Exhibit 1.1
$350,000,000
XTO ENERGY INC.
$350,000,000 7 1/2% Senior Notes due 2012
UNDERWRITING AGREEMENT
----------------------
April 17, 2002
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
Banc of America Securities LLC
Deutsche Bank Securities Inc.
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Credit Lyonnais Securities (USA) Inc.
Hibernia Southcoast Capital, Inc.
c/▇ ▇▇▇▇▇▇ Brothers Inc.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
XTO Energy Inc., a Delaware corporation (the "Company"), proposes
to issue and sell $350,000,000 aggregate principal amount of its 7 1/2% Senior
Notes due 2012 (the "Notes") to you (the "Underwriters"). The Notes will be
issued pursuant to an Indenture to be dated on or before the Delivery Date (as
hereinafter defined), as amended and supplemented by a First Supplemental
Indenture to be dated as of the same date (collectively, the "Indenture")
between the Company and The Bank of New York, as Trustee (the "Trustee"). This
agreement (this "Agreement") is to confirm the agreement concerning the purchase
of the Notes from the Company by the Underwriters.
Section 1. Representations, Warranties and Agreements of the
Company. The Company represents, warrants and agrees that:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on
Form S-3 (File No. 333-71762), including a prospectus, relating to,
among other securities, the Notes and the offering thereof from time
to time in conformity with the requirements of the Securities Act of
1933, as amended (the "Securities Act") and Rule 415 of the rules and
regulations (the "Rules and Regulations") of the Commission
thereunder. Such registration
statement has been declared effective by the Commission. As provided
in Section 5(a), a prospectus supplement reflecting the terms of the
offering of the Notes and the other matters set forth therein has been
prepared and will be filed pursuant to Rule 424(b) of the Rules and
Regulations. Such prospectus supplement, in the form first filed after
the Effective Time (as defined below) pursuant to Rule 424(b) of the
Rules and Regulations and deemed to be a part of the registration
statement as of the Effective Time pursuant to Rule 430A of the Rules
and Regulations, is herein referred to as the "Prospectus Supplement."
Such registration statement, as amended at the Effective Time,
including the exhibits thereto and the documents incorporated by
reference therein, is herein called the "Registration Statement," and
the basic prospectus included therein relating to all offerings of
securities under the Registration Statement, as supplemented by the
Prospectus Supplement, is herein called the "Prospectus," except that,
if such basic prospectus is amended or supplemented on or prior to the
date on which the Prospectus Supplement is first filed pursuant to
Rule 424(b) of the Rules and Regulations, the term "Prospectus" shall
refer to the basic prospectus as so amended or supplemented and as
supplemented by the Prospectus Supplement. As used herein, "Effective
Time" means the date and the time as of which such registration
statement, or the most recent post-effective amendment thereto, if
any, was declared effective by the Commission; "Effective Date" means
the date of the Effective Time. As used herein, "Preliminary
Prospectus Supplement" means the Prospectus Supplement of the Company
dated April 15, 2002 relating to the offering of the Notes, and
containing a "Subject to Completion" legend comparable to that
contained in paragraph 10 of Item 501 under Regulation S-K of the
Rules and Regulations. Reference made herein to any Prospectus,
Preliminary Prospectus Supplement or Prospectus Supplement shall be
deemed to refer to and include any documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities Act, as
of the date of such Prospectus, Preliminary Prospectus Supplement or
Prospectus Supplement, as the case may be, and any reference to any
amendment or supplement to any Prospectus, Preliminary Prospectus
Supplement or Prospectus Supplement shall be deemed to refer to and
include any document filed under the United States Securities Exchange
Act of 1934 (the "Exchange Act") after the date of such Prospectus,
Preliminary Prospectus Supplement or Prospectus Supplement, as the
case may be, and incorporated by reference in such Prospectus,
Preliminary Prospectus Supplement or Prospectus Supplement, as the
case may be; and any reference to any amendment to the Registration
Statement shall be deemed to include any annual report of the Company
filed with the Commission pursuant to Section 13(a) or 15(d) of the
Exchange Act after the Effective Time that is incorporated by
reference in the Registration Statement. If the Company has filed an
abbreviated registration statement to register additional Notes
pursuant to Rule 462(b) under the Securities Act (the "Rule 462
Registration Statement"), then any reference herein to the term
Registration Statement shall be deemed to include such Rule 462
Registration Statement. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus
Supplement.
(b) The Registration Statement conforms, and the Prospectus
Supplement and any further amendments or supplements to the
Registration Statement or the Prospectus
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Supplement will, when they become effective or are filed with the
Commission, as the case may be, conform in all respects to the
requirements of the Securities Act and the Rules and Regulations and
do not and will not, as of the applicable effective date (as to the
Registration Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or
supplement thereto) contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided that
no representation or warranty is made as to information contained in
or omitted from the Registration Statement or the Prospectus
Supplement in reliance upon and in conformity with written information
furnished to the Company through the Underwriters by or on behalf of
any Underwriter specifically for inclusion therein.
(c) The documents incorporated by reference in the Prospectus or
Prospectus Supplement, when they became effective or were filed with
the Commission, as the case may be, conformed in all material respects
to the requirements of the Exchange Act and the rules and regulations
of the Commission thereunder, and none of such documents 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; and any further documents so filed and
incorporated by reference in the Prospectus or Prospectus Supplement,
when such documents become effective or are filed with Commission, as
the case may be, will conform in all material respects to the
requirements of the Securities Act or the Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder and will
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading.
(d) Neither the Company nor any of its subsidiaries has sustained
since the date of the latest audited financial statements included in
the Prospectus or Prospectus Supplement any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus or Prospectus
Supplement; and, since the respective dates as of which information is
given in the Registration Statement, the Prospectus and the Prospectus
Supplement, there has not been any change in the long-term debt of the
Company or any of its subsidiaries or any material adverse change, or
any development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the
Prospectus and the Prospectus Supplement.
(e) (1) The Company has good and defensible title to all real
property, free and clear of all liens, encumbrances and defects,
except security interests securing loans under the Company's bank
revolving credit agreement and except (A) royalties, overriding
royalties and other burdens under oil and gas leases, (B) easements,
restrictions, rights-of-way and other matters that commonly affect
property, (C) liens securing taxes and other governmental charges, or
claims of materialmen, mechanics and similar persons, not yet
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due and payable, (D) liens and encumbrances under operating
agreements, farmout agreements, unitization, pooling and commutation
agreements, declarations and orders, and gas sales contracts, securing
payment of amounts not yet due and payable and of a scope and nature
customary in the oil and gas industry and (E) liens, encumbrances and
defects that do not in the aggregate materially affect the value of
the real property or materially interfere with the use made or
proposed to be made of such real property by the Company; and (2) the
working interests in oil, gas and mineral leases or mineral interests
which constitute a portion of the real property held by the Company
reflect in all material respects the right of the Company to explore
or receive production from such real property, and the care taken by
the Company and its subsidiaries with respect to acquiring or
otherwise procuring such leases or mineral interests was generally
consistent with standard industry practices for acquiring or procuring
leases and interests therein to explore for hydrocarbons.
(f) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of Delaware,
is duly qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which its ownership or lease of
property or the conduct of its business requires such qualification,
and has all power and authority necessary to own or hold its
properties and to conduct the businesses in which it is engaged; and
none of the subsidiaries of the Company is a significant subsidiary,
as such term is defined in Rule 405 of the Rules and Regulations.
(g) The Company has an authorized capitalization as set forth in
the Prospectus Supplement. All of the issued shares of capital stock
of the Company have been duly and validly authorized and issued, were
issued in compliance with federal and state securities laws, are fully
paid and non-assessable and conform to the description thereof
contained in the Registration Statement and the Prospectus. All of the
Company's options, warrants and other rights to purchase or exchange
any securities for shares of the Company's capital stock have been
duly and validly authorized and issued, were issued in compliance with
federal and state securities laws, and conform to the description
thereof contained in the Registration Statement and the Prospectus.
(h) Neither (i) the execution or delivery hereof by the Company,
(ii) the consummation of the transactions contemplated hereby, (iii)
the execution and delivery of the Indenture and the Notes by the
Company nor (iv) compliance by the Company with all of the provisions
of this Agreement, the Indenture and the Notes, will (A) result in a
breach or violation of, or constitute a default under, the certificate
of incorporation, by-laws, partnership agreement or other governing
documents of the Company or any of its subsidiaries, or any material
agreement, indenture or other instrument to which the Company or any
of its subsidiaries is a party or by which any of them is bound, or to
which any of their properties is subject or (B) violate any law, rule,
administrative regulation or decree of any court, or any governmental
agency or body having jurisdiction over the Company, its subsidiaries
or any of their respective properties, or result in the creation or
imposition of any lien, charge, claim or encumbrance upon any property
or asset of the Company or any of its subsidiaries, which in any such
event described in this
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subclause (B) would have a material adverse effect on the Company.
Except for permits, consents, approvals and similar authorizations
required under the securities or "Blue Sky" laws of certain
jurisdictions, and except for such permits, consents, approvals and
authorizations which have been obtained, no permit, consent, approval,
authorization or order of any court, governmental agency or body or
financial institution is required in connection with the consummation
of the transactions contemplated by this Agreement.
(i) Neither the Company nor any of its subsidiaries is in
violation of its Certificate of Incorporation or Bylaws or in default
in the performance or observance of any material obligation,
agreement, covenant or condition contained in any indenture, mortgage,
deed of trust, loan agreement, lease or any other agreement or
instrument to which it is a party or by which it or any of its
properties is bound.
(j) This Agreement has been duly authorized, executed and
delivered by the Company.
(k) The Notes will be pari passu with all existing and future
unsecured and unsubordinated indebtedness of the Company.
(l) The Indenture has been duly and validly authorized, and, on
or prior to the Delivery Date, will be executed and delivered by the
Company and will be a valid and binding agreement of the Company,
enforceable against the Company in accordance with its terms, except
as the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization or similar laws relating to or affecting
creditors' rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law). The Indenture (i) has been duly
qualified under the Trust Indenture Act of 1939, as amended (the
"Trust Indenture Act"), (ii) complies as to form with the requirements
of the Trust Indenture Act and (iii) conforms to the description
thereof in the Registration Statement and the Prospectus.
(m) The Notes have been duly and validly authorized by the
Company for issuance and sale to the Underwriters pursuant to this
Agreement and, when executed by the Company and authenticated by the
Trustee in accordance with the Indenture and delivered to the
Underwriters against payment therefor in accordance with the terms
hereof, will have been validly issued and delivered, free of any
preemptive or similar rights to subscribe to or purchase the same
arising by operation of law or under the charter or by-laws of the
Company or otherwise, and will constitute valid and binding
obligations of the Company entitled to the benefits of the Indenture
and enforceable in accordance with their terms, except as enforcement
thereof may be limited by bankruptcy, insolvency, reorganization or
other similar laws relating to or affecting the enforcement of
creditors' rights generally and by general equitable principles, and
the Notes conform, or will conform, to the description thereof in the
Registration Statement and the Prospectus. Neither the filing of the
Registration Statement nor the offering or sale of the Notes as
contemplated by this Agreement gives rise to any rights, other than
those which have been duly waived or satisfied, for or relating to the
registration of any securities of the
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Company. The Company has all requisite corporate power and authority
to issue, sell and deliver the Notes in accordance with and upon the
terms and conditions set forth in this Agreement and in the
Registration Statement and Prospectus. All corporate action required
to be taken by the Company for the authorization, issuance, sale and
delivery of the Notes to be sold by the Company hereunder has been
validly and sufficiently taken.
(n) The financial statements (including the related notes and
supporting schedules) filed as part of the Registration Statement or
included or incorporated by reference in the Prospectus and the
Prospectus Supplement present fairly the financial condition and
results of operations of the entities purported to be shown thereby,
at the dates and for the periods indicated, and have been prepared in
conformity with generally accepted accounting principles applied on a
consistent basis throughout the periods involved.
(o) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ L.L.P. ("▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇"), who have
certified certain financial statements of the Company, whose reports
appear in the Prospectus or are incorporated by reference therein and
who have delivered the initial letter referred to in Section 7(f)
hereof, are independent public accountants as required by the
Securities Act and the Rules and Regulations.
(p) The Company and each of its subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks as is
adequate for the conduct of their respective businesses and the value
of their respective properties as is customary for companies engaged
in similar businesses in similar industries.
(q) The Company and each of its subsidiaries own or possess
adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations,
service mark registrations, copyrights and licenses necessary for the
conduct of their respective businesses and have no reason to believe
that the conduct of their respective businesses will conflict with,
and have not received any notice of any claim of conflict with, any
such rights of others.
(r) Except as described in the Prospectus or Prospectus
Supplement, there are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which
any property or assets of the Company or any of its subsidiaries is
the subject which, if determined adversely to the Company or any of
its subsidiaries, are reasonably likely to have a material adverse
effect on the consolidated financial position, stockholders' equity,
results of operations, business or prospects of the Company and its
subsidiaries; and to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities
or threatened by others.
(s) The conditions for use of Form S-3, as set forth in the
General Instructions thereto, have been satisfied.
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(t) No labor disturbance by the employees of the Company exists
or, to the knowledge of the Company, is imminent, which would be
reasonably expected to have a material adverse effect on the general
affairs, management, consolidated financial position, stockholders'
equity, results of operations, business or prospects of the Company
and its subsidiaries.
(u) Since the date as of which information is given in the
Prospectus Supplement through the date hereof, and except as may
otherwise be disclosed in the Prospectus Supplement, the Company has
not (i) issued or granted any securities other than pursuant to any of
its employee benefit plans, (ii) incurred any liability or obligation,
direct or contingent, other than liabilities and obligations which
were incurred in the ordinary course of business or (iii) entered into
any transaction not in the ordinary course of business.
(v) The Company (i) makes and keeps accurate books and records
and (ii) maintains internal accounting controls which provide
reasonable assurance that (A) transactions are executed in accordance
with management's authorization, (B) transactions are recorded as
necessary to permit preparation of its financial statements and to
maintain accountability for its assets, (C) access to its assets is
permitted only in accordance with management's authorization and (D)
the reported accountability for its assets is compared with existing
assets at reasonable intervals.
(w) Neither the Company nor any director, officer, agent,
employee or other person acting on behalf of the Company, has used any
corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expense relating to political activity; made any direct
or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation
of any provision of the Foreign Corrupt Practices Act of 1977; or made
any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.
(x) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes,
medical wastes, hazardous wastes or hazardous substances by the
Company or any of its subsidiaries (or, to the knowledge of the
Company, any of their predecessors in interest) at, upon or from any
of the property now or previously owned or leased by the Company or
its subsidiaries in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require
remedial action under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or
remedial action which would not be reasonably likely to have,
singularly or in the aggregate with all such violations and remedial
actions, a material adverse effect on the general affairs, management,
consolidated financial position, stockholders' equity or results of
operations of the Company and its subsidiaries; there has been no
material spill, discharge, leak, emission, injection, escape, dumping
or release of any kind onto such property or into the environment
surrounding such property of any toxic wastes, medical wastes, solid
wastes, hazardous wastes or hazardous substances due to or caused by
the Company or any of its
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subsidiaries or with respect to which the Company or any of its
subsidiaries have knowledge, except for any such spill, discharge,
leak, emission, injection, escape, dumping or release which would not
be reasonably likely to have, singularly or in the aggregate with all
such spills, discharges, leaks, emissions, injections, escapes,
dumpings and releases, a material adverse effect on the general
affairs, management, consolidated financial position, stockholders'
equity or results of operations of the Company and its subsidiaries;
and the terms "hazardous wastes," "toxic wastes," "hazardous
substances" and "medical wastes" shall have the meanings specified in
any applicable local, state, federal and foreign laws or regulations
with respect to environmental protection.
(y) The Company is not an investment company as defined in the
Investment Company Act of 1940, as amended.
(z) The information supplied by the Company to its independent
petroleum engineering consultants for purposes of preparing the
reserve reports used to calculate estimates of reserves of the Company
included in the Registration Statement, including, without limitation,
production, costs of operation and development, current prices for
production, agreements relating to current and future operations and
sales of production, was true and correct in all material respects on
the date supplied and was prepared in accordance with customary
industry practices; ▇▇▇▇▇▇ and ▇▇▇▇▇, Ltd., independent consulting
petroleum engineers, who prepared estimates of the extent and value of
proved oil and natural gas reserves, are independent with respect to
the Company.
(aa) The Company has not taken and will not take, directly or
indirectly, any action which is designed to or which has constituted
or which would reasonably be expected to cause or result in
stabilization or manipulation of the price of the Notes or any
security of the Company to facilitate the sale or resale of the Notes.
(bb) The Company has received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ on March 28,
2002 a letter concerning its audit quality controls in connection with
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇'▇ audits of the financial statements of the Company
and its consolidated subsidiaries, including representations regarding
the continuity of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇'▇ personnel working on the audit,
the availability of national office consultation and the availability
of personnel at foreign affiliates of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ to conduct
relevant portions of the audit (the "▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Representation
Letter") and such letter has not been rescinded and the Company has no
reason to believe that the representations in such letter are not true
and correct in all respects.
Section 2. Purchase of the Notes by the Underwriters. Subject to
the terms and conditions and upon the basis of the representations and
warranties herein set forth, the Company agrees to issue and sell to the
Underwriters, and each of the Underwriters agrees, severally and not jointly, to
purchase from the Company, at a price equal to 97.825% of the principal amount
thereof, plus accrued interest, if any, from April 23, 2002, the principal
amount of the Notes set forth opposite such Underwriter's name in Schedule I
hereto.
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Section 3. Offering of Notes by the Underwriters. Upon
authorization by the Underwriters of the release of the Notes, the several
Underwriters propose to offer the Notes for sale upon the terms and conditions
set forth in the Prospectus Supplement.
Section 4. Delivery of and Payment for the Notes. The Closing
shall be held at the offices of ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇, Fort Worth, Texas, at
10:00 A.M., New York City time, on April 23, 2002 or at such other date or place
as shall be determined by agreement between the Underwriters and the Company.
This date and time are sometimes referred to as the "Delivery Date." On the
Delivery Date, the Company shall deliver or cause to be delivered the Notes to
the Underwriters for the account of each Underwriter against payment to or upon
the order of the Company of the purchase price by wire transfer in immediately
available funds. Time shall be of the essence, and delivery at the time and
place specified pursuant to this Agreement is a further condition of the
obligation of each Underwriter hereunder.
Section 5. Further Agreements of the Company. The Company agrees:
(a) To prepare the Prospectus Supplement in a form approved by
the Underwriters and to file such Prospectus Supplement pursuant to
Rule 424(b) under the Securities Act not later than the Commission's
close of business on the second business day following the execution
and delivery of this Agreement or, if applicable, such earlier time as
may be required by Rule 430A(a)(3) under the Securities Act; to make
no further amendment or any supplement to the Registration Statement
or to the Prospectus prior to the Delivery Date except as permitted
herein; to advise the Underwriters, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement
has been filed or becomes effective or any supplement to the
Prospectus Supplement or any amended Prospectus Supplement has been
filed and to furnish the Underwriters with copies thereof; to advise
the Underwriters, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus
Supplement or the Prospectus Supplement, of the suspension of the
qualification of the Notes for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or the Prospectus
Supplement or for additional information; and, in the event of the
issuance of any stop order or of any order preventing or suspending
the use of any Preliminary Prospectus Supplement or the Prospectus
Supplement or suspending any such qualification, to use promptly its
best efforts to obtain its withdrawal;
(b) To furnish promptly to the Underwriters two signed copies of
the Registration Statement as originally filed with the Commission,
and each amendment thereto filed with the Commission, including all
consents and exhibits filed therewith;
(c) To deliver promptly to the Underwriters such number of the
following documents as the Underwriters shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed
with the Commission and each amendment
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thereto (in each case excluding exhibits) and (ii) each Preliminary
Prospectus Supplement, the Prospectus Supplement and any amended or
supplemented Prospectus Supplement; and, if the delivery of a
prospectus is required at any time after the Effective Time in
connection with the offering or sale of the Notes or any other
securities relating thereto and if at such time any events shall have
occurred as a result of which the Prospectus Supplement as then
amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances under
which they were made when such Prospectus Supplement is delivered, not
misleading, or, if for any other reason it shall be necessary to amend
or supplement the Prospectus Supplement in order to comply with the
Securities Act, to notify the Underwriters and, upon their request, to
prepare and furnish without charge to each Underwriter and to any
dealer in securities as many copies as the Underwriters may from time
to time reasonably request of an amended or supplemented Prospectus
Supplement which will correct such statement or omission or effect
such compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus Supplement or any supplement
to the Prospectus Supplement that may, in the judgment of the Company
or the Underwriters, be required by the Securities Act or requested by
the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus Supplement, to
furnish a copy thereof to the Underwriters and counsel for the
Underwriters and obtain the consent (which will not be unreasonably
withheld) of the Underwriters to the filing;
(f) Promptly from time to time to take such action as the
Underwriters may reasonably request to qualify the Notes for offering
and sale under the securities laws of such jurisdictions in the United
States as the Underwriters may request and to comply with such laws so
as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Notes; provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation, to
become subject to taxation or to file a general consent to service of
process in any jurisdiction;
(g) As soon as practicable after the Effective Date, to make
generally available to the Company's security holders and to deliver
to the Underwriters an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Securities Act and the Rules and Regulations (including, at the
option of the Company, Rule 158);
(h) For a period of five years following the Effective Date, to
furnish to the ▇▇▇▇▇▇ Brothers Inc. and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. (or,
upon written request, such other Underwriters) copies of all materials
furnished by the Company to its shareholders and all public reports
and all reports and financial statements furnished by the Company to
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the Commission pursuant to the Exchange Act or any rule or regulation
of the Commission thereunder or to the Noteholders;
(i) To apply the net proceeds from the sale of the Notes being
sold by the Company as set forth in the Prospectus Supplement;
(j) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on
the date of this Agreement, and the Company shall at the time of
filing either pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) under the Securities Act;
(k) To take such steps as shall be necessary to ensure that
neither the Company nor any subsidiary shall become an investment
company as defined in the Investment Company Act of 1940, as amended;
and
(l) To file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long
as the delivery of a prospectus is required in connection with the
offering or sale of the Notes.
Section 6. Expenses. Whether or not this Agreement becomes
effective or is terminated or the sale of the Notes to the Underwriters is
consummated, the Company shall pay or cause to be paid (A) all fees and expenses
(including, without limitation, all registration and filing fees and fees and
expenses of the Company's accountants but excluding fees and expenses of counsel
for the Underwriters) incurred in connection with the preparation, printing,
filing, delivery and shipping of the Registration Statement (including the
financial statements therein and all amendments and exhibits thereto), each
Preliminary Prospectus Supplement, the Prospectus Supplement, the Indenture, the
Statement of Eligibility and Qualification of the Trustee on Form T-1 filed with
the Commission (the "Form T-1") and any amendments or supplements of the
foregoing and any documents incorporated by reference into any of the foregoing,
(B) all fees and expenses incurred in connection with the preparation and
delivery to the Underwriters of the Notes (including the cost of printing the
Notes), (C) any fees required to be paid to rating agencies incurred in
connection with the rating of the Notes, (D) the fees, costs and charges of the
Trustee, including the fees and disbursements of counsel for the Trustee, and
(E) all other costs and expenses incident to the performance of its obligations
under this Agreement; provided that except as provided in this Section 6 and in
Section 11, the Underwriters shall pay their own costs and expenses, including
the costs and expenses of their counsel, any transfer taxes on the Notes that
they may sell and the expenses of advertising any offering of the Notes made by
the Underwriters.
Section 7. Conditions of Underwriters' Obligations. The
respective obligations of the Underwriters hereunder are subject to the
accuracy, when made and on the Delivery Date,
11
of the representations and warranties of the Company contained herein, to the
performance by the Company of its obligations hereunder, and to each of the
following additional terms and conditions:
(a) The Prospectus Supplement shall have been timely filed with
the Commission in accordance with Section 5(a); no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose
shall have been initiated or threatened by the Commission; and any
request of the Commission for inclusion of additional information in
the Registration Statement or the Prospectus Supplement or otherwise
shall have been complied with;
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to the Delivery Date that the Registration
Statement or the Prospectus or any amendment or supplement thereto
contains an untrue statement of a fact which, in the opinion of ▇▇▇▇▇▇
& ▇▇▇▇▇▇ L.L.P., counsel for the Underwriters, is material or omits to
state a fact which, in the opinion of such counsel, is material and is
required to be stated therein or is necessary to make the statements
therein not misleading.
(c) All corporate proceedings and other legal matters incident to
the authorization, form and validity of this Agreement, the Indenture,
the Notes, the Registration Statement and the Prospectus, and all
other legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all material
respects to counsel for the Underwriters, and the Company shall have
furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters;
(d) ▇▇▇▇▇, ▇▇▇▇ & ▇▇▇▇▇▇▇, a professional corporation, shall have
furnished to the Underwriters their written opinion, as counsel to the
Company, addressed to the Underwriters and dated the Delivery Date, in
form and substance reasonably satisfactory to the Underwriters, to the
effect that:
(i) The Company was incorporated, exists and is in good
standing under the laws of the State of Delaware, with corporate
power and authority to own its properties and conduct its
business as described in the Prospectus;
(ii) The Company is qualified as a foreign corporation for
the transaction of business and is in good standing in the State
of Texas and each other state set forth on an exhibit to such
opinion, and such counsel has no knowledge that the character of
the business conducted by the Company or the location of the
properties owned, leased or operated by it makes such
qualification necessary (except where the failure to so qualify
would not, individually or in the aggregate, have a material
adverse effect on the condition (financial or other), results of
operations, business or prospects of the Company and its
subsidiaries taken as a whole);
12
(iii) Each subsidiary of the Company was incorporated,
exists and is in good standing under the laws of its jurisdiction
of incorporation; all of the issued shares of capital stock of
each such subsidiary have been validly authorized and issued, are
fully paid and non-assessable, are owned of record by the Company
directly or through subsidiaries, and, except with respect to
security interests of the Company's bank lenders on the capital
stock of such subsidiaries, such counsel has no knowledge of any
other adverse claim (within the meaning of Article 8 of the
Uniform Commercial Code) thereto;
(iv) Such counsel has no knowledge that the filing of the
Registration Statement or the offering or sale of the Notes as
contemplated by this Agreement gives rise to any rights, other
than those which have been waived or satisfied, for or relating
to the registration of any securities of the Company or any of
its subsidiaries. The Company has all requisite corporate power
and authority to issue, sell and deliver the Notes in accordance
with and upon the terms and conditions set forth in this
Agreement and in the Registration Statement and Prospectus
Supplement;
(v) The Indenture has been duly authorized, executed and
delivered by the Company and assuming the due authorization,
execution and delivery by the Trustee, is a valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except as the enforceability thereof
may be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws relating to or affecting creditors'
rights generally and by general equitable principles (regardless
of whether such enforceability is considered in a proceeding in
equity or at law); and the Indenture has been duly qualified
under the Trust Indenture Act and the rules and regulations
thereunder;
(vi) The Notes have been duly authorized and executed by
the Company for issuance and sale to the Underwriters pursuant to
this Agreement and, assuming due authentication of the Notes by
the Trustee, upon delivery to the Underwriters against payment
therefor in accordance with the terms of this Agreement, will
have been validly issued and delivered, will be entitled to the
benefits of the Indenture and will constitute valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms, except as enforcement thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or
other similar laws or judicial decisions relating to or affecting
creditors' rights generally and by general equitable principles
(regardless of whether such enforceability is considered in a
proceeding in equity or at law);
(vii) Such counsel has no knowledge, other than as set forth
in the Prospectus and the Prospectus Supplement, of any pending
or overtly threatened legal or governmental proceedings to which
the Company or any of its subsidiaries is or may be a party or of
which any property of the Company or any of its subsidiaries is
or may be subject which, if determined adversely to the Company
or any of its subsidiaries would, individually or in the
aggregate, have a material
13
adverse effect on the consolidated financial position, equity or
results of operations of the Company and its subsidiaries;
(viii) This Agreement has been duly authorized, executed and
delivered by the Company;
(ix) The sale of the Notes being delivered at the Delivery
Date by the Company and the compliance by the Company with all of
its obligations under this Agreement and the Indenture will not
(A) conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, the
Indenture or, except with respect to any preferential purchase
rights under applicable joint operating agreements, any other
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the
Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its subsidiaries
is subject, (B) violate any provisions of the Certificate of
Incorporation or Bylaws of the Company or (C) violate any
statute, rule or regulation known to such counsel or any order
known to such counsel of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries
or any of their properties;
(x) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the sale of the Notes
hereunder, except the registration under the Securities Act of
such Notes, and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of such Notes by the Underwriters;
(xi) Such counsel has no knowledge that the Company or any
of its subsidiaries is in violation of its Certificate of
Incorporation or Bylaws or in default in the performance or
observance of any material obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust,
loan agreement, lease or other agreement or instrument known to
such counsel to which it is a party or by which it or any of its
properties may be bound;
(xii) The statements set forth in the Prospectus Supplement
under the caption "Description of the Notes," insofar as they
constitute matters of law, summaries of legal matters, documents
or legal conclusions, have been reviewed by such counsel and are
correct in all material respects;
(xiii) The Company is not an "investment company," as such
term is defined in the Investment Company Act of 1940; and
(xiv) The Registration Statement and the Prospectus
Supplement and any further amendments and supplements thereto
made by the Company prior to the Delivery Date (other than the
financial statements, notes thereto and related
14
schedules therein, and the information that is extracted from the
reports of ▇▇▇▇▇▇ and ▇▇▇▇▇, Ltd. pertaining to oil and gas
reserves that is included therein, as to which such counsel
expresses no opinion) comply as to form in all material respects
with the requirements of the Securities Act and the rules and
regulations thereunder.
In addition to the opinions set forth above, such opinion shall also
include a statement to the effect that although such counsel does not
assume any responsibility for the accuracy, completeness or fairness
of the statements contained in the Registration Statement, the
Prospectus Supplement or any further amendment or supplement thereto,
except for those referred to in the opinion in subsection (xii) above,
nothing has come to the attention of such counsel that has caused them
to believe that, (A) as of its Effective Time, the Registration
Statement, or any further amendment thereto prior to the Delivery Date
(other than the financial statements, notes thereto and related
schedules therein, and the information that is extracted from the
reports of ▇▇▇▇▇▇ and ▇▇▇▇▇, Ltd. pertaining to oil and gas reserves
that is included therein, as to which such counsel need express no
opinion) 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, (B) as of its date, the
Prospectus Supplement or any further amendment or supplement thereto
prior to the Delivery Date (other than the financial statements, notes
thereto and related schedules therein, and the information that is
extracted from the reports of ▇▇▇▇▇▇ and ▇▇▇▇▇, Ltd. pertaining to oil
and gas reserves that is included therein, as to which such counsel
need express no opinion) contained an untrue statement of a material
fact or omitted to state a material fact necessary to make the
statements therein, in the light of the circumstances under which they
were made, not misleading, or (C) as of the Delivery Date, either the
Registration Statement or the Prospectus Supplement or any further
amendment or supplement thereto prior to the Delivery Date (other than
the financial statements, notes thereto and related schedules therein,
and the information that is extracted from the reports of ▇▇▇▇▇▇ and
▇▇▇▇▇, Ltd. pertaining to oil and gas reserves that is included
therein, as to which such counsel need express no opinion) contains an
untrue statement of a material fact or omits to state a material fact
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and such
counsel does not know of any amendment to the Registration Statement
required to be filed or of any contracts or other documents of a
character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration Statement or
the Prospectus Supplement which are not filed or described as
required;
(e) The Underwriters shall have received from ▇▇▇▇▇▇ & ▇▇▇▇▇▇
L.L.P., counsel for the Underwriters, such opinion or opinions, dated
the Delivery Date, with respect to the issuance and sale of the Notes,
the Registration Statement, the Prospectus Supplement and other
related matters as the Underwriters may reasonably require, and the
Company shall have furnished to such counsel such documents as they
reasonably request for the purpose of enabling them to pass upon such
matters.
15
(f) At the time of execution of this Agreement, the Underwriters
shall have received from ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ a letter (the "initial
letter"), in form and substance reasonably satisfactory to the
Underwriters, addressed to the Underwriters and dated the date hereof
(i) confirming that, with respect to the Company, they are independent
public accountants within the meaning of the Securities Act and are in
compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission and (ii) stating, as of the date hereof (or, with respect
to matters involving changes or developments since the respective
dates as of which specified financial information is given in the
Prospectus Supplement, as of a date not more than five days prior to
the date hereof), the conclusions and findings of such firm with
respect to the financial information and other matters ordinarily
covered by accountants' comfort letters to underwriters in connection
with registered public offerings.
(g) With respect to the letter of ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ referred to in
the preceding paragraph and delivered to the Underwriters concurrently
with the execution of this Agreement, the Company shall have furnished
to the Underwriters a letter (the "bring-down letter") of such
accountants, addressed to the Underwriters and dated the Delivery Date
(i) confirming that they are independent public accountants within the
meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of accountants
under Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as
of the date of the bring-down letter (or, with respect to matters
involving changes or developments since the respective dates as of
which specified financial information is given in the Prospectus
Supplement, as of a date not more than five days prior to the date of
the bring-down letter), the conclusions and findings of such firm with
respect to the financial information and other matters covered by the
initial letter and (iii) confirming in all material respects the
conclusions and findings set forth in the initial letter.
(h) The Company shall have furnished to the Underwriters a
certificate, dated the Delivery Date, of its Chairman of the Board,
its President or a Vice President and its chief financial officer
stating that:
(i) The representations, warranties and agreements of the
Company in Section 1 are true and correct as of the Delivery
Date; the Company has complied with all its agreements contained
herein; and the conditions set forth in Sections 7(a), 7(i), 7(k)
and 7(l) have been fulfilled; and
(ii) They have carefully examined the Registration Statement
and the Prospectus and, in their opinion (A) as of the Delivery
Date, the Registration Statement and Prospectus Supplement did
not include any untrue statement of a material fact and did not
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading, and (B)
since the Effective Date no material event has occurred, the
description of which has not been included or incorporated by
reference in the Registration Statement or the Prospectus.
16
(i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial
statements included or incorporated by reference in the
Prospectus Supplement (exclusive of any amendment or supplement
thereto on or after the date of this Agreement) (A) any loss or
interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus
Supplement or (B) since such date there shall not have been any
change in the capitalization or long-term debt of the Company or
any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries,
otherwise than as set forth or contemplated in the Prospectus
Supplement, the effect of which, in any such case described in
clause (A) or (B), is, in the reasonable judgment of the
Underwriters, so material and adverse as to make it impracticable
or inadvisable to proceed with the public offering or the
delivery of the Notes being delivered on the Delivery Date on the
terms and in the manner contemplated in the Prospectus
Supplement.
(j) Subsequent to the execution and delivery of this
Agreement there shall not have occurred any of the following: (i)
trading in securities generally on the New York Stock Exchange or
the American Stock Exchange or in the over-the-counter market, or
trading in any securities of the Company on any exchange or in
the over-the-counter market, shall have been suspended or the
settlement of such trading generally shall have been materially
disrupted, or minimum prices shall have been established on any
such exchange or such market by the Commission, by such exchange
or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared
by Federal or state authorities, (iii) the United States shall
have become engaged in hostilities, there shall have been an
escalation in hostilities involving the United States or there
shall have been a declaration of a national emergency or war by
the United States or (iv) there shall have occurred such a
material adverse change in general economic, political or
financial conditions (or the effect of international conditions
on the financial markets in the United States shall be such),
including, without limitation, as a result of terrorist
activities after the date hereof, as to make it, in the judgment
of the Underwriters, impracticable or inadvisable to proceed with
the public offering or delivery of the Notes being delivered on
the Delivery Date on the terms and in the manner contemplated in
the Prospectus Supplement.
(k) Subsequent to the execution and delivery of this
Agreement, (i) no downgrading shall have occurred in the rating
accorded the Notes or any other debt securities or preferred
stock issued or guaranteed by the Company by either Standard &
Poor's, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc. or ▇▇▇▇▇'▇
Investors Service, Inc., or their respective successors; and (ii)
neither such organization shall have publicly announced that it
has under surveillance or review (other than an announcement with
positive implications of a possible upgrading) its rating of the
Notes or any other debt securities or preferred stock issued or
guaranteed by the Company.
17
(l) On the Closing Date, the ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ Representation
Letter shall not have been rescinded and the Company shall have no
reason to believe that the representations in such letter are not true
and correct in all respects.
All opinions, letters, evidence and certificates mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
Section 8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Underwriter, its directors, officers and employees and each person, if
any, who controls any Underwriter within the meaning of the Securities
Act, from and against any loss, claim, damage or liability, joint or
several, or any action in respect thereof (including, but not limited
to, any loss, claim, damage, liability or action relating to purchases
and sales of Notes), to which that Underwriter, director, officer,
employee or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained (A)
in any Preliminary Prospectus Supplement, the Registration Statement
or the Prospectus Supplement or in any amendment or supplement
thereto, or (B) in any materials or information provided to investors
by, or with the approval of, the Company in connection with the
marketing of the offering of the Notes ("Marketing Materials"),
including any road show or investor presentations made to investors by
the Company (whether in person or electronically), (ii) the omission
or alleged omission to state in any Preliminary Prospectus Supplement,
the Registration Statement, the Prospectus Supplement or any Marketing
Materials, or in any amendment or supplement thereto, any material
fact required to be stated therein or necessary to make the statements
therein not misleading or (iii) any act or failure to act or any
alleged act or failure to act by any Underwriter in connection with,
or relating in any manner to, the Notes or the offering contemplated
hereby, and which is included as part of or referred to in any loss,
claim, damage, liability or action arising out of or based upon
matters covered by clause (i) or (ii) above (provided that the Company
shall not be liable under this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction
that such loss, claim, damage, liability or action resulted directly
from any such acts or failures to act undertaken or omitted to be
taken by such Underwriter through its gross negligence or willful
misconduct), and shall reimburse each Underwriter and each such
director, officer, employee or controlling person promptly upon demand
for any legal or other expenses reasonably incurred by that
Underwriter, director, officer, employee or controlling person in
connection with investigating or defending or preparing to defend
against any such loss, claim, damage, liability or action as such
expenses are incurred; provided, however, that the Company shall not
be liable in any such case to the extent that any such loss, claim,
damage, liability or action arises out of, or is based upon, any
untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus Supplement, the
Registration Statement or the Prospectus
18
Supplement, or in any such amendment or supplement, in reliance upon
and in conformity with written information concerning such Underwriter
furnished to the Company through the Underwriters by or on behalf of
any Underwriter specifically for inclusion therein which information
consists solely of the information specified in Section 8(e); provided
further, that such indemnification with respect to any Preliminary
Prospectus Supplement shall not apply if a copy of the Prospectus
Supplement as then amended or supplemented (excluding the documents
incorporated by reference therein) were not sent or given by or on
behalf of an Underwriter to the claimant, if required by law, at or
prior to the written confirmation of the sale of Notes to such
claimant and if the Prospectus Supplement as so amended or
supplemented would have cured the defect giving rise to such claim,
unless the failure to so deliver a Prospectus Supplement resulted from
the Company's failure to comply with Section 5(c)(ii). The obligations
of the Company under this Section or Section 12 shall be in addition
to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any,
who controls any Underwriter or the QIU (as hereinafter defined)
within the meaning of the Securities Act; and the obligations of the
Underwriters under this Section shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend,
upon the same terms and conditions, to each director of the Company,
to each officer of the Company who has signed a Registration Statement
and to each person, if any, who controls the Company within the
meaning of the Securities Act.
(b) Each Underwriter, severally and not jointly, shall indemnify
and hold harmless the Company, its officers and employees, each of its
directors and each person, if any, who controls the Company within the
meaning of the Securities Act, from and against any loss, claim,
damage or liability, joint or several, or any action in respect
thereof, to which the Company or any such officer, director or
controlling person may become subject, under the Securities Act or
otherwise, insofar as such loss, claim, damage, liability or action
arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary
Prospectus Supplement, the Registration Statement or the Prospectus
Supplement or in any amendment or supplement thereto, or (ii) the
omission or alleged omission to state in any Preliminary Prospectus
Supplement, the Registration Statement or the Prospectus Supplement,
or in any amendment or supplement thereto, any material fact required
to be stated therein or necessary to make the statements therein not
misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information
concerning such Underwriter furnished to the Company through the
Underwriters by or on behalf of that Underwriter specifically for
inclusion therein, and shall reimburse the Company and any such
officer, director or controlling person for any legal or other
expenses reasonably incurred in connection with investigating or
defending or preparing to defend against any such loss, claim, damage,
liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any
Underwriter may otherwise have to the Company or any such director,
officer, employee or controlling person.
19
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action,
the indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under this Section 8, notify the
indemnifying party in writing of the claim or the commencement of that
action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under
this Section 8 except to the extent it has been materially prejudiced
by such failure and, provided further, that the failure to notify the
indemnifying party shall not relieve it from any liability which it
may have to an indemnified party otherwise than under this Section 8.
If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the
indemnifying party shall be entitled to participate therein and, to
the extent that it wishes, jointly with any other similarly notified
indemnifying party, to assume the defense thereof with counsel
reasonably satisfactory to the indemnified party. After notice from
the indemnifying party to the indemnified party of its election to
assume the defense of such claim or action, the indemnifying party
shall not be liable to the indemnified party under this Section 8 for
any legal or other expenses subsequently incurred by the indemnified
party in connection with the defense thereof other than reasonable
costs of investigation; provided, however, that the Underwriters shall
have the right to employ counsel to represent jointly the Underwriters
and their respective officers, employees and controlling persons who
may be subject to liability arising out of any claim in respect of
which indemnity may be sought by the Underwriters against the Company
under this Section 8 if, in the reasonable judgment of the
Underwriters, it is advisable for the Underwriters, officers,
employees and controlling persons to be jointly represented by
separate counsel, and in that event the fees and expenses of one such
separate counsel shall be paid by the Company. No indemnifying party
shall (i) without the prior written consent of the indemnified parties
(which consent shall not be unreasonably withheld), settle or
compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of
which indemnification or contribution may be sought hereunder (whether
or not the indemnified parties are actual or potential parties to such
claim or action) unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding, or
(ii) be liable for any settlement of any such action effected without
its written consent (which consent shall not be unreasonably
withheld), but if settled with the consent of the indemnifying party
or if there be a final judgment of the plaintiff in any such action,
the indemnifying party agrees to indemnify and hold harmless any
indemnified party from and against any loss or liability by reason of
such settlement or judgment.
(d) If the indemnification provided for in this Section 8 shall
for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred
to therein, then each indemnifying party shall, in lieu of
indemnifying such indemnified party, contribute to the amount paid or
payable by such indemnified party as a result of such loss, claim,
damage or liability, or action in respect thereof, (i) in such
proportion as shall be appropriate to reflect the relative benefits
received by the Company
20
on the one hand and the Underwriters on the other from the offering of
the Notes or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company on the one hand and
the Underwriters on the other with respect to the statements or
omissions which resulted in such loss, claim, damage or liability, or
action in respect thereof, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the
one hand and the Underwriters on the other with respect to such
offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Notes purchased under this Agreement
(before deducting expenses) received by the Company on the one hand,
and the total underwriting discounts and commissions received by the
Underwriters with respect to the Notes purchased under this Agreement,
on the other hand, bear to the total gross proceeds from the offering
of the Notes under this Agreement, in each case as set forth in the
table on the cover page of the Prospectus Supplement. The relative
fault shall be determined by reference to whether the untrue or
alleged untrue statement of a material fact or omission or alleged
omission to state a material fact relates to information supplied by
the Company or the Underwriters, the intent of the parties and their
relative knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company and the
Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section were to be determined by pro
rata allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the
loss, claim, damage or liability, or action in respect thereof,
referred to above in this Section shall be deemed to include, for
purposes of this Section 8(d), any legal or other expenses reasonably
incurred by such indemnified party in connection with investigating or
defending any such action or claim. Notwithstanding the provisions of
this Section 8(d), no Underwriter shall be required to contribute any
amount in excess of the amount by which the total price at which the
Notes underwritten by it and offered to the public exceeds the amount
of any damages which such Underwriter has otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or
omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute as provided in this Section 8(d) are several
in proportion to their respective underwriting obligations and not
joint.
(e) The Underwriters severally confirm and the Company
acknowledges that the statements with respect to the public offering
of the Notes by the Underwriters set forth on the cover page of the
Prospectus Supplement, and the statements in the third, fourth, fifth
and ninth paragraphs under the caption "Underwriting" in the
Prospectus Supplement, constitute the only information concerning such
Underwriters furnished in writing to the Company by or on behalf of
the Underwriters specifically for inclusion in the Registration
Statement and the Prospectus Supplement.
21
Section 9. Defaulting Underwriters. If, on the Delivery Date, any
Underwriter defaults in the performance of its obligations under this Agreement,
the remaining non-defaulting Underwriters shall be obligated to purchase the
principal amount of Notes which the defaulting Underwriter agreed but failed to
purchase on the Delivery Date in the respective proportions which the principal
amount of Notes set opposite the name of each remaining non-defaulting
Underwriter in Schedule 1 hereto bears to the total principal amount of Notes
set opposite the names of all the remaining non-defaulting Underwriters in
Schedule 1 hereto; provided, however, that the remaining non-defaulting
Underwriters shall not be obligated to purchase any of the Notes on the Delivery
Date if the total principal amount of Notes which the defaulting Underwriter or
Underwriters agreed but failed to purchase on such date exceeds 9.09% of the
total principal amount of Notes to be purchased on the Delivery Date, and any
remaining non-defaulting Underwriter shall not be obligated to purchase more
than 110% of the principal amount of the Notes which it agreed to purchase on
the Delivery Date pursuant to the terms of Section 2. If the foregoing maximums
are exceeded, the remaining non-defaulting Underwriters, or those other
underwriters satisfactory to the Underwriters who so agree, shall have the
right, but shall not be obligated, to purchase, in such proportion as may be
agreed upon among them, all the Notes to be purchased on the Delivery Date. If
the remaining Underwriters or other underwriters satisfactory to the
Underwriters do not elect to purchase the Notes which the defaulting Underwriter
or Underwriters agreed but failed to purchase on the Delivery Date, this
Agreement shall terminate without liability on the part of any non-defaulting
Underwriter or the Company, except that the Company will continue to be liable
for the payment of expenses to the extent set forth in Sections 6 and 11. As
used in this Agreement, the term "Underwriter" includes, for all purposes of
this Agreement unless the context requires otherwise, any party not listed in
Schedule 1 hereto who, pursuant to this Section 9, purchases Notes which a
defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter
of any liability it may have to the Company for damages caused by its default.
If other underwriters are obligated or agree to purchase the Notes of a
defaulting or withdrawing Underwriter, either the Underwriters or the Company
may postpone the Delivery Date for up to seven full business days in order to
effect any changes that in the opinion of counsel for the Company or counsel for
the Underwriters may be necessary in the Registration Statement, the Prospectus
Supplement or in any other document or arrangement.
Section 10. Termination. The obligations of the Underwriters
hereunder may be terminated by the Underwriters by notice given to and received
by the Company prior to delivery of and payment for the Notes if, prior to that
time, any of the events described in Sections 7(i) or 7(j), shall have occurred
or if the Underwriters shall decline to purchase the Notes for any reason
permitted under this Agreement.
Section 11. Reimbursement of Underwriters' Expense. If the
Company shall fail to tender the Notes for delivery to the Underwriters by
reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed, or because any other
condition of the Underwriters' obligations hereunder required to be fulfilled by
the Company is not fulfilled, the Company will reimburse the Underwriters for
all reasonable out-of-
22
pocket expenses (including fees and disbursements of counsel) incurred by the
Underwriters in connection with this Agreement and the proposed purchase of the
Notes, and upon demand the Company shall pay the full amount thereof to the
Underwriters. If this Agreement is terminated pursuant to Section 9 by reason of
the default of one or more Underwriters, the Company shall not be obligated to
reimburse any defaulting Underwriter on account of those expenses.
Section 12. Qualified Independent Underwriter. The Company hereby
confirms that, at its request, ▇▇▇▇▇▇ Brothers Inc. has without additional
compensation acted as "qualified independent underwriter" (in such capacity, the
"QIU") within the meaning of Rule 2720 of the Conduct Rules of the National
Association of Securities Dealers, Inc. in connection with the offering of the
Notes. The Company will indemnify and hold harmless the QIU against any losses,
claims, damages or liabilities, joint or several, to which the QIU may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon the
QIU's acting (or alleged failing to act) as such "qualified independent
underwriter" and will reimburse the QIU for any legal or other expenses
reasonably incurred by the QIU in connection with investigating or defending any
such loss, claim, damage, liability or action as such expenses are incurred.
▇▇▇▇▇▇ Brothers Inc., in its capacity as QIU, hereby recommends and approves the
yield to the public of the Notes set forth in the Prospectus Supplement, in
accordance with Rule 2720(c)(3)(A) of the Conduct Rules of the National
Association of Securities Dealers, Inc.
Section 13. Notices, Etc. All statements, requests, notices and
agreements hereunder shall be in writing, and:
(a) if to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to ▇▇▇▇▇▇ Brothers Inc., ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Syndicate Department
(Fax: ▇▇▇-▇▇▇-▇▇▇▇), with a copy, in the case of any notice pursuant
to Section 8(c), to the Director of Litigation, Office of the General
Counsel, ▇▇▇▇▇▇ Brothers Inc., ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇,
▇▇▇ ▇▇▇▇ ▇▇▇▇▇; and
(b) if to the Company, shall be delivered or sent by mail, telex
or facsimile transmission to the address of the Company set forth in
the Registration Statement, Attention: Chief Financial Officer (Fax:
(▇▇▇) ▇▇▇-▇▇▇▇). Any such statements, requests, notices or agreements
shall take effect at the time of receipt thereof. The Company shall be
entitled to act and rely upon any request, consent, notice or
agreement given or made on behalf of the Underwriters by ▇▇▇▇▇▇
Brothers Inc. on behalf of the Underwriters.
Section 14. Persons Entitled to Benefit of Agreement. This
Agreement shall inure to the benefit of and be binding upon the Underwriters,
the Company, and their respective successors. This Agreement and the terms and
provisions hereof are for the sole benefit of only those persons, except that
(A) the representations, warranties, indemnities and agreements of the Company
contained in this Agreement shall also be deemed to be for the benefit of the
directors, officers and employees of any Underwriter and the person or persons,
if any, who control any Underwriter within the meaning of Section 15 of the
Securities Act and (B) the indemnity
23
agreement of the Underwriters contained in Section 8(b) of this Agreement shall
be deemed to be for the benefit of directors of the Company, officers of the
Company who have signed the Registration Statement and any person controlling
the Company within the meaning of Section 15 of the Securities Act. Nothing in
this Agreement is intended or shall be construed to give any person, other than
the persons referred to in this Section 14, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision contained
herein.
Section 15. Survival. The respective indemnities,
representations, warranties and agreements of the Company and the Underwriters
contained in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Notes and shall remain in full force and effect, regardless of any investigation
made by or on behalf of any of them or any person controlling any of them.
Section 16. Definition of the Terms Business Day and Subsidiary.
For purposes of this Agreement, (a) "business day" means each Monday, Tuesday,
Wednesday, Thursday or Friday which is not a day on which banking institutions
in New York are generally authorized or obligated by law or executive order to
close and (b) "subsidiary" has the meaning set forth in Rule 405 of the Rules
and Regulations.
Section 17. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of New York.
Section 18. Counterparts. This Agreement may be executed in one
or more counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
Section 19. Headings. The headings herein are inserted for
convenience of reference only and are not intended to be part of, or to affect
the meaning or interpretation of, this Agreement.
24
If the foregoing correctly sets forth the agreement among the
Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
XTO ENERGY INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Vice President
Accepted:
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
Banc of America Securities LLC
Deutsche Bank Securities Inc.
▇.▇. ▇▇▇▇▇▇ Securities Inc.
Credit Lyonnais Securities (USA) Inc.
Hibernia Southcoast Capital, Inc.
By: ▇▇▇▇▇▇ Brothers Inc.
By:
--------------------------------------------
Authorized Representative
25
SCHEDULE 1
Amount of Notes
Underwriters to be Purchased
------------ ---------------
▇▇▇▇▇▇ Brothers Inc. ....................................... $ 131,250,000
▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. .................................. 78,750,000
------------
Banc of America Securities LLC ............................. 35,000,000
------------
Deutsche Bank Securities Inc. .............................. 35,000,000
------------
▇.▇. ▇▇▇▇▇▇ Securities Inc. ................................ 35,000,000
------------
Credit Lyonnais Securities (USA) Inc. ...................... 17,500,000
------------
Hibernia Southcoast Capital, Inc. .......................... 17,500,000
------------
Total ............................................. $ 350,000,000
============
