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AMERICAN EXPLORATION COMPANY
3,579,229 SHARES(1)
COMMON STOCK
UNDERWRITING AGREEMENT
October ___, 1996
PRUDENTIAL SECURITIES INCORPORATED
XXXXXX, READ & CO., INC.
X.X. XXXXXXX & SONS, INC.
As Representatives of the several Underwriters
c/o Prudential Securities Incorporated
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Each of American Exploration Company, a Delaware corporation (the
"Company"), New York Life Insurance and Annuity Corporation ("New York Life")
and The Prudential Insurance Company of America ("Prudential Insurance" and,
together with New York Life the "Selling Securityholders") hereby confirms its
agreement with the several underwriters named in Schedule 1 hereto (the
"Underwriters"), for whom you have been duly authorized to act as
representatives (in such capacities, the "Representatives"), as set forth
below. If you are the only Underwriters, all references herein to the
Representatives shall be deemed to be to the Underwriters.
1. Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell, and each of New York Life
and Prudential Insurance propose to sell, to the several Underwriters an
aggregate of 3,000,000 shares, 379,229 shares and 200,000 shares, respectively
(the "Firm Securities"), of the Company's Common Stock, par
__________________________________
(1) Plus an option to purchase up to 536,884 additional shares to cover
over-allotments.
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value $.05 per share ("Common Stock"). The Company also proposes to issue and
sell and New York Life proposes to sell, to the several Underwriters not more
than 480,000 and 56,884, respectively, additional shares of Common Stock if
requested by the Representatives as provided in Section 4 of this Agreement.
Any and all shares of Common Stock to be purchased by the Underwriters pursuant
to such option are referred to herein as the "Option Securities", and the Firm
Securities and any Option Securities are collectively referred to herein as the
"Securities".
2. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the several Underwriters
that:
(a) A registration statement on Form S-1 (File No. 333-13017) with
respect to the Securities, including a prospectus subject to completion, has
been filed by the Company with the Securities and Exchange Commission (the
"Commission") under the Securities Act of 1933, as amended (the "Act"), and one
or more amendments to such registration statement may have been so filed.
After the execution of this Agreement, the Company will file with the
Commission either (i) if such registration statement, as it may have been
amended, has been declared by the Commission to be effective under the Act,
either (A) if the Company relies on Rule 434 under the Act, a Term Sheet (as
hereinafter defined) relating to the Securities, that shall identify the
Preliminary Prospectus (as hereinafter defined) that it supplements containing
such information as is required or permitted by Rules 434, 430A and 424(b)
under the Act or (B) if the Company does not rely on Rule 434 under the Act, a
prospectus in the form most recently included in an amendment to such
registration statement (or, if no such amendment shall have been filed, in such
registration statement), with such changes or insertions as are required by
Rule 430A under the Act or permitted by Rule 424(b) under the Act, and in the
case of either clause (i)(A) or (i)(B) of this sentence as have been provided
to and approved by the Representatives prior to the execution of this
Agreement, or (ii) if such registration statement, as it may have been amended,
has not been declared by the Commission to be effective under the Act, an
amendment to such registration statement, including a form of prospectus, a
copy of which amendment has been furnished to and approved by the
Representatives prior to the execution of this Agreement. The Company may also
file a related registration statement with the Commission pursuant to Rule
462(b) under the Act for the purpose of registering certain additional
Securities, which registration shall be effective upon filing with the
Commission. As used in this Agreement, the term "Original Registration
Statement" means the registration statement initially filed relating to the
Securities, as amended at the time when it was or is declared effective,
including all financial schedules and exhibits thereto and including any
information omitted therefrom pursuant to Rule 430A under the Act and included
in the Prospectus (as hereinafter defined); the term "Rule 462(b) Registration
Statement" means any registration statement filed with the Commission pursuant
to Rule 462(b) under the Act (including the Registration Statement and any
Preliminary
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Prospectus or Prospectus incorporated therein at the time such Registration
Statement becomes effective); the term "Registration Statement" includes both
the Original Registration Statement and any Rule 462(b) Registration Statement;
the term "Preliminary Prospectus" means each prospectus subject to completion
filed with such registration statement or any amendment thereto (including the
prospectus subject to completion, if any, included in the Registration
Statement or any amendment thereto at the time it was or is declared
effective); the term "Prospectus" means:
(A) if the Company relies on Rule 434 under the Act, the
Term Sheet relating to the Securities that is first filed pursuant to
Rule 424(b)(7) under the Act, together with the Preliminary Prospectus
identified therein that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434 under the
Act, the prospectus first filed with the Commission pursuant to Rule
424(b) under the Act; or
(C) if the Company does not rely on Rule 434 under the Act
and if no prospectus is required to be filed pursuant to Rule 424(b)
under the Act, the prospectus included in the Registration Statement;
and the term "Term Sheet" means any term sheet that satisfies the requirements
of Rule 434 under the Act. Any reference herein to the "date" of a Prospectus
that includes a Term Sheet shall mean the date of such Term Sheet.
(b) The Commission has not issued any order preventing or
suspending use of any Preliminary Prospectus. When any Preliminary Prospectus
was filed with the Commission, it (i) contained all statements required to be
stated therein in accordance with, and complied in all material respects with
the requirements of, the Act and the rules and regulations of the Commission
thereunder and (ii) did not 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, not
misleading. When the Registration Statement or any amendment thereto was or is
declared effective, it (i) contained or will contain all statements required to
be stated therein in accordance with, and complied or will comply in all
material respects with the requirements of, the Act and the rules and
regulations of the Commission thereunder and (ii) did not or will not include
any untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading. When the Prospectus
or any Term Sheet that is a part thereof or any amendment or supplement to the
Prospectus is filed with the Commission pursuant to Rule 424(b) (or, if the
Prospectus or part thereof or such amendment or supplement is not required to
be so filed, when the
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Registration Statement or the amendment thereto containing such amendment or
supplement to the Prospectus was or is declared effective) and on the Firm
Closing Date and any Option Closing Date (both as hereinafter defined), the
Prospectus, as amended or supplemented at any such time, (i) contained or will
contain all statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the requirements of, the
Act and the rules and regulations of the Commission thereunder and (ii) did not
or will not 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, not misleading. The
foregoing provisions of this paragraph (b) do not apply to statements or
omissions made in any Preliminary Prospectus, the Registration Statement or any
amendment thereto or the Prospectus or any amendment or supplement thereto in
reliance upon and in conformity with written information furnished to the
Company by any Underwriter through the Representatives specifically for use
therein.
(c) If the Company has elected to rely on Rule 462(b) and the Rule
462(b) Registration Statement has not been declared effective, (i) the Company
has filed a Rule 462(b) Registration Statement in compliance with and that is
effective upon filing pursuant to Rule 462(b) and has received confirmation of
its receipt and (ii) either the Company has given irrevocable instructions for
transmission of the applicable filing fee in connection with the filing of the
Rule 462(b) Registration Statement, in compliance with Rule 111 promulgated
under the Act, or the Commission has received payment of such filing fee.
(d) The Company and each of its subsidiaries have been duly
organized and are validly existing as corporations in good standing under the
laws of their respective jurisdictions of incorporation and are duly qualified
to transact business as foreign corporations and are in good standing under the
laws of all other jurisdictions where the ownership or leasing of their
respective properties or the conduct of their respective businesses requires
such qualification, except where the failure to be so qualified does not amount
to a material liability or disability to the Company and its subsidiaries,
taken as a whole.
(e) The Company and each of its subsidiaries have full power
(corporate and other) to own or lease their respective properties and conduct
their respective businesses as described in the Registration Statement and the
Prospectus or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus; and the Company has full power (corporate and other) to
enter into this Agreement and to carry out all the terms and provisions hereof
to be carried out by it.
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(f) The issued shares of capital stock of each of the Company's
subsidiaries have been duly authorized and validly issued, are fully paid and
nonassessable and, except for directors' qualifying shares and as otherwise set
forth in the Prospectus or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus, are owned beneficially by the Company free and
clear of any security interests, liens, encumbrances, equities or claims.
(g) The Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus. All of the issued shares of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and nonassessable. The Firm Securities and the Option
Securities have been duly authorized and at the Firm Closing Date or the
related Option Closing Date (as the case may be), after payment therefor in
accordance herewith, will be validly issued, fully paid and nonassessable. No
holders of outstanding shares of capital stock of the Company are entitled as
such to any preemptive or other rights to subscribe for any of the Securities,
and no holder of securities of the Company has any right which has not been
fully exercised or waived to require the Company to register the offer or sale
of any securities owned by such holder under the Act in the public offering
contemplated by this agreement.
(h) The capital stock of the Company conforms to the description
thereof contained in the Prospectus or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus.
(i) Except as disclosed in the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), there are no
outstanding (A) securities or obligations of the Company or any of its
subsidiaries convertible into or exchangeable for any capital stock of the
Company or any such subsidiary, (B) warrants, rights or options to subscribe
for or purchase from the Company or any such subsidiary any such capital stock
or any such convertible or exchangeable securities or obligations, or (C)
obligations of the Company or any such subsidiary to issue any shares of
capital stock, any such convertible or exchangeable securities or obligations,
or any such warrants, rights or options.
(j) The consolidated financial statements and schedules of the
Company and its consolidated subsidiaries included in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) fairly present the financial position of
the Company and its consolidated subsidiaries and the results of operations and
changes in financial condition as of the dates and periods therein specified.
Such financial statements and schedules have been prepared in accordance with
generally accepted accounting principles consistently applied throughout the
periods involved
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(except as otherwise noted therein). The selected financial data set forth
under the caption "Selected Financial Information" in the Prospectus (or, if
the Prospectus is not in existence, the most recent Preliminary Prospectus)
fairly present, on the basis stated in the Prospectus (or such Preliminary
Prospectus), the information included therein.
(k) Xxxxxx Xxxxxxxx L.L.P., who have certified certain financial
statements of the Company and its consolidated subsidiaries and delivered their
report with respect to the audited consolidated financial statements and
schedules included in the Registration Statement and the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus), are
independent public accountants as required by the Act and the applicable rules
and regulations thereunder.
(l) KPMG Peat Marwick L.L.P., who have certified certain financial
statements relating to properties to properties acquired by the Company from
Zilkha Energy Company and delivered their report with respect to the audited
consolidated financial statements and schedules included in the Registration
Statement and the Prospectus with respect thereto (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus), are independent public
accountants as required by the Act and the applicable rules and regulations
thereunder.
(m) The execution and delivery of this Agreement have been duly
authorized by the Company and this Agreement has been duly executed and
delivered by the Company, and is the valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms, except
that such enforceability is subject to the effect of (i) any applicable
bankruptcy, insolvency, reorganization or other laws relating to or affecting
creditors' rights generally and (ii) general principles of equity (regardless
of whether such enforceability is considered in a proceeding in equity or at
law) and except as rights to indemnity and contribution thereunder may be
limited by federal and state securities laws.
(n) No legal or governmental proceedings are pending to which the
Company or any of its subsidiaries is a party or to which the property of the
Company or any of its subsidiaries is subject that are required to be described
in the Registration Statement or the Prospectus and are not described therein
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), and no such proceedings have been threatened against the Company
or any of its subsidiaries or with respect to any of their respective
properties; and no contract or other document is required to be described in
the Registration Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement that is not described therein (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus) or filed as
required.
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(o) The issuance, offering and sale of the Securities to the
Underwriters by the Company pursuant to this Agreement, the compliance by the
Company with the other provisions of this Agreement and the consummation of the
other transactions herein contemplated do not (i) require the consent,
approval, authorization, registration or qualification of or with any
governmental authority, except such as have been obtained, such as may be
required under state securities or blue sky laws and, if the registration
statement filed with respect to the Securities (as amended) is not effective
under the Act as of the time of execution hereof, such as may be required (and
shall be obtained as provided in this Agreement) under the Act, or (ii)
conflict with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any material indenture, mortgage,
deed of trust, lease or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries or any of their respective properties are bound, or the charter
documents or by-laws of the Company or any of its subsidiaries, or any statute
or any judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator applicable to the Company or any of
its subsidiaries.
(p) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus, neither the Company
nor any of its subsidiaries has sustained any material loss or interference
with their respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or from any
labor dispute or any legal or governmental proceeding and there has not been
any material adverse change, or any development involving a prospective
material adverse change, in the condition (financial or otherwise), management,
business prospects, net worth, or results of the operations of the Company and
its subsidiaries, taken as a whole, except in each case as described in or
contemplated by the Prospectus or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus.
(q) The Company has not, directly or indirectly, (i) taken any
action designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Securities or (ii) since the filing of the Registration Statement (A) sold,
bid for, purchased, or paid anyone any compensation for soliciting purchases
of, the Securities or (B) paid or agreed to pay to any person any compensation
for soliciting another to purchase any other securities of the Company (except
for the sale of Securities by the Selling Securityholders under this
Agreement).
(r) The Company and its subsidiaries have (i) generally
satisfactory or good and indefeasible title to all their oil and gas
properties, title investigations having been carried out by the Company in
accordance with the practice in the oil and gas industry, (ii) owned by
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them, good and marketable title in fee simple to all other real property owned
by them and (iii) good and marketable 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 any Preliminary Prospectus or such
as do not have a material adverse effect in the condition (financial and
other), management, business prospects, net worth or results of operations of
the Company and its subsidiaries, taken as a whole and do not materially
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and any real property and buildings held under
lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases with such exceptions as are not material to
the Company and its subsidiaries taken as a whole and do not materially
interfere with the use made and proposed to be made of such property and
buildings by the Company and its subsidiaries;
(s) The participation agreements, joint development agreements,
joint operating agreements, farm-out agreements and other agreements described
in the Prospectus or any Preliminary Prospectus relating to the Company's
rights with respect to the ownership, lease or operation of oil and gas
properties, the acquisition of interests in oil and gas properties or the
exploration for, development of or production of oil and gas reserves thereon
constitute valid and binding agreements of the Company and its subsidiaries
that are parties thereto and, to the best knowledge of the Company, of the
other parties thereto, enforceable in accordance with their terms, except that
such enforceability is subject to the effect of (i) any applicable bankruptcy,
insolvency, reorganization or other laws relating to or affecting creditors'
rights generally and (ii) general principles of equity (regardless of whether
such enforceability is considered in a proceeding in equity or at law) and
except as rights to indemnity and contribution thereunder may be limited by
federal and state securities laws;
(t) The information underlying the estimates of the reserves of
the Company and the subsidiaries, which was supplied by the Company to
Netherland, Xxxxxx & Associates ("Netherland Xxxxxx"), independent petroleum
engineers, for purposes of auditing the reserve reports and estimates of the
Company, 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 dates such estimates were made and such information was
supplied and was prepared in accordance with customary industry practices;
Netherland Xxxxxx and Xxxxxxx X. Xxxx & Associates, Inc. ("Xxxx") are
independent petroleum engineers with respect to the Company; other than normal
production of the reserves and intervening spot market product price
fluctuations described in the Prospectus or any Preliminary Prospectus, the
Company is not aware of any facts or circumstances that would result in a
material adverse change in the reserves, or the present value of future net
cash flows therefrom, as described in the Prospectus or any Preliminary
Prospectus; estimates of such reserves and present values
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as described in the Prospectus or any Preliminary Prospectus comply in all
material respects to the applicable requirements of Regulation S-X and Industry
Guide 2 under the Act;
(u) Except as described or reflected in the financial statements
set forth in the Prospectus or any Preliminary Prospectus, as of the date
hereof, (i) all royalties, rentals, deposits and other amounts due on the oil
and gas properties of the Company have been properly and timely paid, and no
proceeds from the sale or production attributable to the oil and gas properties
of the Company are currently being held in suspense by any purchaser thereof,
except where such amounts due could not, singly or in the aggregate, have a
material adverse effect on the financial condition or results of operations of
the Company and its subsidiaries taken as a whole and (ii) there are no claims
under take-or-pay contracts pursuant to which natural gas purchasers have any
make-up rights affecting the interest of the Company in its oil and gas
properties, except where such claims could not, singly or in the aggregate,
have a material adverse effect on the Company's financial condition or results
of operations;
(v) As of the date hereof, the aggregate undiscounted monetary
liability of the Company for petroleum taken or received under any operating or
gas balancing and storage agreement relating to its oil and gas properties that
permits any person to receive any portion of the interest of the Company in any
petroleum or to receive cash or other payments to balance any disproportionate
allocation of petroleum could not, in the aggregate, have a material adverse
effect on the financial condition or results of operations of the Company and
its subsidiaries, taken as a whole.
(w) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus (or, if the Prospectus
is not in existence, the most recent Preliminary Prospectus), (1) the Company
and its subsidiaries have not incurred any material liability or obligation,
direct or contingent, nor entered into any material transaction not in the
ordinary course of business; (2) the Company has not purchased any of its
outstanding capital stock, nor declared, paid or otherwise made any dividend or
distribution of any kind on its capital stock; and (3) there has not been any
material change in the capital stock, short-term debt or long-term debt of the
Company and its consolidated subsidiaries, except in each case as described in
or contemplated by the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus).
(x) No labor dispute with the employees of the Company or any of
its subsidiaries exists or is threatened or imminent that could reasonably be
expected to result in a material adverse change in the condition (financial or
otherwise), business prospects, net worth or results of operations of the
Company and its subsidiaries taken as a whole, except as described in or
contemplated by the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus).
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(y) The Company and each of its subsidiaries are insured by
insurers of recognized financial responsibility against such losses and risks
and in such amounts as are prudent and customary in the businesses in which
they are engaged, except as described in or contemplated by the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus).
(z) No subsidiary of the Company is currently prohibited, directly
or indirectly, from paying any dividends to the Company, from making any other
distribution on such subsidiary's capital stock, from repaying to the Company
any loans or advances to such subsidiary from the Company or from transferring
any of such subsidiary's property or assets to the Company or any other
subsidiary of the Company, except (i) for restrictions imposed by general
corporate law of the jurisdiction in which any such subsidiary may be organized
or (ii) as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus) or
(iii) restrictions which would not, singly or in the aggregate, result in a
material adverse change in the condition (financial or otherwise), net worth,
business prospects or results of operations of the Company and its
subsidiaries, taken as a whole.
(aa) The Company and its subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or foreign
regulatory authorities necessary to conduct their respective businesses, except
where a failure to possess any such items would not result in a material
adverse change in the condition (financial or otherwise), net worth, business
prospects or results of operations of the Company and its subsidiaries taken as
a whole, and neither the Company nor any such subsidiary has received any
notice of proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would result in a
material adverse change in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and its
subsidiaries taken as a whole, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(ab) The Company has filed all foreign, federal, state and local
tax returns that are required to be filed or has requested extensions thereof
(except in any case in which the failure so to file would not have a material
adverse effect on the Company and its subsidiaries taken as a whole) and has
paid all taxes required to be paid by it and any other assessment, fine or
penalty levied against it, to the extent that any of the foregoing is due and
payable, except for any such assessment, fine or penalty that is currently
being contested in good faith or as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(ac) Neither the Company nor any of its subsidiaries is in
violation of any federal or state law or regulation relating to occupational
safety and health or to the storage, handling or
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transportation of hazardous or toxic materials; the Company and its
subsidiaries have received all permits, licenses or other approvals required of
them under applicable federal and state occupational safety and health and
environmental laws and regulations to conduct their respective businesses; and
the Company and each such subsidiary is in compliance with all terms and
conditions of any such permit, license or approval, except in each case any
such violation, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such permits,
licenses or approvals which would not, singly or in the aggregate, result in a
material adverse change in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and its
subsidiaries taken as a whole, except as described in or contemplated by the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(ad) Each certificate signed by any officer of the Company and
delivered to the Representatives or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to each Underwriter
as to the matters covered thereby.
(ae) (i) Except for the shares of capital stock of each of the
subsidiaries owned by the Company and such subsidiaries, (ii) except as
described in or contemplated by the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus) and (iii) for investments
that are not material to the Company and its subsidiaries taken as a whole,
neither the Company nor any such subsidiary owns any shares of stock or any
other equity securities of any corporation or has any equity interest in any
firm, partnership, association or other entity.
(af) No default exists, and no event has occurred which, with
notice or lapse of time or both, would constitute a default in the due
performance and observance of any term, covenant or condition of any indenture,
mortgage, dead of trust, lease or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any of
its subsidiaries or any of their respective properties is bound or may be
affected, except for any such default or event that will not, individually or
in the aggregate, result in a material adverse change in the condition
(financial or otherwise), net worth, business prospects or results of
operations of the Company and its subsidiaries taken as a whole.
(ag) The Company has not distributed and, prior to the later of (i)
the Closing Date and (ii) the completion of the distribution of the Securities,
will not distribute any offering material in connection with the offering and
sale of the Securities other than the Registration Statement or any amendment
thereto, any Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or other materials, if any, permitted by the Act.
3. Representations and Warranties of the Selling Securityholders.
Each Selling Securityholder, severally and not jointly, represents and warrants
to, and agrees with, each of the several Underwriters that:
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(a) Such Selling Securityholder has full power (corporate and
other) to enter into this Agreement and to sell, assign, transfer and deliver
to the Underwriters the Securities to be sold by such Selling Securityholder
hereunder in accordance with the terms of this Agreement; the execution and
delivery of this Agreement have been duly authorized by all necessary corporate
action of such Selling Securityholder; and this Agreement has been duly
executed and delivered by such Selling Securityholder.
(b) Such Selling Securityholder has good and marketable title to
the Securities to be sold by such Selling Securityholder hereunder and upon
sale and delivery of, and payment for, such Securities, as provided herein,
such Selling Securityholder will convey good and marketable title to such
Securities, free and clear of any interests, liens, encumbrances, equities,
claims or other defects.
(c) Such Selling Securityholder has not, directly or indirectly,
(i) taken any action designed to cause or result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities or (ii) since the filing of the Registration
Statement (A) sold, bid for, purchased, or paid anyone any compensation for
soliciting purchases of, the Securities or (B) paid or agreed to pay to any
person any compensation for soliciting another to purchase any other securities
of the Company (except for the sale of Securities by the Selling
Securityholders under this Agreement).
(d) Such Selling Securityholder has reviewed the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus)
and the Registration Statement, and the information regarding such Selling
Securityholder set forth therein under the captions "Security Ownership of
Management and Certain Beneficial Owners" and "Selling Stockholders" is
complete and accurate.
(e) The sale by such Selling Securityholder of Securities pursuant
hereto is not prompted by any adverse information concerning the Company that
is not set forth in the Registration Statement or the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus).
(f) The sale of the Securities to the Underwriters by such Selling
Securityholder pursuant to this Agreement, the compliance by such Selling
Securityholder with the other provisions of this Agreement and the consummation
of the other transactions herein contemplated do not (i) require the consent,
approval, authorization, registration or qualification of or with any
governmental authority, except such as have been obtained, such as may be
required under state securities or blue sky laws and, if the registration
statement filed with respect to the Securities (as amended) is not effective
under the Act as of the time of execution hereof, such as may be required (and
shall be obtained as provided in this Agreement) under the Act and the Exchange
Act or (ii) conflict with or result in a breach or
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violation of any of the terms and provisions of, or constitute a default under
any indenture, mortgage, deed of trust, lease or other agreement or instrument
to which such Selling Securityholder or any of its subsidiaries is a party or
by which such Selling Securityholder or any of its subsidiaries or any of such
Selling Securityholder's properties are bound, or the charter documents or
by-laws of such Selling Securityholder or any statute or any judgment, decree,
order, rule or regulation of any court or other governmental authority or any
arbitrator applicable to such Selling Securityholder or any of its
subsidiaries.
(g) Neither of the Selling Securityholders has distributed and,
prior to the later of (i) the Closing Date and (ii) the completion of the
distribution of the Securities, will not distribute any offering material in
connection with the offering and sale of the Securities other than the
Registration Statement or any amendment thereto, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or other materials, if
any permitted by the Act.
4. Purchase, Sale and Delivery of the Securities. (a) On the
basis of the representations, warranties, agreements and covenants herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to issue and sell, and each of the Selling Securityholders, severally
and not jointly agrees to sell, to each of the Underwriters, and each of the
Underwriters, severally and not jointly, agrees to purchase from the Company
and each of the Selling Securityholders, severally and not jointly, at a
purchase price of $________ per share, the number of Firm Securities set forth
opposite the name of such Underwriter in Schedule 1 hereto. One or more
certificates in definitive form for the Firm Securities that the several
Underwriters have agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Representatives
request upon notice to the Company at least 48 hours prior to the Firm Closing
Date, shall be delivered by or on behalf of the Company and each of the Selling
Securityholders to the Representatives for the respective accounts of the
Underwriters, against payment by or on behalf of the Underwriters of the
purchase price therefor by wire transfer in same-day funds (the "Wired Funds")
to the accounts designated by the Company and each of the Selling
Securityholders. Such delivery of and payment for the Firm Securities shall be
made at the offices of Xxxxxxx & Xxxxx L.L.P., Texas Commerce Tower, 000
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 at 9:30 A.M., New York time, on
November ___, 1996, or at such other place, time or date as the Representatives
and the Company may agree upon or as the Representatives may determine pursuant
to Section 9 hereof, such time and date of delivery against payment being
herein referred to as the "Firm Closing Date". The Company and each of the
Selling Securityholders will make such certificate or certificates for the Firm
Securities available for checking and packaging by the Representatives at the
offices in New York, New York of the Company's transfer agent or registrar or
of Prudential Securities Incorporated at least 24 hours prior to the Firm
Closing Date.
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(b) For the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Securities as contemplated by the
Prospectus, the Company and New York Life, severally and not jointly, hereby
grant to the several Underwriters an option to purchase, severally and not
jointly, the Option Securities. The purchase price to be paid for any Option
Securities shall be the same price per share as the price per share for the
Firm Securities set forth above in paragraph (a) of this Section 4, plus if the
purchase and sale of any Option Securities takes place after the Firm Closing
Date and after the Firm Securities are trading "ex-dividend", an amount equal
to the dividends payable on such Option Securities. The option granted hereby
may be exercised as to all or any part of the Option Securities from time to
time within thirty (30) days after the date of the Prospectus (or, if such 30th
day shall be a Saturday or Sunday or a holiday, on the next business day
thereafter when the New York Stock Exchange is open for trading). The
Underwriters shall not be under any obligation to purchase any of the Option
Securities prior to the exercise of such option. The Representatives may from
time to time exercise the option granted hereby by giving notice in writing or
by telephone (confirmed in writing) to each of the Company and New York Life
setting forth the aggregate number of Option Securities as to which the several
Underwriters are then exercising the option and the date and time for delivery
of and payment for such Option Securities. Any such date of delivery shall be
determined by the Representatives but shall not be earlier than two business
days or later than five business days after such exercise of the option and, in
any event, shall not be earlier than the Firm Closing Date. The time and date
set forth in such notice, or such other time on such other date as the
Representatives and Company may agree upon or as the Representatives may
determine pursuant to Section 9 hereof, is herein called the "Option Closing
Date" with respect to such Option Securities. Upon exercise of the option as
provided herein, the Company and New York Life shall become obligated to sell
to each of the several Underwriters, and, subject to the terms and conditions
herein set forth, each of the Underwriters (severally and not jointly) shall
become obligated to purchase from the Company and New York Life, the same
percentage of the total number of the Option Securities as to which the several
Underwriters are then exercising the option as such Underwriter is obligated to
purchase of the aggregate number of Firm Securities, as adjusted by the
Representatives in such manner as they deem advisable to avoid fractional
shares. If the option is exercised as to all or any portion of the Option
Securities, one or more certificates in definitive form for such Option
Securities, and payment therefor, shall be delivered on the related Option
Closing Date in the manner, and upon the terms and conditions, set forth in
paragraph (a) of this Section 4, except that reference therein to the Firm
Securities and the Firm Closing Date shall be deemed, for purposes of this
paragraph (b), to refer to such Option Securities and Option Closing Date,
respectively.
(c) The Company and each Selling Securityholder hereby acknowledge
that the wire transfer by or on behalf of the Underwriters of the purchase
price for any shares does not constitute closing of a purchase and sale of the
shares. Only execution and delivery of a receipt for shares by the
Underwriters indicates completion of the closing of a purchase of the shares
from the Company and each Selling Securityholder. Furthermore,
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in the event that the Underwriters wire funds to the Company and each Selling
Securityholder prior to the completion of the closing of a purchase of shares,
the Company and each Selling Securityholder hereby acknowledge that until the
Underwriters execute and deliver a receipt for the shares, by facsimile or
otherwise, the Company and each Selling Securityholder will not be entitled to
the wired funds and shall return the wired funds to the Underwriters as soon as
practicable (by wire transfer of same-day funds) upon demand. In the event
that the closing of a purchase of shares is not completed and the wire funds
are not returned by the Company and each Selling Securityholder to the
Underwriters on the same day the wired funds were received by the Company and
each Selling Securityholder, the Company and each Selling Securityholder agree
to pay to the Underwriters in respect of each day the wire funds are not
returned by the Company or either of the Selling Securityholders, as the case
may be, in same-day funds, interest on the amount of such wire funds in an
amount representing the Underwriters' cost of financing as reasonably
determined by Prudential Securities Incorporated.
(d) It is understood that any of you, individually and not as one
of the Representatives, may (but shall not be obligated to) make payment on
behalf of any Underwriter or Underwriters for any of the Securities to be
purchased by such Underwriter or Underwriters. No such payment shall relieve
such Underwriter or Underwriters from any of its or their obligations
hereunder.
5. Offering by the Underwriters. Upon your authorization of the
release of the Firm Securities, the several Underwriters propose to offer the
Firm Securities for sale to the public upon the terms set forth in the
Prospectus.
6. Covenants of the Company. The Company covenants and agrees
with each of the Underwriters and each of the Selling Securityholders that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of this
Agreement, and any amendments thereto to become effective as promptly as
possible. If required, the Company will file the Prospectus or any Term Sheet
that constitutes a part thereof and any amendment or supplement thereto with
the Commission in the manner and within the time period required by Rules 434
and 424(b) under the Act. During any time when a prospectus relating to the
Securities is required to be delivered under the Act, the Company (i) will
comply with all requirements imposed upon it by the Act and the rules and
regulations of the Commission thereunder to the extent necessary to permit the
continuance of sales of or dealings in the Securities in accordance with the
provisions hereof and of the Prospectus, as then amended or supplemented, and
(ii) will not file with the Commission the prospectus, Term Sheet or the
amendment referred to in the second sentence of Section 2(a) hereof, any
amendment or supplement to such Prospectus, Term Sheet or any amendment to the
Registration Statement or any Rule 462(b) Registration Statement of which the
Representatives previously have not been advised and furnished with
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a copy for a reasonable period of time prior to the proposed filing and as to
which filing the Representatives shall reasonably object. The Company will
prepare and file with the Commission, in accordance with the rules and
regulations of the Commission, promptly upon request by the Representatives or
counsel for the Underwriters, any amendments to the Registration Statement or
amendments or supplements to the Prospectus that may be reasonably necessary or
advisable in connection with the distribution of the Securities by the several
Underwriters, and will use its reasonable best efforts to cause any such
amendment to the Registration Statement to be declared effective by the
Commission as promptly as possible. The Company will advise the
Representatives, promptly after receiving notice thereof, of the time when the
Registration Statement or any amendment thereto has been filed or declared
effective or the Prospectus or any amendment or supplement thereto has been
filed and will provide evidence satisfactory to the Representatives of each
such filing or effectiveness.
(b) The Company will advise the Representatives, promptly after
receiving notice or obtaining knowledge thereof, of (i) the issuance by the
Commission of any stop order suspending the effectiveness of the Original
Registration Statement or any Rule 462(b) Registration Statement or any
amendment thereto or any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, (ii) the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, (iii) the institution, threatening or
contemplation of any proceeding for any such purpose or (iv) any request made
by the Commission for amending the Original Registration Statement or any Rule
462(b) Registration Statement, for amending or supplementing the Prospectus or
for additional information. The Company will use its reasonable best efforts
to prevent the issuance of any such stop order and, if any such stop order is
issued, to obtain the withdrawal thereof as promptly as possible.
(c) The Company will arrange for the qualification of the
Securities for offering and sale under the securities or blue sky laws of such
jurisdictions as the Representatives may designate and will continue such
qualifications in effect for as long as may be reasonably necessary to complete
the distribution of the Securities, provided, however, that in connection
therewith the Company shall not be required to qualify as a foreign corporation
or dealer in securities or to execute a general consent to service of process
or subject itself to taxation as a result of doing business, in any case, in
any jurisdiction in which it was not otherwise required to be so qualified or
so subject to service of process or taxation
(d) If, at any time prior to the later of (i) the final date when
a prospectus relating to the Securities is required to be delivered under the
Act or (ii) the Option Closing Date, any event occurs 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 a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading, or if for any other reason it is necessary at any time to
amend or
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supplement the Prospectus to comply with the Act or the rules or regulations of
the Commission thereunder, the Company will promptly notify the Representatives
thereof and, subject to Section 5(a) hereof, will prepare and file with the
Commission, at the Company's expense, an amendment to the Registration
Statement or an amendment or supplement to the Prospectus that corrects such
statement or omission or effects such compliance.
(e) The Company will, without charge, provide (i) to the
Representative and to counsel for the Underwriters a conformed copy of the
registration statement originally filed with respect to the Securities and each
amendment thereto (in each case including exhibits thereto) or any Rule 462(b)
Registration Statement, (ii) to each other Underwriter, a conformed copy of
such registration statement or any Rule 462(b) Registration Statement and each
amendment thereto (in each case without exhibits thereto) and (iii) so long as
a prospectus relating to the Securities is required to be delivered under the
Act, as many copies of each Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto as the Representatives may reasonably request.
Without limiting the application of clause (iii) of the preceding sentence, the
Company, not later than (A) 6:00 P.M., New York City time, on the date of
determination of the public offering price, if such determination occurred at
or prior to 10:00 A.M., New York City time, on such date or (B) 2:00 P.M., New
York City time, on the business day following the date of determination of the
public offering price, if such determination occurred after 10:00 A.M., New
York City time, on such date, will deliver to the Underwriters, without charge,
as many copies of the Prospectus and any amendment or supplement thereto as the
Representatives may reasonably request for purposes of confirming orders that
are expected to settle on the Firm Closing Date.
(f) The Company, as soon as practicable (it being understood that
the Company shall have until at least 455 days after the end of the Company's
current fiscal quarter), will make generally available to its Securityholders
and to the Representatives a consolidated earnings statement of the Company and
its subsidiaries that satisfies the provisions of Section 11(a) of the Act and
Rule 158 thereunder.
(g) The Company will apply the net proceeds from the sale of the
Securities as set forth under "Use of Proceeds" in the Prospectus.
(h) The Company will not, directly or indirectly, without the
prior written consent of Prudential Securities Incorporated, on behalf of the
Underwriters, offer, sell, offer to sell, contract to sell, pledge, grant any
option to purchase or otherwise sell or dispose (or announce any offer, sale,
offer of sale, contract of sale, pledge, grant of any option to purchase or
other sale or disposition) of any shares of Common Stock or any securities
convertible into, or exchangeable or exercisable for, shares of Common Stock
for a period of 90 days after the date hereof, except (i) pursuant to this
Agreement, (ii) for issuances pursuant to the exercise of employee or director
stock options outstanding on the date hereof, (iii) pursuant to the terms
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of convertible securities of the Company outstanding on the date hereof and
(iv) for the grants of options pursuant to option plans existing on the date
hereof.
(i) The Company will not, directly or indirectly, (i) take any
action designed to cause or to result in, or that has constituted or which
might reasonably be expected to constitute, the stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Securities or (ii) (A) sell, bid for, purchase, or pay anyone any
compensation for soliciting purchases of, the Securities or any other
securities of the Company.
(j) The Company will obtain the agreements described in Section
9(j) hereof prior to the Firm Closing Date.
(k) If at any time during the 25-day period after the Registration
Statement becomes effective or the period prior to the Option Closing Date, any
rumor, publication or event relating to or affecting the Company shall occur as
a result of which in your opinion the market price of the Common Stock has been
or is likely to be materially affected (regardless of whether such rumor,
publication or event necessitates a supplement to or amendment of the
Prospectus), the Company will, after notice from you advising the Company to
the effect set forth above, forthwith prepare, consult with you concerning the
substance of, and disseminate a press release or other public statement,
reasonably satisfactory to you, responding to or commenting on such rumor,
publication or event.
(l) If the Company elects to rely on Rule 462(b), the Company
shall both file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) and pay the applicable fees in accordance with Rule
111 promulgated under the Act by the earlier of (i) 10:00 P.M. Eastern time on
the date of this Agreement and (ii) the time confirmations are sent or given,
as specified by Rule 462(b)(2).
(m) The Company will use its reasonable best efforts to cause the
Securities to be duly authorized for listing by the American Stock Exchange.
7. Covenants of Selling Securityholders.
(a) Each Selling Securityholder will not, directly or indirectly,
without the prior written consent of Prudential Securities Incorporated, offer,
sell, offer to sell, contract to sell, pledge, grant any option to purchase or
otherwise sell or dispose (or announce any offer, sale, pledge, offer of sale,
contract of sale, grant of any option to purchase or other sale or disposition)
of any shares of Common Stock legally or beneficially owned by such Selling
Securityholder or any securities convertible into, or exchangeable or
exercisable for, shares of Common Stock for a period of 90 days after the date
hereof.
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(b) Such Selling Securityholder will not, directly or indirectly,
(i) take any action designed to cause or result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities or (ii) (a) sell, bid for, purchase, or pay anyone
any compensation for soliciting purchases of, the Securities or any other
securities of the Company.
(c) Each of the Selling Securityholders agrees to deliver to you
prior to or at the Firm Closing Date (as hereinafter defined) a properly
completed and executed United States Treasury Department Form W-9 (or other
applicable form or statement specified by Treasury Department regulations in
lieu thereof).
8. Expenses. The Company will pay all costs and expenses
incident to the performance of its [and the Selling Securityholders']
obligations under this Agreement, whether or not the transactions contemplated
herein are consummated or this Agreement is terminated pursuant to Section 11
hereof, including all costs and expenses incident to (i) the printing or other
production of documents with respect to the transactions, including any costs
of printing the registration statement originally filed with respect to the
Securities and any amendment thereto, any Rule 462(b) Registration Statement,
any Preliminary Prospectus and the Prospectus and any amendment or supplement
thereto, this Agreement and any blue sky memoranda, (ii) all arrangements
relating to the delivery to the Underwriters of copies of the foregoing
documents, (iii) the fees and disbursements of the counsel, the accountants and
any other experts or advisors retained by the Company, (iv) preparation,
issuance and delivery to the Underwriters of any certificates evidencing the
Securities, including transfer agent's and registrar's fees, (v) the
qualification of the Securities under state securities and blue sky laws,
including filing fees and reasonable fees and disbursements of counsel for the
Underwriters relating thereto, (vi) the filing fees of the Commission and the
National Association of Securities Dealers, Inc. relating to the Securities,
(vii) any listing of the Securities on the American Stock Exchange, (viii) any
meetings with prospective investors in the Securities (other than as shall have
been specifically approved by the Representatives to be paid for by the
Underwriters) and, (ix) advertising relating to the offering of the Securities
(other than as shall have been specifically approved by the Representatives to
be paid for by the Underwriters). If the sale of the Securities provided for
herein is not consummated because any condition to the obligations of the
Underwriters set forth in Section 9 hereof is not satisfied or because this
Agreement is terminated pursuant to Section 13(a)(i) or (a)(ii) hereof, or
because of any failure, refusal or inability on the part of the Company to
perform all obligations and satisfy all conditions on its part to be performed
or satisfied hereunder other than by reason of a default by any of the
Underwriters, the Company will reimburse the Underwriters severally upon demand
for all reasonable out-of-pocket expenses (including counsel fees and
disbursements) that shall have been incurred by them in connection reasonable
with the proposed purchase and sale of the Securities. The Company shall not
in any event be
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liable to any of the Underwriters for the loss of anticipated profits from the
transactions covered by this Agreement.
9. Conditions of the Underwriters' Obligations. The obligations
of the several Underwriters to purchase and pay for the Firm Securities shall
be subject, in the Representatives' sole discretion, to the accuracy of the
representations and warranties of the Company and each Selling Securityholder
contained herein as of the date hereof and as of the Firm Closing Date, as if
made on and as of the Firm Closing Date, to the accuracy of the statements of
the Company's and each Selling Securityholder's officers made pursuant to the
provisions hereof, to the performance by the Company and each Selling
Securityholder of its covenants and agreements hereunder and to the following
additional conditions:
(a) If the Original Registration Statement or any amendment
thereto filed prior to the Firm Closing Date has not been declared effective as
of the time of execution hereof, the Original Registration Statement or such
amendment and, if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have been declared effective not later than
the earlier of (i) 11:00 A.M., New York time, on the date on which the
amendment to the registration statement originally filed with respect to the
Securities or to the Registration Statement, as the case may be, containing
information regarding the initial public offering price of the Securities has
been filed with the Commission and (ii) the time confirmations are sent or
given as specified by Rule 462(b)(2), or with respect to the Original
Registration Statement, or such later time and date as shall have been
consented to by the Representatives; if required, the Prospectus or any Term
Sheet that constitutes a part thereof and any amendment or supplement thereto
shall have been filed with the Commission in the manner and within the time
period required by Rules 434 and 424(b) under the Act; no stop order suspending
the effectiveness of the Registration Statement or any amendment thereto shall
have been issued, and no proceedings for that purpose shall have been
instituted or threatened or, to the knowledge of the Company or the
Representatives, shall be contemplated by the Commission; and the Company shall
have complied with any request of the Commission for additional information (to
be included in the Registration Statement or the Prospectus or otherwise).
(b) The Representatives shall have received an opinion dated the
Firm Closing of Xxxxx & Xxxxx, L.L.P., counsel for the Company, to the effect
that:
(i) the execution and delivery of this Agreement has been
duly authorized by all necessary corporate action of the Company and
this Agreement has been duly executed and delivered by the Company
(ii) the Firm Securities have been duly authorized by all
necessary corporate action of the Company and, when issued and
delivered to and paid for by
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the Underwriters pursuant to this Agreement, will be validly issued,
fully paid and nonassessable;
(iii) the statements set forth under the heading
"Description of Capital Stock" in the Prospectus, insofar as such
statements purport to summarize certain provisions of the capital
stock of the Company, provide a fair summary in all material respects
of such provisions; and the statements set forth under the headings
"Business--Regulation," "Business--Royalty Matters,"
"Business--Environmental Matters," "Business--Legal Proceedings--NYLOG
Litigation" and "Business--Legal Proceedings--KN Litigation" in the
Prospectus, insofar as such statements constitute a summary of the
legal matters, documents or proceedings referred to therein, provide a
fair summary in all material respects of such legal matters, documents
and proceedings;
(iv) the issuance, offering and sale of the Securities to
the Underwriters by the Company pursuant to this Agreement, the
compliance by the Company with the other provisions of this Agreement
and the consummation of the other transactions herein contemplated do
not require the consent, approval, authorization, registration or
qualification of or with any governmental authority of the United
States of America, the State of Texas or the State of Delaware, except
such as have been obtained and as would not prevent or adversely
affect in any material respect the performance of this Agreement or
have a material adverse effect on the Company and its subsidiaries,
taken as a whole;
(v) the Registration Statement is effective under the
Act; any required filing of the Prospectus, or any Term Sheet that
constitutes a part thereof, pursuant to Rules 434 and 424(b) has been
made in the manner and within the time period required by Rules 434
and 424(b); and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement or any
amendment thereto has been issued, and no proceedings for that purpose
have been instituted or threatened or are contemplated by the
Commission;
(vi) the Registration Statement originally filed with
respect to the Securities and each amendment thereto, any Rule 462(b)
Registration Statement and the Prospectus (in each case, other than
the reserve information, the financial statements and other financial
information contained therein, as to which such counsel need express
no opinion) comply as to form in all material respects with the
applicable requirements of the Act and the rules and regulations of
the Commission thereunder; and
(vii) if the Company elects to rely on Rule 434, the
Prospectus is not "materially different", as such term is used in Rule
434, from the prospectus
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included in the Registration Statement at the time of its
effectiveness or an effective post-effective amendment thereto
(including such information that is permitted to be omitted pursuant
to Rule 430A).
Such counsel shall also state that such counsel participated in
conferences with certain officers and other representatives of the Company,
representatives of the independent public accountants of the Company, your
representatives and counsel for the Underwriters at which the contents of the
Registration Statement and Prospectus and related matters were discussed. Such
counsel shall state that although such counsel is not passing upon and does not
assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the Prospectus (except as
otherwise expressly provided in clause (iii) of such opinion), such counsel
advises the Underwriters that, on the basis of the foregoing (relying as to
materiality to a large extent upon statements and other representations of
officers and other representatives of the Company), no facts have come to their
attention that lead them to believe that the Registration Statement except for
(i) the financial statements and schedules contained therein (including the
notes thereto and the auditors' report thereon), (ii) the other financial,
statistical or reserve information contained therein or (iii) the exhibits
thereto, as to which they have not been asked to comment) of the effective date
of the Registration Statement, contained in untrue statement of a material fact
or omitted to state any material fact required to be stated therein or
necessary to make the statements therein not misleading or that the Prospectus
(except as indicated above) as of its date or as of the date of such opinion
contained any untrue statement of a material fact or omitted or omits to state
a material fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading.
In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials (provided that they provide you
with copies of such certificates) and in rendering the opinion set forth in
paragraph (v) above, state that they have relied on oral advice of the staff of
the Commission that the Commission has declared the Registration Statement
effective under the Act.
References to the Registration Statement and the Prospectus in this
paragraph (b) shall include any amendment or supplement thereto at the date of
such opinion.
(c) The Representatives shall have received an opinion, dated the
Firm Closing Date, of Patterson, Belknap, Xxxx & Xxxxx LLP, counsel for the
Company, to the effect that:
(i) the Company and each of the subsidiaries listed on
Schedule 3 hereto (the "Material Subsidiaries") have been duly
organized and are validly existing as
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corporations in good standing under the laws of their respective
jurisdictions of incorporation and are duly qualified to transact
business as foreign corporations and are in good standing under the
laws of all other jurisdictions set forth opposite its name on
Schedule I to such opinion except where the failure to be so qualified
does not amount to a material liability or disability to the Company
and its subsidiaries, taken as a whole;
(ii) the Company and each of the Material Subsidiaries have
corporate power to own or lease their respective properties and
conduct their respective businesses as described in the Registration
Statement and the Prospectus, and the Company has corporate power to
enter into this Agreement and to carry out all the terms and
provisions hereof to be carried out by it;
(iii) the issued shares of capital stock of each of the
Material Subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable and, except for directors' qualifying
shares and as otherwise set forth in the Prospectus, are owned
beneficially by the Company free and clear of any perfected security
interests or, to the best knowledge of such counsel, any other
security interests, liens, encumbrances, equities or claims except for
capital stock of the Material Subsidiaries that has been pledged under
the Amended and Restated Credit Agreement dated as of December 21,
1994, between the Company and the banks name therein, as amended;
(iv) the Company has an authorized, issued and outstanding
capitalization as set forth in the Prospectus; all of the issued
shares of capital stock of the Company have been duly authorized and
validly issued and are fully paid and nonassessable were not issued in
violation of or subject to any preemptive rights or other rights to
subscribe for or purchase securities; the Securities have been duly
authorized for listing, subject to official notice of issuance, on the
American Stock Exchange; except for such rights as have been waived as
of the date hereof, no holders of outstanding shares of capital stock
of the Company are entitled as such to any preemptive or other rights
to subscribe for any of the Securities; and, assuming that the Company
has sent written notice to all holders of securities of the Company
who have the right to register the offer or sale of any securities
owned by such holders under the Act in connection with the public
offering contemplated by this Agreement, and except as set forth in
the Prospectus, there is no holder of such securities who has not
waived such registration rights or failed to exercise such
registration rights within the time permitted by the notice;
(v) (A) to such Counsel's knowledge, no legal or
governmental proceedings are pending to which the Company or any of
its subsidiaries is a party or to which the property of the Company or
any of the subsidiaries is subject that
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are required to be described in the Registration Statement or the
Prospectus and are not described therein, and, to the best knowledge
of such counsel, no such proceedings have been threatened against the
Company or any of its subsidiaries or with respect to any of their
respective properties and (B) no contract or other document is
required to be described in the Registration Statement or the
Prospectus or to be filed as an exhibit to the Registration Statement
that is not described therein or filed as required;
(vi) the issuance, offering and sale of the Securities to
the Underwriters by the Company pursuant to this Agreement, the
compliance by the Company with the other provisions of this Agreement
and the consummation of the other transactions herein contemplated do
not conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, lease or other agreement or instrument, known
to such counsel, to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries or any of
their respective properties are bound, or the charter documents or
by-laws of the Company or any of the Material Subsidiaries, or any
statute or any judgment, decree, order, rule or regulation of any
court or other governmental authority or any arbitrator known to such
counsel and applicable to the Company or its subsidiaries;
Such counsel shall also state that such counsel participated in a
limited manner in conferences with certain officers and other representatives
of the Company, representatives of the independent public accountants of the
Company, your representatives and counsel for the Underwriters at which the
contents of the Registration Statement and Prospectus and related matters were
discussed. Such counsel shall state that although such counsel is not passing
upon and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus, such counsel advises the Underwriters that, on the basis of the
foregoing (relying as too materiality to a large extent upon statements and
other representations of officers and other representatives of the Company), no
facts have come to their attention that lead them to believe that the
Registration Statement except for (i) the operating statistics, financial
statements and schedules contained therein (including the notes thereto and the
auditors' report thereon), (ii) the other financial, statistical or reserve
information contained therein or (iii) the exhibits thereto, as too which they
have not been asked to comment) on the effective date of the Registration
Statement, contained in the untrue statement of a material fact or omitted to
state any material fact required to be stated therein or necessary to make the
statement therein not misleading or that the Prospectus (except as indicated
above) as of its date or as of the date of such opinion contained any untrue
statement of a material fact or omitted or omits to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading.
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In rendering any such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deems proper, on certificates of responsible
officers of the Company and public officials and, as to matters involving the
application of laws of any jurisdiction other than the States of Texas, New
York or Delaware or the United States, to the extent satisfactory in form and
scope to counsel for the Underwriters, upon the opinion of local counsel
acceptable to you and your counsel; provided, however, that any such opinion of
local counsel shall also state that the Underwriters are justified in relying
upon such opinion, and copies of such opinion shall be delivered to the
Representatives and counsel for the Underwriters.
References to the Registration Statement and the Prospectus in this
paragraph (c) shall include any amendment or supplement thereto at the date of
such opinion.
(d) The Representatives shall have received an opinion, dated the
Firm Closing Date, of Xxxxxxx & Xxxxx L.L.P., Texas Commerce Tower, 000 Xxxxxx,
Xxxxx 0000, Xxxxxxx, Xxxxx 00000, counsel for the Underwriters, with respect to
the issuance and sale of the Firm Securities, the Registration Statement and
the Prospectus, and such other related matters as the Representatives may
reasonably require, and the Company shall have furnished to such counsel such
documents as they may reasonably request for the purpose of enabling them to
pass upon such matters. In rendering such opinion, such counsel may rely as to
all matters of law upon the opinion of Xxxxx & Xxxxx, L.L.P. and Patterson,
Belknap, Xxxx & Tyler L.L.P. referred to in paragraphs (b) and (c) above.
(e) New York Life and Prudential Insurance shall have furnished to
the Representatives an opinion from Xxxx Xxxxx, Esq., General Counsel of New
York Life and Xxxxxxxxxx Xxxxx Xxxxx, Esq., Assistant General Counsel of
Prudential Insurance, respectively, dated the Closing Date, to the effect that:
(i) Such Selling Securityholder has full corporate power
to enter into this Agreement and to sell, transfer and deliver the
Securities being sold by such Selling Securityholder hereunder in the
manner provided in this Agreement; the execution and delivery of this
Agreement has been duly authorized by all necessary corporate action
of such Selling Securityholder; this Agreement has been duly executed
and delivered by such Selling Securityholder;
(ii) the delivery by such Selling Securityholder to the
several Underwriters of certificates for the Securities being sold
hereunder by such Selling Securityholder against payment therefor as
provided herein, will convey good and marketable title to such
Securities to the several Underwriters, free and clear of all security
interests, liens, encumbrances, equities, claims or other defects,
assuming that the Underwriters are purchasing in good faith and
without notice of any adverse claim,
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as such term is used in Section 8-302 of the Uniform Commercial Code
as in effect in the State of New York;
(iii) the sale of the Securities to the Underwriters by
such Selling Securityholder pursuant to this Agreement, the compliance
by such Selling Securityholder with the other provisions of this
Agreement and the consummation of the other transactions herein
contemplated do not (i) require the consent, approval, authorization,
registration or qualification of or with any governmental authority,
except such as have been obtained and such as may be required under
state securities or blue sky laws, or (ii) conflict with or result in
a breach or violation of any of the terms and provisions of, or
constitute a default under (A) any indenture, mortgage, deed of trust,
lease or other agreement or instrument to which such Selling
Securityholder or any of such Selling Securityholder's properties are
bound (other than such conflicts, breaches, defaults or violations
which would not impair such Selling Securityholders obligations
hereunder or have any adverse effect on the Underwriters as such or
the title to the Shares), (B) the charter documents or by-laws of such
Selling Securityholder or (C) any statute or any judgment, decree,
order, rule or regulation of any court or other governmental authority
or any arbitrator applicable to such Selling Securityholder.
In rendering such opinion, such counsel may rely, as to matters of
fact, to the extent such counsel deem proper, on certificates of responsible
officers of the Selling Securityholders and public officials.
References to the Registration Statement and the Prospectus in this
paragraph (e) shall include any amendment or supplement thereto at the date of
such opinion.
(f) The Representatives shall have received a certificate from
each Selling Securityholder, signed by an appropriate officer of such Selling
Securityholder, dated the Closing Date, to the effect that:
(i) the representations and warranties of such Selling
Securityholder in this Agreement are true and correct as if made on
and as of the Closing Date;
(ii) to the extent that any statements or omissions are
made in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto in reliance upon and
in conformity with written information furnished to the Company by
such Selling Securityholder specifically for use therein, the
Registration Statement, as amended as of the Closing Date, does not
include any untrue
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statement of a material fact or omit to state any material fact
necessary to make the statements therein not misleading, and the
Prospectus, as amended or supplemented as of the Closing Date, does
not 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, not
misleading; and
(iii) such Selling Securityholder has performed all
covenants and agreements on its part to be performed or satisfied at
or prior to the Closing Date.
(g) The Representatives shall have received from Xxxxxx Xxxxxxxx
LLP a letter or letters dated, respectively, the date hereof and the Firm
Closing Date, in form and substance satisfactory to the Representatives, to the
effect that:
(i) they are independent accountants with respect to the
Company and its consolidated subsidiaries within the meaning of the Act and the
applicable rules and regulations thereunder;
(ii) in their opinion, the audited consolidated financial
statements and schedules and pro forma financial statements examined by them
and included in the Registration Statement and the Prospectus comply in form in
all material respects with the applicable accounting requirements of the Act
and the related published rules and regulations;
(iii) on the basis of a reading of the latest available
interim unaudited consolidated condensed financial statements of the
Company and its consolidated subsidiaries, carrying out certain
specified procedures (which do not constitute an examination made in
accordance with generally accepted auditing standards) that would not
necessarily reveal matters of significance with respect to the
comments set forth in this paragraph (iii), a reading of the minute
books of the shareholders, the board of directors and any committees
thereof of the Company and each of its consolidated subsidiaries, and
inquiries of certain officials of the Company and its consolidated
subsidiaries who have responsibility for financial and accounting
matters, nothing came to their attention that caused them to believe
that:
(A) the unaudited consolidated condensed
financial statements of the Company and its consolidated
subsidiaries included in the Registration Statement and the
Prospectus do not comply in form in all material respects with
the applicable accounting requirements of the Act and the
related published rules and regulations thereunder or are not
in conformity with generally accepted accounting principles
applied on a basis substantially consistent with that of the
audited consolidated financial statements included in the
Registration Statement and the Prospectus;
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(B) at a specific date not more than five
business days prior to the date of such letter, there were any
changes in the capital stock or long-term debt of the Company
and its consolidated subsidiaries or any decreases in
stockholders' equity of the Company and its consolidated
subsidiaries, in each case compared with amounts shown on the
September 30, 1996 unaudited consolidated condensed balance
sheet included in the Registration Statement and the
Prospectus, or for the period from October 1, 1996 to such
specified date there were any decreases, as compared with
September 30, 1996, in total revenues, net revenues, net
income before income taxes or total or per share amounts of
net income of the Company and its consolidated subsidiaries,
except in all instances for changes, decreases or increases
set forth in such letter; and
(iv) they have carried out certain specified procedures,
not constituting an audit, with respect to certain amounts,
percentages and financial information that are derived from the
general accounting records of the Company and its consolidated
subsidiaries and are included in the Registration Statement and the
Prospectus, and have compared such amounts, percentages and financial
information with such records of the Company and its consolidated
subsidiaries and with information derived from such records and have
found them to be in agreement, excluding any questions of legal
interpretation; and
(v) on the basis of a reading of the unaudited pro forma
consolidated condensed financial statements included in the
Registration Statement and the Prospectus, carrying out certain
specified procedures that would not necessarily reveal matters of
significance with respect to the comments set forth in this paragraph
(v), inquiries of certain officials of the Company and its
consolidated subsidiaries who have responsibility for financial and
accounting matters and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts in
the unaudited pro forma consolidated condensed financial statements,
nothing came to their attention that caused them to believe that the
unaudited pro forma consolidated condensed financial statements do not
comply in form in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical amounts
in the compilation of such statements.
In the event that the letter referred to above sets forth any such
changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letter shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the
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Representatives, make it impractical or inadvisable to proceed with the
purchase and delivery of the Securities as contemplated by the Registration
Statement.
References to the Registration Statement and the Prospectus in this
paragraph (d) with respect to either letter referred to above shall include any
amendment or supplement thereto at the date of such letter.
(h) The Representatives shall have received from KPMG Peat Marwick
LLP a letter or letter dated, respectively, the date hereof and the Firm
Closing Date, containing, with respect to certain properties acquired by the
Company from Zilkha Energy Company, substantially the same information with
respect to such properties as is contained in the letter described in paragraph
(g) above.
(i) Xxxx, an independent petroleum engineering consultant, shall
have delivered to you on the date of this Agreement a letter and also on the
Closing Date a letter dated the Closing Date, in each case in form and
substance reasonably satisfactory to you, stating, as of the date of such
letter (or, with respect to matters involving changes or developments since the
respective dates as of which specified information with respect to the oil and
gas reserves attributable to the Zilkha I Properties and Zilkha II Properties,
as such properties are defined in the Prospectus, is given or incorporated in
the Prospectus or any Preliminary Prospectus as of the date not more than five
days prior to the date of such letter), the conclusions and findings of such
firm with respect to the Company's oil and gas reserves as well as such other
information as the Representatives or their counsel may reasonably request.
(j) Netherland Xxxxxx shall have delivered to you on the date of
this Agreement a letter dated on such date and also on the Closing Date a
letter dated the Closing Date, in each case in form and substance reasonably
satisfactory to you stating (i) that they are independent petroleum engineers,
(ii) that they have conducted an independent audit of the Company's reserve
information presented in the Prospectus or any Preliminary Prospectus (iii)
that the Company's reserve information presented in the Prospectus or any
Preliminary Prospectus (exclusive of any adjustments to give effect to the
acquisition of the Zilkha I Properties and Zilkha II Properties) is based on
such firm's reserve report with respect to the Company's oil and gas reserves
dated as of December 31, 1996, and (iv) that the findings of the Company with
respect to the Company's oil and gas reserves presented in the Prospectus or
any Preliminary Prospectus are reasonable in the aggregate and were prepared in
accordance with generally accepted petroleum engineering principals promulgated
by the Society of Petroleum Engineers.
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(k) The Representatives shall have received a certificate, dated
the Firm Closing Date, of the principal executive officer and the principal
financial or accounting officer of the Company to the effect that:
(i) the representations and warranties of the Company in
this Agreement are true and correct as if made on and as of the Firm
Closing Date; the Registration Statement, as amended as of the Firm
Closing Date, does not include any untrue statement of a material fact
or omit to state any material fact necessary to make the statements
therein not misleading, and the Prospectus, as amended or supplemented
as of the Firm Closing Date, does not 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, not misleading; and the Company has
performed all covenants and agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to the Firm Closing
Date;
(ii) no stop order by the Commission suspending the
effectiveness of the Registration Statement or any amendment thereto
has been issued, and no proceedings for that purpose have been
instituted or, to the best of the Company's knowledge, have been
threatened or are contemplated by the Commission; and
(iii) subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
neither the Company nor any of its subsidiaries has sustained any
material loss or interference with their respective businesses or
properties from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any labor dispute or any
legal or governmental proceeding, and there has not been any material
adverse change, or any development involving a prospective material
adverse change, in the condition (financial or otherwise), management,
business prospects, net worth or results of operations of the Company
and its subsidiaries taken as a whole, except in each case as
described in or contemplated by the Prospectus (exclusive of any
amendment or supplement thereto).
(l) The Representatives shall have received from each person who
is a director or officer of the Company an agreement to the effect that such
person will not, directly or indirectly, without the prior written consent of
Prudential Securities Incorporated, on behalf of the Underwriters, offer, sell,
offer to sell, contract to sell, pledge, grant any option to purchase or
otherwise sell or dispose (or announce any offer, sale, offer of sale, contract
of sale, pledge, grant of an option to purchase or other sale or disposition)
of any shares of Common Stock or any securities convertible into, or
exchangeable or exercisable for, shares of Common Stock for a period of 90 days
after the date of this Agreement, except as provided in such agreements.
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(m) On or before the Firm Closing Date, the Representatives and
counsel for the Underwriters shall have received such further certificates,
documents or other information as they may have reasonably requested from the
Company.
(n) Prior to the commencement of the offering of the Securities,
the Securities shall have been approved for listing on the American Stock
Exchange, subject to official notice of issuance.
All opinions, certificates, letters and documents delivered pursuant
to this Agreement will comply with the provisions hereof only if they are
reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representatives and counsel for the Underwriters shall
reasonably request.
The respective obligations of the several Underwriters to purchase and
pay for any Option Securities shall be subject, in their discretion, to each of
the foregoing conditions to purchase the Firm Securities, except that all
references to the Firm Securities and the Firm Closing Date shall be deemed to
refer to such Option Securities and the related Option Closing Date,
respectively.
10. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Securities Exchange Act of 1934 (the "Exchange Act"), against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter or such controlling person may become subject under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made
by the Company in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any amendment
thereto, any Preliminary Prospectus or the Prospectus or any amendment
or supplement thereto or
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, a material fact required
to be stated therein or necessary to make the statements therein not misleading
or
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(iv) any untrue statement or alleged untrue statement of
any material fact contained in any audio or visual materials used in
connection with the marketing of the Securities, including without
limitation, slides, videos, films and tape recordings,
and will reimburse, promptly (but in no event more than 30 days) after
receipt of invoices in reasonable detail, each Underwriter and each such
controlling person for any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that the
Company will not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon any untrue statement
or alleged untrue statement or omission or alleged omission made in the
Registration Statement or any amendment thereto, any Preliminary Prospectus,
the Prospectus or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through the Representatives specifically for use therein; and
provided, further, that the Company will not be liable to any Underwriter or
any person controlling such Underwriter with respect to any such untrue
statement or omission made in any Preliminary Prospectus that is corrected in
the Prospectus (or any amendment or supplement thereto) if the person asserting
any such loss, claim, damage or liability purchased Securities from such
Underwriter but was not sent or given a copy of the Prospectus (as amended or
supplemented) at or prior to the written confirmation of the sale of such
Securities to such person in any case where such delivery of the Prospectus (as
amended or supplemented) is required by the Act, unless such failure to deliver
the Prospectus (as amended or supplemented) was a result of noncompliance by
the Company with Section 6(d) and (e) of this Agreement. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have. The Company will not, without the prior written consent of the
Underwriter or Underwriters purchasing, in the aggregate, more than fifty
percent (50%) of the Securities, settle or compromise or consent to the entry
of any judgment in any pending or threatened claim, action, suit or proceeding
in respect of which indemnification may be sought hereunder (whether or not any
such Underwriter or any person who controls any such Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act is a party
to such claim, action, suit or proceeding), unless such settlement, compromise
or consent includes an unconditional release of all of the Underwriters and
such controlling persons from all liability arising out of such claim, action,
suit or proceeding.
(b) Each Selling Securityholder, severally and not jointly, agrees
to indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement or any amendment thereto, each
Underwriter and each person who controls the Company or any Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act against
any losses, claims, damages or liabilities, joint or several, to which the
Company, any such director, officer, such Underwriter or any such
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33
controlling person may become subject under the Act, the Exchange Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of any material fact contained in the Registration
Statement or any amendment thereto, any Preliminary Prospectus or the
Prospectus or any amendment or supplement thereto, or (ii) the omission or the
alleged omission to state therein a material fact required to be stated in the
Registration Statement or any amendment thereto, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto, or necessary to make the
statements therein not misleading, in each case to the extent, but only to the
extent, that such 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 such Selling Securityholder for use
therein; provided, however, that such Selling Securityholder will not be liable
to any Underwriter or any person controlling such Underwriter with respect to
any such untrue statement or omission made in any Preliminary Prospectus that
is corrected in the Prospectus (or any amendment or supplement thereto) if the
Person asserting any such loss, claim, damage or liability purchased Securities
from such Underwriter but was not sent or given a copy of the Prospectus (as
amended or supplemented) at or prior to the written confirmation of the sale of
such Securities to such person in any case where such delivery of the
Prospectus (as amended or supplemented) is required by the Act, unless such
failure to deliver the Prospectus (as amended or supplemented) was a result of
noncompliance by the Company with Section 6(d) and (e) of this Agreement;
provided further, that no Selling Securityholder shall be liable for any untrue
statement, alleged untrue statement, omission or alleged omission of any other
Selling Securityholder. Subject to the limitations set forth in the
immediately preceding sentence, will reimburse, as incurred, any legal or other
expenses reasonably incurred by the Company, any such director, officer, such
Underwriter or any such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or any action in respect
thereof. This indemnity agreement will be in addition to any liability which
any Selling Securityholder may otherwise have. Each Selling Securityholder
will not, without the prior written consent of the Underwriter or Underwriters
purchasing, in the aggregate, more than fifty percent (50%) of the Securities,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any such Underwriter or
any person who controls any such Underwriter within the meaning of Section 15
of the Act or Section 20 of the Exchange Act is a party to such claim, action,
suit or proceeding), unless such settlement, compromise or consent includes an
unconditional release of all of the Underwriters and such controlling persons
from all liability arising out of such claim, action, suit or proceeding.
(c) Each Underwriter will, severally and not jointly,
indemnify and hold harmless the Company, each of its directors, each of its
officers who signed the Registration Statement or any amendment thereto, each
Selling Securityholder and each
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person, if any, who controls the Company or such Selling Securityholder within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act against
any losses, claims, damages or liabilities to which the Company, any such
director or officer of the Company, such Selling Securityholder or any such
controlling person of the Company or such Selling Securityholder may become
subject under the Act, the Exchange Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement or any amendment thereto,
any Preliminary Prospectus or the Prospectus or any amendment or supplement
thereto, or (ii) the omission or the alleged omission to state therein a
material fact required to be stated in the Registration Statement or any
amendment thereto, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto, or necessary to make the statements therein
not misleading, in each case to the extent, but only to the extent, that such
untrue statement or alleged untrue statement or omission or alleged omission
was made in reliance upon and in conformity with written information furnished
to the Company by any Underwriter through the Representatives specifically for
use therein; and, subject to the limitation set forth immediately preceding
this clause, will reimburse, as incurred, any legal or other expenses
reasonably incurred by the Company, any such director, officer or controlling
person or such Selling Securityholder in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or any action in respect thereof. This
indemnity agreement will be in addition to any liability which such Underwriter
may otherwise have.
(d) Promptly after receipt by an indemnified party under this
Section 10 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 10, notify the indemnifying party of the commencement
thereof; but the failure so to notify the indemnifying party will not relieve
it from any liability which it may have to any indemnified party except to the
extent that the indemnifying party 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 that it may have to an
indemnified party otherwise than under this Section 10. In case any such action
is brought against any indemnified party, and it notifies the indemnifying
party of the commencement thereof, the indemnifying party will be entitled to
participate therein and, to the extent that it may wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party; provided, however,
that if the defendants in any such action include both the indemnified party
and the indemnifying party and the indemnified party shall have reasonably
concluded, upon advice of counsel, that there are one or more legal defenses
available to it and/or other indemnified parties which are different from or
additional to those available to the indemnifying party, the indemnifying party
shall not have the right to direct the defense of such action on behalf of such
indemnified party or parties and such indemnified party or parties shall have
the right to select separate counsel to
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defend such action on behalf of such indemnified party or parties. After
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will not be liable to
such indemnified party under this Section 10 for any legal or other expenses,
other than reasonable costs of investigation, subsequently incurred by such
indemnified party in connection with the defense thereof, unless (i) the
indemnified party shall have employed separate counsel in accordance with the
proviso to the next preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to no more than one
local counsel) in any one action or separate but substantially similar actions
in the same jurisdiction arising out of the same general allegations or
circumstances, designated by the Representatives in the case of paragraph (a)
of this Section 10, representing the indemnified parties under such paragraph
(a) who are parties to such action or actions) or (ii) the indemnifying party
does not promptly retain counsel reasonably satisfactory to the indemnified
party or (iii) the indemnifying party has authorized the employment of counsel
for the indemnified party at the expense of the indemnifying party. After such
notice from the indemnifying party to such indemnified party, the indemnifying
party will not be liable for the costs and expenses of any settlement of such
action effected by such indemnified party without the consent of the
indemnifying party.
(e) In circumstances in which the indemnity agreement provided for
in the preceding paragraphs of this Section 10 is unavailable or insufficient,
for any reason other than a failure by the indemnified party to give timely
notice as required by this Section 8, to hold harmless an indemnified party in
respect of any losses, claims, damages or liabilities (or actions in respect
thereof), each indemnifying party, in order to provide for just and equitable
contribution, shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is appropriate to reflect
(i) the relative benefits received by the indemnifying party or parties on the
one hand and the indemnified party on the other from the offering of the
Securities or (ii) if the allocation provided by the foregoing clause (i) is
not permitted by applicable law, not only such relative benefits but also the
relative fault of the indemnifying party or parties on the one hand and the
indemnified party on the other in connection with the statements or omissions
or alleged statements or omissions that resulted in such losses, claims,
damages or liabilities (or actions in respect thereof), as well as any other
relevant equitable considerations. The relative benefits received by the
Company and the Selling Securityholders on the one hand and the Underwriters on
the other shall be deemed to be in the same proportion as the total proceeds
from the offering (before deducting expenses) received by the Company and the
Selling Securityholders bear to the total underwriting discounts and
commissions received by the Underwriters. The relative fault of the parties
shall be determined by reference to, among other things, whether the untrue or
alleged untrue statement of a
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material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company, the Selling Securityholders or
the Underwriters, the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission,
and any other equitable considerations appropriate in the circumstances. The
Company, the Selling Securityholders and the Underwriters agree that it would
not be equitable if the amount of such contribution were determined by pro rata
or per capita allocation (even if the Underwriters were treated as one entity
for such purpose) or by any other method of allocation that does not take into
account the equitable considerations referred to above in this paragraph (e).
Notwithstanding any other provision of this paragraph (e), no Underwriter shall
be obligated to make contributions hereunder that in the aggregate exceed the
total public offering price of the Securities purchased by such Underwriter
under this Agreement, less the aggregate amount of any damages that such
Underwriter has otherwise been required to pay in respect of the same or any
substantially similar claim, and no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations to contribute hereunder are
several in proportion to their respective underwriting obligations and not
joint, and contributions among Underwriters shall be governed by the provisions
of the Prudential Securities Incorporated Master Agreement Among Underwriters.
For purposes of this paragraph (e), each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act shall have the same rights to contribution as such Underwriter,
and each director of the Company, each officer of the Company who signed the
Registration Statement or any amendment thereto and each person, if any, who
controls the Company or any Selling Securityholder within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, shall have the same
rights to contribution as the Company or such Selling Securityholder, as the
case may be.
(f) The liability of each Selling Securityholder under this
Section 10 shall not exceed the total public offering price of the Shares sold
by such Selling Securityholder, less applicable underwriting discounts and
commissions. Further, the provisions of this Section 10 shall not affect any
other agreement among the Company and the Selling Securityholders with respect
to indemnification and contribution.
11. Default of Underwriters. If one or more Underwriters default
in their obligations to purchase Firm Securities or Option Securities hereunder
and the aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, the other Underwriters may make
arrangements satisfactory to the Representatives for the purchase of such
Securities by other persons (who may include one or more of the non-defaulting
Underwriters, including the Representatives), but if no such arrangements are
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made by the Firm Closing Date or the related Option Closing Date, as the case
may be, the other Underwriters shall be obligated severally in proportion to
their respective commitments hereunder to purchase the Firm Securities or
Option Securities that such defaulting Underwriter or Underwriters agreed but
failed to purchase. If one or more Underwriters so default with respect to an
aggregate number of Securities that is more than ten percent of the aggregate
number of Firm Securities or Option Securities, as the case may be, to be
purchased by all of the Underwriters at such time hereunder, and if
arrangements satisfactory to the Representatives are not made within 36 hours
after such default for the purchase by other persons (who may include one or
more of the non-defaulting Underwriters, including the Representatives) of the
Securities with respect to which such default occurs, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or
the Company other than as provided in Section 12 hereof. In the event of any
default by one or more Underwriters as described in this Section 11, the
Representatives shall have the right to postpone the Firm Closing Date or the
Option Closing Date, as the case may be, established as provided in Section 4
hereof for not more than seven business days in order that any necessary
changes may be made in the arrangements or documents for the purchase and
delivery of the Firm Securities or Option Securities, as the case may be. As
used in this Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this Section 11. Nothing herein shall relieve any
defaulting Underwriter from liability for its default.
12. Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers, the Selling Securityholders and the several Underwriters set forth in
this Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company, any of its officers or
directors, any Selling Securityholder, any Underwriter or any controlling
person referred to in Section 10 hereof and (ii) delivery of and payment for
the Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 8 and 10 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
13. Termination. (a) This Agreement may be terminated with
respect to the Firm Securities or any Option Securities in the sole discretion
of the Representatives by notice to the Company and each of the Selling
Securityholders given prior to the Firm Closing Date or the related Option
Closing Date, respectively, in the event that the Company or either of the
Selling Securityholders shall have failed, refused or been unable to perform
all obligations and satisfy all conditions on its part to be performed or
satisfied hereunder at or prior thereto or, if at or prior to the Firm Closing
Date or such Option Closing Date, respectively,
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(i) the Company or any of its subsidiaries shall have, in
the sole judgment of the Representatives, sustained any material loss
or interference with their respective businesses or properties from
fire, flood, hurricane, accident or other calamity, whether or not
covered by insurance, or from any labor dispute or any legal or
governmental proceeding or there shall have been any material adverse
change, or any development involving a prospective material adverse
change (including without limitation a change in management or control
of the Company), in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and its
subsidiaries taken as a whole, except in each case as described in or
contemplated by the Prospectus (exclusive of any amendment or
supplement thereto);
(ii) trading in the Common Stock shall have been suspended
by the Commission or the American Stock Exchange;
(iii) trading generally on the New York or American Stock
Exchange shall have been suspended or minimum or maximum prices shall
have been established on either such exchange;
(iv) a banking moratorium shall have been declared by New
York or United States authorities; or
(v) there shall have been (A) an outbreak or escalation of
hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or
material adverse change in general economic, political or financial
conditions having an effect on the U.S. financial markets that, in the
sole judgment of the Representatives, makes it impractical or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Registration Statement, as amended
as of the date hereof.
(b) Termination of this Agreement pursuant to this Section 13
shall be without liability of any party to any other party except as provided
in Section 12 hereof.
14. Information Supplied by Underwriters. The statements set
forth in the last paragraph on the front cover page, in the stabilization
legend on the inside cover page, and under the heading "Underwriting" in any
Preliminary Prospectus or the Prospectus (to the extent such statements relate
to the Underwriters) constitute the only information furnished by any
Underwriter through the Representatives to the Company for the purposes of
Sections 2(b) and 10 hereof. The Underwriters confirm that such statements (to
such extent) are correct.
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39
15. Notices. All communications hereunder shall be in writing
and, if sent to any of the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission and confirmed in writing to Prudential
Securities Incorporated, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Equity Transactions Group (facsimile: (212) 778- 4312); if sent to
the Company, shall be delivered or sent by mail, telex or facsimile
transmission and confirmed in writing to the Company at 0000 Xxxxx Xxxxxx,
Xxxxx 000, Xxxxxxx, Xxxxx 00000-0000, Attention: Xxxx X. Xxxxx, Senior Vice
President and Chief Financial Officer (facsimile: (000) 000-0000); if sent to
the New York Life, shall be delivered or sent by mail, telex or facsimile
transmission and confirmed in writing to New York Life at Office of the General
Counsel, 00 Xxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, Attention: Xxxx Xxxxx, Esq.
(facsimile: (000) 000-0000); and if sent to Prudential Insurance, shall be
delivered or sent by mail, telex or facsimile transmission and confirmed in
writing to Prudential Insurance at Four Gateway Center, 6th Floor, 000 Xxxxxxxx
Xxxxxx, Xxxxxx, Xxx Xxxxxx 00000-0000, Attention: Xxxxxxxxxx Xxxxx Xxxxx, Esq.
(facsimile: (000) 000-0000).
16. Successors. This Agreement shall inure to the benefit of and
shall be binding upon the several Underwriters, the Company, the Selling
Securityholders and their respective successors and legal representatives, and
nothing expressed or mentioned in this Agreement is intended or shall be
construed to give any other person any legal or equitable right, remedy or
claim under or in respect of this Agreement, or any provisions herein
contained, this Agreement and all conditions and provisions hereof being
intended to be and being for the sole and exclusive benefit of such persons and
for the benefit of no other person except that (i) the indemnities of the
Company contained in Section 10 of this Agreement shall also be for the benefit
of any person or persons who control any Underwriter within the meaning of
Section 15 of the Act or Section 20 of the Exchange Act, (ii) the indemnities
of the Underwriters contained in Section 10 of this Agreement shall also be for
the benefit of the directors of the Company, the officers of the Company who
have signed the Registration Statement and any person or persons who control
the Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and shall also be for the benefit of any person or persons who
control any Selling Securityholder within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act, and (iii) the indemnities of the Selling
Securityholders contained in Section 10 of this Agreement shall also be for the
benefit of the directors of the Company, the officers of the Company who have
signed the Registration Statement and any person or persons who control the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act and shall also be for the benefit of any person or persons who
control any Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act. No purchaser of Securities from any Underwriter shall
be deemed a successor because of such purchase.
17. Applicable Law. The validity and interpretation of this
Agreement, and the terms and conditions set forth herein, shall be governed by
and construed in accordance with the
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40
laws of the State of New York, without giving effect to any provisions relating
to conflicts of laws.
18. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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41
If the foregoing correctly sets forth our understanding, please
indicate your acceptance thereof in the space provided below for that purpose,
whereupon this letter shall constitute an agreement binding the Company and
each of the several Underwriters.
Very truly yours,
AMERICAN EXPLORATION COMPANY
By:
----------------------------------------
NEW YORK LIFE INSURANCE AND ANNUITY
CORPORATION
By:
----------------------------------------
THE PRUDENTIAL INSURANCE COMPANY
OF AMERICA
By:
----------------------------------------
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
XXXXXX, READ & CO., INC.
X.X. XXXXXXX & SONS, INC.
By: PRUDENTIAL SECURITIES INCORPORATED
By:
-------------------------------------
Xxxx-Xxxxxx Canfin
Director
For itself and on behalf of the Representatives.
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42
SCHEDULE 1
UNDERWRITERS
Number of Firm
Securities to
Underwriter be Purchased
----------- -------------
Prudential Securities Incorporated . . . . . . . . . . . . . . . .
Xxxxxx, Read & Co., Inc. . . . . . . . . . . . . . . . . . . . . .
X.X. Xxxxxxx & Sons, Inc. . . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . .
----------
3,579,229
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SCHEDULE 2
Number of Optional
Number of Shares to be Sold if
Firm Shares Maximum Option
Name to be Sold Exercised
---- ---------- ---------
The Company 3,000,000 480,000
New York Life Insurance 379,229 56,884
Company
The Prudential Insurance 200,000 0
Company of America
--------- -------
Total 3,579,229 536,884
========= =======
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SCHEDULE 3
SUBSIDIARIES
JURISDICTION
OF
NAME INCORPORATION STATES QUALIFIED TO DO BUSINESS IN
AMERICAN EXPLORATION COMPANY DE AL, AR, CO, DE, KS, LA, MS, MT, NE, NM, ND, OK, SD,
TX, UT, WY
AMERICAN EXPLORATION GAS SYSTEMS CORPORATION DE CO, DE, KS, LA, MS, NM, OK, TX
AMERICAN EXPLORATION PRODUCTION COMPANY TX CO, KS, MT, NE, NM, ND, OK, TX, UT
AUSTRAL OIL COMPANY, INCORPORATED DE CO, DE, KS, LA, MI, OK, TX, WY
CONQUEST EXPLORATION COMPANY DE CA, CO, DE, KS, LA, MS, MT, NV, NM, ND, OK, TX, UT, WY
CONQUEST EXPLORATION TUNISIA, INC. DE DE
CONQUEST OVERSEAS EXPLORATION COMPANY DE DE, TX
CONQUEST TEXAS, INC. DE DE, TX
SOURGASCO, INC. NV MS, NV
SOUTH STATES OIL & GAS COMPANY TX TX
3300 CORPORATION NV MS, NV
AMERICAN MINERALS CORP. DE DE,
AMERICAN EXPLORATION AUSTRALIA, INC. DE DE
BOUNDARY PROPERTIES, INC. DE DE, KY, MS, OK, TX
AMERICAN RESERVE CORP. TX LA, TX
AXSIMAL COMPANY DE DE
AXMISAL COMPANY DE DE
MATAGORDA BAY PIPELINE COMPANY TX TX
500 CORP. NV NV
CONQUEST TRANSMISSION COMPANY DE DE, TX
ANM SERVICES CORPORATION DE DE, TX
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