AS FILED WITH THE SECURITIES AND EXCHANGE COMMISSION ON JUNE 25, 1997
REGISTRATION NO. 333-27885
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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
AMENDMENT NO. 2
TO
FORM S-1
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
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MIDCOAST ENERGY RESOURCES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
NEVADA 4922
(STATE OR OTHER JURISDICTION OF (PRIMARY STANDARD INDUSTRIAL
INCORPORATION OR ORGANIZATION) CLASSIFICATION CODE NUMBER)
76-0378638
(I.R.S. EMPLOYER
IDENTIFICATION NO.)
1100 LOUISIANA, SUITE 2950
HOUSTON, TEXAS 77002
PHONE: (713) 650-8900
FAX: (713) 650-3232
(ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE, OF
REGISTRANTS PRINCIPAL EXECUTIVE OFFICES)
------------------------
DAN C. TUTCHER
PRESIDENT AND CHIEF EXECUTIVE OFFICER
MIDCOAST ENERGY RESOURCES, INC.
1100 LOUISIANA, SUITE 2950
HOUSTON, TEXAS 77002
PHONE: (713) 650-8900
FAX: (713) 650-3232
(NAME, ADDRESS, INCLUDING ZIP CODE, AND TELEPHONE NUMBER, INCLUDING AREA CODE,
OF AGENT FOR SERVICE)
------------------------
COPIES TO:
ROBERT G. REEDY JAMES M. PRINCE
PORTER & HEDGES, L.L.P. ANDREWS & KURTH L.L.P.
700 LOUISIANA STREET, 35TH FLOOR 600 TRAVIS, SUITE 4200
HOUSTON, TEXAS 77002-2764 HOUSTON, TEXAS 77002
PHONE: (713) 226-0600 PHONE: (713) 220-4200
FAX: (713) 228-1331 FAX: (713) 220-4285
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APPROXIMATE DATE OF COMMENCEMENT OF PROPOSED SALE TO THE PUBLIC: As soon
as practicable after this Registration Statement becomes effective.
If any of the securities being registered on this Form are to be offered on
a delayed or continuous basis pursuant to Rule 415 under the Securities Act of
1933 check the following box. [ ]
If this Form is filed to register additional securities for an offering
pursuant to Rule 462(b) under the Securities Act of 1933, please check the
following box and list the Securities Act of 1933 registration statement number
of the earlier effective registration statement for the same offering. [ ]
If this Form is a post-effective amendment filed pursuant to Rule 462(c)
under the Securities Act of 1933, check the following box and list the
Securities Act of 1933 registration statement number of the earlier effective
registration statement for the same offering. [ ]
If delivery of the prospectus is expected to be made pursuant to Rule 434,
please check the following box. [ ]
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THE REGISTRANT HEREBY AMENDS THIS REGISTRATION STATEMENT ON SUCH DATE OR
DATES AS MAY BE NECESSARY TO DELAY ITS EFFECTIVE DATE UNTIL THE REGISTRANT SHALL
FILE A FURTHER AMENDMENT WHICH SPECIFICALLY STATES THAT THIS REGISTRATION
STATEMENT SHALL THEREAFTER BECOME EFFECTIVE IN ACCORDANCE WITH SECTION 8(A) OF
THE SECURITIES ACT OF 1933 OR UNTIL THE REGISTRATION STATEMENT SHALL BECOME
EFFECTIVE ON SUCH DATE AS THE COMMISSION, ACTING PURSUANT TO SAID SECTION 8(A),
MAY DETERMINE.
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<PAGE>
PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
ITEM 13. OTHER EXPENSES OF ISSUANCE AND DISTRIBUTION.
The estimated cash expenses to be incurred in connection with the
registration and distribution of the securities covered by this Registration
Statement are set forth below.
SEC Registration Fee................. $ 10,794
AMEX Additional Listing Fees......... 17,500
NASD Filing Fee...................... 4,062
Printing Expenses.................... 40,000
Legal Fees and Expenses.............. 110,000
Blue Sky Fees and Expenses (including
legal expenses).................... 0
Accounting Fees and Expenses......... 40,000
Transfer Agent and Registrar Fees and
Expenses........................... 3,500
Miscellaneous Expenses............... 59,144
---------
TOTAL........................... $ 285,000
=========
ITEM 14. INDEMNIFICATION OF DIRECTORS AND OFFICERS.
The NGCL provides that a corporation may indemnify any person who was or is
a party or is threatened to be made a party, by reason of the fact that such
person was an officer or director of such corporation, or is or was serving at
the request of such corporation as a director, officer, employee or agent of
another corporation, partnership, joint venture, trust or other enterprise, to
(x) any action or suit by or in the right of the corporation against expenses,
including amounts paid in settlement and attorneys' fees, actually and
reasonably incurred, in connection with the defense or settlement believed to be
in, or not opposed to, the best interests of the corporation, except that
indemnification may not be made for any claim, issue or matter as to which such
a person has been adjudged by a court of competent jurisdiction to be liable to
the corporation or for amounts paid in settlement to the corporation and (y) any
other action or suit or proceeding against expenses, including attorneys' fees,
judgments, fines and amounts paid in settlement, actually and reasonably
incurred, if he or she acted in good faith and in a manner which he or she
reasonably believed to be in, or not opposed to, reasonable cause to believe his
or her conduct was unlawful. To the extent that a director, officer, employee or
agent has been "successful on the merits or otherwise" the corporation must
indemnify such person. The articles of incorporation or bylaws may provide that
the expenses of officers and directors incurred in defending any such action
must be paid as incurred and in advance of the final disposition of such action.
The NGCL also permits the Registrant to purchase and maintain insurance on
behalf of the Registrant's directors and officers against any liability arising
out of their status as such, whether or not the Registrant would have the power
to indemnify him against such liability. These provisions may be sufficiently
broad to indemnify such persons for liabilities arising under the Securities
Act.
The Company's Articles and Bylaws provide that the Company shall, to the
fullest extent not prohibited by applicable law, indemnify any director or
officer of the Company in connection with certain actions, suits or proceedings,
against expenses, including attorney's fees, judgments, fines and amounts paid
in settlement actually and reasonably incurred. The Company is also required to
pay any expenses incurred by a director or officer in defending such an action,
in advance of the final disposition of such action. The Company's Articles and
Bylaws further provide that, by resolution of the Board, such benefits may be
extended to employees, agents or other representatives of the Company. In
addition, the Company's Articles and Bylaws provide that all rights to
indemnification and advancement of expenses are deemed to arise out of a
contract between the Company and each person to be indemnified which may be
evidenced by a separate contract between the Company and each such person.
II-1
<PAGE>
The NGCL provides that a corporation's articles of incorporation may
contain a provision which eliminates or limits the personal liability of a
director or officer to the corporation or its stockholders for damages for
breach of fiduciary duty as a director or officer, provided that such a
provision must not eliminate or limit the liability of a director or officer
for: (a) acts or omissions which involve intentional misconduct, fraud or a
knowing violation of law; or (b) the payment of illegal distributions. The
Company's Articles include a provision eliminating the personal liability of
directors for breach of fiduciary duty except that such provision will not
eliminate or limit any liability which may not be so eliminated or limited under
applicable law.
The Company's Bylaws provide that the Registrant may maintain insurance, at
its expense, to protect itself and any of its directors, officers, employees or
agents or any person serving at the request of the Registrant as a director,
officer, employee or agent of another corporation, partnership, joint venture,
trust or other enterprise, against any expense, liability or loss, whether or
not the Registrant would have the power to indemnify such person against such
expense, liability or loss under the NGCL.
Pursuant to certain indemnity agreements executed by each current director
and executive officer, the Company must indemnify, defend and hold harmless its
directors and officers from and against any loss, liability or claim arising out
of or relating to their capacities as such. There is in effect for the Company
an insurance policy providing directors and officers with indemnification,
subject to certain exclusions and to the extent not otherwise indemnified by the
Company, against loss (including expenses incurred in the defense of actions,
suits or proceedings in connection therewith) arising from any negligent act,
error, omission or breach of duty while acting in their capacity as directors
and officers of the Company. The policy also reimburses the Company for
liability incurred in the indemnification of its directors and officers.
Insofar as indemnification for liabilities arising under the Securities Act
may be permitted to directors, officers and controlling persons of the
registrant pursuant to the foregoing provisions, or otherwise, the registrant
has been advised that in the opinion of the Commission such indemnification is
against public policy as expressed in the Securities Act, and is, therefore,
unenforceable. In the event that a claim for indemnification against such
liabilities (other than the payment by the Registrant of expenses incurred or
paid by a director, officer or controlling person of the Registrant in the
successful defense of any action, suit or proceeding) is asserted by such
director, officer or controlling person in connection with the securities being
registered, the Registrant will, unless in the opinion of its counsel the matter
has been settled by controlling precedent, submit to a court of appropriate
jurisdiction the question whether such indemnification by it is against public
policy as expressed in the Securities Act, and will be governed by the final
adjudication of such issue.
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ITEM 15. RECENT SALES OF UNREGISTERED SECURITIES.
The following table reflects sales by the Company of unregistered
securities within the past three years. Except as otherwise disclosed, the
issuances by the Company of the securities sold in the transactions referenced
below were not registered under the Securities Act, pursuant to the exemption
contemplated in Section 4(2) thereof, for transactions not involving a public
offering. No underwriter was involved in the transactions and no commissions
were paid. The consideration for which the shares of Common Stock were issued is
indicated below:
<TABLE>
<CAPTION>
DATE SHARES CONSIDERATION PURCHASER
- ------------------------------------- --------- -------------- ---------------------------------------
<S> <C> <C> <C>
April 17, 1995....................... 44,609 Services I.J. Berthelot II
April 30, 1995....................... 446 Services I.J. Berthelot II
446 Services Richard A. Robert
446 Services Bill G. Bray
August 1, 1995....................... 446 Services Duane S. Herbst
446 Services Donna J. Haddock
446 Services Barbara A. Jordan
446 Services Kathy C. Smith
September 20, 1995................... 13,382 Services I.J. Berthelot II
December 1, 1995..................... 446 Services Duane S. Herbst
446 Services I.J. Berthelot II
446 Services Richard A. Robert
446 Services Bill G. Bray
446 Services Ronald Harris
March 1, 1996........................ 4,460 Financing Rainbow
April 8, 1996........................ 892 Services Karen Callaway
334 Services Donna J. Haddock
446 Services Ronald Harris
2,676 Services Duane S. Herbst
446 Services Barbara A. Jordan
8,921 Services Richard A. Robert
557 Services Kathy C. Smith
April 17, 1996....................... 7,275 Services Bill G. Bray
4,460 Services Mark W. Fuqua
July 1, 1996......................... 2,007 Services E.P. Marinos
2,007 Services Richard W. Richards
</TABLE>
ITEM 16. EXHIBITS.
EXHIBITS DESCRIPTION
- -------------------------------------------------------------
**1.1 -- Underwriting Agreement by and among the Underwriters,
the Selling Stockholder and Midcoast Energy Resources,
Inc.
2.1 -- Agreement for Purchase and Sale of Stock dated
September 6, 1995, by and between Midcoast Holdings No.
One, Inc. and Koch Gateway Pipeline Company
(Incorporated by reference from Midcoast Form 10-KSB for
the fiscal year ended December 31, 1995, as Exhibit
10.25).
II-3
<PAGE>
2.2 -- First Amendment to Agreement for Purchase and Sale of
Stock dated September 6, 1995, by and between Midcoast
Holdings No. One, Inc. and Koch Gateway Pipeline Company
dated October 2, 1995 (Incorporated by reference from
Midcoast Form 10-KSB for the fiscal year ended December
31, 1995, as Exhibit 10.26).
2.3 -- Agreement for Purchase and Sale of Stock dated
September 13, 1995, by and between Five Flags Holding
Company and Midcoast Holdings No. One, Inc.
(Incorporated by reference from Midcoast Form 10-KSB for
the fiscal year ended December 31, 1995, as Exhibit
10.27).
2.4 -- Agreement for Purchase of Stock dated September 13,
1995, by and between Midcoast Holdings No. One, Inc. and
Rainbow Investments Company (Incorporated by reference
from Midcoast Form 10-KSB for the fiscal year ended
December 31, 1995, as Exhibit 10.28 ).
2.5 -- Agreement for Purchase and Sale of Stock dated July
27, 1995, by and between Williams Holdings of Delaware,
Inc. and Midcoast Holdings No. One, Inc. (Incorporated
by reference from Midcoast Form 8-K dated September 22,
1995).
2.6 -- Agreement for Sale and Purchase of Harmony Gas
Processing Plant and Related Gathering System dated
October 3, 1996, by and between Koch Hydrocarbon
Company, a division of Koch Industries, Inc. and
Midcoast Holdings No. One, Inc. (Incorporated by
reference from Midcoast Form 8-K dated October 21, 1996,
as Exhibit 2.1).
2.7 -- Stock Purchase Agreement dated March 18, 1997, by and
between Midcoast Energy Resources, Inc. and Atrion
Corporation. (Incorporated by reference from Midcoast
Form 10-KSB for the fiscal year ended December 31,
1996.)
3.1 -- Articles of Incorporation of Midcoast Energy
Resources, Inc. (Incorporated by reference from Midcoast
Form 10-KSB for the fiscal year ended December 31,
1992).
3.2 -- Certificate of Amendment of Articles of Incorporation
of Midcoast Energy Resources, Inc. (Incorporated by
reference from Midcoast Registration Statement on Form
SB-2 (No. 333-4643) dated August 8, 1996).
3.3 -- Bylaws of Midcoast Energy Resources, Inc.
(Incorporated by reference from Midcoast Form 10-KSB for
the fiscal year ended December 1, 1992).
4.1 -- Shareholder Agreement dated April 30, 1994, by and
between Midcoast Energy Resources, Inc. and Bill G. Bray
(Incorporated by reference from Midcoast Form 10-KSB for
the fiscal year ended December 31, 1994).
4.2 -- Shareholder Agreement dated April 30, 1994, by and
between Midcoast Energy Resources, Inc. and Duane S.
Herbst (Incorporated by reference from Midcoast Form
10-KSB for the fiscal year ended December 31, 1994).
4.3 -- Shareholder Agreement dated April 30, 1994, by and
between Midcoast Energy Resources, Inc. and Richard A.
Robert (Incorporated by reference from Midcoast Form
10-KSB for the fiscal year ended December 31, 1994).
4.4 -- Shareholder Agreement dated April 30, 1994, by and
between Midcoast Energy Resources, Inc. and I. J.
Berthelot, II (Incorporated by reference from Midcoast
Form 10-KSB for the fiscal year ended December 31,
1994).
4.5 -- Specimen Certificate for Shares of Common Stock, par
value $.01 per share. (Incorporated by reference from
Midcoast Registration Statement on Form SB-2 (No.
333-4643) dated August 8, 1996).
4.6 -- Representative's Warrants. (Incorporated by reference
from Midcoast Registration Statement on Form SB-2 (No.
333-4643) dated August 8, 1996).
4.7 -- Voting Proxy Agreement dated August 5, 1996, by and
between Midcoast Energy Resources, Inc., Stevens G.
Herbst, Kenneth B. Holmes, Jr., Rainbow Investments
Company and Texas Commerce Bank National Association.
(Incorporated by reference from Midcoast Registration
Statement on Form SB-2 (No. 333-4643) dated August 8,
1996).
II-4
<PAGE>
4.8 -- Registration Rights Agreement dated August 5, 1996,
by and between Midcoast Energy Resources, Inc. and
Stevens G. Herbst. (Incorporated by reference from
Midcoast Registration Statement on Form SB-2 (No.
333-4643) dated August 8, 1996).
4.9 -- Registration Rights Agreement dated August 5, 1996,
by and between Midcoast Energy Resources, Inc. and
Kenneth B. Holmes, Jr. (Incorporated by reference from
Midcoast Registration Statement on Form SB-2 (No.
333-4643) dated August 8, 1996).
4.10 -- Registration Rights Agreement dated August 5, 1996,
by and between Midcoast Energy Resources, Inc. and
Rainbow Investments Company. (Incorporated by reference
from Midcoast Registration Statement on Form SB-2 (No.
333-4643) dated August 8, 1996).
*5.1 -- Opinion of Porter & Hedges, L.L.P. respecting
legality of securities being offered.
10.1 -- Employment Agreement dated January 1, 1993, by and
between Midcoast Energy Resources, Inc. and Dan C.
Tutcher (Incorporated by reference from Midcoast Form
10-KSB for the fiscal year ended December 31, 1992).
10.2 -- Amendment to the Employment Agreement dated April 1,
1993, by and between Midcoast Energy Resources, Inc. and
Dan C. Tutcher (Incorporated by reference from Midcoast
Form 10-KSB for the fiscal year ended December 31,
1993).
10.3 -- Amendment to Employment Agreement dated April 14,
1997, by and between Midcoast Energy Resources, Inc. and
Dan Tutcher (Incorporated by reference from Midcoast
Form 10-QSB for the three-month period ended March 31,
1997).
10.4 -- Employment Agreement dated April 30, 1994, by and
between Midcoast Energy Resources, Inc. and Richard A.
Robert (Incorporated by reference from Midcoast Form
10-KSB for the fiscal year ended December 31, 1994).
10.5 -- Amendment to the Employment Agreement dated April 8,
1996, by and between Midcoast Energy Resources, Inc. and
Richard A. Robert (Incorporated by reference from
Midcoast Form 10-QSB for the three-month period ended
March 31, 1996).
10.6 -- Employment Agreement dated July 1, 1994, by and
between Midcoast Energy Resources, Inc. and Bill G. Bray
(Incorporated by reference from Midcoast Form 10-KSB for
the fiscal year ended December 31, 1994).
10.7 -- Employment Agreement dated April 25, 1995, by and
between Midcoast Energy Resources, Inc. and I.J.
Berthelot, II (Incorporated by reference from Midcoast
Form 10-KSB for the fiscal year ended December 31,
1995).
10.9 -- Amendment to Employment Agreement dated December 8,
1995, by and between Midcoast Energy Resources, Inc. and
I.J. Berthelot, II (Incorporated by reference from
Midcoast Form 10-KSB for the fiscal year ended December
31, 1995).
10.8 -- Amendment to Employment Agreement dated April 14,
1997, by and between Midcoast Energy Resources, Inc. and
I.J. Berthelot, II (Incorporated by reference from
Midcoast Form 10-QSB for the three-month period ended
March 31, 1997).
10.10 -- Assignment of Net Revenue Interest dated July 1,
1994, by and between Texline Gas Company and Midcoast
Energy Resources, Inc. (Incorporated by reference from
Midcoast Form 10-KSB for the fiscal year ended December
31, 1994).
10.11 -- Assignment of Net Revenue Interest dated July 1,
1994, by and between Rainbow Investments Co. and
Midcoast Energy Resources, Inc. (Incorporated by
reference from Midcoast Form 10-KSB for the fiscal year
ended December 31, 1994).
10.12 -- Agreement dated March 31, 1994, by and between
Midcoast Energy Resources, Inc., and Stewart Petroleum
Company (Incorporated by reference from Midcoast Form
10-KSB for the fiscal year ended December 31, 1993).
10.13 -- Operating Agreement of Pan Grande Pipeline, L.L.C.
dated February 28, 1996, by and between Midcoast
Holdings No. One, Inc. and Resource Energy Development,
L.L.C. (Incorporated by reference from Midcoast Form
10-KSB for the fiscal year ended December 31, 1995).
II-5
<PAGE>
10.14 -- Warrant by and between Triumph Resources Corporation
and Midcoast Energy Resources, Inc. (Incorporated by
reference from Midcoast Registration Statement on Form
SB-2 (No. 333-4643) dated August 8, 1996).
10.15 -- Midcoast Energy Resources, Inc. 1996 Incentive Stock
Plan. (Incorporated by reference from Midcoast
Registration Statement on Form SB-2 (No. 333-4643) dated
August 8, 1996).
10.16 -- Credit Agreement dated August 22, 1996, by and
between Bank One, Texas N.A. and Midcoast Energy
Resources, Inc., Magnolia Pipeline Corporation and H&W
Pipeline Corporation. (Incorporated by reference from
Midcoast Form 10-QSB for the nine-month period ended
September 30, 1996).
10.17 -- Midcoast Energy Resources, Inc. 1997 Non-Employee
Director Stock Option Plan (Incorporated by reference
from Midcoast Form 10-QSB for the three-month period
ended March 31, 1997).
10.18 -- Indemnity Agreement dated April 23, 1997, by and
between Midcoast Energy Resources, Inc. and Richard A.
Robert.
10.19 -- Indemnity Agreement dated April 23, 1997, by and
between Midcoast Energy Resources, Inc. and I.J.
Berthelot, II.
**10.20 -- Indemnity Agreement dated April 23, 1997, by and
between Midcoast Energy Resources, Inc. and E.P.
Marinos.
10.21 -- Indemnity Agreement dated April 23, 1997, by and
between Midcoast Energy Resources, Inc. and Richard N.
Richards.
10.22 -- Indemnity Agreement dated April 23, 1997, by and
between Midcoast Energy Resources, Inc. and Duane S.
Herbst.
10.23 -- Indemnity Agreement dated April 23, 1997, by and
between Midcoast Energy Resources, Inc. and Dan C.
Tutcher.
*21.1 -- Schedule listing subsidiaries of Midcoast Energy
Resources, Inc.
**23.1 -- Consent of Hein + Associates LLP.
*23.2 -- Consent of Bruce M. Withers, Jr.
*23.3 -- Consent of Porter & Hedges, L.L.P. (included in its
opinion filed as Exhibit 5.1 hereto).
*24.1 -- Power of Attorney (included on signature page to
originally filed Registration Statement).
27.1 -- Financial Data Schedule for the three month period
ended March 31, 1997. (Incorporated by reference from
Midcoast Form 10-QSB for the three month period ended
March 31, 1997).
- ------------
* Previously filed.
** Filed herewith.
II-6
<PAGE>
ITEM 17. UNDERTAKINGS
The undersigned Registrant hereby undertakes:
(1) To file during any period in which it offers or sells securities,
a post-effective amendment to this Registration Statement to:
(i) Include any prospectus required by section 10(a)(3) of the
Securities Act;
(ii) Reflect in the prospectus any facts or events which,
individually or together, represent a fundamental change in the
information in the registration statement; and
(iii) Include any additional or changed material information on
the plan of distribution.
(2) For determining liability under the Securities Act, treat each
post-effective amendment as a new registration statement of the securities
offered, and the offering of the securities at that time to be the initial
bona fide offering.
(3) File a post-effective amendment to remove from registration any
of the securities that remain unsold at the end of the Offering.
II-7
<PAGE>
SIGNATURES
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THE REGISTRANT
HAS DULY CAUSED THIS AMENDMENT NO. 2 TO THE REGISTRATION STATEMENT TO BE SIGNED
ON ITS BEHALF BY THE UNDERSIGNED, THEREUNTO DULY AUTHORIZED, IN THE CITY OF
HOUSTON, STATE OF TEXAS, ON THIS 25TH DAY OF JUNE, 1997.
MIDCOAST ENERGY RESOURCES, INC.
By: /s/ DAN C. TUTCHER
DAN C. TUTCHER, CHAIRMAN OF THE BOARD,
CHIEF EXECUTIVE OFFICER AND PRESIDENT
PURSUANT TO THE REQUIREMENTS OF THE SECURITIES ACT OF 1933, THIS AMENDMENT
NO. 2 TO THE REGISTRATION STATEMENT HAS BEEN SIGNED BY THE FOLLOWING PERSONS IN
THE CAPACITIES AND ON THE DATES INDICATED.
SIGNATURE TITLE DATE
- ------------------------ ------------------------------------ ------------
/s/DAN C. TUTCHER Chairman of the Board, President and June 25, 1997
(DAN C. TUTCHER) Chief Executive Officer
* Vice President of Operations and June 25, 1997
(I.J. BERTHELOT, II) Director
* Treasurer, Principal Financial June 25, 1997
(RICHARD A. ROBERT) Officer and Principal Accounting
Officer
* Director June 25, 1997
(RICHARD N. RICHARDS)
* By: /s/ DAN C. TUTCHER
Dan C. Tutcher,
as Attorney-In-Fact
II-8
EXHIBIT 1.1
2,100,000 Shares
MIDCOAST ENERGY RESOURCES, INC.
Common Stock
(par value $.01 per share)
UNDERWRITING AGREEMENT
July ___, 1997
Oppenheimer & Co., Inc.
A. G. Edwards & Sons, Inc.
Coleman and Company Securities, Inc.
c/o Oppenheimer & Co., Inc.
Oppenheimer Tower
World Financial Center
New York, New York 10281
On behalf of the
Several Underwriters
named on Schedule I
attached hereto.
Ladies and Gentlemen:
Midcoast Energy Resources, Inc., a Nevada corporation (the
"Company"), and the selling stockholder named on Schedule II attached hereto
(the "Selling Stockholder") propose, subject to the terms and conditions stated
herein, to issue and sell to you and the other underwriters named on Schedule I
to this Agreement (the "Underwriters"), for whom you are acting as
Representatives (the "Representatives"), an aggregate of 2,100,000 shares (the
"Firm Shares") of the Company's common stock, $0.01 par value (the "Common
Stock"). In addition, the Company proposes to grant to the Underwriters an
option to purchase up to an additional 315,000 shares (the "Option Shares") of
Common Stock from it for the purpose of covering over-allotments in connection
with the sale of the Firm Shares. The Firm Shares and the Option Shares are
together called the "Shares."
1. SALE AND PURCHASE OF THE SHARES. On the basis of the
representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
<PAGE>
(a) FIRM SHARES. The Company and the Selling Stockholder agree to
sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at a purchase
price of $_____ per share (the "Initial Price"), the number of Firm Shares
set forth opposite the name of such Underwriter on Schedule I to this
Agreement.
(b) OPTION SHARES. The Company grants to the several Underwriters an
option to purchase, severally and not jointly, at their election up to
315,000 Option Shares at the Initial Price. The number of Option Shares to
be purchased by each Underwriter shall be the same percentage (adjusted by
the Representatives to eliminate fractions) of the total number of Option
Shares to be purchased by the Underwriters as such Underwriter is
purchasing of the Firm Shares. Such option may be exercised only to cover
over-allotments in the sales of the Firm Shares by the Underwriters. Such
option may be exercised in whole or in part at any time on or before 12:00
noon, New York City time, on the business day before the Firm Shares
Closing Date (as defined below), and only once thereafter within 30 days
after the date of this Agreement, in each case upon written or telegraphic
notice, or verbal or telephonic notice confirmed by written or telegraphic
notice, by the Representatives to the Company no later than 12:00 noon,
New York City time, on the business day before the Firm Shares Closing
Date or at least two business days before the Option Shares Closing Date
(as defined below), as the case may be, setting forth the number of Option
Shares to be purchased and the time and date (if other than the Firm
Shares Closing Date) of such purchase.
2. DELIVERY AND PAYMENT. Delivery by the Company and the Selling
Stockholder of the Firm Shares to the Representatives for the respective
accounts of the Underwriters, and payment of the purchase price by certified or
official bank check or checks or wire transfer payable or by wire transfer of
Federal funds in immediately available funds to the Company and the Selling
Stockholder, shall take place at the offices of Porter & Hedges, L.L.P., 700
Louisiana, 35th Floor, Houston, Texas 77002, at 10:00 a.m., New York City time,
(a) on the third full business day following the first day the Shares are
traded, (b) if this Agreement is executed and delivered after 4:30 p.m. New York
City time, on the fourth business day following the date of this Agreement, or
(c) at such other time or date, but not later than the fourth full business day
following the Effective Date (as hereinafter defined), as shall be agreed upon
by the Company and the Representatives (such time and date of delivery and
payment are called the "Firm Shares Closing Date").
In the event the option with respect to the Option Shares is
exercised, delivery by the Company of the Option Shares to the Representatives
for the respective accounts of the Underwriters and payment of the purchase
price by certified or official bank check or checks or by wire transfer of
Federal funds payable in immediately available funds to the Company shall take
place at the offices of Porter & Hedges, L.L.P. specified above at the time and
on the date (which may be the same date as, but in no event shall be earlier
than, the Firm Shares Closing Date) specified in the notice referred to in
Section 1(b) (such time and date of delivery and
- 2 -
<PAGE>
payment are called the "Option Shares Closing Date"). The Firm Shares Closing
Date and the Option Shares Closing Date are called, individually, a "Closing
Date" and, together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in such names
and shall be in such denominations as the Representatives shall request at least
two full business days before the Firm Shares Closing Date or, in the case of
Option Shares, on the day of notice of exercise of the option as described in
Section l(b) and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, on the full
business day before the Firm Shares Closing Date (or the Option Shares Closing
Date in the case of the Option Shares).
3. REGISTRATION STATEMENT AND PROSPECTUS; PUBLIC OFFERING. The
Company has prepared in conformity with the requirements of the Securities Act
of 1933, as amended (the "Securities Act"), and the published rules and
regulations thereunder (the "Rules") adopted by the Securities and Exchange
Commission (the "Commission") a registration statement on Form S-1 (No.
333-27885), including a preliminary prospectus relating to the Shares, and has
filed with the Commission the Registration Statement (as hereinafter defined)
and such amendments thereof as may have been required to the date of this
Agreement. Copies of such Registration Statement (including all amendments
thereof) and of the related preliminary prospectus have heretofore been
delivered by the Company to you. The Company may also file a related
registration statement with the Commission pursuant to Rule 462(b) under the
Securities Act for the purpose of registering additional Shares, which
registration shall be effective upon filing with the Commission. The term
"Registration Statement" means the Registration Statement as amended at the time
and on the date it becomes effective (the "Effective Date"), including all
exhibits and information, if any, deemed to be part of the Registration
Statement pursuant to Rule 424(b), Rule 430A, Rule 434 and Rule 462(b) of the
Rules. The term "preliminary prospectus" means any preliminary prospectus (as
described in Rule 430 of the Rules) included at any time as a part of the
Registration Statement. The term "Prospectus" means the prospectus in the form
first used to confirm sales of the Shares (whether such prospectus was included
in the Registration Statement at the time of effectiveness or was subsequently
filed with the Commission pursuant to Rule 424(b) of the Rules) or the
preliminary prospectus forming part of the Registration Statement at the time it
was declared effective together with the term sheet permitted under Rule 434(b)
and filed with the Commission pursuant to Rule 424(b), as applicable.
The Company understands that the Underwriters propose to make a
public offering of the Shares, as set forth in and pursuant to the Prospectus,
as soon after the Effective Date and the date of this Agreement as the
Representatives deem advisable. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed each preliminary prospectus and are authorized to distribute the
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters).
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4. REPRESENTATIONS AND WARRANTIES. (a) REPRESENTATIONS AND
WARRANTIES BY THE COMPANY. The Company represents and warrants to each
Underwriter as of the date hereof and as of each Closing Date, and agrees with
each Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Registration
Statement (including, if applicable, any Rule 462(b) Registration
Statement) has become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement (including, if
applicable, any Rule 462(b) Registration Statement) has been issued under
the Securities Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with. On the
Effective Date the Registration Statement complied, and on the date of the
Prospectus, on the date any post-effective amendment to the Registration
Statement shall become effective, on the date any supplement or amendment
to the Prospectus is filed with the Commission and on each Closing Date,
the Registration Statement and the Prospectus (and any amendment thereof
or supplement thereto) will comply, in all material respects with the
requirements of the Securities Act and the Rules; the Registration
Statement and the Prospectus do not, as of the Effective Date, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and on the other dates referred to above neither the
Registration Statement nor the Prospectus, nor any amendment thereof or
supplement thereto, will contain an untrue statement of a material fact or
will omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading. When any
related preliminary prospectus was first filed with the Commission
(whether filed as part of the Registration Statement or any amendment
thereto or pursuant to Rule 424(a) of the Rules) and when any amendment
thereof or supplement thereto was first filed with the Commission, such
preliminary prospectus as amended or supplemented complied in all material
respects with the applicable provisions of the Securities Act and the
Rules and did not contain any untrue statement of a material fact or omit
to state any material fact required to be stated therein or necessary in
order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. Notwithstanding the foregoing,
the Company makes no representation or warranty as to (i) the paragraph
with respect to stabilization on the inside front cover page of the
Prospectus and (ii) certain statements contained under the caption
"Underwriting" in the Prospectus furnished in writing to the Company by an
Underwriter through the Representatives expressly for use therein. The
Company acknowledges that the statements referred to in the previous
sentence constitute the only information furnished in writing by the
Representatives on behalf of the several Underwriters specifically for
inclusion in the Registration Statement, any preliminary prospectus or the
Prospectus.
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Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act, complied
when so filed in all material respects with the Rules. If applicable, each
preliminary prospectus and the Prospectus delivered to the Underwriters
for use in connection with this offering was identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to the Commission's Electronic Data Gathering, Analysis and
Retrieval System ("EDGAR"), except to the extent permitted by Regulation
S-T under the Rules.
(ii) FINANCIAL STATEMENTS. The consolidated financial statements of
the Company (including all notes and schedules thereto) included in the
Registration Statement and Prospectus present fairly the consolidated
financial position, the results of operations and cash flows and the
shareholders' equity and the other information purported to be shown
therein of the Company at the respective dates and for the respective
periods to which they apply; and such consolidated financial statements
have been prepared in conformity with generally accepted accounting
principles, consistently applied throughout the periods involved, and all
adjustments necessary for a fair presentation of the results for such
periods have been made, except in the case of the unaudited consolidated
financial statements presented, for which (A) normal year-end audit
adjustments may not have been made and (B) footnote disclosure necessary
for generally accepted accounting purposes may not have been presented.
The summary and selected historical consolidated financial data included
in the Prospectus present fairly the information shown therein as at the
respective dates and for the respective periods specified, and the summary
and selected financial data have been presented on a basis consistent with
the consolidated financial statements in the Prospectus from which such
information has been derived. The unaudited pro forma consolidated
financial data included in the Registration Statement and the Prospectus
present fairly the information shown therein, comply in all material
respects with the requirements of the Securities Act and the Rules with
respect to pro forma financial statements, have been properly compiled on
the pro forma basis described therein and the assumptions used in
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred
to therein.
(iii) INDEPENDENT ACCOUNTANTS. Hein + Associates LLP, whose reports
are filed with the Commission as a part of the Registration Statement, are
and, during the respective periods covered by their reports were,
independent public accountants as required by the Securities Act and the
Rules.
(iv) GOOD STANDING OF THE COMPANY. The Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Nevada. The Company is duly qualified and
in good standing as a foreign corporation in each jurisdiction in which
the character or location of its assets or properties (owned, leased or
licensed) or the nature of its business makes such qualification necessary
except
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where the failure to so qualify would not have a material adverse effect
on the condition (financial or other) assets or properties, business or
results of operations of the Company and its subsidiaries, taken as a
whole, whether or not occurring in the ordinary course of business (a
"Material Adverse Effect"). The Company has all requisite corporate power
and authority, to own and lease its assets and properties and conduct its
businesses as now being conducted and as described in the Registration
Statement and the Prospectus. Except as disclosed in the Registration
Statement and the Prospectus, the Company does not own, lease or license
any asset or property or conduct any business outside the United States of
America.
(v) GOOD STANDING OF SUBSIDIARIES. The Company does not own,
directly or indirectly, any capital stock of any corporation, any interest
in any partnership or limited liability company or any other equity
interest or participation in any other person, other than as described in
the Prospectus and in Exhibit 21.1 to the Registration Statement (each of
which, except for the Arcadia/Midcoast Pipeline Company of New York
L.L.C., Pan Grande Pipeline, L.L.C. and Starr County Gathering System, A
Joint Venture, a "Subsidiary"). Each Subsidiary has been duly chartered
and organized and is existing in good standing under the laws of its
jurisdiction of incorporation or organization, as the case may be, and has
full corporate power and authority to own or lease its property and
conduct its business as now being conducted and as proposed to be
conducted as described in the Registration Statement and the Prospectus
(and, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), except where the failure to so qualify would not have a
Material Adverse Effect. All of the issued and outstanding capital stock
of each such Subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable and, except as otherwise disclosed in the
Registration Statement, is owned by the Company, directly or indirectly,
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity. None of the outstanding shares of capital
stock of any Subsidiary was issued in violation of the preemptive rights
of any security holder of such Subsidiary.
(vi) AUTHORIZATION OF AGREEMENT. The Company has all requisite
corporate power and authority to enter into, deliver and perform this
Agreement and to issue and sell the Shares, and this Agreement has been
duly executed and delivered by the Company.
(vii) INTANGIBLES. The Company and each Subsidiary owns or possesses
adequate and enforceable rights to use all intellectual property,
including all U.S. and foreign patents, patent applications, licenses,
trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, licenses, inventions, trade secrets,
know-how and other similar rights and proprietary knowledge (collectively,
"Intangibles") necessary for the conduct of its business as described in
the Registration Statement and the Prospectus. The Company has not
received any notice of, or to the best of its knowledge is not aware of,
any infringement of or conflict with asserted rights of others with
respect to any Intangibles which, singly or in the aggregate, if the
subject of an unfavorable
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decision, ruling or finding, would individually or in the aggregate have a
Material Adverse Effect. All such patents, licenses (and the patents
underlying those licenses as applicable), trademarks, service marks, trade
names and copyrights are (i) valid and enforceable and (ii) to the best
knowledge of the Company, not being infringed by any third parties.
(viii)TITLE TO PROPERTY. The Company and each Subsidiary has good
and marketable title to each of the items of personal property which are
reflected in the financial statements referred to in Section 4(c) or are
referred to in the Registration Statement and the Prospectus as being
owned by it and valid and enforceable leasehold interests in each of the
items of real and personal property which are referred to in the
Registration Statement and the Prospectus as being leased by it, in each
case free and clear of all liens, mortgages, pledges, encumbrances,
claims, charges, security interests and defects, other than (A) those
described in the Registration Statement and the Prospectus and (B) those
which do not and will not, singly or in the aggregate, materially affect
the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company or any
Subsidiary. The Company has no knowledge of any challenge to the
underlying fee title of any lease, easement, right-of-way or license held
by the Company or any Subsidiary or to the title of the Company or any
Subsidiary to any lease, easement, right-of-way or permit that would have
a Material Adverse Effect and to the Company's knowledge it and all of its
Subsidiaries have satisfactory title to all of their material leases,
easements, rights-of-way and licenses.
(ix) ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending or, to the knowledge of
the Company, threatened against or affecting the Company or any
subsidiary, which is required to be disclosed in the Registration
Statement (other than as disclosed therein), or which might reasonably be
expected to result in a Material Adverse Effect, or which might reasonably
be expected to materially and adversely affect the properties or assets
thereof or the consummation of this Agreement or the performance by the
Company of its obligations hereunder; the aggregate of all pending legal
or governmental proceedings to which the Company or any subsidiary is a
party or of which any of their respective property or assets is the
subject which are not described in the Registration Statement, including
ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.
(x) POSSESSION OF LICENSES AND PERMITS. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate Federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them, except for such
Governmental Licenses which the failure by the Company to possess would
not, singly or in the aggregate, have a Material Adverse Effect; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental
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Licenses, except where the failure so to comply would not, singly or in
the aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except where the
invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not, singly or
in the aggregate, have a Material Adverse Effect; and neither the Company
nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental
Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(xi) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated therein, (i)
there has been no material adverse change in the assets or properties,
business, results of operations, earnings, business affairs, business
prospects or condition (financial or otherwise), of the Company and the
subsidiaries, taken as a whole, whether or not arising from transactions
in the ordinary course of business; (ii) the Company has not sustained any
material loss or interference with its assets, businesses or properties
(whether owned or leased) from fire, explosion, earthquake, flood or other
calamity, whether or not covered by insurance, or from any labor dispute
or any court or legislative or other governmental action, order or decree;
and (iii) and since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, except as reflected therein,
the Company has not (a) issued any securities or incurred any liability or
obligation, direct or contingent, for borrowed money, except such
liabilities or obligations incurred in the ordinary course of business,
(b) entered into any transaction not in the ordinary course of business or
(c) declared or paid any dividend or made any distribution on any shares
of any class of its capital stock or redeemed, purchased or otherwise
acquired or agreed to redeem, purchase or otherwise acquire any shares of
any class of its capital stock.
(xii) ACCURACY OF EXHIBITS. There is no document or contract of a
character required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration Statement
which is not described or filed as required. Each agreement described in
the Registration Statement and the Prospectus or listed in the Exhibits to
the Registration Statement is in full force and effect and is valid and
enforceable by and against the Company in accordance with its terms except
as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law), assuming the due authorization, execution and delivery thereof
by each of the other parties thereto.
(xiii)ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company and the
subsidiaries nor, to the Company's knowledge, any other party is in
default in the
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observance or performance of any term or obligation to be performed by it
under any agreement applicable to (xii) above, and no event has occurred
which with the notice or lapse of time or both would constitute such a
default, in any such case which default or event would have a Material
Adverse Effect. No default exists, and no event has occurred which with
notice or lapse of time or both would constitute a default, in the due
performance and observation of any term, covenant, or condition, by the
Company or any subsidiary of any other agreement or instrument to which
the Company or a subsidiary is a party or by which it or its properties or
business may be bound or affected which default or event would have a
Material Adverse Effect.
(xiv) CAPITALIZATION. The authorized, issued and outstanding capital
stock of the Company is as set forth under the caption "Capitalization" in
the Prospectus. All of the issued and outstanding shares of Common Stock,
including the Shares to be purchased by the Underwriters from the Selling
Stockholder, have been duly authorized and validly issued and are fully
paid and non-assessable, and none of the outstanding shares of capital
stock of the Company, including the Shares to be purchased by the
Underwriters from the Selling Stockholder, was issued in violation of any
preemptive or other similar rights of any securityholder of the Company
arising by operation of law, under the charter or bylaws of the Company or
under any agreement to which the Company or any of its subsidiaries is a
party or by which it is bound. The Shares, when issued and sold pursuant
to this Agreement, will be duly authorized and validly issued, fully paid
and non-assessable and none of them will be issued in violation of any
preemptive or other similar rights of any securityholder of the Company
arising by operation of law, under the charter or bylaws of the Company or
under any agreement to which the Company or any of its subsidiaries is a
party or by which it is bound. Except as disclosed in the Registration
Statement and the Prospectus, there is no outstanding option, warrant or
other right calling for the issuance of, and there is no commitment, plan
or arrangement to issue or sell, any share of Common Stock or other
securities of the Company or any security convertible into, or exercisable
or exchangeable for, Common Stock or other securities of the Company. The
Common Stock and the Shares conform in all material respects to all
statements in relation thereto contained in the Registration Statement and
the Prospectus.
(xv) AUTHORIZATION AND DESCRIPTION OF SHARES; LOCK-UP. No holder of
any security of the Company has the right to have any security owned by
such holder included in the Registration Statement or to demand
registration of any security owned by such holder during the period ending
180 days after the date of this Agreement. Each stockholder, director and
executive officer of the Company set forth on Schedule III hereto has
delivered to the Representatives his enforceable written agreement that he
will not, directly or indirectly, offer, sell, contract to sell, make a
short sale, pledge or otherwise dispose of, or exercise any registration
rights with respect to, any shares of Common Stock (or any securities
convertible into or exchangeable or exercisable for any other rights to
purchase or acquire shares of Common Stock) owned by him, other than for
sales of Common Stock to the Underwriters pursuant to this Agreement, for
a period of 180
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days after the date of this Agreement, without the prior written consent
of Oppenheimer. In addition, the Company hereby agrees that it will not
consent to the sale, distribution, pledge or other disposition or
encumbrance of, or exercise any registration right with respect to, any
shares of Common Stock subject to the above-referenced lock-ups, without
the prior written consent of Oppenheimer.
(xvi) ENFORCEABILITY. All necessary corporate action has been duly
and validly taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares by
the Company. This Agreement has been duly and validly authorized, executed
and delivered by the Company and constitutes and will constitute legal,
valid and binding obligations of the Company enforceable against the
Company in accordance with their respective terms, except (A) as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether enforcement is considered in a
proceeding in equity or at law), and (B) to the extent that rights to
indemnity or contribution under this Agreement may be limited by Federal
and state securities laws or the public policy underlying such laws.
(xvii)ABSENCE OF LABOR DISPUTES. No labor dispute with the employees
of the Company or any subsidiary exists or, to the knowledge of the
Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any
subsidiary's principal suppliers, manufacturers, customers or contractors,
which, in either case, might reasonably be expected to result in a
Material Adverse Effect.
(xviii) TAXES. Each of the Company and the subsidiaries has filed
all Federal, state and local income, franchise and other tax returns which
have been required to be filed and has paid all taxes shown as due
thereon. All such returns, as amended if applicable, are complete,
accurate and correct in all material respects. Neither the Company nor any
of the subsidiaries has any knowledge of any tax deficiency which might be
asserted against it which would have a Material Adverse Effect. The
provisions and reserves on the books of the Company in respect of Federal,
state, local and other taxes for any taxable period as to which the
Company's liability for taxes has not been finally determined are, in the
opinion of the Company, adequate.
(xix) RELATED PARTY TRANSACTIONS. No transaction has occurred
between or among the Company and any of its officers or directors or any
affiliate or affiliates of any such officer or director that is required
to be described in and is not described in the Registration Statement and
the Prospectus.
(xx) ABSENCE OF MANIPULATION. The Company has not taken, nor will it
take, directly or indirectly, any action designed to or which might
reasonably be expected to
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cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of the price of
the Common Stock to facilitate the sale or resale of any of the Shares.
(xxi) AMEX LISTING. The Shares have been duly authorized for listing
on American Stock Exchange (the "AMEX").
(xxii)COMPLIANCE WITH CUBA ACT. The Company has complied with, and
is and will be in compliance with, the provisions of that certain Florida
act relating to disclosure of doing business with Cuba, codified as
Section 517.075 of the Florida statutes, and the rules and regulations
thereunder (collectively, the "Cuba Act") or is exempt therefrom.
(xxiii) NO FINDERS FEES. No person has acted as a finder in
connection with the transactions contemplated herein and the Company will
indemnify the several Underwriters with respect to any claim for finder's
fees in connection herewith. Except as set forth in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus), the Company has no management or
financial consulting agreement with anyone. No promoter, officer, director
or stockholder of the Company is, directly or indirectly, associated with
a member of the National Association of Securities Dealers, Inc. ("NASD").
(xxiv)INSURANCE COVERAGE. The Company and each Subsidiary is insured
by insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses
in which it is engaged. Neither the Company nor any Subsidiary has been
refused any insurance coverage sought or applied for, and the Company has
no reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not have a Material Adverse Effect.
(xxv) INVESTMENT COMPANY ACT OF 1940. The Company is not subject to
registration as an "investment company" under the Investment Company Act
of 1940.
(b) REPRESENTATIONS AND WARRANTIES BY THE SELLING STOCKHOLDER. The Selling
Stockholder represents and warrants to each Underwriter as of the date hereof,
and as of the Closing Time, and agrees with each Underwriter, as follows:
(i) ACCURATE DISCLOSURE. The Selling Stockholder has reviewed and is
familiar with the Registration Statement and the Prospectus, and, to the
knowledge of the Selling Stockholder, the Prospectus does not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection shall
not apply to statements in or omissions
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from the Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through Oppenheimer expressly for use in the Registration
Statement or Prospectus. The Selling Stockholder is not prompted to sell
the Shares to be sold by the Selling Stockholder hereunder by any
information concerning the Company or any subsidiary of the Company which
is not set forth in the Prospectus.
(ii) CAPACITY TO ENTER INTO AGREEMENT. The Selling Stockholder has
the full right, power and capacity to execute and deliver this Agreement
and to sell, assign, transfer and deliver the Shares to be sold by the
Selling Stockholder hereunder.
(iii) GOOD AND VALID TITLE. The Selling Stockholder now has, and
will at the Firm Shares Closing Time have, good and valid title to the
Shares to be sold by the Selling Stockholder hereunder, free and clear of
any security interest, mortgage, pledge, lien, charge, claim, equity or
encumbrance of any kind, including, without limitation, any restriction on
transfer other than the lock-up arrangements that are in effect as a
result of the Company's August 1996 public offering of Common Stock, other
than pursuant to this Agreement; and upon delivery of and payment of the
purchase price for such Shares as herein contemplated, each of the
Underwriters will acquire good and valid title to the Shares purchased by
it from the Selling Stockholder, free and clear of any security interest,
mortgage, pledge, lien, charge, claim, equity or encumbrance of any kind
(other than any security interest, mortgage, pledge, lien, charge, claim,
equity or encumbrance that may be imposed by, or may arise through or
under, the Underwriters) or restriction on transfer, other than those
arising under Federal or state securities laws.
(iv) ABSENCE OF CONFLICTS, DEFAULTS AND VIOLATIONS. The execution
and delivery of this Agreement and the sale and delivery of the Shares to
be sold by the Selling Stockholder and the consummation of the
transactions contemplated herein and compliance by the Selling Stockholder
with its obligations hereunder do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default under, or result in the creation or
imposition of any tax, lien, charge or encumbrance upon the Shares to be
sold by the Selling Stockholder or any property or assets of the Selling
Stockholder pursuant to, any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, license, lease or other agreement or
instrument to which the Selling Stockholder is a party or by which the
Selling Stockholder may be bound, or to which any of the property or
assets of the Selling Stockholder is subject, nor will such action result
in any violation of the provisions of any applicable treaty, law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Selling Stockholder or any of its properties.
(v) ENFORCEABILITY. This Agreement has been duly executed and
delivered by or on behalf of the Selling Stockholder and is the valid and
binding agreement of the Selling Stockholder enforceable against the
Selling Stockholder in accordance with its terms, except
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(i) the enforceability hereof and thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally, (ii) the remedy of specific performance and other forms of
equitable relief may be subject to certain equitable defenses and to the
discretion of the court before which the proceedings may be brought
(regardless of whether enforcement is considered in a proceeding in equity
or at law), and (iii) rights to indemnity and contribution hereunder may
be limited by Federal or state securities laws or the public policy
underlying such laws.
(vi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or consent,
approval, authorization, order, registration, qualification or decree of,
any court or governmental authority or agency, domestic or foreign, is
necessary or required for the performance by the Selling Stockholder of
its obligations hereunder or in connection with the sale and delivery of
the Shares hereunder or the consummation of the transactions contemplated
by this Agreement, except such as may have previously been made or
obtained or as may be required under the Securities Act and the Securities
Exchange Act of 1934 as amended (the "Exchange Act") or state securities
Blue Sky laws.
(vii) ABSENCE OF MANIPULATION. The Selling Stockholder has not
taken, and will not take, directly or indirectly, any action which is
designed to, 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.
(viii)RESTRICTION ON SALE OF SHARES. During a period of 180 days
from the date of the Prospectus, the Selling Stockholder will not, without
the prior written consent of Oppenheimer, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase
or otherwise transfer or dispose of, directly or indirectly, any share of
Common Stock or any securities convertible into ro exercisable or
exchangeable for Common Stock or cause any registration statement to be
filed under the Securities Act with respect to any of the foregoing or
(ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise.
The foregoing sentence shall not apply to the Shares to be sold hereunder.
(ix) CERTIFICATES SUITABLE FOR TRANSFER. Certificates for all of the
shares to be sold by the Selling Stockholder pursuant to this Agreement,
in suitable form for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank with signatures guaranteed,
will be delivered to the Underwriters at the Firm Shares Closing Date
pursuant to this Agreement.
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(x) NO ASSOCIATION WITH NASD. Neither the Selling Stockholder nor
any of this affiliates directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, or has any other association with (within the meaning of Article I,
Section 1(m) of the By-laws of the NASD), any member firm of the NASD.
(c) OFFICER'S CERTIFICATES. Any certificate signed by any officer of
the Company or any subsidiary delivered to the Representatives or to counsel for
the Underwriters shall be deemed a representation and warranty by the Company to
each Underwriter as to the matters covered thereby. Any certificate signed by
the Selling Stockholder as such and delivered to the Representatives or to
counsel for the Underwriters pursuant to the terms of this Agreement shall be
deemed a representation and warranty by the Selling Stockholder to the
Underwriters as to the matters covered thereby. Counsel for the Underwriters and
counsel for the Company and the Selling Stockholder shall be entitled to rely on
any certificate delivered by the Company or the Selling Stockholder for purposes
of delivering such counsel's opinion pursuant to Sections 5(h), (i) and (j)
hereunder.
(d) AGREEMENT TO EXECUTE W-9. The Selling Stockholder agrees to
deliver to the Representatives, on or prior to the Firm Shares Closing Date 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).
5. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of
the Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission
in accordance with Section 6(a) of this Agreement.
(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and no
order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the Commission, and any requests for additional information
on the part of the Commission (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to
the satisfaction of the Representatives.
(c) The representations and warranties of the Company and the
Selling Stockholder contained in this Agreement and in the certificates
delivered pursuant to Section 5(e) shall be true and correct (in the case
of representations and warranties that are qualified as to materiality) or
true and correct in all material respects (in the case of representations
and warranties that are not so qualified) when made and on and as of each
Closing Date as if made on such date; and the Company shall have performed
all
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covenants and agreements and satisfied all conditions contained in this
Agreement required to be performed or satisfied by it at or prior to such
Closing Date.
(d) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall not
have been any changes which would have a Material Adverse Effect, or any
development involving a prospective Material Adverse Effect, except in
each case as described in or contemplated by the Prospectus (exclusive of
any amendment or supplement thereto).
(e) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date,
of the chief executive or chief operating officer and the chief financial
officer or chief accounting officer of the Company to the effect that the
signers of such certificate have carefully examined the Registration
Statement, the Prospectus and this Agreement and to the effect set forth
in subparagraphs (b) through (d) above.
(f) The Representatives shall have received on the Firm Shares
Closing Date a certificate, addressed to the Representatives and dated
such Closing Date, of the Selling Stockholder stating that (i) the
representations and warranties made by the Selling Stockholder in this
Agreement are true and correct in all material respects on the Firm Shares
Closing Date, and (ii) the Selling Stockholder has complied with each
obligation which is required to be performed on his part at or prior to
the Firm Shares Closing Date.
(g) The Representatives shall have received on the Effective Date,
at the time this Agreement is executed and on each Closing Date a signed
letter from Hein + Associates LLP addressed to the Representatives and
dated, respectively, the Effective Date, the date of this Agreement and
each such Closing Date, in form and substance reasonably satisfactory to
the Representatives, confirming that they are independent accountants
within the meaning of the Securities Act and the Rules, that the response
to Item 10 of the Registration Statement is correct insofar as it relates
to them and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration Statement
and the Prospectus and reported on by them comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act and the Rules;
(ii) on the basis of a reading of the amounts included in the
Registration Statement and the Prospectus under the headings
"Summary Historical Consolidated Financial and Operating Data" and
"Selected Historical Consolidated Financial Data," carrying out
certain procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set
forth in
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<PAGE>
such letter, a reading of the minutes of the meetings of the
stockholders and directors of the Company, and inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters of the Company as to transactions and events
subsequent to the date of the latest audited financial statements,
except as disclosed in the Registration Statement and the
Prospectus, nothing came to their attention which caused them to
believe that:
(A) the amounts in "Summary Historical Consolidated
Financial and Operating Data" and "Selected Historical
Consolidated Financial Data," included in the Registration
Statement and the Prospectus do not agree with the
corresponding amounts in the audited and unaudited financial
statements from which such amounts were derived; or
(B) with respect to the Company, there were, at a
specified date not more than five business days prior to the
date of the letter, any increases in the current liabilities
and long-term liabilities of the Company or any decreases in
net income or in working capital or the shareholders' equity
in the Company, as compared with the amounts shown on the
Company's audited balance sheet for the fiscal year ended
December 31, 1996 and the three months ended March 31, 1997
included in the Registration Statement; and
(iii) they have performed certain other procedures as a result
of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general
accounting records of the Company) set forth in the Registration
Statement and the Prospectus and reasonably specified by the
Representatives agrees with the accounting records of the Company.
References to the Registration Statement and the Prospectus in this
paragraph (g) are to such documents as amended and supplemented at
the date of the letter.
(h) The Representatives shall have received on each Closing Date
from Porter & Hedges, L.L.P., counsel for the Company, an opinion,
addressed to the Representatives and dated such Closing Date, in
substantially the same form as set forth on EXHIBIT A hereto.
(i) The Representatives shall have received on the Firm Shares
Closing Date from counsel to the Selling Stockholder an opinion, addressed
to the Representatives and dated such Closing Date, in substantially the
same form as set forth on EXHIBIT B hereto.
(j) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and
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<PAGE>
substance to the Representatives and their counsel and the Underwriters
shall have received from Andrews & Kurth L.L.P. a favorable opinion,
addressed to the Representatives and dated such Closing Date, with respect
to the Shares, the Registration Statement and the Prospectus, and such
other related matters, as the Representatives may reasonably request, and
the Company shall have furnished to Andrews & Kurth L.L.P. such documents
as they may reasonably request for the purpose of enabling them to pass
upon such matters.
6. COVENANTS OF THE COMPANY. The Company covenants and agrees with
each Underwriter as follows:
(a) COMPLIANCE WITH FEDERAL SECURITIES REGULATIONS AND COMMISSION
REQUESTS. The Company shall prepare the Prospectus in a form approved by
the Representatives and file such Prospectus pursuant to Rule 424(b) under
the Securities 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 Securities Act. The Company shall promptly advise the
Representatives after the Company receives notice thereof (i) when any
amendment to the Registration Statement shall have become effective, (ii)
of any request by the Commission for any amendment of the Registration
Statement or the Prospectus or for any additional information, (iii) of
the prevention or suspension of the use of any preliminary prospectus or
the Prospectus or of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (iv) of
the receipt by the Company of any notification with respect to the
suspension of the qualification of the Shares for sale in any jurisdiction
or the initiation or threatening of any proceeding for such purpose. The
Company shall not file any amendment of the Registration Statement or
supplement to the Prospectus unless the Company has furnished the
Representatives a copy for its review prior to filing and shall not file
any such proposed amendment or supplement to which the Representatives
reasonably object. The Company shall use its best efforts to prevent the
issuance of any such stop order and, if issued, to obtain as soon as
possible the withdrawal thereof.
(b) AMENDMENTS AND SUPPLEMENTS. If, at any time when a prospectus
relating to the Shares is required to be delivered under the Securities
Act and the Rules, any event occurs as a result of which the Prospectus as
then amended or supplemented would include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein in the light of the circumstances under which they were
made not misleading, or if it shall be necessary to amend or supplement
the Prospectus to comply with the Securities Act or the Rules, the Company
promptly shall prepare and file with the Commission, subject to the second
sentence of paragraph (a) of this Section 6, an amendment or supplement
which shall correct such statement or omission or an amendment which shall
effect such compliance.
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<PAGE>
(c) EARNING STATEMENTS. The Company shall make generally available
to its security holders and to the Representatives as soon as practicable,
but not later than 45 days after the end of the 12-month period beginning
at the end of the fiscal quarter of the Company during which the Effective
Date occurs (or 90 days if such 12-month period coincides with the
Company's fiscal year), an earning statement (which need not be audited)
of the Company, covering such 12-month period, which shall satisfy the
provisions of Section 11(a) of the Securities Act or Rule 158 of the
Rules.
(d) COPIES OF REGISTRATION STATEMENT AND PROSPECTUS. The Company
shall furnish to the Representatives and counsel for the Underwriters,
without charge, signed copies of the Registration Statement (including all
exhibits thereto and amendments thereof) and to each other Underwriter a
copy of the Registration Statement (without exhibits thereto) and all
amendments thereof and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Securities Act or the Rules,
as many copies of any preliminary prospectus and the Prospectus and any
amendments thereof and supplements thereto as the Representatives may
reasonably request.
(e) COMPLIANCE WITH STATE SECURITIES REGULATIONS. The Company shall
cooperate with the Representatives and their counsel in endeavoring to
qualify the Shares for offer and sale under the laws of such jurisdictions
as the Representatives may designate and shall maintain such
qualifications in effect so long as required for the distribution of the
Shares; provided, however, that the Company shall not be required in
connection therewith, as a condition thereof, to qualify as a foreign
corporation or to execute a general consent to service of process in any
jurisdiction or subject itself to taxation as doing business in any
jurisdiction.
(f) PERIODIC REPORTS. For a period of five years after the date of
this Agreement, the Company shall supply to the Representatives, and to
each other Underwriter who may so request in writing, copies of such
consolidated financial statements and other periodic and special reports
as the Company may from time to time distribute generally to the holders
of any class of its capital stock and to furnish to the Representatives a
copy of each annual or other report it shall be required to file with the
Commission.
(g) COMPANY LOCK-UP. Without the prior written consent of the
Representatives, for a period of 180 days after the date of this
Agreement, the Company shall not, directly or indirectly, offer, issue,
sell or register with the Commission (other than on Form S-4, Form S-8 or
on any successor form), or otherwise dispose of, any equity securities of
the Company (or any securities convertible into or exercisable or
exchangeable for equity securities of the Company), except for (i) the
issuance and sale of the Shares by the Company pursuant to the
Registration Statement, (ii) the issuance of shares upon the exercise of
options granted under the Company's existing stock option plans, (iii) the
issuance of options pursuant to the Company's existing stock option plans,
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<PAGE>
(iv) the issuance of shares upon the exercise of warrants described in the
Prospectus and outstanding as of the date hereof and (v) the issuance of
unregistered shares in connection with the Company's acquisition of a
business; provided, in the event that during this period, (A) any shares
are issued pursuant to the Company's existing stock option plans or (B)
any registration is effected on Form S-4, Form S-8 or on any successor
form, or in connection with an acquisition of a business, the Company
shall obtain the written agreement of such grantee or purchaser or holder
of such registered securities that, for a period of 180 days after the
date of this Agreement, such person will not, without the prior written
consent of the Representatives, offer for sale, sell, distribute, grant
any option for the sale of, or otherwise dispose of, directly or
indirectly, or exercise any registration rights with respect to, any
shares of Common Stock (or any securities convertible into or exercisable
or exchangeable for any shares of Common Stock) owned by such person.
(h) AMEX LISTING. On or before completion of this offering, the
Company shall make all filings required under applicable securities laws
and by the AMEX.
(i) PAYMENT AND REIMBURSEMENT OF CERTAIN EXPENSES. The Company
agrees to pay, or reimburse if paid by the Representatives, whether or not
the transactions contemplated hereby are consummated or this Agreement is
terminated pursuant to Section 9 hereof, all costs and expenses incident
to the public offering of the Shares and the performance of the
obligations of the Company under this Agreement including those relating
to: (i) the preparation, printing, filing and distribution of the
Registration Statement including all exhibits thereto, each preliminary
prospectus, the Prospectus, all amendments and supplements to the
Registration Statement and the Prospectus, and the printing, filing and
distribution of this Agreement; (ii) the preparation and delivery of
certificates for the Shares to the Underwriters; (iii) the registration or
qualification of the Shares for offer and sale under the securities or
Blue Sky laws of the various jurisdictions referred to in Section 6(e),
including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such registration and qualification and
the preparation, printing, distribution and shipment of preliminary and
supplementary Blue Sky memoranda; (iv) the furnishing (including costs of
shipping and mailing) to the Representatives and to the Underwriters of
copies of each preliminary prospectus, the Prospectus and all amendments
or supplements to the Prospectus, and of the several documents required by
this Section to be so furnished, as may be reasonably requested for use in
connection with the offering and sale of the Shares by the Underwriters or
by dealers to whom Shares may be sold; (v) the filing fees of the NASD in
connection with its review of the terms of the public offering; (vi) the
furnishing (including costs of shipping and mailing) to the
Representatives and to the Underwriters of copies of all reports and
information required by Section 6(f); (vii) inclusion of the Shares for
listing on the AMEX; and (viii) all transfer taxes, if any, with respect
to the sale and delivery of the Shares by the Company to the Underwriters.
Subject to the provisions of Section 9, the Underwriters agree to pay,
whether or not the transactions contemplated hereby are consummated or
this Agreement is terminated, all costs and expenses incident to the
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performance of the obligations of the Underwriters under this Agreement
not payable by the Company pursuant to the preceding sentence, including,
without limitation, the fees and disbursements of counsel for the
Underwriters.
7. INDEMNIFICATION.
(a) INDEMNIFICATION OF UNDERWRITERS BY THE COMPANY. The Company
agrees to indemnify and hold harmless each Underwriter and each person, if any,
who controls any Underwriter within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act against any and all losses, claims,
damages, expenses and liabilities, joint or several (including any reasonable
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other Federal or state law or regulation, at
common law or otherwise, insofar as such losses, claims, damages, expenses or
liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment thereof or supplement
thereto, or arise out of or are based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statements therein not misleading; provided, however, that such indemnity
shall not inure to the benefit of any Underwriter (or any person controlling
such Underwriter) on account of any losses, claims, damages, expenses or
liabilities arising from the sale of the Shares to any person by such
Underwriter if such untrue statement or omission or alleged untrue statement or
omission was made in such preliminary prospectus, the Registration Statement or
the Prospectus, or such amendment or supplement, in reliance upon and in
conformity with information furnished in writing to the Company by the
Representatives on behalf of any Underwriter specifically for use therein. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) INDEMNIFICATION OF UNDERWRITERS BY THE SELLING STOCKHOLDER. The
Selling Stockholder agrees to indemnify and hold harmless each Underwriter and
each person, if any, who controls any Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act against any and all
losses, claims, damages, or liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claim asserted), to which the Selling Stockholder may become subject under the
Securities Act, the Exchange Act or other Federal or state law or regulation, at
common law or otherwise, insofar as such losses, claims, damages, expenses or
liabilities arise out of or are based upon any untrue statement or alleged
untrue statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus or any amendment thereof or supplement
thereto, or arise out of or are based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to make
the statement therein not misleading; provided, however, that such indemnity
shall not inure to the benefit of any Underwriter (or any person controlling
such Underwriter) on account of any losses, claims, damages, expenses or
liabilities arising from the
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sale of the Shares to any person by such Underwriter if such untrue statement or
omission or alleged untrue statement or omission was made in such preliminary
prospectus, the Registration Statement or the Prospectus, or such amendment or
supplement, in reliance upon and in conformity with information furnished in
writing to the Company by the Representatives on behalf of any Underwriter
specifically for use therein. Notwithstanding the other provisions of this
Section 7, the liability of the Selling Stockholder under this Section 7 shall
be limited to the total proceeds (net of underwriting discounts and commissions,
but before deducting expenses) received by the Selling Stockholder from the
offering of the Shares by the Selling Stockholder under this Agreement.
(c) INDEMNIFICATION OF THE COMPANY AND THE SELLING STOCKHOLDER. Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless
the Company, the Selling Stockholder, each person, if any, who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, each director of the Company, and each officer of the Company
who signs the Registration Statement, to the same extent as the foregoing
indemnity from the Company and the Selling Stockholder to each Underwriter, but
only insofar as such losses, claims, damages or liabilities arise out of or are
based upon any untrue statement or omission or alleged untrue statement or
omission which was made in any preliminary prospectus, the Registration
Statement or the Prospectus, or any amendment thereof or supplement thereto,
contained in the last paragraph of the cover page, in the paragraph relating to
stabilization on the inside front cover page of the Prospectus, the fifth
paragraph relating to over-allotment, stabilizing transactions, syndicate
covering transactions and penalty bids, and the final paragraph relating to
Coleman and Company Securities, Inc. contained under the caption "Underwriting"
in the Prospectus; provided, however, that the obligation of each Underwriter to
indemnify the Company (including any controlling person, director or officer
thereof) or the Selling Stockholder, respectively, shall be limited to the net
proceeds received by the Company or the Selling Stockholder, as the case may be,
from such Underwriter.
(d) Any party that proposes to assert the right to be indemnified
under this Section 7 will, promptly after receipt of notice of commencement of
any action, suit or proceeding against such party in respect of which a claim is
to be made against an indemnifying party or parties under this Section 7, notify
each such indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served. No indemnification provided
for in Section 7(a), (b) or 7(c) shall be available to any party who shall fail
to give notice as provided in this Section 7(d) if the party to whom notice was
not given was unaware of the proceeding to which such notice would have related
and was prejudiced by the failure to give such notice but the omission to so
notify such indemnifying party of any such action, suit or proceeding shall not
relieve it from any liability that it may have to any indemnified party for
contribution or otherwise than under this Section. In case any such action, suit
or proceeding 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 in, and, to the extent that it shall wish, jointly
with any other indemnifying party similarly notified, to assume the defense
thereof, with counsel reasonably satisfactory to such indemnified party, and
after notice from the
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<PAGE>
indemnifying party to such indemnified party of its election so to assume the
defense thereof and the approval by the indemnified party of such counsel, the
indemnifying party shall not be liable to such indemnified party for any legal
or other expenses, except as provided below and except for the reasonable costs
of investigation subsequently incurred by such indemnified party in connection
with the defense thereof. The indemnified party shall have the right to employ
its counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the employment of counsel
by such indemnified party has been authorized in writing by the indemnifying
parties, (ii) the indemnified party shall have reasonably concluded that there
may be a conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (in which case
the indemnifying parties shall not have the right to direct the defense of such
action on behalf of the indemnified party) or (iii) the indemnifying parties
shall not have employed counsel to assume the defense of such action within a
reasonable time after notice of the commencement thereof, in each of which cases
the fees and expenses of counsel shall be at the expense of the indemnifying
parties. An indemnifying party shall not be liable for any settlement of any
action, suit, proceeding or claim effected without its written consent.
8. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnifications provided for in
Sections 7(a), (b) and (c) are due in accordance with their terms but for any
reason is held to be unavailable from the Company or the Selling Stockholder,
the Company, the Selling Stockholder, and the Underwriters shall contribute to
the aggregate losses, claims, damages and liabilities (including any
investigation, legal and other expenses reasonably incurred in connection with,
and any amount paid in settlement of, any action, suit or proceeding or any
claims asserted, but after deducting any contribution received by the Company or
the Selling Stockholder from persons other than the Underwriters, such as
persons who control the Company within the meaning of the Securities Act,
officers of the Company who signed the Registration Statement and directors of
the Company, who may also be liable for contribution) to which the Company, the
Selling Stockholder and one or more of the Underwriters may be subject 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 or, if such allocation is not permitted by
applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided in Section 7 hereof,
in such proportion as is appropriate to reflect not only the relative benefits
referred to above 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,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, the Selling Stockholder and the
Underwriters shall be deemed to be in the same proportion as (x) the total
proceeds from the offering (net of underwriting discounts but before deducting
expenses) received by the Company and the Selling Stockholder, as the case may
be, as set forth in the table on the cover page of the Prospectus, bear to (y)
the underwriting discounts received by the Underwriters, as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company and
the Selling Stockholder or the Underwriters shall be determined by reference to,
among other
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things, whether the untrue or alleged untrue statement of a material fact
related to information supplied by the Company and the Selling Stockholder or
the Underwriters 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 contribution pursuant to this Section 8 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. Notwithstanding
the provisions of this Section 8, (i) in no case shall any Underwriter (except
as may be provided in the Master Agreement Among Underwriters) be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Shares purchased by such Underwriter hereunder, and (ii) the Company and/or
the Selling Stockholder, as the case may be, shall be liable and responsible for
any amount in excess of such underwriting discount applicable to the Shares sold
by each hereunder; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 8, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act shall have the same rights to
contribution as such Underwriter, and each person, if any, who controls the
Company within the meaning of the Section 15 of the Securities Act or Section 20
of the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i) and
(ii) in the immediately preceding sentence of this Section 8. Any party entitled
to contribution will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim for
contribution may be made against another party or parties under this Section,
notify such party or parties from whom contribution may be sought, but the
omission so to notify such party or parties from whom contribution may be sought
shall not relieve the party or parties from whom contribution may be sought from
any other obligation it or they may have hereunder or otherwise than under this
Section. No party shall be liable for contribution with respect to any action,
suit, proceeding or claim settled without its written consent. The Underwriters'
obligations to contribute pursuant to this Section 8 are several in proportion
to their respective underwriting commitments and not joint. The Company's and
the Selling Stockholder's obligations to contribute in this Section 8 are
several and not joint.
9. TERMINATION. (a) TERMINATION; GENERAL. This Agreement may be
terminated with respect to the Shares to be purchased on a Closing Date by the
Representatives by notifying the Company at any time:
(i) in the absolute discretion of the Representatives at or before
any Closing Date: (A) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or in
the opinion of the Representatives will in the immediate future materially
disrupt, the securities markets; (B) if there has occurred any new
outbreak or material escalation of hostilities or other calamity or crisis
the effect of
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which on the financial markets of the United States is such as to make it,
in the judgment of the Representatives, inadvisable to proceed with the
offering; (C) if there shall be such a material adverse change in general
financial, political or economic conditions or the effect of international
conditions on the financial markets in the United States is such as to
make it, in the judgment of the Representatives, inadvisable or
impracticable to market the Shares; (D) if trading in the Shares has been
suspended by the Commission or trading generally on the New York Stock
Exchange, Inc. or on the AMEX has been suspended or limited, or minimum or
maximum ranges for prices for securities shall have been fixed, or maximum
ranges for prices for securities have been required, by such exchange or
by order of the Commission, the NASD, or any other governmental or
regulatory authority; or (E) if a banking moratorium has been declared by
any state or Federal authority, or
(ii) at or before any Closing Date, that any of the conditions
specified in Section 5 shall not have been fulfilled when and as required
by this Agreement.
(b) TERMINATION LIABILITIES. If this Agreement is terminated
pursuant to any of its provisions, the Company and the Selling Stockholder shall
not be under any liability to any Underwriter, and no Underwriter shall be under
any liability to the Company or the Selling Stockholder, except that (A) if this
Agreement is terminated by the Representatives or the Underwriters because of
any failure, refusal or inability on the part of the Company or the Selling
Stockholder to comply with the terms or to fulfill any of the conditions of this
Agreement, the Company will reimburse the Underwriters for all out-of-pocket
expenses (including the reasonable fees and disbursements of their counsel)
incurred by them in connection with the proposed purchase and sale of the Shares
or in contemplation of performing their obligations hereunder and (B) no
Underwriter who shall have failed or refused to purchase the Shares agreed to be
purchased by it under this Agreement, without some reason sufficient hereunder
to justify cancellation or termination of its obligations under this Agreement,
shall be relieved of liability to the Company, to the Selling Stockholder or to
the other Underwriters for damages occasioned by its failure or refusal.
10. SUBSTITUTION OF UNDERWRITERS. If one or more of the Underwriters
shall fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 9) to purchase on any Closing Date
the Shares agreed to be purchased on such Closing Date by such Underwriter or
Underwriters, the Representatives may find one or more substitute underwriters
to purchase such Shares or make such other arrangements as the Representatives
may deem advisable or one or more of the remaining Underwriters may agree to
purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, then
each of the non-defaulting Underwriters
- 24 -
<PAGE>
shall be obligated to purchase such Shares on the terms herein set forth
in proportion to their respective obligations hereunder; provided, that in
no event shall the maximum number of Shares that any Underwriter has
agreed to purchase pursuant to Section 1 be increased pursuant to this
Section 10 by more than one-ninth of such number of Shares without the
written consent of such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then the
Company shall be entitled to an additional business day within which it
may, but is not obligated to, find one or more substitute underwriters
reasonably satisfactory to the Representatives to purchase such Shares
upon the terms set forth in this Agreement.
In any such case, either the Representatives or the Company shall
have the right to postpone the applicable Closing Date for a period of not more
than five business days in order that necessary changes and arrangements
(including any necessary amendments or supplements to the Registration Statement
or Prospectus) may be effected by the Representatives and the Company. If the
number of Shares to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, and none of the
non-defaulting Underwriters or the Company shall make arrangements pursuant to
this Section within the period stated for the purchase of the Shares that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Shares to be purchased on such Closing Date without liability on
the part of any non-defaulting Underwriter to the Company and without liability
on the part of the Company, except in both cases as provided in Sections 6(B),
7, 8 and 9. The provisions of this Section shall not in any way affect the
liability of any defaulting Underwriter to the Company or the non-defaulting
Underwriters arising out of such default. A substitute underwriter hereunder
shall become an Underwriter for all purposes of this Agreement.
11. DEFAULT BY SELLING STOCKHOLDER. If on the Firm Shares Closing
Date the Selling Stockholder fails to sell the Shares which the Selling
Stockholder has agreed to sell on such date as set forth on Schedule II hereto,
the Company agrees that it will sell or arrange for the sale of that number of
shares of Common Stock to the Underwriters which represents the Shares which the
Selling Stockholder has failed to so sell, as set forth in Schedule II hereto,
or such fewer number of shares of Common Stock as may be requested by the
Underwriters.
12. MISCELLANEOUS. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers or
the Selling Stockholder and of the Underwriters set forth in or made pursuant to
this Agreement shall remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company, the
Selling Stockholder or any of the officers, directors or controlling persons
referred to in Sections 7 and 8 hereof, and shall survive delivery of and
payment for the Shares. The provisions of Sections 6(i), 7, 8 and 9(b) shall
survive the termination or cancellation of this Agreement.
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<PAGE>
This Agreement has been and is made for the benefit of the
Underwriters, the Company and the Selling Stockholder and their respective
successors and assigns, and, to the extent expressed herein, for the benefit of
persons controlling any of the Underwriters, or the Company, and directors and
officers of the Company, and their respective successors and assigns, and no
other person shall acquire or have any right under or by virtue of this
Agreement. The term "successors and assigns" shall not include any purchaser of
Shares from any Underwriter merely because of such purchase.
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone, telegraph or facsimile if subsequently
confirmed in writing, (a) if to the Representatives, c/o Oppenheimer & Co.,
Inc., Oppenheimer Tower, World Financial Center, New York, New York 10281
Attention: Richard D. White, (b) if to the Company, to its agent for service as
such agent's address appears on the cover page of the Registration Statement,
and (c) if to the Selling Stockholder, Kenneth B. Holmes, Jr., 710 Buffalo,
Suite 800, Corpus Christi, Texas 78401.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflict of
laws.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement among
us.
Very truly yours,
MIDCOAST ENERGY RESOURCES, INC.
By:
Name: Dan C. Tutcher
Title: President
KENNETH B. HOLMES, JR.
By:
Kenneth B. Holmes
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<PAGE>
Confirmed:
OPPENHEIMER & CO., INC.
A.G. EDWARDS & SONS, INC.
COLEMAN AND COMPANY SECURITIES, INC.
Acting severally on behalf of themselves and as Representatives of the several
Underwriters named in Schedule I annexed hereto.
By: OPPENHEIMER & CO., INC.
By:
Name:
Title:
- 27 -
<PAGE>
SCHEDULE I
Underwriters
NUMBER OF
FIRM SHARES TO
NAME BE PURCHASED
Oppenheimer & Co., Inc...................................
A. G. Edwards & Sons, Inc................................
Coleman and Company Securities, Inc......................
--------
Total........................... 2,100,000
=========
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<PAGE>
SCHEDULE II
Selling Stockholder
NUMBER OF
FIRM SHARES TO
NAME BE SOLD
Kenneth B. Holmes, Jr.................................... 100,000
-------
Total........................... 100,000
=======
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<PAGE>
SCHEDULE III
Persons Delivering Lock-Up Letters
Magic Gas Corp.
Stevens G. Herbst
Dan C. Tutcher
I.J. Berthelot, II
Richard A. Robert
Duane S. Herbst
E.P. Marinos
Richard N. Richards
Bill G. Bray
Mark W. Fuqua
- 30 -
<PAGE>
EXHIBIT A
MATTERS TO BE COVERED IN THE OPINION OF COUNSEL FOR THE COMPANY
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Nevada. The Company is duly qualified to do business and in
good standing as a foreign corporation in each jurisdiction in which
the character or location of its assets or properties (owned,
leased, licensed or operated) or the nature of its businesses makes
such qualification necessary, except where the failure to so qualify
would not have a Material Adverse Effect.
(ii) Each Subsidiary has been duly incorporated or organized,
as the case may be, and is validly existing and in good standing
under the laws of the jurisdiction of its formation, and is in good
standing as a foreign corporation in each jurisdiction in which the
character or location of its assets or properties (owned, leased,
licensed or operated) or the nature of its businesses makes such
qualification necessary, except where the failure to so qualify
would not have a Material Adverse Effect. Except as otherwise
disclosed in the Registration Statement, all of the issued and
outstanding capital stock of each Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and,
to the best of our knowledge, is owned by the Company, directly or
indirectly, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; none of the outstanding
shares of capital stock of any Subsidiary was issued in violation of
the preemptive or similar rights of any security holder of such
Subsidiary.
(iii) The Company and each Subsidiary has all requisite
corporate power and authority to own or lease its assets and
properties and conduct its business as now being conducted, in each
case as described in the Registration Statement and the Prospectus.
The Company has all requisite corporate power and authority to enter
into, deliver and perform its obligations under this Agreement and
to issue and sell the Shares.
(iv) The Company has authorized and issued capital stock as
set forth in the Registration Statement and the Prospectus; the
certificates evidencing the Shares are in due and proper legal form
and have been duly authorized for issuance by the Company. All of
the outstanding shares of Common Stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable,
and none of the outstanding shares of capital stock of the Company
was issued in violation of any preemptive or other similar right of
any security holder of the Company.
- 31 -
<PAGE>
(v) The Shares, when issued and sold pursuant to this
Agreement, will be duly and validly issued, outstanding, fully paid
and nonassessable and none of them will have been issued in
violation of any preemptive or other similar right of any security
holder of the Company.
(vi) To the best of such counsel's knowledge, except as
disclosed in the Registration Statement and the Prospectus, there is
no outstanding option, warrant or other right calling for the
issuance of, and no commitment, plan or arrangement to issue, any
share of stock of the Company or any security convertible into,
exercisable for, or exchangeable for stock of the Company. The
Common Stock and the Shares conform in all material respects to the
descriptions thereof contained in the Registration Statement and the
Prospectus. No person or entity is entitled to have securities
registered by the Company under the Registration Statement or
otherwise under the Act other than as described in the Prospectus.
All prior sales by the Company of the Company's securities have been
made in compliance with or under an exemption from registration
under the Act and applicable state securities laws and no
shareholders of the Company have any rescission rights with respect
to Company securities other than those that have been effectively
waived or satisfied.
(vii) The agreement of the Company's directors and officers
stating that for a period of 180 days from the date of this
Agreement they will not, without the Representatives' prior written
consent, sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, any shares of Common Stock (or
any securities convertible into, exercisable for, or exchangeable
for any shares of Common Stock) owned by them has been duly and
validly delivered by such persons and constitutes the legal, valid
and binding obligation of each such person enforceable against each
such person in accordance with its terms, except as the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by
general equitable principles.
(viii)All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the
Shares. This Agreement has been duly and validly authorized,
executed and delivered by the Company and this Agreement constitutes
the legal, valid and binding obligation of the Company enforceable
against the Company in accordance with their respective terms except
(A) as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by
general equitable principles and (B) to the extent that rights to
indemnity or contribution under this Agreement may be limited by
Federal or state securities laws or the public policy underlying
such laws.
- 32 -
<PAGE>
(ix) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) will give rise to a
right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or any event which with
notice or lapse of time, or both, would constitute a default) under,
or require consent or waiver under, or result in the execution or
imposition of any lien, charge or encumbrance upon any properties or
assets of the Company pursuant to the terms of any indenture,
mortgage, deed trust, note or other agreement or instrument of which
such counsel is aware and to which the Company or any of the
Subsidiaries is a party or by which it or any of its properties or
businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation of which such counsel is
aware, where the consequences of such violation would have a
Material Adverse Effect, or violate any provision of the charter or
by-laws of the Company.
(x) To the best of such counsel's knowledge, no default
exists, and no event has occurred which with notice or lapse of
time, or both, would constitute a default, in the due performance
and observance of any term, covenant or condition by the Company or
any of the Subsidiaries of any indenture, mortgage, deed of trust,
note or any other agreement or instrument to which the Company is a
party or by which it or any of its assets or properties or
businesses may be bound or affected, where the consequences of such
default might reasonably be expected to result in a Material Adverse
Effect.
(xi) To the best of such counsel's knowledge, neither the
Company nor any of the Subsidiaries is in violation of any term or
provision of its charter or by-laws or any franchise, license,
permit, judgment, decree, order, statute, rule or regulation, where
the consequences of such violation would have a Material Adverse
Effect.
(xii) No consent, approval, authorization or order of any
court or governmental agency or body is required for the performance
of this Agreement by the Company or the consummation of the
transactions contemplated hereby or thereby, except such as have
been obtained under the Securities Act and such as may be required
under state securities or Blue Sky laws in connection with the
purchase and distribution of the Shares by the several Underwriters.
(xii) To the best of such counsel's knowledge, except as
described in the Prospectus, there is no action, suit, proceeding,
inquiry or investigation before or by any court or governmental
agency or body, domestic or foreign, now pending or threatened,
against or affecting the Company or any Subsidiary which is
- 33 -
<PAGE>
required to be disclosed in the Registration Statement and the
Prospectus, or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets thereof or
the consummation of the transactions contemplated in the Agreement
or the performance by the Company of its obligations thereunder.
(xiv) The statements in the Prospectus under the captions
"Description of Capital Stock," "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Capital
Resources and Liquidity," "Business and Properties," "Shares
Eligible for Future Sale," and "Management -- Certain Transactions,"
insofar as such statements constitute a summary of documents
referred to therein, matters of law or legal conclusions, has been
reviewed by us, are fair summaries in all material respects and
accurately present the information called for with respect to such
documents and matters. All contracts and other documents required to
be filed as exhibits to, or described in, the Registration Statement
have been so filed with the Commission or are fairly described in
the Registration Statement, as the case may be.
(xv) The Registration Statement, all preliminary prospectuses
and the Prospectus and each amendment or supplement thereto (except
for the financial statements and schedules and other financial data
included therein, as to which such counsel expresses no opinion)
comply as to form in all material respects with the requirements of
the Securities Act and the Rules.
(xvi) The Registration Statement has become effective under
the Securities Act, any required filing of the Prospectus pursuant
to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b), and no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are threatened
or pending.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Representatives as to matters which are governed by laws other than the laws of
the State of Nevada, the laws of the State of Texas, the General Corporation Law
of the State of Delaware and the Federal laws of the United States; provided
that such counsel shall state that in their opinion the Underwriters and they
are justified in relying on such other opinions. Copies of such certificates and
other opinions shall be furnished to the Representatives and counsel for the
Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent certified public accountants of the
- 34 -
<PAGE>
Company, at which conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus (except as specified in the foregoing opinion), on
the basis of the foregoing, no facts have come to the attention of such counsel
which lead such counsel to believe that the Registration Statement at the time
it became effective (except with respect to the financial statements and notes
and schedules thereto and other financial data, as to which such counsel need
express no belief) contained any 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 as amended or
supplemented (except with respect to the financial statements and notes
schedules thereto and other financial data, as to which such counsel need make
no statement) on the date thereof contained any 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.
- 35 -
<PAGE>
EXHIBIT B
MATTERS TO BE COVERED IN THE OPINION OF COUNSEL FOR THE SELLING STOCKHOLDER
1. The Agreement has been duly executed and delivered by or on behalf of the
Selling Stockholder.
2. To such counsel's knowledge the Selling Stockholder has full legal right,
power and capacity, and any approval required by law (other than any approved
required by the applicable federal or state securities and Blue Sky laws) to
sell, assign, transfer and deliver the Shares to be sold by him in the manner
provided in the Agreement.
3. Upon delivery to the Underwriters of the certificate representing the
Shares, indorsed to the Underwriters or in blank,by the Selling Stockholder and
payment for the Shares by the Underwriters, the Underwriters will acquire all of
the rights of such Selling Stockholder in the Shares free of any adverse
interest (within the meaning of Section 8-303 of the Texas Business and Commerce
Code).
- 36 -
EXHIBIT 10.20
AGREEMENT
This Agreement, made and entered into this 23rd day of April, 1997
("Agreement"), is by and between Midcoast Energy Resources, Inc., a Nevada
corporation ("Company"), and E. P. Marinos ("Indemnitee"):
WHEREAS, highly competent persons are becoming more reluctant to serve
publicly-held corporations as directors or in other capacities unless they are
provided with adequate protection through insurance or adequate indemnification
against inordinate risks of claims and actions against them arising out of their
service to, and activities on behalf of, the corporation;
WHEREAS, the current impracticability of obtaining adequate insurance and
the uncertainties relating to indemnification have increased the difficulty of
attracting and retaining such persons;
WHEREAS, the Board of Directors of the Company (the "Board") has
determined that the inability to attract and retain such persons is detrimental
to the best interests of the Company's stockholders and that the Company should
act to assure such persons that there will be increased certainty of such
protection in the future;
WHEREAS, it is reasonable, prudent and necessary for the Company
contractually to obligate itself to indemnify such persons to the fullest extent
permitted by applicable law so that they will serve or continue to serve the
Company free from undue concern that they will not be so indemnified; and
WHEREAS, Indemnitee is willing to serve, continue to serve and to take on
additional service for or on behalf of the Company on the condition that he be
so indemnified.
NOW, THEREFORE, in consideration of the premises and the covenants
contained herein, the Company and Indemnitee do hereby covenant and agree as
follows:
SECTION 1. SERVICES BY INDEMNITEE. Indemnitee agrees to serve as Director
of the Company. Indemnitee may at any time and for any reason resign from such
position (subject to any other contractual obligation or any obligation imposed
by operation of law), in which event the Company shall have no obligation under
this Agreement to continue Indemnitee in any such position.
SECTION 2. INDEMNIFICATION - GENERAL. The Company shall indemnify, and
advance Expenses (as hereinafter defined), to Indemnitee as provided in this
Agreement and to the fullest extent permitted by applicable law in effect on the
date hereof and to such greater extent as applicable law may thereafter from
time to time permit. The rights of Indemnitee provided under
<PAGE>
the preceding sentence shall include, but shall not be limited to, the rights
set forth in the other Sections of this Agreement.
SECTION 3. PROCEEDINGS OTHER THAN PROCEEDINGS BY OR IN THE RIGHT OF THE
COMPANY. Indemnitee shall be entitled to the rights of indemnification provided
in this Section 3 if, by reason of his Corporate Status (as hereinafter defined)
or by reason of anything done or not done by Indemnitee in any such capacity, he
is, or is threatened to be made, a party to any threatened, pending, or
completed Proceeding (as hereinafter defined), other than a Proceeding by or in
the right of the Company. Pursuant to this Section 3, Indemnitee shall be
indemnified to the full extent of the law against Expenses, judgments,
penalties, fines and amounts paid in settlement (including all interest,
assessments and other charges paid or payable in connection with or in respect
of such expenses, judgments, fines, penalties or amounts paid in settlement)
actually and reasonably incurred by him or on his behalf in connection with such
Proceeding or any claim, issue or matter therein, if he acted in good faith and
in a manner he reasonably believed to be in or not opposed to the best interests
of the Company, and, with respect to any criminal Proceeding, had no reasonable
cause to believe his conduct was unlawful.
SECTION 4. PROCEEDINGS BY OR IN THE RIGHT OF THE COMPANY. Indemnitee shall
be entitled to the rights of indemnification provided in this Section 4 if, by
reason of his Corporate Status, he is, or is threatened to be made, a party to
any threatened, pending or completed Proceeding brought by or in the right of
the Company to procure a judgment in its favor. Pursuant to this Section,
Indemnitee shall be indemnified to the full extent of the law against Expenses
actually and reasonably incurred by him or on his behalf in connection with such
Proceeding if he acted in good faith and in a manner he reasonably believed to
be in or not opposed to the best interests of the Company. Notwithstanding the
foregoing, no indemnification against such Expenses shall be made in respect of
any claim, issue or matter in such Proceeding as to which Indemnitee shall have
been adjudged to be liable to the Company if applicable law prohibits such
indemnification; PROVIDED, HOWEVER, that, if applicable law so permits,
indemnification against Expenses shall nevertheless be made by the Company in
such event if and only to the extent that the court in which such Proceeding
shall have been brought or is pending or other court of competent jurisdiction,
shall determine.
SECTION 5. INDEMNIFICATION FOR EXPENSES OF A PARTY WHO IS WHOLLY OR PARTLY
SUCCESSFUL. Notwithstanding any other provision of this Agreement, to the extent
that Indemnitee is, by reason of his Corporate Status, a party to and is
successful, on the merits or otherwise, in any Proceeding, he shall be
indemnified against all Expenses actually and reasonably incurred by him or on
his behalf in connection therewith. If Indemnitee is not wholly successful in
such Proceeding but is successful, on the merits or otherwise, as to one or more
but less than all claims, issues or matters in such Proceeding, the Company
shall indemnify Indemnitee against all Expenses actually and reasonably incurred
by him or on his behalf in connection with each successfully resolved claim,
issue or matter. For purposes of this Section and without limitation, the
termination of any claim, issue or matter in such a Proceeding by dismissal,
with or without prejudice, shall be deemed to be a successful result as to such
claim, issue or matter.
2
<PAGE>
SECTION 6. INDEMNIFICATION FOR EXPENSES OF A WITNESS. Notwithstanding any
other provision of this Agreement, to the extent that Indemnitee is, by reason
of his Corporate Status, a witness in any Proceeding, he shall be indemnified
against all Expenses actually and reasonably incurred by him or on his behalf in
connection therewith.
SECTION 7. ADVANCEMENT OF EXPENSES. The Company shall advance all
reasonable Expenses incurred by or on behalf of Indemnitee in connection with
any Proceeding within two days after the receipt by the Company of a statement
or statements from Indemnitee requesting such advance or advances from time to
time, whether prior to or after final disposition of such Proceeding. Such
statement or statements shall reasonably evidence the Expenses incurred by
Indemnitee and shall include or be preceded or accompanied by an undertaking by
or on behalf of Indemnitee to repay any Expenses advanced if it shall ultimately
be determined that Indemnitee is not entitled to be indemnified against such
Expenses; PROVIDED, HOWEVER, that Indemnitee shall not be required to reimburse
Company for any advancement of Expenses until a final judicial determination is
made (as to which all rights of appeal have been exhausted or lapsed).
SECTION 8. PROCEDURE FOR DETERMINATION OF ENTITLEMENT TO INDEMNIFICATION.
(a) To obtain indemnification under this Agreement, Indemnitee shall
submit to the Company a written request, including therein or therewith such
documentation and information as is reasonably available to Indemnitee and is
reasonably necessary to determine whether and to what extent Indemnitee is
entitled to indemnification. The Secretary of the Company shall, promptly upon
receipt of such a request for indemnification, advise the Board in writing that
Indemnitee has requested indemnification.
(b) Upon written request by Indemnitee for indemnification pursuant
to the first sentence of Section 8(a) hereof, a determination, if required by
applicable law, with respect to Indemnitee's entitlement thereto shall be made
in the specific case: (i) if a Change in Control (as hereinafter defined) shall
have occurred, by Independent Counsel (as hereinafter defined) (unless
Indemnitee shall request that such determination be made by the Board or the
stockholders, in which case by the person or persons or in the manner provided
for in clauses (ii) or (iii) of this Section 8(b)) in a written opinion to the
Board, a copy of which shall be delivered to Indemnitee; (ii) if a Change of
Control shall not have occurred, (A) by the Board by a majority vote of a quorum
consisting of Disinterested Directors (as hereinafter defined), or (B) if a
quorum of the Board consisting of Disinterested Directors is not obtainable or,
even if obtainable, such quorum of Disinterested Directors so directs, by
Independent Counsel in a written opinion to the Board, a copy of which shall be
delivered to Indemnitee or (C) if so directed by the Board, by the stockholders
of the Company; or (iii) as provided in Section 9(b) of this Agreement; and, if
it is so determined that Indemnitee is entitled to Indemnification, payment to
Indemnitee shall be made within ten (10) days after such determination.
Indemnitee shall cooperate with the person, persons or entity making such
determination with respect to Indemnitee's entitlement to indemnification,
including providing to such person, persons or entity upon reasonable advance
request any documentation or information which is not privileged or otherwise
protected from disclosure and which is reasonably available to
3
<PAGE>
Indemnitee and reasonably necessary to such determination. Any costs or expenses
(including attorneys' fees and disbursements) incurred by Indemnitee in so
cooperating with the person, persons or entity making such determination shall
be borne by the Company (irrespective of the determination as to Indemnitee's
entitlement to indemnification) and the Company hereby indemnifies and agrees to
hold Indemnitee harmless therefrom.
(c) In the event the determination of entitlement to indemnification
is to be made by Independent Counsel pursuant to Section 8(b) hereof, the
Independent Counsel shall be selected as provided in this Section 8(c). If a
Change of Control shall not have occurred, the Independent Counsel shall be
selected by the Board, and the Company shall give written notice to Indemnitee
advising him of the identity of the Independent Counsel so selected. If a Change
of Control shall have occurred, the Independent Counsel shall be selected by
Indemnitee (unless Indemnitee shall request that such selection be made by the
Board, in which event the preceding sentence shall apply), and Indemnitee shall
give written notice to the Company advising it of the identity of the
Independent Counsel so selected. In either event, Indemnitee or the Company, as
the case may be, may, within 7 days after such written notice of selection shall
have been given, deliver to the Company or to Indemnitee, as the case may be, a
written objection to such selection. Such objection may be asserted only on the
ground that the Independent Counsel so selected does not meet the requirements
of "Independent Counsel" as defined in Section 18 of this Agreement, and the
objection shall set forth with particularity the factual basis of such
assertion. If such written objection is made, the Independent Counsel so
selected may not serve as Independent Counsel unless and until a court has
determined that such objection is without merit. If, within 20 days after
submission by Indemnitee of a written request for indemnification pursuant to
Section 8(a) hereof, no Independent Counsel shall have been selected without
objection, either the Company or Indemnitee may petition the court in which such
Proceeding shall have been brought or is pending or other court of competent
jurisdiction for resolution of any objection which shall have been made by the
Company or Indemnitee to the other's selection of Independent Counsel and/or for
the appointment as Independent Counsel of a person selected by the court or by
such other person as the court shall designate, and the person with respect to
whom an objection is so resolved or the person so appointed shall act as
Independent Counsel under Section 8(b) hereof. The Company shall pay any and all
reasonable fees and expenses of Independent Counsel incurred by such Independent
Counsel in connection with acting pursuant to Section 8(b) hereof, and the
Company shall pay all reasonable fees and expenses incident to the procedures of
this Section 8(c), regardless of the manner in which such Independent Counsel
was selected or appointed. Upon the due commencement of any judicial proceeding
or arbitration pursuant to Section 10(a)(iii) of this Agreement, Independent
Counsel shall be discharged and relieved of any further responsibility in such
capacity (subject to the applicable standards of professional conduct then
prevailing).
SECTION 9. PRESUMPTIONS AND EFFECT OF CERTAIN PROCEEDINGS.
(a) In making a determination with respect to entitlement to
indemnification hereunder, the person or persons or entity making such
determination shall presume that Indemnitee is entitled to indemnification under
this Agreement if Indemnitee has submitted a request for
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indemnification in accordance with Section 8(a) of this Agreement, and the
Company shall have the burden of proof to overcome that presumption in
connection with the making by any person, persons or entity of any determination
contrary to that presumption.
(b) If the person, persons or entity empowered or selected under
Section 8 of this Agreement to determine whether Indemnitee is entitled to
indemnification shall not have made a determination within 60 days after receipt
by the Company of the request therefor, the requisite determination of
entitlement to indemnification shall be deemed to have been made and Indemnitee
shall be entitled to such indemnification, absent (i) a misstatement by
Indemnitee of a material fact, or an omission of a material fact necessary to
make Indemnitee's statement not materially misleading, in connection with the
request for indemnification, or (ii) a prohibition of such indemnification under
applicable law; provided, however, that such 60-day period may be extended for a
reasonable time, not to exceed an additional 30 days, if the person, persons or
entity making the determination with respect to entitlement to indemnification
in good faith requires such additional time for the obtaining or evaluating of
documentation and/or information relating thereto; and provided, further, that
the foregoing provisions of this Section 9(b) shall not apply (i) if the
determination of entitlement to indemnification is to be made by the
stockholders pursuant to Section 8(b) of this Agreement and if (A) within 15
days after receipt by the Company of the request for such determination the
Board has resolved to submit such determination to the stockholders for their
consideration at an annual meeting thereof to be held within 75 days after such
receipt and such determination is made thereat, or (B) a special meeting of
stockholders is called within 15 days after such receipt for the purpose of
making such determination, such meeting is held for such purpose within 60 days
after having been so called and such determination is made thereat, or (ii) if
the determination of entitlement to indemnification is to be made by Independent
Counsel pursuant to Section 8(b) of this Agreement.
(c) The termination of any Proceeding or of any claim, issue or
matter therein, by judgment, order, settlement or conviction, or upon a plea of
NOLO CONTENDERE or its equivalent, shall not (except as otherwise expressly
provided in this Agreement) of itself adversely affect the right of Indemnitee
to indemnification or create a presumption that Indemnitee did not act in good
faith and in a manner which he reasonably believed to be in or not opposed to
the best interests of the Company or, with respect to any criminal Proceeding,
that Indemnitee had reasonable cause to believe that his conduct was unlawful.
SECTION 10. REMEDIES OF INDEMNITEE.
(a) In the event that (i) a determination is made pursuant to
Section 8 of this Agreement that Indemnitee is not entitled to indemnification
under this Agreement, or (ii) advancement of Expenses is not timely made
pursuant to Section 7 of this Agreement, or (iii) the determination of
entitlement to indemnification is to be made by Independent Counsel pursuant to
Section 8(b) of this Agreement and such determination shall not have been made
and delivered in a written opinion within 90 days after receipt by the Company
of the request for indemnification, or (iv) payment of indemnification is not
made pursuant to Section 6 of this Agreement within ten
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(10) days after receipt by the Company of a written request therefor, or (v)
payment of indemnification is not made within ten (10) days after a
determination has been made that Indemnitee is entitled to indemnification or
such determination is deemed to have been made pursuant to Sections 8 or 9 of
this Agreement, Indemnitee shall be entitled to an adjudication in an
appropriate court of the State of Nevada, or in any other court of competent
jurisdiction, of his entitlement to such indemnification or advancement of
Expenses, and Company hereby consents to service of process and to appear in any
such proceeding. Alternatively, Indemnitee, at his option, may seek an award in
arbitration to be conducted by a single arbitrator pursuant to the rules of the
American Arbitration Association. Indemnitee shall commence such proceeding
seeking an adjudication or an award in arbitration within 180 days following the
date on which Indemnitee first has the right to commence such proceeding
pursuant to this Section 10(a); PROVIDED, HOWEVER, that the foregoing clause
shall not apply in respect of a proceeding brought by an Indemnitee to enforce
his rights under Section 5 of the Agreement.
(b) In the event that a determination shall have been made pursuant
to Section 8 of this Agreement that Indemnitee is not entitled to
indemnification, any judicial proceeding or arbitration commenced pursuant to
this Section 10 shall be conducted in all respects as a DE NOVO trial, or
arbitration, on the merits and Indemnitee shall not be prejudiced by reason of
that adverse determination. If a Change of Control shall have occurred, in any
judicial proceeding or arbitration commenced pursuant to this Section 10 the
Company shall have the burden of proving that Indemnitee is not entitled to
indemnification or advancement of Expenses, as the case may be.
(c) If a determination shall have been made or deemed to have been
made pursuant to Section 8 or 9 of this Agreement that Indemnitee is entitled to
indemnification, the Company shall be bound by such determination in any
judicial proceeding or arbitration commenced pursuant to this Section 10, absent
(i) a misstatement by Indemnitee of a material fact, or an omission of a
material fact necessary to make Indemnitee's statement not materially
misleading, in connection with the request for indemnification, or (ii) a
prohibition of such indemnification under applicable law.
(d) The Company shall be precluded from asserting in any judicial
proceeding or arbitration commenced pursuant to this Section 10 that the
procedures and presumptions of this Agreement are not valid, binding and
enforceable and shall stipulate in any such court or before any such arbitrator
that the Company is bound by all the provisions of this Agreement.
(e) In the event that Indemnitee, pursuant to this Section 10, seeks
a judicial adjudication of or an award in arbitration to enforce his rights
under, or to recover damages for breach of, this Agreement, Indemnitee shall be
entitled to recover from the Company, and shall be indemnified by the Company
against, any and all expenses (of the types described in the definition of
Expenses in Section 18 of this Agreement) actually and reasonably incurred by
him in such judicial adjudication or arbitration, but only if he prevails
therein. If it shall be determined in said judicial adjudication or arbitration
that Indemnitee is entitled to receive part but not all of the
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indemnification or advancement of expenses sought, the expenses incurred by
Indemnitee in connection with such judicial adjudication or arbitration shall be
appropriately prorated.
SECTION 11. NON-EXCLUSIVITY; INSURANCE; SUBROGATION; NO DUPLICATE
PAYMENTS.
(a) The rights of indemnification and to receive advancement of
Expenses as provided by this Agreement shall not be deemed exclusive of any
other rights to which Indemnitee may at any time be entitled under applicable
law, the articles of incorporation, the bylaws, any agreement, a vote of
stockholders or a resolution of directors, or otherwise. No amendment,
alteration or repeal of this Agreement or any provision hereof shall be
effective as to any Indemnitee with respect to any action taken or omitted by
such Indemnitee in his Corporate Status prior to such amendment, alteration or
repeal.
(b) To the extent that the Company maintains an insurance policy or
policies providing liability insurance for directors, officers, employees,
agents or fiduciaries of the Company or of any other corporation, partnership,
joint venture, trust, employee benefit plan or other enterprise, which such
person serves at the request of the Company, Indemnitee shall be covered by such
policy or policies in accordance with its or their terms to the maximum extent
of the coverage available for any such director, officer, employee or agent
under such policy or policies.
(c) In the event of any payment under this Agreement, the Company
shall be subrogated to the extent of such payment to all of the rights of
recovery of Indemnitee, who shall execute all papers required and take all
action necessary to secure such rights, including execution of such documents as
are necessary to enable the Company to bring suit to enforce such rights.
(d) The Company shall not be liable under this Agreement to make any
payment of amounts otherwise indemnifiable hereunder if and to the extent that
Indemnitee has otherwise actually received such payment under any insurance
policy, contract, agreement or otherwise.
SECTION 12. BINDING EFFECT; SURVIVAL OF RIGHTS. This Agreement shall be
binding upon and inure to the benefit of and be enforceable by the parties and
their respective successors, assigns (including any direct or indirect
successors by purchase, merger, consolidation or otherwise to all or
substantially all of the business and/or assets of the Company), spouses, heirs,
executors, administrators, and personal and legal representatives. The Company
shall require and cause any successor (whether direct or indirect by purchase,
merger, consolidation or otherwise) to all, substantially all or a substantial
part, of the business and/or assets of the Company, by written agreement in form
and substance satisfactory to the Indemnitee, expressly to assume and agree to
perform this Agreement in the same manner and to the same extent that the
Company would be required to perform if no such succession had taken place. This
Agreement shall continue in effect regardless of whether Indemnitee continues to
serve as an officer or director of the Company or of any other enterprise at the
Company's request.
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SECTION 13. LIMITATIONS PERIOD. No legal action shall be brought and no
cause of action shall be asserted by or in the right of the Company or any
affiliate of the Company against Indemnitee, Indemnitee's spouse, heirs,
executors or personal or legal representatives after the expiration of two years
from the date of accrual of such cause of action, and any claim or cause of
action of the Company or its affiliate shall be extinguished and deemed released
unless asserted by the timely filing of a legal action within such two year
period; PROVIDED, HOWEVER, that if any shorter period of limitations is
otherwise applicable to any such cause of action such shorter period shall
govern.
SECTION 14. SEVERABILITY. If any provision of this Agreement shall be held
to be invalid, illegal or unenforceable for any reason whatsoever: (a) the
validity, legality and enforceability of the remaining provisions of this
Agreement (including without limitation, each portion of any Section of this
Agreement containing any such provision held to be invalid, illegal or
unenforceable, that is not itself invalid, illegal or unenforceable) shall not
in any way be affected or impaired thereby; and (b) to the fullest extent
possible, the provisions of this Agreement (including, without limitation, each
portion of any Section of this Agreement containing any such provision held to
be invalid, illegal or unenforceable, that is not itself invalid, illegal or
unenforceable) shall be construed so as to give effect to the intent manifested
by the provision held invalid, illegal or unenforceable.
SECTION 15. EXCEPTION TO RIGHT OF INDEMNIFICATION OR ADVANCEMENT OF
EXPENSES. Notwithstanding any other provision of this Agreement, Indemnitee
shall not be entitled to indemnification or advancement of Expenses under this
Agreement with respect to any Proceeding, or any claim therein, brought or made
by him against the Company or the Individual Indemnitors, unless the Company has
joined in or consented to the initiation of such Proceeding.
SECTION 16. IDENTICAL COUNTERPARTS. This Agreement may be executed in one
or more counterparts, each of which shall for all purposes be deemed to be an
original but all of which together shall constitute one and the same Agreement.
Only one such counterpart signed by the party against whom enforceability is
sought needs to be produced to evidence the existence of this Agreement.
SECTION 17. HEADINGS. The headings of the paragraphs of this Agreement are
inserted for convenience only and shall not be deemed to constitute part of this
Agreement or to affect the construction thereof.
SECTION 18. DEFINITIONS. For purposes of this Agreement:
(a) "Change in Control" means a change in control of the Company
occurring after the Effective Date of a nature that would be required to be
reported in response to item 6(e) of Schedule 14A of Regulation 14A (or in
response to any similar item on any similar schedule or form) promulgated under
the Securities Exchange Act of 1934 (the "Act"), whether or not the Company is
then subject to such reporting requirement; PROVIDED, HOWEVER, that, without
limitation, such a Change in Control shall be deemed to have occurred if after
the Effective Date (i) any
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"person" (as such term is used in Section 13(d) and 14(d) of the Act) is or
becomes the "beneficial owner" (as defined in Rule 13d-3 under the Act),
directly or indirectly, of securities of the Company representing 10% or more of
the combined voting power of the Company's then outstanding securities without
the prior approval of at least two-thirds of the members of the Board in office
immediately prior to such person attaining such percentage interest; (ii) the
Company is a party to a merger, consolidation, sale of assets or other
reorganization, or a proxy contest, as a consequence of which members of the
Board in office immediately prior to such transaction or event constitute less
than a majority of the Board thereafter; or (iii) during any period of two
consecutive years, individuals who at the beginning of such period constituted
the Board (including for this purpose any new director whose election or
nomination for election by the Company's stockholders was approved by a vote of
at least two-thirds of the directors then still in office who were directors at
the beginning of such period) cease for any reason to constitute at least a
majority of the Board.
(b) "Corporate Status" describes the status of a person who is or
was a director, officer, employee, agent or fiduciary of the Company or of any
other corporation, partnership, joint venture, trust, employee benefit plan or
other enterprise which such person is or was serving at the request of the
Company.
(c) "Disinterested Director" means a director of the Company who is
not and was not a party to the Proceeding in respect of which indemnification is
sought by Indemnitee.
(d) "Effective Date" means the date of this Agreement.
(e) "Expenses" shall include all reasonable attorneys' fees,
retainers, court costs, transcript costs, fees of experts, witness fees, travel
expenses, duplicating costs, printing and binding costs, telephone charges,
postage, delivery service fees, and all other disbursements or expenses paid or
incurred in connection with prosecuting, defending, preparing to prosecute or
defend, investigating, or being or preparing to be a witness in a Proceeding,
including on appeal.
(f) "Independent Counsel" means a law firm, or a member of a law
firm, that is experienced in matters of corporation law and neither presently
is, nor in the past five years has been, retained to represent: (i) the Company
or Indemnitee in any matter material to either such party, or (ii) any other
party to the Proceeding giving rise to a claim for indemnification hereunder.
Notwithstanding the foregoing, the term "Independent Counsel" shall not include
any person who, under the applicable standards of professional conduct then
prevailing, would have a conflict of interest in representing either the Company
or Indemnitee in an action to determine Indemnitee's rights under this
Agreement.
(g) "Proceeding" includes any action, suit, arbitration, alternate
dispute resolution mechanism, administrative hearing, inquiry or investigation,
whether civil, criminal, administrative or other (whether instituted by the
Company or any other party), or any inquiry or investigation that Indemnitee in
good faith believes might lead to the institution of any such action, suit, or
proceeding, whether civil, criminal, administrative, investigative, or other;
Notwithstanding the foregoing, the
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term "Proceeding" shall not include any action, suit, arbitration, alternate
dispute resolution mechanism, administrative hearing, or any inquiry or
investigation initiated by an Indemnitee pursuant to Section 10 of this
Agreement to enforce his rights under this Agreement.
SECTION 19. MODIFICATION AND WAIVER. No supplement, modification or
amendment of this Agreement shall be binding unless executed in writing by both
of the parties hereto. No waiver of any of the provision of this Agreement shall
be deemed or shall constitute a waiver of any other provision hereof (whether or
not similar) nor shall such waiver constitute a continuing waiver.
SECTION 20. NOTICE BY INDEMNITEE. Indemnitee agrees promptly to notify the
Company in writing upon being served with any summons, citation, subpoena,
complaint, indictment, information or other document relating to any Proceeding
or matter which may be subject to indemnification or advancement of Expenses
covered hereunder.
SECTION 21. NOTICES. All notices, requests, demands and other
communications hereunder shall be in writing and shall be deemed to have been
duly given if (i) delivered by hand and receipted for by the party to whom said
notice or other communication shall have been directed, or (ii) mailed by
certified or registered mail with postage prepaid, on the third business day
after the date on which it is so mailed:
(a) If to Indemnitee, to:
E. P. Marinos
2901 Seargent Stret
Seabrook, Texas 77586-3209
(b) If to the Company, to:
MIDCOAST ENERGY RESOURCES, INC.
700 Louisiana, Suite 2950
Houston, Texas 77002
or to such other address as may have been furnished to Indemnitee by the Company
or to the Company by Indemnitee, as the case may be.
SECTION 22. GOVERNING LAW. The parties agree that this Agreement shall be
governed by, and construed and enforced in accordance with, the laws of the
State of Nevada.
SECTION 23. MISCELLANEOUS. Use of the masculine pronoun shall be deemed to
include usage of the feminine pronoun where appropriate.
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IN WITNESS WHEREOF, the parties hereto have executed this Agreement on the
day and year first above written.
MIDCOAST ENERGY RESOURCES, INC.
By: /s/ DAN C. TUTCHER
Dan C. Tutcher
Chief Executive Officer,
President and Chairman of the Board
INDEMNITEE
/s/ E. P. MARINOS
E. P. Marinos
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EXHIBIT 23.1
CONSENT OF INDEPENDENT CERTIFIED PUBLIC ACCOUNTANTS
We consent to the use of our reports on the financial statements as of
December 31, 1995 and 1996, and for each of the years in the three-year period
ended December 31, 1996, dated March 27, 1997, included herein, in this
Registration Statement on Form S-1 and to the reference to our Firm under the
heading "Experts". We also consent to the use of our reports on the financial
statements of the AlaTenn Subsidiaries as of December 31, 1995 and 1996, and for
each of the years in the three-year period ended December 31, 1996, dated May 9,
1997, and the historical summary of revenue and direct operating expenses of the
KOCH Hydrocarbon Company - Harmony Gas Processing Plant for the year ended
December 31, 1995, dated November 8, 1996, included herein, in this Registration
Statement on Form S-1.
HEIN + ASSOCIATES LLP
Houston, Texas
June 24, 1997
