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EXHIBIT 1.1
QUEEN SAND RESOURCES, INC.
10,000,000 SHARES OF COMMON STOCK
UNDERWRITING AGREEMENT
_______, 2000
FRIEDMAN, BILLINGS, XXXXXX & CO., INC.
as Representative of the several Underwriters
c/o Friedman, Billings, Xxxxxx & Co., Inc.
0000 00xx Xxxxxx Xxxxx
Xxxxxxxxx, Xxxxxxxx 00000
Dear Sirs:
Queen Sand Resources, a Delaware corporation (the "Company"), confirms
its agreement with Friedman, Billings, Xxxxxx & Co., Inc. and each of the other
Underwriters listed on Schedule I hereto (collectively, the "Underwriters"), for
whom Friedman, Billings, Xxxxxx & Co., Inc. is acting as representative (in such
capacity, the "Representative"), with respect to (i) the sale by the Company and
the purchase by the Underwriters, acting severally and not jointly, of the
respective numbers of shares of Common Stock, par value $0.234 per share, of the
Company ("Common Stock") set forth in Schedule I hereto and (ii) the grant by
the Company to the Underwriters, acting severally and not jointly, of the option
described in Section 1(b) hereof to purchase all or any part of 1,500,000
additional shares of Common Stock to cover over-allotments, if any. The
10,000,000 shares of Common Stock (the "Initial Shares") to be purchased by the
Underwriters and all or any part of the 1,500,000 shares of Common Stock subject
to the option described in Section 1(b) hereof (the "Option Shares") are
hereinafter called, collectively, the "Shares".
The Company understands that the Underwriters propose to make a public
offering of the Shares as soon as the Underwriters deem advisable after this
Agreement has been executed and delivered.
The Company has filed with the Securities and Exchange Commission (the
"Commission"), a registration statement on Form S-2 (No. 333-41992) and a
related preliminary prospectus for the registration of the Shares under the
Securities Act of 1933, as amended (the "Securities Act"), and the rules and
regulations thereunder (the "Securities Act Regulations"). The Company has
prepared
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and filed such amendments thereto, if any, and such amended preliminary
prospectuses, if any, as may have been required to the date hereof, and will
file such additional amendments thereto and such amended prospectuses as may
hereafter be required. The registration statement has been declared effective
under the Securities Act by the Commission. The registration statement as
amended at the time it became effective (including all information deemed to be
a part of the registration statement at the time it became effective pursuant to
Rule 430A(b) of the Securities Act Regulations) is hereinafter called the
"Registration Statement," except that, if the Company files a post-effective
amendment to such registration statement which becomes effective prior to the
Closing Time (as defined below), "Registration Statement" shall refer to such
registration statement as so amended. Any registration statement filed pursuant
to Rule 462(b) of the Securities Act Regulations is hereinafter called the "Rule
462(b) Registration Statement," and after such filing the term "Registration
Statement" shall include the Rule 462(b) Registration Statement. Each prospectus
included in the registration statement, or amendments thereof or supplements
thereto, before it became effective under the Securities Act and any prospectus
filed with the Commission by the Company with the consent of the Underwriters
pursuant to Rule 424(a) of the Securities Act Regulations is hereinafter called
the "Preliminary Prospectus." The term "Prospectus" means the final prospectus,
as first filed with the Commission pursuant to paragraph (1) or (4) of Rule
424(b) of the Securities Act Regulations, and any amendments thereof or
supplements thereto. The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus.
The Company and the Underwriters agree as follows:
1. Sale and Purchase:
(a) Initial Shares. Upon the basis of the warranties and
representations and other terms and conditions herein set forth, the Company
agrees to sell to each Underwriter, severally and not jointly, and each
Underwriter agrees, severally and not jointly, to purchase from the Company at
the purchase price per share of $____, the number of Initial Shares set forth in
Schedule I opposite such Underwriter's name, plus any additional number of
Initial Shares which such Underwriter may become obligated to purchase pursuant
to the provisions of Section 8 hereof, subject in each case to such adjustments
among the Underwriters as the Representative in its sole discretion shall make
to eliminate any sales or purchases of fractional shares. The Underwriters may
from time to time increase or decrease the public offering price after the
initial public offering to such extent as the Underwriters may determine.
(b) Option Shares. In addition, upon the basis of the warranties and
representations and other terms and conditions herein set forth, the Company
hereby grants an option to the Underwriters, severally and not jointly, to
purchase from the Company up to an aggregate of 1,500,000 Option Shares at the
purchase price per share set forth in paragraph (a) above plus any additional
number of Option Shares which such Underwriter may become obligated to purchase
pursuant to the provisions of Section 8 hereof. The option hereby granted will
expire 30 days after the date hereof and may be exercised in whole or in part
from time to time only for the purpose of covering over-allotments which may be
made in connection with the offering and distribution of the
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Initial Shares upon notice by the Representative to the Company setting forth
the number of Option Shares as to which the several Underwriters are then
exercising the option and the time and date of payment and delivery for such
Option Shares. Any such time and date of delivery (a "Date of Delivery") shall
be determined by the Representative, but shall not be later than three full
business days (or earlier, without the consent of the Company, than two full
business days) after the exercise of said option, nor in any event prior to the
Closing Time, as hereinafter defined. If the option is exercised as to all or
any portion of the Option Shares, each of the Underwriters, acting severally and
not jointly, will purchase that proportion of the total number of Option Shares
then being purchased which the number of Initial Shares set forth in Schedule I
opposite the name of such Underwriter bears to the total number of Initial
Shares, subject in each case to such adjustments as the Representative in its
sole discretion shall make to eliminate any sales or purchases of fractional
shares. The Underwriters may from time to time increase or decrease the public
offering price of the Option Shares after the initial public offering to such
extent as the Underwriters may determine.
2. Payment and Delivery:
(a) Initial Shares. Payment of the purchase price for the Initial
Shares shall be made to the Company by wire transfer of immediately available
funds or certified or official bank check payable in federal (same-day) funds at
the offices of Fulbright & Xxxxxxxx L.L.P. located at 0000 Xxxx Xxxxxx, Xxxxx
0000, Xxxxxx, Xxxxx 00000 (unless another place shall be agreed upon by the
Representative and the Company) against delivery of the certificates for the
Initial Shares to the Representative for the respective accounts of the
Underwriters. Such payment and delivery shall be made at 9:30 a.m., New York
City time, on the third (or fourth, if pricing occurs after 4:30 p.m., New York
City time) business day after the date hereof (unless another time, not later
than ten business days after such date, shall be agreed to by the Representative
and the Company). The time at which such payment and delivery are actually made
is hereinafter sometimes called the "Closing Time." Certificates for the Initial
Shares shall be delivered to the Representative in definitive form registered in
such names and in such denominations as the Representative shall specify. For
the purpose of expediting the checking of the certificates for the Initial
Shares by the Representative, the Company agrees to make such certificates
available to the Representative for such purpose at least one full business day
preceding the Closing Time.
(b) Option Shares. In addition, payment of the purchase price for the
Option Shares shall be made to the Company by wire transfer of immediately
available funds or certified or official bank check payable in federal
(same-day) funds at the offices of Fulbright & Xxxxxxxx L.L.P. located at 0000
Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 (unless another place shall be
agreed upon by the Representative and the Company), against delivery of the
certificates for the Option Shares to the Representative for the respective
accounts of the Underwriters. Such payment and delivery shall be made at 9:30
a.m., New York City time, on each Date of Delivery. Certificates for the Option
Shares shall be delivered to the Representative in definitive form registered in
such names and in such denominations as the Representative shall specify. For
the purpose of expediting the checking of the certificates for the Option Shares
by the Representative, the Company agrees to make such certificates available to
the Representative for such purpose at least one full business day preceding the
relevant Date of Delivery.
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3. Representations and Warranties of the Company: The Company
represents and warrants to the Underwriters that:
(a) the Company's current business operations and investments and its
contemplated business operations and investments as described in the Prospectus
constitute permissible activities and investments for a corporation organized
under the Delaware General Corporation Law;
(b) the Company has an authorized capitalization as set forth in the
Prospectus under the caption "Capitalization"; the outstanding shares of capital
stock of the Company and its direct and indirect subsidiaries (the
"Subsidiaries") have been duly and validly authorized and issued and are fully
paid and non-assessable, and all of the outstanding shares of capital stock of
the Subsidiaries are directly or indirectly owned of record and beneficially by
the Company; except as disclosed in the Prospectus, there are no outstanding (i)
securities or obligations of the Company or any of its Subsidiaries convertible
into or exchangeable for any capital stock of the Company or any such
Subsidiary, (ii) warrants, rights or options to subscribe for or purchase from
the Company or any such Subsidiary any such capital stock or any such
convertible or exchangeable securities or obligations, or (iii) obligations of
the Company or any such Subsidiary to issue any shares of capital stock, any
such convertible or exchangeable securities or obligation, or any such warrants,
rights or options;
(c) each of the Company and its Subsidiaries (all of which are named in
Exhibit 21.1 to the Registration Statement) has been duly incorporated and is
validly existing as a corporation in good standing under the laws of its
respective jurisdiction of incorporation with full corporate power and authority
to own its respective properties and to conduct its respective business as
described in the Registration Statement and Prospectus and, in the case of the
Company, to execute and deliver this Agreement and the other agreements
described in the Prospectus, including but not limited to the Settlement
Agreement dated July 17, 2000 among the Company and the stockholders named
therein and the Participation Agreement dated July 17, 2000 among the Company
and the holders of its 12 1/2% senior notes named therein and any other
agreement entered into for the purpose of consummating the recapitalization of
the Company's capital stock (the "Recapitalization") and effecting the offering
of common stock described herein (collectively, the "Other Transaction
Documents");
(d) the Company and all of its Subsidiaries are duly qualified or
licensed by each jurisdiction in which they conduct their respective businesses
and in which the failure, individually or in the aggregate, to be so qualified
or licensed could have a material adverse effect on the assets, operations,
business or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole, and the Company and its Subsidiaries are duly
qualified, and are in good standing, in each jurisdiction in which they own or
lease real property or maintain an office and in which such qualification is
necessary, except where the failure to be so qualified and in good standing
would not have a material adverse effect on the assets, operations, business or
condition (financial or otherwise) of the Company and its Subsidiaries taken as
a whole; except as disclosed in the Prospectus, no Subsidiary is prohibited or
restricted, directly or indirectly, from paying dividends to the Company, or
from making any other distribution with respect to such Subsidiary's capital
stock or from paying the Company or any other Subsidiary, any loans or advances
to such Subsidiary from the Company
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or such other Subsidiary, or from transferring any such Subsidiary's property or
assets to the Company or to any other Subsidiary; other than as disclosed in the
Prospectus, the Company does not own, directly or indirectly, any capital stock
or other equity securities of any other corporation or any ownership interest in
any partnership, joint venture or other association;
(e) the Company and its Subsidiaries are in compliance in all material
respects with all applicable laws, rules, regulations, orders, decrees and
judgments, including those relating to transactions with affiliates;
(f) except as disclosed in the Prospectus, neither the Company nor any
of its Subsidiaries is in breach of, or in default under (nor has any event
occurred which with notice, lapse of time or both would constitute a breach of
or default under), its respective articles or certificate of incorporation or
charter or by-laws or in the performance or observance of any obligation,
agreement, covenant or condition contained in any license, indenture, mortgage,
deed of trust, loan or credit agreement or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which any of them
or their respective properties is bound, except for such breaches or defaults
which would not have a material adverse effect on the assets, operations,
business or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole, and the execution, delivery and performance of
this Agreement and the Other Transaction Documents and consummation of the
transactions contemplated hereby and thereby will not conflict with, or result
in any breach of, or constitute a default under (nor constitute any event which
with notice, lapse of time, or both would constitute a breach of or default
under), (i) any provision of the articles or certificate of incorporation or
charter or by-laws of the Company or any of its Subsidiaries, or (ii) any
provision of any license, indenture, mortgage, deed of trust, loan or credit
agreement or other agreement or instrument to which the Company or any of its
Subsidiaries is a party or by which any of them or their respective properties
may be bound or affected, or under any federal, state, local or foreign law,
regulation or rule or any decree, judgment or order applicable to the Company or
any of its Subsidiaries, except in the case of this clause (ii) for such
breaches or defaults which would not have a material adverse effect on the
assets, operations, business or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole; or result in the creation or
imposition of any lien, charge, claim or encumbrance upon any property or asset
of the Company or its Subsidiaries;
(g) this Agreement and the Other Transaction Documents have been duly
authorized, executed and delivered by the Company and are legal, valid and
binding agreements of the Company enforceable in accordance with their terms,
except as may be limited by bankruptcy, insolvency, reorganization, moratorium
or other similar laws affecting creditors' rights generally, and by general
principles of equity, and except to the extent that the indemnification and
contribution provisions of Section 9 hereof may be limited by federal or state
securities laws and public policy considerations in respect thereof;
(h) no approval, authorization, consent or order of or filing with any
federal, state or local governmental or regulatory commission, board, body,
authority or agency is required in connection with the execution, delivery and
performance of this Agreement and the Other Transaction Documents, the
consummation of the transactions contemplated hereby and thereby, the sale and
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delivery of the Shares, other than (A) such as have been obtained, or will have
been obtained at the Closing Time or the relevant Date of Delivery, as the case
may be, under the Securities Act, (B) such approvals as have been obtained in
connection with the approval of the quotation of the Shares on the Nasdaq
National Market and (C) any necessary qualification under the securities or blue
sky laws of the various jurisdictions in which the Shares are being offered by
the Underwriters;
(i) each of the Company and its Subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all necessary
filings required under any federal, state or local law, regulation or rule, and
has obtained all necessary authorizations, consents and approvals from other
persons, required in order to conduct their respective businesses as described
in the Prospectus, except to the extent that any failure to have any such
licenses, authorizations, consents or approvals, to make any such filings or to
obtain any such authorizations, consents or approvals would not, individually or
in the aggregate, have a material adverse effect on the assets, operations,
business or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole; neither the Company nor any of its Subsidiaries
is in violation of, in default under, or has received any notice regarding a
possible violation, default or revocation of any such license, authorization,
consent or approval or any federal, state, local or foreign law, regulation or
rule or any decree, order or judgment applicable to the Company or any of its
Subsidiaries the effect of which could be material and adverse to the assets,
operations, business or condition (financial or otherwise) of the Company and
its Subsidiaries taken as a whole; and no such license, authorization, consent
or approval contains a materially burdensome restriction that is not adequately
disclosed in the Registration Statement and the Prospectus;
(j) each of the Registration Statement and any Rule 462(b) Registration
Statement has become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company, are threatened by the Commission, and any request on
the part of the Commission for additional information has been complied with;
(k) the Preliminary Prospectus and the Registration Statement comply
and the Prospectus and any further amendments or supplements thereto will, when
they have become effective or are filed with the Commission, as the case may be,
comply in all material respects with the requirements of the Securities Act and
the Securities Act Regulations; the Registration Statement did not, and any
amendment thereto will not, in each case as of the applicable effective date,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading; and
the Preliminary Prospectus does not, and the Prospectus or any amendment or
supplement thereto will not, as of the applicable filing date and at the Closing
Time and on each Date of Delivery (if any), contain an untrue statement of a
material fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however, that the Company
makes no warranty or representation with respect to any statement contained in
the Registration Statement or the Prospectus in reliance upon and in conformity
with the information concerning the
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Underwriters and furnished in writing by or on behalf of the Underwriters
through the Representative to the Company expressly for use in the Registration
Statement or the Prospectus (that information being limited to that described in
the last sentence of the first paragraph of Section 9(b) hereof);
(l) the Preliminary Prospectus was and the Prospectus delivered to the
Underwriters for use in connection with this offering will be identical to the
versions of the Preliminary Prospectus and Prospectus created to be transmitted
to the Commission for filing via the Commission's Electronic Data Gathering
Analysis and Retrieval ("XXXXX") System, except to the extent permitted by
Regulation S-T of the Securities Act Regulations;
(m) all legal or governmental proceedings, contracts or documents of a
character required to be filed as exhibits to the Registration Statement or to
be summarized or described in the Prospectus have been so filed, summarized or
described as required;
(n) except as disclosed in the Prospectus, there are no actions, suits,
proceedings, inquiries or investigations pending or, to the Company's knowledge,
threatened against the Company or any of its Subsidiaries or any of their
respective officers and directors or to which the properties, assets or rights
of any such entity are subject, at law or in equity, before or by any federal,
state, local or foreign governmental or regulatory commission, board, body,
authority, arbitral panel or agency which could result in a judgment, decree,
award or order having a material adverse effect on the assets, operations,
business or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole;
(o) the financial statements, including the notes thereto, included in
the Registration Statement and the Prospectus present fairly the consolidated
financial position of the Company and its Subsidiaries as of the dates indicated
and the consolidated results of operations and changes in financial position and
cash flows of the Company and its Subsidiaries for the periods specified; such
financial statements have been prepared in conformity with generally accepted
accounting principles applied on a consistent basis during the periods involved
(except as indicated in the notes thereto); the financial statement schedules
included in the Registration Statement and the amounts in the Prospectus under
the captions "Summary -- Summary Consolidated Financial Information" and
"Selected Consolidated Financial Data" fairly present the information shown
therein and have been compiled on a basis consistent with the financial
statements included in the Registration Statement and the Prospectus; the
unaudited pro forma financial information (including the related notes) included
in the Prospectus or any Preliminary Prospectus complies as to form in all
material respects to the applicable accounting requirements of the Securities
Act and the Securities Act Regulations, and management of the Company believes
that the assumptions underlying the pro forma adjustments are reasonable; such
pro forma adjustments have been properly applied to the historical amounts in
the compilation of the unaudited proforma financial information and such
unaudited proforma financial information fairly presents with respect to the
Company and its Subsidiaries the financial position, results of operations and
other information purported to be shown therein at the respective dates and for
the respective periods specified;
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(p) Ernst & Young LLP, whose reports on the consolidated financial
statements of the Company and its Subsidiaries are filed with the Commission as
part of the Registration Statement and Prospectus, are and were during the
periods covered by their reports independent public accountants as required by
the Securities Act and the Securities Act Regulations;
(q) subsequent to the respective dates as of which information is given
in the Registration Statement and the Prospectus, and except as may be otherwise
stated in the Registration Statement or Prospectus, there has not been (A) any
material adverse change, in the assets, liabilities, capital, operations,
business or condition (financial or otherwise), present or prospective, of the
Company and its Subsidiaries taken as a whole, whether or not arising in the
ordinary course of business, (B) any transaction contemplated or entered into by
the Company or any of its Subsidiaries that is material to the Company and its
Subsidiaries taken as a whole, (C) any obligation, contingent or otherwise,
directly or indirectly incurred by the Company or any of its Subsidiaries, that
is material to the Company and its Subsidiaries taken as a whole or (D) any
dividend or distribution of any kind declared, paid or made by the Company on
any class of its capital stock;
(r) the Company is not, and upon the sale of the Shares as herein
contemplated will not be, an investment company required to register under the
Investment Company Act of 1940, as amended;
(s) the Shares conform in all material respects to the description
thereof contained in the Registration Statement and the Prospectus;
(t) other than as described in the Prospectus with respect to rights
being extinguished pursuant to the Recapitalization, there are no persons with
registration or other similar rights to have any securities registered pursuant
to the Registration Statement or otherwise registered by the Company under the
Securities Act;
(u) the Shares have been duly authorized and, when the Shares have been
issued and duly delivered against payment therefor as contemplated by this
Agreement, the Shares will be validly issued, fully paid and nonassessable, free
and clear of any pledge, lien, encumbrance, security interest or other claim,
and the issuance and sale of the Shares by the Company is not subject to
preemptive or other similar rights arising by operation of law, under the
articles of incorporation or by-laws of the Company, under any agreement to
which the Company or any of its Subsidiaries is a party or otherwise, other than
as described in the Prospectus with respect to rights being extinguished
pursuant to the Recapitalization;
(v) the Company has not taken, and will not take, directly or
indirectly, any action which is designed to or which has constituted or which
might reasonably be expected to cause or result in stabilization or manipulation
of the price of any security of the Company to facilitate the sale or resale of
the Shares;
(w) neither the Company nor any of its affiliates (i) is required to
register as a "broker" or "dealer" in accordance with the provisions of the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), or the rules
and regulations thereunder, or (ii) directly, or indirectly through one or more
intermediaries, controls or has any other association with (within the meaning
of Article 1
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of the By-laws of the National Association of Securities Dealers, Inc. (the
"NASD")) any member firm of the NASD;
(x) the Company has not relied upon the Representative or legal counsel
for the Representative for any legal, tax or accounting advice in connection
with the offering and sale of the Shares;
(y) any certificate signed by any officer of the Company or any
Subsidiary delivered to the Representative or to counsel for the Underwriters
pursuant to or in connection with this Agreement shall be deemed a
representation and warranty by the Company to each Underwriter as to the matters
covered thereby;
(z) 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 and by-laws of the
Company and the requirements of the Nasdaq National Market;
(aa) the Company and the Subsidiaries have good and marketable title in
fee simple to all real property, if any, and good title to all personal property
owned by them, in each case free and clear of all liens, security interests,
pledges, charges, encumbrances, mortgages and defects, except such as are
disclosed in the Prospectus or such as do not materially and adversely affect
the value of such property and do not interfere with the use made or proposed to
be made of such property by the Company and the Subsidiaries; and any real
property and buildings held under lease by the Company or any Subsidiary are
held under valid, existing and enforceable leases, with such exceptions as are
disclosed in the Prospectus or are not material and do not interfere with the
use made or proposed to be made of such property and buildings by the Company or
such Subsidiary;
(bb) the descriptions in the Registration Statement and the Prospectus
of the contracts, leases and other legal documents therein described present
fairly the information required to be shown, and there are no contracts, leases,
or other documents of a character required to be described in the Registration
Statement or the Prospectus or to be filed as exhibits to the Registration
Statement which are not described or filed as required;
(cc) the Company and each Subsidiary owns or possesses adequate license
or other rights to use all patents, trademarks, service marks, trade names,
copyrights, software and design licenses, trade secrets, manufacturing
processes, other intangible property rights and know-how (collectively
"Intangibles") necessary to entitle the Company and each Subsidiary to conduct
its business as described in the Prospectus, and neither the Company, nor any
Subsidiary, has received notice of infringement of or conflict with (and knows
of no such infringement of or conflict with) asserted rights of others with
respect to any Intangibles which could materially and adversely affect the
business, prospects, properties, assets, results of operations or condition
(financial or otherwise) of the Company or any Subsidiary;
(dd) the Company and each of its Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurance that (i)
transactions are executed in accordance with management's general or specific
authorizations; (ii) transactions are recorded as necessary to
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permit preparation of financial statements in conformity with generally accepted
accounting principles and to maintain asset accountability; (iii) access to
assets is permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
the existing assets at reasonable intervals and appropriate action is taken with
respect to any differences;
(ee) each of the Company and the Subsidiaries has filed on a timely
basis all necessary federal, state, local and foreign income and franchise tax
returns required to be filed through the date hereof and has paid all taxes
shown as due thereon; and no tax deficiency has been asserted against any such
entity, nor does any such entity know of any tax deficiency which is likely to
be asserted against any such entity which if determined adversely to any such
entity, could materially adversely affect the business, prospects, properties,
assets, results of operations or condition (financial or otherwise) of any such
entity, respectively; all tax liabilities are adequately provided for on the
respective books of such entities;
(ff) each of the Company and its Subsidiaries maintains insurance
(issued by insurers of recognized financial responsibility) of the types and in
the amounts generally deemed adequate for their respective businesses and
consistent with insurance coverage maintained by similar companies in similar
businesses, including, but not limited to, insurance covering real and personal
property owned or leased by the Company and its Subsidiaries against theft,
damage, destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect;
(gg) neither the Company nor any of its Subsidiaries has violated, or
received notice of any violation with respect to, any applicable environmental,
safety or similar law applicable to the business of the Company or any of its
Subsidiaries, nor any federal or state law relating to discrimination in the
hiring, promotion or pay of employees, nor any applicable federal or state wages
and hours law, nor any provisions of the Employee Retirement Income Security Act
of 1974, as amended, or the rules and regulations promulgated thereunder, the
violation of any of which could have a material adverse effect on the business,
earnings, prospects, properties, assets, results of operations or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a whole;
(hh) neither the Company nor any of its Subsidiaries nor any officer or
director purporting to act on behalf of the Company or any of its Subsidiaries
has at any time (i) made any contributions to any candidate for political
office, or failed to disclose fully any such contributions, in violation of law,
(ii) made any payment to any state, federal or foreign governmental officer or
official, or other person charged with similar public or quasi-public duties,
other than payments required or allowed by applicable law, (iii) made any
payment outside the ordinary course of business to any investment officer or
loan broker or person charged with similar duties of any entity to which the
Company or any of its Subsidiaries sells or from which the Company or any of its
Subsidiaries buys loans or servicing arrangements for the purpose of influencing
such agent, officer, broker or person to buy loans or servicing arrangements
from or sell loans to the Company or any of its Subsidiaries, or (iv) engaged in
any transactions, maintained any bank account or used any corporate funds except
for transactions, bank accounts and funds which have been and are reflected in
the normally maintained books and records of the Company and its Subsidiaries;
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(ii) except as otherwise disclosed in the Prospectus, there are no
material outstanding loans or advances or material guarantees of indebtedness by
the Company or any of its Subsidiaries to or for the benefit of any of the
officers or directors of the Company or any of its Subsidiaries or any of the
members of the families of any of them;
(jj) neither the Company nor any of its Subsidiaries nor, to the
Company's knowledge, any employee or agent of the Company or any of its
Subsidiaries, has made any payment of funds of the Company or of any of its
Subsidiaries or received or retained any funds in violation of any law, rule or
regulation or of a character required to be disclosed in the Prospectus;
(kk) all securities issued by the Company or any of its Subsidiaries
have been issued and sold in compliance with all applicable federal and state
securities laws;
(ll) in connection with this offering, the Company has not offered and
will not offer its Common Stock or any other securities convertible into or
exchangeable or exercisable for Common stock in a manner in violation of the
Securities Act; the Company has not distributed and will not distribute any
Prospectus or other offering material in connection with the offer and sale of
the Shares; and
(mm) the Company has not incurred any liability for any finder's fees
or similar payments in connection with the transactions herein contemplated.
4. Certain Covenants of the Company: The Company hereby agrees with
each Underwriter:
(a) to furnish such information as may be required and otherwise to
cooperate in qualifying the Shares for offering and sale under the securities or
blue sky laws of such states as the Representative may designate and to maintain
such qualifications in effect as long as required for the distribution of the
Shares, provided that the Company shall not be required to qualify as a foreign
corporation or to consent to the service of process under the laws of any such
state (except service of process with respect to the offering and sale of the
Shares);
(b) to prepare the Prospectus in a form approved by the Underwriters
and file such Prospectus with the Commission pursuant to Rule 424(b) not later
than 10 a.m. (New York City time), on the day following the execution and
delivery of this Agreement and to furnish promptly (and with respect to the
initial delivery of such Prospectus, not later than 10 a.m. (New York City time)
on the day following the execution and delivery of this Agreement) to the
Underwriters as many copies of the Prospectus (or of the Prospectus as amended
or supplemented if the Company shall have made any amendments or supplements
thereto after the effective date of the Registration Statement) as the
Underwriters may reasonably request for the purposes contemplated by the
Securities Act Regulations, which Prospectus and any amendments or supplements
thereto furnished to the Underwriters will be identical to the version created
to be transmitted to the Commission for filing via XXXXX, except to the extent
permitted by Regulation S-T of the Securities Act Regulations;
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(c) to advise the Representative promptly and (if requested by the
Representative) to confirm such advice in writing, when the Registration
Statement has become effective and when any post-effective amendment thereto
becomes effective under the Securities Act Regulations;
(d) to advise the Representative immediately, confirming such advice in
writing, of (i) the receipt of any comments from, or any request by, the
Commission for amendments or supplements to the Registration Statement or
Prospectus or for additional information with respect thereto, or (ii) 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 Prospectus, or of the suspension of the
qualification of the Shares for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes and, if
the Commission or any other government agency or authority should issue any such
order, to make every reasonable effort to obtain the lifting or removal of such
order as soon as possible; to advise the Representative promptly of any proposal
to amend or supplement the Registration Statement or Prospectus and to file no
such amendment or supplement to which the Representative shall reasonably object
in writing;
(e) to furnish to the Underwriters for a period of five years from the
date of this Agreement (i) as soon as available, copies of all annual, quarterly
and current reports or other communications supplied to holders of shares of
Common Stock, (ii) as soon as practicable after the filing thereof, copies of
all reports filed by the Company with the Commission, the NASD or any securities
exchange and (iii) such other information as the Underwriters may reasonably
request regarding the Company and its Subsidiaries;
(f) to advise the Underwriters promptly of the happening of any event
known to the Company within the time during which a Prospectus relating to the
Shares is required to be delivered under the Securities Act Regulations which,
in the judgment of the Company, would require the making of any change in the
Prospectus then being used so that the Prospectus would not include an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading, and, during such time,
to prepare and furnish, at the Company's expense, to the Underwriters promptly
such amendments or supplements to such Prospectus as may be necessary to reflect
any such change and to furnish to the Underwriters a copy of such proposed
amendment or supplement before filing any such amendment or supplement with the
Commission;
(g) to furnish promptly to the Representative a signed copy of the
Registration Statement, as initially filed with the Commission, and of all
amendments or supplements thereto (including all exhibits filed therewith or
incorporated by reference therein) and such number of conformed copies of the
foregoing as the Underwriters may reasonably request;
(h) to furnish to the Underwriters, not less than two business days
before filing with the Commission subsequent to the effective date of the
Prospectus and during the period referred to in
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paragraph (f) above, a copy of any document proposed to be filed with the
Commission pursuant to Section 13, 14, or 15(d) of the Exchange Act;
(i) to apply the net proceeds of the sale of the Shares in accordance
with the statements under the caption "Use of Proceeds" in the Prospectus;
(j) to make generally available to its security holders as soon as
practicable, but in any event not later than the end of the fiscal quarter first
occurring after the first anniversary of the effective date of the Registration
Statement an earnings statement complying with the provisions of Section 11(a)
of the Securities Act (in form, at the option of the Company, complying with the
provisions of Rule 158 of the Securities Act Regulations) covering a period of
12 months beginning after the effective date of the Registration Statement;
(k) to use its best efforts to effect and maintain the quotation of the
Shares on the Nasdaq National Market and to file with the Nasdaq National Market
all documents and notices required by the Nasdaq National Market;
(l) to refrain during a period of 180 days from the date of the
Prospectus, without the prior written consent of the Representative, from (i)
offering, pledging, selling, contracting to sell, selling any option or contract
to purchase, purchasing any option or contract to sell, granting any option for
the sale of, or otherwise disposing of or transferring, directly or indirectly,
any share of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or filing any registration statement under the
Securities Act with respect to any of the foregoing or (ii) entering into any
swap or any other agreement or any transaction that transfers, in whole or in
part, directly or indirectly, the economic consequence of ownership of the
Common Stock, whether any such swap or transaction described in clause (i) or
(ii) above is to be settled by delivery of Common Stock or such other
securities, in cash or otherwise. The foregoing sentence shall not apply to (A)
the Shares to be sold hereunder or (B) any shares of Common Stock issued by the
Company upon the exercise of an option outstanding on the date hereof and
referred to in the Prospectus;
(m) to not, and to use its best efforts to cause its officers,
directors and affiliates not to, (i) take, directly or indirectly prior to
termination of the underwriting syndicate contemplated by this Agreement, any
action designed to stabilize or manipulate the price of any security of the
Company, or which may cause or result in, or which might in the future
reasonably be expected to cause or result in, the stabilization or manipulation
of the price of any security of the Company, to facilitate the sale or resale of
any of the Shares, (ii) sell, bid for, purchase or pay anyone any compensation
for soliciting purchases of the Shares or (iii) pay or agree to pay to any
person any compensation for soliciting any order to purchase any other
securities of the Company;
(n) if at any time during the 30-day period after the Registration
Statement becomes effective, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in the Representative's
reasonable opinion the market price of the Common Stock has been or is likely to
be materially affected (regardless of whether such rumor, publication or event
necessitates a supplement to or amendment of the Prospectus) and after written
notice from the
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Representative advising the Company to the effect set forth above, to forthwith
prepare, consult with the Representative concerning the substance of, and
disseminate a press release or other public statement, reasonably satisfactory
to the Representative, responding to or commenting on such rumor, publication or
event; and
(o) to file timely and accurate reports with the Commission in
accordance with Rule 463 of the Securities Act Regulations or any successor
provision.
5. Payment of Expenses:
(a) The Company agrees to pay all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the
transactions contemplated hereunder or thereunder are consummated or this
Agreement is terminated, including expenses, fees and taxes in connection with
(i) the preparation and filing of the Registration Statement, each Preliminary
Prospectus, the Prospectus, and any amendments or supplements thereto, and the
printing and furnishing of copies of each thereof to the Underwriters and to
dealers (including costs of mailing and shipment), (ii) the preparation,
issuance and delivery of the certificates for the Shares to the Underwriters,
including any stock or other transfer taxes or duties payable upon the sale of
the Shares to the Underwriters, (iii) the printing of this Agreement and any
dealer agreements and furnishing of copies of each to the Underwriters and to
dealers (including costs of mailing and shipment), (iv) the qualification of the
Shares for offering and sale under state laws that the Company and the
Representative have mutually agreed are appropriate and the determination of
their eligibility for investment under state law as aforesaid (including the
legal fees and filing fees and other disbursements of counsel for the
Underwriters relating thereto) and the printing and furnishing of copies of any
blue sky surveys or legal investment surveys to the Underwriters and to dealers,
(v) filing fees for review of the public offering of the Shares by the NASD,
(vi) the fees and expenses of any transfer agent or registrar for the Shares and
miscellaneous expenses referred to in the Registration Statement, (vii) the fees
and expenses incurred in connection with the quotation of the Shares on the
Nasdaq National Market, (viii) making road show presentations with respect to
the offering of the Shares, (ix) preparing and distributing bound volumes of
transaction documents for the Representative and its legal counsel and (x) the
performance of the Company's other obligations hereunder (including, without
limitation, costs incurred in closing the purchase of the Option Shares, if
any). Upon the Representative's request, the Company will provide funds in
advance for filing fees.
(b) The Company agrees to reimburse the Representative for its
reasonable and documented out-of-pocket expenses in connection with the
performance of its activities under this Agreement, including, but not limited
to, costs such as printing, facsimile, courier service, direct computer
expenses, accommodations, travel and the fees and expenses of the Underwriters'
outside legal counsel and any other advisors, accountants, appraisers, etc., but
only if the Initial Shares are purchased by the Underwriters as provided in
Section 2(a) hereof.
6. Conditions of the Underwriters' Obligations: The obligations of the
Underwriters hereunder are subject to the accuracy of the representations and
warranties on the part of the Company in all material respects on the date
hereof and at the Closing Time and on each Date of
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Delivery, the performance by the Company of its obligations hereunder in all
material respects and to the following further conditions:
(a) The Company shall furnish to the Underwriters at the Closing Time
and on each Date of Delivery an opinion of Xxxxxx and Xxxxx, LLP, counsel for
the Company, addressed to the Underwriters and dated the Closing Time and each
Date of Delivery and in form satisfactory to Fulbright & Xxxxxxxx L.L.P.,
counsel for the Underwriters, stating that:
(i) the Company's current business operations and investments
and its contemplated business operations and investments as described
in the Prospectus constitute permissible activities and investments
under the Delaware General Corporation Law;
(ii) the Company has an authorized capitalization as set forth
in the Prospectus under the caption "Capitalization"; the outstanding
shares of capital stock of the Company and its Subsidiaries have been
duly and validly authorized and issued and are fully paid and
non-assessable, and all of the outstanding shares of capital stock of
the Subsidiaries are directly or indirectly owned of record and
beneficially by the Company; except as disclosed in the Prospectus,
there are no outstanding (i) securities or obligations of the Company
or any of its Subsidiaries convertible into or exchangeable for any
capital stock of the Company or any such Subsidiary, (ii) warrants,
rights or options to subscribe for or purchase from the Company or any
such Subsidiary any such capital stock or any such convertible or
exchangeable securities or obligations, or (iii) obligations of the
Company or any such Subsidiary to issue any shares of capital stock,
any such convertible or exchangeable securities or obligation, or any
such warrants, rights or options;
(iii) each of the Company and its Subsidiaries (all of which
are named in Exhibit 21.1 to the Registration Statement) has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of its respective jurisdiction of incorporation with
full corporate power and authority to own its respective properties and
to conduct its respective business as described in the Registration
Statement and Prospectus and, in the case of the Company, to execute
and deliver this Agreement and the Other Transaction Documents;
(iv) the Company and its Subsidiaries are duly qualified or
licensed by each jurisdiction in which they conduct their respective
businesses and in which the failure, individually or in the aggregate,
to be so licensed could have a material adverse effect on the assets,
operations, business or condition (financial or otherwise) of the
Company and its Subsidiaries taken as a whole, and the Company and its
Subsidiaries are duly qualified, and are in good standing, in each
jurisdiction in which they own or lease real property or maintain an
office and in which such qualification is necessary except where the
failure to be so qualified and in good standing would not have a
material adverse effect on the assets, operations, business or
condition (financial or otherwise) of the Company and its Subsidiaries
taken as a whole; except as disclosed in the Prospectus, no Subsidiary
is prohibited or restricted, directly or indirectly, from paying
dividends to the Company, or from making any
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other distribution with respect to such Subsidiary's capital stock or
from paying the Company or any other Subsidiary, any loans or advances
to such Subsidiary from the Company or such other Subsidiary, or from
transferring any such Subsidiary's property or assets to the Company or
to any other Subsidiary; other than as disclosed in the Prospectus, the
Company does not own, directly or indirectly, any capital stock or
other equity securities of any other corporation or any ownership
interest in any partnership, joint venture or other association;
(v) the Company and its Subsidiaries are in compliance in all
material respects with all applicable laws, orders, rules, regulations
and orders, including those relating to transactions with affiliates;
(vi) to such counsel's knowledge, neither the Company nor any
of its Subsidiaries is in breach of, or in default under (nor has any
event occurred which with notice, lapse of time, or both would
constitute a breach of or default under), any license, indenture,
mortgage, deed of trust, loan or credit agreement or any other
agreement or instrument to which the Company or any of its Subsidiaries
is a party or by which any of them or their respective properties may
be bound or affected or under any law, regulation or rule or any
decree, judgment or order applicable to the Company or any of its
Subsidiaries, except such breaches or defaults which would not have a
material adverse effect on the assets, operations, business or
condition (financial or otherwise) of the Company and its Subsidiaries
taken as a whole;
(vii) the execution, delivery and performance of this
Agreement and the Other Transaction Documents by the Company and the
consummation by the Company of the transactions contemplated under this
Agreement or the Other Transaction Documents, as the case may be, do
not and will not conflict with, or result in any breach of, or
constitute a default under (nor constitute any event which with notice,
lapse of time, or both would constitute a breach of or default under),
(i) any provisions of the articles or certificate of incorporation,
charter or by-laws of the Company or any Subsidiary, (ii) any provision
of any license, indenture, mortgage, deed of trust, loan or credit
agreement or other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them or their respective
properties may be bound or affected, or any law or regulation or any
decree, judgment or order applicable to the Company or any Subsidiary,
except in the case of this clause (ii) for such conflicts, breaches or
defaults which individually or in the aggregate would not have a
material adverse effect on the assets, operations, business or
condition (financial or otherwise) of the Company and its Subsidiaries
taken as a whole; or result in the creation or imposition of any lien,
charge, claim or encumbrance upon any property or assets of the Company
or its Subsidiaries;
(viii) this Agreement has been duly authorized, executed and
delivered by the Company and is a legal, valid and binding agreement of
the Company enforceable in accordance with its terms, except as may be
limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors' rights generally, and by general
principles of equity, and except that enforceability of the
indemnification and contribution provisions set forth in Section 9 of
this Agreement may be limited by the federal or state securities laws
of the United States or public policy underlying such laws;
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(ix) no approval, authorization, consent or order of or filing
with any federal or state governmental or regulatory commission, board,
body, authority or agency is required in connection with the execution,
delivery and performance of this Agreement and the Other Transaction
Documents, the consummation of the transactions contemplated hereby and
thereby, the sale and delivery of the Shares by the Company as
contemplated hereby other than such as have been obtained or made under
the Securities Act and except that such counsel need express no opinion
as to any necessary qualification under the state securities or blue
sky laws of the various jurisdictions in which the Shares are being
offered by the Underwriters or any approval of the underwriting terms
and arrangements by the NASD;
(x) each of the Company and its Subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all
necessary filings required under any federal, state or local law,
regulation or rule, and has obtained all necessary authorizations,
consents and approvals from other persons, required to conduct their
respective businesses, as described in the Prospectus, except to the
extent that any failure to have any such authorizations, consents or
approvals would not, individually or in the aggregate, have a material
adverse effect on the assets, operations, business or condition
(financial or otherwise) of the Company and its Subsidiaries taken as a
whole; to such counsel's knowledge neither the Company nor any
Subsidiaries is in violation of, in default under, or has received any
notice regarding a possible violation, default or revocation of any
such license, authorization, consent or approval or any federal, state,
local or foreign law, regulation or decree, order or judgment
applicable to the Company or any of its Subsidiaries, the effect of
which could be material and adverse to the assets, operations, business
or condition (financial or otherwise) of the Company and its
Subsidiaries taken as a whole; and no such license, authorization,
consent or approval contains a materially burdensome restriction that
is not adequately disclosed in the Registration Statement and the
Prospectus;
(xi) The Company is not an investment company under the
Investment Company Act of 1940, as amended.
(xii) the Shares have been duly authorized and, when the
Shares have been issued and duly delivered against payment therefor as
contemplated by this Agreement, the Shares will be validly issued,
fully paid and nonassessable, free and clear of any pledge, lien,
encumbrance, security interest, or other claim;
(xiii) the issuance and sale of the Shares by the Company is
not subject to preemptive or other similar rights arising by operation
of law, under the certificate of incorporation or by-laws of the
Company, under any agreement known to such counsel to which the Company
or any of its Subsidiaries is a party or, to such counsel's knowledge,
otherwise;
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(xiv) to such counsel's knowledge, there are no persons with
registration or other similar rights to have any securities registered
pursuant to the Registration Statement or otherwise registered by the
Company under the Securities Act;
(xv) the Shares conform in all material respects to the
descriptions thereof contained in the Registration Statement and
Prospectus;
(xvi) 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 and by-laws of the Company and the requirements of the
Nasdaq National Market;
(xvii) the Registration Statement has become effective under
the Securities Act and no stop order suspending the effectiveness of
the Registration Statement has been issued and, to such counsel's
knowledge, no proceedings with respect thereto have been commenced or
threatened;
(xviii) as of the effective date of the Registration
Statement, the Registration Statement and the Prospectus (except as to
the financial statements and other financial and statistical data
contained therein, as to which such counsel need express no opinion)
complied as to form in all material respects with the requirements of
the Securities Act and the Securities Act Regulations;
(xix) the statements under the captions "Capitalization,"
"Regulation", "Description of Capital Stock," and "Shares Eligible for
Future Sale," in the Registration Statement and the Prospectus, insofar
as such statements constitute a summary of the legal matters referred
to therein, constitute accurate summaries thereof in all material
respects;
(xx) except as disclosed in the Prospectus, there are no
actions, suits or proceedings, inquiries, or investigations pending or,
to such counsel's knowledge, threatened against the Company or any of
its Subsidiaries or any of their respective officers and directors or
to which the properties, assets or rights of any such entity are
subject, at law or in equity, before or by any federal, state, local or
foreign governmental or regulatory commission, board, body, authority,
arbitral panel or agency which are required to be described in the
Prospectus but are not so described;
(xxi) to such counsel's knowledge, there are no contracts or
documents of a character which are required to be filed as exhibits to
the Registration Statement or to be described or summarized in the
Prospectus which have not been so filed, summarized or described;
(xxii) to such counsel's knowledge, the Company and each
Subsidiary owns or possesses adequate license or other rights to use
all Intangibles necessary to entitle the Company and each Subsidiary to
conduct its business as described in the Prospectus, and neither the
Company, nor any Subsidiary, has received notice of infringement of or
conflict with (and knows of no such infringement of or conflict with)
asserted rights of others with
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respect to any Intangibles which could materially and adversely affect
the business, prospects, properties, assets, results of operations or
condition (financial or otherwise) of the Company or any Subsidiary;
and
(xxiii) to such counsel's knowledge, each of the Company and
its Subsidiaries has filed on a timely basis all necessary federal,
state, local and foreign income and franchise tax returns required to
be filed through the date hereof and has paid all taxes shown as due
thereon; and no tax deficiency has been asserted against any such
entity, nor does any such entity know of any tax deficiency which is
likely to be asserted against any such entity which if determined
adversely to any such entity, could materially and adversely affect the
business, prospects, properties, assets, results of operations or
condition (financial or otherwise) of any such entity, respectively.
In addition, such counsel shall state that they have participated in
conferences with officers and other representatives of the Company, independent
public accountants of the Company and Underwriters at which the contents of the
Registration Statement and Prospectus were discussed and, although such counsel
is not passing upon and does not assume responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement or Prospectus (except as and to the extent stated in subparagraphs
(xviii) and (xix) above), they have no reason to believe that the Registration
Statement, the Preliminary Prospectus or the Prospectus, as of their respective
effective or issue dates and as of the date of such counsel's opinion, contained
or contains an untrue statement of a material fact or omitted or omits to state
a material fact required to be stated therein or necessary to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that, in each case, such counsel need
express no view with respect to the financial statements and other financial and
statistical data included in the Registration Statement, Preliminary Prospectus
or Prospectus).
(b) The Representative shall have received from Ernst & Young LLP,
"comfort letters" addressing the accuracy of the Company's financial data dated,
respectively, as of the date of this Agreement, the Closing Time and each Date
of Delivery, as the case may be, addressed to the Representative as
representative of the Underwriters and in form and substance satisfactory to the
Representative.
(c) The Underwriters shall have received at the Closing Time and on
each Date of Delivery the favorable opinion of Fulbright & Xxxxxxxx L.L.P.,
dated the Closing Time or such Date of Delivery, addressed to the Representative
and in form and substance satisfactory to the Representative.
(d) No amendment or supplement to the Registration Statement or
Prospectus shall have been filed to which the Underwriters shall have objected
in writing.
(e) Prior to the Closing Time and each Date of Delivery (i) no stop
order suspending the effectiveness of the Registration Statement or any order
preventing or suspending the use of any Preliminary Prospectus or Prospectus has
been issued by the Commission, and no suspension of the
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qualification of the Shares for offering or sale in any jurisdiction, or of the
initiation or threatening of any proceedings for any of such purposes, has
occurred; and (ii) the Registration Statement and the Prospectus shall not
contain an untrue statement of material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein, in
the light of the circumstances under which they were made, not misleading.
(f) Between the time of execution of this Agreement and the Closing
Time or the relevant Date of Delivery (i) no material and unfavorable change in
the assets, operations, business, prospects or condition (financial or
otherwise) of the Company and its Subsidiaries taken as a whole shall occur or
become known (whether or not arising in the ordinary course of business), and
(ii) no transaction which is material and unfavorable to the Company shall have
been entered into by the Company or any of its Subsidiaries.
(g) At the Closing Time, the Other Transaction Documents shall have
been entered into and delivered by all required parties and the transactions
contemplated therein shall have been completed.
(h) At the Closing Time, the Shares shall have been approved for
inclusion in the Nasdaq National Market.
(i) The NASD shall not have raised any objection with respect to the
fairness and reasonableness of the underwriting terms and arrangements.
(j) The Representative shall have received "lock-up" letters from the
officers and directors and certain stockholders of the Company, in form and
substance satisfactory to the Representative, confirming that for a period of
180 days after the Closing Time, such persons will not directly or indirectly
(i) offer, pledge to secure any obligation due on or within 180 days after the
Closing Time, sell, contract to sell, sell any option or contract to purchase,
purchase any option or contract to sell, grant any option for the sale of, or
otherwise dispose of or transfer, directly or indirectly, any share of Common
Stock or any securities convertible into or exercisable or exchangeable for
Common Stock or (ii) enter into any swap or any other agreement or any
transaction that transfers, in whole or in part, directly or indirectly, the
economic consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by delivery
of Common Stock or such other securities, in cash or otherwise, without the
prior written consent of the Representative, which consent may be withheld at
the sole discretion of the Representative.
(k) The Company will, at the Closing Time and on each Date of Delivery,
deliver to the Underwriters a certificate of its Chief Executive Officer and
Chief Financial Officer, to the effect that, to each of such officer's
knowledge, the representations and warranties of the Company set forth in this
Agreement and the conditions set forth in paragraphs (e), (f), (g) and (h) have
been met and are true and correct as of such date.
(l) The Company shall have furnished to the Underwriters such other
documents and certificates as to the accuracy and completeness of any statement
in the Registration Statement and
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the Prospectus, the representations, warranties and statements of the Company
contained herein and the performance by the Company of its covenants contained
herein and therein, and the fulfillment of any conditions contained herein or
therein, as of the Closing Time or any Date of Delivery as the Underwriters may
reasonably request.
(m) The Company shall perform such of its obligations under this
Agreement as are to be performed by the terms hereof at or before the Closing
Time or the relevant Date of Delivery.
7. Termination: The obligations of the several Underwriters hereunder
shall be subject to termination in the absolute discretion of the
Representative, at any time prior to the Closing Time or any Date of Delivery,
(i) if any of the conditions specified in Section 6 shall not have been
fulfilled when and as required by this Agreement to be fulfilled, or (ii) if
there has been since the respective dates as of which information is given in
the Registration Statement, any material adverse change, or any development
involving a prospective material adverse change, in or affecting the business of
the Company, whether or not arising in the ordinary course of business, or (iii)
if there has occurred an outbreak or escalation of hostilities or other national
or international calamity or crisis or change in economic, political or other
conditions the effect of which on the financial markets of the United States is
such as to make it, in the judgment of the Representative, impracticable to
market the Shares or enforce contracts for the sale of the Shares, or (iv) if
trading in any securities of the Company has been suspended by the Commission or
by the Nasdaq National Market or if trading generally on the New York Stock
Exchange or in the Nasdaq National Market has been suspended (including an
automatic halt in trading pursuant to market-decline triggers other than those
in which solely program trading is temporarily halted), or limitations on prices
for trading (other than limitations on hours or numbers of days of trading) have
been fixed, or maximum ranges for prices for securities have been required, by
such exchange or the NASD or the Nasdaq National Market or by order of the
Commission or any other governmental authority, or (v) if there has been any
downgrading in the rating of any of the company's debt securities or preferred
stock by any "nationally recognized statistical rating organization" (as defined
for purposes of Rule 436(g) of the Securities Act Regulations), or (vi) any
federal or state statute, regulation, rule or order of any court or other
governmental authority has been enacted, published, decreed or otherwise
promulgated which in the reasonable opinion of the Representative materially
adversely affects or will materially adversely affect the business, prospects,
management, properties, assets, results of operations or condition (financial or
otherwise) of the Company, or (vii) any action has been taken by any federal,
state or local government or agency in respect of its monetary or fiscal affairs
which in the reasonable opinion of the Representative has a material adverse
effect on the securities markets in the United States.
If the Representative elects to terminate this Agreement as provided in
this Section 7, the Company and the Underwriters shall be notified promptly by
telephone, promptly confirmed by facsimile.
If the sale to the Underwriters of the Shares, as contemplated by this
Agreement, is not carried out by the Underwriters for any reason permitted under
this Agreement or if such sale is not carried out because the Company shall be
unable to comply in all material respects with any of the terms of this
Agreement, the Company shall not be under any obligation or liability under this
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Agreement (except to the extent provided in Sections 5 and 9 hereof) and the
Underwriters shall be under no obligation or liability to the Company under this
Agreement (except to the extent provided in Section 9 hereof) or to one another
hereunder.
8. Increase in Underwriters' Commitments: If any Underwriter shall
default at the Closing Time or on a Date of Delivery in its obligation to take
up and pay for the Shares to be purchased by it under this Agreement, on such
date the Representative shall have the right, within 36 hours after such
default, to make arrangements for one or more of the non-defaulting
Underwriters, or any other underwriters, to purchase all, but not less than all,
of the Shares which such Underwriter shall have agreed but failed to take up and
pay for (the "Defaulted Shares"). Absent the completion of such arrangements
within such 36 hour period, (i) if the total number of Defaulted Shares does not
exceed 10% of the total number of Shares to be purchased on such date, each
non-defaulting Underwriter shall take up and pay for (in addition to the number
of Shares which it is otherwise obligated to purchase on such date pursuant to
this Agreement) the portion of the total number of Shares agreed to be purchased
by the defaulting Underwriter on such date in the proportion that its
underwriting obligations hereunder bears to the underwriting obligations of all
non-defaulting Underwriters; and (ii) if the total number of Defaulted Shares
exceeds 10% of such total, the Representative may terminate this Agreement by
notice to the Company, without liability to any non-defaulting Underwriter.
Without relieving any defaulting Underwriter from its obligations
hereunder, the Company agrees with the non-defaulting Underwriters that it will
not sell any Shares hereunder on such date unless all of the Shares to be
purchased on such date are purchased on such date by the Underwriters (or by
substituted Underwriters selected by the Representative with the approval of the
Company or selected by the Company with the approval of the Representative).
If a new Underwriter or Underwriters are substituted for a defaulting
Underwriter in accordance with the foregoing provision, the Company or the
non-defaulting Underwriters shall have the right to postpone the Closing Time or
the relevant Date of Delivery for a period not exceeding five business days in
order that any necessary changes in the Registration Statement and Prospectus
and other documents may be effected.
The term Underwriter as used in this Agreement shall refer to and
include any Underwriter substituted under this Section 8 with the like effect as
if such substituted Underwriter had originally been named in this Agreement.
9. Indemnity and Contribution by the Company and the Underwriters:
(a) The Company agrees to indemnify, defend and hold harmless each
Underwriter and any person who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any loss, expense, liability, damage or claim (including the reasonable
cost of investigation) which, jointly or severally, any such Underwriter or
controlling person may incur under the Securities Act, the Exchange Act or
otherwise, insofar as such loss, expense, liability, damage or claim arises out
of or is based upon (i) any breach of any
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representation, warranty or covenant of the Company contained herein or (ii) any
untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement (or in the Registration Statement as amended by any
post-effective amendment thereof by the Company) or in a Prospectus (the term
Prospectus for the purpose of this Section 9 being deemed to include any
Preliminary Prospectus, the Prospectus and the Prospectus as amended or
supplemented by the Company), or arises out of or is based upon any omission or
alleged omission to state a material fact required to be stated in either such
Registration Statement or Prospectus or necessary to make the statements made
therein, in the light of the circumstances under which they were made, not
misleading, except insofar as any such loss, expense, liability, damage or claim
arises out of or is based upon any untrue statement or alleged untrue statement
or omission or alleged omission of a material fact contained in and in
conformity with information furnished in writing by the Underwriters through the
Representative to the Company expressly for use in such Registration Statement
or such Prospectus, provided, however, that the indemnity agreement contained in
this subsection (a) with respect to the Preliminary Prospectus or the Prospectus
shall not inure to the benefit of an Underwriter (or to the benefit of any
person controlling such Underwriter) with respect to any person asserting any
such loss, expense, liability, damage or claim which is the subject thereof if
the Prospectus or any supplement thereto prepared with the consent of the
Representative and furnished to the Underwriters prior to the Closing Time
corrected any such alleged untrue statement or omission and if such Underwriter
failed to send or give a copy of the Prospectus or supplement thereto to such
person at or prior to the written confirmation of the sale of Shares to such
person, unless such failure resulted from noncompliance by the Company with
Section 4(b).
If any action is brought against an Underwriter or controlling person
in respect of which indemnity may be sought against the Company pursuant to the
preceding paragraph, such Underwriter shall promptly notify the Company in
writing of the institution of such action and the Company shall assume the
defense of such action, including the employment of counsel and payment of
expenses, provided, however, that any failure or delay to so notify the Company
will not relieve the Company of any obligation hereunder, except to the extent
that its ability to defend is actually impaired by such failure or delay. Such
Underwriter or controlling person shall have the right to employ its or their
own counsel in any such case, but the fees and expenses of such counsel shall be
at the expense of such Underwriter or such controlling person unless the
employment of such counsel shall have been authorized in writing by the Company
in connection with the defense of such action or the Company shall not have
employed counsel to have charge of the defense of such action within a
reasonable time or such indemnified party or parties shall have reasonably
concluded (based on the advice of counsel) that there may be defenses available
to it or them which are different from or additional to those available to the
Company and which counsel to the Underwriter believes may present a conflict for
counsel representing the Company and the Underwriter (in which case the Company
shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and expenses
shall be borne by the Company and paid as incurred (it being understood,
however, that the Company shall not be liable for the expenses of more than one
separate firm of attorneys for the Underwriters or controlling persons in any
one action or series of related actions in the same jurisdiction representing
the indemnified parties who are parties to such action). Anything in this
paragraph to the contrary notwithstanding, the Company shall not be liable for
any settlement of any such claim or action effected without its written consent.
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(b) Each Underwriter agrees, severally and not jointly, to indemnify,
defend and hold harmless the Company, its directors, the officers that signed
the Registration Statement and any person who controls the Company within the
meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act
from and against any loss, expense, liability, damage or claim (including the
reasonable cost of investigation) which, jointly or severally, the Company or
any such person may incur under the Securities Act, the Exchange Act or
otherwise, insofar as such loss, expense, liability, damage or claim arises out
of or is based upon any untrue statement or alleged untrue statement of a
material fact contained in and in conformity with information furnished in
writing by such Underwriter through the Representative to the Company expressly
for use in the Registration Statement (or in the Registration Statement as
amended by any post-effective amendment thereof by the Company) or in a
Prospectus, or arises out of or is based upon any omission or alleged omission
to state a material fact in connection with such information required to be
stated either in such Registration Statement or Prospectus or necessary to make
such information, in the light of the circumstances under which made, not
misleading. The statements set forth in the paragraph below the table on the
cover page and under the caption "Underwriting" in the Preliminary Prospectus
and the Prospectus (to the extent such statements relate to the Underwriters)
constitute the only information furnished by or on behalf of any Underwriter
through the Representative to the Company for purposes of Section 3(k) and this
Section 9.
If any action is brought against the Company or any such person in
respect of which indemnity may be sought against any Underwriter pursuant to the
foregoing paragraph, the Company or such person shall promptly notify the
Representative in writing of the institution of such action and the
Representative, on behalf of the Underwriters, shall assume the defense of such
action, including the employment of counsel and payment of expenses. The Company
or such person shall have the right to employ its own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of the Company
or such person unless the employment of such counsel shall have been authorized
in writing by the Representative in connection with the defense of such action
or the Representative shall not have employed counsel to have charge of the
defense of such action within a reasonable time or such indemnified party or
parties shall have reasonably concluded (based on the advice of counsel) that
there may be defenses available to it or them which are different from or
additional to those available to the Underwriters (in which case the
Representative shall not have the right to direct the defense of such action on
behalf of the indemnified party or parties), in any of which events such fees
and expenses shall be borne by such Underwriter and paid as incurred (it being
understood, however, that the Underwriters shall not be liable for the expenses
of more than one separate firm of attorneys in any one action or series of
related actions in the same jurisdiction representing the indemnified parties
who are parties to such action). Anything in this paragraph to the contrary
notwithstanding, no Underwriter shall be liable for any settlement of any such
claim or action effected without the written consent of the Representative.
(c) If the indemnification provided for in this Section 9 is
unavailable to an indemnified party under subsections (a) and (b) of this
Section 9 in respect of any losses, expenses, liabilities, damages or claims
referred to therein, then each applicable indemnifying party, in lieu of
indemnifying such indemnified party, shall contribute to the amount paid or
payable by such indemnified party as a result of such losses, expenses,
liabilities, damages or claims (i) in such proportion as is appropriate
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to reflect the relative benefits received by the Company on the one hand and the
Underwriters on the other hand from the offering of the Shares or (ii) if (but
only if) the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the
relative benefits referred to in clause (i) above but also the relative fault of
the Company on the one hand and of the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, expenses,
liabilities, damages or claims, as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same proportion
as the total proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the Company bear to the
underwriting discounts and commissions received by the Underwriters. The
relative fault of the Company on the one hand and of the Underwriters on the
other shall be determined by reference to, among other things, whether the
untrue statement or alleged untrue statement of a material fact or omission or
alleged omission relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by a party as a result of the losses, claims, damages and
liabilities referred to above shall be deemed to include any legal or other fees
or expenses reasonably incurred by such party in connection with investigating
or defending any claim or action.
(d) The Company and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 9 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 in subsection (c)(i) and, if applicable
(c)(ii), above. Notwithstanding the provisions of this Section 9, no Underwriter
shall be required to contribute any amount in excess of the underwriting
discounts and commissions applicable to the Shares purchased by such
Underwriter. 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. The Underwriters' obligations to contribute pursuant to this
Section 9 are several in proportion to their respective underwriting commitments
and not joint.
10. Survival: The indemnity and contribution agreements contained in
Section 9 and the covenants, warranties and representations of the Company
contained in Sections 3, 4 and 5 of this Agreement shall remain in full force
and effect regardless of any investigation made by or on behalf of any
Underwriter, or any person who controls any Underwriter within the meaning of
Section 15 of the Securities Act or Section 20 of the Exchange Act, or by or on
behalf of the Company, its directors and officers or any person who controls the
Company within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act, and shall survive any termination of this Agreement or the
sale and delivery of the Shares. The Company and each Underwriter agree promptly
to notify the others of the commencement of any litigation or proceeding against
it and, in the case of the Company, against any of the Company's officers and
directors, in connection with the sale and delivery of the Shares, or in
connection with the Registration Statement or Prospectus.
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11. Notices: Except as otherwise herein provided, all statements,
requests, notices and agreements shall be in writing or by telegram and, if to
the Underwriters, shall be sufficient in all respects if delivered to Friedman,
Billings, Xxxxxx & Co., Inc., 0000 00xx Xxxxxx Xxxxx, Xxxxxxxxx, Xxxxxxxx 00000,
Attention: Syndicate Department; if to the Company, shall be sufficient in all
respects if delivered to the Company at the offices of the Company at 00000 Xxxx
Xxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000-0000.
12. Governing Law; Headings: THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE COMMONWEALTH OF VIRGINIA, WITHOUT
REGARD TO CONFLICTS OF LAWS PRINCIPLES. The section headings in this Agreement
have been inserted as a matter of convenience of reference and are not a part of
this Agreement.
13. Parties at Interest: The Agreement herein set forth has been and is
made solely for the benefit of the Underwriters, the Company and the controlling
persons, directors and officers referred to in Sections 9 and 10 hereof, and
their respective successors, assigns, executors and administrators. No other
person, partnership, association or corporation (including a purchaser, as such
purchaser, from any of the Underwriters) shall acquire or have any right under
or by virtue of this Agreement.
14. Counterparts: This Agreement may be signed by the parties in
counterparts which together shall constitute one and the same agreement among
the parties.
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If the foregoing correctly sets forth the understanding among the
Company and the Underwriters, please so indicate in the space provided below for
the purpose, whereupon this Agreement shall constitute a binding agreement among
the Company and the Underwriters.
Very truly yours,
QUEEN SAND RESOURCES, INC.
-------------------------------
By:
Title:
Accepted and agreed to as
of the date first above written:
FRIEDMAN, BILLINGS, XXXXXX &
CO., INC.
---------------------------------
By:
Title:
For themselves and as Representative
of the other Underwriters named on
Schedule I hereto.
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Schedule I
Number of Initial
Underwriter Shares to be Purchased
----------- ----------------------
Friedman, Billings, Xxxxxx & Co., Inc. ..........................
[OTHER UNDERWRITERS TO COME]
---------
Total .................................................... 10,000.00
=========
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