EXHIBIT 1
______________ Shares
XXXXXXX EXPLORATION COMPANY
Common Stock
UNDERWRITING AGREEMENT
________, 2003
CIBC World Markets Corp.
Xxxxxxx Xxxxx & Associates, Inc.,
Xxxxxxx Rice & Company L.L.C.
as Representatives of the several
Underwriters named in Schedule I hereto
c/o CIBC World Markets Corp.
000 0xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Xxxxxxx Exploration Company, a Delaware corporation (the "Company") and
the persons listed on Schedule II hereto (the "Selling Stockholders") propose,
subject to the terms and conditions contained herein, to sell to you and the
other underwriters named on Schedule I to this Agreement (the "Underwriters"),
for whom you are acting as Representatives (the "Representatives"), an aggregate
of ________ shares (the "Firm Shares") of the Company's common stock, $0.01 par
value per share (the "Common Stock"). Of the _____ Firm Shares, _____ are to be
issued and sold by the Company and _____ are to be sold by the Selling
Stockholders. The respective amounts of the Firm Shares to be purchased by each
of the several Underwriters are set forth opposite their names on Schedule I
hereto. In addition, the Company proposes to grant to the Underwriters an option
to purchase up to an additional ___________ shares (the "Option Shares") of
Common Stock from the Company for the purpose of covering over-allotments in
connection with the sale of the Firm Shares. The Firm Shares and the Option
Shares are collectively called the "Shares." [NOTE THAT THIS AND OTHER SECTIONS
WILL CHANGE IF THE SELLING STOCKHOLDERS ARE INCLUDED IN THE SHOE.]
The Company has prepared and filed in conformity with the requirements
of the Securities Act of 1933, as amended (the "Securities Act"), and the
published rules and regulations thereunder (the "Rules") adopted by the
Securities and Exchange Commission (the "Commission") a Registration Statement
(as hereinafter defined) on Form S-2 (No. 333-_____), including a preliminary
prospectus relating to the Shares, and such amendments thereof as may
have been required to the date of this Agreement. Copies of such Registration
Statement (including all amendments thereof) and of the related Preliminary
Prospectus (as hereinafter defined) have heretofore been delivered by the
Company to you. The term "Preliminary Prospectus" means any preliminary
prospectus included at any time as a part of the Registration Statement or filed
with the Commission by the Company pursuant to Rule 424(a) of the Rules. The
term "Registration Statement" as used in this Agreement means the initial
registration statement (including all exhibits, financial schedules and all
documents and information deemed to be a part of the Registration Statement
through incorporation by reference or otherwise), as amended at the time and on
the date it becomes effective (the "Effective Date"), including the information
(if any) contained in the form of final prospectus filed with the Commission
pursuant to Rule 424(b) of the Rules and deemed to be part thereof at the time
of effectiveness pursuant to Rule 430A of the Rules. If the Company has filed an
abbreviated registration statement to register additional Shares pursuant to
Rule 462(b) under the Rules (the "462(b) Registration Statement"), then any
reference herein to the Registration Statement shall also be deemed to include
such 462(b) Registration Statement. The term "Prospectus" as used in this
Agreement means the prospectus in the form included in the Registration
Statement at the time of effectiveness or, if Rule 430A of the Rules is relied
on, the term Prospectus shall also include the final prospectus filed with the
Commission pursuant to Rule 424(b) of the Rules. Reference made herein to any
Preliminary Prospectus or to the Prospectus shall be deemed to refer to and
include any documents incorporated by reference therein pursuant to Item 12 of
Form S-2 under the Securities Act, as of the date of such Preliminary Prospectus
or the Prospectus, as the case may be, and any reference to any amendment or
supplement to any Preliminary Prospectus or the Prospectus shall be deemed to
refer to and include any document filed under the Securities Exchange Act of
1934, as amended (the "Exchange Act"), after the date of such Preliminary
Prospectus or the Prospectus, as the case may be, and incorporated by reference
in such Preliminary Prospectus or the Prospectus, as the case may be.
The Company and the Selling Stockholders understand that the
Underwriters propose to make a public offering of the Shares, as set forth in
and pursuant to the Prospectus, as soon after the Effective Date and the date of
this Agreement as the Representatives deem advisable. The Company and the
Selling Stockholders hereby confirm that the Underwriters and dealers have been
authorized to distribute or cause to be distributed each Preliminary Prospectus
and are authorized to distribute the Prospectus (as from time to time amended or
supplemented if the Company furnishes amendments or supplements thereto to the
Underwriters).
1. Sale, Purchase, Delivery and Payment for the Shares. On the basis of
the representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
(a) The Company agrees to issue and sell to each of the Underwriters,
and each of the Underwriters agrees, severally and not jointly, to purchase
from the Company, at a purchase price of $_____ per share (the "Initial
Price"), the number of Firm Shares set forth opposite the name of such
Underwriter under the column "Number of Firm Shares to be Purchased from
the Company" on Schedule I to this Agreement, subject to adjustment in
accordance with Section 9 hereof. Each of the Selling Stockholders agrees,
severally and not jointly, to sell to each of the Underwriters, and each of
the Underwriters agrees, severally and not jointly, to purchase from the
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Selling Stockholders, at the Initial Price, the number of Firm Shares set
forth opposite the name of such Underwriter under the column "Number of
Firm Shares to be Purchased from the Selling Stockholders" on Schedule I to
this Agreement, subject to adjustment in accordance with Section 9 hereof.
(b) The Company hereby grants to the several Underwriters an option to
purchase, severally and not jointly, all or any part of the Option Shares
at the Initial Price. The number of Option Shares to be purchased by each
Underwriter shall be the same percentage (adjusted by the Representatives
to eliminate fractions) of the total number of Option Shares to be
purchased by the Underwriters as such Underwriter is purchasing of the Firm
Shares. Such option may be exercised only to cover over-allotments in the
sales of the Firm Shares by the Underwriters and may be exercised in whole
or in part at any time on or before 12:00 noon, New York City time, on the
business day before the Firm Shares Closing Date (as defined below), and
from time to time thereafter within 30 days after the date of this
Agreement, in each case upon written, facsimile or telegraphic notice, or
verbal or telephonic notice confirmed by written, facsimile or telegraphic
notice, by the Representatives to the Company no later than 12:00 noon, New
York City time, on the business day before the Firm Shares Closing Date or
at least two business days before the Option Shares Closing Date (as
defined below), as the case may be, setting forth the number of Option
Shares to be purchased and the time and date (if other than the Firm Shares
Closing Date) of such purchase.
(c) Payment of the purchase price for, and delivery of certificates
for, the Firm Shares shall be made at the offices of CIBC World Markets
Corp., Xxx Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m.,
New York City time, on the third business day following the date of this
Agreement or at such time on such other date, not later than ten (10)
business days after the date of this Agreement, as shall be agreed upon by
the Company and the Representatives (such time and date of delivery and
payment are called the "Firm Shares Closing Date"). In addition, in the
event that any or all of the Option Shares are purchased by the
Underwriters, payment of the purchase price, and delivery of the
certificates, for such Option Shares shall be made at the above-mentioned
offices, or at such other place as shall be agreed upon by the
Representatives and the Company, on each date of delivery as specified in
the notice from the Representatives to the Company (such time and date of
delivery and payment are called the "Option Shares Closing Date"). The Firm
Shares Closing Date and any Option Shares Closing Date are called,
individually, a "Closing Date" and, together, the "Closing Dates."
(d) Payment shall be made to the Company and the Selling Stockholders
by wire transfer of immediately available funds or by certified or official
bank check or checks payable in New York Clearing House (same day) funds
drawn to the order of the Company and to the Selling Stockholders for the
shares purchased from the Company and the Selling Stockholders, against
delivery of the respective certificates to the Representatives for the
respective accounts of the Underwriters of certificates for the Shares to
be purchased by them.
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(e) Certificates evidencing the Shares shall be registered in such
names and shall be in such denominations as the Representatives shall
request at least two full business days before the Firm Shares Closing Date
or, in the case of Option Shares, on the day of notice of exercise of the
option as described in Section 1(b) and shall be delivered by or on behalf
of the Company to the Representatives through the facilities of the
Depository Trust Company ("DTC") for the account of such Underwriter.
2. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Firm Shares Closing Date and as of each Option Shares Closing Date (if any), as
follows:
(a) On the Effective Date, the Registration Statement complied, and on
the date of the Prospectus, the date any post-effective amendment to the
Registration Statement becomes effective, the date any supplement or
amendment to the Prospectus is filed with the Commission and each Closing
Date, the Registration Statement and the Prospectus (and any amendment
thereof or supplement thereto) will comply, in all material respects, with
the requirements of the Securities Act and the Rules and the Exchange Act
and the rules and regulations of the Commission thereunder. The
Registration Statement did not, as of the Effective Date, contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and on the Effective Date and the other dates
referred to above neither the Registration Statement nor the Prospectus,
nor any amendment thereof or supplement thereto, will contain any untrue
statement of a material fact or will omit to state any material fact
required to be stated therein or necessary in order to make the statements
therein not misleading. When any related preliminary prospectus was first
filed with the Commission (whether filed as part of the Registration
Statement or any amendment thereto or pursuant to Rule 424(a) of the Rules)
and when any amendment thereof or supplement thereto was first filed with
the Commission, such preliminary prospectus as amended or supplemented
complied in all material respects with the applicable provisions of the
Securities Act and the Rules and did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading. If applicable, each Preliminary Prospectus and the Prospectus
delivered to the Underwriters for use in connection with this offering was
identical to the electronically transmitted copies thereof filed with the
Commission pursuant to XXXXX, except to the extent permitted by Regulation
S-T. Notwithstanding the foregoing, none of the representations and
warranties in this paragraph 2(a) shall apply to statements in, or
omissions from, the Registration Statement or the Prospectus made in
reliance upon, and in conformity with, information herein or otherwise
furnished in writing by the Representatives on behalf of the several
Underwriters for use in the Registration Statement or the Prospectus. With
respect to the preceding sentence, the Company acknowledges that the only
information furnished in writing by the Representatives on behalf of the
several Underwriters for use in the Registration Statement or the
Prospectus is the statements contained in the [ ] and [ ] paragraphs under
the caption "Underwriting" in the Prospectus.
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(b) The Registration Statement is effective under the Securities Act
and no stop order preventing or suspending the effectiveness of the
Registration Statement or suspending or preventing the use of the
Prospectus has been issued by the Commission and no proceedings for that
purpose have been instituted or are threatened under the Securities Act.
Any required filing of the Prospectus and any supplement thereto pursuant
to Rule 424(b) of the Rules has been or will be made in the manner and
within the time period required by such Rule 424(b).
(c) The documents incorporated by reference in the Registration
Statement and the Prospectus, at the time they became effective or were
filed with the Commission, as the case may be, complied in all material
respects with the requirements of the Securities Act or the Exchange Act,
as applicable, and the rules and regulations of the Commission thereunder,
and none of such documents contained an untrue statement of a material fact
or omitted to state a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and any further
documents so filed and incorporated by reference in the Registration
Statement and the Prospectus, when such documents become effective or are
filed with the Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange Act, as
applicable, and the rules and regulations of the Commission thereunder and
will not contain an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they are
made, not misleading.
(d) The financial statements of the Company (including all notes and
schedules thereto) included or incorporated by reference in the
Registration Statement and Prospectus present fairly the financial position
of the Company and its consolidated subsidiaries at the dates indicated and
the statement of operations, stockholders' equity and cash flows of the
Company and its consolidated subsidiaries for the periods specified; and
such financial statements and related schedules and notes thereto, and the
unaudited financial information filed with the Commission as part of the
Registration Statement, have been prepared in conformity with generally
accepted accounting principles, consistently applied throughout the periods
involved. The summary and selected financial data included in the
Prospectus present fairly the information shown therein as at the
respective dates and for the respective periods specified and have been
presented on a basis consistent with the consolidated financial statements
set forth in the Prospectus and other financial information.
(e) PricewaterhouseCoopers LLP, whose reports are filed with the
Commission as a part of the Registration Statement, are and, during the
periods covered by their reports, were independent public accountants as
required by the Securities Act and the Rules.
(f) The Company and each of its subsidiaries, including each entity
(corporation, partnership, joint venture, association or other business
organization) controlled directly or indirectly by the Company, is duly
organized, validly existing and in good standing under the laws of their
respective jurisdictions of incorporation or
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organization. The Company and each of its subsidiaries is duly qualified to
do business and is in good standing as a foreign corporation in each
jurisdiction in which the nature of the business conducted by it or
location of the assets or properties owned, leased or licensed by it
requires such qualification, except for such jurisdictions where the
failure to so qualify individually or in the aggregate would not have a
material adverse effect on the assets, properties, condition, financial or
otherwise, or in the results of operations, business affairs or business
prospects of the Company and its subsidiaries considered as a whole (a
"Material Adverse Effect"); and to the Company's knowledge, 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. The Company does not own, lease or license any
asset or property or conduct any business outside the United States of
America.
(g) The Company and each of its subsidiaries has all requisite
corporate power and authority, and all necessary authorizations, approvals,
consents, orders, licenses, certificates and permits of and from all
governmental or regulatory bodies or any other person or entity
(collectively, the "Permits"), to own, lease and license its assets and
properties and conduct its business, all of which are valid and in full
force and effect, except where the lack of such Permits, individually or in
the aggregate, would not have a Material Adverse Effect. The Company and
each of its subsidiaries has fulfilled and performed in all material
respects all of its material obligations with respect to such Permits and
no event has occurred that allows, or after notice or lapse of time would
allow, revocation or termination thereof or results in any other material
impairment of the rights of the Company thereunder. Except as may be
required under the Securities Act and state and foreign Blue Sky laws, no
other Permits are required to enter into, deliver and perform this
Agreement and to issue and sell the Shares.
(h) The Company and each of its subsidiaries owns or possesses legally
enforceable rights to use all trademarks, trademark applications, trade
names, service marks, copyrights, copyright applications, licenses,
know-how and other similar rights and proprietary knowledge (collectively,
"Intangibles") necessary for the conduct of its business. Neither the
Company nor any of its subsidiaries has received any notice of, or is not
aware of, any infringement of or conflict with asserted rights of others
with respect to any Intangibles.
(i) Except as disclosed in the Registration Statement and the
Prospectus, the Company and each of its subsidiaries has good and
marketable title in fee simple to all real property, and good and
marketable title to all other property owned by it, including, without
limitation, all oil and gas producing properties and all assets and
facilities used by the Company and its subsidiaries in the production and
marketing of oil and gas, in each case free and clear of all liens,
encumbrances, claims, security interests and defects, except (A) such as do
not materially affect the value of such property and do not materially
interfere with the use made or proposed to be made of such property by the
Company and its subsidiaries, (B) security interests securing loans under
the Company's senior credit facility and senior subordinated notes, (C)
royalties, overriding royalties and other burdens under oil and gas leases,
(D) easements, restrictions, rights-of-way and other matters that commonly
affect oil and gas properties and (E) liens and encumbrances
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under gas sales contracts, geophysical exploration agreements, operating
agreements, farmout agreements, participation agreements, unitization,
pooling and commutation agreements, declarations and orders and gas sales
contracts, securing payment of amounts not yet due and payable and of a
scope and nature customary in the oil and gas industry. The working
interest in oil, gas and mineral leases or mineral interests which
constitute a portion of the real property held by the Company and its
subsidiaries reflect in all material respects the right of the Company or
its subsidiaries to explore or receive production from such real property,
and the care taken by the Company and its subsidiaries with respect to
acquiring or otherwise procuring such leases or mineral interests was
generally consistent with standard industry practices for acquiring or
procuring leases and interests therein to explore for hydrocarbons. All
property held under lease by the Company and its subsidiaries is held by
them under valid, existing and enforceable leases, free and clear of all
liens, encumbrances, claims, security interests and defects, except such as
would not have a Material Adverse Effect.
(j) There are no litigation or governmental proceedings to which the
Company or any of its subsidiaries are subject or which is pending or, to
the knowledge of the Company, threatened, against the Company or any of its
subsidiaries, which, individually or in the aggregate, might have a
Material Adverse Effect, affect the consummation of this Agreement or which
are required to be disclosed in the Registration Statement and the
Prospectus that are not so disclosed.
(k) Subsequent to the respective dates as of which information is given
in the Registration Statement or the Prospectus, except as described
therein, (i) there has not been any Material Adverse Effect; (ii) neither
the Company nor any of its subsidiaries has sustained any loss or
interference with its assets, businesses or properties (whether owned or
leased) from fire, explosion, earthquake, flood or other calamity, whether
or not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree which would have
a Material Adverse Effect; and (iii) since the date of the latest balance
sheet included in the Registration Statement and the Prospectus, neither
the Company nor its subsidiaries has (A) issued any securities or incurred
any liability or obligation, direct or contingent, for borrowed money,
except such liabilities or obligations incurred in the ordinary course of
business, (B) entered into any transaction not in the ordinary course of
business or (C) except for regular dividends on the shares of the Company's
Series A Preferred Stock and Series B Preferred Stock declared and paid in
accordance with their terms, declared or paid any dividend or made any
distribution on any shares of its stock or redeemed, purchased or otherwise
acquired or agreed to redeem, purchase or otherwise acquire any shares of
its capital stock.
(l) There is no document, contract or other agreement required to be
described in the Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement which is not described or filed as
required by the Securities Act or Rules. Each description of a contract,
document or other agreement in the Registration Statement and the
Prospectus accurately reflects in all respects the terms of the underlying
contract, document or other agreement. Each contract, document or other
agreement described in the Registration Statement and Prospectus or listed
in the Exhibits to the Registration Statement or incorporated by reference
is in full force and effect and is
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valid and enforceable by and against the Company or its subsidiary, as the
case may be, in accordance with its terms. Neither the Company nor any of
its subsidiaries, if a subsidiary is a party, nor to the Company's
knowledge, any other party is in default in the observance or performance
of any term or obligation to be performed by it under any such agreement,
and no event has occurred which with notice or lapse of time or both would
constitute such a default, in any such case which default or event,
individually or in the aggregate, would have a Material Adverse Effect. No
default exists, and no event has occurred which with notice or lapse of
time or both would constitute a default, in the due performance and
observance of any term, covenant or condition, by the Company or its
subsidiary, if a subsidiary is a party thereto, of any other agreement or
instrument to which the Company or any of its subsidiaries is a party or by
which Company or its properties or business or a subsidiary or its
properties or business may be bound or affected which default or event,
individually or in the aggregate, would have a Material Adverse Effect.
(m) Neither the Company nor any of its subsidiaries is in violation of
any term or provision of its charter or by-laws or of any franchise,
license, permit, judgment, decree, order, statute, rule or regulation,
where the consequences of such violation, individually or in the aggregate,
would have a Material Adverse Effect.
(n) Neither the execution, delivery and performance of this Agreement
by the Company nor the consummation of any of the transactions contemplated
hereby (including, without limitation, the issuance and sale by the Company
of the Shares) will give rise to a right to terminate or accelerate the due
date of any payment due under, or conflict with or result in the breach of
any term or provision of, or constitute a default (or an event which with
notice or lapse of time or both would constitute a default) under, or
require any consent or waiver under, or result in the execution or
imposition of any lien, charge or encumbrance upon any properties or assets
of the Company or its subsidiaries pursuant to the terms of, any indenture,
mortgage, deed of trust or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which either the
Company or its subsidiaries or any of their properties or businesses is
bound, or any franchise, license, permit, judgment, decree, order, statute,
rule or regulation applicable to the Company or any of its subsidiaries or
violate any provision of the charter or by-laws of the Company or any of
its subsidiaries, except for such consents or waivers which have already
been obtained and are in full force and effect.
(o) The Company has authorized and outstanding capital stock as set
forth under the captions "Capitalization" and "Description of Capital
Stock" in the Prospectus. The certificates evidencing the Shares are in due
and proper legal form and have been duly authorized for issuance by the
Company. All of the issued and outstanding shares of Common Stock have been
duly and validly issued and are fully paid and nonassessable. There are no
statutory preemptive or other similar rights to subscribe for or to
purchase or acquire any shares of Common Stock of the Company or any of its
subsidiaries or any such rights pursuant to its Certificate of
Incorporation or by-laws or any agreement or instrument to or by which the
Company or any of its subsidiaries is a party or bound. The Shares, when
issued and sold pursuant to this Agreement, will be duly and validly
issued, fully paid and nonassessable and none of them will be issued in
violation of any
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preemptive or other similar right. Except as disclosed in the Registration
Statement and the Prospectus, there is no outstanding option, warrant or
other right calling for the issuance of, and there is no commitment, plan
or arrangement to issue, any share of stock of the Company or any of its
subsidiaries or any security convertible into, or exercisable or
exchangeable for, such stock. The Common Stock and the Shares conform in
all material respects to all statements in relation thereto contained in
the Registration Statement and the Prospectus. All outstanding shares of
capital stock of each of the Company's subsidiaries have been duly
authorized and validly issued, and are fully paid and nonassessable and are
owned directly by the Company or by another wholly-owned subsidiary of the
Company free and clear of any security interests, liens, encumbrances,
equities or claims, other than those described in the Prospectus.
(p) No holder of any security of the Company has any right, which has
not been waived, to have any security owned by such holder included in the
Registration Statement or to demand registration of any security owned by
such holder for a period of 180 days after the date of this Agreement. Each
director and executive officer of the Company and each stockholder of the
Company listed on Schedule III has delivered to the Representatives his
enforceable written lock-up agreement in the form attached to this
Agreement as Exhibit A hereto ("Lock-Up Agreement").
(q) All necessary corporate action has been duly and validly taken by
the Company to authorize the execution, delivery and performance of this
Agreement and the issuance and sale of the Shares by the Company. This
Agreement has been duly and validly authorized, executed and delivered by
the Company and constitute and will constitute legal, valid and binding
obligations of the Company enforceable against the Company in accordance
with their respective terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally and
by general equitable principles.
(r) Neither the Company nor any of its subsidiaries is involved in any
labor dispute nor, to the knowledge of the Company, is any such dispute
threatened, which dispute would have a Material Adverse Effect. The Company
is not aware of any existing or imminent labor disturbance by the employees
of any of its principal suppliers or contractors which would have a
Material Adverse Effect. The Company is not aware of any threatened or
pending litigation between the Company or its subsidiaries and any of its
executive officers and has no reason to believe that such officers will not
remain in the employment of the Company.
(s) No transaction has occurred between or among the Company and any of
its officers or directors, shareholders or any affiliate or affiliates of
any such officer or director or shareholder that is required to be
described in and is not described in the Registration Statement and the
Prospectus.
(t) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be expected to
cause or result in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or
9
manipulation of the price of the Common Stock or any security of the
Company to facilitate the sale or resale of any of the Shares.
(u) The Company and each of its subsidiaries has filed all Federal,
state, local and foreign tax returns which are required to be filed through
the date hereof, which returns are true and correct in all material
respects or has received timely extensions thereof, and has paid all taxes
shown on such returns and all assessments received by it to the extent that
the same are material and have become due. There are no tax audits or
investigations pending, which if adversely determined would have a Material
Adverse Effect; nor are there any material proposed additional tax
assessments against the Company or any of its subsidiaries.
(v) The Shares have been duly authorized for quotation on the National
Association of Securities Dealers Automated Quotation ("Nasdaq") National
Market System, subject to official notice of issuance.
(w) The Company has taken no action designed to, or likely to have the
effect of, terminating the registration of the Common Stock under the
Exchange Act or the quotation of the Common Stock on the Nasdaq National
Market, nor has the Company received any notification that the Commission
or the Nasdaq National Market is contemplating terminating such
registration or quotation.
(x) The consolidated books, records and accounts of the Company
accurately and fairly reflect, in reasonable detail, the transactions in,
and dispositions of, the assets of, and the results of operations of, the
Company and its subsidiaries. The Company and each of its subsidiaries
maintains a system of internal accounting controls sufficient to provide
reasonable assurances 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
accordance 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 with respect to any
differences.
(y) The written engineering reports prepared by Xxxxxx, Xxxxxxxxx &
Associates, Inc. ("Xxxxxx, Xxxxxxxxx"), an oil and gas engineering
consulting firm, as of December 31, 2002, setting forth the engineering
values attributed to the oil and gas properties of the Company and its
subsidiaries accurately reflect in all material respects the ownership
interests of the Company and its subsidiaries in the properties therein as
of December 31, 2002, except as otherwise disclosed in the Registration
Statement and the Prospectus. The information furnished by the Company to
Xxxxxx, Xxxxxxxxx for purposes of preparing its report, including, without
limitation, production, costs of operation and development, current prices
for production, agreements relating to current and future operations and
sales of production, was true, correct and complete in all material
respects on the date supplied and was prepared in accordance with customary
industry practices; Xxxxxx, Xxxxxxxxx & Associates, Inc., independent
petroleum
10
consultants, who prepared estimates of the extent and value of proved oil
and natural gas reserves, are independent with respect to the Company.
(z) The Company and its subsidiaries are insured by insurers of
recognized financial responsibility against such losses and risks and in
such amounts as are customary in the businesses in which they are engaged
or propose to engage after giving effect to the transactions described in
the Prospectus; all policies of insurance and fidelity or surety bonds
insuring the Company or any of its subsidiaries or the Company's or its
subsidiaries' respective businesses, assets, employees, officers and
directors are in full force and effect; the Company and each of its
subsidiaries are in compliance with the terms of such policies and
instruments in all material respects; and neither the Company nor any
subsidiary of the Company has any reason to believe that it will not be
able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that is not materially greater
than the current cost. Neither the Company nor any of its subsidiaries has
been denied any insurance coverage which it has sought or for which it has
applied.
(aa) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed by
the Company (except such additional steps as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") or may be
necessary to qualify the Shares for public offering by the Underwriters
under the state securities or Blue Sky laws) has been obtained or made and
is in full force and effect.
(bb) There are no affiliations with the NASD among the Company's
officers, directors or, to the best of the knowledge of the Company, any
five percent or greater stockholder of the Company, except as set forth in
the Registration Statement or otherwise disclosed in writing to the
Representatives.
(cc) (i) Each of the Company and each of its subsidiaries is in
compliance in all material respects with all rules, laws and regulation
relating to the use, treatment, storage and disposal of toxic substances
and protection of health or the environment ("Environmental Law") which are
applicable to its business; (ii) neither the Company nor its subsidiaries
has received any notice from any governmental authority or third party of
an asserted claim under Environmental Laws; (iii) each of the Company and
each of its subsidiaries has received all permits, licenses or other
approvals required of it under applicable Environmental Laws to conduct its
business and is in compliance with all terms and conditions of any such
permit, license or approval; (iv) to the Company's knowledge, no facts
currently exist that will require the Company or any of its subsidiaries to
make future material capital expenditures to comply with Environmental
Laws; and (v) no property which is or has been owned, leased or occupied by
the Company or its subsidiaries has been designated as a Superfund site
pursuant to the Comprehensive Environmental Response, Compensation of
Liability Act of 1980, as amended (42 U.S.C. Section 9601, et. seq.)
("CERCLA") or otherwise designated as a
11
contaminated site under applicable state or local law. Neither the Company
nor any of its subsidiaries has been named as a "potentially responsible
party" under the CERCLA.
(dd) In the ordinary course of its business, the Company periodically
reviews the effect of Environmental Laws on the business, operations and
properties of the Company and its subsidiaries, in the course of which the
Company identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures
required for clean-up, closure of properties or compliance with
Environmental Laws, or any permit, license or approval, any related
constraints on operating activities and any potential liabilities to third
parties). On the basis of such review, the Company has reasonably concluded
that such associated costs and liabilities would not, singly or in the
aggregate, have a Material Adverse Effect.
(ee) The Company is not and, after giving effect to the offering and
sale of the Shares and the application of proceeds thereof as described in
the Prospectus, will not be an "investment company" within the meaning of
the Investment Company Act of 1940, as amended (the "Investment Company
Act").
(ff) The Company or any other person associated with or acting on
behalf of the Company including, without limitation, any director, officer,
agent or employee of the Company or its subsidiaries, has not, directly or
indirectly, while acting on behalf of the Company or its subsidiaries (i)
used any corporate funds for unlawful contributions, gifts, entertainment
or other unlawful expenses relating to political activity; (ii) made any
unlawful payment to foreign or domestic government officials or employees
or to foreign or domestic political parties or campaigns from corporate
funds; (iii) violated any provision of the Foreign Corrupt Practices Act of
1977, as amended; or (iv) made any other unlawful payment.
(gg) Except as described in the Prospectus or in the documents
incorporated by reference into the Prospectus, the Company has not sold or
issued any shares of Common Stock during the six-month period preceding the
date of the Prospectus, including any sales pursuant to Rule 144A under, or
Regulations D or S of, the Securities Act, other than shares issued
pursuant to employee benefit plans, qualified stock options plans or other
employee compensation plans or pursuant to outstanding options, rights or
warrants.
(hh) The Company has fulfilled its obligations, if any, under the
minimum funding standards of Section 302 of the U.S. Employee Retirement
Income Security Act of 1974 ("ERISA") and the regulations and published
interpretations thereunder with respect to each "plan" as defined in
Section 3(3) of ERISA and such regulations and published interpretations in
which its employees are eligible to participate and each such plan is in
compliance in all material respects with the presently applicable
provisions of ERISA and such regulations and published interpretations. No
"Reportable Event" (as defined in 12 ERISA) has occurred with respect to
any "Pension Plan" (as defined in ERISA) for which the Company could have
any liability.
12
(ii) Each of the Company, its directors and officers has not
distributed and will not distribute prior to the later of (i) the Firm
Shares Closing Date, or the Option Shares Closing Date, and (ii) completion
of the distribution of the Shares, any offering material in connection with
the offering and sale of the Shares other than any Preliminary Prospectus,
the Prospectus, the Registration Statement and other materials, if any,
permitted by the Securities Act.
3. Representations and Warranties of the Selling Stockholders. Each of
the Selling Stockholders hereby represents and warrants to each Underwriter as
of the date hereof and as of the Firm Shares Closing Date as follows:
(a) The Selling Stockholder has caused certificates for the number of
Shares to be sold by such Selling Stockholder hereunder to be delivered to
_______________ (the "Custodian"), endorsed in blank or with blank stock
powers duly executed, with a signature appropriately guaranteed, such
certificates to be held in custody by the Custodian for delivery, pursuant
to the provisions of this Agreement and an agreement dated ____________
among the Custodian and the Selling Stockholders substantially in the form
attached hereto as Exhibit B (the "Custody Agreement").
(b) The Selling Stockholder has granted an irrevocable power of
attorney substantially in the form attached hereto as Exhibit C (the "Power
of Attorney") to the person named therein, on behalf of the Selling
Stockholder, to execute and deliver this Agreement and any other document
necessary or desirable in connection with the transactions contemplated
hereby and to deliver the shares to be sold by each the Selling Stockholder
pursuant hereto.
(c) This Agreement, the Custody Agreement, the Power of Attorney and
the Lock-Up Agreement have each been duly authorized, executed and
delivered by or on behalf of the Selling Stockholder and, assuming due
authorization, execution and delivery by the other parties thereto,
constitutes the valid and legally binding agreement of the Selling
Stockholder, enforceable against the Selling Stockholder in accordance with
its terms.
(d) The execution and delivery by the Selling Stockholder of this
Agreement and the performance by the Selling Stockholder of its obligations
under this Agreement, including the sale and delivery of the Shares to be
sold by the Selling Stockholder and the consummation of the transactions
contemplated herein and compliance by the Selling Stockholder with its
obligations hereunder, do not and will not, whether with our without the
giving of notice or the passage of time or both, (i) violate or contravene
any provision of the charter or bylaws or other organizational instrument
of the Selling Stockholder, if applicable, or any applicable law, statute,
regulation, or filing or any agreement or other instrument binding upon the
Selling Stockholder or any judgment, order or decree of any governmental
body, agency or court having jurisdiction over the Selling Stockholder,
(ii) conflict with or constitute a breach of, or default under, or result
in the creation or imposition of any tax, lien, charge or encumbrance upon
the shares to be sold by the Selling Stockholder or any property or assets
of the Selling Stockholder pursuant to the terms of any agreement or
instrument to which the Selling Stockholder is a party or by
13
which the Selling Stockholder may be bound or to which any of the property
or assets of the Selling Stockholder is subject or (iii) require any
consent, approval, authorization or order of or registration or filing with
any court or governmental agency or body having jurisdiction over it,
except such as may be required by the Blue Sky laws of the various states
in connection with the offer and sale of the Shares which have been or will
be effected in accordance with this Agreement.
(e) The Selling Stockholder has, and on the Firm Shares Closing Date
will have, valid and marketable title to the Shares to be sold by the
Selling Stockholder free and clear of any lien, claim, security interest or
other encumbrance, including, without limitation, any restriction on
transfer, except as otherwise described in the Registration Statement and
Prospectus.
(f) The Selling Stockholder has, and on the Firm Shares Closing Date
will have, full legal right, power and authority, and any approval required
by law, to sell, assign, transfer and deliver the Shares to be sold by the
Selling Stockholder in the manner provided by this Agreement.
(g) Upon delivery of and payment for the Shares to be sold by the
Selling Stockholder pursuant to this Agreement, assuming each Underwriter
has no notice of any adverse claim, the several Underwriters will receive
valid and marketable title to such Shares free and clear of any lien,
claim, mortgage, pledge, security interest or other encumbrance.
(h) All information relating to the Selling Stockholder furnished in
writing by the Selling Stockholder expressly for use in the Registration
Statement and Prospectus is, and on each Closing Date will be, true,
correct, and complete, and does not, and on each Closing Date will not,
contain any untrue statement of a material fact or omit to state any
material fact necessary to make such information not misleading.
(i) The Selling Stockholder has reviewed the Registration Statement and
Prospectus and, although the Selling Stockholder has not independently
verified the accuracy or completeness of all the information contained
therein, nothing has come to the attention of the Selling Stockholder that
would lead the Selling Stockholder to believe that (i) on the Effective
Date, the Registration Statement contained any untrue statement of a
material fact or omitted to state any material fact required to be stated
therein in order to make the statements made therein not misleading and
(ii) on the Effective Date the Prospectus contained and, on each Closing
Date contains, no untrue statement of a material fact or omitted or omits
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
misleading.
(j) The sale of Shares by the Selling Stockholder pursuant to this
Agreement is not prompted by the Selling Stockholder's knowledge of any
material information concerning the Company or any of its subsidiaries
which is not set forth in the Prospectus.
14
(k) The Selling Stockholder has not taken and will not take, directly
or indirectly, any action designed to or that might reasonably be expected
to cause or result in stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares.
(l) The Selling Stockholder has no actual knowledge that any
representation or warranty of the Company set forth in Section 2 above is
untrue or inaccurate in any material respect.
(m) The representations and warranties of the Selling Stockholder in
the Custody Agreement are and on each Closing Date will be, true and
correct.
4. Conditions of the Underwriters' Obligations. The obligations of the
Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) Notification that the Registration Statement has become effective
shall have been received by the Representatives and the Prospectus shall
have been timely filed with the Commission in accordance with Section 5(a)
of this Agreement.
(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and no
order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the Commission, and any requests for additional information
on the part of the Commission (to be included in the Registration Statement
or the Prospectus or otherwise) shall have been complied with to the
satisfaction of the Commission and the Representatives. If the Company has
elected to rely upon Rule 430A, Rule 430A information previously omitted
from the effective Registration Statement pursuant to Rule 430A shall have
been transmitted to the Commission for filing pursuant to Rule 424(b)
within the prescribed time period and the Company shall have provided
evidence satisfactory to the Underwriters of such timely filing, or a
post-effective amendment providing such information shall have been
promptly filed and declared effective in accordance with the requirements
of Rule 430A.
(c) The representations and warranties of the Company and the Selling
Stockholders contained in this Agreement and in the certificates delivered
pursuant to Section 4(d) shall be true and correct when made and on and as
of each Closing Date as if made on such date. The Company and the Selling
Stockholders shall have performed all covenants and agreements and
satisfied all the conditions contained in this Agreement required to be
performed or satisfied by them at or before such Closing Date.
(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date,
of the chief executive or chief operating officer and the chief financial
officer or chief accounting officer of the Company to the effect that: (i)
the representations, warranties and agreements of the Company in this
Agreement were true and correct when made and are true and correct as of
such Closing Date; (ii) the Company has performed all covenants
15
and agreements and satisfied all conditions contained herein; (iii) they
have carefully examined the Registration Statement and the Prospectus and,
in their opinion (A) as of the Effective Date and as of the Closing Date,
the Registration Statement and Prospectus did not include any untrue
statement of a material fact and did not omit to state a material fact
required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading,
and (B) since the Effective Date no event has occurred which should have
been set forth in a supplement or otherwise required an amendment to the
Registration Statement or the Prospectus; and (iv) no stop order suspending
the effectiveness of the Registration Statement has been issued and, to
their knowledge, no proceedings for that purpose have been instituted or
are pending under the Securities Act.
(e) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date,
of each Selling Stockholder, to the effect that: (i) the representations,
warranties and agreements of each Selling Stockholder in this Agreement
were true and correct when made and are true and correct as of such Closing
Date; (ii) each Selling Stockholder has performed all covenants and
agreements and satisfied all conditions contained herein; and (iii) each
Selling Stockholder has carefully examined the Registration Statement and
the Prospectus and, in the opinion of such Selling Stockholder, (A) with
respect to the information relating to such Selling Stockholder, as of the
Effective Date, the Registration Statement and Prospectus did not include
any untrue statement of a material fact and did not omit to state a
material fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading, and (B) since the Effective Date no event has
occurred with respect to such Selling Stockholder which should have been
set forth in a supplement or otherwise required an amendment to the
Registration Statement or the Prospectus.
(f) The Representatives shall have received, at the time this Agreement
is executed and on each Closing Date a signed letter from
PricewaterhouseCoopers LLP addressed to the Representatives and dated,
respectively, the date of this Agreement and each such Closing Date, in
form and substance reasonably satisfactory to the Representatives
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 contained in the
Registration Statement and the Prospectus.
(g) The Representatives shall have received on each Closing Date from
Xxxxxxxx & Xxxxxx L.L.P., counsel for the Company, an opinion, addressed to
the Representatives and dated such Closing Date, and stating in effect
that:
(i) Each of the Company and its subsidiaries has been duly
organized and is validly existing as a corporation in good standing
under the laws of the State of Delaware. Each of the Company and its
subsidiaries is duly qualified to transact business and is in good
standing as a foreign corporation in each jurisdiction in which the
character or location of its assets or properties or the nature of its
business makes such qualification necessary, except where the
16
failure to so qualify or to be in good standing, individually or in
the aggregate, would not have a Material Adverse Effect.
(ii) Each of the Company and its subsidiaries has all requisite
corporate power and authority to own, lease and operate its properties
and to conduct its business as now being conducted and as described in
the Registration Statement and the Prospectus and with respect to the
Company to enter into and perform its obligations under this Agreement
and to issue and sell the Shares.
(iii) The authorized, issued and outstanding capital stock of the
Company is as set forth in the Registration Statement and the
Prospectus under the caption "Capitalization" as of the dates stated
therein and, since such dates, there has been no change in the capital
stock of the Company except for subsequent issuances, if any, pursuant
to this Agreement or pursuant to reservations, agreements or employee
benefit plans referred to in the Prospectus or pursuant to the
exercise of convertible securities or options referred to in the
Prospectus; all of the outstanding shares of capital stock of the
Company have been duly and validly authorized and issued and are fully
paid and nonassessable and none of them was issued in violation of any
preemptive or other similar right. The Shares to be issued and sold by
the Company pursuant to this Agreement have been duly authorized for
issuance and sale to the Underwriters pursuant to this Agreement and,
when issued and delivered by the Company pursuant to this Agreement
against payment of the consideration set forth herein, will be validly
issued, fully paid and nonassessable, and no holder of the Shares is
or will be subject to personal liability by reason of being such a
holder. The issuance and sale of the Shares by the Company and the
sale of the shares by the Selling Stockholders is not subject to any
preemptive or other similar rights of any securityholder of the
Company. To the best of such counsel's knowledge, except as disclosed
in the Registration Statement and the Prospectus, there are no
preemptive or other rights to subscribe for or to purchase or any
restriction upon the voting or transfer of any securities of the
Company pursuant to the Company's Certificate of Incorporation or
by-laws or other governing documents or any agreements or other
instruments to which the Company is a party or by which it is bound.
To the best of such counsel's knowledge, except as disclosed in the
Registration Statement and the Prospectus, there is no outstanding
option, warrant or other right calling for the issuance of, and no
commitment, plan or arrangement to issue, any share of stock of the
Company or any security convertible into, exercisable for, or
exchangeable for stock of the Company. The Common Stock, the Shares
and the Warrants conform in all material respects to the descriptions
thereof contained in the Registration Statement and the Prospectus.
The form of certificate used to evidence the Common Stock complies in
all material respects with all applicable statutory requirements, with
any applicable requirements of the Certificate of Incorporation or
By-laws of the Company and the requirements of the Nasdaq National
Market. To the best of such counsel's knowledge, there are no persons
with registration rights or other similar rights to have any
securities registered pursuant to the Registration Statement or
otherwise registered by the Company under the Securities Act.
17
(iv) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares.
This Agreement has been duly and validly authorized, executed and
delivered by the Company and this Agreement constitutes the legal,
valid and binding obligation of the Company enforceable against the
Company in accordance with their respective terms except as such
enforceability may be limited by applicable bankruptcy, insolvency,
fraudulent conveyance, reorganization, moratorium and other similar
laws affecting the enforcement of creditors' rights generally and by
general equitable principles.
(v) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) will give rise to a
right to terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or any event which with notice
or lapse of time, or both, would constitute a default) under, or
require consent or waiver under, or result in the execution or
imposition of any lien, charge, claim, security interest or
encumbrance upon any properties or assets of the Company or any of it
subsidiaries pursuant to the terms of, any indenture, mortgage, deed
trust, note or other agreement or instrument of which such counsel is
aware and to which the Company or any of its subsidiaries is a party
or by which either the Company or any of its subsidiaries or any of
their assets or properties or businesses is bound, or any franchise,
license, permit, judgment, decree, order, statute, rule or regulation,
domestic or foreign, of which such counsel is aware or violate any
provision of the charter or by-laws of the Company or any of its
subsidiaries.
(vi) No consent, approval, authorization, license, registration,
qualification or order of any court or governmental agency or
regulatory body is required for the due authorization, execution,
delivery or performance of this Agreement by the Company or the
consummation of the transactions contemplated hereby or thereby,
except such as have been obtained under the Securities Act and such as
may be required under state securities or Blue Sky laws in connection
with the purchase and distribution of the Shares by the several
Underwriters.
(vii) To the best of such counsel's knowledge, there is no any
action, suit, proceeding or other investigation, before any court or
before or by any public body or board pending or threatened against,
or involving the assets, properties or businesses of, the Company
which is required to be disclosed in the Registration Statement and
the Prospectus and is not so disclosed or which could reasonably be
expected to have a Material Adverse Effect.
(viii) The statements in the Prospectus under the captions
"Description of Capital Stock," and in the Company's annual report on
Form 10-K for the year ended December 31, 2002 and its quarterly
report for the quarter
18
ended March 31, 2003 under the caption "Legal Proceedings," insofar as
such statements constitute a summary of documents referred to therein
or matters of law, are accurate in all material respects and
accurately present the information with respect to such documents and
matters. Accurate copies of all contracts and other documents required
to be filed as exhibits to, or described in, the Registration
Statement have been so filed with the Commission or are fairly
described in the Registration Statement, as the case may be.
(ix) (A) Each of the Company and its subsidiaries is in
compliance in all material respects with all applicable Environmental
Laws; (B) none of the Company or its subsidiaries received any notice
from any governmental authority or third party of an asserted claim
under any Environmental Law; (C) each of the Company and its
Subsidiaries has received all permits, licenses or other approvals
required of it under applicable Environmental Laws to conduct its
business and is in compliance with all terms and conditions of any
such permit, license or approval, except where such failure to receive
required permits, licenses or other approvals or failure to comply
with the terms and conditions of such permits, licenses or other
approvals would not, singly or in the aggregate, have a Material
Adverse Effect; and (D) no property which is or has been owned, leased
or occupied by the Company or its subsidiaries has been designated as
a Superfund site pursuant to the Comprehensive Environmental Response,
Compensation of Liability Act of 1980, as amended (42 U.S.C. Section
9601, et seq.), or otherwise designated as a contaminated site under
applicable state or local law.
(x) The Registration Statement, all Preliminary Prospectuses and
the Prospectus and each amendment or supplement thereto (except for
the financial statements and schedules and other financial data
included therein, as to which such counsel expresses no opinion)
comply as to form in all material respects with the requirements of
the Securities Act and the Rules and the documents incorporated by
reference in the Registration Statement, all Preliminary Prospectuses
and the Prospectuses and any further amendment or supplement to any
such incorporated document made by the Company (except for the
financial statements and schedules and other financial data included
therein, as to which such counsel expresses no opinion) when they
became effective or were filed with the Commission, as the case may
be, complied as to form in all material respects with the requirements
of the Securities Act or the Exchange Act, as applicable, and the
rules and regulations of the Commission thereunder.
(xi) The Registration Statement is effective under the Securities
Act, and to such counsel's knowledge no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or are threatened,
pending or contemplated. Any required filing of the Prospectus and any
supplement thereto pursuant to Rule 424(b) under the Securities Act
has been made in the manner and within the time period required by
such Rule 424(b).
19
(xii) The Shares have been approved for listing on the Nasdaq
National Market.
(xiii) The capital stock of the Company conforms in all material
respects to the description thereof contained in the Prospectus under
the caption "Description of Capital Stock."
(xiv) The Company is not 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.
To the extent deemed advisable by such counsel, such counsel may rely
as to matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Representatives as to matters which are governed by laws other than the laws of
the State of New York, the General Corporation Law of the State of Delaware and
the Federal laws of the United States; provided that such counsel shall state
that in their opinion the Underwriters and they are justified in relying on such
other opinions. Copies of such certificates and other opinions shall be
furnished to the Representatives and counsel for the Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent certified public accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus (except as
specified in the foregoing opinion), on the basis of the foregoing, no facts
have come to the attention of such counsel which lead such counsel to believe
that (i) the Registration Statement at the time it became effective (except with
respect to the financial statements and notes and schedules thereto and other
financial data, as to which such counsel need express no belief) contained any
untrue statement of a material fact or omitted to state a material fact required
to be stated therein or necessary to make the statements therein not misleading,
or that the Prospectus as amended or supplemented (except with respect to the
financial statements, notes and schedules thereto and other financial data, as
to which such counsel need make no statement) on the date thereof contained any
untrue statement of a material fact or omitted to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading or (ii) any document
incorporated by reference in the Prospectus or any further amendment or
supplement to any such incorporated document made by the Company, when they
became effective or were filed with the Commission, as the case may be,
contained, in the case of a registration statement which became effective under
the Securities Act, 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 not misleading, or, in the case of other documents which were
filed under the Exchange Act with the Commission, an untrue statement of a
material fact or omitted to state a material
20
fact necessary in order to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(h) The Representatives shall have received on the Firm Shares Closing
Date from one or more counsels for the Selling Stockholders acceptable to
the Representatives, an opinion, addressed to the Representatives and dated
such Closing Date, and stating in effect that:
(i) This Agreement has been duly authorized, executed and
delivered by or on behalf of each Selling Stockholder.
(ii) Each of the Custody Agreement, the Power of Attorney and the
Lock-up Agreement has been duly authorized, executed and delivered by
each Selling Stockholder.
(iii) This Agreement, the Custody Agreement, the Power of
Attorney and the Lock-Up Agreement each constitute the legal, valid
and binding obligation of each Selling Stockholder enforceable against
each Selling Stockholder in accordance with its terms except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or other similar laws affecting the
enforcement of creditors' rights generally and by general equitable
principles.
(iv) Each Selling Stockholder has the legal right, power and
authority to enter into this Agreement and to sell, transfer and
deliver in the manner provided in this Agreement, the Shares to be
sold by the Selling Stockholders hereunder.
(v) The execution, delivery and performance of this Agreement,
the Power of Attorney, the Custody Agreement and the Lock-Up Agreement
and the sale and delivery by each Selling Stockholder of the Shares to
be sold by Selling Stockholders as contemplated by this Agreement and
the consummation of the transactions contemplated in this Agreement
and in the Registration Statement and the Prospectus and compliance by
the Selling Stockholders with its obligations hereunder do not and
will not, whether with or without the giving of notice or passage of
time or both, conflict with or constitute a breach of, or default
under or result in the creation or imposition of any tax, lien, charge
or encumbrance upon the Shares or any property or assets of such
Selling Stockholder pursuant to, any contract, indenture, mortgage,
deed of trust, loan or credit agreement, note, license, lease or other
instrument or agreement to which such Selling Stockholder is a party
or by which such Selling Stockholder may be bound, or to which any of
the property or assets of such Selling Stockholder may be subject nor
will such action result in any violation of the provisions of the
charter or by-laws of such Selling Stockholder, if applicable, or any
law, administrative regulation, judgment or order of any governmental
agency or body or any administrative or court decree having
jurisdiction over such Selling Stockholder or any of its properties.
21
(vi) To the best of such counsel's knowledge, each Selling
Stockholder has valid and marketable title to the Shares to be sold by
such Selling Stockholder pursuant to this Agreement, free and clear of
any pledge, lien, security interest, charge, claim, equity or
encumbrance of any kind, and has full right, power and authority to
sell, transfer and deliver such Shares pursuant to this Agreement. By
delivery of a certificate or certificates therefor each Selling
Stockholder will transfer to the Underwriters who have purchased such
Shares pursuant to this Agreement (without notice of any defect in the
title of each Selling Stockholder and who are otherwise bona fide
purchasers for purposes of the Uniform Commercial Code) valid and
marketable title to such Shares, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of any kind.
(vii) No filing with, consent, approval, authorization, license,
certificate, permit or order of any court, governmental or regulatory
agency, authority or body or financial institution is required in
connection with the performance of this Agreement, the Custody
Agreement, the Power of Attorney or the Lock-up Agreement by each
Selling Stockholder or the consummation of the transactions
contemplated hereby or thereby, including the delivery and sale of the
Shares to be delivered and sold by each Selling Stockholder, except
such as may be required under state securities or blue sky laws in
connection with the purchase and distribution of the Shares by the
several Underwriters.
To the extent deemed advisable by such counsel, such counsel may rely
as to matters of fact on certificates of the Selling Stockholders and on the
opinions of other counsel satisfactory to the Representatives as to matters
which are governed by laws other than the laws of the State of New York and the
General Corporate Law of the State of Delaware or the Federal laws of the United
States; provided that such counsel shall state that in their opinion the
Underwriters and they are justified in relying on such other opinions. Copies of
such certificates and other opinions shall be furnished to the Representatives
and counsel for the Underwriters.
(i) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be reasonably
satisfactory in form and substance to the Representatives, and their counsel and
the Underwriters shall have received from Xxxxxx & Xxxxxx L.L.P. a favorable
opinion, addressed to the Representatives and dated such Closing Date, with
respect to the Shares, the Registration Statement and the Prospectus, and such
other related matters, as the Representatives may reasonably request, and the
Company shall have furnished to Xxxxxx & Xxxxxx L.L.P. such documents as they
may reasonably request for the purpose of enabling them to pass upon such
matters.
(j) The Representatives shall have received copies of the Lock-up
Agreements executed by each entity or person listed on Schedule III hereto.
(k) The Shares shall have been approved for quotation on the Nasdaq
National Market, subject only to official notice of issuance.
22
(l) The Company and each Selling Stockholder shall have furnished or
caused to be furnished to the Representatives such further certificates or
documents as the Representatives shall have reasonably requested.
5. Covenants of the Company.
(a) The Company covenants and agrees as follows:
(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of
this Agreement, and any amendments thereto, to become effective as
promptly as possible. The Company shall prepare the Prospectus in a
form approved by the Representatives and file such Prospectus pursuant
to Rule 424(b) under the Securities Act not later than the Commission's
close of business on the second business day following the execution
and delivery of this Agreement, or, if applicable, such earlier time as
may be required by the Rules.
(ii) The Company shall promptly advise the Representatives in
writing (A) when any post-effective amendment to the Registration
Statement shall have become effective or any supplement to the
Prospectus shall have been filed, (B) of any request by the Commission
for any amendment of the Registration Statement or the Prospectus or
for any additional information, (C) of 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 the institution or threatening of any
proceeding for that purpose and (D) of the receipt by the Company of
any notification with respect to the suspension of the qualification of
the Shares for sale in any jurisdiction or the initiation or
threatening of any proceeding for such purpose. The Company shall not
file any amendment of the Registration Statement or supplement to the
Prospectus or any document incorporated by reference in the
Registration Statement unless the Company has furnished the
Representatives a copy for its review prior to filing and shall not
file any such proposed amendment or supplement to which the
Representatives reasonably object. The Company shall use its best
efforts to prevent the issuance of any such stop order and, if issued,
to obtain as soon as possible the withdrawal thereof.
(iii) If, at any time when a prospectus relating to the Shares
is required to be delivered under the Securities Act and the Rules, any
event occurs as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material fact or
omit to state any material fact necessary to make the statements
therein in the light of the circumstances under which they were made
not misleading, or if it shall be necessary to amend or supplement the
Prospectus to comply with the Securities Act or the Rules, the Company
promptly shall prepare and file with the Commission, subject to the
second sentence of paragraph (ii) of this Section 5(a), an amendment or
supplement which shall correct such statement or omission or an
amendment which shall effect such compliance.
23
(iv) The Company shall make generally available to its
security holders and to the Representatives as soon as practicable, but
not later than 45 days after the end of the 12-month period beginning
at the end of the fiscal quarter of the Company during which the
Effective Date occurs (or 90 days if such 12-month period coincides
with the Company's fiscal year), an earning statement (which need not
be audited) of the Company, covering such 12-month period, which shall
satisfy the provisions of Section 11(a) of the Securities Act or Rule
158 of the Rules.
(v) The Company shall furnish to the Representatives and
counsel for the Underwriters, without charge, signed copies of the
Registration Statement (including all exhibits thereto and amendments
thereof) and to each other Underwriter a copy of the Registration
Statement (without exhibits thereto) and all amendments thereof and, so
long as delivery of a prospectus by an Underwriter or dealer may be
required by the Securities Act or the Rules, as many copies of any
preliminary prospectus and the Prospectus and any amendments thereof
and supplements thereto as the Representatives may reasonably request.
If applicable, the copies of the Registration Statement and Prospectus
and each amendment and supplement thereto furnished to the Underwriters
will be identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the extent
permitted by Regulation S-T.
(vi) The Company shall cooperate with the Representatives and
their counsel in endeavoring to qualify the Shares for offer and sale
in connection with the offering under the laws of such jurisdictions as
the Representatives may designate and shall maintain such
qualifications in effect so long as required for the distribution of
the Shares; provided, however, that the Company shall not be required
in connection therewith, as a condition thereof, to qualify as a
foreign corporation or to execute a general consent to service of
process in any jurisdiction or subject itself to taxation as doing
business in any jurisdiction.
(vii) The Company, during the period when the Prospectus is
required to be delivered under the Securities Act and the Rules or the
Exchange Act, will file all reports and other documents required to be
filed with the Commission pursuant to Section 13, 14 or 15 of the
Exchange Act within the time periods required by the Exchange Act and
the regulations promulgated thereunder.
(viii) Without the prior written consent of CIBC World Markets
Corp., for a period of 180 days after the date of this Agreement, the
Company and each of its individual directors and executive officers
shall not issue, sell or register with the Commission (other than on
Form S-8 or on any successor form), or otherwise dispose of, directly
or indirectly, any equity securities of the Company (or any securities
convertible into, exercisable for or exchangeable for equity securities
of the Company), except for the issuance of the Shares pursuant to the
Registration Statement and the issuance of shares pursuant to the
Company's existing stock option plan or bonus plan as described in the
24
Registration Statement and the Prospectus. In the event that during
this period, (A) any shares are issued pursuant to the Company's
existing stock option plan or bonus plan that are exercisable during
such 180 day period or (B) any registration is effected on Form S-8 or
on any successor form relating to shares that are exercisable during
such 180 period, the Company shall obtain the written agreement of such
grantee or purchaser or holder of such registered securities that, for
a period of 180 days after the date of this Agreement, such person will
not, without the prior written consent of CIBC World Markets Corp.,
offer for sale, sell, distribute, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, or exercise any
registration rights with respect to, any shares of Common Stock (or any
securities convertible into, exercisable for, or exchangeable for any
shares of Common Stock) owned by such person.
(ix) On or before completion of this offering, the Company
shall make all filings required under applicable securities laws and by
the Nasdaq National Market (including any required registration under
the Exchange Act).
(x) Prior to the Closing Date, the Company will issue no press
release or other communications directly or indirectly and hold no
press conference with respect to the Company, the condition, financial
or otherwise, or the earnings, business affairs or business prospects
of any of them, or the offering of the Shares without the prior written
consent of the Representatives unless in the judgment of the Company
and its counsel, and after notification to the Representatives, such
press release or communication is required by law.
(xi) The Company will apply the net proceeds from the offering
of the Shares in the manner set forth under "Use of Proceeds" in the
Prospectus.
(b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of the
obligations of the Company under this Agreement including those relating
to: (i) the preparation, printing, filing and distribution of the
Registration Statement including all exhibits thereto, each preliminary
prospectus, the Prospectus, all amendments and supplements to the
Registration Statement and the Prospectus and any document incorporated by
reference therein, and the printing, filing and distribution of this
Agreement; (ii) the preparation and delivery of certificates for the Shares
to the Underwriters; (iii) the registration or qualification of the Shares
for offer and sale under the securities or Blue Sky laws of the various
jurisdictions referred to in Section 5(a)(vi), including the reasonable
fees and disbursements of counsel for the Underwriters in connection with
such registration and qualification and the preparation, printing,
distribution and shipment of preliminary and supplementary Blue Sky
memoranda; (iv) the furnishing (including costs of shipping and mailing) to
the Representatives and to the Underwriters of copies of each preliminary
prospectus, the Prospectus and all amendments or supplements to the
Prospectus, and of the several documents required by this Section to be so
furnished, as may be reasonably requested for use in connection with the
offering and sale of the Shares by the Underwriters or by dealers to whom
Shares may
25
be sold; (v) the filing fees of the NASD in connection with its review of
the terms of the public offering and reasonable fees and disbursements of
counsel for the Underwriters in connection with such review; (vi) inclusion
of the Shares for quotation on the Nasdaq National Market; and (vii) all
transfer taxes, if any, with respect to the sale and delivery of the Shares
by the Company to the Underwriters. Subject to the provisions of Section 8,
the Underwriters agree to pay, whether or not the transactions contemplated
hereby are consummated or this Agreement is terminated, all costs and
expenses incident to the performance of the obligations of the Underwriters
under this Agreement not payable by the Company pursuant to the preceding
sentence, including, without limitation, the fees and disbursements of
counsel for the Underwriters.
(c) The Selling Stockholders, severally, and not jointly, will pay all
expenses incident to the performance of their respective obligations under,
and the consummation of the transactions contemplated by, this Agreement,
including (i) any stamp duties, capital duties and stock transfer taxes, if
any, payable upon the sale of the Shares to the Underwriters, and their
transfer between the Underwriters pursuant to an agreement between such
Underwriters, and (ii) the fees and disbursements of their respective
counsel and accountants.
6. Indemnification.
(a) The Company and the Selling Stockholders agree, jointly and
severally, to indemnify and hold harmless each Underwriter and each person,
if any, who controls any Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act against any and all
losses, claims, damages and liabilities, joint or several (including any
reasonable investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit or proceeding
or any claim asserted), to which they, or any of them, may become subject
under the Securities Act, the Exchange Act or other Federal or state law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus or any
amendment thereof or supplement thereto, or in any Blue Sky application or
other information or other documents executed by the Company filed in any
state or other jurisdiction to qualify any or all of the Shares under the
securities laws thereof (any such application, document or information
being hereinafter referred to as a "Blue Sky Application") or arise out of
or are based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that such indemnity
shall not inure to the benefit of any Underwriter (or any person
controlling such Underwriter) on account of any losses, claims, damages or
liabilities arising from the sale of the Shares to any person by such
Underwriter if such untrue statement or omission or alleged untrue
statement or omission was made in such preliminary prospectus, the
Registration Statement or the Prospectus, or such amendment or supplement
thereto, or in any Blue Sky Application in reliance upon and in conformity
with information furnished in writing to the Company by the Representatives
on behalf of any Underwriter specifically for use therein; provided
further, that no Selling Stockholder, other than a Selling Stockholder who
is an executive
26
officer of the Company, shall be responsible, pursuant to this indemnity
for losses, claims, expenses, damages or liability arising out of or based
upon information other than information furnished by such Selling
Stockholder specifically for inclusion a preliminary prospectus, the
Registration Statement or the Prospectus, or any amendments or supplements
thereto. Notwithstanding the foregoing, the liability of each Selling
Stockholder pursuant to the provisions of this Section 6(a) shall be
limited to an amount equal to the aggregate net proceeds received by such
Selling Stockholder from the sale of the Shares sold by such Selling
Stockholder hereunder. This indemnity agreement will be in addition to any
liability which the Company and Selling Stockholders may otherwise have.
(b) Each Underwriter agrees to indemnify and hold harmless the Company,
the Selling Stockholders and each person, if any, who controls the Company
or the Selling Stockholders within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each director of the
Company, and each officer of the Company who signs the Registration
Statement, against any losses, claims, damages or liabilities to which such
party may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in any preliminary prospectus, the
Registration Statement or the Prospectus, or any amendment or supplement
thereto, or arise out of or are based upon the omission or alleged omission
to state therein a material fact required to be stated therein or necessary
to make the statements therein not misleading, in each case to the extent,
but only to the extent, that such untrue statement or alleged untrue
statement or omission or alleged omission was made in any preliminary
prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with written
information furnished to the Company by such Underwriter through the
Representative expressly for use therein; provided, however, that the
obligation of each Underwriter to indemnify the Company or the Selling
Stockholders (including any controlling person, director or officer
thereof) shall be limited to the net proceeds received by the Company from
such Underwriter.
(c) Any party that proposes to assert the right to be indemnified under
this Section will, promptly after receipt of notice of commencement of any
action, suit or proceeding against such party in respect of which a claim
is to be made against an indemnifying party or parties under this Section,
notify each such indemnifying party of the commencement of such action,
suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 6(a) or 6(b) shall be available to
any party who shall fail to give notice as provided in this Section 6(c) if
the party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was prejudiced by the failure to
give such notice but the omission so to notify such indemnifying party of
any such action, suit or proceeding shall not relieve it from any liability
that it may have to any indemnified party for contribution or otherwise
than under this Section. In case any such action, suit or proceeding shall
be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
27
defense thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and the approval by
the indemnified party of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses, except as
provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the
defense thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the employment of
counsel by such indemnified party has been authorized in writing by the
indemnifying parties, (ii) the indemnified party shall have been advised by
counsel that there may be one or more legal defenses available to it which
are different from or in addition to those available to the indemnifying
party (in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party) or
(iii) the indemnifying parties shall not have employed counsel to assume
the defense of such action within a reasonable time after notice of the
commencement thereof, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement of any action,
suit, and proceeding or claim effected without its written consent, which
consent shall not be unreasonably withheld or delayed.
7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 6(a) or 6(b) is due in accordance with its terms but for any reason is
unavailable to or insufficient to hold harmless an indemnified party in respect
to any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate losses,
liabilities, claims, damages and expenses (including any investigation, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claims asserted, but
after deducting any contribution received by any person entitled hereunder to
contribution from any person who may be liable for contribution) incurred by
such indemnified party, as incurred, in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other hand from the
offering of the Shares pursuant to this Agreement or, if such allocation is not
permitted by applicable law, in such proportion as is appropriate to reflect not
only the relative benefits referred to above but also the relative fault of the
Company and the Selling Stockholders on the one hand and the 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 Company, the Selling Stockholders and the
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
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. The aggregate amount of losses, liabilities, claims, damages
and expenses incurred by an indemnified party and referred to above shall be
deemed to include nay 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, (i) no Underwriter (except as
may be provided in the Agreement
28
Among Underwriters) shall be required to contribute any amount in excess of the
amount by which the total price at which the shares underwritten by it and
distributed to the public were offered to the public exceeds the amount of
damages which such underwriter has otherwise been required to pay by reason of
any such untrue or alleged untrue statement or omission or alleged omission; and
(ii) no Selling Stockholder shall be required to contribute any amount in excess
of the aggregate net proceeds of the sale of Shares received by such Selling
Stockholder. No person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent
misrepresentation. For purposes of this Section 7, each person, if any, who
controls an Underwriter within the meaning of Section 15 of the Securities Act
or Section 20 of the Exchange Act shall have the same rights to contribution as
such Underwriter, and each director of the Company, each officer of the Company
who signed the Registration Statement, and each person, if any, who controls the
Company or any of the Selling Stockholders within the meaning of the Section 15
of the Securities Act or Section 20 of the Exchange Act, shall have the same
rights to contribution as the Company or any of the Selling Stockholders, as the
case may be. Any party entitled to contribution will, promptly after receipt of
notice of commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another party or
parties under this Section 7, notify such party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
from whom contribution may be sought shall not relieve the party or parties from
whom contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Section 7. No party shall be liable for
contribution with respect to any action, suit, proceeding or claim settled
without its written consent. The Underwriter's obligations to contribute
pursuant to this Section 7 are several in proportion to their respective
underwriting commitments and not joint.
8. Termination.
(a) This Agreement may be terminated with respect to the Shares to be
purchased on a Closing Date by the Representatives by notifying the Company
and the Selling Stockholders at any time at or before a Closing Date in the
absolute discretion of the Representatives if: (i) there has occurred any
material adverse change in the securities markets or any event, act or
occurrence that has materially disrupted, or in the opinion of the
Representatives, will in the future materially disrupt, the securities
markets or there shall be such a material adverse change in general
financial, political or economic conditions or the effect of international
conditions on the financial markets in the United States, including,
without limitation, as a result of terrorist activities, is such as to make
it, in the judgment of the Representatives, inadvisable or impracticable to
market the Shares or enforce contracts for the sale of the Shares; (ii)
there has occurred any outbreak or material escalation of hostilities, acts
of terrorism or other calamity or crisis the effect of which on the
financial markets of the United States is such as to make it, in the
judgment of the Representatives, inadvisable or impracticable to market the
Shares or enforce contracts for the sale of the Shares; (iii) trading in
the Shares or any securities of the Company has been suspended or
materially limited by the Commission or trading generally on the New York
Stock Exchange, Inc., the American Stock Exchange, Inc. or the Nasdaq
National Market has been suspended or materially limited, or minimum or
maximum ranges for prices for securities shall have been fixed, or maximum
ranges for
29
prices for securities have been required, by said any of said exchanges or
by such system or by order of the Commission, the National Association of
Securities Dealers, Inc., or any other governmental or regulatory
authority; or (iv) a banking moratorium has been declared by any state or
Federal authority; or (v) in the judgment of the Representatives, there has
been, since the time of execution of this Agreement or since the respective
dates as of which information is given in the Prospectus, any material
adverse change in the assets, properties, condition, financial or
otherwise, or in the results of operations, business affairs or business
prospects of the Company and its subsidiaries considered as a whole,
whether or not arising in the ordinary course of business.
(b) If this Agreement is terminated pursuant to any of its provisions,
neither the Company nor the Selling Stockholders shall be under any
liability to any Underwriter, and no Underwriter shall be under any
liability to the Company or a Selling Stockholder, except that (y) if this
Agreement is terminated by the Representatives or the Underwriters because
of any failure, refusal or inability on the part of the Company or the
Selling Stockholders to comply with the terms or to fulfill any of the
conditions of this Agreement, the Company will reimburse the Underwriters
for all out-of-pocket expenses (including the reasonable fees and
disbursements of their counsel) incurred by them in connection with the
proposed purchase and sale of the Shares or in contemplation of performing
their obligations hereunder and (z) no Underwriter who shall have failed or
refused to purchase the Shares agreed to be purchased by it under this
Agreement, without some reason sufficient hereunder to justify cancellation
or termination of its obligations under this Agreement, shall be relieved
of liability to the Company, the Selling Stockholders or to the other
Underwriters for damages occasioned by its failure or refusal.
9. Substitution of Underwriters. If any Underwriter shall default in
its obligation to purchase on any Closing Date the Shares agreed to be purchased
hereunder on such Closing Date, the Representatives shall have the right, within
36 hours thereafter, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase such Shares on the terms
contained herein. If, however, the Representatives shall not have completed such
arrangements within such 36-hour period, then the Company shall be entitled to a
further period of thirty-six hours within which to procure another party or
other parties satisfactory to the Underwriters to purchase such Shares on such
terms. If, after giving effect to any arrangements for the purchase of the
Shares of a defaulting Underwriter or Underwriters by the Representatives and
the Company as provided above, the aggregate number of Shares which remains
unpurchased on such Closing Date does not exceed one-eleventh of the aggregate
number of all the Shares that all the Underwriters are obligated to purchase on
such date, then the Company shall have the right to require each non-defaulting
Underwriter to purchase the number of Shares which such Underwriter agreed to
purchase hereunder at such date and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of Shares which
such Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default. In any such case, either the Representatives or the Company shall have
the right to postpone the applicable Closing Date for a period of not more than
seven days in order to effect any necessary changes and arrangements (including
any necessary amendments or supplements to the
30
Registration Statement or Prospectus or any other documents), and the Company
agrees to file promptly any amendments to the Registration Statement or the
Prospectus which in the opinion of the Company and the Underwriters and their
counsel may thereby be make necessary.
If, after giving effect to any arrangements for the purchase of the Shares
of a defaulting Underwriter or Underwriters by the Representatives and the
Company as provided above, the aggregate number of such Shares which remains
unpurchased exceeds 10% of the aggregate number of all the Shares to be
purchased at such date, then this Agreement, or, with respect to a Closing Date
which occurs after the First Closing Date, the obligations of the Underwriters
to purchase and of the Company, as the case may be, to sell the Option Shares to
be purchased and sold on such date, shall terminate, without liability on the
part of any non-defaulting Underwriter to the Company, and without liability on
the part of the Company, except as provided in Sections 5(b), 6, 7 and 8. The
provisions of this Section 9 shall not in any way affect the liability of any
defaulting Underwriter to the Company or the nondefaulting Underwriters arising
out of such default. The term "Underwriter" as used in this Agreement shall
include any person substituted under this Section 9 with like effect as if such
person had originally been a party to this Agreement with respect to such
Shares.
10. Miscellaneous. The respective agreements, representations, warranties,
indemnities and other statements of the Company, Selling Stockholders and the
several Underwriters, as set forth in this Agreement or made by or on behalf of
them pursuant to this Agreement, shall remain in full force and effect,
regardless of any investigation (or any statement as to the results thereof)
made by or on behalf of any Underwriter or the Company or the Selling
Stockholders or any of their respective officers, directors or controlling
persons referred to in Sections 6 and 7 hereof, and shall survive delivery of
and payment for the Shares. In addition, the provisions of Sections 5(b), 6, 7
and 8 shall survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the Underwriters,
the Company and the Selling Stockholders and their respective successors and
assigns, and, to the extent expressed herein, for the benefit of persons
controlling any of the Underwriters, or the Company, and directors and officers
of the Company, and their respective successors and assigns, and no other person
shall acquire or have any right under or by virtue of this Agreement. The term
"successors and assigns" shall not include any purchaser of Shares from any
Underwriter merely because of such purchase.
All notices and communications hereunder shall be in writing and mailed or
delivered or by telephone or telegraph if subsequently confirmed in writing, (a)
if to the Representatives, c/o CIBC World Markets Corp., 000 0xx Xxxxxx, 0xx
Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: ________, with a copy to Xxxxxx &
Xxxxxx, 2300 First City Tower, 0000 Xxxxxx, Xxxxxxx, Xxxxx 00000, Attention:
Xxxxx X. Xxxxxx and (b) if to the Company, to its agent for service as such
agent's address appears on the cover page of the Registration Statement with a
copy to __________ and (c) if to the Selling Stockholders to __________ with a
copy to __________.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF NEW YORK.
31
This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement among
us.
Very truly yours,
XXXXXXX EXPLORATION COMPANY
By
------------------------
Title:
SELLING STOCKHOLDERS
By
------------------------
Title:
Confirmed:
CIBC WORLD MARKETS CORP.
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I annexed
hereto.
By CIBC WORLD MARKETS CORP.
By
------------------------
Title:
32
SCHEDULE I
Number of Number of
Firm Shares to Firm Shares to
Be Purchased From Be Purchased From the
Name the Company Selling Stockholders
--------------------------------- ----------------- ---------------------
CIBC World Markets Corp.
Xxxxxxx Xxxxx & Associates, Inc.
Xxxxxxx Rice & Company L.L.C.
Total
----------------- ---------------------
Sch I - 1
SCHEDULE II
Number of
Firm Shares to
Name of Selling Stockholders Be Sold
---------------------------- --------------
--------------
Total
Sch II - 1
SCHEDULE III
Lock-up Signatories
Sch III - 1
Exhibit A
FORM OF LOCK-UP AGREEMENT
_____, 2003
CIBC World Markets Corp.
As Representative of the Several Underwriters
c/o CIBC World Markets Corp.
CIBC World Markets Tower
World Financial Center
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Public Offering of Common Stock of
Gentlemen:
The undersigned, a holder of common stock ("Common Stock") or rights to
acquire Common Stock, of Xxxxxxx Exploration Company (the "Company") understands
that the Company intends to file a Registration Statement on Form S-2 (the
"Registration Statement") with the Securities and Exchange Commission (the
"Commission") on or about June 6, 2003 for the registration of approximately
__________ shares of Common Stock (including ___________ shares subject to an
over-allotment option on the part of the Underwriters) (the "Offering"). The
undersigned further understands that you are contemplating entering into an
Underwriting Agreement with the Company in connection with the Offering.
In order to induce the Company, you and the other Underwriters to enter
into the
Underwriting Agreement and to proceed with the Offering, the
undersigned agrees, for the benefit of the Company, you and the other
Underwriters, that should the Offering be effected the undersigned will not,
without your prior written consent, directly or indirectly, make any offer,
sale, assignment, transfer, encumbrance, contract to sell, grant of an option to
purchase or other disposition of any Common Stock beneficially owned (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended) by
the undersigned on the date hereof or hereafter acquired for a period of 180
days subsequent to the date of the
Underwriting Agreement, other than Common
Stock to be sold in the Offering or transferred as a gift or gifts (provided
that any donee thereof agrees in writing to be bound by the terms hereof).
The undersigned, whether or not participating in the Offering, confirms
that he, she or it understands that the Underwriters and the Company will rely
upon the representations set forth in this agreement in proceeding with the
Offering. This agreement shall be binding on the undersigned and his, her or its
respective successors, heirs, personal representatives and assigns.
The undersigned agrees and consents to the entry of stop transfer instructions
with the Company's transfer agent against the transfer of Common Stock or
securities convertible into or exchangeable or exercisable for Common Stock held
by the undersigned except in compliance with this agreement.
Very truly yours,
Dated: , 2003
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Signature
Printed Name and Title (if applicable)
