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EXHIBIT 1.1
KCS ENERGY, INC.
2,400,000 SHARES*
COMMON STOCK
($.01 PAR VALUE)
U.S. UNDERWRITING AGREEMENT
New York, New York
December , 1996
Salomon Brothers Inc
Xxxxxx, Read & Co. Inc.
Prudential Securities Inc.
Xxxxxx Xxxxxx & Company, Inc.
Southcoast Capital Corporation
As Representatives of the several U.S. Underwriters
c/o Salomon Brothers Inc
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
KCS Energy, Inc., a Delaware corporation (the "Company"), proposes to
sell to the underwriters named in Schedule I hereto (the "U.S. Underwriters"),
for whom you (the "Representatives") are acting as representatives, 2,400,000
shares of Common Stock, $.01 par value ("Common Stock") of the Company (said
shares to be issued and sold by the Company being hereinafter called the "U.S.
Underwritten Securities"). The Company also proposes to grant to the U.S.
Underwriters an option to purchase up to 360,000 additional shares of Common
Stock (the "U.S. Option Securities"; the U.S. Option Securities, together with
the U.S. Underwritten Securities, being hereinafter called the "U.S.
Securities") solely to cover over-allotments.
It is understood that the Company is concurrently entering into an
International Underwriting Agreement dated the date hereof (the "International
Underwriting Agreement") providing for the sale by the Company of an aggregate
of 600,000 shares of Common Stock (said shares to be sold by the Company
pursuant to the International Underwriting Agreement being hereinafter called
the "International Underwritten Securities," and, together with the U.S.
Securities, the "Securities"), outside the United States and Canada through
arrangements with certain underwriters outside the United States and Canada
(the "International Underwriters") for whom Salomon Brothers
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*Plus up to 360,000 additional shares of common stock to cover
over-allotments.
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International Limited, Xxxxxx, Read & Co. Inc., Prudential-Bache Securities,
Xxxxxx Xxxxxx & Company, Inc. and Southcoast Capital Corporation are acting as
representatives (the "International Representatives"). The Company also
proposes to grant to the International Underwriters an option to purchase up to
90,000 additional shares of Common Stock solely to cover over-allotments (the
"International Option Securities"; the International Option Securities,
together with the International Underwritten Securities, being hereinafter
called the "International Securities"). It is further understood and agreed
that the U.S. Underwriters and the International Underwriters have entered into
an Agreement Between U.S. Underwriters and International Underwriters dated the
date hereof (the "Agreement Between U.S. Underwriters and International
Underwriters"), pursuant to which, among other things, the International
Underwriters may purchase from the U.S. Underwriters a portion of the U.S.
Securities to be sold pursuant to the U.S. Underwriting Agreement and the U.S.
Underwriters may purchase from the International Underwriters a portion of the
International Securities to be sold pursuant to the International Underwriting
Agreement.
1. REPRESENTATIONS AND WARRANTIES.
(a) The Company represents and warrants to, and agrees
with, each U.S. Underwriter as set forth below in this Section 1. Certain
terms used in this Section 1 are defined in paragraph (iv) hereof.
(i) The Company meets the requirements for filing on Form
S-3 and has filed with the Securities and Exchange Commission (the
"Commission") a registration statement (file number 333-15581) on Form
S-3, including a related preliminary prospectus, for the registration
under the Securities Act of 1933 (the "Act") of the offering and sale
of the Securities. The Company may have filed one or more amendments
thereto, including the related preliminary prospectuses, each of which
has previously been furnished to you. The Company will next file with
the Commission either (A) prior to effectiveness of such registration
statement, a further amendment to such registration statement
(including the form of final prospectuses) or (B) after effectiveness
of such registration statement, the final prospectuses in accordance
with Rules 430A and 424(b)(1) or (4). In the case of clause (B), the
Company has included in such registration statement, as amended at the
Effective Date, all information (other than Rule 430A Information)
required by the Act and the rules thereunder to be included in the
Prospectuses (as hereinafter defined) with respect to the Securities
and the offering thereof. As filed, such amendment and form of final
prospectuses, or such final prospectuses, shall contain all Rule 430A
Information, together with all other such required information, with
respect to the Securities and the offering thereof and, except to the
extent the Representatives shall agree in writing to a modification,
shall be in all substantive respects in the form furnished to you
prior to the Execution Time or, to the extent not completed at the
Execution Time, shall contain only such specific additional
information and other changes (beyond that contained in the latest
U.S. Preliminary Prospectus (as hereinafter defined)) as the Company
has advised you, prior to the Execution Time, will be included or made
therein.
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(ii) It is understood that two forms of prospectuses are
to be used in connection with the offering and sale of the Securities:
one form of prospectus relating to the U.S. Securities, which are to
be offered and sold to United States and Canadian Persons, and one
form of prospectus relating to the International Securities, which are
to be offered and sold to persons other than United States and
Canadian Persons. Such form of prospectus relating to the U.S.
Securities as first filed pursuant to Rule 424(b) or, if no filing
pursuant to Rule 424(b) is made, such form of prospectus included in
the Registration Statement at the Effective Date, is hereinafter
called the "U.S. Prospectus"; such form of prospectus relating to the
International Securities as first filed pursuant to Rule 424(b) or, if
no filing pursuant to Rule 424(b) is made, such form of prospectus
included in the Registration Statement at the Effective Date, is
hereinafter called the "International Prospectus"; and the U.S.
Prospectus and the International Prospectus are hereinafter
collectively called the "Prospectuses."
(iii) On the Effective Date, the Registration Statement did
or will, and when the Prospectuses are first filed (if required) in
accordance with Rule 424(b) and on the Closing Date (as hereinafter
defined), each Prospectus (and any supplements thereto) will, comply
in all material respects with the applicable requirements of the Act
and the rules thereunder; on the Effective Date, the Registration
Statement did not or will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading; and, on the Effective Date, each Prospectus, if not filed
pursuant to Rule 424(b), did not or will not, and on the date of any
filing pursuant to Rule 424(b) and on the Closing Date, each
Prospectus (together with any supplement thereto) will not, include
any untrue statement of a material fact or omit to state a material
fact necessary in order to make the statements therein, in the light
of the circumstances under which they were made, not misleading;
provided, however, that the Company makes no representations or
warranties as to the information contained in or omitted from the
Registration Statement, or the Prospectuses (or any supplement
thereto) in reliance upon and in conformity with information furnished
in writing to the Company by or on behalf of any Underwriter through
the Representatives specifically for inclusion in the Registration
Statement or the Prospectus (or any supplement thereto).
(iv) The terms which follow, when used in this Agreement,
shall have the meanings indicated. The term "the Effective Date"
shall mean each date that the Registration Statement and any
post-effective amendment or amendments thereto became or become
effective. "Execution Time" shall mean the date and time that this
Agreement is executed and delivered by the parties hereto. The "U.S.
Preliminary Prospectus" and the "International Preliminary
Prospectus," respectively, shall mean any preliminary prospectus with
respect to the offering of the U.S. Securities and the International
Securities, as the case may be, referred to in paragraph (i) above and
any preliminary prospectus with respect to the offering of the U.S.
Securities and the International Securities, as the case may be,
included in the Registration Statement at the Effective Date that
omits Rule 430A Information; and the U.S. Preliminary Prospectus and
the International Preliminary Prospectus are
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hereinafter called the "Preliminary Prospectuses." "Registration
Statement" shall mean the registration statement referred to in
paragraph (i) above, including exhibits and financial statements, as
amended at the Execution Time (or, if not effective at the Execution
Time, in the form in which it shall become effective) and, in the
event any post-effective amendment thereto becomes effective prior to
the Closing Date (as hereinafter defined), shall also mean such
registration statement as so amended. Such term shall include any
Rule 430A Information deemed to be included therein at the Effective
Date as provided by Rule 430A. "Rule 424" and "Rule 430A" refer to
such rules under the Act. "Rule 430A Information" means information
with respect to the Securities and the offering thereof permitted to
be omitted from the Registration Statement when it becomes effective
pursuant to Rule 430A. "United States or Canadian Person" shall mean
any person who is a national or resident of the United States or
Canada, any corporation, partnership or other entity created or
organized in or under the laws of the United States or Canada or of
any political subdivision thereof, or any estate or trust the income
of which is subject to United States or Canadian Federal income
taxation, regardless of its source (other than any non-United States
or non-Canadian branch of any United States or Canadian Person), and
shall include any United States or Canadian branch of a person other
than a United States or Canadian Person. "U.S." or "United States"
shall mean the United States of America (including the states thereof
and the District of Columbia), its territories, its possessions and
other areas subject to its jurisdiction.
(v) The documents incorporated or deemed to be
incorporated by reference in the Registration Statement and the
Prospectuses, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission
thereunder, and when read together with the other information in the
Prospectuses, at the Effective Date and on the Closing Date, did not
and will not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading.
(vi) All the outstanding shares of capital stock of the
Company have been duly authorized and validly issued and are fully
paid and nonassessable and were not issued in violation of any
preemptive or similar rights.
(vii) The Company is a corporation duly organized, validly
existing and 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 to conduct its business as described in the
Prospectuses, and is duly qualified to conduct its business and is in
good standing in each jurisdiction or place where the nature of its
properties or the conduct of its business requires such qualification,
except where the failure so to qualify does not have a material
adverse effect on the condition (financial or other), business,
prospects, properties, net worth or results of operations of the
Company and the Subsidiaries (as hereinafter defined) taken as a whole
(a "Material Adverse Effect").
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(viii) All the Company's subsidiaries (as defined in the
Act) are referred to herein individually as a "Subsidiary" and
collectively as the "Subsidiaries." Each Subsidiary is a corporation
duly organized, validly existing and in good standing in the
jurisdiction of its incorporation, with full corporate power and
authority to own, lease and operate its properties and to conduct its
business as described in the Prospectuses, and is duly qualified to
conduct its business and is in good standing in each jurisdiction or
place where the nature of its properties or the conduct of its
business requires such qualification, except where the failure so to
qualify or be in good standing does not have a Material Adverse
Effect. All of the outstanding shares of capital stock of each of the
Subsidiaries have been duly authorized and validly issued, are fully
paid and nonassessable, and are wholly owned by the Company directly
or indirectly through one of the other Subsidiaries, free and clear of
any lien, adverse claim, security interest, equity or other
encumbrance, except as described in the Prospectuses and except for
restriction on transferability imposed by the Act or applicable state
securities or Blue Sky laws.
(ix) There are no legal or governmental proceedings
pending or, to the knowledge of the Company, threatened, against the
Company or any of the Subsidiaries or to which the Company or any of
the Subsidiaries or to which any of their respective properties, is
subject, that are not disclosed in the Prospectuses and which, if
adversely decided, are reasonably likely to cause a Material Adverse
Effect or to materially affect the issuance of the Securities or the
consummation of the transactions contemplated by this Agreement.
There are no agreements, contracts, indentures, leases or other
instruments of the Company or any of the Subsidiaries that are
material to the Company and the Subsidiaries, taken as a whole, that
are not described in the Prospectuses. Neither the Company nor any
Subsidiary is involved in any strike, job action or labor dispute with
any group of employees except any action or dispute that would not
have a Material Adverse Effect, and, to the knowledge of the Company,
no such action or dispute is threatened.
(x) Neither the Company nor any of the Subsidiaries is
(1) in violation of its certificate or articles of incorporation or
by-laws or other organization documents, or of any law, ordinance,
administrative or governmental rule or regulation applicable to the
Company or any of the Subsidiaries or of any decree of any court or
governmental agency or body having jurisdiction over the Company or
any of the Subsidiaries except where any such violation or violations
in the aggregate would not have a Material Adverse Effect or (2) in
default in the performance of any obligation, agreement or condition
contained in any bond, debenture, note or any other evidence of
indebtedness or in any agreement, indenture, lease or other instrument
to which the Company or any of the Subsidiaries is a party or by which
any of them or any of their respective properties may be bound, except
as may be disclosed in the Prospectuses or except where such default
would not have a Material Adverse Effect.
(xi) Neither the issuance, offer, sale or delivery of the
Securities, the execution, delivery or performance of this Agreement
by the Company or the
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consummation by the Company of the transactions contemplated hereby or
thereby (i) requires any consent, approval, authorization or other
order of, or registration or filing with, any court, regulatory body,
administrative agency or other governmental body, agency or official
(except for compliance with the securities or Blue Sky laws of various
jurisdictions), or conflicts or will conflict with or constitutes or
will constitute a breach of, or a default under, the certificate or
articles of incorporation or bylaws, or other organization documents,
of the Company or any of the Subsidiaries or (ii) conflicts or will
conflict with or constitutes or will constitute a breach of, or a
default under, any material agreement, indenture, lease or other
instrument to which the Company or any of the Subsidiaries is a party
or by which any of them or any of their respective properties may be
bound, or (iii) violates or will violate in any material respect any
statute, law, regulation or filing or judgment, injunction, order or
decree applicable to the Company or any of the Subsidiaries or any of
their respective properties, or (iv) will result in the creation or
imposition of any lien, charge or encumbrance upon any property or
assets of the Company or any of the Subsidiaries pursuant to the terms
of any agreement or instrument to which any of them is a party or by
which any of them may be bound or to which any of the property or
assets of any of them is subject.
(xii) The accountants, Xxxxxx Xxxxxxxx LLP, who have
certified or shall certify the consolidated and combined financial
statements included or incorporated by reference in the Prospectuses
are independent public accountants under Rule 101 of the AICPA's Code
of Professional Conduct, and its interpretation and rulings.
(xiii) The consolidated financial statements, together with
related schedules and notes included or incorporated by reference in
the Prospectuses, present fairly the consolidated financial position,
results of operations and changes in stockholders' equity and cash
flows of the Company and the Subsidiaries on the basis stated in the
Prospectuses at the respective dates or for the respective periods to
which they apply and have been prepared in accordance with generally
accepted accounting principles consistently applied throughout the
periods involved. The combined financial statements, together with
the notes included in the Prospectuses, present fairly the financial
position, results of operations and changes in stockholders' equity
and cash flow of Intercoast Oil & Gas Company (formerly Medallion
Production Company) and certain of its affiliates (the "Intercoast
Entities") on the basis stated in the Prospectuses at the respective
dates or for the respective periods to which they apply and have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved. The statements
of revenues and direct operating expenses, together with the notes
included in the Prospectuses, present fairly the revenues and direct
operating expenses of the Xxxxxx Canyon Properties on the basis stated
in the Prospectuses at the respective dates or for the respective
periods to which they apply and have been prepared in accordance with
generally accepted accounting principles consistently applied
throughout the periods involved. The pro forma financial statements
and other pro forma financial information (including the notes
thereto) included in the Prospectuses (A) present fairly in all
material respects the information shown therein, (B) have been
prepared in accordance with the
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applicable requirements of Rule 11-02 of Regulations S-X promulgated
under the Act, (C) have been properly computed on the basis described
therein, and (D) the assumptions used in preparing the pro forma
financial statements and other pro forma financial data included in
the Prospectuses are reasonable; and the other financial and
statistical information and data set forth in the Prospectuses are
accurately presented and, to the extent such information and data is
derived from the financial books and records of the Company, are
prepared on a basis consistent with such financial statements and the
books and records of the Company.
(xiv) The Company has all requisite corporate power and
authority to execute, deliver and perform its obligations under this
Agreement and the International Underwriting Agreement; the execution
and delivery of, and the performance by the Company of its obligations
under this Agreement and the International Underwriting Agreement have
been duly and validly authorized by the Company, and this Agreement
and the International Underwriting Agreement have been duly executed
and delivered by the Company and constitute the valid and legally
binding agreement of the Company, enforceable against the Company in
accordance with their terms, except as the enforcement hereof and
thereof 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.
(xv) Except as disclosed in the Prospectuses, subsequent
to the date as of which such information is given in the Prospectuses,
neither the Company nor any of the Subsidiaries has incurred any
liability or obligation, direct or contingent, or entered into any
transaction, not in the ordinary course of business, that is material
to the Company and the Subsidiaries taken as a whole, and there has
not been any material change in the capital stock, or material
increase in the short-term or long-term debt, of the Company or any of
the Subsidiaries or any material adverse change, or any development
involving or which could reasonably be expected to involve a
prospective material adverse change, in the condition (financial or
other), business, properties, net worth or results of operations of
the Company and the Subsidiaries taken as a whole.
(xvi) Each of the Company and the Subsidiaries has good and
indefeasible title to all real property (and good and marketable title
to all personal property) described in the Prospectuses as being owned
by it, free and clear of all liens, claims, security interests or
other encumbrances except such as are described in the Prospectuses
and all the property described in the Prospectuses as being held under
lease by each of the Company and the Subsidiaries is held by it under
valid, subsisting and enforceable leases, with only such exceptions in
the matters described herein that in the aggregate are not materially
burdensome and do not interfere in any material respect with the
conduct of the business of the Company and the Subsidiaries taken as a
whole.
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(xvii) Except as permitted by the Act, the Company has not
distributed and, prior to the later to occur of the Closing Date and
completion of the distribution of the Securities, will not distribute
any offering material in connection with the offering and sale of the
Securities other than the Preliminary Prospectuses and the
Prospectuses.
(xviii) Each of the Company and the Subsidiaries have such
permits, licenses, franchises, certificates of need and other
approvals of authorizations of governmental or regulatory authorities
("Permits") as are necessary under applicable law to own their
respective properties and to conduct their respective businesses in
the manner described in the Prospectuses, except to the extent that
the failure to have such Permits would not have a Material Adverse
Effect; the Company and each of the Subsidiaries have fulfilled and
performed, all their respective obligations with respect to the
Permits, except where the failure to fulfill or perform such
obligations would not have a Material Adverse Effect, 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 Permit, subject in
each case to such qualification as may be set forth in the
Prospectuses and except to the extent that any such revocation or
termination would not have a Material Adverse Effect; and, except as
described in the Prospectuses, none of the Permits contains any
restriction that is materially burdensome to the conduct of the
business of the Company and the Subsidiaries taken as a whole.
(xix) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i)
transactions of the Company and the Subsidiaries are executed in
accordance with management's general or specific authorization; (ii)
transactions of the Company and the Subsidiaries 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 of the Company and
the Subsidiaries is permitted only in accordance with management's
general or specific authorization; and (iv) the recorded
accountability for assets of the Company and the Subsidiaries is
compared with existing assets at reasonable intervals and appropriate
action is taken with respect to any differences.
(xx) Neither the Company nor any of the Subsidiaries, any
employee or agent of the Company or any Subsidiary has made any
payment of funds of the Company or any Subsidiary or received or
retained any funds in violation of any law, rule or regulation, which
violation would have a Material Adverse Effect.
(xxi) Except as disclosed in the Prospectuses, the Company
and each of the Subsidiaries have filed all tax returns required to be
filed, which returns are true and correct in all material respects,
and neither the Company nor any Subsidiary is in default in the
payment of any taxes which were payable pursuant to said returns or
any assessments with respect thereto, except where the failure to file
such returns and make such payments would not have a Material Adverse
Effect.
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(xxii) No holder of any security of the Company has any
right to request or demand registration of shares of Common Stock or
any other security of the Company because of the consummation of the
transactions contemplated by this Agreement or the International
Underwriting Agreement. Except as described in the Prospectuses and
except for options granted after September 30, 1996 pursuant to plans
or arrangements described in the Prospectuses, there are no
outstanding options, warrants or other rights calling for the issuance
of, and there are no commitments, plans or arrangements to issue, any
shares of capital stock of the Company or any of the Subsidiaries or
any security convertible into or exchangeable or exercisable for
capital stock of the Company or any of the Subsidiaries.
(xxiii) The Company is not and, upon sale of the Securities
to be issued and sold thereby in accordance herewith and the
application of the net proceeds to the Issuers of such sale as
described in the Prospectuses under the caption "Use of Proceeds,"
will not be an "investment company" within the meaning of the
Investment Company Act of 1940, as amended (the "1940 Act").
(xxiv) The Company and the Subsidiaries are in compliance
with, and not subject to any liability under, the common law and all
applicable federal, state, local and foreign laws, regulations, rules,
codes, ordinances, directives, and orders relating to pollution or to
protection of public or employee health or safety or to the
environment, including, without limitation, those that relate to any
Hazardous Material (as defined herein) ("Environmental Laws"),
except, in each case, where noncompliance or liability, individually
or in the aggregate, would not have a Material Adverse Effect. The
term "Hazardous Material" means any pollutant, contaminant or waste,
or any hazardous, dangerous, or toxic chemical, material, waste,
substance or constituent subject to regulation under any Environmental
Law.
(xxv) Neither the Company nor any of its Subsidiaries is a
"holding company" or a "subsidiary company" of a "holding company" or
an "affiliate" of a "holding company," within the meaning of the
Public Utility Holding Company Act of 1935, as amended ("PUHCA").
(xxvi) The agreement (the "Medallion Acquisition Agreement")
to acquire all of the outstanding stock of Intercoast Oil and Gas
Company, GED Energy Services, Inc. and Intercoast Gas Services Company
and certain Section 29 tax credits (collectively, the "Medallion
Acquisition") has been duly and validly authorized by the Company and
is the legally valid and binding obligation of the Company,
enforceable against the Company in accordance with its terms, except
as the enforceability thereof may be limited by (i) the effect of
bankruptcy, insolvency, reorganization, moratorium or other similar
laws now or hereafter in effect relating to or affecting the rights
and remedies of creditors and (ii) the effect of general principles of
equity, whether enforcement is considered in a proceeding in equity or
at law in the discretion of the court before which any proceeding
thereof may be brought. The U.S. Underwriters and their counsel have
been provided with true and complete copies of the Medallion
Acquisition Agreement and all schedules, exhibits
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and amendments thereto, and the Medallion Acquisition Agreement
conforms in all materials respects to the description thereof in the
Prospectuses.
(xxvii) To the knowledge of the Company, each of the
representations and warranties of the Company and the other parties to
the Medallion Acquisition Agreement are true and correct in all
material respects as of the date of this Agreement, and to the
knowledge of the Company, there is no condition or exception to any
such representations and warranties contained in any schedule to the
Medallion Acquisition Agreement that could reasonably be expected to
have a Material Adverse Effect.
2. PURCHASE AND SALE.
(a) Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company agrees to
sell to each U.S. Underwriter, and each U.S. Underwriter agrees, severally and
not jointly, to purchase from the Company at a purchase price of $_____ per
share, the amount of the U.S. Underwritten Securities set forth opposite such
Underwriter's name in Schedule I hereto.
(b) Subject to the terms and conditions and in reliance
upon the representations and warranties herein set forth, the Company hereby
grants an option to the several U.S. Underwriters to purchase, severally and
not jointly, up to 360,000 shares of the U.S. Option Securities at the same
purchase price per share as the Underwriters shall pay for the U.S.
Underwritten Securities. Said option may be exercised only to cover
over-allotments in the sale of the U.S. Underwritten Securities by the U.S.
Underwriters. Said option may be exercised in whole or in part at any time
(but not more than once) on or before the 30th day after the date of the
Prospectuses upon written or telegraphic notice by the Representatives to the
Company setting forth the number of shares of the U.S. Option Securities as to
which the several U.S. Underwriters are exercising the option and the
settlement date. Delivery of certificates for the shares of U.S. Option
Securities by the Company and payment therefor to the Company shall be made as
provided in Section 3 hereof. The number of shares of the U.S. Option
Securities to be purchased by each U.S. Underwriter shall be the same
percentage of the total number of shares of the U.S. Option Securities to be
purchased by the several U.S. Underwriters as such U.S. Underwriter is
purchasing of the U.S. Underwritten Securities, subject to such adjustments as
you in your absolute discretion shall make to eliminate any fractional shares.
3. DELIVERY AND PAYMENT. Delivery of and payment for the U.S.
Underwritten Securities and the U.S. Option Securities (if the option provided
for in Section 2(b) hereof shall have been exercised on or before the third
business day prior to the Closing Date) shall be made at 10:00 a.m., New York
City time, on ____________, 19___, or such later date (not later than
____________, 19___) as the Representatives shall designate, which date and
time may be postponed by agreement among the Representatives and the Company or
as provided in Section 9 hereof (such date and time of delivery and payment for
the U.S. Securities being herein called the "Closing Date"). Delivery of the
U.S. Securities shall be made to the Representatives for the respective
accounts of the several U.S. Underwriters against payment by the several U.S.
Underwriters through the
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Representatives of the respective aggregate purchase prices of the U.S.
Securities being sold by the Company to or upon the order of the Company by
[wire transfer of immediately available funds to a bank account designated by
the Company]. Delivery of the U.S. Underwritten Securities and the U.S. Option
Securities shall be made at such location as the Representatives shall
reasonably designate at least one business day in advance of the Closing Date
and payment for such U.S. Securities shall be made at the office of Xxxxxx &
Xxxxxx L.L.P., Houston, Texas. Certificates for the U.S. Securities shall be
registered in such names and in such denominations as the Representatives may
request not less than three full business days in advance of the Closing Date.
The Company agrees to have the U.S. Securities available for
inspection, checking and packaging by the Representatives in New York, New
York, not later than 1:00 p.m. on the business day prior to the Closing Date.
If the option provided for in Section 2(b) hereof is exercised after
the third business day prior to the Closing Date, the Company will deliver (at
the expense of the Company) to the Representatives, at One New York Plaza, New
York, New York, on the date specified by the Representatives (which shall be
within three business days after exercise of said option), certificates for the
Option Securities in such names and denominations as the Representatives shall
have requested against payment of the purchase price thereof to or upon the
order of the Company by certified or official bank check or checks drawn on or
by a New York Clearing House bank and payable in next day funds. If settlement
for the Option Securities occurs after the Closing Date, the Company will
deliver to the Representatives on the settlement date for the Option
Securities, and the obligation of the U.S. Underwriters to purchase the Option
Securities shall be conditioned upon receipt of, supplemental opinions,
certificates and letters confirming as of such date the opinions, certificates
and letters delivered on the Closing Date pursuant to Section 6 hereof.
It is understood and agreed that the Closing Date shall occur
simultaneously with the "Closing Date" under the International Underwriting
Agreement.
4. OFFERING BY U.S. UNDERWRITERS. It is understood that the
several U.S. Underwriters propose to offer the U.S. Securities for sale to the
public as set forth in the U.S. Prospectus.
5. AGREEMENTS.
(a) The Company agrees with the several U.S. Underwriters
that:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and
any amendment thereof to become effective. Prior to the termination of
the offering of the Securities, the Company will not file any
amendment of the Registration Statement or supplement to the U.S.
Prospectus without your prior consent. Subject to the foregoing
sentence, if the Registration Statement has become or becomes
effective pursuant to Rule 430A, or filing of the U.S. Prospectus is
otherwise required under Rule 424(b), the Company will cause the U.S.
Prospectus, properly completed, and any
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supplement thereto to be filed with the Commission pursuant to the
applicable paragraph of Rule 424(b) within the time period prescribed
and will provide evidence satisfactory to the Representatives of such
timely filing. The Company will promptly advise the Representatives
(A) when the Registration Statement, if not effective at the Execution
Time, and any amendment thereto, shall have become effective, (B) when
the U.S. Prospectus, and any supplement thereto, shall have been filed
(if required) with the Commission pursuant to Rule 424(b), (C) when,
prior to termination of the offering of the Securities, any amendment
to the Registration Statement shall have been filed or become
effective, (D) of any request by the Commission for any amendment of
the Registration Statement or supplement to the U.S. Prospectus or for
any additional information, (E) of the issuance by the Commission of
any stop order suspending the effectiveness of the Registration
Statement or the institution or threatening of any proceeding for that
purpose and (F) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the U.S. Securities
for sale in any jurisdiction or the initiation or threatening of any
proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order and, if issued, to obtain
as soon as possible the withdrawal thereof.
(ii) If, at any time when a prospectus relating to the
U.S. Securities is required to be delivered under the Act, any event
occurs as a result of which the U.S. Prospectus as then supplemented
would include any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein in the
light of the circumstances under which they were made not misleading,
or if it shall be necessary to amend the Registration Statement or
supplement the U.S. Prospectus to comply with the Act or the rules
thereunder, the Company promptly will (1) prepare and file with the
Commission, subject to the second sentence of paragraph (a) of this
Section 5, an amendment or supplement which will correct such
statement or omission or effect such compliance and (2) supply any
supplemented U.S. Prospectus to you in such quantities as you may
reasonably request.
(iii) As soon as practicable, the Company will make
generally available to its security holders and to the Representatives
an earnings statement or statements of the Company and its
subsidiaries which will satisfy the provisions of Section 11(a) of the
Act and Rule 158 under the Act.
(iv) The Company will furnish to the Representatives and
counsel for the U.S. Underwriters, without charge, signed copies of
the Registration Statement (including exhibits thereto) and to each
other U.S. Underwriter a copy of the Registration Statement (without
exhibits thereto) and, so long as delivery of a prospectus by a U.S.
Underwriter or dealer may be required by the Act, as many copies of
each U.S. Preliminary Prospectus and the U.S. Prospectus and any
supplement thereto as the Representatives may reasonably request. The
Company will pay the expenses of printing or other production of all
documents relating to the offering.
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(v) The Company will arrange for the qualification of the
U.S. Securities for sale under the laws of such jurisdictions as the
Representatives may designate, will maintain such qualifications in
effect so long as required for the distribution of the U.S. Securities
and will pay the fee of the National Association of Securities
Dealers, Inc., in connection with its review of the offering.
(vi) The Company will not, for a period of 90 days
following the Execution Time, without the prior written consent of
Salomon Brothers Inc, offer, sell or contract to sell, or otherwise
dispose of, directly or indirectly, or announce the offering of, any
other shares of Common Stock or any securities convertible into, or
exchangeable for, shares of Common Stock; provided, however, that the
Company may issue and sell Common Stock pursuant to any employee stock
option or other benefit or incentive plans maintained for the
Company's officers, directors or employees in effect at the Execution
Time, and the Company may issue up to 435,000 shares of Common Stock
upon exercise of warrants issued in the Medallion Acquisition.
(vii) The Company confirms as of the date hereof that it is
in compliance with all provisions of Section 1 of Laws of Florida,
Chapter 92-198, An Act Relating to Disclosure of Doing Business with
Cuba, and the Company further agrees that if it commences engaging in
business with the government of Cuba or with any person or affiliate
located in Cuba after the date the Registration Statement becomes or
has become effective with the Commission or with the Florida
Department of Banking and Finance (the "Department"), whichever date
is later, or if the information reported in the U.S. Prospectus, if
any, concerning the Company's business with Cuba or with any person or
affiliate located in Cuba changes in any material way, the Company
will provide the Department notice of such business or change, as
appropriate, in a form acceptable to the Department.
(b) Each U.S. Underwriter agrees that (i) it is not
purchasing any of the U.S. Securities for the account of any non-United States
or Canadian Person, (ii) it has not offered or sold, and will not offer or
sell, directly or indirectly, any of the U.S. Securities or distribute any U.S.
Prospectus to any person outside the United States or Canada, or to any
non-United States or Canadian Person, and (iii) any dealer to whom it may sell
any of the U.S. Securities will represent that it is not purchasing for the
account of any non-United States or Canadian Person and agree that it will not
offer or resell, directly or indirectly, any of the U.S. Securities outside the
United States or Canada, or to any non-United States or Canadian Person or to
any other dealer who does not so represent and agree; provided, however, that
the foregoing shall not restrict (A) purchases and sales between the U.S.
Underwriters on the one hand and the International Underwriters on the other
hand pursuant to the Agreement Between U.S. Underwriters and International
Underwriters, (B) stabilization transactions contemplated under the Agreement
Between U.S. Underwriters and International Underwriters, conducted through
Salomon Brothers Inc (or through the Representatives and International
Representatives) as part of the distribution of the Securities, and (C) sales
to or through (or distributions of U.S. Prospectuses or U.S. Preliminary
Prospectuses to) United States or Canadian Persons who are investment
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advisors, or who otherwise exercise investment discretion, and who are
purchasing for the account of any non-United States or Canadian Person.
(c) The agreements of the U.S. Underwriters set forth in
paragraph (b) of this Section 5 shall terminate upon the earlier of the
following events:
(i) a mutual agreement of the Representatives and the
International Representatives to terminate the selling restrictions
set forth in paragraph (b) of this Section 5 and Section 5(b) of the
International Underwriting Agreement; or
(ii) the expiration of a period of 30 days after the
Closing Date, unless (A) the International Representatives shall have
given notice to the Company and the Representatives that the
distribution of the International Securities by the International
Underwriters has not yet been completed, or (B) the Representatives
shall have given notice to the Company and the International
Underwriters that the distribution of the U.S. Securities by the U.S.
Underwriters has not yet been completed. If such notice by the
Representatives or the International Representatives is given, the
agreements set forth in such paragraph (b) shall survive until the
earlier of (1) the event referred to in clause (i) of this subsection
(c) or (2) the expiration of an additional period of 30 days from the
date of any such notice.
6. CONDITIONS TO THE OBLIGATIONS OF THE U.S. UNDERWRITERS. The
obligations of the U.S. Underwriters to purchase the U.S. Underwritten
Securities and the Option Securities, as the case may be, shall be subject to
the accuracy of the representations and warranties on the part of the Company
contained herein as of the Execution Time, the Closing Date and any settlement
date pursuant to Section 3 hereof, to the accuracy of the statements of the
Company made in any certificates pursuant to the provisions hereof, to the
performance by the Company of its obligations hereunder and to the following
additional conditions:
(a) If the Registration Statement has not become
effective prior to the Execution Time, unless the Representatives
agree in writing to a later time, the Registration Statement will
become effective not later than (i) 6:00 p.m., New York City time, on
the date of determination of the public offering price, if such
determination occurred at or prior to 3:00 p.m., New York City time,
on such date or (ii) 12:00 Noon on the business day following the day
on which the public offering price was determined, if such
determination occurred after 3:00 p.m., New York City time, on such
date; if filing of the U.S. Prospectus, or any supplement thereto, is
required pursuant to Rule 424(b), the U.S. Prospectus, and any such
supplement, will be filed in the manner and within the time period
required by Rule 424(b); and no stop order suspending the
effectiveness of the Registration Statement shall have been issued and
no proceedings for that purpose shall have been instituted or
threatened.
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(b) The Company shall have furnished to the
Representatives the opinion of Mayor, Day, Xxxxxxxx & Xxxxxx, L.L.P.,
counsel for the Company, dated the Closing Date, to the effect that:
(i) each of the Company, and the material
subsidiaries listed on Schedule II hereto (individually, a
"Subsidiary" and, collectively, the "Subsidiaries") has been
duly incorporated and is validly existing as a corporation in
good standing under the laws of the jurisdiction in which it
is chartered or organized, with full corporate power and
authority to own its properties and conduct its business as
described in the Prospectuses, and is duly qualified to do
business as a foreign corporation and is in good standing
under the laws of each jurisdiction which requires such
qualification wherein it owns or leases material properties or
conducts material business;
(ii) all the outstanding shares of capital stock
of each Subsidiary have been duly and validly authorized and
issued and are fully paid and nonassessable, and, except as
otherwise set forth in the Prospectuses, all outstanding
shares of capital stock of the Subsidiaries are owned by the
Company either directly or through wholly owned subsidiaries
free and clear of any perfected security interest and, to the
knowledge of such counsel, after due inquiry, any other
security interests, claims, liens or encumbrances;
(iii) the Company's authorized equity
capitalization is as set forth in the Prospectuses; the
capital stock of the Company conforms to the description
thereof contained in the Prospectuses; the outstanding shares
of Common Stock have been duly and validly authorized and
issued and are fully paid and nonassessable; the Securities
being sold hereunder and under the International Underwriting
Agreement by the Company have been duly and validly
authorized, and, when issued and delivered to and paid for by
the U.S. Underwriters pursuant to this Agreement or the
International Underwriters as contemplated by the
International Underwriting Agreement, will be fully paid and
nonassessable; the Securities are duly authorized for listing,
subject to official notice of issuance, on the New York Stock
Exchange; the certificates for the Securities are in valid and
sufficient form; and the holders of outstanding shares of
capital stock of the Company are not entitled to preemptive or
other rights to subscribe for the Securities;
(iv) to the best knowledge of such counsel, there
is no pending or threatened action, suit or proceeding before
any court or governmental agency, authority or body or any
arbitrator involving the Company or any of the Subsidiaries of
a character required to be disclosed in the Registration
Statement which is not adequately disclosed in the
Prospectuses, and there is no franchise, contract or other
document of a character required to be described in the
Registration Statement or Prospectuses, or to be filed as an
exhibit, which is not described or filed as required; and the
statements in the Prospectus under the headings "Business --
Regulation" and "Business -- Legal Proceedings" fairly
summarize the matters therein described;
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(v) the Registration Statement has become
effective under the Act; any required filing of the
Prospectuses, and any supplements thereto, pursuant to Rule
424(b) has been made in the manner and within the time period
required by Rule 424(b); to the best knowledge of such
counsel, no stop order suspending the effectiveness of the
Registration Statement has been issued, no proceedings for
that purpose have been instituted or threatened and the
Registration Statement and the Prospectuses (other than the
financial statements and other financial and statistical
information contained therein as to which such counsel need
express no opinion) comply as to form in all material respects
with the applicable requirements of the Act and the rules
thereunder;
(vi) this Agreement and the International
Underwriting Agreement has been duly authorized, executed and
delivered by the Company;
(vii) no consent, approval, authorization or order
of any court or governmental agency or body is required in
connection with the execution and delivery by the Company of
this Agreement or the International Underwriting Agreement or
the consummation of the transactions contemplated by this
Agreement or the International Underwriting Agreement, except
such as have been obtained under the Act and such as may be
required under state securities or blue sky laws, as to which
such state securities or blue sky laws such counsel need not
express an opinion;
(viii) neither the offer, sale or delivery of the
Securities, the execution, delivery or performance by the
Company of this Agreement or the International Underwriting
Agreement, compliance by the Company with the provisions
hereof or thereof nor consummation by the Issuers of the
transactions contemplated hereby or thereby conflicts or will
conflict with or constitutes or will constitute a breach of,
or a default under, the certificate or articles of
incorporation or bylaws or other organizational documents of
the Company or, to such counsel's knowledge, any material
agreement, indenture, lease or other instrument to which the
Company is a party or by which it or any of its respective
properties is bound, or will result in the creation or
imposition of any lien, charge or encumbrance upon any
property or assets of any of the Company pursuant to the terms
of any material agreement or instrument known to such counsel
to which it is a party or by which it may be bound or to which
any of its property or assets is subject, nor (assuming
compliance with all applicable securities laws, rules and
regulations) will any such action result in any violation in
any material respect of any existing law, or any regulation,
ruling judgment, injunction, order or decree known to such
counsel to be applicable to the Company or any of its
properties;
(ix) no holders of securities of the Company have
rights to the registration of such securities under the
Registration Statement;
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(x) neither the Company nor any of its
Subsidiaries is an "investment company," or a company
"controlled" by an "investment company, " within the meaning
of the Investment Company Act of 1940, as amended; and
(xi) although such counsel have not undertaken,
except as otherwise indicated in their opinion, to determine
independently, and do not assume any responsibility for, the
accuracy, completeness or fairness of the statements in the
Registration Statement, such counsel have participated in
conferences with officers and other representatives of the
Company, representatives of the U.S. Underwriters,
representatives of the independent public accountants and
reserve engineers of the Company and other outside counsel to
the Company, at which conferences the contents of the
Registration Statement and related matters were discussed and
relying as to materiality to a large extent upon the analyses,
judgments and opinion of officers and other representatives of
the Company, nothing has come to the attention of such counsel
that has caused them to believe that the Registration
Statement, as of its date and as of the Closing Date,
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 or
that any amendment or supplement to the Prospectus, as of its
respective date, and as of the Closing Date, contained any
untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the
circumstances under which they were made, not misleading (it
being understood that such counsel need express no opinion
with respect to the financial statements and the notes thereto
and the schedules and other financial and statistical data or
reserve information included or incorporated by reference in
the Registration Statement and information furnished by or on
behalf of the U.S. Underwriters).
In rendering the foregoing opinion, Mayor, Day, Xxxxxxxx & Xxxxxx,
L.L.P. may state that such opinion is limited to the Federal laws of
the United States, the laws of the State of New York, the laws of the
State of Texas and the General Corporation Law of the State of
Delaware, and that they are expressing no opinion as to the effect of
the laws of any other jurisdiction. In addition, such counsel may
state that they have relied (i) as to certain matters on information
obtained from public officials, officers of the Company and other
sources believed by them to be responsible and (ii) as to matters of
New Jersey law, on the opinion of Orloff, Lowenbach, Xxxxxxxxx &
Xxxxxx.
(c) The Representatives shall have received from Xxxxxx &
Xxxxxx L.L.P., counsel for the Underwriters, such opinion or opinions,
dated the Closing Date, with respect to the issuance and sale of the
U.S. Securities, the Registration Statement, the Prospectuses
(together with any supplement thereto) and other related matters as
the Representatives may reasonably require, and the Company shall have
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furnished to such counsel such documents as they request for the
purpose of enabling them to pass upon such matters.
(d) The Company shall have furnished to the
Representatives a certificate of the Company, signed by the Chairman
of the Board or the President and the principal financial or
accounting officer of the Company, dated the Closing Date, to the
effect that the signers of such certificate have carefully examined
the Registration Statement, the Prospectuses, any supplements to the
Prospectuses, this Agreement and the International Underwriting
Agreement and that:
(i) the representations and warranties of the
Company in this Agreement are true and correct in all material
respects on and as of the Closing Date with the same effect as
if made on the Closing Date and the Company has complied with
all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to the Closing
Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement has been issued and no proceedings
for that purpose have been instituted or, to the Company's
knowledge, threatened; and
(iii) since the date of the most recent financial
statements included in the Prospectus (exclusive of any
supplement thereto), there has been no material adverse change
in the condition (financial or other), earnings, business or
properties of the Company and its subsidiaries, whether or not
arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Prospectuses
(exclusive of any supplement thereto); and
(iv) to the knowledge of such officer, the
representations and warranties of the other parties to the
Medallion Acquisition Agreement are true and correct in all
material respects as if made on and as of the Closing Date
(other than to the extent that such representation or warranty
is expressly made as to only a certain other date); and
(v) to the knowledge of such officer, subsequent
to the date the financial information regarding the Intercoast
Entities is provided in the Prospectuses, there has not been
any Material Adverse Effect, or development involving a
prospective Material Adverse Effect, with respect to the
business and operations of the Intercoast Entities; and
(vi) the Company has, and the Intercoast Entities
have certified to the Company that they have, complied in all
material respects with all agreements and covenants in the
Medallion Acquisition Agreement, that all conditions precedent
set forth therein have been satisfied, and that there have
been no material amendments, alterations, modifications or
additional agreements with respect to the Medallion
Acquisition Agreement since the
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respective dates of the execution and delivery thereof by the
parties thereto (other than any such amendments, alterations,
modifications or additional agreements of which copies have
been provided to the U.S. Underwriters).
(e) The U.S. Underwriters shall have received the legal
opinions of _______________ delivered in connection with the Medallion
Acquisition Agreement. Each legal opinion delivered to the U.S.
Underwriters pursuant to this Section 6(e) shall indicate that, or be
attached to a letter of the author thereof dated the Closing Date
stating that, the U.S. Underwriters shall have the right to rely upon
such legal opinion.
(f) At the Execution Time and at the Closing Date, Xxxxxx
Xxxxxxxx LLP shall have furnished to the Representatives a letter or
letters, dated respectively as of the Execution Time and as of the
Closing Date, in form and substance satisfactory to the
Representatives, confirming that they are independent accountants
within the meaning of the Act and the applicable published rules and
regulations thereunder and stating in effect that:
(i) in their opinion the audited financial
statements and financial statement schedules and pro forma
financial statements included in the Registration Statement
and the Prospectuses and reported on by them comply in form in
all material respects with the applicable accounting
requirements of the Act and the related published rules and
regulations;
(ii) on the basis of a reading of the latest
unaudited financial statements made available by the Company
and its subsidiaries, the Intercoast Entities and the Xxxxxx
Canyon Properties, their limited review in accordance with
standards established by the American Institute of Certified
Public Accountants of the unaudited interim financial
information for the nine-month period ended September 30,
1996, and as at September 30, 1996; carrying out certain
specified procedures (but not an examination in accordance
with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter; a reading of the minutes of
the meetings of the stockholders, directors and committees of
the Company and the Subsidiaries, the Intercoast Entities and
the Xxxxxx Canyon Properties; and inquiries of certain
officials of the Company, the Intercoast Entities and the
Xxxxxx Canyon Properties who have responsibility for financial
and accounting matters of the Company and its subsidiaries,
the Intercoast Entities and the Xxxxxx Canyon Properties as to
transactions and events subsequent to December 31, 1995,
nothing came to their attention which caused them to believe
that:
(1) any unaudited financial statements
included in the Registration Statement and the
Prospectuses do not comply in form in all material
respects with applicable accounting requirements of
the Act and with the published rules and regulations
of the Commission
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with respect to registration statements on Form S-3;
and said unaudited financial statements are not in
conformity with generally accepted accounting
principles applied on a basis substantially
consistent with that of the audited financial
statements included in the Registration Statement and
the Prospectuses; or
(2) with respect to the period
subsequent to September 30, 1996, there were any
changes, at a specified date not more than five
business days prior to the date of the letter, in the
long-term debt of the Company and its subsidiaries or
capital stock of the Company or decreases in the
stockholders' equity of the Company as compared with
the amounts shown on the September 30, 1996
consolidated balance sheet included in the
Registration Statement and the Prospectus, or for the
period from October 1, 1990 to such specified date
there were any decreases, as compared with the
corresponding period in the preceding year in net
revenues or income before income taxes or in total or
per share amounts of net income of the Company and
its subsidiaries, except in all instances for changes
or decreases set forth in such letter, in which case
the letter shall be accompanied by an explanation by
the Company as to the significance thereof unless
said explanation is not deemed necessary by the
Representatives;
(iii) they have performed certain other specified
procedures as a result of which they determined that certain
information of an accounting, financial or statistical nature
(which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company and its subsidiaries) set forth in the Registration
Statement and the Prospectus; and
(iv) on the basis of a reading of the unaudited
pro forma financial statements included in the Registration
Statement and the Prospectuses (the "pro forma financial
statements"); carrying out certain specified procedures;
inquiries of certain officials of the Company and the
Intercoast Entities who have responsibility for financial and
accounting matters; and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical
amounts in the pro forma financial statements, nothing came to
their attention which caused them to believe that the pro
forma financial statements do not comply in form in all
material respects with the applicable accounting requirements
of Rule 11-02 of Regulation S-X or that the pro forma
adjustments have not been properly applied to the historical
amounts in the compilation of such statements.
References to the U.S. Prospectus in this paragraph (f) includes any
supplement thereto at the date of the letter.
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(g) Subsequent to the Execution Time or, if earlier, the
dates as of which information is given in the Registration Statement
(exclusive of any amendment thereof) and the Prospectuses (exclusive
of any supplement thereto), there shall not have been (i) any change
or decrease specified in the letter or letters referred to in
paragraph (f) of this Section 6 or (ii) any change, or any development
involving a prospective change, in or affecting the business or
properties of the Company and its subsidiaries the effect of which, in
any case referred to in clause (i) or (ii) above, is, in the judgment
of the Representatives, so material and adverse as to make it
impractical or inadvisable to proceed with the offering or delivery of
the Securities as contemplated by the Registration Statement
(exclusive of any amendment thereof) and the Prospectuses (exclusive
of any supplement thereto).
(h) At the Execution Time, the Company shall have
furnished to the Representatives a letter substantially in the form of
Exhibit A hereto from each officer and director of the Company
addressed to the Representatives, in which each such person agrees not
to offer, sell or contract to sell, or otherwise dispose of, directly
or indirectly, or announce an offering of, any shares of Common Stock
beneficially owned by such person or any securities convertible into,
or exchangeable for, shares of Common Stock for a period of 90 days
following the Execution Time without the prior written consent of
Salomon Brothers Inc, other than shares of Common Stock disposed of as
bona fide gifts.
(i) Subsequent to the Execution Time, there shall not
have been any decrease in the rating of any of the Company's debt
securities by any "nationally recognized statistical rating
organization" (as defined for purposes of Rule 436(g) under the Act)
or any notice given of any intended or potential decrease in any such
rating or of a possible change in any such rating that does not
indicate the direction of the possible change.
(j) Prior to the Closing Date, the Company shall have
furnished to the Representatives such further information,
certificates and documents as the Representatives may reasonably
request.
(k) The closing of the purchase of the International
Securities to be issued and sold by the Company pursuant to the
International Underwriting Agreement shall occur concurrently with the
closing described herein.
If any of the conditions specified in this Section 6 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
or if any of the opinions and certificates mentioned above or elsewhere in this
Agreement shall not be in all material respects reasonably satisfactory in form
and substance to the Representatives and counsel for the U.S. Underwriters,
this Agreement and all obligations of the U.S. Underwriters hereunder may be
canceled at, or at any time prior to, the Closing Date by the Representatives.
Notice of such cancellation shall be given to the Company and in writing or by
telephone or telegraph confirmed in writing.
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7. REIMBURSEMENT OF U.S. UNDERWRITERS' EXPENSES. If the sale of
the Securities provided for herein is not consummated because any condition to
the obligations of the Underwriters set forth in Section 6 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 any of the U.S. Underwriters, the Company will reimburse the U.S.
Underwriters severally upon demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been incurred by
them in connection with the proposed purchase and sale of the Securities.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless
each U.S. Underwriter, the directors, officers, employees and agents of each
U.S. Underwriter and each person who controls any U.S. Underwriter within the
meaning of either the Act or the Exchange Act against any and all losses,
claims, damages or liabilities, joint or several, to which they or any of them
may become subject under the Act, the Exchange Act or other Federal or state
statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the registration statement for the registration of
the Securities as originally filed or in any amendment thereof, or in any U.S.
or International Preliminary Prospectus or in either of the Prospectuses, or in
any amendment thereof 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,
and agrees to reimburse each such indemnified party, as incurred, for any legal
or other expenses reasonably incurred by them in connection with investigating
or defending any such loss, claim, damage, liability or action; provided,
however, that the Company will 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
any such untrue statement or alleged untrue statement or omission or alleged
omission made therein in reliance upon and in conformity with written
information furnished to the Company by or on behalf of any U.S. Underwriter
through the Representatives specifically for inclusion therein. This indemnity
agreement will be in addition to any liability which the Company may otherwise
have.
(b) Each U.S. Underwriter severally agrees to indemnify
and hold harmless the Company, each of its directors, each of its officers who
signs the Registration Statement, and each person who controls the Company
within the meaning of either the Act or the Exchange Act, to the same extent as
the foregoing indemnity from the Company to each U.S. Underwriter, but only
with reference to written information relating to such U.S. Underwriter
furnished to the Company by or on behalf of such U.S. Underwriter through the
Representatives specifically for inclusion in the documents referred to in the
foregoing indemnity. This indemnity agreement will be in addition to any
liability which any U.S. Underwriter may otherwise have. The Company
acknowledges that the statements set forth in the last paragraph of the cover
page and under the heading "Underwriting" in any U.S. or International
Preliminary Prospectus and the Prospectus constitute the only information
furnished in writing by or on behalf of the several U.S. Underwriters for
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inclusion in any U.S. or International Preliminary Prospectus or the
Prospectuses, and you, as the Representatives, confirm that such statements are
correct.
(c) Promptly after receipt by an indemnified party under
this Section 8 of notice of the commencement of any action, such indemnified
party will, if a claim in respect thereof is to be made against the
indemnifying party under this Section 8, notify the indemnifying party in
writing of the commencement thereof; but the failure so to notify the
indemnifying party (i) will not relieve it from liability under paragraph (a)
or (b) above unless and to the extent it did not otherwise learn of such action
and such failure results in the forfeiture by the indemnifying party of
substantial rights and defenses and (ii) will not, in any event, relieve the
indemnifying party from any obligations to any indemnified party other than the
indemnification obligation provided in paragraph (a) or (b) above. The
indemnifying party shall be entitled to appoint counsel of the indemnifying
party's choice at the indemnifying party's expense to represent the indemnified
party in any action for which indemnification is sought (in which case the
indemnifying party shall not thereafter be responsible for the fees and
expenses of any separate counsel retained by the indemnified party or parties
except as set forth below); provided, however, that such counsel shall be
satisfactory to the indemnified party. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action,
the indemnified party shall have the right to employ separate counsel
(including local counsel), and the indemnifying party shall bear the reasonable
fees, costs and expenses of such separate counsel if (i) the use of counsel
chosen by the indemnifying party to represent the indemnified party would
present such counsel with a conflict of interest, (ii) the actual or potential
defendants in, or targets of, any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have
reasonably concluded that there may be legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, (iii) the indemnifying party shall not
have employed counsel satisfactory to the indemnified party to represent the
indemnified party within a reasonable time after notice of the institution of
such action or (iv) the indemnifying party shall authorize the indemnified
party to employ separate counsel at the expense of the indemnifying party. An
indemnifying party will not, without the prior written consent of the
indemnified parties, 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.
(d) In the event that the indemnity provided in paragraph
(a) or (b) of this Section 8 is unavailable to or insufficient to hold harmless
an indemnified party for any reason, the Company and the U.S. Underwriters
agree to contribute to the aggregate losses, claims, damages and liabilities
(including legal or other expenses reasonably incurred in connection with
investigating or defending same) (collectively, "Losses") to which the Company
and one or more of the U.S. Underwriters may be subject in such proportion as
is appropriate to reflect the relative benefits received by the Company and by
the U.S. Underwriters from the offering of the Securities; provided, however,
that in no
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case shall any (except as may be provided in any agreement among underwriters
relating to the offering of the Securities) be responsible for any amount in
excess of the underwriting discount or commission applicable to the Securities
purchased by such hereunder. If the allocation provided by the immediately
preceding sentence is unavailable for any reason, the Company and the U.S.
Underwriters shall contribute in such proportion as is appropriate to reflect
not only such relative benefits but also the relative fault of the Company and
of the U.S. Underwriters in connection with the statements or omissions which
resulted in such Losses as well as any other relevant equitable considerations.
Benefits received by the Company shall be deemed to be equal to the total net
proceeds from the offering (before deducting expenses) received by the Company
and benefits received by the U.S. Underwriters shall be deemed to be equal to
the total underwriting discounts and commissions, in each case as set forth on
the cover page of the U.S. Prospectus. Relative fault shall be determined by
reference to whether any alleged untrue statement or omission relates to
information provided by the Company or the U.S. Underwriters. The Company and
the U.S. Underwriters agree that it would not be just and equitable if
contribution were determined by pro rata allocation or any other method of
allocation which does not take account of the equitable considerations referred
to above. Notwithstanding the provisions of this paragraph (d), 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. For purposes of this Section 8, each
person who controls a U.S. Underwriter within the meaning of either the Act or
the Exchange Act and each director, officer, employee and agent of a U.S.
Underwriter shall have the same rights to contribution as such and each person
who controls the Company within the meaning of either the Act or the Exchange
Act, each officer of the Company who shall have signed the Registration
Statement and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the applicable terms and
conditions of this paragraph (d).
9. DEFAULT BY A U.S. UNDERWRITER. If any one or more U.S.
Underwriters shall fail to purchase and pay for any of the Securities agreed to
be purchased by such U.S. Underwriter or U.S. Underwriters hereunder and such
failure to purchase shall constitute a default in the performance of its or
their obligations under this Agreement, the remaining U.S. Underwriters shall
be obligated severally to take up and pay for (in the respective proportions
which the amount of U.S. Securities set forth opposite their names in Schedule
I hereto bears to the aggregate amount of U.S. Securities set forth opposite
the names of all the remaining U.S. Underwriters) the U.S. Securities which the
defaulting U.S. Underwriter or U.S. Underwriters agreed but failed to
purchase; provided, however, that in the event that the aggregate amount of
U.S. Securities which the defaulting U.S. Underwriter or U.S. Underwriters
agreed but failed to purchase shall exceed 10% of the aggregate amount of U.S.
Securities set forth in Schedule I hereto, the remaining U.S. Underwriters
shall have the right to purchase all, but shall not be under any obligation to
purchase any, of the U.S. Securities, and if such nondefaulting U.S.
Underwriters do not purchase all the U.S. Securities, this Agreement will
terminate without liability to any nondefaulting U.S. Underwriter or the
Company. In the event of a default by any U.S. Underwriter as set forth in this
Section 9, the Closing Date shall be postponed for such period, not exceeding
seven days, as the Representatives shall determine in order that the required
changes in the Registration Statement and the U.S. Prospectus or in any other
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documents or arrangements may be effected. Nothing contained in this Agreement
shall relieve any defaulting U.S. Underwriter of its liability, if any, to the
Company and any nondefaulting U.S. Underwriter for damages occasioned by its
default hereunder.
10. TERMINATION. This Agreement shall be subject to termination
in the absolute discretion of the Representatives, by notice given to the
Company prior to delivery of and payment for the U.S. Securities, if prior to
such time (i) trading in the Company's Common Stock shall have been suspended
by the Commission or trading in securities generally on the New York Stock
Exchange shall have been suspended or limited or minimum prices shall have been
established on such Exchange, (ii) a banking moratorium shall have been
declared either by Federal or New York State authorities or (iii) there shall
have occurred any outbreak or escalation of hostilities, declaration by the
United States of a national emergency or war or other calamity or crisis the
effect of which on financial markets is such as to make it, in the judgment of
the Representatives, impracticable or inadvisable to proceed with the offering
or delivery of the Securities as contemplated by the U.S. Prospectus (exclusive
of any supplement thereto).
11. REPRESENTATIONS AND INDEMNITIES TO SURVIVE. The respective
agreements, representations, warranties, indemnities and other statements of
the Company or its officers and of the U.S. Underwriters set forth in or made
pursuant to this Agreement will remain in full force and effect, regardless of
any investigation made by or on behalf of any U.S. Underwriter or the Company
or any of the officers, directors or controlling persons referred to in Section
8 hereof, and will survive delivery of and payment for the U.S. Securities.
The provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.
12. NOTICES. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Representatives, will be mailed,
delivered or telegraphed and confirmed to them, care of Salomon Brothers Inc,
at Xxxxx Xxxxx Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx, 00000; or, if sent to the
Company, will be mailed, delivered or telegraphed and confirmed to it at
attention of the legal department.
13. SUCCESSORS. This Agreement will inure to the benefit of and
be binding upon the parties hereto and their respective successors and the
officers and directors and controlling persons referred to in Section 8 hereof,
and no other person will have any right or obligation hereunder.
14. APPLICABLE LAW. This Agreement will be governed by and
construed in accordance with the laws of the State of New York.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof,
whereupon this letter and your acceptance shall represent a binding agreement
among the Company and the several U.S. Underwriters.
Very truly yours,
KCS ENERGY, INC.
By
--------------------------------
Name:
Title:
The foregoing Agreement is hereby confirmed
and accepted as of the date first above written.
SALOMON BROTHERS INC
XXXXXX, READ & CO. INC.
PRUDENTIAL SECURITIES INC.
XXXXXX XXXXXX & COMPANY, INC.
SOUTHCOAST CAPITAL CORPORATION
BY: SALOMON BROTHERS INC
By
---------------------------------------
Vice President
For themselves and the other several Under-
writers named in Schedule I to the foregoing
Agreement.
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SCHEDULE I
NUMBER OF SHARES OF
UNDERWRITTEN SECURITIES
UNDERWRITERS TO BE PURCHASED
------------ -----------------------
Salomon Brothers Inc . . . . . . . . . . . . . . . . . .
Xxxxxx, Read & Co. Inc. . . . . . . . . . . . . . . . . .
Prudential Securities Inc. . . . . . . . . . . . . . . .
Xxxxxx Xxxxxx & Company, Inc. . . . . . . . . . . . . . .
Southcoast Capital Corporation . . . . . . . . . . . . .
-----------
Total . . . . . . . . . . . . . . . . . 2,400,000
===========
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SCHEDULE II
Subsidiaries
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EXHIBIT A
KCS ENERGY, INC.
Public Offering of Common Stock
, 1996
Salomon Brothers Inc
Xxxxxx, Read & Co. Inc.
Xxxxxx Xxxxxx & Company, Inc.
Prudential Securities Inc.
Southcoast Capital Corporation
As Representatives of the several U.S. Underwriters
and
Salomon Brothers International Limited
Xxxxxx, Read & Co. Inc.
Prudential-Bache Securities
Xxxxxx Xxxxxx & Company, Inc.
Southcoast Capital Corporation
As International Representatives of the several
International Underwriters
c/o Salomon Brothers Inc
Seven Xxxxx Xxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
This letter is being delivered to you in connection with the proposed
U.S. Underwriting Agreement (the "U.S. Underwriting Agreement") and
International Underwriting Agreement (together with the U.S. Underwriting
Agreement the "Underwriting Agreements"), between KCS Energy, Inc., a Delaware
corporation (the "Company"), and each of you as respective representatives of a
group of U.S. Underwriters and International Underwriters named therein
(collectively, the "Underwriters"), relating to an underwritten public offering
of Common Stock, $.01 par value (the "Common Stock"), of the Company.
In order to induce you and the other Underwriters to enter into the
Underwriting Agreements, the undersigned agrees not to offer, sell or contract
to sell, or otherwise dispose of, directly or indirectly, or announce an
offering of, any shares of Common Stock beneficially owned by the undersigned
or any securities convertible into, or exchangeable for, shares of Common Stock
for a period of 90 days following the day on which the Underwriting Agreements
are executed without the prior consent of Salomon Brothers Inc and Salomon
Brothers International Limited, other than shares of Common Stock disposed of
as bona fide gifts.
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If for any reason the Underwriting Agreements shall be
terminated prior to the Closing Date (as defined in the Underwriting
Agreements), the agreement set forth above shall likewise be
terminated.
Yours very truly,
----------------------------------
Name:
Address:
--------------------------
--------------------------
--------------------------
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EXHIBIT B
List of Persons to sign lock-up letter:
Xxxxx X. Christmas
X.X. Xxxxxx
Xxxxx X. Xxxxxx
Xxxxx Xxx Xxxxx
Xxxxxxx X. Xxxxxxx, Xx.
X. Xxxxxxx Xxxxx
Xxxxxxx X. Xxxx
Xxxxx X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxxxx
Xxxx X. Xxxxxx
Xxxxxxxxxxx X. Xxxxxxxx
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