Morgan Stanley
& Co. Incorporated
As Representative of the several
Underwriters named in Schedule 1
hereto
1585 Broadway
New York, New York 10036
SandRidge Energy,
Inc., a Delaware corporation (the “ Company ”),
proposes to issue and sell to the several underwriters named in
Schedule 1 hereto (the “ Underwriters
”), and the Company’s Chairman, President and Chief
Executive Officer, Tom L. Ward (the “ Selling
Shareholder ”), proposes to sell to the several
Underwriters, an aggregate of 15,200,000 shares of the common
stock, par value $0.001 per share, of the Company (the “
Firm Shares ”), of which 12,200,000 shares are to be
issued and sold by the Company and 3,000,000 shares are to be sold
by the Selling Shareholder.
The Company also
proposes to issue and sell to the several Underwriters not more
than an additional 2,280,000 shares of its common stock, par value
$0.001 per share, (the “ Additional Shares ”) if
and to the extent that you, as manager of the offering, shall have
determined to exercise the right to purchase such shares of common
stock granted to the Underwriters in Section 2 hereof. The
Firm Shares and the Additional Shares are hereinafter collectively
referred to as the “ Shares .” The shares of
common stock, par value $0.001 per share, of the Company to be
outstanding after giving effect to the sales contemplated hereby
are hereinafter referred to as the “ Common Stock
.” The Company and the Selling Shareholder are hereinafter
sometimes collectively referred to as the “ Sellers
.”
The Company has
filed with the Securities and Exchange Commission (the “
Commission ”) a registration statement (File
No. 333-158554), including a prospectus, on Form S-3, relating
to the securities (the “ Shelf Securities ”),
including the Shares, to be issued from time to time by the
Company. Such registration statement as amended to the date of this
Agreement, including the information (if any) deemed to be part of
the registration statement at the time of effectiveness pursuant to
Rule 430A or Rule 430 B under the Securities Act of 1933,
as amended (the “ Securities Act ”), is
hereinafter referred to as the “ Company Registration
Statement ”, and the related prospectus covering the
Shelf Securities dated April 13, 2009 in the form first used
to confirm sales of the Shares (or in the form first made available
to the Underwriters by the Company to meet requests of purchasers
pursuant to Rule 173 under the Securities Act) is hereinafter
referred to as the “ Company Basic Prospectus.
”
1
The Company has
also filed with the Commission a registration statement (File
No. 333-158556), including a prospectus, on Form S-3, relating
to 47,776,451 shares of common stock, par value $0.001 per share
(the “ Secondary Shares ”), of the Company,
which may be offered for sale by the selling shareholders named in
such prospectus. Such registration statement as amended to the date
of this Agreement, including the information (if any) deemed to be
part of the registration statement at the time of effectiveness
pursuant to Rule 430A or Rule 430 B under the Securities
Act of 1933, as amended (the “ Securities Act
”), is hereinafter referred to as the “ Selling
Shareholder Registration Statement ” (together with
Company Registration Statement, the “ Registration
Statements ”), and the related prospectus covering the
Secondary Shares dated April 13, 2009 in the form first used
to confirm sales of the Shares (or in the form first made available
to the Underwriters by the Company to meet requests of purchasers
pursuant to Rule 173 under the Securities Act) is hereinafter
referred to as the “ Selling Shareholder Basic
Prospectus ” (together with the Company Basic Prospectus,
the “ Basic Prospectus ”).
The Basic
Prospectus, as supplemented by the prospectus supplement
specifically relating to the Shares in the form first used to
confirm sales of the Shares (or in the form first made available to
the Underwriters by the Company to meet requests of purchasers
pursuant to Rule 173 under the Securities Act) is hereinafter
referred to as the “ Prospectus ,” and the term
“ preliminary prospectus ” means any preliminary
form of the Prospectus. For purposes of this Agreement, “
free writing prospectus ” has the meaning set forth in
Rule 405 under the Securities Act, “ Pricing
Disclosure Package ” means the preliminary prospectus
together with the information set forth in Schedule 3
hereto, “ Applicable Time ” means 6:00 p.m. (New
York City time) on the date of this Agreement, and “
broadly available road show ” means a “bona fide
electronic road show” as defined in Rule 433(h)(5) under
the Securities Act that has been made available without restriction
to any person. As used herein, the terms “Registration
Statement,” “Basic Prospectus,”
“preliminary prospectus,” “Pricing Disclosure
Package” and “Prospectus” shall include the
documents, if any, incorporated by reference therein. The terms
“ supplement ,” “ amendment
,” and “ amend ” as used herein with
respect to the Registration Statement, the Basic Prospectus, the
Pricing Disclosure Package, any preliminary prospectus or free
writing prospectus shall include all documents subsequently filed
by the Company with the Commission pursuant to the Securities
Exchange Act of 1934, as amended (the “ Exchange Act
”), that are deemed to be incorporated by reference
therein.
1.
Representations, Warranties and Agreements of the Company and
the Selling Shareholder .
A. The Company
represents, warrants and agrees that:
(a) No Stop
Order; Automatic Shelf Registration Statements . Each
Registration Statement has become effective; no stop order
suspending the effectiveness of either Registration Statement is in
effect, and no proceedings for such purpose are pending before or
threatened by the Commission. Each Registration Statement is an
automatic shelf registration statement as defined in Rule 405
under the Securities Act. The Company is a well-known seasoned
issuer (as defined in Rule 405 under the Securities Act)
eligible to use each Registration Statement as an automatic shelf
registration statement and the Company has not received notice that
the Commission
2
objects to the
use of either Registration Statement as an automatic shelf
registration statement.
(b) Company Not
Ineligible Issuer . The Company was not at the time of initial
filing of each Registration Statement and at the earliest time
thereafter that the Company or another offering participant made a
bona fide offer (within the meaning of Rule 164(h)(2)
of the Rules and Regulations) of the Shares, is not on the date
hereof and will not be on the applicable Delivery Date an
“ineligible issuer” (as defined in
Rule 405).
(c) Compliance
with Registration Requirements. The Registration Statements
conformed and will conform in all material respects on the
Effective Date and on the applicable Delivery Date, and any
amendment to the Registration Statements filed after the date
hereof will conform in all material respects when filed, to the
requirements of the Securities Act and the Rules and Regulations.
The most recent Preliminary Prospectus conformed, and the
Prospectus will conform, in all material respects when filed with
the Commission pursuant to Rule 424(b) and on the applicable
Delivery Date to the requirements of the Securities Act and the
Rules and Regulations.
(d) The
Registration Statements. The Registration Statements did not,
as of the Effective Date, 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
Statements in reliance upon and in conformity with written
information furnished to the Company through the Representative by
or on behalf of any Underwriter specifically for inclusion therein,
which information is specified in Section 8(f).
(e) The
Prospectus. The Prospectus will not, as of its date and on the
applicable Delivery Date, contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
provided that no representation or warranty is made as to
information contained in or omitted from the Prospectus in reliance
upon and in conformity with written information furnished to the
Company through the Representative by or on behalf of any
Underwriter specifically for inclusion therein, which information
is specified in Section 8(f).
(f) The Pricing
Disclosure Package. As of the Applicable Time, the Pricing
Disclosure Package did 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 the light of the circumstances
under which they were made, not misleading. The preceding sentence
does not apply to statements or omissions from the Pricing
Disclosure Package based upon and in conformity with written
information furnished to the Company by or on behalf of the
Underwriters specifically for the inclusion therein, which
information is specified in Section 8(f).
3
(g) Issuer Free
Writing Prospectuses. Each Issuer Free Writing Prospectus
(including, without limitation, any road show that is a free
writing prospectus under Rule 433), when considered together
with the Pricing Disclosure Package as of the Applicable Time, did
not contain an untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances under
which they were made, not misleading.
Each Issuer Free
Writing Prospectus conformed or will conform in all material
respects to the requirements of the Securities Act and the Rules
and Regulations on the date of first use, and the Company has
complied with all prospectus delivery and any filing requirements
applicable to such Issuer Free Writing Prospectus pursuant to the
Rules and Regulations. The Company has not made any offer relating
to the Shares that would constitute an Issuer Free Writing
Prospectus without the prior written consent of the Representative.
The Company has retained in accordance with the Rules and
Regulations all Issuer Free Writing Prospectuses that were not
required to be filed pursuant to the Rules and Regulations. The
Company has taken all actions necessary so that any “road
show” (as defined in Rule 433 of the Rules and
Regulations) in connection with the offering of the Shares will not
be required to be filed pursuant to the Rules and
Regulations.
(h) No
Integration . None of the Company or any of its subsidiaries
has, directly or through any agent, sold, offered for sale,
solicited offers to buy or otherwise negotiated in respect of, any
“security” (as defined in the Securities Act) that is
or will be integrated with the sale of the Shares in a manner that
would require registration of such offer or sale of such securities
under the Securities Act.
(i) Exclusive
Agreement . The Company has not paid or agreed to pay to any
person any compensation for soliciting another person to purchase
any securities of the Company (except as contemplated in this
Agreement).
(j) Statements
in Prospectus . The statements in the Prospectus under the
headings “Description of Capital Stock” and
“Certain U.S. Tax Consequences to Non-U.S. Holders”
insofar as such statements summarize legal matters, agreements,
documents or proceedings discussed therein, are accurate and fair
summaries of such legal matters, agreements, documents or
proceedings.
(k)
Authorization of the Underwriting Agreement . This Agreement
has been duly authorized, executed and delivered by the
Company.
(l)
Authorization of the Shares . The Shares to be purchased by
the Underwriters from the Company have been duly authorized for
issuance and sale pursuant to this Agreement and, when issued and
delivered by the Company to the Underwriters pursuant to this
Agreement on the Initial Delivery Date or any Subsequent Delivery
Date, will be validly issued, fully paid and non-assessable, and
the issuance of the Shares will not be subject to any preemptive or
similar rights.
4
(m) Company
Additional Written Communications . The Company has not
prepared, made, used, authorized, approved or distributed and will
not prepare, make, use, authorize, approve or distribute any
written communication that constitutes an offer to sell or
solicitation of an offer to buy the Shares (each such communication
by the Company or its agents and representatives (other than a
communication referred to in clauses (i) and (ii) below) a
“Company Additional Written Communication”) other than
(i) the Pricing Disclosure Package, (ii) the Prospectus,
and (iii) any electronic road show or other written
communications, in each case used in accordance with
Section 3(a). Each such Company Additional Written
Communication, 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 the
light of the circumstances under which they were made, not
misleading; provided that this representation, warranty and
agreement shall not apply to statements in or omissions from each
such Company Additional Written Communication made in reliance upon
and in conformity with information furnished to the Company in
writing by the Underwriter expressly for use in any Company
Additional Written Communication.
(n)
Incorporated Documents. The documents incorporated or deemed
to be incorporated by reference in the Prospectus at the time they
were or hereafter are filed with the Commission (collectively, the
“Incorporated Documents”) complied and will comply in
all material respects with the requirements of the Exchange
Act.
(o) Outstanding
Capital Stock. The outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully
paid and non-assessable; none of the outstanding shares of capital
stock of the Company was issued in violation of any preemptive or
similar rights of any stockholder of the Company.
(p) No
Convertible Stock . Except as otherwise disclosed in the
Pricing Disclosure Package, there are no outstanding securities of
the Company convertible into, exchangeable for or evidencing the
right to purchase or subscribe for any shares of capital stock of
the Company and there are no outstanding or authorized options,
warrants or rights of any character obligating the Company to issue
any shares of its capital stock or any securities convertible or
exchangeable into or evidencing the right to purchase or subscribe
for any
shares
of such stock.
(q) No Material
Adverse Change . Except as otherwise disclosed in the Pricing
Disclosure Package, subsequent to the respective dates as of which
information is given in the Pricing Disclosure Package and the
Prospectus: (i) there has been no material adverse change, or
any development that could reasonably be expected to result in a
material adverse change, in the condition, financial or otherwise,
or in the earnings, business, properties, operations or prospects
(other than as a result of developments affecting the oil and gas
industry generally), whether or not arising from transactions in
the ordinary course of business, of the Company and its
subsidiaries, considered as one entity (a “Material Adverse
Change”); (ii) the Company and its subsidiaries,
considered as one entity, have not incurred any material liability
or obligation, indirect, direct or contingent, nor entered into any
material transaction or agreement; and (iii) there
has
5
been no cash
dividend or distribution of any kind declared, paid or made by the
Company or, except for dividends paid to the Company or other
subsidiaries, any of its subsidiaries on any class of capital stock
or repurchase or redemption by the Company or any of its
subsidiaries of any class of capital stock.
(r) Independent
Accountants . PricewaterhouseCoopers LLP, who have expressed
their opinion with respect to the financial statements (which term
as used in this Agreement includes the related notes thereto) and
supporting schedules included in the Prospectus, are independent
registered public accountants with respect to the Company as
required by the Securities Act and the Exchange Act.
(s) Preparation
of the Financial Statements . The consolidated financial
statements of the Company included in the Pricing Disclosure
Package and the Prospectus present fairly the consolidated
financial position of the entities to which they relate as of and
at the dates indicated and the results of their operations and cash
flows for the periods specified. Such financial statements comply
as to form with the applicable accounting requirements of
Regulation S-X and have been prepared in conformity with
generally accepted accounting principles applied on a consistent
basis throughout the periods involved, except as may be expressly
stated in the related notes thereto.
(t)
Incorporation and Good Standing of the Company. The Company
has been duly incorporated and is validly existing and in good
standing under the laws of the jurisdiction of its incorporation
and has power and authority (corporate or otherwise) to own or
lease, as the case may be, and operate its properties and to
conduct its business as described in the Pricing Disclosure Package
and the Prospectus and, in the case of the Company, to enter into
and perform its obligations under each of this Agreement and the
Shares. The Company is duly qualified to transact business and is
in good standing in each jurisdiction in which such qualification
is required, whether by reason of the ownership or leasing of
property or the conduct of business, except for such jurisdictions
where the failure to so qualify or to be in good standing would
not, individually or in the aggregate, result in a material adverse
effect on the condition, financial or otherwise, or on the
earnings, business, properties or operations, whether or not
arising from transactions in the ordinary course of business, of
the Company and its subsidiaries, considered as one entity (a
“Material Adverse Effect”). All of the issued and
outstanding shares of capital stock, or similar equity interest, of
each subsidiary have been duly authorized and validly issued, are
fully paid and nonassessable and are owned by the Company, directly
or through subsidiaries, free and clear of any security interest,
mortgage, pledge, lien, encumbrance or claim, except that the
Senior Credit Facility, dated November 21, 2006, by and among
SandRidge Energy, Inc. (as successor by merger to Riata Energy,
Inc.) and Bank of America, N.A., as Administrative Agent and Banc
of America Securities LLC as Lead Arranger and Book Running
Manager, as amended, (the “Credit Facility”) is secured
by a negative pledge on any of the Company’s non-mortgage
properties.
(u)
Non-Contravention of Existing Instruments; No Further
Authorizations or Approvals Required . Neither the Company nor
any of its subsidiaries is (i) in violation of its charter or
by laws (or other applicable organizational document), (ii) is
(or, with the
6
giving of
notice or lapse of time, would be) in default
(“Default”) under any indenture, mortgage, loan or
credit agreement, note, contract, franchise, lease or other
instrument to which the Company or any of its subsidiaries is a
party or by which it or any of them may be bound (including,
without limitation, the Credit Facility), or to which any of the
property or assets of the Company or any of its subsidiaries is
subject (each, an “Existing Instrument”), or
(iii) is in violation of any statute, law, rule, regulation,
judgment, order or decree of any court, regulatory body,
administrative agency, governmental body, arbitrator or other
authority having jurisdiction over the Company or such subsidiary
or any of its properties, as applicable, except with respect to
clause (ii) and (iii), for such Defaults or violations as
would not, individually or in the aggregate, have a Material
Adverse Effect.
The
Company’s execution, delivery and performance of this
Agreement, the issuance and delivery of the Shares and the
consummation of the transactions contemplated hereby and thereby
and by the Prospectus (i) have been duly authorized by all
necessary action (corporate or otherwise) and will not result in
any violation of the charter or by laws (or other applicable
organizational document) of the Company or any subsidiary,
(ii) will not conflict with or constitute a breach of, or
Default or a Debt Repayment Triggering Event (as defined below)
under, or result in the creation or imposition of any lien, charge
or encumbrance upon any property or assets of the Company or any of
its subsidiaries pursuant to, or require the consent of any other
party to, any Existing Instrument and (iii) will not result in
any violation of any statute, law, rule, regulation, judgment,
order or decree applicable to the Company or any of its
subsidiaries of any court, regulatory body, administrative agency,
governmental body, arbitrator or other authority having
jurisdiction over the Company or any of its subsidiaries or any of
its or their properties. As used herein, a “Debt Repayment
Triggering Event” means any event or condition which gives,
or with the giving of notice or lapse of time would give, the
holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder’s behalf) the right to
require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any of its
subsidiaries.
No consent,
approval, authorization or other order of, or registration or
filing with, any court or other governmental or regulatory
authority or agency is required for the Company’s execution,
delivery and performance of this Agreement or the issuance and
delivery of the Shares, or the consummation of the transactions
contemplated hereby and thereby and by the Prospectus, except for
such as have been obtained or made by the Company and are in full
force and effect under the Securities Act, and applicable state
securities or blue sky laws.
(v) No Material
Actions or Proceedings. Except as otherwise disclosed in the
Pricing Disclosure Package and the Prospectus, there are no legal
or governmental actions, suits or proceedings pending or, to the
Company’s knowledge, threatened (i) against or affecting
the Company or any of its subsidiaries, (ii) which has as the
subject thereof any officer or director of, or property owned or
leased by, the Company or any of its subsidiaries or (iii) relating
to environmental or discrimination matters, where in any such case
(A) there is a reasonable possibility that such action, suit
or proceeding might
7
be determined
adversely to the Company or such subsidiary and (B) any such
action, suit or proceeding, if so determined adversely, would
reasonably be expected to have a Material Adverse Effect or
adversely affect the consummation of the transactions contemplated
by this Agreement.
(w) Labor
Matters. No labor problem or dispute with the employees of the
Company or any of its subsidiaries exists or is threatened or
imminent that would reasonably be expected to have a Material
Adverse Effect.
(x)
Intellectual Property Rights. The Company and its
subsidiaries own, possess, license or have other rights to use, on
reasonable terms, all patents, patent applications, trade and
service marks, trade and service mark registrations, trade names,
copyrights, licenses, inventions, trade secrets, technology,
know-how and other intellectual property (collectively, the
“Intellectual Property Rights”) necessary for the
conduct of the Company’s business as now conducted or as
proposed in the Pricing Disclosure Package and the Prospectus to be
conducted except where the failure to do so would not reasonably be
expected to have a Material Adverse Effect. Except as set forth in
the Pricing Disclosure Package and the Prospectus, (a) no
party has been granted an exclusive license to use any portion of
such Intellectual Property Rights owned by the Company; (b) to
the Company’s knowledge there is no material infringement by
third parties of any such Intellectual Property Rights owned by or
exclusively licensed to the Company; (c) there is no pending
or, to the Company’s knowledge, threatened action, suit,
proceeding or claim by others challenging the Company’s
rights in or to any material Intellectual Property Rights; and (d)
there is no pending or, to the Company’s knowledge,
threatened action, suit, proceeding or claim by others that the
Company’s business as now conducted infringes or otherwise
violates any material patent, trademark, copyright, trade secret or
other proprietary rights of others, and the Company is unaware of
any other fact which would form a reasonable basis for any such
claim.
(y) All
Necessary Permits, etc. The Company possesses such valid and
current licenses, certificates, authorizations or permits issued by
the appropriate state, federal or foreign regulatory agencies or
bodies necessary to conduct its business except where the failure
to do so would not reasonably be expected to have a Material
Adverse Effect, and the Company has not received any notice of
proceedings relating to the revocation or modification of, or
non-compliance with, any such certificate, authorization or permit
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would reasonably be expected to have a
Material Adverse Effect.
(z) Title to
Properties. Each of the Company and its subsidiaries has
(i) generally satisfactory title to its oil and gas
properties, title investigations having been carried out by the
Company or its subsidiaries in accordance with the practice in the
oil and gas industry in the areas in which the Company and its
subsidiaries operate, (ii) good and marketable title to all
other real property owned by it (including pipeline easement
rights) to the extent necessary to carry on its business, and
(iii) good and marketable title to all personal property owned
by it, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Prospectus or such as
do not materially affect the value of the properties of the Company
and its subsidiaries, considered as one
8
enterprise, and
do not interfere in any material respect with the use made and
proposed to be made of such properties, by the Company and its
subsidiaries, considered as one enterprise; and all of the
easements, leases and subleases material to the business of the
Company and its subsidiaries, considered as one enterprise, and
under which the Company or any of its subsidiaries holds or uses
properties described in the Prospectus, are in full force and
effect, and neither the Company nor any of its subsidiaries has any
notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or its subsidiaries
under any of the easements, leases or subleases mentioned above, or
affecting or questioning the rights of the Company or any
subsidiary thereof to the continued possession or use of the
easement or leased or subleased premises.
(aa) Condition
of Properties. Except as would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect
on the Company, the plants, buildings, structures and equipment
owned by the Company are in good operating condition and repair and
have been reasonably maintained consistent with standards generally
followed in the industry (giving due account to the age and length
of use of same, ordinary wear and tear excepted), are adequate and
suitable for their present uses and, in the case of plants,
buildings and other structures, are structurally sound.
(bb) Tax Law
Compliance. The Company and its consolidated subsidiaries have
filed all necessary federal, state, local and foreign income and
franchise tax returns in a timely manner and have paid all taxes
required to be paid by any of them and, if due and payable, any
related or similar assessment, fine or penalty levied against any
of them, except for any taxes, assessments, fines or penalties as
may be being contested in good faith and by appropriate proceedings
or where the failure to do so would not reasonably be expected to
have a Material Adverse Effect. The Company has made appropriate
provisions in the financial statements included in the Prospectus
in respect of all federal, state and foreign income and franchise
taxes for all current or prior periods as to which the tax
liability of the Company or any of its consolidated subsidiaries
has not been finally determined except to the extent it would not
have a Material Adverse Effect.
(cc) Company
Not an “Investment Company”. The Company is not,
and, after receipt of payment for the Shares and application of the
proceeds as described under “Use of Proceeds” in the
Prospectus will not be, required to register as an
“investment company” within the meaning of the
Investment Company Act and will conduct its business in a manner so
that it will not become subject to the Investment Company
Act.
(dd)
Insurance. Each of the Company and its subsidiaries are
insured by recognized, and to the knowledge of the Company,
financially sound and reputable institutions with policies in such
amounts and with such deductibles and covering such risks as are
generally deemed adequate and customary for their businesses
including, but not limited to, policies covering real and personal
property owned or leased by the Company and its subsidiaries
against theft, damage, destruction, acts of terrorism or vandalism
and earthquakes. All policies of insurance and fidelity or surety
bonds insuring the Company or any of its subsidiaries or their
respective businesses, assets, employees, officers and directors
are in full force and effect; the Company and its
9
subsidiaries
are in compliance, in all material respects, with the terms of such
policies and instruments; and there are no material claims by the
Company or any of its subsidiaries under any such policy or
instrument as to which any insurance company is denying liability
or defending under a reservation of rights clause; and neither the
Company nor any such subsidiary has, in the past three years, been
refused any insurance coverage sought or applied for.
(ee) No Price
Stabilization or Manipulation. The Company has not taken and
will not take, directly or indirectly, any action designed to or
that might be reasonably expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares. The Company
acknowledges that the Underwriters may engage in stabilization
transactions as described in the Prospectus.
(ff) Compliance
with Sarbanes-Oxley. The Company and its subsidiaries and their
respective officers and directors are in compliance with the
applicable provisions of the Sarbanes-Oxley Act of 2002 (the
“Sarbanes-Oxley Act,” which term, as used herein,
includes the rules and regulations of the Commission promulgated
thereunder).
(gg) Internal
Controls. The Company maintains effective internal control over
financial reporting as defined in Rule 13a-15 under the
Exchange Act and a system of internal accounting control 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 the Company’s financial statements in
conformity with accounting principles generally accepted in the
United States and to maintain accountability for its assets,
(C) access to the Company’s assets is permitted only in
accordance with management’s general or specific
authorization and (D) the recorded accountability for the
Company’s assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect
to any differences.
(hh) Disclosure
Controls and Procedures. The Company has established and
maintains disclosure controls and procedures (as such term is
defined in Rules 13a-15 and 15d-14 under the Exchange Act);
such disclosure controls and procedures are designed to ensure that
material information relating to the Company and its subsidiaries
is made known to the chief executive officer and chief financial
officer of the Company by others within the Company or any of its
subsidiaries, and such disclosure controls and procedures are
reasonably effective to perform the functions for which they were
established subject to the limitations of any such control system;
the Company’s auditors and the Audit Committee of the Board
of Directors of the Company have been advised of: (i) any
significant deficiencies or material weaknesses in the design or
operation of internal controls which could adversely affect the
Company’s ability to record, process, summarize, and report
financial data; and (ii) any fraud, whether or not material,
that involves management or other employees who have a role in the
Company’s internal controls; and since the date of the most
recent evaluation of such disclosure controls and procedures, there
have been no significant changes in internal controls or in other
factors
10
that could
significantly affect internal controls, including any corrective
actions with regard to significant deficiencies and material
weaknesses.
(ii) Compliance
with Environmental Laws. Except as otherwise disclosed in the
Pricing Disclosure Package and the Prospectus: (i) neither the
Company nor any of its subsidiaries is in violation of any federal,
state, local or foreign law, regulation, order, permit or other
requirement relating to pollution or protection of human health or
the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or
wildlife, including without limitation, laws and regulations
relating to emissions, discharges, releases or threatened releases
of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum and petroleum products
(collectively, “Materials of Environmental Concern”),
or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
Materials of Environmental Concern (collectively,
“Environmental Laws”), which violation includes, but is
not limited to, noncompliance with any permits or other
governmental authorizations required for the operation of the
business of the Company or its subsidiaries under applicable
Environmental Laws, or noncompliance with the terms and conditions
thereof, nor has the Company or any of its subsidiaries received
any written communication, whether from a governmental authority,
citizens group, employee or otherwise, that alleges that the
Company or any of its subsidiaries is in violation of any
Environmental Law, except, in each case, as would not, individually
or in the aggregate, have a Material Adverse Effect;
(ii) there is no claim, action or cause of action filed with a
court or governmental authority, no investigation with respect to
which the Company has received written notice, and no written
notice by any person or entity alleging potential liability for
investigatory costs, cleanup costs, governmental responses costs,
natural resources damages, property damages, personal injuries,
attorneys’ fees or penalties arising out of, based on or
resulting from the presence, or release into the environment, of
any Material of Environmental Concern at any location owned, leased
or operated by the Company or any of its subsidiaries, now or in
the past (collectively, “Environmental Claims”),
pending or, to the Company’s knowledge, threatened against
the Company or any of its subsidiaries or any person or entity
whose liability for any Environmental Claim the Company or any of
its subsidiaries has retained or assumed either contractually or by
operation of law, except as would not, individually or in the
aggregate, have a Material Adverse Effect; and (iii) to the
Company’s knowledge, there are no past, present or
anticipated future actions, activities, circumstances, conditions,
events or incidents, including, without limitation, the release,
emission, discharge, presence or disposal of any Material of
Environmental Concern, that reasonably could result in a violation
of any Environmental Law, require expenditures to be incurred
pursuant to Environmental Law, except as would not, individually or
in the aggregate, have a Material Adverse Effect.
(jj)
Independent Petroleum Engineers. DeGolyer and MacNaughton,
whose reports as of December 31, 2006, 2007 and 2008, are
referenced in the Prospectus, was, as of the date of such reports,
and is, as of the date hereof, an independent petroleum engineer
with respect to the SandRidge CO2, LLC (f/k/a PetroSource Energy
Company, L.P.). Netherland, Sewell & Associates Inc., whose
reports as of December 31, 2006, 2007 and 2008, are referenced
in the Prospectus, was as of December 31, 2006, 2007
and
11
2008, and is,
as of the date hereof, an independent petroleum engineer with
respect to the Company (excluding SandRidge CO2 f/k/a PetroSource
Energy Company, L.P.). The information underlying the estimates of
reserves of the Company and its subsidiaries, which was supplied by
the Company to DeGolyer and MacNaughton and Netherland, Sewell
& Associates Inc. for purposes of reviewing the reserve reports
and estimates of the Company and preparing the letters (the
“Reserve Report Letters”) of DeGolyer and MacNaughton
and Netherland, Sewell & Associates Inc., 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 dates such estimates were made and such
information was supplied and was prepared in accordance with
customary industry practices; estimates of such reserves and
present values as described in the Prospectus and reflected in the
Reserve Report Letters comply in all material respects with the
applicable requirements of Regulation S-X and Industry Guide 2
under the Act.
(kk) Related
Party Transactions. No relationship, direct or indirect, exists
between or among any of the Company or any affiliate of the
Company, on the one hand, and any director, officer, member,
stockholder, customer or supplier of the Company or any affiliate
of the Company, on the other hand, which is required by the
Exchange Act to be disclosed in an annual report on Form 10-K which
is not so disclosed in the Prospectus. There are no outstanding
loans, advances (except advances for business expenses in the
ordinary course of business) or guarantees of indebtedness by the
Company or any affiliate of the Company to or for the benefit of
any of the officers or directors of the Company or any affiliate of
the Company or any of their respective family members.
(ll) Lending
Relationship. Except as disclosed in the Pricing Disclosure
Package and the Prospectus, to its knowledge, the Company
(i) does not have any material lending or other relationship
with any bank or lending affiliate of the Underwriter and
(ii) does not intend to use any of the proceeds from the sale
of the Shares hereunder to repay any outstanding debt owed to any
affiliate of the Underwriter.
(mm) No Default
in Senior Indebtedness. No event of default exists under the
Credit Facility.
(nn) Exclusive
Agreement. The Company has not paid or agreed to pay to any
person any compensation for soliciting another person to purchase
any securities of the Company (expect as contemplated in this
Agreement).
(oo)
Brokers. Except for certain fees payable to the Underwriter
in connection with the offering, there is no broker, finder or
other party that is entitled to receive from the Company any
brokerage or finder’s fee or other fee or commission as a
result of any transactions contemplated by this
Agreement.
(pp) New York
Stock Exchange Listing. The Shares have been approved for
listing, subject to official notice of issuance and evidence of
satisfactory distribution, on the New York Stock
Exchange.
12
(qq) Neither the
Company nor any of its subsidiaries or affiliates, nor any
director, officer, or employee, nor, to the Company’s
knowledge, any agent or representative of the Company or of any of
its subsidiaries or affiliates, has taken or will take any action
in furtherance of an offer, payment, promise to pay, or
authorization or approval of the payment or giving of money,
property, gifts or anything else of value, directly or indirectly,
to any “government official” (including any officer or
employee of a government or government-owned or controlled entity
or of a public international organization, or any person acting in
an official capacity for or on behalf of any of the foregoing, or
any political party or party official or candidate for political
office) to influence official action or secure an improper
advantage; and the Company and its subsidiaries and affiliates have
conducted their businesses in compliance with applicable
anti-corruption laws and have instituted and maintain and will
continue to maintain policies and procedures designed to promote
and achieve compliance with such laws and with the representation
and warranty contained herein.
(rr) The
operations of the Company and its subsidiaries are and have been
conducted at all times in material compliance with all applicable
financial recordkeeping and reporting requirements, including those
of the Bank Secrecy Act, as amended by Title III of the Uniting and
Strengthening America by Providing Appropriate Tools Required to
Intercept and Obstruct Terrorism Act of 2001 (USA PATRIOT Act), and
the applicable anti-money laundering statutes of jurisdictions
where the Company and its subsidiaries conduct business, the rules
and regulations thereunder and any related or similar rules,
regulations or guidelines, issued, administered or enforced by any
governmental agency (collectively, the “ Anti-Money
Laundering Laws ”), and no action, suit or proceeding by
or before any court or governmental agency, authority or body or
any arbitrator involving the Company or any of its subsidiaries
with respect to the Anti-Money Laundering Laws is pending or, to
the best knowledge of the Company, threatened.
(ss) The Company
represents that neither the Company nor any of its subsidiaries
(collectively, the “ Entity ”) or , to the
knowledge of the Entity, any director, officer, employee, agent,
affiliate or representative of the Entity, is an individual or
entity (“ Person ”) that is, or is owned or
controlled by a Person that is:
(A) the subject of
any sanctions administered or enforced by the U.S. Department of
Treasury’s Office of Foreign Assets Control (“
OFAC ”), the United Nations Security Council (“
UNSC ”), the European Union (“ EU
”), Her Majesty’s Treasury (“ HMT
”), or other relevant sanctions authority (collectively,
“ Sanctions ”), nor
(B) located,
organized or resident in a country or territory that is the subject
of Sanctions (including, without limitation, Burma/Myanmar, Cuba,
Iran, North Korea, Sudan and Syria).
(tt) The Entity
represents and covenants that it will not, directly or indirectly,
use the proceeds of the offering, or lend, contribute or otherwise
make available such proceeds to any subsidiary, joint venture
partner or other Person:
13
(A) to fund or
facilitate any activities or business of or with any Person or in
any country or territory that, at the time of such funding or
facilitation, is the subject of Sanctions; or
(B) in any other
manner that will result in a violation of Sanctions by any Person
(including any Person participating in the offering, whether as
underwriter, advisor, investor or otherwise).
(uu) The Entity
represents and covenants that for the past 5 years, it has not
knowingly engaged in, is not now knowingly engaged in, and will not
engage in, any dealings or transactions with any Person, or in any
country or territory, that at the time of the dealing or
transaction is or was the subject of Sanctions.
Any certificate
signed by an officer of the Company and delivered to the
Underwriter or to counsel for the Underwriter in connection with
this offering shall be deemed to be a representation and warranty
by the Company to each Underwriter as to the matters set forth
therein.
B. The Selling
Shareholder represents, warrants and covenants to the Underwriter
as follows:
(a) The
Underwriting Agreement. This Agreement has been duly
authorized, executed and delivered by the Selling
Shareholder.
(b) Title to
Shares to be Sold; All Authorizations Obtained. The Selling
Shareholder is, and on the Closing Date will be, the record and
beneficial owner of the Shares to be sold by the Selling
Shareholder hereunder free and clear of all liens, encumbrances,
equities and claims, and, assuming that the Underwriters purchase
such Shares without notice of any adverse claim (within the meaning
of Section 8-105 of the UCC), upon sale and delivery of, and
payment for, such securities, as provided herein, the Underwriters
will own the Shares, free and clear of all liens, encumbrances,
equities and claims whatsoever. The Selling Shareholder has the
legal right and power, and all authorizations and approvals
required by law to enter into this Agreement, to sell, transfer and
deliver all of the Shares which may be sold by the Selling
Shareholder pursuant to this Agreement and to comply with its other
obligations hereunder and thereunder.
(c) Delivery of
the Shares to be Sold. Delivery of the Shares which are sold by
the Selling Shareholder pursuant to this Agreement will pass good
and valid title to such Shares, free and clear of any adverse claim
(within the meaning of Section 8-105 of the UCC).
(d)
Non-Contravention; No Further Authorizations or Approvals
Required. The execution and delivery by the Selling Shareholder
of, and the performance by the Selling Shareholder of its
obligations under, this Agreement (i) will not conflict with
or constitute a breach of, or Default under, any other agreement or
instrument to which the Selling Shareholder is a party or by which
it is bound or under which it is entitled to any right or benefit,
and (ii) will not result in any violation of any statute, law,
regulation, order or decree applicable to the Selling Shareholder
of any court, regulatory body,
14
administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Selling Shareholder or its properties. No
consent, approval, authorization or other order of, or registration
or filing with, any court or other governmental authority or
agency, is required for the consummation by the Selling Shareholder
of the transactions contemplated in this Agreement, except such as
have been obtained or made and are in full force and effect under
the Securities Act, applicable state securities or blue sky laws
and from the FINRA.
(e) No Further
Consents, etc. No consent, approval or waiver is required under
any instrument or agreement to which the Selling Shareholder is a
party or by which it is bound or under which it is entitled to any
right or benefit, in connection with the offering, sale or purchase
by the Underwriters of any of the Shares which may be sold by the
Selling Shareholder under this Agreement or the consummation by the
Selling Shareholder of any of the other transactions contemplated
hereby.
(f) Disclosure
Made by The Selling Shareholder in the Prospectus. All
information furnished by or on behalf of the Selling Shareholder in
writing expressly for use in the Pricing Disclosure Package and the
Prospectus is, on the date hereof and on the Closing Date will be,
true, correct, and complete in all material respects, and does not,
and on the Closing Date will not, contain any untrue statement of a
material fact or omit to state any material fact necessary to make
such information not misleading. The Selling Shareholder confirms
as accurate the number of shares of Common Stock set forth opposite
the Selling Shareholder’s name in the Pricing Disclosure
Package and the Prospectus under the caption “Selling
Stockholder” (both prior to and after giving effect to the
sale of the Shares).
(g) No Price
Stabilization or Manipulation. The Selling Shareholder has not
taken and will not take, directly or indirectly, any action
designed to or that might be reasonably expected to cause or result
in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the
Shares.
Any certificate
signed by the Selling Shareholder and delivered to the
Representative or to counsel for the Underwriters shall be deemed
to be a representation and warranty by the Selling Shareholder to
each Underwriter as to the matters covered thereby.
2.
Purchase of the Shares by the Underwriters. On the basis of
the representations and warranties contained in, and subject to the
terms and conditions of, this Agreement, the Company agrees to sell
12,200,000 Firm Shares and the Selling Shareholder agrees to sell
3,000,000 Firm Shares to the Underwriters, and each Underwriter,
severally and not jointly, agrees to purchase the number of shares
of Firm Shares set forth opposite its name on
Schedule 1 .
In
addition, the Company grants to the Underwriters an option to
purchase the Option Shares. Such option is exercisable in the event
that the Underwriters sell more shares of
15
Common Stock
than the number of Firm Shares in the offering and as set forth in
Section 4 hereof.
The
price of both the Firm Shares and any Option Shares purchased by
the Underwriters shall be $7.46 per share.
The
Company shall not be obligated to deliver any of the Firm Shares or
Option Shares to be delivered on the applicable Delivery Date,
except upon payment for all such Shares to be purchased on such
Delivery Date as provided herein.
3.
Offering of Shares by the Underwriters . Upon authorization
by the Representative of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon
the terms and conditions to be set forth in the
Prospectus.
4.
Delivery of and Payment for the Shares. Delivery of and
payment for the Firm Shares shall be made at 10:00 A.M., New
York City time, on the fourth full business day following the date
of this Agreement or at such other date or place as shall be
determined by agreement between the Representative and the Company.
This date and time are sometimes referred to as the “
Initial Delivery Date .” Delivery of the Firm Shares
shall be made to the Representative for the account of each
Underwriter against payment by the several Underwriters through the
Representative and of the respective aggregate purchase prices of
the Firm Shares being sold by the Company to or upon the order of
the Company of the purchase price by wire transfer in immediately
available funds to the accounts specified by the Company. 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. The Company shall deliver
the Firm Shares through the facilities of DTC unless the
Representative shall otherwise instruct.
The
option granted in Section 2 will expire 30 days after the
date of this Agreement and may be exercised in whole or in part at
any one time by written notice being given to the Company by the
Representative; provided that if such date falls on a day
that is not a business day, the option granted in Section 2
will expire on the next succeeding business day. Such notice shall
set forth the aggregate number of shares of Option Shares as to
which the option is being exercised, the names in which the shares
of Option Shares are to be registered, the denominations in which
the shares of Option Shares are to be issued and the date and time,
as determined by the Representative, when the shares of Option
Shares are to be delivered; provided, however , that this
date and time shall not be earlier than the Initial Delivery Date
nor earlier than the second business day after the date on which
the option shall have been exercised nor later than the fifth
business day after the date on which the opt
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