UNDERWRITING AGREEMENT PETROQUEST ENERGY, INC. 10% Senior Notes due 2017 Underwriting Agreement
Exhibit 1.1
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
$150,000,000
PETROQUEST ENERGY, INC.
10% Senior Notes due 2017
August 12, 2010
▇.▇. ▇▇▇▇▇▇ Securities Inc.
As Representative of the
several Underwriters listed
in Schedule 1 hereto
c/o ▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
As Representative of the
several Underwriters listed
in Schedule 1 hereto
c/o ▇.▇. ▇▇▇▇▇▇ Securities Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
PetroQuest Energy, 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 representative (the “Representative”), $150,000,000 principal amount of its 10% Senior Notes due
2017 (the “Securities”). The Securities will be issued pursuant to an Indenture to be dated as of
August 19, 2010 (“Base Indenture”), among the Company, the guarantors listed in Schedule 2 hereto
(the “Guarantors”) and The Bank of New York Mellon Trust Company, N.A., as trustee (the “Trustee”),
as amended and supplemented by the First Supplemental Indenture thereto to be dated as of August
19, 2010 (the Base Indenture, as so amended and supplemented, the “Indenture”), and will be
guaranteed on a senior unsecured basis by each of the Guarantors (the “Guarantees”).
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
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registration statement on Form S-3 (File No. 333-158446), including a prospectus, relating to
the Securities and the Guarantees. Such registration statement, as amended at the time it became
effective, 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”; and as used herein, the term
“Preliminary Prospectus” means each prospectus included in such registration statement at the time
of its effectiveness, including the preliminary prospectus supplement dated August 9, 2010 filed
with the Commission that omits Rule 430 Information, and the term “Prospectus” means the prospectus
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. 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 and each “free-writing prospectus” (as defined pursuant to Rule 405 under
the Securities Act) listed on Annex B hereto as constituting part of the Time of Sale Information.
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 97.75% of the principal amount thereof plus accrued interest,
if any, from August 19, 2010 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
Representative 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.
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(c) Payment for and delivery of the Securities will be made at the offices of Cravath, Swaine
& ▇▇▇▇▇ LLP, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ at 10:00 A.M., New York City time, on August 19,
2010, or at such other time or place on the same or such other date, not later than the fifth
business day thereafter, as the Representative 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 Representative 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 Representative 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 the
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, the Guarantors or any other person.
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 or 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 Representative expressly for use in any Preliminary Prospectus, it being
understood and agreed that the only such information furnished by any Underwriter consists of the
information described as such in Section 7(b) hereof.
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(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 or 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 Representative expressly for use in such Time of Sale
Information, it being understood and agreed that the only such information furnished by any
Underwriter consists of the information described as such in Section 7(b) hereof. No statement of
material fact included in the Prospectus has been omitted from the Time of Sale Information and no
statement of material fact included in the Time of Sale Information that is required to be included
in the Prospectus has been omitted therefrom.
(c) Issuer Free Writing Prospectus. The Company (including its agents and representatives,
other than the Underwriters in their capacity as such) has not prepared, made, used, 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 clauses (i), (ii) and
(iii) 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 Rules 134 and 168 under the
Securities Act, (ii) the Preliminary Prospectus, (iii) the Prospectus, (iv) the documents listed on
Annex B hereto as constituting part of the Time of Sale Information and (v) any electronic road
show (to the extent it constitutes a written communication) or other written communications, in
each case approved in writing in advance by the Representative. Each such Issuer Free Writing
Prospectus complied in all material respects with the Securities Act, has been or will be (within
the time period specified in Rule 433) filed in accordance with the Securities Act (to the extent
required thereby) and, when taken together with the Preliminary Prospectus filed prior to the first
use 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 or warranty with
respect to any statements or omissions made in each such Issuer Free Writing Prospectus, when taken
together with the Preliminary Prospectus, in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by such Underwriter through the
Representative expressly for use in any Issuer Free Writing Prospectus, when taken together with
the Preliminary Prospectus, it being understood and agreed that the only such information furnished
by any Underwriter consists of the information described as such in Section 7(b) hereof.
(d) Registration Statement and Prospectus. The Registration Statement has been declared
effective by the Commission. No order suspending the effectiveness of the Registration Statement
has been issued by the Commission and no proceeding for that purpose or pursuant to Section 8A of
the Securities Act against the Company or the Guarantors or related to the offering of the
Securities has been initiated or, to the knowledge of the Company and each of the Guarantors,
threatened by the Commission; as of the applicable effective date of the Registration
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Statement and any post-effective amendment thereto, the Registration Statement and any such
post-effective amendment 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 makes
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 Representative expressly for use in the Registration Statement and the
Prospectus and any amendment or supplement thereto, it being understood and agreed that the only
such information furnished by any Underwriter consists of the information described as such in
Section 7(b) hereof.
(e) Incorporated Documents. The documents incorporated by reference in the Registration
Statement, the Prospectus and the Time of Sale Information, when they were filed with the
Commission, conformed in all material respects to the requirements of the Exchange Act, 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 are filed with the Commission, will conform in all material
respects to the requirements of the Securities 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 Prospectus and the Time of Sale
Information comply as to form 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 consolidated subsidiaries as of the dates indicated and
the results of their operations and the changes in their cash flows for the periods specified; and
except as otherwise disclosed in the Registration Statement, the Prospectus and the Time of Sale
Information, such financial statements have been prepared in conformity with generally accepted
accounting principles in the United States applied on a consistent basis throughout the periods
covered thereby, and the supporting schedules included or incorporated by reference in the
Registration Statement, the Prospectus and the Time of Sale Information present fairly in all
material respects the information required to be stated therein; and the other financial
information included or incorporated by reference in the Registration Statement, the Time of Sale
Information and the Prospectus has been derived from the accounting records of the
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Company and its consolidated subsidiaries and presents fairly in all material respects the
information shown thereby (except as otherwise stated therein).
(g) No Material Adverse Change. Since the date of the last audited 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 material change in the capital stock
(other than the issuance of shares of Common Stock upon exercise of stock options and warrants
described as outstanding in, and the grant of options and awards under existing equity incentive
plans described in, the Registration Statement, the Prospectus and the Time of Sale Information),
short-term debt or long-term debt of the Company or any of its subsidiaries, or any material
adverse change, or any development or event involving a prospective material adverse change, in or
affecting the condition (financial or other), business, properties or results of operations of the
Company and its subsidiaries taken as a whole, and, except as disclosed in or contemplated by the
Registration Statement, the Prospectus and the Time of Sale Information, there has been no dividend
or distribution of any kind declared, paid or made by the Company on any class of its capital
stock, other than (A) dividends declared and paid on its outstanding 6.875% Series B cumulative
convertible perpetual preferred stock or (B) dividends or distributions deemed to occur upon the
exercise or exchange of stock options, warrants, or other convertible securities of such capital
stock or which represent a portion of the exercise or exchange price thereof or made in lieu of
withholding taxes in connection with any such exercise or exchange; (ii) neither the Company nor
any of its subsidiaries has entered into any transaction or agreement (whether or not in the
ordinary course of business) that is material to the Company and its subsidiaries taken as a whole
or incurred any liability or obligation, direct or contingent, that is material to the Company and
its subsidiaries taken as a whole; 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 has been duly
incorporated or organized and is a validly existing corporation or limited liability company in
good standing under the laws of the jurisdiction of its incorporation or organization, with power
and authority (corporate and other) to own its properties and conduct its business as described in
the Registration Statement, the Time of Sale Information and the Prospectus, except where the
failure to have such power or authority would not, individually or in the aggregate, have a
material adverse effect on the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole or on the performance by the
Company or the Guarantors of their respective obligations under the Securities and the Guarantees
(“Material Adverse Effect”); and the Company and each of its subsidiaries is duly qualified to do
business as a foreign corporation in good standing in the jurisdictions set forth on Schedule 3
hereto, which includes all jurisdictions in which the Company’s or any of its subsidiaries’
ownership or lease of property or the conduct of its business requires such qualification, except
where the failure to so qualify or to be in good standing would not, individually or in the
aggregate, result in a Material Adverse Effect. The Company does not own or control, directly or
indirectly, any corporation, association or other entity other than the
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subsidiaries required to be listed and so listed in Exhibit 21.1 to the Company’s Annual
Report on Form 10-K for the year ended December 31, 2009.
(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” and all the outstanding shares of capital stock or other equity interests of each
subsidiary of the Company have been duly and validly authorized and issued, 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, except as otherwise disclosed in the Registration Statement, the Time of Sale
Information and the Prospectus.
(j) Due Authorization. The Company and each of the Guarantors has full right, 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 their
respective obligations hereunder and thereunder; and all action required to be taken by the Company
and each of the Guarantors for the due and proper authorization, execution and delivery of each of
the Transaction Documents to which they are or are specified to be a party and the consummation of
the transactions contemplated thereby has been duly and validly taken.
(k) The Indenture. The Base Indenture and the Supplemental Indenture have been duly
authorized by the Company and each of the Guarantors and when duly executed and delivered in
accordance with their terms by each of the parties thereto on the Closing Date, will constitute
valid and legally binding agreements of the Company and each of the Guarantors enforceable against
the Company and each of the Guarantors in accordance with their 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”). The Indenture (including, as of the Closing Date, as amended and
supplemented by the First Supplemental Indenture) is duly qualified under the Trust Indenture Act.
(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. 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 in this Agreement, the Guarantees 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.
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(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.
(o) No Violation or Default. Neither the Company nor any of its subsidiaries is (i) in
violation of its respective 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, obligation, agreement, 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 each of the Transaction Documents to which it is or is specified to be a party, the
issuance and sale of the Securities (including the Guarantees) and compliance by the Company and
each of the Guarantors with the terms thereof and the consummation of the transactions contemplated
by the Transaction Documents to which it is or is specified to be a party 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,
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 and or any of the Guarantors of
each of the Transaction Documents to which it is or is specified to be a party, the issuance and
sale of the Securities (including the Guarantees) and compliance by the Company and each of the
Guarantors with the terms thereof and the consummation of the transactions contemplated by the
Transaction Documents to which it is or is specified to be a party, 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 or foreign securities
laws in connection with the purchase and distribution of the Securities by the Underwriters.
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(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 a party or
to which any property of the Company or any of its subsidiaries is the subject that, individually
or in the aggregate, if determined adversely to the Company or any of its subsidiaries, could
reasonably be expected to have a Material Adverse Effect; no such investigations, actions, suits or
proceedings are, to the best knowledge of the Company and the Guarantors, threatened or
contemplated by any governmental or regulatory authority or others; 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 or the Prospectus 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 and 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. Ernst & Young LLP, who has certified certain financial
statements of the Company and its subsidiaries is 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 Company Accounting Oversight Board (United States) and as
required by the Securities Act.
(t) Independent Petroleum Engineers. ▇▇▇▇▇ ▇▇▇▇▇ Company, L.P. and Netherland, ▇▇▇▇▇▇ and
Associates, Inc., who have certified the reserve information of the Company and its subsidiaries,
have represented to the Company that they are, and the Company believes them to be, independent
petroleum engineers in accordance with guidelines established by the Commission.
(u) Title to Real and Personal Property. Except as disclosed in the Registration Statement,
the Prospectus and the Time of Sale Information, or such as in the aggregate has not had and would
not reasonably be expected to have a Material Adverse Effect, the Company and its subsidiaries have
title to their respective properties as follows: (a) with respect to ▇▇▇▇▇ (including leasehold
interests and appurtenant personal property) and non-producing oil and gas properties (including
undeveloped locations on leases held by production), such title is good and free and clear of all
liens, security interests, pledges, charges, encumbrances, mortgages and restrictions; (b) with
respect to non-producing properties in exploration prospects, such title was investigated in
accordance with customary industry procedures prior to the acquisition thereof by the Company or
its subsidiaries; (c) with respect to real property other than oil and gas interests, such title is
good and marketable free and clear of all liens, security interests, pledges, charges,
encumbrances, mortgages and restrictions; and (d) with respect to personal property other than that
appurtenant to oil and gas interests, such title is free and clear of all liens, security
interests, pledges, charges, encumbrances, mortgages and restrictions.
(v) Title to Intellectual Property. The Company and its subsidiaries own, possess or can
acquire on reasonable terms, adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service ▇▇▇▇ registrations,
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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 now operated by them or presently employed by them; and the
conduct of their respective businesses, to the knowledge of the Company and the Guarantors, 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, misappropriation of or
conflict with any such asserted rights of others with respect to any such intellectual property
rights that, if determined adversely to the Company or any of its subsidiaries, could reasonably be
expected, individually or in the aggregate, to have a Material Adverse Effect.
(w) 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.
(x) Investment Company Act. The Company and the Guarantors are not, and will not be, after
giving effect to the offering and sale of the Securities and the issuance of the Guarantees and the
application of the proceeds thereof as described in the Registration Statement, the Time of Sale
Information and the Prospectus and the consummation of the Company’s tender offer for its 10 3/8%
Senior Notes due 2012, 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”).
(y) Taxes. The Company and its subsidiaries have paid all material federal, state, local and
foreign taxes except as may be contested in good faith and by appropriate proceedings and filed or
have properly requested extensions of all tax returns required to be filed (and taxes required to
be paid) through the date hereof; and except as otherwise disclosed in the Registration Statement,
the Time of Sale Information and the Prospectus, there is no tax deficiency that has been, or could
reasonably be expected to be, asserted against the Company or any of its subsidiaries or any of
their respective properties or assets, except for such tax deficiencies as would not, individually
or in the aggregate, have a Material Adverse Effect.
(z) Licenses and Permits. The Company and its subsidiaries possess all necessary
certificates, authorities or permits issued by appropriate governmental agencies or bodies to
conduct the business now operated by them and have not received any notice of proceedings relating
to the revocation or modification of any such certificate, authority or permit that, if determined
adversely to the Company or any of its subsidiaries, would have a Material Adverse Effect.
(aa) No Labor Disputes. No labor dispute with the employees of the Company or any of its
subsidiaries exists or, to the knowledge of the Company and the Guarantors, is imminent that might
have a Material Adverse Effect.
(bb) Compliance With Environmental Laws. Except for any matters that would not, individually
or in the aggregate, reasonably be expected to have a Material Adverse Effect, the
11
Company and its subsidiaries are in compliance with Environmental Laws (as defined below).
Except as described in the Registration Statement, the Prospectus and the Time of Sale Information,
(x) there are no proceedings that are pending, or that are known to be contemplated, against the
Company or any of its subsidiaries under any Environmental Laws in which a governmental entity is
also a party, other than such proceedings regarding which the Company reasonably believes no
monetary sanctions of $100,000 or more will be imposed, (y) the Company and its subsidiaries are
not aware of any facts or issues regarding compliance with Environmental Laws, or liabilities or
other obligations under Environmental Laws, including the Release (as defined below) or threat of
Release of Hazardous Materials (as defined below), that could reasonably be expected to have a
material effect on the capital expenditures, earnings or competitive position of the Company and
its subsidiaries, and (z) none of the Company and its subsidiaries anticipates material capital
expenditures relating to any Environmental Laws. “Hazardous Materials” means any material,
chemical, substance, waste, pollutant, contaminant, compound, mixture, or constituent thereof, in
any form or amount, including petroleum (including crude oil or any fraction thereof) and petroleum
products, natural gas liquids, asbestos and asbestos containing materials, naturally occurring
radioactive materials, brine, and drilling mud, regulated or which can give rise to liability under
any Environmental Law. “Release” means any spilling, leaking, seepage, pumping, pouring, emitting,
emptying, discharging, injecting, escaping, leaching, dumping, disposing, depositing, dispersing,
or migrating in, into or through the environment, or in, into from or through any building or
structure. “Environmental Laws” means any and all applicable federal, state, local and foreign
laws, rules, regulations, requirements, decisions, judgments, decrees, orders and the common law
relating to pollution or the protection of the environment, natural resources or human health or
safety, including those relating to the generation, storage, treatment, use, handling,
transportation, Release or threat of Release of Hazardous Materials.
(cc) Compliance With ERISA. Each employee benefit plan, within the meaning of Section 3(3) of
the Employee Retirement Income Security Act of 1974, as amended (“ERISA”), that is maintained,
administered or contributed to by the Company or any of its affiliates for employees or former
employees of the Company and its affiliates has been maintained in compliance in all material
respects with its terms and the requirements of any applicable statutes, orders, rules and
regulations, including but not limited to ERISA and the Internal Revenue Code of 1986, as amended
(the “Code”); no prohibited transaction, within the meaning of Section 406 of ERISA or Section 4975
of the Code, has occurred with respect to any such plan excluding transactions effected pursuant to
a statutory or administrative exemption; and for each such plan that is subject to the funding
rules of Section 412 of the Code or Section 302 of ERISA, the minimum funding standard of Section
412 of the Code or Section 302 of ERISA, as applicable, has been satisfied (without taking into
account any waiver thereof or extension of any amortization period) and is reasonably expected to
be satisfied in the future (without taking into account any waiver thereof or extension of any
amortization period).
(dd) 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 comply
with the requirements of the Exchange Act and 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 in accordance with the Exchange Act and the rules and
regulations thereunder. The Company and its subsidiaries have carried out
12
evaluations, under the supervision and with the participation of the Company’s management, of
the effectiveness of the design and operation of their disclosure controls and procedures as
required by Rule 13a-15 of the Exchange Act.
(ee) 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 in
all material respects 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 in the United States, 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 in the United States and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any differences. 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.
(ff) Insurance. The Company and its subsidiaries have insurance covering their respective
properties, operations, personnel and businesses, including business interruption insurance, which
insurance is in amounts and insures against such losses and risks as are adequate to protect the
Company and its subsidiaries and their respective businesses and are customary for the business in
which they are engaged; 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 similar coverage from similar insurers as may be necessary to continue its business.
(gg) No Unlawful Payments. Neither the Company nor any of its subsidiaries nor, to the best
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.
(hh) Compliance with Money Laundering Laws. The operations of the Company and its
subsidiaries are and have been conducted at all times in compliance in all material respects 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
13
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 best knowledge of the Company and the
Guarantors, threatened.
(ii) Compliance with OFAC. None of the Company, any of its subsidiaries or, to the knowledge
of the Company and the Guarantors, any director, officer, agent, employee or affiliate of the
Company or any of its subsidiaries is currently subject to any U.S. sanctions administered by the
Office of Foreign Assets Control of the U.S. Department of the Treasury (“OFAC”); and the Company
will not directly or indirectly use the proceeds of the offering of the Securities hereunder, or
lend, contribute or otherwise make available such proceeds to any subsidiary, joint venture partner
or other person or entity, for the purpose of financing the activities of any person currently
subject to any U.S. sanctions administered by OFAC.
(jj) 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, 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.
(kk) No Restrictions on Subsidiaries. Except as disclosed in the Registration Statement, the
Time of Sale Information and the Prospectus, 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 or similar ownership interest, 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.
(ll) 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.
14
(mm) 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.
(nn) 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.
(oo) 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.
(pp) Forward-Looking Statements. No forward-looking statement (within the meaning of Section
27A of the Securities Act and Section 21E of the Exchange Act) included or incorporated by
reference 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.
(qq) Statistical and Market Data. Nothing has come to the attention of the Company or any
Guarantor that has caused the Company or any Guarantor to believe that the statistical and
market-related data included or incorporated by reference 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.
(rr) ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act. There is and has been no failure on the part of the Company or, to
the knowledge of the Company, any of the Company’s directors or officers, in their capacities as
such, to comply in all material respects with any provision 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.
(ss) Status under the Securities Act. The Company has paid the registration fee for the
offering of the Securities pursuant to Rule 457 under the Securities Act. At the time of filing
the Registration Statement and any post-effective amendment thereto, at the earliest time
thereafter that the Company or any offering participant made a bona fide offer
(within the meaning of Rule 164(h)(2) under the Securities Act) of the Securities and at the date
hereof, the Company was not and is not an “ineligible issuer,” as defined in Rule 405 under the
Securities Act.
4. Further Agreements of the Company and the Guarantors. The Company and 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 (including the Term Sheet substantially in the form of
Annex C hereto) to the extent required by Rule 433 under the Securities Act; and will file within
the time periods required under the Exchange Act all reports and any definitive proxy or
information statements required to be filed by the Company with the
15
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 Representative may reasonably
request.
(b) Delivery of Copies. The Company will deliver, without charge, (i) to the Representative,
two 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 Representative may reasonably request; provided that the availability of
the Registration Statement and each amendment thereto on ▇▇▇▇▇ shall constitute delivery so long as
the ▇▇▇▇▇ copy is substantially identical except as permitted by Regulation S-T. 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 reasonable 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 making, 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, whether
before or after the time that the Registration Statement becomes effective the Company will furnish
to the Representative and counsel for the Underwriters a copy of the proposed Issuer Free Writing
Prospectus, amendment or supplement for review and the Company will not make, 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 Representative reasonably objects.
(d) Notice to the Representative. The Company will advise the Representative promptly, and
confirm such advice in writing, (i) during the Prospectus Delivery Period when any amendment to the
Registration Statement has been filed or becomes effective; (ii) when any supplement to the
Prospectus or any amendment to the Prospectus or any Issuer Free Writing Prospectus has been filed;
(iii) during the Prospectus Delivery Period 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; (iv) 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; (v) 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
16
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 delivered to
a purchaser, not misleading; and (vi) 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
commercially reasonable 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 obtain as soon as possible the withdrawal thereof.
(e) Time of Sale Information. 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, not
misleading or (ii) it is necessary to 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 Representative 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, be
misleading or so that the Time of Sale Information will comply with law.
(f) Ongoing Compliance. 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 delivered 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 Representative may
designate, such amendments or supplements to the Prospectus as may be necessary so that the
statements in the Prospectus as so amended or supplemented will not, in the light of the
circumstances existing when the Prospectus is delivered to a purchaser, be misleading or so that
the Prospectus will comply with law.
(g) 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 Representative shall reasonably request
and will continue such qualifications in effect so long as required for distribution of the
Securities; provided that the Company 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.
17
(h) Earning Statement. The Company will make generally available to its security holders and
the Representative 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.
(i) Clear Market. During the period from the date hereof through and including the date that
is 45 days after the date hereof, the Company will not, without the prior written consent of the
Representative, offer, sell, contract to sell or otherwise dispose of any debt securities issued or
guaranteed by the Company and having a tenor of more than one year.
(j) 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”.
(k) No Stabilization. The Company 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.
(l) Reports. So long as the Securities are outstanding, the Company will furnish to the
Representative, as soon as they are available, copies of all reports or other communications
(financial or other) furnished to holders of the Securities, and copies of any reports and
financial statements furnished to or filed with the Commission or any national securities exchange
or automatic quotation system; provided that the availability of such reports, financial
statements or other communications on ▇▇▇▇▇ shall constitute delivery so long as the ▇▇▇▇▇ copy is
substantially identical except as permitted by Regulation S-T.
(m) 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.
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, solely as a result of use by such
Underwriter, would not trigger an obligation to file such free writing prospectus with the
Commission pursuant to Rule 433, (ii) any Issuer Free Writing Prospectus listed on Annex B or
prepared pursuant to Section 3(c) or Section 4(c) above (including any electronic road show), 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”). Notwithstanding the foregoing, the Underwriters may
18
use a term sheet substantially in the form of Annex C hereto without the consent of the
Company.
(b) 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 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 an Issuer Free Writing Prospectus, to the extent required
by Rule 433 under the Securities Act) and in 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 Representative.
(b) Representations and Warranties. The representations and warranties of the Company and
each of 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 earlier of (A) the Time of Sale and (B) 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 issued 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 issued 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 Representative
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 Representative shall have received on and as of the Closing
Date a certificate of the chief financial officer or chief accounting officer of the
19
Company and one additional senior executive officer of the Company who has specific knowledge
of the Company’s and the Guarantors’ financial matters and is satisfactory to the Representative
(i) confirming that such officer has carefully reviewed the Registration Statement, the Time of
Sale Information and the Prospectus and, to the best knowledge of such officers, the
representations set forth in Sections 3(b) and 3(d) hereof are true and correct, (ii) confirming
that the other representations and warranties of the Company and each of the Guarantors in this
Agreement are true and correct and that the Company and each of the Guarantors has complied with
all agreements and satisfied all conditions on its part to be performed or satisfied hereunder at
or prior to the Closing Date and (iii) confirming the satisfaction of the conditions set forth in
paragraphs (a), (c) and (d) above.
(f) Comfort Letters. On the date of this Agreement and on the Closing Date, Ernst & Young LLP
shall have furnished to the Representative, at the request of the Company, letters, dated the
respective dates of delivery thereof and addressed to the Underwriters, in form and substance
reasonably satisfactory to the Representative, 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 and 10b-5 Statement of Counsel for the Company. ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P. and
Onebane Law Firm, P.C., counsel for the Company, and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, general counsel of the
Company, shall have furnished to the Representative, at the request of the Company, their written
opinion or opinions and 10b-5 Statement or Statements, dated the Closing Date and addressed to the
Underwriters, in form and substance reasonably satisfactory to the Representative, to the effect
set forth in Annex A hereto.
(h) Opinion and 10b-5 Statement of Counsel for the Underwriters. The Representative shall
have received on and as of the Closing Date an opinion and 10b-5 Statement of Cravath, Swaine &
▇▇▇▇▇ LLP, counsel for the Underwriters, with respect to such matters as the Representative 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 Representative shall have received on and as of the Closing Date
satisfactory evidence of the good standing of the Company and its subsidiaries in their respective
jurisdictions of organization and their good standing as foreign entities in such other
jurisdictions as the Representative may reasonably request, in each case in writing or any
20
standard form of telecommunication from the appropriate governmental authorities of such
jurisdictions.
(k) Additional Documents. On or prior to the Closing Date, the Company shall have furnished
to the Representative such further certificates and documents as the Representative may reasonably
request.
(l) Reserves Comfort Letters. On the date of this Agreement and on the Closing Date, (i)
▇▇▇▇▇ ▇▇▇▇▇ Company, L.P. shall have furnished to the Underwriters, at the request of the Company,
letters, dated the respective dates of delivery thereof and addressed to the Underwriters, in form
and substance reasonably satisfactory to the Representative, containing statements and information
of the type customarily included in reserve engineers’ “comfort letters” to underwriters with
respect to the reserves information contained or incorporated by reference in the Registration
Statement, the Time of Sale Information and the Prospectus and (ii) Netherland, ▇▇▇▇▇▇ and
Associates, Inc. shall have furnished to the Underwriters, at the request of the Company, letters,
dated the respective dates of delivery thereof and addressed to the Underwriters, in form and
substance reasonably satisfactory to the Representative, containing statements and information of
the type customarily included in reserve engineers’ “comfort letters” to underwriters with respect
to the reserves information contained or incorporated by reference in the Registration Statement,
the Time of Sale Information and the Prospectus.
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 agrees 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, legal fees and other 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 or (ii) 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 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 Representative expressly for use therein, it being
understood and agreed that the only such
21
information furnished by any Underwriter consists of the information described as such in
subsection (b) below.
(b) Indemnification of the Company. Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, the Guarantors, their directors, their officers who signed
the Registration Statement and each person, if any, who controls the Company or 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 Representative 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: under the caption “Underwriting” in the Prospectus, the concession and reallowance
figures in the third paragraph and the market stabilization activities described in the fifth
(third sentence only) and eighth paragraphs.
(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, 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 paragraph (a) or (b) above, 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 paragraph (a) or (b)
above. 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 and
any others entitled to indemnification pursuant to Section 7 that the Indemnifying Party may
designate in such proceeding and shall pay the fees and expenses of such proceeding and shall pay
the fees and expenses of counsel related to such proceeding, as incurred. In any such proceeding,
any Indemnified Person shall have the right to retain its own counsel, 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; (ii) the Indemnifying Person
has failed within a reasonable time to retain counsel reasonably satisfactory to the Indemnified
Person; (iii) the Indemnified Person shall have reasonably concluded that there may be legal
defenses available to it that are different from or in addition to those available to the
Indemnifying Person; or (iv) the named parties in any such proceeding (including any impleaded
parties) include both the Indemnifying Person and the Indemnified Person and representation of both
parties by the same counsel would be inappropriate due to actual or potential differing interests
between them. It is understood and agreed that the Indemnifying Person shall not, in connection
with any proceeding or related proceedings in the same jurisdiction, be liable for the fees and
expenses of more than one separate firm (in addition
22
to any local counsel) for all Indemnified Persons, and that all such fees and expenses shall
be paid or 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 the Representative and any such separate firm for the Company, its directors, its
officers who signed the Registration Statement and any control persons of the Company 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 30
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. 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 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
relative fault of the Company 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 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 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 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 by the
Underwriters and the parties’ relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
23
(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 proportions 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
Representative, 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 been suspended or materially
limited on or by any of the New York Stock Exchange, the American Stock Exchange, the Nasdaq Stock
Market, the Chicago Board Options Exchange, the Chicago Mercantile Exchange or the Chicago Board of
Trade or in 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 the
over-the-counter market; (iii) a general moratorium on commercial banking activities shall have
been declared by federal or New York State authorities; or (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 Representative, 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.
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
24
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, if any, 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 the aggregate principal amount of all the Securities, or if the
Company shall not exercise the right described in paragraph (b) above, if applicable, 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 or the Guarantors, except that the Company and each of the Guarantors will continue to
be liable for the payment of expenses as set forth in Section 11(a) hereof, but not as set forth in
Section 11(b), 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. Payment of Expenses. (a) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company and each of the Guarantors
jointly and severally agrees to pay or cause to be paid all costs and expenses incident to the
performance of their respective 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 fees and expenses of
the Company’s counsel, independent accountants and reserve engineers; (iv) the fees
25
and expenses incurred in connection with the registration or qualification and determination
of eligibility for investment of the Securities under the state or foreign securities or blue sky
laws of such jurisdictions as the Representative may designate and the preparation, printing and
distribution of a Blue Sky Memorandum (including the related fees and expenses of counsel for the
Underwriters); (v) any fees charged by rating agencies for rating the Securities; (vi) the fees and
expenses of the Trustee and any paying agent (including related fees and expenses of any counsel to
such parties); (vii) the costs and charges of any transfer agent and any registrar; (viii) all
expenses and application fees incurred in connection with any filing with, and clearance of the
offering by, the Financial Industry Regulatory Authority (“FINRA”); and (ix) all expenses incurred
by the Company in connection with any “road show” presentation to potential investors.
(b) If (i) this Agreement is terminated pursuant to Section 9(ii), (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 for any reason permitted under this Agreement, (other than
Section 6(h) or any subsection of Section 6 where the failure to satisfy the applicable conditions
was solely attributable to an Underwriter) the Company and each of the Guarantors jointly and
severally agrees to reimburse the Underwriters for all out-of-pocket costs and expenses (including
the fees and expenses of their counsel) reasonably incurred by the Underwriters in connection with
this Agreement and the offering contemplated hereby.
12. 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.
13. 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.
14. 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; and (c) the term “subsidiary” has the meaning set forth in
Rule 405 under the Securities Act .
15. Miscellaneous. (a) Authority of the Representative. Any action by the
Underwriters hereunder may be taken by ▇.▇. ▇▇▇▇▇▇ Securities Inc. on behalf of the Underwriters,
and any such action taken by ▇.▇. ▇▇▇▇▇▇ Securities Inc. shall be binding upon the Underwriters.
26
(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 Representative c/o ▇.▇.
▇▇▇▇▇▇ Securities Inc., ▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (fax: (▇▇▇)-▇▇▇-▇▇▇▇);
Attention: ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇. Notices to the Company shall be given to it at ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ (fax: (▇▇▇) ▇▇▇-▇▇▇▇); Attention:
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, Executive Vice President and General Counsel.
(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. Facsimile or
portable document format (PDF) copies of this Agreement shall have the same force and effect as an
original.
(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.
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, PETROQUEST ENERGY, INC. |
||||
| By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | ||||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |||
| Title: | Executive Vice President and General Counsel | |||
| PETROQUEST ENERGY, L.L.C. |
||||
| By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | ||||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |||
| Title: | Executive Vice President and General Counsel | |||
| TDC ENERGY LLC |
||||
| By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | ||||
| Name: | ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇ | |||
| Title: | Executive Vice President and General Counsel | |||
Accepted: August 12, 2010
▇.▇. ▇▇▇▇▇▇ SECURITIES INC.
For itself and on behalf of the
several Underwriters listed
in Schedule 1 hereto.
several Underwriters listed
in Schedule 1 hereto.
By
|
/s/ ▇▇▇▇▇ ▇▇▇▇▇▇ | |||
Authorized Signatory
Schedule 1
| Underwriter | Principal Amount | |||
▇.▇. ▇▇▇▇▇▇ Securities Inc. |
$ | 60,000,000.00 | ||
Banc of America Securities, LLC |
$ | 10,500,000.00 | ||
Credit Agricole Securities (USA) Inc. |
$ | 10,500,000.00 | ||
▇▇▇▇▇ Fargo Securities, LLC |
$ | 10,500,000.00 | ||
▇▇▇▇▇▇ ▇▇▇▇ Incorporated |
$ | 10,500,000.00 | ||
▇▇▇▇▇▇▇ ▇▇▇▇ & Company L.L.C. |
$ | 10,500,000.00 | ||
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ & Company, Incorporated |
$ | 10,500,000.00 | ||
Credit Suisse Securities (USA), LLC |
$ | 5,400,000.00 | ||
Capital One Southcoast, Inc. |
$ | 5,400,000.00 | ||
Global Hunter Securities, LLC |
$ | 5,400,000.00 | ||
▇▇▇▇▇▇▇▇▇ Capital Partners, LLC |
$ | 5,400,000.00 | ||
▇▇▇▇▇▇▇ & Company International |
$ | 5,400,000.00 | ||
Total |
$ | 150,000,000.00 | ||
Schedule 2
Guarantors
| Entity | State of Incorporation | |
PetroQuest Energy, L.L.C.
|
Louisiana | |
TDC Energy LLC
|
Louisiana |
Schedule 3
Foreign Qualifications
| Entity | Jurisdiction of Qualification | |
PetroQuest Energy, L.L.C.
|
Arkansas | |
| Mississippi | ||
| Oklahoma | ||
| Texas | ||
| Wyoming | ||
TDC Energy LLC
|
Texas |
Annex A
Form of Opinion of Counsel for the Company
Capitalized terms used but not defined herein have the meanings assigned to such terms in the
Underwriting Agreement.
(a) The Registration Statement was declared effective under the Securities Act and the
Indenture was qualified under the Trust Indenture Act as of the date and time specified in such
opinion; each of the Preliminary Prospectus and the Prospectus was filed with the Commission
pursuant to the subparagraph of Rule 424(b) under the Securities Act specified in such opinion on
the date specified therein; and no order suspending the effectiveness of the Registration Statement
has been issued and no proceeding for that purpose or pursuant to Section 8A of the Securities Act
against the Company or in connection with the offering of the Securities is pending or, to the
knowledge of such counsel, threatened by the Commission.
(b) The Registration Statement, the Preliminary Prospectus, each Issuer Free Writing
Prospectus included in the Time of Sale Information and the Prospectus (other than (i) the
financial statements and the related notes and schedules thereto and auditor’s reports thereon and
schedules included or incorporated by reference therein or omitted therefrom, (ii) the summary
reserve reports of the independent petroleum engineers included or incorporated by reference
therein, (iii) other financial and statistical derived from the financial statements and the
related notes and schedules thereto, or (iv) other reserve engineering data derived from the
summary reserve reports of the independent petroleum engineers included or incorporated by
reference therein, as to which such counsel need express no opinion) appear on their face to comply
as to form in all material respects with the requirements of the Securities Act; and the Indenture
complies as to form in all material respects with the requirements of the Trust Indenture Act.
(c) The Company and each of the Guarantors has been duly incorporated or organized and is a
validly existing corporation or limited liability company in good standing under the laws of the
jurisdiction of its incorporation or organization, with power and authority (corporate and other)
to own or hold its properties and conduct the business in which it is engaged, except where the
failure to have such power or authority would not, individually or in the aggregate, have a
Material Adverse Effect, and are duly qualified to do business as a foreign corporation in good
standing in the jurisdictions listed on an exhibit to the opinion.
(d) 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” and all the
outstanding shares of capital stock or other equity interests of each Guarantor have been duly and
validly authorized and issued, are fully paid and non-assessable.
(e) The Company and each of the Guarantors has full right, power and authority to execute and
deliver each of the Transaction Documents to which it is or is specified to be a party and to
perform their respective obligations thereunder; and all action required to be taken by the Company
and each of the Guarantors 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.
(f) The Indenture has been duly authorized, executed and delivered by the Company and each of
the Guarantors and, assuming due authorization, execution and delivery thereof by the Trustee,
constitutes a valid and legally binding agreement of the Company and each of the Guarantors
enforceable against the Company and each of the Guarantors in accordance with its terms, subject to
the Enforceability Exceptions.
(g) The Securities have been duly authorized, executed and delivered by the Company and, when
duly authenticated as provided in the Indenture and paid for as provided in the Underwriting
Agreement, 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.
(h) The Guarantees have been duly authorized by each of the Guarantors and, when the
Securities have been duly authenticated as provided in the Indenture and paid for as provided in
the Underwriting Agreement, the Guarantees 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.
(i) The Underwriting Agreement has been duly authorized, executed and delivered by the Company
and each of the Guarantors.
(j) 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. The
execution, delivery and performance by the Company and each of the Guarantors of each of the
Transaction Documents to which it is or is specified to be a party, the issuance and sale of the
Securities (including the Guarantees) and compliance by the Company and each of the Guarantors with
the terms thereof 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 Guarantor pursuant to, any
indenture, mortgage, deed of trust, loan agreement or other agreement or instrument to which the
Company or any Guarantor is a party or by which the Company or any Guarantor is bound or to which
any of the property or assets of the Company or any Guarantor is subject, in each case that is
filed as an exhibit to the Company’s Annual Report on Form 10-K for the year ended December 31,
2009 or the Company’s Quarterly Report on Form 10-Q for the period ended ▇▇▇▇▇ ▇▇, ▇▇▇▇, (▇▇)
result in any violation of the provisions of the charter or by-laws or similar organizational
documents of the Company or any Guarantor, (iii) result in the violation of any included law (as
defined in such opinion) or (iv) result in the violation of any judgment, order, rule or regulation
of any court or arbitrator or governmental or regulatory authority known to us except, in the case
of clauses (i), (iii) and (iv) above, for any such conflict, breach, violation or default that
would not, individually or in the aggregate, have a Material Adverse Effect.
(k) 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, obligation, agreement, covenant or condition contained in any indenture,
mortgage, deed of trust, loan agreement or other agreement or instrument to which it is a party or
by which it is bound or to which any of its property or assets is subject; (iii) in violation of
any included law (as defined in such opinion); or (iv) in violation of any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory authority known to such
counsel, except in the case of clauses (ii), (iii) and (iv) for any such default or violation that
would not, individually or in the aggregate, have a Material Adverse Effect.
(l) 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 of each of the Transaction Documents, the issuance and sale of the
Securities and compliance by the Company with the terms thereof and the consummation of the
transactions contemplated by the Transaction Documents, except for such consents, approvals,
authorizations, orders and registrations or qualifications (i) as have been obtained or made by the
Company and are in full force and effect under the Securities Act or the Trust Indenture Act, (ii)
as may be required under the Exchange Act or by the Financial Industry Regulatory Authority and
(iii) as may be required under applicable state or foreign securities laws in connection with the
purchase and distribution of the Securities (including the Guarantees) by the Underwriters.
(m) The statements in (i) the Company’s Annual Report on Form 10-K for the year ended December
31, 2009 under the headings “Business — Federal Regulations”, “Business — State Regulations”, and
“Business — Environmental Regulations”, and (ii) the Preliminary Prospectus and Prospectus under
the heading “Certain United States federal income and estate tax considerations”, to the extent
that they constitute summaries of matters of law or regulation or legal conclusions, fairly
summarize the matters described therein in all material respects; and, to the knowledge of such
counsel, (A) 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 or the Prospectus and that are not so described in the Registration Statement, the Time
of Sale Information and the Prospectus and (B) there are no statutes, regulations or contracts and
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 and that have
not been so filed as exhibits to the Registration Statement or described in the Registration
Statement, the Time of Sale Information and the Prospectus.
(n) To such counsel’s knowledge, except as described 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, could reasonably be expected to have a
Material Adverse Effect; and to such counsel’s knowledge, no such investigations, actions, suits or
proceedings are threatened or contemplated by any governmental or regulatory authority or
threatened by others.
(o) Each of the Company and its subsidiaries owns, possesses or has obtained all licenses,
permits, certificates, consents, orders, approvals and other authorizations from, and has made all
declarations and filings with, all governmental or regulatory authorities (including foreign
regulatory agencies), all self-regulatory organizations and all courts and other tribunals,
domestic or foreign, necessary to own or lease, as the case may be, and to operate its properties
and to carry on its business as conducted as of the date hereof, except for (i) such licenses,
permits, certificates, consents, orders, approvals and other authorizations the failure of which to
own, possess or obtain, and (ii) such declarations and filings the failure of which to make, in
each case, would not have a Material Adverse Effect. Neither the Company nor any such subsidiary
has received any actual notice of any proceeding relating to revocation or modification of any such
license, permit, certificate, consent, order, approval or other authorization which would, if the
subject of an unfavorable decision, ruling or finding, would have a Material Adverse Effect; and,
to such counsel’s knowledge, each of the Company and each of its subsidiaries is in compliance with
all laws and regulations relating to the conduct of its business as conducted as of the date of the
Prospectus, except where the non-compliance would not have a Material Adverse Effect.
(p) The Company and the Guarantors are not and, after giving effect to the offering and sale
of the Securities and the issuance of the Guarantees and the application of the proceeds thereof as
described in the Registration Statement, the Time of Sale Information and the Prospectus and the
consummation of the Company’s tender offer for its 10 3/8% Senior Notes due 2012, will not be an
“investment company” or an entity “controlled” by an “investment company” within the meaning of the
Investment Company Act.
(q) The documents incorporated by reference in the Time of Sale Information and the Prospectus
or any further amendment or supplement thereto made by the Company prior to the Closing Date (other
than (i) the financial statements and the related notes and schedules thereto and auditor’s reports
thereon and schedules included or incorporated by reference therein or omitted therefrom, (ii) the
summary reserve reports of the independent petroleum engineers included or incorporated by
reference therein, (iii) other financial and statistical derived from the financial statements and
the related notes and schedules thereto, or (iv) other reserve engineering data derived from the
summary reserve reports of the independent petroleum engineers included or incorporated by
reference therein, as to which such counsel need express no opinion), when they were filed with the
Commission, appeared on their face to have complied as to form in all material respects with the
requirements of the Exchange Act and the rules and regulations of the Commission thereunder.
(r) Neither the issuance, sale and delivery of the Securities nor the application of the
proceeds thereof by the Company as described in 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.
Such counsel shall also state that they have participated in conferences with officers and
other representatives of the Company and the Guarantors, including representatives of the
independent registered public accounting firm for the Company, and of the independent petroleum
engineers for the Company, and representatives of the Underwriters, including counsel to the
Underwriters, at which conferences the contents of the Registration Statement, the
Time of Sale Information, the Prospectus and any amendment and supplement thereto and related
matters were discussed. Although such counsel did not independently verify such information and is
not passing upon, and does not assume any responsibility for, the accuracy, completeness or
fairness of the statements contained in the Registration Statement, the Time of Sale Information,
the Prospectus and any amendment or supplement thereto (except as expressly provided in paragraphs
(b), (d) and (m) above), on the basis of the foregoing nothing has come to the attention of such
counsel to cause such counsel to believe that (a) the Registration Statement, as of its most recent
effective date, 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 not misleading, (b)
the Time of Sale Information, at the Time of Sale (which such counsel may assume to be the date of
the Underwriting Agreement), contained any untrue statement of a material fact or omitted to state
a material fact necessary to make the statements therein, in the light of the circumstances under
which they were made, not misleading or (c) the Prospectus or any amendment or supplement thereto
as of its date and the Closing Date contained or contains any untrue statement of a material fact
or omitted or omits to state a material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading (other than, in the case of clauses
(a), (b) and (c), (i) the financial statements and the related notes and schedules thereto and
auditor’s reports thereon and schedules included or incorporated by reference therein or omitted
therefrom, (ii) the summary reserve reports of the independent petroleum engineers included or
incorporated by reference therein, (iii) other financial and statistical data derived from the
financial statements and the related notes and schedules thereto, or (iv) other reserve engineering
data derived from the summary reserve reports of the independent petroleum engineers included or
incorporated by reference therein, as to which such counsel need express no belief). In addition,
such counsel need not express any view as to the conveyance of the Time of Sale Information to
investors consistently with the principles set forth in Rule 159 under the Securities Act.
In rendering such opinion, such counsel may rely as to matters of fact on certificates of
responsible officers of the Company, the Guarantors and public officials that are furnished to the
Underwriters.
The opinion of such counsel described above shall be rendered to the Underwriters at the request of
the Company and shall so state therein.
Annex B
Time of Sale Information
| 1. | Issuer Free Writing Prospectus, dated August 12, 2010, filed pursuant to Rule 433. |
Annex C
PetroQuest Energy, Inc.
Pricing Term Sheet
Issuer: |
PetroQuest Energy, Inc. (the “Company”) | |
Security Description: |
Senior Unsecured Notes | |
Size: |
$150,000,000 | |
Gross Proceeds: |
$150,000,000 | |
Gross Proceeds to Issuer (before expenses): |
$146,625,000 | |
Maturity: |
September 1, 2017 | |
Coupon: |
10% | |
Price: |
100% of face amount | |
Yield to maturity: |
10% | |
Spread to Benchmark Treasury: |
+ 791 basis points | |
Benchmark Treasury: |
UST 2.375% due 07/31/2017 | |
Benchmark Treasury Price and Yield: |
2.087% at a price of 101 27/32 | |
Interest Payment Dates: |
March 1 and September 1, commencing March 1, 2011 | |
Redemption Provisions: |
||
First call date: |
September 1, 2014 | |
Make-whole call: |
Prior to September 1, 2014 at a discount rate | |
| of Treasury plus 50 basis points | ||
Redemption prices: |
Commencing September 1, 2014: 105% | |
| Commencing September 1, 2015: 102.5% | ||
| Commencing September 1, 2016 and thereafter: | ||
| 100% | ||
Redemption with proceeds of equity offering: |
Prior to September 1, 2013, up to 35% may be | |
| redeemed at 110% | ||
Change of control: |
Put @ 101% of principal plus accrued interests | |
Trade date: |
August 12, 2010 | |
Settlement: |
T+5; August 19, 2010 | |
CUSIP: |
▇▇▇▇▇▇▇▇▇ | |
ISIN: |
US716748AA63 | |
Bookrunner: |
JPMorgan | |
Co-Managers |
BofA ▇▇▇▇▇▇▇ ▇▇▇▇▇ | |
| Credit Agricole CIB | ||
| ▇▇▇▇▇ Fargo Securities | ||
| Credit Suisse | ||
| ▇▇▇▇▇▇ ▇▇▇▇ Incorporated | ||
| ▇▇▇▇▇▇▇ Rice & Company L.L.C. | ||
| Stifel ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ | ||
Junior Co-Managers |
Capital One Southcoast | |
| Global Hunter Securities | ||
| ▇▇▇▇▇▇▇▇ Capital Partners, LLC | ||
| ▇▇▇▇▇▇▇ & Company International |
Certain Modifications to the Preliminary Prospectus Supplement
The following discussion summarizes certain modifications to the specified disclosure contained in
the Preliminary Prospectus Supplement. Pursuant to this Pricing Term Sheet, the modifications set
forth below are deemed to be included in the Preliminary Prospectus Supplement.
Summary — General
The reference to “179 MMcfe” set forth in the second paragraph on page S-1 of the Preliminary
Prospectus Supplement under the heading “Summary — General” is hereby amended by replacing “179
MMcfe” with “179 Bcfe”.
Summary — Summary historical reserve and operating data
The reference to “Natural gas reserves (MMcf)” on the second line of the chart setting forth the
summary historical reserve and operating data on page S-12 of the Preliminary Prospectus Supplement
is hereby amended by replacing “Natural gas reserves (MMcf)” with “Natural gas reserves (Mmcfe)”.
Description of the notes, Certain covenants — Limitations on indebtedness
The reference to “$125.0 million” on the fourth line of subparagraph (b)(1) of the section entitled
“Limitation on indebtedness” on page S-46 of the Preliminary Prospectus Supplement is hereby
amended by replacing “$125.0 million” with “$100.0 million”.
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
toll-free ▇-▇▇▇ ▇▇▇-▇▇▇▇ or emailing the Syndicate Desk at ▇▇▇▇▇▇▇▇▇▇@▇▇▇▇▇▇▇▇.▇▇▇.