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EXHIBIT 1.1
9,000,000 PREMIUM INCOME EQUITY SECURITIES(SM) ("PIES(SM)")
TESORO PETROLEUM CORPORATION
CONSISTING OF DEPOSITARY SHARES, EACH REPRESENTING ONE ONE-HUNDREDTH OF A
SHARE OF THE 7 1/4% MANDATORILY CONVERTIBLE PREFERRED STOCK
UNDERWRITING AGREEMENT
June 25, 1998
XXXXXX BROTHERS INC.
HOWARD, WEIL, LABOUISSE, XXXXXXXXXX INCORPORATED
c/x Xxxxxx Brothers Inc.
Three World Financial Center
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Tesoro Petroleum Corporation, a Delaware corporation (the "Company"),
proposes to sell to Xxxxxx Brothers Inc. and Howard, Weil, Labouisse, Xxxxxxxxxx
Incorporated, the several underwriters (collectively, the "Underwriters"), and
the Underwriters propose, severally and not jointly, to purchase 9,000,000
Premium Income Equity Securities, or "PIES" (the "Firm Securities"), consisting
of depositary shares, each representing one one-hundredth of a share of the
Company's 7 1/4% mandatorily convertible preferred stock (the "Mandatorily
Convertible Preferred Stock"). In addition, the Company proposes to grant to the
Underwriters an option to purchase up to an additional 1,350,000 PIES on the
terms and for the purposes set forth in Section 2 (the "Option Securities"). The
Firm Securities and the Option Securities, if purchased, are hereinafter
collectively called the "Securities." This is to confirm the agreement
concerning the purchase of the Securities from the Company by the Underwriters.
The Securities are being issued and sold in connection with the
acquisition (the "Hawaii Acquisition") of BHP Petroleum Americas Refining Inc.
and BHP Petroleum South Pacific Inc. (together, "BHP Hawaii") and the proposed
acquisition (the "Washington Acquisition," and together with the Hawaii
Acquisition, the "Acquisitions") of Shell Anacortes Refining Company ("Shell
Washington") by the Company. Concurrently with the offering of the Securities
(the "PIES Offering"), the Company is offering 5,000,000 shares of the Company's
common stock, par value $0.16 2/3 per share (the "Common Stock"), with gross
proceeds of $79.7 million (excluding any proceeds from the exercise of
over-allotment options granted to the underwriters of the Common Stock). The
Company is also proposing to offer $300 million in aggregate principal amount of
its Senior Subordinated Notes (the "Notes"). The closing of the PIES Offering is
not conditioned upon the closings of the offerings of Common Stock (the "Common
Stock Offering") or the Notes (the
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"Notes Offering" and together with the Common Stock Offering and PIES Offering,
the "Offerings"), nor is the closing of any of the Offerings conditioned upon
the closing of the Washington Acquisition. The net proceeds from the Offerings,
together with borrowing under the Company's Third Amended and Restated Credit
Facility (the "Senior Credit Facility"), will be used to fund the cash purchase
price of the Washington Acquisition, to refinance the Company's Second Amended
and Restated Credit Facility (the "Interim Credit Facility") (a portion of which
was used to finance the cash purchase price of the Hawaii Acquisition), to pay
certain fees and expenses related to the Transactions (as defined below) and, to
the extent not used, for general corporate purposes (including working capital
requirements and capital expenditures).
The (i) stock purchase agreement entered into by the Company in
connection with the Washington Acquisition (the "Washington Agreement") and the
Senior Credit Facility, (ii) the underwriting agreement entered into in
connection with the Common Stock Offering and (iii) the purchase agreement,
registration rights agreement, indenture, Notes and subsidiary guarantees
thereof entered into in connection with the Notes Offering are hereinafter
sometimes collectively referred to as the "Transaction Documents." The
Offerings, the Acquisitions and the closing of the Senior Credit Facility are
hereinafter sometimes referred to collectively as the "Transactions."
SECTION 1. Representations, Warranties and Agreements of the Company.
The Company represents and warrants to, and agrees with, the
Underwriters that as of the date hereof:
(a) A registration statement on Form S-3 (file number
333-51789), and amendments thereto, with respect to the Securities, the
Mandatorily Convertible Preferred Stock and the Common Stock has (i) been
prepared by the Company in conformity in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder, (ii) been filed with the
Commission under the Securities Act and (iii) become effective under the
Securities Act. Such registration statement, as amended as of the date of this
Agreement, meets the requirements set forth in Rule 415(a)(1)(x) under the Act
and complies in all material respects with said Rule. Copies of such
registration statement and amendments thereto have been delivered by the Company
to you as the Underwriters. Upon your written request, but not without your
agreement, the Company will also file a Rule 462(b) Registration Statement in
accordance with Rule 462(b). As used in this Agreement, "Effective Time" means
the date and the time as of which such registration statement, the most recent
post-effective amendment thereto, if any, or any Rule 462(b) Registration
Statement became or becomes effective; "Effective Date" means the date of the
Effective Time; "Preliminary Prospectus" means each prospectus included in such
registration statement, or amendments thereof, including without limitation the
preliminary prospectus supplement, dated June 5, 1998 (the "Preliminary
Prospectus Supplement") relating to the Securities filed with the Commission
pursuant to Rule 424(b)(5) of the Rules and Regulations, through the date of the
Preliminary Prospectus
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Supplement; "Registration Statement" means such registration statement, as
amended at the Effective Time, including any documents incorporated by reference
therein at such time and all information contained in the final prospectus
relating to the Securities filed with the Commission pursuant to Rule 424(b) of
the Rules and Regulations in accordance with Section 5(a) hereof and deemed to
be a part of the registration statement as of the Effective Time pursuant to
paragraph (b) of Rule 430A of the Rules and Regulations and, in the event any
Rule 462(b) Registration Statement becomes effective prior to the First Delivery
Date (as hereinafter defined), also means such registration statement as so
amended, unless the context otherwise requires; "Prospectus" means the
Prospectus included in the Registration Statement at the Effective Time,
including without limitation the final prospectus supplement, dated June 26,
1998, relating to the Securities, as first filed with the Commission pursuant to
paragraph (2) or (5) of Rule 424(b) of the Rules and Regulations; and "Rule
462(b) Registration Statement" means the registration statement and any
amendments thereto filed pursuant to Rule 462(b) of the Rules and Regulations
relating to the offering covered by the initial Registration Statement.
Reference made herein to any Preliminary Prospectus or to the Prospectus shall
be deemed to refer to and include any documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the Securities Act, as of the date
of such Preliminary Prospectus or the Prospectus, as the case may be. The
Commission has not issued any order preventing or suspending the use of any
Preliminary Prospectus.
(b) The Registration Statement conforms, and the Prospectus,
any further amendments or supplements to the Registration Statement or the
Prospectus and any Rule 462(b) Registration Statement will, when they become
effective or are filed with the Commission, as the case may be, conform in all
material respects to the requirements of the Securities Act and the Rules and
Regulations and do not and will not, as of the applicable Effective Time (as to
the Registration Statement and any amendment thereto) and as of the applicable
filing date (as to the Prospectus and any amendment or supplement thereto)
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading; provided that no representation or warranty is made as to
information contained in or omitted from the Registration Statement or the
Prospectus in reliance upon and in conformity with written information furnished
to the Company through the Underwriters by or on behalf of any Underwriter
specifically for inclusion therein.
(c) The documents incorporated by reference in the Preliminary
Prospectus and the Prospectus when they became effective or were filed with the
Commission, conformed in all material respects to the requirements of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and the rules
and regulations of the Commission thereunder, and none of such documents, when
read together with the other information in the Prospectus, contained an untrue
statement of a material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and any further
documents so filed and incorporated by reference in the Prospectus when such
documents became effective or are filed with the Commission, as the case may be,
will conform in all material respects to requirements of the Exchange Act and
the rules and regulations of the Commission thereunder, and none of such
documents, when read together with
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the other information in the Prospectus, will contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(d) The Company is a corporation duly organized and validly
existing in good standing under the laws of the State of Delaware with full
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Prospectus, and is duly qualified and
registered as a foreign corporation for the transaction of business and is in
good standing in each jurisdiction in which the character of the business
conducted by it or the location of the properties owned or leased by it make
such qualification or registration necessary (except where the failure to so
qualify or register would not have a Material Adverse Effect (as defined
below)). The Company has an authorized capitalization as set forth under the
caption "Capitalization" in the Prospectus. On the date hereof and on the First
Delivery Date all of the issued and outstanding shares of capital stock of the
Company (including the shares of Common Stock to be issued in the Common Stock
Offering) have been duly authorized and will be validly issued and fully paid
and nonassessable and will conform to the description thereof contained in or
incorporated by reference in the Prospectus. As used herein, "Material Adverse
Effect" means a material adverse effect on the condition (financial or
otherwise), results of operations, business, earnings or prospects of the
Company and the Subsidiaries (as defined below), taken as a whole.
(e) The unissued Securities to be issued and sold by the
Company to the Underwriters have been duly and validly authorized and, when
issued and delivered against payment therefor as provided herein, will be duly
and validly issued, fully paid and nonassessable. The unissued shares of
Mandatorily Convertible Preferred Stock to be issued in exchange by the Company
to Bank of New York, as depositary with respect thereto (the "Depositary") under
the deposit agreement, dated the First Delivery Date, between the Company and
the Depositary (the "Deposit Agreement") have been duly and validly authorized
and, when issued and exchanged for depositary receipts therefor as provided in
the Deposit Agreement, will be duly and validly issued, fully paid and
nonassessable. The shares of Common Stock issuable upon the conversion of the
Mandatorily Convertible Preferred Stock, have been duly and validly authorized
and reserved for issuance, and upon such conversion, will be duly and validly
issued, fully paid and nonassessable.
(f) Schedule II hereto is a complete and accurate schedule of
the names of all corporations, partnerships and joint ventures (the
"Subsidiaries") which constitute "subsidiaries," as such term is defined in Rule
405 of the rules and regulations of the Commission under the Securities Act
(collectively with the rules and regulations of the Commission under the
Exchange Act, the "Rules and Regulations"). Other than the Subsidiaries listed
on Schedule II, no corporation, partnership or other entity in which the Company
has an equity interest constitutes a "subsidiary" as defined in Rule 405 of the
Rules and Regulations. Each Subsidiary is duly organized, validly existing and
in good standing in the jurisdiction of its incorporation or formation, as the
case may be, with full corporate or other power and authority to own, lease and
operate its properties and to conduct its business as described in the
Prospectus. Each Subsidiary is duly qualified and registered
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as a foreign corporation or limited partnership, as the case may be, for the
transaction of business and is in good standing in each jurisdiction in which
the character of the business conducted by it or the location of the properties
owned or leased by it make such qualification or registration unnecessary, save
where the failure to so qualify or be in good standing as a foreign corporation
or limited partnership, as the case may be, would not have a Material Adverse
Effect.
(g) All of the issued and outstanding shares of capital stock
of each of the Subsidiaries that is a corporation have been duly authorized and
validly issued, are fully paid and nonassessable, and are owned by the Company
directly or indirectly, free and clear of any lien, adverse claim, security
interest or other encumbrance (a "Lien"), except as arising from the Interim
Credit Facility and, upon its execution, the Senior Credit Facility or as
described in the Prospectus. All outstanding equity interests in each Subsidiary
that is not a corporation have been duly authorized and validly issued and are
owned by the Company directly or indirectly, free and clear of any Lien, except
as arising from the Interim Credit Facility and, upon its execution, Senior
Credit Facility or as described in the Prospectus. Except as disclosed in the
Prospectus and as outstanding under employee benefit plans of the Company, there
are no outstanding subscriptions, rights (preemptive or other), warrants, calls,
commitments of sale or options to acquire, or instruments convertible into or
exchangeable for, nor any restriction on the voting or transfer of, any capital
stock or other equity interest of the Company or any Subsidiary;
(h) The Company and each of the Subsidiaries have all
requisite power and authority to execute, deliver and perform their respective
obligations under this Agreement, the Deposit Agreement and each of the
Transaction Documents, to which they may respectively be a party, and to
consummate the transactions contemplated hereby and thereby, including, without
limitation, the power and authority to issue, sell and deliver the Securities as
provided herein and therein, to consummate the exchange of the Mandatorily
Convertible Preferred Stock for depositary receipts by the Depositary under the
terms of the Deposit Agreement and to consummate the Transactions.
(i) This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and subject to the applicability of general principles of
equity, and except as rights to indemnity and contribution hereunder and
thereunder may be limited by Federal or state securities laws or principles of
public policy.
(j) The Deposit Agreement has been duly authorized by the
Company, and on the First Delivery Date will have been validly executed and
delivered by the Company. When the Deposit Agreement has been executed and
delivered by the Company, the Deposit Agreement will constitute a valid and
binding agreement of the Company, enforceable against the Company in accordance
with its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and to
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general equity principles. The Prospectus contains and accurate summary, in all
material respects, of the terms of the Deposit Agreement.
(k) The Washington Agreement has been duly authorized, validly
executed and delivered by the Company. The Washington Agreement constitutes a
valid and binding agreement of the Company, enforceable against the Company in
accordance with its terms, except as such enforceability may be limited by
bankruptcy, insolvency, reorganization or other similar laws affecting the
enforcement of creditors' rights generally and to general equity principles.
(l) The Senior Credit Facility has been duly authorized by the
Company and, upon execution thereby, will have been validly executed and
delivered by the Company and the Subsidiaries party thereto. When the Senior
Credit Facility has been duly executed and delivered by the Company and each of
such Subsidiaries, the Senior Credit Facility will constitute a valid and
binding agreement of the Company and each of such Subsidiaries, enforceable
against the Company and each of such Subsidiaries in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and to general equity principles. The Prospectus contains an
accurate summary, in all material respects, of the terms of the Senior Credit
Facility.
(m) The execution, delivery and performance of this Agreement
and the Deposit Agreement by the Company and the Transaction Documents by the
Company and the Subsidiaries party thereto, compliance by the Company and each
of such Subsidiaries with all the provisions hereof and thereof, the issuance
and sale of the Securities by the Company, the exchange of the Mandatorily
Convertible Preferred Stock for depositary receipts by the Depositary and the
consummation by the Company and such Subsidiaries of the transactions
contemplated hereby and thereby, including the Transactions and as described in
the Prospectus under the caption "Use of Proceeds," (i) will not conflict with
or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which the Company or any
Subsidiary is a party or by which the Company or any Subsidiary is bound or to
which any of the properties or assets of the Company or any Subsidiary is
subject, (ii) will not result in any violation of the provisions of the charter,
by-laws or other organizational documents of the Company or any Subsidiary or
(iii) will not result in any violation of the provisions of any law or statute
or any order, rule, regulation, judgment or decree of any court or governmental
agency or body having jurisdiction over the Company or any Subsidiary or any of
their respective properties or assets, or (iv) result in the imposition or
creation of (or the obligation to create or impose) a Lien under any agreement
or instrument to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary or their respective properties or assets is bound,
except in the case of clauses (i), (iii) and (iv) for such conflicts, breaches,
defaults, violations or Liens which individually or in the aggregate would not
result in a Material Adverse Effect. Except for such consents, approvals,
authorizations, other orders, filings, qualifications or registrations (i) as
have been obtained, (ii) as may be required under applicable state securities or
Blue Sky laws of various jurisdictions in connection with the issuance, sale and
delivery of the Securities, (iii) as may be required in connection with the
Washington Acquisition, (iv) as may
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be required in the perfection of liens in connection with the consummation of
the Transactions and (v) which the failure to obtain would not result in a
Material Adverse Effect, no consent, approval, authorization, or order of or
filing, qualification or registration with, any such court or governmental
agency or body is required for the execution, delivery and performance of this
Agreement, the Deposit Agreement or the Transaction Documents by the Company and
each of the Subsidiaries party thereto, compliance by the Company and each of
the Subsidiaries party thereto with all the provisions hereof and thereof, the
issuance and sale of the Securities by the Company, the exchange of the
Mandatorily Convertible Preferred Stock for depositary receipts by the
Depositary and the consummation of the transactions contemplated hereby and
thereby, including the Transactions and as described in the Prospectus under the
caption "Use of Proceeds."
(n) Neither the Company nor any Subsidiaries has sustained,
since the date of the latest quarterly financial statements included in the
Prospectus, any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree, otherwise
than as set forth in the Prospectus, except losses or interferences which do
not, individually or in the aggregate, have a Material Adverse Effect; and,
since such date, there has not been any material change in the capital stock or
other equity interest or long-term debt or short-term debt of the Company or any
Subsidiaries or any change having a Material Adverse Effect, or any development
involving a prospective material adverse change, in or affecting the general
affairs, management, consolidated financial position, stockholders' equity or
results of operations of the Company and the Subsidiaries, otherwise than as set
forth or contemplated in the Prospectus; and, since such date, except as
otherwise disclosed in the Prospectus, the Company has not (i) issued or granted
any securities, other than pursuant to Company employee benefit plans or (ii)
declared or paid any dividend on its capital stock.
(o) The historical consolidated financial statements
(including the related notes and supporting schedules) of the Company, and to
the Company's knowledge, BHP Hawaii and Shell Washington, which appear in the
Preliminary Prospectus and the Prospectus comply as to form in all material
respects with the applicable accounting requirements of Securities Act, the
Exchange Act, and the Rules and Regulations, present fairly in all material
respects the consolidated financial position and results of operations of the
entities purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved except as noted therein. The pro forma financial statements included in
the Preliminary Prospectus and the Prospectus present fairly in all material
respects the historical and proposed transactions contemplated by this Agreement
and in the Preliminary Prospectus and the Prospectus; and such pro forma
financial statements comply as to form in all material respects with the
applicable accounting requirements of the Securities Act, the Exchange Act and
the Rules and Regulations, have been prepared on a basis consistent with the
historical consolidated financial statements of the Company, and to the
Company's knowledge, BHP Hawaii and Shell Washington, give effect to assumptions
used in the preparation thereof on a reasonable basis. The other financial and
statistical information and operating data of the Company, and to the Company's
knowledge BHP Hawaii and Shell
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Washington included in the Preliminary Prospectus and the Prospectus, historical
and pro forma, is in all material respects accurately presented and prepared on
a basis consistent with the financial statements, in all material respects,
included in the Preliminary Prospectus and the Prospectus and the books and
records of the Company, and to the Company's knowledge, the books and records of
BHP Hawaii and Shell Washington.
(p) Except for the Registration Rights Agreement entered into
by the Company and the Subsidiaries party thereto in connection with the Notes
Offering, there are no contracts, agreements or understandings between the
Company and any person granting such person the right to require the Company to
file a registration statement under the Securities Act with respect to any
securities of the Company, owned or to be owned by such person or to require the
Company to include such securities with any securities being registered pursuant
to any registration statement filed by the Company under the Securities Act.
(q) Deloitte & Touche LLP, and to the Company's knowledge,
Xxxxxx Xxxxxxxx LLP and Price Waterhouse LLP, who have certified certain
financial statements of the Company and its Subsidiaries, BHP Hawaii and Shell
Washington, respectively, whose reports are included or incorporated by
reference in the Prospectus and who have delivered the initial letters referred
to in Section 7(g) hereof, are independent public accountants as required by the
Securities Act and the Rules and Regulations.
(r) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any Subsidiary
is a party or to which any of their respective properties or assets is subject
which (i) could reasonable be expected to have a Material Adverse Effect or (ii)
could materially and adversely affect the consummation by the Company of its
obligations pursuant to this Agreement, the Deposit Agreement or the Transaction
Documents; and to the Company's knowledge, no such proceedings are threatened or
contemplated by government authorities or threatened by others.
(s) The Company and each of the Subsidiaries has such permits,
licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own its respective properties and to
conduct its business in the manner described in the Prospectus subject in each
case to such qualifications as may be set forth in the Prospectus and except
where the failure to have such permits would not have a Material Adverse Effect;
the Company and each of the Subsidiaries has fulfilled and performed in all
material respects all of its current obligations with respect to such permits
and no event has occurred which allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any other material
impairment of the rights of the holder of any such permits, subject in each case
to such qualifications as may be set forth in the Prospectus and except where
the failure so to fulfill or perform or the occurrence of such an event would
not have a Material Adverse Effect; and, except as described in the Prospectus,
none of such permits contains any restriction that is materially burdensome to
the Company and the Subsidiaries, taken as a whole.
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(t) The Company and each of the Subsidiaries owns or possesses
adequate rights to use all material patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service xxxx registrations,
copyrights and licenses necessary for the conduct of their respective
businesses, except where the failure to have such permits would not have a
Material Adverse Effect, and have no reason to believe that the conduct of their
respective businesses will conflict with, and have not received any notice of
any claim of conflict with, any such rights of others.
(u) With the exception of producing oil and gas properties and
gas gathering properties (the "Oil and Gas Properties"), the Company and each of
the Subsidiaries has good and indefeasible title in fee simple to all real
property and good and defensible title to all personal property owned by them,
in each case free and clear of all liens, encumbrances and defects except such
as are described in the Prospectus or such as do not materially adversely affect
the value of such property or interfere with the use made and proposed to be
made of such property by the Company and the Subsidiaries; and with the
exception of the Oil and Gas Properties, all real property, buildings and
vessels held under lease by the Company and the Subsidiaries are held by them
under valid, subsisting and enforceable leases, with such exceptions as are not
material and do not interfere with the use made and proposed to be made of such
property, buildings and vessels by the Company and the Subsidiaries.
(v) The Company and each of the Subsidiaries has good and
defensible title to its Oil and Gas Properties, free and clear of all liens,
encumbrances and defects, except (a) those described in the Preliminary
Prospectus and the Prospectus, (b) liens securing taxes and other governmental
charges, or claims of materialmen, mechanics and similar persons, not yet due
and payable, (c) liens and encumbrances under operating agreements, unitization
and pooling agreements, and gas sales contracts, securing payment of amounts not
yet due and payable and of a scope and nature customary in the oil and gas
industry and (d) liens, encumbrances and defects that do not in the aggregate
materially affect the value of such Oil and Gas Properties or materially
interfere with the use made or proposed to be made of such properties by the
Company or any of the Subsidiaries. Except to the extent described in the
Preliminary Prospectus and the Prospectus, the oil, gas and mineral leases, coal
methane leases, options to lease, drilling concessions or other property
interests therein held by the Company and each of the Subsidiaries reflects in
all material respects the right of the Company and its Subsidiaries, as the case
may be, to explore or receive production from the undeveloped properties
described in the Preliminary Prospectus and the Prospectus, and the Company and
each of the Subsidiaries have exercised reasonable diligence with respect to
acquiring or otherwise procuring such leases, options to lease, drilling
concessions and other property interests.
(w) No labor disturbance by the employees of the Company or
any of the Subsidiaries exists or, to the knowledge of the Company, is imminent
which might be expected to have a Material Adverse Effect; except as disclosed
in the Prospectus, neither the Company nor any of the Subsidiaries is party to a
collective bargaining agreement; and there are no significant unfair
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labor practice complaints pending against the Company or any of the Subsidiaries
or, to the best of the Company's knowledge, threatened against any of them.
(x) The Company and each of the Subsidiaries is in compliance
in all material respects with all presently applicable provisions of the
Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension plan" (as
defined in ERISA) for which the Company or any of the Subsidiaries would have
any liability; neither the Company nor any of the Subsidiaries has incurred and
neither do any of them expect to incur liability under (i) title IV of ERISA
with respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue code of 1985, as amended, including
the regulations and published interpretations thereunder (the "Code"); and each
"pension plan" for which the Company or any Subsidiary would have any liability
that is intended to be qualified under Section 401(a) of the Code is so
qualified in all material respects and nothing has occurred, whether by action
or by failure to act, which would cause the loss of such qualification.
(y) The Company and each of the Subsidiaries has filed, and as
of the First Delivery Date will have filed, all federal, state, local and
foreign income and franchise tax returns required to be filed through the date
hereof and has paid all taxes due thereon, and no tax deficiency has been
determined adversely to the Company or any of the Subsidiaries which has had
(nor does the Company have any knowledge of any tax deficiency which, if
determined adversely to the Company or any of the Subsidiaries, might have) a
Material Adverse Effect.
(z) The Company and each of the Subsidiaries (i) makes and
keeps accurate books and records and (ii) maintains internal accounting controls
which provide reasonable assurance that (A) transactions are executed in
accordance with management's authorization, (B) transactions are recorded as
necessary to permit preparation of its financial statements and to maintain
accountability for its assets, (C) access to its assets is permitted only in
accordance with management's authorization and (D) the reported accountability
for its assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any difference.
(aa) Except as described in the Preliminary Prospectus and the
Prospectus and except such matters as would not, singly or in the aggregate,
result in a Material Adverse Effect, (A) neither the Company nor any of the
Subsidiaries is in violation of any federal, state, local or foreign statute,
law, rule, regulation, ordinance, code, policy or rule of common law or any
judicial or administrative order, consent, decree or judgment thereof, including
any judicial or administrative order, consent, decree or judgment relating to
pollution or protection of human health, the environment (including, without
limitation, ambient air, surface water, groundwater, land surface or subsurface
strata) or wildlife, including, without limitation, laws and regulations
relating to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum or
petroleum products (collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, "Environmental Laws"), (B) the
Company and each of the
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Subsidiaries has all permits, authorizations and approvals required under any
applicable Environmental Laws and are each in compliance with their
requirements, (C) there are no pending or, to the knowledge of the Company,
threatened administrative, regulatory or judicial actions, suits, demands,
demand letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against the
Company or any of the Subsidiaries and (D) there are no events or circumstances
that might reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of the
Subsidiaries relating to Hazardous Materials or Environmental Laws.
(bb) The Company is not, and upon the issuance and sale of the
Securities as herein contemplated, the consummation of the exchange of the
Mandatorily Convertible Preferred Stock for depositary receipts by the
Depositary and the application of the net proceeds therefrom as described under
the caption "Use of Proceeds" in the Prospectus will not be 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, and the rules and
regulations thereunder.
(cc) The conditions for the use of Form S-3, as set forth in
the General Instructions thereto, have been satisfied.
(dd) The statements set forth in the Prospectus under the
captions "Prospectus Summary--The Transactions--The Acquisitions,"
"Business--Government Regulation and Legislation," "Description of
Indebtedness," "Description of Capital Stock," "Description of PIES" and
"Description of Depositary Arrangements" insofar as such statements purport to
summarize the provisions of the documents or agreements referred to therein,
matters of law or legal conclusions or federal statute, laws or regulations, are
accurate and fairly present the information required to be shown.
(ee) The information supplied by the Company to the
independent petroleum engineering consultants for the Company for purposes of
preparing the reserve reports and estimates of such consultants incorporated by
reference in the Preliminary Prospectus and the Prospectus, including, without
limitation, production, costs of operation and development, current prices for
production, agreements relating to current and future operations and sales of
production, was true and correct in all material respects on the date supplied
and was prepared in accordance with customary industry practices; and
Netherland, Xxxxxx & Associates, Inc., independent petroleum engineers, who
prepared estimates of the extent and value of proved oil and natural gas
reserves of the Company are independent with respect to the Company.
(ff) The Company and each of the Subsidiaries has complied
with, and is and will be in compliance with, the provisions of that certain
Florida act relating to disclosure of doing business with Cuba, codified as
Section 517.075 of the Florida statutes, and the rules and regulations
thereunder or is exempt therefrom.
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The Company acknowledges that the Underwriters and, for purposes of the
opinions to be delivered to the Underwriters pursuant to Section 7 hereof,
counsel to the Company and counsel to the Underwriters, will rely upon the
accuracy and truth of the foregoing representations and hereby consents to such
reliance. Each certificate signed by any officer of the Company and delivered to
the Underwriters or counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to the Underwriters as to the matters
covered thereby.
SECTION 2. Purchase of the Securities by the Underwriters.
(a) On the basis of the representations and warranties
contained in, and subject to the terms and conditions of, this Agreement, the
Company agrees to sell 9,000,000 of the Firm Securities to the several
Underwriters and each of the Underwriters, severally and not jointly, agrees to
purchase the number of Firm Securities set opposite that Underwriter's name in
Schedule I hereto.
(b) In addition, the Company grants to the Underwriters an
option to purchase up to 1,350,000 of the Option Securities. Such option is
granted solely for the purpose of covering over-allotments in the sale of Firm
Securities and is exercisable as provided in Section 4 hereof. Option Securities
shall be purchased severally and not jointly for the account of the Underwriters
in proportion to the number of Firm Securities set opposite the name of such
Underwriters in Schedule I hereto. The respective purchase obligations of each
Underwriter with respect to the Option Securities shall be adjusted by the
Underwriters so that no Underwriter shall be obligated to purchase Option
Securities other than in amounts of 100 PIES. The price of both the Firm
Securities and any Option Securities shall be $15 15/16 per PIES.
(c) The Company shall not be obligated to deliver any of the
Securities to be delivered on the First Delivery Date or the Second Delivery
Date (as hereinafter defined), as the case may be, except upon payment for all
the Securities to be purchased on such Delivery Date as provided herein.
SECTION 3. Offering of Securities by the Underwriters.
(a) Upon authorization by the Underwriters of the release of
the Firm Securities, the several Underwriters propose to offer the Firm
Securities for sale upon the terms and conditions set forth in the Prospectus.
(b) Each Underwriter agrees that it will not offer or sell any
of the Securities outside of the United States and Canada.
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SECTION 4. Delivery of and Payment for the Securities.
(a) Delivery of and payment for the Firm Securities shall be
made at the offices of Xxxxxxx & Xxxxx, L.L.P., 000 Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxx 00000, at 8:30 A.M., Houston time, on July 1, 1998, or at such other date
or place as shall be determined by agreement between the Underwriters and the
Company. This date and time are sometimes referred to herein as the "First
Delivery Date." On the First Delivery Date, the Company shall deliver or cause
to be delivered certificates representing the Firm Securities to the
Underwriters for the account of each Underwriter against payment to or upon the
order of the Company of the purchase price by wire transfer in immediately
available funds. Time shall be of the essence (except that the Company will not
be responsible for any delay resulting from any action or inaction of any
Underwriter) and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligations of each Underwriter
hereunder. Upon delivery, the Firm Securities shall be registered in such names
and in such denominations as the Underwriters shall request in writing not less
than two full business days prior to the First Delivery Date. For the purpose of
expediting the checking and packaging of the certificates for the Firm
Securities, the Company shall make the certificates representing the Firm
Securities available for inspection by the Underwriters in New York, New York,
not later than 2:00 P.M., New York City time, on the business day prior to the
First Delivery Date.
(b) At any time on or before the thirtieth day after the date
of this Agreement, the option granted in Section 2 may be exercised by written
notice being given to the Company by the Underwriters. Such notice shall set
forth the aggregate number of Option Securities as to which the option is being
exercised, the names in which the Option Securities are to be registered, the
denominations in which the Option Securities are to be issued and the date and
time, as determined by the Underwriters, when the Option Securities are to be
delivered; provided, however, that this date and time shall not be earlier than
the First Delivery Date nor earlier than the second business day after the date
on which the option shall have been exercised nor later than the third business
day after the date on which the option shall have been exercised. The date and
time the Option Securities are delivered are sometimes referred to as the
"Second Delivery Date" and the First Delivery Date and the Second Delivery Date
are sometimes each referred to as a "Delivery Date."
(c) Delivery of and payment for the Option Securities shall be
made at the place specified in the first sentence of the first paragraph of this
Section 4 (or at such other place as shall be determined by agreement between
the Underwriters and the Company) at 8:30 A.M., Houston time, on the Second
Delivery Date. On the Second Delivery Date, the Company shall deliver or cause
to be delivered the certificates representing the Option Securities to the
Underwriters for the account of each Underwriter against payment to or upon the
order of the Company of the purchase price by wire transfer in immediately
available funds. Time shall be of the essence (except that the Company will not
be responsible for any delay resulting from any action or inaction of any
Underwriter), and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligations of each Underwriter
hereunder. Upon delivery, the Option Securities shall be registered in such
names and in such denominations as the Underwriters shall request in the
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aforesaid written notice. For the purpose of expediting the checking and
packaging of the certificates representing the Option Securities available for
inspection by the Underwriters in New York, New York, not later than 2:00 P.M.,
New York City time, on the business day prior to the Second Delivery Date.
(d) Since an affiliate of Xxxxxx Brothers Inc. will receive in
excess of 10% of the net proceeds of the Offerings, the PIES Offering is being
made pursuant to the provisions of Rule 2710(c)(8) of the Conduct Rule of the
National Association of Securities Dealers (the "Conduct Rules"). The Company
hereby confirms its engagement of Howard, Weil, Labouisse, Xxxxxxxxxx
Incorporated as, and Howard, Weil, Labouisse, Xxxxxxxxxx Incorporated, hereby
confirms its agreement with the Company to render services as qualified
independent underwriter within in the meaning of Rule 2720 of the Conduct Rules
for the PIES Offering. Howard, Weil, Labouisse, Xxxxxxxxxx Incorporated, solely
in its capacity as qualified independent underwriter and not otherwise, is
referred to herein as the "Independent Underwriter." It is understood and agreed
by all parties hereto that the price at which the Securities are issued and sold
is not higher than the price recommended by the Independent Underwriter. Howard,
Weil, Labouisse, Xxxxxxxxxx Incorporated hereby confirms that it meets the
requirements for serving as a qualified independent underwriter within the
meaning of Rule 2720 of the Conduct Rules.
SECTION 5. Further Agreements of the Company.
The Company further agrees:
(a) To prepare the Prospectus in a form approved by the
Underwriters and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than Commission's close of business on the second
business day following the execution and delivery of this Agreement or, if
applicable, such earlier time as may be required by Rule 430A(a)(3) under the
Securities Act; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus and to file no Rule 462(b)
Registration Statement except as permitted herein; to advise the Underwriters ,
promptly after it receives notice thereof, of the time when any amendment to the
Registration Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed and to furnish the
Underwriters with copies thereof; upon your request, to cause the Rule 462(b)
Registration Statement, properly completed, to be filed with the Commission
pursuant to Rule 462(b) and to provide evidence satisfactory to the Underwriters
of such filing; to advise the Underwriters , promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or the Prospectus or for
additional information; and, in the event of the issuance of any stop order or
of any order preventing or suspending the use of any Preliminary Prospectus or
the Prospectus or suspending any such qualification, to use promptly its
reasonable best efforts to obtain its withdrawal;
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(b) To furnish reasonably promptly to each of the Underwriters
and to counsel for the Underwriters a signed copy of the Registration Statement
as originally filed with the Commission, each amendment thereto and any Rule
462(b) Registration Statement filed with the Commission, including all consents
and exhibits filed therewith;
(c) To deliver promptly to the Underwriters such number of the
following documents as the Underwriters shall reasonably request: (i) conformed
copies of the Registration Statement as originally filed with the Commission,
each amendment thereto (in each case excluding exhibits other than this
Agreement) and any Rule 462(b) Registration Statement, (ii) each Preliminary
Prospectus, the Prospectus and any amended or supplemented Prospectus and (iii)
any document incorporated by reference in the Prospectus (excluding exhibits
thereto); and, if the delivery of a prospectus is required at any time after the
Effective Time in connection with the offering or sale of the Securities or any
other securities relating thereto and if at such time any events shall have
occurred as a result of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be necessary to amend or
supplement the Prospectus or to file under the Exchange Act any document
incorporated by reference in the Prospectus in order to comply with the
Securities Act or the Exchange Act, to notify the Underwriters and, upon their
request, to file such document and to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as the Underwriters
may from time to time reasonably request of an amended or supplemented
Prospectus which will correct such statement or omission or effect such
compliance;
(d) To file promptly with the Commission any amendment to the
Registration Statement or the Prospectus or any supplement to the Prospectus
that may, in the judgment of the Company or the Underwriters, be required by
the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to the
Registration Statement or supplement to the Prospectus, any document
incorporated by reference in the Prospectus, any Prospectus pursuant to Rule 424
of the Rules and Regulations or any Rule 462(b) Registration Statement to
furnish a copy thereof to the Underwriters and counsel for the Underwriters and
obtain the consent of the Underwriters to the filing;
(f) The Company will make generally available to holders of
its securities as soon as may be practicable 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).
(g) For a period of five years following the Effective Date,
to furnish to the Underwriters copies of all materials furnished by the Company
to its public shareholders and all public reports and all reports and financial
statements furnished by the Company to the principal national securities
exchange upon which the PIES may be listed pursuant to requirements of or
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agreements with such exchange or to the Commission pursuant to the Exchange Act
or any rule or regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Underwriters may reasonably request to qualify the Securities for offering and
sale (or obtain an exemption from registration) under the securities laws of
such jurisdictions as the Underwriters may request and to comply with such laws
so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Securities; provided, however, that the Company shall not be required to
qualify as a foreign corporation or a dealer in securities or to execute a
general consent to service of process in any jurisdiction in any action other
than one arising out of the offering or sale of the Securities;
(i) For a period of 90 days from the date of the Prospectus,
not to, directly or indirectly, (A) offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device which is designed to, or
could be expected to, result in the disposition by any person at any time in the
future of) any PIES or shares of Common Stock or any securities convertible into
or exchangeable for PIES or Common Stock (other than the Securities, the
Mandatorily Convertible Preferred Stock, the Common Stock issued in the Common
Stock Offering and upon conversion of the Mandatorily Convertible Preferred
Stock and the shares of Common Stock issued pursuant to employee benefit plans,
qualified stock option plans or other employee compensation plans existing on
the date hereof or pursuant to currently outstanding options, warrants or rights
or upon conversion of the Convertible Subordinated Debentures of Coastwide
Energy Services, Inc.) or (B) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of the economic
benefits or risks of ownership of such securities, whether any such transaction
described in clause (A) or (B) above is to be settled by delivery of PIES,
shares of Common Stock or other securities, in cash or otherwise, in each case
without the prior written consent of Xxxxxx Brothers Inc.
(j) To take such steps as shall be necessary to ensure that
neither the Company nor any Subsidiary of the Company shall become an
"investment company" within the meaning of such term under the Investment
Company Act of 1940, as amended, and the rules and regulations of the Commission
thereunder.
(k) To apply the net proceeds from the sale of the Notes as
set forth under the caption "Use of Proceeds" in the Prospectus.
(l) To do all things required or necessary to be done or
performed under this Agreement prior to such Delivery Date by such date and to
satisfy the closing conditions set forth in Section 7 hereof.
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SECTION 6. Expenses.
Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, the Company agrees to pay or cause
to be paid all reasonable expenses incident to the performance of the
obligations of the Company under this Agreement, including: (i) the costs
incident to the authorization, issuance, sale and delivery of the Securities and
any taxes payable in that connection; (ii) fees, disbursements and expenses of
counsel to the Company and accountants to Company in connection with the sale
and delivery of the Securities, and all other fees and expenses in connection
with the preparation, printing and filing under the Securities Act of the
Registration Statement and any amendments and exhibits thereto (including
financial statements), including the mailing and delivering of copies to the
Underwriters and persons designated by them in the quantities specified; (iii)
the costs of distributing the Registration Statement as originally filed and
each amendment thereto and any post-effective amendments thereof (including, in
each case, exhibits), any Preliminary Prospectus, the Prospectus and any
amendment or supplement to the Prospectus or any document incorporated by
reference therein, all as provided in this Agreement; (iv) the costs of
producing and distributing this Agreement, the Deposit Agreement and any related
documents in connection with the offering, purchase, sale and delivery of the
Securities (v) listing or other fees incident to the inclusion of the Securities
and the Common Stock issuable upon conversion of the Mandatorily Convertible
Preferred Stock for listing on the New York Stock Exchange; (vi) the fees and
expenses, if applicable, of qualifying the Securities under the securities laws
of the several jurisdictions as provided in Section 5(h) and of preparing,
printing and distributing a Blue Sky Memorandum (including reasonable related
fees and expenses of counsel to the Underwriters in connection with such
qualification and memorandum relating thereto); (vii) the fees and expenses of
the Depositary (including reasonable related fees and expenses of counsel to the
Depositary) and (viii) all other costs and expenses incident to the performance
of the obligations of the Company or any of the Subsidiaries under this
Agreement; provided that, except as provided in this Section 6 and in Section
11, the Underwriters shall pay their own costs and expenses, including the costs
and expenses of their counsel, any transfer taxes on the Securities which they
may sell and the expenses of advertising any offering of the Securities made by
the Underwriters.
SECTION 7. Conditions to the Underwriters' Obligations.
The obligations of the Underwriters hereunder are subject to the
accuracy, when made and on each Delivery Date, of the representations and
warranties of the Company contained herein, to the performance by the Company of
its obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); no stop order suspending the
effectiveness of the Registration Statement or any part thereof shall have been
issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and any request of the Commission for inclusion
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of additional information in the Registration Statement or the Prospectus or
otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to the
Company on or prior to such Delivery Date that the Registration Statement or the
Prospectus or any amendment or supplement thereto contains an untrue statement
of a fact which, in the opinion of Xxxxxxx & Xxxxx, L.L.P., counsel for the
Underwriters, is material or omits to state a fact which, in the opinion of such
counsel, is material and is required to be stated therein or is necessary to
make the statements therein, in the light of the circumstances under which they
were made, not misleading.
(c) All corporate proceedings and other legal matters incident
to the authorization, form and validity of this Agreement and the Prospectus,
and all other legal matters relating to this Agreement and the transactions
contemplated hereby shall be reasonably satisfactory in all material respects to
counsel for the Underwriters, and the Company shall have furnished to such
counsel all documents and information that they may reasonably request to enable
them to pass upon such matters.
(d) The Prospectus shall have been printed and copies
distributed to the Underwriters not later than 10:00 a.m., New York City time,
on the day following the date of this Agreement or at such later date and time
as to which the Underwriters may agree.
(e) The Underwriters shall have received from Fulbright &
Xxxxxxxx L.L.P. their written opinion, as counsel to the Company, addressed to
the Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Underwriters, to the effect set forth in Exhibit A hereto
and to such further effect as counsel to the Underwriters may reasonably
request.
(f) The Underwriters shall have received from Xxxxx X. Xxxx,
Xx., his written opinion, as General Counsel of the Company, addressed to the
Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Underwriters, to the effect set forth in Exhibit B hereto
and to such further effect as counsel to the Underwriters may reasonably
request.
(g) At the time of execution of this Agreement, the
Underwriters shall have received from each of Deloitte & Touche LLP, Xxxxxx
Xxxxxxxx LLP and Price Waterhouse LLP a letter, in form and substance
satisfactory to the Underwriters, addressed to the Underwriters and dated the
date hereof, (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date hereof (or, with
respect to matters involving changes or developments since the respective dates
as of which specified financial information is given in the Prospectus, as of a
date not more than five business days prior to the date hereof), the conclusions
and findings of such firm with respect to the financial information, operating
data and other matters ordinarily covered by accountants' "comfort letters" to
underwriters, including the financial information contained or incorporated by
reference in the Prospectus as identified by you.
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(h) With respect to the letters of Deloitte & Touche LLP,
Xxxxxx Xxxxxxxx LLP and Price Waterhouse LLP referred to in the preceding
paragraph and delivered to the Underwriters concurrently with the execution of
this Agreement (the "initial letters"), the Company shall have furnished to the
Underwriters letters (the "bring-down letters") of such accountants, addressed
to the Underwriters and dated such Delivery Date, (i) confirming that they are
independent public accountants within the meaning of the Securities Act and are
in compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating,
as of the date of the bring-down letters (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given in the Prospectus, as of a date not more than
five business days prior to the date of the respective bring-down letter), the
conclusions and findings of such firm with respect to the financial information,
operating data and other matters covered by the respective initial letter and
(iii) confirming in all material respects the conclusions and findings set forth
in the respective initial letter.
(i) (A) At the time of execution of this Agreement, the
Underwriters shall have received from Netherland, Xxxxxx & Associates, Inc.,
independent petroleum engineers for the Company, a letter dated as of such date,
in form and substance satisfactory to the Underwriters; and (B) on such Delivery
Date, the Underwriters shall have received from Netherland, Xxxxxx and
Associates, Inc., independent petroleum engineers for the Company, a letter
dated as of such Delivery Date, to the effect that they reaffirm the statements
made in the letter referred to in clause (i)(A) above.
(j) The Company shall have furnished to the Underwriters a
certificate, dated the such Delivery Date, of (i) the Chairman of the Board,
President or a Vice President of the Company and (ii) the Treasurer or Chief
Financial Officer of the Company stating that:
(i) The representations, warranties and agreements of
the Company in Section 1 are true and correct as of such Delivery Date
and the Company has complied with all its agreements contained herein;
(ii) (A) Neither the Company nor any of the
Subsidiaries has sustained since the date of the latest quarterly
financial statements included or incorporated by reference in the
Preliminary Prospectus or the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Preliminary Prospectus or the
Prospectus and (B) since such date there has not been any material
change in the capital stock, long-term debt or short-term debt of the
Company or any of the Subsidiaries or any material change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity, results of operations or prospects of the Company
and the Subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Preliminary Prospectus or the Prospectus; and
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(iii) They have carefully examined the Registration
Statement or the Prospectus and, in their opinion (A) the Registration
Statement or the Prospectus, as of their respective dates, did not
include any untrue statement of a material fact and did not omit to
state any material fact necessary to make the statements therein, (in
the case of the Prospectus, in the light of the circumstances under
which they were made), not misleading, and (B) since the date of the
Prospectus, no event has occurred which should have been set forth in a
supplement or amendment to the Prospectus.
(iv) The Prospectus shall have been timely filed with
the Commission in accordance with Section 5(a) of this Agreement; no
stop order suspending the effectiveness of the Registration Statement
or any part thereof shall have been issued and no proceeding for that
purpose shall have been initiated or threatened by the Commission as of
such Delivery Date; and any request of the Commission for inclusion of
additional information in the Registration Statement or the Prospectus
or otherwise shall have been complied with.
(k) (i) Neither the Company nor any of its Subsidiaries shall
have sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other calamity,
whether or not covered by insurance, or from any labor dispute or court or
governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus and (ii) since such date there shall not have
been any material change in the capital stock, long-term debt or short-term debt
of the Company or any of its Subsidiaries or any material change, or any
development involving a prospective material change, in or affecting the general
affairs, management, consolidated financial position, stockholders' equity or
results of operations of the Company and its Subsidiaries taken as a whole,
otherwise than as set forth or contemplated in the Prospectus, the effect of
which, in any such case described in clause (i) or (ii), is, in the judgment of
the Underwriters, so material and adverse as to make it impracticable or
inadvisable to proceed with the offering or the delivery of the Securities on
the terms and in the manner contemplated in the Prospectus.
(l) The Company shall have entered into the Deposit Agreement.
(m) Subsequent to the execution and delivery of this Agreement
(i) no downgrading shall have occurred in the rating accorded the Company or any
of the Subsidiaries or any securities of the Company or any of the Subsidiaries
by any "nationally recognized statistical rating organization," as that term is
defined by the Commission for purposes of Rule 436(g)(2) of the Rules and
Regulations and (ii) no such organization shall have publicly announced that it
has under surveillance or review, with possible negative implications, its
rating of any of the Notes.
(n) The Underwriters shall have received from Xxxxxxx & Xxxxx
L.L.P., counsel for the Underwriters, their opinion, dated such Delivery Date,
with respect to such matters as the Underwriters may reasonably require, and the
Company shall have furnished to such counsel such
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documents and information as they may reasonably request for the purpose of
enabling them to pass upon such matters.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Underwriters.
SECTION 8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Underwriter, its officers and employees and each person, if any, who controls
any Underwriter within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of the Securities), to which that
Underwriter, officer, employee or controlling person may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, liability
or action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus,
Registration Statement or the Prospectus or in any amendment or supplement
thereto, (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto, any material fact required to be stated therein or necessary
to make the statements therein 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 Securities or the offering contemplated
hereby, and which is included as part of or referred to in any loss, claim,
damage, liability or action arising out of or based upon matters covered by
clause (i) or (ii) above (provided that the Company shall not be liable in the
case of any matter covered by this clause (iii) to the extent that it is
determined in a final judgment by a court of competent jurisdiction that such
loss, claim, damage, liability or action resulted directly from any such act or
failure to act undertaken or omitted to be taken by such Underwriter through its
gross negligence or willful misconduct), and shall reimburse each Underwriter
and each officer, employee and controlling person promptly upon demand for any
legal or other expenses reasonably incurred by that Underwriter, officer,
employee or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any such
amendment or supplement, in reliance upon and in conformity with the written
information furnished to the Company by or on behalf of any Underwriter
specifically for inclusion therein and described in Section 8(e); provided,
further, that with respect to any such untrue statement or omission made in the
Preliminary Prospectus, the indemnity agreement contained in this Section 8(a)
shall not enure to the benefit of the Underwriter from whom the person asserting
any such losses, claims, damages or liabilities purchased the Securities
concerned if, to the extent that such sale was an initial sale by such
Underwriter and any such loss claim, damage or liability of such Underwriter is
a result of the fact that both (A) a copy of the Prospectus was not sent
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or given to such person at or prior to the written confirmation of the sale of
such Securities to such person, and (B) the untrue statement or omission in the
Preliminary Prospectus was corrected in the Prospectus unless, in either case,
such failure to deliver the Prospectus was a result of noncompliance by the
Company with Section 5(c) hereof. The foregoing indemnity agreement is in
addition to any liability which the Company may otherwise have to any
Underwriter or to any officer, employee or controlling person of any
Underwriter.
In addition to and without limitation of the Company's
obligation to indemnify Howard, Weil, Labouisse, Xxxxxxxxxx Incorporated as an
Underwriter, the Company also agrees to indemnify and hold harmless the
Independent Underwriter and each person, if any, who controls the Independent
Underwriters within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act from and against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, incurred as a result of the Independent
Underwriter's participation as a "qualified independent underwriter" in
connection with the PIES Offering.
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act, from and against any loss,
claim, damage or liability, joint or several, or any action in respect thereof,
to which the Company, any such director, officer or employee, or any controlling
person may become subject, under the Securities Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus or in any amendment or supplement thereto or (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto, any
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with the written information furnished to the
Company by or on behalf of such Underwriter specifically for inclusion therein
and described in Section 8(e), and shall reimburse the Company and any such
director, officer or employee, or any such controlling person, for any legal or
other expenses reasonably incurred by the Company or any such director, officer
or employee, or any controlling person in connection with investigating or
defending or preparing to defend against any such loss, claim, damage, liability
or action as such expenses are incurred. The foregoing indemnity agreement is in
addition to any liability which any Underwriter may otherwise have to the
Company or any such director, officer or employee, or any controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; provided, however, that
the failure to notify the indemnifying party shall not relieve it from any
liability which it may have under this Section 8 except to the extent it has
been materially prejudiced by such failure and, provided further, that the
failure to notify the indemnifying party shall not relieve it from any liability
which it may
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have to an indemnified party otherwise than under this Section 8. If any such
claim or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the indemnified party shall have the right to employ counsel to represent all
indemnified parties who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the indemnified parties against the
indemnifying party under this Section 8 if, (i) the employment of such counsel
shall have been authorized by the indemnifying party in connection with the
defense of such action, (ii) the indemnifying party shall not have engaged
counsel reasonably promptly to take charge of the defense of such action or
(iii) counsel for any of the indemnified parties shall have reasonably concluded
that there may be defenses available to the indemnified parties that are in
addition to or in conflict with those available to the indemnifying party, and,
in that event, the fees and expenses of such separate counsel shall be paid by
the indemnifying party; provided, further, that in connection with any
proceedings or related proceedings in the same jurisdiction, the indemnifying
party shall not be liable for the legal fees and expenses of more than one
separate firm of attorneys (in addition to any local counsel). No indemnifying
party shall (i) without the prior written consent of the indemnified parties
(which consent shall not be unreasonably withheld), settle or compromise or
consent to the entry of any judgment with respect to any pending or threatened
claim, action, suit or proceeding in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified parties are
actual or potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each indemnified
party from all liability arising out of such claim, action, suit or proceeding,
or (ii) be liable for any settlement of any such action effected without its
written consent (which consent shall not be unreasonably withheld), but if
settled with its written consent or if there be a final judgment of the
plaintiff in any such action, the indemnifying party agrees to indemnify and
hold harmless any indemnified party from and against any loss of liability by
reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein, then
each indemnifying party shall, in lieu of indemnifying such indemnified party,
contribute to the amount paid or payable by such indemnified party as a result
of such loss, claim, damage or liability, or action in respect thereof, (i) in
such proportion as shall be appropriate to reflect the relative benefits
received by the Company, on the one hand, and the Underwriters, on the other,
from the offering of the Securities or (ii) if the allocation provided by clause
(i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company, on the one hand, and the
Underwriters on the other with respect to the statements or omissions which
resulted in such loss,
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claim, damage or liability, or action in respect thereof, as well as any other
relevant equitable considerations. The relative benefits received by the
Company, on the one hand, and the Underwriters on the other, with respect to
such offering shall be deemed to be in the same proportion as the total net
proceeds from the offering of the Securities purchased under this Agreement
(before deducting expenses) received by the Company, on the one hand, and the
total underwriting discounts and commissions received by the Underwriters with
respect to the Securities purchased under this Agreement, on the other hand,
bear to the total gross proceeds from the offering of the Securities under this
Agreement, in each case as set forth in the table on the cover page of the
Prospectus. The 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, on the one hand, or the Underwriters, the intent of the parties and
their relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company and the Underwriters agree that
it would not be just and equitable if contributions pursuant to this Section
8(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, damage or liability, or action in respect thereof, referred to
above in this Section 8(d) shall be deemed to include, for purposes of this
Section 8(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 8(d), the Underwriters
shall not be required to contribute any amount in excess of the amount by which
the total price at which the Securities sold and distributed by it was offered
to the purchasers exceeds the amount of any damages which the Underwriters have
otherwise paid or become liable to pay by reason of any untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation.
(e) The Underwriters severally confirm and the Company
acknowledges that the statements with respect to the offering of the Securities
set forth in the bottom paragraph on the cover page of, the legend concerning
stabilization and overallotment on the inside front cover of the Prospectus, and
the seventh, eighth, ninth and tenth paragraphs under the caption "Underwriting"
relating to stabilization and over-allotment in, the Prospectus are correct and
constitute the only information furnished in writing to the Company by or on
behalf of the Underwriters specifically for inclusion in the Prospectus.
SECTION 9. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Securities which
the defaulting Underwriter agreed but failed to purchase on such Delivery Date
in the respective proportions which the number of Firm Securities set opposite
the name of each remaining non-defaulting Underwriter in Schedule I hereto bears
to the total number of Firm
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Securities set opposite the names of all the remaining non-defaulting
Underwriters in Schedule I hereto; provided, however, that the remaining
non-defaulting Underwriters shall not be obligated to purchase any of the
Securities on such Delivery Date if the total number of Securities which the
defaulting Underwriter or Underwriters agreed but failed to purchase on such
date exceeds 9% of the total number of Securities to be purchased on such
Delivery Date, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the number of Securities which it agreed
to purchase on such Delivery Date pursuant to the terms of Section 2. If the
foregoing maximums are exceeded, the remaining non-defaulting Underwriters, or
those other underwriters satisfactory to the Underwriters who so agree, shall
have the right, but shall not be obligated, to purchase, in such proportion as
may be agreed upon among them, all the Securities to be purchased on such
Delivery Date. If the remaining Underwriters or other underwriters satisfactory
to the Underwriters do not elect to purchase the shares which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such Delivery Date,
this Agreement (or, with respect to the Second Delivery Date, the obligation of
the Underwriters to purchase, and of the Company to sell, the Option Securities)
shall terminate without liability on the part of any non-defaulting Underwriter
or the Company, except that the Company will continue to be liable for the
payment of expenses to the extent set forth in Section 6. As used in this
Agreement, the term "Underwriter" includes, for all purposes of this Agreement
unless the context requires otherwise, any party not listed in Schedule I hereto
who, pursuant to this Section 9, purchases Securities which a defaulting
Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If other
underwriters are obligated or agree to purchase the Securities of a defaulting
or withdrawing Underwriter, either the Underwriters or the Company may postpone
the Delivery Date for up to seven full business days in order to effect any
changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
SECTION 10. Termination.
The obligations of the Underwriters hereunder may be terminated by them
by notice given to and received by the Company prior to delivery of and payment
for the Securities if, prior to that time, (i) trading in securities generally
on the New York Stock Exchange or the American Stock Exchange or in the
over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or minimum
prices shall have been established on any such exchange or such market by the
Commission, by such exchange or by any other regulatory body or governmental
authority having jurisdiction, (ii) a banking moratorium shall have been
declared by Federal or New York State authorities, (iii) the United States shall
have become engaged in hostilities, there shall have been an escalation in
hostilities involving the United States or there shall have been a declaration
of a national emergency or war by the United States or (iv) there shall have
occurred such a material adverse change in general economic, political or
financial conditions (or the effect of international conditions on the financial
markets in the United States shall be such; provided, however, in the case of
(iii) and (iv) above, as to make it, in the
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judgment of the Underwriters, impracticable or inadvisable to proceed with the
offering or delivery of the Securities on the terms and in the manner
contemplated in the Prospectus.
SECTION 11. Reimbursement of Underwriters' Expenses.
If the sale of Securities provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 7 hereof is not satisfied, because of any termination pursuant to
Section 10 hereof or because of any refusal, inability or failure on the part of
the Company to perform any agreement herein or comply with any provision hereof
other than by reason of a default by the Underwriters, the Company shall
reimburse the Underwriters for the reasonable fees and expenses of its counsel
and for such other out-of-pocket expenses as shall have been incurred by it in
connection with this Agreement and the proposed purchase of the Securities, and
upon demand the Company shall pay the full amount thereof to the Underwriters.
SECTION 12. Notices, etc.
All statements, requests, notices and agreements hereunder shall be in
writing, and:
(a) if to the Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission to Xxxxxx Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate Department
(Fax: 000-000-0000);
(b) if to the Company shall be delivered or sent by mail,
telex or facsimile transmission to the address of the Company set forth in the
Prospectus, Attention: Vice President, Finance and Treasurer (Facsimile:
210-828-8600).
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof.
SECTION 13. Persons Entitled to Benefit of Agreement.
This Agreement shall inure to the benefit of and be binding upon the
Underwriters, the Company, and their respective successors. This Agreement and
the terms and provisions hereof are for the sole benefit of only those persons,
except that (x) the representations, warranties, indemnities and agreements of
the Company contained in this Agreement shall also be deemed to be for the
benefit of the officers and employees of the Underwriters and the person or
persons, if any, who control the Underwriters within the meaning of Section 15
of the Securities Act and (y) the indemnity agreement of the Underwriters
contained in Section 8(b) of this Agreement shall be deemed to be for the
benefit of directors, officers and employees of the Company and any person
controlling the Company within the meaning of Section 15 of the Securities Act.
Nothing in this Agreement is intended or shall be construed to give any person,
other than the persons referred to in this Section 13, any legal or equitable
right, remedy or claim under or in respect of this Agreement or any provision
contained herein.
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SECTION 14. Survival.
The respective indemnities, representations, warranties and agreements
of the Company and the Underwriters contained in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement, shall survive the
delivery of and payment for the Securities and shall remain in full force and
effect, regardless of any investigation made by or on behalf of any of them or
any person controlling any of them.
SECTION 15. Definition of "Business Day."
For purposes of this Agreement, "business day" means any day on which
the New York Stock Exchange, Inc. is open for trading.
SECTION 16. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF NEW YORK.
SECTION 17. Counterparts.
This Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original but all such counterparts shall together constitute one
and the same instrument.
SECTION 18. Headings.
The headings herein are inserted for convenience of reference only and
are not intended to be part of, or to affect the meaning or interpretation of,
this Agreement.
* * * * *
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If the foregoing correctly sets forth the agreement between the Company
and the Underwriters, please indicate your acceptance in the space provided for
that purpose below.
Very truly yours,
TESORO PETROLEUM CORPORATION
By: /s/ XXXXX X. XXXXX
------------------------------------
Xxxxx X. Xxxxx
Chairman of the Board, President and
Chief Executive Officer
HOWARD, WEIL, LABOUISSE, XXXXXXXXXX
INCORPORATED
(solely in its role as Qualified Independent
Underwriter)
By: HOWARD, WEIL, LABOUISSE, XXXXXXXXXX
INCORPORATED
By: /s/ XXXXX XXXXXX
------------------------------------
(Authorized Representative)
Accepted:
XXXXXX BROTHERS INC.
HOWARD, WEIL, LABOUISSE, XXXXXXXXXX INCORPORATED
By: XXXXXX BROTHERS INC.
By: /s/ H.E. XxXXX III
------------------------------------
(Authorized Representative)
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SCHEDULE I
Number
Number of Firm of Option Securities to be
Securities to purchased (if over-allotment
Name of Underwriter be purchased option exercised in full)
------------------- -------------- ----------------------------
Xxxxxx Brothers Inc.................................. 8,100,000 1,215,000
Howard, Weil, Labouisse, Xxxxxxxxxx
Incorporated .................................. 900,000 135,000
----------- ----------
Total................................................ 9,000,000 1,350,000
=========== ==========
A-1
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SCHEDULE II
1. Digicomp, Inc.
2. Interior Fuels Company
3. Kenai Pipe Line Company
4. Tesoro Alaska Petroleum Company
5. Tesoro Alaska Pipeline Company
6. Tesoro Bolivia Petroleum Company
7. Tesoro E&p Company, L.P.
8. Tesoro Exploration and Production Company
9. Tesoro Financial Services Holding Company
10. Tesoro Gas Resources Company, Inc.
11. Tesoro Hawaii Corporation
12. Tesoro Latin America Company
13. Tesoro Marine Services, Inc.
14. Tesoro Natural Gas Company
15. Tesoro Northstore Company
16. Tesoro Petroleum Companies, Inc.
17. Tesoro Petroleum South Pacific Company
18. Tesoro Pipeline Company, L.P.
19. Tesoro Refining, Marketing & Supply Company
20. Tesoro Vostok Company
21. Victory Finance Company
A-2
