EXHIBIT 1.1
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KCS ENERGY, INC.
(a Delaware corporation)
6,000,000 Shares of Common Stock
UNDERWRITING AGREEMENT
Dated: November 20, 2003
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TABLE OF CONTENTS
PAGE
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SECTION 1. Representations and Warranties............................................................2
(a) Representations and Warranties by the Company................................................2
(i) Compliance with Registration Requirements...........................................2
(ii) Incorporated Documents..............................................................3
(iii) Independent Accountants.............................................................3
(iv) Financial Statements................................................................3
(v) No Material Adverse Change in Business..............................................3
(vi) Good Standing of the Company........................................................4
(vii) Good Standing of the Subsidiaries...................................................4
(viii) Capitalization......................................................................4
(ix) Authorization of Agreement..........................................................5
(x) Authorization and Description of Securities.........................................5
(xi) Absence of Defaults and Conflicts...................................................5
(xii) Absence of Labor Dispute............................................................6
(xiii) Absence of Proceedings..............................................................6
(xiv) Accuracy of Exhibits................................................................6
(xv) Absence of Further Requirements.....................................................6
(xvi) Possession of Intellectual Property.................................................6
(xvii) Possession of Licenses and Permits..................................................7
(xviii) Title to Property...................................................................7
(xix) Certain Oil and Gas Matters.........................................................7
(xx) Investment Company Act..............................................................8
(xxi) Environmental Laws..................................................................8
(xxii) Registration Rights.................................................................8
(xxiii) Stabilizing Transactions............................................................9
(xxiv) Statistical and Market Data.........................................................9
(xxv) Finders' Fee........................................................................9
(xxvi) Payment of Taxes....................................................................9
(xxvii) Internal Controls...................................................................9
(xxviii) Insurance..........................................................................10
(xxix) Related Party Transactions.........................................................10
(xxx) Offering Materials.................................................................10
(xxxi) Reserve Reports....................................................................10
(xxxii) No Integration.....................................................................10
(xxxiii) ▇▇▇▇▇▇▇▇-▇▇▇▇▇.....................................................................10
SECTION 2. Sale and Delivery to Underwriters; Closing...............................................11
(a) Initial Securities..........................................................................11
(b) Option Securities...........................................................................11
(c) Payment.....................................................................................12
SECTION 3. Covenants of the Company..................................................................12
(a) Compliance with Securities Regulations and Commission Requests...............................12
(b) Filing of Amendments.........................................................................12
(c) Delivery of Registration Statements..........................................................13
(d) Delivery of Prospectuses.....................................................................13
(e) Continued Compliance with Securities Laws....................................................13
(f) Blue Sky Qualifications......................................................................13
(g) Rule 158.....................................................................................14
(h) Use of Proceeds..............................................................................14
(i) Listing......................................................................................14
(j) Restriction on Sale of Securities............................................................14
(k) Reporting Requirements.......................................................................14
SECTION 4. Payment of Expenses.......................................................................14
SECTION 5. Conditions of the Underwriters' Obligations...............................................15
(a) Effectiveness of Registration Statement......................................................15
(b) Opinion of Counsel for the Company...........................................................15
(c) Opinion of Counsel for the Underwriters......................................................15
(d) Officers' Certificate........................................................................16
(e) Accountant's Comfort Letter..................................................................16
(f) Bring-Down Comfort Letter....................................................................16
(g) Reserve Engineer's Letter....................................................................16
(h) Approval of Listing..........................................................................16
(i) Lock-up Agreements...........................................................................16
(j) Conditions to Purchase of Option Securities..................................................17
(i) Officers' Certificate...............................................................17
(ii) Opinion of Counsel for the Company..................................................17
(iii) Opinion of Counsel for the Underwriters.............................................17
(iv) Bring-down Comfort Letter...........................................................17
(k) Additional Documents.........................................................................17
(l) Termination of Agreement.....................................................................17
SECTION 6. Indemnification...........................................................................18
(a) Indemnification of the Underwriters..........................................................18
(b) Indemnification of the Company and its Directors and Officers................................18
(c) Actions against Parties; Notification........................................................19
(d) Settlement without Consent if Failure to Reimburse...........................................19
ii
SECTION 7. Contribution..............................................................................20
SECTION 8. Defaulting Underwriters...................................................................21
SECTION 9. Representations, Warranties and Agreements to Survive Delivery............................22
SECTION 10. Termination of Agreement..................................................................22
(a) Termination; General.........................................................................22
(b) Liabilities..................................................................................22
SECTION 11. Notices...................................................................................22
SECTION 12. Parties...................................................................................23
SECTION 13. APPLICABLE LAW AND TIME...................................................................23
SECTION 14. Effect of Headings........................................................................23
SECTION 15. Counterparts..............................................................................23
SCHEDULES
Schedule A - Pricing Information
Schedule B - List of Underwriters
Schedule C - List of Persons Subject to Lock-up
EXHIBITS
Exhibit A - Form of Opinion of ▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP
Exhibit B - Form of Lock-up Letter
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November 20, 2003
▇▇▇▇▇▇▇▇▇ & COMPANY, INC.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ INC.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CORP.
C/▇ ▇▇▇▇▇▇▇▇▇ & COMPANY, INC.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
KCS Energy, Inc., a Delaware corporation (the "Company"), confirms its
agreement with ▇▇▇▇▇▇▇▇▇ & Company, Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and ▇▇▇▇▇▇
▇▇▇▇▇▇▇ Corp. (collectively, the "Underwriters") with respect to the issue and
sale by the Company and the purchase by the Underwriters of 6,000,000 shares of
its Common Stock, par value $0.01 per share (the "Initial Securities"), and with
respect to the grant by the Company of the option described in Section 2 hereof
to purchase all or part of an additional 900,000 shares of its Common Stock, par
value $0.01 per share (the "Option Securities"), to cover over-allotments, if
any. The Initial Securities and the Option Securities to be purchased by the
Underwriters are hereinafter called, collectively, the "Securities."
The Company understands that the Underwriters propose to make a public
offering of the Securities as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (Registration No. 333-108824)
covering the registration of common stock (including the Securities) under the
Securities Act of 1933, as amended (the "1933 Act"), and the offering thereof
from time to time in accordance with Rule 415 of the rules and regulations of
the Commission under the 1933 Act (the "1933 Act Regulations"). The registration
statement has been declared effective by the Commission. Such registration
statement is referred to herein as the "Registration Statement," and the final
prospectus and the final prospectus supplement relating to the offering of the
Securities, in the final forms furnished to the Underwriters by the Company for
use in connection with the offering of the Securities, are collectively referred
to herein as the "Prospectus;" provided, however, that all references to the
"Registration Statement" and the "Prospectus" shall also be deemed to include
all documents incorporated therein by reference pursuant to the Securities
Exchange Act of 1934, as amended (the "1934 Act"), prior to the execution of
this Agreement. For purposes of this Agreement, all references to the
Registration Statement, Prospectus or to any amendment or supplement to either
of the foregoing shall be deemed to include any copy filed with the Commission
pursuant to its Electronic Data Gathering, Analysis and Retrieval system
("▇▇▇▇▇").
All references in this Agreement to financial statements and schedules
and other information which is "contained," "included" or "stated" (or other
references of like import) in
the Registration Statement or Prospectus shall be deemed to mean and include all
such financial statements and schedules and other information which is
incorporated by reference in the Registration Statement or Prospectus, as the
case may be, prior to the execution of this Agreement; and all references in
this Agreement to amendments or supplements to the Registration Statement or
Prospectus shall be deemed to include the filing of any document under the 1934
Act which is incorporated by reference in the Registration Statement or
Prospectus, as the case may be, after the execution of this Agreement and until
the termination of the offering.
SECTION 1. Representations and Warranties.
(a) Representations and Warranties by the Company. The Company
represents and warrants to the Underwriters as of the date hereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(b) hereof, and agrees with each Underwriter,
as follows:
(i) Compliance with Registration Requirements. The Company
meets the requirements for use of Form S-3 under the 1933 Act. The
Registration Statement has become effective under the 1933 Act, no stop
order suspending the effectiveness of the Registration Statement has
been issued under the 1933 Act and, to the knowledge of the Company, no
proceedings for that purpose have been instituted or are pending or are
contemplated by the Commission, and, if applicable, the Company has
complied with all requests by the Commission for additional
information.
At the time the Registration Statement became effective and at
the Closing Time (and, if any Option Securities are purchased, at the
Date of Delivery), the Registration Statement and any amendments and
supplements thereto complied and will comply when filed in all material
respects with the 1933 Act and the 1933 Act Regulations and did not and
will not 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. At the date of the
Prospectus, or any amendments or supplements thereto, and at the
Closing Time (and, if any Option Securities are purchased, at the Date
of Delivery), neither the Prospectus nor any amendments or supplements
thereto, included or will include an untrue statement of a material
fact or omitted or will 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. The representations and
warranties in this subsection shall not apply to statements in or
omissions from the Registration Statement or Prospectus made in
reliance upon and in conformity with information furnished to the
Company in writing by the Underwriters expressly for use in the
Registration Statement or Prospectus. With respect to the preceding
sentence, the Company acknowledges that the only information furnished
in writing by the Underwriters for use in the Registration Statement or
the Prospectus are the statements contained in the paragraphs under the
caption "Underwriting--Commission and Expenses", "--Stabilization,
Short Swing Positions and Penalty Bids", "--Discretionary Sales" and
"--Electronic Distribution" in the Prospectus.
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Each prospectus filed as part of the Registration Statement as
originally filed or as part of any amendment thereto, or filed pursuant
to Rule 424 under the 1933 Act Regulations, complied when so filed in
all material respects with the 1933 Act Regulations and the Prospectus
delivered to the Underwriters for use in connection with this offering
was identical to the electronically transmitted copies thereof filed
with the Commission pursuant to ▇▇▇▇▇, except to the extent permitted
by Regulation S-T.
(ii) Incorporated Documents. Each document incorporated or
deemed to be incorporated by reference in the Registration Statement
and the Prospectus, at the time they were or hereafter are filed with
the Commission, complied and will comply when filed in all material
respects with the requirements of the 1934 Act and the rules and
regulations of the Commission thereunder (the "1934 Act Regulations"),
and, when read together with the other information in the Prospectus,
at the date of the Prospectus, at the Closing Time (and, if any Option
Securities are purchased, at the Date of Delivery), did not and will
not include an 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.
(iii) Independent Accountants. Ernst & Young LLP, which is
reporting on certain of the audited financial statements of the Company
included in the Registration Statement and the Prospectus, are
independent public accountants within the meaning of the 1993 Act and
1933 Act Regulations.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who certified certain of the financial statements
and supporting schedules included in the Registration Statement and the
Prospectus, were at the time of the certification of such reports
independent public accountants as required by the 1933 Act and the 1933
Act Regulations.
(iv) Financial Statements. The historical financial statements
of the Company included in the Registration Statement and the
Prospectus, together with the related schedules and notes thereto
present fairly in all material respects the financial position of the
Company and its consolidated subsidiaries at the dates indicated and
the statement of operations, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries for the periods specified.
Such financial statements have been prepared in conformity with
accounting principles generally accepted in the United States of
America ("GAAP") applied, except as disclosed therein, on a consistent
basis throughout the periods involved. The supporting schedules, if
any, included in the Registration Statement and the Prospectus present
fairly in accordance with GAAP the information required to be stated
therein.
(v) No Material Adverse Change in Business. 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 in the earnings, business affairs or business
prospects of the Company and its subsidiaries, whether or not arising
in the ordinary course of business (a "Material Adverse Effect"), (B)
the Company and its subsidiaries have not incurred any liability or
obligations, direct or contingent, nor entered into any transaction,
other
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than those in the ordinary course of business, which are material with
respect to the Company or its subsidiaries, (C) there has been no
dividend or distribution of any kind declared, paid or made by the
Company on any class of its capital stock, other than the payment of a
dividend on its outstanding shares of Series A convertible preferred
stock, par value $0.01 per share (the "Preferred Stock"), in October
2003, and (D) there has not been any material adverse change in the
capital stock, short-term debt or long term debt of the Company or any
of its subsidiaries.
(vi) Good Standing of the Company. The Company has been duly
organized, is validly existing as a corporation in good standing under
the laws of the State of Delaware and has corporate power and authority
to own, lease and operate its properties and to conduct its business as
described in the Registration Statement and the Prospectus and to enter
into and perform its obligations under this Agreement. The Company is
duly qualified as a foreign corporation to transact business and is in
good standing in each jurisdiction in which such qualification is
required, whether by reason of the ownership or leasing of property or
the conduct of business, except where the failure to be so qualified or
be in good standing would not result in a Material Adverse Effect. To
the Company's knowledge, no proceeding has been instituted in any
jurisdiction revoking, limiting or curtailing or seeking to revoke,
limit or curtail, such power and authority or qualification. The
Company does not own, lease or license any asset or property or conduct
any material business outside of the United States of America.
(vii) Good Standing of the Subsidiaries. Each subsidiary of
the Company (each a "Subsidiary" and, collectively, the "Subsidiaries")
has been duly organized, is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, has
the corporate power and authority to own, lease and operate its
properties and to conduct its business in as described in the
Registration Statement and the Prospectus and is duly qualified as a
foreign corporation, to transact business and is in good standing in
each jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure to be so qualified or be in good
standing would not result in a Material Adverse Effect. Except as
otherwise stated in the Registration Statement and the Prospectus and
except for liens resulting from the Company's credit facility and
pledges under such credit facility, all of the issued and outstanding
shares of capital stock of each Subsidiary has been duly authorized and
is validly issued, fully paid and non-assessable and is owned by the
Company, directly or indirectly, through Subsidiaries, free and clear
of any security interest, mortgage, pledge, lien, encumbrance, claim or
equity. None of the outstanding shares of capital stock of any
Subsidiary were issued in violation of preemptive or other similar
rights of any securityholder of such Subsidiary. The only Subsidiaries
of the Company are the Subsidiaries listed in the Company's Annual
Report on Form 10-K for the year ended December 31, 2002.
(viii) Capitalization. The authorized, issued and outstanding
shares of capital stock of the Company are as set forth in the
Prospectus in the column entitled "Actual" in the "Capitalization"
section of the Prospectus (except for subsequent issuances, if any,
pursuant to this Agreement, pursuant to the conversion of the Preferred
Stock, pursuant to reservations, agreements or employee benefit plans
referred to in the Prospectus or
4
pursuant to the exercise of convertible securities, warrants or options
referred to in the Prospectus). The shares of issued and outstanding
capital stock of the Company have been duly authorized and validly
issued and are fully paid and non-assessable. None of the outstanding
shares of capital stock of the Company were issued in violation of
preemptive or other similar rights of any securityholder of the
Company.
(ix) Authorization of Agreement. This Agreement has been duly
authorized, executed and delivered by the Company.
(x) Authorization and Description of Securities. The
Securities have been duly authorized for issuance and sale to the
Underwriters pursuant to this Agreement and, when issued and delivered
by the Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued, fully paid and
non-assessable; the statements set forth in the Prospectus under the
caption "Description of Capital Stock--Common Stock," insofar as it
purports to constitute a summary of the terms of the Common Stock, are
a fair summary in all material respects; no holder of the Securities
will be subject to personal liability under the Delaware General
Corporation Law by reason of being such a holder; and the issuance of
the Securities is not subject to the preemptive or other similar rights
of any securityholder of the Company.
(xi) Absence of Defaults and Conflicts. Neither the Company
nor any of its Subsidiaries is in violation of its charter or bylaws or
in default in the performance or observance of any obligation,
agreement, covenant or condition contained in any contract, indenture,
mortgage, deed of trust, loan or credit agreement, note, lease or other
agreement or 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 Subsidiary is subject
(collectively, "Agreements and Instruments"), except for such defaults
that would not result in a Material Adverse Effect. The execution,
delivery and performance by the Company of its obligations under this
Agreement and the consummation of the transactions contemplated herein
and in the Registration Statement and the Prospectus (including the
issuance and sale of the Securities and the use of the proceeds from
the sale of the Securities as described in the Prospectus in the "Use
of Proceeds" section of the Prospectus) and compliance by the Company
with its obligations hereunder have been duly authorized by all
necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with
or constitute a breach of, or default or Repayment Event (as defined
below) 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, the Agreements and Instruments (except
for such conflicts, breaches or defaults or liens, charges or
encumbrances that would not result in a Material Adverse Effect), nor
will such action result in any violation of (A) the provisions of the
charter or bylaws of the Company or any of its Subsidiaries or (B) any
applicable law, statute, rule, regulation, judgment, order, writ or
decree of any government, government instrumentality or court, domestic
or foreign, having jurisdiction over the Company or any of its
Subsidiaries or any of their assets, properties or operations, which
violations, in the case of clause (B), would, individually or in the
aggregate, have a Material Adverse Effect. As used herein, a "Repayment
Event" means any event or condition that gives the
5
holder of any note, debenture or other evidence of indebtedness (or any
person acting on such holder's behalf) the right to require the
repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any of its Subsidiaries.
(xii) Absence of Labor Dispute. No labor dispute with the
employees of the Company or any of its Subsidiaries exists or, to the
knowledge of the Company, is imminent that could reasonably be expected
to result in a Material Adverse Effect.
(xiii) Absence of Proceedings. There is no action, suit,
proceeding, inquiry or investigation before or brought by any court or
governmental agency or body, domestic or foreign, to the knowledge of
the Company, now pending, or threatened, against or directly affecting
the Company or any of its Subsidiaries which could reasonably be
expected to result in a Material Adverse Effect, or that might
reasonably be expected to materially and adversely affect the
consummation of the transactions contemplated in this Agreement or the
performance by the Company of its obligations hereunder. The aggregate
of all pending legal or governmental proceedings to which the Company
or any of its Subsidiaries is a party or of which any of their
respective properties or assets is the subject that are not described
in the Registration Statement and the Prospectus, including ordinary
routine litigation incidental to the business, could not reasonably be
expected to result in a Material Adverse Effect.
(xiv) Accuracy of Exhibits. There are no contracts or
documents that are required to be described in the Registration
Statement, the Prospectus or the documents incorporated by reference
therein or to be filed as exhibits thereto that have not been so
described and filed as required.
(xv) Absence of Further Requirements. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or
agency is necessary or required for the performance by the Company of
its obligations hereunder, in connection with the offering, issuance or
sale of the Securities hereunder or the consummation of the
transactions contemplated by this Agreement, except (A) for such
required under the 1933 Act, the 1933 Act Regulations, the 1934 Act,
the 1934 Act Regulations and state securities or "Blue Sky" laws, (B)
for such which have been, or prior to the applicable Date of Delivery
(as defined below) will be, obtained or (C) for such which, if not
obtained, would not, individually or in the aggregate, have a Material
Adverse Effect.
(xvi) Possession of Intellectual Property. The Company and its
Subsidiaries own or possess, or can acquire on reasonable terms,
adequate know-how (including unpatented and/or unpatentable proprietary
or confidential information, systems or procedures) or other
intellectual property (collectively, "Intellectual Property") necessary
to carry on the business now operated by them, and neither the Company
nor any of its Subsidiaries has received any notice or is otherwise
aware of any infringement of or conflict with asserted rights of others
with respect to any Intellectual Property or of any facts or
circumstances that could reasonably be expected to render any
Intellectual Property invalid or inadequate to protect the interests of
the Company or any of its Subsidiaries therein, and which infringement
or conflict (if the subject of any unfavorable
6
decision, ruling or finding) or invalidity or inadequacy, singly or in
the aggregate, would result in a Material Adverse Effect.
(xvii) Possession of Licenses and Permits. The Company and its
Subsidiaries possess such permits, licenses, approvals, consents and
other authorizations (collectively, "Governmental Licenses") issued by
the appropriate federal, state, local or foreign regulatory agencies or
bodies necessary to conduct the business in the manner described in the
Prospectus, subject to such qualifications as may be set forth in the
Prospectus and except for such permits which, if not obtained, would
not, individually or in the aggregate, have a Material Adverse Effect;
the Company and its Subsidiaries are in compliance with the terms and
conditions of all such Governmental Licenses, subject to such
qualifications as may be set forth in the Prospectus and except for
such noncompliance which would not, individually or in the aggregate,
have a Material Adverse Effect; all of the Governmental Licenses are
valid and in full force and effect, subject to such qualifications as
may be set forth in the Prospectus and except for such Governmental
Licenses which, if not valid and in full force and effect, would not,
individually or in the aggregate, have a Material Adverse Effect.
Neither the Company nor any of its Subsidiaries has received any notice
of proceedings relating to the revocation or modification of any such
Governmental Licenses.
(xviii) Title to Property. The Company and its Subsidiaries
have good and indefeasible title to all of their interests in oil and
gas properties (other than interests earned under farm-out,
participation or similar agreements in which an assignment or transfer
is pending) and all other real property owned by the Company and its
Subsidiaries and good title to all other properties owned by them, in
each case, free and clear of all mortgages, pledges, liens, security
interests, claims, restrictions or encumbrances of any kind except such
as (a) are described in the Prospectus, (b) liens and encumbrances
under operating agreements, unitization and pooling agreements,
production sales contracts, farm-out agreements and other oil and gas
exploration participation and production agreements, in each case that
secure payment of amounts not yet due and payable for the performance
of other inchoate obligations and are of a scope and nature customary
in the oil and gas industry or arise in connection with drilling and
production operations, or (c) do not, singly or in the aggregate,
materially affect the value of the affected property and do not
interfere with the use made and proposed to be made of such property by
the Company or its Subsidiaries, as the case may be. All of the leases
and subleases of real property that are material to the business of the
Company or any of its Subsidiaries and under which the Company or any
of its Subsidiaries holds properties described in the Prospectus, are
in full force and effect, and neither the Company nor any of its
Subsidiaries has received notice of any material claim of any sort that
has been asserted by anyone adverse to the rights of the Company or any
of its Subsidiaries under any of such leases or subleases, or affecting
or questioning the rights of the Company or such Subsidiary to the
continued possession of the leased or subleased premises under any such
lease or sublease.
(xix) Certain Oil and Gas Matters. Except as described in the
Prospectus, as of the date hereof, (i) all royalties, rentals, deposits
and other amounts owed under the oil and gas leases constituting the
oil and gas properties of the Company and its Subsidiaries
7
have been properly and timely paid (other than amounts held in routine
suspense accounts pending payments), and no material amount of proceeds
from the sale or production attributable to the oil and gas properties
of the Company and its Subsidiaries are currently being held in
suspense by any purchaser thereof, except where such amounts due could
not, singly or in the aggregate, have a Material Adverse Effect on the
Company or any of its Subsidiaries, and (ii) 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 or its
Subsidiaries in their oil and gas properties, except where such claims
could not, singly or in the aggregate, have a Material Adverse Effect
on the Company or any of its Subsidiaries.
(xx) Investment Company Act. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the
Prospectus will not be, an "investment company" or an entity
"controlled" by an "investment company" as such terms are defined in
the Investment Company Act of 1940, as amended.
(xxi) Environmental Laws. Except as described in the
Registration Statement and the Prospectus, (A) neither the Company nor
any of its Subsidiaries is in violation of any federal, state, local or
foreign statute, law, rule, regulation, ordinance, code, policy or rule
of common law or any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or
judgment, relating to pollution or protection of human health, the
environment (including, without limitation, ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including,
without limitation, laws and regulations relating to the release or
threatened release of chemicals, pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum or petroleum products
(collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport
or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company and its Subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their requirements,
(C) to the knowledge of the Company, there are no pending or threatened
administrative, regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law against
the Company or any of its Subsidiaries and (D) there are no events or
circumstances that could reasonably be expected to form the basis of an
order for clean-up or remediation, or an action, suit or proceeding by
any private party or governmental body or agency, against or affecting
the Company or any of its Subsidiaries relating to Hazardous Materials
or any Environmental Laws, except in the case of clauses (A), (B), (C)
or (D) where such violation, failure to receive required permits,
authorizations and approvals or failure to comply with the requirements
of such permits, authorizations and approvals, action or liabilities
related to Hazardous Materials or any Environmental Laws would not,
individually or in the aggregate, have a Material Adverse Effect.
(xxii) Registration Rights. No holder of any securities of the
Company has any rights, not effectively satisfied or waived, to require
the Company to register the sale of
8
any securities under the 1933 Act in connection with the filing of the
Registration Statement or the consummation of the transactions
contemplated therein or pursuant to this Agreement.
(xxiii) Stabilizing Transactions. The Company has not taken
and will not take, directly or indirectly, any action designed to, or
that might be reasonably expected to, cause or result in stabilization
or manipulation of the price of the Securities.
(xxiv) Statistical and Market Data. The statistical and
market-related data included or incorporated by reference in the
Registration Statement and the Prospectus are based on or derived from
sources that the Company believes to be reliable and accurate or
represent the Company's good faith estimates that are made on the basis
of data derived from such sources.
(xxv) Finders' Fee. The Company knows of no outstanding claims
for services, in the nature of a finder's fee or origination fee or
other similar claim, with respect to the transactions contemplated
hereby, other than the underwriting fees and compensation to be paid to
the Underwriters in accordance with this Agreement.
(xxvi) Payment of Taxes. All United States federal income tax
returns of the Company and its Subsidiaries required by law to be filed
have been filed (or extensions with respect to such tax returns have
been obtained). All taxes shown by such filed tax returns or otherwise
assessed, that are due and payable, have been paid, except those which
are being contested in good faith and as to which adequate reserves
have been provided in accordance with generally accepted accounting
principles. The Company has not received any notice from the Internal
Revenue Service that it intends to audit the Company's federal income
tax returns for any year during the three year period ended December
31, 2002 and no audit proceeding by the Internal Revenue Service has
been conducted during such period. The Company and its Subsidiaries
have filed all other tax returns (or obtained extensions with respect
to such tax returns) that are required to have been filed by them
pursuant to applicable foreign, state, local or other law, and have
paid all taxes due pursuant to such returns or pursuant to any
assessment received by the Company and its Subsidiaries, except those
which are being contested in good faith and as to which adequate
reserves have been provided in accordance with generally accepted
accounting principles. The charges, accruals and reserves on the books
of the Company in respect of any income and corporation tax liability
for any years not finally determined are adequate in all material
respects to meet any assessments or reassessments for additional income
tax for any years not finally determined.
(xxvii) Internal Controls. The Company and its Subsidiaries
maintain a system of internal accounting controls sufficient to provide
reasonable assurances that (A) transactions are executed in accordance
with management's general or specific authorization, (B) transactions
are recorded as necessary to permit preparation of financial statements
in conformity with GAAP 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 accountability
for assets is compared with the
9
existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
(xxviii) Insurance. The Company and its Subsidiaries carry or
are covered by insurance, with financially sound and reputable
insurers, in such amounts and covering such risks as is generally
maintained by companies similar to the Company engaged in the same or
similar business, and all such insurance is in full force and effect.
(xxix) Related Party Transactions. No relationship, direct or
indirect, exists between or among any of the Company or any affiliate
of the Company, on the one hand, and any director, officer,
stockholder, customer or supplier of any of them, on the other hand,
which is required by the 1933 Act or by the 1933 Act Regulations to be
described in the Registration Statement or the Prospectus which is not
so described or is not described as required.
(xxx) Offering Materials. The Company has not distributed and,
prior to the later to occur of (a) the Closing Time 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 Prospectus, or other
materials, if any, permitted by the 1933 Act and approved by the
Underwriters.
(xxxi) Reserve Reports. The written engineering report
prepared by Netherland, ▇▇▇▇▇▇ & Associates, Inc., an oil and gas
engineering consulting firm ("NSA"), as of June 30, 2003, setting forth
the engineering values attributed to the oil and gas properties of the
Company and its Subsidiaries accurately reflect in all material
respects the ownership interests of the Company and its Subsidiaries in
the properties therein as of June 30, 2003, except as otherwise
disclosed in the Registration Statement and the Prospectus. The
information furnished by the Company to NSA for purposes of preparing
its report, including, without limitation, production, costs of
operation and development, current prices for production, agreements
relating to current and future operations and sales of production, was
true, correct and complete in all material respects on the date
supplied and was prepared in accordance with customary industry
practices, as indicated in the letter of NSA dated August 7, 2003; NSA,
who prepared estimates of and the extent and value of proved oil and
natural gas reserves, are independent with respect to the Company.
(xxxii) No Integration. Except as described in the Prospectus
or in the documents incorporated by reference into the Prospectus, the
Company has not sold or issued any shares of Common Stock during the
six-month period preceding the date of the Prospectus, including any
sales pursuant to Rule 144A under, or Regulations D or S of, the 1933
Act, other than shares issued pursuant to the conversion of the
Preferred Stock, pursuant to employee benefit plans, qualified stock
options plans or other employee compensation plans or pursuant to
outstanding options, rights or warrants.
(xxxiii) ▇▇▇▇▇▇▇▇-▇▇▇▇▇. The principal executive officer and
principal financial officer of the Company have made all certifications
required by the ▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act or any related rules and regulations
promulgated by the Commission, and the statements
10
contained in any such certification are complete and correct. The
Company maintains "disclosure controls and procedures" (as defined in
Rule 13a-15(e) under the 1934 Act Regulations), and such controls and
procedures are designed (a) to ensure that material information
required to be disclosed by the Company in the reports that it files or
submits under the 1934 Act is recorded, processed, summarized and
reported, within the time periods specified in the Commission's rules
and forms and (b) to ensure that material information required to be
disclosed by the Company in the reports that it files or submits under
the 1934 Act is accumulated and communicated to the Company's
management, including its principal executive officer and principal
financial officer, as appropriate to allow timely decisions regarding
required disclosure. The Company does not have any material weaknesses
in internal control over financial reporting (as defined in Rule
13a-15(f) under the 1934 Act Regulations), and there has been no fraud,
whether or not material, that involves management or other employees
who have a significant role in the Company's internal control over
financial reporting (as defined in Rule 13a-15(f) under the 1934 Act
Regulations). The Company is otherwise in compliance in all material
respects with all applicable effective provisions of the ▇▇▇▇▇▇▇▇-▇▇▇▇▇
Act and the rules and regulations promulgated by the Commission.
SECTION 2. Sale and Delivery to Underwriters; Closing.
(a) Initial Securities. On the basis of the representations and
warranties herein contained and subject to the terms and conditions herein set
forth, the Company agrees to sell to each Underwriter, severally and not
jointly, and each Underwriter, severally and not jointly, agrees to purchase
from the Company, at the price per share set forth in Schedule A, the number of
Initial Securities set forth in Schedule B opposite the name of such
Underwriter, plus any additional number of Initial Securities which such
Underwriter may become obligated to purchase pursuant to the provisions of
Section 8 hereof.
(b) Option Securities. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriters, severally
and not jointly, to purchase, from the Company up to an additional 900,000
shares of Common Stock at the price per share set forth in Schedule A, less an
amount per share equal to any dividends or distributions declared by the Company
and payable on the Initial Securities but not payable on the Option Securities.
The option hereby granted will expire 30 days after the date hereof and may be
exercised in whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial Securities upon written notice by the Underwriters
to the Company setting forth the aggregate number of Option Securities as to
which the Underwriters are then exercising the option and the time and date of
payment and delivery for such Option Securities. Any such time and date of
delivery (a "Date of Delivery") shall be determined by the Underwriters, but
shall not be later than five full business days after the exercise of said
option, nor in any event prior to the Closing Time, as hereinafter defined. If
the option is exercised as to all or any portion of the Option Securities, each
of the Underwriters, acting severally and not jointly, will purchase that
proportion of the total number of Option Securities then being purchased which
the number of Initial Securities set forth in Schedule B opposite the name of
such Underwriter bears to the total number of Initial Securities, subject in
11
each case to such adjustments as the Underwriters discretion shall make to
eliminate any sales or purchases of fractional shares.
(c) Payment. Payment of the purchase price for the Initial Securities
shall be made to the Company by wire transfer of immediately available funds
against delivery of such Initial Securities for the respective accounts of the
several Underwriters through the facilities of the Depository Trust Company for
the account of the Underwriters, of the Initial Securities to be purchased by
them at 9:00 A.M. (Texas time) on the third business day after the date hereof,
or such other time not later than ten business days after such date as shall be
agreed upon by the Underwriters and the Company (such time and date of payment
and delivery being herein called "Closing Time").
In addition, in the event that any or all of the Option Securities are
purchased by the Underwriters, payment of the purchase price for such Option
Securities shall be made by wire transfer of immediately available funds against
delivery of such Option Securities for the respective accounts of the
Underwriters, through the facilities of the Depository Trust Company for the
account of the Underwriters, of the Option Securities to be purchased by them on
each Date of Delivery as specified in the written notice from the Underwriters
to the Company.
SECTION 3. Covenants of the Company. In further consideration of the
agreements of the Underwriters contained herein, the Company covenants with the
Underwriters as follows:
(a) Compliance with Securities Regulations and Commission Requests.
Prior to any termination of the offering of the Securities, the Company, subject
to Section 3(b) will notify the Underwriters immediately, and confirm the notice
in writing, (i) when any post-effective amendment to the Registration Statement
shall become effective, or any supplement to the Prospectus or any amended
Prospectus shall have been filed, (ii) of the receipt of any comments from the
Commission, (iii) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus or for
additional information, and (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement, or of the
suspension of the qualification of the Securities for offering or sale in any
jurisdiction, or of the initiation or threatening of any proceedings for any of
such purposes. The Company will promptly effect the filings necessary pursuant
to Rule 424(b) of the 1933 Act Regulations and will take such steps as it deems
necessary to ascertain promptly whether the form of prospectus transmitted for
filing under Rule 424(b) of the 1933 Act Regulations was received for filing by
the Commission and, in the event that it was not, it will promptly file such
prospectus. If any stop order is issued, the Company will make a commercially
reasonable effort to obtain the lifting thereof at the earliest possible moment.
(b) Filing of Amendments. Prior to any termination of the offering of
the Securities, the Company will (i) give the Underwriters notice of its
intention to file or prepare any amendment to the Registration Statement or any
amendment, supplement or revision to either the prospectus included in the
Registration Statement at the time it became effective or to the Prospectus,
whether pursuant to the 1933 Act, the 1934 Act or otherwise, (ii) furnish the
Underwriters with copies of any such documents a reasonable amount of time prior
to such
12
proposed filing or use, as the case may be, and (iii) not file or use any such
document to which the Underwriters or counsel for the Underwriters shall
reasonably object.
(c) Delivery of Registration Statements. The Company has furnished or
will deliver to the Underwriters and counsel for the Underwriters, without
charge, conformed copies of the Registration Statement as originally filed and
of each amendment thereto (in each case excluding exhibits). The copies of the
Registration Statement and each amendment thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof filed with
the Commission pursuant to ▇▇▇▇▇, except to the extent permitted by Regulation
S-T.
(d) Delivery of Prospectuses. The Company will furnish to the
Underwriters, without charge, during the period when the Prospectus is required
to be delivered under the 1933 Act or the 1934 Act, such number of copies of the
Prospectus (as amended or supplemented) as the Underwriters may reasonably
request. The Prospectus and any amendments or supplements thereto furnished to
the Underwriters will be identical to the electronically transmitted copies
thereof filed with the Commission pursuant to ▇▇▇▇▇, except to the extent
permitted by Regulation S-T.
(e) Continued Compliance with Securities Laws. The Company will comply
with the 1933 Act, the 1933 Act Regulations, the 1934 Act and the 1934 Act
Regulations so as to permit the completion of the distribution of the Securities
as contemplated in this Agreement and in the Prospectus. If at any time when a
prospectus is required by the 1933 Act to be delivered in connection with sales
of the Securities, any event shall occur or condition shall exist as a result of
which it is necessary, in the opinion of counsel for the Underwriters or for the
Company, to amend the Registration Statement in order that the Registration
Statement will not 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 or to amend or supplement the Prospectus in
order that the Prospectus 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 not misleading in the light of the circumstances existing at the time it
is delivered to a purchaser, or if it shall be necessary, in the opinion of such
counsel, at any such time to amend the Registration Statement or amend or
supplement the Prospectus in order to comply with the requirements of the 1933
Act or the 1933 Act Regulations, the Company will promptly prepare and file with
the Commission, subject to Section 3(b), such amendment or supplement as may be
necessary to correct such statement or omission or to make the Registration
Statement or the Prospectus comply with such requirements, and the Company will
furnish to the Underwriters such number of copies of such amendment or
supplement as the Underwriters may reasonably request.
(f) Blue Sky Qualifications. The Company will use its best efforts, in
cooperation with the Underwriters, to qualify the Securities for offering and
sale under the applicable securities laws of such states and other jurisdictions
(domestic or foreign) as the Underwriters may designate and to maintain such
qualifications in effect for so long as required for the resale of the
Securities; provided, however, that the Company shall not be obligated to file
any general consent to service of process or to qualify as a foreign corporation
or as a dealer in securities in any jurisdiction in which it is not so qualified
or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject. In each jurisdiction in
which the Securities have been so qualified, the Company will file such
statements and reports as may
13
be required by the laws of such jurisdiction to continue such qualification in
effect for so long as required for the resale of the Securities.
(g) Rule 158. The Company will timely file such reports pursuant to the
1934 Act as are necessary in order to make generally available to its
securityholders as soon as practicable an earnings statement of the Company
(which need not be audited) for the purposes of, and to provide the benefits
contemplated by, the last paragraph of Section 11(a) of the 1933 Act.
(h) Use of Proceeds. The Company will use the net proceeds received by
it from the sale of the Securities in the manner specified in the "Use of
Proceeds" section of the Prospectus.
(i) Listing. The Company will use its best efforts to effect the
listing of the Securities on the
New York Stock Exchange. In this connection,
the Company will make any and all filings with the
New York Stock Exchange
required to list the Securities on or prior to completion of the offering.
(j) Restriction on Sale of Securities. During a period commencing on
the date of the Prospectus and ending on the 90th day after the date of the
Prospectus, the Company will not, without the prior written consent of the
Underwriters, (i) directly or indirectly, offer, pledge, sell, contract to sell,
sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise transfer or
dispose of any share of Common Stock or any securities convertible into or
exercisable or exchangeable for Common Stock or file any registration statement
under the 1933 Act with respect to any of the foregoing or (ii) enter into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Securities to be sold hereunder, (B) any shares of Common Stock issued by
the Company upon the exercise of an option or warrant or the conversion of a
security outstanding on the date hereof and referred to in the Prospectus, (C)
any issuance of shares of Common Stock, or granting of options to purchase
Common Stock, pursuant to existing employee benefit plans of the Company
referred to in the Prospectus or (D) any issuance of shares of Common Stock by
the Company, or options to purchase Common Stock, pursuant to any non-employee
director stock plan or dividend reinvestment plan referenced in the Prospectus.
(k) Reporting Requirements. The Company, during the period when the
Prospectus is required to be delivered under the 1933 Act, will file all
documents required to be filed with the Commission pursuant to the 1934 Act
within the time periods required by the 1934 Act and the 1934 Act Regulations.
SECTION 4. Payment of Expenses. The Company will pay all expenses
incident to the performance of its obligations under this Agreement, including
(a) the preparation, printing, filing and distribution of the Registration
Statement (including financial statements and exhibits) as originally filed and
of each amendment thereto, (b) the preparation, issuance and delivery of the
certificates for the Securities to the Underwriters, including any stock or
other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the
14
Underwriters, (c) the fees and disbursements of the Company's counsel,
accountants and other advisors, (d) the registration or qualification of the
Securities under securities laws in accordance with the provisions of Section
3(f) hereof, including filing fees and the reasonable fees and disbursements of
counsel for the Underwriters in connection therewith and in connection with the
preparation of the Blue Sky Survey and any supplement thereto, (e) the printing
and delivery to the Underwriters of copies of the Prospectus and any amendments
or supplements thereto, (f) the preparation, printing and delivery to the
Underwriters of copies of the Blue Sky Survey and any supplement thereto, (g)
the fees and expenses of any transfer agent or registrar for the Securities, and
(h) the fees and out-of-pocket expenses incurred in connection with the listing
of the Securities. In addition, whether or not the transactions contemplated
under this Agreement are consummated, or this Agreement expires or is
terminated, the Company shall pay to, or on behalf of, the Underwriters,
promptly as billed, all reasonable fees, disbursements and out-of-pocket
expenses incurred by the Underwriters in connection with their services rendered
(including, without limitation, travel and lodging expenses, word processing
charges, messenger and duplicating services, facsimile expenses and other
customary expenditures); provided, that, except as provided in this Section 4,
the Underwriters shall pay their own costs and expenses, including the costs and
expenses of their counsel, any transfer taxes on the Securities which they may
sell and the expenses of advertising any offering of the Securities made by the
Underwriters. If this agreement is terminated pursuant to Section 8 by reason of
default of one or more of the Underwriters, the Company shall not be obligated
to reimburse any defaulting Underwriter on account of those expenses.
SECTION 5. Conditions of the Underwriters' Obligations. The obligations
of the Underwriters hereunder are subject to the accuracy of the representations
and warranties of the Company contained in Section 1 hereof or in certificates
of any officer of the Company or any Subsidiary of the Company delivered
pursuant to the provisions hereof, to the performance by the Company of its
covenants and other obligations hereunder, and to the following further
conditions:
(a) Effectiveness of Registration Statement. The Registration Statement
has become effective and at Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued under the
1933 Act or, to the knowledge of the Company, proceedings therefor initiated or
threatened by the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the Underwriters.
(b) Opinion of Counsel for the Company. At Closing Time, the
Underwriters shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters to the effect set forth in Exhibit
A hereto and to such further effect as counsel to the Underwriters may
reasonably request.
(c) Opinion of Counsel for the Underwriters. At Closing Time, the
Underwriters shall have received the favorable opinion, dated as of Closing
Time, of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel for the Underwriters, with respect to
the matters set forth in clauses (4), (5) (solely as to preemptive or other
similar rights arising by operation of law or under the charter or bylaws of the
Company), (6), (10) and (12) (solely as to the information in the Prospectus in
the
15
"Description of Capital Stock" section of the Prospectus) and the first
paragraph following clause (14) of Exhibit A hereto. In giving such opinion such
counsel may rely, as to all matters governed by the laws of jurisdictions other
than the law of the State of
New York, the federal law of the United States and
the General Corporation Law of the State of Delaware, upon the opinions of
counsel satisfactory to the Underwriters. Such counsel may also state that,
insofar as such opinion involves factual matters, they have relied, to the
extent they deem proper, upon certificates of officers of the Company and its
Subsidiaries and certificates of public officials.
(d) Officers' Certificate. At Closing Time, there shall not have been,
since the date hereof or since the respective dates as of which information is
given in the Prospectus, any material adverse change in the condition, financial
or otherwise, or in the earnings, business affairs or business prospects of the
Company and its Subsidiaries considered as one enterprise, whether or not
arising in the ordinary course of business, and the Underwriters shall have
received a certificate of the Chief Executive Officer or Chief Operating Officer
of the Company and of the Chief Financial or Chief Accounting Officer of the
Company, dated as of Closing Time, to the effect that (i) there has been no such
material adverse change, (ii) the representations and warranties in Section 1(a)
hereof are true and correct with the same force and effect as though expressly
made at and as of Closing Time, (iii) the Company has complied with all
agreements contained herein and satisfied all conditions on its part to be
performed or satisfied hereunder at or prior to Closing Time, and (iv) no stop
order suspending the effectiveness of the Registration Statement has been issued
and, to the best of such officers' knowledge, no proceedings for that purpose
have been instituted or are pending or are contemplated by the Commission.
(e) Accountant's Comfort Letter. At the time of the execution of this
Agreement, the Underwriters shall have received from Ernst & Young LLP a letter
dated such date, in form and substance satisfactory to the Underwriters,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to Underwriters with respect to the financial
statements and certain financial information contained in the Registration
Statement and the Prospectus.
(f) Bring-Down Comfort Letter. At Closing Time, the Underwriters shall
have received from Ernst & Young LLP a letter, dated as of Closing Time, to the
effect that they reaffirm the statements made in the letter furnished pursuant
to subsection (e) of this Section, except that the specified date referred to
shall be a date not more than three business days prior to Closing Time.
(g) Reserve Engineer's Letter. At Closing Time, the Underwriters shall
have received from NSA a letter, in form and substance satisfactory to the
Underwriters with respect to the reserve information included in the
Registration Statement and Prospectus.
(h) Approval of Listing. At Closing Time, the Securities shall have
been approved for listing on the
New York Stock Exchange, subject only to
official notice of issuance.
(i) Lock-up Agreements. At the date of this Agreement, the Underwriters
shall have received an agreement substantially in the form of Exhibit B hereto
signed by the persons listed on Schedule C hereto.
16
(j) Conditions to Purchase of Option Securities. In the event that the
Underwriters exercise their option provided in Section 2(b) hereof to purchase
all or any portion of the Option Securities, the representations and warranties
of the Company contained herein and the statements in any certificates furnished
by the Company or any subsidiary of the Company hereunder shall be true and
correct as of each Date of Delivery and, at the relevant Date of Delivery, the
Underwriters shall have received:
(i) Officers' Certificate. A certificate, dated such Date of
Delivery, of the President or a Vice President of the Company and of
the Chief Financial or Chief Accounting Officer of the Company
confirming that the certificate delivered at the Closing Time pursuant
to Section 5(d) hereof remains true and correct as of such Date of
Delivery.
(ii) Opinion of Counsel for the Company. The favorable opinion
of ▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP, counsel for the Company, in form and substance
satisfactory to counsel for the Underwriters, dated such Date of
Delivery, relating to the Option Securities to be purchased on such
Date of Delivery and otherwise to the same effect as the respective
opinions required by Section 5(b) hereof.
(iii) Opinion of Counsel for the Underwriters. The favorable
opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P., counsel for the Underwriters, dated
such Date of Delivery, relating to the Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect as
the opinion required by Section 5(c) hereof.
(iv) Bring-down Comfort Letter. A letter from Ernst & Young
LLP, in form and substance satisfactory to the Underwriters and dated
such Date of Delivery, substantially in the same form and substance as
the letter furnished to the Underwriters pursuant to Section 5(f)
hereof, except that the "specified date" in the letter furnished
pursuant to this paragraph shall be a date not more than five days
prior to such Date of Delivery.
(k) Additional Documents. At Closing Time and each Date of Delivery,
▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. shall have been furnished with such documents as they may
require for the purpose of enabling them to pass upon the issuance and sale of
the Securities as herein contemplated, or in order to evidence the accuracy of
any of the representations or warranties, or the fulfillment of any of the
conditions, herein contained. All proceedings taken by the Company in connection
with the issuance and sale of the Securities as herein contemplated shall be
satisfactory in form and substance to the Underwriters and counsel for the
Underwriters.
(l) Termination of Agreement. If any condition specified in this
Section shall not have been fulfilled when and as required to be fulfilled, this
Agreement, or, in the case of any condition to the purchase of Option
Securities, on a Date of Delivery which is after the Closing Time, the
obligations of the several Underwriters to purchase the relevant Option
Securities, may be terminated by the Underwriters by notice to the Company at
any time at or prior to Closing Time or such Date of Delivery, as the case may
be, and such termination shall be without liability of any party to any other
party except as provided in Section 4 and except that Sections 1, 6, 7 and 9
shall survive any such termination and remain in full force and effect.
17
SECTION 6. Indemnification.
(a) Indemnification of the Underwriters. The Company agrees to
indemnify and hold harmless each Underwriter and each person, if any, who
controls such Underwriter within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act as follows:
(i) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, arising out of any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement (or any amendment thereto), or the omission
or alleged omission therefrom of a material fact required to be stated
therein or necessary to make the statements therein not misleading or
arising out of any untrue statement or alleged untrue statement of a
material fact included in the Prospectus (or any amendment or
supplement thereto), or the omission or alleged omission therefrom of a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(ii) from and against any and all loss, liability, claim,
damage and expense whatsoever, as incurred, to the extent of the
aggregate amount paid in settlement of any litigation, or any
investigation or proceeding by any governmental agency or body,
commenced or threatened, or of any claim whatsoever based upon any such
untrue statement or omission, or any such alleged untrue statement or
omission; provided, that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
(iii) from and against any and all expense whatsoever, as
incurred (including the fees and disbursements of counsel chosen by the
Underwriters), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding by
any governmental agency or body, commenced or threatened, or any claim
whatsoever based upon any such untrue statement or omission, or any
such alleged untrue statement or omission, to the extent that any such
expense is not paid under (i) or (ii) above;
provided, however, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by or
on behalf of the Underwriters expressly for use in the Registration Statement
(or any amendment thereto) or the Prospectus (or any amendment or supplement
thereto).
(b) Indemnification of the Company and its Directors and Officers. The
Underwriters agree to indemnify and hold harmless the Company, its directors,
each of its officers who signed the Registration Statement, its employees and
each person, if any, who controls the Company within the meaning of Section 15
of the 1933 Act or Section 20 of the 1934 Act against any and all loss,
liability, claim, damage and expense whatsoever described in the indemnity
contained in subsection (a) of this Section, as incurred, but only with respect
to untrue statements or omissions, or alleged untrue statements or omissions,
made in the Registration Statement (or any amendment thereto), or the Prospectus
(or any amendment or supplement thereto) in reliance
18
upon and in conformity with written information furnished to the Company by or
on behalf of the Underwriters expressly for use in the Registration Statement
(or any amendment thereto) or the Prospectus (or any amendment or supplement
thereto).
(c) Actions against Parties; Notification. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) or (b)
above, the indemnifying party shall assume the defense of such action, including
the employment of counsel and payment of reasonable expenses. The indemnified
party or parties shall have the right to employ its or their own counsel in any
such case, but the fees and expenses of such counsel shall be at the expense of
the indemnified party or parties unless (i) the employment of such counsel shall
have been authorized in writing by the indemnifying party in connection with the
defense of such action, (ii) the indemnifying party shall not have employed
counsel reasonably satisfactory to the indemnified party to take charge of the
defense of such action within a reasonable time after notice of the institution
of such action, (iii) such indemnified party or parties shall have reasonably
concluded (based on the advice of counsel) that there may be defenses available
to it or them that are different from or additional to those available to the
indemnifying party or (iv) the use of counsel chosen by the indemnifying party
to represent the indemnified party would present such counsel with a conflict of
interest (based on the advice of counsel) (in which case the indemnifying party
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties) in any of which events such fees and expenses
shall be borne by the indemnifying party and paid as incurred; provided that the
indemnifying party shall only be responsible for the fees and expenses of one
counsel for the indemnified party or parties hereunder. Anything in this
paragraph to the contrary notwithstanding, the indemnifying party shall not be
liable for any settlement of any such claim or action effected without its
written consent, which consent shall not be unreasonably withheld. No
indemnifying party shall, without the prior written consent of the indemnified
parties, settle or compromise or consent to the entry of any judgment with
respect to any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever in
respect of which indemnification or contribution could be sought under this
Section 6 or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or consent
includes an unconditional release of each indemnified party from all liability
arising out of such litigation, investigation, proceeding or claim.
(d) Settlement without Consent if Failure to Reimburse. If at any time
an indemnified party shall have requested an indemnifying party to reimburse the
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)(ii) effected without its written consent if (i) such settlement is
entered into more than 45 days after receipt by such indemnifying party of the
aforesaid request, (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 such
indemnified party in accordance with such request prior to the date of such
settlement.
19
SECTION 7. Contribution. If the indemnification provided for in Section
6 hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall contribute to
the aggregate amount of such losses, liabilities, claims, damages and expenses
incurred by such indemnified party, as incurred, (a) 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
pursuant to this Agreement or (b) if the allocation provided by clause (a) is
not permitted by applicable law, in such proportion as is appropriate to reflect
not only the relative benefits referred to in clause (a) above but also the
relative fault of the Company on the one hand and of the Underwriters on the
other hand in connection with the untrue statements or omissions that resulted
in such losses, liabilities, claims, damages or expenses, as well as any other
relevant equitable considerations.
The relative benefits received by the Company, on the one hand, and the
Underwriters, on the other hand, in connection with the offering of the
Securities pursuant to this Agreement shall be deemed to be in the same
proportions as the total net proceeds from the offering of the Securities
pursuant to this Agreement (before deducting expenses) received by the Company,
on the one hand, and the total underwriting discounts and commissions received
by the Underwriters, on the other hand, bear to the total gross proceeds from
the offering of the Securities under this Agreement, in each case as set forth
on the cover of the Prospectus.
The relative fault of the Company, on the one hand, and the
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether any untrue statement or omission or alleged untrue
statement or omission relates to information supplied by the Company or by the
Underwriters 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 7 were determined by pro rata
allocation or by any other method of allocation that does not take account of
the equitable considerations referred to above in this Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, the Underwriters
shall not 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 the
Underwriters has otherwise been required to pay by reason of any 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 ▇▇▇▇ ▇▇▇) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
20
For purposes of this Section 7, each person, if any, who controls the
Underwriters within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as the Underwriters, and
each director of the Company, each officer of the Company who signed the
Registration Statement, and each person, if any, who controls the Company within
the meaning of Section 15 of the 1933 Act or Section 20 of the 1934 Act shall
have the same rights to contribution as the Company.
The Underwriters severally confirm and the Company acknowledges that
the statements with respect to the public offering of the Securities by the
Underwriters set forth on the cover page of the Prospectus and the statements in
the paragraphs under the caption "Underwriting--Commission and Expenses",
"--Stabilization, Short Swing Positions," "--Penalty Bids" and "--Discretionary
Sales" section of the Prospectus constitute the only information concerning the
Underwriters furnished in writing to the Company by or on behalf of the
Underwriters for inclusion in the Registration Statement and the Prospectus.
SECTION 8. Defaulting Underwriters. If, at the Closing Time or any Date
of Delivery, any Underwriter defaults in the performance of its obligations
under this Agreement, the remaining non-defaulting Underwriters shall be
obligated to purchase the Securities which the defaulting Underwriter agreed but
failed to purchase at such Closing Time or Date of Delivery, as the case may be,
in the respective portions which the number of Initial Securities set opposite
the name of each remaining non-defaulting Underwriter in Schedule B hereto bears
to the total number of Initial Securities set opposite the names of all the
remaining non-defaulting Underwriters in Schedule B hereto; provided, however,
that the remaining non-defaulting Underwriters shall not be obligated to
purchase any of the Securities at such Closing Time or Date of Delivery, as the
case may be, if the total number of Securities which the defaulting Underwriter
or Underwriters agreed but failed to purchase on any such date exceeds 9.09% of
the total number of Securities to be purchased at such Closing Time or Date of
Delivery, as the case may be, and any remaining non-defaulting Underwriter shall
not be obligated to purchase more than 110% of the number of Securities which it
agreed to purchase at such Closing Time or Date of Delivery, as the case may be,
pursuant to the terms of Section 2. If the foregoing maximums are exceeded, the
remaining non-defaulting Underwriters, or those other underwriters satisfactory
to ▇▇▇▇▇▇▇▇▇ & Company, Inc. who so agree, shall have the right, but shall not
be obligated, to purchase, in such proportion as may be agreed upon among them,
all the Securities to be purchased at such Closing Time or Date of Delivery, as
the case may be. If the remaining Underwriters or other underwriters
satisfactory to ▇▇▇▇▇▇▇▇▇ & Company, Inc. do not elect to purchase the
Securities which the defaulting Underwriter agreed but failed to purchase at
such Closing Time or Date of Delivery, as the case may be, this Agreement (or,
with respect to the Date of Delivery, the obligation of the Underwriters to
purchase, and of the Company to sell, the Option Securities) shall terminate
without liability on the part of any non-defaulting Underwriter or the Company
or its Subsidiaries except that the Company will continue to be liable for the
payment of expenses set forth in Section 4. As used in this agreement, the term
"Underwriter" includes, for all purposes of this Agreement unless the context
requires otherwise, any party not listed in Schedule B hereto who, pursuant to
this Section 8, purchases Initial Securities which a defaulting Underwriter
agreed but failed to purchase.
Nothing contained in herein shall relieve a defaulting Underwriter of
any liability it may have to the Company for damages, including expenses paid by
the Company pursuant to Section
21
4, caused by its default. If other underwriters are obligated or agree to
purchase the Securities of a defaulting Underwriter, either the non-defaulting
Underwriters or the Company may postpone the Closing Time or the Date of
Delivery, as the case may be, for up to seven full business days in order to
effect any changes that in the opinion of counsel for the Company or counsel for
the Underwriters may be necessary in the Registration Statement, the Prospectus
or in any other document or agreement.
SECTION 9. Representations, Warranties and Agreements to Survive
Delivery. All representations, warranties and agreements contained in this
Agreement or in certificates of officers of the Company or any of its
Subsidiaries submitted pursuant hereto, shall remain operative and in full force
and effect, regardless of any investigation made by or on behalf of the
Underwriters or controlling person, or by or on behalf of the Company, and shall
survive delivery of the Securities to the Underwriters.
SECTION 10. Termination of Agreement.
(a) Termination; General. The Underwriters may terminate this
Agreement, by notice to the Company, at any time at or prior to Closing Time (i)
if there has occurred any material adverse change in the financial markets in
the United States, any outbreak of hostilities or escalation thereof or other
calamity or crisis or any change or development involving a prospective change
in national or international political, financial or economic conditions, in
each case the effect of which is such as to make it, in the judgment of the
Underwriters, impracticable to market the Securities or to enforce contracts for
the sale of the Securities, or (ii) if trading in any securities of the Company
has been suspended or materially limited by the Commission or the
New York Stock
Exchange, or if trading generally on the American Stock Exchange, the
New York
Stock Exchange or in the Nasdaq National Market has been suspended or materially
limited, or minimum or maximum prices for trading have been fixed, or maximum
ranges for prices have been required, by any of said exchanges or by such system
or by order of the Commission, the National Association of Securities Dealers,
Inc. or any other governmental authority, or (iii) if a banking moratorium has
been declared by either Federal,
New York or Texas authorities.
(b) Liabilities. If this Agreement is terminated pursuant to this
Section, such termination shall be without liability of any party to any other
party except as provided in Section 4 hereof, and provided further that Sections
1, 6, 7 and 9 shall survive such termination and remain in full force and
effect.
SECTION 11. Notices. All notices and other communications hereunder
shall be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
Underwriters shall be directed to the Underwriters at ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; and notices to the Company
shall be directed to it at ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇,
Attention: Secretary.
22
SECTION 12. Parties. This Agreement shall inure to the benefit of and
be binding upon the Underwriters and the Company and their respective
successors. Nothing expressed or mentioned in this Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
Underwriters and the Company and their respective successors and the controlling
persons and officers, directors and employees referred to in Sections 6 and 7
and their heirs and legal representatives, 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 are intended
to be for the sole and exclusive benefit of the Underwriters and the Company and
their respective successors, and said controlling persons and officers,
directors and employees and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any Underwriters shall be deemed to be a successor by reason merely of such
purchase.
SECTION 13. APPLICABLE LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED
BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO
NEW YORK CITY TIME.
SECTION 14. Effect of Headings. The Article and Section headings herein
and the Table of Contents are for convenience only and shall not affect the
construction hereof.
SECTION 15. Counterparts. This Agreement may be signed in two or more
counterparts, each of which shall be an original, with the same effect as if the
signatures thereto and hereto were upon the same instrument.
23
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this instrument, along with all counterparts, will become a binding agreement
between the Underwriters and the Company in accordance with its terms.
Very truly yours,
KCS ENERGY, INC.
By: /s/ ▇▇▇▇▇ ▇. Christmas
------------------------------------
▇▇▇▇▇ ▇. Christmas
Chairman and Chief
Executive Officer
CONFIRMED AND ACCEPTED,
as of the date first
above written:
JEFFERIES & COMPANY, INC.
By: /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------
Authorized Signatory
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ INC.
By: /s/ ▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
---------------------------------
Authorized Signatory
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ CORP.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇
---------------------------------
Authorized Signatory
For themselves and the other several Underwriters,
if any, named in Schedule B to the foregoing Agreement.
24
SCHEDULE A
KCS ENERGY, INC.
6,000,000 Shares of Common Stock
(Par Value $0.01 Per Share)
1. The public offering price per share for the Securities, determined
as provided in said Section 2, shall be $8.00.
2. The purchase price per share for the Securities to be paid by the
Underwriters shall be $7.58, being an amount equal to the public offering price
set forth above less $0.42 per share.
Schedule A-1
SCHEDULE B
NAME OF UNDERWRITER NUMBER OF INITIAL SECURITIES
------------------- ----------------------------
Jefferies & Company, Inc. 2,700,000
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc. 2,700,000
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corp. 600,000
Schedule B-1
SCHEDULE C
▇▇▇▇▇ ▇. Christmas, Chairman, Chief Executive Officer and Director
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, President, Chief Operating Officer and Director
G. ▇▇▇▇▇▇▇ ▇▇▇▇▇, Director
▇▇▇▇▇ ▇. ▇▇▇▇▇▇, Director
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Director
▇▇▇▇ ▇. ▇▇▇▇▇▇, Director
▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Director
▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇, Senior Vice President, Marketing and Risk Management
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Vice President, Controller and Secretary
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President and Chief Financial Officer
Schedule C-1
EXHIBIT A
FORM OF OPINION OF ▇▇▇▇▇▇▇ ▇▇▇▇▇ LLP
TO BE DELIVERED PURSUANT TO
SECTION 5(b)
1. The Company is validly existing as a corporation in good standing
under the laws of the State of Delaware.
2. The Company has corporate power and authority to own or lease its
properties and to conduct its business, as described in the Registration
Statement and the Prospectus and to execute and deliver, and perform its
obligations under, the Agreement.
3. Each of (a) KCS Resources, Inc. and (b) California Medallion
Properties Company is validly existing as a corporation in good standing under
the laws of the jurisdiction of its incorporation and has corporate power and
authority to own or lease its properties and to conduct its business, as
described in the Registration Statement and the Prospectus; all of the issued
and outstanding capital stock of each Subsidiary has been duly authorized and
validly issued, and is owned of record and, to our knowledge, beneficially by
the Company, directly or through Subsidiaries.
4. The Securities have been duly authorized and, when issued and
delivered in accordance with the terms of the Agreement against payment therefor
as set forth in the Agreement, will be validly issued, fully paid and
non-assessable.
5. The issuance of the Securities is not subject to the preemptive or
other similar rights of any securityholder of the Company pursuant to the
Delaware General Corporation Law, the Restated Certificate of Incorporation, as
amended, and Restated By-Laws, as amended, of the Company or any material
agreement, contract, indenture, mortgage, loan agreement, note, lease or other
agreement or instrument that is described or referred to in the Registration
Statement or the Prospectus or filed or incorporated by reference as an exhibit
to the Registration Statement or the Company's Annual Report on Form 10-K
("Material Agreements").
6. The Agreement has been duly authorized, executed and delivered by
the Company.
7. To our knowledge, neither the Company nor any Subsidiary is in
violation of its charter or bylaws.
8. Neither the offer, sale or delivery of the Securities by the
Company, the execution, delivery or performance of the Agreement by the Company
(including the use of the proceeds from the sale of the Securities as described
in the Prospectus under the caption "Use of Proceeds") nor compliance by the
Company with its obligations under the Agreement constitutes or will constitute,
whether with or without the giving of notice or lapse of time or both, a breach
of, or default or Repayment Event (as defined in Section 1(a)(xi) of the
Agreement) under or result in the creation or imposition of any lien, charge or
encumbrance upon any property or assets of the Company or any Subsidiary
pursuant to any contract, indenture, mortgage, deed of trust, loan or credit
agreement, note, lease or any other agreement or instrument to which the
Exhibit A-1
Company or any Subsidiary 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 Subsidiary is
subject, that has been filed as an exhibit to the Registration Statement or to
the Company's Annual Report on Form 10-K (except for such breaches or defaults
or liens, charges or encumbrances that would not result in a Material Adverse
Effect), nor will any such action result in any violation of (a) the provisions
of the charter or bylaws of the Company or any Subsidiary, (b) any Applicable
Laws (as defined in such counsel's opinion) (assuming compliance with all
applicable state securities and blue sky laws) or (c) any judgment, order, writ
or decree of any court, governmental agency or arbitrator that is known to us to
be applicable to the Company or any Subsidiary or any of their respective
properties, which in the case of clause (b) and (c) would not cause a Material
Adverse Effect.
9. The Registration Statement and the Prospectus, and each amendment or
supplement to the Registration Statement or Prospectus as of their respective
effective or issue dates, appeared on their face to comply in all material
respects with the requirements of the 1933 Act and the 1933 Act Regulations
(except that in each case, we express no opinion as to the financial statements,
schedules and other financial data included therein or excluded therefrom, or
the exhibits thereto).
10. Each of the documents incorporated by reference into the
Registration Statement filed prior to the date hereof appeared on its face to
comply in all material respects with the requirements of the 1934 Act and the
1934 Act Regulations (except that in each case, we express no opinion as to the
financial statements, schedules and other financial data included therein or
excluded therefrom, or the exhibits to any of such documents).
11. The statements in the Registration Statement and the Prospectus
under the caption "Description of Capital Stock," and in the Registration
Statement under Item 15, insofar as they constitute descriptions of contracts,
agreements or other legal documents, or refer to statements of law or legal
conclusions, fairly summarize the matter referred to therein in all material
respects, subject to the qualifications and assumptions stated therein.
12. No Governmental Approval (as defined in such counsel's opinion),
which has not been obtained or taken and is not in full force and effect, is
required as a condition to the execution and delivery by the Company of the
Agreement, or the performance by the Company of its obligations under the
Agreement.
13. The Company is not an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in the 1940
Act.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company and counsel
for and other representatives of the Underwriters at which the contents of the
Registration Statement and the Prospectus and related matters were discussed
and, although such counsel have not independently verified and are not passing
upon, and do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the
Prospectus (except and to the extent set forth in paragraph 11 above), on the
basis of the foregoing, no facts have come to such counsel's attention that have
lead them to believe that at its effective date, the Registration Statement
contained an untrue statement of a material fact or omitted to state a
Exhibit A-2
material fact required to be stated therein or necessary to make the statements
therein not misleading or that, as of the date of the Prospectus or as of the
date hereof, the Prospectus contained or contains an untrue statement of a
material fact or omitted 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, it being understood that such counsel expresses no
statement or belief with respect to (a) the financial statements and related
schedules included therein, including the notes and the auditor's report
thereon, (b) the other information of a financial nature included in the
Registration Statement or the Prospectus and (c) the exhibits to the
Registration Statement.
As used in this letter, the phrase "to our knowledge" or words of
similar import means conscious awareness of facts or other information by the
lawyers in our firm who have devoted substantive attention to legal matters on
behalf of the Company.
In addition, such counsel's opinion shall state that based solely on
its review of a copy of the Effectiveness Order, the Registration Statement was
declared effective under the 1933 Act at 10:00 a.m. (Washington D.C. time) on
September 30, 2003. Such counsel have also been orally advised by the SEC that
no stop order suspending the effectiveness of the Registration Statement has
been issued, and based solely on such counsel's communications with the SEC, to
such counsel's knowledge no proceedings for that purpose have been instituted or
are pending or threatened by the SEC. The Prospectus has been filed pursuant to
Rule 424(b) of the 1933 Act Regulations in the manner and within the time period
required by the Rule.
In rendering such opinion, such counsel may (a) rely in respect of
matters of fact upon certificates of officers and employees of the Company and
upon information obtained from public officials, (b) assume the legal capacity
of all natural persons, that all documents submitted to them as originals are
authentic, that all copies submitted to them conform to the authentic originals
thereof, and that the signatures on all documents examined by them are genuine
and (c) state that their opinion is limited to the Applicable Laws of the State
of Texas, the General Corporation Law of the State of Delaware, the Applicable
Laws of the United States of America and certain specified laws, rules and
regulations of the United States of America to the extent referred to
specifically herein.
"Applicable Laws" of a specified jurisdiction means all laws, rules and
regulations of a specified jurisdiction that, in our experience, are applicable
to transactions of the type contemplated by the Agreement, and which are not the
subject of a specific opinion herein referring expressly to a particular law,
rule or regulation; provided that the term "Applicable Laws" does not include:
(a) any municipal or other local law, rule or regulation, and any other
law, rule or regulation relating to (i) pollution or protection of the
environment, (ii) zoning, land use, building or construction codes or guidelines
or (iii) occupational safety and health or (iv) public utility company
regulation;
(b) antitrust and other laws regulating competition;
(c) antifraud laws;
Exhibit A-3
(d) tax laws, rules or regulations; or
(e) United States federal or state securities or blue sky laws, rules
or regulations.
"Governmental Approval" means any consent, approval, license,
authorization or validation of, or filing, recording or registration with, any
governmental authority pursuant to (i) the Applicable Laws of the State of
Texas, (ii) federal securities laws, rules or regulations, (iii) the Applicable
Laws of the United States of America, or (iv) the General Corporation Law of the
State of Delaware.
Exhibit A-4
EXHIBIT B
November 20, 2003
Jefferies & Company, Inc.
▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc.
▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corp.
c/o Jefferies & Company, Inc.
▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Re: Proposed Public Offering by KCS Energy, Inc.
Dear Sirs:
The undersigned, an executive officer and/or director of KCS Energy,
Inc., a Delaware corporation (the "Company"), understands that Jefferies &
Company, Inc., ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇ Inc. and ▇▇▇▇▇▇ ▇▇▇▇▇▇▇ Corp.
(collectively, the "Underwriters") propose to enter into an
Underwriting
Agreement (the "
Underwriting Agreement") with the Company providing for the
public offering of shares (the "Securities") of the Company's common stock, par
value $.01 per share (the "Common Stock"). In recognition of the benefit that
such an offering will confer upon the undersigned as an executive officer and/or
director of the Company, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the undersigned agrees
with the Underwriters that, during a period commencing on the date of the
Underwriting Agreement and ending on the 90th day after the date of the
Underwriting Agreement, the undersigned will not, without the prior written
consent of the Underwriters, directly or indirectly, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant for the sale of, or
otherwise dispose of or transfer any shares of the Company's Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether now owned or hereafter acquired by the undersigned or with respect to
which the undersigned has or hereafter acquires the power of disposition, or
file any registration statement under the Securities Act of 1933, as amended,
with respect to any of the foregoing or (ii) enter into any swap or any other
agreement or any transaction that transfers, in whole or in part, directly or
indirectly, the economic consequence of ownership of the Common Stock or any
securities convertible into or exchangeable or exercisable for Common Stock,
whether any such swap or transaction is to be settled by delivery of Common
Stock or other securities, in cash or otherwise; provided, however, that the
restrictions in clauses (i) and (ii) above shall not apply to any bona fide gift
of Common Stock or any securities convertible into or exchangeable or
exercisable for Common Stock to a donee; provided that (a) each donee shall
execute and deliver to the Underwriters a duplicate form of this Lock-up
Agreement and (b) no filing by any party (donor or donee) under Section 16(a) of
the Securities Exchange Act of 1934, as amended, shall be required or shall be
made voluntarily in connection with such transfer (other than a filing on Form 5
made after the expiration of the 90-day period referred to above.
Exhibit B-1
Very truly yours,
Signature:
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Print Name:
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Exhibit B-2