1
Exhibit 1.1
SOUTHERN MINERAL CORPORATION
$30,000,000 __% Convertible Subordinated Debentures Due 2007
UNDERWRITING AGREEMENT
_____________, 1997
Xxxxxx Xxxxxx & Company, Inc.
XxXxxxxx & Company Securities, Inc.
Xxxxxxxx Xxxxxx Refsnes Inc.
c/o Xxxxxx Xxxxxx & Company, Inc.
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Southern Mineral Corporation, a Nevada corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and
sell to the Underwriters named in Schedule I hereto (the "Underwriters")
an aggregate of $30,000,000 principal amount of the Convertible
Subordinated Debentures, convertible into Common Stock, par value $0.01 per
share ("Stock") of the Company, specified above ("Firm Securities") and, at
the option of the Underwriters, up to an aggregate of $4,500,000 additional
aggregate principal amount of Convertible Subordinated Debentures (the
"Optional Securities") of the Company. The Firm Securities and the Optional
Securities that the Underwriters elect to purchase pursuant to Section 2
hereof are herein collectively called the Securities.
1. The Company represents and warrants to, and agrees with, each
of the Underwriters that:
(a) The Company meets the requirements for use of Form
S-2 and a registration statement on Form S-2 (File No. 333-35843) in
respect of the Securities, including a preliminary prospectus and such
amendments to such registration statement as may have been required to
the date of this Agreement, has been prepared by the Company under the
provisions of the Securities Act of 1933, as amended (the "Act"), and
the rules and regulations thereunder (the "Rules and Regulations"), and
has been filed with the Securities and Exchange Commission (the
"Commission"); the registration statement, in the form heretofore
delivered to you, and, excluding exhibits thereto, to you for each of
the other Underwriters, has been declared effective by the Commission
in such form; no other document with respect to the registration
statement has heretofore been filed with the Commission; and no stop
order suspending the effectiveness of the registration statement, any
post-effective amendment thereto or the Rule 462(b) registration
statement, if any, has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission (any preliminary
prospectus included in the registration
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statement or filed with the Commission pursuant to Rule 424(a) of the
Rules and Regulations is hereinafter called a Preliminary Prospectus ;
the registration statement as amended at the time it became effective
(the Effective Date ), including all financial statements, schedules
and exhibits thereto and including the information contained in the
form of final prospectus filed with the Commission pursuant to Rule
424(b) under the Act in accordance with Section 5(a) hereof and deemed
by virtue of Rule 430A under the Act to be part of the registration
statement at the time it was declared effective, is hereinafter
collectively called the Registration Statement; and such final
prospectus, in the form first filed pursuant to Rule 424(b) under the
Act, is hereinafter called the Prospectus ); any reference herein to
the Preliminary Prospectus, Registration Statement and Prospectus
shall be deemed to refer to and include the documents incorporated by
reference therein and shall be deemed to refer to and include any
documents filed after the date of such Preliminary Prospectus,
Registration Statement and Prospectus under the Securities Exchange
Act of 1934, as amended (the Exchange Act ); if the Company has filed
an abbreviated registration statement to register additional
Securities pursuant to Rule 462(b) under the Act, then any reference
herein to the Registration Statement shall also be deemed to include
such Rule 462(b) registration statement; any reference herein to the
terms amend, amendment or supplement with respect to the Registration
Statement, the Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include the filing of any document under the
Exchange Act after the Effective Date, or the date of the Preliminary
Prospectus or the Prospectus, as the case may be, and deemed to be
incorporated therein by reference;
(b) On the Effective Date, the date the Prospectus is
first filed with the Commission pursuant to Rule 424(b), at all times
subsequent to and including each Time of Delivery (as defined) and, if
later, when any post-effective amendment to the Registration Statement
becomes effective or any amendment or supplement to the Prospectus is
filed with the Commission, the Registration Statement and the
Prospectus (as amended or as supplemented if the Company shall have
filed with the Commission any amendment or supplement thereto),
including financial statements included or incorporated by reference
in the Prospectus, did or will comply with all applicable provisions
of the Act, the Rules and Regulations, the Exchange Act, the rules and
regulations thereunder (the Exchange Act Rules and Regulations) and
the Trust Indenture Act of 1939, as amended (the Trust Indenture Act )
and the rules and regulations of the Commission thereunder; on the
Effective Date and when any post-effective amendment to the
Registration Statement becomes effective, no part of the Registration
Statement, the Prospectus or any such amendment or supplement did or
will contain any untrue statement of a material fact or omit to state
a material fact required to be stated therein or necessary in order to
make the statements therein not misleading; at the Effective Date, the
date the Prospectus or any amendment or supplement to the Prospectus
is filed with the Commission and each Time of Delivery, the Prospectus
did not or will not contain any untrue statement of a material fact or
omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading;
(c) The documents which are incorporated by reference in
the Preliminary Prospectus and the Prospectus or from which
information is so incorporated by reference, when they became
effective or were filed with the
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Commission, as the case may be, complied in all material respects with
the requirements of the Act, the Rules and Regulations, the Exchange
Act and the Exchange Act Rules and Regulations, as applicable; and any
documents so filed and incorporated by reference subsequent to the
Effective Date shall, when they are filed with the Commission, conform
in all material respects with the requirements of the Act, the Rules
and Regulations, the Exchange Act and the Exchange Act Rules and
Regulations, as applicable; no such documents when they were filed
(or, if amendments with respect to such documents were filed, when
such amendments were filed), contained an untrue statement of a
material fact or omitted to state a material fact required to be
stated therein or necessary to make the statements made therein, in
light of the circumstances under which they were made, not misleading;
(d) The financial statements, together with related
schedules and notes, included or incorporated by reference in the
Registration Statement or the Prospectus comply as to form in all
material respects with the requirements of the Act and the Exchange
Act, and present fairly the consolidated financial condition of the
Company and its subsidiaries as of the respective dates thereof and
the consolidated results of operations and cash flows of the Company
and its subsidiaries for the respective periods covered thereby, all
in conformity with generally accepted accounting principles applied on
a consistent basis throughout the entire period involved, except as
otherwise disclosed in the Prospectus. The pro forma financial
information set forth or incorporated by reference into the
Registration Statement or Prospectus comply as to form in all material
respects with the requirements of the Act and the Rules and
Regulations. No other financial statements or schedules of the Company
are required by the Act or the Rules and Regulations, the Exchange Act
and the Exchange Act Rules and Regulations to be included in the
Prospectus; all selected financial, operating and statistical data set
forth in the Prospectus under the captions Prospectus Summary,
Selected Consolidated Historical and Pro Forma Financial Data,
Management s Discussion and Analysis of Financial Condition and
Results of Operations, Business and elsewhere in the Prospectus fairly
presents, when read in conjunction with the Companys financial
statements and the related notes and schedules, the information set
forth therein;
(e) The Company maintains a system of internal
accounting control sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences;
(f) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus
and prior to each Time of Delivery, except as set forth in or
contemplated by the Registration Statement and the Prospectus (i)
neither the Company nor any of its subsidiaries has sustained any
material loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from
any labor dispute or court or governmental action, order or decree,
and (ii) there has not been any change in
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the capital stock or long-term debt of the Company or any of
its subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries;
(g) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Nevada, with power and authority (corporate and other) to
own, lease and operate its assets and conduct its business as
described in the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction; and
each direct or indirect subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation [or has been
formed and is validly existing as a general or limited partnership, as
the case may be,] has power and authority to own, lease and operate
its assets and conduct its business as described in the Prospectus,
and has been duly qualified for the transaction of business and is in
good standing under the laws of each jurisdiction in which it owns or
leases properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction;
(h) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable, free and clear of all liens,
encumbrances, equities or claims, and conform to the description of
the Stock contained in the Prospectus; the shares of Stock initially
issuable upon conversion of the Securities have been duly authorized
and reserved for issuance and, when issued and delivered in accordance
with the provisions of the Securities and the Indenture referred to
below, will be validly issued, fully paid and non-assessable and will
conform to the description of the Stock contained in the Prospectus;
and all of the issued shares of capital stock of, [or partnership or
other equity ownership interest in,] each subsidiary of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable and are owned directly or indirectly by the Company,
free and clear of all liens, encumbrances, equities or claims; except
as set forth in the Prospectus, the Company does not have outstanding,
and at the Time of Delivery will not have outstanding, any options to
purchase, or any rights or warrants to subscribe for, or any
securities or obligations convertible into, or any contracts or
commitments to issue or sell, or any restrictions upon the voting or
transfer of, any shares of Stock, any shares of capital stock of any
subsidiary or any such warrants, convertible securities or
obligations; the shares of Stock issuable upon conversion of the
Securities have been approved for trading on the Nasdaq National
Market, subject to official notice of issuance;
(i) The Securities have been duly authorized and, when
issued and delivered pursuant to this Agreement, will have been duly
executed, authenticated, issued and delivered and will constitute
valid and legally binding obligations of the Company entitled to the
benefits provided by the indenture dated as of ________, 1997 (the
"Indenture") between the Company and American Stock Transfer and
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Trust Company, as trustee (the Trustee), under which they are to be
issued, which is substantially in the form filed as an exhibit to the
Registration Statement; the Indenture has been duly authorized and
qualified under the Trust Indenture Act and, when executed and
delivered by the Company and the Trustee, will constitute a valid and
legally binding instrument, enforceable in accordance with its terms,
subject as to enforcement, to bankruptcy, insolvency, reorganization
and other laws of general applicability relating to or affecting
creditors rights and to general equity principals; and the Securities
and the Indenture will conform to the descriptions thereof in the
Prospectus;
(j) The issue and sale of the Securities to be sold by
the Company and the compliance by the Company with all of the
provisions of this Agreement and the consummation of the transactions
herein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, or result in the creation of any lien, charge or
encumbrance on any property or assets of the Company or any of its
subsidiaries pursuant to, any indenture, mortgage, deed of trust, loan
agreement, note, 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 is bound or to which any of the property or
assets of the Company or any of its subsidiaries is subject, nor will
such action result in any violation of the provisions of the Restated
Certificate of Incorporation, as amended (Certificate of Incorporation
), or Restated By- laws (By-laws ) of the Company or any statute or
any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries
or any of their properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Securities or the consummation by the Company of the transactions
contemplated by this Agreement, except the registration of the
Securities and Stock issuable upon conversion thereof under the Act,
such as have been obtained under the Trust Indenture Act and as may be
required under the securities or Blue Sky laws of certain
jurisdictions and the bylaws and rules of the National Association of
Securities Dealers, Inc. ( NASD ) in connection with the purchase and
distribution by the Underwriters of the Securities;
(k) As of the date hereof, and at each Time of Delivery,
neither the Company nor any of its subsidiaries is in violation of its
Certificate of Incorporation or By-laws or other organizational
documents or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained in any
indenture, mortgage, deed of trust, loan agreement, lease or other
agreement or instrument to which it is a party or by which it or any
of its properties may be bound; each of the Company and its
subsidiaries is in possession of and operating in compliance with all
leases, concessions, franchises, grants, authorizations, licenses,
permits, easements, consents, certificates and orders required for the
conduct of its business as described in the Prospectus, all of which
are valid and in full force and effect other than those which could
not, singly or in the aggregate, have a material adverse effect on the
condition, financial or otherwise, or on the earnings, business
affairs or business prospects of the Company and its subsidiaries
taken as a whole (a Material Adverse Effect ), and neither the Company
nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such lease,
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concession, franchise, grant, authorization, license, permit,
easement, consent, certificate or order which, individually or in the
aggregate, if subject to an unfavorable decisions, would result in a
Material Adverse Effect;
(l) The Company has full corporate power and authority to
enter into this Agreement, and this Agreement has been duly
authorized, executed and delivered by the Company;
(m) The statements set forth in the Prospectus under
the captions Deception of the "Debentures and Description of Common
Stock", insofar as they purport to constitute a summary of the terms
of the Securities and the Stock [tax?] are accurate and complete;
(n) Except as described in the Prospectus, each of the
Company and its subsidiaries has (1) generally satisfactory or good
and indefeasible title to all its interest in its oil and gas
properties, title investigations having been carried out by or on
behalf of such person in accordance with good practice in the oil and
gas industry in the areas in which the Company and its subsidiaries
operate and (2) good and indefeasible title to all other real property
and good and marketable title to all other material properties and
assets described in the Prospectus as owned by the Company or its
subsidiaries and valid, subsisting and enforceable leases for all of
the properties and assets, real or personal, described in the
Prospectus as leased by them, in each case free and clear of any
security interests, mortgages, pledges, liens, encumbrances or charges
of any kind, other than those described in the Prospectus;
(o) Except as described in the Prospectus, as of the
date hereof, (i) all royalties, rentals, deposits and other amounts
due on the oil and gas properties of the Company and its subsidiaries
have been properly and timely paid, and no proceeds from the sale or
production attributable to the oil and gas properties of the Company
and its subsidiaries are currently being held in suspense by any
purchaser thereof, 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 and its subsidiaries in
its oil and gas properties;
(p) As of the date hereof, the aggregate undiscounted
monetary liability of the Company and its subsidiaries for oil or
natural gas 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 or
any of its subsidiaries in oil or natural gas or to receive cash or
other payments to balance any disproportionate allocation of oil or
natural gas could not have a Material Adverse Effect;
(q) Other than as set forth in the Prospectus, there
are no legal or governmental actions, suits or proceedings pending or
threatened against or affecting the Company or any of its subsidiaries
or any of their respective officers, directors or partners in their
capacity as such, before or by any federal, state or local court,
commission, regulatory body, administrative agency or other
governmental body, domestic or foreign, which, if determined adversely
to the Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect;
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(r) The Company is not and, after giving effect to
the offering and sale of the Securities, will not be an "investment
company" or an entity "controlled" by an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended
(the "Investment Company Act");
(s) Neither the Company nor any of its affiliates does
business with the government of Cuba or with any person or affiliate
located in Cuba within the meaning of Section 517.075, Florida
Statutes;
(t) KPMG Peat Marwick L.L.P. and Xxxxx Xxxxxxxx
LLP, who have certified certain financial statements of the Company
and its subsidiaries, are independent public accountants as required
by the Act and the Rules and Regulations;
(u) The information underlying the estimates of the
reserves of the Company and its subsidiaries, which was supplied by
the Company to Netherland, Xxxxxx & Associates, Inc. and XxXxxxxx &
Associates Consultants Ltd. (the "Reserve Engineers"), independent
petroleum engineers, for purposes of preparing the reserve information
referenced in the Prospectus (the "Reserve Information"), including,
without limitation, production, volumes, sales prices for production,
contractual pricing provisions under oil or gas sales or marketing
contracts under hedging arrangements, costs of operations and
development, and working interest and net revenue information relating
to the Company's ownership interests in properties, was true and
correct in all material respects on the date of such Reserve
Information; the estimates of future capital expenditures and other
future exploration and development costs supplied to the Reserve
Engineers were prepared in good faith and with a reasonable basis; the
information provided to the Reserve Engineers for purposes of
preparing the Reserve Information was prepared in accordance with
customary industry practices; the Reserve Engineers were, as of the
date of the Reserve Information prepared by it, and are, as of the
date hereof, 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,
the Company is not aware of any facts or circumstances that would
result in a materially adverse change in the reserves in the
aggregate, or the aggregate present value of future net cash flows
therefrom, as described in the Prospectus and reflected in the Reserve
Information; estimates of such reserves and the present value of the
future net cash flows therefrom as described in the Prospectus and
reflected in the Reserve Information comply in all material respects
to the applicable requirements of Regulation S-X and Industry Guide 2
under the Act;
(v) The Company and its subsidiaries (A) are in
compliance with any and all applicable federal, state and local laws
and regulations relating to the protection of human health and safety,
the environment or hazardous or toxic substances or waste, pollutants
or contaminants ("Environmental Laws"), (B) have received all permits,
licenses or other approvals required under applicable Environmental
Laws to conduct their respective businesses and (C) are in compliance
with all terms and conditions of any such permit, license or approval,
except for such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits,
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licenses or approvals that would not, singularly or in the aggregate,
have a Material Adverse Effect. There has been no storage, disposal,
generation, transportation, handling or treatment of hazardous
substances or solid wastes by the Company or its subsidiaries (or to
the knowledge of the Company and its subsidiaries, any of their
respective predecessors in interest) at, upon or from any of the
property now or previously owned or leased by the Company or any
subsidiary in violation of any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit or which would require
remedial action by the Company or any subsidiary under any applicable
law, ordinance, rule, regulation, order, judgment, decree or permit,
except for any violation or remedial action which would not result in,
or which would not be reasonably likely to result in, singularly or in
the aggregate with all such violations and remedial actions, a
Material Adverse Effect; there has been no spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such
property or into the environment surrounding such property of any
solid wastes or hazardous substances due to or caused by the Company
or any subsidiary, except for any such spill, discharge, leak,
emission, injection, escape, dumping or release which would not result
in or would not be reasonably likely to result in, singularly or in
the aggregate with all such spills, discharges, leaks, emissions,
injections, escape, dumping or releases, a Material Adverse Effect;
and the terms "hazardous substances" and "solid wastes" shall have the
meanings specified in any applicable local, state and federal laws or
regulations with respect to environmental protection;
(w) There are no persons with registration or similar
rights to require registration of any securities of the Company under
the Act because of the filing of the Registration Statement or the
sale of the shares by the Company to the Underwriters, other than such
rights as are described in the Prospectus and have been duly and
effectively waived;
(x) The Company and its subsidiaries and their
respective directors, officers or controlling persons have not taken,
directly or indirectly, any action intended, or which might reasonably
be expected, to cause or result, under the Act or otherwise, in, or
which has constituted, stabilization or manipulation of the price of
any security of the Company to facilitate the sale or resale of the
Securities;
(y) Neither the Company nor any of its subsidiaries nor,
to the Company s knowledge, any employee or agent of the Company or
any subsidiary has made any payment of funds of the Company or any
subsidiary or received or retained any funds in violation of any law,
rule or regulation or of a character required to be disclosed in the
Prospectus;
(z) There are no contracts or other documents of a
character required to be filed as an exhibit to the Registration
Statement or required to be described in the Registration Statement or
the Prospectus which are not filed or described as required; and
(aa) The Board of Directors of Company has taken all
appropriate action so that (i) neither Xxxxxx Xxxxxx & Company, Inc.
nor any other Underwriter will be an "interested stockholder" within
the meaning of Sections 78.378 to 78.3793 of the Nevada General
Corporation Law by virtue of the execution of this Agreement or the
consummation of the transactions contemplated hereby and (ii) the
entry into
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this Agreement and the consummation of the transactions contemplated
hereunder shall be exempted from the provisions of Sections 78.411 to
78.444 of the Nevada General Corporation Law.
2. Subject to the terms and conditions herein set forth, (a)
the Company agrees to issue and sell to each of the Underwriters, and each of
the Underwriters agrees, severally and not jointly, to purchase from the
Company, at a purchase price of _____% of the principal amount thereof,
plus accrued interest, if any, from ________________________, 1997 to the Time
of Delivery hereunder, the principal amount of Securities set forth opposite
the name of such Underwriter in Schedule I hereto and (b) in the event and to
the extent that the Underwriters shall exercise the election to purchase
Optional Securities as provided below, the Company agrees to issue and sell
to each of the Underwriters, and each of the Underwriters agrees, severally
and not jointly, to purchase from the Company, at the same purchase price
set forth in clause (a) of this Section 2, that portion of the aggregate
principal amount of the Optional Securities as to which such election
shall have been exercised (to be adjusted by you so as to eliminate fractions
of $1,000) determined by multiplying the aggregate principal amount of
Optional Securities by a fraction, the numerator of which is the maximum
aggregate principal amount of Optional Securities which such Underwriter is
entitled to purchase as set forth opposite the name of such Underwriter in
Schedule I hereto and the denominator of which is the maximum aggregate
principal amount of Optional Securities that all of the Underwriters are
entitled to purchase hereunder.
The Company hereby grants to the Underwriters the right to
purchase at their election up to $4,500,000 aggregate principal amount
of Optional Securities, at the purchase price set forth in the
paragraph above, for the sole purpose of covering overallotments in the sale
of the Firm Securities. Any such election to purchase Optional Securities
may be exercised only by written notice from you to the Company, given
within a period of 30 calendar days after the date of this Agreement and
setting forth the aggregate principal amount of Optional Securities to be
purchased and the date on which such Optional Securities are to be
delivered, as determined by you but in no event earlier than the First Time
of Delivery (as defined in Section 4 hereof) or, unless you and the Company
otherwise agree in writing, earlier than two
or later than ten business days after the date of such notice.
3. Upon the authorization by you of the release of the
Firm Securities, the several Underwriters propose to offer the Firm
Securities for sale upon the terms and conditions set forth in the
Prospectus.
4. (a) The Securities to be purchased by each Underwriter
hereunder will be represented by one or more definitive global Securities in
book-entry form which will be deposited by or on behalf of the Company
with The Depository Trust Company ("DTC") or its designated custodian. The
Company will deliver the Securities to Xxxxxx Xxxxxx & Company, Inc. ("Xxxxxx
Xxxxxx"), for the account of each Underwriter, against payment by or on
behalf of such Underwriter of the purchase price therefor by wire transfer or
by certified or official bank check or checks, payable to the order of the
Company in [Federal (same day)] [New York Clearing House (next day)] funds,
by causing DTC to credit the Securities to the account of Xxxxxx Xxxxxx at
DTC. The Company will cause the certificates representing the Securities to
be made available for checking and packaging at least twenty-four hours prior
to the Time of Delivery at the office of DTC or its designated custodian (the
"Designated Office"). The time and date of such delivery and
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payment shall be, with respect to the Firm Securities, 8:30 a.m., Central
daylight time on _________________, 1997 or such other time and date as Xxxxxx
Xxxxxx and the Company may agree in writing, and with respect to the Option
Securities, 8:30 a.m., Central daylight time, on the date specified by Xxxxxx
Xxxxxx in the written notice given by Xxxxxx Xxxxxx of the Underwriters'
election to purchase such Optional Securities, or such other time and date as
Xxxxxx Xxxxxx and the Company may agree upon in writing. Such time and date for
delivery of the Firm Securities is herein called the "First Time of Delivery",
such time and date for delivery of the Optional Securities, if not the First
Time of Delivery, is herein called the "Second Time of Delivery", and each such
time and date for delivery is herein called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or
on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross receipt for the Securities and any additional documents requested by
the Underwriters pursuant to Section 7(k) hereof will be delivered at the
offices of Xxxxxx & Xxxxxx, L.L.P. (the "Closing Location"), and the
Securities will be delivered at the Designated Office, all at the Time of
Delivery. A meeting will be held at the Closing Location at 2:00 p.m.,
Central daylight time, on the business day next preceding such Time of
Delivery, at which meeting the final drafts of the documents to be delivered
pursuant to the preceding sentence will be available for review by the
parties hereto. For the purposes of this Section 4, "business day" shall
mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a day
on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters as follows:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to prepare and file with
the Commission, promptly upon your request, any amendments of or supplements to
the Registration Statement or Prospectus which, in your opinion, may be
necessary or advisable in connection with the distribution of the Securities;
to make no further amendment or any supplement to the Registration Statement or
Prospectus or file any document under the Exchange Act before the termination
of the offering of the Securities by the Underwriters if such document would be
deemed to be incorporated by reference into the Prospectus which shall be
disapproved by you promptly after reasonable notice thereof; to advise you,
promptly after it receives notice thereof, of the time when any amendment to
the Registration Statement has been filed or becomes effective or any
supplement to the Prospectus or any amended Prospectus has been filed and to
furnish you with copies thereof; to advise you, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or of any
order preventing or suspending the use of any Preliminary Prospectus or
Prospectus, of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the Commission for the
amending or supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any stop order or
of any order preventing or suspending the use of any Preliminary Prospectus or
Prospectus or suspending any such qualification, promptly to use its best
efforts to obtain the withdrawal of such order;
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(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Securities and the shares of Stock issuable
upon conversion of the Securities for offering and sale under the securities
laws of such jurisdictions as you may request and to comply with such laws
so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Securities, provided that in connection therewith the Company shall not
be required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
(c) Prior to 9:00 a.m., Central daylight time, on the business
day next succeeding the date of this Agreement and from time to time, to
furnish the Underwriters with copies of the Prospectus in such quantities as
you may from time to time reasonably request, and, if the delivery of a
Prospectus is required at any time prior to the expiration of nine months
after the time of issue of the Prospectus in connection with the offering
or sale of the Securities and the shares of Stock issuable upon
conversion of the Securities and if at such time any event shall have
occurred as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when
such Prospectus is delivered, not misleading, or, if for any other
reason it shall be necessary during such period to amend or supplement the
Prospectus in order to comply with the Act or to file under the Exchange Act
any document which would be deemed to be incorporated by reference in the
Prospectus in order to comply with the Act or the Exchange Act, to notify
you and amend the Registration Statement, supplement the Prospectus or file
such document and upon your request to prepare and furnish without charge to
each Underwriter and to any dealer in securities as many copies as you may
from time to time reasonably request of an amended Prospectus or a
supplement to the Prospectus which will correct such statement or omission
or effect such compliance, and in case any Underwriter is required to
deliver a Prospectus in connection with sales of any of the Securities at any
time nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and
deliver to such Underwriter as many copies as you may request of an amended
or supplemented Prospectus complying with Section 10(a)(3) of the Act;
(d) If the Company elects to rely upon 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 of the Act by the earlier of (i) 10:00 p.m.,
Washington, D.C. time, on the date of this Agreement, or (ii) the time that
confirmation is given or sent, as specified by Rule 462(b)(2);
(e) To make generally available to its security holders as soon
as practicable, but in any event not later than eighteen months after the
Effective Date (as defined in Rule 158(c) under the Act), an earnings
statement of the Company and its subsidiaries (which need not be audited)
complying with Section 11(a) of the Act and the rules and regulations of the
Commission thereunder (including, at the option of the Company, Rule 158);
(f) During the period beginning from the date hereof and
continuing to and including the date 90 days after the date of the
Prospectus, not to offer, sell, contract to sell or otherwise dispose of,
except as provided hereunder, any securities of the Company that are
substantially similar to the Securities or the Stock, including but not
limited to any securities that are convertible into or exchangeable for, or
that represent the right to
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receive, Stock or any such substantially similar securities (other than
pursuant to employee stock option plans existing on the date of this
Agreement), without the prior written consent of Xxxxxx Xxxxxx;
(g) To furnish to its stockholders as soon as practicable after
the end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries certified by independent public
accountants) and, as soon as practicable after the end of each of the first
three quarters of each fiscal year (beginning with the fiscal quarter ending
after the Effective Date of the Registration Statement), consolidated
summary financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
(h) During a period of five years from the Effective Date of
the Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to deliver
to you (i) as soon as they are available, copies of any reports and
financial statements furnished to or filed with the Commission or any
national securities exchange on which any class of securities of the
Company is listed; and (ii) such additional information concerning the
business and financial condition of the Company as you may from time to time
reasonably request (such financial statements to be on a consolidated basis
to the extent the accounts of the Company and its subsidiaries are consolidated
in reports furnished to its stockholders generally or to the Commission);
(i) To use the net proceeds received by it from the sale of
the Securities pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds";
(j) To use its best efforts to list for quotation the Stock
issuable upon conversion of the Securities on the Nasdaq National Market; and
(k) To reserve and keep available at all times, free of
preemptive rights, shares of Stock for the purpose of enabling the Company
to satisfy any obligations to issue shares of Stock upon conversion of the
Securities.
6. The Company covenants and agrees with the several
Underwriters that the Company will pay or cause to be paid, the following:
(a) The fees, disbursements and expenses of the Company's
counsel and accountants in connection with the registration of the Securities
and the shares of Stock issuable upon conversion of the Securities under the
Act and all other expenses in connection with the preparation, printing
and filing of the Registration Statement, Preliminary Prospectus and
Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers;
(b) The cost of printing or producing any Agreement among
Underwriters, this Agreement, the Blue Sky Memorandum, closing documents
(including any compilations thereof) and any other documents in connection
with the offering, purchase, sale and delivery of the Securities;
(c) All fees and expenses in connection with listing the
Securities and the shares of Stock issuable upon conversion of the
Securities on the Nasdaq National Market;
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(d) The filing fees incident to, and the fees and disbursements
of counsel for the Underwriters in connection with, securing any required
review by the NASD of the terms of the sale of the Securities;
(e) Any fees charged by securities rating services for rating the
Securities;
(f) The cost of preparing the Securities;
(g) The cost and charges of any transfer agent or registrar;
(h) The fees and expenses of the Trustee and any agent of
the Trustee and the fees and disbursements of counsel to the Trustee in
connection with the Indenture and the Securities;
(i) All other costs and expenses incident to the performance of
its obligations hereunder.
It is understood, that except as provided in this Section, and
Sections 8 and 11 hereof, the Underwriters will pay all of their own
costs and expenses, including the fees of their counsel, stock transfer
taxes on resale of any of the Securities by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder as to the
Securities to be delivered at each Time of Delivery, shall be subject, in
their discretion, to the condition that all representations and warranties
and other statements of the Company herein are, at and as of such Time of
Delivery, true and correct, the condition that the Company shall have
performed all of its obligations hereunder theretofore to be performed, and
the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for
such filing by the rules and regulations under the Act and in
accordance with Section 5(a) hereof; if the Company has elected to rely
upon Rule 462(b), the Rule 462(b) Registration Statement shall have become
effective not later than the earlier of (x) 10:00 p.m., Washington, D.C.
time, on the date of this Agreement; or (y) at such later date and time as
may be approved by a majority in interest of the Underwriters; no stop order
suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose shall
have been initiated or threatened by the Commission; and all requests for
additional information on the part of the Commission shall have been complied
with to your reasonable satisfaction;
(b) Xxxxxx & Xxxxxx, L.L.P., counsel for the Underwriters,
shall have furnished to you such opinion or opinions, dated such Time of
Delivery, with respect to such matters as you may reasonably request, and such
counsel shall have received such papers and information as they may
reasonably request to enable them to pass upon such matters;
(c) Akin, Gump, Strauss, Xxxxx & Xxxx, counsel for the
Company, shall have furnished to you their written opinion, dated such Time
of Delivery, in form and substance satisfactory to you, to the effect that:
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(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Nevada, with power and authority (corporate and other) to own, lease
and operate its assets and conduct its business as described in the
Prospectus;
(ii) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued and are fully
paid and non-assessable; the shares of Stock initially issuable upon
conversion of the Securities have been duly authorized and reserved for
issuance and, when issued and delivered in accordance with the
provisions of the Securities and the Indenture, will be validly issued,
fully paid and non-assessable; and the shares of Stock initially
issuable upon conversion of the Securities conform to the description of
the Stock contained in the Prospectus;
(iii) The Company has been duly qualified as a foreign
corporation for the transaction of business in, and is in good standing
under the laws of, each jurisdiction in which it owns or leases
properties or conducts any business so as to require such qualification,
or is subject to no material liability or disability by reason of
failure to be so qualified in any such jurisdiction (such counsel being
entitled to rely in respect of the opinion in this clause upon opinions
of local counsel and in respect of matters of fact upon certificates of
officers of the Company, provided that such counsel shall state that
they believe that both you and they are justified in relying upon such
opinions and certificates);
(iv) Each direct or indirect subsidiary of the Company has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation [or is duly
formed and validly existing as a general or limited partnership under
the laws of its state of formation, as the case may be,] has power and
authority to own, lease and operate its assets and conduct its business
as described in the Prospectus, and is duly qualified to transact
business and is in good standing in each jurisdiction in which the
nature of its activities requires such qualification; all of the issued
shares of capital stock of, [or partnership or other equity ownership
interest in,] each such subsidiary have been duly and validly authorized
and issued, are fully paid and non-assessable, and are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims (such counsel being entitled to rely in respect of
the opinion in this clause upon opinions of local counsel and in respect
of matters of fact upon certificates of officers of the Company or its
subsidiaries, provided that such counsel shall state that they believe
that both you and they are justified in relying upon such opinions and
certificates);
(v) The Company has full corporate power and authority to enter
into this Agreement, and this Agreement has been duly authorized,
executed and delivered by the Company;
(vi) The Securities have been duly authorized and, when executed
and authenticated in accordance with the terms of the Indenture and
issued and delivered to and paid for by the Underwriters pursuant to the
Underwriting Agreement, will constitute valid and legally binding
obligations of the Company
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entitled to the benefits provided by the Indenture; and the Securities
and the Indenture conform to the descriptions thereof in the Prospectus;
(vii) The Indenture has been duly authorized, executed and
delivered by the Company and, assuming due authorization, execution and
delivery by the Trustee, constitutes a valid and legally binding
instrument of the Company, enforceable in accordance with its terms,
subject to bankruptcy, insolvency, reorganization, moratorium and
similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles; and the Indenture
has been duly qualified under the Trust Indenture Act;
(viii) To the best of such counsel's knowledge and other than as
set forth in the Prospectus, there are no legal or governmental actions,
suits or proceedings pending or threatened against or affecting the
Company or any of its subsidiaries, or any of their respective officers,
directors or partners in their capacity as such, before or by any
federal or state court, commission, regulatory body, administrative
agency or other governmental body, domestic or foreign, which, if
determined adversely to the Company or any of its subsidiaries, would
individually or in the aggregate have a Material Adverse Effect on the
current or future consolidated financial position, stockholders' equity
or results of operations of the Company and its subsidiaries;
(ix) The issue and sale of the Securities being delivered at
such Time of Delivery to be sold by the Company and the compliance by
the Company with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not conflict
with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, or result in the creation
of any lien, charge or encumbrance on any property or assets of the
Company or any of its subsidiaries pursuant to, any indenture, mortgage,
deed of trust, loan agreement, note, 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 is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or any statute or any order,
rule or regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Company or any of its
subsidiaries or any of their properties;
(xi) All contracts and agreements summarized in the Registration
Statement and the Prospectus (other than oil and gas leases and other
oil and gas property interests) are, to the extent summarized therein,
fairly summarized therein,
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conform in all material respects to the descriptions thereof contained
therein, and, to the extent such contracts or agreements or any other
material agreements are required under the Act or the Rules and
Regulations thereunder to be filed as exhibits to the Registration
Statement, they are so filed; and such counsel does not know of any
contracts or other documents required to be summarized or disclosed in
the Prospectus (or required to be filed under the Exchange Act if upon
such filing they would be incorporated, in whole or in part, by
reference therein) or to be so filed as an exhibit to the Registration
Statement, which have not been so summarized, disclosed or filed;
(xii) The statements set forth in the Prospectus under the
caption "Description of Common Stock" and "Description of the Notes",
insofar as they purport to constitute a summary of the terms of the
Stock, are accurate, complete and fair;
(xiii) The Company is not an "investment company" or an entity
"controlled" by an "investment company", as such terms are defined in
the Investment Company Act;
(xiv) To the best of such counsel's knowledge, except as have
been waived at the Time of Delivery, there are no persons with
registration or similar rights to have any securities of the Company
registered pursuant to the Registration Statement;
(xv) The Registration Statement is effective under the Act and,
to the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued under the
Act or proceedings therefor initiated or threatened by the Commission;
and
(xvi) Such counsel (A) is of the opinion that the Registration
Statement and the Prospectus and any amendment or supplement thereto
(including any document incorporated by reference into the Prospectus),
as of their respective effective dates and as of each Time of Delivery,
complied in all material respects with the requirements of the
Securities Act, the Rules and Regulations, the Exchange Act and the
Exchange Act Rules and Regulations (it being understood that such
counsel need express no opinion as to the financial statements and
schedules or other financial data contained in the Registration
Statement, the Prospectus or the documents incorporated by reference
therein), and the conditions for use of Form S-2, set forth in the
General Instructions thereto, have been satisfied; and (B) has no reason
to believe that the Registration Statement or any amendment or
supplement thereto, at the time such Registration Statement or amendment
or supplement became effective, or the Prospectus or any amendment or
supplement thereto (including any document filed under the Exchange Act
and deemed to be incorporated by reference into the Prospectus or any
amendment or supplement thereto), as of its date and as of each Time of
Delivery, contained or contain any untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; and
(xvii) The Board of Directors of Company has taken all
appropriate action so that (i) neither Xxxxxx Xxxxxx & Company, Inc. nor
any other Underwriter will
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be an "interested stockholder" within the meaning of Sections 78.378 to
78.3793 of the Nevada General Corporation Law by virtue of the execution
of this Agreement or the consummation of the transactions contemplated
hereby and (ii) the entry into this Agreement and the consummation of
the transactions contemplated hereunder shall be exempted from the
provisions of Sections 78.411 to 78.444 of the Nevada General
Corporation Law.
(d) On the date of the Prospectus, on the effective date of any
post-effective amendment to the Registration Statement filed subsequent to the
date of this Agreement and also at each Time of Delivery, KPMG Peat Marwick
L.L.P. shall have furnished to you a letter or letters, dated the respective
dates of delivery thereof, in form and substance satisfactory to you, to the
effect set forth in Annex I hereto;
(e) The Reserve Engineers, such firms constituting independent
petroleum engineering consultants, shall have each delivered to you on the date
of this Agreement a letter (the "Reserve Letter") and also at each Time of
Delivery a letter dated the date of such Time of Delivery, in each case in form
and substance reasonably satisfactory to you, stating, as of the date of such
letters (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 is given or incorporated in the Prospectus as of the date not
more than five days prior to the date of such letter), the conclusions and
findings of such firms with respects to the oil and gas reserves of the
Company.
(f)(i) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any loss or interference with its
business from fire, explosion, flood or other calamity, whether or not covered
by insurance, or from any labor dispute or court or governmental action, order
or decree, otherwise than as set forth or contemplated in the Prospectus, and
(ii) since the respective dates as of which information is given or
incorporated by reference in the Prospectus there shall not have been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective change,
in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus,
the effect of which, in any such case described in Clause (i) or (ii), is in
the judgment of the Underwriters so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Securities being delivered at such Time of Delivery on the
terms and in the manner contemplated in the Prospectus;
(g) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the New York Stock Exchange or on the Nasdaq National Market; (ii)
a suspension or material limitation in trading in the Company's securities on
the Nasdaq National Market; (iii) a general moratorium on commercial banking
activities declared by either federal or New York or Tennessee state
authorities; or (iv) the outbreak or escalation of hostilities involving the
United States or the declaration by the United States of a national emergency
or war, or any other crisis or change in political, financial or economic
conditions if the effect of any such event specified in this Clause (iv) in the
judgment of the Underwriters makes it impracticable or inadvisable to proceed
with the public offering
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or the delivery of the Securities being delivered at such Time of Delivery on
the terms and in the manner contemplated in the Prospectus;
(h) The Securities at such Time of Delivery shall have been duly
approved for quotation on the Nasdaq National Market and the shares of Stock
issuable upon conversion of the Securities shall have been duly approved for
quotation on the Nasdaq National Market, subject to notice of issuance;
(i) The Company shall have complied with the provisions of Section 5(c)
hereto with respect to the furnishing of prospectuses on the Business Day next
succeeding the date of this Agreement; and
(j) The Company shall have furnished or caused to be furnished to you
at such Time of Delivery certificates of officers of the Company, satisfactory
to you as to the accuracy of the representations and warranties of the Company
herein at and as of such Time of Delivery, as to the performance by the Company
of all of its obligations hereunder to be performed at or prior to such Time of
Delivery, and as to such other matters as you may reasonably request, and the
Company shall have furnished or caused to be furnished certificates as to the
matters set forth in subsections (a) and (f) of this Section.
8. (a) The Company will indemnify and hold harmless each Underwriter
against any losses, claims, damages or liabilities to which such Underwriter
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 of a material
fact contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or (ii) any untrue statement or alleged untrue statement made by
the Company in Section 1(a) of this Agreement and will reimburse each
Underwriter for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such action or
claim as such expenses are incurred; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss, claim, damage
or liability arises out of or is based upon an untrue statement or alleged
untrue statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through Xxxxxx Xxxxxx expressly for
use therein.
(b) Each Underwriter will indemnify and hold harmless the Company
against any losses, claims, damages or liabilities to which the Company 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 an untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out of or are
based upon the omission or alleged omission to state therein a material fact
required to be stated therein 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 any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or
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supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through Xxxxxx Xxxxxx, expressly
for use therein; and will reimburse the Company for any legal or other expenses
reasonably incurred by the Company in connection with investigating or
defending any such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection (a)
or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against the
indemnifying party under such subsection, notify the indemnifying party in
writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party 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
the relative benefits received by the Company on the one hand and the
Underwriters on the other from the offering of the Securities. If, however, the
allocation provided by the immediately preceding sentence is not permitted by
applicable law or if the indemnified party failed to give the notice required
under subsection (c) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company on the one hand and the Underwriters on the other in
connection with the statements or omissions which 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 on the one hand and the Underwriters on the other shall be deemed to be
in the same proportion as the total net proceeds from the offering (before
deducting expenses) received by the Company bear to the total underwriting
discounts and commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The relative fault
shall be
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determined by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or alleged omission
to state a material fact relates to information supplied by the Company on the
one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission. The Company and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this subsection (d) were
determined by pro rata allocation (even if the Underwriters were treated as one
entity for such purpose) or by any other method of allocation which does not
take account of the equitable considerations referred to above in this
subsection (d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (d) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Securities underwritten by it and distributed to the public were offered to
the public exceeds the amount of any damages which such Underwriter has
otherwise been required to pay by reason of such untrue or alleged untrue
statement or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section 8 shall be in
addition to any liability which the Company may otherwise have and shall
extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the obligations of
the Underwriters under this Section 8 shall be in addition to any liability
which the respective Underwriters may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of the Company
(including any person who, with his or her consent, is named in the
Registration Statement as about to become a director of the Company) and to
each person, if any, who controls the Company within the meaning of the Act.
9.(a) If any Underwriter shall default in its obligation to purchase
any of the Securities which it has agreed to purchase hereunder at a Time of
Delivery you may in your discretion arrange for you or another party or other
parties to purchase such Securities on the terms contained herein. If within
thirty- six hours after such default by any Underwriter you do not arrange for
the purchase of such Securities, then the Company shall be entitled to a
further period of thirty-six hours within which to procure another party or
other parties satisfactory to you to purchase such Securities on such terms. In
the event that, within the respective prescribed periods, you notify the
Company that you have so arranged for the purchase of such Securities, or the
Company notifies you that it has so arranged for the purchase of such
Securities, you or the Company shall have the right to postpone Time of
Delivery for a period of not more than seven days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company agrees
to file promptly any amendments to the Registration Statement or the Prospectus
which in your opinion may thereby be made necessary. The term Underwriter as
used in this Agreement shall include any person substituted under this Section
with like effect as if such person had originally been a party to this
Agreement with respect to such Securities.
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(b) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters by you and the Company
as provided in subsection (a) above, the aggregate number of such Securities
which remains unpurchased does not exceed one-eleventh of the aggregate number
of all the Securities to be purchased at such Time of Delivery, then the
Company shall have the right to require each non-defaulting Underwriter to
purchase the number of Securities which such Underwriter agreed to purchase
hereunder at such Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Securities which such Underwriter agreed to purchase hereunder) of the
Securities of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the purchase of the
Securities of a defaulting Underwriter or Underwriters by you and the Company
as provided in subsection (a) above, the aggregate principal amount of such
Securities which remains unpurchased exceeds one-eleventh of the aggregate
principal amount of all of the Securities to be purchased at such Time of
Delivery, or if the Company shall not exercise the right described in
subsection (b) above to require non-defaulting Underwriters to purchase
Securities of a defaulting Underwriter or Underwriters, then this Agreement
(or, with respect to the Second Time of Delivery, the obligations of the
Underwriters to purchase and of the Company to sell the Optional Securities)
shall thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company, except for the expenses to be borne by the Company
and the Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company and the several Underwriters, as 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 any
investigation (or any statement as to the results thereof) made by or on behalf
of any Underwriter or any controlling person of any Underwriter, or the
Company, or any officer or director or controlling person of the Company, and
shall survive delivery of and payment for the Securities.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
the Company shall not then be under any liability to any Underwriter except as
provided in Sections 6 and 8 hereof; but, if for any other reason any
Securities are not delivered by or on behalf of the Company as provided herein,
the Company will reimburse the Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Securities not so delivered, but the Company
shall then be under no further liability to any Underwriter in respect of the
Securities not so delivered except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by you jointly or by Xxxxxx Xxxxxx on behalf of you.
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22
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex
or facsimile transmission to you in care of Xxxxxx Xxxxxx & Company, Inc., 00
Xxxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000, Attention: Xxxx Xxxxxx; and if to
the Company shall be delivered or sent by mail, telex or facsimile transmission
to the address of the Company set forth in the Registration Statement,
Attention: Secretary; provided, however, that any notice to an Underwriter
pursuant to Section 8(c) hereof shall be delivered or sent by mail, telex or
facsimile transmission to such Underwriter at its address set forth in its
Underwriters' Questionnaire or telex constituting such Questionnaire, which
address will be supplied to the Company by you on request. Any such statements,
requests, notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters and the Company and, to the extent provided in
Sections 8 and 10 hereof, the officers and directors of the Company and each
person who controls the Company or any Underwriter, and their respective heirs,
executors, administrators, successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement. No purchaser of
any of the Securities from any Underwriter shall be deemed a successor or
assign by reason merely of such purchase.
14. Time shall be of the essence of this Agreement. Except as provided
in Section 4 hereof, as used herein, the term "business day" shall mean any day
when the Commission's office in Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF TENNESSEE.
16. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
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23
If the foregoing is in accordance with your understanding, please sign
and return to us one for the Company and each of the Underwriters plus one for
each counsel, in any counterparts hereof, and upon the acceptance hereof by
you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters and
the Company. It is understood that your acceptance of this letter on behalf of
each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company for examination, upon request, but without warranty on your part as to
the authority of the signers thereof.
Very truly yours,
Southern Mineral Corporation
By:
-----------------------------------
Name:
Title:
Accepted as of the date hereof:
Xxxxxx Xxxxxx & Company, Inc.
XxXxxxxx & Company Securities, Inc.
Xxxxxxxx Xxxxxx Refsnes Inc.
By:
--------------------------------------
Xxxxxx Xxxxxx & Company, Inc.
On behalf of each of the Underwriters
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SCHEDULE I
NUMBER OF OPTIONAL
TOTAL NUMBER OF FIRM SECURITIES TO BE PURCHASED
UNDERWRITER SECURITIES TO BE PURCHASED IF MAXIMUM OPTION EXERCISED
----------- -------------------------- ---------------------------
Xxxxxx Xxxxxx
& Company, Inc. . . .
XxXxxxxx & Company
Securities, Inc. . .
Xxxxxxxx Xxxxxx
Refsnes Inc. . . . .
25
ANNEX I
FORM OF COMFORT LETTER
Pursuant to Section 7(d) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(1) They are independent certified public accountants with respect to
the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(2) They have audited the financial statements and related schedules
included or incorporated in the Registration Statement and that their reports
with respect thereto are also included in the Registration Statement, and, if
applicable, they have made a review in accordance with standards established by
the American Institute of Certified Public Accountants of the unaudited
consolidated interim financial statements, condensed or complete, that have
been included (or incorporated by reference in) the Registration Statement, and
such unaudited consolidated financial statements provided by the Company that
shall be available for any period or periods after the latest period of such
statements included (or incorporated by reference in) the Registration
Statement, copies of which have been separately furnished to the Underwriters
(the "Underwriters");
(3) In their opinion, the consolidated financial statements and related
schedules audited by them and included or incorporated by reference in the
Registration Statement comply as to form in all material respects with the
applicable accounting requirements of the Act and the Rules and Regulations
thereunder, the Exchange Act and the Exchange Act Rules and Regulations
thereunder;
(4) For purposes of such letters, they have read the 1996 and 1997
minutes of meetings of the stockholders, the board of directors and appropriate
committees of the Company and its subsidiaries as set forth in the minute books
as of a date not more than five days before the Registration Statement is
declared effective (the "Cutoff Date"), officials of the Company having advised
them that the minutes of all such meetings through the Cutoff Date were set
forth therein and that (a) with respect to the six month periods ended June 30,
1997 and 1996, they have (i) performed the procedures specified by the American
Institute of Certified Public Accountants for a review of interim financial
information, on the unaudited condensed consolidated balance sheet dated as of
June 30, 1997, and the unaudited condensed consolidated statements of income,
retained earnings and cash flows for the six month periods ended June 30, 1997
and 1996, included or incorporated by reference in the Registration Statement,
and have (ii) inquired of certain officials of the Company who have
responsibility for financial and accounting matters whether the unaudited
condensed consolidated financial statements referred to in a(i) comply as to
form in all material respects with the applicable accounting requirements of
the Act and the Rules and Regulations thereunder or the Exchange Act and the
Exchange Act Rules and Regulations thereunder and (b) with respect to the
period from July 1, 1997, to the Cutoff Date, they have read all available
unaudited consolidated financial statements of the Company and its subsidiaries
for July through the last month or other period ending before the Cutoff Date
and such corresponding period or periods for 1996 and 1997 furnished to them by
the Company, officials of the Company having advised them that no such
financial statements as of any date or for any period subsequent to such
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26
last month or other period ending before the Cutoff Date were available, and
(ii) have inquired of certain officials of the Company who have responsibility
for financial and accounting matters whether the unaudited consolidated
financial statements referred to in b(i) are stated on a basis substantially
consistent with that of the audited consolidated financial statements included
or incorporated by reference in the Registration Statement;
(5) Nothing came to their attention as a result of the foregoing
procedures that caused them to believe that (a)(i) any material modifications
should be made to the unaudited condensed consolidated financial statements
described in 4(a)(i) included (or incorporated by reference in) the
Registration Statement for them to be in conformity with generally accepted
accounting principles, (ii) the unaudited condensed consolidated financial
statements described in 4(a)(i) do not comply as to form in all material
respects with the applicable accounting requirements of the Act and the Rules
and Regulations thereunder or the Exchange Act and the Exchange Act Rules and
Regulations thereunder (b)(i) at the end of such last month or other period
ending before the Cutoff Date, there was any change in the capital stock,
increase in long- term debt, or decrease in consolidated net current assets or
stockholders equity, or such other changes specified by the Underwriters in
items, of the Company consolidated with its subsidiaries as compared with
amounts shown in the June 30, 1997 unaudited condensed consolidated balance
sheet included or incorporated by reference in the Registration Statement, or
(ii) for the period from July 1, 1997, to the end of such last month or other
period ending before the Cutoff Date, there were any decreases, as compared to
the corresponding period in the preceding year, in consolidated net sales or in
the total or per-share amounts of income before extraordinary items, of net
income, or in such other items specified by the Underwriters, except in all
instances for changes, increases, or decreases that the Registration Statement
discloses have occurred or may occur;
(6) Company officials have advised them that no consolidated financial
statements as of any date or for any period subsequent the end of such last
month or other period ending before the Cutoff Date are available, and
accordingly, the procedures carried out by them with respect to changes in the
financial statement items after the end of such last month or other period
ending before the Cutoff Date have, of necessity, been even more limited than
those with respect to the periods referred to in 4 above, and they have
inquired of certain officials of the Company who have responsibility for
financial and accounting matters whether (a) at the Cutoff Date, the was any
change in the capital stock, increase in long-term debt or any decreases in
consolidated net current assets or stockholders equity of the Company
consolidated with its subsidiaries as compared with amounts shown on the June
30, 1997 unaudited condensed consolidated balance sheet included in the
Registration Statement or (b) for the period from June 1, 1997 to the Cutoff
Date, there were any decreases, as compared with the corresponding period in
the preceding year, in consolidated net sales or in the total or per-share
amounts of income before extraordinary items or of net income, and on the basis
of theses inquiries and their reading of the minutes as described in 4 above,
nothing came to their attention that caused them to believe that there was any
such change, increase, or decrease, except in all instances for changes,
increases, or decreases that the Registration Statement discloses have occurred
or may occur;
(7) They have compared the information in the Prospectus under selected
captions with the disclosure requirements of Regulation S-K and on the basis of
limited procedures specified in such letter nothing came to their attention as
a result of the foregoing procedures that caused them to believe that this
information does not conform
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27
in all material respects with the disclosure requirements of Items 301, 302,
402 and 503(d), respectively, of Regulation S-K, if the requirements of such
Items are applicable;
(8) They are qualified to comment with respect to any unaudited pro
forma financial information included (or incorporated by reference) in the
Registration Statement, if applicable, and after application of appropriate
procedures, nothing came to their attention that caused them to believe that
the unaudited pro forma financial statements, if any, do not comply as to form
in all material respects with the applicable accounting requirements of Rule
11-02 of Regulation S-X and that the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of those
statements; and
(9) Other than the procedures and findings or assurances referred to
above, they have carried out certain specified procedures with respect to
certain amounts, percentages and financial information specified by the
Underwriters, which are derived from the general accounting records of the
Company and its subsidiaries, which appear or are incorporated by reference in
the Registration Statement, and have compared certain of such amounts,
percentages and financial information with the accounting records of the
Company and its subsidiaries and have found them to be in agreement or have
performed such other procedures and have made such findings as shall be
specified by the Underwriters.
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