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SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
--------------------
FORM 8-K
Current Report Pursuant to Section 13 or 15(d) of
the Securities Exchange Act of 1934
Date of Report (date of earliest event reported): June 17, 1999
BASIN EXPLORATION, INC.
(Exact Name of Registrant as Specified in Charter)
Delaware 0-20125 84-1143307
(State or Other Jurisdiction (Commission (I.R.S. Employer
of Incorporation) File Number) Identification No.)
370 Seventeenth Street, Suite 3400, Denver, Colorado
80202 (Address of principal executive offices, zip code)
Registrant's telephone number, including area code: (303) 685-8000
Not Applicable
Former Name or Former Address if Changed Since Last Report
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ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
(c) EXHIBITS
1.1 Underwriting Agreement
10.1 Company Indemnity Agreement
23.1 Consent of Arthur Andersen LLP
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
BASIN EXPLORATION, INC.
(Registrant)
Date: June 17, 1999 By: /s/ Howard L. Boigon
--------------------------------
Howard L. Boigon
VICE PRESIDENT, GENERAL COUNSEL AND
SECRETARY
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EXHIBIT INDEX
<TABLE>
<CAPTION>
Exhibit
Number Exhibit Description
- ------- -------------------
<S> <C>
1.1 Underwriting Agreement
10.1 Company Indemnity Agreement
23.1 Consent of Arthur Andersen LLP
</TABLE>
-3-
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BASIN EXPLORATION, INC.
COMMON STOCK
(PAR VALUE $.01 PER SHARE)
------------------
UNDERWRITING AGREEMENT
June 17, 1999
<PAGE>
Goldman, Sachs & Co.,
Banc of America Securities LLC,
Dain Rauscher Wessels,
a division of Dain Rauscher Incorporated,
Petrie Parkman & Co., Inc.,
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Goldman, Sachs & Co.,
85 Broad Street,
New York, New York 10004.
Ladies and Gentlemen:
Basin Exploration, Inc., a Delaware corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and
sell to the Underwriters named in Schedule I hereto (the "Underwriters") an
aggregate of 3,750,000 shares and, at the election of the Underwriters, up to
562,500 additional shares of Common Stock, par value $.01 per share
("Stock"), of the Company, and the stockholder of the Company named in
Schedule II hereto (the "Selling Stockholder") proposes, subject to the terms
and conditions stated herein, to sell to the Underwriters an aggregate of
250,000 shares and, at the election of the Underwriters, up to 37,500
additional shares of Stock. The aggregate of 4,000,000 shares to be sold by
the Company and the Selling Stockholder is herein called the "Firm Shares"
and the aggregate of 600,000 additional shares to be sold by the Company and
the Selling Stockholder is herein called the "Optional Shares". The Firm
Shares and the Optional Shares that the Underwriters elect to purchase
pursuant to Section 2 hereof are herein collectively called the "Shares".
1. (a) The Company and the Selling Stockholder, jointly and
severally, represent and warrant to, and agree with, each of the Underwriters
that:
(i) A registration statement on Form S-3 (File No. 333-36143)
(the "Initial Registration Statement") in respect of the Shares has
been filed with the Securities and Exchange Commission (the
"Commission"); the Initial Registration Statement and any
post-effective amendment thereto, each in the form heretofore delivered
to you and, excluding exhibits thereto but including all documents
incorporated by reference in the prospectus contained therein, to you
for each of the other Underwriters, have been declared effective by the
Commission in such form; other than a registration statement, if any,
increasing the size of the offering (a "Rule 462(b) Registration
Statement"), filed pursuant to Rule 462(b) under the Securities Act of
1933, as amended (the "Act"), which became effective upon filing, no
other document with respect to the Initial Registration Statement or
document incorporated by reference therein has heretofore been filed,
or transmitted for filing, with the Commission (other than prospectuses
filed pursuant to Rule 424(b) under the Act, each in the Form
heretofore delivered to the Representatives); and no stop order
suspending the effectiveness of the Initial Registration Statement, any
post-effective amendment thereto or the Rule 462(b) Registration
Statement, if any, has been issued and no proceeding for that purpose
has been initiated or threatened by the Commission (any preliminary
prospectus included in the Initial Registration Statement or filed with
the Commission pursuant to Rule 424(a) of the rules and regulations of
the Commission under the Act is hereinafter called a "Preliminary
Prospectus"; the various parts of the Initial Registration Statement
and the Rule 462(b) Registration Statement, if any, including all
exhibits thereto and including the documents incorporated by reference
in the prospectus contained in the Initial Registration Statement at
the time such part of the Initial Registration Statement became
effective, each as amended at the time such part of the Initial
Registration Statement became effective or such part of the Rule 462(b)
Registration Statement, if any, became or hereafter becomes effective,
are hereinafter collectively called the "Registration Statement"; the
prospectus used in the offer and sale of the Shares, in the
<PAGE>
form in which it has most recently been filed, or transmitted for
filing with the Commission on or prior to the date of this Agreement,
is hereinafter called the "Prospectus"; any reference herein to any
Preliminary Prospectus or the Prospectus shall be deemed to refer to
and include the documents incorporated by reference therein pursuant to
Item 12 of Form S-3 under the Act, as of the date of such Preliminary
Prospectus or Prospectus, as the case may be; any reference to any
amendment or supplement to any Preliminary Prospectus or the Prospectus
shall be deemed to refer to and include any documents filed after the
date of such Preliminary Prospectus or Prospectus, as the case may be,
under the Securities Exchange Act of 1934, as amended (the "Exchange
Act"), and incorporated by reference in such Preliminary Prospectus or
Prospectus, as the case may be; any reference to any amendment to the
Registration Statement shall be deemed to refer to and include any
annual report of the Company filed pursuant to Section 13(a) or 15(d)
of the Exchange Act after the effective date of the Registration
Statement that is incorporated by reference in the Registration
Statement, and any reference to the Prospectus as amended or
supplemented shall be deemed to refer to the Prospectus as amended or
supplemented in relation to the Shares in the form in which it is first
filed with the Commission pursuant to Rule 424(b) under the Act in
accordance with Section 5(a) hereof, including any documents
incorporated by reference therein as of the date of such filing;
(ii) No order preventing or suspending the use of any
Preliminary Prospectus has been issued by the Commission, and each
Preliminary Prospectus, at the time of filing thereof, conformed in all
material respects to the requirements of the Act and the rules and
regulations of the Commission thereunder, and did not contain an untrue
statement of a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; PROVIDED, HOWEVER, that this representation and warranty
shall not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the Company
by an Underwriter through Goldman, Sachs & Co. expressly for use
therein or by a Selling Stockholder expressly for use in the
preparation of the answers therein to Item 7 of Form S-3;
(iii) The documents incorporated by reference in the Prospectus,
when they became effective or were filed with the Commission, as the
case may be, conformed in all material respects to the requirements of
the Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; and any
further documents so filed and incorporated by reference in the
Prospectus or any further amendment or supplement thereto, when such
documents become effective or are filed with the Commission, as the
case may be, will conform in all material respects to the requirements
of the Act or the Exchange Act, as applicable,
2
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and the rules and regulations of the Commission thereunder and will
not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that this
representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter through
Goldman, Sachs & Co. expressly for use therein;
(iv) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or
the Prospectus will conform, in all material respects to the
requirements of the Act and the rules and regulations of the Commission
thereunder and do not and will not, as of the applicable effective date
as to the Registration Statement and any amendment thereto and as of
the applicable filing date as to the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material fact or
omit to state a material fact required to be stated therein or
necessary to make the statements therein not misleading or omitted to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; PROVIDED, HOWEVER, that this representation and
warranty shall not apply to any statements or omissions made in
reliance upon and in conformity with information furnished in writing
to the Company by an Underwriter through Goldman, Sachs & Co. expressly
for use therein or by the Selling Stockholder expressly for use in the
preparation of the answers therein to Item 7 of Form S-3;
(v) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included or incorporated by reference 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, other than any
such losses which, in the aggregate with such other losses, would not
have a material adverse effect on the prospects, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole ("Material Adverse Effect"); and, since
the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any
change in the capital stock or long-term debt of the Company or any of
its subsidiaries or any material adverse change, or any development
involving a prospective material adverse change, in or affecting the
general affairs, management, financial position, stockholders' equity
or results of operations of the Company and its subsidiaries, otherwise
than as set forth or contemplated in the Prospectus;
(vi) Except as otherwise set forth in the Prospectus or such as
are not material to the financial condition, stockholders' equity,
business, properties, prospects or results of operations of the Company
and its subsidiaries, taken as a whole, the Company has title to its
properties as follows: (a) with respect to its wells (including
leasehold interests and appurtenant personal property), such title is
free and clear of all liens,
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claims, encumbrances and restrictions, except liens for taxes not yet
due and payable, and other defects reasonably acceptable to a prudent
owner or purchaser of producing oil and gas properties; (b) with
respect to its non-producing oil and gas properties (including
undeveloped locations on leases held by production and those leases
not held by production, but excluding exploration prospects not
situated offshore in state or federal waters), such title, to the
knowledge of the Company, is free and clear of all liens, claims,
encumbrances and restrictions except for matters expected to be cured
in the ordinary course prior to drilling; (c) with respect to its
non-producing properties in exploration prospects not situated offshore
in state or federal waters, such title was investigated in accordance
with customary industry procedures prior to the Company's acquisition
thereof; (d) with respect to its real property other than oil and gas
interests, such title is good and marketable; and (e) with respect to
its personal property other than that appurtenant to its oil and gas
interests, such title is free and clear of all liens, claims,
encumbrances and restrictions other than restrictions contained in
licensing agreements for licensed seismic data;
(vii) 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;
(viii) The Company has an authorized capitalization as set forth
in the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, are fully
paid and nonassessable and conform to the description of the Stock
contained in the Prospectus; all of the partnership interests in each
partnership subsidiary in which the Company or one of its subsidiaries
is a general partner and all of the issued shares of capital stock of
each corporate subsidiary of the Company have been duly and validly
authorized and issued, are fully paid and, in the case of each
corporate subsidiary, nonassessable, and the Company's interests in
such subsidiaries (except for directors' qualifying shares and except
as set forth in the Prospectus) are owned directly or indirectly by the
Company, free and clear of all liens, encumbrances, equities or claims;
(ix) The unissued Shares to be issued and sold by the Company to
the Underwriters hereunder have been duly and validly authorized and,
when issued and delivered against payment therefor as provided herein,
will be duly and validly issued and fully paid and nonassessable and
will conform to the description of the Stock contained in the
Prospectus;
(x) The issue and sale of the Shares to be sold by the Company
and the
4
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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 (a) any of the
provisions of the Amended and Restated Certificate of Incorporation
or By-laws of the Company; (b) 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 or (c) 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 except in the case of (b) and (c) for such
breaches, violations and defaults as would not, individually or in the
aggregate with all other such breaches, violations and defaults, have a
Material Adverse Effect or affect the validity, performance or
consummation of this Agreement by the Company; and no consent,
approval, authorization, order, registration or qualification of or
with any such court or governmental agency or body is required for the
issue and sale of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement, except the registration
under the Act of the Shares and such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the Underwriters;
(xi) Neither the Company nor any of its subsidiaries is in
violation of its certificate of incorporation, by-laws or other
organizational documents or in default in the performance or observance
of any material obligation, agreement, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement, lease or
other agreement or instrument to which it is a party or by which it or
any of its properties may be bound except, other than in respect of the
Amended and Restated Certificate of Incorporation of the Company and
the Bylaws of the Company, for such breaches, violations and defaults
as would not, individually or in the aggregate with all other such
breaches, violations and defaults, have a Material Adverse Effect or
affect the validity, performance or consummation of this Agreement by
the Company;
(xii) The statements set forth in the Prospectus under the
caption "Description of Common Stock", insofar as they purport to
constitute a summary of the terms of the Stock, are accurate and
complete;
(xiii) Other than as set forth in the Prospectus, there are no
legal or governmental proceedings pending to which the Company or any
of its subsidiaries is a party or of which any property of the Company
or any of its subsidiaries is the subject which, if determined
adversely to the Company or any of its subsidiaries, would individually
or in the aggregate have a material adverse effect on the current or
future consolidated financial position, stockholders' equity or results
of operations of the Company and its subsidiaries; and, to the best of
the Company's knowledge, no such proceedings are threatened or
contemplated by governmental authorities or threatened by others;
(xiv) The Company is not and, after giving effect to the
offering and sale of the Shares, will not be an "investment company",
as such term is defined in the Investment Company Act of 1940, as
amended (the "Investment Company Act");
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(xv) Neither the Company nor any of its affiliates does business
with the government of Cuba or with any person or affiliate located in
Cuba within the meaning of Section 517.075, Florida Statutes;
(xvi) Arthur Andersen LLP, who have certified certain financial
statements of the Company and its subsidiaries, are independent public
accountants as required by the Act and the rules and regulations of the
Commission thereunder;
(xvii) The factual information underlying the estimates of the
oil and gas reserve information of the Company and its subsidiaries
included or incorporated by reference in the Prospectus (the "Reserve
Information"), including such information supplied by the Company to
Ryder Scott & Company ("Ryder Scott") and Netherland Sewell &
Associates, Inc. ("Netherland Sewell"), independent petroleum
engineers, for purposes of preparing and or auditing the Reserve
Information, and including, without limitation, historical production
volumes, sales prices for production, contractual pricing provisions
under oil or gas sales or marketing contracts, incurred costs of
operations and development, and working interest and net revenue
information relating to the Company's ownership interests in
properties, was accurate and complete in all material respects on the
date of such Reserve Information; the estimates of future capital
expenditures and other future exploration and development costs
supplied to Ryder Scott and Netherland Sewell were prepared in good
faith and with a reasonable basis; the information provided by Ryder
Scott for purposes of preparing the Reserve Information was prepared in
accordance with customary industry practices; Ryder Scott and
Netherland Sewell were, as of the date of the Reserve Information was
prepared and/or audited by them, and are, as of the date hereof,
independent petroleum engineers with respect to the Company and its
subsidiaries; other than normal production of the reserves, intervening
spot market product price fluctuations and other factors described
under "Risk Factors" in the Prospectus, the Company is not aware of any
facts or circumstances that would result in a material adverse change
in the Reserve Information in the aggregate, or the aggregate present
value of future net cash flows therefrom, as described in the
Prospectus or reflected in the Reserve Information; the terminology,
estimates of such reserves and the present value of the future net cash
flows therefrom, as described in the Prospectus and reflected in the
Reserve Information comply in all material respects with the applicable
requirements of Regulation S-X, Industry Guide 2 under the Act and
general practices in the oil and gas industry;
(xviii) The Company and its subsidiaries (A) are in compliance
with any and all applicable federal, state and local laws and
regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or waste, pollutants or
contaminants ("Environmental Laws"), (B) have received all permits,
licenses or other approvals required under applicable Environmental
Laws necessary to conduct their respective businesses and (C) are in
compliance with all terms and conditions of any such permit, license or
approval, except for such noncompliance with Environmental Laws,
failure to receive required permits, licenses or other approvals or
6
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failure to comply with the terms and conditions of such permits,
licenses or approvals that would not, singularly or in the aggregate,
have a material adverse effect on the prospects, financial position,
stockholders' equity or results of operations of the Company and its
subsidiaries, taken as a whole ("Material Adverse Effect"). There has
been no storage, disposal, generation, transportation, handling or
treatment of hazardous substances or solid wastes by the Company or
any of its subsidiaries (or to the knowledge of the Company and its
subsidiaries, any of their respective predecessors in interest) at,
upon or from any of the property now or previously owned or leased
by the Company or any subsidiary in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit, or
which would require remedial action by the Company or any subsidiary
under any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit, except for any violation or remedial action which has
already been remedied, has been assumed by a third party, or which
would not result in, or which would not be reasonably likely to result
in, singularly or in the aggregate with all such violations and
remedial actions, a Material Adverse Effect; there has been no spill,
discharge, leak, emission, injection, escape, dumping or release of any
kind onto such property or into the environment surrounding such
property of any solid wastes or hazardous substances due to or caused
by the Company or any subsidiary, except for any such spill, discharge,
leak, emission, injection, escape, dumping or release which has already
been remedied, has been assumed by a third party, or which would not
result in or would not be reasonably likely to result in, singularly or
in the aggregate with all such spills, discharges, leaks, emissions,
injections, escapes, dumping or releases, a Material Adverse Effect;
(xix) The Company and each of its subsidiaries is in possession
of, and operating in compliance with, all concessions, licenses,
franchises, permits, authorizations, approvals and orders of and from
all governmental and regulatory agencies and bodies that are required
for the conduct of their respective businesses as currently operated
and as described in the Prospectus, except when the failure to be in
possession of, or to have obtained, such concessions, licenses,
franchises, permits, authorizations, approvals and orders would not
have a Material Adverse Effect; and such businesses are conducted in
compliance with all applicable laws and regulations, except when such
non-compliance would not have a Material Adverse Effect;
(xx) The Company is in the process of conducting a review of its
operations and that of its subsidiaries and any third parties with
which the Company or any of its subsidiaries has a material
relationship to evaluate the extent to which the business or operations
of the Company or any of its subsidiaries will be affected by the Year
2000 Problem. As a result of such review, the Company has no reason to
believe, and does not believe, that the Year 2000 Problem will have a
Material Adverse Effect or result in any material loss or interference
with the Company's business or operations. The "Year 2000 Problem" as
used herein means any significant risk that computer hardware or
software used in the receipt, transmission, processing, manipulation,
storage, retrieval, retransmission or other utilization of data or in
the operation of mechanical or electrical systems of any kind will not,
in the case of dates or time periods occurring after
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December 31, 1999, function at least as effectively as in the case of
dates or time periods occurring prior to January 1, 2000.
(b) The Selling Stockholder represents and warrants to, and agrees
with, each of the Underwriters and the Company that:
(i) All consents, approvals, authorizations and orders necessary
for the execution and delivery by him of this Agreement and the Custody
Agreement hereinafter referred to, and for the sale and delivery of the
Shares to be sold by him hereunder, have been obtained; and he has full
right, power and authority to enter into this Agreement, the Custody
Agreement and to sell, assign, transfer and deliver the Shares to be
sold by him hereunder;
(ii) The sale of the Shares to be sold by him hereunder and the
compliance by him with all of the provisions of this Agreement and the
Custody Agreement and the consummation of the transactions herein and
therein contemplated will not conflict with or result in a breach or
violation of any of the terms or provisions of, or constitute a default
under, any statute, indenture, mortgage, deed of trust, loan agreement
or other agreement or instrument to which he is a party or by which he
is bound or to which any of his property or assets is subject, nor will
such action result in any violation of the provisions of any statute or
any order, rule or regulation of any court or governmental agency or
body having jurisdiction over him or his property;
(iii) He has, and immediately prior to each Time of Delivery (as
defined in Section 4 hereof) he will have, good and valid title to the
Shares to be sold by him hereunder, free and clear of all liens,
encumbrances, equities or claims; and, upon delivery of such Shares and
payment therefor pursuant hereto, good and valid title to such Shares,
free and clear of all liens, encumbrances, equities or claims, will
pass to the several Underwriters;
(iv) During the period beginning from the date hereof and
continuing to and including the date 90 days after the date of the
Prospectus, he will not offer, sell, contract to sell or otherwise
dispose of, except as provided hereunder, any securities of the Company
that are substantially similar to the Shares, including but not limited
to any securities that are convertible into or exchangeable for, or
that represent the right to receive, Stock or any such substantially
similar securities (other than pursuant to employee equity incentive
plans existing on, or upon the conversion or exchange of convertible or
exchangeable securities outstanding as of, the date of this Agreement),
without your prior written consent;
(v) He has not taken and will not take, directly or indirectly,
any action which is designed to or which has constituted or which might
reasonably be expected to cause or result in stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares;
(vi) To the extent that any statements or omissions made in the
Registration Statement, any Preliminary Prospectus, the Prospectus or
any amendment or supplement thereto are made in reliance upon and in
conformity with written information furnished to the Company by such
Selling Stockholder expressly for use therein, such Preliminary
Prospectus and the Registration Statement did, and the Prospectus and
any
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further amendments or supplements to the Registration Statement and
the Prospectus, when they become effective or are filed with the
Commission, as the case may be, will conform in all material respects
to the requirements of the Act and the rules and regulations of the
Commission thereunder and will not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary to make the statements therein not misleading or
omit to state any material fact necessary in order to make the
statements contained therein, in the light of the circumstances under
which they were made, not misleading;
(vii) In order to document the Underwriters' compliance with the
reporting and withholding provisions of the Tax Equity and Fiscal
Responsibility Act of 1982 with respect to the transactions herein
contemplated, such Selling Stockholder will deliver to you prior
to or at the First Time of Delivery (as hereinafter defined) a properly
completed and executed United States Treasury Department Form W-9 (or
other applicable form or statement specified by Treasury Department
regulations in lieu thereof); and
(viii) Certificates in negotiable form representing all of the
Shares to be sold by him hereunder have been placed in custody under a
Custody Agreement, in the form heretofore furnished to you (the
"Custody Agreement"), duly executed and delivered by him to Corporate
Stock Transfer, Inc., as custodian (the "Custodian").
2. Subject to the terms and conditions herein set forth, (a) the
Company and the Selling Stockholder agree, severally and not jointly, to sell to
each of the Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company and the Selling Stockholder, at a purchase
price per share of $15.56, the number of Firm Shares (to be adjusted by you so
as to eliminate fractional shares) determined by multiplying the aggregate
number of Shares to be sold by the Company and the Selling Stockholder as set
forth opposite their respective names in Schedule II hereto by a fraction, the
numerator of which is the aggregate number of Firm Shares to be purchased by
such Underwriter as set forth opposite the name of such Underwriter in Schedule
I hereto and the denominator of which is the aggregate number of Firm Shares to
be purchased by all of the Underwriters from the Company and the Selling
Stockholder hereunder and (b) in the event and to the extent that the
Underwriters shall exercise the election to purchase Optional Shares as provided
below, the Company and the Selling Stockholder agree, severally and not jointly,
to sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company and the Selling
Stockholder, at the purchase price per share set forth in clause (a) of this
Section 2, that portion of the number of Optional Shares as to which such
election shall have been exercised (to be adjusted by you so as to eliminate
fractional shares) determined by multiplying such number of Optional Shares by a
fraction the numerator of which is the maximum number of Optional Shares which
such Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of Optional Shares that all of the Underwriters are entitled to purchase
hereunder.
The Company and the Selling Stockholder, as and to the extent indicated
in Schedule II hereto, hereby grant, severally and not jointly, to the
Underwriters the right to purchase at their
9
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election up to 562,500 Optional Shares, at the purchase price per share set
forth in the paragraph above, for the sole purpose of covering sales of
shares in excess of the number of Firm Shares. Any such election to purchase
Optional Shares shall be made in proportion to the maximum number of Optional
Shares to be sold by the Company and the Selling Stockholder as set forth in
Schedule II hereto. Any such election to purchase Optional Shares may be
exercised only by written notice from you to the Company and the Selling
Stockholder, given within a period of 30 calendar days after the date of this
Agreement and setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless you and the Company and the Selling
Stockholder otherwise agree in writing, earlier than two or later than ten
business days after the date of such notice.
3. Upon the authorization by you of the release of the Firm Shares,
the several Underwriters propose to offer the Firm Shares for sale upon the
terms and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered in such
names as Goldman, Sachs & Co. 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 Company and the Selling Stockholder to Goldman, Sachs &
Co., through the facilities of The Depository Trust Company ("DTC"), for the
account of such Underwriter, against payment by or on behalf of such
Underwriter of the purchase price therefor by wire transfer of Federal
(same-day) funds to the accounts specified by the Company and the Selling
Stockholder, respectively, to Goldman, Sachs & Co. at least forty-eight hours
in advance. The Company will cause the certificates representing the Shares
to be made available for checking and packaging at least twenty-four hours
prior to the Time of Delivery (as defined below) with respect thereto at the
office of DTC or its designated custodian (the "Designated Office"). The time
and date of such delivery and payment shall be, with respect to the Firm
Shares, 9:30 a.m., New York time, on June 23, 1999 or such other time and
date as Goldman, Sachs & Co. and the Company may agree upon in writing, and,
with respect to the Optional Shares, 9:30 a.m., New York time, on the date
specified by Goldman, Sachs & Co. in the written notice given by Goldman,
Sachs & Co. of the Underwriters' election to purchase such Optional Shares,
or such other time and date as Goldman, Sachs & Co. and the Company may agree
upon in writing. Such time and date for delivery of the Firm Shares is herein
called the "First Time of Delivery", such time and date for delivery of the
Optional Shares, if not the First Time of Delivery, is herein called the
"Second Time of Delivery", and each such time and date for delivery is herein
called a "Time of Delivery".
(b) The documents to be delivered at each Time of Delivery by or on
behalf of the parties hereto pursuant to Section 7 hereof, including the
cross-receipt for the Shares and any additional documents requested by the
Underwriters pursuant to Section 7(m) hereof, will be delivered at the
offices of Davis, Graham & Stubbs LLP, 370 17th Street, Denver, Colorado
80202 (the "Closing Location"), and the Shares will be delivered at the
Designated Office, all at such Time of Delivery. A meeting will be held at
the Closing Location at 2:00 p.m., New York
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City time, on the New York Business Day next preceding such Time of Delivery,
at which meeting the final drafts of the documents to be delivered pursuant
to the preceding sentence will be available for review by the parties hereto.
For the purposes of this Section 4, "New York Business Day" shall mean each
Monday, Tuesday, Wednesday, Thursday and Friday which is not a day on which
banking institutions in New York are generally authorized or obligated by law
or executive order to close.
5. The Company and the Selling Stockholder, jointly and severally,
agree with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you and to
file such Prospectus pursuant to Rule 424(b) under the Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Act; to make no further amendment or any supplement to the
Registration Statement or Prospectus prior to the last Time of Delivery
which shall be disapproved by you promptly after reasonable notice
thereof; to advise you, promptly after it receives notice thereof, of
the time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or any
amended Prospectus has been filed and to furnish you with copies
thereof; to file promptly all reports and any definitive proxy or
information statements required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c), 14 or 15(d) of the
Exchange Act subsequent to the date of the Prospectus and for so long
as the delivery of a prospectus is required in connection with the
offering or sale of the Shares; to advise you, promptly after it
receives notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus, of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction,
of the initiation or threatening of any proceeding for any such
purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or prospectus or suspending any such
qualification, promptly to use its best efforts to obtain the
withdrawal of such order;
(b) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under
the securities laws of such jurisdictions in the United States and
Canada as you may request and to comply with such laws so as to permit
the continuance of sales and dealings therein in such jurisdictions for
as long as may be necessary to complete the distribution of the Shares,
provided that in connection therewith, the Company shall not be
required to qualify as a foreign corporation or to file a general
consent to service of process in any jurisdiction;
(c) Prior to 10:00 a.m., New York City time, on the New York
Business Day next succeeding the date of this Agreement and from time
to time, to furnish the Underwriters with copies of the Prospectus in
New York City in such quantities as you may reasonably request, and, if
the delivery of a prospectus is required at any time prior
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to the expiration of nine months after the time of issue of the
Prospectus in connection with the offering or sale of the Shares and if
at such time any events shall have occurred as a result of which the
Prospectus as then amended or supplemented would include an untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Prospectus or
to file under the Exchange Act any document incorporated by reference
in the Prospectus in order to comply with the Act or the Exchange Act,
to notify you and upon your request to file such document and to
prepare and furnish without charge to each Underwriter and to any
dealer in securities as many copies as you may from time to time
reasonably request of an amended Prospectus or a supplement to the
Prospectus which will correct such statement or omission or effect such
compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Shares at any time
nine months or more after the time of issue of the Prospectus, upon
your request but at the expense of such Underwriter, to prepare and
deliver to such Underwriter as many copies as you may request of an
amended or supplemented Prospectus complying with Section 10(a)(3) of
the Act;
(d) To make generally available to its securityholders as soon
as practicable, but in any event not later than eighteen months after
the effective date of the Registration Statement (as defined in Rule
158(c) under the Act), an earnings statement of the Company and its
subsidiaries (which need not be audited) complying with Section 11(a)
of the Act and the rules and regulations of the Commission thereunder
(including, at the option of the Company, Rule 158);
(e) During the period beginning from the date hereof and
continuing to and including the date 90 days after the date of the
Prospectus, not to offer, sell, contract to sell or otherwise dispose
of, except as provided hereunder, any securities of the Company that
are substantially similar to the Shares, including but not limited to
any securities that are convertible into or exchangeable for, or that
represent the right to receive, Stock or any such substantially similar
securities (other than the issuance of Stock by the Company pursuant to
employee incentive plans existing, and warrants issued and outstanding,
on the date of this Agreement), without your prior written consent;
(f) To furnish to its stockholders as soon as practicable after
the end of each fiscal year an annual report (including a balance sheet
and statements of income, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries certified by independent
public accountants) and, as soon as practicable after the end of each
of the first three quarters of each fiscal year (beginning with the
fiscal quarter ending after the effective date of the Registration
Statement), to make available to its stockholders consolidated summary
financial information of the Company and its subsidiaries for such
quarter in reasonable detail;
(g) During a period of five years from the effective date of the
Registration Statement, to furnish to you copies of all reports or
other communications (financial or
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other) furnished to stockholders, and to deliver to you (i) as soon as
they are available, copies of any reports and financial statements
furnished to or filed with the Commission or any national securities
exchange on which any class of securities of the Company is listed; and
(ii) for so long as the Company is required to file periodic reports
with the Commission pursuant to the Exchange Act, such additional
information concerning the business and financial condition of the
Company as you may from time to time reasonably request (such financial
statements to be on a consolidated basis to the extent the accounts of
the Company and its subsidiaries are consolidated in reports furnished
to its stockholders generally or to the Commission);
(h) To use the net proceeds received by the Company from the
sale of the Shares pursuant to this Agreement in the manner specified
in the Prospectus under the caption "Use of Proceeds";
(i) To use its best efforts to list for quotation the Shares on
the National Association of Securities Dealers Automated Quotations
National Market System ("NASDAQ"); and
(j) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on
the date of this Agreement, and the Company shall at the time of filing
either pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the payment
of such fee pursuant to Rule 111(b) under the Act.
6. (a) 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 and accountants
in connection with the registration of the Shares under the Act and all other
expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or
producing any Agreement among Underwriters, this Agreement, the Blue Sky
Memorandum, closing documents (including any compilations thereof) and any
other documents in connection with the offering, purchase, sale and delivery
of the Shares; (iii) all expenses in connection with the qualification of the
Shares for offering and sale under state securities laws as provided in
Section 5(b) hereof, including the fees and disbursements of counsel for the
Underwriters in connection with such qualification and in connection with the
Blue Sky survey; (iv) all fees and expenses in connection with listing the
Shares on NASDAQ; and (v) the filing fees incident to, and the fees and
disbursements of counsel for the Underwriters in connection with, securing
any required review by the National Association of Securities Dealers, Inc.
of the terms of the sale of the Shares. (b) The Company covenants and agrees
with the several Underwriters that the Company will pay or cause to be paid:
(i) the cost of preparing stock certificates; (ii) the cost and charges of
any transfer agent or registrar and (iii) all other costs and expenses
incident to the performance of its obligations hereunder which are not
otherwise specifically provided for in this Section. (c) The Company and the
Selling Stockholder, jointly and severally, covenant and agree that the
Selling
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Stockholder will pay or cause to be paid all costs and expenses incident to
the performance of the Selling Stockholder's obligations hereunder which are
not otherwise specifically provided for in this Section, including (i) any
fees and expenses of counsel for such Selling Stockholder, (ii) the fees and
expenses of the Custodian and (iii) all expenses and taxes incident to the
sale and delivery of the Shares to be sold by the Selling Stockholder to the
Underwriters hereunder. In connection with clause (c)(iii) of the preceding
sentence, the Selling Stockholder agrees to reimburse Goldman, Sachs & Co.
for any Colorado stock transfer tax it may incur. It is understood, however,
that, except as provided in this Section and Sections 8 and 11 hereof, the
Underwriters will pay all of their own costs and expenses, including the fees
of their counsel, stock transfer taxes on resale of any of the Shares by them
and any advertising expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the Shares
to be delivered at each Time of Delivery, shall be subject, in their
discretion, to the condition that all representations and warranties and
other statements of the Company and of the Selling Stockholder herein are, at
and as of such Time of Delivery, true and correct, the condition that the
Company and the Selling Stockholder shall have performed all of their
respective obligations hereunder theretofore to be performed and the
following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Act and in
accordance with Section 5(a) hereof; if the Company has elected to rely
upon Rule 462(b), the Rule 462(b) Registration Statement shall have
become effective by 10:00 p.m., Washington, D.C. time, on the date of
this Agreement; no stop order suspending the effectiveness of the
Registration Statement or any part thereof shall have been issued and
no proceeding for that purpose shall have been initiated or threatened
by the Commission; and all requests for additional information on the
part of the Commission shall have been complied with to your reasonable
satisfaction;
(b) Sullivan & Cromwell, counsel for the Underwriters, shall
have furnished to you such written opinion or opinions (a draft of each
such opinion is attached as Annex II(a) hereto), dated such Time of
Delivery, with respect to the matters covered in paragraphs (i), (ii),
(iii), (vi), (viii) and (ix) of subsection (c) below as well as such
other related matters as you may reasonably request, and such counsel
shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(c) Davis, Graham & Stubbs LLP, counsel for the Company, shall
have furnished to you their written opinion (a draft of such opinion is
attached as Annex II(b) hereto), dated such Time of Delivery, in form
and substance satisfactory to you, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
state of Delaware, with corporate power and authority to own its
properties and conduct its business as described in the
Prospectus;
(ii) The Company has an authorized capitalization as set
forth in the
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Prospectus, and all of the issued shares of capital stock of
the Company (including the Shares being delivered at such Time
of Delivery) have been duly and validly authorized and issued
and are fully paid and nonassessable; and the description
of the Shares conforms in all material respects to the
description of the Stock contained or incorporated by reference
in the Prospectus;
(iii) This Agreement has been duly authorized, executed
and delivered by the Company;
(iv) The issue and sale of the Shares being delivered at
such Time of Delivery to be sold by the Company and 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 agreement or instrument included or
incorporated by reference as an exhibit to the Registration
Statement, nor will such action result in any violation of the
provisions of the Amended and Restated Certificate of
Incorporation or By-laws of the Company or any statute or any
order, rule or regulation known to such counsel of any court or
governmental agency or body having jurisdiction over the Company
or any of its subsidiaries or any of their properties; except,
other than in respect of the Amended and Restated Certificate of
Incorporation and Bylaws of the Company, for such conflicts,
breaches and violations as would not, individually or in the
aggregate with such other conflicts, breaches and violations,
have a Material Adverse Effect or affect the validity,
performance or consummation of this Agreement by the Company;
(v) No consent, approval, authorization, order,
registration or qualification of or with any such court or
governmental agency or body is required for the issue and sale
of the Shares or the consummation by the Company of the
transactions contemplated by this Agreement, except the
registration under the Act of the Shares, and such consents,
approvals, authorizations, registrations or qualifications as
may be required under state securities or Blue Sky laws in
connection with the purchase and distribution of the Shares by
the Underwriters;
(vi) The statements set forth in the Prospectus under the
caption "Description of Capital Stock", insofar as they purport
to constitute a summary of the terms of the Stock, are accurate
and complete in all material respects;
(vii) The Company is not an "investment company", as such
term is defined in the Investment Company Act;
(viii) The documents incorporated by reference in the
Prospectus or any further amendment or supplement thereto made
by the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein and other
than operational and production data and reserve information
therein, as to which such counsel need express no opinion), when
they became effective or were filed with the Commission, as the
case may be, complied as to form in all
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<PAGE>
material respects with the requirements of the Act or the
Exchange Act, as applicable, and the rules and regulations of
the Commission thereunder; and they have no reason to believe
that any of such documents, when such documents became effective
or were so filed, as the case may be, contained, in the case of
a registration statement which became effective under the Act,
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, in the case of
other documents which were filed under the Exchange Act with the
Commission, an untrue statement of a material fact or omitted
to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made when such documents were so filed, not
misleading; and
(ix) The Registration Statement and the Prospectus and any
further amendments and supplements thereto made by the Company
prior to such Time of Delivery (other than the financial
statements and related schedules therein and other than
operational and production data and reserve information 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; although they do not
assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration
Statement or the Prospectus, except for those referred to in the
opinion in subsection (vi) of this Section 7(c), they have no
reason to believe that, as of its effective date, the
Registration Statement or any further amendment thereto made by
the Company prior to such Time of Delivery (other than the
financial statements and related schedules therein and other
than operational and production data and reserve information
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 such Time of Delivery
(other than the financial statements and related schedules
therein and other than operational and production data and
reserve information 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 the light of the circumstances under
which they were made, not misleading or that, as of such Time of
Delivery, either the Registration Statement or the Prospectus or
any further amendment or supplement thereto made by the Company
prior to such Time of Delivery (other than the financial
statements and related schedules therein and other than
operational and production data and reserve information 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 the light of
the circumstances under which they were made, not misleading;
and they do not know of any amendment to the Registration
Statement required to be filed in order for the Registration
Statement to comply as
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to form in all material respects with the requirements of the
Act and the rules and regulations thereunder 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
incorporated by reference into the Prospectus or required to be
described in the Registration Statement or the Prospectus which
are not filed or incorporated by reference or described as
required;
(d) Howard L. Boigon, Esq., General Counsel of the Company, in
his capacity as General Counsel, shall have furnished to you his
written opinion (a draft of such opinion is attached as Annex II(c)
hereto), dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good
standing under the laws of each other jurisdiction in which it
owns or leases properties or conducts any business so as to
require such qualification, or is subject to no material
liability or disability by reason of failure to be so qualified
in any such jurisdiction (such counsel being entitled to rely in
respect of the opinion in this clause upon opinions of local
counsel and in respect of matters of fact upon certificates of
officers of the Company, provided that such counsel shall state
that they believe that both you and they are justified in
relying upon such opinions and certificates);
(ii) 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 or
has been duly organized and is validly existing as a general or
limited partnership under the laws of its jurisdiction of
organization; all of the partnership interests in each
partnership subsidiary in which the Company or one of its
subsidiaries is a general partner and all of the issued shares
of capital stock of each corporate subsidiary of the Company
have been duly and validly authorized and issued, are fully paid
and, in the case of each corporate subsidiary, nonassessable,
and (except for directors' qualifying shares and except as
otherwise set forth in the Prospectus) are owned directly or
indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims (such counsel being entitled to
rely in respect of the opinion in this clause upon opinions of
local counsel and in respect of matters of fact upon
certificates of officers of the Company or its subsidiaries,
provided that such counsel shall state that they believe that
both you and they are justified in relying upon such opinions
and certificates);
(iii) To the best of such counsel's knowledge, the Company
and each of its subsidiaries is in possession of, and operating
in compliance with, all concessions, licenses, franchises,
permits, authorizations, approvals and orders of and from all
governmental and regulatory agencies and bodies that are
required for the conduct of their respective businesses as
currently operated and as described in the Prospectus, except
when the failure to be in possession of, or to have obtained,
such concessions, licenses, franchises, permits, authorizations,
approvals and orders would not have a Material Adverse Effect;
and, to the best of such counsel's knowledge, such businesses
are conducted in compliance with all
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applicable laws and regulations, except when such non-compliance
would not have a Material Adverse Effect;
(iv) 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 which, if
determined adversely to the Company or any of its subsidiaries,
would individually or in the aggregate have a material adverse
effect on the current or future consolidated financial position,
stockholders' equity or results of operations of the Company and
its subsidiaries; and, to the best of such counsel's knowledge,
no such proceedings are threatened or contemplated by
governmental authorities or threatened by others;
(v) The issue and sale of the Shares being delivered at
such Time of Delivery to be sold by the Company and 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 Amended and Restated
Certificate of Incorporation or Bylaws of the Company or any
statute or any order, rule or regulation known to such counsel
of any court or governmental agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their
properties except, other than in respect of the Amended and
Restated Certificate of Incorporation and Bylaws of the Company,
for such conflicts, breaches and violations as would not,
individually or in the aggregate with such other conflicts,
breaches and violations, have a Material Adverse Effect or
affect the validity, performance or consummation of this
Agreement by the Company;
(vi) To the best of such counsel's knowledge, neither the
Company nor any of its subsidiaries is in violation of its
certificate of incorporation, by-laws or other organizational
documents or in default in the performance or observance of any
material obligation, agreement, covenant or condition contained
in any indenture, mortgage, deed of trust, loan agreement, or
lease or agreement or other instrument to which it is a party or
by which it or any of its properties may be bound except, other
than in respect of the Amended and Restated Certificate of
Incorporation and Bylaws of the Company, for such violations and
defaults as would not, individually or in the aggregate with
such other violations and defaults, have a Material Adverse
Effect or affect the validity, performance or consummation of
this Agreement by the Company;
(vii) Such counsel has no reason to believe that any of
the documents incorporated by reference into the Prospectus
(other than the financial statements
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and related schedules therein and other than operational and
production data and reserve information therein, as to which
such counsel need express no opinion), when such documents
became effective or were so filed, as the case may be,
contained, in the case of a registration statement which became
effective under the Act, 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, in the case of other documents which were filed
under the Exchange Act with the Commission, an untrue statement
of a material fact or omitted to state a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made when such documents
were so filed, not misleading; and
(viii) Although such counsel does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement or the
Prospectus, he 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 such Time of
Delivery (other than the financial statements and related
schedules therein and other than operational and production data
and reserve information 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 such Time of Delivery (other than the financial
statements and related schedules therein and other than
operational and production data and reserve information 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 the
light of the circumstances under which they were made, not
misleading or that, as of such Time of Delivery, either the
Registration Statement or the Prospectus or any further
amendment or supplement thereto made by the Company prior to
such Time of Delivery (other than the financial statements and
related schedules therein and other than operational and
production data and reserve information 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 the light of the
circumstances under 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 incorporated by
reference into the Prospectus or required to be described in the
Registration Statement or the Prospectus which are not filed or
incorporated by reference or described as required;
(e) Davis, Graham & Stubbs LLP, counsel for the Selling
Stockholder, as indicated in Schedule II hereto, shall have furnished
to you their written opinion with
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respect to the Selling Stockholder (a draft of such opinion is attached
as Annex II(d) hereto), dated such Time of Delivery, in form and
substance satisfactory to you, to the effect that:
(i) A Custody Agreement has been duly executed and
delivered by the Selling Stockholder and constitutes a valid and
binding agreement of the Selling Stockholder in accordance with
its terms;
(ii) This Agreement has been duly executed and delivered
by or on behalf of the Selling Stockholder; and the sale of the
Shares to be sold by the Selling Stockholder hereunder and the
compliance by the Selling Stockholder with all of the provisions
of this Agreement and the Custody Agreement and the consummation
of the transactions herein and therein contemplated will not
conflict with or result in a breach or violation of any terms or
provisions of, or constitute a default under, any statute,
indenture, mortgage, deed of trust, loan agreement or other
agreement or instrument known to such counsel to which the
Selling Stockholder is a party or by which the Selling
Stockholder is bound or to which any of the property or assets
of the Selling Stockholder is subject, nor will such action
result in any violation of the provisions of any order, rule
or regulation known to such counsel of any court or governmental
agency or body having jurisdiction over the Selling Stockholder
or the property of the Selling Stockholder;
(iii) No consent, approval, authorization or order of any
court or governmental agency or body is required for the
consummation of the transactions contemplated by this Agreement
in connection with the Shares to be sold by the Selling
Stockholder hereunder, except such as have been obtained under
the Act and such as may be required under state securities or
Blue Sky laws in connection with the purchase and distribution
of such Shares by the Underwriters;
(iv) Immediately prior to such Time of Delivery, the
Selling Stockholder had good title to the Shares to be sold at
such Time of Delivery by the Selling Stockholder under this
Agreement, free and clear of all liens, encumbrances, equities
or claims, and full right, power and authority to sell, assign,
transfer and deliver the Shares to be sold by the Selling
Stockholder hereunder; and
(v) Good title to such Shares, free and clear of all
liens, encumbrances, equities or claims, has been transferred to
each of the several Underwriters who have purchased such Shares
in good faith and without notice of any such lien, encumbrance,
equity or claim or any other adverse claim within the meaning of
the Uniform Commercial Code.
In rendering the opinion in paragraph (iv), such counsel may rely upon
a certificate of the Selling Stockholder in respect of matters of fact as to
ownership of, and liens, encumbrances, equities or claims on, the Shares sold by
the Selling Stockholder, provided that such counsel shall state that they
believe that both you and they are justified in relying upon such certificate;
(f) On the date of the Prospectus at a time prior to the
execution of this
20
<PAGE>
Agreement, at 9:30 a.m., New York City time, on the effective date of
any post-effective amendment to the Registration Statement filed
subsequent to the date of this Agreement and also at each Time of
Delivery, Arthur Andersen LLP shall have furnished to you a letter or
letters, dated the respective dates of delivery thereof, in form and
substance satisfactory to you, to the effect set forth in Annex I
hereto (the executed copy of the letter delivered prior to the
execution of this Agreement is attached as Annex I(a) hereto and a
draft of the form of letter to be delivered on the effective date of
any post-effective amendment to the Registration Statement and as of
each Time of Delivery is attached as Annex I(b) hereto);
(g) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Prospectus any loss or
interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or court or governmental action, order or decree, otherwise
than as set forth or contemplated in the Prospectus, and (ii) since the
respective dates as of which information is given in the Prospectus
there shall not have been any change in the capital stock or long-term
debt of the Company or any of its subsidiaries or any change, or any
development involving a prospective change, in or affecting the general
affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, otherwise
than as set forth or contemplated in the Prospectus, the effect of
which, in any such case described in clause (i) or (ii), is in the
judgment of the representatives so material and adverse as to make it
impracticable or inadvisable to proceed with the public offering or
the delivery of the Shares being delivered at such Time of Delivery on
the terms and in the manner contemplated in the Prospectus;
(h) Ryder Scott and Netherland Sewell shall have each delivered
to you at each Time of Delivery a letter, dated the date of such Time
of Delivery, in each case in form and substance reasonably satisfactory
to you, stating, as of the date of such letter (or, with respect to
matters involving changes or developments since the respective dates as
of which specified information with respect to the oil and gas reserves
is given or incorporated in the Prospectus as of the date not more than
five days prior to the date of such letter), their respective
conclusions and findings with respect to the oil and gas reserves of
the Company;
(i) 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 or on
NASDAQ; (ii) a suspension or material limitation in trading in the
Company's securities on NASDAQ; (iii) a general moratorium on
commercial banking activities declared by either Federal or New York
State authorities; or (iv) the outbreak or escalation of hostilities
involving the United States or the declaration by the United States of
a national emergency or war, if the effect of any such event specified
in this clause (iv) in the judgment of the Representatives makes it
impracticable or inadvisable to proceed with the public offering or the
delivery of the Shares being delivered at such Time of Delivery on the
terms and in the manner contemplated in the Prospectus;
(j) The Shares at such Time of Delivery shall have been duly
listed for quotation
21
<PAGE>
on NASDAQ;
(k) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from each person listed under the
caption "Management" in the Prospectus, substantially to the effect set
forth in Subsection 1(b)(iv) hereof in form and substance satisfactory
to you;
(l) The Company shall have complied with the provisions of
Section 5(c) hereof with respect to the furnishing of prospectuses on
the New York Business Day next succeeding the date of this Agreement;
and
(m) The Company and the Selling Stockholder shall have each
furnished or caused to be furnished to you at such Time of Delivery
certificates of officers of the Company and a certificate of the
Selling Stockholder satisfactory to you as to the accuracy of the
representations and warranties of the Company and the Selling
Stockholder, respectively, herein at and as of such Time of Delivery,
as to the performance by the Company and the Selling Stockholder of all
of their respective obligations hereunder to be performed at or prior
to such Time of Delivery, and as to such other matters as you may
reasonably request, and the Company shall have furnished or caused to
be furnished certificates as to the matters set forth in subsections
(a) and (g) of this Section.
8. (a) The Company and the Selling Stockholder, jointly and
severally, will indemnify and hold harmless each Underwriter against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter may become subject, under the Act or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise
out of or are based upon an untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus, the Registration
Statement or the Prospectus, or any amendment or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter for
any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim as such
expenses are incurred; PROVIDED, HOWEVER, that the Company and the Selling
Stockholder shall not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus, the Registration Statement or the Prospectus or
any such amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter through
Goldman, Sachs & Co. expressly for use therein; and provided further, that
(i) the liability of the Selling Stockholder pursuant to this subsection 8(a)
shall not exceed the product of the number of Shares to be sold by the
Selling Stockholder and the initial price to public per Share as set forth on
the cover page of the Prospectus and (ii) prior to making any demand for
payment from the Selling Stockholder under this subsection 8(a), the
Underwriters shall have first made demand for payment of any amounts due
under this subsection 8(a) against the Company and the Company shall have
failed to make payment of any of such amounts within 30 days following such
demand.
22
<PAGE>
(b) Each Underwriter will indemnify and hold harmless the Company and
the Selling Stockholder against any losses, claims, damages or liabilities to
which the Company or the Selling Stockholder may become subject, under the Act
or otherwise, insofar as such losses, claims, damages or liabilities (or actions
in respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any amendment or
supplement thereto, or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each case to the
extent, but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such amendment
or supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through Goldman, Sachs & Co.
expressly for use therein; and will reimburse the Company and the Selling
Stockholder for any legal or other expenses reasonably incurred by the Company
or the Selling Stockholder in connection with investigating or defending any
such action or claim as such expenses are incurred.
(c) Promptly after receipt by an indemnified party under subsection
(a) or (b) above of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be made against
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 which it may have
to any indemnified party otherwise than under such subsection. In case any
such action shall be brought against any indemnified party and it shall
notify the indemnifying party of the commencement thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
shall wish, jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel reasonably 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. No indemnifying party shall, without the
written consent of the indemnified party, effect the settlement or compromise
of, or consent to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified party is
an actual or potential party to such action or claim) unless such settlement,
compromise or judgment (i) includes an unconditional release of the
indemnified party from all liability arising out of such action or claim and
(ii) does not include a statement as to or an admission of fault, culpability
or a failure to act, by or on behalf of any indemnified party.
(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
23
<PAGE>
party as a result of such losses, claims, damages or liabilities (or actions
in respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Selling Stockholder on the
one hand and the Underwriters on the other from the offering of the Shares.
If, however, the allocation provided by the immediately preceding sentence is
not permitted by applicable law or if the indemnified party failed to give
the notice required under subsection (c) above, then each indemnifying party
shall contribute to such amount paid or payable by such indemnified party in
such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company and the Selling Stockholder on the
one hand and the Underwriters on the other in connection with the statements
or omissions which resulted in such losses, claims, damages or liabilities
(or actions in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company and the Selling
Stockholder on the one hand and the Underwriters on the other shall be deemed
to be in the same proportion as the total net proceeds from the offering
(before deducting expenses) received by the Company and the Selling
Stockholder bear to the total underwriting discounts and commissions received
by the Underwriters, in each case as set forth in the table on the cover page
of the Prospectus. The relative fault shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or the Selling Stockholder on
the one hand or the Underwriters on the other and the parties' relative
intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Selling Stockholder and
the Underwriters agree that it would not be just and equitable if
contributions pursuant to this subsection (d) were determined by PRO RATA
allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above in this subsection (d). The
amount paid or payable by an indemnified party as a result of the losses,
claims, damages or liabilities (or actions in respect thereof) referred to
above in this subsection (d) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim. Notwithstanding the
provisions of this subsection (d), no Underwriter shall be required to
contribute any amount in excess of the amount by which the total price at
which the Shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations in this
subsection (d) to contribute are several in proportion to their respective
underwriting obligations and not joint. In no event shall the liability of
the Selling Stockholder pursuant to this subsection 8(d) exceed the product
of the number of Shares to be sold by the Selling Stockholder and the initial
price to public per share as set forth on the cover page of the Prospectus.
(e) The obligations of the Company and the Selling Stockholder under
this Section 8 shall be in addition to any liability which the Company and the
Selling Stockholder may otherwise have and shall extend, upon the same terms and
conditions, to each person, if any,
24
<PAGE>
who controls any Underwriter within the meaning of the Act; and the
obligations of the Underwriters under this Section 8 shall be in addition to
any liability which the respective Underwriters may otherwise have and shall
extend, upon the same terms and conditions, to each officer and director of
the Company and to each person, if any, who controls the Company within the
meaning of the Act.
9. (a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at a Time of
Delivery, you may in your discretion arrange for you or another party or
other parties to purchase such Shares on the terms contained herein. If
within thirty-six hours after such default by any Underwriter you do not
arrange for the purchase of such Shares, then the Company and the Selling
Stockholder shall be entitled to a further period of thirty-six hours within
which to procure another party or other parties satisfactory to you to
purchase such Shares on such terms. In the event that, within the respective
prescribed periods, you notify the Company and the Selling Stockholder that
you have so arranged for the purchase of such Shares, or the Company and the
Selling Stockholder notify you that they have so arranged for the purchase of
such Shares, you or the Company and the Selling Stockholder shall have the
right to postpone a Time of Delivery for a period of not more than seven
days, in order to effect whatever changes may thereby be made necessary in
the Registration Statement or the Prospectus, or in any other documents or
arrangements, and the Company agrees to file promptly any amendments to the
Registration Statement or the Prospectus which in your opinion may thereby be
made necessary. The term "Underwriter" as used in this Agreement shall
include any person substituted under this Section with like effect as if such
person had originally been a party to this Agreement with respect to such
Shares.
(b) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company
and the Selling Stockholder as provided in subsection (a) above, the
aggregate number of such Shares which remains unpurchased does not exceed
one-eleventh of the aggregate number of all the Shares to be purchased at
such Time of Delivery, then the Company and the Selling Stockholder shall
have the right to require each non-defaulting Underwriter to purchase the
number of Shares which such Underwriter agreed to purchase hereunder at such
Time of Delivery and, in addition, to require each non-defaulting Underwriter
to purchase its pro rata share (based on the number of Shares which such
Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made;
but nothing herein shall relieve a defaulting Underwriter from liability for
its default.
(c) If, after giving effect to any arrangements for the purchase of
the Shares of a defaulting Underwriter or Underwriters by you and the Company
and the Selling Stockholder as provided in subsection (a) above, the
aggregate number of such Shares which remains unpurchased exceeds
one-eleventh of the aggregate number of all of the Shares to be purchased at
such Time of Delivery, or if the Company 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 this Agreement (or, with respect to the Second Time of
Delivery, the obligations of the Underwriters to purchase and of
25
<PAGE>
the Company and the Selling Stockholder to sell the Optional Shares) shall
thereupon terminate, without liability on the part of any non-defaulting
Underwriter or the Company or the Selling Stockholder, except for the
expenses to be borne by the Company and the Selling Stockholder and the
Underwriters as provided in Section 6 hereof and the indemnity and
contribution agreements in Section 8 hereof; but nothing herein shall relieve
a defaulting Underwriter from liability for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Selling Stockholder and
the several Underwriters, as set forth in this Agreement or made by or on
behalf of them, respectively, pursuant to this Agreement, shall remain in
full force and effect, regardless of any investigation (or any statement as
to the results thereof) made by or on behalf of any Underwriter or any
controlling person of any Underwriter, or the Company, or any officer or
director or controlling person of the Company, and shall survive delivery of
and payment for the Shares.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, neither the Company nor the Selling Stockholder shall then be under
any liability to any Underwriter except as provided in Sections 6 and 8
hereof; but, if for any other reason any Shares are not delivered by or on
behalf of the Company and the Selling Stockholder as provided herein, the
Company will reimburse the Underwriters through you for all out-of-pocket
expenses approved in writing by you, including fees and disbursements of
counsel, reasonably incurred by the Underwriters in making preparations for
the purchase, sale and delivery of the Shares not so delivered, but the
Company and the Selling Stockholder shall then be under no further liability
to any Underwriter in respect of the Shares not so delivered except as
provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of
the Underwriters, and the parties hereto shall be entitled to act and rely
upon any statement, request, notice or agreement on behalf of any Underwriter
made or given by you jointly or by Goldman, Sachs & Co. on behalf of you as
the representatives.
All statements, requests, notices and agreements hereunder shall be
in writing, and if to the Underwriters shall be delivered or sent by mail,
telex or facsimile transmission to you as the representatives in care of
Goldman, Sachs & Co., 32 Old Slip, 21st Floor, New York, New York 10005,
Attention: Registration Department; if to the Selling Stockholder shall be
delivered or sent by mail, telex or facsimile transmission to the address of
the Company set forth in the Registration Statement; and if to the Company
shall be delivered or sent by mail, telex or facsimile transmission to the
address of the Company set forth in the Registration Statement, Attention:
Secretary; provided, however, that any notice to an Underwriter pursuant to
Section 8(c) hereof shall be delivered or sent by mail, telex or facsimile
transmission to such Underwriter at its address set forth in its
Underwriters' Questionnaire or telex constituting such Questionnaire, which
address will be supplied to the Company or the Selling Stockholder by you on
request. Any such statements, requests, notices or agreements shall take
effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and the Selling Stockholder and, to
the extent provided in Sections 8 and 10 hereof, the officers and directors of
the Company and each person who
26
<PAGE>
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. THIS 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.
27
<PAGE>
If the foregoing is in accordance with your understanding, please
sign and return to us one counterpart hereof for the Company, the Selling
Stockholder and each of the representatives plus one for each counsel and the
Custodian, and upon the acceptance hereof by you, on behalf of each of the
Underwriters, this letter and such acceptance hereof shall constitute a
binding agreement among each of the Underwriters, the Company and the Selling
Stockholder. It is understood that your acceptance of this letter on behalf
of each of the Underwriters is pursuant to the authority set forth in a form
of Agreement among Underwriters, the form of which shall be submitted to the
Company and the Selling Stockholder for examination, upon request, but
without warranty on your part as to the authority of the signers thereof.
Very truly yours,
Basin Exploration, Inc.
By: /s/ Michael S. Smith
--------------------------
Name: Michael S. Smith
Title: President
Michael S. Smith
By: /s/ Michael s. Smith
--------------------------
Name: Michael S. Smith
Accepted as of the date hereof:
Goldman, Sachs & Co.
Banc of America Securities LLC
Dain Rauscher Wessels,
a division of Dain Rauscher Incorporated
Petrie Parkman & Co., Inc.
By: /s/ Goldman, Sachs & Co.
--------------------------
(Goldman, Sachs & Co.)
On behalf of each of the Underwriters
28
<PAGE>
SCHEDULE I
<TABLE>
<CAPTION>
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF PURCHASED IF
FIRM SHARES MAXIMUM OPTION
TO BE PURCHASED EXERCISED
--------------- ------------------
<S> <C> <C>
Goldman, Sachs & Co......................................... 1,275,000 191,250
Banc of America Securities LLC.............................. 637,500 95,625
Dain Rauscher Wessels, a division of Dain Rauscher
Incorporated............................................. 637,500 95,625
Petrie Parkman & Co., Inc................................... 637,500 95,625
J.C. Bradford & Co.......................................... 203,125 30,469
Hanifen, Imhoff Inc......................................... 203,125 30,469
Morgan Keegan & Company, Inc................................ 203,125 30,469
Southcoast Capital Corporation.............................. 203,125 30,468
--------- -------
Total.............................................. 4,000,000 600,000
--------- -------
--------- -------
</TABLE>
<PAGE>
SCHEDULE II
<TABLE>
<CAPTION>
NUMBER OF OPTIONAL
SHARES TO BE
TOTAL NUMBER OF SOLD-IF
FIRM SHARES MAXIMUM OPTION
TO BE SOLD EXERCISED
--------------- ------------------
<S> <C>
The Company........................................................ 3,750,000 562,500
Michael S. Smith................................................... 250,000 37,500
-------------- ------------
Total..................................................... 4,000,000 600,000
-------------- ------------
-------------- ------------
</TABLE>
<PAGE>
ANNEX I
FORM OF DESCRIPTION OF COMFORT LETTER
Pursuant to Section 7(f) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public accountants with respect
to the Company and its subsidiaries within the meaning of the Act and
the applicable published rules and regulations thereunder;
(ii) In their opinion, the financial statements and any
supplementary financial information and schedules (and, if applicable,
financial forecasts and/or pro forma financial information) examined by
them and included or incorporated by reference in the Registration
Statement or the Prospectus comply as to form in all material respects
with the applicable accounting requirements of the Act or the Exchange
Act, as applicable, and the related published rules and regulations
thereunder; and, if applicable, they have made a review in accordance
with standards established by the American Institute of Certified
Public Accountants of the consolidated interim financial statements,
selected financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from audited
financial statements of the Company for the periods specified in such
letter, as indicated in their reports thereon, copies of which have
been furnished to the representatives of the Underwriters (the
"representatives");
(iii) They have made a review in accordance with standards
established by the American Institute of Certified Public Accountants
of the unaudited condensed consolidated statements of income,
consolidated balance sheets and consolidated statements of cash flows
included in the Prospectus and/or included in the Company's Quarterly
Report on Form 10-Q incorporated by reference into the Prospectus as
indicated in their reports thereon; and on the basis of specified
procedures including inquiries of officials of the Company who have
responsibility for financial and accounting matters regarding whether
the unaudited condensed consolidated financial statements referred to
in paragraph (vi)(A)(i) below comply as to form in all material
respects with the applicable accounting requirements of the Act and the
Exchange Act and the related published rules and regulations, nothing
came to their attention that caused them to believe that the unaudited
condensed consolidated financial statements do not comply as to form in
all material respects with the applicable accounting requirements of
the Act and the Exchange Act and the related published rules and
regulations;
(iv) The unaudited selected financial information with respect to
the consolidated results of operations and financial position of the
Company for the five most recent fiscal years included in the
Prospectus and included or incorporated by reference in Item 6 of the
Company's Annual Report on Form 10-K for the most recent fiscal year
agrees with the corresponding amounts (after restatement where
applicable) in the audited consolidated financial statements for such
five fiscal years which were included or incorporated by reference in
the Company's Annual Reports on Form 10-K for such
<PAGE>
fiscal years;
(v) They have compared the information in the Prospectus under
selected captions with the disclosure requirements of Regulation S-K,
and on the basis of limited procedures specified in such letter,
nothing came to their attention as a result of the foregoing procedures
that caused them to believe that this information does not conform in
all material respects with the disclosure requirements of Items 301,
302, 402 and 503(d), respectively, of Regulation S-K;
(vi) On the basis of limited procedures not constituting an
examination in accordance with generally accepted auditing standards,
consisting of a reading of the unaudited financial statements and other
information referred to below, a reading of the latest available
interim financial statements of the Company and its subsidiaries,
inspection of the minute books of the Company and its subsidiaries
since the date of the latest audited financial statements included or
incorporated by reference in the Prospectus, inquiries of officials of
the Company and its subsidiaries responsible for financial and
accounting matters and such other inquiries and procedures as may be
specified in such letter, nothing came to their attention that caused
them to believe that:
(A) (i) the unaudited condensed consolidated statements of
income, consolidated balance sheets and consolidated statements of
cash flows included in the Prospectus and/or included or
incorporated by reference in the Company's quarterly reports on
Form 10-Q incorporated by reference in the Prospectus do not
comply as to form in all material respects with the applicable
accounting requirements of the Exchange Act as it applies to Form
10-Q and the related published rules and regulations, or (ii) any
material modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the Prospectus
or included in the Company's Quarterly Reports on Form 10-Q
incorporated by reference in the Prospectus, for them to be
conformity with generally accepted accounting principles;
(B) any other unaudited income statement data and balance
sheet items included in the Prospectus do not agree with the
corresponding items in the unaudited consolidated financial
statements from which such data and items were derived, and any
such unaudited data and items were not determined on a basis
substantially consistent with the basis for the corresponding
amounts in the audited consolidated financial statements included
or incorporated by reference in the Company's Annual Report on
Form 10-K for the most recent fiscal year;
(C) the unaudited financial statements which were not
included in the Prospectus but from which were derived the
unaudited condensed financial statements referred to in clause (A)
and any unaudited income statement data and balance sheet items
included in the Prospectus and referred to in clause (B) were not
determined on a basis substantially consistent with the basis for
the audited financial statements included or incorporated by
reference in the Company's Annual Report on Form 10-K for the most
recent fiscal year;
(D) any unaudited pro forma consolidated condensed
financial statements
<PAGE>
included or incorporated by reference in the Prospectus do not
comply as to form in all material respects with the applicable
accounting requirements of the Act and the published rules and
regulations thereunder or the pro forma adjustments have not been
properly applied to the historical amounts in the compilation of
those statements;
(E) as of a specified date not more than five days prior
to the date of such letter, there have been any changes in the
consolidated capital stock (other than issuances of capital stock
upon exercise of options and stock appreciation rights, upon
earn-outs of performance shares and upon conversions of
convertible securities, in each case which were outstanding on the
date of the latest balance sheet included or incorporated by
reference in the Prospectus) or any increase in the consolidated
long-term debt of the Company and its subsidiaries, or any
decreases in consolidated net current assets or stockholders'
equity or other items specified by the representatives, or any
increases in any items specified by the representatives, in each
case as compared with amounts shown in the latest balance sheet
included or incorporated by reference in the Prospectus, except in
each case for changes, increases or decreases which the Prospectus
discloses have occurred or may occur or which are described in
such letter; and
(F) for the period from the date of the latest financial
statements included or incorporated by reference in the Prospectus
to the specified date referred to in clause (E) there were any
decreases in consolidated net revenues or operating profit or the
total or per share amounts of consolidated net income or other
items specified by the representatives, or any increases in any
items specified by the representatives, in each case as compared
with the comparable period of the preceding year and with any
other period of corresponding length specified by the
representatives, except in each case for increases or decreases
which the Prospectus discloses have occurred or may occur or which
are described in such letter; and
(vii) In addition to the examination referred to in their
report(s) included or incorporated by reference in the Prospectus and
the limited procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (iii) and (vi) above, they have
carried out certain specified procedures, not constituting an
examination in accordance with generally accepted auditing standards,
with respect to certain amounts, percentages and financial information
specified by the representatives which are derived from the general
accounting records of the Company and its subsidiaries, which appear in
the Prospectus (excluding documents incorporated by reference) or in
Part II of, or in exhibits and schedules to, the Registration Statement
specified by the representatives or in documents incorporated by
reference in the Prospectus specified by the representatives, and have
compared certain of such amounts, percentages and financial information
with the accounting records of the Company and its subsidiaries and
have found them to be in agreement.
<PAGE>
[LETTERHEAD OF BASIN EXPLORATION, INC.]
June 17, 1999
Mr. Michael S. Smith
370 Seventeenth St.
Suite 3400
Denver, CO 80202
Dear Mr. Smith:
Basin Exploration, Inc. (the "Company") and you are parties to an
Underwriting Agreement dated June 17, 1999 (the "Underwriting Agreement"),
pursuant to which the Company and you are selling to Goldman, Sachs & Co.,
Banc of America Securities LLC, Dain Rauscher Wessels, a division of Dain
Rauscher Incorporated, and Petrie Parkman & Co., Inc. (collectively, the
"Underwriters") 3,750,000 and 250,000 shares, respectively, of the Company's
common stock, $.01 par value per share, plus, if so elected by the
Underwriters, up to an additional 562,500 and 37,500 shares, respectively, to
cover over-allotments (the "Shares"). In the Underwriting Agreement, the
Company and you have jointly and severally agreed to indemnify the
Underwriters against certain losses incurred in connection with the offer and
sale of the Shares, subject to the terms and conditions set forth therein. By
this letter, the Company agrees to indemnify you from and against liabilities
that you may incur pursuant to the Underwriting Agreement, as set forth
below. Capitalized terms used herein and not defined herein have the meanings
therefor set forth in the Underwriting Agreement.
The Company agrees to indemnify you and hold you harmless from and
against any and all losses, claims, damages, liabilities and judgments
incurred by you pursuant to the Underwriting Agreement caused by any untrue
statement or alleged untrue statement of a material fact contained in the
Registration Statement or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or supplements thereto) or any
preliminary prospectus, or caused by any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, except insofar as such losses,
claims, damages, liabilities or judgments are caused by any such untrue
statement or omission or alleged untrue statement or omission based upon
information relating to you furnished in writing to the Company by you or on
your behalf expressly for use therein.
The Company and you agree that the indemnification procedures set
forth in the Underwriting Agreement, including those relating to notice and
assumption of defense, shall also govern the indemnity provided for herein.
<PAGE>
Mr. Michael S. Smith
June 17, 1999
Page 2
BASIN EXPLORATION, INC.
By: /s/ Howard L. Boigon
--------------------------------
Howard L. Boigon
Vice President and General Counsel
AGREED AND ACCEPTED:
/s/ Michael S. Smith
- ----------------------------
Michael S. Smith
<PAGE>
EXHIBIT 23.1
CONSENT OF INDEPENDENT PUBLIC ACCOUNTANTS
As independent public accountants, we hereby consent to the use of our report
dated February 24, 1999 (and to all references to our Firm) included in or
made a part of the prospectus supplement dated June 17, 1999 pursuant to the
registration statement on Form S-3 (No. 333-36143) filed by Basin
Exploration, Inc.
/s/ Arthur Andersen LLP
Denver, Colorado
June 17, 1999
