EXHIBIT 1.1
MAGNUM HUNTER RESOURCES, INC.
15,000,000 SHARES
COMMON STOCK ($.002 PAR VALUE)
UNDERWRITING AGREEMENT
June 24, 2004
XXXXXX BROTHERS INC.
DEUTSCHE BANK SECURITIES INC.
X.X. XXXXXXX & SONS, INC.
XXXXXXXXX & COMPANY, INC.
XXXXXXX RICE & COMPANY L.L.C.
XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXX XXXXXX & CO., INC.
XXXXXXXXX CAPITAL PARTNERS, LLC
SOUTHWEST SECURITIES, INC.
as Representatives of the several underwriters named in Schedule I hereto
c/x
Xxxxxx Brothers Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
and
Deutsche Bank Securities Inc.
00 Xxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Magnum Hunter Resources, Inc. (the "Company"), a Nevada
corporation, hereby confirms its agreement with you as representatives (the
"Representatives") of the several underwriters named on Schedule I hereto (the
"Underwriters"), as set forth below.
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1. The Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell to the Underwriters 15,000,000
shares of the Company's common stock ($.002 par value) (the "Common Stock" and,
together with the rights (the "Rights") evidenced by such Common Stock to the
extent provided for in the Shareholder Rights Agreement dated as of January 6,
1998 by and between the Company and Securities Transfer Corporation, as Rights
Agent (the "Rights Agreement"), the "Firm Shares"). The Company also proposes to
issue and sell to the Underwriters, at the option of the Representatives, an
additional 2,250,000 shares of Common Stock (together with the Rights evidenced
thereby, the "Option Shares" and together with the Firm Shares, the
"Securities").
2. Representations and Warranties of the Company. The Company
represents and warrants to and agrees with each of the Underwriters that:
(a) A registration statement on Form S-3 with respect to
securities of the Company (the "Shelf Securities") to be issued from
time to time by the Company has (i) been prepared by the Company in
conformity with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations (the "Rules and
Regulations") of the United States Securities and Exchange Commission
(the "Commission") thereunder, (ii) been filed with the Commission
under the Act and (iii) become effective under the Act. Copies of such
registration statement and each of the amendments thereto have been
delivered by the Company to you. As used in this Agreement, "Effective
Time" means the date and the time as of which such registration
statement, or the most recent post-effective amendment thereto, if any,
was declared effective by the Commission; "Effective Date" means the
date of the Effective Time; "Registration Statement" means such
registration statement, as amended as of the date hereof, including all
information contained in the final prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations and deemed to be a
part of the registration statement; "Base Prospectus" means the related
prospectus dated October 28, 2003 relating to the Shelf Securities in
the form first used to confirm sales of the Securities; "Preliminary
Prospectus" means the preliminary prospectus supplement, issued June
21, 2004, prepared by the Company in connection with the sale of the
Securities, together with the Base Prospectus; and "Prospectus" and
"Final Prospectus" mean the prospectus supplement dated the date
hereof, together with the Base Prospectus, in the form first used to
confirm sales of the Securities. Unless otherwise indicated, all
references herein to the Preliminary Prospectus or the Prospectus shall
be deemed to include any documents filed under the Securities Exchange
Act of 1934, as amended, and the rules and regulations thereunder (the
"Exchange Act") which are incorporated by reference therein. As used
herein, the term "Incorporated Documents" means the documents which at
the time are incorporated by reference in the Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto. References
herein to the Preliminary Prospectus or the Prospectus shall be deemed
to
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include the Incorporated Documents. The terms "supplement," "amendment"
and "amend" as used herein with respect to the Registration Statement,
any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include any documents filed by the Company under the Exchange
Act subsequent to the date of this Underwriting Agreement which are
deemed to be incorporated by reference therein. If the Company has
filed an abbreviated registration statement to register additional
shares of Common Stock pursuant to Rule 462(b) under the Act (the "Rule
462 Registration Statement"), then any reference herein to the term
"Registration Statement" shall be deemed to include such Rule 462
Registration Statement. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement
or the Prospectus will, when they become effective or are filed with
the Commission, as the case may be, conform in all respects to the
requirements of the Act and the Rules and Regulations and do not and
will not, as of the date hereof (as to the Registration Statement and
any amendment thereto) and as of the applicable filing date (as to the
Prospectus and any amendment or supplement thereto) contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; provided that no representation or warranty is made as to
information contained in or omitted from the Registration Statement or
the Prospectus in reliance upon and in conformity with written
information furnished to the Company through the Representatives by or
on behalf of any Underwriter specifically for inclusion therein.
(c) The Incorporated Documents heretofore filed were filed in
a timely manner and, when they were filed (or, if any amendment with
respect to any such document was filed, when such amendment was filed)
conformed in all material respects to the requirements of the Exchange
Act 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 to
make the statements therein, in the light of the circumstances under
which they were made, not misleading; and any further Incorporated
Documents will, when so filed, be filed in a timely manner and conform
in all material respects to the requirements of the Exchange Act and
will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
(d) All of the outstanding shares of capital stock of the
Company and of each of the entities listed on Schedule III hereof (the
"Subsidiaries") have been, and as of the Closing Date will be, duly
authorized and validly issued, are fully paid and nonassessable and
were not issued in violation of any preemptive or similar rights; the
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shares of Common Stock to be sold hereunder have been duly authorized
and, when issued upon payment therefor pursuant to this Agreement, will
be validly issued, fully paid and nonassessable; no preemptive or
similar rights exist with respect to the Common Stock; the Rights
evidenced by the shares of Common Stock to be sold hereunder have been
duly authorized and, when issued in accordance with the terms hereof,
will have been validly issued; as of the Closing Date, all of the
outstanding shares of capital stock of the Subsidiaries are free and
clear of all liens, encumbrances, equities and claims or restrictions
on transferability (other than those imposed by the Act and the
securities or "Blue Sky" laws of certain jurisdictions and other than
the security interests granted to the agent for the benefit of the
lenders under the Fourth Amended and Restated Credit Agreement, dated
March 15, 2002, between the Company and Bankers Trust Company et al.,
as amended (the "Credit Agreement")) or voting. Attached as Schedule
III is a true and complete list of each entity in which the Company has
a direct or indirect majority equity or voting interest, their
jurisdictions of incorporation or formation, their equity holders and
percentage equity ownership by the Company. Except as set forth on
Schedule IV hereto and in the Prospectus, there are no (i) options,
warrants or other rights to purchase, (ii) agreements or other
obligations to issue or (iii) other rights to convert any obligation
into, or exchange any securities for, shares of capital stock of or
ownership interests in the Company or any of the Subsidiaries
outstanding. Except for the Company's direct and indirect interests in
the Subsidiaries and as set forth on Schedule IV hereto, the Company
does not own, directly or indirectly, any shares of capital stock or
any other equity or long-term debt securities or have any equity
interest in any firm, partnership, joint venture or other entity.
(e) Each of the Company and the Subsidiaries is duly
organized, validly existing and in good standing under the laws of its
jurisdiction of organization and has all requisite corporate or
partnership power and authority to own its properties and conduct its
business as now conducted and as described in the Final Prospectus;
each of the Company and the Subsidiaries is duly qualified to do
business and is in good standing in all other jurisdictions where the
ownership or leasing of its properties or the conduct of its business
requires such qualification, except where the failure to be so
qualified would not, individually or in the aggregate, have a material
adverse effect on the management, business, condition (financial or
otherwise), prospects or results of operations of the Company and the
Subsidiaries, taken as a whole (any such event, a "Material Adverse
Effect").
(f) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and to consummate the transactions contemplated hereby. This
Agreement and the consummation by the Company of the transactions
contemplated hereby have been duly and validly authorized
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by the Company. This Agreement has been duly executed and delivered by
the Company.
(g) No consent, approval, authorization or order of any court
or governmental agency or body, or third party is required for the
issuance and sale by the Company of the Securities to the Underwriters,
except such as have been obtained and such as may be required under
state securities or "Blue Sky" laws in connection with the purchase and
resale of the Securities by the Underwriters. Neither the Company nor
any of the Subsidiaries is (i) in violation of its certificate of
incorporation or bylaws or similar organizational documents, (ii) in
breach or violation of any statute, judgment, decree, order, rule or
regulation applicable to any of them or any of their respective
properties or assets, except for any such breach or violation which
would not, individually or in the aggregate, have a Material Adverse
Effect, or (iii) in breach of or default under (nor has any event
occurred which, with notice or passage of time or both, would
constitute a default under) or in violation of any of the terms or
provisions of any indenture, mortgage, deed of trust, loan agreement,
note, lease, license, franchise agreement, permit, certificate,
contract or other agreement or instrument to which any of them is a
party or to which their respective properties or assets are subject
(collectively, "Contracts"), except for any such breach, default,
violation or event which would not, individually or in the aggregate,
have a Material Adverse Effect.
(h) The execution, delivery and performance by the Company of
this Agreement and the consummation of the transactions contemplated
hereby, and the fulfillment of the terms thereof, will not conflict
with or constitute or result in a breach of or a default under (or an
event which with notice or passage of time or both would constitute a
default under) or violation of or cause an acceleration of any
obligation under, or result in the imposition or creation of (or the
obligation to create or impose) a lien, charge, encumbrance or
restriction on any property or assets of the Company or any Subsidiary
with respect to (i) the terms or provisions of any Contract, except for
any such conflict, breach, violation, default or event which would not,
individually or in the aggregate, have a Material Adverse Effect, (ii)
the certificate of incorporation or bylaws or similar organizational
documents of the Company or any of the Subsidiaries, or (iii) (assuming
compliance with all applicable state securities or "Blue Sky" laws) any
statute, judgment, decree, order, rule or regulation of any court or
governmental agency or body applicable to the Company, the Subsidiaries
or any of their respective properties or assets, except for any such
conflict, breach or violation which would not, individually or in the
aggregate, have a Material Adverse Effect.
(i) The Securities conform in all material respects to the
description thereof in the Final Prospectus.
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(j) The consolidated financial statements of the Company and
the related notes thereto incorporated by reference in the Final
Prospectus present fairly in all material respects the financial
position, results of operations and cash flows of the Company at the
dates and for the periods to which they relate and have been prepared
in accordance with generally accepted accounting principles applied on
a consistent basis, except as otherwise stated therein, and comply as
to form in all material respects with the applicable accounting
requirements of the Act and the rules and regulations thereunder. The
summary and selected financial and statistical data of the Company
included or incorporated by reference in the Final Prospectus present
fairly in all material respects the information shown therein and have
been prepared and compiled on a basis consistent with the audited
financial statements included or incorporated by reference therein,
except as otherwise stated therein, and comply as to form in all
material respects with the applicable accounting requirements of the
Act and the rules and regulations thereunder. Deloitte & Touche LLP is
a registered independent public accounting firm as required by the Act
and the rules and regulations thereunder.
(k) There is not pending or, to the best knowledge of the
Company, threatened any action, suit, proceeding, inquiry or
investigation to which the Company or any of the Subsidiaries is a
party, or to which any of their properties or assets are subject,
before or brought by any court, arbitrator or governmental agency or
body, which, if determined adversely to the Company or any such
Subsidiary, would have a Material Adverse Effect, or which seeks to
restrain, enjoin, prevent the consummation of or otherwise challenge
the issuance or sale of the Securities to be sold hereunder or the
consummation of the other transactions described in the Final
Prospectus.
(l) Each of the Company and the Subsidiaries owns or possesses
adequate licenses or other rights to use all patents, trademarks,
service marks, trade names, copyrights and know-how necessary to
conduct the businesses now or proposed to be operated by it as
described in the Final Prospectus, and neither the Company nor any of
the Subsidiaries has received any notice of infringement of or conflict
with (or knows of no such infringement of or conflict with) asserted
rights of others with respect to any patents, trademarks, service
marks, trade names, copyrights or know-how which, if such assertion of
infringement or conflict were sustained, would, individually or in the
aggregate, have a Material Adverse Effect.
(m) Each of the Company and the Subsidiaries possesses all
licenses, permits, certificates, consents, orders, approvals and other
authorizations from, and has made or will have made all declarations
and filings with, all federal, state, local and other governmental
authorities, all self-regulatory organizations and all courts and other
tribunals presently required or necessary to own or lease, as the case
may be, and to operate its properties and to carry on its business as
now or proposed to be conducted
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as set forth in the Final Prospectus ("Permits"), except where the
failure to obtain such Permits would not, individually or in the
aggregate, have a Material Adverse Effect; each of the Company and the
Subsidiaries has fulfilled and performed all of its obligations with
respect to such Permits and no event has occurred which allows, or
after notice or lapse of time would allow, revocation or termination
thereof or results in any other material impairment of the rights of
the holder of any such Permit, except for the termination of drilling
permits in the ordinary course of business which would not have a
Material Adverse Effect; and neither the Company nor any Subsidiary has
received any notice of any proceeding relating to revocation or
modification of any such Permit, except where such revocation or
modification would not, individually or in the aggregate, have a
Material Adverse Effect.
(n) Since the date of the most recent audited financial
statements incorporated by reference in the Final Prospectus, except as
described therein there has been no material adverse change, and no
fact has become known to the Company which could reasonably be expected
to result in a material adverse change, to the management, business,
condition (financial or otherwise) or results of operations of the
Company and its Subsidiaries taken as a whole, whether or not arising
from transactions in the ordinary course of business, or any loss of,
or damage to, properties (whether or not insured) which could
reasonably be expected to affect materially and adversely the
management, business, condition (financial or otherwise) or results of
operations of the Company and its Subsidiaries taken as a whole. Since
the date of the latest balance sheet incorporated by reference in the
Final Prospectus, except as expressly disclosed in the Final Prospectus
and except as set forth on Schedule V hereto, neither the Company nor
any of its Subsidiaries has (i) incurred or undertaken any liabilities
or obligations, direct or contingent, that are material to the Company
and its Subsidiaries taken as a whole, (ii) entered into any material
transaction not in the ordinary course of business and consistent with
past practice or (iii) declared or paid any dividend or made any
distribution on any shares of its capital stock or redeemed, purchased
or otherwise acquired or agreed to redeem, purchase or otherwise
acquire any shares of its capital stock (other than any dividends or
distributions to the Company and as set forth on Schedule V hereto).
(o) Each of the Company and the Subsidiaries has filed all
necessary federal, state and foreign income and franchise tax returns,
except where the failure to so file such returns would not,
individually or in the aggregate, have a Material Adverse Effect, and
has paid all taxes shown as due thereon; and other than tax
deficiencies which the Company or any of the Subsidiaries is contesting
in good faith and for which the Company or such Subsidiary has provided
adequate reserves, there is no tax deficiency that has been asserted
against the Company or any Subsidiary that would have, individually or
in the aggregate, a Material Adverse Effect.
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(p) The statistical and market-related data incorporated by
reference or included in the Final Prospectus are based on or derived
from sources which the Company believes to be reliable and accurate.
(q) Each of the Company and the Subsidiaries has good title to
all personal property described in the Final Prospectus as being owned
by it, good and defensible title to all real property described in the
Final Prospectus as being owned by it and good and defensible title to
a leasehold estate in the real and personal property described in the
Final Prospectus as being leased by it, in each case free and clear of
all liens, charges, encumbrances or restrictions, except for liens
securing obligations under the Credit Agreement or the guaranty
agreement related thereto, liens securing obligations relating to the
Master Lease Agreement between General Electric Capital Corporation and
Magnum Hunter Production, Inc., and liens on assets of Redhead Energy,
Inc. securing indebtedness of Redhead Energy, Inc. and except as
described in the Final Prospectus or to the extent the failure to have
such title or the existence of such liens, charges, encumbrances or
restrictions would not, individually or in the aggregate, have a
Material Adverse Effect. All leases, contracts and agreements to which
the Company or any Subsidiary is a party or by which the Company or
such Subsidiary is bound are valid and enforceable against the Company
or such Subsidiary, to the knowledge of the Company are valid and
enforceable against the other party or parties thereto and are in full
force and effect with only such exceptions as would not, individually
or in the aggregate, have a Material Adverse Effect.
(r) There are no legal or governmental proceedings involving
or affecting the Company, any of the Subsidiaries or any of their
respective properties or assets required to be described in a
prospectus pursuant to the Act that are not described in the Final
Prospectus, nor are there any material contracts or other documents
required to be described that are not described in the Final
Prospectus.
(s) Except as would not, individually or in the aggregate,
have a Material Adverse Effect, (A) each of the Company and the
Subsidiaries is in compliance with and not subject to liability under
applicable Environmental Laws (as defined below), (B) each of the
Company and the Subsidiaries has made all filings and provided all
notices required under any applicable Environmental Law, and has and is
in compliance with all Permits required under any applicable
Environmental Laws and each of them is in full force and effect, (C)
there is no civil, criminal or administrative action, suit, demand,
claim, hearing, notice of violation, investigation, proceeding, notice
or demand letter or request for information pending or, to the
knowledge of the Company, threatened against the Company or any
Subsidiary under any Environmental Law, (D) no lien, charge,
encumbrance or restriction has been recorded under any Environmental
Law with respect to any assets, facility or property owned, operated,
leased or
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controlled by the Company or any Subsidiary, (E) neither the Company
nor any Subsidiary has received notice that it has been identified as a
potentially responsible party under the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended
("CERCLA"), or any comparable state law and (F) no property or facility
of the Company or any Subsidiary is (i) listed or proposed for listing
on the National Priorities List under CERCLA or (ii) listed in the
Comprehensive Environmental Response, Compensation, Liability
Information System List promulgated pursuant to CERCLA, or on any
comparable list maintained by any state or local governmental
authority.
For purposes of this Agreement, "Environmental Laws" means the
common law and all applicable federal, state and local laws or
regulations, codes, orders, decrees, judgments or injunctions issued,
promulgated, approved or entered thereunder, relating to pollution or
protection of public or employee health and safety or the environment,
including, without limitation, laws relating to (i) emissions,
discharges, releases or threatened releases of hazardous materials,
into the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata), (ii)
the manufacture, processing, distribution, use, generation, treatment,
storage, disposal, transport or handling of hazardous materials, and
(iii) underground and aboveground storage tanks, and related piping,
and emissions, discharges, releases or threatened releases therefrom.
(t) There is no strike, labor dispute, slowdown or work
stoppage with the employees of the Company or the Subsidiaries that is
pending or, to the knowledge of the Company, threatened.
(u) Each of the Company and the Subsidiaries carries insurance
in such amounts and covering such risks as is adequate for the conduct
of its business and the value of its properties.
(v) Neither the Company nor any Subsidiary has any liability
for any prohibited transaction within the meaning of Section 406 of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
or funding deficiency within the meaning of Section 302 of ERISA or any
complete or partial withdrawal liability under Section 4201 of ERISA
with respect to any pension, profit sharing or other plan which is
subject to ERISA to which the Company or any Subsidiary makes or ever
has made a contribution and in which any employee of the Company or any
Subsidiary is or has ever been a participant. With respect to such
plans, each of the Company and the Subsidiaries is in compliance in all
material respects with all applicable provisions of ERISA.
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(w) Each of the Company and the Subsidiaries (i) makes and
keeps accurate books and records and (ii) maintains internal accounting
controls which provide reasonable assurance that (A) transactions are
executed in accordance with management's authorization, (B)
transactions are recorded as necessary to permit preparation of its
financial statements and to maintain accountability for its assets, (C)
access to its assets is permitted only in accordance with management's
authorization and (D) the reported accountability for its assets is
compared with existing assets at reasonable intervals.
(x) Neither the Company nor any Subsidiary is, nor will be
after the transactions contemplated by this Agreement, an "investment
company" or "promoter" or "principal underwriter" for an "investment
company," as such terms are defined in the Investment Company Act of
1940, as amended, and the rules and regulations thereunder.
(y) As of the date hereof, (a) the only material assets of
Xxxxxx Xxxxxxx International Limited Liability Company, Canvasback
Energy, Inc. and Redhead Energy, Inc. are set forth on Schedule VI
hereto and (b) the total consolidated assets owned by Inseco
Corporation, SPL Gas Marketing Inc., Midland Hunter Petroleum Limited
Liability Company and Pintail Oil & Gas, Inc. do not exceed 2% of the
total consolidated assets of the Company.
(z) No holder of securities of the Company is entitled to
participate in the transactions contemplated by this Agreement as a
result of registration or similar rights.
(aa) Neither the Company nor any Subsidiary has taken, nor
will they take, directly or indirectly, any action designed to, or that
might be reasonably expected to, cause or result in stabilization or
manipulation of the price of the Securities.
(bb) The information set forth under the caption
"Capitalization" in the Final Prospectus is true and correct; the form
of certificate for the shares of Common Stock conforms to the corporate
law of the jurisdiction of the Company's incorporation.
(cc) The Securities have been duly authorized and accepted for
listing on the New York Stock Exchange, subject to official notice of
issuance.
(dd) There is and has been no failure on the part of the
Company or any of the Company's directors or officers, in their
capacities as such, to comply in all material respects with any
provision of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and
regulations promulgated in connection therewith, including Section 402
related to loans and Sections 302 and 906 related to certifications.
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Any certificate signed by any officer of the Company or any
Subsidiary and delivered to the Representatives or to counsel for the
Underwriters shall be deemed a joint and several representation and warranty by
the Company and each of the Subsidiaries to each Underwriter as to the matters
covered thereby.
3. Purchase, Sale and Delivery of the Securities. On the basis
of the representations, warranties, agreements and covenants herein contained
and subject to the terms and conditions herein set forth, the Company agrees to
issue and sell to the Underwriters the Firm Shares, and each of the Underwriters
agrees, acting severally and not jointly, to purchase the number of Firm Shares
set forth opposite its respective name on Schedule I hereto, at $9.84 per share
(the "Purchase Price").
The Firm Shares that the Underwriters have agreed to purchase
hereunder, in such denomination or denominations and registered in such name or
names as the Representatives request upon notice to the Company at least 48
hours prior to the Closing Date, shall be delivered by or on behalf of the
Company to the Representatives, against payment by or on behalf of the
Underwriters of the Purchase Price therefor by wire transfer of immediately
available funds payable to such account or account as the Company shall specify
prior to the Closing Date, or by such means as the parties hereto shall agree
prior to the Closing Date. Such delivery of and payment for the Firm Shares
shall be made at the offices of Xxxxx Xxxx & Xxxxxxxx, 000 Xxxxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, at 10:00 A.M., New York time, on June 30, 2004, or at such other
place, time or date as the Representatives and the Company may agree upon, such
time and date of delivery against payment being herein referred to as the
"Closing Date."
In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company hereby grants an option to the Underwriters to purchase the
Option Shares at the Purchase Price set forth in the first paragraph of this
Section 3 for the purpose of covering over-allotments, if any. The option
granted hereby may be exercised in whole or in part by giving written notice (i)
at any time before the Closing Date and (ii) from time to time thereafter within
30 days after the date of the first issuance of the Firm Shares, by the
Representatives to the Company setting forth the number of Option Shares as to
which they are exercising their option and the time and date for delivery of and
payment for such Option Shares. Option Shares shall be purchased severally for
the account of the Underwriters in proportion to the number of Firm Shares set
forth opposite the respective names of such Underwriters in Schedule I. The time
and date for delivery of and payment for such Option Shares shall be determined
by the Representatives but shall not be later than ten full business days after
the exercise of such option, nor in any event prior to the Closing Date (each
such time and date being herein referred to as an "Option Closing Date"). If the
date of exercise of the option is two or more business days before the Closing
Date, the notice of exercise shall set the Closing Date as the Option Closing
Date. The Representatives
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may cancel such option at any time prior to its expiration by giving written
notice of such cancellation to the Company.
4. Reserved.
5. Covenants of the Company. The Company covenants and agrees
with each of the Underwriters that:
(a) The Company will prepare the Prospectus in a form approved
by the Representatives and file such Prospectus pursuant to Rule 424(b)
under the Act not later than the Commission's close of business on the
second business day following the execution and delivery of this
Agreement. The Company will not amend or supplement the Final
Prospectus or any amendment or supplement thereto unless the
Representatives and counsel to the Underwriters shall previously have
been advised of such proposed amendment or supplement and furnished a
copy for a reasonable period of time prior to the proposed amendment or
supplement and the Representatives shall have given their consent
thereto, which consent shall not be unreasonably withheld. The Company
will advise the Representatives, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement
has been filed or becomes effective or any supplement to the Prospectus
or any amended Prospectus has been filed and will furnish the
Representatives with copies thereof. The Company will advise the
Representatives, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing
or suspending the use of the Preliminary Prospectus or the Prospectus,
of the suspension of the qualification of the Securities for offering
or sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission
for the amending or supplementing of the Registration Statement or the
Prospectus or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending the
use of the Preliminary Prospectus or the Prospectus or suspending any
such qualification, to use promptly its best efforts to obtain its
withdrawal. The Company will promptly, upon the reasonable request of
the Representatives or counsel for the Underwriters, make any
amendments or supplements to the Preliminary Prospectus or the Final
Prospectus that may be necessary or advisable in connection with the
resale of the Securities by the Underwriters.
(b) The Company will deliver promptly to the Representatives
such number of the following documents as the Representatives shall
reasonably request: (i) conformed copies of the Registration Statement
as originally filed with the Commission and each amendment thereto (in
each case excluding exhibits) and (ii) each Preliminary Prospectus, the
Prospectus and any amended or supplemented Prospectus; and, if the
delivery of a prospectus is required at any time after the Effective
Time in
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connection with the offering or sale of the Securities and if at such
time any events shall have occurred 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 in order to
make the statements therein, in the light of the circumstances under
which they were made when such Prospectus is delivered, not misleading,
or, if for any other reason it shall be necessary to amend or
supplement the Prospectus in order to comply with the Act, to notify
the Representatives and, upon their request, to file such document and
to prepare and furnish without charge to each Underwriter and to any
dealer in securities as many copies as the Representatives may from
time to time reasonably request of an amended or supplemented
Prospectus which will correct such statement or omission or effect such
compliance.
(c) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any
Prospectus pursuant to Rule 424 of the Rules and Regulations, the
Company will furnish a copy thereof to the Representatives and counsel
for the Underwriters and obtain the consent of the Representatives to
the filing.
(d) The Company will cooperate with the Underwriters in
arranging for the qualification of the Securities for offering and sale
under the securities or "Blue Sky" laws of such jurisdictions as the
Representatives may designate and will continue such qualification in
effect for as long as may be necessary to complete the resale of the
Securities by the Underwriters; provided, however, that in connection
therewith the Company shall not be required to qualify as a foreign
corporation or partnership or to execute a general consent to service
of process in any jurisdiction or subject itself to any tax in any such
jurisdiction where it is not then so subject.
(e) If, at any time prior to the completion of the
distribution by the Underwriters of the Securities, any event occurs or
information becomes known as a result of which the Registration
Statement or the Final Prospectus as then amended or supplemented would
include an untrue statement of a material fact, or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or if for any other reason it is necessary
at any time to amend or supplement the Final Prospectus in order to
comply with applicable law, the Company will promptly notify the
Representatives thereof and will prepare and file with the Commission,
at the Company's expense, an amendment or supplement to the Final
Prospectus that corrects such statement or omission or effects such
compliance.
(f) The Company will, without charge, provide to the
Representatives and to counsel for the Underwriters as many copies of
the Preliminary Prospectus and the
-14-
Final Prospectus or any amendment or supplement thereto as the
Underwriters may reasonably request.
(g) The Company will apply the net proceeds from the sale of
the Securities substantially as set forth under "Use of Proceeds" in
the Final Prospectus.
(h) Prior to the Closing Date, the Company will furnish to the
Representatives, as soon as they have been prepared by or are available
to the Company, a copy of any unaudited interim consolidated financial
statements of the Company for any period subsequent to the period
covered by its most recent financial statements appearing in the Final
Prospectus.
(i) No offering, sale, short sale or other disposition of any
shares of Common Stock or other securities convertible into or
exchangeable or exercisable for shares of Common Stock or derivative of
Common Stock (or agreement for such) will be made for a period of 90
days after the date of this Agreement, directly or indirectly, by the
Company otherwise than (i) hereunder, (ii) with the prior written
consent of the Representatives on behalf of the Underwriters, (iii)
grants of employee, officer or director stock options and issuance of
shares of Common Stock upon the exercise of any option granted under
any employee, officer or director stock option or similar benefit plan
in existence on the date hereof or (iv) issuance of shares of Common
Stock, stock appreciation rights or common stock equivalents or
warrants, rights or options to purchase any of the foregoing pursuant
to any employee, officer or director stock option, stock purchase or
similar benefit plans in existence on the date hereof.
(j) The Company will cause the Securities to be duly
authorized for listing by the New York Stock Exchange on or prior to
the Closing Date and ensure that the Securities remain authorized for
listing following the Closing Date.
6. Expenses. The Company agrees to pay all costs and expenses
incident to the performance of its obligations under this Agreement, whether or
not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 11 or 12 hereof, including all costs and expenses
incident to: (i) the printing, word processing or other production of documents
with respect to such transactions, including any costs of printing and filing
the Registration Statement, the Preliminary Prospectus and the Final Prospectus
and any amendments or supplements thereto, and any "Blue Sky" memoranda, (ii)
all arrangements relating to the delivery to the Underwriters of copies of the
foregoing documents, (iii) the fees and disbursements of the counsel, the
accountants and any other experts or advisors retained by the Company, (iv) the
preparation (including printing), issuance and delivery to the Underwriters of
any certificates evidencing the Securities, (v) the qualification of the
Securities under state securities and "Blue Sky" laws, including filing fees and
reasonable fees
-15-
and disbursements of counsel for the Underwriters relating thereto, (vi) the
expenses of the Company in connection with any "road show" meetings with
prospective investors in the Securities, including, without limitation, expenses
associated with the production of road show slides and graphics, fees and
expenses of any consultants engaged in connection with the road show
presentations with the prior approval of the Company, travel and lodging
expenses of the representatives and officers of the Company and any such
consultants, and the cost of any aircraft chartered in connection with the road
show; (vii) the fees and expenses of the transfer agent, including fees and
expenses of its counsel and (viii) all expenses and listing fees incurred in
connection with the listing of the Securities on the New York Stock Exchange. If
the issuance and sale of the Securities provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 7 hereof is not satisfied, because this Agreement is terminated pursuant
to Section 12 hereof or because of any failure, refusal or inability on the part
of the Company to perform all obligations and satisfy all conditions on its part
to be performed or satisfied hereunder (other than solely by reason of a default
by the Underwriters of their obligations hereunder after all conditions
hereunder have been satisfied in accordance herewith), the Company will promptly
reimburse the Underwriters upon demand for all out-of-pocket expenses (including
fees, disbursements and charges of Xxxxx Xxxx & Xxxxxxxx, counsel for the
Underwriters) that shall have been incurred by the Underwriters in connection
with the proposed purchase and sale of the Securities.
7. Conditions of the Underwriters' Obligations. The obligation
of the Underwriters to purchase and pay for the Securities on the Closing Date
or on any Option Closing Date shall, in their sole discretion, be subject to the
satisfaction or waiver of the following conditions on or prior to the Closing
Date or such Option Closing Date, as the case may be:
(a) The Final Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); no stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission; and any request of the
Commission for inclusion of additional information in the Registration
Statement or the Prospectus or otherwise shall have been complied with.
(b) On the Closing Date or the Option Closing Date, as the
case may be, the Representatives shall have received the opinion, dated
as of the Closing Date and addressed to the Underwriters, of Fulbright
& Xxxxxxxx L.L.P., counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
(i) Each of the Subsidiaries is duly incorporated
(or, in the case of Prize Energy Resource, L.P., organized as
a limited partnership), validly
-16-
existing and in good standing under the laws of its
jurisdiction of incorporation and has all requisite corporate
or partnership power and authority to own, lease and operate
its properties and to conduct its business as described in the
Final Prospectus. Each of the Company and the Subsidiaries is
duly qualified as a foreign corporation or limited partnership
and in good standing in each jurisdiction set forth on a
schedule to such opinion.
(ii) All of the outstanding shares of capital stock
of the Subsidiaries are owned, directly or indirectly, by the
Company, free and clear of all perfected security interests
and, to the knowledge of such counsel, free and clear of all
other liens, encumbrances, equities and claims or restrictions
on transferability (other than those imposed by the Act and
the securities or "Blue Sky" laws of certain jurisdictions and
other than the security interests granted to the agent for the
benefit of the lenders under the Credit Agreement).
(iii) To the knowledge of such counsel, (A) except as
set forth on Schedule IV hereto, no options, warrants or other
rights to purchase from the Company or any Subsidiary shares
of capital stock or ownership interests in the Company or any
Subsidiary are outstanding and (B) except as set forth on
Schedule IV hereto, no agreements or other obligations of the
Company or any Subsidiary to issue, or other rights to cause
the Company or any Subsidiary to convert, any obligation into,
or exchange any securities for, shares of capital stock or
ownership interests in the Company or any Subsidiary are
outstanding.
(iv) This Agreement has been duly executed and
delivered by the Company.
(v) To the knowledge of such counsel, no legal or
governmental proceedings are pending or threatened to which
the Company or any Subsidiary is a party or to which the
property or assets of the Company or any Subsidiary is subject
which are required under the Act to be described in the Final
Prospectus and are not described in the Final Prospectus, or
which seek to restrain, enjoin, prevent the consummation of or
otherwise challenge the issuance or sale of the Securities to
be sold hereunder or the consummation of the other
transactions described in the Final Prospectus.
(vi) The statements in the Final Prospectus under the
headings "Description of Capital Stock," and "Underwriting,"
insofar as they are descriptions of contracts, agreements or
other legal documents, or refer to statements of law or legal
conclusions, present fairly the information described therein.
The statements in the Final Prospectus under the heading
"Certain
-17-
U.S. Tax Consequences to Non-U.S. Holders," insofar as such
statements constitute a summary of the United States federal
income tax laws referred to therein, and subject to the
assumptions, qualifications and limitations stated therein,
summarize accurately in all material respects the United
States federal income tax laws referred to therein. The
opinion of such counsel filed as Exhibit 5.1 to the
Registration Statement is confirmed and the Underwriters may
rely upon such opinion as if it were addressed to them.
(vii) Neither the Company nor any Subsidiary is, to
the knowledge of such counsel, (i) in violation of its
certificate of incorporation or bylaws or similar
organizational documents, or (ii) in breach or violation of
any statute, judgment, decree, order, rule or regulation
applicable to it or any of its properties or assets, except
for any such breach or violation which would not, individually
or in the aggregate, have a Material Adverse Effect.
(viii) The execution, delivery and performance of
this Agreement and the consummation of the transactions
contemplated hereby (including, without limitation, the
issuance and sale of the Securities to the Underwriters) will
not conflict with or constitute or result in a breach or a
default under (or an event which with notice or passage of
time or both would constitute a default under) or violation of
or cause an acceleration of any obligation under, or result in
the imposition or creation of (or the obligation to create or
impose) a lien on any property or assets of the Company or any
Subsidiary with respect to (i) the terms or provisions of the
Credit Agreement, as amended to the date hereof or of the
Indenture, dated as of March 15, 2002, among the Company, as
Issuer, the Subsidiary Guarantors named therein and Bankers
Trust Company, as Trustee, except as disclosed in the Final
Prospectus and except for any such conflict, breach,
violation, default or event which would not, individually or
in the aggregate, have a Material Adverse Effect, (ii) the
articles of incorporation or bylaws or similar organizational
documents of the Company or any Subsidiary, or (iii) (assuming
compliance with all applicable state securities or "Blue Sky"
laws) any statute, judgment, decree, order, rule or regulation
known to such counsel to be applicable to the Company or any
Subsidiary and to transactions of the type contemplated by the
Final Prospectus, except for any such conflict, breach or
violation which would not, individually or in the aggregate,
have a Material Adverse Effect.
(ix) To the knowledge of such counsel, no consent,
approval, authorization or order of any governmental authority
is required for the issuance and sale by the Company of the
Securities to the Underwriters or the other transactions
contemplated in this Agreement, except such as may be required
-18-
under state securities and Blue Sky laws, as to which such
counsel need express no opinion, and those which have
previously been obtained.
(x) None of the Company or the Subsidiaries is, or
immediately after the sale of the Securities to be sold
hereunder and the application of the proceeds from such sale
(as described in the Final Prospectus under the caption "Use
of Proceeds") will be, an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended.
(xi) Based upon Section 35.51 of the Uniform
Commercial Code of Texas, in a properly presented action or
proceeding arising out of or relating to this Agreement in any
court in the State of Texas or in any federal court sitting in
the State of Texas, such court would give effect to the choice
of substantive law of the State of New York to govern this
Agreement.
(xii) The Registration Statement was declared
effective under the Act as of the date and time specified in
such opinion, the Prospectus was filed with the Commission
pursuant to the subparagraph of Rule 424(b) of the Rules and
Regulations specified in such opinion on the date specified
therein and no stop order suspending the effectiveness of the
Registration Statement has been issued and, to the knowledge
of such counsel, no proceeding for that purpose is pending or
threatened by the Commission.
(xiii) The Registration Statement and the Prospectus
and any further amendments or supplements thereto made by the
Company prior to the Closing Date or Option Closing Date, as
the case may be, comply as to form in all material respects
with the requirements of the Act and the Rules and Regulations
(it being understood that such firm need express no position
with respect to the financial statements and related notes
thereto and the other financial, statistical, accounting,
reserve and well data included in the Registration Statement
or the Prospectus).
At the time the foregoing opinion is delivered, such counsel
shall additionally state that it has participated in conferences with
officers and other representatives of the Company, representatives of
the registered independent public accountants for the Company,
representatives of the Underwriters and counsel for the Underwriters,
at which conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed, and, although it has not
independently verified and is not passing upon and assumes no
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus
(except to the extent specified in subsection 7(b)(vi)), no facts have
come to its attention
-19-
which lead it to believe that (x) the Registration Statement, as of the
date hereof, contained any untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading or (y)
the Final Prospectus, on the date thereof or at the Closing Date or the
Option Closing Date, as the case may be, contained an untrue statement
of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements contained therein,
in the light of the circumstances under which they were made, not
misleading (it being understood that such firm need express no position
with respect to the financial statements and related notes thereto and
the other financial, statistical, accounting, reserve and well data
included in the Registration Statement or the Final Prospectus).
The opinion of such counsel described in this Section shall be
rendered to the Underwriters at the request of the Company and shall so
state therein.
References to the Final Prospectus in this subsection (b)
shall include any amendment or supplement thereto prepared in
accordance with the provisions of this Agreement at the Closing Date or
the Option Closing Date, as the case may be.
In rendering such opinion, such counsel may state that they
express no opinion as to the laws of any jurisdiction other than the
federal laws of the United States, and the laws of the States of
Delaware, New York and Texas. Such counsel may also state that, insofar
as such opinion involves factual matters, such counsel have relied, to
the extent they deem proper, upon certificates of officers of the
Company and certificates of public officials; provided that such
certificates have been provided to the Representatives.
(c) On the Closing Date or any Option Closing Date, the
Representatives shall have received the opinion, dated as of the
Closing Date or the Option Closing Date, as the case may be, and
addressed to the Underwriters, of Xxxxxxxx and Wedge, special Nevada
counsel for the Company, in form and substance satisfactory to counsel
for the Underwriters, to the effect that:
(i) The Company is duly incorporated, validly
existing and in good standing under the laws of the State of
Nevada and has all requisite corporate power and authority to
own, lease and operate its properties and to conduct its
business as described in the Final Prospectus.
(ii) None of the outstanding shares of capital stock
of the Company has been issued in violation of any preemptive
or similar rights.
-20-
(iii) The Company has all requisite corporate power
and authority to execute, deliver and perform its obligations
under this Agreement and to consummate the transactions
contemplated hereby; and this Agreement has been duly and
validly authorized, executed and delivered by the Company.
(iv) The shares of Common Stock to be delivered on
the Closing Date or the Option Closing Date, as the case may
be, have been duly and validly authorized and, when issued and
delivered against payment therefor, will be validly issued,
fully paid and nonassessable; no preemptive or similar rights
exist with respect to the Common Stock to be delivered on the
Closing Date or the Option Closing Date, as the case may be;
the Rights relating to the shares of Common Stock to be
delivered on the Closing Date or the Option Closing Date, as
the case may be, have been duly authorized and validly issued.
(v) The statements in the Final Prospectus under the
heading "Description of Capital Stock" and in the Company's
Current Report on Form 8-K dated January 7, 1998 relating to
the Rights, insofar as they are descriptions of legal
documents, or refer to statements of law or legal conclusions,
present fairly the information described therein.
The opinion of such counsel described in this Section shall be
rendered to the Underwriters at the request of the Company and shall so
state therein.
(d) On the Closing Date or any Option Closing Date, as the
case may be, the Representatives shall have received the opinion, dated
as of the Closing Date or the Option Closing Date, as the case may be,
and addressed to the Underwriters, of Xxxxxx X. Xxxxxxxx, Senior Vice
President and General Counsel of the Company, in form and substance
satisfactory to counsel for the Underwriters, to the effect that:
(i) No legal or governmental proceedings are pending
or, to the knowledge of such counsel, threatened to which the
Company or any Subsidiary is a party or to which the property
or assets of the Company or any Subsidiary is subject which
are required under the Act to be described in the Final
Prospectus and are not so described, or which seek to
restrain, enjoin, prevent the consummation of or otherwise
challenge the issuance or sale of the Securities to be sold
hereunder or the consummation of the other transactions
described in the Final Prospectus.
(ii) To the knowledge of such counsel, no Contract to
which the Company or any Subsidiary is a party that is
required under the Act to be described in a registration
statement or prospectus or filed as an exhibit to the
-21-
Registration Statement is not so described in the Registration
Statement or Final Prospectus or filed as an exhibit to the
Registration Statement.
(iii) Neither the Company nor any Subsidiary is (i)
in violation of its certificate of incorporation or bylaws or
similar organizational documents, (ii) to the knowledge of
such counsel, in breach or violation of any statute, judgment,
decree, order, rule or regulation applicable to it or any of
its properties or assets, except for any such breach or
violation which would not, individually or in the aggregate,
have a Material Adverse Effect, or (iii) to the knowledge of
such counsel, in breach or default under (nor has any event
occurred which, with notice or passage of time or both, would
constitute a default under) or in violation of any of the
terms or provisions of any Contract, except for any such
breach, default, violation or event which would not,
individually or in the aggregate, have a Material Adverse
Effect.
(iv) The execution, delivery and performance of this
Agreement and the consummation of the transactions
contemplated hereby (including, without limitation, the
issuance and sale of the Securities to the Underwriters) will
not conflict with or constitute or result in a breach or a
default under (or an event which with notice or passage of
time or both would constitute a default under) or violation of
or cause an acceleration of any obligation under, or result in
the imposition or creation of (or the obligation to create or
impose) a lien on any property or assets of the Company or any
Subsidiary with respect to (i) the terms or provisions of any
Contract, except for any such conflict, breach, violation,
default or event which would not, individually or in the
aggregate, have a Material Adverse Effect, (ii) the
certificate of incorporation or bylaws or similar
organizational documents of the Company or any Subsidiary, or
(iii) (assuming compliance with all applicable state
securities or "Blue Sky" laws) any statute, judgment, decree,
order, rule or regulation known to such counsel to be
applicable to the Company or any Subsidiary and to
transactions of the type contemplated by the Final Prospectus,
except for any such conflict, breach or violation which would
not, individually or in the aggregate, have a Material Adverse
Effect.
(v) To the knowledge of such counsel, no consent,
approval, authorization or order of any governmental authority
is required for the issuance and sale by the Company of the
Securities to the Underwriters or the other transactions
contemplated in this Agreement, except such as may be required
under Blue Sky laws, as to which such counsel need express no
opinion, and those which have previously been obtained.
-22-
(vi) To the knowledge of such counsel, the Company
and the Subsidiaries have obtained all Permits necessary to
conduct the businesses now conducted by them as described in
the Final Prospectus, the lack of which would, individually or
in the aggregate, have a Material Adverse Effect; each of the
Company and the Subsidiaries has fulfilled and performed all
of its obligations with respect to such Permits and no event
has occurred which allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in
any other material impairment of the rights of the holder of
any such Permit, except for any such revocation or termination
which would not have a Material Adverse Effect.
(vii) No holder of securities of the Company or any
Subsidiary is entitled to have such securities included in the
offering contemplated by this Agreement pursuant to
registration or similar rights.
At the time the foregoing opinion is delivered, such counsel
shall additionally state that he has participated in conferences with
officers and other representatives of the Company, representatives of
the registered independent public accountants for the Company,
representatives of the Underwriters and counsel for the Underwriters,
at which conferences the contents of the Registration Statement and the
Final Prospectus and related matters were discussed, and, although he
has not independently verified and is not passing upon and assumes no
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Final
Prospectus, no facts have come to his attention which lead him to
believe that (x) the Registration Statement, as of the date hereof,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to
make the statements therein not misleading or (y) the Final Prospectus,
on the date thereof or at the Closing Date or the Option Closing Date,
as the case may be, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or
necessary to make the statements contained therein, in the light of the
circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to
the financial statements and related notes thereto and the other
financial, statistical, accounting, reserve and well data included in
the Registration Statement or the Final Prospectus). The opinion of
such counsel described in this Section shall be rendered to the
Underwriters at the request of the Company and shall so state therein.
References to the Final Prospectus in this subsection (d)
shall include any amendment or supplement thereto prepared in
accordance with the provisions of this Agreement at the Closing Date or
the Option Closing Date, as the case may be.
-23-
In rendering such opinion, such counsel may state that he
expresses no opinion as to the laws of any jurisdiction other than the
federal laws of the United States and the laws of the State of Texas.
Such counsel may also state that, insofar as such opinion involves
factual matters, such counsel has relied, to the extent he deems
proper, upon certificates of officers of the Company and certificates
of public officials; provided that such certificates have been provided
to the Representatives. The opinion of such counsel described in this
Section shall be rendered to the Underwriters at the request of the
Company and shall so state therein.
(e) The Representatives shall have received an opinion, dated
the Closing Date or the Option Closing Date, as the case may be, of
Xxxxx Xxxx & Xxxxxxxx, counsel for the Underwriters, with respect to
certain legal matters relating to this Agreement, and such other
related matters as the Representatives may reasonably require. In
rendering such opinion, Xxxxx Xxxx & Xxxxxxxx shall have received and
may rely upon such certificates and other documents and information as
they may reasonably request to pass upon such matters.
(f) The Representatives shall have received from Deloitte &
Touche LLP, registered independent public accountants for the Company,
comfort letters, dated the date hereof and the Closing Date or the
Option Closing Date, as the case may be, in form and substance
reasonably satisfactory to the Representatives and counsel for the
Underwriters.
(g) The Representatives, shall have received letters, dated
the date hereof and the Closing Date or the Option Closing Date, as the
case may be, and addressed to the Underwriters, from XxXxxxxx and
XxxXxxxxxxx and Xxxxxx, Xxxxxxxxx & Associates, Inc., each independent
petroleum engineers for the Company, in form and substance reasonably
satisfactory to the Representatives and counsel for the Underwriters.
(h) The representations and warranties of the Company
contained in this Agreement shall be true and correct in all material
respects on and as of the Closing Date or the Option Closing Date, as
the case may be, as if made on and as of the Closing Date or the Option
Closing Date, as the case may be; the Company shall have performed all
covenants and agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing Date or the
Option Closing Date, as the case may be; and, except as set forth in
the Final Prospectus (exclusive of any amendment or supplement thereto
after the date hereof) subsequent to the date of the most recent
financial statements in such Final Prospectus, there shall have been no
event or development that, individually or in the aggregate, has or
would be reasonably likely to have a Material Adverse Effect.
-24-
(i) The issuance and sale of the Securities pursuant to this
Agreement shall not be enjoined (temporarily or permanently) and no
restraining order or other injunctive order shall have been issued or
any action, suit or proceeding shall have been commenced with respect
to this Agreement before any court or governmental authority.
(j) The Representatives shall have received certificates,
dated the Closing Date or the Option Closing Date, as the case may be,
signed on behalf of the Company by its Chief Executive Officer and
Chief Financial Officer to the effect that:
(i) the representations and warranties of the Company
in this Agreement are true and correct in all material
respects as if made on and as of the Closing Date or the
Option Closing Date, as the case may be, and the Company has
performed in all material respects all covenants and
agreements and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to the Closing
Date or the Option Closing Date, as the case may be;
(ii) at the Closing Date or the Option Closing Date,
as the case may be, since the date hereof or since the date of
the most recent financial statements in the Final Prospectus
(exclusive of any amendment or supplement thereto after the
date hereof), no event or development has occurred and no
information has become known that, individually or in the
aggregate, has or would be reasonably likely to have a
Material Adverse Effect;
(iii) the sale of the Securities hereunder has not
been enjoined (temporarily or permanently);
(iv) the Prospectus has been timely filed with the
Commission; no stop order suspending the effectiveness of the
Registration Statement or any part thereof has been issued and
no proceeding for that purpose has been initiated or
threatened by the Commission; and any request of the
Commission for inclusion of additional information in the
Registration Statement or the Prospectus or otherwise has been
complied with.
(k) The Company shall have caused each officer and director of
the Company to furnish to you, on or prior to the date of this
agreement, a "lock-up" letter or letters, in substantially the form of
Exhibit A hereto, provided that, notwithstanding such letters, such
officers and directors may sell up to an aggregate of 1,000,000 shares
of Common Stock, counting all sales by all such officers and directors
pursuant to this proviso, during the period covered by such letters.
-25-
(l) The Securities shall have been duly listed, subject to
notice of issuance, on the New York Stock Exchange.
(m) On or before the Closing Date or the Option Closing Date,
as the case may be, the Representatives and counsel for the
Underwriters shall have received such further documents, certificates
and schedules or instruments relating to the business, corporate, legal
and financial affairs of the Company as they shall have heretofore
reasonably requested from the Company.
All such documents, opinions, certificates and schedules or
instruments delivered pursuant to this Agreement will comply with the provisions
hereof only if they are reasonably satisfactory in all material respects to the
Representatives and counsel for the Underwriters. The Company shall furnish to
the Representatives such conformed copies of such documents, opinions,
certificates and schedules or instruments in such quantities as the
Representatives shall reasonably request.
8. Offering of Securities. Upon authorization by the
Representatives of the release of the Firm Shares, the several Underwriters
propose to offer the Firm Shares for sale upon the terms and conditions set
forth in the Final Prospectus.
9. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless the Underwriters and their respective affiliates,
directors, officers, agents, representatives and employees, and each other
person, if any, who controls any Underwriter within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act, against any losses, claims, damages
or liabilities, joint or several, to which any Underwriter or any such
affiliate, director, officer, agent, representative, employee or controlling
person may become subject under the Act, the Exchange Act or otherwise, insofar
as any such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement
of any material fact contained in the Registration Statement
or any Prospectus or any amendment or supplement thereto; or
(ii) the omission or alleged omission to state, in
the Registration Statement or any Prospectus or any amendment
or supplement thereto, a material fact required to be stated
therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading,
and will reimburse, as incurred, the Underwriters and each such affiliate,
director, officer, agent, representative and employee and each such controlling
person for any legal or other expenses
-26-
reasonably incurred by the Underwriters, such affiliate, director, officer,
agent, representative or employee or such controlling person in connection with
investigating, defending against or appearing as a third-party witness in
connection with any such loss, claim, damage, liability or action; provided,
however, that the Company will not be liable (i) in any such case to the extent
that any such loss, claim, damage, or liability arises out of or is based upon
any untrue statement or alleged untrue statement or omission or alleged omission
made in any Prospectus or any amendment or supplement thereto in reliance upon
and in conformity with written information furnished to the Company by the
Underwriters specifically for use therein or (ii) with respect to the
Preliminary Prospectus, to the extent that any such loss, claim, damage or
liability arises solely from the fact that the Underwriters sold Securities to a
person to whom there was not sent or given a copy of the Final Prospectus (as
amended or supplemented) at or prior to the written confirmation of such sale if
such sending or giving was required by law and the Company shall have previously
furnished copies thereof to the Underwriters in accordance with Section 5(b)
hereof and the Final Prospectus (as amended or supplemented) would have
corrected any such untrue statement or omission. The indemnity agreement
provided for in this Section 9 will be in addition to any liability that the
Company may otherwise have to the indemnified parties. The Company shall not be
liable under this paragraph (a) for any settlement of any claim or action
effected without its consent, which consent shall not be unreasonably withheld
or delayed.
The Underwriters shall not, without the prior written consent
of the Company (which consent shall not be unreasonably withheld), effect any
settlement or compromise of any pending or threatened proceeding in respect of
which the Company is or could have been a party, or indemnity could have been
sought hereunder by the Company, unless such settlement (A) includes an
unconditional written release of the Company, in form and substance reasonably
satisfactory to the Company, from all liability on claims that are the subject
matter of such proceeding and (B) does not include any statement as to an
admission of fault, culpability or failure to act by or on behalf of the
Company.
(b) The Underwriters agree, severally and not jointly, to
indemnify and hold harmless the Company, its affiliates, directors, officers,
agents, representatives and employees and each other person, if any, who
controls the Company within the meaning of Section 15 of the Act or Section 20
of the Exchange Act against any losses, claims, damages or liabilities to which
the Company or any such affiliate, director, officer, agent, representative,
employees or controlling person may become subject under the Act, the Exchange
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement or any Prospectus or any amendments or supplement thereto
or (ii) the omission or the alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, in
each case to the extent, but
-27-
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 concerning such Underwriter furnished to the Company by such
Underwriter specifically for use therein; and, subject to the limitation set
forth immediately preceding this clause, will reimburse, as incurred, any legal
or other expenses reasonably incurred by the Company or any such affiliate,
director, officer, agent, representative, employee or controlling person in
connection with investigating or defending against or appearing as a third party
witness in connection with any such loss, claim, damage, liability or action in
respect thereof. This indemnity agreement will be in addition to any liability
that the Underwriters may otherwise have to the indemnified parties. The
Underwriters shall not be liable under this Section 9 for any settlement of any
claim or action effected without their consent, which consent shall not be
unreasonably withheld or delayed.
The Company shall not, without the prior written consent of
the Underwriters (which consent shall not be unreasonably withheld), effect any
settlement or compromise of any pending or threatened proceeding in respect of
which any Underwriter is or could have been a party, or indemnity could have
been sought hereunder by any Underwriter, unless such settlement (A) includes an
unconditional written release of the Underwriters, in form and substance
reasonably satisfactory to the Representatives, from all liability on claims
that are the subject matter of such proceeding and (B) does not include any
statement as to an admission of fault, culpability or failure to act by or on
behalf of any Underwriter.
(c) Promptly after receipt by an indemnified party under this
Section 9 of notice of the commencement of any action for which such indemnified
party is entitled to indemnification under this Section 9, such indemnified
party will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 9, notify the indemnifying party of the commencement
thereof in writing; but the omission to so notify the indemnifying party (i)
will not relieve it from any liability under paragraph (a) or (b) above unless
and to the extent such failure results in the forfeiture by the indemnifying
party of substantial rights and defenses and (ii) will not, in any event,
relieve the indemnifying party from any obligations to any indemnified party
other than the indemnification obligation provided in paragraphs (a) and (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 reasonably satisfactory to such indemnified
party; provided, however, that 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 defendants in any such action include both
the indemnified party and the indemnifying party and the indemnified party shall
have been advised by counsel that there may be one or more legal defenses
available to it and/or other indemnified parties that are different from or
additional to those available to the indemnifying party, or (iii) the
indemnifying party
-28-
shall not have employed counsel reasonably satisfactory to the indemnified party
to represent the indemnified party within a reasonable time after receipt by the
indemnifying party of notice of the institution of such action, then, in each
such case, the indemnifying party shall not have the right to direct the defense
of such action on behalf of such indemnified party or parties and such
indemnified party or parties shall have the right to select separate counsel to
defend such action on behalf of such indemnified party or parties. After notice
from the indemnifying party to such indemnified party of its election so to
assume the defense thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will not be liable to
such indemnified party under this Section 9 for any legal or other expenses,
other than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the immediately preceding sentence (it being understood, however,
that in connection with such action the indemnifying party shall not be liable
for the expenses of more than one separate counsel (in addition to local
counsel) in any one action or separate but substantially similar actions in the
same jurisdiction arising out of the same general allegations or circumstances,
designated by the Representatives in the case of paragraph (a) of this Section 9
or the Company in the case of paragraph (b) of this Section 9, representing the
indemnified parties under such paragraph (a) or paragraph (b), as the case may
be, who are parties to such action or actions) or (ii) the indemnifying party
has authorized in writing the employment of counsel for the indemnified party at
the expense of the indemnifying party. After such notice from the indemnifying
party to such indemnified party, the indemnifying party will not be liable for
the costs and expenses of any settlement of such action effected by such
indemnified party without the prior written consent of the indemnifying party
(which consent shall not be unreasonably withheld), unless such indemnified
party waived in writing its rights under this Section 9, in which case the
indemnified party may effect such a settlement without such consent.
(d) In circumstances in which the indemnity agreement provided
for in the preceding paragraphs of this Section 9 is unavailable to, or
insufficient to hold harmless, an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect (i) the relative
benefits received by the indemnifying party or parties on the one hand and the
indemnified party on the other from the offering of the Securities or (ii) if
the allocation provided by the foregoing clause (i) is not permitted by
applicable law, not only such relative benefits but also the relative fault of
the indemnifying party or parties on the one hand and the indemnified party on
the other in connection with the statements or omissions or alleged statements
or omissions that resulted in such losses, claims, damages or liabilities (or
actions in respect thereof). The relative benefits received by the Company on
the one hand
-29-
and any Underwriter on the other shall be deemed to be in the same proportion as
the total proceeds from the offering (before deducting expenses) received by the
Company bear to the total discounts and commissions received by such
Underwriter. The relative fault of the parties 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 on the one hand, or such
Underwriter on the other, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission or
alleged statement or omission, and any other equitable considerations
appropriate in the circumstances. The Company and the Underwriters agree that it
would not be just and equitable if the amount of such contribution were
determined by pro rata or per capita allocation or by any other method of
allocation that does not take into account the equitable considerations referred
to in the first sentence of this paragraph (d). Notwithstanding any other
provision of this paragraph (d), no Underwriter shall be obligated to make
contributions hereunder that in the aggregate exceed the total discounts,
commissions and other compensation received by such Underwriter under this
Agreement, less the aggregate amount of any damages that such Underwriter has
otherwise been required to pay by reason of the untrue or alleged untrue
statements or the omissions or alleged omissions to state a material fact, and
no person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this paragraph (d),
each affiliate, director, officer, agent, representative and employee of an
Underwriter and each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act shall have
the same rights to contribution as the Underwriters, and each affiliate,
director, officer, agent, representative and employee of the Company 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, shall have the same rights to
contribution as the Company.
10. Survival Clause. The respective representations,
warranties, agreements, covenants, indemnities and other statements of the
Company, its officers and the Underwriters set forth in this Agreement or made
by or on behalf of them, respectively, pursuant to this Agreement shall remain
in full force and effect, regardless of (i) any investigation made by or on
behalf of the Company any of its officers or directors, the Underwriters or any
controlling person referred to in Section 9 hereof and (ii) delivery of and
payment for the Securities. The respective agreements, covenants, indemnities
and other statements set forth in Sections 6, 9 and 16 hereof shall remain in
full force and effect, regardless of any termination or cancellation of this
Agreement.
11. Default by an Underwriter. If any one or more Underwriters
shall fail to purchase and pay for any of the Securities agreed to be purchased
by such Underwriter hereunder and such failure to purchase shall constitute a
default in the performance of its or their obligations under this Agreement, the
remaining Underwriters shall be obligated severally
-30-
to take up and pay for (in the respective proportions which the number of
Securities set forth opposite their names in Schedule I hereto bears to the
aggregate number of Securities set forth opposite the names of all the remaining
Underwriters) the Securities which the defaulting Underwriter or Underwriters
agreed but failed to purchase; provided, however, that in the event that the
amount of Securities which the defaulting Underwriter or Underwriters agreed but
failed to purchase shall exceed 10% of the total aggregate number of Securities
set forth in Schedule I hereto, the remaining Underwriters shall have the right
to purchase all, but shall not be under any obligation to purchase any, of the
Securities, and if such nondefaulting Underwriters do not purchase all the
Securities, this Agreement will terminate without liability to any nondefaulting
Underwriter or the Company except as provided in Section 10 hereof. In the event
of a default by any Underwriter as set forth in this Section 11, the Closing
Date shall be postponed for such period, not exceeding five business days, as
the nondefaulting Underwriters shall determine in order that the required
changes in the Final Prospectus or in any other documents or arrangements may be
effected. Nothing contained in this Agreement shall relieve any defaulting
Underwriter of its liability, if any, to the Company or any nondefaulting
Underwriter for damages occasioned by its default hereunder.
12. Termination. (a) This Agreement may be terminated in the
sole discretion of the Representatives by notice to the Company given prior to
the Closing Date in the event that the Company shall have failed, refused or
been unable to perform, in all material respects, all obligations and satisfy
all conditions on its part to be performed or satisfied hereunder at or prior
thereto or, if at or prior to the Closing Date:
(i) either (i) the Company shall have sustained any
loss or interference with respect to its businesses or
properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any
strike, labor dispute, slow down or work stoppage or any legal
or governmental proceeding, which loss or interference, in the
sole judgment of the Representatives, has had or has a
Material Adverse Effect, or (ii) there shall have been, in the
sole judgment of the Representatives, any event or development
that, individually or in the aggregate, has or could be
reasonably likely to have a Material Adverse Effect (including
without limitation a change in control of the Company), except
in each case as described in the Final Prospectus (exclusive
of any amendment or supplement thereto);
(ii) trading in securities generally on the New York
Stock Exchange, the American Stock Exchange or the Nasdaq
National Market shall have been suspended or maximum or
minimum prices shall have been established on any such
exchange or market;
-31-
(iii) a banking moratorium shall have been declared
by New York or United States authorities;
(iv) there shall have been (A) an outbreak or
escalation of hostilities between the United States and any
foreign power, or (B) an outbreak or escalation of any other
insurrection or armed conflict involving the United States or
any other national or international calamity or emergency or
(C) any material change in the financial markets of the United
States that, in the case of (A), (B) or (C) above and in the
sole judgment of the Representatives, makes it impracticable
or inadvisable to proceed with the offering or the delivery of
the Securities as contemplated by the Final Prospectus; or
(v) any securities of the Company shall have been
downgraded or placed on any "watch list" for possible
downgrading by any nationally recognized statistical rating
organization.
(b) Termination of this Agreement pursuant to Section 11 or
this Section 12 shall be without liability of any party to any other party
except as provided in Section 10 or 11 hereof.
13. Information Supplied by the Underwriters. The statements
set forth in the last paragraph of the cover page and under the caption
"Underwriting---Stabilization, Short Positions and Penalty Bids" constitute the
only information furnished by the Underwriters to the Company for the purposes
of Sections 2(a) and 9 hereof.
14. Notices. All communications hereunder shall be in writing
and, if sent to the Underwriters, shall be mailed or delivered or telecopied and
confirmed in writing to (i) Xxxxxx Brothers Inc., 000 Xxxxxxx Xxxxxx, Xxx Xxxx,
XX 00000, Attention: Syndicate Registration Department, Fax (000) 000-0000, with
a copy, in the case of any notice pursuant to Section 9(c), to the Director of
Litigation, Office of the General Counsel, Xxxxxx Brothers Inc., 000 Xxxx
Xxxxxx, 00xx Xxxxx, Xxx Xxxx, XX 00000 and (ii) Deutsche Bank Securities Inc.,
00 Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Equity Capital Markets,
Facsimile No. (000) 000-0000, with a copy to the General Counsel, Facsimile No.
(000) 000-0000 and, if sent to the Company, shall be mailed, delivered or
telecopied and confirmed in writing to the Company at: 000 Xxxx Xxx Xxxxxxx
Xxxx., Xxxxx 0000, Xxxxxx, Xxxxx 00000, Attention: Senior Vice President and
General Counsel. All such notices and communications shall be deemed to have
been duly given: when delivered by hand, if personally delivered; five business
days after being deposited in the mail, postage prepaid, if mailed; and one
business day after being timely delivered to a next-day air courier.
-32-
15. Successors. This Agreement shall inure to the benefit of
and be binding upon the Underwriters, the Company and their respective
successors, assigns and legal representatives, and nothing expressed or
mentioned in this Agreement is intended or shall be construed to give any other
person any legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained; this Agreement and all conditions
and provisions hereof being intended to be and being for the sole and exclusive
benefit of the Underwriters, the Company and their respective successors,
assigns and legal representatives and for the benefit of no other person except
that (i) the indemnities of the Company contained in Section 9 of this Agreement
shall also be for the benefit of the affiliates, directors, officers, agents,
representatives and employees of the Underwriters and any person or persons who
control any of the Underwriters within the meaning of Section 15 of the Act or
Section 20 of the Exchange Act and (ii) the indemnities of the Underwriters
contained in Section 9 of this Agreement shall also be for the benefit of the
affiliates, directors, officers, agents, representatives and employees of the
Company and any person or persons who control the Company within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act. No purchaser of any of
the Securities from the Underwriters will be deemed a successor because of such
purchase.
16. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
17. Counterparts. This Agreement may be executed in two or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement among the
Company and the Underwriters.
Very truly yours,
MAGNUM HUNTER RESOURCES, INC.
By: /s/ XXXXXX X. XXXXXXXX
----------------------------------
Name: Xxxxxx X. Xxxxxxxx
Title: Sr. Vice President, General
Counsel and Secretary
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
XXXXXX BROTHERS INC.
DEUTSCHE BANK SECURITIES INC.
X.X. XXXXXXX & SONS, INC.
XXXXXXXXX & COMPANY, INC.
XXXXXXX RICE & COMPANY L.L.C.
XXXXXXX XXXXX & ASSOCIATES, INC.
XXXXX XXXXXX & CO., INC.
XXXXXXXXX CAPITAL PARTNERS, LLC
SOUTHWEST SECURITIES, INC.
acting on behalf of themselves and the several underwriters named in Schedule I
hereto
By: XXXXXX BROTHERS INC.
By: /s/ XXXXXX XXXXXXXXX
------------------------------------
Name: Xxxxxx Xxxxxxxxx
Title: Vice President
By: DEUTSCHE BANK SECURITIES INC.
By: /s/ C. XXXXXXXX XXX
------------------------------------
Name: C. Xxxxxxxx Xxx
Title: Managing Director
By: /s/ XXXX XXXXX
------------------------------------
Name: Xxxx Xxxxx
Title: Director
