Exhibit 1.01
FX ENERGY, INC.
SALES AGENCY AGREEMENT
August 10, 2004
Great American Investors, Inc.
0000 Xxxxxxx Xxxx
Xxxxxxxx Xxxx, Xxxxxx 00000
Ladies and Gentlemen:
FX Energy, Inc., a Nevada corporation (the "Company"), proposes to sell (the
"Offering"), upon the terms and subject to the conditions of this Agreement, to
certain investors having certain contractual anti-dilution rights in connection
with their purchase of shares of 2003 Series Convertible Preferred Stock and
related warrants, their legal successors in interest and certain others
(collectively, the "Investors"). The Company desires to engage as its sales
agent Great American Investors, Inc. (the "Sales Agent") in connection with such
the issuance and sale, on a best efforts basis, as agent and not as principal,
of an aggregate of 950,000 shares (the "Offered Shares") of the Company's common
stock, par value $0.001 per share ("Common Stock").
1. Registration Statement and Prospectus. A registration statement (File
No. 333-80489) on Form S-3 relating to the Common Stock, and such
amendments to such registration statement as may have been required to
the date of this Agreement, has been prepared by the Company under the
provisions of the Securities Act of 1933, as amended (the "Securities
Act"), and the rules and regulations (collectively referred to as the
"Rules and Regulations") of the Securities and Exchange Commission (the
"Commission") thereunder, and has been filed with the Commission. Such
registration statement, including any documents incorporated therein by
reference and any exhibits, financial statements and schedules thereto,
together with any registration statement filed pursuant to Rule 462(b),
is herein referred to as the "Registration Statement." The form of
prospectus to be included in the Registration Statement, as
supplemented by any preliminary prospectus supplement or definitive
prospectus supplement relating to the offering of the Offered Shares
and filed by the Company with the Commission pursuant to Rule 424(b),
are herein referred to collectively as the "Prospectus." Any reference
herein to the Registration Statement or the Prospectus shall be deemed
to refer to and include the documents incorporated by reference
therein, as of the date of such Registration Statement or Prospectus,
as the case may be, and, in the case of any reference herein to any
Prospectus, also shall be deemed to include any documents incorporated
by reference therein, and any supplements or amendments relating to the
Offered Shares being issued and sold pursuant hereto, filed with the
Commission under Rule 424(b), and prior to the termination of the
offering of the Offered Shares by the Sales Agent.
2. Representations and Warranties. The Company hereby makes the following
representations and warranties to the Sales Agent:
(a) Effectiveness of Registration Statement. The Registration Statement
has been declared effective as of June 30, 1999, by the Commission.
Neither the Commission nor any state regulatory authority has issued
any order preventing or suspending the use of the Registration
Statement or the Prospectus and no proceedings for a stop order
suspending the effectiveness of the Registration Statement have been
instituted, or, to the Company's knowledge, are threatened.
(b) Accuracy and Completeness of Registration Statement. The
Registration Statement contains and the Prospectus and any amendments
or supplements thereto conforms or will conform, as the case may be, as
of their dates, in all material respects with the requirements of the
Securities Act and the Rules and Regulations. The documents
incorporated or deemed to be incorporated by reference in the
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Prospectus, at the time they were or hereafter are filed with the
Commission, complied and will comply, as the case may be, in all
material respects with the applicable requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and the Rules
and Regulations promulgated thereunder. Neither the Registration
Statement nor any amendment thereto, and neither the Prospectus nor any
supplement thereto, including any documents incorporated by reference
therein, contains or will contain, as the case may be, any untrue
statement of a material fact or omits or will omit, as the case may be,
to state any material fact required to be stated therein or necessary
to make the statements therein, in light of the circumstances under
which they were made, not misleading; provided, however, that the
Company makes no representations or warranties as to information
contained in or omitted from the Registration Statement or the
Prospectus, in reliance upon, and in conformity with, written
information furnished to the Company by or on behalf of the Sales
Agent, specifically for use in the preparation thereof.
(c) State Securities Laws. The Company (or at the Company's request,
counsel to the Sales Agent) will prepare and file the necessary
documents so that offers and sales of the Offered Shares may be made in
those jurisdictions in the United States in which Investors reside, as
advised by the Sales Agent prior to any offering in such state.
(d) Description of Common Stock. The Common Stock conforms to all
statements relating thereto contained in the Registration Statement or
the Prospectus.
(e) Conduct of Business. The Company is not, and does not intend to
conduct its business in a manner in which it would be, an "investment
company" as defined in Section 3(a) of the Investment Company Act of
1940 (the "Investment Company Act").
(f) No Third-Party Rights to Registration. No person or entity has the
right to require registration of shares of Common Stock or other
securities of the Company because of the filing or effectiveness of the
Registration Statement, except such persons or entities from whom
written waivers of such rights have been received prior to the date
hereof.
(g) Nasdaq Authorization for Quotation. The Common Stock, including the
Offered Shares, is registered pursuant to Section 12(g) of the Exchange
Act, has been listed on the Nasdaq SmallCap Market, and has been
approved for listing on the Nasdaq National Market effective August 10,
2004. The Company has taken no action designed to terminate, or likely
to have the effect of terminating, the registration of the Common Stock
under the Exchange Act or delisting the Common Stock from the Nasdaq
National Market, nor has the Company received any notification that the
Commission or Nasdaq is contemplating terminating such registration or
listing. The Company is not aware of any facts or circumstances that
might reasonably be expected to give rise to any of the foregoing.
(h) Subsidiaries. Except as set forth on exhibit 21 to the most recent
report on Form 10-K included in the SEC Documents as defined in Section
2(n) herein, the Company does not have any subsidiaries engaged in
active operations, owning material assets, or having material
liabilities and does not own or control, directly or indirectly, and
interest in any other corporation, association or other business
entity.
(i) Organization. The Company is duly organized and validly existing in
good standing under the laws of the jurisdiction of its organization.
The Company has full power and authority to own, operate and occupy its
properties and to conduct its business as presently conducted and as
described in the documents filed by the Company under the Exchange Act
since the end of its most recently completed fiscal year through the
date hereof, including its most recent report on Form 10-K included in
the SEC Documents as defined in Section 2(n) herein, and is registered
or qualified to do business and in good standing in each jurisdiction
in which the nature of the business conducted by it or the location of
the properties owned or leased by it requires such qualification and
where the failure to be so qualified would have a material adverse
effect upon the condition (financial or otherwise), earnings, business
or business prospects, properties or operations of the Company,
considered as one enterprise (a "Material Adverse Effect"), and no
proceeding has been instituted in any such jurisdiction revoking,
limiting or curtailing, or seeking to revoke, limit or curtail, such
power and authority or qualification.
(j) Due Authorization and Valid Issuance. The Company has all requisite
power and authority to execute, deliver and perform its obligations
hereunder (including its obligation to issue, sell and deliver the
Offered Shares), and this Agreement has been duly authorized and
validly executed and delivered by the Company and constitutes a legal,
valid and binding agreement of the Company enforceable against the
Company in accordance with its terms, except as rights to indemnity and
contribution may be limited by state or federal securities laws or the
public policy underlying such laws, except as enforceability may be
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limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' and contracting
parties' rights generally, and except as enforceability may be subject
to general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or at law). The
Offered Shares will, upon issuance and payment therefor pursuant to the
terms of this Agreement, be duly authorized, validly issued, fully-paid
and nonassessable.
(k) Noncontravention. The execution, delivery and performance of this
Agreement and the consummation of the transactions herein contemplated
will not (i) conflict with or constitute a violation of, or default
(with the passage of time or otherwise) under (1) any material bond,
debenture, note or other evidence of indebtedness, lease, contract,
indenture, mortgage, deed of trust, loan agreement, joint venture or
other agreement or instrument to which the Company is a party or by
which its properties are bound, (2) the charter, bylaws or other
organizational documents of the Company, or (3) any law, administrative
regulation, ordinance or order of any court or governmental agency,
arbitration panel or authority applicable to the Company or by which
its properties are bound, except in the case of clauses (1) and (3) for
any such conflicts, violations or defaults that are not reasonably
likely to have a Material Adverse Effect, or (ii) result in the
creation or imposition of any lien, encumbrance, claim, security
interest or restriction whatsoever upon any of the material properties
or assets of the Company or an acceleration of indebtedness pursuant to
any obligation, agreement or condition contained in any material bond,
debenture, note or any other evidence of indebtedness or any material
indenture, mortgage, deed of trust or any other agreement or instrument
to which the Company is a party or by which it is bound or to which any
of the material property or assets of the Company is subject. No
consent, approval, authorization or other order of, or registration,
qualification or filing with, any regulatory body, administrative
agency, or other governmental body in the United States or any other
person is required for the execution and delivery of the Agreement and
the valid issuance and sale of the Common Stock to be sold pursuant to
the Agreement, other than such as have been made or obtained, and
except for any post-closing securities filings or notifications
required to be made under federal or state securities laws.
(l) No Violation. The Company is not in violation of its charter,
bylaws or other organizational document, or in violation of any law,
administrative regulation, ordinance or order of any court or
governmental agency, arbitration panel or authority applicable to the
Company, which violation, individually or in the aggregate, would be
reasonably likely to have a Material Adverse Effect, or is in default
(and there exists no condition that, with the passage of time or
otherwise, would constitute a default) in any material respect in the
performance of any bond, debenture, note or any other evidence of
indebtedness, indenture, mortgage, deed of trust or any other material
agreement or instrument to which the Company is a party or by which the
Company is bound or by which the properties of the Company are bound,
that would be reasonably likely to have a Material Adverse Effect. The
business of the Company and its subsidiaries is not being conducted,
and shall not be conducted so long as the investors own any of the
Common Stock, in violation of any law, ordinance, rule, regulation,
order, judgment or decree of any governmental entity, court or
arbitration tribunal, except for possible violations, the sanctions for
which either singly or in the aggregate, would not have a Material
Adverse Effect.
(m) Capitalization. The prospectus accurately sets forth the
capitalization of the Company. The Offered Shares to be sold pursuant
to the Prospectus have been duly authorized, and when issued and paid
for in accordance with the terms of the Prospectus will be duly and
validly issued, fully paid and nonassessable. The outstanding shares of
capital stock of the Company have been duly and validly issued and are
fully paid and nonassessable, have been issued in compliance with all
applicable federal and state securities laws, and were not issued in
violation of any preemptive rights or similar rights to subscribe for
or purchase securities. Except as set forth on in the SEC Documents,
there are no other outstanding rights (including preemptive or
anti-dilution rights), warrants or options to acquire, or instruments
convertible into or exchangeable for, any unissued shares of capital
stock or other equity interest in the Company, or any contract,
commitment, agreement, understanding or arrangement of any kind to
which the Company is a party or of which the Company has knowledge and
relating to the issuance or sale of any capital stock of the Company,
any such convertible or exchangeable securities or any such rights,
warrants or options. Without limiting the foregoing, except as set
forth in the SEC Documents, no preemptive right, anti-dilution right,
co-sale right, right of first refusal, registration right, or other
similar right exists respecting the Common Stock or the issuance and
sale thereof. No further approval or authorization of any stockholder,
the Board of Directors of the Company or of a third party is required
for the issuance and sale of the Common Stock. Except as set forth in
the SEC Documents, there are no stockholders agreements, voting
agreements or other similar agreements respecting the Common Stock to
which the Company is a party or, to the knowledge of the Company,
between or among any of the Company's stockholders. Except as set forth
in the SEC Documents, the Company does not have any so-called
stockholder rights plan or "poison pill" and there are no
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"shark-repellant" charter or bylaw provisions or so-called "state
anti-takeover" statutes applicable, in any case, to all or any portion
of the transactions contemplated by the Agreements, including the
issuance of the Common Stock.
(n) Reporting Status. Since December 31, 2003, the Company has timely
filed all reports, schedules, forms, statements and other documents
required to be filed by it with the Commission pursuant to the
reporting requirements of the Exchange Act (all of the foregoing filed
after December 31, 2003, and all exhibits included therein and
financial statements and schedules thereto and documents incorporated
by reference therein, being referred to herein as the "SEC
Documents")). True and complete copies of the SEC Documents are
available to the Sales Agent on the Electronic Data Gathering,
Analysis, and Retrieval ("XXXXX") system of the Commission. As of their
respective dates, the SEC Documents complied in all material respects
with the requirements of the Exchange Act and the Rules and Regulations
of the Commission promulgated thereunder applicable to the SEC
Documents, and none of the SEC Documents, at the time they were filed
with the Commission, contained any untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading, except to the
extent corrected by a subsequent SEC Document. None of the statements
made in any such SEC Documents is currently required to be updated or
amended under applicable law (except for such statements as have been
amended or updated by subsequent SEC Documents prior to the date of
this Agreement). The SEC Documents contain or incorporate by reference
a complete and accurate list of all material undischarged written or
oral contracts, agreements, leases or other instruments to which the
Company or any subsidiary is a party, or by which the Company or any
subsidiary is bound, or to which any of the properties or assets of the
Company or any subsidiary is subject, and that are required by the
Rules and Regulations promulgated under the Exchange Act to be included
as exhibits to the SEC Documents (each a "Contract"). None of the
Company, its subsidiaries or, to the best knowledge of the Company, any
of the other parties thereto, is in breach or violation of any
Contract, which breach or violation would have a Material Adverse
Effect. No event, occurrence or condition exists that, with the lapse
of time, the giving of notice, or both, or the happening of any further
event or condition, would become a breach or default by the Company or
its subsidiaries under any Contract, which breach or default would have
a Material Adverse Effect.
(o) Legal Proceedings. There is no action, suit, proceeding, or to the
knowledge of the Company or any of its subsidiaries, inquiry or
investigation before or by any court, public board, governmental agency
or authority, or self-regulatory organization or body pending or, to
the knowledge of the Company or any of its subsidiaries, threatened
against or affecting the Company, any of its subsidiaries, or any of
their respective directors or officers in their capacities as such,
wherein an unfavorable decision, ruling or finding would have a
Material Adverse Effect or would adversely affect the Offering or that
would adversely affect the validity or enforceability of, or the
authority or ability of the Company to consummate the Offering. The
Company and its subsidiaries are unaware of any facts that could give
rise to a claim or proceeding that, if asserted or conducted with
results unfavorable to the Company or any of its subsidiaries, could
have a Material Adverse Effect.
(p) No Manipulation of Stock. The Company has not taken and will not,
in violation of applicable law, take any action designed to or that
might reasonably be expected to cause or result in stabilization or
manipulation of the price of the Company's Common Stock to facilitate
the sale or resale of the Common Stock.
(q) Environmental. Except as would not, individually or in the
aggregate, result in a Material Adverse Effect (i) the Company is not
in violation of any applicable federal, state, provincial, local or
foreign law or regulation relating to pollution or protection of human
health or the environment (including ambient air, surface water,
groundwater, land surface or subsurface strata) or wildlife, including
without limitation, laws and regulations relating to emissions,
discharges, releases or threatened releases of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances, petroleum
and petroleum products (collectively, "Materials of Environmental
Concern"), or otherwise relating to the manufacture, processing,
distribution, use, treatment, storage, disposal, transport or handling
of Materials of Environmental Concern (collectively, "Environmental
Laws"), which violation includes, but is not limited to, noncompliance
with any permits or other governmental authorizations required for the
operation of the business of the Company under applicable Environmental
Laws, or noncompliance with the terms and conditions thereof, nor has
the Company received any written communication, whether from a
governmental authority, citizens group, employee or otherwise, that
alleges that the Company is in violation of any Environmental Law; (ii)
there is no claim, action or cause of action filed with a court or
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governmental authority, no investigation respecting which the Company
has received written notice, and no written notice to the Company by
any person or entity alleging potential liability for investigatory
costs, cleanup costs, governmental responses costs, natural resources
damages, property damages, personal injuries, attorneys' fees or
penalties arising out of, based on or resulting from the presence, or
release into the environment, of any Material of Environmental Concern
at any location owned, leased or operated by the Company, now or to the
Company's knowledge, in the past (collectively, "Environmental
Claims"), pending or, to the best of the Company's knowledge,
threatened against the Company or any person or entity whose liability
for any Environmental Claim the Company has retained or assumed either
contractually or by operation of law; and (iii) to the best of the
Company's knowledge, there are no past or present actions, activities,
circumstances, conditions, events or incidents, including the release,
emission, discharge, presence or disposal of any Material of
Environmental Concern, that reasonably could result in a violation of
any Environmental Law or form the basis of a potential Environmental
Claim against the Company or against any person or entity whose
liability for any Environmental Claim the Company has retained or
assumed either contractually or by operation of law.
(r) Intellectual Property. The Company owns, possesses or has pending,
or licenses or otherwise has the right to use all patents, patent
applications, trademarks, trademark applications, trade names, service
marks, copyrights, copyright applications, franchises, licenses,
inventions, trade secrets and other intangible properties and assets
described in the Prospectus (all of the foregoing being collectively
herein called "Intangibles"), and such Intangibles, if applicable, are
in good standing and uncontested. Other than the Intangibles described
in the Prospectus, the Company is unaware of any other Intangibles
necessary for the conduct of its business as now conducted or as
proposed to be conducted. The Company has not infringed, is not
infringing, nor has it received any notice of infringement respecting
asserted Intangibles of others. To the knowledge of the Company, there
is no infringement by others of Intangibles of the Company.
(s) Foreign Corrupt Practices. Neither the Company nor any of its
subsidiaries has, nor any director, officer, agent, employee or other
person acting on behalf of the Company or any subsidiary has in the
course of his actions for or on behalf of the Company, used any
corporate funds for any unlawful contribution, gift, entertainment or
other unlawful expenses relating to political activity; made any direct
or indirect unlawful payment to any foreign or domestic government
official or employee from corporate funds; violated or is in violation
of any provision of the U.S. Foreign Corrupt Practices Act of 1977, as
amended; or made any bribe, rebate, payoff, influence payment, kickback
or other unlawful payment to any foreign or domestic government
official or employee. Without limiting the generality of the foregoing,
the Company and its subsidiaries have not directly or indirectly made
or agreed to make (whether or not said payment is lawful) any payment
to obtain, or respecting, sales other than usual and regular
compensation to its or their employees and sales representatives
respecting such sales.
(t) Internal Accounting Controls. The Company and each of its
subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with
management's general or specific authorization, and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken respecting any
differences. The Company has established disclosure controls and
procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e))
for the Company and designed such disclosure controls and procedures to
ensure that material information relating to the Company, including its
subsidiaries, is made known to the certifying officers by others within
those entities, particularly during the period in which the Company's
Form 10-K or 10-Q, as the case may be, is being prepared. The Company's
certifying officers have evaluated the effectiveness of the Company's
controls and procedures as of the end of the period covered for such
report. The Company presented in its most recently filed Form 10-K or
Form 10-Q, as the case may be, the conclusions of the certifying
officers about the effectiveness of the disclosure controls and
procedures based on their evaluations as of the end of the period
covered by such report. Since the end of the period covered by such
report, there have been no significant changes in the Company's
internal controls (as such term is used in Item 307(b) of Regulation
S-K under the Exchange Act) or, to the Company's knowledge, in other
factors that could significantly affect the Company's internal
controls.
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(u) Financial Statements. The financial statements, together with the
related notes and schedules, set forth or incorporated by reference in
the Prospectus and in the Registration Statement fairly present, on the
basis stated in the Registration Statement, the financial condition and
the results of operations of the Company at the respective dates or for
the respective periods therein specified. Such statements and related
notes and schedules have been prepared in accordance with generally
accepted accounting principles applied on a consistent basis, except
that interim financial statements do not contain all of the notes
required by generally accepted accounting principles to be included in
audited financial statements and are subject to normal year-end audit
adjustments, and as otherwise may be set forth in the Prospectus.
(v) Independent Auditors. PricewaterhouseCoopers, LLP has expressed its
opinions on the audited financial statements and related schedules
included in the Registration Statement and the Prospectus and is an
independent public accountant as required by the Securities Act and the
Rules and Regulations.
(w) Material Contracts. The Company has performed all material
obligations required to be performed by it through the date hereof
under all contracts required by Item 601(b)(10) of Regulation S-K under
the Securities Act to be filed as exhibits to the Registration
Statement, and neither the Company nor, to the knowledge of the
Company, any other party to such contract is in default under or in
breach of any such obligations, except respecting defaults or breaches
which, singly or in the aggregate, will not result in a Material
Adverse Effect. The Company has not received any notice of such default
or breach.
(x) Labor Agreements and Actions. The Company is not involved in any
labor dispute of a type likely to have a Material Adverse Effect, and
to the Company's knowledge, no such dispute is threatened. The Company
is not aware that (i) any executive, key employee or significant group
of employees of the Company plans to terminate employment with the
Company, or (ii) any such executive or key employee is subject to any
noncompete, nondisclosure, confidentiality, employment, consulting or
similar agreement that would be violated by the present or proposed
business activities of the Company. The Company does not have or expect
to have any liability for any prohibited transaction or funding
deficiency or any complete or partial withdrawal liability respecting
any pension, profit sharing or other plan which is subject to the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"),
to which the Company makes or ever has made a contribution and in which
any employee of the Company is or has ever been a participant, except
where such liability would not have a Material Adverse Effect. The
Company is in compliance in all material respects with all applicable
provisions of ERISA respecting any pension, profit sharing or other
plan subject to ERISA.
(y) Key Employees; Company's Knowledge. Each Key Employee (as defined
below) is currently serving the Company in the capacity disclosed in
its most recent report on Form 10-K and reports filed thereafter and
included in the SEC Documents. No Key Employee, to the best of the
knowledge of the Company and its subsidiaries, is, or is now expected
to be, in violation of any material term of any employment contract,
confidentiality, disclosure or proprietary information agreement,
noncompetition agreement, or any other contract or agreement or any
restrictive covenant, and the continued employment of each Key Employee
does not subject the Company or any of its subsidiaries to any
liability respecting any of the foregoing matters. No Key Employee has,
to the best of the knowledge of the Company and its subsidiaries, any
intention to terminate or limit his employment with, or services to,
the Company or any of its subsidiaries, nor is any such Key Employee
subject to any constraints (e.g., litigation) that would cause such
employee to be unable to devote his full time and attention to such
employment or services. "Key Employee" means each of Xxxxx X. Xxxxxx,
President and Chief Executive Officer; Xxxxxx X. Xxxxxx, Vice President
and Chief Operating Officer; Xxxxxx X. Xxxxxxx, Chairman and Chief
Financial Officer; Xxxxx X. Xxxxxxxx, Vice-President of Exploration;
and Xxxxxxx Xxxxxxx, Exploration Advisor. For purposes hereof, the term
"knowledge of the Company" shall mean the knowledge of each of the Key
Employees.
(z) Drilling Practices. The real property that the Company has the
right to explore, develop or from which it cmay recover oil and gas
substances (the "Lands"), all right, title and interest of the Company
in and to the Lands, and all machinery, equipment, jigs, drills, dies,
tools, handling equipment, furniture, furnishings and accessories and
supplies of all kinds used on the Lands (collectively, the "Oilfield
Assets") have been operated in accordance with good oilfield practice,
in compliance with the applicable law, ordinance, rule, regulation,
order, judgment or decree of any governmental entity, court or
arbitration tribunal, except for possible violations, the sanctions for
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which, either singly or in the aggregate would not have a Material
Adverse Effect, and materially in accordance with the terms and
conditions of all agreements applicable thereto.
(aa) Sale/Leasebacks. The Oilfield Assets are not be subject to any
lease, leaseback or sale/leaseback arrangements.
(bb) Oil or Gas Balancing Agreements. Neither the Company nor any other
person on its behalf has entered into any agreement or arrangements,
commonly known as an oil or gas balancing, swap, overproduction or
underlift-overlift agreements, that are among two or more persons
owning interests in a portion of the Lands or pooled or unitized
therewith, nor, to the knowledge of the Company, has there been any
circumstance or case whereby one of such persons has taken, or may
hereafter take, a share of the production of oil or gas substances from
such Lands greater than it would otherwise be entitled to by virtue of
its interest in such Lands, and which excess taking entitled the other
persons to a credit in respect of subsequent production of the
Company's oil and gas substances produced from such Lands.
(cc) Assets Subject to Obligations. The Oilfield Assets are not
affected by any "take or pay" obligations.
(dd) Abandoned Xxxxx. To the knowledge of the Company, there are no oil
and gas xxxxx on the Lands that have been either plugged and abandoned,
or drilled and abandoned, in which the Company had or now has an
interest, and for which authorization, if required, has been obtained
for each such well from the applicable governmental entity.
(ee) Allowables. To the knowledge of the Company, none of the oil and
gas xxxxx operated by the Company on the Lands has been produced in
excess of applicable production allowables imposed by applicable law,
ordinance, rule, regulation, order, judgment or decree of any
governmental entity, court or arbitration tribunal, since the Company
acquired its interest therein. Such oil and gas xxxxx are not subject
to any production penalty and, to the knowledge of the Company, it is
not aware of any impending change in statutorily imposed or sanctioned
production allowables imposed by applicable governmental entities
currently applicable to any of the oil and gas xxxxx other than changes
that are in the public domain.
(ff) No Disagreements with Accountants and Lawyers. There are no
disagreements of any kind presently existing, or reasonably anticipated
by the Company to arise, that have had or could reasonably be expected
to result in a Material Adverse Effect, between the accountants and
lawyers formerly or presently engaged or employed by the Company and
the Company is current respecting any fees owed to its accountants and
lawyers.
(gg) Title to Property and Assets. The Company has good title to all
personal property owned by it that is material to the business of the
Company, in each case free and clear of all liens, encumbrances and
defects except such as are described in the Prospectus or such as would
not have a Material Adverse Effect. Any real property and buildings
held under lease by the Company described in the Prospectus are held by
it under valid, subsisting and enforceable leases with such exceptions
as would not have a Material Adverse Effect, in each case except as
described in or contemplated by the Prospectus.
(hh) Insurance. The Company is insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as the Company believes are reasonable respecting the business
in which it is engaged, all of which insurance is in full force an
effect.
(ii) Brokers. There is no broker, finder or other party that is
entitled to receive from the Company any brokerage or finder's fee or
similar fee or commission as a result of any of the transactions
contemplated by this Agreement.
(jj) Distribution of Offering Materials. The Company has not
distributed and will not distribute prior to the later of (i) the
Closing Date and (ii) the completion of the distribution of the Offered
Shares, any offering material in connection with the offering and sale
of the Offered Shares other than the Prospectus, the Registration
Statement and other materials, if any, permitted by the Securities Act
and the use of which has been approved in advance by the Sales Agent.
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(kk) NASD Rule 2710. In connection with the Sales Agent's determination
of whether the compensation to be paid to the Sales Agent under this
Agreement is exempt from the filing requirements of NASD Rule 2710, the
Company has met and continues to meet the pre-1992 eligibility
requirements for the use of the Registration Statement on Form S-3 in
connection with the Offering contemplated thereby and hereby. Further,
the Offered Shares meet the "actively traded securities" definition
contained in NASD Rule IM-2710-1(7), namely, that the Offered Shares
have an ADTV value of at least $1 million and are issued by an issuer
whose common equity securities have a public float value of at least
$150 million. Additionally, the Company has been continuously subject
to and fulfilled the reporting requirements under the Exchange Act for
a period of 36 months. As used in this Section 2(kk), "ADTV" means the
worldwide average daily trading volume during the two full calendar
months immediately preceding, or any 60 consecutive calendar days
ending within the 10 calendar days preceding, the filing of a
registration statement; or, if there is no registration statement or if
the distribution involves the sale of securities on a delayed basis
pursuant to Rule 415 of the Securities Act, two full calendar months
immediately receding, or any consecutive 60 calendar days ending within
the 10 calendar days preceding, the determination of the offering
price.
(ll) Solvency. The Company (both before and after giving effect to
transactions contemplated by the Offering) is solvent (i.e., its assets
have a fair market value in excess of the amount required to pay its
probable liabilities on its existing debts as they become absolute and
matured) and currently the Company has no information that would lead
it to reasonably conclude that the Company would not have the ability
to, nor does it intend to take any action that would impair its ability
to, pay its debts from time to time incurred in connection therewith as
such debts mature.
(mm) Certificates. Each certificate signed by any officer of the
Company and delivered to the Sales Agent or counsel for the Sales Agent
pursuant to this Agreement or in connection with the Offering
contemplated hereby shall be deemed to be a representation and warranty
of the Company to the Sales Agent as to the matters covered thereby.
3. Offering of the Offered Shares. Upon the basis of the representations,
warranties and covenants and subject to the terms and conditions herein
set forth, the Sales Agent, acting as agent for the Company and not as
principal, agrees on a best efforts basis to offer the Offered Shares
for sale to the Investors in accordance with the Plan of Distribution
section set forth in the supplement to the Prospectus. The Company
understands and agrees that the Sales Agent is under no obligation to
obtain offers to purchase any or all of the Offered Shares, the Sales
Agent's undertaking hereunder is a best efforts undertaking, and the
Sales Agent is not obligated to purchase any Offered Shares that are
not sold to the public. As compensation for the sale of Offered Shares
on behalf of the Company pursuant to this Agreement, the Company will
pay to the Sales Agent, at Closing out of the proceeds of the Offering
as directed by the Sales Agent prior to or at the Closing, a commission
of $0.45 per share for each Offered Share sold in the Offering.
(a) Public Offering. The Sales Agent agrees to offer the Offered Shares
(subject to the terms of the Sales Agency Agreement) to the Investors
at the public offering price of $7.20 per share (the "Purchase Price")
as soon after the execution and delivery of this Agreement as, in its
reasonable judgment, is advisable. The Sales Agent shall promptly
advise the Company of the making of such offering.
(b) Closing. The Company will deliver the Offered Shares so purchased
(the "Purchased Shares") to the Investors in the form of definitive
certificates, issued in names of the Investors, in such denominations
as the Sales Agent may direct by notice in writing to the Company given
at or prior to 10:00 a.m., Mountain time, on the second full business
day preceding the Closing Date (as defined below) , against payment of
the aggregate Purchase Price therefor or other immediately available
funds, by certified or official bank check payable to the order of the
Company or by wire transfer to accounts designated by the Company6.
Such delivery and closing shall occur at 10:00 a.m., mountain time, on
the third business day after the date of this Agreement (the "Closing
Date"). The Closing Date and the location of delivery of, and the form
of payment for, the Purchased Shares may be varied by agreement between
the Company and the Sales Agent.
(c) Certificates for the Purchased Shares. The Company shall transmit
by overnight courier the certificates for the Purchased Shares on the
Closing Date, as may be designated by the Sales Agent.
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(d) No Adverse Changes. There shall not have occurred, at any time
prior to the applicable closing (i) any domestic or international
event, act or occurrence which has materially disrupted, or in the
Sales Agent's opinion will in the immediate future materially disrupt,
the securities markets; (ii) a general suspension of, or a general
limitation on prices for, trading in securities on the New York Stock
Exchange or the Nasdaq - Amex Stock Exchange or in the over-the-counter
market; (iii) any outbreak of major hostilities or other national or
international calamity; (iv) any banking moratorium declared by a state
or federal authority; (v) any moratorium declared in foreign exchange
trading by major international banks or other persons; (vi) any
material interruption in the mail service or other significant means of
communication within the United States; (vii) any material adverse
change in the business, properties, assets, results of operations, or
financial condition of the Company; or (viii) any change in the market
for securities in general or in political, financial, or economic
conditions which, in the Sales Agent's reasonable judgment, makes it
inadvisable to proceed with the applicable Offering.
4. Conditions to Sales Agent's Obligations. The obligations of the Sales
Agent hereunder to sell the Purchased Shares on the Closing Date and
any Offered Shares on each other Closing Date will be subject to the
accuracy of the representations and warranties of the Company herein
contained as of the date hereof and as of each Closing Date, to the
performance by the Company of its obligations hereunder and to the
following additional conditions:
(a) No Stop Order. No order preventing or suspending the use of any
preliminary prospectus or the Prospectus shall have been or shall be in
effect and no order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for such purpose shall
be pending before or threatened by the Commission or by any
Governmental Authority, and any requests for additional information on
the part of the Commission (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with
to the satisfaction of the Sales Agent.
(b) No Material Misstatements. Neither the Registration Statement, nor
any supplement thereto, will contain any untrue statement of a fact by
the Company which in the opinion of the Sales Agent is material, or
omits to state a fact, which in the opinion of the Sales Agent is
material and is required to be stated therein, or is necessary to make
the statements therein, in light of the circumstances under which they
were made, not misleading;
(c) Compliance with Agreements. The Company will have complied with all
agreements and satisfied all conditions on its part to be performed or
satisfied hereunder at or prior to the Closing Date;
(d) Corporate Action. The Company will have taken all necessary
corporate action, including obtaining the approval of its Board, for
the execution and delivery of this Agreement, the performance by the
Company of its obligations hereunder and the Offering contemplated
hereby;
(e) Officers' Certificate. The Sales Agent shall receive a certificate
of the Company, signed by the Chief Executive Officer and Chief
Financial Officer thereof, that the representations and warranties
contained in Section 4 hereof are true and accurate in all material
respects at the Closing Date with the same effect as though expressly
made at such Closing Date.
(f) Due Diligence. The Sales Agent shall have completed and been
satisfied with the results of its due diligence investigation of the
Company, including the Company's financial statements, projections,
expense budgets, business prospects, capital structure, background
searches and contractual arrangements.
(g) Filing of Prospectus. The Prospectus shall have been timely filed
with the Commission in accordance with Section 5(c) of the Securities
Act.
(h) Satisfaction of Sales Agent. All proceedings taken in connection
with the sale of the Offered Shares as herein contemplated shall be
reasonably satisfactory in form and substance to the Sales Agent.
(i) Completeness of Information. On or prior to the Closing Date, the
Sales Agent shall have beenfurnished with such documents, certificates
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and opinions as they may reasonably require in order to evidence the
accuracy, completeness or satisfaction of any of the representations,
warranties, covenants, agreements or conditions contained in this
Agreement.
(j) No NASD Objection. The NASD shall not have objected to the Sales
Agent's participation in the Offering.
5. Covenants of the Company.
(a) Effectiveness of Registration Statement. The Company will not at
any time, whether before or after the effective date of the
Registration Statement, file any amendment to the Registration
Statement or supplement to the Prospectus or file any document under
the Securities Act or Exchange Act before termination of the offering
of the Offered Shares which the Sales Agent shall not previously have
been advised and furnished with a copy, or to which the Sales Agent
shall have reasonably objected or which is not in compliance with the
Securities Act, the Exchange Act or the Regulations.
(b) Prospectus Supplement. The Company will (A) prepare and timely file
with the Commission under Rule 424(b) of the Rules and Regulations a
prospectus supplement setting forth the information and the terms of
the offering contemplated by Section 4 hereof, (B) not file any
amendment to the Registration Statement or supplement to the Prospectus
of which the Sales Agent shall not previously have been advised and
furnished with a copy or to which the Sales Agent shall have reasonably
objected in writing or which is not in compliance with the Rules and
Regulations and (C) file on a timely basis all reports and any
definitive proxy or information statements required to be filed by the
Company with the Commission subsequent to the date of the Prospectus
and prior to the termination of the offering of the Offered Shares by
the Sales Agent.
(c) Notification. As soon as the Company is advised or obtains
knowledge thereof, the Company will advise the Sales Agent and confirm
the notice in writing, (i) when the Prospectus has been filed in
accordance with said Rule 430A and when any post-effective amendment to
the Registration Statement becomes effective, (ii) of the issuance by
the Commission of any proceeding, suspending the effectiveness of the
Registration Statement or any order preventing or suspending the use of
any preliminary prospectus or the Prospectus, or any amendment or
supplement thereto, or the institution of proceedings for that purpose,
(iii) of the issuance by the Commission or by any state securities
commission of any proceedings for the suspension of the qualification
of any of the Common Stock for offering or sale in any jurisdiction or
of the initiation, or the threatening, of any proceeding for that
purpose, (iv) of the receipt of any comments from the Commission; and
(v) of any request by the Commission for any amendment to the
Registration Statement or any amendment or supplement to the Prospectus
or for additional information. If the Commission or any state
securities commission shall enter a stop order and suspend such
qualifications at any time, the Company will use its best efforts to
obtain promptly the lifting of such order.
(d) Amendments. The Company shall give the Sales Agent reasonable
notice of its intention to file or prepare any amendment to the
Registration Statement (including any post-effective amendment) or any
amendment or supplement to the Prospectus (including any revised
prospectus which the Company proposes for use by the Sales Agent in
connection with the offering of the Common Stock which differs from the
corresponding prospectus on file at the Commission at the time the
Registration Statement becomes effective, whether or not such revised
prospectus is required to be filed pursuant to Rule 424(b) of the
Regulations), and will furnish the Sales Agent with copies of any such
amendment or supplement a reasonable amount of time prior to such
proposed filing or use, as the case may be, and will not file any such
amendment or supplement to which the Sales Agent or Sales Agent's
Counsel shall reasonably object.
(e) Copies of Registration Statement and Prospectus. The Company will
deliver to the Sales Agent, at or before the Closing Date, conformed
copies of the Registration Statement, and each amendment thereto,
including all financial statements and exhibits thereto, and will
deliver to the Sales Agent such number of copies of the Registration
Statement, including such financial statements but without exhibits,
and all amendments thereto, as the Sales Agent may reasonably request.
The Company will deliver or mail to the Investors and the Sales Agent
on the date of the public offering, and thereafter from time to time
during the period when delivery of a prospectus relating to the Offered
Shares is required under the Securities Act, as many copies of the
Prospectus, in final form or as thereafter amended or supplemented as
the Sales Agent may reasonably request.
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(f) Section 11(a) Earnings Statement. The Company will make generally
available to its stockholders as soon as practicable, but not later
than 45 days after the end of the fourth fiscal quarter following the
fiscal quarter that includes the "effective date of the registration
statement" (as defined in Rule 158(c) of the Securities Act) if such
fourth fiscal quarter is not the last fiscal quarter of the Company's
fiscal year and not later than 90 days after the end of the fourth
fiscal quarter following the fiscal quarter that includes the
"effective date of the registration statement" if such fourth fiscal
quarter is the last fiscal quarter of the Company's fiscal year, an
earnings statement which will be in reasonable detail (but which need
not be audited) and which will comply with Section 11(a) of the
Securities Act, covering a period of at least twelve (12) months
beginning after the "effective date of the registration statement,"
provided that compliance with Rule 158 shall satisfy this subsection
(f).
(g) Compliance with Requirements. During the time when a prospectus is
required to be delivered under the Securities Act, the Company shall
use all reasonable efforts to comply with all requirements imposed upon
it by the Securities Act, as now and hereafter amended, and by the
Rules and Regulations, as from time to time in force, so far as
necessary to permit the continuance of sales of or dealings in the
Common Stock in accordance with the provisions hereof and the
Prospectus, or any amendments or supplements thereto. If at any time
when a prospectus relating to the Offered Shares is required to be
delivered under the Securities Act, any event shall have occurred as a
result of which, in the opinion of counsel for the Company or Sales
Agent's Counsel, the Prospectus, as then amended or supplemented,
includes an untrue statement of a material fact or omits to state any
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, or it is necessary at any time to amend or
supplement the Prospectus to comply with the Securities Act, the
Company shall notify the Sales Agent promptly and prepare and file with
the Commission an appropriate amendment or supplement in accordance
with Section 10 of the Securities Act, each such amendment or
supplement to be satisfactory to the Company's and the Sales Agent's
Counsel, and the Company will furnish to the Sales Agent copies of such
amendment or supplement as soon as available and in such quantities as
the Sales Agent may request.
(h) Use of Proceeds. The net proceeds of the Offering will be used by
the Company as set forth in the Prospectus. Except as set forth in the
Prospectus, the Company shall not use any of the proceeds from the
Offering to repay any indebtedness of the Company (other than trade
payables in the ordinary course), including but not limited to
indebtedness to any current executive officers, directors or principal
stockholders of the Company.
(i) Expenses of Offering. The Company shall be responsible for, and
shall bear all reasonable expenses directly incurred in connection
with, the proposed offering including, but not limited to legal fees of
the Company's counsel relating to the costs of preparing the
Registration Statement and all amendments, supplements and exhibits
thereto and preparing and delivering all sales Agent and selling
documents, Common Stock certificates. In addition, the Company shall
reimburse the Sales Agent for all of its reasonable out-of-pocket
expenses incurred in connection with the Offering, including mailing,
printing, copying, telephone, travel, background searches, due
diligence investigations, legal and consulting fees or other similar
expenses.
(j) Press Releases, Etc. The Company shall not, during the period
commencing on the date hereof and ending on the termination of the
offering of the Offered Shares, issue any press release or other
communication, or hold any press conference respecting the Company, its
financial condition, results of operations, business, properties,
assets, or liabilities, or the Offering, without the prior consent of
the Sales Agent, which consent shall not be unreasonably withheld. The
Company shall not include information respecting the Offering or use
the Sales Agent's name in any press release, advertisement or on any
website maintained by the Company with out the prior written consent of
the Sales Agent.
(k) Restrictions on Issuances of Securities. During the period
commencing on the date hereof and ending on the later of (i) the
Closing Date or (ii) the termination of the offering of the Offered
Shares, the Company will not, without the prior written consent of the
Sales Agent, issue additional shares of Common Stock, other than
pursuant to the exercise of options or warrants outstanding on the date
hereof, or grant any warrants, options or other securities of the
Company except for options under the Company's stock option plans.
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(l) Nasdaq Stock Market. On or before completion of this Offering, the
Company shall make all filings required under applicable securities
laws and by the Nasdaq National Market and will use its best efforts to
maintain the listing of the Common Stock on the Nasdaq National Market,
or if the Company so elects, the New York Stock Exchange or the
American Stock Exchange for a period of two (2) years after the date
hereof.
(m) Financial Statements. Prior to the Closing Date the Company will
furnish to the Sales Agent, as soon as they have been prepared, copies
of any unaudited interim financial statements of the Company for any
periods subsequent to the periods covered by the financial statements
appearing in the Prospectus.
6. Indemnification and Contribution.
(a) Indemnification by the Company. The Company agrees to indemnify and
hold harmless the Sales Agent, each person, if any, who controls the
Sales Agent within the meaning of the Securities Act and the respective
officers, directors, partners, employees, and agents of the Sales Agent
and controlling person (collectively, the "Sales Agent Indemnified
Parties" and, each, a "Sales Agent Indemnified Party") against any
losses, claims, damages, liabilities or expenses (including the
reasonable cost of investigating and defending against any claims
therefor and fees of one counsel incurred in connection therewith),
joint or several, which may be based upon the Securities Act, the
Exchange Act, or any other federal, state, local or foreign statute or
regulation, or at common law, on the ground or alleged ground that the
Registration Statement or the Prospectus (as from time to time amended
or supplemented) includes or allegedly includes an untrue statement of
a material fact or omits or allegedly omits to state a material fact
required to be stated therein or necessary in order to make the
statements therein, in light of the circumstances under which they were
made, not misleading, unless such statement or omission was made in
reliance upon, and in conformity with, written information furnished to
the Company by the Sales Agent, directly or through the Sales Agent,
specifically for use in the preparation thereof. The Company will be
entitled to participate at its own expense in the defense or, if it so
elects, to assume the defense of any suit brought to enforce any such
liability, but, if the Company elects to assume the defense, such
defense shall be conducted by counsel chosen by it. In the event the
Company elects to assume the defense of any such suit and retain such
counsel, any Sales Agent Indemnified Parties may retain additional
counsel but shall bear the fees and expenses of such counsel unless (i)
the Company shall have specifically authorized the retaining of such
counsel, or (ii) the parties to such suit include any Sales Agent
Indemnified Parties, and the Company and Sales Agent Indemnified
Parties have been advised by counsel to the Sales Agent that one or
more legal defenses may be available to it or them which may not be
available to the Company, in which case counsel selected by the Sales
Agent Indemnified Parties shall participate in such suit respecting
those defenses, provided that the Company shall not be required to bear
the reasonable fees and expenses of more than one such counsel. The
Company shall not be liable to indemnify any person for any settlement
of any such claim effected without the Company's consent. This
indemnity agreement is not exclusive and will be in addition to any
liability which the Company might otherwise have and shall not limit
any rights or remedies which may otherwise be available at law or in
equity to Sales Agent Indemnified Party.
(b) Indemnification by the Sales Agent. The Sales Agent agrees to
indemnify and hold harmless the Company, each of its directors, each of
its officers who have signed the Registration Statement and each
person, if any, who controls the Company within the meaning of the
Securities Act (collectively, the "Company Indemnified Parties")
against any losses, claims, damages, liabilities or expenses
(including, unless the Sales Agent elects to assume the defense, the
reasonable cost of investigating and defending against any claims
therefor and fees of counsel incurred in connection therewith), joint
or several, which arise out of or are based in whole or in part upon
the Securities Act, the Exchange Act or any other federal, state, local
or foreign statute or regulation, or at common law, on the ground or
alleged ground that the Registration Statement or the Prospectus (as
from time to time amended and supplemented) includes or allegedly
includes an untrue statement of a material fact or omits or allegedly
omits to state a material fact required to be stated therein or
necessary in order to make the statements therein, in light of the
circumstances in which they were made, not misleading, but only insofar
as any such statement or omission was made in reliance upon, and in
conformity with, written information furnished to the Company by the
Sales Agent, directly or through an agent of the Sales Agent,
specifically for use in the preparation thereof, and the parties
acknowledge and agree that the only information furnished by the Sales
Agent to the Company for inclusion in the Prospectus, as from time to
time amended or supplemented, is the information under the caption
"Plan of Distribution" in the Prospectus that does not describe this
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Agreement; provided, however, that in no case is the Sales Agent to be
liable respecting any claims made against any Company Indemnified Party
against whom the action is brought unless such Company Indemnified
Party shall have notified the Sales Agent in writing within a
reasonable time after the summons or other first legal process giving
information of the nature of the claim shall have been served upon the
Company Indemnified Party, but failure to notify the Sales Agent of
such claim shall not relieve it from any liability which it may have to
any Company Indemnified Party except to the extent such failure
prejudices the Sales Agent's defense of such action or otherwise than
on account of its indemnity agreement contained in this paragraph. The
Sales Agent shall be entitled to participate at their own expense in
the defense, or, if they so elect, to assume the defense of any suit
brought to enforce any such liability, but, if the Sales Agent elects
to assume the defense, such defense shall be conducted by counsel
chosen by them. In the event that the Sales Agent elects to assume the
defense of any such suit and retain such counsel, the Company
Indemnified Parties or controlling person or persons, defendant or
defendants in the suit, shall bear the fees and expenses of any
additional counsel retained by them, respectively. The Sales Agent
shall not be liable to indemnify any person for any settlement of any
such claim effected without such Sales Agent's consent. This indemnity
agreement is not exclusive and will be in addition to any liability
which the Sales Agent might otherwise have and shall not limit any
rights or remedies which may otherwise be available at law or in equity
to any Company Indemnified Party.
(c) Contribution. If the indemnification provided for in this Section 6
is unavailable or insufficient to hold harmless an indemnified party
under subsection (a) or (b) above in respect of any losses, claims,
damages, liabilities or expenses (or actions in respect thereof)
referred to herein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of
such losses, claims, damages, liabilities or expenses (or actions in
respect thereof) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Sales Agent,
respectively, from the offering of the Offered Shares. If, however, the
allocation provided by the immediately preceding sentence is not
permitted by applicable law, then each indemnifying party shall
contribute to such amount paid or payable by such indemnified party in
such proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company on the one hand,
and the Sales Agent on the other hand, in connection with the
statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses (or actions in respect thereof), as well as any
other relevant equitable considerations. The relative benefits received
by the Company on the one hand, and the Sales Agent on the other hand,
shall be deemed to be in the same proportion as the total net proceeds
from the offering (before deducting expenses) received by the Company
bears to the total underwriting discounts and commissions received by
the Sales Agent, in each case as set forth in the table on the cover
page of the Prospectus. The relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue
statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or
the Sales Agent, and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or
omission. The Company and the Sales Agent agree that it would not be
just and equitable if contribution were determined by pro rata
allocation or by any other method of allocation which does not take
account of the equitable considerations referred to above. The amount
paid or payable by an indemnified party as a result of the losses,
claims, damages, liabilities or expenses (or actions in respect
thereof) referred to above shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party in
connection with investigating, defending, settling or compromising any
such claim. Notwithstanding the provisions of this subsection (c), the
Sales Agent shall not be required to contribute any amount in excess of
the amount by which the total price at which the Offered Shares sold by
such Sales Agent exceeds the amount of any damages which the Sales
Agent has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person
guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation.
7. Miscellaneous.
(a) Notices. All notices or communications hereunder will be in writing
and will be mailed or delivered as follows: If to the Company, at 0000
Xxxxxxxx Xxxxx, Xxxxx 000, Xxxx Xxxx Xxxx, Xxxx 00000, Attention: Xxxxx
X. Xxxxxx, facsimile number (000) 000-0000, with a copy to Xxxxx Xxxxx
Xxxxxxx & Xxxxx, LLC, 00 Xxxx Xxxxxxxx, Xxxxxx Xxxxx, Xxxx Xxxx Xxxx,
Xxxx 00000, Attention: Xxxxx X. Xxxxx, facsimile number (000) 000-0000;
and if to the Sales Agent at Great American Investors, Inc., 0000
Xxxxxxx Xxxx, Xxxxxxxx Xxxx, Xxxxxx 00000, facsimile number (913)
384-1806.
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(b) Survival; Governing Law; Entire Agreement; Independent Contractor.
The representations warranties and covenants of the Company set forth
herein will remain in full force and effect regardless of any
investigation made by or on behalf of the Sales Agent, any Investor or
any other entity or persons and will survive delivery of the
Securities. The provisions of this Section 7 ("Miscellaneous") and
Sections 2 and 6, shall survive any closing of the Offering or
termination of this Agreement, as applicable. This Agreement contains
the entire agreement between the Company and the Sales Agent concerning
the Offering and supersedes any prior understanding or agreement
whether written or oral. Any amendment hereto or waiver of any right or
obligation hereunder must be in writing signed by the party to be
charged. This Agreement shall be governed by and construed in
accordance with the internal laws of the state of Utah without giving
effect to that state's principles of conflicts of law. The Sales Agent
will act under this Agreement as an independent contractor at
"arm's-length" with duties solely to the Company. It is understood that
the Sales Agent's responsibility to the Company is solely contractual
in nature and that the Sales Agent does not owe the Company, or any
other party, any financial advisory, fiduciary, agency or similar
duties as a result of its engagement. The Company acknowledges and
agrees that any statement made by the Sales Agent, or any of its
representatives or agents, in connection with this Agreement or the
transactions contemplated hereby is not advice or a recommendation, is
merely incidental thereto and has not been relied upon in any way by
the Company, its officers, directors or other representatives. The
invalidity or unenforceability of any provision of this Agreement shall
not affect the validity or enforceability of any other provision of
this Agreement, which shall remain in full force and effect. The Sales
Agent and the Company (on its own behalf and, to the extent permitted
by law, on behalf of its stockholders or other interest holders) each
waives any right to trial by jury in any action, claim, suit or
proceeding respecting the Sales Agent's engagement hereunder or its
role in connection therewith. The benefits of, and the obligations and
liabilities assumed in, this Agreement shall inure to the benefit of,
and be binding upon, any successors and assigns.
This Agreement is effective as of the date first set forth above.
Please confirm that the foregoing correctly and completely sets forth our
understanding, by signing and returning to us the enclosed duplicate of this
Agreement.
Sincerely,
FX ENERGY, INC.
By: /s/ Xxxxx X. Xxxxxx
----------------------------
Xxxxx X. Xxxxxx
President
Accepted and agreed:
Great American Investors, Inc.
By: /s/ Xxxxx X. Xxxxxxxx
-----------------------------
Xxxxx X. Xxxxxxxx
President
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