EXHIBIT 1.1
7,150,000 Shares
INTERCOAST ENERGY COMPANY
Common Stock
UNDERWRITING AGREEMENT
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July __, 1996
PAINEWEBBER INCORPORATED
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Dear Sirs:
InterCoast Energy Company, a Delaware corporation (the "Company"), and
MidAmerican Capital Company, a Delaware corporation ("Capital"), propose to sell
an aggregate of 7,150,000 shares (the "Firm Shares") of the Company's Common
Stock, par value $.01 per share (the "Common Stock"), of which 6,150,000 shares
are to be issued and sold by the Company and 1,000,000 shares are to be sold by
Capital, in each case to you and to the other underwriters named in Schedule I
(collectively, the "Underwriters"), for whom you are acting as representatives
(the "Representatives"). Capital has also agreed to grant to you and the other
Underwriters an option (the "Option") to purchase up to an additional 1,072,500
shares of Common Stock (the "Option Shares") on the terms and for the purposes
set forth in Section 1(b). The Firm Shares and the Option Shares are hereinafter
collectively referred to as the "Shares." References to the Company and the
Subsidiaries (as hereinafter defined) in this Agreement include the Company's
and the Subsidiaries' predecessors, respectively, to the extent the context so
requires.
The initial public offering price per share for the Shares and the
purchase price per share for the Shares to be paid by the several Underwriters
shall be agreed upon by the Company, Capital and the Representatives, acting on
behalf of the several Underwriters, and such agreement shall be set forth in a
separate written instrument substantially in the form of Exhibit A hereto (the
"Price Determination Agreement"). The Price Determination Agreement may take the
form of an exchange of any standard form of written telecommunication among the
Company, Capital and the
Representatives and shall specify such applicable information as is indicated in
Exhibit A hereto. The offering of the Shares will be governed by this Agreement,
as supplemented by the Price Determination Agreement. From and after the date of
the execution and delivery of the Price Determination Agreement, this Agreement
shall be deemed to incorporate, and, unless the context otherwise indicates, all
references contained herein to "this Agreement" and to the phrase "herein" shall
be deemed to include the Price Determination Agreement.
The Company and Capital confirm as follows their respective agreements
with the Representatives and the several other Underwriters.
1. Agreement to Sell and Purchase.
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(a) On the basis of the respective representations, warranties
and agreements of the Company and Capital, herein contained and subject to all
the terms and conditions of this Agreement, (i) the Company and Capital,
severally and not jointly, agree to sell to the several Underwriters and (ii)
each of the Underwriters, severally and not jointly, agrees to purchase from the
Company and Capital at the purchase price per share for the Firm Shares to be
agreed upon by the Representatives, the Company and Capital in accordance with
Section 1(c) and set forth in the Price Determination Agreement, the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule I, plus
such additional number of Firm Shares which such Underwriter may become
obligated to purchase pursuant to Section 9 hereof. Schedule I may be attached
to the Price Determination Agreement.
(b) Subject to all the terms and conditions of this Agreement,
Capital grants the Option to the several Underwriters to purchase, severally and
not jointly, up to 1,072,500 Option Shares from Capital at the same price per
share as the Underwriters shall pay for the Firm Shares. The Option may be
exercised only to cover over-allotments in the sale of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time (but not more
than once) on or before the 30th day after the date of this Agreement (or, if
the Company has elected to rely on Rule 430A, on or before the 30th day after
the date of the Price Determination Agreement), upon written or telegraphic
notice (the "Option Shares Notice") by the Representatives to Capital no later
than 12:00 noon, New York City time, at least two and no more than five business
days before the date specified for closing in the Option Shares Notice (the
"Option Closing Date") setting forth the aggregate number of Option Shares to be
purchased and the time and date for such purchase. On the Option Closing Date,
Capital will sell to the Underwriters the number of Option Shares set forth in
the Option Shares Notice, and each Underwriter will purchase such percentage of
the Option Shares as is equal to the percentage of Firm Shares that such
Underwriter is purchasing, as adjusted by the Representatives in such manner as
they deem advisable to avoid fractional shares.
(c) If the Company has elected to rely on Rule 430A, the
initial public offering price per share for the Firm Shares and the purchase
price per share for the Firm Shares to be paid by the several Underwriters shall
be agreed upon and set forth in the Price Determination Agreement. In the event
such price has not been agreed upon and the Price Determination
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Agreement has not been executed by the close of business on the fourteenth
business day following the date on which the Registration Statement becomes
effective, this Agreement shall terminate forthwith, without liability of any
party to any other party except that Section 7 shall remain in effect.
2. Delivery and Payment. Delivery of the Firm Shares shall be made
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at the office of PaineWebber Incorporated, 1285 Avenue of the Americas, New
York, New York 10019 to the Representatives for the accounts of the Underwriters
against payment of the purchase price by wire transfer of immediately available
funds (i) to an account designated by the Company with respect to Firm Shares
purchased from the Company and (ii) to an account designated by Capital with
respect to Firm Shares purchased from Capital. Such payments shall be made at
10:00 a.m., New York City time, on the [third][fourth] business day after the
date on which the first bona fide offering of the Shares to the public is made
by the Underwriters or at such time on such other date, not later than ten
business days after such date, as may be agreed upon by the Company and the
Representatives (such date is hereinafter referred to as the "Closing Date").
To the extent the Option is exercised, delivery of the Option Shares
against payment by the Underwriters (in the manner specified above) will take
place at the offices specified above for the Closing Date at the time and date
(which may be the Closing Date) specified in the Option Shares Notice.
Certificates evidencing the Shares shall be in definitive form and
shall be registered in such names and in such denominations as the
Representatives shall request at least two business days prior to the Closing
Date or the Option Closing Date, as the case may be, by written notice to the
Company. For the purpose of expediting the checking and packaging of
certificates for the Shares, the Company agrees to make such certificates
available for inspection at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be.
The cost of original issue tax stamps, if any, in connection with the
issuance and delivery of the Firm Shares by the Company to the respective
Underwriters shall be borne by the Company. The cost of tax stamps, if any, in
connection with the sale of the Firm Shares and the Option Shares by Capital to
the respective Underwriters shall be borne by Capital. The Company and Capital
will pay and save each Underwriter and any subsequent holder of the Shares
harmless from any and all liabilities with respect to or resulting from any
failure or delay in paying Federal and state stamp and other transfer taxes, if
any, which may be payable or determined to be payable in connection with the
original issuance or sale to such Underwriter of the Firm Shares and the Option
Shares.
3. Representations and Warranties of the Company. The Company
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represents, warrants and covenants to each Underwriter that:
(a) A registration statement (Registration No. 333-04525) on
Form S-1 relating to the Shares, including a preliminary prospectus and such
amendments to such registration
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statement as may have been required to the date of this Agreement, has been
prepared by the Company under the provisions of the Securities Act of 1933, as
amended (the "Act"), and the rules and regulations (collectively referred to as
the "Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, and has been filed with the Commission. The term
"preliminary prospectus" as used herein means a preliminary prospectus as
contemplated by Rule 430 or Rule 430A ("Rule 430A") of the Rules and Regulations
included at any time as part of the registration statement. Copies of such
registration statement and amendments and of each related preliminary prospectus
have been delivered to the Representatives. The term "Registration Statement"
means the registration statement as amended at the time it becomes or became
effective (the "Effective Date"), including financial statements and all
exhibits and any information deemed to be included by Rule 430A or Rule 434 of
the Rules and Regulations. If the Company files a registration statement to
register a portion of the Shares and relies on Rule 462(b) of the Rules and
Regulations for such registration statement to become effective upon filing with
the Commission (the "Rule 462 Registration Statement"), then any reference to
the "Registration Statement" shall be deemed to include the Rule 462
Registration Statement, as amended from time to time. The term "Prospectus"
means the prospectus as first filed with the Commission pursuant to Rule 424(b)
of the Rules and Regulations or, if no such filing is required, the form of
final prospectus included in the Registration Statement at the Effective Date.
(b) On the Effective Date, the date the Prospectus is first
filed with the Commission pursuant to Rule 424(b) (if required), at all times
subsequent to and including the Closing Date and, if later, the Option Closing
Date and when any post-effective amendment to the Registration Statement becomes
effective or any amendment or supplement to the Prospectus is filed with the
Commission, the Registration Statement and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any amendment
or supplement thereto), including the financial statements included in the
Prospectus, did or will comply with all applicable provisions of the Act and the
Rules and Regulations and will contain all statements required to be stated
therein in accordance with the Act and the Rules and Regulations. On the
Effective Date and when any post-effective amendment to the Registration
Statement becomes effective, no part of the Registration Statement or any such
amendment did or will contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary in order to
make the statements therein not misleading. At the Effective Date, the date the
Prospectus or any amendment or supplement to the Prospectus is filed with the
Commission and at the Closing Date and, if later, the Option Closing Date, the
Prospectus did not or will not contain any untrue statement of a material fact
or omit to state a material fact necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading. The
foregoing representations and warranties in this Section 3(b) do not apply to
any statements or omissions made in reliance on and in conformity with
information relating to any Underwriter furnished in writing to the Company by
the Representatives specifically for inclusion in the Registration Statement or
the Prospectus or any amendment or supplement thereto. For all purposes of this
Agreement, the Company acknowledges that the statements in the first, third,
sixth and seventh paragraphs under the caption "Underwriting" in the Prospectus
constitute the only information relating to any Underwriter furnished in writing
to the Company by the Representatives
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specifically for inclusion in the Registration Statement, the preliminary
prospectus or the Prospectus. The Company has not distributed any offering
material in connection with the offering or sale of the Shares other than the
Registration Statement, the preliminary prospectus, the Prospectus or any other
materials, if any, permitted by the Act.
(c) The only subsidiaries (as defined in the Rules and
Regulations) of the Company are the subsidiaries listed on Exhibit 21.1 to the
Registration Statement (the "Subsidiaries"). The Company and each of the
Subsidiaries is, and at the Closing Date will be, a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation. The Company and each of the Subsidiaries has, and at the Closing
Date will have, full power and authority to conduct all the activities conducted
by it, to own or lease all the assets owned or leased by it and to conduct its
business as described in the Registration Statement and the Prospectus. The
Company and each of the Subsidiaries is, and at the Closing Date will be, duly
licensed or qualified to do business and in good standing as a foreign
corporation in all jurisdictions in which the nature of the activities conducted
by it or the character of the assets owned or leased by it makes such licensing
or qualification necessary, except where the failure to be duly licensed or
qualified or to be in good standing would not materially and adversely affect
the Company or any of the Subsidiaries or the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company and the Subsidiaries taken as a whole (a "Material Adverse Effect"). All
of the outstanding shares of capital stock of the Subsidiaries have been duly
authorized and validly issued and are fully paid and non-assessable and are
owned by the Company free and clear of all liens, encumbrances and claims
whatsoever. Except for the stock of the Subsidiaries and as disclosed in the
Registration Statement, the Company does not own, and at the Closing Date will
not own, directly or indirectly, any shares of stock or any other equity or
long-term debt securities of any corporation or have any material equity
interest in any firm, partnership, joint venture, association or other entity.
Complete and correct copies of the certificate of incorporation and of the by-
laws of the Company and each of the Subsidiaries and all amendments thereto have
been delivered to the Representatives or their counsel, and no material changes
therein will be made subsequent to the date hereof and prior to the Closing Date
or, if later, the Option Closing Date; provided, however, that the Company shall
provide the Representatives and their counsel with copies of any subsequent
amendments prior to the effectiveness of such amendments.
(d) The outstanding shares of Common Stock have been, and the
Shares to be issued and sold by the Company upon such issuance will be, duly
authorized, validly issued, fully paid and nonassessable and will not be subject
to any preemptive or similar right. The description of the Common Stock in the
Registration Statement and the Prospectus is, and at the Closing Date will be,
complete and accurate in all respects. Except as set forth in the Prospectus,
the Company does not have outstanding, and at the Closing Date will not have
outstanding, any options to purchase, or any rights or warrants to subscribe
for, or any securities or obligations convertible into, or any contracts or
commitments to issue or sell, any shares of Common Stock, any shares of capital
stock of any Subsidiary or any such warrants, convertible securities or
obligations.
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(e) The financial statements and schedules included in the
Registration Statement or the Prospectus present fairly the consolidated
financial condition of the Company as of the respective dates thereof and the
consolidated results of operations and cash flows of the Company for the
respective periods covered thereby, all in conformity with generally accepted
accounting principles applied on a consistent basis throughout the entire period
involved, except as otherwise disclosed in the Prospectus. The pro forma
financial statements and other pro forma financial information included in the
Registration Statement or the Prospectus (i) present fairly in all material
respects the information shown therein, (ii) have been prepared in accordance
with the Commission's rules and guidelines with respect to pro forma financial
statements and (iii) have been properly computed on the bases described therein.
The assumptions used in the preparation of the pro forma financial statements
and other pro forma financial information included in the Registration Statement
or the Prospectus are, in the opinion of the Company, reasonable and the
adjustments used therein are appropriate to give effect to the transactions or
circumstances referred to therein. No other financial statements or schedules of
the Company are required by the Act or the Rules and Regulations to be included
in the Registration Statement or the Prospectus. Arthur Andersen LLP (the
"Accountants"), who have reported on such financial statements and schedules,
are independent accountants with respect to the Company as required by the Act
and the Rules and Regulations. The statements included in the Registration
Statement with respect to the Accountants pursuant to Item 509 of Regulation S-K
of the Rules and Regulations are true and correct in all material respects.
(f) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorization; (ii)
transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv) the
recorded accountability for assets is compared with existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(g) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus and prior to the
Closing Date, except as set forth in or contemplated by the Registration
Statement and the Prospectus, (i) there has not been and will not have been any
change in the capitalization of the Company, or any material adverse change in
the business, properties, business prospects, condition (financial or otherwise)
or results of operations of the Company and the Subsidiaries, arising for any
reason whatsoever, (ii) neither the Company nor any of the Subsidiaries has
incurred nor will it incur any material liabilities or obligations, direct or
contingent, nor has it entered into nor will it enter into any material
transactions other than pursuant to this Agreement and the transactions referred
to herein and (iii) the Company has not and will not have paid or declared any
dividends or other distributions of any kind on any class of its capital stock.
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(h) The Company is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company," as such terms are defined in the Investment Company Act of 1940, as
amended.
(i) Except as set forth in the Registration Statement and the
Prospectus, there are no actions, suits or proceedings pending or, to the best
of the Company's knowledge, threatened against or affecting the Company or any
of the Subsidiaries or any of their respective officers in their capacity as
such, before or by any Federal or state court, commission, regulatory body,
administrative agency or other governmental body, domestic or foreign, wherein
an unfavorable ruling, decision or finding might result in a Material Adverse
Effect.
(j) The Company and each of the Subsidiaries has, and at the
Closing Date will have, (i) all material governmental licenses, permits,
consents, orders, approvals and other authorizations necessary to carry on its
business as described in the Prospectus, (ii) complied in all material respects
with all laws, regulations and orders applicable to it or its business and (iii)
performed all its material obligations required to be performed by it, and is
not, and at the Closing Date will not be, in default, under any indenture,
mortgage, deed of trust, voting trust agreement, loan agreement, bond,
debenture, note agreement, lease, contract or other agreement or instrument
(collectively, a "contract or other agreement") to which it is a party or by
which its property is bound or affected. To the best knowledge of the Company
and each of the Subsidiaries, no other party under any contract or other
agreement to which it is a party is in default in any respect thereunder.
Neither the Company nor any of the Subsidiaries is, nor at the Closing Date will
any of them be, in violation of any provision of its certificate of
incorporation or by-laws.
(k) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is required
in connection with the authorization, issuance, transfer, sale or delivery of
the Shares by the Company, in connection with the execution, delivery and
performance of this Agreement by the Company or in connection with the taking by
the Company of any action contemplated hereby, except such as have been obtained
under the Act or the Rules and Regulations and such as may be required under
state securities or Blue Sky laws or the by-laws and rules of the National
Association of Securities Dealers, Inc. (the "NASD") in connection with the
purchase and distribution by the Underwriters of the Shares.
(l) The Company has full corporate power and authority to enter
into this Agreement. This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding agreement of the
Company and is enforceable against the Company in accordance with the terms
hereof (subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles). The execution and delivery
of this Agreement by the Company and the performance of this Agreement and the
consummation of the transactions contemplated hereby and the application of the
net proceeds from the offering and sale of the Firm Shares to be sold by the
Company in the manner set forth in the Prospectus under "Use of Proceeds" will
not result in the creation or imposition of any lien, charge or encumbrance upon
any of the assets
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of the Company or any of the Subsidiaries pursuant to the terms or provisions
of, or result in a breach or violation of any of the terms or provisions of, or
constitute a default under, or give any other party a right to terminate any of
its obligations under, or result in the acceleration of any obligation under,
the certificate of incorporation or by-laws of the Company or any of the
Subsidiaries, any contract or other agreement to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the Subsidiaries or
any of their respective properties is bound or affected, or violate or conflict
with any judgment, ruling, decree, order, statute, rule or regulation of any
court or other governmental agency or body applicable to the business or
properties of the Company or any of the Subsidiaries.
(m) Except as to their interests in oil and gas leases, the
Company and each of the Subsidiaries have good and marketable title to all
properties and assets described in the Prospectus as owned by them, free and
clear of all liens, charges, encumbrances or restrictions, except such as are
described in the Prospectus or are not material to the business of the Company
or the Subsidiaries. Except as to their interests in oil and gas leases, the
Company and each of the Subsidiaries have valid, subsisting and enforceable
leases for the properties described in the Prospectus as leased by them, with
such exceptions as are not material and do not materially interfere with the use
made and proposed to be made of such properties by the Company and the
Subsidiaries. The Company and each of the Subsidiaries have good and defensible
title to their respective interests in oil and gas leases, free and clear of any
security interests, mortgages, pledges, liens, encumbrances, charges, defects or
restrictions of any kind or character, other than (i) those described in the
Prospectus; (ii) liens and encumbrances under operating agreements, unitization
and pooling arrangements and gas sales contracts that secure payment of amounts
not yet due and payable and which are of a nature and scope customary in
connection with similar oil and gas drilling and producing operations; and (iii)
those that do not have a Material Adverse Effect. The Company and each of the
Subsidiaries have conducted such title investigations and have acquired their
respective interests in oil and gas leases in such manner as is customary in the
oil and gas industry. The Company and each of the Subsidiaries have complied in
all material respects with the terms of the oil and gas leases in which they
purport to own an interest, and no claim of any sort has been asserted by anyone
adverse to the rights of the Company or any Subsidiary as lessee or sublessee
under any of such leases or questioning their respective rights to the continued
possession of the leased premises under any such lease, except with respect to
any such default or claim which would not have a Material Adverse Effect. The
concessions, reservations, licenses, permits and rights to hydrocarbons held by
the Company and the Subsidiaries are valid, subsisting and enforceable with such
exceptions as are described in the Prospectus or which would not have a Material
Adverse Effect.
(n) There is no document or contract of a character required to
be described in the Registration Statement or the Prospectus or to be filed as
an exhibit to the Registration Statement which is not described or filed as
required. All such contracts to which the Company or any Subsidiary is a party
have been duly authorized, executed and delivered by the Company or such
Subsidiary, constitute valid and binding agreements of the Company or such
Subsidiary and are enforceable against the Company or such Subsidiary in
accordance with the terms
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thereof (subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles).
(o) No statement, representation, warranty or covenant made by
the Company in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Representatives was or will be, when made,
inaccurate, untrue or incorrect.
(p) None of the Company or any of its directors, officers or
controlling persons has taken, directly or indirectly, any action intended, or
which might reasonably be expected, to cause or result, under the Act or
otherwise, in, or which has constituted, stabilization or manipulation of the
price of any security of the Company to facilitate the sale or resale of the
Shares.
(q) No holder of securities of the Company has rights to the
registration of any securities of the Company because of the filing of the
Registration Statement.
(r) The Shares are duly authorized for listing, subject to
official notice of issuance, on the New York Stock Exchange.
(s) Neither the Company nor any of the Subsidiaries is involved
in any material labor dispute nor, to the knowledge of the Company, is any such
dispute threatened.
(t) The Company and the Subsidiaries own, or possess adequate
rights to use in all material respects, all patents, patent applications,
trademarks, trademark registrations, applications for trademark registration,
trade names, service marks, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable proprietary or
confidential technology, information, systems, design methodologies and devices
or procedures developed or derived from the Company's business), trade secrets,
confidential information, processes and formulations (collectively,
"Intellectual Property") necessary for or used in the conduct of their
respective businesses as currently conducted. The Company has not received any
notice of conflict with the asserted rights of others with respect to their
Intellectual Property, and, to the Company's knowledge, it has not infringed and
is not infringing upon the Intellectual Property of others. To the knowledge of
the Company, no others have infringed upon or are in conflict with its
Intellectual Property.
(u) Neither the Company nor any of the Subsidiaries nor, to the
Company's knowledge, any employee or agent of the Company or any Subsidiary has
made any payment of funds of the Company or any Subsidiary or received or
retained any funds in violation of any law, rule or regulation or of a character
required to be disclosed in the Prospectus.
(v) The Company has complied, and until the completion of the
distribution of the Shares will comply, with all of the provisions of
(including, without limitation,
9
filing all forms required by) Section 517.075 of the Florida Securities and
Investor Protection Act and regulation 3E-900.001 issued thereunder with respect
to the offering and sale of the Shares.
(w) The Tax Sharing Agreement dated as of July , 1996 (the "Tax
Sharing Agreement"), the Administrative Services Agreement dated as of July ,
1996 (the "Administrative Services Agreement"), the Registration Rights
Agreement dated as of July , 1996 (the "Registration Rights Agreement"), the
Indemnification Agreement dated as of July , 1996 (the "Indemnification
Agreement") and the Sublease dated as of July , 1996 (the "Sublease"), each
between the Company and Capital, in substantially the forms filed as exhibits to
the Registration Statement, have been duly authorized, executed and delivered
by, and are the valid and binding obligations of, the Company. There is no
transaction or relationship between the Company and any affiliate of the
Company, including, without limitation, Capital, required to be described in the
Registration Statement or the Prospectus which is not described as required.
(x) The information upon which were based the estimates of
reserves in the reserve reports for the oil and gas properties of the Company
and the Subsidiaries prepared by Netherland, Sewell and Associates, Inc. (with
respect to reserves at December 31, 1994, December 31, 1995 and January 1, 1996)
and Crowell and Crowell (with respect to reserves at December 31, 1992 and
December 31, 1993) (the "Engineers"), to the extent provided by the Company or
any Subsidiary, was at the time of delivery thereof complete and accurate in all
material respects. Each Engineer is a firm of independent petroleum engineers.
Information in the Prospectus regarding estimates of reserves, future net cash
flows and present values of estimated net cash flows comply in all material
respects with the applicable requirements of Rule 4-10 of Regulation S-X and
Industry Guide 2 under the Act.
(y) The Company and the Subsidiaries carry, or are covered by,
insurance in such amounts and covering such risks as is adequate for the conduct
of their businesses and the value of their properties and as is customary for
companies engaged in similar businesses in similar industries.
(z) Except as described in the Prospectus, there has been no
storage, disposal, generation, manufacture, spill, discharge, refinement,
transportation, handling or treatment of toxic wastes, hazardous wastes or
hazardous substances by the Company or any Subsidiary (or to the knowledge of
the Company, any of its predecessors in interest) at, upon or from any of the
property now or previously owned or leased or under contract for purchase by the
Company or any Subsidiary in violation of any applicable law, ordinance, rule,
regulation, order, judgement, decree or permit or which would require remedial
action under any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit, except for any violation or remedial action which would not
result in, or which would not be reasonably likely to result in, singularly or
in the aggregate with all such violations and remedial actions, any Material
Adverse Effect. The terms "hazardous wastes," "toxic wastes" and "hazardous
substances" shall have the meanings specified in any applicable local, state,
federal and foreign laws or regulations with respect to environmental
protection.
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4. Representations and Warranties of Capital. Capital represents,
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warrants and covenants to each Underwriter that:
(a) Capital is a corporation duly organized, validly existing
and in good standing under the laws of the State of Delaware and has full
corporate power and authority to enter into this Agreement and to sell, transfer
and deliver the Shares to be sold by it pursuant to this Agreement. All
authorizations and consents necessary for the execution and delivery of this
Agreement by Capital have been given. This Agreement has been duly authorized,
executed and delivered by Capital and constitutes a valid and binding agreement
of Capital and is enforceable against Capital in accordance with the terms
hereof (subject to bankruptcy, insolvency, fraudulent transfer, reorganization,
moratorium and similar laws of general applicability relating to or affecting
creditors' rights and to general equity principles).
(b) Capital now has, and at the time of delivery thereof
hereunder will have, (i) good and marketable title to the Shares to be sold by
Capital hereunder, free and clear of all liens, encumbrances and claims
whatsoever and (ii) full legal right and power, and all authorizations and
approvals required by law, to sell, transfer and deliver such Shares to the
Underwriters hereunder and to make the representations, warranties and
agreements made by Capital herein. Upon the delivery of and payment for such
Shares hereunder, Capital will deliver good and marketable title thereto, free
and clear of all liens, encumbrances and claims whatsoever.
(c) On the Closing Date or the Option Closing Date, as the case
may be, all stock transfer or other taxes (other than income taxes) which are
required to be paid in connection with the sale and transfer of the Shares to be
sold by Capital to the several Underwriters hereunder will have been fully paid
or provided for by Capital and all laws imposing such taxes will have been fully
complied with.
(d) The performance of this Agreement and the consummation of
the transactions contemplated hereby will not result in the creation or
imposition of any lien, charge or encumbrance upon any of the assets of Capital
pursuant to the terms or provisions of, or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, or result in
the acceleration of any obligation under, the certificate of incorporation or
by-laws of Capital, any contract or other agreement to which Capital is a
party or by which Capital or any of its property is bound or affected, or
violate or conflict with any ruling, decree, judgment, order, statute, rule or
regulation of any court or other governmental agency or body having jurisdiction
over Capital or the property of Capital.
(e) No consent, approval, authorization or order of, or any
filing or declaration with, any court or governmental agency or body is required
for the consummation by Capital of the transactions on its part contemplated
herein, except such as have been obtained under the Act or the Rules and
Regulations and such as may be required under state securities or Blue Sky laws
or the by-laws and rules of the NASD in connection with the purchase and
distribution by the Underwriters of the Shares to be sold by Capital.
11
(f) Capital has no knowledge of any material fact or condition
not set forth in the Registration Statement or the Prospectus which has
adversely affected, or may adversely affect, the business, properties, business
prospects, condition (financial or otherwise) or results of operations of the
Company, and the sale of the Shares proposed to be sold by Capital is not
prompted by any such knowledge.
(g) All information with respect to Capital contained in the
Registration Statement and the Prospectus (as amended or supplemented, if the
Company shall have filed with the Commission any amendment or supplement
thereto) complied and will comply with all applicable provisions of the Act and
the Rules and Regulations, contains and will contain all statements required to
be stated therein in accordance with the Act and the Rules and Regulations, and
does 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 in order to
make the statements therein not misleading.
(h) To the best knowledge of Capital, the representations and
warranties of the Company contained in Section 3 are true and correct.
(i) Other than as permitted by the Act and the Rules and
Regulations, Capital has not distributed and will not distribute any preliminary
prospectus, the Prospectus or any other offering material in connection with the
offering and sale of the Shares. Capital has not taken, directly or indirectly,
any action intended, or which might reasonably be expected, to cause or result
in, under the Act or otherwise, or which has caused or resulted in,
stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
(j) No statement, representation, warranty or covenant made by
Capital in this Agreement or made in any certificate or document required by
this Agreement to be delivered to the Representatives was or will be, when made,
inaccurate, untrue or incorrect.
(k) Capital is not an "investment company" or an "affiliated
person" of, or "promoter" or "principal underwriter" for, an "investment
company", as such terms are defined in the Investment Company Act of 1940, as
amended.
(l) The Tax Sharing Agreement, the Administrative Services
Agreement, the Registration Rights Agreement, the Indemnification Agreement and
the Sublease, each between the Company and Capital, in substantially the forms
filed as exhibits to the Registration Statement, have been duly authorized,
executed and delivered by, and are the valid and binding obligations of,
Capital. There is no transaction or relationship between the Company and Capital
required to be described in the Registration Statement or the Prospectus which
is not described as required.
5. Agreements of the Company and Capital. The Company (as to
-------------------------------------
Sections 5(a) through 5(n)) and Capital (as to Sections 5(i), (j), (k), (o),
(p), (q) and (r)) agree, severally and not jointly, with the several
Underwriters as follows:
12
(a) The Company will not, either prior to the Effective Date or
thereafter during such period as the Prospectus is required by law to be
delivered in connection with sales of the Shares by an Underwriter or dealer,
file any amendment or supplement to the Registration Statement or the
Prospectus, unless a copy thereof shall first have been submitted to the
Representatives within a reasonable period of time prior to the filing thereof
and the Representatives shall not have objected thereto in good faith.
(b) The Company will use every reasonable effort to cause the
Registration Statement to become effective, and will notify the Representatives
promptly, and will confirm such notice in writing, (1) when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective, (2) of any request by the Commission for amendments or
supplements to the Registration Statement or the Prospectus or for additional
information, (3) of the issuance by the Commission of any stop order suspending
the effectiveness of the Registration Statement or the initiation of any
proceedings for that purpose or the threat thereof, (4) of the happening of any
event during the period mentioned in the second sentence of Section 5(e) that in
the judgment of the Company makes any statement made in the Registration
Statement or the Prospectus untrue or that requires the making of any changes in
the Registration Statement or the Prospectus in order to make the statements
therein, in the light of the circumstances in which they are made, not
misleading and (5) of receipt by the Company or any representative or attorney
of the Company of any other substantive communication from the Commission
relating to the Company, the Registration Statement, any preliminary prospectus
or the Prospectus. If at any time the Commission shall issue any order
suspending the effectiveness of the Registration Statement, the Company will
make every reasonable effort to obtain the withdrawal of such order at the
earliest possible moment. The Company will use its best efforts to comply with
the provisions of and make all requisite filings with the Commission pursuant to
Rule 430A and to notify the Representatives promptly of all such filings.
(c) The Company will furnish to the Representatives, without
charge, three signed copies of the Registration Statement and of any post-
effective amendment thereto, including financial statements and schedules, and
all exhibits thereto, and will furnish to the Representatives, without charge,
for transmittal to each of the other Underwriters, a copy of the Registration
Statement and any post-effective amendment thereto, including financial
statements and schedules but without exhibits.
(d) The Company will comply with all the provisions of any
undertakings contained in the Registration Statement.
(e) On the Effective Date, and thereafter from time to time, the
Company will deliver to each of the Underwriters, without charge, as many copies
of the Prospectus or any amendment or supplement thereto as the Representatives
may reasonably request. The Company consents to the use of the Prospectus or any
amendment or supplement thereto by the several Underwriters and by all dealers
to whom the Shares may be sold, both in connection with the offering or sale of
the Shares and for any period of time thereafter during which the Prospectus is
13
required by law to be delivered in connection therewith. If during such period
of time any event shall occur which in the judgment of the Company or counsel to
the Underwriters should be set forth in the Prospectus in order to make any
statement therein, in the light of the circumstances under which it was made,
not misleading, or if it is necessary to supplement or amend the Prospectus to
comply with law, the Company will forthwith prepare and duly file with the
Commission an appropriate supplement or amendment thereto, and will deliver to
each of the Underwriters, without charge, such number of copies thereof as the
Representatives may reasonably request.
(f) Prior to any public offering of the Shares by the
Underwriters, the Company will cooperate with the Representatives and counsel to
the Underwriters in connection with the registration or qualification of the
Shares for offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Representatives may request; provided, that in no event
shall the Company be obligated to qualify to do business in any jurisdiction
where it is not now so qualified or to take any action which would subject it to
general service of process in any jurisdiction where it is not now so subject.
(g) During the period of five years commencing on the Effective
Date, the Company will furnish to the Representatives and each other Underwriter
who may so request copies of such financial statements and other periodic and
special reports as the Company may from time to time distribute generally to the
holders of any class of its capital stock, and will furnish to the
Representatives and each other Underwriter who may so request a copy of each
annual or other report it shall be required to file with the Commission.
(h) The Company will make generally available to holders of its
securities as soon as may be practicable but in no event later than the last day
of the fifteenth full calendar month following the calendar quarter in which the
Effective Date falls, an earnings statement (which need not be audited but shall
be in reasonable detail) for a period of 12 months ended commencing after the
Effective Date, and satisfying the provisions of Section 11(a) of the Act
(including Rule 158 of the Rules and Regulations).
(i) Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement is terminated, the Company and
Capital, jointly and severally, will pay, or reimburse if paid by the
Representatives, all costs and expenses incident to the performance of the
obligations of the Company and Capital under this Agreement, including but not
limited to costs and expenses of or relating to (1) the preparation, printing
and filing of the Registration Statement and exhibits to it, each preliminary
prospectus, the Prospectus and any amendment or supplement to the Registration
Statement or the Prospectus, (2) the preparation and delivery of certificates
representing the Shares, (3) the printing of this Agreement, the Agreement Among
Underwriters, any Dealer Agreements and any Underwriters' Questionnaire, (4)
furnishing (including costs of shipping, mailing and courier) such copies of the
Registration Statement, the Prospectus and any preliminary prospectus, and all
amendments and supplements thereto, as may be requested for use in connection
with the offering and sale of the Shares by the Underwriters or by dealers to
whom Shares may be sold, (5) the listing of the Shares on the New York Stock
Exchange, (6) any filings
14
required to be made by the Underwriters with the NASD, and the fees,
disbursements and other charges of counsel for the Underwriters in connection
therewith, (7) the registration or qualification of the Shares for offer and
sale under the securities or Blue Sky laws of such jurisdictions designated
pursuant to Section 5(f), including the fees, disbursements and other charges of
counsel to the Underwriters in connection therewith, and the preparation and
printing of preliminary, supplemental and final Blue Sky memoranda, (8) counsel
to the Company and counsel to Capital, (9) the transfer agent for the Shares,
(10) the Accountants and (11) the Engineers.
(j) If this Agreement shall be terminated by the Company or
Capital pursuant to any of the provisions hereof (otherwise than pursuant to
Section 9) or if for any reason the Company or Capital shall be unable to
perform its obligations hereunder, the Company and Capital, jointly and
severally, will reimburse the several Underwriters for all out-of-pocket
expenses (including the fees, disbursements and other charges of counsel to the
Underwriters) reasonably incurred by them in connection herewith.
(k) The Company and Capital will not at any time, directly or
indirectly, take any action intended, or which might reasonably be expected, to
cause or result in, or which will constitute, stabilization of the price of the
shares of Common Stock to facilitate the sale or resale of any of the Shares.
(l) The Company will apply the net proceeds from the offering
and sale of the Shares to be sold by the Company in the manner set forth in the
Prospectus under "Use of Proceeds" and shall file such reports with the
Commission with respect to the sale of the Shares and the application of the
proceeds therefrom as may be required in accordance with Rule 463 under the Act.
(m) During the period of 180 days commencing at the Closing
Date, the Company will not, without the prior written consent of PaineWebber
Incorporated, grant options to purchase shares of Common Stock at a price less
than the initial public offering price.
(n) The Company will not, and will cause each of its executive
officers and directors to enter into agreements with the Representatives in the
form set forth in Exhibit B to the effect that they will not, for a period of
180 days after the commencement of the public offering of the Shares, without
the prior written consent of PaineWebber Incorporated, sell, contract to sell or
otherwise dispose of any shares of Common Stock or rights to acquire such shares
(other than pursuant to the Company's employee stock option plans or in
connection with other employee incentive compensation or director compensation
arrangements of the Company).
(o) Capital will not, for a period of 180 days after the
commencement of the public offering of the Shares, without the prior written
consent of PaineWebber Incorporated, sell, contract to sell or otherwise dispose
of any shares of Common Stock.
15
(p) Capital will not, without the prior written consent of
PaineWebber Incorporated, make any bid for or purchase any shares of Common
Stock during the 120-day period following the date hereof.
(q) As soon as Capital is advised thereof, Capital will advise
PaineWebber Incorporated and confirm such advice in writing, (1) of receipt by
Capital, or by any representative of Capital, of any communication from the
Commission relating to the Registration Statement, the Prospectus or any
preliminary prospectus, or any notice or order of the Commission relating to the
Company or Capital in connection with the transactions contemplated by this
Agreement and (2) of the happening of any event during the period from and after
the Effective Date that in the judgment of Capital makes any statement made in
the Registration Statement or the Prospectus untrue or that requires the making
of any changes in the Registration Statement or the Prospectus in order to make
the statements therein, in light of the circumstances in which they were made,
not misleading.
(r) Capital will deliver to PaineWebber Incorporated prior to or
on the Effective Date a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified by Treasury
Department regulations in lieu thereof).
6. Conditions of the Obligations of the Underwriters. In addition to
-------------------------------------------------
the execution and delivery of the Price Determination Agreement, the obligations
of each Underwriter hereunder are subject to the following conditions:
(a) Notification that the Registration Statement has become
effective shall be received by the Representatives not later than 5:00 p.m., New
York City time, on the date of this Agreement or at such later date and time as
shall be consented to in writing by the Representatives and all filings required
by Rule 424 of the Rules and Regulations and Rule 430A shall have been made.
(b) (i) No stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall be pending or threatened by the Commission, (ii) no order
suspending the effectiveness of the Registration Statement or the qualification
or registration of the Shares under the securities or Blue Sky laws of any
jurisdiction shall be in effect and no proceeding for such purpose shall be
pending before or threatened or contemplated by the Commission or the
authorities of any such jurisdiction, (iii) any request for additional
information on the part of the staff of the Commission or any such authorities
shall have been complied with to the satisfaction of the staff of the Commission
or such authorities and (iv) after the date hereof no amendment or supplement to
the Registration Statement or the Prospectus shall have been filed unless a copy
thereof was first submitted to the Representatives and the Representatives did
not object thereto in good faith, and the Representatives shall have received
certificates, dated the Closing Date and the Option Closing Date and signed by
the Chief Executive Officer or the Chairman of the Board of Directors of the
Company and the Chief Financial Officer of the Company (who may, as to
proceedings threatened, rely upon the best of their information and belief), to
the effect of clauses (i), (ii) and (iii).
16
(c) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, (i) there shall not have been
a material adverse change in the general affairs, business, business prospects,
properties, management, condition (financial or otherwise) or results of
operations of the Company and the Subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, in each case other
than as set forth in or contemplated by the Registration Statement and the
Prospectus and (ii) neither the Company nor any of the Subsidiaries shall have
sustained any material loss or interference with its business or properties from
fire, explosion, flood or other casualty, whether or not covered by insurance,
or from any labor dispute or any court or legislative or other governmental
action, order or decree, which is not set forth in the Registration Statement
and the Prospectus, if in the judgment of the Representatives any such
development makes it impracticable or inadvisable to consummate the sale and
delivery of the Shares by the Underwriters at the initial public offering price.
(d) Since the respective dates as of which information is given
in the Registration Statement and the Prospectus, there shall have been no
litigation or other proceeding instituted against the Company or any of the
Subsidiaries or any of their respective officers or directors in their
capacities as such, before or by any Federal, state or local court, commission,
regulatory body, administrative agency or other governmental body, domestic or
foreign, in which litigation or proceeding an unfavorable ruling, decision or
finding would have a Material Adverse Effect.
(e) Each of the representations and warranties of the Company
and Capital contained herein shall be true and correct in all material respects
at the Closing Date and, with respect to the Option Shares, at the Option
Closing Date, as if made at the Closing Date and, with respect to the Option
Shares, at the Option Closing Date, and all covenants and agreements herein
contained to be performed on the part of the Company and Capital and all
conditions herein contained to be fulfilled or complied with by the Company and
Capital at or prior to the Closing Date and, with respect to the Option Shares,
at or prior to the Option Closing Date, shall have been duly performed,
fulfilled or complied with.
(f) The Representatives shall have received opinions, each dated
the Closing Date and, with respect to the Option Shares, the Option Closing
Date, and satisfactory in form and substance to counsel for the Underwriters,
from Conner & Winters, counsel to the Company, to the effect set forth in
Exhibit C and from James R. Barnett, Associate General Counsel of Capital, to
the effect set forth in Exhibit D.
(g) The Representatives shall have received an opinion, dated
the Closing Date and the Option Closing Date, from Baker & Botts, L.L.P.,
counsel to the Underwriters, with respect to the Registration Statement, the
Prospectus and this Agreement, which opinion shall be satisfactory in all
respects to the Representatives.
(h) On the date of the Prospectus, the Accountants shall have
furnished to the Representatives a letter, dated the date of its delivery,
addressed to the Representatives and
17
in form and substance satisfactory to the Representatives, confirming that they
are independent accountants with respect to the Company as required by the Act
and the Rules and Regulations and with respect to the financial (including pro
forma) and other statistical and numerical information contained in the
Registration Statement. At the Closing Date and, as to the Option Shares, the
Option Closing Date, the Accountants shall have furnished to the Representatives
a letter, dated the date of its delivery, which shall confirm, on the basis of a
review in accordance with the procedures set forth in the letter from the
Accountants, that nothing has come to their attention during the period from the
date of the letter referred to in the prior sentence to a date (specified in the
letter) not more than two business days prior to the Closing Date and the Option
Closing Date which would require any change in their letter dated the date of
the Prospectus, if it were required to be dated and delivered at the Closing
Date and the Option Closing Date.
(i) On the date of the Prospectus and at the Closing Date and, as
to the Option Shares, the Option Closing Date, Netherland, Sewell and
Associates, Inc. shall have furnished to the Representatives a letter, dated the
date of its delivery, addressed to the Representatives and in form and substance
satisfactory to the Representatives, confirming that they are independent
petroleum engineers with respect to the Company and with respect to certain of
the oil and gas information contained in the Registration Statement.
(j) At the Closing Date and, as to the Option Shares, the Option
Closing Date, there shall be furnished to the Representatives an accurate
certificate, dated the date of its delivery, signed by each of the Chief
Executive Officer and the Chief Financial Officer of the Company, in form and
substance satisfactory to the Representatives, to the effect that:
(i) Each signer of such certificate has carefully examined
the Registration Statement and the Prospectus and (A) as of the date of
such certificate, such documents are true and correct in all material
respects and do not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not untrue or
misleading and (B) since the Effective Date, no event has occurred as a
result of which it is necessary to amend or supplement the Prospectus in
order to make the statements therein not untrue or misleading in any
material respect.
(ii) To the best of their knowledge after reasonable
investigation, each of the representations and warranties of the Company
contained in this Agreement were, when originally made, and are, at the
time such certificate is delivered, true and correct in all material
respects.
(iii)Each of the covenants required herein to be performed
by the Company on or prior to the delivery of such certificate has been
duly, timely and fully performed and each condition herein required to be
complied with by the Company on or prior to the delivery of such
certificate has been duly, timely and fully complied with.
18
(k) At the Closing Date and, as to the Option Shares, the Option
Closing Date, there shall be furnished to the Representatives an accurate
certificate on behalf of Capital, dated the date of its delivery, signed by the
President or any Vice President and the principal financial officer of Capital,
in form and substance satisfactory to the Representatives, to the effect that
(i), to the best of their knowledge after reasonable investigation, each of the
representations and warranties of Capital contained in this Agreement were, when
originally made, and are, at the time such certificate is delivered, true and
correct in all material respects and (ii) each of the covenants required herein
to be performed by Capital on or prior to the delivery of such certificate has
been duly, timely and fully performed and each condition herein required to be
complied with by Capital on or prior to the delivery of such certificate has
been duly, timely and fully complied with.
(l) On or prior to the Closing Date, the Representatives shall
have received the executed agreements referred to in Section 5(n).
(m) The Shares shall be qualified for sale in such states as the
Representatives may reasonably request, and each such qualification shall be in
effect and not subject to any stop order or other proceeding on the Closing Date
and the Option Closing Date.
(n) Prior to the Closing Date, the Shares shall have been duly
authorized for listing by the New York Stock Exchange upon official notice of
issuance.
(o) The Company and Capital shall have furnished to the
Representatives such certificates, in addition to those specifically mentioned
herein, as the Representatives may have reasonably requested as to the accuracy
and completeness at the Closing Date and the Option Closing Date of any
statement in the Registration Statement or the Prospectus, as to the accuracy at
the Closing Date and the Option Closing Date of the representations and
warranties of the Company and Capital herein, as to the performance by the
Company and Capital of their respective obligations hereunder, or as to the
fulfillment of the conditions concurrent and precedent to the obligations
hereunder of the Representatives.
7. Indemnification.
---------------
(a) Each of the Company and Capital, jointly and severally,
(subject to the provisions of subsection (e) below), will indemnify and hold
harmless each Underwriter, the directors, officers, employees and agents of each
Underwriter and each person, if any, who controls each Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Securities Exchange Act of
1934, as amended (the "Exchange Act"), from and against any and all losses,
claims, liabilities, expenses and damages (including any and all investigative,
legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding between any of the
indemnified parties and any indemnifying parties or between any indemnified
party and any third party, or otherwise, or any claim asserted), to which they,
or any of them, may become subject under the Act, the Exchange Act or other
Federal or state statutory law or regulation, at common law or otherwise,
insofar as such losses, claims, liabilities, expenses or
19
damages arise out of or are based on any untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment or supplement to the
Registration Statement or the Prospectus, or the omission or alleged omission to
state in such document a material fact required to be stated in it or necessary
to make the statements in it not misleading; provided, however, that the Company
-------- -------
and Capital will not be liable to the extent that such loss, claim, liability,
expense or damage is based on an untrue statement or omission or alleged untrue
statement or omission made in reliance on and in conformity with information
relating to any Underwriter furnished in writing to the Company by the
Representatives on behalf of any Underwriter expressly for inclusion in the
Registration Statement, any preliminary prospectus or the Prospectus; and
provided, further, that this indemnity agreement with respect to any untrue
- -------- -------
statement or omission or alleged untrue statement or omission made in any
preliminary prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such loss, claim, liability, expense or damage
purchased Shares (or any person who controls such Underwriter within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act) to the extent that a
copy of the Prospectus (as then amended or supplemented and furnished by the
Company to such Underwriter) was not sent or given by or on behalf of such
Underwriter to such person at or prior to the sale of such Shares and if the
Prospectus (as so amended or supplemented) would have cured the defect giving
rise to such loss, claim, liability, expense or damage and the Company has
complied with its obligations under Section 5(e) hereof. This indemnity
agreement will be in addition to any liability that the Company or Capital might
otherwise have.
(b) Each Underwriter will indemnify and hold harmless the Company and
Capital, each person, if any, who controls the Company or Capital within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act, each
director of the Company and each officer of the Company who signs the
Registration Statement to the same extent as the foregoing indemnity from the
Company and Capital to each Underwriter, but only insofar as losses, claims,
liabilities, expenses or damages arise out of or are based on any untrue
statement or omission or alleged untrue statement or omission made in reliance
on and in conformity with information relating to any Underwriter furnished in
writing to the Company by the Representatives on behalf of such Underwriter
expressly for use in the Registration Statement, any preliminary prospectus or
the Prospectus. This indemnity will be in addition to any liability that each
Underwriter might otherwise have.
(c) Any party that proposes to assert the right to be indemnified
under this Section 7 will, promptly after receipt of notice of commencement of
any action against such party in respect of which a claim is to be made against
an indemnifying party or parties under this Section 7, notify each such
indemnifying party of the commencement of such action, enclosing a copy of all
papers served, but the omission so to notify such indemnifying party will not
relieve it from any liability that it may have to any indemnified party under
the foregoing provisions of this Section 7 unless, and only to the extent that,
such omission results in the forfeiture of substantive rights or defenses by the
indemnifying party. If any such action is brought against any indemnified party
and it notifies the indemnifying party of its commencement, the indemnifying
party will be entitled to participate in and, to the extent that it elects by
delivering written notice to the indemnified party promptly after receiving
notice of the commencement of the action from the
20
idemnified party, jointly with any other indemnifying party similarly notified,
to assume the defense of the action, with counsel reasonably satisfactory to the
indemnified party, and after notice from the indemnifying party to the
indemnified party of its election to assume the defense, the indemnifying party
will not be liable to the indemnified party for any legal or other expenses
except as provided below and except for the reasonable costs of investigation
subsequently incurred by the indemnified party in connection with the defense.
The indemnified party will have the right to employ its own counsel in any such
action, but the fees, expenses and other charges of such counsel will be at the
expense of such indemnified party unless (1) the employment of counsel by the
indemnified party has been authorized in writing by the indemnifying party, (2)
the indemnified party has reasonably concluded (based on advice of counsel) that
there may be legal defenses available to it that are different from or in
addition to those available to the indemnifying party, (3) a conflict or
potential conflict exists (based on advice of counsel to the indemnified party)
between the indemnified party and the indemnifying party (in which case the
indemnifying party will not have the right to direct the defense of such action
on behalf of the indemnified party) or (4) the indemnifying party has not in
fact employed counsel to assume the defense of such action within a reasonable
time after receiving notice of the commencement of the action, in each of which
cases the reasonable fees, disbursements and other charges of counsel will be at
the expense of the indemnifying party or parties. It is understood that the
indemnifying party or parties shall not, in connection with any proceeding or
related proceedings in the same jurisdiction, be liable for the reasonable fees,
disbursements and other charges of more than one separate firm admitted to
practice in such jurisdiction at any one time for all such indemnified party or
parties. All such fees, disbursements and other charges will be reimbursed by
the indemnifying party promptly as they are incurred. An indemnifying party will
not be liable for any settlement of any action or claim effected without its
written consent (which consent will not be unreasonably withheld). No
indemnifying party shall, without the prior written consent of each indemnified
party, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action or proceeding relating to the matters
contemplated by this Section 7 (whether or not any indemnified party is a party
thereto), unless such settlement, compromise or consent includes an
unconditional release of each indemnified party from all liability arising or
that may arise out of such claim, action or proceeding.
(d) In order to provide for just and equitable contribution in
circumstances in which the indemnification provided for in the foregoing
paragraphs of this Section 7 is applicable in accordance with its terms but for
any reason is held to be unavailable from the Company and Capital or the
Underwriters, the Company, Capital and the Underwriters will contribute to the
total losses, claims, liabilities, expenses and damages (including any
investigative, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted, but after deducting any contribution received by the Company and
Capital from persons other than the Underwriters, such as persons who control
the Company or Capital within the meaning of the Act, officers of the Company
who signed the Registration Statement and directors of the Company, who also may
be liable for contribution) to which the Company or Capital and any one or more
of the Underwriters may be subject in such proportion as shall be appropriate to
reflect the relative benefits received by the Company and
21
Capital on the one hand and the Underwriters on the other. The relative benefits
received by the Company and Capital on the one hand and the Underwriters on the
other shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company and
Capital bear to the total underwriting discounts and commissions received by the
Underwriters, in each case as set forth in the table on the cover page of the
Prospectus. If, but only if, the allocation provided by the foregoing sentence
is not permitted by applicable law, the allocation of contribution shall be made
in such proportion as is appropriate to reflect not only the relative benefits
referred to in the foregoing sentence but also the relative fault of the Company
and Capital, on the one hand, and the Underwriters, on the other, with respect
to the statements or omissions which resulted in such loss, claim, liability,
expense or damage, or action in respect thereof, as well as any other relevant
equitable considerations with respect to such offering. Such relative fault
shall be determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a material
fact relates to information supplied by the Company or Capital, on the one hand,
or the Representatives on behalf of the Underwriters, on the other, the intent
of the parties and their relative knowledge, access to information and
opportunity to correct or prevent such statement or omission. The Company and
Capital and the Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section 7(d) were to be determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, liability, expense or
damage, or action in respect thereof, referred to above in this Section 7(d)
shall be deemed to include, for purpose of this Section 7(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 7(d), no Underwriter shall be required to contribute
any amount in excess of the underwriting discounts received by it and no person
found guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Act) will be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. The Underwriters' obligations to
contribute as provided in this Section 7(d) are several in proportion to their
respective underwriting obligations and not joint. For purposes of this Section
7(d), any person who controls a party to this Agreement within the meaning of
the Act will have the same rights to contribution as that party, and each
officer of the Company who signed the Registration Statement and each director
of the Company will have the same rights to contribution as the Company, subject
in each case to the provisions hereof. Any party entitled to contribution,
promptly after receipt of notice of commencement of any action against such
party in respect of which a claim for contribution may be made under this
Section 7(d), will notify any such party or parties from whom contribution may
be sought, but the omission so to notify will not relieve the party or parties
from whom contribution may be sought from any other obligation it or they may
have under this Section 7(d). No party will be liable for contribution with
respect to any action or claim settled without its written consent (which
consent will not be unreasonably withheld).
(e) Notwithstanding any other provision of this Section 7, the
liability of Capital under Section 7(a) or 7(d) shall be limited to the
proportion of any and all such losses, claims, liabilities, expenses and damages
(including any investigative, legal and other expenses
22
reasonably incurred in connection with, and any amount paid in settlement of,
any action, suit or proceeding between any of the indemnified parties and any
indemnifying parties or between any indemnified party and any third party, or
otherwise, or any claim asserted), as set forth in such sections, that the total
net proceeds (before deducting expenses) received by Capital from the sale of
the Shares hereunder bears to the aggregate total net proceeds (before deducting
expenses) received by the Company and Capital from the sale of the Shares
hereunder.
(f) The indemnity and contribution agreements contained in this
Section 7 and the representations and warranties of the Company and Capital
contained in this Agreement shall remain operative and in full force and effect
regardless of (i) any investigation made by or on behalf of the Underwriters,
(ii) acceptance of any of the Shares and payment therefor or (iii) any
termination of this Agreement.
8. Termination. The obligations of the several Underwriters under this
-----------
Agreement may be terminated at any time on or prior to the Closing Date (or,
with respect to the Option Shares, on or prior to the Option Closing Date), by
notice to the Company from the Representatives, without liability on the part of
any Underwriter to the Company or Capital, if, prior to delivery and payment for
the Shares (or the Option Shares, as the case may be), in the sole judgment of
the Representatives, (i) trading in any of the equity securities of the Company
shall have been suspended by the Commission, by an exchange that lists the
Shares or by the Nasdaq Stock Market, (ii) trading in securities generally on
the New York Stock Exchange shall have been suspended or limited or minimum or
maximum prices shall have been generally established on such exchange, or
additional material governmental restrictions, not in force on the date of this
Agreement, shall have been imposed upon trading in securities generally by such
exchange or by order of the Commission or any court or other governmental
authority, (iii) a general banking moratorium shall have been declared by either
Federal or New York State authorities or (iv) any material adverse change in the
financial or securities markets in the United States or in political, financial
or economic conditions in the United States or any outbreak or material
escalation of hostilities or declaration by the United States of a national
emergency or war or other calamity or crisis shall have occurred, the effect of
any of which is such as to make it, in the sole judgment of the Representatives,
impracticable or inadvisable to market the Shares on the terms and in the manner
contemplated by the Prospectus.
9. Substitution of Underwriters. If any one or more of the Underwriters
----------------------------
shall fail or refuse to purchase any of the Firm Shares which it or they have
agreed to purchase hereunder, and the aggregate number of Firm Shares which such
defaulting Underwriter or Underwriters agreed but failed or refused to purchase
is not more than one-tenth of the aggregate number of Firm Shares, the other
Underwriters shall be obligated, severally, to purchase the Firm Shares which
such defaulting Underwriter or Underwriters agreed but failed or refused to
purchase, in the proportions which the number of Firm Shares which they have
respectively agreed to purchase pursuant to Section 1 bears to the aggregate
number of Firm Shares which all such non-defaulting Underwriters have so agreed
to purchase, or in such other proportions as the Representatives may specify;
provided that in no event shall the maximum number of Firm Shares which any
Underwriter has
23
become obligated to purchase pursuant to Section 1 be increased pursuant to this
Section 9 by more than one-ninth of the number of Firm Shares agreed to be
purchased by such Underwriter without the prior written consent of such
Underwriter. If any Underwriter or Underwriters shall fail or refuse to purchase
any Firm Shares and the aggregate number of Firm Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase exceeds
one-tenth of the aggregate number of the Firm Shares and arrangements
satisfactory to the Representatives, the Company and Capital for the purchase of
such Firm Shares are not made within 48 hours after such default, this Agreement
will terminate without liability on the part of any non-defaulting Underwriter,
or the Company or Capital for the purchase or sale of any Shares under this
Agreement. In any such case either the Representatives or the Company or Capital
shall have the right to postpone the Closing Date, but in no event for longer
than seven days, in order that the required changes, if any, in the Registration
Statement and in the Prospectus or in any other documents or arrangements may be
effected. Any action taken pursuant to this Section 9 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
10. Miscellaneous. Notice given pursuant to any of the provisions of this
-------------
Agreement shall be in writing and, unless otherwise specified, shall be mailed
or delivered (a) if to the Company, at the office of the Company, 666 Grand
Avenue, 26th Floor, Des Moines, Iowa 50309, Attention: <QUAD>Chairman and Chief
Executive Officer, with a copy to Conner & Winters, A Professional Corporation,
2400 First Place Tower, 15 East Fifth Street, Tulsa, Oklahoma, 74103, Attention:
Lynnwood R. Moore, Jr., (b) if to Capital, at the offices of Capital, 666 Grand
Avenue, 26th Floor, Des Moines, Iowa 50309, Attention: Chairman and Chief
Executive Officer, or (c) if to the Underwriters, to the Representatives at the
offices of PaineWebber Incorporated, 1285 Avenue of the Americas, New York, New
York 10019, Attention: Corporate Finance Department. Any such notice shall be
effective only upon receipt. Any notice under Section 8 or 9 may be made by
telex or telephone, but if so made shall be subsequently confirmed in writing.
This Agreement has been and is made solely for the benefit of the several
Underwriters, the Company and Capital and of the controlling persons, directors
and officers referred to in Section 7, and their respective successors and
assigns, and no other person shall acquire or have any right under or by virtue
of this Agreement. The term "successors and assigns" as used in this Agreement
shall not include a purchaser, as such purchaser, of Shares from any of the
several Underwriters.
With respect to any obligation of the Company and Capital hereunder to make
any payment, to indemnify for any liability or to reimburse for any expense,
notwithstanding the fact that such obligation is a joint and several obligation
of the Company and Capital, the Underwriters (or any other person to whom such
payment, indemnification or reimbursement is owed) may pursue the Company with
respect thereto prior to pursuing Capital.
All representations, warranties and agreements of the Company and Capital
contained herein or in certificates or other instruments delivered pursuant
hereto, shall remain operative and
24
in full force and effect regardless of any investigation made by or on behalf of
any Underwriter or any of their controlling persons and shall survive delivery
of and payment for the Shares hereunder.
Any action required or permitted to be taken by the Representatives under
this Agreement may be taken by them jointly or by PaineWebber Incorporated.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK WITHOUT REGARD TO THE CONFLICT OF LAWS PRINCIPLES
OF SUCH STATE.
This Agreement may be signed in two or more counterparts with the same
effect as if the signatures thereto and hereto were upon the same instrument.
In case any provision in this Agreement shall be invalid, illegal or
unenforceable, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby.
The Company, Capital and the Underwriters each hereby irrevocably waive any
right they may have to a trial by jury in respect of any claim based upon or
arising out of this Agreement or the transactions contemplated hereby.
This Agreement may not be amended or otherwise modified or any provision
hereof waived except by an instrument in writing signed by the Representatives,
the Company and Capital.
Please confirm that the foregoing correctly sets forth the agreement among
the Company, Capital and the several Underwriters.
25
Very truly yours,
INTERCOAST ENERGY COMPANY
By: ----------------------------------
Title:
MIDAMERICAN CAPITAL COMPANY
By:
----------------------------------
Title:
Confirmed as of the date first
above mentioned:
PAINEWEBBER INCORPORATED
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Acting on behalf of themselves
and as the Representatives of
the other several Underwriters
named in Schedule I hereof.
By: PAINEWEBBER INCORPORATED
By: ----------------------------------
Title:
26
SCHEDULE I
UNDERWRITERS
Number of
Firm Shares
to be
Underwriter Purchased
----------- ---------
PaineWebber Incorporated .......................................
Merrill Lynch, Pierce, Fenner & Smith
Incorporated .......................................
---------
Total .................................................. 7,150,000
=========
27
EXHIBIT A
INTERCOAST ENERGY COMPANY
--------------------
PRICE DETERMINATION AGREEMENT
-----------------------------
July __ , 1996
PAINEWEBBER INCORPORATED
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Dear Sirs:
Reference is made to the Underwriting Agreement, dated July , 1996
(the"Underwriting Agreement"), among InterCoast Energy Company, a Delaware
corporation (the "Company"), MidAmerican Capital Company, a Delaware corporation
and the sole stockholder of the Company ("Capital"), and the several
Underwriters named in Schedule I thereto or hereto (the "Underwriters"), for
whom PaineWebber Incorporated and Merrill Lynch, Pierce, Fenner & Smith
Incorporated are acting as representatives (the "Representatives"). The
Underwriting Agreement provides for the purchase by the Underwriters from the
Company and Capital, subject to the terms and conditions set forth therein, of
an aggregate of 7,150,000 shares (the "Firm Shares") of the Company's common
stock, par value $.01 per share. This Agreement is the Price Determination
Agreement referred to in the Underwriting Agreement.
Pursuant to Section 1 of the Underwriting Agreement, the undersigned
agree with the Representatives as follows:
The initial public offering price per share for the Firm Shares shall be
$_______.
The purchase price per share for the Firm Shares to be paid by the
several Underwriters shall be $______, representing an amount equal to the
initial public offering price set forth above, less $______ per share.
1
The Company represents and warrants to each of the Underwriters that the
representations and warranties of the Company set forth in Section 3 of the
Underwriting Agreement are accurate as though expressly made at and as of the
date hereof.
Capital represents and warrants to each of the Underwriters that the
representations and warranties of Capital set forth in Section 4 of the
Underwriting Agreement are accurate as though expressly made at and as of the
date hereof.
As contemplated by the Underwriting Agreement, attached as Schedule I is
a completed list of the several Underwriters, which shall be a part of this
Agreement and the Underwriting Agreement.
This Agreement shall be governed by the law of the State of New York
without regard to the conflict of laws principles of such State.
If the foregoing is in accordance with your understanding of the
agreement among the Underwriters, the Company and Capital, please sign and
return to the Company a counterpart hereof, whereupon this instrument along with
all counterparts and together with the Underwriting Agreement shall be a binding
agreement among the Underwriters, the Company and Capital in accordance with its
terms and the terms of the Underwriting Agreement.
Very truly yours,
INTERCOAST ENERGY COMPANY
By:
-----------------------------
Title:
MIDAMERICAN CAPITAL COMPANY
By:
------------------------------
Title:
2
Confirmed as of the date first
above mentioned:
PAINEWEBBER INCORPORATED
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
Acting on behalf of themselves
and as the Representatives of
the other several Underwriters
named in Schedule I hereof.
By: PAINEWEBBER INCORPORATED
By:
------------------------------
Title:
3
EXHIBIT B
[DATE]
PAINEWEBBER INCORPORATED
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Dear Sirs:
In consideration of the agreement of the several Underwriters, for which
PaineWebber Incorporated and Merrill Lynch, Pierce, Fenner & Smith Incorporated
(the "Representatives") intend to act as Representatives to underwrite a
proposed public offering (the "Offering") of 7,150,000 shares of Common Stock,
par value $.01 per share (the "Common Stock"), of InterCoast Energy Company, a
Delaware corporation (the "Company"), as contemplated by a registration
statement with respect to such shares filed with the Securities and Exchange
Commission on Form S-1 (Registration No. 333-04525), the undersigned hereby
agrees that the undersigned will not, for a period of 180 days after the
commencement of the public offering of such shares, without the prior written
consent of PaineWebber Incorporated, offer to sell, sell, contract to sell,
grant any option to sell, or otherwise dispose of, or require the Company to
file with the Securities and Exchange Commission a registration statement under
the Securities Act of 1933 to register, any shares of Common Stock or securities
convertible into or exchangeable for Common Stock or warrants or other rights to
acquire shares of Common Stock of which the undersigned is now, or may in the
future become, the beneficial owner (within the meaning of Rule 13d-3 under the
Securities Exchange Act of 1934) (other than pursuant to the Company's employee
stock option plans or in connection with other employee incentive compensation
or director compensation arrangements of the Company).
Very truly yours,
By:
--------------------------------
Print Name:
-------------------------------
EXHIBIT C
July , 1996
PaineWebber Incorporated
Merrill Lynch, Pierce, Fenner & Smith
Incorporated
As Representatives of the
several Underwriters
c/o PaineWebber Incorporated
1285 Avenue of the Americas
New York, New York 10019
Gentlemen:
We have acted as counsel to InterCoast Energy Company, a Delaware
corporation (the "Company") in connection with the sale on the date hereof of an
aggregate of 7,150,000 shares (the "Shares") of the Company's common stock, par
value $.01 per share (the "Common Stock"), which shares are being sold by the
Company and Mid-American Capital Company, a Delaware corporation, to the several
underwriters (the "Underwriters") named in Schedule I to that certain
Underwriting Agreement (the "Underwriting Agreement") dated July , 1996, by and
among Company and you acting for yourselves and as representatives of the
Underwriters.
We have also acted as counsel to the Company in connection with the
preparation and filing with the Securities and Exchange Commission (the
"Commission"), in accordance with the provisions of the Securities Act of 1933,
as amended, and the rules and regulations of the Commission thereunder (the
"Act"), a Registration Statement on Form S-1, File No.333-04525, as subsequently
amended by Amendment Nos. 1 and 2 thereto, with respect to the Shares (the
"Registration Statement"), including the Prospectus dated July , 1996, included
in the Registration Statement (the "Prospectus").
1
We are rendering this opinion to you pursuant to Section 6(f) of the
Agreement. All terms capitalized in this opinion shall have the same meanings as
in the Agreement unless otherwise defined herein. All references in this opinion
to the Agreement shall include the Price Determination Agreement.
In connection with this opinion, we have examined such certificates,
documents and instruments as we have deemed necessary as a basis for the
opinions hereinafter expressed. In our examination, we have assumed the
genuineness of all signatures, the accuracy, authenticity and completeness of
all documents, certificates and records submitted to us as originals, and the
conformity with the originals of all documents, certificates and records
submitted to us as copies. On the basis of the foregoing and subject to the
qualifications and limitations set forth herein, it is our opinion that:
1. The Company and each of the Subsidiaries is a corporation duly
organized, validly existing and in good standing under the laws of the
jurisdiction of its incorporation and has full corporate power and authority to
own or lease all the material assets owned or leased by it and to conduct its
business as described in the Registration Statement and the Prospectus. The
Company is the sole record owner and, to our knowledge, the sole beneficial
owner of all of the capital stock of each of the Subsidiaries.
2. All of the outstanding shares of Common Stock have been, and the
Shares, when paid for by the Underwriters in accordance with the terms of the
Agreement, will be, duly authorized, validly issued, fully paid and
nonassessable and will not be subject to any preemptive or similar right under
(i) the statutes, judicial and administrative decisions, and the rules and
regulations of the governmental agencies of the State of Delaware, (ii) the
Company's certificate of incorporation or by-laws or (iii) any instrument,
document, contract or other agreement referred to in the Registration Statement
or any instrument, document, contract or agreement filed as an exhibit to the
Registration Statement. Except as described in the Registration Statement or the
Prospectus, to the best of our knowledge, there is no commitment or arrangement
to issue, and there are no outstanding options, warrants or other rights calling
for the issuance of, any share of capital stock of the Company or any Subsidiary
to any person or any security or other instrument that by its terms is
convertible into, exercisable for or exchangeable for capital stock of the
Company.
3. No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the authorization, issuance, transfer, sale or delivery of the
Shares by the Company, in connection with the execution, delivery and
performance of the Agreement by the Company or in connection with the taking by
the Company of any action contemplated thereby, except such as have been
obtained under the Act and the Rules and Regulations and such as may be required
under state securities or "Blue Sky" laws or by the by-laws and rules of the
NASD in connection with the purchase and distribution by the Underwriters of the
Shares to be sold by the Company.
2
4. The authorized, issued and outstanding capital stock of the Company
is as set forth in the Registration Statement and the Prospectus under the
caption "Capitalization." The description of the Common Stock contained in the
Prospectus is complete and accurate in all material respects. The form of
certificate used to evidence the Common Stock is in due and proper form and
complies with all applicable statutory requirements.
5. The Registration Statement and the Prospectus comply in all material
respects as to form with the requirements of the Act and the Rules and
Regulations (except that we express no opinion as to (i) financial statements,
schedules and other financial data, and (ii) estimates of oil and gas reserves
and information related thereto, contained in the Registration Statement or the
Prospectus).
6. To the best of our knowledge, any instrument, document, lease,
license, contract or other agreement (collectively, "Documents") required to be
described or referred to in the Registration Statement or the Prospectus has
been properly described or referred to therein and any Document required to be
filed as an exhibit to the Registration Statement has been filed as an exhibit
thereto or has been incorporated as an exhibit by reference in the Registration
Statement; and, to the best of our knowledge, no default exists in the due
performance or observance of any material obligation, agreement, covenant or
condition contained in any Document filed or required to be filed as an exhibit
to the Registration Statement.
7. To the best of our knowledge, except as disclosed in the Registration
Statement or the Prospectus, no person or entity has the right to require the
registration under the Act of shares of Common Stock or other securities of the
Company by reason of the filing or effectiveness of the Registration Statement.
8. To the best of our knowledge, the Company is not in violation of, or
in default with respect to, any law, rule, regulation, order, judgment or
decree, except as may be described in the Prospectus or such as in the aggregate
do not now have and will not in the future have a material adverse effect upon
the operations, business or assets of the Company and the Subsidiaries, taken as
a whole.
9. All descriptions in the Prospectus of statutes, regulations or legal
or governmental proceedings are accurate and fairly present the information
required to be shown.
10. The Company has full corporate power and authority to enter into the
Agreement, and the Agreement has been duly authorized, executed and delivered by
the Company, is a valid and binding agreement of the Company and, except for the
indemnification and contribution provisions thereof, as to which we express no
opinion, is enforceable against the Company in accordance with the terms
thereof, subject to the qualification that the enforceability of the Agreement
may be (i) subject to bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally; and (ii) subject to general
principles of equity (regardless of whether such enforceability is considered in
a proceeding at law or in equity)
3
including principles of commercial reasonableness or conscionability and an
implied covenant of good faith and fair dealing.
11. The execution and delivery by the Company of, and the performance by
the Company of its agreements in, the Agreement do not and will not (i) violate
the certificate of incorporation or by-laws of the Company, (ii) breach or
result in a default under, cause the time for performance of any obligation to
be accelerated under, or result in the creation or imposition of any lien,
charge or encumbrance upon any of the assets of the Company or any of the
Subsidiaries pursuant to the terms of, (x) any indenture, mortgage, deed of
trust, loan agreement, bond, debenture, note agreement, capital lease or other
evidence of indebtedness of which we have knowledge, (y) any voting trust
arrangement or any contract or other agreement to which the Company is a party
that restricts the ability of the Company to issue securities and of which we
have knowledge or (z) any Document filed as an exhibit to the Registration
Statement, (iii) breach or otherwise violate any existing obligation of the
Company or any of the Subsidiaries under any court or administrative order,
judgment or decree of which we have knowledge or (iv) violate applicable
provisions of any statute or regulation in the States of Delaware, Oklahoma or
of the United States.
12. Delivery of certificates for the Shares to be sold by the Company
will transfer valid and marketable title thereto to each Underwriter that has
purchased such Shares in good faith and without notice of any adverse claim with
respect thereto.
13. The Company is not an "investment company" or an "affiliated person"
of, or "promoter" or "principal underwriter" for, an "investment company," as
such terms are defined in the Investment Company Act of 1940, as amended.
We hereby confirm to you that there are no actions, suits, proceedings
or investigations pending or, to our knowledge, overtly threatened in writing
against the Company or any of the Subsidiaries, or any of their respective
officers or directors in their capacities as such, before or by any court,
governmental agency or arbitrator which (i) seek to challenge the legality or
enforceability of the Agreement, (ii) seek to challenge the legality or
enforceability of any of the Documents filed, or required to be filed, as
exhibits to the Registration Statement, (iii) seek damages or other remedies
with respect to any of the Documents filed, or required to be filed, as exhibits
to the Registration Statement, (iv) except as set forth in or contemplated by
the Registration Statement and the Prospectus, seek money damages in excess of
$2,000,000 or seek to impose criminal penalties upon the Company, any of the
Subsidiaries, or any of their respective officers or directors in their
capacities as such and of which we have knowledge or (v) seek to enjoin any of
the business activities of the Company or any of the Subsidiaries or the
transactions described in the Prospectus and of which we have knowledge.
We hereby further confirm to you that we have been advised (i) by the
Commission that the Registration Statement has become effective under the Act
and that no order suspending the effectiveness of the Registration Statement has
been issued and no proceeding for that purpose has
4
been instituted or is pending, threatened or contemplated, and (ii) by the New
York Stock Exchange that the Shares have been authorized for listing by that
exchange upon official notice of issuance.
In addition, we have participated in conferences with officers and other
representatives of the Company, representatives of the Representatives and
representatives of the independent certified public accountants of the Company,
at which conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although we 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 as specified in the foregoing opinion); on the basis of the
foregoing, no fact has come to our attention which has caused us to believe that
the Registration Statement at the time it became effective or as of the date
hereof contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus as of its date and at the date
hereof contained any untrue statement of a material fact or omitted 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 (it being
understood that we are expressing no belief with respect to (i) financial
statements, schedules and other financial data, and (ii) estimates of oil and
gas reserve and information related thereto, contained in the Registration
Statement or the Prospectus).
The phrases "to our knowledge," "to the best of our knowledge," and
similar phrases as used herein refer to matters within our actual knowledge and,
except as otherwise stated herein, we have made no specific investigation or
review of any facts, documents, instrument, judgment, decrees, franchises,
permits or the like, and have made no independent search of the records of any
judicial authority or government agency.
We are members of the Oklahoma Bar and, accordingly, do not express or
purport to express any opinions with respect to any laws other than the laws of
the State of Oklahoma, the corporate laws of the State of Delaware, and the
federal laws of the United States of America. In rendering the foregoing
opinion, we have with your permission relied on or assumed the following:
(a) our opinions as to certain factual matters have been based on
certificates of officers of the Company; and
(b) with respect to our opinion in paragraph 10. hereof as to the
enforceability of the Agreement against the Company, we have, with your
permission, assumed the laws of the State of Oklahoma are identical to
the laws of the State of New York.
The certificates referred to above are in form satisfactory to us and copies
thereof have been delivered to your counsel. We and you are justified in relying
thereon.
5
This letter is furnished by us solely for your benefit in connection
with the transactions referred to in the Agreement and may not be circulated to,
or relied upon by, any other person, except that this letter may be relied upon
by your counsel in connection with the opinion letter to be delivered to you
pursuant to Section 6(g) of the Agreement.
Sincerely,
CONNER & WINTERS,
A Professional Corporation
LRM:pp
6
EXHIBIT D
Form of Opinion
of Counsel to Capital
---------------------
Capital is a corporation duly organized, validly existing and in good
standing under the laws of the State of Delaware and has full corporate power
and authority to enter into the Agreement and to sell, transfer and deliver the
Shares to be sold by it pursuant to the Agreement. All authorizations and
consents necessary for the execution and delivery of the Agreement have been
given. The delivery of the Shares to be sold by Capital to the Underwriters
pursuant to the terms of the Agreement and payment therefor by the Underwriters
will transfer good and marketable title to such Shares to the several
Underwriters purchasing such Shares, free and clear of all liens, encumbrance
and claims whatsoever.
The Agreement has been duly authorized, executed and delivered by
Capital, is a valid and binding agreement of Capital and, except for the
indemnification and contribution provisions of the Agreement, is enforceable
against Capital in accordance with the terms thereof.
No consent, approval, authorization or order of, or any filing or
declaration with, any court or governmental agency or body is required in
connection with the authorization, issuance, transfer, sale or delivery of the
Shares by Capital, in connection with the execution, delivery and performance of
the Agreement by Capital or in connection with the taking by Capital of any
action contemplated thereby, except such as have been obtained under the Act or
the Rules and Regulations and such as may be required under state securities or
Blue Sky laws or by the by-laws and rules of the NASD in connection with the
purchase and distribution by the Underwriters of the Shares to be sold by
Capital.
The execution and delivery by Capital of, and the performance by Capital
of its agreements in, the Agreement, do not and will not (i) violate the
certificate of incorporation or by-laws of Capital, (ii) breach or result in a
default under, cause the time for performance of any obligation to be
accelerated under, or result in the creation or imposition of any lien, charge
or encumbrance upon any of the assets of Capital pursuant to the terms of, (x)
any indenture, mortgage, deed of trust, loan agreement, bond, debenture, note
agreement, capital lease or other evidence of indebtedness of which we have
knowledge, (y) any voting trust arrangement or any contract or other agreement
to which Capital is a party that restricts the ability of the Company to issue
securities and of which we have knowledge or (z) any other contract or other
agreement of which we have knowledge, (iii) breach or otherwise violate any
existing obligation of Capital under any court or administrative order, judgment
or decree of which we have knowledge or (iv) violate applicable provisions of
any statute or regulation in the States of Delaware, Iowa or of the United
States.
There are no transfer or similar taxes payable in connection with the
sale and delivery of the Shares to be sold by Capital to the several
Underwriters, except as specified in such opinion.
1
The foregoing opinion is subject to the qualification that the
enforceability of the Agreement may be: (i) subject to bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting creditors' rights
generally; and (ii) subject to general principles of equity (regardless of
whether such enforceability is considered in a proceeding at law or in equity),
including principles of commercial reasonableness or conscionability and an
implied covenant of good faith and fair dealing.
This letter is furnished by us solely for your benefit in connection
with the transactions referred to in the Agreement and may not be circulated to,
or relied upon by, any other person, except that this letter may be relied upon
by your counsel in connection with the opinion letter to be delivered to you
pursuant to Section 6(g) of the Agreement.
In rendering the foregoing opinion, counsel may rely, to the extent they
deem such reliance proper, on the opinions (in form and substance reasonably
satisfactory to Underwriters' counsel) of other counsel reasonably acceptable to
Underwriters' counsel as to matters governed by the laws of jurisdictions other
than the United States and the States of Iowa and Delaware, and as to matters of
fact, upon certificates of Capital and of government officials; provided that
such counsel shall state that the opinion of any other counsel is in form
satisfactory to such counsel. Copies of all such opinions and certificates shall
be furnished to counsel to the Underwriters on the Closing Date.
2