1
Draft dated July 12, 1999
EXHIBIT 1.1
▇▇▇▇▇▇ Petroleum Company
$40,000,000
____% Senior Subordinated Notes due 2004
UNDERWRITING AGREEMENT
__________________, 1999
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY, INC.
c/o ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
The undersigned, ▇▇▇▇▇▇ Petroleum Company, a Delaware corporation (the
"Company"), hereby confirms its agreement with ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. and
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc. (the "Underwriters") as follows:
1. DESCRIPTION OF SECURITIES. The Company proposes to issue and sell
to the Underwriters $40,000,000 in aggregate principal amount of the Company's
____% Senior Subordinated Notes due 2004 (the "Securities"), subject to the
terms and conditions set forth herein. The Securities are to be issued pursuant
to an indenture dated as of _________, 1999 (the "Indenture") between the
Company and American Stock Transfer & Trust Company, as trustee (the
"Trustee"). The Securities are more fully described in the Prospectus (as
hereinafter defined).
2. OFFERING; PURCHASE, SALE AND DELIVERY OF SECURITIES.
(a) The Company is advised by the Underwriters that they propose to
make a public offering of their respective portions of the Securities as soon
after the effectiveness of this Agreement as in their judgment is advisable.
The Company is further advised by the Underwriters that the Securities will be
offered to the public at the initial public offering price specified in the
Prospectus as amended or supplemented plus accrued interest thereon, if any,
from the Closing Date (as hereinafter defined) to the date of delivery of the
Securities.
(b) On the basis of the representations, warranties and agreements
herein contained, and subject to the terms and conditions herein set forth, the
Company agrees to sell to each Underwriter, and each Underwriter agrees,
severally and not jointly, to purchase from the Company, at a purchase price
equal to ____% of the principal amount thereof, plus accrued interest, if any,
from the Closing Date, the respective principal amounts of Securities set forth
opposite the name of such Underwriter in Schedule I hereto.
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(c) Delivery of the Securities to the Underwriters against payment of
the purchase price therefor in immediately available funds by wire transfer
shall be made prior to 1:00 p.m., New York time, on ____________, 1999, in
book-entry form through the facilities of The Depository Trust Company, New
York, New York ("DTC"), or at such other time and date as may be agreed upon in
writing by the Company and the Underwriters. Delivery of the documents required
by Section 5 hereof with respect to the Securities shall be made at such time
and date at the offices of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., 1000 Louisiana, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, or at such other location as may be agreed upon in
writing by the Company and the Underwriters. For purposes of this Agreement,
"Closing Date" shall mean the hour and date of such delivery and payment.
The Securities shall be issued in the form of a global certificate
registered in the name of "Cede & Co.," as nominee of DTC. For the purpose of
expediting the checking of the Securities by the Underwriters, the Company
agrees to make the Securities available to the Underwriters for such purpose at
the offices of DTC (or a custodian thereof) in New York, New York, not later
than 1:00 p.m., New York time, on the business day preceding the Closing Date
or at such other time and place as may be agreed upon by the Company and the
Underwriters.
3. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY. (a) The
Company represents and warrants to, and agrees with, each Underwriter that:
(i) A registration statement (Registration No. 333-80579) on
Form S-2 with respect to 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 carefully
prepared by the Company pursuant to and in conformity with the
requirements of the Securities Act of 1933, as amended (the "1933
Act"), and the rules and regulations thereunder (the "1933 Act Rules
and Regulations") of the Securities and Exchange Commission (the
"SEC") and has been filed with the SEC under the 1933 Act. The Company
meets the requirements for use of Form S-2 under the 1933 Act. Copies
of such registration statement, including any amendments thereto, each
related preliminary prospectus (meeting the requirements of Rule 430
or 430A of the 1933 Act Rules and Regulations) contained therein, and
the exhibits, financial statements and schedules thereto have
heretofore been delivered by the Company to the Underwriters. If such
registration statement has not become effective under the 1933 Act, a
further amendment to such registration statement, including a form of
final prospectus, necessary to permit such registration statement to
become effective will be filed promptly by the Company with the SEC.
If such registration statement has become effective under the 1933
Act, a final prospectus containing information permitted to be omitted
at the time of effectiveness by Rule 430A of the 1933 Act Rules and
Regulations will be filed promptly by the Company with the SEC in
accordance with Rule 424(b) of the 1933 Act Rules and Regulations. The
term "Registration Statement" as used herein means the registration
statement as amended at the time it becomes effective under the 1933
Act (the "Effective Date"), including financial statements and all
exhibits and all documents incorporated by reference therein pursuant
to Item 12 of Form S-2 under the 1933 Act and, if applicable, the
information deemed to be included by Rule 430A of the 1933 Act Rules
and Regulations. If it is
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contemplated, at the time this Agreement is executed, that a
post-effective amendment to such registration statement will be filed
and must be declared effective before the offering of Securities may
commence, the term "Registration Statement" as used herein means the
registration statement as amended by said post-effective amendment. If
an abbreviated registration statement is prepared and filed with the
SEC in accordance with Rule 462(b) under the 1933 Act (an "Abbreviated
Registration Statement"), the term "Registration Statement" as used in
this Agreement includes the Abbreviated Registration Statement. The
term "Prospectus" as used herein means (a) the prospectus as first
filed with the SEC pursuant to Rule 424(b) of the 1933 Act Rules and
Regulations, or (b) if no such filing is required, the form of final
prospectus included in the Registration Statement at the Effective
Date or (c) if a Term Sheet or Abbreviated Term Sheet (as such terms
are defined in Rule 434(b) and 434(c), respectively, of the 1933 Act
Rules and Regulations) is filed with the SEC pursuant to Rule
424(b)(7) of the 1933 Act Rules and Regulations, the Term Sheet or
Abbreviated Term Sheet and the last Preliminary Prospectus filed with
the SEC prior to the time the Registration Statement became effective,
taken together, including, in each case, the documents incorporated by
reference therein pursuant to Item 12 of Form S-2 under the 1933 Act.
The term "Preliminary Prospectus" as used herein shall mean a
preliminary prospectus as contemplated by Rule 430 or 430A of the 1933
Act Rules and Regulations included at any time in the Registration
Statement. For purposes of this Agreement, the words "amend,"
"amendment," "amended," "supplement" or "supplemented" with respect to
the Registration Statement or the Prospectus shall mean amendments or
supplements to the Registration Statement or the Prospectus, as the
case may be; as well as documents filed after the date of this
Agreement and prior to the completion of the distribution of the
Securities and incorporated by reference therein as described above.
(ii) Neither the SEC nor any state or other jurisdiction or
other regulatory body has issued, and neither is, to the knowledge of
the Company, threatening to issue, any stop order under the 1933 Act
or other order suspending the effectiveness of the Registration
Statement (as amended or supplemented) or preventing or suspending the
use of any Preliminary Prospectus or the Prospectus or suspending the
qualification or registration of the Securities for offering or sale
in any jurisdiction nor instituted or, to the knowledge of the
Company, threatened to institute proceedings for any such purpose.
Each Preliminary Prospectus at its date of issue, the Registration
Statement and the Prospectus and any amendments or supplements thereto
contain or will contain, as the case may be, all statements which are
required to be stated therein by, and in all material respects conform
or will conform to, as the case may be, the requirements of, the 1933
Act and the 1933 Act Rules and Regulations. Neither the Registration
Statement nor any amendment thereto, as of the applicable effective
date, contains or will contain, as the case may be, any untrue
statement of a material fact or omits or will omit to state any
material fact required to be stated therein or necessary to make the
statements therein not misleading, and neither any Preliminary
Prospectus, the Prospectus nor any supplement thereto contains or will
contain, as the case may be, any untrue statement of a material fact
or omits or will omit to state any material fact required to be stated
therein or necessary to make the statements therein, in the light of
the circumstances under which they were made, not misleading;
provided, however,
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that the Company makes no representation or warranty as to (i)
information contained in or omitted from 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
relating to the Underwriters by or on behalf of the Underwriters
expressly for use in the preparation thereof (as provided in Section
11 hereof) and (ii) the Statement of Eligibility and Qualification (the
"Form T-1") under the Trust Indenture Act of 1939, as amended (the
"1939 Act"), which is included as an exhibit to the Registration
Statement. There is no contract or document required to be described
in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed
as required. The documents incorporated by reference in the Prospectus
pursuant to Item 12 of Form S-2 under the 1933 Act, at the time they
were filed with the SEC, complied in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the
"1934 Act"), and the rules and regulations adopted by the SEC
thereunder (the "1934 Act Rules and Regulations"). Any future
documents incorporated by reference so filed, when they are filed,
will comply in all material respects with the requirements of the 1934
Act and the 1934 Act Rules and Regulations; at the time of filing, no
such incorporated document contained or will contain any untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein not
misleading; and, when read together and with the other information in
the Prospectus, at the time the Registration Statement became
effective and at the Closing Date, each such incorporated document did
not or will not, as the case may be, contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading.
(iii) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
obligation of the Company enforceable against the Company in
accordance with its terms, except as enforceability may be limited by
bankruptcy, insolvency, fraudulent conveyance, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally and by general principles of equity (the
"Exceptions").
(iv) The Company and its subsidiaries have been duly
organized and are validly existing as corporations in good standing
under the laws of the states or other jurisdictions in which they are
incorporated. CN Resources ("CN") is the only partnership of which the
Company or any of its subsidiaries is a general partner or owns fifty
percent or more of the partnership interests. CN is a general
partnership duly organized under the laws of the State of Texas, and
the Company owns all of the partnership interests in CN. Each of the
Company, its subsidiaries and CN has full power and authority
(corporate and other) to own, lease and operate their properties and
conduct their businesses as described in the Prospectus and, with
respect to the Company, to execute and deliver, and perform the
Company's obligations under, this Agreement; each of the Company, its
subsidiaries and CN is duly qualified to do business as a foreign
corporation or partnership in good standing in each state or other
jurisdiction in which their ownership or leasing of property or
conduct of business legally requires such qualification, except where
the failure to be so qualified, individually
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or in the aggregate, would not have a Material Adverse Effect. The
term "Material Adverse Effect" as used herein means any material
adverse effect on the condition (financial or other), business,
properties, net worth or results of operations of the Company, its
subsidiaries and CN that is or would be, singly or in the aggregate,
material to the Company, its subsidiaries and CN, taken as a whole,
whether or not occurring in the ordinary course of business.
(v) None of the Company, its subsidiaries or CN has sustained
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree. Otherwise
than as set forth in the Prospectus and, since the respective dates as
of which information is given in the Prospectus, there has not been
any change in the capitalization or material increase in the
short-term or long-term debt of the Company, any of its subsidiaries
or CN or any material adverse change, or any development involving a
prospective material adverse change, in or affecting the general
affairs, management, financial position, debt, stockholders' equity or
results of operations of the Company, its subsidiaries and CN, taken
as a whole, otherwise than as set forth in the Prospectus.
(vi) The issuance and sale of the Securities and the
execution, delivery and performance by the Company 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 or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company, any of its subsidiaries or CN
under any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument to which the Company, any of its subsidiaries
or CN is a party or by which the Company, any of its subsidiaries or
CN is bound or to which any of the properties or assets of the
Company, any of its subsidiaries or CN is subject, except to such
extent as, individually or in the aggregate, does not have a Material
Adverse Effect, nor will such action result in any violation of the
provisions of the Company's certificate of incorporation or bylaws or
any statute, rule, regulation or other law, or any order or judgment,
of any court or governmental agency or body having jurisdiction over
the Company, any of its subsidiaries or CN 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 execution, delivery and performance of this
Agreement, the issuance and sale of the Securities or the consummation
of the transactions contemplated hereby, except such as have been, or
will be prior to the Closing Date, obtained under the 1933 Act, the
1939 Act or as may be required by the National Association of
Securities Dealers, Inc. (the "NASD") and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or blue sky laws in connection with the
purchase and distribution of the Securities by the Underwriters.
(vii) The Company has duly and validly authorized capital
stock as set forth in the Prospectus; all outstanding shares of Common
Stock and $2.125 Convertible Exchangeable
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Preferred Stock, Series A (the "Series A Preferred Stock") of the
Company conform to the descriptions thereof in the Prospectus and have
been duly authorized and validly issued, and are fully paid and
non-assessable. Except as disclosed in the Prospectus, there are no
outstanding subscriptions, rights, warrants, options, calls,
convertible securities, commitments of sale or rights related to or
entitling any person to purchase or otherwise to acquire any shares
of, or any security convertible into or exchangeable or exercisable
for, the capital stock of, or other ownership interest in, the
Company. The outstanding shares of capital stock of the Company's
subsidiaries and interests in CN have been duly authorized and validly
issued, are fully paid and non-assessable and are owned by the Company
free and clear of any mortgage, pledge, lien, encumbrance, charge or
adverse claim and are not the subject of any agreement or
understanding with any person and were not issued in violation of any
preemptive or similar rights; and there are no outstanding
subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or instruments related to or entitling
any person to purchase or otherwise acquire any shares of, or any
security convertible into or exchangeable or exercisable for, the
capital stock of, or other ownership interest in any of the
subsidiaries or CN.
(viii) The Securities have been duly authorized and, when
issued, authenticated by the Trustee and delivered in accordance with
this Agreement and the Indenture, will constitute valid and binding
obligations of the Company, enforceable against the Company in
accordance with their terms and entitled to the benefits provided by
the Indenture, except as may be limited by the Exceptions; the
Indenture has been duly qualified under the 1939 Act, has been
authorized and, when duly executed and delivered by the Company and
the Trustee, will constitute a valid and binding agreement of the
Company, enforceable against the Company in accordance with its terms,
except as may be limited by the Exceptions. The Securities and the
Indenture will conform to the description thereof contained in the
Prospectus.
(ix) The statements set forth in the Prospectus describing
the Securities, the Indenture and this Agreement, insofar as they
purport to describe the provisions of the laws and documents referred
to therein, are accurate, complete and fair.
(x) Each of the Company, its subsidiaries and CN is in
possession of and is operating in compliance with all franchises,
grants, authorizations, licenses, certificates, permits, easements,
consents, orders and approvals ("Permits") from all state, federal,
foreign and other regulatory authorities, and has satisfied the
requirements imposed by regulatory bodies, administrative agencies or
other governmental bodies, agencies or officials, that are required
for the Company, its subsidiaries and CN lawfully to own, lease and
operate their properties and conduct their businesses as described in
the Prospectus, and, each of the Company, its subsidiaries and CN is
conducting its business in compliance with all of the laws, rules and
regulations of each jurisdiction in which it conducts its business, in
each case with such exceptions, individually or in the aggregate, as
would not have a Material Adverse Effect; each of the Company, its
subsidiaries and CN has filed all notices, reports, documents or other
information ("Notices") required to be filed under applicable laws,
rules and
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regulations, in each case, with such exceptions, individually or in
the aggregate, as would not have a Material Adverse Effect; and,
except as otherwise specifically described in the Prospectus, none of
the Company, its subsidiaries or CN has received any notification from
any court or governmental body, authority or agency, relating to the
revocation or modification of any such Permit or, to the effect that
any additional authorization, approval, order, consent, license,
certificate, permit, registration or qualification ("Approvals") from
such regulatory authority is needed to be obtained by any of them, in
any case where it could be reasonably expected that such revocation or
modification or the failure to obtain such Approvals, individually or
in the aggregate, would have a Material Adverse Effect.
(xi) The Company, its subsidiaries and CN have filed all
necessary federal, state and foreign income and franchise tax returns
and paid all taxes shown as due thereon; all such tax returns are
complete and correct in all material respects; all tax liabilities are
adequately provided for on the books of the Company, its subsidiaries
and CN except to such extent as would not have a Material Adverse
Effect; the Company, its subsidiaries and CN have timely made all
necessary payroll tax payments; and the Company, its subsidiaries and
CN have no knowledge of any tax proceeding or action pending or
threatened against the Company, its subsidiaries or CN which,
individually or in the aggregate, might have a Material Adverse
Effect.
(xii) Except as described in the Prospectus, the Company, its
subsidiaries and CN own or possess, or can acquire on reasonable
terms, or are licensed or otherwise have the full exclusive right to
use, adequate patents, patent licenses, trademarks, service marks and
trade names necessary to conduct the business now operated by them,
and none of the Company, its subsidiaries or CN has received any
notice of infringement of or conflict with asserted rights of others
with respect to any patents, patent licenses, trademarks, service
marks or trade names which, individually or in the aggregate, if the
subject of an unfavorable decision, ruling or finding, would have a
Material Adverse Effect.
(xiii) The Company, its subsidiaries and CN have good and
marketable title to all items of real property and good title to all
personal property owned by them, in each case free and clear of all
liens, encumbrances, restrictions and defects except such as are
described in the Prospectus or do not materially affect the value of
such property and do not interfere with the use made and proposed to
be made of such property; and any property held under lease or
sublease by the Company, any of its subsidiaries or CN is held under
valid, subsisting and enforceable leases or subleases with such
exceptions as are not material and do not interfere with the use made
and proposed to be made of such property by the Company, its
subsidiaries and CN.
(xiv) Except as described in the Prospectus, there is no
factual basis for any action, suit or other proceeding involving the
Company, any of its subsidiaries or CN or any of their material assets
for any failure of the Company, any of its subsidiaries or CN, or any
predecessor thereof, to comply with any requirements of federal, state
or local regulation relating to air, water, solid waste management,
hazardous or toxic substances, or the
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protection of health or the environment, which might, individually or
in the aggregate, result in a Material Adverse Effect. Except as
described in the Prospectus, none of the property owned or leased by
the Company, any of its subsidiaries or CN is, to the best knowledge
of the Company, contaminated with any waste or hazardous substances,
which might, individually or in the aggregate, result in a Material
Adverse Effect, and none of the Company, its subsidiaries or CN may be
deemed an "owner or operator" of a "facility" or "vessel" which owns,
possesses, transports, generates or disposes of a "hazardous
substance" as those terms are defined in ss.9601 of the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. ss.9601 et seq.
(xv) No labor disturbance exists with the employees of the
Company, any of its subsidiaries or CN or is imminent which,
individually or in the aggregate, would have a Material Adverse
Effect. None of the employees of the Company, any of its subsidiaries
or CN is represented by a union and, to the best knowledge of the
Company, its subsidiaries and CN, no union organizing activities are
taking place. None of the Company, its subsidiaries or CN has violated
any federal, state or local law or foreign law relating to
discrimination in hiring, promotion or pay of employees, nor any
applicable wage or hour laws, or the rules and regulations thereunder,
or analogous foreign laws and regulations, which might, individually
or in the aggregate, result in a Material Adverse Effect.
(xvi) The Company, its subsidiaries and CN are in compliance
in all material respects with all presently applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended,
including the regulations and published interpretations thereunder
("ERISA"); no "reportable event" (as defined in ERISA) has occurred
with respect to any "pension plan" (as defined in ERISA) for which the
Company, its subsidiaries or CN would have any liability; none of the
Company, its subsidiaries or CN has incurred and none expects to incur
liability under (a) Title IV of ERISA with respect to termination of,
or withdrawal from, any "pension plan" or (b) Sections 412 or 4971 of
the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (the "Code"); and
each "pension plan" for which the Company, any of its subsidiaries or
CN would have any liability that is intended to be qualified under
Section 401(a) of the Code is so qualified in all material respects,
and nothing has occurred, whether by action or by failure to act,
which would cause the loss of such qualification.
(xvii) The Company, its subsidiaries and CN maintain
insurance of the types and in the amounts generally deemed adequate
for its business. None of the Company, its subsidiaries or CN has been
refused any insurance coverage sought or applied for, and the Company
has no reason to believe that it, its subsidiaries and CN will not be
able to renew their existing insurance coverage as and when such
coverage expires or to obtain similar coverage from similar insurers
as may be necessary to continue its business at a cost that would not
have a Material Adverse Effect.
(xviii) None of the Company, its subsidiaries or CN is, or
with the giving of notice or lapse of time or both would be, in
default or violation with respect to its certificate of
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incorporation or bylaws or other governing documents. None of the
Company, its subsidiaries or CN is, or with the giving of notice or
lapse of time or both would be, 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 the
Company, any of its subsidiaries or CN is a party or by which the
Company, any of its subsidiaries or CN is bound or to which any of the
properties or assets of the Company, any of its subsidiaries or CN is
subject, or in violation of any statutes, laws, ordinances or
governmental rules or regulations or any orders or decrees to which it
is subject, including, without limitation, Section 13 of the 1934 Act,
which default or violation, individually or in the aggregate, would
have a Material Adverse Effect.
(xix) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company, any of
its subsidiaries or CN is a party or of which any property of the
Company, any of its subsidiaries or CN is the subject that, if
determined adversely to the Company, any of its subsidiaries or CN,
would individually or in the aggregate have a Material Adverse Effect
or which would materially and adversely affect the consummation of the
transactions contemplated hereby or which is required to be disclosed
in the Prospectus; and, to the best of the Company's knowledge, no
such proceedings are threatened or contemplated.
(xx) The Company is not and, after giving effect to the
offering and sale of the Securities, will not be a "holding company,"
or a "subsidiary company" of a "holding company," or an "affiliate" of
a "holding company" or of a "subsidiary company," as such terms are
defined in the Public Utility Holding Company Act of 1935, as amended
(the "1935 Act").
(xxi) 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 "1940 Act").
(xxii) ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, the accounting firm which has
certified the financial statements filed with or incorporated by
reference in and as a part of the Registration Statement, is an
independent public accounting firm within the meaning of the 1933 Act
and the 1933 Act Rules and Regulations. The Company, each of its
subsidiaries and CN maintain a system of internal accounting controls
sufficient to provide reasonable assurance that: (a) transactions are
executed in accordance with management's general or specific
authorizations; (b) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain accountability for
assets; (c) access to assets is permitted only in accordance with
management's general or specific authorization; and (d) the recorded
accounts for assets are compared with the existing assets at
reasonable intervals and appropriate action is taken with respect
thereto. The consolidated financial statements and schedules of the
Company,
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including the notes thereto, filed with (or incorporated by reference)
and as a part of the Registration Statement or Prospectus, present
fairly the financial condition of the Company, its subsidiaries and CN
as of the respective dates thereof and the consolidated results of
operations and changes in financial position and consolidated
statements of cash flow for the respective periods covered thereby,
all in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved except
as otherwise disclosed therein. All adjustments necessary for a fair
presentation of results for such periods have been made. The selected
financial data included or incorporated by reference in the
Registration Statement and Prospectus present fairly the information
shown therein and have been compiled on a basis consistent with that
of the audited financial statements. Any operating or other
statistical data included or incorporated by reference in the
Registration Statement and Prospectus comply in all material respects
with the 1933 Act and the 1933 Act Rules and Regulations and present
fairly the information shown therein.
(xxiii) Except as disclosed in the Prospectus, no holder of
any security of the Company has rights to require registration of any
securities of the Company because of the filing of the Registration
Statement that have not been waived. No person has the right,
contractual or otherwise, to cause the Company to permit such person
to underwrite the sale of any of the Securities. Except for this
Agreement, there are no contracts, agreements or understandings
between the Company, any of its subsidiaries or CN and any person that
would give rise to a valid claim against the Company, its
subsidiaries, CN or any Underwriter for a brokerage commission,
finder's fee or like payment in connection with the issuance, purchase
and sale of the Securities.
(xxiv) The Company has not distributed and, prior to the
later to occur of (a) the Closing Date and (b) 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, the Preliminary Prospectus or
the Prospectus.
(xxv) The Company has not taken and will not take, directly
or indirectly, any action designed to or which might reasonably be
expected to cause or result in stabilization or manipulation of the
price of the Company's Common Stock, and the Company is not aware of
any such action taken or to be taken by affiliates of the Company.
(xxvi) Subsequent to the date as of which information is
given in the Prospectus, except as set forth in the Prospectus (a)
none of the Company, its subsidiaries or CN has incurred nor will it
incur any material liabilities or obligations, direct or contingent,
nor has it entered into nor will it enter into any material
transactions other than, in any case, pursuant to this Agreement and
the transactions referred to herein or in the ordinary course of
business and (b) the Company has not and will not have paid or
declared any dividends or other distributions of any kind on any class
of its capital stock (except for dividends at an annual rate of $2.125
per share with respect to the Series A Preferred Stock).
- 10 -
11
(xxvii) All contracts described in the Prospectus and to
which the Company, any subsidiaries or CN is a party have been duly
authorized, executed and delivered by the Company, such subsidiaries
or CN, constitute valid and binding agreements of the Company, such
subsidiaries or CN and are enforceable against the Company, such
subsidiaries or CN in accordance with the terms thereof, except as may
be limited by the Exceptions.
(xxviii) The outstanding Common Stock and the Series A
Preferred Stock of the Company are duly authorized for trading on the
New York Stock Exchange.
(xxix) The historical information underlying the estimates of
the reserves of the Company supplied by the Company to ▇▇▇▇▇▇▇▇▇▇ &
Co., Inc., an independent petroleum and geological engineering firm
(the "Petroleum Engineers"), for the purposes of preparing the reserve
reports of the Company referenced in the Prospectus (the "Reserve
Reports"), including, without limitation, production volumes, sales
prices for production, contractual pricing provisions under oil or gas
sales or marketing contracts or 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 Reports; the estimates of future capital expenditures
and other future exploration and development costs supplied to the
Petroleum Engineers were prepared in good faith and with a reasonable
basis; the information provided by the Petroleum Engineers for
purposes of preparing the Reserve Reports was prepared in accordance
with customary industry practices; to the best of the Company's
knowledge, the Petroleum Engineers were, as of the date of the Reserve
Reports prepared by them, and are, as of the date hereof, independent
petroleum and geological engineers with respect to the Company; other
than normal production of reserves and intervening spot market product
price fluctuations, and except as disclosed in the Registration
Statement and 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 as
reflected in the Reserve Reports; and 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 Reports comply in all
material respects to the applicable requirements of the 1933 Act Rules
and Regulations.
(xxx) Except as described in the Prospectus, as of the date
hereof, (a) 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 Company, its subsidiaries and CN taken as a whole, and (b)
there are no claims under take-or-pay contracts pursuant to which
natural gas purchasers have any make-up rights affecting the interests
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, its subsidiaries and CN taken as a whole.
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12
(b) Any certificate signed by any officer of the Company and delivered
to the Underwriters or to counsel for the Underwriters shall be deemed a
representation and warranty by the Company to each Underwriter as to the
matters covered thereby.
4. ADDITIONAL COVENANTS. The Company covenants and agrees with the
Underwriters that:
(a) The Company will timely transmit copies of the Prospectus, and any
amendments or supplements thereto, or a Term Sheet or Abbreviated Term Sheet,
as applicable, to the SEC for filing pursuant to Rule 424(b) of the 1933 Act
Rules and Regulations.
(b) The Company will deliver to each of the Underwriters, and to
counsel for the Underwriters (i) one signed and two conformed copies of the
Registration Statement as originally filed, including copies of exhibits
thereto (other than any exhibits incorporated by reference therein), of any
amendments and supplements to the Registration Statement (including all
documents incorporated by reference therein) and (ii) a signed copy of each
consent and certificate included or incorporated by reference in, or filed as
an exhibit to, the Registration Statement as so amended or supplemented; the
Company will deliver to the Underwriters as soon as practicable after the date
of this Agreement as many copies of the Prospectus (including all documents
incorporated by reference therein) as the Underwriters may reasonably request
for the purposes contemplated by the 1933 Act; if the Registration Statement is
not effective under the 1933 Act, the Company will use its best efforts to
cause the Registration Statement to become effective as promptly as possible,
and it will notify the Underwriters, promptly after it shall receive notice
thereof, of the time when the Registration Statement has become effective; the
Company will promptly advise the Underwriters of any request of the SEC for
amendment of the Registration Statement or for supplement to the Prospectus or
for any additional information, and of the issuance by the SEC or any state or
other jurisdiction or other regulatory body of any stop order under the 1933
Act or other order suspending the effectiveness of the Registration Statement
(as amended or supplemented) or preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending the qualification or
registration of the Securities for offering or sale in any jurisdiction, and of
the institution or threat of any proceedings therefor, of which the Company
shall have received notice or otherwise have knowledge prior to the completion
of the distribution of the Securities; and the Company will use its best
efforts to prevent the issuance of any such stop order or other order and, if
issued, to secure the prompt removal thereof.
(c) The Company will not file any amendment or supplement to the
Registration Statement, the Prospectus (or any other prospectus relating to the
Securities filed pursuant to Rule 424(b) of the 1933 Act Rules and Regulations
that differs from the Prospectus as filed pursuant to such Rule 424(b)) and
will not file any document under the 1934 Act before the termination of the
offering of the Securities by the Underwriters if the document would be deemed
to be incorporated by reference into the Registration Statement or the
Prospectus, of which the Underwriters shall not previously have been advised
and furnished with a copy or to which the Underwriters shall have reasonably
objected or which is not in compliance with the 1933 Act Rules and Regulations;
and the Company will promptly notify the Underwriters after it shall have
received
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13
notice thereof of the time when any amendment to the Registration Statement
becomes effective or when any supplement to the Prospectus has been filed.
(d) During the period when a prospectus relating to any of the
Securities is required to be delivered under the 1933 Act by any Underwriter or
dealer, the Company will comply, at its own expense, with all requirements
imposed by the 1933 Act and the 1933 Act Rules and Regulations, as now and
hereafter amended, and by the rules and regulations of the SEC thereunder, as
from time to time in force, so far as necessary to permit the continuance of
sales of or dealing in the Securities during such period in accordance with the
provisions hereof and as contemplated by the Prospectus.
(e) If, during the period when a prospectus relating to any of the
Securities is required to be delivered under the 1933 Act by any Underwriter or
dealer, (i) any event relating to or affecting the Company or of which the
Company shall be advised in writing by the Underwriters shall occur as a result
of which, in the opinion of the Company or the Underwriters, 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 (ii) it shall be necessary to amend or supplement the
Registration Statement or the Prospectus to comply with the 1933 Act, the 1933
Act Rules and Regulations, the 1934 Act or the 1934 Act Rules and Regulations,
the Company will forthwith at its expense prepare and file with the SEC, and
furnish to the Underwriters a reasonable number of copies of, such amendment or
supplement or other filing that will correct such statement or omission or
effect such compliance.
(f) During the period when a prospectus relating to any of the
Securities is required to be delivered under the 1933 Act by any Underwriter or
dealer, the Company will furnish such proper information as may be lawfully
required and otherwise cooperate in qualifying the Securities for offer and
sale under the securities or blue sky laws of such jurisdictions as the
Underwriters may reasonably designate and will file and make in each year such
statements or reports as are or may be reasonably required by the laws of such
jurisdictions; provided, however, that the Company shall not be required to
qualify as a foreign corporation or to qualify as a dealer in securities or to
file a general consent to service of process under the laws of any
jurisdiction.
(g) In accordance with Section 11(a) of the 1933 Act and Rule 158 of
the 1933 Act Rules and Regulations, the Company will make generally available
to its security holders, as soon as practicable, an earnings statement (which
need not be audited) in reasonable detail covering the 12 months beginning not
later than the first day of the month next succeeding the month in which
occurred the effective date (within the meaning of Rule 158) of the
Registration Statement.
(h) During the period when a prospectus relating to any of the
Securities is required to be delivered under the 1933 Act by any Underwriter or
dealer, the Company will file promptly all documents required to be filed with
the SEC pursuant to Sections 13(a), 13(c), 14 or 15(d) of the 1934 Act. The
Company will furnish to its security holders annual reports containing
financial statements audited by independent public accountants and quarterly
reports containing financial statements and financial information which may be
unaudited. The Company will, so long as any
- 13 -
14
Securities are outstanding, deliver to the Underwriters at their principal
executive offices a reasonable number of copies of annual reports, quarterly
reports, current reports and copies of all other documents, reports and
information furnished by the Company to its shareholders or filed with any
securities exchange or market pursuant to the requirements of such exchange or
market or with the SEC pursuant to the 1933 Act or the 1934 Act. The Company
will deliver to the Underwriters similar reports with respect to any
significant subsidiaries, as that term is defined in the 1933 Act Rules and
Regulations, which are not consolidated in the Company's financial statements.
Any report, document or other information required to be furnished under this
paragraph (h) shall be furnished as soon as practicable after such report,
document or information becomes available.
(i) During the period beginning from the date of this Agreement and
continuing to 30 days after the Closing Date, the Company will not, without the
prior written consent of the Underwriters, offer for sale, sell or enter into
any agreement to sell, or otherwise dispose of, any debt securities of the
Company, other than the Securities.
(j) The Company will apply the proceeds from the sale of the
Securities as set forth in the description under "Use of Proceeds" in the
Prospectus.
(k) The Company will promptly provide the Underwriters with copies of
all correspondence to and from, and all documents issued to and by, the SEC in
connection with the registration of the Securities under the 1933 Act or
relating to any documents incorporated by reference into the Registration
Statement or the Prospectus.
(l) Prior to the Closing Date, the Company will furnish to the
Underwriters, as soon as they have been prepared, copies of any unaudited
interim consolidated financial statements of the Company and its subsidiaries
for any periods subsequent to the periods covered by the financial statements
appearing in the Registration Statement and the Prospectus.
(m) Prior to the Closing Date, the Company will not issue any press
releases or other communications directly or indirectly and will hold no press
conferences with respect to the Company, any of its subsidiaries or CN, the
financial condition, results of operations, business, properties, assets or
liabilities of the Company, any of its subsidiaries or CN, or the offering of
the Securities, without the prior written consent of the Underwriters.
(n) The Company will use its best efforts to obtain approval for, and
maintain the listing of, the Securities on the New York Stock Exchange.
(o) The Company, its subsidiaries and CN will maintain and keep
accurate books and records reflecting their assets and maintain internal
accounting controls which provide reasonable assurance that (i) transactions
are executed in accordance with management's authorization, (ii) transactions
are recorded as necessary to permit the preparation of the Company's
consolidated financial statements and to maintain accountability for the assets
of the Company, its subsidiaries and CN, (iii) access to the assets of the
Company, its subsidiaries and CN is permitted only in
- 14 -
15
accordance with management's authorization, and (iv) the recorded accounts of
the assets of the Company, its subsidiaries and CN are compared with existing
assets at reasonable intervals.
(p) If the Company elects to rely on Rule 462(b) under the 1933 Act,
the Company shall both file an Abbreviated Registration Statement with the SEC
in compliance with Rule 462(b) and pay the applicable fees in accordance with
Rule 111 of the 1933 Act by the earlier of (i) 10:00 p.m., New York time, on
the date of this Agreement, and (ii) the time that confirmations are given or
sent, as specified by Rule 462(b)(2).
5. CONDITIONS OF UNDERWRITERS' OBLIGATIONS. The several obligations of
the Underwriters to purchase and pay for the Securities, as provided herein,
shall be subject to the accuracy, as of the date hereof and as of the Closing
Date, of the representations and warranties of the Company contained herein, to
the performance by the Company of its covenants and obligations hereunder, and
to the following additional conditions:
(a) The Registration Statement and all post-effective amendments
thereto shall have become effective not later than 1:00 p.m., New York time, on
the date hereof, or, with the Underwriters' consent, at a later date and time,
not later than 1:00 p.m., New York time, on the first business day following
the date hereof, or at such later date and time as may be approved by the
Underwriters; if the Company has elected to rely on Rule 462(b) under the 1933
Act, the Abbreviated Registration Statement shall have become effective not
later than the earlier of (x) 10:00 p.m. New York time, on the date hereof, or
(y) at such later date and time as may be approved by the Underwriters. All
filings required by Rule 424 and Rule 430A of the 1933 Act Rules and
Regulations shall have been made. No stop order suspending the effectiveness of
the Registration Statement, as amended from time to time, shall have been
issued and no proceeding for that purpose shall have been initiated or, to the
knowledge of the Company or any Underwriter, threatened or contemplated by the
SEC, and any request of the SEC for additional information (to be included in
the Registration Statement or the Prospectus or otherwise) shall have been
complied with to the reasonable satisfaction of the Underwriters.
(b) No Underwriter shall have advised the Company on or prior to the
Closing Date that the Registration Statement or Prospectus or any amendment or
supplement thereto contains an untrue statement of fact which, in the opinion
of counsel to the Underwriters, is material, or omits to state a fact which, in
the opinion of such counsel, is material and is required to be stated therein
or is necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading.
(c) On the Closing Date, the Underwriters shall have received the
opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., counsel for the Company, addressed to the
Underwriters and dated the Closing Date, to the effect that:
(i) The Registration Statement and all post-effective
amendments thereto and the Abbreviated Registration Statement, if any,
have become effective under the 1933 Act; any required filing of the
Prospectus or any supplement thereto pursuant to Rule 424(b) or
- 15 -
16
otherwise has been made in the manner and within the time period
required thereby; and, to the knowledge of such counsel after due
inquiry, no stop or other order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or are pending or contemplated under the
1933 Act or under the securities laws of any jurisdiction.
(ii) The Registration Statement and the Prospectus, and each
amendment or supplement thereto (including any document incorporated
by reference into the Prospectus), as of their respective effective or
issue date, complied as to form in all material respects to the
requirements of Form S-2 under the 1933 Act and the applicable 1933
Act Rules and Regulations (except that such counsel need express no
opinion as to the Form T-1, the financial statements, the schedules,
reserve information and other financial and statistical data included
in the Registration Statement or in the Prospectus or in any document
incorporated by reference therein).
(iii) To the extent summarized therein, all contracts and
agreements summarized in the Registration Statement and the Prospectus
are fairly summarized therein, 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 1933 Act, or the 1933 Act Rules and Regulations, 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 to be so
filed as exhibits to the Registration Statement that have not been so
summarized, disclosed or so filed.
(iv) This Agreement has been duly authorized, executed and
delivered by the Company.
(v) The Company and its subsidiaries have been duly
incorporated and are validly existing as corporations in good standing
under the laws of the states or other jurisdictions in which they are
incorporated. CN is the only partnership of which the Company or any
of its subsidiaries is a general partner or owns fifty percent or more
of the partnership interests. CN is a general partnership duly
organized under the laws of the State of Texas, and the Company owns
all of the partnership interests in CN. Each of the Company, its
subsidiaries and CN has full corporate power and authority to own,
lease and operate their properties and conduct their businesses as
described in the Prospectus and, with respect to the Company, to
execute and deliver, and perform the Company's obligations under, this
Agreement; each of the Company, its subsidiaries and CN is duly
qualified to do business as a foreign corporation or partnership in
good standing in each state or other jurisdiction in which their
ownership or leasing of property or conduct of business legally
requires such qualification, except where the failure to be so
qualified, individually or in the aggregate, would not have a Material
Adverse Effect.
(vi) The Company is the sole record owner, directly or
indirectly, of all of the outstanding capital stock of each of its
subsidiaries.
- 16 -
17
(vii) The issuance and sale of the Securities and the
execution, delivery and performance by the Company of this Agreement,
and the consummation of the transactions herein contemplated, will not
conflict with or constitute a breach or violation of any of the terms
or provisions of, or constitute a default under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company, any of its subsidiaries or CN
under any indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel after due inquiry to
which the Company, any of its subsidiaries or CN is a party or by
which the Company, any of its subsidiaries or CN is bound or to which
any of the properties or assets of the Company, any of its
subsidiaries or CN is subject, except to such extent as, individually
or in the aggregate, would not have a Material Adverse Effect, nor
will such action result in any violation of the provisions of the
Company's certificate of incorporation or bylaws or any statute, rule,
regulation or other law, or any order or judgment known to such
counsel after due inquiry, of any court or governmental agency or body
having jurisdiction over the Company, any of its subsidiaries or CN or
any of their properties.
(viii) No consent, approval, authorization, order,
registration or qualification of or with any court or governmental
agency or body is required in connection with the execution, delivery
and performance of this Agreement, and the issuance and sale of the
Securities or the consummation of the transactions contemplated
hereby, except such as may be required under the 1933 Act, the 1933
Act Rules and Regulations or the 1939 Act and have been obtained, or
as may be required by the NASD or under state securities or blue sky
laws in connection with the purchase and distribution of the
Securities by the Underwriters.
(ix) To the knowledge of such counsel after due inquiry and
other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company, any of its
subsidiaries or CN is a party or of which any property of the Company,
any of its subsidiaries or CN is the subject that, if determined
adversely to the Company, any of its subsidiaries or CN, 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, its subsidiaries and
CN taken as a whole; and, to the knowledge of such counsel after due
inquiry, no such proceedings are threatened or contemplated by
governmental authorities or threatened by others.
(x) The Company has duly and validly authorized capital stock
as set forth under the caption "Capitalization" in the Prospectus; all
outstanding shares of Common Stock of the Company conform as to legal
matters to the description thereof in the Prospectus and have been
duly authorized and validly issued, and are fully paid and
non-assessable. The Securities have been duly authorized and, when
issued, authenticated by the Trustee and delivered and paid for in
accordance with this Agreement and the Indenture, will constitute
valid and binding obligations of the Company in accordance with their
terms and entitled to the benefits of the Indenture, except as may be
limited by the Exceptions. The Securities are duly authorized for
trading, subject to official notice of issuance, on the New York Stock
- 17 -
18
Exchange. The form of global certificate representing the Securities
filed as an exhibit to the Registration Statement is in valid and
sufficient form.
(xi) The Indenture has been duly authorized, executed and
delivered by the Company and constitutes a valid and legally binding
instrument of the Company enforceable against the Company in
accordance with its terms, except as may be limited by the Exceptions;
the Indenture conforms to the description thereof in the Prospectus;
and the Indenture has been duly qualified under the 1939 Act.
(xii) The statements made in the Prospectus under the
captions "Risk Factors," "Business and Properties," "Description of
the Notes," "Description of Bank Credit Facility and Other
Indebtedness," "Description of Capital Stock" and Item 15 of Part II
of the Registration Statement, and in the Company's Annual Report on
Form 10-K for the year ended December 31, 1998 under Item 11,
"Executive Compensation" and Item 13, "Certain Relationships and
Related Transactions," to the extent that they constitute summaries of
documents referred to therein or matters of law or legal conclusions,
have been reviewed by such counsel and are accurate summaries and
fairly present the information disclosed therein.
(xiii) The Company is not and, after giving effect to the
offering and sale of the Securities, will not be a "holding company,"
or a "subsidiary company" of a "holding company," or an "affiliate" of
a "holding company" or of a "subsidiary company," as such terms are
defined in the 1935 Act.
(xiv) 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 1940 Act.
(xv) To the knowledge of such counsel after due inquiry and
except as disclosed in the Prospectus, no holder of any security of
the Company has any right to require registration of shares of Common
Stock or any other security of the Company because of the filing of
the Registration Statement or the consummation of the transactions
contemplated hereby that have not been waived and, except as disclosed
in the Prospectus, no person has the right to require registration
under the 1933 Act of any shares of Common Stock or other securities
of the Company.
Such counsel shall confirm that during the preparation of the
Registration Statement and Prospectus, such counsel participated in conferences
with the Underwriters and their counsel and with officers and representatives
of the Company and its independent accountants, at which conferences the
contents of the Registration Statement and the Prospectus (including all
documents filed under the 1934 Act and deemed incorporated by reference
therein) were discussed, reviewed and revised. On the basis of the information
which was developed in the course thereof, considered in light of such
counsel's understanding of applicable law and the experience gained by such
counsel through their practice thereunder, without such counsel assuming
responsibility for the accuracy and completeness of such statements except to
the extent expressly provided above, such counsel shall
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19
confirm that nothing came to their attention that would lead them to believe
that either the Registration Statement (including any document filed under the
1934 Act and deemed incorporated by reference therein), as of the Effective
Date, contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they were made, not
misleading, or the Prospectus or any amendment or supplement thereto (including
any document filed under the 1934 Act and deemed incorporated by reference
therein) as of its respective issue date and as of the Closing Date, contained
or contains any untrue statement of a material fact or omitted or omits to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. Such counsel may state that they are not giving advice as
to the Form T-1, the financial statements, the schedules, reserve information
and other financial and statistical data included in the Registration Statement
or in the Prospectus or in any document incorporated by reference therein.
In rendering the foregoing opinion, such counsel may rely, (1) as to
matters involving laws of any jurisdiction other than Texas, Delaware, New York
or the United States, upon opinions addressed to the Underwriters or other
counsel satisfactory to them and ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., and (2) as to all
matters of fact, upon certificates and written statements of the executive
officers of, and accountants for, the Company, provided, in either case, that
such counsel shall state in their opinion that they and the Underwriters are
justified in relying thereon.
(d) The Underwriters shall have received on the Closing Date from
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel to the Underwriters, an opinion, dated the
Closing Date, with respect to such matters as the Underwriters may reasonably
require; and the Company shall have furnished to such counsel such documents as
they reasonably request for the purposes of enabling them to review or pass on
the matters referred to in this Section 5 and in order to evidence the
accuracy, completeness and satisfaction of the representations, warranties and
conditions herein contained.
(e) On the business day immediately preceding the date of this
Agreement and on the Closing Date, the Underwriters shall have received from
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, a letter or letters, dated the date of this Agreement and
the Closing Date, respectively, in form and substance satisfactory to the
Underwriters, confirming that they are independent public accountants with
respect to the Company within the meaning of the 1933 Act and the published
Rules and Regulations, to the effect set forth in Schedule II hereto.
(f) Except as contemplated in the Prospectus, (i) none of the Company,
its subsidiaries or CN 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; and (ii) subsequent
to the respective dates as of which information is given in the Registration
Statement and the Prospectus, none of the Company, its subsidiaries or CN shall
have incurred any liability or obligation, direct or contingent, or entered
into any transactions, and there shall not have been any change in the
capitalization or material increase in the short-term or long-term debt of the
Company, its subsidiaries or CN or any change,
- 19 -
20
or any development involving or which might reasonably be expected to involve a
prospective change in the condition (financial or other), net worth, business,
affairs, management, prospects, results of operations or cash flow of the
Company, its subsidiaries or CN, the effect of which, in any such case
described in clause (i) or (ii), is in the Underwriters' judgment so material
or adverse as to make it impracticable or inadvisable to proceed with the
public offering or the delivery of the Securities being delivered on such
Closing Date on the terms and in the manner contemplated in the Prospectus.
(g) No "nationally recognized statistical rating organization," as
that term is defined by the SEC for purposes of Rule 436(g)(2) under the 1933
Act, has informed the Company that it is contemplating rating any of the
Company's debt securities, including the Securities.
(h) 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 the American Stock Exchange or The Nasdaq National
Market or the establishing on such exchanges or market by the SEC or by such
exchanges or markets of minimum or maximum prices which are not in force and
effect on the date hereof; (ii) a suspension or material limitation in trading
in the Company's securities on the New York Stock Exchange or the establishing
on such exchange by the SEC or by such exchange of minimum or maximum prices
which are not in force and effect on the date hereof; (iii) a general
moratorium on commercial banking activities declared by either federal or any
state authorities; (iv) the outbreak or escalation of hostilities involving the
United States or the declaration by the United States of a national emergency
or war, which in the Underwriters' judgment makes it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Securities in the manner contemplated in the Prospectus; or (v) any calamity or
crisis, change in national, international or world affairs, act of God, change
in the international or domestic markets, or change in the existing financial,
political or economic conditions in the United States or elsewhere, which in
the Underwriters' judgment makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Securities in the manner
contemplated in the Prospectus.
(i) The Underwriters shall have received a certificate, dated the
Closing Date and signed by the President and the Chief Financial Officer of the
Company, in their capacities as such, stating that:
(i) the condition set forth in Section 5(a) has been fully
satisfied;
(ii) they have carefully examined the Registration Statement
and the Prospectus as amended or supplemented and all documents
incorporated by reference therein and nothing has come to their
attention that would lead them to believe that either the Registration
Statement or the Prospectus, or any amendment or supplement thereto or
any documents incorporated by reference therein as of their respective
effective, issue or filing dates, contained, and the Prospectus as
amended or supplemented and all documents incorporated by reference
therein and when read together with the documents incorporated by
reference therein, at such Closing Date, contains any untrue statement
of a material fact, or omits to state a material fact required to be
stated therein or necessary in order to make the
- 20 -
21
statements therein, in light of the circumstances under which they
were made, not misleading;
(iii) since the Effective Date, there has occurred no event
required to be set forth in an amendment or supplement to the
Registration Statement or the Prospectus which has not been so set
forth and there has been no document required to be filed under the
1934 Act and the 1934 Act Rules and Regulations that upon such filing
would be deemed to be incorporated by reference into the Prospectus
that has not been so filed;
(iv) all representations and warranties made herein by the
Company are true and correct at such Closing Date, with the same
effect as if made on and as of such Closing Date, and all agreements
herein to be performed or complied with by the Company on or prior to
such Closing Date have been duly performed and complied with by the
Company;
(v) none of the Company, its subsidiaries or CN has sustained
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, any material loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree; and
(vi) except as disclosed in the Prospectus, subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, none of the Company, its subsidiaries or
CN has incurred any liabilities or obligations, direct or contingent,
other than in the ordinary course of business, or entered into any
transactions not in the ordinary course of business, which in either
case are material to the Company, such subsidiary or CN; and there has
not been any change in the capitalization or material increase in the
short-term debt or long-term debt of the Company, any of its
subsidiaries or CN or any material adverse change or any development
involving or which may reasonably be expected to involve a prospective
material adverse change, in the condition (financial or other), net
worth, business, affairs, management, prospects, results of operations
or cash flow of the Company, its subsidiaries and CN, taken as a
whole; and there has been no dividend or distribution of any kind,
paid or made by the Company on any class of its capital stock (except
for dividends at an annual rate of $2.125 per share with respect to
the Series A Preferred Stock).
(j) The Company shall have furnished to the Underwriters at the
Closing Date such further information, opinions, certificates, letters and
documents as the Underwriters may have reasonably requested.
(k) The Securities shall have been approved for trading upon official
notice of issuance on the New York Stock Exchange.
All such opinions, certificates, letters and documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to the Underwriters and to
- 21 -
22
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel for the Underwriters. The Company will furnish
the Underwriters with such signed and conformed copies of such opinions,
certificates, letters and documents as the Underwriters may request.
If any of the conditions specified above in this Section 5 shall not
have been satisfied at or prior to the Closing Date or waived by the
Underwriters in writing, this Agreement may be terminated by the Underwriters
on notice to the Company.
6. INDEMNIFICATION AND CONTRIBUTION. (a) The Company will indemnify
and hold harmless each Underwriter for and against any losses, damages or
liabilities, joint or several, to which such Underwriter may become subject,
under the 1933 Act or otherwise, insofar as such losses, damages or liabilities
(or actions or claims 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, 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, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating, preparing, pursuing or
defending against or appearing as a third party witness in connection with any
such loss, damage, liability or action or claim, including, without limitation,
any investigation or proceeding by any governmental agency or body, commenced
or threatened, including the reasonable fees and expenses of counsel to the
indemnified party, as such expenses are incurred (including such losses,
damages, liabilities or expenses to the extent of the aggregate amount paid in
settlement of any such action or claim, provided that (subject to Section 6(d)
hereof) any such settlement is effected with the written consent of the
Company); provided, however, that the Company shall not be liable in any such
case to the extent that any such loss, 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, the Prospectus, or any amendment or supplement, in reliance upon and
in conformity with written information relating to the Underwriter furnished to
the Company by the Underwriters or by any Underwriter through the Underwriters,
expressly for use in the preparation thereof (as provided in Section 11
hereof).
(b) Each Underwriter, severally and not jointly, will indemnify and
hold harmless the Company for and against any losses, damages or liabilities to
which the Company may become subject, under the 1933 Act or otherwise, insofar
as such losses, damages or liabilities (or actions or claims 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, the Prospectus, or any amendment or supplement thereto,
or arise out of 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, the Prospectus, or any amendment or supplement, in reliance upon and
in conformity with written information relating to the Underwriters furnished
to the Company by the Underwriters, expressly for use in the preparation
thereof (as
- 22 -
23
provided in Section 11 hereof), and will reimburse the Company for any legal or
other expenses incurred by the Company in connection with investigating,
preparing, pursuing or defending against any such loss, damage, liability or
action or claim including, without limitation, any investigation or proceeding
by any governmental agency or body commenced or threatened, including the
reasonable fees and expenses of counsel to the indemnified party, as such
expenses are incurred (including such losses, damages, liabilities or expenses
to the extent of the aggregate amount paid in settlement of any such action or
claim, provided that (subject to Section 6(d) hereof) any such settlement is
effected with the written consent of the Underwriters).
(c) Promptly after receipt by an indemnified party under Section 6(a)
or 6(b) hereof of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against an
indemnifying party under Section 6(a) or 6(b) hereof, notify each such
indemnifying party in writing of the commencement thereof, but the failure so
to notify such indemnifying party shall not relieve such indemnifying party
from any liability except to the extent that it has been prejudiced in any
material respect by such failure or from any liability that it may have to any
such indemnified party otherwise than under Section 6(a) or 6(b) hereof. In
case any such action shall be brought against any such indemnified party and it
shall notify each indemnifying party of the commencement thereof, each such
indemnifying party shall be entitled to participate therein and, to the extent
that it shall wish, jointly with any other indemnifying party under Section
6(a) or 6(b) hereof similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (who shall not, except with the
consent of such indemnified party, be counsel to such indemnifying party), and,
after notice from such indemnifying party to such indemnified party of its
election so to assume the defense thereof, such indemnifying party shall not be
liable to such indemnified party under Section 6(a) or 6(b) hereof 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. The indemnified party
shall have the right to employ its own counsel in any such action, but the fees
and expenses of such counsel shall be at the expense of such indemnified party
unless (i) the employment of counsel by such indemnified party at the expense
of the indemnifying party has been authorized by the indemnifying party, (ii)
the indemnified party shall have been advised by such counsel that there may be
a conflict of interest between the indemnifying party and the indemnified party
in the conduct of the defense, or certain aspects of the defense, of such
action (in which case the indemnifying party shall not have the right to direct
the defense of such action with respect to those matters or aspects of the
defense on which a conflict exists or may exist on behalf of the indemnified
party) or (iii) the indemnifying party shall not in fact have employed counsel
reasonably satisfactory to such indemnified party to assume the defense of such
action, in any of which events such fees and expenses to the extent applicable
shall be borne, and shall be paid as incurred, by the indemnifying party. If at
any time such indemnified party shall have requested such indemnifying party
under Section 6(a) or 6(b) hereof to reimburse such indemnified party for fees
and expenses of counsel, such indemnifying party agrees that it shall be liable
for any settlement of the nature contemplated by Section 6(a) or 6(b) hereof
effected without its written consent if (i) such settlement is entered into
more than 45 days after receipt by such indemnifying party of such request for
reimbursement, (ii) such indemnifying party shall have received notice of the
terms of such settlement at least 30 days prior to such settlement being
entered into and (iii) such indemnifying party shall not have reimbursed
- 23 -
24
such indemnified party in accordance with such request for reimbursement prior
to the date of such settlement. No such indemnifying party shall, without the
written consent of such 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 such indemnified party is an actual or
potential party to such action or claim) unless such settlement, compromise or
judgment (A) includes an unconditional release of such indemnified party from
all liability arising out of such action or claim and (B) does not include a
statement as to or an admission of fault, culpability or a failure to act, by
or on behalf of any such indemnified party. In no event shall such indemnifying
parties be liable for the fees and expenses of more than one counsel, including
any local counsel, for all such indemnified parties in connection with any one
action or separate but similar or related actions in the same jurisdiction
arising out of the same general allegations or circumstances.
(d) If the indemnification provided for in this Section 6 is
unavailable to or insufficient to indemnify or hold harmless an indemnified
party under Section 6(a) or 6(b) hereof in respect of any losses, damages or
liabilities (or actions or claims in respect thereof) referred to therein, then
each indemnifying party under Section 6(a) or 6(b) hereof shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, damages or liabilities (or actions or claims 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 hand, 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 Section 6(c) hereof
and such indemnifying party was prejudiced in a material respect by such
failure, then each such 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, as
applicable, of the Company, on the one hand, and the Underwriters, on the other
hand, in connection with the statements or omissions that resulted in such
losses, damages or liabilities (or actions or claims in respect thereof), as
well as any other relevant equitable considerations. The relative benefits
received by, as applicable, the Company, on the one hand, and the Underwriters,
on the other hand, shall be deemed to be in the same proportion as the total
net proceeds from such offering (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received by
the Underwriters. The relative fault, as applicable, of the Company, on the one
hand, and the Underwriters, on the other hand, shall be 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 hand, 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 contribution pursuant to this Section 6(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 that does not take account of the
equitable considerations referred to above in this Section 6(d). The amount
paid or payable by such an indemnified party as a result of the losses, damages
or liabilities (or actions or claims in respect thereof) referred to above in
this Section 6(d) shall be deemed to include any legal or other expenses
incurred by such indemnified party in connection with
- 24 -
25
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 6(d), no Underwriter shall be required to contribute
any amount in excess of the 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 that 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 1933 Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The obligations of the Underwriters in this Section 6(d) to
contribute are several in proportion to their respective underwriting
obligations with respect to the Securities and not joint.
(e) The obligations of the Company under this Section 6 shall be in
addition to any liability that the Company may otherwise have and shall extend,
upon the same terms and conditions, to each officer, director, employee, agent
or other representative and to each person, if any, who controls any
Underwriter within the meaning of the 1933 Act; and the obligations of the
Underwriters under this Section 6 shall be in addition to any liability that
the respective Underwriters may otherwise have and shall extend, upon the same
terms and conditions, to each officer and director of the Company who signed
the Registration Statement and to each person, if any, who controls the Company
within the meaning of the 1933 Act.
7. REPRESENTATIONS AND AGREEMENTS TO SURVIVE DELIVERY. The respective
representations, warranties, agreements and statements of the Company and the
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain operative and 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, any officer,
director, employee, agent or other representative or any controlling person of
any Underwriter, or the Company, any officer or director of the Company who
signed the Registration Statement or any controlling person of the Company, and
shall survive delivery of and payment for the Securities.
8. EFFECTIVE DATE AND TERMINATION. (a) This Agreement shall become
effective at 1:00 p.m., New York time, on the first business day following the
effective date of the Registration Statement, or at such earlier time after the
effective date of the Registration Statement as the Underwriters in the
Underwriters' discretion shall first release the Securities for offering to the
public; provided, however, that the provisions of Section 6 and 9 shall at all
times be effective. For the purposes of this Section 8(a), the Securities shall
be deemed to have been released to the public upon release by the Underwriters
of the publication of a newspaper advertisement relating to the Securities or
upon release of telegrams, facsimile transmissions or letters offering the
Securities for sale to securities dealers, whichever shall first occur.
(b) This Agreement may be terminated by the Underwriters at any time
before it becomes effective in accordance with Section 8(a) by notice to the
Company; provided, however, that the provisions of this Section 8 and of
Section 6 and Section 9 hereof shall at all times be effective. In the event of
any termination of this Agreement pursuant to this Section 8(b) hereof, the
Company shall not then be under any liability to any Underwriter except as
provided in Section 6 or Section 9 hereof.
- 25 -
26
(c) This Agreement may be terminated by the Underwriters at any time
at or prior to the Closing Date by notice to the Company if any condition
specified in Section 5 hereof shall not have been satisfied on or prior to the
Closing Date. Any such termination shall be without liability of any party to
any other party except as provided in Sections 6 and 9 hereof.
If the Underwriters terminate this Agreement as provided in Sections
8(b) or 8(c), the Underwriters shall notify the Company by telephone or
telegram, confirmed by letter.
9. COSTS AND EXPENSES. The Company, whether or not the transactions
contemplated hereby are consummated or this Agreement is prevented from
becoming effective under Section 8 hereof or is terminated, will bear and pay
the costs and expenses incident to the registration of the Securities and
public offering thereof, including, without limitation, (a) the filing fees of
the SEC and the fees and expenses of the Company's counsel and accountants, (b)
all expenses incurred in connection with the preparation, printing, filing,
delivery and shipping of the Registration Statement, each Preliminary
Prospectus, the Prospectus and any amendments or supplements thereto and the
printing, delivery and shipping of this Agreement and other underwriting
documents, (c) the furnishing of copies of such documents to the Underwriters,
(d) all expenses incurred in connection with the registration or qualification
of the Securities for offering and sale under the securities laws of the
various states and other jurisdictions, including the fees and disbursements of
counsel to the Underwriters relating to such registration or qualification, (e)
the filing fees of the NASD and fees and disbursements of counsel to the
Underwriters relating to any review of the offering by the NASD, (f) the cost
of the preparation, issuance and delivery of the Securities to the
Underwriters, including any charges of DTC in connection therewith, (g) all
fees and expenses relating to the authorization of the Securities for trading
on the New York Stock Exchange, (h) all travel expenses, including air fare and
accommodation expenses, of representatives of the Company in connection with
the offering of the Securities, (i) the fees and disbursements of the Trustee
and any agent of the Trustee and the fees and disbursements of their counsel
incurred in connection with the Indenture and the Securities, and (j) all of
the other costs and expenses incident to the performance by the Company of the
registration and offering of the Securities.
If this Agreement is terminated by the Underwriters in accordance with
the provisions of Section 8(c), the Company shall reimburse the Underwriters
for all of their out-of-pocket expenses, including the fees and disbursements
of counsel to the Underwriters.
10. NOTICES. All notices or communications hereunder, except as herein
otherwise specifically provided, shall be in writing and if sent to the
Underwriters shall be mailed, delivered, sent by facsimile transmission, or
telegraphed and confirmed c/o ▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇. ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention: Director, Corporate Finance,
facsimile number (▇▇▇) ▇▇▇-▇▇▇▇, or if sent to the Company shall be mailed,
delivered, sent by facsimile transmission, or telegraphed and confirmed to the
Company at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, facsimile number
(▇▇▇) ▇▇▇-▇▇▇▇. Notice to any Underwriter pursuant to Section 7 shall be
mailed, delivered, sent by facsimile transmission, or telegraphed and confirmed
to such Underwriter's address as it appears in the Underwriters' Questionnaire
furnished in connection with the offering of the Securities or as otherwise
furnished to the Company.
- 26 -
27
11. INFORMATION FURNISHED BY UNDERWRITERS. The statements set forth in
the penultimate paragraph of the cover page of the Prospectus and the
statements in the table and the second, fourth, fifth and sixth paragraphs
under the caption "Underwriting" in the Prospectus constitute the only
information furnished by or on behalf of the Underwriters through the
Underwriters as such information is referred to in Section 3(a)(ii) and Section
6 hereof.
12. PARTIES. This Agreement shall inure to the benefit of and be
binding upon the Underwriters, the Company and, to the extent provided in
Sections 6 and 7, 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. Nothing expressed or mentioned in this
Agreement is intended or shall be construed to give any person, corporation or
other entity any legal or equitable right, remedy or claim under or in respect
of this Agreement or any provision herein contained; this Agreement and all
conditions and provisions hereof being intended to be and being for the sole
and exclusive benefit of the parties hereto and their respective successors and
assigns and said controlling persons and said officers and directors, and for
the benefit of no other person, corporation or other entity. No purchaser of
any of the Securities from any Underwriter shall be construed a successor or
assign by reason merely of such purchase.
13. COUNTERPARTS. 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.
14. PRONOUNS. Whenever a pronoun of any gender or number is used
herein, it shall, where appropriate, be deemed to include any other gender and
number.
15. TIME OF ESSENCE. Time shall be of the essence of this Agreement.
16. APPLICABLE LAW. This Agreement shall be governed by, and construed
in accordance with, the laws of the State of New York, without giving effect to
the choice of law or conflict of laws principles thereof.
- 27 -
28
If the foregoing is in accordance with the understanding of the
Underwriters, please so indicate in the space provided below for that purpose,
whereupon this letter shall constitute a binding agreement between the Company
and the Underwriters.
▇▇▇▇▇▇ PETROLEUM COMPANY
By:
------------------------------------
Title:
-----------------------------------
Accepted as of the date hereof on behalf of ourselves.
▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇ & COMPANY, INC.
By: ▇.▇. ▇▇▇▇▇▇▇ & SONS, INC.
By:
------------------------------------
Title:
-----------------------------------
- 28 -
29
SCHEDULE I
Principal Amount
Name of Securities
---- ----------------
▇.▇. ▇▇▇▇▇▇▇ & Sons, Inc. $ --
▇▇▇▇▇▇ ▇▇▇▇▇▇ & Company, Inc. $ --
================
Total $ 40,000,000
30
SCHEDULE II
Pursuant to Section 5(e) of the Underwriting Agreement, ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ LLP shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the 1933 Act
and the applicable Rules and Regulations thereunder.
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules audited (and, if applicable,
prospective financial statements and/or pro forma financial information
examined) by them and included or incorporated by reference in the Prospectus
or the Registration Statement comply as to form in all material respects with
the applicable accounting requirements of the 1933 Act and the applicable Rules
and Regulations with respect to registration statements on Form S-2; 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, selected financial data, pro forma
financial information, prospective financial statements and/or condensed
financial statements derived from audited financial statements of the Company
for the periods specified in such letter, as indicated in their reports
thereon, copies of which have been furnished to the Underwriters.
(iii) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards, consisting of a
reading of the unaudited financial statements and other information referred to
below, performing the procedures specified by the AICPA for a review of interim
financial information as discussed in SAS No. 71, Interim Financial
Information, on the latest available interim financial statements of the
Company and its subsidiaries, inspection of the minute books of the Company and
its subsidiaries since the date of the latest audited financial statements
included in the Prospectus, inquiries of officials of the Company and its
subsidiaries responsible for financial and accounting matters and such other
inquiries and procedures as may be specified in such letter, nothing came to
their attention that caused them to believe that:
(A) any material modifications should be made to the
unaudited statements of consolidated income, statements of
consolidated financial position and statements of
consolidated cash flows included or incorporated by reference
in the Prospectus for them to be in conformity with generally
accepted accounting principles, or the unaudited statements
of consolidated income, statements of consolidated financial
position and statements of consolidated cash flows included
in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the
1933 Act and the related published Rules and Regulations
thereunder.
31
(B) any other unaudited income statement data and
balance sheet items included or incorporated by reference in
the Prospectus do not agree with the corresponding items in
the unaudited consolidated financial statements from which
such data and items were derived, and any such unaudited data
and items were not determined on a basis substantially
consistent with the basis for the corresponding amounts in
the audited consolidated financial statements included or
incorporated by reference in the Prospectus.
(C) the unaudited financial statements which were
not included or incorporated by reference in the Prospectus
but from which were derived any unaudited condensed financial
statements referred to in Clause (A) and any unaudited income
statement data and balance sheet items included in the
Prospectus and referred to in Clause (B) were not determined
on a basis substantially consistent with the basis for the
audited consolidated financial statements included or
incorporated by reference in the Prospectus.
(D) any unaudited pro forma consolidated condensed
financial statements included or incorporated by reference in
the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the
1933 Act and the published rules and regulations thereunder
or the pro forma adjustments have not been properly applied
to the historical amounts in the compilation of those
statements.
(E) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the consolidated capital stock or any increase in the
consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated working
capital, net current assets or net assets, or any changes in
any other items specified by the Underwriters, in each case
as compared with amounts shown in the latest balance sheet
included or incorporated by reference in the Prospectus,
except in each case for changes, increases or decreases which
the Prospectus discloses have occurred or may occur or which
are described in such letter.
(F) for the period from the date of the latest
financial statements included or incorporated by reference in
the Prospectus to the specified date referred to in Clause
(E) there were any decreases in consolidated net revenues or
operating profit or the total or per share amounts of
consolidated net income or any changes in any other items
specified by the Underwriters, in each case as compared with
the comparable period of the preceding year and with any
other period of corresponding length specified by the
Underwriters, except in each case for changes, decreases or
increases which the Prospectus discloses have occurred or may
occur or which are described in such letter.
32
(iv) In addition to the audit referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures referred
to in paragraph (iii) above, they have carried out certain specified
procedures, not constituting an audit in accordance with generally accepted
auditing standards, 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 for the periods covered
by their reports and any interim or other periods since the latest period
covered by their reports, which appear or are incorporated by reference in the
Prospectus, or in Part II of, or in exhibits and schedules to, the Registration
Statement specified by the Underwriters, 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.