EXHIBIT 1.1
EXECUTION
COPY
$500,000,000
PLAINS EXPLORATION &
PRODUCTION COMPANY
7% Senior Notes due
2017
UNDERWRITING
AGREEMENT
March 8, 2007
J.P. Morgan Securities
Inc.
Lehman Brothers Inc.
c/o J.P. Morgan Securities Inc.
270 Park Avenue
New York, New York 10017
Dear Ladies and
Gentlemen:
Plains Exploration &
Production Company, a Delaware corporation (the “
Company ”), proposes, upon the terms and
considerations set forth herein, to issue and sell to you, as the
underwriters (the “ Underwriters ”), for whom
J.P. Morgan Securities Inc. (“ JPMorgan ”) and
Lehman Brothers Inc. (“ Lehman Brothers ”) are
acting as the representatives (the “ Representatives
”), $500,000,000 in aggregate principal amount of its 7%
Senior Notes due 2017 (the “ Notes ”). The
Company’s obligations under the Notes, including the payment
of principal, premium, if any, and interest with respect to the
Notes, will be unconditionally guaranteed (the “
Guarantees ”) by Arguello Inc., a Delaware
corporation, Brown PXP Properties, LLC, a Texas limited liability
company, Nuevo Ghana Inc., a Delaware corporation, Nuevo
International Inc., a Delaware corporation, Nuevo Offshore Company,
a Delaware corporation, Nuevo Resources Inc., a Delaware
corporation, Pacific Interstate Offshore Company, a California
corporation, Plains Acquisition Corporation, a Delaware
corporation, Plains Louisiana Inc., a Delaware corporation, Plains
Resources International Inc., a Delaware corporation, PXP Deepwater
L.L.C., a Delaware limited liability company, PXP Gulf Coast Inc.,
a Delaware corporation, PXP Louisiana L.L.C., a Delaware limited
liability company, PXP Permian Inc., a Delaware corporation, PXP
Texas Inc., a Delaware corporation and PXP Texas Limited
Partnership, a Texas limited partnership (collectively, the “
Guarantors ”). The Notes and the Guarantees are
hereinafter collectively called the “ Securities
.” The Securities (i) will have terms and provisions
which are summarized in the Prospectus Supplement (as defined
below) dated as of the date hereof and (ii) are to be issued
pursuant to an Indenture (to be dated as of March 13, 2007
(the “ Base Indenture ”)) to be entered into
between the Company and Wells Fargo Bank, N.A., as trustee (the
“ Trustee ”), and a supplement to the Base
Indenture (to be dated as of March 13, 2007) (the “
Supplemental Indenture ” and, together with the Base
Indenture, the “ Indenture ”)) to be entered
into among the Company, the Guarantors and the Trustee. This is to
confirm the agreement concerning the purchase of the Securities
from the Company by the Underwriters.
1. Representations, Warranties
and Agreements of the Company and the Guarantors. The Company
and each of the Guarantors, jointly and severally, represents,
warrants and agrees that:
(a) The Company has prepared and
filed with the Securities and Exchange Commission (the “
Commission ”) an “automatic shelf registration
statement” (as defined in Rule 405 of the Securities Act of
1933, as amended (the “ Securities Act ”)) on
Form S-3 (File No. 333-141110) (the “ Initial
Registration Statement ”), including a prospectus,
relating to, among other securities, the Securities and the
offering thereof from time to time in accordance with Rule 415
under the rules and regulations of the Commission under the
Securities Act (the “ Rules and Regulations ”).
The Initial Registration Statement has become effective upon filing
with the Commission under the Securities Act. The Company has
furnished to you, for use by the Underwriters and by dealers,
copies of a preliminary prospectus supplement to the base
prospectus included in the Initial Registration Statement relating
to the Securities (together with such base prospectus, the “
Preliminary Prospectus ”). As provided in
Section 5(a), a final prospectus supplement reflecting the
terms of the offering of the Securities and the other matters set
forth therein has been prepared and will be filed pursuant to Rule
424 under the Rules and Regulations. Such final prospectus
supplement, in the form first filed pursuant to Rule 424 under the
Rules and Regulations and furnished by the Company for use by the
Underwriters and by dealers in connection with the offering of the
Securities, is herein referred to as the “ Prospectus
Supplement .” The Initial Registration Statement, as
amended at the Effective Time, including the exhibits thereto and
the documents incorporated by reference therein is herein called
the “Registration Statement.” The Prospectus
Supplement, together with the base prospectus relating to all
offerings of securities under the Registration Statement, is
hereinafter called the “ Prospectus ,” in either
case including the documents filed by the Company with the
Commission pursuant to the Securities Exchange Act of 1934, as
amended (the “ Exchange Act ”), that are
incorporated by reference therein. As used herein, “
Issuer Free Writing Prospectus ” means the documents
listed on Annex 1 hereof and each “road show” (as
defined in Rule 433 under the Rules and Regulations), if any,
related to the offering of the Securities that is a “written
communication” (as defined in Rule 405 under the Rules and
Regulations), and each such road show is referred to herein as a
“ Road Show ”), including the final term sheet
prepared pursuant to Section 5(a)(i) hereof and attached to
this Agreement as Annex 2 (the “ Final Term Sheet
”). As used herein, “ Pricing Disclosure Package
” means the Preliminary Prospectus included in the
Registration Statement immediately prior to the Applicable Time and
each Issuer Free Writing Prospectus (other than a Road Show), if
any, issued at or prior to the Applicable Time. As used herein,
“ Effective Time ” means the date and the time
as of which the Initial Registration Statement, or the most recent
post-effective amendment thereto, if any, became effective, or the
most recent deemed amendment was filed with the Commission,
including any deemed amendment under Rule 430B under the Rules and
Regulations. “ Effective Date ” means the date
of the Effective Time. Any reference to any deemed amendment to the
Registration Statement shall refer to and include any filing of an
annual report of the Company filed pursuant to Section 13(a)
or 15(d) of the Exchange Act after the effective date of the
Initial Registration Statement that is incorporated by reference in
the Registration Statement as well as the other documents
incorporated by reference therein pursuant to Item 12 of Form
S-3 under the Rules and Regulations. Reference made herein to any
Preliminary Prospectus or Prospectus shall be deemed to refer to
and include any documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the
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Rules and Regulations, as of the
date of such Preliminary Prospectus or Prospectus, as the case may
be, and any reference to any amendment or supplement to any
Preliminary Prospectus or Prospectus shall be deemed to refer to
and include such Preliminary Prospectus or Prospectus as amended or
supplemented in relation to the Securities (including any final
prospectus supplement relating to the Securities) together with any
document filed under the Exchange Act after the date of such
Preliminary Prospectus or Prospectus, as the case may be, and
incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; and any reference to any amendment
to the Registration Statement shall be deemed to include any annual
report of the Company filed with the Commission pursuant to
Section 13(a) or 15(d) of the Exchange Act after the Effective
Time that is incorporated by reference in the Registration
Statement; and any reference to the “Prospectus as amended or
supplemented” shall be deemed to refer to the Prospectus as
amended or supplemented in relation to the applicable Securities
(including any final prospectus supplement relating to the
Securities) in the form in which it is filed with the Commission
pursuant to Rule 424(b) under the Rules and Regulations in
accordance with Section 5(a) hereof, including any documents
incorporated by reference therein as of the date of such filing.
The Commission has not issued any order preventing or suspending
the use of any Preliminary Prospectus or Prospectus.
(b) The Company has been since the
time of initial filing of the Registration Statement and continues
to be a “well-known seasoned issuer” (as defined in
Rule 405 under the Rules and Regulations) eligible to use Form S-3
for the offering of the Securities, including not having been an
“ineligible issuer” (as defined in Rule 405 under the
Rules and Regulations) at any such time or date. No notice of
objection of the Commission to the use of the Registration
Statement or any post-effective amendment thereto pursuant to Rule
401(g)(2) under the Securities act has been received by the
Company. No order suspending the effectiveness of the Registration
Statement has been issued by the Commission, and, to the
Company’s knowledge, no proceeding for that purpose or
pursuant to Section 8A of the Securities Act against the
Company or related to the offering has been initiated or threatened
by the Commission.
(c) Both before and after giving
effect to the consummation of the transactions contemplated hereby,
neither the Company nor any Guarantor is or will be an
“investment company” or a company
“controlled” by an “investment company”
within the meaning of the Investment Company Act of 1940, as
amended (the “ Investment Company Act ”) and the
rules and regulations of the Commission thereunder.
(d) The Registration Statement
conformed and will conform on the Effective Date and on the Closing
Date, and any amendment to the Registration Statement filed after
the date hereof will conform when filed, to the requirements of the
Securities Act and the Rules and Regulations. The Preliminary
Prospectus conformed, and the Prospectus will conform, when filed
with the Commission pursuant to Rule 424(b) under the Rules and
Regulations and on the Closing Date to the requirements of the
Securities Act and the Rules and Regulations. The documents
incorporated by reference in any Preliminary Prospectus or the
Prospectus conformed, and any further documents so incorporated
will conform, when filed with the Commission, to the requirements
of the Exchange Act or the Securities Act, as applicable, and the
rules and regulations of the Commission thereunder.
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(e) The Registration Statement 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 Statement in reliance upon and in conformity with
written information furnished to the Company through the
Representatives by or on behalf of any Underwriter specifically for
inclusion therein, which information is specified in
Section 9(e).
(f) The Prospectus will not, as of
its date and on the Closing 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 Representatives by or on
behalf of any Underwriter specifically for inclusion therein, which
information is specified in Section 9(e).
(g) The documents incorporated by
reference in any Preliminary Prospectus or the Prospectus did not,
and any further documents filed and incorporated by reference
therein will not, when filed with the Commission, 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.
(h) The Pricing Disclosure Package
did not, as of the time when sales of the Securities were first
made on the date of this Agreement (the “ Applicable
Time ”), 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 Pricing Disclosure
Package in reliance upon and in conformity with written information
furnished to the Company through the Representatives by or on
behalf of any Underwriter specifically for inclusion therein, which
information is specified in
Section 9(e).
(i) Each Issuer Free Writing
Prospectus did not, and on the Closing Date will not, include any
information that conflicts with the information in the Registration
Statement or the Pricing Disclosure Package and, 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.
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(j) 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 any requirements of Rule 433 under the Rules and Regulations
with respect to each such Issuer Free Writing Prospectus pursuant
to the Rules and Regulations. The Company has not made any offer
relating to the Securities that would constitute an Issuer Free
Writing Prospectus (other than the Final Term Sheet and the Road
Show) without the prior written consent of the Representatives. Any
Issuer Free Writing Prospectus, the use of which as been consented
to by the Representatives, is listed on Annex 1 hereto. 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.
(k) Each of the Company and the
Guarantors has been duly organized and is validly existing and in
good standing as a corporation or other business entity under the
laws of its jurisdiction of organization and is duly qualified to
do business and in good standing as a foreign corporation or other
business entity in each jurisdiction in which its respective
ownership or lease of property or the conduct of its respective
businesses requires such qualification, except where the failure to
be so qualified would not reasonably be expected to have a material
adverse effect on the general affairs, management, business,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole (“ Material Adverse
Effect ”), and have all power and authority necessary to
own or hold their respective properties and to conduct the
businesses in which they are engaged. The Company does not own or
control, directly or indirectly, any corporation, association or
other entity other than the subsidiaries listed on Annex 3 attached
to this Agreement. None of the subsidiaries of the Company (other
than those identified as such on Annex 3) is a “significant
subsidiary” (as defined in Rule 405 under the Rules and
Regulations).
(l) The Company has an authorized
capitalization as set forth in the Preliminary Prospectus and the
Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, and are
fully paid and non-assessable. All of the issued shares of capital
stock or other equity interests of each Guarantor have been duly
and validly authorized and issued and are fully paid and (except
with respect to limited liability company interests, limited
partnership interests and general partnership interests, to the
extent provided by applicable law) non-assessable and are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims; and none of the outstanding
shares of capital stock or other equity interests of the Company or
any of its subsidiaries was issued in violation of the preemptive
rights or similar rights of any security holder of the Company or
any of its subsidiaries, respectively.
(m) The Indenture has been duly and
validly authorized by the Company and the Guarantors, and upon its
execution and delivery and, assuming due authorization, execution
and delivery by the Trustee, will constitute the valid and binding
agreement of the Company and the Guarantors, enforceable against
the Company and the Guarantors in accordance with its terms, except
that the enforceability of the Company’s and the
Guarantors’ obligations thereunder may be limited by
bankruptcy, fraudulent conveyance,
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insolvency, reorganization,
moratorium, and other similar laws relating to or affecting
creditors’ rights generally and by general equitable
principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law). The Indenture (i) is
duly qualified under the Trust Indenture Act of 1939, as amended
(the “ Trust Indenture Act ”),
(ii) conforms with the requirements of the Trust Indenture Act
and the rules and regulations thereunder and (iii) conforms,
or will conform, to the description thereof in the Registration
Statement, the Preliminary Prospectus and the
Prospectus.
(n) The Notes have been duly and
validly authorized by the Company and when duly executed by the
Company in accordance with the terms of the Indenture and, assuming
due authentication of the Notes by the Trustee, upon delivery to
the Underwriters against payment therefor in accordance with the
terms hereof, will have been validly issued and delivered, free of
any preemptive or similar rights to subscribe to or purchase the
same arising by operation of law or under the charter or bylaws of
the Company or otherwise, and will constitute valid and binding
obligations of the Company entitled to the benefits of the
Indenture, enforceable against the Company in accordance with their
terms, except that the enforceability of the Company’s
obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other
similar laws relating to or affecting creditors’ rights
generally and by general equitable principles (regardless of
whether such enforceability is considered in a proceeding in equity
or at law). The Company has all requisite corporate power and
authority to issue, sell and deliver the Notes in accordance with
and upon the terms and conditions set forth in this Agreement and
in the Registration Statement, the Preliminary Prospectus and
Prospectus.
(o) The Guarantees have been duly
and validly authorized by the Guarantors and when the Indenture is
duly executed and delivered by the Guarantors and upon the due
execution, authentication and delivery of the Notes in accordance
with the Indenture and the delivery of the Notes to the
Underwriters against payment therefor in accordance with the terms
hereof, will constitute valid and binding obligations of the
Guarantors, enforceable against the Guarantors in accordance with
their terms, except that the enforceability of the
Guarantors’ obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other similar laws relating to or affecting
creditors’ rights generally and by general equitable
principles (regardless of whether such enforceability is considered
in a proceeding in equity or at law). Each Guarantor has all
requisite corporate, limited liability or other power and authority
to issue and deliver its respective Guarantee in accordance with
and upon the terms and conditions set forth in this Agreement and
in the Registration Statement, the Preliminary Prospectus and
Prospectus.
(p) This Agreement has been duly
authorized, executed and delivered by the Company and the
Guarantors.
(q) The execution, delivery and
performance of this Agreement and the Indenture by the Company and
the Guarantors and the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the
issuance and delivery of the Securities, and the application of the
proceeds from the sale of the Securities as
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described under “Use of
Proceeds” in each of the Preliminary Prospectus and the
Prospectus will not result in a breach or violation of any of the
terms or provisions of, or constitute a default under, (i) any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject and that is
required to be filed by the Company with the Commission under
Item 601 of Regulation S-K, (ii) the provisions of the
charter or bylaws (or similar organizational documents) of the
Company or any of its subsidiaries or (iii) any law, statute
or any order, rule or regulation of any court or governmental
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties or assets, except, in the
case of the foregoing clauses (i) and (iii), for such
conflicts, breaches or violations that would not reasonably be
expected to have a Material Adverse Effect.
(r) No consent, approval,
authorization or order of, or filing or registration with, any
financial institution or any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or
any of their properties or assets is required for the execution,
delivery and performance of this Agreement or the Indenture by the
Company or any Guarantor, the consummation of the transactions
contemplated hereby and thereby, including, without limitation, the
issuance and delivery of the Securities, by the Company and the
Guarantors, the application of the proceeds from the sale of the
Securities as described under “Use of Proceeds” in each
of the Preliminary Prospectus and the Prospectus, except for such
consents, approvals, authorizations, registrations or
qualifications as have been obtained or may be required under the
Exchange Act or under applicable state securities laws in
connection with the purchase and sale of the Securities by the
Underwriters.
(s) No person has the right to
require the Company or any of its subsidiaries to register any
securities for sale under the Securities Act by reason of the
filing of the Registration Statement with the Commission or the
issuance and sale of the Securities.
(t) Neither the Company nor any of
its subsidiaries has sustained, since the date of the latest
audited financial statements included or incorporated by reference
in the Preliminary Prospectus and the Prospectus, any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Preliminary Prospectus and
the Prospectus; and, otherwise than as set forth in the Preliminary
Prospectus and the Prospectus, since the date of the latest audited
financial statements included or incorporated by reference in the
Preliminary Prospectus, there has not been any change in the
capital stock or other equity interests or long-term debt of the
Company or any of its subsidiaries, except (i) pursuant to the
exercise of options or warrants or pursuant to the issuance of
common stock under the Company’s stock incentive plans,
(ii) for the repurchase by the Company of 7,700 shares of the
Company’s common stock pursuant to the Company’s stock
repurchase program (which such repurchase was settled on
January 3, 2007), (iii) for any borrowing under the
Amended and Restated Credit Agreement dated as of May 16,
2005, among the Company, as borrower, each of the lenders that is a
signatory thereto, and JPMorgan
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Chase Bank, N.A., as administrative
agent (as amended, the “ Senior Credit Facility
”), and (iv) for any borrowing under the Company’s
short-term credit facility with Wells Fargo Bank, N.A. (as amended,
the “ Short-Term Credit Facility ”), in the
ordinary course of business for working capital purposes, or any
material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs,
management, financial position, stockholders’ equity, results
of operations of the Company and its subsidiaries, taken as a
whole.
(u) The consolidated financial
statements (including the related notes and supporting schedules)
filed as part of the Registration Statement or included or
incorporated by reference in the Preliminary Prospectus and the
Prospectus comply as to form in all material respects with the
requirements of Regulation S-X under the Securities Act and present
fairly the financial condition and results of operations and cash
flows of the entities purported to be shown thereby, at the dates
and for the periods indicated, and have been prepared in conformity
with generally accepted accounting principles (“ GAAP
”) applied on a consistent basis throughout the periods
involved, except as otherwise stated therein and in the case of
unaudited financial statements, subject to year-end audit
adjustments; and the pro forma financial information (including the
related notes thereto) included or incorporated by reference in the
Preliminary Prospectus and the Prospectus comply as to form in all
material respects with the requirements of Regulation S-X under the
Securities Act, as applicable, and the assumptions underlying such
pro forma financial information are reasonable and are set forth in
the Preliminary Prospectus and the Prospectus.
(v) PricewaterhouseCoopers LLP, who
have certified certain financial statements of the Company and its
consolidated subsidiaries, whose report is incorporated by
reference into the Preliminary Prospectus and the Prospectus and
who have delivered the initial letter referred to in
Section 7(f) hereof, is an independent registered public
accounting firm as required by the Securities Act, the Rules and
Regulations and the rules and regulations of the Public Company
Accounting Oversight Board and were independent as required by the
Securities Act, the Rules and Regulations and the rules and
regulations of the Public Company Accounting Oversight Board during
the periods covered by the financial statements on which they
reported incorporated by reference in the Preliminary
Prospectus.
(w) The Company and each Guarantor
have good and indefeasible title in fee simple to all real property
and good title to all personal property owned by them, in each case
free and clear of all liens, encumbrances and defects except
(i) royalties, overriding royalties and other burdens under
oil and gas leases, (ii) easements, restrictions,
rights-of-way and other matters that commonly affect property,
(iii) liens securing taxes and other governmental charges, or
claims of materialmen, mechanics and similar persons, not yet due
and payable, (iv) liens and encumbrances under operating
agreements, farm out agreements, unitization, pooling and
commutation agreements, declarations and orders, and gas sales
contracts, securing payment of amounts not yet due and payable and
of a scope and nature customary in the oil and gas industry and
(v) liens, encumbrances and defects that do not in the
aggregate materially affect the value of the real property or
materially interfere with the use made or proposed to be made of
such real property by
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the Company. The working interests
in oil, gas and mineral leases or mineral interests which
constitute a portion of the real property held by the Company
reflect in all material respects the right of the Company to
explore or receive production from such real property, and the care
taken by the Company and its subsidiaries with respect to acquiring
or otherwise procuring such leases or mineral interests was
generally consistent with standard industry practices for acquiring
or procuring leases and interests therein to explore for
hydrocarbons.
(x) The Company and each of the
Guarantors carry, or are covered by, insurance in such amounts and
covering such risks as the Company believes is adequate for the
conduct of their respective businesses and the value of their
respective properties and as is customary for companies engaged in
similar businesses in similar industries.
(y) Except as would not reasonably
be expected to have a Material Adverse Effect, the Company and each
of the Guarantors (i) own or possess adequate rights to use
all material patents, patent applications, trademarks, service
marks, trade names, trademark registrations, service mark
registrations, copyrights and licenses necessary for the conduct of
their respective businesses and (ii) have no reason to believe
that the conduct of their respective businesses will conflict with,
and have not received any notice of any claim of conflict with, any
such rights of others.
(z) Except as described in the
Preliminary Prospectus and the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of its
subsidiaries is a party or of which any property or assets of the
Company or any of its subsidiaries is the subject which, if
determined adversely, would have a Material Adverse Effect, or
could, in the aggregate, reasonably be expected to have a material
adverse effect, on the performance of this Agreement or the
consummation of the transactions contemplated hereby; and to the
Company’s knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by
others.
(aa) No relationship, direct or
indirect, exists between or among the Company or any Guarantor on
the one hand, and the directors, officers, stockholders, customers
or suppliers of the Company on the other hand, that would be
required to be described in the Preliminary Prospectus or the
Prospectus which is not so described.
(bb) No labor disturbance by the
employees of the Company or its subsidiaries exists or, to the
knowledge of the Company, is imminent that would reasonably be
expected to have a Material Adverse Effect.
(cc) (i) Each “employee
benefit plan” (within the meaning of Section 3(3) of the
Employee Retirement Security Act of 1974, as amended (“
ERISA ”)) for which the Company or any member of its
“Controlled Group” (defined as any organization which
is a member of a controlled group of corporations within the
meaning of Section 414 of the Internal Revenue Code of 1986,
as amended (the “ Code ”)) would have any
liability (each a “ Plan ”) has been maintained
in compliance in all material respects with its terms and the
requirements of all applicable statutes, rules and regulations
including ERISA and the Code; (ii) with respect to each Plan
subject to Title IV of ERISA (a) no “reportable
event”
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(within the meaning of
Section 4043(c) of ERISA) has occurred or is reasonably
expected to occur for which the Company and any member of its
Controlled Group would have any liability, (b) no
“accumulated funding deficiency” (within the meaning of
Section 302 of ERISA or Section 412 of the Code), whether
or not waived, has occurred or is reasonably expected to occur,
(c) the fair market value of the assets under each such Plan
exceeds the present value of all benefits accrued under such Plan
(determined based on those assumptions used to fund such Plan) and
(d) neither the Company nor any member of its Controlled Group
has incurred, or reasonably expects to incur, any liability under
Title IV of ERISA (other than contributions to the Plan or premiums
to the Pension Benefit Guaranty Corporation in the ordinary course
and without default) in respect of a Plan (including a
“multiemployer plan”, within the meaning of
Section 4001(c)(3) of ERISA); and (iii) each Plan that is
intended to be qualified under Section 401(a) of the Code has
received a favorable determination letter to the effect that the
form of such Plan satisfies the requirements under
Section 401(a) of the Code, and neither the Company nor any
member of its Controlled Group has any reason to believe that
anything has occurred, whether by action or by failure to act,
which would adversely affect such qualification.
(dd) The Company and the Guarantors
have filed all federal, state and local income and franchise tax
returns required to be filed through the date hereof and have paid
all taxes due thereon, other than those being contested in good
faith, those for which reserves have been provided in accordance
with GAAP or those currently payable without penalty or interest;
other than as described in the Preliminary Prospectus and the
Prospectus, no tax deficiency has been determined adversely to the
Company or any of its subsidiaries which has had (nor does the
Company have any knowledge of) any tax deficiency which, if
determined adversely, would reasonably be expected to have a
Material Adverse Effect.
(ee) Since the date as of which
information is given in the Preliminary Prospectus and the
Prospectus, and except as may otherwise be disclosed or
contemplated in the Preliminary Prospectus and the Prospectus, the
Company has not (i) incurred any material liability or
obligation, direct or contingent, other than liabilities and
obligations which were incurred in the ordinary course of business,
(ii) entered into any material transaction not in the ordinary
course of business or (iii) declared or paid any dividend on
its capital stock.
(ff) The Company (i) makes and
keeps accurate books and records and (ii) maintains internal
accounting controls which provide reasonable assurance that
(A) transactions are executed in accordance with
management’s authorization, (B) transactions are
recorded as necessary to permit preparation of its financial
statements and to maintain accountability for its assets,
(C) access to its assets is permitted only in accordance with
management’s authorization and (D) the reported
accountability for its assets is compared with existing assets at
reasonable intervals. The Company and its subsidiaries maintain an
effective system of “disclosure controls and
procedures” (as defined in Rule 13a-15(e) of the Exchange
Act) that is designed to ensure that information required to be
disclosed by the Company in reports that it files or submits under
the Exchange Act is recorded, processed, summarized and reported
within the time periods specified in the Commission’s rules
and forms, including controls and procedures
10
designed to ensure that such
information is accumulated and communicated to the Company’s
management as appropriate to allow timely decisions regarding
required disclosure. The Company and its subsidiaries have carried
out evaluations of the effectiveness of their disclosure controls
and procedures as required by Rule 13a-15 of the Exchange
Act.
(gg) Neither the Company nor any
Guarantor (i) is in violation of its charter or bylaws (or
similar organizational documents), (ii) is in default, and no
event has occurred which, with notice or lapse of time or both,
would constitute such a default, in the due performance or
observance of any term, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which it is a party or by which it is
bound or to which any of its properties or assets is subject and
that is required to be filed by the Company with the Commission
under Item 601 of Regulation S-K or (iii) is in violation
of any law, ordinance, governmental rule, regulation or court
decree to which it or its property or assets may be subject or has
failed to obtain any license, permit, certificate, franchise or
other governmental authorization or permit necessary to the
ownership of its property or to the conduct of its business,
except, in the case of clause (iii) above, for any such
defaults or violations that, individually or in the aggregate,
would not reasonably be expected to have a Material Adverse
Effect.
(hh) Neither the Company nor any of
its subsidiaries, nor any director, officer, agent, employee or
other person associated with or acting on behalf of the Company or
any of its subsidiaries, has: (i) used any corporate funds for
any unlawful contribution, gift, entertainment or other unlawful
expense relating to political activity; (ii) made any direct
or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; (iii) violated, or
is in violation of, any provision of the Foreign Corrupt Practices
Act of 1977; or (iv) made any bribe, unlawful rebate, payoff,
influence payment, kickback or other unlawful payment.
(ii) There is and has been no
failure on the part of the Company and any of the Company’s
directors or officers, in their capacities as such, to comply with
the provisions of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith. The Company has
completed its required assessment under Section 404 of the
Sarbanes-Oxley Act and the rules and regulations promulgated in
connection therewith (collectively “ Section 404
”) and included such assessment in its Annual Report on Form
10-K for the fiscal year ended December 31, 2006 (the “
Form 10-K ”). The Company’s assessment
under Section 404 concluded that its internal control over
financial reporting was effective as of December 31, 2006, and
this assessment has been audited by PricewaterhouseCoopers LLP as
stated in their report which was included in the Form
10-K.
(jj) There has been no storage,
disposal, generation, manufacture, refinement, transportation,
handling or treatment of toxic wastes, medical wastes, hazardous
wastes or hazardous substances by the Company or any of its
subsidiaries (or, to the knowledge of the Company, any of their
predecessors-in-interest) at, upon or from any of the properties
now or previously owned or leased by the Company or any of its
subsidiaries in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or
11
permit or which would require
remedial action under any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit, except for any
violation or remedial action which would not have, or could not be
reasonably likely to have, singularly or in the aggregate with all
such violations and remedial actions, a Material Adverse Effect.
There has been no spill, discharge, leak, emission, injection,
escape, dumping or release of any kind onto such property or into
the environment surrounding such property of any toxic wastes,
medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or any of its
subsidiaries or with respect to which the Company or any of its
subsidiaries have knowledge, except for any such spill, discharge,
leak, emission, injection, escape, dumping or release which would
not have, or would not be reasonably likely to have, singularly or
in the aggregate with all such spills, discharges, leaks,
emissions, injections, escapes, dumpings and releases, a Material
Adverse Effect; and the terms “hazardous wastes,”
“toxic wastes,” “hazardous substances” and
“medical wastes” shall have the meanings specified in
any applicable local, state, federal and foreign laws or
regulations with respect to environmental protection.
(kk) The statements set forth in the
Preliminary Prospectus and the Prospectus under the caption
“Description of notes,” insofar as they purport to
constitute a summary of the terms of the Securities, and under the
caption “United States federal income tax
considerations,” insofar as they purport to describe the
provisions of the laws referred to therein, are accurate and
complete in all material respects.
(ll) The Company has not distributed
and, prior to the later to occur of the Closing Date and completion
of the distribution of the Securities, will not distribute any
offering material in connection with the offering and sale of the
Securities other than any Preliminary Prospectus, the Final Term
Sheet, the Prospectus and any Issuer Free Writing Prospectus to
which the Representatives have consented in accordance with
Section 1(j) or 5(a)(vii).
(mm) None of the transactions
contemplated by this Agreement (including, without limitation, the
use of the proceeds from the sale of the Securities) will violate
or result in violation of Section 7 of the Exchange Act or any
regulation promulgated thereunder. Each of the Company and its
subsidiaries does not own, and none of the proceeds from the sale
of Securities contemplated hereby will be used directly or
indirectly to purchase or carry, any “margin stock” as
defined in Regulation U promulgated by the Board of Governors of
the Federal Reserve System, except for shares of stock of the
Company that do not and will not in the aggregate constitute more
than 25% of the consolidated total assets of the Company and its
subsidiaries.
(nn) The Company and its
subsidiaries have not taken, directly or indirectly, any action
designed to, or that might reasonably be expected to, cause or
result in stabilization or manipulation of the price of the
Securities to facilitate the sale or resale of the
Securities.
(oo) The information supplied by the
Company to its independent petroleum engineering consultants for
purposes of preparing the reserve reports used to calculate
estimates of reserves of the Company included in the Registration
Statement, Preliminary
12
Prospectus and Prospectus,
including, without limitation, production, costs of operation and
development, current prices for production, agreements relating to
current and future operations and sales of production, was true and
correct in all material respects on the date supplied and was
prepared in accordance with customary industry practices.
Netherland, Sewell & Associates, Inc., independent
consulting petroleum engineers, who prepared estimates of the
extent and value of proved oil and natural gas reserves, are
independent with respect to the Company.
(pp) There are no contracts or other
documents which are required by the Rules and Regulations to be
described in the Preliminary Prospec
