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EXHIBIT 1.01
ENRON OIL & GAS COMPANY
COMMON STOCK
($.01 PAR VALUE)
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UNDERWRITING AGREEMENT
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August __, 1999
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
Banc of America Securities LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
a division of ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
PaineWebber Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
Warburg Dillon Read LLC,
As representatives of the several
Underwriters named in Schedule I hereto,
c/o Goldman, ▇▇▇▇▇ & Co.
▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Enron Oil & Gas Company, a Delaware corporation (the "Company"), and
Enron Corp., an Oregon corporation (the "Selling Stockholder"), propose, subject
to the terms and conditions stated herein, to sell to the Underwriters named in
Schedule I hereto (the "Underwriters") the aggregate number of shares (the "Firm
Shares") set forth on Schedule I hereto and, at the election of the
Underwriters, the Selling Stockholder proposes, subject to the terms and
conditions stated herein, to sell to the Underwriters up to _______________
additional shares (the "Optional Shares"), of Common
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Stock, $.01 par value ("Stock"), of the Company (the Firm Shares and the
Optional Shares that the Underwriters elect to purchase pursuant to Section 2
hereof are herein collectively called the "Shares").
The Company and the Selling Stockholder are concurrently entering into
an agreement (the "Notes Underwriting Agreement") providing for the issue and
sale by Enron Corp. of ___% Exchangeable Notes due _________, 2002 (the "Notes")
issued by the Selling Stockholder (__________ Notes if the underwriters'
over-allotment option in such offering is exercised in full) through ▇▇▇▇▇▇▇,
Sachs & Co., Banc of America Securities LLC and ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ Inc. The
Notes are exchangeable for Stock. The Company's registration statement mentioned
in Section 1(a) below filed with respect to the sale of the Stock pursuant to
this Agreement contains two forms of prospectus, one relating to the sale of the
Shares and one relating to the Stock deliverable upon Maturity (as defined in
the indenture dated November 1, 1985 between Enron Corp. and ▇▇▇▇▇▇ Trust and
Savings Bank, as amended (the "Indenture"), pursuant to which the Notes are
issued) of the Notes. The latter form of prospectus will be identical to the
former except for certain substitute pages as included in the registration
statement and amendments thereto mentioned below. Except as used in Sections 6
and 8 herein, and except as the context may otherwise require, references
hereinafter to any prospectus of the Company, whether in preliminary or final
form, and whether as amended or supplemented, shall include only the version
thereof related to the sale of Shares pursuant to this Agreement.
1. (a) The Company represents and warrants to, and agrees with, each of
the Underwriters and the Selling Stockholder that:
(i) A registration statement on Form S-3 (File No. 333-83533),
as amended by Amendment No. 1 thereto (the "Initial Registration
Statement"), in respect of the Shares has been filed with the
Securities and Exchange Commission (the "Commission"); the Initial
Registration Statement and any post-effective amendment thereto, each
in the form heretofore delivered to you, and, excluding exhibits
thereto but including all documents incorporated by reference in the
prospectus contained therein, to you for each of the other
Underwriters, have been declared effective by the Commission in such
form; other than a registration statement, if any, increasing the size
of the offering (a "Rule 462(b) Registration Statement"), filed
pursuant to Rule 462(b) under the Securities Act of 1933, as amended
(the "Act"), which became effective upon filing, no other document with
respect to the Initial Registration Statement or document incorporated
by reference therein has heretofore been filed with the Commission; and
no stop order suspending the effectiveness of the Initial Registration
Statement, any post-effective amendment thereto or the Rule 462(b)
Registration Statement, if any, has been issued and no proceeding for
that purpose has been initiated or, to the Company's knowledge,
threatened by the Commission (any preliminary prospectus included in
the Initial Registration Statement or filed with the Commission
pursuant to Rule 424(a) of the rules and regulations of the Commission
under the Act, is hereinafter called a "Preliminary Prospectus"; the
various parts of the Initial Registration Statement and the Rule 462(b)
Registration Statement, if any, including all exhibits thereto and
including (i) the information contained in the form of final prospectus
filed with the Commission pursuant to Rule 424(b) under the Act in
accordance with Section 5(a) hereof
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and deemed by virtue of Rule 430A under the Act to be part of the
Initial Registration Statement at the time it was declared effective
and (ii) the documents incorporated by reference in the prospectus
contained in the Initial Registration Statement at the time such part
of the registration statement became effective or such part of the Rule
462(b) Registration Statement, if any, became or hereafter becomes
effective, each as amended at the time such part of the Initial
Registration Statement became effective, are hereinafter collectively
called the "Registration Statement"; such final prospectus, in the form
first filed pursuant to Rule 424(b) under the Act, is hereinafter
called the "Prospectus"; any reference herein to any Preliminary
Prospectus or the Prospectus shall be deemed to refer to and include
the documents incorporated by reference therein pursuant to Item 12 of
Form S-3 under the Act, as of the date of such Preliminary Prospectus
or Prospectus, as the case may be; any reference to any amendment or
supplement to any Preliminary Prospectus or the Prospectus shall be
deemed to refer to and include any documents filed after the date of
such Preliminary Prospectus or Prospectus, as the case may be, under
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
and incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; any reference to any amendment to the
Registration Statement shall be deemed to refer to and include any
annual report of the Company filed pursuant to Section 13(a) or 15(d)
of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration
Statement); and all references to the Registration Statement, any
preliminary prospectus, the Prospectus or any amendment or supplement
to any of the foregoing shall be deemed to include the copy filed with
the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval System (▇▇▇▇▇), which ▇▇▇▇▇ copy is substantially identical
to the other copies of such material, except to the extent permitted by
Regulation S-T;
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by an Underwriter through ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use
therein or by the Selling Stockholder expressly for use in the
preparation of the answers therein to Item 7 of Form S-3;
(iii) The documents incorporated by reference in the
Prospectus, when they became effective or were filed with the
Commission, as the case may be, conformed in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder, and none of such
documents contained an untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to
make the statements therein not misleading; and any further documents
so filed and incorporated by reference in the Prospectus or any further
amendment or supplement thereto, when such documents become effective
or are filed with the
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Commission, as the case may be, will conform in all material respects
to the requirements of the Act or the Exchange Act, as applicable, and
the rules and regulations of the Commission thereunder 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; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through ▇▇▇▇▇▇▇,
Sachs & Co. expressly for use therein;
(iv) The Registration Statement conforms, and the Prospectus
and any further amendments or supplements to the Registration Statement
or the Prospectus will conform, in all material respects, to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date
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,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by an Underwriter
through ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use therein or by the
Selling Stockholder expressly for use in the preparation of the answers
therein to Item 7 of Form S-3;
(v) Neither the Company nor any of its Material Subsidiaries
(as defined in Section 16) has 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, since the respective dates as of which information is
given in the Registration Statement and the Prospectus, there has not
been any change in the capital stock (other than changes in Stock
resulting from employee benefit plans or dividend reinvestment plan
transactions or, if disclosed to the Underwriters in writing, purchases
pursuant to the Company's stock repurchase program) or any increase in
long-term debt of the Company or any of its Material Subsidiaries or
any material adverse change, or any development involving a prospective
material adverse change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, taken as a whole,
otherwise than as set forth or contemplated in the Prospectus;
(vi) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with power and authority (corporate and other) to own its
properties and conduct its business as described in the Prospectus, and
has been duly qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties or conducts any
business so as to require such qualification, or is subject to no
material liability or disability by reason of the failure to be so
qualified in any such
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jurisdiction; and each Material Subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation, with power and
authority (corporate and other) to own its properties and conduct its
business as described in the Prospectus, and has been duly qualified as
a foreign corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it owns or
leases properties, or conducts any business, so as to require
qualification, or is subject to no material liability or disability by
reason of the failure to be so qualified in any such jurisdiction;
(vii) The Company and its Material Subsidiaries have good and
indefeasible title to their producing oil and gas properties, free and
clear of all liens, encumbrances and defects, except (1) those
described in the Prospectus, (2) liens securing taxes and other
governmental charges, or claims of materialmen, mechanics and similar
persons, not yet due and payable, (3) 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 (4) liens,
encumbrances and defects that do not, singly or 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 and its subsidiaries;
(viii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital stock
of the Company have been duly and validly authorized and issued, are
fully paid and non-assessable and conform to the description of the
Stock contained in the Prospectus; and all of the issued shares of
capital stock of each Material Subsidiary of the Company have been duly
and validly authorized and issued, are fully paid and non-assessable
and (except for directors' qualifying shares) are owned directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims;
(ix) The unissued Shares to be issued and sold by the Company
to the Underwriters hereunder have been duly and validly authorized
and, when issued and delivered against payment therefor as provided
herein, will be duly and validly issued and fully paid and
non-assessable and will conform to the description of the Stock
contained in the Prospectus;
(x) The issue and sale of the Shares by the Company and the
compliance by the Company with all of the provisions of this Agreement
and the Notes Underwriting Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of
its subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or the charter or by-laws of
any of its subsidiaries or any statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over
the Company or any
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of its subsidiaries or any of their properties; and no consent,
approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for the
sale of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement, except the registration
under the Act of the Shares and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters;
(xi) Neither the Company nor any of its subsidiaries is (a) in
violation of its Certificate of Incorporation or charter, as the case
may be, or By-laws or (b) in default in the performance or observance
of any material obligation, agreement, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by which it or
any of its properties may be bound to the extent such default would
have a material adverse effect on the consolidated financial position,
stockholders' equity or results of operations of the Company and its
consolidated subsidiaries, taken as a whole;
(xii) Other than as set forth or contemplated in the
Prospectus, there are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which any
property of the Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the current or future consolidated financial
position, stockholders' equity or results of operations of the Company
and its consolidated subsidiaries, taken as a whole; and, to the best
of the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(xiii) The Company is not and, after giving effect to the
offering and sale of the Shares (and, if consummated, the offering and
sale of the Notes), will not be an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in
the Investment Company Act of 1940, as amended (the "Investment Company
Act");
(xiv) The statements set forth in the Prospectus under the
caption "Description of Capital Stock," insofar as they purport to
constitute a summary of the terms of the Stock, are accurate, complete
and fair;
(xv) The information regarding the Year 2000 problem contained
in the Company's reports filed under the Exchange Act which are
incorporated by reference in the Prospectus are true in all material
respects as of the date of such filings;
(xvi) The consummation of the transactions contemplated in the
Share Exchange Agreement, dated as of July 19, 1999, as amended through
the Time of Delivery (the "Share Exchange Agreement"), between the
Company and the Selling Stockholder, either alone or in combination
with another event, will not result in any "parachute payment" under
Section
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280G of the Internal Revenue Code of 1986, as amended, whether or not
such payment is considered to be reasonable compensation for services
rendered;
(xvii) The transactions contemplated by the Share Exchange
Agreement are intended to be tax-free to the Company, and the Company
shall take no action or position inconsistent with such tax treatment
unless required to do so pursuant to a determination; and
(xviii) To the best of the Company's knowledge after due
inquiry, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder.
(b) The Selling Stockholder represents and warrants to, and agrees
with, each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders
necessary for the execution and delivery by the Selling Stockholder of
this Agreement, and for the sale and delivery of the Shares to be sold
by the Selling Stockholder hereunder, have been obtained; and the
Selling Stockholder has full right, power and authority to enter into
this Agreement and to sell, assign, transfer and deliver the Shares to
be sold by the Selling Stockholder hereunder;
(ii) The sale of the Shares to be sold by the Selling
Stockholder hereunder and the compliance by the Selling Stockholder
with all of the provisions of this Agreement and the consummation of
the transactions herein contemplated, and the issue and sale of the
Notes pursuant to the Notes Underwriting Agreement and the compliance
by the Selling Stockholder with all of the provisions thereof and the
consummation of the transactions therein contemplated, will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, any statute, indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument to which the Selling Stockholder or any of its subsidiaries
is a party or by which the Selling Stockholder or any of its
subsidiaries is bound, or to which any of the property or assets of the
Selling Stockholder or any of its subsidiaries is subject, nor will
such action result in any violation of the provisions of the Amended
and Restated Articles of Incorporation or By-laws of the Selling
Stockholder or the charter documents or by-laws of any of its
subsidiaries or any statute or any order, rule or regulation of any
court or governmental agency or body having jurisdiction over the
Selling Stockholder or any of its subsidiaries or the property of the
Selling Stockholder or any of its subsidiaries;
(iii) The Selling Stockholder has, and immediately prior to
each Time of Delivery (as defined in Section 4 hereof) the Selling
Stockholder will have, good and valid title to the Shares to be sold by
the Selling Stockholder hereunder, free and clear of all liens,
encumbrances, equities or claims; and, upon delivery of such Shares and
payment therefor pursuant hereto and thereto, good and valid title to
such Shares, free and clear of all liens, encumbrances, equities or
claims, will pass to the several Underwriters;
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(iv) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Prospectus, the Selling Stockholder will not offer, sell, contract to
sell or otherwise dispose of or hedge, except as provided hereunder and
except for the sale of the Notes under the Notes Underwriting
Agreement, any shares of Stock or any securities that are convertible
into or exchangeable for, or that represent the right to receive, Stock
or any such substantially similar securities without the prior written
consent of ▇▇▇▇▇▇▇, Sachs & Co.;
(v) The Selling Stockholder has not taken and will not take,
directly or indirectly, any action which is designed to or which has
constituted or which might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares;
(vi) To the extent that any statements or omissions made in
the Registration Statement, any Preliminary Prospectus, the Prospectus
or any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to the Company by the
Selling Stockholder expressly for use therein, such Preliminary
Prospectus and the Registration Statement did, and the Prospectus and
any further amendments or supplements to the Registration Statement and
the Prospectus, when they become effective or are filed with the
Commission, as the case may be, will conform in all material respects
to the requirements of the Act and the rules and regulations of the
Commission thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading; and
(vii) In order to document the Underwriters' compliance with
the reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Stockholder will deliver to you prior to or
at the First Time of Delivery (as hereinafter defined) a properly
completed and executed United States Treasury Department Form W-9 (or
other applicable form or statement specified by Treasury Department
regulations in lieu thereof).
2. Subject to the terms and conditions herein set forth, (a) the
Company agrees to issue and sell to each of the Underwriters and the Selling
Stockholder agrees to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company and
the Selling Stockholder, respectively, at a purchase price per share of $_____,
the number of Firm Shares to be purchased by such Underwriter as set forth
opposite the name of such Underwriter in Schedule I hereto and (b) in the event
and to the extent that the Underwriters shall exercise the election to purchase
Optional Shares as provided below, the Selling Stockholder agrees to sell to
each of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Selling Stockholder, at the purchase price per
share set forth in clause (a) of this Section 2, that portion of the number of
Optional Shares as to which such election shall have been exercised (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
such number of Optional Shares by a fraction the numerator of which is the
maximum number of Optional Shares which such Underwriter is entitled to purchase
as set forth opposite the name of such
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Underwriter in Schedule I hereto and the denominator of which is the maximum
number of Optional Shares that all of the Underwriters are entitled to purchase
hereunder.
The Selling Stockholder hereby grants to the Underwriters the right to
purchase at their election up to _________ Optional Shares, at the purchase
price per share set forth in the paragraph above, for the sole purpose of
covering over-allotments in the sale of the Firm Shares. Any such election to
purchase Optional Shares may be exercised by written notice from you to the
Selling Stockholder, given within a period of 30 calendar days after the date of
this Agreement and setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless you and the Selling Stockholder
otherwise agree in writing, earlier than two or later than ten business days
after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares, the
several Underwriters propose to offer the Firm Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. may request upon at least 48 hours' prior notice
to the Company or the Selling Stockholder, as the case may be, shall be
delivered by or on behalf of the Company or the Selling Stockholder, as the case
may be, to ▇▇▇▇▇▇▇, Sachs & Co., through the facilities of The Depository Trust
Company ("DTC"), for the account of such Underwriter, against payment by or on
behalf of such Underwriter of the purchase price therefor by wire transfer of
Federal (same-day) funds to the account specified by the Company or the Selling
Stockholder, as the case may be, to ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. at least 48 hours in
advance. The Company or the Selling Stockholder, as the case may be, will cause
the certificates representing the Shares to be made available for checking and
packaging at least 24 hours prior to the Time of Delivery (as defined below)
with respect thereto at the office of DTC or its designated custodian (the
"Designated Office"). The time and date of such delivery and payment shall be,
with respect to the Firm Shares, 9:30 a.m., New York City time, on August __,
1999 or on such other time and date as ▇▇▇▇▇▇▇, Sachs & Co. and the Company may
agree upon in writing, and, with respect to the Optional Shares, 9:30 a.m., New
York City time, on the date specified by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. in the written
notice given by ▇▇▇▇▇▇▇, Sachs & Co. of the Underwriters' election to purchase
such Optional Shares, or such other time and date as ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. and
the Selling Stockholder may agree upon in writing. Such time and date for
delivery of the Firm Shares is herein called the "First Time of Delivery," such
time and date for delivery of the Optional Shares, if not the First Time of
Delivery, is herein called the "Second Time of Delivery," and each such time and
date for delivery is herein called a "Time of Delivery."
(b) The documents to be delivered at each Time of Delivery by
or on behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(j) hereof, will be delivered at the offices
of Bracewell & ▇▇▇▇▇▇▇▇▇, L.L.P., ▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(the "Closing Location"), and the Shares will be delivered at the Designated
Office, all at each Time of Delivery. A meeting will be held at the Closing
Location at 2:00 p.m., New York City time, on the
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New York Business Day next preceding each Time of Delivery, at which meeting the
final drafts of the documents to be delivered pursuant to the preceding sentence
will be available for review by the parties hereto. For the purposes of this
Section 4, "New York Business Day" shall mean each Monday, Tuesday, Wednesday,
Thursday and Friday which is not a day on which banking institutions in New York
are generally authorized or obligated by law or executive order to close.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to file
such Prospectus pursuant to Rule 424(b) under the Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or Prospectus prior to
the last Time of Delivery which shall be disapproved by you promptly after
reasonable notice thereof; to advise you, promptly after it receives notice
thereof, of the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish you with copies thereof; to file
promptly all reports and any definitive proxy or information statements required
to be filed by the Company with the Commission pursuant to Section 13(a), 13(c),
14 or 15(d) of the Exchange Act subsequent to the date of the Prospectus and for
so long as the delivery of a prospectus is required in connection with the
offering or sale of the Shares; to advise you, promptly after it receives notice
thereof, of the issuance by the Commission of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or the
Prospectus, of the suspension of the qualification of the Shares for offering or
sale in any jurisdiction, of the initiation or threatening of any proceeding for
any such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or the Prospectus
or suspending any such qualification, promptly to use its best efforts to obtain
the withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under the
securities laws of such jurisdictions as you may request and to comply with such
laws so as to permit the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the distribution of
the Shares, provided that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to file a general consent to
service of process in any jurisdiction;
(c) From time to time, to furnish the Underwriters with copies of
the Prospectus in New York City at such times and in such quantities as you may
reasonably request, and, if the delivery of a prospectus is required at any time
prior to the expiration of nine months after the time of issue of the Prospectus
in connection with the offering or sale of the Shares and if at such time any
events shall have occurred as a result of which the Prospectus as then amended
or supplemented would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made when such Prospectus
is delivered, not misleading, or, if for any other reason it shall be necessary
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during such period 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 Act or the Exchange Act, to notify you and upon your 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 you may from time
to time reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance, and in case any Underwriter is required to deliver a prospectus in
connection with sales of any of the Shares at any time nine months or more after
the time of issue of the Prospectus, upon your request but at the expense of
such Underwriter, to prepare and deliver to such Underwriter as many copies as
you may request of an amended or supplemented Prospectus complying with Section
10(a)(3) of the Act;
(d) To make generally available to its securityholders as soon as
practicable, but in any event not later than eighteen months after the effective
date of the Registration Statement (as defined in Rule 158(c) under the Act), an
earnings statement of the Company and its subsidiaries (which need not be
audited) complying with Section 11(a) of the Act and the rules and regulations
of the Commission thereunder (including, at the option of the Company, Rule
158);
(e) During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus, not to
offer, sell, contract to sell or otherwise dispose of or hedge, except as
provided hereunder, any shares of Stock or any securities that are convertible
into or exchangeable for, or that represent the right to receive, shares of
Stock (other than pursuant to director or employee stock option plans existing
on the date of this Agreement), without the prior written consent of ▇▇▇▇▇▇▇,
Sachs & Co., and to cause the Company's directors and executive officers to
agree not to offer, sell, contract to sell or otherwise dispose of or hedge any
shares of Stock or any securities convertible into or exchangeable for Stock
(other than the Stock deliverable at maturity of the Notes and pursuant to
director or employee stock option plans existing on the date of this Agreement),
during such period, without the prior written consent of ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.;
(f) To furnish to its stockholders as soon as practicable after the
end of each fiscal year an annual report (including a balance sheet and
statements of income, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries certified by independent public accountants) and, as
soon as practicable after the end of each of the first three quarters of each
fiscal year (beginning with the fiscal quarter ending after the effective date
of the Registration Statement), to make available to its stockholders
consolidated summary financial information of the Company and its subsidiaries
for such quarter in reasonable detail;
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or other
communications (financial or other) furnished to stockholders, and to deliver to
you (i) as soon as they are available, copies of any reports and financial
statements furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and (ii)
such additional information concerning the business and financial condition of
the Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of the
Company and its subsidiaries are consolidated in reports furnished to its
stockholders
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generally or to the Commission), provided that prior to the Company's furnishing
any such additional information that is material and non-public you shall enter
into such agreement respecting the confidentiality thereof as the Company may
reasonably request;
(h) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on the date of
this Agreement, and the Company shall at the time of filing either pay to the
Commission the filing fee for the Rule 462(b) Registration Statement or give
irrevocable instructions for the payment of such fee pursuant to Rule 111(b)
under the Act;
(i) To use the net proceeds received by it from the sale of the Firm
Shares pursuant to this Agreement in the manner specified in the Prospectus
under the caption "Use of Proceeds"; and
(j) To use its best efforts to list, subject to notice of issuance,
the Shares on the New York Stock Exchange (the "Exchange").
6. The Company and the Selling Stockholder covenant and agree with one
another and with the several Underwriters that (a) the Company will pay or cause
to be paid the following: (i) the fees, disbursements and expenses of the
Company's counsel and accountants in connection with the registration of the
Shares under the Act and all other expenses in connection with the preparation,
printing and filing of the Registration Statement, any Preliminary Prospectus
and the Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers; (ii) the cost of
printing or producing any Agreement among Underwriters, this Agreement, the Blue
Sky Memorandum and any Legal Investment Memorandum and any other documents in
connection with the offering, purchase, sale and delivery of the Shares; (iii)
all expenses in connection with the qualification of the Shares for offering and
sale under state securities laws as provided in Section 5(b) hereof, including
the fees and disbursements of counsel for the Underwriters in connection with
such qualification and in connection with the Blue Sky and legal investment
surveys; (iv) all fees and expenses in connection with listing the Shares on the
Exchange; (v) the filing fees incident to, and the fees and disbursements of
counsel for the Underwriters in connection with, securing any required review by
the National Association of Securities Dealers, Inc. of the terms of the sale of
the Shares; (vi) the cost of preparing stock certificates; (vii) the cost and
charges of any transfer agent or registrar; and (viii) all other costs and
expenses incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section; and (b) the Selling
Stockholder will pay or cause to be paid all costs and expenses incident to the
performance of the Selling Stockholder's obligations hereunder which are not
otherwise specifically provided for in this Section, including (i) any fees and
expenses of counsel for the Selling Stockholder, and (ii) all expenses and taxes
incident to the sale and delivery of the Optional Shares to be sold by the
Selling Stockholder to the Underwriters hereunder. It is understood, however,
that the Company shall bear, and the Selling Stockholder shall not be required
to pay or to reimburse the Company for, the cost of any other matters not
directly relating to the sale and purchase of the Shares pursuant to this
Agreement, and that, except as provided in this Section, and Sections 8 and 11
hereof, the Underwriters will pay all of their own costs and expenses, including
the fees and expenses of their counsel, stock transfer taxes on resale of any of
the Shares by them,
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and any advertising expenses connected with any offers they may make. If a
separate agreement exists between the Company and the Selling Stockholder which
allocates such costs and expenses in a manner different from that set forth
above, such agreement shall control as between the Company and the Selling
Stockholder only, but such agreement shall not modify the obligations of the
Company and the Selling Stockholder to the Underwriters to cause the payment of
costs and expenses as set forth above.
7. The obligations of the Underwriters hereunder, as to the Shares to
be delivered at each Time of Delivery, shall be subject, in their discretion, to
the condition that all representations and warranties and other statements of
the Company and of the Selling Stockholder herein are, at and as of such Time of
Delivery, true and correct, the condition that the Company and the Selling
Stockholder each shall have performed all of its obligations hereunder
theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed for such
filing by the rules and regulations under the Act and in accordance with Section
5(a) hereof; if the Company has elected to rely upon Rule 462(b), the Rule
462(b) Registration Statement shall have become effective by 10:00 p.m.,
Washington, D.C. time, on the date of this Agreement; no stop order suspending
the effectiveness of the Registration Statement or any part thereof shall have
been issued and no proceeding for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P., counsel for the Underwriters,
shall have furnished to you such opinion or opinions, dated such Time of
Delivery, with respect to certain of the matters covered in paragraphs (i) and
(ii) of subsection (c) below and paragraph (i) of subsection (n) below as well
as such other related matters as you may reasonably request, and such counsel
shall have received such papers and information as they may reasonably request
to enable them to pass upon such matters. Such counsel shall also state in such
opinion the following: Because the primary purpose of our engagement was not to
establish or confirm factual matters or financial or accounting matters and
because of the wholly or partially non-legal character of many of the statements
contained in the Registration Statement and the Prospectus, we are not passing
upon and do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus, and we have not independently verified the accuracy, completeness or
fairness of such statements. Without limiting the foregoing, we assume no
responsibility for, have not independently verified and have not been asked to
comment on the accuracy, completeness or fairness of the financial statements,
schedules and other financial data or information pertaining to natural resource
reserves included in the Registration Statement or the exhibits to the
Registration Statement, and we have not examined the accounting, financial or
other records from which such financial statements, schedules and other
financial data and information were derived. We note that, although certain
portions of the Registration Statement (including financial statements and
supporting schedules and related data and reports pertaining to natural resource
reserves) have been included therein on the authority of "experts" within the
meaning of the Act, we are not experts with respect to any portion of the
Registration Statement, including,
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without limitation, such financial statements and supporting schedules and
related data and other financial or accounting data and information pertaining
to natural resource reserves included therein. However, we have participated in
conferences with officers and other representatives of the Company and the
Selling Stockholder, including their respective counsel, representatives of the
Company's accountants and of the Selling Stockholder and your representatives at
which the contents of the Registration Statement and the Prospectus and related
matters were discussed. Based upon such participation and review, and relying as
to materiality in part upon the factual statements of officers and other
representatives of the Company and upon your representatives and of the Selling
Stockholder, we advise you that no facts have come to our attention that have
caused us to believe that the Registration Statement and any further amendment
thereto made by the Company prior to the date of this opinion (except for the
financial statements, schedules and related data and other financial or
accounting data, information pertaining to natural resource reserves or
exhibits, as to which we have not been asked to comment), at the time it became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus and any further
amendment or supplement thereto made by the Company prior to the date of this
opinion (except for the financial statements, schedules and related data and
other financial or accounting data, information pertaining to natural resource
reserves or exhibits, as to which we have not been asked to comment), as of the
date of such Prospectus and, as so amended or supplemented, as of the date of
this opinion, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not misleading;
(c) Fulbright & ▇▇▇▇▇▇▇▇ L.L.P., counsel for the Company, shall have
furnished to you such written opinion, dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The Company has an authorized capitalization as set forth
in the Prospectus, (including the Shares being delivered at such Time
of Delivery) and the Shares have been duly authorized and validly
issued and are fully paid and non-assessable and conform to the
description of the Stock contained in the Prospectus;
(ii) This Agreement has been duly authorized, executed and
delivered by the Company;
(iii) The statements set forth in the Prospectus under the
caption "Description of Common Stock," insofar as they purport to
constitute a summary of the terms of the Stock, are accurate in all
material respects;
(iv) The Company is not, and after the consummation of the
sale of the Shares contemplated by this Agreement and the consummation
of the sale of the Notes contemplated by the Notes Underwriting
Agreement will not be, an "investment company" or an entity
"controlled" by an "investment company," as such terms are defined in
the Investment Company Act;
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(v) The Company is not subject to, or is exempt from,
regulation as a "holding company" or a "subsidiary company" of a
"holding company," in each case as such terms are defined in the Public
Utility Holding Company Act of 1935, as amended;
(vi) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company prior to
such Time of Delivery (other than the financial statements and related
schedules, reports of experts pertaining to natural resource reserves
and other information of a financial or natural resource reserve nature
included therein, as to which such counsel need express no opinion)
appear on their face to comply as to form in all material respects with
the requirements of the Act and the rules and regulations thereunder;
and such counsel does not know of any amendment to the Registration
Statement required to be filed.
Such counsel shall also state in such opinion the following: We have
participated in conferences with officers and other representatives of the
Company and counsel for and representatives of the Underwriters and the Selling
Stockholder at which the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although we are not passing
upon and do not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the
Prospectus (except to the extent specified in paragraph (iii) of this letter),
on the basis of the foregoing (relying, to the extent we deem appropriate, as to
facts necessary to the determination of materiality upon the opinions of
officers and other representatives of the Company), no facts have come to our
attention that lead us to believe that at its effective date the Registration
Statement contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the statements
therein not misleading or that, as of the date of the Prospectus or as of the
date hereof, the Prospectus contained or contains an untrue statement of a
material fact or omitted or omits to state a material fact necessary to make the
statements therein, in the light of circumstances under which they are made, not
misleading (except as to financial statements and schedules, natural resource
reserve reports or other financial and reserve data included in the Registration
Statement or the Prospectus, as to which we do not comment).
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction other than Texas, the Delaware
General Corporation Laws (the "DGCL") and the United States.
(d) ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇., Executive Vice President and General
Counsel of the Selling Stockholder, shall have furnished to you his written
opinion, dated such Time of Delivery, in form and substance satisfactory to you,
to the effect that:
(i) This Agreement has been duly authorized, executed and
delivered by the Selling Stockholder; and the sale of the Shares to be
sold by the Selling Stockholder hereunder and the compliance by the
Selling Stockholder with all of the provisions of this Agreement and
the Notes Underwriting Agreement and the consummation of the
transactions herein and therein contemplated will not conflict with or
result in a breach or violation of any terms or provisions of, or
constitute a default under, any statute, indenture, mortgage, deed
-15-
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of trust, loan agreement or other agreement or instrument known to such
counsel to which the Selling Stockholder or any of its subsidiaries is
a party or by which the Selling Stockholder or any of its subsidiaries
is bound, or to which any of the property or assets of the Selling
Stockholder or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the Restated Articles of
Incorporation or By-laws of such Selling Stockholder or the charter
documents or by-laws of any of its subsidiaries or any order, rule or
regulation known to such counsel of any court or governmental agency or
body having jurisdiction over the Selling Stockholder or the property
of such Selling Stockholder;
(ii) No consent, approval, authorization or order of any court
or governmental agency or body is required for the consummation of the
transactions contemplated by this Agreement in connection with the
Shares to be sold by such Selling Stockholder hereunder, except which
have been duly obtained and are in full force and effect, such as have
been obtained under the Act and such as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of such Shares by the Underwriters;
(iii) Immediately prior to such Time of Delivery the Selling
Stockholder had good and valid title to the Shares to be sold at such
Time of Delivery by the Selling Stockholder under this Agreement, free
and clear of all liens, encumbrances, equities or claims, and full
right, power and authority to sell, assign, transfer and deliver the
Shares to be sold by the Selling Stockholder hereunder;
(iv) Good and valid title to such Shares, free and clear of
all liens, encumbrances, equities or claims, has been transferred to
each of the several Underwriters who have purchased such Shares in good
faith and without notice of any such lien, encumbrance, equity or claim
or any other adverse claim within the meaning of the Uniform Commercial
Code.
In rendering such opinion, such counsel may state that he expresses no opinion
as to the laws of any jurisdiction other than Texas, the Oregon Business
Corporation Act, the DGCL, and the United States and may rely, as to matters of
New York law, on an opinion of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇▇▇, L.L.P.
delivered therewith.
(e) On the date of the Prospectus at a time prior to the execution
of this Agreement, at 9:30 a.m., New York City time, on the effective date of
any post-effective amendment to the Registration Statement filed subsequent to
the date of this Agreement and also at each Time of Delivery, ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
LLP shall have furnished to you a letter or letters, dated the respective dates
of delivery thereof, in form and substance satisfactory to you, to the effect
set forth in Annex I hereto (the executed copy of the letter delivered prior to
the execution of this Agreement is attached as Annex I(a) hereto and a draft of
the form of letter to be delivered on the effective date of any post-effective
amendment to the Registration Statement and as of each Time of Delivery is
attached as Annex I(b) hereto);
(f) (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
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Prospectus any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise than as set
forth or contemplated in the Prospectus, and (ii) since the respective dates as
of which information is given in the Prospectus there shall not have been any
change in the capital stock or long-term debt of the Company or any of its
subsidiaries or any change, or any development involving a prospective change,
in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, otherwise than as set forth or contemplated in the Prospectus, the
effect of which, in any such case described in Clause (i) or (ii), is in the
judgment of the representatives of the Underwriters (the "Representatives") so
material and adverse as to make it impracticable or inadvisable to proceed with
the public offering or the delivery of the Shares being delivered at such Time
of Delivery on the terms and in the manner contemplated in the Prospectus;
(g) On or after the date hereof (i) no downgrading shall have
occurred in the rating accorded the Company's debt securities by any "nationally
recognized statistical rating organization," as that term is defined by the
Commission for purposes of Rule 436(g)(2) under the Act, 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 Company's
debt securities;
(h) On or after the date hereof there shall not have occurred any of
the following: (i) a suspension or material limitation in trading in securities
generally on the Exchange; (ii) a suspension or material limitation in trading
in the Company's securities on the Exchange; (iii) a general moratorium on
commercial banking activities declared by either Federal or New York State
authorities; or (iv) the outbreak or escalation of hostilities involving the
United States or the declaration by the United States of a national emergency or
war, if the effect of any such event specified in this Clause (iv) in the
judgment of the Representatives makes it impracticable or inadvisable to proceed
with the public offering or the delivery of the Shares being delivered at such
Time of Delivery on the terms and in the manner contemplated in the Prospectus;
(i) The Shares to be sold by the Company or the Selling Stockholder,
as the case may be, at such Time of Delivery shall have been duly listed on the
Exchange;
(j) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from the Company's directors and executive
officers to the effect set forth in Subsection 5(e) hereof in form and substance
satisfactory to you;
(k) The Company and the Selling Stockholder shall have furnished or
caused to be furnished to you at such Time of Delivery certificates of officers
of the Company and the Selling Stockholder, respectively, satisfactory to you as
to the accuracy of the representations and warranties of the Company and the
Selling Stockholder, respectively, herein at and as of such Time of Delivery, as
to the performance by the Company and the Selling Stockholder of all of their
respective obligations hereunder to be performed at or prior to such Time of
Delivery, and as to such other matters as you may reasonably request, and the
Company shall have furnished or caused to be furnished certificates as to the
matters set forth in subsections (a) and (f) of this Section, and as to such
other matters as you may reasonably request;
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(l) The Company shall have complied with the provisions of Section
5(c) hereof with respect to the furnishing of prospectuses on the New York
Business Day next succeeding the date of this Agreement; and
(m) The closing of the transactions contemplated by the Share
Exchange Agreement shall have been completed.
(n) ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇., Senior Vice President and General Counsel
of the Company, shall have furnished to you such written opinion, dated such
Time of Delivery, in form and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the State
of Delaware, with all necessary corporate power and authority to own
its properties and conduct its business as described in the Prospectus;
(ii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company (including the Shares being delivered at such Time of Delivery)
have been duly and validly authorized and issued and are fully paid and
non-assessable; and the Shares conform to the description of the Stock
contained in the Prospectus;
(iii) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties or conducts any business so as to require such
qualification, or is subject to no material liability or disability by
reason of failure to be so qualified in any such jurisdiction (such
counsel being entitled to rely in respect of the opinion in this clause
upon opinions of local counsel and in respect of matters of fact upon
certificates of officers of the Company, provided that such counsel
shall state that such counsel believes that both you and such counsel
are justified in relying upon such opinions and certificates);
(iv) Each Material Subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its jurisdiction of incorporation and has been duly
qualified as a foreign corporation for the transaction of business and
is in good standing under the laws of each other jurisdiction in which
it owns or leases properties, or conducts any business, so as to
require such qualification, or is subject to no material liability or
disability by reason of failure to be so qualified in any such
jurisdiction; and all of the issued shares of capital stock of each
such subsidiary have been duly and validly authorized and issued, are
fully paid and non-assessable, and (except for directors' qualifying
shares) are owned directly or indirectly by the Company, free and clear
of all liens, encumbrances, equities or claims (such counsel being
entitled to rely in respect of the opinion in this clause upon opinions
of local counsel and in respect of matters of fact upon certificates of
officers of the Company or its subsidiaries, provided that such counsel
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shall state that such counsel believes that both you and such counsel
are justified in relying upon such opinions and certificates);
(v) To such counsel's knowledge and other than as set forth in
the Prospectus, there are no legal or governmental proceedings pending
to which the Company or any of its subsidiaries is a party or of which
any property of the Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of its
subsidiaries, would individually or in the aggregate have a material
adverse effect on the current or future consolidated financial
position, stockholders' equity or results of operations of the Company
and its consolidated subsidiaries, taken as a whole; and, to the best
of such counsel's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(vi) This Agreement has been duly authorized, executed and
delivered by the Company;
(vii) The compliance by the Company with all of the provisions
of this Agreement and the Notes Underwriting Agreement and the
consummation of the transactions herein and therein contemplated will
not conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, loan agreement or other agreement or
instrument known to such counsel to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, nor will such action
result in any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or the charter or by-laws of
any of its subsidiaries or any statute or any order, rule or regulation
known to such counsel of any court or governmental agency or body
having jurisdiction over the Company or any of its subsidiaries or any
of their properties;
(viii) No consent, approval, authorization, order,
registration or qualification of or with any such court or governmental
agency or body is required for the sale of the Shares or the
consummation by the Company of the transactions contemplated by this
Agreement, except such as have been obtained under the Act, and such
consents, approvals, authorizations, registrations or qualifications as
may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the Underwriters;
(ix) The documents incorporated by reference in the Prospectus
or any further amendment or supplement thereto made by the Company
prior to such Time of Delivery (other than the financial statements and
related schedules, reports of experts pertaining to natural resource
reserves and other information of a financial or natural resource
reserve nature included therein, as to which such counsel need express
no opinion), when they became effective or were filed with the
Commission, as the case may be, appeared on their face to comply as to
form in all material respects with the requirements of the Act or the
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Exchange Act, as applicable, and the rules and regulations of the
Commission thereunder; and
In rendering such opinion, such counsel may state that he expresses no
opinion as to the laws of any jurisdiction other than Texas, the DGCL and the
United States.
8. (a) The Company and the Selling Stockholder, jointly and severally,
will indemnify and hold harmless each Underwriter against any losses, claims,
damages or liabilities, joint or several, to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the omission
or alleged omission to state therein a material fact required to be stated
therein or necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses reasonably incurred
by such Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that the
Company and the Selling Stockholder shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises out of or is based
upon an untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon and in
conformity with written information furnished to the Company by any Underwriter
through ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. expressly for use therein; and provided, further,
that the Company and the Selling Stockholder shall not be liable to any
Underwriter under this indemnity agreement in this subsection (a) with respect
to any Preliminary Prospectus to the extent that any such loss, claim, damage or
liability of such Underwriter results from the fact such Underwriter sold Shares
to a person as to whom it shall be established that there was not sent or given,
at or prior to the written confirmation of such sale, a copy of the Prospectus
or of the Prospectus as then amended or supplemented in any case where such
delivery is required by the Act if the Company has previously furnished copies
thereof to such Underwriter and the loss, claim, damage or liability of such
Underwriter results from an untrue statement or omission of a material fact
contained in the Preliminary Prospectus which was corrected in the Prospectus or
in the Prospectus as then amended or supplemented and delivered to the
Underwriter.
(b) Each Underwriter will indemnify and hold harmless the Company
and the Selling Stockholder against any losses, claims, damages or liabilities
to which the Company or the Selling Stockholder may become subject, under the
Act or otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue statement
or alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through ▇▇▇▇▇▇▇, Sachs & Co.
expressly for use
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therein; and will reimburse the Company and the Selling Stockholder for any
legal or other expenses reasonably incurred by the Company or the Selling
Stockholder in connection with investigating or defending any such action or
claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such indemnified
party shall, if a claim in respect thereof is to be made against an indemnifying
party under such subsection, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the indemnifying party shall
not relieve it from any liability which it may have to any indemnified party
otherwise than under such subsection. In case any such action shall be brought
against any indemnified party and it shall notify the indemnifying party of the
commencement thereof, the indemnifying party shall be entitled to participate
therein and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof, with
counsel satisfactory to such indemnified party (which shall not, except with the
consent of the indemnified party, be counsel to the indemnifying party), and,
after notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party shall not be
liable to such indemnified party under such subsection for any legal expenses of
other counsel or any other expenses, in each case subsequently incurred by such
indemnified party, in connection with the defense thereof other than reasonable
costs of investigation. No indemnifying party shall, without the written consent
of the indemnified party, effect the settlement or compromise of, or consent to
the entry of any judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may be sought
hereunder (whether or not the indemnified party is an actual or potential party
to such action or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from all liability
arising out of such action or claim and (ii) does not include a statement as to
or an admission of fault, culpability or a failure to act, by or on behalf of
any indemnified party. Further, an indemnifying party shall not be liable for
any settlement of any action or claim effected without its consent, which
consent shall not be unreasonably withheld.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party under
subsection (a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or payable by such
indemnified party as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholder on the one
hand and the Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding sentence is not
permitted by applicable law or if the indemnified party failed to give the
notice required under subsection (c) above, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative benefits but also
the relative fault of the Company and the Selling Stockholder on the one hand
and the Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Stockholder on the one
hand and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from
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the offering of the Shares purchased under this Agreement (before deducting
expenses) received by the Company and the Selling Stockholder bear to the total
underwriting discounts and commissions received by the Underwriters with respect
to the Shares purchased 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, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to state
a material fact relates to information supplied by the Company or the Selling
Stockholder on the one hand or the Underwriters on the other and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Selling Stockholder and the
Underwriters agree that it would not be just and equitable if contributions
pursuant to this subsection (d) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or by any other
method of allocation which does not take account of the equitable considerations
referred to above in this subsection (d). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or liabilities (or
actions in respect thereof) referred to above in this subsection (d) shall be
deemed to include any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any such action
or claim. Notwithstanding the provisions of this subsection (d), no Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the Shares underwritten by it and distributed to the public
were offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this subsection
(d) to contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company and the Selling Stockholder under
this Section 8 shall be in addition to any liability which the Company and the
Selling Stockholder may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any, who controls any Underwriter within the
meaning of the Act; and the obligations of the Underwriters under this Section 8
shall be in addition to any liability which the respective Underwriters may
otherwise have and shall extend, upon the same terms and conditions, to each
officer and director of the Company and to each person, if any, who controls the
Company or the Selling Stockholder within the meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to purchase
the Shares which it has agreed to purchase hereunder at a Time of Delivery, you
may in your discretion arrange for you or another party or other parties to
purchase such Shares on the terms contained herein. If within thirty-six hours
after such default by any Underwriter you do not arrange for the purchase of
such Shares, then the Company or the Selling Stockholder, as the case may be,
shall be entitled to a further period of thirty-six hours within which to
procure another party or other parties satisfactory to you to purchase such
Shares on such terms. In the event that, within the respective prescribed
periods, you notify the Company or the Selling Stockholder, as the case may be,
that you have so arranged for the purchase of such Shares, or the Company or
-22-
23
the Selling Stockholder, as the case may be, notifies you that it has so
arranged for the purchase of such Shares, you or the Company or the Selling
Stockholder, as the case may be, shall have the right to postpone such Time of
Delivery for a period of not more than seven days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or the
Prospectus, or in any other documents or arrangements, and the Company agrees to
file promptly any amendments to the Registration Statement or the Prospectus
which in your opinion may thereby be made necessary. The term "Underwriter" as
used in this Agreement shall include any person substituted under this Section
with like effect as if such person had originally been a party to this Agreement
with respect to such Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company or
the Selling Stockholder, as the case may be, as provided in subsection (a)
above, the aggregate number of such Shares which remains unpurchased does not
exceed one-eleventh of the aggregate number of all of the Shares to be purchased
at such Time of Delivery, then the Company or the Selling Stockholder, as the
case may be, shall have the right to require each non-defaulting Underwriter to
purchase the number of Shares which such Underwriter agreed to purchase
hereunder at such Time of Delivery and, in addition, to require each
non-defaulting Underwriter to purchase its pro rata share (based on the number
of Shares which such Underwriter agreed to purchase hereunder) of the Shares of
such defaulting Underwriter or Underwriters for which such arrangements have not
been made; but nothing herein shall relieve a defaulting Underwriter from
liability for its default.
(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company or
the Selling Stockholder, as the case may be, as provided in subsection (a)
above, the aggregate number of such Shares which remains unpurchased exceeds
one-eleventh of the aggregate number of all of the Shares to be purchased at
such Time of Delivery, or if the Company or the Selling Stockholder, as the case
may be, shall not exercise the right described in subsection (b) above to
require non-defaulting Underwriters to purchase Shares of a defaulting
Underwriter or Underwriters, then this Agreement (or, with respect to the Second
Time of Delivery, the obligations of the Underwriters to purchase and of the
Selling Stockholder to sell the Optional Shares) shall thereupon terminate,
without liability on the part of any non-defaulting Underwriter or the Company
or the Selling Stockholder, except for the expenses to be borne by the Company
and the Selling Stockholder and the Underwriters as provided in Section 6 hereof
and the indemnity and contribution agreements in Section 8 hereof; but nothing
herein shall relieve a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations, warranties
and other statements of the Company, the Selling Stockholder and the several
Underwriters, as set forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or any controlling person of any
Underwriter, or the Company, or the Selling Stockholder, or any officer or
director or controlling person of the Company or the Selling Stockholder, and
shall survive delivery of and payment for the Shares.
Anything herein to the contrary notwithstanding, the indemnity
agreement of the Company in subsection (a) of Section 8 hereof, the
representations and warranties in subsections (a)(ii), (a)(iii)
-23-
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and (a)(iv) of Section 1 hereof and any representation or warranty as to the
accuracy of the Registration Statement or the Prospectus contained in any
certificate furnished by the Company pursuant to Section 7 hereof, the indemnity
agreement of the Selling Stockholder in subsection (a) of Section 8 hereof, the
representations and warranties in subsection (b)(vi) of Section 1 hereof and any
representation or warranty as to the accuracy of the Registration Statement or
the Prospectus contained in any certificate furnished by the Selling Stockholder
pursuant to Section 7 hereof, insofar as they may constitute a basis for
indemnification for liabilities (other than payment by the Company of expenses
incurred or paid in the successful defense of any action, suit or proceeding)
arising under the Act, shall not extend to the extent of any interest therein of
a controlling person or partner of an Underwriter who is a director, officer or
controlling person of the Company when the Registration Statement has become
effective, except in each case to the extent that an interest of such character
shall have been determined by a court of appropriate jurisdiction as not against
public policy as expressed in the Act. Unless in the opinion of counsel for the
Company the matter has been settled by controlling precedent, the Company will,
if a claim for such indemnification is asserted, submit to a court of
appropriate jurisdiction the question of whether such interest is against public
policy as expressed in the Act and will be governed by the final adjudication of
such issue.
11. If this Agreement shall be terminated pursuant to Section 9 hereof,
neither the Company nor the Selling Stockholder shall then be under any
liability to any Underwriter except as provided in Sections 6 and 8 hereof; but,
if for any other reason any Shares are not delivered by or on behalf of the
Company or the Selling Stockholder, as the case may be, as provided herein, the
Company will reimburse the Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for the
purchase, sale and delivery of the Shares not so delivered, but the Company and
the Selling Stockholder shall then be under no further liability to any
Underwriter in respect of the Shares not so delivered except as provided in
Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of the
Underwriters, and the parties hereto shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of any Underwriter made or
given by ▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co. on behalf of you.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex or
facsimile transmission to you as the representatives in care of ▇▇▇▇▇▇▇, Sachs &
Co., ▇▇ ▇▇▇ ▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, Attention: Registration
Department, Facsimile Number (▇▇▇) ▇▇▇-▇▇▇▇; if to the Selling Stockholder shall
be delivered or sent by mail, telex or facsimile transmission to the Selling
Stockholder, Attention: Senior Vice President-Finance and Treasurer, Facsimile
Number (▇▇▇) ▇▇▇-▇▇▇▇, at its address set forth in Schedule II hereto; and if to
the Company shall be delivered or sent by mail, telex or facsimile transmission
to the address of the Company set forth in the Registration Statement,
Attention: Vice President, Finance/Planning and Treasurer, Facsimile Number
(▇▇▇) ▇▇▇-▇▇▇▇; provided, however, that any notice to an Underwriter pursuant to
Section 8 (c) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its Underwriters'
Questionnaire or telex constituting such Questionnaire,
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which address will be supplied to the Company or the Selling Stockholder by you
upon request. Any such statements, requests, notices or agreements shall take
effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters and the Company and the Selling Stockholder and, to
the extent provided in Sections 8 and 10 hereof, the officers and directors of
the Company and each person who controls the Company, the Selling Stockholder or
any Underwriter, and their respective heirs, executors, administrators,
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. No purchaser of any of the Shares from any
Underwriter shall be deemed a successor or assign by reason merely of such
purchase.
14. Time shall be of the essence of this Agreement. As used herein, the
term "business day" shall mean any day when the Commission's office in
Washington, D.C. is open for business.
15. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE
WITH THE LAWS OF THE STATE OF NEW YORK.
16. As used herein, the terms "Material Subsidiary" or "Material
Subsidiaries" shall include any subsidiary of the Company, the assets,
operations, financial position or results of operations of which are material to
the Company. At the date hereof, Enron Oil & Gas International, Inc., EOG-
Canada, Inc., Enron Oil Canada, Ltd., Enron Gas & Oil Trinidad Limited, Enron
Oil & Gas India Ltd. and Enron Oil & Gas Marketing, Inc. are the only Material
Subsidiaries.
17. This Agreement may be executed by any one or more of the parties
hereto in any number of counterparts, each of which shall be deemed to be an
original, but all such counterparts shall together constitute one and the same
instrument.
If the foregoing is in accordance with your understanding, please sign
and return to us 12 counterparts hereof, and upon the acceptance hereof by you,
on behalf of each of the Underwriters, this letter and such acceptance hereof
shall constitute a binding agreement among each of the Underwriters, the Company
and the Selling Stockholder. It is understood that your acceptance of this
letter on behalf of each of the Underwriters is pursuant to the authority set
forth in a form of
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Agreement among Underwriters, the form of which shall be submitted to the
Company and the Selling Stockholder for examination upon request, but without
warranty on your part as to the authority of the signers thereof.
Very truly yours,
Enron Oil & Gas Company
By:
-------------------------------------
Name:
Title:
Enron Corp.
By:
-------------------------------------
Name:
Title:
Accepted as of the date hereof at New York, New York:
▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.
Banc of America Securities LLC
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
a division of ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated
▇▇▇▇▇▇ Brothers Inc.
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated
PaineWebber Incorporated
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc.
Warburg Dillon Read LLC,
By:
-----------------------------------------
(▇▇▇▇▇▇▇, ▇▇▇▇▇ & Co.)
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27
SCHEDULE I
NUMBER OF
OPTIONAL SHARES
TOTAL NUMBER OF TO BE PURCHASED
TOTAL NUMBER OF FIRM SHARES TO BE FROM THE SELLING
FIRM SHARES TO PURCHASED FROM THE STOCKHOLDER IF
BE PURCHASED SELLING MAXIMUM OPTION
UNDERWRITER FROM THE COMPANY STOCKHOLDER EXERCISED
----------- ---------------- ------------------ -----------------
▇▇▇▇▇▇▇, Sachs & Co.....................................
Banc of America Securities LLC..........................
▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇,
a division of ▇▇▇▇ ▇▇▇▇▇▇▇▇ Incorporated.............
▇▇▇▇▇▇ Brothers Inc.....................................
▇▇▇▇▇▇▇ Lynch, Pierce, ▇▇▇▇▇▇ & ▇▇▇▇▇
Incorporated................................
PaineWebber Incorporated................................
▇▇▇▇▇▇▇ ▇▇▇▇▇ Barney Inc................................
Warburg Dillon Read LLC.................................
----------- -------------
Total......................................... 27,000,000
28
ANNEX I
Pursuant to Section 7(f) of the Underwriting Agreement, the accountants
shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with
respect to the Company and its subsidiaries within the meaning of the
Act and the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) audited by
them and included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act or the Exchange
Act, as applicable, and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance
with standards established by the American Institute of Certified
Public Accountants of the consolidated interim financial statements,
selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such
letter, as indicated in their reports thereon, copies of which have
been separately furnished to the Representatives;
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included in the Company's Quarterly
Reports on Form 10-Q incorporated by reference into the Prospectus; and
on the basis of specified procedures including inquiries of officials
of the Company who have responsibility for financial and accounting
matters regarding whether the unaudited condensed consolidated
financial statements referred to in paragraph (v)(A)(i) below comply as
to form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related published
rules and regulations, nothing came to their attention that caused them
to believe that the unaudited condensed consolidated financial
statements do not comply as to form in all material respects with the
applicable accounting requirements of the Act and the Exchange Act and
the related published rules and regulations;
(iv) The unaudited selected financial information with respect
to the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus and included or incorporated by reference in Item 6 of the
Company's Annual Report on Form 10-K for the most recent fiscal year
agrees with the corresponding amounts (after restatement where
applicable) in the audited consolidated financial statements for such
five fiscal years which were included or incorporated by reference in
the Company's Annual Reports on Form 10-K for such fiscal years;
29
(v) On the basis of limited procedures, not constituting an
audit in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and certain of its
subsidiaries since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus, inquiries of
officials of the Company and its subsidiaries responsible for financial
and accounting matters and such other inquiries and procedures as may
be specified in such letter, nothing came to their attention that
caused them to believe that:
(A) (i) the unaudited condensed consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus and/or included or incorporated by reference in the
Company's Quarterly Reports on Form 10-Q incorporated by
reference in the Prospectus do not comply as to form in all
material respects with the applicable accounting requirements
of the Exchange Act and the related published rules and
regulations, or (ii) any material modifications should be made
to the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus or included in the
Company's Quarterly Reports on Form 10-Q incorporated by
reference in the Prospectus, for them to be in conformity with
generally accepted accounting principles;
(B) any unaudited pro forma consolidated condensed
financial statements included or incorporated by reference in
the Prospectus do not comply as to form in all material
respects with the applicable accounting requirements of the
Act and the published rules and regulations thereunder or the
pro forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(C) as of a specified date not more than five days
prior to the date of such letter, there have been any changes
in the consolidated capital stock or any increase in the
consolidated long-term debt of the Company and its
subsidiaries, or any decreases in consolidated net assets or
other items specified by the Representatives, or any increases
in any items specified by the Representatives, in each case as
compared with amounts shown in the latest balance sheet
included or incorporated by reference in the Prospectus,
except in each case for changes, increases or decreases which
the Prospectus discloses have occurred or may occur or which
are described in such letter; and
(D) for the period from the date of the latest
financial statements included or incorporated by reference in
the Prospectus to the specified date referred to in Clause (C)
there were any decreases in consolidated net operating
revenues or operating income or the total or per share amounts
of consolidated net income or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, in each case as compared with the
comparable period of the
A-2
30
preceding year and with any other period of corresponding
length specified by the Representatives, except in each case
for increases or decreases which the Prospectus discloses have
occurred or may occur or which are described in such letter;
(vi) On the basis of limited procedures not constituting an
audit in accordance with generally-accepted auditing standards
consisting of a reading of the unaudited consolidated condensed pro
forma statements, inquiries of officials of the Company who have
responsibility for financial and accounting matters regarding the basis
for their pro forma adjustments and whether the unaudited consolidated
condensed pro forma financial statements comply as to form in all
material respects with the applicable accounting requirements of Rule
11-02 of Regulation S-X and proving the arithmetic accuracy of the
application of the pro forma adjustments to the historical amounts,
that nothing came to their attention that caused them to believe that
the unaudited consolidated condensed financial statements do not comply
as to form in all material respects with the applicable accounting
requirements of Rule 11-02 of Regulation S-X and that the pro forma
adjustments have not been properly applied to the historical amounts in
the compilation of those statements; and
(vii) In addition to the audit referred to in their report(s)
included or incorporated by reference in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other procedures
referred to in paragraphs (iii) and (v) above, they have carried out
certain specified procedures, not constituting an audit in accordance
with generally accepted auditing standards, with respect to certain
amounts, percentages and financial information specified by the
Representatives which are derived from the general accounting records
of the Company and its subsidiaries, which appear in the Prospectus
(excluding documents incorporated by reference) or in Part II of, or in
exhibits and schedules to, the Registration Statement specified by the
Representatives or in documents incorporated by reference in the
Prospectus specified by the Representatives, and have compared certain
of such amounts, percentages and financial information with the
accounting records of the Company and its subsidiaries and have found
them to be in agreement.
