CHESAPEAKE ENERGY CORPORATION UNDERWRITING AGREEMENT
Exhibit
99.1
$800,000,000
CHESAPEAKE
ENERGY CORPORATION
7.25%
Senior Notes due 2018
May 20,
2008
CREDIT
SUISSE SECURITIES (USA) LLC
BANC OF
AMERICA SECURITIES LLC
DEUTSCHE
BANK SECURITIES INC
XXXXXX
BROTHERS INC
GREENWICH
CAPITAL MARKETS, INC
As
Representatives (the “Representatives”) of the
Several Underwriters
c/o
Credit Suisse Securities (USA) LLC
Eleven
Xxxxxxx Xxxxxx
Xxx Xxxx,
XX 00000
Dear
Sirs:
1. Introductory. Chesapeake
Energy Corporation, an Oklahoma corporation (the “Company”), proposes to issue
and sell to the several underwriters named in Schedule A hereto (the “Underwriters”) $800,000,000
principal amount of its 7.25% Senior Notes due 2018 (the “Offered
Securities”). The Offered Securities will be unconditionally
guaranteed (the “Guarantees”) on a senior basis
by each existing subsidiary of the Company, other than certain de minimis
subsidiaries, and, subject to certain exceptions, by subsequently acquired
domestic subsidiaries of the Company in accordance with the terms of the
Indenture referred to below (collectively, the “Subsidiary
Guarantors”). The Offered Securities are to be issued under an
indenture to be dated as of May 27, 2008 (the “Indenture”), among the
Company, the Subsidiary Guarantors and The Bank of New York Trust Company,
N.A., as trustee (the “Trustee”). The
Company hereby agrees with the Underwriters as follows:
2. Representations and Warranties of
the Company and the Subsidiary Guarantors. The Company and
each Subsidiary Guarantor represents and warrants to, and agrees with, the
several Underwriters that:
(a) A
registration statement (No. 333-151010, including all materials
incorporated by reference therein and a base prospectus, relating to the Offered
Securities, has been filed with the Securities and Exchange Commission (the
“Commission”) and has
become effective. Such registration statement, including all
materials incorporated by reference therein and any prospectus or prospectus
supplement deemed or retroactively deemed to be part thereof that has not been
superseded or modified, is hereinafter referred to as the “Registration
Statement”. “Registration Statement”
without reference to a time means the Registration Statement as of the date and
time of its filing and effectiveness which time shall be considered the
“effective date” of the Registration Statement. For purposes of the
previous sentence, information contained in a form of prospectus or prospectus
supplement that is deemed retroactively to be a part of the Registration
Statement pursuant to Rule 430B (“Rule 430B”) under the
Securities Act of 1933 (the “Act”) shall be considered to
be included in the Registration Statement as of the time specified in Rule
430B. “Statutory
Prospectus” as of any time means the prospectus included in the
Registration Statement immediately prior to that time, including any document
incorporated by reference therein and any base prospectus or prospectus
supplement deemed to be a part thereof that has not been superseded or
modified. For purposes of the preceding sentence, information
contained in a form of prospectus (including a prospectus supplement) that is
deemed retroactively to be a part of the Registration Statement pursuant to Rule
430B shall be considered to be included in the Statutory Prospectus as of the
actual time that form of prospectus (including a prospectus supplement) is filed
with the Commission pursuant to Rule 424(b) (“Rule 424(b)”) under the Act.
“Prospectus” means the
Statutory Prospectus that discloses the public offering price and other final
terms of the Offered Securities and otherwise satisfies Section 10(a) of
the Act. “Issuer
Free Writing Prospectus” means any “issuer free writing prospectus,” as
defined in Rule 433, relating to the Offered Securities in the form filed
or required to be filed with the Commission or, if not required to be filed, in
the form retained in the Company’s records pursuant to Rule 433(g). “General Use Issuer Free Writing
Prospectus” means any Issuer Free Writing Prospectus that is intended for
general distribution to prospective investors, as evidenced by its being
specified in Schedule B to this Agreement. “Limited Use Issuer Free Writing
Prospectus” means any Issuer Free Writing Prospectus that is not a
General Use Issuer Free Writing Prospectus. “Applicable Time” means 2:50
p.m. (Eastern time) on the date of this Agreement. Any reference
herein to the terms “amend,” “amendment,” or “supplement” with respect to
the Registration Statement, the Prospectus or any Issuer Free Writing Prospectus
shall be deemed to refer to and include the filing of any document under the
Securities Exchange Act of 1934 (the “Exchange Act”) and the rules
and regulations of the Commission (the “Rules and Regulations”) on or
after the initial effective date of the Registration Statement, or the date of
such Prospectus or Issuer Free Writing Prospectus, as the case may be, and
deemed to be incorporated by reference therein.
(b) On its
effective date, the Registration Statement conformed in all respects to the
requirements of the Act and the Rules and Regulations and did not include any
untrue statement of a material fact or omit to state any material fact required
to be stated therein or necessary to make the statements therein not misleading,
and on the date of this Agreement and on the Closing Date, the Registration
Statement and the Prospectus will conform in all respects to the requirements of
the Act and the Rules and Regulations, and neither of such documents will
include any untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the statements therein
not misleading, except that the foregoing does not apply to statements in or
omissions from any of such documents based upon written information furnished to
the Company by any Underwriter through the Representatives, if any, specifically
for use therein, it being understood and agreed that the only such information
furnished by the Underwriters consists of the information described as such in
Section 8(b) hereof. The documents incorporated by reference in
the Prospectus (the “Company
Filed Documents”), when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects with the
requirements of the Act or the Exchange Act, as applicable, and the Rules and
Regulations and did not include any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary to make
the statement therein not misleading.
(c) The
Registration Statement is an “automatic shelf registration statement”, as
defined in Rule 405 under the Act, that initially became effective within
three years of the date of this Agreement, and as of the determination date
applicable to the Registration Statement (and any amendment thereof) and the
offering contemplated hereby, the Company is a “well-known seasoned issuer” (as
defined in Rule 405 under the Act). If immediately prior to the
third anniversary (the “Renewal
Deadline”) of the initial effective date of the Registration Statement,
any of the Offered Securities remain unsold by the Underwriters, the Company
will prior to the Renewal Deadline file, if it has not already done so and is
eligible to do so, a new automatic shelf registration statement relating to the
Offered Securities, in a form satisfactory to the Representatives. If
the Company is no longer eligible to file an automatic shelf registration
statement, the Company will prior to the Renewal Deadline, if it has not already
done so, file a new shelf registration statement relating to the Offered
Securities, in a form satisfactory to the Representatives, and will use its best
efforts to cause such registration statement to be declared effective within 180
days after the Renewal Deadline. The Company will take all other
action necessary or appropriate to permit the public offering and sale of the
Offered Securities to continue as contemplated in the expired registration
statement relating to the Offered Securities. References herein to
the Registration Statement shall include such new automatic shelf registration
statement or such new shelf registration statement, as the case may
be.
(d) The
Company has not received from the Commission any notice pursuant to
Rule 401(g)(2) objecting to use of the automatic shelf registration
statement form. If at any time when Offered Securities remain unsold
by the Underwriters the Company receives from the Commission a notice pursuant
to Rule 401(g)(2) or otherwise ceases to be eligible to use the automatic shelf
registration statement form, the Company will (i) promptly notify the
Representatives, (ii) promptly file a new registration statement or
post-effective amendment on the proper form relating to the Offered Securities
in a form satisfactory to the Representatives, (iii) use its best efforts
to cause such registration statement or post-effective amendment to be declared
effective as soon as practicable, and (iv) promptly notify the Representatives
of such effectiveness. The Company will take all other action
necessary or appropriate to permit the public offering and sale of the Offered
Securities to continue as contemplated in the registration statement that was
the subject of the Rule 401(g)(2) notice or for which the Company has otherwise
become ineligible. References herein to the registration statement
relating to the Offered Securities shall include such new registration statement
or post-effective amendment, as the case may be.
(e) The
Company has paid or shall pay the required Commission filing fees relating to
the Offered Securities within the time required by Rule 456(b)(1) without
regard to the proviso therein and otherwise in accordance with Rules 456(b)
and 457(r).
(f) (i) At
the time of filing the Registration Statement and (ii) at the date of this
Agreement, the Company was not and is not an “ineligible issuer,” as defined in
Rule 405, including (x) the Company or any other subsidiary in the
preceding three years not having been convicted of a felony or misdemeanor or
having been made the subject of a judicial or administrative decree or order as
described in Rule 405 and (y) the Company in the preceding three years
not having been the subject of a bankruptcy petition or insolvency or similar
proceeding, not having had a registration statement be the subject of a
proceeding under Section 8 of the Act and not being the subject of a
proceeding under Section 8A of the Act in connection with the offering of
the Offered Securities, all as described in Rule 405.
(g) As of the
Applicable Time and at all subsequent times through the completion of the public
offer and sale of the Offered Securities, neither (i) the General Use Issuer
Free Writing Prospectus(es) issued at or prior to the Applicable Time, the
Statutory Prospectus or the information set out in Schedule B hereto all
considered together (collectively, the “General Disclosure Package”),
nor (ii) any individual Limited Use Issuer Free Writing Prospectus, when
considered together with the General Disclosure Package, included any untrue
statement of a material fact or omitted to state any material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading. The preceding sentence does not
apply to statements in or omissions from any prospectus included in the
Registration Statement or any Issuer Free Writing Prospectus in reliance upon
and in conformity with written information furnished to the Company by any
Underwriter through the Representatives specifically for use therein, it being
understood and agreed that the only such information furnished by any
Underwriter consists of the information described as such in Section 8(b)
hereof.
(h) Each
Issuer Free Writing Prospectus, as of its issue date and at all subsequent times
through the completion of the public offer and sale of the Offered Securities or
until any earlier date that the Company notified or notifies the Representatives
as described in the next sentence, did not, does not and will not include any
information that conflicted, conflicts or will conflict with the information
then contained in the Registration Statement. If at any time
following issuance of an Issuer Free Writing Prospectus there occurred or occurs
an event or development as a result of which such Issuer Free Writing Prospectus
conflicted or would conflict with the information then contained in the
Registration Statement or included or would include an untrue statement of a
material fact or omitted or would omit to state a material fact necessary in
order to make the statements therein, in the light of the circumstances
prevailing at that subsequent time, not misleading, (i) the Company has promptly
notified or will promptly notify the Representatives and (ii) the Company has
promptly amended or will promptly amend or supplement such Issuer Free Writing
Prospectus to eliminate or correct such conflict, untrue statement or
omission. The foregoing two sentences do not apply to statements in
or omissions from any Issuer Free Writing Prospectus in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through the Representatives specifically for use therein, it being understood
and agreed that the only such information furnished by any Underwriter consists
of the information described as such in Section 8(b) hereof.
(i) The
Company has been duly incorporated and is an existing corporation in good
standing under the laws of the State of Oklahoma, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the General Disclosure Package; and the Company is duly qualified
to do business as a foreign corporation in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification, except where the failure to be so
qualified would not reasonably be expected to individually or in the aggregate
have a material adverse effect on the condition (financial or other), business,
prospects, properties or results of operations of the Company and its
subsidiaries taken as a whole (“Material Adverse
Effect”).
(j) Each
subsidiary of the Company has been duly organized and is in good standing under
the laws of the jurisdiction of its organization, with power and authority
(corporate and other) to own its properties and conduct its business as
described in the General Disclosure Package; and each subsidiary of the Company
is duly qualified to do business and is in good standing in all other
jurisdictions in which its ownership or lease of property or the conduct of its
business requires such qualification; except where the failure to be so
qualified would not reasonably be expected to individually or in the aggregate
have a Material Adverse Effect; all of the issued and outstanding capital stock
or similar equity interests of each subsidiary of the Company has been duly
authorized and validly issued and is fully paid and nonassessable; and the
capital stock or similar equity interests of each subsidiary owned by the
Company, directly or through subsidiaries, is owned free from liens,
encumbrances and defects.
(k) The
Indenture has been duly authorized by the Company and each Subsidiary Guarantor;
the Guarantees have been duly authorized by each Subsidiary Guarantor; the
Offered Securities have been duly authorized; when the Offered Securities are
delivered and paid for in accordance with this Agreement on the Closing Date,
the Indenture will have been duly executed and delivered, such Offered
Securities will have been duly executed, authenticated, issued and delivered and
will conform to the description thereof contained in the General Disclosure
Package and the Indenture and, in the case of the Company, such Offered
Securities, and in the case of the Subsidiary Guarantors, such Guarantees, will
constitute valid and legally binding obligations of the Company and each
Subsidiary Guarantor, as applicable, enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles.
(l) Except as
disclosed in the General Disclosure Package, there are no contracts, agreements
or understandings between the Company and any person that would give rise to a
valid claim against the Company or any Underwriter for a brokerage commission,
finder’s fee or other like payment in connection with this
offering.
(m) No
consent, approval, authorization, filing with or order of any court or
governmental agency or body is required for the consummation of the transactions
contemplated by this Agreement in connection with the issuance and sale of the
Offered Securities by the Company, except such as have been obtained and made
under the Act and such as may be required under state securities laws in
connection with the resale of the Offered Securities by the
Underwriters.
(n) None of
the execution, delivery and performance of this Agreement and the Indenture, the
issuance and sale of the Offered Securities and compliance with the terms and
provisions hereof and thereof, will result in a breach or violation of any of
the terms and provisions of, or constitute a default under, any statute, rule,
regulation or order of any governmental agency or body or any court, domestic or
foreign, having jurisdiction over the Company or any subsidiary of the Company
or any of their properties, or any agreement or instrument to which the Company
or any such subsidiary is a party or by which the Company or any such subsidiary
is bound or to which any of the properties of the Company or any such subsidiary
is subject, or the charter or by-laws (or similar organizational documents) of
the Company or any such subsidiary, and the Company has full power and authority
to authorize, issue and sell the Offered Securities as contemplated by this
Agreement.
(o) This
Agreement has been duly authorized, executed and delivered by the Company and
each Subsidiary Guarantor.
(p) Except as
disclosed in the General Disclosure Package, the Company and its subsidiaries
have good and marketable title to all real properties and all other properties
and assets owned by them, including, without limitation, all oil and gas
producing properties of the Company and its subsidiaries, in each case free from
liens, encumbrances and defects that would materially affect the value thereof
or materially interfere with the use made or to be made thereof by them; and,
except as disclosed in the General Disclosure Package, the Company and its
subsidiaries hold any leased real or personal property, including, without
limitation, all oil and gas producing properties of the Company and its
subsidiaries, under valid and enforceable leases with no exceptions that would
materially interfere with the use made or to be made thereof by
them.
(q) The
Company and its subsidiaries possess adequate certificates, authorities or
permits issued by appropriate governmental agencies or bodies necessary to
conduct the business now operated by them and have not received any notice of
proceedings relating to the revocation or modification of any such certificate,
authority or permit that, if determined adversely to the Company or any of its
subsidiaries, would reasonably be expected to individually or in the aggregate
have a Material Adverse Effect.
(r) No labor
dispute with the employees of the Company or any subsidiary exists or, to the
knowledge of the Company, is imminent that would reasonably be expected to have
a Material Adverse Effect.
(s) The
Company and its subsidiaries own, possess or can acquire on reasonable terms,
adequate trademarks, trade names and other rights to inventions, know-how,
patents, copyrights, confidential information and other intellectual property
(collectively, “intellectual
property rights”) necessary to conduct the business now operated by them,
or presently employed by them, and have not received any notice of infringement
of, or conflict with, asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Company or any of its
subsidiaries, would reasonably be expected to individually or in the aggregate
have a Material Adverse Effect.
(t) Except as
disclosed in the General Disclosure Package, neither the Company nor any of its
subsidiaries is in violation of any statute, rule, regulation, decision or order
of any governmental agency or body or any court, domestic or foreign, relating
to the use, disposal or release of hazardous or toxic substances or relating to
the protection or restoration of the environment or human exposure to hazardous
or toxic substances (collectively, “environmental laws”), owns or
operates any real property contaminated with any substance that is subject to
any environmental laws, is liable for any off-site disposal or contamination
pursuant to any environmental laws, or is subject to any claim relating to any
environmental laws which violation, contamination, liability or claim would
reasonably be expected to individually or in the aggregate have a Material
Adverse Effect; and the Company is not aware of any pending investigation which
might lead to such a claim.
(u) Except as
disclosed in the General Disclosure Package, there are no pending actions, suits
or proceedings against or affecting the Company, any of its subsidiaries or any
of their respective properties that, if determined adversely to the Company or
any of its subsidiaries, would reasonably be expected to individually or in the
aggregate have a Material Adverse Effect, or would materially and adversely
affect the ability of the Company or any Subsidiary Guarantor to perform its
obligations under this Agreement or the Indenture, or which are otherwise
material in the context of the sale of the Offered Securities; and no such
actions, suits or proceedings are threatened or, to the Company’s knowledge,
contemplated.
(v) The
financial statements included or incorporated by reference in the Registration
Statement and the General Disclosure Package present fairly the financial
position of the Company and its consolidated subsidiaries as of the dates shown
and their results of operations and cash flows for the periods shown, and such
financial statements have been prepared in conformity with the generally
accepted accounting principles in the United States applied on a consistent
basis.
(w) Except as
disclosed in the General Disclosure Package, since the date of the latest
audited financial statements incorporated by reference in the General Disclosure
Package, there has been no material adverse change, nor any development or event
involving a prospective material adverse change, in the condition (financial or
other), business, properties or results of operations of the Company and its
subsidiaries taken as a whole, and, except as disclosed in the General
Disclosure Package, there has been no dividend or distribution of any kind
declared, paid or made by the Company on any class of its capital
stock.
(x) The
Company is not, and at no time during which a prospectus is required by the Act
to be delivered (whether physically or through compliance with Rule 172 under
the Act or any similar rule) in connection with the sales will it be, and, after
giving effect to the offering and sale of the Offered Securities and the
application of proceeds thereof as described in the General Disclosure Package,
will not be an “investment company” as defined in the Investment Company Act of
1940.
(y) The
Company is subject to the reporting requirements of either Section 13 or
15(d) of the Exchange Act and files reports with the Commission on the
Electronic Data Gathering, Analysis, and Retrieval (XXXXX) system.
(z) The
statistical and market related data and forward looking statements included in
the General Disclosure Package and any Limited Use Issuer Free Writing
Prospectus, are based on or derived from sources that the Company believes to be
reliable and accurate in all material respects and represents its good faith
estimates that are made on the basis of data derived from such
sources.
(aa) Neither
the Company nor any of its subsidiaries has any liability for any prohibited
transaction or accumulated funding deficiency (within the meaning of
Section 412 of the Internal Revenue Code) or any complete or partial
withdrawal liability (within the meaning of Sections 4203 and 4205 of the
Employee Retirement Income Security Act of 1974, as amended (“ERISA”), respectively), with
respect to any pension, profit sharing or other plan which is subject to ERISA,
to which the Company or any of its subsidiaries 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, the Company
and each of its subsidiaries is in compliance in all material respects with all
applicable provisions of ERISA.
(bb) The
Company has established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15 under the Exchange Act); such
disclosure controls and procedures are designed to ensure that material
information relating to the Company and its subsidiaries is made known to the
chief executive officer and chief financial officer of the Company by others
within the Company or any subsidiary, and such disclosure controls and
procedures are reasonably effective to perform the functions for which they were
established subject to the limitations of any such control system; the Company’s
auditors and the audit committee of the board of directors of the Company have
been advised of: (A) any significant deficiencies in the design or
operation of internal controls which could adversely affect the Company’s
ability to record, process, summarize, and report financial data; and
(B) any fraud, whether or not material, that involves management or other
employees who have a role in the Company’s internal controls; any material
weaknesses in internal controls have been identified for the Company’s auditors;
and since the date of the most recent evaluation of such disclosure controls and
procedures, there have been no significant changes in internal controls or in
other factors that could significantly affect internal controls, including any
corrective actions with regard to significant deficiencies and material
weaknesses. The Company made available to the Underwriters or their
counsel for review true and complete copies of all minutes or draft minutes of
meetings, or resolutions adopted by written consent, of the board of directors
of the Company and each subsidiary and each committee of each such board in the
past three years, and all agendas for each such meeting for which minutes or
draft minutes do not exist.
(cc) Except as
disclosed in the General Disclosure Package and the Registration Statement (i)
all stock options granted under any stock option plan of the Company (the "Stock
Plans") have been granted in compliance with the terms of applicable law and the
applicable Stock Plans and (ii) the Company has properly accounted for all stock
options granted under the Stock Plans in conformity with generally accepted
accounting principles in the United States applied on a consistent
basis.
(dd) All
information on (or hyperlinked from) the Company’s website at xxx.xxx.xxx either
(i) qualifies for the exemption for regularly released factual business
information or forward-looking information in Rule 168 of the Act or (ii)
qualifies for the safe-harbor related to historical information in
Rule 433(e)(2) under the Act, and the Company does not maintain or support
any website other than xxx.xxx.xxx.
(ee) The
Company has not received any written comments from the Commission staff in
connection with the Company’s reports under the Exchange Act that remain
unresolved.
(ff) The
Company has been informed of the existence of the United Kingdom Financial
Services Authority stabilizing guidance contained in Section MAR 2, Xxx 2G of
the Handbook of rules and guidance issued by the Financial Services Authority;
and none of the Company or any Subsidiary Guarantor has taken any action or
omitted to take any action (such as issuing any press release relating to any
Notes without an appropriate legend) which may result in the loss by any of the
Underwriters of the ability to rely on any stabilization safe harbor provided
under the Financial Services and Markets Xxx 0000 (“FSMA”).
(gg) Neither
the Company nor any of the Subsidiary Guarantors has distributed and, prior to
the later to occur of (i) the Closing Date and (ii) the completion of the
distribution of the Offered Securities, will not distribute any material in
connection with the offering and sale of the Offered Securities other than the
General Disclosure Package, the Prospectus or other materials, if any, permitted
by the Securities Act and FSMA (or regulations promulgated pursuant to the
Securities Act or FSMA) and approved by the parties to this
Agreement.
In
addition, any certificate signed by any officer of the Company or any of the
Subsidiaries and delivered to the Underwriters or counsel for the Underwriters
in connection with the offering of the Offered Securities shall be deemed to be
a representation and warranty by the Company, as to matters covered thereby, to
each Underwriter.
3. Purchase, Sale and Delivery of
Offered Securities. On the basis of the representations,
warranties and agreements herein contained, but subject to the terms and
conditions herein set forth, the Company agrees to sell to the Underwriters, and
the Underwriters agree, severally and not jointly, to purchase from the Company,
at a purchase price of 98.375% of the principal amount thereof plus accrued
interest from May 27, 2008 to the Closing Date, the respective principal
amounts of Offered Securities set forth opposite the names of the Underwriters
in Schedule A hereto.
The
Company will deliver against payment of the purchase price the Offered
Securities in the form of one or more permanent global securities in definitive
form (the “Global
Securities”) deposited with the Trustee as custodian for The Depository
Trust Company (“DTC”)
and registered in the name of Cede & Co., as nominee for DTC. Interests in
any permanent Global Securities will be held only in book-entry form through
DTC, except in the limited circumstances described in the General Disclosure
Package. Payment for the Offered Securities shall be made by the Underwriters in
Federal (same day) funds by wire transfer to an account at a bank acceptable to
the Representatives drawn to the order of Chesapeake Energy Corporation at the
office of Cravath, Swaine & Xxxxx LLP at 10:00 A.M. (New York time), on
May 27, 2008 or at such other time not later than seven full business days
thereafter as the Representatives and the Company determine, such time being
herein referred to as the “Closing Date”, against
delivery to the Trustee as custodian for DTC of the Global Securities
representing all of the Offered Securities.
4. Offering by
Underwriters. It is understood that the Underwriters propose
to offer the Offered Securities for sale to the public as set forth in the
Prospectus.
5. Certain Agreements of the
Company. The Company agrees with the Underwriters
that:
(a) The
Company will file each Statutory Prospectus with the Commission pursuant to and
in accordance with Rule 424(b)(2) (or, if applicable and if consented to by
the Representatives, subparagraph (5), such consent not to be unreasonably
withheld or delayed) not later than the second business day following the
execution and delivery of this Agreement. The Company will also
prepare a final term sheet, containing solely the terms of the Offered
Securities, in the form set out in Schedule C, and file such term sheet
pursuant to Rule 433(d) under the Act within the time required by such Rule and
file promptly all other material required to be filed by the Company with the
Commission pursuant to Rule 433(d) under the Act.
(b) The
Company will advise the Representatives promptly of any proposal to amend or
supplement the Registration Statement or any Statutory Prospectus and will not
undertake any such amendment or supplement if the Representatives reasonably
object in writing thereto; and the Company will also advise the Representatives
promptly of the filing of any such amendment or supplement and of the
institution by the Commission of any stop order proceedings in respect of the
Registration Statement or of any part thereof and will use its best efforts to
prevent the issuance of any such stop order and to obtain as soon as possible
its lifting, if issued.
(c) If, at
any time when a prospectus relating to the Offered Securities is required to be
delivered (whether physically or through compliance with Rule 172 under the Act)
in connection with sales by the Underwriters or any dealer, any event occurs as
a result of which the Prospectus, as then amended or supplemented would include
an untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any time to
amend the Registration Statement or the Prospectus to comply with the Act, the
Company promptly will notify the Representatives of such event and will promptly
prepare and file with the Commission, at its own expense, an amendment or
supplement which will correct such statement or omission or an amendment which
will effect such compliance. Neither the Representatives’ consent to,
nor the Underwriters’ delivery of, any such amendment or supplement shall
constitute a waiver of any of the conditions set forth in Section 6
hereof.
(d) As soon
as practicable, but not later than 16 months, after the date of this
Agreement, the Company will make generally available to its securityholders an
earnings statement covering a period of at least 12 months beginning after
the later of (i) the effective date of the registration statement relating
to the Offered Securities, (ii) the effective date of the most recent
post-effective amendment to the Registration Statement to become effective prior
to the date of this Agreement and (iii) the date of the Company’s most
recent Annual Report on Form 10-K filed with the Commission prior to the
date of this Agreement, which will satisfy the provisions of Section 11(a)
of the Act.
(e) The
Company will furnish to the Representatives copies of the Registration Statement
in the form it became effective (including all exhibits) and of all amendments
thereto, any related preliminary prospectus, any related preliminary prospectus
supplement, and, so long as a prospectus relating to the Offered Securities is
(or but for the exemption in Rule 172 would be required to be) delivered under
the Act in connection with sales by the Underwriters or any dealer, the
Prospectus and all amendments and supplements to such documents, in each case in
such quantities as the Representatives request. The Prospectus shall
be so furnished on or prior to 3:00 p.m., New York time, on the business day
following the execution and delivery of this Agreement. All other
documents shall be so furnished as soon as available. The Company
will pay the expenses of printing and distributing to the Underwriters all such
documents.
(f) The
Company will arrange for the qualification of the Offered Securities for sale
under the laws of such jurisdictions as the Representatives designate and will
continue such qualifications in effect so long as required for the
distribution.
(g) The
Company will pay all expenses incidental to the performance of its obligations
under this Agreement, for any filing fees and other expenses (including fees and
disbursements of counsel) incurred in connection with qualification of the
Offered Securities for sale under the laws of such jurisdictions as the
Representatives designate and the printing of memoranda relating thereto, and
for expenses incurred in distributing preliminary prospectuses, preliminary
prospectus supplements and the Prospectus (including any amendments and
supplements thereto) to the Underwriters and for expenses incurred for
preparing, printing and distributing any Issuer Free Writing Prospectuses to
investors or prospective investors; provided that the
Underwriters (acting collectively) will reimburse the Company for up to $150,000
of expenses incurred by the Company in the performance of its obligations under
this Agreement.
(h) For a
period of 60 days after the date of this Agreement, the Company will not
offer, sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, any U.S. dollar-denominated debt securities registered under the
Securities Act or eligible for trading pursuant to Rule 144A, issued or
guaranteed by the Company or its subsidiaries and having a maturity of more than
one year from the date of issue, without the prior written consent of Credit
Suisse Securities (USA) LLC, except issuances of exchangeable securities of the
size and type previously described to the Representatives; provided that the
Company may offer and sell one or more series of senior notes, the proceeds of
which are used to repurchase or redeem outstanding senior notes of the
Company.
6. Free Writing Prospectuses. The
Company represents and agrees that (other than the final term sheet prepared and
filed pursuant to Section 5(a) hereto), unless it obtains the prior consent
of the Representatives, and each Underwriter represents and agrees that (other
than one or more term sheets relating to the Offered Securities containing
customary information and conveyed to purchasers of Offered Securities), unless
it obtains the prior consent of the Company and the Representatives, it has not
made and will not make any offer relating to the Offered Securities that would
constitute an Issuer Free Writing Prospectus, or that would otherwise constitute
a “free writing prospectus,” as defined in Rule 405, required to be filed
with the Commission. Any such free writing prospectus consented to by
the Company and the Representatives is hereinafter referred to as a “Permitted Free Writing
Prospectus.” The Company represents that it has treated and
agrees that it will treat each Permitted Free Writing Prospectus as an “issuer
free writing prospectus,” as defined in Rule 433, and has complied and will
comply with the requirements of Rule 433 applicable to any Permitted Free
Writing Prospectus, including timely Commission filing where required, legending
and record keeping.
7. Conditions of the Obligations of the
Underwriters. The obligations of the several Underwriters to
purchase and pay for the Offered Securities will be subject to the accuracy of
the representations and warranties on the part of the Company and each
Subsidiary Guarantor herein, to the accuracy of the statements of officers of
the Company and each Subsidiary Guarantor made pursuant to the provisions
hereof, to the performance by the Company and each Subsidiary Guarantor of its
obligations hereunder and to the following additional conditions
precedent:
(a) The
Representatives shall have received a letter (the “Initial Comfort Letter”),
dated on or prior to the date of this Agreement, of PricewaterhouseCoopers LLP
in form and substance satisfactory to the Representatives and
PricewaterhouseCoopers LLP, which comfort letter shall address, without
limitation, the various financial disclosures, if any, set forth in the
Registration Statement and the General Disclosure Package.
(b) The
Prospectus shall have been filed with the Commission in accordance with the Act
and Section 5(a) of this Agreement. No stop order suspending the
effectiveness of the Registration Statement or of any part thereof shall have
been issued and no proceedings for that purpose shall have been instituted or,
to the knowledge of the Company or any Underwriter, shall be contemplated by the
Commission.
(c) Subsequent
to the execution and delivery of this Agreement, there shall not have occurred
(i) any change, or any development or event involving a prospective change,
in the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as one enterprise which, in
the judgment of the Representatives, is material and adverse and makes it
impractical or inadvisable to proceed with completion of the public offering or
the sale of and payment for the Offered Securities; (ii) any downgrading in
the rating of any debt securities of the Company by any “nationally recognized
statistical rating organization” (as defined for purposes of Rule 436(g)
under the Act), or any public announcement that any such organization has under
surveillance or review its rating of any debt securities of the Company (other
than an announcement with positive implications of a possible upgrading, and no
implication of a possible downgrading, of such rating) or any announcement that
the Company has been placed on negative outlook; (iii) any change in U.S.
or international financial, political or economic conditions or currency
exchange rates or exchange controls as would, in the judgment of the
Representatives, be likely to prejudice materially the success of the proposed
issue, sale or distribution of the Offered Securities, whether in the primary
market or in respect of dealings in the secondary market; (iv) any material
suspension or material limitation of trading in securities generally on the New
York Stock Exchange, or any setting of minimum prices for trading on such
exchange, or any suspension of trading of any securities of the Company on any
exchange or in the over-the-counter market; (v) any banking moratorium
declared by U.S. Federal or New York authorities; (vi) any major disruption of
settlements of securities or clearance services in the United States; or
(vii) any attack on, outbreak or escalation of hostilities or acts of
terrorism involving the United States, any declaration of war by Congress or any
other national or international calamity or emergency if, in the judgment of the
Representatives, the effect of any such attack, outbreak, escalation, act,
declaration, calamity or emergency makes it impractical or inadvisable to
proceed with completion of the public offering or the sale of and payment for
the Offered Securities.
(d) The
Representatives shall have received an opinion, dated such Closing Date, of
Xxxxxxxxx & Xxxxxxxx LLP, counsel for the Company, that:
(i) The
Company has been duly incorporated and is an existing corporation in good
standing under the laws of the State of Oklahoma, with corporate power and
authority to own its properties and conduct its business as described in the
General Disclosure Package.
(ii) Each
subsidiary of the Company has been duly organized and is in good standing under
the laws of the jurisdiction of its organization, with power and authority
(corporate and other) to own its property and conduct its business as described
in the General Disclosure Package; except where the failure to be so qualified
would not reasonably be expected to individually or in the aggregate have a
Material Adverse Effect; and, to the best of such counsel’s knowledge after
reasonable investigation, the capital stock or similar equity interests of each
subsidiary owned by the Company, directly or through subsidiaries, is owned free
from liens, encumbrances and defects.
(iii) The
Indenture has been duly authorized, executed and delivered by the Company and
each Subsidiary Guarantor; the Guarantees have been duly authorized by each
Subsidiary Guarantor; the Offered Securities have been duly authorized; when the
Offered Securities are delivered and paid for pursuant to this Agreement on the
Closing Date, such Offered Securities will have been duly executed,
authenticated, issued and delivered and will conform to the description thereof
contained in the General Disclosure Package and the Indenture; and such Offered
Securities will constitute valid and legally binding obligations of the Company
and each Subsidiary Guarantor, enforceable in accordance with their terms,
subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors’ rights and to general equity principles;
(iv) The
Company is not and, after giving effect to the offering and sale of the Offered
Securities and the application of the proceeds thereof as described in the
General Disclosure Package, will not be an “investment company” as defined in
the Investment Company Act.
(v) No
consent, approval, authorization or order of, or filing with, any governmental
agency or body or any court is required for the consummation of the transactions
contemplated by this Agreement in connection with the issuance or sale of the
Offered Securities by the Company, except such as may be required under
applicable securities laws in connection with the purchase and resale of the
Offered Securities by the Underwriters.
(vi) None of
the execution, delivery and performance of this Agreement and the Indenture, the
issuance and sale of the Offered Securities and compliance with the terms and
provisions hereof will result in a breach or violation of any of the terms and
provisions of, or constitute a default under, (1) any statute, rule, regulation
or order of any governmental agency or body or any court having jurisdiction
over the Company or any subsidiary of the Company or any of their properties
which is, in the experience of such counsel, customarily applicable to
securities offerings or (2) any agreement or instrument filed or referenced as
an exhibit to the Company’s Annual Report on Form 10-K for the year ended
December 31, 2007, or to any report on Form 8-K or Form 10-Q filed since
December 31, 2007, to which the Company or any such subsidiary is party or
by which the Company or any such subsidiary is bound or to which any of the
properties of the Company or any such subsidiary is subject, or (3) the charter
or by-laws (or similar organizational documents) of the Company or any such
subsidiary, and the Company has full power and authority to authorize, issue and
sell the Offered Securities as contemplated by this Agreement except in the case of clause (2) for such breaches or
violations that would not have a Material Adverse Effect.
(vii) The
statements under the captions “Description of Notes” and “Material United States
Federal Income Tax Considerations” in the Prospectus, insofar as such statements
purport to describe or summarize the legal matters and documents therein, fairly
present in all material respects such legal matters and documents
(viii) Except as
disclosed in the General Disclosure Package, there are no pending actions, suits
or proceedings against or affecting the Company, any of its subsidiaries or any
of their respective properties that, if determined adversely to the Company or
any of its subsidiaries, would individually or in the aggregate have a Material
Adverse Effect, or would materially and adversely affect the ability of the
Company or any Subsidiary Guarantor to perform its obligations under this
Agreement or the Indenture, or which are otherwise material in the context of
the sale of the Offered Securities; and no such actions, suits or proceedings
are threatened or, to such counsel’s knowledge, contemplated.
(ix) This
Agreement has been duly authorized, executed and delivered by the Company and
each Subsidiary Guarantor.
(x) The
Registration Statement has become effective under the Act, the Prospectus was
filed with the Commission pursuant to the subparagraph of Rule 424(b) specified
in such opinion on the date specified therein in the manner and within the time
period required by Rule 424 and in compliance with Rule 430B, and, to the best
of the knowledge of such counsel, no stop order suspending the effectiveness of
the Registration Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or are pending or contemplated
under the Act, and the Registration Statement, as of its effective date and as
of the date of this Agreement, the Statutory Prospectus as of the Applicable
Time, and the Prospectus, as of its date and the Closing, and any amendment or
supplement thereto, as of its date, complied as to form in all material respects
with the requirements of the Act and the Rules and Regulations; the descriptions
in the Registration Statement and the Prospectus of statutes, legal and
governmental proceedings and contracts and other documents are accurate and
fairly present the information required to be shown; and such counsel do not
know of any legal or governmental proceedings required to be described in the
Prospectus which are not described as required or of any contracts or documents
of a character required to be described in the Registration Statement or
Prospectus or to be filed as exhibits to the Registration Statement which are
not described and filed as required.
It is
understood and agreed that certain of the opinions set forth in paragraphs (i),
(ii), (iii), (v) (with respect to conflicts with charters, by-laws or similar
organizational documents and with respect to certain of the documents filed as
exhibits to the filings described in such paragraph) and (viii) (with respect to
due authorization) may be given by the Commercial Law Group, P.C., and certain
opinions in paragraphs (viii) and (ix) may be given by Xxxxx Xxxx,
Esq.
In
addition, Xxxxxxxxx & Xxxxxxxx LLP shall state that they have participated
in conferences with officers and other representatives of the Company,
representatives of the independent public accountants of the Company, general
counsel of the Company, representatives of the Underwriters and counsel for the
Underwriters, at which conferences the Registration Statement and the Prospectus
were discussed. Such counsel shall further state that, although they have made
certain additional inquiries and investigations in connection with the
preparation of the Registration Statement and the Prospectus, they have not
verified, are not passing on and do not assume any responsibility for the
accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus or any documents incorporated by
reference therein, based on the participation described above in the course of
acting as counsel to the Company in this transaction, no information has come to
their attention that has caused such counsel to believe that (i) any part of the
Registration Statement, at the time such part became effective (other than the
financial statements and schedules and other financial and accounting data
(including the notes thereto and auditors’ report thereon) and the oil and gas
reserve data and related future net revenue data and exhibits, in each case
contained or incorporated by reference therein, as to which such counsel need
not express any comment or belief) contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) the General
Disclosure Package (other than the financial statements and schedules and other
financial and accounting data (including the notes thereto and auditors’ report
thereon) and the oil and gas reserve data and related future net revenue data
and exhibits, in each case contained or incorporated by reference therein, as to
which such counsel need not express any comment or belief), as of the Applicable
Time and as of the date of this Agreement, contained any untrue statement of a
material fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading, (iii) the Prospectus (other than the financial statements
and schedules and other financial and accounting data and the oil and gas
reserve data and related future net revenue data (including the notes thereto
and auditors’ report thereon) and exhibits, in each case contained or
incorporated by reference therein, as to which such counsel need not express any
comment or belief), as of its date and as of the Closing Date, contained an
untrue statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or (iv) any of the documents
incorporated by reference in the Registration Statement (other than the
financial statements and schedules and other financial and accounting data and
the oil and gas reserve data and related future net revenue data (including the
notes thereto and auditors’ report thereon) and exhibits , in each case
contained or incorporated by reference therein, as to which such counsel need
not express any comment or belief), at the time such Registration Statement
became effective or was filed with the Commission (or the time of filing of an
amendment, if so amended or deemed amended), as the case may be, did not comply
as to form in all material respects with the requirements of the Act or Exchange
Act, as the case may be, and the Rules and Regulations.
(e) The
Representatives shall have received from Cravath, Swaine & Xxxxx LLP,
counsel for the Underwriters, such opinion or opinions, dated the Closing Date,
with respect to the incorporation of the Company, the validity of the Offered
Securities delivered on the Closing Date, the Registration Statement, the
Prospectus and other related matters as the Representatives may require, and the
Company shall have furnished to such counsel such documents as they request for
the purpose of enabling them to pass upon such matters. In rendering such
opinion, Cravath, Swaine & Xxxxx LLP may rely as to the incorporation of the
Company and all other matters governed by Oklahoma law upon the opinion of
Commercial Law Group, P.C. referred to above.
(f) The
Representatives shall have received a certificate, dated the Closing Date, of
the President or any Vice President and a principal financial or accounting
officer of the Company in which such officers, on behalf of the Company, shall
state that the representations and warranties of the Company in this Agreement
are true and correct, that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder at
or prior to the Closing Date, that no stop order suspending the effectiveness of
the Registration Statement or of any part thereof has been issued and no
proceedings for that purpose have been instituted or are contemplated by the
Commission and that, subsequent to the date of the most recent financial
statements included or incorporated by reference into the Registration Statement
and the General Disclosure Package, there has been no material adverse change,
nor any development or event involving a prospective material adverse change, in
the condition (financial or other), business, properties or results of
operations of the Company and its subsidiaries taken as a whole except as set
forth in or contemplated by the Registration Statement and the General
Disclosure Package or as described in such certificate.
(g) The
Representatives shall have received a letter (the “Bring-Down Comfort Letter”),
dated the Closing Date, of PricewaterhouseCoopers LLP (i)
confirming that they are independent public accountants with respect to the
Company and its subsidiaries within the meaning of the Act and the applicable
Rules and Regulations thereunder, (ii) stating, as of the date of the Bring-Down
Comfort Letter (or, with respect to matters involving changes or developments
since the respective dates as of which specified financial information is given
in the Registration Statement and the General Disclosure Package, as of a date
not more than three business days prior to the date of the Bring-Down Comfort
Letter), that the conclusions and findings of such accountants with respect to
the financial information and other matters covered by the Initial Comfort
Letter are accurate, (iii) confirming in all material respects the
conclusions and findings set forth in the Initial Comfort Letter and (iv)
otherwise in form and substance satisfactory in all respects to the
Representatives and PricewaterhouseCoopers LLP.
(h) The
Representatives shall have received (i) a copy of the certificate or articles of
incorporation, including all amendments thereto, of the Company, certified as of
a recent date by the Secretary of State of the State of Oklahoma, (ii) a
certificate of good standing for the Company, dated as of a recent date, from
such Secretary of State and (iii) a certificate, dated as of a recent date, of
the Secretary of State of each state in which the Company is qualified to do
business as a foreign corporation under the laws of such state.
(i) The
Representatives shall have received (i) a copy of the certificate or articles of
incorporation (or similar organizational document), including all amendments
thereto, of each of the Company’s subsidiaries, certified as of a recent date by
the Secretary of State of the state in which such subsidiary is organized, (ii)
a certificate of good standing for each of the Company’s subsidiaries, certified
as of a recent date by the Secretary of State of the state in which such
subsidiary is organized, and (iii) a certificate, dated as of a recent date, of
the Secretary of State of each state in which each such subsidiary is qualified
to do business as a foreign corporation (or similar entity) under the laws of
each such state.
The
Company will furnish the Representatives with such conformed copies of such
opinions, certificates, letters and documents as the Representatives reasonably
request. The Representatives may in their sole discretion waive on
behalf of the Underwriters compliance with any conditions to the obligations of
the Underwriters hereunder.
8. Indemnification and
Contribution. (a) Each of the Company and the
Subsidiary Guarantors, jointly and severally, will indemnify and hold harmless
each Underwriter, its partners, members, directors and officers and each person,
if any, who controls such Underwriter within the meaning of Section 15 of
the Act, against any losses, claims, damages or liabilities, joint or several,
to which such Underwriter may become subject, under the Act or 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 any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement, each Statutory Prospectus, the Prospectus, any Issuer Free Writing
Prospectus or any amendment or supplement thereto, any related preliminary
prospectus or preliminary prospectus supplement, or any “issuer information”
filed or required to be filed pursuant to Rule 433(d) under the Act or
arise out of or are based upon the omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such loss, claim, damage, liability or
action as such expenses are incurred; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement in or omission or alleged omission from any of such
documents in reliance upon and in conformity with written information furnished
to the Company by any Underwriter through the Representatives specifically for
use therein, it being understood and agreed that the only such information
furnished by the Underwriters consists of the information described as such in
subsection (b) below.
(b) Each
Underwriter will severally and not jointly indemnify and hold harmless the
Company, its directors and officers and each person, if any, who controls the
Company within the meaning of Section 15 of the Act, against any losses,
claims, damages or liabilities to which the Company may become subject, under
the Act or 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 any untrue statement or alleged untrue statement of any material fact
contained in the Registration Statement, each Statutory Prospectus, the
Prospectus, any Issuer Free Writing Prospectus or any amendment or supplement
thereto, or any related preliminary prospectus or preliminary prospectus
supplement, or arise out of or are based upon the omission or the alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information furnished to the Company by such Underwriter
through the Representatives specifically for use therein, and will reimburse any
legal or other expenses reasonably incurred by the Company in connection with
investigating or defending any such loss, claim, damage, liability or action as
such expenses are incurred, it being understood and agreed that the only such
information furnished by the Underwriters consists of the following information
in the Prospectus: paragraphs 5, 6 and 7 under the caption
“Underwriting”.
(c) Without
limitation and in addition to their obligation under the other subsections of
this Section 8, each of the Company and the Subsidiary Guarantors jointly and
severally will indemnify and hold harmless Credit Suisse Securities (USA) LLC
(the qualified independent underwriter, the “QIU”), its partners, members,
directors and officers and each person, if any, who controls the QIU within the
meaning of Section 15 of the Act against any losses, claims, damages or
liabilities, joint or several, to which the QIU may become subject under the Act
or 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 the
QIU’s acting as a “qualified independent underwriter” (within the meaning of
Rule 2720 to the NASD’s Conduct Rules) in connection with the offering
contemplated by this Agreement, and agree to reimburse each such indemnified
party for any legal or other expense reasonably incurred by them in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided that the
Company shall not be liable in any such case to the extent that any such loss,
claim, damage or liability results from the gross negligence or willful
misconduct of the QIU.
(d) Promptly
after receipt by an indemnified party under this Section of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against the indemnifying party under subsection (a), (b)
or (c) above, notify the indemnifying party in writing of the commencement
thereof; but the failure to notify the indemnifying party will not relieve it
from any liability which it may have under subsection (a), (b) or (c) above
except to the extent that it has been materially prejudiced (through the
forfeiture of substantive rights or defenses) by such failure; provided that the
failure to notify the indemnifying party shall not relieve it from any liability
that it may have to any indemnified party otherwise than under subsection (a),
(b) or (c) 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 satisfactory to such indemnified
party (who shall not, except with the consent of the indemnified party, be
counsel to the indemnifying party), and after notice from the indemnifying party
to such indemnified party of its election so to assume the defense thereof, the
indemnifying party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred by such
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, if such
indemnified party shall have been advised by counsel that there are one or more
defenses available to it that are in conflict with those available to the
indemnifying party (in which case the indemnifying party shall not have the
right to direct the defense of such action on behalf of the indemnified party),
the reasonable fees and expenses of such indemnified party’s counsel shall be
borne by the indemnifying party. In no event shall the indemnifying
party be liable for the fees and expenses of more than one counsel (together
with appropriate local counsel) at any time for any indemnified party in
connection with any one action or separate but substantially similar or related
actions arising in the same jurisdiction out of the same general allegations or
circumstances. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement of any pending or
threatened action in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party unless such settlement includes an unconditional release of such
indemnified party from all liability on any claims that are the subject matter
of such action and does not include a statement as to or an admission of fault,
culpability or failure to act by or on behalf of any indemnified
party.
(e) If the
indemnification provided for in this Section is unavailable or insufficient to
hold harmless an indemnified party under subsection (a), (b) or (c) above, then
each indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of the losses, claims, damages or liabilities
referred to in subsection (a), (b) or (c) above (i) in such proportion as
is appropriate to reflect the relative benefits received by the Company, on the
one hand, and the Underwriters or the QIU, as the case may be, on the other from
the offering of the Offered Securities or (ii) if the allocation provided
by clause (i) above is not permitted by applicable law, in such proportion
as is appropriate to reflect not only the relative benefits referred to in
clause (i) above but also the relative fault of the Company, on the one
hand, and the Underwriters or the QIU, as the case may be, on the other in
connection with the statements or omissions, in the case of clauses (a) and
(b), or actions, in the case of clause (c), which resulted in such losses,
claims, damages or liabilities as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and the Underwriters or the QIU, as the case may be, on the other shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters or the total
legal or other expense reimbursements received by the QIU, as the case may be,
in each case, from the Company under this Agreement. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the
Underwriters and the parties’ relative intent, knowledge, access to information
and opportunity to correct or prevent such untrue statement or omission. The
amount paid by an indemnified party as a result of the losses, claims, damages
or liabilities referred to in the first sentence of this subsection (e) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any action or
claim which is the subject of this subsection (e). Notwithstanding the
provisions of this subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Offered Securities underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such Underwriter
has otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters’ obligations in this subsection
(e) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The
obligations of the Company under this Section shall be in addition to any
liability which the Company may otherwise have and shall extend, upon the same
terms and conditions, to each person, if any, who controls an Underwriter or the
QIU, as the case may be, within the meaning of the Act or the Exchange Act; and
the obligations of the Underwriters, and the QIU, as the case may be, under this
Section shall be in addition to any liability which the Underwriters or the QIU,
as the case may be, may otherwise have and shall extend, upon the same terms and
conditions, to each director of the Company, to each officer of the Company who
has signed the Registration Statement and to each person, if any, who controls
the Company within the meaning of the Act or the Exchange Act.
9. Default of
Underwriters. If any Underwriter or Underwriters default in
their obligations to purchase Offered Securities hereunder the aggregate
principal amount of Offered Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase does not exceed 10% of the total
principal amount of Offered Securities, the Representatives may make
arrangements satisfactory to the Company for the purchase of such Offered
Securities by other persons, including any of the Underwriters, but if no such
arrangements are made by the Closing Date, the non-defaulting Underwriters shall
be obligated severally, in proportion to their respective commitments hereunder,
to purchase the Offered Securities that such defaulting Underwriters agreed but
failed to purchase. If any Underwriter or Underwriters so default and the
aggregate principal amount of Offered Securities with respect to which such
default or defaults occur exceeds 10% of the total principal amount of Offered
Securities and arrangements satisfactory to the Representatives and the Company
for the purchase of such Offered Securities by other persons are not made within
36 hours after such default, this Agreement will terminate without liability on
the part of any non-defaulting Underwriter or the Company, except as provided in
Section 10. As used in this Agreement, the term “Underwriter” includes any
person substituted for an Underwriter under this Section. Nothing herein will
relieve a defaulting Underwriter from liability for its default.
10. Survival of Certain Representations
and Obligations. The respective indemnities, agreements,
representations, warranties and other statements of the Company or its officers
and of the several Underwriters set forth in or made pursuant to this Agreement
will remain in full force and effect, regardless of any investigation, or
statement as to the results thereof, made by or on behalf of any Underwriter,
the Company or any of their respective representatives, officers or directors or
any controlling person, and will survive delivery of and payment for the Offered
Securities. If this Agreement is terminated pursuant to Section 9 or if for
any reason the purchase of the Offered Securities by the Underwriters is not
consummated, the Company shall remain responsible for the expenses to be paid or
reimbursed by it pursuant to Section 5 and the respective obligations of the
Company and the Underwriters pursuant to Section 8 shall remain in effect,
and if any Offered Securities have been purchased hereunder the representations
and warranties in Section 2 and all obligations under Section 5 shall also
remain in effect. If the purchase of the Offered Securities by the Underwriters
is not consummated for any reason other than solely because of the termination
of this Agreement pursuant to Section 9 or the occurrence of any event
specified in clause (iii), (iv) (other than any suspension of trading of any
securities of the Company on any exchange or in the over-the-counter market),
(v), (vi) or (vii) of Section 7(c), the Company will reimburse the
Underwriters for all out-of-pocket expenses (including fees and disbursements of
counsel) reasonably incurred by them in connection with the offering of the
Offered Securities.
11. Research
Independence. In addition, the Company acknowledges that the
Underwriters’ research analysts and research departments are required to be
independent from their respective investment banking divisions and are subject
to certain regulations and internal policies, and that the Underwriters’
research analysts may hold and make statements or investment recommendations
and/or publish research reports with respect to the Company and/or the offering
that differ from the views of their investment bankers. The Company
hereby waives and releases, to the fullest extent permitted by law, any claims
that the Company may have against the Underwriters with respect to any conflict
of interest that may arise from the fact that the views expressed by the
Underwriters’ independent research analysts and research departments may be
different from or inconsistent with the views or advice communicated to the
Company by the Underwriters’ investment banking divisions. The
Company acknowledges that the Underwriters are full service securities firms and
as such from time to time, subject to applicable securities laws, may effect
transactions for their own accounts or the accounts of their customers and hold
long or short positions in debt or equity securities of the companies that may
be the subject of the transactions contemplated by this Agreement.
12. No Fiduciary
Duty. The Company acknowledges and agrees that in connection
with this offering, the sale of the Offered Securities or any other services the
Underwriters may be deemed to be providing hereunder, notwithstanding any
preexisting relationship, advisory or otherwise, between the parties or any oral
representations or assurances previously or subsequently made by the
Underwriters: (i) no fiduciary or agency relationship between the Company and
any other person, on the one hand, and the Underwriters, on the other, exists;
(ii) the Underwriters are not acting as advisors, expert or otherwise, to the
Company, including, without limitation, with respect to the determination of the
public offering price of the Offered Securities, and such relationship between
the Company, on the one hand, and the Underwriters, on the other, is entirely
and solely commercial, based on arm’s-length negotiations; (iii) any duties and
obligations that the Underwriters may have to the Company shall be limited to
those duties and obligations specifically stated herein; and (iv) the
Underwriters and their respective affiliates may have interests that differ from
those of the Company. The Company hereby waives any claims that the
Company may have against the Underwriters with respect to any breach of
fiduciary duty in connection with the offering.
13. Notices. All communications
hereunder will be in writing and, if sent to the Underwriters, will be mailed,
delivered or telegraphed and confirmed to the Underwriters, at Credit Suisse
Securities (USA) LLC, Eleven Xxxxxxx Xxxxxx, Xxx Xxxx, XX 00000,
Attention: Xxxx Xxxxxxx or, if sent to the Company, will be mailed,
delivered or telegraphed and confirmed to it at Chesapeake Energy Corporation,
0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxxxxx Xxxx, Xxxxxxxx 00000,
Attention: Corporate Secretary; provided, however, that any notice to
an Underwriter pursuant to Section 8 will be mailed, delivered or
telegraphed and confirmed to such Underwriter.
14. Successors. This
Agreement will inure to the benefit of and be binding upon the parties hereto
and their respective successors and the officers and directors and controlling
persons referred to in Section 8, and no other person will have any right
or obligation hereunder.
15. Representation of
Underwriters. The Representatives will act for the several
Underwriters in connection with this financing, and any action under this
Agreement taken by the Representatives will be binding upon all the
Underwriters.
16. Counterparts. This
Agreement may be executed in any number of counterparts, each of which shall be
deemed to be an original, but all such counterparts shall together constitute
one and the same Agreement.
17. Applicable
Law. This Agreement shall be governed by, and construed in
accordance with, the laws of the State of New York without regard to principles
of conflicts of laws. The Company hereby submits to the non-exclusive
jurisdiction of the Federal and state courts in the Borough of Manhattan in The
City of New York in any suit or proceeding arising out of or relating to this
Agreement or the transactions contemplated hereby.
Each of the Underwriters and the
Company (on its behalf and, to the extent permitted by applicable law, on behalf
of its stockholders and affiliates) waives all right to trial by jury in any
action, proceeding or counterclaim (whether based upon contract, tort or
otherwise) in any way arising out of or relating to this Agreement.
If the
foregoing is in accordance with the Representatives’ understanding of our
agreement, kindly sign and return to us one of the counterparts hereof,
whereupon it will become a binding agreement between the Company and each
Subsidiary Guarantor and the Underwriters in accordance with its
terms.
Very
truly yours,
|
CHESAPEAKE
ENERGY CORPORATION,
|
||
|
By:
|
/s/ Xxxxxxxx X. Xxxxxxx | |
| Name: Xxxxxxxx X. Xxxxxxx | ||
| Title: Senior Vice President, Treasurer and Corporate Secretary | ||
|
SUBSIDIARY
GUARANTORS:
ARKANSAS
MIDSTREAM GAS SERVICES CORP.,
CHESAPEAKE
ENERGY LOUISIANA CORPORATION,
CHESAPEAKE
ENERGY MARKETING, INC.,
CHESAPEAKE
OPERATING, INC.,
DIAMOND
Y ENTERPRISE, INCORPORATED,
XXXX
X. XXXX & SON, INC.,
BLUESTEM
GAS SERVICES, L.L.C.,
XXXXXX
ACQUISITION, L.L.C.,
CHESAPEAKE
APPALACHIA, L.L.C.,
CHESAPEAKE
LAND COMPANY, L.L.C.,
CHESAPEAKE
EXPLORATION, L.L.C.,
CHESAPEAKE
ROYALTY, L.L.C.,
CHK
HOLDINGS, L.L.C.,
GOTHIC
PRODUCTION, L.L.C.,
XXXXXX
TRUCKING COMPANY, L.L.C.,
MC
MINERAL COMPANY, L.L.C.,
MIDCON
COMPRESSION, L.L.C.,
TEXAS
MIDSTREAM GAS SERVICES, L.L.C.,
NOMAC
DRILLING, L.L.C.,
|
|
HAWG
HAULING & DISPOSAL, LLC,
|
||
|
By: Diamond
Y Enterprise, Incorporated, its Sole Member
|
||
|
CHESAPEAKE
LOUISIANA, L.P.,
|
||
|
By: Chesapeake
Operating, Inc., its General Partner
|
||
|
By:
|
/s/ Xxxxxxxx X. Xxxxxxx | |
| Name: Xxxxxxxx X. Xxxxxxx | ||
| Title: Senior Vice President, Treasurer and Corporate Secretary | ||
The
foregoing Underwriting Agreement is hereby confirmed and accepted
as of the
date first above written.
CREDIT
SUISSE SECURITIES (USA) LLC
BANC OF
AMERICA SECURITIES LLC
DEUTSCHE
BANK SECURITIES INC
XXXXXX
BROTHERS INC
GREENWICH
CAPITAL MARKETS, INC
Acting on
behalf of themselves
and
as the Representatives of
the
several Underwriters.
| BY: CREDIT SUISSE SECURITIES (USA) LLC, | ||
|
By:
|
/s/ Xxxxx Xxxxxxx | |
| Name: Xxxxx Xxxxxxx | ||
| Title: Director | ||
| BY: BANC OF AMERICA SECURITIES LLC, | ||
|
By:
|
/s/ Xxx Xxxxxxxx | |
| Name: Xxx Xxxxxxxx | ||
| Title: Managing Director | ||
| BY: DEUTSCHE BANK SECURITIES INC, | ||
|
By:
|
/s/ Xxxxx X. Xxxxxx | |
| Name: Xxxxx X. Xxxxxx | ||
| Title: Managing Director | ||
| BY: XXXXXX BROTHERS INC, | ||
|
By:
|
/s/ Xxxx X. Xxxxx | |
| Name: Xxxx X. Xxxxx | ||
| Title: Managing Director | ||
|
BY: GREENWICH
CAPITAL MARKETS, INC,
|
||
|
By:
|
/s/ Xxxxxxx X. Xxxxxxx XX | |
| Name: Xxxxxxx X. Xxxxxxx XX | ||
| Title: Managing Director | ||
SCHEDULE
A
|
Underwriter
|
Principal Amount of
Offered Securities
|
|
Credit
Suisse Securities (USA) LLC
|
$200,000,000
|
|
Banc
of America Securities LLC
|
$89,001,000
|
|
Deutsche
Bank Securities Inc.
|
$89,001,000
|
|
Xxxxxx
Brothers Inc.
|
$89,001,000
|
|
Greenwich
Capital Markets, Inc.
|
$89,001,000
|
|
Barclays
Capital Inc.
|
$24,000,000
|
|
Comerica
Securities, Inc.
|
$24,000,000
|
|
Xxxxxxx,
Sachs & Co.
|
$24,000,000
|
|
X.X.
Xxxxxx Securities Inc.
|
$24,000,000
|
|
Xxxxxx
Xxxxxxx & Co. Incorporated
|
$24,000,000
|
|
UBS
Securities LLC
|
$24,000,000
|
|
Wachovia
Capital Markets, LLC
|
$24,000,000
|
|
Xxxxx
Fargo Securities, LLC
|
$24,000,000
|
|
BBVA
Securities, Inc.
|
$4,333,000
|
|
BMO
Capital Markets Corp.
|
$4,333,000
|
|
BNP
Paribas Securities Corp.
|
$4,333,000
|
|
BOSC,
Inc.
|
$4,333,000
|
|
Calyon
Securities (USA) Inc.
|
$4,333,000
|
|
Fortis
Securities LLC
|
$4,333,000
|
|
Natixis
Bleichroeder Inc.
|
$4,333,000
|
|
Scotia
Capital (USA) Inc.
|
$4,333,000
|
|
SunTrust
Xxxxxxxx Xxxxxxxx, Inc.
|
$4,333,000
|
|
TD
Securities (USA) LLC
|
$4,333,000
|
|
UMB
Financial Services, Inc.
|
$4,333,000
|
|
Wedbush
Xxxxxx Securities Inc.
|
$4,333,000
|
|
Total
|
$800,000,000
|
SCHEDULE
B
The
Pricing Term Sheet attached as Schedule C hereto.
SCHEDULE
C
Filed
Pursuant to Rule 433
Registration
No. 333-151010
Pricing
Term Sheet
May 20,
2008
Chesapeake
Energy Corporation
$800,000,000
aggregate principal amount of 7.25% Senior Notes due 2018
The
following information supplements the Preliminary Prospectus Supplement, dated
May 19, 2008, filed pursuant to Rule 424, Registration Statement No.
333-151010.
|
Title
of securities:
|
7.25%
Senior Notes due 0000
|
|
Xxxxxxxxx
principal amount offered:
|
$800,000,000
principal amount
|
|
Principal
amount per note:
|
$1,000
|
|
Price
to public:
|
100%
of principal amount
|
|
Net
proceeds to Chesapeake Energy Corporation, after underwriters’ discount,
but before other offering expenses:
|
$787,000,000
|
|
Use
of proceeds:
|
We
intend to use the net proceeds from this offering, together with the net
proceeds from our pending public offering of Contingent Convertible Notes,
to fund the redemption of our 7.75% Senior Notes due 2015, to temporarily
repay indebtedness outstanding under our revolving bank credit facility
and for general corporate purposes
|
|
Concurrent
Offering:
|
On
May 19, 2008, we commenced a separate public offering of $500 million in
aggregate principal amount of Contingent Convertible Notes due
2038. The aggregate principal amount of Contingent Convertible
Notes due 2038 offered in the separate offering is being increased to up
to $1.2 billion, plus an overallotment option. The additional
proceeds from any such increase will be applied to temporarily repay
additional indebtedness outstanding under our revolving bank credit
facility. Neither this offering, nor the offering of Contingent
Convertible Notes, is contingent on the other
|
|
Underwriters’
discount:
|
1.625%
|
|
Estimated
expenses of notes offering:
|
$250,000
|
|
Annual
interest rate:
|
7.25%
per annum
|
|
Interest
payment dates:
|
June 15
and December 15 of each year, commencing December 15,
2008
|
|
Record
dates:
|
June 1
and December 1
|
|
Maturity:
|
December 15,
2018
|
|
Make-whole
redemption:
|
At
any time prior to the maturity date at Treasury Rate plus 50 basis
points
|
|
Ranking:
|
Senior
unsecured
|
|
Joint
Book-Running Managers
|
Credit
Suisse Securities (USA) LLC, Banc of America Securities LLC, Deutsche Bank
Securities Inc., Xxxxxx Brothers Inc. and Greenwich Capital Markets,
Inc.
|
|
Senior
Co-Managers
|
Barclays
Capital Inc., Comerica Securities, Inc., Xxxxxxx, Sachs & Co., X.X.
Xxxxxx Securities Inc., Xxxxxx Xxxxxxx & Co. Incorporated, UBS
Securities LLC, Wachovia Capital Markets, LLC and Xxxxx Fargo Securities,
LLC
|
|
Co-Managers
|
BBVA
Securities, Inc., BMO Capital Markets Corp., BNP Paribas Securities Corp.,
BOSC, Inc., Calyon Securities (USA) Inc., Fortis Securities LLC, Natixis
Bleichroeder Inc., Scotia Capital (USA) Inc., SunTrust Xxxxxxxx Xxxxxxxx,
Inc., TD Securities (USA) LLC, UMB Financial Services, Inc. and Wedbush
Xxxxxx Securities Inc.
|
|
Trade
date:
|
May 20,
2008
|
|
Settlement
date:
|
May 27,
2008 (T+4)
|
|
CUSIP:
|
165167
CC9
|
The
issuer has filed a registration statement (including a prospectus) with the SEC
for the offering to which this communication relates. Before you
invest, you should read the prospectus in that registration statement and other
documents the issuer has filed with the SEC for more complete information about
the issuer and this offering. You may get these documents for free by
visiting XXXXX on the SEC Web site at xxx.xxx.xxx. Alternatively, the
issuer, any underwriter or any dealer participating in the offering will arrange
to send you the prospectus if you request it by calling toll free
1-800-221-1037.
