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EXHIBIT 1.1
Hugoton Energy Corporation
6,000,000 Shares (1)
Common Stock
(no par value)
Underwriting Agreement
_____________, 1997
Salomon Brothers Inc,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation,
▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and
▇▇▇▇▇▇▇▇▇ & Company, Inc.
As Representatives of the several Underwriters,
c/o Salomon Brothers Inc
Seven ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Dear Sirs:
Hugoton Energy Corporation, a Kansas corporation (the
"Company"), proposes to sell to the underwriters named in Schedule I hereto
(the "Underwriters"), for whom you (the "Representatives") are acting as
representatives, 1,500,000 shares of Common Stock, no par value ("Common
Stock"), of the Company, and the persons named in Schedule II hereto (the
"Selling Stockholders") propose to sell to the Underwriters 4,500,000 shares of
Common Stock (said shares to be issued and sold by the Company and shares to be
sold by the Selling Stockholders collectively being hereinafter called the
"Underwritten Securities"). The Company and a Selling Stockholder named in
Schedule III hereto also propose to grant to the Underwriters an option to
purchase up to 900,000 additional shares of Common Stock (the "Option
Securities"; the Option Securities, together with the Underwritten Securities,
being hereinafter called the "Securities").
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(1) Plus an option to purchase from the Company and the person named
in Schedule III hereto up to 900,000 additional shares to cover
over-allotments.
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1. Representations and Warranties.
(a) The Company represents and warrants to, and agrees
with, each Underwriter as set forth below in this Section 1. Certain terms
used in this Section 1 are defined in paragraph (iii) hereof.
(i) The Company has filed with the Securities and
Exchange Commission (the "Commission") a registration statement (file
number 333-22189) on Form S-2, including a related preliminary
prospectus, for the registration under the Securities Act of 1933 (the
"Act") of the offering and sale of the Securities. The Company may
have filed one or more amendments thereto, including the related
preliminary prospectus, each of which has previously been furnished to
you. The Company will next file with the Commission either (A) prior
to effectiveness of such registration statement, a further amendment
to such registration statement (including the form of final
prospectus) or (B) after effectiveness of such registration statement,
a final prospectus in accordance with Rules 430A and 424(b)(1) or (4).
In the case of clause (B), the Company has included in such
registration statement, as amended at the Effective Date, all
information (other than Rule 430A Information) required by the Act and
the rules thereunder to be included in the Prospectus with respect to
the Securities and the offering thereof. As filed, such amendment and
form of final prospectus, or such final prospectus, shall contain all
Rule 430A Information, together with all other such required
information, with respect to the Securities and the offering thereof
and, except to the extent the Representatives shall agree in writing
to a modification, shall be in all substantive respects in the form
furnished to you prior to the Execution Time or, to the extent not
completed at the Execution Time, shall contain only such specific
additional information and other changes (beyond that contained in the
latest Preliminary Prospectus) as the Company has advised you, prior
to the Execution Time, will be included or made therein.
(ii) On the Effective Date, the Registration Statement did
or will, and when the Prospectus is first filed (if required) in
accordance with Rule 424(b) and on the Closing Date, the Prospectus
(and any supplements thereto) will, comply in all material respects
with the applicable requirements of the Act and the rules thereunder;
on the Effective Date, the Registration Statement did not or will not
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein not misleading; and, on the Effective
Date, the Prospectus, if not filed pursuant to Rule 424(b), did not or
will not, and on the date of any filing pursuant to Rule 424(b) and on
the Closing Date, the Prospectus ( together with any supplement
thereto) will not, 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; provided, however, that the Company makes
no representations or warranties as to the information contained in or
omitted from the Registration Statement, or the Prospectus (or any
supplement thereto) in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter through the Representatives specifically for inclusion in
the Registration Statement or the Prospectus (or any supplement
thereto).
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(iii) The terms which follow, when used in this Agreement,
shall have the meanings indicated. The term "the Effective Date"
shall mean each date that the Registration Statement and any
post-effective amendment or amendments thereto became or become
effective. "Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto.
"Preliminary Prospectus" shall mean any preliminary prospectus
referred to in paragraph (i) above and any preliminary prospectus
included in the Registration Statement at the Effective Date that
omits Rule 430A Information. "Prospectus" shall mean the prospectus
(including all documents incorporated by reference therein) relating
to the Securities that is first filed pursuant to Rule 424(b) after
the Execution Time or, if no filing pursuant to Rule 424(b) is
required, shall mean the form of final prospectus relating to the
Securities included in the Registration Statement at the Effective
Date. "Registration Statement" shall mean the registration statement
referred to in paragraph (i) above (including all documents
incorporated by reference therein), exhibits and financial statements,
as amended at the Execution Time (or, if not effective at the
Execution Time, in the form in which it shall become effective) and,
in the event any post-effective amendment thereto becomes effective
prior to the Closing Date (as hereinafter defined), shall also mean
such registration statement as so amended. Such term shall include
Rule 430A Information deemed to be included therein at the Effective
Date as provided by Rule 430A. "Rule 424" and "Rule 430A" refer to
such rules under the Act. "Rule 430A Information" means information
with respect to the Securities and the offering thereof permitted to
be omitted from the Registration Statement when it becomes effective
pursuant to Rule 430A.
(iv) The financial statements, including the notes
thereto, and supporting schedules included in the Registration
Statement or incorporated by reference therein present fairly the
financial position of the Company and its consolidated subsidiaries as
at the dates indicated and the results of their operations for the
periods specified; except as otherwise stated in the Registration
Statement, such financial statements have been prepared in conformity
with generally accepted accounting principles applied on a consistent
basis; and the supporting schedules included in the Registration
Statement or incorporated by reference therein present fairly the
information required to be stated therein.
(v) The information on the basis of which the reserve
estimates and related information included in the Registration
Statement or incorporated by reference therein were prepared by the
Company, its subsidiaries, ▇▇▇▇▇ ▇▇▇▇▇ Company Petroleum Engineers or
any other person is true and correct in all material respects.
(vi) Since the respective dates as of which information is
given in the Registration Statement and the Prospectus, except as
otherwise stated therein, (A) there has been no material adverse
change in the condition, financial or otherwise, or the earnings,
affairs or business prospects of the Company and its subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, (B) there have been no transactions entered into
by the Company or any of its subsidiaries other than those in the
ordinary course of business, which are material with respect to the
Company and its subsidiaries considered as one enterprise, and (C)
there has been no dividend or
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distribution of any kind declared, paid or made by the Company on any
class of its capital stock.
(vii) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Kansas with corporate power and authority to own, lease and operate
its properties and conduct its business as described in the
Prospectus.
(viii) The authorized, issued and outstanding capital stock
of the Company is as set forth in the Prospectus under
"Capitalization" (except for issuances, if any, subsequent to the date
of the Prospectus pursuant to employee benefit plans); the shares of
issued and outstanding Common Stock have been duly authorized and
validly issued and are fully paid and nonassessable; the Securities to
be purchased by the Underwriters from the Company have been duly
authorized for issuance and sale to pursuant to this Agreement and,
when issued and delivered by the Company pursuant to this Agreement
against payment therefor, will be validly issued and fully paid and
non-assessable; the issuance of the Securities is not subject to
preemptive or other similar rights; and the Common Stock conforms to
all statements relating thereto contained in the Prospectus.
(ix) This Agreement has been duly and validly authorized
by the Company.
(x) The execution, delivery and performance of this
Agreement and the consummation of the transactions herein contemplated
have been duly and validly authorized by all necessary corporate
action and will not conflict with or constitute a breach or violation
of, or default under, or result in the creation or imposition of any
lien, charge or encumbrance upon any property or assets of the Company
or any of its subsidiaries pursuant to, any contract, indenture,
mortgage, loan agreement, note, lease or other instrument to which the
Company or any of its subsidiaries is a party or by which it or any of
them may be bound, or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such action
result in any breach or violation of, or default under, the provisions
of the charter or by-laws of the Company or of any applicable law,
administrative regulation or administrative or court decree.
(b) Each Selling Stockholder represents and warrants to,
and agrees with, each Underwriter that:
(i) Such Selling Stockholder is the lawful owner of the
Securities to be sold by such Selling Stockholder hereunder and upon
sale and delivery of, and payment for, such Securities, as provided
herein, such Selling Stockholder will convey good and marketable title
to such Securities, free and clear of all liens, encumbrances,
equities and claims whatsoever.
(ii) Such Selling Stockholder has not taken and will not
take, directly or indirectly, any action designed to or which has
constituted or which might reasonably be expected to cause or result,
under the Exchange Act or otherwise, in stabilization or
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manipulation of the price of any security of the Company to facilitate
the sale or resale of the Securities and has not effected any sales of
shares of Common Stock which, if effected by the issuer, would be
required to be disclosed in response to Item 701 of Regulation S-K.
[(iii) Certificates in negotiable form for such Selling
Stockholder's Securities have been placed in custody, for delivery
pursuant to the terms of this Agreement, under a Custody Agreement
duly authorized, executed and delivered by such Selling Stockholders,
in the form heretofore furnished to you (the "Custody Agreement") with
_______________ of _______________, as Custodian (the "Custodian");
the Securities represented by the certificates so held in custody for
each Selling Stockholder are subject to the interests hereunder of the
Underwriters, the Company and the other Selling Stockholders; and the
arrangements for custody and delivery of such certificates, made by
such Selling Stockholder hereunder and under the Custody Agreement,
are not subject to termination by any acts of such Selling
Stockholder, or by operation of law, incapacity of such Selling
Stockholder or the occurrence of any other event.]
(iv) No consent, approval, authorization or order of any
court or governmental agency or body is required for the consummation
by such Selling Stockholder of the transactions contemplated herein,
except such as may have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in connection
with the purchase and distribution of the Securities by the
Underwriters and such other approvals as have been obtained.
(v) Neither the sale of the Securities being sold by
such Selling Stockholder nor the consummation of any other of the
transactions herein contemplated by such Selling Stockholder or the
fulfillment of the terms hereof by such Selling Stockholder will
conflict with, result in a breach or violation of, or constitute a
default under any law or the charter or by-laws of such Selling
Stockholder or the terms of any indenture or other agreement or
instrument to which such Selling Stockholder or any of its
subsidiaries is a party or bound, or any judgement, order or decree
applicable to such Selling Stockholder or any of its subsidiaries of
any court, regulatory body, administrative agency, governmental body
or arbitrator having jurisdiction over such Selling Stockholder or any
of its subsidiaries.
2. Purchase and Sale. (a) Subject to the terms and
conditions and in reliance upon the representations and warranties herein set
forth, the Company and the Selling Stockholders agree, severally and not
jointly, to sell to each Underwriter, and each Underwriter agrees, severally
and not jointly, to purchase from the Company and the Selling Stockholders, at
a purchase price of $_____ per share, the amount of the Underwritten Securities
set forth opposite such Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company and the
Selling Stockholder named in Schedule III hereto hereby grants an option to the
several Underwriters to purchase, severally and not jointly, up to 900,000
shares of the Option Securities at the same purchase price per share as the
Underwriters
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shall pay for the Underwritten Securities. Said option may be exercised only
to cover over-allotments in the sale of the Underwritten Securities by the
Underwriters. Said option may be exercised in whole or in part at any time
(but not more than once) on or before the 30th day after the date of the
Prospectus upon written or telegraphic notice by the Representatives to the
Company and such Selling Stockholder setting forth the number of shares of the
Option Securities as to which the several Underwriters are exercising the
option and the settlement date. Delivery of certificates for the shares of
Option Securities by the such Selling Stockholder, and payment therefor to such
Selling Stockholder, shall be made as provided in Section 3 hereof. The
maximum number of shares of the Option Securities to be sold by the Company and
the Selling Stockholder is set forth in Schedule III hereto. In the event the
Underwriters exercise less than their full over-allotment option, the number of
shares of the Option Securities to be sold by each party listed on Schedule III
shall be, as nearly as practicable, in the same proportion to each other as are
the number of shares of the Option Securities listed opposite their respective
names on said Schedule III. The number of shares of the Option Securities to
be purchased by each Underwriter shall be the same percentage of the total
number of shares of the Option Securities to be purchased by the several
Underwriters as such Underwriter is purchasing of the Underwritten Securities,
subject to such adjustments as you in your absolute discretion shall make to
eliminate any fractional shares.
3. Delivery and Payment. Delivery of and payment for
the Underwritten Securities and the Option Securities (if the option provided
for in Section 2(b) hereof shall have been exercised on or before the third
business day prior to the Closing Date) shall be made at 10:00 AM, New York
City time, on _______________, 1997, or such later date (not later than
______________, 1997) as the Representatives shall designate, which date and
time may be postponed by agreement among the Representatives, the Company and
the Selling Stockholders or as provided in Section 9 hereof (such date and time
of delivery and payment for the Securities being herein called the "Closing
Date"). Delivery of the Securities shall be made to the Representatives for
the respective accounts of the several Underwriters against payment by the
several Underwriters through the Representatives of the respective aggregate
purchase prices of the Securities being sold by the Company and each of the
Selling Stockholders to or upon the order of the Company and the Selling
Stockholders by wire transfer of same day funds to accounts designated by each
of them. Delivery of the Underwritten Securities and the Option Securities
shall be made at such location as the Representatives shall reasonably
designate at least one business day in advance of the Closing Date and payment
for such Securities shall be made at the office of ________________.
Certificates for the Securities shall be registered in such names and in such
denominations as the Representatives may request not less than three full
business days in advance of the Closing Date.
The Company and the Selling Stockholders agree to have the
Securities available for inspection, checking and packaging by the
Representatives in New York, New York, not later than 1:00 PM on the business
day prior to the Closing Date.
Each Selling Stockholder will pay all applicable state
transfer taxes, if any, involved in the transfer to the several Underwriters of
the Securities to be purchased by them from such Selling Stockholder and the
respective Underwriters will pay any additional stock transfer taxes involved
in further transfers.
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If the option provided for in Section 2(b) hereof is exercised
after the third business day prior to the Closing Date, the Company will
deliver (at the expense of the Company) to the Representatives, at One New York
Plaza, New York, New York, on the date specified by the Representatives (which
shall be within three business days after exercise of said option),
certificates for the Option Securities in such names and denominations as the
Representatives shall have requested against payment of the purchase price
thereof to or upon the order of the Selling Stockholder identified in Schedule
III by wire transfer of same day funds to an account designated by each of
them. If settlement for the Option Securities occurs after the Closing Date,
the Company and the Selling Stockholder will deliver to the Representatives on
the settlement date for the Option Securities, and the obligation of the
Underwriters to purchase the Option Securities shall be conditioned upon
receipt of, supplemental opinions, certificates and letters confirming as of
such date the opinions, certificates and letters delivered on the Closing Date
pursuant to Section 6 hereof.
4. Offering by Underwriters. It is understood that the
several Underwriters propose to offer the Securities for sale to the public as
set forth in the Prospectus.
5. Agreements.
(a) The Company agrees with the several Underwriters that:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and
any amendment thereof, to become effective. Prior to the termination
of the offering of the Securities, the Company will not file any
amendment of the Registration Statement or supplement to the
Prospectus without your prior consent. Subject to the foregoing
sentence, if the Registration Statement has become or becomes
effective pursuant to Rule 430A, or filing of the Prospectus is
otherwise required under Rule 424(b), the Company will cause the
Prospectus, properly completed, and any supplement thereto to be filed
with the Commission pursuant to the applicable paragraph of Rule
424(b) within the time period prescribed and will provide evidence
satisfactory to the Representatives of such timely filing. The
Company will promptly advise the Representatives (A) when the
Registration Statement, if not effective at the Execution Time, and
any amendment thereto, shall have become effective, (B) when the
Prospectus, and any supplement thereto, shall have been filed (if
required) with the Commission pursuant to Rule 424(b), (C) when, prior
to termination of the offering of the Securities, any amendment to the
Registration Statement shall have been filed or become effective, (D)
of any request by the Commission for any amendment of the Registration
Statement or supplement to the Prospectus or for any additional
information, (E) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (F)
of the receipt by the Company of any notification with respect to the
suspension of the qualification of the Securities for sale in any
jurisdiction or the initiation or threatening of any proceeding for
such purpose. The Company will use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
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(ii) If, at any time when a prospectus relating to the
Securities is required to be delivered under the Act, any event occurs
as a result of which the Prospectus as then supplemented would include
any untrue statement of a material fact or omit to state any material
fact necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it
shall be necessary to amend the Registration Statement or supplement
the Prospectus to comply with the Act or the rules thereunder, the
Company promptly will (i) prepare and file with the Commission,
subject to the second sentence of paragraph (a) of this Section 5, an
amendment or supplement which will correct such statement or omission
or effect such compliance and (ii) supply any supplemented Prospectus
to you in such quantities as you may reasonably request.
(iii) As soon as practicable, the Company will make
generally available to its security holders and to the Representatives
an earnings statement or statements of the Company and its
subsidiaries which will satisfy the provisions of Section 11(a) of the
Act and Rule 158 under the Act.
(iv) The Company will furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including exhibits thereto) and to each other
Underwriter a copy of the Registration Statement (without exhibits
thereto) and, so long as delivery of a prospectus by an Underwriter or
dealer may be required by the Act, as many copies of each Preliminary
Prospectus and the Prospectus and any supplement thereto as the
Representatives may reasonably request. The Company will pay the
expenses of printing or other production of all documents relating to
the offering.
(v) The Company will arrange for the qualification of the
Securities for sale under the laws of such jurisdictions as the
Representatives may designate, and will maintain such qualifications
in effect so long as required for the distribution of the Securities
and will pay the fee of the National Association of Securities
Dealers, Inc., in connection with its review of the offering.
(vi) The Company will not, for a period of 90 days
following the Execution Time, without the prior written consent of
Salomon Brothers Inc, offer, sell or contract to sell, or otherwise
dispose of, directly or indirectly, or announce the offering of, any
other shares of Common Stock or any securities convertible into, or
exchangeable for, shares of Common Stock; provided, however, that the
Company may issue and sell Common Stock pursuant to any employee stock
option plan, stock ownership plan or dividend reinvestment plan of the
Company in effect at the Execution Time; and, provided, further, that
the Company may issue Common Stock in connection with an acquisition
provided that the recipient of such Common Stock agrees to the
foregoing restriction.
(b) Each Selling Stockholder agrees with the several Underwriters
that it will not during the period of 90 days following the Execution Time,
without the prior written consent of Salomon Brothers Inc, offer, sell or
contract to sell, or otherwise dispose of, directly or indirectly,
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or announce the offering of, any other shares of Common Stock beneficially
owned by such person, or any securities convertible into, or exchangeable for,
shares of Common Stock.
6. Conditions to the Obligations of the Underwriters.
The obligations of the Underwriters to purchase the Underwritten Securities and
the Option Securities, as the case may be, shall be subject to the accuracy of
the representations and warranties on the part of the Company and the Selling
Stockholders contained herein as of the Execution Time, the Closing Date and
any settlement date pursuant to Section 3 hereof, to the accuracy of the
statements of the Company and the Selling Stockholders made in any certificates
pursuant to the provisions hereof, to the performance by the Company and the
Selling Stockholders of their respective obligations hereunder and to the
following additional conditions:
(a) If the Registration Statement has not become
effective prior to the Execution Time, unless the Representatives
agree in writing to a later time, the Registration Statement will
become effective not later than (i) 6:00 PM New York City time on the
date of determination of the public offering price, if such
determination occurred at or prior to 3:00 PM New York City time on
such date or (ii) 12:00 Noon on the business day following the day on
which the public offering price was determined, if such determination
occurred after 3:00 PM New York City time on such date; if filing of
the Prospectus, or any supplement thereto, is required pursuant to
Rule 424(b), the Prospectus, and any such supplement, will be filed in
the manner and within the time period required by Rule 424(b); and no
stop order suspending the effectiveness of the Registration Statement
shall have been issued and no proceedings for that purpose shall have
been instituted or threatened.
(b) The Company shall have furnished to the
Representatives the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel for the Company,
dated the Closing Date, to the effect that:
(i) each of the Company and Hugoton Exploration Company
and [HEC Trading Company] and __________________ (individually a
"Subsidiary" and collectively the "Subsidiaries") has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the jurisdiction in which it is chartered or
organized, with full corporate power and authority to own its
properties and conduct its business as described in the Prospectus;
(ii) all the outstanding shares of capital stock of each
Subsidiary have been duly and validly authorized and issued and are
fully paid and nonassessable, and, except as otherwise set forth in
the Prospectus, all outstanding shares of capital stock of the
Subsidiaries are owned of record by the Company either directly or
through wholly owned subsidiaries free and clear of any perfected
security interest and, to the knowledge of such counsel, after due
inquiry, any other security interests, claims, liens or encumbrances;
(iii) the Company's authorized equity capitalization is as
set forth in the Prospectus; the capital stock of the Company conforms
to the description thereof contained in the Prospectus; the
outstanding shares of Common Stock (including the Securities being
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sold hereunder by the Selling Stockholders) have been duly and validly
authorized and issued and are fully paid and nonassessable; the
Securities being sold hereunder by the Company have been duly and
validly authorized, and, when issued and delivered to and paid for by
the Underwriters pursuant to this Agreement, will be fully paid and
nonassessable; the certificates for the Securities are in valid and
sufficient form; and the holders of outstanding shares of capital
stock of the Company are not entitled to preemptive or other rights to
subscribe for the Securities;
(iv) to the best knowledge of such counsel, there is no
pending or threatened action, suit or proceeding before any court or
governmental agency, authority or body or any arbitrator involving the
Company or any of its subsidiaries of a character required to be
disclosed in the Registration Statement which is not adequately
disclosed in the Prospectus, and there is no franchise, contract or
other document of a character required to be described in the
Registration Statement or Prospectus, or to be filed as an exhibit,
which is not described or filed as required;
(v) the Registration Statement has become effective under
the Act; any required filing of the Prospectus, and any supplements
thereto, pursuant to Rule 424(b) has been made in the manner and
within the time period required by Rule 424(b); to the best knowledge
of such counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for that
purpose have been instituted or threatened and the Registration
Statement and the Prospectus (other than the financial statements and
other financial and statistical information contained therein as to
which such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act and the
rules thereunder; and such counsel has no reason to believe that at
the Effective Date and as of the Closing Date the Registration
Statement contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein or necessary
to make the statements therein not misleading or that the Prospectus
includes any untrue statement of a material fact or omits to state a
material fact necessary to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
(vi) this Agreement has been duly authorized, executed and
delivered by the Company;
(vii) no consent, approval, authorization or order of any
court or governmental agency or body is required for the consummation
of the transactions contemplated herein, except such as have been
obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and
distribution of the Securities by the Underwriters and such other
approvals (specified in such opinion) as have been obtained;
(viii) neither the issue and sale of the Securities, nor the
consummation of any other of the transactions herein contemplated nor
the fulfillment of the terms hereof will conflict
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with, result in a breach or violation of, or constitute a default
under any law or the charter or by-laws of the Company or the terms of
any indenture or other agreement or instrument known to such counsel
and to which the Company or any of its subsidiaries is a party or
bound or any judgment, order or decree known to such counsel to be
applicable to the Company or any of its subsidiaries of any court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over the Company or any of its
subsidiaries; and
(ix) no holders of securities of the Company have rights
to the registration of such securities under the Registration
Statement except such holders who have not elected to participate in
the offering contemplated thereby.
In rendering such opinion, such counsel may rely (A) as to matters involving
the application of laws of any jurisdiction other than the State of Delaware or
Texas or the United States, to the extent they deem proper and specified in
such opinion, upon the opinion of other counsel of good standing whom they
believe to be reliable and who are satisfactory to counsel for the Underwriters
and (B) as to matters of fact, to the extent they deem proper, on certificates
of responsible officers of the Company and public officials. Reference to the
Prospectus in this paragraph (b) include any supplements thereto at the Closing
Date.
(c) The Selling Stockholders shall have furnished to the
Representatives the opinion of ______________________________, counsel for the
Selling Stockholders, dated the Closing Date, to the effect that:
(i) this Agreement [, the Custody Agreement and the
Power-of-Attorney] has [have] been duly authorized, executed and
delivered by the Selling Stockholders [, the Custody Agreement is
valid and binding on the Selling Stockholders] and each Selling
Stockholder has full legal right and authority to sell, transfer and
deliver in the manner provided in this Agreement [and the Custody
Agreement] the Securities being sold by such Selling Stockholder
hereunder;
(ii) the delivery by each Selling Stockholder to the
several Underwriters of certificates for the Securities being sold
hereunder by such Selling Stockholder against payment therefor as
provided herein, will pass good and marketable title to such
Securities to the several Underwriters, free and clear of all liens,
encumbrances, equities and claims whatsoever;
(iii) no consent, approval, authorization or order of any
court or governmental agency or body is required for the consummation
by any Selling Stockholder of the transactions contemplated herein,
except such as may have been obtained under the Act and such as may be
required under the blue sky laws of any jurisdiction in connection
with the purchase and distribution of the Securities by the
Underwriters and such other approvals (specified in such opinion) as
have been obtained; and
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(iv) neither the sale of the Securities being sold by any
Selling Stockholder nor the consummation of any other of the
transactions herein contemplated by any Selling Stockholder or the
fulfillment of the terms hereof by any Selling Stockholder will
conflict with, result in a breach or violation of, or constitute a
default under any law or the charter or By-laws of the Selling
Stockholder or the terms of any indenture or other agreement or
instrument known to such counsel and to which any Selling Stockholder
is a party or bound, or any judgment, order or decree known to such
counsel to be applicable to any Selling Stockholder of any court,
regulatory body, administrative agency, governmental body or
arbitrator having jurisdiction over any Selling Stockholder.
In rendering such opinion, such counsel may rely (A) as to matters involving
the application of laws of any jurisdiction other than the State of
______________ or the United States, to the extent they deem proper and
specified in such opinion, upon the opinion of other counsel of good standing
whom they believe to be reliable and who are satisfactory to counsel for the
Underwriters, and (B) as to matters of fact, to the extent they deem proper, on
certificates of the Selling Stockholders and public officials.
(d) The Representatives shall have received from ▇▇▇▇▇ &
▇▇▇▇▇, L.L.P., counsel for the Underwriters, such opinion or opinions, dated
the Closing Date, with respect to the issuance and sale of the Securities, the
Registration Statement, the Prospectus (together with any supplement thereto)
and other related matters as the Representatives may reasonably require, and
the Company and each Selling Stockholder shall have furnished to such counsel
such documents as they request for the purpose of enabling them to pass upon
such matters.
(e) The Company shall have furnished to the
Representatives a certificate of the Company, signed by the Chairman of the
Board or the President and the principal financial or accounting officer of the
Company, dated the Closing Date, to the effect that the signers of such
certificate have carefully examined the Registration Statement, the Prospectus,
any supplement to the Prospectus and this Agreement and that:
(i) the representations and warranties of the Company in
this Agreement are true and correct in all material respects on and as
of the Closing Date with the same effect as if made on the Closing
Date and the Company has complied with all the agreements and
satisfied all the conditions on its part to be performed or satisfied
at or prior to the Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that
purpose have been instituted or, to the Company's knowledge,
threatened; and
(iii) since the date of the most recent financial statements
included in the Prospectus (exclusive of any supplement thereto),
there has been no material adverse change in the condition (financial
or other), earnings, business or properties of the Company and its
subsidiaries, whether or not arising from transactions in the ordinary
course of business,
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except as set forth in or contemplated in the Prospectus (exclusive of
any supplement thereto).
(f) Each Selling Stockholder shall have furnished to the
Representatives a certificate, signed by the Chairman of the Board or the
President or the principal financial or accounting officer of such Selling
Stockholder, dated the Closing Date, to the effect that the signer of such
certificate has carefully examined the Registration Statement, the Prospectus,
any supplement to the Prospectus and this Agreement and that the
representations and warranties of such Selling Stockholder in this Agreement
are true and correct in all material respects on and as of the Closing Date to
the same effect as if made on the Closing Date.
(g) At the Execution Time and at the Closing Date, Ernst
& Young shall have furnished to the Representatives a letter or letters, dated
respectively as of the Execution Time and as of the Closing Date, in form and
substance satisfactory to the Representatives, confirming that they are
independent accountants within the meaning of the Act and the applicable
published rules and regulations thereunder and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration Statement
and the Prospectus and reported on by them comply in form in all
material respects with the applicable accounting requirements of the
Act and the related published rules and regulations;
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its
subsidiaries; carrying out certain specified procedures (but not an
examination in accordance with generally accepted auditing standards)
which would not necessarily reveal matters of significance with
respect to the comments set forth in such letter; a reading of the
minutes of the meetings of the stockholders, directors and committees
of the Company and the Subsidiaries; and inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters of the Company and its subsidiaries as to
transactions and events subsequent to December 31, 1996, nothing came
to their attention which caused them to believe that:
(1) any unaudited financial statements included
in the Registration Statement and the Prospectus do not comply
in form in all material respects with applicable accounting
requirements of the Act and with the published rules and
regulations of the Commission with respect to registration
statements on Form S-2; and said unaudited financial
statements are not in conformity with generally accepted
accounting principles applied on a basis substantially
consistent with that of the audited financial statements
included in the Registration Statement and the Prospectus; or
(2) with respect to the period subsequent to
December 31, 1996, there were any changes, at a specified date
not more than five business days prior to the date of the
letter, in the long-term debt of the Company and its
subsidiaries or capital
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stock of the Company or decreases in the stockholders' equity
of the Company as compared with the amounts shown on the
December 31, 1996 consolidated balance sheet included in the
Registration Statement and the Prospectus, or for the period
from December 31, 1996 to such specified date there were any
decreases, as compared with the corresponding period in the
preceding year; in net revenues or income before income taxes
or in total or per share amounts of net income of the Company
and its subsidiaries, except in all instances for changes or
decreases set forth in such letter, in which case the letter
shall be accompanied by an explanation by the Company as to
the significance thereof unless said explanation is not deemed
necessary by the Representatives.
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature (which
is limited to accounting, financial or statistical information derived
from the general accounting records of the Company and its
subsidiaries) set forth in the Registration Statement and the
Prospectus, agrees with the accounting records of the Company and its
subsidiaries, excluding any questions of legal interpretation.
References to the Prospectus in this paragraph (g) include any
supplement thereto at the date of the letter.
(h) Subsequent to the Execution Time or, if earlier, the
dates as of which information is given in the Registration Statement (exclusive
of any amendment thereof) and the Prospectus (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified in the
letter or letters referred to in paragraph (g) of this Section 6 or (ii) any
change, or any development involving a prospective change, in or affecting the
business or properties of the Company and its subsidiaries the effect of which,
in any case referred to in clause (i) or (ii) above, is, in the judgment of the
Representatives, so material and adverse as to make it impractical or
inadvisable to proceed with the offering or delivery of the Securities as
contemplated by the Registration Statement (exclusive of any amendment thereof)
and the Prospectus (exclusive of any supplement thereto).
(i) At the Execution Time, the Company shall have
furnished to the Representatives a letter substantially in the form of Exhibit
A hereto from each officer and director of the Company and Comdisco, Inc.
addressed to the Representatives, in which each such person agrees not to
offer, sell or contract to sell, or otherwise dispose of, directly or
indirectly, or announce an offering of, any shares of Common Stock beneficially
owned by such person or any securities convertible into, or exchangeable for,
shares of Common Stock for a period of 90 days following the Execution Time
without the prior written consent of the Representatives.
(j) At the Execution Time, ▇▇▇▇▇ ▇▇▇▇▇ Company Petroleum
Engineers shall have furnished to the Representatives a letter dated as of the
Execution Time substantially in the form heretofore approved by you.
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15
(k) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information, certificates and
documents as the Representatives may reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled in all material respects when and as provided in this
Agreement, or if any of the opinions and certificates mentioned above or
elsewhere in this Agreement shall not be in all material respects reasonably
satisfactory in form and substance to the Representatives and counsel for the
Underwriters, this Agreement and all obligations of the Underwriters hereunder
may be canceled at, or at any time prior to, the Closing Date by the
Representatives. Notice of such cancellation shall be given to the Company and
each Selling Stockholder in writing or by telephone or telegraph confirmed in
writing.
The documents required to be delivered by this Section 6 shall
be delivered on the Closing Date.
7. Reimbursement of Underwriters' Expenses. If the sale
of the Securities provided for herein is not consummated because any condition
to the obligations of the Underwriters set forth in Section 6 hereof is not
satisfied, because of any termination pursuant to Section 10 hereof or because
of any refusal, inability or failure on the part of the Company or any Selling
Stockholder to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriters, the Company will
reimburse the Underwriters severally upon demand for all out-of-pocket expenses
(including reasonable fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of the
Securities. If the Company is required to make any payments to the
Underwriters under this Section 7 because of any Selling Stockholder's refusal,
inability or failure to satisfy any condition to the obligations of the
Underwriters set forth in Section 6, the Selling Stockholders pro rata in
proportion to the percentage of Securities to be sold by each shall reimburse
the Company on demand for all amounts so paid.
8. Indemnification and Contribution. (a) The Company
jointly and severally and each Selling Stockholder, severally in proportion to
the percentage of Securities to be sold by it, agree to indemnify and hold
harmless each Underwriter, the directors, officers, employees and agents of
each Underwriter and each person who controls any Underwriter within the
meaning of either the Act or the Securities Exchange Act of 1934 (the "Exchange
Act") against any and all losses, claims, damages or liabilities, joint or
several, to which they or any of them may become subject under the Act, the
Exchange Act or other Federal or state statutory law or regulation, at common
law or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the registration
statement for the registration of the Securities as originally filed or in any
amendment thereof, or in any Preliminary Prospectus or the Prospectus, or in
any amendment thereof 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 agrees to reimburse each such indemnified party, as incurred, for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such
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loss, claim, damage, liability or action; provided, however, that the Company
and the Selling Stockholders will not be liable in any such case to the extent
that any such loss, claim, damage or liability arises out of or is based upon
any such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any Underwriter through
the Representatives specifically for inclusion therein. This indemnity
agreement will be in addition to any liability which the Company or the Selling
Stockholders may otherwise have.
(b) Each Underwriter severally agrees to indemnify and
hold harmless the Company, each of its directors, each of its officers who
signs the Registration Statement, and each person who controls the Company
within the meaning of either the Act or the Exchange Act and each Selling
Stockholder, to the same extent as the foregoing indemnity to each Underwriter,
but only with reference to written information relating to such Underwriter
furnished to the Company by or on behalf of such Underwriter through the
Representatives specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which any Underwriter may otherwise have. The Company and the
Selling Stockholders acknowledge that the statements set forth in the last
paragraph of the cover page and under the heading "Underwriting" in any
Preliminary Prospectus and the Prospectus constitute the only information
furnished in writing by or on behalf of the several Underwriters for inclusion
in any Preliminary Prospectus or the Prospectus, and you, as the
Representatives, confirm that such statements are correct.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph (a)
or (b) above unless and to the extent it did not otherwise learn of such action
and such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying
party's election to appoint counsel to represent the indemnified party in an
action, the indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the reasonable
fees, costs and expenses of such separate counsel if (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party would
present such counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not
have employed
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counsel satisfactory to the indemnified party to represent the indemnified
party within a reasonable time after notice of the institution of such action
or (iv) the indemnifying party shall authorize the indemnified party to employ
separate counsel at the expense of the indemnifying party. An indemnifying
party will not, without the prior written consent of the indemnified parties,
settle or compromise or consent to the entry of any judgment with respect to
any pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding.
(d) In the event that the indemnity provided in paragraph
(a) or (b) of this Section 8 is unavailable to or insufficient to hold harmless
an indemnified party for any reason, the Company, jointly and severally, the
Selling Stockholders, severally, and the Underwriters agree to contribute to
the aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending
same) (collectively "Losses") to which the Company, one or more of the Selling
Stockholders and one or more of the Underwriters may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders on the one hand and by the Underwriters on
the other from the offering of the Securities; provided, however, that in no
case shall any Underwriter (except as may be provided in any agreement among
underwriters relating to the offering of the Securities) be responsible for any
amount in excess of the underwriting discount or commission applicable to the
Securities purchased by such Underwriter hereunder. If the allocation provided
by the immediately preceding sentence is unavailable for any reason, the
Company, jointly and severally, the Selling Stockholders, severally, and the
Underwriters shall contribute in such proportion as is appropriate to reflect
not only such relative benefits but also the relative fault of the Company and
the Selling Stockholders on the one hand and of the Underwriters on the other
in connection with the statements or omissions which resulted in such Losses as
well as any other relevant equitable considerations. Benefits received by the
Company and the Selling Stockholders shall be deemed to be equal to the total
net proceeds from the offering (before deducting expenses), and benefits
received by the Underwriters shall be deemed to be equal to the total
underwriting discounts and commissions, in each case as set forth on the cover
page of the Prospectus. Relative fault shall be determined by reference to
whether any alleged untrue statement or omission relates to information
provided by the Company, the Selling Stockholders or the Underwriters. The
Company, the Selling Stockholders and the Underwriters agree that it would not
be just and equitable if contribution were determined by pro rata allocation or
any other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes
of this Section 8, each person who controls an Underwriter within the meaning
of either the Act or the Exchange Act and each director, officer, employee and
agent of an Underwriter shall have the same rights to contribution as such
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the
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same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
(e) The liability of each Selling Stockholder under such
Selling Stockholder's representations and warranties contained in Section 1
hereof and under the indemnity and contribution agreements contained in this
Section 8 shall be limited to an amount equal to the initial public offering
price of the Securities sold by such Selling Stockholder to the Underwriters.
9. Default by an Underwriter. If any one or more
Underwriters shall fail to purchase and pay for any of the Securities agreed to
be purchased by such Underwriter or Underwriters hereunder and such failure to
purchase shall constitute a default in the performance of its or their
obligations under this Agreement, the remaining Underwriters shall be obligated
severally to take up and pay for (in the respective proportions which the
amount of Securities set forth opposite their names in Schedule I hereto bears
to the aggregate amount of Securities set forth opposite the names of all the
remaining Underwriters) the Securities which the defaulting Underwriter or
Underwriters agreed but failed to purchase; provided, however, that in the
event that the aggregate amount of Securities which the defaulting Underwriter
or Underwriters agreed but failed to purchase shall exceed 10% of the aggregate
amount of Securities set forth in Schedule I hereto, the remaining Underwriters
shall have the right to purchase all, but shall not be under any obligation to
purchase any, of the Securities, and if such nondefaulting Underwriters do not
purchase all the Securities, this Agreement will terminate without liability to
any nondefaulting Underwriter, the Selling Stockholders or the Company. In the
event of a default by any Underwriter as set forth in this Section 9, the
Closing Date shall be postponed for such period, not exceeding seven days, as
the Representatives shall determine in order that the required changes in the
Registration Statement and the Prospectus or in any other documents or
arrangements may be effected. Nothing contained in this Agreement shall
relieve any defaulting Underwriter of its liability, if any, to the Company,
the Selling Stockholders and any nondefaulting Underwriter for damages
occasioned by its default hereunder.
10. Termination. This Agreement shall be subject to
termination in the absolute discretion of the Representatives, by notice given
to the Company prior to delivery of and payment for the Securities, if prior to
such time (i) trading in the Company's Common Stock shall have been suspended
by the Commission or the National Association of Securities Dealers National
Market System or trading in securities generally on the New York Stock Exchange
or the National Association of Securities Dealers National Market System shall
have been suspended or limited or minimum prices shall have been established on
either of such Exchange or Market System, (ii) a banking moratorium shall have
been declared either by Federal or New York State authorities or (iii) there
shall have occurred any outbreak or escalation of hostilities, declaration by
the United States of a national emergency or war or other calamity or crisis
the effect of which on financial markets is such as to make it, in the judgment
of the Representatives, impracticable or inadvisable to proceed with the
offering or delivery of the Securities as contemplated by the Prospectus
(exclusive of any supplement thereto).
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11. Representations and Indemnities to Survive. The
respective agreements, representations, warranties, indemnities and other
statements of the Company or its officers, of each Selling Stockholder and of
the Underwriters set forth in or made pursuant to this Agreement will remain in
full force and effect, regardless of any investigation made by or on behalf of
any Underwriter, any Selling Stockholder or the Company or any of the officers,
directors or controlling persons referred to in Section 8 hereof, and will
survive delivery of and payment for the Securities. The provisions of Sections
7 and 8 hereof shall survive the termination or cancellation of this Agreement.
12. Notices. All communications hereunder will be in
writing and effective only on receipt, and, if sent to the Representatives,
will be mailed, delivered or telegraphed and confirmed to them, care of Salomon
Brothers Inc, at ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇; or, if
sent to the Company, will be mailed, delivered or telegraphed and confirmed to
it at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇, attention of the legal
department; or if sent to the Selling Stockholders, will be mailed, delivered
or telegraphed and confirmed to them at the addresses set forth in Schedule II
hereto.
13. Successors. This Agreement will inure to the benefit
of and be binding upon the parties hereto and their respective successors and
the officers and directors and controlling persons referred to in Section 8
hereof, and no other person will have any right or obligation hereunder.
14. Applicable Law. This Agreement will be governed by
and construed in accordance with the laws of the State of New York.
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If the foregoing is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several Underwriters.
Very truly yours,
HUGOTON ENERGY CORPORATION
By:_____________________________________
Name:___________________________________
Title:__________________________________
ODYSSEY PARTNERS, L.P.
By:_____________________________________
Name:___________________________________
Title:__________________________________
FIRST RESERVE SECURED ENERGY ASSET FUND,
LIMITED PARTNERSHIP
FIRST RESERVE FUND V, LIMITED PARTNERSHIP
AMERICAN GAS & OIL INVESTORS LIMITED
PARTNERSHIP
AMERICAN GAS & OIL INVESTORS II LIMITED
PARTNERSHIP
By: FIRST RESERVE CORPORATION,
GENERAL PARTNER
By:_______________________________
Name:_____________________________
Title:____________________________
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The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
Salomon Brothers Inc,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇
Securities Corporation,
▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and
▇▇▇▇▇▇▇▇▇ & Company, Inc.
By: Salomon Brothers Inc
By:_______________________________
Vice President
For themselves and the other
several Underwriters named in
Schedule I to the foregoing
Agreement.
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