EXHIBIT 1.1
PETROQUEST ENERGY, INC.
5,000,000 SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
October 30, 2002
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
Potomac Tower
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
PetroQuest Energy, Inc., a Delaware corporation (the "Company"), hereby
confirms its agreement with Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. (the
"Underwriter") with respect to (i) the sale by the Company of an aggregate of
5,000,000 shares (the "Initial Shares") of common stock, par value $0.001 per
share, of the Company (the "Common Stock") and the purchase by the Underwriter
of the Initial Shares and (ii) the grant of the option described in Section 1(b)
hereof to purchase all or any part of 750,000 additional shares of Common Stock
to cover overallotments (the "Option Shares"), if any, from the Company to the
Underwriter. The Initial Shares to be purchased by the Underwriter and all or
any part of the Option Shares subject to the option described in Section 1(b)
hereof are hereinafter collectively referred to as the "Shares."
The Company has prepared and filed with the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-3 (No.
333-63920) for the registration of the offer and sale of its securities,
including the Shares, under the Securities Act of 1933, as amended (the
"Securities Act"), and the rules and regulations thereunder (the "Securities Act
Regulations") in accordance with Rule 415 under the Securities Act, and one or
more amendments to such registration statement have been so filed, if
applicable. Copies of such registration statement and of each amendment thereto,
if any, heretofore filed by the Company with the Commission have been delivered
to the Underwriter. Such registration statement (as so amended) has been
declared effective by the Commission.
The Company has filed or will file with the Commission a prospectus
supplement specifically relating to the Shares with the information required by
Rule 430A under the Securities Act or permitted by Rule 424(b) under the
Securities Act which has been provided to and approved by the Underwriter prior
to the execution of this Agreement.
The registration statement as amended at the time it became effective
(including all exhibits, financial schedules and 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 of the
Securities Act Regulations or otherwise) is hereinafter called the "Registration
Statement," provided that, all references to the "Registration Statement" shall
be deemed to
include all documents incorporated therein by reference prior to the execution
of this Agreement, and if the Company files a post-effective amendment to such
registration statement which becomes effective prior to the Closing Time (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 462(b) Registration Statement. The term "Basic Prospectus"
means the prospectus included in the Registration Statement; and the term
"Prospectus" means the Basic Prospectus and the final prospectus first furnished
to the Underwriter for use in connection with the offering of the Shares and
filed with the Commission pursuant to Rule 424(b) under the Securities Act.
As used herein, the terms "Basic Prospectus" and "Prospectus" include
in each case, the documents incorporated by reference therein. All references in
this Agreement to financial statements and schedules and other information which
is "contained," "included" or "stated" (or other references of like import) in
the Registration Statement or Prospectus shall be deemed to mean and include all
such financial statements and schedules and other information which is
incorporated by reference in the Registration Statement or Prospectus, as the
case may be; and all references in this Agreement to amendments or supplements
to the Registration Statement or Prospectus shall be deemed to mean and include
the filing of any document which is incorporated by reference in the
Registration Statement or Prospectus, as the case may be.
The Company understands that the Underwriter proposes to make a public
offering of the Shares as soon as the Underwriter deems advisable after this
Agreement has been executed and delivered. The Company hereby confirms that the
Underwriter and dealers have been authorized to distribute or cause to be
distributed the Prospectus (as from time to time amended or supplemented if the
Company furnishes any amendments or supplements thereto to the Underwriter).
The Company and the Underwriter 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 $4.08, the Company agrees to sell to the Underwriter the
Initial Shares, and the Underwriter agrees to purchase from the Company the
Initial 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 purchase all or any part of the Option Shares to the
Underwriter. The option hereby granted will expire 30 days after the date hereof
and may be exercised in whole or in part (but not more than once) 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 Underwriter
to the Company setting forth the number of Option Shares as to which the
Underwriter is exercising the option and the time and date of payment and
delivery for such Option Shares. Such time and date of delivery (the "Date of
Delivery") shall be determined by the Underwriter, but shall not be later than
three full business
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days (or earlier, without the consent of the Company, than two full business
days) after the exercise of said option, nor in any event prior to the Closing
Time, as hereinafter defined. If the option is exercised as to all or any
portion of the Option Shares, the Company will sell, and the Underwriter will
purchase, the number of Option Shares set forth in the notice from the
Underwriter.
2. Payment and Delivery:
(a) Initial Shares. Payment of the purchase price for the
Initial Shares shall be made to the Company by wire transfer of immediately
available funds at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (unless another place shall be agreed upon by
the Underwriter and the Company) against delivery of the Initial Shares to the
Underwriter through the facilities of the Depository Trust Company. Such payment
and delivery shall be made at 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, not later than ten business days
after such date, shall be agreed to by the Underwriter and the Company). The
time at which such payment and delivery are actually made is hereinafter
sometimes referred to as the "Closing Time." The Company shall deliver to the
Company's transfer agent at least 24 hours prior to the Closing Time,
instructions in form and substance satisfactory to the Underwriter, instructing
such transfer agent to register the Initial Shares through the Full Fast system
of the Depository Trust Company at the Closing Time.
(b) Option Shares. In addition, in the event the option with
respect to the Option Shares is exercised in whole or in part, payment of the
purchase price for the Option Shares so purchased shall be made to the Company
by wire transfer of immediately available funds at the offices of ▇▇▇▇▇▇ &
▇▇▇▇▇▇ L.L.P., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (unless
another place shall be agreed upon by the Underwriter and the Company), against
delivery of the Option Shares through the facilities of the Depository Trust
Company to the Underwriter. Such payment and delivery shall be made at 9:30
a.m., New York City time, on the Date of Delivery determined pursuant to Section
1(b) above. The Company shall deliver to the Company's transfer agent at least
24 hours prior to the Date of Delivery, instructions in form and substance
satisfactory to the Underwriter, instructing such transfer agent to register the
Option Shares through the Full Fast system of the Depository Trust Company at
the Date of Delivery.
3. Representations and Warranties of the Company: The Company
represents and warrants to, and agrees with, the Underwriter that:
(a) The Company meets the requirements for use of Form S-3
under the Securities Act. The Company meets the requirements of Rule
2710(b)(7)(C)(i) of the National Association of Securities Dealers, Inc.
("NASD") Manual, and is not required to file the Registration Statement or
Prospectus with the NASD. Each of the Registration Statement and any Rule 462(b)
Registration Statement has become effective under the Securities Act and no stop
order preventing or suspending the effectiveness of the Registration Statement
or any Rule 462(b) Registration Statement or the use of any preliminary
prospectus or the Prospectus has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company, are threatened by the Commission, and any request on
the part of the Commission for additional information has been complied with;
any
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required filing of the Prospectus and any supplement thereto pursuant to
Rule 424(b) of the Securities Act Regulations has been or will be made in the
manner and within the time period required by such Rule 424(b).
(b) When the Basic Prospectus was first filed with the
Commission, and when any amendment thereof or supplement thereto was first filed
with the Commission, it: (i) contained all statements required to be stated
therein in accordance with, and complied in all material respects with the
requirements of, the Securities Act, the Securities Act Regulations, the
Securities Exchange Act of 1934, as amended (the "Exchange Act") and the rules
and regulations of the Commission promulgated thereunder (the "Exchange Act
Regulations"); and (ii) did not include any untrue statement of a material fact
or omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading. When the Registration Statement or any amendment thereto (including
the filing of the Company's most recent Annual Report on Form 10-K with the
Commission (the "Annual Report on Form 10-K")) was or is declared effective, it:
(x) contained or will contain all statements required to be stated therein in
accordance with, and complied or will comply in all material respects with the
requirements of, the Securities Act, the Securities Act Regulations, the
Exchange Act and the Exchange Act Regulations; and (y) did not or will not
include any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein not misleading. When the
Prospectus or any amendment or supplement to the Prospectus is filed with the
Commission pursuant to Rule 424(b) (or, if the Prospectus or any part thereof or
such amendment or supplement is not required to be so filed, when the
Registration Statement or the amendment thereto containing such amendment or
supplement to the Prospectus was or is declared effective) and at the Closing
Time and the Date of Delivery, the Prospectus, as amended or supplemented at any
such time: (1) contained or will contain all statements required to be stated
therein in accordance with, and complied or will comply in all material respects
with the requirements of, the Securities Act, the Securities Act Regulations,
the Exchange Act and the Exchange Act Regulations; and (2) did not or will not
include any untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that the Company makes no warranty or representation in the foregoing provisions
of this paragraph 2(b) with respect to any statements in, or omissions from, the
Registration Statement or any amendment thereto or the Prospectus or any
amendment or supplement thereto in reliance upon and in conformity with written
information concerning the Underwriter and furnished to the Company by the
Underwriter specifically for use therein (that information being limited to that
described in the last sentence of the first paragraph of Section 8(b) hereof).
(c) The documents incorporated or deemed to be incorporated by
reference in the Registration Statement and the Prospectus, at the time they
were or hereafter are filed with the Commission, complied and will comply in all
material respects with the requirements of the Exchange Act and the Exchange Act
Regulations and when filed, and when read together with the other information in
the Prospectus, at the date of the Prospectus, did or will not include an untrue
statement of a material fact or omit to state a material fact necessary to make
the statements therein, in the light of the circumstances under which they were
made, not misleading.
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(d) The Prospectus delivered to the Underwriter for use in
connection with this offering will be identical to the version of the Prospectus
created to be transmitted to the Commission for filing via the Electronic Data
Gathering Analysis and Retrieval System ("▇▇▇▇▇"), except to the extent
permitted by Regulation S-T.
(e) Each of the Company, PetroQuest Energy, L.L.C. and
PetroQuest Oil & Gas, L.L.C. (PetroQuest Energy, L.L.C. and PetroQuest Oil &
Gas, L.L.C. each a "Subsidiary" and together the "Subsidiaries") has been duly
incorporated or formed and is validly existing and in good standing under the
laws of the jurisdiction of its incorporation or formation with full corporate
or other power and authority to own, lease, license and operate its respective
assets and properties and to conduct its respective business as described in the
Registration Statement and Prospectus and, in the case of the Company, to
execute and deliver this Agreement and to consummate the transactions
contemplated hereby (including the issuance and sale of the Shares).
(f) Each of the Company and each Subsidiary is duly qualified
or licensed to do business as a foreign corporation or other organization by
each jurisdiction in which the nature of the business conducted by it or the
location of the assets or properties owned, leased, licensed or operated by it
requires such qualification or license and in which the failure, individually or
in the aggregate, to be so qualified or licensed could have a material adverse
effect on the assets, business, operations, earnings, prospects, properties or
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole, and the Company and each of the Subsidiaries are duly qualified, and
are in good standing, in each jurisdiction in which they own or lease real
property or maintain an office and in which such qualification is necessary,
except where the failure to be so qualified and in good standing could not have
a material adverse effect on the assets, business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole. No Subsidiary is prohibited or restricted,
directly or indirectly, from paying dividends to the Company, or from making any
other distribution with respect to such Subsidiary's capital stock or from
repaying to the Company or any other Subsidiary any amounts which may from time
to time become due under any loans or advances to such Subsidiary from the
Company or such other Subsidiary, or from transferring any such Subsidiary's
property or assets to the Company or to any other Subsidiary; other than as
disclosed in the Prospectus, the Company does not control or own, directly or
indirectly, any capital stock or other equity securities of any other
corporation or any ownership interest in any partnership, limited liability
company, joint venture or other association.
(g) The Company and its Subsidiaries are in compliance in all
respects with all applicable laws, rules, regulations, writs, orders, decrees,
injunctions, and judgments, including those relating to transactions with
affiliates, except where such non-compliance would not have a material adverse
effect on the assets, business, operations, earnings, prospects, properties or
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole. To the best of knowledge of the Company, there are no proposed
prospective changes in any applicable laws, rules, regulations, writs, orders,
decrees, injunctions, and judgments that, if the Company and its Subsidiaries
conduct their business in substantially the same manner as on the date hereof,
would have a material adverse effect on the assets, business, operations,
earnings, prospects, properties or condition (financial or otherwise) of the
Company and its Subsidiaries, taken as a whole.
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(h) Neither the Company nor any of its Subsidiaries is in
breach or violation or in default (nor has any event occurred which with notice,
lapse of time or both would constitute a breach, violation or default), (A) of
or under any term or provision of its respective articles or certificate of
incorporation or charter or by-laws or limited liability company agreement, or
(B) in the performance or observance of any obligation, agreement, covenant or
condition contained in any license, indenture, mortgage, deed of trust, loan or
credit agreement or other agreement or instrument to which the Company or any of
its Subsidiaries is a party or by which any of them or their respective
properties is bound, except for such breaches or defaults which could not have a
material adverse effect on the assets, business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company and
its Subsidiaries, taken as a whole. The execution, delivery and performance of
this Agreement and consummation of any of the transactions contemplated hereby
(including the issuance and sale of the Shares), will not (A) conflict with, or
result in any breach or violation of, or constitute a default under (nor
constitute any event which with notice, lapse of time or both would constitute a
breach of or default under), or require any consent or waiver under, (i) any
provision of the articles or certificate of incorporation or charter or by-laws
of the Company or the limited liability company agreement of any of its
Subsidiaries, or (ii) any provision of any franchise, permit, license,
indenture, mortgage, deed of trust, loan or credit agreement or other agreement
or instrument to which the Company or any of its Subsidiaries is a party or by
which any of them or their respective properties may be bound or affected, or
under any federal, state, local or foreign law, regulation or rule or any writ,
injunction, decree, judgment or order applicable to the Company or any of its
Subsidiaries, except in the case of this clause (ii) for such breaches,
defaults, consents or waivers which would not have a material adverse effect on
the assets, business, operations, earnings, prospects, properties or condition
(financial or otherwise) of the Company and its Subsidiaries, taken as a whole;
or (B) result in the creation or imposition of any lien, charge, claim or
encumbrance upon any property or asset of the Company or its Subsidiaries.
(i) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and performance of
this Agreement and the issuance and sale of the Shares by the Company. This
Agreement has been duly authorized, executed and delivered by the Company and is
the legal, valid and binding agreement of the Company enforceable in accordance
with its terms, except as may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally, and by general principles of equity, and except to the extent that
the indemnification and contribution provisions of Section 8 hereof may be
limited by federal or state securities laws and public policy considerations in
respect thereof. No action is necessary by the Company's stockholders to
authorize the execution, delivery and performance of this Agreement by the
Company and the issuance and sale of the Shares by the Company.
(j) No approval, authorization, consent, license, permit,
certificate or order of or filing by or with any federal, state or local
governmental or regulatory commission, board, body, authority or agency is
required in connection with the Company's execution, delivery and performance of
this Agreement, its consummation of the transactions contemplated hereby or its
sale and delivery of the Shares, other than (i) such as have been obtained and
are in full force and effect, or will have been obtained and will be in full
force and effect at the Closing Time or the Date of Delivery, as the case may
be, under the Securities Act, (ii) such approvals as have been obtained and are
in full force and effect in connection with the approval of the quotation of the
6
Shares on the Nasdaq Stock Market ("Nasdaq") and (iii) any necessary
qualification under the securities or blue sky laws of the various jurisdictions
in which the Shares are being offered by the Underwriter.
(k) Each of the Company and its Subsidiaries has all necessary
licenses, authorizations, consents, permits, certificates and approvals and has
made all necessary filings required under any federal, state, local or foreign
law, regulation or rule, and has obtained all necessary licenses,
authorizations, consents, permits, certificates and approvals from other
persons, required in order to conduct their respective businesses as described
in the Prospectus, all of which are valid and in full force and effect, except
to the extent that any failure to have any such licenses, authorizations,
consents or approvals, to make any such filings or to obtain any such licenses,
authorizations, consents, permits, certificates or approvals could not,
individually or in the aggregate, have a material adverse effect on the assets,
business, operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole; neither the
Company nor any of its Subsidiaries is in violation of, in default under, or has
received any notice regarding a possible violation, default or revocation of any
such license, authorization, consent, permit, certificate or approval or any
federal, state, local or foreign law, regulation or rule or any decree, order or
judgment applicable to the Company or any of its Subsidiaries the effect of
which could be material and adverse to the assets, business, operations,
earnings, prospects, properties or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole; no event has occurred that
allows, or after notice or lapse of time would allow, revocation or termination
of any such license, authorization, consent, permit, certificate or approval or
results in any other material impairment of the rights of the Company or any
Subsidiary thereunder, except where such revocation or termination could not
have a material adverse effect on the assets, business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole.
(l) The Company had an authorized capitalization as set forth
in the Prospectus as of the dates set forth therein; the outstanding shares of
capital stock of the Company and its Subsidiaries have been duly and validly
authorized and issued and are fully paid and non-assessable and none of them was
issued in violation of any preemptive or other similar right, and, except as set
forth in the Registration Statement or the Prospectus, all of the membership
interests of the Subsidiaries are directly owned of record and beneficially by
the Company, free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity. Except as disclosed in the Prospectus, there are
no outstanding (i) securities or obligations of the Company or any of its
Subsidiaries convertible into or exchangeable for any capital stock of the
Company or any membership interests of any such Subsidiary, (ii) warrants,
rights or options to subscribe for or purchase from the Company or any such
Subsidiary any such capital stock or membership interests or any such
convertible or exchangeable securities or obligations, or (iii) obligations,
commitments, plans or arrangements of the Company or any such Subsidiary to
issue any shares of capital stock, any membership interests, any such
convertible or exchangeable securities or obligations, or any such warrants,
rights or options; there are no statutory preemptive or other similar rights to
subscribe for or to purchase or acquire any shares of capital stock of the
Company or any such rights pursuant to its certificate of incorporation or
by-laws or any agreement or instrument to or by which the Company is a party or
bound.
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(m) All contracts, leases or documents of a character required
to be filed as exhibits to or incorporated by reference in the Registration
Statement or to be summarized or described in the Prospectus have been so filed,
incorporated, summarized or described as required. The summaries and
descriptions in the Registration Statement and the Prospectus of the contracts,
leases and other legal documents therein described present fairly in all
material respects the information required to be disclosed. Each agreement
described in the Registration Statement and the Prospectus or listed in the
exhibits to the Registration Statement or incorporated by reference is in full
force and effect and is valid and enforceable by and against the Company or the
Subsidiary party thereto in accordance with its terms, subject to the effect of
any applicable bankruptcy, insolvency, reorganization, moratorium or other
similar laws relating to or affecting enforcement of creditors' generally and
general principles of equity.
(n) There are no actions, suits, proceedings, inquiries or
investigations pending or, to the knowledge of the Company, threatened against,
affecting or reasonably likely to affect, the Company or any of its Subsidiaries
or any of their respective officers and directors or to which the properties,
assets or rights of any such entity are subject, at law or in equity, before or
by any federal, state, local or foreign governmental or regulatory commission,
board, body, authority, arbitral panel or agency which, individually or in the
aggregate, could result in a judgment, decree, award or order having a material
adverse effect on the assets, business, operations, earnings, prospects,
properties or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole, affect the consummation of this Agreement or
which are required to be disclosed in the Prospectus that are not so disclosed.
(o) The financial statements, including the notes and
schedules thereto, included or incorporated by reference in the Registration
Statement and the Prospectus present fairly in all material respects the
consolidated financial position of the entities to which such financial
statements relate (the "Covered Entities") as of the dates indicated and the
consolidated results of operations and changes in financial position and cash
flows of the Covered Entities for the periods specified; such financial
statements and related notes and schedules have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis during
the periods involved and in accordance with Regulation S-X promulgated by the
Commission and all adjustments necessary for a fair presentation of the results
for such periods have been made. The amounts in the Prospectus under the caption
"Prospectus Supplement Summary -- Summary Financial Data" fairly present the
information shown therein and have been compiled on a basis consistent with the
financial statements included or incorporated by reference in the Registration
Statement and the Prospectus.
(p) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, whose reports on the consolidated
financial statements and related schedules of the Company and its Subsidiaries
are filed with the Commission as part of the Registration Statement and
Prospectus, are and were during the periods covered by their reports independent
public accountants as required by the Securities Act and the Securities Act
Regulations. Ernst & Young LLP are independent public accountants as required by
the Securities Act and the Securities Act Regulations.
(q) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, and except as may be
otherwise stated in the Registration Statement or Prospectus, there has not been
(i) any material adverse change in the
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assets, business, operations, earnings, prospects, properties or condition
(financial or otherwise), present or prospective, of the Company and its
Subsidiaries taken as a whole, whether or not arising in the ordinary course of
business, (ii) any transaction, which is material to the Company and its
Subsidiaries taken as a whole, contemplated or entered into by the Company or
any of its Subsidiaries, except transactions contemplated or entered into in the
ordinary course of business, (iii) any obligation, contingent or otherwise,
directly or indirectly incurred by the Company or any of its Subsidiaries, which
is material to the Company and its Subsidiaries taken as a whole, except
obligations incurred in the ordinary course of business, (iv) any dividend or
distribution of any kind declared, paid or made by the Company on any class of
its capital stock, or any redemption, purchase or other acquisition by the
Company (or agreement to do any of the foregoing) of any shares of its capital
stock, (v) any issuance of any securities of the Company (other than the grant
of employee stock options in the ordinary course of business, and the issuance
of shares of Common Stock upon the exercise of outstanding options and warrants
in accordance with their terms) or (vi) any loss or interference with the
Company or any Subsidiary's assets, business or properties (whether owned or
leased) from fire, explosion, earthquake, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or any court or legislative
or other governmental action, order or decree which is material to the Company
and its Subsidiaries taken as a whole.
(r) The Common Stock and the Shares conform in all material
respects to all statements in relation thereto contained in the Registration
Statement and the Prospectus.
(s) There are no persons with registration or other similar
rights to have any equity securities, including securities that are convertible
into or exchangeable for equity securities, registered by the Company under the
Securities Act. There are no persons with registration or other similar rights
to have any equity securities, including securities that are convertible into or
exchangeable for equity securities, registered pursuant to the Registration
Statement.
(t) The Shares have been duly authorized and, when issued and
duly delivered against payment therefor as contemplated by this Agreement, will
be validly issued, fully paid and nonassessable; no holder of the Shares will be
subject to personal liability by reason of being such a holder; and the issuance
and sale of the Shares is not subject to preemptive or other similar rights
arising by operation of law, under the certificate of incorporation or by-laws
of the Company, under any agreement to which the Company or any of its
Subsidiaries is a party or otherwise.
(u) The form of certificate used to evidence the Common Stock
complies in all material respects with all applicable statutory requirements,
with any applicable requirements of the articles of incorporation and by-laws of
the Company and the requirements of Nasdaq.
(v) Each of the Company and each Subsidiary has good and
marketable title in fee simple to, or valid and enforceable leasehold interests
in, all of their owned and leased real properties and good and indefeasible
title to, or valid and enforceable leasehold interests in, all other material
properties owned or leased by them, in each case free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions or
encumbrances of any kind except such as: (i) are described in the Registration
Statement or Prospectus or (ii) do not, singly or in the
9
aggregate, have a material adverse effect on the assets, business, operations,
earnings, prospects, properties or condition (financial or otherwise) of the
Company and it Subsidiaries taken as a whole.
(w) Each of the Company and each Subsidiary owns or possesses
adequate and enforceable license or other rights to use all patents, trademarks,
service marks, trade names, copyrights, software and design licenses, trade
secrets, manufacturing processes, other intangible property rights (including
applications for any of the foregoing) and know-how (collectively,
"Intangibles") necessary for the Company and each Subsidiary to conduct its
business as described in the Prospectus, except where such failure to own or
possess such license or other right to use would not have a material adverse
effect on the assets, business, operations, earnings, prospects, properties or
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole, and neither the Company, nor any Subsidiary, has received notice of
infringement of or conflict with (and the Company knows of no such infringement
of or conflict with) asserted rights of others with respect to any Intangibles.
(x) The books, records and accounts of the Company and its
Subsidiaries accurately and fairly reflect, in all material respects and in
reasonable detail, the transactions in and dispositions of the assets and the
results of operations of the Company and the Subsidiaries. The Company and each
of its Subsidiaries maintain a system 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; and, to the knowledge of the Company, none of the Company, the
Subsidiaries, or any employee or agent thereof, has made any payment of funds of
the Company or the Subsidiaries, or received or retained any funds, and no funds
of the Company or the Subsidiaries have been set aside to be used for any
payment, in each case in violation of any law, rule or regulation.
(y) Each of the Company and each Subsidiary has filed on a
timely basis all necessary federal, state, local and foreign tax returns
required to be filed through the date hereof except in any case in which failure
to file would not have a material adverse effect on the assets, business,
operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole and have paid
all taxes shown as due thereon; no tax deficiency or proposed additional tax
assessment has been asserted against any such entity, nor does any such entity
know of any tax deficiency or assessment which is likely to be asserted against
any such entity which, if determined adversely, could materially adversely
affect the business, prospects, properties, assets, results of operations or
condition (financial or otherwise) of the Company and its Subsidiaries, taken as
a whole; all tax liabilities are adequately provided for on the respective books
of such entities; and other than routine state audits, none of which are
material, there are no tax audits or investigations pending with respect to the
Company or any Subsidiary.
10
(z) Each of the Company and its Subsidiaries is insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which they
are engaged. All policies of insurance insuring the Company and each of its
Subsidiaries or their respective businesses, assets, employees, officers and
directors are in full force and effect. The Company and each of its Subsidiaries
are in compliance with the terms of such policies and instruments in all
material respects. There are no claims by the Company or any of its Subsidiaries
under any such policy or instrument as to which any insurance company is denying
liability or defending under a reservation of rights clause that could be
reasonably be expected to have a material adverse effect on the assets,
business, operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and it Subsidiaries taken as a whole. Neither the
Company nor any of its Subsidiaries has been refused any insurance coverage
sought or applied for and neither the Company nor any of its Subsidiaries has
any reason to believe that any of them will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its business at a
cost that could not be reasonably be expected to have a have a material adverse
effect on the assets, business, operations, earnings, prospects, properties or
condition (financial or otherwise) of the Company and it Subsidiaries taken as a
whole.
(aa) Except as otherwise disclosed in the Prospectus, or
except as would not, singly or in the aggregate, have a material adverse effect
on the assets, business, operations, earnings, prospects, properties or
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole, (i) the Company and the Subsidiaries have been and are in compliance
with applicable Environmental Statutes (as hereinafter defined); (ii) neither
the Company, any of the Subsidiaries, nor to the Company's knowledge any prior
owners or operators of a property or any other party has at any time "released"
(as such term is defined in Section 101(22) of CERCLA (as hereinafter defined))
or otherwise disposed of Hazardous Materials (as hereinafter defined) on, to or
from the Company's or the Subsidiaries' properties; (iii) neither the Company
nor any Subsidiary intends to use its currently owned or leased properties or
any subsequently acquired properties, other than in compliance with applicable
Environmental Statutes; (iv) neither the Company nor any Subsidiary knows of any
seepage, leak, discharge, release, emission, spill, or dumping of Hazardous
Materials into waters (including without limitation to groundwater and surface
water) on, beneath or adjacent to any of their properties or onto lands from
which Hazardous Materials might seep, flow or drain into such waters; (v)
neither the Company nor any of the Subsidiaries has received any notice of, or
has any knowledge of any occurrence or circumstance that, with notice or passage
of time or both, would give rise to a claim under or pursuant to any
Environmental Statute with respect to the properties or the assets described in
the Registration Statement or Prospectus or arising out of the conduct of the
Company or its Subsidiaries; (vi) none of the Company's or the Subsidiaries'
properties is included or, to their knowledge, proposed for inclusion on the
National Priorities List issued pursuant to CERCLA by the United States
Environmental Protection Agency (the "EPA") or proposed for inclusion on any
similar list or inventory issued pursuant to any other Environmental Statute or
issued by any other Governmental Authority (as hereinafter defined). As used
herein, "Hazardous Material" shall include without limitation any flammable
explosives, radioactive materials, hazardous materials, hazardous wastes, toxic
substances, or related materials, asbestos or any hazardous material as defined
by any federal, state or local environmental law, ordinance, rule or regulation
including, without limitation, the
11
Comprehensive Environmental Response, Compensation, and Liability Act of 1980,
as amended, 42 U.S.C. Sections 9601-9675 ("CERCLA"), the Hazardous Materials
Transportation Act, as amended, 49 U.S.C. Sections 1801-1819, the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. Sections 6901-K, the
Emergency Planning and Community Right-to-Know Act of 1986, 42 U.S.C. Sections
11001-11050, the Toxic Substances Control Act, 15 U.S.C. Sections 2601-2671, the
Federal Insecticide, Fungicide and Rodenticide Act, 7 U.S.C. Sections 136-136y,
the Clean Air Act, 42 U.S.C. Sections 7401-7642, the Clean Water Act (Federal
Water Pollution Control Act), 33 U.S.C. Sections 1251-1387, the Safe Drinking
Water Act, 42 U.S.C. Sections 300f-300j-26, the Occupational Safety and Health
Act, 29 U.S.C. Sections 651-678, and the Air Pollution Act of 1990, 33 U.S.C.
Sections 2701-2766, as any of the above statutes may be amended from time to
time, and in the regulations promulgated pursuant to each of the foregoing
(including environmental statues not specifically defined herein) (individually,
an "Environmental Statute" and collectively "Environmental Statutes") or by any
federal, state or local governmental authority having or claiming jurisdiction
over the properties and assets of the Company or any of the Subsidiaries (a
"Governmental Authority").
(bb) Except as set forth in the Registration Statement and the
Prospectus, the mortgages and deeds of trust encumbering the properties and
assets described in the Prospectus are not convertible, and neither the Company,
nor any Subsidiary, nor any person affiliated therewith holds a participating
interest therein, and such mortgages and deeds of trust are not cross-defaulted
or cross-collateralized to any property not owned directly or indirectly by the
Company or any of its Subsidiaries.
(cc) Except as otherwise disclosed in the Prospectus, there
are no material outstanding loans or advances or material guarantees of
indebtedness by the Company or any of its Subsidiaries to or for the benefit of
any of the officers or directors of the Company or any of its Subsidiaries or
any of the members of the families of any of them.
(dd) 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 in violation of
the Securities Act; and neither the Company nor any Subsidiary has distributed
or will distribute any prospectus or other offering material in connection with
the offer and sale of the Shares, other than the Prospectus, the Registration
Statement or any amendment or supplement thereto.
(ee) 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 hand, which is required by the Securities Act and the
Securities Act Regulations to be described in the Registration Statement and the
Prospectus and which is not so described.
(ff) Neither the Company nor any of the Subsidiaries is and,
after giving effect to the offering and sale of the Shares by the Company and
the application of the net proceeds therefrom as described in the Prospectus,
will be an "investment company" or an entity "controlled" by an "investment
company", as such terms are defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act").
12
(gg) There is no existing or, to the knowledge of the Company,
threatened labor dispute with the employees of the Company or any of its
Subsidiaries, nor is the Company aware of any existing or imminent labor
disturbance by the employees of any of the Company's or its Subsidiaries'
principal suppliers or contractors or any threatened or pending litigation
between the Company or any Subsidiary and any of its respective executive
officers, in each case which are likely to have individually or in the aggregate
a material adverse effect on the assets, business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole.
(hh) The Company's Common Stock is quoted and traded on
Nasdaq. Application will be made for approval of the Shares for quotation and
trading on Nasdaq, and of each Delivery Date, as appropriate, the Shares shall
have been approved for quotation and trading on Nasdaq, subject to official
notice of issuance.
(ii) Neither the Company nor any Subsidiary has directly or
indirectly: (A) taken any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares; or (B) since the filing of the
Registration Statement and except for the shares of Common Stock pursuant to the
underwriting agreement dated February 14, 2002 between the Company and ▇▇▇▇▇▇▇
▇▇▇▇ & Company L.L.C.: (1) sold, bid for, purchased, or paid anyone any
compensation for soliciting purchases of, the Shares, or (2) paid or agreed to
pay to any person any compensation for soliciting another to purchase any other
securities of the Company.
(jj) ▇▇▇▇▇ ▇▇▇▇▇ Company, L.P. was, as of the date of its
reports referenced in the Registration Statement and Prospectus, and is, of the
date hereof, an independent petroleum engineering firm with respect to the
Company and its Subsidiaries.
(kk) Any certificate signed by any officer of the Company or
any Subsidiary delivered to the Underwriter or to counsel for the Underwriter
pursuant to or in connection with this Agreement shall be deemed a
representation and warranty by the Company to the Underwriter as to the matters
covered thereby.
4. Certain Covenants of the Company: The Company hereby covenants and
agrees with the 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 states as the Underwriter may designate and
to maintain such qualifications in effect for as long as may be necessary for
the distribution of the Shares, provided that the Company shall not be required
to qualify as a foreign corporation or to execute a general 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) to prepare the Prospectus and any amendment or supplement
thereto in a form approved by the Underwriter and file such with the Commission
pursuant to Rule 424(b) not later than 10:00 a.m. (New York City time), on the
day following the execution and delivery of
13
this Agreement or, if applicable, such earlier time as may be required by Rule
430A(a)(3) under the Securities Act, 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) to
the Underwriter as many 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) as
the Underwriter may reasonably request for the purposes contemplated by the
Securities Act Regulations, which Prospectus and any amendments or supplements
thereto furnished to the Underwriter will be identical to the version created to
be transmitted to the Commission for filing via ▇▇▇▇▇, except to the extent
permitted by Regulation S-T;
(c) during any time when a prospectus relating to the Shares
is required to be delivered under the Securities Act: (i) to comply with all
requirements imposed upon it by the Securities Act and the Securities Act
Regulations to the extent necessary to permit the continuance of sales of or
dealings in the Shares in accordance with the provisions hereof and of the
Prospectus, as then amended or supplemented; and (ii) not to file with the
Commission the Prospectus, any amendment or supplement to such Prospectus or any
amendment to the Registration Statement or any Rule 462(b) Registration
Statement of which the Underwriter shall not previously have been advised and
furnished with a copy for a reasonable period of time prior to the proposed
filing and as to which filing the Underwriter shall not have given its consent;
and to prepare and file with the Commission, in accordance with the rules and
regulations of the Commission, promptly upon request by the Underwriter or
counsel for the Underwriter, any amendments to the Registration Statement or
amendments or supplements to the Prospectus that may be necessary or advisable
in connection with the distribution of the Shares by the Underwriter;
(d) to use its best efforts to cause any amendments to the
Registration Statement to become effective as promptly as possible; to advise
the Underwriter promptly and (if requested by the Underwriter) to confirm such
advice in writing, when any post-effective amendment to the Registration
Statement is filed and becomes effective under the Securities Act Regulations
and of the time when the Prospectus or any amendment or supplement thereto has
been filed, and to provide to the Underwriter copies of each such filing;
(e) if the Company elects to rely on Rule 462(b), to both file
a Rule 462(b) Registration Statement with the Commission in compliance with Rule
462(b) and to pay the applicable fees in accordance with Rule 111 promulgated
under the Securities Act by the earlier of (i) 10:00 p.m., New York City time,
on the date of this Agreement and (ii) the time confirmations are sent or given,
as specified by Rule 462(b)(2);
(f) to advise the Underwriter 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
14
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
Underwriter promptly, and to furnish the Underwriter with a copy for its review
prior to filing, of any proposal to amend or supplement the Registration
Statement or Prospectus and to file no such amendment or supplement to which the
Underwriter shall reasonably object in writing;
(g) to furnish to the Underwriter, upon their request, for a
period of three 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 publicly
available information as the Underwriter may reasonably request regarding the
Company and its Subsidiaries;
(h) to advise the Underwriter 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 reasonable judgment of the Company, 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 or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading, and,
during such time, to prepare and furnish, at the Company's expense, to the
Underwriter promptly such amendments or supplements to such Prospectus as may be
necessary to reflect any such change and to furnish to the Underwriter a copy of
such proposed amendment or supplement before filing any such amendment or
supplement with the Commission and to file no such amendment or supplement to
which the Underwriter shall reasonably object in writing;
(i) to furnish promptly to the Underwriter and counsel for the
Underwriter, without charge, 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 exhibits or documents
incorporated by reference therein) and such number of conformed copies of the
foregoing as the Underwriter may reasonably request, and, so long as delivery of
a prospectus by the Underwriter or dealer may be required by the Securities Act
or the Securities Act Regulations, as many copies of the Prospectus and any
amendments thereof or supplements thereto as the Underwriter reasonably
requests;
(j) during the period when a Prospectus is required to be
delivered under the Securities Act or the Exchange Act, to file all documents
required to be filed with the Commission pursuant to the Exchange Act within the
time periods required by the Exchange Act and the Exchange Act Regulations;
(k) to apply the net proceeds of the sale of the Shares by the
Company in accordance with its statements under the caption "Use of Proceeds" in
the Prospectus;
(l) to make generally available to its security holders and to
the Underwriter as soon as practicable, an earnings statement complying with the
provisions of Section 11(a) of the Securities Act and Rule 158 of the Securities
Act Regulations;
15
(m) to use its best efforts to cause the Shares to be duly
included for listing on Nasdaq prior to the Closing Time; to make all filings
required under applicable securities laws (including any required registration
under the Exchange Act) and with Nasdaq; and to use its best efforts to ensure
that the Shares remain included for listing on Nasdaq for a period of three
years following the Closing Time;
(n) to engage and maintain, at its expense, a registrar and
transfer agent for the Shares;
(o) to refrain during a period of 120 days from the date of
the Prospectus, without the prior written consent of the Underwriter, from (i)
directly or indirectly, 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, directly or indirectly, any shares of Common Stock of the Company
or any securities convertible into or exercisable or exchangeable for shares of
Common Stock of the Company, 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; provided, however, that the foregoing shall
not apply to (A) the Shares to be sold by the Company hereunder, (B) the
issuance of shares of Common Stock or options to purchase Common Stock granted
under the current employee benefit plans of the Company described in the
Registration Statement or the Prospectus or any employee benefit plans in
existence on the date hereof, (C) the issuance by the Company of shares of
Common Stock in exchange for or upon conversion or exercise of outstanding
securities of the Company that are described in the Registration Statement or
the Prospectus in accordance with their terms, or (D) the issuance by the
Company of shares of Common Stock in a private placement transaction involving
the purchase of an entity or assets;
(p) to not itself 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 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;
(q) to obtain each of the lock-up agreements described in
Section 6(k) hereof prior to the Closing Time.
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,
16
fees and taxes in connection with (i) the preparation and filing of the
Registration Statement, all exhibits thereto, the Prospectus, and any amendments
or supplements thereto, and the printing and furnishing of copies of each
thereof to the Underwriter and to dealers (including costs of mailing and
shipment) as may be reasonably requested, (ii) the preparation, issuance and
delivery of the certificates for the Shares to the Underwriter, including any
stock or other transfer taxes or duties payable upon the sale and delivery of
the Shares to the Underwriter, (iii) the printing of this Agreement and any
dealer agreements and furnishing of copies of each to the Underwriter and to
dealers (including costs of mailing and shipment), (iv) the registration or
qualification of the Shares for offering and sale under state laws that the
Company and the Underwriter 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 Underwriter, which fees shall not exceed $5,000) and the preparation,
printing and furnishing of copies of any blue sky surveys or legal investment
surveys to the Underwriter and to dealers, (v) the fees and disbursements of its
counsel, the accountants and any other experts or advisors retained by the
Company, (vi) the fees and expenses of any transfer agent or registrar for the
Shares and miscellaneous expenses referred to in the Registration Statement,
(vii) the fees and expenses incurred in connection with the inclusion of the
Shares on Nasdaq, (viii) making road show presentations with respect to the
offering of the Shares, (ix) preparing and distributing bound volumes of
transaction documents for the Underwriter and its legal counsel and (x) the
performance of the Company's other obligations hereunder. Upon the request of
the Underwriter, the Company will provide funds in advance for filing fees.
(b) The Company agrees to reimburse the Underwriter for its
reasonable out-of-pocket expenses incurred 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, and the fees and expenses of the Underwriter's
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, which shall be reimbursed by the Company pursuant to the
provisions of subsection (a) above).
6. Conditions of the Underwriter's Obligations:
The obligations of the Underwriter hereunder to purchase Shares at the
Closing Time or on the Date of Delivery, as applicable, are subject, in the
Underwriter's sole discretion, to the accuracy of the representations and
warranties of the Company contained herein as of the date hereof and at the
Closing Time and on the Date of Delivery, as applicable, as if made on and as of
such date, to the accuracy of the statements of the Company's officers made
pursuant to the provisions hereof, to the performance by the Company of its
covenants, agreements and obligations hereunder and to the satisfaction of the
following further conditions at the Closing Time or on the Date of Delivery, as
applicable:
(a) If any amendment to the Registration Statement filed prior
to the Closing Time has not been declared effective as of the time of execution
hereof, such amendment, and if the Company has elected to rely upon Rule 462(b),
the Rule 462(b) Registration Statement, shall have been declared effective not
later than the earlier of: (i) 11:00 a.m., New York City time, on the date on
which the amendment to the Registration Statement originally filed with respect
to
17
the Shares or to the Registration Statement, as the case may be, containing
information regarding the initial public offering price of the Shares has been
filed with the Commission; and (ii) the time confirmations are sent or given as
specified by Rule 462(b); and the Underwriter shall have received written
notification of such effectiveness. The Prospectus that constitutes a part
thereof and any amendment or supplement thereto shall have been filed with the
Commission in the manner and within the time period required by Rule 424(b)
under the Securities Act.
(b) The Company shall furnish to the Underwriter at the
Closing Time and on the Date of Delivery an opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.,
counsel for the Company, addressed to the Underwriter and dated the Closing Time
and the Date of Delivery and in form and substance satisfactory to ▇▇▇▇▇▇ &
▇▇▇▇▇▇, L.L.P., counsel for the Underwriter, stating that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Delaware. The Company has the corporate
power and authority to own, lease and operate its properties
and to conduct its business as described in the Registration
Statement and Prospectus and to enter into and perform its
obligations under this Agreement.
(ii) To such counsel's knowledge, the Company is not
in breach or violation of, or in default under (nor has any
event occurred which with notice, lapse of time, or both would
constitute a breach of, or default under) its certificate of
incorporation or by-laws.
(iii) All necessary corporate action has been duly
and validly taken by the Company to authorize the execution,
delivery and performance of this Agreement and the issuance
and sale of the Shares, and no action by the Company's
stockholders is necessary in connection with such execution,
delivery and performance or such issuance and sale of the
Shares; this Agreement has been duly and validly authorized,
executed and delivered by the Company.
(iv) No approval, authorization, consent, license,
permit, certificate or order of or filing by or with any
federal or state governmental or regulatory commission, board,
body, authority or agency is required in connection with the
execution, delivery and performance of this Agreement, the
consummation of the transactions contemplated hereby and the
sale and delivery of the Shares by the Company as contemplated
hereby, other than such as have been obtained or made and are
in full force and effect under the Securities Act and the
Securities Act Regulations and such approvals as have been
obtained and are in full force and effect in connection with
the approval of the listing of the Shares on Nasdaq, and
except that such counsel need express no opinion in this
clause (iv) as to any necessary qualification under the state
securities or blue sky laws of the various jurisdictions in
which the Shares are being offered by the Underwriter.
(v) The Company has an authorized capitalization as
set forth in the Prospectus.
(vi) The issuance by the Company of the Shares as
contemplated by this Agreement has been duly authorized by the
Company and when the Shares have been
18
issued and duly delivered against payment therefor as
contemplated by this Agreement, such Shares will be validly
issued, fully paid and nonassessable.
(vii) The issuance and sale of the Shares is not
subject to preemptive or other similar rights arising by
operation of law, under the certificate of incorporation or
by-laws of the Company or, to such counsel's knowledge, under
any other agreement to which the Company or any of its
Subsidiaries is a party or otherwise.
(viii) To such counsel's knowledge, there are no
persons with registration or other similar rights to have any
equity securities, including securities that are convertible
into or exchangeable for equity securities, registered
pursuant to the Registration Statement or otherwise registered
by the Company under the Securities Act, other than as set
forth in the Prospectus.
(ix) The Common Stock conforms in all material
respects to the description thereof contained in the
Registration Statement and Prospectus.
(x) The Registration Statement has become effective
under the Securities Act. No stop order preventing or
suspending the effectiveness of the Registration Statement or
the use of the Prospectus has been issued and no proceedings
with respect thereto have been initiated or, to the best of
such counsel's knowledge, pending or threatened by the
Commission. Any required filing of the Prospectus pursuant to
Rule 424(b) under the Securities Act has been made in the
manner and within the time period required by such Rule
424(b).
(xi) The Registration Statement and the Prospectus,
including the documents incorporated by reference therein, and
each amendment or supplement to the Registration Statement and
Prospectus, including the documents incorporated by reference
therein, in each case as of their respective effective or
issue dates (other than the financial statements and notes
thereto, schedules and other financial, reserve and production
data included or incorporated by reference therein or omitted
therefrom, as to which such counsel is not required to express
an opinion ) complied as to form in all material respects with
the requirements of the Securities Act, the Securities Act
Regulations, the Exchange Act and the Exchange Act
Regulations.
(xii) All descriptions in the Registration Statement
of the statutes, legal and governmental proceedings and
contracts and other documents fairly present the information
required to be shown. To the best of such counsel's knowledge,
there are no franchises, contracts, indentures, mortgages,
loan agreements, notes, leases, or other instruments required
to be described or referred to in the Registration Statement
or to be filed as exhibits thereto other than those described
or referred to therein or filed or incorporated by reference
as exhibits thereto, and the descriptions thereof or
references thereto are correct in all material respects.
(xiii) Neither the Company nor any Subsidiary is or,
after giving effect to the offering and sale of the Shares by
the Company and the application of the net proceeds therefrom
as described in the Prospectus, will be an "investment
company" or
19
an entity "controlled by" an "investment company", as such
terms are defined in the Investment Company Act.
Such opinion shall be limited to the federal laws of the United States,
the laws of the State of Texas, and the General Corporation Law of the State of
Delaware. In addition, such counsel shall state that they have participated in
conferences with officers of the Company, independent public accountants of the
Company and the representatives of the Underwriter, at which the contents of the
Registration Statement and Prospectus and related matters were discussed and,
although such counsel is not passing upon and does not assume responsibility for
the accuracy, completeness or fairness of the statements contained in the
Registration Statement or Prospectus, on the basis of the foregoing, no facts
have come to the attention of such counsel that lead them to believe that the
Registration Statement or any post-effective amendment thereto (including the
filing of the Company's Annual Report on Form 10-K with the Commission) at the
time it became effective, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus, as of its
issue date, and as of the date of such counsel's opinion, contained or contains
an untrue statement of a material fact or omitted or omits 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 (it
being understood that, in each case, such counsel need express no view with
respect to the financial statements and other financial data and reserve and
production data included in the Registration Statement or Prospectus).
(c) The Company shall furnish to the Underwriter at the
Closing Time and on the Date of Delivery an opinion of Onebane Law Firm, counsel
for the Company, addressed to the Underwriter and dated the Closing Time and the
Date of Delivery and in form and substance satisfactory to ▇▇▇▇▇▇ & ▇▇▇▇▇▇,
L.L.P., counsel for the Underwriter with regard to the matters set forth in
Schedule II.
(d) The Underwriter shall have received from Ernst & Young
LLP, letters dated, respectively, as of the date of this Agreement, the Closing
Time and the Date of Delivery, as the case may be, addressed to the Underwriter,
in form and substance satisfactory to the Underwriter, relating to the financial
statements of the Company and its Subsidiaries, and such other matters
customarily covered by comfort letters issued in connection with registered
public offerings.
(e) The Underwriter shall have received at the Closing Time
and on the Date of Delivery the favorable opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.,
dated the Closing Time or the Date of Delivery, addressed to the Underwriter and
in form and substance satisfactory to the Underwriter.
(f) No amendment or supplement to the Registration Statement
or Prospectus shall have been filed to which the Underwriter shall have objected
in writing.
(g) Prior to the Closing Time and the Date of Delivery (i) no
stop order suspending the effectiveness of the Registration Statement or any
order preventing or suspending the use of the Prospectus shall have been issued,
and no proceedings for such purpose shall have
20
been initiated or threatened, by the Commission, and no 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, shall
have occurred; (ii) the Registration Statement shall not contain an untrue
statement of material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not misleading, and
the Prospectus shall not contain an untrue statement of material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and (iii) any requests for additional information on the
part of the Commission (to be included in the Registration Statement or the
Prospectus or otherwise) shall have been complied with to the satisfaction of
the Commission and the Underwriter.
(h) Subsequent to the execution of this Agreement or, if
earlier, the respective dates as of which information is given in the
Registration Statement (exclusive of any amendment thereto) and the Prospectus
(i) no material and unfavorable change in the assets, business, operations,
earnings, prospects, properties or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole shall occur or become known
(whether or not arising in the ordinary course of business), (ii) no transaction
which is material to the Company shall have been entered into by the Company or
any of its Subsidiaries, except transactions entered into in the ordinary course
of business, (iii) neither the Company nor any Subsidiary has incurred any
obligation, direct or contingent, that is material to the Company and the
Subsidiaries, taken as a whole, except obligations incurred in the ordinary
course of business, (iv) there has not been any change in the capital stock or
outstanding indebtedness of the Company or the Subsidiaries that is material to
the Company and the Subsidiaries, taken as a whole, (v) neither the Company nor
any Subsidiary has declared or paid any dividend or distribution of any kind on
the capital stock of the Company or such Subsidiary or (vii) neither the Company
nor any Subsidiary has sustained any loss or damage (whether or not insured) to
the property of the Company or such Subsidiary which could have a material
adverse effect on the assets, business, operations, earnings, prospects,
properties or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole.
(i) When the Registration Statement was declared effective,
and at all times subsequent thereto up to the Closing Time and the Date of
Delivery, the Registration Statement and the Prospectus contained all statements
required to be stated therein in accordance with, and complied in all material
respects with the requirements of, the Securities Act and the Securities Act
Regulations; the Registration Statement, and any amendment or supplement
thereto, did not and does not include any untrue statement of a material fact or
omit to state any material fact, necessary to make the statements therein not
misleading; the Prospectus did not and does not include any untrue statement of
a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; and since the effective date of the Registration
Statement, there has occurred no event required to be set forth in an amended or
supplemented Prospectus which has not been so set forth.
(j) The Shares shall have been approved for listing on Nasdaq.
21
(k) The Underwriter shall have received lock-up agreements
from each director, executive officer and stockholder of the Company listed on
Schedule I hereto, in the form of Exhibit A attached hereto, and such letter
agreements shall be in full force and effect.
(l) The Underwriter shall have received at the Closing Time, a
letter from ▇▇▇▇▇ ▇▇▇▇▇ Company, L.P., dated the Closing Time, in form and
substance satisfactory to ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., counsel for the Underwriter.
(m) The Company will, at the Closing Time and on the Date of
Delivery, deliver to the Underwriter a certificate of its Chairman of the Board
and Chief Executive Officer, and its Senior Vice President and Chief Financial
Officer, to the effect that the signers of such certificate have carefully
examined the Registration Statement, the Prospectus and this Agreement and (i)
the representations and warranties of the Company set forth in this Agreement
are true and correct in all material respects, except to the extent otherwise
qualified with respect to materiality or material adverse effect, on and as of
such date with the same effect as if made on such date, (ii) the Company has
performed all covenants and agreements and satisfied all conditions contained in
this Agreement required to be performed or satisfied by it at or prior to such
date and (iii) the conditions set forth in paragraphs 6(g), (h) and (i) of this
Section 6 have been satisfied, in each case as of such date.
(n) The Company shall have furnished to the Underwriter 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 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 Time or the Date of Delivery, as the Underwriter may
reasonably request.
(o) The Company shall have performed all of its obligations
under this Agreement as are to be performed by the terms hereof at or before the
Closing Time or the Date of Delivery.
7. Termination: The obligations of the Underwriter hereunder shall be
subject to termination in the absolute discretion of the Underwriter, at any
time prior to the Closing Time or the Date of Delivery, (a) 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 (b) 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 (other than developments
affecting the industry generally) involving a prospective material adverse
change, in or affecting the assets, business, operations, earnings, prospects,
properties, condition (financial or otherwise) or management of the Company or
any Subsidiary, taken as a whole, whether or not arising in the ordinary course
of business, or (c) if there has occurred 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 Underwriter,
impracticable to market the Shares or enforce contracts for the sale of the
Shares, or (d) if trading in any securities of the Company has been suspended by
the Commission or by Nasdaq, or if trading generally on the New York Stock
Exchange, Nasdaq or in any over-the-counter market has been suspended or limited
(including automatic halt in trading pursuant to
22
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 the New York Stock
Exchange or the NASD or the Nasdaq National Market or by order of the Commission
or any other governmental authority, or (e) if any federal or state statute,
regulation, rule or order of any court or other governmental authority has been
enacted, published, decreed or otherwise promulgated which in the reasonable
opinion of the Underwriter materially adversely affects or will materially
adversely affect the business or operations of the Company, or (f) if 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
Underwriter has a material adverse effect on the securities markets in the
United States, or (g) if a banking moratorium has been declared by any state or
federal authority.
If the Underwriter elects to terminate this Agreement as provided in
this Section 7, the Company and the Underwriter shall be notified promptly by
telephone, promptly confirmed by facsimile.
If the sale to the Underwriter of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriter 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 8 hereof) and the
Underwriter shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 8 hereof) or to one another
hereunder.
8. Indemnity and Contribution by the Company and the Underwriter:
(a) The Company agrees to indemnify, defend and hold harmless
the 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 (or action in respect
thereof) (including the reasonable cost of investigation) which, jointly or
severally, the Underwriter or controlling person may incur under the Securities
Act, the Exchange Act or otherwise, insofar as such loss, expense, liability,
damage or claim (or action in respect thereof) arises out of or is based upon
(A) any breach or alleged 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, or (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) or in a Prospectus (the term Prospectus for
the purpose of this Section 8 being deemed to include any preliminary
prospectus, the Prospectus and the Prospectus as amended or supplemented by the
Company), or arises out of or is based upon any omission or alleged omission to
state a material fact required to be stated in either such Registration
Statement or Prospectus or necessary to make the statements made therein, in the
case of the Registration Statement, not misleading, and in the case of the
Prospectus, in light of the circumstances under which they were made, not
misleading, and will promptly reimburse the Underwriter for all reasonable
out-of-pocket expenses (including reasonable counsel fees and expenses) as they
are incurred in
23
connection with the investigation of, preparation for or defense arising from
any threatened or pending claim, except insofar as any such loss, expense,
liability, damage or claim (or action in respect thereof) 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 made in reliance upon and
in conformity with information furnished in writing by the Underwriter through
the Underwriter to the Company expressly for use in such Registration Statement
or such Prospectus.
If any action is brought against the Underwriter or controlling person
in respect of which indemnity may be sought against the Company pursuant to the
foregoing paragraph, the 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. The
Underwriter or controlling 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 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 Underwriter 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 written consent.
(b) The Underwriter agrees to indemnify, defend and hold
harmless the Company, the Company's directors, the Company's officers who 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 (or action in
respect thereof) (including the reasonable cost of investigation) which 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
(or action in respect thereof) arises out of or is based upon any untrue
statement or alleged untrue statement of a material fact contained in and made
in reliance upon and in conformity with information furnished in writing by the
Underwriter 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) or in a Prospectus, or arises out of or is based upon any
omission or alleged omission to state a material fact in connection with such
information required to be stated either in such Registration Statement or
Prospectus or necessary to make such information, in the case of the
Registration Statement, not misleading, and in the case of the Prospectus, in
light of the circumstances under which they were made, not misleading, and will
promptly reimburse the Company for all
24
reasonable out-of-pocket expenses (including reasonable counsel fees and
expenses) as they are incurred in connection with the investigation of,
preparation for or defense arising from any threatened or pending claim. The
statements set forth in the fourth and seventh paragraphs under the caption
"Underwriting" in the Prospectus (to the extent such statements relate to the
Underwriter) constitute the only information furnished by or on behalf of any
Underwriter through the Underwriter to the Company for purposes of Section 3(b)
and this Section 8.
If any action is brought against the Company or any such person in
respect of which indemnity may be sought against the Underwriter pursuant to the
foregoing paragraph, the Company or such person shall promptly notify the
Underwriter in writing of the institution of such action and the Underwriter, on
behalf of the Underwriter, 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 Underwriter will not relieve the Underwriter
of any obligation hereunder, except to the extent that its ability to defend is
actually impaired by such failure or delay. 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 Underwriter in connection with the defense of such action or the Underwriter
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 Underwriter (in which case the Underwriter 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
Underwriter and paid as incurred (it being understood, however, that the
Underwriter 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, the Underwriter shall not be liable
for any settlement of any such claim or action effected without its written
consent.
(c) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsections (a) or (b) of this Section 8 in respect of any losses, expenses,
liabilities, damages or claims (or actions in respect thereof) 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 (or actions in respect thereof) (i) in such proportion as is appropriate
to reflect the relative benefits received by the Company and the Underwriter
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 Underwriter in
connection with the statements or omissions which resulted in such losses,
expenses, liabilities, damages or claims (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by the Company and the Underwriter shall be deemed to be in the same
proportion as 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 Underwriter.
The relative fault of the Company and of the Underwriter shall be determined by
25
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 Underwriter and the parties'
relative intent, knowledge, 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 (or actions in respect
thereof) referred to above shall be deemed to include any legal or other fees or
out-of-pocket expenses reasonably incurred by such party in connection with
investigating or defending any claim or action.
(d) The Company and the Underwriter agree that it would not be
just and equitable if contribution pursuant to this Section 8 were determined by
pro rata allocation 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 8, the
Underwriter shall not be required to contribute any amount in excess of the
underwriting discounts and commissions applicable to the Shares purchased by the
Underwriter pursuant to this Agreement. 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.
9. Survival: The indemnity and contribution agreements contained in
Section 8 and the covenants, warranties and representations of the Company
contained in Sections 3, 4 and 5, and the provisions of Sections 7, 9, 10, 11,
12 and 13 of this Agreement shall remain in full force and effect regardless of
any investigation made by or on behalf of the Underwriter, or any person who
controls the 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 the sale and delivery of the Shares or any termination or cancellation
of this Agreement. The Company and the 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.
10. Notices: Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriter, shall be sufficient in all respects if delivered to Friedman,
Billings, ▇▇▇▇▇▇ & Co., Inc., ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
facsimile (▇▇▇) ▇▇▇-▇▇▇▇, Attention: Syndicate Department, with a copy to ▇▇▇▇▇▇
& ▇▇▇▇▇▇, L.L.P., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇.▇., ▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇-▇▇▇▇,
facsimile (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇; and if to the
Company, shall be sufficient in all respects if delivered to the Company at the
offices of the Company at ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, with a copy to ▇▇▇▇▇▇ & ▇▇▇▇▇▇
L.L.P., facsimile (▇▇▇) ▇▇▇-▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇.
11. 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
26
headings in this Agreement have been inserted as a matter of convenience of
reference and are not a part of this Agreement.
12. Parties at Interest: The Agreement herein set forth has been and is
made solely for the benefit of the Underwriter, the Company and the controlling
persons, directors and officers referred to in Sections 8 and 9 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 Underwriter) shall acquire or have any right under or
by virtue of this Agreement.
13. 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.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
27
If the foregoing correctly sets forth the understanding among the
Company and the Underwriter, please so indicate in the space provided below for
the purpose, whereupon this Agreement shall constitute a binding agreement
between the Company and the Underwriter.
Very truly yours,
PETROQUEST ENERGY, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chairman of the Board and Chief
Executive Officer
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
FRIEDMAN, BILLINGS, ▇▇▇▇▇▇ & CO., INC.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
Title: Senior Managing Director
28
SCHEDULE I
PERSONS DELIVERING LOCK-UPS
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇
E. ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇. ▇▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, III
Schedule I-1
SCHEDULE II
FORM OF OPINION FROM ONEBANE LAW FIRM
(a) Each Subsidiary has been duly organized and is validly existing as
a limited liability company ("LLC") in good standing under the laws of the State
of Louisiana, has all requisite power and authority as an LLC to own, lease and
operate its properties and to conduct its business as described in the
Registration Statement and Prospectus. Each Subsidiary has been duly qualified
as a foreign limited liability company for the transaction of business under the
laws of the jurisdictions set forth in Annex I to the Underwriting Agreement.
Except as otherwise stated in the Registration Statement and the Prospectus or
the documents incorporated therein by reference, all of the issued and
outstanding membership interests of each Subsidiary have been duly authorized
and are validly issued, fully paid and non-assessable and are owned by the
Company free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity.
(b) To the best of such counsel's knowledge, neither Subsidiary is in
breach or violation of, or in default under (nor has any event occurred which
with notice, lapse of time, or both would constitute a breach of, or default
under) its limited liability company agreement.
(c) To the best of such counsel's knowledge, no default exists and no
event has occurred that with notice, lapse of time, or both, would constitute a
default in the due performance and observance of any term, covenant or condition
of any loan agreement, note or any other similar obligation evidencing
indebtedness for borrowed money to which the Company or any Subsidiary is a
party or by which any of them is bound, which default is or would result in a
material adverse effect on the assets, business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole.
(d) The execution, delivery and performance of the Underwriting
Agreement and the consummation of the transactions contemplated by the
Underwriting Agreement and compliance by the Company with its obligations
thereunder do not and will not, whether with or without the giving of notice or
passage of time or both, conflict with or constitute a breach of, or 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 contract, indenture, mortgage, deed of trust, loan
or credit agreement, note, lease or any other agreement or instrument, known to
us after reasonable inquiry, to which the Company or any of its Subsidiaries is
a party or by which it or any of them may be bound, or to which any of the
assets, properties or operations of the Company or any of its Subsidiaries is
subject, except for conflicts, breaches, defaults, events or liens, charges or
encumbrances that would not, individually or in the aggregate, result in a
material adverse effect on the assets, business, operations, earnings,
prospects, properties or condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole, nor will such actions result in any violation
of the provisions of the charter or by-laws of the Company or the articles of
organization or operating agreement of any of its Subsidiaries or any applicable
law, statute, rule, regulation, judgment, order, writ or decree, known to such
counsel, of any government, government instrumentality or court, domestic or
Schedule II-1
foreign, having jurisdiction over the Company or any of its Subsidiaries or any
of their assets, properties or operations.
(e) To the best of such counsel's knowledge and except as disclosed in
the Registration Statement and Prospectus, there is not pending or threatened
any action, suit, proceeding, inquiry or investigation to which the Company or
any of its Subsidiaries is a party or to which the assets, properties or
operations of the Company or any of its Subsidiaries is subject, before or by
any court or governmental agency or body, domestic or foreign, that might
reasonably be expected to result in a material adverse effect on the assets,
business, operations, earnings, prospects, properties or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole or might
reasonably be expected to materially and adversely affect the consummation of
the transactions contemplated under the Underwriting Agreement or the
performance by the Company of its obligations thereunder.
Such opinion shall be limited to the federal laws of the United States, the laws
of the State of Louisiana, and the General Corporation Law of the State of
Delaware.
Schedule II-2
ANNEX I
FOREIGN QUALIFICATIONS
PetroQuest Energy, L.L.C Louisiana
Texas
Mississippi
PetroQuest Energy Oil & Gas, L.L.C. Louisiana
Annex I
EXHIBIT A
FORM OF LOCK-UP AGREEMENT
October __, 2002
Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc.
Potomac Tower
▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
This letter is being delivered to you in connection with the
proposed Underwriting Agreement (the "Underwriting Agreement"), among PetroQuest
Energy, Inc. (the "Company"), a Delaware corporation, and Friedman, Billings,
▇▇▇▇▇▇ & Co., Inc. as Underwriter, relating to an underwritten public offering
of shares of common stock of the Company (the "Common Stock").
In order to induce Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc. to
enter into the Underwriting Agreement, the undersigned will not, without the
prior written consent of Friedman, Billings, ▇▇▇▇▇▇ & Co., Inc., offer, sell,
contract to sell, pledge or otherwise dispose of (or enter into any transaction
which is designated to, or might reasonably be expected to, result in the
disposition (whether by actual disposition or effective economic disposition due
to cash settlement or otherwise) by the undersigned or any affiliate of the
undersigned or any person in privity with the undersigned or any affiliate of
the undersigned), directly or indirectly, including the filing (or participation
in the filing) of a registration statement with the Securities and Exchange
Commission in respect of, or establish or increase a put equivalent position or
liquidate or decrease a call equivalent position within the meaning of Section
16 of the Securities Exchange Act of 1934, as amended, and the rules and
regulations of the Securities and Exchange Commission promulgated thereunder
with respect to, any shares of Common Stock of the Company or any securities
convertible into, or exercisable or exchangeable for such Common Stock, or
publicly announce an intention to effect any such transaction, for a period of
120 days after the date of this Agreement, other than shares disposed of as bona
fide gifts where the donees agree prior to such transfer to be bound by a
lock-up agreement similar to this one.
The undersigned understands that Friedman, Billings, ▇▇▇▇▇▇ &
Co., Inc. is entering into the Underwriting Agreement in reliance upon this
letter agreement. The undersigned agrees that the provisions of this letter
agreement shall also be binding upon the successors, assigns, heirs or personal
representatives of the undersigned, as the case may be.
Very truly yours,
By:
------------------------------------
Name:
Title:
A-1
