EXHIBIT 1.1
3,500,000 Shares of Common Stock
QUICKSILVER RESOURCES INC.
UNDERWRITING AGREEMENT
August 20, 2003
BEAR, XXXXXXX & CO. INC.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies/Gentlemen:
Quicksilver Resources Inc., a corporation organized and existing under the
laws of Delaware (the "Company"), proposes, subject to the terms and conditions
stated herein, to issue and sell to Bear Xxxxxxx & Co. Inc. (the "Underwriter")
an aggregate of 3,500,000 shares (the "Firm Shares") of its common stock, par
value $.01 per share (the "Common Stock") and Mercury Exploration Company, a
Texas corporation (the "Selling Stockholder") proposes, subject to the terms and
conditions stated herein, for the sole purpose of covering over-allotments in
connection with the sale of the Firm Shares, at the option of the Underwriter,
to sell up to an additional 525,000 shares (the "Additional Shares") of Common
Stock. The Firm Shares and any Additional Shares purchased by the Underwriter
are referred to herein as the "Shares". The Shares are more fully described in
the Registration Statement and Prospectus referred to below.
1. Representations and Warranties of the Company. The Company represents
and warrants to, and agrees with, the Underwriter that:
(a) The Company has filed with the Securities and Exchange Commission (the
"Commission") two registration statements on Form S-3 (No. 333-89204 and No.
333-92196), and amendments thereto, and related preliminary prospectuses for the
registration under the Securities Act of 1933, as amended (the "Securities
Act"), of the Shares which registration statements, as so amended (including
post-effective amendments, if any), have been declared effective by the
Commission and copies of which have heretofore been delivered to the
Underwriter. The registration statements, as amended at the time they each
became effective, including the prospectus, financial statements, schedules,
exhibits and other information (if any) deemed to be part of each such
registration statement at the time of effectiveness pursuant to Rule 430A or
434(d) under the Securities Act, are hereinafter referred to collectively as the
"Registration Statement." If the Company has filed or is required pursuant to
the terms hereof to file a registration statement pursuant to Rule 462(b) under
the Securities Act registering additional shares of Common Stock (a "Rule 462(b)
Registration Statement"), then, unless otherwise specified, any reference herein
to the term "Registration Statement" shall be deemed to include such Rule 462(b)
Registration Statement. Other than a Rule 462(b) Registration Statement, which,
if filed, becomes effective upon filing and a Rule 424(b) Prospectus filed in
November 2002, no other document with respect to the Registration Statement has
heretofore been filed with the Commission. All of the Shares have been
registered under the Securities Act pursuant to the Registration Statement or,
if any Rule 462(b) Registration Statement is filed, will be duly registered
under the Securities Act with the filing of such Rule 462(b) Registration
Statement. No stop order suspending the effectiveness of either the Registration
Statement or the Rule 462(b) Registration Statement, if any, has been issued and
no proceeding for that purpose has been initiated or threatened by the
Commission. The Company, if required by the Securities Act and the rules and
regulations of the Commission (the "Rules and Regulations"), proposes to file
the Prospectus (as defined below) with the Commission pursuant to Rule 424(b)
under the Securities Act ("Rule 424(b)"). The prospectus, in the form in which
it is to be filed with the Commission pursuant to Rule 424(b), or, if the
prospectus is not to be filed with the Commission pursuant to Rule 424(b), the
prospectus in the form included as part of the Registration Statement at the
time the Registration Statement became effective, is hereinafter referred to as
the "Prospectus," except that if any revised prospectus or prospectus supplement
shall be provided to the Underwriter by the Company for use in connection with
the Offering which differs from the Prospectus (whether or
not such revised prospectus or prospectus supplement is required to be filed by
the Company pursuant to Rule 424(b)), the term "Prospectus" shall also refer to
such revised prospectus or prospectus supplement, as the case may be, from and
after the time it is first provided to the Underwriter for such use. Any
preliminary prospectus or prospectus subject to completion included in the
Registration Statement or filed with the Commission pursuant to Rule 424 under
the Securities Act is hereafter called a "Preliminary Prospectus." Any reference
herein to the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 which were filed under the
Exchange Act (as defined below) on or before the effective date of the
Registration Statement, the date of such Preliminary Prospectus or the date of
the Prospectus, as the case may be, and any reference herein to the terms
"amend", "amendment" or "supplement" with respect to the Registration Statement,
any Preliminary Prospectus or the Prospectus shall be deemed to refer to and
include (i) the filing of any document under the Exchange Act after the
effective date of the Registration Statement, the date of such Preliminary
Prospectus or the date of the Prospectus, as the case may be, which is
incorporated therein by reference and (ii) any such document so filed. All
references in this Agreement to the Registration Statement, the Rule 462(b)
Registration Statement, a Preliminary Prospectus and the Prospectus, or any
amendments or supplements to any of the foregoing shall be deemed to include any
copy thereof filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System ("XXXXX").
(b) At the time of the effectiveness of the Registration Statement or any
Rule 462(b) Registration Statement or the effectiveness of any post-effective
amendment to the Registration Statement, when the Prospectus is first filed with
the Commission pursuant to Rule 424(b) or Rule 434 under the Securities Act
("Rule 434"), when any supplement to or amendment of the Prospectus is filed
with the Commission, when any document filed under the Exchange Act was or is
filed and at the Closing Date and the Additional Closing Date, if any (as
hereinafter respectively defined), the Registration Statement and the Prospectus
and any amendments thereof and supplements thereto complied or will comply in
all material respects with the applicable provisions of the Securities Act, the
Exchange Act (as defined below) and the Rules and Regulations and did not and
will not contain an untrue statement of a material fact and did not and will not
omit to state any material fact required to be stated therein or necessary in
order to make the statements therein (i) in the case of the Registration
Statement, not misleading and (ii) in the case of the Prospectus or any related
Preliminary Prospectus in light of the circumstances under which they were made,
not misleading. When any Preliminary Prospectus was first filed with the
Commission (whether filed as part of the registration statement for the
registration of the Shares or any amendment thereto or pursuant to Rule 424(a)
under the Securities Act) and when any amendment thereof or supplement thereto
was first filed with the Commission, such Preliminary Prospectus and any
amendments thereof and supplements thereto complied in all material respects
with the applicable provisions of the Securities Act, the Exchange Act and the
Rules and Regulations and did not contain an untrue statement of a material fact
and did not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein, in light of the circumstances
under which they were made, not misleading. If Rule 434 is used, the Company
will comply with the requirements of Rule 434 and the Prospectus shall not be
"materially different," as such term is used in Rule 434, from the Prospectus
included in the Registration Statement at the time it became effective. No
representation and warranty is made in this subsection (b), however, with
respect to any information contained in or omitted from the Registration
Statement or the Prospectus or any related Preliminary Prospectus or any
amendment thereof or supplement thereto in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of the
Underwriter specifically for use therein. The parties acknowledge and agree that
such information provided by or on behalf of the Underwriter consists solely of
the material included in paragraphs 2, 10, 11 and 12 under the caption
"Underwriting" in the Prospectus.
(c) Deloitte & Touche, L.L.P, who have certified the financial statements
and supporting schedules and information of the Company and its subsidiaries
that are included or incorporated by reference in the Registration Statement,
are independent public accountants as required by the Securities Act, the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the Rules
and Regulations.
(d) Subsequent to the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as disclosed in the
Registration Statement and the Prospectus, the Company has not declared, paid or
made any dividends or other distributions of any kind on or in respect of its
capital stock and there has been no material adverse change or any development
involving a prospective material adverse change, whether or not arising from
transactions in the ordinary course of business, in or affecting (i) the
business, condition (financial or otherwise), results of operations,
stockholders' equity, properties or prospects of the Company and each subsidiary
of the Company listed on Exhibit A hereto (the "Subsidiaries"), individually or
taken as a whole; (ii) the long-term debt or capital stock of the Company or any
of its Subsidiaries; or (iii) the Offering or consummation of any of the other
transactions contemplated by this Agreement, the Registration Statement or the
Prospectus (a "Material Adverse Change"). Since the date of the latest balance
sheet presented, or incorporated by reference, in the Registration Statement and
the Prospectus, neither the Company nor any Subsidiary has incurred or
undertaken any liabilities or obligations, whether direct or indirect,
liquidated or contingent, matured or unmatured, or entered into any
transactions, including any acquisition or disposition of any business or asset,
which are material to the Company and the Subsidiaries individually or taken as
a whole, except for liabilities, obligations and transactions which are
disclosed in the Registration Statement and the Prospectus.
(e) The authorized, issued and outstanding capital stock of the Company is
as set forth in the Prospectus in the column headed "Actual" under the caption
"Capitalization" and, after giving effect to the Offering and the other
transactions contemplated by this Agreement, the Registration Statement and the
Prospectus, will be as set forth in the column headed "As Adjusted" under the
caption "Capitalization". All of the issued and outstanding shares of capital
stock of the Company are fully paid and non-assessable and have been duly and
validly authorized and issued, in compliance with all applicable state, federal
and foreign securities laws and not in violation of or subject to any preemptive
or similar right that does or will entitle any person, upon the issuance or sale
of any security, to acquire from the Company or any Subsidiary any Common Stock
or other security of the Company or any Subsidiary or any security convertible
into, or exercisable or exchangeable for, Common Stock or any other such
security (any "Relevant Security"), except for such rights as may have been
fully satisfied or waived prior to the effectiveness of the Registration
Statement.
(f) The Firm Shares have been duly and validly authorized and, when
delivered in accordance with this Agreement, will be duly and validly issued,
fully paid and non-assessable, will have been issued in compliance with all
applicable state, federal and foreign securities laws and will not have been
issued in violation of or subject to any preemptive or similar right that does
or will entitle any person to acquire any Relevant Security from the Company or
any Subsidiary upon issuance or sale of Firm Shares in the Offering. The Common
Stock and the Shares conform to the descriptions thereof contained in the
Registration Statement and the Prospectus. Except as disclosed in the
Registration Statement and the Prospectus, neither the Company nor any
Subsidiary has outstanding warrants, options to purchase, or any preemptive
rights or other rights to subscribe for or to purchase, or any contracts or
commitments to issue or sell, any Relevant Security.
(g) The Subsidiaries are the only subsidiaries of the Company within the
meaning of Rule 405 under the Securities Act. Except for the Subsidiaries and as
otherwise disclosed in the Registration Statement and the Prospectus, the
Company holds no ownership or other interest, nominal or beneficial, direct or
indirect, in any corporation, partnership, joint venture or other business
entity. Except as disclosed in the Registration Statement and the Prospectus,
all of the issued shares of capital stock of or other ownership interests in
each Subsidiary have been duly and validly authorized and issued and are fully
paid and non-assessable and are owned directly or indirectly by the Company free
and clear of any lien, charge, mortgage, pledge, security interest, claim,
equity, trust or other encumbrance, preferential arrangement, defect or
restriction of any kind whatsoever (any "Lien").
(h) Each of the Company and the Subsidiaries has been duly organized and
validly exists as a corporation, partnership or limited liability company in
good standing under the laws of its jurisdiction of organization. Each of the
Company and the Subsidiaries has all requisite power and authority to carry on
its business as it is currently being conducted and as described in the
Prospectus, and to own, lease and operate its respective properties. Each of the
Company and the Subsidiaries is duly qualified to do business and is in good
standing as a foreign corporation, partnership or limited liability company in
each jurisdiction in which the character or location of its properties (owned,
leased or licensed) or the nature or conduct of its business makes such
qualification necessary, except for those failures to be so qualified or in good
standing which (individually and in the aggregate) could not reasonably be
expected to have a material adverse effect on (i) the business, condition
(financial or otherwise), results of operations, stockholders' equity,
properties or prospects of the Company and the Subsidiaries, individually or
taken as a whole; (ii) the long-term debt or capital stock of the Company or any
Subsidiary; or (iii) the Offering or consummation of any of the other
transactions contemplated by this Agreement, the Registration Statement or the
Prospectus (any such effect being a "Material Adverse Effect").
(i) Each of the Company and the Subsidiaries has all necessary consents,
approvals, authorizations, orders, registrations, qualifications, licenses,
filings and permits of, with and from all judicial, regulatory and other legal
or governmental agencies and bodies and all third parties, foreign and domestic
(collectively, the "Consents"), to own, lease and operate its properties and
conduct its business as it is now being conducted and as disclosed in the
Registration Statement and the Prospectus, and each such Consent is valid and in
full force and effect, and neither the Company nor any Subsidiary has received
notice of any investigation or proceedings which results in or, if decided
adversely to the Company or any Subsidiary, could reasonably be expected to
result in, the revocation of, or imposition of a materially burdensome
restriction on, any Consent. Each of the Company and the Subsidiaries is in
compliance with all applicable laws, rules, regulations, ordinances, directives,
judgments, decrees and orders, foreign and domestic, except where failure to be
in compliance could not reasonably be expected to have a Material Adverse
Effect. No Consent contains a materially burdensome restriction not adequately
disclosed in the Registration Statement and the Prospectus.
(j) The Company has full right, power and authority to execute and deliver
this Agreement, to perform its obligations hereunder and to consummate the
transactions contemplated by this Agreement, the Registration Statement and the
Prospectus. This Agreement and the transactions contemplated by this Agreement,
the Registration Statement and the Prospectus have been duly and validly
authorized by the Company. This Agreement has been duly and validly executed and
delivered by the Company and constitutes the legal, valid and binding obligation
of the Company, enforceable in accordance with its terms, except as
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
(k) The execution, delivery, and performance of this Agreement and
consummation of the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus do not and will not (i) conflict with,
require consent under or result in a breach of any of the terms and provisions
of, or constitute a default (or an event which with notice or lapse of time, or
both, would constitute a default) under, or result in the creation or imposition
of any lien, charge or encumbrance upon any property or assets of the Company or
any Subsidiary pursuant to, any indenture, mortgage, deed of trust, loan
agreement or other agreement, instrument, franchise, license or permit to which
the Company or any Subsidiary is a party or by which the Company or any
Subsidiary or their respective properties, operations or assets may be bound or
(ii) violate or conflict with any provision of the certificate or articles of
incorporation, by-laws, certificate of formation, limited liability company
agreement, partnership agreement or other organizational documents of the
Company or any Subsidiary, or (iii) violate or conflict with any law, rule,
regulation, ordinance, directive, judgment, decree or order of any judicial,
regulatory or other legal or governmental agency or body, domestic or foreign,
except (in the case of clauses (i) and (iii) above) as could not reasonably be
expected to have a Material Adverse Effect.
(l) No Consent of, with or from any judicial, regulatory or other legal or
governmental agency or body or any third party, foreign or domestic, is required
for the execution, delivery and performance of this Agreement or consummation of
the transactions contemplated by this Agreement, the Registration Statement and
the Prospectus, including the issuance, sale and delivery of the Shares to be
issued, sold and delivered hereunder, except the registration under the
Securities Act of the Shares, which has become effective, and such Consents as
may be required under state securities or blue sky laws or the by-laws and rules
of the National Association of Securities Dealers, Inc. (the "NASD") or NASD
Regulation, Inc. ("NASDR") in connection with the purchase and distribution of
the Shares by the Underwriter, each of which has been obtained and is in full
force and effect.
(m) Except as disclosed in the Registration Statement and the Prospectus,
there is no judicial, regulatory, arbitral or other legal or governmental
proceeding or other litigation or arbitration, domestic or foreign, pending to
which the Company or any Subsidiary is a party or of which any property,
operations or assets of the Company or any Subsidiary is the subject which,
individually or in the aggregate, if determined adversely to the Company or any
Subsidiary, could reasonably be expected to have a Material Adverse Effect; to
the best of the Company's knowledge, no such proceeding, litigation or
arbitration is threatened or contemplated; and the defense of all such
proceedings, litigation and arbitration against or involving the Company or any
Subsidiary could not reasonably be expected to have a Material Adverse Effect.
(n) The financial statements and pro forma data, including the notes
thereto, and the supporting schedules included or incorporated by reference in
the Registration Statement and the Prospectus present fairly the financial
position as of the dates indicated and the cash flows and results of operations
for the periods specified of the Company and its consolidated subsidiaries and
the other entities for which financial statements are included or incorporated
by reference in the Registration Statement and the Prospectus; except as
otherwise stated in the Registration Statement and the Prospectus, said
financial statements have been prepared in conformity with United States
generally accepted accounting principles applied on a consistent basis
throughout the periods involved; and the supporting schedules included or
incorporated by reference in the Registration Statement and the Prospectus
present fairly the information required to be stated therein. No other financial
statements or supporting schedules are required to be included in the
Registration Statement. The other financial and statistical information included
or incorporated by reference in the Registration Statement and the Prospectus
present fairly the information included therein and have been prepared on a
basis consistent with that of the financial statements that are included or
incorporated by reference in the Registration Statement and the Prospectus and
the books and records of the respective entities presented therein.
(o) There are no pro forma or as adjusted financial statements which are
required to be included or incorporated by reference in the Registration
Statement and the Prospectus in accordance with Regulation S-X which have not
been included as so required.
(p) The statistical, industry-related and market-related data included in
the Registration Statement and the Prospectus are based on or derived from
sources which the Company reasonably and in good faith believes are reliable and
accurate, and such data agree with the sources from which they are derived.
(q) The Company is subject to the reporting requirements of Section 13 or
15(d) of the Exchange Act and files reports with the Commission on the XXXXX
System. The Common Stock is registered pursuant to Section 12(b) of the Exchange
Act and the outstanding shares of Common Stock (other than the Shares) are
listed on the NYSE (as defined in Section 10(b) below) and the Company has taken
no action designed to, or likely to have the effect of, terminating the
registration of the Common Stock under the Exchange Act or de-listing the Common
Stock from the NYSE, nor has the Company received any notification that the
Commission or the NYSE is contemplating terminating such registration or
listing.
(r) The Company and the Subsidiaries maintain a system of internal
accounting and other controls sufficient to provide reasonable assurances that
(i) transactions are executed in accordance with management's general or
specific authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with United States generally
accepted accounting principles and to maintain accountability for assets, (iii)
access to assets is permitted only in accordance with management's general or
specific authorization, and (iv) the recorded accounting for assets is compared
with existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(s) Neither the Company nor any of its affiliates (within the meaning of
Rule 144 under the Securities Act) has taken, directly or indirectly, any action
which constitutes or is designed to cause or result in, or which could
reasonably be expected to constitute, cause or result in, the stabilization or
manipulation of the price of any security to facilitate the sale or resale of
the Shares.
(t) Neither Company nor any of its affiliates has, prior to the date
hereof, made any offer or sale of any securities which could be "integrated" for
purposes of the Securities Act or the Rules and Regulations with the offer and
sale of the Shares pursuant to the Registration Statement. Except as disclosed
in the Registration Statement and the Prospectus, neither Company nor any of its
affiliates has sold or issued any Relevant Security during the six-month period
preceding the date of the Prospectus, including but not limited to any sales
pursuant to Rule 144A or Regulation D or S under the Securities Act, other than
shares of Common Stock issued pursuant to employee benefit plans, qualified
stock option plans or the employee compensation plans or pursuant to outstanding
options, rights or warrants as described in the Registration Statement and the
Prospectus.
(u) Except as disclosed in the Registration Statement and the Prospectus,
no holder of any Relevant Security has any rights to require registration of any
Relevant Security as part or on account of, or
otherwise in connection with, the offer and sale of the Shares contemplated
hereby, and any such rights so disclosed have either been fully complied with by
the Company or effectively waived by the holders thereof, and any such waivers
remain in full force and effect.
(v) The conditions for use of Form S-3 to register the Offering under the
Securities Act, as set forth in the General Instructions to such Form, have been
satisfied.
(w) The documents incorporated or deemed to be incorporated by reference in
the Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the Securities Act, the Exchange Act and the Rules and
Regulations, and, when read together with the other information in the
Prospectus, do 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.
(x) The Company is not and, at all times up to and including consummation
of the transactions contemplated by this Agreement, the Registration Statement
and the Prospectus, and after giving effect to application of the net proceeds
of the Offering, will not be, subject to registration as an "investment company"
under the Investment Company Act of 1940, as amended, and is not and will not be
an entity "controlled" by an "investment company" within the meaning of such
act.
(y) The Company is not and, at all times up to and including consummation
of the transactions contemplated by this Agreement, the Registration Statement
and the Prospectus, and after giving effect to application of the net proceeds
of the Offering, will not be, subject to regulation as a "public utility" as
such term is defined under the Public Utility Holding Company Act, as amended.
(z) There are no contracts or other documents (including, without
limitation, any voting agreement), which are required to be described in the
Registration Statement and the Prospectus or filed as exhibits to the
Registration Statement by the Securities Act, the Exchange Act or the Rules and
Regulations and which have not been so described or filed.
(aa) No relationship, direct or indirect, exists between or among any of
the Company or any affiliate of the Company, on the one hand, and any director,
officer, stockholder, customer or supplier of the Company or any affiliate of
the Company, on the other hand, which is required by the Securities Act the
Exchange Act or the Rules and Regulations to be described in the Registration
Statement or the Prospectus which is not so described and described as required.
There are no outstanding loans, advances (except normal advances for business
expenses in the ordinary course of business) or guarantees of indebtedness by
the Company to or for the benefit of any of the officers or directors of the
Company or any of their respective family members, except as disclosed in the
Registration Statement and the Prospectus. The Company has not, in violation of
the Xxxxxxxx-Xxxxx Act, directly or indirectly, including through a Subsidiary,
extended or maintained credit, arranged for the extension of credit, or renewed
an extension of credit, in the form of a personal loan to or for any director or
executive officer of the Company.
(bb) Except as disclosed in the Registration Statement and the Prospectus,
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 the
Underwriter for a brokerage commission, finder's fee or other like payment in
connection with the transactions contemplated by this Agreement, the
Registration Statement and the Prospectus or, to the Company's knowledge, any
arrangements, agreements, understandings, payments or issuance with respect to
the Company or any of its officers, directors, shareholders, partners,
employees, Subsidiaries or affiliates that may affect the Underwriter's
compensation as determined by the NASD.
(cc) The Company and each Subsidiary (i) owns or possesses adequate right
to use all patents, patent applications, trademarks, service marks, trade names,
trademark registrations, service xxxx registrations, copyrights, licenses,
formulae, customer lists, and know-how and other intellectual property
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential information, systems or procedures, "Intellectual Property")
necessary for the conduct of their respective businesses as being conducted and
as described in the Registration Statement and Prospectus and (ii) have no
reason to believe that the conduct of their
respective businesses does or will conflict with, and have not received any
notice of any claim of conflict with, any such right of others. To the best of
the Company's knowledge, all material technical information developed by and
belonging to the Company or any Subsidiary which has not been patented has been
kept confidential. Neither the Company nor any Subsidiary has granted or
assigned to any other person or entity any right to manufacture, have
manufactured, assemble or sell the current products and services of the Company
and its Subsidiaries or those products and services described in the
Registration Statement and Prospectus. There is no infringement by third parties
of any such Intellectual Property; there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others challenging
the Company's or any Subsidiary's rights in or to any such Intellectual
Property, and the Company is unaware of any facts which would form a reasonable
basis for any such claim; and there is no pending or, to the Company's
knowledge, threatened action, suit, proceeding or claim by others that the
Company or any Subsidiary infringes or otherwise violates any patent, trademark,
copyright, trade secret or other proprietary rights of others, and the Company
is unaware of any other fact which would form a reasonable basis for any such
claim.
(dd) The Company and the Subsidiaries maintain insurance in such amounts
and covering such risks as the Company reasonably considers adequate for the
conduct of its business and the value of its properties and as is customary for
companies engaged in similar businesses in similar industries, all of which
insurance is in full force and effect, except where the failure to maintain such
insurance could not reasonably be expected to have a Material Adverse Effect.
There are no material claims by the Company or any Subsidiary under any such
policy or instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause. The Company reasonably believes
that it will be able to renew its existing insurance as and when such coverage
expires or will be able to obtain replacement insurance adequate for the conduct
of the business and the value of its properties at a cost that could not
reasonably be expected to have a Material Adverse Effect.
(ee) The Company has in effect insurance covering the Company, its
directors, officers and the Underwriter for liabilities or losses arising in
connection with this Offering, including, without limitation, liabilities or
losses arising under the Securities Act, the Exchange Act, the Rules and
Regulations and applicable foreign securities laws.
(ff) Each of the Company and the Subsidiaries has accurately prepared and
timely filed all federal, state, foreign and other tax returns that are required
to be filed by it and has paid or made provision for the payment of all taxes,
assessments, governmental or other similar charges, including without
limitation, all sales and use taxes and all taxes which the Company or any
Subsidiary is obligated to withhold from amounts owing to employees, creditors
and third parties, with respect to the periods covered by such tax returns
(whether or not such amounts are shown as due on any tax return). No deficiency
assessment with respect to a proposed adjustment of the Company's or any
Subsidiary' federal, state, local or foreign taxes is pending or, to the best of
the Company's knowledge, threatened. The accruals and reserves on the books and
records of the Company and the Subsidiaries in respect of tax liabilities for
any taxable period not finally determined are adequate to meet any assessments
and related liabilities for any such period and, since December 31, 2002, the
Company and the Subsidiaries have not incurred any liability for taxes other
than in the ordinary course of its business. There is no tax lien, whether
imposed by any federal, state, foreign or other taxing authority, outstanding
against the assets, properties or business of the Company or any Subsidiary.
(gg) No labor disturbance by the employees of the Company or any Subsidiary
exists or, to the best of the Company's knowledge, is imminent and the Company
is not aware of any existing or imminent labor disturbances by the employees of
any of its or any Subsidiary's principal suppliers, manufacturers', customers or
contractors, which, in either case (individually or in the aggregate), could
reasonably be expected to have a Material Adverse Effect.
(hh) No "prohibited transaction" (as defined in either Section 406 of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA") or Section 4975
of the Internal Revenue Code of 1986, as amended from time to time (the
"Code")), "accumulated funding deficiency" (as defined in Section 302 of ERISA)
or other event of the kind described in Section 4043(b) of ERISA (other than
events with respect to which the 30-day notice requirement under Section 4043 of
ERISA has been waived) has occurred with respect to any employee benefit plan
for which the
Company or any Subsidiary would have any liability which could (individually or
in the aggregate) reasonably be expected to have a Material Adverse Effect; each
employee benefit plan for which the Company or any Subsidiary would have any
liability is in compliance in all material respects with applicable law,
including (without limitation) ERISA and the Code; the Company has not incurred
and does not expect to incur liability under Title IV of ERISA with respect to
the termination of, or withdrawal from any "pension plan"; and each plan for
which the Company would have any liability that is intended to be qualified
under Section 401(a) of the Code is so qualified and nothing has occurred,
whether by action or by failure to act, which could cause the loss of such
qualification.
(ii) There has been no storage, generation, transportation, handling,
treatment, disposal, discharge, emission or other release of any kind of toxic
or other wastes or other hazardous substances by, due to, or caused by the
Company or any Subsidiary (or, to the Company's knowledge, any other entity for
whose acts or omissions the Company is or may be liable) upon any other property
now or previously owned or leased by the Company or any Subsidiary, or upon any
other property, which would be a violation of or give rise to any liability
under any applicable law, rule, regulation, order, judgment, decree or permit
relating to pollution or protection of human health and the environment
("Environmental Law"), except for violations and liabilities which, individually
or in the aggregate, could not reasonably be expected to have a Material Adverse
Effect. There has been no disposal discharge, emission or other release of any
kind onto such property or into the environment surrounding such property of any
toxic or other wastes or other hazardous substances with respect to which the
Company or any Subsidiary has knowledge, except as could not, individually or in
the aggregate, reasonably be expected to have a Material Adverse Effect. Neither
the Company nor any Subsidiary has agreed to assume, undertake or provide
indemnification for any liability of any other person under any Environmental
Law, including any obligation for cleanup or remedial action , except as could
not, individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect. There is no pending or, to the best of the Company's knowledge,
threatened administrative, regulatory or judicial action, claim or notice of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any Subsidiary.
(jj) Neither the Company, any Subsidiary nor, to the Company's knowledge,
any of its employees or agents has at any time during the last five years (i)
made any unlawful contribution to any candidate for foreign office, or failed to
disclose fully any contribution in violation of law, or (ii) made any payment to
any federal or state governmental officer or official, or other person charged
with similar public or quasi-public duties, other than payments required or
permitted by the laws of the United States of any jurisdiction thereof.
(kk) Neither the Company nor any Subsidiary (i) is in violation of its
certificate or articles of incorporation, by-laws, certificate of formation,
limited liability company agreement, partnership agreement or other
organizational documents, (ii) is in default under, and no event has occurred
which, with notice or lapse of time or both, would constitute a default under or
result in the creation or imposition of any lien, charge or encumbrance upon any
of its property or assets pursuant to, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which it is a party or by
which it is bound or to which any of its property or assets is subject or (iii)
is in violation in any respect of any law, rule, regulation, ordinance,
directive, judgment, decree or order of any judicial, regulatory or other legal
or governmental agency or body, foreign or domestic, except (in the case clauses
(ii) and (iii) above) violations or defaults that could not (individually or in
the aggregate) reasonably be expected to have a Material Adverse Effect and
except (in the case of clause (ii) alone) for any lien, charge or encumbrance
disclosed in the Registration Statement and the Prospectus.
(ll) Except as described in the Prospectus, as of the date hereof, each of
the Company and its Subsidiaries has (A) generally satisfactory or good and
indefeasible title to all its interests in its oil and gas properties, title
investigations having been carried out by or on behalf of such person in
accordance with good practice in the oil and gas industry in the areas in which
the Company and its subsidiaries operate and (B) good and indefeasible title to
all other real property and other material properties and assets described in
the Prospectus as owned by the Company or such subsidiary and valid, subsisting
and enforceable leases for all of the properties and assets, real or personal,
described in the Prospectus as leased by them, in each case free and clear of
any security interests, mortgages, pledges, liens, encumbrances or charges of
any kind, other than those described in the Prospectus and those that could not,
individually or in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(mm) Except as described in the Prospectus, as of the date hereof, (A) all
royalties, rentals, deposits and other amounts due on the oil and gas properties
of the Company and each of its subsidiaries have
been properly and timely paid, and no proceeds from the sale or production
attributable to the oil and gas properties of the Company and its subsidiaries
are currently being held in suspense by any purchaser thereof, except where such
amounts due could not, singly or in the aggregate, have a Material Adverse
Effect and (B) there are no claims under take-or-pay contracts pursuant to which
natural gas purchasers have any make-up rights affecting the interest of the
Company or its subsidiaries in its oil and gas properties, except where such
claims could not, individually or in the aggregate, reasonably be expected to
have a Material Adverse Effect.
(nn) As of the date of this Agreement, the aggregate undiscounted monetary
liability of the Company and its subsidiaries for petroleum taken or received
under any operating or gas balancing and storage agreement relating to its oil
and gas properties that permits any person to receive cash or other payments to
balance any disproportionate allocation of petroleum could not, individually or
in the aggregate, reasonably be expected to have a Material Adverse Effect.
(oo) Holditch-Reservoir Technologies Consulting Services, whose report is
referenced in the Prospectus, was, as of the date of such report, and is, as of
the date hereof, an independent petroleum engineer with respect to the Company.
(pp) Netherland, Xxxxxx & Associates, Inc, whose report is referenced in
the Prospectus, was, as of the date of such report, and is, as of the date
hereof, an independent petroleum engineer with respect to the Company.
(qq) The Company is in compliance with applicable provisions of the
Xxxxxxxx-Xxxxx Act that are effective and is actively taking steps to ensure
that it will be in compliance with other applicable provisions of the
Xxxxxxxx-Xxxxx Act upon the effectiveness of such provisions.
(rr) The Company has established and maintains "disclosure controls and
procedures" (as defined in Rules 13a-14(c) and 15d-14(c) of the Exchange Act);
the Company's "disclosure controls and procedures" are reasonably designed to
ensure that all information (both financial and non-financial) required to be
disclosed by the Company in the reports that it files or submits under the
Exchange Act is recorded, processed, summarized and reported within the time
periods specified in the Rules and Regulations, and that all such information is
accumulated and communicated to the Company's management as appropriate to allow
timely decisions regarding required disclosure and to make the certifications of
the Chief Executive Officer and Chief Financial Officer of the Company required
under the Exchange Act with respect to such reports.
(ss) Since the date of the filing of the Company's Annual Report on Form
10-K for the year ended December 31, 2002, the Company's auditors and the audit
committee of the board of directors of the Company (or persons fulfilling the
equivalent function) have not been advised of (i) 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 nor
any material weaknesses in internal controls; (ii) any fraud, whether or not
material, that involves management or other employees who have a significant
role in the Company's internal controls.
(tt) Since the date of the filing of the Company's Annual Report on Form
10-K for the year ended December 31, 2002, 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.
(uu) The section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operation - Critical Accounting Policies" in
the Registration Statement and the Prospectus accurately and fully describes (i)
accounting policies which the Company believes are the most important in the
portrayal of the financial condition and results of operations of the Company
and its consolidated subsidiaries and which require management's most difficult,
subjective or complex judgments ("critical accounting policies"); (ii) judgments
and uncertainties affecting the application of critical accounting policies; and
(iii) explanation of the likelihood that materially different amounts would be
reported under different conditions or using different assumptions.
(vv) The Company's board of directors, senior management and audit
committee have reviewed and agreed with the selection, application and
disclosure of critical accounting policies and have consulted with their legal
advisers and independent accountants with regard to such disclosure.
(ww) The section entitled "Management's Discussion and Analysis of
Financial Condition and Results of Operations - Liquidity and Capital Resources"
in the Registration Statement and the Prospectus accurately and fully describes
(i) all material trends, demands, commitments, events, uncertainties and risks,
and the potential effects thereof, that the Company believes would materially
affect liquidity and are reasonably likely to occur; and (ii) all off-balance
sheet arrangements that have or are reasonably likely to have a current or
future effect on the financial condition, changes in financial condition,
revenues or expenses, results of operations, liquidity, capital expenditures or
capital resources of the Company and the Subsidiaries taken as a whole.
(xx) Except as disclosed in the Registration and the Prospectus, there are
no outstanding guarantees or other contingent obligations of the Company or any
Subsidiary that could reasonably be expected to have a Material Adverse Effect.
Any certificate signed by or on behalf of the Company and delivered to the
Underwriter or to counsel for the Underwriter shall be deemed to be a
representation and warranty by the Company to the Underwriter as to the matters
covered thereby.
2. Representations and Warranties of the Selling Stockholder. The Selling
Stockholder represents and warrants to, and agrees with, the Underwriter that:
(a) This Agreement has been duly and validly authorized, executed and
delivered by or on behalf of the Selling Stockholder and is a valid and binding
agreement of the Selling Stockholder, enforceable against it in accordance with
its terms, except as enforcement hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws relating to or
affecting the rights and remedies of creditors or by general equitable
principles.
(b) The Selling Stockholder is the lawful owner of the Additional Shares
proposed to be sold by the Selling Stockholder hereunder and upon sale and
delivery of, and payment for, such Additional Shares as provided herein, the
Selling Stockholder will convey to the Underwriter good and marketable title to
such Additional Shares, free and clear of all liens, charges, encumbrances,
equities, claims and security interests whatsoever.
(c) The Selling Stockholder has good and valid title to all of the
Additional Shares which may be sold by such Selling Stockholder pursuant to this
Agreement and the legal right and power and capacity, and all authorizations and
approvals required by law to enter into this Agreement to sell, transfer and
deliver all of the Additional Shares which may be sold by the Selling
Stockholder pursuant to this Agreement and to comply with its other obligations
hereunder.
(d) No consent, approval, authorization or order of any court or
governmental agency or body is required for the execution, delivery and
performance by the Selling Stockholder of this Agreement and the consummation by
the Selling Stockholder of the transactions contemplated herein, except (i) such
as may have been obtained under the Securities Act, (ii) such as may be required
under the state securities laws or the blue sky laws or any jurisdiction in
connection with the purchase and distribution of the Shares by the Underwriters
and (iii) such other approvals as have been obtained.
(e) The execution, delivery and performance of this Agreement by the
Selling Stockholder and the consummation by the Selling Stockholder of the
transactions contemplated hereby or the fulfillment of the terms hereof by the
Selling Stockholder will not conflict with, result in a breach or violation of,
or constitute a default under any law or the terms of any indenture or other
agreement or instrument to which the Selling Stockholder is party or bound, or
to which any of the property or assets of the Selling Stockholder is subject,
nor will such actions result in any violation of the provisions of the charter
or bylaws or certificate of formation of the Selling Stockholder or, any
judgment, order or decree applicable to the Selling Stockholder or any court or
regulatory body, administrative agency, governmental body or arbitrator having
jurisdiction over the Selling Stockholder.
(f) The Selling Stockholder does not have any registration or other similar
rights to have any equity or debt securities registered for sale by the Company
under the Registration Statement or included in the offering of the Additional
Shares, except for such rights as have been waived or which are described in the
Registration Statement and the Prospectus or incorporated by reference therein.
(g) The Selling Stockholder does not own any warrants, options or similar
rights to acquire, and does not have any right or arrangement to acquire, any
capital stock, right, warrants, options or other securities from the Company,
other than those described in the Registration Statement and the Prospectus.
(h) All information furnished by or on behalf of the Selling Stockholder in
writing for use in the Registration Statement and Prospectus is true, correct,
and complete in all material respects and does not and will not contain any
untrue statement of a material fact; provided that this representation and
warranty is made only as to information contained in the Registration Statement
or the Prospectus under the caption "Selling Stockholder" and relating to the
Selling Stockholder.
(i) The Selling Stockholder has reviewed and is familiar with the
Registration Statement and the Prospectus and (i) has no knowledge of any
material adverse information with regard to the Company or the Subsidiaries
which is not disclosed in the Registration Statement and the Prospectus, and
(ii) is not prompted to sell the Additional Shares, if any, to be sold by the
Selling Stockholder by any information concerning the Company or any Subsidiary
which is not set forth in the Registration Statement and the Prospectus.
(j) The Selling Stockholder has not taken and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Shares.
(k) The Selling Stockholder has not distributed and will not distribute,
prior to the Closing Date, if any, and the completion of the Underwriter's
distribution of the Shares, any offering material in connection with the
offering and sale of the Shares by the Selling Stockholder other than a
Preliminary Prospectus, the Prospectus or the Registration Statement.
Any certificate signed by or on behalf of the Selling Stockholder and
delivered to the Underwriter or to counsel for the Underwriter shall be deemed
to be a representation and warranty by the Selling Stockholder to the
Underwriter as to the matters covered thereby.
3. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties, covenants and
agreements herein contained, but subject to the terms and conditions herein set
forth, the Company agrees to sell to the Underwriter and the Underwriter agrees
to purchase from the Company, at a purchase price per share of $22.65, the Firm
Shares.
(b) Payment of the purchase price for, and delivery of certificates
representing, the Firm Shares shall be made at the office of Xxxxxx & Xxxxxx,
L.L.P. , 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000 ("Underwriter's Counsel"),
or at such other place as shall be agreed upon by the Underwriter and the
Company, at 10:00 A.M., New York City time, on August 26, 2003 or such other
time not later than ten business days after such date as shall be agreed upon by
the Underwriter and the Company (such time and date of payment and delivery
being herein called the "Closing Date").
Payment of the purchase price for the Firm Shares shall be made by wire
transfer in same day funds to or as directed by the Company upon delivery of
certificates for the Firm Shares to the Underwriter through the facilities of
The Depository Trust Company for the account of the Underwriter. Certificates
for the Firm Shares shall be registered in such name or names and shall be in
such denominations as the Underwriter may request at
least two business days before the Closing Date. The Company will permit the
Underwriter to examine and package such certificates for delivery at least one
full business day prior to the Closing Date.
(c) In addition, on the basis of the representations, warranties, covenants
and agreements herein contained, but subject to the terms and conditions herein
set forth, the Selling Stockholder hereby grants to the Underwriter the option
to purchase up to 525,000 Additional Shares at the same purchase price per share
to be paid by the Underwriter for the Firm Shares as set forth in Section 2(a)
above, for the sole purpose of covering over-allotments in the sale of Firm
Shares by the Underwriter. This option may be exercised at any time, in whole or
in part, on one occasion, on or before the thirtieth day following the date of
the Prospectus, by written notice from the Underwriter to the Company and the
Selling Stockholder. Such notice shall set forth the aggregate number of
Additional Shares as to which the option is being exercised and the date and
time, as reasonably determined by the Underwriter, when the Additional Shares
are to be delivered (any such date and time being herein sometimes referred to
as the "Additional Closing Date"); provided, however, that no Additional Closing
Date shall occur earlier than the Closing Date or earlier than the second full
business day after the date on which the option shall have been exercised nor
later than the eighth full business day after the date on which the option shall
have been exercised.
(d) Payment of the purchase price for, and delivery of certificates
representing, the Additional Shares shall be made at the office of Underwriter's
Counsel, or at such other place as shall be agreed upon by the Underwriter and
the Selling Stockholder, at 10:00 A.M., New York City time, on the Additional
Closing Date, or such other time as shall be agreed upon by the Underwriter and
the Company.
Payment of the purchase price for the Additional Shares shall be made by
wire transfer in same day funds to or as directed by the Selling Stockholder
upon delivery of certificates for the Additional Shares to the Underwriter
through the facilities of The Depository Trust Company for the account of the
Underwriter. Certificates for the Additional Shares shall be registered in such
name or names and shall be in such denominations as the Underwriter may request
at least two business days before the Additional Closing Date. The Selling
Stockholder will permit the Underwriter to examine and package such certificates
for delivery at least one full business day prior to the Additional Closing
Date.
4. Offering. Upon authorization of the release of the Firm Shares by the
Underwriter, the Underwriter propose to offer the Shares for sale to the public
upon the terms and conditions set forth in the Prospectus.
5. Covenants of the Company. The Company covenants and agrees with the
Underwriter that:
(a) The Registration Statement and any amendments thereto have been
declared effective, and if Rule 430A is used or the filing of the Prospectus is
otherwise required under Rule 424(b) or Rule 434, the Company will file the
Prospectus (properly completed if Rule 430A has been used) pursuant to Rule
424(b) within the prescribed time period and will provide evidence satisfactory
to the Underwriter of such timely filing. If the Company elects to rely on Rule
434, the Company will prepare and file a term sheet that complies with the
requirements of Rule 434, and the Prospectus shall not be "materially different"
(as such term is used in Rule 434) from the Prospectus included in the
Registration Statement at the time it became effective.
The Company will notify you immediately (and, if requested by the
Underwriter, will confirm such notice in writing) (i) when the Registration
Statement and any amendments thereto become effective, (ii) of any request by
the Commission for any amendment of or supplement to the Registration Statement
or the Prospectus or for any additional information, (iii) of the Company's
intention to file or prepare any supplement or amendment to the Registration
Statement or the Prospectus, (iv) of the mailing or the delivery to the
Commission for filing of any amendment of or supplement to the Registration
Statement or the Prospectus, including but not limited to Rule 462(b) under the
Securities Act, (v) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or any post-effective
amendment thereto or of the initiation, or the threatening, of any proceedings
therefor, it being understood that the Company shall make every effort to avoid
the issuance of any such stop order, (vi) of the receipt of any comments from
the Commission, and (vii) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares for sale in any
jurisdiction or the initiation or threatening of any proceeding for that
purpose. If the Commission shall propose or enter a stop order at any time, the
Company will make every reasonable effort to prevent the issuance of any such
stop order and, if issued, to obtain the lifting of such order as soon as
possible. The Company will not file any amendment to the Registration Statement
or any amendment of or supplement to the Prospectus (including the prospectus
required to be filed pursuant to Rule 424(b) or Rule 434) that differs from the
prospectus on file at the time of the effectiveness of the Registration
Statement or file any document under the Exchange Act if such document would be
deemed to be incorporated by reference into the Prospectus to which the
Underwriter shall object in writing after being timely furnished in advance a
copy thereof. The Company will provide the Underwriter with copies of all such
amendments, filings and other documents a sufficient time prior to any filing or
other publication thereof to permit the Underwriter a reasonable opportunity to
review and comment thereon.
(b) The Company shall comply with the Securities Act and the Exchange Act
to permit completion of the distribution as contemplated in this Agreement, the
Registration Statement and the Prospectus. If at any time when a prospectus
relating to the Shares is required to be delivered under the Securities Act or
the Exchange Act in connection with the sales of Shares, any event shall have
occurred as a result of which the Prospectus as then amended or supplemented
would, in the judgment of the Underwriter or the Company, include an 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, in the light of the
circumstances existing at the time of delivery to the purchaser, not misleading,
or if to comply with the Securities Act, the Exchange Act or the Rules and
Regulations it shall be necessary at any time to amend or supplement the
Prospectus or Registration Statement, or to file any document incorporated by
reference in the Registration Statement or the Prospectus or in any amendment
thereof or supplement thereto, the Company will notify you promptly and prepare
and file with the Commission, subject to Section 5(a) hereof, an appropriate
amendment or supplement (in form and substance satisfactory to the Underwriter)
which will correct such statement or omission or which will effect such
compliance and will use its best efforts to have any amendment to the
Registration Statement declared effective as soon as possible.
(c) The Company will promptly deliver to each of you and Underwriter's
Counsel a signed copy of the Registration Statement, as initially filed and all
amendments thereto, including all consents and exhibits filed therewith, and
will maintain in the Company's files manually signed copies of such documents
for at least five years after the date of filing. The Company will promptly
deliver to the Underwriter such number of copies of any Preliminary Prospectus,
the Prospectus, the Registration Statement, all amendments of and supplements to
such documents, if any, and all documents incorporated by reference in the
Registration Statement and Prospectus or any amendment thereof or supplement
thereto, as you may reasonably request. Prior to 10:00 A.M., New York time, on
the business day next succeeding the date of this Agreement and from time to
time thereafter, the Company will furnish the Underwriter with copies of the
Prospectus in New York City in such quantities as you may reasonably request.
(d) The Company consents to the use and delivery of the Preliminary
Prospectus by the Underwriter in accordance with Rule 430 and Section 5(b) of
the Securities Act.
(e) The Company will use its best efforts, in cooperation with the
Underwriter, at or prior to the time of effectiveness of the Registration
Statement, to qualify the Shares for offering and sale under the securities laws
relating to the offering or sale of the Shares of such jurisdictions, domestic
or foreign, as the Underwriter may designate and to maintain such qualification
in effect for so long as required for the distribution thereof; except that in
no event shall the Company be obligated in connection therewith to qualify as a
foreign corporation or to execute a general consent to service of process.
(f) The Company will make generally available to its security holders and
to the Underwriter as soon as practicable, but in any event not later than
twelve months after the effective date of the Registration Statement (as defined
in Rule 158(c) under the Securities Act), an earnings statement of the Company
and the Subsidiaries (which need not be audited) complying with Section 11(a) of
the Securities Act and the Rules and Regulations (including, at the option of
the Company, Rule 158).
(g) During the period of 90 days from the date of the Prospectus, without
the prior written consent of the Underwriter the Company (i) will not, directly
or indirectly, issue, offer, sell, agree to issue, offer or sell, solicit offers
to purchase, grant any call option, warrant or other right to purchase, purchase
any put
option or other right to sell, pledge, borrow or otherwise dispose of any
Relevant Security, or make any announcement of any of the foregoing, (ii) will
not establish or increase any "put equivalent position" or liquidate or decrease
any "call equivalent position" (in each case within the meaning of Section 16 of
the Exchange Act and the rules and regulations promulgated thereunder) with
respect to any Relevant Security, and (iii) will not otherwise enter into any
swap, derivative or other transaction or arrangement that transfers to another,
in whole or in part, any economic consequence of ownership of a Relevant
Security, whether or not such transaction is to be settled by delivery of
Relevant Securities, other securities, cash or other consideration; and the
Company will obtain an undertaking in substantially the form of Annex IV hereto
of each of its executive officers and directors, the Selling Stockholder and
Quicksilver Energy, L.L.C. not to engage in any of the aforementioned
transactions on their own behalf, other than the sale of Shares as contemplated
by this Agreement and the Company's issuance of Common Stock upon (i) the
conversion or exchange of convertible or exchangeable securities outstanding on
the date hereof; (ii) the exercise of currently outstanding options; (iii) the
exercise of currently outstanding warrants; and (iv) the grant and exercise of
options under, or the issuance and sale of shares pursuant to, employee stock
option plans in effect on the date hereof, each as described in the Registration
Statement and the Prospectus. The Company will not file a registration statement
under the Securities Act in connection with any transaction by the Company or
any person that is prohibited pursuant to the foregoing, except for registration
statements on Form S-8 relating to employee benefit plans or Form S-4 relating
to corporate reorganizations or other transactions under Rule 145.
(h) During the period of five years from the effective date of the
Registration Statement, the Company will furnish to you copies of all reports or
other communications (financial or other) furnished to security holders or from
time to time published or publicly disseminated by the Company, and will deliver
to you (i) as soon as they are available, copies of any reports, financial
statements and proxy or information statements furnished to or filed with the
Commission or any national securities exchange on which any class of securities
of the Company is listed; and (ii) such additional information concerning the
business and financial condition of the Company as you may from time to time
reasonably request (such financial information to be on a consolidated basis to
the extent the accounts of the Company and the Subsidiaries are consolidated in
reports furnished to its security holders generally or to the Commission).
(i) The Company will apply the net proceeds from the sale of the Shares as
set forth under the caption "Use of Proceeds" in the Prospectus.
(j) The Company will use its best efforts to list the Shares on the NYSE
and maintain the listing of the Shares on the NYSE.
(k) The Company, during the period when the Prospectus is required to be
delivered under the Securities Act or the Exchange Act, will file all documents
required to be filed with the Commission pursuant to the Securities Act the
Exchange Act and the Rules and Regulations within the time periods required
thereby.
(l) The Company will use its best efforts to do and perform all things
required to be done or performed under this Agreement by the Company prior to
the Closing Date or the Additional Closing Date, as the case may be, and to
satisfy all conditions precedent to the delivery of the Firm Shares and the
Additional Shares.
(m) The Company will not take, and will cause its affiliates (within the
meaning of Rule 144 under the Securities Act) not to take, directly or
indirectly, any action which constitutes or is designed to cause or result in,
or which could reasonably be expected to constitute, cause or result in, the
stabilization or manipulation of the price of any security to facilitate the
sale or resale of the Shares.
6. Payment of Expenses. Whether or not the transactions contemplated by
this Agreement, the Registration Statement and the Prospectus are consummated or
this Agreement is terminated, the Company hereby agrees to pay all costs and
expenses incident to the performance of its obligations hereunder, including the
following: (i) all expenses in connection with the preparation, printing and
filing of the Registration Statement, any Preliminary Prospectus and the
Prospectus and any and all amendments and supplements thereto and the mailing
and delivering of copies thereof to the Underwriter and dealers; (ii) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Securities Act and
the Offering; (iii) the cost of producing this Agreement and any agreement among
Underwriter, blue sky survey, closing documents and other instruments,
agreements or documents (including any compilations thereof) in connection with
the Offering; (iv) all expenses in connection with the qualification of the
Shares for offering and sale under state or foreign securities or blue sky laws
as provided in Section 5(e) hereof, including the fees and disbursements of
counsel for the Underwriter in connection with such qualification and in
connection with any blue sky survey; (v) the filing fees incident to, and the
fees and disbursements of counsel for the Underwriter in connection with,
securing any required review by the NASD of the terms of the Offering; (vi) all
fees and expenses in connection with listing the Shares on the NYSE; (vii) all
travel expenses of the Company's officers and employees and any other expense of
the Company incurred in connection with attending or hosting meetings with
prospective purchasers of the Shares; and (viii) any stock transfer taxes
incurred in connection with this Agreement or the Offering. The Company also
will pay or cause to be paid: (x) the cost of preparing stock certificates
representing the Shares; (y) the cost and charges of any transfer agent or
registrar for the Shares; and (z) all other costs and expenses incident to the
performance of its obligations hereunder which are not otherwise specifically
provided for in this Section 6. It is understood, however, that except as
provided in this Section, and Sections 8, 9 and 11 hereof, the Underwriter will
pay all of its own costs and expenses, including the fees of its counsel and
stock transfer taxes on resale of any of the Shares by it. Notwithstanding
anything to the contrary in this Section 6, in the event that this Agreement is
terminated pursuant to Section 6 or 11(b) hereof, or subsequent to a Material
Adverse Change, the Company will pay all out-of pocket expenses of the
Underwriter (including but not limited to fees and disbursements of counsel to
the Underwriter) incurred in connection herewith.
7. Conditions of Underwriter's Obligations. The obligations of the
Underwriter to purchase and pay for the Firm Shares and the Additional Shares,
as provided herein, shall be subject to the accuracy of the representations and
warranties of the Company and the Selling Stockholder herein contained, as of
the date hereof and as of the Closing Date (for purposes of this Section 7
"Closing Date" shall refer to the Closing Date for the Firm Shares and any
Additional Closing Date, if different, for the Additional Shares), to the
absence from any certificates, opinions, written statements or letters furnished
to you or to Underwriter's Counsel pursuant to this Section 7 of any
misstatement or omission, to the performance by the Company of its obligations
hereunder, and to each of the following additional conditions:
(a) The Registration Statement shall have become effective and all
necessary regulatory or stock exchange approvals (with the exception of the
listing requirements addressed in Section 1(q)) shall have been received not
later than 5:30 P.M., New York time, on the date of this Agreement, or at such
later time and date as shall have been consented to in writing by the
Underwriter; if the Company shall have elected to rely upon Rule 430A or Rule
434 under the Securities Act, the Prospectus shall have been filed with the
Commission in a timely fashion in accordance with Section 5(a) hereof and a form
of the Prospectus containing information relating to the description of the
Shares and the method of distribution and similar matters shall have been filed
with the Commission pursuant to Rule 424(b) within the applicable time period;
and, at or prior to the Closing Date no stop order suspending the effectiveness
of the Registration Statement or any post-effective amendment thereof shall have
been issued and no proceedings therefor shall have been initiated or threatened
by the Commission.
(b) At the Closing Date you shall have received:
(i) An opinion, dated the Closing Date, of Xxxxxx & Hanger, L.L.P.,
counsel for the Company, substantially in the form set forth in
Annex I attached hereto.
(ii) An opinion, dated the Closing Date of XxXxxxxx Xxxxxxxx L.L.P,
Canadian counsel for the Company, substantially in the form set
forth in Annex II attached hereto.
(iii)An opinion, dated the Closing Date of Loomis, Ewert, Parsley,
Xxxxx & Gotting, P.C., Michigan counsel for the Company,
substantially in the form set forth in Annex III attached hereto.
(c) All proceedings taken in connection with the sale of the Firm Shares
and the Additional Shares as herein contemplated shall be satisfactory in form
and substance to the Underwriter and to Underwriter's Counsel, and the
Underwriter shall have received from Underwriter's Counsel a favorable written
opinion, dated as of the Closing Date, with respect to the issuance and sale of
the Shares, the Registration Statement and the Prospectus and such other related
matters as the Underwriter may require, and the Company shall have furnished to
Underwriter's Counsel such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(d) At the Closing Date you shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of the Company, dated the Closing
Date to the effect that (i) the condition set forth in subsection (a) of this
Section 7 has been satisfied, (ii) as of the date hereof and as of the Closing
Date, the representations and warranties of the Company set forth in Section 1
hereof are accurate, (iii) as of the Closing Date all agreements, conditions and
obligations of the Company to be performed or complied with hereunder on or
prior thereto have been duly performed or complied with, (iv) the Company and
the Subsidiaries have not sustained any material loss or interference with their
respective businesses or properties from fire, flood, hurricane, accident or
other calamity, whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding, (v) no stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereof has been issued and no proceedings therefor have been initiated or
threatened by the Commission, (vi) there are no pro forma or as adjusted
financial statements that are required to be included in the Registration
Statement and the Prospectus pursuant to the Rules and Regulations that have not
been included as required and (vii) subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus
there has not been any material adverse change or any development involving a
prospective material adverse change, whether or not arising from transactions in
the ordinary course of business, in or affecting (x) the business, condition
(financial or otherwise), results of operations, stockholders' equity,
properties or prospects of the Company and the Subsidiaries, individually or
taken as a whole; (y) the long-term debt or capital stock of the Company or any
of its Subsidiaries; or (z) the Offering or consummation of any of the other
transactions contemplated by this Agreement, the Registration Statement and the
Prospectus.
(e) At the Closing Date you shall have received a certificate of the Chief
Executive Officer and Chief Financial Officer of the Selling Stockholder, dated
the Closing Date to the effect that (i) as of the date hereof and as of the
Closing Date, the representations and warranties of the Selling Stockholder set
forth in Section 2 hereof are accurate, (ii) as of the Closing Date all
agreements, conditions and obligations of the Selling Stockholder to be
performed or complied with hereunder on or prior thereto have been duly
performed or complied with, and (iii) subsequent to the respective dates as of
which information is given in the Registration Statement and the Prospectus the
Selling Stockholder is not aware of any material adverse change or any
development involving a prospective material adverse change, whether or not
arising from transactions in the ordinary course of business, in or affecting
(x) the business, condition (financial or otherwise), results of operations,
stockholders' equity, properties or prospects of the Company and the
Subsidiaries, individually or taken as a whole; (y) the long-term debt or
capital stock of the Company or any of its Subsidiaries; or (z) the Offering or
consummation of any of the other transactions contemplated by this Agreement,
the Registration Statement and the Prospectus.
(f) At the Closing Date, you shall have received a comfort letter, from
Deloitte & Touche, L.L.P., independent public accountants for the Company, dated
as of the Closing Date addressed to the Underwriter and in form and substance
satisfactory to the Underwriter and Underwriter' Counsel.
(g) Subsequent to the execution and delivery of this Agreement or, if
earlier, the dates as of which information is given in the Registration
Statement (exclusive of any amendment thereof) and the Prospectus (exclusive of
any supplement thereto), there shall not have been any change in the capital
stock or long-term debt of the Company or any Subsidiary or any change or
development involving a change, whether or not arising from transactions in the
ordinary course of business, in the business, condition (financial or
otherwise), results of operations, stockholders' equity, properties or prospects
of the Company and the Subsidiaries, individually or taken as a whole, including
but not limited to the occurrence of any fire, flood, storm, explosion, accident
or other calamity at any of the properties owned or leased by the Company or any
of its Subsidiaries, the effect of which, in any such case described above, is,
in the judgment of the Underwriter, so material and adverse as to make it
impracticable or inadvisable to proceed with the Offering on the terms and in
the manner contemplated in the Prospectus (exclusive of any supplement).
(h) No downgrading shall have occurred in the Company's corporate credit
rating or the rating accorded the Company's debt securities or preferred stock
by any "nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Securities Act) and no such organization shall
have publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt securities.
(i) You shall have received a duly executed lock-up agreement from each
person who is a director or executive officer of the Company, the Selling
Stockholder and Quicksilver Energy, L.L.C., in each case substantially in the
form attached hereto as Annex IV.
(j) At the Closing Date, the Shares shall have been approved for listing on
the NYSE.
(k) No action shall have been taken and no statute, rule, regulation or
order shall have been enacted, adopted or issued by any federal, state or
foreign governmental or regulatory authority that would, as of the Closing Date,
prevent the issuance or sale of the Shares; and no injunction or order of any
federal, state or foreign court shall have been issued that would, as of the
Closing Date, prevent the issuance or sale of the Shares.
(l) The Company shall have furnished the Underwriter and Underwriter's
Counsel with such other certificates, opinions or other documents as they may
have reasonably requested.
If any of the conditions specified in this Section 7 shall not have been
fulfilled when and as required by this Agreement, or if any of the certificates,
opinions, written statements or letters furnished to you or to Underwriter's
Counsel pursuant to this Section 7 shall not be satisfactory in form and
substance to the Underwriter and to Underwriter's Counsel, all obligations of
the Underwriter hereunder may be cancelled by the Underwriter at, or at any time
prior to, the Closing Date and the obligations of the Underwriter to purchase
the Additional Shares may be cancelled by the Underwriter at, or at any time
prior to, the Additional Closing Date. Notice of such cancellation shall be
given to the Company in writing, or by telephone. Any such telephone notice
shall be confirmed promptly thereafter in writing.
8. Indemnification .
(a) The Company shall indemnify and hold harmless the Underwriter and each
person, if any, who controls the Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, against any and all
losses, liabilities, claims, damages and expenses whatsoever as incurred
(including but not limited to attorneys' fees and any and all expenses
whatsoever incurred in investigating, preparing or defending against any
litigation, commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or several, to
which they or any of them may become subject under the Securities Act, the
Exchange Act or otherwise, insofar as such losses, liabilities, claims, damages
or expenses (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of a material fact contained in
(A) the Registration Statement, as originally filed or any amendment thereof, or
any related Preliminary Prospectus or the Prospectus, or in any supplement
thereto or amendment thereof, or (B) in any materials or information provided to
investors by, or with the approval of, the Company in connection with the
marketing of the offering of the Shares, including any road show or investor
presentations made to investors by the Company (whether in person or
electronically) ("Marketing Materials"), or (ii) the omission or alleged
omission to state in the Registration Statement, as originally filed or any
amendment thereof, or any related Preliminary Prospectus or the Prospectus, or
in any supplement thereto or amendment thereof, or in any Marketing Materials, a
material fact required to be stated therein or necessary to make the statements
therein not misleading; provided, however, that the Company will not be liable
in any such case to the extent but only to the extent that any such loss,
liability, claim, damage or expense arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
the Registration Statement, as originally filed or any amendment thereof, or any
related Preliminary Prospectus or the Prospectus, or in any supplement thereto
or amendment thereof,
in reliance upon and in conformity with written information furnished to the
Company by or on behalf of the Underwriter expressly for use therein. The
parties agree that such information provided by or on behalf of the Underwriter
consists solely of the material referred to in the last sentence of Section 1(b)
hereof. This indemnity agreement will be in addition to any liability which the
Company may otherwise have, including but not limited to other liability under
this Agreement.
(b) The Underwriter shall indemnify and hold harmless the Company, each of
the directors of the Company, each of the officers of the Company who shall have
signed the Registration Statement, and each other person, if any, who controls
the Company within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, against any losses, liabilities, claims, damages and
expenses whatsoever as incurred (including but not limited to attorneys' fees
and any and all expenses whatsoever incurred in investigating, preparing or
defending against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become subject
under the Securities Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, as originally filed or
any amendment thereof, or any related Preliminary Prospectus or the Prospectus,
or in any amendment thereof or supplement thereto, 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,
in each case to the extent, but only to the extent, that any such loss,
liability, claim, damage or expense arises out of or is based upon any such
untrue statement or alleged untrue statement or omission or alleged omission
made therein in reliance upon and in conformity with information furnished in
writing to the Company by or on behalf of the Underwriter specifically for use
therein; provided, however, that in no case shall the Underwriter be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Shares to be purchased by the Underwriter hereunder. The parties agree that
such information provided by or on behalf of the Underwriter consists solely of
the material referred to in the last sentence of Section 1(b) hereof. This
indemnity will be in addition to any liability which the Underwriter may
otherwise have, including but not limited to other liability under this
Agreement.
(c) Promptly after receipt by an indemnified party under subsection (a) or
(b) above of notice of any claims or the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify each party against whom
indemnification is to be sought in writing of the claim or the commencement
thereof (but the failure so to notify an indemnifying party shall not relieve
the indemnifying party from any liability which it may have under this Section 8
to the extent that it is not materially prejudiced as a result thereof and in
any event shall not relieve it from any liability that such indemnifying party
may have otherwise than on account of the indemnity agreement hereunder). In
case any such claim or action is brought against any indemnified party, and it
notifies an indemnifying party of the commencement thereof, the indemnifying
party will be entitled to participate, at its own expense in the defense of such
action, and to the extent it may elect by written notice delivered to the
indemnified party promptly after receiving the aforesaid notice from such
indemnified party, to assume the defense thereof with counsel satisfactory to
such indemnified party; provided however, that counsel to the indemnifying party
shall not (except with the written consent of the indemnified party) also be
counsel to the indemnified party. Notwithstanding the foregoing, the indemnified
party or parties shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
such indemnified party or parties unless (i) the employment of such counsel
shall have been authorized in writing by one of the indemnifying parties in
connection with the defense of such action, (ii) the indemnifying parties shall
not have employed counsel to have charge of the defense of such action within a
reasonable time after notice of commencement of the action, (iii) the
indemnifying party does not diligently defend the action after assumption of the
defense, or (iv) such indemnified party or parties shall have reasonably
concluded that there may be defenses available to it or them which are different
from or additional to those available to one or all of the indemnifying parties
(in which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any of
which events such fees and expenses shall be borne by the indemnifying parties.
No indemnifying party shall, without the prior written consent of the
indemnified parties, effect any settlement or compromise of, or consent to the
entry of judgment with respect to, any pending or threatened claim,
investigation, action or proceeding in respect of which indemnity or
contribution may be or could have been sought by an indemnified party under this
Section 8 or Section 9 hereof (whether or not the indemnified party is an actual
or potential party thereto), unless (x) such settlement, compromise or judgment
(i) includes an unconditional release of the indemnified party from all
liability arising out of such claim,
investigation, action or proceeding and (ii) does not include a statement as to
or an admission of fault, culpability or any failure to act, by or on behalf of
the indemnified party, and (y) the indemnifying party confirms in writing its
indemnification obligations hereunder with respect to such settlement,
compromise or judgment.
9. Contribution. In order to provide for contribution in circumstances in
which the indemnification provided for in Section 8 hereof is for any reason
held to be unavailable from any indemnifying party or is insufficient to hold
harmless a party indemnified thereunder, the Company and the Underwriter shall
contribute to the aggregate losses, claims, damages, liabilities and expenses of
the nature contemplated by such indemnification provision (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company, any contribution received by
the Company from persons, other than the Underwriter, who may also be liable for
contribution, including persons who control the Company within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, officers of
the Company who signed the Registration Statement and directors of the Company)
as incurred to which the Company and the Underwriter may be subject, in such
proportions as is appropriate to reflect the relative benefits received by the
Company and the Underwriter from the Offering or, if such allocation is not
permitted by applicable law, in such proportions as are appropriate to reflect
not only the relative benefits referred to above but also the relative fault of
the Company and the Underwriter in connection with the statements or omissions
which resulted in such losses, claims, damages, liabilities or expenses, as well
as any other relevant equitable considerations. The relative benefits received
by the Company and the Underwriter shall be deemed to be in the same proportion
as (x) the total proceeds from the Offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company bears to (y)
the underwriting discount or commissions received by the Underwriter, in each
case as set forth in the table on the cover page of the Prospectus. The relative
fault of each of the Company and of the Underwriter shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Underwriter and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company and the Underwriter
further agree that it would not be just and equitable if contribution pursuant
to this Section 9 were determined by pro rata allocation or by any other method
of allocation which does not take account of the equitable considerations
referred to above in this Section. The aggregate amount of losses, liabilities,
claims, damages and expenses incurred by an indemnified party and referred to
above in this Section 9 shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
judicial, regulatory or other legal or governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission. Notwithstanding the provisions of
this Section 9, (i) no Underwriter shall be required to contribute any amount in
excess of the amount by which the discounts and commissions applicable to the
Shares underwritten by it and distributed 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 and
(ii) no person guilty of fraudulent misrepresentation (within the meaning of
Section 10(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 9, each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
shall have the same rights to contribution as such Underwriter, and each person,
if any, who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each officer of the Company
who shall have signed the Registration Statement and each director of the
Company shall have the same rights to contribution as the Company, subject in
each case to clauses (i) and (ii) of the immediately preceding sentence. Any
party entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in respect of
which a claim for contribution may be made against another party or parties,
notify each party or parties from whom contribution may be sought, but the
omission to so notify such party or parties shall not relieve the party or
parties from whom contribution may be sought from any obligation it or they may
have under this Section 9 or otherwise.
10. Survival of Representations and Agreements. All representations and
warranties, covenants and agreements of the Underwriter and the Company
contained in this Agreement or in certificates of officers of the Company or any
Subsidiary submitted pursuant hereto, including the agreements contained in
Section 6, the indemnity agreements contained in Section 8 and the contribution
agreements contained in Section 9, shall
remain operative and in full force and effect regardless of any investigation
made by or on behalf of the Underwriter or any controlling person thereof or by
or on behalf of the Company, any of its officers and directors or any
controlling person thereof, and shall survive delivery of and payment for the
Shares to and by the Underwriter. The representations contained in Section 1 and
the agreements contained in Sections 6, 8, 9, 10 and 11 hereof shall survive any
termination of this Agreement, including termination pursuant to Section 11
hereof.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon the execution of this
Agreement. Notwithstanding any termination of this Agreement, the provisions of
this Section 11 and of Sections 1, 6, 8, 9 and 12 through 17 inclusive, shall
remain in full force and effect at all times after the execution hereof.
(b) The Underwriter shall have the right to terminate this Agreement at any
time prior to the Closing Date or to terminate the obligations of the
Underwriter to purchase the Additional Shares at any time prior to the
Additional Closing Date, as the case may be, if (i) any domestic or
international event or act or occurrence has materially disrupted, or in the
opinion of the Underwriter will in the immediate future materially disrupt, the
market for the Company's securities or securities in general; or (ii) trading on
The New York Stock Exchange ("the NYSE") or The NASDAQ National Market (the
"NASDAQ") shall have been suspended or been made subject to material
limitations, or minimum or maximum prices for trading shall have been fixed, or
maximum ranges for prices for securities shall have been required, on the NYSE
or the NASDAQ or by order of the Commission or any other governmental authority
having jurisdiction; or (iii) a banking moratorium has been declared by any
state or federal authority or if any material disruption in commercial banking
or securities settlement or clearance services shall have occurred; (iv) any
downgrading shall have occurred in the Company's corporate credit rating or the
rating accorded the Company's debt securities by any "nationally recognized
statistical rating organization" as that term is defined by the Commission for
purposes of Rule 436(g)(2) under the Securities Act or if any such organization
shall have publicly announced that it has under surveillance or review, with
possible negative implications, its rating of any of the Company's debt
securities; or (v) if there has been since the time of the execution of this
Agreement or since the respective dates as of which information is given in the
Prospectus (excluding any supplement thereto), any Material Adverse Effect, or
(vi) (A) there shall have occurred any outbreak or escalation of hostilities or
acts of terrorism involving the United States or there is a declaration of a
national emergency or war by the United States or (B) there shall have been any
other calamity or crisis or any change in political, financial or economic
conditions if the effect of any such event in (A) or (B), in the judgment of the
Underwriter, makes it impracticable or inadvisable to proceed with the offering,
sale and delivery of the Firm Shares or the Additional Shares, as the case may
be, on the terms and in the manner contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11 shall be in
writing.
(d) If this Agreement shall be terminated pursuant to any of the provisions
hereof (other than pursuant to (i) notification by the Underwriter as provided
in Section 11(a) hereof, or if the sale of the Shares provided for herein is not
consummated because any condition to the obligations of the Underwriter set
forth herein is not satisfied or because of any refusal, inability or failure on
the part of the Company to perform any agreement herein or comply with any
provision hereof, the Company will, subject to demand by the Underwriter,
reimburse the Underwriter for all out-of-pocket expenses (including the fees and
expenses of their counsel), incurred by the Underwriter in connection herewith.
12. Notices. All communications hereunder, except as may be otherwise
specifically provided herein, shall be in writing, and:
(a) if sent to the Underwriter, shall be mailed, delivered, or faxed and
confirmed in writing, to such Underwriter c/o Bear, Xxxxxxx & Co. Inc., 000
Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Xxxxxxx Parish, Senior
Managing Director, Equity Capital Markets, with a copy to Underwriter's Counsel
at Xxxxxx & Xxxxxx, L.L.P, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000,
Attention: Xxxx Xxxxx;
(b) if sent to the Company or the Selling Stockholder, shall be mailed,
delivered, or faxed and confirmed in writing to the Company or the Selling
Stockholder and its counsel at the addresses set forth in the Registration
Statement, Attention: Xxxxx Xxxxxx;
provided, however, that any notice to an Underwriter pursuant to Section 8 shall
be delivered or sent by mail or facsimile transmission to such Underwriter at
its address set forth in its acceptance facsimile to the Underwriter, which
address will be supplied to any other party hereto by the Underwriter upon
request. Any such notices and other communications shall take effect at the time
of receipt thereof.
13. Parties. This Agreement shall inure solely to the benefit of, and shall
be binding upon, the Underwriter, the Company, the Selling Stockholder and the
controlling persons, directors, officers, employees and agents referred to in
Sections 8 and 9 hereof, and their respective successors and assigns, and no
other person shall have or be construed to have any legal or equitable right,
remedy or claim under or in respect of or by virtue of this Agreement or any
provision herein contained. This Agreement and all conditions and provisions
hereof are intended to be for the sole and exclusive benefit of the parties
hereto and said controlling persons and their respective successors, officers,
directors, heirs and legal representative, and it is not for the benefit of any
other person, firm or corporation. The term "successors and assigns" shall not
include a purchaser, in its capacity as such, of Shares from the Underwriter.
14. Governing Law and Jurisdiction; Waiver of Jury Trial. This Agreement
shall be governed by and construed in accordance with the laws of the State of
New York. The Company irrevocably (a) submits to the jurisdiction of any court
of the State of New York or the United State District Court for the Southern
District of the State of New York for the purpose of any suit, action, or other
proceeding arising out of this Agreement, or any of the agreements or
transactions contemplated by this Agreement, the Registration Statement and the
Prospectus (each, a "Proceeding"), (b) agrees that all claims in respect of any
Proceeding may be heard and determined in any such court, (c) waives, to the
fullest extent permitted by law, any immunity from jurisdiction of any such
court or from any legal process therein, (d) agrees not to commence any
Proceeding other than in such courts, and (e) waives, to the fullest extent
permitted by law, any claim that such Proceeding is brought in an inconvenient
forum. THE COMPANY (ON BEHALF OF ITSELF AND, TO THE FULLEST EXTENT PERMITTED BY
LAW, ON BEHALF OF ITS RESPECTIVE EQUITY HOLDERS AND CREDITORS) HEREBY WAIVES ANY
RIGHT IT MAY HAVE TO A TRIAL BY JURY IN RESPECT OF ANY CLAIM BASED UPON, ARISING
OUT OF OR IN CONNECTION WITH THIS AGREEMENT AND THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT, THE REGISTRATION STATEMENT AND THE PROSPECTUS.
15. 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 instrument. Delivery of
a signed counterpart of this Agreement by facsimile transmission shall
constitute valid and sufficient delivery thereof.
16. Headings. The headings herein are inserted for convenience of reference
only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
17. Time is of the Essence. Time shall be of the essence of this Agreement.
As used herein, the term "business day" shall mean any day when the Commission's
office in Washington, D.C. is open for business.
[signature page follows]
If the foregoing correctly sets forth your understanding, please so
indicate in the space provided below for that purpose, whereupon this letter
shall constitute a binding agreement among us. Very truly yours,
QUICKSILVER RESOURCES INC.
By: /s/ Xxxx X.Xxxxxx
----------------------------
Name: Xxxx X. Xxxxxx
Title:Executive Vice President and Chief
Financial Officer
MERCURY EXPLORATION COMPANY
By: /s/ Xxxx Xxxxxx Self
--------------------------------
Name: Xxxx Xxxxxx Self
Title:President
Accepted as of the date first above written
BEAR, XXXXXXX & CO. INC.
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------------
Name: Xxxxxxx X. Xxxxxx
Title: Senior Managing Director
EXHIBIT A
Subsidiaries
Direct Subsidiaries:
MGV Energy Inc.
Mercury Michigan, Inc.
Beaver Creek Pipeline, L.L.C. (50% interest owned)
Cinnabar Energy Services & Trading, LLC (50% interest owned)
Terra Energy Ltd.
GTG Pipeline Corporation
Direct Subsidiaries of Terra Energy Ltd.:
Energy Acquisition Operating Corporation
Xxxxxxx Corporation
Terra Pipeline Company
Direct Subsidiaries of Mercury Michigan, Inc.:
Beaver Creek Pipeline, L.L.C.
Cinnabar Energy Services & Trading, LLC
Direct Subsidiaries of Beaver Creek Pipeline, L.L.C.:
Saginaw Bay Lateral, LP (54% interest owned)
Non Wholly-Owned Subsidiaries:
Xxxxx Xxxxx Pipeline Company (45.85% interest owned)
Voyager Compression Services, L.L.C. (65% interest owned)
ANNEX I
Form of Opinion of Company Counsel
1. Each of the Company and its Subsidiaries has been duly organized and
validly exists as a corporation, limited liability company or partnership in
good standing under the laws of its jurisdiction of incorporation or
organization, with full corporate, limited liability company or partnership
power and authority to own its properties and conduct its business as described
in the Registration Statement and the Prospectus. Each of the Company and its
Subsidiaries is duly qualified and in good standing as a foreign corporation,
limited liability company or partnership in each jurisdiction in which the
character or location of its properties (owned, leased or licensed) or the
nature or conduct of its business makes such qualification necessary, except for
those failures to be so qualified or in good standing which will not in the
aggregate have a Material Adverse Effect.
2. The Company has an authorized capitalization as set forth in the
Registration Statement and the Prospectus. All of the issued shares of capital
stock of the Company have been duly and validly authorized and issued, are fully
paid and non-assessable and are not in violation of or subject to any preemptive
or, to the best of such counsel's knowledge, similar rights that entitle or will
entitle any person to acquire any Shares from the Company upon issuance or sale
thereof. The Shares to be delivered on the Closing Date and the Additional
Closing Date, if any, have been duly and validly authorized and, when delivered
in accordance with the Underwriting Agreement, will be duly and validly issued,
fully paid and non-assessable and will not have been issued in violation of or
subject to preemptive or, to the best of such counsel's knowledge, similar
rights that entitle or will entitle any person to acquire any Shares from the
Company upon issuance or sale thereof. All of the issued shares of capital stock
of each Subsidiary of the Company have been duly and validly authorized and
issued and are fully paid and non-assessable and are owned directly or
indirectly by the Company, free and clear of all Liens except as disclosed in
the Registration Statement or the Prospectus. The Common Stock, the Firm Shares
and the Additional Shares conform to the descriptions thereof contained in the
Registration Statement and the Prospectus.
3. The Common Stock currently outstanding is listed, and the Shares are
duly authorized for listing on the New York Stock Exchange.
4. The Underwriting Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, enforceable in accordance with its terms,
except as enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights generally
and except as enforceability may be subject to general principles of equity
(regardless of whether such enforceability is considered in a proceeding in
equity or at law).
5. To the best of such counsel's knowledge and other than as set forth in
the Prospectus, there are no judicial, regulatory or other legal or governmental
proceedings pending to which the Company or any of its Subsidiaries is a party
or of which any property of the Company or any of its Subsidiaries is the
subject which, if determined adversely to the Company or any of its
Subsidiaries, would individually or in the aggregate have a Material Adverse
Effect; and, to the best of such counsel's knowledge, no such proceedings are
threatened or contemplated.
6. The execution, delivery, and performance of the Underwriting Agreement
and consummation of the transactions contemplated by Underwriting Agreement, the
Registration Statement and the Prospectus do not and will not (A) conflict with
or result in a breach of any of the terms and provisions of, or constitute a
default (or an event which with notice or lapse of time, or both, would
constitute a default) under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company or any of
its Subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan
agreement or any other agreement, instrument, franchise, license or permit known
to such counsel to which the Company or any of its Subsidiaries is a party or by
which any of the Company or any of its Subsidiaries or their respective
properties or assets may be bound or (B) violate or conflict with any provision
of the certificate of incorporation or by-laws of the Company or any of its
Subsidiaries, or, to the best knowledge of such counsel, any judgment, decree,
order, statute, rule or regulation of any court or any judicial, regulatory or
other legal or governmental agency or body.
7. No consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any judicial,
regulatory or other legal or governmental agency or body is required for the
execution, delivery and performance of this Agreement or consummation of the
transactions contemplated by the Underwriting Agreement, the Registration
Statement and the Prospectus, except for (1) such as may be required under state
securities or blue sky laws in connection with the purchase and distribution of
the Shares by the Underwriter (as to which such counsel need express no
opinion), (2) such as have been made or obtained under the Securities Act and
(3) such as are required by the NASD.
8. The Registration Statement and the Prospectus and any amendments thereof
or supplements thereto (other than the financial statements and schedules and
other financial data included or incorporated by reference therein, as to which
no opinion need be rendered) comply as to form in all material respects with the
requirements of the Securities Act, the Exchange Act and the Rules and
Regulations. The documents filed under the Exchange Act and incorporated by
reference in the Registration Statement and the Prospectus or any amendment
thereof or supplement thereto (other than the financial statements and schedules
and other financial data included or incorporated by reference therein, as to
which no opinion need be rendered) when they became effective or were filed with
the Commission, as the case may be, complied as to form in all material respects
with the Securities Act or the Exchange Act, as applicable, and the Rules and
Regulations.
9. The statements under the caption "Description of Capital Stock" and
"Underwriting" in the Prospectus and Items 14 and 15 of Part II of the
Registration Statement, insofar as such statements constitute a summary of the
legal matters, documents or proceedings referred to therein, fairly present the
information called for with respect to such legal matters, documents and
proceedings.
10. The Company is not and, after giving effect to the offering and sale of
the Shares and the application of the proceeds thereof as described in the
Registration Statement and the Prospectus, will not be, an "investment company"
as such term is defined in the Investment Company Act of 1940, as amended.
11. The Company is not and, at all times up to and including consummation
of the transactions contemplated by this Agreement, the Registration Statement
and the Prospectus, and after giving effect to application of the net proceeds
of the Offering, will not be, subject to regulation as a "public utility" as
such term is defined under the Public Utility Holding Company Act, as amended.
12. The Registration Statement is effective under the Securities Act, and,
to the best knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereof has been issued and no proceedings therefor have been initiated or
threatened by the Commission and all filings required by Rule 424(b) and Rule
430A under the Securities Act have been made.
13. The Company has full right, power and authority to execute and deliver
this Agreement and the Shares and to perform its obligations hereunder, and all
corporate action required to be taken for the due and proper authorization,
execution and delivery of this Agreement and the Shares and consummation of the
transactions contemplated by Underwriting Agreement, the Registration Statement
and the Prospectus and as described in the Registration Statement and the
Prospectus have been duly and validly taken.
14. To the best knowledge of such counsel, no contract or agreement is
required to be filed as an exhibit to the Registration Statement that is not so
filed.
15. Neither the Company nor any of its Subsidiaries is in violation of its
respective charter or by-laws and, to the best of such counsel's knowledge after
due inquiry, neither the Company nor any of its Subsidiaries is in default in
the performance of any obligation, agreement, covenant or condition contained in
any indenture, loan agreement, mortgage, lease or other agreement or instrument
that is material to the Company and its Subsidiaries, individually or taken as a
whole, to which the Company or any of its Subsidiaries is a party or by which
the Company or any of its Subsidiaries or their respective property is bound.
In addition, such opinion shall also contain a statement that such counsel
has participated in conferences with officers and representatives of the
Company, representatives of the independent public accountants for the Company
and the Underwriter at which the contents and the Prospectus and related matters
were discussed and, no facts have come to the attention of such counsel which
would lead such counsel to believe that either the
Registration Statement, at the time it became effective (including the
information deemed to be part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A(b) or Rule 434, if applicable), or any
amendment thereof made prior to the Closing Date, as of the date of such
amendment, contained or incorporated by reference any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or that the
Prospectus (including the documents incorporated by reference therein), as of
its date (or any amendment thereof or supplement thereto made prior to the
Closing Date as of the date of such amendment or supplement) and as of the
Closing Date, contained or contains an untrue statement of a material fact or
omitted or omits to state any material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances under
which they were made, not misleading (it being understood that such counsel need
express no belief or opinion with respect to the financial statements and
schedules and other financial data included or incorporated by reference
therein).
ANNEX II
Form of Opinion of Canadian Counsel
(i) MGV Energy Inc. ("MGV") is duly organized, validly existing, and in
good standing under the laws of the Province of Alberta, and has the
organizational power and authority to own or lease its properties and to conduct
its business as described in the Prospectus.
(ii) MGV is duly qualified to do business and is in good standing in all
jurisdictions where it is required to be so qualified, except where the failure
to be so qualified would not individually or in the aggregate have a Material
Adverse Effect.
(iii) Except for MGV exchangeable shares referred to in the Prospectus, all
of the issued and outstanding shares of capital stock of MGV have been duly and
validly authorized and issued, are fully paid and non-assessable and, are owned
by the Company, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature, of which such counsel is aware.
To such counsel's knowledge, there are no outstanding options, warrants, or
other rights to acquire capital stock or other equity securities of MGV.
ANNEX III
Form of Opinion of Michigan Counsel
(i) Each of __________ [the Company's Michigan subsidiaries] (the "Michigan
Subsidiaries") is duly organized, validly existing, and in good standing under
the laws of the State of Michigan, and has the organizational power and
authority to own or lease its properties and to conduct its business as
described in the Prospectus.
(ii) Each of the Michigan Subsidiaries is duly qualified to do business and
is in good standing in all jurisdictions where it is required to be so
qualified, except where the failure to be so qualified would not individually or
in the aggregate have a Material Adverse Effect.
(iii) Except as disclosed in the Prospectus, all of the issued and
outstanding shares of capital stock (or any limited liability company interests,
as the case may be) of the Michigan Subsidiaries have been duly and validly
authorized and issued, are fully paid and nonassessable and, are owned by the
Company, free and clear of any security interest, claim, lien, encumbrance or
adverse interest of any nature. To such counsel's knowledge, there are no
outstanding options, warrants, or other rights to acquire capital stock or other
equity securities of any of the Michigan Subsidiaries.
ANNEX IV
Form of Lock-Up Agreement
August 20, 2003
Bear, Xxxxxxx & Co. Inc.
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Attention: Equity Capital Markets
Quicksilver Resources Inc. Lock-Up Agreement
Ladies and Gentlemen:
In consideration of the agreement of Bear, Xxxxxxx & Co. Inc. (the
"Underwriter") to purchase from Quicksilver Resources Inc. (the "Company") up to
3,500,000 shares of common stock of the Company ("Common Stock"), as
contemplated by a Prospectus Supplement relating to the Common Stock (the
"Prospectus Supplement"), the undersigned hereby agrees that, for a period of 90
days after the date of the Prospectus Supplement (the "Lock-Up Period"), the
undersigned will not offer, sell, contract to sell, pledge or otherwise dispose
of, directly or indirectly, (a) any shares of Common Stock or any other capital
stock of the Company or (b) any other securities which are convertible into, or
exercisable or exchangeable for, Common Stock or other capital stock of the
Company, or publicly disclose the intention to make any such offer, sale, pledge
or disposition, in any such case without the prior written consent of the
Underwriter. Such agreement will not prevent (i) the exercise of options to
purchase shares of Common Stock pursuant to employee stock option plans existing
on the date of the Prospectus Supplement, (ii) the exercise or conversion of
securities that are outstanding on the date of the Prospectus Supplement and
(iii) bona fide gifts of shares of Common Stock so long as the transferee of
such shares of Common Stock agrees with the Underwriter (as evidenced by a
signed letter to the Underwriter) not to sell or otherwise dispose of such
shares of Common Stock during the period of 90 days after the date of the
Prospectus Supplement.
The undersigned hereby authorizes the Company during the Lock-Up Period to
cause any transfer agent for the Relevant Securities to decline to transfer, and
to note stop transfer restrictions on the stock register and other records
relating to, Relevant Securities for which the undersigned is the record holder
and, in the case of Relevant Securities for which the undersigned is the
beneficial but not the record holder, agrees during the Lock-Up Period to cause
the record holder to cause the relevant transfer agent to decline to transfer,
and to note stop transfer restrictions on the stock register and other records
relating to, such Relevant Securities. The undersigned hereby further agrees
that, without the prior written consent of The Underwriter, during the Lock-up
Period the undersigned (x) will not file or participate in the filing with the
Securities and Exchange Commission of any registration statement, or circulate
or participate in the circulation of any preliminary or final prospectus or
other disclosure document with respect to any proposed offering or sale of a
Relevant Security and (y) will not exercise any rights the undersigned may have
to require registration with the Securities and Exchange Commission of any
proposed offering or sale of a Relevant Security.
The undersigned hereby represents and warrants that the undersigned has
full power and authority to enter into this Agreement. Upon request, the
undersigned will execute any additional documents necessary in connection with
enforcement hereof. Any obligations of the undersigned shall be binding upon the
successors and assigns of the undersigned from the date first above written.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York. Delivery of a signed copy of this letter by
facsimile transmission shall be effective as delivery of the original hereof.
Very truly yours,
By: _______________________________________
Print Name: ________________________________
