QUICKSILVER RESOURCES INC. 71/8% Senior Subordinated Notes due 2016 Underwriting Agreement
Exhibit 1.1
EXECUTION COPY
$350,000,000
71/8% Senior Subordinated Notes due 2016
March 13, 2006
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Credit Suisse Securities (USA) LLC
As Representatives of the
several Underwriters listed
in Schedule 1 hereto
c/o ▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Credit Suisse Securities (USA) LLC
As Representatives of the
several Underwriters listed
in Schedule 1 hereto
c/o ▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Quicksilver Resources Inc., a Delaware corporation (the “Company”), proposes to issue and sell
to the several Underwriters listed in Schedule 1 hereto (the “Underwriters”), for whom you are
acting as representatives (the “Representatives”), $350,000,000 principal amount of its 71/8% Senior
Subordinated Notes due 2016 (the “Securities”). The Securities will be issued pursuant to an
Indenture dated as of December 22, 2005, as supplemented by a First Supplemental Indenture
(collectively, the “Indenture”) between the Company and JPMorgan Chase Bank, National Association,
as trustee (the “Trustee”), and will be guaranteed on an unsecured senior subordinated basis by
each of the Guarantors listed in Schedule 2 hereto (the “Guarantors”).
The Company hereby confirms its agreement with the several Underwriters concerning the
purchase and sale of the Securities, as follows:
1. Registration Statement. The Company has prepared and filed with the Securities and
Exchange Commission (the “Commission”) under the Securities Act of 1933, as amended, and the rules
and regulations of the Commission thereunder (collectively, the “Securities Act”), a registration
statement on Form S-3 (File No. 333-130597), including a prospectus, relating to the Securities.
Such registration statement, as amended at the time it became effective and by Post-Effective
Amendment No. 1 filed on March 2, 2006, and including the information, if any, deemed pursuant to
Rule 430A, 430B or 430C under the Securities Act to be part of the registration statement at the
time of its effectiveness (“Rule 430 Information”), is referred to herein as the “Registration
Statement”. The base prospectus included in the Registration Statement (the “Base Prospectus”), as
supplemented by the preliminary prospectus supplement dated March 3, 2006 relating to the
Securities and used prior to
the filing of the Prospectus (as defined below) (the “Preliminary Prospectus Supplement”), is
hereinafter referred to as the “Preliminary Prospectus.” The Base Prospectus, as supplemented by
the prospectus supplement dated March 13, 2006 relating to the Securities in the form first used
(or made available upon request of purchasers pursuant to Rule 173 under the Securities Act) in
connection with confirmation of sales of the Securities (the “Prospectus Supplement”) is
hereinafter referred to as the “Prospectus”. If the Company has filed an abbreviated registration
statement pursuant to Rule 462(b) under the Securities Act (the “Rule 462 Registration Statement”),
then any reference herein to the term “Registration Statement” shall be deemed to include such Rule
462 Registration Statement. Any reference in this Agreement to the Registration Statement, any
Preliminary Prospectus or the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 under the Securities Act, as of
the effective date of the Registration Statement or the date of such Preliminary Prospectus or the
Prospectus, as the case may be and any reference to “amend”, “amendment” or “supplement” with
respect to the Registration Statement, any Preliminary Prospectus or the Prospectus shall be deemed
to refer to and include any documents filed after such date under the Securities Exchange Act of
1934, as amended, and the rules and regulations of the Commission thereunder (collectively, the
“Exchange Act”) that are deemed to be incorporated by reference therein. Capitalized terms used
but not defined herein shall have the meanings given to such terms in the Registration Statement
and the Prospectus.
At or prior to the time when sales of the Securities were first made (the “Time of Sale”), the
Company had prepared the following information (collectively, the “Time of Sale Information”): a
Preliminary Prospectus Supplement dated March 3, 2006, and each “free-writing prospectus” (as
defined pursuant to Rule 405 under the Securities Act) listed on Annex B hereto.
2. Purchase of the Securities by the Underwriters. (a) The Company agrees to issue
and sell the Securities to the several Underwriters as provided in this Agreement, and each
Underwriter, on the basis of the representations, warranties and agreements set forth herein and
subject to the conditions set forth herein, agrees, severally and not jointly, to purchase from the
Company the respective principal amount of Securities set forth opposite such Underwriter’s name in
Schedule 1 hereto at a price equal to 97.750% of the principal amount thereof plus accrued
interest, if any, from March 16, 2006 to the Closing Date (as defined below). The Company will not
be obligated to deliver any of the Securities except upon payment for all the Securities to be
purchased as provided herein.
(b) The Company understands that the Underwriters intend to make a public offering of the
Securities as soon after the effectiveness of this Agreement as in the judgment of the
Representatives is advisable, and initially to offer the Securities on the terms set forth in the
Prospectus. The Company acknowledges and agrees that the Underwriters may offer and sell
Securities to or through any affiliate of an Underwriter and that any such affiliate may offer and
sell Securities purchased by it to or through any Underwriter.
2
(c) Payment for and delivery of the Securities will be made at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
& ▇▇▇▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 10:00 A.M., New York City time, on
March 16, 2006, or at such other time or place on the same or such other date, not later than the
fifth business day thereafter, as the Representatives and the Company may agree upon in writing.
The time and date of such payment and delivery is referred to herein as the “Closing Date”.
(d) Payment for the Securities shall be made by wire transfer in immediately available funds
to the account(s) specified by the Company to the Representatives against delivery to the nominee
of The Depository Trust Company, for the account of the Underwriters, of one or more global notes
representing the Securities (collectively, the “Global Note”), with any transfer taxes payable in
connection with the sale of the Securities duly paid by the Company. The Global Note will be made
available for inspection by the Representatives not later than 1:00 P.M., New York City time, on
the business day prior to the Closing Date.
(e) The Company and the Guarantors acknowledge and agree that the Underwriters are acting
solely in the capacity of an arm’s length contractual counterparty to the Company and the
Guarantors with respect to the offering of Securities contemplated hereby (including in connection
with determining the terms of the offering) and not as a financial advisor or a fiduciary to, or an
agent of, the Company, the Guarantors or any other person. Additionally, neither Representative
nor any other Underwriter is advising the Company, the Guarantors or any other person as to any
legal, tax, investment, accounting or regulatory matters in any jurisdiction. The Company and the
Guarantors shall consult with their own advisors concerning such matters and shall be responsible
for making their own independent investigation and appraisal of the transactions contemplated
hereby, and the Underwriters shall have no responsibility or liability to the Company or the
Guarantors with respect thereto. Any review by the Underwriters of the Company, the Guarantors the
transactions contemplated hereby or other matters relating to such transactions will be performed
solely for the benefit of the Underwriters and shall not be on behalf of the Company or the
Guarantors.
3. Representations and Warranties of the Company and the Guarantors. The Company and
the Guarantors jointly and severally represent and warrant to each Underwriter that:
(a) Preliminary Prospectus. No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission, and each Preliminary Prospectus, at the time of
filing thereof, complied in all material respects with the Securities Act and did not contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that the Company and the Guarantors make no
representation and warranty with respect to any statements or omissions made in reliance upon and
in conformity with information relating to any Underwriter furnished to the Company in
3
writing by such Underwriter through the Representatives expressly for use in any Preliminary
Prospectus.
(b) Time of Sale Information. The Time of Sale Information, at the Time of Sale did not, and
at the Closing Date will not, contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided that the Company and the Guarantors
make no representation and warranty with respect to any statements or omissions made in reliance
upon and in conformity with information relating to any Underwriter furnished to the Company in
writing by such Underwriter through the Representatives expressly for use in such Time of Sale
Information.
(c) Issuer Free Writing Prospectus. Other than the Preliminary Prospectus and the Prospectus,
the Company (including its agents and representatives, other than the Underwriters in their
capacity as such) has not made, used, prepared, authorized, approved or referred to and will not
prepare, make, use, authorize, approve or refer to any “written communication” (as defined in Rule
405 under the Securities Act) that constitutes an offer to sell or solicitation of an offer to buy
the Securities (each such communication by the Company or its agents and representatives (other
than a communication referred to in clause (i) below) an “Issuer Free Writing Prospectus”) other
than (i) any document not constituting a prospectus pursuant to Section 2(a)(10)(a) of the
Securities Act or Rule 134 under the Securities Act or (ii) the documents listed on Annex B hereto
and other written communications approved in writing in advance by the Representatives. Each such
Issuer Free Writing Prospectus complied in all material respects with the Securities Act, has been
filed in accordance with the Securities Act (to the extent required thereby) and, when taken
together with the Preliminary Prospectus accompanying, or delivered prior to delivery of, such
Issuer Free Writing Prospectus, did not, and at the Closing Date will not, contain any untrue
statement of a material fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were made, not misleading;
provided that the Company and the Guarantors make no representation and warranty with
respect to any statements or omissions made in each such Issuer Free Writing Prospectus in reliance
upon and in conformity with information relating to any Underwriter furnished to the Company in
writing by such Underwriter through the Representatives expressly for use in any Issuer Free
Writing Prospectus.
(d) Registration Statement and Prospectus. The Registration Statement is an “automatic
effective registration statement” as defined under Rule 405 of the Securities Act that has been
filed with the Commission not earlier than three years prior to the date hereof; and no notice of
objection of the Commission to the use of such registration statement or any post-effective
amendment thereto pursuant to Rule 401(g)(2) under the Securities Act has been received by the
Company. No order suspending the effectiveness of the Registration Statement has been issued by
the Commission and no proceeding for that purpose or pursuant to Section 8A of the Securities Act
against the Company or related to the offering has been initiated or, to the knowledge of the
Company, threatened by the Commission; as of the applicable
4
effective date of the Registration Statement and any amendment thereto, the Registration
Statement complied and will comply in all material respects with the Securities Act and the Trust
Indenture Act of 1939, as amended, and the rules and regulations of the Commission thereunder
(collectively, the “Trust Indenture Act”), and did not and will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading; and as of the date of the Prospectus and any
amendment or supplement thereto and as of the Closing Date, the Prospectus will not contain any
untrue statement of a material fact or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein, in the light of the circumstances under which
they were made, not misleading; provided that the Company and the Guarantors make no
representation and warranty with respect to (i) that part of the Registration Statement that
constitutes the Statement of Eligibility and Qualification (Form T-1) of the Trustee under the
Trust Indenture Act or (ii) any statements or omissions made in reliance upon and in conformity
with information relating to any Underwriter furnished to the Company in writing by such
Underwriter through the Representatives expressly for use in the Registration Statement and the
Prospectus and any amendment or supplement thereto.
(e) Incorporated Documents. The documents incorporated by reference in the Registration
Statement, the Prospectus or the Time of Sale Information, when they became effective or were filed
with the Commission , as the case may be, conformed in all material respects to the requirements of
the Securities Act or the Exchange Act, as applicable, and none of such documents contained any
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, in the light of the circumstances under which
they were made, not misleading; and any further documents so filed and incorporated by reference in
the Registration Statement, the Prospectus or the Time of Sale Information, when such documents
become effective or are filed with the Commission, as the case may be, will conform in all material
respects to the requirements of the Act or the Exchange Act, as applicable, and will not contain
any untrue statement of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in the light of the circumstances under which
they were made, not misleading.
(f) Financial Statements. The financial statements and the related notes thereto included or
incorporated by reference in the Registration Statement, the Time of Sale Information and the
Prospectus comply in all material respects with the applicable requirements of the Securities Act
and the Exchange Act, as applicable, and present fairly, in all material respects, the financial
position of the Company and its subsidiaries as of the dates indicated and the results of their
operations and the changes in their cash flows for the periods specified; except as disclosed
therein, such financial statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods covered thereby, and the
supporting schedules included or incorporated by reference in the Registration Statement present
fairly, in all material respects, the information required to be stated therein; and the other
financial information included or incorporated by
5
reference in the Registration Statement, the Time of Sale Information and the Prospectus has
been derived from the accounting records of the Company and its subsidiaries and presents fairly,
in all material respects, the information shown thereby.
(g) No Material Adverse Change. Since the date of the most recent financial statements of the
Company included or incorporated by reference in the Registration Statement, the Time of Sale
Information and the Prospectus, (i) there has not been any change in the capital stock or long-term
debt of the Company or any of its Subsidiaries, or any dividend or distribution of any kind
declared, set aside for payment, paid or made by the Company on any class of capital stock, or any
material adverse change, or any development involving a prospective material adverse change, in or
affecting the business, properties, management, financial position, results of operations or
prospects of the Company and its subsidiaries taken as a whole except that the Company’s previously
outstanding share of special voting preferred stock has been retired and the Company’s borrowings
under the Credit Agreement have been increased; (ii) neither the Company nor any of its
Subsidiaries has entered into any transaction or agreement that would reasonably be expected to
have a Material Adverse Effect (as defined below); and (iii) neither the Company nor any of its
Subsidiaries has sustained any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from any labor
disturbance or dispute or any action, order or decree of any court or arbitrator or governmental or
regulatory authority, except in each case as otherwise disclosed in the Registration Statement, the
Time of Sale Information and the Prospectus.
(h) Organization and Good Standing. The Company and each of its subsidiaries listed on
Schedule 3 hereto (the “Subsidiaries”) have been duly organized and are validly existing and, where
applicable to entities of its type, in good standing under the laws of their respective
jurisdictions of organization, are duly qualified to do business and, where applicable to entities
of its type, are in good standing in each jurisdiction in which their respective ownership or lease
of property or the conduct of their respective businesses requires such qualification, and have all
power and authority necessary to own or hold their respective properties and to conduct the
businesses in which they are engaged, except where the failure to be so qualified or have such
power or authority would not, individually or in the aggregate, have a material adverse effect on
the business, properties, management, financial position, results of operations or prospects of the
Company and its subsidiaries taken as a whole or on the performance by the Company and the
Guarantors of their obligations under the Securities and the Guarantees (a “Material Adverse
Effect”). The subsidiaries listed in Exhibit 21 to the Company’s Annual Report on Form 10-K for
the year ended December 31, 2005 are the only significant subsidiaries of the Company.
(i) Capitalization. The Company has an authorized capitalization as set forth in the
Registration Statement, the Time of Sale Information and the Prospectus under the heading
“Capitalization” (other than subsequent issuances, if any, of capital stock of the Company pursuant
to conversion of its 1.875% convertible subordinated debentures, pursuant to employee benefit plans
described in the Prospectus or upon issuance of outstanding options described in the Prospectus)
and all the outstanding
6
shares of capital stock or other equity interests of each Subsidiary of the Company have been
duly and validly authorized and issued, and, except for general partner and limited liability
company interests, are fully paid and non-assessable and are owned directly or indirectly by the
Company, free and clear of any lien, charge, encumbrance, security interest, restriction on voting
or transfer or any other claim of any third party other than those securing obligations of the
Company and its Subsidiaries under the Credit Agreement and Note Purchase Agreement (as hereinafter
defined).
(j) Due Authorization. The Company and each of the Guarantors have the requisite corporate,
partnership or limited liability company power and authority to execute and deliver this Agreement,
the Securities and the Indenture (including each Guarantee set forth therein) (collectively, the
“Transaction Documents”) and to perform its obligations hereunder and thereunder; and all
corporate, partnership or limited liability company action required to be taken for the due and
proper authorization, execution and delivery of each of the Transaction Documents and the
consummation of the transactions contemplated thereby has been duly and validly taken.
(k) The Indenture. The Indenture has been duly authorized by the Company and each of the
Guarantors and, upon effectiveness of the Registration Statement, was or will have been duly
qualified under the Trust Indenture Act and, when duly executed and delivered in accordance with
its terms by each of the parties thereto, will constitute a valid and legally binding agreement of
the Company and each of the Guarantors enforceable against each of them in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy, insolvency or similar laws
affecting the enforcement of creditors’ rights generally or by equitable principles relating to
enforceability (collectively, the “Enforceability Exceptions”).
(l) The Securities and the Guarantees. The Securities have been duly authorized by the
Company and, when duly executed, authenticated, issued and delivered as provided in the Indenture
and paid for as provided herein, will be duly and validly issued and outstanding and will
constitute valid and legally binding obligations of the Company enforceable against the Company in
accordance with their terms, subject to the Enforceability Exceptions, and will be entitled to the
benefits of the Indenture; and the Guarantees have been duly authorized by each of the Guarantors
and, when the Securities have been duly executed, authenticated, issued and delivered as provided
in the Indenture and paid for as provided herein, will be valid and legally binding obligations of
each of the Guarantors, enforceable against each of the Guarantors in accordance with their terms,
subject to the Enforceability Exceptions, and will be entitled to the benefits of the Indenture.
(m) Underwriting Agreement. This Agreement has been duly authorized, executed and delivered
by the Company and each of the Guarantors.
(n) Descriptions of the Transaction Documents. Each Transaction Document conforms in all
material respects to the description thereof contained in the Registration Statement, the Time of
Sale Information and the Prospectus.
7
(o) No Violation or Default. Neither the Company nor any of its Subsidiaries is (i) in
violation of its charter or by-laws or similar organizational documents; (ii) in default, and no
event has occurred that, with notice or lapse of time or both, would constitute such a default, in
the due performance or observance of any term, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to which the Company or
any of its Subsidiaries is a party or by which the Company or any of its Subsidiaries is bound or
to which any of the property or assets of the Company or any of its Subsidiaries is subject; or
(iii) in violation of any law or statute or any judgment, order, rule or regulation of any court or
arbitrator or governmental or regulatory authority, except, in the case of clauses (ii) and (iii)
above, for any such default or violation that would not, individually or in the aggregate, have a
Material Adverse Effect.
(p) No Conflicts. The execution, delivery and performance by the Company and each of the
Guarantors of the Transaction Documents to which it is a party, the issuance and sale of the
Securities, the issuance of the Guarantees and compliance by the Company and each of the Guarantors
with its obligations thereunder and the consummation of the transactions contemplated by the
Transaction Documents will not (i) conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the Company or any of its
Subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan agreement or other agreement
or instrument to which the Company or any of its Subsidiaries is a party or by which the Company or
any of its Subsidiaries is bound or to which any of the property or assets of the Company or any of
its Subsidiaries is subject, (ii) result in any violation of the provisions of the charter or
by-laws or similar organizational documents of the Company or any of its Subsidiaries or (iii)
result in the violation of any law or statute or any judgment, order, rule or regulation of any
court or arbitrator or governmental or regulatory authority, except, in the case of clauses (i) and
(iii) above, for any such conflict, breach, violation, default, lien, charge or encumbrance that
would not, individually or in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(q) No Consents Required. No consent, approval, authorization, order, registration or
qualification of or with any court or arbitrator or governmental or regulatory authority is
required for the execution, delivery and performance by the Company or each of the Guarantors of
this Agreement or the Indenture, the issuance and sale of the Securities, the issuance of the
Guarantees and compliance by the Company and each of the Guarantors with the terms of the
Transaction Documents to which it is a party or the consummation of the transactions contemplated
by the Transaction Documents, except for the registration of the Securities (including the
Guarantees) under the Securities Act, the qualification of the Indenture under the Trust Indenture
Act and such consents, approvals, authorizations, orders and registrations or qualifications as may
be required under applicable state securities laws in connection with the purchase and distribution
of the Securities (including the Guarantees) by the Underwriters.
8
(r) Legal Proceedings. Except as disclosed in the Registration Statement, the Time of Sale
Information and the Prospectus, there are no legal, governmental or regulatory investigations,
actions, suits or proceedings pending to which the Company or any of its Subsidiaries is or may be
a party or to which any property of the Company or any of its Subsidiaries is or may be the subject
that, individually or in the aggregate, if determined adversely to the Company or any of its
Subsidiaries, would reasonably be expected to have a Material Adverse Effect; to the knowledge of
the Company and the Guarantors no such investigations, actions, suits or proceedings are threatened
or contemplated and (i) there are no current or pending legal, governmental or regulatory actions,
suits or proceedings that are required under the Securities Act to be described in the Registration
Statement that are not so described in the Registration Statement, the Time of Sale Information and
the Prospectus and (ii) there are no statutes, regulations or contracts or other documents that are
required under the Securities Act to be filed as exhibits to the Registration Statement or
described in the Registration Statement or the Prospectus that are not so filed as exhibits to the
Registration Statement or described in the Registration Statement, the Time of Sale Information and
the Prospectus.
(s) Independent Accountants. Deloitte & Touche LLP, who have certified certain financial
statements of the Company and its subsidiaries, are an independent registered public accounting
firm with respect to the Company and its subsidiaries within the applicable rules and regulations
adopted by the Commission and the Public Accounting Oversight Board (United States) and as required
by the Securities Act.
(t) Title to Real and Personal Property. Except as disclosed in the Registration Statement,
the Time of Sale Information and the Prospectus, the Company and its Subsidiaries have good and
valid title to, or have valid rights to lease or otherwise use, all items of real and personal
property that are material to the business of the Company and its Subsidiaries taken as a whole, in
each case free and clear of all liens, encumbrances, claims and defects and imperfections of title
except those that (i) do not materially interfere with the use made and proposed to be made of such
property by the Company and its Subsidiaries (ii) secure the obligations of the Company and its
Subsidiaries under the Credit Agreement and Note Purchase Agreement, or (iii) would not reasonably
be expected to have, individually or in the aggregate, a Material Adverse Effect.
(u) Title to Intellectual Property. (i) The Company and its Subsidiaries own or possess
adequate rights to use all material patents, patent applications, trademarks, service marks, trade
names, trademark registrations, service ▇▇▇▇ registrations, copyrights, licenses and know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or confidential
information, systems or procedures) necessary for the conduct of their respective businesses taken
as a whole; and (ii) the conduct of their businesses will not conflict in any material respect with
any such rights of others, and the Company and its Subsidiaries have not received any notice of any
claim of infringement or conflict with any such rights of others, except in
9
the case of each of clauses (i) and (ii) as would not reasonably expected to have,
individually or in the aggregate, a Material Adverse Effect.
(v) No Undisclosed Relationships. No relationship, direct or indirect, exists between or
among the Company or any of its subsidiaries, on the one hand, and the directors, officers,
stockholders, customers or suppliers of the Company or any of its subsidiaries, on the other, that
is required by the Securities Act to be described in the Registration Statement and the Prospectus
and that is not so described in such documents and in the Time of Sale Information.
(w) Investment Company Act. Each of the Company and its Subsidiaries is not and, after giving
effect to the offering and sale of the Securities and the application of the proceeds thereof as
described in the Registration Statement, the Time of Sale Information and the Prospectus, will not
be an “investment company” or an entity “controlled” by an “investment company” within the meaning
of the Investment Company Act of 1940, as amended, and the rules and regulations of the Commission
thereunder (collectively, “Investment Company Act”).
(x) Taxes. The Company and its Subsidiaries have paid all federal, state, local and foreign
taxes and filed all tax returns required to be paid or filed through the date hereof except where
the failure to so pay or file would not, individually or in the aggregate, have a Material Adverse
Effect; and except as otherwise disclosed in the Registration Statement, the Time of Sale
Information and the Prospectus, there is no material tax deficiency that has been, or to the
Company’s knowledge would reasonably be expected to be, asserted against the Company or any of its
Subsidiaries or any of their respective properties or assets.
(y) Licenses and Permits. The Company and its Subsidiaries possess all licenses,
certificates, permits and other authorizations issued by, and have made all declarations and
filings with, the appropriate federal, state, local or foreign governmental or regulatory
authorities that are necessary for the ownership or lease of their respective properties or the
conduct of their respective businesses as described in the Registration Statement, the Time of Sale
Information and the Prospectus, except where the failure to possess or make the same would not
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; and
except as described in the Registration Statement, the Time of Sale Information and the Prospectus,
neither the Company nor any of its Subsidiaries has received notice of any revocation or
modification of any such license, certificate, permit or authorization or has any reason to believe
that any such license, certificate, permit or authorization will not be renewed in the ordinary
course except where such revocation, modification or non-renewal would not reasonably be expected
to have, individually or in the aggregate, a Material Adverse Effect.
(z) No Labor Disputes. No labor disturbance by or dispute with employees of the Company or
any of its Subsidiaries exists or, to the knowledge of the Company and the Guarantors, is
contemplated or threatened and to the knowledge of the Company and the Guarantors there is no
existing or imminent labor disturbance by,
10
or dispute with, the employees of any of its or its Subsidiaries’ principal suppliers,
contractors or customers, except as would not have a Material Adverse Effect.
(aa) Compliance With Environmental Laws. (i) The Company and its Subsidiaries (x) are in
compliance with any and all applicable federal, state, local and foreign laws, rules, regulations,
requirements, decisions and orders relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or contaminants (collectively,
“Environmental Laws”); (y) have received and are in compliance with all permits, licenses,
certificates or other authorizations or approvals required of them under applicable Environmental
Laws to conduct their respective businesses; and (z) have not received notice of any actual or
potential liability for the investigation or remediation of any disposal or release of hazardous or
toxic substances or wastes, pollutants or contaminants, and (ii) there are no costs or liabilities
associated with Environmental Laws of or relating to the Company or its Subsidiaries for any such
failure to comply, or failure to receive required permits, licenses or approvals, or cost or
liability, except in the case of each of clauses (i) and (ii) above, for any such failure to
comply, failure to receive permits, licenses, certificates, authorizations or approvals,
liabilities or costs, as would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect.
(bb) Disclosure Controls. The Company and its Subsidiaries maintain an effective system of
“disclosure controls and procedures” (as defined in Rule 13a-15(e) of the Exchange Act) that is
designed to ensure that information required to be disclosed by the Company in reports that it
files or submits under the Exchange Act is recorded, processed, summarized and reported within the
time periods specified in the Commission’s rules and forms, including controls and procedures
designed to provide reasonable assurance that such information is accumulated and communicated to
the Company’s management as appropriate to allow timely decisions regarding required disclosure.
The Company and its Subsidiaries have carried out evaluations of the effectiveness of their
disclosure controls and procedures as required by Rule 13a-15 of the Exchange Act.
(cc) Accounting Controls. The Company and its Subsidiaries maintain systems of “internal
control over financial reporting” (as defined in Rule 13a-15(f) of the Exchange Act) that comply
with the requirements of the Exchange Act and have been designed by, or under the supervision of,
their respective principal executive and principal financial officers, or persons performing
similar functions, to provide reasonable assurance regarding the reliability of financial reporting
and the preparation of financial statements for external purposes in accordance with generally
accepted accounting principles, including, but not limited to 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 generally accepted accounting
principles 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
11
any differences. Except as disclosed in the Registration Statement, the Time of Sale
Information and the Prospectus, there are no material weaknesses in the Company’s internal
controls.
(dd) Insurance. The Company and its Subsidiaries have insurance covering their respective
properties, operations, personnel and businesses, which insurance is in amounts and insures against
such losses and risks as are customary in the industry to protect the Company and its Subsidiaries
and their respective businesses; and neither the Company nor any of its Subsidiaries has (i)
received notice from any insurer or agent of such insurer that capital improvements or other
expenditures are required or necessary to be made in order to continue such insurance or (ii) any
reason to believe that it will not be able to renew its existing insurance coverage as and when
such coverage expires or to obtain replacement insurance adequate for the conduct of its business
and the value of their respective properties at a cost that would not reasonably be expected to
have a Material Adverse Effect.
(ee) No Unlawful Payments. Neither the Company nor any of its Subsidiaries nor, to the
knowledge of the Company and the Guarantors, any director, officer, agent, employee or other person
associated with or acting on behalf of the Company or any of its Subsidiaries has (i) used any
corporate funds for any unlawful contribution, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds; (iii) violated or is in violation of
any provision of the Foreign Corrupt Practices Act of 1977; or (iv) made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(ff) Compliance with Money Laundering Laws. The operations of the Company and its
Subsidiaries are and have been conducted at all times in compliance with applicable financial
recordkeeping and reporting requirements of the Currency and Foreign Transactions Reporting Act of
1970, as amended, the money laundering statutes of all jurisdictions, the rules and regulations
thereunder and any related or similar rules, regulations or guidelines, issued, administered or
enforced by any governmental agency (collectively, the “Money Laundering Laws”) and no action, suit
or proceeding by or before any court or governmental agency, authority or body or any arbitrator
involving the Company or any of its Subsidiaries with respect to the Money Laundering Laws is
pending or, to the knowledge of the Company and the Guarantors, threatened.
(gg) Solvency. On and immediately after the Closing Date, the Company (after giving effect to
the issuance of the Securities and the other transactions related thereto as described in the
Registration Statement, the Time of Sale Information and the Prospectus) will be Solvent. As used
in this paragraph, the term “Solvent” means, with respect to a particular date, that on such date
(i) the present fair market value (or present fair saleable value) of the assets of the Company is
not less than the total amount required to pay the liabilities of the Company on its total existing
debts and liabilities (including contingent liabilities) as they become absolute and matured; (ii)
the Company is able to realize upon its assets and pay its debts and other liabilities,
12
contingent obligations and commitments as they mature and become due in the normal course of
business; (iii) assuming consummation of the issuance of the Securities as contemplated by this
Agreement, the Registration Statement, the Time of Sale Information and the Prospectus, the Company
is not incurring debts or liabilities beyond its ability to pay as such debts and liabilities
mature; (iv) the Company is not engaged in any business or transaction, and does not propose to
engage in any business or transaction, for which its property would constitute unreasonably small
capital after giving due consideration to the prevailing practice in the industry in which the
Company is engaged; and (v) the Company is not a defendant in any civil action that would result in
a judgment that the Company is or would become unable to satisfy.
(hh) No Restrictions on Subsidiaries. Except as provided in (1) the Credit Agreement, dated
as of July 28, 2004, among Quicksilver Resources Inc., as Borrower, ▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇ Bank, N.A
(successor by merger to Bank One, NA), Global Administrative Agent, and the other agents and
financial institutions from time to time party thereto, as amended; (2) the Credit Agreement, dated
as of July 28, 2004, among MGV Energy, Inc., as Borrower, ▇▇ ▇▇▇▇▇▇ Chase Bank, N.A., Toronto
Branch (successor by merger to ▇▇▇▇ ▇▇▇, ▇▇, ▇▇▇▇▇▇ Branch), Canadian Administrative Agent, Bank
One, NA, Global Administrative Agent, and the financial institutions from time to time party
thereto, as amended; (3) the Note Purchase Agreement, dated as of June 27, 2003, among the Company,
BNP Paribas, as collateral agent, and the Purchasers from time to time party thereto; and (4) each
such agreement as the same may be amended, supplemented or otherwise modified from time to time
(collectively the “Credit Agreement and Note Purchase Agreement”) no Subsidiary of the Company is
currently prohibited, directly or indirectly, under any agreement or other instrument to which it
is a party or is subject, from paying any dividends to the Company, from making any other
distribution on such Subsidiary’s capital stock, from repaying to the Company any loans or advances
to such Subsidiary from the Company or from transferring any of such Subsidiary’s properties or
assets to the Company or any other Subsidiary of the Company.
(ii) No Broker’s Fees. Neither the Company nor any of its subsidiaries is a party to any
contract, agreement or understanding with any person (other than this Agreement) that would give
rise to a valid claim against the Company or any of its subsidiaries or any Underwriter for a
brokerage commission, finder’s fee or like payment in connection with the offering and sale of the
Securities.
(jj) No Registration Rights. No person has the right to require the Company or any of its
subsidiaries to register any securities for sale under the Securities Act by reason of the filing
of the Registration Statement with the Commission or the issuance and sale of the Securities.
(kk) No Stabilization. The Company has not taken, directly or indirectly, any action designed
to or that could reasonably be expected to cause or result in any stabilization or manipulation of
the price of the Securities.
13
(ll) Margin Rules. Neither the issuance, sale and delivery of the Securities nor the
application of the proceeds thereof by the Company as described in the Registration Statement, the
Time of Sale Information and the Prospectus will violate Regulation T, U or X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board of Governors.
(mm) Forward-Looking Statements. No material forward-looking statement (within the meaning of
Section 27A of the Securities Act and Section 21E of the Exchange Act) contained in the
Registration Statement, the Time of Sale Information and the Prospectus has been made or reaffirmed
without a reasonable basis or has been disclosed other than in good faith.
(nn) Statistical and Market Data. Nothing has come to the attention of the Company that has
caused the Company to believe that the statistical and market-related data included in the
Registration Statement, the Time of Sale Information and the Prospectus is not based on or derived
from sources that are reliable and accurate in all material respects.
(oo) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. There is and has been no failure on the part of the Company or any
of the Company’s directors or officers, in their capacities as such, to comply in all material
respects with the applicable provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and
regulations promulgated in connection therewith (the “▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act”), including Section 402
related to loans and Sections 302 and 906 related to certifications.
(pp) Status under the Securities Act. The Company is not an ineligible issuer and is a
well-known seasoned issuer, in each case as defined under the Securities Act, in each case at the
times specified in the Securities Act in connection with the offering of the Securities. The
Company has paid the registration fee for this offering pursuant to Rule 456(b)(1) under the
Securities Act or will pay such fees within the time period required by such rule (without giving
effect to the proviso therein) and in any event prior to the Closing Date.
(qq) Reserve Report Data. The oil and gas reserve estimates of the Company and its
subsidiaries for the fiscal years ended December 31, 2005, 2004 and 2003 contained in the
Preliminary Prospectus and the Prospectus are derived from reports that have been prepared by the
petroleum consulting firm as set forth therein, such reserve estimates fairly reflect, in all
material respects, the estimated oil and gas reserves of the Company and its subsidiaries at the
dates indicated therein and are in accordance, in all material respects, with the Commission
guidelines applicable thereto applied on a consistent basis throughout the periods involved.
(rr) Independent Reserve Engineering Firms. Each of ▇▇▇▇▇▇▇ Petroleum Consultants, Ltd.,
Netherland ▇▇▇▇▇▇ & Associates, Inc. and Schlumberger Data and Consulting Services have represented
to the Company that they are, and the Company believes each of them to be, independent reserve
engineers with respect to
14
the Company and its subsidiaries and for the periods set forth in the Preliminary Prospectus
and the Prospectus.
4. Further Agreements of the Company and the Guarantors. The Company and each of the
Guarantors jointly and severally covenant and agree with each Underwriter that:
(a) Required Filings. The Company will file the final Prospectus with the Commission within
the time periods specified by Rule 424(b) and Rule 430A, 430B or 430C under the Securities Act,
will file any Issuer Free Writing Prospectus to the extent required by Rule 433 under the
Securities Act; and will file promptly all reports and any definitive proxy or information
statements required to be filed by the Company with the Commission pursuant to Section 13(a),
13(c), 14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for so long as
the delivery of a prospectus is required in connection with the offering or sale of the Securities;
and the Company will furnish copies of the Prospectus and each Issuer Free Writing Prospectus (to
the extent not previously delivered) to the Underwriters in New York City prior to 10:00 A.M., New
York City time, on the business day next succeeding the date of this Agreement in such quantities
as the Representatives may reasonably request.
(b) Delivery of Copies. The Company will deliver, without charge, (i) to the Representatives,
two signed copies of the Registration Statement as originally filed and each amendment thereto, in
each case including all exhibits and consents filed therewith; and (ii) to each Underwriter (A) a
conformed copy of the Registration Statement as originally filed and each amendment thereto, in
each case including all exhibits and consents filed therewith and (B) during the Prospectus
Delivery Period (as defined below), as many copies of the Prospectus (including all amendments and
supplements thereto and documents incorporated by reference therein) and each Issuer Free Writing
Prospectus as the Representatives may reasonably request. As used herein, the term “Prospectus
Delivery Period” means such period of time after the first date of the public offering of the
Securities as in the opinion of counsel for the Underwriters a prospectus relating to the
Securities is required by law to be delivered (or required to be delivered but for Rule 172 under
the Securities Act) in connection with sales of the Securities by any Underwriter or dealer.
(c) Amendments or Supplements; Issuer Free Writing Prospectuses. Before preparing, using,
authorizing, approving, referring to or filing any Issuer Free Writing Prospectus, and before
filing any amendment or supplement to the Registration Statement or the Prospectus, the Company
will furnish to the Representatives and counsel for the Underwriters a copy of the proposed Issuer
Free Writing Prospectus, amendment or supplement for review and will not prepare, use, authorize,
approve, refer to or file any such Issuer Free Writing Prospectus or file any such proposed
amendment or supplement to which the Representatives reasonably objects.
(d) Notice to the Representatives. The Company will advise the Representatives promptly, and
confirm such advice in writing, (i) when the Registration Statement has become effective; (ii) when
any amendment to the Registration
15
Statement has been filed or becomes effective; (iii) when any supplement to the Prospectus or
any amendment to the Prospectus or any Issuer Free Writing Prospectus has been filed; (iv) of any
request by the Commission for any amendment to the Registration Statement or any amendment or
supplement to the Prospectus or the receipt of any comments from the Commission relating to the
Registration Statement or any other request by the Commission for any additional information; (v)
of the issuance by the Commission of any order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of any Preliminary Prospectus or the Prospectus or
the initiation or threatening of any proceeding for that purpose or pursuant to Section 8A of the
Securities Act; (vi) of the occurrence of any event within the Prospectus Delivery Period as a
result of which the Prospectus, the Time of Sale Information or any Issuer Free Writing Prospectus
as then amended or supplemented would include any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances existing when the Prospectus, the Time of Sale
Information or any such Issuer Free Writing Prospectus is required to be delivered to a purchaser,
not misleading; and (vii) of the receipt by the Company of any notice of objection of the
Commission to the use of the Registration Statement or any post-effective amendment thereto
pursuant to Rule 401(g)(2) under the Securities Act; and (viii) of the receipt by the Company of
any notice with respect to any suspension of the qualification of the Securities for offer and sale
in any jurisdiction or the initiation or threatening of any proceeding for such purpose; and the
Company will use its reasonable best efforts to prevent the issuance of any such order suspending
the effectiveness of the Registration Statement, preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any such qualification of the Securities
and, if any such order is issued, will use its reasonable best efforts obtain as soon as possible
the withdrawal thereof.
(e) Ongoing Compliance. (1) If during the Prospectus Delivery Period (i) any event shall
occur or condition shall exist as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary in order to make the statements therein, in the light of the
circumstances existing when the Prospectus is required to be delivered (or required to be delivered
but for Rule 172 under the Securities Act) to a purchaser, not misleading or (ii) it is necessary
to amend or supplement the Prospectus to comply with law, the Company will immediately notify the
Underwriters thereof and forthwith prepare and, subject to paragraph (c) above, file with the
Commission and furnish to the Underwriters and to such dealers as the Representatives may
designate, such amendments or supplements to the Prospectus as may be necessary so that the
statements in the Prospectus as so amended or supplemented will not, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser, be misleading or so that
the Prospectus will comply with law and (2) if at any time prior to the Closing Date (i) any event
shall occur or condition shall exist as a result of which the Time of Sale Information as then
amended or supplemented would include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading or (ii) it is necessary to
16
amend or supplement the Time of Sale Information to comply with law, the Company will
immediately notify the Underwriters thereof and forthwith prepare and, subject to paragraph (c)
above, file with the Commission (to the extent required) and furnish to the Underwriters and to
such dealers as the Representatives may designate, such amendments or supplements to the Time of
Sale Information as may be necessary so that the statements in the Time of Sale Information as so
amended or supplemented will not, in the light of the circumstances under which they were made, be
misleading or so that the Time of Sale Information will comply with law.
(f) Blue Sky Compliance. The Company will qualify the Securities for offer and sale under the
securities or Blue Sky laws of such jurisdictions as the Representatives shall reasonably request
and will continue such qualifications in effect so long as required for distribution of the
Securities; provided that the Company and each of the Guarantors shall not be required to
(i) qualify as a foreign corporation or other entity or as a dealer in securities in any such
jurisdiction where it would not otherwise be required to so qualify, (ii) file any general consent
to service of process in any such jurisdiction or (iii) subject itself to taxation in any such
jurisdiction if it is not otherwise so subject.
(g) Earning Statement. The Company will make generally available to its security holders and
the Representatives as soon as practicable an earning statement that satisfies the provisions of
Section 11(a) of the Securities Act and Rule 158 of the Commission promulgated thereunder covering
a period of at least twelve months beginning with the first fiscal quarter of the Company occurring
after the “effective date” (as defined in Rule 158) of the Registration Statement; provided,
however that this Section 4(g) shall not be construed to require the Company to file any report
referred to in Rule 158 prior to the time at which such report is otherwise due.
(h) Clear Market. During the period from the date hereof through and including the business
day following the Closing Date, the Company and each of the Guarantors will not, without the prior
written consent of the Representatives, offer, sell, contract to sell or otherwise dispose of any
debt securities issued or guaranteed by the Company or any of the Guarantors and having a stated
maturity of more than one year.
(i) Use of Proceeds. The Company will apply the net proceeds from the sale of the Securities
as described in the Registration Statement, the Time of Sale Information and the Prospectus under
the heading “Use of Proceeds”.
(j) No Stabilization. The Company and each of the Guarantors will not take, directly or
indirectly, any action designed to or that could reasonably be expected to cause or result in any
stabilization or manipulation of the price of the Securities.
(k) Record Retention. The Company will, pursuant to reasonable procedures developed in good
faith, retain copies of each Issuer Free Writing Prospectus that is not filed with the Commission
in accordance with Rule 433 under the Securities Act.
17
5. Certain Agreements of the Underwriters. Each Underwriter hereby represents and
agrees that
(a) It has not and will not use, authorize use of, refer to, or participate in the planning
for use of, any “free writing prospectus”, as defined in Rule 405 under the Securities Act (which
term includes use of any written information furnished to the Commission by the Company and not
incorporated by reference into the Registration Statement and any press release issued by the
Company) other than (i) a free writing prospectus that contains no “issuer information” (as defined
in Rule 433(h)(2) under the Securities Act) that was not included (including through incorporation
by reference) in the Preliminary Prospectus or a previously filed Issuer Free Writing Prospectus,
(ii) any Issuer Free Writing Prospectus listed on Annex B or prepared pursuant to Section 3(c) or
Section 4(c) above, or (iii) any free writing prospectus prepared by such underwriter and approved
by the Company in advance in writing (each such free writing prospectus referred to in clauses (i)
or (iii), an “Underwriter Free Writing Prospectus”).
(b) It has not and will not distribute any Underwriter Free Writing Prospectus referred to in
clause (a)(i) in a manner reasonably designed to lead to its broad unrestricted dissemination.
(c) It has not and will not, without the prior written consent of the Company, use any free
writing prospectus that contains the preliminary or final terms of the Securities unless such terms
have previously been included in a free writing prospectus filed with the Commission; provided that
Underwriters may use a preliminary or final term sheet substantially in the form of Annex C hereto
without the consent of the Company.
(d) It will, pursuant to reasonable procedures developed in good faith, retain copies of each
free writing prospectus used or referred to by it, in accordance with Rule 433 under the Securities
Act.
(e) It is not subject to any pending proceeding under Section 8A of the Securities Act with
respect to the offering (and will promptly notify the Company if any such proceeding against it is
initiated during the Prospectus Delivery Period).
6. Conditions of Underwriters’ Obligations. The obligation of each Underwriter to
purchase Securities on the Closing Date as provided herein is subject to the performance by the
Company and each of the Guarantors of their respective covenants and other obligations hereunder
and to the following additional conditions:
(a) Registration Compliance; No Stop Order. No order suspending the effectiveness of the
Registration Statement shall be in effect, and no proceeding for such purpose, pursuant to Rule
401(g)(2) or pursuant to Section 8A under the Securities Act shall be pending before or threatened
by the Commission; the Prospectus and each Issuer Free Writing Prospectus shall have been timely
filed with the Commission under the Securities Act (in the case of a Issuer Free Writing
Prospectus, to the extent required by Rule 433 under the Securities Act) and in
18
accordance with Section 4(a) hereof; and all requests by the Commission for additional
information shall have been complied with to the reasonable satisfaction of the Representatives.
(b) Representations and Warranties. The representations and warranties of the Company and the
Guarantors contained herein shall be true and correct on the date hereof and on and as of the
Closing Date; and the statements of the Company, the Guarantors and their respective officers made
in any certificates delivered pursuant to this Agreement shall be true and correct on and as of the
Closing Date.
(c) No Downgrade. Subsequent to the execution and delivery of this Agreement, (i) no
downgrading shall have occurred in the rating accorded the Securities or any other debt securities
or preferred stock of or guaranteed by the Company, or any of its subsidiaries by any “nationally
recognized statistical rating organization”, as such term is defined by the Commission for purposes
of Rule 436(g)(2) under the Securities Act and (ii) no such organization shall have publicly
announced that it has under surveillance or review, or has changed its outlook with respect to, its
rating of the Securities or of any other debt securities or preferred stock of or guaranteed by the
Company, or any of its Subsidiaries (other than an announcement with positive implications of a
possible upgrading).
(d) No Material Adverse Change. No event or condition of a type described in Section 3(g)
hereof shall have occurred or shall exist, which event or condition is not described in the Time of
Sale Information (excluding any amendment or supplement thereto) and the Prospectus (excluding any
amendment or supplement thereto) and the effect of which in the judgment of the Representatives
makes it impracticable or inadvisable to proceed with the offering, sale or delivery of the
Securities on the terms and in the manner contemplated by this Agreement, the Time of Sale
Information and the Prospectus.
(e) Officer’s Certificate. The Representatives shall have received on and as of the Closing
Date a certificate of an executive officer of the Company and of each Guarantor who has specific
knowledge of the Company’s or such Guarantor’s financial matters and is satisfactory to the
Representatives (i) confirming that such officer has carefully reviewed the Registration Statement,
the Time of Sale Information and the Prospectus and, to the knowledge of such officer, the
representations set forth in Sections 3(b) or 3(d) hereof are true and correct, (ii) confirming
that the other representations and warranties of the Company and the Guarantors in this Agreement
are true and correct and that the Company and the Guarantors have complied with all agreements and
satisfied all conditions on their part to be performed or satisfied hereunder at or prior to the
Closing Date and (iii) to the effect set forth in paragraphs (a), (c) and (d) above.
(f) Comfort Letters. On the date of this Agreement and on the Closing Date, Deloitte & Touche
LLP shall have furnished to the Representatives, at the request of the Company, letters, dated the
respective dates of delivery thereof and addressed to
19
the Underwriters, in form and substance reasonably satisfactory to the Representatives,
containing statements and information of the type customarily included in accountants’ “comfort
letters” to underwriters with respect to the financial statements and certain financial information
contained or incorporated by reference in the Registration Statement, the Time of Sale Information
and the Prospectus; provided that the letter delivered on the Closing Date shall use a
“cut-off” date no more than three business days prior to the Closing Date.
(g) Opinion of Counsel for the Company and the Guarantors. The Representatives, at the
request of the Company and the Guarantors, shall have received the written opinion, dated the
Closing Date and addressed to the Underwriters, of (i) ▇▇▇▇▇ Day, counsel for the Company and the
Guarantors in the form set forth in Annex A-1 hereto; (ii) Loomis, Ewert, Parsley, ▇▇▇▇▇ & Gotting
P.C., Michigan local counsel for Mercury Michigan Inc., Terra Energy Ltd, Terra Pipeline Company
and Beaver Creek Pipeline, L.L.C. (collectively, the “Michigan Guarantors”) in the form set forth
in Annex A-2 hereto; (iii) McGuireWoods LLP , Virginia local counsel for GTG Pipeline Corporation,
in the form set forth in Annex A-3 hereto; and (iv) the General Counsel of the Company in the form
set forth in Annex A-4 hereto.
(h) Opinion of Counsel for the Underwriters. The Representatives shall have received on and
as of the Closing Date an opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇ LLP, counsel for the Underwriters,
with respect to such matters as the Representatives may reasonably request, and such counsel shall
have received such documents and information as they may reasonably request to enable them to pass
upon such matters.
(i) No Legal Impediment to Issuance. No action shall have been taken and no statute, rule,
regulation or order shall have been enacted, adopted or issued by any federal, state or foreign
governmental or regulatory authority that would, as of the Closing Date, prevent the issuance or
sale of the Securities or the issuance of the Guarantees; and no injunction or order of any
federal, state or foreign court shall have been issued that would, as of the Closing Date, prevent
the issuance or sale of the Securities or the issuance of the Guarantees.
(j) Good Standing. The Representatives shall have received on and as of the Closing Date
satisfactory evidence of the good standing of the Company and the Subsidiaries that are
corporations or limited liability companies in their respective jurisdictions of organization, of
the existence of the Subsidiaries that are limited partnerships and their good standing (where
applicable) in such other jurisdictions as the Representatives may reasonably request, in each case
in writing or any standard form of telecommunication from the appropriate governmental authorities
of such jurisdictions.
(k) Additional Documents. On or prior to the Closing Date, the Company and the Guarantors
shall have furnished to the Representatives such further certificates and documents as the
Representatives may reasonably request.
20
(l) Reserve Report Confirmation Letter. On the date of this Agreement and on the Closing
Date, ▇▇▇▇▇▇▇ Petroleum Consultants, Ltd. shall have furnished to the Representatives, at the
request of the Company, letters, dated the respective dates of delivery thereof and addressed to
the Representatives, in form and substance reasonably satisfactory to the Representatives,
containing statements and information with respect to the estimated oil and gas reserves of the
Company and its subsidiaries as reported in letters to the Company.
(m) Reserve Report Confirmation Letter. On the date of this Agreement and on the Closing
Date, Netherland ▇▇▇▇▇▇ & Associates, Inc. shall have furnished to the Representatives, at the
request of the Company, letters, dated the respective dates of delivery thereof and addressed to
the Representatives, in form and substance reasonably satisfactory to the Representatives,
containing statements and information with respect to the estimated oil and gas reserves of the
Company and its subsidiaries as reported in letters to the Company.
(n) Reserve Report Confirmation Letter. On the date of this Agreement and on the Closing
Date, Schlumberger Data and Consulting Services shall have furnished to the Representatives, at the
request of the Company, letters, dated the respective dates of delivery thereof and addressed to
the Representatives, in form and substance reasonably satisfactory to the Representatives,
containing statements and information with respect to the estimated oil and gas reserves of the
Company and its subsidiaries as reported in letters to the Company.
All opinions, letters, certificates and evidence mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if they are in form
and substance reasonably satisfactory to counsel for the Underwriters.
7. Indemnification and Contribution.
(a) Indemnification of the Underwriters. The Company and each of the Guarantors jointly and
severally agree to indemnify and hold harmless each Underwriter, its affiliates, directors and
officers and each person, if any, who controls such Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, from and against any and all losses, claims,
damages and liabilities (including, without limitation, reasonable legal fees and other reasonable
expenses incurred in connection with any suit, action or proceeding or any claim asserted, as such
fees and expenses are incurred), joint or several, that arise out of, or are based upon, (i) any
untrue statement or alleged untrue statement of a material fact contained in the Registration
Statement or caused by any omission or alleged omission to state therein a material fact required
to be stated therein or necessary in order to make the statements therein, not misleading, (ii) or
any untrue statement or alleged untrue statement of a material fact contained in the Prospectus (or
any amendment or supplement thereto), any Issuer Free Writing Prospectus or any Time of Sale
Information, or caused by any omission or alleged omission to state therein a material fact
necessary in order to make the statements therein, in light of the circumstances under which they
were made, not misleading, in each case except insofar as such losses, claims, damages or
liabilities
21
arise out of, or are based upon, any untrue statement or omission or alleged untrue statement
or omission made in reliance upon and in conformity with any information relating to any
Underwriter furnished to the Company in writing by such Underwriter through the Representatives
expressly for use therein.
(b) Indemnification of the Company. Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, each of the Guarantors, each of their respective
directors, each of their respective officers who signed the Registration Statement and each person,
if any, who controls the Company or any of the Guarantors within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act to the same extent as the indemnity set forth in
paragraph (a) above, but only with respect to any losses, claims, damages or liabilities that arise
out of, or are based upon, any untrue statement or omission or alleged untrue statement or omission
made in reliance upon and in conformity with any information relating to such Underwriter furnished
to the Company in writing by such Underwriter through the Representatives expressly for use in the
Registration Statement, the Prospectus (or any amendment or supplement thereto), any Issuer Free
Writing Prospectus or any Time of Sale Information, it being understood and agreed that the only
such information consists of the following: the third paragraph under the caption “Underwriting”
in the Prospectus concerning the terms of the offering by the Underwriters; the third sentence of
the fifth paragraph under the caption “Underwriting” in the Prospectus concerning market making by
the Underwriters; the sixth paragraph under the caption “Underwriting” in the Prospectus concerning
short-sales, stabilizing transactions and purchases to cover short sales by the Underwriters; and
the seventh paragraph under the caption “Underwriting” concerning certain relationships between you
and the Underwriters; and the following information in the Issuer Free Writing Prospectus dated
March 13, 2006: the final sentence of the legend in the final pricing term sheet.
(c) Notice and Procedures. If any suit, action, proceeding (including any governmental or
regulatory investigation), claim or demand shall be brought or asserted against any person in
respect of which indemnification may be sought pursuant to either paragraph (a) or (b) above or
Section 11, such person (the “Indemnified Person”) shall promptly notify the person against whom
such indemnification may be sought (the “Indemnifying Person”) in writing; provided that
the failure to notify the Indemnifying Person shall not relieve it from any liability that it may
have under this Section 7 or Section 11 except to the extent that it has been materially prejudiced
(through the forfeiture of substantive rights or defenses) by such failure; and provided,
further, that the failure to notify the Indemnifying Person shall not relieve it from any
liability that it may have to an Indemnified Person otherwise than under this Section 7 or Section
11. If any such proceeding shall be brought or asserted against an Indemnified Person and it shall
have notified the Indemnifying Person thereof, the Indemnifying Person shall retain counsel
reasonably satisfactory to the Indemnified Person (who shall not, without the consent of the
Indemnified Person, be counsel to the Indemnifying Person) to represent the Indemnified Person in
such proceeding and shall pay the reasonable fees and expenses of such counsel related to such
proceeding, as incurred. In any such proceeding, any Indemnified Person shall have the right to
retain its own counsel,
22
but the fees and expenses of such counsel shall be at the expense of such Indemnified Person
unless (i) the Indemnifying Person and the Indemnified Person shall have mutually agreed to the
contrary, or (ii) the Indemnifying Person has failed within a reasonable time to retain counsel
reasonably satisfactory to the Indemnified Person. It is understood and agreed that the
Indemnifying Person shall not, in connection with any proceeding or related proceeding in the same
jurisdiction, be liable for the fees and expenses of more than one separate firm (in addition to
any local counsel) for all Indemnified Persons, and that all such fees and expenses shall be
reimbursed as they are incurred. Any such separate firm for any Underwriter, its affiliates,
directors and officers and any control persons of such Underwriter shall be designated in writing
by ▇.▇. ▇▇▇▇▇▇ Securities Inc. and any such separate firm for the Company, each of the Guarantors,
each of their respective directors, each of their respective officers who signed the Registration
Statement and any control persons of the Company and the Guarantors shall be designated in writing
by the Company. The Indemnifying Person shall not be liable for any settlement of any proceeding
effected without its written consent, but if settled with such consent or if there be a final
judgment for the plaintiff, the Indemnifying Person agrees to indemnify each Indemnified Person
from and against any loss or liability by reason of such settlement or judgment. Notwithstanding
the foregoing sentence, if at any time an Indemnified Person shall have requested that an
Indemnifying Person reimburse the Indemnified Person for fees and expenses of counsel as
contemplated by this paragraph, the Indemnifying Person shall be liable for any settlement of any
proceeding effected without its written consent if (i) such settlement is entered into more than 60
days after receipt by the Indemnifying Person of such request and (ii) the Indemnifying Person
shall not have reimbursed the Indemnified Person in accordance with such request prior to the date
of such settlement and the Indemnifying Person shall not have notified the Indemnified Person in
writing that it is disputing in good faith all or a portion of the fees and expenses included in
such request stating in reasonable detail the basis for such dispute. No Indemnifying Person
shall, without the written consent of the Indemnified Person, effect any settlement of any pending
or threatened proceeding in respect of which any Indemnified Person is or could have been a party
and indemnification could have been sought hereunder by such Indemnified Person, unless such
settlement (x) includes an unconditional release of such Indemnified Person, in form and substance
reasonably satisfactory to such Indemnified Person, from all liability on claims that are the
subject matter of such proceeding and (y) does not include any statement as to or any admission of
fault, culpability or a failure to act by or on behalf of any Indemnified Person.
(d) Contribution. If the indemnification provided for in paragraphs (a) and (b) above is
unavailable to an Indemnified Person or insufficient in respect of any losses, claims, damages or
liabilities referred to therein, then each Indemnifying Person under such paragraph, in lieu of
indemnifying such Indemnified Person thereunder, shall contribute to the amount paid or payable by
such Indemnified Person as a result of such losses, claims, damages or liabilities (i) in such
proportion as is appropriate to reflect the relative benefits received by the Company and the
Guarantors on the one hand and the Underwriters on the other from the offering of the Securities or
(ii) if the allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred to in clause (i)
but also the
23
relative fault of the Company and the Guarantors on the one hand and the Underwriters on the
other in connection with the statements or omissions that resulted in such losses, claims, damages
or liabilities, as well as any other relevant equitable considerations. The relative benefits
received by the Company and the Guarantors on the one hand and the Underwriters on the other shall
be deemed to be in the same respective proportions as the net proceeds (before deducting expenses)
received by the Company and the Guarantors from the sale of the Securities and the total
underwriting discounts and commissions received by the Underwriters in connection therewith, in
each case as set forth in the table on the cover of the Prospectus, bear to the aggregate offering
price of the Securities. The relative fault of the Company and the Guarantors on the one hand and
the Underwriters on the other shall be determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or any Guarantor or by the
Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
(e) Limitation on Liability. The Company, the Guarantors 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 that does not take account of the equitable
considerations referred to in paragraph (d) above. The amount paid or payable by an Indemnified
Person as a result of the losses, claims, damages and liabilities referred to in paragraph (d)
above shall be deemed to include, subject to the limitations set forth above, any legal or other
expenses incurred by such Indemnified Person in connection with any such action or claim.
Notwithstanding the provisions of this Section 7, in no event shall an Underwriter be required to
contribute any amount in excess of the amount by which the total underwriting discounts and
commissions received by such Underwriter with respect to the offering of the Securities exceeds the
amount of any damages that such Underwriter has otherwise been required to pay by reason of 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 Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent misrepresentation. The
Underwriters’ obligations to contribute pursuant to this Section 7 are several in proportion to
their respective purchase obligations hereunder and not joint.
(f) Non-Exclusive Remedies. The remedies provided for in this Section 7 are not exclusive and
shall not limit any rights or remedies which may otherwise be available to any Indemnified Person
at law or in equity.
8. Effectiveness of Agreement. This Agreement shall become effective upon the
execution and delivery hereof by the parties hereto.
9. Termination. This Agreement may be terminated in the absolute discretion of the
Representatives, by notice to the Company, if after the execution and delivery of this Agreement
and prior to the Closing Date (i) trading generally shall have
24
been suspended or materially limited on the New York Stock Exchange or the over-the-counter
market; (ii) trading of any securities issued or guaranteed by the Company or any of the Guarantors
shall have been suspended on any exchange or in any over-the-counter market; (iii) a general
moratorium on commercial banking activities shall have been declared by federal or New York State
authorities; (iv) there shall have occurred any outbreak or escalation of hostilities or any change
in financial markets or any calamity or crisis, either within or outside the United States, that,
in the judgment of the Representatives, is material and adverse and makes it impracticable or
inadvisable to proceed with the offering, sale or delivery of the Securities on the terms and in
the manner contemplated by this Agreement, the Time of Sale Information and the Prospectus; or (v)
the representation in Section 3(b) is incorrect in any respect.
10. Defaulting Underwriter. (a) If, on the Closing Date, any Underwriter defaults on
its obligation to purchase the Securities that it has agreed to purchase hereunder, the
non-defaulting Underwriters may in their discretion arrange for the purchase of such Securities by
other persons satisfactory to the Company on the terms contained in this Agreement. If, within 36
hours after any such default by any Underwriter, the non-defaulting Underwriters do not arrange for
the purchase of such Securities, then the Company shall be entitled to a further period of 36 hours
within which to procure other persons satisfactory to the non-defaulting Underwriters to purchase
such Securities on such terms. If other persons become obligated or agree to purchase the
Securities of a defaulting Underwriter, either the non-defaulting Underwriters or the Company may
postpone the Closing Date for up to five full business days in order to effect any changes that in
the opinion of counsel for the Company or counsel for the Underwriters may be necessary in the
Registration Statement and the Prospectus or in any other document or arrangement, and the Company
agrees to promptly prepare any amendment or supplement to the Registration Statement and the
Prospectus that effects any such changes. As used in this Agreement, the term “Underwriter”
includes, for all purposes of this Agreement unless the context otherwise requires, any person not
listed in Schedule 1 hereto that, pursuant to this Section 10, purchases Securities that a
defaulting Underwriter agreed but failed to purchase.
(b) If, after giving effect to any arrangements for the purchase of the Securities of a
defaulting Underwriter or Underwriters by the non-defaulting Underwriters and the Company as
provided in paragraph (a) above, the aggregate principal amount of such Securities that remains
unpurchased does not exceed one-eleventh of the aggregate principal amount of all the Securities,
then the Company shall have the right to require each non-defaulting Underwriter to purchase the
principal amount of Securities that such Underwriter agreed to purchase hereunder plus such
Underwriter’s pro rata share (based on the principal amount of Securities that such
Underwriter agreed to purchase hereunder) of the Securities of such defaulting Underwriter or
Underwriters for which such arrangements have not been made.
(c) If, after giving effect to any arrangements for the purchase of the Securities of a
defaulting Underwriter or Underwriters by the non-defaulting Underwriters and the Company as
provided in paragraph (a) above, the aggregate principal amount of such Securities that remains
unpurchased exceeds one-eleventh of
25
the aggregate principal amount of all the Securities, or if the Company shall not exercise the
right described in paragraph (b) above, then this Agreement shall terminate without liability on
the part of the non-defaulting Underwriters. Any termination of this Agreement pursuant to this
Section 10 shall be without liability on the part of the Company, except that the Company will
continue to be liable for the payment of expenses as set forth in Section 11 hereof and except that
the provisions of Section 7 hereof shall not terminate and shall remain in effect.
(d) Nothing contained herein shall relieve a defaulting Underwriter of any liability it may
have to the Company or any non-defaulting Underwriter for damages caused by its default.
11. Qualified Independent Underwriter. The Company hereby confirms that at its request
Credit Suisse Securities (USA) LLC has without compensation acted as “qualified independent
underwriter” (in such capacity, the “QIU”) within the meaning of Rule 2720 of the Conduct Rules of
the National Association of Securities Dealers, Inc. in connection with the offering of the
Securities. The Company will indemnify and hold harmless the QIU against any losses, claims,
damages or liabilities, joint or several, to which the QIU may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon the QIU’s acting (or alleged failing to act) as such “qualified
independent underwriter” and will reimburse the QIU for any legal or other expenses reasonably
incurred by the QIU in connection with investigating or defending any such loss, claim, damage,
liability or action as such expenses are incurred
12. Payment of Expenses. (a) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay or cause to be paid
all costs and expenses incident to the performance of its obligations hereunder, including without
limitation, (i) the costs incident to the authorization, issuance, sale, preparation and delivery
of the Securities and any taxes payable in that connection; (ii) the costs incident to the
preparation, printing and filing under the Securities Act of the Registration Statement, the
Preliminary Prospectus, any Issuer Free Writing Prospectus, any Time of Sale Information and the
Prospectus (including all exhibits, amendments and supplements thereto) and the distribution
thereof; (iii) the costs of reproducing and distributing each of the Transaction Documents; (iv)
the fees and expenses of the Company’s and the Guarantor’s counsel and independent accountants and
independent reserve engineers; (v) the fees and expenses incurred in connection with the
registration or qualification and determination of eligibility for investment of the Securities
under the laws of such jurisdictions as the Representatives may designate and the preparation,
printing and distribution of a Blue Sky Memorandum (including the reasonable fees and expenses of
counsel for the Underwriters in connection therewith); (vi) any fees charged by rating agencies for
rating the Securities; (vii) the fees and expenses of the Trustee and any paying agent (including
related fees and expenses of any counsel to such parties); (viii) all expenses and application fees
incurred in connection with any filing with, and clearance of the offering by, the National
Association of Securities Dealers, Inc.; and (ix) all expenses incurred by the Company in
connection with any “road show” presentation to potential investors.
26
(b) If (i) this Agreement is terminated pursuant to Section 9(ii) or 9(v) (other than in the
case of Section 9(v), if the Company, the Guarantors and the Underwriters subsequently enter into
another agreement for the Underwriters to underwrite the same or substantially similar securities
of the Company) or (ii) the Company for any reason fails to tender the Securities for delivery to
the Underwriters or (iii) the Underwriters decline to purchase the Securities due to the failure of
the Company and the Guarantors to satisfy any condition under Section 6 hereof, the Company and
each of the Guarantors jointly and severally agree to reimburse the Underwriters for all
out-of-pocket costs and expenses (including the reasonable fees and expenses of their counsel)
reasonably incurred by the Underwriters in connection with this Agreement and the offering
contemplated hereby.
13. Persons Entitled to Benefit of Agreement. This Agreement shall inure to the
benefit of and be binding upon the parties hereto and their respective successors and the officers
and directors and any controlling persons referred to herein, and the affiliates of each
Underwriter referred to in Section 7 hereof. Nothing in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision contained herein. No purchaser of Securities from any
Underwriter shall be deemed to be a successor merely by reason of such purchase.
14. Survival. The respective indemnities, rights of contribution, representations,
warranties and agreements of the Company, the Guarantors and the Underwriters contained in this
Agreement or made by or on behalf of the Company, the Guarantors or the Underwriters pursuant to
this Agreement or any certificate delivered pursuant hereto shall survive the delivery of and
payment for the Securities and shall remain in full force and effect, regardless of any termination
of this Agreement or any investigation made by or on behalf of the Company, the Guarantors or the
Underwriters.
15. Certain Defined Terms. For purposes of this Agreement, (a) except where otherwise
expressly provided, the term “affiliate” has the meaning set forth in Rule 405 under the Securities
Act; (b) the term “business day” means any day other than a day on which banks are permitted or
required to be closed in New York City; (c) the term “subsidiary” has the meaning set forth in Rule
405 under the Securities Act; and (d) the term “significant subsidiary” has the meaning set forth
in Rule 1-02 of Regulation S-X under the Exchange Act.
16. Miscellaneous. (a) Authority of the Representatives. Any action by the
Underwriters hereunder may be taken by ▇.▇. ▇▇▇▇▇▇ Securities Inc. or Credit Suisse Securities
(USA) LLC on behalf of the Underwriters, and any such action taken by ▇.▇. ▇▇▇▇▇▇ Securities Inc.
or Credit Suisse Securities (USA) LLC shall be binding upon the Underwriters.
(b) Notices. All notices and other communications hereunder shall be in writing and shall be
deemed to have been duly given if mailed or transmitted and confirmed by any standard form of
telecommunication. Notices to the Underwriters shall be given to the Representatives c/o ▇.▇.
▇▇▇▇▇▇ Securities Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇,
▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (fax: ▇▇▇-▇▇▇-▇▇▇▇); Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇. Notices to the
Company shall be given to it at ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (fax:
▇▇▇-▇▇▇-▇▇▇▇); Attention: ▇▇▇▇▇ ▇▇▇▇▇▇.
(c) Governing Law. This Agreement shall be governed by and construed in accordance with the
laws of the State of New York.
(d) Counterparts. This Agreement may be signed in counterparts (which may include
counterparts delivered by any standard form of telecommunication), each of which shall be an
original and all of which together shall constitute one and the same instrument.
(e) Amendments or Waivers. No amendment or waiver of any provision of this Agreement, nor any
consent or approval to any departure therefrom, shall in any event be effective unless the same
shall be in writing and signed by the parties hereto.
(f) Headings. The headings herein are included for convenience of reference only and are not
intended to be part of, or to affect the meaning or interpretation of, this Agreement.
28
If the foregoing is in accordance with your understanding, please indicate your acceptance of
this Agreement by signing in the space provided below.
| Very truly yours, QUICKSILVER RESOURCES INC. |
||||
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| ▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||
| Senior Vice President, General Counsel and Secretary |
||||
| SUBSIDIARY GUARANTORS: MERCURY MICHIGAN, INC. |
||||
| By: | /s/ D. ▇▇▇▇▇ ▇▇▇▇▇ | |||
| D. ▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Vice President – Chief Accounting Officer | ||||
| TERRA ENERGY LTD. |
||||
| By: | /s/ D. ▇▇▇▇▇ ▇▇▇▇▇ | |||
| D. ▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Vice President – Chief Accounting Officer | ||||
| GTG PIPELINE CORPORATION |
||||
| By: | /s/ D. ▇▇▇▇▇ ▇▇▇▇▇ | |||
| D. ▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Vice President – Chief Accounting Officer | ||||
29
| COWTOWN PIPELINE FUNDING, INC. |
||||
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| ▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||
| Vice President, General Counsel and Secretary | ||||
| COWTOWN PIPELINE MANAGEMENT, INC. | ||||
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| ▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||
| Vice President, General Counsel and Secretary | ||||
| TERRA PIPELINE COMPANY |
||||
| By: | /s/ D. ▇▇▇▇▇ ▇▇▇▇▇ | |||
| D. ▇▇▇▇▇ ▇▇▇▇▇ | ||||
| Vice President – Chief Accounting Officer | ||||
| BEAVER CREEK PIPELINE, L.L.C. |
||||
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| ▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||
| Vice President, General Counsel and Secretary | ||||
30
| COWTOWN PIPELINE L.P. |
||||
| By: | COWTOWN PIPELINE | |||
| MANAGEMENT, INC., its general partner | ||||
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| ▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||
| Vice President, General Counsel and Secretary | ||||
| COWTOWN GAS PROCESSING L.P. |
||||
| By: | COWTOWN PIPELINE | |||
| MANAGEMENT, INC., its general partner | ||||
| By: | /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇ | |||
| ▇▇▇▇ ▇. ▇▇▇▇▇▇ | ||||
| Vice President, General Counsel and Secretary | ||||
31
Accepted: March 13, 2006 |
||
▇.▇. ▇▇▇▇▇▇ SECURITIES INC. |
||
For itself and on behalf of the several Underwriters listed in Schedule 1 hereto. |
||
By: |
/s/ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | |
| Authorized Signatory | ||
32
Schedule 1
| Underwriter | Principal Amount | |||
▇.▇. ▇▇▇▇▇▇ Securities Inc. |
$ | 157,500,000 | ||
Credit Suisse Securities (USA) LLC |
122,500,000 | |||
Banc of America Securities LLC |
35,000,000 | |||
BNP Paribas Securities Corp. |
17,500,000 | |||
▇▇▇▇▇▇▇, Sachs & Co. |
17,500,000 | |||
Total |
$ | 350,000,000 | ||
Schedule 1
Schedule 2
| State of Incorporation or | ||
| Guarantors | Organization | |
Mercury Michigan Inc.
|
Michigan | |
Terra Energy Ltd.
|
Michigan | |
GTG Pipeline Corporation
|
Virginia | |
Cowtown Pipeline Funding, Inc.
|
Delaware | |
Cowtown Pipeline Management, Inc.
|
Texas | |
Terra Pipeline Company
|
Michigan | |
Beaver Creek Pipeline, L.L.C.
|
Michigan | |
Cowtown Pipeline, LP
|
Texas | |
Cowtown Gas Processing L.P.
|
Texas |
Schedule 2
Schedule 3
Subsidiaries
MGV Energy Inc.
Mercury Michigan Inc.
Terra Energy Ltd.
GTG Pipeline Corporation
Cowtown Pipeline Funding, Inc.
Cowtown Pipeline Management, Inc.
Terra Pipeline Company
Beaver Creek Pipeline, L.L.C.
Cowtown Pipeline, LP
Cowtown Gas Processing L.P.
Schedule 3
Annex A-1
[Form of Opinion of ▇▇▇▇▇ Day]
▇-▇-▇
▇▇▇▇▇ ▇-▇
[Form of Opinion of Loomis, Ewert, Parsley, ▇▇▇▇▇ & Gotting P.C.]
▇-▇-▇
▇▇▇▇▇ ▇-▇
[Form of Opinion of McGuireWoods LLP]
▇-▇-▇
▇▇▇▇▇ ▇-▇
[Form of Opinion of General Counsel of the Company]
A-4-1
Annex B
Additional Time of Sale Information
Final pricing term sheet substantially in the form of Annex C attached hereto.
Electronic road show presentation to potential investors
B-1
Annex C
Pricing Term Sheet
Issuer
|
Quicksilver Resources Inc. | |||
Security Description
|
Senior Subordinated Notes | |||
Distribution
|
SEC Registered | |||
Face |
$ | 350,000,000 | ||
Gross Proceeds
|
$ | 350,000,000 | ||
Coupon:
|
7.125 | % | ||
Maturity
|
April 1, 2016 | |||
Offering Price
|
100.000% of face amount | |||
Yield to maturity
|
7.125 | % | ||
Spread to Treasury
|
2.36 | % | ||
Benchmark
|
UST 4.5% 2/16 | |||
Ratings
|
B2/B | |||
Interest Payment Dates
|
April 1 and October 1, commencing October 1, 2006 | |||
Redemption Provisions: |
||||
Clawback
|
Up to 35% at 107.125% | |||
Make-whole call
|
Before the first call date at a discount rate of Treasury plus 50 basis points | |||
Redemption prices
|
Commencing April 1, 2011: 103.563%
Commencing April 1, 2012: 102.375% Commencing April 1, 2013: 101.188% April 1, 2014 and thereafter: 100.000% |
|||
Redemption
with proceeds of equity offering |
Prior to April 1, 2009, up to 35% may be redeemed at 107.125% | |||
Settlement:
|
T+3; March 16, 2006 | |||
CUSIP:
|
▇▇▇▇▇▇▇▇▇ | |||
ISIN:
|
US74837RAC88 | |||
Bookrunners:
|
JPMorgan Credit Suisse | |||
Co-Managers:
|
Banc of America Securities LLC
BNP Paribas ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. |
|||
The issuer has filed a registration statement (including a prospectus) with the SEC for the
offering to which this communication relates. Before you invest, you should read the prospectus in
that registration statement and other documents the issuer has filed with the SEC for more complete
information about the issuer and this offering. You may get these documents for free by visiting
▇▇▇▇▇ on the SEC Web site at ▇▇▇.▇▇▇.▇▇▇. Alternatively, the issuer, any underwriter or any dealer
participating in the offering will arrange to send you the prospectus if you request it by calling
collect at ▇-▇▇▇-▇▇▇-▇▇▇▇.
C-1