Attached files
| file | filename |
|---|---|
| 8-K - MAGNUM HUNTER RESOURCES CORPORATION - MAGNUM HUNTER RESOURCES CORP | magnum_8k-120909.htm |
| EX-8.1 - OPINION OF FULBRIGHT & JAWORSKI L.L.P. WITH RESPECT TO TAX MATTERS - MAGNUM HUNTER RESOURCES CORP | magnum_8k-ex0801.htm |
| EX-5.1 - OPINION OF FULBRIGHT & JAWORSKI L.L.P. - MAGNUM HUNTER RESOURCES CORP | magnum_8k-ex0501.htm |
Exhibit
1.1
214,950
Shares
MAGNUM
HUNTER RESOURCES CORPORATION
10.25%
Series C Cumulative Perpetual Preferred Stock
UNDERWRITING
AGREEMENT
December
9, 2009
Wunderlich
Securities, Inc.
400 E.
Pratt Street, Suite 710
Baltimore,
Maryland, 21202
Ladies
and Gentlemen:
|
1.
|
Introductory. Magnum
Hunter Resources Corporation, a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions stated herein, to issue and sell to
Wunderlich Securities, Inc. (the "Underwriter") an
aggregate of 214,950 shares of its 10.25% Series C Cumulative Perpetual
Preferred Stock, par value $0.01 per share and liquidation preference $25
per share (the "Firm Securities") and, at the
election of the Underwriter, up to 32,242 additional shares of its 10.25%
Series C Cumulative Perpetual Preferred Stock (the "Optional Securities")
(the Firm Securities and the Optional Securities that the Underwriter
purchases pursuant to Section 3
hereof being collectively called the "Securities").
|
The
Securities will be issued pursuant to a Certificate of
Designations (the "Certificate
of Designations"), adopted pursuant to a resolution of the board of
directors of the Company and to be filed with the Secretary of State of the
State of Delaware.
|
2.
|
Representations and Warranties
of the Company. The Company represents and warrants to,
and agrees with, the Underwriter
that:
|
(a) Filing of Registration
Statement. The Company has prepared and filed, in conformity with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"), and the
published rules and regulations thereunder (the "Rules and Regulations")
adopted by the Securities and Exchange Commission (the "Commission"), a registration
statement, including a prospectus, on Form S-3 (File No. 333-161937), which
became effective as of October 15, 2009, relating to the Securities and the
offering thereof (the "Offering") from time to time
in accordance with Rule 415(a)(1)(x) of the Rules and Regulations, and such
amendments thereof as may have been required to the date of this Agreement. The
term "Registration
Statement" as used in this Agreement means the aforementioned
registration statement, at the time of effectiveness of such registration
statement or any part thereof for purposes of Section 11 of the Securities Act,
(the "Effective Time"),
including (i) all documents filed as a part thereof or incorporated or deemed to
be incorporated by reference therein and (ii) any information in the
corresponding Base Prospectus (as defined below) or a prospectus supplement
filed with the Commission pursuant to Rule 424(b) under the Securities Act, to
the extent such information is deemed pursuant to Rule 430A ("Rule 430A"), 430B ("Rule 430B") or 430C
("Rule 430C") under
the Securities Act to be a part thereof at the Effective Time. For purposes of
this Agreement, all references to the Registration Statement, the Base
Prospectus, any Preliminary Prospectus (as defined below), the Prospectus (as
defined below) 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 ("EDGAR"). All references in
this Agreement to amendments or supplements to the Registration Statement, the
Base Prospectus, any Preliminary Prospectus or the Prospectus shall be deemed to
mean and include the subsequent filing of any document under the Exchange Act
and which is deemed to be incorporated therein by reference therein or otherwise
deemed to be a part thereof.
(b) Effectiveness of Registration
Statement; Certain Defined Terms. The Company and the transactions
contemplated by this Agreement meet the requirements and comply with the
conditions for the use of Form S-3 under the Securities Act. The
Registration Statement meets, and the offering and sale of the Securities as
contemplated hereby complies with, the requirements of Rule 415 under the
Securities Act (including, without limitation, Rule 415(a)(4) and (a)(5) of the
Rules and Regulations). The Company has complied, to the Commission's
satisfaction, with all requests of the Commission for additional or supplemental
information. No stop order preventing or suspending use of the Registration
Statement, any Preliminary Prospectus or the Prospectus or the effectiveness of
the Registration Statement has been issued by the Commission, and no proceedings
for such purpose pursuant to Section 8A of the Securities Act against the
Company or related to the Offering have been instituted or are pending or, to
the Company's knowledge, are contemplated or threatened by the Commission, and
any request received by the Company on the part of the Commission for additional
information has been complied with. As used in this
Agreement:
(1) "Base Prospectus" means the
prospectus included in the Registration Statement at the Effective
Time.
(2) "Disclosure Package" means (i)
the Statutory Prospectus and (ii) each Issuer Free Writing Prospectus, if any,
filed or used by the Company on or before the Effective Time and listed on Schedule II hereto
(other than a roadshow that is an Issuer Free Writing Prospectus but is not
required to be filed under Rule 433 of the Rules and Regulations), all
considered together.
(3) "Issuer Free Writing
Prospectus" means any "issuer free writing prospectus," as defined in Rule 433 of
the Rules and Regulations relating to the Securities in the form filed or
required to be filed with the Commission or, if not required to be filed, in the
form retained in the Company's records pursuant to Rule 433(g) of the Rules and
Regulations.
2
(4) "Preliminary Prospectus" means
any preliminary prospectus supplement, subject to completion, relating to the
Securities, filed by the Company with the Commission pursuant to Rule 424(b)
under the Securities Act for use in connection with the offering and sale of the
Securities, together with the Base Prospectus attached to or used with such
preliminary prospectus supplement.
(5) "Prospectus" means the final
prospectus supplement, relating to the Securities, filed by the Company with the
Commission pursuant to Rule 424(b) under the Securities Act on or before the
second business day after the date hereof (or such earlier time as may be
required under the Securities Act), in the form furnished by the Company to the
Underwriter, for use in connection with the offering and sale of the Securities
that discloses the public offering price and other final terms of the
Securities, together with the Base Prospectus attached to or used with such
final prospectus supplement.
(6) "Statutory Prospectus" means
the Preliminary Prospectus, if any, and the Base Prospectus, each as amended and
supplemented immediately prior to the Time of Sale, including any document
incorporated by reference therein, and any prospectus supplement.
(7) "Time of Sale" means 12:30
p.m., New York City time, on the date of this Agreement.
(c) Contents of Registration
Statement. As of each Effective Time, the Registration Statement complied
in all material respects, with the requirements of the Securities Act and the
Rules and Regulations and did not contain an 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, provided, that the Company
makes no representation or warranty in this subsection (c) with
respect to statements in or omissions from the Registration Statement in
reliance upon, and in conformity with, written information furnished to the
Company by the Underwriter specifically for inclusion therein, which information
the parties hereto agree is limited to the Underwriter's Information (as defined
in Section 9(b)
hereof).
(d) Contents of Prospectus. The
Prospectus, as of its date and as of each Time of Delivery (as defined in Section 5(a) hereof)
will comply in all material respects, with the requirements of the Securities
Act and will not include an 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
makes no representation or warranty with respect to statements in or omissions
from the Prospectus in reliance upon, and in conformity with, written
information furnished to the Company by the Underwriter specifically for
inclusion therein, which information the parties hereto agree is limited to the
Underwriter's Information. The Prospectus contains all required
information under the Securities Act with respect to the Securities and the
distribution of the Securities.
3
(e) Incorporated Documents. Each
of the documents incorporated or deemed to be incorporated by reference in the
Registration Statement, at the time such document was filed with the Commission
or at the time such document became effective, as applicable, complied, in all
material respects, with the requirements of the Securities Exchange Act of 1934,
as amended (the "Exchange
Act"), was filed on a timely basis with the Commission and did not
include an 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.
(f) Disclosure Package. The
Disclosure Package, as of the Time of Sale, did not, and at each Time of
Delivery will not, contain 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 under which they
were made, not misleading; provided, that the Company
makes no representations or warranties in this subsection (f) with
respect to statements in or omissions from the Disclosure Package in reliance
upon, and in conformity with, written information furnished to the Company by
the Underwriter specifically for inclusion therein, which information the
parties hereto agree is limited to the Underwriter's Information.
(g) Distributed Materials; Conflict with
Registration Statement. Other than the Base Prospectus, any Preliminary
Prospectus and the Prospectus, the Company has not made, used, prepared,
authorized, approved or referred to and will not make, use, prepare, authorize,
approve or refer to any "written communication" (as defined in Rule 405 under
the Securities Act) that constitutes an offer to sell or a solicitation of an
offer to buy the Securities other than (i) any document not constituting a
prospectus pursuant to Section 2(a)(10)(a) of the Securities Act or Rule 134
under the Securities Act or (ii) the documents listed on Schedule II hereto
and other written communications approved in advance by the
Underwriter.
(h) Issuer Free Writing
Prospectuses. Each Issuer Free Writing Prospectus, if any, conformed or
will conform in all material respects to the requirements of the Securities Act
and the Rules and Regulations on the date of first use, and the Company has
complied or will comply with any filing requirements applicable to such Issuer
Free Writing Prospectus pursuant to the Rules and Regulations. Each Issuer Free
Writing Prospectus, if any, when considered together with the Disclosure
Package, as of its issue date and at all subsequent times through the completion
of the Prospectus Delivery Period did not, does not and will not include any
information that conflicted, conflicts or will conflict with the information
contained in the Registration Statement, the Statutory Prospectus or the
Prospectus, including any document incorporated by reference therein and any
prospectus supplement deemed to be a part thereof that has not been superseded
or modified, or include an untrue statement of a material fact or omitted or
would 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
prevailing at the subsequent time, not misleading; provided, that the Company
makes no representation or warranty with respect to statements in or omissions
from any Issuer Free Writing Prospectus in reliance upon, and in conformity
with, written information furnished to the Company by the Underwriter
specifically for inclusion therein, which information the parties hereto agree
is limited to the Underwriter's Information.
4
(i) Not an Ineligible Issuer. (i)
At the earliest time after the filing of the Registration Statement that the
Company or another offering participant made a bona fide offer (within the
meaning of Rule 164(h)(2) under the Securities Act) of the Securities and (ii)
at the date hereof, the Company was not and is not an "ineligible issuer," as
defined in Rule 405 under the Securities Act ("Rule 405").
(j) Due
Incorporation.
(1) The
Company has been duly organized and is validly existing as a corporation in good
standing under the laws of the State of Delaware, with the corporate power and
authority to own its properties and to conduct its business as it is currently
being conducted and as described in the Registration Statement, the Prospectus
and the Disclosure Package. The Company is duly qualified to transact business
and is in good standing as a foreign corporation or other legal entity in each
other jurisdiction in which its ownership or leasing of property or the conduct
of its business requires such qualification, except where the failure to be so
qualified or in good standing or have such power or authority would not (i)
have, individually or in the aggregate, a material adverse effect upon the
general affairs, business, operations, properties, financial condition, or
results of operations of the Company and its subsidiaries, taken as a whole, or
(ii) impair in any material respect the power or ability of the Company to
perform its obligations under this Agreement or to consummate any transactions
contemplated by the Agreement, including the issuance and sale of the Securities
(any such effect as described in clauses (i) or (ii), a "Material Adverse
Effect");
(2) Each
of the subsidiaries of the Company has been duly incorporated or formed, as the
case may be, and is validly existing and in good standing under the laws of its
respective jurisdiction of organization, each with full power and authority
(corporate or otherwise) to own its properties and conduct its business as
described in the Registration Statement, the Prospectus and the Disclosure
Package, and each has been duly qualified as a foreign corporation, limited
liability company or limited partnership for the transaction of business and is
in good standing under the laws of each other jurisdiction in which it owns or
leases properties or conducts any business so as to require such qualification,
except where the failure to be so qualified or in good standing would not result
in any Material Adverse Effect.
(k) Subsidiaries. Except for PRC
Williston, LLC, Sharon Resources, Inc., Triad Hunter LLC and Sharon Hunter
Resources, Inc., Magnum Hunter Resources, LP, Magnum Hunter Resources GP, LLC
and as otherwise described in the Registration Statement, the Prospectus and the
Disclosure Package, the Company has no subsidiaries and does not own any
beneficial interest, directly or indirectly, in any corporation, partnership,
joint venture or other business entity.
5
(l) Due Authorization and
Enforceability. The Company has the full right, power and authority to
enter into this Agreement and to perform and discharge its obligations
hereunder; and this Agreement has been duly authorized, executed and delivered
by the Company, and constitutes a valid, legal and binding obligation of the
Company, enforceable against the Company in accordance with its terms, except as
rights to indemnity hereunder may be limited by federal or state securities laws
and except as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization or similar laws affecting the rights of creditors
generally and subject to general principles of equity. The Certificate of
Designations has been duly authorized by the Company and will be filed with the
Secretary of State of the State of Delaware on or before the First Time of
Delivery (as defined in Section 5(a)
hereof).
(m) The Securities. The issuance
of the Securities has been duly and validly authorized by the Company, and the
Securities, when issued, delivered and paid for in accordance with the terms of
this Agreement, will have been duly and validly issued and will be fully paid
and nonassessable, will not be subject to any statutory or contractual
preemptive rights or other rights to subscribe for or purchase or acquire any
shares of capital stock of the Company which have not been waived or complied
with, and will conform in all material respects to the description thereof
contained in the Disclosure Package and the Prospectus and such description
conforms in all material respects to the rights set forth in the instruments
defining the same.
(n) Capitalization. The
information set forth under the caption "Capitalization" in the Statutory
Prospectus (and any similar sections or information, if any, contained in the
Disclosure Package) is fairly presented on a basis consistent with the Company's
financial statements. The certificates evidencing the Securities are in due and
proper legal form and have been duly authorized for issuance by the
Company. The authorized capital stock of the Company conforms as to
legal matters to the description thereof contained in the Preliminary Prospectus
and the Prospectus under the captions "Description of Series C Preferred Stock"
and "Description of Capital Stock" (and any similar sections or information, if
any, contained in the Disclosure Package). The issued and outstanding shares of
capital stock of the Company have been duly authorized and validly issued, are
fully paid and nonassessable, and have been issued in compliance with all
federal and state securities laws. None of the outstanding shares of capital
stock of the Company was issued in violation of any preemptive rights, rights of
first refusal or other similar rights to subscribe for or purchase or acquire
any securities of the Company or any of its subsidiaries. There are no
authorized or outstanding shares of capital stock, options, warrants, preemptive
rights, rights of first refusal or other rights to purchase, or equity or debt
securities convertible into or exchangeable for, any capital stock of the
Company or any of its subsidiaries other than those described in the Prospectus
and the Disclosure Package. The description of the Company's stock option, stock
bonus and other stock plans or arrangements, and the options or other rights
granted thereunder, as described in the Prospectus and the Disclosure Package,
accurately and fairly presents the information required to be shown with respect
to such plans, arrangements, options and rights. The issued and
outstanding shares of capital stock of each of the Company's subsidiaries have
been duly authorized and validly issued, are fully paid and nonassessable, have
been issued in compliance with all federal and state securities laws, and are
owned directly by the Company or by another wholly-owned subsidiary of the
Company and, except for liens in favor of Bank of Montreal and the other lenders
under the Credit Agreement dated November 23, 2009, are free and clear of any
lien, encumbrance, security interest, claim or charge, other than those
described in, or incorporated by reference into the Registration Statement and
the Prospectus. All the outstanding shares of capital stock of each
subsidiary of the Company have been duly authorized and validly issued, are
fully paid and nonassessable and except to the extent set forth in the
Disclosure Package and the Prospectus, are owned by the Company directly or
indirectly through one or more wholly-owned subsidiaries, free and clear of any
lien, encumbrance, security interest, claim or charge, restriction upon voting
or transfer or any other claim of any third party.
6
(o) No Conflict. The execution,
delivery and performance by the Company of this Agreement, and the consummation
of the transactions contemplated hereby, including the issuance and sale of the
Securities by the Company, will not conflict with or result in a breach or
violation of, or constitute a default under (nor constitute any event which with
or without notice, lapse of time or both would result in any breach or violation
of or constitute a default under), give rise to any right of termination or
other right or the cancellation or acceleration of any right or obligation or
loss of a benefit under, or give rise to the creation or imposition of any lien,
encumbrance, security interest, claim or charge upon any property or assets of
the Company or its subsidiaries pursuant to (i) 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 either the Company or its
subsidiaries or any of their properties may be bound or to which any of their
property or assets is subject, (ii) result in any violation of the provisions of
the charter or by-laws of the Company or any of its subsidiaries, or
(iii) result in any violation of any law, statute, rule, regulation,
judgment, order or decree of any court or governmental agency or body, domestic
or foreign, having jurisdiction over the Company or any of its properties or
assets.
(p) No Consents Required. No
approval, authorization, consent or order of or filing, qualification or
registration with, any court or governmental agency or body, foreign or
domestic, which has not been made, obtained or taken and is not in full force
and effect, is required in connection with the Company's execution, delivery and
performance of this Agreement, the consummation by the Company of the
transactions contemplated hereby or the issuance and sale of the Securities
other than (i) the filing of the Certificate of Designations with the Secretary
of State of the State of Delaware, (ii) as may be required under the
Securities Act, (iii) any necessary qualification of the Securities under
the securities or blue sky laws of the various jurisdictions in which the
Securities are being offered, (iv) under the rules and regulations of the
Financial Industry Regulatory Authority, Inc. ("FINRA") (other than any
approval required with respect to the Base Prospectus), (v) the New York Stock
Exchange Amex Equities, ("NYSE
Amex") or (vi) any required filing on Form 8-K under the Exchange
Act.
7
(q) Preemptive Rights. There are
no preemptive rights or other rights (other than rights which have been waived
in writing in connection with the transactions contemplated by this Agreement or
otherwise satisfied or as described in the Prospectus, including the proposed
issuance of the Company’s Series B Redeemable Convertible Preferred Stock to
Triad Energy Corporation or its designees) to subscribe for or to purchase any
shares of capital stock of the Company or other equity interests of the Company
or any of its subsidiaries, or any agreement or arrangement between the Company
and any of the Company's stockholders or between any of the Company's
subsidiaries and any of such subsidiary's stockholders, or to the Company's
knowledge, between or among any of the Company's stockholders or any of its
subsidiaries' stockholders, which grant special rights with respect to any
shares of the Company's or any of its subsidiaries' capital stock or which in
any way affect any stockholder's ability or right to alienate freely or vote
such shares.
(r) Registration Rights. Except
for the Company's registration obligation for the common stock of the Company,
par value $0.01 per share (the "Common Stock") underlying
certain warrants pursuant to the Securities Purchase and Registration Rights
Agreement dated November 5, 2009, there are no contracts, agreements or
understandings between the Company or any of its subsidiaries and any person
granting such person the right (other than rights which have been waived in
writing in connection with the transactions contemplated by this Agreement or
otherwise satisfied) to require the Company or any of its subsidiaries to
register any securities with the Commission.
(s) Independent Accountants.
Malone & Bailey, PC, whose reports on the consolidated financial statements
of the Company are incorporated by reference in the Registration Statement, the
Prospectus and the Disclosure Package, is (i) an independent public accounting
firm within the meaning of the Securities Act, (ii) a registered public
accounting firm (as defined in Section 2(a)(12) of the Sarbanes-Oxley Act of
2002 (the "Sarbanes-Oxley
Act")), and (iii) to the Company's knowledge, not in violation of the
auditor independence requirements of the Sarbanes-Oxley Act. Except
as disclosed in the Registration Statement and as pre-approved in accordance
with the requirements set forth in Section 10A of the Exchange Act, Malone &
Bailey, PC has not been engaged by the Company to perform any "prohibited
activities" (as defined in Section 10A of the Exchange Act).
8
(t) Financial Statements. The
consolidated financial statements of the Company, together with the related
schedules and notes thereto, set forth or incorporated by reference in the
Registration Statement, the Prospectus and the Disclosure Package comply in all
material respects with the applicable requirements of the Securities Act and the
Exchange Act, as applicable, and present fairly in all material respects (i) the
financial condition of the Company and its consolidated subsidiaries as of the
dates indicated and (ii) the consolidated results of operations, stockholders'
equity and changes in cash flows of the Company and its consolidated
subsidiaries for the periods therein specified; and such financial statements
and related schedules and notes thereto have been prepared in conformity with
United States generally accepted accounting principles, consistently applied
throughout the periods involved (except as otherwise stated therein and subject,
in the case of unaudited financial statements, to the absence of footnotes and
normal year-end adjustments). The historical consolidated financial statements
of Triad Energy Corporation and certain of its affiliates ("Triad"), together with the
related schedules and notes thereto set forth or incorporated by reference in
the Registration Statement, the Prospectus and the Disclosure Package comply in
all material respects with the applicable requirements of the Securities Act and
the Exchange Act, as applicable, and present fairly in all material respects (i)
the financial condition of Triad as of the dates indicated and (ii) the
consolidated results of operations, stockholders' equity and changes in cash
flows of Triad for the periods therein specified; and such financial statements
and related schedules and notes thereto have been prepared in conformity with
United States generally accepted accounting principles, consistently applied
throughout the periods involved (except as otherwise stated therein and subject,
in the case of unaudited financial statements, to the absence of footnotes and
normal year-end adjustments). There are no other financial statements
(historical or pro forma) that are required to be included or incorporated by
reference in the Registration Statement, the Prospectus or the Disclosure
Package; and the Company does not have any material liabilities or obligations,
direct or contingent (including any off-balance sheet obligations), not
disclosed in the Registration Statement, the Disclosure Package and the
Prospectus; and all disclosures contained in the Registration Statement, the
Disclosure Package and the Prospectus regarding "non-GAAP financial measures"
(as such term is defined by the rules and regulations of the Commission) comply
with Regulation G of the Exchange Act and Item 10(e) of Regulation S-K under the
Securities Act, to the extent applicable, and present fairly the information
shown therein and the Company's basis for using such measures.
(u) Pro Forma Financial
Information. The pro forma financial statements included in
the Registration Statement, the Prospectus and the Disclosure Package reflect,
subject to the limitations set forth therein as to such pro forma financial
information, the results of operations of the Company and its consolidated
subsidiaries purported to be shown thereby for the periods indicated and conform
to the requirements of Regulation S-X of the Rules and Regulations under the
Securities Act, and management of the Company believes (i) the assumptions
underlying the pro forma adjustments are reasonable, (ii) that such adjustments
have been properly applied to the historical amounts in the compilation of such
pro forma statements and notes thereto, and (iii) that such statements and notes
thereto present fairly, with respect to the Company and its consolidated
subsidiaries, the pro forma financial position and results of operations and the
other information purported to be shown therein at the respective dates or for
the respective periods therein specified.
9
(v) Absence of Material Changes.
Subsequent to the respective dates as of which information is given in the
Registration Statement, the Prospectus and the Disclosure Package, and except as
may be otherwise stated or incorporated by reference in the Registration
Statement, the Prospectus and the Disclosure Package, and the delivery to JP
Morgan Chase, as escrow agent (the "Escrow Agent"), of an
aggregate of 661,652 shares of Common Stock to satisfy the Company's deposit
obligation in the Triad acquisition, there has not been (i) any Material Adverse
Effect, (ii) any transaction which is material to the Company or any of its
subsidiaries, (iii) any obligation, direct or contingent (including any
off-balance sheet obligations), incurred by the Company or any of its
subsidiaries, which is material to the Company or any of its subsidiaries, (iv)
any dividend or distribution of any kind declared, paid or made on the capital
stock of the Company, (v) any change in the capital stock (other than a change
in the number of outstanding shares of Common Stock due to the issuance of
shares upon the exercise of outstanding options or warrants or the conversion of
convertible indebtedness), or material change in the short-term debt or
long-term debt of the Company or any of its subsidiaries (other than upon
conversion of convertible indebtedness) or any issuance of options, warrants,
convertible securities or other rights to purchase the capital stock (other than
grants of stock options under the Company's stock option plans existing on the
date hereof) of the Company or any of its subsidiaries.
(w) Legal Proceedings. Except as
disclosed in the Company's filings with the Commission, there are no legal or
governmental actions, suits, claims or proceedings pending or, to the Company's
knowledge, threatened or contemplated to which the Company or any of its
subsidiaries is or would be a party or of which any of their respective
properties is or would be subject at law or in equity, before or by any federal,
state, local or foreign governmental or regulatory commission, board, body,
authority or agency, or before or by any self-regulatory organization or other
non-governmental regulatory authority which are required to be described in the
Registration Statement, the Disclosure Package or the Prospectus or a document
incorporated by reference therein and are not so described therein, or which,
singularly or in the aggregate, if resolved adversely to the Company or such
subsidiary, would reasonably be likely to result in a Material Adverse Effect or
prevent or materially and adversely affect the ability of the Company to
consummate the transactions contemplated hereby. To the Company's knowledge, no
such proceedings are threatened or contemplated by governmental authorities or
threatened by other third parties.
(x) No Violation. Neither the
Company nor any of its subsidiaries is in breach or violation of or in default
(nor has any event occurred which with notice, lapse of time or both would
result in any breach or violation of, or constitute a default) (i) under the
provisions of its charter or bylaws (or analogous governing instrument, as
applicable) or (ii) in the performance or observance of any term, covenant,
obligation, agreement or condition contained in any indenture, mortgage, deed of
trust, bank loan or credit agreement or other evidence of indebtedness, or any
license, lease, contract or other agreement or instrument to which the Company
or such subsidiary is a party or by which any of its properties may be bound or
affected, or (iii) in the performance or observance of any statute, law, rule,
regulation, ordinance, judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or such subsidiary or any of its properties, as
applicable, except, with respect to clauses (ii) and (iii) above, to the extent
any such contravention has been waived or would not result in a Material Adverse
Effect.
10
(y) Permits. The Company and each
of its subsidiaries have made all filings, applications and submissions required
by, and own or possess all approvals, licenses, certificates, certifications,
clearances, consents, exemptions, marks, notifications, orders, permits and
other authorizations issued by, the appropriate federal, state or foreign
regulatory authorities necessary to conduct its business as described in the
Disclosure Package (collectively, "Permits"), and is in
compliance in all material respects with the terms and conditions of all such
Permits. All such Permits are valid and in full force and effect. Neither the
Company nor any of its subsidiaries has received any notice of any proceedings
relating to revocation or modification of, any such Permit, which, individually
or in the aggregate, if the subject of an unfavorable decision, ruling or
finding, would have a Material Adverse Effect. Except as may be
required under the Securities Act and state and foreign Blue Sky laws and the
rules and regulations of FINRA, no other Permits are required for the Company or
any of its subsidiaries to enter into, deliver and perform this Agreement and to
issue and sell the Securities to be issued and sold by the Company
hereunder.
(z) Not an Investment Company.
The Company is not or, after giving effect to the offering and sale of the
Securities and the application of the proceeds thereof as described in the
Disclosure Package and the Prospectus, will not be (i) required to register as
an "investment company" as defined in the Investment Company Act of 1940, as
amended (the "Investment
Company Act"), and the rules and regulations of the Commission thereunder
or (ii) a "business development company" (as defined in
Section 2(a)(48) of the Investment Company Act).
(aa) No Price Stabilization.
Neither the Company nor any of its subsidiaries, or any of their respective
officers, directors, affiliates or controlling persons has taken or will take,
directly or indirectly, any action designed to or that would be reasonably
expected to cause or result in, or which has constituted or which would
reasonably be expected to constitute the stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Securities.
(bb) Good Title to Property. The
Company and each of its subsidiaries has good and defensible title to all
property (whether real or personal) described in the Registration Statement, the
Disclosure Package and the Prospectus as being owned by it, in each case free
and clear of all liens, claims, security interests, other encumbrances or
defects (collectively, "Liens"), except such as are
described in the Registration Statement, the Disclosure Package and the
Prospectus and those that would not, individually or in the aggregate materially
affect the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company or any of its
subsidiaries. All of the property described in the Registration Statement,
Disclosure Package and the Prospectus as being held under lease by the Company
or any of its subsidiaries is held thereby under valid, subsisting and
enforceable leases, without any liens, restrictions, encumbrances or claims,
except those that, individually or in the aggregate, are not material and
do not materially interfere with the use made and proposed to be made of such
property by the Company or such subsidiary.
11
(cc) Intellectual Property Rights.
The Company and each of its subsidiaries owns or possesses the right to use all
patents, trademarks, trademark registrations, service marks, service mark
registrations, trade names, copyrights, licenses, inventions, software,
databases, know-how, Internet domain names, trade secrets and other unpatented
and/or unpatentable proprietary or confidential information, systems or
procedures, and other intellectual property (collectively, "Intellectual Property")
necessary to carry on its businesses as currently conducted, and as proposed to
be conducted as described in the Disclosure Package and the Prospectus, and the
Company is not aware of any claim to the contrary or any challenge by any other
person to the rights of the Company or any of its subsidiaries with respect to
the foregoing except for those that could not have a Material Adverse Effect.
The Intellectual Property licenses described in the Disclosure Package and the
Prospectus are, to the knowledge of the Company, valid, binding upon, and
enforceable by or against the parties thereto in accordance with their terms.
The Company and each of its subsidiaries has complied in all material respects
with, and is not in breach nor has received any asserted or threatened claim of
breach of, any Intellectual Property license, and the Company has no knowledge
of any breach or anticipated breach by any other person of any Intellectual
Property license. The Company's and each of its subsidiaries'
business as now conducted and as proposed to be conducted, to the knowledge of
the Company, does not and will not infringe or conflict with any patents,
trademarks, service marks, trade names, copyrights, trade secrets, licenses or
other Intellectual Property or franchise right of any person. Neither the
Company nor any of its subsidiaries has received notice of any claim against the
Company or any of its subsidiaries alleging the infringement by the Company or
any of its subsidiaries of any patent, trademark, service mark, trade name,
copyright, trade secret, license in or other intellectual property right or
franchise right of any person. The Company and each of its subsidiaries has
taken all reasonable steps to protect, maintain and safeguard its rights in all
Intellectual Property, including the execution of appropriate nondisclosure and
confidentiality agreements. The consummation of the transactions contemplated by
this Agreement will not result in the loss or impairment of or payment of any
additional amounts with respect to, nor require the consent of any other person
in respect of, the Company's or any of its subsidiaries' right to own, use, or
hold for use any of the Intellectual Property as owned, used or held for use in
the conduct of the businesses as currently conducted. Neither the
Company nor any of its subsidiaries owns any patents or has made application for
the issuance of a patent. To the Company's knowledge, no employee of
the Company or any of its subsidiaries is the subject of any claim or proceeding
involving a violation of any term of any employment contract, patent disclosure
agreement, invention assignment agreement, non-competition agreement,
non-solicitation agreement, nondisclosure agreement or any restrictive covenant
to or with a former employer where the basis of such violation relates to such
employee's employment with the Company or any of the Company's subsidiaries or
actions undertaken by the employee while employed with the Company or any of the
Company's subsidiaries.
12
(dd) No Labor Disputes. No labor
problem or dispute with the employees of the Company or any of the Company's
subsidiaries exists, or, to the Company's knowledge, is threatened or imminent,
which would reasonably be expected to result in a Material Adverse Effect. The
Company is not aware that any key employee or significant group of employees of
the Company or any of the Company's subsidiaries plans to terminate employment
with the Company or any of the Company's subsidiaries. Neither the Company nor
any of its subsidiaries has engaged in any unfair labor practice; except for
matters which would not, individually or in the aggregate, result in a Material
Adverse Effect, (i) there is (A) no unfair labor practice complaint pending or,
to the Company's knowledge, threatened against the Company or any of its
subsidiaries before the National Labor Relations Board, and no grievance or
arbitration proceeding arising out of or under collective bargaining agreements
is pending or to the Company's knowledge, threatened, (B) no strike, labor
dispute, slowdown or stoppage pending or, to the Company's knowledge, threatened
against the Company or any of its subsidiaries and (C) no union representation
dispute currently existing concerning the employees of the Company or any of its
subsidiaries and (ii) to the Company's knowledge, (A) no union organizing
activities are currently taking place concerning the employees of the Company or
any of its subsidiaries and (B) there has been no violation of any federal,
state, local or foreign law relating to discrimination in the hiring, promotion
or pay of employees, any applicable wage or hour laws or any provision of the
Employee Retirement Income Security Act of 1974 ("ERISA") or the rules and
regulations promulgated thereunder concerning the employees of the Company or
any of its subsidiaries.
(ee) Taxes. Except as disclosed in
its filings with the Commission, the Company and each of its subsidiaries (i)
has timely filed all necessary federal, state, local and foreign income and
franchise tax returns (or timely filed applicable extensions therefor) that have
been required to be filed and (ii) is not in default in the payment of any taxes
which were payable pursuant to such returns or any assessments with respect
thereto, other than any which the Company or any of its subsidiaries is
contesting in good faith and for which adequate reserves have been provided and
reflected in the Company's financial statements included in the Registration
Statement, the Disclosure Package and the Prospectus. Neither the Company nor
any of its subsidiaries has any tax deficiency that has been or, to the
knowledge of the Company, is reasonably likely to be asserted or threatened
against it that would result in a Material Adverse Effect. Neither
the Company nor any of its subsidiaries has engaged in any transaction which is
a corporate tax shelter or which could be characterized as such by the Internal
Revenue Service or any other taxing authority.
13
(ff) ERISA. The Company and each
of its subsidiaries is in compliance in all material respects with all presently
applicable provisions of ERISA; no "reportable event" (as defined in ERISA) has
occurred with respect to any "pension plan" (as defined in ERISA) for which the
Company or any of its subsidiaries would have any liability; neither the Company
nor any of its subsidiaries has incurred and does not expect to incur liability
under (i) Title IV of ERISA with respect to termination of, or withdrawal from,
any "pension plan" or (ii) Sections 412 or 4971 of the Internal Revenue Code of
1986, as amended, including the regulations and published interpretations
thereunder (the "Code");
and each "pension plan" for which the Company or any of its subsidiaries would
have any liability that is intended to be qualified under Section 401(a) of the
Code is so qualified in all material respects and nothing has occurred, whether
by action or by failure to act, which would cause the loss of such
qualification.
(gg) Compliance with Environmental
Laws. The Company and each of its subsidiaries (i) is in compliance with
any and all applicable foreign, federal, state and local laws, orders, rules,
regulations, directives, decrees and judgments relating to the use, treatment,
storage and disposal of hazardous or toxic substances or waste and protection of
human health and safety or the environment which are applicable to their
businesses ("Environmental
Laws"); (ii) has received and is in compliance with all permits, licenses
or other approvals required of it under applicable Environmental Laws to conduct
its business; and (iii) is in compliance with all terms and conditions of any
such permit, license or approval, except where such noncompliance with
Environmental Laws, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals would not, individually or in the aggregate, result in a
Material Adverse Effect. There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or operating
expenditures required for clean-up, closure of properties or compliance with
Environmental Laws or any permit, license or approval, any related constraints
on operating activities and any potential liabilities to third parties) which
would, individually or in the aggregate, result in a Material Adverse
Effect.
(hh) Insurance. The Company and
each of its subsidiaries maintains or is covered by insurance provided by
recognized, financially sound and reputable institutions with insurance policies
in such amounts and covering such risks as is adequate for the conduct of its
business and the value of its properties and as is customary for companies
engaged in similar businesses in similar industries. All such insurance is fully
in force on the date hereof and will be fully in force as of each Time of
Delivery. The Company has no reason to believe that it and its subsidiaries will
not be able to renew their 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 would not have a Material Adverse
Effect. Neither the Company nor any of its subsidiaries has been
denied any material insurance policy or coverage for which it has
applied. Neither the Company nor any of its subsidiaries insures risk
of loss through any captive insurance, risk retention group, reciprocal group or
by means of any fund or pool of assets specifically set aside for contingent
liabilities other than as described in the Disclosure Package.
14
(ii) Accounting Controls. 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 authorization; (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.
(jj) Disclosure Controls. The
Company has established, maintains and evaluates "disclosure controls and
procedures" (as such term is defined in Rule 13a-15(e) and 15d-15(e) under
the Exchange Act), which (i) are designed to ensure that material
information relating to the Company and its subsidiaries is made known to the
Company's principal executive officer and its principal financial officer by
others within those entities, particularly during the periods in which the
periodic reports required under the Exchange Act are being prepared, (ii) have
been evaluated for effectiveness as of the end of the last fiscal period covered
by the Registration Statement; and (iii) such disclosure controls and procedures
are effective to perform the functions for which they were established. There
are no significant deficiencies or material weaknesses in the design or
operation of internal controls which could adversely affect the Company's
ability to record, process, summarize, or report financial data to management
and the Board of Directors of the Company. The Company is not aware of any
fraud, whether or not material, that involves management or other employees who
have a role in the Company's internal controls; and since the date of the most
recent evaluation of such disclosure controls and procedures, there have been no
significant changes in internal controls or in other factors that could
significantly affect internal controls, including any corrective actions with
regard to significant deficiencies and material weaknesses. A member
of the Audit Committee of the Board of Directors of the Company (the "Audit Committee") has
confirmed to the Chief Executive Officer, Chief Financial Officer or General
Counsel of the Company that, except as set forth in the Disclosure Package, the
Audit Committee is not reviewing or investigating, and neither the Company's
independent auditors nor its internal auditors have recommended that the Audit
Committee review or investigate, (i) adding to, deleting, changing the
application of or changing the Company's disclosure with respect to, any of the
Company's material accounting policies, (ii) any matter which could result in a
restatement of the Company's financial statements for any annual or interim
period during the current or prior three fiscal years, or (iii) a significant
deficiency, material weakness, change in internal control over financial
reporting or fraud involving management or other employees who have a
significant role in the internal control over financial reporting.
15
(kk) Minute Books. The
minute books of the Company and each of its subsidiaries have been made
available upon request to the Underwriter and counsel for the Underwriter, and
such books (i) contain a materially complete summary of all meetings and actions
of the board of directors (including each board committee) and shareholders of
the Company (or analogous governing bodies and interest holders, as applicable),
and each of its subsidiaries since the time of its incorporation or organization
through the date of the latest meeting and action, and (ii) accurately in all
material respects reflect all transactions referred to in such
minutes.
(ll)
Contracts; Off-Balance Sheet
Interests. There is no document, contract, permit or instrument, or
off-balance sheet transaction (including without limitation, any "variable
interests" in "variable interest entities," as such terms are defined in
Financial Accounting Standards Board Interpretation No. 46) of a character
required by the Securities Act or the Rules and Regulations to be described in
the Registration Statement or the Disclosure Package or to be filed as an
exhibit to the Registration Statement or document incorporated by reference
therein, which is not described or filed as required. Each
description of a document, contract, permit or instrument in the Registration
Statement or the Disclosure Package accurately reflects in all material respects
the terms of the underlying document, contract, permit or
instrument. The documents, contracts, permits and instruments
described in the immediately preceding sentence to which the Company is a party
have been duly authorized, executed and delivered by the Company, constitute
valid and binding agreements of the Company, are enforceable against and by the
Company in accordance with the terms thereof and are in full force and effect on
the date hereof. Neither the Company nor any of its subsidiaries, if
a subsidiary is a party, nor to the Company's knowledge, any other party is in
default in the observance or performance of any term or obligation to be
performed by it under any such agreement, and no event has occurred which with
notice or lapse of time or both would constitute such a default, in any case
which default or event, individually or in the aggregate, would have a Material
Adverse Effect. No default exists, and no event has occurred which
with notice or lapse of time or both would constitute a default, in the due
performance and observance of any term, covenant or condition, by the Company or
a subsidiary, if a subsidiary is a party thereto, of any agreement or instrument
to which the Company or any of its subsidiaries is a party or by which the
Company or its properties or business or a subsidiary or the subsidiary's
properties or business may be bound or affected which default or event,
individually or in the aggregate, would have a Material Adverse
Effect.
(mm) No Undisclosed 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 or any of their affiliates on the other hand, which is required to
be described in the Registration Statement, the Disclosure Package or the
Prospectus or a document incorporated by reference therein and which has not
been so described.
16
(nn) Brokers Fees. Except as
disclosed in the Disclosure Package, there are no contracts, agreements or
understandings between the Company and any person (other than this Agreement)
that would give rise to a claim against the Company or the Underwriter for a
brokerage commission, finder's fee or other like payment in connection with the
offering and sale of the Securities.
(oo) Forward-Looking Statements.
No forward-looking statements (within the meaning of Section 27A of the
Securities Act and Section 21E of the Exchange Act) contained in either the
Disclosure Package or the Prospectus have been made or reaffirmed without a
reasonable basis therefor or have been disclosed other than in good
faith.
(pp) Sarbanes-Oxley Act. The
Company, and to its knowledge, each of the Company's directors or officers, in
their capacities as such, is in compliance in all material respects with all
applicable effective provisions of the Sarbanes-Oxley Act and any related rules
and regulations promulgated by the Commission. Each of the principal executive
officer and the principal financial officer of the Company (and each former
principal executive officer of the Company and each former principal financial
officer of the Company as applicable) has made all certifications required by
Sections 302 and 906 of the Sarbanes-Oxley Act with respect to all reports,
schedules, forms, statements and other documents required to be filed by him or
her with the Commission. For purposes of the preceding sentence, "principal
executive officer" and "principal financial officer" shall have the meanings
given to such terms in the Sarbanes-Oxley Act.
(qq) Foreign Corrupt Practices.
Neither the Company nor, to the Company's knowledge, any other person associated
with or acting on behalf of the Company, including without limitation any
director, officer, agent or employee of the Company or any of its subsidiaries
has, directly or indirectly, while acting on behalf of the Company or any of its
subsidiaries (i) used any corporate funds for unlawful contributions, gifts,
entertainment or other unlawful expenses relating to political activity or
failed to disclose fully any contribution in violation of law, (ii) made any
payment to any federal or state governmental officer or official, or other
person charged with similar public or quasi-public duties, other than payments
required or permitted by the laws of the United States or any jurisdiction
thereof, (iii) violated or is in violation of any provision of the U.S. Foreign
Corrupt Practices Act of 1977, as amended or (iv) made any bribe, rebate,
payoff, influence payment, kickback or other unlawful payment.
(rr) Affiliate
Transactions. There are no transactions, arrangements or other
relationships between and/or among the Company, any of its affiliates (as such
term is defined in Rule 405) and any unconsolidated entity, including, but not
limited to, any structured finance, special purpose or limited purpose entity
that could reasonably be expected to materially affect the Company's liquidity
or the availability of or requirements for its capital resources required to be
described in the Disclosure Package and the Prospectus or a document
incorporated by reference therein which have not been described as
required. The Company does not, directly or indirectly, including
through any subsidiary, have any outstanding personal loans or other credit
extended to or for any of its directors or executive officers.
17
(ss) Statistical or Market-Related
Data. Any statistical, industry-related or market-related data included
or incorporated by reference in the Registration Statement, the Prospectus or
the Disclosure Package, are based on or derived from sources that the Company
reasonably and in good faith believes to be reliable and accurate, and such data
agree with the sources from which they are derived.
(tt) 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 USA PATRIOT Act, the money
laundering statutes of all jurisdictions, the rules and regulations thereunder
and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the "Money Laundering Laws") and no
action, suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company with respect to the
Money Laundering Laws is pending, or to the knowledge of the Company, threatened
against the Company or any of its subsidiaries.
(uu) OFAC. Neither the Company
nor, to the knowledge of the Company, any director, officer, agent, employee or
affiliate of the Company or any of its subsidiaries is currently subject to any
U.S. sanctions administered by the Office of Foreign Assets Control of the U.S.
Treasury Department ("OFAC"); and the Company will
not directly or indirectly use the proceeds of the offering, or lend, contribute
or otherwise make available such proceeds to any affiliate, joint venture
partner or other person or entity, which, to the Company's knowledge, will use
such proceeds for the purpose of financing the activities of any person
currently subject to any U.S. sanctions administered by OFAC.
(vv) Margin Securities. The
Company does not own any "margin securities" as that term is defined in
Regulation U of the Board of Governors of the Federal Reserve System (the "Federal Reserve Board"), and
none of the proceeds of the sale of the Securities will be used, directly or
indirectly, for the purpose of purchasing or carrying any margin security, for
the purpose of reducing or retiring any indebtedness which was originally
incurred to purchase or carry any margin security or for any other purpose which
might cause any of the Securities to be considered a "purpose credit" within the
meanings of Regulation T, U or X of the Federal Reserve Board.
(ww) Rated Securities. At the Time
of Sale there were, and as of each Time of Delivery there will be, no securities
of or guaranteed by the Company that are rated by a "nationally recognized
statistical rating organization," as that term is defined in Rule 436(g)(2)
promulgated under the Securities Act.
18
(xx) FINRA Affiliations. There are
no affiliations or associations between (i) any member of the FINRA and (ii) the
Company or any of the Company's officers, directors or 5% or greater
securityholders or any beneficial owner of the Company's unregistered equity
securities that were acquired at any time on or after the one hundred eightieth
(180th) day immediately preceding the date the Registration Statement was
initially filed with the Commission, except as set forth in the Registration
Statement, the Disclosure Package and the Prospectus.
(yy) Exchange Act Requirements.
The Company has filed in a timely manner all reports required to be filed
pursuant to Sections 13(a), 13(e), 14 and 15(d) of the Exchange Act during the
preceding 12 months (except to the extent that Section 15(d) requires reports to
be filed pursuant to Sections 13(d) and 13(g) of the Exchange Act, which shall
be governed by the next clause of this sentence); and the Company has filed in a
timely manner all reports required to be filed pursuant to Sections 13(d) and
13(g) of the Exchange Act, except where the failure to timely file could not
reasonably be expected individually or in the aggregate to have a Material
Adverse Effect.
(zz) Trading Market. No approval
of the shareholders of the Company under the rules and regulations of any
trading market is required for the Company to issue and deliver the
Securities.
(aaa) Reserve
Reports. The information underlying the estimates of the
reserves of the Company and its subsidiaries, which was supplied by the Company
to each of Cawley Gillespie & Associates, Inc. ("Cawley"), DeGolyer and MacNaughton ("D&M"), W.D. Von Gonten & Co. ("Von Gonten") and Netherland,
Sewell and Associates, Inc. ("Netherland" and together with
Cawley, D&M and Von Gonten, the "Reserve Engineers"), each are
independent petroleum engineers, for purposes of preparing the respective
reserve reports incorporated by reference into the Registration Statement (the
"Reserve Reports"),
including, without limitation, production, volumes, sales prices for production,
contractual pricing provisions under oil or gas sales or marketing contracts
under hedging arrangements, costs of operations and development, and working
interest and net revenue interest information relating to the Company's
ownership interests in properties, was true and correct in all material respects
on the dates of such Reserve Reports; the estimates of future capital
expenditures and other future exploration and development costs supplied to the
Reserve Engineers were prepared in good faith and with a reasonable basis; the
information provided to each of the Reserve Engineers by the Company for
purposes of preparing the Reserve Reports was prepared in accordance with
customary industry practices; each of the Reserve Engineers was, as of the dates
of the Reserve Reports, and is, as of the date hereof, independent petroleum
engineers with respect to the Company; other than any decrease in reserves
resulting from normal production of the reserves and intervening spot market
product price fluctuations or as disclosed in the Preliminary Prospectus
Supplement and incorporated by reference into the Registration Statement, to the
knowledge of the Company, there are not any facts or circumstances that would
adversely affect the reserves in the aggregate, or the aggregate present value
of future net cash flows therefrom, as disclosed in the Statutory Prospectus and
incorporated by reference into the Registration Statement and reflected in the
Reserve Reports such as to cause a material adverse change; estimates of such
reserves and the present value of the future net cash flows therefrom as
disclosed in the Statutory Prospectus and incorporated by reference into the
Registration Statement and reflected in the Reserve Reports comply in all
material respects to the applicable requirements of Regulation S-X and Industry
Guide 2 under the Securities Act.
19
(bbb) To
the best of the Company's knowledge, information and belief, none of the current
directors or officers of the Company or any of its subsidiaries (or such
shareholders' respective principals) is or has ever been subject to prior
regulatory, criminal or bankruptcy proceedings in the U.S. or
elsewhere.
(ccc) The
Company has not provided and has not authorized any other person to act on its
behalf to provide any investor or its respective agents or counsel with any
information about the Company that constitutes or might constitute material,
non-public information which is not otherwise disclosed in the
Prospectus.
Any
certificate signed by any officer of the Company and delivered to the
Underwriter or to counsel for the Underwriter in connection with the offering of
the Securities shall be deemed a representation and warranty by the Company to
the Underwriter as to the matters covered thereby.
|
3.
|
Purchase, Sale and Delivery of
Securities. Subject to the terms and conditions herein
set forth, (a) the Company agrees to issue and sell to the Underwriter,
and the Underwriter agrees to purchase from the Company, the number of
Firm Securities set forth opposite the name of the Underwriter in Schedule
I hereto, at a purchase price per share of $23.75 and (b) in the event and
to the extent that the Underwriter shall exercise the election to purchase
Optional Securities as provided below, the Company agrees to issue and
sell to the Underwriter, and the Underwriter agrees to purchase from the
Company, at the purchase price per share set forth in clause (a) of this
Section
2, that portion of the number of Optional Securities as to which
such election shall have been exercised (to be adjusted by the Underwriter
so as to eliminate fractional shares) determined by multiplying such
number of Optional Securities by a fraction, the numerator of which is the
maximum number of Optional Securities which the Underwriter is entitled to
purchase as set forth opposite the name of the Underwriter in Schedule I
hereto and the denominator of which is the maximum number of Optional
Securities that the Underwriter is entitled to purchase
hereunder.
|
The
Company hereby grants to the Underwriter the right to purchase at their election
up to 32,242 Optional Securities, at the purchase price per share set forth in
the paragraph above, for the sole purpose of covering sales of shares of its
10.25% Series C Cumulative Perpetual Preferred Stock in excess of the number of
Firm Securities, provided that the purchase price per Optional Security shall be
reduced by an amount per share equal to any dividends or distributions declared
by the Company and payable on the Firm Securities but not payable on the
Optional Securities. Any such election to purchase Optional
Securities may be exercised only by written notice from the Underwriter to the
Company, given within a period of 30 calendar days after the date of this
Agreement, setting forth the aggregate number of Optional Securities to be
purchased and the date on which such Optional Securities are to be delivered, as
determined by the Underwriter but in no event earlier than the First Time of
Delivery (as defined in Section 5(a) hereof)
or, unless the Underwriter and the Company otherwise agree in writing, earlier
than two or later than ten business days after the date of such
notice.
20
|
4.
|
Offering by
Underwriter. Upon the authorization by the Underwriter
of the release of the Firm Securities,
the Underwriter proposes to offer the Firm Securities for sale upon the
terms and conditions set forth in the Disclosure Package and the
Prospectus.
|
|
5.
|
Delivery of the
Securities.
|
|
(a)
|
The
Securities to be purchased by each Underwriter hereunder, in definitive
form, and registered in such names as the Underwriter may request upon at
least forty-eight hours' prior notice to the Company shall be delivered by
or on behalf of the Company, to the Underwriter through the facilities of
The Depository Trust Company ("DTC") or a custodian
designated by DTC for the account of the Underwriter, against payment by
or on behalf of the Underwriter of the purchase price therefor by wire
transfer of Federal (same-day) funds to the account specified by the
Company to the Underwriter at least forty-eight hours in
advance. The Company will cause the certificates representing
the Securities to be made available for checking and packaging at least
twenty-four hours prior to the Time of Delivery (as defined below) with
respect thereto at the office of DTC or its designated custodian. The time
and date of such delivery and payment shall be, with respect to the Firm
Securities, 9:30 a.m., New York City time, on December 14, 2009 or such
other time and date as the Underwriter and the Company may agree upon in
writing, and, with respect to the Optional Securities, 9:30 a.m., New York
time, on the date specified by the Underwriter in the written notice given
by the Underwriter of the Underwriter's election to purchase such Optional
Securities, or such other time and date as the Underwriter and the Company
may agree upon in writing. Such time and date for delivery of
the Firm Securities is herein called the "First Time of Delivery",
such time and date for delivery of the Optional Securities, if not the
First Time of Delivery, is herein called the "Second Time of
Delivery", and each such time and date for delivery is herein
called a "Time of
Delivery"
|
|
(b)
|
The
documents to be delivered at each Time of Delivery by or on behalf of the
parties hereto pursuant to Section 8
hereof, including the cross receipt for the Securities and any additional
documents requested by the Underwriter, will be delivered at the offices
of Bracewell & Giuliani LLP, 711 Louisiana Street, Ste. 2300, Houston,
Texas 77002 (the "Closing
Location"), and the Securities will be delivered at the office of
DTC or its designated custodian, all at each Time of
Delivery. A meeting will be held at the Closing Location at
3:00 p.m., New York City time, on the New York Business Day next preceding
each Time of Delivery, at which meeting the final drafts of the documents
to be delivered pursuant to the preceding sentence will be available for
review by the parties hereto. For the purposes of this Section 5,
"New York Business
Day" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to
close.
|
21
|
6.
|
Certain Agreements of the
Company. The Company agrees with the Underwriter
that:
|
|
(a)
|
Filing of
Prospectuses. The Company has filed or will file each
Statutory Prospectus and the Prospectus pursuant to and in accordance with
Rule 424(b)(2) (or, if applicable and consented to by the
Underwriter, subparagraph (5)) not later than the second business day
following the earlier of the date it is first used or the execution and
delivery of this Agreement. The Company has complied and will
comply with Rule 433.
|
|
(b)
|
Filing of Amendments; Response
to Commission Requests. The Company will promptly advise
the Underwriter of any proposal to amend or supplement the Registration
Statement or any Statutory Prospectus at any time and will offer the
Underwriter a reasonable opportunity to comment on any such amendment or
supplement; and the Company will also advise the Underwriter promptly of
(i) the filing of any such amendment or supplement, (ii) any
request by the Commission or its staff for any amendment to the
Registration Statement, for any supplement to any Statutory Prospectus or
for any additional information, (iii) the institution by the
Commission of any stop order proceedings in respect of the Registration
Statement or the threatening of any proceeding for that purpose, and
(iv) the receipt by the Company of any notification with respect to
the suspension of the qualification of the Securities in any jurisdiction
or the institution or threatening of any proceedings for such
purpose. The Company will use its best efforts to prevent the
issuance of any such stop order or the suspension of any such
qualification and, if issued, to obtain as soon as possible the withdrawal
thereof.
|
|
(c)
|
Continued Compliance with
Securities Laws. If, at any time when a prospectus
relating to the Securities is (or but for the exemption in Rule 172
would be) required to be delivered under the Act by the Underwriter or
dealer, any event occurs as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or if it is necessary at any time to amend the Registration
Statement or supplement the Prospectus to comply with the Act, the Company
will promptly notify the Underwriter of such event and will promptly
prepare and file with the Commission and furnish, at its own expense, to
the Underwriter and the dealers and any other dealers upon request of the
Underwriter, an amendment or supplement which will correct such statement
or omission or an amendment which will effect such
compliance. Neither the Underwriter's consent to, nor the
Underwriter's delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 8
hereof.
|
22
|
(d)
|
Rule 158. As
soon as practicable, but not later than 16 months, after the date of this
Agreement, the Company will make generally available to its
securityholders an earnings statement covering a period of at least 12
months beginning after the date of this Agreement and satisfying the
provisions of Section 11(a) of the Act and
Rule 158.
|
|
(e)
|
Furnishing of
Prospectuses. The Company will furnish to the
Underwriter copies of the Registration Statement, including all exhibits,
any Statutory Prospectus, the Prospectus and all amendments and
supplements to such documents, in each case as soon as available
and in such quantities as the Underwriter reasonably
requests. The Company will pay the expenses of printing and
distributing to the Underwriter all such
documents.
|
|
(f)
|
Blue Sky
Qualifications. The Company will arrange for the
qualification of the Securities for sale under the laws of such
jurisdictions as the Underwriter designates and will continue such
qualifications in effect so long as required for the distribution; provided that
in no event shall the Company be obligated to qualify to do business in
any jurisdiction where it is not now so qualified, to register or qualify
as a dealer in securities or to take any action that would subject it to
service of process in any jurisdiction, other than those arising out of
the offering or sale of the Securities, in any jurisdiction where it is
not now so subject.
|
|
(g)
|
Reporting
Requirements. For so long as the Securities remain
outstanding, the Company will furnish to the Underwriter as soon as
practicable after the end of each fiscal year, a copy of its annual report
to stockholders for such year; and the Company will furnish to the
Underwriter (i) as soon as available, a copy of each report and any
definitive proxy statement of the Company filed with the Commission under
the Exchange Act or mailed to stockholders, and (ii) from time to
time, such other information concerning the Company as the Underwriter may
reasonably request. However, so long as the Company is subject
to the reporting requirements of either Section 13 or Section 15(d) of the
Exchange Act and is timely filing reports with the Commission on EDGAR, it
is not required to furnish such reports or statements to the
Underwriter.
|
|
(h)
|
Payment of
Expenses. The Company will pay all expenses incident to
the performance of its obligations under this Agreement, including but not
limited to any filing fees and other expenses incurred in connection with
qualification of the Securities for sale under the laws of such
jurisdictions as the Underwriter designates and the preparation and
printing of memoranda relating thereto, any fees charged by investment
rating agencies for the rating of the Securities, costs and expenses
relating to investor presentations or any "road show" in connection with
the offering and sale of the Securities including, without limitation, any
travel expenses of the Company's officers and employees and any other
expenses of the Company including the chartering of airplanes, expenses
incurred in distributing preliminary prospectuses and the Prospectus
(including any amendments and supplements thereto) to the Underwriter and
for expenses incurred for preparing, printing and distributing any Issuer
Free Writing Prospectuses to investors or prospective investors, all fees
and expenses incurred in connection with any filing for the review of the
Offering by FINRA, and all fees and disbursements of counsel for the
Underwriter in connection with the offering up to
$125,000.
|
23
|
(i)
|
Use of
Proceeds. The Company will use the net proceeds received
in connection with this offering in the manner described in the "Use of
Proceeds" section of the Disclosure Package and the Prospectus and, except
as disclosed in the Disclosure Package and the Prospectus, the Company
does not intend to use any of the proceeds from the sale of the Securities
hereunder to repay any outstanding debt owed to any affiliate of the
Underwriter.
|
|
(j)
|
Absence of
Manipulation. The Company will not take, directly or
indirectly, any action designed to or that would constitute or that might
reasonably be expected to cause or result in, stabilization or
manipulation of the price of any securities of the Company to facilitate
the sale or resale of the
Securities.
|
|
(k)
|
Restriction on Sale of
Securities. The Company will not offer, sell, contract
to sell, pledge or otherwise dispose of, directly or indirectly, or file
with the Commission a registration statement under the Securities Act
relating to 10.25% Series C Cumulative Perpetual Preferred Stock or any
other substantially similar series of preferred stock of the Company, or
publicly disclose the intention to make any such offer, sale, pledge,
disposition or filing, without the prior written consent of the
Underwriter for a period beginning on the date hereof and ending 15 days
after the First Time of Delivery; provided, however, the Company may issue
its Series B Redeemable Convertible Preferred Stock to Triad or its
designees without the prior written consent of the
Underwriter.
|
|
(l)
|
NYSE Amex
Listing. The Company will use its best efforts to list,
subject to notice of issuance, the Securities on the NYSE
Amex.
|
|
7.
|
Free Writing
Prospectuses.
|
|
(a)
|
Issuer Free Writing
Prospectuses. The Company represents and agrees that, unless it
obtains the prior consent of the Underwriter, and the Underwriter
represents and agrees that, unless it obtains the prior consent of the
Company and the Underwriter, it has not made and will not make any offer
relating to the Securities that would constitute an Issuer Free Writing
Prospectus, or that would otherwise constitute a "free writing
prospectus," as defined in Rule 405, required to be filed with the
Commission. Any such free writing prospectus consented to by
the Company and the Underwriter is hereinafter referred to as a "Permitted Free Writing
Prospectus." The Company represents that it has treated
and agrees that it will treat each Permitted Free Writing Prospectus as an
"issuer free writing prospectus," as defined in Rule 433, and has
complied and will comply with the requirements of Rules 164
and 433 applicable to any Permitted Free Writing Prospectus,
including timely Commission filing where required, legending and record
keeping.
|
24
|
(b)
|
Term
Sheets. The Company will prepare a final term sheet
relating to the Securities, containing only information that describes the
final terms of the Securities and otherwise in a form consented to by the
Underwriter, and will file such final term sheet within the period
required by Rule 433(d)(5)(ii) following the date such final
terms have been established for all classes of the offering of the
Securities. Any such final term sheet is an Issuer Free Writing
Prospectus and a Permitted Free Writing Prospectus for purposes of this
Agreement. The Company also consents to the use by the
Underwriter of a free writing prospectus that contains only (i)(x)
information describing the preliminary terms of the Securities or their
offering, (y) information permitted by Rule 134, or (z) information that
describes the final terms of the Securities or their offering and that is
included in the final term sheet of the Company contemplated in the first
sentence of this subsection or (ii) other information that is not
"issuer information," as defined in Rule 433, it being understood
that any such free writing prospectus referred to in clause (i) or
(ii) above shall not be an Issuer Free Writing Prospectus for
purposes of this Agreement.
|
|
8.
|
Conditions of the Obligations
of the Underwriter. The obligations of the Underwriter to purchase
and pay for the Securities at each Time of Delivery will be subject to the
accuracy of the representations and warranties of the Company herein (as
though made on such Time of Delivery), to the accuracy of the statements
of Company officers made pursuant to the provisions hereof, to the
performance by the Company of their obligations hereunder and to the
following additional conditions
precedent:
|
|
(a)
|
Accountants' Comfort
Letters.
|
|
|
(i)
|
On
the date hereof, the Underwriter shall have received a letter dated the
date hereof (the "Comfort
Letter"), addressed to the Underwriter and in form and substance
reasonably satisfactory to the Underwriter and its counsel, from each of
Malone & Bailey, PC and Appalachian Basin CPAs, Inc., (i) confirming
that they are independent public accountants with respect to the Company
and Triad, respectively, within the meaning of the Securities Act and the
Rules and Regulations and (ii) stating, as of the date hereof (or, with
respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the
Disclosure Package, as of a date not more than three days prior to the
date hereof), the conclusions and findings of such firm with respect to
the financial information and other matters ordinarily covered by
accountants' "comfort letters" to underwriters, delivered according to
Statement of Auditing Standards No. 72 and Statement of Auditing Standard
No. 100 (or successor bulletins), in connection with registered public
offerings.
|
25
|
|
(ii)
|
At
each Time of Delivery, the Underwriter shall have received from each of
Malone & Bailey, PC and Appalachian Basin CPAs a letter (the "Bring-Down Letter"),
dated such Time of Delivery, addressed to the Underwriter and in form and
substance reasonably satisfactory to the Underwriter and its counsel, (i)
confirming that they are independent public accountants with respect to
the Company and Triad, respectively, within the meaning of the Securities
Act and the Rules and Regulations, (ii) stating, as of the date of the
Bring-Down Letter (or, with respect to matters involving changes or
developments since the respective dates as of which specified financial
information is given in the Disclosure Package and the Prospectus, as of a
date not more than three days prior to the date of the Bring-Down Letter),
the conclusions and findings of such firm with respect to the financial
information and other matters covered by the Comfort Letter and (iii)
confirming in all material respects the conclusions and findings set forth
in the Comfort Letter.
|
|
(b)
|
Filing of
Prospectus. The Prospectus shall have been filed with
the Commission in accordance with the Rules and Regulations and Section 6(a)
hereof.
|
|
(c)
|
No Stop Orders. Prior
to each Time of Delivery: (i) no stop order suspending the effectiveness
of the Registration Statement or any part thereof, preventing or
suspending the use of the Prospectus or any Issuer Free Writing Prospectus
or any part thereof shall have been issued under the Securities Act and no
proceedings for that purpose or pursuant to Section 8A under the
Securities Act shall have been initiated or threatened by the Commission,
(ii) no order suspending the qualification or registration of the
Securities under the securities or blue sky laws of any jurisdiction shall
be in effect and (iii) all requests for additional information on the part
of the Commission (to be included or incorporated by reference in the
Registration Statement, the Disclosure Package, the Prospectus or any
Issuer Free Writing Prospectus or otherwise) shall have been complied with
to the reasonable satisfaction of the Underwriter. On or prior to each
Time of Delivery, the Registration Statement or any amendment thereof or
supplement thereto shall not contain an untrue statement of material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and neither the
Disclosure Package, nor any Issuer Free Writing Prospectus nor the
Prospectus nor any amendment thereof or supplement thereto shall 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 light of the circumstances in which they were made, not
misleading.
|
26
|
(d)
|
Action Preventing
Issuance. No action shall have been taken and no law, statute,
rule, regulation or order shall have been enacted, adopted or issued by
any governmental agency or body which would prevent the issuance or sale
of the Securities or materially and adversely affect or potentially
materially and adversely affect the business or operations of the Company;
and no injunction, restraining order or order of any other nature by any
federal or state court of competent jurisdiction shall have been issued
which would prevent the issuance or sale of the Securities or materially
and adversely affect or potentially materially and adversely affect the
business or operations of the
Company.
|
|
(e)
|
No Material Adverse
Change. Subsequent to the date of the latest audited
financial statements included or incorporated by reference in the
Disclosure Package, (i) 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 dispute or court or governmental action,
order or decree, otherwise than as set forth in the Disclosure Package,
(ii) there has not been any change in the capital stock (other than a
change in the number of outstanding shares of Common Stock due to the
issuance of shares upon the exercise of outstanding options or warrants or
the conversion of convertible indebtedness), or material change in the
short–term debt or long–term debt of the Company (other than upon
conversion of convertible indebtedness) or any material adverse change, in
or affecting the business, assets, general affairs, management, financial
position, stockholders' equity or results of operations of the Company,
otherwise than as set forth in the Disclosure Package, the effect of
which, in any such case described in clause (i) or (ii) of this subsection (e),
is, in the reasonable judgment of the Underwriter, so material and adverse
as to make it impracticable or inadvisable to proceed with the sale or
delivery of the Securities on the terms and in the manner contemplated in
the Disclosure Package.
|
|
(f)
|
Representations and
Warranties. Each of the representations and warranties of the
Company contained herein shall be true and correct when made and on and as
of each Time of Delivery, as if made on such date (except that those
representations and warranties that address matters only as of a
particular date shall remain true and correct as of such date), and all
covenants and agreements herein contained to be performed on the part of
the Company and all conditions herein contained to be fulfilled or
complied with by the Company at or prior to each Time of Delivery shall
have been duly performed, fulfilled or complied
with.
|
|
(g)
|
Engineers' Comfort
Letters. Each of the Reserve Engineers shall have
furnished to the Underwriter a letter or letters, dated each Time of
Delivery, in form and substance reasonably satisfactory to the
Underwriter.
|
27
|
(h)
|
Opinion of Counsel for
Company. The Underwriter shall have received from
Fulbright & Jaworski L.L.P., counsel to the Company, such counsel's
written opinion, addressed to the Underwriter and dated such Time of
Delivery, in form and substance reasonably satisfactory to the Underwriter
and its counsel, substantially in the form of Annex I hereto. Such counsel
to the Company shall also have furnished to the Underwriter a written
statement ("Negative
Assurances"), addressed to the Underwriter and dated such Time of
Delivery, in form and substance satisfactory to the Underwriter and its
counsel.
|
|
(i)
|
Opinion of Counsel for
Underwriter. The Underwriter
shall have received from Bracewell & Giuliani LLP, counsel for the
Underwriter, such opinion or opinions, dated such Time of Delivery, with
respect to such matters as the Underwriter may reasonably require, and the
Company shall have furnished to such counsel such documents as it requests
to enable it to pass upon such
matters.
|
|
(j)
|
Officer's Certificate.
The Underwriter shall have received on each Time of Delivery a
certificate, addressed to the Underwriter and dated such Time of Delivery,
of the chief executive or chief operating officer and the chief financial
officer or chief accounting officer of the Company to the effect
that:
|
|
|
(i)
|
each
of the representations, warranties and agreements of the Company contained
in this Agreement were true and correct when originally made and are true
and correct as of the Time of Sale and such Time of Delivery as if made on
each such date (except that those representations and warranties that
address matters only as of a particular date remain true and correct as of
each such date); and the Company has complied with all agreements and
satisfied all the conditions on its part required under this Agreement to
be performed or satisfied at or prior to such Time of
Delivery;
|
|
|
(ii)
|
there
has not been, subsequent to the date of the most recent audited financial
statements included or incorporated by reference in the Disclosure
Package, any material adverse change in the financial position or results
of operations of the Company, or any change or development that,
singularly or in the aggregate, would involve a material adverse change or
a prospective material adverse change, in or affecting the condition
(financial or otherwise), results of operations, business or assets of the
Company except as set forth in the
Prospectus;
|
|
|
(iii)
|
no
stop order suspending the effectiveness of the Registration Statement or
any part thereof or any amendment thereof or the qualification of the
Securities for offering or sale, nor suspending or preventing the use of
the Disclosure Package, the Prospectus or any Issuer Free Writing
Prospectus shall have been issued, and no proceedings for that purpose or
pursuant to Section 8A under the Securities Act shall be pending or to
their knowledge, threatened by the Commission or any state or regulatory
body;
|
28
|
|
(iv)
|
the
Registration Statement and each amendment thereto, at the Time of Sale and
as of the date of this Agreement and as of such Time of Delivery did not
include any untrue statement of a material fact and did not omit to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and the Disclosure Package, as of the
Time of Sale and as of such Time of Delivery, any Issuer Free Writing
Prospectus as of its date and as of such Time of Delivery, the Prospectus
and each amendment or supplement thereto, as of the respective date
thereof and as of such Time of Delivery, did not include any untrue
statement of a material fact and did not omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances in which they were made, not misleading;
and
|
|
|
(v)
|
no
event has occurred as a result of which it is necessary to amend or
supplement the Registration Statement, the Prospectus or the Disclosure
Package in order to make the statements therein not untrue or misleading
in any material respect.
|
|
(k)
|
Certificate of
Designations. The Certificate of Designations shall have been filed
with the Secretary of State of the State of
Delaware.
|
|
(l)
|
NYSE Amex
Listing. The Securities shall have been approved for
listing on the NYSE Amex, subject only to official notice of
issuance.
|
|
9.
|
Indemnification and
Contribution.
|
|
(a)
|
Indemnification of
Underwriter. The Company will indemnify and hold
harmless the Underwriter, its partners, members, directors, officers,
employees, agents, affiliates and each person, if any, who controls the
Underwriter within the meaning of Section 15 of the Act or Section 20 of
the Exchange Act (each, an "Indemnified Party"),
against any and all losses, claims, damages or liabilities, joint or
several, to which such Indemnified Party may become subject, under the
Act, the Exchange Act, other Federal or state statutory law or regulation
or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
any part of the Registration Statement at any time, any Statutory
Prospectus as of any time, the Prospectus or any Issuer Free Writing
Prospectus, or arise out of or are based upon the omission or alleged
omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse each
Indemnified Party for any legal or other expenses reasonably incurred by
such Indemnified Party in connection with investigating or defending
against any loss, claim, damage, liability, action, litigation,
investigation or proceeding whatsoever (whether or not such Indemnified
Party is a party thereto), whether threatened or commenced, and in
connection with the enforcement of this provision with respect to any of
the above as such expenses are incurred; provided, however, that the
Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement in or omission or alleged omission
from any of such documents in reliance upon and in conformity with written
information furnished to the Company by the Underwriter specifically for
use therein, it being understood and agreed that the only such information
furnished by the Underwriter consists of the information described as such
in subsection
(b) below.
|
29
|
(b)
|
Indemnification of
Company. Each Underwriter will severally and not jointly
indemnify and hold harmless the Company and its directors and officers who
sign a Registration Statement and each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act (each, an "Underwriter Indemnified
Party"), against any losses, claims, damages or liabilities to
which the Underwriter Indemnified Party may become subject, under the Act,
the Exchange Act, other Federal or state statutory law or regulation or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue
statement or alleged untrue statement of any material fact contained in
any part of the Registration Statement at any time, any Statutory
Prospectus as of any time, the Prospectus, or any Issuer Free Writing
Prospectus, or arise out of or are based upon the omission or the alleged
omission of a material fact required to be stated therein or necessary to
make the statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by the
Underwriter specifically for use therein, and will reimburse any legal or
other expenses reasonably incurred by the Underwriter Indemnified Party in
connection with investigating or defending against any such loss, claim,
damage, liability, action, litigation, investigation or proceeding
whatsoever (whether or not the Underwriter Indemnified Party is a party
thereto), whether threatened or commenced, based upon any such untrue
statement or omission, or any such alleged untrue statement or omission as
such expenses are incurred, it being understood and agreed that the only
such information furnished by the Underwriter consists of the following
information (the "Underwriter's
Information") in the Prospectus furnished on behalf of each
Underwriter: the concession and reallowance figures appearing
in the third paragraph under the caption "Underwriting" and the
information contained in the eleventh paragraph under the caption
"Underwriting."
|
30
|
(c)
|
Actions against Parties;
Notification. Promptly after receipt by an indemnified
party under this Section of notice of the commencement of any action, such
indemnified party will, if a claim in respect thereof is to be made
against the indemnifying party under subsection (a)
or (b)
above, notify the indemnifying party of the commencement thereof; but the
failure to notify the indemnifying party shall not relieve it from any
liability that it may have under subsection (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 party shall
not relieve it from any liability that it may have to an indemnified party
otherwise than under subsection (a)
or (b)
above. In case any such action is brought against any
indemnified party and it notifies the indemnifying party of the
commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the defense
thereof, with counsel selected by the indemnifying party and reasonably
satisfactory to such indemnified party (who shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party),
and after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof, the indemnifying party will
not be liable to such indemnified party under this Section for any legal
or other expenses subsequently incurred by such indemnified party in
connection with the defense thereof other than reasonable costs of
investigation. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an
action, the indemnified party shall have the right to employ separate
counsel (including local counsel), and the indemnifying party shall bear
the reasonable fees, costs and expenses of such separate counsel if (i)
the use of counsel chosen by the indemnifying party to represent the
indemnified party would present such counsel with a conflict of interest;
(ii) the actual or potential defendants in, or targets of, any such action
include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be legal
defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party;
(iii) the indemnifying party shall not have employed counsel reasonably
satisfactory to the indemnified party to represent the indemnified party
within a reasonable time after notice of the institution of such action;
or (iv) the indemnifying party shall authorize the indemnified party to
employ separate counsel at the expense of the indemnifying party;
provided, however, the indemnifying party shall not be responsible for
paying the fees, costs and expenses for more than one separate counsel for
all indemnified parties in any one jurisdiction. No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened
action in respect of which any indemnified party is or could have been a
party and indemnity could have been sought hereunder by such indemnified
party unless such settlement (i) includes an unconditional release of
such indemnified party from all liability on any claims that are the
subject matter of such action 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 an indemnified party.
|
31
|
(d)
|
Contribution. If
the indemnification provided for in this Section is unavailable or
insufficient to hold harmless an indemnified party under subsection (a)
or (b)
above, then each indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of the losses, claims,
damages or liabilities referred to in subsection (a)
or (b)
above (i) in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the
Underwriter on the other from the offering of the Securities or
(ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company on the one hand
and the Underwriter on the other in connection with the statements or
omissions which 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 Underwriter on the other
shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company bear
to the total underwriting discounts and commissions received by the
Underwriter. The relative fault 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 the Underwriter and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid by
an indemnified party as a result of the losses, claims, damages or
liabilities referred to in the first sentence of this subsection (d)
shall be deemed to include any legal or other expenses reasonably incurred
by such indemnified party in connection with investigating or defending
any action or claim which is the subject of this subsection (d).
Notwithstanding the provisions of this subsection (d),
no Underwriter shall be required to contribute any amount in excess of the
amount by which the total price at which the Securities underwritten by it
and distributed to the public were offered to the public exceeds the
amount of any damages which the 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 Underwriter's obligations in
this subsection
(d) to contribute are several in proportion to their respective
underwriting obligations and not joint. The Company and the
Underwriter agree that it would not be just and equitable if contribution
pursuant to this Section 9(d)
were determined by pro rata allocation (even if the Underwriter was
treated as one entity for such purpose) or by any other method of
allocation which does not take account of the equitable considerations
referred to in this Section
9(d).
|
|
10.
|
Survival of Certain
Representations and Obligations. The respective
indemnities, agreements, representations, warranties and other statements
of the Company or its officers and of the Underwriter set forth in or made
pursuant to this Agreement will remain in full force and effect,
regardless of any investigation, or statement as to the results thereof,
made by or on behalf of the Underwriter, the Company or any of their
respective representatives, officers or directors or any controlling
person, and will survive delivery of and payment for the Securities. If
the purchase of the Securities by the Underwriter is not consummated for
any reason, the Company will reimburse the Underwriter for all
out-of-pocket expenses (including reasonable fees and disbursements of
counsel) incurred by them in connection with the offering of the
Securities, and the respective obligations of the Company and the
Underwriter pursuant to Section 8
hereof shall remain in effect. In addition, if any Securities
have been purchased hereunder, the representations and warranties in Section 2
and all obligations under Section 6
shall also remain in effect.
|
32
|
11.
|
Notices. All
communications hereunder will be in writing and, if sent to the
Underwriter, will be mailed, delivered or telegraphed and confirmed to
Wunderlich Securities, Inc., 400 E. Pratt Street, Suite 710, Baltimore,
Maryland 21202, Attention: Christopher A. Freeman, Senior Vice
President, or, if sent to the Company, will be mailed, delivered or
telegraphed and confirmed to it at Magnum Hunter Resources
Corporation 777 Post Oak Blvd., Suite 910, Houston,
Texas 77056, Attention: Gary C. Evans, Chairman, Facsimile No.:
(832) 369-6992, with a copy (which shall not constitute notice) to
Fulbright & Jaworski L.L.P., 2200 Ross Avenue, Suite 2800, Dallas,
Texas 75201, Attention: Dave Morrison and Alexis Thomason, Facsimile No.:
(214) 855-8200; provided, however, that any notice to the Underwriter
pursuant to Section 9
will be mailed, delivered or telegraphed and confirmed to the Underwriter.
Any such statements, requests, notices or agreements shall be effective
only upon receipt. Any party to this Agreement may change such address for
notices by sending to the parties to this Agreement written notice of a
new address for such purpose.
|
|
12.
|
Successors. This
Agreement will inure to the benefit of and be binding upon the parties
hereto and their respective successors and the officers and directors and
controlling persons referred to in Section 9,
and no other person will have any right or obligation
hereunder.
|
|
13.
|
Counterparts. This
Agreement may be executed in any number of counterparts, each of which
shall be deemed to be an original, but all such counterparts shall
together constitute one and the same
Agreement.
|
|
14.
|
Absence of Fiduciary
Relationship. The Company
acknowledges and agrees
that:
|
|
(a)
|
No Other
Relationship. The
Underwriter has been retained solely
to act as underwriter in connection with the sale of Securities and that
no fiduciary, advisory or agency relationship between the Company and the
Underwriter has been created in
respect of any of the transactions contemplated by this Agreement or the
Prospectus, irrespective of whether the Underwriter has advised or are advising the Company on other
matters;
|
33
|
(b)
|
Arms' Length
Negotiations. The price of
the Securities set forth in this Agreement was established by the Company
following discussions and arms-length negotiations with the
Underwriter, and the Company is
capable of evaluating and understanding and understands and accepts the
terms, risks and conditions of the transactions contemplated by this
Agreement;
|
|
(c)
|
Absence of Obligation to
Disclose. The Company has
been advised that the Underwriter and
its affiliates are engaged in a broad range of transactions which may
involve interests that differ from those of the Company and that the
Underwriter has no obligation to
disclose such interests and transactions to the Company by virtue of any
fiduciary, advisory or agency relationship;
and
|
|
(d)
|
Waiver. The Company waives, to the fullest
extent permitted by law, any claims it may have against the
Underwriter for breach of fiduciary
duty or alleged breach of fiduciary duty and agrees that the
Underwriter shall have no liability
(whether direct or indirect) to the Company in respect of such a fiduciary
duty claim or to any person asserting a fiduciary duty claim on behalf of
or in right of the Company, including stockholders, employees or creditors
of the Company.
|
|
15.
|
Applicable Law. This Agreement shall be
governed by, and construed in accordance with, the laws of the State of
New York.
|
|
16.
|
The
Company and the Underwriter hereby submit to the non-exclusive
jurisdiction of the Federal and state courts in the Borough of Manhattan
in The City of New York in any suit or proceeding arising out of or
relating to this Agreement or the transactions contemplated
hereby. The Company and the Underwriter irrevocably and
unconditionally waive any objection to the laying of venue of any suit or
proceeding arising out of or relating to this Agreement or the
transactions contemplated hereby in Federal and state courts in the
Borough of Manhattan in The City of New York and irrevocably and
unconditionally waive and agree not to plead or claim in any such court
that any such suit or proceeding in any such court has been brought in an
inconvenient forum.
|
[Remainder of page intentionally left
blank.]
34
If the
foregoing is in accordance with the Underwriter's understanding of our
agreement, kindly sign and return to the Company one of the counterparts hereof,
whereupon it will become a binding agreement among the Company and the
Underwriter in accordance with its terms.
| Very truly yours, | |||
|
MAGNUM
HUNTER RESOURCES CORPORATION
|
|||
| By: | /s/ Ronald D. Ormand | ||
| Name: | Ronald D. Ormand | ||
| Title: | EVP-CFO | ||
The
foregoing Underwriting Agreement is hereby confirmed and accepted as of the date
first above written.
|
By: WUNDERLICH
SECURITIES, INC.
|
|||
| By: | /s/ Christopher Freeman | ||
| Name: | Christopher Freeman | ||
| Title: | Senior Vice President | ||
35
SCHEDULE
I
|
Underwriter
|
Number of Firm
Securities to be purchased
|
Maximum Number of
Optional Securities which may be purchased
|
|
Wunderlich
Securities, Inc........................
|
214,950
|
32,242
|
36
SCHEDULE
II
|
1.
|
General
Use Free Writing Prospectuses (included in the Disclosure
Package):
|
None, other than the final term sheet
filed pursuant to Section
7(b)
|
2.
|
Other
Information Included in the Disclosure
Package:
|
None
37