EXHIBIT 1.1
6,000,000 SHARES
DOMAIN ENERGY CORPORATION
COMMON STOCK
FORM OF
UNDERWRITING AGREEMENT
June __, 1997
CREDIT SUISSE FIRST BOSTON CORPORATION
PaineWebber Incorporated
Prudential Securities Incorporated
Xxxxxx Xxxxxx & Company, Inc.
As Representatives of the Several Underwriters,
c/o Credit Suisse First Boston Corporation
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000-0000
Ladies and Gentlemen:
Domain Energy Corporation, a Delaware corporation (the "Company"),
proposes to sell an aggregate of 6,000,000 shares (the "Firm Shares") of the
Company's common stock, par value $.01 per share (the "Common Stock"), to you
and to the other underwriters named in Schedule I (collectively, the
"Underwriters"), for whom you are acting as representatives (the
"Representatives"). The Company has also agreed to grant to you and the other
Underwriters an option (the "Option") to purchase up to an additional 900,000
shares of Common Stock (the "Option Shares") on the terms and for the purposes
set forth in Section 1(b). The Firm Shares and the Option Shares are hereinafter
collectively referred to as the "Shares."
The Company and the subsidiaries of the Company signatory hereto
(the "Material Subsidiaries") confirm as follows their agreements with the
Representatives and the several other Underwriters.
1. AGREEMENT TO SELL AND PURCHASE.
(a) On the basis of the representations, warranties and
agreements herein contained of the Company and the Material Subsidiaries and,
subject to all the terms and conditions of this Agreement, the Company agrees to
sell to each Underwriter named below, and each Underwriter, severally and not
jointly, agrees to purchase from the Company, at price equal to $____ per share,
the number of Firm Shares set forth opposite the name of such Underwriter in
Schedule I,
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plus such additional number of Shares which such Underwriter may become
obligated to purchase pursuant to Section 8 hereof.
(b) Subject to all the terms and conditions of this Agreement,
the Company grants the Option to the several Underwriters to purchase, severally
and not jointly, up to 900,000 Option Shares from the Company at the same price
per share as the Underwriters shall pay for the Firm Shares. The Option may be
exercised only to cover over-allotments in the sale of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time or from time
to time on or before the 30th day after the date of this Agreement, upon written
or telegraphic notice (the "Option Shares Notice") by the Representatives to the
Company no later than 12:00 noon, New York City time, at least three and no more
than five business days before the date specified for closing in the Option
Shares Notice (the "Option Closing Date") setting forth the aggregate number of
Option Shares to be purchased and the time and date for such purchase. On each
Option Closing Date, the Company will issue and sell to the Underwriters the
number of Option Shares set forth in corresponding Option Shares Notice, and
each Underwriter will purchase such percentage of the Option Shares as is equal
to the percentage of Firm Shares that such Underwriter is purchasing, as
adjusted by the Representatives in such manner as they deem advisable to avoid
fractional shares.
2. DELIVERY AND PAYMENT. Delivery of the Firm Shares shall be made
to the Representatives for the accounts of the Underwriters at the office of
Credit Suisse First Boston Corporation ("CSFBC"), Eleven Xxxxxxx Xxxxxx, Xxx
Xxxx, Xxx Xxxx, 00000 against payment of the purchase price by wire transfer of
Federal Funds or similar same day funds to an account designated by the Company
of a bank acceptable to CSFBC at least one day prior to the Closing Date (as
hereinafter defined). Such payment shall be made at 10:00 a.m., New York City
time, on _____________, 1997 or at such time on such other date, not later than
ten business days after such date, as may be agreed upon by the Company and
CSFBC (such date is hereinafter referred to as the "Closing Date").
To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the office specified above for the Closing Date at the time and date
(which may be the Closing Date) specified in the Option Shares Notice.
Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the
Representatives shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
The cost of original issue tax stamps, if any, in connection with
the issuance and delivery of the Firm Shares and the Option Shares by the
Company to the respective Underwriters shall be borne by the Company. The
Company will pay and save each Underwriter and any
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subsequent holder of the Shares harmless from any and all liabilities with
respect to or resulting from any failure or delay in paying Federal and state
stamp and other transfer taxes, if any, which may be payable or determined to be
payable in connection with the original issuance or sale to such Underwriter of
the Firm Shares or the Option Shares.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The Company and
the Material Subsidiaries, jointly and severally, represent, warrant and
covenant to each Underwriter that:
(a) A registration statement (Registration No. 333-24641) on
Form S-1 relating to the Shares, including a preliminary prospectus and such
amendments to such registration statement as may have been required to the date
of this Agreement, has been prepared by the Company under the provisions of the
Securities Act of 1933, as amended (the "Act"), and the rules and regulations
(collectively referred to as the "Rules and Regulations") of the Securities and
Exchange Commission (the "Commission") thereunder, and has been filed with the
Commission. The term "preliminary prospectus" as used herein means a preliminary
prospectus as contemplated by Rule 430 or Rule 430A ("Rule 430A") of the Rules
and Regulations included at any time as part of the registration statement.
Copies of such registration statement and amendments and of each related
preliminary prospectus have been delivered to the Representatives. The term
"Registration Statement" means the registration statement as amended at the time
it becomes or became effective (the "Effective Date"), including financial
statements and all exhibits and any information deemed to be included by Rule
430A or Rule 434 of the Rules and Regulations. If the Company files a
registration statement to register a portion of the Shares and relies on Rule
462(b) of the Rules and Regulations for such registration statement to become
effective upon filing with the Commission (the "Rule 462 Registration
Statement"), then any reference to the "Registration Statement" shall be deemed
to include the Rule 462 Registration Statement, as amended from time to time.
The term "Prospectus" means the prospectus as first filed with the Commission
pursuant to Rule 424(b) of the Rules and Regulations or, if no such filing is
required, the form of final prospectus included in the Registration Statement at
the Effective Date.
(b) On the Effective Date, the date the Prospectus is first
filed with the Commission pursuant to Rule 424(b) (if required), at all times
subsequent to and including the Closing Date and, if later, any Option Closing
Date and when any post-effective amendment to the Registration Statement becomes
effective or any amendment or supplement to the Prospectus is filed with the
Commission, the Registration Statement and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
or supplement thereto), including the financial statements included in the
Prospectus, did or will comply with all applicable provisions of the Act and the
Rules and Regulations and will contain all statements required to be stated
therein in accordance with the Act and the Rules and Regulations. On the
Effective Date and when any post-effective amendment to the Registration
Statement becomes effective, no part of the Registration Statement or any such
amendment did or will contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading. At the Effective Date, the date the
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Prospectus or any amendment or supplement to the Prospectus is filed with the
Commission and at the Closing Date and, if later, any Option Closing Date, the
Prospectus did not or will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
foregoing representations and warranties in this Section 3(b) do not apply to
any statements or omissions made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
the Representatives specifically for inclusion in the Registration Statement or
the Prospectus or any amendment or supplement thereto. For all purposes of this
Agreement, the Company acknowledges that (i) the last paragraph at the bottom of
the cover page of the Prospectus concerning the terms of the offering by the
Underwriters, (ii) the legend on the inside front cover page concerning
stabilization and (iii) the statements in the first, fourth, seventh, ninth,
tenth and eleventh paragraphs under the caption "Underwriting" in the Prospectus
constitute the only information relating to any Underwriter furnished in writing
to the Company by the Representatives specifically for inclusion in the
Registration Statement, the preliminary prospectus or the Prospectus. The
Company has not distributed and will not distribute any offering material in
connection with the offering or sale of the Shares other than the Registration
Statement, the preliminary prospectus, the Prospectus or any other materials, if
any, permitted by the Act.
(c) For purposes of this Agreement, "Subsidiaries" shall mean
Domain Energy Ventures Corporation, Domain Energy Production Corporation, Domain
Energy Finance Corporation, Domain Energy Guarantor Corporation, Oceana
Exploration Company, L.C. and Matrix Energy Limited Partnership. The Company has
no subsidiaries that are "Significant Subsidiaries" within the meaning of Rule
405 of the Rules and Regulations that are not Subsidiaries. The Company and each
of the Subsidiaries is, and at the Closing Date will be, a corporation or other
entity duly organized, validly existing and in good standing under the laws of
its jurisdiction of formation. The Company and each of the Subsidiaries has, and
at the Closing Date will have, full power and authority to conduct all the
activities conducted by it, to own or lease all the assets owned or leased by it
and to conduct its business as described in the Registration Statement and the
Prospectus. The Company and each of the Subsidiaries that is a corporation is,
and at the Closing Date will be, duly licensed or qualified to do business and
in good standing as a foreign corporation in all jurisdictions in which the
nature of the activities conducted by it or the character of the assets owned or
leased by it makes such licensing or qualification necessary, except where the
failure to be duly licensed or qualified or to be in good standing would not
have a material adverse effect on the business, properties, condition (financial
or otherwise) or results of operations of the Company and the Subsidiaries taken
as a whole (a "Material Adverse Effect"). All of the outstanding shares of
capital stock of the Subsidiaries have been duly authorized and validly issued
and are fully paid and non-assessable and are owned by the Company directly, or
indirectly through one of the other Subsidiaries, free and clear of all liens,
encumbrances and claims whatsoever except such as are described in the
Prospectus. Except for the stock of the Subsidiaries, as disclosed in the
Registration Statement and as set forth on Schedule II hereto, the Company does
not own, and at the Closing Date will not own, directly or indirectly, any
shares of stock or any other equity or long-term debt securities of any
corporation or have any material equity interest in any firm, partnership, joint
venture, association or other entity. Complete and correct copies of the
certificate of incorporation
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and of the by-laws of the Company and each of the Subsidiaries and all
amendments thereto have been delivered to the Representatives or their counsel,
and except as disclosed in the Registration Statement, no material changes
therein will be made subsequent to the date hereof and prior to the Closing Date
or, if later, the Option Closing Date.
(d) The outstanding shares of Common Stock have been, and the
Shares to be issued and sold by the Company upon such issuance will be, duly
authorized, validly issued, fully paid and nonassessable and will not be subject
to any preemptive or similar right. The description of the Common Stock in the
Registration Statement and the Prospectus is, and at the Closing Date will be,
complete and accurate in all respects. Except as set forth in the Prospectus,
the Company does not have outstanding, and at the Closing Date will not have
outstanding, any options to purchase, or any rights or warrants to subscribe
for, or any securities or obligations convertible into, or any contracts or
commitments to issue or sell, any shares of Common Stock, any shares of capital
stock of any Subsidiary or any such warrants, convertible securities or
obligations.
(e) The financial statements and schedules included in the
Registration Statement or the Prospectus present fairly the consolidated
financial condition of the Company as of the respective dates thereof and the
consolidated results of operations and cash flows of the Company for the
respective periods covered thereby, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout the entire period
involved, except as otherwise disclosed in the Prospectus. The pro forma
financial statements and other pro forma financial information included in the
Registration Statement or the Prospectus (i) present fairly in all material
respects the information shown therein, (ii) have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma financial
statements and (iii) have been properly computed on the bases described therein.
The assumptions used in the preparation of the pro forma financial statements
and other pro forma financial information included in the Registration Statement
or the Prospectus are, in the opinion of the Company, reasonable, and the
adjustments used therein are appropriate to give effect to the transactions or
circumstances referred to therein. No other financial statements or schedules of
the Company or any of the Subsidiaries are required by the Act or the Rules and
Regulations to be included in the Registration Statement or the Prospectus.
Deloitte & Touche LLP (the "Accountants"), who have reported on such financial
statements and schedules, are independent accountants with respect to the
Company as required by the Act and the Rules and Regulations. The statements
included in the Registration Statement with respect to the Accountants pursuant
to Item 509 of Regulation S-K of the Rules and Regulations are true and correct
in all material respects.
(f) The Company and the Subsidiaries maintain a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded
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accountability for assets is compared with existing assets at reasonable
intervals and appropriate action is taken with respect to any differences.
(g) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus and prior to the
Closing Date, except as set forth in or contemplated by the Registration
Statement and the Prospectus, (i) there has not been and will not have been any
change in the capitalization of the Company and there has not occurred any
Material Adverse Effect, (ii) neither the Company nor any of the Subsidiaries
has incurred nor will any of them incur any material liabilities or obligations,
direct or contingent, nor has any of them entered into any material transactions
other than pursuant to this Agreement and the transactions referred to herein
and (iii) the Company has not and will not have paid or declared any dividends
or other distributions of any kind on any class of its capital stock.
(h) The Company is not an "investment company" or an entity
controlled by, an "investment company", as such terms are defined in the
Investment Company Act of 1940, as amended.
(i) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or, to the best
of the Company's knowledge, threatened against or affecting the Company or any
of the Subsidiaries or any of their respective officers in their capacity as
such, before or by any Federal or state court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, wherein
an unfavorable ruling, decision or finding might result in a Material Adverse
Effect.
(j) The Company and each of the Subsidiaries has, and at the
Closing Date will have, (i) all material governmental licenses, permits,
consents, orders, approvals and other authorizations necessary to carry on its
business as described in the Prospectus, (ii) complied in all material respects
with all laws, regulations and orders applicable to it or its business and (iii)
performed all its material obligations required to be performed by it, and is
not, and at the Closing Date will not be, in default under any indenture,
mortgage, deed of trust, voting trust agreement, loan agreement, bond,
debenture, note agreement, material lease, material contract or other material
agreement or material instrument (collectively, a "contract or other agreement")
to which it is a party or by which its property is bound or affected. To the
best knowledge of the Company and each of the Subsidiaries, no other party under
any contract or other agreement to which it is a party is in default in any
respect thereunder. Neither the Company nor any of the Subsidiaries is, nor at
the Closing Date will any of them be, in violation of any provision of its
certificate of incorporation or by-laws.
(k) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is required
in connection with the authorization, issuance, transfer, sale or delivery of
the Shares by the Company, in connection with the execution, delivery and
performance of this Agreement by the Company or in connection with the taking by
the Company of any action contemplated hereby, except such as have been obtained
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or made under the Act, the Rules and Regulations or the Delaware General
Corporation Law and such as may be required under state securities or Blue Sky
laws or the by-laws and rules of the National Association of Securities Dealers,
Inc. (the "NASD") in connection with the purchase and distribution by the
Underwriters of the Shares.
(l) The Company and each of the Material Subsidiaries have
full corporate power and authority to enter into this Agreement. This Agreement
has been duly authorized, executed and delivered by the Company and each of the
Material Subsidiaries, constitutes a valid and binding agreement of the Company,
each of the Material Subsidiaries and is enforceable against the Company and
each of the Material Subsidiaries in accordance with the terms hereof (subject
to bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium and
similar laws of general applicability relating to or affecting creditors' rights
and to general equity principles). The execution and delivery of this Agreement
by the Company and each of the Material Subsidiaries and the performance of this
Agreement and the consummation of the transactions contemplated hereby and the
application of the net proceeds from the offering and sale of the Shares in the
manner set forth in the Prospectus under "Use of Proceeds" will not result in
the creation or imposition of any lien, charge or encumbrance upon any of the
assets of the Company or any of the Subsidiaries pursuant to the terms or
provisions of, or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or give any other party a right to
terminate any of its obligations under, or result in the acceleration of any
obligation under, the certificate of incorporation or by-laws of the Company or
any of the Subsidiaries, any contract or other agreement to which the Company or
any of the Subsidiaries is a party or by which the Company or any of the
Subsidiaries or any of their respective properties is bound or affected, or
violate or conflict with any judgment, ruling, decree, order, statute, rule or
regulation of any court or other governmental agency or body applicable to the
business or properties of the Company or any of the Subsidiaries.
(m) Except as to their interests in oil and gas leases, the
Company and each of the Subsidiaries have good and marketable title to all
properties and assets described in the Prospectus as owned by them, free and
clear of all liens, charges, encumbrances or restrictions, except such as are
described in the Prospectus or are not material to the business of the Company
or the Subsidiaries. Except as to their interests in oil and gas leases, the
Company and each of the Subsidiaries have valid, subsisting and enforceable
leases for the properties described in the Prospectus as leased by them, with
such exceptions as are not material and do not materially interfere with the use
made and proposed to be made of such properties by the Company and the
Subsidiaries. The Company and each of the Subsidiaries have good and defensible
title to their respective interests in oil and gas leases, free and clear of any
security interests, mortgages, pledges, liens, encumbrances, charges, defects or
restrictions of any kind or character, other than (i) those described in the
Prospectus; (ii) liens and encumbrances under operating agreements, unitization
and pooling arrangements and gas sales contracts that secure payment of amounts
not yet due and payable and which are of a nature and scope customary in
connection with similar oil and gas drilling and producing operations; and (iii)
those that do not have a Material Adverse Effect. The Company and each of the
Subsidiaries have conducted such title investigations and have acquired their
respective interests in oil and gas leases in such manner as is customary in the
oil and gas industry. The
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Company and each of the Subsidiaries have complied in all material respects with
the terms of the oil and gas leases in which they purport to own an interest,
and no claim of any sort has been asserted by anyone adverse to the rights of
the Company or any Subsidiary as lessee or sublessee under any of such leases or
questioning their respective rights to the continued possession of the leased
premises under any such lease, except with respect to any such default or claim
which would not have a Material Adverse Effect. The concessions, reservations,
licenses, permits and rights to hydrocarbons held by the Company and the
Subsidiaries are valid, subsisting and enforceable with such exceptions as are
described in the Prospectus or which would not have a Material Adverse Effect.
(n) Neither the Company nor any Subsidiary is a party to any
material contract, agreement or other document except for the contracts and
other documents (the "Material Contracts") filed as exhibits 10.1, 10.2, 10.3,
10.4, 10.5, 10.6, 10.7, 10.8, 10.9, 10.10, 10.11, 10.12, 10.13 and 10.14 to the
Registration Statement and the Material Contracts are the only contracts
required to be filed as an exhibit to the Registration Statement. All Material
Contracts to which the Company or any Subsidiary is a party have been duly
authorized, executed and delivered by the Company or such Subsidiary, constitute
valid and binding agreements of the Company or such Subsidiary and are
enforceable against the Company or such Subsidiary in accordance with the terms
thereof (subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles).
(o) No statement, representation, warranty or covenant made in
this Agreement by the Company or any of the Material Subsidiaries, or made in
any certificate or document required by this Agreement to be delivered to the
Representatives, was or will be, when made, inaccurate, untrue or incorrect in
any material respect.
(p) None of the Company or any of its directors or officers
has taken, directly or indirectly, any action intended, or which might
reasonably be expected, to cause or result, under the Act or otherwise, in, or
which has constituted, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares.
(q) Except as set forth in the Registration Statement and the
Prospectus, no holder of securities of the Company has any right to require the
registration of any securities of the Company because of the filing of the
Registration Statement.
(r) The Shares are duly authorized for listing, subject to
official notice of issuance, on the New York Stock Exchange.
(s) The Company and its Subsidiaries are in compliance with
all federal, state and local employment and labor laws, including, but not
limited to, laws relating to non-discrimination in hiring, promotion and pay of
employees; no labor dispute with the employees of the Company or any Subsidiary
exists or, to the knowledge of the Company, is imminent or
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threatened; and the Company is not aware of any existing, imminent or threatened
labor disturbance by the employees of any of its principal suppliers,
manufacturers or contractors in any case described above that could result in a
Material Adverse Effect.
(t) The Company and the Subsidiaries own, or possess adequate
rights to use the material patents, patent rights, licenses, inventions,
copyrights, know-how (including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems or procedures),
trademarks, services marks and trade names (collectively, "patent and
proprietary rights") presently employed by them or which are necessary in
connection with the conduct of the business now operated by them, and neither
the Company nor any of its Subsidiaries has received any written notice or
otherwise has actual knowledge of any infringement of or conflict with asserted
rights of others or any other claims with respect to any patent or proprietary
rights, or of any basis for rendering any patent and proprietary rights invalid
or inadequate to protect the interest of the Company or any of its Subsidiaries.
(u) Neither the Company nor any of the Subsidiaries nor, to
the Company's knowledge, any employee or agent of the Company or any Subsidiary,
has made any payment of funds of the Company or any Subsidiary or received or
retained any funds in violation of any law, rule or regulation or of a character
required to be disclosed in the Prospectus.
(v) There is no transaction or relationship between the
Company and any affiliate of the Company, including, without limitation, First
Reserve Fund VII, Limited Partnership, a Delaware limited partnership ("First
Reserve"), required to be described in the Registration Statement or the
Prospectus which is not described as required.
(w) The information upon which were based the estimates of
reserves in the reserve reports for the oil and gas properties of the Company
and the Subsidiaries prepared by XxXxxxxx and XxxXxxxxxxx and Netherland, Xxxxxx
& Associates, Inc. (collectively, the "Engineers"), to the extent provided by
the Company or any Subsidiary, was at the time of delivery thereof complete and
accurate in all material respects. Each Engineer is a firm of independent
petroleum engineers. Information in the Prospectus regarding estimates of
reserves, future net cash flows and present values of estimated net cash flows
comply in all material respects with the applicable requirements of Rule 4-10 of
Regulation S-X and Industry Guide 2 under the Act.
(x) The Company and the Subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the conduct
of their businesses and the value of their properties and as is customary for
companies engaged in similar businesses in similar industries.
(y) The Company and its Subsidiaries (i) are in compliance
with any and all applicable foreign, federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or imposing liability or standards of conduct concerning any
Hazardous Material (as hereinafter defined) ("Environmental Laws"), (ii) have
received all
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permits, licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) are in
compliance with all terms and conditions of any such permit, license or
approval, except where such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to comply with
the terms and conditions of such permits, licenses or approvals would not,
individually or in the aggregate, result in a Material Adverse Effect. The term
"Hazardous Material" means (i) any "hazardous substance" as defined by the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, (ii) any "hazardous waste" as defined by the Resource Conservation and
Recovery Act, as amended, (iii) any petroleum or petroleum product, (iv) any
polychlorinated biphenyl and (v) any pollutant or contaminant or hazardous,
dangerous, or toxic chemical, material, waste or substance regulated under or
within the meaning of any other Environmental Law.
(z) Except as set forth in the Registration Statement and the
Prospectus there are no costs and liabilities associated with or arising in
connection with Environmental Laws as currently in effect (including, without
limitation, costs of compliance therewith) which would, singly or in the
aggregate, result in a Material Adverse Effect.
(aa) The Company has filed all material federal, state and
foreign income and franchise tax returns required to be filed by it and has paid
all taxes shown as due thereon, other than taxes which are being contested in
good faith and for which adequate reserves have been established in accordance
with generally accepted accounting principles ("GAAP"); and the Company has no
knowledge of any tax deficiency which has been or might be asserted or
threatened against the Company. There are no tax returns of the Company or any
of its Subsidiaries that are currently being audited by state, local or federal
taxing authorities or agencies (and with respect to which the Company or any
Subsidiary has received notice), where the findings of such audit, if adversely
determined, would result in a Material Adverse Effect.
(bb) With respect to each employee benefit plan, program and
arrangement (including, without limitation, any "employee benefit plan" as
defined in Section 3(3) of the Employee Retirement Income Security Act of 1974,
as amended ("ERISA")) maintained or contributed to by the Company, or with
respect to which the Company could incur any liability under ERISA
(collectively, the "Benefit Plans"), no event has occurred and, to the best
knowledge of the Company, there exists no condition or set of circumstances, in
connection with which the Company could be subject to any liability under the
terms of such Benefit Plan, applicable law (including, without limitation, ERISA
and the Internal Revenue Code of 1986, as amended) or any applicable agreement
that could result in a Material Adverse Effect.
4. AGREEMENTS OF THE COMPANY. The Company agrees with the several
Underwriters as follows:
(a) The Company will not, either prior to the Effective Date
or thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer,
file any amendment or supplement to the Registration
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Statement or the Prospectus, unless a copy thereof shall first have been
submitted to the Representatives within a reasonable period of time prior to the
filing thereof and the Representatives shall not have objected thereto in good
faith. Neither CSFBC's consent to, nor the Underwriters' delivery of, any such
amendment or supplement shall constitute a waiver of any of the conditions set
forth in Section 5 hereof.
(b) The Company will use every reasonable effort to cause the
Registration Statement to become effective and will notify the Representatives
promptly, and will confirm such notice in writing, (i) when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective, (ii) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus or for additional
information, (iii) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the initiation of
any proceedings for that purpose or the threat thereof, (iv) of the happening of
any event during the period mentioned in the second sentence of Section 4(e)
that in the judgment of the Company makes any statement made in the Registration
Statement or the Prospectus untrue or that requires the making of any changes in
the Registration Statement or the Prospectus in order to make the statements
therein, in the light of the circumstances in which they are made, not
misleading and (v) of receipt by the Company or any representative or attorney
of the Company of any other substantive communication from the Commission
relating to the Company, the Registration Statement, any preliminary prospectus
or the Prospectus. If at any time the Commission shall issue any order
suspending the effectiveness of the Registration Statement, the Company will
make every reasonable effort to obtain the withdrawal of such order at the
earliest possible moment. The Company will use its best efforts to comply with
the provisions of and make all requisite filings with the Commission pursuant to
Rule 430A and to notify the Representatives promptly of all such filings.
(c) The Company will furnish to the Representatives, without
charge, three signed copies of the Registration Statement and of any
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto, and will furnish to the Representatives, without
charge, for transmittal to each of the other Underwriters, a copy of the
Registration Statement and any post-effective amendment thereto, including
financial statements and schedules but without exhibits.
(d) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(e) On the Effective Date, and thereafter from time to time,
the Company will deliver to each of the Underwriters, without charge, as many
copies of the Prospectus or any amendment or supplement thereto as the
Representatives may reasonably request. The Company consents to the use of the
Prospectus or any amendment or supplement thereto by the several Underwriters
and by all dealers to whom the Shares may be sold, both in connection with the
offering or sale of the Shares and for any period of time thereafter during
which the Prospectus is required by law to be delivered in connection therewith.
If during such period of time any event
HOU03A:432629.7
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shall occur which in the judgment of the Company or counsel to the Underwriters
should be set forth in the Prospectus in order to make any statement therein, in
the light of the circumstances under which it was made, not misleading, or if it
is necessary to supplement or amend the Prospectus to comply with law, the
Company will forthwith prepare and duly file with the Commission an appropriate
supplement or amendment thereto and will deliver to each of the Underwriters,
without charge, such number of copies thereof as the Representatives may
reasonably request.
(f) Prior to any public offering of the Shares by the
Underwriters, the Company will cooperate with the Representatives and counsel to
the Underwriters in connection with the registration or qualification of the
Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Representatives may request; provided, that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which would subject it to
general service of process in any jurisdiction where it is not now so subject.
(g) During the period of five years commencing on the
Effective Date, the Company will furnish to the Representatives and each other
Underwriter who may so request copies of such financial statements and other
periodic and special reports as the Company may from time to time distribute
generally to the holders of any class of its capital stock and will furnish to
the Representatives and each other Underwriter who may so request a copy of each
annual or other report it shall be required to file with the Commission.
(h) The Company will make generally available to holders of
its securities as soon as may be practicable but in no event later than the last
day of the fifteenth full calendar month following the calendar quarter in which
the Effective Date falls, an earnings statement (which need not be audited but
shall be in reasonable detail) for a period of 12 months ended commencing after
the Effective Date and satisfying the provisions of Section 11(a) of the Act
(including Rule 158 of the Rules and Regulations).
(i) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company will pay,
or reimburse if paid by the Representatives, all costs and expenses incident to
the performance of the obligations of the Company under this Agreement,
including, but not limited to, costs and expenses of or relating to (i) the
preparation, printing and filing of the Registration Statement and exhibits to
it, each preliminary prospectus, the Prospectus and any amendment or supplement
to the Registration Statement or the Prospectus, (ii) the preparation and
delivery of certificates representing the Shares, (iii) the word processing and
reproduction of this Agreement, (iv) furnishing (including costs of shipping,
mailing and courier) such copies of the Registration Statement, the Prospectus
and any preliminary prospectus, and all amendments and supplements thereto, as
may be requested for use in connection with the offering and sale of the Shares
by the Underwriters or by dealers to whom Shares may be sold, (v) the listing of
the Shares on the New York Stock Exchange, (vi) any filings required to be made
by the Underwriters with the NASD, and the fees, disbursements and other charges
of counsel for the Underwriters in connection therewith not to exceed $10,850,
(vii) the
HOU03A:432629.7
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registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of such jurisdictions designated pursuant to Section
4(f), including the fees, disbursements and other charges of counsel to the
Underwriters in connection therewith not to exceed $10,000, and the preparation
and printing of preliminary, supplemental and final Blue Sky memoranda, (viii)
counsel to the Company, (ix) the transfer agent for the Shares, (x) the
Accountants and (xi) the Engineers.
(j) If this Agreement shall be terminated by the Company
pursuant to any of the provisions hereof (otherwise than pursuant to Section 8
or following the occurrence of any of the events specified in Sections 7(c), (d)
or (e)) or if for any reason the Company shall be unable to perform its
obligations hereunder, the Company will reimburse the several Underwriters for
all out-of-pocket expenses (including the fees, disbursements and other charges
of counsel to the Underwriters) reasonably incurred by them in connection
herewith.
(k) The Company will not at any time, directly or indirectly,
take any action intended, or which might reasonably be expected, to cause or
result in, or which will constitute, stabilization of the price of the shares of
Common Stock to facilitate the sale or resale of any of the Shares.
(l) The Company will apply the net proceeds from the offering
and sale of the Shares to be sold by the Company in the manner set forth in the
Prospectus under "Use of Proceeds" and shall file such reports with the
Commission with respect to the sale of the Shares and the application of the
proceeds therefrom as may be required in accordance with Rule 463 under the Act.
(m) During the period of 180 days commencing at the Closing
Date, the Company will not, without the prior written consent of CSFBC, directly
or indirectly, sell, offer to sell, grant any option for the sale of, pledge or
otherwise dispose of, or file with the Commission a registration statement under
the Act relating to, any additional shares of Common Stock or securities
convertible into or exchangeable or exercisable for shares of Common Stock, or
publicly disclose the intention to make such offer, sale, pledge, disposition or
filing, other than (i) to the Underwriters pursuant to this Agreement (ii)
pursuant to a registration statement filed with the Commission on Form S-4 in
connection with a transaction with a public company and (iii) pursuant to
employee or director benefit plans, provided, that the Company will not grant
options to purchase shares of Common Stock pursuant to such employee or director
benefit plans at a price less than the initial public offering price.
(n) The Company will cause each of its executive officers and
directors and First Reserve and each other beneficial owner of more than 5% of
the outstanding shares of Common Stock, if any, to enter into agreements with
the Representatives in the form set forth in Exhibit A to the effect that they
will not, for a period of 180 days after the commencement of the public offering
of the Shares, without the prior written consent of CSFBC, sell, contract to
sell or otherwise dispose of any shares of Common Stock or rights to acquire
such shares (other than
HOU03A:432629.7
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pursuant to the Company's employee stock option plans or in connection with
other employee incentive compensation or director compensation arrangements of
the Company).
(o) For so long as the Company shall be an independent
publicly traded company, during the period of two years commencing on the
Effective Date, the Company will use every reasonable effort to cause the Shares
to remain listed on the New York Stock Exchange.
5. CONDITIONS OF THE OBLIGATIONS OF THE UNDERWRITERS. The
obligations of each Underwriter hereunder are subject to the following
conditions:
(a) Notification that the Registration Statement has become
effective shall be received by the Representatives not later than 10:00 p.m.,
New York City time, on the date of this Agreement or at such later date and time
as shall be consented to in writing by the Representatives, and all filings
required by Rule 424 of the Rules and Regulations and Rule 430A shall have been
made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued, and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect, and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the Commission
or such authorities and (iv) after the date hereof, no amendment or supplement
to the Registration Statement or the Prospectus shall have been filed unless a
copy thereof was first submitted to the Representatives and the Representatives
did not object thereto in good faith, and the Representatives shall have
received certificates, dated the Closing Date and the Option Closing Date and
signed by the Chief Executive Officer or the Chairman of the Board of Directors
of the Company and the Chief Financial Officer of the Company (who may, as to
proceedings threatened, rely upon the best of their information and belief), to
the effect of clauses (i), (ii) and (iii).
(c) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, (i) there shall not have
occurred and no development shall have occurred which could reasonably be
expected to result in a Material Adverse Effect, whether or not arising from
transactions in the ordinary course of business, in each case other than as set
forth in or contemplated by the Registration Statement and the Prospectus and
(ii) neither the Company nor any of the Subsidiaries shall have sustained any
material loss or interference with its business or properties from fire,
explosion, flood or other casualty, whether or not covered by insurance, or from
any labor dispute or any court or legislative or other governmental action,
order or decree, which is not set forth in the Registration Statement and the
Prospectus, if in the judgment of the Representatives any such development makes
it impracticable or inadvisable to consummate the sale and delivery of the
Shares by the Underwriters at the initial public offering price.
HOU03A:432629.7
14
(d) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of the
Subsidiaries or any of their respective officers or directors in their
capacities as such, before or by any Federal, state or local court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, in which litigation or proceeding an unfavorable ruling, decision or
finding would have a Material Adverse Effect.
(e) Each of the representations and warranties of the Company
and the Material Subsidiaries contained herein shall be true and correct in all
material respects at the Closing Date and, with respect to the Option Shares, at
the Option Closing Date, as if made at the Closing Date and, with respect to the
Option Shares, at the Option Closing Date, and all covenants and agreements
herein contained to be performed on the part of the Company and all conditions
herein contained to be fulfilled or complied with by the Company at or prior to
the Closing Date and, with respect to the Option Shares, at or prior to the
Option Closing Date, shall have been duly performed, fulfilled or complied with.
(f) The Representatives shall have received an opinion, dated
the Closing Date and, with respect to the Option Shares, the Option Closing
Date, from Weil, Gotshal & Xxxxxx LLP, counsel to the Company, to the effect set
forth in Exhibit B.
(g) The Representatives shall have received an opinion, dated
the Closing Date and, with respect to the Option Shares, the Option Closing
Date, from Xxxxx & Xxxxx, L.L.P., counsel to the Underwriters, with respect to
the Registration Statement, the Prospectus and this Agreement, which opinion
shall be satisfactory in all respects to the Representatives.
(h) On the date of the Prospectus, the Accountants shall have
furnished to the Representatives a letter, dated the date of its delivery,
addressed to the Representatives and in form and substance satisfactory to the
Representatives, confirming that they are independent accountants with respect
to the Company as required by the Act and the Rules and Regulations and stating
in effect that:
(i) In their opinion the financial statements and
schedules examined by them and included or incorporated by reference in
the Registration Statement comply in form in all material respects with
the applicable accounting requirements of the Act and the Rules and
Regulations;
(ii) They have made a review of the unaudited financial
statements included in the Registration Statement in accordance with
standards established by the American Institute of Certified Public
Accountants, as indicated in their reports attached to such letter;
HOU03A:432629.7
15
(iii) On the basis of the review referred to in clause
(ii) above, a reading of the latest available interim financial statements
of the Company, inquiries of officials of the Company who have
responsibility for financial and accounting matters and other specified
procedures, nothing came to their attention that caused them to believe
that:
(A) The unaudited financial statements included in
the Registration Statement do not comply in form in all material
respects with the applicable accounting requirements of the Act and
the Rules and Regulations or are not in conformity with GAAP applied
on a basis substantially consistent with that of the audited
financial statements in the Registration Statement;
(B) The pro forma financial statements included in
the Registration Statement and the Prospectus do not comply in form
in all material respects with the applicable accounting requirements
of Rule 11-02 of Regulation SX of the Rules and Regulations or that
the pro forma adjustments have not been properly applied to the
historical amounts in the compilation of such statements;
(C) At the date of the latest available balance
sheet read by such accountants, or at a subsequent specified date
not more than five days prior to the date of this Agreement, there
was any change in the capital stock or any increase in total current
liabilities or total liabilities or any decrease in total current
assets or total assets of the Company, as compared with amounts
shown on the latest balance sheet included in the Prospectus; or
(D) For the period from the closing date of the
latest income statement included in the Prospectus to the closing
date of the latest available income statement read by such
accountants, or to the subsequent specified date referred to in
clause (C), there were any decreases, as compared with the
corresponding periods of the previous year, in total revenues, total
operating expenses or net income;
except in all cases set forth above for changes, increases or decreases
which the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(iv) They have compared specified dollar amounts (or
percentages derived from such dollar amounts) and other financial
information contained in the Registration Statement (in each case to the
extent that such dollar amounts, percentages and other financial
information are derived from the general accounting records of the Company
and its subsidiaries subject to the internal controls of the Company's
accounting system or are derived directly from such records by analysis or
computation) with the results obtained from inquiries, a reading of such
general accounting records and other procedures specified in such letter
and have found such dollar amounts, percentages and
HOU03A:432629.7
16
other financial information to be in agreement with such results, except
as otherwise specified in such letter.
At the Closing Date and, as to the Option Shares, the Option Closing Date, the
Accountants shall have furnished to the Representatives a letter, dated the date
of its delivery, which shall confirm, on the basis of a review in accordance
with the procedures set forth in the letter from the Accountants, that nothing
has come to their attention during the period from the date of the letter
referred to above to a date (specified in the letter) not more than two business
days prior to the Closing Date and the Option Closing Date which would require
any change in their letter dated the date of the Prospectus, if it were required
to be dated and delivered at the Closing Date and the Option Closing Date.
(i) On the date of the Prospectus and at the Closing Date and,
as to the Option Shares, the Option Closing Date, each of the Engineers shall
have furnished to the Representatives a letter, dated the date of its delivery,
addressed to the Representatives and in form and substance satisfactory to the
Representatives, confirming that they are independent petroleum engineers with
respect to the Company and with respect to certain of the oil and gas
information contained in the Registration Statement.
(j) At the Closing Date and, as to the Option Shares, the
Option Closing Dates, there shall be furnished to the Representatives an
accurate certificate, dated the date of its delivery, signed by each of the
Chief Executive Officer and the Chief Financial Officer of the Company, in form
and substance satisfactory to the Representatives, to the effect that:
(i) Each signer of such certificate has carefully
examined the Registration Statement and the Prospectus and (A) as of the
date of such certificate, such documents are true and correct in all
material respects and do not omit to state a material fact required to be
stated therein or necessary in order to make the statements therein not
untrue or misleading and (B) since the Effective Date, no event has
occurred as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein not untrue or
misleading in any material respect;
(ii) To the best of their knowledge after reasonable
investigation, each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at the
time such certificate is delivered, true and correct in all material
respects;
(iii) Each of the covenants required herein to be
performed by the Company on or prior to the delivery of such certificate
has been duly, timely and fully performed and each condition herein
required to be complied with by the Company on or prior to the delivery of
such certificate has been duly, timely and fully complied with; and
(iv) Since the respective dates as of which information
is given in the Registration Statement and the Prospectus, (A) there has
not been, and no development
HOU03A:432629.7
17
has occurred which could reasonably be expected to result in, a Material
Adverse Effect, whether or not arising from transactions in the ordinary
course of business, in each case other than as set forth in or
contemplated by the Registration Statement and the Prospectus and (B)
neither the Company nor any of its Subsidiaries has sustained any material
loss or interference with its business or properties from fire, explosion,
flood or other casualty, whether or not covered by insurance, or from any
labor dispute or any court or legislative or other governmental action,
order or decree, which is not set forth in the Registration Statement and
the Prospectus.
(k) On or prior to the Closing Date, the Representatives shall
have received the executed agreements referred to in Section 4(n).
(l) The Shares shall be qualified for sale in such states as
the Representatives may reasonably request, and each such qualification shall be
in effect and not subject to any stop order or other proceeding on the Closing
Date and the Option Closing Date.
(m) Prior to the Closing Date, the Shares shall have been duly
authorized for listing by the New York Stock Exchange upon official notice of
issuance.
(n) The National Association of Securities Dealers, Inc. shall have
approved the underwriting terms and arrangements and such approval shall not
have been withdrawn or limited.
(o) The Company and each of the Material Subsidiaries shall
have furnished to the Representatives such certificates, in addition to those
specifically mentioned herein, as the Representatives may have reasonably
requested as to the accuracy and completeness at the Closing Date and the Option
Closing Date of any statement in the Registration Statement or the Prospectus,
as to the accuracy at the Closing Date and the Option Closing Date of the
representations and warranties of the Company and the Material Subsidiaries
herein, as to the performance by the Company and the Material Subsidiaries of
their respective obligations hereunder or as to the fulfillment of the
conditions concurrent and precedent to the obligations hereunder of the
Representatives.
6. INDEMNIFICATION.
(a) The Company and each of the Material Subsidiaries, jointly
and severally, will indemnify and hold harmless each Underwriter, the directors,
officers, employees and agents of each Underwriter and each person, if any, who
controls each 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, liabilities, expenses and damages
(including, but not limited to, any and all investigative, legal and other
expenses reasonably incurred as such expenses are incurred in connection with,
and any and all amounts paid in settlement of, any action, suit or proceeding
between any of the indemnified parties and any indemnifying parties or
HOU03A:432629.7
18
between any indemnified party and any third party, or otherwise, or any claim
asserted), as and when incurred, to which any Underwriter, or any of such
persons, may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, liabilities, expenses or damages arise out of or are based on
(i) any untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, the Registration Statement or the
Prospectus or any amendment or supplement to the Registration Statement or the
Prospectus, (ii) the omission or alleged omission to state in such document a
material fact required to be stated in it or necessary to make the statements in
it not misleading or (iii) any act or failure to act or any alleged act or
failure to act by any Underwriter in connection with, or relating in any manner
to, the Shares or the offering contemplated hereby, and which is included as a
part of or referred to in any loss, claim, liability, expense or damage arising
out of or based upon matters covered by clause (i) or (ii) above (provided that
the Company shall not be liable under this clause (iii) to the extent it is
finally judicially determined by a court of competent jurisdiction that such
loss, claim, liability, expense or damage resulted directly from any such acts
or failures to act undertaken or omitted to be taken by such Underwriter through
its gross negligence or wilful misconduct); PROVIDED, HOWEVER, that the Company
will not be liable to the extent that such loss, claim, liability, expense or
damage (A) arises from the sale of the Shares in the public offering to any
person by an Underwriter and is based on an untrue statement or omission or
alleged untrue statement or omission made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
the Representatives on behalf of any Underwriter expressly for inclusion in the
Registration Statement, any preliminary prospectus or the Prospectus or (B)
results solely from an untrue statement of a material fact contained in, or the
omission of a material fact from, such preliminary prospectus, which untrue
statement or omission was completely corrected in the Prospectus (as then
amended or supplemented) if the Company shall sustain the burden of proving that
the Underwriters sold Shares to the person alleging such loss, claim, liability,
expense or damage without sending or giving, at or prior to the written
confirmation of such sale, a copy of the Prospectus (as then amended or
supplemented) if the Company has previously furnished copies thereof to the
Underwriters within a reasonable amount of time prior to such sale or such
confirmation, and the Underwriters failed to deliver the corrected Prospectus,
if required by law to have so delivered it and if delivered would have been a
complete defense against the person asserting such loss, claim, liability,
expense or damage. This indemnity agreement will be in addition to any liability
that the Company might otherwise have.
(b) Each Underwriter will, severally and not jointly,
indemnify and hold harmless the Company, each of the Subsidiaries, First
Reserve, each other person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act, each director of the
Company and each officer of the Company who signs the Registration Statement to
the same extent as the foregoing indemnity from the Company and the Material
Subsidiaries to each Underwriter, but only insofar as losses, claims,
liabilities, expenses or damages arise out of or are based on any untrue
statement or omission or alleged untrue statement or omission made in reliance
on and in conformity with information relating to any Underwriter furnished in
writing to the Company by CSFBC on behalf of such Underwriter expressly for use
in the Registration Statement, any preliminary prospectus or the Prospectus;
PROVIDED, HOWEVER, that in no
HOU03A:432629.7
19
case shall any Underwriter be liable or responsible for any amount in excess of
the underwriting discounts and commissions received by such Underwriter. This
indemnity will be in addition to any liability that each Underwriter might
otherwise have.
(c) Any party that proposes to assert the right to be
indemnified under this Section 6 will, promptly after receipt of notice of
commencement of any action against such party in respect of which a claim is to
be made against an indemnifying party or parties under this Section 6, notify
each such indemnifying party of the commencement of such action, enclosing a
copy of all papers served, but the omission so to notify such indemnifying party
will not relieve it from any liability that it may have to any indemnified party
under the foregoing provisions of this Section 6 unless, and only to the extent
that, such omission results in the forfeiture of substantive rights or defenses
by the indemnifying party. If any such action is brought against any indemnified
party and it notifies the indemnifying party of its commencement, the
indemnifying party will be entitled to participate in and, to the extent that it
elects by delivering written notice to the indemnified party promptly after
receiving notice of the commencement of the action from the indemnified party,
jointly with any other indemnifying party similarly notified, to assume the
defense of the action, with counsel reasonably satisfactory to the indemnified
party, and after notice from the indemnifying party to the indemnified party of
its election to assume the defense, the indemnifying party will not be liable to
the indemnified party for any legal or other expenses except as provided below
and except for the reasonable costs of investigation subsequently incurred by
the indemnified party in connection with the defense. The indemnified party will
have the right to employ its own counsel in any such action, but the fees,
expenses and other charges of such counsel will be at the expense of such
indemnified party unless (i) the employment of counsel by the indemnified party
has been authorized in writing by the indemnifying party, (ii) the indemnified
party has reasonably concluded (based on advice of counsel) that there may be
legal defenses available to it that are different from or in addition to those
available to the indemnifying party, (iii) a conflict or potential conflict
exists (based on advice of counsel to the indemnified party) between the
indemnified party and the indemnifying party (in which case the indemnifying
party will not have the right to direct the defense of such action on behalf of
the indemnified party) or (iv) the indemnifying party has not in fact employed
counsel to assume the defense of such action within a reasonable time after
receiving notice of the commencement of the action, in each of which cases the
reasonable fees, disbursements and other charges of counsel will be at the
expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time (in addition to any local counsel)
for all such indemnified party or parties. All such fees, disbursements and
other charges will be reimbursed by the indemnifying party promptly as they are
incurred. An indemnifying party will not be liable for any settlement of any
action or claim effected without its written consent (which consent will not be
unreasonably withheld). No indemnifying party shall, without the prior written
consent of each indemnified party, settle or compromise or consent to the entry
of any judgment in any pending or threatened claim, action or proceeding
relating to the matters contemplated by this Section 6 (whether or not any
indemnified party is a party thereto), unless such settlement, compromise or
consent includes an
HOU03A:432629.7
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unconditional release of each indemnified party from all liability arising or
that may arise out of such claim, action or proceeding.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 6 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company, any of the Material
Subsidiaries, or the Underwriters, the Company and the Material Subsidiaries, on
the one hand, and the Underwriters or the other will contribute to the total
losses, claims, liabilities, expenses and damages (including any investigative,
legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim asserted, but
after deducting any contribution received by the Company or any Material
Subsidiary from persons other than the Underwriters, such as persons who control
the Company within the meaning of the Act, officers of the Company who signed
the Registration Statement and directors of the Company, who also may be liable
for contribution) to which the Company, any one or more of the Material
Subsidiaries and any one or more of the Underwriters may be subject in such
proportion as shall be appropriate to reflect the relative benefits received by
the Company, the Material Subsidiaries, on the one hand, and the Underwriters on
the other. The relative benefits received by the Company and the Material
Subsidiaries, on the one hand, and the Underwriters, on the other, shall be
deemed to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. If, but only
if, the allocation provided by the foregoing sentence is not permitted by
applicable law, the allocation of contribution shall be made in such proportion
as is appropriate to reflect not only the relative benefits referred to in the
foregoing sentence but also the relative fault of the Company and the Material
Subsidiaries, on the one hand, and the Underwriters, on the other, with respect
to the statements or omissions which resulted in such loss, claim, liability,
expense or damage, or action in respect thereof, as well as any other relevant
equitable considerations with respect to such offering. Such relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or any of the Material
Subsidiaries, on the one hand, or the Representatives on behalf of the
Underwriters, on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company, the Material Subsidiaries and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this Section 6(d) were to be 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 into account the equitable
considerations referred to herein. The amount paid or payable by an indemnified
party as a result of the loss, claim, liability, expense or damage, or action in
respect thereof, referred to above in this Section 6(d) shall be deemed to
include, for purposes of this Section 6(d), 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 6(d), no Underwriter shall be required to contribute any amount in
excess of the underwriting discounts and commissions received by it, and no
person found guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) will
HOU03A:432629.7
21
be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute as
provided in this Section 6(d) are several in proportion to their respective
underwriting obligations and not joint. For purposes of this Section 6(d), any
person who controls a party to this Agreement within the meaning of the Act will
have the same rights to contribution as that party, and each officer of the
Company who signed the Registration Statement and each director of the Company
will have the same rights to contribution as the Company, subject in each case
to the provisions hereof. Any party entitled to contribution, promptly after
receipt of notice of commencement of any action against such party in respect of
which a claim for contribution may be made under this Section 6(d), will notify
any such party or parties from whom contribution may be sought, but the omission
so to notify will not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have under this Section 6(d).
(e) The indemnity and contribution agreements contained in
this Section 6 and the representations and warranties of the Company and the
Subsidiaries contained in this Agreement shall remain operative and in full
force and effect regardless of (i) any investigation made by or on behalf of the
Underwriters, (ii) acceptance of any of the Shares and payment therefor or (iii)
any termination of this Agreement.
7. TERMINATION. The obligations of the several Underwriters under
this Agreement may be terminated at any time on or prior to the Closing Date
(or, with respect to the Option Shares, on or prior to the Option Closing Date),
by notice to the Company from the Representatives, without liability on the part
of any Underwriter to the Company or any of the Material Subsidiaries, if, prior
to delivery and payment for the Shares (or the Option Shares, as the case may
be), in the sole judgment of the Representatives, (a) since the respective dates
as of which information is given in the Registration Statement there has been,
and no development has occurred which could reasonably be expected to result in,
any Material Adverse Effect, (b) trading in any of the equity securities of the
Company shall have been suspended by the Commission, the NASD, by an exchange
that lists the Shares, (c) trading in securities generally on the New York Stock
Exchange or the Nasdaq Stock Market shall have been suspended or limited or
minimum or maximum prices shall have been generally established on such
exchange, or additional material governmental restrictions, not in force on the
date of this Agreement, shall have been imposed upon trading in securities
generally by such exchange or by order of the Commission or any court or other
governmental authority, (d) a general banking moratorium shall have been
declared by either Federal or New York State authorities or (e) any outbreak or
escalation of major hostilities in which the United States is involved, any
declaration of war by Congress or any other substantial national or
international calamity or emergency if, in the judgment of a majority in
interest of the Underwriters including the Representatives, the effect of any
such outbreak, declaration, calamity or emergency makes it impracticable or
inadvisable to proceed with completion of the public offering or the sale of and
payment for the Shares.
8. SUBSTITUTION OF UNDERWRITERS. If any one or more of the
Underwriters shall default in their obligations to purchase Shares hereunder on
either the Closing Date or the Option
HOU03A:432629.7
22
Closing Date, and the aggregate number of Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date is not more than one-tenth of the aggregate number of Shares that the
Underwriters are obligated to purchase on such date, the other Underwriters
shall be obligated, severally, to purchase the Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase, in the
proportions which the number of Shares which they have respectively agreed to
purchase on such date bears to the aggregate number of Shares which all such
non-defaulting Underwriters have so agreed to purchase, or in such other
proportions as CSFBC may specify; provided that in no event shall the maximum
number of Shares which any Underwriter has become obligated to purchase on such
date be increased pursuant to this Section 8 by more than one-ninth of the
number of Shares agreed to be purchased by such Underwriter on such date without
the prior written consent of such Underwriter. If any Underwriter or
Underwriters shall so default and the aggregate number of Shares with respect to
which such default or defaults occur exceeds one-tenth of the aggregate number
of Shares that the Underwriters are obligated to purchase on such date and
arrangements satisfactory to CSFBC and the Company for the purchase of such
Shares are not made within 48 hours after such default, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or the
Company for the purchase or sale of any Shares under this Agreement (provided
that if such default occurs with respect to the Option Shares after the Closing
Date, this Agreement will not terminate as to the Firm Shares). In any such
case, either the Representatives or the Company shall have the right to postpone
the Closing Date or the Option Closing Date, as applicable, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and in the Prospectus or in any other documents or
arrangements may be effected. As used in this Agreement, the term "Underwriters"
includes any person substituted for an Underwriter under this Section. Any
action taken pursuant to this Section 8 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
9. MISCELLANEOUS. Notice given pursuant to any of the provisions of
this Agreement shall be in writing and, unless otherwise specified, shall be
mailed or delivered if to the Company, at the office of the Company, 1100
Louisiana, 00xx Xxxxx, X.X. Xxx 0000, Xxxxxxx, Xxxxx 00000, Attention: President
and Chief Executive Officer, with a copy to Weil, Gotshal & Xxxxxx LLP, 000
Xxxxxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000, Attention: Xxxxx X. Xxxx III, Esq.,
or, if to the Underwriters, to the Representatives at the offices of Credit
Suisse First Boston Corporation, Eleven Madison Avenue, New York, New York,
10010-3629, Attention: Investment Banking Department -- Transactions Advisory
Group. Any such notice shall be effective only upon receipt. Any notice under
Section 7 or 8 may be made by telex or telephone, but if so made shall be
subsequently confirmed in writing.
This Agreement has been and is made solely for the benefit of the
several Underwriters and the Company and the controlling persons, directors and
officers referred to in Section 6, and their respective successors and assigns,
and no other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" as used in this Agreement shall not
include a purchaser, as such purchaser, of Shares from any of the several
Underwriters.
HOU03A:432629.7
23
All representations, warranties and agreements of the Company
contained herein or in certificates or other instruments delivered pursuant
hereto, shall remain operative and in full force and effect regardless of any
investigation made by or on behalf of any Underwriter or any of its controlling
persons and shall survive delivery of and payment for the Shares hereunder.
Any action required or permitted to be taken by the Representatives
under this Agreement may be taken by them jointly or by CSFBC.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS
PRINCIPLES OF SUCH STATE.
This Agreement may be signed in two or more counterparts with the
same effect as if the signatures thereto and hereto were upon the same
instrument.
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
The Company and the Underwriters each hereby irrevocably waives any
right it may have to a trial by jury in respect of any claim based upon or
arising out of this Agreement or the transactions contemplated hereby.
This Agreement may not be amended or otherwise modified or any
provision hereof waived except by an instrument in writing signed by the
Representatives, the Company and each of the Material Subsidiaries.
Please confirm that the foregoing correctly sets forth the agreement
among the Company, the Material Subsidiaries and the several Underwriters.
HOU03A:432629.7
24
Very truly yours,
DOMAIN ENERGY CORPORATION
By:
Name:
Title:
DOMAIN ENERGY VENTURES CORPORATION
By:
Name:
Title:
DOMAIN ENERGY PRODUCTION CORPORATION
By:
Name:
Title:
DOMAIN ENERGY FINANCE CORPORATION
By:
Name:
Title:
HOU03A:432629.7
25
Confirmed as of the date first above mentioned:
CREDIT SUISSE FIRST BOSTON CORPORATION
PAINEWEBBER INCORPORATED, PRUDENTIAL
SECURITIES CORPORATION and
XXXXXX XXXXXX & COMPANY, INC.
Acting on behalf of themselves
and as the Representatives of
the other several Underwriters
named in Schedule I hereof.
By: CREDIT SUISSE FIRST BOSTON CORPORATION
By:
Name:
Title:
HOU03A:432629.7
26
SCHEDULE I
UNDERWRITERS
Number of
Firm Shares
to be
UNDERWRITER PURCHASED
Credit Suisse First Boston Corporation..........................
PaineWebber Incorporated........................................
Prudential Securities Incorporated..............................
Xxxxxx Xxxxxx & Company, Inc....................................
_____________________...........................................
_____________________...........................................
_____________________...........................................
_____________________...........................................
Total..................................................... 6,000,000
HOU03A:432629.7
27
SCHEDULE II
EQUITY INVESTMENTS
ENTITY HOLDING INVESTMENT NATURE OF INVESTMENT
Domain Energy Ventures Corporation Warrants to acquire 28,350 shares
of Common Stock of Xxxxxx Corp.
Domain Energy Ventures Corporation 63,000 shares of National Energy
Group Common Stock
HOU03A:432629.7
28
EXHIBIT A
[DATE]
CREDIT SUISSE FIRST BOSTON CORPORATION
PAINEWEBBER INCORPORATED,
PRUDENTIAL SECURITIES CORPORATION and
XXXXXX XXXXXX & COMPANY, INC.
As Representatives of the
several Underwriters
c/oCredit Suisse First Boston Corporation,
Eleven Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
In consideration of the agreement of the several Underwriters, for which
Credit Suisse First Boston Corporation, PaineWebber Incorporated, Prudential
Securities Corporation and Xxxxxx Xxxxxx & Company, Inc. (the "Representatives")
intend to act as representatives to underwrite a proposed public offering (the
"Offering") of 6,000,000 shares of common stock, par value $.01 per share (the
"Common Stock"), of Domain Energy Corporation, a Delaware corporation (the
"Company"), as contemplated by a registration statement with respect to such
shares filed with the Securities and Exchange Commission on Form S-1
(Registration No. 333-24641), the undersigned hereby agrees that the undersigned
will not, for a period of 180 days after the commencement of the public offering
of such shares, without the prior written consent of Credit Suisse First Boston
Corporation, offer to sell, sell, contract to sell, grant any option to sell, or
otherwise dispose of, or require the Company to file with the Securities and
Exchange Commission a registration statement under the Securities Act of 1933 to
register, any shares of Common Stock or securities convertible into or
exchangeable for Common Stock or warrants or other rights to acquire shares of
Common Stock of which the undersigned is now, or may in the future become, the
beneficial owner (within the meaning of Rule 13d-3 under the Securities Exchange
Act of 1934) (other than pursuant to the Company's employee stock option plans
or in connection with other employee incentive compensation or director
compensation arrangements of the Company).
In furtherance of the foregoing, the Company and its transfer agent and
registrar are hereby authorized to decline to make any transfer of shares of
Common Stock if such transfer would constitute a violation or breach of this
Agreement.
HOU03A:432629.7
This Agreement shall be binding on the undersigned and the respective
successors, heirs, personal representatives and assigns of the undersigned. This
Agreement shall lapse and become null and void if the Offering shall not have
occurred on or before , 1997.
Very truly yours,
By:
Print Name:
HOU03A:432629.7
A-2
EXHIBIT B
[Weil, Gotshal & Xxxxxx LLP letterhead]
_______________, 1997
Credit Suisse First Boston Corporation
PaineWebber Incorporated,
Prudential Securities Incorporated and
Xxxxxx Xxxxxx & Company, Inc.
As Representatives of the
several Underwriters
c/oCredit Suisse First Boston Corporation
Eleven Madison Avenue
New York, New York 10010-3629
Gentlemen:
We have acted as counsel to Domain Energy Corporation, a Delaware
corporation (the "Company"), in connection with (i) the execution and delivery
of, and the consummation of the transactions contemplated by, the Underwriting
Agreement (the "Agreement"), dated ____________, 1997, among Credit Suisse First
Boston Corporation, PaineWebber Incorporated, Prudential Securities Incorporated
and Xxxxxx Xxxxxx & Company, Inc., as representatives of the several
underwriters named in Schedule I thereto (the "Underwriters"), and the Company
and certain of the Company's subsidiaries and (ii) the sale by the Company to
the Underwriters of 6,000,000 shares (the "Shares") of common stock, par value
$.01 per share (the "Common Stock"), of the Company. This opinion is delivered
to you pursuant to Section 5(f) of the Agreement. Capitalized terms defined in
the Agreement and used but not otherwise defined herein are used herein as so
defined.
In so acting, we have examined originals or copies, certified or otherwise
identified to our satisfaction, of (i) the Agreement, (ii) the Registration
Statement on Form S-1 (Registration No. 333-24641) of the Company filed with the
Securities and Exchange Commission (the "Commission") under the Securities Act
of 1933, as amended (the "Act"), on April 4, 1997, (iii) Amendment No. 1 to the
Registration Statement filed with the Commission on May 22, 1997, (iv) Amendment
No. 2 to the Registration Statement filed with the Commission on
___________________, 1997 (the Registration Statement, as so amended and
including information deemed to be a part of the Registration Statement at the
time it became effective pursuant to Rule 430A under the Act, is hereinafter
referred to as the ("Registration Statement"), (v) the
HOU03A:432629.7
A-1
prospectus dated _____________________, 1997 of the Company in the form filed
with the Commission pursuant to Rule 424(b) under the Act (the "Prospectus"),
and (vi) such other corporate records, agreements, documents and other
instruments, and such certificates or comparable documents of public officials
and of officers and representatives of the Company, and we have made such
inquiries of such officers and representatives, as we have deemed relevant and
necessary as a basis for the opinions hereinafter set forth.
In such examination, we have assumed the genuineness of all signatures,
the legal capacity of natural persons, the authenticity of all documents
submitted to us as originals, the conformity to original documents of all
documents submitted to us as certified, conformed or photostatic copies and the
authenticity of the originals of such latter documents. As to all questions of
fact material to this opinion that have not been independently established, we
have relied upon certificates or comparable documents of officers and
representatives of the Company and upon the representations and warranties of
the Company contained in the Agreement. As used herein "to our knowledge" and
"of which we are aware" means the conscious awareness of facts or other
information by any lawyer in our firm actively involved in the transactions
contemplated by the Agreement.
Based on the foregoing, and subject to the qualifications stated herein,
we are of the opinion that:
1. The Company, and Domain Energy Ventures Corporation, Domain
Energy Production Corporation, and Domain Energy Finance Corporation
(collectively, the "Subsidiaries"), each is a corporation duly incorporated,
validly existing and in good standing under the laws of the State of Delaware
and has all requisite corporate power and authority to own, lease and operate
its properties and to carry on its business as described in the Prospectus.
2. The authorized capital stock of the Company consists of
25,000,000 shares of common stock, par value $.01 per share, and 5,000,000
shares of preferred stock, par value $.01 per share. As of ________________,
1997, there were 7,663,684 shares of common stock and no shares of preferred
stock issued and outstanding. All of such outstanding shares of the Company's
capital stock are duly authorized, validly issued, fully paid and nonassessable,
and have not been issued in violation of any preemptive rights pursuant law or
in the Company's restated certificate of incorporation or in any instrument,
contract or other document filed as an exhibit to the Registration Statement.
The statements in the Prospectus under the caption "Description of Capital
Stock," insofar as they constitute descriptions of the capital stock of the
Company, constitute fair summaries thereof in all material respects. Except as
described in the Registration Statement or the Prospectus, to our knowledge,
there are no outstanding securities of the Company or any Subsidiary convertible
into or evidencing the right to purchase or subscribe for any shares of capital
stock of the Company and there are no outstanding or authorized options,
warrants, calls, subscriptions, rights, commitments or any other agreements of
any character obligating the Company to issue any shares of its capital stock or
any securities convertible into or evidencing the right to purchase or subscribe
for any shares of such stock.
HOU03A:432629.7
B-2
3. The Shares to be issued pursuant to the Agreement have been duly
authorized and, when issued as contemplated by the Agreement, will be validly
issued, fully paid and nonassessable and free of preemptive rights (i) pursuant
to law, (ii) in the Company's restated certificate of incorporation or (iii) in
any instrument, contract or other document filed as an exhibit to the
Registration Statement.
4. All of the outstanding shares of capital stock of each Subsidiary
are owned of record by the Company or one of the other Subsidiaries. To our
knowledge, all of the outstanding shares of capital stock of each Subsidiary are
owned beneficially by the Company or one of the other Subsidiaries, subject to
the pledge of the capital stock of Domain Energy Ventures Corporation and Domain
Energy Production Corporation to The Chase Manhattan Bank as Administrative
Agent under that certain Credit Agreement filed as Exhibit 10.10 to the
Registration Statement. Upon transfer and delivery of the Shares and payment
therefor in accordance with the terms of the Agreement, the Underwriters will
acquire good and marketable title to such Shares, assuming the Underwriters
acquire the Shares without notice of any adverse claim as such term is used in
Section 8-302 of the Uniform Commercial Code in effect in the State of New York.
5. The Company and each of the Subsidiaries has all requisite
corporate power and authority to execute and deliver the Agreement and to
perform its obligations thereunder. The execution, delivery and performance of
the Agreement by the Company and each of the Subsidiaries and the consummation
by the Company and each of the Subsidiaries of the transactions contemplated
thereby have been duly authorized by all necessary corporate action on the part
of the Company and each of the Subsidiaries. The Agreement has been duly and
validly executed and delivered by the Company and each of the Subsidiaries and
(assuming the due authorization, execution and delivery thereof by the other
parties thereto) constitutes the legal, valid and binding obligation of the
Company and each of the Subsidiaries, enforceable against each in accordance
with its terms, subject to applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium and similar laws affecting creditors'
rights and remedies generally, and subject, as to enforceability, to general
principles of equity, including principles of commercial reasonableness, good
faith and fair dealing (regardless of whether enforcement is sought in a
proceeding at law or in equity) and except that rights to indemnification and
contribution thereunder may be limited by federal or state securities laws or
public policy relating thereto.
6. The execution and delivery of the Agreement, the consummation of
the transactions contemplated thereby and compliance by the Company and the
Subsidiaries with the provisions thereof will not conflict with, constitute a
default under or violate (i) any of the terms, conditions or provisions of the
restated certificate of incorporation or by-laws of the Company or any of the
Subsidiaries, (ii) any of the terms, conditions or provisions of any material
document, agreement or other instrument to which the Company or any of the
Subsidiaries is a party or by which any of them is bound of which we are aware,
(iii) any New York, Texas or Delaware corporate or federal law or regulation
(other than federal and state securities or blue sky laws, as to which we
express no opinion in this paragraph) or (iv) any judgment, writ, injunction,
decree, order
HOU03A:432629.7
B-3
or ruling of any court or governmental authority binding on the Company or any
of the Subsidiaries of which we are aware.
7. No consent, approval, waiver, license or authorization or other
action by or filing with any New York, Texas or Delaware corporate or federal
governmental authority is required in connection with the execution and delivery
by the Company or any of the Subsidiaries of the Agreement or the consummation
by the Company or any of the Subsidiaries of the transactions contemplated
thereby, except for filings and other actions required pursuant to federal and
state securities or blue sky laws, as to which we express no opinion in this
paragraph, and those already obtained and made under the Delaware General
Corporation Law.
8. To our knowledge, there is no litigation, proceeding or
governmental investigation pending or overtly threatened against the Company or
any of the Subsidiaries that relates to any of the transactions contemplated by
the Agreement.
9. The Registration Statement and the Prospectus (except for (i) the
financial statements and the notes thereto, the financial statement schedules
and the other financial, statistical and accounting data and (ii) the estimates
of oil and gas reserves and information related thereto, included in or which
should be included in the Registration Statement or the Prospectus, as to which
we express no opinion) comply as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder.
10. To our knowledge, there is no instrument, contract or other
document (the "Documents") that is required to be described in the Registration
Statement or the Prospectus or is required to be filed as an exhibit to the
Registration Statement that is not described therein or filed as an exhibit
thereto. Insofar as the provisions of any of the Documents are described in the
Registration Statement or the Prospectus, such provisions conform in all
material respects to the respective descriptions thereof set forth in the
Prospectus or the Registration Statement.
11. To our knowledge, except as disclosed in the Registration
Statement or the Prospectus, no person or entity has the right to require the
Company to register under the Act shares of Common Stock or other securities of
the Company by reason of the filing or effectiveness of the Registration
Statement.
12. Insofar as certain provisions of the Delaware General
Corporation Law have been described under the caption "Management -- Limitation
of Directors' Liability; Indemnification of Directors and Officers" or under
Item 14 of Part II of the Registration Statement, such provisions conform in all
material respects to the respective descriptions thereof set forth under such
caption and such Item 14, respectively. The statements in the Prospectus under
the caption "Shares Eligible for Future Sale," insofar as they refer to
statements of laws or legal conclusions under the Act or the rules and
regulations thereunder, constitute fair summaries thereof in all material
respects. The statements in the Prospectus under the caption "Description of
Capital Stock," insofar as they refer to statements of laws or legal conclusions
under the Delaware General Corporation Law, constitute
HOU03A:432629.7
B-4
fair summaries thereof in all material respects. The statements in the
Prospectus under the caption "Business and Properties -- Regulation," insofar as
they constitute descriptions of the NGA, the NGPA, the Decontrol Act, Order No.
636, the OCSLA, regulations promulgated by the MMS, Order No. 509 and
regulations promulgated by the FERC (each as defined in the Prospectus) or
amendments thereto or, as applicable, the rules and regulations thereunder,
constitute fair summaries thereof in all material respects. The statements in
the Prospectus under the caption "Business and Properties --Environmental
Matters," insofar as they constitute descriptions of the CERCLA, OPA or CWA
(each as defined in the Prospectus) or amendments thereto or the rules and
regulations thereunder, constitute fair summaries thereof in all material
respects.
13. The Company is not an "investment company" or an entity
"controlled" by an "investment company" under the Investment Company Act of
1940, as amended, and the rules and regulations promulgated by the Commission
thereunder (the "Investment Company Act"). In rendering the opinion in this
paragraph 13, we have assumed that neither Fund VII nor its managing general
partner, First Reserve Corporation, is or is controlled by an "investment
company" under the Investment Company Act.
14. Based solely upon telephonic confirmation from the Commission,
the Registration Statement has become effective under the Act and, to our
knowledge, no stop order suspending the effectiveness of the Registration
Statement or suspending or preventing the use of the Prospectus has been issued
and no proceedings for that purpose have been instituted or are pending or
threatened under the Act. Any required filing of the Prospectus pursuant to Rule
424(b) under the Act has been made in the manner and within the time period
required by Rule 424(b).
We have participated in conferences with directors, officers and other
representatives of the Company, representatives of the independent public
accountants for the Company, representatives of the Underwriters and
representatives of counsel for the Underwriters, at which conferences the
contents of the Registration Statement and the Prospectus and related matters
were discussed, and, although we have not independently verified and are not
passing upon and assume no responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the
Prospectus, no facts have come to our attention which lead us to believe that
the Registration Statement, on the effective date thereof, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements contained therein not
misleading or that the Prospectus, on the date thereof or on the date hereof,
contained or contains an untrue statement of a material fact or omitted or omits
to state a material fact required to be stated therein or necessary to make the
statements contained therein, in light of the circumstances under which they
were made, not misleading (it being understood that we express no view with
respect to (i) the financial statements and related notes, the financial
statement schedules and the other financial, statistical and accounting data and
(ii) the estimates of oil and gas reserves and information related thereto,
included in the Registration Statement).
HOU03A:432629.7
B-5
The opinions expressed herein are limited to the laws of the States of New
York and Texas, the corporate laws of the State of Delaware and the federal laws
of the United States, and we express no opinion as to the effect on the matters
covered by this letter of the laws of any other jurisdiction.
The opinions expressed herein are rendered solely for your benefit in
connection with the transactions described herein. Those opinions may not be
used or relied upon by any other person (other than your counsel solely for the
purpose of delivering to you the opinion required by Section 5(g) of the
Agreement), nor may this letter or any copies thereof be furnished to a third
party, filed with a governmental agency, quoted, cited or otherwise referred to
without our prior written consent.
Very truly yours,
HOU03A:432629.7
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