EXHIBIT 1
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▇▇▇▇▇▇▇ PETROLEUM CORPORATION
(a Delaware corporation)
7 1/4% SENIOR SUBORDINATED NOTES DUE 2013
PURCHASE AGREEMENT
Dated: April 14, 2005
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▇▇▇▇▇▇▇ PETROLEUM CORPORATION
(a Delaware corporation)
$220,000,000
7 1/4% Senior Subordinated Notes Due 2013
PURCHASE AGREEMENT
April 14, 2005
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇▇▇▇▇▇ Brothers Inc.
Banc of America Securities LLC
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Wachovia Capital Markets, LLC
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
KeyBanc Capital Markets, a Division of McDonald
Investments Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc.
as Representatives of the several Underwriters
▇/▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
▇▇▇▇▇▇▇ Petroleum Corporation, a Delaware corporation (the "Company"),
▇▇▇▇▇▇▇ Oil and Gas Corporation, a Delaware corporation and wholly-owned
subsidiary of the Company ("▇▇▇▇▇▇▇ Oil and Gas"), ▇▇▇▇▇▇▇ Programs, Inc., a
Delaware corporation and wholly-owned subsidiary of the Company ("▇▇▇▇▇▇▇
Programs"), and Equity Oil Company, a Colorado corporation and wholly-owned
subsidiary of the Company ("Equity Oil" and, collectively with ▇▇▇▇▇▇▇ Oil and
Gas and ▇▇▇▇▇▇▇ Programs, the "Guarantors"), confirm their agreement with
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., ▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated
("▇▇▇▇▇▇▇ ▇▇▇▇▇") and each of the other underwriters named in Schedule A hereto
(collectively, the "Underwriters", which term shall also include any underwriter
substituted as hereinafter provided in Section 10 hereof), for whom ▇▇▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇ Brothers Inc., Banc of America Securities LLC, ▇.▇. ▇▇▇▇▇▇
Securities Inc., Wachovia Capital Markets, LLC, ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.,
KeyBanc Capital Markets, a Division of McDonald Investments Inc., ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& Co., Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. are acting as representatives
(in such capacity, the
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"Representatives"), with respect to the issue and sale by the Company and the
purchase by the Underwriters, acting severally and not jointly, of the
respective principal amounts set forth in said Schedule A of $220,000,000
aggregate principal amount of the Company's 7 1/4% Senior Subordinated Notes due
2013 (the "Securities"). The Securities are to be issued pursuant to an
indenture to be dated as of April 19, 2005, and supplemented by the First
Supplemental Indenture to be dated as of April 19, 2005 (collectively, the
"Indenture"), among the Company, the Guarantors and ▇.▇. ▇▇▇▇▇▇ Trust Company,
National Association, as trustee (the "Trustee"). Securities issued in
book-entry form will be issued to Cede & Co. as nominee of The Depository Trust
Company ("DTC") pursuant to a blanket letter agreement, dated March 30, 2004 (as
defined in Section 2(b)) (the "DTC Agreement"), between the Company and DTC. The
Securities will be unconditionally guaranteed (the "Guaranties" and each a
"Guaranty") on a senior subordinated basis by the Guarantors.
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Representatives deem advisable after
this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (Registration No.
333-121615), including the related prospectus, for the registration of debt
securities and other securities of the Company (including the Securities) under
the Securities Act of 1933, as amended (the "1933 Act"), and the offering
thereof from time to time in accordance with Rule 415 of the rules and
regulations of the Commission under the 1933 Act (the "1933 Act Regulations").
Such registration statement, including any Rule 462(b) Registration Statement
(as defined below), has been declared effective by the Commission and the
Indenture has been duly qualified under the Trust Indenture Act of 1939, as
amended (the "1939 Act"). A prospectus supplement reflecting the terms of the
Securities, the terms of the offering thereof and the other matters set forth
therein has been prepared and will be filed pursuant to Rule 424 of the 1933 Act
Regulations. Such prospectus supplement, in the form first filed after the date
hereof pursuant to Rule 424, is herein referred to as the "Prospectus
Supplement." Such registration statement on Form S-3 (Registration No.
333-121615), as amended at the date hereof, including the exhibits thereto, is
herein called the "Registration Statement," and the basic prospectus included
therein relating to all offerings of securities under the Registration
Statement, as supplemented by the Prospectus Supplement, is herein called the
"Prospectus;" provided, however, that, if such basic prospectus is amended or
supplemented on or after the date hereof but prior to the date on which the
Prospectus Supplement is first filed pursuant to Rule 424, the term "Prospectus"
shall refer to the basic prospectus as so amended or supplemented and as
supplemented by the Prospectus Supplement; and provided, further, that all
references to the "Registration Statement" and the "Prospectus" shall be deemed
to include all documents incorporated therein by reference pursuant to the
Securities Exchange Act of 1934, as amended (the "1934 Act"); and provided,
further, that if the Company files a registration statement with the Commission
pursuant to Rule 462(b) of the 1933 Act Regulations (the "Rule 462(b)
Registration Statement"), then, after such filing, all references to the
"Registration Statement" shall also be deemed to include the Rule 462(b)
Registration Statement. For purposes of this Agreement, all references to the
Registration Statement, Prospectus, Prospectus Supplement or preliminary
prospectus or to any amendment or supplement to any of the foregoing shall be
deemed to include any copy filed with the
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Commission pursuant to its Electronic Data Gathering, Analysis and Retrieval
system ("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules and
other information which is "described," "contained," "included" or "stated" in
the Registration Statement, any preliminary prospectus or the Prospectus (or
other references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus or the
Prospectus, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing of
any document under the 1934 Act which is incorporated by reference in the
Registration Statement, such preliminary prospectus or the Prospectus, as the
case may be.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company and the Guarantors. The
Company and the Guarantors jointly and severally represent and warrant to each
Underwriter as of the date hereof and as of the Closing Time referred to in
Section 2(b) hereof, and agree with each Underwriter, as follows:
(i) Compliance with Registration Requirements. The Company meets the
requirements for use of Form S-3 under the 1933 Act. Each of the
Registration Statement, any Rule 462(b) Registration Statement and any
post-effective amendment thereto has become effective under the 1933 Act
and no stop order suspending the effectiveness of the Registration
Statement, any Rule 462(b) Registration Statement or any post-effective
amendment thereto has been issued under the 1933 Act and no proceedings
for that purpose have been instituted or are pending or, to the knowledge
of the Company, are contemplated by the Commission, and any request on the
part of the Commission for additional information has been complied with.
At the respective times the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendments thereto became
effective and at the Closing Time, the Registration Statement, the Rule
462(b) Registration Statement and any amendments and supplements thereto
complied and will comply in all material respects with the requirements of
the 1933 Act and the 1933 Act Regulations and the 1939 Act and the rules
and regulations of the Commission under the 1939 Act (the "1939 Act
Regulations"), and did not and will not contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
Neither the Prospectus nor any amendments or supplements thereto, at the
time the Prospectus or any such amendment or supplement is issued and at
the Closing Time, will include an untrue statement of a material fact or
will omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. The representations and warranties in this
paragraph shall not apply to statements in or omissions from the
Registration Statement or Prospectus or any amendment or supplement
thereto made in reliance upon and in conformity with written information
furnished to the Company by
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any Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the
Registration Statement (or any amendment thereto) or the Prospectus (or
any amendment or supplement thereto).
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto complied when so filed in all material respects with the 1933 Act
Regulations and each preliminary prospectus and the Prospectus to be
delivered to the Underwriters for use in connection with this offering
will be identical to the electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by
Regulation S-T.
(ii) Incorporated Documents. The documents incorporated or deemed to
be incorporated by reference in the Registration Statement and the
Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read
together with the other information in the Prospectus, at the time the
Registration Statement became effective, at the time the Prospectus is
issued and at the Closing Time, did not and will not contain an untrue
statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not
misleading.
(iii) Independent Accountants. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement are independent public accountants with respect to the Company
as required by the 1933 Act and the 1933 Act Regulations.
(iv) Financial Statements. The financial statements included in the
Registration Statement and the Prospectus, together with the related
schedules and notes, present fairly in all material respects, on the basis
set forth in the Prospectus, the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the statement of
income, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; said financial
statements have been prepared in conformity with generally accepted
accounting principles in the United States ("GAAP") applied on a
consistent basis throughout the periods involved. The supporting
schedules, if any, included in the Registration Statement present fairly
in all material respects, on the basis set forth in the Prospectus, in
accordance with GAAP the information required to be stated therein. The
summary financial information included in the Prospectus presents fairly
in all material respects the information shown therein and has been
compiled on a basis consistent with that of the audited financial
statements included in the Registration Statement.
(v) No Material Adverse Change in Business. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectus, except as otherwise stated therein, (A) there has been no
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business (a "Material Adverse Effect"), (B) there
have been no transactions entered into by the Company or any of its
subsidiaries, other than those in
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the ordinary course of business, which are material with respect to the
Company and its subsidiaries considered as one enterprise, and (C) except
as described in the Prospectus, there has been no dividend or distribution
of any kind declared, paid or made by the Company on any class of its
capital stock.
(vi) Good Standing of the Company. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the State of Delaware and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under this Agreement; and the Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of
the ownership or leasing of property or the conduct of business, except
where the failure so to qualify or to be in good standing would not result
in a Material Adverse Effect.
(vii) Good Standing of Subsidiaries. Each of the Guarantors has been
duly organized and is validly existing as a corporation in good standing
under the laws of the jurisdiction of its incorporation, has corporate
power and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectus and is duly qualified
as a foreign corporation to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of business,
except where the failure so to qualify or to be in good standing would not
result in a Material Adverse Effect; except as otherwise disclosed in the
Registration Statement, all of the issued and outstanding capital stock of
each such Guarantor has been duly authorized and validly issued, is fully
paid and non-assessable and is owned by the Company, directly or through
subsidiaries, free and clear of any security interest, mortgage, pledge,
lien, encumbrance, claim or equity; none of the outstanding shares of
capital stock of any Subsidiary was issued in violation of the preemptive
or similar rights of any securityholder of such Guarantor. The other
subsidiaries of the Company other than the Guarantors, considered in the
aggregate as a single subsidiary, do not constitute a "significant
subsidiary" as defined in Rule 1-02 of Regulation S-X.
(viii) Capitalization. The authorized, issued and outstanding
capital stock of the Company is as set forth in the Prospectus in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances, if any, pursuant to reservations, agreements or
employee benefit plans referred to in the Prospectus). The shares of
issued and outstanding capital stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable; none
of the outstanding shares of capital stock of the Company was issued in
violation of the preemptive or other similar rights of any securityholder
of the Company.
(ix) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company and each Guarantor.
(x) Authorization of the Indenture. The Indenture has been duly
authorized by the Company and each Guarantor and duly qualified under the
1939 Act and, when
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duly executed and delivered by the Company and each Guarantor and the
Trustee, will constitute a valid and binding agreement of the Company and
each Guarantor, enforceable against the Company and each Guarantor in
accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or similar
laws affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law).
(xi) Authorization of the Securities. The Securities have been duly
authorized and, at the Closing Time, will have been duly executed by the
Company and, when authenticated, issued and delivered in the manner
provided for in the Indenture and delivered against payment of the
purchase price therefor as provided in this Agreement, 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 (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or
similar laws affecting enforcement of creditors' rights generally and
except as enforcement thereof is subject to general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law), and will be in the form contemplated by, and entitled to the
benefits of, the Indenture.
(xii) Description of the Securities and the Indenture. The
Securities and the Indenture will conform in all material respects to the
respective statements relating thereto contained in the Prospectus and
will be in substantially the respective forms filed or incorporated by
reference, as the case may be, as exhibits to the Registration Statement.
(xiii) Authorization of the Guaranties. The Guaranty of the
Securities by each Guarantor thereof has been duly authorized by such
Guarantor, and at Closing Time, will conform in all material respects to
the description thereof contained in the Prospectus; when the Securities
have been issued, executed and authenticated in accordance with the
Indenture and delivered to and paid for by the Underwriters in accordance
with the terms of this Agreement, the Guaranty of each Guarantor will
constitute valid and legally binding obligations of such Guarantor
enforceable against such Guarantor in accordance with its terms, except as
the enforcement thereof may be limited by bankruptcy, insolvency
(including, without limitation, all laws relating to fraudulent
transfers), reorganization, moratorium or similar laws affecting
enforcement of creditors' rights generally and except as enforcement
thereof is subject to general principles of equity (regardless of whether
enforcement is considered in a proceeding in equity or at law).
(xiv) Absence of Defaults and Conflicts. None of the Company, the
Guarantors or any of the Guarantors' subsidiaries is in violation of its
charter or by-laws or in default in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease
or other agreement or instrument to which the Company, the Guarantors or
any of the Guarantors' subsidiaries is a party or by which any of them may
be bound, or
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to which any of the property or assets of the Company, the Guarantors or
any of the Guarantors' subsidiaries is subject (collectively, "Agreements
and Instruments"), except for such violations or defaults that would not
result in a Material Adverse Effect; and, except with respect to the
retirement, redemption or payment by the Company or any affiliate of the
Company of any part of the principal of the Securities at any time prior
to the termination of all commitments and the payment and performance in
full of all obligations under ▇▇▇▇▇▇▇ Oil and Gas' credit agreement, the
execution, delivery and performance of this Agreement, the Indenture and
the Securities and any other agreement or instrument entered into or
issued or to be entered into or issued by the Company in connection with
the transactions contemplated hereby or thereby or in the Prospectus and
the consummation of the transactions contemplated herein and in the
Prospectus (including the issuance and sale of the Securities and the use
of the proceeds from the sale of the Securities as described in the
Prospectus under the caption "Use of Proceeds") and compliance by each of
the Company and the Guarantors with its obligations hereunder and under
the Indenture and the Securities have been duly authorized by all
necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company, the Guarantors or
any subsidiary of the Guarantors pursuant to, the Agreements and
Instruments (except for such conflicts, breaches, defaults or Repayment
Events or liens, charges or encumbrances that would not result in a
Material Adverse Effect), nor will such action result in any violation of
the provisions of the charter or by-laws of the Company, the Guarantors or
any subsidiary of the Guarantors or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government, government
instrumentality or court, domestic or foreign, having jurisdiction over
the Company, the Guarantors or any subsidiary of the Guarantors or any of
their assets, properties or operations (except for such violations that
would not result in a Material Adverse Effect). As used herein, a
"Repayment Event" means any event or condition which gives the holder of
any note, debenture or other evidence of indebtedness (or any person
acting on such holder's behalf) the right to require the repurchase,
redemption or repayment of all or a portion of such indebtedness by the
Company, the Guarantors or any subsidiary of the Guarantors.
(xv) Absence of Labor Dispute. No labor dispute with the employees
of the Company or any subsidiary of the Company exists or, to the
knowledge of the Company or the Guarantors, is imminent, and the Company
and the Guarantors are not aware of any existing or imminent labor
disturbance by the employees of any of their or any subsidiary's principal
suppliers, manufacturers, customers or contractors, which, in either case,
would reasonably be expected to result in a Material Adverse Effect.
(xvi) Absence of Proceedings. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending, or, to the knowledge of
the Company or the Guarantors, threatened, against or affecting the
Company or any subsidiary of the Company, which is required to be
disclosed in the Registration Statement (other than as disclosed therein),
or which might reasonably be expected to result in a Material Adverse
Effect, or which
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might reasonably be expected to materially and adversely affect the
properties or assets thereof or the consummation of the transactions
contemplated by this Agreement or the performance by the Company or the
Guarantors of their respective obligations hereunder. The aggregate of all
pending legal or governmental proceedings to which the Company or any
subsidiary of the Company is a party or of which any of their respective
property or assets is the subject which are not described in the
Registration Statement, including ordinary routine litigation incidental
to the business, could not reasonably be expected to result in a Material
Adverse Effect.
(xvii) Accuracy of Exhibits. There are no contracts or documents
which are required to be described in the Registration Statement, the
Prospectus or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required.
(xviii) Possession of Intellectual Property. The Company and its
subsidiaries own or possess, or can acquire on reasonable terms, adequate
patents, patent rights, licenses, inventions, copyrights, know how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual property
(collectively, "Intellectual Property") necessary to carry on the business
now operated by them, and neither the Company nor any of its subsidiaries
has received any written notice or is otherwise aware of any infringement
of or conflict with asserted rights of others with respect to any
Intellectual Property or of any facts or circumstances which would render
any Intellectual Property invalid or inadequate to protect the interest of
the Company or any of its subsidiaries therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or finding)
or invalidity or inadequacy, singly or in the aggregate, would result in a
Material Adverse Effect.
(xix) Absence of Manipulation. Neither the Company nor any affiliate
of the Company has taken, nor will the Company or any affiliate take,
directly or indirectly, any action which is designed to or which has
constituted or which would be expected to cause or result in stabilization
or manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities.
(xx) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by each of the Company and
the Guarantors of their respective obligations hereunder, in connection
with the offering, issuance or sale of the Securities hereunder or the
consummation of the transactions contemplated by this Agreement or for the
due execution, delivery or performance of the Indenture by the Company,
except such as have been already obtained or as may be required under the
1933 Act or the 1933 Act Regulations or state securities laws and except
for the qualification of the Indenture under the 1939 Act.
(xxi) Possession of Licenses and Permits. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign
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regulatory agencies or bodies necessary to conduct the business now
operated by them, except where the failure so to possess would not, singly
or in the aggregate, result in a Material Adverse Effect; the Company and
its subsidiaries are in compliance with the terms and conditions of all
such Governmental Licenses, except where the failure so to comply would
not, singly or in the aggregate, result in a Material Adverse Effect; all
of the Governmental Licenses are valid and in full force and effect,
except where the invalidity of such Governmental Licenses or the failure
of such Governmental Licenses to be in full force and effect would not,
singly or in the aggregate, result in a Material Adverse Effect; and
neither the Company nor any of its subsidiaries have received any written
notice of proceedings relating to the revocation or modification of any
such Governmental Licenses which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
Material Adverse Effect.
(xxii) Title to Property. The Company and its subsidiaries have good
and marketable title to all real property owned by the Company and its
subsidiaries, including, without limitation, all oil and gas producing
properties, and good title to all other properties owned by them,
including, without limitation, all assets and facilities used by the
Company and its subsidiaries in the production and marketing of oil and
gas, in each case, free and clear of all mortgages, pledges, liens,
security interests, claims, restrictions or encumbrances of any kind
except such as (a) are described in the Prospectus or (b) do not, singly
or in the aggregate, materially affect the value of such property and do
not interfere with the use made and proposed to be made of such property
by the Company or any of its subsidiaries; and all of the leases and
subleases material to the business of the Company and its subsidiaries,
considered as one enterprise, and under which the Company or any of its
subsidiaries holds properties described in the Prospectus, including,
without limitation, all oil and gas producing properties of the Company
and its subsidiaries and all assets and facilities used by the Company and
its subsidiaries in the production and marketing of oil and gas, are in
full force and effect, except where such would not have a Material Adverse
Effect, and neither the Company nor any subsidiary of the Company has any
written notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any of its subsidiaries
under any of the leases or subleases mentioned above, or affecting or
questioning the rights of the Company or such subsidiary to the continued
possession of the leased or subleased premises under any such lease or
sublease, except where such would not have a Material Adverse Effect.
(xxiii) Environmental Laws. Except as described in the Registration
Statement and except as would not, singly or in the aggregate, result in a
Material Adverse Effect, (A) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common
law or any judicial or administrative interpretation thereof, including
any judicial or administrative order, consent, decree or judgment,
relating to pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water, groundwater,
land surface or subsurface strata) or wildlife, including, without
limitation, laws and regulations relating to the release or threatened
release of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum or petroleum products, asbestos-containing
materials or mold (collectively, "Hazardous Materials") or
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to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport or handling of Hazardous Materials (collectively,
"Environmental Laws"), (B) the Company and its subsidiaries have all
permits, authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements, (C)
there are no pending or, to the knowledge of the Company or the
Guarantors, threatened administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of noncompliance or
violation, investigation or proceedings relating to any Environmental Law
against the Company or any of its subsidiaries and (D) there are no events
or circumstances that would reasonably be expected to form the basis of an
order for clean-up or remediation, or an action, suit or proceeding by any
private party or governmental body or agency, against or affecting the
Company or any of its subsidiaries relating to Hazardous Materials or any
Environmental Laws.
(xxiv) Independent Petroleum Engineers. ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ &
Associates, Inc., whose report as of December 31, 2004 was, as of the date
of such report, and is, as of the date hereof, an independent petroleum
engineer with respect to the Company and its subsidiaries. ▇.▇. ▇▇▇▇▇▇ &
Associates, Inc., whose report as of December 31, 2004 was, as of the date
of such report, and is, as of the date hereof, an independent petroleum
engineer with respect to the Company and its subsidiaries. ▇▇▇▇▇ ▇▇▇▇▇
Company, L.P., whose report as of December 31, 2004, was, as of the date
of such report, and is, as of the date hereof, an independent petroleum
engineer with respect to the Company and its subsidiaries.
(xxv) Accuracy of Reserve Information. The information underlying
the estimates of reserves of the Company and its subsidiaries, which was
supplied by the Company to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & Associates, Inc., ▇.▇.
▇▇▇▇▇▇ & Associates, Inc. and ▇▇▇▇▇ ▇▇▇▇▇ Company, L.P. for purposes of
auditing the reserve reports and estimates of the Company and preparing
the respective letters (the "Reserve Report Letters" and each a "Reserve
Report Letter") of each of ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ & Associates, Inc., ▇.▇.
▇▇▇▇▇▇ & Associates, Inc. and ▇▇▇▇▇ ▇▇▇▇▇ Company, L.P., including,
without limitation, production, costs of operation and development,
current prices for production, agreements relating to current and future
operations and sales of production, was true and correct in all material
respects on the dates such estimates were made and such information was
supplied and was prepared in accordance with customary industry practices;
other than normal production of the reserves and intervening spot market
product price fluctuations described in the Prospectus, neither the
Company nor its subsidiaries are aware of any facts or circumstances that
would result in an adverse change in the reserves, or the present value of
future net cash flows therefrom, as described in the Prospectus and as
reflected in each Reserve Report Letter, that would reasonably be expected
to result in a Material Adverse Effect; estimates of such reserves and
present values as described in the Prospectus and reflected in each
Reserve Report Letter comply in all material respects with the applicable
requirements of Regulation S-X and Industry Guide 2 under the 1933 Act.
(xxvi) Oil and Gas Agreements. The participation agreements, joint
development agreements, joint operating agreements, farm-out agreements
and other agreements described in the Prospectus relating to the Company's
or its subsidiaries'
10
rights with respect to the ownership, lease or operation of oil and gas
properties, the acquisition of interests in oil and gas properties or the
exploration for, development of or production of oil and gas reserves
thereon, constitute valid and binding agreements of the Company and its
subsidiaries that are parties thereto and, to the best knowledge of the
Company, of the other parties thereto, enforceable in accordance with
their terms, except as the enforcement thereof may be limited by
bankruptcy, insolvency (including, without limitation, all laws relating
to fraudulent transfers), reorganization, moratorium or similar laws
affecting enforcement of creditors' rights generally and except as
enforcement thereof is subject to general principles of equity (regardless
of whether enforcement is considered in a proceeding in equity or at law).
(xxvii) Insurance. The Company and each of its subsidiaries maintain
insurance covering their properties, operations, personnel and businesses
that, in the Company's reasonable judgment, insures against such losses
and risks as are adequate in accordance with customary industry practices
to protect the Company and its subsidiaries and their businesses.
(xxviii) Internal Controls.
(a) The Company and each of its subsidiaries maintain a system
of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations, (ii) transactions
are recorded as necessary to permit preparation of financial
statements in conformity with GAAP and to maintain asset
accountability, (iii) access to assets is permitted only in
accordance with management's general or specific authorization and
(iv) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(b) The Company has established and maintains disclosure
controls and procedures (as such term is defined in Rule 13a-15
under the Exchange Act), and such disclosure controls and procedures
are effective in all material respects to perform the functions for
which they were established.
(c) Since the date of the most recent balance sheet of the
Company and its consolidated subsidiaries reviewed or audited by
Deloitte & Touche LLP and the audit committee of the board of
directors of the Company, (i) the Company has not been advised of
(A) any significant deficiencies in the design or operation of
internal control over financial reporting that are reasonably likely
to adversely affect the ability of the Company to record, process,
summarize and report financial data and (B) any fraud, whether or
not material, that involves management or other employees who have a
significant role in the Company's internal control over financial
reporting, and (ii) since that date, there has been no change in the
Company's internal control over financial reporting that has
materially affected, or is reasonably likely to materially affect,
the Company's internal control over financial reporting.
11
(b) Officer's Certificates. Any certificate signed by any officer of the
Company or any of its subsidiaries delivered to the Representatives or to
counsel for the Underwriters shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered thereby.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Securities. On the basis of the representations and warranties herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter, severally and not jointly, agrees to purchase from the Company, at
the price set forth in Schedule B, the aggregate principal amount of Securities
set forth in Schedule A opposite the name of such Underwriter, plus any
additional principal amount of Securities which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 10 hereof.
(b) Payment. Payment of the purchase price for, and delivery of a global
certificate for, the Securities shall be made at the offices of the Company,
▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, or at such other place
as shall be agreed upon by the Representatives and the Company, at 9:00 A.M.
(Eastern time) on the third (fourth, if the pricing occurs after 4:30 P.M.
(Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10), or such other time
not later than ten business days after such date as shall be agreed upon by the
Representatives and the Company (such time and date of payment and delivery
being herein called "Closing Time").
Payment shall be made to the Company by wire transfer of immediately
available funds to a bank account designated by the Company, against delivery of
the Securities to ▇▇▇▇▇▇▇ ▇▇▇▇▇ for the respective accounts of the Underwriters
through the facilities of DTC. It is understood that each Underwriter has
authorized the Representatives, for its account, to accept delivery of, receipt
for, and make payment of the purchase price for, the Securities which it has
agreed to purchase. ▇▇▇▇▇▇▇ ▇▇▇▇▇, individually and not as representative of the
Underwriters, may (but shall not be obligated to) make payment of the purchase
price for the Securities to be purchased by any Underwriter whose funds have not
been received by the Closing Time, but such payment shall not relieve such
Underwriter from its obligations hereunder.
(c) Denominations; Registration. The Securities shall be in global form,
registered in the name of Cede & Co., as nominee of DTC.
SECTION 3. Covenants of the Company. The Company covenants with each
Underwriter as follows:
(a) Compliance with Securities Regulations and Commission Requests. The
Company, subject to Section 3(b), will notify the Representatives immediately,
and confirm the notice in writing, (i) when any post-effective amendment to the
Registration Statement shall become effective, or any supplement to the
Prospectus or any amended Prospectus shall have been filed, (ii) of the receipt
of any comments from the Commission with respect to the Registration Statement,
(iii) of any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectus or any document
12
incorporated by reference therein or for additional information, and (iv) of the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
preliminary prospectus, or of the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Company will
promptly effect the filings necessary pursuant to Rule 424(b) and will take such
steps as it deems necessary to ascertain promptly whether the form of prospectus
transmitted for filing under Rule 424(b) was received for filing by the
Commission and, in the event that it was not, it will promptly file such
prospectus. The Company will make every reasonable effort to prevent the
issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) Filing of Amendments. The Company will give the Representatives notice
of its intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)) or any amendment, supplement or
revision to either the prospectus included in the Registration Statement at the
time it became effective or to the Prospectus, whether pursuant to the 1933 Act,
the 1934 Act or otherwise, will furnish the Representatives with copies of any
such documents a reasonable amount of time prior to such proposed filing or use,
as the case may be, and will not file or use any such document to which the
Representatives or counsel for the Underwriters shall reasonably object.
(c) Delivery of Registration Statements. The Company has furnished or will
deliver to the Representatives and counsel for the Underwriters, without charge,
copies (one of which shall be manually signed) of the Registration Statement as
originally filed and of each amendment thereto (including exhibits filed
therewith or incorporated by reference therein) and copies (one of which shall
be manually signed) of all consents and certificates of experts, and will also
deliver to the Representatives, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the Underwriters. The copies of the Registration
Statement and each amendment thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(d) Delivery of Prospectuses. The Company has delivered to each
Underwriter, without charge, as many copies of each preliminary prospectus as
such Underwriter reasonably requested, and the Company hereby consents to the
use of such copies for purposes permitted by the 1933 Act. The Company will
furnish to each Underwriter, without charge, during the period when the
Prospectus is required to be delivered under the 1933 Act, such number of copies
of the Prospectus (as amended or supplemented) as such Underwriter may
reasonably request. The Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇, except
to the extent permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act and the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations and the 1939 Act and the 1939 Act Regulations so as to permit the
completion of the distribution of the Securities as contemplated in this
Agreement and in the Prospectus. If at any time when a prospectus is required by
the 1933 Act to be delivered in connection with sales of the Securities, any
event shall occur or condition shall exist as a result of which it is necessary,
in the
13
reasonable opinion of counsel for the Underwriters or for the Company, to amend
the Registration Statement or amend or supplement the Prospectus in order that
the Prospectus will not include any untrue statements of a material fact or omit
to state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the reasonable opinion
of such counsel, at any such time to amend the Registration Statement or amend
or supplement the Prospectus in order to comply with the requirements of the
1933 Act or the 1933 Act Regulations, the Company will promptly prepare and file
with the Commission, subject to Section 3(b), such amendment or supplement as
may be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectus comply with such requirements, and the
Company will furnish to the Underwriters such number of copies of such amendment
or supplement as the Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
(domestic or foreign) as the Representatives may designate and to maintain such
qualifications in effect for a period of not less than one year from the later
of the effective date of the Registration Statement and any Rule 462(b)
Registration Statement; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify as a
foreign corporation or as a dealer in securities in any jurisdiction in which it
is not so qualified or to subject itself to taxation in respect of doing
business in any jurisdiction in which it is not otherwise so subject and
provided, further, that the Company shall not be obligated to cause the
Securities to be listed on any non-U.S. securities exchange. The Company will
also supply the Underwriters with such information as is necessary for the
determination of the legality of the Securities for investment under the laws of
such jurisdictions as the Underwriters may request.
(g) Rating of Securities. The Company shall take all reasonable action
necessary to enable Standard & Poor's Ratings Services, a division of The McGraw
Hill Companies, Inc. ("S&P"), and ▇▇▇▇▇'▇ Investors Service, Inc. ("Moody's") to
provide their respective credit ratings of the Securities.
(h) DTC. The Company will cooperate with the Representatives and use its
best efforts to permit the Securities to be eligible for clearance and
settlement through the facilities of DTC.
(i) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement for the purposes
of, and to provide the benefits contemplated by, the last paragraph of Section
11(a) of the 1933 Act.
(j) Use of Proceeds. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds".
(k) Restriction on Sale of Securities. During a period of 90 days from the
date of the Prospectus, the Company will not, without the prior written consent
of ▇▇▇▇▇▇▇ ▇▇▇▇▇, directly or indirectly, issue, sell, offer or contract to
sell, grant any option for the sale of, or otherwise
14
transfer or dispose of, any debt securities of the Company or securities of the
Company that are convertible into, or exchangeable for, the Securities or such
other debt securities, excluding any borrowings under ▇▇▇▇▇▇▇ Oil and Gas's
credit agreement, as such credit agreement may be amended from time to time.
(l) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act, will file all
documents required to be filed with the Commission pursuant to the 1934 Act
within the time periods required by the 1934 Act and the 1934 Act Regulations
and in accordance with the requirements of the Indenture.
SECTION 4. Payment of Expenses.
(a) Expenses. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the reproduction and delivery to the Underwriters of this
Agreement, any Agreement among Underwriters, the Indenture and such other
documents as may be required in connection with the offering, purchase, sale,
issuance or delivery of the Securities, (iii) the preparation, issuance and
delivery of the certificates for the Securities to the Underwriters, including
any transfer taxes, any stamp or other duties payable upon the sale, issuance
and delivery of the Securities to the Underwriters and any charges of DTC in
connection therewith, (iv) the fees and disbursements of the Company's counsel,
accountants and other advisors, (v) the qualification of the Securities under
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the Underwriters in connection therewith and in connection with the preparation
of the Blue Sky Survey and any supplement thereto (provided that counsel fees in
connection therewith do not exceed $5,000), (vi) the printing and delivery to
the Underwriters of copies of each preliminary prospectus and of the Prospectus
and any amendments or supplements thereto, (vii) the fees and expenses of the
Trustee, including the fees and disbursements of counsel for the Trustee in
connection with the Indenture and the Securities, (viii) the costs and expenses
of the Company relating to investor presentations on any "road show" undertaken
in connection with the marketing of the Securities, including without
limitation, expenses associated with the production of road show slides and
graphics, fees and expenses of any consultants engaged in connection with the
road show presentations, travel and lodging expenses of the representatives and
officers of the Company and any such consultants, and the cost of aircraft and
other transportation chartered in connection with the road show, (ix) any fees
payable in connection with the rating of the Securities, and (x) the filing fees
incident to, and the reasonable fees and disbursements of counsel to the
Underwriters in connection with, the review by the National Association of
Securities Dealers, Inc. (the "NASD") of the terms of the sale of the
Securities.
(b) Termination of Agreement. If this Agreement is terminated by the
Representatives in accordance with the provisions of Section 5 or Section
9(a)(i) hereof, the Company shall reimburse the Underwriters for all of their
out-of-pocket expenses, up to $200,000, including the reasonable fees and
disbursements of counsel for the Underwriters.
SECTION 5. Conditions of Underwriters' Obligations. The obligations of the
several Underwriters hereunder are subject to the accuracy of the
representations and warranties of the
15
Company and the Guarantors contained in Section 1 hereof or in certificates of
any officer of the Company or any of its subsidiaries delivered pursuant to the
provisions hereof, to the performance by the Company of its covenants and other
obligations hereunder, and to the following further conditions:
(a) Effectiveness of Registration Statement. The Registration Statement,
including any Rule 462(b) Registration Statement, has become effective and at
Closing Time no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriters. A prospectus supplement
reflecting the terms of the Securities, the terms of the offering thereof and
the other matters set forth therein has been prepared and will be filed pursuant
to Rule 424 of the 1933 Act Regulations.
(b) Opinion of Counsel for Company. At Closing Time, the Representatives
shall have received the favorable opinion, dated as of Closing Time, in form and
substance reasonably satisfactory to counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters,
of each of (i) ▇▇▇▇▇ & Lardner LLP, counsel for the Company to the effect set
forth in Exhibit A hereto, and (ii) ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇, P.C.,
counsel for the Company to the effect set forth in Exhibit B hereto.
(c) Opinion of Counsel for Underwriters. At Closing Time, the
Representatives shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel for the Underwriters, together with
signed or reproduced copies of such letter for each of the other Underwriters
with respect to the matters set forth in clauses (i), (ii), (vi) through (xii),
inclusive, and the penultimate paragraph of Exhibit A hereto. In giving such
opinion such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York, the federal law of
the United States and the General Corporation Law of the State of Delaware, upon
the opinions of counsel satisfactory to the Representatives. Such counsel may
also state that, insofar as such opinion involves factual matters, they have
relied, to the extent they deem proper, upon certificates of officers of the
Company and its subsidiaries and certificates of public officials.
(d) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company, the Guarantors and each subsidiary of the Guarantors considered as one
enterprise, whether or not arising in the ordinary course of business, and the
Representatives shall have received a certificate of the President or a Vice
President of the Company and of the chief financial or chief accounting officer
of the Company, dated as of Closing Time, to the effect that (i) there has been
no such material adverse change, (ii) the representations and warranties in
Section 1(a) hereof are true and correct with the same force and effect as
though expressly made at and as of Closing Time, (iii) each of the Company and
the Guarantors has complied in all material respects with all agreements and
satisfied all conditions on its part to be performed or satisfied at or prior to
Closing Time, and (iv) no stop order suspending the effectiveness of the
Registration Statement has been issued and no
16
proceedings for that purpose have been instituted or are pending or, to their
knowledge, contemplated by the Commission.
(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Representatives shall have received from Deloitte & Touche LLP a
letter dated such date, in form and substance satisfactory to the
Representatives, together with signed or reproduced copies of such letter for
each of the other Underwriters containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial information contained
in the Registration Statement and the Prospectus.
(f) Bring-down Comfort Letter. At Closing Time, the Representatives shall
have received from Deloitte & Touche LLP a letter, dated as of Closing Time, to
the effect that they reaffirm the statements made in the letter furnished
pursuant to subsection (e) of this Section, except that the specified date
referred to shall be a date not more than three business days prior to Closing
Time.
(g) Maintenance of Rating. At Closing Time, the Securities shall be rated
at least B2 by Moody's and B- by S&P, and the Company shall have delivered to
the Representatives a letter dated the Closing Time, from each such rating
agency, or other evidence satisfactory to the Representatives, confirming that
the Securities have such ratings; and from the date of this Agreement until
Closing Time, there shall not have occurred a downgrading in the rating assigned
to the Securities or any of the Company's other debt securities by any
"nationally recognized statistical rating agency", as that term is defined by
the Commission for purposes of Rule 436(g)(2) under the 1933 Act, and no such
organization shall have publicly announced that it has under surveillance or
review its rating of the Securities or any of the Company's other debt
securities.
(h) No Objection. The NASD shall have confirmed that it has not raised any
objection with respect to the fairness and reasonableness of the underwriting
terms and arrangements.
(i) Additional Documents. At Closing Time, counsel for the Underwriters
shall have been furnished with such documents and opinions as they may
reasonably require for the purpose of enabling them to pass upon the issuance
and sale of the Securities as herein contemplated, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment of any
of the conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the Securities as herein contemplated
shall be reasonably satisfactory in form and substance to the Representatives
and counsel for the Underwriters.
(j) Termination of Agreement. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Representatives by notice to the Company at
any time at or prior to Closing Time, and such termination shall be without
liability of any party to any other party except as provided in Section 4 and
except that Sections 1, 6, 7 and 8 shall survive any such termination and remain
in full force and effect.
17
SECTION 6. Indemnification.
(a) Indemnification of Underwriters. (1) Each of the Company and the
Guarantors agree to jointly and severally indemnify and hold harmless each
Underwriter, its affiliates, as such term is defined in Rule 501(b) under the
1933 Act (each, an "Affiliate"), its selling agents and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
(i) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto) or the omission or alleged omission
therefrom of a material fact required to be stated therein or necessary to
make the statements therein not misleading or arising out of any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto), or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(ii) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of
the Company; and
(iii) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by ▇▇▇▇▇▇▇ ▇▇▇▇▇), reasonably
incurred in investigating, preparing or defending against any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in the Registration
Statement (or any amendment thereto), including any preliminary prospectus or
the Prospectus (or any amendment or supplement thereto) provided, further, that
this indemnity agreement shall not inure to the benefit of any Underwriter or
any person who controls such Underwriter on account of any such loss, liability,
claim, damage or expense arising out of any such defect or alleged defect in any
preliminary prospectus if a copy of the Prospectus shall not have been given or
sent by such Underwriter with or prior to the written confirmation of the sale
involved to the extent that (i) the Prospectus would have cured such defect or
alleged defect and (ii) sufficient quantities of the Prospectus were timely made
available to such Underwriter.
18
(b) Indemnification of Company and the Guarantors. Each Underwriter
severally agrees to indemnify and hold harmless the Company, the Guarantors,
their directors, each of their officers who signed the Registration Statement,
and each person, if any, who controls the Company or any Guarantor within the
meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act against any
and all loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a)(1) of this Section, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto) or any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) in reliance upon and in conformity with written information furnished
to the Company by such Underwriter through ▇▇▇▇▇▇▇ ▇▇▇▇▇ expressly for use in
the Registration Statement (or any amendment thereto) or such preliminary
prospectus or the Prospectus (or any amendment or supplement thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a)(1) above,
counsel to the indemnified parties shall be selected by ▇▇▇▇▇▇▇ ▇▇▇▇▇, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. In addition, the indemnifying
party shall be entitled, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense of any claim or
action brought against an indemnified party with counsel reasonably satisfactory
to the indemnified party. After notice from the indemnifying party to the
indemnified party of its election to assume the defense of such claim or action,
the indemnifying party shall not be liable to the indemnified party under this
Section 6 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that the Representatives shall have
the right to employ one counsel (in addition to local counsel) to represent them
and those other Underwriters and their respective officers, employees and
controlling persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Underwriters against the
indemnifying party under this Section 6 if, in the reasonable judgment of the
Representatives, either (i) there is an actual or potential conflict between the
position of the indemnifying party on the one hand and the Underwriters on the
other hand or (ii) there may be defenses available to it or them that are
different from or additional to those available to the indemnifying party (in
any of which events the indemnifying party shall not have the right to direct
the defense of such action on behalf of the Representatives with respect to such
different defenses), in any of which events such reasonable fees and expenses
shall be borne by the indemnifying party. No indemnifying party shall, without
the prior written consent of the
19
indemnified parties, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) Settlement without Consent if Failure to Reimburse. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Section 6(a), (ii) effected without its written consent if (i) such settlement
is entered into more than 45 days after receipt by such indemnifying party of
the aforesaid request, (ii) such indemnifying party shall have received notice
of the terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed such
indemnified party in accordance with such request prior to the date of such
settlement.
SECTION 7. Contribution. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (i) in such proportion as is
appropriate to reflect the relative benefits received by the Company on the one
hand and the Underwriters on the other hand from the offering of the Securities
pursuant to this Agreement or (ii) if the allocation provided by clause (i) 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 of the Underwriters on the
other hand in connection with the statements or omissions which resulted in such
losses, liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriters on the other hand in connection with the offering of the Securities
pursuant to this Agreement shall be deemed to be in the same respective
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company
and the total underwriting discount received by the Underwriters, in each case
as set forth on the cover of the Prospectus bear to the aggregate initial public
offering price of the Securities as set forth on the cover of the Prospectus.
The relative fault of the Company on the one hand and the Underwriters on
the other hand shall be determined by reference to, among other things, whether
any such untrue or alleged untrue statement of a material fact or omission or
alleged omission to state a material fact relates to information supplied by the
Company or by the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
20
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no Underwriter shall be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission.
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act and each Underwriter's Affiliates and selling agents shall have the
same rights to contribution as such Underwriter, and each director of the
Company and the Guarantors, each officer of the Company and the Guarantors who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company and the
Guarantors. The Underwriters' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the principal amount of Securities
set forth opposite their respective names in Schedule A hereto and not joint.
SECTION 8. Representations, Warranties and Agreements to Survive. All
representations, warranties and agreements contained in this Agreement or in
certificates of officers of the Company or any of its subsidiaries submitted
pursuant hereto, shall remain operative and in full force and effect regardless
of (i) any investigation made by or on behalf of any Underwriter or its
Affiliates or selling agents, any person controlling any Underwriter, its
officers or directors or any person controlling the Company and the Guarantors,
and (ii) delivery of and payment for the Securities.
21
SECTION 9. Termination of Agreement.
(a) Termination; General. The Representatives may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus (exclusive
of any amendments or supplements thereto subsequent to the date of this
Agreement), any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company, the Guarantors and the subsidiaries of the Guarantors considered as one
enterprise, whether or not arising in the ordinary course of business, or (ii)
if there has occurred after the date hereof and prior to the Closing Time any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
reasonable judgment of the Representatives, impracticable or inadvisable to
market the Securities or to enforce contracts for the sale of the Securities, or
(iii) if trading in any securities of the Company has been suspended or
materially limited by the Commission or the New York Stock Exchange, or if
trading generally on the American Stock Exchange or the New York Stock Exchange
or in the Nasdaq National Market has been suspended or materially limited, or
minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the NASD or any other governmental authority, or (iv) a
material disruption has occurred in commercial banking or securities settlement
or clearance services in the United States, or (v) if a banking moratorium has
been declared by either Federal or New York authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this Section,
such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
SECTION 10. Default by One or More of the Underwriters. If one or more of
the Underwriters shall fail at Closing Time to purchase the Securities which it
or they are obligated to purchase under this Agreement (the "Defaulted
Securities"), the Representatives shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Defaulted Securities in such amounts as may be agreed upon and upon the
terms herein set forth; if, however, the Representatives shall not have
completed such arrangements within such 24-hour period, then:
(a) if the principal amount of Defaulted Securities does not exceed
10% of the aggregate principal amount of the Securities to be purchased
hereunder, each of the non-defaulting Underwriters shall be obligated, severally
and not jointly, to purchase the full amount thereof in the proportions that
their respective underwriting obligations hereunder bear to the underwriting
obligations of all nondefaulting Underwriters, or
22
(b) if the principal amount of Defaulted Securities exceeds 10% of
the aggregate principal amount of the Securities to be purchased hereunder, this
Agreement shall terminate without liability on the part of any nondefaulting
Underwriter.
No action taken pursuant to this Section shall relieve any defaulting
Underwriter from liability in respect of its default.
In the event of any such default which does not result in a termination of
this Agreement, either the Representatives or the Company shall have the right
to postpone Closing Time for a period not exceeding seven days in order to
effect any required changes in the Registration Statement or Prospectus or in
any other documents or arrangements. As used herein, the term "Underwriter"
includes any person substituted for an Underwriter under this Section 10.
SECTION 11. Tax Disclosure. Notwithstanding any other provision of this
Agreement, immediately upon commencement of discussions with respect to the
transactions contemplated hereby, the Company (and each employee, representative
or other agent of the Company) may disclose to any and all persons, without
limitation of any kind, the tax treatment and tax structure of the transactions
contemplated by this Agreement and all materials of any kind (including opinions
or other tax analyses) that are provided to the Company relating to such tax
treatment and tax structure. For purposes of the foregoing, the term "tax
treatment" is the purported or claimed federal income tax treatment of the
transactions contemplated hereby, and the term "tax structure" includes any fact
that may be relevant to understanding the purported or claimed federal income
tax treatment of the transactions contemplated hereby.
SECTION 12. Notices. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Representatives, c/o Merrill ▇▇▇▇▇ & Co.
at 1 Houston Center, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, attention
of ▇▇▇▇▇ ▇▇▇▇; and notices to the Company and the Guarantors shall be directed
to them at ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, attention of
▇▇▇▇▇ ▇. ▇▇▇▇▇▇.
SECTION 13. Parties. This Agreement shall inure to the benefit of and be
binding upon the Underwriters and the Company and the Guarantors and their
respective successors. Nothing expressed or mentioned in this Agreement is
intended or shall be construed to give any person, firm or corporation, other
than the Underwriters and the Company and the Guarantors and their respective
successors and the controlling persons and officers and directors referred to in
Sections 6 and 7 and their heirs and legal representatives, any legal or
equitable right, remedy or claim under or in respect of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the Underwriters
and the Company and the Guarantors and their respective successors, and said
controlling persons and officers and directors and their heirs and legal
representatives, and for the benefit of no other person, firm or corporation. No
purchaser of Securities from any Underwriter shall be deemed to be a successor
by reason merely of such purchase.
23
SECTION 14. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
SECTION 15. TIME. TIME SHALL BE OF THE ESSENCE OF THIS AGREEMENT. EXCEPT
AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY
TIME.
SECTION 16. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, but all such
counterparts shall together constitute one and the same Agreement.
SECTION 17. Effect of Headings. The Section headings herein are for
convenience only and shall not affect the construction hereof.
24
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters, the Company and the Guarantors in accordance with its
terms.
Very truly yours,
▇▇▇▇▇▇▇ PETROLEUM CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman,
Chief Executive Officer and President
▇▇▇▇▇▇▇ OIL AND GAS CORPORATION
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman,
Chief Executive Officer and President
▇▇▇▇▇▇▇ PROGRAMS, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman,
Chief Executive Officer and President
EQUITY OIL COMPANY
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇
-------------------------------------
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Chairman,
Chief Executive Officer and President
25
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ ▇▇▇▇▇ & CO.
▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
▇▇▇▇▇▇ BROTHERS INC.
BANC OF AMERICA SECURITIES LLC
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
WACHOVIA CAPITAL MARKETS, LLC
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
KEYBANC CAPITAL MARKETS,
a Division of McDonald Investments Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & CO., INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇ & ASSOCIATES, INC.
as Representatives of the several Underwriters
By: ▇▇▇▇▇▇▇ LYNCH, PIERCE, ▇▇▇▇▇▇ & ▇▇▇▇▇
INCORPORATED
By /s/ ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇
-------------------------------
Authorized Signatory
For themselves and as Representatives of the other Underwriters named in
Schedule A hereto.
26
================================================================================
SCHEDULE A
Principal
Amount of
Name of Underwriter Securities
-------------------------------------------------------------------- -------------
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇ Incorporated.................. $ 71,500,000
▇▇▇▇▇▇ Brothers Inc. ............................................... $ 49,500,000
Banc of America Securities LLC...................................... $ 22,000,000
▇.▇. ▇▇▇▇▇▇ Securities Inc. ........................................ $ 22,000,000
Wachovia Capital Markets, LLC....................................... $ 11,000,000
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. .......................................... $ 11,000,000
KeyBanc Capital Markets, a Division of McDonald Investments Inc. ... $ 11,000,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & Co., Inc. ......................................... $ 11,000,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ & Associates, Inc. ................................... $ 11,000,000
-------------
Total............................................................... $ 220,000,000
=============
================================================================================
Sch A-1
================================================================================
SCHEDULE B
▇▇▇▇▇▇▇ PETROLEUM CORPORATION
$220,000,000 7 1/4% Senior Subordinated
Notes due 2013
1. The initial public offering price of the Securities shall be 98.507% of
the principal amount thereof, plus accrued interest, if any, from the date of
issuance.
2. The purchase price to be paid by the Underwriters for the Securities
shall be 97.007% of the principal amount thereof, plus accrued interest, if any,
from the date of issuance.
3. The interest rate on the Securities shall be 7.25% per annum.
================================================================================
Sch B-1
EXHIBIT A
FORM OF OPINION OF ▇▇▇▇▇ & ▇▇▇▇▇▇▇
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) The Company and the Guarantors have been duly incorporated (other than
Equity Oil Company, as to which such counsel is not required to express any
opinion) and are validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation.
(ii) Each of the Company and the Guarantors has corporate power and
authority to own, lease and operate its properties and to conduct its business
as described in the Prospectus and to enter into and perform its obligations
under the Purchase Agreement and the Indenture.
(iii) The Company is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect.
(iv) The authorized, issued and outstanding capital stock of the Company
is as set forth in the Prospectus in the column entitled "Actual" under the
caption "Capitalization" (except for subsequent issuances, if any, pursuant to
reservations, agreements or employee benefit plans referred to in the
Prospectus, or pursuant to the exercise of convertible securities or options
referred to in the Prospectus).
(v) The Purchase Agreement has been duly authorized, executed and
delivered by the Company and each Guarantor.
(vi) The Indenture has been duly authorized, executed and delivered by the
Company and each Guarantor and (assuming the due authorization, execution and
delivery thereof by the Trustee) constitutes a valid and binding agreement of
the Company and each Guarantor, enforceable against the Company and each
Guarantor in accordance with its terms, except as the enforcement thereof may be
limited by bankruptcy, insolvency (including, without limitation, all laws
relating to fraudulent transfers), reorganization, moratorium or other similar
laws relating to or affecting enforcement of creditors' rights generally, or by
general principles of equity (regardless of whether enforcement is considered in
a proceeding in equity or at law).
(vii) The Securities are substantially in the form contemplated by the
Indenture, have been duly authorized by the Company 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 Indenture by the
Trustee) and issued 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
(including, without limitation, all laws relating to fraudulent transfers) or
other similar laws relating to or affecting enforcement of creditors' rights
generally, or by general principles of
A-1
equity (regardless of whether enforcement is considered in a proceeding in
equity or at law), and will be entitled to the benefits of the Indenture.
(viii) The Indenture has been duly qualified under the 1939 Act.
(ix) The Guaranties have been duly authorized by the Guarantors and, when
the Securities have been 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 Indenture by the Trustee) and issued and delivered
against payment of the purchase price therefor, the Guaranty of each Guarantor
will constitute valid and binding obligations of such Guarantor, enforceable
against such Guarantor in accordance with its terms, except as the enforcement
thereof may be limited by bankruptcy, insolvency (including, without limitation,
all laws relating to fraudulent transfers), reorganization, moratorium or other
similar laws relating to or affecting enforcement of creditors' rights
generally, or by general principles of equity (regardless of whether enforcement
is considered in a proceeding in equity or at law), and will be entitled to the
benefits of the Indenture.
(x) The Securities, the Guaranties and the Indenture conform in all
material respects to the descriptions thereof contained in the Prospectus.
(xi) The Registration Statement, including any Rule 462(b) Registration
Statement, has been declared effective under the 1933 Act; any required filing
of the Prospectus pursuant to Rule 424(b) has been made in the manner and within
the time period required by Rule 424(b); and, to the best of our knowledge, no
stop order suspending the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement has been issued under the 1933 Act and no
proceedings for that purpose have been instituted or are pending or threatened
by the Commission.
(xii) The Registration Statement, including any Rule 462(b) Registration
Statement, the Prospectus, excluding the documents incorporated by reference
therein, and each amendment or supplement to the Registration Statement and
Prospectus, excluding the documents incorporated by reference therein, as of
their respective effective or issue dates (other than the financial statements,
financial data and supporting schedules included therein or omitted therefrom,
and the Trustee's Statement of Eligibility on Form T-1 (the "Form T-1"), as to
which we need express no opinion) complied as to form in all material respects
with the requirements of the 1933 Act and the 1933 Act Regulations.
(xiii) The documents incorporated by reference in the Prospectus (other
than the financial statements, financial data and supporting schedules included
therein or omitted therefrom, as to which we need express no opinion), when they
were filed with the Commission, complied as to form in all material respects
with the requirements of the 1934 Act and the rules and regulations of the
Commission thereunder.
(xiv) The information in the Prospectus under "Description of Notes,"
"Description of Debt Securities," "Description of Capital Stock," "Description
of Warrants" and "Description of Stock Purchase Contracts and Stock Purchase
Units," in the Registration Statement under Item 15 and incorporated in the
Prospectus by reference to the Company's annual report on Form
A-2
10-K under "Business--Environmental Regulations", to the extent that it
constitutes matters of law, summaries of legal matters, the Company's charter
and bylaws or legal proceedings, or legal conclusions, has been reviewed by us
and is correct in all material respects.
(xv) No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any domestic court or governmental
authority or agency (other than under the 1933 Act and the 1933 Act Regulations,
which have been made or obtained, or as may be required under (a) the securities
or blue sky laws of the various states and (b) the Natural Gas Act of 1938, the
Natural Gas Policy Act of 1978, the Natural Gas Wellhead Decontrol Act, the
Outer Continental Shelf Lands Act and the Interstate Commerce Act and the rules,
regulations and orders of the FERC and the Minerals Management Service, as the
case may be, under such Acts (collectively, the "Gas and Oil Acts and
Regulations"), as to which, in each case, we express no opinion in this
paragraph (xv)) is necessary or required in connection with the due
authorization, execution and delivery of the Purchase Agreement or the due
execution, delivery or performance of the Indenture by the Company and the
Guarantors or for the offering, issuance, sale or delivery of the Securities
pursuant to the Purchase Agreement or the consummation of the transactions
contemplated by the Purchase Agreement.
(xvi) Except with respect to the retirement, redemption or payment by the
Company or any affiliate of the Company of any part of the principal of the
Securities at any time prior to the termination of all commitments and the
payment and performance in full of all obligations under ▇▇▇▇▇▇▇ Oil and Gas'
credit agreement, the execution, delivery and performance of the DTC Agreement,
the Purchase Agreement, the Indenture and the Securities and the consummation of
the transactions contemplated in the Purchase Agreement and in the Registration
Statement (including the issuance and sale of the Securities pursuant to the
Purchase Agreement and the use of the proceeds from the sale of the Securities
as described in the Prospectus under the caption "Use of Proceeds") and
compliance by the Company and the Guarantors with their obligations under the
Purchase Agreement, the Indenture and the Securities do not and will not,
whether with or without the giving of notice or lapse of time or both, conflict
with or constitute a breach of, or default or Repayment Event (as defined in
Section 1(a)(xiv) of the Purchase Agreement) under or, except as set forth in
the Registration Statement, result in the creation or imposition of any lien,
charge or encumbrance upon any property or assets of the Company or the
Guarantors pursuant to those agreements identified in Schedule I to this opinion
(except for such conflicts, breaches, defaults or Repayment Events or liens,
charges or encumbrances that would not have a Material Adverse Effect), nor will
such action result in any violation of the provisions of the charter or bylaws
of the Company or the Guarantors, or any applicable law, statute, rule,
regulation, judgment, order, writ or decree, known to us (other than Gas and Oil
Acts and Regulations, as to which, in each case, we express no opinion), of any
U.S. government, government instrumentality or court, having jurisdiction over
the Company or the Guarantors or any of their respective properties, assets or
operations.
(xvii) The Company is not required, and upon the issuance and sale of the
Securities as herein contemplated and the application of the net proceeds
therefrom as described in the Prospectus will not be required to, register as an
"investment company" under the 1940 Act.
A-3
Nothing has come to our attention that would lead us to believe that the
Registration Statement or any amendment thereto (except for financial statements
and schedules and other financial data included or incorporated by reference
therein or omitted therefrom and the Form T-1, as to which we make no
statement), at the time such Registration Statement or any such amendment became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus or any amendment or
supplement thereto (except for financial statements and schedules and other
financial data included or incorporated by reference therein or omitted
therefrom and the Form T-1, as to which we make no statement), at the time the
Prospectus was issued, at the time any such amended or supplemented Prospectus
was issued or at the Closing Time, included or includes an untrue statement of a
material fact or omitted or omits to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
In rendering such opinion, such counsel may rely as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. In
giving such opinion such counsel may, as to all matters governed by the laws of
jurisdictions other than the law of the State of Wisconsin, the federal law of
the United States, and the General Corporation Law of the State of Delaware,
assume that the applicable laws of such other jurisdictions are identical in all
relevant respects to the substantive laws of the State of Wisconsin. Such
opinion shall not state that it is to be governed or qualified by, or that it is
otherwise subject to, any treatise, written policy or other document relating to
legal opinions, including, without limitation, the Legal Opinion Accord of the
ABA Section of Business Law (1991).
A-4
SCHEDULE I
1. Second Amended and Restated Credit Agreement, dated as of September 23,
2004, among ▇▇▇▇▇▇▇ Oil and Gas Corporation, ▇▇▇▇▇▇▇ Petroleum Corporation, the
financial institutions listed therein and Bank One, NA, as Administrative Agent.
2. First Amendment to Second Amended and Restated Credit Agreement dated
as of April 11, 2005, by and among ▇▇▇▇▇▇▇ Oil and Gas Corporation, ▇▇▇▇▇▇▇
Petroleum Corporation, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank, N.A., as Administrative Agent, and
each of the financial institutions party thereto as Banks.
3. ▇▇▇▇▇▇▇ Petroleum Corporation 2003 Equity Incentive Plan.
4. ▇▇▇▇▇▇▇ Oil and Gas Corporation Production Participation Plan, as
Amended and Restated as of April 23, 2004.
5. Indenture, dated as of May 11, 2004, by and among ▇▇▇▇▇▇▇ Petroleum
Corporation, ▇▇▇▇▇▇▇ Oil and Gas Corporation, ▇▇▇▇▇▇▇ Programs, Inc. and ▇.▇.
▇▇▇▇▇▇ Trust Company, National Association, as Trustee.
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EXHIBIT B
FORM OF OPINION OF ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ & ▇▇▇▇▇▇, P.C.
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
(i) Each Guarantor is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect. Except as
otherwise disclosed in the Registration Statement, all of the issued and
outstanding capital stock of each Guarantor has been duly authorized and validly
issued, is fully paid and non-assessable and, to the best of our knowledge, is
owned by the Company, directly or through subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or equity; and, to
the best of our knowledge, none of the outstanding shares of capital stock of
any Guarantor was issued in violation of the preemptive or similar rights of any
securityholder of such Guarantor.
(ii) To the best of our knowledge, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation, to which the Company, the
Guarantors or any subsidiary is a party, or to which the property of the
Company, the Guarantors or any subsidiary is subject, before or brought by any
domestic court or governmental agency or body, which would reasonably be
expected to result in a Material Adverse Effect, or which would reasonably be
expected to materially and adversely affect the properties or assets thereof or
the consummation of the transactions contemplated in the Purchase Agreement or
the performance by the Company or the Guarantors or any of their respective
obligations thereunder or the transactions contemplated by the Prospectus.
(iii) All descriptions in the Registration Statement of contracts and
other documents to which the Company or any of its subsidiaries are a party
(excluding the Indenture and the Purchase Agreement) are, to the best of our
knowledge, accurate in all material respects; to the best of our knowledge,
there are no franchises, contracts, indentures, mortgages, loan agreements,
notes, leases or other instruments required to be described or referred to in
the Registration Statement or to be filed as exhibits to the Registration
Statement other than those described or referred to therein or filed as
incorporated by reference as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.
(iv) The information incorporated in the Prospectus by reference to the
Company's annual report on Form 10-K under "Business -- Regulation", and
"Business--Title to Properties", to the extent that it constitutes matters of
law, summaries of legal matters or legal proceedings, or legal conclusions, has
been reviewed by us and is correct in all material respects.
(v) No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any domestic court or governmental
authority or agency pursuant to the Natural Gas Act of 1938, the Natural Gas
Policy Act of 1978, the Natural Gas Wellhead Decontrol Act, the Outer
Continental Shelf Lands Act and the Interstate Commerce Act and the rules,
regulations and orders of the FERC and the Minerals Management Service, as the
case
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may be, under such Acts is necessary or required in connection with the due
authorization, execution or delivery of the Purchase Agreement or for the
offering sale or delivery of the Securities.
(vi) The execution, delivery and performance of the DTC Agreement,
Purchase Agreement, the Indenture and the Securities and the consummation of the
transactions contemplated in the Purchase Agreement and in the Registration
Statement (including the issuance and sale of the Securities pursuant to the
Purchase Agreement and the use of proceeds from the sale of the Securities as
described in the Prospectus under the caption "Use of Proceeds") and compliance
by the Company and the Guarantors with their obligations under the Purchase
Agreement, the Indenture and the Securities do not and will not, whether with or
without the giving of notice or lapse of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined in Section
1(a)(xiv) of the Purchase Agreement) under or result in the creation or
imposition of any lien, charge or encumbrance upon any property or assets of the
Company, the Guarantors or any subsidiary of the Company pursuant to any
contract, indenture, mortgage, deed of trust, loan or credit agreement, note,
lease or any other agreement or instrument, known to us, to which the Company,
the Guarantors or any subsidiary of the Company is a party or by which it or any
of them may be bound, or to which any of the property or assets of the Company,
the Guarantors or any subsidiary of the Company is subject (except for such
conflicts, breaches, defaults or Repayment Events or liens, charges or
encumbrances that would not have a Material Adverse Effect), nor will such
action result in any violation of the provisions of the charter or bylaws of the
Company, the Guarantors or any subsidiary of the Company, or any applicable law,
statute, rule, regulation, judgment, order, writ or decree, known to us, of any
U.S. government, government instrumentality or court, having jurisdiction over
the Company, the Guarantors or any subsidiary of the Company, the Guarantors or
any of their respective properties, assets or operations.
Nothing has come to our attention that would lead us to believe that the
Registration Statement or any amendment thereto (except for financial statements
and schedules and other financial data included therein or omitted therefrom, as
to which we make no statement), at the time such Registration Statement or any
such amendment became effective, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the Prospectus
or any amendment or supplement thereto (except for financial statements and
schedules and other financial data included therein or omitted therefrom, as to
which we make no statement), at the time the Prospectus was issued, at the time
any such amended or supplemented prospectus was issued or at the Closing Time,
included or includes an untrue statement of a material fact or omitted or omits
to state a material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
In rendering such opinion, such counsel may rely, as to matters of fact
(but not as to legal conclusions), to the extent they deem proper, on
certificates of responsible officers of the Company and public officials. In
giving such opinion such counsel may, as to all matters governed by the laws of
jurisdictions other than the law of the State of Colorado, the federal law of
the United States, and the General Corporation Law of the State of Delaware,
assume that the applicable laws of such other jurisdictions are identical in all
relevant respects to the substantive laws of the State of Colorado. Such opinion
shall not state that it is to be governed or qualified
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by, or that it is otherwise subject to, any treatise, written policy or other
document relating to legal opinions, including, without limitation, the Legal
Opinion Accord of the ABA Section of Business Law (1991).
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