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EXHIBIT 1.2
5,000,000 SHARES
TESORO PETROLEUM CORPORATION
COMMON STOCK, PAR VALUE $0.16 2/3 PER SHARE
UNDERWRITING AGREEMENT
June 25, 1998
XXXXXX BROTHERS INC.
CIBC OPPENHEIMER
CREDIT SUISSE FIRST BOSTON
XXXXXXX XXXXX & CO.
XXXXXXX XXXXX XXXXXX
c/x Xxxxxx Brothers Inc.
Three World Financial Center
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Tesoro Petroleum Corporation, a Delaware corporation (the "Company"),
proposes to sell to Xxxxxx Brothers Inc., CIBC Xxxxxxxxxxx Corp., Credit Suisse
First Boston Corporation, Xxxxxxx Lynch, Pierce, Xxxxxx & Xxxxx Incorporated
and Xxxxx Xxxxxx Inc., as the several underwriters (collectively, the
"Underwriters"), and the Underwriters propose, severally and not jointly, to
purchase 5,000,000 shares (the "Firm Stock") of the Company's Common Stock, par
value $0.16 2/3 per share (the "Common Stock"). In addition, the Company
proposes to grant to the Underwriters an option to purchase up to an additional
750,000 shares of the Common Stock on the terms and for the purposes set forth
in Section 2 (the "Option Stock"). The Firm Stock and the Option Stock, if
purchased, are hereinafter collectively called the "Stock." This is to confirm
the agreement concerning the purchase of the Stock from the Company by the
Underwriters.
The Stock is being issued and sold in connection with the acquisition
(the "Hawaii Acquisition") of BHP Petroleum Americas Refining Inc. and BHP
Petroleum South Pacific Inc. (together, "BHP Hawaii") and the proposed
acquisition (the "Washington Acquisition," and together with the Hawaii
Acquisition, the "Acquisitions") of Shell Anacortes Refining Company ("Shell
Washington") by the Company. Concurrently with the offering of the Stock (the
"Common Stock Offering"), the Company is offering 9,000,000 Premium Income
Equity Securities(SM) (the "PIES(SM)") representing interests in the Company's
7 1/4% Mandatorily Convertible Preferred Stock (the "Mandatorily Convertible
Preferred Stock"), with gross proceeds of $143.4 million (excluding any
proceeds from the exercise of over-allotment options granted to the
underwriters of the PIES). The Company is also proposing to offer $300 million
in aggregate principal amount of its Senior
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Subordinated Notes due 2008 (the "Notes"). The closing of the Common Stock
Offering is not conditioned upon the closings of the offerings of PIES (the
"PIES Offering") or the Notes (the "Notes Offering" and together with the
Common Stock Offering and PIES Offering, the "Offerings"), nor is the closing
of any of the Offerings conditioned upon the closing of the Washington
Acquisition. The net proceeds from the Offerings, together with borrowing
under the Company's Third Amended and Restated Credit Facility (the "Senior
Credit Facility"), will be used to fund the cash purchase price of the
Washington Acquisition, to refinance the Company's Second Amended and Restated
Credit Facility (the "Interim Credit Facility") (a portion of which was used to
finance the cash purchase price of the Hawaii Acquisition), to pay certain fees
and expenses related to the Transactions (as defined below) and, to the extent
not used, for general corporate purposes (including working capital
requirements and capital expenditures).
The (i) stock purchase agreement entered into by the Company in
connection with the Washington Acquisition (the "Washington Agreement") and the
Senior Credit Facility, (ii) the underwriting agreement entered into in
connection with the PIES Offering and the deposit agreement entered into in
connection with the PIES Offering and (iii) the purchase agreement,
registration rights agreement, indenture, Notes and subsidiary guarantees
thereof entered into in connection with the Notes Offering are hereinafter
sometimes collectively referred to as the "Transaction Documents." The
Offerings, the Acquisitions and the closing of the Senior Credit Facility are
hereinafter sometimes referred to collectively as the "Transactions."
SECTION 1. Representations, Warranties and Agreements of the Company.
The Company represents and warrants to, and agrees with, the
Underwriters that as of the date hereof:
(a) A registration statement on Form S-3 (file number
333-51789), and amendments thereto, with respect to the Stock has (i) been
prepared by the Company in conformity in all material respects with the
requirements of the Securities Act of 1933, as amended (the "Securities Act"),
and the rules and regulations (the "Rules and Regulations") of the Securities
and Exchange Commission (the "Commission") thereunder, (ii) been filed with the
Commission under the Securities Act and (iii) become effective under the
Securities Act. Such registration statement, as amended as of the date of this
Agreement, meets the requirements set forth in Rule 415(a)(1)(x) under the Act
and complies in all material respects with said Rule. Copies of such
registration statement and amendments thereto have been delivered by the
Company to you as the Underwriters. Upon your written request, but not without
your agreement, the Company will also file a Rule 462(b) Registration Statement
in accordance with Rule 462(b). As used in this Agreement, "Effective Time"
means the date and the time as of which such registration statement, the most
recent post-effective amendment thereto, if any, or any Rule 462(b)
Registration Statement became or becomes effective; "Effective Date" means the
date of the Effective Time; "Preliminary Prospectus" means each prospectus
included in such registration statement, or amendments thereof, including
without limitation the preliminary prospectus supplement, dated June 5, 1998
(the "Preliminary
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Prospectus Supplement") relating to the Stock filed with the Commission
pursuant to Rule 424(b)(5) of the Rules and Regulations, through the date of
the Preliminary Prospectus Supplement; "Registration Statement" means such
registration statement, as amended at the Effective Time, including any
documents incorporated by reference therein at such time and all information
contained in the final prospectus relating to the Stock filed with the
Commission pursuant to Rule 424(b) of the Rules and Regulations in accordance
with Section 5(a) hereof and deemed to be a part of the registration statement
as of the Effective Time pursuant to paragraph (b) of Rule 430A of the Rules
and Regulations and, in the event any Rule 462(b) Registration Statement
becomes effective prior to the First Delivery Date (as hereinafter defined),
also means such registration statement as so amended, unless the context
otherwise requires; "Prospectus" means the Prospectus included in the
Registration Statement at the Effective Time, including without limitation the
final prospectus supplement, dated June 26, 1998, relating to the Stock, as
first filed with the Commission pursuant to paragraph (2) or (5) of Rule 424(b)
of the Rules and Regulations; and "Rule 462(b) Registration Statement" means
the registration statement and any amendments thereto filed pursuant to Rule
462(b) of the Rules and Regulations relating to the offering covered by the
initial Registration Statement. Reference made herein to any Preliminary
Prospectus or to the Prospectus shall be deemed to refer to and include any
documents incorporated by reference therein pursuant to Item 12 of Form S-3
under the Securities Act, as of the date of such Preliminary Prospectus or the
Prospectus, as the case may be. The Commission has not issued any order
preventing or suspending the use of any Preliminary Prospectus.
(b) The Registration Statement conforms, and the
Prospectus, any further amendments or supplements to the Registration Statement
or the Prospectus and any Rule 462(b) Registration Statement will, when they
become effective or are filed with the Commission, as the case may be, conform
in all material respects to the requirements of the Securities Act and the
Rules and Regulations and do not and will not, as of the applicable Effective
Time (as to the Registration Statement and any amendment thereto) and as of the
applicable filing date (as to the Prospectus and any amendment or supplement
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; provided that no representation or warranty is made as
to information contained in or omitted from the Registration Statement or the
Prospectus in reliance upon and in conformity with written information
furnished to the Company through the Underwriters by or on behalf of any
Underwriter specifically for inclusion therein.
(c) The documents incorporated by reference in the
Preliminary Prospectus and the Prospectus when they became effective or were
filed with the Commission, conformed in all material respects to the
requirements of the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and the rules and regulations of the Commission thereunder, and none of
such documents, when read together with the other information in the
Prospectus, contained an untrue statement of a material fact or omitted to
state a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading; and any further documents so filed and incorporated by
reference in the Prospectus when such documents became effective or are filed
with the Commission, as the case
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may be, will conform in all material respects to requirements of the Exchange
Act and the rules and regulations of the Commission thereunder, and none of
such documents, when read together with the other information in the
Prospectus, will 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.
(d) The Company is a corporation duly organized and
validly existing in good standing under the laws of the State of Delaware with
full corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Prospectus, and is duly qualified and
registered as a foreign corporation for the transaction of business and is in
good standing in each jurisdiction in which the character of the business
conducted by it or the location of the properties owned or leased by it make
such qualification or registration necessary (except where the failure to so
qualify or register would not have a Material Adverse Effect (as defined
below)). The Company has an authorized capitalization as set forth under the
caption "Capitalization" in the Prospectus. On the date hereof and on the
First Delivery Date all of the issued and outstanding shares of capital stock
of the Company (including the shares of Common Stock to be issued in the Common
Stock Offering and upon conversion of the Mandatorily Convertible Preferred
Stock) have been duly authorized and will be validly issued and fully paid and
nonassessable and will conform to the description thereof contained in or
incorporated by reference in the Prospectus. As used herein, "Material Adverse
Effect" means a material adverse effect on the condition (financial or
otherwise), results of operations, business, earnings or prospects of the
Company and the Subsidiaries (as defined below), taken as a whole.
(e) Schedule II hereto is a complete and accurate
schedule of the names of all corporations, partnerships and joint ventures (the
"Subsidiaries") which constitute "subsidiaries," as such term is defined in
Rule 405 of the rules and regulations of the Commission under the Securities
Act (collectively with the rules and regulations of the Commission under the
Exchange Act, the "Rules and Regulations"). Other than the Subsidiaries listed
on Schedule II, no corporation, partnership or other entity in which the
Company has an equity interest constitutes a "subsidiary" as defined in Rule
405 of the Rules and Regulations. Each Subsidiary is duly organized, validly
existing and in good standing in the jurisdiction of its incorporation or
formation, as the case may be, with full corporate or other power and authority
to own, lease and operate its properties and to conduct its business as
described in the Prospectus. Each Subsidiary is duly qualified and registered
as a foreign corporation or limited partnership, as the case may be, for the
transaction of business and is in good standing in each jurisdiction in which
the character of the business conducted by it or the location of the properties
owned or leased by it make such qualification or registration unnecessary, save
where the failure to so qualify or be in good standing as a foreign corporation
or limited partnership, as the case may be, would not have a Material Adverse
Effect.
(f) All of the issued and outstanding shares of capital
stock of each of the Subsidiaries that is a corporation have been duly
authorized and validly issued, are fully paid and nonassessable, and are owned
by the Company directly or indirectly, free and clear of any lien, adverse
claim, security interest or other encumbrance (a "Lien"), except as arising
from the Interim
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Credit Facility and, upon its execution, the Senior Credit Facility or as
described in the Prospectus. All outstanding equity interests in each
Subsidiary that is not a corporation have been duly authorized and validly
issued and are owned by the Company directly or indirectly, free and clear of
any Lien, except as arising from the Interim Credit Facility and, upon its
execution, Senior Credit Facility or as described in the Prospectus. Except as
disclosed in the Prospectus and as outstanding under employee benefit plans of
the Company, there are no outstanding subscriptions, rights (preemptive or
other), warrants, calls, commitments of sale or options to acquire, or
instruments convertible into or exchangeable for, nor any restriction on the
voting or transfer of, any capital stock or other equity interest of the
Company or any Subsidiary;
(g) The Company and each of the Subsidiaries have all
requisite power and authority to execute, deliver and perform their respective
obligations under this Agreement and each of the Transaction Documents, to
which they may respectively be a party, and to consummate the transactions
contemplated hereby and thereby, including, without limitation, the power and
authority to issue, sell and deliver the Stock as provided herein and therein
and to consummate the Transactions.
(h) This Agreement has been duly and validly authorized,
executed and delivered by the Company and constitutes a valid and binding
agreement of the Company, enforceable against the Company in accordance with
its terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization or other similar laws affecting the enforcement of
creditors' rights generally and subject to the applicability of general
principles of equity, and except as rights to indemnity and contribution
hereunder and thereunder may be limited by Federal or state securities laws or
principles of public policy.
(i) The Washington Agreement has been duly authorized,
validly executed and delivered by the Company. The Washington Agreement
constitutes a valid and binding agreement of the Company, enforceable against
the Company in accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization or other similar laws
affecting the enforcement of creditors' rights generally and to general equity
principles.
(j) The Senior Credit Facility has been duly authorized
by the Company and, upon execution thereby, will have been validly executed and
delivered by the Company and the Subsidiaries party thereto. When the Senior
Credit Facility has been duly executed and delivered by the Company and each of
such Subsidiaries, the Senior Credit Facility will constitute a valid and
binding agreement of the Company and each of such Subsidiaries, enforceable
against the Company and each of such Subsidiaries in accordance with its terms,
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization or other similar laws affecting the enforcement of creditors'
rights generally and to general equity principles. The Prospectus contains an
accurate summary, in all material respects, of the terms of the Senior Credit
Facility.
(k) The execution, delivery and performance of this
Agreement by the Company and the Transaction Documents by the Company and the
Subsidiaries party thereto, compliance by
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the Company and each of such Subsidiaries with all the provisions hereof and
thereof, the issuance and sale of the Stock by the Company and the consummation
by the Company and such Subsidiaries of the transactions contemplated hereby
and thereby, including the Transactions and as described in the Prospectus
under the caption "Use of Proceeds," (i) 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 Subsidiary is a party or by
which the Company or any Subsidiary is bound or to which any of the properties
or assets of the Company or any Subsidiary is subject, (ii) will not result in
any violation of the provisions of the charter, by- laws or other
organizational documents of the Company or any Subsidiary or (iii) will not
result in any violation of the provisions of any law or statute or any order,
rule, regulation, judgment or decree of any court or governmental agency or
body having jurisdiction over the Company or any Subsidiary or any of their
respective properties or assets, or (iv) result in the imposition or creation
of (or the obligation to create or impose) a Lien under any agreement or
instrument to which the Company or any Subsidiary is a party or by which the
Company or any Subsidiary or their respective properties or assets is bound,
except in the case of clauses (i), (iii) and (iv) for such conflicts, breaches,
defaults, violations or Liens which individually or in the aggregate would not
result in a Material Adverse Effect. Except for such consents, approvals,
authorizations, other orders, filings, qualifications or registrations (i) as
have been obtained, (ii) as may be required under applicable state securities
or Blue Sky laws of various jurisdictions in connection with the issuance, sale
and delivery of the Stock, (iii) as may be required in connection with the
Washington Acquisition, (iv) as may be required in the perfection of liens in
connection with the consummation of the Transactions and (v) which the failure
to obtain would not result in a Material Adverse Effect, no consent, approval,
authorization, or order of or filing, qualification or registration with, any
such court or governmental agency or body is required for the execution,
delivery and performance of this Agreement or the Transaction Documents by the
Company and each of the Subsidiaries party thereto, compliance by the Company
and each of the Subsidiaries party thereto with all the provisions hereof and
thereof, the issuance and sale of the Stock by the Company and the consummation
of the transactions contemplated hereby and thereby, including the Transactions
and as described in the Prospectus under the caption "Use of Proceeds."
(l) Neither the Company nor any Subsidiaries has
sustained, since the date of the latest quarterly financial statements included
in the Prospectus, any material 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 in the Prospectus, except losses or interferences
which do not, individually or in the aggregate, have a Material Adverse Effect;
and, since such date, there has not been any material change in the capital
stock or other equity interest or long-term debt or short-term debt of the
Company or any Subsidiaries or any change having a Material Adverse Effect, or
any development involving a prospective material adverse change, in or
affecting the general affairs, management, consolidated financial position,
stockholders' equity or results of operations of the Company and the
Subsidiaries, otherwise than as set forth or contemplated in the Prospectus;
and, since such date, except as otherwise disclosed in the Prospectus, the
Company has not (i) issued or granted any securities, other
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than pursuant to Company employee benefit plans or (ii) declared or paid any
dividend on its capital stock.
(m) The historical consolidated financial statements
(including the related notes and supporting schedules) of the Company, and to
the Company's knowledge, BHP Hawaii and Shell Washington, which appear in the
Preliminary Prospectus and the Prospectus comply as to form in all material
respects with the applicable accounting requirements of Securities Act, the
Exchange Act, and the Rules and Regulations, present fairly in all material
respects the consolidated financial position and results of operations of the
entities purported to be shown thereby, at the dates and for the periods
indicated, and have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved except as noted therein. The pro forma financial statements included
in the Preliminary Prospectus and the Prospectus present fairly in all material
respects the historical and proposed transactions contemplated by this
Agreement and in the Preliminary Prospectus and the Prospectus; and such pro
forma financial statements comply as to form in all material respects with the
applicable accounting requirements of the Securities Act, the Exchange Act and
the Rules and Regulations, have been prepared on a basis consistent with the
historical consolidated financial statements of the Company, and to the
Company's knowledge, BHP Hawaii and Shell Washington, give effect to
assumptions used in the preparation thereof on a reasonable basis. The other
financial and statistical information and operating data of the Company, and to
the Company's knowledge, BHP Hawaii and Shell Washington included in the
Preliminary Prospectus and the Prospectus, historical and pro forma, is, in all
material respects, accurately presented and prepared on a basis consistent
with the financial statements, in all material respects, included in the
Preliminary Prospectus and the Prospectus and the books and records of the
Company, and to the Company's knowledge, the books and records of BHP Hawaii
and Shell Washington.
(n) Except for the Registration Rights Agreement entered
into by the Company and the Subsidiaries party thereto in connection with the
Notes Offering, there are no contracts, agreements or understandings between
the Company and any person granting such person the right to require the
Company to file a registration statement under the Securities Act with respect
to any securities of the Company, owned or to be owned by such person or to
require the Company to include such securities with any securities being
registered pursuant to any registration statement filed by the Company under
the Securities Act.
(o) Deloitte & Touche LLP, and to the Company's
knowledge, Xxxxxx Xxxxxxxx LLP and Price Waterhouse LLP, who have certified
certain financial statements of the Company and its Subsidiaries, BHP Hawaii
and Shell Washington, respectively, whose reports are included or incorporated
by reference in the Prospectus and who have delivered the initial letters
referred to in Section 7(g) hereof, are independent public accountants as
required by the Securities Act and the Rules and Regulations.
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(p) Other than as set forth in the Prospectus, there are
no legal or governmental proceedings pending to which the Company or any
Subsidiary is a party or to which any of their respective properties or assets
is subject which (i) could reasonable be expected to have a Material Adverse
Effect or (ii) could materially and adversely affect the consummation by the
Company of its obligations pursuant to this Agreement or the Transaction
Documents; and to the Company's knowledge, no such proceedings are threatened
or contemplated by government authorities or threatened by others.
(q) The Company and each of the Subsidiaries has such
permits, licenses, franchises and authorizations of governmental or regulatory
authorities ("permits") as are necessary to own its respective properties and
to conduct its business in the manner described in the Prospectus subject in
each case to such qualifications as may be set forth in the Prospectus and
except where the failure to have such permits would not have a Material Adverse
Effect; the Company and each of the Subsidiaries has fulfilled and performed in
all material respects all of its current obligations with respect to such
permits and no event has occurred which allows, or after notice or lapse of
time would allow, revocation or termination thereof or results in any other
material impairment of the rights of the holder of any such permits, subject in
each case to such qualifications as may be set forth in the Prospectus and
except where the failure so to fulfill or perform or the occurrence of such an
event would not have a Material Adverse Effect; and, except as described in the
Prospectus, none of such permits contains any restriction that is materially
burdensome to the Company and the Subsidiaries, taken as a whole.
(r) The Company and each of the Subsidiaries owns or
possesses adequate rights to use all material patents, patent applications,
trademarks, service marks, trade names, trademark registrations, service xxxx
registrations, copyrights and licenses necessary for the conduct of their
respective businesses, except where the failure to have such permits would not
have a Material Adverse Effect, and have no reason to believe that the conduct
of their respective businesses will conflict with, and have not received any
notice of any claim of conflict with, any such rights of others.
(s) With the exception of producing oil and gas
properties and gas gathering properties (the "Oil and Gas Properties"), the
Company and each of the Subsidiaries has good and indefeasible title in fee
simple to all real property and good and defensible title to all personal
property owned by them, in each case free and clear of all liens, encumbrances
and defects except such as are described in the Prospectus or such as do not
materially adversely affect the value of such property or interfere with the
use made and proposed to be made of such property by the Company and the
Subsidiaries; and with the exception of the Oil and Gas Properties, all real
property, buildings and vessels held under lease by the Company and the
Subsidiaries are held by them under valid, subsisting and enforceable leases,
with such exceptions as are not material and do not interfere with the use made
and proposed to be made of such property, buildings and vessels by the Company
and the Subsidiaries.
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(t) The Company and each of the Subsidiaries has good and
defensible title to its Oil and Gas Properties, free and clear of all liens,
encumbrances and defects, except (a) those described in the Preliminary
Prospectus and the Prospectus, (b) liens securing taxes and other governmental
charges, or claims of materialmen, mechanics and similar persons, not yet due
and payable, (c) liens and encumbrances under operating agreements, unitization
and pooling agreements, and gas sales contracts, securing payment of amounts
not yet due and payable and of a scope and nature customary in the oil and gas
industry and (d) liens, encumbrances and defects that do not in the aggregate
materially affect the value of such Oil and Gas Properties or materially
interfere with the use made or proposed to be made of such properties by the
Company or any of the Subsidiaries. Except to the extent described in the
Preliminary Prospectus and the Prospectus, the oil, gas and mineral leases,
coal methane leases, options to lease, drilling concessions or other property
interests therein held by the Company and each of the Subsidiaries reflects in
all material respects the right of the Company and its Subsidiaries, as the
case may be, to explore or receive production from the undeveloped properties
described in the Preliminary Prospectus and the Prospectus, and the Company
and each of the Subsidiaries have exercised reasonable diligence with respect
to acquiring or otherwise procuring such leases, options to lease, drilling
concessions and other property interests.
(u) No labor disturbance by the employees of the Company
or any of the Subsidiaries exists or, to the knowledge of the Company, is
imminent which might be expected to have a Material Adverse Effect; except as
disclosed in the Prospectus, neither the Company nor any of the Subsidiaries is
party to a collective bargaining agreement; and there are no significant unfair
labor practice complaints pending against the Company or any of the
Subsidiaries or, to the best of the Company's knowledge, threatened against any
of them.
(v) The Company and each of the Subsidiaries is in
compliance in all material respects with all presently applicable provisions of
the Employee Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); no "reportable
event" (as defined in ERISA) has occurred with respect to any "pension plan"
(as defined in ERISA) for which the Company or any of the Subsidiaries would
have any liability; neither the Company nor any of the Subsidiaries has
incurred and neither do any of them expect to incur liability under (i) title
IV of ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (ii) Sections 412 or 4971 of the Internal Revenue code of 1985, as
amended, including the regulations and published interpretations thereunder
(the "Code"); and each "pension plan" for which the Company or any Subsidiary
would have any liability that is intended to be qualified under Section 401(a)
of the Code is so qualified in all material respects and nothing has occurred,
whether by action or by failure to act, which would cause the loss of such
qualification.
(w) The Company and each of the Subsidiaries has filed,
and as of the First Delivery Date will have filed, all federal, state, local
and foreign income and franchise tax returns required to be filed through the
date hereof and has paid all taxes due thereon, and no tax deficiency has been
determined adversely to the Company or any of the Subsidiaries which has had
(nor does
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the Company have any knowledge of any tax deficiency which, if determined
adversely to the Company or any of the Subsidiaries, might have) a Material
Adverse Effect.
(x) The Company and each of the Subsidiaries (i) makes
and keeps accurate books and records and (ii) maintains internal accounting
controls which provide reasonable assurance that (A) transactions are executed
in accordance with management's authorization, (B) transactions are recorded as
necessary to permit preparation of its financial statements and to maintain
accountability for its assets, (C) access to its assets is permitted only in
accordance with management's authorization and (D) the reported accountability
for its assets is compared with existing assets at reasonable intervals and
appropriate action is taken with respect to any difference.
(y) Except as described in the Preliminary Prospectus and
the Prospectus and except such matters as would not, singly or in the
aggregate, result in a Material Adverse Effect, (A) neither the Company nor any
of the Subsidiaries is in violation of any federal, state, local or foreign
statute, law, rule, regulation, ordinance, code, policy or rule of common law
or any judicial or administrative order, consent, decree or judgment thereof,
including any judicial or administrative order, consent, decree or judgment
relating to pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water, groundwater, land
surface or subsurface strata) or wildlife, including, without limitation, laws
and regulations relating to the release or threatened release of chemicals,
pollutants, contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous Materials") or to the
manufacture, processing, distribution, use, treatment, storage, disposal,
transport or handling of Hazardous Materials (collectively, "Environmental
Laws"), (B) the Company and each of the Subsidiaries has all permits,
authorizations and approvals required under any applicable Environmental Laws
and are each in compliance with their requirements, (C) there are no pending
or, to the knowledge of the Company, threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating to any
Environmental Law against the Company or any of the Subsidiaries and (D) there
are no events or circumstances that might reasonably be expected to form the
basis of an order for clean-up or remediation, or an action, suit or proceeding
by any private party or governmental body or agency, against or affecting the
Company or any of the Subsidiaries relating to Hazardous Materials or
Environmental Laws.
(z) The Company is not, and upon the issuance and sale of
the Stock as herein contemplated and the application of the net proceeds
therefrom as described under the caption "Use of Proceeds" in the Prospectus
will not be an "investment company" or an entity "controlled" by an "investment
company" as such terms are defined in the Investment Company Act of 1940, as
amended, and the rules and regulations thereunder.
(aa) The conditions for the use of Form S-3, as set forth
in the General Instructions thereto, have been satisfied.
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(bb) The statements set forth in the Prospectus under the
captions "Prospectus Summary--The Transactions--The Acquisitions,"
"Business--Government Regulation and Legislation," "Description of
Indebtedness" and "Description of Capital Stock" insofar as such statements
purport to summarize the provisions of the documents or agreements referred to
therein, matters of law or legal conclusions or federal statute, laws or
regulations, are accurate and fairly present the information required to be
shown.
(cc) The information supplied by the Company to the
independent petroleum engineering consultants for the Company for purposes of
preparing the reserve reports and estimates of such consultants incorporated by
reference in the Preliminary Prospectus and the Prospectus, including, without
limitation, production, costs of operation and development, current prices for
production, agreements relating to current and future operations and sales of
production, was true and correct in all material respects on the date supplied
and was prepared in accordance with customary industry practices; and
Netherland, Xxxxxx & Associates, Inc., independent petroleum engineers, who
prepared estimates of the extent and value of proved oil and natural gas
reserves of the Company are independent with respect to the Company.
(dd) The Company and each of the Subsidiaries has complied
with, and is and will be in compliance with, the provisions of that certain
Florida act relating to disclosure of doing business with Cuba, codified as
Section 517.075 of the Florida statutes, and the rules and regulations
thereunder or is exempt therefrom.
The Company acknowledges that the Underwriters and, for purposes of
the opinions to be delivered to the Underwriters pursuant to Section 7 hereof,
counsel to the Company and counsel to the Underwriters, will rely upon the
accuracy and truth of the foregoing representations and hereby consents to such
reliance. Each certificate signed by any officer of the Company and delivered
to the Underwriters or counsel for the Underwriters shall be deemed to be a
representation and warranty by the Company to the Underwriters as to the
matters covered thereby.
SECTION 2. Purchase of the Stock by the Underwriters.
(a) On the basis of the representations and warranties
contained in, and subject to the terms and conditions of, this Agreement, the
Company agrees to sell 5,000,000 shares of the Firm Stock to the several
Underwriters and each of the Underwriters, severally and not jointly, agrees to
purchase the number of shares of the Firm Stock set opposite that Underwriter's
name in Schedule I hereto.
(b) In addition, the Company grants to the Underwriters
an option to purchase up to 750,000 shares of Option Stock. Such option is
granted solely for the purpose of covering over-allotments in the sale of Firm
Stock and is exercisable as provided in Section 4 hereof. Shares of Option
Stock shall be purchased severally and not jointly for the account of the
Underwriters in proportion to the number of shares of Firm Stock set opposite
the name of such Underwriters in Schedule I hereto. The respective purchase
obligations of each Underwriter with respect to the
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Option Stock shall be adjusted by the Underwriters so that no Underwriter shall
be obligated to purchase Option Stock other than in 100 share amounts. The
price of both the Firm Stock and any Option Stock shall be $15 15/16 per share.
(c) The Company shall not be obligated to deliver any of
the Stock to be delivered on the First Delivery Date or the Second Delivery
Date (as hereinafter defined), as the case may be, except upon payment for all
the Stock to be purchased on such Delivery Date as provided herein.
SECTION 3. Offering of Stock by the Underwriters.
(a) Upon authorization by the Underwriters of the release
of the Firm Stock, the several Underwriters propose to offer the Firm Stock for
sale upon the terms and conditions set forth in the Prospectus.
(b) Each Underwriter agrees that it will not offer or
sell any of the Stock outside of the United States and Canada.
SECTION 4. Delivery of and Payment for the Stock.
(a) Delivery of and payment for the Firm Stock shall be
made at the offices of Xxxxxxx & Xxxxx, L.L.P., 000 Xxxxxx Xxxxxx, Xxxxxxx,
Xxxxx 00000, at 8:30 A.M., Houston time, on July 1, 1998, or at such other
date or place as shall be determined by agreement between the Underwriters and
the Company. This date and time are sometimes referred to herein as the "First
Delivery Date." On the First Delivery Date, the Company shall deliver or cause
to be delivered certificates representing the Firm Stock to the Underwriters
for the account of each Underwriter against payment to or upon the order of the
Company of the purchase price by wire transfer in immediately available funds.
Time shall be of the essence (except that the Company will not be responsible
for any delay resulting from any action or inaction of any Underwriter) and
delivery at the time and place specified pursuant to this Agreement is a
further condition of the obligations of each Underwriter hereunder. Upon
delivery, the Firm Stock shall be registered in such names and in such
denominations as the Underwriters shall request in writing not less than two
full business days prior to the First Delivery Date. For the purpose of
expediting the checking and packaging of the certificates for the Firm Stock,
the Company shall make the certificates representing the Firm Stock available
for inspection by the Underwriters in New York, New York, not later than 2:00
P.M., New York City time, on the business day prior to the First Delivery Date.
(b) At any time on or before the thirtieth day after the
date of this Agreement, the option granted in Section 2 may be exercised by
written notice being given to the Company by the Underwriters. Such notice
shall set forth the aggregate number of shares of Option Stock as to which the
option is being exercised, the names in which the shares of Option Stock are to
be registered, the denominations in which the shares of Option Stock are to be
issued and the date and time, as determined by the Underwriters, when the
shares of Option Stock are to be delivered; provided, however, that this date
and time shall not be earlier than the First Delivery Date nor earlier
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than the second business day after the date on which the option shall have been
exercised nor later than the third business day after the date on which the
option shall have been exercised. The date and time the shares of Option Stock
are delivered are sometimes referred to as the "Second Delivery Date" and the
First Delivery Date and the Second Delivery Date are sometimes each referred to
as a "Delivery Date."
(c) Delivery of and payment for the Option Stock shall be
made at the place specified in the first sentence of the first paragraph of
this Section 4 (or at such other place as shall be determined by agreement
between the Underwriters and the Company) at 8:30 A.M., Houston time, on the
Second Delivery Date. On the Second Delivery Date, the Company shall deliver
or cause to be delivered the certificates representing the Option Stock to the
Underwriters for the account of each Underwriter against payment to or upon the
order of the Company of the purchase price by wire transfer in immediately
available funds. Time shall be of the essence (except that the Company will
not be responsible for any delay resulting from any action or inaction of any
Underwriter), and delivery at the time and place specified pursuant to this
Agreement is a further condition of the obligations of each Underwriter
hereunder. Upon delivery, the Option Stock shall be registered in such names
and in such denominations as the Underwriters shall request in the aforesaid
written notice. For the purpose of expediting the checking and packaging of
the certificates representing the Option Stock available for inspection by the
Underwriters in New York, New York, not later than 2:00 P.M., New York City
time, on the business day prior to the Second Delivery Date.
SECTION 5. Further Agreements of the Company.
The Company further agrees:
(a) To prepare the Prospectus in a form approved by the
Underwriters and to file such Prospectus pursuant to Rule 424(b) under the
Securities Act not later than 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
Securities Act; to make no further amendment or any supplement to the
Registration Statement or to the Prospectus and to file no Rule 462(b)
Registration Statement except as permitted herein; to advise the Underwriters,
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 the Underwriters with copies thereof; upon your request, to cause the
Rule 462(b) Registration Statement, properly completed, to be filed with the
Commission pursuant to Rule 462(b) and to provide evidence satisfactory to the
Underwriters of such filing; to advise the Underwriters, 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
the Prospectus, of the suspension of the qualification of the Stock 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 the 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 the
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Prospectus or suspending any such qualification, to use promptly its reasonable
best efforts to obtain its withdrawal;
(b) To furnish reasonably promptly to each of the
Underwriters and to counsel for the Underwriters a signed copy of the
Registration Statement as originally filed with the Commission, each amendment
thereto and any Rule 462(b) Registration Statement filed with the Commission,
including all consents and exhibits filed therewith;
(c) To deliver promptly to the Underwriters such number
of the following documents as the Underwriters shall reasonably request: (i)
conformed copies of the Registration Statement as originally filed with the
Commission, each amendment thereto (in each case excluding exhibits other than
this Agreement) and any Rule 462(b) Registration Statement, (ii) each
Preliminary Prospectus, the Prospectus and any amended or supplemented
Prospectus and (iii) any document incorporated by reference in the Prospectus
(excluding exhibits thereto); and, if the delivery of a prospectus is required
at any time after the Effective Time in connection with the offering or sale of
the Stock or any other securities relating thereto and if at such time any
events shall have occurred as a result of which the Prospectus as then amended
or supplemented would include any 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 to amend or supplement the Prospectus or to file under the
Exchange Act any document incorporated by reference in the Prospectus in order
to comply with the Securities Act or the Exchange Act, to notify the
Underwriters and, upon their request, to file such document and to prepare and
furnish without charge to each Underwriter and to any dealer in securities as
many copies as the Underwriters may from time to time reasonably request of an
amended or supplemented Prospectus which will correct such statement or
omission or effect such compliance;
(d) To file promptly with the Commission any amendment to
the Registration Statement or the Prospectus or any supplement to the
Prospectus that may, in the judgment of the Company or the Underwriters, be
required by the Securities Act or requested by the Commission;
(e) Prior to filing with the Commission any amendment to
the Registration Statement or supplement to the Prospectus, any document
incorporated by reference in the Prospectus, any Prospectus pursuant to Rule
424 of the Rules and Regulations or any Rule 462(b) Registration Statement to
furnish a copy thereof to the Underwriters and counsel for the Underwriters and
obtain the consent of the Underwriters to the filing;
(f) The Company will make generally available to holders
of its securities as soon as may be practicable an earnings statement (which
need not be audited but shall be in reasonable detail) for a period of 12
months ended commencing after the Effective Date, and satisfying the provisions
of Section 11(a) of the Act (including Rule 158 of the Rules and Regulations).
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(g) For a period of five years following the Effective
Date, to furnish to the Underwriters copies of all materials furnished by the
Company to its public shareholders and all public reports and all reports and
financial statements furnished by the Company to the principal national
securities exchange upon which the Common Stock may be listed pursuant to
requirements of or agreements with such exchange or to the Commission pursuant
to the Exchange Act or any rule or regulation of the Commission thereunder;
(h) Promptly from time to time to take such action as the
Underwriters may reasonably request to qualify the Stock for offering and sale
(or obtain an exemption from registration) under the securities laws of such
jurisdictions as the Underwriters 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 Stock; provided, however, that the Company shall not be required to qualify
as a foreign corporation or a dealer in securities or to execute a general
consent to service of process in any jurisdiction in any action other than one
arising out of the offering or sale of the Stock;
(i) For a period of 90 days from the date of the
Prospectus, not to, directly or indirectly, (A) offer for sale, sell, pledge or
otherwise dispose of (or enter into any transaction or device which is designed
to, or could be expected to, result in the disposition by any person at any
time in the future of) any shares of Common Stock or any securities convertible
into or exchangeable for Common Stock (other than the Stock, the PIES, the
Mandatorily Convertible Preferred Stock, shares of Common Stock issued pursuant
to employee benefit plans, qualified stock option plans or other employee
compensation plans existing on the date hereof or pursuant to currently
outstanding options, warrants or rights or upon the conversion of the
Mandatorily Convertible Preferred Stock or upon the conversion of Convertible
Subordinated Debentures of Coastwide Energy Services, Inc.) or (B) enter into
any swap or other derivatives transaction that transfers to another, in whole
or in part, any of the economic benefits or risks of ownership of such
securities, whether any such transaction described in clause (A) or (B) above
is to be settled by delivery of shares of Common Stock or other securities, in
cash or otherwise, in each case without the prior written consent of Xxxxxx
Brothers Inc.; and to cause each executive officer and director of the company
to furnish to Xxxxxx Brothers, prior to the First Delivery Date, a letter (a
"Lock-Up Letter") in form and substance satisfactory to Xxxxxxx & Xxxxx L.L.P.,
pursuant to which each such person shall agree, not to, directly or indirectly,
(x) offer for sale, sell, pledge or otherwise dispose of (or enter into any
transaction or device which is designed to, or could be expected to, result in
the disposition by any person at any time in the future of) any shares of
Common Stock or any securities convertible into or exchangeable for Common
Stock or (y) enter into any swap or other derivatives transaction that
transfers to another, in whole or in part, any of the economic benefits or
risks of ownership of such shares of Common Stock, whether any such transaction
described in clause (x) or (y) above is to be settled by delivery of Common
Stock or other securities, in cash or otherwise, in each case for a period of
90 days from the date of the Prospectus, without the prior written consent of
Xxxxxx Brothers Inc.
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(j) To take such steps as shall be necessary to ensure
that neither the Company nor any Subsidiary of the Company shall become an
"investment company" within the meaning of such term under the Investment
Company Act of 1940, as amended, and the rules and regulations of the
Commission thereunder.
(k) To apply the net proceeds from the sale of the Notes
as set forth under the caption "Use of Proceeds" in the Prospectus.
(l) To do all things required or necessary to be done or
performed under this Agreement prior to such Delivery Date by such date and to
satisfy the closing conditions set forth in Section 7 hereof.
SECTION 6. Expenses.
Whether or not the transactions contemplated in this Agreement are
consummated or this Agreement is terminated, the Company agrees to pay or cause
to be paid all reasonable expenses incident to the performance of the
obligations of the Company under this Agreement, including: (i) the costs
incident to the authorization, issuance, sale and delivery of the Stock and any
taxes payable in that connection; (ii) fees, disbursements and expenses of
counsel to the Company and accountants to Company in connection with the sale
and delivery of the Stock, and all other fees and expenses in connection with
the preparation, printing and filing under the Securities Act of the
Registration Statement and any amendments and exhibits thereto (including
financial statements), including the mailing and delivering of copies to the
Underwriters and persons designated by them in the quantities specified; (iii)
the costs of distributing the Registration Statement as originally filed and
each amendment thereto and any post-effective amendments thereof (including, in
each case, exhibits), any Preliminary Prospectus, the Prospectus and any
amendment or supplement to the Prospectus or any document incorporated by
reference therein, all as provided in this Agreement; (iv) the costs of
producing and distributing this Agreement, and any related documents in
connection with the offering, purchase, sale and delivery of the Stock; (v)
listing or other fees incident to the inclusion of the Stock for listing on the
New York Stock Exchange; (vi) the fees and expenses, if applicable, of
qualifying the Stock under the securities laws of the several jurisdictions as
provided in Section 5(h) and of preparing, printing and distributing a Blue Sky
Memorandum (including reasonable related fees and expenses of counsel to the
Underwriters in connection with such qualification and memorandum relating
thereto); and (vii) all other costs and expenses incident to the performance of
the obligations of the Company or any of the Subsidiaries under this Agreement;
provided that, except as provided in this Section 6 and in Section 11, the
Underwriters shall pay their own costs and expenses, including the costs and
expenses of their counsel, any transfer taxes on the Stock which they may sell
and the expenses of advertising any offering of the Stock made by the
Underwriters.
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SECTION 7. Conditions to the Underwriters' Obligations.
The obligations of the Underwriters hereunder are subject to the
accuracy, when made and on each Delivery Date, of the representations and
warranties of the Company contained herein, to the performance by the Company
of its obligations hereunder, and to each of the following additional terms and
conditions:
(a) The Prospectus shall have been timely filed with the
Commission in accordance with Section 5(a); 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 any request of the Commission for inclusion
of additional information in the Registration Statement or the Prospectus or
otherwise shall have been complied with.
(b) No Underwriter shall have discovered and disclosed to
the Company on or prior to such Delivery Date that the Registration Statement
or the Prospectus or any amendment or supplement thereto contains an untrue
statement of a fact which, in the opinion of Xxxxxxx & Xxxxx, L.L.P., counsel
for the Underwriters, is material or omits to state a fact which, in the
opinion of such counsel, is material and is required to be stated therein or is
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading.
(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement and the
Prospectus, and all other legal matters relating to this Agreement and the
transactions contemplated hereby shall be reasonably satisfactory in all
material respects to counsel for the Underwriters, and the Company shall have
furnished to such counsel all documents and information that they may
reasonably request to enable them to pass upon such matters.
(d) The Prospectus shall have been printed and copies
distributed to the Underwriters not later than 10:00 a.m., New York City time,
on the day following the date of this Agreement or at such later date and time
as to which the Underwriters may agree.
(e) The Underwriters shall have received from Fulbright &
Xxxxxxxx L.L.P. their written opinion, as counsel to the Company, addressed to
the Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Underwriters, to the effect set forth in Exhibit A hereto
and to such further effect as counsel to the Underwriters may reasonably
request.
(f) The Underwriters shall have received from Xxxxx X.
Xxxx, Xx., his written opinion, as General Counsel of the Company, addressed to
the Underwriters and dated such Delivery Date, in form and substance reasonably
satisfactory to the Underwriters, to the effect set forth in Exhibit B hereto
and to such further effect as counsel to the Underwriters may reasonably
request.
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(g) At the time of execution of this Agreement, the
Underwriters shall have received from each of Deloitte & Touche LLP, Xxxxxx
Xxxxxxxx LLP and Price Waterhouse LLP a letter, in form and substance
satisfactory to the Underwriters, addressed to the Underwriters and dated the
date hereof, (i) confirming that they are independent public accountants within
the meaning of the Securities Act and are in compliance with the applicable
requirements relating to the qualification of accountants under Rule 2-01 of
Regulation S-X of the Commission, (ii) stating, as of the date hereof (or, with
respect to matters involving changes or developments since the respective dates
as of which specified financial information is given in the Prospectus, as of a
date not more than five business days prior to the date hereof), the
conclusions and findings of such firm with respect to the financial
information, operating data and other matters ordinarily covered by
accountants' "comfort letters" to underwriters, including the financial
information contained or incorporated by reference in the Prospectus as
identified by you.
(h) With respect to the letters of Deloitte & Touche LLP,
Xxxxxx Xxxxxxxx LLP and Price Waterhouse LLP referred to in the preceding
paragraph and delivered to the Underwriters concurrently with the execution of
this Agreement (the "initial letters"), the Company shall have furnished to the
Underwriters letters (the "bring-down letters") of such accountants, addressed
to the Underwriters and dated such Delivery Date, (i) confirming that they are
independent public accountants within the meaning of the Securities Act and are
in compliance with the applicable requirements relating to the qualification of
accountants under Rule 2-01 of Regulation S-X of the Commission, (ii) stating,
as of the date of the bring-down letters (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given in the Prospectus, as of a date not more than
five business days prior to the date of the respective bring-down letter), the
conclusions and findings of such firm with respect to the financial
information, operating data and other matters covered by the respective initial
letter and (iii) confirming in all material respects the conclusions and
findings set forth in the respective initial letter.
(i) (A) At the time of execution of this Agreement, the
Underwriters shall have received from Netherland, Xxxxxx & Associates, Inc.,
independent petroleum engineers for the Company, a letter dated as of such
date, in form and substance satisfactory to the Underwriters; and (B) on such
Delivery Date, the Underwriters shall have received from Netherland, Xxxxxx and
Associates, Inc., independent petroleum engineers for the Company, a letter
dated as of such Delivery Date, to the effect that they reaffirm the statements
made in the letter referred to in clause (i)(A) above.
(j) The Company shall have furnished to the Underwriters
a certificate, dated the such Delivery Date, of (i) the Chairman of the Board,
President or a Vice President of the Company and (ii) the Treasurer or Chief
Financial Officer of the Company stating that:
(i) The representations, warranties and
agreements of the Company in Section 1 are true and correct as of such
Delivery Date and the Company has complied with all its agreements
contained herein;
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(ii) (A) Neither the Company nor any of the
Subsidiaries has sustained since the date of the latest quarterly
financial statements included or incorporated by reference in the
Preliminary Prospectus or the Prospectus any material 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 Preliminary Prospectus or the
Prospectus and (B) since such date there has not been any material
change in the capital stock, long-term debt or short-term debt of the
Company or any of the Subsidiaries or any material change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
stockholders' equity, results of operations or prospects of the
Company and the Subsidiaries, taken as a whole, otherwise than as set
forth or contemplated in the Preliminary Prospectus or the Prospectus;
and
(iii) They have carefully examined the Registration
Statement or the Prospectus and, in their opinion (A) the Registration
Statement or the Prospectus, as of their respective dates, did not
include any untrue statement of a material fact and did not omit to
state any material fact necessary to make the statements therein, (in
the case of the Prospectus, in the light of the circumstances under
which they were made), not misleading, and (B) since the date of the
Prospectus, no event has occurred which should have been set forth in
a supplement or amendment to the Prospectus.
(iv) The Prospectus shall have been timely filed
with the Commission in accordance with Section 5(a) 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 as of such Delivery Date; and any request of the Commission
for inclusion of additional information in the Registration Statement
or the Prospectus or otherwise shall have been complied with.
(k) (i) Neither the Company nor any of its
Subsidiaries shall have sustained since the date of the latest audited
financial statements included or incorporated by reference in the Prospectus
any material 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 such date there shall
not have been any material change in the capital stock, long-term debt or
short-term debt of the Company or any of its Subsidiaries or any material
change, or any development involving a prospective material change, in or
affecting the general affairs, management, consolidated financial position,
stockholders' equity or results of operations of the Company and its
Subsidiaries taken as a whole, 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 Underwriters, so material and adverse as to
make it impracticable or inadvisable to proceed with the offering or the
delivery of the Stock on the terms and in the manner contemplated in the
Prospectus.
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(l) The Underwriters have received Lock-Up Letters
referred to in Section 5(i) hereof from each of the Company's executive
officers and directors.
(m) Subsequent to the execution and delivery of this
Agreement (i) no downgrading shall have occurred in the rating accorded the
Company or any of the Subsidiaries or any securities of the Company or any of
the Subsidiaries by any "nationally recognized statistical rating
organization," as that term is defined by the Commission for purposes of Rule
436(g)(2) of the Rules and Regulations and (ii) no such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Notes.
(n) The Underwriters shall have received from Xxxxxxx &
Xxxxx L.L.P., counsel for the Underwriters, their opinion, dated such Delivery
Date, with respect to such matters as the Underwriters may reasonably require,
and the Company shall have furnished to such counsel such documents and
information as they may reasonably request for the purpose of enabling them to
pass upon such matters.
All opinions, letters, evidence and certificates mentioned above or
elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to counsel for the Underwriters.
SECTION 8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Underwriter, its officers and employees and each person, if any, who controls
any Underwriter within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof (including, but not limited to, any loss, claim, damage, liability or
action relating to purchases and sales of the Stock), to which that
Underwriter, officer, employee or controlling person may become subject, under
the Securities Act or otherwise, insofar as such loss, claim, damage, liability
or action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained in any Preliminary Prospectus,
Registration Statement or the Prospectus or in any amendment or supplement
thereto, (ii) the omission or alleged omission to state in any Preliminary
Prospectus, the Registration Statement or the Prospectus or in any amendment or
supplement thereto, any material fact required to be stated therein or
necessary to make the statements therein not misleading or (iii) any act or
failure to act, or any alleged act or failure to act, by any Underwriter in
connection with, or relating in any manner to, the Stock or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (provided that the Company shall not be
liable in the case of any matter covered by this clause (iii) to the extent
that it is determined in a final judgment by a court of competent jurisdiction
that such loss, claim, damage, liability or action resulted directly from any
such act or failure to act undertaken or omitted to be taken by such
Underwriter through its gross negligence or willful misconduct), and shall
reimburse each Underwriter and each officer, employee and controlling person
promptly upon demand for any legal or other expenses reasonably incurred by
that Underwriter, officer, employee
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or controlling person in connection with investigating or defending or
preparing to defend against any such loss, claim, damage, liability or action
as such expenses are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim, damage,
liability or action arises out of, or is based upon, any untrue statement or
alleged untrue statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement or the Prospectus or in any
such amendment or supplement in reliance upon and in conformity with the
written information furnished to the Company by or on behalf of any Underwriter
specifically for inclusion therein and described in Section 8(e); provided,
further, that with respect to any such untrue statement or omission made in the
Preliminary Prospectus, the indemnity agreement contained in this Section 8(a)
shall not enure to the benefit of the Underwriter from whom the person
asserting any such losses, claims, damages or liabilities purchased the Stock
concerned if, to the extent that such sale was an initial sale by such
Underwriter and any such loss claim, damage or liability of such Underwriter is
a result of the fact that both (A) a copy of the Prospectus was not sent or
given to such person at or prior to the written confirmation of the sale of
such Stock to such person, and (B) the untrue statement or omission in the
Preliminary Prospectus was corrected in the Prospectus unless, in either case,
such failure to deliver the Prospectus was a result of noncompliance by the
Company with Section 5(c) hereof. The foregoing indemnity agreement is in
addition to any liability which the Company may otherwise have to any
Underwriter or to any officer, employee or controlling person of any
Underwriter.
(b) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company and each person, if any, who controls
the Company within the meaning of the Securities Act, from and against any
loss, claim, damage or liability, joint or several, or any action in respect
thereof, to which the Company, any such director, officer or employee, or any
controlling person may become subject, under the Securities Act or otherwise,
insofar as such loss, claim, damage, liability or action arises out of, or is
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 in any amendment or supplement thereto or (ii) the omission or
alleged omission to state in any Preliminary Prospectus, the Registration
Statement or the Prospectus or in any amendment or supplement thereto any
material fact required to be stated therein or necessary to make the statements
therein not misleading, but in each case only to the extent that the untrue
statement or alleged untrue statement or omission or alleged omission was made
in reliance upon and in conformity with the written information furnished to
the Company by or on behalf of such Underwriter specifically for inclusion
therein and described in Section 8(e), and shall reimburse the Company and any
such director, officer or employee, or any such controlling person, for any
legal or other expenses reasonably incurred by the Company or any such
director, officer or employee, or any controlling person in connection with
investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred. The foregoing
indemnity agreement is in addition to any liability which any Underwriter may
otherwise have to the Company or any such director, officer or employee, or any
controlling person.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect
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thereof is to be made against the indemnifying party under this Section 8,
notify the indemnifying party in writing of the claim or the commencement of
that action; provided, however, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under this
Section 8 except to the extent it has been materially prejudiced by such
failure and, provided further, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 8. If any such claim or
action shall be brought against an indemnified party, and it shall notify the
indemnifying party thereof, the indemnifying party shall be entitled to
participate therein and, to the extent that it wishes, jointly with any other
similarly notified indemnifying party, to assume the defense thereof with
counsel satisfactory to the indemnified party. After notice from the
indemnifying party to the indemnified party of its election to assume the
defense of such claim or action, the indemnifying party shall not be liable to
the indemnified party under this Section 8 for any legal or other expenses
subsequently incurred by the indemnified party in connection with the defense
thereof other than reasonable costs of investigation; provided, however, that
the indemnified party shall have the right to employ counsel to represent all
indemnified parties who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the indemnified parties against the
indemnifying party under this Section 8 if, (i) the employment of such counsel
shall have been authorized by the indemnifying party in connection with the
defense of such action, (ii) the indemnifying party shall not have engaged
counsel reasonably promptly to take charge of the defense of such action or
(iii) counsel for any of the indemnified parties shall have reasonably
concluded that there may be defenses available to the indemnified parties that
are in addition to or in conflict with those available to the indemnifying
party, and, in that event, the fees and expenses of such separate counsel shall
be paid by the indemnifying party; provided, further, that in connection with
any proceedings or related proceedings in the same jurisdiction, the
indemnifying party shall not be liable for the legal fees and expenses of more
than one separate firm of attorneys (in addition to any local counsel). No
indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional release
of each indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such action
effected without its written consent (which consent shall not be unreasonably
withheld), but if settled with its written consent or if there be a final
judgment of the plaintiff in any such action, the indemnifying party agrees to
indemnify and hold harmless any indemnified party from and against any loss of
liability by reason of such settlement or judgment.
(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein,
then each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative
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benefits received by the Company, on the one hand, and the Underwriters, on the
other, from the offering of the Stock or (ii) if the allocation provided by
clause (i) above is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to in clause (i)
above but also the relative fault of the Company, on the one hand, and the
Underwriters on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and the Underwriters on the
other, with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Stock purchased
under this Agreement (before deducting expenses) received by the Company, on
the one hand, and the total underwriting discounts and commissions received by
the Underwriters with respect to the Stock purchased under this Agreement, on
the other hand, bear to the total gross proceeds from the offering of the Stock
under this Agreement, 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
whether the untrue or alleged untrue statement of a material fact or omission
or alleged omission to state a material fact relates to information supplied by
the Company, on the one hand, or the Underwriters, the intent of the parties
and their relative knowledge, access to information and opportunity to correct
or prevent such statement or omission. The Company and the Underwriters agree
that it would not be just and equitable if contributions pursuant to this
Section 8(d) were to be determined by pro rata allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take into account the equitable
considerations referred to herein. The amount paid or payable by an
indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section 8(d) shall be
deemed to include, for purposes of this Section 8(d), any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this Section 8(d), the Underwriters shall not be required to
contribute any amount in excess of the amount by which the total price at which
the Stock sold and distributed by it was offered to the purchasers exceeds the
amount of any damages which the Underwriters have otherwise paid or become
liable to pay by reason of any untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation.
(e) The Underwriters severally confirm and the Company
acknowledges that the statements with respect to the offering of the Stock set
forth in the bottom paragraph on the cover page of, the legend concerning
stabilization and overallotment on the inside front cover of the Prospectus,
and the seventh, eighth, ninth and tenth paragraphs under the caption
"Underwriting" relating to stabilization and over-allotment in, the Prospectus
are correct and constitute the only information furnished in writing to the
Company by or on behalf of the Underwriters specifically for inclusion in the
Prospectus.
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SECTION 9. Defaulting Underwriters.
If, on either Delivery Date, any Underwriter defaults in the
performance of its obligations under this Agreement, the remaining
non-defaulting Underwriters shall be obligated to purchase the Stock which the
defaulting Underwriter agreed but failed to purchase on such Delivery Date in
the respective proportions which the number of shares of the Firm Stock set
opposite the name of each remaining non-defaulting Underwriter in Schedule I
hereto bears to the total number of shares of the Firm Stock set opposite the
names of all the remaining non-defaulting Underwriters in Schedule I hereto;
provided, however, that the remaining non-defaulting Underwriters shall not be
obligated to purchase any of the Stock on such Delivery Date if the total
number of shares of the Stock which the defaulting Underwriter or Underwriters
agreed but failed to purchase on such date exceeds 9% of the total number of
shares of the Stock to be purchased on such Delivery Date, and any remaining
non-defaulting Underwriter shall not be obligated to purchase more than 110% of
the number of shares of the Stock which it agreed to purchase on such Delivery
Date pursuant to the terms of Section 2. If the foregoing maximums are
exceeded, the remaining non-defaulting Underwriters, or those other
underwriters satisfactory to the Underwriters who so agree, shall have the
right, but shall not be obligated, to purchase, in such proportion as may be
agreed upon among them, all the Stock to be purchased on such Delivery Date.
If the remaining Underwriters or other underwriters satisfactory to the
Underwriters do not elect to purchase the shares which the defaulting
Underwriter or Underwriters agreed but failed to purchase on such Delivery
Date, this Agreement (or, with respect to the Second Delivery Date, the
obligation of the Underwriters to purchase, and of the Company to sell, the
Option Stock) shall terminate without liability on the part of any
non-defaulting Underwriter or the Company, except that the Company will
continue to be liable for the payment of expenses to the extent set forth in
Section 6. As used in this Agreement, the term "Underwriter" includes, for all
purposes of this Agreement unless the context requires otherwise, any party not
listed in Schedule I hereto who, pursuant to this Section 9, purchases Stock
which a defaulting Underwriter agreed but failed to purchase.
Nothing contained herein shall relieve a defaulting Underwriter of any
liability it may have to the Company for damages caused by its default. If
other underwriters are obligated or agree to purchase the Stock of a defaulting
or withdrawing Underwriter, either the Underwriters or the Company may postpone
the Delivery Date for up to seven full business days in order to effect any
changes that in the opinion of counsel for the Company or counsel for the
Underwriters may be necessary in the Registration Statement, the Prospectus or
in any other document or arrangement.
SECTION 10. Termination.
The obligations of the Underwriters hereunder may be terminated by
them by notice given to and received by the Company prior to delivery of and
payment for the Stock if, prior to that time, (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on any
exchange or in the over-the-counter market, shall have been suspended or
minimum prices shall have been established on any such exchange or such market
by the Commission, by such exchange or by any
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other regulatory body or governmental authority having jurisdiction, (ii) a
banking moratorium shall have been declared by Federal or New York State
authorities, (iii) the United States shall have become engaged in hostilities,
there shall have been an escalation in hostilities involving the United States
or there shall have been a declaration of a national emergency or war by the
United States or (iv) there shall have occurred such a material adverse change
in general economic, political or financial conditions (or the effect of
international conditions on the financial markets in the United States shall be
such); provided, however, in the case of (iii) and (iv) above, as to make it,
in the judgment of the Underwriters, impracticable or inadvisable to proceed
with the offering or delivery of the Stock on the terms and in the manner
contemplated in the Prospectus.
SECTION 11. Reimbursement of Underwriters' Expenses.
If the sale of Stock provided for herein is not consummated because
any condition to the obligations of the Underwriters set forth in Section 7
hereof is not satisfied, because of any termination pursuant to Section 10
hereof or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof
other than by reason of a default by the Underwriters, the Company shall
reimburse the Underwriters for the reasonable fees and expenses of its counsel
and for such other out-of-pocket expenses as shall have been incurred by it in
connection with this Agreement and the proposed purchase of the Stock, and upon
demand the Company shall pay the full amount thereof to the Underwriters.
SECTION 12. Notices, etc.
All statements, requests, notices and agreements hereunder shall be in
writing, and:
(a) if to the Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission to Xxxxxx Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate Department
(Fax: 000- 000-0000);
(b) 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
Prospectus, Attention: Vice President, Finance and Treasurer (Facsimile: 210-
828-8600).
Any such statements, requests, notices or agreements shall take effect at the
time of receipt thereof.
SECTION 13. Persons Entitled to Benefit of Agreement.
This Agreement shall inure to the benefit of and be binding upon the
Underwriters, the Company, and their respective successors. This Agreement and
the terms and provisions hereof are for the sole benefit of only those persons,
except that (x) the representations, warranties, indemnities and agreements of
the Company contained in this Agreement shall also be deemed to be for the
benefit of the officers and employees of the Underwriters and the person or
persons, if any, who control the Underwriters within the meaning of Section 15
of the Securities Act and (y) the
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indemnity agreement of the Underwriters contained in Section 8(b) of this
Agreement shall be deemed to be for the benefit of directors, officers and
employees of the Company and any person controlling the Company within the
meaning of Section 15 of the Securities Act. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 13, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
SECTION 14. Survival.
The respective indemnities, representations, warranties and agreements
of the Company and the Underwriters contained in this Agreement or made by or
on behalf of them, respectively, pursuant to this Agreement, shall survive the
delivery of and payment for the Stock and shall remain in full force and
effect, regardless of any investigation made by or on behalf of any of them or
any person controlling any of them.
SECTION 15. Definition of "Business Day."
For purposes of this Agreement, "business day" means any day on which
the New York Stock Exchange, Inc. is open for trading.
SECTION 16. Governing Law.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE LAWS OF NEW YORK.
SECTION 17. Counterparts.
This Agreement may be executed in one or more counterparts and, if
executed in more than one counterpart, the executed counterparts shall each be
deemed to be an original but all such counterparts shall together constitute
one and the same instrument.
SECTION 18. Headings.
The headings herein are inserted for convenience of reference only and
are not intended to be part of, or to affect the meaning or interpretation of,
this Agreement.
* * * * *
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If the foregoing correctly sets forth the agreement between the
Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
TESORO PETROLEUM CORPORATION
By: /s/ XXXXX X. XXXXX
----------------------------------
Xxxxx X. Xxxxx
Chairman of the Board, President
and Chief Executive Officer
Accepted:
XXXXXX BROTHERS INC.
CIBC XXXXXXXXXXX
CREDIT SUISSE FIRST BOSTON
XXXXXXX XXXXX & CO.
XXXXXXX XXXXX XXXXXX
By: XXXXXX BROTHERS INC.
By: /s/ H.E. XxXXX III
---------------------------
(Authorized Representative)
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SCHEDULE I
Number of shares of Number of shares of Option Stock
Firm Stock to be to be purchased (if over-allotment
Name of Underwriter purchased option exercised in full)
------------------- --------- ------------------------
Xxxxxx Brothers Inc. . . . . . . . . . . . . . . 1,000,000 $ 150,000
CIBC Xxxxxxxxxxx Corp. . . . . . . . . . . . . . 1,000,000 150,000
Credit Suisse First Boston Corporation . . . . . 1,000,000 150,000
Xxxxxxx Xxxxx, Xxxxxx Xxxxxx & Xxxxx
Incorporated . . . . . . . . . . . . . . . . . 1,000,000 150,000
Xxxxx Xxxxxx Inc. . . . . . . . . . . . . . . . . 1,000,000 150,000
-------------- --------------------
Total . . . . . . . . . . . . . . . . . . . . . . 5,000,000 750,000
============== ====================
A-2
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SCHEDULE II
1. Digicomp, Inc.
2. Interior Fuels Company
3. Kenai Pipe Line Company
4. Tesoro Alaska Petroleum Company
5. Tesoro Alaska Pipeline Company
6. Tesoro Bolivia Petroleum Company
7. Tesoro E&p Company, L.P.
8. Tesoro Exploration and Production Company
9. Tesoro Financial Services Holding Company
10. Tesoro Gas Resources Company, Inc.
11. Tesoro Hawaii Corporation
12. Tesoro Latin America Company
13. Tesoro Marine Services, Inc.
14. Tesoro Natural Gas Company
15. Tesoro Northstore Company
16. Tesoro Petroleum Companies, Inc.
17. Tesoro Petroleum South Pacific Company
18. Tesoro Pipeline Company, L.P.
19. Tesoro Refining, Marketing & Supply Company
20. Tesoro Vostok Company
21. Victory Finance Company
A-3
