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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
SCHEDULE 13D
UNDER THE SECURITIES EXCHANGE ACT OF 1934
SANTA FE ENERGY RESOURCES, INC.
(NAME OF ISSUER)
COMMON STOCK, PAR VALUE $.01 PER SHARE
(TITLE OF CLASS OF SECURITIES)
802-012-104
(CUSIP NUMBER)
DAVID M. SCHULTE
ZELL/CHILMARK FUND, L.P.
TWO NORTH RIVERSIDE PLAZA
CHICAGO, ILLINOIS 60606
(312) 984-9711
(NAME, ADDRESS AND TELEPHONE NUMBER OF PERSON
AUTHORIZED TO RECEIVE NOTICES AND COMMUNICATIONS)
MAY 15, 1995
(DATE OF EVENT WHICH REQUIRES
FILING OF THIS STATEMENT)
If the filing person has previously filed a statement on Schedule 13G
to report the acquisition which is the subject of this Schedule 13D, and is
filing this Schedule because of Rule 13d-1(b)(3) or (4), check the following
box. / /
Check the following box if a fee is being paid with the statement. /X/
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Exhibit Index Appears on Page 8
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SCHEDULE 13D
CUSIP No. 802-012-104
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Zell/Chilmark Fund, L.P. 36-3716608
2. CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP (a) /__/
(b) /X/
3. SEC USE ONLY
4. SOURCE OF FUNDS
00
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS REQUIRED
PURSUANT TO ITEMS 2(d) or 2(e) /__/
6. CITIZENSHIP OR PLACE OF ORGANIZATION
DELAWARE
7. SOLE VOTING POWER
NONE
NUMBER OF
SHARES 8. SHARED VOTING POWER
BENEFICIALLY
OWNED BY NONE
EACH
REPORTING 9. SOLE DISPOSITIVE POWER
PERSON
WITH 5,007,987
10. SHARED DISPOSITIVE POWER
NONE
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING PERSON
5,007,987
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES /__/
13. PERCENT OF CLASS REPRESENTED BY AMOUNT IN ROW (11)
5.5%
14. TYPE OF REPORTING PERSON
PN
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Exhibit Index Appears on Page 8
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ITEM 1. SECURITY AND ISSUER.
This Statement relates to the common stock, par value $.01 per
share ("Common Stock"), of Santa Fe Energy Resources, Inc. (the "Issuer"). The
Issuer has its principal executive offices at 1616 South Voss Road, Suite 1000,
Houston, Texas 77057.
ITEM 2. IDENTITY AND BACKGROUND.
(a-c) This Statement is being filed by Zell/Chilmark Fund,
L.P., a Delaware limited partnership ("Zell/Chilmark"). The sole general
partner of Zell/Chilmark is ZC Limited Partnership, an Illinois limited
partnership ("ZC Limited"). No limited partner in Zell/Chilmark acts as a
general partner or has control over Zell/Chilmark. The sole general partner of
ZC Limited is ZC Partnership, a Delaware general partnership ("ZC"). ZC's sole
partners are ZC, Inc., an Illinois corporation ("ZCI"), and CZ Inc., a Delaware
corporation ("CZI"). The principal executive office of each of Zell/Chilmark,
ZC Limited, ZC, ZCI and CZI is Two North Riverside Plaza, Chicago, Illinois
60606. The principal business of Zell/Chilmark, ZC Limited, ZC, ZCI and CZI is
investing in, and providing capital and management support to, companies that
are engaged in or are the appropriate subject of significant recapitalizations
or corporated restructurings. The terms of the partnership agreements of ZC
Limited and ZC give the principal shareholders of ZCI and CZI indirect control
over ZC Limited. Certain information concerning the executive officers,
directors and principal shareholders of ZCI and CZI is set forth in Appendix A
hereto.
(d) and (e) Neither Zell/Chilmark, ZC Limited, ZC, ZCI, CZI,
nor, to the best knowledge of Zell/Chilmark, any of the persons listed on
Appendix A hereto, have during the last five years (i) been convicted in a
criminal proceeding (excluding traffic violations or similar misdemeanors), or
(ii) been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was, or is, subject
to a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
ITEM 3. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
Zell/Chilmark acquired beneficial ownership of the 5,007,987
shares of Common Stock to which this Statement relates (the "Shares") pursuant
to the terms of that certain Partnership Withdrawal and Amendment Agreement
(the "Withdrawal Agreement") dated as of May 15, 1995 by and between
Zell/Chilmark, HC Associates, a Delaware general partnership of which
Zell/Chilmark is a general partner ("HC"), and the various other general
partners of HC. Certain information concerning the partners of HC is set forth
in Appendix B hereto. The Withdrawal Agreement is attached hereto as Exhibit
99.1 and is incorporated herein by reference. Pursuant to the terms of the
Withdrawal Agreement, Zell/Chilmark has the right to request and receive, from
time to time, from HC a distribution or distributions aggregating up to the
5,007,987 Shares of Common Stock, or to cause such Shares to be conveyed
directly
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Exhibit Index Appears on Page 8
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to its designee. Because Zell/Chilmark will receive the Shares as a
distribution from HC, no funds will be used to acquire the Shares.
ITEM 4. PURPOSE OF TRANSACTION.
Zell/Chilmark expects to exercise its right under the
Withdrawal Agreement to receive a distribution of the Shares held by HC for the
Sole purpose of disposing of such Shares as described herein.
Zell/Chilmark entered into an agreement with the Issuer dated
March 24, 1995 (the "Registration Rights Agreement") pursuant to which the
Issuer agreed to file with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 to register the offer and
sale of the Shares. The Registration Rights Agreement is attached hereto as
Exhibit 99.2 and is incorporated herein by reference. A registration statement
on Form S-3 was filed by the Issuer with the Commission with respect to the
possible sale by Zell/Chilmark of the Shares and with respect to the possible
sale by Itel Corporation ("Itel") of 8,064,005 shares of Common Stock
beneficially owned by Itel. Such registration statement became effective on
May 8, 1995. Zell/Chilmark also entered into an Underwriting Agreement (the
"Underwriting Agreement") dated May 23, 1995 with Goldman, Sachs & Co.
("Goldman"), pursuant to which Zell/Chilmark has agreed to sell the Shares to
Goldman for a purchase price of $9.00 per share. Itel is also a party to the
Underwriting Agreement and has agreed to sell its shares to Goldman for the
same purchase price. The Underwriting Agreement is attached hereto as Exhibit
99.3 and is incorporated herein by reference. It is anticipated that the sale
of the Shares pursuant to the Underwriting Agreement will be completed on May
31, 1995.
David M. Schulte, whose relationship with Zell/Chilmark is
described in Appendix A hereto, currently serves as a member of the Board of
Directors of the Issuer. Mr. Schulte has advised the Issuer that if
Zell/Chilmark sells all of the Shares, Mr. Schulte intends to resign as a
director of the Company.
Except as stated above, Zell/Chilmark does not have any plans
or proposals of the type referred to in clauses (a) through (j) of Item 4 of
Schedule 13D, as promulgated by the Commission.
ITEM 5. INTEREST IN SECURITIES OF THE ISSUER.
(a) and (b) To the best knowledge of Zell/Chilmark, as of May
15, 1995 there are 90,256,958 shares of Common Stock outstanding. The 5,007,987
Shares beneficially owned by Zell/Chilmark (because of its right to acquire
such shares within sixty (60) days of the date hereof, as provided by Rule
13d-3(d)(1) promulgated by the Commission under the Exchange Act) represent
approximately 5.5% of the outstanding shares of Common Stock. Zell/Chilmark
has the sole power to dispose, or to direct the disposition, of the Shares
insofar as HC has
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agreed pursuant to the Withdrawal Agreement not to dispose of any of the Shares
without the consent of Zell/Chilmark. Pursuant to the terms of the Agreement of
Partnership of HC Associates, HC has the sole right to vote the Shares so long
as the Shares are held by HC. Upon consummation of the sale of the Shares as
described herein, Zell/Chilmark will no longer beneficially own any shares of
Common Stock.
Based upon a Schedule 13D filed by Itel, Zell/Chilmark
understands that Itel beneficially owns 8,064,005 shares of Common Stock of the
Issuer. Itel has also agreed to sell such shares pursuant to the Underwriting
Agreement. As stated in Itel's Schedule 13D, under the definition of
"beneficial ownership" in Rule 13d-3 of the Rules and Regulations under the
Securities Exchange Act of 1934, Samuel Zell, Chairman of the Board of Itel,
Ann Lurie and Sheli Z. Rosenberg, directors of Itel, might be deemed to be
beneficial owners of approximately 26% of Itel's common stock and might be
deemed to be controlling persons of Itel. Zell/Chilmark disclaims beneficial
ownership of any shares of Common Stock held by HC (other than the Shares), by
Itel or by Mr. Zell, Mrs. Lurie or Mrs. Rosenberg as a result of the foregoing.
At the date hereof, to the best knowledge of Zell/Chilmark, none of ZC
Limited, ZC, ZCI, CZI or any of the persons listed in Appendix A hereto owns
any Common Stock (other than shares of Common Stock beneficially owned by
Zell/Chilmark, as described herein, or Itel, of which one or more of such
other persons may be deemed to have beneficial ownership pursuant to Rule 13d-3
of the Exchange Act).
(c) Other than as described herein, during the last sixty
(60) days, no transactions in Common Stock were effected by Zell/Chilmark (or,
to the best knowledge of Zell/Chilmark, ZC Limited, ZCI, CZI or any of the
persons listed in Appendix A).
(d) Until the earlier to occur of the dissolution of HC and
the distribution to Zell/Chilmark of all of the Shares (together with other
assets of HC to which Zell/Chilmark may be entitled in respect of its HC
percentage interest), HC has the right to receive cash dividends in respect of
the Shares, or any proceeds arising from any involuntary disposition of the
Shares (voluntary dispositions are proscribed under the Withdrawal Agreement),
but Zell/Chilmark retains its right to receive cash distributions attributable
to its HC percentage interest, including distributions arising from Common
Stock dividends.
(e) Not applicable.
ITEM 6. CONTRACT, ARRANGEMENTS, UNDERSTANDINGS OR
RELATIONSHIPS WITH RESPECT TO SECURITIES OF THE ISSUER.
Except for the agreements described herein and the Agreement of
Partnership of HC Associates (which is attached hereto as Exhibit 99.4 and is
incorporated herein by reference), neither Zell/Chilmark nor, to the best of
its knowledge, ZC Limited, ZC, ZCI, CZI or any of the persons listed on
Appendix A hereto has any contract, arrangement, understanding or relationship
with any person with respect to any securities of the Issuer, except that
Zell/Chilmark understands that HC and
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Itel have each entered into registration rights agreements similar to the
Registration Rights Agreement.
ITEM 7. MATERIAL TO BE FILED AS EXHIBITS.
Exhibit 99.1 - The Withdrawal Agreement.
Exhibit 99.2 - The Registration Rights Agreement.
Exhibit 99.3 - The Underwriting Agreement
Exhibit 99.4 - Agreement of Partnership of HC Associates
(Exclusive of Exhibits and Schedules)
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Exhibit Index Appears on Page 8
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SIGNATURE
After reasonable inquiry and the best of my knowledge and belief, I
certify that the information set forth in the statement is true, complete and
correct.
Zell/Chilmark Fund, L.P.
By: ZC Limited Partnership,
general partner
By: ZC Partnership,
general partner
Dated: May 25, 1995 By: CZ Inc., a partner
By: /s/ Matthew Rosenberg
------------------------
Matthew Rosenberg,
Vice President
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Exhibit Index Appears on Page 8
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EXHIBIT INDEX
EXHIBIT PAGE
NUMBER DESCRIPTION NUMBER
99.1 The Withdrawal Agreement
99.2 The Registration Rights Agreement
99.3 The Underwriting Agreement
99.4 Agreement of Partnership of HC Associates
(Exclusive of Exhibits and Schedules)
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APPENDIX A
Information Concerning Executive Officers, Directors and Major Shareholders of
ZC, Inc. and CZ Inc. All the individuals listed below are United States
citizens.
ZC, INC.
DIRECTORS AND EXECUTIVE OFFICERS
PRESENT PRINCIPAL OCCUPATION
BUSINESS ADDRESS NAME AND EMPLOYMENT
Samuel Zell Sole director and President of ZC, Inc.
Two North Riverside Plaza Mr. Zell is Chairman of the Board of
Chicago, Illinois 60606 Equity Group Investments, Inc., Great
American Management and Investment,
Inc., Itel Corporation, American
Classic Voyages Co., Falcon Building
Products, Inc., Broadway Stores, Inc.
and Equity Residential Properties
Trust; Co-Chairman of the Board of
Revco D.S., Inc.; and Chairman of the
Board and Chief Executive Officer of
Capsure Holdings Corp. and Manufactured
Home Communities, Inc.
Donald W. Phillips Vice President of ZC, Inc. Mr. Phillips
Two North Riverside Plaza is Executive Vice President of Equity
Chicago, Illinois 60606 Financial and Management Company and
Chairman of the Board of Equity
Institutional Investors, Inc.
Sheli Z. Rosenberg Vice President and Secretary of ZC,
Two North Riverside Plaza Inc. Mrs. Rosenberg is Chairman of the
Chicago, Illinois 60606 Board of the law firm Rosenberg &
Liebentritt, P.C. and a director and
President and Chief Executive Officer
of Equity Group Investments, Inc.
Arthur A. Greenberg Vice President and Treasurer of ZC,
Two North Riverside Plaza Inc. Mr. Greenberg is President of
Chicago, Illinois 60606 Greenberg & Pociask Ltd., a director
and Executive Vice President and Chief
Financial Officer of Equity Group
Investments, Inc. and Senior Vice
President and Treasurer of Capsure
Holdings Corp.
Page 9 of 11 Pages
Exhibit Index Appears on Page 8
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MAJOR SHAREHOLDERS
Samuel Zell, as trustee of the Samuel Zell Revocable Trust dated January 17,
1990 (the "SZ Trust"), is the sole shareholder of ZC, Inc. Mr. Zell is also
the beneficiary of the SZ Trust.
CZ INC.
DIRECTORS AND EXECUTIVE OFFICERS
David M. Schulte Sole director, President, Secretary and
Two North Riverside Plaza Treasurer of CZ Inc. Mr. Schulte is the
Chicago, Illinois 60606 managing general partner of Chilmark Partners,
L.P. and devotes all of his time to the affairs
of Zell/Chilmark.
Joel S. Friedland Vice President and Assistant Secretary of CZ
Two North Riverside Plaza Inc. Mr. Friedland is a partner of Chilmark
Chicago, Illinois 60606 Partners, L.P. and devotes all of his time to
the affairs of Zell/Chilmark.
Matthew R. Rosenberg Vice President and Assistant Secretary of CZ
Two North Riverside Plaza Inc. Mr. Rosenberg is a partner of Chilmark
Chicago, Illinois 60606 Partners, L.P. and devotes all of his time to
the affairs of Zell/Chilmark.
MAJOR SHAREHOLDERS
David M. Schulte is the sole shareholder of CZ Inc.
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APPENDIX B
HC ASSOCIATES
The partners of HC Associates are as follows:
Zell/Chilmark Fund, L.P.
Two North Riverside Plaza
Chicago, Illinois 60606
GKH Investments, L.P. and GKH Partners, L.P.,
as nominee for GKH Private Limited
1940 First City Bank Tower
Corpus Christi, Texas 78477
Ernest H. Cockrell
Texas Testamentary Trust u/a/d February 20, 1972
1600 Smith
Suite 4600
Houston, Texas 77002
Carol C. Jennings
Texas Testamentary Trust u/a/d February 20, 1972
1600 Smith
Suite 4600
Houston, Texas 77002
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EXHIBIT 99.1
PARTNERSHIP WITHDRAWAL AND AMENDMENT AGREEMENT
THIS PARTNERSHIP WITHDRAWAL AND AMENDEMENT AGREEMENT is entered into as
of the 15th day of May, 1995 by and between HC Associates, a Delaware general
partnership ("HC") and Zell/Chilmark Fund, L.P., a Delaware limited partnership
("ZC").
RECITALS
Reference is made to that certain Agreement of Partnership of HC
Associates dated as of December 30, 1992 (the "Partnership Agreement"). All
terms used herein bearing initial capital letters which are defined in the
Partnership Agreement shall have like meaning when used herein.
ZC is a general partner of the Partnership with a Percentage Interest,
as of the date hereof, of 49.044606%. ZC desires to withdraw from the
Partnership over a period of time and to receive distributions in kind in
liquidation of its Partnership Interest. HC is willing to permit such
withdrawal by ZC, all on the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the foregoing and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties agree as follows:
1. Distributions In Kind. ZC shall be entitled to request and
receive from HC an aggregate of 5,007,987 shares of common stock, par value
$.01 per share, of Santa Fe Energy Resources, Inc. (the "Company") now held by
HC, subject to adjustment as provided herein (the "Distributable Shares"). The
parties further agree that ZC shall be entitled to receive such
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Distributable Shares, or cause such Distributable Shares to be conveyed
directly to its designee, from time to time, upon delivery to HC of a written
notice (a "Distribution Notice") stating the number of Distributable Shares to
be distributed, the effective date of such distribution (a "Distribution
Date"), the place of delivery of Distributable Shares and providing other
relevant information in reasonable detail, including the name in which the
certificates representing the Distributable Shares shall be issued, whether in
the name of ZC or its designee. (Distributable Shares which are issued in the
name of a designee of ZC shall, nonetheless, be deemed to have been distributed
by HC to ZC and then transferred from ZC to such designee). On the date
specified in the Distribution Notice, HC shall use its reasonable best efforts
to cause to be delivered to ZC certificates representing the number of
Distributable Shares which are the subject of the Distribution Notice, duly
endorsed for transfer as designated in the Distribution Notice or otherwise
accompanied by a duly executed assignment separate from certificate, in each
case completed in accordance with the instructions contained in the
Distribution Notice, or on such other terms as shall be acceptable to ZC and
HC.
2. Adjustment of Percentage Interest. In addition to any other
adjustments to the Percentage Interests of the Partners as provided in the
Partnership Agreement (other than adjustments resulting solely from the
distribution of Distributable Shares), as of each Distribution Date (assuming
delivery by HC of certificates representing Distributable Shares, as
contemplated by Paragraph 1 hereof), the Percentage Interest of ZC in the
Partnership shall be adjusted to equal the percentage derived by dividing the
number of Distributable Shares remaining after the disposition identified in
the applicable Distribution Notice by the total number of shares of
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Company common stock (or other securities or assets as contemplated by
Paragraph 3 hereof) held by HC after giving effect to such disposition, and the
respective Percentage Interests of each other Partner shall be increased pro
rata based on their respective Percentage Interests immediately prior to such
disposition. The reduction of ZC's Percentage Interest in HC shall not affect
the number of then remaining Distributable Shares, which shall be subject to
adjustment from time to time pursuant to Paragraph 3.
3. Adjustment of Number of Distributable Shares. The number of
Distributable Shares shall be subject to adjustment as follows: (i) as of each
Distribution Date, the number of Distributable Shares shall be reduced by the
number of Distributable Shares distributed with respect to such Distribution
Date; (ii) in case the Company shall at any time subdivide or split its
outstanding shares of common stock into a greater number of shares, the number
of Distributable Shares in effect immediately prior to such subdivision shall
be proportionately increased, and conversely, in case the outstanding shares of
common stock of the Company shall be combined into a smaller number of shares,
the number of Distributable Shares in effect immediately prior to such
combination shall be proportionately reduced; (iii) in case the Company shall
declare a dividend or make any other distribution upon its common stock payable
in common stock, or other securities of the Company or any other issuer, the
number of Distributable Shares shall be increased by the number of shares of
common stock distributed in respect of the number of Distributable Shares in
effect immediately prior to such distribution; (iv) if any capital
reorganization or reclassification of the capital stock of the Company, or any
consolidation or merger of the Company with another corporation, or the sale of
all or
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substantially all of its assets to another corporation shall be effected in
such a way that holders of common stock shall be entitled to receive stock,
securities or assets with respect to or in exchange for common stock, then,
Distributable Shares shall mean, in lieu of the shares of the common stock of
the Company, such shares of stock, securities or assets as may be issued or
payable with respect to or in exchange for the number of Distributable Shares
in effect immediately prior to such transaction, and in any such case
appropriate provision shall be made with respect to the rights and interests of
the parties to the end that the provisions hereof shall thereafter be
applicable, as nearly as may be, in relation to any shares of stock, securities
or assets thereafter constituting Distributable Shares; (v) in the event of a
merger or consolidation of the Company with or into another corporation as a
result of which a number of shares of common stock of the surviving corporation
greater or lesser than the number of shares of common stock of the Company
outstanding immediately prior to such merger or consolidation are issuable to
holders of common stock of the Company, then the number of Distributable Shares
in effect immediately prior to such merger or consolidation shall be adjusted
in the same manner as though there were a subdivision or combination of the
outstanding shares of common stock of the Company outstanding immediately prior
to such merger or consolidation; and (vi) in the case of any other
reorganization of the Company or in the event HC shall acquire any securities
or assets, other than as contemplated by clauses (ii) - (v) above, the number
of Distributable Shares shall be subject to equitable adjustment to effectuate
the purpose and
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intent of this Agreement and to assure that ZC shall at all times be entitled
to receive Distributable Shares or other securities or assets from time to time
held by HC based on its then Percentage Interest.
4. Restriction on Disposition of Distributable Shares. HC shall not
sell, exchange, transfer or otherwise dispose of the Distributable Shares;
provided, however, that in the case of the dissolution and final liquidation of
HC, ZC shall be given at least forty-five (45) days' prior written notice of
any proposed liquidating distributions to allow ZC sufficient time to elect to
receive the Distributable Shares prior to the consummation of such transaction.
At such time as the Distributable Shares consist only of 1,000,000 or fewer
shares of Company common stock, ZC shall accept and receive a distribution of
such remaining Distributable Shares, provided that such receipt will not
require ZC to comply with the report-and-wait requirements of the Hart Scott
Rodino Improvements Act of 1976, as amended.
5. Partnership Rights Retained. Until the earlier to occur of (i)
the termination of the Partnership or (ii) the distribution to ZC of the
balance of the Distributable Shares (together with any other assets to which ZC
may be hereafter entitled in respect of its Percentage Interest) ZC's rights,
interests and obligations as a Partner, including, without limitation, the
right to receive distributions of Cash Flow and allocations of Partnership Net
Income or Net Loss, shall remain in full force and effect, (subject to
adjustment based on ZC's Percentage Interest from time to time as contemplated
hereby); provided, however, that, without regard to any such termination or
distribution, ZC shall continue to be subject to, and entitled to benefit from,
the indemnification provisions of the Partnership Agreement with respect to the
period prior to such
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withdrawal or termination date. Notwithstanding the foregoing, from and after
the date hereof, (i) GKH Investments, L.P. shall be the Tax Matters Partner of
HC, (ii) ZC waives the right to participate under the terms of the registration
rights agreement entered into between HC and the Company, and (iii) ZC shall
not be entitled to vote with respect to, or approve any matter relating to, the
sale, exchange, transfer or other disposition of assets of HC which do not
constitute Distributable Shares.
6. Expenses. ZC shall be responsible for any reasonable
out-of-pocket expenses incurred by HC in the performance of this Agreement and
shall, within thirty (30) days of receipt of appropriate invoices (reasonably
detailed), pay directly or reimburse HC for such amounts.
7. No Dissolution; Supersede Inconsistent Provisions.
Notwithstanding the provisions of Section 9.1 of the Partnership Agreement, the
withdrawal of ZC as contemplated hereunder shall not result in a dissolution of
the Partnership, and ZC shall not be deemed a "Defaulting Partner" within the
meaning of said Section 9.1 nor shall such withdrawal be deemed to constitute a
breach of any other term or provision of the Partnership Agreement. This
Agreement shall supersede any inconsistent provisions of the Partnership
Agreement and, to the extent of any such inconsistency, shall be deemed to
constitute an amendment to the Partnership Agreement.
8. Notices. Any notices required, desired or permitted to be given
hereunder, shall be delivered personally, sent by overnight courier or mailed,
registered or certified mail, return receipt requested, to the following
addresses (or to such other address as each party may specify in a notice given
hereunder) and shall be deemed to have been received on the day of
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personal delivery, one business day after delivery to the overnight courier
service or three business days after such mailing:
If to HC:
HC Associates
c/o GKH Investments, L.P.
200 West Madison
27th Floor
Chicago, Illinois 60606
Attn: William S. Goldberg
with a copy to:
Neal, Gerber & Eisenberg
2 North LaSalle Street - Suite 2200
Chicago, Illinois 60602
Attention: Charles Evans Gerber, Esq.
If to ZC:
Zell/Chilmark Fund, L.P.
Two North Riverside Plaza, Suite 1500
Chicago, Illinois 60606
Attention: Sheli Z. Rosenberg
with a copy to:
Rosenberg & Liebentritt, P.C.
2 North LaSalle Street - Suite 1515
Chicago, Illinois 60606
Attention: Alisa M. Singer, Esq.
9. EXECUTION IN COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which when so executed and delivered shall be
deemed an original, and such counterparts together shall constitute one
instrument.
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IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
HC ASSOCIATES:
By: GKH INVESTMENTS, L.P.,
a Delaware limited partnership
By: GKH Partners, L.P.,
a Delaware limited partnership
By: /s/ JAKK Holding Corp
-----------------------------------
/s/ Melvyn N. Klein
-----------------------------------
Name: /s/ Melvyn N. Klein
-----------------------------
President of /s/ JAKK Holding Corp
----------------------
Corp., a general partner of
GKH Partners, L.P.,
a general partner
By: GKH PARTNERS, L.P.,
a Delaware limited partnership
as nominee for GKH Private
Limited
By: /s/ JAKK Holding Corp
-----------------------------------
/s/ Melvyn N. Klein
-----------------------------------
Name: /s/ Melvyn N. Klein
-----------------------------
President of /s/ JAKK Holding Corp
----------------------
Corp., a general partner
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ERNEST H. COCKRELL TEXAS
TESTAMENTARY TRUST u/a/d
February 20, 1972
By: /s/ Milton T. Graves
----------------------------
Co-Trustee
By: /s/ Charles Hubbard
----------------------------
Co-Trustee
By: /s/ Williams
----------------------------
Co-Trustee
CAROL C. JENNINGS TEXAS
TESTAMENTARY TRUST u/a/d
February 20, 1972
By: /s/ Milton T. Graves
----------------------------
Co-Trustee
By: /s/ Charles Hubbard
----------------------------
Co-Trustee
By: /s/ Williams
----------------------------
Co-Trustee
ZELL/CHILMARK FUND, L.P.,
a Delaware limited partnership
By: ZC, Inc.,
an Illinois corporation,
its general partner
By: /s/ Sheli Z. Rosenberg
----------------------------------
Name: Sheli Z. Rosenberg
-----------------------------
Title: Vice President of ZC, Inc.
----------------------------
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[SANTA FE ENERGY RESOURCES, INC. LETTERHEAD]
EXHIBIT 99.2
March 24, 1995
Zell/Chilmark Fund, L.P.
Two North Riverside Plaza
Suite No. 1500
Chicago, Illinois 60606
Re: Shelf Registration Statement for Zell/Chilmark Fund, L.P.
Dear David:
As you are aware, Santa Fe Energy Resources, Inc. (the "Company"), has
agreed that upon your demand it will file with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (the
"Registration Statement") to register the offer and sale, from time to time, by
Zell/Chilmark Fund, L.P. ("Zell/Chilmark") of the 5,007,987 shares (the
"Shares") of the Company's common stock, par value $0.01 per share (the "Common
Stock"), that are owned by Zell/Chilmark, provided that Zell/Chilmark shall
have the right to only one such demand registration. Such agreement to register
shall be subject to the following terms and conditions:
1. Registration Procedures. Upon your demand, the Company will use
its reasonable commercial efforts to effect the registration and facilitate the
sale and distribution of all of the Shares or such portion thereof as
Zell/Chilmark may elect (the "Offered Securities") in accordance with the
intended method of disposition thereof and pursuant thereto the Company will as
expeditiously as reasonably possible, but subject to the provisions hereof:
(a) prepare and file with the Commission a registration
statement with respect to such Offered Securities and use its
reasonable commercial efforts to cause such registration statement to
become effective (provided that before filing a registration statement
or prospectus or any amendments or supplements thereto, the Company
will furnish on a timely basis to the counsel selected by
Zell/Chilmark copies of all such documents proposed to be filed, which
documents will be subject to the review of such counsel);
(b) subject to the terms of paragraph 3, prepare and
file with the Commission such amendments, post-effective amendments and
supplements to such registration statement and the prospectus used in
connection therewith as may be necessary to keep such registration
statement continuously effective for the period provided in Section 3
required by the intended method of disposition or to describe the terms
of any offering made from an effective shelf registration, and comply
with the provisions of the Securities Act of 1933, as amended (the
"Securities Act") with respect to the disposition of all securities
covered by such registration
<PAGE> 2
Zell/Chilmark Fund, L.P.
March 24, 1995
Page 2
statement during such period in accordance with the intended methods of
disposition by Zell/Chilmark set forth in such registration statement;
(c) furnish to Zell/Chilmark such number of copies of such
registration statement, each amendment, post-effective amendment and
supplement thereto, the prospectus included in such registration
statement (including each preliminary prospectus) and such other
documents as Zell/Chilmark may reasonably request in order to
facilitate the disposition of the Offered Securities; the Company
consents to the use of the prospectus, including each preliminary
prospectus, by Zell/Chilmark in connection with the offering and sale
of the Offered Securities covered by the prospectus or the preliminary
prospectus;
(d) use its reasonable commercial efforts to register or
qualify such Offered Securities under such other securities or blue sky
laws of such jurisdictions as Zell/Chilmark reasonably requests and do
any and all other acts and things which may be reasonably necessary or
advisable to enable Zell/Chilmark to consummate the disposition in such
jurisdictions of the Offered Securities owned by Zell/Chilmark
(provided that the Company will not be required to (i) qualify
generally to do business in any jurisdiction where it would not
otherwise be required to qualify but for this subparagraph, (ii)
subject itself to taxation in any such jurisdiction, (iii) consent to
general service of process in any such jurisdiction (unless the Company
is subject to service in such jurisdiction and except as may be
required by the Securities Act), or (iv) qualify such Offered
Securities in a given jurisdiction where expressions of investment
interest are not sufficient in such jurisdiction to reasonably justify
the expense of qualification in that jurisdiction or where such
qualification would require the Company to register as a broker or
dealer in such jurisdiction);
(e) promptly notify Zell/Chilmark at any time when a
prospectus relating thereto is required to be delivered under the
Securities Act, of the occurrence of any event as a result of which the
prospectus included in such registration statement contains an untrue
statement of a material fact or omits any material fact necessary, in
light of the circumstances under which made, to make the statements
therein not misleading, and, at the request of Zell/Chilmark and
subject to the third paragraph of paragraph 3, the Company will
promptly prepare and furnish to Zell/Chilmark a supplement or amendment
to such prospectus so that, as thereafter delivered to the purchasers
of such Offered Securities, such prospectus will not contain an untrue
statement of a material fact or omit to state any material fact
necessary, in light of the circumstances under which made, to make the
statements therein not misleading;
(f) provide a transfer agent and registrar of all such Offered
Securities not later than the effective date of such registration
statement and thereafter maintain such a transfer agent and registrar,
and otherwise cooperate with Zell/Chilmark and any managing underwriter
of such offering to facilitate the timely preparation and delivery of
certificates representing Offered Securities to be sold, and enable
such Offered Securities to be in such denominations and
<PAGE> 3
Zell/Chilmark Fund, L.P.
March 24, 1995
Page 3
registered in such names as the managing underwriter may reasonably
request at least two business days prior to any sale of Offered
Securities to the underwriters;
(g) enter into such customary agreements (including
underwriting agreements in customary form) and take all such other
actions as Zell/Chilmark or the underwriters, if any, reasonably request
in order to expedite or facilitate the disposition of such Offered
Securities, including, without limitation:
(i) making such representations and warranties to the
underwriters in form, substance and scope reasonably
satisfactory to the managing underwriter and the Company, as
are customarily made by issuers to underwriters in primary
underwritten offerings;
(ii) obtaining opinions (and, if required, updates
thereof) of counsel, which counsel and opinions (in form,
scope and substance) shall be reasonably satisfactory to the
managing underwriter, if any, and addressed to the managing
underwriter covering the matters customarily covered in
opinions requested in underwritten offerings and such other
matters as may be reasonably requested by the managing
underwriter;
(iii) causing the underwriting agreements to set forth
in full the indemnification provisions and procedures of
paragraph 2 (or such other substantially similar provisions
and procedures as the managing underwriter shall reasonably
request) with respect to all parties to be indemnified
pursuant to said paragraph; and
(iv) delivering such documents (including causing the
Company's independent public accountants to furnish a
customary "cold comfort" letter) and certificates as may be
reasonably requested by Zell/Chilmark to evidence compliance
with the provisions of this paragraph 1 and with any customary
conditions contained in the underwriting agreement or other
agreement entered into by the Company;
(h) upon receipt by the Company of reasonable confidentiality
agreements, make available for inspection by any underwriter
participating in any disposition pursuant to such registration
statement and any attorney, accountant or other agent retained by any
such underwriter, all financial and other records, pertinent corporate
documents and properties of the Company, and cause the Company's
officers, directors, employees and independent accountants to be
available on a reasonable basis and cooperate with such parties' "due
diligence" and to supply all information reasonably requested by any
such underwriter, attorney, accountant or agent in connection with such
registration statement, provided that the Company may refrain from
disclosing any proprietary or other information that is not material to
the Company's financial condition or results of operations;
<PAGE> 4
Zell/Chilmark Fund, L.P.
March 24, 195
Page 4
(i) in the event of the issuance of any stop order suspending
the effectiveness of a registration statement, or of any order
suspending or preventing the use of any related prospectus or
suspending the qualification of any Common Stock included in such
registration statement for sale in any jurisdiction, the Company will
use its reasonable commercial efforts promptly to obtain the withdrawal
of such order; and
(j) use its reasonable efforts to cause the Offered Securities
covered by a registration statement to be registered with or approved
by such other governmental agencies or authorities as may be necessary
by virtue of the business and operations of the Company to enable
Zell/Chilmark to consummate the disposition of such Offered Securities.
Zell/Chilmark agrees that, upon receipt of any notice from the Company
of the occurrence of any event of the kind described in paragraphs 1(e) or 1(i)
hereof, Zell/Chilmark will forthwith discontinue disposition of the Offered
Shares until receipt of the copies of an appropriate supplement or amendment to
the prospectus under paragraph 1(e) or until the withdrawal of such order under
paragraph 1(i).
2. Indemnification.
(a) The Company agrees to indemnify to the extent permitted by
law, Zell/Chilmark, its officers, directors, stockholders, partners,
employees and directors and each person who controls (within the
meaning of the Securities Act) Zell/Chilmark against all losses,
claims, damages, liabilities and expenses whatsoever, as incurred,
including any of the foregoing, and reasonable fees and expenses of
counsel incurred in investigating, preparing or defending against, or
aggregate amounts paid in settlement of, any litigation, action,
investigation or proceeding by any third party or governmental agency
or body, commenced or threatened, in each case whether or not a party,
or any claim whatsoever based upon, caused by or arising out of any
untrue or alleged untrue statement of a material fact contained in any
registration statement, prospectus or preliminary prospectus or any
amendment thereof or supplement thereto or any omission or alleged
omission of a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as the
same are caused by or contained in any information furnished in writing
to the Company by Zell/Chilmark (or on behalf of Zell/Chilmark)
expressly for use therein or by Zell/Chilmark's failure to deliver a
copy of the registration statement or prospectus or any amendments or
supplements thereto after the Company has furnished Zell/Chilmark with
a sufficient number of copies of the same. In connection with an
underwritten offering, the Company will indemnify such underwriters,
their officers and directors and each person who controls (within the
meaning of the Securities Act) such underwriters to the same extent as
provided above with respect to the indemnification.
<PAGE> 5
Zell/Chilmark Fund, L.P.
March 24, 1995
Page 5
(b) In connection with any registration statement in which
Zell/Chilmark is participating, Zell/Chilmark will furnish to the Company in
writing such information relating to Zell/Chilmark as the Company reasonably
requests for use in connection with any such registration statement or
prospectus and, to the extent permitted by law, will indemnify the Company, its
directors, shareholders, employees and officers and each person who controls
(within the meaning of the Securities Act) the Company against any losses,
claims, damages, liabilities and expenses whatsoever, as incurred, including
any of the foregoing, and reasonable fees and expenses of counsel incurred in
investigating, preparing or defending against, or aggregate amounts paid in
settlement of, any litigation, action, investigation or proceeding by any third
party or governmental agency or body, commenced or threatened, in each case
whether or not a party, or any claim whatsoever based upon, caused by or
arising out of any untrue or alleged untrue statement of a material fact
contained in the registration statement, prospectus or preliminary prospectus
or any amendment thereof or supplement thereto or any omission or alleged
omission of a material fact required to be stated therein or necessary to make
the statements therein not misleading, but only to the extent that such untrue
statement or omission is contained in any information so furnished in writing by
Zell/Chilmark expressly for such purpose and is reasonably relied upon in
conformity with such written information, or by Zell/Chilmark's failure to
deliver a copy of the registration statment or prospectus or any amendments or
supplements thereto after the Company has furnished Zell/Chilmark with a
sufficient number of copies of same.
(c) Any person entitled to indemnification hereunder will (i) give
reasonably prompt written notice to the indemnifying party of any claim with
respect to which it seeks indemnification and (ii) unless in such indemnified
party's reasonable judgment a conflict of interest between such indemnified and
indemnifying parties may exist with respect to such claim, permit such
indemnifying party to assume the defense of such claim with counsel reasonably
satisfactory to the indemnified party. If such defense is assumed, the
indemnifying party will not be subject to any liability for any settlement made
by the indemnified party without its consent (but such consent will not be
unreasonably withheld). An indemnifying party who is not entitled to, or elects
not to, assume the defense of a claim will not be obigated to pay the fees and
expenses of more than one counsel for all parties indemnified by such
indemnifying party with respect to such claim, unless in the reasonable judgment
of any indemnified party a conflict of interest may exist between such
indemnified party and any other of such indemnified parties with respect to
such claim.
(d) The indemnification provided for under this Agreement will remain
in full force and effect regardless of any investigation made by or on behalf
of the indemnified party or any officer, director or controlling person of such
indemnified party and will survive the transfer of securities. The Company
also agrees to make such provisions, as are reasonably requested by any
indemnified party, for contribution to such party in the event the Company's
indemnification is unavailable for any reason. Such right to contribution shall
be in such proportion as is appropriate to reflect the relative fault of and
benefits to the Company on the
<PAGE> 6
Zell/Chilmark Fund, L.P.
March 24, 1995
Page 6
one hand and Zell/Chilmark on the other, in connection with the
statements or omissions which result in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits to the indemnifying party and
indemnified parties shall be determined by reference to, among other
things, the total proceeds received by the indemnifying party and
indemnified parties in connection with the offering to which such losses,
claims, damages, liabilities or expenses relate. The relative fault of the
indemnifying party and indemnified parties shall be determined by reference
to, among other things, whether the action in question, including any
untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact, has been made by, or relates to
information supplied by, such indemnifying party or the indemnified
parties, and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such action.
The parties hereto agree that it would not be just or equitable if
contribution pursuant hereto were determined by pro rata allocation or by any
other method of allocation which does not take account of the equitable
considerations referred to in the immediate preceding paragraph. No person
found guilty of any fruadulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not found guilty of such fraudulent misrepresentation.
3. Underwritten Offerings and Black-Out Periods. The Company agrees
to maintain an effective registration statement covering the Offered Securities
until the second anniversary of the date that such registration statement is
declared effective by the Commission plus any additional periods represented by
any "Black-out Period" (defined below). Zell/Chilmark may request permission
from the Company to offer and sell Offered Securities pursuant to an
underwritten offering (an "Underwritten Offering"). Any request (an
"Underwriting Request") for an Underwritten Offering shall be in writing and
shall specify the approximate number of Offered Securities to be included in
such offering. Within 10 days after receipt by the Company of such
Underwriting Request, the Company will provide written notice to Zell/Chilmark
indicating whether or not it consents to such request.
The Company shall be entitled to refuse its consent and to postpone the
commencement of any Underwritten Offering for a period of up to 180 days after
written notice to Zell/Chilmark of its refusal to consent to such request based
upon a determination made by the Company to promptly proceed to prepare and
file a registration statement (other than the registration pursuant to which
the offer and sale of the Offered Securities shall be registered or
registration statements on Form S-8 or other similar form) and the Company
shall be entitled to postpone for up to 90 days an Underwritten Offering if
such offering (y) would require disclosure of material information the Company
has a bona fide business purpose of retaining as confidential or (z) have a
material adverse effect on the Company or its shareholders in relation to any
financing, acquisition, corporate reorganization or other material transaction
contemplated by the Board of Directors of the Company, involving the Company or
any of its affiliates, in each case as determined by the Company. The Company
agrees to notify Zell/Chilmark promptly upuon its abandonment of any proposed
offering or other
<PAGE> 7
Zell/Chilmark Fund, L.P.
March 24, 1995
Page 7
material transaction as described above, upon which notification Zell/Chilmark
shall be permitted to proceed with the Underwritten Offering.
Zell/Chilmark agrees that if the Company has delivered preliminary or
final prospectuses to Zell/Chilmark and after having done so (a) the Company
determines that the prospectus needs to be amended or supplemented to comply
with the requirements of the Securities Act, (b) a stop order suspending the
effectiveness of the registration statement is issued by the Commission or (c)
the Company shall, in good faith and for business reasons, enter into
negotiations relating to or otherwise commence a material business transaction,
including, without limitation, the acquisition or divestiture of assets or the
offering or sale of securities, then the Company shall promptly notify
Zell/Chilmark and Zell/Chilmark shall immediately cease making offers of the
Shares and return all remaining prospectuses to the Company. Following such
amendment or supplement, the lifting of any stop order or the completion or
termination of any material transaction, the Company shall promptly provide
Zell/Chilmark with revised prospectuses and, following receipt of the revised
prospectuses, Zell/Chilmark shall be free to resume making offers of the Offered
Securities, or any portion thereof.
The period during which the Company exercises its rights as described
in this paragraph 3 to postpone, delay or interrupt the offer and sale of the
Offered Securities or during the pendency of any stop order, injunction or
other order or requirement of the Commission or any other governmental agency
or court shall be referred to herein as a "Black-out Period."
4. Holdback Agreements. The Company agrees (a) not to effect any
public sale or public distribution of its equity securities, or any securities
convertible into or exchangeable or exercisable for such securities, during the
20-day period prior to and during the 120-day period beginning on the
commencement date of any Underwritten Offering on behalf of Zell/Chilmark
(except pursuant to (i) registrations on Form S-8 or any successor form, (ii)
registrations on Form S-4 or any successor form, (iii) registrations of
securities in connection with a dividend reinvestment plan on form(s)
applicable to such securities) unless the underwriters managing an Underwritten
Offering on behalf of Zell/Chilmark otherwise agree, and (b) to use its
reasonable commercial efforts to obtain agreements from its officers and
directors to agree not to effect any public sale or public distribution of any
such securities during such period (except as part of such underwritten
registration, if otherwise permitted), unless the underwriters managing the
Underwritten Offering on behalf of Zell/Chilmark otherwise agree.
Zell/Chilmark agrees not to effect any public sale or public
distribution of the Offered Securities, during the 20-day period prior to and
during the 120-day period beginning on the effective date of any underwritten
offering on behalf of the Company unless the underwriters managing such
underwritten offering on behalf of the Company otherwise agree.
<PAGE> 8
Zell/Chilmark Fund, L.P.
March 24, 1995
Page 8
The Company will pay all costs and expenses of the registration of the
Shares (including any costs and expenses incurred to amend or supplement the
prospectus, if required), except that Zell/Chilmark shall pay, and the Company
shall not pay, any underwriting or brokerage discounts or commissions, any
fees or disbursements of legal counsel for Zell/Chilmark or any transfer or
other taxes attributable to the registration or sale of the Shares.
Zell/Chilmark shall furnish to the Company such information regarding
Zell/Chilmark and the distribution proposed by Zell/Chilmark as the Company may
request and as shall be required in connection with any registration,
qualification or compliance referred to herein.
If the foregoing is acceptable to you, please execute the letter and
enclosed duplicate in the space provided below and return one executed original
to me.
Very truly yours,
SANTA FE ENERGY RESOURCES, INC.
By: /s/ David Huhn
Its: Vice President, Law and General Counsel
Agreed to and accepted
this the 28th day of March 1995.
ZELL/CHILMARK FUND, L.P.
By: ZC LIMITED PARTNERSHIP, General Partner
By: ZC PARTNERSHIP, General Partner
By: CZ INC., a partner
By: /s/ David Schults
Its: President
<PAGE> 1
EXHIBIT 99.3
Santa Fe Energy Resources Inc.
Common Stock
(par value $0.01 per share)
____________________________
UNDERWRITING AGREEMENT
May 23, 1995
Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
Certain stockholders named in Schedule I hereto (the "Selling
Stockholders") of Santa Fe Energy Resources, Inc., a Delaware corporation (the
"Company"), propose, subject to the terms and conditions stated herein, to sell
to Goldman, Sachs & Co. (the "Underwriters") an aggregate of 13,071,992 shares
(the "Shares") of Common Stock, par value $0.01 per Share ("Stock") of the
Company.
1. (a) The Company represents and warrants to, and agrees with, the
Underwriters that:
(i) A registration statement on Form S-3 (File No. 33-58285) in
respect of the Shares has been filed with the Securities and Exchange
Commission (the "Commission"); such registration statement and any
post-effective amendment thereto, each in the form heretofore delivered to
you, and, excluding exhibits thereto but including all documents
incorporated by reference in the prospectus contained therein, to you,
have been declared effective by the Commission in such form; no other
document with respect to such registration statement or document
incorporated by reference therein has heretofore been filed with the
Commission; and no stop order suspending the effectiveness of such
registration statement has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission (any preliminary
prospectus included in such registration statement or filed with the
Commission pursuant to Rule 424(a) of the rules and regulations of the
Commission under the Securities Act of 1933, as amended (the "Act"), is
hereinafter called a "Preliminary Prospectus"; the various parts of such
registration statement, including all exhibits thereto and including (i)
the information contained in the form of final prospectus filed with the
Commission pursuant to Rule 424(b) under the Act in accordance with
Section 5(a) hereof and deemed by virtue of Rule 430A under the Act to be
part of the registration statement at the time it was declared effective
and (ii) the documents incorporated by reference in the prospectus
contained in the registration statement at the time such part of the
registration statement became effective, each as amended at the time such
part of the registration statement became effective, are hereinafter
collectively called the "Registration Statement"; such final prospectus,
in the form first filed pursuant to Rule 424(b) under the Act, is
hereinafter called the "Prospectus"; any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include the documents incorporated by reference therein pursuant to Item
12 of Form S-3 under the Act, as of the date of such Preliminary
Prospectus or Prospectus, as the case may be; any reference to any
amendment or supplement to any Preliminary Prospectus or the
<PAGE> 2
Prospectus shall be deemed to refer to and include any documents filed
after the date of such Preliminary Prospectus or Prospectus, as the case
may be, under the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and incorporated by reference in such Preliminary
Prospectus or Prospectus, as the case may be; and any reference to any
amendment to the Registration Statement shall be deemed to refer to and
include any annual report of the Company filed pursuant to Section 13(a)
or 15(d) of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration Statement;
(ii) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary
Prospectus, at the time of filing thereof, conformed in all material
respects to the requirements of the Act and the rules and regulations of
the Commission thereunder, and did 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, in the light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by the Underwriters
expressly for use therein or by a Selling Stockholder expressly for use in
the preparation of the answers therein to Item 7 of Form S-3;
(iii) The documents incorporated by reference in the Prospectus, when
they became effective or were filed with the Commission, as the case may
be, conformed in all material respects to the requirements of the Act or
the Exchange Act, as applicable, 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 or any further amendment or supplement
thereto, when such documents become effective or are filed with the
Commission, as the case may be, will conform in all material respects to
the requirements of the Act or the Exchange Act, as applicable, 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; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon and
in conformity with information furnished in writing to the Company by the
Underwriters expressly for use therein or by a Selling Stockholder
expressly for use in the preparation of the answers therein to Item 7 of
Form S-3;
(iv) The Registration Statement conforms, and the Prospectus and any
further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of
the Act and the rules and regulations of the Commission thereunder and do
not and will not, as 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, however, that this representation and
warranty shall not apply to any statements or omissions made in reliance
upon and in conformity with information furnished in writing to the
Company by the Underwriters expressly for use therein or by a Selling
Stockholder expressly for use in the preparation of the answers therein to
Item 7 of Form S-3;
2
<PAGE> 3
(v) Neither the Company nor any of its subsidiaries has 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, which is material and adverse to the consolidated
financial condition, stockholder's equity or results of operations of the
Company and its subsidiaries considered as a whole; and, since the
respective dates as of which information is given in the Registration
Statement and the Prospectus, there has not been any change in the capital
stock or increase in long-term debt of the Company or any of its
subsidiaries or any material adverse change, or any development involving
a prospective material adverse change, in or affecting the general
affairs, management, financial position, stockholders' equity or results
of operations of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus, in either case which is material
and adverse to the consolidated financial condition, stockholder's equity
or results of operations of the Company and its subsidiaries considered as
a whole;
(vi) (a) The Company and its subsidiaries have good title to their
producing oil and gas properties, free and clear of all liens,
encumbrances and defects, except (W) those described in the Prospectus,
(X) liens securing taxes and other governmental charges, or claims of
materialmen, mechanics and similar persons, not yet due and payable, (Y)
liens and encumbrances under oil and gas leases, options to lease,
operating agreements, unitization and pooling agreements, participation
and drilling concession agreements and gas sales contracts, securing
payment of amounts not yet due and payable and of a scope and nature
customary in the oil and gas industry and (Z) liens, encumbrances and
defects that do not, singly or in the aggregate, materially affect the
value of such oil and gas properties or materially interfere with the use
made or proposed to be made of such properties by the Company and its
subsidiaries; and (b) except to the extent described in the Prospectus,
the leases, options to lease, drilling concessions or other arrangements
held by the Company and its subsidiaries reflect in all material respects
the right of the Company and its subsidiaries to explore the unexplored
and undeveloped acreage described in the Prospectus and the care taken by
the Company and its subsidiaries with respect to acquiring or otherwise
procuring such leases, options to lease, drilling concessions and other
arrangements was generally consistent with standard industry practices for
acquiring or procuring leases to explore acreage for hydrocarbons;
(vii) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware,
with corporate power and authority to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; and
each subsidiary of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation;
(viii) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and conform in all material respects to the description of
the capital stock contained in the Prospectus; and all of the issued
shares of capital stock of each subsidiary of the Company have been duly
and validly authorized and issued, are fully
3
<PAGE> 4
paid and non-assessable and are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims,
except as disclosed in the Prospectus or incorporated therein by
reference;
(ix) The compliance by the Company with all of the provisions of this
Agreement and the consummation of the transactions herein contemplated
will not conflict with or result in (a) a breach or violation of any of
the terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of the
property or assets of the Company or any of its subsidiaries is subject,
(b) any violation of the provisions of the Certificate of Incorporation or
Bylaws of the Company or (c) any violation of any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties other than, in the case of clauses (a) and (c) above, any
breach, default or violation which, individually or in the aggregate, will
not have a material adverse effect on the consolidated financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries considered as a whole; and no consent, approval,
authorization, order, registration or qualification of or with any such
court or governmental agency or body is required for the sale of the
Shares or the consummation by the Company of the transactions contemplated
by this Agreement, except (a) the registration under the Act of the Shares
and (b) such consents, approvals, authorizations, registrations or
qualifications (1) as have been, or prior to the Time of Delivery (as
defined in Section 4 hereof) will be, obtained or (2) as may be required
under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters;
(x) Other than as set forth or contemplated in the Prospectus, there
are no legal or governmental proceedings pending to which the Company or
any of its subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which, if determined adversely
to the Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the consolidated financial
position, stockholders' equity or results of operations of the Company and
its subsidiaries considered as a whole; and, other than as set forth or
contemplated in the Prospectus, to the Company's knowledge after
reasonable investigation, no such proceedings are threatened by
governmental authorities or threatened by others; and
(xi) Price Waterhouse LLP, who have certified certain financial
statements of the Company and its subsidiaries that are included or
incorporated by reference in the Registration Statement and the
Prospectus, are independent public accountants as required by the Act and
the rules and regulations of the Commission thereunder.
(b) Each of the Selling Stockholders severally and not jointly
represents and warrants to, and agrees with, the Underwriters and the
Company that:
(i) All consents, approvals, authorizations and orders
necessary for the execution and delivery by such Selling Stockholder
of this Agreement, and for the sale and delivery of the Shares to be
sold by such Selling Stockholder hereunder, have been obtained; and
such Selling Stockholder has full right, power and authority to enter
into this Agreement and to sell, assign, transfer and deliver, or
cause to be sold, assigned, transferred and delivered, the Shares to
be sold by such Selling Stockholder hereunder;
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<PAGE> 5
(ii) The sale of the Shares to be sold by such Selling
Stockholder hereunder and the compliance by such Selling Stockholder
with all of the provisions of this Agreement and the consummation of
the transactions herein contemplated 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 statute, indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which such
Selling Stockholder is a party or by which such Selling Stockholder is
bound or to which any of the property or assets of such Selling
Stockholder is subject, nor will such action result in any violation
of the provisions of the Certificate of Incorporation or By-laws of
such Selling Stockholder if such Selling Stockholder is a corporation,
the Partnership Agreement of such Selling Stockholder if such Selling
Stockholder is a partnership or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over such Selling Stockholder or the property of such
Selling Stockholder;
(iii) Such Selling Stockholder (or, in the case of Zell/Chilmark
Fund, L.P. ("Z/C"), HC Associates, a partnership of which Z/C is a
general partner ("HC")), has, and immediately prior to the Time of
Delivery such Selling Stockholder (or, in the case of Z/C, HC) will
have, good and valid title to the Shares to be sold by such Selling
Stockholder hereunder, free and clear of all liens, encumbrances,
equities or claims; and upon delivery of such Shares and payment
therefor pursuant hereto, good and valid title to such Shares, free
and clear of all liens, encumbrances, equities or claims, will pass to
the Underwriters;
(iv) During the 120-day period beginning from the date hereof,
such Selling Shareholder will not effect any public sale or public
distribution of, except as provided hereunder, any securities of the
Company that are substantially similar to the Shares, without your
prior written consent;
(v) Such Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result
in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares;
(vi) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or
any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to the Company by such
Selling Stockholder expressly for use therein, such Preliminary
Prospectus and the Registration Statement did, and the Prospectus and
any further amendments or supplements to the Registration Statement
and the Prospectus, when they become effective or are filed with the
Commission, as the case may be, will conform in all material respects
to the requirements of the Act and the rules and regulations of the
Commission thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading;
(vii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Stockholder will deliver to you prior to or
at the Time of Delivery a properly completed and executed United
States Treasury Department Form W-9 (or other applicable form or
statement specified by Treasury Department regulations in lieu
thereof);
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<PAGE> 6
(viii) The Shares represented by the certificates held by such
Selling Stockholder are subject to the interests of the Underwriters
hereunder; the obligations of the Selling Stockholders hereunder shall
not be terminated by operation of law, whether by the death or
incapacity of any individual Selling Stockholder or, in the case of an
estate or trust, by the death or incapacity of any executor or trustee
or the termination of such estate or trust, or in the case of a
partnership or corporation, by the dissolution of such partnership or
corporation, or by the occurrence of any other event; if any
individual Selling Stockholder or any such executor or trustee should
die or become incapacitated, or if any such estate or trust should be
terminated, or if any such partnership or corporation should be
dissolved, or if any other such event should occur, before the
delivery of the Shares hereunder, certificates representing the Shares
shall be delivered by or on behalf of the Selling Stockholders in
accordance with the terms and conditions of this Agreement; and
(ix) In order to document an exemption from any liability for
withholding under Section 1445(a) of the Internal Revenue Code of
1986, as amended, with respect to the transactions herein
contemplated, each Selling Stockholder will deliver to you prior to or
at the Time of Delivery a certification of non-foreign status
substantially similar to the sample certification provided in Treasury
Regulations Section 1.1445-2(b)(2)(iii)(B).
2. Subject to the terms and conditions herein set forth, each of the
Selling Stockholders agrees, severally and not jointly, to sell to the
Underwriters, and the Underwriters agree to purchase from each of the Selling
Stockholders, at a purchase price per share of $9.00 the number of
Shares set forth opposite the name of such Selling Stockholder in Schedule I
hereto.
3. Upon the authorization by you of the release of the Shares, the
Underwriters propose to offer the Shares for sale upon the terms and conditions
set forth in the Prospectus.
4. (a) The Shares to be purchased by the Underwriters hereunder, in
book-entry form, and in such authorized denominations and registered in such
names as the Underwriters may request upon at least forty-eight hours' prior
notice to the Selling Stockholders shall be delivered by or on behalf of the
Selling Stockholders to Goldman, Sachs & Co., through the facilities of the
Depository Trust Company ("DTC"), for the account of the Underwriters, against
payment by or on behalf of the Underwriters of the purchase price therefor by
certified or official bank check or checks, payable to the order of each of the
Selling Stockholders, as their interests may appear, in New York Clearing House
(next day) funds. The Company will cause the certificates representing the
Shares to be made available for checking and packaging at least twenty-four
hours prior to the Time of Delivery (as defined below) at the office of DTC or
its designated custodian (the "Designated Office"). The time and date of such
delivery and payment shall be 9:30 a.m., New York time, on May 31, 1995 or such
other time and date as Goldman, Sachs & Co. and the Selling Stockholders may
agree upon in writing. Such time and date are herein called the "Time of
Delivery".
(b) The documents to be delivered at the Time of Delivery by or on behalf
of the parties hereto pursuant to Section 7 hereof, including the cross
receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(i) hereof, will be delivered at the offices
of Sullivan & Cromwell, 125 Broad Street, New York, New York 10004 (the
"Closing Location"), and the Shares will be delivered at the Designated Office,
all at the Time of Delivery. A meeting will be held at the Closing Location at
2:00 p.m., New York City time, on the New York Business Day next preceding the
Time of Delivery, at which meeting the final drafts of the documents to be
delivered pursuant to the preceding sentence will be available for review by
the parties hereto. For the purposes of this Section 4, "New York Business
Day" shall mean each
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Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law
or executive order to close.
5. The Company agrees with the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the 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 Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus prior to the Time of Delivery
which shall be disapproved by you promptly after reasonable notice
thereof; to advise you, 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 you with copies
thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company 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 Shares; to advise you, 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 prospectus, of the suspension of the
qualification of the Shares 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 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 prospectus or suspending any such
qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under
the securities laws of such jurisdictions as you 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 Shares, 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;
(c) To furnish the Underwriters with copies of the Prospectus
in such quantities as you may from time to time reasonably request,
and, if the delivery of a prospectus is required at any time prior to
the expiration of nine months after the time of issue of the
Prospectus in connection with the offering or sale of the Shares 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 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 Act or the Exchange Act,
to notify you and upon your request to file such document and to
prepare and furnish without charge to the Underwriters and to any
dealer in securities as many copies as you may from time to
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<PAGE> 8
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 Underwriters are required to deliver
a prospectus in connection with sales of any of the Shares at any time
nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of the Underwriters, to prepare and
deliver to the Underwriters as many copies as you may request of an
amended or supplemented Prospectus complying with Section 10(a)(3) of
the Act;
(d) To make generally available to its securityholders as soon
as practicable, but in any event not later than eighteen months after
the effective date of the Registration Statement (as defined in Rule
158(c) under the Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
(e) Not to effect any public sale or public distribution of
its equity securities, or any securities convertible into or
exchangeable or exercisable for such securities, during the 120-day
period beginning from the date hereof (except (i) pursuant to (A)
registration on Form S-8 or any successor form, (B) registration on
Form S-4 or any successor form, or (C) registration of securities in
connection with a dividend reinvestment plan on form(s) applicable to
such securities, or (ii) the issuance of shares of Stock upon the
conversion by holders of shares of preferred stock of the Company
outstanding on the date hereof) without your prior written consent;
(f) To the extent required by law or any applicable national
stock exchange regulation, to furnish to its stockholders within 120
days after the end of each fiscal year an annual report (including a
balance sheet and statements of operations, stockholder's equity and
cash flow of the Company and its consolidated subsidiaries certified
by independent public accountants) and, within 60 days after the end
of each of the first three quarters of each fiscal year (beginning
with the fiscal quarter ending after the effective date of the
Registration Statement), a quarterly report (including unaudited
consolidated summary financial information of the Company and its
subsidiaries for such quarter in reasonable detail); and
(g) During a period of three years from the effective date of
the Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to stockholders,
and to deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of
securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the
Company as you may from time to time reasonably request (such
financial statements to be on a consolidated basis to the extent the
accounts of the Company and its subsidiaries are consolidated in
reports furnished to its stockholders generally or to the Commission),
provided that you agree not to disclose any information furnished to
you pursuant to this Section 5(g)(ii) to any person who is not your
partner, officer, employee or counsel except with the consent of the
Company or pursuant to a subpoena or order issued by a court of
competent jurisdiction or by a judicial or administrative or
legislative body or committee unless such information becomes
available in the public domain other than as a result of disclosure by
you or your partners, officers, employees or counsel.
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<PAGE> 9
6. The Company and each of the Selling Stockholders covenant and
agree with one another and with the Underwriters that (a) the Company will pay
or cause to be paid the following: (i) the fees, disbursements and expenses of
the Company's counsel and accountants in connection with the registration of
the Shares under the Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any Preliminary
Prospectus and the Prospectus and amendments and supplements thereto and the
mailing and delivering of copies thereof to the Underwriters and dealers; (ii)
the cost of printing or producing this Agreement, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Shares;
(iii) all expenses in connection with the qualification of the Shares for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky survey;
and (iv) the filing fees incident to, and the fees and disbursements of counsel
for the Underwriters in connection with, securing any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of
the Shares; (b) the Company will pay or cause to be paid: (i) the cost of
preparing stock certificates; (ii) the cost and charges of any transfer agent
or registrar; and (iii) all other costs and expenses incident to the
registration of the Shares and the performance of its obligations hereunder
which are not otherwise specifically provided for in this Section; and (c) such
Selling Stockholder will pay or cause to be paid all costs and expenses
incident to the performance of such Selling Stockholder's obligations hereunder
which are not otherwise specifically provided for in this Section, including
(i) any fees and expenses of counsel for such Selling Stockholder, (ii) any
underwriting or brokerage discounts or commissions, and (iii) any transfer or
other taxes attributable to the registration or the sale and delivery of the
Shares to be sold by such Selling Stockholder to the Underwriters hereunder.
It is understood, however, that the Company shall bear the cost of any other
matters not directly relating to the sale and purchase of the Shares pursuant
to this Agreement, and that, except as provided in this Section, and Sections 8
and 10 hereof, the Underwriters will pay all of their own costs and expenses,
including the fees of their counsel, stock transfer taxes on resale of any of
the Shares by them, and any advertising expenses connected with any offers they
may make.
7. The obligations of the Underwriters hereunder, as to the Shares
to be delivered at the Time of Delivery, shall be subject, in their discretion,
to the condition that all representations and warranties and other statements
of the Company and of the Selling Stockholders herein are, at and as of the
Time of Delivery, true and correct, the condition that the Company and the
Selling Stockholders shall have performed all of its and their obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and 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 all requests for
additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction;
(b) Sullivan & Cromwell, counsel for the Underwriters, shall
have furnished to you such opinion or opinions, dated the Time of
Delivery, with respect to the incorporation of the Company, the
validity of the Shares being delivered at the Time of Delivery, the
Registration Statement, the Prospectus, and other related matters as
you may reasonably request, and
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<PAGE> 10
such counsel shall have received such papers and information as they
may reasonably request to enable them to pass upon such matters;
(c) Andrews & Kurth LLP, special counsel for the Company,
shall have furnished to you their written opinion, dated the Time
of Delivery, in form and substance satisfactory to you, to the
effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of Delaware, with corporate power and authority to
own its properties and conduct its business as described in the
Prospectus;
(ii) The Company has an authorized capitalization as
set forth in the Prospectus, and all of the issued shares of
capital stock of the Company (including the Shares) have been
duly and validly authorized and issued and are fully paid and
non-assessable; and the Shares conform in all material respects
to the description of the Stock contained in the Prospectus;
(iii) This Agreement has been duly authorized, executed
and delivered by the Company;
(iv) The compliance by the Company with all of the
provisions of this Agreement and the consummation of the
transactions herein contemplated will not conflict with or result
in (a) any violation of the provisions of the Certificate of
Incorporation or Bylaws of the Company or (b) any violation of
any statute or any order, rule or regulation of the United States
(or any state, territory or possession thereof) known to such
counsel of any court or governmental agency or body of the United
States (or any state, territory or possession thereof) having
jurisdiction over the Company or any of its subsidiaries or any
of their properties other than, in the case of clause (b) above,
any violation which, individually or in the aggregate, will not
have a material adverse effect on the consolidated financial
position, stockholders' equity or results of operations of the
Company and its subsidiaries considered as a whole;
(v) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body of the United States (or any state,
territory or possession thereof) having jurisdiction over the
Company or any of its subsidiaries is required for the sale of
the Shares or the consummation by the Company of the transactions
contemplated by this Agreement, except (a) the registration under
the Act of the Shares, and (b) such consents, approvals,
authorizations, registrations or qualifications (1) as have been,
or prior to the Time of Delivery will be, obtained or (2) as may
be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the
Underwriters;
(vi) The documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto made by
the Company prior to the Time of Delivery (other than the
financial statements and related schedules and other financial
data therein, other financial data and information included
therein that is extracted from a report of Ryder Scott Company
pertaining to natural resource reserves that is referred to or
included 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 Act or the
Exchange Act,
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<PAGE> 11
as applicable and the rules and regulations of the Commission
thereunder; and they do not believe that any of such documents,
when such documents became effective or were so filed, as the
case may be, contained, in the case of a registration statement
which became effective under the Act, 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, or, in the case of other documents which were filed
under the Exchange Act with the Commission, 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 when such documents were
so filed, not misleading; and
(vii) The Registration Statement and the Prospectus and
any further amendments and supplements thereto made by the
Company prior to the Time of Delivery (other than the financial
statements and related schedules and other financial data
therein, as to which such counsel need express no opinion)
appeared on their face to be appropriately responsive in all
material respects with the requirements of the Act and the rules
and regulations thereunder; they do not believe that, as of its
effective date, the Registration Statement or any further
amendment thereto made by the Company prior to the Time of
Delivery (other than the financial statements and related
schedules and other financial data therein, other financial data
and information included therein that is extracted from a report
of Ryder Scott Company pertaining to natural resource reserves
that is referred to or included therein, as to which such counsel
need express no opinion) 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 or that, as of its date, the Prospectus or any further
amendment or supplement thereto made by the Company prior to the
Time of Delivery (other than the financial statements and related
schedules and other financial data therein, other financial data
and information included therein that is extracted from a report
of Ryder Scott Company pertaining to natural resource reserves
that is referred to or included therein, as to which such counsel
need express no opinion) contained an untrue statement of a
material fact or omitted to state a material fact necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading or that, as of the
Time of Delivery, either the Registration Statement or the
Prospectus or any further amendment or supplement thereto made by
the Company prior to the Time of Delivery (other than the
financial statements and related schedules and other financial
data therein, other financial data and information included
therein that is extracted from a report of Ryder Scott Company
pertaining to natural resource reserves that is referred to or
included therein, as to which such counsel need express no
opinion) contains an untrue statement of a material fact or omits
to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were
made, not misleading; and they do not know of any amendment to
the Registration Statement required to be filed or of any
contracts or other documents of a character required to be filed
as an exhibit to the Registration Statement or required to be
incorporated by reference into the Prospectus or required to be
described in the Registration Statement or the Prospectus which
are not filed or incorporated by reference or described as
required;
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(d) David L. Hicks, General Counsel for the Company, shall
have furnished to you his written opinion, dated the Time of Delivery,
in form and substance satisfactory to you, to the effect that:
(i) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business, so as to
require such qualification, or is subject to no material
liability or disability by reason of failure to be so qualified
in any such jurisdiction (such counsel being entitled to rely in
respect of the opinion in this clause upon opinions of local
counsel and in respect of matters of fact upon certificates of
officers of the Company, provided that he shall state that he
believes that both you and he are justified in relying upon such
opinions and certificates);
(ii) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation; and
all of the issued shares of capital stock of each such subsidiary
have been duly and validly authorized and issued, are fully paid
and non-assessable, and, except as disclosed in the Prospectus or
incorporated therein by reference, are owned directly or
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims (such counsel being entitled to
rely in respect of the opinion in this clause upon opinions of
local counsel and in respect of matters of fact upon certificates
of officers of the Company or its subsidiaries, provided that he
shall state that he believes that both you and he are justified
in relying upon such opinions and certificates);
(iii) To such counsel's knowledge after reasonable
investigation and other than as set forth in the Prospectus,
there are no legal or governmental proceedings pending to which
the Company or any of its subsidiaries is a party or of which any
property of the Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of its
subsidiaries, would be likely, individually or in the aggregate,
to have a material adverse effect on the consolidated financial
position, stockholder's equity or results of operations of the
Company and its subsidiaries considered as a whole; and, to such
counsel's knowledge after reasonable investigation, no such
proceedings are threatened by governmental authorities or
threatened by others; and
(iv) The compliance by the Company with all of the
provisions of this Agreement and the consummation of the
transactions herein contemplated 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 indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to
such counsel to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound
or to which any of the property or assets of the Company or any
of its subsidiaries is subject other than any breach, default or
violation which, individually or in the aggregate, will not have
a material adverse effect on the consolidated financial position,
stockholders' equity or results of operations of the Company and
its subsidiaries considered as a whole.
(e) The respective counsel for each of the Selling
Stockholders, as indicated in Schedule I hereto, each shall have
furnished to you their written opinion with respect to each
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<PAGE> 13
of the Selling Stockholders for whom they are acting as counsel, dated
the Time of Delivery, in form and substance satisfactory to you, to
the effect that:
(i) This Agreement has been duly executed and
delivered by or on behalf of such Selling Stockholder; and the
sale of the Shares to be sold by such Selling Stockholder
hereunder and the compliance by such Selling Stockholder with all
of the provisions of this Agreement and the consummation of the
transactions herein contemplated will not conflict with or result
in a breach or violation of any terms or provisions of, or
constitute a default under, any statute, indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument
known to such counsel to which such Selling Stockholder is a
party or by which such Selling Stockholder is bound or to which
any of the property or assets of such Selling Stockholder is
subject, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or By-laws of such
Selling Stockholder if such Selling Stockholder is a corporation,
the Partnership Agreement of such Selling Stockholder if such
Selling Stockholder is a partnership or any order, rule or
regulation known to such counsel of any court or governmental
agency or body having jurisdiction over such Selling Stockholder
or the property of such Selling Stockholder;
(ii) Based, in the case of the Hart-Scott-Rodino
Antitrust Improvements Act of 1976, as amended (the "HSR Act"),
upon certain unpublished oral interpretations and certain
published interpretations of the regulatory authorities vested
with responsibility for enforcement of the HSR Act, no consent,
approval, authorization or order of any court or governmental
agency or body is required for the consummation of the
transactions contemplated by this Agreement in connection with
the Shares to be sold by such Selling Stockholder hereunder,
except such as have been obtained under the Act and such as may
be required under state securities or Blue Sky laws in connection
with the purchase and distribution of such Shares by the
Underwriters;
(iii) To the best of such counsel's knowledge after
reasonable inquiry, such Selling Stockholder had full right,
power and authority to sell, assign, transfer and deliver, or to
cause to be sold, assigned, transferred and delivered, the Shares
to be sold by such Selling Stockholder hereunder; and
(iv) The Underwriters have acquired marketable title to
such Shares, free and clear of all liens, pledges, encumbrances
or claims, assuming the Underwriters have acquired such Shares in
good faith and without notice of any adverse claim as used in the
Uniform Commercial Code in effect in the State of New York.
In rendering the foregoing opinion, such counsel may rely upon
certificates of such Selling Stockholder, the Company and the transfer
agent for the Stock in respect of certain identified matters of fact,
provided that such counsel shall state that they believe that both you
and they are justified in relying upon such certificate;
(f) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, on the
effective date of any post-effective amendment to the Registration
Statement filed subsequent to the date of this Agreement and also at
the Time of Delivery, Price Waterhouse LLP shall have furnished to you
a letter or letters, dated the respective dates of delivery thereof,
in form and substance satisfactory to you, to the effect set forth in
Annex I hereto;
13
<PAGE> 14
(g)(i) Neither the Company nor any of its subsidiaries 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, which is material
and adverse to the consolidated financial condition, stockholder's
equity or results of operations of the Company and its subsidiaries
considered as a whole, and (ii) since the respective dates as of which
information is given in the Prospectus there shall not have been any
change in the capital stock or any increase in long-term debt of the
Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus, in either case which is
material and adverse to the consolidated financial condition,
stockholder's equity or results of operations of the Company and its
subsidiaries considered as a whole, the effect of which, in any such
case described in Clause (i) or (ii), is in your reasonable judgment
so material and adverse as to make it impracticable or inadvisable to
proceed with the public offering or the delivery of the Shares being
delivered at the Time of Delivery on the terms and in the manner
contemplated in the Prospectus;
(h) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange; (ii) a
suspension or material limitation in trading in the Company's
securities on the New York Stock Exchange; (iii) a general moratorium
on commercial banking activities in New York declared by either
Federal or New York State authorities; or (iv) the outbreak or
escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or war, if
the effect of any such event specified in this Clause (iv) in your
judgment makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares being delivered at the
Time of Delivery on the terms and in the manner contemplated in the
Prospectus;
(i) The Company and the Selling Stockholders shall have
furnished or caused to be furnished to you at the Time of Delivery
certificates of officers of the Company and of the Selling
Stockholders, respectively, satisfactory to you in your reasonable
judgment as to the accuracy of the representations and warranties of
the Company and the Selling Stockholders, respectively, herein at and
as of the Time of Delivery, as to the performance by the Company and
the Selling Stockholders of all of their respective obligations
hereunder to be performed at or prior to the Time of Delivery, and as
to such other matters as you may reasonably request, and the Company
shall have furnished or caused to be furnished certificates as to the
matters set forth in subsections (a) and (g) of this Section; and
(j) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 9:30 a.m., New York City time, and on
the effective date of any post-effective amendment to the Registration
Statement filed subsequent to the date of this Agreement, the Company
shall have furnished or caused to be furnished to you letters from
Ryder Scott Company, dated the respective dates of delivery thereof,
in form and substance satisfactory to you.
14
<PAGE> 15
8. (a) The Company will indemnify and hold harmless the
Underwriters against any losses, claims, damages or liabilities, joint or
several, to which the Underwriters may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon 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 will reimburse the
Underwriters for any legal or other expenses reasonably incurred by the
Underwriters in connection with investigating or defending any such action or
claim 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
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by the Underwriters expressly for use therein; and
provided further that the Company shall not be liable to the Underwriters under
the indemnity agreement in this subsection (a) with respect to any Prospectus
to the extent that any such loss, claim, damage or liability of the
Underwriters results from the fact that such Underwriters sold Shares to a
person as to whom it shall be established that there was not sent or given, at
or prior to the written confirmation of such sale, a copy of the Prospectus
(not including the documents incorporated therein by reference) as then amended
or supplemented in any case where such delivery is required by the Act if the
Company had previously furnished copies thereof in sufficient quantities to the
Underwriters and the loss, claim, damage or liability of the Underwriters
results from an untrue statement or omission of a material fact contained in
the Prospectus which was identified in writing at such time to the Underwriters
and corrected in the Prospectus as then amended or supplemented.
(b) Each of the Selling Stockholders, severally and not jointly,
will indemnify and hold harmless the Underwriters against any losses, claims,
damages or liabilities, joint or several, to which the Underwriters may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, the Registration Statement or the Prospectus, or
any amendment or supplement thereto, or arise out of or are based upon 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, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Selling Stockholder expressly for
use therein; and will reimburse the Underwriters for any legal or other
expenses reasonably incurred by the Underwriters in connection with
investigating or defending any such action or claim as such expenses are
incurred; provided, however, that such Selling Stockholder shall not be liable
in any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue statement
or omission or alleged omission made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any such amendment or supplement in
reliance upon and in conformity with written information furnished to the
Company by the Underwriters expressly for use therein; and provided further
that the Selling Stockholders shall not be liable to the Underwriters under the
indemnity agreement in this subsection (b) with respect to any Prospectus to
the extent that any such loss, claim, damage or liability of the
15
<PAGE> 16
Underwriters results from the fact that such Underwriters sold Shares to a
person as to whom it shall be established that there was not sent or given, at
or prior to the written confirmation of such sale, a copy of the Prospectus
(not including the documents incorporated therein by reference) as then amended
or supplemented in any case where such delivery is required by the Act if the
Company or the Selling Stockholders had previously furnished copies thereof in
sufficient quantities to the Underwriters and the loss, claim, damage or
liability of the Underwriters results from an untrue statement or omission of a
material fact contained in the Prospectus which was identified in writing at
such time to the Underwriters and corrected in the Prospectus as then amended
or supplemented.
(c) The Underwriters will indemnify and hold harmless the Company
and each Selling Stockholder against any losses, claims, damages or liabilities
to which the Company or such Selling Stockholder may become subject, under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon 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, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by the Underwriters expressly for use therein; and
will reimburse the Company and each Selling Stockholder for any legal or other
expenses reasonably incurred by the Company or such Selling Stockholder in
connection with investigating or defending any such action or claim as such
expenses are incurred.
(d) Promptly after receipt by an indemnified party under subsection
(a), (b) or (c) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation undertaken
with the consent of the indemnifying party.
(e) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
the relative benefits received by the Company and the Selling
16
<PAGE> 17
Stockholders on the one hand and the Underwriters on the other from the
offering of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or if the
indemnified party failed to give the notice required under subsection (d)
above, then each indemnifying party shall contribute to such amount paid or
payable by such indemnified party in such proportion as is appropriate to
reflect not only such relative benefits but also the relative fault of the
Company and the Selling Stockholders on the one hand and the Underwriters on
the other in connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect thereof), as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Selling Stockholders on the one hand and the
Underwriters on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by
the Company and the Selling Stockholders bear to the total underwriting
discounts and commissions paid by the Selling Stockholders to the Underwriters.
The relative fault shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company or the Selling Stockholders on the one hand or the
Underwriters on the other and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or
omission. The Company, each of the Selling Stockholders and the Underwriters
agree that it would not be just and equitable if contributions pursuant to this
subsection (e) were determined by pro rata allocation or by any other method of
allocation which does not take account of the equitable considerations referred
to above in this subsection (e). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or liabilities (or actions in
respect thereof) referred to above in this subsection (e) shall be deemed to
include 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 subsection (e), the Underwriters shall
not be required to contribute any amount in excess of the amount by which the
total price at which the Shares were offered to the public exceeds the amount
of any damages which the Underwriters have otherwise been required to pay by
reason of such untrue or alleged untrue statement or omission or alleged
omission. Neither Selling Stockholder shall be required to contribute any
amount pursuant to this subsection (e) if the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in this
subsection (e) do not arise out of or are not based upon an untrue statement or
alleged untrue statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information furnished to the Company by such Selling Stockholder expressly for
use therein as set forth in subsection (b) above. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(f) The obligations of the Company and the Selling Stockholders
under this Section 8 shall be in addition to any liability which the Company
and the respective Selling Stockholders may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who controls the
Underwriters within the meaning of the Act; and the obligations of the
Underwriters under this Section 8 shall be in addition to any liability which
the Underwriters may otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to each person, if
any, who controls the Company or any Selling Stockholder within the meaning of
the Act.
17
<PAGE> 18
9. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Selling Stockholders and
the Underwriters, as set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by the Underwriters or any controlling person of the
Underwriters, or the Company, or any of the Selling Stockholders, or any
officer or director or controlling person of the Company, or any controlling
person of any Selling Stockholder, and shall survive delivery of and payment
for the Shares.
10. If any Shares are not delivered by or on behalf of the Selling
Stockholders because the condition set forth in Section 7(h) has not been met,
neither the Company nor the Selling Stockholders shall then be under any
liability to any Underwriter except as provided in Section 6 and Section 8
hereof; but, if any Shares are not delivered by or on behalf of a Selling
Stockholder because a condition set forth in Section 7(e) or 7(i) has not been
met with respect to such Selling Stockholder, such Selling Stockholder (or if
any such condition has not been met with respect to both Selling Stockholders
the Selling Stockholders, pro rata based on the number of Shares to be sold
hereunder), or if for any other reason, the Shares are not delivered by or on
behalf of the Selling Stockholders as provided herein, the Company, will
reimburse the Underwriters for all out-of-pocket expenses approved in writing
by the Underwriters, including fees and disbursements of counsel, reasonably
incurred by the Underwriters in making preparations for the purchase, sale and
delivery of the Shares, but the Company and the Selling Stockholders shall then
be under no further liability to the Underwriters in respect of the Shares not
so delivered except as provided in Sections 6 and 8 hereof.
11. All statements, requests, notices and agreements hereunder shall
be in writing, and if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to them at 85 Broad Street, New York, New York
10004, Attention: Registration Department; if to any Selling Stockholder shall
be delivered or sent by mail, telex or facsimile transmission to counsel for
such Selling Stockholder at its address set forth in Schedule I hereto; and 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: General Counsel, with a copy to Andrews & Kurth LLP, 4200
Texas Commerce Tower, 600 Travis Street, Houston, Texas 77002, Facsimile:
(713) 220-4593, Attention: Michael O'Leary, Esq. Any such statements,
requests, notices or agreements shall take effect upon receipt thereof.
12. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and the Selling Stockholders and, to
the extent provided in Sections 8 and 9 hereof, the officers and directors of
the Company and each person who controls the Company, any Selling Stockholder
or Underwriters, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the Shares from
any Underwriters shall be deemed a successor or assign by reason merely of such
purchase.
13. Time shall be of the essence of this Agreement. As used herein,
the term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
14. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
18
<PAGE> 19
15. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
16. The rights and obligations of the Selling Stockholders hereunder
are several and not joint.
17. THIS AGREEMENT IS IN ADDITION TO, AND DOES NOT MODIFY THE RIGHTS
OR OBLIGATIONS OF THE SELLING STOCKHOLDERS UNDER, THE RESPECTIVE REGISTRATION
RIGHTS AGREEMENTS BETWEEN THE COMPANY AND EACH OF THE SELLING STOCKHOLDERS.
19
<PAGE> 20
If the foregoing is in accordance with your understanding, please sign
and return to us eight counterparts hereof, and upon the acceptance hereof by
you, this letter and such acceptance hereof shall constitute a binding
agreement among the Underwriters, the Company and each of the Selling
Stockholders.
Very truly yours,
Santa Fe Energy Resources, Inc.
By: /s/
--------------------------------
Name:
Title:
Itel Corporation
By: /s/
--------------------------------
Name:
Title:
Zell/Chilmark Fund, L.P.
By: ZC Limited Partnership, General Partner
By: ZC Partnership, General Partner
By: CZ Inc., a Partner
By: /s/
--------------------------------
Name:
Title:
Accepted as of the date hereof:
--------------------------------
(Goldman, Sachs & Co.)
20
<PAGE> 21
SCHEDULE I
<TABLE>
<CAPTION>
Total Number of
Shares
to be Sold
<S> <C>
The Selling Stockholders:
Itel Corporation(a) . . . . . . . . . . . . . . . 8,064,005
Zell/Chilmark Fund, L.P.(b) . . . . . . . . . . . 5,007,987
-----------
Total . . . . . . . . . . . . . . . . . . . . . . . 13,071,992
===========
</TABLE>
---------------
(a) This Selling Stockholder is represented by:
Mayer, Brown & Platt
190 S. LaSalle Street
Suite 3900
Chicago, Illinois 60603
Telephone: (312) 782-0600
Facsimile: (312) 701-7711
Attention: Jim Junewicz, Esq.
(b) This Selling Stockholder is represented by:
Cleary, Gottlieb, Steen & Hamilton
One Liberty Plaza
New York, New York 10006
Telephone: (212) 225-2000
Facsimile: (212) 225-3999
Attention: William Groll, Esq.
Rosenberg & Liebentritt
Two North Riverside Plaza
15th Floor
Chicago, Illinois 60606
Telephone: (312) 466-3196
Facsimile: (312) 454-0335
Attention: Alisa Singer, Esq.
21
<PAGE> 22
ANNEX I
Pursuant to Section 7(f) of the Underwriting Agreement, the accountants shall
furnish letters to the Underwriters to the effect that:
(i) They are independent accountants with respect to the
Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the consolidated financial statements of
the Company and its subsidiaries audited by them and incorporated by
reference in the Registration Statement or the Prospectus comply as to
form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act, as applicable, and the
related published rules and regulations thereunder with respect to
registration statements on Form S-3;
(iii) On the basis of procedures (but not an audit in accordance
with generally accepted auditing standards) consisting of:
(a) Reading the minutes of meetings of the Board of
Directors of the Company and its consolidated subsidiaries
since December 31, 1994 as set forth in the minute books
through a specified date not more than five business days
prior to the date of delivery of such letter;
(b) Performing the procedures specified by the
American Institute of Certified Public Accountants for a
review of interim financial information as described in SAS
No. 71, Interim Financial Information, on the unaudited
interim financial statements of the Company and its
consolidated subsidiaries incorporated by reference in the
Registration Statement and reading the unaudited interim
financial data for the period from the date of the latest
balance sheet incorporated by reference in the Registration
Statement to the date of the latest available interim
financial data; and
(c) Making inquiries of certain officials of the
Company who have responsibility for financial and accounting
matters regarding the specific items for which representations
are requested below; nothing has come to their attention as a
result of the foregoing procedures that caused them to believe
that:
(1) (i) the unaudited interim financial
statements, incorporated by reference in the
Registration Statement, do not comply as to form in
all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the
published rules and regulations thereunder;
(2) any material modifications should be
made to the unaudited interim financial statements,
incorporated by reference in the Registration
Statement, for them to be in conformity with
generally accepted accounting principles;
(3) (i) at the date of the latest available
interim financial data and at a specified date not
more than five business days prior to the date of
delivery of such letter, there was any change in the
capital stock, increase
22
<PAGE> 23
in long-term debt or any decreases in consolidated
net current assets (working capital) or shareholders'
equity of the Company and subsidiaries consolidated as
compared with amounts shown in the latest balance
sheet incorporated by reference in the Registration
Statement or (ii) for the period from the date of the
latest available unaudited financial statements
incorporated by reference in the Registration
Statement to a specified date not more than five
business days prior to delivery of such letter, there
were any decreases, as compared with the corresponding
period in the preceding year, in consolidated
revenues, income from operations or in the total or
per share amounts of net income, except in all
instances for changes or decreases which the
Registration Statement discloses have occurred or may
occur, or they shall state any specific changes or
decreases.
(iv) In addition to the audit referred to in this
report incorporated by reference in the Registration
Statement and the limited procedures, reading of minute
books, inquiries and other procedures referred to in
paragraph (iii) above, they have performed certain other
procedures, as specified by the Underwriters, not constituting
an audit in accordance with generally accepted auditing
standards, with respect to certain information of an
accounting, financial or statistical nature, which are derived
from the general accounting records of the Company (which are
subject to the Company's system of internal accounting
controls), set forth in documents incorporated by reference in
the Registration Statement, including information set forth
in: the Company's Annual Report on Form 10-K for the year ended
December 31, 1994 under the captions "Business and Properties",
"Selected Financial Data", and "Management's Discussion and
Analysis of Financial Condition and Results of Operations"; the
Company's Quarterly Report on Form 10-Q for the quarter ended
March 31, 1995 under the caption "Management's Discussion and
Analysis of Financial Condition and Results of Operations"; the
Company's Notice of Annual Meeting dated March 21, 1995 under
the captions "Election of Directors", "Chief Executive Officer
Compensation", "Compensation Committee Interlocks and Insider
Participants" and "Summary Compensation Table", and have agreed
certain of such information of an accounting, financial or
statistical nature to (i) audited financial statements; or (ii)
schedules prepared by the Company and (a) agreed the amounts on
the schedules to corresponding amounts appearing in the
accounting records of the Company and (b) determined the
schedules were mathematically correct, excluding any questions
of legal interpretation.
23
<PAGE> 1
EXHIBIT 99.4
AGREEMENT OF PARTNERSHIP
OF
HC ASSOCIATES
THIS AGREEMENT OF PARTNERSHIP is made and entered into as of the 30th
day of December, 1992, by and among the Persons whose names are subscribed to a
counterpart hereof.
W I T N E S S E T H:
WHEREAS, the parties hereto desire to form a general partnership under
and pursuant to the laws of the State of Delaware for the purposes and subject
to the terms and conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE I
DEFINED TERMS
1.1 Definitions. As used in this Agreement, the following terms shall
have the respective meanings indicated below:
"Accountants" shall mean the firm or firms of independent certified
public accountants selected by a Majority in Interest of the Partners on
behalf of the Partnership to audit the books and records of the Partnership and
to prepare statements and reports in connection therewith.
"Act" shall mean the Uniform Partnership Act as enacted in the State of
Delaware, as the same may be amended from time to time.
"Affiliate" shall mean, as to any Partner (or as to any other Person
the affiliates of whom are relevant for purposes of any of the provisions of
this Agreement), any Person controlled by, under common control with or
controlling, directly or indirectly through one or more intermediaries, such
Partner or such other Person.
<PAGE> 2
"Agreement" shall mean this Agreement of Partnership, as originally
executed and as amended, modified, supplemented or restated from time to time,
as the context requires.
"Audited Financial Statements" shall mean financial statements (balance
sheet, statement of income, statement of partners' equity and statement of cash
flows) prepared in accordance with generally accepted accounting principles and
accompanied by an independent auditor's report containing (i) an opinion
containing no material qualification and (ii) no explanatory paragraph
disclosing information relating to material uncertainties (except as to
litigation) or going concern issues.
"Bankruptcy" shall mean, with respect to any Partner, (a) the making of an
assignment for the benefit of creditors, (b) the filing of any proceedings in
bankruptcy or reorganization by or against it or (c) the failure to vacate,
discharge or dismmiss within sixty (60) days from the date of its initiation
either (i) the filing of a proceeding in bankruptcy against it or (ii) the
appointment of a receiver or trustee for all or any part of such Partner's
assets or property.
"Capital Account(s)" shall mean, with respect to any Partner, the separate
"book" account which the Partnership shall establish and maintain for such
Partner in accordance with Section 704(b) of the Code and Section
1.704-1(b)(2)(iv) of the Regulations and such other provisions of Section
1.704-1(b) of the Regulations that must be complied with in order for the
Capital Accounts to be determined in accordance with the provisions of said
Regulations. In furtherance of the foregoing, the Capital Accounts shall be
maintained in compliance with Section 1.704-1(b)(2)(iv) of the Regulations, and
the provisions hereof shall be interpreted and applied in a manner consistent
therewith.
"Capital Contribution" shall mean, with respect to any Partner, the amount
of money and the fair market value of any property other than money contributed
to the Partnership with respect to the Partnership Interest held by such
Partner.
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"Cash Flow" shall mean, with respect to any Fiscal Year or other
applicable fiscal period, the excess, if any, of (a) all cash receipts of the
Partnership from all sources for such period, including without limitation
receipts from operations, contributions of capital by the Partners, deposits
and all other Partnership cash sources, and all Partnership cash reserves on
hand at the beginning of such period, over (b) all cash expenses of the
Partnership for such period, all payments of principal and interest on account
of Partnership indebtedness and such reasonable cash reserves as a Majority in
Interest of the Partners deems necessary for any Partnership needs.
"Code" shall mean the Internal Revenue Code of 1986, as amended, or any
replacement or successor code thereto.
"Common Stock" shall mean the common stock, $0.01 par value per share,
of Santa Fe.
"Defaulting Partner" shall have the meaning set forth in Section 9.1.
"Entity" shall mean any general partnership, limited partnership,
corporation, limited liability company, joint venture, trust, business trust,
cooperative or association.
"Fiscal Year" shall mean the calendar year.
"Liquidating Trustee" shall mean such Person as is selected by the
Non-Defaulting Partner(s), which Person may include an Affiliate of the
Partners. The Liquidating Trustee shall be empowered to give and receive
notices, reports and payments in connection with the dissolution, liquidation
and/or winding-up of the Partnership, and shall hold and exercise such other
rights and powers as are necessary or required to permit all parties to deal
with the Liquidating Trustee in connection with the dissolution, liquidation,
and/or winding-up of the Partnership.
"Majority in Interest" shall mean the Partner or Partners holding
66 2/3% of the Percentage Interests then held by all of the Partners.
"Net Income or Net Loss" shall mean, for each Fiscal Year or other
applicable period, an amount equal to the Partnership's
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taxable income or loss for such year or period, determined by the Accountants
in accordance with Section 703(a) of the Code (for this purpose, all items of
income, gain, loss or deduction required to be stated separately pursuant to
Section 703(a) of the Code shall be included in taxable income or loss).
"Non-Defaulting Partner" shall have the meaning set forth in Section 9.1.
"Partners" shall mean the original signatories to this Agreement, their
duly admitted successors or assigns or any Person who is a partner at the time
of reference thereto.
"Partnership Interest" shall mean the right, title and interest of a
Partner in the Partnership at any particular time, including the right of such
Partner to any and all benefits to which a Partner may be entitled as provided
in this Agreement, together with the obligations of such Partner to comply with
all the terms and provisions of this Agreement.
"Percentage Interest" shall mean the percentage set forth opposite each
Partner's name on Schedule A attached hereto.
"Person" shall mean any natural person or Entity.
"Regulations" means the proposed, temporary and final regulations
promulgated by the Treasury Department pursuant to the Code, as amended from
time to time.
"Santa Fe" shall mean Sante Fe Energy Resources, Inc., a Delaware
corporation, together with any successor thereto.
"Tax Items" shall have the meaning set forth in Section 4.4A.
"Tax Matters Partner" shall have the meaning set forth in Section 6.4.
1.2 Exhibits, Etc. References to "Exhibit" or to "Schedule" are, unless
otherwise specified, to an Exhibit or Schedule attached to this Agreement, and
references to an "Article" or a "Section" are, unless otherwise specified, to
one of the Articles or Sections of this Agreement. Each Exhibit and Schedule
attached hereto and referred to herein is hereby incorporated herein by such
reference.
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ARTICLE II
FORMATION OF PARTNERSHIP
2.1 Formation of Partnrship. The Partners have agreed and by these
presents do hereby enter into a general partnership under the laws of the State
of Delaware.
2.2 Name. The business of the Partnership shall be conducted under the
name HC ASSOCIATES, or such other name or names designated in writing by a
Majority in Interest of the Partners. All transactions of the Partnership, to
the extent permitted by applicable law, shall be carried on and completed in
the name of the Partnership or such other name or names as shall be determined
by the Partners in writing from time to time.
2.3 Principal Place of Business. The location of the Parternship's
principal place of business shall be at 200 West Madison Street, 27th Floor,
Chicago, Illinois 60606 or such other location as shall be designated by a
Majority in Interest of the Partners.
2.4 Purpose and Business of the Partnership. The purpose of the
Partnership shall be to acquire, hold, own, sell, transfer, encumber, convey,
exchange and otherwise deal with shares of Common Stock of Santa Fe, and to
engage in such other ancillary activities as shall be necessary or desirable to
effectuate the foregoing purpose. The Partnership shall have all powers
necessary or desirable to accomplish the purposes enumerated.
2.5 Term. The Partnership shall commence its business as of the date
hereof and shall continue until its termination on December 31, 1997, unless
sooner terminated as hereinafter provided.
2.6 Documents. The Partners shall execute all such certificates,
notices, statements or other instruments, including without limitation,
fictitious or assumed name certificates, as shall constitute compliance with
all requirements as may be necessary to enable the Partnership to conduct its
business or to own its properties under the Partnership name or to preserve the
character of the Partnership under applicable law.
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ARTICLE III
PARTNERSHIP CAPITAL
3.1 Contributions of Partners. Each Partner shall contribute to the
Partnership the amount of cash and Common Stock set forth opposite its name on
Schedule A attached hereto. By execution and delivery of this Agreement, the
Partners hereby acknowledge and agree that the relative values of their
capital interests in the Partnership are as reflected by the Capital Accounts
and Percentage Interests. Except as otherwise expressly provided herein or
required by applicable law, the Partners shall not be required to contribute
any additional capital to the Partnership.
3.2 Withdrawal, Return of Capital; Interest. No Partner shall be
entitled to withdraw any part of its Capital Contribution(s), or shall be
entitled to any distributions from the Partnership, except as specifically
provided herein. No Partner shall be entitled to interest on any Capital
Contribution to the Partnership.
3.3 No Third Party Beneficiary. No creditor or other third party
having dealings with the Partnership shall have the right to enforce the right
or obligation of any Partner to make Capital Contributions or to pursue any
other right or remedy hereunder or at law or in equity, it being understood
and agreed that the provisions of this Agreement shall be solely for the
benefit of, and may be enforced solely by, the parties hereto and their
respective successors and assigns. None of the rights or obligations of the
Partners herein set forth to make Capital Contributions to the Partnership
shall be deemed an asset of the Partnership for any purpose by any creditor or
other third party, nor may such rights or obligations be sold, transferred or
assigned by the Partnership or pledged or encumbered by the Partnership to
secure any debt or other obligation of the Partnership or of any of the
Partners.
3.4 Priority. Except as otherwise expressly provided herein, there
shall be no priority among the Partners as to the return of
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capital contributions or withdrawals from or distributions of the Partnership.
ARTICLE IV
ALLOCATION OF PARTNERSHIP ITEMS
4.1 Net Income and Net Loss. After giving effect to the allocations
set forth in Section 4.2, Net Income or Net Loss, as the case may be, for any
Fiscal Year or other applicable period shall be allocated between the Partners
in accordance with their respective Percentage Interests.
4.2 Allocations Subsequent to Assignment. To the extent permitted by
the Code, Net Income or Net Loss and other items attributable to a Partnership
Interest acquired by reason of an assignment from a Partner shall be allocated
or adjusted between the assignor and the assignee based upon either (a) the
length of time in any fiscal period of the Partnership during which the
assigned Partnership Interest was owned by each of them, determined with
reference to the effective date of the assignment, or (b) an interim closing of
the Partnership's books (at assignor's sole expense), such manner of allocation
or adjustment to be determined by the assignor, with the consent of the
remaining Partners, which consent shall not be unreasonably withheld.
ARTICLE V
PARTNERSHIP DISTRIBUTIONS
The Partners shall cause the Partnership to distribute Cash Flow to the
Partners quarterly in amounts determined by a Majority in Interest of the
Partners, provided all such distributions shall be in accordance with the
Partners' respective Percentage Interests.
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ARTICLE VI
ACCOUNTING MATTERS
6.1 BOOKS AND RECORDS. The Partners shall maintain or cause to be
maintained at the offices of the Partnership full, true, complete and correct
books of account of the Partnership, in accordance with generally accepted
accounting principles applied on a consistent basis. The books of account
shall contain particulars of all monies, goods or effects belonging to or owing
to or by the Partnership, or paid, received, sold or purchased in the course of
the Partnership's business, and all of such other transactions, matters and
things relating to the business of the Partnership as are usually entered in
books of accounts kept by persons engaged in a business of a like kind and
character. In addition, the Partnership shall keep all records as required to
be kept pursuant to the Act. Each Partner shall, at reasonable times, have
free access thereto for the purpose of inspecting or copying same.
6.2 REPORTS. The Partners shall prepare, or cause to be prepared,
and furnish to each Person who was a Partner during a Fiscal Year as soon as
practicable after the close of such Fiscal Year, but in no event later than 90
days after the close of the Fiscal Year, Audited Financial Statements of the
Partnership, consistent with the books of account of the Partnership, together
with the reports thereon and all supplementary schedules and information
prepared by the Accountants.
6.3 ACCOUNTING DECISIONS. All decisions as to accounting
principles shall be made by a Majority in Interest of the Partners.
6.4 TAX MATTERS PARTNER. Zell/Chilmark Fund, L.P. is hereby
designated as the Tax Matters Partner within the meaning of Section 6231(a)(7)
of the Code for the Partnership; provided, however, (i) in exercising its
authority as Tax Matters Partner it shall be limited by the provisions of this
Agreement affecting tax aspects of the Partnership; (ii) the Tax Matters
Partner shall consult in good faith with the other Partners regarding the
filing of a Code Section 6227(b) administrative adjustment request with
respect to the Partnership before filing such request, it being understood,
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however, that the provisions hereof shall not be construed to limit the ability
of any Partner, to file an administrative adjustment request on its own behalf
pursuant to Section 6227(a) of the Code; (iii) the Tax Matters Partner shall
consult in good faith with the other Partners regarding the filing of a
petition for judicial review of an administrative adjustment request under
Section 6228 of the Code, or a petition for judicial review of a final
partnership administrative judgment under Section 6226 of the Code relating to
the Partnership before filing such petition; (iv) the Tax Matters Partner shall
give prompt notice to the other Partner of the receipt of any written notice
that the Internal Revenue Service or any state or local taxing authority
intends to examine Partnership income tax returns for any year, receipt of
written notice of the beginning of an administrative proceeding at the
Partnership level relating to the Partnership under Section 6223 of the Code,
receipt of written notice of the final Partnership administrative adjustment
relating to the Partnership pursuant to Section 6223 of the Code, and receipt
of any request from the Internal Revenue Service for waiver of any applicable
statute of limitations with respect to the filing of any tax return by the
Partnership; and (v) the Tax Matters Partner shall promptly notify the other
Partners if the Tax Matters Partner does not intend to file for judicial review
with respect to the Partnership.
6.5 Tax Elections And Returns. The Tax Matters Partner shall, from time
to time, make such tax elections on behalf of the Partnership as it deems
necessary or desirable in its sole discretion to carry out the business of the
Partnership or the purposes of this Agreement, including but not limited to
elections under Section 754 of the Code. The Tax Matters Partner shall cause
the Accountants to prepare and file federal, state and local tax returns for
the Partnership on a timely basis, and shall furnish copies thereof to the
Partners with required partnership schedules showing allocations of book and
tax items. The Tax Matters Partner shall cause the Accountants to submit to the
Partners on or before the first day of the fourth month following the end of
each Fiscal
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Year for approval all federal and state income tax returns of the Partnership.
If any Partner shall disapprove the tax returns of the Partnership, as
submitted by the Accountants, such disapproving Partner may indicate to the
Accountants the suggested revisions to the tax returns.
6.6 Interim Accounting. A Majority in Interest of the Partners
may cause the books of account of the Partnership to be closed on an interim
basis, when a Majority in Interest of the Partners deems such closing necessary
or appropriate under the circumstances, including but not limited to a transfer
of a Partnership Interest causing a termination of the Partnership for tax
purposes.
ARTICLE VII
RIGHTS AND DUTIES OF THE PARTNERS
7.1 Management. Except as otherwise provided herein, any
decisions concerning the business or property of the Partnership shall be made
by a Majority in Interest of the Partners.
7.2 Right of Public to Rely on Authority of the Partners. Nothing
herein contained shall impose any obligations on any Person doing business with
the Partnership to inquire as to whether or not a Partner has exceeded its
authority in executing any contract, lease, mortgage, deed or other instrument
on behalf of the Partnership, and any such third person shall be fully
protected in relying upon such authority.
7.3 Reimbursement. Upon proper written substantiation and
verification, any Partner shall be entitled to receive out of Partnership funds
available therefor reimbursement of all amounts reasonably expended by such
Partner out of its own funds in payment of properly incurred Partnership
obligations. To the extent the duties of the Partners require expenditures of
funds to be paid to third parties, the Partners shall not have any obligations
hereunder except to the extent that Partnership funds are reasonably available
to it for the performance of such duties, and nothing herein contained shall be
deemed to authorize or require
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the Partners, in their capacity as such, to expend individual funds for payment
to third parties or to undertake any individual liability or obligation on
behalf of the Partnership.
7.4 Compensation of the Partners. The Partners shall not be entitled to
any compensation for sevices rendered to the Partnership solely in their
capacity as Partners.
7.5 Contracts with Affiliates. The Partnership may retain, on behalf of
the Partnership, the services of a Partner or a firm to which a Partner is an
Affiliate to render such services as a Majority in Interest of the Partners
shall deem advisable for the operation and management of the Partnership on
such terms and for such compensation as a Majority in Interest of the Partners
shall determine. The validity of any transaction, agreement or payment
involving the Partnership and an Affiliate, otherwise permitted by the terms of
this Agreement shall not be affected by reason of the relationship between the
Partnership and the Partners or such Affiliate.
7.6 Waiver and Indemnification.
(a) Neither the Partners nor any Person acting on their behalf pursuant
hereto, shall be liable, responsible or accountable in damages or otherwise to
the Partnership or to any Partner for any acts or omissions performed or
omitted to be performed by them within the scope of the authority conferred
upon the Partners by this Agreement and the Act, provided that the Partner's or
such other Person's conduct or omission to act was taken in good faith and in
belief that such conduct or omission was in the best interests of the
Partnership and, provided further, that the Partner or such other Person shall
not be guilty of fraud, misconduct or negligence. The Partnership shall, and
hereby does, indemnify and hold harmless the Partners and their Affiliates and
any individual acting on their behalf from any loss, damage, claims or
liability, including, but not limited to, reasonable attorneys' fees and
expenses, incurred by them by reason of any act performed by them in accordance
with the standards set forth above or in enforcing the provisions of this
indemnity; provided, however, no
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Partner shall have any personal liability with respect to the foregoing
indemnification, any such indemnification to be satisfied solely out of the
assets of the Partnership.
(b) Any Person entitled to indemnification under this Agreement shall
be entitled to receive, upon application therefor, advances to cover the costs
of defending any proceeding against such Person; provided, however, that such
advances shall be repaid to the Partnership, without interest, if such Person
is found by a court of competent jurisdiction upon entry of a final judgment
not to be entitled to such indemnification. All rights of the indemnitee
hereunder shall survive the dissolution of the Partnership; provided, however,
that a claim for indemnification under this Agreement must be made by or on
behalf of the Person seeking indemnification prior to the time the Partnership
is liquidated hereunder. The indemnification rights contained in this Agreement
shall be cumulative of, and in addition to, any and all rights, remedies and
recourse to which the person seeking indemnification shall be entitled, whether
at law or at equity. Indemnification pursuant to this Agreement shall be made
solely and entirely from the assets for the Partnership and no Partner shall be
liable therefor.
7.7 Title Holder. To the extent allowable under applicable law, the
Partnership may hold title to all or any part of its properties in the name of
an individual, corporation, partnership, trust or otherwise, the beneficial
interest in which shall at all times be vested in the Partnership, and may
agree that any such title holders be vested with all or any part of the powers
which might otherwise reside in the Partnership. Any such title holders shall
perform any and all of their respective functions to the extent and upon such
terms and conditions as may be determined from time to time by a Majority in
Interest of the Partners in accordance with the terms hereof.
7.8 Acquisition Of Additional Common Stock. If any Partner (the
"Offering Partner") intends to acquire, directly or indirectly, any additional
shares of Common Stock such Partner
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shall provide to the other Partners prior notice of, or if not reasonably
practicable, prompt notice following, such acquisition and shall offer to each
of the other Partners an option, exercisable within ten (10) days after
delivery of the Offering Partner's notice, to acquire that proportion of the
Common Stock acquired or to be acquired which is equal to the exercising
Partner's Percentage Interest in the Partnership immediately prior to the
acquisition at the purchase price described below and on the same terms as such
Common Stock is to be acquired by the Offering Partner. In the event any
Partner exercises its option to acquire such additional shares of Common Stock,
the purchase price for such shares shall be equal to the cost thereof to the
Offering Partner, including any brokerage fees and commissions paid by the
Offering Partner, together with interest at the per annum prime rate announced
from time to time by Citibank, N.A. on such purchase price from the date the
shares are acquired by the Offering Partner to the date of payment. All
additional shares of Common Stock acquired directly or indirectly by any
Partner shall promptly be contributed by such Partner to the Partnership and
the respective Capital Accounts and Percentage Interests of the Partners shall
be adjusted accordingly.
ARTICLE VIII
TRANSFER OF PARTNERSHIP INTERESTS;
WITHDRAWAL FROM THE PARTNERSHIP
8.1 General Restriction on Transfer. Except as provided in Section
8.3, no Partner may, directly or indirectly, sell, assign, pledge, encumber or
otherwise dispose of (collectively, "transfer") all or any portion of its
Partnership Interest, whether or not the transferee shall thereby, or as a
result thereof, become or seek to become a Partner, without the express prior
written consent of the other Partners. Any Partnership Interest validly
transferred in accordance with the provisions of this Article VIII shall remain
subject to all limitations and restrictions contained in this
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Agreement and any such transferee must so agree in writing as provided in
Section 8.4.
8.2 FURTHER RESTRICTIONS ON TRANSFER. In addition to any other
restrictions on transfer herein contained, in no event may any transfer or
assignment of any Partnership Interest be made (a) to any Person who lacks the
legal right, power or capacity to own a Partnership Interest; (b) to any Person
whose status as a Partner would have an adverse effect for income tax purposes
on the Partnership or any of the continuing Partners (including, without
limitation, a constructive termination of the Partnership pursuant to Code
Section 708(b)(1)(B)); (c) in violation of any provision of any instrument or
agreement to which the Partnership is a party or otherwise bound; (d) in
violation of applicable law; or (e) of any component portion of a Partnership
Interest, separate and apart from all other components of said Partnership
Interest.
8.3 RIGHT OF FIRST REFUSAL. If a Partner desires to sell all or any
portion of his Partnership Interest (the "Selling Partner"), such Selling
Partner shall give written notice to each of the other Partners stating the
Percentage Interest to be transferred (the "Offered Interest"), the name and
address of the proposed transferee, the purchase price and method of payment
for the Offered Interest and any other material terms of sale. Each of the
other Partners (or their respective designees) shall then be entitled to
purchase, for a period of thirty (30) days following the receipt of notice from
the Selling Partner, that proportion of the Offered Interest which equals the
proportion which the Percentage Interest of such Partner bears to the aggregate
Percentage Interest of all of the other Partners electing to purchase the
Offered Interest pursuant hereto. Any purchase pursuant to this Section 8.3
shall be at the price and upon the terms and conditions specified in the
Selling Partner's notice. If the other Partners (or their respective designees)
do not elect to purchase all of the Offered Interest, the Selling Partner shall
have the right to sell all of the Offered Interest to the proposed transferee
named in the Selling Partner's notice provided that (i)
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such sale is consummated within sixty (60) days after the expiration of the
option period, (ii) such sale is made strictly upon the terms set forth in
the Selling Partner's notice, and (iii) the transferee has complied with
the provisions of Section 8.4 hereof. The closing of any purchase and sale
hereunder shall occur at the principal office of the Partnership on the
later of the date specified in the Selling Partner's notice or thirty (30)
days following the expiration of the option period.
8.4 New Partners. Any Person, not then a Partner, to whom a
Partnership Interest shall be transferred in accordance with the provisions
hereof shall not, notwithstanding in such transfer, become a Partner hereunder
unless such Person shall, in a written instrument reasonably satisfactory to
the Partners, expressly assume and agree to be bound by all of the terms and
provisions of this Agreement. All reasonable costs and expenses incurred by
the Partnership in connection with any transfer, and, if applicable, the
admission of a Person as a Partner hereunder, shall be paid by the transferring
Person. If a Partnership Interest is transferred in accordance with the
provisions hereof and the transferee refuses to execute an agreement to be bound
by all of the terms and provisions of this Agreement, such transferee shall be
deemed a mere assignee of profits only without any right, power or authority of
a Partner hereunder and shall bear losses in the same manner as its predecessor
in interest; the transferor of such interest shall thereafter be considered to
have no further rights or interest in the Partnership with respect to the
interest transferred, but shall nontheless be subject to its obligations under
this Agreement with respect to such interest. Upon compliance with the
provisions hereof, and upon execution and delivery of the aforesaid written
instrument by the transferee, the transferee shall be admitted to the
Partnership as a Partner, the transferor shall withdraw from the Partnership to
the extent of its transferred Partnership Interest, and, subject to Section
8.2, the transferor shall be relieved of any further liabilities or obligations
as a Partner to the extent of its transferred Partnership Interest from and
after
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the effective date of such transfer, but shall continue to be liable for any
matters arising prior to the effective date of such transfer.
8.5 DISSOLUTION OF PARTNERSHIP UPON TRANSFER. Except as otherwise
provided by law, in the event of a transfer of a Partnership Interest pursuant
to this Article VIII, such transfer shall not cause a dissolution of the
Partnership.
ARTICLE IX
DISSOLUTION AND TERMINATION
9.1 DISSOLUTION. The Partnership shall continue in effect until the
expiration of its term, unless sooner dissolved upon the occurrence of any one
or more of the following events:
(a) the termination, dissolution, insolvency, Bankruptcy or
retirement of any Partner other than in connection with a valid
transfer of Partnership Interest;
(b) the affirmative vote of a Majority in Interest of the
Partners to dissolve the Partnership; and
(c) dissolution required by operation of law.
Dissolution of the Partnership caused by a Partner in contravention of
this Agreement (a "Defaulting Partner") shall be a violation of this Agreement
and the other Partners (the "Non-Defaulting Partners") shall have: all
rights and remedies provided under applicable law and, in addition thereto, the
right to any and all damages at law or in equity resulting from such
violation of this Agreement. To the extent permissible by law, whether or not
the business of the Partnership is continued by the Non-Defaulting Partners,
such Non-Defaulting Partners shall be permitted to withhold the Defaulting
Partner's share of Partnership property the Defaulting Partner would otherwise
be entitled to under this Article IX upon the winding-up and termination of
the Partnership as collateral security for the obligations such Defaulting
Partner may have to the Non-Defaulting Partners in connection with the
operation and dissolution of the Partnership.
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9.2 Satisfaction of Obligations. No vote by the Partners to dissolve
the Partnership pursuant to Section 9.1(b) hereof shall be effective unless,
prior to or concurrently with such vote, there shall have been established
procedures for the assumption or satisfaction of all of the Partnership's
obligations.
9.3 Accounting. Upon the dissolution of the Partnership, a proper
accounting (which shall be certified) shall be made of the assets and
liabilities of the Partnership and the Capital Account of each Partner as of
the date of dissolution and of the items of Net Income and Net Loss of the
Partnership from the date of the last previous accounting to the
date of dissolution. Audited financial statements presenting such accounting
shall be prepared.
9.4 Liquidating Trustee.
9.4A Winding-Up. Upon the dissolution of the Partnership, the affairs
of the Partnership shall be wound up and terminated and the Partners shall
continue to share Net Income, Net Loss, Cash Flow and other items of the
Partnership during the winding-up period in accordance with the provisions of
Articles IV and V hereof. The winding-up of the affairs of the Partnership and
the distribution of its assets shall be conducted exclusively by the
Liquidating Trustee, who is hereby authorized to do all acts authorized by law
for these purposes. The Liquidating Trustee, in carrying out such winding up
and distribution, shall have full power and authority to sell, assign, transfer
and encumber all or any of the Partnership assets; provided, however, the
Liquidating Trustee shall not sell any assets unless such transactions shall be
made by the Liquidating Trustee solely on an "arm's length" basis and at the
best price and on the best terms and conditions that the Liquidating Trustee
believes are reasonably available. In the event of the dissolution of the
Partnership by the affirmative vote of the Partners as provided by this
Agreement, any distribution of Partnership property shall be subject to the
conditions set forth in Section 9.5 hereof.
9.4B Termination. Upon the completion of the winding up of the
Partnership and the distribution of all Partnership assets, the
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Partnership shall terminate and the Liquidating Trustee shall have the
authority to execute and record any and all other documents required to
effectuate the termination of the Partnership.
9.4C Indemnification. The Liquidating Trustee shall be indemnified and
held harmless by the Partnership from and against any and all claims,
liabilities, costs, damages and causes of action of any nature whatsoever
arising out of or incidental to the Liquidating Trustee's taking of or failure
to take any action authorized under, or within the scope of, this Agreement;
provided, however, that the Liquidating Trustee shall not be entitled to
indemnification for (a) matters entirely unrelated to the Liquidating Trustee's
actions under the provisions of this Agreement or (b) its proven gross
negligence or proven willful misconduct.
9.5 Liquidating Distribution. In the event of the dissolution of the
Partnership for any reason, the Partnership assets shall be liquidated for
distribution in the following rank and order:
(a) first, to the payment and discharge of all the
Partnership's debts and liabilities in the order of priority as
provided by law;
(b) second, to the establishment of any necessary reserves to
provide for contingent liabilities, if any; and
(c) the balance, if any, to the Partners in accordance with
their respective positive Capital Accounts, after giving effect to all
contributions, distributions and allocations for all periods, including
the period during which such distributions occur.
9.6 Distributions in Kind. Partnership property distributed in kind
shall be transferred and conveyed to the distributees as tenants in common
subject to any liabilities attached thereto so as to vest in them undivided
interests in the whole of such property in proportion to their respective
rights to share in the proceeds of the sale of such property in accordance with
this Article IX.
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ARTICLE X
TRUST PARTNERS
10.1 TRUSTEE LIABILITY. When this Agreement is executed by the
trustee of any trust, such execution is by the trustee, not individually but
solely as trustee in the exercise of and under the power and authority
conferred upon and invested in such trustee, and it is expressly understood and
agreed that nothing herein contained shall be construed as creating any
liability on any such trustee personally to pay any amounts required to be paid
hereunder, or to perform any covenant, either express or implied, contained
herein, all such liability, if any, being expressly waived by the parties
hereto by their execution hereof. Any liability of any Partner which is a
trust to the Partnership or to any third person shall be only that of such
trust to the full extent of its trust estate and shall not be a personal
liability of any trustee, grantor or beneficiary thereof.
10.2 STATUS OF SUCCESSOR TRUSTEE AS PARTNER. Any successor trustee
or trustees of any trust which shall be a Partner herein shall be entitled to
exercise the same rights and privileges and be subject to the same duties and
obligations as his predecessor trustee. As used in this Agreement, the term
"trustee" shall include any or all such successor trustees.
10.3 TERMINATION OF A TRUST. The termination of any trust which is a
Partner shall not terminate the Partnership. Upon the allocation or
distribution of all or any portion of the Partnership Interest of a trust which
is a Partner pursuant to the exercise of any power of appointment, or
otherwise, to a beneficiary of such trust or to another Person or Persons or to
another trust or trusts, whether or not such distribution shall terminate such
distributing trust, each distributee shall only succeed to the rights of an
assignee and shall not become a Partner unless and until the provisions of
Article VIII hereof are adhered to and such distributee executes a counterpart
of this Agreement.
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ARTICLE XI
MISCELLANEOUS
11.1 Amendments. This Agreement may be amended, modified or changed
in any respect only upon the written consent of all Partners.
11.2 Further Assurances. Each Partner agrees to execute, acknowledge,
deliver, file, record and publish such further certificates, amendments to
certificates, instruments and documents, and do such other acts and things as
may be required by law, or as may be required to carry out the intent and
purposes of this Agreement.
11.3 Notices. All notices, demands, consents, approvals, requests,
offers or other communications which any of the parties to this Agreement may
desire or shall be required to be given hereunder shall be in writing and shall
be given (a) by registered or certified mail, return receipt requested, (b) by
personal delivery, (c) delivery via reputable private air freight service, the
cost and expense of such delivery to be borne by the sending party, or (d) by
electronic communication (telex or facsimile transmission). All notices shall
be addressed to the recipient at the address set forth below its name on the
signature page hereof. Any Partner may designate another address (or change
its address) for notices hereunder by delivery of a written notice to all other
Partners in accordance with the provisions of this Section. Any notice sent in
compliance with the above provisions shall be deemed delivered and received,
except for electronic communications, on the third business day next succeeding
the day on which it was sent, or, if sooner, on the actual date received by the
other party, and, in the case of electronic communications, only on the date
the sending party receives acknowledgement of receipt of such notice by the
other party.
11.4 Governing Law. This Agreement is made pursuant to and shall be
governed by and construed in accordance with the laws of Delaware.
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<PAGE> 21
11.5 Pronouns and Headings. As used herein, all pronouns shall include
the masculine, feminine, neuter, singular and plural thereof wherever the
context and facts require such construction. The headings, titles and subtitles
herein are inserted for convenience of reference only and are to be ignored in
any construction of the provisions hereof.
11.6 Successors and Assigns. This Agreement shall be binding upon the
parties hereto and their respective executors, administrators, legal
representatives, heirs, successors and assigns, and shall inure to the benefit
of the parties hereto and, except as otherwise herein expressly provided, their
respective executors, administrators, legal representatives, successors and
assigns.
11.7 Extension Not a Waiver. No delay or omission in the exercise of any
power, remedy or right herein provided or otherwise available to a party or to
the Partnership shall impair or affect the right of such Partner or the
Partnership thereafter to exercise the same. Any extension of time or other
indulgences granted to a Partner hereunder shall not otherwise alter or affect
any power, remedy or right of any other Partner or of the Partnership, or of
the obligations of the Partner to whom such extension or indulgence is granted.
11.8 Severability. If any provision of this Agreement or application to
any party or circumstances shall be determined by any court of competent
jurisdiction to be invalid or unenforceable to any extent, the remainder of
this Agreement or the application of such provision to such Person or
circumstances, other than as to which it is so determined invalid or
unenforceable, shall not be affected thereby, and each provision shall be valid
and shall be enforced to the fullest extent permitted by law.
11.9 Entire Agreement. This Agreement, and any schedules and exhibits
hereto, contain the entire understanding and agreement of the parties hereto
relating to the subject matter hereof and all prior agreements relative hereto
which are not contained herein are terminated.
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<PAGE> 22
11.10 Waiver of Partition. Each Partner hereby irrevocably waives
during the term of the Partnership any right that it or he may have to maintain
any action for partition with respect to any Partnership property.
11.11 Counterparts. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, and all of which, when
taken together, shall be deemed one agreement, but no counterpart shall be
binding unless an identical counterpart shall have been executed and delivered
by each of the other parties hereto.
IN WITNESS WHEREOF the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
GKH INVESTMENTS, L.P., GKH PARTNERS, L.P., a
a Delaware limited partnership Delaware limited partnership,
as nominee for GKH Private
Limited
By: /s/ Melvyn N. Klein By: /s/ Melvyn N. Klein
---------------------------- ---------------------------
Name: Melvyn N. Klein Name: Melvyn N. Klein
President of JAKK Holding President of JAKK
Corp., a general partner of Holding Corp., a general
GKH Partners L.P., a partner
general partner
Address: 200 West Madison St. Address: 200 West Madison St.
27th Floor 27th Floor
Chicago, Illinois 60606 Chicago, Illinois 60606
Attn: Melvyn N. Klein Attn: Melvyn N. Klein
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<PAGE> 23
ZELL/CHILMARK FUND, L.P., a ERNEST H. COCKRELL TEXAS
Delaware limited TESTAMENTARY TRUST u/a/d
partnership February 20, 1972
By: ZC, Inc., an Illinois
corporation, its
general partner By: /s/ Milton T. Grave
------------------------------
Co-Trustee
By: Sheli Z. Rosenberg By: /s/
----------------------------- ------------------------------
Name: Sheli Z. Rosenberg Co-Trustee
Title: Vice President
By: /s/
Address: 2 N. Riverside Plaza ------------------------------
Chicago, Illinois 60606 Co-Trustee
Attn: Address: 1600 Smith Suite 4600
------------------------ -------------------------
Houston TX 77002
-------------------------
Milton T. Graves
Attn: -------------------------
CAROL C. JENNINGS TEXAS
TESTAMENTARY TRUST u/a/d
February 20, 1972
By: /s/
-------------------------
Co-Trustee
By: /s/
-------------------------
Co-Trustee
By: /s/
-------------------------
Co-Trustee
Address: 1600 Smith Suite 4600
-------------------------
Houston TX 77002
-------------------------
Attn:
-------------------------
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