STONE ENERGY CORPORATION $100,000,000 8.625% Senior Notes Due 2017 UNDERWRITING AGREEMENT
Execution Version
Exhibit 1.1
STONE ENERGY CORPORATION
$100,000,000 8.625% Senior Notes Due 2017
November 12, 2010
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
As Representative of the several
Underwriters named in Schedule 1 attached hereto,
c/o Merrill Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Incorporated
As Representative of the several
Underwriters named in Schedule 1 attached hereto,
c/o Merrill Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Stone Energy Corporation, a Delaware corporation (the “Company”), proposes to issue and sell
to the several underwriters named in Schedule 1 hereto (the “Underwriters”), for whom you
(the “Representative”) are acting as representative, $100,000,000 aggregate principal amount of its
8.625% Senior Notes due 2017 (the “Notes”). The Notes will be guaranteed (collectively, the
“Guarantees”) by Stone Energy Offshore, L.L.C., a Delaware limited liability company (the “Notes
Guarantor”). The Notes and the Guarantees are collectively referred to herein as the “Securities.”
The Securities are to be issued under the Indenture, dated January 26, 2010 (the “Original
Indenture”), among the Company, the Notes Guarantor and The Bank of New York Mellon Trust Company,
N.A., as trustee (the “Trustee”), as amended and supplemented by the First Supplemental Indenture,
dated January 26, 2010 (the “Supplemental Indenture”), among the Company, the Notes Guarantor and
the Trustee. The Original Indenture, as amended and supplemented by the Supplemental Indenture, is
herein called the “Indenture.” The Notes will be issued as additional debt securities under the
Indenture pursuant to which the Company had previously issued $275 million in aggregate principal
amount of its 8.625% Senior Notes due 2017 (the “Original Notes”). The Notes and the
Original Notes will be treated as a single class of debt securities under the Indenture. The use
of the neuter in this Underwriting Agreement (the “Agreement”) shall include the feminine and
masculine wherever appropriate. This is to confirm the agreement concerning the purchase of the
Notes from the Company by the Underwriters.
1. Representations and Warranties. The Company and the Notes Guarantor, jointly and
severally, represent, warrant and agree that:
(a) A registration statement on Form S-3 (Registration No. 333-158998) relating to the
Securities has (i) been prepared by the Company and the Notes Guarantor in conformity with
the requirements of the Securities Act of 1933, as amended (the “Securities Act”), and the
rules and regulations (the “Rules and Regulations”) of the
Securities and Exchange Commission (the “Commission”) thereunder; (ii) been filed with
the Commission under the Securities Act; and (iii) become effective under the Securities
Act. Copies of such registration statement and any amendment thereto have been made
available by the Company to the Representative. As used in this Agreement:
(i) “Applicable Time” means 5:00 p.m. (New York City time) on November 12,
2010;
(ii) “Effective Date” means any date as of which any part of such registration
statement relating to the Securities became, or is deemed to have become, effective
under the Securities Act in accordance with the Rules and Regulations;
(iii) “Issuer Free Writing Prospectus” means (i) any issuer free writing
prospectus as defined in Rule 433 of the Rules and Regulations identified on
Schedule 2 and (ii) each “free writing prospectus” (as defined in Rule 405
of the Rules and Regulations) prepared by or on behalf of the Company or used or
referred to by the Company in connection with the offering of the Securities;
(iv) “Preliminary Prospectus” means any preliminary prospectus relating to the
Securities included in such registration statement or filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations, including any preliminary
prospectus supplement thereto relating to the Securities;
(v) “Pricing Disclosure Package” means (1) the most recent Preliminary
Prospectus, together with the Final Term Sheet (as defined below), and (2) each
Issuer Free Writing Prospectus filed or used by the Company on or before the
Applicable Time, other than a road show that is an Issuer Free Writing Prospectus
under Rule 433 of the Rules and Regulations;
(vi) “Prospectus” means the final prospectus relating to the Securities,
including any prospectus supplement thereto relating to the Securities, as filed
with the Commission pursuant to Rule 424(b) of the Rules and Regulations; and
(vii) “Registration Statement” means, collectively, the various parts of such
registration statement, each as amended as of the Effective Date for such part,
including any Preliminary Prospectus or the Prospectus and all exhibits to such
registration statement.
Any reference to any Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include any documents incorporated by reference therein pursuant to Form S-3 under the
Securities Act as of the date of such Preliminary Prospectus or the Prospectus, as the case
may be. Any reference to the “most recent Preliminary Prospectus” shall be deemed to refer
to the latest Preliminary Prospectus included in the Registration Statement or filed
pursuant to Rule 424(b) prior to or on the date hereof (including, for purposes hereof, any
documents incorporated by reference therein prior to or on the date hereof). Any reference
to any amendment or supplement to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include any document filed under the
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Securities Exchange Act of 1934, as amended (the “Exchange Act”), after the date of such
Preliminary Prospectus or the Prospectus, as the case may be, and incorporated by reference
in such Preliminary Prospectus or the Prospectus, as the case may be; and any reference to
any amendment to the Registration Statement shall be deemed to include any annual report of
the Company on Form 10-K filed with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act after the Effective Date that is incorporated by reference in the Registration
Statement. The Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending the effectiveness of the Registration
Statement, and no proceeding or examination for such purpose has been instituted or
threatened by the Commission.
(b) Neither the Company nor the Notes Guarantor was at the time of initial filing of
the Registration Statement and at the earliest time thereafter that the Company, the Notes
Guarantor or another offering participant made a bona fide offer (within the meaning of Rule
164(h)(2) of the Rules and Regulations) of the Securities, is on the date hereof or will be
on the Closing Date an “ineligible issuer” (as defined in Rule 405). Each of the Company
and the Notes Guarantor has been since the time of initial filing of the Registration
Statement and continues to be eligible to use Form S-3 for the offering of the Securities.
(c) The Registration Statement conformed and will conform in all material respects on
the Effective Date and on the Closing Date, and any amendment to the Registration Statement
filed after the date hereof will conform in all material respects when filed, to the
requirements of the Securities Act and the Rules and Regulations. The most recent
Preliminary Prospectus conformed, and the Prospectus will conform, in all material respects
when filed with the Commission pursuant to Rule 424(b) and on the Closing Date to the
requirements of the Securities Act and the Rules and Regulations. The documents
incorporated by reference in any Preliminary Prospectus or the Prospectus conformed, and any
further documents so incorporated will conform, when filed with the Commission, in all
material respects to the requirements of the Exchange Act or the Securities Act, as
applicable, and the rules and regulations of the Commission thereunder. The Registration
Statement has been declared effective by the Commission. No order suspending the
effectiveness of the Registration Statement has been issued by the Commission and no
proceeding for that purpose or pursuant to Section 8A of the Securities Act against the
Company or related to the offering has been initiated or threatened by the Commission as of
the applicable effective date of the Registration Statement and any amendment thereto.
(d) The Registration Statement did not, as of the Effective Date, contain an untrue
statement of a material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading; provided that no representation
or warranty is made as to information contained in or omitted from the Registration
Statement in reliance upon and in conformity with written information furnished to the
Company through the Representative by or on behalf of any Underwriter specifically for
inclusion therein, which information is specified in Section 8(e).
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(e) The Prospectus will not, as of its date and on the Closing Date, 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 that no representation or warranty is made as to
information contained in or omitted from the Prospectus in reliance upon and in conformity
with written information furnished to the Company by an Underwriter or through the
Representative by or on behalf of any Underwriter specifically for inclusion therein, which
information is specified in Section 8(e).
(f) The documents incorporated by reference in any Preliminary Prospectus or the
Prospectus did not, and any further documents filed and incorporated by reference therein
will not, when filed with the Commission, 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.
(g) The Pricing Disclosure Package did not, as of the Applicable Time, 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 that no representation or warranty is made as
to information contained in or omitted from the Pricing Disclosure Package in reliance upon
and in conformity with written information furnished to the Company by an Underwriter or
through the Representative by or on behalf of any Underwriter specifically for inclusion
therein, which information is specified in Section 8(e).
(h) Each Issuer Free Writing Prospectus (including, without limitation, any road show
that is a free writing prospectus under Rule 433), when considered together with the Pricing
Disclosure Package as of the Applicable Time, 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.
(i) Each Issuer Free Writing Prospectus conformed or will conform in all material
respects to the requirements of the Securities Act and the Rules and Regulations on the date
of first use, and the Company has complied with any filing requirements applicable to such
Issuer Free Writing Prospectus pursuant to the Rules and Regulations. The Company has not
made any offer relating to the Securities that would constitute an Issuer Free Writing
Prospectus without the prior written consent of the Representative, except as set forth on
Schedule 2 hereto. The Company has retained in accordance with the Rules and
Regulations all Issuer Free Writing Prospectuses that were not required to be filed pursuant
to the Rules and Regulations.
(j) Each of the Company and its subsidiaries (as defined in Section 17) has been duly
organized, is validly existing and in good standing as a corporation or other business
entity under the laws of its jurisdiction of organization and is duly qualified to do
business and in good standing as a foreign corporation or other business entity in each
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jurisdiction in which its respective ownership or lease of property or the conduct of
its respective businesses requires such qualification, except where the failure to be so
qualified or in good standing would not, in the aggregate, reasonably be expected to have a
material adverse effect on the financial condition, results of operations, stockholders’
equity, properties or business of the Company and its subsidiaries taken as a whole (a
“Material Adverse Effect”); each of the Company and its subsidiaries has all power and
authority necessary to own or hold its properties and to conduct the businesses in which it
is engaged. The Company does not own or control, directly or indirectly, any corporation,
association or other entity other than the subsidiaries listed in Exhibit 21 to the
Company’s Annual Report on Form 10-K for the most recent fiscal year.
(k) Except as set forth in the Pricing Disclosure Package, all of the issued membership
interests of each subsidiary of the Company have been duly authorized and validly issued,
are fully paid and non-assessable (except as such nonassessability may be affected by
Section 18-607 of the Delaware Limited Liability Company Act or Section 86.343 of the Nevada
Revised Statutes) are owned directly or indirectly by the Company, free and clear of all
liens, encumbrances, equities or claims, except for such liens, encumbrances, equities or
claims as would not, in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(l) Each of the Company and the Notes Guarantor has all requisite corporate or limited
liability company, as applicable, power and authority to execute, deliver and perform its
obligations under this Agreement. This Agreement has been duly authorized and validly
executed and delivered by the Company and the Notes Guarantor.
(m) The execution, delivery and performance of the Original Indenture, the Supplemental
Indenture and this Agreement by the Company and the Notes Guarantor, the issuance and sale
of the Securities, the consummation of the transactions contemplated hereby and the
application of the proceeds from the sale of the Securities as described under “Use of
Proceeds” in the Pricing Disclosure Package will not (i) 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 to which the Company, the
Notes Guarantor or any of their subsidiaries is a party or by which the Company, the Notes
Guarantor or any of their subsidiaries is bound or to which any of the property or assets of
the Company, the Notes Guarantor or any of their subsidiaries is subject; (ii) result in any
violation of the provisions of the charter or by-laws (or similar organizational documents)
of the Company, the Notes Guarantor or any of their subsidiaries; or (iii) result in any
violation of any statute or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company, the Notes Guarantor or any of their
subsidiaries or any of their properties or assets, except in the case of the foregoing
clauses (i) and (iii), for such breaches or violations that would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect.
(n) The Notes to be purchased by the Underwriters from the Company are in substantially
the form contemplated by the Indenture, have been duly authorized for issuance and sale
pursuant to this Agreement and the Indenture and, at the Closing Date,
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will have been duly executed by the Company and, when authenticated in the manner
provided for in the Indenture and delivered against payment of the purchase price therefor,
will constitute valid and binding agreements of the Company, enforceable in accordance with
their terms, except as the enforcement thereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the rights and
remedies of creditors or by general equitable principles and will be entitled to the
benefits of the Indenture. The Guarantees of the Notes have been duly authorized for
issuance pursuant to this Agreement and the Indenture and, when the Notes have been
authenticated in the manner provided for in the Indenture and delivered against payment of
the purchase price therefor, will constitute valid and binding agreements of the Notes
Guarantor, enforceable in accordance with their terms, except as the enforcement thereof may
be limited by bankruptcy, insolvency, reorganization, moratorium or other similar laws
relating to or affecting the rights and remedies of creditors or by general equitable
principles and will be entitled to the benefits of the Indenture.
(o) Each of the Original Indenture and the Supplemental Indenture has been duly
authorized, executed and delivered by the Company and the Notes Guarantor, and (assuming the
due authorization, execution and delivery of the Original Indenture and the Supplemental
Indenture by the Trustee) the Indenture constitutes a valid and binding agreement of the
Company and the Notes Guarantor, enforceable in accordance with its terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws relating to or affecting the rights and remedies of creditors or by
general equitable principles. The Indenture has been qualified under the Trust Indenture Act
of 1939, as amended (the “Trust Indenture Act”), and conforms to the requirements thereof.
(p) No consent, approval, authorization or order of, or filing or registration with,
any court or governmental agency or body having jurisdiction over the Company, the Notes
Guarantor or any of their subsidiaries or any of their properties or assets is required for
the execution, delivery and performance of this Agreement by the Company and the Notes
Guarantor, the consummation of the transactions contemplated hereby, the application of the
proceeds from the sale of the Securities as described under “Use of Proceeds” in the Pricing
Disclosure Package, except such as have been obtained, or will have been prior to the
Closing Date, under the Securities Act and the Trust Indenture Act and such consents,
approvals, authorizations, registrations or qualifications as have been obtained or may be
required under the Exchange Act and applicable state or foreign securities laws in
connection with the purchase and sale of the Securities by the Underwriters.
(q) Except as set forth in the Pricing Disclosure Package, there are no contracts,
agreements or understandings between the Company and any person granting such person the
right (other than rights which have been waived in writing or otherwise satisfied) to
require the Company to file a registration statement under the Securities Act with respect
to any securities of the Company owned or to be owned by such person or to require the
Company to include such securities in the securities registered pursuant to the
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Registration Statement or in any securities being registered pursuant to any other
registration statement filed by the Company under the Securities Act.
(r) Except as described in the Pricing Disclosure Package, 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 Pricing Disclosure Package, any loss or
interference with its respective business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or governmental
action, order or decree, and since such date, there has not been any change in the capital
stock, net current assets or 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 financial condition, results of operations, stockholders’ equity,
properties, management or business of the Company and its subsidiaries taken as a whole, in
each case except as would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(s) Since the date as of which information is given in the most recent Preliminary
Prospectus, and except as may otherwise be disclosed in the Pricing Disclosure Package, the
Company has not (i) incurred any material liability or obligation, direct or contingent,
other than liabilities and obligations that were incurred in the ordinary course of
business, (ii) entered into any material transaction not in the ordinary course of business
or (iii) declared or paid any dividend on its capital stock.
(t) The consolidated financial statements (including the related notes and supporting
schedules) of the Company included or incorporated by reference in the Pricing Disclosure
Package comply as to form in all material respects with the requirements of Regulation S-X
under the Securities Act and present fairly the financial condition, results of operations
and cash flows of the entities purported to be shown thereby at the dates and for the
periods indicated and have been prepared in conformity with accounting principles generally
accepted in the United States applied on a consistent basis throughout the periods involved,
except as otherwise stated therein and, in the case of unaudited financial statements,
subject to year-end amount adjustments.
(u) Ernst & Young LLP, who have certified certain financial statements of the Company
and its consolidated subsidiaries, whose report appears in the most recent Preliminary
Prospectus or is incorporated by reference therein, are independent public accountants as
required by the Securities Act and the Rules and Regulations and the rules and regulations
of the Public Company Accounting Oversight Board (the “PCAOB”).
(v) Netherland, ▇▇▇▇▇▇ & Associates, Inc., whose report appears in the most recent
Preliminary Prospectus or is incorporated by reference therein, was, as of the date of such
report, and is, as of the date hereof, an independent reserve engineer with respect to the
Company.
(w) Estimates of proved reserves and present values as described in the Pricing
Disclosure Package and reflected in the letter referred to in Section 7(i) hereof comply in
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all material respects with the applicable requirements of Regulation S-X and Industry
Guide 2 under the Securities Act.
(x) Neither the Company nor any subsidiary is, and as of the Closing Date, after giving
effect to the offer and sale of the Securities and the application of the proceeds therefrom
as described under “Use of Proceeds” in the Pricing Disclosure Package, none of them will
be, (i) an “investment company” within the meaning of such term under the Investment Company
Act of 1940, as amended (the “Investment Company Act”), and the rules and regulations of the
Commission thereunder or (ii) a “business development company” (as defined in Section
2(a)(48) of the Investment Company Act).
(y) Except as described in the Pricing Disclosure Package, 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 or assets of the Company or any of its subsidiaries is the subject
which, if determined adversely, would, in the aggregate, reasonably be expected to have a
Material Adverse Effect or would, in the aggregate, reasonably be expected to have a
material adverse effect on the performance of this Agreement or the consummation of the
transactions contemplated hereby; and to the Company’s knowledge, no such proceedings are
threatened or contemplated by governmental authorities or others.
(z) No relationship, direct or indirect, exists between or among the Company, on the
one hand, and the directors, officers, stockholders, customers or suppliers of the Company,
on the other hand, that is required to be described in the Pricing Disclosure Package which
is not so described.
(aa) No labor disturbance by the employees of the Company or its subsidiaries exists
or, to the knowledge of the Company, is imminent that would reasonably be expected to have a
Material Adverse Effect.
(bb) Except for matters that would not, in the aggregate, reasonably be expected to
have a Material Adverse Effect: (i) each “employee benefit plan” (within the meaning of
Section 3(3) of the Employee Retirement Security Act of 1974, as amended (“ERISA”)) for
which the Company or any member of its “Controlled Group” (defined as any organization which
is a member of a controlled group of corporations within the meaning of Section 414 of the
Internal Revenue Code of 1986, as amended (the “Code”)) would have any liability (each a
“Plan”) has been maintained in compliance with its terms and with the requirements of all
applicable statutes, rules and regulations including ERISA and the Code; (ii) with respect
to each Plan subject to Title IV of ERISA (a) no “reportable event” (within the meaning of
Section 4043(c) of ERISA) has occurred or is reasonably expected to occur, (b) no failure to
satisfy the minimum funding standards under Section 430 of the Code and in Section 303 of
ERISA, whether or not waived, has occurred or is reasonably expected to occur, (c) the fair
market value of the assets under each Plan exceeds the present value of all benefits accrued
under such Plan (determined based on those assumptions used to fund such Plan) and (d)
neither the Company or any member of its Controlled Group has incurred, or reasonably
expects to incur, any liability
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under Title IV of ERISA (other than contributions to the Plan or premiums to the PBGC
in the ordinary course and without default) in respect of a Plan (including a “multiemployer
plan,” within the meaning of Section 4001(c)(3) of ERISA); and (iii) each Plan that is
intended to be qualified under Section 401(a) of the Code is so qualified and nothing has
occurred, whether by action or by failure to act, which would cause the loss of such
qualification.
(cc) The Company and each of its subsidiaries have filed all federal, state and local
income and franchise tax returns required to be filed through the date hereof, subject to
permitted extensions, and have paid all taxes due thereon other than those being contested
in good faith, those for which reserves have been provided in accordance with U.S. generally
accepted accounting principles or those currently payable without penalty or interest, and,
other than disclosed in the Pricing Disclosure Package, no tax deficiency has been
determined adversely to the Company or any of its subsidiaries which has had, nor does the
Company have any knowledge of any tax deficiencies which, if determined adversely, would, in
the aggregate, reasonably be expected to have a Material Adverse Effect.
(dd) Neither the Company nor any of its subsidiaries (i) is in violation of its charter
or by-laws (or similar organizational documents), (ii) is in default, and no event has
occurred that, with notice or lapse of time or both, would constitute such a default, in the
due performance or observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to which it is a
party or by which it is bound or to which any of its properties or assets is subject or
(iii) is in violation of any statute or any order, rule or regulation of any court or
governmental agency or governmental body having jurisdiction over it or its property or
assets or has failed to obtain any license, permit, certificate, franchise or other
governmental authorization or permit necessary to the ownership of its property or to the
conduct of its business, except in the case of clauses (ii) and (iii) above, except for
breaches or defaults that would not, in the aggregate, reasonably be expected to have a
Material Adverse Effect.
(ee) There is and has been no failure on the part of the Company and any of the
Company’s directors or officers, in their capacities as such, to comply with the provisions
of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated in connection
therewith.
(ff) The Company and each of its subsidiaries have such permits, licenses, patents,
franchises, certificates of need and other approvals or authorizations of governmental or
regulatory authorities (“Permits”) as are necessary under applicable law to own their
properties and conduct their businesses in the manner described in the Pricing Disclosure
Package, except where the failure to have such Permits would not, in the aggregate,
reasonably be expected to have a Material Adverse Effect; each of the Company and its
subsidiaries has fulfilled and performed all of its obligations with respect to the Permits,
and no event has occurred that allows, or after notice or lapse of time would allow,
revocation or termination thereof or results in any other impairment of
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the rights of the holder or any such Permits, except for any of the foregoing that
would not reasonably be expected to have a Material Adverse Effect.
(gg) Except as would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect, the Company and each of its subsidiaries own or possess adequate rights to
use all material patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service ▇▇▇▇ registrations, copyrights, licenses, know-how,
software, systems and technology (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures) necessary for
the conduct of their respective businesses; and the Company and each of its subsidiaries
have no reason to believe that the conduct of their respective businesses will conflict
with, and have not received any notice of any material claim of conflict with, any such
rights of others.
(hh) Except as described in the Pricing Disclosure Package, the Company and each of its
subsidiaries (i) are in compliance with all applicable laws, regulations, ordinances, rules,
orders, judgments, decrees, permits or other legally enforceable requirements of any
governmental authority having lawful jurisdiction over the assets or operations of the
Company or any of its subsidiaries, relating to the protection of human health or safety (to
the extent such health or safety requirements relate to exposure to hazardous or toxic
substances or wastes, pollutants or contaminants), the environment, or natural resources, or
to hazardous or toxic substances or wastes, pollutants or contaminants (“Environmental
Laws”) applicable to such entity, which compliance includes, without limitation, obtaining,
maintaining and complying with all permits and authorizations and approvals required by
Environmental Laws to conduct their respective businesses as they are currently being
conducted, and (ii) have not received written notice of any actual or alleged violation of
Environmental Laws, or of any potential legally enforceable liability for, or other legally
enforceable obligation under, Environmental Laws concerning the presence, disposal or
release of hazardous or toxic substances or wastes, pollutants or contaminants, except in
the case of each of clause (i) or (ii) where such non-compliance, violation, liability, or
other obligation would not, in the aggregate, reasonably be expected to have a Material
Adverse Effect. Except as described in the Pricing Disclosure Package, (A) there are no
legal proceedings that are pending, or currently known to the Company to be contemplated,
against the Company or any of its subsidiaries under Environmental Laws in which a
governmental authority is also a party, other than such proceedings regarding which it is
reasonably believed no monetary sanctions of $100,000 or more will be imposed and (B) none
of the Company and its subsidiaries anticipates capital expenditures relating to
Environmental Laws that would, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(ii) No subsidiary of the Company is currently prohibited, directly or indirectly, from
paying any dividends to the Company, from making any other distribution on such subsidiary’s
capital stock, from repaying to the Company any loans or advances to such subsidiary from
the Company or from transferring any of such subsidiary’s property or assets to the Company
or any other subsidiary of the Company, except as described in the Pricing Disclosure
Package.
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(jj) Neither the Company nor any of its subsidiaries, nor, to the knowledge of the
Company, any director, officer, agent, employee or other person associated with or acting on
behalf of the Company or any of its subsidiaries, has (i) used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating to political
activity; (ii) made any direct or indirect unlawful payment to any foreign or domestic
government official or employee from corporate funds; (iii) violated or is in violation of
any provision of the U.S. Foreign Corrupt Practices Act of 1977; or (iv) made any unlawful
bribe, rebate, payoff, influence payment, kickback or other unlawful payment.
(kk) The operations of the Company and its subsidiaries are and have been conducted at
all times in compliance with applicable financial recordkeeping and reporting requirements
of the Currency and Foreign Transactions Reporting Act of 1970, as amended, the money
laundering statutes of all jurisdictions, the rules and regulations thereunder and any
related or similar rules, regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the “Money Laundering Laws”) and no action, suit or
proceeding by or before any court or governmental agency, authority or body or any
arbitrator involving the Company or any of its subsidiaries with respect to the Money
Laundering Laws is pending or, to the knowledge of the Company, threatened, except, in each
case, as would not reasonably be expected to have a Material Adverse Effect.
(ll) Neither the Company nor any of its subsidiaries nor, to the knowledge of the
Company, any director, officer, agent, employee or affiliate of the Company or any of its
subsidiaries is currently subject to any U.S. sanctions administered by the Office of
Foreign Assets Control of the U.S. Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture partner or other person or
entity, for the purpose of financing the activities of any person currently subject to any
U.S. sanctions administered by OFAC.
(mm) The Company has not distributed and, prior to the Closing Date, will not
distribute any offering material in connection with the offering and sale of the Securities
other than any Preliminary Prospectus, the Prospectus, any Issuer Free Writing Prospectus to
which the Representative has consented in accordance with Section 1(i) or 5(a)(vii) and any
Issuer Free Writing Prospectus set forth on Schedule 2 hereto.
(nn) The Company has not taken and will not take, directly or indirectly, any action
designed to or that has constituted or that would reasonably be expected to cause or result
in the stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Securities.
(oo) Except as otherwise set forth in the Pricing Disclosure Package or such as in the
aggregate has not had and would not reasonably be expected to have a Material Adverse
Effect, the Company and its subsidiaries have title to their respective properties as
follows: (a) with respect to ▇▇▇▇▇ (including leasehold interests and appurtenant personal
property) and non-producing oil and gas properties (including undeveloped
11
locations on leases held by production), such title is good and free and clear of all
liens, security interests, pledges, charges, encumbrances, mortgages and restrictions; (b)
with respect to non-producing properties in exploration prospects, such title was
investigated in accordance with customary industry procedures prior to the acquisition
thereof by the Company or its subsidiaries; (c) with respect to real property other than oil
and gas interests, such title is good and marketable free and clear of all liens, security
interests, pledges, charges, encumbrances, mortgages and restrictions; and (d) with respect
to personal property other than that appurtenant to oil and gas interests, such title is
free and clear of all liens, security interests, pledges, charges, encumbrances, mortgages
and restrictions. No real property owned, leased, licensed or used by the Company or its
subsidiaries lies in an area which is, or to the knowledge of the Company will be, subject
to restrictions that would prohibit, and no statements of facts relating to the actions or
inaction of another person or entity or his or its ownership, leasing, licensing or use of
any real or personal property exists or will exist that would prevent, the continued
effective ownership, leasing, licensing, exploration, development or production or use of
such real property in the business of the Company or its subsidiaries as presently conducted
or as the Registration Statement, the Preliminary Prospectus, the Prospectus or the Pricing
Disclosure Package indicates they contemplate conducting, except as disclosed in the
Registration Statement, the Preliminary Prospectus, the Prospectus or the Pricing Disclosure
Package or such as in the aggregate has not had and would not reasonably be expected to have
a Material Adverse Effect.
(pp) The statements set forth in the Preliminary Prospectus and the Prospectus under
the captions “Description of Debt Securities” and “Description of Notes,” insofar as they
purport to constitute a summary of the terms of the Securities, and under the caption
“Underwriting,” insofar as it purports to describe the provisions of this Agreement, are
accurate in all material respects.
(qq) Except as otherwise disclosed in the Pricing Disclosure Package, no “nationally
recognized statistical rating organization” as such term is defined for purposes of Rule
436(g)(2) under the Securities Act (i) has imposed (or has informed the Company that it is
considering imposing) any condition (financial or otherwise) on the Company’s retaining any
rating assigned to the Company, any securities of the Company or (ii) has indicated to the
Company that it is considering (a) the downgrading, suspension, or withdrawal of, or any
review for a possible change that does not indicate the direction of the possible change in,
any rating so assigned or (b) any change in the outlook for any rating of the Company or any
securities of the Company.
(rr) The Company maintains “disclosure controls and procedures” (as defined in Rule
13a-15(e) of the Exchange Act) that are designed to ensure that information required to be
disclosed by the Company in reports that it files or submits under the Exchange Act is
recorded, processed, summarized and reported within the time periods specified in the
Commission’s rules and forms, including controls and procedures designed to ensure that such
information is accumulated and communicated to the Company’s management as appropriate to
allow timely decisions regarding required disclosure. The management of the Company, with
the participation of its principal executive and principal financial officer, or persons
performing similar functions, has
12
evaluated the effectiveness of the Company’s disclosure controls and procedures as
required by Rule 13a-15(b) of the Exchange Act.
(ss) The Company maintains “internal controls over financial reporting” (as defined in
Rule 13a-15(f) of the Exchange Act) that have been designed by, or under the supervision of,
its principal executive and principal financial officer, or persons performing similar
functions, and effected by the Company’s board of directors, management and other personnel,
to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally
accepted accounting principles, including policies and procedures that (i) pertain to the
maintenance of records that in reasonable detail accurately and fairly reflect the
transactions and dispositions of the assets of the Company, (ii) provide reasonable
assurance that transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles, and that receipts
and expenditures of the Company are being made only in accordance with authorizations of
management and directors of the Company and (iii) provide reasonable assurance regarding
prevention or timely detection of unauthorized acquisition, use or disposition of the
Company’s assets that could have a material effect on the financial statements.
Any certificate signed by any officer of the Company and delivered to the Representative or
counsel for the Underwriters in connection with the offering of the Securities shall be deemed a
representation and warranty by the Company, as to matters covered thereby, to each Underwriter.
2. Purchase and Sale. The Company agrees to issue and sell to the several Underwriters the
Notes upon the terms herein set forth. On the basis of the representations, warranties and
agreements herein contained, and upon the terms and subject to the conditions herein set forth, the
Underwriters agree, severally and not jointly, to purchase from the Company the respective
aggregate principal amount of Notes set forth opposite their names on Schedule 1. The
purchase price per Note to be paid by the several Underwriters to the Company shall be equal to
98.50% of the principal amount thereof.
The Company hereby confirms its engagement of Tudor, Pickering, ▇▇▇▇ & Co. Securities, Inc.
(the “Independent Underwriter”) as, and the Independent Underwriter hereby confirms its agreement
with the Company to render services as, a “qualified independent underwriter” within the meaning of
NASD Rule 2720(f)(12) as administered by the Financial Industry Regulatory Authority, Inc.
(“FINRA”) with respect to the offering and sale of the Securities.
3. Public Offering of the Securities. The Representative hereby advises the Company that the
Underwriters intend to offer for sale to the public, as described in the Pricing Disclosure Package
and the Prospectus, their respective portions of the Securities as soon after this Agreement has
been executed that the Representative, in its sole judgment, has determined is advisable and
practicable.
13
4. Delivery of and Payment for the Notes. Delivery of the Securities in the form of one or
more global securities in definitive form (the “Global Securities”) and payment therefor shall be
made at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ at
10:00 A.M., New York City time, on the third full business day following the date of this Agreement
or at such other date or place as shall be determined by agreement between the Representative and
the Company. This date and time are sometimes referred to as the “Closing Date.” Payment for the
Securities shall be made on the Closing Date by wire transfer of immediately available funds to the
order of the Company. It is understood that the Representative has been authorized, for its own
account and the accounts of the several Underwriters, to accept delivery of and receipt for, and
make payment of the purchase price for, the Securities. Time shall be of the essence, and delivery
of the Global Securities at the time and place specified pursuant to this Agreement is a further
condition of the obligation of each Underwriter hereunder. The Company shall deliver the Global
Securities representing all the Securities through the facilities of DTC unless the Representative
shall otherwise instruct.
5. Further Agreements of the Company and the Underwriters. (a) The Company agrees:
(i) To prepare the Prospectus in a form approved by the Representative and to file such
Prospectus pursuant to Rule 424(b) under the Securities Act not later than the Commission’s
close of business on the second business day following the execution and delivery of this
Agreement; to make no further amendment or any supplement to the Registration Statement or
the Prospectus prior to the Closing Date except as provided herein; to advise the
Representative, promptly after it receives notice thereof, of the time when any amendment or
supplement to the Registration Statement or the Prospectus has been filed and to make
available to the Representative copies thereof; to file timely 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 Securities; to advise the Representative,
promptly after it receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the effectiveness of the Registration
Statement or preventing or suspending the use of the Prospectus or any Issuer Free Writing
Prospectus or the initiation or threatening of any proceeding for that purpose or pursuant
to Section 8A of the Securities Act, of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, of the initiation or threatening of any
proceeding or examination for any such purpose or of any request by the Commission for the
amending or supplementing of the Registration Statement, the Prospectus or any Issuer Free
Writing 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 the Prospectus or any Issuer
Free Writing Prospectus or suspending any such qualification, to use promptly its best
efforts to obtain its withdrawal;
(ii) To make available promptly to the Representative and to counsel for the
Underwriters a signed copy of the Registration Statement as originally filed with the
Commission, and each amendment thereto filed with the Commission, including all
14
consents and exhibits filed therewith, except in each case to the extent available on
the Commission’s Interactive Data Electronic Application website;
(iii) The Company will prepare a final term sheet containing solely a description of
the Notes, including the price at which the Notes are to be sold to the public, in a form
approved by the Representative and attached as Schedule 3, and will file such term
sheet pursuant to Rule 433(d) of the Rules and Regulations within the time period required
by that rule (the “Final Term Sheet”);
(iv) To make available promptly to the Representative such number of the following
documents as the Representative shall reasonably request: (A) conformed copies of the
Registration Statement as originally filed with the Commission and each amendment thereto
(in each case excluding exhibits other than this Agreement and the computation of per share
earnings), (B) each Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus, (C) each Issuer Free Writing Prospectus and (D) any document incorporated by
reference in any Preliminary Prospectus or the Prospectus; and, if the delivery of a
prospectus is required at any time after the date hereof in connection with the offering or
sale of the Securities or any other securities relating thereto 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 to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by reference in the Prospectus in
order to comply with the Securities Act, the Exchange Act or the Trust Indenture Act, to
notify the Representative and, upon its request, to file such document and to prepare and
make available without charge to each Underwriter and to any dealer in securities as many
copies as the Representative may from time to time reasonably request of an amended or
supplemented Prospectus that will correct such statement or omission or effect such
compliance;
(v) To file promptly with the Commission any amendment or supplement to the
Registration Statement or the Prospectus that may, in the judgment of the Company or the
Representative, be required by the Securities Act or requested by the Commission;
(vi) To the extent practicable, prior to filing with the Commission any amendment or
supplement to the Registration Statement or the Prospectus, any document incorporated by
reference in the Prospectus or any amendment to any document incorporated by reference in
the Prospectus, to furnish a copy thereof to the Representative and counsel for the
Underwriters and obtain the consent of the Representative to the filing (which consent shall
not be unreasonably conditioned, withheld or delayed);
(vii) Not to make any offer relating to the Securities that would constitute an Issuer
Free Writing Prospectus without the prior written consent of the Representative;
15
(viii) If at any time prior to the Closing Date (i) any event shall occur or condition
shall exist as a result of which the Pricing Disclosure Package as then amended or
supplemented would include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of the
circumstances, not misleading or (ii) it is necessary to amend or supplement the Pricing
Disclosure Package to comply with law, the Company will promptly notify the Underwriters
thereof and forthwith prepare and, subject to paragraph (v) above, file with the Commission
(to the extent required) and furnish to the Underwriters and to such dealers as the
Representative may designate, such amendments or supplements to the Pricing Disclosure
Package as may be necessary so that the statements in the Pricing Disclosure Package as so
amended or supplemented will not, in the light of the circumstances, be misleading or so
that the Pricing Disclosure Package will comply with law.
(ix) If during the Prospectus Delivery Period (as defined below) (i) any event shall
occur or condition shall exist as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances existing when the Prospectus is delivered to a
purchaser, not misleading or (ii) it is necessary to amend or supplement the Prospectus to
comply with law, the Company will promptly notify the Underwriters thereof and forthwith
prepare and, subject to paragraph (v) above, file with the Commission and furnish to the
Underwriters and to such dealers as the Representative may designate, such amendments or
supplements to the Prospectus as may be necessary so that the statements in the Prospectus
as so amended or supplemented will not, in the light of the circumstances existing when the
Prospectus is delivered to a purchaser, be misleading or so that the Prospectus will comply
with law. As used herein, the term “Prospectus Delivery Period” means such period of time
after the first date of the public offering of the Securities as in the opinion of counsel
for the Underwriters a prospectus relating to the Securities is required by law to be
delivered (or required to be delivered but for Rule 172 under the Securities Act) in
connection with sales of the Securities by any Underwriter or dealer.
(x) As soon as practicable after the date of this Agreement and in any event not later
than 16 months after the date hereof, to make generally available to the Company’s security
holders and to deliver to the Representative an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a) of the Securities Act
and the Rules and Regulations;
(xi) Promptly from time to time to take such action as the Representative may
reasonably request to qualify the Securities for offering and sale under the securities laws
of Canada and such other jurisdictions as the Representative 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
Securities; provided that in connection therewith the Company shall not be required to (i)
qualify as a foreign corporation in any jurisdiction in which it would not otherwise be
required to so qualify, (ii) file a general consent to service of process in any such
16
jurisdiction or (iii) subject itself to taxation in any jurisdiction in which it would
not otherwise be subject;
(xii) During the period of 60 days following the date of the Prospectus, the Company
will not, without the prior written consent of ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated (which consent may be withheld at the sole discretion of ▇▇▇▇▇▇▇ Lynch, Pierce,
▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated), directly or indirectly, sell, offer, contract or grant any
option to sell, pledge, transfer or establish an open “put equivalent position” within the
meaning of Rule 16a-1 under the Exchange Act, or otherwise dispose of or transfer, or
announce the offering of, or file any registration statement under the Securities Act in
respect of, any debt securities of the Company or securities exchangeable for or convertible
into debt securities of the Company (other than as contemplated by this Agreement);
(xiii) The Company shall use commercially reasonable efforts to obtain the approval of
DTC to permit the Securities to be eligible for “book-entry” transfer and settlement through
the facilities of DTC, and agrees to comply with all of its agreements set forth in the
representation letters of the Company to DTC relating to the approval of the Securities by
DTC for “book-entry” transfer; and
(xiv) To apply the net proceeds from the sale of the Securities being sold by the
Company as set forth in the Prospectus.
(b) Each Underwriter severally agrees that such Underwriter shall not include any “issuer
information” (as defined in Rule 433) in any “free writing prospectus” (as defined in Rule 405)
used or referred to by such Underwriter without the prior consent of the Company (any such issuer
information with respect to whose use the Company has given its consent, “Permitted Issuer
Information”); provided that (i) no such consent shall be required with respect to any such issuer
information contained in any document filed by the Company with the Commission prior to the use of
such free writing prospectus and (ii) “issuer information,” as used in this Section 5(b), shall not
be deemed to include information prepared by or on behalf of such Underwriter on the basis of or
derived from issuer information.
6. Expenses. The Company agrees, whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, to pay all costs, expenses, fees and
taxes incident to and in connection with (a) the authorization, issuance, sale and delivery of the
Securities and any stamp duties or other taxes payable in that connection; (b) services provided by
the Company’s counsel, independent public or certified public accountants and other advisors; (c)
the preparation, printing and filing under the Securities Act of the Registration Statement
(including any exhibits thereto), any Preliminary Prospectus, the Prospectus, any Issuer Free
Writing Prospectus and any amendment or supplement thereto; (d) the distribution of the
Registration Statement (including any exhibits thereto), any Preliminary Prospectus, the
Prospectus, any Issuer Free Writing Prospectus and any amendment or supplement thereto, or any
document incorporated by reference therein, all as provided in this Agreement; (e) the production
and distribution of this Agreement, any supplemental agreement among Underwriters, the Indenture
and any other related documents in connection with the offering, purchase, sale and delivery of the
Securities (but not, however, legal fees and expenses
17
of counsel to the Underwriters incurred in connection with any of the foregoing, except under
the circumstances contemplated by Section 11 of this Agreement); (f) the Trustee, including fees
and disbursements of counsel for the Trustee in connection with the Indenture and the Securities;
(g) the rating of the Securities by any rating agency; (h) FINRA, in connection with the review, if
any, of the terms of the sale of the Securities; (i) the DTC; (j) the qualification of the
Securities under the securities laws of the several jurisdictions as provided in Section 5(a)(xi)
and the preparation, printing and distribution of a Blue Sky Memorandum (including related fees and
expenses of counsel to the Underwriters); (k) the preparation, printing and distribution of one or
more versions of the Preliminary Prospectus and the Prospectus for distribution in Canada, often in
the form of a Canadian “wrapper” (including related fees and expenses of Canadian counsel to the
Underwriters); (l) the Independent Underwriter; (m) the investor presentations on any “road show”
undertaken in connection with the marketing of the Securities, including, without limitation,
expenses associated with any electronic roadshow, travel and lodging expenses of the
representatives and officers of the Company and the cost of any aircraft chartered in connection
with the road show; and (n) all other costs and expenses incident to the performance of the
obligations of the Company under this Agreement; provided that, except as provided in this Section
6 and in Section 8 and Section 11, the Underwriters shall pay their own costs and expenses,
including the costs and expenses of their counsel, any transfer taxes on the Securities which they
may sell and the expenses of advertising any offering of the Securities made by the Underwriters.
7. Conditions of Underwriters’ Obligations. The respective obligations of the Underwriters
hereunder are subject to the accuracy, when made and on the Closing Date, of the representations,
warranties and other statements of the Company and the Notes Guarantor contained herein, to the
performance by the Company and the Notes Guarantor of their respective obligations hereunder, and
to each of the following additional terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission in accordance with
Section 5(a)(i); the Company shall have complied with all filing requirements applicable to
any Issuer Free Writing Prospectus used or referred to after the date hereof; the Final Term
Sheet shall have been timely filed with the Commission in accordance with Rule 433 of the
Rules and Regulations; no stop order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of the Prospectus or any Issuer Free Writing
Prospectus shall have been issued and no proceeding or examination for such purpose or
pursuant to Section 8A under the Securities Act shall have been initiated or threatened by
the Commission; and any request of the Commission for inclusion of additional information in
the Registration Statement or the Prospectus or otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the Company on or prior to
the Closing Date that the Registration Statement, the Prospectus, the Pricing Disclosure
Package or any Issuer Free Writing Prospectus, or any amendment or supplement thereto,
contains an untrue statement of a fact which, in the opinion of ▇▇▇▇▇ ▇▇▇▇▇ L.L.P., counsel
for the Underwriters, is material or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary to make the
statements therein not misleading.
18
(c) All corporate proceedings and other legal matters incident to the authorization,
form and validity of this Agreement, the Indenture, the Securities, the Registration
Statement, the Prospectus and any Issuer Free Writing Prospectus, and all other legal
matters relating to this Agreement and the transactions contemplated hereby shall be
reasonably satisfactory in all material respects to counsel for the Underwriters, and the
Company shall have furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. shall have furnished to the Representative its written
opinion, as counsel to the Company, addressed to the Underwriters and dated the Closing
Date, in form and substance reasonably satisfactory to the Representative, substantially in
the form attached hereto as Exhibit A.
(e) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III, shall have furnished to the Representative his written
opinion, as the Company’s Senior Vice President, Secretary and General Counsel, addressed to
the Underwriters and dated the Closing Date, in form and substance reasonably satisfactory
to the Representative, substantially in the form attached hereto as Exhibit B.
(f) The Representative shall have received from ▇▇▇▇▇ ▇▇▇▇▇ L.L.P., counsel for the
Underwriters, such opinion or opinions, dated the Closing Date, with respect to the issuance
and sale of the Securities, the Registration Statement, the Prospectus and the Pricing
Disclosure Package and other related matters as the Representative may reasonably require,
and the Company shall have furnished to such counsel such documents as they reasonably
request for the purpose of enabling them to pass upon such matters.
(g) At the time of execution of this Agreement, the Representative shall have received
from Ernst & Young LLP a letter, in form and substance reasonably satisfactory to the
Representative, addressed to the Underwriters and dated the date hereof (i) confirming that
they are independent public accountants within the meaning of the Securities Act and the
rules and regulations of the PCAOB and are in compliance with the applicable requirements
relating to the qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, and (ii) stating, as of the date hereof (or, with respect to matters involving
changes or developments since the respective dates as of which specified financial
information is given in the most recent Preliminary Prospectus, as of a date not more than
three days prior to the date hereof), the conclusions and findings of such firm with respect
to the financial information and other matters ordinarily covered by accountants’ “comfort
letters” to underwriters in connection with registered public offerings.
(h) With respect to the letter of Ernst & Young LLP referred to in the preceding
paragraph (the “initial letter”), the Company shall have caused to be furnished to the
Representative a letter (the “bring-down letter”) of such accountants, addressed to the
Underwriters and dated the Closing Date (i) confirming that they are independent public
accountants within the meaning of the Securities Act and the rules and regulations of the
PCAOB and are in compliance with the applicable requirements relating to the
19
qualification of accountants under Rule 2-01 of Regulation S-X of the Commission, (ii)
stating, as of the date of the bring-down letter (or, with respect to matters involving
changes or developments since the respective dates as of which specified financial
information is given in the Prospectus, as of a date not more than three days prior to the
date of the bring-down letter), the conclusions and findings of such firm with respect to
the financial information and other matters covered by the initial letter and (iii)
confirming in all material respects the conclusions and findings set forth in the initial
letter.
(i) At the time of execution of this Agreement, the Representative shall have received
from Netherland, ▇▇▇▇▇▇ & Associates, Inc. an initial letter (the “initial expert letter”),
in form and substance reasonably satisfactory to the Representative, addressed to the
Underwriters and dated the date hereof and a subsequent letter dated as of the Closing Date,
which such letter shall cover the period from the initial expert letter to the Closing Date,
stating the conclusions and findings of such firm with respect to the Company’s proved
reserves as is customary to underwriters in connection with registered public offerings.
(j) The Company shall have furnished to the Representative a certificate, dated the
Closing Date, of its Chief Executive Officer and its Chief Financial Officer stating that:
(i) The representations and warranties of the Company in Section 1 are true and
correct on and as of the Closing Date, and the Company has complied with all its
agreements contained herein and satisfied all the conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date;
(ii) No stop order suspending the effectiveness of the Registration Statement
has been issued; and no proceedings or examination for that purpose or pursuant to
Section 8A under the Securities Act have been instituted or, to the knowledge of
such officers, threatened; and
(iii) They have carefully examined the Registration Statement, the Prospectus
and the Pricing Disclosure Package, and, in their opinion, (A) (1) the Registration
Statement, as of the Effective Date, (2) the Prospectus, as of its date and on the
Closing Date, and (3) the Pricing Disclosure Package, as of the Applicable Time, did
not and do not contain any untrue statement of a material fact and did not and do
not omit to state a material fact required to be stated therein or necessary to make
the statements therein (except in the case of the Registration Statement, in the
light of the circumstances under which they were made) not misleading, and (B) since
the Effective Date, no event has occurred that should have been set forth in a
supplement or amendment to the Registration Statement, the Prospectus or any Issuer
Free Writing Prospectus that has not been so set forth.
(k) Except as disclosed in the Pricing Disclosure Package, neither the Company nor any
of its subsidiaries shall have sustained, since the date of the latest
20
audited financial statements included or incorporated by reference in the Pricing
Disclosure Package, any loss or interference with its respective business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree and, since such date, there shall
not have been any change in the capital stock, net current assets or long-term debt of the
Company or any of its subsidiaries or any material adverse change, or any development
involving a prospective change, in or affecting the financial condition, results of
operations, stockholders’ equity, properties, management or business of the Company and its
subsidiaries taken as a whole, the effect of which, in any such case is, in the judgment of
the Representative, so material and adverse as to make it impracticable or inadvisable to
proceed with the public offering, sale or the delivery of the Securities on the Closing Date
on the terms and in the manner contemplated in the Prospectus.
(l) Subsequent to the execution and delivery of this Agreement (i) no downgrading shall
have occurred in the rating accorded the Company’s debt securities by any “nationally
recognized statistical rating organization” (as that term is defined by the Commission for
purposes of Rule 436(g)(2) of the Rules and Regulations), and (ii) no such organization
shall have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company’s debt securities.
(m) Subsequent to the execution and delivery of this Agreement there shall not have
occurred any of the following: (i) trading in securities generally on the New York Stock
Exchange or in the over-the-counter market, or trading in any securities of the Company on
any exchange or in the over-the-counter market, shall have been suspended or materially
limited or the settlement of such trading generally shall have been materially disrupted or
minimum prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental authority
having jurisdiction, (ii) a banking moratorium shall have been declared by federal or state
authorities, (iii) the United States shall have become engaged in hostilities, there shall
have been an escalation in hostilities involving the United States or there shall have been
a declaration of a national emergency or war by the United States or (iv) such a material
adverse change in general economic, political or financial conditions, including, without
limitation, as a result of terrorist activities after the date hereof (or the effect of
international conditions on the financial markets in the United States shall be such), as to
make it, in the judgment of the Representative, impracticable or inadvisable to proceed with
the public offering, sale or delivery of the Securities being delivered on the Closing Date
on the terms and in the manner contemplated in the Prospectus.
(n) The Company shall have executed and delivered a Company Order to the Trustee
relating to the issuance of the Notes pursuant to Section 401 of the Supplemental Indenture.
(o) The Notes and the notation of the Guarantees shall be executed by the Company and
the Notes Guarantor in substantially the respective forms set forth in Annex A and Annex B
to the Supplemental Indenture.
21
All opinions, letters, evidence and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Underwriters.
8. Indemnification and Contribution.
(a) The Company and the Notes Guarantor shall, jointly and severally, indemnify and
hold harmless each Underwriter, its directors, officers, employees and affiliates
participating in this offering (“Participating Affiliates”), and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Securities Act, from and
against any loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or action
relating to purchases and sales of the Securities), to which that Underwriter, director,
officer, employee, Participating Affiliate or controlling person may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged untrue statement of a
material fact contained in (A) the Preliminary Prospectus, the Registration Statement, the
Prospectus or in any amendment or supplement thereto, (B) any Issuer Free Writing Prospectus
or in any amendment or supplement thereto, (C) any Permitted Issuer Information used or
referred to in any “free writing prospectus” (as defined in Rule 405) used or referred to by
any Underwriter, (D) any “road show” (as defined in Rule 433) not constituting an Issuer
Free Writing Prospectus (a “Non-Prospectus Road Show”) or (E) any Blue Sky application or
other document prepared or executed by the Company (or based upon any written information
furnished by the Company for use therein) specifically for the purpose of qualifying any or
all of the Securities under the securities laws of any state or other jurisdiction (any such
application, document or information being hereinafter called a “Blue Sky Application”) or
(ii) the omission or alleged omission to state in the Preliminary Prospectus, the
Registration Statement, the Prospectus, any Issuer Free Writing Prospectus or in any
amendment or supplement thereto or in any Permitted Issuer Information, any Non-Prospectus
Road Show or any Blue Sky Application, any material fact required to be stated therein or
necessary to make the statements therein not misleading, and shall reimburse each
Underwriter and each such director, officer, employee, Participating Affiliate or
controlling person promptly upon demand for any legal or other expenses reasonably incurred
by that Underwriter, director, officer, employee, Participating Affiliate or controlling
person in connection with investigating, defending, preparing to defend against, settling,
compromising or paying any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that the Company shall not be liable in any such case to
the extent that any such loss, claim, damage, liability or action arises out of, or is based
upon, any untrue statement or alleged untrue statement or omission or alleged omission made
in the Preliminary Prospectus, the Registration Statement, the Prospectus, any Issuer Free
Writing Prospectus or in any such amendment or supplement thereto or in any Permitted Issuer
Information, any Non-Prospectus Road Show or any Blue Sky Application, in reliance upon and
in conformity with written information concerning such Underwriter furnished to the Company
by such Underwriter or through the Representative by or on behalf of any Underwriter
specifically for inclusion therein, which information consists solely of the information
specified in
22
Section 8(e). The foregoing indemnity agreement is in addition to any liability which
the Company may otherwise have to any Underwriter or to any director, officer, employee,
Participating Affiliate or controlling person of that Underwriter.
(b) Each Underwriter, severally and not jointly, shall indemnify and hold harmless the
Company, the Notes Guarantor and their respective directors, officers and employees, and
each person, if any, who controls the Company or the Notes Guarantor within the meaning of
Section 15 of the Securities Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the Company, the Notes
Guarantor or any such director, officer, employee or controlling person may become subject,
under the Securities Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged untrue statement
of a material fact contained in any Preliminary Prospectus, the Registration Statement, the
Prospectus, any Issuer Free Writing Prospectus or in any amendment or supplement thereto or
in any Non-Prospectus Road Show or Blue Sky Application, or (ii) the omission or alleged
omission to state in any Preliminary Prospectus, the Registration Statement, the Prospectus,
any Issuer Free Writing Prospectus or in any amendment or supplement thereto or in any
Non-Prospectus Road Show or Blue Sky Application, any material fact required to be stated
therein or necessary to make the statements therein not misleading, but in each case only to
the extent that the untrue statement or alleged untrue statement or omission or alleged
omission was made in reliance upon and in conformity with written information concerning
such Underwriter furnished to the Company by an Underwriter or through the Representative by
or on behalf of that Underwriter specifically for inclusion therein, which information is
limited to the information set forth in Section 8(e) and shall reimburse the Company and any
such director, officer, employee or controlling person in connection with investigating,
defending, preparing to defend against, settling, compromising or paying any such loss,
claim, damage, liability or action as such expenses are incurred. The foregoing indemnity
agreement is in addition to any liability that any Underwriter may otherwise have to the
Company or any such director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this Section 8 of notice of
any claim or the commencement of any action, the indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party under this Section 8, notify
the indemnifying party in writing of the claim or the commencement of that action; provided,
however, that the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under paragraph (a) or (b) above except to the extent it has
been materially prejudiced by such failure and, provided, further, that the failure to
notify the indemnifying party shall not relieve it from any liability which it may have to
an indemnified party otherwise than under paragraph (a) or (b) above. If any such claim or
action shall be brought against an indemnified party, and it shall notify the indemnifying
party thereof, the indemnifying party shall be entitled to participate therein and, to the
extent that it wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the indemnified party.
After notice from the indemnifying party to the indemnified party of its election to assume
the defense of such claim or action, the indemnifying party shall
23
not be liable to the indemnified party under this Section 8 for any legal or other
expenses subsequently incurred by the indemnified party in connection with the defense
thereof; provided, however, that the indemnified party shall have the right to employ
counsel to represent jointly the indemnified party and those other indemnified parties and
their respective directors, officers, employees and controlling persons who may be subject
to liability arising out of any claim in respect of which indemnity may be sought under this
Section 8 if (i) the indemnified party and the indemnifying party shall have so mutually
agreed; (ii) the indemnifying party has failed within a reasonable time to retain counsel
reasonably satisfactory to the indemnified party; (iii) the indemnified party and its
directors, officers, employees and controlling persons shall have reasonably concluded that
there may be legal defenses available to them that are different from or in addition to
those available to the indemnifying party; or (iv) the named parties in any such proceeding
(including any impleaded parties) include both the indemnified parties or their respective
directors, officers, employees or controlling persons, on the one hand, and the indemnifying
party, on the other hand, and representation of both sets of parties by the same counsel
would be inappropriate due to actual or potential differing interests between them, and in
any such event the fees and expenses of one such separate counsel (in addition to any local
counsel) shall be paid by the indemnifying party. No indemnifying party shall (i) without
the prior written consent of the indemnified parties (which consent shall not be
unreasonably withheld, conditioned or delayed), settle or compromise or consent to the entry
of any judgment with respect to any pending or threatened claim, action, suit or proceeding
in respect of which indemnification or contribution may be sought hereunder (whether or not
the indemnified parties are actual or potential parties to such claim or action) unless such
settlement, compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding and does not
include any findings of fact or admissions of fault or culpability as to the indemnified
party, or (ii) be liable under this Section 8 or otherwise for any settlement of any such
action effected without its written consent (which consent shall not be unreasonably
withheld, conditioned or delayed), but if settled with the consent of the indemnifying party
or if there be a final judgment for the plaintiff in any such action, the indemnifying party
agrees to indemnify and hold harmless any indemnified party from and against any loss or
liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall for any reason be
unavailable to or insufficient to hold harmless an indemnified party under Section 8(a),
8(b) or 8(c) in respect of any loss, claim, damage or liability, or any action in respect
thereof, referred to therein, then each indemnifying party shall, in lieu of indemnifying
such indemnified party, contribute to the amount paid or payable by such indemnified party
as a result of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Underwriters, on the other, from the offering of the
Securities or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the relative
benefits referred to in clause (i) above but also the relative fault of the Company, on the
one hand, and the Underwriters, on the other, with respect to the statements or omissions
that resulted in such loss, claim, damage or liability, or action in respect thereof, as
well as
24
any other relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and the Underwriters, on the other, with respect to such offering
shall be deemed to be in the same proportion as the total net proceeds from the offering of
the Securities purchased under this Agreement (before deducting expenses) received by the
Company, as set forth in the table on the cover page of the Prospectus, on the one hand, and
the total underwriting discounts and commissions received by the Underwriters with respect
to the Securities purchased under this Agreement, as set forth in the table on the cover
page of the Prospectus, on the other hand. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates to
information supplied by the Company or the Underwriters, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not be just and
equitable if contributions pursuant to this Section 8(d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation that does not take into account the equitable considerations
referred to herein. The amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof, referred to above in this
Section 8(d) shall be deemed to include, for purposes of this Section 8(d), any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the provisions of this
Section 8(d), no Underwriter shall be required to contribute any amount in excess of the
underwriting commissions received by such Underwriter in connection with the Securities
underwritten by it and distributed to the public. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters’ obligations to contribute as provided in this Section
8(d) are several in proportion to their respective underwriting obligations and not joint.
For purposes of this Section 8(d), each director, officer, employee and agent of an
Underwriter and each person, if any, who controls an Underwriter within the meaning of
Section 15 of the Securities Act shall have the same rights to contribution as such
Underwriter, and each director, officer, employee and each person, if any, who controls the
Company and the Notes Guarantor within the meaning of Section 15 of the Securities Act shall
have the same rights to contribution as the Company and the Notes Guarantor.
(e) The Underwriters severally confirm that the statements set forth in the table in
the first paragraph and the statements set forth in the fifth, sixth, twelfth and thirteenth
paragraphs under the heading “Underwriting” in the most recent Preliminary Prospectus and
the Prospectus are correct and the Company acknowledges and agrees that such statements
constitute the only information concerning such Underwriters furnished in writing to the
Company by or on behalf of the Underwriters specifically for inclusion in any Preliminary
Prospectus, the Registration Statement, the Prospectus, any Issuer Free Writing Prospectus
or in any amendment or supplement thereto or in any Non-Prospectus Road Show.
25
(f) Without limitation of and in addition to its obligations under the other paragraphs
of this Section 8, the Company and the Notes Guarantor agree, jointly and severally, to
indemnify and hold harmless the Independent Underwriter, its directors, officers and
employees and each person who controls the Independent Underwriter within the meaning of
Section 15 of the Securities Act from and against any and all loss, claim, damage or
liability, joint or several, or any action in respect thereof (including, but not limited
to, any loss, claim, damage, liability or action relating to purchases and sales of
Securities) to which the Independent Underwriter, its directors, officers, employees or
controlling persons may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon, the
Independent Underwriter acting as a “qualified independent underwriter” (within the meaning
of NASD Conduct Rule 2720) in connection with the offering contemplated by this Agreement,
and agrees to reimburse each such indemnified party promptly upon demand for any legal or
other expenses reasonably incurred by them in connection with investigating, defending,
preparing to defend against, settling, compromising or paying any such loss, claim, damage,
liability or action; provided, however, that the Company and the Notes Guarantor shall not
be liable in any such case to the extent that it is determined in a final judgment by a
court of competent jurisdiction that such loss, claim, damage, liability or action resulted
directly from the gross negligence or willful misconduct of the Independent Underwriter.
The relative benefits received by the Independent Underwriter with respect to the offering
contemplated by this Agreement shall, for purposes of Section 8(d), be deemed to be equal to
the compensation received by the Independent Underwriter for acting in such capacity. In
addition, notwithstanding the provisions of Section 8(d), the Independent Underwriter shall
not be required to contribute any amount in excess of the compensation received by the
Independent Underwriter for acting in such capacity.
9. Defaulting Underwriters. If, on the Closing Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining non-defaulting Underwriters
shall be obligated to purchase the principal amount of the Securities that the defaulting
Underwriter agreed but failed to purchase on the Closing Date in the respective proportions which
the principal amount of Securities set forth opposite the name of each remaining non-defaulting
Underwriter in Schedule 1 hereto bears to the aggregate principal amount of the Securities
set forth opposite the names of all the remaining non-defaulting Underwriters in Schedule 1
hereto; provided, however, that the remaining non-defaulting Underwriters shall not be obligated to
purchase any of the Securities on the Closing Date if the aggregate principal amount of the
Securities that the defaulting Underwriter or Underwriters agreed but failed to purchase exceeds
10% of the aggregate principal amount of the Securities to be purchased on the Closing Date, and
any remaining non-defaulting Underwriters shall not be obligated to purchase more than 110% of the
principal amount of the Securities that it agreed to purchase on the Closing Date pursuant to the
terms of Section 2. If the foregoing maximums are exceeded, the remaining non-defaulting
Underwriters, or those other underwriters satisfactory to the Representative who so agree, shall
have the right, but shall not be obligated, to purchase, in such proportion as may be agreed upon
among them, the aggregate principal amount of the Securities to be purchased on the Closing Date.
If the remaining Underwriters or other underwriters satisfactory to the Representative do not elect
to purchase the Securities that the defaulting Underwriter or Underwriters agreed but failed to
purchase, this Agreement shall
26
terminate without liability on the part of any non-defaulting Underwriter or the Company,
except that the Company will continue to be liable for the payment of expenses to the extent set
forth in Sections 6 and 11. As used in this Agreement, the term “Underwriter” includes, for all
purposes of this Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto that, pursuant to this Section 9, purchases Securities that a defaulting
Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any liability it may have
to the Company for damages caused by its default. If other Underwriters are obligated or agree to
purchase the Securities of a defaulting or withdrawing Underwriter, either the Representative or
the Company may postpone the Closing Date for up to seven full business days in order to effect any
changes that in the opinion of counsel for the Company or counsel for the Underwriters may be
necessary in the Registration Statement, the Prospectus or in any other document or arrangement.
10. Termination. The obligations of the Underwriters hereunder may be terminated by the
Representative by notice given to and received by the Company prior to delivery of and payment for
the Securities if, prior to that time, any of the events described in Sections 7(k), 7(l) or 7(m)
shall have occurred or if the Underwriters shall decline to purchase the Securities for any reason
permitted under this Agreement.
11. Reimbursement of Underwriters’ Expenses. If (a) the Company or the Notes Guarantor shall
fail to tender the Securities for delivery to the Underwriters for any reason or (b) the
Underwriters shall decline to purchase the Securities for any reason permitted under this Agreement
(other than pursuant to Section 9), the Company will reimburse the Underwriters for all reasonable
out-of-pocket expenses (including fees and disbursements of counsel) incurred by the Underwriters
in connection with this Agreement and the proposed purchase of the Securities, and upon demand the
Company shall pay the full amount thereof to the Representative. If this Agreement is terminated
pursuant to Section 9 by reason of the default of one or more Underwriters, the Company shall not
be obligated to reimburse any Underwriter on account of those expenses.
12. Research Analyst Independence. The Company and the Notes Guarantor acknowledge that the
Underwriters’ research analysts and research departments are required to be independent from their
respective investment banking divisions and are subject to certain regulations and internal
policies, and that such Underwriters’ research analysts may hold views and make statements or
investment recommendations and/or publish research reports with respect to the Company and/or the
offering that differ from the views of their respective investment banking divisions. The Company
and the Notes Guarantor hereby waive and release, to the fullest extent permitted by law, any
claims that the Company and the Notes Guarantor may have against the Underwriters with respect to
any conflict of interest that may arise from the fact that the views expressed by their independent
research analysts and research departments may be different from or inconsistent with the views or
advice communicated to the Company or the Notes Guarantor by such Underwriters’ investment banking
divisions. The Company and the Notes Guarantor acknowledge that each of the Underwriters is a full
service securities firm and as such from time to time, subject to applicable securities laws, may
effect transactions for its own account or the account of its customers and hold long or short
positions in debt or equity
27
securities of the companies that may be the subject of the transactions contemplated by this
Agreement.
13. No Fiduciary Duty. The Company and the Notes Guarantor acknowledge and agree that in
connection with this offering, sale of the Securities or any other services the Underwriters may be
deemed to be providing hereunder, notwithstanding any preexisting relationship, advisory or
otherwise, between the parties or any oral representations or assurances previously or subsequently
made by the Underwriters: (i) no fiduciary or agency relationship between the Company and the
Notes Guarantor and any other person, on the one hand, and the Underwriters, on the other, exists;
(ii) the Underwriters are not acting as advisors, expert or otherwise, to the Company and the Notes
Guarantor, including, without limitation, with respect to the determination of the public offering
price of the Securities, and such relationship between the Company and the Notes Guarantor, on the
one hand, and the Underwriters, on the other, is entirely and solely commercial, based on
arms-length negotiations; (iii) any duties and obligations that the Underwriters may have to the
Company and the Notes Guarantor shall be limited to those duties and obligations specifically
stated herein; and (iv) the Underwriters and their respective affiliates may have interests that
differ from those of the Company and the Notes Guarantor. The Company and the Notes Guarantor
hereby waive any claims that the Company and the Notes Guarantor may have against the Underwriters
with respect to any breach of fiduciary duty in connection with this offering.
14. Notices, Etc. All statements, requests, notices and agreements hereunder shall be in
writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail or facsimile
transmission to ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Legal Department (Fax: ▇▇▇-▇▇▇-▇▇▇▇); and
(b) if to the Company and the Notes Guarantor, shall be delivered or sent by
mail or facsimile transmission to the address of the Company set forth in the
Registration Statement, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III, Esq. (Fax: ▇▇▇-▇▇▇-▇▇▇▇).
Any such statements, requests, notices or agreements shall take effect at the time of receipt
thereof. The Company shall be entitled to act and rely upon any request, consent, notice or
agreement given or made on behalf of the Underwriters by ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated on behalf of the Representative.
15. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the benefit of
and be binding upon the Underwriters, the Company, and their respective successors. This Agreement
and the terms and provisions hereof are for the sole benefit of only those persons, except that (A)
the representations, warranties, indemnities and agreements of the Company in this Agreement shall
also be deemed to be for the benefit of the directors, officers and employees of the Underwriters
and each person or persons, if any, who control any Underwriter within the meaning of Section 15 of
the Securities Act and (B) the indemnity agreement of the Underwriters contained in Section 8(b) of
this Agreement shall be deemed to be
28
for the benefit of the directors of the Company, the officers of the Company who have signed
the Registration Statement and any person controlling the Company within the meaning of Section 15
of the Securities Act. Nothing in this Agreement is intended or shall be construed to give any
person, other than the persons referred to in this Section 15, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained herein.
16. Survival. The respective indemnities, representations, warranties and agreements of the
Company and the Underwriters, including any substitute Underwriters pursuant to Section 9 hereof,
contained in this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Securities and shall remain in full
force and effect, regardless of any investigation made by or on behalf of any of them or any person
controlling any of them.
17. Definition of the Terms “Business Day” and “Subsidiary.” For purposes of this Agreement,
(a) “business day” means each Monday, Tuesday, Wednesday, Thursday or Friday that is not a day on
which banking institutions in New York are generally authorized or obligated by law or executive
order to close and (b) “subsidiary” has the meaning set forth in Rule 405.
18. Partial Unenforceability. The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of any other Section,
paragraph or provision hereof. If any Section, paragraph or provision of this Agreement is for any
reason determined to be invalid or unenforceable, there shall be deemed to be made such minor
changes (and only such minor changes) as are necessary to make it valid and enforceable.
19. Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
20. Amendment; Waiver. This Agreement may not be amended or modified unless in writing by all
of the parties hereto, and no condition herein (express or implied) may be waived unless waived in
writing by each party whom the condition is meant to benefit.
21. Counterparts. This Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts shall each be deemed to be an
original but all such counterparts shall together constitute one and the same instrument.
22. Headings. The headings herein are inserted for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this Agreement.
29
If the foregoing correctly sets forth the agreement between the Company, the Notes
Guarantor and the Underwriters, please indicate your acceptance in the space provided for that
purpose below.
| Very truly yours, STONE ENERGY CORPORATION |
||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. Beer | |||
| Name: | ▇▇▇▇▇▇▇ ▇. Beer | |||
| Title: | Senior Vice President and Chief Financial Officer |
|||
| STONE ENERGY OFFSHORE, L.L.C. By and through its sole member, STONE ENERGY CORPORATION |
||||
| By: | /s/ ▇▇▇▇▇▇▇ ▇. Beer | |||
| Name: | ▇▇▇▇▇▇▇ ▇. Beer | |||
| Title: | Senior Vice President and Chief Financial Officer |
|||
30
| Accepted: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED For itself and as Representative of the several Underwriters named in Schedule 1 hereto ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇ INCORPORATED |
|||||
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | ||||
| ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ | |||||
| Director | |||||
| TUDOR, PICKERING, ▇▇▇▇ & CO. SECURITIES, INC., solely in its capacity as Independent Underwriter |
||||
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III | |||
| ▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III | ||||
| Managing Director | ||||
31
SCHEDULE 1
| Principal | ||||
| Amount of Securities | ||||
| to be | ||||
| Underwriters | Purchased | |||
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated |
$ | 48,000,000 | ||
Barclays Capital Inc. |
6,000,000 | |||
BNP Paribas
Securities Corp. |
6,000,000 | |||
Capital One Southcoast, Inc. |
6,000,000 | |||
Natixis Securities North America Inc. |
6,000,000 | |||
Scotia Capital (USA) Inc. |
6,000,000 | |||
TD Securities (USA) LLC |
6,000,000 | |||
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc. |
5,000,000 | |||
U.S. Bancorp Investments, Inc. |
5,000,000 | |||
Tudor, Pickering, ▇▇▇▇ & Co. Securities, Inc. |
3,500,000 | |||
Daiwa Capital Markets Inc. |
2,500,000 | |||
Total |
$ | 100,000,000 | ||
SCHEDULE 2
ISSUER FREE WRITING PROSPECTUSES
SCHEDULE 3
TERM SHEET
Issuer Free Writing Prospectus
Filed by: Stone Energy Corporation
Pursuant to Rule 433 under the Securities Act of 1933
Registration Statement on Form S-3: No. 333-158998
Filed by: Stone Energy Corporation
Pursuant to Rule 433 under the Securities Act of 1933
Registration Statement on Form S-3: No. 333-158998
Stone Energy Corporation
Pricing Term Sheet
Pricing Term Sheet
This Pricing Term Sheet is qualified in its entirety by reference to the Preliminary Prospectus
Supplement, dated November 12, 2010. The information in this Pricing Term Sheet supplements the
Preliminary Prospectus Supplement and supersedes the information in the Preliminary Prospectus
Supplement to the extent it is inconsistent with the information in the Preliminary Prospectus
Supplement. Capitalized terms used in this Pricing Term Sheet but not defined have the meanings
given them in the Preliminary Prospectus Supplement.
Issuer: |
Stone Energy Corporation | |
Guarantee: |
Fully and unconditionally guaranteed by Stone Energy Offshore, L.L.C. | |
Security: |
8.625% Senior Notes due 2017 | |
Size: |
$100,000,000 | |
Maturity: |
February 1, 2017 | |
Coupon: |
8.625% | |
Offering Price: |
100.50%, plus accrued interest from August 1, 2010 | |
Yield to maturity: |
8.515% | |
Interest Payment Dates: |
February 1 and August 1 | |
Record Dates: |
January 15 and July 15 | |
Gross Proceeds: |
$100,500,000 | |
Net Proceeds to the
Issuer (before expenses): |
$98,500,000 | |
Redemption Provisions: |
||
First call date: |
February 1, 2014 | |
Make-whole call: |
Before the first call date at a discount rate of Treasury plus 50 basis points | |
Redemption prices: |
||
Commencing February 1, 2014: 104.313% |
||
Commencing February 1, 2015: 102.156% |
||
Commencing February 1, 2016: 100.000% |
||
Redemption with proceeds of equity offering: |
Prior to February 1, 2013, up to 35% may be redeemed at 108.625% | |
Change of control: |
Put at 101% of principal plus accrued interest | |
Trade date: |
November 12, 2010 | |
Settlement (T+3): |
November 17, 2010 | |
Denominations: |
$2,000 and integral multiples of $1,000 | |
CUSIP: |
▇▇▇▇▇▇▇▇▇ | |
ISIN: |
US861642AK21 | |
Form of Offering: |
SEC Registered (Registration No. 333-158998) | |
Sole book-running manager: |
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated | |
Co-managers: |
Barclays Capital Inc. | |
| BNP Paribas Securities Corp. | ||
| Capital One Southcoast, Inc. |
| Natixis Securities North America Inc. | ||
| Scotia Capital (USA) Inc. | ||
| TD Securities (USA) LLC | ||
| ▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc. | ||
| U.S. Bancorp Investments, Inc. | ||
| Tudor, Pickering, ▇▇▇▇ & Co. Securities, Inc. | ||
| Daiwa Capital Markets America Inc. |
The issuer has filed a registration statement (including a prospectus and prospectus
supplement) with the SEC for the offering to which this communication relates. Before you invest,
you should read the prospectus in that registration statement and other documents the issuer has
filed with the SEC for more complete information about the issuer and this offering. You may get
these documents for free by visiting ▇▇▇▇▇ on the SEC website at ▇▇▇.▇▇▇.▇▇▇. Alternatively, the
issuer, any underwriter or any dealer participating in the offering will arrange to send you the
prospectus if you request it by contacting ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated at ▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇, Attention: Syndicate Operations or by calling (▇▇▇)
▇▇▇-▇▇▇▇.
EXHIBIT A
FORM OF OPINION OF ISSUER’S COUNSEL
(i) The Company is validly existing and in good standing as a corporation under the laws of
the State of Delaware. Stone Energy Offshore, L.L.C. (“Stone Offshore”) is validly existing and in
good standing as a limited liability company under the laws of the State of Delaware. The Company
has all corporate power and authority necessary to own or hold its properties to conduct its
businesses as described in the Pricing Disclosure Package and the Prospectus and to enter into and
perform its obligations under the Underwriting Agreement. Stone Offshore has all limited liability
company power and authority necessary to own or hold its properties and to conduct its business as
described in the Pricing Disclosure Package and the Prospectus and to enter into and perform its
obligations under the Underwriting Agreement.
(ii) The Company has an authorized capitalization as set forth in each of the Pricing
Disclosure Package and the Prospectus.
(iii) The Agreement has been duly authorized, executed and delivered by the Company and Stone
Offshore.
(iv) Each of the Original Indenture and the Supplemental Indenture has been duly authorized,
executed and delivered by the Company and Stone Offshore and (assuming the due authorization,
execution and delivery thereof by the Trustee) the Indenture constitutes a valid and binding
agreement of the Company and Stone Offshore, enforceable against the Company and Stone Offshore in
accordance with its terms, except as the enforcement thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or affecting the rights
and remedies of creditors or by general principles of equity.
(v) The Notes are in substantially the form contemplated by the Indenture, have been duly
authorized by the Company for issuance and sale pursuant to the Underwriting Agreement and the
Indenture and, when executed by the Company and authenticated by the Trustee in the manner provided
in the Indenture (assuming the due authorization, execution and delivery of the Original Indenture
and the Supplemental Indenture by the Trustee) and delivered against payment of the purchase price
therefor, will constitute valid and binding obligations of the Company, enforceable against the
Company in accordance with their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium, or similar laws relating to or affecting
enforcement of the rights and remedies of creditors or by general principles of equity and will be
entitled to the benefits of the Indenture.
(vi) The Guarantees of the Notes have been duly authorized by Stone Offshore for issuance and
sale pursuant to the Underwriting Agreement and the Indenture and (assuming the due authorization,
execution and delivery of the Original Indenture and the Supplemental Indenture by the Trustee) and
when the Notes have been duly authenticated and delivered against payment of the purchase price
therefor, the Guarantees of the Notes will constitute valid and binding obligations of Stone
Offshore, enforceable against Stone Offshore in accordance with their terms, except as the
enforcement thereof may be limited by bankruptcy, insolvency, reorganization, moratorium or similar
laws relating to or affecting enforcement of the rights and
Exhibit A-1
remedies of creditors or by general principles of equity and will be entitled to the benefits
of the Indenture.
(vii) The execution and delivery of this Agreement, the Original Indenture and the
Supplemental Indenture by the Company and Stone Offshore, the issuance and sale of the Securities,
the consummation of the transactions contemplated by the Agreement and the application of the
proceeds from the sale of the Securities as described under “Use of Proceeds” in the Pricing
Disclosure Package do not and will not (a) result in a breach of any of the terms of the indentures
and credit agreements incorporated as exhibits to the Company’s Annual Report on Form 10-K for the
year ended December 31, 2009 and Quarterly Reports on Form 10-Q for the quarterly periods ended
March 31, 2010, June 30, 2010 and September 30, 2010 (as such indentures and credit agreements have
been amended); (b) result in any violation of the provisions of the charter or by-laws (or similar
organizational documents) of the Company or Stone Offshore; or (c) result in any violation of any
law of the United States or the State of New York, or any rule or regulation thereunder (provided
that such counsel shall not be required to opine as to the prospective compliance by the Company
with applicable securities laws), except in the case of clauses (a) and (c), for any such breach or
violation that would not reasonably be expected to have a Material Adverse Effect.
(viii) Except for the registration of the Securities under the Securities Act and such
consents, approvals, authorizations, registrations or qualifications as may be required by FINRA or
under the Exchange Act and applicable state or foreign securities laws in connection with the
purchase and sale of the Securities by the Underwriters, no consent, approval, authorization or
order of, or filing or registration with, any United States federal or New York state court or
governmental agency or body is required for the execution, delivery and performance of this
Agreement and the Indenture by the Company and the Notes Guarantor and the consummation of the
transactions contemplated hereby and thereby.
(ix) The Registration Statement has become effective under the Securities Act and the
Prospectus was filed with the Commission pursuant to the subparagraph of Rule 424(b) of the Rules
and Regulations specified in such opinion and the Indenture was qualified under the Trust Indenture
Act on the date specified therein. To such counsel’s knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no proceedings for such purpose or
pursuant to Section 8A of the Securities Act against the Company or in connection with the offering
has been instituted or threatened in writing by the Commission.
(x) (A) The Registration Statement, on the Effective Date and on the Closing Date, and (B) the
Prospectus, when filed with the Commission pursuant to Rule 424(b) and on the Closing Date, on
their face complied as to form in all material respects with the requirements of the Securities Act
and the Rules and Regulations, except that in each case such counsel need express no opinion with
respect to the form, accuracy, completeness or fairness of the Form T-1 of the Trustee, the
financial statements, including the related notes and schedules thereto and the auditors’ reports
thereon, other financial and accounting information, the oil and gas reserve reports and related
reserve information or statistical data contained or incorporated by reference in or omitted from
the Registration Statement, the Prospectus or the most recent Preliminary Prospectus.
Exhibit A-2
(xi) The description in the Pricing Disclosure Package and the Prospectus under the caption
“Description of Debt Securities” and “Description of Notes,” insofar as it purports to constitute a
description of the terms of the Securities, is accurate in all material respects.
(xii) The description in the Pricing Disclosure Package and the Prospectus under the caption
“Certain United States Federal Income and Estate Tax Consequences,” insofar as it purports to
constitute a summary of matters of United States federal tax law and regulations, is accurate in
all material respects.
(xiii) Neither the Company nor Stone Offshore is an “investment company” within the meaning of
and subject to regulation under the Investment Company Act of 1940, as amended.
In rendering such opinion, such counsel may state (i) that its opinion is limited to matters
governed by the federal laws of the United States of America, the laws of the State of New York,
the Delaware General Corporation Law and the Delaware Limited Liability Company Act and (ii) that
such counsel is not admitted in the State of Delaware.
Such counsel shall also have furnished to the Representative a written statement, which may be
in a separate document, addressed to the Underwriters and dated the Closing Date, in form and
substance satisfactory to the Representative, to the effect that:
We are not passing upon and do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained or included in the Pricing Disclosure Package and the
Prospectus and have not independently verified the accuracy, completeness or fairness of such
statements, except as and to the extent set forth in paragraphs (xi) and (xii) of our opinion of
even date herewith and delivered to you pursuant to the Underwriting Agreement. In the course of
the preparation by the Company and Stone Offshore of the Registration Statement, the Pricing
Disclosure Package and the Prospectus, we have participated in conferences with certain officers
and other representatives of the Company and Stone Offshore, representatives of the independent
accountants of the Company, and with your representatives and counsel, at which the contents of the
Registration Statement, the Pricing Disclosure Package and the Prospectus and related matters were
discussed. Based on such participation (relying as to matters of fact upon statements made to us
by representatives of the Company) and our review of the Registration Statement, the Pricing
Disclosure Package and the Prospectus, and subject to the limitations described herein, no
information has come to our attention that has caused us to believe that the Registration
Statement, as of the latest Effective Date, included an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary in order to make the
statements therein not misleading, that the Pricing Disclosure Package, as of the Applicable Time,
included an untrue statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under which they were made,
not misleading, or that the statements contained in the Prospectus, as of the date thereof and as
of the Closing Date, included or includes an untrue statement of a material fact or omitted or
omits to state a material fact or necessary in order to
Exhibit A-3
make the statements therein, in the light of the circumstances under which they were made, not
misleading, except that we express no view, belief or comment with respect to the form, accuracy,
completeness or fairness of the financial statements, including the related notes and schedules
thereto and the auditors’ reports thereon, other financial and accounting information, the oil and
gas reserve reports and related reserve information contained or incorporated by reference in the
Registration Statement, the Pricing Disclosure Package and the Prospectus or excluded therefrom.
Exhibit A-4
EXHIBIT B
FORM OF OPINION OF IN-HOUSE COUNSEL
(i) Stone Energy, L.L.C. (“Stone Energy LLC”) is validly existing and in good standing as a
limited liability company under the laws of the State of Delaware. Caillou Boca Gathering, L.L.C.
(“Caillou Boca”) is validly existing and in good standing as a limited liability company under the
laws of the State of Nevada. Each of the Company, Stone Energy LLC, Caillou Boca and Stone Energy
Offshore, L.L.C. (“Stone Offshore” and together with Stone Energy LLC and Caillou Boca, the
“Subsidiaries” and each a “Subsidiary”) is qualified to do business and in good standing as a
foreign corporation or limited liability company in each jurisdiction in which its ownership or
lease of property or the conduct of its business requires such qualification, except where the
failure to be so qualified or in good standing would not reasonably be expected to have a Material
Adverse Effect.
(ii) All of the issued shares of capital stock of the Company have been duly authorized and
validly issued, are fully paid and non-assessable and conform to the description thereof contained
in each of the Pricing Disclosure Package and the Prospectus. All of the Company’s options,
warrants and other rights to purchase or exchange any securities for shares of the Company’s
capital stock have been duly authorized and validly issued and conform to the description thereof
contained in each of the Pricing Disclosure Package and the Prospectus.
(iii) Except as disclosed in the Pricing Disclosure Package, all of the issued membership
interests of each Subsidiary have been duly authorized and validly issued, are fully paid and
non-assessable (except as such nonassessability may be affected by Section 18-607 of the Delaware
Limited Liability Company Act or Section 86.343 of the Nevada Revised Statutes) are owned directly
or indirectly by the Company, free and clear of all liens or encumbrances, except for such liens or
encumbrances as would not reasonably be expected to have a Material Adverse Effect.
(iv) The execution and delivery of the Agreement by the Company and Stone Offshore, the
consummation of the transactions contemplated by the Agreement and the application of the proceeds
from the sale of the Securities as described under “Use of Proceeds” in the Pricing Disclosure
Package do not and will not result in any violation of any order known to such counsel issued by
any court or governmental agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties or assets, except for any such violation that would not be
reasonably expected to have a Material Adverse Effect.
(v) To such counsel’s knowledge, except as disclosed in the Pricing Disclosure Package, there
are no contracts, agreements or understandings between the Company and any person granting such
person the right (other than rights which have been waived in writing or otherwise satisfied) to
require the Company to file a registration statement under the Securities Act with respect to any
securities of the Company owned or to be owned by such person or to require the Company to include
such securities in the securities registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration statement filed by the Company under
the Securities Act.
Exhibit B-1
(vi) To such counsel’s knowledge, except as described in the Pricing Disclosure Package, 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 or assets of the Company or any of its subsidiaries is the
subject, which, if determined adversely, would reasonably be expected to have a Material Adverse
Effect; and, to such counsel’s knowledge, no such proceedings are threatened by governmental
authorities or others.
In rendering such opinion, such counsel may state (i) that its opinion is limited to matters
governed by the federal laws of the United States of America, the laws of the State of Louisiana,
the Delaware General Corporation Law, the Delaware Limited Liability Company Act and the Nevada
Limited Liability Company Act and (ii) that such counsel is not admitted in the State of Delaware
or State of Nevada.
Exhibit B-2