or the Prospectus; and
(j) (i) Neither the Royalty Properties nor the
Company and its Significant Subsidiaries, taken as a
whole, shall have sustained since the date of the latest
audited financial statements included or incorporated by
reference in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus
or any development involving a prospective change, in or
affecting any of the Royalty Properties or the general
affairs, management, financial position, stockholders' equity
or results
<PAGE> 21
21
of operations of the Company and its Significant Subsidiaries,
taken as a whole otherwise than as set forth or contemplated
in the Prospectus, the effect of which, in any such case
described in clause (i) or (ii), is, in the judgment of the
Underwriter, so material and adverse as to make it
impracticable or inadvisable to proceed with the public
offering or the delivery of the Depositary Units being
delivered on the Delivery Date on the terms and in the manner
contemplated in the Prospectus.
(k) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following:
(i) trading in securities generally on the New York Stock
Exchange, the American Stock Exchange or the over-the-counter
market shall have been suspended or minimum prices shall have
been established on either of such exchanges or such market by
the Commission, by such exchange or by any other regulatory
body or governmental authority having jurisdiction, (ii) a
banking moratorium shall have been declared by Federal or
state authorities, (iii) the United States shall have become
engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have
been a declaration of a national emergency or war by the
United States or (iv) there shall have occurred such a
material adverse change in general economic, political or
financial conditions (or the effect of international
conditions on the financial markets in the United States shall
be such) as to make it, in the judgment of the Underwriter,
impractical or inadvisable to proceed with the public offering
or delivery of the Depositary Units being delivered on the
Delivery Date on the terms and in the manner contemplated in
the Prospectus.
(l) The Depositary Units are listed on the New
York Stock Exchange in integral multiples of 50 Depositary
Units.
(m) The Trustee shall have furnished a certificate
to the Underwriter, dated the Delivery Date, stating that (i)
since the date the Trust was formed through the date thereof,
and except as may otherwise be disclosed in the Prospectus,
the Trust has not (a) issued or granted any Trust Units,
except for the original issuance of 6,300,000 Trust Units in
November 1992 (b) incurred any liability or obligation,
direct or contingent, other than as permitted in the Trust
Agreement, (c) entered into any transaction not in the
ordinary course of business other than as permitted in the
Trust Agreement, (ii) the Trustee is a national
banking association duly authorized and empowered to act as
trustee of the Trust pursuant to the Trust Agreement (iii) the
Trust has filed and will file with the Commission all documents
required to be filed on behalf of the Trust under the Exchange
Act and (iv) as to such other matters concerning the Trust
Agreement, the Trustee and the issuance of the Trust Units as
the Underwriter may reasonably request.
(n) The Depositary shall have furnished a
certificate to the Underwriter, dated the Delivery Date, as to
such matters concerning the
<PAGE> 22
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Depositary Agreement, the Depositary, the Depositary Units,
the Treasury Obligations and the Certificates as the
Underwriter may reasonably request.
All opinions, letters, evidence and certificates mentioned
above or elsewhere in this Agreement shall be deemed to be in compliance with
the provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriter.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless the
Underwriter and each person, if any, who controls the Underwriter within the
meaning of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including, but
not limited to, any loss, claim, damage, liability or action relating to
purchases and sales of the Depositary Units), to which the Underwriter or
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
based upon, (A) any untrue statement or alleged untrue statement of a material
fact contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto or (B) the omission or
alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, and shall reimburse
the Underwriter and each such controlling person promptly upon demand for any
legal or other expenses reasonably incurred by the Underwriter or controlling
person in connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such expenses are
incurred; provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, claim, damage, liability or action
arises out of, or is based upon, any untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
the Registration Statement or the Prospectus or in any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by the Underwriter specifically for inclusion therein;
and provided further that as to any Preliminary Prospectus this indemnity
agreement shall not inure to the benefit of the Underwriter or any person
controlling the Underwriter on account of any loss, claim, damage, liability or
action arising from the sale of Depositary Units to any person by the
Underwriter if the Underwriter failed to send or give a copy of the Prospectus,
as the same may be amended or supplemented, to that person within the time
required by the Securities Act, and the untrue statement or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact in such Preliminary Prospectus was corrected in the Prospectus,
unless such failure resulted from noncompliance by the Company with Section
5(c). The foregoing indemnity agreement is in addition to any liability which
the Company may otherwise have to the Underwriter or to any controlling person
of the Underwriter.
(b) The Underwriter shall indemnify and hold harmless the
Company, each of its directors, each of its officers who signed the
Registration Statement, each person, if any, who controls the Company within
the meaning of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to
<PAGE> 23
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which the Company, any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss, claim,
damage, liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
amendment or supplement thereto or (ii) the omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, but in each case only to the extent
that the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information
furnished to the Company by the Underwriter specifically for inclusion therein,
and shall reimburse the Company, any such director, officer or controlling
person for any legal or other expenses reasonably incurred by the Company, any
such director, officer or controlling person in connection with investigating
or defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred. The foregoing indemnity
agreement is in addition to any liability which the Underwriter may otherwise
have to the Company, any such director, officer or controlling person.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however,
that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and provided further that the
failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 8. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to assume
the defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party of
its election to assume the defense of such claim or action, the indemnifying
party shall not be liable to the indemnified party under this Section 8 for any
legal or other expenses subsequently incurred by the indemnified party in
connection with the defense thereof other than reasonable costs of
investigation; provided, however, that the Underwriter shall have the right to
employ counsel to represent the Underwriter and its controlling persons who
may be subject to liability arising out of any claim in respect of which
indemnity may be sought by the Underwriter against the Company under this
Section 8 if, in the reasonable judgment of the Underwriter, it is advisable
for the Underwriter and its controlling persons to be jointly represented by
separate counsel, and in that event the fees and expenses of such separate
counsel shall be paid by the Company
<PAGE> 24
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Each indemnified party, as a condition of the indemnity agreements contained
in Sections 8(a) and 8(b), shall use its best efforts to cooperate with the
indemnifying party in the defense of any such action or claim. No
indemnifying party shall be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment of the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein,
then each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative benefits
received by the Company and the Underwriter from the offering of the Depositary
Units or (ii) if the allocation provided by clause (i) above is not permitted
by applicable law or if the indemnified party failed to give the notice
required under Section 8(c), 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 Underwriter with respect to the
statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company on the
one hand and the Underwriter on the other with respect to such offering shall
be deemed to be in the same proportion as the total net proceeds from the
offering of the Depositary Units purchased under this Agreement (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriter with respect to the
Depositary Units purchased under this Agreement, in each case as set forth in
the table on the cover page of the Prospectus. The relative fault shall be
determined by reference to whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or the Underwriter, the intent of the
parties and their relative knowledge,
<PAGE> 25
25
access to information and opportunity to correct or prevent such statement or
omission. The Company and the Underwriter agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were to be determined
by pro rata allocation or by any other method of allocation which does not take
into account the equitable considerations referred to herein. The amount paid
or payable by an indemnified party as a result of the loss, claim, damage or
liability, or action in respect thereof, referred to above in this Section 8(d)
shall be deemed to include, for purposes of this Section 8(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), the Underwriter shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Depositary Units underwritten by it and distributed to the public was
offered to the public exceeds the amount of any damages which the Underwriter
has otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation.
(e) The Underwriter confirms that the statements with
respect to the public offering of the Depositary Units set forth on the cover
page of, the last paragraph on the second page of, and under the caption
"Underwriting" in, the Prospectus are correct and constitute the only
information furnished in writing to the Company by the Underwriter
specifically for inclusion in the Registration Statement and the
Prospectus.
9. Termination.
The obligations of the Underwriter hereunder may be terminated
by by notice given to and received by the Company prior to delivery of and
payment for the Depositary Units if, prior to that time, any of the events
described in Sections 7(j) or 7(k) shall have occurred or if the Underwriter
shall decline to purchase the Depositary Units for any reason permitted under
this Agreement.
10. Reimbursement of Underwriter's Expenses. If the
Company shall fail to tender the Depositary Units for delivery to the
Underwriter for any reason permitted under this Agreement or the Underwriter
shall decline to purchase the Depositary Units for any reason permitted under
this Agreement (including the termination of this Agreement pursuant to Section
9 hereof) the Company shall reimburse the Underwriter for the reasonable fees
and expenses of their counsel and for such other out-of-pocket expenses as
shall have been incurred by them in connection with this Agreement and the
proposed purchase of the Depositary Units, and upon demand the Company shall
pay the full amount thereof to the Underwriter.
11. Notices, etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
<PAGE> 26
26
(a) if to the Underwriter, shall be delivered or sent
by mail, telex or facsimile transmission to Lehman Brothers
Inc., 3 World Financial Center, 200 Vesey Street, New York,
New York 10285, Attention: Syndicate Department (Fax:
212-528- 8822);
(b) if to the Company, shall be delivered or sent by
mail, telex or facsimile transmission to the address of the
Company set forth in the Registration Statement, Attention:
David L. Hicks (Fax: 713-268-5341);
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof.
12. Persons Entitled to Benefit of Agreement. This
Agreement shall inure to the benefit of and be binding upon the Underwriter,
the Company, and its successors. This Agreement and the terms and provisions
hereof are for the sole benefit of only those persons, except that (A) the
representations, warranties, indemnities and agreements of the Company
contained in this Agreement shall also be deemed to be for the benefit of the
person or persons, if any, who control the Underwriter within the meaning of
Section 15 of the Securities Act and (B) the indemnity agreement of the
Underwriter contained in Section 8(b) of this Agreement shall be deemed to be
for the benefit of directors of the Company, officers of the Company who have
signed the Registration Statement and any person controlling the Company within
the meaning of Section 15 of the Securities Act. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 12, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
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13. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the Underwriter contained in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Depositary Units
and shall remain in full force and effect, regardless of any investigation made
by or on behalf of any of them or any person controlling any of them.
14. Definition of the Terms "Business Day" and
"Subsidiary". For purposes of this Agreement, (a) "business day" means any day
on which the New York Stock Exchange, Inc. is open for trading and (b)
"subsidiary" has the meaning set forth in Rule 405 of the Rules and
Regulations.
15. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF NEW YORK.
16. Counterparts. This Agreement may be executed in one
or more counterparts and, if executed in more than one counterpart, the
executed counterparts shall each be deemed to be an original but all such
counterparts shall together constitute one and the same instrument.
<PAGE> 27
27
17. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
<PAGE> 28
28
If the foregoing correctly sets forth the agreement between
the Company and the Underwriter, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
SANTA FE ENERGY RESOURCES, INC.
By ________________________________________
Title:
<PAGE> 29
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Accepted:
LEHMAN BROTHERS INC.
By _____________________________________
Authorized Representative
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