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EXHIBIT 10.2
OFFSHORE ENERGY DEVELOPMENT CORPORATION
COMMON STOCK (PAR VALUE $.01 PER SHARE)
UNDERWRITING AGREEMENT
October 31, 1996
Xxxxxx Xxxxxx & Company, Inc.
Principal Financial Securities, Inc.
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Xxxxxx Xxxxxx & Company, Inc.
00 Xxxxx Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Offshore Energy Development Corporation, a Delaware corporation (the
"Company"), proposes, subject to the terms and conditions stated herein, to
issue and sell to the Underwriters named in Schedule I hereto (the
"Underwriters") an aggregate of 3,500,000 shares of common stock, par value
$.01 per share ("Stock"), of the Company and, at the option of the
Underwriters, up to 150,000 additional shares of Stock; the stockholders of the
Company named in Schedule II hereto propose, subject to the terms and
conditions stated herein, to sell to the Underwriters an aggregate of 182,000
shares of Stock; and the stockholders of the Company named in Schedule III
hereto propose to sell to the Underwriters, subject to the terms and conditions
stated herein, at the election of the Underwriters, up to 402,300 additional
shares of Stock. The stockholders named in Schedule II hereto and the
stockholders named in Schedule III hereto shall collectively be referred to
herein as the "Selling Stockholders." The aggregate of 3,182,000 shares to be
sold by the Company and the selling stockholders named in Schedule II hereto is
herein called the "Firm Shares" and the aggregate of 552,300 additional shares
to be sold by the Company and the selling stockholders named in Schedule III
hereto is herein called the "Optional Shares." The Firm Shares and the
Optional Shares that the Underwriters elect to purchase pursuant to Section 2
hereof are herein collectively called the "Shares."
1. (a) The Company represents and warrants to, and agrees
with, each of the Underwriters that:
(i) A registration statement on Form S-1 (File
No. 333-11269) as amended by Amendment No. 1 filed on October 8,
1996, Amendment No. 2 filed on October 9, 1996 and Amendment No. 3
filed on October 30, 1996, Amendment No. 4 filed on October 31, 1996
and Amendment No. 5 filed on October 31, 1996 (the "Initial
Registration Statement") in respect of the Shares has been filed with
the Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any
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post-effective amendment thereto, each in the form heretofore
delivered to you, and, excluding exhibits thereto, to you for each of
the other Underwriters, have been declared effective by the Commission
in such form; no other document with respect to the Initial
Registration Statement has heretofore been filed with the Commission;
and no stop order suspending the effectiveness of the Initial
Registration Statement, any post-effective amendment thereto or the
Rule 462(b) Registration Statement, if any, has been issued and no
proceeding for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in the Initial
Registration Statement or filed with the Commission pursuant to Rule
424(a) of the rules and regulations of the Commission under the
Securities Act of 1933, as amended (the "Act"), is hereinafter called
a "Preliminary Prospectus"; the various parts of the Initial
Registration Statement, any post-effective amendment thereto or the
Rule 462(b) Registration Statement including all exhibits thereto and
including the information contained in the form of final prospectus
filed with the Commission pursuant to Rule 424(b) under the Act in
accordance with Section 5(a) hereof and deemed by virtue of Rule 430A
under the Act to be part of the registration statement at the time it
was declared effective or such part of the Rule 462(b) Registration
Statement, if any, became or hereafter becomes effective, each as
amended at the time such part of the registration statement became
effective, is hereinafter collectively called the "Registration
Statement"; and such final prospectus, in the form first filed
pursuant to Rule 424(b) under the Act, is hereinafter called the
"Prospectus");
(ii) No order preventing or suspending the use of
any Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in
all material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, and did 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; provided, however, that the foregoing shall not apply
to statements or omissions made in reliance upon information furnished
in writing to the Company by the Underwriters or the Selling
Stockholders expressly for use therein.
(iii) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus will conform, in all material
respects to the requirements of the Act and the rules and regulations
of the Commission thereunder; the Registration Statement does not and
will not, as of the applicable effective date as to the Registration
Statement and any amendment thereto contain an untrue statement of a
material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading;
and the Prospectus, as of the date of such Prospectus, does not
contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading.
(iv) The historical and pro forma financial
statements, together with related schedules and notes, set forth in
the Prospectus comply as to form in all
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material respects with the requirements of the Act. The historical
consolidated financial statements of OEDC, Inc. and OEDC Partners,
L.P. present fairly (subject, in the case of unaudited interim
financial information, to normal year-end adjustments) the
consolidated financial position of OEDC, Inc. and OEDC Partners, L.P.
(collectively, the "Predecessor Entities") at the respective dates
indicated and the consolidated results of operations and cash flows of
the Predecessor Entities for the respective periods indicated and in
accordance with generally accepted accounting principles consistently
applied throughout such periods, unless otherwise reflected in the
notes to such financial statements. The historical consolidated
balance sheet of the Company fairly presents its financial position at
June 30, 1996. The pro forma financial statements of the Company have
been prepared on a basis consistent with the historical statements of
the Predecessor Entities and the Company, except for the pro forma
adjustments specified therein, and give effect to the Combination (as
such term is defined in the Prospectus). The other financial and
statistical information and data included in the Prospectus are, in
all material respects, accurately presented and prepared on a basis
consistent with such historical and pro forma financial statements and
the books and records of the Company;
(v) The Company maintains a system of internal
accounting control sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and
(iv) the recorded accountability for assets is compared with existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences;
(vi) Neither the Company nor any of its
subsidiaries has sustained since the date of the latest audited
financial statements included in the Prospectus any loss or
interference with its business material to the Company and its
subsidiaries considered as one enterprise from fire, explosion, flood
or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus; and,
since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any
change in the capital stock or long-term debt of the Company or any of
its subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries
considered as one enterprise, otherwise than as set forth or
contemplated in the Prospectus;
(vii) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws of
the State of Delaware, with corporate power and authority to own its
properties and conduct its business as described in the Prospectus,
and has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of each
other
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jurisdiction in which it owns or leases properties or conducts any
business except where the failure so to qualify or to be in good
standing would not have a material adverse effect on the business
affairs, business prospects, assets, financial position or results of
operations of the Company and its subsidiaries considered as one
enterprise (a "Material Adverse Effect"); and each direct or indirect
subsidiary of the Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of its
jurisdiction of incorporation or has been formed and is validly
existing as a limited partnership, as the case may be;
(viii) The Company has authorized capital stock as
set forth in the Prospectus, and all of the issued shares of capital
stock of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and conform in all material respects
to the description of the Stock contained in the Prospectus; and all
of the issued shares of capital stock of, or partnership or other
equity ownership interest in, each subsidiary of the Company have been
duly and validly authorized and issued, are fully paid and
non-assessable and (except for directors' qualifying shares and South
Dalphin Partners, Ltd.) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims
except as disclosed in the Prospectus;
(ix) The Shares to be issued and sold by the
Company to the Underwriters hereunder have been duly and validly
authorized and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued and fully paid and
non-assessable and will conform to the description of the Stock
contained in the Prospectus;
(x) The issue and sale of the Shares to be sold
by the Company and the compliance by the Company with all of the
provisions of this Agreement and the consummation of the transactions
herein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a
default under, any indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or any applicable statute or
any order, rule or regulation of any court or governmental agency or
body having jurisdiction over the Company or any of its subsidiaries
or any of their properties; and no consent, approval, authorization,
order, registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale of the
Shares or the consummation by the Company of the transactions
contemplated by this Agreement, except the registration of the Shares
under the Act and under the Securities Exchange Act of 1934 and such
consents, approvals, authorizations, registrations or qualifications
as may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by the
Underwriters;
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(xi) Neither the Company nor any of its
subsidiaries is in violation of its Certificate of Incorporation or
By-laws or other organizational documents or in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, deed of trust, loan
agreement, lease or other agreement or instrument to which it is a
party or by which it or any of its properties may be bound except to
the extent it would not have a Material Adverse Effect;
(xii) The statements set forth in the Prospectus
under the caption "Description of Capital Stock", insofar as they
purport to constitute a summary of the terms of the Stock are accurate
and complete in all material respects;
(xiii) Except as described in the Prospectus, the
Company and its subsidiaries have (1) generally satisfactory or good
and indefeasible title to all its interest in its oil and gas
properties, title investigations having been carried out by or on
behalf of such person in accordance with customary practice in the oil
and gas industry in the areas in which the Company and its
subsidiaries operate and (2) good and indefeasible title to all other
real property and good and marketable title to all other material
properties and assets described in the Prospectus as owned by the
Company or its subsidiaries and valid, subsisting and enforceable
leases for all of the properties and assets, real or personal,
described in the Prospectus as leased by them, in each case free and
clear of any security interests, mortgages, pledges, liens,
encumbrances or charges of any kind, other than those described in the
Prospectus;
(xiv) Except as described in the Prospectus and
except to the extent it would not have a Material Adverse Effect, as
of the date hereof, (i) all royalties, rentals, deposits and other
amounts due on the oil and gas properties of the Company and its
subsidiaries have been properly and timely paid, and no proceeds from
the sale or production attributable to the oil and gas properties of
the Company and its subsidiaries are currently being held in suspense
by any purchaser thereof, and (ii) there are no claims under
take-or-pay contracts pursuant to which natural gas purchasers have
any make-up rights affecting the interest of the Company and its
subsidiaries in its oil and gas properties;
(xv) As of the date hereof, the aggregate
undiscounted monetary liability of the Company and its subsidiaries
for oil or natural gas taken or received under any operating or gas
balancing and storage agreement relating to its oil and gas properties
that permits any person to receive any portion of the interest of the
Company or any of its subsidiaries in oil or natural gas or to receive
cash or other payments to balance any disproportionate allocation of
oil or natural gas could not, singly or in the aggregate, have a
Material Adverse Effect;
(xvi) Other than as set forth in the Prospectus,
there are no legal or governmental proceedings pending to which the
Company or any of its subsidiaries is a party or to the best of the
Company's knowledge of which any property of the Company or any of its
subsidiaries is the subject which, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a Material Adverse Effect; and, to the best of the
Company's knowledge, no such
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proceedings are threatened or contemplated by governmental authorities
or threatened by others;
(xvii) The Company is not and, after giving effect
to the offering and sale of the Shares, will not be, an "investment
company" or an entity "controlled" by an "investment company", as such
terms are defined in the Investment Company Act of 1940, as amended
(the "Investment Company Act");
(xviii) Neither the Company nor any of its affiliates
does business with the government of Cuba or with any person or
affiliate located in Cuba within the meaning of Section 517.075,
Florida Statutes; and
(xix) KPMG Peat Marwick LLP, who have certified
certain financial statements of the Company and its subsidiaries, are
independent public accountants as required by the Act and the rules
and regulations of the Commission thereunder.
(xx) The information underlying the estimates of
the reserves of the Company and its subsidiaries, which was supplied
by the Company to Xxxxx Xxxxx & Company ("Xxxxx Xxxxx"), independent
petroleum engineers, for purposes of preparing the reserve reports
referenced in the Prospectus (the "Reserve Report"), including,
without limitation, production, volumes, sales prices for production,
contractual pricing provisions under oil or gas sales or marketing
contracts under hedging arrangements, costs of operations and
development, and working interest and net revenue information relating
to the Company's ownership interests in properties, was true and
correct in all material respects on the date of such Reserve Report;
the estimates of future capital expenditures and other future
exploration and development costs supplied to Xxxxx Xxxxx were
prepared in good faith and with a reasonable basis; the information
provided to Xxxxx Xxxxx for purposes of preparing the Reserve Report
was prepared in accordance with customary industry practices; to the
best of the Company's knowledge, Xxxxx Xxxxx were, as of the date of
the Reserve Report prepared by it, and are, as of the date hereof,
independent petroleum engineers with respect to the Company; other
than normal production of the reserves and intervening spot market
product price fluctuations described in the Prospectus, the Company is
not aware of any facts or circumstances that would result in a
materially adverse change in the reserves in the aggregate, or the
aggregate present value of future net cash flows therefrom, as
described in the Prospectus and reflected in the Reserve Report;
estimates of such reserves and the present value of the future net
cash flows therefrom as described in the Prospectus and reflected in
the Reserve Report comply in all material respects to the applicable
requirements of Regulation S-X and Industry Guide 2 under the Act.
(xxi) The Company (A) is in compliance with any and
all applicable federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or
hazardous or toxic substances or waste, pollutants or contaminants
("Environmental Laws"), (B) has received all permits, licenses or
other approvals required of it under applicable Environmental Laws to
conduct its business and (C) is in compliance with all terms and
conditions of any such permit, license or approval, except for such
noncompliance with Environmental Laws, failure to receive
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required permits, licenses or other approvals or failure to comply
with the terms and conditions of such permits, licenses or approvals
that would not, singularly or in the aggregate, have a Material
Adverse Effect. There has been no storage, disposal, generation,
transportation, handling or treatment of hazardous substances or solid
wastes by the Company (or to the knowledge of the Company, any of its
predecessors in interest) at, upon or from any of the property now or
previously owned or leased by the Company in violation of any
applicable law, ordinance, rule, regulation, order, judgment, decree
or permit or which would require remedial action by the Company under
any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit, except for any violation or remedial action which
would not result in, or which would not be reasonably likely to result
in, singularly or in the aggregate with all such violations and
remedial actions, a Material Adverse Effect; there has been no spill,
discharge, leak, emission, injection, escape, dumping or release of
any kind onto such property or into the environment surrounding such
property of any solid wastes or hazardous substances due to or caused
by the Company, except for any such spill, discharge, leak, emission,
injection, escape, dumping or release which would not result in or
would not be reasonably likely to result in, singularly or in the
aggregate with all such spills, discharges, leaks, emissions,
injections, escape, dumping or releases, a Material Adverse Effect;
and the terms "hazardous substances" and "solid wastes" shall have the
meanings specified in any applicable local, state and federal laws or
regulations with respect to environmental protection;
(xxii) There are no persons with registration or
similar rights to require registration of any securities of the
Company under the Act because of the filing of the Registration
Statement or the sale of the shares by the Company to the
Underwriters, other than such rights as are described in the
Prospectus and have been duly and effectively waived; and
(xxiii) This Agreement has been duly authorized,
executed and delivered by the Company.
(b) Each of the Selling Stockholders severally represents
and warrants to, and agrees with, each of the Underwriters and the Company
that:
(i) All consents, approvals, authorizations and
orders necessary for the execution and delivery by such Selling
Stockholder of this Agreement and the Power of Attorney and the
Custody Agreement hereinafter referred to, and for the sale and
delivery of the Shares to be sold by such Selling Stockholder
hereunder, have been obtained; and such Selling Stockholder has full
right, power and authority to enter into this Agreement, the
Power-of-Attorney and the Custody Agreement and to sell, assign,
transfer and deliver the Shares to be sold by such Selling Stockholder
hereunder;
(ii) The sale of the Shares to be sold by such
Selling Stockholder hereunder and the compliance by such Selling
Stockholder with all of the provisions of this Agreement, the Power of
Attorney and the Custody Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a
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default under, any statute, indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument to which such Selling
Stockholder is a party or by which such Selling Stockholder is bound
or to which any of the property or assets of such Selling Stockholder
is subject, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or By-laws of such
Selling Stockholder if such Selling Stockholder is a corporation, the
Partnership Agreement of such Selling Stockholder if such Selling
Stockholder is a partnership; or any applicable statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over such Selling Stockholder or the property of such
Selling Stockholder;
(iii) Such Selling Stockholder has, and immediately
prior to each Time of Delivery (as defined in Section 4 hereof) such
Selling Stockholder will have, good and valid title to the Shares to
be sold by such Selling Stockholder hereunder, free and clear of all
liens, encumbrances, equities or claims; and, upon delivery of such
Shares and payment therefor pursuant hereto, good and valid title to
such Shares, free and clear of all liens, encumbrances, equities or
claims, will pass to the several Underwriters;
(iv) During the period beginning from the date
hereof and continuing to and including the date 180 days after the
date of the Prospectus, not to offer, sell contract to sell or
otherwise dispose of, except as provided hereunder, any securities of
the Company that are substantially similar to the Shares, including
but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Stock or any
such substantially similar securities (other than pursuant to employee
stock option or benefit plans existing on the date of this Agreement),
without the prior written consent of Xxxxxx Xxxxxx;
(v) To the best of such Selling Stockholder's
knowledge, as of the date hereof, and as of each Time of Delivery
(defined below), the Registration Statement did not and will not
contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary in order to
make the statements therein not misleading and the Prospectus did not
contain an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading
(vi) In order to document the Underwriters'
compliance with the reporting and withholding provisions of the Tax
Equity and Fiscal Responsibility Act of 1982 with respect to the
transactions herein contemplated, such Selling Stockholder will
deliver to you prior to or at the First Time of Delivery (as
hereinafter defined) a properly completed and executed United States
Treasury Department Form W-9 (or other applicable form or statement
specified by Treasury Department regulations in lieu thereof);
(vii) Certificates in negotiable form representing
all of the Shares to be sold by such Selling Stockholder hereunder
have been placed in custody under a Custody Agreement, in the form
heretofore furnished to you (the "Custody Agreement"), duly executed
and delivered by such Selling Stockholder to Xxxxxxx X. Xxxxxxxxxxx,
as
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custodian (the "Custodian"), and such Selling Stockholder has duly
executed and delivered a Power of Attorney, in the form heretofore
furnished to you (the "Power of Attorney"), appointing the persons
indicated in Schedule II hereto, and each of them, as such Selling
Stockholder's attorneys-in-fact (the "Attorneys-in-Fact") with
authority to execute and deliver this Agreement on behalf of such
Selling Stockholder, to determine the purchase price to be paid by the
Underwriters to the Selling Stockholders as provided in Section 2
hereof, to authorize the delivery of the Shares to be sold by such
Selling Stockholder hereunder and otherwise to act on behalf of such
Selling Stockholder in connection with the transactions contemplated
by this Agreement and the Custody Agreement; and
(viii) The Shares represented by the certificates
held in custody for such Selling Stockholder under the Custody
Agreement are subject to the interests of the Underwriters hereunder;
the arrangements made by such Selling Stockholder for such custody,
and the appointment by such Selling Stockholder of the
Attorneys-in-Fact by the Power of Attorney, are to that extent
irrevocable; the obligations of the Selling Stockholders hereunder
shall not be terminated by operation of law, whether by the death or
incapacity of any individual Selling Stockholder or, in the case of an
estate or trust, by the death or incapacity of any executor or trustee
or the termination of such estate or trust, or in the case of a
partnership or corporation, by the dissolution of such partnership or
corporation, or by the occurrence of any other event; if any
individual Selling Stockholder or any such executor or trustee should
die or become incapacitated, or if any such estate or trust should be
terminated, or if any such partnership or corporation should be
dissolved, or if any other such event should occur, before the
delivery of the Shares hereunder, certificates representing the Shares
shall be delivered by or on behalf of the Selling Stockholders in
accordance with the terms and conditions of this Agreement and of the
Custody Agreements; and actions taken by the Attorneys-in-Fact
pursuant to the Powers of Attorney shall be as valid as if such death,
incapacity, termination, dissolution or other event had not occurred,
regardless of whether or not the Custodian, the Attorneys-in-Fact, or
any of them, shall have received notice of such death, incapacity,
termination, dissolution or other event.
2. Subject to the terms and conditions herein set forth, (a) the
Company and each of the Selling Stockholders named in Schedule II hereto agree,
severally and not jointly, to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company
and each of such Selling Stockholders, at a purchase price per share of $11.16,
the number of Firm Shares (to be adjusted by you so as to eliminate fractional
shares) determined by multiplying the aggregate number of Shares to be sold by
the Company and each of such Selling Stockholders as set forth opposite their
respective names in Schedule II hereto by a fraction, the numerator of which is
the aggregate number of Firm Shares to be purchased by such Underwriter as set
forth opposite the name of such Underwriter in Schedule I hereto and the
denominator of which is the aggregate number of Firm Shares to be purchased by
all of the Underwriters from the Company and all of such Selling Stockholders
hereunder and (b) in the event and to the extent that the Underwriters shall
exercise the election to purchase Optional Shares as provided below, the
Company and each of the Selling Stockholders named in Schedule III hereto
agree, severally and not jointly, to sell to each of the Underwriters, and each
of the Underwriters agrees, severally and not jointly, to purchase
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from the Company and each of such Selling Stockholders, at the purchase price
per share set forth in clause (a) of this Section 2, that portion of the number
of Optional Shares as to which such election shall have been exercised (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
such number of Optional Shares by a fraction, the numerator of which is the
maximum number of Optional Shares which such Underwriter is entitled to
purchase as set forth opposite the name of such Underwriter in Schedule I
hereto and the denominator of which is the maximum number of Optional Shares
that all of the Underwriters are entitled to purchase hereunder.
The Company and the Selling Stockholders named in Schedule III hereto,
as and to the extent indicated in Schedule III hereto, hereby grant, severally
and not jointly, to the Underwriters the one-time right to purchase at their
election up to 552,300 Optional Shares, at the purchase price per share set
forth in the paragraph above, for the sole purpose of covering overallotments
in the sale of the Firm Shares. Any such election to purchase Optional Shares
shall be made in proportion to the maximum number of Optional Shares to be sold
by the Company and each selling stockholder named in Schedule III hereto as set
forth in Schedule III hereto. Any such election to purchase Optional Shares
may be exercised only by written notice from you to the Company and the
Attorneys-in-Fact, given within a period of 30 calendar days after the date of
this Agreement and setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless you and the Company and the
Attorneys-in-Fact otherwise agree in writing, earlier than two or later than
ten business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm
Shares, the several Underwriters propose to offer the Firm Shares for sale upon
the terms and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized denominations and
registered in such names as Xxxxxx Xxxxxx & Company, Inc., ("Xxxxxx Xxxxxx")
may request upon at least forty-eight hours' prior notice to the Company and
the Selling Stockholders, shall be delivered by or on behalf of the Company and
the Selling Stockholders to Xxxxxx Xxxxxx for the account of such Underwriter,
against payment therefor in immediately available funds. The Company will
cause the certificates representing the Shares to be made available for
checking and packaging at least twenty-four hours prior to the Time of Delivery
(as defined below) with respect thereto at the office of Xxxxxx Xxxxxx, 00 X.
Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000 (the "Designated Office"). The time and
date of such delivery and payment shall be, with respect to the Firm Shares,
8:30 a.m., Central daylight time on November 6, 1996 or such other time and
date as Xxxxxx Xxxxxx and the Company may agree in writing, and with respect to
the Option Shares, 8:30 a.m., Central daylight time, on the date specified by
Xxxxxx Xxxxxx in the written notice given by Xxxxxx Xxxxxx of the Underwriters'
election to purchase such Optional Shares, or such other time and date as
Xxxxxx Xxxxxx, the Company and the Attorneys-in-Fact may agree upon in writing.
Such time and date for delivery of the Firm Shares is herein called the "First
Time of Delivery", such time and date for delivery of the Optional Shares, if
not the First Time of Delivery, is herein called the "Second Time of Delivery",
and each such time and date for delivery is herein called a "Time of Delivery".
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(b) The documents to be delivered at each Time of
Delivery by or on behalf of the parties hereto pursuant to Section 7 hereof,
including the cross receipt for the Shares and any additional documents
requested by the Underwriters pursuant to Section 7(l) hereof will be delivered
at the offices of Xxxxxx & Xxxxxx L.L.P., 0000 Xxxxxx, Xxxxx 0000, Xxxxxxx,
Xxxxx 00000 (the "Closing Location"), and the Shares will be delivered at the
Designated Office, all at Time of Delivery. A meeting will be held at the
Closing Location at 2:00 p.m., Central daylight time, on the Business Day next
preceding Time of Delivery, at which meeting the final drafts of the documents
to be delivered pursuant to the preceding sentence will be available for review
by the parties hereto. For the purposes of this Section 4, "Business Day"
shall mean each Monday, Tuesday, Wednesday, Thursday and Friday which is not a
day on which banking institutions in New York are generally authorized or
obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you
and to file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day following
the execution and delivery of this Agreement, or, if applicable, such earlier
time as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus which
reasonably shall be disapproved by you promptly after reasonable notice
thereof; to advise you, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or becomes
effective or any supplement to the Prospectus or any amended Prospectus has
been filed and to furnish you with copies thereof; to advise you, promptly
after it receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any Preliminary
Prospectus or prospectus, of the suspension of the qualification of the Shares
for offering or sale in any jurisdiction, of the initiation or threatening of
any proceeding for any such purpose, or of any request by the Commission for
the amending or supplementing of the Registration Statement or Prospectus or
for additional information; and, in the event of the issuance of any stop order
or of any order preventing or suspending the use of any Preliminary Prospectus
or prospectus or suspending any such qualification, promptly to use its best
efforts to obtain the withdrawal of such order;
(b) Promptly from time to time to take such action as you
may reasonably request to cooperate with the Underwriters to qualify the Shares
for offering and sale under the securities laws of such jurisdictions as you
may request and to comply with such laws so as to permit the continuance of
sales and dealings therein in such jurisdictions for as long as may be
necessary to complete the distribution of the Shares, provided that in
connection therewith the Company shall not be required to qualify as a foreign
corporation or as a dealer in securities, to file a general consent to service
of process in any jurisdiction or to subject itself to taxation in any
jurisdiction in which it is not otherwise so subject;
(c) On the Business Day next succeeding the date of this
Agreement and from time to time, to furnish the Underwriters with copies of the
Prospectus in such quantities as you may from time to time reasonably request,
and, if the delivery of a prospectus is required at any time prior to the
expiration of nine months after the time of issue of the
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Prospectus in connection with the offering or sale of the Shares and if at such
time any events shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a material fact or
omit to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made when such
Prospectus is delivered, not misleading, or, if for any other reason it shall
be necessary during such period to amend or supplement the Prospectus in order
to comply with the Act, to notify you and upon your request to prepare and
furnish without charge to each Underwriter and to any dealer in securities as
many copies as you may from time to time reasonably request of an amended
Prospectus or a supplement to the Prospectus which will correct such statement
or omission or effect such compliance, and in case any Underwriter is required
to deliver a prospectus in connection with sales of any of the Shares at any
time nine months or more after the time of issue of the Prospectus, upon your
request but at the expense of such Underwriter, to prepare and deliver to such
Underwriter as many copies as you may request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Act;
(d) If the Company elects to rely upon Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date
of this Agreement, and the Company shall at the time of filing either pay to
the Commission the filing fee for the Rule 462(b) Registration Statement or
give irrevocable instructions for the payment of such fee pursuant to Rule II
1(b) under the Act;
(e) To make generally available to its security holders
as soon as practicable, but in any event not later than eighteen months after
the effective date of the Registration Statement (as defined in Rule 158(c)
under the Act), an earnings statement of the Company and its subsidiaries
(which need not be audited) complying with Section 11(a) of the Act and the
rules and regulations of the Commission thereunder (including, at the option of
the Company, Rule 158);
(f) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the Prospectus,
not to offer, sell, contract to sell or otherwise dispose of, except as
provided hereunder, any securities of the Company that are substantially
similar to the Shares, including but not limited to any securities that are
convertible into or exchangeable for, or that represent the right to receive,
Stock or any such substantially similar securities (other than pursuant to
employee stock option plans existing on the date of this Agreement), without
the prior written consent of Xxxxxx Xxxxxx;
(g) To furnish to its stockholders as soon as practicable
after the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders' equity and cash flows of the Company
and its consolidated subsidiaries certified by independent public accountants)
and, as soon as practicable after the end of each of the first three quarters
of each fiscal year (beginning with the fiscal quarter ending after the
effective date of the Registration Statement), consolidated summary financial
information of the Company and its subsidiaries for such quarter in reasonable
detail;
(h) During a period of five years from the effective date
of the Registration Statement, to furnish to you copies of all reports or other
communications (financial or other)
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furnished generally to stockholders, and to deliver to you (i) as soon as they
are available, copies of any reports and financial statements furnished to or
filed with the Commission or any national securities exchange on which any
class of securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the Company as
you may from time to time reasonably request (such financial statements to be
on a consolidated basis to the extent the accounts of the Company and its
subsidiaries are consolidated in reports furnished to its stockholders
generally or to the Commission);
(i) To use the net proceeds received by it from the sale
of the Shares pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds";
(j) To use all reasonable efforts to list for quotation
the Shares on the National Association of Securities Dealers Automated
Quotations National Market ("NASDAQ"); and
(k) To file with the Commission such reports on Form SR
as may be required by Rule 463 under the Act.
6. The Company covenants and agrees with the several Underwriters
that (a) the Company will pay or cause to be paid, the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Blue Sky Memorandum,
closing documents (including any compilations thereof) and any other documents
in connection with the offering, purchase, sale and delivery of the Shares;
(iii) all expenses in connection with the qualification of the Shares for
offering and sale under state securities laws as provided in Section 5(b)
hereof, including the fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the Blue Sky survey;
(iv) all fees and expenses in connection with listing the Shares on the NASDAQ;
(v) the filing fees incident to, and the fees and disbursements of counsel for
the Underwriters in connection with, securing any required review by the
National Association of Securities Dealers, Inc. of the terms of the sale of
the Shares; (vi) the cost of preparing stock certificates; (vii) the cost and
charges of any transfer agent or registrar and (viii) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section. It is understood, that
except as provided in this Section, and Sections 8 and 11 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees
of their counsel, stock transfer taxes on resale of any of the Shares by them,
and any advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the
Shares to be delivered at each Time of Delivery, shall be subject, in their
discretion, to the condition that all representations and warranties of the
Company and of the Selling Stockholders herein are, at and as of such Time of
Delivery, true and correct, the condition that the Company and the
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Selling Stockholders shall have performed all of its and their obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in accordance
with Section 5(a) hereof; if the Company has elected to rely upon Rule 462(b),
the Rule 462(b) Registration Statement shall have become effective by 10:00
p.m., Washington, D.C. time, on the date of this Agreement; no stop order
suspending the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have been
initiated or threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been complied with to your
reasonable satisfaction;
(b) Xxxxxx & Xxxxxx L.L.P., counsel for the Underwriters,
shall have furnished to you such opinion or opinions, dated such Time of
Delivery, with respect to the matters covered in paragraphs (i), (ii), (xi) and
(xiv) of subsection (c) below as well as such other related matters as you may
reasonably request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass upon such
matters;
(c) Xxxxxxxxx & Xxxxxxxxx L.L.P., counsel for the
Company, shall have furnished to you their written opinion, dated such Time of
Delivery, in form and substance satisfactory to you, to the effect that:
(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, with corporate power and authority to own its
properties and conduct its business as described in the Prospectus;
(ii) The Company has authorized capital stock as
set forth in the Prospectus under the caption "Description of Capital
Stock" (except for subsequent issuances, if any, pursuant to this
Agreement or pursuant to the Combination, reservations, agreements,
employee benefit plans or the exercise of convertible securities or
options referred to in the Prospectus); all of the issued and
outstanding shares of capital stock of the Company (including the
Shares being delivered at such Time of Delivery) have been duly
authorized and validly issued and are fully paid and non-assessable;
and the Shares conform, as to legal matters, in all material respects
to the description of the Shares contained in the Prospectus under the
caption "Description of Capital Stock;"
(iii) The Company has been duly qualified as a
foreign corporation to transact business and is in good standing
under the laws of each other jurisdiction in which such qualification
is required, except where the failure so to qualify or to be in good
standing would not have a Material Adverse Effect;
(iv) Each direct or indirect subsidiary of the
Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of
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its jurisdiction of incorporation or is duly formed and validly existing as a
limited partnership, as the case may be, and all of the issued shares of
capital stock of, or partnership or other equity ownership interest in, each
such subsidiary have been duly and validly authorized and issued, are fully
paid and non-assessable, and (except for directors' qualifying shares and South
Dalphin Partners, Ltd.) to such counsel's knowledge after due inquiry are owned
directly or indirectly by the Company), free and clear of all liens,
encumbrances, equities or claims;
(v) To such counsel's knowledge after due
inquiry, there is no legal or governmental proceeding which is
required to be disclosed in the Prospectus and is not disclosed;
(vi) This Agreement has been duly authorized,
executed and delivered by the Company;
(vii) The issue and sale of the Shares being
delivered at such Time of Delivery to be sold by the Company and the
compliance by the Company with all of the provisions of this Agreement
and the consummation of the transactions herein contemplated will not
conflict with or result in a breach or violation of any of the terms
or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan or credit agreement or other agreement
or instrument known to such counsel to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or any applicable statute or
any order, rule or regulation known to such counsel after due inquiry
of any court or governmental agency or body having jurisdiction over
the Company or any of its subsidiaries or any of their material
properties;
(viii) No consent, approval, authorization or order
of any court or governmental agency is required to be obtained by the
Company for the issue and sale of the Shares by the Company to the
Underwriters or the consummation by the Company of the transactions
contemplated by this Agreement, except the registration under the Act
of the Shares, and such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters;
(ix) To the extent summarized therein, all
contracts and agreements summarized in the Registration Statement and
the Prospectus are fairly summarized therein, conform in all material
respects to the descriptions thereof contained therein, and, to the
extent such contracts or agreements or any other material agreements
are required under the Act or the Rules and Regulations thereunder to
be filed, as exhibits to the Registration Statement, they are so
filed; and such counsel does not know of any contracts or other
documents required to be summarized or disclosed in the Prospectus or
to be so filed as an exhibit to the Registration Statement, which have
not been so summarized or disclosed, or so filed;
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(x) The Company is not an "investment company" or
an entity "controlled" by an "investment company", as such terms are
defined in the Investment Company Act; and
(xi) To such counsel's knowledge after due
inquiry, except as have been waived at the Time of Delivery, there are
no persons with registration or similar rights to have any securities
of the Company registered pursuant to the Registration Statement.
(xii) Each of the Agreement and Plan of
Reorganization by and among the Company, Offshore Energy Development
Corporation, a Texas corporation ("Offshore Texas"), OEDC, Inc, a
Texas corporation, Natural Gas Partners, L.P., a Delaware limited
partnership, NGP-OEDC Holdings, L.P., a Texas limited partnership,
Xxxxx X. Xxxxxxxxx, Xxxxxxx X. Xxxxxxxxxxx, R. Xxxxx Xxxxxxxx, Xxxxxxx
X. Xxxxxxxx, Xxxx Xxxxxxxx, Xxxxx Xxxxxxxx, X. Xxxxxx Xxxxxxx, Xxxxx
X. Xxxxx, the Xxxxx Income Trust, Xxxx X. Xxxxxx, Xxxxxxx X. Xxxxx,
Xxxxx X. Xxxxxxx, III, Xxxx X. Xxxx and Xxxxx Xxxxxx Xxxxxxxx dated
August 30, 1996 and the Agreement and Plan of Merger by and between
the Company and Offshore Texas dated August 30, 1996 has been duly
authorized and validly executed and delivered by the Company and
constitute the valid and legally binding agreement of the Company; and
(xiii) The Registration Statement and each
amendment or supplement thereto, as of their respective effective
dates and the Prospectus as of its date, comply as to form in all
material respects with the requirements of the Act and the rules and
regulations thereunder (it being understood that such counsel need
express no opinion as to the financial statements and schedules or
other financial data and reports pertaining to natural resource
reserves contained in the Registration Statement or the Prospectus);
and nothing has come to such counsel's attention that would lead such
counsel to believe that either the Registration Statement or any
amendment or supplement thereto, at the time such Registration
Statement or amendment or supplement became effective, or the
Prospectus or any amendment or supplement thereto, as of its date and
as of each Time of Delivery, contains or contained any untrue
statement of a material fact or omitted or omits to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading;
(d) The respective counsel for each of the Selling
Stockholders, as indicated in Schedules II and III hereto, as applicable, each
shall have furnished to you their written opinion with respect to each of the
Selling Stockholders for whom they are acting as counsel, dated the such Time
of Delivery, in form and substance satisfactory to you, to the effect that:
(i) A Power-of-Attorney and a Custody Agreement
have been duly executed and delivered by such Selling Stockholder and
constitute valid and binding agreements of such Selling Stockholder in
accordance with their terms;
(ii) This Agreement has been duly executed and
delivered by or on behalf of such Selling Stockholder; the sale of
the Shares to be sold by such Selling
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Stockholder hereunder and the compliance by such Selling Stockholder
with all of the provisions of this Agreement, the Power-of-Attorney
and the Custody Agreement and the consummation of the transactions
herein and therein contemplated will not conflict with or result in a
breach or violation of any terms or provisions of, or constitute a
default under, any statute, indenture, mortgage, deed of trust, loan
agreement or other agreement or instrument known to such counsel to
which such Selling Stockholder is a party or by which such Selling
Stockholder is bound or to which any of the property or assets of such
Selling Stockholder is subject, nor will such action result in any
violation of the provisions of the Certificate of Incorporation or
By-laws of such Selling Stockholder if such Selling Stockholder is a
corporation, the Partnership Agreement of such Selling Stockholder if
such Selling Stockholder is a partnership or any order, rule or
regulation known to such counsel of any court or governmental agency
or body having jurisdiction over such Selling Stockholder or the
property of such Selling Stockholder;
(iii) No authorization, approval, consent or order
of any court or governmental agency (other than under the 1933 Act and
the rules and regulations promulgated thereunder, which have been
obtained, or as may be required under the securities or blue sky laws
of the various states, as to which we have not been asked to express
an opinion) is required to be obtained by such Selling Stockholder for
the issuance or sale of the Shares by such Selling Stockholder to the
Underwriters or for the consummation by the Selling Stockholders of
the transactions contemplated by this Agreement;
(iv) Immediately prior to such Time of Delivery,
such Selling Stockholder had good and valid title to the Shares to be
sold at such Time of Delivery by such Selling Stockholder under this
Agreement to our knowledge after due inquiry, free and clear of all
liens, encumbrances, equities or claims, and had full right, power and
authority to sell, assign, transfer and deliver the Shares to be sold
by such Selling Stockholder hereunder; and
(v) Good and valid title to such Shares, free and
clear of all liens, encumbrances, equities or claims, has been
transferred to each of the several Underwriters who have purchased
such Shares in good faith and without notice of any such lien,
encumbrance, equity or claim or any other adverse claim within the
meaning of the Uniform Commercial Code.
In rendering the opinion in paragraph (iv), such counsel may rely upon
a certificate of such Selling Stockholder in respect of matters of fact as to
ownership of, and liens, encumbrances, equities or claims on, the Shares sold
by such Selling Stockholder, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such certificate;
(e) On the date of the Prospectus at a time prior to the
execution of this Agreement, at 8:30 a.m., Central daylight time, on the
effective date of any post-effective amendment to the Registration Statement
filed subsequent to the date of this Agreement and also at each Time of
Delivery, KPMG Peat Marwick LLP shall have furnished to you a letter or
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letters, dated the respective dates of delivery thereof, in form and substance
satisfactory to you, to the effect set forth in Annex I hereto;
(f) Xxxxx Xxxxx, such firm constituting independent
petroleum engineering consultants, shall have delivered to you on the date of
this Agreement a letter (the "Reserve Letter") and also at each Time of
Delivery a letter dated the date of such Time of Delivery, in each case in form
and substance reasonably satisfactory to you and substantially in the form
attached hereto as Annex II, stating, as of the date of such letter (or, with
respect to matters involving changes or developments since the respective dates
as of which specified information with respect to the oil and gas reserves is
given or incorporated in the Prospectus as of the date not more than five days
prior to the date of such letter), the conclusions and findings of such firm
with respects to the oil and gas reserves of the Company.
(g)(i) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial statements
included in the Prospectus any loss or interference with its business from
fire, explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus, and (ii) since
the respective dates as of which information is given in the Prospectus there
shall not have been any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any change, or any development involving
a prospective change, in or affecting the general affairs, management,
financial position, stockholders' equity or results of operations of the
Company and its subsidiaries, otherwise than as set forth or contemplated in
the Prospectus, the effect of which, in any such case described in Clause (i)
or (ii), is in the judgment of the representatives of the Underwriters so
material and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Shares being delivered at such Time
of Delivery on the terms and in the manner contemplated in the Prospectus;
(h) On or after the date hereof there shall not have
occurred any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange or on the
NASDAQ; (ii) a suspension or material limitation in trading in the Company's
securities on the NASDAQ; (iii) a general moratorium on commercial banking
activities declared by either Federal or New York or Texas state authorities;
or (iv) the outbreak or escalation of hostilities involving the United States
or the declaration by the United States of a national emergency or war, if the
effect of any such event specified in this Clause (iv) in the judgment of the
representatives of the Underwriters makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the Shares being delivered
at such Time of Delivery on the terms and in the manner contemplated in the
Prospectus;
(i) The Shares at such Time of Delivery shall have been
approved for inclusion in the NASDAQ subject only to official notice of
issuance;
(k) The Company has obtained and delivered to the
Underwriters executed copies of an agreement from each officer and director of
the Company and Natural Gas Partners, L.P., substantially to the effect set
forth in Subsection 1(b)(iv) hereof in form and substance satisfactory to you;
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(l) The Company and the Selling Stockholders shall have
furnished or caused to be furnished to you at such Time of Delivery
certificates of officers of the Company on behalf of the Company and of the
Selling Stockholders, respectively, satisfactory to you as to the accuracy of
the representations and warranties of the Company and the Selling Stockholders,
respectively, herein at and as of such Time of Delivery, as to the performance
by the Company and the Selling Stockholders of all of their respective
obligations hereunder to be performed at or prior to such Time of Delivery, and
as to such other matters as you may reasonably request, and the Company shall
have furnished or caused to be furnished certificates as to the matters set
forth in subsection (a) and (g) of this Section; and
(m) The Combination shall have been completed.
8. (a) The Company and each of Xxxxx X. Xxxxxxxxx,
Xxxxxxx X. Xxxxxxxxxxx, R. Xxxxx Xxxxxxxx (the "Managing Selling
Stockholders"), jointly and severally, will indemnify and hold harmless each
Underwriter against any losses, claims, damages or liabilities, joint or
several, to which such Underwriter may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon (i) any untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, or (ii) any untrue
statement or alleged untrue statement made by the Company in Section 1(a) of
this Agreement or by the Managing Selling Stockholders in Section 1(b) of this
Agreement and will reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with investigating or
defending any such action or claim as such expenses are incurred; provided,
however, (a) that the Company and the Managing Selling Stockholders shall not
be liable in any such case to the extent that any such loss, claim, damage or
liability arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary Prospectus,
the Registration Statement or the Prospectus or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by any Underwriter through Xxxxxx Xxxxxx expressly for
use therein; (b) that each of the Managing Selling Stockholders' liability to
the Underwriters shall be limited to the proceeds received by such Managing
Selling Stockholder from the sale of such Managing Selling Stockholder's Shares
in the Offering and (c) the Underwriters shall look to the Managing Selling
Stockholders for the purposes of the indemnity provided in this Section 8(a)
only if the indemnification from the Company is insufficient or unavailable to
indemnify and hold harmless each Underwriter.
(b) Each Selling Stockholder, severally and not jointly,
will indemnify and hold harmless each Underwriter to the same extent as the
foregoing indemnity from the Company and the Managing Selling Stockholders to
the Underwriters, but only insofar as losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon (i) any untrue
statement or omission or alleged untrue statement or omission which was made in
the Registration Statement, the Prospectus or any amendment or supplement
thereto, in reliance on and in conformity with information furnished in writing
by such Selling Stockholder expressly for use therein or (ii) any untrue
statement or alleged untrue statement made by the Selling
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Stockholder in Section 1(b) of this Agreement; provided, however, that each of
such Selling Stockholders' liability to the Underwriters shall be limited to
the proceeds received by such Selling Stockholder from the sale of such Selling
Stockholder's Shares in the Offering.
(c) Each Underwriter will indemnify and hold harmless the
Company and each Selling Stockholder against any losses, claims, damages or
liabilities to which the Company or such Selling Stockholder may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, the Registration Statement or the Prospectus, or
any amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not misleading, in
each case to the extent, but only to the extent, that such untrue statement or
alleged untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through Xxxxxx Xxxxxx,
expressly for use therein; and will reimburse the Company and each Selling
Stockholder for any legal or other expenses reasonably incurred by the Company
or such Selling Stockholder in connection with investigating or defending any
such action or claim as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of any action,
such indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under such subsection, notify the indemnifying
party in writing of the commencement thereof; but the omission so to notify the
indemnifying party shall not relieve it from any liability which it may have to
any indemnified party otherwise than under such subsection. In case any such
action shall be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party (who shall not,
except with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying party to such
indemnified party of its election so to assume the defense thereof, the
indemnifying party shall not be liable to such indemnified party under such
subsection for any legal expenses of other counsel or any other expenses, in
each case subsequently incurred by such indemnified party, in connection with
the defense thereof other than reasonable costs of investigation. No
indemnifying party shall, without the written consent of the indemnified party,
effect the settlement or compromise of, or consent to the entry of any judgment
with respect to, any pending or threatened action or claim in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action or claim)
unless such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of such action
or claim and (ii) does not include a statement as to or an admission of fault,
culpability or a failure to act, by or on behalf of any indemnified party.
(e) If the indemnification provided for in this Section 8
is unavailable to or insufficient to hold harmless an indemnified party under
subsection (a), (b) or (c) above in
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respect of any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of such
losses, claims, damages or liabilities (or actions in respect thereof) in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholders on the one hand and the Underwriters on
the other from the offering of the Shares. If, however, the allocation
provided by the immediately preceding sentence is not permitted by applicable
law or if the indemnified party failed to give the notice required under
subsection (d) above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such proportion as is
appropriate to reflect not only such relative benefits but also the relative
fault of the Company and the Selling Stockholders on the one hand and the
Underwriters on the other in connection with the statements or omissions which
resulted in such losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Selling Stockholders on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total net proceeds from the offering (before deducting expenses)
received by the Company and the Selling Stockholders bear to the total
underwriting discounts and commissions received by the Underwriters, in each
case as set forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other things, whether
the untrue or alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information supplied by
the Company or the Selling Stockholders on the one hand or the Underwriters on
the other and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company,
each of the Selling Stockholders and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this subsection (e) 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 above in this
subsection (e). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (e) shall be deemed to include any legal
or other expenses reasonably incurred by such indemnified party in connection
with investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (e), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at which
the Shares underwritten by it and distributed to the public were offered to the
public exceeds the amount of any damages which such Underwriter has otherwise
been required to pay by reason of such untrue or alleged untrue statement or
omission or alleged omission and no Selling Shareholder shall be required to
contribute any amount in excess of the proceeds received by such Selling
Shareholder in the Offering. No person guilty of fraudulent misrepresentation
(within the meaning of Section 11(f) of the Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. The Underwriters' obligations in this subsection (e) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(f) The obligations of the Company and the Selling
Stockholders under this Section 8 shall be in addition to any liability which
the Company and the respective Selling Stockholders may otherwise have and
shall extend, upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the meaning of the Act; and the
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obligations of the Underwriters under this Section 8 shall be in addition to
any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of the
Company (including any person who, with his or her consent, is named in the
Registration Statement as about to become a director of the Company) and to
each person, if any, who controls the Company or any Selling Stockholder within
the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at a Time of
Delivery you may in your discretion arrange for you or another party or other
parties to purchase such Shares on the terms contained herein. If within
thirty-six hours after such default by any Underwriter you do not arrange for
the purchase of such Shares, then the Company and the Selling Stockholders
shall be entitled to a further period of thirty-six hours within which to
procure another party or other parties satisfactory to you to purchase such
Shares on such terms. In the event that, within the respective prescribed
periods, you notify the Company and the Selling Stockholders that you have so
arranged for the purchase of such Shares, or the Company and the Selling
Stockholders notify you that they have so arranged for the purchase of such
Shares, you or the Company and the Selling Stockholders shall have the right to
postpone (a) Time of Delivery for a period of not more than seven days, in
order to effect whatever changes may thereby be made necessary in the
Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall include
any person substituted under this Section with like effect as if such person
had originally been a party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by you and
the Company and the Selling Stockholders as provided in subsection (a) above,
the aggregate number of such Shares which remains unpurchased does not exceed
one-eleventh of the aggregate number of all the Shares to be purchased at such
Time of Delivery, then the Company and the Selling Stockholders shall have the
right to require each non-defaulting Underwriter to purchase the number of
Shares which such Underwriter agreed to purchase hereunder at such Time of
Delivery and, in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default.
(c) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by you and
the Company and the Selling Stockholders as provided in subsection (a) above,
the aggregate number of such Shares which remains unpurchased exceeds
one-eleventh of the aggregate number of all of the Shares to be purchased at
such Time of Delivery, or if the Company and the Selling Stockholders shall not
exercise the right described in subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or Underwriters,
then this Agreement (or, with respect to the Second Time of Delivery, the
obligations of the Underwriters to purchase and of the Company and the Selling
Stockholders to sell the Optional Shares) shall thereupon
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terminate, without liability on the part of any non-defaulting Underwriter or
the Company or the Selling Stockholders, except for the expenses to be borne by
the Company and the Selling Stockholders and the Underwriters as provided in
Section 6 hereof and the indemnity and contribution agreements in Section 8
hereof; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Selling Stockholders and
the several Underwriters, as set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement, shall remain in full
force and effect, regardless of any investigation (or any statement as to the
results thereof) made by or on behalf of any Underwriter or any controlling
person of any Underwriter, or the Company, or any of the Selling Stockholders,
or any officer or director or controlling person of the Company, or any
controlling person of any Selling Stockholder, and shall survive delivery of
and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, neither the Company nor the Selling Stockholders shall then be under
any liability to any Underwriter except as provided in Sections 6 and 8 hereof;
but, if for any other reason any Shares are not delivered by or on behalf of
the Company and the Selling Stockholders as provided herein, the Company and
each of the Selling Stockholders pro rata (based on the number of Shares to be
sold by the Company and such Selling Stockholder hereunder) will reimburse the
Underwriters through you for all out-of-pocket expenses approved in writing by
you, including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of the
Shares not so delivered, but the Company and the Selling Stockholders shall
then be under no further liability to any Underwriter in respect of the Shares
not so delivered except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of
the Underwriters, and the parties hereto shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any Underwriter made
or given by you jointly or by Xxxxxx Xxxxxx on behalf of you as the
representatives; and in all dealings with any Selling Stockholder hereunder,
you and the Company shall be entitled to act and rely upon any statement,
request, notice or agreement on behalf of such Selling Stockholder made or
given by any or all of the Attorneys-in-Fact for such Selling Stockholder.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex
or facsimile transmission to you as the representatives in care of Xxxxxx
Xxxxxx & Company, Inc., 00 Xxxxx Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000,
Attention: Xxxx Xxxxxx, telecopier number (000) 000-0000 ; if to any Selling
Stockholder shall be delivered or sent by mail, telex or facsimile transmission
to counsel for such Selling Stockholder at its address set forth in Schedule II
or Schedule III hereto; and if to the Company shall be delivered or sent by
mail, telex or facsimile transmission to the address of the Company set forth
in the Registration Statement, Attention: Secretary, telecopier number (713)
364-1122; provided, however, that any notice to an Underwriter pursuant to
Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its Underwriters'
Questionnaire or telex constituting such Questionnaire, which address will be
supplied to the Company or the
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Selling Stockholders by you on request. Any such statements, requests, notices
or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and the Selling Stockholders and, to
the extent provided in Sections 8 and 10 hereof, the officers and directors of
the Company and each person who controls the Company, any Selling Stockholder
or any Underwriter, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the Shares from
any Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TENNESSEE.
16. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us one for the Company and each of the representatives of the
Underwriters plus one for each counsel and the Custodian, of any counterparts
hereof, and upon the acceptance hereof by you, on behalf of each of the
Underwriters, this letter and such acceptance hereof shall constitute a binding
agreement among each of the Underwriters, the Company and each of the Selling
Stockholders. It is understood that your acceptance of this letter on behalf
of each of the Underwriters is pursuant to the authority set forth in a form of
Agreement among Underwriters, the form of which shall be submitted to the
Company and the Selling Stockholders for examination, upon request, but without
warranty on your part as to the authority of the signers thereof.
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Any person executing and delivering this Agreement as Attorney-in-Fact
for a Selling Stockholder represents by so doing that he has been duly
appointed as Attorney-in-Fact by such Selling Stockholder pursuant to a validly
existing and binding Power-of-Attorney which authorizes such Attorney-in-Fact
to take such action.
Very truly yours,
Offshore Energy Development Corporation
By:
----------------------------------------------
Name:
Title:
Selling Stockholders Named in Schedule II and III
to this Agreement
By:
----------------------------------------------
Name:
Title:
As Attorney-in-Fact acting on behalf of each
of the Selling Stockholders named in
Schedule II and III to this Agreement.
Accepted as of the date hereof
Xxxxxx Xxxxxx & Company, Inc.
Principal Financial Securities
By:
---------------------------------
Xxxxxx Xxxxxx & Company, Inc.
On behalf of each of the Underwriters
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SCHEDULE I
Number of Optional
Total Number of Firm Shares to be purchased
Underwriter Shares to be Purchased if Maximum Option Exercised
----------- ---------------------- ---------------------------
Xxxxxx Xxxxxx & Company, Inc. 1,016,000 152,400
Principal Financial Securities, Inc. 1,016,000 152,400
Banque Paribas 75,000 11,250
X.X. Xxxxxxxx & Co. 75,000 11,250
Xxxxx Xxxxxx & Co., Inc. 75,000 11,250
Xxxxxxx, Xxxxxx & Co. 75,000 11,250
Xxxx Xxxxxxxx Incorporated 75,000 11,250
Equitable Securities Corporation 75,000 11,250
Xxxxxxx, Xxxxxx Inc. 75,000 11,250
Interstate/Xxxxxxx Lane Corporation 75,000 11,250
Xxxxxxxxx & Company 75,000 11,250
Xxxxxxx Rice & Company L.L.C. 75,000 11,250
Xxxx Xxxxx Xxxx Xxxxxx, Incorporated 75,000 11,250
XxXxxxxx & Company Securities, Inc. 75,000 11,250
Xxxxxxx Xxxxx Securities Inc. 75,000 11,250
Xxxxxx Xxxxxxx & Co. 75,000 11,250
Xxxxxxxx Xxxxxx Refsnes, Inc. 75,000 11,250
Xxxxxxx Xxxxx & Associates, Inc. 75,000 11,250
The Xxxxxxxx-Xxxxxxxx Company, Inc. 75,000 11,250
Xxxxxxx & Company International 75,000 11,250
Southwest Securities, Inc. 75,000 11,250
Xxxxxxxx Inc. 75,000 11,250
Xxxxxx, Xxxxxxxx & Company, 75,000 11,250
Incorporated
Wheat First Butcher Singer 75,000 11,250
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SCHEDULE II
Total Number of firm
Shares to be Sold
-----------------------
R. Xxxxx Xxxxxxxx 45,500
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Fax: (000)000-0000
Xxxxxx X. Xxxxx 136,500
Xxxxxx Xxxxx
0000 Xxxxxx Xxxxxx, X.X.
Xxxxx Xxxxxx, Xxxxxxxx 00000
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SCHEDULE III
Total Number of Option
Shares to be Sold
-------------------------
The Company 150,000
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Fax: (000)000-0000
Xxxxx X. Xxxxxxxxx as trustee of the 68,250
Xxxxx X. and Xxxxx X. Xxxxxxxxx
1989 Revocable Management Trust
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Fax: (000)000-0000
Xxxxxxx X. Xxxxxxxxxxx as trustee of the 22,750
Xxxxxxx X. and Xxxxxxx X. Xxxxxxxxxxx
1989 Revocable Management Trust
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Fax: (000)000-0000
Xxxxxxx X. Xxxxxxxxxxx as trustee of the 20,475
Xxxxxxx X. and Xxxxx X. Xxxxxxxxxxx
1983 Revocable Management Trust
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Fax: (000)000-0000
Xxxxxxx X. Xxxxxxxxxxx as trustee of the 5,625
Xxxxx X. Xxxxxx 1988 Trust
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Fax: (000)000-0000
22,750
R. Xxxxx Xxxxxxxx
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Fax: (000)000-0000
R. Xxxxx Xxxxxxxx as trustee f/b/o 3,750
Xxxx Xxxxxx
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Fax: (000)000-0000
R. Xxxxx Xxxxxxxx as trustee f/b/o 3,750
X. X. Xxxxxxxx
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Fax: (000)000-0000
R. Xxxxx Xxxxxxxx as trustee f/b/o 3,750
Xxxxxx X. Xxxxxxxx
0000 Xxxxxxxx Xxxxxx Xxxxx
Xxxxx 000
Xxx Xxxxxxxxx, Xxxxx 00000
Fax: (000)000-0000
The Christian Community Foundation 50,050
X.X. Xxx 0000
Xxxxxxxx Xxxx, Xxxxxxxx 00000-0000
Fax:(000)000-0000
Natural Gas Partners, L.P. 201,150
000 Xxxx Xxxxxx Xxx.
Xxxxxxxxx, Xxxxxxxxxxx 00000
Fax:(000)000-0000
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ANNEX I
FORM OF COMFORT LETTER
Pursuant to Section 7(d) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Act and the
applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by them
and included in the Prospectus or the Registration Statement comply as to form
in all material respects with the applicable accounting requirements of the Act
and the related published rules and regulations thereunder; and, if applicable,
they have made a review in accordance with standards established by the
American Institute of Certified Public Accountants of the unaudited
consolidated interim financial statements, selected financial data, pro forma
financial information, financial forecasts and/or condensed financial
statements derived from audited financial statements of the Company for the
periods specified in such letter, as indicated in their reports thereon, copies
of which have been separately furnished to the representatives of the
Underwriters (the "Representatives);
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants of the
unaudited condensed consolidated statements of income, consolidated balance
sheets and consolidated statements of cash flows included in the Prospectus as
indicated in their reports thereon copies of which have been separately
furnished to the Representatives and on the basis of specified procedures
including inquiries of officials of the Company who have responsibility for
financial and accounting matters regarding whether the unaudited condensed
consolidated financial statements referred to in paragraph (vi)(A)(i) below
comply as to form in all material respects with the applicable accounting
requirements of the Act and the related published rules and regulations,
nothing came to their attention that caused them to believe that the unaudited
condensed consolidated financial statements do not comply as to form in all
material respects with the applicable accounting requirements of the Act and
the related published rules and regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the Company
for the five most recent fiscal years included in the Prospectus agrees with
the corresponding amounts (after restatements where applicable) in the audited
consolidated financial statements for such five fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K and on the
basis of limited procedures specified in such letter nothing came to their
attention as a result of the foregoing procedures that caused them to believe
that this information does not conform in all material respects with the
disclosure requirements of Items 301, 302, 402 and 503(d), respectively, of
Regulation S-K;
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(vi) On the basis of limited procedures, not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available interim
financial statements of the Company and its subsidiaries, inspection of the
minute books of the Company and its subsidiaries since the date of the latest
audited financial statements included in the Prospectus, inquiries of officials
of the Company and its subsidiaries responsible for financial and accounting
matters and such other inquiries and procedures as may be specified in such
letter, nothing came to their attention that caused them to believe that:
(A) (i) the unaudited consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the Act and
the related published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed consolidated
statements of income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus for them to be in
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial statements
from which such data and items were derived, and any such unaudited
data and items were not determined on a basis substantially consistent
with the basis for the corresponding amounts in the audited
consolidated financial statements included in the Prospectus;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived any unaudited
condensed financial statements referred to in Clause (A) and any
unaudited income statement data and balance sheet items included in
the Prospectus and referred to in Clause (B) were not determined on a
basis substantially consistent with the basis for the audited
consolidated financial statements included in the Prospectus;
(D) any unaudited pro forma consolidated condensed
financial statements included in the Prospectus do not comply as to
form in all material respects with the applicable accounting
requirements of the Act and the published rules and regulations
thereunder or the pro forma adjustments have not been properly applied
to the historical amounts in the compilation of those statements;
(E) as of a specified date not more than five days prior
to the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock upon
exercise of options and stock appreciation rights, upon earn-outs of
performance shares and upon conversions of convertible securities, in
each case which were outstanding on the date of the latest financial
statements included in the Prospectus) or any increase in the
consolidated long-term debt of the Company and its subsidiaries, or
any decreases in consolidated net current assets or stockholders'
equity or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each case
as compared with amounts shown in the
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latest balance sheet included in the Prospectus, except in each case
for changes, increases or decreases which the Prospectus discloses
have occurred or may occur or which are described in such letter; and
(F) for the period from the date of the latest financial
statements included in the Prospectus to the specified date referred
to in Clause (E) there were any decreases in consolidated net revenues
or operating profit or the total or per share amounts of consolidated
net income or other items specified by the Representatives, or any
increases in any items specified by the Representatives, in each case
as compared with the comparable period of the preceding year and with
any other period of corresponding length specified by the
Representatives, except in each case for decreases or increases which
the Prospectus discloses have occurred or may occur or which are
described in such letter; and
(vii) In addition to the examination referred to in their report(s)
included in the Prospectus and the limited procedures, inspection of minute
books, inquiries and other procedures referred to in paragraphs (iii) and (vi)
above, they have carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards, with
respect to certain amounts, percentages and financial information specified by
the Representatives, which are derived from the general accounting records of
the Company and its subsidiaries, which appear in the Prospectus, or in Part II
of, or in exhibits and schedules to, the Registration Statement specified by
the Representatives, and have compared certain of such amounts, percentages and
financial information with the accounting records of the Company and its
subsidiaries and have found them to be in agreement.
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