Exhibit 1.2
GIANT INDUSTRIES, INC.
3,000,000 Shares
Common Stock
UNDERWRITING AGREEMENT
dated April [__], 2004
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON LLC
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
TABLE OF CONTENTS
SECTION 1. REPRESENTATIONS AND WARRANTIES.............................. 5
(a) Compliance with Registration Requirements.......................... 5
(b) Exchange Act Compliance............................................ 6
(c) Offering Materials Furnished to Underwriters....................... 6
(d) Distribution of Offering Material By the Company................... 6
(e) Authorization of the Underwriting Agreement........................ 6
(f) Authorization of the Common Shares................................. 6
(g) No Applicable Registration or Other Similar Rights................. 6
(h) No Material Adverse Change......................................... 6
(i) Independent Accountants............................................ 7
(j) Preparation of the Financial Statements............................ 7
(k) Incorporation and Good Standing of the Company and its Subsidiaries 7
(l) Capitalization and Other Capital Stock Matters..................... 8
(m) Stock Exchange Listing............................................. 8
(n) Non-Contravention of Contracts; No Further Authorizations or
Approvals Required.................................................. 8
(o) Notice of Term Loan Prepayment..................................... 9
(p) No Material Actions or Proceedings................................. 9
(q) No Labor Disputes.................................................. 9
(r) Intellectual Property Rights....................................... 9
(s) All Necessary Permits, etc......................................... 9
(t) Title to Properties................................................ 9
(u) Tax Law Compliance................................................. 10
(v) Company Not an "Investment Company"................................ 10
(w) Insurance.......................................................... 10
(x) No Mandatory Redemption............................................ 10
(y) Solvency........................................................... 10
(z) No Price Stabilization or Manipulation............................. 11
(aa) Related Party Transactions........................................ 11
(bb) No Unlawful Contributions or Other Payments....................... 11
(cc) Company's Accounting System....................................... 11
(dd) Compliance with Environmental Laws................................ 11
(ee) Periodic Review of Costs of Environmental Compliance.............. 12
(ff) ERISA Compliance.................................................. 12
(gg) Brokers........................................................... 12
(hh) No Outstanding Loans or Other Indebtedness........................ 12
(ii) Compliance with Laws.............................................. 13
(jj) No Event of Default............................................... 13
(kk) Disclosure Controls and Procedures................................ 13
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES............ 13
(a) The Firm Common Shares............................................. 13
(b) The First Closing Date............................................. 13
(c) The Optional Common Shares; the Second Closing Date................ 14
(d) Public Offering of the Common Shares............................... 14
(e) Payment for the Common Shares...................................... 14
(f) Delivery of the Common Shares...................................... 15
(g) Delivery of Prospectus to the Underwriters......................... 15
SECTION 3. ADDITIONAL COVENANTS OF THE COMPANY......................... 15
(a) Representatives' Review of Proposed Amendments and Supplements..... 15
(b) Securities Act Compliance.......................................... 15
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(c) Notification of Breach of this Agreement........................... 16
(d) Amendments and Supplements to the Prospectus and Other Securities
Act Matters........................................................ 16
(e) Copies of any Amendments and Supplements to the Prospectus......... 16
(f) Blue Sky Compliance................................................ 16
(g) Use of Proceeds.................................................... 16
(h) Transfer Agent..................................................... 16
(i) Earnings Statement................................................. 16
(j) Periodic Reporting Obligations..................................... 16
(k) Company to Provide Interim Financial Statements.................... 17
(l) Listing............................................................ 17
(m) Agreement Not to Offer or Sell Additional Securities............... 17
(n) Future Reports to the Representatives.............................. 17
(o) Investment Limitation.............................................. 17
(p) No Manipulation of Price........................................... 18
(q) Existing Lock-Up Agreement......................................... 18
SECTION 4. PAYMENT OF EXPENSES......................................... 18
SECTION 5. CONDITIONS TO OBLIGATIONS OF THE UNDERWRITERS............... 18
(a) No Untrue Statements; Inadvisable to Proceed....................... 19
(b) Corporate Proceedings.............................................. 19
(c) Resolutions........................................................ 19
(d) Accountant's Comfort Letter........................................ 19
(e) Bring-Down Comfort Letters......................................... 19
(f) Compliance with Registration Requirements; No Stop Order; No
Objection from NASD................................................ 20
(g) No Material Adverse Change......................................... 20
(h) Opinion of Counsel for the Company................................. 20
(i) Opinion of Counsel for the Underwriters............................ 20
(j) Officers' Certificate.............................................. 20
(k) Other Certificates................................................. 21
(l) Lock-Up Agreement from Certain Securityholders of the Company...... 21
(m) Additional Documents............................................... 21
(n) Notice of Redemption for 11% Notes................................. 21
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES..................... 21
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT............................. 22
SECTION 8. INDEMNIFICATION............................................. 22
(a) Indemnification of the Underwriters by the Company................. 22
(b) Indemnification of the Company, its Directors and Officers......... 22
(c) Notifications and Other Indemnification Procedures................. 23
(d) Settlements........................................................ 24
SECTION 9. CONTRIBUTION................................................ 24
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS......... 25
SECTION 11. TERMINATION OF THIS AGREEMENT.............................. 26
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY........ 26
SECTION 13. NOTICES.................................................... 26
SECTION 14. SUCCESSORS................................................. 28
SECTION 15. PARTIAL UNENFORCEABILITY................................... 28
SECTION 16. GOVERNING LAW PROVISIONS................................... 28
SECTION 17. GENERAL PROVISIONS......................................... 28
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UNDERWRITING AGREEMENT
April [__], 2004
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON LLC
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
As Representatives of the several Underwriters
c/o BANC OF AMERICA SECURITIES LLC
9 West 57th Street
New York, New York 10019
Ladies and Gentlemen:
Introductory. Giant Industries Inc., a Delaware corporation (the
"Company"), proposes to issue and sell to the several underwriters named in
Schedule A (the "Underwriters") an aggregate of 3,000,000 shares (the "Firm
Common Shares") of its common stock, par value $0.01 per share (the "Common
Stock"). In addition, the Company has granted to the Underwriters an option
to purchase up to an additional 450,000 shares (the "Optional Common Shares")
of Common Stock, as provided in Section 2. The Firm Common Shares and, if and
to the extent such option is exercised, the Optional Common Shares are
collectively called the "Common Shares". Banc of America Securities LLC
("BAS"), Credit Suisse First Boston LLC and Friedman, Billings, Ramsey & Co.,
Inc., have agreed to act as representatives of the several Underwriters (in
such capacity, the "Representatives") in connection with the offering and
sale of the Common Shares.
The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-3
(File No. 333-113590) for the registration of Common Stock (including the
Common Shares), preferred stock, debt securities, debt and equity warrants,
stock purchase contracts, stock purchase units and units of the Company under
the Securities Act of 1933, as amended, and the rules and regulations
promulgated thereunder (collectively, the "Securities Act"), and the offering
thereof from time to time in accordance with Rule 415 under the Securities
Act. Such registration statement has been declared effective by the
Commission. Such registration statement, as so amended, if applicable,
including the exhibits and schedules thereto, and including all documents
incorporated or deemed to be incorporated by reference therein pursuant to
Item 12 of Form S-3, prior to the execution of this Agreement, is called the
"Registration Statement". The final prospectus and the final prospectus
supplement relating to the offering of the Common Shares, in the form first
furnished to the Underwriters by the Company for use in connection with the
offering of the Common Shares, including all documents incorporated or deemed
to be incorporated by reference therein pursuant to Item 12 of Form S-3,
prior to the execution of this Agreement, is called the "Prospectus". A
"preliminary prospectus" shall be deemed to refer to any prospectus that
omitted information to be included upon pricing in a form of prospectus filed
with the Commission pursuant to Rule 424(b) under the Securities Act and was
used prior to the execution and delivery of this Agreement. All references in
this Agreement to the Registration Statement, a preliminary prospectus, the
Prospectus or any amendments or supplements to any of the foregoing, shall
include any copy thereof filed with the Commission pursuant to its Electronic
Data Gathering, Analysis and Retrieval System ("EDGAR").
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All references in this Agreement to financial statements and
schedules and other information which is "contained", "included" or "stated"
(all other references of like import) in the Registration Statement, a
preliminary prospectus or the Prospectus shall be deemed to mean and include
all such financial statements and schedules and other information which is or
is deemed to be incorporated by reference in the Registration Statement, a
preliminary prospectus or the Prospectus, as the case may be, prior to the
execution of this Agreement; and all references in this Agreement to
amendments or supplements to the Registration Statement, a preliminary
prospectus or the Prospectus shall be deemed to mean and include the filing
of any document under the Securities Exchange Act of 1934, as amended, and
the rules and regulations promulgated thereunder (collectively, the "Exchange
Act") which is or is deemed to be incorporated by reference in the
Registration Statement, a preliminary prospectus or the Prospectus, as the
case may be, after the execution of this Agreement.
As described in the Prospectus, the proceeds from the offering of
the Common Shares will be used to redeem a portion of the aggregate
outstanding principal amount of the Company's 11% senior subordinated notes
due 2012 (the "11% Notes") in accordance with the terms and conditions under
the Indenture, dated as of May 14, 2002, as amended, among the Company, the
guarantors party thereto and The Bank of New York, as trustee (the "2002
Indenture"), and pay related redemption premiums and transaction fees and
expenses. The Company will issue an irrevocable notice of such redemption of
the 11% Notes (the "11% Notes Notice of Redemption") on the First Closing
Date and the Second Closing Date, as the case may be (each as defined below),
in accordance with the terms and conditions under the 2002 Indenture.
Concurrently with this offering of Common Shares pursuant to this
Agreement, the Company will issue and sell $150 million of senior
subordinated notes (the "Senior Subordinated Notes") pursuant to a separate
underwriting agreement dated the date hereof, among the Company, certain
subsidiary guarantors and the underwriters thereto, some of whom are
underwriters in this offering (the "Senior Subordinated Notes Offering"). On
April 13, 2004, the Company mailed (the "Tender Offer and Consent
Solicitation") an Offer to Purchase and Consent Solicitation Statement along
with a Letter of Transmittal and Consent, thereby making a tender offer to
purchase for cash all $150 million aggregate principal amount outstanding of
the Company's 9% senior subordinated notes due 2007 (the "9% Notes") and a
consent solicitation to the adoption of certain proposed amendments to the
Indenture, dated August 26, 1997, as amended, among the Company, the
guarantors party thereto and The Bank of New York, as trustee (the "1997
Indenture"). The Tender Offer and Consent Solicitation is conditioned upon
closing of the Senior Subordinated Notes Offering. The closing of the Senior
Subordinated Notes Offering is conditioned upon receipt of appropriate
waivers and/or consents, which were received from the lenders party to the
Revolving Credit Facility (as defined below) on April 7th, 2004 and from the
lenders party to the Term Loan Agreement (as defined below) on April 6th,
2004 (collectively, the "Consents"). The proceeds from the Senior
Subordinated Notes Offering, together with cash on hand, will be used to
finance the Tender Offer and Consent Solicitation, and pay related
transaction fees and expenses. The consent solicitation relates to consents
of the holders of the 9% Notes to amend the provisions of the 1997 Indenture.
Upon receipt of the requisite consents (the "Requisite Consents"), the
Company, the guarantors party thereto and the trustee will enter into a
supplemental indenture (the "Supplemental Indenture") giving effect to the
proposed amendments, which would eliminate substantially all of the
restrictive covenants and certain other related provisions (including certain
events of default of the 1997 Indenture).
In the event that all of the outstanding 9% Notes are not
tendered to the Company pursuant to the Tender Offer and Consent
Solicitation, or the Tender Offer and Consent Solicitation is not consummated
for any reason, the proceeds from the Senior Subordinated Notes Offering not
otherwise used in the Tender Offer and Consent Solicitation, together with
cash on hand, will be used to redeem all of the $150 million aggregate
principal amount of the 9% Notes that remain outstanding
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after the completion or termination of the Tender Offer and Consent
Solicitation in accordance with the terms and conditions under the 1997
Indenture (the "Back-End Redemption") and to pay related redemption premiums
and transaction fees and expenses. In the event of a Back-End Redemption, the
Company will issue an irrevocable notice of such redemption of the 9% Notes
(the "9% Notes Notice of Redemption") promptly (but in any event within 2
business days) following expiration or termination of the Tender Offer and
Consent Solicitation) in accordance with the terms and conditions under the
1997 Indenture and in accordance with the terms contained in the Consents.
Prior to the date hereof, the Company has given notice to the
lenders under the Term Loan Agreement (as defined below) to prepay the
remaining amounts outstanding under the Term Loan Agreement in July 2004 (the
"Term Loan Agreement Notice").
The Senior Subordinated Notes Offering, the Tender Offer and
Consent Solicitation, the Back-End Redemption and the prepayment of the Term
Loan Agreement in July 2004 are herein collectively referred to as the
"Related Transactions".
The Company hereby confirms its respective agreements with the
Underwriters as follows:
SECTION 1. REPRESENTATIONS AND WARRANTIES.
The Company hereby represents, warrants and covenants to each
Underwriter as follows:
(a) Compliance with Registration Requirements. The Company meets the
requirements for use of Form S-3 under the Securities Act. The Registration
Statement has been declared effective by the Commission under the Securities
Act. No stop order suspending the effectiveness of the Registration Statement
is in effect and no proceedings for such purpose have been instituted or are
pending or, to the knowledge of the Company, have been threatened by the
Commission.
Each preliminary prospectus and the prospectus filed as part of
the Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act, complied
when so filed in all material respects with the Securities Act and each
preliminary prospectus and the Prospectus delivered to the Underwriter for
use in connection with the offer and sale of the Common Shares will, at the
time of such delivery, be identical to any copies filed by electronic
transmission pursuant to EDGAR (except as may be permitted by Regulation S-T
under the Securities Act). The Registration Statement and any post-effective
amendment thereto, at the time it became effective and at all subsequent
times through the end of the Prospectus Delivery Period (as hereinafter
defined), complied and will comply in all material respects with the
Securities Act and did not and will not contain any untrue statement of a
material fact or omit to state a material fact required to be stated therein
or necessary to make the statements therein not misleading. The Prospectus,
as amended or supplemented, as of its date and at all subsequent times
through the end of the Prospectus Delivery Period, did not and will not
contain any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The representations
and warranties set forth in the two immediately preceding sentences do not
apply to statements in or omissions from the Registration Statement, or any
post-effective amendment thereto, or the Prospectus, or any amendments or
supplements thereto, made in reliance upon and in conformity with information
relating to any Underwriter furnished to the Company in writing by or on
behalf of the Representatives expressly for use therein. There are no
contracts or other documents required to be
6
described in the Prospectus or to be filed as exhibits to the Registration
Statement that have not been described or filed as required.
(b) Exchange Act Compliance. The documents incorporated or deemed to be
incorporated by reference in the Registration Statement and Prospectus, at
the time they were or hereafter are filed with the Commission, complied and
will comply in all material respects with the requirements of the Exchange
Act, and, when read together with the other information in the Prospectus, at
the time the Registration Statement became effective and at the First Closing
Date and the Second Closing Date, as the case may be, will not contain an
untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(c) Offering Materials Furnished to Underwriters. The Company has
delivered to the Representatives one complete manually signed copy of the
Registration Statement and of each consent and certificate of experts filed
as a part thereof.
(d) Distribution of Offering Material By the Company. The Company has not
distributed and will not distribute, prior to the later of the Second Closing
Date (as defined below) and the completion of the Underwriters' distribution
of the Common Shares, any offering material in connection with the offering
and sale of the Common Shares other than a preliminary prospectus, the
Prospectus or the Registration Statement.
(e) Authorization of the Underwriting Agreement. This Agreement has been
duly authorized, executed and delivered by, and is a valid and binding
agreement of, the Company, enforceable in accordance with its terms, except
as rights to indemnification hereunder may be limited by applicable law and
except as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the
rights and remedies of creditors or by general equitable principles.
(f) Authorization of the Common Shares. The Common Shares to be purchased
by the Underwriters from the Company have been duly authorized for issuance
and sale pursuant to this Agreement and, when issued and delivered by the
Company to the Underwriters pursuant to and in accordance with the terms of
this Agreement against payment of the consideration set forth herein, will be
validly issued, fully paid and nonassessable.
(g) No Applicable Registration or Other Similar Rights. There are no
persons with registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or included
in the offering contemplated by this Agreement or the concurrent Senior
Subordinated Notes Offering.
(h) No Material Adverse Change. Since the respective dates as of which
information is given in the Prospectus, and except as otherwise stated
therein, (i) there has been no material adverse change in the assets,
liabilities, results of operations, condition (financial or otherwise),
earnings, business affairs or prospects, whether or not arising from
transactions in the ordinary course of business, of the Company and its
subsidiaries, taken as a whole (any such change is called a "Material Adverse
Change"), (ii) there has been no transaction entered into or material
liability or obligation, direct, indirect or contingent, incurred by the
Company or any subsidiary that is material to the Company and its
subsidiaries, taken as a whole, and (iii) there has been no dividend
declared, paid or made by the Company or, except for dividends paid to the
Company or other subsidiaries, any of its subsidiaries on any class of its
capital stock or repurchase or redemption by the Company or any of its
subsidiaries of any class of capital stock.
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(i) Independent Accountants. Deloitte & Touche LLP, the accountants who
have audited and reported upon the financial statements of the Company and
its subsidiaries and the related notes thereto, together with the supporting
schedules filed with the Commission as part of the Registration Statement and
included in the Prospectus, are independent public accountants with respect
to the Company and its subsidiaries within the meaning of the Exchange Act.
(j) Preparation of the Financial Statements. The financial statements of
the Company and its consolidated subsidiaries and the related notes thereto
filed with the Commission as a part of the Registration Statement and
included in the Prospectus present fairly the consolidated financial position
of the Company and its consolidated subsidiaries as of the dates indicated
and the results of their operations for the periods specified; such financial
statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved. No other financial statements or supporting schedules are required
to be included in the Registration Statement. The historical financial data
set forth in the Prospectus under the captions "Prospectus Supplement Summary
- Summary Financial Data," "Selected Financial Data" and "Capitalization"
fairly present the information set forth therein on a basis consistent with
that of the audited financial statements contained in the Registration
Statement.
(k) Incorporation and Good Standing of the Company and its Subsidiaries.
Each of the Company and its subsidiaries has been duly incorporated and is
validly existing as a corporation in good standing under the laws of the
jurisdiction of its incorporation, with full corporate power and authority to
own, lease and operate its properties and conduct its business as presently
conducted and as described in the Prospectus and to enter into and perform
its obligations under this Agreement, to redeem the 11% Notes in accordance
with the terms and conditions of the 2002 Indenture and to enter into and
perform its obligations under the Related Transactions. Each of the Company
and its subsidiaries is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing of
property or the conduct of business, except where the failure to so qualify
would not, singly or in the aggregate, have a Material Adverse Effect on the
Company and its subsidiaries, taken as a whole. As used herein, "Material
Adverse Effect," with respect to any person, means a material adverse effect
on the assets, liabilities, results of operations, condition (financial or
otherwise), earnings, business affairs or prospects, whether or not arising
from transactions in the ordinary course of business, of such person and its
subsidiaries, taken as a whole. Except with respect to Navajo Convenient
Store Co., LLC (which is a majority owned subsidiary), all the issued and
outstanding capital stock of each subsidiary of the Company has been duly
authorized and validly issued, is fully paid and nonassessable and is owned
by the Company or another subsidiary of the Company, free and clear of any
security interest, mortgage, pledge, lien, charge or other encumbrance (each,
a "Lien"), except for the Liens under the (i) $100 million Second Amended and
Restated Credit Agreement, dated as of May 14, 2002, among the Company, the
lenders party thereto and Bank of America, N.A., as administrative agent and
as letter of credit bank, as amended by the First Amendment to Second Amended
and Restated Credit Agreement, dated October 28, 2002, the Second Amendment
to Second Amended and Restated Credit Agreement, dated September 30, 2003,
and the Third Amendment to Second Amended and Restated Credit Agreement,
dated February 9, 2004 (collectively, the "Revolving Credit Facility"), and
(ii) Loan Agreement, dated as of May 14, 2002, among Giant Yorktown, Inc.,
Banc of America Leasing & Capital, LLC, and Wells Fargo Bank Nevada, National
Association, as collateral agent, as amended by the Amendment to Loan
Agreement and Omnibus Amendment, dated as of May 22, 2002, the Second
Amendment to Loan Agreement and Omnibus Amendment, dated as of October 28,
2002, the Third Amendment to Loan Agreement and Omnibus Amendment, dated as
of December 20, 2002, and the Fourth Amendment to Loan Agreement and Omnibus
Amendment, dated as of February 9, 2004 (collectively, the "Term Loan
Agreement"). The Company does not own or control, directly or indirectly, any
corporation,
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association or other entity other than the subsidiaries listed in Exhibit
21.1 to the Company's Annual Report on Form 10-K for the fiscal year ended
December 31, 2003.
(l) Capitalization and Other Capital Stock Matters. The authorized, issued
and outstanding capitalization is as set forth in the Prospectus under the
caption "Capitalization". The Common Stock (including the Common Shares)
conforms in all material respects to the description thereof contained in the
Prospectus. All the issued and outstanding shares of the capital stock of the
Company have been duly authorized and validly issued, are fully paid and
non-assessable and have been issued in compliance with Federal and state
securities laws. None of the outstanding shares of Common Stock were issued
in violation of any preemptive rights, rights of first refusal or other
similar rights to subscribe for or purchase securities of the Company. There
are no authorized or outstanding options, warrants, preemptive rights, rights
of first refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital stock of the
Company or any of its subsidiaries other than those accurately described in
the Prospectus. The description of the Company's stock option, stock bonus
and other stock plans or arrangements, and the options or other rights
granted thereunder, set forth in the Prospectus accurately and fairly
presents the information required to be shown with respect to such plans,
arrangements, options and rights under the Securities Act and Exchange Act.
(m) Stock Exchange Listing. The Common Shares have been approved for
listing on the New York Stock Exchange, subject only to official notice of
issuance.
(n) Non-Contravention of Contracts; No Further Authorizations or Approvals
Required. Neither the Company nor any of its subsidiaries is in violation of
its charter or by-laws or is in default (or, with the giving of notice or
lapse of time, would be in default) ("Default") in the performance or
observance of any obligation, agreement, covenant or condition contained in
any Contract (as defined below) or any applicable law, administrative
regulation or administrative or court order or decree, except for such
defaults as would not, singly or in the aggregate, have a Material Adverse
Effect on the Company. The execution, delivery and performance by the Company
of this Agreement and the issuance and delivery of the Common Shares and the
consummation of the transactions contemplated herein and in the Prospectus
(including the redemption of the 11% Notes in accordance with the terms and
conditions of the 2002 Indenture) and the Related Transactions have been duly
authorized by all necessary corporate action and will not conflict with or
constitute a breach of, or a Default or a Debt Repayment Triggering Event (as
defined below) under, or the loss of any material benefit under, or the
termination of, or result in the creation or imposition of any Lien upon any
property or assets of the Company or any of its subsidiaries pursuant to any
contract, indenture, mortgage, loan agreement, note, lease, license or other
instrument to which the Company or any of its subsidiaries is a party or by
which any of them may be bound (including, without limitation, the 2002
Indenture, the 1997 Indenture, the Revolving Credit Facility and the Term
Loan Agreement) or to which any of the property or assets of any of them is
subject (each, a "Contract"), except for such conflicts, breaches, Defaults,
losses or Liens as would not, singly or in the aggregate, have a Material
Adverse Effect on the Company, nor will such action result in any violation
of the provisions of the charter or bylaws of the Company or any of its
subsidiaries or any applicable law, administrative regulation or
administrative or court order or decree applicable to the Company or any of
its subsidiaries. Except such as have been obtained by the Company and are in
full force and effect under the Securities Act, applicable state securities
or Blue Sky laws and from the New York Stock Exchange or the National
Association of Securities Dealers, Inc. (the "NASD"), no consent, approval,
authorization or order of, or notice to or filing with, any United States
federal or state governmental or regulatory agency or body or any court of
the United States or of any state thereof is required for the Company's
execution, delivery and performance of this Agreement or the issuance and
delivery of the Common Shares, or consummation of the transactions
contemplated herein and in the Prospectus (including the
9
redemption of the 11% Notes in accordance with the terms and conditions of
the 2002 Indenture) and the Related Transactions. As used herein, a "Debt
Repayment Triggering Event" means any event or condition which gives, or with
the giving of notice or lapse of time would give, the holder of any note,
debenture or other evidence of indebtedness (or any person acting on such
holder's behalf) the right to require the repurchase, redemption or repayment
of all or a portion of such indebtedness by the Company or any of its
subsidiaries.
(o) Notice of Term Loan Prepayment. Prior to the date hereof, the
Company has given the Term Loan Agreement Notice.
(p) No Material Actions or Proceedings. Except as otherwise disclosed in
the Prospectus, there is no action, suit or proceeding before or by any court
or governmental agency or body now pending or, to the Company's knowledge,
threatened against or affecting the Company or any of its subsidiaries which,
if adversely determined, would result in a Material Adverse Effect on the
Company, or would prevent or hinder the consummation of all the transactions
contemplated by this Agreement and in the Prospectus (including the
redemption of the 11% Notes in accordance with the terms and conditions of
the 2002 Indenture) and the Related Transactions.
(q) No Labor Disputes. No strike, work stoppage or other similar labor
dispute with the employees of the Company or any subsidiary, or, to the
knowledge of the Company, with the employees of any principal supplier of the
Company or any subsidiary, exists or, to the knowledge of the Company, is
threatened, which would have a Material Adverse Effect on the Company.
(r) Intellectual Property Rights. The Company and its subsidiaries own or
possess sufficient trademarks, trade names, copyrights, licenses, approvals,
trade secrets and other similar rights (collectively, "Intellectual Property
Rights") reasonably necessary to conduct their businesses as now conducted;
and the expected expiration of any of such Intellectual Property Rights would
not result in a Material Adverse Effect on the Company. Neither the Company
nor any of its subsidiaries has received any notice of infringement or
conflict with asserted Intellectual Property Rights of others, which
infringement or conflict, if the subject of an unfavorable decision, would
result in a Material Adverse Effect on the Company.
(s) All Necessary Permits, etc. The Company and each subsidiary possesses
such certificates, authorizations or permits issued by the appropriate
regulatory or other governmental agencies or bodies as are necessary to
conduct their respective businesses as currently conducted and as described
in the Prospectus, each such certificate, authorization and permit being in
full force and effect and the Company and each subsidiary is in compliance
with the terms of each such certificate, authorization and permit, except
where the failure to possess or comply with any such certificate,
authorization or permit would not, singly or in the aggregate, have a
Material Adverse Effect on the Company; and neither the Company nor any of
its subsidiaries has received any notice of proceedings relating to the
revocation or modification of, or non-compliance with, any such certificate,
authorization or permit which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would have a Material Adverse
Effect on the Company.
(t) Title to Properties. The Company and each subsidiary has good and
marketable title to all the properties and assets reflected as owned in the
financial statements of the Company and its consolidated subsidiaries
referred to in Section 1(k) above (or elsewhere in the Prospectus) free and
clear of any Liens, except for the Liens under the Revolving Credit Facility
and the Term Loan Agreement and such as do not materially and adversely
affect the value of such property and do not materially interfere with the
use made or proposed to be made of such property by the Company or such
subsidiary. The real property, improvements, equipment and personal property
held under lease
10
by the Company or any subsidiary are held under valid and enforceable leases,
with such exceptions as are not material and do not materially interfere with
the use made or proposed to be made of such real property, improvements,
equipment or personal property by the Company or such subsidiary.
(u) Tax Law Compliance. All necessary federal, state and foreign income
and franchise tax returns required to be filed by the Company and its
subsidiaries have been filed, other than those filings being contested in
good faith, and all material taxes, including withholding taxes, penalties
and interest, assessments, fees and other charges due or claimed to be due
from such entities have been paid, other than those being contested in good
faith and for which adequate reserves have been provided or those currently
payable without penalty or interest. The Company has made adequate charges,
accruals and reserves in the applicable financial statements referred to in
Section 1(j) above in respect of all federal, state and foreign income and
franchise taxes for all periods as to which the tax liability of the Company
or any of its subsidiaries has not been finally determined.
(v) Company Not an "Investment Company". The Company is not and will not
after receipt of payment for the Common Shares and the Senior Subordinated
Notes in the concurrent Senior Subordinated Notes Offering be (i) an
"investment company" or a company "controlled" by an investment company
within the meaning of the United States Investment Company Act of 1940, as
amended, (ii) a "holding company" or a "subsidiary company" of a holding
company or an "affiliate" thereof within the meaning of the United States
Public Utility Holding Company Act of 1935, as amended, or (iii) subject to
regulation under the United States Federal Power Act or any federal or state
statute or regulation limiting its ability to incur indebtedness for borrowed
money.
(w) Insurance. Except as otherwise disclosed in the Prospectus, each of
the Company and its subsidiaries is insured by recognized, financially sound
institutions with policies in such amounts and with such deductibles and
covering such risks as are generally deemed adequate and customary for its
business including, but not limited to, policies covering real and personal
property owned or leased by the Company and its subsidiaries against theft,
damage, destruction, acts of vandalism and earthquakes. Except as disclosed
in the Prospectus, neither the Company nor any of its subsidiaries has any
reason to believe that it will not be able (i) to renew its existing
insurance coverage as and when such policies expire or (ii) to obtain
comparable coverage from similar institutions as may be necessary or
appropriate to conduct its business as now conducted and at a cost that would
not result in a Material Adverse Effect on the Company, as the case may be.
Neither the Company nor any of its subsidiaries has been denied any insurance
coverage which it has sought or for which it has applied.
(x) No Mandatory Redemption. Except as otherwise disclosed in the
Prospectus, the Company is not actively considering any plan or transaction
that, if consummated, would result in any mandatory requirement to redeem, or
make an offer to purchase, any securities of the Company pursuant to the
terms thereof.
(y) Solvency. The Company is, and immediately after the First Closing Date
and the Second Closing Date, as the case may be (after giving effect to the
sale of the Common Shares and the application of the proceeds therefrom, and
the Related Transactions), will be, Solvent. As used herein, the term
"Solvent" means, with respect to the Company on a particular date, that on
such date the fair market value of the assets of the Company is greater than
the total amount of liabilities (including contingent liabilities) of the
Company, (ii) the present fair salable value of the assets of the Company is
greater than the amount that will be required to pay the probable liabilities
of the Company on its debts as they become absolute and matured, (iii) the
Company is able to realize upon its assets and pay its debts and other
liabilities, including contingent obligations, as they mature and (iv) the
Company does not have unreasonably small capital.
11
(z) No Price Stabilization or Manipulation. The Company has not taken and
will not take, directly or indirectly, any action designed to or that might
be reasonably expected to cause or result in stabilization or manipulation of
the price of the Common Stock to facilitate the sale or resale of the Common
Shares.
(aa) Related Party Transactions. There are no business relationships or
related-party transactions involving the Company or any subsidiary or any
other person required to be described in the Prospectus which have not been
described as required.
(bb) No Unlawful Contributions or Other Payments. Neither the Company nor
any of its subsidiaries nor, to the knowledge of the senior management of the
Company, any employee or agent of the Company or any subsidiary, has, at any
time during the last five years, made any contribution or other payment to
any official of, or candidate for, any federal, state or foreign office in
violation of any law where such violation would result in a Material Adverse
Change or be of the character required to be disclosed in the Prospectus.
(cc) Company's Accounting System. Except as otherwise disclosed in the
Prospectus, the Company maintains a system of accounting controls sufficient
to provide reasonable assurances 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.
(dd) Compliance with Environmental Laws. Except as otherwise disclosed in
the Prospectus or as would not, singly or in the aggregate, result in a
Material Adverse Effect on the Company, as the case may be, (i) neither the
Company nor any of its subsidiaries is in violation of any federal, state,
local or foreign law or regulation relating to pollution or protection of
human health or the environment (including, without limitation, ambient air,
surface water, groundwater, land surface or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum and
petroleum products (collectively, "Materials of Environmental Concern"), or
otherwise relating to the manufacture, processing, distribution, use,
treatment, storage, disposal, transport or handling of Materials of
Environmental Concern (collectively, "Environmental Laws"), which violation
includes, but is not limited to, noncompliance with any permits or other
governmental authorizations required for the operation of the business of the
Company or any of its subsidiaries under applicable Environmental Laws, or
noncompliance with the terms and conditions thereof, nor has the Company or
any of its subsidiaries received any written communication, whether from a
governmental authority, citizens group, employee or otherwise, that alleges
that such the Company or such subsidiary is in violation of any Environmental
Law; (ii) there is no claim, action or cause of action filed with a court or
governmental authority, nor investigation with respect to which the Company
has received written notice, and no written notice by any person or entity
alleging potential liability for investigatory costs, cleanup costs,
governmental responses costs, natural resources damages, property damages,
personal injuries, attorneys' fees or penalties arising out of, based on or
resulting from the presence, or release into the environment, of any Material
of Environmental Concern at any location owned, leased or operated by the
Company or any of its subsidiaries, now or in the past (collectively,
"Environmental Claims"), pending, or, to the best of the Company's knowledge,
threatened or contemplated against the Company or any of its subsidiaries or
any person or entity whose liability for any Environmental Claim the Company
or any of is subsidiaries has retained or assumed either contractually or by
operation of law; and (iii) to the
12
best of the Company's knowledge, there are no past or present actions,
activities, circumstances, conditions, events or incidents, including,
without limitation, the release, emission, discharge, presence or disposal of
any Material of Environmental Concern, that reasonably could result in a
violation of any Environmental Law or form the basis of a potential
Environmental Claim against the Company or any of its subsidiaries or against
any person or entity whose liability for any Environmental Claim the Company
or any of its subsidiaries has retained or assumed either contractually or by
operation of law.
(ee) Periodic Review of Costs of Environmental Compliance. In the ordinary
course of its business, the Company conducts a periodic review of the effect
of Environmental Laws on its business, operations and properties, in the
course of which it identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with Environmental
Laws or any permit, license or approval, any related constraints on operating
activities and any potential liabilities to third parties). On the basis of
such review and the amount of its established reserves, the Company has
reasonably concluded that such associated costs and liabilities would not,
singly or in the aggregate, result in a Material Adverse Effect on the
Company, except as otherwise disclosed in the Prospectus.
(ff) ERISA Compliance. The Company or such subsidiary and any "employee
benefit plan" (as defined under the Employee Retirement Income Security Act
of 1974, as amended, and the regulations and published interpretations
thereunder (collectively, "ERISA")) established or maintained by the Company,
its subsidiaries or their "ERISA Affiliates" (as defined below) are and will
be in compliance in all material respects with ERISA. "ERISA Affiliate"
means, with respect to the Company or a subsidiary, any member of any group
of organizations described in Section 414(b), (c), (m) or (o) of the Internal
Revenue Code of 1986, as amended, and the regulations and published
interpretations thereunder (the "Code") of which the Company or such
subsidiary is a member. No "reportable event" (as defined under ERISA and for
which notice has not been waived by applicable regulations) has occurred or
is reasonably expected to occur with respect to any "employee benefit plan"
established or maintained by the Company, its subsidiaries or any of their
ERISA Affiliates. No "employee benefit plan" established or maintained by the
Company, its subsidiaries or any of their ERISA Affiliates, if such "employee
benefit plan" were terminated, would have any "amount of unfunded benefit
liabilities" (as defined in Title IV of ERISA), except that, in the case of
the Giant Yorktown Cash Balance Plan, the amount of such unfunded benefit
liabilities, if any, would not have a Material Adverse Effect on the Company.
Neither the Company, its subsidiaries nor any of their ERISA Affiliates has
incurred or reasonably expects to incur any liability under (i) Title IV of
ERISA with respect to termination of, or withdrawal from, any "employee
benefit plan" or (ii) Sections 412, 4971, 4975 or 4980B of the Code. Each
"employee benefit plan" established or maintained by the Company, its
subsidiaries or any of their ERISA Affiliates that is intended to be
qualified under Section 401 of the Code is and will be so qualified and, to
the best of the Company's knowledge, nothing has occurred, whether by action
or failure to act, which would cause the loss of such qualification.
(gg) Brokers. There is no broker, finder or other party that is entitled
to receive from the Company any brokerage or finder's fee or other fee or
commission as a result of any transactions contemplated by this Agreement,
except as provided in this Agreement.
(hh) No Outstanding Loans or Other Indebtedness. Except as otherwise
disclosed in the Prospectus, there are no outstanding loans, advances (except
normal advances for business expenses in the ordinary course of business) or
guarantees of indebtedness by the Company to or for the benefit of any of the
officers or directors of the Company.
13
(ii) Compliance with Laws. The Company has not been advised, and has no
reason to believe, that it and each of its subsidiaries are not conducting
business in compliance with all applicable laws, rules and regulations of the
jurisdictions in which it is conducting business, except as otherwise
disclosed in the Prospectus or except where failure to be so in compliance
would not result in a Material Adverse Change.
(jj) No Event of Default. No event of default exists under any contract,
indenture, mortgage, loan agreement, note, lease or other agreement or
instrument constituting Senior Indebtedness (as defined in the 2002
Indenture).
(kk) Disclosure Controls and Procedures. The Company has established and
maintains disclosure controls and procedures (as such term is defined in Rule
13a-14 under the Exchange Act), which (i) are designed to ensure that
material information relating to the Company, including its consolidated
subsidiaries, is made known to the Company's principal executive officer and
its principal financial officer by others within those entities, particularly
during the periods in which the periodic reports required under the Exchange
Act are being prepared, (ii) have been evaluated for effectiveness as of a
date within 90 days prior to the filing of the Company's most recent annual
or quarterly report filed with the Commission and (iii) are effective in all
material respects to perform the functions for which they were established.
Based on the evaluation of the Company's disclosure controls and procedures
described above, the Company is not aware of (a) any significant deficiency
in the design or operation of internal controls which could adversely affect
the Company's ability to record, process, summarize and report financial data
or any material weaknesses in internal controls or (b) any fraud, whether or
not material, that involves management or other employees who have a
significant role in the Company's internal controls. Since the most recent
evaluation of the Company's disclosure controls and procedures described
above, there have been no significant changes in internal controls or in
other factors that could significantly affect internal controls.
Any certificate signed by an officer of the Company and delivered
to the Representatives or to counsel for the Underwriters shall be deemed to
be a representation and warranty by the Company to each Underwriter as to the
matters set forth therein.
The Company acknowledges that the Underwriters and, for purposes
of the opinions to be delivered pursuant to Section 5 hereof, counsel to the
Company and counsel to the Underwriters, will rely upon the accuracy and
truthfulness of the foregoing representations and hereby consents to such
reliance.
SECTION 2. PURCHASE, SALE AND DELIVERY OF THE COMMON SHARES.
(a) The Firm Common Shares. Upon the terms herein set forth, the Company
agrees to issue and sell to the several Underwriters an aggregate of
3,000,000 Firm Common Shares. On the basis of the representations, warranties
and agreements herein contained, and upon the terms but subject to the
conditions herein set forth, the Underwriters agree, severally and not
jointly, to purchase from the Company the respective number of Firm Common
Shares set forth opposite their names on Schedule A. The purchase price per
Firm Common Share to be paid by the several Underwriters to the Company shall
be $[_______] per share.
(b) The First Closing Date. Delivery of certificates for the Firm Common
Shares to be purchased by the Underwriters and payment therefor shall be made
at the offices of Shearman & Sterling LLP, 599 Lexington Avenue, New York,
New York 10022 (or such other place as may be agreed to by the Company and
the Representatives) at 9:00 a.m. New York time, on May [__], 2004
14
or such other time and date as the Representatives and the Company shall
agree (the time and date of such closing are called the "First Closing
Date").
(c) The Optional Common Shares; the Second Closing Date. In addition, on
the basis of the representations, warranties and agreements herein contained,
and upon the terms but subject to the conditions herein set forth, the
Company hereby grants an option to the several Underwriters to purchase,
severally and not jointly, up to an aggregate of 450,000 Optional Common
Shares from the Company at the purchase price per share to be paid by the
Underwriters for the Firm Common Shares. The option granted hereunder may be
exercised by the Underwriters solely for the purpose of covering any
over-allotments in connection with the sale and distribution of the Firm
Common Shares. The option granted hereunder may be exercised at any time (but
not more than once) upon notice by the Representatives to the Company, which
notice may be given at any time within 30 days from the date of this
Agreement. Such notice shall set forth (i) the aggregate number of Optional
Common Shares as to which the Underwriters are exercising the option, (ii)
the names and denominations in which the certificates for the Optional Common
Shares are to be registered and (iii) the time, date and place at which such
certificates will be delivered (which time and date may be simultaneous with,
but not earlier than, the First Closing Date; and in such case the term
"First Closing Date" shall refer to the time and date of delivery of
certificates for the Firm Common Shares and the Optional Common Shares). Such
time and date of delivery, if subsequent to the First Closing Date, is called
the "Second Closing Date" and shall be determined by the Representatives and
shall not be earlier than three nor later than five full business days after
delivery of such notice of exercise. If any Optional Common Shares are to be
purchased, (a) each Underwriter agrees, severally and not jointly, to
purchase the number of Optional Common Shares (subject to such adjustments to
eliminate fractional shares as the Representatives may determine) that bears
the same proportion to the total number of Optional Common Shares to be
purchased as the number of Firm Common Shares set forth on Schedule A
opposite the name of such Underwriter bears to the total number of Firm
Common Shares and (b) the Company agrees to sell up to an aggregate of
450,000 Optional Common Shares as requested by the Representatives. The
Representatives may cancel the option at any time prior to its expiration by
giving written notice of such cancellation to the Company.
(d) Public Offering of the Common Shares. The Representatives hereby
advise the Company that the Underwriters intend to offer for sale to the
public, as described in the Prospectus, their respective portions of the
Common Shares as soon after this Agreement has been executed and the
Registration Statement has been declared effective as the Representatives, in
their sole judgment, have determined is advisable and practicable.
(e) Payment for the Common Shares. Payment for the Common Shares to be
sold by the Company shall be made at the First Closing Date (and, if
applicable, at the Second Closing Date) by wire transfer of immediately
available funds to the order of the Company.
It is understood that the Representatives have been authorized,
for their own account and the accounts of the several Underwriters, to accept
delivery of and receipt for, and make payment of the purchase price for, the
Firm Common Shares and any Optional Common Shares the Underwriters have
agreed to purchase. BAS, individually and not as a Representative of the
Underwriters, may (but shall not be obligated to) make payment for any Common
Shares to be purchased by any Underwriter whose funds shall not have been
received by the Representatives by the First Closing Date or the Second
Closing Date, as the case may be, for the account of such Underwriter, but
any such payment shall not relieve such Underwriter from any of its
obligations under this Agreement.
15
(f) Delivery of the Common Shares. The Company shall deliver, or cause to
be delivered, to the Representatives for the accounts of the several
Underwriters certificates for the Firm Common Shares to be sold by them at the
First Closing Date, against the irrevocable release of a wire transfer of
immediately available funds for the amount of the purchase price therefor. The
Company shall also deliver, or cause to be delivered, to the Representatives for
the accounts of the several Underwriters, certificates for the Optional Common
Shares the Underwriters have agreed to purchase at the First Closing Date or the
Second Closing Date, as the case may be, against the irrevocable release of a
wire transfer of immediately available funds for the amount of the purchase
price therefor. The certificates for the Common Shares shall be in definitive
form and registered in such names and denominations as the Representatives shall
have requested at least two full business days prior to the First Closing Date
(or the Second Closing Date, as the case may be) and shall be made available for
inspection on the business day preceding the First Closing Date (or the Second
Closing Date, as the case may be) at a location in New York City as the
Representatives may designate. Time shall be of the essence, and delivery at the
time and place specified in this Agreement is a further condition to the
obligations of the Underwriters.
(g) Delivery of Prospectus to the Underwriters. Not later than 12:00 p.m.
on the second business day following the date the Common Shares are first
released by the Underwriters for sale to the public, the Company shall deliver
or cause to be delivered, copies of the Prospectus in such quantities and at
such places as the Representatives shall request.
SECTION 3. ADDITIONAL COVENANTS OF THE COMPANY.
The Company further covenants and agrees with each Underwriter as
follows:
(a) Representatives' Review of Proposed Amendments and Supplements. During
such period beginning on the date hereof and ending on the later of the First
Closing Date or such date, as in the opinion of counsel for the Underwriters,
the Prospectus is no longer required by law to be delivered in connection with
sales by an Underwriter or dealer (the "Prospectus Delivery Period"), prior to
amending or supplementing the Registration Statement (including any registration
statement filed under Rule 462(b) under the Securities Act) or the Prospectus,
the Company shall furnish to the Representatives for review a copy of each such
proposed amendment or supplement, and the Company shall not file any such
proposed amendment or supplement to which the Representatives or their counsel
reasonably object.
(b) Securities Act Compliance. After the date of this Agreement, the
Company shall promptly advise the Representatives in writing (i) of the receipt
of any comments of, or requests for additional or supplemental information from,
the Commission, (ii) of the time and date of any filing of any post-effective
amendment to the Registration Statement or any amendment or supplement to any
preliminary prospectus or the Prospectus, (iii) of the time and date that any
post-effective amendment to the Registration Statement becomes effective and
(iv) of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or any post-effective amendment
thereto or of any order preventing or suspending the use of any preliminary
prospectus or the Prospectus, or of any proceedings to remove, suspend or
terminate from listing or quotation the Common Stock from any securities
exchange upon which it is listed for trading or included or designated for
quotation, or of the threatening or initiation of any proceedings for any of
such purposes. If the Commission shall enter any such stop order at any time,
the Company will use its best efforts to obtain the lifting of such order at the
earliest possible moment. Additionally, the Company agrees that it shall comply
with the provisions of Rules 424(b), 430A and 434, as applicable, under the
Securities Act and will use its reasonable efforts to confirm that any filings
made by the Company under such Rule 424(b) were received in a timely manner by
the Commission.
16
(c) Notification of Breach of this Agreement. The Company shall promptly
notify the Representatives if the Company discovers that any of its
representations contained in this Agreement is not, at any time prior to the
completion of the distribution of the Common Shares, true and correct, or if the
Company has at any such time breached any of its obligations hereunder.
(d) Amendments and Supplements to the Prospectus and Other Securities Act
Matters. If, during the Prospectus Delivery Period, any event shall occur or
condition exist as a result of which it is necessary to amend or supplement the
Prospectus in order to make the statements therein, in the light of the
circumstances when the Prospectus is delivered to a purchaser, not misleading,
or if in the opinion of the Representatives or counsel for the Underwriters it
is otherwise necessary to amend or supplement the Prospectus to comply with law,
the Company agrees to promptly prepare (subject to Section 3(A)(a) hereof), file
with the Commission and furnish at its own expense to the Underwriters and to
dealers, amendments or supplements to the Prospectus so that the statements in
the Prospectus as so amended or supplemented will not, in the light of the
circumstances when the Prospectus is delivered to a purchaser, be misleading or
so that the Prospectus, as amended or supplemented, will comply with law.
(e) Copies of any Amendments and Supplements to the Prospectus. The
Company agrees to furnish the Representatives, without charge, during the
Prospectus Delivery Period, as many copies of the Prospectus and any amendments
and supplements thereto (including any documents incorporated or deemed
incorporated by reference therein) as the Representatives may reasonably
request.
(f) Blue Sky Compliance. The Company shall cooperate with the
Representatives and counsel for the Underwriters to qualify or register the
Common Shares for sale under (or obtain exemptions from the application of) the
state securities or Blue Sky laws of those jurisdictions designated by the
Representatives, shall comply with such laws and shall continue such
qualifications, registrations and exemptions in effect so long as required for
the distribution of the Common Shares. The Company shall not be required to
qualify as a foreign corporation or to take any action that would subject it to
general service of process in any such jurisdiction where it is not presently
qualified or where it would be subject to taxation as a foreign corporation. The
Company will advise the Representatives promptly of the suspension of the
qualification or registration of (or any such exemption relating to) the Common
Shares for offering, sale or trading in any jurisdiction or any initiation or
threat of any proceeding for any such purpose, and in the event of the issuance
of any order suspending such qualification, registration or exemption, the
Company shall use its best efforts to obtain the withdrawal thereof at the
earliest possible moment.
(g) Use of Proceeds. The Company shall apply the net proceeds from the
sale of the Common Shares sold by it and, if completed, the net proceeds of the
Senior Subordinated Notes Offering in the manner described under the caption
"Use of Proceeds" in the Prospectus.
(h) Transfer Agent. The Company shall engage and maintain, at its expense,
a registrar and transfer agent for the Common Stock.
(i) Earnings Statement. As soon as practicable, the Company will make
generally available to its security holders and to the Representatives an
earnings statement (which need not be audited) covering the twelve-month period
ending June 30, 2004 that satisfies the provisions of Section 11(a) of the
Securities Act.
(j) Periodic Reporting Obligations. During the Prospectus Delivery Period
the Company shall file, on a timely basis, with the Commission and the New York
Stock Exchange all reports and documents required to be filed under the Exchange
Act.
17
(k) Company to Provide Interim Financial Statements. Prior to the Closing
Date, the Company will furnish the Underwriters, as soon as they have been
prepared by or are available to the Company, a copy of any unaudited interim
financial statements of the Company for any period subsequent to the period
covered by the most recent financial statements appearing in the Registration
Statement and the Prospectus.
(l) Listing. The Company will use its best efforts to list, subject to
notice of issuance, the Common Shares on the New York Stock Exchange.
(m) Agreement Not to Offer or Sell Additional Securities. During the
period commencing on the date hereof and ending on the 90th day following the
date of the Prospectus, the Company will not, without the prior written consent
of BAS (which consent may be withheld at the sole discretion of BAS), directly
or indirectly, sell, offer, contract or grant any option to sell, pledge,
transfer or establish an open "put equivalent position" within the meaning of
Rule 16a-1(h) under the Exchange Act, or otherwise dispose of or transfer, or
announce the offering of, or file any registration statement under the
Securities Act in respect of, any shares of Common Stock, options or warrants to
acquire shares of the Common Stock or securities exchangeable or exercisable for
or convertible into shares of Common Stock (other than as contemplated by this
Agreement with respect to the Common Shares); provided, however, that the
Company may issue shares of its Common Stock or options to purchase its Common
Stock, or Common Stock upon exercise of options, pursuant to any stock option,
stock bonus or other stock plan or arrangement described in the Prospectus, but
only if the executive officers and directors that are holders of such shares,
options, or shares issued upon exercise of such options, agree in writing not to
sell, offer, dispose of or otherwise transfer any such shares or options during
such 90 day period without the prior written consent of BAS (which consent may
be withheld at the sole discretion of the BAS). Notwithstanding the foregoing,
if (x) during the last 17 days of the 90-day restricted period the Company
issues an earnings release or material news or a material event relating to the
Company occurs; or (y) prior to the expiration of the 90-day restricted period,
the Company announces that it will release earnings results during the 16-day
period beginning on the last day of the 90-day period; the restrictions imposed
in this clause (m) shall continue to apply until the expiration of the 18-day
period beginning on the issuance of the earnings release or the occurrence of
the material news or material event; provided however, that this sentence shall
not apply if the research published or distributed on the Company is compliant
under Rule 139 of the Securities Act and the Company's securities are actively
traded as defined in Rule 101(c)(1) of Regulation M of the Exchange Act.
(n) Future Reports to the Representatives. During the period of three
years hereafter the Company will furnish to the Representatives at 700
Louisiana, 8th Floor, Houston, Texas 77002-2700, Attention: Scott Warrander: (i)
as soon as practicable after the end of each fiscal year, copies of the Annual
Report of the Company containing the balance sheet of the Company as of the
close of such fiscal year and statements of income, stockholders' equity and
cash flows for the year then ended and the opinion thereon of the Company's
independent public or certified public accountants; (ii) as soon as practicable
after the filing thereof, copies of each proxy statement, Annual Report on Form
10-K, Quarterly Report on Form 10-Q, Current Report on Form 8-K or other report
filed by the Company with the Commission, the NASD or any securities exchange;
and (iii) as soon as available, copies of any report or communication of the
Company mailed generally to holders of its capital stock.
(o) Investment Limitation. The Company shall not invest, or otherwise use
the proceeds received by the Company from its sale of the Common Shares in such
a manner as would require the Company or any of its subsidiaries to register as
an investment company under the Investment Company Act.
18
(p) No Manipulation of Price. Neither the Company nor any of its
affiliates will take, directly or indirectly, any action designed to or which
constitutes or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any securities of the Company at
any time prior to the Representatives notifying the Company of the completion of
the distribution of the Common Shares.
(q) Existing Lock-Up Agreement. The Company will enforce all existing
agreements between the Company and any of its security holders that prohibit the
sale, transfer, assignment, pledge or hypothecation of any of the Company's
securities in connection with a public offering by the Company. In addition, the
Company will direct the transfer agent to place stop transfer restrictions upon
any such securities of the Company that are bound by such existing "lock-up"
agreements for the duration of the periods contemplated in such agreements.
SECTION 4. PAYMENT OF EXPENSES.
The Company agrees to pay all costs, fees and expenses incurred in
connection with the performance of its obligations hereunder and in connection
with the transactions contemplated hereby, including without limitation (i) all
expenses incident to the issuance and delivery of the Common Shares (including
all printing and engraving costs), (ii) all fees and expenses of the registrar
and transfer agent of the Common Stock, (iii) all necessary issue, transfer and
other stamp taxes in connection with the issuance and sale of the Common Shares
to the Underwriters, (iv) all fees and expenses of the Company's counsel,
independent public or certified public accountants and other advisors, (v) all
costs and expenses incurred in connection with the preparation, printing,
filing, shipping and distribution of the Registration Statement (including
financial statements and exhibits), each preliminary prospectus and the
Prospectus, and all amendments and supplements thereto, and this Agreement, (vi)
all filing fees, attorneys' fees and expenses incurred by the Company or the
Underwriters in connection with qualifying or registering (or obtaining
exemptions from the qualification or registration of) all or any part of the
Common Shares for offer and sale under the state securities or Blue Sky laws,
and, if requested by the Representatives, preparing and printing a "Blue Sky
Survey" or memorandum, and any supplements thereto, advising the Underwriters of
such qualifications, registrations and exemptions, (vii) any filing fees
incident to, and any reasonable fees and disbursements of counsel for the
Underwriters in connection with, the NASD's review and approval of the
Underwriters' participation in the offering and distribution of the Common
Shares, (viii) the fees and disbursements associated with listing the Common
Shares on the New York Stock Exchange, and (ix) all other fees, costs and
expenses referred to in Item 14 of Part II of the Registration Statement. Except
as provided in clauses (vi) and (vii) of this Section 4, Section 6, Section 8
and Section 9 hereof, the Underwriters shall pay their own expenses, including
the fees and disbursements of their counsel.
SECTION 5. CONDITIONS TO OBLIGATIONS OF THE UNDERWRITERS.
The obligations of the several Underwriters to purchase and pay for
the Common Shares as provided herein on the First Closing Date and, with respect
to the Optional Common Shares, the Second Closing Date, shall be subject to the
accuracy of the representations and warranties on the part of the Company set
forth in Section 1 hereof as of the date hereof and as of the First Closing Date
as though then made and, with respect to the Optional Common Shares, as of the
Second Closing Date as though then made, to the timely performance by the
Company of their respective covenants and other obligations hereunder, and to
each of the following additional conditions:
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(a) No Untrue Statements; Inadvisable to Proceed. The Representatives
shall not have disclosed to the Company on or prior to the First Closing Date or
the Second Closing Date, as the case may be, that the Prospectus contains an
untrue statement of a fact which, in the reasonable opinion of the
Representatives, is material or omits to state a fact which, in the reasonable
opinion of the Representatives, is material and is necessary in order to make
the statements therein, in the light of the circumstances under which they were
made, not misleading; the Company shall not have prepared and distributed any
amendment or supplement to the Prospectus either without prior review by, or
over the reasonable objection of, the Representatives; and no change shall have
occurred under the Securities Act which in the reasonable judgment of the
Representatives makes it impracticable or inadvisable to proceed with the
purchase, sale and delivery of the Common Shares on the terms and in the manner
contemplated in the Prospectus.
(b) Corporate Proceedings. All corporate proceedings and other legal
matters incident to the authorization, form and validity of this Agreement, the
Prospectus and all other legal matters relating to this Agreement and the
transactions contemplated hereby and thereby (including the redemption of the
11% Notes in accordance with the terms and conditions of the 2002 Indenture)
shall be reasonably satisfactory in all respects to the Representatives and
their counsel, and the Company and each subsidiary shall have furnished to the
Representatives all documents and information that they may reasonably request
to enable them to pass upon such matters.
(c) Resolutions. The Company shall have delivered to the Representatives a
certified copy of the resolutions of the Board of Directors (or any authorized
committee thereof, together with the resolutions of the Board of Directors
establishing such committee) of the Company approving the issuance of the Common
Shares on the terms and conditions of this Agreement and approving the terms
hereof and authorizing the execution and delivery of this Agreement and all
other documents relevant to the issue of the Common Shares by the Company
(including the redemption of the 11% Notes in accordance with the terms and
conditions of the 2002 Indenture).
(d) Accountant's Comfort Letter. The Company shall have furnished to the
Representatives on the date hereof a letter of Deloitte & Touche LLP,
independent public accountants for the Company, addressed to the Underwriters
and dated the date hereof, in form and substance reasonably satisfactory to the
Representatives, containing statements and information of the type ordinarily
included in accountant's "comfort letters" to initial purchasers, delivered
according to Statement of Auditing Standards Nos. 72 and 76 (or any successor
bulletins), with respect to the Company's audited financial statements and
unaudited pro forma financial statements and certain financial information
contained in the Registration Statement and the Prospectus (and the
Representatives shall have received an additional two conformed copies of such
accountants' letter for each of the several underwriters).
(e) Bring-Down Comfort Letters. The Company shall have furnished to the
Representatives on each of the First Closing Date and the Second Closing Date, a
letter of Deloitte & Touche LLP, independent public accountants for the Company,
addressed to the Representatives and dated as of such Closing Date, in form and
substance reasonably satisfactory to the Representatives, to the effect that
they reaffirm the statements made in the letter furnished by them pursuant to
Section 5(d), except that the specified date referred to therein for the
carrying out of procedures shall be no more than three business days prior to
the First Closing Date or Second Closing Date, as the case may be (and the
Representatives shall have received an additional two conformed copies of such
accountants' letter for each of the several underwriters).
20
(f) Compliance with Registration Requirements; No Stop Order; No Objection
from NASD. For the period from and after effectiveness of this Agreement and
prior to the First Closing Date and, with respect to the Optional Common Shares,
the Second Closing Date:
(i) the Company shall have filed the Prospectus with the Commission
(including the information required by Rule 430A under the Securities Act)
in the manner and within the time period required by Rule 424(b) under the
Securities Act; or the Company shall have filed a post-effective amendment
to the Registration Statement containing the information required by such
Rule 430A, and such post-effective amendment shall have become effective;
or, if the Company elected to rely upon Rule 434 under the Securities Act
and obtained the Representatives' consent thereto, the Company shall have
filed a Term Sheet with the Commission in the manner and within the time
period required by such Rule 424(b);
(ii) no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment to the Registration Statement,
shall be in effect and no proceedings for such purpose shall have been
instituted or threatened by the Commission; and
(iii) the NASD shall have raised no objection to the fairness and
reasonableness of the underwriting terms and arrangements.
(g) No Material Adverse Change. For the period from and after the date of
this Agreement and prior to the First Closing Date and, with respect to the
Optional Common Shares, the Second Closing Date, in the reasonable judgment of
the Representatives there shall not have occurred any Material Adverse Change.
(h) Opinion of Counsel for the Company. On each of the First Closing Date
and the Second Closing Date, the Representatives shall have received (i) the
favorable opinion of Fennemore Craig, P.C., United States counsel for the
Company, addressed to the Representatives and dated as of such Closing Date, the
form of which is attached as Exhibit A, and (ii) the favorable opinion of Kim
Bullerdick, Esq., the General Counsel of the Company, addressed to the
Representatives and dated as of such Closing Date, the form of which is attached
as Exhibit B (and the Representatives shall have received an additional two
conformed copies of each such counsel's legal opinion for each of the several
Underwriters).
(i) Opinion of Counsel for the Underwriters. On each of the First Closing
Date and the Second Closing Date, the Representatives shall have received the
favorable opinion of Shearman & Sterling LLP, counsel for the Underwriters,
dated as of such Closing Date, (and the Representatives shall have received an
additional two conformed copies of such counsel's legal opinion for each of the
several Underwriters) with respect to such matters as the Representatives may
reasonably request.
(j) Officers' Certificate. On each of the First Closing Date and the
Second Closing Date the Representatives shall have received a written
certificate executed by the President or a Vice President and the principal
financial or accounting officer of the Company, dated as of such Closing Date,
to the effect set forth in subsection (f)(ii) of this Section 5, and further to
the effect that:
(i) for the period from and after the date of this Agreement and
prior to such Closing Date, there has not occurred any Material Adverse
Change;
(ii) the representations, warranties and covenants of the Company
set forth in Section 1 of this Agreement are true and correct with the
same force and effect as though expressly made on and as of such Closing
Date;
21
(iii) the Company and each subsidiary has complied with all the
agreements hereunder and satisfied all the conditions on its part to be
performed or satisfied hereunder at or prior to such Closing Date; and
(iv) there shall not have occurred any downgrading, nor shall any
notice have been given of any intended or potential downgrading or of any
review for a possible change that does not indicate the direction of the
possible change, in the rating accorded any securities of the Company or
any of its subsidiaries by any "nationally recognized statistical rating
organization" as such term is defined for purposes of Rule 436 under the
Securities Act.
(k) Other Certificates. The Company shall have furnished to the
Representatives such further certificates and documents, including certificates
of officers of the Company's subsidiaries, as the Representatives shall have
reasonably requested.
(l) Lock-Up Agreement from Certain Securityholders of the Company. On or
prior to the date hereof, the Company shall have furnished to the
Representatives an agreement in the form of Exhibit C hereto from each officer
and director listed on Schedule B hereto, and such agreement shall be in full
force and effect on each of the First Closing Date and the Second Closing Date.
(m) Additional Documents. On or before each of the First Closing Date and
the Second Closing Date, the Representatives and counsel for the Underwriters
shall have received such information, documents and opinions as they may
reasonably require for the purposes of enabling them to pass upon the issuance
and sale of the Common Shares as contemplated herein, or in order to evidence
the accuracy of any of the representations and warranties, or the satisfaction
of any of the conditions or agreements, herein contained.
(n) Notice of Redemption for 11% Notes. On the First Closing Date and the
Second Closing Date, as the case may be, the Company shall have given the 11%
Notes Notice of Redemption for the redemption of the 11% Notes in accordance
with the terms and conditions of the 2002 Indenture.
All opinions (other than the opinion set forth in Section 5(i)
above), letters, evidences and certificates mentioned above or elsewhere in this
Agreement shall be deemed to be in compliance with the provisions hereof only if
they are in form and substance reasonably satisfactory to Shearman & Sterling
LLP, counsel to the Underwriters.
If any condition specified in this Section 5 is not satisfied when
and as required to be satisfied, this Agreement may be terminated by the
Representatives by notice to the Company at any time on or prior to the First
Closing Date and, with respect to the Optional Common Shares, at any time prior
to the Second Closing Date, which termination shall be without liability on the
part of any party to any other party, except that Section 4, Section 6, Section
8 and Section 9 shall at all times be effective and shall survive such
termination.
SECTION 6. REIMBURSEMENT OF UNDERWRITERS' EXPENSES.
If this Agreement is terminated by the Representatives pursuant to
Section 5, Section 7, Section 10 or Section 11, or if the sale to the
Underwriters of the Common Shares on the First Closing Date is not consummated
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or to comply with any provision hereof, the Company
agrees to reimburse the Representatives and the other Underwriters (or such
Underwriters as have terminated this Agreement with respect to themselves),
severally, upon demand for all out-of-pocket expenses that shall have been
reasonably incurred by the Representatives and the other Underwriters
22
in connection with the proposed purchase and the offering and sale of the Common
Shares, including but not limited to fees and disbursements of counsel, printing
expenses, travel expenses, postage, facsimile and telephone charges.
SECTION 7. EFFECTIVENESS OF THIS AGREEMENT.
This Agreement shall not become effective until the later of (i) the
execution of this Agreement by the parties hereto and (ii) notification by the
Commission to the Company and the Representative of the effectiveness of the
Registration Statement under the Securities Act.
Prior to such effectiveness, this Agreement may be terminated by any
party by notice to each of the other parties hereto, and any such termination
shall be without liability on the part of (a) the Company to any Underwriter,
except that the Company shall be obligated to reimburse the expenses of the
Representative and the Underwriters pursuant to Sections 4 and 6 hereof, (b) of
any Underwriter to the Company, or (c) of any party hereto to any other party
except that the provisions of Section 8 and Section 9 shall at all times be
effective and shall survive such termination.
SECTION 8. INDEMNIFICATION.
(a) Indemnification of the Underwriters by the Company. The Company agrees
to indemnify and hold harmless each Underwriter, its directors, officers and
employees, and each person, if any, who controls any Underwriter within the
meaning of the Securities Act and the Exchange Act against any loss, claim,
damage, liability or expense, as incurred, to which such Underwriter or such
controlling person may become subject, under the Securities Act, the Exchange
Act or other federal or state statutory law or regulation, or at common law or
otherwise (including in settlement of any litigation, if such settlement is
effected with the written consent of the Company), insofar as such loss, claim,
damage, liability or expense (or actions in respect thereof as contemplated
below) arises out of or is based (i) upon any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement, or any
amendment thereto, including any information deemed to be a part thereof
pursuant to Rule 430A or Rule 434 under the Securities Act, or the omission or
alleged omission therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading; or (ii) upon any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus or the Prospectus (or any amendment or supplement
thereto) or the omission or alleged omission therefrom of a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; or (iii) in whole or
in part upon any inaccuracy in the representations and warranties of the Company
contained herein; or (iv) in whole or in part upon any failure of the Company to
perform its obligations hereunder or under law; and to reimburse each
Underwriter and each such controlling person for any and all expenses (including
the fees and disbursements of counsel chosen by BAS) as such expenses are
reasonably incurred by such Underwriter or such controlling person in connection
with investigating, defending, settling, compromising or paying any such loss,
claim, damage, liability, expense or action; provided, however, that the
foregoing indemnity agreement shall not apply to any loss, claim, damage,
liability or expense to the extent, but only to the extent, arising out of or
based upon any untrue statement or alleged untrue statement or omission or
alleged omission made in reliance upon and in conformity with written
information furnished to the Company by the Representatives expressly for use in
the Registration Statement, any preliminary prospectus or the Prospectus (or any
amendment or supplement thereto). The indemnity agreement set forth in this
Section 8(a) shall be in addition to any liabilities that the Company may
otherwise have.
(b) Indemnification of the Company, its Directors and Officers. Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless
the Company, each of its directors, each of
23
its officers who signed the Registration Statement and each person, if any, who
controls the Company within the meaning of the Securities Act or the Exchange
Act, against any loss, claim, damage, liability or expense, as incurred, to
which the Company, or any such director, officer or controlling person may
become subject, under the Securities Act, the Exchange Act, or other federal or
state statutory law or regulation, or at common law or otherwise (including in
settlement of any litigation, if such settlement is effected with the written
consent of such Underwriter), insofar as such loss, claim, damage, liability or
expense (or actions in respect thereof as contemplated below) arises out of or
is based upon any untrue or alleged untrue statement of a material fact
contained in the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto), or arises out of or is
based upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged omission was made
in the Registration Statement, any preliminary prospectus, the Prospectus (or
any amendment or supplement thereto), in reliance upon and in conformity with
written information furnished to the Company by the Representatives expressly
for use therein; and to reimburse the Company, or any such director, officer or
controlling person for any legal and other expense reasonably incurred by the
Company, or any such director, officer or controlling person in connection with
investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action. The Company hereby acknowledges that the
only information that the Underwriters have furnished to the Company expressly
for use in the Registration Statement, any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) are the statements set forth
in the table in the first paragraph and as the third, eighth, ninth, tenth and
eleventh paragraphs under the caption "Underwriting" in the final prospectus
supplement; and the Underwriters confirm that such statements are correct. The
indemnity agreement set forth in this Section 8(b) shall be in addition to any
liabilities that each Underwriter may otherwise have.
(c) Notifications and Other Indemnification Procedures. Promptly after
receipt by an indemnified party under this Section 8 of notice of the
commencement of any action, such indemnified party will, if a claim in respect
thereof is to be made against an indemnifying party under this Section 8, notify
the indemnifying party in writing of the commencement thereof, but the omission
so to notify the indemnifying party will not relieve it from any liability which
it may have to any indemnified party for contribution or otherwise than under
the indemnity agreement contained in this Section 8 or to the extent it is not
prejudiced as a proximate result of such failure. In case any such action is
brought against any indemnified party and such indemnified party seeks or
intends to seek indemnity from an indemnifying party, the indemnifying party
will be entitled to participate in, and, to the extent that it shall elect,
jointly with all other indemnifying parties similarly notified, by written
notice delivered to the indemnified party promptly after receiving the aforesaid
notice from such indemnified party, to assume the defense thereof with counsel
reasonably satisfactory to such indemnified party; provided, however, if the
defendants in any such action include both the indemnified party and the
indemnifying party and the indemnified party shall have reasonably concluded
that a conflict may arise between the positions of the indemnifying party and
the indemnified party in conducting the defense of any such action or that there
may be legal defenses available to it and/or other indemnified parties which are
different from or additional to those available to the indemnifying party, the
indemnified party or parties shall have the right to select separate counsel to
assume such legal defenses and to otherwise participate in the defense of such
action on behalf of such indemnified party or parties. Upon receipt of notice
from the indemnifying party to such indemnified party of such indemnifying
party's election so to assume the defense of such action and approval by the
indemnified party of counsel, the indemnifying party will not be liable to such
indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by such indemnified party in connection with the defense
thereof unless (i) the indemnified
24
party shall have employed separate counsel in accordance with the proviso to the
next preceding sentence (it being understood, however, that the indemnifying
party shall not be liable for the expenses of more than one separate counsel
(together with local counsel), approved by the indemnifying party (BAS in the
case of Section 8(b) and Section 9), representing the indemnified parties who
are parties to such action) or (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of commencement of the
action, in each of which cases the fees and expenses of counsel shall be at the
expense of the indemnifying party.
(d) Settlements. The indemnifying party under this Section 8 shall not be
liable for any settlement of any proceeding effected without its written
consent, but if settled with such consent or if there be a final judgment for
the plaintiff, the indemnifying party agrees to indemnify the indemnified party
against any loss, claim, damage, liability or expense by reason of such
settlement or judgment. Notwithstanding the foregoing sentence, if at any time
an indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel as contemplated by Section
8(c) hereof, the indemnifying party agrees that it shall be liable for any
settlement of any proceeding effected without its written consent if (i) such
settlement is entered into more than 30 days after receipt by such indemnifying
party of the aforesaid request and (ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with such request prior to the
date of such settlement. No indemnifying party shall, without the prior written
consent of the indemnified party, effect any settlement, compromise or consent
to the entry of judgment in any pending or threatened action, suit or proceeding
in respect of which any indemnified party is or could have been a party and
indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent includes an unconditional release
of such indemnified party from all liability on claims that are the subject
matter of such action, suit or proceeding.
SECTION 9. CONTRIBUTION.
If the indemnification provided for in Section 8 is for any reason held to
be unavailable to or otherwise insufficient to hold harmless an indemnified
party in respect of any losses, claims, damages, liabilities or expenses
referred to therein, then each indemnifying party shall contribute to the
aggregate amount paid or payable by such indemnified party, as incurred, as a
result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the Underwriters, on the
other hand, from the offering of the Common Shares pursuant to this Agreement or
(ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, on the one hand, and the Underwriters, on the other hand, in
connection with the statements or omissions or inaccuracies in the
representations and warranties herein which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company, on the one hand,
and the Underwriters, on the other hand, in connection with the offering of the
Common Shares pursuant to this Agreement shall be deemed to be in the same
respective proportions as the total net proceeds from the offering of the Common
Shares pursuant to this Agreement (before deducting expenses) received by the
Company, and the total underwriting discount received by the Underwriters, in
each case as set forth on the front cover page of the Prospectus bear to the
aggregate initial public offering price of the Common Shares as set forth on
such cover. The relative fault of the Company, on the one hand, and the
Underwriters, on the other hand, shall be determined by reference to, among
other things, whether any such untrue or alleged untrue statement of a material
fact or omission or alleged omission to state a material fact or any such
inaccurate or alleged inaccurate representation or warranty relates to
information supplied by the Company, on the one hand, or the
25
Underwriters, on the other hand, and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission.
The amount paid or payable by a party as a result of the losses,
claims, damages, liabilities and expenses referred to above shall be deemed to
include, subject to the limitations set forth in Section 8(c), any legal or
other fees or expenses reasonably incurred by such party in connection with
investigating or defending any action or claim. The provisions set forth in
Section 8(c) with respect to notice of commencement of any action shall apply if
a claim for contribution is to be made under this Section 9; provided, however,
that no additional notice shall be required with respect to any action for which
notice has been given under Section 8(c) for purposes of indemnification.
The Company and the Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 9 were determined by pro rata
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the underwriting
commissions received by such Underwriter in connection with the Common Shares
underwritten by it and distributed to the public. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section 9 are several, and not joint, in proportion to their
respective underwriting commitments as set forth opposite their names in
Schedule A. For purposes of this Section 9, each officer and employee of an
Underwriter and each person, if any, who controls an Underwriter within the
meaning of the Securities Act and the Exchange Act shall have the same rights to
contribution as such Underwriter, and each director of the Company, each officer
of the Company who signed the Registration Statement, and each person, if any,
who controls the Company with the meaning of the Securities Act and the Exchange
Act shall have the same rights to contribution as the Company.
SECTION 10. DEFAULT OF ONE OR MORE OF THE SEVERAL UNDERWRITERS.
If, on the First Closing Date or the Second Closing Date, as the
case may be, any one or more of the several Underwriters shall fail or refuse to
purchase Common Shares that it or they have agreed to purchase hereunder on such
date, and the aggregate number of Common Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase does not
exceed 10% of the aggregate number of the Common Shares to be purchased on such
date, the other Underwriters shall be obligated, severally, in the proportions
that the number of Firm Common Shares set forth opposite their respective names
on Schedule A bears to the aggregate number of Firm Common Shares set forth
opposite the names of all such non-defaulting Underwriters, or in such other
proportions as may be specified by the Representatives with the consent of the
non-defaulting Underwriters, to purchase the Common Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such
date. If, on the First Closing Date or the Second Closing Date, as the case may
be, any one or more of the Underwriters shall fail or refuse to purchase Common
Shares and the aggregate number of Common Shares with respect to which such
default occurs exceeds 10% of the aggregate number of Common Shares to be
purchased on such date, and arrangements satisfactory to the Representatives and
the Company for the purchase of such Common Shares are not made within 48 hours
after such default, this Agreement shall terminate without liability of any
party to any other party except that the provisions of Section 4, Section 6,
Section 8, Section 9, and the last sentence of this Section 10 shall at all
times be effective and shall survive such
26
termination. In any such case either the Representatives or the Company shall
have the right to postpone the First Closing Date or the Second Closing Date, as
the case may be, but in no event for longer than seven days in order that the
required changes, if any, to the Registration Statement and the Prospectus or
any other documents or arrangements may be effected.
As used in this Agreement, the term "Underwriter" shall be deemed to
include any person substituted for a defaulting Underwriter under this Section
10. Any action taken under this Section 10 shall not relieve any defaulting
Underwriter from liability in respect of any default of such Underwriter under
this Agreement.
SECTION 11. TERMINATION OF THIS AGREEMENT.
Prior to the First Closing Date, this Agreement may be terminated by
the Representatives by notice given to the Company if at any time (i) trading or
quotation in any of the Company's securities shall have been suspended or
limited by the Commission or by the New York Stock Exchange, or trading in
securities generally on either the Nasdaq Stock Market or the New York Stock
Exchange shall have been suspended or limited, or minimum or maximum prices
shall have been generally established on any of such stock exchanges by the
Commission or the NASD; (ii) a general banking moratorium shall have been
declared by any of federal, New York or Delaware authorities; (iii) there shall
have occurred any outbreak or escalation of national or international
hostilities or any crisis or calamity, or any change in the United States or
international financial markets, or any substantial change or development
involving a prospective substantial change in United States or international
political, financial or economic conditions, as in the judgment of the
Representatives is material and adverse and makes it impracticable to market the
Common Shares in the manner and on the terms described in the Prospectus or to
enforce contracts for the sale of securities; (iv) in the judgment of the
Representatives there shall have occurred any Material Adverse Change; (v) the
Company or any of its subsidiaries shall have sustained a loss by strike, fire,
flood, earthquake, accident or other calamity of such character as in the
judgment of the Representatives may interfere materially with the conduct of the
business and operations of the Company and its subsidiaries regardless of
whether or not such loss shall have been insured; or (vi) there shall have
occurred a material disruption in commercial banking or securities settlement or
clearance services in the United States. Any termination pursuant to this
Section 11 shall be without liability on the part of (a) the Company to any
Underwriter, except that the Company shall be obligated to reimburse the
expenses of the Representatives and the Underwriters pursuant to Sections 4 and
6 hereof, (b) any Underwriter to the Company, or (c) of any party hereto to any
other party except that the provisions of Section 8 and Section 9 shall at all
times be effective and shall survive such termination.
SECTION 12. REPRESENTATIONS AND INDEMNITIES TO SURVIVE DELIVERY.
The respective indemnities, agreements, representations, warranties
and other statements of the Company, of its officers, and of the several
Underwriters set forth in or made pursuant to this Agreement will remain in full
force and effect, regardless of any investigation made by or on behalf of any
Underwriter or the Company or any of its or their partners, officers or
directors or any controlling person, as the case may be, and will survive
delivery of and payment for the Common Shares sold hereunder.
SECTION 13. NOTICES.
All communications hereunder shall be in writing and shall be
mailed, hand delivered or telecopied and confirmed to the parties hereto as
follows:
27
If to the Representatives:
Banc of America Securities LLC
9 West 57th Street
New York, New York 10019
Facsimile: (212) 583-8567
Attention: Legal Department
with a copy to:
Shearman & Sterling LLP
599 Lexington Avenue
New York, New York 10022
Facsimile: (212) 848-7179
Attention: Andrew R. Schleider
If to the Company:
Giant Industries, Inc.
23733 North Scottsdale Road
Scottsdale, Arizona 95255
Facsimile: (480) 585-8985
Attention: General Counsel
with a copy to:
Fennemore Craig, P.C.
3003 North Central, Suite 2600
Phoenix, Arizona 85012-2913
Facsimile: (602) 916-5507
Attention: Karen C. McConnell
28
Any party hereto may change the address for receipt of communications by
giving written notice to the others.
SECTION 14. SUCCESSORS.
This Agreement will inure to the benefit of and be binding upon the
parties hereto, including any substitute Underwriters pursuant to Section 10
hereof, and to the benefit of the employees, officers and directors and
controlling persons referred to in Section 8 and Section 9, and in each case
their respective successors, and personal representatives, and no other person
will have any right or obligation hereunder. The term "successors" shall not
include any purchaser of the Common Shares as such from any of the Underwriters
merely by reason of such purchase.
SECTION 15. PARTIAL UNENFORCEABILITY.
The invalidity or unenforceability of any Section, paragraph or
provision of this Agreement shall not affect the validity or enforceability of
any other Section, paragraph or provision hereof. If any Section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, there shall be deemed to be made such minor changes (and only
such minor changes) as are necessary to make it valid and enforceable.
SECTION 16. GOVERNING LAW PROVISIONS.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF THE STATE OF NEW YORK.
SECTION 17. GENERAL PROVISIONS.
No indemnified party shall be entitled to any consequential, special
or punitive damages by virtue of Section 8 or 9 of this Agreement except to the
extent that such indemnified party is obligated to pay such types of damages to
a third party in respect of a claim for which such indemnified party is entitled
to indemnification or contribution. This Agreement constitutes the entire
agreement of the parties to this Agreement and supersedes all prior written or
oral and all contemporaneous oral agreements, understandings and negotiations
with respect to the subject matter hereof. This Agreement may be executed in two
or more counterparts, each one of which shall be an original, with the same
effect as if the signatures thereto and hereto were upon the same instrument.
This Agreement may not be amended or modified unless in writing by all of the
parties hereto, and no condition herein (express or implied) may be waived
unless waived in writing by each party whom the condition is meant to benefit.
The Table of Contents and the Section headings herein are for the convenience of
the parties only and shall not affect the construction or interpretation of this
Agreement.
Each of the parties hereto acknowledges that it is a sophisticated
business person who was adequately represented by counsel during negotiations
regarding the provisions hereof, including, without limitation, the
indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties
hereto further acknowledges that the provisions of Sections 8 and 9 hereto
fairly allocate the risks in light of the ability of the parties to investigate
the Company, its affairs and its business in order to assure that adequate
disclosure has been made in the Registration Statement, any preliminary
prospectus and the Prospectus (and any amendments and supplements thereto), as
required by the Securities Act and the Exchange Act.
29
If the foregoing is in accordance with your understanding of our
agreement, kindly sign and return to the Company the enclosed copies hereof,
whereupon this instrument, along with all counterparts hereof, shall become a
binding agreement in accordance with its terms.
Very truly yours,
GIANT INDUSTRIES, INC.
a Delaware corporation
By:______________________________
Name:
Title:
The foregoing Underwriting Agreement is hereby confirmed and
accepted by the Representatives in New York, New York as of the date first above
written.
BANC OF AMERICA SECURITIES LLC
CREDIT SUISSE FIRST BOSTON LLC
FRIEDMAN, BILLINGS, RAMSEY & CO., INC.
As Representatives of the several Underwriters
named in the attached Schedule A
By: BANC OF AMERICA SECURITIES LLC
By:______________________________
Name:
Title:
30
SCHEDULE A
NUMBER OF FIRM
COMMON SHARES
UNDERWRITERS TO BE PURCHASED
- ------------ ---------
Banc of America Securities LLC............................... [________]
Credit Suisse First Boston LLC............................... [________]
Friedman, Billings, Ramsey & Co., Inc........................ [________]
Total............................................... 3,000,000
=========
SCHEDULE B
LIST OF PERSONS SUBJECT TO LOCK-UP
Anthony J. Bernitsky
Kim H. Bullerdick
Mark B. Cox
C. Leroy Crow
Larry DeRoin
Fred L. Holliger
S. Leland Gould
Morgan Gust
Richard T. Kalen, Jr.
Jack W. Keller
Brooks Klimley
George Rapport
Roger Sandeen
Robert C. Sprouse
Donald M. Wilkinson
EXHIBIT A
Opinion of Fennemore Craig, P.C., United States counsel for the
Company to be delivered pursuant to Section 5(h) of the Underwriting Agreement.
References to the Prospectus in this Exhibit A include any
supplements thereto at the Closing Date.
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware.
(ii) The authorized, issued and outstanding capital stock of the
Company (including the Common Stock) conform in all material respects to
the descriptions thereof (other than with respect to the number of issued
or outstanding shares of capital stock, as to which no opinion need be
rendered) set forth in the Prospectus. The form of certificate used to
evidence the Common Stock complies with all applicable requirements of the
charter and by-laws of the Company and the General Corporation Law of the
State of Delaware.
(iii) No stockholder of the Company or any other person has any
preemptive right, right of first refusal or other similar right to
subscribe for or purchase securities of the Company arising by operation
of the charter or by-laws of the Company or the General Corporation Law of
the State of Delaware.
(iv) The Underwriting Agreement has been duly authorized, executed
and delivered by the Company.
(v) The Common Shares to be purchased by the Underwriters from the
Company have been duly authorized for issuance and sale pursuant to the
Underwriting Agreement and, when issued and delivered by the Company
pursuant to the Underwriting Agreement against payment of the
consideration set forth therein, will be validly issued, fully paid and
nonassessable.
(vi) The Registration Statement has been declared effective by the
Commission under the Securities Act. To the knowledge of such counsel, no
stop order suspending the effectiveness of the Registration Statement has
been issued under the Securities Act and no proceedings for such purpose
have been instituted or are pending by the Commission. Any required filing
of the Prospectus and any supplement thereto pursuant to Rule 424(b) under
the Securities Act has been made in the manner and within the time period
required by such Rule 424(b).
(vii) The Registration Statement, the Prospectus including any
document incorporated by reference therein, and each amendment or
supplement to the Prospectus including any document incorporated by
reference therein (other than the financial statements and supporting
schedules included or incorporated by reference therein or in exhibits to
or excluded from the Registration Statement, as to which no opinion need
be rendered), as of the issue date thereof in the case of the Prospectus
or any supplement thereto or the filing date thereof in the case of the
Registration Statement or any document incorporated by reference therein
or in the Prospectus or any supplement thereto, comply as to form in all
material respects with the applicable requirements of the Securities Act
and the Exchange Act.
(viii) The Common Shares have been approved for listing upon notice
of issuance on the New York Stock Exchange.
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(ix) No consent, approval, authorization or other order of, or
registration or filing with, any court or other governmental authority or
agency, is required for the Company's execution, delivery and performance
of the Underwriting Agreement and consummation of the transactions
contemplated thereby and by the Prospectus, except as required under the
Securities Act, applicable state securities or Blue Sky laws, or the rules
of the NASD.
(x) The execution and delivery of the Underwriting Agreement by the
Company and the performance by the Company of its obligations thereunder
(other than performance by the Company of its obligations under the
indemnification section of the Underwriting Agreement, as to which no
opinion need be rendered), the redemption of the 11% Notes in accordance
with the terms of the 2002 Indenture and the Related Transactions (a) have
been duly authorized by all necessary corporate action on the part of the
Company; (b) will not result in any violation of the provisions of the
charter or by-laws of the Company; (c) will not constitute a breach of, or
Default or a Debt Repayment Triggering Event under, or result in the
creation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its subsidiaries pursuant to
the 2002 Indenture, the 1997 Indenture, the Revolving Credit Facility, the
Term Loan Agreement or any document filed as an exhibit to the
Registration Statement or a filing specifically listed as being
incorporated into the Prospectus or (d) to the knowledge of such counsel,
will not result in any violation of any law, administrative regulation or
administrative or court decree applicable to the Company.
(xi) The Company is not and will not as a result of the offer and
sale of the Common Shares be (i) an "investment company" or a company
"controlled" by an investment company within the meaning of the United
States Investment Company Act of 1940, as amended, (ii) a "holding
company" or a "subsidiary company" of a holding company or an "affiliate"
thereof within the meaning of the United States Public Utility Holding
Company Act of 1935, as amended, or (iii) subject to regulation under the
United States Federal Power Act or any federal or state statute or
regulation limiting its ability to incur indebtedness for borrowed money.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company,
representatives of the independent public or certified public accountants
for the Company and with representatives of the Underwriters at which the
contents of the Registration Statement and the Prospectus, and any
supplements or amendments thereto, and related matters were discussed and,
although such counsel is not passing upon the accuracy, completeness of
the statements contained in the Registration Statement or the Prospectus
(other than as specified in paragraph (ix) above), and any supplements or
amendments thereto, on the basis of the foregoing, nothing has come to
their attention which gives them reason to believe that either the
Registration Statement or any amendments thereto, at the time the
Registration Statement or such amendments became effective or as the date
of the Underwriting Agreement, contained an untrue statement of a material
fact or omitted to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or that the
Prospectus or any amendment or supplement thereto, as of its date, at the
date of any such amendment or supplement or at the First Closing Date or
the Second Closing Date, as the case may be, contained an 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 such
counsel need express no belief as to the financial statements and
financial data included or incorporated by reference in the Registration
Statement or the Prospectus or any amendments or supplements thereto).
The aforementioned opinion shall be limited to the federal laws of
the United States of America, the laws of the State of Arizona and the general
corporate law of the State of Delaware.
A-2
Such counsel may state that insofar as the aforementioned opinion is indicated
to be based on the best of such counsel's knowledge, such opinion is based upon
such counsel's actual knowledge, which the attorneys in such counsel's firm have
obtained in connection with the representation of the Company. Such counsel may
rely, to the extent they deem proper and specified in such opinion, on opinions
(which shall be dated the First Closing Date or the Second Closing Date, as the
case may be, and shall be satisfactory in form and substance to the
Underwriters, shall expressly state that the Underwriters may rely on such
opinion as if it were addressed to them and shall be furnished to the
Representatives) of local counsel reasonably satisfactory to the Underwriters
with respect to matters of law of jurisdictions other than the federal laws of
the United States of America, the laws of the State of Arizona and the general
corporate law of the State of Delaware; provided, however, that such counsel
shall further state that they believe that they and the Underwriters are
justified in relying upon such opinion of other counsel, and as to matters of
fact, to the extent they deem proper, on certificates of responsible officers of
the Company and public officials.
A-3
EXHIBIT B
Opinion of Kim Bullerdick, Esq., General Counsel of the Company to
be delivered pursuant to Section 5(h) of the Underwriting Agreement.
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Delaware;
has the corporate power and authority to own, lease and operate its
properties and to conduct its business as presently conducted and as
described in the Prospectus and to enter into and perform its obligations
under this Agreement (including the redemption of the 11% Notes in
accordance with the terms of the 2002 Indenture) and to enter into and
perform its obligations under the Related Transactions; and is duly
qualified as a foreign corporation to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure to so qualify would not have a
Material Adverse Effect on the Company.
(ii) Each subsidiary of the Company has been duly incorporated and
is validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation; has the corporate power and
authority to own, lease and operate its properties and conduct its
business as presently conducted and as described in the Prospectus and to
enter into and perform its obligations under this Agreement (including the
redemption of the 11% Notes in accordance with the terms of the 2002
Indenture) and to enter into and perform its obligations under the Related
Transactions; and is duly qualified as a foreign corporation to transact
business and is in good standing in each jurisdiction in which such
qualification is required, whether by reason of the ownership or leasing
of property or the conduct of business, except where the failure to so
qualify would not have a Material Adverse Effect on the Company. Except
with respect to Navajo Convenient Store Co., LLC (which is a majority
owned subsidiary), all the issued and outstanding capital stock of each
subsidiary of the Company has been duly authorized and validly issued, is
fully paid and nonassessable and is owned, directly or indirectly, by the
Company, and, to the knowledge of such counsel, free and clear of any
Lien, except for the Liens under the Revolving Credit Facility and the
Term Loan Agreement.
(iii) The descriptions in the Prospectus of statutes, legal and
governmental proceedings, contracts and other documents are accurate and
fairly present the information which, to such counsel's knowledge, is
required to be shown; and such counsel does not know of any statutes or
legal or governmental proceedings required to be described in the
Prospectus that are not described as required, or of any contracts or
documents of a character required to be described in the Prospectus that
are not described as required.
(iv) The statements (a) in the prospectus supplement under the
captions "Management's Discussion and Analysis of Financial Condition and
Results of Operation - Liquidity and Capital Resources", "Business -
Regulatory, Environmental and Other Matters", "Business - Motor Fuel
Programs", Business - MTBE Litigation", "Business - Alleged Regulatory
Violations", "Business - Discharges, Releases and Cleanup Activities",
"Business - Health and Safety", "Business - Changes in Environmental,
Health and Safety Laws", "Business - Rights-Of-Way", "Business - Jet Fuel
Claims", "Business - Yorktown Power Outage Claim", "Description of Capital
Stock" and "Underwriting", (b) in the base prospectus under the caption
"Description of Capital Stock" and "Plan of Distribution", and (c) in Item
15 of the Registration Statement, insofar as such statements constitute
summaries of legal matters, the documents or legal proceedings, fairly
present and summarize, in all material respects, the matters referred to
therein.
B-1
(v) To the best of such counsel's knowledge, neither the Company nor
any of its subsidiaries is in violation of its charter or bylaws, and to
the best of such counsel's knowledge, except as otherwise disclosed in the
Prospectus, neither the Company nor any of its subsidiaries is in Default
in the performance or observance of any obligation, agreement, covenant or
condition contained in any Contract or any applicable law, administrative
regulation or administrative or court order or decree, which violation or
default would, singly or in the aggregate, have a Material Adverse Effect
on the Company.
(vi) The issuance and delivery of the Common Shares, the execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein (including the redemption of the 11% Notes in
accordance with the terms of the 2002 Indenture) and the Related
Transactions will not conflict with or constitute a breach of, or Default
or a Debt Repayment Triggering Event under, or result in the creation or
imposition of any Lien upon any material property or assets of the Company
or any of its subsidiaries pursuant to any Contract, which conflict,
breach, Default, Debt Repayment Triggering Event or Lien would, singly or
in the aggregate, have a Material Adverse Effect on the Company.
(vii) The issuance and delivery of the Common Shares, the execution
and delivery of this Agreement and the consummation of the transactions
contemplated herein (including the redemption of the 11% Notes in
accordance with the terms of the 2002 Indenture) and the Related
Transactions will not result in a violation of the provisions of the
charter or bylaws of the Company or any of its subsidiaries or, to the
best of such counsel's knowledge, any material applicable law,
administrative regulation, administrative or court order or decree.
(viii) All of the issued and outstanding capital stock of each
subsidiary of the Company is owned, directly or indirectly, by the
Company, and, to the knowledge of such counsel, free and clear of any
security interest, mortgage, pledge, lien, encumbrance or any pending or
threatened claim.
(ix) All of the outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable and, to
the knowledge of such counsel, have been issued in compliance with the
registration and qualification requirements of federal and state
securities laws.
(x) To the knowledge of such counsel, no stockholder of the Company
or any other person has any preemptive right, right of first refusal or
other similar right to subscribe for or purchase securities of the Company
arising by contract or agreement.
(xi) To the knowledge of such counsel, there are no legal or
governmental actions, suits or proceedings pending or threatened which are
required to be disclosed in the Registration Statement, other than those
disclosed therein.
(xii) To the knowledge of such counsel, there are no Contracts
required to be described or referred to in the Registration Statement or
to be filed as exhibits thereto other than those described or referred to
therein or filed or incorporated by reference as exhibits thereto; and the
descriptions thereof and references thereto are correct in all material
respects.
(xiii) To the knowledge of such counsel, there are no persons with
registration or other similar rights to have any equity or debt securities
registered for sale under the Registration Statement or included in the
offering contemplated by this Agreement or the concurrent Senior
Subordinated Notes Offering.
B-2
In addition, such counsel shall state that such counsel has reviewed
the Prospectus, and any supplements or amendments thereto, and, on the basis of
such review, to the best of such counsel's knowledge, the Prospectus, or any
supplements or amendments thereto, as of its date, at the date of any such
amendment or supplement or at the First Closing Date or the Second Closing Date,
as the case may be, did not contain any untrue statement of a material fact or
omit to state a material fact required to be stated therein or necessary to make
the statements therein, in the light of the circumstances in which made, not
misleading. The aforementioned opinion shall be limited to the federal laws of
the United States of America, the laws of the State of Arizona and the corporate
law of the State of Delaware. Such counsel may state that insofar as the
aforementioned opinion is indicated to be based on the best of such counsel's
knowledge, such opinion is based upon such counsel's actual knowledge. Such
counsel may rely, to the extent he deems proper and specified in such opinion,
on opinions (which shall be dated the First Closing Date or the Second Closing
Date, as the case may be, and shall be satisfactory in form and substance to the
Underwriters, shall expressly state that the Underwriters may rely on such
opinion as if it were addressed to them and shall be furnished to the
Representatives) of local counsel satisfactory to the Underwriters with respect
to matters of law of jurisdictions other than the federal laws of the United
States of America, the laws of the State of Arizona and the general corporate
law of the State of Delaware; provided, however, that such counsel shall further
state that he believes that he and the Underwriters are justified in relying
upon such opinion of other counsel, and as to matters of fact, to the extent
they deem proper, on certificates of responsible officers of the Company and its
subsidiaries and public officials. Such counsel may rely on certificates of good
standing and foreign qualification from appropriate state officials with respect
to opinions regarding good standing and foreign qualification.
B-3
EXHIBIT C
_______, 2004
Banc of America Securities LLC
BNP Paribas Securities Corp
Credit Suisse First Boston LLC
Friedman, Billings, Ramsey & Co., Inc.
(As Representatives of the several Underwriters)
c/o Banc of America Securities LLC
9 West 57th Street
New York, New York 10019
Re: Giant Industries, Inc. (the "Company")
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of
Common Stock of the Company ("Common Stock") or securities convertible into or
exchangeable or exercisable for Common Stock. The Company proposes to carry out
a public offering of Common Stock (the "Offering") for which you will act as the
representatives of the underwriters. The undersigned recognizes that the
Offering will be of benefit to the undersigned and will benefit the Company by,
among other things, raising additional capital for its operations. The
undersigned acknowledges that you and the other underwriters are relying on the
representations and agreements of the undersigned contained in this letter in
carrying out the Offering and in entering into underwriting arrangements with
the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the
undersigned will not, (and will cause any spouse or immediate family member of
the spouse or the undersigned living in the undersigned's household not to),
without the prior written consent of Banc of America Securities LLC (which
consent may be withheld in its sole discretion), directly or indirectly, sell,
offer, contract or grant any option to sell (including without limitation any
short sale), pledge, transfer, establish an open "put equivalent position"
within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934,
as amended, or otherwise dispose of any shares of Common Stock, options or
warrants to acquire shares of Common Stock, or securities exchangeable or
exercisable for or convertible into shares of Common Stock currently or
hereafter owned either of record or beneficially (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) by the undersigned (or such
spouse or family member), or publicly announce an intention to do any of the
foregoing, for a period commencing on the date hereof and continuing through the
close of trading on the date 90 days after the date of the Prospectus.
Notwithstanding the foregoing, if (x) during the last 17 days of the 90-day
restricted period the Company issues an earnings release or material news or a
material event relating to the Company occurs; or (y) prior to the expiration of
the 90-day restricted period, the Company announces that it will release
earnings results during the 16-day period beginning on the last day of
C-1
the 90-day period; the restrictions imposed above shall continue to apply until
the expiration of the 18-day period beginning on the issuance of the earnings
release or the occurrence of the material news or material event; provided
however, that this sentence shall not apply if the research published or
distributed on the Company is compliant under Rule 139 of the Securities Act and
the Company's securities are actively traded as defined in Rule 101(c)(1) of
Regulation M of the Exchange Act. The undersigned also agrees and consents to
the entry of stop transfer instructions with the Company's transfer agent and
registrar against the transfer of shares of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock held by the
undersigned except in compliance with the foregoing restrictions.
This agreement is irrevocable and will be binding on the undersigned and the
respective successors, heirs, personal representatives, and assigns of the
undersigned.
_______________________________________
Printed Name of Holder
By:____________________________________
Signature
_______________________________________
Printed Name of Person Signing
(indicate capacity of person signing if
signing as custodian, trustee, or on
behalf of an entity)
C-2