Exhibit 1.1
6,050,000
Gulfport Energy
Corporation
Common Stock
UNDERWRITING
AGREEMENT
April __, 2006
JOHNSON RICE & COMPANY,
L.L.C.
As Representative of the several
Underwriters
c/o JOHNSON RICE & COMPANY,
L.L.C.
639 Loyola Avenue, Suite 2775
New Orleans, Louisiana 70113
Ladies and Gentlemen:
Introductory.
The stockholders of Gulfport Energy
Corporation, a Delaware corporation (the “ Company
”), named in Schedule B (collectively, the
“ Selling Stockholders ”) severally propose to
sell to the several underwriters named in Schedule A
(the “ Underwriters ”) an aggregate of 6,050,000
shares (the “ Firm Shares ”) of common stock,
par value $.01 per share (the “ Shares ”), of
the Company. In addition, the Company has granted to the
Underwriters an option to purchase up to an additional 907,500
Shares (the “ Optional Shares ”), as provided in
Section 2. The Firm Shares and, if and to the extent such
option is exercised, the Optional Shares are collectively called
the “ Offered Shares .” Johnson Rice &
Company, L.L.C. (“ JRCO ”) has agreed to act as
representative of the several Underwriters (in such capacity, the
“ Representative ”) in connection with the
offering and sale of the Offered Shares.
The Company has prepared and filed
with the Securities and Exchange Commission (the “
Commission ”) a registration statement on
Form S-3 (File No. 333-133109), and amendments thereto,
and related preliminary prospectuses to be used in connection with
the public offering and sale of the Offered Shares. Such
registration statement, as amended, including the prospectus,
financial statements, exhibits and schedules thereto, in the form
in which it was declared effective by the Commission under the
Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (collectively, the “ Securities
Act ”), including all documents incorporated or deemed to
be incorporated by reference therein and any information deemed to
be a part thereof at the time of effectiveness pursuant to
Rule 430A under the Securities Act or the Securities Exchange
Act of 1934, as amended, and the rules and regulations promulgated
thereunder (collectively, the “ Exchange Act ”),
is called the “ Registration Statement .” Any
registration statement filed by the Company pursuant to Rule 462(b)
under the Securities Act is called the “ Rule 462(b)
Registration Statement ,” and from and after the date and
time of filing of the Rule 462(b) Registration Statement the term
“Registration Statement” shall include the Rule 462(b)
Registration Statement. The prospectus, in the form first used by
the Underwriters to confirm sales of the Offered 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 called the “ Prospectus .”
Any preliminary prospectus included in the Registration Statement
or filed with the Commission pursuant to Rule 424 under the
Securities Act is called a “ preliminary prospectus
.” As used herein, “ free writing
prospectus ” has the meaning set forth in Rule 405
under the Securities Act, and “ Time of Sale
Prospectus ” means any preliminary prospectus, together
with the free writing prospectuses, if any, identified on
Schedule C . As used herein, the terms
“Registration Statement,” “preliminary
prospectus” and Prospectus shall include the documents, if
any, incorporated by reference therein pursuant to Item 12 of
Form S-3, which were filed under the Exchange Act on or before the
effective date of the Registration Statement or the date of any
preliminary prospectus or the Prospectus, as the case may be, and
any reference herein to the terms “amend,”
“amendment” or “supplement” with respect to
the Registration Statement, any preliminary prospectus or the
Prospectus shall be deemed to refer to and include (i) the
filing of any document under the Exchange Act after the effective
date of the Registration Statement or the date of any preliminary
prospectus or the Prospectus, as the case may be, which is
incorporated therein by reference and (ii) any such document
so filed. All references in this Agreement to (i) the
Registration Statement, 462(b) Registration Statement, a
preliminary prospectus, or the Prospectus, or any amendments or
supplements to any of the foregoing, shall include any copy thereof
filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System (“ EDGAR
”) and (ii) the Prospectus shall be deemed to include
the “ electronic Prospectus ” provided for use
in connection with the offering of the Offered Shares as
contemplated by Section 3(A)(n) of this Agreement. All
references in this Agreement to financial statements and schedules
and other information which are “ contained ,”
“ included ” or “ stated ” in
the Registration Statement or the Prospectus (and all other
references of like import) shall be deemed to mean and include all
such financial statements and schedules and other information which
is or is deemed to be incorporated by reference in the Registration
Statement or the Prospectus pursuant to Item 12 of Form S-3 ,
which were filed under the Exchange Act on or before the effective
date of the Registration Statement or the date of any preliminary
prospectus or the Prospectus, as the case may be.
The Company and each of the Selling
Stockholders hereby confirm their respective agreements with the
Underwriters as follows:
Section 1. Representations and
Warranties
A. Representations and
Warranties of the Company. The Company hereby represents, warrants and
covenants to each Underwriter as follows:
(a) Compliance with Registration
Requirements. The Registration Statement and any
Rule 462(b) Registration Statement have been declared
effective by the Commission under the Securities Act. The Company
has complied with all requests of the Commission for additional or
supplemental information. No stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement is in effect and no proceedings for such
purpose have been instituted or are pending or, to the best
knowledge of the Company, are contemplated or threatened by the
Commission.
Each preliminary prospectus and the
Prospectus when filed complied in all material respects with the
Securities Act and, if filed by electronic transmission pursuant to
EDGAR (except as may be permitted by Regulation S T under the
Securities Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the
Offered Shares. Each of the Registration Statement, any Rule 462(b)
Registration Statement and any post-effective amendment thereto, at
the time it became effective complied and, as amended or
supplemented, if applicable, will, as of the date of such amendment
or supplement, as applicable, comply in all material respects with
the Securities Act and did not and, as amended or supplemented, if
applicable, will not, as of the date of such amendment or
supplement, as applicable, contain any untrue statement of a
material fact or omit to state a material fact required
2
to be stated therein or necessary to make the
statements therein not misleading. The Time of Sale Prospectus does
not, and at the time of each sale of the Shares in connection with
the offering and at the First Closing Date (as defined in
Section 2), the Time of Sale Prospectus, as then amended or
supplemented by the Company, if applicable, will not, contain any
untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The
Prospectus, as of its date, did not and, as amended or
supplemented, if applicable, will not, as of the date of such
amendment or supplement, as applicable, 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
representations and warranties set forth in the three immediately
preceding sentences do not apply to statements in or omissions from
the Registration Statement any Rule 462(b) Registration Statement,
or any post-effective amendment thereto, or the Prospectus or Time
of Sale Prospectus, or any amendments or supplements thereto, made
in reliance upon and in conformity with information relating to any
Underwriter furnished to the Company in writing by the
Representative expressly for use therein, it being understood and
agreed that the only such information furnished by the
Representative to the Company consists of the information described
in Section 9(c) below. There are no contracts or other
documents required to be described in the Prospectus or to be filed
as exhibits to the Registration Statement which have not been
described or filed as required.
The Company is not an
“ineligible issuer” (as defined in Rule 405 under the
Securities Act) in connection with the offering pursuant to Rules
164, 405 and 433 under the Securities Act. Any free writing
prospectus that the Company is required to file pursuant to Rule
433(d) under the Securities Act has been, or will be, filed with
the Commission in accordance with the requirements of the
Securities Act. Each free writing prospectus that the Company has
filed, or is required to file, pursuant to Rule 433(d) under the
Securities Act or that was prepared by or on behalf of or used or
referred to by the Company complies or will comply in all material
respects with the requirements of the Securities Act. Except for
the free writing prospectuses, if any, identified on Schedule
C , and electronic road shows, if any, furnished to you before
first use, the Company has not prepared, used or referred to, and
will not, without your prior consent, prepare, use or refer to, any
free writing prospectus.
(b) Offering Materials Furnished
to Underwriters. The Company has delivered to the
Representative one complete manually signed copy of the
Registration Statement and of each consent and certificate of
experts filed as a part thereof, and conformed copies of the
Registration Statement (without exhibits) and preliminary
prospectuses, Time of Sale Prospectus, and the Prospectus, as
amended or supplemented, in such quantities and at such places as
the Representative has reasonably requested for each of the
Underwriters.
(c) Distribution of Offering
Material By the Company. The Company has not distributed and
will not distribute, prior to the later of (i) the expiration
or termination of the option granted to the several Underwriters in
Section 2 and (ii) the completion of the
Underwriters’ distribution of the Offered Shares, any
offering material in connection with the offering and sale of the
Offered Shares other than a preliminary prospectus, Time of Sale
Prospectus, the Prospectus or the Registration Statement or any
other document not constituting a prospectus pursuant to
Section 2(a)(10)(a) of the Securities Act or Rule 134 under
the Securities Act.
(d) Independent Accountants.
Grant Thornton LLP (i) was listed as an independent registered
public accounting firm with the Public Company Accounting Oversight
Board as of the date hereof and, to the knowledge of the Company,
continues to hold this status and (ii) to the knowledge of the
Company, is, with respect to the Company, in compliance with
subsections (g)
3
through (l) of Section 10A of the
Exchange Act. Hogan & Slovacek, a professional
corporation, (i) was listed as an independent registered
public accounting firm with the Public Company Accounting Oversight
Board as of the date hereof and, to the knowledge of the Company,
continues to hold this status and (ii) to the knowledge of the
Company, is, with respect to the Company, in compliance with
subsections (g) through (l) of Section 10A of the
Exchange Act.
(e) Financial Statements. The
financial statements filed with the Commission as a part of or
incorporated by reference into the Registration Statement, the
Prospectus and Time of Sale Prospectus present fairly in all
material respects the financial condition of the Company as of and
at the dates indicated, and the statements of operations,
stockholders’ equity and comprehensive income and cash flows
of the Company for the periods specified; such financial statements
have been prepared in conformity with generally accepted accounting
principles in the United States of America (“ GAAP
”) applied on a consistent basis throughout the periods
involved except to the extent disclosed in the notes thereto. The
selected historical financial data and the summary financial data
included in the Prospectus present fairly, in all material
respects, the information shown therein and have been compiled on a
basis consistent with that of the audited financial statements
included or incorporated by reference into the Registration
Statement. The other financial and statistical data set forth in
the Registration Statement and included in either the Prospectus or
the Time of Sale Prospectus are accurately presented and prepared
on a basis consistent with the financial statements and books and
records of the Company. There are no financial statements
(historical or pro forma) that are required to be included in the
Registration Statement and either the Prospectus or the Time of
Sale Prospectus that are not included as required. The Company has
not engaged in or effected any transaction or arrangement that
would constitute an “off-balance sheet arrangement” (as
defined in Item 303 of Regulation S-K of the Commission
(“ Regulation S-K ”)). All non-GAAP financial
measures (as defined in Regulation G of the Commission) and ratios
derived using non-GAAP financial measures have been presented in
compliance with Item 10 of Regulation S-K.
(f) Reserve Report Data. The
oil and gas reserve estimates of the Company contained or
incorporated by reference into the Registration Statement and
included in the Prospectus and Time of Sale Prospectus have been
prepared by independent reserve engineers in accordance with
Commission guidelines applied on a consistent basis throughout the
periods involved, and the Company has no reason to believe that
such estimates do not fairly reflect the oil and gas reserves of
the Company at the dates indicated. Other than production of the
reserves in the ordinary course of business and intervening product
price fluctuations described in the Registration Statement,
Prospectus and Time of Sale Prospectus, the Company is not aware of
any facts or circumstances that would cause a Material Adverse
Change in the reserves or the present value of future net cash
flows therefrom as described in the Registration Statement,
Prospectus or Time of Sale Prospectus.
(g) No Material Adverse Change in
Business. Except as disclosed in the Time of Sale Prospectus,
subsequent to the respective dates as of which information is given
in the Time of Sale Prospectus, there has been no (i) material
adverse change in the condition, financial or otherwise, results of
operations or prospects of the Company taken as a whole (the
“ Enterprise ”), whether or not arising in the
ordinary course of business (a “ Material Adverse
Change ”), (ii) transaction which is material to the
Enterprise, (iii) any obligation, direct or contingent
(including any off-balance sheet obligations), incurred by the
Company, which is material to the Enterprise, (iv) change in
the capital stock of the Company, (v) material change in the
outstanding indebtedness of the Company or (vi) dividend or
distribution of any kind declared, paid or made on the capital
stock of the Company.
4
(h) Good Standing of the
Company. The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the
State of Delaware and has the requisite corporate power and
authority to own, lease and operate its properties and to conduct
its business as described in the Registration Statement and Time of
Sale Prospectus and to enter into and perform its obligations under
this Agreement. The Company is duly qualified as a foreign
corporation to transact business and is in good standing in each
other jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or to be in good
standing would not result in a Material Adverse Change. Except as
otherwise set forth in the Registration Statement, the Prospectus
or the Time of Sale Prospectus, the Company does not own or
control, directly or indirectly, any corporation, association or
other entity.
(i) Capitalization. The
authorized capital stock of the Company, and the issued and
outstanding capital stock of the Company as of the date hereof
after giving effect to the offering of the Shares and the other
transactions contemplated by this Agreement and assuming the
exercise by the Underwriters of the option to purchase the Optional
Shares, as provided in Section 2, is as set forth in the Time
of Sale Prospectus under the caption “Capitalization”
under the “As Adjusted” column (other than for
subsequent issuances, if any, pursuant to employee benefit plans
described in the Time of Sale Prospectus or upon exercise of
outstanding options described in the Time of Sale Prospectus). The
shares of issued and outstanding capital stock of the Company have
been duly authorized and validly issued and are fully paid and
non-assessable and none of the outstanding shares of capital stock
of the Company was issued in violation of the preemptive or similar
rights of any security holder of the Company. The description of
the Company’s stock option, stock bonus and other stock plans
or arrangements, and the options or other rights granted
thereunder, as described in the Registration Statement or in the
Time of Sale Prospectus accurately and fairly present in all
material respects the information required to be shown with respect
to such plans, arrangements, options and rights.
(j) Other Securities. Except
as disclosed in the Time of Sale Prospectus, there are no
outstanding (i) securities or obligations of the Company
convertible into or exchangeable for any equity interests of the
Company, (ii) warrants, rights or options to subscribe for or
purchase from the Company any equity interests or any such
convertible or exchangeable securities or obligations, or
(iii) obligations of the Company to issue any equity
interests, any such convertible or exchangeable securities or
obligations, or any such warrants, rights or options.
(k) Stock Exchange Listing.
The Shares are registered pursuant to Section 12(g) of the
Exchange Act and are listed on the Nasdaq National Market and the
Company has taken no action designed to, or likely to have the
effect of, terminating the registration of the Shares under the
Exchange Act or delisting the Shares from the Nasdaq National
Market, nor has the Company received any notification that the
Commission or the Nasdaq National Market is contemplating
terminating such registration of listing.
(l) Authorization of Agreement
and Binding Effect. This Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and
binding obligation of the Company enforceable in accordance with
its terms except as enforcement may be limited by bankruptcy,
insolvency or other laws or court decisions relating to or
affecting creditor’s rights generally, and except to the
extent that enforcement of the indemnification and contribution
obligations provided for herein may be limited by federal or state
securities laws or the public policies underlying such
laws.
5
(m) Authorization and Description
of Optional Shares. The Optional Shares have been duly
authorized for issuance and sale to the Underwriters pursuant to
this Agreement. When the Company issues and delivers the Optional
Shares pursuant to this Agreement against payment of the
consideration set forth herein, the Optional Shares will be validly
issued, fully paid and non-assessable; the capital stock of the
Company conforms in all material respects to the description
thereof contained in the Time of Sale Prospectus, and such
descriptions conform in all material respects to the rights set
forth in the instruments defining the same; the issuance by the
Company of the Optional Shares is not subject to preemptive or
other similar rights of any security holder of the Company; and the
Company has authorized and available a sufficient number of Shares
for issuance of the Optional Shares pursuant to this Agreement and
for issuance upon the exercise, conversion or exchange of all
outstanding options and other securities of the Company that are
convertible into or exchangeable for Shares.
(n) Absence of Defaults and
Conflicts. The Company is not (i) in violation of its
certificate of incorporation or by-laws, or (ii) in default in
the performance or observance of any obligation, agreement,
covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or
other agreement or instrument to which it is a party or by which it
may be bound, or to which any of the property or assets of the
Company is subject (collectively, “ Agreements and
Instruments ”) except, in the case of clause (ii), for
any defaults which, singularly or in the aggregate, would not
result in a Material Adverse Change; and the execution, delivery
and performance of this Agreement, the consummation of the
transactions contemplated by this Agreement and in the Time of Sale
Prospectus including the issuance and sale of the Offered Shares
and the use of the proceeds from the sale of the Offered Shares as
described therein, and the compliance by the Company with its
obligations under this Agreement (except as contemplated by the
Time of Sale Prospectus) do not and will not, whether with or
without the giving of notice or passage of time or both, conflict
with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of
any lien, charge or encumbrance upon any of the properties or
assets of the Company pursuant to the Agreements and Instruments
except for such conflicts, breaches, defaults, liens, charges or
encumbrances which, singularly or in the aggregate, would not
result in a Material Adverse Change, nor will such action result in
any violation of the provisions of the certificate of incorporation
or by-laws of the Company or any applicable law, statute, rule,
regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any of its assets, properties or
operations. As used herein, a “ Repayment Event
” means any event or condition which gives 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.
(o) Absence of Labor Dispute.
No labor dispute with the employees of the Company exists or to the
knowledge of the Company is imminent, and the Company is not aware
of any existing or imminent labor disturbance by the employees of
any of its principal operators, contractors, suppliers or
customers, which, in either case, would result in a Material
Adverse Change. The Company is not aware that any key employee or
significant group of employees of the Company plans to terminate
employment with the Company.
(p) Absence of Proceedings.
There is no action, suit, proceeding, inquiry or investigation
before or brought by any court or governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company, which is
required to be disclosed in the Registration Statement (other than
as disclosed in the Time of Sale Prospectus), or which might result
in a Material Adverse Change, or which might
6
materially and adversely affect the properties
or assets of the Enterprise or the consummation of the transactions
contemplated in this Agreement or the performance by the Company of
its obligations hereunder; the aggregate of any and all pending
legal or governmental proceedings to which the Company is a party
or of which any of its property or assets is the subject which are
not described in the Time of Sale Prospectus, including ordinary
routine litigation incidental to the business, could not result in
a Material Adverse Change.
(q) Accuracy of Exhibits.
There are no contracts or documents which are required to be
described in the Registration Statement or the Prospectus pursuant
to Form S-3 or to be filed as exhibits to the Registration
Statement pursuant to Item 601 of Regulation S-K or
incorporated by reference therein which have not been so described,
filed or incorporated as required.
(r) Possession of Intellectual
Property. The Company owns or possesses, or can acquire on
reasonable terms, adequate patents, patent rights, licenses,
inventions, copyrights, know-how (including trade secrets and other
unpatented and/or unpatentable proprietary or confidential
information, systems or procedures), trademarks, service marks,
trade names or other intellectual property (collectively,
“Intellectual Property”) necessary to carry on the
business now operated by it, except where the failure to own or
possess, or have the ability to acquire on reasonable terms such
Intellectual Property would not, singularly or in the aggregate,
cause a Material Adverse Change. The Company has not received any
notice and is not otherwise aware of any infringement of or
conflict with asserted rights of others with respect to any
Intellectual Property or of any facts or circumstances which would
render any Intellectual Property invalid or inadequate to protect
the interest of the Company therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling or
finding) or invalidity or inadequacy, singly or in the aggregate,
would result in a Material Adverse Change.
(s) Absence of Further
Requirements. No filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of,
any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations
hereunder, or in connection with the offering, issuance or sale of
the Offered Shares under this Agreement or the consummation of the
transactions contemplated by this Agreement except such as have
been already obtained or as may be required under the Securities
Act or the regulations promulgated thereunder or state securities
laws or by the National Association of Securities Dealers
(“NASD”).
(t) No Price Stabilization or
Manipulation; Compliance with Regulation M. The Company has not
taken, directly or indirectly, any action designed to or that would
be reasonably expected to cause or result in stabilization or
manipulation of the price of the Shares or any other
“reference security” (as defined in Rule 100 of
Regulation M under the Exchange Act (“ Regulation M
”)) whether to facilitate the sale or resale of the Offered
Shares or otherwise, and has taken no action which would directly
or indirectly violate Regulation M. The Company acknowledges that
the Underwriters may engage in passive market making transactions
in the Offered Shares on the Nasdaq National Market in accordance
with Regulation M.
(u) Possession of Licenses and
Permits. The Company possesses such permits, licenses,
certificates, approvals, consents and other authorizations
(collectively, “ Governmental Licenses ”) issued
by appropriate federal, state, local or foreign regulatory bodies
necessary for the ownership of its assets and to conduct the
business now operated by it, except where the failure to have
obtained the same would not cause a Material Adverse Change; the
Company is in compliance with the terms and conditions of all such
Governmental Licenses, except where the failure to so comply would
not singly or in the aggregate cause a Material Adverse Change; all
of
7
the Governmental Licenses are valid and in full
force and effect, except where the invalidity or the failure to be
in full force and effect would not singly or in the aggregate cause
a Material Adverse Change; and the Company has not received any
notice of proceedings relating to the revocation or modification of
any such Governmental Licenses which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding would
result in a Material Adverse Change.
(v) Properties. Except as
otherwise set forth in the Registration Statement, the Prospectus
or the Time of Sale Prospectus or such as in the aggregate does not
now cause or will in the future cause a Material Adverse Change,
the Company has title to its properties as follows: (a) with
respect to its wells (including leasehold interests and appurtenant
personal property) and its non-producing oil and gas properties
(including undeveloped locations on leases held by production and
those leases not held by production), such title is good and free
and clear of all liens, security interests, pledges, charges,
encumbrances, mortgages and restrictions, (b) with respect to
its non-producing properties in exploration prospects, such title
was investigated in accordance with customary industry procedures
prior to the Company’s acquisition thereof; (c) with
respect to its real property other than oil and gas interests, such
title is good and marketable free and clear of all liens, security
interests, pledges, charges, encumbrances, mortgages and
restrictions; and (d) with respect to its personal property
other than that appurtenant to its oil and gas interests, such
title is free and clear of all liens, security interests, pledges,
charges, encumbrances, mortgages and restrictions. No real property
owned, leased, licensed, or used by the Company lies in an area
which is, or to the knowledge of the Company will be, subject to
restrictions which would prohibit, and no statements of facts
relating to the actions or inaction of another person or entity or
his or its ownership, leasing, licensing, or use of any real or
personal property exists or will exist which would prevent, the
continued effective ownership, leasing, licensing, exploration,
development or production or use of such real property in the
business of the Company as presently conducted or as the
Registration Statement, the Prospectus or the Time of Sale
Prospectus indicates it contemplates conducting, except as may be
properly described in the Registration Statement, the Prospectus or
the Time of Sale Prospectus or such as in the aggregate do not now
cause and will not in the future cause a Material Adverse
Change.
(w) Insurance. Except as
otherwise set forth in the Registration Statement, the Prospectus
or the Time of Sale Prospectus, the Company is insured by insurers
of recognized financial responsibility against such losses and
risks and in such amounts as are adequate for the conduct of its
businesses and as are customary for the business in which it is
engaged; all such policies of insurance insuring the Company are in
full force and effect and the Company has no reason to believe that
it will not be able to renew its existing insurance coverage as and
when such coverage expires or to obtain similar coverage from
similar insurers as may be necessary to continue its
business.
(x) Taxes. The Company has
filed on a timely basis all foreign, federal, state and local tax
returns that are required to be filed or have requested extensions
thereof (except in any case in which the failure so to file would
not cause a Material Adverse Change) and has paid all taxes
required to be paid by it and any other assessment, fine or penalty
levied against it to the extent due and payable, except for any
such assessment, fine or penalty that is currently being contested
in good faith or would not cause a Material Adverse
Change.
(y) Investment Company Act.
The Company is not required, and upon the issuance and sale of the
Offered Shares as herein contemplated and the application of the
net proceeds therefrom as described in the Time of Sale Prospectus
will not be required, to register as an
8
“investment company” within the
meaning of such term under the Investment Company Act of 1940, as
amended, and the rules and regulations of the Commission
promulgated thereunder.
(z) Environmental Laws. There
has been no storage, disposal, generation, manufacture, refinement,
transportation, handling or treatment of hazardous substances or
hazardous wastes by the Company (or, to the knowledge the Company
or any of its predecessors in interest), at, upon or from any of
the property now or previously owned, leased or operated by the
Company in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit that would require
the Company to undertake any remedial action under any applicable
law, ordinance, rule, regulation, order, judgment, decree or
permit, except for any violation or remedial action that would not,
individually or in the aggregate with all such violations and
remedial actions, cause a Material Adverse Change. Except for
abandonment and similar costs incurred or to be incurred in the
ordinary course of business of the Company, there has been no
material spill, discharge, leak, emission, injection, escape,
dumping or release of any kind onto any property now or previously
owned, leased or operated by the Company or into the environment
surrounding such property of any hazardous substances or hazardous
wastes due to or caused by the Company (or, to the knowledge of the
Company, any of its predecessors in interest), except for any such
spill, discharge, leak, emission, injection, escape, dumping or
release that would not, singularly or in the aggregate with all
such spills, discharges, leaks, emissions, injections, escapes,
dumpings and releases, result in a Material Adverse Change; and the
terms “hazardous substances,” and “hazardous
wastes” shall be construed broadly to include such terms and
similar terms, all of which shall have the meanings specified in
any applicable local, state and federal laws or regulations with
respect to environmental protection. Except as set forth in the
Time of Sale Prospectus, the Company has not been named as a
“potentially responsible party” under the Comprehensive
Environmental Response, Compensation, and Liability Act of 1980, as
amended.
(aa) Registration Rights.
There are no persons with registration rights or other similar
rights to have any securities of the Company registered pursuant to
the Registration Statement or sold in the offering contemplated by
this Agreement, other than the Selling Stockholders with respect to
the Offered Shares included in the Registration Statement, except
for such rights as have been duly waived.
(bb) Internal Accounting.
Subject to such exceptions, if any, as could not reasonably be
expected to cause a Material Adverse Change, the Company maintains
a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in
accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP
and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management’s
general or specific authorization, and (iv) the recorded
accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect
to any differences.
(cc) Disclosure Controls and
Procedures. The Company has established and maintains
disclosure controls and procedures (as defined in Exchange Act
Rules 13a-15(e) and 15d-15(e)), which (i) are designed to
ensure that material information relating to the Company is made
known to the Company’s principal executive officer and its
principal financial officer by others within the Company,
particularly during the periods in which the periodic reports
required under the Exchange Act are being prepared; (ii) have
been evaluated for effectiveness as of a date within 90 days prior
to the earlier of the date that the Company filed its most recent
annual or quarterly report with the Commission and the date of the
Time of Sale Prospectus; and (iii) are
9
effective in all material respects to perform
the functions for which they were established. Based on the most
recent evaluation of its disclosure controls and procedures,
(i) the Company is not aware of material weaknesses in the
design or operation of internal control over financial reporting
which are reasonably likely to adversely affect the
registrant’s ability to record, process, summarize and report
financial information, (ii) the Company’s audit
committee of the Company’s board of directors and the
Company’s independent registered public accounting firm have
been made aware of any significant deficiencies in the design or
operation of internal control over financial reporting which are
reasonably likely to adversely affect the registrant’s
ability to record, process, summarize and report financial
information and (iii) the Company is not aware of any fraud,
whether or not material, that involves management or other
employees who have a significant role in the Company’s
internal control over financial reporting. The Company is not aware
of any change in its internal control over financial reporting that
has occurred during its most recent fiscal quarter that has
materially affected, or is reasonably likely to materially affect,
the Company’s internal control over financial
reporting.
(dd) Certain Relationships and
Related Transactions. No relationship, direct or indirect,
exists between or among the Company on the one hand, and the
directors, officers, stockholders, customers or suppliers of the
Company on the other hand, which is required to be described or
incorporated by reference in the Prospectus and which is not so
described or incorporated. The Time of Sale Prospectus contains in
all material respects the same description of the matters set forth
in the preceding sentence contained in the Prospectus.
(ee) Brokers. The Company is
not a party to any contract, agreement or understanding with any
person that would give rise to a valid claim against the Company or
the Underwriters for a brokerage commission, finder’s fee or
like payment in connection with the offering and sale of the
Offered Shares.
(ff) Sarbanes-Oxley Act of
2002. The Company is in compliance, in all material respects,
with all applicable provisions of the Sarbanes-Oxley Act of 2002
and all rules and regulations promulgated thereunder or
implementing the provisions thereof.
(gg) Certain Payments.
Neither the Company nor, to the best knowledge of the Company, any
director, officer, agent, employee or other person associated with
or acting on behalf of the Company, (i) has used any corporate
funds for any unlawful contribution, gift, entertainment or other
unlawful expense relating to political activity, made any direct or
indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds, (ii) violated or is
in violation of any provisions of the Foreign Corrupt Practices Act
of 1977, or (iii) made any bribe, rebate, payoff, influence
payment, kickback or other unlawful payment.
(hh) ERISA. The minimum
funding standard under Section 302 of the Employee Retirement
Income Security Act of 1974, as amended, and the regulations and
published interpretations thereunder (“ ERISA
”), has been satisfied by each “pension plan” (as
defined in Section 3(2) of ERISA) which has been established
or maintained by the Company, and the trust forming part of each
such plan which is intended to be qualified under Section 401
of the Internal Revenue Code of 1986, as amended, is so qualified;
the Company has fulfilled its obligations, if any, under
Section 515 of ERISA; the Company does not maintains and is
not required to contribute to a “welfare plan” (as
defined in Section 3(1) of ERISA) which provides retiree or
other post-employment welfare benefits or insurance coverage (other
than “continuation coverage” (as defined in
Section 602 of ERISA)); each pension plan and welfare plan
established or maintained by the Company is in compliance with the
currently applicable provisions of
10
ERISA, except where the failure to comply would
not cause a Material Adverse Change; and the Company has not
incurred or could reasonably be expected to incur any withdrawal
liability under Section 4201 of ERISA, any liability under
Section 4062, 4063, or 4064 of ERISA, or any other liability
under Title IV of ERISA.
(ii) Corporate Records. The
minute book of the Company has been made available to the
Underwriters and counsel for the Underwriters, and such book
(i) reflects all meetings and actions of the board of
directors (including each board committee) and stockholders of the
Company since the time of its respective organization through the
date of the latest meeting and action, and (ii) accurately in
all material respects reflect all transactions referred to in such
minutes.
(jj) Margin Securities. The
Company does not own any “margin securities” as that
term is defined in Regulation U of the Board of Governors of the
Federal Reserve System (the “ Federal Reserve Board
”), and none of the proceeds of the sale of the Offered
Shares will be used, directly or indirectly, for the purpose of
purchasing or carrying any margin security, for the purpose of
reducing or retiring any indebtedness which was originally incurred
to purchase or carry any margin security or for any other purpose
which might cause any of the Offered Shares to be considered a
“purpose credit” within the meanings of Regulation T, U
or X of the Federal Reserve Board.
(kk) Prospectus Statements.
The statements set forth in the Time of Sale Prospectus under the
captions “Risk Factors,” “Prospectus
Summary” and “Business,” insofar as they purport
to describe the provisions of the laws and documents referred to
therein, are accurate and complete in all material
respects.
(ll) Transfer Taxes. There
are no transfer taxes or other similar fees or charges under
federal law or 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 the
sale by the Company of the Offered Shares.
Any certificate signed by any
officer of the Company that is delivered to the Representative or
to counsel for the Underwriters pursuant to this Agreement shall be
deemed a representation and warranty by the Company to each
Underwriter as to the matters covered thereby.
B. Representations and
Warranties of the Selling Stockholders. Each Selling Stockholder represents, warrants
and covenants to each Underwriter as follows:
(a) Authorization of Agreement
and Binding Effect. This Agreement has been duly authorized,
executed and delivered by or on behalf of such Selling Stockholder
and constitutes a valid and binding obligation of such Selling
Stockholder enforceable in accordance with its terms except as
enforcement may be limited by bankruptcy, insolvency or other laws
or court decisions relating to or affecting creditor’s rights
generally, and except to the extent that enforcement of the
indemnification and contribution obligations provided for herein
may be limited by federal or state securities laws or the public
policies underlying such laws.
(b) Ownership of Offered
Shares. Such Selling Stockholder is the beneficial owner of the
Shares to be sold by it hereunder free and clear of all liens,
encumbrances, equities and claims and, where applicable, has duly
endorsed such Shares in blank, and, assuming that each Underwriter
acquires its interest in the Offered Shares it has purchased from
such Selling
11
Stockholder without notice of any adverse claim
(within the meaning of Section 8-105 of the Delaware Uniform
Commercial Code (“ UCC ”)), each Underwriter
that has purchased such Offered Shares delivered on the First
Closing Date, to The Depository Trust Company or other securities
intermediary by making payment therefor as provided herein, and
that has had such Offered Shares credited to the securities account
or accounts of such Underwriters maintained with The Depository
Trust Company or such other securities intermediary will have
acquired a security entitlement (within the meaning of
Section 8-102(a)(17) of the UCC) to such Offered Shares
purchased by such Underwriter, and no action based on an adverse
claim (within the meaning of Section 8-105 of the UCC) may be
asserted against such Underwriter with respect to such Offered
Shares.
(c) Delivery of the Offered
Shares to be Sold. Delivery of the Offered Shares which are
sold by such Selling Stockholder pursuant to this Agreement will
pass good and valid title to such Offered Shares, free and clear of
any security interest, mortgage, pledge, lien, encumbrance or other
adverse claim.
(d) No Price Stabilization or
Manipulation; Compliance with Regulation M. Such Selling
Stockholder has not taken, directly or indirectly, any action
designed to or that would be reasonably expected to cause or result
in stabilization or manipulation of the price of the Shares or any
other reference security, whether to facilitate the sale or resale
of the Offered Shares or otherwise, and has taken no action which
would directly or indirectly violate any provision of Regulation
M.
(e) Absence of Further
Requirements. No filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of,
any court or governmental authority or agency is necessary or
required for the performance by such Selling Stockholder of its
obligations hereunder, or in connection with the offering or sale
of the Offered Shares under this Agreement or the consummation of
the transactions contemplated by this Agreement except such as have
been already obtained or as may be required under the Securities
Act or the regulations promulgated thereunder, state securities
laws or by the NASD.
(f) Absence of Defaults and
Conflicts. Neither the sale of the Shares being sold by such
Selling Stockholder nor the consummation of any other of the
transactions herein contemplated by such Selling Stockholder or the
fulfillment of the terms hereof by such Selling Stockholder will
conflict with, result in a breach or violation of, or constitute a
default under any law or, if such Selling Stockholder is a
corporation, association or other entity, the charter, by-laws or
similar organizational documents of such Selling Stockholder or, as
to all such Selling Stockholders, the terms of any indenture or
other agreement or instrument to which such Selling Stockholder is
a party or bound, or any judgment, order or decree applicable to
such Selling Stockholder of any court, regulatory body,
administrative agency, governmental body or arbitrator having
jurisdiction over such Selling Stockholder.
(g) Selling Stockholder
Information. In respect of any statements in or omissions from
the Registration Statement or the Time of Sale Prospectus or any
supplements thereto made in reliance upon and in conformity with
information furnished in writing to the Company by such Selling
Stockholder specifically for use in connection with the preparation
thereof, such information does not contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary in order to make such statements not
misleading. The parties acknowledge that the only information
furnished by or on behalf of such Selling Stockholder in writing
expressly for use in connection with the preparation of the
Registration Statement or the Time of Sale Prospectus or any
supplements thereto is the information as to its
12
name, address, the amount of shares of the
Company held by such Selling Stockholder prior to the offering and
to be offered for such Selling Stockholder’s account, and
with respect to all such Selling Stockholders other than Liddell
Investments, L.L.C., the information set forth under the caption
“Prospectus Summary—Our Equity
Sponsor.”
(h) No Registration, Pre-emptive,
Co-Sale or Other Similar Rights. Such Selling Stockholder
(i) does not have any registration or other similar rights to
have any equity or debt securities registered for sale by the
Company under the Registration Statement or included in the
offering contemplated by this Agreement except to the extent
exercised and so included or hereby waived, (ii) does not have
any preemptive right, co-sale right or right of first refusal or
other similar right to purchase any of the Offered Shares that are
to be sold by the Company to the Underwriters pursuant to this
Agreement, except for such rights as such Selling Stockholder has
waived prior to the date hereof and as have been described in the
Registration Statement and Time of Sale Prospectus, and
(iii) does not own any warrants, options or similar rights to
acquire, and does not have any right or arrangement to acquire, any
capital stock, right, warrants, options or other securities from
the Company, other than those, in each instance, described in the
Registration Statement and the Time of Sale Prospectus.
(i) No Transfer Taxes or Other
Fees. 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 sale by
such Selling Stockholder of the Offered Shares.
(j) Distribution of Offering
Materials by the Selling Stockholders. Such Selling Stockholder
has not distributed and will not distribute, prior to the later of
(i) the expiration or termination of the option granted to the
several Underwriters under Section 2 and (ii) the
completion of the Underwriters’ distribution of the Offered
Shares, any offering material in connection with the offering and
sale of the Offered Shares other than a preliminary prospectus, the
Time of Sale Prospectus or the Registration Statement.
Such Selling Stockholder
acknowledges that the Underwriters and, for purposes of the opinion
to be delivered pursuant to Section 6 hereof, counsel to such
Selling Stockholder and counsel to the Underwriters, will rely upon
the accuracy and truthfulness of the foregoing representations and
hereby consents to such reliance.
Section 2. Purchase, Sale and
Delivery of the Offered Shares.
(a) The Firm Shares. The
Selling Stockholders agree to sell to the several Underwriters the
Firm Shares upon the terms set forth herein, with each Selling
Stockholder selling the number of Fir
