EXHIBIT 1.1
4,875,000 Shares
BELLWETHER EXPLORATION COMPANY
Common Stock
UNDERWRITING AGREEMENT
__________, 1997
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
X.X. XXXXXX SECURITIES INC.
PRINCIPAL FINANCIAL SECURITIES, INC.
As representatives of the
several underwriters
named in Schedule I hereto
c/x Xxxxxxxxx, Xxxxxx & Xxxxxxxx
Securities Corporation
000 Xxxx Xxxxxx
Xxx Xxxx, XX 00000
Dear Sirs:
Bellwether Exploration Company, a Delaware corporation (the
"Company"), and the stockholders of the Company named in Schedule II hereto,
(collectively, the "Selling Stockholders"), severally propose to sell an
aggregate of 4,875,000 shares of common stock, par value $0.01 per share
("Common Stock") of the Company (the "Firm Shares"), to the several underwriters
named in Schedule I hereto (the "Underwriters"). The Firm Shares consist of
4,400,000 shares to be issued and sold by the Company and 475,000 outstanding
shares to be sold by the Selling Stockholders. In addition, the Company and the
Selling Stockholders severally propose to sell not more than an aggregate of
731,250 shares of common stock, par value $0.01 per share, of the Company (the
"Additional Shares"), if requested by the Underwriters as provided in Section 2
hereof. The Additional Shares consist of up to 11,986 shares to be issued and
sold by the Company and up to 719,264 outstanding shares to be sold by the
Selling Stockholders. The Firm Shares and the Additional Shares are herein
collectively called the "Shares." The shares of common stock of the Company to
be outstanding after giving effect to the sales contemplated hereby are
hereinafter referred to as the Common Stock. The
Company and the Selling Stockholders are hereinafter collectively called the
"Sellers." All references herein to the "Acquired Properties" refer to the oil
and gas properties and associated working capital owned by partnerships and
other entities (the "Program Partnerships") managed by Torch Energy Advisors
Incorporated that are to be acquired (the "Pending Acquisition") by the Company
pursuant to the Acquisition and Consolidation Agreement, dated as of March 31,
1997 (the "Acquisition Agreement"), among the Company and the Program
Partnerships.
1. REGISTRATION STATEMENT AND PROSPECTUS. The Company has
prepared and filed with the Securities and Exchange Commission (the
"Commission") in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder
(collectively called the "Act"), a registration statement on Form S-1 including
a prospectus relating to the Shares.1 The registration statement, as amended at
the time when it became effective, including information (if any) deemed to be
part of the registration statement at the time of effectiveness pursuant to Rule
430A under the Act, is hereinafter referred to as the "Registration Statement";
and the prospectus in the form first used to confirm sales of Shares is
hereinafter referred as the "Prospectus."
2. AGREEMENTS TO SELL AND PURCHASE AND LOCK-UP AGREEMENTS. On the
basis of the representations and warranties contained in this Agreement, and
subject to its terms and conditions, (i) the Company agrees to issue and sell
4,400,000 Firm Shares, (ii) the Selling Stockholders agree to sell an aggregate
of 475,000 Firm Shares (the number of Firm Shares which each Selling Stockholder
agrees to sell is set forth opposite their respective names in Schedule II
hereto) and (iii) each Underwriter agrees, severally and not jointly, to
purchase from each Seller at a price per share of $______ (the "Purchase Price")
the number of Firm Shares (subject to such adjustments to eliminate fractional
shares as you may determine) which bears the same proportion to the total number
of Firm Shares to be sold by such Seller as the number of Firm Shares set forth
opposite the name of such Underwriter in Schedule I hereto bears to the total
number of Firm Shares.
On the basis of the representations and warranties contained in
this Agreement, and subject to its terms and conditions, (i) the Company agrees
to issue and sell up to 11,986 Additional Shares, (ii) the Selling Stockholders
agree to sell up to an aggregate of 719,264 Additional Shares (the maximum
number of Additional Shares which each Selling Stockholder agrees to sell upon
exercise of the over-allotment option is set forth opposite their respective
names in Schedule II hereto) and (iii) the Underwriters shall have the right to
purchase, severally and not jointly, up to an aggregate 731,250 Additional
Shares from the Company and the Selling Stockholders at the Purchase Price.
Additional Shares may be purchased solely for the purpose of covering
over-allotments made in connection with the offering of the Firm Shares. The
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1 The registration statement also includes a form of prospectus to be
used in connection with the concurrent offering of the ____% Senior Subordinated
Notes due 2007 (the "Notes") of the Company.
2
Underwriters may exercise their right to purchase Additional Shares in whole or
in part from time to time by giving written notice thereof to the Company and
the Selling Stockholders within 30 days after the date of this Agreement. You
shall give any such notice on behalf of the Underwriters and such notice shall
specify the aggregate number of Additional Shares to be purchased pursuant to
such exercise and the date for payment and delivery thereof. The date specified
in any such notice shall be a business day (i) no earlier than the Closing Date
(as hereinafter defined), (ii) no later than ten business days after such notice
has been given and (iii) no earlier than two business days after such notice has
been given. If the Underwriters exercise their right to purchase 402,696 or
fewer Additional Shares, then United Investors Management Company ("United"), a
Selling Stockholder, will sell all such shares (and the Company and PPM America
Inc. ("PPM"), a Selling Stockholder, will sell no such shares) to the
Underwriters. If the Underwriters exercise their right to purchase greater than
402,696 but less than 719,264 Additional Shares, then United will sell 402,696
of such shares and PPM will sell the balance of the Additional Shares (and the
Company will sell no such shares) to the Underwriters. If the Underwriters
exercise their right to purchase less than all but greater than 719,264
Additional Shares, then United and PPM will sell 402,696 and 316,568 of such
shares, respectively, and the Company will sell the balance of the Additional
Shares to the Underwriters. If any Additional Shares are to be purchased, each
Underwriter, severally and not jointly, agrees to purchase from the Company and
the Additional Selling Stockholders the number of Additional Shares (subject to
such adjustments to eliminate fractional shares as you may determine) which
bears the same proportion to the total number of Additional Shares to be
purchased from the Company and the Selling Stockholders as the number of Firm
Shares set forth opposite the name of such Underwriter in Schedule I bears to
the total number of Firm Shares.
The Sellers hereby agree, severally and not jointly, not to
offer, sell, contract to sell, pledge, grant any option, right or warrant to
purchase, or otherwise transfer or dispose of, directly or indirectly, any
shares of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock or in any other manner transfer all or a portion
of the economic consequences associated with the ownership of Common Stock
(regardless of whether any of the foregoing transactions is to be settled by the
delivery of Common Stock, or such other securities, in cash or otherwise),
except to the Underwriters pursuant to this Agreement, for a period of 90 days
after the date of the Prospectus without the prior written consent of Xxxxxxxxx,
Xxxxxx & Xxxxxxxx Securities Corporation and the Company shall, concurrently
with the execution of this Agreement, deliver an agreement executed by each of
the directors and officers of the Company to the effect that such person will
not engage in any of the foregoing transactions with respect to any Common Stock
or any securities convertible into or exercisable or exchangeable for Common
Stock, in each case, beneficially owed by such person during such period without
the prior written consent of Xxxxxxxxx, Lufkin & Xxxxxxxx Securities
Corporation. Notwithstanding the foregoing, during such period (i) the Company
may grant stock options pursuant to the Company's existing stock option plans
and (ii) the Company may issue shares of Common Stock upon the exercise of an
option or warrant or the conversion of a security outstanding on the date hereof
or issued pursuant to an existing stock option plan.
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3. TERMS OF PUBLIC OFFERING. The Sellers are advised by you that
the Underwriters propose (i) to make a public offering of their respective
portions of the Shares as soon after the execution and delivery of this
Agreement as in your judgment is advisable and (ii) initially to offer the
Shares upon the terms set forth in the Prospectus.
4. DELIVERY AND PAYMENT. Delivery to the Underwriters of and
payment for the Firm Shares shall be made at 10:00 A.M., New York City time, on
________________, 1997 (the "Closing Date") at such place as you shall
designate. The Closing Date and the location of delivery of and the form of
payment for the Firm Shares may be varied by agreement between you and the
Sellers.
Delivery to the Underwriters of and payment for any Additional
Shares to be purchased by the Underwriters shall be made at such place as you
shall designate at 10:00 A.M., New York City time, on the date specified in the
applicable exercise notice given by you pursuant to Section 2 (an "Option
Closing Date"). Any such Option Closing Date and the location of delivery of and
the form of payment for such Additional Shares may be varied by agreement
between you and the Sellers.
Certificates for the Shares shall be registered in such names and
issued in such denominations as you shall request in writing not later than two
full business days prior to the Closing Date or an Option Closing Date, as the
case may be. Such certificates shall be made available to you for inspection not
later than 9:30 A.M., New York City time, on the business day next preceding the
Closing Date or an Option Closing Date, as the case may be. Certificates in
definitive form evidencing the Shares shall be delivered to you on the Closing
Date or an Option Closing Date, as the case may be, with any transfer taxes
thereon duly paid by the respective Sellers, for the respective accounts of the
several Underwriters, against payment of the Purchase Price therefor by wire
transfer or of Federal or other funds immediately available in New York City to
the order of the applicable Sellers.
5. AGREEMENTS OF THE COMPANY. The Company agrees with you:
(a) To advise you promptly and, if requested by you, to
confirm such advice in writing, (i) of any request by the Commission for
amendments to the Registration Statement or amendments or supplements to
the Prospectus or for additional information, (ii) of the issuance by
the Commission of any stop order suspending the effectiveness of the
Registration Statement or of the suspension of qualification of the
Shares for offering or sale in any jurisdiction, or the initiation of
any proceeding for such purposes, (iii) when any amendment to the
Registration Statement becomes effective, (iv) if the Company is
required to file a Rule 462(b) Registration Statement after the
effectiveness of this Agreement, when the Rule 462(b) Registration
Statement has become effective, and (v) of the happening of any event
during the period referred to in paragraph (d) below which makes any
statement of a material fact made in the Registration Statement or the
Prospectus untrue or which requires the making of any
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additions to or changes in the Registration Statement or the Prospectus
in order to make the statements therein not misleading. If at any time
the Commission shall issue any stop order suspending the effectiveness
of the Registration Statement, the Company will use its best efforts to
obtain the withdrawal or lifting of such order at the earliest possible
time.
(b) To furnish to you, without charge, four signed copies
of the Registration Statement as first filed with the Commission and of
each amendment to it, including all exhibits, and to furnish to you and
each Underwriter designated by you such number of conformed copies of
the Registration Statement as so filed and of each amendment to it,
without exhibits, as you may reasonably request.
(c) To prepare the Prospectus in a form approved by you
and to file the Prospectus in such form with the Commission within the
applicable time period specified in Rule 424(b) under the Act; not to
file any further amendment to the Registration Statement and not to make
any amendment or supplement to the Prospectus of which you shall not
previously have been advised or to which you shall reasonably object
after being so advised; and to prepare and file with the Commission,
promptly upon your reasonable request, any amendment to the Registration
Statement or supplement to the Prospectus which may be necessary or
advisable in connection with the distribution of the Shares by you, and
to use its best efforts to cause any such amendment to the Registration
Statement to become promptly effective.
(d) Prior to 10:00 A.M. New York City time on the business
day next succeeding the date of this Agreement and from time to time
thereafter for such period as in the opinion of counsel for the
Underwriters a prospectus is required by law to be delivered in
connection with sales by an Underwriter or a dealer, to furnish in New
York City to each Underwriter and dealer as many copies of the
Prospectus (and of any amendment or supplement to the Prospectus) as
such Underwriter or dealer may reasonably request.
(e) If during the period specified in paragraph (d) any
event shall occur as a result of which, in the opinion of written
counsel for the Underwriters, it becomes necessary to amend or
supplement the Prospectus in order to make the statements therein, in
the light of the circumstances when the Prospectus is delivered to a
purchaser, not misleading, or if it is necessary to amend or supplement
the Prospectus to comply with applicable law, forthwith to prepare and
file with the Commission an appropriate amendment or supplement to the
Prospectus so that the statements in the Prospectus, as so amended or
supplemented, will not in the light of the circumstances when it is so
delivered, be misleading, or so that the Prospectus will comply with
law, and to furnish to each Underwriter and to such dealers as you shall
specify, such number of copies thereof as such Underwriter or dealers
may reasonably request.
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(f) Prior to any public offering of the Shares, to
cooperate with you and counsel for the Underwriters in connection with
the registration or qualification of the Shares for offer and sale by
the several Underwriters and by dealers under the state securities or
Blue Sky laws of such jurisdictions as you may request, to continue such
qualification in effect so long as required for distribution of the
Shares and to file such consents to service of process or other
documents as may be necessary in order to effect such registration or
qualification.
(g) To mail and make generally available to its
stockholders as soon as reasonably practicable an earnings statement
covering a period of at least twelve months after the effective date of
the Registration Statement (but in no event commencing later than 90
days after such date) which shall satisfy the provisions of Section
11(a) of the Act, and to advise you in writing when such statement has
been so made available.
(h) During the period of three years after the date of
this Agreement, to furnish to you as soon as distributed to stockholders
or filed with the Commission copies of all reports or other
communications furnished to the record holders of Common Stock or filed
with the Commission and such other publicly available information
concerning the Company and its subsidiaries as you may reasonably
request.
(i) Whether or not the transactions contemplated in this
Agreement are consummated or this Agreement is terminated, to pay or
cause to be paid all expenses incident to the performance of its
obligations under this Agreement, including: (i) the fees, disbursements
and expenses of the Company's counsel and the Company's accountants in
connection with the registration and delivery of the Shares under the
Act and all other fees or expenses in connection with the preparation,
printing, filing and distribution of the Registration Statement
(including financial statements and exhibits), any preliminary
prospectus, the Prospectus and all amendments and supplements to any of
the foregoing prior to or during the period specified in paragraph (d)
including the mailing and delivering of copies thereof to the
Underwriters and dealers in the quantities specified herein, (ii) all
costs and expenses related to the transfer and delivery of the Shares to
the Underwriters, including any transfer or other taxes payable thereon,
(iii) all costs of printing or producing this Agreement and any other
documents in connection with the offering, purchase, sale or delivery of
the Shares, (iv) all expenses in connection with the registration or
qualification of the Shares for offer and sale under the securities or
Blue Sky laws of the several states and the cost of printing or
producing any Preliminary and Supplemental Blue Sky Memoranda in
connection therewith (including the filing fees and fees and
disbursements of counsel for the Underwriters in connection with such
registration or qualification and memoranda relating thereto), (v) the
filing fees and disbursements of counsel for the Underwriters in
connection with the review and clearance of the offering of the Shares
by the National Association of Securities Dealers, Inc., (vi) all costs
and expenses incident to the listing of the Shares on the Nasdaq
National Market, (vii) the cost of printing certificates representing
the Shares, (viii) the
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costs and charges of any transfer agent, registrar or depositary, (ix)
any expenses incurred by the Company in connection with a "road show"
presentation to potential investors, and (x) and all other costs and
expenses incident to the performance of the obligations of the Company
hereunder for which provision is not otherwise made in this Section.
(j) To use its best efforts to maintain the listing of the
Common Stock in the Nasdaq National Market for a period of three years
after the date of this Agreement, PROVIDED that the Company may list the
Common Stock on the New York Stock Exchange in lieu of the Nasdaq
National Market.
(k) To use its best efforts to do and perform all things
required or necessary to be done and performed under this Agreement by
the Company prior to the Closing Date or any Option Closing Date, as the
case may be, and to satisfy all conditions precedent to the delivery of
the Shares.
(l) If the Registration Statement at the time of the
effectiveness of this Agreement does not cover all of the Shares, to
file a Rule 462(b) Registration Statement with the Commission
registering the Shares not so covered in compliance with Rule 462(b) by
10:00 P.M., New York City time, on the date of this Agreement and to pay
to the Commission the filing fee for such Rule 462(b) Registration
Statement at the time of the filing thereof or to give irrevocable
instructions for the payment of such fee pursuant to Rule 111(b) under
the Act.
6. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company
represents and warrants to each Underwriter that:
(a) The Registration Statement has become effective (other
than any Rule 462(b) Registration Statement to be filed by the Company
after the effectiveness of this Agreement); any Rule 462(b) Registration
Statement filed after the effectiveness of this Agreement will become
effective no later than 10:00 P.M. New York City time, on the date of
this Agreement; no stop order suspending the effectiveness of the
Registration Statement is in effect, and no proceedings for such purpose
are pending before or, to the Company's knowledge, threatened by the
Commission.
(b) (i) The Registration Statement (other than any Rule
462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement) when it became effective, did not
contain and, as amended or supplemented, if applicable, will not contain
any 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, (ii) the Registration Statement (other than any
Rule 462(b) Registration Statement to be filed by the Company after the
effectiveness of this Agreement) and the Prospectus comply and, as
amended or supplemented, if applicable, will comply in all material
respects with the Act, (iii) if the Company is required to filed a Rule
462(b)
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Registration Statement after the effectiveness of this Agreement, such
Rule 462(b) Registration Statement and any amendments or supplements
thereto, when they became effective (1) will not contain any 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 and (2) will comply in all material respects with the Act,
and (iv) the Prospectus does not contain and, as amended or
supplemented, 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, except that the representations and
warranties set forth in this paragraph (b) do not apply to statements or
omissions in the Registration Statement or the Prospectus based upon
information relating to any Underwriter furnished to the Company in
writing by such Underwriter through you expressly for use therein.
(c) Each preliminary prospectus filed as part of the
registration statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Act, 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, except that the representations and warranties set forth
in this paragraph (c) do not apply to statements or omissions in any
preliminary prospectus based upon information relating to any
Underwriter furnished to the Company in writing by such Underwriter
through you expressly for use therein.
(d) Each of the Company and its subsidiaries that are
corporations has been duly incorporated, is validly existing as a
corporation in good standing under the laws of its jurisdiction of
incorporation and has the corporate power and authority to carry on its
business as described in the Prospectus and to own, lease and operate
its properties, and each is duly qualified and is in good standing as a
foreign corporation authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so qualified
would not have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole; each of the Company's subsidiaries that
are partnerships has been duly formed, is validly existing as a
partnership in good standing under the laws of its jurisdiction of
formation and has the partnership power and authority to carry on its
business as described in the Prospectus and to own, lease and operate
its properties, and each is duly qualified and is in good standing as a
foreign partnership authorized to do business in each jurisdiction in
which the nature of its business or its ownership or leasing of property
requires such qualification, except where the failure to be so qualified
would not have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(e) There are no outstanding subscriptions, rights,
warrants, options,
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calls, convertible securities, commitments of sale or liens granted or
issued by the Company or any of its subsidiaries related to or entitling
any person to purchase or otherwise to acquire any shares of the capital
stock of the Company or any of its subsidiaries, except as otherwise
disclosed in the Registration Statement.
(f) All the outstanding shares of capital stock of the
Company (including the Shares to be sold by the Selling Stockholders)
have been duly authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar rights; and
the Shares to be issued and sold by the Company hereunder have been duly
authorized and, when issued and delivered to the Underwriters against
payment therefor as provided by this Agreement, will be validly issued,
fully paid and non-assessable, and the issuance of such Shares will not
be subject to any preemptive or similar rights.
(g) All of the outstanding shares of capital stock of, or
other ownership interests in, each of the Company's subsidiaries that
are corporations have been duly authorized and validly issued and are
fully paid and non-assessable, and are owned by the Company, free and
clear of any security interest, claim, lien, encumbrance or adverse
interest of any nature. The portion of the partnership interests in each
of the Company's subsidiaries that are partnerships that the
Registration Statement describes as being owned by the Company is so
owned by the Company, free and clear of any security interest, claim,
lien, encumbrance or adverse interest of any nature.
(h) The authorized capital stock of the Company, including
the Common Stock, conforms as to legal matters to the description
thereof contained in the Prospectus.
(i) Neither the Company nor any of its subsidiaries is in
violation of its respective charter or by-laws or other organizational
documents, as the case may be, or in default in the performance of any
obligation, agreement or condition contained in any bond, debenture,
note or any other evidence of indebtedness or in any other agreement,
indenture or instrument material to the conduct of the business of the
Company and its subsidiaries, taken as a whole, to which the Company or
any of its subsidiaries is a party or by which it or any of its
subsidiaries or their respective property is bound.
(j) The execution, delivery and performance of this
Agreement and the Acquisition Agreement by the Company, compliance by
the Company with all the provisions hereof and thereof and the
consummation of the transactions contemplated hereby and thereby will
not require any consent, approval, authorization or other order of, or
qualification with, any court or governmental body or agency (except as
such may be required under the securities or Blue Sky laws of the
various states) and will not conflict with or constitute a breach of any
of the terms or provisions of, or a default under, the charter or
by-laws or other organizational documents, as the case may be, of the
Company or any of its subsidiaries or any indenture, loan agreement,
mortgage, lease or
9
instrument that is material to the Company and its subsidiaries, taken
as a whole, to which it or any of its subsidiaries is a party or by
which it or any of its subsidiaries or their respective property is
bound, or violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or governmental body
or agency having jurisdiction over the Company, any of its subsidiaries
or their respective property.
(k) There are no material legal or governmental
proceedings pending or threatened to which the Company or any of its
subsidiaries is a party or to which any of their respective property is
the subject that are required to be described in the Registration
Statement or the Prospectus and are not so described; nor are there any
statutes, regulations, contracts or other documents that are required to
be described in the Registration Statement or the Prospectus or to be
filed as exhibits to the Registration Statement that are not described
or filed as required.
(l) Neither the Company nor any of its subsidiaries has
violated any foreign, federal, state or local law or regulation relating
to the protection of human health and safety, the environment or
hazardous or toxic substances or wastes, pollutants or contaminants
("Environmental Laws"), or any provisions of the Employee Retirement
Income Security Act or the rules and regulations promulgated thereunder,
except for such violations which, singly or in the aggregate, would not
have a material adverse effect on the business, prospects, financial
condition or results of operation of the Company and its subsidiaries,
taken as a whole.
(m) Each of the Company and its subsidiaries has such
permits, licenses, franchises and authorizations of governmental or
regulatory authorities ("permits"), including, without limitation, under
any applicable Environmental Laws, as are necessary to own, lease and
operate its respective properties and to conduct its business and are in
compliance with all terms and conditions thereof; and no event has
occurred which allows, or after notice or lapse of time or both would
allow, revocation or termination of such permits or results or, after
notice or lapse of time or both, would result in any other impairment of
the rights of the holder of any such permit; and, such permits contain
no restrictions that are materially burdensome to the Company or any of
its subsidiaries; except where such failure to have, or comply with the
terms or conditions of, such permits, the occurrence of any such event
or the presence of any such restriction would not, singly or in the
aggregate, have a material adverse effect on the business, prospects,
financial condition or results of operations of the Company and its
subsidiaries, taken as a whole.
(n) There are no costs or liabilities associated with
Environmental Laws (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties or
compliance with Environmental Laws or any permit, license or approval,
any related constraints on operating activities and any potential
liabilities to third parties) which would, singly or in the aggregate,
have a material
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adverse effect on the business, prospects, financial condition or
results of operations of the Company and its subsidiaries, taken as a
whole.
(o) Each of the Company and its subsidiaries has (i)
generally satisfactory title to all its interests in its oil and gas
properties, title investigations having been carried out by the Company
and its subsidiaries in accordance with the general practice in the oil
and gas industry, (ii) good and marketable title in fee simple to all
other real property owned by it and (iii) good and marketable title to
all personal property owned by it, in each case free and clear of all
liens, encumbrances, claims, security interests, subleases and defects
except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and
its subsidiaries; and any real property and buildings held under lease
by the Company or any of its subsidiaries are held by it under valid,
subsisting and enforceable leases with such exceptions as are not
material and do not interfere with the use made and proposed to be made
of such property and buildings by the Company or its subsidiaries.
(p) Each of the Company and its subsidiaries maintains
reasonably adequate insurance.
(q) This Agreement has been duly authorized, executed and
delivered by the Company.
(r) The Acquisition Agreement has been duly authorized,
executed and delivered by the Company and each of the Program
Partnerships and constitutes a valid and legally binding obligation of
the Company and each of the Program Partnerships.
(s) Upon consummation of the transactions contemplated by
the Acquisition Agreement, the Company will have (i) generally
satisfactory title to all of the interests of the Program Partnerships
in their oil and gas properties, title investigations having been
carried out by the Company and its subsidiaries in accordance with the
general practice in the oil and gas industry, (ii) good and marketable
title in fee simple to all other real property owned by the Program
Partnerships and (iii) good and marketable title to all personal
property owned by the Program Partnerships, in each case free and clear
of all liens, encumbrances, claims, security interests, subleases and
defects except such as are described in the Prospectus or such as do not
materially affect the value of such property and do not interfere with
the use made and proposed to be made of such property by the Company and
its subsidiaries.
(t) Each of Deloitte & Touche LLP, which is certifying the
financial statements of the Company, and KPMG Peat Marwick LLP, which is
certifying the financial statements of the Acquired Properties, are
independent public accountants as
11
required by the Act.
(u) Each of Xxxxxxxxxx Petroleum Consultants Inc. and
Xxxxx Xxxxx Company, Petroleum Engineers are independent petroleum
engineers with respect to the Company.
(v) The consolidated historical and pro forma financial
statements, together with related schedules and notes, included in the
Registration Statement and the Prospectus (and any amendment or
supplement thereto), comply as to form in all material respects with the
requirements of the Act. Such historical financial statements present
fairly the consolidated financial position, results of operations and
changes in financial position of the Company and its subsidiaries or the
revenues and direct operating expenses and working capital of the
Acquired Properties, as the case may be, on the basis stated in the
Registration Statement at the respective dates or for the respective
periods to which they apply; such statements and related schedules and
notes have been prepared in accordance with generally accepted
accounting principles consistently applied throughout the periods
involved, except as disclosed therein. Such pro forma financial
statements have been prepared on a basis consistent with such historical
statements, except for the pro forma adjustments specified therein, and
give effect to assumptions made on a reasonable basis and present fairly
the proposed transactions contemplated by the Prospectus and this
Agreement. The other financial and statistical information and data
included in the Registration Statement and the Prospectus (and any
amendment or supplement thereto) are accurately presented and prepared
on a basis consistent with such financial statements and the books and
records of the Company and its subsidiaries or of the Acquired
Properties, as the case may be.
(w) The Company is not and, after giving effect to the
offering and sale of the Shares and the Notes and the application of the
proceeds thereof as described in the Prospectus, will not be, an
"investment company" as such term is defined in the Investment Company
Act of 1940, as amended.
(x) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to
require the Company to file a registration statement under the Act with
respect to any securities of the Company or to require the Company to
include such securities with the Shares registered pursuant to the
Registration Statement which have not been waived.
(y) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) there has
not occurred any material adverse change or any development involving a
prospective material adverse change in the condition, financial or
otherwise, or the earnings, business, management or operations of the
Company and its subsidiaries, taken as a whole, or of the Acquired
Properties, (ii) there has not been any material adverse change or any
development involving a
12
prospective material adverse change in the capital stock or in the
long-term debt of the Company or any of its subsidiaries and (iii) none
of the Company, any of its subsidiaries or the Acquired Properties has
incurred any material liability or obligation, direct or contingent
except as disclosed in the Prospectus.
(z) The Company has complied with all provisions of
Section 517.075, Florida Statutes (Chapter 92-198, Laws of Florida).
(aa) Except as disclosed in the Prospectus, there are no
business relationships or related party transactions required to be
disclosed therein by Item 404 of Regulation S-K of the Commission.
(bb) The Company and each of its subsidiaries maintains a
system of internal accounting controls sufficient to provide reasonable
assurance 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 generally accepted accounting principles and to maintain
asset accountability; (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 the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(cc) All material tax returns required to be filed by the
Company and each of its subsidiaries in any jurisdiction have been
filed, other than those filings being contested in good faith, and all
material taxes, including withholding taxes, penalties and interest,
assessments, fees and other charges due pursuant to such returns or
pursuant to any assessment received by the Company or any of its
subsidiaries have been paid, other than those being contested in good
faith and for which adequate reserves have been provided.
(dd) The Company has filed an application to list the
Shares on the Nasdaq National Market, and has received notification that
the listing has been approved, subject to notice of issuance.
7. REPRESENTATIONS AND WARRANTIES OF THE SELLING STOCKHOLDERS.
(a) United represents and warrants to each Underwriter
that:
(i) United is the lawful owner of the Shares to be
sold by such Selling Stockholder pursuant to this Agreement and
has, and on the Closing Date (and Option Closing Date, if
applicable) will have, good and clear title to such Shares, free
of all restrictions on transfer, liens, encumbrances, security
interests and claims whatsoever.
13
(ii) Upon delivery of and payment for such Shares
pursuant to this Agreement, good and clear title to such Shares
will pass to the Underwriters, free of all restrictions on
transfer, liens, encumbrances, security interests and claims
whatsoever.
(iii) United has, and on the Closing Date will
have, full legal right, power and authority to enter into this
Agreement and to sell, assign, transfer and deliver such Shares
to be sold by it in the manner provided herein, and this
Agreement has been duly authorized, executed and delivered by
United.
(iv) United has not taken, and will not take,
directly or indirectly, any action designed to, or which might
reasonably be expected to, cause or result in stabilization or
manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares pursuant to the
distribution contemplated by this Agreement, and other than as
permitted by the Act, United has not distributed and will not
distribute any prospectus or other offering material in
connection with the offering and sale of the Shares.
(v) The execution, delivery and performance of this
Agreement by United, compliance by United with all the provisions
hereof and the consummation of the transactions contemplated
hereby will not require any consent, approval, authorization or
other order of any court, regulatory body, administrative agency
or other governmental body (except as such may be required under
the Act, state securities laws or Blue Sky laws) and will not
conflict with or constitute a breach of any of the terms or
provisions of, or a default under, organizational documents of
United, if not an individual, or any agreement, indenture or
other instrument to which United is a party or by which United or
property of United is bound, or violate or conflict with any
laws, administrative regulation or ruling or court decree
applicable to United or property of United.
(vi) Such parts of the Registration Statement under
the caption "Principal and Selling Stockholders" which
specifically relate to United do not, and will not on the Closing
Date (and any Option Closing Date, if applicable), contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of circumstances under which they
were made, not misleading; United does not have any knowledge or
any reason to believe that any other part of the Registration
Statement or the Prospectus (or any amendment or supplement
thereto) contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
14
(vii) United is not prompted to sell the Shares to
be sold by United hereunder by any information concerning the
Company or any of its subsidiaries which is not set forth in the
Prospectus.
(viii) At any time during the period described in
paragraph 5(e) hereof, if there is any change in the information
referred to in paragraph 7(g) above, United will immediately
notify you of such change.
(b) PPM represents and warrants to each Underwriter that:
(i) PPM is the lawful owner of the Shares to be
sold by PPM pursuant to this Agreement and has, and on the
Closing Date (and Option Closing Date, if applicable) will have,
good and clear title to such Shares, free of all restrictions on
transfer, liens, encumbrances, security interests and claims
whatsoever.
(ii) Upon delivery of and payment for such Shares
pursuant to this Agreement, good and clear title to such Shares
will pass to the Underwriters, free of all restrictions on
transfer, liens, encumbrances, security interests and claims
whatsoever.
(iii) PPM has, and on the Closing Date will have,
full legal right, power and authority to enter into this
Agreement and the Custody Agreement between PPM and the Company,
as Custodian (the "Custody Agreement") and to sell, assign,
transfer and deliver such Shares in the manner provided herein
and therein, and this Agreement and the Custody Agreement have
been duly authorized, executed and delivered by PPM and each of
this Agreement and the Custody Agreement is a valid and binding
agreement of PPM enforceable in accordance with its terms, except
as rights to indemnity and contribution hereunder may be limited
by applicable law.
(iv) The power of attorney signed by PPM appointing
X. Xxxxx Sere and Xxxxxxx X. Xxxxx III, or either one of them, as
its attorney-in-fact to the extent set forth therein with regard
to the transactions contemplated hereby and by the Registration
Statement and the Custody Agreement has been duly authorized,
executed and delivered by or on behalf of PPM and is a valid and
binding instrument of PPM enforceable in accordance with its
terms, and, pursuant to such power of attorney, PPM has
authorized X. Xxxxx Sere and Xxxxxxx X. Xxxxx III, or either one
of them, to execute and deliver on his behalf this Agreement and
any other document necessary or desirable in connection with
transactions contemplated hereby and to deliver the Shares to be
sold by PPM pursuant to this Agreement.
15
(v) PPM has not taken, and will not take, directly
or indirectly, any action designed to, or which might reasonably
be expected to, cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the
sale or resale of the Shares pursuant to the distribution
contemplated by this Agreement, and other than as permitted by
the Act, PPM has not distributed and will not distribute any
prospectus or other offering material in connection with the
offering and sale of the Shares.
(vi) The execution, delivery and performance of
this Agreement by PPM, compliance by PPM with all the provisions
hereof and the consummation of the transactions contemplated
hereby will not require any consent, approval, authorization or
other order of any court, regulatory body, administrative agency
or other governmental body (except as such may be required under
the Act, state securities laws or Blue Sky laws) and will not
conflict with or constitute a breach of any of the terms or
provisions of, or a default under, organizational documents of
PPM, if not an individual, or any agreement, indenture or other
instrument to which PPM is a party or by which PPM or property of
PPM is bound, or violate or conflict with any laws,
administrative regulation or ruling or court decree applicable to
PPM or property of PPM.
(vii) Such parts of the Registration Statement
under the caption "Principal and Selling Stockholders" which
specifically relate to PPM do not, and will not on the Closing
Date (and any Option Closing Date, if applicable), contain any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of circumstances under which they
were made, not misleading; PPM does not have any knowledge or any
reason to believe that any other part of the Registration
Statement or the Prospectus (or any amendment or supplement
thereto) contains any untrue statement of a material fact or
omits to state any material fact required to be stated therein or
necessary to make the statements therein not misleading.
(viii) PPM is not prompted to sell the Shares to be
sold by PPM hereunder by any information concerning the Company
or any of its subsidiaries which is not set forth in the
Prospectus.
(ix) At any time during the period described in
paragraph 5(e) hereof, if there is any change in the information
referred to in paragraph 7(g) above, PPM will immediately notify
you of such change.
8. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
16
Underwriter, its directors, its officers and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or
Section 20 of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), from and against any and all losses, claims, damages,
liabilities and judgments caused by any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement or the Prospectus (as amended or supplemented if the Company
shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, except insofar as such
losses, claims, damages, liabilities or judgments are caused by any such
untrue statement or omission or alleged untrue statement or omission
based upon information relating to any Underwriter furnished in writing
to the Company by or on behalf of such Underwriter through you expressly
for use therein; PROVIDED, HOWEVER, that the foregoing indemnity
agreement with respect to any preliminary prospectus shall not inure to
the benefit of any Underwriter from whom the person asserting any such
losses, claims, damages and liabilities and judgments purchased Shares,
or any person controlling such Underwriter, if a copy of the Prospectus
(as then amended or supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or given by or on behalf
of such Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the
Shares to such person, and if the Prospectus (as so amended and
supplemented) would have cured the defect giving rise to such loss,
claim, damage, liability or judgment.
(b) In case any proceeding (including any governmental
investigation) shall be brought against any Underwriter or any director
or officer of, or person controlling such Underwriter, based upon any
preliminary prospectus, the Registration Statement or the Prospectus or
any amendment or supplement thereto and with respect to which indemnity
may be sought against the Company, such Underwriter shall promptly
notify the Company in writing and the Company shall assume the defense
thereof, including the employment of counsel reasonably satisfactory to
such indemnified party and payment of all fees and expenses, as
incurred. Any Underwriter or any director or officer of, or person
controlling such Underwriter shall have the right to employ separate
counsel in any such proceeding and participate in the defense thereof,
but the fees and expenses of such counsel shall be at the expense of
such Underwriter, director, officer or controlling person unless (i) the
employment of such counsel has been specifically authorized in writing
by the Company, (ii) the Company shall have failed to assume the defense
and employ counsel or (iii) the named parties to any such proceeding
(including any impleaded parties) include both such Underwriter,
director, officer or controlling person and the Company and such
Underwriter, director, officer or controlling person shall have been
advised by such counsel that there may be one or more legal defenses
available to it which are different from or additional to those
available to the Company or the Selling Stockholders, as the case may
be, (in which case the Company shall not have the right to assume the
defense of such proceeding on behalf of such Underwriter,
17
director, officer or controlling person). In any such case described in
the immediately preceding sentence, the Company shall not, in connection
with any one proceeding or separate but substantially similar or related
proceedings in the same jurisdiction arising out of the same general
allegations or circumstances, be liable for the fees and expenses of
more than one separate firm of attorneys (in addition to any local
counsel) for all such Underwriters, director, officer and controlling
persons. In any case where any Underwriter or any director or officer of
or person controlling such Underwriter has the right to employ separate
counsel at the Company's expense, such counsel shall be designated in
writing by Xxxxxxxxx, Xxxxxx & Xxxxxxxx Securities Corporation and that
all the reasonable fees and expenses of such counsel shall be reimbursed
as they are incurred. The Company agrees to indemnify and hold harmless
any Underwriter and any director or officer of, or person controlling,
such Underwriter from and against any loss or liability by reason of any
proceeding (x) settled with the written consent of the Company or (y)
settled more than thirty business days after the Company receives a
request for reimbursement of legal fees and expenses from such
Underwriter, director, officer or controlling person in any case where
such fees and expenses are at the expense of the Company if the Company
shall have failed to comply with such reimbursement request prior to the
date of such settlement. The Company shall not, without the prior
written consent of each Underwriter and each person controlling such
Underwriter, effect any settlement of any pending or threatened
proceeding in respect of which such Underwriter or controlling person or
any director or officer of such Underwriter is or could have been a
party and indemnity could have been sought hereunder by such
Underwriter, director, officer or controlling person, unless such
settlement includes an unconditional release of such Underwriter and
each such director, officer and controlling person from all liability on
claims that are the subject matter of such proceeding.
(c) Each Selling Stockholder, severally and not jointly,
agrees to indemnify and hold harmless each Underwriter, its directors,
its officers and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, the Company, its directors, its officers who sign the
Registration Statement, and any person who controls the Company within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
to the same extent as the foregoing indemnity from the Company to each
Underwriter but only with respect to the information furnished in
writing by or on behalf of such Selling Stockholder expressly for use in
the Registration Statement, the Prospectus or any preliminary
prospectus. Notwithstanding the foregoing, the aggregate liability of
any Selling Stockholder pursuant to the provisions of this paragraph
shall be limited to an amount equal to the aggregate purchase price
received by such Selling Stockholder from the sale of such Selling
Stockholder's Shares hereunder. If any action, suit or proceeding shall
be brought against any Underwriter, its directors, its officers, any
such controlling person of any Underwriter, the Company, any of its
directors, any such officer, or any such controlling person of the
Company, based on the Registration Statement, the Prospectus or any
preliminary prospectus and in respect of which indemnity may be sought
against any
18
Selling Stockholder pursuant to this paragraph (c), such Selling
Stockholder shall have the rights and duties given to the Company by
Section 8(b) hereof (except that if the Company shall have assumed the
defense thereof such Selling Stockholder shall not be required to do so,
but may employ separate counsel therein and participate in the defense
thereof, but the fees and expenses of such counsel shall be at such
Selling Stockholder's expense), and each Underwriter, each such
controlling person of any Underwriter, the Company, its directors, any
such officer, and any such controlling person of the Company shall have
the rights and duties given to the Underwriters by Section 8(b) hereof.
The foregoing indemnity agreement shall be in addition to any liability
which any Selling Stockholder may otherwise have.
(d) Each Underwriter agrees, severally and not jointly, to
indemnify and hold harmless the Company, its directors, its officers who
sign the Registration Statement, any person controlling the Company
within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, each Selling Stockholder and each person, if any,
controlling such Selling Stockholder within the meaning of Section 15 of
the Act or Section 20 of the Exchange Act to the same extent as the
foregoing indemnity from the Company to each Underwriter but only with
reference to information relating to such Underwriter furnished in
writing by or on behalf of such Underwriter through you expressly for
use in the Registration Statement, the Prospectus or any preliminary
prospectus. In case any action shall be brought against the Company, any
of its directors, any such officer or any person controlling the Company
or any Selling Stockholder or any person controlling such Selling
Stockholder based on the Registration Statement, the Prospectus or any
preliminary prospectus and in respect of which indemnity may be sought
against any Underwriter, such Underwriter shall have the rights and
duties given to the Sellers (except that if any Seller shall have
assumed the defense thereof, such Underwriter shall not be required to
do so, but may employ separate counsel therein and participate in the
defense thereof but the fees and expenses of such counsel shall be at
the expense of such Underwriter), and the Company, its directors, any
such officers and any person controlling the Company and the Selling
Stockholders and any person controlling such Selling Stockholders shall
have the rights and duties given to such Underwriter by Section 8(b)
hereof (except that if the Company, any of its directors, any such
officers or any such controlling person shall have the right to employ
separate counsel at such Underwriter's expense pursuant to the second
sentence of Section 8(b), such counsel shall be designated by the
Company).
(e) To the extent the indemnification provided for in this
Section 8 is unavailable to an indemnified party or insufficient in
respect of any losses, claims, damages, liabilities or judgments
referred to therein, then each indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid
or payable by such indemnified party as a result of such losses, claims,
damages, liabilities and judgments (i) in such proportion as is
appropriate to reflect the relative benefits received by the Sellers on
the one hand and the Underwriters on the other hand from the offering
19
of the Shares or (ii) if the allocation provided by clause (i) above is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above
but also the relative fault of the Sellers and the Underwriters in
connection with the statements or omissions which resulted in such
losses, claims, damages, liabilities or judgments, as well as any other
relevant equitable considerations. The relative benefits received by the
Sellers and the Underwriters shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Sellers, and the total underwriting discounts
and commissions received by the Underwriters, bear to the total price to
the public of the Shares, in each case as set forth in the table on the
cover page of the Prospectus. The relative fault of the Sellers and the
Underwriters shall be determined by reference to, among other things,
whether the untrue or alleged untrue statement of a material fact or the
omission to state a material fact relates to information supplied by the
Company, the Selling Stockholders or the Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission.
The Sellers and the Underwriters agree that it would not
be just and equitable if contribution pursuant to this Section 8(e) were
determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other method of allocation
which does not take account of the equitable considerations referred to
in the immediately preceding paragraph. The amount paid or payable by an
indemnified party as a result of the losses, claims, damages,
liabilities or judgments referred to in the immediately preceding
paragraph shall be deemed to include, subject to the limitations set
forth above, any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such
action or claim. Notwithstanding the provisions of this Section 8, (i)
no Selling Stockholder shall be required to contribute any amount in
excess of an amount equal to the aggregate purchase price received by
such Selling Stockholder for the sale of such Selling Stockholder's
Shares hereunder and (ii) no Underwriter shall be required to contribute
any amount in excess of the amount by which the total price at which the
Shares underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters'
obligations to contribute pursuant to this Section 8(e) are several in
proportion to the respective number of Shares purchased by each of the
Underwriters hereunder and not joint.
(f) The remedies provided for in this Section 8 are not
exclusive and shall not limit any rights or remedies which may otherwise
be available to any indemnified party at law or in equity.
20
9. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase the Firm Shares under this Agreement
are subject to the satisfaction of each of the following conditions:
(a) All the representations and warranties of the Company
contained in this Agreement shall be true and correct on the Closing
Date (including after giving effect to the Pending Acquisition) with the
same force and effect as if made on and as of the Closing Date.
(b) If the Company is required to file a Rule 462(b)
Registration Statement after the effectiveness of this Agreement, such
Rule 462(b) Registration Statement shall have become effective by 10:00
P.M., New York City time, on the date of this Agreement, and no stop
order suspending the effectiveness of the Registration Statement shall
have been issued and no proceedings for that purpose shall have been
commenced or shall be pending before or contemplated by the Commission.
(c) On or after the date hereof there shall not have
occurred any downgrading, nor shall any notice have been given of any
intended or potential downgrading or of any review for a possible change
that does not indicate the direction of the possible change, in the
rating accorded any of the Company's securities (including, without
limitation, the placing of any securities on negative or developing
watch or negative or developing outlook) by any "nationally recognized
statistical rating organization" as such term is defined for purposes of
Rule 436(g)(2) under the Act.
(d) You shall have received on the Closing Date a
certificate dated the Closing Date, signed by X. Xxxxx Sere and Xxxxxxx
X. Xxxxx III, in their capacities as the President and Chief Executive
Officer and the Executive Vice President and Chief Financial Officer of
the Company, confirming the matters set forth in paragraphs (a), (b),
and (c) of this Section 9.
(e) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) there shall
not have occurred any change or any development involving a prospective
change in the condition, financial or otherwise, or the earnings,
business, management or operations of the Company and its subsidiaries,
taken as a whole, or of the Acquired Properties, (ii) there shall not
have been any change or any development involving a prospective change
in the capital stock or in the long-term debt of the Company or any of
its subsidiaries other than as disclosed in the Prospectus and (iii)
none of the Company, any of its subsidiaries or the Acquired Properties
shall have incurred any liability or obligation, direct or contingent,
other than as disclosed in the Prospectus, the effect of which, in any
such case described in clause (i), (ii) or (iii), in your judgment, is
material and adverse and, in your judgment, makes it impracticable to
market the Shares on the terms and in the manner contemplated in the
Prospectus.
21
(f) All the representations and warranties of the Selling
Stockholders contained in this Agreement shall be true and correct on
the Closing Date with the same force and effect as if made on and as of
the Closing Date and you shall have received a certificate to such
effect, dated the Closing Date, from each Selling Stockholder.
(g) You shall have received on the Closing Date an opinion
(satisfactory to you), dated the Closing Date, of Xxxxxx & Xxxxxx,
L.L.P., counsel for the Company, to the effect that:
(i) each of the Company and its subsidiaries that
are corporations has been duly incorporated, is validly existing
as a corporation in good standing under the laws of its
jurisdiction of incorporation and has the corporate power and
authority to carry on its business as described in the Prospectus
and to own, lease and operate its properties; each subsidiary of
the Company that is a partnership has been duly formed and is
validly existing as a partnership in good standing under the laws
of its jurisdiction of formation, with all necessary power and
authority granted by its respective partnership agreement, as
amended, to carry on its business as described in the Prospectus
and to own, lease and operate its properties;
(ii) each of the Company and its subsidiaries is
duly qualified and is in good standing as a foreign corporation
or partnership, as the case may be, authorized to do business in
each jurisdiction in which the nature of its business or its
ownership or leasing of property requires such qualification,
except where the failure to be so qualified would not have a
material adverse effect on the business, prospects, financial
condition or results of operations of the Company and its
subsidiaries, taken as a whole;
(iii) all the outstanding shares of Common Stock
(including the Shares to be sold by the Selling Stockholders)
have been duly authorized and validly issued and are fully paid,
non-assessable and not subject to any preemptive or similar
rights arising by operation of law, under the charter or by-laws
of the Company, or to the best of such counsel's knowledge after
due inquiry, otherwise;
(iv) the Shares to be issued and sold by the
Company hereunder have been duly authorized, and when issued and
delivered to the Underwriters against payment therefor as
provided by this Agreement, will be validly issued, fully paid
and non-assessable, and the issuance of such Shares is not
subject to any preemptive or similar rights arising by operation
of law, under the charter or by-laws of the Company, or to the
best of such counsel's knowledge after due inquiry, otherwise;
22
(v) all of the outstanding shares of capital stock
of, or other ownership interests in, each of the Company's
subsidiaries that are corporations have been duly and validly
authorized and issued and are fully paid and non-assessable, and
are owned of record by the Company, free and clear of any
security interest, claim, lien, encumbrance or adverse interest
of any nature; to the best of such counsel's knowledge after due
inquiry, the portion of the partnership interests in each of the
Company's subsidiaries that are partnerships that the Prospectus
describes as being owned by the Company is so owned by the
Company, free and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature;
(vi) this Agreement has been duly authorized,
executed and delivered by the Company;
(vii) the authorized capital stock of the Company,
including the Common Stock, conforms as to legal matters to the
description thereof contained in the Prospectus;
(viii) the Registration Statement has become
effective under the Act, no stop order suspending its
effectiveness has been issued and no proceedings for that purpose
are, to the best of such counsel's knowledge after due inquiry,
pending before or contemplated by the Commission;
(ix) the statements under the captions "Risk
Factors -- Environmental and Other Regulation", "Business and
Properties -- Litigation", "Business and Properties -- Federal
Regulation", "Business and Properties -- Environmental
Regulation", "Transactions with Related Persons", "Description of
Capital Stock", "Description of Indebtedness" and "Underwriting"
in the Prospectus and Items 14 and 15 of Part II of the
Registration Statement insofar as such statements constitute a
summary of legal matters, documents or proceedings referred to
therein, fairly present the information called for with respect
to such legal matters, documents and proceedings;
(x) to the best of such counsel's knowledge after
due inquiry, neither the Company nor any of its subsidiaries is
in violation of its respective charter or by-laws and neither the
Company nor any of its subsidiaries is in default in the
performance of any obligation, agreement, covenant or condition
contained in any indenture, loan agreement, mortgage, lease or
other instrument material to the Company and its subsidiaries,
taken as a whole, to which the Company or any of its subsidiaries
is a party or by which it or any of its subsidiaries or their
respective property is bound;
(xi) The Acquisition Agreement has been duly
authorized,
23
executed and delivered by the Company and constitutes a valid and
legally binding obligation of the Company.
(xii) the execution, delivery and performance of
this Agreement and the Acquisition Agreement by the Company,
compliance by the Company with all the provisions hereof and
thereof and the consummation of the transactions contemplated
hereby and thereby will not require any consent, approval,
authorization or other order of, or qualification with, any court
or governmental body or agency (except such as may be required
under the securities or Blue Sky laws of the various states) and
will not conflict with or constitute a breach of any of the terms
or provisions of, or a default under, the charter or by-laws of
the Company or any of its subsidiaries or, to the best of such
counsel's knowledge after due inquiry, any indenture, loan
agreement, mortgage, lease or other agreement or instrument that
is material to the Company and its subsidiaries, taken as a
whole, to which it or any of its subsidiaries is a party or by
which it or any of its subsidiaries or their respective property
is bound, or violate or conflict with any applicable law or any
rule, regulation, judgment, order or decree of any court or any
governmental body or agency having jurisdiction over the Company,
any of its subsidiaries or their respective property;
(xiii) after due inquiry, such counsel does not
know of any legal or governmental proceedings pending or
threatened to which the Company or any of its subsidiaries is a
party or to which any of their respective property is subject
that are required to be described in the Registration Statement
or the Prospectus and are not so described, or of any statutes,
regulations, contracts or other documents that are required to be
described in the Registration Statement or the Prospectus or to
be filed as exhibits to the Registration Statement that are not
described or filed as required;
(xiv) the Company is not and, after giving effect
to the offering and sale of the Shares and the Notes and the
application of the proceeds thereof as described in the
Prospectus, will not be, an "investment company" as such term is
defined in the Investment Company Act of 1940, as amended;
(xv) to the best of such counsel's knowledge after
due inquiry, there are no contracts, agreements or understandings
between the Company and any person granting such person the right
to require the Company to file a registration statement under the
Act with respect to any securities of the Company or to require
the Company to include such securities with the Shares registered
pursuant to the Registration Statement that have not been waived;
(xvi) the Registration Statement and the Prospectus
and any supplement or amendment thereto (except for the financial
statements and other
24
financial and statistical data included therein as to which no
opinion need be expressed) comply as to form in all material
respects with the Act; and
(xvii) such counsel shall also state that such
counsel has no reason to believe that (except for the financial
statements and other financial and statistical data as to which
such counsel need not express any belief) at the time the
Registration Statement became effective and on the date of this
Agreement, the Registration Statement and the prospectus included
therein contained any 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 not misleading, and such
counsel has no reason to believe that the Prospectus, as amended
or supplemented, if applicable (except for the financial
statements and other financial and statistical data, as
aforesaid) contains any untrue statement of a material fact or
omits 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 opinion of Xxxxxx & Xxxxxx, L.L.P. described in
paragraph (g) above shall be rendered to you at the request of the
Company and shall so state therein.
(h) You shall have received on the Closing Date an opinion
(satisfactory to you), dated the Closing Date, of ____________________,
counsel for United, to the effect that:
(i) United has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of its jurisdiction of incorporation;
(ii) this Agreement has been duly authorized,
executed and delivered by United;
(iii) the execution, delivery and performance of
this Agreement by United, compliance by United with all the
provisions hereof and the consummation of the transactions
contemplated hereby will not require any consent, approval,
authorization or other order of , or qualification with, any
court or governmental body or agency (except such as may be
required under the securities or Blue Sky laws of the various
states) and will not conflict with or constitute a breach of any
of the terms or provisions of, or a default under, the charter or
by-laws of United or, to the best of such counsel's knowledge
after due inquiry, any indenture, loan agreement, mortgage, lease
or other agreement or instrument that is material to United to
which it is a party or by which it or its property is bound, or
violate or conflict with any applicable law or any rule,
regulation, judgment, order or decree of any court or
governmental body or agency having jurisdiction over United or
its property;
25
(iv) United has full legal right, power and
authority, and any approval required by law (other than any
approval imposed by the applicable state securities and Blue Sky
laws) to sell, assign, transfer and deliver the Shares to be sold
by it in the manner provided in this Agreement; and
(v) United has good and clear title to the
certificates for the Shares to be sold by it and upon delivery
thereof, pursuant hereto and payment therefor, good and clear
title will pass to the Underwriters, severally, free of all
restrictions on transfer, liens, encumbrances, security interests
and claims whatsoever.
The opinion of ________________ described in paragraph (h)
above shall be rendered to you at the request of United and shall so
state therein.
(i) You shall have received on the Closing Date an opinion
(satisfactory to you), dated the Closing Date, of ____________________,
counsel for PPM, to the effect that:
(i) PPM has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation;
(ii) this Agreement has been duly authorized,
executed and delivered by PPM;
(iii) the Custody Agreement has been duly
authorized, executed and delivered by PPM and is a valid and
binding agreement of PPM enforceable in accordance with its terms
(except as may be limited by bankruptcy, insolvency,
reorganization or other laws of general application relating to
or affecting creditors' rights generally or the availability of
equitable remedies, regardless of whether such enforcement is
considered in a proceeding in equity or at law);
(iv) the execution, delivery and performance of
this Agreement by PPM, compliance by PPM with all the provisions
hereof and the consummation of the transactions contemplated
hereby will not require any consent, approval, authorization or
other order of , or qualification with, any court or governmental
body or agency (except such as may be required under the
securities or Blue Sky laws of the various states) and will not
conflict with or constitute a breach of any of the terms or
provisions of, or a default under, the charter or by-laws of PPM
or, to the best of such counsel's knowledge after due inquiry,
any indenture, loan agreement, mortgage, lease or other agreement
or instrument that is material to PPM to which it is a party or
by which it or its property is bound, or violate or conflict with
any applicable law or any rule, regulation, judgment, order or
decree of any court or governmental body or agency having
jurisdiction over PPM or its property;
26
(v) PPM has full legal right, power and authority,
and any approval required by law (other than any approval imposed
by the applicable state securities and Blue Sky laws) to sell,
assign, transfer and deliver the Shares to be sold by it in the
manner provided in this Agreement and the Custody Agreement;
(vi) PPM has good and clear title to the
certificates for the Shares to be sold by it and upon delivery
thereof, pursuant hereto and payment therefor, good and clear
title will pass to the Underwriters, severally, free of all
restrictions on transfer, liens, encumbrances, security interests
and claims whatsoever; and
(vii) the power of attorney signed by PPM
appointing X. Xxxxx Sere and Xxxxxxx X. Xxxxx III, or either of
them, as its attorney-in-fact to the extent set forth therein
with regard to the transactions contemplated hereby and by the
Registration Statement has been duly authorized, executed and
delivered by or on behalf of PPM and is a valid and binding
instrument of PPM enforceable in accordance with its terms, and
pursuant to such power of attorney, PPM has authorized X. Xxxxx
Sere and Xxxxxxx X. Xxxxx III, or either of them, to execute and
deliver on its behalf this Agreement and any other document
necessary or desirable in connection with transactions
contemplated hereby and to deliver the Shares to be sold by it
pursuant to this Agreement. The opinion of ________________
described in paragraph (i) above shall be rendered to you at the
request of PPM and shall so state therein.
(j) You shall have received on the Closing Date an
opinion, dated the Closing Date, of Xxxxx & Xxxxx, L.L.P., counsel for
the Underwriters, as to the matters referred to in clauses (iv), (vi),
(viii), (ix) (but only with respect to the statements under the captions
"Description of Capital Stock" and "Underwriting"), (xvi) and (xvii) of
the foregoing paragraph (g).
In giving such opinion with respect to the matters covered
by clause (xvii), Xxxxxx & Xxxxxx, L.L.P. and Xxxxx & Xxxxx, L.L.P. may
state that their opinion and belief are based upon their participation
in the preparation of the Registration Statement and Prospectus and any
amendments or supplements thereto and review and discussion of the
contents thereof, but are without independent check or verification
except as specified.
(k) You shall have received on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date, as
the case may be, in form and substance satisfactory to you, from
Deloitte & Touche LLP, independent public accountants, containing the
information and statements of the type ordinarily included in
accountants' "comfort letters" to Underwriters with respect to certain
financial statements and certain financial information contained in the
Registration Statement and the
27
Prospectus.
(l) You shall have received on each of the date hereof and
the Closing Date, a letter dated the date hereof or the Closing Date, as
the case may be, in form and substance satisfactory to you, from KPMG
Peat Marwick LLP, independent public accountants, containing the
information and statements of the type ordinarily included in
accountants' "comfort letters" to Underwriters with respect to certain
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(m) The Company shall have delivered to you the agreements
specified in Section 2 hereof which agreements shall be in full force
and effect on the Closing Date.
(n) The Shares shall have been duly listed for quotation
on the Nasdaq National Market.
(o) The sale by the Company of $100,000,000 aggregate
principal amount of Notes pursuant to the Underwriting Agreement, dated
as of even date herewith, among the Company and X.X. Xxxxxx Securities
Inc. and Chase Securities Inc. shall have been consummated prior to or
concurrently with the sale by the Company of the Firm Shares pursuant to
this Agreement.
(p) The acquisition of the Acquired Properties pursuant to
the Acquisition Agreement shall have been consummated prior to or
concurrently with the sale by the Company of the Firm Shares pursuant to
this Agreement.
(q) The Company and the Selling Stockholders shall not
have failed at or prior to the Closing Date to perform or comply with
any of the agreements herein contained and required to be performed or
complied with by the Company at or prior to the Closing Date.
(r) You shall have received on the Closing Date, a
certificate of each Selling Stockholder who is not a U.S. Person to the
effect that such Selling Stockholder is not a U.S. Person (as defined
under applicable U.S. federal tax legislation), which certificate may be
in the form of a properly completed and executed United States Treasury
Department Form W-8 (or other applicable form or statement specified by
Treasury Department regulations in lieu thereof).
The several obligations of the Underwriters to purchase any Additional Shares
hereunder are subject to the delivery to you on the applicable Option Closing
Date of such documents as you may reasonably request with respect to the good
standing of the Company, the due authorization and issuance of such Additional
Shares and other matters related to the issuance of such
28
Additional Shares.
10. EFFECTIVE DATE OF AGREEMENT AND TERMINATION. This Agreement
shall become effective upon the execution and delivery of this Agreement by the
parties hereto.
This Agreement may be terminated at any time prior to the Closing
Date by you by written notice to the Sellers if any of the following has
occurred: (i) any outbreak or escalation of hostilities or other national or
international calamity or crisis or change in economic conditions or in the
financial markets of the United States or elsewhere that, in your judgment, is
material and adverse and would, in your judgment, make it impracticable to
market the Shares on the terms and in the manner contemplated in the Prospectus,
(ii) the suspension or material limitation of trading in securities on the New
York Stock Exchange, the American Stock Exchange or the Nasdaq National Market
or limitation on prices for securities on any such exchange or the Nasdaq
National Market, (iii) the suspension of trading of any securities of the
Company on any exchange or in the over-the-counter market, (iv) the enactment,
publication, decree or other promulgation of any federal or state statute,
regulation, rule or order of any court or other governmental authority which in
your opinion materially and adversely affects, or will materially and adversely
affect, the business or operations of the Company or any of its subsidiaries,
(v) the declaration of a banking moratorium by either federal or New York State
authorities or (vi) the taking of any action by any federal, state or local
government or agency in respect of its monetary or fiscal affairs which in your
opinion has a material adverse effect on the financial markets in the United
States.
If on the Closing Date or on an Option Closing Date, as the case
may be, any one or more of the Underwriters shall fail or refuse to purchase the
Firm Shares or Additional Shares, as the case may be, which it or they have
agreed to purchase hereunder on such date and the aggregate number of Firm
Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused to
purchase is not more than one-tenth of the total number of Shares to be
purchased on such date by all Underwriters, each non-defaulting Underwriter
shall be obligated severally, in the proportion which the number of Firm Shares
set forth opposite its name in Schedule I bears to the total number of Firm
Shares which all the non-defaulting Underwriters, as the case may be, have
agreed to purchase, or in such other proportion as you may specify, to purchase
the Firm Shares or Additional Shares, as the case may be, which such defaulting
Underwriter or Underwriters, as the case may be, agreed but failed or refused to
purchase on such date; PROVIDED that in no event shall the number of Firm Shares
or Additional Shares, as the case may be, which any Underwriter has agreed to
purchase pursuant to Section 2 hereof be increased pursuant to this Section 10
by an amount in excess of one-ninth of such number of Firm Shares or Additional
Shares, as the case may be, without the written consent of such Underwriter. If
on the Closing Date, any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of Firm
Shares to be purchased by all Underwriters and arrangements satisfactory to you
and the applicable Sellers for purchase of such Firm Shares are
29
not made within 48 hours after such default, this Agreement will terminate
without liability on the part of any non-defaulting Underwriter and the
applicable Sellers. In any such case which does not result in termination of
this Agreement, either you or the Sellers shall have the right to postpone the
Closing Date, but in no event for longer than seven days, in order that the
required changes, if any, in the Registration Statement and the Prospectus or
any other documents or arrangements may be effected. If, on an Option Closing
Date, any Underwriter or Underwriters shall fail or refuse to purchase
Additional Shares and the aggregate number of Additional Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of
Additional Shares to be purchased on such date, the non-defaulting Underwriters
shall have the option to (i) terminate their obligation hereunder to purchase
such Additional Shares or (ii) purchase not less than the number of Additional
Shares that such non-defaulting Underwriters would have been obligated to
purchase on such date in the absence of such default. Any action taken under
this paragraph shall not relieve any defaulting Underwriter from liability in
respect of any default of any such Underwriter under this Agreement.
11. AGREEMENTS OF THE SELLING STOCKHOLDERS. Each Selling
Stockholder severally agrees with you and the Company:
(a) To pay or to cause to be paid all transfer taxes with
respect to the Shares to be sold by such Selling Stockholder; and
(b) To take all reasonable actions in cooperation with the
Company and the Underwriters to cause the Registration Statement to
become effective at the earliest possible time, to do and perform all
things to be done and performed under this Agreement prior to the
Closing Date and to satisfy all conditions precedent to the delivery of
the Shares pursuant to this Agreement.
12. MISCELLANEOUS. Notices given pursuant to any provision of
this Agreement shall be addressed as follows: (a) if to the Company, to
Bellwether Exploration Company, 0000 Xxxxx, Xxxxx 0000, Xxxxxxx, XX 00000,
Attention: X. Xxxxx Sere, (b) if to United, to United Investors Management
Company, 0000 Xxxxx Xxxxxx Xxxxx, Xxxxxxxxxx, Xxxxxxx 00000, Attention: Xxxxxx
Xxxxxxxx, Esq., (c) if to PPM, to X. Xxxxx Sere, c/o Bellwether Exploration
Company, 0000 Xxxxx, Xxxxx 0000, Xxxxxxx, XX 00000 and (d) if to any Underwriter
or to you, to you c/x Xxxxxxxxx, Lufkin & Xxxxxxxx Securities Corporation, 000
Xxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention: Syndicate Department, or in
any case to such other address as the person to be notified may have requested
in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the Selling Stockholders,
the Company, its officers and directors and of the several Underwriters set
forth in or made pursuant to this Agreement shall remain operative and in full
force and effect, and will survive delivery of and payment for the Shares,
regardless of (i) any investigation, or statement as to the results thereof,
made by or on behalf of any Underwriter, the officers or directors of any
Underwriter, any person controlling any Underwriter
30
or by or on behalf of the Sellers, the officers or directors of the Company or
any controlling person of the Sellers, (ii) acceptance of the Shares and payment
for them hereunder and (iii) termination of this Agreement.
If for any reason the Shares are not delivered by or on behalf of
the Sellers as provided herein (other than as a result of any termination of
this Agreement pursuant to Section 10), the Sellers agree to reimburse the
several Underwriters for all out-of-pocket expenses (including the fees and
disbursements of counsel) reasonably incurred by them.
Except as otherwise provided, this Agreement has been and is made
solely for the benefit of and shall be binding upon the Sellers, the
Underwriters, the Underwriters' directors and officers, any controlling persons
referred to herein, the Company's directors and the Company's officers who sign
the Registration Statement and their respective successors and assigns, all as
and to the extent provided in this Agreement, and no other person shall acquire
or have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include a purchaser of any of the Shares from any of the
several Underwriters merely because of such purchase.
This Agreement shall be governed and construed in accordance with
the laws of the State of New York.
This Agreement may be signed in various counterparts which
together shall constitute one and the same instrument.
31
Please confirm that the foregoing correctly sets forth the
agreement between the Company, the Selling Stockholders and the several
Underwriters.
Very truly yours,
BELLWETHER EXPLORATION COMPANY
By: _________________________
X. Xxxxx Sere
President and Chief Executive Officer
THE SELLING STOCKHOLDERS NAMED
IN SCHEDULE II HERETO
UNITED INVESTORS MANAGEMENT COMPANY
By: _____________________
Name: ___________________
Title: __________________
PPM AMERICA INC.
By: _____________________
Attorney-in-fact
XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
X.X. XXXXXX SECURITIES INC.
PRINCIPAL FINANCIAL SECURITIES, INC.
Acting severally on behalf of
themselves and the several
32
Underwriters named in
Schedule I hereto
By: XXXXXXXXX, XXXXXX & XXXXXXXX
SECURITIES CORPORATION
By: ________________________
Name: __________________
Title: _________________
33
SCHEDULE I
Number of Firm Shares
Underwriters to be Purchased
------------ ---------------
Xxxxxxxxx, Lufkin & Xxxxxxxx
Securities Corporation
X.X. Xxxxxx Securities Inc.
Principal Financial Securities, Inc.
------------------------------
Total 4,875,000
==============================
34
SCHEDULE II
SELLING STOCKHOLDERS
Maximum Number
Number of Firm of Additional Shares
Name Shares Being Sold Being Sold
---- --------------- ---------------
United Investors Management Company .... 285,000 402,696
PPM America Inc. ....................... 190,000 316,568
--------------- ---------------
Total ...... 475,000 719,264
=============== ===============
35
