EXHIBIT 1.1
THE MERIDIAN RESOURCE CORPORATION
SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
July 28, 2004
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
as Representative of the several Underwriters
c/o Friedman, Billings, Xxxxxx & Co., Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
The Meridian Resource Corporation, a Texas corporation (the "Company"),
confirms its agreement with each of the Underwriters listed on Schedule II
hereto (collectively, the "Underwriters"), for whom Friedman, Billings, Xxxxxx &
Co., Inc. is acting as representative (in such capacity, the "Representative"),
with respect to (i) the sale by the Company of 12,000,000 shares (the "Initial
Shares") of Common Stock, par value $0.01 per share, of the Company ("Common
Stock"), and the purchase by the Underwriters, acting severally and not jointly,
of the respective number of shares of Common Stock set forth opposite the names
of the Underwriters in Schedule II hereto, and (ii) the grant of the option
described in Section 1(b) hereof to purchase all or any part of 1,800,000
additional shares of Common Stock to cover over-allotments (the "Option
Shares"), if any, from the Company to the Underwriters, acting severally and not
jointly, in the same ratio to the aggregate number of Option Shares being
purchased as the number of Initial Shares set forth opposite the names of the
Underwriters in Schedule II hereto. The 12,000,000 shares of Common Stock to be
purchased by the Underwriters and all or any part of the shares of Common Stock
subject to the option described in Section l(b) hereof are hereinafter called,
collectively, the "Shares."
The Company understands that the Underwriters propose to make a public
offering of the Shares as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a registration statement on Form S-3 (No. 333-116240) and a
related preliminary prospectus for the registration of the Shares under the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder (the "Securities Act Regulations"). The Company has
prepared and filed such amendments thereto, if any, and such amended preliminary
prospectuses, if any, as may have been required to the date hereof, and will
file such additional amendments thereto and such amended prospectuses as may
hereafter be
required. The registration statement has been declared effective under the
Securities Act by the Commission. The registration statement as amended at the
time it became effective (including all information deemed (whether by
incorporation by reference or otherwise) to be a part of the registration
statement at the time it became effective pursuant to Rule 430A(b) of the
Securities Act Regulations) is hereinafter called the "Registration Statement,"
except that, if the Company files a post-effective amendment to such
registration statement which becomes effective prior to the Closing Date (as
defined below), "Registration Statement" shall refer to such registration
statement as so amended. Any registration statement filed pursuant to Rule
462(b) of the Securities Act Regulations is hereinafter called the "Rule 462(b)
Registration Statement," and after such filing the term "Registration Statement"
shall include the Rule 462(b) Registration Statement. The Company proposes to
file with the Commission pursuant to Rule 424 under the Securities Act, a
supplement, dated the date specified on Schedule I hereto, to the prospectus
dated July 7, 2004, relating to the Shares and the method of distribution
thereof. The term "Base Prospectus" means the prospectus included in the
Registration Statement; the term "Preliminary Prospectus" means any preliminary
form of the Prospectus (as defined herein) specifically relating to the Shares,
in the form first filed with, or transmitted for filing to, the Commission
pursuant to Rule 424 of the Securities Act Regulations; the term "Prospectus
Supplement" means any prospectus supplement specifically relating to the Shares,
in the form first filed with, or transmitted for filing to, the Commission
pursuant to Rule 424 under the Securities Act; the term "Prospectus" means the
Base Prospectus, including, in each case, the Prospectus Supplement. Any
reference in this Agreement to the Registration Statement, any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include the
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Securities Act, as of the effective date of the Registration Statement
or the date of such Preliminary Prospectus or the Prospectus, as the case may be
and any reference to "amend", "amendment" or "supplement" with respect to the
Registration Statement, any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include any documents filed after such date under the
Securities Exchange Act of 1934, as amended, and the rules and regulations of
the Commission thereunder (collectively, the "Exchange Act") that are deemed to
be incorporated by reference therein. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
The Company and the Underwriters agree as follows:
1. Sale and Purchase:
(a) Initial Shares. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share of $6.96, the Company agrees to sell to the Underwriters the
Initial Shares, and each Underwriter agrees, severally and not jointly, to
purchase from the Company the number of Initial Shares set forth in Schedule II
opposite such Underwriter's name, plus any additional number of Initial Shares
which such Underwriter may become obligated to purchase pursuant to the
provisions of Section 8 hereof, subject in each case, to such adjustments among
the Underwriters as the Representative in its sole discretion shall make to
eliminate any sales or purchases of fractional shares.
(b) Option Shares. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, at the purchase
price per share set forth in paragraph (a), the Company hereby grants an option
to the Underwriters, acting severally and not
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jointly, to purchase from the Company, all or any part of the Option Shares,
plus any additional number of Option Shares which such Underwriter may become
obligated to purchase pursuant to the provisions of Section 8 hereof. The option
hereby granted will expire 30 days after the date hereof and may be exercised in
whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Shares upon notice by the Representative to the
Company setting forth the number of Option Shares as to which the several
Underwriters are then exercising the option and the time and date of payment and
delivery for such Option Shares. Any such time and date of delivery, with
respect to both the Initial Shares and the Option Shares, (a "Date of Delivery")
shall be determined by the Representative, but shall not be later than three
full business days (or earlier, without the consent of the Company, than two
full business days) after the exercise of such option, nor in any event prior to
the Closing Date, as hereinafter defined. If the option is exercised as to all
or any portion of the Option Shares, each of the Underwriters, acting severally
and not jointly, will purchase that proportion of the total number of Option
Shares then being purchased which the number of Initial Shares set forth in
Schedule II opposite the name of such Underwriter bears to the total number of
Initial Shares, subject in each case to such adjustments among the Underwriters
as the Representative in its sole discretion shall make to eliminate any sales
or purchases of fractional shares.
2. Payment and Delivery
(a) Initial Shares. The Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered in such names as the Representative may request upon at least
forty-eight hours' prior notice to the Company shall be delivered by or on
behalf of the Company to the Representative, including, at the option of the
Representative, through the facilities of The Depository Trust Company ("DTC")
for the account of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the account specified to the Representative by the Company
upon at least forty-eight hours' prior notice. The Company will cause the
certificates representing the Initial Shares to be made available for checking
and packaging at least twenty-four hours prior to the Closing Date (as defined
below) with respect thereto at the office of the Representative, 0000 00xx
Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000, or at the office of DTC or its
designated custodian, as the case may be (the "Designated Office"). The time and
date of such delivery and payment shall be 9:30 a.m., New York City time, on the
third (fourth, if pricing occurs after 4:30 p.m., New York City time) business
day after the date hereof (unless another time and date shall be agreed to by
the Representative and the Company). The time at which such payment and delivery
are actually made is hereinafter sometimes called the "Closing Date" and the
time and date for such payment and delivery of the Option Shares, if other than
the Closing Date, are herein referred to as the "Additional Closing Date."
(b) Option Shares. Any Option Shares to be purchased by each
Underwriter hereunder, in definitive form, and in such authorized denominations
and registered in such names as the Representative may request upon at least
forty-eight hours' prior notice to the Company shall be delivered by or on
behalf of the Company to the Representative, including, at the option of the
Representative, through the facilities of DTC for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the purchase
price therefor by wire transfer of Federal (same-day) funds to the account
specified to the Representative by
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the Company upon at least forty-eight hours' prior notice. The Company will
cause the certificates representing the Option Shares to be made available for
checking and packaging at least twenty-four hours prior to the Date of Delivery
with respect thereto at the Designated Office. The Additional Closing Date shall
be 9:30 a.m., New York City time, on the date specified by the Representative in
the notice given by the Representative to the Company of the Underwriters'
election to purchase such Option Shares or on such other time and date as the
Company and the Representative may agree upon in writing.
3. Representations and Warranties of the Company
The Company represents and warrants to each Underwriter that:
(a) Preliminary Prospectus. No order preventing or suspending the use
of any Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, complied in all material
respects with the Securities Act and did not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided that the
Company makes no representation and warranty with respect to any statements or
omissions made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by such Underwriter through
the Representative expressly for use in any Preliminary Prospectus.
(b) Registration Statement and Prospectus. The Registration Statement
has been declared effective by the Commission. No order suspending the
effectiveness of the Registration Statement has been issued by the Commission
and no proceeding for that purpose has been initiated or, to the knowledge of
the Company, threatened by the Commission; as of the applicable effective date
of the Registration Statement and any amendment thereto, the Registration
Statement complied and will comply, as the case may be, in all material respects
with the Securities Act and Securities Act Regulations, and did not and will not
contain, as of the applicable effective date, any untrue statement of a material
fact or omit to state a material fact required to be stated therein or necessary
in order to make the statements therein not misleading; and as of the applicable
filing date of the Prospectus and any amendment or supplement thereto and as of
the Closing Date and as of the Additional Closing Date, as the case may be, the
Prospectus will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided that the Company makes no representation and
warranty with respect to any statements or omissions made in reliance upon and
in conformity with information relating to any Underwriter furnished to the
Company in writing by such Underwriter through the Representative expressly for
use in the Registration Statement and the Prospectus and any amendment or
supplement thereto.
(c) Incorporated Documents. The documents incorporated by reference in
the Prospectus, when they became effective or were filed with the Commission, as
the case may be, conformed in all material respects to the requirements of the
Securities Act or the Exchange Act, as applicable, and none of such documents
contained any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
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therein, in the light of the circumstances under which they were made, not
misleading; and any further documents so filed and incorporated by reference in
the Prospectus, when such documents become effective or are filed with the
Commission will conform in all material respects to the requirements of the
Exchange Act and will not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
(d) Financial Statements. The financial statements and the related
notes thereto of the Company and its consolidated subsidiaries included or
incorporated by reference in the Registration Statement and the Prospectus
comply in all material respects with the applicable requirements of the
Securities Act and the Exchange Act, as applicable, and present fairly the
consolidated financial position of the Company and its consolidated subsidiaries
as of the dates indicated and the results of their operations and the changes in
their consolidated cash flows for the periods specified; such financial
statements have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods covered thereby,
and the supporting schedules included or incorporated by reference in the
Registration Statement present fairly the information required to be stated
therein; the other financial information included or incorporated by reference
in the Registration Statement and the Prospectus, including oil and gas
production information, has been derived from the accounting records of the
Company and its subsidiaries and presents fairly the information shown thereby;
and any pro forma financial information and the related notes thereto included
or incorporated by reference in the Registration Statement and the Prospectus
has been prepared in accordance with the applicable requirements of the
Securities Act and the Exchange Act, as applicable, and the assumptions
underlying such pro forma financial information are reasonable and are set forth
or included or incorporated by reference in the Registration Statement and the
Prospectus.
(e) No Material Adverse Change. Since the respective dates as of which
information is given in the Registration Statement and the Prospectus, (i) there
has not been any change in the capital stock (other than restricted stock and
any options granted or shares of Common Stock of the Company issued upon
exercise of options granted or to be granted under the Company's employee stock
option plans existing on the date of the Prospectus) or long-term debt of the
Company or any of its subsidiaries (each, a "Subsidiary"), or any dividend or
distribution of any kind declared, set aside for payment, paid or made by the
Company on any class of capital stock, or any material adverse change, or any
development involving a prospective material adverse change, in or affecting the
assets, business, operations, earnings, properties, condition (financial or
otherwise), stockholders' equity, or results of operations of the Company and
its Subsidiaries taken as a whole, whether or not occurring in the ordinary
course of business (any such effect or change, where the context so requires, is
hereinafter called a "Material Adverse Effect" or "Material Adverse Change");
(ii) neither the Company nor any of its Subsidiaries has entered into any
transaction or agreement that is material to the Company and its Subsidiaries
taken as a whole or incurred any liability or obligation, direct or contingent,
that is material to the Company and its Subsidiaries taken as a whole; and (iii)
neither the Company nor any of its Subsidiaries has sustained any material loss
or material interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor disturbance or
dispute or from any action, order or decree of any court or arbitrator or
governmental or
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regulatory authority, except in the case of clauses (i), (ii) and (iii) as
otherwise disclosed in the Registration Statement and the Prospectus.
(f) Organization and Good Standing. The Company and each of its
Subsidiaries have been duly organized and are validly existing and in good
standing under the laws of their respective jurisdictions of organization, are
duly qualified to do business and are in good standing in each jurisdiction in
which their respective ownership or lease of property or the conduct of their
respective businesses requires such qualification, and have all corporate or
other power and authority, as the case may be, necessary to own or hold their
respective properties and to conduct the businesses in which they are engaged,
except where the failure to be so qualified or have such power or authority
would not, individually or in the aggregate, have a Material Adverse Effect. The
Subsidiaries listed in Schedule III to this Agreement are the only Subsidiaries
of the Company.
(g) Capitalization. The Company has an authorized capitalization as set
forth under the heading "Capitalization" in the Prospectus; all the outstanding
shares of capital stock of the Company have been duly and validly authorized and
issued and are fully paid and nonassessable and are not subject to any
pre-emptive or similar rights; except as described in or expressly contemplated
by the Prospectus, there are no outstanding rights (including, without
limitation, pre-emptive rights), warrants or options (other than restricted
stock and any options granted or shares of Common Stock of the Company issued
upon exercise of options granted or to be granted under the Company's employee
and directors' stock option plans existing on the date of the Prospectus) to
acquire, or instruments convertible into or exchangeable for, any shares of
capital stock or other equity interest in the Company or any of its
Subsidiaries, or any contract, commitment, agreement, understanding or
arrangement of any kind relating to the issuance of any capital stock of the
Company or any such Subsidiary, any such convertible or exchangeable securities
or any such rights, warrants or options (other than restricted stock and any
options granted or shares of Common Stock of the Company issued upon exercise of
options granted or to be granted under the Company's employee and directors'
stock option plans existing on the date of the Prospectus); the capital stock of
the Company conforms in all material respects to the description thereof
contained in the Registration Statement and the Prospectus; and all the
outstanding shares of capital stock or other equity interests of each Subsidiary
of the Company have been duly and validly authorized and issued, are fully paid
and nonassessable and are owned directly or indirectly by the Company, free and
clear of any lien, charge, encumbrance, security interest, restriction on voting
or transfer or any other claim of any third party except as otherwise described
in the Prospectus.
(h) Due Authorization. The Company has the corporate right, power and
authority to execute and deliver this Agreement and the stock purchase agreement
dated July 21, 2004 by and between the Company and SWEPI LP ("Shell"), successor
by merger to Shell Louisiana Onshore Properties Inc. (the "Stock Purchase
Agreement" and, together with this Agreement, the "Transaction Documents") to
perform its obligations hereunder and thereunder (including, without limitation,
the use of proceeds from the sale of the Shares as described in the Prospectus);
and all action required to be taken for the due and proper authorization,
execution and delivery of each of the Transaction Documents and the consummation
of the transactions contemplated hereby and thereby (including, without
limitation, the use of proceeds from the sale of the Shares as described in the
Prospectus) has been duly and validly taken.
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(i) Underwriting Agreement. This Agreement has been duly authorized,
executed and delivered by the Company.
(j) The Shares. The Shares to be issued and sold by the Company
hereunder have been duly authorized by the Company and, when issued and
delivered and paid for as provided herein, will be duly and validly issued and
will be fully paid and nonassessable and will conform to the descriptions
thereof contained in the Prospectus; and the issuance of the Shares is not
subject to any preemptive or similar rights.
(k) Other Transaction Documents. The Stock Purchase Agreement has been
duly authorized, executed and delivered by the Company and constitutes a valid
and legally binding agreement of the Company enforceable against the Company in
accordance with its terms, except as enforceability may be limited by applicable
bankruptcy, insolvency or similar laws affecting creditors' rights generally or
by equitable principles relating to enforceability.
(l) Descriptions of the Transaction Documents. Each Transaction
Document conforms in all material respects to the description thereof contained
in the Registration Statement and the Prospectus.
(m) No Violation or Default. Neither the Company nor any of its
Subsidiaries is (i) in violation of its charter or by-laws or similar
organizational documents; (ii) in default, and no event has occurred that, with
notice or lapse of time or both, would constitute such a default, in the due
performance or observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Company or any of its Subsidiaries is a party or by
which the Company or any of its Subsidiaries is bound or to which any of the
property or assets of the Company or any of its Subsidiaries is subject; or
(iii) in violation of any law or statute or any judgment, order, rule or
regulation of any court or arbitrator or governmental or regulatory authority,
except, in the case of clauses (ii) and (iii) above, for any such default or
violation that would not, individually or in the aggregate, have a Material
Adverse Effect.
(n) No Conflicts. The execution, delivery and performance by the
Company of each of the Transaction Documents, the issuance and sale of the
Shares by the Company hereunder and the consummation of the transactions
contemplated herein, by the Stock Purchase Agreement, and in the Prospectus
(including the use of proceeds from the sale of the Shares as described in the
Prospectus) will not (i) conflict with or result in a breach or violation of any
of the terms or provisions of, or 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 other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which the Company
or any of its Subsidiaries is bound or to which any of the property or assets of
the Company or any of its Subsidiaries is subject, (ii) result in any violation
of the provisions of the charter or by-laws or similar organizational documents
of the Company or any of its Subsidiaries or (iii) result in the violation of
any law or statute or any judgment, order, rule or regulation of any court or
arbitrator or governmental or regulatory authority, except in the case of clause
(i) and (iii), for such conflicts, breaches, violations or defaults that would
not, individually or in the aggregate, have a Material Adverse Effect.
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(o) No Consents Required. No consent, approval, authorization, order,
registration or qualification of or with any court or arbitrator or governmental
or regulatory authority is required for the execution, delivery and performance
by the Company of each of the Transaction Documents, the issuance and sale of
the Shares and the consummation of the transactions contemplated by the
Transaction Documents, except (i) as have been obtained under the Securities
Act, (ii) such filings and consents as may be required by the National
Association of Securities Dealers, Inc. (the "NASD") and (iii) such consents,
approvals, authorizations, orders and registrations or qualifications as may be
required under applicable state securities laws in connection with the purchase
and distribution of the Shares by the Underwriters.
(p) Legal Proceedings. Except as described in the Prospectus, there are
no legal, governmental or regulatory investigations, actions, suits or
proceedings pending to which the Company or any of its Subsidiaries is or may be
a party or to which any property of the Company or any of its Subsidiaries is or
may be subject that, individually or in the aggregate, if determined adversely
to the Company or any of its Subsidiaries, could reasonably be expected to have
a Material Adverse Effect or materially and adversely affect the ability of the
Company to perform its obligations under the Transaction Documents; no such
investigations, actions, suits or proceedings are, to the best knowledge of the
Company, threatened or contemplated by any governmental or regulatory authority
or by others; and (i) there are no current or pending legal, governmental or
regulatory actions, suits or proceedings that are required under the Securities
Act to be described in the Prospectus that are not so described and (ii) there
are no statutes, regulations or contracts or other documents that are required
under the Securities Act to be filed as exhibits to the Registration Statement
or described in the Registration Statement or the Prospectus that are not so
filed or described.
(q) Descriptions. The descriptions in the Registration Statement and
the Prospectus of the legal, governmental or regulatory actions, suits or
proceedings, contracts, leases and other legal documents therein described
present fairly the information required to be shown.
(r) Independent Accountants. BDO Xxxxxxx LLP, who has certified certain
financial statements of the Company, are independent public accountants with
respect to the Company as required by the Securities Act; Ernst & Young LLP, who
certified certain financial statements of the Company prior to January 1, 2003,
were independent public accountants with respect to the Company as required by
the Securities Act.
(s) Reserve Information. X. X. Xxxxx & Company, Inc. (the "Engineer"),
whose reserve evaluations are referenced or appear, as the case may be, in the
Prospectus were, as of December 31, 2001, 2002 and 2003, and are, as of the date
hereof, independent engineers with respect to the Company; the historical
information underlying the estimates of the reserves of the Company supplied by
the Company to the Engineer for the purposes of preparing the reserve reports of
the Company referenced in the Prospectus (the "Reserve Reports"), including,
without limitation, production volumes, sales prices for production, contractual
pricing provisions under oil or gas sales or marketing contracts or under
hedging arrangements, costs of operations and development, and working interest
and net revenue information relating to the Company's ownership interests in
properties was true and correct in all material respects on the date of each
such Reserve Report; the estimates of future capital expenditures and other
future exploration and development costs supplied to the Engineer were prepared
in good faith and with a
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reasonable basis; the information provided to the Engineer for purposes of
preparing the Reserve Reports was prepared in all material respects in
accordance with customary industry practices; other than normal production of
reserves and intervening spot market product price fluctuations, and except as
disclosed in the Prospectus, the Company is not aware of any facts or
circumstances that would result in a material decline in the reserves in the
aggregate, or the aggregate present value of future net cash flows therefrom, as
described in the Prospectus and as reflected in the Reserve Reports; estimates
of such reserves and the present value of the future net cash flows therefrom as
described in the Prospectus and reflected in the Reserve Reports comply in all
material respects with the Securities Act.
(t) Title to Real and Personal Property. The Company and its
Subsidiaries have (1) good and indefeasible title to all of their interests in
the oil and gas properties described in the Prospectus, (2) good and
indefeasible title in fee simple to all other real property owned by the Company
or any of its Subsidiaries and (3) good title to all personal property owned by
the Company or any of its Subsidiaries, in each case, free and clear of all
liens, encumbrances and defects, except (i) as described in the Prospectus, (ii)
liens securing taxes and other governmental charges, or claims of materialmen,
mechanics and similar persons, not yet due and payable, (iii) liens and
encumbrances under oil and gas leases, options to lease, operating agreements,
unitization and pooling agreements, participation and drilling concessions
agreements and gas sales contracts, securing payment of amounts not yet due and
payable and of a scope and nature customary in the oil and gas industry and (iv)
liens, encumbrances and defects that do not, individually or in the aggregate,
materially affect the value of such properties or materially interfere with the
use made or proposed to be made of such properties by the Company or its
Subsidiaries; except as described in the Prospectus, the leases, options to
lease, drilling concessions or other arrangements held by the Company and its
Subsidiaries reflect in all material respects the right of the Company and its
Subsidiaries to explore the unexplored and undeveloped acreage described in the
Prospectus, and the care taken by the Company and its Subsidiaries with respect
to acquiring or otherwise procuring such leases, options to lease, drilling
concessions and other arrangements was generally consistent with standard
industry practices for acquiring or procuring leases to explore acreage for
hydrocarbons; and any real property and buildings held under lease by the
Company and its Subsidiaries are held by them under valid, subsisting and
enforceable leases with such exceptions as are not material and do not interfere
with the use made or proposed to be made of such real property and buildings by
the Company or its Subsidiaries.
(u) Title to Intellectual Property. The Company and its Subsidiaries
own or possess adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service xxxx
registrations, copyrights, licenses and know-how (including trade secrets and
other unpatented and/or unpatentable proprietary or confidential information,
systems or procedures) necessary for the conduct of their respective businesses
except where the failure to own or possess such intellectual property rights
would not reasonably be expected to, individually or in the aggregate, have a
Material Adverse Effect and, to the knowledge of the Company, the conduct of
their respective businesses will not conflict in any material respect with any
such rights of others, and the Company and its Subsidiaries have not received
any notice of any claim of infringement or conflict with any such rights of
others.
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(v) No Undisclosed Relationships. No relationship, direct or indirect,
exists between or among the Company or any of its Subsidiaries, on the one hand,
and the directors, officers, stockholders, customers or suppliers of the Company
or any of its Subsidiaries, on the other, that is required by the Securities Act
to be described in the Registration Statement and the Prospectus and that is not
so described.
(w) Investment Company Act. 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 Prospectus, will not be required to register as, an
"investment company" or an entity "controlled" by an "investment company" within
the meaning of the Investment Company Act of 1940, as amended, and the rules and
regulations of the Commission thereunder (collectively, "Investment Company
Act").
(x) Taxes. The Company and its Subsidiaries have paid all federal,
state, local and foreign taxes and filed all tax returns required to be paid or
filed through the date hereof and except as otherwise disclosed in the
Prospectus, there is no tax deficiency that has been, or could reasonably be
expected to be, asserted against the Company or any of its Subsidiaries or any
of their respective properties or assets that could reasonably be expected,
individually or in the aggregate, to have a Material Adverse Effect.
(y) Licenses and Permits. The Company and its Subsidiaries possess all
licenses, franchises, certificates, permits, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by, and have made
all declarations and filings with, the appropriate federal, state, local or
foreign governmental or regulatory authorities that are necessary for the
ownership or lease of their respective properties or the conduct of their
respective businesses as described in the Registration Statement and the
Prospectus, except where the failure to possess or make such Governmental
Licenses would not, individually or in the aggregate, have a Material Adverse
Effect; the Company and its Subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, except where the failure to so
comply would not, individually or in the aggregate, be reasonably expected to
have a Material Adverse Effect; all of the Governmental Licenses are valid and
in full force and effect, except where the invalidity of such Governmental
Licenses or the failure of such Governmental Licenses to be in full force and
effect would not, individually or in the aggregate, be reasonably expected to
have a Material Adverse Effect; and except as described in the Prospectus,
neither the Company nor any of its Subsidiaries has received notice of any
revocation or modification of any such license, certificate, permit or
authorization or has any reason to believe that any such Governmental Licenses
will not be renewed in the ordinary course.
(z) No Labor Disputes. No labor disturbance by or dispute with
employees of the Company or any of its Subsidiaries exists or, to the best
knowledge of the Company, is contemplated or threatened.
(aa) No Discrimination. Neither the Company nor any Subsidiary is in
violation of or has received notice of any violation with respect to any federal
or state law relating to discrimination in the hiring, promotion or pay of
employees, nor any applicable federal or state wages and hours law, nor any
state law precluding the denial of credit due to the neighborhood in
-10-
which a property is situated, the violation of any of which could be reasonably
expected to have a Material Adverse Effect.
(bb) Compliance With Environmental Laws. Except as otherwise stated or
incorporated by reference in the Registration Statement or Prospectus, the
Company and its Subsidiaries (i) are in compliance with any and all applicable
federal, state, local and foreign laws, rules, regulations, decisions and orders
relating to pollution or the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants (collectively, "Environmental Laws"); (ii) have received and are in
compliance with all permits, licenses or other approvals required of them under
applicable Environmental Laws to conduct their respective businesses; and (iii)
have not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or toxic
substances or wastes, pollutants or contaminants, except in the case of clauses
(i), (ii) and (iii) for any such failure to comply, or failure to receive
required permits, licenses or approvals, or liability as would not, individually
or in the aggregate, have a Material Adverse Effect.
(cc) Compliance With ERISA. Except as would not reasonably be expected
to have a Material Adverse Effect, each employee benefit plan, within the
meaning of Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA"), that is maintained, administered or contributed to by the
Company or any of its affiliates for employees or former employees of the
Company and its affiliates has been maintained in compliance with its terms and
the requirements of any applicable statutes, orders, rules and regulations,
including but not limited to ERISA and the Internal Revenue Code of 1986, as
amended (the "Code"); except as would not reasonably be expected to have a
Material Adverse Effect, no prohibited transaction, within the meaning of
Section 406 of ERISA or Section 4975 of the Code, has occurred with respect to
any such plan excluding transactions effected pursuant to a statutory or
administrative exemption; and for each such plan that is subject to the funding
rules of Section 412 of the Code or Section 302 of ERISA, except as would not
reasonably be expected to have a Material Adverse Effect, no "accumulated
funding deficiency" as defined in Section 412 of the Code has been incurred,
whether or not waived, and the fair market value of the assets of each such plan
(excluding for these purposes accrued but unpaid contributions) exceeds the
present value of all benefits accrued under such plan determined using
reasonable actuarial assumptions.
(dd) Accounting Controls. The Company and its Subsidiaries maintain
systems of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with management's
general or specific authorizations; (ii) transactions are recorded as necessary
to permit preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with the existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(ee) Insurance. The Company and its Subsidiaries have insurance
covering their respective properties, operations, personnel and businesses,
which insurance is in amounts and insures against such losses and risks as are
adequate to protect the Company and its Subsidiaries and their respective
businesses; and neither the Company nor any of its Subsidiaries has (i) received
notice from any insurer or agent of such insurer that capital improvements or
other
-11-
expenditures are required or necessary to be made in order to continue such
insurance or (ii) any reason to believe that it will not be able to renew its
existing insurance coverage as and when such coverage expires or to obtain
similar coverage at reasonable cost from similar insurers as may be necessary to
continue its business.
(ff) No Restrictions on Subsidiaries. Except as otherwise stated or
incorporated by reference in the Registration Statement or Prospectus, no
Subsidiary of the Company is currently prohibited, directly or indirectly, under
any agreement or other instrument to which it is a party or is subject, from
paying any dividends to the Company, from making any other distribution on such
Subsidiary's capital stock, from repaying to the Company any loans or advances
to such Subsidiary from the Company or from transferring any of such
Subsidiary's properties or assets to the Company or any other Subsidiary of the
Company.
(gg) No Broker's Fees. Neither the Company nor any of its Subsidiaries
is a party to any contract, agreement or understanding with any person (other
than this Agreement) that would give rise to a valid claim against the Company
or any of its Subsidiaries or any Underwriter for a brokerage commission,
finder's fee or like payment in connection with the offering and sale of the
Shares.
(hh) No Registration Rights. No person has the right to require the
Company or any of its Subsidiaries to register any securities for sale under the
Securities Act by reason of the filing of the Registration Statement with the
Commission or the issuance and sale of the Shares.
(ii) No Stabilization. Neither the Company, nor to the Company's
knowledge, any of its affiliates, has taken or will take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to constitute, the stabilization or
manipulation of the price of the shares of Common Stock to facilitate the sale
or resale of the Shares. The Company acknowledges that the Underwriters may
engage in passive market making transactions in the Shares on the New York Stock
Exchange in accordance with Regulation M under the Exchange Act.
(jj) Statistical and Market Data. Nothing has come to the attention of
the Company that has caused the Company to believe that the statistical and
market-related data included in the Registration Statement and the Prospectus is
not based on or derived from sources that are reliable and accurate in all
material respects.
(kk) Xxxxxxxx-Xxxxx Act. The Company has established and maintains
disclosure controls and procedures (as such term is defined in Rule 13a-15 and
15d-15 under the Exchange Act); such disclosure controls and procedures are
designed to ensure that material information relating to the Company, including
its consolidated Subsidiaries, is made known to the Company's principal
executive officer and its principal financial officer by others within those
entities, and such disclosure controls and procedures are effective to perform
the functions for which they were established; the Company's auditors and the
Audit Committee of the Board of Directors have 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; and (ii) any fraud, whether or not material, discovered
;by the Company prior to or as of the date hereof, that involves management or
other employees who
-12-
have a role in the Company's internal controls; any material weaknesses in
internal controls have been identified for the Company's auditors; since the
date of the most recent evaluation of such disclosure controls and procedures,
there have been no significant changes in internal controls or in other factors
that could significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material weaknesses; the
principal executive officer and principal financial officer of the Company have
made all certifications required by the Xxxxxxxx-Xxxxx Act of 2002 (the
"Xxxxxxxx-Xxxxx Act") and any related rules and regulations promulgated by the
Commission, and the statements contained in any such certification are complete
and correct; and the Company is otherwise in compliance in all material respects
with all applicable provisions of the Xxxxxxxx-Xxxxx Act that are effective.
(ll) Form S-3 Eligibility. The conditions for use of Form S-3 as set
forth in the General Instructions thereto have been satisfied.
(mm) Listing. The Shares have been approved for listing on the New York
Stock Exchange, subject to official notice of issuance.
(nn) Certificates. Any certificate signed by any officer of the Company
or any Subsidiary delivered to the Representative or to counsel for the
Underwriters pursuant to this Agreement or on the Closing Date or Additional
Closing Date, as the case may be, shall be deemed a representation and warranty
by the Company to each Underwriter as to the matters covered thereby.
(oo) No Offers. In connection with this offering, the Company has not
offered and will not offer its Common Stock or any other securities convertible
into or exchangeable or exercisable for Common Stock in a manner that would
violate the Securities Act in any material respect.
4. Certain Covenants:
The Company hereby agrees with each Underwriter:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the securities or
blue sky laws of such jurisdictions (both domestic and foreign) as the
Representative may designate and to maintain such qualifications in effect as
long as requested by the Representative for the distribution of the Shares,
provided that the Company shall not be required to qualify as a foreign
corporation or to consent to the service of process under the laws of any such
state (except service of process with respect to the offering and sale of the
Shares);
(b) if, at the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration Statement to be
declared effective before the offering of the Shares may commence, the Company
will endeavor to cause such post-effective amendment to become effective as soon
as possible and will advise the Representative promptly and, if requested by the
Representative, will confirm such advice in writing, when such post-effective
amendment has become effective;
-13-
(c) to prepare the Prospectus in a form approved by the Underwriters
and file such Prospectus (or a term sheet as permitted by Rule 434) with the
Commission pursuant to Rule 424(b) under the Securities Act not later than 10:00
a.m. (New York City time), on the day following the execution and delivery of
this Agreement or on such other day as the parties may mutually agree and to
furnish promptly (and with respect to the initial delivery of such Prospectus,
not later than 10:00 a.m. (New York City time) on the day following the
execution and delivery of this Agreement or on such other day as the parties may
mutually agree to the Underwriters copies of the Prospectus (or of the
Prospectus as amended or supplemented if the Company shall have made any
amendments or supplements thereto after the effective date of the Registration
Statement) in such quantities and at such locations as the Underwriters may
reasonably request for the purposes contemplated by the Securities Act
Regulations, which Prospectus and any amendments or supplements thereto
furnished to the Underwriters will be identical to the version created to be
transmitted to the Commission for filing via XXXXX, except to the extent
permitted by Regulation S-T;
(d) to advise the Representative promptly and (if requested by the
Representative) to confirm such advice in writing, when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective under the Securities Act Regulations;
(e) to advise the Representative immediately, confirming such advice in
writing, of (i) the receipt of any comments from, or any request by, the
Commission for amendments or supplements to the Registration Statement or
Prospectus or for additional information with respect thereto, or (ii) the
issuance by the Commission of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, or of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes and, if
the Commission or any other government agency or authority should issue any such
order, to make every reasonable effort to obtain the lifting or removal of such
order as soon as possible; to advise the Representative promptly of any proposal
to amend or supplement the Registration Statement or Prospectus and to file no
such amendment or supplement to which the Representative shall reasonably object
in writing;
(f) to furnish to the Underwriters for a period of five years from the
date of this Agreement (i) as soon as available, copies of all annual, quarterly
and current reports or other communications supplied to holders of shares of
Common Stock, (ii) as soon as practicable after the filing thereof, copies of
all reports filed by the Company with the Commission, the NASD or any securities
exchange and (iii) such other information as the Underwriters may reasonably
request regarding the Company and the Subsidiaries; provided, that the Company
shall not be required to furnish to the Underwriters any such reports or
communications that have been filed with the Commission and are available on the
Commission's XXXXX system;
(g) to advise the Underwriters promptly of the happening of any event
known to the Company within the time during which a Prospectus relating to the
Shares is required to be delivered under the Securities Act Regulations which,
in the judgment of the Company or in the reasonable opinion of the
Representative or counsel for the Underwriters, would require the making of any
change in the Prospectus then being used so that the Prospectus would not
include an untrue statement of a material fact or omit to state a material fact
required to be stated therein
-14-
or necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading, or if it is necessary at any time to
amend or supplement the Prospectus to comply with any law and, during such time,
to promptly prepare and furnish to the Underwriters copies of the proposed
amendment or supplement before filing any such amendment or supplement with the
Commission and thereafter promptly furnish at the Company's own expense to the
Underwriters and to dealers, copies in such quantities and at such locations as
the Representative may from time to time reasonably request of an appropriate
amendment to the Registration Statement or supplement to the Prospectus so that
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when it is so delivered, be misleading, or so that the Prospectus
will comply with applicable law;
(h) to file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Representative, be required by
the Securities Act or requested by the Commission;
(i) prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus or any Prospectus
pursuant to Rule 424 under the Securities Act, to furnish a copy thereof to the
Representative and counsel for the Underwriters and will not file any such
amendment, supplement or Prospectus to which the Representative reasonably
objects;
(j) to furnish promptly to each Representative a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments or supplements thereto (including all exhibits filed therewith or
incorporated by reference therein) and such number of conformed copies of the
foregoing as the Representative may reasonably request;
(k) to furnish to each Representative, not less than two business days
before filing with the Commission subsequent to the effective date of the
Prospectus and during the period referred to in paragraph (f) above, a copy of
any document proposed to be filed with the Commission pursuant to Section 13, 14
or 15(d) of the Exchange Act and during such period to file all such documents
in the manner and within the time periods required by the Exchange Act and the
Exchange Act Regulations;
(l) to apply the net proceeds of the sale of the Shares in accordance
with its statements under the caption "Use of Proceeds" in the Prospectus;
(m) to make generally available to its security holders and to deliver
to the Representative as soon as practicable, but in any event not later than
the end of the fiscal quarter first occurring after the first anniversary of the
effective date of the Registration Statement an earnings statement complying
with the provisions of Section 11(a) of the Securities Act (in form, at the
option of the Company, complying with the provisions of Rule 158 of the
Securities Act Regulations,) covering a period of 12 months beginning after the
effective date of the Registration Statement;
(n) to use its best efforts to maintain the quotation of the Shares on
the New York Stock Exchange and to file with the New York Stock Exchange all
documents and notices
-15-
required by the New York Stock Exchange of companies that have securities that
are traded and quotations for which are reported by the New York Stock Exchange;
(o) to engage and maintain, at its expense, a registrar and transfer
agent for the Shares;
(p) to refrain during a period of 90 days from the date of the
Prospectus, without the prior written consent of the Representative, from,
directly or indirectly, (i) offering, pledging, selling, contracting to sell,
selling any option or contract to purchase, purchasing any option or contract to
sell, granting any option for the sale of, or otherwise disposing of or
transferring, (or entering into any transaction or device which is designed to,
or could be expected to, result in the disposition by any person at any time in
the future of), any share of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock, or filing any registration
statement under the Securities Act with respect to any of the foregoing, or (ii)
entering into any swap or any other agreement or any transaction that transfers,
in whole or in part, directly or indirectly, the economic consequence of
ownership of the Common Stock, whether any such swap or transaction described in
clause (i) or (ii) above is to be settled by delivery of Common Stock or such
other securities, in cash or otherwise. The foregoing sentence shall not apply
to (A) the Shares to be sold hereunder, (B) any shares of Common Stock issued by
the Company upon the exercise of an option outstanding on the date hereof and
referred to in the Prospectus; or (C) options to purchase Common Stock that are
granted automatically in accordance with the terms of the Company's directors'
stock option plan;
(q) not to, and to use its best efforts to cause its officers,
directors and affiliates not to, (i) take, directly or indirectly prior to
termination of the underwriting syndicate contemplated by this Agreement, any
action designed to stabilize or manipulate the price of any security of the
Company, or which may cause or result in, or which might in the future
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
any of the Shares, (ii) sell, bid for, purchase or pay anyone any compensation
for soliciting purchases of the Shares or (iii) pay or agree to pay to any
person any compensation for soliciting any order to purchase any other
securities of the Company;
(r) to cause certain stockholders, officers and directors of the
Company, listed on Schedule IV, to furnish to the Representative, prior to the
first Date of Delivery, a letter or letters, substantially in the form of Annex
C hereto, pursuant to which each such person shall agree not to, directly or
indirectly, (1) offer for sale, sell, pledge or otherwise dispose of (or enter
into any transaction or device which is designed to, or could be expected to,
result in the disposition by any person at any time in the future of) any shares
of Common Stock or securities convertible into or exchangeable for Common Stock
or (2) enter into any swap or other derivatives transaction that transfers to
another, in whole or in part, any of the economic benefits or risks of ownership
of such shares of Common Stock, whether any such transaction described in clause
(1) or (2) above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, in each case for a period of 90 days, except
in the case of Shell for 45 days, from the date of the Prospectus, without the
prior written consent of the Representative on behalf of the Underwriters; and
-16-
(s) that the Company will comply with all of the provisions of any
undertakings in the Registration Statement.
5. Payment of Expenses:
(a) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated hereunder are consummated or this Agreement is
terminated, including expenses, fees and taxes in connection with (i) the
preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment), (ii) the preparation,
issuance and delivery of the certificates for the Shares to the Underwriters,
including any stock or other transfer taxes or duties payable upon the sale of
the Shares to the Underwriters, (iii) the printing of this Agreement and any
dealer agreements and furnishing of copies of each to the Underwriters and to
dealers (including costs of mailing and shipment), (iv) the qualification of the
Shares for offering and sale under state laws that the Company and the
Representative have mutually agreed are appropriate and the determination of
their eligibility for investment under state law as aforesaid (including the
legal fees and filing fees and other disbursements of counsel for the
Underwriters) and the printing and furnishing of copies of any blue sky surveys
or legal investment surveys to the Underwriters and to dealers, (v) filing for
review of the public offering of the Shares by the NASD (including the legal
fees and filing fees and other disbursements of counsel for the Underwriters
relating thereto), (vi) any transfer agent or registrar for the Shares and
miscellaneous expenses referred to in the Registration Statement, (vii) the
listing of the Shares on the New York Stock Exchange, (viii) making road show
presentations with respect to the offering of the Shares, and (ix) the
performance of the Company's other obligations hereunder. Upon the request of
the Representative, the Company will provide funds in advance for filing fees.
Notwithstanding anything contained in this Agreement to the contrary, the
Underwriters shall pay, and the Company shall not be responsible for, all costs
and expenses incident to the printing and distribution of the Preliminary
Prospectus Supplement dated July 26, 2004.
(b) Subject to Section 5(a), the Company agrees to reimburse the
Representative for its reasonable out-of-pocket expenses in connection with the
performance of its activities under this Agreement, including, but not limited
to, costs such as printing, facsimile, courier service, direct computer
expenses, accommodations and travel, but excluding the fees and expenses of the
Underwriters' outside legal counsel and any other advisors, accountants,
appraisers, etc. (other than the fees and expenses of counsel with respect to
state securities or blue sky laws and obtaining the filing for review of the
public offering of the Shares by the NASD, all of which shall be reimbursed by
the Company pursuant to the provisions of subsection (a) above).
(c) If this Agreement shall be terminated by the Underwriters, or any
of them, because of any failure or refusal on the part of the Company to comply
with the terms or to fulfill any of the conditions of this Agreement, or if for
any reason the Company shall be unable to perform its obligations under this
Agreement, the Company will reimburse the Underwriters or such Underwriters as
have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (such as printing, facsimile, courier service, direct
computer expenses, accommodations, travel and the fees and disbursements of
Underwriters' counsel and
-17-
any other advisors, accountants, appraisers, etc.) reasonably incurred by such
Underwriters in connection with this Agreement or the transactions contemplated
herein.
6. Conditions of the Underwriters' Obligations:
(a) The obligations of the Underwriters hereunder to purchase Shares on
the Closing Date or on the Additional Closing Date, as applicable, are subject
to the accuracy of the representations and warranties on the part of the Company
hereunder on the date hereof and at the Closing Date and on the Additional
Closing Date, as applicable, the performance by the Company of its obligations
hereunder and to the satisfaction of the following further conditions on the
Closing date or on the Additional Closing Date, as applicable:
(b) The Company shall furnish to the Underwriters on the Closing Date
and on the Additional Closing Date, as the case may be, an opinion of Fulbright
& Xxxxxxxx L.L.P., counsel for the Company and the Subsidiaries, addressed to
the Underwriters and dated the Closing Date or the Additional Closing Date, as
the case may be, and in form and substance satisfactory to Xxxxxxx Xxxxx LLP,
counsel for the Underwriters, to the effect set forth in Annex A hereto.
(c) On the date of this Agreement, on the Closing Date and on the
Additional Closing Date, as applicable, the Representative shall have received
from BDO Xxxxxxx, letters dated the respective dates of delivery thereof and
addressed to the Representative, in form and substance satisfactory to the
Representative, relating to the financial statements, including any pro forma
financial statements, of the Company and the Subsidiaries, and such other
matters customarily covered by comfort letters issued in connection with
registered public offerings for periods on or after January 1, 2003.
(d) On the date of this Agreement, on the Closing Date and on the
Additional Closing Date, as applicable, the Representative shall have received
from Ernst & Young LLP, letters dated the respective dates of delivery thereof
and addressed to the Representative, in form and substance satisfactory to the
Representative, relating to the financial statements, including any pro forma
financial statements, of the Company and the Subsidiaries, and such other
matters customarily covered by comfort letters issued in connection with
registered public offerings for periods prior to January 1, 2003.
(e) The Engineer shall have delivered to the Underwriter on the date
hereof, on the Closing Date and on the Additional Closing Date, as applicable, a
letter (the "Reserve Comfort Letter") in form and substance reasonably
satisfactory to the Underwriter and substantially in the form attached hereto as
Annex B, stating, as of the date of such letter (or, with respect to matters
involving changes or developments since the respective dates as of which
specified information with respect to the oil and gas reserves is given or
incorporated in the Prospectus as of the date not more than five days prior to
the date of such letter), the conclusions and findings of such firm with respect
to the oil and gas reserves of the Company.
(f) The Representative shall have received on the Closing Date and on
the Additional Closing Date, as applicable, the favorable opinion of Xxxxxxx
Xxxxx LLP, dated the Closing Date or the Additional Closing Date, as the case
may be, addressed to the Representative and in form and substance satisfactory
to the Representative.
-18-
(g) No amendment or supplement to the Registration Statement or
Prospectus shall have been filed to which the Underwriters shall have objected
in writing.
(h) Prior to the Closing Date and the Additional Closing Date, as
applicable, (i) no stop order suspending the effectiveness of the Registration
Statement or any order preventing or suspending the use of any Preliminary
Prospectus or Prospectus has been issued, and no proceedings for such purpose
shall have been initiated or threatened, by the Commission, and no suspension of
the listing of the Shares for offering or sale in any jurisdiction, or the
initiation or threatening of any proceedings for any of such purposes, has
occurred; (ii) all requests for additional information on the part of the
Commission shall have been complied with to the reasonable satisfaction of the
Representative; (iii) the Prospectus shall have been timely filed with the
Commission under the Securities Act and in accordance with Section 4(c) hereof;
and (iv) the Registration Statement and the Prospectus shall 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.
(i) Subsequent to the execution and delivery of this Agreement and
prior to the Closing Date, (i) there shall not have occurred any downgrading,
nor shall any notice have been given of any downgrading in the rating accorded
the Company or any securities or preferred stock of or guaranteed by the Company
or any of its Subsidiaries by any "nationally recognized statistical rating
organization", as such term is defined by the Commission for purposes of Rule
436(g)(2) under the Securities Act and (ii) no such organization shall have
publicly announced that it has under surveillance or review, or has changed its
outlook with respect to, its rating of the Company or any securities or
preferred stock of, or guaranteed by, the Company or any of its Subsidiaries
(other than an announcement with positive implications of a possible upgrading).
(j) Subsequent to the execution and delivery of this Agreement, no
event or condition of a type described in Section 3(e) hereof shall have
occurred or shall exist, which event or condition is not described in the
Prospectus (excluding any amendment or supplement thereto) and the effect of
which in the judgment of the Representative makes it impracticable or
inadvisable to proceed with the offering, sale or delivery of the Shares on the
Closing Date or the Additional Closing Date, as the case may be, on the terms
and in the manner contemplated by this Agreement and the Prospectus.
(k) All filings with the Commission required by Rule 424 under the
Securities Act to have been filed by the Closing Date shall have been made
within the applicable time period prescribed for such filing by such Rule.
(l) The Shares shall have been approved for listing on the New York
Stock Exchange.
(m) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
-19-
(n) The Representative shall have received lock-up agreements from each
officer, director, and stockholder of the Company listed on Schedule IV, in the
form of Annex C attached hereto, and such letter agreements shall be in full
force and effect.
(o) The Company will, at the Closing Date and on the Additional Closing
Date, as applicable, deliver to the Underwriters a certificate of its Chairman
of the Board, Chief Executive Officer, President, Chief Operating Officer or
Vice President and Chief Accounting Officer or Chief Financial Officer, (i)
confirming that such officers have carefully reviewed the Registration Statement
and the Prospectus and, to the best knowledge of such officers, the
representation set forth in Section 3(b) hereof is true and correct, (ii)
confirming that the other representations and warranties of the Company in this
Agreement are correct and that the Company has complied with all agreements and
satisfied all conditions on its part to be performed or satisfied hereunder at
or prior to such Closing Date or the Additional Closing Date, as the case may
be, and (iii) to the effect set forth in paragraphs (h), (i) and (j) above.
(p) The Company shall have furnished to the Underwriters such other
documents and certificates as to the accuracy and completeness of any statement
in the Registration Statement and the Prospectus, the representations,
warranties and statements of the Company contained herein, and the performance
by the Company of its covenants contained herein, and the fulfillment of any
conditions contained herein, as of the Closing Date or the Additional Closing
Date, as the case may be, as the Underwriters may reasonably request.
7. Termination:
Notwithstanding anything contained herein, the obligations of the
several Underwriters hereunder shall be subject to termination in the absolute
discretion of the Representative, at any time prior to the Closing Date or the
Additional Closing Date, as the case may be, (i) if any of the conditions
specified in Section 6 shall not have been fulfilled when and as required by
this Agreement to be fulfilled, or (ii) if there has been since the respective
dates as of which information is given in the Registration Statement, any
Material Adverse Change, or any development involving a prospective Material
Adverse Change, or material change in management of the Company or any
Subsidiary, whether or not arising in the ordinary course of business, or (iii)
if there has occurred any outbreak or escalation of hostilities or other
national or international calamity or crisis or change in economic, political or
other conditions the effect of which on the financial markets of the United
States is such as to make it, in the judgment of the Representative,
impracticable to market the Shares or enforce contracts for the sale of the
Shares, or (iv) if trading in any securities of the Company has been suspended
by the Commission or by the New York Stock Exchange, or if trading generally on
the New York Stock Exchange or in the Nasdaq over-the-counter market has been
suspended (including an automatic halt in trading pursuant to market-decline
triggers, other than those in which solely program trading is temporarily
halted), or limitations on prices for trading (other than limitations on hours
or numbers of days of trading) have been fixed, or maximum ranges for prices for
securities have been required, by such exchange or the NASD or the
over-the-counter market or by order of the Commission or any other governmental
authority, or (v) if there has been any downgrade in the rating of any of 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), or (vi) any federal or state statute, regulation, rule or
order of any court or other governmental
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authority has been enacted, published, decreed or otherwise promulgated which,
in the reasonable opinion of the Representative, materially adversely affects or
will materially adversely affect the business or operations of the Company, or
(vii) any action has been taken by any federal, state or local government or
agency in respect of its monetary or fiscal affairs which, in the reasonable
opinion of the Representative, has a material adverse effect on the securities
markets in the United States.
If the Representative elects to terminate this Agreement as provided in
this Section 7, the Company and the Underwriters shall be notified promptly by
telephone, promptly confirmed by facsimile.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply in all material respects with any of the terms of this
Agreement, the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Sections 5 and 9 hereof) and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 9 hereof) or to one another
hereunder.
8. Increase in Underwriters' Commitments:
If any Underwriter shall default at the Closing Date or on the
Additional Closing Date, as the case may be, in its obligation to take up and
pay for the Shares to be purchased by it under this Agreement on such date, the
Representative shall have the right, within 36 hours after such default, to make
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase all, but not less than all, of the Shares which such
Underwriter shall have agreed but failed to take up and pay for (the "Defaulted
Shares"). Absent the completion of such arrangements within such 36-hour period,
(i) if the total number of Defaulted Shares does not exceed 10% of the total
number of Shares to be purchased on such date, each non-defaulting Underwriter
shall take up and pay for (in addition to the number of Shares which it is
otherwise obligated to purchase on such date pursuant to this Agreement) the
portion of the total number of Shares agreed to be purchased by the defaulting
Underwriter on such date in the proportion that its underwriting obligations
hereunder bears to the underwriting obligations of all non-defaulting
Underwriters; and (ii) if the total number of Defaulted Shares exceeds 10% of
such total, the Representative may terminate this Agreement by notice to the
Company, without liability of any party to any other party except that the
provisions of Sections 5 and 9 hereof shall at all times be effective and shall
survive such termination.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Shares hereunder on such date unless all of the Shares to be
purchased on such date are purchased on such date by the Underwriters (or by
substituted Underwriters selected by the Representative with the approval of the
Company or selected by the Company with the approval of the Representative).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Date or
the Additional Closing Date, as the case may be,
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for a period not exceeding five business days in order that any necessary
changes in the Registration Statement and Prospectus and other documents may be
effected.
The term "Underwriter" as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with the same effect as
if such substituted Underwriter had originally been named in this Agreement.
9. Indemnity and Contribution by the Company and the Underwriters:
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter and any person who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any loss, expense, liability, damage or claim (including, without
limitation, legal fees and other expenses incurred in connection with any suit,
action or proceeding or any claim asserted and any out-of-pocket expenses
reasonably incurred by any Underwriter, its affiliates, directors and officers
or any person who controls such Underwriter, its affiliates, directors and
officers or any person who controls such Underwriter in connection with
investigating or defending any such loss, claim, damage or liability, action or
proceeding or in responding to a subpoena or governmental inquiry related to the
offering of the Shares, whether or not such Underwriter or person is a party to
any action or proceeding, as such fees and expenses are incurred), which,
jointly or severally, any such Underwriter or controlling person may incur under
the Securities Act, the Exchange Act or otherwise, insofar as such loss,
expense, liability, damage or claim arises out of or is based upon (A) any
breach of any representation, warranty or covenant of the Company contained
herein, (B) any failure on the part of the Company to comply with any applicable
law, rule or regulation relating to the offering of securities being made
pursuant to the Prospectus, (C) any untrue statement or alleged untrue statement
of a material fact contained in the Registration Statement (or in the
Registration Statement as amended by any post-effective amendment thereof by the
Company), the Prospectus (the term Prospectus for the purpose of this Section 9
being deemed to include any Preliminary Prospectus, the Prospectus and the
Prospectus as amended or supplemented by the Company), (D) any application or
other document, or any amendment or supplement thereto, executed by the Company
or based upon written information furnished by or on behalf of the Company filed
in any jurisdiction (domestic or foreign) in order to qualify the Shares under
the securities or blue sky laws thereof or filed with the Commission or any
securities association or securities exchange (each an "Application"), (E) any
omission or alleged omission to state a material fact required to be stated in
any such Registration Statement, Prospectus or any Application or necessary to
make the statements made therein, in the light of the circumstances under which
they were made, not misleading, or (F) any untrue statement or alleged untrue
statement of any material fact contained in any audio or visual materials used
in connection with the marketing of the Shares, including, without limitation,
slides, videos, films and tape recordings; except insofar as any such loss,
expense, liability, damage or claim arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission of a
material fact contained in and in conformity with information furnished in
writing by the Underwriters through the Representative to the Company expressly
for use in such Registration Statement, Prospectus or Application; provided,
however, that the Company shall not be liable to any Underwriter under the
indemnity agreement in this Section 9 to the extent, but only to the extent,
that (i) such loss, claim, damage, or liability of such Underwriter results from
an untrue statement of a material fact or an omission of a material fact
contained in the Preliminary
-22-
Prospectus, which untrue statement or omission was completely corrected in the
Prospectus and (ii) the Company had previously furnished sufficient quantities
(as requested by the Underwriters) of the Prospectus to the Underwriters within
a reasonable amount of time prior to such sale or such confirmation and (iii)
such Underwriter failed to deliver the Prospectus, if required by law to have so
delivered it, and such delivery would have cured the defect giving rise to such
loss, claim, liability, expense or damage. The indemnity agreement set forth in
this Section 9(a) shall be in addition to any liability which the Company may
otherwise have.
If any action is brought against an Underwriter or controlling person
in respect of which indemnity may be sought against the Company pursuant to
subsection (a) above, such Underwriter shall promptly notify the Company in
writing of the institution of such action, and the Company shall assume the
defense of such action, including the employment of counsel and payment of
expenses; provided, however, that any failure or delay to so notify the Company
will not relieve the Company of any obligation hereunder, except to the extent
that its ability to defend is actually impaired by such failure or delay. Such
Underwriter or controlling person 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 Underwriter or such controlling person unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such action, or the Company shall not have
employed counsel to have charge of the defense of such action within a
reasonable time or such indemnified party or parties shall have reasonably
concluded (based on the advice of counsel) that there may be defenses available
to it or them which are different from or additional to those available to the
Company (in which case the Company 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 Company and paid as
incurred (it being understood, however, that the Company shall not be liable for
the expenses of more than one separate firm of attorneys for the Underwriters or
controlling persons in any one action or series of related actions in the same
jurisdiction (other than local counsel in any such jurisdiction) representing
the indemnified parties who are parties to such action). Anything in this
paragraph to the contrary notwithstanding, the Company shall not be liable for
any settlement of any such claim or action effected without its consent.
(b) Each Underwriter agrees, severally and not jointly, to indemnify,
defend and hold harmless the Company, the Company's directors, the Company's
officers that signed the Registration Statement, and any person who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, from and against any loss, expense, liability, damage or claim
(including the reasonable cost of investigation) which, jointly or severally,
the Company, or any such person may incur under the Securities Act, the Exchange
Act or otherwise, but only insofar as such loss, expense, liability, damage or
claim arises out of or is based upon (A) any untrue statement or alleged untrue
statement of a material fact contained in and in conformity with information
furnished in writing by such Underwriter through the Representative to the
Company expressly for use in the Registration Statement (or in the Registration
Statement as amended by any post-effective amendment thereof by the Company),
the Prospectus, or any Application, or (B) any omission or alleged omission to
state a material fact in connection with such information required to be stated
either in such Registration Statement, Prospectus or any Application or
necessary to make such information, in the light of the circumstances under
which made, not misleading. The statements set forth in the fourth,
-23-
fifth, eighth, ninth, tenth, eleventh, twelfth and fourteenth paragraphs under
the caption "Underwriting" in the Preliminary Prospectus and the Prospectus
constitute the only information furnished by or on behalf of any Underwriter
through the Representative to the Company for purposes of Section 3(k) and this
Section 9. The indemnity agreement set forth in this Section 9(b) shall be in
addition to any liabilities that such Underwriter may otherwise have.
If any action is brought against the Company, or any such person in
respect of which indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Company, or such person shall promptly notify the
Representative in writing of the institution of such action and the
Representative, on behalf of the Underwriters, shall assume the defense of such
action, including the employment of counsel and payment of expenses. The
Company, or such person shall have the right to employ its own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
the Company, or such person unless the employment of such counsel shall have
been authorized in writing by the Representative in connection with the defense
of such action or the Representative shall not have employed counsel to have
charge of the defense of such action within a reasonable time or such
indemnified party or parties shall have reasonably concluded (based on the
advice of counsel) that there may be defenses available to it or them which are
different from or additional to those available to the Underwriters (in which
case the Representative 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 such Underwriter and paid as incurred
(it being understood, however, that the Underwriters shall not be liable for the
expenses of more than one separate firm of attorneys in any one action or series
of related actions in the same jurisdiction (other than local counsel in any
such jurisdiction) representing the indemnified parties who are parties to such
action). Anything in this paragraph to the contrary notwithstanding, no
Underwriter shall be liable for any settlement of any such claim or action
effected without the written consent of the Representative.
(c) If the indemnification provided for in this Section 9 is
unavailable or insufficient to hold harmless an indemnified party under
subsections (a), (b) and (c) of this Section 9 in respect of any losses,
expenses, liabilities, damages or claims referred to therein, then each
applicable indemnifying party, in lieu of indemnifying such indemnified party,
shall contribute to the amount paid or payable by such indemnified party as a
result of such losses, expenses, liabilities, damages or claims (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company, and the Underwriters from the offering of the Shares or (ii) if (but
only if) the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, and of the Underwriters in connection with the statements or
omissions which resulted in such losses, expenses, liabilities, damages or
claims, as well as any other relevant equitable considerations. The relative
benefits received by the Company, and the Underwriters shall be deemed to be in
the same proportion as the total proceeds from the offering (net of underwriting
discounts and commissions but before deducting expenses) received by the Company
bear to the underwriting discounts and commissions received by the Underwriters.
The relative fault of the Company, and of the Underwriters shall be determined
by reference to, among other things, whether the untrue statement or alleged
untrue statement of a material fact or omission or alleged omission relates to
information supplied by the Company, or by the Underwriters and the parties'
relative intent, knowledge,
-24-
access to information and opportunity to correct or prevent such statement or
omission. The amount paid or payable by a party as a result of the losses,
claims, damages and liabilities referred to above shall be deemed to include any
legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any claim or action.
(d) The Company, and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 9 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in subsection (c)(i) and, if applicable
(ii), above. Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the underwriting
discounts and commissions applicable to the Shares purchased by such
Underwriter. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to their respective underwriting commitments
and not joint.
10. Survival:
The indemnity and contribution agreements contained in Section 9 and
the covenants, warranties and representations of the Company contained in
Sections 3, 4 and 5 of this Agreement shall remain in full force and effect
regardless of any investigation made by or on behalf of any Underwriter, or any
person who controls any Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, or by or on behalf of the
Company, its directors and officers, or any person who controls the Company
within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and shall survive any termination of this Agreement or the sale
and delivery of the Shares. The Company, and each Underwriter agree promptly to
notify the others of the commencement of any litigation or proceeding against it
and, in the case of the Company, against any of the Company's officers and
directors, in connection with the sale and delivery of the Shares, or in
connection with the Registration Statement or Prospectus.
11. Notices:
Except as otherwise herein provided, all statements, requests, notices
and agreements shall be in writing or by telegram and, if to the Underwriters,
shall be sufficient in all respects if delivered to Friedman, Billings, Xxxxxx &
Co., Inc., 0000 00xx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000 (fax: (703)
000-0000), Attention: Syndicate Department, with a copy to: Xxxxxxx Xxxxx LLP,
000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 (fax: (000) 000-0000),
Attention: Xxxxx X. Xxxx; if to the Company, shall be sufficient in all respects
if delivered to the Company at the offices of the Company at 0000 Xxxxxxx
Xxxxxxx, Xxxxx 000, Xxxxxxx, Xxxxx, 00000 (fax: (000) 000-0000), Attention:
Xxxxxx X. Xxxxxx, Xx., with a copy to Fulbright & Xxxxxxxx L.L.P., 0000
XxXxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx, 00000 (fax: (000) 000-0000), Attention:
Xxxxxxx X. Xxxxxxx.
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12. Governing Law; Headings:
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH,
THE LAWS OF THE COMMONWEALTH OF VIRGINIA, WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES. The section headings in this Agreement have been inserted as a
matter of convenience of reference and are not a part of this Agreement.
13. Parties at Interest:
The Agreement herein set forth has been and is made solely for the
benefit of the Underwriters, the Company, and the controlling persons, directors
and officers referred to in Sections 9 and 10 hereof, and their respective
successors, assigns, executors and administrators. No other person, partnership,
association or corporation (including a purchaser, as such purchaser, from any
of the Underwriters) shall acquire or have any right under or by virtue of this
Agreement.
14. Counterparts and Facsimile Signatures:
This Agreement may be signed by the parties in counterparts which
together shall constitute one and the same agreement among the parties. A
facsimile signature shall constitute an original signature for all purposes.
-26-
If the foregoing correctly sets forth the understanding among the
Company, and the Underwriters, please so indicate in the space provided below
for the purpose, whereupon this Agreement shall constitute a binding agreement
among the Company and the Underwriters.
Very truly yours,
THE MERIDIAN RESOURCE CORPORATION
By: /s/ Xxxxxxx X. Xxxxxx
--------------------------------
By: Xxxxxxx X. Xxxxxx
Title: President
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
By: /s/ Xxxxx X. Xxxxxxxxx
---------------------------------
Title: Senior Managing Director
For itself and as Representative of the other
Underwriters named on Schedule II hereto.
-27-
