As filed with the Securities and Exchange Commission on June 14,1995
Registration No. 33-59199
SECURITIES AND EXCHANGE COMMISSION
AMENDMENT NO. 1TO
FORM S-3
REGISTRATION STATEMENT UNDER THE SECURITIES ACT OF 1933
CAIRN ENERGY USA, INC.
(Exact name of registrant as specified in its charter)
Delaware 1331
(State or other (Primary Standard
jurisdiction of Industrial Classification
incorporation or Code Number)
organization)
23-2169839
(I.R.S.
Employer
Identification
Number)
Michael R. Gilbert
President and Chief Executive Officer
Cairn Energy USA, Inc.
8235 Douglas Avenue, Suite 1221
Dallas, Texas 75225
(214) 369-0316
(Name, address, including zip code, and telephone number,
including area code, of registrant's principal executive offices
and of agent for service)
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Copy to:
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Mark D. Wigder, Esq. James B. Smith, Jr., Esq. L.R. McMillan, II, Esq.
Jenkens & Gilchrist, Cox & Smith Incorporated Jones, Walker, Waechter,
A Professional Corporation 112 E. Pecan Street, Suite 1800 Carrere & Denegre, L.L.P.
1445 Ross Avenue, Suite 3200 San Antonio, Texas 74205 Place St. Charles
Dallas, Texas 75202 (210) 554-5251 201 St. Charles Avenue
(214) 855-4326 New Orleans, LA 70170
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Approximate Date of Commencement of Proposed Sale to the
Public: As soon as practicable after the effective date of this
registration statement.
If the only securities being registered on this form are
being offered pursuant to dividend or interest reinvestment
plans, please check the following box.
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, other than securities
offered in connection with dividend or interest reimbursement
plans, check the following box. X
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 Section 8(a), may determine.
<PAGE>
Subject to Completion, Dated June ____, 1995
PROSPECTUS
2,623,260 Shares
CAIRN ENERGY USA, INC.
Common Stock
This Prospectus relates to an aggregate of 2,623,260 shares
(the "Shares") of common stock, par value $.01 per share (the
"Common Stock"), of Cairn Energy USA, Inc., a Delaware
corporation (the "Company"), that may be offered from time to
time by Cairn Energy PLC, a Scottish corporation (the "Selling
Stockholder"). The Company will receive no part of the proceeds
of such sales. The expenses (other than commissions and
discounts of underwriters, brokers, dealers or agents) incurred
in connection with this offering are expected to be approximately
$78,000. Substantially all of such expenses will be paid by the
Company.
The Company's Common Stock is traded on the NASDAQ Stock
Market National Market ("NNM") under the symbol "CEUS." On
June 9, 1995, the closing price for the Common Stock on the NNM
was $9 7/8.
_______________
THESE SECURITIES HAVE NOT BEEN APPROVED OR DISAPPROVED BY THE
SECURITIES AND EXCHANGE COMMISSION OR ANY STATE SECURITIES
COMMISSION NOR HAS THE COMMISSION OR ANY STATE SECURITIES
COMMISSION PASSED UPON THE ACCURACY OR ADEQUACY OF THIS
PROSPECTUS. ANY REPRESENTATION TO THE CONTRARY IS A CRIMINAL
OFFENSE.
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Price to Underwriting Proceeds to Selling
Public Discount Stockholder (1)
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<S> <C> <C> <C>
Per Share $____________ $___________ _____________
Total $____________ $___________ _____________
</TABLE>
(1)For acting as agent on behalf of the Selling Stockholder,
Societe Generale Strauss Turnbull Securities Limited will receive
from the Selling Stockholder a commission of 1% of the net
proceeds to the Selling Stockholder. See "Underwriting."
The Shares are offered, subject to prior sale, when, as and
if delivered to and accepted by the Underwriters and subject to
their right to reject any order in whole or in part. It is
expected that delivery of the Shares will be made against payment
therefor on or about June ____, 1995 at the offices of Southcoast
Capital Corporation, New Orleans, Louisiana.
Morgan Keegan & Company, Inc. Southcoast Capital Corporation
The date of this Prospectus is June ___, 1995.
<PAGE>
THE COMPANY
The registrant, Cairn Energy USA, Inc., a Delaware
corporation (the "Company"), was incorporated on May 5, 1981 in
Delaware as "Omni Exploration, Inc." On September 29, 1992,
Cairn Energy USA, Inc., an oil and gas exploration and
development company and wholly-owned subsidiary of Cairn Energy
PLC, a Scottish corporation (the "Selling Stockholder"), merged
with and into the registrant with the registrant being the
survivor (the "Merger"). Pursuant to the Merger, the registrant
changed its name to "Cairn Energy USA, Inc." As used in this
Prospectus, "Omni" refers to Omni Exploration, Inc. prior to the
Merger, "Cairn USA" refers to the corporation prior to the Merger
that merged into Omni Exploration, Inc. and the "Company" refers
to the surviving corporation in the Merger. Because Omni was the
reporting company under the federal securities laws and the
surviving corporation in the Merger (but was not the survivor for
accounting purposes), all references to the Company prior to
September 29, 1992 are to Omni, except for financial data and oil
and gas information. As a result of the accounting treatment of
the Merger, all financial data and oil and gas information of the
Company prior to September 29, 1992 are the historical financial
data and oil and gas information of Cairn USA.
The Company's principal executive offices are located at
8235 Douglas Avenue, Suite 1221, Dallas, Texas 75225 and its
telephone number is (214) 369-0316.
SELLING STOCKHOLDER
As of the date of this Prospectus, the Selling Stockholder
owned 2,623,260 shares, or approximately 15.5% of the 16,983,150
shares of Common Stock issued and outstanding. Assuming all
Shares offered hereby are actually sold, the Selling Stockholder
will no longer hold any shares of Common Stock.
Of the 16,983,150 shares of Common Stock issued and
outstanding, 1,000,000 shares (the "Escrow Shares") were issued
to Phemus Corporation ("Phemus") in connection with the October
1994 acquisition (the "Smith Acquisition") of substantially all
the oil and gas assets (the "Smith Assets") of Smith Offshore
Exploration Company II ("Smith") and are being held in escrow.
Phemus, a Massachusetts corporation that is a subsidiary of the
President and Fellows of Harvard College (a Massachusetts non-
profit educational corporation) and the successor in interest to
Smith, is entitled to notice of all meetings of the Company's
stockholders and to vote all Escrow Shares on all matters
submitted to the Company's stockholders for a vote. The Escrow
Shares, however, are deemed not to be outstanding for financial
reporting purposes. The Smith Assets will be valued as of
June 30, 1995, unless extended under certain circumstances until
December 31, 1995. Following the completion of the valuation
process, the Escrow Shares will be released to Phemus or returned
to the Company. See "Acquisition of Smith Offshore Exploration
Company II" at page 4 of the Company's Annual Report on Form 10-K
for the year ended December 31, 1994.
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Prior to the Merger, Cairn USA was a wholly-owned subsidiary
of the Selling Stockholder. From time to time prior to the
Merger, Cairn USA obtained funds through borrowings from third
parties and borrowings and capital contributions from the Selling
Stockholder. Effective December 31, 1991, the Selling
Stockholder converted the unpaid principal balance of its loans
to Cairn USA, an aggregate of approximately $12,400,000, to
additional paid-in capital. The accrued and unpaid interest on
the converted principal of these promissory notes was not,
however, converted to additional paid-in capital, and as of June
30, 1993, the Company owed the Selling Stockholder approximately
$2,600,000 for this interest. In connection with the Merger, PLC
received 7,992,260 shares of Common Stock and 200,000 shares of
Series A Preferred Stock constituting approximately 95.4% of the
issued and outstanding capital stock of the Company. The Company
paid the accrued and unpaid interest on the converted principal
of the promissory notes to the Selling Stockholder from the
proceeds of the Company's July 1993 public offering of Common
Stock, which yielded net proceeds to the Company of approximately
$17,100,000. The Company also used an additional $3,600,000 of
such proceeds to redeem from the Selling Stockholder all of the
Company's then outstanding Series A Preferred Stock.
In connection with the Smith Acquisition, the Company and
the Selling Stockholder entered into a registration rights
agreement (the "PLC Registration Rights Agreement") pursuant to
which the Selling Stockholder has the right to up to five demand
registrations under the Securities Act of the Common Stock it
holds. Each demand registration must relate to the offering and
sale of at least 1,000,000 shares of Common Stock. The Company
is not obligated to effect any Securities Act registration with
respect to which the registration request is made within six
months of the termination of a prior demand registration of the
Selling Stockholder or a piggyback registration in which there
was no reduction in the number of securities requested by the
Selling Stockholder to be included in such registration. In
addition, the Company will not be obligated to register the sale
of shares by the Selling Stockholder under the Securities Act
that may be sold through an exemption from registration available
pursuant to Rule 144(k) promulgated under the Securities Act.
The Selling Stockholder also has piggyback registration rights to
include shares in certain Securities Act registration statements
filed by the Company.
The Company shall pay all expenses relating to demand
registrations and piggyback registrations (including the
reasonable fees and expenses of counsel to the Selling
Stockholder), except for underwriting discounts and commissions
attributable to the sale of shares of Common Stock by the Selling
Stockholder.
The Selling Stockholder may assign its registration rights
to any one or more transferees; provided, however, that no
transferee of the Selling Stockholder may assign or transfer
rights under the PLC Registration Rights Agreement without the
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prior written consent of the Company. See "Registration Rights
Relating to Common Stock" at page 18 of the Company's Proxy
Statement relating to its 1995 annual meeting (the "Proxy
Statement").
In connection with the Smith Acquisition, the Company and
the Selling Stockholder entered into a participation agreement
(the "Participation Agreement"). Pursuant to the Participation
Agreement, the Selling Stockholder or an affiliate of the Selling
Stockholder has the right under certain circumstances to acquire
an interest in certain oil and gas prospects to be acquired by
the Company in the future in the continental United States or in
the Gulf of Mexico. If the Selling Stockholder is entitled under
the Participation Agreement to acquire such interest, the Selling
Stockholder will be required to purchase such interest at the
same price as the Company has determined that it will offer such
interest to industry participants. The Participation Agreement
became effective upon the consummation of the Smith Acquisition.
As of the date of this Prospectus, the Company has entered into
no transactions with the Selling Stockholder under the
Participation Agreement.
Recent Sales of Shares by the Selling Stockholder
On July 8, 1994, the Selling Stockholder sold 824,000 shares
of Common Stock it held at a price of $7.50 per share pursuant to
a registration statement on Form S-3 under the Securities Act,
(Registration No. 33-80526). Mr. J. Munro M. Sutherland, a then-
Director of the Selling Stockholder and a Director and Senior
Vice President of the Company, purchased 12,000 shares of Common
Stock from the Selling Stockholder in that offering.
On October 10, 1994, in connection with the Smith
Acquisition, the Selling Stockholder sold 2,000,000 shares of
Common Stock to Phemus at a price of $7.50 per share in cash.
On October 18, 1994 the Selling Stockholder sold 1,926,000
shares of Common Stock at a price of $7.00 per share pursuant to
a registration statement on Form S-3 under the Securities Act
(Registration No. 33-84206).
In March 1995, the Selling Stockholder sold 162,000 shares
and 7,000 shares of Common Stock at prices of $8 and $8 1/8 per
share, respectively, in sales pursuant to Rule 144 under the
Securities Act.
RECENT DEVELOPMENTS
East Cameron Blocks 331/332
At the end of May, gross production from the Company's
largest recent development project on East Cameron Blocks 331/332
had reached 103 MMcf of gas and 9,400 barrels of oil and
condensate with eight of the nine wells on production. The
remaining well is expected to be on production prior to the end
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<PAGE>
of the month. Company owns a 40% interest in the shallower zone
of Block 331 and a 20% interest in the deeper zone of both
blocks. Approximately 80% of the proved reserves are located in
the deeper zone.
East Cameron Block 356
The Company has recently participated in a successful
exploration well on East Cameron Block 356. The well has been
suspended after encountering hydrocarbon-bearing sands based on
wireline log analysis and formation test information. Additional
drilling is expected on this block later in the year. The
Company owns a 37.5% working interest in this block.
Smith Assets
On the Smith Assets, there is currently, or has been
recently, drilling activity on three blocks, Eugene Island
Block 59, Mustang Island Block 858 and Vermilion Block 203.
Eugene Island Block 59
An exploration well drilled on Eugene Island Block 59 was
unsuccessful and has been plugged and abandoned. The Company
will seek to clarify the prospectivity of the block with the aid
of a 3-D survey. The Company owns a 25% working interest in this
block.
Mustang Island Block 858
On Mustang Island Block 858, the second well drilled by the
Company, the A-3, has been suspended pending completion
operations The original well drilled on the block, which was
drilled before the Company acquired its interest in this block,
Mustang Island 858 A-1, has been tied back. It is expected that
testing operations on the Mustang Island 858 A-2 well will
commence prior to the end of the month. The Company owns a 17.5%
working interest in this block.
Vermilion Block 203
The first of the exploration wells drilled by the Company to
target certain shallow formations on Vermilion Block 203
encountered several productive sand intervals as indicated by
wireline log analysis. The well has been suspended pending
completion operations. A second exploratory well targeting
shallow horizons is currently drilling. It is expected that a
well to target deeper formations on the block will be spud in the
third quarter of this year. The Company owns a 50% working
interest in this block.
Lease Sale
The Company, together with partners, bid on eighteen blocks
at the Gulf of Mexico Central Area lease sale which was held on
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<PAGE>
May 10, 1995. Of these bids, thirteen were high bids and to date
five of the blocks have been awarded to the Company and its
partners. The decisions by the MMS on the awarding of the
remaining eight blocks is expected to be made in the next two
months. If all of the leases in which the Company or its bidding
group was high bid are awarded, the Company's net share of the
lease bonuses will be $2.5 million. This amount is consistent
with the Company's expected expenditures for the lease sale. The
expenditures for the lease sale will be funded from cash flow
from operations and from amounts available under the Company's
existing credit facility.
Property Sales
On June 6, 1995 the Company entered into an agreement to
sell most of the properties which it owns in Texas and Oklahoma
with effect from April 1, 1995, for a consideration of $1.77
million. At January 1, 1995, the properties had reserves of
approximately 123 MBbl barrels of oil and 2.1 Bcf of gas and had
a Discounted Present Value of $2.03 million. Completion of the
sale, which is still subject to due diligence and certain
customary conditions, is expected before the end of June.
UNDERWRITING
Subject to the terms and conditions of the Underwriting
Agreement, the Selling Stockholder, acting through its agent,
Societe Generale Strauss Turnbull Securities Limited, has agreed
to sell to each of the Underwriters named below, and each such
Underwriter has severally agreed to purchase from the Selling
Stockholder, the respective number of shares of Common Stock set
forth opposite its name below:
Number of Shares
Underwriter of Common Stock
Morgan Keegan & Company, Inc. . . . . . 1,511,630
Southcoast Capital Corporation . . . . . 1,111,630
Total . . . . . . . . . . . . . . . 2,623,260
The Underwriting Agreement provides that the obligations of
the Underwriters are subject to certain conditions precedent and
that the Underwriters are committed to take and pay for all the
Shares offered hereby, if any are taken.
The Underwriters propose to offer the Shares directly to the
public at the public offering price set forth on the cover page
of this Prospectus. After the Shares of Common Stock are
released for sale to the public, the offering price and other
selling terms may, from time to time, be varied by the
Underwriters. For acting as agent on behalf of the Selling
Stockholder, Societe Generale Strauss Turnbull Securities Limited
will receive from the Selling Stockholder a commission of 1% of
the net proceeds to the Selling Stockholder.
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Each of the Underwriters makes a market in the Common Stock.
During the two business days immediately prior to the offer and
sale of the Common Stock, regulations under the Exchange Act
impose restrictions on the market-making activities of the
Underwriters, although the Underwriters may engage in passive
market-making activities during such two-day period. Passive
market-making transactions must comply with certain volume and
price limitations and be identified as such. In general, a
passive market-maker may display its bid at a price not in excess
of the highest bid for the security, and if all independent bids
are lower below the passive market-maker's bid, then such bid
must be lower when certain purchase limits are exceeded.
The Company and the Selling Stockholder have agreed to
indemnify the several Underwriters against certain liabilities,
including liabilities under the Securities Act, or to contribute
to payments that the Underwriters may be required to make in
respect thereof.
LEGAL MATTERS
The validity of the Common Stock offered hereby is being
passed upon for the Company by Jenkens & Gilchrist, a
Professional Corporation, Dallas, Texas. Certain legal matters
relating to the offering will be passed on for the Selling
Stockholder by Cox & Smith Incorporated, San Antonio, Texas.
Certain matters of Scottish law relating to the offering will be
passed on for the Selling Stockholder by Shepherd & Wedderburn
W.S., Edinburgh, Scotland. Certain legal matters relating to the
offering will be passed on for the Underwriters by Jones, Walker,
Waechter, Poitevent, Carrere & Denegre, L.L.P., New Orleans,
Louisiana.
EXPERTS
The consolidated financial statements of the Company
included in the Company's Annual Report on Form 10-K for the year
ended December 31, 1994 have been audited by Ernst & Young LLP,
independent auditors, as set forth in their report thereon,
included therein and incorporated herein by reference. Such
consolidated financial statements are incorporated herein by
reference in reliance upon such report given upon the authority
of such firm as experts in accounting and auditing.
The audited financial statements of Smith that are included
in the Company's Prospectus dated October 11, 1994 and in the
Company's Proxy Statement relating to a special meeting of
stockholders held on October 10, 1994 have been audited by Arthur
Andersen, LLP, independent public accountants, as set forth in
their report thereon, included therein and incorporated herein by
reference in reliance upon the authority of said firm as experts
in giving said reports.
The estimated reserve review of Ryder Scott included in the
Company's Annual Report on Form 10-K for the year ended December
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31, 1994 and incorporated by reference in this Prospectus has
been included herein in reliance upon the authority of that firm
as an expert in petroleum engineering.
AVAILABLE INFORMATION
The Company is subject to the informational requirements of
the Exchange Act and in accordance therewith files reports, proxy
statements and other information with the Securities and Exchange
Commission (the "Commission"). Such reports, proxy statements
and other information can be inspected and copied at the public
reference facilities maintained by the Commission at Room 1024,
450 Fifth Street, N.W., Washington, D.C. 20549, and at the
following Regional Offices of the Commission: The Chicago
Regional Office, Northwestern Atrium Center, 500 West Madison
Street, Suite 1400, Chicago, Illinois 60661-2511, and the New
York Regional Office, 7 World Trade Center, 12th Floor, New York,
New York 10007, at prescribed rates. Such reports, proxy
statements and other information concerning the Company can also
be inspected at the offices of the National Association of
Securities Dealers, Inc., 1735 K Street, N.W., Washington, D.C.
20006.
ADDITIONAL INFORMATION
The Company has filed with the Commission a Registration
Statement on Form S-3 under the Securities Act with respect to
the Common Stock offered hereby (the "Registration Statement").
This Prospectus does not contain all the information set forth in
the Registration Statement and the exhibits and schedules
thereto. Such additional information can be obtained from the
Commission's principal office in Washington, D.C. Statements in
this Prospectus concerning provisions of documents filed with the
Registration Statement as exhibits are necessarily summaries of
such documents, and each statement is qualified in its entirety
by reference to the copy of the applicable document filed with
the Commission.
DOCUMENTS INCORPORATED BY REFERENCE
The following documents or portions thereof filed by the
Company are hereby incorporated by reference in this Prospectus:
(i) the Company's Annual Report on Form 10-K for the year
ended December 31, 1994, filed with the Commission on
March 15, 1995, and Amendment Number 1 thereto on Form
10-K/A, filed with the Commission on April 10, 1995;
(ii) the Company's Quarterly Report on Form 10-Q for the
quarter ended March 31, 1995, filed with the Commission
on May 2, 1995;
(iii) the Company's Proxy Statement for its 1995 Annual
Meeting, filed with the Commission on April 4,
1995;
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(iv) the Financial Statements of Smith Offshore Exploration
Company II and the Pro Forma Combined Financial
Statements contained in the Company's Proxy Statement
for its Special Meeting of Stockholders held October
10, 1994, filed with the Commission on September 19,
1994;
(v) the Financial Statements of Smith Offshore Exploration
Company II contained in the Prospectus dated October
11, 1994, filed with the Commission on October 13, 1994
pursuant to Rule 424(b) and included in the Company's
Registration Statement on Form S-3 (Registration No.
33-84206); and
(vi) the description of the Common Stock set forth in the
Registration Statement on Form 8-A, filed with the
Commission on January 29, 1982, including any amendment
or report filed for the purpose of updating such
description.
In addition, all documents subsequently filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act after the date of this Prospectus and prior to the
termination of the offering of Common Stock made hereby shall be
deemed to be incorporated by reference into this Prospectus and
to be a part hereof from the date of filing of such documents.
Any statement contained herein or in a document incorporated or
deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for the purposes of this Prospectus to
the extent that a statement contained herein or in any
subsequently filed document which is or is deemed to be
incorporated by reference herein modifies or supersedes such
statement. Any such statement so modified or superseded shall
not be deemed, except as so modified or superseded, to constitute
a part of this Prospectus.
The Company will provide without charge to each person to
whom a copy of this Prospectus is delivered, upon oral or written
request of such person, a copy of any and all of the documents
incorporated by reference herein (other than exhibits and
schedules to such documents, unless such exhibits or schedules
are specifically incorporated by reference into such documents).
Such requests should be directed to A. Allen Paul, Vice
President-Finance, Cairn Energy USA, Inc., 8235 Douglas Avenue,
Suite 1221, Dallas, Texas 75225 or by telephone at (214) 369-
0316.
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No dealer, salesperson or any other person has been
authorized to give any information or to make any representation
in connection with this Offering other than those contained in
this Prospectus, and, if given or made, such information or
representation must not be relied upon as having been authorized
by the Company. This Prospectus does not constitute an offer to
sell or solicitation of any offer to buy by anyone in any
jurisdiction in which such offers or solicitation is not
authorized, or in which the person making such offer or
solicitation is not qualified to do so or to any person to whom
it is unlawful to make such offer or solicitation. Neither the
delivery of this Prospectus nor any sale hereunder shall, under
any circumstances create any implication that there has been no
change in the affairs of the Company since the date hereof or
that the information contained herein is correct as of any time
subsequent to its date.
TABLE OF CONTENTS
Page
THE COMPANY . . . . . . . . . . . . . . . . . . . . . . . . . 2
SELLING STOCKHOLDER . . . . . . . . . . . . . . . . . . . . . 2
RECENT DEVELOPMENTS . . . . . . . . . . . . . . . . . . . . . 4
UNDERWRITING . . . . . . . . . . . . . . . . . . . . . . . . 5
LEGAL MATTERS . . . . . . . . . . . . . . . . . . . . . . . . 6
EXPERTS . . . . . . . . . . . . . . . . . . . . . . . . . . . 6
AVAILABLE INFORMATION . . . . . . . . . . . . . . . . . . . . 6
ADDITIONAL INFORMATION . . . . . . . . . . . . . . . . . . . 7
DOCUMENTS INCORPORATED BY REFERENCE . . . . . . . . . . . . . 7
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PART II
INFORMATION NOT REQUIRED IN PROSPECTUS
Item 14. Other Expenses of Issuance and Distribution.
The following table indicates the expenses to be incurred in
connection with the issuance and distribution of the securities
described in this registration statement, other than underwriting
discounts and commissions. The Company will pay substantially
all of such expenses.
SEC registration fee $ 8,873.86
National Association of Securities Dealers, Inc.
Filing Fee 3,800.00
Blue sky fees and expenses 500.00*
Accounting fees and expenses 8,000.00*
Legal fees and expenses 50,000.00*
Printing and engraving fees and expenses 5,000.00*
Miscellaneous 2,000.00*
TOTAL $ 78,173.86*
*Estimated.
Item 15. Indemnification of Directors and Officers
The Company has authority under the Delaware General
Corporation Law, subject to certain limitations, to indemnify its
directors and officers against expenses (including attorneys'
fees), judgments, fines and certain settlements actually and
reasonably incurred by them in connection with any suit or
proceeding to which they are a party so long as they acted in
good faith and in a manner reasonably believed to be in or not
opposed to the best interests of the Company, and, with respect
to a criminal action or proceeding, so long as they had no
reasonable cause to believe their conduct was unlawful.
Reference is also made to the Company's Certificate of
Incorporation, which limits or eliminates a director's liability
for monetary damages to the Company or its stockholders for acts
or omissions in the director's capacity as a director, except
that the Company's Certificate of Incorporation does not
eliminate or limit the liability of a director for (i) a breach
of the director's duty of loyalty to the Company or its
stockholders, (ii) an act or omission not in good faith that
constitutes a breach of duty of the director to the Company or an
act or omission that involves intentional misconduct or a knowing
violation of the law, (iii) a transaction from which a director
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received an improper benefit, whether or not the benefit resulted
from an action taken within the scope of the director's office,
or (iv) an act or omission for which the liability of a director
is expressly provided for by an applicable statute. In the case
of an action by or in the right of the Company, indemnification
is precluded if such person has been adjudged to be liable,
unless and only to the extent that the Court of Chancery of the
State of Delaware or the court in which the action was brought
shall determine that indemnification is proper. The Company will
advance amounts to an indemnified person on receipt of an
undertaking to repay the advance following any subsequent
determination that the indemnified person is not entitled to
indemnification. Indemnification will be provided unless it is
determined to be improper (i) by a majority of disinterested
directors constituting a quorum or if no such quorum is
obtainable, a majority vote of a committee of two or more
directors, (ii) by a majority vote of a quorum of the outstanding
shares of stock of all classes entitled to vote for directors,
voting as a single class, which quorum shall consist of
disinterested stockholders, (iii) by independent legal counsel in
a written opinion, or (iv) by a court of competent jurisdiction.
The Company also has the power to obtain insurance indemnifying
officers and directors of the Company against any liability which
it may deem proper, whether or not the Company would have the
power to indemnify such officer or director pursuant to the
General Corporation Law of the State of Delaware. The Company
has obtained such insurance.
Item 16. Exhibits and Financial Statement Schedules.
(a) Exhibits:
*1.1 Form of Underwriting Agreement
4 Specimen Stock Certificate evidencing the Common
Stock (incorporated by reference from the
Company's Annual Report on Form 10-K for the year
ended December 31, 1992).
5 Opinion of Jenkens & Gilchrist, a Professional
Corporation.
*23.1 Consent of Ernst & Young, LLP, Independent
Auditors.
*23.2 Consent of Arthur Andersen LLP, Independent
Public Accountants.
23.3 Consent of Jenkens & Gilchrist, A Professional
Corporation (included in opinion Exhibit 5).
23.4 Consent of Ryder Scott Company.
24 Power of Attorney (included on the signature page
of the Registration Statement).
*Filed herewith
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Item 17. Undertakings
A. The undersigned registrant hereby undertakes:
(1) To file, during any period in which offers or
sales are being made, a post-effective
amendment to this registration statement:
(i) To include any prospectus required by Section
10(a)(3) of the Securities Act of 1933;
(ii) To reflect in the prospectus any facts or
events arising after the effective date of
the registration statement (or the most
recent post-effective amendment thereof)
which, individually or in the aggregate,
represent a fundamental change in the
information set forth in the registration
statement; and
(iii) To include any material information with
respect to the plan of distribution not
previously disclosed in the registration
statement or any material change to such
information in the registration
statement;
provided, however, that paragraphs A(1)(i) and A(1)(ii) do not
apply if the information required to be included in a post-
effective amendment by these paragraphs is contained in periodic
reports filed by the registrant pursuant to section 13 or section
15(d) of the Securities Exchange Act of 1934.
(2) That, for the purpose of determining any liability
under the Securities Act of 1933, each such post-effective
amendment shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
(3) To remove from registration by means of a post-
effective amendment any of the securities being registered which
remain unsold at the termination of the offering.
B. The undersigned registrant hereby undertakes that, for
purposes of determining any liability under the Securities Act of
1933, each filing of the registrant's annual report pursuant to
section 13(a) or section 15(d) of the Securities Exchange Act of
1934 that is incorporated by reference in the registration
statement shall be deemed to be a new registration statement
relating to the securities offered therein, and the offering of
such securities at that time shall be deemed to be the initial
bona fide offering thereof.
II-3
<PAGE>
C. The undersigned registrant hereby undertakes to deliver
or cause to be delivered with the prospectus, to each person to
whom the prospectus is sent or given, the latest annual report to
security-holders that is incorporated by reference in the
prospectus and furnished pursuant to and meeting the requirements
of Rule 14a-3 or Rule 14c-3 under the Securities Exchange Act of
1934; and, where interim financial information required to be
presented by Article 3 of Regulation S-X is not set forth in the
prospectus, to deliver, or cause to be delivered to each person
to whom the prospectus is sent or given, the latest quarterly
report that is specifically incorporated by reference in the
prospectus to provide such interim financial information.
D. Insofar as indemnification for liabilities arising
under the Securities Act of 1933 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 Securities and Exchange
Commission such indemnification is against public policy as
expressed in the Securities Act of 1933 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 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 Act and will be governed by the final
adjudication of such issue.
E. The registrant hereby undertakes that:
(1) For purposes of determining any liability under
the Securities Act of 1933, the information omitted from the form
of prospectus filed as part of this registration statement or in
reliance upon Rule 430A and contained in a form of prospectus
filed by the registrant pursuant to Rule 424(b)(1) or (4) or
497(h) under the Securities Act of 1933 shall be deemed to be
part of this registration statement as of the time it was
declared effective.
(2) For the purpose of determining any liability under
the Securities Act of 1933, each post-effective amendment that
contains a form of prospectus shall be deemed to be a new
registration statement relating to the securities offered
therein, and the offering of such securities at that time shall
be deemed to be the initial bona fide offering thereof.
II-4
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Act of 1933,
the registrant certifies that it has reasonable grounds to
believe that it meets all of the requirements for filing on Form
S-3 and has duly caused this Amendment No. 1 to the Registration
Statement to be signed on its behalf by the undersigned,
thereunto duly authorized, in the City of Dallas, and State of
Texas, on the 13th day of June, 1995.
CAIRN ENERGY USA, INC.
(Registrant)
By: /s/ Michael R. Gilbert
Michael R. Gilbert, President
and Chief Executive Officer
POWER OF ATTORNEY
Know All Men By These Presents, that each person whose
signature appears below constitutes and appoints Michael R.
Gilbert and J. M. M. Sutherland, and each of them, each with full
power to act without the other, his or her true and lawful
attorney-in-fact and agent, with full power and substitution, for
him and in his name, place and stead, in any and all capacities,
to sign any or all amendments to this Registration Statement, and
to file the same, with all exhibits thereto, and all other
documents in connection therewith, with the Securities and
Exchange Commission, granting unto said attorney-in-fact and
agent full power and authority to do and perform each and every
act and thing requisite and necessary to be done in and about the
premises, as fully to all intents and purposes as he might or
could do in person, hereby ratifying and confirming all that said
attorney-in-fact and agent, or his substitute, may lawfully do or
cause to be done by virtue thereof.
Pursuant to the requirements of the Securities Act of 1933,
this Registration Statement has been signed below by the
following persons in the capacities and on the dates indicated.
Signature Title Date
/s/ Michael R. Gilbert President and Chief ExecutiveJune 13, 1995
Michael R. Gilbert Officer and Director (Principal
Executive Officer)
* Senior Vice President, June ___, 1995
J.Munro M. Sutherland Chief Financial
Officer, Treasurer and Director
(Principal Financial Officer)
<PAGE>
* Vice President-Finance
(Principal June , 1995
A. Allen Paul Accounting Officer)
* Director June , 1995
Jack O. Nutter, II
* Director June , 1995
R. Daniel Robins
* Director June , 1995
William B. B. Gammell
* Director June , 1995
Michael E. McMahon
* Director June , 1995
John C. Halsted
/s/ Michael R. Gilbert
*By: Michael R. Gilbert
Agent and Attorney-in-Fact
<PAGE>
EXHIBIT INDEX
Exhibit
Number: Exhibit: Page
Number:
*1.1 Form of Underwriting Agreement
4 Specimen Stock Certificate evidencing
the Common Stock (incorporated by
reference from the Company's Annual
Report on Form 10-K for the year
ended December 31, 1992).
5 Opinion of Jenkens & Gilchrist, a
Professional Corporation.
*23.1 Consent of Ernst & Young, LLP,
Independent Auditors.
*23.2 Consent of Arthur Andersen LLP,
Independent Public Accountants.
23.3 Consent of Jenkens & Gilchrist, a
Professional Corporation (included in
opinion Exhibit 5).
23.4 Consent of Ryder Scott Company.
24 Power of Attorney (included on the
signature page of the Registration
Statement).
*Filed herewith
<PAGE>
EXHIBIT 1.1
<PAGE>
EXHIBIT 23.1
<PAGE>
EXHIBIT 23.2
<PAGE>
CONSENT OF ERNST & YOUNG LLP, INDEPENDENT AUDITORS
We consent to the reference to our firm under the caption
"Experts" in the Registration Statement (Form S-3) and related
Prospectus of Cairn Energy USA, Inc. for the registration of
2,623,260 shares of its common stock, and to the incorporation by
reference therein of our report dated February 17, 1995, with
respect to the consolidated financial statements of Cairn Energy
USA, Inc. included in its Annual Report (Form 10-K) for the year
ended December 31, 1994, filed with the Securities and Exchange
Commission.
ERNST & YOUNG LLP
Dallas, Texas
June 13, 1995
<PAGE>
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the
use of our reports included in or made a part of this
registration statement.
ARTHUR ANDERSEN, LLP
Houston, Texas
June 13, 1995
<PAGE>
CAIRN ENERGY USA, INC.
2,623,260 Shares of Common Stock
($.01 par value)
_______________
Underwriting Agreement
June , 1995
Morgan Keegan & Company, Inc.
Fifty Front Street
Morgan Keegan Tower
Memphis, Tennessee 38103
Southcoast Capital Corporation
300 Poydras Street, Suite 2000
New Orleans, Louisiana 70130
Dear Sirs:
Cairn Energy PLC, a Scottish corporation (the "Selling
Stockholder"), proposes, subject to the terms and conditions
stated herein, to sell to the Underwriters named above (the
"Underwriters") an aggregate of 2,623,260 shares (the "Shares")
of Common Stock, $.01 par value ("the Stock"), of Cairn Energy
USA, Inc., a Delaware Corporation (the "Company").
1. A. The Company represents and warrants to, and agrees
with, each of the Underwriters that:
(a) A registration statement on Form S-3 (File
No. 33-59199) with respect to the Shares has been filed with the
Securities and Exchange Commission (the "Commission"); such
registration statement and any post-effective amendment thereto,
each in the form heretofore delivered to you, have been declared
effective by the Commission in such form; no other document with
respect to such registration statement has heretofore been filed
with the Commission; and no stop order suspending the
effectiveness of such registration statement has been issued and
no proceeding for that purpose has been initiated or threatened
by the Commission (any preliminary prospectus included in such
registration statement or filed with the Commission pursuant to
Rule 424(a) of the rules and regulations of the Commission under
the Securities Act of 1933, as amended (the "Act"), being
hereinafter called a "Preliminary Prospectus"; the various parts
of such registration statement, including all exhibits thereto
and including the information contained in the form of final
prospectus filed with the Commission pursuant to Rule 424(b)
under the Act in accordance with Section 5(a) hereof and deemed
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<PAGE>
by virtue of Rule 430A under the Act to be part of the
registration statement at the time it was declared effective,
each as amended at the time such part of the registration
statement became effective, being hereinafter called the
"Registration Statement"; and such final prospectus, in the form
first filed pursuant to Rule 424(b) under the Act, being
hereinafter called the "Prospectus"); any reference herein to the
Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-
3, which were filed under the Securities Exchange Act of 1934, as
amended (the "Exchange Act") on or before the effective date of
the Registration Statement, the date of such Preliminary
Prospectus or the date of the Prospectus, as the case may be, and
any reference herein to the terms "amend," "amendment," or
"supplement" with respect to the Registration Statement, any
Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include (i) the filing of any document under the Exchange
Act after the effective date of the Registration Statement, the
date of such Preliminary Prospectus or the date of the
Prospectus, as the case may be, which is incorporated therein by
reference and (ii) any such document so filed.
(b) No order preventing or suspending the use of
any Preliminary Prospectus or the Prospectus has been issued by
the Commission, and each Preliminary Prospectus, at the time of
filing thereof, conformed in all material respects to the
requirements of the Act and the rules and regulations of the
Commission thereunder, and did not contain an untrue statement of
a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; provided, however, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in
writing to the Company by an Underwriter or the Selling
Stockholder expressly for use therein;
(c) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus will conform, in all
material respects to the requirements of the Act and the rules
and regulations of the Commission thereunder and do not and will
not, as of the applicable effective date as to the Registration
Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement
thereto, contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading;
provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the
2
<PAGE>
Company by an Underwriter or the Selling Stockholder expressly
for use therein; the documents incorporated by reference in the
Registration Statement and the Prospectus, when they were first
filed with the Commission, complied in all material respect with
the applicable provisions of the Exchange Act and the rules and
regulations of the Commission thereunder;
(d) The filing of the Registration Statement and
the execution and delivery of this Agreement have been duly and
validly authorized, and this Agreement has been duly executed and
delivered by the Company and represents the legal, valid and
binding agreement of the Company;
(e) Neither the Company nor any of its
subsidiaries has sustained since the date of the latest audited
financial statements incorporated by reference in the Prospectus
any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental
action, order or decree, otherwise than as set forth or
contemplated in the Prospectus; and, since the respective dates
as of which information is given in the Registration Statement
and the Prospectus, there has not been any material change in the
capital stock or long-term debt of the Company or any of its
subsidiaries (except for amounts drawn down under the Company's
revolving credit facility) or any material adverse change, or any
development involving a prospective material adverse change, in
or affecting the general affairs, management, financial position,
shareholders' equity or results of operations of the Company and
its subsidiaries, otherwise than as set forth or contemplated in
the Prospectus;
(f) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of Delaware, with power and authority (corporate and
other) to own its properties and conduct its business as
described in the Prospectus, and has been duly qualified as a
foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which
it owns or leases properties, or conducts any business, so as to
require such qualification, or is subject to no material
liability or disability by reason of the failure to be so
qualified in any such jurisdiction; and each subsidiary of the
Company has been duly incorporated and is validly existing as a
corporation in good standing under the laws of its jurisdiction
of incorporation, with power and authority (corporate and other)
to own its properties and conduct its business as described in
the Prospectus, and has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties, or conducts any business, so as to
require qualification, or is subject to no material liability or
3
<PAGE>
disability by reason of the failure to be so qualified in any
such jurisdiction;
(g) The Company and its subsidiaries have good
and defensible title to their real properties and their producing
oil and gas properties, free and clear of all liens, encumbrances
and defects, except (i) those described in the Prospectus, (ii)
liens securing taxes and other governmental charges, or claims of
materialmen, mechanics and similar persons, not yet due and
payable, (iii) liens and encumbrances under operating agreements,
unitization and pooling agreements, and other similar agreements
of a scope and nature customary in the oil and gas industry that
do not materially affect the value of such oil and gas properties
or materially interfere with the use made or proposed to be made
of such properties by the Company and its subsidiaries and (iv)
such other liens, encumbrances and defects that do not, singly or
in the aggregate, materially affect the value of such properties
or materially interfere with the use made or proposed to be made
of such properties by the Company and its subsidiaries;
(h) The Company has an authorized capitalization
as set forth in the Prospectus, and all of the issued shares of
capital stock of the Company have been duly and validly
authorized and issued, are fully paid and non-assessable and
conform to the description thereof contained in the Prospectus;
and all of the issued shares of capital stock of each subsidiary
of the Company have been duly and validly authorized and issued,
are fully paid and non-assessable and are owned, directly or
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims, except for the security
interest granted to Internationale Nederlanden (U.S.) Credit
Corporation ("INCC") pursuant to the Credit Agreement dated
September 8, 1993, as amended on October 15, 1993, May 10, 1994
and December 20, 1994 (the "Credit Agreement") between the
Company and INCC, a copy of which has been filed with the
Commission as an exhibit to the Registration Statement or to
documents incorporated by reference therein;
(i) The Shares conform to the description of the
Stock contained in the Prospectus;
(j) The compliance by the Company with all of the
provisions of this Agreement and the consummation of the
transactions herein contemplated will not conflict with or result
in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which
the Company or any of its subsidiaries is a party or by which the
Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its subsidiaries
is subject, nor will such action result in any violation of the
provisions of the Certificate of Incorporation or By-laws of the
Company or the charter, by-laws or other constitutional documents
4
<PAGE>
of any of its subsidiaries or any violation by the Company of any
statute or any order, rule or regulation of any court or
governmental agency or body having jurisdiction over the Company
or any of its subsidiaries or any of their properties; and no
consent, approval, authorization, order, registration or
qualification of or with any such court or governmental agency or
body is required for the sale of the Shares or the consummation
by the Company of the transactions contemplated by this
Agreement, except (i) the registration under the Act of the
Shares, (ii) such consents, approvals, authorizations,
registrations or qualifications as may be required under state
securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters, and (iii) such
approval of the underwriting arrangements as may be required
under the by-laws of the National Association of Securities
Dealers, Inc. (the "NASD");
(k) Other than as set forth or contemplated in
the Prospectus, there are no legal or governmental proceedings
pending to which the Company or any of its subsidiaries is a
party or of which any property of the Company or any of its
subsidiaries is the subject that, if determined adversely to the
Company or any of its subsidiaries, would individually or in the
aggregate have a material adverse effect on the consolidated
financial position, shareholders' equity or results of operations
of the Company and its subsidiaries; and, to the best of the
Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(l) Ernst & Young LLP, and Arthur Andersen, LLP,
who have certified certain financial statements of the Company
and its subsidiaries and certain financial statements of
businesses and operations acquired by the Company that are
incorporated by reference in the Registration Statement and the
Prospectus, are each independent public accountants as required
by the Act and the rules and regulations of the Commission
thereunder;
(m) Ryder Scott Company, who has issued reports
on the Company's oil and gas reserves that are incorporated by
reference in the Registration Statement and the Prospectus, were,
as of the date of their respective reports, and are, as of the
date hereof, independent petroleum engineers with respect to the
Company and its subsidiaries;
(n) The audited and unaudited consolidated
financial statements and schedules of the Company and its
subsidiaries incorporated by reference in the Registration
Statement and the Prospectus, taken together, present fairly the
consolidated financial position of the Company and its
subsidiaries as of their respective dates and the consolidated
results of their operations, their cash flows and changes in
shareholders' equity of the Company for the respective periods
5
<PAGE>
covered thereby; such financial statements have been prepared in
conformity with generally accepted accounting principles applied
on a consistent basis throughout the periods involved, except as
set forth in the notes to such financial statements and except to
the extent that certain footnote disclosures regarding the
unaudited financial statements have been omitted in accordance
with the applicable rules of the Commission; the consolidated
financial statements of the Company and its subsidiaries
incorporated by reference in the Registration Statement and the
Prospectus comply in all material respects to the requirements of
the Act and the regulations thereunder;
(o) The Stock is qualified for inclusion in, and
is quoted on, the NASDAQ National Market System;
(p) None of the Company, its subsidiaries, or any
of their officers, directors or affiliates has taken or will
take, directly or indirectly, any action designed to cause or
result in, or that has constituted or might reasonably be
expected to cause or result in, the stabilization or manipulation
of the price of any securities of the Company to facilitate the
sale or resale of the Shares; and
(q) The Company and its subsidiaries have filed
all federal, state and foreign income and franchise tax returns
required to be filed and have paid all taxes shown thereon to be
due, except for taxes that are being contested in good faith or
with respect to which an extension has been granted, and there is
no tax deficiency that has been or, to the best knowledge of the
Company, might be asserted against the Company, any of its
subsidiaries or any of their respective properties or assets that
would have a material adverse effect on the condition (financial
or other), business, properties, assets or results of operations
of the Company and its subsidiaries taken as a whole.
B. The Selling Stockholder represents and warrants
to, and agrees with, each of the Underwriters that:
(a) The Selling Stockholder has been duly
incorporated and is validly existing as a corporation under the
laws of Scotland, with power and authority (corporate and other)
to own its properties and conduct its business as it is currently
being conducted, and has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each jurisdiction in the United States
in which it owns or leases properties, or conducts any business,
so as to require such qualification, or is subject to no material
liability or disability by reason of the failure to be so
qualified in any such jurisdiction;
(b) The sale of the Shares by the Selling
Stockholder, the compliance by the Selling Stockholder with all
of the provisions of this Agreement and the consummation of the
6
<PAGE>
transactions herein contemplated will not conflict with or result
in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument to which
the Selling Stockholder or any of its subsidiaries is a party or
by which the Selling Stockholder or any of its subsidiaries is
bound or to which any of the property or assets of the Selling
Stockholder or any of its subsidiaries is subject, nor will such
action result in any violation of the provisions of the
Memorandum and Articles of Association of the Selling Stockholder
or the charter, by-laws or other constitutional documents of any
of its subsidiaries or any statute or any order, rule or
regulation of any court or governmental agency or body having
jurisdiction over the Selling Stockholder or any of its
subsidiaries or any of their properties; and no consent,
approval, authorization, order, registration or qualification of
or with any such court or governmental agency or body is required
for the sale of the Shares or the consummation by the Selling
Stockholder of the transactions contemplated by this Agreement,
except (i) the registration under the Act of the Shares, (ii)
such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue
Sky laws in connection with the purchase and distribution of the
Shares by the Underwriters, and (iii) such approval of the
underwriting arrangements as may be required under the by-laws of
the NASD;
(c) The Selling Stockholder has, and at the time
of delivery of the Shares to be sold by the Selling Stockholder
the Selling Stockholder will have, full legal right, power,
authority and capacity, and, except as required under the Act and
state securities and Blue Sky laws, all necessary consents,
approvals, authorizations, orders, registrations, filings,
qualifications, licenses and permits of and from all public,
regulatory or governmental agencies and bodies, as are required
for the execution, delivery and performance of this Agreement,
and the consummation of the transactions contemplated hereby,
including the sale, assignment, transfer and delivery of the
Shares to be sold, assigned, transferred and delivered by the
Selling Stockholder hereunder;
(d) This Agreement has been duly and validly
authorized, executed and delivered by the Selling Stockholder and
represents the legal, valid and binding obligation of the Selling
Stockholder;
(e) The Selling Stockholder has good, valid and
marketable title to the Shares to be sold by the Selling
Stockholder pursuant to this Agreement, free and clear of all
liens, encumbrances, claims, security interests, restrictions on
transfer, shareholders' agreements, voting trusts and other
defects in title whatsoever, with full power to deliver such
Shares hereunder, and, upon the delivery of and payment for such
7
<PAGE>
Shares as herein contemplated, each of the Underwriters will
receive good, valid and marketable title to the Shares purchased
by it from the Selling Stockholder, free and clear of all liens,
encumbrances, claims, security interests, restrictions on
transfer, shareholders' agreements, voting trusts and other
defects in title whatsoever;
(f) The Selling Stockholder has not taken and
shall not take, directly or indirectly, any action designed to
cause or result in, or that has constituted or might reasonably
be expected to cause or result in, the stabilization or
manipulation of any securities of the Company to facilitate the
sale or resale of the Shares;
(g) (i) At the time of filing thereof, such parts
of each Preliminary Prospectus as relate to the Selling
Stockholder and are based on information furnished in writing to
the Company by or on behalf of the Selling Stockholder expressly
for use therein did not contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; and
(ii) as of the applicable effective date as to the Registration
Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement
thereto, such parts of the Registration Statement and the
Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus as relate to the Selling
Stockholder and are based on information furnished in writing to
the Company by or on behalf of the Selling Stockholder expressly
for use therein do not and will not contain an untrue statement
of a material fact or omit to state a material fact required to
be stated therein or necessary to make the statements therein, in
light of the circumstances under which they were made, not
misleading; and
(h) Societe Generale Strauss Turnbull Securities
Limited (the "Agent") will act as agent on behalf of the Selling
Stockholder in the sale and delivery of the Shares to the
Underwriters hereunder, for which service the Agent will receive
from the Selling Stockholder a commission of 1% of the net
proceeds to the Selling Stockholder. No party hereto, other than
the Selling Stockholder, will have any liability whatsoever to
the Agent for the payment of any fees, commissions or expenses in
connection with any of the transactions contemplated herein.
2. Subject to the terms and conditions herein set forth,
the Selling Stockholder agrees to sell to each of the
Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company, at a purchase price
per share of $ , the number of Shares set forth opposite
the name of such Underwriter on Schedule I hereto.
8
<PAGE>
3. Upon the authorization by you of the release of the
Shares, you propose to offer the Shares for sale upon the terms
and conditions set forth in the Prospectus.
4. Certificates in definitive form for the Shares to be
purchased by each Underwriter hereunder, and in such
denominations and registered in such names as Southcoast Capital
Corporation may request upon at least forty-eight hours' prior
notice to the Company and the Selling Stockholder, shall be
delivered by or on behalf of the Selling Stockholder to you
against payment by such Underwriter of the purchase price
therefor by certified official bank check or checks, payable to
the order of the Selling Stockholder in New York Clearing House
funds, all at the offices of Southcoast Capital Corporation, at
9:30 a.m., Central time, on , 1995, or at such other time
and date as you, the Company and the Selling Stockholder may
agree upon in writing, such time and date being herein called the
"Time of Delivery." Such certificates will be made available for
checking and packaging at least twenty-four hours prior to the
Time of Delivery at the offices of Southcoast Capital Corporation
or such other place as may be designated by you.
5. The Company agrees with each of the Underwriters:
(a) To prepare the Prospectus in a form approved
by you and to file such Prospectus pursuant to Rule 424(b) under
the Act not later than the Commission's close of business on the
second business day following the execution and delivery of this
Agreement, or, if applicable, such earlier time as may be
required by Rule 430A(a)(3) under the Act; to make no further
amendment or any supplement to the Registration Statement or
Prospectus that shall be disapproved by you promptly after
reasonable notice thereof; to advise you, promptly after it
receives notice thereof, of the time when the Registration
Statement, or any amendment thereto, has been filed or becomes
effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish you with copies thereof;
to advise you, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or any order
preventing or suspending the use of any Preliminary Prospectus or
Prospectus, of the suspension of the qualification of the Shares
for offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, and of any
request by the Commission to amend or supplement the Registration
Statement or the Prospectus or for additional information; and,
in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or
Prospectus or suspending any such qualification, to use promptly
its best efforts to obtain its withdrawal;
(b) Promptly from time to time to take such
action as you may reasonably request to qualify the Shares for
offering and sale under the securities laws of such jurisdictions
9
<PAGE>
as you may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such
jurisdictions for as long as may be necessary to complete the
distribution of the Shares, provided that in connection therewith
the Company shall not be required to qualify as a foreign
corporation or to file a general consent to service of process in
any jurisdiction; and
(c) To furnish the Underwriters with copies of
the Prospectus in such quantities as you may from time to time
reasonably request, and, if the delivery of a prospectus is
required at any time prior to expiration of three months after
the time of issue of the Prospectus in connection with the
offering or sale of the Shares and if at such time any event
shall have occurred as a result of which the Prospectus as then
amended or supplemented would include an untrue statement of a
material fact or omit to state any material fact necessary in
order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall
be necessary during such period to amend or supplement the
Prospectus in order to comply with the Act, to notify you and
upon your request to prepare and furnish without charge to each
Underwriter and to any dealer in securities as many copies as you
may from time to time reasonably request of an amended Prospectus
or a supplement to the Prospectus that will correct such
statement or omission or effect such compliance, and in case any
Underwriter is required to deliver a prospectus in connection
with sales of any of the Shares at any time three months or more
after the time of issue of the Prospectus, upon your request but
at the expense of such Underwriter, to prepare and deliver to
such Underwriter as many copies as you may request of an amended
or supplemented Prospectus complying with Section 10(a)(3) of the
Act.
6. The Company covenants and agrees with the several
Underwriters that the Company will pay or cause to be paid the
following: (i) the fees, disbursements and expenses of the
Company's counsel, accountants and petroleum engineers in
connection with the registration of the Shares under the Act and
all other expenses in connection with the preparation, printing
and filing of the Registration Statement, any Preliminary
Prospectus and the Prospectus and amendments and supplements
thereto and the mailing and delivering of copies thereof to the
Underwriters and dealers; (ii) all expenses in connection with
the qualification of the Shares for offering and sale under state
securities laws as provided in Section 5(b) hereof, including the
fees and disbursements of counsel for the Underwriters in
connection with such qualification and in connection with the
Blue Sky survey; (iii) the filing fees incident to securing any
required review by the NASD of the terms of the sale of the
Shares, (iv) the reasonable fees and expenses of not more than
one counsel to the Selling Stockholder, (v) the cost and charges
10
<PAGE>
of any transfer agent or registrar; and (vi) all other costs and
expenses incurred by the Company incident to the performance of
its obligations hereunder that are not otherwise specifically
provided for in this Section. It is understood, however, that,
except as provided in this Section, Section 8 and Section 11
hereof, the Underwriters will pay all of their own costs and
expenses, including the fees and expenses of their counsel, stock
transfer taxes on resale by them of any of the Shares, and any
advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder shall be
subject, in their discretion, to the condition that all
representations and warranties and other statements of the
Company and the Selling Stockholder herein are, at and as of the
Time of Delivery, true and correct, the condition that the
Company and the Selling Stockholder shall each have performed all
of its obligations hereunder theretofore to be performed, and the
following additional conditions:
(a) The Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time
period prescribed for such filing by the rules and regulations
under the Act and in accordance with Section 5(a) hereof; no stop
order suspending the effectiveness of the Registration Statement
or any part thereof shall have been issued and no proceeding for
that purpose shall have been initiated or threatened by the
Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your
reasonable satisfaction;
(b) Jones, Walker, Waechter, Poitevent, Carrere &
Denegre, L.L.P., counsel for the Underwriters, shall have
furnished to you such opinion or opinions, dated the Time of
Delivery, with respect to the incorporation of the Company, the
validity of the Shares, the Registration Statement, the
Prospectus, and other related matters as you may reasonably
request, and such counsel shall have received such papers and
information as they may reasonably request to enable them to pass
upon such matters;
(c) Jenkens & Gilchrist, a Professional Corporation,
counsel for the Company, shall have furnished to you their
written opinion, dated the Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of Delaware, with power and authority (corporate and
other) to own its properties and conduct its business as
described in the Prospectus;
(ii) The Company has an authorized capitalization
as set forth in the Prospectus; the Shares and the shares of
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<PAGE>
Common Stock issued by the Company in its 1993 public offering
have been duly and validly authorized and issued and are fully
paid and non-assessable; and the Shares conform to the
description of the Stock contained in the Prospectus;
(iii) The Company has been duly qualified as a
foreign corporation for the transaction of business and is in
good standing under the laws of each other jurisdiction in which
it owns or leases properties, or conducts any business, so as to
require such qualification, or is subject to no material
liability or disability by reason of the failure to be so
qualified in any such jurisdiction (such counsel being entitled
to rely with respect to the opinion in this clause upon opinions
of local counsel and with respect to matters of fact upon
certificates of officers of the Company, provided that such
counsel shall state that they believe that both you and they are
justified in relying upon such opinions and certificates);
(iv) Each subsidiary of the Company has been duly
incorporated and is validly existing as a corporation in good
standing under the laws of its jurisdiction of incorporation and
has been duly qualified as a foreign corporation for the
transaction of business and is in good standing under the laws of
each other jurisdiction in which it owns or leases properties, or
conducts any business, so as to require such qualification, or is
subject to no material liability or disability by reason of the
failure to be so qualified in any such jurisdiction; and all of
the issued shares of capital stock of each such subsidiary have
been duly and validly authorized and issued, are fully paid and
non-assessable, and are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or
claims except for the security interest granted to INCC pursuant
to the Credit Agreement (such counsel being entitled to rely with
respect to the opinion in this clause upon opinions of local or
other counsel and with respect to matters of fact upon
certificates of officers of the Company or its subsidiaries,
provided that such counsel shall state that they believe that
both you and they are justified in relying upon such opinions and
certificates);
(v) To the best of such counsel's knowledge and
other than as set forth in the Prospectus, there are no legal or
governmental proceedings pending to which the Company or any of
its subsidiaries is a party or of which any property of the
Company or any of its subsidiaries is the subject that, if
determined adversely to the Company or any of its subsidiaries,
would individually or in the aggregate have a material adverse
effect on the consolidated financial position, shareholders'
equity or results of operations of the Company and its
subsidiaries; and, to the best of such counsel's knowledge, no
such proceedings are threatened or contemplated by governmental
authorities or threatened by others;
12
<PAGE>
(vi) This Agreement has been duly authorized,
executed and delivered by the Company and constitutes the legal,
valid and binding agreement of the Company, subject as to the
enforcement of remedies to applicable bankruptcy, insolvency,
moratorium and other laws affecting the rights of creditors
generally and except as to rights of indemnification and
contribution hereunder which may be limited by federal securities
laws;
(vii) The compliance by the Company with all
of the provisions of this Agreement and the consummation of the
transactions herein contemplated will not conflict with or result
in a breach or violation of any of the terms or provisions of, or
constitute a default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to
such counsel to which the Company or any of its subsidiaries is a
party or by which the Company or any of its subsidiaries is bound
or to which any of the property or assets of the Company or any
of its subsidiaries is subject, nor will such action result in
any violation of the provisions of the Certificate of
Incorporation or By-laws of the Company or the charter, by-laws
or other constitutional documents of any of its subsidiaries, or
to counsel's knowledge, any statute applicable to the Company or
any order, rule or regulation known to such counsel of any court
or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties;
(viii) No consent, approval, authorization,
order, registration or qualification of or with any court or
governmental agency or body is required to be obtained by the
Company for the sale of the Shares or the consummation by the
Company of the transactions contemplated by this Agreement,
except (i) the registration under the Act of the Shares, (ii)
such consents, approvals, authorizations, registrations or
qualifications as may be required under state securities or Blue
Sky laws in connection with the purchase and distribution of the
Shares by the Underwriters and (iii) such approval of the
underwriting arrangements as may be required under the by-laws of
the NASD; and
(ix) The Registration Statement and the Prospectus
and any further amendments and supplements thereto made by the
Company prior to the Time of Delivery (other than the financial
statements and related schedules incorporated by reference
therein and the report of Ryder Scott Company incorporated by
reference therein, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Act and the rules and regulations thereunder;
such counsel has no reason to believe that, as of its effective
date, the Registration Statement or any further amendment thereto
made by the Company prior to the Time of Delivery (other than the
financial statements and related schedules incorporated by
reference therein and the report of Ryder Scott Company
13
<PAGE>
incorporated by reference therein, as to which such counsel need
express no opinion) contained an untrue statement of a material
fact or omitted to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading or that, as of its date, the Prospectus or any further
amendment or supplement thereto made by the Company prior to the
Time of Delivery (other than the financial statements and related
schedules incorporated by reference therein and the report of
Ryder Scott Company incorporated by reference therein, as to
which such counsel need express no opinion) contained an untrue
statement of a material fact or omitted to state a material fact
necessary to make the statements therein, in light of the
circumstances in which they were made, not misleading or that, as
of the Time of Delivery, either the Registration Statement or the
Prospectus or any further amendment or supplement thereto made by
the Company prior to the Time of Delivery (other than the
financial statements and related schedules incorporated by
reference therein and the report of Ryder Scott Company
incorporated by reference therein, as to which such counsel need
express no opinion) contains an untrue statement of a material
fact or omits to state a material fact necessary to make the
statements therein in light of the circumstances in which they
were made, not misleading; and such counsel does not know of any
amendment to the Registration Statement required to be filed or
of any contracts or other documents of a character required to be
filed as an exhibit to the Registration Statement or required to
be described in the Registration Statement or the Prospectus that
are not filed or described as required.
In rendering such opinion, such counsel may
state that they express no opinion as to the laws of any
jurisdiction other than the federal laws of the United States and
the corporate laws of the State of Delaware.
(d) Cox & Smith Incorporated and Shepherd &
Wedderburn, W.S., each counsel for the Selling Stockholder, shall
have furnished to you their written opinions, dated the Time of
Delivery, in form and substance satisfactory to you, collectively
to the effect that:
(i) The Selling Stockholder has been duly
incorporated and is validly existing as a corporation under the
laws of Scotland, with power and authority (corporate and other)
to own its properties and conduct its business as currently being
conducted;
(ii) This Agreement has been duly authorized,
executed and delivered by the Selling Stockholder and constitutes
the legal, valid and binding agreement of the Selling
Stockholder, subject as to the enforcement of remedies to
applicable bankruptcy, insolvency, moratorium and other laws
affecting the rights of creditors generally and except as to
14
<PAGE>
rights of indemnification and contribution hereunder which may be
limited by federal or state securities or other laws or policies;
(iii) The compliance by the Selling
Stockholder with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the
Selling Stockholder or any of its subsidiaries is a party or by
which the Selling Stockholder or any of its subsidiaries is bound
or to which any of the property or assets of the Selling
Stockholder or any of its subsidiaries is subject, nor will such
action result in any violation of the provisions of the
Memorandum and Articles of Association of the Selling Stockholder
or the charter, by-laws or other constitutional documents of any
of its subsidiaries or any statute or any order, rule or
regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Selling Stockholder
or any of its subsidiaries or any of their properties;
(iv) No consent, approval, authorization, order,
registration or qualification of or with any court or
governmental agency or body is required for the sale of the
Shares or the consummation by the Selling Stockholder of the
transactions contemplated by this Agreement, except (i) the
registration under the Act of the Shares, (ii) such consents,
approvals, authorizations, registrations or qualifications as may
be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the
Underwriters and (iii) such approval of the underwriting
arrangements as may be required under the by-laws of the NASD;
and
(v) Upon the delivery of and payment for the
Shares to be sold by the Selling Stockholder pursuant to this
Agreement as herein contemplated, each of the Underwriters who
purchases any of the Shares for value, in good faith and without
notice of any adverse claim with respect thereto will receive
good, valid and marketable title to such Shares purchased by it
from the Selling Stockholder, free and clear of all liens,
encumbrances, claims, security interests, restrictions on
transfer, stockholders' agreements, voting trusts and other
defects in title whatsoever.
(e) (i) Neither the Company nor any of its
subsidiaries shall have sustained, since the date of the latest
audited financial statements included in the Prospectus, any loss
or interference with its business from fire, explosion, flood or
other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree,
otherwise than as set forth or contemplated in the Prospectus,
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<PAGE>
and (ii) since the respective dates as of which information is
given in the Prospectus there shall not have been any change in
the capital stock or long-term debt of the Company or any of its
subsidiaries, except for amounts drawn down under the Company's
revolving credit facility, or any change or any development
involving a prospective change, in or affecting the general
affairs, management, financial position, shareholders' equity or
results of operations of the Company and its subsidiaries,
otherwise than as set forth or contemplated in the Prospectus,
the effect of which, in any such case described in Clause (i) or
(ii), is in your judgment so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering
or the delivery of the Shares on the terms and in the manner
contemplated in the Prospectus;
(f) On or after the date hereof there shall not have
occurred any of the following: (i) a suspension or material
limitation in trading in securities generally on the New York
Stock Exchange; (ii) a general moratorium on commercial banking
activities in New York declared by either federal or New York
State authorities; or (iii) the outbreak or escalation of
hostilities involving the United States or the declaration by the
United States of a national emergency or war if the effect of any
such event specified in this Clause (iii) in your judgment makes
it impracticable or inadvisable to proceed with the public
offering or the delivery of the Shares on the terms and in the
manner contemplated in the Prospectus; and
(g) The Company shall have furnished or caused to be
furnished to you at the Time of Delivery certificates of officers
of the Company satisfactory to you as to the accuracy of the
representations and warranties of the Company herein at and as of
the Time of Delivery, as to the performance by the Company of all
of its obligations hereunder to be performed at or prior to the
Time of Delivery, as to the matters set forth in subsections (a)
and (e) of this Section and as to such other matters as you may
reasonably request.
(h) The Selling Stockholder shall have furnished or
caused to be furnished to you at the Time of Delivery
certificates of officers of the Selling Stockholder satisfactory
to you as to the accuracy of the representations and warranties
of the Selling Stockholder herein at and as of the Time of
Delivery, as to the performance by the Selling Stockholder of all
of its obligations hereunder to be performed at or prior to the
Time of Delivery, and as to such other matters as you may
reasonably request.
8. (a) (i) The Company will indemnify and hold harmless
each Underwriter against any losses, claims, damages or
liabilities, joint or several, to which such Underwriter may
become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect
16
<PAGE>
thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any
Preliminary Prospectus, the Registration Statement or the
Prospectus, or any amendment or supplement thereto, or arise out
of or are based upon the omission or alleged omission to state
therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, and will
reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with
investigating or defending any such action or claim as such
expenses are incurred; provided, however, that the Company shall
not be liable in any such case to the extent that any such loss,
claim, damage or liability arises out of or is based upon an
untrue statement or alleged untrue statement or omission or
alleged omission made in any Preliminary Prospectus, the
Registration Statement or the Prospectus or any such amendment or
supplement in reliance upon and in conformity with written
information furnished to the Company by any Underwriter or the
Selling Stockholder expressly for use therein; and provided
further, however, that as to any Preliminary Prospectus, this
indemnity shall not inure to the benefit of any Underwriter on
account of any loss, claim, damage or liability arising from the
sale of Shares to any person by such Underwriter if such
Underwriter failed to send or give a copy of the Prospectus, as
the same may be amended or supplemented, to such person within
the time required by the Act, and the untrue statement or alleged
untrue statement of a material fact or omission or alleged
omission to state a material fact in such Preliminary Prospectus
was corrected in the Prospectus, unless such failure resulted
from noncompliance by the Company with Section 5(c) hereof.
(ii) The Selling Stockholder will indemnify and
hold harmless each Underwriter against any losses, claims,
damages or liabilities to which such Underwriter may become
subject, under the Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material
fact required to be stated therein or necessary to make the
statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged
untrue statement or omission or alleged omission was made in any
Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement in reliance upon
and in conformity with written information furnished to the
Company by such Selling Stockholder expressly for use therein;
and will reimburse each Underwriter for any legal or other
expenses reasonably incurred by such Underwriter in connection
with investigating or defending any such action or claim as such
expenses are incurred; provided, however, that as to any
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<PAGE>
Preliminary Prospectus, this indemnity shall not inure to the
benefit of any Underwriter on account of any loss, claim, damage
or liability arising from the sale of Shares to any person by
such Underwriter if such Underwriter failed to send or give a
copy of the Prospectus, as the same may be amended or
supplemented, to such person within the time required by the Act,
and the untrue statement or alleged untrue statement of a
material fact or omission or alleged omission to state a material
fact in such Preliminary Prospectus was corrected in the
Prospectus, unless such failure resulted from noncompliance by
the Company with Section 5(c) hereof.
(b) Each Underwriter, severally and not jointly, will
indemnify and hold harmless the Company and the Selling
Stockholder against any losses, claims, damages or liabilities to
which they or either of them may become subject, under the Act or
otherwise, insofar as such losses, claims, damages or liabilities
(or actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material fact
contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent,
that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any
such amendment or supplement in reliance upon and in conformity
with written information furnished to the Company by such
Underwriter expressly for use therein; and will reimburse the
Company and the Selling Stockholder for any legal or other
expenses reasonably incurred by them or either of them in
connection with investigating or defending any such action or
claim as such expenses are incurred. The Company and the Selling
Stockholder acknowledge that the statements set forth in the
footnote on the cover page, the last paragraph of the cover page
and under the caption "Underwriting" in the Prospectus constitute
the only information furnished in writing by or on behalf of any
Underwriters expressly for use in the registration statement
relating to the Shares as originally filed, or in any amendment
thereof, any related preliminary prospectus or the Prospectus or
in any amendment thereof or supplement thereto, as the case may
be.
(c) Promptly after receipt by an indemnified party
under subsection (a) or (b) above of notice of the commencement
of any action, such indemnified party shall, if a claim in
respect thereof is to be made against the indemnifying party
under such subsection, notify the indemnifying party in writing
of the commencement thereof, but the omission so to notify the
indemnifying party shall not relieve it from any liability that
it may have to any indemnified party otherwise than under such
18
<PAGE>
subsection. In case any such action shall be brought against any
indemnified party and it shall notify the indemnifying party of
the commencement thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it shall
wish, jointly with any other indemnifying party similarly
notified, to assume the defense thereof, with counsel
satisfactory to such indemnified party (who shall not, except
with the consent of the indemnified party, be counsel to the
indemnifying party), and, after notice from the indemnifying
party to such indemnified party of its election so to assume the
defense thereof, the indemnifying party shall not be liable to
such indemnified party under such subsection for any legal
expenses of other counsel or any other expenses, in each case
subsequently incurred by such indemnified party, in connection
with the defense thereof other than reasonable costs of
investigation.
(d) If the indemnification provided for in this
Section 8 is unavailable to or insufficient to hold harmless an
indemnified party under Subsection (a) or (b) above in respect of
any losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified
party as a result of such losses, claims, damages or liabilities
(or actions in respect thereof) in such proportion as is
appropriate to reflect the relative benefits received by the
Company and the Selling Stockholder on the one hand and the
Underwriters on the other from the offering of the Shares. If,
however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law or if the indemnified
party failed to give the notice required under Subsection (c)
above, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company and the
Selling Stockholder on the one hand and the Underwriters on the
other in connection with the statements or omissions that
resulted in such losses, claims, damages or liabilities (or
actions in respect thereof), as well as any other relevant
equitable considerations. The relative benefits received by the
Company and the Selling Stockholder on the one hand and the
Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering of the
Shares purchased under this Agreement (before deducting expenses)
received by the Selling Stockholder bear to the total
underwriting discounts and commissions received by the
Underwriters with respect to the Shares purchased under this
Agreement, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault shall be determined
by reference to, among other things, whether the untrue or
alleged untrue statement of a material fact or the omission or
alleged omission to state a material fact relates to information
supplied by the Company or the Selling Stockholder on the one
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<PAGE>
hand or the Underwriters on the other and the parties relative
intent, knowledge, access to information and opportunity to
correct or prevent such statement or omission. The Company, the
Selling Stockholder and the Underwriters agree that it would not
be just and equitable if contributions pursuant to this
subsection (d) were determined by pro rata allocation (even if
the Underwriters were treated as one entity for such purpose) or
by any other method of allocation that does not take account of
the equitable considerations referred to above in this Subsection
(d). The amount paid or payable by an indemnified party as a
result of the losses, claims, damages or liabilities (or actions
in respect thereof) referred to above in this Subsection (d)
shall be deemed to include any legal or other expenses reasonably
incurred by such indemnified party in connection with
investigating or defending any such action or claim. The Company
and the Selling Stockholder shall be jointly and severally liable
for the amounts to be contributed by any of them pursuant to the
provisions of this Section 8(d). Notwithstanding the provisions
of this Subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total
price at which the Shares underwritten by it and distributed to
the public were offered to the public exceeds the amount of any
damages that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission
or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Act) shall be entitled to contribution from any person who was
not guilty of such fraudulent misrepresentations. The
Underwriters' obligations in this Subsection (d) to contribute
are several in proportion to their respective underwriting
obligations and not joint.
(e) The obligations of the Company under this Section
8 shall be in addition to any liability that the Company and the
Selling Stockholder may otherwise have and shall extend, upon the
same terms and conditions, to each person, if any, who controls
any Underwriter within the meaning of the Act; and the
obligations of the Underwriters under this Section 8 shall be in
addition to any liability that the respective Underwriters may
otherwise have and shall extend, upon the same terms and
conditions, to each officer and director of the Company and to
each person, if any, who controls the Company within the meaning
of the Act.
9. (a) If any Underwriter shall default in its obligation
to purchase the Shares that it has agreed to purchase hereunder,
the non-defaulting Underwriter may in its discretion arrange for
it or another party or other parties to purchase such Shares on
the terms contained herein. If within thirty-six hours after
such default by any Underwriter the non-defaulting Underwriter
does not arrange for the purchase of such Shares, then the
Company and the Selling Stockholder shall be entitled to a
further period of thirty-six hours within which to procure
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<PAGE>
another party or other parties satisfactory to the non-defaulting
Underwriter to purchase such Shares on such terms. In the event
that, within the respective prescribed periods, the non-
defaulting Underwriter notifies the Company that it has so
arranged for the purchase of such Shares, or the Company notifies
you that it has so arranged for the purchase of such Shares, the
non-defaulting Underwriter or the Company shall have the right to
postpone the Time of Delivery for a period of not more than seven
days, in order to effect whatever changes may thereby be made
necessary in the Registration Statement or the Prospectus, or in
any other documents or arrangements, and the Company agrees to
file promptly any amendments to the Registration Statement or the
Prospectus that in the opinion of the non-defaulting Underwriter
may thereby be made necessary. The term "Underwriter" as used in
this Agreement shall include any person substituted under this
Section with like effect as if such person had originally been a
party to this Agreement with respect to such Shares.
(b) If, after giving effect to any arrangements for
the purchase of the Shares of a defaulting Underwriter or
Underwriters by the non-defaulting Underwriter, the Company and
the Selling Stockholder as provided in Subsection (a) above, the
aggregate number of such Shares that remains unpurchased does not
exceed one-eleventh of the aggregate number of all the Shares,
then the Company and the Selling Stockholder shall have the right
to require each non-defaulting Underwriter to purchase the number
of Shares that such Underwriter agreed to purchase hereunder and,
in addition, to require each non-defaulting Underwriter to
purchase its pro rata share (based on the number of Shares that
such Underwriter agreed to purchase hereunder) of the Shares of
such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve
a defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for
the purchase of the Shares of a defaulting Underwriter or
Underwriters by the non-defaulting Underwriter, the Company and
the Selling Stockholder as provided in Subsection (a) above, the
aggregate number of such Shares that remains unpurchased exceeds
one-eleventh of the aggregate number of all the Shares, or if the
Company and the Selling Stockholder shall not exercise the right
described in Subsection (b) above to require non-defaulting
Underwriters to purchase Shares of a defaulting Underwriter or
Underwriters, then each non-defaulting Underwriter shall be
required to purchase only the number of Shares that such
Underwriter agreed to purchase hereunder without further
liability on the part of any non-defaulting Underwriter or the
Company or the Selling Stockholder, except for the expenses to be
borne by the Company and the Underwriters as provided in Section
6 hereof and the indemnity and contribution agreements in Section
8 hereof; but nothing herein shall relieve a defaulting
Underwriter from liability for its default.
21
<PAGE>
10. The respective indemnities, agreements,
representations, warranties and other statements of the Company,
the Selling Stockholder and the several Underwriters, as set
forth in this Agreement or made by or on behalf of them,
respectively, pursuant to this Agreement, shall remain in full
force and effect, regardless of any investigation (or any
statement as to the results thereof) made by or on behalf of any
Underwriter or any controlling person of any Underwriter, or the
Company, the Selling Stockholder or any officer or director or
controlling person of the Company, and shall survive delivery of
and payment for the Shares.
Anything herein to the contrary notwithstanding, the
indemnity agreements of the Company and the Selling Stockholder
in Subsection (a) of Section 8 hereof, the representations and
warranties in Subsections (b) and (c) of Section 1A hereof and
any representation or warranty as to the accuracy of the
Registration Statement or the Prospectus contained in any
certificate furnished by the Company pursuant to Section 7
hereof, insofar as they may constitute a basis for
indemnification for liabilities (other than payment by the
Company or the Selling Stockholder of expenses incurred or paid
in the successful defense of any action, suit or proceeding)
arising under the Act, shall not extend to the extent of any
interest therein of a controlling person or partner of an
Underwriter who is a director, officer or controlling person of
the Company when the Registration Statement has become effective,
except in each case to the extent that an interest of such
character shall have been determined by a court of appropriate
jurisdiction as not against public policy as expressed in the
Act. Unless in the opinion of counsel for the Company the matter
has been settled by controlling precedent, the Company will, if a
claim for such indemnification is asserted, submit to a court of
appropriate jurisdiction the question whether such interest is
against public policy as expressed in the Act and will be
governed by the final adjudication of such issue.
11. If for any reason the Shares are not delivered by or on
behalf of the Selling Stockholder as provided herein, the Selling
Stockholder will reimburse the Underwriters for all out-of-pocket
expenses approved in writing by you, including fees and
disbursements of counsel, reasonably incurred by the Underwriters
in making preparations for the purchase, sale and delivery of the
Shares, but the Company and the Selling Stockholder shall then be
under no further liability to any Underwriter except as provided
in Section 6 and Section 8 hereof.
12. All statements, requests, notices and agreements
hereunder shall be in writing, and if to the Underwriters shall
be delivered or sent by mail, telex or facsimile transmission, in
the case of Morgan Keegan & Company, Inc., at Fifty Front Street,
Morgan Keegan Tower, Memphis, Tennessee, 38103, Attention:
Michael J. Harris; and in the case of Southcoast Capital
22
<PAGE>
Corporation, at 300 Poydras Street, Suite 2000, New Orleans,
Louisiana, 70130, Attention: Corporate Finance Department; if to
the Company or the Selling Stockholder shall be delivered or sent
by mail, telex or facsimile transmission, in the case of the
Company, to the address of the Company set forth in the
Registration Statement, Attention: Michael R. Gilbert; and in
the case of the Selling Stockholder to Cairn House, 61 Dublin
Street, Edinburgh EH3 6NL, Scotland, Attention: Chief Executive-
Legal Manager. Any such statements, requests, notices or
agreements shall take effect at the time of receipt thereof.
13. This Agreement shall be binding upon, and inure solely
to the benefit of, the Underwriters, the Company, the Selling
Stockholder and, to the extent provided in Sections 8 and 10
hereof, the officers and directors of the Company and each person
who controls the Company or any Underwriter, and their respective
heirs, executors, administrators, successors and assigns, and no
other person shall acquire or have any right under or by virtue
of this Agreement. No purchaser of any of the Shares from any
Underwriter shall be deemed a successor or assign by reason
merely of such purchase.
14. Time shall be of the essence of this Agreement. As
used herein, the term "business day" shall mean any day when the
Commission's office in Washington, D.C. is open for business.
15. The Agreement shall be governed by and construed in
accordance with the laws of the State of New York.
16. This Agreement may be executed by any one or more of
the parties hereto in any number of counterparts, each of which
shall be deemed to be an original, but all such counterparts
shall together constitute one and the same instrument.
23
<PAGE>
If the foregoing is in accordance with your understanding,
please sign and return to us six counterparts hereof, and upon
the acceptance hereof by you, this letter and such acceptance
hereof shall constitute a binding agreement between each of the
Underwriters and the Selling Stockholder and the Company.
Very truly yours,
Cairn Energy USA, Inc.
By:
______________________________
Name:
Title:
Cairn Energy PLC, as Selling
Stockholder
By:
______________________________
Name:
Title:
Accepted as of the date hereof:
Morgan Keegan & Company, Inc.
By:
Name:
Title:
Southcoast Capital Corporation
By:
Name:
Title:
24
<PAGE>
SCHEDULE I
Total Number of Shares
Underwriter to be Purchased
Morgan Keegan & Company, Inc. . . . . 1,511,630
Southcoast Capital Corporation . . . . 1,111,630
Total . . . . . . . . . . . . . . 2,623,260
25
<PAGE>
JENKENS & GILCHRIST,
A PROFESSIONAL CORPORATION
1445 ROSS AVENUE
SUITE 3200
DALLAS, TEXAS 75202
June 13, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Attention: Jeffrey P. Riedler, Branch Chief
Re: Cairn Energy USA, Inc. Amendment No. 1 to Registration
Statement on Form S-3 (No. 33-59199)
Gentlemen and Ladies:
On behalf of Cairn Energy USA, Inc. (the "Company"), we have
this day filed Amendment No. 1 to the Company's Registration
Statement (the Registration Statement, as amended, hereinafter
referred to as the "Registration Statement") with the Securities
and Exchange Commission (the "Commission") pursuant to EDGAR, and
we have enclosed copies, including marked copies, of the
Registration Statement with exhibits in accordance with the
Commission's rules. We have set forth below the Company's
response to the Commission's comment letter, dated June 9, 1995.
Defined terms used below have the meaning set forth in the
Registration Statement.
Form S-3 Selling Stockholder
1. You note that the Escrow Shares will either be released or
returned prior to July 1, 1995. This is not correct. We
have clarified the discussion in the Registration Statement
to reflect that the valuation of the Smith Assets will take
place after July 1, 1995 and shall be conducted as of
June 30, 1995, such effective date to be subject to
extension under certain circumstances until December 31,
1995. It is only following this valuation process that the
Escrow Shares will either be released to Phemus or returned
to the Company.
DCC1150F 15467-6
<PAGE>
Securities and Exchange Commission
June 13, 1995
Page 2
Documents Incorporated by Reference
2. The dates upon which the incorporated reports were filed
with the Commission are reflected in the Registration
Statement.
Exhibits
3. Pursuant to the plan of distribution set forth under the
caption "UNDERWRITING," the underwriting agreement by and
among the underwriters, the Company and the Selling
Stockholder is attached as Exhibit 1.1 to the Registration
Statement.
Consents
4. Currently dated consents of the independent accounts are
included in the Registration Statement.
Form 10-K
Changes in Prices and Inflation, page 21
5. The Company had presented additional disclosures in Note 9
to the Company's consolidated financial statements
describing the Company's policy with respect to hedging oil
and gas prices. Accordingly, the Company believes the
disclosures contained in the Form 10-K are accurate and
provide all appropriate disclosure concerning the Company's
hedging policy. However, the Company will include
disclosures with respect to its hedging policy similar to
those described in Note 9 to its consolidated financial
statements in Management's Discussion and Analysis in future
filings.
Management's Discussion and Analysis, page 17
6. The consistent increase in proved reserves is the result of
significant discoveries in offshore areas, principally East
Cameron Blocks 331/332. The completion of offshore
production facilities requires a substantial amount of time.
Therefore, reserves discovered in these offshore areas do
not reflect production until such facilities are completed.
Initial production from East Cameron Blocks 331/332 began in
late 1994 and is expected to reach full production in 1995.
DCC1150F 15467-6
<PAGE>
Securities and Exchange Commission
June 13, 1995
Page 3
7. New production that came on-line in November and December
1994 from the East Cameron, Matagorda and Ship Shoal fields
increased accounts receivable at December 31, 1994 by
approximately $400,000. Collections of these receivables
began in the first quarter of 1995. By March 31, 1995, the
relationship between receivables and revenue is more
consistent with the Company's past experience and
collections from these properties. Because the increase in
receivables related to revenues was only temporary, the
Company does not believe additional disclosures are
required.
March 31, 1995, Form 10-Q - Management's Discussion and Analysis
8. Although gas prices declined during the first quarter of
1995, they have subsequently recovered. The Company's
average production cost per mcfe was $0.20 in the first
quarter of 1995. Therefore, a significant long-term price
decline would be necessary to materially impact the economic
feasibility of existing wells. As disclosed in Management's
Discussion and Analysis, the Company has entered into
hedging transactions to mitigate the effects of short-term
price declines. Accordingly, the Company does not believe
that short-term declines in the price of natural gas, such
as those experienced in the first quarter of 1995, will have
a significant impact on exploration and development of new
producing properties and that current gas prices will enable
the Company to complete current planned exploration and
development projects. The impact of fluctuating oil and gas
prices on the Company is discussed in Management's
Discussion and Analysis in the Company's 1994 Annual Report
on Form 10-K. Absent a significant and sustained decline in
oil and gas prices (which is currently not the case), the
Company believes its current disclosures are appropriate.
If we can be of assistance in facilitating the Commission's
review of our responses to the Commission's comments and the
Registration Statement, please contact me at (214) 855-4326,
William P. Bowers at (214) 855-4340 or Paul W. Talbot at (214)
855-4322, all of this office. You may also contact Fred Miller
(214) 969-8720 or Chris Robb (214) 969-8556 of Ernst & Young with
respect to comments 4 through 8.
Very truly yours,
DCC1150F 15467-6
<PAGE>
Securities and Exchange Commission
June 13, 1995
Page 4
Mark D. Wigder
MDW/ps
Enc.
cc: James M. Daly, Assistant Director (with encl.)
Solomon Cromwell, Chief Accountant (with encl.)
Al Pavot, Assistant Chief Accountant (with encl.)
Hugh Fuller (with encl.)
Michael R. Gilbert (with encl.)
William B.B. Gammell (with encl.)
Hew Dundas (with encl.)
Munro Sutherland (with encl.)
Allen Paul (with encl.)
Fred Miller (with encl.)
Chris Robb (with encl.)
James B. Smith, Jr. (with encl.)
Daniel Webster (with encl.)
Tobin Olson (with encl.)
William P. Bowers (with encl.)
Paul W. Talbot (with encl.)
L. Richard McMillan (with encl.)
Douglas N. Currault, II (with encl.)
DCC1150F 15467-6
<PAGE>
CAIRN ENERGY USA, INC.
8235 DOUGLAS AVENUE
SUITE 1221
DALLAS, TEXAS 75225
June 13, 1995
Securities and Exchange Commission
450 Fifth Street, N.W.
Judiciary Plaza
Washington, D.C. 20549
Re: Cairn Energy USA, Inc.
Registration Statement on Form S-3
(Registration No. 33-59199)
Ladies and Gentlemen:
The undersigned hereby requests that the above-referenced
Registration Statement on Form S-3 be made effective pursuant to
Section 8(a) of the Securities Act of 1933, as amended (the
"Act"), at 9:00 (E.D.T.) on June 16, 1995, or as soon thereafter
as practicable. In addition, we request that, if practicable,
the Form S-3 be made effective prior thereto.
CAIRN ENERGY USA, INC.
By: /s/ Michael R. Gilbert
Michael R. Gilbert, President
cc: Hugh Fuller, Securities and Exchange Commission
William P. Bowers
Paul W. Talbot
James B. Smith, Jr.
L. Richards McMillan
Fred Miller
William B. B. Gammell
DCC11577 15467.6
<PAGE>
