Exhibit 1.1
$400,000,000
PLAINS EXPLORATION &
PRODUCTION COMPANY
8.625% Senior Notes due
2019
UNDERWRITING
AGREEMENT
September 8, 2009
J.P. Morgan Securities
Inc.
Banc of America Securities LLC
Barclays Capital Inc.
BMO Capital Markets Corp.
Morgan Stanley & Co.
Incorporated
as Representatives of the several
Underwriters
named in Schedule I hereto
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 the
underwriters named in Schedule I hereto (the “
Underwriters ”), for whom J.P. Morgan Securities Inc.
(“ JPMorgan ”), Banc of America Securities LLC,
Barclays Capital Inc., BMO Capital Markets Corp. and Morgan
Stanley & Co. Incorporated are acting as the
representatives (the “ Representatives ”),
$400,000,000 in aggregate principal amount of its 8.625% Senior
Notes due 2019 (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, Latigo Petroleum, Inc., a Delaware corporation, Plains
Acquisition Corporation, a Delaware corporation, Plains Resources
Inc., a Delaware corporation, Pogo Partners, Inc., a Texas
corporation, Pogo Producing Company LLC, a Delaware limited
liability company, PXP Aircraft LLC, a Delaware limited liability
company, PXP Gulf Coast LLC, a Delaware limited liability company,
PXP Louisiana L.L.C., a Delaware limited liability company, and PXP
Louisiana Operations LLC, a Delaware limited liability company
(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 dated as of March 13, 2007
(the “ Base Indenture ”), by and between the
Company and Wells Fargo Bank, N.A., as trustee (the “
Trustee ”), as supplemented and amended by the Tenth
Supplemental Indenture thereto to be dated as of September 11,
2009 (the “ Supplemental Indenture ”), by and
among the
Company, the Guarantors and the Trustee
(relating to the Notes). The Base Indenture, as supplemented and
amended by the Supplemental Indenture, is referred to herein as the
“ Indenture .”
This agreement (this “
Agreement ”) 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 ”) (i) 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 ”),
(ii) Post-Effective Amendment No. 1 thereto,
(iii) Post-Effective Amendment No. 2 thereto, and
(iv) Post-Effective Amendment No. 3 thereto. Each of the
Initial Registration Statement, Post-Effective Amendment No. 1
thereto, Post-Effective Amendment No. 2 thereto, and Post
Effective Amendment No. 3 thereto has become effective upon
filing with the Commission under the Securities Act. The Company
has furnished to the Underwriters, 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 without limitation by
Post-Effective Amendment No. 1 thereto, Post-Effective
Amendment No. 2 thereto, and Post Effective Amendment
No. 3 thereto), 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 hereto, 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 ”),
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
.” As used
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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
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.
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(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 (as defined in Section 4), 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.
(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
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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) No Issuer Free Writing
Prospectus included, and on the Closing Date no Issuer Free Writing
Prospectus will include, any information that conflicts with the
information in the Registration Statement or the Preliminary
Prospectus and no Issuer Free Writing Prospectus, when considered
together with the Preliminary Prospectus as of the Applicable Time,
contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(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 any Road
Show) without the prior written consent of the Representatives. Any
Issuer Free Writing Prospectus other than any Road Show, the use of
which has 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 its
subsidiaries has been duly organized and is validly existing and in
good standing as a corporation or other business entity under the
laws of its jurisdiction of organization and is duly qualified to
do business and in good standing as a foreign corporation or other
business entity in each jurisdiction in which its respective
ownership or lease of property or the conduct of its respective
businesses requires such qualification, except where the failure to
be so qualified or in good standing would not reasonably be
expected to have a material adverse effect on the general affairs,
management, business, stockholders’ equity, financial
condition or results of operations of the Company and its
subsidiaries, taken as a whole (“ Material Adverse
Effect ”), and has all power and authority necessary to
own or hold its respective properties and to conduct the businesses
in which it is engaged. The Company does not own or control,
directly or indirectly, any corporation, association or other
entity other than the subsidiaries listed on Annex 3 hereto. 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 Pricing Disclosure Package 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
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non-assessable. All of the issued
shares of capital stock or other equity interests of each
subsidiary of the Company 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 (other than liens arising under the Senior Credit Facility);
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 Base Indenture has been duly
and validly authorized, executed and delivered by the Company and,
assuming due authorization, execution and delivery thereof by the
Trustee, constitutes the valid and binding agreement of the
Company, enforceable against the Company in accordance with its
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 Supplemental 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 thereof 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, 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 Base Indenture is duly
qualified under the Trust Indenture Act of 1939, as amended (the
“ Trust Indenture Act ”). The Indenture conforms
with the requirements of the Trust Indenture Act and the rules and
regulations thereunder and 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
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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 Supplemental
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 company 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 described under
“Use of proceeds” in each of the Pricing Disclosure
Package 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 or 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
breaches, violations or defaults 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 or 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 and the application of the proceeds
7
from the sale of the Securities as
described under “Use of proceeds” in each of the
Pricing Disclosure Package 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) The Company has not sold or
issued any securities that would be integrated with the offering of
the Securities contemplated by this Agreement pursuant to the
Securities Act, the Rules and Regulations or the interpretations
thereof by the Commission.
(u) 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 Pricing Disclosure Package
and the Prospectus; and, otherwise than as set forth in the Pricing
Disclosure Package 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 the
Company’s common stock, par value $0.01 per share (“
Common Stock ”), under the Company’s stock
incentive plans, (ii) for the issuance and sale of
$565,000,000 aggregate principal amount of 10% Senior Notes due
2016 issued by the Company on March 6, 2009 and April 6,
2009 (and the subsidiary guarantees of the Company’s
obligations thereunder), (iii) for the issuance and sale of an
aggregate of 31,050,000 shares of Common Stock issued by the
Company on April 27, 2009, May 7, 2009 and
August 12, 2009, (iv) for any borrowings or repayments
under the Amended and Restated Credit Agreement dated as of
November 6, 2007, among the Company, as borrower, each of the
lenders that is a signatory thereto, and JPMorgan Chase Bank, N.A.,
as administrative agent (as amended, the “ Senior Credit
Facility ”), and (v) for any borrowings 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.
(v) The consolidated financial
statements (including the related notes and supporting schedules)
of the Company and Pogo Producing Company (“ Pogo
”) 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
8
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 complies as to form in all material respects with, and
has been prepared in accordance with, the applicable requirements
of the Securities Act and the Exchange Act (including without
limitation Regulation S-X under the Securities Act), and the
assumptions underlying such pro forma financial information are
reasonable and are set forth in the Preliminary Prospectus and the
Prospectus.
(w) (i) PricewaterhouseCoopers LLP,
which has certified certain financial statements of the Company and
its consolidated subsidiaries, the report of which is incorporated
by reference into the Preliminary Prospectus and the Prospectus and
which has 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 was independent with respect to the
Company 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 it reported incorporated by reference
in the Preliminary Prospectus. (ii) PricewaterhouseCoopers
LLP, which has certified certain financial statements of Pogo and
its consolidated subsidiaries, the report of which is incorporated
by reference into the Preliminary Prospectus and the Prospectus and
which has delivered the initial letter referred to in
Section 7(g) 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 was independent with respect to Pogo
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 it reported incorporated by reference in the
Preliminary Prospectus.
(x) The Company and each subsidiary
thereof 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,
(v) liens arising under the Senior Credit Facility and
(vi) liens, encumbrances and defects that do not in the
aggregate materially affect the value of the real property or
materially interfere with the use made or proposed to be made of
such real property by the Company. The
9
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.
(y) The Company and each of the
subsidiaries of the Company 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.
(z) Except as would not reasonably
be expected to have a Material Adverse Effect, the Company and each
of the subsidiaries of the Company (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.
(aa) Except as described in the
Pricing Disclosure Package 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.
(bb) 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 Pricing Disclosure Package or the
Prospectus which is not so described.
(cc) 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.
(dd) (i) Each “employee
benefit plan” (within the meaning of Section 3(3) of the
Employee Retirement Income 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
10
regulations including ERISA and the
Code; (ii) with respect to each Plan subject to Title IV of
ERISA (A) no “reportable event” (within the
meaning of Section 4043(c) of ERISA) has occurred or is
reasonably expected to occur 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.
(ee) The Company and each of its
subsidiaries 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; and other than as described in the Pricing
Disclosure Package 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.
(ff) 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 Pricing Disclosure Package 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.
(gg) 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
11
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 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.
(hh) Neither the Company nor any of
its subsidiaries (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 clauses (ii) and (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.
(ii) 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.
(jj) 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 (the “
Sarbanes-Oxley Act ”) 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, 2008 (the “
Form 10-K ”).
(kk) 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
12
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, and could not
reasonably be expected 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 has knowledge, except for any such spill, discharge,
leak, emission, injection, escape, dumping or release which would
not have, and could not reasonably be expected 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.
(ll) 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.
(mm) No “significant
subsidiary” (as defined in Rule 405 of the Rules and
Regulations) of the Company is currently prohibited, directly or
indirectly, from paying any dividends to the Company, from making
any other distribution on such subsidiary’s capital stock,
from repaying to the Company any loans or advances to such
subsidiary from the Company or from transferring any of such
subsidiary’s property or assets to the Company or any other
subsidiary of the Company, except as described in the Pricing
Disclosure Package and the Prospectus.
(nn) 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).
(oo) 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. Neither the Company nor any of
its subsidiaries owns, 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.
13
(pp) 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, under the Exchange Act, the rules and regulations of the
Commission thereunder (including Regulation M under the Exchange
Act), or otherwise, the stabilization or manipulation of the price
of the Securities to facilitate the sale or resale of the
Securities.
(qq) 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 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. and Ryder Scott Company,
independent consulting petroleum engineers, each of which prepared
estimates of the extent and value of certain proved oil and natural
gas reserves, are independent with respect to the
Company.
(rr) There are no contracts or other
documents which are required by the Rules and Regulations to be
described in the Preliminary Prospectus and Prospectus or filed as
exhibits to the Registration Statement by the Securities Act or by
the Rules and Regulations that have not been described in such
Preliminary Prospectus and Prospectus or filed as exhibits to the
Registration Statement.
(ss) The Company has not received
any written comments from the Commission staff in connection with
the Company’s reports under the Exchange Act that remain
unresolved.
(tt) On and immediately after the
Closing Date, the Company (after giving effect to the issuance of
the Securities and the other transactions related thereto as
described in the Pricing Disclosure Package and the Prospectus)
will be Solvent. As used in this paragraph, the term
“Solvent” means, with respect to a particular date,
that on such date (i) the present fair market value (or
present fair saleable value) of the assets of the Company is not
less than the total amount required to pay the liabilities of the
Company on its total existing debts and liabilities (including
contingent liabilities) as they become absolute and matured;
(ii) the Company is able to realize upon its assets and pay
its debts and other liabilities, contingent obligations and
commitments as they mature and become due in the normal course of
business; (iii) assumin
