SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of
earliest event reported).........................July 22, 1996
TEJAS GAS CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-17389 76-0263364
(Commission File Number) (I.R.S. Employer
Identification Number)
1301 McKinney, Suite 700
Houston, Texas 77010
(Address of Principal (Zip Code)
Executive Offices)
Registrant's telephone number
including area code: (713) 658-0509
<PAGE>
ITEM 7. FINANCIAL STATEMENTS AND EXHIBITS.
Explanatory Note: This Current Report on Form 8-K is being filed
for the purpose of filing Exhibits 1(a) and 1(b) hereof in
connection with the Registrant's Registration Statement on Form S-3
(Reg. No. 333-06207), which became effective July 3, 1996.
(c) Exhibits.
1(a) U.S. Purchase Agreement
1(b) International Purchase Agreement
<PAGE>
Signature
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.
TEJAS GAS CORPORATION
Date: June 22, 1996 By: /s/ JAMES W. WHALEN
James W. Whalen
Executive Vice President and Chief
Financial Officer (principal financial
officer and principal accounting officer)
EXHIBIT 1(a)
TEJAS GAS CORPORATION
(a Delaware corporation)
2,260,000 SHARES OF COMMON STOCK
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U.S. PURCHASE AGREEMENT
---------------------------------------------------
Dated: July ___, 1996
TABLE OF CONTENTS
U.S. PURCHASE AGREEMENT......................................................1
SECTION 1. REPRESENTATIONS AND WARRANTIES................................4
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY..........4
(1) Compliance with Registration Requirements.......4
(2) Incorporated Documents..........................5
(3) Independent Accountants.........................5
(4) Financial Statements............................5
(5) No Material Adverse Change in Business..........6
(6) Good Standing of the Company....................6
(7) Good Standing of Subsidiaries...................6
(8) Capitalization..................................7
(9) Authorization of Agreements.....................7
(10) Authorization of Common Stock...................7
(11) Absence of Defaults and Conflicts...............8
(12) Violation of Law................................9
(13) Absence of Proceedings..........................9
(14) Accuracy of Exhibits............................9
(15) Description of the Securities...................9
(16) Absence of Further Requirements.................9
(17) Possession of Licenses and Permits..............9
(18) Title to Property..............................10
(19) Investment Company Act.........................10
(20) Derivatives Business...........................10
(21) Compliance with Cuba Act.......................10
(b) OFFICER'S CERTIFICATES................................10
SECTION 2. SALE AND DELIVERY TO INTERNATIONAL UNDERWRITERS; CLOSING.....11
(a) INITIAL SECURITIES....................................11
(b) OPTION SECURITIES.....................................11
(c) PAYMENT...............................................11
(d) DENOMINATIONS; REGISTRATION...........................12
SECTION 3. COVENANTS OF THE COMPANY.....................................12
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND
COMMISSION REQUESTS...................................12
(b) FILING OF AMENDMENTS..................................13
(c) DELIVERY OF REGISTRATION STATEMENTS...................13
(d) DELIVERY OF PROSPECTUSES..............................13
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS.............13
(f) BLUE SKY QUALIFICATIONS...............................14
(g) RULE 158..............................................14
(h) USE OF PROCEEDS.......................................15
(i) LISTING...............................................15
(j) RESTRICTION ON SALE OF SECURITIES.....................15
(k) REPORTING REQUIREMENTS................................15
SECTION 4. PAYMENT OF EXPENSES..........................................15
(a) EXPENSES..............................................15
(b) TERMINATION OF AGREEMENT..............................15
SECTION 5. CONDITIONS OF U.S. UNDERWRITERS' OBLIGATIONS.................16
(a) EFFECTIVENESS OF REGISTRATION STATEMENT...............16
(b) OPINION OF COUNSEL FOR COMPANY........................16
(c) OPINION OF COUNSEL FOR U.S. UNDERWRITERS..............16
(d) OFFICERS' CERTIFICATE.................................17
(e) ACCOUNTANTS' COMFORT LETTERS..........................17
(f) BRING-DOWN COMFORT LETTER.............................17
(g) APPROVAL OF LISTING...................................18
(h) LOCK-UP AGREEMENTS....................................18
(i) PURCHASE OF INITIAL INTERNATIONAL SECURITIES..........18
(j) CONDITIONS TO PURCHASE OF U.S. OPTION SECURITIES......18
(k) ADDITIONAL DOCUMENTS..................................19
(l) TERMINATION OF TERMS AGREEMENTS.......................19
SECTION 6. INDEMNIFICATION..............................................19
(a) INDEMNIFICATION OF UNDERWRITERS.......................19
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS....20
(c) ACTIONS AGAINST PARTIES; NOTIFICATION.................21
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE....21
SECTION 7. CONTRIBUTION.................................................22
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE
DELIVERY.....................................................23
SECTION 9. TERMINATION..................................................23
(a) PURCHASE AGREEMENT....................................23
(b) TERMS AGREEMENT.......................................23
(c) LIABILITIES...........................................24
SECTION 10. DEFAULT BY ONE OR MORE OF THE U.S. UNDERWRITERS..............24
SECTION 11. NOTICES......................................................25
SECTION 12. PARTIES......................................................25
SECTION 13. GOVERNING LAW AND TIME.......................................25
SECTION 14. EFFECT OF HEADINGS...........................................25
TEJAS GAS CORPORATION
(a Delaware corporation)
2,260,000 Shares
of
Common Stock
(Par value $0.25 per share)
U.S. PURCHASE AGREEMENT
July ____, 1996
MERRILL LYNCH & CO.
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
OPPENHEIMER & CO., INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES
as U.S. Representatives of the several U.S. Underwriters
c/o Merrill Lynch & Co.
Merrill Lynch, Pierce, Fenner & Smith Incorporated
North Tower
World Financial Center
New York, New York 10281-1209
Ladies and Gentlemen:
Tejas Gas Corporation, a Delaware corporation (the "Company"), proposes to
issue and sell up to 2,260,000 shares of common stock, par value $0.25 per share
(the "Common Stock"), of the Company.
As used herein, "Initial U.S. Securities" shall mean the 2,260,000 shares
of Common Stock to be initially sold to the U.S. Underwriters; "U.S. Option
Securities" shall mean 339,000 additional shares of Common Stock to be sold to
the U.S. Underwriters to cover over-allotments; and "U.S. Securities" shall mean
the Initial U.S. Securities and the U.S. Option Securities.
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The Company shall offer the U.S. Securities through Merrill Lynch & Co.,
Merrill Lynch, Pierce, Fenner & Smith Incorporated ("Merrill Lynch"),
Oppenheimer & Co., Inc. ("Oppenheimer"), PaineWebber Incorporated
("PaineWebber"), and Prudential Securities ("Prudential"), and will enter
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into an agreement (the "U.S. Terms Agreement") providing for the sale of the
U.S. Securities to, and the purchase and offering thereof by, Merrill Lynch,
Oppenheimer, PaineWebber, and Prudential and each of the other Underwriters
named in the U.S. Terms Agreement (collectively, the "U.S. Underwriters," which
term shall also include any underwriter substituted as hereinafter provided in
Section 10 hereof), for whom Merrill Lynch, Oppenheimer, PaineWebber and
Prudential are acting as representatives (in such capacity, the "U.S.
Representatives"), with respect to the issue and sale by the Company and the
purchase by the U.S. Underwriters, acting severally and not jointly, of the
respective numbers of shares of U.S. Initial Securities set forth in said
Schedule A to the U.S. Terms Agreement, and with respect to the grant by the
Company to the U.S. Underwriters, acting severally and not jointly, of the
option described in Section 2(b) hereof to purchase all or any part of the U.S.
Option Securities to cover over-allotments, if any.
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "International Purchase Agreement"),
subject to the completion of a related terms agreement thereto (the
"International Terms Agreement") (collectively, the U.S. Terms Agreement and the
International Terms Agreement are referred to herein as the "Terms Agreements"),
providing for the offering by the Company of an aggregate of 565,000 shares of
Common Stock (the "Initial International Securities") through arrangements with
certain underwriters outside of the United States and Canada (the "International
Managers") for which Merrill Lynch International, Cazenove & Co. and NatWest
Securities Limited are acting as lead managers (the "Lead Managers") and the
grant by the Company to the International Managers, acting severally and not
jointly, of an option to purchase all or part of the International Managers' pro
rata portion of up to 84,750 additional shares of Common Stock solely to cover
overallotments, if any (the "International Option Securities" and, together with
the U.S. Option Securities, the "Option Securities"). The Initial International
Securities and the International Option Securities are hereinafter called the
"International Securities".
The U.S. Underwriters and the International Managers are hereinafter
collectively called the "Underwriters", the Initial U.S. Securities and the
Initial International Securities are hereinafter collectively called the
"Initial Securities", and the U.S. Securities, and the International Securities
are hereinafter collectively called the "Securities".
The Underwriters will concurrently enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the direction
of Merrill Lynch (in such capacity, the "Global Coordinator").
The Company understands that the U.S. Underwriters propose to make a
public offering of the U.S. Securities as soon as the Representatives deem
advisable after this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-06207) and
pre-effective Amendment No. 1 thereto for the registration of the Securities
under the Securities Act of 1933, as amended (the "1933 Act"),
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and the offering thereof from time to time in accordance with Rule 415 of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations"), and the Company has filed such post-effective amendments thereto
as may be required prior to the execution of the Terms Agreements. Promptly
after execution and delivery of this Agreement and the Terms Agreements, the
Company will either (i) prepare and file a prospectus in accordance with the
provisions of Rule 430A ("Rule 430A") of the rules and regulations of the
Commission under the 1933 Act (the "1933 Act Regulations") and paragraph (b) of
Rule 424 ("Rule 424(b)") of the 1933 Act Regulations or (ii) if the Company has
elected to rely upon Rule 434 ("Rule 434") of the 1933 Act Regulations, prepare
and file a term sheet (a "Term Sheet") in accordance with the provisions of Rule
434 and Rule 424(b). Two forms of prospectus are to be used in connection with
the offering and sale of the Securities: one relating to the U.S. Securities
(the "Form of U.S. Prospectus") and one relating to the International Securities
(the "Form of International Prospectus"). The Form of International Prospectus
is identical to the Form of U.S. Prospectus, except for the front cover and back
cover pages and the information under the caption "Underwriting" and the
inclusion in the Form of International Prospectus of a section under the caption
"Certain United States Tax Considerations for Non-United States Holders.") The
information included in any such prospectus or in any such Term Sheet, as the
case may be, that was omitted from such registration statement at the time it
became effective but that is deemed to be part of such registration statement at
the time it became effective (a) pursuant to paragraph (b) of Rule 430A is
referred to as "Rule 430A Information" or (b) pursuant to paragraph (d) of Rule
434 is referred to as "Rule 434 Information." Each Form of International
Prospectus and Form of U.S. Prospectus used before such registration statement
became effective, and any prospectus that omitted, as applicable, the Rule 430A
Information or the Rule 434 Information, that was used after such effectiveness
and prior to the execution and delivery of this Agreement, is herein called a
"preliminary prospectus." Such registration statement, including the exhibits
thereto, schedules thereto, if any, and the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act, at the time it
became effective and including the Rule 430A Information and the Rule 434
Information, as applicable, is herein called the "Registration Statement." Any
registration statement filed pursuant to Rule 462(b) of the 1933 Act Regulations
is herein referred to as the "Rule 462(b) Registration Statement," and after
such filing the term "Registration Statement" shall include the Rule 462(b)
Registration Statement. The final Form of International Prospectus and the final
Form of U.S. Prospectus, including the documents incorporated by reference
therein pursuant to Item 12 of Form S-3 under the 1933 Act, in the forms first
furnished to the Underwriters for use in connection with the offering of the
Securities are herein called the "International Prospectus" and the "U.S.
Prospectus," respectively, and collectively, the "Prospectuses." If Rule 434 is
relied on, the terms "International Prospectus" and "U.S. Prospectus" shall
refer to the preliminary International Prospectus dated July 5, 1996 and
preliminary U.S. Prospectus dated July 5, 1996, respectively, each together with
the applicable Term Sheet and all references in this Agreement and the Terms
Agreements to the date of such Prospectuses shall mean the date of the
applicable Term Sheet. For purposes of this Agreement and the Terms Agreements,
all references to the Registration Statement, any preliminary prospectus, the
International Prospectus, the U.S. Prospectus or any Term Sheet or any amendment
or supplement to any of the foregoing shall be deemed to include the copy filed
with the Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system ("EDGAR").
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All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus (including the Form of U.S.
Prospectus and Form of International Prospectus) or the Prospectuses (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus
(including the Form of U.S. Prospectus and Form of International Prospectus) or
the Prospectuses, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectuses shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectuses, as the case may be.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents
and warrants to Merrill Lynch, as of the date hereof, and to each U.S.
Underwriter named in the U.S. Terms Agreement, as of the date thereof, as of the
Closing Time referred to in Section 2(c) hereof, and as of each Date of Delivery
(if any) referred to in Section 2(b) hereof, and agrees with each U.S.
Underwriter, as follows:
(1) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company meets the
requirements for use of Form S-3 under the 1933 Act. The Registration
Statement has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement has been issued
under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with.
At the respective times the Registration Statement and any
post-effective amendments thereto (including, the filing of the Company's
most recent Annual Report on Form 10-K with the Commission (the "Annual
Report on Form 10-K")) became effective and at the Closing Time (and, if
any International Option Securities are purchased, at the Date of
Delivery), the Registration Statement and any amendments and supplements
thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and did not and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. Neither of the Prospectuses nor any
amendments or supplements thereto, at the time the Prospectuses or any
amendments or supplements thereto were issued and at the Closing Time
(and, if any U.S. Option Securities are purchased, at the Date of
Delivery), included or will include an untrue statement of a material fact
or omitted or will omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading. If the Company elects to rely upon Rule
434 of the 1933 Act Regulations, the Company will comply with the
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requirements of Rule 434. Notwithstanding the foregoing, the
representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or the U.S.
Prospectus made in reliance upon and in conformity with information
furnished in writing by any U.S. Underwriter through the U.S.
Representatives expressly for use in the Registration Statement or the
Prospectuses.
Each preliminary prospectus and prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when
so filed in all material respects with the 1933 Act Regulations and, if
applicable, each preliminary prospectus and the U.S. Prospectus delivered
to the U.S. Underwriters for use in connection with the offering of the
U.S. Securities will, at the time of such delivery, be identical to the
electronically transmitted copies thereof filed with the Commission
pursuant to EDGAR, except to the extent permitted by Regulation S-T.
(2) INCORPORATED DOCUMENTS. The documents incorporated or deemed to
be incorporated by reference in the Registration Statement and the
Prospectuses, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations") and, when read together
with the other information in the Prospectuses, at the date of the
Prospectuses, and at the Closing Time (and, if any International Option
Securities are purchased, at the Date of Delivery) did not and will not
include 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.
(3) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement and the Prospectuses are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(4) FINANCIAL STATEMENTS. The financial statements of the Company
included in the Registration Statement and the Prospectuses, together with
the related schedules and notes, as well as those financial statements,
schedules and notes of any other entity included therein, present fairly
the financial position of the Company and its consolidated subsidiaries,
or such other entity, as the case may be, at the dates indicated and the
statement of operations, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries, or such other entity, as the
case may be, for the periods specified. Except (A) as otherwise stated in
the Registration Statement or (B) in the case of the unaudited interim
financial statements and the pro forma financial information incorporated
by reference therein, as otherwise stated therein, such financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved. The supporting schedules, if any, included in the
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Registration Statement and the Prospectuses present fairly in accordance
with GAAP the information required to be stated therein. The selected
financial data and the summary financial information included in the
Prospectuses present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited financial
statements and the unaudited financial statements, as the case may be,
included in the Registration Statement and the Prospectuses. In addition,
any pro forma financial statements of the Company and its subsidiaries and
the related notes thereto included in the Registration Statement and the
Prospectuses present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly compiled
on the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred
to therein.
(5) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectuses, except as otherwise stated therein, (A) there has been
no material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise (a "Material Adverse
Effect"), whether or not arising in the ordinary course of business, (B)
there have been no transactions entered into by the Company or any of its
subsidiaries, other than those arising in the ordinary course of business,
which are material with respect to the Company and its subsidiaries
considered as one enterprise and (C) except for the initial and regular
quarterly dividends on the Company's outstanding shares of preferred
stock, in amounts per share that are consistent with past practice or the
applicable charter document or supplement thereto, there has been no
dividend or distribution of any kind declared, paid or made by the Company
on any class of its capital stock.
(6) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the state of Delaware and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under, or as contemplated under, this Agreement and the applicable Terms
Agreements. The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except where the
failure to so qualify or be in good standing would not result in a
Material Adverse Effect.
(7) GOOD STANDING OF SUBSIDIARIES. Each "significant subsidiary" of
the Company (as such term is defined in Rule 1-02 of Regulation S-X
promulgated under the 1933 Act) (each, a "Subsidiary" and collectively,
the "Subsidiaries") has been duly organized and is validly existing as a
corporation (or partnership or joint venture in the case of a
non-corporate subsidiary) in good standing under the laws of the
jurisdiction of its organization, has corporate power (or partnership or
joint venture power in the case of a non-corporate
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subsidiary) and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectuses and is duly
qualified as a foreign corporation (or partnership or joint venture in the
case of a non-corporate subsidiary) to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure to so qualify or be in good standing
would not result in a Material Adverse Effect. Except as otherwise stated
in the Registration Statement and the Prospectus, all of the issued and
outstanding capital stock of each Subsidiary has been duly authorized and
is validly issued, fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity other than
the pledges to banks under the loan agreements of the Company. None of the
outstanding shares of capital stock of the Subsidiaries was issued in
violation of preemptive or other similar rights arising by operation of
law, under the charter or by-laws of any Subsidiary or under any agreement
to which the Company or any Subsidiary is a party, or otherwise.
(8) CAPITALIZATION. The authorized, issued and outstanding shares of
capital stock of the Company is as set forth in the Prospectuses in the
column entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances thereof, if any, contemplated under this Agreement
and the U.S. Purchase Agreement, pursuant to employee benefit plans
referred to in the Prospectuses or pursuant to the exercise of convertible
securities or options referred to in the Prospectuses). Such shares of
capital stock have been duly authorized and validly issued by the Company
and are fully paid and non-assessable, and none of such shares of capital
stock were issued in violation of preemptive or other similar rights
arising by operation of law, under the charter and by-laws of the Company
or under any agreement to which the Company or any of its subsidiaries is
a party, or otherwise.
(9) AUTHORIZATION OF AGREEMENTS. This Agreement and the
International Purchase Agreement have been, and the related Terms
Agreements thereto as of the date thereof will have been, duly authorized,
executed and delivered by the Company.
(10) AUTHORIZATION OF COMMON STOCK. The Securities being sold to the
Underwriters pursuant to the respective Terms Agreements have been, or as
of the date of the Terms Agreements will have been, duly authorized by the
Company for issuance and sale to the U.S. Underwriters pursuant to this
Agreement and the U.S. Terms Agreement and to the International Managers
pursuant to the International Purchase Agreement and the International
Terms Agreement. Such Securities, when issued and delivered by the Company
pursuant to this Agreement, the International Purchase Agreement and the
applicable Terms Agreements, against payment of the consideration
therefore specified in such Terms Agreements, will be validly issued,
fully paid and non-assessable and will not be subject to preemptive or
other similar rights arising by operation of law, under the charter and
by-laws of the Company or under any agreement to which the Company or any
of its subsidiaries is a party, or otherwise. No holder of the Securities
will be subject to personal
-8-
liability by reason of being such a holder. There are no persons with
registration or other similar rights to have securities of the Company
registered pursuant to the Registration Statement or otherwise registered
by the Company under the 1933 Act as a result thereof.
(11) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor any
subsidiary is in violation of its charter or by-laws or in default in the
performance or observance of any material obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any subsidiary is a party or by which
it or any of them may be bound, or to which any of the property or assets
of the Company or any subsidiary is subject (collectively, "Agreements and
Instruments"), except for such defaults as would not result in a Material
Adverse Effect. The execution, delivery and performance of this Agreement,
the International Purchase Agreement and the applicable Terms Agreements
and any other agreement or instrument entered into or issued or to be
entered into or issued by the Company in connection with the transactions
contemplated hereby or thereby or in the Registration Statement and the
Prospectuses and the consummation of the transactions contemplated herein
and in the Registration Statement and the Prospectuses (including the
issuance and sale of the Securities and the use of the proceeds from the
sale of the Securities as described under the caption "Use of Proceeds")
and compliance by the Company with its obligations under this Agreement
and the International Purchase Agreement have been duly authorized by all
necessary corporate action and do not and will not, whether with or
without the giving of notice or passage of time or both, conflict with or
constitute a breach of, or default or Repayment Event (as defined below)
under, or result in the creation or imposition of any lien, charge or
encumbrance upon any assets, properties or operations of the Company or
any subsidiary pursuant to, any Agreements and Instruments, except for
such conflicts, breaches, defaults, events or liens, charges or
encumbrances that would not result in a Material Adverse Effect, nor will
such action result in any violation of the provisions of the charter or
by-laws of the Company or any Subsidiary or any applicable law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Company or any subsidiary or any of their assets,
properties or operations. As used herein, a "Repayment Event" means any
event or condition which gives the holder of any note, debenture or other
evidence of indebtedness (or any person acting on such holder's behalf)
the right to require the repurchase, redemption or repayment of all or a
portion of such indebtedness by the Company or any Subsidiary other than
the requirement to use proceeds of the offering contemplated hereby or in
the International Purchase Agreement to pay down the loan agreements.
(12) VIOLATION OF LAW. Neither the Company nor any subsidiary is in
violation of any law, ordinance, governmental rule or regulation or court
decree to which it may be subject, which violation might result in a
Material Adverse Effect.
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(13) ABSENCE OF PROCEEDINGS. Except as disclosed in the Registration
Statement and the Prospectuses, there is no action, suit, proceeding,
inquiry or investigation before or by any court or governmental agency or
body, domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company or any subsidiary
which is required to be disclosed in the Registration Statement and the
Prospectuses (other than as stated therein), or which might reasonably be
expected to result in a Material Adverse Effect, or which might reasonably
be expected to materially and adversely affect the assets, properties or
operations thereof or the consummation of this Agreement, the U.S.
Purchase Agreement and the applicable Terms Agreements or the transactions
contemplated herein or therein. The aggregate of all pending legal or
governmental proceedings to which the Company or any subsidiary is a party
or of which any of their respective assets, properties or operations is
the subject which are not described in the Registration Statement and the
Prospectuses, including ordinary routine litigation incidental to the
business, could not reasonably be expected to result in a Material Adverse
Effect.
(14) ACCURACY OF EXHIBITS. There are no contracts or documents which
are required to be described in the Registration Statement, the
Prospectuses or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and/or filed as
required.
(15) DESCRIPTIONS OF THE SECURITIES. The Securities being sold
pursuant to the Terms Agreements, as of the date of the Prospectuses, will
conform in all material respects to the statements relating thereto
contained in the Prospectus.
(16) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations under this Agreement, the International Purchase Agreement or
the Terms Agreements or in connection with the transactions contemplated
under this Agreement, the International Purchase Agreement or the Terms
Agreements, except such as have been already obtained or as may be
required under state securities laws.
(17) POSSESSION OF LICENSES AND PERMITS. The Company and each
subsidiary possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them, except where the
failure so to comply would not, singly or in the aggregate, result in a
Material Adverse Effect. The Company and each subsidiary are in compliance
with the terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not, singly or in the aggregate,
result in a Material Adverse Effect. All of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be
in full force and effect would not result in a Material Adverse Effect.
Neither the Company nor any subsidiary has
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received any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses which, singly or in the
aggregate, if the subject of an unfavorable decision, ruling or finding,
would result in a Material Adverse Effect.
(18) TITLE TO PROPERTY. The Company and the subsidiaries have good
and indefeasible title to all real property owned by the Company and the
subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind, except (A) as otherwise
stated in the Registration Statement and the Prospectuses or (B) those
which do not, singly or in the aggregate, materially affect the value of
such property and do not interfere with the use made and proposed to be
made of such property by the Company or any subsidiary. All of the leases
and subleases material to the business of the Company and the subsidiaries
considered, as one enterprise, and under which the Company or any
subsidiary holds properties described in the Prospectuses, are in full
force and effect, and neither the Company nor any subsidiary has received
any notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any subsidiary under any of
the leases or subleases mentioned above, or affecting or questioning the
rights of the Company or such subsidiary to the continued possession of
the leased or subleased premises under any such lease or sublease.
(19) INVESTMENT COMPANY ACT. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectuses
will not be, an "investment company" or an entity "controlled by" an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(20) DERIVATIVES BUSINESS. The internal controls and policies used
in connection with the natural gas derivatives business of the Company and
each subsidiary are reasonable and to the best knowledge of the Company,
adequate in light of the business conducted.
(21) COMPLIANCE WITH CUBA ACT. The Company has complied with, and is
and will be in compliance with, the provisions of that certain Florida act
relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida statutes, and the rules and regulations thereunder
or is exempt therefrom.
(b) OFFICERS' CERTIFICATES. Any certificate signed by any officer of the
Company or any Subsidiary and delivered to the Global Coordinator, the Lead
Managers or to counsel for the U.S. Underwriters in connection with the offering
of the U.S. Securities shall be deemed a representation and warranty by the
Company to each U.S. Underwriter as to the matters covered thereby on the date
of such certificate.
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SECTION 2. SALE AND DELIVERY TO UNDERWRITERS; CLOSING.
(a) INITIAL SECURITIES. The several commitments of the U.S. Underwriters
to purchase the Initial U.S. Securities pursuant to the U.S. Terms Agreement
shall be deemed to have been made on the basis of the representations and
warranties herein contained and shall be subject to the terms and conditions
herein set forth.
(b) OPTION SECURITIES. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the U.S. Underwriters,
severally and not jointly, to purchase up to the number of U.S. Option
Securities to cover over-allotments at a price per U.S. Option Security equal to
the price per Initial U.S. Security, less an amount equal to any dividends or
distributions declared by the Company and paid or payable on the Initial U.S.
Securities but not payable on the U.S. Option Securities. Such option will
expire 30 days after the date of the Terms Agreements, and may be exercised in
whole or in part from time to time only for the purpose of covering
over-allotments which may be made in connection with the offering and
distribution of the Initial U.S. Securities upon notice by the Global
Coordinator to the Company setting forth the number of U.S. Option Securities as
to which the several U.S. Underwriters are then exercising the option and the
time, date and place of payment and delivery for such U.S. Option Securities.
Any such time and date of payment and delivery (each, a "Date of Delivery")
shall be determined by the Global Coordinator, but shall not be later than seven
full business days after the exercise of said option, nor in any event prior to
the Closing Time (as hereinafter defined), unless otherwise agreed upon by the
Global Coordinator and the Company. If the option is exercised as to all or any
portion of the U.S. Option Securities, each of the U.S. Underwriters, severally
and not jointly, will purchase that proportion of the total number of U.S.
Option Securities then being purchased which the number of Initial U.S.
Securities each such U.S. Underwriter has severally agreed to purchase as set
forth in the U.S. Terms Agreement bears to the total number of Initial U.S.
Securities, subject to such adjustments as the Global Coordinator in its
discretion shall make to eliminate any sales or purchases of a fractional number
of U.S. Option Securities.
(c) PAYMENT. Payment of the purchase price for, and delivery of, the
Initial U.S. Securities shall be made at the office of Andrews & Kurth L.L.P.,
4200 Texas Commerce Tower, Suite 4300, Houston, Texas 77002, or at such other
place as shall be agreed upon by the Global Coordinator and the Company, at
10:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs after 4:30
P.M. (Eastern time) on any given day) business day after the date hereof (unless
postponed in accordance with the provisions of Section 10 hereof), or such other
time not later than ten business days after such date as shall be agreed upon by
the Global Coordinator and the Company (such time and date of payment and
delivery being herein called "Closing Time").
In addition, in the event that the U.S. Underwriters have exercised their
option to purchase any or all of the U.S. Option Securities, payment of the
purchase price for, and delivery of such U.S. Option Securities, shall be made
at the above-mentioned offices of Andrews & Kurth L.L.P., or at
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such other place as shall be agreed upon by the Global Coordinator and the
Company, on the relevant Date of Delivery as specified in the notice from the
Global Coordinator to the Company.
Payment shall be made to the Company by wire transfer in same day funds to
a bank account designated by the Company, against delivery to the U.S.
Representatives for the respective accounts of the U.S. Underwriters of
certificates for the U.S. Securities to be purchased by them. It is understood
that each U.S. Underwriter has authorized Merrill Lynch, for its account, to
accept delivery of, receipt for, and make payment of the purchase price for, the
Initial U.S. Securities and the U.S. Option Securities, if any, which it has
severally agreed to purchase. Merrill Lynch, individually and not as
representative of the U.S. Underwriters may (but shall not be obligated to) make
payment of the purchase price for the Initial U.S. Securities and the U.S.
Option Securities, if any, to be purchased by any U.S. Underwriter whose funds
have not been received by the Closing Time or the relevant Date of Delivery, as
the case may be, but such payment shall not relieve such U.S. Underwriter from
its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. The Initial U.S. Securities and
certificates therefor and the U.S. Option Securities, if any, and certificates
therefor shall be in such denominations and registered in such names as the U.S.
Representatives may request in writing at least one full business day prior to
the Closing Time or the relevant Date of Delivery, as the case may be. The U.S.
Securities and certificates therefor and the U.S. Option Securities, if any, and
certificates therefor will be made available for examination and packaging by
the U.S. Representatives in The City of New York not later than 10:00 A.M.
(Eastern time) on the business day prior to the Closing Time or the relevant
Date of Delivery, as the case may be.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with Merrill
Lynch and with each U.S. Underwriter participating in the offering of U.S.
Securities, as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.
The Company, subject to Section 3(b), will comply with the requirements of
Rule 430A or Rule 434, as applicable, of the 1933 Act Regulations and will
notify the Global Coordinator immediately, and confirm the notice in
writing, of (i) the effectiveness of any post-effective amendment to the
Registration Statement or the filing of any supplement or amendment to the
Prospectuses, (ii) the receipt of any comments from the Commission, (iii)
any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectuses or for
additional information, and (iv) the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or
of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Securities
for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Company will
promptly effect the filings necessary pursuant to Rule 424 and will take
such steps as it deems necessary to ascertain promptly whether the
Prospectus transmitted for filing under Rule 424 was received for filing
by the Commission and, in the event that it was not, it will promptly file
the Prospectus. The Company will make every reasonable effort to prevent
the
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issuance of any stop order and, if any stop order is issued, to obtain the
lifting thereof at the earliest possible moment.
(b) FILING OF AMENDMENTS. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment to
the Registration Statement or any amendment, supplement or revision to
either the Prospectuses included in the Registration Statement at the time
it became effective or to the Prospectuses filed after the effectiveness
of the Registration Statement, whether pursuant to the 1933 Act, the 1934
Act or otherwise, will furnish the Global Coordinator with copies of any
such documents a reasonable amount of time prior to such proposed filing
or use, as the case may be, and will not file or use any such document to
which the Global Coordinator or counsel for the U.S. Underwriters shall
object.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished
or will deliver to the U.S. Representatives and counsel for the U.S.
Underwriters, without charge, (i) signed copies of the Registration
Statement as originally filed and of each amendment thereto (including
exhibits filed therewith or incorporated by reference therein and
documents incorporated or deemed to be incorporated by reference therein),
(ii) copies of the Registration Statement and each amendment thereto in
the form electronically filed with the Commission pursuant to EDGAR and
(iii) signed copies of all consents and certificates of experts, and will
also deliver to the U.S. Representatives, without charge, a conformed copy
of the Registration Statement as originally filed and of each amendment
thereto (without exhibits) for each of the U.S. Underwriters. The
Registration Statement and any amendments or supplements thereto furnished
to the U.S. Underwriters will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR,
except to the extent permitted by Regulation S-T.
(d) DELIVERY OF PROSPECTUS. The Company has delivered to each U.S.
Underwriter, without charge, as many copies of each preliminary prospectus
as such U.S. Underwriter reasonably requested, and the Company hereby
consents to the use of such copies for purposes permitted by the 1933 Act.
The Company will furnish to each U.S. Underwriter, without charge, during
the period when the U.S. Prospectus is required to be delivered under the
1933 Act or the 1934 Act, such number of copies of the U.S. Prospectus (as
amended or supplemented) as such U.S. Underwriter may reasonably request.
The U.S. Prospectus and any amendments or supplements thereto furnished to
the U.S. Underwriters will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and
the 1934 Act Regulations so as to permit the completion of the
distribution of the Securities as contemplated in this Agreement, the
International Purchase Agreement, and the Terms Agreements, and in the
Registration Statement and the Prospectuses. If at any time when a
Prospectus is required
-14-
by the 1933 Act or the 1934 Act to be delivered in connection with sales
of the Securities, any event shall occur or condition shall exist as a
result of which it is necessary, in the opinion of counsel for the U.S.
Underwriters or for the Company, to amend the Registration Statement in
order that the Registration Statement 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 or to
amend or supplement any Prospectuses in order that the Prospectus will not
include any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein not
misleading in the light of the circumstances existing at the time it is
delivered to a purchaser, or if it shall be necessary, in the opinion of
such counsel, at any such time to amend the Registration Statement or
amend or supplement any Prospectus in order to comply with the
requirements of the 1933 Act or the 1933 Act Regulations, the Company will
promptly prepare and file with the Commission, subject to Section 3(b),
such amendment or supplement as may be necessary to correct such statement
or omission or to make the Registration Statement or the Prospectuses
comply with such requirements, and the Company will furnish to the U.S.
Underwriters, without charge, such number of copies of such amendment or
supplement as the U.S. Underwriters may reasonably request.
(f) BLUE SKY QUALIFICATIONS. The Company will use reasonable
commercial efforts, in cooperation with the U.S. Underwriters, to qualify
the U.S. Securities for offering and sale under the applicable securities
laws of such states and other jurisdictions (domestic or foreign) as the
Global Coordinator may designate and to maintain such qualifications in
effect for so long as may be required by the laws of such jurisdiction to
continue such qualification in effect for so long as may be required in
connection with the distribution of the U.S. Securities; provided,
however, that the Company shall not be obligated to file any general
consent to service of process or to qualify as a foreign corporation or as
a dealer in securities in any jurisdiction in which it is not so qualified
or to subject itself to taxation in respect of doing business in any
jurisdiction in which it is not otherwise so subject. In each jurisdiction
in which the U.S. Securities have been so qualified, the Company will file
such statements and reports as may be required by the laws of such
jurisdiction to continue such qualification in effect for so long as may
be required by the laws of such jurisdiction to continue such
qualification in effect for so long as may be required in connection with
the distribution of the U.S. Securities.
(g) RULE 158. The Company will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
security holders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
(h) USE OF PROCEEDS. The Company will use the net proceeds received
by it from the sale of the Securities in the manner specified in the
Prospectuses under "Use of Proceeds".
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(i) LISTING. The Company will use its reasonable commercial efforts
to effect the listing of the Securities, subject to notice of issuance to
be provided at the Closing Time, on the New York Stock Exchange.
(j) RESTRICTION ON SALE OF SECURITIES. Between the date of the Terms
Agreements and the Closing Time or such other date specified in the Terms
Agreements, the Company will not, without the prior written consent of the
Global Coordinator directly or indirectly, issue, sell, offer to sell,
grant any option for the sale of, or otherwise dispose of, any share of
Common Stock or Common Stock equivalent.
(k) REPORTING REQUIREMENTS. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934
Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act
and the 1934 Act Regulations.
SECTION 4. PAYMENT OF EXPENSES. (a) EXPENSES. The Company will pay all
expenses incident to the performance of its obligations under this Agreement or
the U.S. Terms Agreement, including (i) the preparation, printing and filing of
the Registration Statement (including financial statements and exhibits) as
originally filed and of each amendment thereto, (ii) the duplication and
delivery to the U.S. Underwriters of this Purchase Agreement, the Terms
Agreements, any Agreement Among Underwriters, and such other documents as may be
required in connection with the offering, purchase, sale and delivery of the
U.S. Securities, (iii) the preparation, issuance and delivery of the U.S.
Securities and certificates for the U.S. Securities to the U.S. Underwriters,
(iv) the fees and disbursements of the Company's counsel, accountants and other
advisors or agents (including transfer agents and registrars), (v) the
qualification of the U.S. Securities under state securities laws in accordance
with the provisions of Section 3(f) hereof, including filing fees and the
reasonable fees and disbursements of counsel for the U.S. Underwriters in
connection therewith and in connection with the preparation, printing and
delivery of the Blue Sky Survey and any Legal Investment Survey, and any
amendment thereto, (vi) the printing and delivery to the U.S. Underwriters of
copies of each preliminary prospectus, any Term Sheet, and the Prospectuses and
any amendments or supplements thereto, and (vii) the fees and expenses incurred
in connection with the listing of the U.S. Securities on the New York Stock
Exchange.
(b) TERMINATION OF AGREEMENT. If the U.S. Terms Agreement is terminated by
Merrill Lynch in accordance with the provisions of Section 5(l) or Section
9(b)(i) hereof, the Company shall reimburse the U.S. Underwriters for all of
their out-of-pocket expenses, including the reasonable fees and disbursements of
counsel for the U.S. Underwriters.
SECTION 5. CONDITIONS OF U.S. UNDERWRITERS' OBLIGATIONS. The obligations
of the U.S. Underwriters to purchase and pay for the U.S. Securities pursuant to
the U.S. Terms Agreement are subject to the accuracy of the representations and
warranties of the Company contained in Section 1 hereof or in certificates of
any officer of the Company or any Subsidiary delivered
-16-
pursuant to the provisions hereof, to the performance by the Company of its
covenants and other obligations hereunder, and to the following further
conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement, has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened
by the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the U.S. Underwriters. A prospectus containing
the Rule 430A Information shall have been filed with the Commission in
accordance with Rule 424(b) (or any required post-effective amendment
providing such information shall have been filed and declared effective in
accordance with the requirements of Rule 430A), or, if the Company has
elected to rely upon Rule 434 of the 1933 Act Regulations, a Term Sheet
including the Rule 434 Information shall have been filed with the
Commission in accordance with Rule 424(b)(7).
(b) OPINION OF COUNSEL FOR COMPANY. At Closing Time, the U.S.
Representatives shall have received the favorable opinion, dated as of
Closing Time, of Baker & Botts, L.L.P., counsel for the Company, in form
and substance satisfactory to counsel for the U.S. Underwriters, together
with signed or reproduced copies of such letter for each of the other U.S.
Underwriters, to the effect set forth in EXHIBIT A hereto. In giving such
opinion, such counsel may rely, as to all matters governed by the laws of
jurisdictions other than the law of the State of New York, the federal law
of the United States and the General Corporation Law of the State of
Delaware, upon the opinions of counsel satisfactory to Merrill Lynch. Such
counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and the Subsidiaries and
certificates of public officials.
(c) OPINION OF COUNSEL FOR U.S. UNDERWRITERS. At Closing Time, the
U.S. Representatives shall have received the favorable opinion, dated as
of Closing Time, of Andrew & Kurth L.L.P., counsel for the U.S.
Underwriters, together with signed or reproduced copies of such letter for
each of the other U.S. Underwriters with respect to the matters set forth
in paragraphs (1), (6), (7), (8) (solely as to the information in the U.S.
Prospectus under "Description of Capital Stock" or any other caption
purporting to describe any such U.S. Securities), (14), (15) and the
penultimate paragraph of EXHIBIT A hereto. In giving such opinion, such
counsel may rely, as to all matters governed by the laws of jurisdictions
other than the law of the State of New York, the federal law of the United
States and the General Corporation Law of the State of Delaware, upon the
opinions of counsel satisfactory to the U.S. Representatives. Such counsel
may also state that, insofar as such opinion involves factual matters,
they have relied, to the extent they deem proper, upon certificates of
officers of the Company and its Subsidiaries and certificates of public
officials.
(d) OFFICERS' CERTIFICATE. At Closing Time, there shall not have
been, since the date of the Terms Agreements or since the respective dates
as of which information is given
-17-
in the Prospectuses, any material adverse change in the condition,
financial or otherwise, or in the earnings, business affairs or business
prospects of the Company and the Subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business, and
the U.S. Representatives shall have received a certificate of the Company,
executed by the President or a Vice President of the Company and the chief
financial officer or chief accounting officer of the Company, dated as of
Closing Time, to the effect that (i) there has been no such material
adverse change, (ii) the representations and warranties in Section 1
hereof are true and correct with the same force and effect as though
expressly made at and as of the Closing Time, (iii) the Company has
complied with all agreements and satisfied all conditions on its part to
be performed or satisfied at or prior to the Closing Time, (iv) there are
no material subsidiaries other than those set forth on Schedule I hereto,
and (v) no stop order suspending the effectiveness of the Registration
Statement has been issued and no proceedings for that purpose have been
initiated or, to the Company's knowledge, threatened by the Commission.
(e) ACCOUNTANT'S COMFORT LETTERS. At the time of the execution of
the Terms Agreements, the U.S. Representatives shall have received (i)
from Deloitte & Touche LLP a letter dated such date, in form and substance
satisfactory to the U.S. Representatives, together with signed or
reproduced copies of such letter for each of the U.S. Underwriters,
containing statements and information of the type ordinarily included in
accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information of the Company and
Subsidiaries contained, or incorporated by reference, in the Registration
Statement and the Prospectuses and (ii) from Arthur Andersen LLP a letter
dated such date, in form and substance satisfactory to the U.S.
Representatives, together with signed or reproduced copies of such letter
for each of the other U.S. Underwriters, containing statements and
information of the type ordinarily included in accountants' "comfort
letters" to underwriters with respect to the financial statements and
financial information of Transok, Inc. contained, or incorporated by
reference, in the Registration Statement and the Prospectuses.
(f) BRING-DOWN COMFORT LETTER. At Closing Time, the U.S.
Representatives shall have received from each of Deloitte & Touche LLP and
Arthur Andersen LLP a letter, dated as of Closing Time, to the effect that
they reaffirm the statements made in the letter furnished pursuant to
subsection (e) of this Section 5, except that the specified date referred
to shall be a date not more than three business days prior to the Closing
Time.
(g) APPROVAL OF LISTING. At Closing Time, the Securities shall have
been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.
(h) LOCK-UP AGREEMENTS. On the date of the Terms Agreements, the
U.S. Representatives shall have received, in form and substance
satisfactory to them, each lock-up
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agreement, if any, specified in the Terms Agreements as being required to
be delivered by the persons listed therein.
(i) PURCHASE OF INITIAL INTERNATIONAL SECURITIES. Contemporaneously
with the purchase by the U.S. Underwriters of the U.S. International
Securities under this Agreement, the International Managers shall have
purchased the Initial International Securities under the International
Purchase Agreement.
(j) CONDITIONS TO PURCHASE OF U.S. OPTION SECURITIES. If the U.S.
Underwriters exercise their option provided in Section 2(b) hereof to
purchase all or any portion of the U.S. Option Securities, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company hereunder shall be
true and correct as of each Date of Delivery, and, at the relevant Date of
Delivery, the U.S. Representatives shall have received:
(1) OFFICERS' CERTIFICATE. A certificate, dated such Date of
Delivery, of the Company executed by the President or a Vice
President of the Company and the chief financial officer or chief
accounting officer of the Company, confirming that the certificate
delivered at the Closing Time pursuant to Section 5(d) hereof
remains true and correct as of such Date of Delivery.
(2) OPINION OF COUNSEL FOR COMPANY. The favorable opinion of
Baker & Botts, L.L.P., counsel for the Company, in form and
substance satisfactory to counsel for the U.S. Underwriters, dated
such Date of Delivery, relating to the U.S. Option Securities to be
purchased on such Date of Delivery and otherwise to the same effect
as the opinion required by Section 5(b) hereof.
(3) OPINION OF COUNSEL FOR INTERNATIONAL MANAGERS. The
favorable opinion of Andrews & Kurth L.L.P., counsel for the U.S.
Underwriters, dated such Date of Delivery, relating to the U.S.
Option Securities and otherwise to the same effect as the opinion
required by Section 5(c) hereof.
(4) BRING-DOWN COMFORT LETTER. A letter from each of Deloitte
& Touche LLP and Arthur Andersen LLP, in form and substance
satisfactory to the U.S. Representatives and dated such Date of
Delivery, substantially in the same form and substance as the letter
furnished to the U.S. Representatives pursuant to Section 5(f)
hereof, except that the "specified date" on the letter furnished
pursuant to this paragraph shall be a date not more than three
business days prior to such Date of Delivery.
(k) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of
Delivery, counsel for the U.S. Underwriters shall have been furnished with
such documents as they may reasonably require for the purpose of enabling
them to pass upon the issuance and sale
-19-
of the U.S. Securities as herein contemplated, or in order to evidence the
accuracy of any of the representations or warranties, or the fulfillment
of any of the conditions, herein contained; and all proceedings taken by
the Company in connection with the issuance and sale of the U.S.
Securities as herein contemplated shall be reasonably satisfactory in form
and substance to the U.S. Representatives and counsel for the U.S.
Underwriters.
(l) TERMINATION OF TERMS AGREEMENTS. If any condition specified in
this Section 5 shall not have been fulfilled when and as required to be
fulfilled, the U.S. Terms Agreement (or, with respect to the U.S.
Underwriters' exercise the over-allotment option for the purchase of U.S.
Option Securities on a Date of Delivery after the Closing Time, the
obligations of the U.S. Underwriters to purchase the U.S. Option
Securities on such Date of Delivery) may be terminated by the U.S.
Representatives by notice to the Company at any time at or prior to the
Closing Time (or such Date of Delivery, as applicable), and such
termination shall be without liability of any party to any other party
except as provided in Section 4 and except that Sections 1, 6 and 7 shall
survive any such termination and remain in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF UNDERWRITERS. The Company agrees to indemnify
and hold harmless each U.S. Underwriter and each person, if any, who
controls any U.S. Underwriter within the meaning of Section 15 of the 1933
Act or Section 20 of the 1934 Act as follows:
(1) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, arising out of any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement (or any amendment thereto), including the
Rule 430A Information and the Rule 434 Information deemed to be a
part thereof, if applicable, or the omission or alleged omission
therefrom of a material fact required to be stated therein or
necessary to make the statements therein not misleading or arising
out of any untrue statement or alleged untrue statement of a
material fact included in any preliminary prospectus or the
Prospectuses (or any amendment or supplement thereto), or the
omission or alleged omission therefrom of a material fact necessary
in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading;
(2) against any and all loss, liability, claim, damage and
expense whatsoever, as incurred, to the extent of the aggregate
amount paid in settlement of any litigation, or any investigation or
proceeding by any governmental agency or body, commenced or
threatened, or of any claim whatsoever based upon any such untrue
statement or omission, or any such alleged untrue statement or
omission; provided that (subject to Section 6(d) below) any such
settlement is effected with the written consent of the Company; and
-20-
(3) against any and all expense whatsoever, as incurred
(including the fees and disbursements of counsel chosen by the U.S.
Representatives), reasonably incurred in investigating, preparing or
defending against any litigation, or any investigation or proceeding
by any governmental agency or body, commenced or threatened, or any
claim whatsoever based upon any such untrue statement or omission,
or any such alleged untrue statement or omission, to the extent that
any such expense is not paid under (i) or (ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any
loss, liability, claim, damage or expense to the extent arising out of any
untrue statement or omission or alleged untrue statement or omission made
in reliance upon and in conformity with written information furnished to
the Company by any U.S. Underwriter through the U.S. Representatives
expressly for use in the Registration Statement (or any amendment
thereto), including the Rule 430A Information and the Rule 434 Information
deemed to be a part thereof, if applicable, or any preliminary prospectus
or the Prospectus (or any amendment or supplement thereto); PROVIDED,
FURTHER, that this indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any U.S. Underwriter from
whom the person asserting any losses, liabilities, claims, damages or
expenses purchased U.S. Securities, or any person controlling such U.S.
Underwriter, if a copy of the Prospectuses (as then amended or
supplemented if the Company shall have furnished any such amendments or
supplements thereto, but excluding documents incorporated or deemed to be
incorporated by reference therein) was not sent or given by or on behalf
of such U.S. Underwriter to such person if such is required by law at or
prior to the written confirmation of the sale of such U.S. Securities to
such person and if the Prospectuses (as so amended or supplemented, but
excluding documents incorporated or deemed to be incorporated by reference
therein) would have corrected the defect giving rise to such loss,
liability, claim, damage or expense, it being understood that this proviso
shall have no application if such defect shall have been corrected in a
document which is incorporated or deemed to be incorporated by reference
in the Prospectuses.
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each U.S.
Underwriter severally agrees to indemnify and hold harmless the Company,
its directors, each of its officers who signed the Registration Statement,
and each person, if any, who controls the Company within the meaning of
Section 15 of the 1933 Act or Section 20 of the 1934 Act against any and
all loss, liability, claim, damage and expense described in the indemnity
contained in subsection (a) of this Section, as incurred, but only with
respect to untrue statements or omissions, or alleged untrue statements or
omissions, made in the Registration Statement (or any amendment thereto),
including the Rule 430A Information and the Rule 434 Information deemed to
be a part thereof, if applicable, or any preliminary prospectus or the
Prospectus (or any amendment or supplement thereto) in reliance upon and
in conformity with written information furnished to the Company by such
U.S. Underwriter through the U.S. Representatives expressly for use in the
Registration Statement (or any amendment
-21-
thereto) or such preliminary prospectus or the Prospectuses (or any
amendment or supplement thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party
shall give notice as promptly as reasonably practicable to each
indemnifying party of any action commenced against it in respect of which
indemnity may be sought hereunder, but failure to so notify an
indemnifying party shall not relieve such indemnifying party from any
liability hereunder to the extent it is not materially prejudiced as a
result thereof and in any event shall not relieve it from any liability
which it may have otherwise than on account of this indemnity agreement.
In the case of parties indemnified pursuant to Section 6(a) above, counsel
to the indemnified parties shall be selected by the U.S. Representatives,
and, in the case of parties indemnified pursuant to Section 6(b) above,
counsel to the indemnified parties shall be selected by the Company. An
indemnifying party may participate at its own expense in the defense of
any such action; provided, however, that counsel to the indemnifying party
shall not (except with the consent of the indemnified party) also be
counsel to the indemnified party. In no event shall the indemnifying
parties be liable for fees and expenses of more than one counsel (in
addition to any local counsel) separate from their own counsel for all
indemnified parties in connection with any one action or separate but
similar or related actions in the same jurisdiction arising out of the
same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever in respect of
which indemnification or contribution could be sought under this Section 6
or Section 7 hereof (whether or not the indemnified parties are actual or
potential parties thereto), unless such settlement, compromise or consent
(i) includes an unconditional release of each indemnified party from all
liability arising out of such litigation, investigation, proceeding 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) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any
time an indemnified party shall have requested an indemnifying party to
reimburse the indemnified party for fees and expenses of counsel, such
indemnifying party agrees that it shall be liable for any settlement of
the nature contemplated by Sections 6(a)(2) or 6(b) effected without its
written consent if (i) such settlement is entered into more than 45 days
after receipt by such indemnifying party of the aforesaid request, (ii)
such indemnifying party shall have received notice of the terms of such
settlement at least 30 days prior to such settlement being entered into
and (iii) such indemnifying party shall not have reimbursed such
indemnified party for such fees and expenses of counsel in accordance with
such request prior to the date of such settlement.
SECTION 7. CONTRIBUTION. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any
-22-
losses, liabilities, claims, damages or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount of such losses,
liabilities, claims, damages and expenses incurred by such indemnified party, as
incurred, (i) in such proportion as is appropriate to reflect the relative
benefits received by the Company, on the one hand, and the U.S. Underwriters, on
the other hand, from the offering of the U.S. Securities pursuant to the Terms
Agreements or (ii) if the allocation provided by clause (i) is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company, on the one hand, and of the U.S. Underwriters, on the other hand,
in connection with the statements or omissions which resulted in such losses,
liabilities, claims, damages or expenses, as well as any other relevant
equitable considerations.
The relative benefits received by the Company, on the one hand, and the
U.S. Underwriters, on the other hand, in connection with the offering of the
U.S. Securities pursuant to the Terms Agreements shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of such
U.S. Securities (before deducting expenses) received by the Company and the
total underwriting discount received by the U.S. Underwriters, in each case as
set forth on the cover of the Prospectus, or, if Rule 434 is used, the
corresponding location on the Term Sheet bear to the aggregate public offering
price of such U.S. Securities as set forth on such cover.
The relative fault of the Company, on the one hand, and the U.S.
Underwriters, on the other hand, 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 by the U.S. Underwriters and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the U.S. Underwriters agree that it would not be just and
equitable if contribution pursuant to this Section 7 were determined by pro rata
allocation (even if the U.S. 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 Section 7. The aggregate
amount of losses, liabilities, claims, damages and expenses incurred by an
indemnified party and referred to above in this Section 7 shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no U.S. Underwriter
shall be required to contribute any amount in excess of the amount by which the
total price at which the U.S. Securities underwritten by it and distributed to
the public were offered to the public exceeds the amount of any damages which
such U.S. Underwriter has otherwise been required to pay by reason of such
untrue or alleged untrue statement or omission or alleged omission.
-23-
No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1993 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls a U.S.
Underwriter within the meaning of Section 15 of the 1933 Act or Section 20 of
the 1934 Act shall have the same rights to contribution as such U.S.
Underwriter, and each director of the Company, each officer of the Company who
signed the Registration Statement, and each person, if any, who controls the
Company within the meaning of Section 15 of the 1933 Act or Section 20 of the
1934 Act shall have the same rights to contribution as the Company. The U.S.
Underwriters' respective obligations to contribute pursuant to this Section 7
are several in proportion to the number of U.S. Securities set forth opposite
their respective names on the U.S. Terms Agreement, and not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement or
the U.S. Terms Agreement or in certificates of officers of the Company submitted
pursuant hereto shall remain operative and in full force and effect, regardless
of any investigation made by or on behalf of any U.S. Underwriter or controlling
person, or by or on behalf of the Company, and shall survive delivery of and
payment for the U.S. Securities.
SECTION 9. TERMINATION.
(a) PURCHASE AGREEMENT. This Agreement (excluding the Terms
Agreements) may be terminated for any reason at any time by the Company or
by the U.S. Representatives upon the giving of 30 days' prior written
notice of such termination to the other party hereto or as otherwise
provided for herein.
(b) TERMS AGREEMENT. Merrill Lynch may terminate the U.S. Terms
Agreement, by notice to the Company, at any time at or prior to the
Closing Time or any relevant Date of Delivery, if (i) there has been,
since the time of execution of the Terms Agreement or since the respective
dates as of which information is given in the U.S. Prospectus, any
material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and
the Subsidiaries considered as one enterprise, whether or not arising in
the ordinary course of business, or (ii) there has occurred any material
adverse change in the financial markets in the United States or in the
international financial markets, or any outbreak of hostilities or
escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of
which is such as to make it, in the judgment of the U.S. Representatives,
impracticable to market the Securities or to enforce contracts for the
sale of the Securities, or (iii) trading in any securities of the Company
has been suspended or limited by the Commission or the New York Stock
Exchange, Inc., or if trading generally on the New York Stock Exchange or
the American Stock Exchange or in the over-the-counter market has been
suspended or limited,
-24-
or minimum or maximum prices for trading have been fixed, or maximum
ranges for the prices have been required, by either of said exchanges or
by such system or by order of the Commission, the National Association of
Securities Dealers, Inc. or any other governmental authority, or (iv) a
banking moratorium has been declared by either Federal or New York
authorities.
(c) LIABILITIES. If this Agreement or the U.S. Terms Agreement is
terminated pursuant to this Section 9, such termination shall be without
liability of any party to any other party except as provided in Section 4
hereof, and provided further that Sections 1, 6 and 7 shall survive such
termination and remain in full force and effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE U.S. UNDERWRITERS. If one or
more of the U.S. Underwriters shall fail at the Closing Time or the relevant
Date of Delivery, as the case may be, to purchase the Securities which it or
they are obligated to purchase under the applicable Terms Agreements (the
"Defaulted Securities"), then Merrill Lynch shall have the right, within 24
hours thereafter, to make arrangements for one or more of the non-defaulting
U.S. Underwriters, or any other underwriters, to purchase all, but not less than
all, of the Defaulted Securities in such amounts as may be agreed upon and upon
the terms herein set forth; if, however, Merrill Lynch shall not have completed
such arrangements within such 24-hour period, then:
(a) if the number or aggregate principal amount, as the case may be,
of Defaulted Securities does not exceed 10% of the number of U.S.
Securities to be purchased on such date pursuant to such U.S. Terms
Agreement, the non-defaulting U.S. Underwriters shall be obligated,
severally and not jointly, to purchase the full amount thereof in the
proportions that their respective underwriting obligations under such
Terms Agreements bear to the underwriting obligations of all
non-defaulting U.S. Underwriters, or
(b) if the number or aggregate principal amount, as the case may be,
of Defaulted Securities exceeds 10% of the number of U.S. Securities to be
purchased on such date pursuant to such U.S. Terms Agreement, this
Agreement (or, with respect to the U.S. Underwriters' exercise of the
over-allotment option for the purchase of U.S. Option Securities on a Date
of Delivery after the Closing Time, the obligations of the U.S.
Underwriters to purchase, and the Company to sell, such U.S. Option
Securities on such Date of Delivery) shall terminate without liability on
the part of any non-defaulting U.S.
Underwriter.
No action taken pursuant to this Section 10 shall relieve any defaulting
U.S. Underwriter from liability in respect of its default.
In the event of any such default which does not result in (i) a
termination of the Terms Agreements or (ii) in the case of a Date of Delivery
after the Closing Time, a termination of the obligations of the U.S.
Underwriters to purchase and the Company to sell the relevant U.S. Option
Securities, as the case may be, either the U.S. Representatives or the Company
shall have the right
-25-
to postpone the Closing Time or the relevant Date of Delivery, as the case may
be, for a period not exceeding seven days in order to effect any required
changes in the Registration Statement or the Prospectuses or in any other
documents or arrangements. As used herein, the term "U.S. Underwriter" includes
any person substituted for U.S. Underwriter under this Section 10.
SECTION 11. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the U.S.
Underwriters shall be directed to Merrill Lynch at World Financial Center, North
Tower, New York, New York 10281-1201, attention of Wood Steinberg, Vice
President; and notices to the Company shall be directed to it at 1301 McKinney
Street, Suite 700, Houston, Texas 77010, attention of James W. Whalen, Executive
Vice President, Chief Financial Officer and Treasurer.
SECTION 12. PARTIES. This Agreement and the U.S. Terms Agreements shall
inure to the benefit of and be binding upon the Company, Merrill Lynch and, upon
execution of the U.S. Terms Agreement, the other U.S. Underwriters and their
respective successors. Nothing expressed or mentioned in this Agreement or the
U.S. Terms Agreement is intended or shall be construed to give any person, firm
or corporation, other than the U.S. Underwriters and the Company and their
respective successors and the controlling persons and officers and directors
referred to in Sections 6 and 7 and their heirs and legal representatives, any
legal or equitable right, remedy or claim under or in respect of this Agreement
or the U.S. Terms Agreement or any provision herein contained. This Agreement
and the U.S. Terms Agreement and all conditions and provisions hereof and
thereof are intended to be for the sole and exclusive benefit of the parties
hereto and thereto and their respective successors, and said controlling persons
and officers and directors and their heirs and legal representatives, and for
the benefit of no other person, firm or corporation. No purchaser of U.S.
Securities from any U.S. Underwriter shall be deemed to be a successor by reason
merely of such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT AND THE U.S. TERMS
AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
STATE OF NEW YORK. EXCEPT AS OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY
REFER TO NEW YORK CITY TIME.
SECTION 14. EFFECT OF HEADLINES. The Article and Section headings herein
and any table of contents are for convenience only and shall not affect the
construction hereof.
-26-
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this Agreement, along with all counterparts, will become a binding agreement
between Merrill Lynch and the Company in accordance with its terms.
Very truly yours,
TEJAS GAS CORPORATION
By:_____________________________
Name:___________________________
Title:__________________________
CONFIRMED AND ACCEPTED,
as of the date first
above written:
MERRILL LYNCH, PIERCE, FENNER & SMITH
INCORPORATED
OPPENHEIMER & CO., INC.
PAINEWEBBER INCORPORATED
PRUDENTIAL SECURITIES
By: MERRILL LYNCH, PIERCE, FENNER &
SMITH INCORPORATED
By:_____________________________
Authorized Signatory
For themselves and as the U.S. Representatives of the other U.S.
Underwriters named in the U.S. Terms Agreement.
-27-
EXHIBIT 1(b)
TEJAS GAS CORPORATION
(a Delaware corporation)
565,000 SHARES OF COMMON STOCK
------------------------------------------
INTERNATIONAL PURCHASE AGREEMENT
------------------------------------------
Dated: July ___, 1996
TABLE OF CONTENTS
INTERNATIONAL PURCHASE AGREEMENT.............................................1
SECTION 1. REPRESENTATIONS AND WARRANTIES...................................4
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY..............4
(1) Compliance with Registration Requirements............4
(2) Incorporated Documents...............................5
(3) Independent Accountants..............................5
(4) Financial Statements.................................5
(5) No Material Adverse Change in Business...............6
(6) Good Standing of the Company.........................6
(7) Good Standing of Subsidiaries........................6
(8) Capitalization.......................................7
(9) Authorization of Agreements..........................7
(10) Authorization of Common Stock........................7
(11) Absence of Defaults and Conflicts....................8
(12) Violation of Law.....................................8
(13) Absence of Proceedings...............................8
(14) Accuracy of Exhibits.................................9
(15) Description of the Securities........................9
(16) Absence of Further Requirements......................9
(17) Possession of Licenses and Permits...................9
(18) Title to Property...................................10
(19) Investment Company Act..............................10
(20) Derivatives Business................................10
(21) Compliance with Cuba Act............................10
(b) OFFICER'S CERTIFICATES....................................10
SECTION 2. SALE AND DELIVERY TO INTERNATIONAL UNDERWRITERS; CLOSING........11
(a) INITIAL SECURITIES........................................11
(b) OPTION SECURITIES.........................................11
(c) PAYMENT...................................................11
(d) DENOMINATIONS; REGISTRATION...............................12
SECTION 3. COVENANTS OF THE COMPANY........................................12
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION
REQUESTS..................................................12
(b) FILING OF AMENDMENTS......................................13
(c) DELIVERY OF REGISTRATION STATEMENTS.......................13
(d) DELIVERY OF PROSPECTUSES..................................13
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS.................13
(f) BLUE SKY QUALIFICATIONS...................................14
(g) RULE 158..................................................14
(h) USE OF PROCEEDS...........................................15
(i) LISTING...................................................15
(j) RESTRICTION ON SALE OF SECURITIES.........................15
(k) REPORTING REQUIREMENTS....................................15
SECTION 4. PAYMENT OF EXPENSES.............................................15
(a) EXPENSES..................................................15
(b) TERMINATION OF AGREEMENT..................................15
SECTION 5. CONDITIONS OF INTERNATIONAL MANAGERS' OBLIGATIONS...............16
(a) EFFECTIVENESS OF REGISTRATION STATEMENT...................16
(b) OPINION OF COUNSEL FOR COMPANY............................16
(c) OPINION OF COUNSEL FOR INTERNATIONAL MANAGERS.............16
(d) OFFICERS' CERTIFICATE.....................................17
(e) ACCOUNTANTS' COMFORT LETTERS..............................17
(f) BRING-DOWN COMFORT LETTER.................................17
(g) APPROVAL OF LISTING.......................................18
(h) LOCK-UP AGREEMENTS........................................18
(i) PURCHASE OF INITIAL U.S. SECURITIES.......................18
(j) CONDITIONS TO PURCHASE OF INTERNATIONAL OPTION
SECURITIES................................................18
(k) ADDITIONAL DOCUMENTS......................................19
(l) TERMINATION OF TERMS AGREEMENT............................19
SECTION 6. INDEMNIFICATION.................................................19
(a) INDEMNIFICATION OF INTERNATIONAL MANAGERS.................19
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS........20
(c) ACTIONS AGAINST PARTIES; NOTIFICATION.....................21
(d) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE........21
SECTION 7. CONTRIBUTION....................................................21
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY..23
SECTION 9. TERMINATION.....................................................23
(a) PURCHASE AGREEMENT........................................23
(b) TERMS AGREEMENT...........................................23
(4) LIABILITIES...............................................24
SECTION 10.DEFAULT BY ONE OR MORE OF THE INTERNATIONAL MANAGERS............24
SECTION 11.NOTICES.........................................................25
SECTION 12.PARTIES.........................................................25
SECTION 13.GOVERNING LAW AND TIME..........................................25
SECTION 14.EFFECT OF HEADINGS..............................................25
TEJAS GAS CORPORATION
(a Delaware corporation)
565,000 Shares
of
Common Stock
(Par value $0.25 per share)
INTERNATIONAL PURCHASE AGREEMENT
July , 1996
MERRILL LYNCH INTERNATIONAL
CAZENOVE & CO.
NATWEST SECURITIES LIMITED
as Lead Managers of the several International Managers
c/o Merrill Lynch International
Ropemaker Place
25 Ropemaker Street
London EC2Y 9LY
England
Ladies and Gentlemen:
Tejas Gas Corporation, a Delaware corporation (the "Company"), proposes to
issue and sell up to 2,260,000 shares of common stock, par value $0.25 per share
(the "Common Stock"), of the Company.
As used herein, "Initial International Securities" shall mean the 565,000
shares of Common Stock to be initially sold to the U.S. Underwriters;
"International Option Securities" shall mean 84,750 additional shares of Common
Stock to be sold to the International Managers to cover over-allotments; and
"International Securities" shall mean the Initial International Securities and
the International Option Securities.
The Company shall offer the International Securities through Merrill Lynch
International ("Merrill Lynch"), Cazenove & Co. and NatWest Securities Limited,
and will enter into an agreement (the "International Terms Agreement") providing
for the sale of the International Securities to, and the purchase and offering
thereof by, Merrill Lynch, Cazenove & Co. and NatWest Securities Limited and
each of the other Underwriters named in the International Terms Agreement
-1-
(collectively, the "International Managers," which term shall also include any
underwriter substituted as hereinafter provided in Section 10 hereof), for whom
Merrill Lynch, Cazenove & Co. and
-2-
NatWest Securities Limited are acting as representatives (in such capacity, the
"Lead Managers"), with respect to the issue and sale by the Company and the
purchase by the U.S. Underwriters, acting severally and not jointly, of the
respective numbers of shares of International Initial Securities set forth in
said International Terms Agreement, and with respect to the grant by the Company
to the International Managers, acting severally and not jointly, of the option
described in Section 2(b) hereof to purchase all or any part of the
International Option Securities to cover over-allotments, if any.
It is understood that the Company is concurrently entering into an
agreement dated the date hereof (the "U.S. Purchase Agreement"), subject to the
completion of a related terms agreement thereto (the 'U.S. Terms Agreement")
(collectively, the International Terms Agreement and the U.S. Terms Agreement
are referred to herein as the "Terms Agreements") providing for the offering by
the Company of an aggregate of 2,260,000 shares of Common Stock (the "Initial
U.S. Securities") through arrangements with certain underwriters in the United
States (the "U.S. Underwriters") for which Merrill Lynch, Pierce, Fenner & Smith
Incorporated, Oppenheimer & Co., Inc., PaineWebber Incorporated and Prudential
Securities are acting as representative(s) (the "U.S. Representative(s)") and
the grant by the Company to the U.S. Underwriters, acting severally and not
jointly, of an option to purchase all or part of the U.S. Underwriters' pro rata
portion of up to 339,000 additional shares of Common Stock solely to cover
overallotments, if any (the "U.S. Option Securities" and, together with the
International Option Securities, the "Option Securities"). The Initial U.S.
Securities and the U.S. Option Securities are hereinafter called the "U.S.
Securities". It is understood that the Company is not obligated to sell and the
International Managers are not obligated to purchase, any Initial International
Securities unless all of the Initial U.S. Securities are contemporaneously
purchased by the U.S. Underwriters.
The International Managers and the U.S. Underwriters are hereinafter
collectively called the "Underwriters", the Initial International Securities and
the Initial U.S. Securities are hereinafter collectively called the "Initial
Securities", and the International Securities, and the U.S. Securities are
hereinafter collectively called the "Securities".
The Underwriters will concurrently enter into an Intersyndicate Agreement
of even date herewith (the "Intersyndicate Agreement") providing for the
coordination of certain transactions among the Underwriters under the direction
of Merrill Lynch & Co., Merrill Lynch, Pierce, Fenner & Smith Incorporated (in
such capacity, the "Global Coordinator").
The Company understands that the International Managers propose to make a
public offering of the International Securities as soon as the Lead Managers
deem advisable after this Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement on Form S-3 (No. 333-06207) and
pre-effective Amendment No. 1 thereto for the registration of the Securities
under the Securities Act of 1933, as amended (the "1933 Act"), and the offering
thereof from time to time in accordance with Rule 415 of the rules and
regulations
-3-
of the Commission under the 1933 Act (the "1933 Act Regulations"), and the
Company has filed such post-effective amendments thereto as may be required
prior to the execution of the Terms Agreements. Promptly after execution and
delivery of this Agreement, the Company will either (i) prepare and file a
prospectus in accordance with the provisions of Rule 430A ("Rule 430A") of the
rules and regulations of the Commission under the 1933 Act (the "1933 Act
Regulations") and paragraph (b) of Rule 424 ("Rule 424(b)") of the 1933 Act
Regulations or (ii) if the Company has elected to rely upon Rule 434 ("Rule
434") of the 1933 Act Regulations, prepare and file a term sheet (a "Term
Sheet") in accordance with the provisions of Rule 434 and Rule 424(b). Two forms
of prospectus are to be used in connection with the offering and sale of the
Securities: one relating to the International Securities (the "Form of
International Prospectus") and one relating to the U.S. Securities (the "Form of
U.S. Prospectus"). The Form of International Prospectus is identical to the Form
of U.S. Prospectus, except for the front cover and back cover pages and the
information under the caption "Underwriting" and the inclusion in the Form of
International Prospectus of a section under the caption "Certain United States
Tax Considerations for Non-United States Holders.") The information included in
any such prospectus or in any such Term Sheet, as the case may be, that was
omitted from such registration statement at the time it became effective but
that is deemed to be part of such registration statement at the time it became
effective (a) pursuant to paragraph (b) of Rule 430A is referred to as "Rule
430A Information" or (b) pursuant to paragraph (d) of Rule 434 is referred to as
"Rule 434 Information." Each Form of International Prospectus and Form of U.S.
Prospectus used before such registration statement became effective, and any
prospectus that omitted, as applicable, the Rule 430A Information or the Rule
434 Information, that was used after such effectiveness and prior to the
execution and delivery of this Agreement, is herein called a "preliminary
prospectus." Such registration statement, including the exhibits thereto,
schedules thereto, if any, and the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 under the 1933 Act, at the time it became
effective and including the Rule 430A Information and the Rule 434 Information,
as applicable, is herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the 1933 Act Regulations is herein
referred to as the "Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall include the Rule 462(b) Registration
Statement. The final Form of International Prospectus and the final Form of U.S.
Prospectus, including the documents incorporated by reference therein pursuant
to Item 12 of Form S-3 under the 1933 Act, in the forms first furnished to the
Underwriters for use in connection with the offering of the Securities are
herein called the "International Prospectus" and the "U.S. Prospectus,"
respectively, and collectively, the "Prospectuses." If Rule 434 is relied on,
the terms "International Prospectus" and "U.S. Prospectus" shall refer to the
preliminary International Prospectus dated July 5, 1996 and preliminary U.S.
Prospectus dated July 5, 1996, respectively, each together with the applicable
Term Sheet and all references in this Agreement to the date of such Prospectuses
shall mean the date of the applicable Term Sheet. For purposes of this
Agreement, all references to the Registration Statement, any preliminary
prospectus, the International Prospectus, the U.S. Prospectus or any Term Sheet
or any amendment or supplement to any of the foregoing shall be deemed to
include the copy filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval system ("EDGAR").
-4-
All references in this Agreement to financial statements and schedules and
other information which is "contained," "included" or "stated" in the
Registration Statement, any preliminary prospectus (including the Form of U.S.
Prospectus and Form of International Prospectus) or the Prospectuses (or other
references of like import) shall be deemed to mean and include all such
financial statements and schedules and other information which is incorporated
by reference in the Registration Statement, any preliminary prospectus
(including the Form of U.S. Prospectus and Form of International Prospectus) or
the Prospectuses, as the case may be; and all references in this Agreement to
amendments or supplements to the Registration Statement, any preliminary
prospectus or the Prospectuses shall be deemed to mean and include the filing of
any document under the Securities Exchange Act of 1934 (the "1934 Act") which is
incorporated by reference in the Registration Statement, such preliminary
prospectus or the Prospectuses, as the case may be.
SECTION 1. REPRESENTATIONS AND WARRANTIES.
(a) REPRESENTATIONS AND WARRANTIES BY THE COMPANY. The Company represents
and warrants to Merrill Lynch, as of the date hereof, and to each International
Manager named in the International Terms Agreement, as of the date thereof, as
of the Closing Time referred to in Section 2(c) hereof, and as of each Date of
Delivery (if any) referred to in Section 2(b) hereof, and agrees with each
International Manager, as follows:
(1) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Company meets the
requirements for use of Form S-3 under the 1933 Act. The Registration
Statement has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement has been issued
under the 1933 Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with.
At the respective times the Registration Statement and any
post-effective amendments thereto (including, the filing of the Company's
most recent Annual Report on Form 10-K with the Commission (the "Annual
Report on Form 10-K")) became effective and at the Closing Time (and, if
any International Option Securities are purchased, at the Date of
Delivery), the Registration Statement and any amendments and supplements
thereto complied and will comply in all material respects with the
requirements of the 1933 Act and the 1933 Act Regulations and did not and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading. Neither of the Prospectuses nor any
amendments or supplements thereto, at the time the Prospectuses or any
amendments or supplements thereto were issued and at the Closing Time
(and, if any International Option Securities are purchased, at the Date of
Delivery), included or will include an untrue statement of a material fact
or omitted or will omit to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading. If the Company elects to rely upon Rule
434 of the 1933 Act Regulations, the Company will
-5-
comply with the requirements of Rule 434. Notwithstanding the foregoing,
the representations and warranties in this subsection shall not apply to
statements in or omissions from the Registration Statement or the
International Prospectus made in reliance upon and in conformity with
information furnished to the Company in writing by any International
Manager through the Lead Managers expressly for use in the Registration
Statement or the Prospectuses.
Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the 1933 Act, complied when
so filed in all material respects with the 1933 Act Regulations and, if
applicable, each preliminary prospectus and the International Prospectus
delivered to the International Managers for use in connection with the
offering of the International Securities will, at the time of delivery, be
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to EDGAR, except to the extent permitted by Regulation
S-T.
(2) INCORPORATED DOCUMENTS. The documents incorporated or deemed to
be incorporated by reference in the Registration Statement and the
Prospectuses, at the time they were or hereafter are filed with the
Commission, complied and will comply in all material respects with the
requirements of the 1934 Act and the rules and regulations of the
Commission thereunder (the "1934 Act Regulations"), and, when read
together with the other information in the Prospectuses, at the date of
the Prospectus, at the Closing Time (and, if any International Option
Securities are purchased, at the Date of Delivery) did not and will not
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading.
(3) INDEPENDENT ACCOUNTANTS. The accountants who certified the
financial statements and supporting schedules included in the Registration
Statement and the Prospectus are independent public accountants as
required by the 1933 Act and the 1933 Act Regulations.
(4) FINANCIAL STATEMENTS. The financial statements of the Company
included in the Registration Statement and the Prospectuses, together with
the related schedules and notes, as well as those financial statements,
schedules and notes of any other entity included therein, present fairly
the financial position of the Company and its consolidated subsidiaries,
or such other entity, as the case may be, at the dates indicated and the
statement of operations, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries, or such other entity, as the
case may be, for the periods specified. Except (A) as otherwise stated in
the Registration Statement or (B) in the case of the unaudited interim
financial statements and the pro forma financial information incorporated
by reference therein, as otherwise stated therein, such financial
statements have been prepared in conformity with generally accepted
accounting principles ("GAAP") applied on a consistent basis throughout
the periods involved. The supporting schedules, if any, included in the
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Registration Statement and the Prospectuses present fairly in accordance
with GAAP the information required to be stated therein. The selected
financial data and the summary financial information included in the
Prospectuses present fairly the information shown therein and have been
compiled on a basis consistent with that of the audited financial
statements and the unaudited financial statements, as the case may be,
included in the Registration Statement and the Prospectuses. In addition,
any pro forma financial statements of the Company and its subsidiaries and
the related notes thereto included in the Registration Statement and the
Prospectuses present fairly the information shown therein, have been
prepared in accordance with the Commission's rules and guidelines with
respect to pro forma financial statements and have been properly compiled
on the bases described therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions and circumstances referred
to therein.
(5) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Since the respective
dates as of which information is given in the Registration Statement and
the Prospectuses, except as otherwise stated therein, (A) there has been
no material adverse change in the condition, financial or otherwise, or in
the earnings, business affairs or business prospects of the Company and
its subsidiaries considered as one enterprise (a "Material Adverse
Effect"), whether or not arising in the ordinary course of business, (B)
there have been no transactions entered into by the Company or any of its
subsidiaries, other than those arising in the ordinary course of business,
which are material with respect to the Company and its subsidiaries
considered as one enterprise and (C) except for the initial and regular
quarterly dividends on the Company's outstanding shares of preferred
stock, in amounts per share that are consistent with past practice or the
applicable charter document or supplement thereto, there has been no
dividend or distribution of any kind declared, paid or made by the Company
on any class of its capital stock.
(6) GOOD STANDING OF THE COMPANY. The Company has been duly
organized and is validly existing as a corporation in good standing under
the laws of the state of Delaware and has corporate power and authority to
own, lease and operate its properties and to conduct its business as
described in the Prospectus and to enter into and perform its obligations
under, or as contemplated under, this Agreement and the applicable Terms
Agreements. The Company is duly qualified as a foreign corporation to
transact business and is in good standing in each other jurisdiction in
which such qualification is required, whether by reason of the ownership
or leasing of property or the conduct of business, except where the
failure to so qualify or be in good standing would not result in a
Material Adverse Effect.
(7) GOOD STANDING OF SUBSIDIARIES. Each "significant subsidiary" of
the Company (as such term is defined in Rule 1-02 of Regulation S-X
promulgated under the 1933 Act) (each, a "Subsidiary" and collectively,
the "Subsidiaries") has been duly organized and is validly existing as a
corporation (or partnership or joint venture in the case of a
non-corporate subsidiary) in good standing under the laws of the
jurisdiction of its organization, has corporate power (or partnership or
joint venture power in the case of a non-corporate
-7-
subsidiary) and authority to own, lease and operate its properties and to
conduct its business as described in the Prospectuses and is duly
qualified as a foreign corporation (or partnership or joint venture in the
case of a non-corporate subsidiary) to transact business and is in good
standing in each jurisdiction in which such qualification is required,
whether by reason of the ownership or leasing of property or the conduct
of business, except where the failure to so qualify or be in good standing
would not result in a Material Adverse Effect. Except as otherwise stated
in the Registration Statement and the Prospectus, all of the issued and
outstanding capital stock of each Subsidiary has been duly authorized and
is validly issued, fully paid and non-assessable and is owned by the
Company, directly or through subsidiaries, free and clear of any security
interest, mortgage, pledge, lien, encumbrance, claim or equity other than
the pledges to banks under the loan agreements of the Company. None of the
outstanding shares of capital stock of the Subsidiaries was issued in
violation of preemptive or other similar rights arising by operation of
law, under the charter or by-laws of any Subsidiary or under any agreement
to which the Company or any Subsidiary is a party, or otherwise.
(8) CAPITALIZATION. The authorized, issued and outstanding capital
stock of the Company is as set forth in the Prospectuses in the column
entitled "Actual" under the caption "Capitalization" (except for
subsequent issuances thereof, if any, contemplated under this Agreement
and the International Purchase Agreement, pursuant to employee benefit
plans referred to in the Prospectuses or pursuant to the exercise of
convertible securities or options referred to in the Prospectuses). Such
shares of capital stock have been duly authorized and validly issued by
the Company and are fully paid and non-assessable and none of such shares
of capital stock were issued in violation of preemptive or other similar
rights arising by operation of law, under the charter and bylaws of the
Company or under any agreement to which the Company or any of its
subsidiaries is a party, or otherwise.
(9) AUTHORIZATION OF AGREEMENTS. This Agreement and the U.S.
Purchase Agreement have been, and the related Terms Agreements thereto as
of the date thereof will have been, duly authorized, executed and
delivered by the Company.
(10) AUTHORIZATION OF COMMON STOCK. The Securities being sold to the
Underwriters pursuant to the respective Terms Agreements have been, or as
of the date of the Terms Agreements will have been, duly authorized by the
Company for issuance and sale to the International Managers pursuant to
this Agreement and the U.S. Underwriters pursuant to the U.S. Purchase
Agreement, respectively. Such Securities, when issued and delivered by the
Company pursuant to this Agreement, the U.S. Purchase Agreement and the
applicable Terms Agreements, against payment of the consideration
therefore specified in such Terms Agreements, will be validly issued,
fully paid and non-assessable and will not be subject to preemptive or
other similar rights arising by operation of law, under the charter and
by-laws of the Company or under any agreement to which the Company or any
of its subsidiaries is a party, or otherwise. No holder of the Securities
will be subject to personal liability by reason of being such a holder.
There are no persons with registration or other
-8-
similar rights to have securities of the Company registered pursuant to
the Registration Statement or otherwise registered by the Company under
the 1933 Act as a result thereof.
(11) ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company nor any
subsidiary is in violation of its charter or by-laws or in default in the
performance or observance of any material obligation, agreement, covenant
or condition contained in any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or other agreement or
instrument to which the Company or any subsidiary is a party or by which
it or any of them may be bound, or to which any of the property or assets
of the Company or any subsidiary is subject (collectively, "Agreements and
Instruments"), except for such defaults as would not result in a Material
Adverse Effect. The execution, delivery and performance of this Agreement,
the U.S. Purchase Agreement and the applicable Terms Agreements and any
other agreement or instrument entered into or issued or to be entered into
or issued by the Company in connection with the transactions contemplated
hereby or thereby or in the Registration Statement and the Prospectuses
and the consummation of the transactions contemplated in this Agreement,
the U.S. Purchase Agreement and in the Registration Statement (including
the issuance and sale of the Securities and the use of the proceeds from
the sale of the Securities as described in the Prospectuses under the
caption "Use of Proceeds") and compliance by the Company with its
obligations under this Agreement and the U.S. Purchase Agreement have been
duly authorized by all necessary corporate action and do not and will not,
whether with or without the giving of notice or passage of time or both,
conflict with or constitute a breach of, or default or Repayment Event (as
defined below) under, or result in the creation or imposition of any lien,
charge or encumbrance upon any assets, properties or operations of the
Company or any subsidiary pursuant to, any Agreements and Instruments
,except for such conflicts, breaches, defaults, events or liens, charges
or encumbrances that would not result in a Material Adverse Effect, nor
will such action result in any violation of the provisions of the charter
or by-laws of the Company or any Subsidiary or any applicable law,
statute, rule, regulation, judgment, order, writ or decree of any
government, government instrumentality or court, domestic or foreign,
having jurisdiction over the Company or any subsidiary or any of their
assets, properties or operations. As used herein, a "Repayment Event"
means any event or condition which gives the holder of any note, debenture
or other evidence of indebtedness (or any person acting on such holder's
behalf) the right to require the repurchase, redemption or repayment of
all or a portion of such indebtedness by the Company or any Subsidiary
other than the requirement to use proceeds of the offering contemplated
hereby or in the U.S. Purchase Agreement to pay down the loan agreements.
(12) VIOLATION OF LAW. Neither the Company nor any subsidiary is in
violation of any law, ordinance, governmental rule or regulation or court
decree to which it may be subject, which violation might result in a
Material Adverse Effect.
(13) ABSENCE OF PROCEEDINGS. Except as disclosed in the Registration
Statement and the Prospectuses, there is no action, suit, proceeding,
inquiry or investigation before or
-9-
by any court or governmental agency or body, domestic or foreign, now
pending, or, to the knowledge of the Company, threatened, against or
affecting the Company or any subsidiary, which is required to be disclosed
in the Registration Statement and the Prospectuses (other than as stated
therein), or which might reasonably be expected to result in a Material
Adverse Effect, or which might reasonably be expected to materially and
adversely affect the assets, properties or operations thereof or the
consummation of this Agreement, the U.S. Purchase Agreement, the
applicable Terms Agreements or the transactions contemplated herein or
therein. The aggregate of all pending legal or governmental proceedings to
which the Company or any subsidiary is a party or of which any of their
respective assets, properties or operations is the subject which are not
described in the Registration Statement and the Prospectuses, including
ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.
(14) ACCURACY OF EXHIBITS. There are no contracts or documents which
are required to be described in the Registration Statement, the
Prospectuses or the documents incorporated by reference therein or to be
filed as exhibits thereto which have not been so described and filed as
required.
(15) DESCRIPTIONS OF THE SECURITIES. The Securities being sold
pursuant to the Terms Agreements, as of the date of the Prospectuses, will
conform in all material respects to the statements relating thereto
contained in the Prospectus.
(16) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or
authorization, approval, consent, license, order, registration,
qualification or decree of, any court or governmental authority or agency
is necessary or required for the performance by the Company of its
obligations under this Agreement, the U.S. Purchase Agreement or the Terms
Agreements or in connection with the transactions contemplated under this
Agreement, the U.S. Purchase Agreement or the Terms Agreements, except
such as have been already obtained or as may be required under state
securities laws.
(17) POSSESSION OF LICENSES AND PERMITS. The Company and each
subsidiary possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them, except where the
failure so to comply would not, singly or in the aggregate, result in a
Material Adverse Effect. The Company and each subsidiary are in compliance
with the terms and conditions of all such Governmental Licenses, except
where the failure so to comply would not, singly or in the aggregate,
result in a Material Adverse Effect. All of the Governmental Licenses are
valid and in full force and effect, except when the invalidity of such
Governmental Licenses or the failure of such Governmental Licenses to be
in full force and effect would not result in a Material Adverse Effect.
Neither the Company nor any subsidiary has received any notice of
proceedings relating to the revocation or modification of any such
-10-
Governmental Licenses which, singly or in the aggregate, if the subject of
an unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(18) TITLE TO PROPERTY. The Company and the subsidiaries have good
and indefeasible title to all real property owned by the Company and the
subsidiaries and good title to all other properties owned by them, in each
case, free and clear of all mortgages, pledges, liens, security interests,
claims, restrictions or encumbrances of any kind, except (A) as otherwise
stated in the Registration Statement and the Prospectuses or (B) those
which do not, singly or in the aggregate, materially affect the value of
such property and do not interfere with the use made and proposed to be
made of such property by the Company or any subsidiary. All of the leases
and subleases material to the business of the Company and the
subsidiaries, considered as one enterprise, and under which the Company or
any subsidiary holds properties described in the Prospectuses, are in full
force and effect, and neither the Company nor any subsidiary has received
any notice of any material claim of any sort that has been asserted by
anyone adverse to the rights of the Company or any subsidiary under any of
the leases or subleases mentioned above, or affecting or questioning the
rights of the Company or such subsidiary to the continued possession of
the leased or subleased premises under any such lease or sublease.
(19) INVESTMENT COMPANY ACT. The Company is not, and upon the
issuance and sale of the Securities as herein contemplated and the
application of the net proceeds therefrom as described in the Prospectuses
will not be an "investment company" or an entity "controlled" by an
"investment company" as such terms are defined in the Investment Company
Act of 1940, as amended (the "1940 Act").
(20) DERIVATIVES BUSINESS. The internal controls and policies used
in connection with the natural gas derivatives business of the Company and
each subsidiary are reasonable and to the best knowledge of the Company,
adequate in light of the business conducted.
(21) COMPLIANCE WITH CUBA ACT. The Company has complied with, and is
and will be in compliance with, the provisions of that certain Florida act
relating to disclosure of doing business with Cuba, codified as Section
517.075 of the Florida statutes, and the rules and regulations thereunder
or is exempt therefrom.
(b) OFFICERS' CERTIFICATES. Any certificate signed by any officer of the
Company or any Subsidiary and delivered to the Global Coordinator, the Lead
Managers or to counsel for the International Managers in connection with the
offering of the Securities shall be deemed a representation and warranty by the
Company to each International Manager as to the matters covered thereby on the
date of such certificate.
-11-
SECTION 2. SALE AND DELIVERY TO INTERNATIONAL MANAGERS; CLOSING.
(a) INITIAL SECURITIES. The several commitments of the International
Managers to purchase the Initial International Securities pursuant to the
International Terms Agreement shall be deemed to have been made on the basis of
the representations and warranties herein contained and subject to the terms and
conditions herein set forth.
(b) OPTION SECURITIES. In addition, on the basis of the representations
and warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the International Managers,
severally and not jointly, to purchase up to the number of International Option
Securities to cover over-allotments at a price per International Option Security
equal to the price per Initial International Security, less an amount equal to
any dividends or distributions declared by the Company and paid or payable on
the Initial International Securities but not payable on the International Option
Securities. Such option will expire 30 days after the date of the Terms
Agreements, and may be exercised in whole or in part from time to time only for
the purpose of covering over-allotments which may be made in connection with the
offering and distribution of the Initial International Securities upon notice by
the Global Coordinator to the Company setting forth the number of U.S. Option
Securities as to which the several International Managers are then exercising
the option and the time, date and place of payment and delivery for such
International Option Securities. Any such time and date of payment and delivery
(each, a "Date of Delivery") shall be determined by the Global Coordinator, but
shall not be later than seven full business days after the exercise of said
option, nor in any event prior to the Closing Time (as hereinafter defined),
unless otherwise agreed upon by the Global Coordinator and the Company. If the
option is exercised as to all or any portion of the International Option
Securities, each of the International Managers, severally and not jointly, will
purchase that proportion of the total number of International Option Securities
then being purchased which the number of Initial International Securities each
such International Underwriter has severally agreed to purchase as set forth in
the International Terms Agreement bears to the total number of Initial
International Securities, subject to such adjustments as the Global Coordinator
in its discretion shall make to eliminate any sales or purchases of a fractional
number of International Option Securities.
(c) PAYMENT. Payment of the purchase price for, and delivery of, the
Initial International Securities shall be made at the office of Andrews & Kurth
L.L.P., 4200 Texas Commerce Tower, Suite 4300, Houston, Texas 77002, or at such
other place as shall be agreed upon by the Global Coordinator and the Company,
at 10:00 A.M. (Eastern time) on the third (fourth, if the pricing occurs after
4:30 P.M. (Eastern time) on any given day) business day after the date hereof
(unless postponed in accordance with the provisions of Section 10 hereof), or
such other time not later than ten business days after such date as shall be
agreed upon by the Global Coordinator and the Company (such time and date of
payment and delivery being herein called "Closing Time").
In addition, in the event that the International Managers have exercised
their option to purchase any or all of the International Option Securities,
payment of the purchase price for, and delivery of such International Option
Securities shall be made at the above-mentioned offices of
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Andrews & Kurth L.L.P., or at such other place as shall be agreed upon by the
Global Coordinator and the Company, on the relevant Date of Delivery as
specified in the notice from the Global Coordinator to the Company.
Payment shall be made to the Company by wire transfer in same day funds to
a bank account designated by the Company, against delivery to the Lead Managers
for the respective accounts of the International Managers of certificates for
the International Securities to be purchased by them. It is understood that each
International Manager has authorized the Lead Managers, for its account, to
accept delivery of, receipt for, and make payment of the purchase price for, the
Initial International Securities and the International Option Securities, if
any, which it has severally agreed to purchase. The Lead Managers, individually
and not as representative of the International Managers, may (but shall not be
obligated to) make payment of the purchase price for the Initial International
Securities and the International Option Securities, if any, to be purchased by
any International Manager whose funds have not been received by the Closing Time
or the relevant Date of Delivery, as the case may be, but such payment shall not
relieve such International Manager from its obligations hereunder.
(d) DENOMINATIONS; REGISTRATION. The Initial International Securities and
certificates therefor and the International Option Securities, if any, and
certificates therefor shall be in such denominations and registered in such
names as the Lead Managers may request in writing at least one full business day
prior to the Closing Time or the relevant Date of Delivery, as the case may be.
The Initial International Securities and certificates therefor and the
International Option Securities, if any, and certificates therefor will be made
available for examination and packaging by the Lead Managers in the City of New
York not later than 10:00 A.M. (Eastern time) on the business day prior to the
Closing Time or the relevant Date of Delivery, as the case may be.
SECTION 3. COVENANTS OF THE COMPANY. The Company covenants with Merrill
Lynch and with each International Manager participating in the offering of
International Securities as follows:
(a) COMPLIANCE WITH SECURITIES REGULATIONS AND COMMISSION REQUESTS.
The Company, subject to Section 3(b), will comply with the requirements of
Rule 430A or Rule 434, as applicable, of the 1933 Act Regulations and will
notify the Global Coordinator immediately, and confirm the notice in
writing, of (i) the effectiveness of any post-effective amendment to the
Registration Statement, or the filing of any supplement or amendment to
the Prospectuses, (ii) the receipt of any comments from the Commission,
(iii) any request by the Commission for any amendment to the Registration
Statement or any amendment or supplement to the Prospectuses or for
additional information, and (iv) the issuance by the Commission of any
stop order suspending the effectiveness of the Registration Statement or
of any order preventing or suspending the use of any preliminary
prospectus, or of the suspension of the qualification of the Securities
for offering or sale in any jurisdiction, or of the initiation or
threatening of any proceedings for any of such purposes. The Company will
promptly effect the filings necessary pursuant to Rule 424 and will take
such steps as it deems necessary to ascertain promptly whether the
Prospectus transmitted for filing under
-13-
Rule 424 was received for filing by the Commission and, in the event that
it was not, it will promptly file the Prospectus. The Company will make
every reasonable effort to prevent the issuance of any stop order and, if
any stop order is issued, to obtain the lifting thereof at the earliest
possible moment.
(b) FILING OF AMENDMENTS. The Company will give the Global
Coordinator notice of its intention to file or prepare any amendment to
the Registration Statement or any amendment, supplement or revision to
either the Prospectuses included in the Registration Statement at the time
it became effective or to the Prospectuses filed after the effectiveness
of the Registration Statement, whether pursuant to the 1933 Act, the 1934
Act or otherwise, will furnish the Global Coordinator with copies of any
such documents a reasonable amount of time prior to such proposed filing
or use, as the case may be, and will not file or use any such document to
which the Global Coordinator or counsel for the International Managers
shall object.
(c) DELIVERY OF REGISTRATION STATEMENTS. The Company has furnished
or will deliver to the Lead Managers and counsel for the International
Managers, without charge, (i) signed copies of the Registration Statement
as originally filed and of each amendment thereto (including exhibits
filed therewith or incorporated by reference therein and documents
incorporated or deemed to be incorporated by reference therein), (ii)
copies of the Registration Statement and each amendment thereto in the
form electronically filed with the Commission pursuant to EDGAR and (iii)
signed copies of all consents and certificates of experts, and will also
deliver to the Lead Managers, without charge, a conformed copy of the
Registration Statement as originally filed and of each amendment thereto
(without exhibits) for each of the International Managers. The
Registration Statement and any amendments or supplements thereto furnished
to the International Managers will be identical to the electronically
transmitted copies thereof filed with the Commission pursuant to EDGAR,
except to the extent permitted by Regulation S-T.
(d) DELIVERY OF PROSPECTUSES. The Company has delivered to each
International Manager, without charge, as many copies of each preliminary
prospectus as such International Manager reasonably requested, and the
Company hereby consents to the use of such copies for purposes permitted
by the 1933 Act. The Company will furnish to each International Managers,
without charge, during the period when the International Prospectus is
required to be delivered under the 1933 Act or the 1934 Act, such number
of copies of the International Prospectus (as amended or supplemented) as
such International Managers may reasonably request. The International
Prospectus and any amendments or supplements thereto furnished to the
International Managers will be identical to the electronically transmitted
copies thereof filed with the Commission pursuant to EDGAR, except to the
extent permitted by Regulation S-T.
(e) CONTINUED COMPLIANCE WITH SECURITIES LAWS. The Company will
comply with the 1933 Act and the 1933 Act Regulations and the 1934 Act and
the 1934 Act Regulations
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so as to permit the completion of the distribution of the Securities as
contemplated in this Agreement, the U.S. Purchase Agreement and the Terms
Agreements, and in the Registration Statement and the Prospectuses. If at
any time when a Prospectus is required by the 1933 Act or the 1934 Act to
be delivered in connection with sales of the Securities, any event shall
occur or condition shall exist as a result of which it is necessary, in
the opinion of counsel for the International Managers or for the Company,
to amend the Registration Statement in order that the Registration
Statement 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 or amend or supplement any
Prospectus in order that the Prospectuses will not include any untrue
statement of a material fact or omit to state a material fact necessary in
order to make the statements therein not misleading in the light of the
circumstances existing at the time it is delivered to a purchaser, or if
it shall be necessary, in the opinion of such counsel, at any such time to
amend the Registration Statement or amend or supplement any Prospectus in
order to comply with the requirements of the 1933 Act or the 1933 Act
Regulations, the Company will promptly prepare and file with the
Commission, subject to Section 3(b), such amendment or supplement as may
be necessary to correct such statement or omission or to make the
Registration Statement or the Prospectuses comply with such requirements,
and the Company will furnish to the International Managers such number of
copies of such amendment or supplement as the International Managers may
reasonably request.
(f) BLUE SKY QUALIFICATIONS. The Company will use reasonable
commercial efforts, in cooperation with the International Managers, to
qualify the International Securities for offering and sale under the
applicable securities laws of such states and other jurisdictions
(domestic or foreign) as the Global Coordinator may designate and to
maintain such qualifications in effect for so long as may be required by
the laws of such jurisdiction to continue such qualification in effect for
so long as may be required in connection with the distribution of the
International Securities; provided, however, that the Company shall not be
obligated to file any general consent to service of process or to qualify
as a foreign corporation or as a dealer in securities in any jurisdiction
in which it is not so qualified or to subject itself to taxation in
respect of doing business in any jurisdiction in which it is not otherwise
so subject. In each jurisdiction in which the International Securities
have been so qualified, the Company will file such statements and reports
as may be required by the laws of such jurisdiction to continue such
qualification in effect for so long as may be required in connection with
the distribution of the International Securities.
(g) RULE 158. The Company will timely file such reports pursuant to
the 1934 Act as are necessary in order to make generally available to its
security holders as soon as practicable an earnings statement for the
purposes of, and to provide the benefits contemplated by, the last
paragraph of Section 11(a) of the 1933 Act.
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(h) USE OF PROCEEDS. The Company will use the net proceeds received
by it from the sale of the Securities in the manner specified in the
Prospectuses under "Use of Proceeds".
(i) LISTING. The Company will use its reasonable commercial efforts
to effect the listing of the Securities, subject to notice of issuance to
be provided at the Closing Time, on the New York Stock Exchange.
(j) RESTRICTION ON SALE OF SECURITIES. Between the date of the Terms
Agreement and the Closing Time or such other date specified in the Terms
Agreement, the Company will not, without the prior written consent of the
Global Coordinator, directly or indirectly, issue, sell, offer to sell,
grant any option for the sale of, or otherwise dispose of, any share of
Common Stock or Common Stock equivalent.
(k) REPORTING REQUIREMENTS. The Company, during the period when the
Prospectuses are required to be delivered under the 1933 Act or the 1934
Act, will file all documents required to be filed with the Commission
pursuant to the 1934 Act within the time periods required by the 1934 Act
and the 1934 Act Regulations.
SECTION 4. PAYMENT OF EXPENSES. (a) EXPENSES. The Company will pay all
expenses incident to the performance of its obligations under this Agreement or
the International Terms Agreement, including (i) the preparation, printing and
filing of the Registration Statement (including financial statements and
exhibits) as originally filed and of each amendment thereto, (ii) the
duplication and delivery to the International Managers of this Agreement, the
Terms Agreement, any Agreement Among International Managers and such other
documents as may be required in connection with the offering, purchase, sale and
delivery of the International Securities, (iii) the preparation, issuance and
delivery of the International Securities and the certificates for the
International Securities to the International Managers, including any stock or
other transfer taxes and any stamp or other duties payable upon the sale,
issuance or delivery of the Securities to the International Managers and the
transfer of the International Securities between the U.S. Underwriters and the
International Managers, (iv) the fees and disbursements of the Company's
counsel, accountants and other advisors or agents (including transfer agents and
registrars), (v) the qualification of the International Securities under
securities laws in accordance with the provisions of Section 3(f) hereof,
including filing fees and the reasonable fees and disbursements of counsel for
the International Managers in connection therewith and in connection with the
preparation, printing and delivery of the Blue Sky Survey, any Legal Investment
Survey, and any amendment thereto, (vi) the printing and delivery to the
International Managers of copies of each preliminary prospectus, any Term Sheet,
and the Prospectuses and any amendments or supplements thereto and (vii) the
fees and expenses incurred in connection with the listing of the International
Securities on the New York Stock Exchange.
(B) TERMINATION OF AGREEMENT. If the Terms Agreement is terminated by the
Lead Managers in accordance with the provisions of Section 5(l) or Section
9(a)(i) hereof, the Company
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shall reimburse the International Managers for all of their out-of-pocket
expenses, including the reasonable fees and disbursements of counsel for the
International Managers.
SECTION 5. CONDITIONS OF INTERNATIONAL MANAGERS' OBLIGATIONS. The
obligations of the International Managers to purchase and pay for the
International Securities pursuant to the International Terms Agreement are
subject to the accuracy of the representations and warranties of the Company
contained in Section 1 hereof or in certificates of any officer of the Company
or any Subsidiary delivered pursuant to the provisions hereof, to the
performance by the Company of its covenants and other obligations hereunder, and
to the following further conditions:
(a) EFFECTIVENESS OF REGISTRATION STATEMENT. The Registration
Statement has become effective under the 1933 Act and no stop order
suspending the effectiveness of the Registration Statement shall have been
issued under the 1933 Act or proceedings therefor initiated or threatened
by the Commission, and any request on the part of the Commission for
additional information shall have been complied with to the reasonable
satisfaction of counsel to the International Managers. A prospectus
containing the Rule 430A Information shall have been filed with the
Commission in accordance with Rule 424(b) (or any required post-effective
amendment providing such information shall have been filed and declared
effective in accordance with the requirements of Rule 430A) or, if the
Company has elected to rely upon Rule 434 of the 1933 Act Regulations, a
Term Sheet shall have been filed with the Commission in accordance with
Rule 424(b).
(b) OPINION OF COUNSEL FOR COMPANY. At Closing Time, the Lead
Managers shall have received the favorable opinion, dated as of Closing
Time, of Baker & Botts, L.L.P., counsel for the Company, in form and
substance satisfactory to counsel for the International Managers, together
with signed or reproduced copies of such letter for each of the other
International Managers to the effect set forth in Exhibit A hereto. In
giving such opinion such counsel may rely, as to all matters governed by
the laws of jurisdictions other than the law of the State of New York, the
federal law of the United States and the General Corporation Law of the
State of Delaware, upon the opinions of counsel satisfactory to the Lead
Managers. Such counsel may also state that, insofar as such opinion
involves factual matters, they have relied, to the extent they deem
proper, upon certificates of officers of the Company and its Subsidiaries
and certificates of public officials.
(c) OPINION OF COUNSEL FOR INTERNATIONAL MANAGERS. At Closing Time,
the Lead Managers shall have received the favorable opinion, dated as of
Closing Time, of Andrews & Kurth L.L.P., counsel for the International
Managers, together with signed or reproduced copies of such letter for
each of the other International Managers with respect to the matters set
forth in paragraphs (1), (6), (7), (8) (solely as to the information in
the International Prospectus under "Description of Capital Stock" or to
any other caption purporting to describe any such International
Securities), (14) and (15) and the penultimate paragraph of Exhibit A
hereto. In giving such opinion such counsel may rely, as to all matters
governed by the laws of jurisdictions other than the law of the State of
New York, the federal law of
-17-
the United States and the General Corporation Law of the State of
Delaware, upon the opinions of counsel satisfactory to the Lead Managers.
Such counsel may also state that, insofar as such opinion involves factual
matters, they have relied, to the extent they deem proper, upon
certificates of officers of the Company and its Subsidiaries and
certificates of public officials.
(d) OFFICERS' CERTIFICATE. At Closing Time, there shall not have
been, since the date of the Terms Agreement or since the respective dates
as of which information is given in the Prospectuses, any material adverse
change in the condition, financial or otherwise, or in the earnings,
business affairs or business prospects of the Company and the Subsidiaries
considered as one enterprise, whether or not arising in the ordinary
course of business, and the Lead Managers shall have received a
certificate of the Company executed by the President or a Vice President
of the Company and of the chief financial or chief accounting officer of
the Company, dated as of Closing Time, to the effect that (i) there has
been no such material adverse change, (ii) the representations and
warranties in Section 1 hereof are true and correct with the same force
and effect as though expressly made at and as of Closing Time, (iii) the
Company has complied with all agreements and satisfied all conditions on
its part to be performed or satisfied at or prior to Closing Time, (iv)
there are no material subsidiaries other than those set forth on Schedule
I hereto, and (v) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been initiated or, to the Company's knowledge, threatened by the
Commission.
(e) ACCOUNTANTS' COMFORT LETTERS. At the time of the execution of
the Terms Agreements, the Lead Managers shall have received (i) from
Deloitte & Touche LLP a letter dated such date, in form and substance
satisfactory to the Lead Managers, together with signed or reproduced
copies of such letter for each of the International Managers, containing
statements and information of the type ordinarily included in accountants'
"comfort letters" to underwriters with respect to the financial statements
and certain financial information of the Company and its Subsidiaries
contained, or incorporated by reference, in the Registration Statement and
the Prospectuses and (ii) from Arthur Andersen LLP a letter dated such
date, in form and substance satisfactory to the Lead Managers, together
with signed or reproduced copies of such letter for each of the other
International Managers, containing statements and information of the type
ordinarily included in accountants' "comfort letters" to underwriters with
respect to the financial statements and financial information of Transok,
Inc. contained, or incorporated by reference, in the Registration
Statement and the Prospectuses.
(f) BRING-DOWN COMFORT LETTER. At Closing Time, the Lead Managers
shall have received from each of Deloitte & Touche LLP and Arthur Andersen
LLP a letter, dated as of Closing Time, to the effect that they reaffirm
the statements made in the letter furnished pursuant to subsection (e) of
this Section 5, except that the specified date referred to shall be a date
not more than three business days prior to the Closing Time.
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(g) APPROVAL OF LISTING. At Closing Time, the Securities shall have
been approved for listing on the New York Stock Exchange, subject only to
official notice of issuance.
(h) LOCK-UP AGREEMENTS. At the date of the Terms Agreement, the Lead
Managers shall have received, in form and substance satisfactory to them,
each lock-up agreement, if any, specified in the Terms Agreement as being
required to be delivered by the persons listed therein.
(i) PURCHASE OF INITIAL U.S. SECURITIES. Contemporaneously with the
purchase by the International Managers of the Initial International
Securities under this Agreement, the U.S. Underwriters shall have
purchased the Initial U.S. Securities under the U.S. Purchase Agreement.
(j) CONDITIONS TO PURCHASE OF INTERNATIONAL OPTION SECURITIES. If
the International Managers exercise their option provided in Section 2(b)
hereof to purchase all or any portion of the International Option
Securities, the representations and warranties of the Company contained
herein and the statements in any certificates furnished by the Company
hereunder shall be true and correct as of each Date of Delivery and, at
the relevant Date of Delivery, the Lead Managers shall have received:
(1) OFFICERS' CERTIFICATE. A certificate, dated such Date of
Delivery, of the Company executed by the President or a Vice
President of the Company and of the chief financial or chief
accounting officer of the Company, confirming that the certificate
delivered at the Closing Time pursuant to Section 5(d) hereof
remains true and correct as of such Date of Delivery.
(2) OPINION OF COUNSEL FOR COMPANY. The favorable opinion of
Baker & Botts, L.L.P., counsel for the Company, in form and
substance satisfactory to counsel for the International Managers,
dated such Date of Delivery, relating to the International Option
Securities to be purchased on such Date of Delivery and otherwise to
the same effect as the opinion required by Section 5(b) hereof.
(3) OPINION OF COUNSEL FOR INTERNATIONAL MANAGERS. The
favorable opinion of Andrews & Kurth L.L.P., counsel for the
International Managers, dated such Date of Delivery, relating to the
International Option Securities and otherwise to the same effect as
the opinion required by Section 5(c) hereof.
(4) BRING-DOWN COMFORT LETTER. A letter from each of Deloitte
& Touche LLP and Arthur Andersen LLP, in form and substance
satisfactory to the Lead Managers and dated such Date of Delivery,
substantially in the same form and substance as the letter furnished
to the Lead Managers pursuant to Section 5(f)
-19-
hereof, except that the "specified date" in the letter furnished
pursuant to this paragraph shall be a date not more than five days
prior to such Date of Delivery.
(k) ADDITIONAL DOCUMENTS. At Closing Time and at each Date of
Delivery counsel for the International Managers shall have been furnished
with such documents as they may reasonably require for the purpose of
enabling them to pass upon the issuance and sale of the International
Securities as herein contemplated, or in order to evidence the accuracy of
any of the representations or warranties, or the fulfillment of any of the
conditions, herein contained; and all proceedings taken by the Company in
connection with the issuance and sale of the International Securities as
herein contemplated shall be satisfactory in form and substance to the
Lead Managers and counsel for the International Managers.
(l) TERMINATION OF TERMS AGREEMENT. If any condition specified in
this Section 5 shall not have been fulfilled when and as required to be
fulfilled, the International Terms Agreement (or, with respect to the
International Managers' exercise of the over-allotment option for the
purchase of International Option Securities on a Date of Delivery after
the Closing Time, the obligations of the International Managers to
purchase the International Option Securities may be terminated by the Lead
Managers by notice to the Company at any time at or prior to Closing Time
or such Date of Delivery, as applicable), and such termination shall be
without liability of any party to any other party except as provided in
Section 4 and except that Sections 1, 6 and 7 shall survive any such
termination and remain in full force and effect.
SECTION 6. INDEMNIFICATION.
(a) INDEMNIFICATION OF INTERNATIONAL MANAGERS. The Company agrees to
indemnify and hold harmless each International Manager and each person, if any,
who controls any International Manager within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act as follows:
(1) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, arising out of any untrue statement or alleged
untrue statement of a material fact contained in the Registration
Statement (or any amendment thereto), including the Rule 430A Information
and the Rule 434 Information deemed to be a part thereof, if applicable,
or the omission or alleged omission therefrom of a material fact required
to be stated therein or necessary to make the statements therein not
misleading or arising out of any untrue statement or alleged untrue
statement of a material fact included in any preliminary prospectus or the
Prospectuses (or any amendment or supplement thereto), or the omission or
alleged omission therefrom of a material fact necessary in order to make
the statements therein, in the light of the circumstances under which they
were made, not misleading;
-20-
(2) against any and all loss, liability, claim, damage and expense
whatsoever, as incurred, to the extent of the aggregate amount paid in
settlement of any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or of any claim
whatsoever based upon any such untrue statement or omission, or any such
alleged untrue statement or omission; provided that (subject to Section
6(d) below) any such settlement is effected with the written consent of
the Company; and
(3) against any and all expense whatsoever, as incurred (including
the fees and disbursements of counsel chosen by the Lead Managers),
reasonably incurred in investigating, preparing or defending against any
litigation, or any investigation or proceeding by any governmental agency
or body, commenced or threatened, or any claim whatsoever based upon any
such untrue statement or omission, or any such alleged untrue statement or
omission, to the extent that any such expense is not paid under (i) or
(ii) above;
PROVIDED, HOWEVER, that this indemnity agreement shall not apply to any loss,
liability, claim, damage or expense to the extent arising out of any untrue
statement or omission or alleged untrue statement or omission made in reliance
upon and in conformity with written information furnished to the Company by any
International Manager through the Lead Managers expressly for use in the
Registration Statement (or any amendment thereto), including the Rule 430A
Information and the Rule 434 Information, if applicable, or any preliminary
prospectus or the Prospectuses (or any amendment or supplement thereto); and
PROVIDED, FURTHER, that this indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any International Manager from whom
the person asserting any losses, liabilities, claims, damages or expenses
purchased International Securities, or any person controlling such International
Manager, if a copy of the Prospectuses (as then amended or supplemented if the
Company shall have furnished any such amendments or supplements thereto, but
excluding documents incorporated or deemed to be incorporated by reference
therein) was not sent or given by or on behalf of such International Manager to
such person if such is required by law at or prior to the written confirmation
of the sale of such International Securities to such person and if the
Prospectuses (as so amended or supplemented, but excluding documents
incorporated or deemed to be incorporated by reference therein) would have
corrected the defect giving rise to such loss, liability, claim, damage or
expense, it being understood that this proviso shall have no application if such
defect shall have been corrected in a document which is incorporated or deemed
to be incorporated by reference in the Prospectuses.
(b) INDEMNIFICATION OF COMPANY, DIRECTORS AND OFFICERS. Each International
Manager severally agrees to indemnify and hold harmless the Company, its
directors, each of its officers who signed the Registration Statement, and each
person, if any, who controls the Company within the meaning of Section 15 of the
1933 Act or Section 20 of the 1934 Act against any and all loss, liability,
claim, damage and expense described in the indemnity contained in subsection (a)
of this Section, as incurred, but only with respect to untrue statements or
omissions, or alleged untrue statements or omissions, made in the Registration
Statement (or any amendment thereto), including the Rule 430A Information and
the Rule 434 Information, if applicable, or any preliminary prospectus or the
International Prospectus (or any amendment or supplement thereto) in reliance
-21-
upon and in conformity with written information furnished to the Company by such
International Manager through the Lead Managers expressly for use in the
Registration Statement (or any amendment thereto) or such preliminary prospectus
or the Prospectuses (or any amendment or supplement thereto).
(c) ACTIONS AGAINST PARTIES; NOTIFICATION. Each indemnified party shall
give notice as promptly as reasonably practicable to each indemnifying party of
any action commenced against it in respect of which indemnity may be sought
hereunder, but failure to so notify an indemnifying party shall not relieve such
indemnifying party from any liability hereunder to the extent it is not
materially prejudiced as a result thereof and in any event shall not relieve it
from any liability which it may have otherwise than on account of this indemnity
agreement. In the case of parties indemnified pursuant to Section 6(a) above,
counsel to the indemnified parties shall be selected by the Lead Managers, and,
in the case of parties indemnified pursuant to Section 6(b) above, counsel to
the indemnified parties shall be selected by the Company. An indemnifying party
may participate at its own expense in the defense of any such action; PROVIDED,
HOWEVER, that counsel to the indemnifying party shall not (except with the
consent of the indemnified party) also be counsel to the indemnified party. In
no event shall the indemnifying parties be liable for fees and expenses of more
than one counsel (in addition to any local counsel) separate from their own
counsel for all indemnified parties in connection with any one action or
separate but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. No indemnifying party shall,
without the prior written consent of the indemnified parties, settle or
compromise or consent to the entry of any judgment with respect to any
litigation, or any investigation or proceeding by any governmental agency or
body, commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6 or Section
7 hereof (whether or not the indemnified parties are actual or potential parties
thereto), unless such settlement, compromise or consent (i) includes an
unconditional release of each indemnified party from all liability arising out
of such litigation, investigation, proceeding 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) SETTLEMENT WITHOUT CONSENT IF FAILURE TO REIMBURSE. If at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, such indemnifying party
agrees that it shall be liable for any settlement of the nature contemplated by
Sections 6(a)(2) or 6(b) effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such indemnifying
party of the aforesaid request, (ii) such indemnifying party shall have received
notice of the terms of such settlement at least 30 days prior to such settlement
being entered into and (iii) such indemnifying party shall not have reimbursed
such indemnified party for such fees and expenses of counsel in accordance with
such request prior to the date of such settlement.
SECTION 7. CONTRIBUTION. If the indemnification provided for in Section 6
hereof is for any reason unavailable to or insufficient to hold harmless an
indemnified party in respect of any losses, liabilities, claims, damages or
expenses referred to therein, then each indemnifying party shall
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contribute to the aggregate amount of such losses, liabilities, claims, damages
and expenses incurred by such indemnified party, as incurred, (i) in such
proportion as is appropriate to reflect the relative benefits received by the
Company on the one hand and the International Managers on the other hand from
the offering of the Securities pursuant to the Terms Agreement or (ii) if the
allocation provided by clause (i) is not permitted by applicable law, in such
proportion as is appropriate to reflect not only the relative benefits referred
to in clause (i) above but also the relative fault of the Company on the one
hand and of the International Managers on the other hand in connection with the
statements or omissions which resulted in such losses, liabilities, claims,
damages or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
International Managers on the other hand in connection with the offering of the
International Securities pursuant to the International Terms Agreement shall be
deemed to be in the same respective proportions as the total net proceeds from
the offering of the International Securities (before deducting expenses)
received by the Company and the total underwriting discount received by the
International Managers, in each case as set forth on the cover of the
International Prospectus, or, if Rule 434 is used, the corresponding location on
the Term Sheet bear to the aggregate initial public offering price of the
International Securities as set forth on such cover.
The relative fault of the Company on the one hand and the International
Managers on the other hand 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 by the International Managers and the parties'
relative intent, knowledge, access to information and opportunity to correct or
prevent such statement or omission.
The Company and the International Managers agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the International Managers 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 Section 7. The
aggregate amount of losses, liabilities, claims, damages and expenses incurred
by an indemnified party and referred to above in this Section 7 shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in investigating, preparing or defending against any litigation, or any
investigation or proceeding by any governmental agency or body, commenced or
threatened, or any claim whatsoever based upon any such untrue or alleged untrue
statement or omission or alleged omission.
Notwithstanding the provisions of this Section 7, no International Manager
shall be required to contribute any amount in excess of the amount by which the
total price at which the International Securities underwritten by it and
distributed to the public were offered to the public exceeds the amount of any
damages which such International Managers has otherwise been required to pay by
reason of any such untrue or alleged untrue statement or omission or alleged
omission.
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No person guilty of fraudulent misrepresentation (within the meaning of
Section 11(f) of the 1933 Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
For purposes of this Section 7, each person, if any, who controls an
International Managers within the meaning of Section 15 of the 1933 Act or
Section 20 of the 1934 Act shall have the same rights to contribution as such
International Manager, and each director of the Company, each officer of the
Company who signed the Registration Statement, and each person, if any, who
controls the Company within the meaning of Section 15 of the 1933 Act or Section
20 of the 1934 Act shall have the same rights to contribution as the Company.
The International Managers' respective obligations to contribute pursuant to
this Section 7 are several in proportion to the number of Initial International
Securities set forth opposite their respective names on the Terms Agreement and
not joint.
SECTION 8. REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.
All representations, warranties and agreements contained in this Agreement or
the International Terms Agreement or in certificates of officers of the Company
submitted pursuant hereto, shall remain operative and in full force and effect,
regardless of any investigation made by or on behalf of any International
Manager or controlling person, or by or on behalf of the Company, and shall
survive delivery of and payment for the International Securities.
SECTION 9. TERMINATION.
(a) PURCHASE AGREEMENT. This Agreement (excluding the Terms Agreement) may
be terminated for any reason at any time by the Company or by the Lead Managers
upon giving 30 days' prior written notice of such termination to the other party
or as otherwise provided for herein.
(b) TERMS AGREEMENT. The Lead Managers may terminate the International
Terms Agreement, by notice to the Company, at any time at or prior to Closing
Time or any relevant Date of Delivery if (i) there has been, since the time of
execution of the Terms Agreement or since the respective dates as of which
information is given in the International Prospectus, any material adverse
change in the condition, financial or otherwise, or in the earnings, business
affairs or business prospects of the Company and the Subsidiaries considered as
one enterprise, whether or not arising in the ordinary course of business, or
(ii) there has occurred any material adverse change in the financial markets in
the United States or in the international financial markets, any outbreak of
hostilities or escalation thereof or other calamity or crisis or any change or
development involving a prospective change in national or international
political, financial or economic conditions, in each case the effect of which is
such as to make it, in the judgment of the Lead Managers, impracticable to
market the Securities or to enforce contracts for the sale of the Securities, or
(iii) trading in any securities of the Company has been suspended or limited by
the Commission or the New York Stock Exchange, Inc. or if trading generally on
the New York Stock Exchange or American Stock Exchange or in the
over-the-counter market has been suspended or limited, or minimum or maximum
prices for trading have been fixed, or maximum ranges for prices have been
required, by any of said exchanges or by such system or by order of the
Commission, the National Association
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of Securities Dealers, Inc. or any other governmental authority, or (iv) if a
banking moratorium has been declared by either Federal or New York authorities.
(c) LIABILITIES. If this Agreement or the International Terms Agreement is
terminated pursuant to this Section 9, such termination shall be without
liability of any party to any other party except as provided in Section 4
hereof, and provided further that Sections 1, 6 and 7 shall survive such
termination and remain in full force and effect.
SECTION 10. DEFAULT BY ONE OR MORE OF THE INTERNATIONAL MANAGERS. If one
or more of the International Managers shall fail at the Closing Time or the
relevant Date of Delivery, as the case may be, to purchase the Securities which
it or they are obligated to purchase under the applicable Terms Agreement (the
"Defaulted Securities"), the Lead Managers shall have the right, within 24 hours
thereafter, to make arrangements for one or more of the non-defaulting
International Managers, or any other underwriters, to purchase all, but not less
than all, of the Defaulted Securities in such amounts as may be agreed upon and
upon the terms herein set forth; if, however, the Lead Manager(s) shall not have
completed such arrangements within such 24-hour period, then:
(a) if the number or aggregate principal amount, as the case may be,
of Defaulted Securities does not exceed 10% of the number of International
Securities to be purchased on such date pursuant to such International
Terms Agreement, each of the non-defaulting International Managers shall
be obligated, severally and not jointly, to purchase the full amount
thereof in the proportions that their respective underwriting obligations
under such Terms Agreement bear to the underwriting obligations of all
non-defaulting International Managers, or
(b) if the number or aggregate principal amount, as the case may be,
of Defaulted Securities exceeds 10% of the number of Securities to be
purchased on such date pursuant to such International Terms Agreement,
this Agreement (or, with respect to the International Managers' exercise
of an over-allotment option for the purchase of International Option
Securities on a Date of Delivery after the Closing Time, the obligations
of the International Managers to purchase, and the Company to sell, such
International Option Securities on such Date of Delivery) shall terminate
without liability on the part of any non-defaulting International Manager.
No action taken pursuant to this Section 10 shall relieve any defaulting
International Manager from liability in respect of its default.
In the event of any such default which does not result in (i) a
termination of the Terms Agreement or, (ii) in the case of a Date of Delivery
after the Closing Time, a termination of the obligations of the International
Managers to purchase and the Company to sell the relevant International Option
Securities, as the case may be, either the Lead Managers or the Company shall
have the right to postpone the Closing Time or the relevant Date of Delivery, as
the case may be, for a period not exceeding seven days in order to effect any
required changes in the Registration
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Statement or the Prospectuses or in any other documents or arrangements. As used
herein, the term "International Manager" includes any person substituted for an
International Manager under this Section 10.
SECTION 11. NOTICES. All notices and other communications hereunder shall
be in writing and shall be deemed to have been duly given if mailed or
transmitted by any standard form of telecommunication. Notices to the
International Managers shall be directed to Merrill Lynch at North Tower, World
Financial Center, New York, New York 10281-1201, attention of Wood Steinberg,
Vice President; and notices to the Company shall be directed to it at 1301
McKinney Street, Suite 700, Houston, Texas 77010, attention of James W. Whalen,
Executive Vice President, Chief Financial Officer and Treasurer.
SECTION 12. PARTIES. This Agreement and the International Terms Agreement
shall each inure to the benefit of and be binding upon the Company, the Lead
Managers and, upon execution of the International Terms Agreement, any other
International Underwriters and their respective successors. Nothing expressed or
mentioned in this Agreement or the International Terms Agreement is intended or
shall be construed to give any person, firm or corporation, other than the
International Managers and the Company and their respective successors and the
controlling persons and officers and directors referred to in Sections 6 and 7
and their heirs and legal representatives, any legal or equitable right, remedy
or claim under or in respect of this Agreement or any provision herein
contained. This Agreement and all conditions and provisions hereof are intended
to be for the sole and exclusive benefit of the International Managers and the
Company and their respective successors, and said controlling persons and
officers and directors and their heirs and legal representatives, and for the
benefit of no other person, firm or corporation. No purchaser of Securities from
any International Manager shall be deemed to be a successor by reason merely of
such purchase.
SECTION 13. GOVERNING LAW AND TIME. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK. EXCEPT AS
OTHERWISE SET FORTH HEREIN, SPECIFIED TIMES OF DAY REFER TO NEW YORK CITY TIME.
SECTION 14. EFFECT OF HEADINGS. The Article and Section headings herein
and any table of contents are for convenience only and shall not affect the
construction hereof.
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If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof, whereupon
this Agreement, along with all counterparts, will become a binding agreement
between the International Managers and the Company in accordance with its terms.
Very truly yours,
TEJAS GAS CORPORATION
By:____________________________
Name:__________________________
Title:_________________________
CONFIRMED AND ACCEPTED,
as of the date first above written:
MERRILL LYNCH INTERNATIONAL
CAZENOVE & CO.
NATWEST SECURITIES LIMITED
By: MERRILL LYNCH INTERNATIONAL
By_______________________________
Authorized Signatory
For themselves and as Lead Managers and as the only
International Managers named in the International Terms
Agreement.
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