Exhibit 1.2
EXECUTION VERSION
$500,000,000
PETROHAWK ENERGY CORPORATION
7.875% Senior Notes due 2015
PURCHASE AGREEMENT
May 9
, 2008
Lehman Brothers
Inc.
As Representative of the several
Initial Purchasers named in Schedule I
attached hereto,
c/o Lehman Brothers Inc.
745 Seventh Avenue
New York, New York 10019
Ladies and Gentlemen:
Petrohawk Energy Corporation, a
Delaware corporation (the “ Company ”),
proposes, upon the terms and conditions set forth in this agreement
(this “ Agreement ”), to issue and sell to you,
as the initial purchasers (the “ Initial Purchasers
”), $500,000,000 in aggregate principal amount of its
7.875% Senior Notes
due 2015 (the “
Notes ”). The Notes will (i) have terms and
provisions that are summarized in the Offering Memorandum (as
defined below) and (ii) are to be issued pursuant to an
Indenture (the “ Indenture ”) to be entered into
among the Company, the Guarantors (as defined below) and U.S. Bank
Trust National Association, as trustee (the “ Trustee
”). The Company’s obligations under the Notes,
including the due and punctual payment of interest on the Notes,
will be unconditionally guaranteed (the “ Guarantees
”) by the guarantors listed in Schedule II hereto (together
the “ Guarantors ”). As used herein, the term
“Notes” shall include the Guarantees, unless the
context otherwise requires. This is to confirm the agreement
concerning the purchase of the Notes from the Company by the
Initial Purchasers.
1. Purchase and Resale of
the Notes . The Notes will be offered and sold to the Initial
Purchasers without registration under the Securities Act of 1933,
as amended (the “ Securities Act ”), in reliance
on an exemption pursuant to Section 4(2) under the Securities
Act. The Company and the Guarantors have prepared a preliminary
offering memorandum, dated May 6, 2008 (the “
Preliminary Offering Memorandum ”), a pricing term
sheet substantially in the form attached hereto as
Schedule III (the “ Pricing Term Sheet ”)
setting forth the terms of the Notes omitted from the Preliminary
Offering Memorandum and an offering memorandum, dated May 9,
2008 (the “ Offering Memorandum ”), setting
forth information regarding the Company, the Guarantors, the Notes,
and the Exchange Notes (as defined herein), the Guarantees and the
Exchange Guarantees (as defined herein). The Preliminary Offering
Memorandum, as supplemented and amended as of the Applicable Time
(as defined below), together with the Pricing Term Sheet and any of
the documents listed on Schedule IV hereto are collectively
referred to as the “ Pricing Disclosure Package
.” The Company and the Guarantors hereby confirm that they
have authorized the use of the Pricing Disclosure Package and the
Offering Memorandum in connection with the offering and resale of
the Notes by the Initial
Purchasers. “ Applicable Time ” means 7:30 a.m.
(New York City time) on the date of this Agreement.
Any reference to the Preliminary
Offering Memorandum, the Pricing Disclosure Package or the Offering
Memorandum shall be deemed to refer to and include the
Company’s most recent Annual Report on Form 10-K and all
subsequent documents filed with the United States Securities and
Exchange Commission (the “ Commission ”)
pursuant to Section 13(a) or 15(d) of the United States Securities
Exchange Act of 1934, as amended (the “ Exchange Act
”), on or prior to the date of the Preliminary Offering
Memorandum, the Pricing Disclosure Package or the Offering
Memorandum, as the case may be and all documents otherwise
incorporated by reference into the Preliminary Offering Memorandum,
Pricing Disclosure Package or the Offering Memorandum. Any
reference to the Preliminary Offering Memorandum, Pricing
Disclosure Package or the Offering Memorandum, as the case may be,
as amended or supplemented, as of any specified date, shall be
deemed to include (i) any documents filed with the Commission
pursuant to Section 13(a) or 15(d) of the Exchange Act after the
date of the Preliminary Offering Memorandum, Pricing Disclosure
Package or the Offering Memorandum, as the case may be, and prior
to such specified date and all documents otherwise incorporated by
reference into the Preliminary Offering Memorandum, Pricing
Disclosure Package or the Offering Memorandum prior to such
specified date. All documents filed under the Exchange Act and so
deemed to be included in the Preliminary Offering Memorandum,
Pricing Disclosure Package or the Offering Memorandum, as the case
may be, or any amendment or supplement thereto are hereinafter
called the “ Exchange Act Reports .” The
Exchange Act Reports, when they were or are filed with the
Commission, conformed or will conform in all material respects to
the applicable requirements of the Exchange Act and the applicable
rules and regulations of the Commission thereunder.
It is understood and acknowledged
that upon original issuance thereof, and until such time as the
same is no longer required under the applicable requirements of the
Securities Act, the Notes (and all securities issued in exchange
therefor or in substitution thereof) shall bear the following
legend (along with such other legends as the Initial Purchasers and
their counsel deem necessary):
“THIS
SECURITY HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED (THE “SECURITIES ACT”), OR ANY STATE
SECURITIES LAWS. NEITHER THIS SECURITY NOR ANY INTEREST OR
PARTICIPATION HEREIN MAY BE REOFFERED, SOLD, ASSIGNED, TRANSFERRED,
PLEDGED, ENCUMBERED OR OTHERWISE DISPOSED OF IN THE ABSENCE OF SUCH
REGISTRATION OR UNLESS SUCH TRANSACTION IS EXEMPT FROM, OR NOT
SUBJECT TO, THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT.
THE HOLDER OF THIS SECURITY BY ITS ACCEPTANCE HEREOF
(1) REPRESENTS THAT (A) IT IS A “QUALIFIED
INSTITUTIONAL BUYER” (AS DEFINED IN RULE 144A UNDER THE
SECURITIES ACT (“RULE 144A”)), OR (B) IT IS A
NON-U.S. PURCHASER AND IS ACQUIRING THIS SECURITY IN AN OFFSHORE
TRANSACTION WITHIN THE MEANING OF REGULATION S UNDER THE SECURITIES
ACT, PURSUANT TO RULE 904 OF REGULATION S, AND (2) AGREES TO
OFFER, SELL OR OTHERWISE TRANSFER SUCH SECURITY, PRIOR TO THE DATE
WHICH IS
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ONE YEAR (OR
SUCH SHORTER PERIOD AS MAY BE PRESCRIBED BY RULE 144(d) (OR ANY
SUCCESSOR PROVISION THEREOF) UNDER THE SECURITIES ACT) AFTER THE
LATER OF THE ORIGINAL ISSUE DATE HEREOF (OR ANY PREDECESSOR OF THIS
SECURITY) AND THE LAST DATE ON WHICH THE COMPANY OR ANY AFFILIATE
OF THE COMPANY WAS THE OWNER OF THIS SECURITY (OR ANY PREDECESSOR
OF SUCH SECURITY), ONLY (A) TO THE COMPANY OR ANY OF ITS
SUBSIDIARIES, (B) PURSUANT TO A REGISTRATION STATEMENT WHICH
HAS BEEN DECLARED EFFECTIVE UNDER THE SECURITIES ACT, (C) FOR
SO LONG AS THE SECURITIES ARE ELIGIBLE FOR RESALE PURSUANT TO RULE
144A, TO A PERSON IT REASONABLY BELIEVES IS A “QUALIFIED
INSTITUTIONAL BUYER” AS DEFINED IN RULE 144A THAT PURCHASES
FOR ITS OWN ACCOUNT OR FOR THE ACCOUNT OF A QUALIFIED INSTITUTIONAL
BUYER TO WHOM NOTICE IS GIVEN THAT THE TRANSFER IS BEING MADE IN
RELIANCE ON RULE 144A, (D) PURSUANT TO OFFERS AND SALES TO
NON-U.S. PURCHASERS THAT OCCUR OUTSIDE THE UNITED STATES WITHIN THE
MEANING OF REGULATION S UNDER THE SECURITIES ACT, PURSUANT TO RULE
904 OF REGULATION S, OR (E) PURSUANT TO ANOTHER AVAILABLE
EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE SECURITIES ACT
AND THE SECURITIES LAWS OF ANY OTHER JURISDICTION, INCLUDING ANY
STATE OF THE UNITED STATES, SUBJECT TO THE COMPANY’S AND THE
TRUSTEE’S RIGHT PRIOR TO ANY SUCH OFFER, SALE OR TRANSFER
PURSUANT TO CLAUSE (D) OR (E) TO REQUIRE THE DELIVERY OF AN
OPINION OF COUNSEL, CERTIFICATION AND/OR OTHER INFORMATION
SATISFACTORY TO EACH OF THEM, AND IN EACH OF THE FOREGOING CASES, A
CERTIFICATE OF TRANSFER IN THE FORM APPEARING ON THE OTHER SIDE OF
THIS SECURITY IS COMPLETED AND DELIVERED BY THE TRANSFEROR TO THE
TRUSTEE. THIS LEGEND WILL BE REMOVED UPON THE REQUEST OF THE HOLDER
AFTER THE RESALE RESTRICTION TERMINATION DATE.”
You have advised the Company that you
will make offers (the “ Exempt Resales ”) of the
Notes purchased by you hereunder on the terms set forth in each of
the Pricing Disclosure Package and the Offering Memorandum, as
amended or supplemented, solely to (i) persons whom you
reasonably believe to be “qualified institutional
buyers” as defined in Rule 144A under the Securities Act
(“ QIBs ”) and (ii) outside the United
States to certain persons who are not U.S. Persons (as defined in
Regulation S under the Securities Act (“
Regulation S ”)) (such persons, “
Non-U.S. Persons ”) in offshore transactions in
reliance on Regulation S. Those persons specified in clauses
(i) and (ii) are referred to herein as the (“
Eligible Purchasers ”). You will offer the Notes to
Eligible Purchasers initially at a price equal to 100.000% of the
principal amount thereof. Such price may be changed at any time
without notice.
Holders (including subsequent
transferees) of the Notes will have the registration rights set
forth in the registration rights agreement attached hereto as
Exhibit A (the “ Registration Rights
Agreement ”) among the Company, the Guarantors and the
Initial Purchasers to be dated May 13, 2008 (the “
Closing Date ”), for so long as such Notes constitute
“ Transfer Restricted Securities ” (as defined
in the Registration Rights Agreement). Pursuant to the
Registration
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Rights
Agreement, the Company and the Guarantors will agree to file with
the Commission under the circumstances set forth therein, a
registration statement under the Securities Act (the “
Exchange Offer Registration Statement ”) relating to
the Company’s $500,000,000 7.875% Senior Notes due 2015 (the
“ Exchange Notes ”) and the Guarantors’
Exchange Guarantees (the “ Exchange Guarantees
”) to be offered in exchange for the Notes and the
Guarantees. Such portion of the offering is referred to as the
“ Exchange Offer .”
2. Representations,
Warranties and Agreements of the Company and the Guarantors .
The Company and each of the Guarantors, jointly and severally,
represent, warrant and agree as follows:
(a) When
the Notes and Guarantees are issued and delivered pursuant to this
Agreement, such Notes and Guarantees will not be of the same class
(within the meaning of Rule 144A under the Securities Act) as
securities of the Company or the Guarantors that are listed on a
United States national securities exchange registered or that are
quoted in a United States automated inter-dealer quotation
system.
(b) Neither
the Company nor any subsidiary is, and after giving effect to the
offer and sale of the Notes and the application of the proceeds
therefrom as described under “Use of Proceeds” in each
of the Pricing Disclosure Package and the Offering Memorandum will
be, an “investment company” or a company
“controlled” by an “investment company”
within the meaning of the Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission
thereunder.
(c) Assuming
that your representations and warranties in Section 3(b) are true,
the purchase and resale of the Notes pursuant hereto (including
pursuant to the Exempt Resales) is exempt from the registration
requirements of the Securities Act. No form of general solicitation
or general advertising within the meaning of Regulation D
(including, but not limited to, advertisements, articles, notices
or other communications published in any newspaper, magazine or
similar medium or broadcast over television or radio, or any
seminar or meeting whose attendees have been invited by any general
solicitation or general advertising) was used by the Company, the
Guarantors or any of their respective representatives (other than
you, as to whom the Company and the Guarantors make no
representation) in connection with the offer and sale of the
Notes.
(d) No
form of general solicitation or general advertising was used by the
Company, the Guarantors or any of their respective representatives
(other than you, as to whom the Company and the Guarantors make no
representation) with respect to Notes sold outside the United
States to Non-U.S. Persons, by means of any directed selling
efforts within the meaning of Rule 902 under the Securities
Act, and the Company, any affiliate of the Company and any person
acting on its or their behalf (other than you, as to whom the
Company and the Guarantors make no representation) has complied
with and will implement the “offering restrictions”
required by Rule 902 under the Securities Act.
(e) Each
of the Preliminary Offering Memorandum, the Pricing Disclosure
Package and the Offering Memorandum, each as of its respective
date, contains all the
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information specified in, and meeting the requirements of,
Rule 144A(d)(4) under the Securities Act.
(f) The
Preliminary Offering Memorandum, the Pricing Disclosure Package and
the Offering Memorandum have been prepared by the Company and the
Guarantors for use by the Initial Purchasers in connection with the
Exempt Resales. No order or decree preventing the use of the
Preliminary Offering Memorandum, the Pricing Disclosure Package or
the Offering Memorandum, or any order asserting that the
transactions contemplated by this Agreement are subject to the
registration requirements of the Securities Act has been issued,
and no proceeding for that purpose has commenced or is pending or,
to the knowledge of the Company or any of the Guarantors is
contemplated.
(g) The
Pricing Disclosure Package did not, as of the Applicable Time, and
will not, as of the Closing Date, contain an untrue statement of a
material fact or omit to state a material fact necessary in order
to make the statements made therein, in the light of the
circumstances under which they were made, not misleading;
provided that no representation or warranty is made as to
information contained in or omitted from the Pricing Disclosure
Package in reliance upon and in conformity with written information
furnished to the Company through the Representative by or on behalf
of any Initial Purchaser specifically for inclusion therein, which
information is specified in Section 8(e).
(h) The
Offering Memorandum will not, as of its date and as of the Closing
Date, contain an untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they
were made, not misleading; provided that no representation
or warranty is made as to information contained in or omitted from
the Offering Memorandum in reliance upon and in conformity with
written information furnished to the Company through the
Representative by or on behalf of any Initial Purchaser
specifically for inclusion therein, which information is specified
in Section 8(e).
(i) Other
than the Pricing Term Sheet, the Company has not made any offer to
sell or solicitation of an offer to buy the Notes that would
constitute a “free writing prospectus” (if the offering
of the Notes was made pursuant to a registered offering under the
Securities Act), as defined in Rule 405 under the Securities
Act (a “ Free Writing Offering Document ”)
without the prior consent of the Representative; any such Free
Writing Offering Document the use of which has been previously
consented to by the Initial Purchasers is set forth substantially
in form and substance as attached hereto on Schedule IV. Each
such Free Writing Offering Document, when taken together with the
Pricing Disclosure Package, did not, and at the Closing Date will
not, contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in light of the circumstances under which they were made,
not misleading; provided that no representation and warranty
is made with respect to any statements or omissions made in each
such Free Writing Offering Document in reliance upon and in
conformity with information relating to any Initial Purchaser
furnished to the Company through the Representative by or on behalf
of any Initial Purchaser specifically for inclusion therein.
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(j) The
Exchange Act Reports did not, and will not when filed with the
Commission, contain an untrue statement of material fact or omit to
state a material fact necessary in order to make the statements
made therein, in the light of the circumstances under which they
were made, not misleading.
(k) The
statistical and market-related data included under the captions
“Summary,” “Management’s discussion and
analysis of financial condition and results of operations,”
and “Business” in the Pricing Disclosure Package and
the Offering Memorandum and the consolidated financial statements
of the Company and its subsidiaries included in the Pricing
Disclosure Package and the Offering Memorandum are based on or
derived from sources that the Company believes to be reliable and
accurate in all material respects.
(l) Each
of the Company, the Guarantors and their respective subsidiaries
has been duly organized and is validly existing and in good
standing as a corporation or other business entity under the laws
of its jurisdiction of organization and is duly qualified to do
business and in good standing as a foreign corporation or other
business entity in each jurisdiction in which its ownership or
lease of property or the conduct of its businesses requires such
qualification, except where the failure to be so qualified or in
good standing would not, in the aggregate, reasonably be expected
to have a material adverse effect on the condition (financial or
otherwise), results of operations, stockholders’ equity,
properties, business or prospects of the Company and its
subsidiaries taken as a whole or a material adverse effect on the
performance by the Company and the Guarantors of the performance of
this Agreement, the Indenture or the Notes or the consummation of
any of the transactions contemplated hereby or thereby (a “
Material Adverse Effect ”); each of the Company, the
Guarantors and their respective subsidiaries has all power and
authority necessary to own or hold its properties and to conduct
the businesses in which it is engaged. The Company does not own or
control, directly or indirectly, any corporation, association or
other entity other than the subsidiaries listed in the
Company’s Annual Report on Form 10-K for the most recent
fiscal year and the subsidiaries listed on Schedule V. None of
the subsidiaries of the Company (other than the subsidiaries set
forth on Schedule VI (collectively, the “ Significant
Subsidiaries ”)) is a “significant
subsidiary” (as defined in Rule 405 under the Securities
Act).
(m) The
Company has an authorized capitalization as set forth in each of
the Pricing Disclosure Package and the Offering Memorandum, and all
of the issued shares of capital stock of the Company have been duly
authorized and validly issued and are fully paid and
non-assessable; and all of the issued shares of capital stock or
other ownership interests of each subsidiary of the Company have
been duly authorized and validly issued, are fully paid and
non-assessable and are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims,
except as described in the Pricing Disclosure Package and the
Offering Memorandum and except for such liens, encumbrances,
equities or claims as would not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(n) The
Company and each Guarantor has all requisite corporate power and
authority to execute, deliver and perform its obligations under the
Indenture. The Indenture has been duly and validly authorized by
the Company and the Guarantors, and upon its execution and delivery
and, assuming due authorization, execution and delivery by the
Trustee, will constitute the valid and binding agreement of the
Company and the Guarantors, enforceable
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against
the Company and the Guarantors in accordance with its terms, except
as such enforceability may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other 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);
no qualification of the Indenture under the Trust Indenture Act of
1939 (the “ 1939 Act ”) is required in
connection with the offer and sale of the Notes contemplated hereby
or in connection with the Exempt Resales. The Indenture will
conform to the description thereof in each of the Pricing
Disclosure Package and the Offering Memorandum.
(o) The
Company has all requisite corporate power and authority to execute,
issue, sell and perform its obligations under the Notes. The Notes
have been duly authorized by the Company and, when duly executed by
the Company in accordance with the terms of the Indenture, assuming
due authentication of the Notes by the Trustee, upon delivery to
the Initial Purchasers against payment therefor in accordance with
the terms hereof, will be validly issued and delivered and will
constitute valid and binding obligations of the Company entitled to
the benefits of the Indenture, enforceable against the Company in
accordance with their terms, except as such enforceability may be
limited by bankruptcy, fraudulent conveyance, insolvency,
reorganization, moratorium, and other 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 Notes will conform in all
material respects to the description thereof in each of the Pricing
Disclosure Package and the Offering Memorandum.
(p) The
Company has all requisite corporate power and authority to execute,
issue and perform its obligations under the Exchange Notes. The
Exchange Notes have been duly and validly authorized by the Company
and if and when issued and authenticated in accordance with the
terms of the Indenture and delivered in accordance with the
Exchange Offer provided for in the Registration Rights Agreement,
will be validly issued and delivered and will constitute valid and
binding obligations of the Company entitled to the benefits of the
Indenture, enforceable against the Company in accordance with their
terms, except as such enforceability may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium, and
other 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).
(q) Each
Guarantor has all requisite corporate, partnership or limited
liability company power and authority, as applicable, to execute,
issue and perform its obligations under the Guarantees. The
Guarantees have been duly and validly authorized by the Guarantors
and when the Indenture is duly executed and delivered by the
Guarantors in accordance with its terms and upon the due execution,
authentication and delivery of the Notes in accordance with the
Indenture and the issuance of the Notes in the sale to the Initial
Purchasers contemplated by this Agreement, will constitute valid
and binding obligations of the Guarantors, enforceable against the
Guarantors in accordance with their terms, except as such
enforceability may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other 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 Guarantees
will conform in all material respects to the description thereof in
each of the Pricing Disclosure Package and the Offering
Memorandum.
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(r) Each
Guarantor has all requisite corporate, partnership or limited
liability company power and authority, as applicable, to execute,
issue and perform its obligations under the Exchange Guarantees.
The Exchange Guarantees have been duly and validly authorized by
the Guarantors and if and when executed and delivered by the
Guarantors in accordance with the terms of the Indenture and upon
the due execution and authentication of the Exchange Notes in
accordance with the Indenture and the issuance and delivery of the
Exchange Notes in the Exchange Offer contemplated by the
Registration Rights Agreement, will be validly issued and delivered
and will constitute valid and binding obligations of the Guarantors
entitled to the benefits of the Indenture, enforceable against the
Guarantors in accordance with their terms, except as such
enforceability may be limited by bankruptcy, fraudulent conveyance,
insolvency, reorganization, moratorium, and other 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).
(s) The
Company and each Guarantor has all requisite corporate, partnership
or limited liability company power and authority, as applicable, to
execute, deliver and perform its obligations under the Registration
Rights Agreement. The Registration Rights Agreement has been duly
authorized by the Company and each Guarantor and, when executed and
delivered by the Company and each Guarantor in accordance with the
terms hereof and thereof, will be validly executed and delivered
and (assuming the due authorization, execution and delivery thereof
by you) will be the legally valid and binding obligation of the
Company and each Guarantor in accordance with the terms thereof,
enforceable against the Company and each Guarantor in accordance
with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditor’s rights
generally, by general equitable principles (regardless of whether
such enforceability is considered in a proceeding in equity or at
law) and, as to rights of indemnification and contribution, by
principles of public policy. The Registration Rights Agreement will
conform to the description thereof in each of the Pricing
Disclosure Package and the Offering Memorandum.
(t) The
Company and each Guarantor has all requisite corporate power to
execute, deliver and perform its obligations under this Agreement.
This Agreement has been duly and validly authorized, executed and
delivered by the Company and each of the Guarantors.
(u) The
issue and sale of the Notes and the Guarantees, the execution,
delivery and performance by the Company and the Guarantors of the
Notes, the Guarantees, the Exchange Notes, the Exchange Guarantees,
the Indenture, the Registration Rights Agreement and this
Agreement, the application of the proceeds from the sale of the
Notes as described under “Use of Proceeds” in each of
the Pricing Disclosure Package and the Offering Memorandum and the
consummation of the transactions contemplated hereby and thereby,
will not (i) conflict with or result in a breach or violation
of any of the terms or provisions of, impose any lien, charge or
encumbrance upon any property or assets of the Company, the
Guarantors or their respective subsidiaries, or constitute a
default under, any indenture, mortgage, deed of trust, loan
agreement, license, lease or other agreement or instrument to which
the Company, the Guarantors or any of their respective subsidiaries
is a party or by which the Company, the Guarantors or any of their
respective subsidiaries is bound or to which any of the property or
assets of the Company, the Guarantors or any of their respective
subsidiaries is subject, (ii) result
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in any
violation of the provisions of the charter or by-laws or similar
organizational document of the Company, the Guarantors or any of
their respective subsidiaries or (iii) result in any violation
of any statute or any judgment, order, decree, rule or regulation
of any court or governmental agency or body having jurisdiction
over the Company, the Guarantors or any of their respective
subsidiaries or any of their properties or assets, except, with
respect to clauses (i) and (iii), conflicts or violations that
could not reasonably be expected to have a Material Adverse
Effect.
(v) No
consent, approval, authorization or order of, or filing,
registration or qualification with any court or governmental agency
or body having jurisdiction over the Company, the Guarantors or any
of their respective subsidiaries is required for the issue and sale
of the Notes and the Guarantees, the execution, delivery and
performance by the Company and the Guarantors of the Notes, the
Guarantees, the Exchange Notes, the Exchange Guarantees, the
Indenture, the Registration Rights Agreement and this Agreement,
the application of the proceeds from the sale of the Notes as
described under “Use of Proceeds” in each of the
Pricing Disclosure Package and the Offering Memorandum and the
consummation of the transactions contemplated hereby and thereby,
except for the filing of a registration statement by the Company
with the Commission pursuant to the Securities Act as required by
the Registration Rights Agreement and the qualification of the
Indenture under the Trust Indenture Act of 1939 in connection with
the registration of the Exchange Notes under the Securities Act and
such consents, approvals, authorizations, orders, filings,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Notes by the Initial Purchasers.
(w) There
are no contracts, agreements or understandings between the Company,
any Guarantor and any person granting such person the right to
require the Company or any Guarantor to file a registration
statement under the Securities Act with respect to any securities
of the Company or any Guarantor (other than the Registration Rights
Agreement) owned or to be owned by such person or to require the
Company or any Guarantor to include such securities in the
securities registered pursuant to the Registration Rights Agreement
or in any securities being registered pursuant to any other
registration statement filed by the Company or any Guarantor under
the Securities Act.
(x) Neither
the Company, any Guarantor nor any other person acting on behalf of
the Company or any Guarantor has sold or issued any securities that
would be integrated with the offering of the Notes contemplated by
this Agreement pursuant to the Securities Act, the rules and
regulations thereunder or the interpretations thereof by the
Commission. The Company and the Guarantors will take reasonable
precautions designed to insure that any offer or sale, direct or
indirect, in the United States or to any U.S. person (as defined in
Rule 902 under the Securities Act), of any Notes or any
substantially similar security issued by the Company or any
Guarantor, within six months subsequent to the date on which the
distribution of the Notes has been completed (as notified to the
Company by the Initial Purchasers), is made under restrictions and
other circumstances reasonably designed not to affect the status of
the offer and sale of the Notes in the United States and to U.S.
persons contemplated by this Agreement as transactions exempt from
the registration provisions of the Securities Act, including any
sales pursuant to Rule 144A under, or Regulations D or S of,
the Securities Act.
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(y) Neither
the Company, the Guarantors nor any of their respective
subsidiaries has sustained, since the date of the latest audited
financial statements included or incorporated by reference in the
Pricing Disclosure Package and the Offering Memorandum, 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, and,
since such date, there has not been any change in the capital
stock, partnership or limited liability interests, as applicable,
or long-term debt, of the Company, the Guarantors or any of their
respective subsidiaries or any adverse change, or any development
involving a prospective adverse change, in or affecting the
condition (financial or otherwise), results of operations,
stockholders’ equity, properties, management, business or
prospects of the Company and its subsidiaries, taken as a whole, in
each case except as could not, in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(z) The
historical financial statements (including the related notes and
supporting schedules) included or incorporated by reference in the
Pricing Disclosure Package and the Offering Memorandum present
fairly in all material respects the financial condition, results of
operations and cash flows of the entities purported to be shown
thereby, at the dates and for the periods indicated, and have been
prepared in conformity with accounting principles generally
accepted in the United States applied on a consistent basis
throughout the periods involved. The pro forma financial statements
included in the Pricing Disclosure Package and the Offering
Memorandum include assumptions that provide a reasonable basis for
presenting the significant effects directly attributable to the
transactions and events described therein, the related pro forma
adjustments give appropriate effect to those assumptions, and the
pro forma adjustments reflect the proper application of those
adjustments to the historical financial statement amounts in the
pro forma financial statements included in the Pricing Disclosure
Package. The pro forma financial statements included in the Pricing
Disclosure Package and the Offering Memorandum have been prepared
in accordance with the Commission’s rules and guidance with
respect to pro forma financial information. The pro forma
financial statements set forth in the Pricing Disclosure Package
and the Offering Memorandum have been prepared on the basis
consistent with such historical financial statements, except for
the pro forma adjustments specified therein, include all
material adjustments to the historical financial data required by
Rule 11-02 of Regulation S-X to reflect the
Company’s sale of its Gulf Coast properties (as discussed in
the Pricing Disclosure Package and the Offering Memorandum), and
give effect to assumptions made on a reasonable basis and in good
faith present fairly in all material respects the historical and
proposed transactions contemplated by the Pricing Disclosure
Package and the Offering Memorandum. The other financial
information and data included in the Pricing Disclosure Package and
the Offering Memorandum, historical and pro forma , are, in
all material respects, accurately presented and prepared on a basis
consistent with such financial statements and the books and records
of the Company.
(aa) Deloitte
& Touche LLP, who have certified certain financial statements
of the Company and its consolidated subsidiaries, whose report
appears in the Pricing Disclosure Package and the Offering
Memorandum 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 thereunder; and
Ernst & Young LLP, whose report is incorporated by reference
into the Preliminary Offering Memorandum and the Offering
Memorandum and who has delivered the initial letter referred to in
Section 7(g) hereof, were independent public
10
accountants as required by the Securities Act and the rules and
regulations thereunder and the rules and regulations of the Public
Company Accounting Oversight Board (the “ PCAOB
”) during the periods covered by the financial statements on
which they reported contained in the Pricing Disclosure Package and
the Offering Memorandum.
(bb) Netherland,
Sewell & Associates, Inc., an oil and gas consulting firm
(“ NSAI ”), whose report dated February 22,
2008, is summarized or excerpted in reports appearing in the
Pricing Disclosure Package and the Offering Memorandum and who has
delivered the letter referred to in Section 7(j) hereof, was, as of
the date of such report, and is, as of the date hereof, an
independent petroleum engineer with respect to the Company. The
written engineering report prepared by NSAI dated February 22,
2008, setting forth the proved reserves attributed to the oil and
gas properties of the Company and its subsidiaries accurately
reflects in all material respects the ownership interests of the
Company its subsidiaries in the properties therein as of December
31, 2007; the information furnished by the Company to NSAI for
purposes of preparing its report, 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, correct and complete in all
material respects on the date supplied and was prepared in
accordance with customary industry practices, as indicated in the
letter of NSAI dated February 22, 2008.
(cc) Except
as described in the Pricing Disclosure Package and the Offering
Memorandum, the Company, the Guarantors and each of their
respective subsidiaries has defensible title to all of their
interests in oil and gas properties (other than interests earned
under farm-out, participation or similar agreements in which an
assignment or transfer is pending) and all their interests in other
real property and good title to all other properties owned 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 Pricing
Disclosure Package and the Offering Memorandum, (ii) liens and
encumbrances under operating agreements, unitization and pooling
agreements, production sales contracts, farm-out agreements and
other oil and gas exploration participation and production
agreements, in each case that secure payment of amounts not yet due
and payable for the performance of other unmatured obligations and
are of a scope and nature customary in the oil and gas industry or
arise in connection with drilling and production operations, or
(iii) would not have a Material Adverse Effect on the value of
the affected property or the use made and proposed to be made of
such property by the Company, the Guarantors or any of their
respective subsidiaries, as the case may be; except as would not
have a Material Adverse Effect, all of the leases and subleases of
real property of the Company, the Guarantors or any of their
respective subsidiaries and under which the Company, the Guarantors
or any of their respective subsidiaries holds properties described
in the Pricing Disclosure Package and the Offering Memorandum, are
in full force and effect, and neither the Company, the Guarantors
nor any of their respective subsidiaries has received written
notice of any claim of any sort that has been asserted by anyone
adverse to the rights of the Company, the Guarantors or any of
their respective subsidiaries under any of such leases or
subleases, or affecting or questioning the rights of the Company,
the Guarantors or any of their respective subsidiaries to the
continued possession of the leased or subleased premises under any
such lease or sublease.
11
(dd) The
Company and each of its subsidiaries have such permits, licenses,
patents, franchises, certificates of need and other approvals or
authorizations of governmental or regulatory authorities (“
Permits ”) as are necessary under applicable law to
own their properties and conduct their businesses in the manner
described in the Pricing Disclosure Package and the Offering
Memorandum, except for any of the foregoing that could not, in the
aggregate, reasonably be expected to have a Material Adverse
Effect; each of the Company and its subsidiaries has fulfilled and
performed all of its obligations with respect to the Permits, and
no event has occurred that allows, or after notice or lapse of time
would allow, revocation or termination thereof or results in any
other impairment of the rights of the holder or any such Permits,
except for any of the foregoing that could not reasonably be
expected to have a Material Adverse Effect.
(ee) 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, licenses, know-how, software, systems
and technology (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or
procedures) 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.
(ff) 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 that could, in the aggregate, reasonably be expected to
have a Material Adverse Effect or could, in the aggregate,
reasonably be expected to have a material adverse effect on the
performance by the Company and the Guarantors of the performance of
this Agreement, the Indenture or the Notes or the consummation of
any of the transactions contemplated hereby; and to the
Company’s and each Guarantors’ knowledge, no such
proceedings are threatened or contemplated by governmental
authorities or others.
(gg) There
are no legal or governmental proceedings or contracts or other
documents that would be required to be described in a registration
statement filed under the Securities Act or, in the case of
documents, would be required to be filed as exhibits to a
registration statement of the Company pursuant to Item 601(10)
of Regulation S-K that have not been described in the Pricing
Disclosure Package and the Offering Memorandum. Neither the
Company, the Guarantors nor any of their respective subsidiaries
has knowledge that any other party to any such contract, agreement
or arrangement has any intention not to render full performance as
contemplated by the terms thereof; and that statements made in the
Pricing Disclosure Package and the Offering Memorandum under the
captions “Business,” “Certain U.S. Federal Tax
Considerations,” and “Certain ERISA Considerations
insofar as they purport to constitute summaries of the terms of
legal or governmental proceedings or contracts and other documents,
constitute accurate summaries of the terms of such legal and
governmental proceedings and contracts and other documents in all
material respects.
(hh) No
relationship, direct or indirect, that would be required to be
described in a registration statement of the Company pursuant to
Item 404 of Regulation S-K, exists between or among the
Company or any Guarantor, on the one hand, and the directors,
officers,
12
stockholders, customers or suppliers of the Company or any
Guarantor, on the other hand, that has not been described in the
Pricing Disclosure Package and the Offering Memorandum.
(ii) No
labor disturbance by the employees of the Company or any of its
subsidiaries exists or, to the knowledge of the Company or any
Guarantor, is imminent that could reasonably be expected to have a
Material Adverse Effect.
(jj)
(i) Each “employee benefit plan” (within the
meaning of Section 3(3) of the Employee Retirement Security
Act of 1974, as amended (“ ERISA ”)) for which
the Company or any member of its “Controlled Group”
(defined as any organization which is a member of a controlled
group of corporations within the meaning of Section 414 of the
Internal Revenue Code of 1986, as amended (the “ Code
”)) would have any liability (each a “ Plan
”) has been maintained in compliance with its terms and with
the requirements of all applicable statutes, rules and regulations
including ERISA and the Code; (ii) with respect to each Plan
subject to Title IV of ERISA (a) no “reportable
event” (within the meaning of Section 4043(c) of ERISA) has
occurred or is reasonably expected to occur, (b) no
“accumulated funding deficiency” (within the meaning of
Section 302 of ERISA or Section 412 of the Code), whether
or not waived, has occurred or is reasonably expected to occur,
(c) the fair market value of the assets under each Plan
exceeds the present value of all benefits accrued under such Plan
(determined based on those assumptions used to fund such Plan) and
(d) neither the Company or any member of its Controlled Group
has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA (other than contributions to the Plan or premiums
to the PBGC in the ordinary course and without default) in respect
of a Plan (including a “multiemployer plan”, within the
meaning of Section 4001(c)(3) of ERISA); and (iii) each
Plan that is intended to be qualified under Section 401(a) of the
Code is so qualified and nothing has occurred, whether by action or
by failure to act, which would cause the loss of such
qualification.
(kk) The
Company and each of its subsidiaries has filed all federal, state,
local and foreign income and franchise tax returns required to be
filed through the date hereof, subject to permitted extensions, and
paid all taxes due thereon, and (i) no tax deficiency has been
determined adversely to the Company, the Guarantors or any of their
respective subsidiaries, nor (ii) does the Company or any
Guarantor have any knowledge of any tax deficiencies that could, in
the case of clause (i) or (ii) in the aggregate, reasonably be
expected to have a Material Adverse Effect.
(ll) There
are no transfer taxes or other similar fees or charges under
Federal law or the laws of any state, or any political subdivision
thereof, required to be paid in connection with the execution and
delivery of this Agreement or the issuance by the Company or sale
by the Company of the Notes.
(mm) Since
the date as of which information is given in the Pricing Disclosure
Package and the Offering Memorandum and except as may otherwise be
described in the Pricing Disclosure Package and the Offering
Memorandum, neither the Company nor any Guarantor has
(i) issued or granted any securities, (ii) incurred any
liability or obligation, direct or contingent, other than
liabilities and obligations that were incurred in the ordinary
course of business, (iii) entered into any material
transaction not in the ordinary course of business or
(iv) declared or paid any dividend on its capital stock.
13
(nn) The
Company and each of its subsidiaries (i) makes and keeps
accurate financial books and records and (ii) maintains and
has maintained effective internal control over financial reporting
as defined in Rule 13a-15 under the Exchange Act and a system
of internal accounting controls sufficient to provide reasonable
assurance that (A) transactions are executed in accordance
with management’s general or specific authorization,
(B) transactions are recorded as necessary to permit
preparation of its financial statements in conformity with
accounting principles generally accepted in the United States and
to maintain accountability for its assets, (C) access to its
assets is permitted only in accordance with management’s
general or specific authorization and (D) the reported
accountability for its assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect
to any differences.
(oo) Neither
the Company nor any of its subsidiaries (i) is in violation of
its charter or by-laws (or similar organizational documents),
(ii) is in default, and no event has occurred that, with
notice or lapse of time or both, would constitute such a default,
in the due performance or observance of any term, covenant,
condition or other obligation contained in any indenture, mortgage,
deed of trust, loan agreement, license or other agreement or
instrument to which it is a party or by which it is bound or to
which any of its properties or assets is subject or (iii) is
in violation of any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over it or
its property or assets or has failed to obtain any license, permit,
certificate, franchise or other governmental authorization or
permit necessary to the ownership of its property or to the conduct
of its business, except in the case of clauses (ii) and (iii),
to the extent any such conflict, breach, violation or default could
not, in the aggregate, reasonably be expected to have a Material
Adverse Effect.
(pp) Neither
the Company nor any of its subsidiaries, nor, to the knowledge of
the Company and the Guarantors, any director, officer, agent,
employee or other person associated with or acting on behalf of the
Company, the Guarantors or any of their respective subsidiaries,
has (i) used any corporate funds for any unlawful
contribution, gift, entertainment or other unlawful expense
relating to political activity; (ii) made any direct or
indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated or
is in violation of any provision of the Foreign Corrupt Practices
Act of 1977; or (iv) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(qq) The
Company and each of its subsidiaries (i) are, and at all times
prior hereto were, in compliance with all laws, regulations,
ordinances, rules, orders, judgments, decrees, permits or other
legal requirements of any governmental authority, including without
limitation any international, national, state, provincial,
regional, or local authority, relating to the protection of human
health or safety, the environment, or natural resources, or to
hazardous or toxic substances or wastes, pollutants or contaminants
(“ Environmental Laws ”) applicable to such
entity, which compliance includes, without limitation, obtaining,
maintaining and complying with all permits and authorizations and
approvals required by Environmental Laws to conduct their
respective businesses, and (ii) have not received notice of
any actual or alleged violation of Environmental Laws, or of any
potential liability for or other obligation concerning the
presence, disposal or release of hazardous or toxic substances or
wastes, pollutants or contaminants, except in the case of clause
(i) or (ii) where such non-compliance, violation,
liability, or other obligation could not, in the aggregate,
reasonably be expected to have a Material Adverse Effect. Except as
described in the Pricing Disclosure Package, (A) there are
no
14
proceedings that are pending, or known to be contemplated, against
the Company or any of its subsidiaries under Environmental Laws in
which a governmental authority is also a party, other than such
proceedings regarding which it is reasonably believed no monetary
sanctions of $100,000 or more will be imposed, (B) the
Company, the Guarantors and their respective subsidiaries are not
aware of any issues regarding compliance with Environmental Laws,
or liabilities or other obligations under Environmental Laws or
concerning hazardous or toxic substances or wastes, pollutants or
contaminants, that could reasonably be expected to have a Material
Adverse Effect, and (C) none of the Company, the Guarantors
and their respective subsidiaries anticipates material capital
expenditures other than in the ordinary course of business relating
to Environmental Laws.
(rr) None
of the transactions contemplated by this Agreement (including,
without limitation, the use of the proceeds from the sale of the
Notes), will violate or result in a violation of Section 7 of
the Exchange Act, or any regulation promulgated thereunder,
including, without limitation, Regulations T, U and X of the Board
of Governors of the Federal Reserve System.
(ss) The
statements set forth in each of the Pricing Disclosure Package and
the Offering Memorandum under the caption “Description of the
Notes,” insofar as they purport to constitute a summary of
the terms of the Notes and the Guarantees and under the captions
“Certain U.S. Federal Tax Considerations,”
“Description of Other Indebtedness,” and “Plan of
Distribution,” insofar as they purport to describe the
provisions of the documents referred to therein, are accurate in
all material respects.
(tt) The
Company and its affiliates have not taken, directly or indirectly,
any action designed to or that has constituted or that could
reasonably be expected to cause or result in the stabilization or
manipulation of the price of any security of the Company or the
Guarantors in connection with the offering of the Notes.
(uu)
(i) The Company and each of its subsidiaries have established
and maintain disclosure controls and procedures (as such term is
defined in Rule 13a-15 under the Exchange Act), (ii) such
disclosure controls and procedures are designed to ensure that the
information required to be disclosed by the Company in the reports
they file or submit under the Exchange Act (assuming the Company
was required to file or submit such reports under the Exchange Act)
is accumulated and commu
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