EXHIBIT 1.1
PETROQUEST ENERGY, INC.
(a Delaware corporation)
Underwriting Agreement
February 14, 2002
4,545,455 Shares of Common Stock
(par value $0.001 per share)
▇▇▇▇▇▇▇ ▇▇▇▇ & Company L.L.C.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
PetroQuest Energy, Inc., a Delaware corporation (the "Company"),
confirms its agreement with ▇▇▇▇▇▇▇ ▇▇▇▇ & Company, L.L.C. (the "Underwriter"),
with respect to the issue and sale by the Company and the purchase by the
Underwriter of 4,545,455 shares of common stock, par value $0.001 per share (the
"Common Stock"), of the Company (the "Firm Shares"). In addition, the Company
grants to the Underwriter an option to purchase up to an additional 681,818
shares of the Common Stock on the terms and for the purposes set forth in
Section 2 (the "Option Shares"). The Firm Shares to be purchased by the
Underwriter, together with the Option Shares, if purchased, are hereinafter
collectively called the "Securities." The Company understands that the
Underwriter proposes to make a public offering of the Securities as soon as the
Underwriter deems advisable after this Agreement has been executed and
delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-63920), and
Amendment No. 1 thereto ("Amendment No. 1"), covering the registration of the
Securities under the Securities Act of 1933, as amended ("1933 Act"), including
a related prospectus, and the registration statement has been declared effective
by the Commission. The registration statement as amended by Amendment No. 1 and
further amended at the time it became effective, or if a post-effective
amendment has been filed with respect thereto as amended by such post-effective
amendment at the time of its effectiveness (including in each case the
information (if any) deemed to be part of the registration statement at the time
of effectiveness pursuant to Rule 430A under the 1933 Act), is hereinafter
referred to as the "Registration Statement;" the prospectus as supplemented by
the prospectus supplement relating to the sale of the Securities by the
Underwriter in the form first used to confirm sales of Securities is hereinafter
referred to as the "Prospectus." 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 1933 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 (it being understood that the specific references
in this Agreement to documents incorporated by reference in the Registration
Statement or the Prospectus are for clarifying purposes only and are not meant
to limit the inclusiveness of any definition herein), 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 (the "1934 Act"), and the rules and
regulations of the Commission thereunder that are deemed to be incorporated by
reference therein. For purposes of this Agreement, all references to the
Registration Statement, any preliminary prospectus, or the Prospectus or any
amendment or supplement to any of the foregoing shall be deemed to include the
copy filed with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("▇▇▇▇▇").
SECTION 1
REPRESENTATIONS AND WARRANTIES
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents
and warrants to the Underwriter as of the date hereof, and as of the First
Delivery Date or Second Delivery Date referred to in Section 2 hereof, as
appropriate, and agrees with the Underwriter, as follows:
(1) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company meets the
requirements for use of Form S-3. At the time of the initial filing of the
Registration Statement, the Company met the requirements of Form S-3 pursuant to
the standards for that form prior to October 21, 1992. The Registration
Statement has become effective under the 1933 Act, no stop order suspending the
effectiveness of the Registration Statement has been issued under the 1933 Act,
no proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company, are contemplated by the Commission, and any request on
the part of the Commission for additional information has been complied with. At
the respective times that the Registration Statement and any post-effective
amendments thereto became effective and at the First Delivery Date or Second
Delivery Date, as appropriate, the Registration Statement and any amendments and
supplements thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the rules and regulations promulgated
thereunder (the "1933 Act Regulations") and did not and will not contain an
untrue statement of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein not misleading.
Neither the Prospectus nor any amendment or supplement thereto, at the time the
Prospectus or any amendment or supplement thereto was issued and at the First
Delivery Date or Second Delivery Date, as appropriate, included or will include
an untrue statement of a material fact or omitted or will omit to state a
material fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading. The representations
and warranties in this subsection shall not apply to statements in or omissions
from the Registration Statement or the Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by the
Underwriter expressly for use in the Registration Statement or the Prospectus.
Each preliminary prospectus and the Prospectus filed as part
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of the Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when so
filed in all material respects with the 1933 Act Regulations, and the Prospectus
delivered to the Underwriter for use in connection with this offering was
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation S-T.
(2) INDEPENDENT ACCOUNTANTS. The accountants who certified the financial
statements and supporting schedules included or incorporated by reference in the
Registration Statement are independent public accountants as required by the
1933 Act and the 1933 Act Regulations.
(3) FINANCIAL STATEMENTS. The consolidated financial statements included
or incorporated by reference in the Registration Statement and the Prospectus,
together with the related schedules and notes, present fairly in all material
respects the financial position of the Company at the dates indicated, and the
consolidated statements of operations, stockholders' equity and cash flows of
the Company for the periods specified; such financial statements have been
prepared in conformity with U.S. generally accepted accounting principles
("GAAP") applied on a consistent basis throughout the periods. The selected
financial data and the summary financial information included in the
Registration Statement and the Prospectus present fairly in all material
respects the information shown therein and have been compiled on a basis
consistent with that of the audited financial statements included or
incorporated by reference in the Registration Statement. Other than the
historical financial statements (and schedules) included or incorporated by
reference in the Registration Statement and Prospectus, no other historical
financial statements (or schedules) are required by the 1933 Act or the 1933 Act
Regulations to be included therein.
(4) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective dates as
of which information is given in the Registration Statement and the Prospectus,
except as otherwise stated therein or in documents incorporated therein by
reference, (A) there has been no material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and the Subsidiaries (as hereinafter defined)
considered as one enterprise, whether or not arising in the ordinary course of
business (a "Material Adverse Effect"), (B) no casualty loss, condemnation or
other adverse event with respect to any of the properties of the Company or the
Subsidiaries has occurred that would, individually or in the aggregate, have a
Material Adverse Effect, (C) there have been no transactions entered into by the
Company or any of the Subsidiaries, other than those in the ordinary course of
business, that are material to the Company and the Subsidiaries considered as
one enterprise, and (D) there has been no dividend or distribution of any kind
declared, paid or made by the
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Company on any class of its capital stock or by any of the Subsidiaries with
respect to any class of their membership interests.
(5) GOOD STANDING OF THE COMPANY. The Company has been duly organized and
is validly existing as a corporation in good standing under the laws of the
State of Delaware and has the requisite corporate power and authority to own,
lease and operate its properties and to conduct its business as described in the
Registration Statement and Prospectus and to enter into and perform its
obligations under this Agreement. The Company is duly qualified as a foreign
corporation to transact business and is in good standing in each other
jurisdiction in which such qualification is required, whether by reason of the
ownership or leasing of property or the conduct of business, except where the
failure so to qualify or to be in good standing would not result in a Material
Adverse Effect.
(6) ORGANIZATION AND GOOD STANDING OF SUBSIDIARIES; NO OTHER
SUBSIDIARIES. Each of PetroQuest Energy, L.L.C. and PetroQuest Oil & Gas, L.L.C.
(each a "Subsidiary" and together the "Subsidiaries") has been duly organized
and is validly existing as a limited liability company in good standing under
the laws of the State of Louisiana, has all requisite power and authority to
own, lease and operate its properties and to conduct its business as described
in the Registration Statement and Prospectus, and is duly qualified to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure so to qualify or
to be in good standing would not result in a Material Adverse Effect. Except as
stated in the Registration Statement and the Prospectus (including the documents
incorporated therein by reference), all of the membership interests in each
Subsidiary are validly issued and fully paid; all such membership interests are
wholly owned by the Company, directly or through Subsidiaries, free and clear of
any security interest, mortgage, pledge, lien, encumbrance, claim or equity, and
none of the membership interests of either Subsidiary was issued in violation of
the preemptive or similar rights of any security holder of such Subsidiary.
Except for the Subsidiaries the Company does not own an equity interest in any
other person.
(7) CAPITALIZATION. The authorized capital stock of the Company is, and
the issued and outstanding capital stock of the Company as of the First Delivery
Date or Second Delivery Date, as appropriate, will be, as set forth in the
Prospectus, which has been prepared from the books and records of the Company.
The shares of issued and outstanding capital stock of the Company have been duly
authorized and validly issued and are fully paid and non-assessable, and none of
the outstanding shares of capital stock of the Company was issued in violation
of the preemptive or other similar rights of any security holder of the Company.
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(8) OTHER SECURITIES. Except as disclosed in the Registration Statement
or the Prospectus (including the documents incorporated therein by reference),
there are no outstanding (i) securities or obligations of the Company or any of
the Subsidiaries convertible into or exchangeable for any capital stock of the
Company or equity interest in any Subsidiary, (ii) warrants, rights or options
to subscribe for or purchase from the Company or any Subsidiary any capital
stock, equity interest or any such convertible or exchangeable securities or
obligations, or (iii) obligations of the Company or any Subsidiary to issue any
shares of capital stock, equity interest, any such convertible or exchangeable
securities or obligations, or any such warrants, rights or options.
(9) AUTHORIZATION OF AGREEMENT AND BINDING EFFECT. This Agreement has
been duly authorized, executed and delivered by the Company and constitutes a
valid and binding obligation of the Company enforceable against the Company in
accordance with its terms except as enforcement may be limited by bankruptcy,
insolvency, fraudulent conveyance, reorganization, moratorium or other laws or
court decisions relating to or affecting creditors' rights generally and by
general principles of equity.
(10) AUTHORIZATION AND DESCRIPTION OF SECURITIES. The Securities have
been duly authorized for issuance and sale to the Underwriter pursuant to this
Agreement and, when issued and delivered by the Company pursuant to this
Agreement against payment of the consideration set forth herein, will be as of
the First Delivery Date or Second Delivery Date, as appropriate, validly issued,
fully paid and non-assessable; the outstanding shares of Common Stock have been
duly and validly authorized and issued and are fully paid and non-assessable;
the certificates for the Securities are in valid and sufficient form; the Common
Stock conforms in all material respects to the description thereof contained in
the Registration Statement and Prospectus or in documents incorporated therein
by reference, and such descriptions conform in all material respects to the
rights set forth in the instruments defining the same; no holder of the
Securities will be subject to personal liability by reason of being such a
holder; the issuance of the Securities is not subject to preemptive or other
similar rights of any security holder of the Company; and the Company has duly
reserved a sufficient number of shares of Common Stock for issuance of the
Securities pursuant to this Agreement and for issuance upon the exercise,
conversion or exchange of all outstanding options and other securities of the
Company that are convertible into or exchangeable for Common Stock.
(11) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor any of
the Subsidiaries is in violation of its charter, by-laws or other organizational
documents or in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any of the
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Subsidiaries is a party or by which it or any of them may be bound, or to which
any of the property or assets of the Company or any Subsidiary is subject
(collectively "Agreements and Instruments"), except for defaults that would not
result in a Material Adverse Effect; and the execution, delivery and performance
of this Agreement and the consummation of the transactions contemplated in this
Agreement and the Registration Statement and Prospectus (including the issuance
and sale of the Securities and the use of the proceeds from the sale of the
Securities as described in the Prospectus under the caption "Use of Proceeds")
have been duly authorized by all necessary corporate action and (except as
contemplated by the Registration Statement or Prospectus) do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any of the properties or assets of the Company or any
Subsidiary pursuant to, the Agreements and Instruments or violations of any
applicable law, statute, rule, regulation, judgment, order, writ or decree of
any government, government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any Subsidiary or any of their assets,
properties or operations (except for such conflicts, breaches or defaults or
liens, charges, encumbrances or violations that would not result in a Material
Adverse Effect), nor will such action result in any violation of the provisions
of the charter or by-laws of the Company or the articles of organization or
operating agreement of any Subsidiary. As used herein, the term "Repayment
Event" means any event or condition that gives the holder of any note, debenture
or other evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any Subsidiary.
(12) ABSENCE OF LABOR DISPUTE. No material labor dispute with the
employees of the Company or any Subsidiary exists or to the knowledge of the
Company is imminent.
(13) ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental agency
or body, domestic or foreign, now pending, or to the knowledge of the Company
threatened, against or affecting the Company or any Subsidiary that is required
to be disclosed in the Registration Statement (other than as disclosed therein)
or that might reasonably be expected to result in a Material Adverse Effect or
that might reasonably be expected to materially and adversely affect the
consummation of the transactions contemplated in this Agreement or the
performance by the parties of their obligations hereunder; the aggregate of all
pending legal or governmental proceedings to which the Company or any Subsidiary
is a party or of which any of their respective properties or assets is the
subject that are not described in the Registration
6
Statement, including ordinary routine litigation incidental to the business,
could not reasonably be expected to result in a Material Adverse Effect.
(14) EXHIBITS. There are no contracts or documents that are required to
be described in the Registration Statement or the Prospectus or to be filed as
exhibits thereto or to documents incorporated by reference therein that have not
been so described and filed as required.
(15) NASDAQ QUOTATION AND TRADING. The Company's Common Stock is quoted
and traded on the Nasdaq National Market ("Nasdaq"). Application will be made
for approval of the Securities for quotation and trading on Nasdaq, and as of
the First Delivery Date and Second Delivery Date, as appropriate, the Securities
shall have been approved for quotation and trading on Nasdaq, subject to
official notice of issuance.
(16) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or authorization,
approval, consent, license, order, registration, qualification or decree of, any
court or governmental authority or agency is necessary for the performance by
the Company of its obligations hereunder or in connection with the offering,
issuance or sale of the Securities under this Agreement or the consummation of
the transactions contemplated by this Agreement, except such as have been
obtained or as may be required under the 1933 Act or the 1933 Act Regulations
and foreign or state securities or blue sky laws.
(17) POSSESSION OF LICENSES AND PERMITS. The Company and the Subsidiaries
possess and are in compliance with the terms and conditions of all permits,
licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by appropriate federal, state, local or foreign
regulatory bodies necessary to conduct the business now operated by them, except
where the failure so to comply would not, singly or in the aggregate, have a
Material Adverse Effect; all of the Governmental Licenses are valid and in full
force and effect, except where the invalidity or the failure to be in full force
and effect would not have a Material Adverse Effect; and neither the Company nor
any of its Subsidiaries has received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses which, singly or in
the aggregate, if the subject of an unfavorable decision, ruling or finding
would result in a Material Adverse Effect.
(18) PROPERTIES. The Company and the Subsidiaries have good and
marketable title in fee simple to, or valid and enforceable leasehold interests
in, all of their owned and leased real properties and good and indefeasible
title to, or valid and enforceable leasehold interests in, all other material
properties owned or leased by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as (a) are described in the Registration
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Statement or Prospectus or in documents incorporated by reference therein or (b)
do not, singly or in the aggregate, have a Material Adverse Effect.
(19) INSURANCE. The Company and each of the Subsidiaries is insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged; all policies of insurance insuring the Company and each of the
Subsidiaries or their respective businesses, assets, employees, officers and
directors are in full force and effect; the Company and each of the Subsidiaries
are in compliance with the terms of such policies and instruments in all
material respects; there are no claims by the Company or any of the Subsidiaries
under any such policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause that could
reasonably be expected to have a Material Adverse Effect; neither the Company
nor any of the Subsidiaries has been refused any insurance coverage sought or
applied for; and neither the Company nor any of the Subsidiaries has any reason
to believe that any of them 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 at a cost that
could not reasonably be expected to have a Material Adverse Effect.
(20) TAXES. The Company and each of the Subsidiaries has filed all
material foreign, federal, state and local tax returns that are required to be
filed or have requested extensions thereof (except in any case in which the
failure so to file would not have a Material Adverse Effect) and has paid all
taxes required to be paid by it and any other assessment, fine or penalty levied
against it to the extent due and payable, except for any such assessment, fine
or penalty that is currently being contested in good faith or as described in or
contemplated by the Registration Statement or Prospectus.
(21) MORTGAGES AND DEEDS OF TRUST. Except as set forth in the
Registration Statement and the Prospectus, the mortgages and deeds of trust
encumbering the properties and assets described in the Prospectus are not
convertible, and neither the Company, nor any Subsidiary, nor any person
affiliated therewith holds a participating interest therein, and such mortgages
and deeds of trust are not cross-defaulted or cross-collateralized to any
property not owned directly or indirectly by the Company or any of its
Subsidiaries.
(22) INVESTMENT COMPANY ACT. The Company is not, and upon the issuance
and sale of the Securities as herein contemplated and the application of the net
proceeds therefrom as described in the Prospectus will not be, an "investment
company" as such term is defined in the Investment Company Act of 1940, as
amended (the "1940 Act").
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(23) ENVIRONMENTAL LAWS. Except as otherwise disclosed in the Prospectus,
or except as would not, singly or in the aggregate, have a Material Adverse
Effect, (i) the Company and the Subsidiaries have been and are in compliance
with applicable Environmental Statutes (as hereinafter defined); (ii) neither
the Company, any of the Subsidiaries, nor to the Company's knowledge any prior
owners or operators of a property or any other party has at any time "released"
(as such term is defined in Section 101(22) of CERCLA (as hereinafter defined))
or otherwise disposed of Hazardous Materials (as hereinafter defined) on, to or
from the Company's or the Subsidiaries' properties; (iii) neither the Company
nor any Subsidiary intends to use its currently owned or leased properties or
any subsequently acquired properties, other than in compliance with applicable
Environmental Statutes; (iv) neither the Company nor any Subsidiary knows of any
seepage, leak, discharge, release, emission, spill, or dumping of Hazardous
Materials into waters (including without limitation to groundwater and surface
water) on, beneath or adjacent to any of their properties or onto lands from
which Hazardous Materials might seep, flow or drain into such waters; (v)
neither the Company nor any of the Subsidiaries has received any notice of, or
has any knowledge of any occurrence or circumstance that, with notice or passage
of time or both, would give rise to a claim under or pursuant to any
Environmental Statute with respect to the properties or the assets described in
the Registration Statement or Prospectus or arising out of the conduct of the
Company or its Subsidiaries; (vi) none of the Company's or the Subsidiaries'
properties is included or, to their knowledge, proposed for inclusion on the
National Priorities List issued pursuant to CERCLA by the United States
Environmental Protection Agency (the "EPA") or proposed for inclusion on any
similar list or inventory issued pursuant to any other Environmental Statute or
issued by any other Governmental Authority (as hereinafter defined). As used
herein, "Hazardous Material" shall include without limitation any flammable
explosives, radioactive materials, hazardous materials, hazardous wastes, toxic
substances, or related materials, asbestos or any hazardous material as defined
by any federal, state or local environmental law, ordinance, rule or regulation
including, without limitation, the Comprehensive Environmental Response,
Compensation, and Liability Act of 1980, as amended, 42 U.S.C. Sections
9601-9675 ("CERCLA"), the Hazardous Materials Transportation Act, as amended, 49
U.S.C. Sections 1801-1819, the Resource Conservation and Recovery Act, as
amended, 42 U.S.C. Sections 6901-K, the Emergency Planning and Community
Right-to-Know Act of 1986, 42 U.S.C. Sections 11001-11050, the Toxic Substances
Control Act, 15 U.S.C. Sections 2601-2671, the Federal Insecticide, Fungicide
and Rodenticide Act, 7 U.S.C. Sections 136-136y, the Clean Air Act, 42 U.S.C.
Sections 7401-7642, the Clean Water Act (Federal Water Pollution Control Act),
33 U.S.C. Sections 1251-1387, the Safe Drinking Water Act, 42 U.S.C. Sections
300f-300j-26, the Occupational Safety and Health Act, 29 U.S.C. Sections
651-678, and the Air Pollution Act of 1990, 33 U.S.C. Sections 2701-2766, as any
of the above statutes may be amended from time to time, and in the regulations
promulgated pursuant to each of the foregoing (including environmental
9
statues not specifically defined herein) (individually, an "Environmental
Statute" and collectively "Environmental Statutes") or by any federal, state or
local governmental authority having or claiming jurisdiction over the properties
and assets of the Company or any of the Subsidiaries (a "Governmental
Authority").
(24) REGISTRATION RIGHTS. Except as described in the Registration
Statement, there are no registration rights or other similar rights to have any
securities registered pursuant to the Registration Statement that have not been
waived. Except as described in the Registration Statement or as otherwise
disclosed to the Underwriter by the Company in a writing specifically
referencing this Agreement, there are no registration rights or other similar
rights to have any securities otherwise registered by the Company under the 1933
Act.
(25) INTERNAL ACCOUNTING. The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurances that (i)
transactions are executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets, (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
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences; and, to the knowledge of the Company, none of the
Company, the Subsidiaries, or any employee or agent thereof, has made any
payment of funds of the Company or the Subsidiaries, or received or retained any
funds, and no funds of the Company or the Subsidiaries have been set aside to be
used for any payment, in each case in violation of any law, rule or regulation.
(26) CERTAIN TRANSACTIONS AND RELATIONSHIPS. No relationship, direct or
indirect, exists between or among the Company, on the one hand, and the
directors, officers, stockholders, customers or suppliers of the Company, on the
other hand, that is required to be described in the Prospectus and that is not
so described or incorporated therein by reference.
(27) NO MANIPULATION. The Company has not taken and will not take,
directly or indirectly, any action designed to cause or result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Securities to facilitate the
sale or resale of the Securities except for repurchases of common stock in
compliance with Rule 10b-18 and Regulation M under the Exchange Act.
(28) INDEPENDENT PETROLEUM ENGINEERING FIRM. ▇▇▇▇▇ ▇▇▇▇▇ Company, L.P.
was, as of the dates of its reports referenced in the Registration
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Statement and Prospectus (including the documents incorporated therein by
reference), and is, as of the date hereof, an independent petroleum engineering
firm with respect to the Company.
(b) OFFICERS' CERTIFICATES. Any certificate signed by any officer of the
Company or any Subsidiaries that is delivered to the Underwriter or to counsel
for the Underwriter pursuant to this Agreement shall be deemed a representation
and warranty solely by the Company to the Underwriter as to the matters covered
thereby.
SECTION 2
SALE AND DELIVERY TO UNDERWRITER; CLOSING
(a) SALE OF SECURITIES. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriter, and the Underwriter agrees
to purchase from the Company, at a price of $4.224 per share, the 4,545,455 Firm
Shares, for an aggregate purchase price of $19,200,001.92. In addition, the
Company grants to the Underwriter an option to purchase up to 681,818 Option
Shares at the same price per share. Such option is hereby granted for the
purpose of covering over-allotments in the sale of Firm Shares, and will expire
if not exercised within thirty (30) days after the date of this Agreement. The
option granted hereby may be exercised in whole or in part (but not more than
once) by the Underwriter, only for the purpose of covering over-allotments that
may be made in connection with the offering and distribution of the Firm Shares.
The notice of exercise shall set forth the number of Option Shares as to which
the Underwriter is exercising the option, and the time and date of payment
therefor and of issuance and delivery thereof. Such time and date of payment,
issuance and delivery (the "Second Delivery Date") shall be determined by the
Underwriter but shall not be later than three full business days after the
exercise of such option, nor in any event prior to the First Delivery Date (as
defined in Section 2(b)).
(b) PAYMENT. Payment of the purchase price for, and the delivery of, the
Firm Shares shall be made at the offices of ▇▇▇▇▇▇▇ ▇▇▇▇ & Company L.L.C., ▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, or at such other place as
shall be agreed upon by the Underwriter and the Company, at 9:00 a.m. (Central
time) on February 20, 2002, or such other time not later than ten business days
after such date as shall be agreed upon by the Underwriter and the Company (such
time and date of payment and delivery being herein called "First Delivery
Date"). In the event that any or all of the Option Shares are purchased by the
Underwriter, payment of the purchase price for, and the delivery of, the Option
Shares shall be made at the offices of ▇▇▇▇▇▇▇ Rice & Company L.L.C., ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ in the manner set forth above, or at
such other place as the Company and the Underwriter shall determine, on the
Second Delivery Date as specified in the notice from the Underwriter to the
Company. On the First Delivery Date or Second Delivery Date, as the case may be,
the Company shall deliver or cause to be delivered the Firm Shares or the Option
Shares, as the case may be, through the facilities of the Depository Trust
Company ("DTC") for the account of the Underwriter, against payment of the
purchase price therefor by wire transfer of immediately available funds to the
account of PetroQuest Energy, L.L.C. at Hibernia National Bank, as has been
designated by the Company to the Underwriter.
11
SECTION 3
COVENANTS OF THE COMPANY
The Company covenants with the Underwriter as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS. The
Company, subject to Section 3(b) hereof, will comply with the requirements of
Rule 430A or Rule 434, as applicable, and will notify the Underwriter promptly,
and confirm the notice in writing (i) when any post-effective amendment to the
Registration Statement shall become effective or any supplement to the
Prospectus or any amended prospectus shall have been filed, (ii) of the receipt
of any comments from the Commission, (iii) of any request by the Commission for
any amendment to the Registration Statement or any amendment or supplement to
the Prospectus or for additional information, and (iv) of the issuance by the
Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, or of the initiation or threatening of any
proceedings for any of such purposes. The Company will promptly effect the
filings necessary pursuant to Rule 424(b) and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) was received for filing by the Commission and, in the
event that it was not, it will promptly file such prospectus. The Company will
make every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest possible
moment.
(b) FILING OF AMENDMENTS. The Company will give the Underwriter notice of
its intention to file or prepare any amendment to the Registration Statement
(including any filing under Rule 462(b)), or any amendment, supplement or
revision to either the prospectus included in the Registration Statement at the
time it became effective or to the Prospectus, will furnish the Underwriter with
copies of any such documents a reasonable amount of time prior to such proposed
filing or use, as the case may be, and will not file or use any such document to
which the Underwriter or counsel for the Underwriter shall reasonably object.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished or,
upon request and to the extent reasonably available, will deliver to the
Underwriter and counsel for the Underwriter, without charge, signed copies of
the Registration Statement as originally filed and of each amendment thereto
(including exhibits filed therewith or incorporated by reference therein) and
signed copies of all consents and certificates of experts, and will also deliver
to the Underwriter, without charge, a conformed copy of the Registration
Statement as originally filed and of each amendment thereto (without exhibits).
The copies of the Registration Statement and each amendment thereto furnished to
the Underwriter will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the extent
permitted or required by Regulation S-T.
(d) DELIVERY OF PROSPECTUS. The Company will furnish to the Underwriter,
without charge, during the period when the Prospectus is required to be
delivered under the 1933 Act or the 1934 Act, such number of copies of the
Prospectus (as amended or supplemented) as the Underwriter may reasonably
request. The Prospectus and any amendments or supplements
12
thereto furnished to the Underwriter will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to ▇▇▇▇▇, except
to the extent permitted or required by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will comply
with the 1933 Act and the 1933 Act Regulations so as to permit the completion of
the distribution of the Securities as contemplated in this Agreement and in the
Prospectus. If at any time when a prospectus is required by the 1933 Act to be
delivered in connection with sales of the Securities, any event shall occur or
condition shall exist as a result of which it is necessary, in the reasonable
opinion of counsel for the Underwriter or for the Company, to amend the
Registration Statement or amend or supplement the Prospectus in order that the
Prospectus will not include any untrue statements of a material fact or omit to
state a material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the reasonable opinion
of such counsel, at any such time to amend the Registration Statement or amend
or supplement the Prospectus in order to comply with the requirements of the
1933 Act or the 1933 Act Regulations, the Company will promptly prepare and file
with the Commission, subject to Section 3(b) hereof, such amendment or
supplement as may be necessary to correct such statement or omission or to make
the Registration Statement or the Prospectus comply with such requirements, and
the Company will furnish to the Underwriter such number of copies of such
amendment or supplement as the Underwriter may reasonably request.
(f) BLUE SKY QUALIFICATIONS. The Company will use its best efforts, in
cooperation with the Underwriter, to qualify, if necessary, the Securities for
offering and sale under the applicable securities laws of such states and other
jurisdictions (domestic or foreign) as the Underwriter may designate and to
maintain such qualifications in effect for a period of not more than one year
from the effective date of the Registration Statement; provided, however, that
the Company shall not be obligated to file any general consent to service of
process or to qualify as a foreign corporation or as a dealer in securities in
any jurisdiction in which it is not so qualified or to subject itself to
taxation in respect of doing business in any jurisdiction in which it is not
otherwise so subject. In each jurisdiction in which the Securities have been so
qualified, the Company will file such statements and reports as may be required
by the laws of such jurisdiction to continue such qualification in effect for a
period of not more than one year from the effective date of the Registration
Statement.
(g) RULE 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its security
holders as soon as practicable an earnings statement for the purposes of, and to
provide the benefits contemplated by, the last paragraph of Section 11(a) of the
1933 Act.
(h) USE OF PROCEEDS. The Company will use the net proceeds received by it
from the sale of the Securities in the manner specified in the Prospectus under
"Use of Proceeds."
(i) APPROVAL FOR QUOTATION AND TRADING. The Company will use its best
efforts to obtain approval of the Securities for quotation and trading on
Nasdaq.
13
(j) RESTRICTION ON SALE OF SECURITIES. During a period of 120 days from
the date hereof, the Company will not, and will cause its directors, and all
officers with the title of Vice President and above, to enter into letter
agreements in form and substance satisfactory to the Underwriter and its counsel
committing that they will not, without the prior written consent of the
Underwriter, (i) directly or indirectly, offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase, or otherwise transfer or
dispose of any share of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or file any registration statement
under the 1933 Act with respect to any of the foregoing, or (ii) enter into any
swap or any other agreement or transaction that transfers, in whole or in part,
directly or indirectly, the economic consequence of ownership of the Common
Stock, whether any such swap or transaction described in clause (i) or (ii)
above is to be settled by delivery of Common Stock or such other securities, in
cash or otherwise. The foregoing sentence shall not apply to (A) the Securities
to be sold hereunder, (B) the issuance of shares of Common Stock or options to
purchase Common Stock granted under the current employee benefit plans of the
Company described in the Registration Statement or Prospectus or any employee
benefit plans of the Company in existence on the date hereof, (C) the issuance
by the Company of shares of Common Stock in exchange for or upon conversion or
exercise of outstanding securities of the Company that are described in the
Registration Statement or the Prospectus in accordance with their terms, (D)
shares of Common Stock or securities convertible or exercisable into shares of
Common Stock may be transferred as bona fide gifts by a stockholder to such
stockholder's spouse, children, siblings, parent or other descendants, or trusts
controlled by such stockholder who agree prior to such transfer to be bound by a
similar lock-up agreement, and (E) a stockholder that exchanges shares of Common
Stock owned by the stockholder to exercise Company stock options issued in
connection with employment or Company employee or director incentive plans.
14
SECTION 4
PAYMENT OF EXPENSES
(a) EXPENSES. The Company will pay all expenses incident to the
performance of its obligations under this Agreement, including (i) the
preparation, printing and filing of the Registration Statement (including
financial statements and exhibits) as originally filed and of each amendment
thereto, (ii) the printing and delivery to the Underwriter of this Agreement,
and such other documents as may be required in connection with the offering,
purchase, sale, issuance or delivery of the Securities, (iii) the preparation,
issuance and delivery of the certificates for the Securities to the Underwriter,
including any stock or other transfer taxes and any stamp or other duties
payable upon the sale, issuance or delivery of the Securities to the
Underwriter, (iv) the printing and delivery to the Underwriter of copies of each
preliminary prospectus, the Prospectus and any amendments or supplements
thereto, (v) the preparation, printing and delivery to the Underwriter of copies
of the Blue Sky Survey and any supplement thereto, and reasonable fees and
disbursements of counsel for the Underwriter in connection therewith, (vi) the
fees and expenses of any transfer agent or registrar for the Securities, (vii)
the filing fees incident to, and the reasonable fees and disbursements of
counsel to the Underwriter in connection with, the review by the NASD of the
terms of the sale of the Securities, and (viii) the fees and expenses incurred
in connection with the listing of the Securities on Nasdaq.
(b) TERMINATION OF AGREEMENT. If this Agreement is terminated by the
Underwriter in accordance with the provisions of Section 5 or Section 9(a)(i)
hereof, the Company shall reimburse the Underwriter for all of its reasonable
out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the Underwriter, unless such termination was pursuant to the
condition set forth in Section 5(j) and the failure to satisfy such condition
was solely attributable to the Underwriter.
SECTION 5
CONDITIONS OF UNDERWRITER'S OBLIGATIONS
The obligations of the Underwriter hereunder are subject to the
accuracy of the representations and warranties of the Company contained in
Section 1 hereof and in certificates of any officer of the Company or any
Subsidiary delivered pursuant to the provisions hereof, to the performance by
the Company of its covenants and other obligations hereunder, and to the
following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT; FILING OF PROSPECTUS
SUPPLEMENT. The Registration Statement has become effective and at the First
Delivery Date no stop order suspending the effectiveness of the Registration
Statement shall have been issued under the 1933 Act or proceedings therefor
initiated or threatened by the Commission, and any request on the part of the
Commission for additional information shall have been complied with to the
reasonable satisfaction of counsel to the Underwriter. The Prospectus, as
supplemented by the prospectus supplement relating to the offering of the
Securities, shall have been filed with the Commission pursuant to Rule 424(b)
within the applicable time period prescribed for such filing by the 1933 Act
Regulations and in accordance with Section 3(a) hereof.
15
(b) OPINION OF COUNSEL FOR COMPANY. At the First Delivery Date and, if
applicable, the Second Delivery Date, the Underwriter shall have received the
favorable opinion, dated as of such delivery date, of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP and
the Onebane Law Firm, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriter, to the effect set forth in Exhibits
A-1 and A-2, respectively, hereto with such qualifications and explanatory notes
thereto as counsel to the Underwriter may reasonably accept.
(c) OPINION OF COUNSEL FOR UNDERWRITER. At the First Delivery Date and,
if applicable, the Second Delivery Date, the Underwriter shall have received the
favorable opinion, dated as of such delivery date, of Jones, Walker, Waechter,
Poitevent, Carrere & ▇▇▇▇▇▇▇ L.L.P., counsel for the Underwriter, with respect
to such matters as the Underwriter and such counsel deem appropriate. In giving
the opinions described in this Section 5, each counsel may rely, as to all
matters governed by the laws of jurisdictions other than the law of the State of
Louisiana, with respect to the opinions of the Onebane Law Firm and Jones,
Walker, and other than the law of the State of Texas, with respect to the
opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, the federal law of the United States and the General
Corporation Law of the State of Delaware, upon the opinions of counsel
satisfactory to the Underwriter. Such counsel may also state that, insofar as
such opinion involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company and the Subsidiaries and
certificates of public officials.
(d) OFFICERS' CERTIFICATE. At the First Delivery Date and, if applicable,
the Second Delivery Date, there shall not have been, since the date hereof or
since the respective dates as of which information is given in the Registration
Statement or Prospectus, except as contemplated by the Prospectus, any material
adverse change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and the Subsidiaries
considered as one enterprise, whether or not arising in the ordinary course of
business, and the Underwriter shall have received a certificate of the Chief
Executive Officer, President or a Vice President of the Company and of the chief
financial or chief accounting officer of the Company, dated as of such delivery
date, to the effect that (i) there has been no such material adverse change,
(ii) the representations and warranties in Section 1(a) hereof are true and
correct in all material respects with the same force and effect as though
expressly made at and as of such delivery date, (iii) the Company has complied
in all material respects with all agreements and satisfied all conditions on its
part to be performed or satisfied at or prior to such delivery date, and (iv) no
stop order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or are pending
or to such officer's knowledge are contemplated by the Commission.
(e) ACCOUNTANT'S COMFORT LETTER. At the time of the execution of this
Agreement, the Underwriter shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP a letter
dated such date, in the form of Exhibit B hereto.
(f) BRING-DOWN COMFORT LETTER. At the First Delivery Date and, if
applicable, the Second Delivery Date, the Underwriter shall have received from
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP a letter, dated as of such delivery date, to the effect that
they reaffirm the statements made in the letter furnished pursuant to subsection
(e) of this Section, except that the specified date referred to shall be a date
not more than three business days prior to such delivery date.
16
(g) APPROVAL FOR QUOTATION AND TRADING. At the First Delivery Date, the
Securities shall have been approved for quotation and trading on Nasdaq, subject
only to official notice of issuance.
(h) LOCK-UP AGREEMENTS. Each director, and all officers of the Company
with the title of Vice President and above, shall have executed and delivered to
the Underwriter lock-up agreements containing substantially the same terms and
conditions as are set forth in the first sentence of Section 3(j) hereof; such
agreements shall not have been amended or revoked; and such agreements shall be
in full force and effect.
(i) ADDITIONAL DOCUMENTS. At First Delivery Date and, if applicable, the
Second Delivery Date, counsel for the Underwriter shall have been furnished with
such documents and opinions as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the Securities as herein
contemplated, or in order to evidence the accuracy of any of the representations
or warranties, or the fulfillment of any of the conditions, herein contained;
and all proceedings taken by the Company in connection with the issuance and
sale of the Securities as herein contemplated shall be reasonably satisfactory
in form and substance to the Underwriter and counsel for the Underwriter.
(j) TERMINATION OF AGREEMENT. If any condition specified in this Section
shall not have been fulfilled when and as required to be fulfilled, this
Agreement may be terminated by the Underwriter by notice to the Company at any
time at or prior to the First Delivery Date, and such termination shall be
without liability of any party to any other party except as provided in Section
4 and except that Sections 1, 6, 7 and 8 shall survive any such termination and
remain in full force and effect.
SECTION 6
INDEMNIFICATION
(a) INDEMNIFICATION OF UNDERWRITER. The Company agrees to indemnify and
hold harmless the Underwriter and each person, if any, who controls the
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act as follows: (i) against any and all loss, liability, claim, damage
and expense whatsoever arising out of any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any
amendment thereto), or the omission or alleged omission therefrom of a material
fact required to be stated therein or necessary to make the statements therein
not misleading, or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or the omission or alleged
omission therefrom of a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; (ii) against any and all loss, liability, claim, damage and expense
whatsoever to the extent of the aggregate amount paid in settlement of any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission;
provided that (subject to Section 6(d) below) any such settlement is effected
with the written consent of the Company; and (iii) against any and all expense
whatsoever, as incurred (including
17
the reasonable fees and disbursements of counsel chosen by the Underwriter),
reasonably incurred in investigating, preparing for or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or omission
to the extent that any such expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by the
Underwriter expressly for use in the Registration Statement (or any amendment
thereto), or any preliminary prospectus or the Prospectus (or any amendment or
supplement thereto).
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. The Underwriter
agrees to indemnify and hold harmless the Company, its directors, each of its
officers who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act against any and all loss, liability, claim, damage and
expense described in the indemnity contained in subsection (a) of this Section,
as incurred, but only with respect to untrue statements or omissions, or alleged
untrue statements or omissions, made in the Registration Statement (or any
amendment thereto), or any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto) in reliance upon and in conformity with written
information furnished to the Company by the Underwriter expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectus (or any amendment or supplement thereto). The Company
acknowledges that the statements set forth in the fifth paragraph of the cover
page, and in the third, fourth, ninth, tenth, eleventh and twelfth paragraphs
under the caption "Underwriting" in the prospectus supplement constituting part
of the Prospectus, constitute the only information furnished in writing by or on
behalf of the Underwriter expressly for use in the Registration Statement
relating to the Securities as originally filed or in any amendment thereof,
related preliminary prospectus or the Prospectus or in any amendment thereof or
supplement thereto, as the case may be.
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
thereunder, but failure to so notify an indemnifying party shall not relieve
such indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by the Underwriter, and, in
the case of parties indemnified pursuant to Section 6(b) above, counsel to the
indemnified parties shall be selected by the Company. An indemnifying party may
participate at its own expense in the defense of any such action; provided,
however, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party.
Notwithstanding the foregoing, if it so elects within a reasonable time after
receipt of such notice, an indemnifying party, jointly with any other
indemnifying parties receiving such notice, may assume the defense of such
action with counsel chosen by it and approved by the indemnified parties
defendant in such action
18
(which approval shall not be unreasonably withheld), unless such indemnified
parties reasonably object to such assumption on the ground that there may be
legal defenses available to them which are different from or in addition to
those available to such indemnifying party. If an indemnifying party assumes the
defense of such action, the indemnifying party shall not be liable for any fees
and expenses of counsel for the indemnified parties incurred thereafter in
connection with such action, except that the indemnifying party shall be liable
for the reasonable costs of investigation subsequently incurred by the
indemnified party in connection with the defense. In no event shall the
indemnifying parties be liable for fees and expenses of more than one counsel
(in addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but similar or
related actions in the same jurisdiction arising out of the same general
allegations or circumstances. No indemnifying party shall, without the prior
written consent of the indemnified parties, which consent shall not be
unreasonably withheld, settle or compromise or consent to the entry of any
judgment with respect to any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever in respect of which indemnification or contribution could be sought
under this Section 6 or Section 7 hereof (whether or not the indemnified parties
are actual or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding or claim and
(ii) does not include a statement as to or an admission of fault, culpability or
a failure to act by or on behalf of any indemnified party.
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested in writing an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of the
nature contemplated by Section 6(a)(ii) effected without its written consent if
(i) such settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying party shall
have received notice of the terms of such settlement at least 30 days prior to
such settlement being entered into and (iii) such indemnifying party shall not
have reimbursed such indemnified party in accordance with such request prior to
the date of such settlement; provided, however, if at any time an indemnified
party shall have requested an indemnifying party to reimburse the indemnified
party for fees and expenses of counsel, an indemnifying party shall not be
liable for any settlement of the nature contemplated by this Section 6(d)
effected without its written consent if (x) such indemnifying party reimburses
such indemnified party in accordance with such request to the extent it
considers such request to be reasonable; and (y) such indemnifying party
provides written notice to the indemnified party substantiating the unpaid
balance as unreasonable, in each case prior to the date of such settlement.
SECTION 7
CONTRIBUTION
If the indemnification provided for in Section 6 hereof is for any reason
unavailable to or insufficient to hold harmless an indemnified party in respect
of any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate amount of such
losses, liabilities, claims, damages and expenses incurred by such indemnified
party, as incurred, (i) in such proportion as is appropriate to reflect the
relative benefits
19
received by the Company the one hand and the Underwriter on the other hand from
the offering of the Securities pursuant to this Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and of the Underwriter on the other hand in connection with the statements
or omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company the one hand and the Underwriter on the other
hand in connection with the offering of the Securities pursuant to this
Agreement shall be deemed to be in the same respective proportions as the total
net proceeds from the offering of the Securities pursuant to this Agreement
(before deducting expenses) received by the Company and the total underwriting
discount received by the Underwriter, in each case as set forth on the cover of
the Prospectus, bear to the aggregate initial public offering price of the
Securities as set forth on such cover. The relative fault of the Company on the
one hand and the Underwriter on the other hand shall be determined by reference
to, among other things, whether any such untrue or alleged untrue statement of a
material fact or omission or alleged omission to state a material fact relates
to information supplied by the Company or by the Underwriter and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriter agree that
it would not be just and equitable if contribution pursuant to this Section were
determined by pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to above in this
Section 7. The aggregate amount of losses, liabilities, claims, damages and
expenses incurred by an indemnified party and referred to above in this Section
7 shall be deemed to include any legal or other expenses reasonably incurred by
such indemnified party in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever based upon any such
untrue or alleged untrue statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, the Underwriter shall not be
required to contribute any amount in excess of the amount by which the total
price at which the Securities underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which the
Underwriter has otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the ▇▇▇▇
▇▇▇) shall be entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation. For purposes of this Section 7, each person,
if any, who controls the Underwriter within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act shall have the same rights to
contribution as the Underwriter, and each director of the Company, each officer
of the Company who signed the Registration Statement, and each person, if any,
who controls the Company within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as the
Company.
20
SECTION 8
REPRESENTATIONS, WARRANTIES AND
AGREEMENTS TO SURVIVE DELIVERY
All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of the
Subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of the
Underwriter or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriter.
SECTION 9
TERMINATION OF AGREEMENT
(a) TERMINATION; GENERAL. In addition to its rights to terminate this
Agreement under Section 5(j) hereof, the Underwriter may terminate this
Agreement, by notice to the Company, at any time at or prior to the First
Delivery Date (i) if there has been, since the time of execution of this
Agreement or since the respective dates as of which information is given in the
Prospectus, any material adverse change in the condition, financial or
otherwise, or in the earnings, business affairs or business prospects of the
Company and its subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, or (ii) if there has occurred any
material adverse change in the financial markets in the United States or the
international financial markets, any outbreak of hostilities or escalation
thereof or other calamity or crisis or any change or development involving a
prospective change in national or international political, financial or economic
conditions, in each case the effect of which is such as to make it, in the
judgment of the Underwriter, impracticable to market the Securities or to
enforce contracts for the sale of the Securities, or (iii) if trading in any
securities of the Company has been suspended or materially limited by the
Commission or Nasdaq, or if trading generally on the American Stock Exchange or
the New York Stock Exchange or Nasdaq has been suspended or materially limited,
or minimum or maximum prices for trading have been fixed, or maximum ranges for
prices have been required, by any of said exchanges or by such system or by
order of the Commission, the NASD or any other governmental authority, or (iv)
if a banking moratorium has been declared by either Federal or New York
authorities.
(b) LIABILITIES. If this Agreement is terminated pursuant to this Section
9, such termination shall be without liability of any party to any other party
except as provided in Section 4 hereof, and provided further that Sections 1, 6,
7 and 8 shall survive such termination and remain in full force and effect.
SECTION 10
NOTICES
All notices and other communications hereunder shall be in writing and
shall be deemed to have been duly given if mailed or transmitted by any standard
form of telecommunication. Notices to the Underwriter shall be directed to
▇▇▇▇▇▇▇ ▇▇▇▇ & Company L.L.C., ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, fax number (▇▇▇) ▇▇▇-▇▇▇▇, attention of Corporate Finance
Department, and notices to the Company shall be directed to it at ▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇
▇▇
3000, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, fax number (▇▇▇) ▇▇▇-▇▇▇▇, attention of
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Chairman and Chief Executive Officer.
SECTION 11
PARTIES
This Agreement shall inure to the benefit of and be binding upon the
Underwriter and the Company and their respective successors. Nothing expressed
or mentioned in this Agreement is intended or shall be construed to give any
person, firm or corporation, other than the Underwriter and the Company and
their respective successors and the controlling persons and officers and
directors referred to in Sections 6 and 7 and their heirs and legal
representatives, any legal or equitable right, remedy or claim under or in
respect of this Agreement or any provision herein contained. This Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Underwriter and the Company and their respective
successors, and said controlling persons and officers and directors and their
heirs and legal representatives, and for the benefit of no other person, firm or
corporation. No purchaser of Securities from the Underwriter shall be deemed to
be a successor by reason merely of such purchase.
SECTION 12
GOVERNING LAW AND TIME
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF LOUISIANA. SPECIFIED TIMES OF DAY REFER TO CENTRAL STANDARD
OR DAYLIGHT TIME, AS APPROPRIATE.
SECTION 13
EFFECT OF HEADINGS; COUNTERPARTS
The Article and Section headings herein are for convenience only and
shall not affect the construction hereof. If the foregoing is in accordance with
your understanding of our agreement, please sign and return to the Company a
counterpart hereof, whereupon this instrument, along with all counterparts, will
become a binding agreement between the Underwriter and the Company in accordance
with its terms.
22
Very truly yours,
PETROQUEST ENERGY, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman and Chief Executive Officer
CONFIRMED AND ACCEPTED,
as of the date first above written:
▇▇▇▇▇▇▇ RICE & COMPANY L.L.C.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
---------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Title: Partner
23
EXHIBIT A-1
FORM OF OPINION OF COUNSEL
(▇▇▇▇▇▇ & ▇▇▇▇▇▇, LLP)
(1) The Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of the State of Delaware.
(2) The Company has the corporate power and authority to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and Prospectus and to enter into and perform its
obligations under the Underwriting Agreement.
(3) The Company has an authorized capitalization as set forth in the
Prospectus under the caption "Capitalization." When issued to the Underwriter
against payment therefor as provided for in the Underwriting Agreement, the
Securities will have been duly authorized and validly issued and will be fully
paid and non-assessable. The Common Stock conforms in all material aspects to
the descriptions thereof included in or incorporated by reference into the
Registration Statement.
(4) The Underwriting Agreement has been duly authorized, executed and
delivered by the Company.
(5) No filing with, or authorization, approval, consent, license, order,
registration, qualification or decree of, any federal or state court or
governmental authority or agency is legally required for the execution and
delivery of the Underwriting Agreement by the Company or in connection with the
offering or sale of the Securities by the Company under the Underwriting
Agreement, other than those that have been obtained (including those under the
1933 Act and the 1933 Act Regulations), or as may be required under the state
securities or blue sky laws.
(6) The Registration Statement has been declared effective under the 1933
Act. Any required filing of the Prospectus pursuant to Rule 424(b) has been made
in the manner and within the time period required by Rule 424(b). No stop order
suspending the effectiveness of the Registration Statement has been issued under
the 1933 Act and no proceedings for that purpose have been initiated or, to the
best of our knowledge, are pending or threatened by the Commission.
(7) The Registration Statement and the Prospectus, excluding the
documents incorporated by reference therein, and each amendment or supplement to
the Registration Statement and Prospectus, excluding the documents incorporated
by reference therein, in each case as of their respective effective or issue
dates (other than the financial statements and notes thereto, schedules and
other financial, reserve and production data included or incorporated by
reference therein or omitted therefrom, as to which we express no opinion)
complied as to form in all material respects with the requirements of the 1933
Act and the 1934 Act, and the rules and regulations thereunder.
A-1
(8) All descriptions in the Registration Statement and the Prospectus of
statutes, legal and governmental proceedings and contracts and other documents
fairly present the information required to be shown. To the best of our
knowledge, there are no franchises, contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments required to be described or
referred to in the Registration Statement or to be filed as exhibits thereto
other than those described or referred to therein or filed or incorporated by
reference as exhibits thereto, and the descriptions thereof or references
thereto are correct in all material respects.
(9) No holder of any security of the Company has any right to require
registration of shares of Common Stock or any other security of the Company in
the Registration Statement that has not been waived.
(10) The Company is not an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
Nothing has come to our attention that would lead us to believe that
the Registration Statement or any post-effective amendment thereto (except for
financial statements and notes thereto, schedules and other financial reserve
and production data included therein or omitted therefrom, as to which we make
no statement), at the time the Registration Statement or any post-effective
amendment thereto became effective or at the date of the Underwriting Agreement,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading or that the Prospectus or any amendment or supplement thereto
(except for financial statements and schedules and other financial reserve and
production data included therein or omitted therefrom, as to which we make no
statement), at the time the Prospectus was filed with the Commission, or on the
date hereof, included or includes an untrue statement of a material fact or
omitted or omits to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
Such opinion shall be limited to the federal laws of the United States,
the internal laws of the State of Texas, and the General Corporation Law of the
State of Delaware.
▇-▇
▇▇▇▇▇▇▇ ▇-▇
FORM OF OPINION OF COUNSEL
(ONEBANE LAW FIRM)
(1) Each Subsidiary has been duly organized and is validly existing as a
limited liability company ("LLC") in good standing under the laws of the State
of Louisiana, has all requisite power and authority as an LLC to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and Prospectus. Except as otherwise stated in the
Registration Statement and the Prospectus or the documents incorporated therein
by reference, all of the issued and outstanding membership interests of each
Subsidiary have been duly authorized and are validly issued, fully paid and
non-assessable and are owned by the Company free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity.
(2) To the best of our knowledge, no default exists and no event has
occurred that with notice, lapse of time, or both, would constitute a default in
the due performance and observance of any term, covenant or condition of any
loan agreement, note or any other similar obligation evidencing indebtedness for
borrowed money to which the Company or any Subsidiary is a party or by which any
of them is bound, which default is or would result in a Material Adverse Effect.
(3) The execution, delivery and performance of the Underwriting Agreement
and the consummation of the transactions contemplated by the Underwriting
Agreement and compliance by the Company with its obligations thereunder do not
and will not, whether with or without the giving of notice or passage of time or
both, conflict with or constitute a breach of, or default 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 contract,
indenture, mortgage, deed of trust, loan or credit agreement, note, lease or any
other agreement or instrument, known to us after reasonable inquiry, to which
the Company or any of its Subsidiaries is a party or by which it or any of them
may be bound, or to which any of the assets, properties or operations of the
Company or any of its Subsidiaries is subject, except for conflicts, breaches,
defaults, events or liens, charges or encumbrances that would not, individually
or in the aggregate, result in a Material Adverse Effect, nor will such actions
result in any violation of the provisions of the charter or by-laws of the
Company or the articles of organization or operating agreement of any of its
Subsidiaries or any applicable law, statute, rule, regulation, judgment, order,
writ or decree, known to us, of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or any of its
Subsidiaries or any of their assets, properties or operations.
(4) To the best of our knowledge and except as disclosed in the
Registration Statement and Prospectus, there is not pending or threatened any
action, suit, proceeding, inquiry or investigation to which the Company or any
of its Subsidiaries is a party or to which the assets, properties or operations
of the Company or any of its Subsidiaries is subject, before or by any court or
governmental agency or body, domestic or foreign, that might reasonably be
expected to result in a Material Adverse Effect or might reasonably be expected
to materially
A-3
and adversely affect the consummation of the transactions contemplated under the
Underwriting Agreement or the performance by the Company of its obligations
thereunder.
Such opinion shall be limited to the federal laws of the United States, the
internal laws of the State of Louisiana, and the General Corporation Law of the
State of Delaware.
A-4
EXHIBIT B
FORM OF AUDITOR'S COMFORT LETTER
Pursuant to Section 5(e) of the Underwriting Agreement, the Company's
outside auditors shall furnish a letter to the Underwriter to the effect that:
(i) They are independent certified public accountants with respect to the
Company and its Subsidiaries within the meaning of the 1933 Act and the 1934 Act
and the applicable published rules and regulations thereunder;
(ii) In their opinion, the audited consolidated financial statements and
any supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by them and
included or incorporated by reference in the Registration Statement or the
Prospectus comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act or the 1934 Act, as applicable, and the
related published rules and regulations thereunder, and they have made a review
in accordance with procedures established by the American Institute of Certified
Public Accountants of the consolidated interim financial statements, selected
financial data, pro forma financial information, financial forecasts and/or
condensed financial statements derived from audited financial statements of the
Company for the periods specified in such letter, as indicated in their reports
thereon, copies of which have been furnished to the Underwriter;
(iii) They have made a review in accordance with procedures established
by the American Institute of Certified Public Accountants of the unaudited
condensed consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus and/or included
in the Company's quarterly reports on Form 10-Q incorporated by reference into
the Registration Statement or Prospectus as indicated in their reports thereon,
copies of which have been separately furnished to the Underwriter; and on the
basis of specified procedures including inquiries of officials of the Company
who have responsibility for financial and accounting matters regarding whether
the unaudited condensed consolidated financial statements referred to in
paragraph (vi)(A)(i) below comply as to form in all material respects with the
applicable accounting requirements of the 1933 Act and the 1934 Act and the
related published rules and regulations, nothing came to their attention that
caused them to believe that the unaudited condensed consolidated financial
statements do not comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the 1934 Act and the related
published rules and regulations;
(iv) The unaudited selected financial information with respect to the
consolidated results of operations and financial position of the Company for the
five most recent fiscal years incorporated by reference in the Registration
Statement or Prospectus and included or incorporated by reference in Item 6 of
the Company's Annual Report on Form 10-K for the most recent fiscal year agrees
with the corresponding amounts (after restatement where applicable) in the
audited consolidated financial statements for such five fiscal years that were
included or incorporated by reference in the Company's Annual Report on Form
10-K for such fiscal years;
B-1
(v) They have compared the information in the Registration Statement or
Prospectus under selected captions with the disclosure requirements of
Regulation S-K and on the basis of limited procedures specified in such letter
nothing came to their attention as a result of those procedures that caused them
to believe that such information does not confirm in all material respects with
the disclosure requirements of items 301, 302, 402 and 503(d), respectively, of
Regulation S-K;
(vi) On the basis of limited procedures, not constituting an examination
in accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information referred to
below, a reading of the latest available interim financial statements of the
Company and its Subsidiaries, inspection of the minute books of the Company and
its Subsidiaries since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, inquiries of officials
of the Company and its Subsidiaries responsible for financial and accounting
matters and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe that:
(A) (i) the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows included
in the Registration Statement or Prospectus and/or included or incorporated by
reference in the Company's Quarterly Reports on Form 10-Q incorporated by
reference in the Registration Statement or Prospectus do not comply as to form
in all material respects with the applicable accounting requirements of the 1933
Act and the 1934 Act and the related published rules and regulations, or (ii)
any material modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus or included in the Company's
Quarterly Reports on Form 10-Q incorporated by reference in the Registration
Statement or Prospectus, for them to be in conformity with generally accepted
accounting principles;
(B) any other unaudited income statement data and balance sheet items in
the Prospectus do not agree with the corresponding items in the unaudited
consolidated financial statements from which such data and items were derived,
or any such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding amounts in the
audited consolidated financial statements included or incorporated by reference
in the Company's Annual Report on Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements that were not included in the
Prospectus but from which were derived the unaudited consolidated financial
statement data and balance sheet items included in the Registration Statement or
Prospectus and referred to in clause (B) were not determined on a basis
substantially consistent with the basis for the audited financial statements
included or incorporated by reference in the Company's Annual Report on Form
10-K for the most recent fiscal year;
B-2
(D) any unaudited pro forma consolidated condensed financial statements
included or incorporated by reference in the Registration Statement or
Prospectus do not comply as to form in all material respects with the applicable
accounting requirements of the 1933 Act and the published rules and regulations
thereunder, or the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior to the date of
such letter, there have been any changes in the issued and outstanding shares of
Common Stock of the Company (other than issuances of shares upon exercise of
options and stock appreciation rights, upon earn-outs of performance shares and
upon conversions of convertible securities, in each case that were outstanding
on the date of the latest balance sheet included or incorporated by reference in
the Prospectus) or any increase in the consolidated long-term debt of the
Company and its Subsidiaries, or any decrease in consolidated net current assets
or stockholders' equity or in total revenue, income from continuing operations
before extraordinary item, income per share from continuing operations of the
Company and its Subsidiaries, or any increases in any items specified by the
Underwriter, in each case as compared with amounts shown in the latest balance
sheet included or incorporated by reference in the Registration Statement or
Prospectus, except in each case for changes, increases or decreases that the
Registration Statement or Prospectus discloses have occurred or may occur or
that are described in such letter; and
(F) for the period from the date of the latest financial statements
included or incorporated by reference in the Registration Statement or
Prospectus to the specified date referred to in clause (E) there were any
decreases in consolidated revenues or operating profit or the total or per share
amounts of consolidated net income or other items specified by the Underwriter,
or any increases in any items specified by the Underwriter, in each case as
compared with the comparable period of the preceding year and with any other
period of corresponding length specified by the Underwriter, except in each case
for increases or decreases that the Registration Statement or Prospectus
discloses have occurred or may occur or that are described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included or incorporated by reference in the Registration Statement or
Prospectus and the limited procedures, inspection of minute books, inquiries and
other procedures referred to in paragraphs (iii) and (vi) above, they have
carried out certain specified procedures, not constituting an examination in
accordance with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the Underwriter that
are derived from the general accounting records of the Company and its
Subsidiaries, which appear in the Registration Statement or Prospectus
(excluding documents incorporated by reference) or in Part II of, or in exhibits
and schedules to, the Registration Statement, and have compared such amounts,
percentages and financial information with the accounting records of the Company
and its subsidiaries and have found them to be in agreement.
B-3