EXHIBIT 99.1
Xxxxxxx Exploration Company
Common Stock
($.01 par value)
Underwriting Agreement
July 23, 2004
Xxxxxxx Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Ladies and Gentlemen:
Xxxxxxx Exploration Company, a corporation organized under the laws of the
State of Delaware (the "Company"), proposes to sell to Xxxxxxx Xxxxx &
Associates, Inc. (the "Underwriter") common stock, $.01 par value ("Common
Stock"), of the Company in the amount set forth on Schedule I (the "Firm
Stock"). In addition, the Company proposes to grant to the Underwriter an option
to purchase up to an additional amount of shares of the Common Stock as set
forth on Schedule I (the "Option Stock," and collectively with the Firm Stock,
the "Securities"). Any reference herein to the Registration Statement, the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus shall be
deemed to refer to and include the documents incorporated by reference therein
pursuant to Item 12 of Form S-3 which were filed under the Exchange Act on or
before the Effective Date of the Registration Statement or the issue date of the
Basic Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as
the case may be; and any reference herein to the terms "amend", "amendment" or
"supplement" with respect to the Registration Statement, the Basic Prospectus,
any Preliminary Final Prospectus or the Final Prospectus shall be deemed to
refer to and include the filing of any document under the Exchange Act after the
Effective Date of the Registration Statement or the issue date of the Basic
Prospectus, any Preliminary Final Prospectus or the Final Prospectus, as the
case may be, deemed to be incorporated therein by reference. Certain terms used
herein are defined in Section 16 hereof.
1. Representations and Warranties.
(a) The Company represents and warrants to, and agrees with, the
Underwriter as set forth below in this Section 1(a).
(i) The Company meets the requirements for use of Form S-3
under the Act and has prepared and filed with the Commission a
registration statement (File Number 333-116390) on Form S-3, including a
related Basic Prospectus, for registration
under the Act of the offering and sale of the Securities. The Company may
have filed one or more amendments thereto, including a Preliminary Final
Prospectus, each of which has previously been furnished to you. The
Company will next file with the Commission one of the following: (1) after
the Effective Date of such registration statement, a final prospectus
supplement relating to the Securities in accordance with Rules 430A and
424(b), (2) prior to the Effective Date of such registration statement, an
amendment to such registration statement (including the form of final
prospectus supplement) or (3) a final prospectus in accordance with Rules
415 and 424 (b). In the case of clause (1) the Company has included in
such registration statement, as amended at the Effective Date, all
information (other than Rule 430A Information) required by the Act and the
rules thereunder to be included in such registration statement and the
Final Prospectus. As filed, such final prospectus supplement or such
amendment and form of final prospectus supplement shall contain all Rule
430A Information, together with all other such required information, and,
except to the extent the Underwriter shall agree in writing to a
modification, shall be in all substantive respects in the form furnished
to you prior to the Execution Time or, to the extent not completed at the
Execution Time, shall contain only such specific additional information
and other changes (beyond that contained in the Basic Prospectus and any
Preliminary Final Prospectus) as the Company has advised you, prior to the
Execution Time, will be included or made therein. The Registration
Statement, at the Execution Time, meets the requirements set forth in Rule
415(a)(1)(x).
(ii) On the Effective Date, the Registration Statement did or
will, and when the Final Prospectus is first filed (if required) in
accordance with Rule 424(b) and on each Closing Date (as defined herein),
the Final Prospectus (and any supplement thereto) will, comply in all
material respects with the applicable requirements of the Act and the
Exchange Act and the respective rules thereunder; on the Effective Date
and at the Execution Time, the Registration Statement did not or will 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; and, on the Effective Date, the
Final Prospectus, if not filed pursuant to Rule 424(b), will not, and on
the date of any filing pursuant to Rule 424(b) and on each Closing Date
and any settlement date, the Final Prospectus (together with any
supplement thereto) will not, include any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes no
representations or warranties as to the information contained in or
omitted from the Registration Statement or the Final Prospectus (or any
supplement thereto) in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of the Underwriter
specifically for inclusion in the Registration Statement or the Final
Prospectus (or any supplement thereto).
(iii) The Company and each of its subsidiaries, all of which
are listed on Schedule II (each such subsidiary, a "Subsidiary," and
collectively, the "Subsidiaries"), has been duly organized and is validly
existing as an entity in good standing under the laws of the jurisdiction
in which it is chartered or organized with full power and authority to own
or lease, as the case may be, and to operate its properties and
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conduct its business as described in the Final Prospectus, and is duly
qualified to do business as a foreign entity and is in good standing under
the laws of each jurisdiction which requires such qualification, except
where the failure to qualify could not reasonably be expected to have a
material adverse effect on the condition (financial or otherwise),
earnings, business or properties of the Company and its Subsidiaries,
taken as a whole, whether or not arising from transactions in the ordinary
course of business (a "Material Adverse Effect").
(iv) All the outstanding shares of capital stock or other
equity interests of each Subsidiary have been duly and validly authorized
and issued and are fully paid and nonassessable, and, except as otherwise
set forth in the Final Prospectus, all outstanding shares of capital stock
or other equity interests of the Subsidiaries are owned by the Company
either directly or through wholly owned Subsidiaries free and clear of any
perfected security interest or any other security interests, claims, liens
or encumbrances, except for the liens and security interests of the
lenders under the Company's existing credit facility.
(v) The Company's authorized equity capitalization is as set
forth in the Final Prospectus; the capital stock of the Company conforms
in all respects to the description thereof contained in the Final
Prospectus; the outstanding shares of Common Stock have been duly and
validly authorized and issued and are fully paid and nonassessable; the
Securities being sold hereunder by the Company have been duly and validly
authorized, and, when issued and delivered to and paid for by the
Underwriter pursuant to this Agreement, will be fully paid and
nonassessable; the Securities being sold hereunder by the Company are duly
listed for trading, subject to official notice of issuance, on the Nasdaq
National Market; the certificates for the Securities are in valid and
sufficient form; the holders of outstanding shares of capital stock of the
Company are not entitled to preemptive or other rights to subscribe for
the Securities; and, except as set forth in the Final Prospectus, no
options, warrants or other rights to purchase, agreements or other
obligations to issue, or rights to convert any obligations into or
exchange any securities for, shares of capital stock of or ownership
interests in the Company are outstanding.
(vi) There is no franchise, contract or other document of a
character required to be described in the Registration Statement or Final
Prospectus, or to be filed as an exhibit thereto, which is not described
or filed as required.
(vii) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes a valid and binding obligation of
the Company enforceable in accordance with its terms, except as
enforcement may be limited by bankruptcy, insolvency, or other similar
laws or court decisions, relating to or affecting creditors' rights
generally, and except to the extent that enforcement of the
indemnification and contribution obligations provided for herein may be
limited by federal or state laws relating to securities or the public
policies underlying such laws.
(viii) The Company is not and, after giving effect to the
offering and sale of the Securities and the application of the proceeds
thereof as described in the Final
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Prospectus, will not be an "investment company" as defined in the
Investment Company Act of 1940, as amended.
(ix) No consent, approval, authorization, filing with or
order of any court or governmental agency or body is required in
connection with the transactions contemplated herein, except such as have
been obtained under the Act and such as may be required under the blue sky
laws of any jurisdiction in connection with the purchase and distribution
of the Securities by the Underwriter in the manner contemplated herein and
in the Final Prospectus.
(x) Neither the issue and sale of the Securities nor the
consummation of any other of the transactions herein contemplated nor the
fulfillment of the terms hereof will conflict with, result in a breach or
violation or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or any of its Subsidiaries pursuant to,
(i) the charter or by-laws of the Company or any of its Subsidiaries, (ii)
the terms of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which the Company or any of its Subsidiaries is
a party or bound or to which its or their property is subject, or (iii)
any statute, law, rule, regulation, judgment, order or decree applicable
to the Company or any of its Subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or any of its Subsidiaries or any of
its or their properties, except where, in the case of clauses (ii) and
(iii) above, any such conflict, breach, violation or imposition that could
not reasonably be expected to have a Material Adverse Effect.
(xi) No holder of any security of the Company has any right,
which has not been waived or satisfied, (i) to have any security owned by
such holder included in the Registration Statement or (ii) to demand
registration of any security owned by such holder for a period of 180 days
after the date of this Agreement, except, with respect to the rights
referred to in clause (ii), such registration rights set forth in Sections
2, 4 and 16 of the Registration Rights Agreement, dated as of November 1,
2000, by and among the Company and the CSFB Entities (as defined therein),
as amended, and such demand registration rights held by Xxx X. Xxxxxxx and
Xxxx X. Xxxxxxx set forth in the Registration Rights Agreement, dated as
of February 26, 1997, by and among the Company and certain stockholders
named therein (together, the "Registration Rights Agreements").
(xii) The consolidated historical financial statements and
schedules of the Company and its consolidated Subsidiaries included in the
Final Prospectus and the Registration Statement present fairly in all
material respects the financial condition, results of operations and cash
flows of the Company as of the dates and for the periods indicated, comply
as to form with the applicable accounting requirements of the Act and have
been prepared in conformity with generally accepted accounting principles
applied on a consistent basis throughout the periods involved (except as
otherwise noted therein). The selected financial data set forth under the
captions "Summary Financial Data" and "Selected Financial Data" in the
Final Prospectus and the Registration Statement fairly present, on the
basis stated in the Final Prospectus and the Registration Statement.
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(xiii) There is no document, contract or other agreement
required to be described in the Registration Statement or the Final
Prospectus (or any supplement thereto) 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 Final Prospectus (and any
supplement thereto) 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 Final
Prospectus (and any supplement thereto) or listed on Exhibits to the
Registration Statement or incorporated by reference is in full force and
effect and is valid and enforceable by and against the Company or its
Subsidiaries, 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 the 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.
(xiv) Except as disclosed in the Final Prospectus, no action,
suit or proceeding by or before any court or governmental agency,
authority or body or any arbitrator involving the Company or any of its
Subsidiaries or its or their property is pending or, to the best knowledge
of the Company, threatened that (i) could reasonably be expected to have a
material adverse effect on the performance of this Agreement or the
consummation of any of the transactions contemplated hereby or (ii) could
reasonably be expected to have a Material Adverse Effect.
(xv) The Company and each of its Subsidiaries has (1) good
and indefeasible title to all of its interests in its oil and gas
properties, title investigations having been carried out by or on behalf
of such person in accordance with good practice in the oil and gas
industry in the areas in which such properties are located, (2) good and
marketable title in fee simple to all of its real property other than oil
and gas properties, and (3) good title to all personal property owned by
it, in each case free and clear of all liens, encumbrances and defects
except liens under the Company's senior credit facility and senior
subordinated notes or otherwise as described in the Final Prospectus or
such as do not materially affect the value of such properties as a whole
and do not materially interfere with the use made and proposed to be made
of such properties as a whole by the Company and its Subsidiaries; and all
real properties and buildings held under lease by the Company and its
Subsidiaries are held by them under valid, subsisting and enforceable
leases, with such exceptions as are not material and do not interfere with
the use made and proposed to be made of such properties and buildings as a
whole by the Company and its Subsidiaries.
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(xvi) The principal executive officer and the principal
financial officer of the Company have made all certifications required by
the Xxxxxxxx-Xxxxx Act or any related rules and regulations promulgated by
the Commission, and the statements contained in any such certification are
complete and correct. The Company maintains "disclosure controls and
procedures" (as defined in Rule 13a-14(c) under the Exchange Act), and
such controls and procedures are designed (i) to ensure the information
required to be disclosed by the Company in the reports and that it files
or submits under the Exchange Act is accumulated and communicated to the
Company's management, including its principal executive officer and
principal financial officer, as appropriate to allow timely decisions
regarding required disclosure. The Company does not have any knowledge of
any material weakness in internal controls, and to the knowledge of the
Company, there has been no fraud, whether or not material, that involves
management or other employees who have a significant role in the Company's
internal controls. The Company is otherwise in compliance in all material
respects with all applicable effective provisions of the Xxxxxxxx-Xxxxx
Act and the rules and regulations promulgated by the Commission (and
intends to comply with all applicable provisions that are not yet
effective upon effectiveness).
(xvii) Neither the Company nor any Subsidiary is in violation
or default of (i) any provision of its charter or bylaws, (ii) the terms
of any indenture, contract, lease, mortgage, deed of trust, note
agreement, loan agreement or other agreement, obligation, condition,
covenant or instrument to which it is a party or bound or to which its
property is subject, or (iii) any statute, law, rule, regulation,
judgment, order or decree of any court, regulatory body, administrative
agency, governmental body, arbitrator or other authority having
jurisdiction over the Company or such Subsidiary or any of its properties,
as applicable, except where, in the case of clauses (ii) and (iii) above,
such violation or default could not reasonably be expected to have a
Material Adverse Effect.
(xviii) PricewaterhouseCoopers LLP, who have certified
certain financial statements of the Company and its consolidated
Subsidiaries and delivered their report with respect to the audited
consolidated financial statements and schedules included in the Final
Prospectus, are independent public accountants with respect to the Company
within the meaning of the Act and the applicable published rules and
regulations thereunder.
(xix) Except for the filing fees under the Act or any state
securities laws, there are no transfer taxes or other similar fees or
charges under Federal law or the laws of any state, or any political
subdivision thereof, required to be paid in connection with the execution
and delivery of this Agreement or the issuance by the Company or sale by
the Company of the Securities.
(xx) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file
could not reasonably be expected to have a Material Adverse Effect) and
has paid all taxes required to be paid by it and any other assessment,
fine or penalty levied against it, to the extent that any of the foregoing
is due and payable,
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except for any such assessment, fine or penalty that is currently being
contested in good faith or as could not reasonably be expected to have a
Material Adverse Effect.
(xxi) No labor problem or dispute with the employees of the
Company or any of its Subsidiaries exists or is threatened or to the
Company's knowledge is imminent, and the Company is not aware of any
existing or imminent labor disturbance by the employees of any of its or
its Subsidiaries' principal suppliers, contractors or customers, that
could reasonably be expected to have a Material Adverse Effect.
(xxii) No transaction has occurred between or among the
Company and any of its officers or directors, shareholder 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 Final Prospectus (and any supplements thereto).
(xxiii) The written engineering reports prepared by Xxxxxx,
Xxxxxxxxx & Associates, Inc. ("Xxxxxx, Xxxxxxxxx"), an oil and gas
engineering consulting firm, as of December 31, 2003, setting forth the
engineering values attributable 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, 2003, except as otherwise disclosed
in the Registration Statement and the Final Prospectus (and any
supplements thereto). 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 consultants, who prepared estimates of the extent
and value of proved oil and natural gas reserves, are independent with
respect to the Company.
(xxiv) The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses
in which they are engaged; all policies of insurance insuring the Company
or any of its Subsidiaries or their respective businesses, assets,
employees, officers and directors are in full force and effect; the
Company and its Subsidiaries are in compliance with the terms of such
policies and instruments in all material respects; and there are no claims
by the Company or any of its Subsidiaries under any such policy or
instrument as to which any insurance company is denying liability or
defending under a reservation of rights clause that could reasonably be
expected to have a Material Adverse Effect; neither the Company nor any
such Subsidiary has been refused any insurance coverage sought or applied
for; and neither the Company nor any such Subsidiary 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 could not reasonably be expected to have a Material Adverse Effect.
(xxv) The Company and its Subsidiaries possess all licenses,
certificates, permits and other authorizations issued by the appropriate
federal, state or foreign
7
regulatory authorities necessary to conduct their respective businesses,
and neither the Company nor any such Subsidiary has received any notice of
proceedings relating to the revocation or modification of any such
certificate, authorization or permit which, singly or in the aggregate, if
the subject of an unfavorable decision, ruling or finding, could
reasonably be expected to have a Material Adverse Effect.
(xxvi) The Company and each of its Subsidiaries maintain a
system of internal accounting controls sufficient to provide reasonable
assurance that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to maintain
asset accountability; (iii) access to assets is permitted only in
accordance with management's general or specific authorization; and (iv)
the recorded accountability for assets is compared with the existing
assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(xxvii) The Company has not taken, directly or indirectly, any
action designed to or that would constitute or that might reasonably be
expected to cause or result in, under the Exchange Act or otherwise,
stabilization or manipulation of the price of any security of the Company
to facilitate the sale or resale of the Securities.
(xxviii) Neither the Company nor, to the knowledge of the
Company, 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 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.
(xxix) Except as set forth in the Final Prospectus, the
Company and its Subsidiaries are (i) in compliance with any and all
applicable foreign, federal, state and local laws and regulations relating
to the protection of human health and safety, the environment or hazardous
or toxic substances or wastes, pollutants or contaminants ("Environmental
Laws"), (ii) have received and are in compliance with all permits,
licenses or other approvals required of them under applicable
Environmental Laws to conduct their respective businesses and (iii) have
not received notice of any actual or potential liability for the
investigation or remediation of any disposal or release of hazardous or
toxic substances or wastes, pollutants or contaminants, except where such
non-compliance with Environmental Laws, failure to receive required
permits, licenses or other approvals, or liability could not, individually
or in the aggregate, reasonably be expected to have a Material Adverse
Effect. Except as set forth in the Final Prospectus, neither the Company
nor any of the Subsidiaries has been named as a "potentially responsible
party" under the Comprehensive Environmental Response, Compensation, and
Liability Act of 1980, as amended.
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(xxx) 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 it 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 could not, singly or
in the aggregate, reasonably be expected to have a Material Adverse
Effect.
(xxxi) The Company and its Subsidiaries own, possess, license
or have other rights to use, on reasonable terms, all patents, patent
applications, trade and service marks, trade and service xxxx
registrations, trade names, copyrights, licenses, inventions, trade
secrets, technology, know-how and other intellectual property
(collectively, the "Intellectual Property") necessary for the conduct of
the Company's business as now conducted or as proposed in the Final
Prospectus to be conducted. Except as set forth in the Final Prospectus,
(a) to the Company's best knowledge, there are no rights of third parties
to any such Intellectual Property; (b) to the Company's best knowledge,
there is no material infringement by third parties of any such
Intellectual Property; (c) there is no pending or, to the Company's best
knowledge, threatened action, suit, proceeding or claim by others
challenging the Company's rights in or to any such Intellectual Property,
and the Company is unaware of any facts which would form a reasonable
basis for any such claim; (d) there is no pending or, to the Company's
best knowledge, threatened action, suit, proceeding or claim by others
challenging the validity or scope of any such Intellectual Property, and
the Company is unaware of any facts which would form a reasonable basis
for any such claim; (e) there is no pending or, to the Company's best
knowledge, threatened action, suit, proceeding or claim by others that the
Company infringes or otherwise violates any patent, trademark, copyright,
trade secret or other proprietary rights of others, and the Company is
unaware of any other fact which would form a reasonable basis for any such
claim; (f) to the Company's best knowledge, there is no U.S. patent or
published U.S. patent application which contains claims that dominate or
may dominate any Intellectual Property described in the Final Prospectus
as being owned by or licensed to the Company or that interferes with the
issued or pending claims of any such Intellectual Property; and (g) there
is no prior art of which the Company is aware that may render any U.S.
patent held by the Company invalid or any U.S. patent application held by
the Company unpatentable which has not been disclosed to the U.S. Patent
and Trademark Office.
(xxxii) The Company has complied with all provisions of
Florida Statutes, Section 517.075, relating to issuers doing business
with Cuba.
Any certificate signed by any officer of the Company and delivered to the
Underwriter or counsel for the Underwriter in connection with the offering of
the Securities shall be deemed a representation and warranty by the Company, as
to matters covered thereby, to the Underwriter.
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2. Purchase and Sale. Subject to the terms and conditions and in
reliance upon the representations and warranties herein set forth, the Company
agrees to sell to the Underwriter, and the Underwriter agrees to purchase from
the Company, the Firm Stock. In addition, the Company grants to the Underwriter
options to purchase up to the aggregate amount of the Option Stock. Such options
are granted solely for the purpose of covering over-allotments in the sale of
Firm Stock and are exercisable as provided in Section 3 hereof. The price of
both the Firm Stock and any Option Stock shall be at a purchase price per share
specified in Schedule I hereto across from the caption "Proceeds to Company Per
Share."
3. Delivery and Payment. Delivery of and payment for the Firm Stock
shall be made on the date and at the time specified in Schedule I hereto or at
such time on such later date not more than three Business Days after the
foregoing date as the Underwriter shall designate, which date and time may be
postponed by agreement among the Underwriter and the Company (such date and time
of delivery and payment for the Firm Stock being herein called the "First
Closing Date"). Delivery of the Firm Stock shall be made to the Underwriter
against payment by the Underwriter of the aggregate purchase prices of the Firm
Stock being sold by the Company to or upon the order of the Company by wire
transfer payable in same-day funds to an account specified by the Company.
Delivery of the Firm Stock shall be made through the facilities of The
Depository Trust Company unless the Underwriter shall otherwise instruct.
At any time on or before the thirtieth day after the date of this
Agreement, the options granted in Section 2 above may be exercised by written
notice being given to the Company by the Underwriter. Such notice shall set
forth the aggregate number of shares of Option Stock as to which the options are
being exercised, the denominations in which the shares of Option Stock are to be
issued and the date and time, as determined by the Underwriter, when the shares
of Option Stock are to be delivered; provided, however, that this date and time
may be postponed by agreement among the Underwriter and the Company, and such
date shall not be earlier than the First Closing Date nor earlier than the
second business day after the date on which the options shall have been
exercised nor later than the fifth business day after the date on which the
options shall have been exercised. The date and time the shares of Option Stock
are delivered are sometimes referred to as the "Second Closing Date" and the
First Closing Date and the Second Closing Date are sometimes each referred to as
a "Closing Date."
On the Second Closing Date, the Company shall deliver or cause to be
delivered the certificates representing the Option Stock to the Underwriter for
the account of the Underwriter against payment to or upon the order of the
Company by wire transfer payable in same-day funds to an account specified by
the Company. Delivery of the Option Stock shall be made through the facilities
of The Depository Trust Company unless the Underwriter shall otherwise instruct.
Upon delivery, the Option Stock shall be registered in such names and in such
denominations as the Underwriter shall request in the aforesaid written notice.
4. Offering by Underwriter. It is understood that the Underwriter
proposes to offer the Firm Stock for sale to the public as set forth in the
Final Prospectus.
5. Agreements. The Company agrees with the Underwriter that:
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(i) The Company will use its best efforts to cause the
Registration Statement, if not effective at the Execution Time, and any
amendment thereof, to become effective. Prior to the termination of the offering
of the Securities, the Company will not file any amendment of the Registration
Statement or supplement (including the Final Prospectus or any Preliminary Final
Prospectus) to the Basic Prospectus or any Rule 462(b) Registration Statement
unless the Company has furnished you a copy for your review prior to filing and
will not file any such proposed amendment or supplement to which you reasonably
object. Subject to the foregoing sentence, if the Registration Statement has
become or becomes effective pursuant to Rule 430A, or filing of the Final
Prospectus is otherwise required under Rule 424(b), the Company will cause the
Final Prospectus, properly completed, and any supplement thereto to be filed
with the Commission pursuant to the applicable paragraph of Rule 424(b) within
the time period prescribed and will provide evidence satisfactory to the
Underwriter of such timely filing. The Company will promptly advise the
Underwriter (1) when the Registration Statement, if not effective at the
Execution Time, shall have become effective, (2) when the Final Prospectus, and
any supplement thereto, shall have been filed (if required) with the Commission
pursuant to Rule 424(b) or when any Rule 462(b) Registration Statement shall
have been filed with the Commission, (3) when, prior to termination of the
offering of the Securities, any amendment to the Registration Statement shall
have been filed or become effective, (4) of any request by the Commission or its
staff for any amendment of the Registration Statement, or any Rule 462(b)
Registration Statement, or for any supplement to the Final Prospectus or for any
additional information, (5) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (6) of the receipt by the
Company of any notification with respect to the suspension of the qualification
of the Securities for sale in any jurisdiction or the institution or threatening
of any proceeding for such purpose. The Company will use its best efforts to
prevent the issuance of any such stop order or the suspension of any such
qualification and, if issued, to obtain as soon as possible the withdrawal
thereof.
(ii) If, at any time when a prospectus relating to the Securities
is required to be delivered under the Act, any event occurs as a result of which
the Final Prospectus as then 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 the Registration Statement
or supplement the Final Prospectus to comply with the Act or the Exchange Act or
the respective rules thereunder, the Company promptly will (1) notify the
Underwriter of such event, (2) prepare and file with the Commission, subject to
the second sentence of paragraph (i) of this Section 5, an amendment or
supplement which will correct such statement or omission or effect such
compliance and (3) supply any supplemented Final Prospectus to you in such
quantities as you may reasonably request.
(iii) As soon as practicable, the Company will make generally
available to its security holders and to the Underwriter an earnings statement
or statements of the Company and its Subsidiaries which will satisfy the
provisions of Section 11(a) of the Act and Rule 158 under the Act.
11
(iv) (A) The Company will furnish to the Underwriter and counsel
for the Underwriter, without charge, signed copies of the Registration Statement
(including exhibits thereto) a copy of the Registration Statement (without
exhibits thereto) and, so long as delivery of a prospectus by the Underwriter or
dealer may be required by the Act, as many copies of each Preliminary Final
Prospectus and the Final Prospectus and any supplement thereto as the
Underwriter may reasonably request. The Company will pay the expenses of
printing or other production of all documents relating to the offering.
(B) The Company will arrange, if necessary, for the
qualification of the Securities for sale under the laws of such
jurisdictions as the Underwriter may reasonably designate, will maintain
such qualifications in effect so long as required for the distribution of
the Securities and will pay any fee of the National Association of
Securities Dealers, Inc., in connection with its review of the offering;
provided that in no event shall the Company be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to take
any action that would subject it to service of process in suits, other
than those arising out of the offering or sale of the Securities, in any
jurisdiction where it is not now so subject.
(v) The Company will not, without the prior written consent of the
Underwriter, offer, sell, contract to sell, pledge, or otherwise dispose of, (or
enter into any transaction which is designed to, or might reasonably be expected
to, result in the disposition (whether by actual disposition or effective
economic disposition due to cash settlement or otherwise) by the Company or any
affiliate of the Company or any person in privity with the Company or any
affiliate of the Company), directly or indirectly, including the filing (or
participation in the filing) of a registration statement with the Commission in
respect of, or establish or increase a put equivalent position or liquidate or
decrease a call equivalent position within the meaning of Section 16 of the
Exchange Act, any other shares of Common Stock or any securities convertible
into, or exercisable, or exchangeable for, shares of Common Stock; or publicly
announce an intention to effect any such transaction, until the Business Day set
forth on Schedule I hereto, provided, however, that (i) the Company may issue
and sell shares of Common Stock pursuant to any employee stock option plan,
stock ownership plan or dividend reinvestment plan of the Company in effect at
the Execution Time, (ii) the Company may issue shares of Common Stock issuable
upon the conversion of securities or the exercise of warrants outstanding at the
Execution Time, and (iii) the Company may take any actions it deems necessary to
fulfill its obligations under the Registration Rights Agreements.
(vi) The Company will not take, directly or indirectly, any action
designed to or that would constitute or that might reasonably be expected to
cause or result in, under the Exchange Act or otherwise, stabilization or
manipulation of the price of any security of the Company to facilitate the sale
or resale of the Securities.
(vii) The Company agrees to pay the following costs and expenses and
all other costs and expenses incident to the performance by the Company of its
obligations hereunder: (i) the preparation, printing or reproduction and filing
with the Commission of the Registration Statement (including financial
statements and exhibits
12
thereto), each Preliminary Final Prospectus, each Final Prospectus, and
each amendment or supplement to any of them; (ii) the printing (or
reproduction) and delivery (including postage, air freight charges and
charges for counting and packaging) of such copies of the Registration
Statement, each Preliminary Final Prospectus, each Final Prospectus, and
all amendments or supplements to any of them, as may, in each case, be
requested for use in connection with the offering and sale of the
Securities; (iii) the preparation, printing, authentication, issuance and
delivery of certificates for the Securities, including any stamp or
transfer taxes in connection with the original issuance and sale of the
Securities; (iv) the printing (or reproduction) and delivery of this
Agreement, any blue sky memorandum and all other agreements or documents
printed (or reproduced) and delivered in connection with the offering of
the Securities; (v) the registration of the Securities under the Exchange
Act and the listing of the Securities on the Nasdaq National Market; (vi)
any registration or qualification of the Securities for offer and sale
under the securities or blue sky laws of the several states (including
filing fees and the reasonable fees and expenses of counsel for the
Underwriter relating to such registration and qualification); (vii) any
filings required to be made with the National Association of Securities
Dealers, Inc. (including filing fees and the reasonable fees and expenses
of counsel for the Underwriter relating to such filings); (viii) the
expenses incurred by or on behalf of Company representatives in connection
with presentations to prospective purchasers of the Securities; (ix) the
fees and expenses of the Company's accountants and the fees and expenses
of counsel (including local and special counsel) for the Company; and (x)
all other costs and expenses incident to the performance by the Company of
its obligations under this Agreement.
6. Conditions to the Obligations of the Underwriter. The obligations of
the Underwriter to purchase the Firm Stock or Option Stock, as the case may be,
shall be subject to the accuracy of the representations and warranties on the
part of the Company contained herein as of the Execution Time, each Closing Date
and any settlement date pursuant to Section 3 hereof, to the accuracy of the
statements of the Company made in any certificates pursuant to the provisions
hereof, to the performance by the Company of its obligations hereunder and to
the following additional conditions:
(a) If the Registration Statement has not become effective prior
to the Execution Time, unless the Underwriter agrees in writing to a later time,
the Registration Statement will become effective not later than (i) 6:00 PM New
York City time on the date of determination of the public offering price, if
such determination occurred at or prior to 3:00 PM New York City time on such
date or (ii) 9:30 AM on the Business Day following the day on which the public
offering price was determined, if such determination occurred after 3:00 PM New
York City time on such date; if filing of the Final Prospectus, or any
supplement thereto, is required pursuant to Rule 424(b), the Final Prospectus,
and any such supplement, will be filed in the manner and within the time period
required by Rule 424 (b); and no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been instituted or threatened.
(b) The Company shall have requested and caused Xxxxxxxx & Xxxxxx,
LLP, counsel for the Company, to have furnished to the Underwriter their
opinion, dated the First
13
Closing Date or the Second Closing Date, as the case may be, and addressed to
the Underwriter, to the effect that:
(i) each of the Company and its Subsidiaries has been duly
organized and is validly existing as a corporation, limited liability
company or limited partnership in good standing under the laws of the
state of its organization. Each of the Company and its Subsidiaries is
duly qualified to transact business and is in good standing as a foreign
corporation, limited liability company or limited partnership 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 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, limited liability company or limited partnership, as
the case may be, 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 Final Prospectus and with
respect to the Company to enter into and perform its obligations under
this Agreement and to issue and sell the Securities;
(iii) the authorized, issued and outstanding capital stock of
the Company is as set forth in the Registration Statement and the Final
Prospectus 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 employee
benefit plans referred to in the Final Prospectus or pursuant to the
exercise of options referred to in the Final 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 Securities 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 Securities is or will be subject to
personal liability by reason of being such a holder. The issuance and sale
of the Securities by the Company is not subject to any preemptive or other
similar rights of any securityholder of the Company. To the best of such
counsel's knowledge, there are no (i) preemptive or other rights to
subscribe for or to purchase any securities of the Company or (ii)
restrictions 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, other than, in the case of
clause (ii), the restrictions on transfer of shares issued under the
Securities Purchase Agreement dated as of November 1, 2000, the Securities
Purchase Agreement dated as of March 5, 2001 and the Securities Purchase
Agreement dated as of December 5, 2002, each by and among the Company and
the Investors named therein. To the best of such counsel's knowledge,
except as disclosed in the Registration Statement and the Final
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,
14
exercisable for, or exchangeable for stock of the Company. The Common
Stock and the Securities conform in all material respects to the
descriptions thereof contained in the Registration Statement and the Final
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, except as have
been waived or satisfied, (i) to have any security owned by such holder
included in the Registration Statement or (ii) to otherwise demand
registration of any security owned by such holder, except, with respect to
the rights referred to in clause (ii), the registration rights set forth
in the Registration Rights Agreements;
(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 Securities. 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 its terms, except as rights to indemnity and contribution hereunder
may be limited by securities laws, and except as such enforceability may
be limited by applicable bankruptcy, insolvency, fraudulent conveyance,
reorganization, moratorium or 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 Securities) will (i) violate any provision of the
charter or by-laws of the Company or any of its Subsidiaries, (ii) to the
best of such counsel's knowledge, 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 its Subsidiaries pursuant to the terms of, any agreement that is
filed as an exhibit to the Registration Statement (including any document
incorporated therein by reference), or (iii) to the knowledge of such
counsel after reasonable inquiry, conflict with, result in a breach or
violation of or imposition of any lien, charge or encumbrance upon any
property or assets of the Company or its Subsidiaries pursuant to any
statute, law, rule, regulation, judgment, order or decree applicable to
the Company or its Subsidiaries of any court, regulatory body,
administrative agency, governmental body, arbitrator or other authority
having jurisdiction over the Company or its Subsidiaries or any of its or
their properties, which violation or default could, except in the case of
clause (iii) above, either individually or in the aggregate with all other
violations and defaults referred to in this paragraph (if any), reasonably
be expected to have a Material Adverse Effect in the ordinary course of
business;
15
(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 Act and such as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Securities by the several Underwriters;
(vii) to the best of such counsel's knowledge, there is no
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 Final
Prospectus and is not so disclosed or which could reasonably be expected
to have a Material Adverse Effect;
(viii) the Registration Statement, the Basic Prospectus, the
Preliminary Final Prospectus and the Final Prospectus and each amendment
or supplement thereto (except for the financial statements and schedules
and other financial and engineering data included therein, as to which
such counsel expresses no opinion) comply as to form in all material
respects with the requirements of the Act and the rules and documents
incorporated by reference in the Registration Statement, the Basic
Prospectus, the Preliminary Final Prospectus and the Final Prospectus and
any further amendment or supplement to any such incorporated document made
by the Company (except for financial statements and schedules and other
financial and engineering date 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 Act or Exchange Act, as applicable,
and the rules and regulations of the Commission thereunder (excluding
those portions of filings which have been amended in subsequent filings
made prior to the date hereof);
(ix) the Registration Statement is effective under the 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 pending. Any required filing of the
Final Prospectus and any supplement thereto pursuant to Rule 424(b) under
the Act has been made in the manner and within the time period required by
such Rule 424(b);
(x) the Company has filed all applications and other
documents necessary for the Securities to be quoted on the Nasdaq National
Market, subject only to official notice of issuance;
(xi) the capital stock of the Company conforms in all
material respects to the description thereof contained in the Final
Prospectus under the caption "Description of Capital Stock;"
16
(xii) 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. Copies of such 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 Underwriter and representatives of the independent
certified public accountants of the Company, at which conferences the contents
of the Registration Statement and the Final 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 Final 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, and except with respect to engineering 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 Final
Prospectus as amended or supplemented (except with respect to the financial
statements, notes and schedules thereto and other financial data, and except
with respect to engineering 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 Final
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 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 fact necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading.
(c) The Company shall have requested and caused Xxxxxx Xxxxxx,
counsel for the Company, to have furnished to the Underwriter his opinion, dated
the First Closing Date or the Second Closing Date, as the case may be, and
addressed to the Underwriter, to the effect that, to such counsel's knowledge,
accurate copies of all contracts and other documents required to be filed as
exhibits to, or described in, the Registration Statement (including any document
incorporated therein by reference) have been so filed with the Commission or are
fairly described in the Registration Statement (including any document
incorporated therein by reference), as the case may be.
17
(d) The Underwriter shall have received from Xxxxxxx Xxxxx LLP,
counsel for the Underwriter, such opinion or opinions, dated the First Closing
Date or the Second Closing Date, as the case may be, and addressed to the
Underwriter, with respect to the issuance and sale of the Securities, the
Registration Statement, the Final Prospectus (together with any supplement
thereto) and other related matters as the Underwriter may reasonably require,
and the Company shall have furnished to such counsel such documents as they
request for the purpose of enabling them to pass upon such matters.
(e) The Company shall have furnished to the Underwriter a
certificate of the Company, signed by the Chairman of the Board or the President
and the principal financial or accounting officer of the Company, dated the
First Closing Date or the Second Closing Date, as the case may be, to the effect
that the signers of such certificate have carefully examined the Registration
Statement, the Final Prospectus, any supplements to the Final Prospectus and
this Agreement and that:
(i) the representations and warranties of the Company in
this Agreement are true and correct on and as of each Closing Date with
the same effect as if made on such Closing Date and the Company has
complied with all the agreements and satisfied all the conditions on its
part to be performed or satisfied at or prior to such Closing Date;
(ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and no proceedings for that purpose
have been instituted or, to the Company's knowledge, threatened; and
(iii) since the date of the most recent financial statements
included or incorporated by reference in the Final Prospectus (exclusive
of any supplement thereto), there has been no material adverse effect on
the condition (financial or otherwise) prospects, earnings, business or
properties of the Company and its Subsidiaries, taken as a whole, whether
or not arising from transactions in the ordinary course of business,
except as set forth in or contemplated in the Final Prospectus (exclusive
of any supplement thereto).
(f) The Company shall have requested and caused
PricewaterhouseCoopers LLP to have furnished to the Underwriter, at the
Execution Time and at each Closing Date, letters (which may refer to letters
previously delivered to the Underwriter), dated respectively as of the Execution
Time and as of each Closing Date, in form and substance satisfactory to the
Underwriter, confirming that they are independent accountants within the meaning
of the Act and the Exchange Act and the respective applicable rules and
regulations adopted by the Commission thereunder and stating in effect, except
as provided in Schedule I hereto, that:
(i) in their opinion the audited financial statements and
financial statement schedules included or incorporated by reference in the
Registration Statement and the Final Prospectus and reported on by them
comply as to form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act and the related rules and
regulations adopted by the Commission;
18
(ii) on the basis of a reading of the latest unaudited
financial statements made available by the Company and its Subsidiaries;
carrying out certain specified procedures (but not an examination in
accordance with generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the comments
set forth in such letter; a reading of the minutes of the meetings of the
stockholders, directors and the audit committee of the Company and of the
Subsidiaries; and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company and its
Subsidiaries as to transactions and events subsequent to December 31,
2003, nothing came to their attention which caused them to believe that:
1. any unaudited financial statements included or
incorporated by reference in the Registration Statement and the
Final Prospectus do not comply as to form in all material respects
with applicable accounting requirements of the Act and with the
related rules and regulations adopted by the Commission with respect
to financial statements included or incorporated by reference in
quarterly reports on Form 10-Q under the Exchange Act; and said
unaudited financial statements are not in conformity with generally
accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included or
incorporated by reference in the Registration Statement and the
Final Prospectus;
2. with respect to the period subsequent to March 31,
2004, there were any changes, at a specified date not more than five
days prior to the date of the letter, in the long-term debt of the
Company and its Subsidiaries or capital stock of the Company or
decreases in the stockholders' equity of the Company as compared
with the amounts shown on the March 31,2004 consolidated balance
sheet included or incorporated by reference in the Registration
Statement and the Final Prospectus, or for the period from March 31,
2004 to such specified date there were any decreases, as compared
with the corresponding period in the preceding year in net revenues
or income before income taxes or in total or per share amounts of
net income of the Company and its Subsidiaries, except in all
instances for changes or decreases set forth in such letter, in
which case the letter shall be accompanied by an explanation by the
Company as to the significance thereof unless said explanation is
not deemed necessary by the Underwriter;
3. the information included or incorporated by
reference in the Registration Statement and Final Prospectus in
response to Regulation S-K, Item 301 (Selected Financial Data), Item
302 (Supplementary Financial Information) , Item 402 (Executive
Compensation) and Item 503 (d) (Ratio of Earnings to Fixed Charges)
is not in conformity with the applicable disclosure requirements of
Regulation S-K; and
(iii) they have performed certain other specified procedures
as a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from
19
the general accounting records of the Company and its Subsidiaries) set
forth in the Registration Statement and the Final Prospectus, including
the information incorporated by reference in the Registration Statement
and the Final Prospectus from Items 1, 2, 6, 7 and 11 of the Company's
Annual Report on Form 10-K for the year ended December 31, 2003, and = the
information incorporated by reference in the Registration Statement and
the Final Prospectus from the "Management's Discussion and Analysis of
Financial Condition and Results of Operations" included in the Company's
Quarterly Report on Form 10-Q for the quarter ended March 31, 2004 agrees
with the accounting records of the Company and its Subsidiaries, excluding
any questions of legal interpretation.
References to the Final Prospectus in this paragraph (f) include any
supplement thereto at the date of the letter.
(g) The Company shall have requested and caused Xxxxxx, Xxxxxxxxx
& Associates, Inc. to have furnished to the Underwriter, at the Execution Time
and at each Closing Date, letters (which may refer to letters previously
delivered to the Underwriter), dated respectively as of the Execution Time and
as of each Closing Date, in form and substance satisfactory to the Underwriter.
(h) Subsequent to the Execution Time or, if earlier, the dates as
of which information is given in the Registration Statement (exclusive of any
amendment thereof) and the Final Prospectus (exclusive of any supplement
thereto), there shall not have been (i) any change or decrease specified in the
letter or letters referred to in paragraphs (f) and (g) of this Section 6 or
(ii) any change, or any development involving a prospective change, in or
affecting the condition (financial or otherwise), earnings, business or
properties of the Company and its Subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of business, except as set
forth in or contemplated in the Final Prospectus (exclusive of any supplement
thereto) the effect of which, in any case referred to in clause (i) or (ii)
above, is, in the reasonable judgment of the Underwriter, so material and
adverse as to make it impractical or inadvisable to proceed with the offering or
delivery of the Securities as contemplated by the Registration Statement
(exclusive of any amendment thereof) and the Final Prospectus (exclusive of any
supplement thereto).
(i) Prior to each Closing Date, the Company shall have furnished
to the Underwriter such further information, certificates and documents as the
Underwriter may reasonably request.
(j) Prior to the First Closing Date, the Securities shall have
been listed for trading on the Nasdaq National Market, and satisfactory evidence
of such actions shall have been provided to the Underwriter.
(k) At the Execution Time, the Company shall have furnished to the
Underwriter a letter substantially in the form of Exhibit A hereto from each
executive officer and director of the Company.
If any of the conditions specified in this Section 6 shall not have been
fulfilled in all material respects when and as provided in this Agreement, or if
any of the opinions and
20
certificates mentioned above or elsewhere in this Agreement shall not be in all
material respects reasonably satisfactory in form and substance to the
Underwriter and counsel for the Underwriter, this Agreement and all obligations
of the Underwriter hereunder may be canceled at, or at any time prior to, the
First Closing Date or the Second Closing Date, as the case may be, by the
Underwriter. Notice of such cancellation shall be given to the Company in
writing or by telephone or facsimile confirmed in writing.
The documents required to be delivered by this Section 6 shall be
delivered at the office of Xxxxxxx Xxxxx LLP, counsel for the Underwriter, at
8:00 a.m. (Austin, Texas time), on the First Closing Date or the Second Closing
Date, as the case may be.
7. Reimbursement of Underwriter's Expenses. If the sale of the
Securities provided for herein is not consummated because any condition to the
obligations of the Underwriter set forth in Section 6 hereof is not satisfied,
other than the condition set forth in Section 6(h)(ii) if such condition is not
satisfied as a result of event or condition that is industry wide and not
specific to the Company, because of any termination pursuant to Section 9(i)
hereof or because of any refusal, inability or failure on the part of the
Company to perform any agreement herein or comply with any provision hereof
other than by reason of a default by any of the Underwriter, the Company will
reimburse the Underwriter on demand for all out-of-pocket expenses (including
reasonable fees and disbursements of counsel) that shall have been reasonably
incurred by them in connection with the proposed purchase and sale of the
Securities.
8. Indemnification and Contribution. (a) The Company agrees to
indemnify and hold harmless the Underwriter, the directors, officers, employees
and agents of the Underwriter and each person who controls the Underwriter
within the meaning of either the Act or the Exchange Act against any and all
losses, claims, damages or liabilities, joint or several, to which they or any
of them may become subject under the Act, the Exchange Act or other Federal or
state statutory law or regulation, at common law or otherwise, insofar as such
losses, claims, damages or liabilities (or actions in respect thereof) arise out
of or are based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement or in any amendment
thereof, or in the Basic Prospectus, any Preliminary Final Prospectus or the
Final Prospectus, or in any amendment thereof or supplement thereto, or arise
out of or are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, and agrees to reimburse each such indemnified party, as
incurred, for any legal or other expenses reasonably incurred by them in
connection with investigating or defending any such loss, claim, damage,
liability or action; provided, however, that the Company will not be liable in
any such case to the extent that any such loss, claim, damage or liability
arises out of or is based upon any such untrue statement or alleged untrue
statement or omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on behalf of
the Underwriter specifically for inclusion therein. This indemnity agreement
will be in addition to any liability that the Company may otherwise have.
(b) The Underwriter agrees to indemnify and hold harmless the
Company, each of its directors, each of its officers who signs the Registration
Statement, and each person who controls the Company within the meaning of either
the Act or the Exchange Act, to the same extent as the foregoing indemnity to
the Underwriter, but only with reference to written
21
information relating to such Underwriter furnished to the Company by or on
behalf of such Underwriter specifically for inclusion in the documents referred
to in the foregoing indemnity. This indemnity agreement will be in addition to
any liability that the Underwriter may otherwise have. The Company acknowledges
that the statements set forth in the paragraph on the cover page regarding
delivery of the Securities and, under the heading "Underwriting," the paragraph
related to stabilization in the Final Prospectus constitute the only information
furnished in writing by or on behalf of the Underwriter for inclusion in the
Final Prospectus.
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying party
under this Section 8, notify the indemnifying party in writing of the
commencement thereof; but the failure so to notify the indemnifying party (i)
will not relieve it from liability under paragraph (a) or (b) above unless and
to the extent it did not otherwise learn of such action and such failure results
in the forfeiture by the indemnifying party of substantial rights and defenses
and (ii) will not, in any event, relieve the indemnifying party from any
obligations to any indemnified party other than the indemnification obligation
provided in paragraph (a) or (b) above. The indemnifying party shall be entitled
to appoint counsel of the indemnifying party's choice at the indemnifying
party's expense to represent the indemnified party in any action for which
indemnification is sought (in which case the indemnifying party shall not
thereafter be responsible for the fees and expenses of any separate counsel
retained by the indemnified party or parties except as set forth below);
provided, however, that such counsel shall be satisfactory to the indemnified
party in its reasonable discretion. Notwithstanding the indemnifying party's
election to appoint counsel to represent the indemnified party in an action, the
indemnified party shall have the right to employ separate counsel (including one
local counsel), and the indemnifying party shall bear the reasonable fees, costs
and expenses of such separate counsel if (i) the use of counsel chosen by the
indemnifying party to represent the indemnified party would present such counsel
with a conflict of interest, (ii) the actual or potential defendants in, or
targets of, any such action include both the indemnified party and the
indemnifying party and representation of both parties by the same counsel would
be inappropriate due to actual or potential differing interests between them,
(iii) the indemnifying party shall not have employed counsel satisfactory to the
indemnified party to represent the indemnified party within a reasonable time
after notice of the institution of such action or (iv) the indemnifying party
shall authorize the indemnified party to employ separate counsel at the expense
of the indemnifying party. An indemnifying party will not, without the prior
written consent of the indemnified parties, settle or compromise or consent to
the entry of any judgment with respect to any pending or threatened claim,
action, suit or proceeding in respect of which indemnification or contribution
may be sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement, compromise or
consent includes an unconditional release of each indemnified party from all
liability arising out of such claim, action, suit or proceeding.
(d) In the event that the indemnity provided in paragraph (a) or
(b) of this Section 8 is unavailable to or insufficient for any reason to hold
harmless an indemnified party for the types of indemnified losses specified in
those sections, the Company and the Underwriter agree to contribute to the
aggregate losses, claims, damages and liabilities (including legal or other
expenses reasonably incurred in connection with investigating or defending same)
(collectively "Losses") to which the Company and the Underwriter may be subject
in such
22
proportion as is appropriate to reflect the relative benefits received by the
Company and by the Underwriter from the offering of the Securities; provided,
however, that in no case shall the Underwriter be responsible for any amount in
excess of the underwriting discount or commission applicable to the Securities
purchased by the Underwriter hereunder. If the allocation provided by the
immediately preceding sentence is unavailable for any reason, the Company and
the Underwriter shall contribute in such proportion as is appropriate to reflect
not only such relative benefits but also the relative fault of the Company and
of the Underwriter in connection with the statements or omissions which resulted
in such Losses as well as any other relevant equitable considerations. Benefits
received by the Company shall be deemed to be equal to the total net proceeds
from the offering (before deducting expenses) received by the Company, and
benefits received by the Underwriter shall be deemed to be equal to the total
underwriting discounts and commissions, in each case as set forth on the cover
page of the Final Prospectus. Relative fault shall be determined by reference
to, among other things, whether any untrue or any alleged untrue statement of a
material fact or the omission or alleged omission to state a material fact
relates to information provided by the Company on the one hand or the
Underwriter on the other, the intent of the parties and their relative
knowledge, access to information and opportunity to correct or prevent such
untrue statement or omission. The Company and the Underwriter agree that it
would not be just and equitable if contribution were determined by pro rata
allocation or any other method of allocation that does not take account of the
equitable considerations referred to above. Notwithstanding the provisions of
this paragraph (d), no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. For purposes of
this Section 8, each person who controls the Underwriter within the meaning of
either the Act or the Exchange Act and each director, officer, employee and
agent of the Underwriter shall have the same rights to contribution as the
Underwriter, and each person who controls the Company within the meaning of
either the Act or the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to the
applicable terms and conditions of this paragraph (d).
9. Termination. This Agreement shall be subject to termination in the
absolute discretion of the Underwriter, by notice given to the Company prior to
delivery of and payment for the Firm Stock, if at any time prior to such time
(i) trading in the Company's Common Stock shall have been suspended by the
Commission or the Nasdaq National Market, (ii) trading in securities generally
on the New York Stock Exchange or the American Stock Exchange shall have been
suspended or limited or minimum prices shall have been established on the New
York Stock Exchange or the Nasdaq National Market (other than minimum prices
required by the New York Stock Exchange or Nasdaq National Market to maintain
eligibility for listing or trading on such exchange or market), (iii) a banking
moratorium shall have been declared either by Federal or New York State
authorities or if any material disruption in commercial banking or securities
settlement or clearance services shall have occurred or (iv) there shall have
occurred any outbreak or escalation of hostilities or acts of terrorism
involving the United States, declaration by the United States of a national
emergency or war, or other calamity or crisis the effect of which on financial
markets is such as to make it, in the sole judgment of the Underwriter,
impractical or inadvisable to proceed with the offering or delivery of the
Securities as contemplated by the Final Prospectus (exclusive of any supplement
thereto).
23
10. Representations and Indemnities to Survive. The respective
agreements, representations, warranties, indemnities and other statements of the
Company or its officers and of the Underwriter set forth in or made pursuant to
this Agreement will remain in full force and effect, regardless of any
investigation made by or on behalf of the Underwriter or the Company or any of
the officers, directors, employees, agents or controlling persons referred to in
Section 8 hereof, and will survive delivery of and payment for the Securities.
The provisions of Sections 7 and 8 hereof shall survive the termination or
cancellation of this Agreement.
11. Notices. All communications hereunder will be in writing and
effective only on receipt, and, if sent to the Underwriter, will be mailed,
delivered or telefaxed to Xxxxx Xxxx, Xxxxxxx Xxxxx & Associates, Inc., 000
Xxxxxxxx Xxxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000, (facsimile: (000) 000-0000),
with a copy to Xxxxxxx Xxxxx LLP, 000 Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000
(facsimile: (000) 000-0000); or, if sent to the Company, will be mailed,
delivered or telefaxed to Xxxxxx Xxxxxxxx at 0000 Xxxxxx Xxxxx Xxxxxxx, Xxxxxxxx
0, Xxxxx 000, Xxxxxx XX 00000 (facsimile: 512-427-3400), with a copy to Xxxxxxxx
& Xxxxxx L.L.P., Attention Xxxxxxx Xxxxxx, 0000 Xxxxxxx Xxxxxx, Xxxxx 0000,
Xxxxxx, Xxxxx 00000 (facsimile: (000) 000-0000).
12. Successors. This Agreement will inure to the benefit of and be
binding upon the parties hereto and their respective successors and the
officers, directors, employees, agents and controlling persons referred to in
Section 8 hereof, and no other person will have any right or obligation
hereunder.
13. Applicable Law. This Agreement will be governed by and construed in
accordance with the laws of the State of New York applicable to contracts made
and to be performed within the State of New York.
14. Counterparts. This Agreement may be signed in one or more
counterparts, each of which shall constitute an original and all of which
together shall constitute one and the same agreement. A facsimile signature of a
party shall have the same legal effect as an original signature when delivered
to the other party.
15. Headings. The section headings used herein are for convenience only
and shall not affect the construction hereof.
16. Definitions. The terms that follow, when used in this Agreement,
shall have the meanings indicated.
"Act" shall mean the Securities Act of 1933, as amended, and the rules and
regulations of the Commission promulgated thereunder.
"Basic Prospectus" shall mean the prospectus referred to in paragraph 1(a)
above contained in the Registration Statement at the Effective Date including
any Preliminary Final Prospectus.
"Business Day" shall mean any day other than a Saturday, a Sunday or a
legal holiday or a day on which banking institutions or trust companies are
authorized or obligated by law to close in New York City.
24
"Commission" shall mean the Securities and Exchange Commission.
"Effective Date" shall mean each date and time that the Registration
Statement, any post-effective amendment or amendments thereto and any Rule
462(b) Registration Statement became or becomes effective.
"Exchange Act" shall mean the Securities Exchange Act of 1934, as amended,
and the rules and regulations of the Commission promulgated thereunder.
"Execution Time" shall mean the date and time that this Agreement is
executed and delivered by the parties hereto.
"Final Prospectus" shall mean the prospectus supplement relating to the
Securities that was first filed pursuant to Rule 424(b) after the Execution
Time, together with the Basic Prospectus.
"Preliminary Final Prospectus" shall mean any preliminary prospectus
supplement to the Basic Prospectus which describes the Securities and the
offering thereof and is used prior to filing of the Final Prospectus, together
with the Basic Prospectus.
"Registration Statement" shall mean the registration statement referred to
in paragraph 1(a) above, including exhibits and financial statements, as amended
at the Execution Time (or, if not effective at the Execution Time, in the form
in which it shall become effective) and, in the event any post-effective
amendment thereto or any Rule 462(b) Registration Statement becomes effective
prior to the First Closing Date, shall also mean such registration statement as
so amended or such Rule 462(b) Registration Statement, as the case may be. Such
term shall include any Rule 430A Information deemed to be included therein at
the Effective Date as provided by Rule 430A.
"Rule 415", "Rule 424", "Rule 430A" and "Rule 462" refers to such rules
under the Act.
"Rule 430A Information" shall mean information with respect to the
Securities and the offering thereof permitted to be omitted from the
Registration Statement when it becomes effective pursuant to Rule 430A.
"Rule 462(b) Registration Statement" shall mean a registration statement
and any amendments thereto filed pursuant to Rule 462(b) relating to the
offering covered by the registration statement referred to in Section 1(a)
hereof.
25
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to us the enclosed duplicate hereof, whereupon
this letter and your acceptance shall represent a binding agreement among the
Company and the Underwriter.
Very truly yours,
Xxxxxxx Exploration Company
By: /s/ XXXXXX X. XXXXXXXX, XX.
----------------------------------
Name: Xxxxxx X. Xxxxxxxx, Xx.
Title: Executive Vice President
and Chief Financial Officer
The foregoing Agreement is hereby
confirmed and accepted as of the date
first set forth above.
Xxxxxxx Xxxxx & Associates, Inc.
By: /s/ XXXX XXXX
-------------------------------
Name: Xxxx Xxxx
Title: Managing Director
Signature Page to Underwriters Agreement
SCHEDULE I
Underwriting Agreement dated July 23, 2004
Registration Statement No. 333-116390
Title, Purchase Price and Description:
Title: Common Stock
Number of shares of Firm Stock to be sold by the Company: 2,300,000
Number of shares of Option Stock to be sold by the 345,000
Company:
Price to Public per Share (include accrued $8.90
dividends, if any)
Price to Public -- total: $20,470,000
Underwriting Discount per Share: $ 0.31
Underwriting Discount -- total: $ 713,000
Proceeds to Company per Share: $ 8.59
Proceeds to Company -- total: $19,757,000
Other provisions: None
First Closing Date, Time and Location: Wednesday, July 28, 2004
Xxxxxxx Xxxxx LLP
000 Xxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx
Second Closing Location: Xxxxxxx Xxxxx LLP
000 Xxxxxxxx
Xxxxx 0000
Xxxxxx, Xxxxx
Type of Offering: Equity Offering
Date referred to in Section 5(v) after which the 45 days after the note hereof
Company may offer or sell securities issued or
guaranteed by the Company without the consent of
the Underwriter:
Modification of items to be covered by the letter None
from PricewaterhouseCoopers, LLP delivered
pursuant to Section 6 (f) at the Execution Time:
SCHEDULE II
SUBSIDIARIES
Xxxxxxx Oil & Gas, X.X.
Xxxxxxx, Inc.
Xxxxxxx Holdings I, LLC
Xxxxxxx Holdings II, LLC
EXHIBIT A
FORM OF LOCK-UP AGREEMENT
July 23, 2004
Xxxxxxx Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Re: Public Offering of Common Stock of Xxxxxxx Exploration Company
Ladies and 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 sell approximately 2,300,000 shares of Common
Stock (the "Offering") pursuant to a Registration Statement (File Number
333-116390) on Form S-3 (the "Registration Statement") and amendments thereto,
filed with the Securities and Exchange Commission. 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 and you to enter into the Underwriting
Agreement and to proceed with the Offering, the undersigned agrees, for the
benefit of the Company and you that should the Offering by 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 45 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 Underwriter 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 and 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.
Notwithstanding anything herein to the contrary, this agreement shall
terminate, and shall be null and void and of no force or effect whatsoever,
unless the Offering shall have been consummated on or before the date that is
sixty days after the date hereof.
Very truly yours,
Signature:
Printed Name:
Dated: ______________, 2004
