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EXHIBIT 1.1
PARALLEL PETROLEUM CORPORATION
UNDERWRITING AGREEMENT
December __, 1996
XXX XXXXXX & COMPANY
As Representative of the
Several Underwriters
000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000
Xxx Xxxxxxxxx, Xxxxxxxxxx 00000
Ladies and Gentlemen:
Parallel Petroleum Corporation, a Delaware corporation (the
"Company"), proposes to issue and sell to the several Underwriters named in
Schedule I hereto (the "Underwriters") an aggregate of 2,500,000 shares (the
"Firm Shares") of its authorized but unissued Common Stock, par value $0.01 per
share (the "Common Stock"). The Company also proposes to grant to the
Underwriters an option to purchase up to 375,000 additional shares of Common
Stock (the "Option Shares") for the sole purpose of covering over-allotments,
if any, in connection with the sale of the Firm Shares. The Firm Shares and
any Option Shares purchased pursuant to this Agreement are referred to below as
the "Shares." Xxx Xxxxxx & Company is acting as representative of the several
Underwriters and in that capacity is referred to in this Agreement as the
"Representative."
The Company hereby confirms its agreement with the several
Underwriters as follows:
1. Representations and Warranties of the Company. The Company
hereby represents and warrants to and agrees with each Underwriter as follows:
(a) The Company meets the requirements for use of Form S-2 under the
Securities Act of 1933, as amended (the "Securities Act"), and a registration
statement (Registration No. 333-_____) on Form S-2 relating to the Shares,
including such amendments to such registration statement as may have been
required to the date of this Agreement, has been prepared by the Company under
and in conformity with the provisions of the Securities Act and the rules and
regulations (the "Rules and Regulations") of the Securities and Exchange
Commission (the "Commission") thereunder and has been filed with the
Commission. After the execution of this Agreement, the Company will file with
the Commission either (i) if such registration statement, as it may have been
amended, has been declared by the Commission to be effective under the
Securities Act, either (A) if the Company relies on Rule 434 under the
Securities Act, a Term Sheet (defined below) relating to the Shares, that
identifies the Preliminary Prospectus (defined below) that it supplements and
contains such information as is required or permitted by Rules 434, 430A and
424(b) of the Rules and Regulations or (B) if the Company does not rely on Rule
434 under the Securities Act, a prospectus in the form
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most recently included in an amendment to such registration statement (or, if
no such amendment has been filed, in such registration statement), with such
changes or insertions as are required by Rule 430A of the Rules and Regulations
or permitted by Rule 424(b) of the Rules and Regulations, and in the case of
either (i)(A) or (i)(B) of this sentence, as has been provided to and approved
by the Representative prior to the execution of this Agreement, or (ii) if such
registration statement, as it may have been amended, has not been declared by
the Commission to be effective under the Securities Act, an amendment to such
registration statement, including a form of prospectus, a copy of which
amendment has been furnished to and approved by the Representative prior to the
execution of this Agreement. As used in this Agreement, the term "Registration
Statement" means such registration statement, as amended at the time when it
was or is declared effective, including all financial schedules and exhibits
thereto, any information omitted therefrom pursuant to Rule 430A of the Rules
and Regulations and included in the Prospectus (defined below) and further
including all filings or other documents incorporated therein; the term
"Preliminary Prospectus" means each prospectus subject to completion filed with
such registration statement or any amendment thereto (including the prospectus
subject to completion, if any, included in the Registration Statement or any
amendment thereto at the time it was or is declared effective and further
including all filings or documents incorporated therein); and the term
"Prospectus" means the following, including any filings or documents
incorporated therein:
(A) if the Company relies on Rule 434 under the Securities
Act, the Term Sheet relating to the Securities that is
first filed pursuant to Rule 424(b)(7) under the
Securities Act, together with the Preliminary Prospectus
identified therein that such Term Sheet supplements;
(B) if the Company does not rely on Rule 434 under the
Securities Act, the prospectus first filed with the
Commission pursuant to Rule 424(b) under the Securities
Act; or
(C) if the Company does not rely on Rule 434 under the
Securities Act and if no prospectus is required to be
filed pursuant to Rule 424(b) under the Securities Act,
the prospectus included in the Registration Statement;
provided that if any revised prospectus that is provided to the Underwriters by
the Company for use in connection with the offering of the Shares differs from
the prospectus on file with the Commission at the time the Registration
Statement became or becomes, as the case may be, effective, whether or not the
revised prospectus is required to be filed with the Commission pursuant to Rule
424(b)(3) of the Rules and Regulations, the term "Prospectus" shall mean such
revised prospectus (including all filings and documents incorporated therein)
from and after the time it is first provided to the Underwriters for such use.
The term "Term Sheet" as used in this Agreement means any term sheet that
satisfies the requirements of Rule 434 under the Securities Act. Any reference
in this Agreement to the "date" of a Prospectus that includes a Term Sheet
means the date of such Term Sheet.
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(b) No order suspending the effectiveness of the Registration
Statement or preventing or suspending the use of any Preliminary Prospectus or
the Prospectus has been issued and no proceedings for that purpose are pending
or, to the best knowledge of the Company, threatened or contemplated by the
Commission; no stop order suspending the sale of the Shares in any jurisdiction
has been issued and no proceedings for that purpose are pending or, to the best
knowledge of the Company, threatened or contemplated, and any request of the
Commission for additional information (to be included in the Registration
Statement, any Preliminary Prospectus or the Prospectus or otherwise) has been
complied with.
(c) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the jurisdiction of its
incorporation, has full power (corporate and other) and authority to own or
lease its properties and conduct its business as described in the Registration
Statement and the Prospectus and as is currently being conducted by it and is
duly qualified as a foreign corporation and in good standing in all
jurisdictions in which the character of the property owned or leased or the
nature of the business transacted by it makes qualification necessary (except
where the failure to be so qualified would not have a material adverse effect
on the business, properties, condition (financial or otherwise), results of
operations or prospects of the Company). The Company is in possession of and
operating in compliance with all authorizations, licenses, certificates,
consents, orders and permits from federal, state, local and other governmental
or regulatory authorities that are material to the conduct of its business, all
of which are valid and in full force and effect. The Company does not have any
"subsidiaries" (defined below) or own any equity securities of any other Entity
(defined below). As used in this Agreement, the word "subsidiary" means any
corporation, partnership, limited liability company or other entity (each an
"Entity") of which the Company directly or indirectly owns 50% or more of the
equity or that the Company directly or indirectly controls.
(d) When any Preliminary Prospectus was filed with the Commission it
(i) contained all statements required to be contained therein and complied in
all material respects with the requirements of the Securities Act, the Rules
and Regulations, the Securities Exchange Act of 1934, as amended (the "Exchange
Act") and the rules and regulations of the Commission thereunder (the "Exchange
Act Rules and Regulations") and (ii) did not include any untrue statement of a
material fact or omit to state any material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading. When the Registration Statement or any amendment thereto
was or is declared effective (the "Effective Date"), it (i) contained or will
contain all statements required to be contained therein and complied or will
comply in all material respects with the requirements of the Securities Act,
the Rules and Regulations, the Exchange Act and the Exchange Act Rules and
Regulations and (ii) did not or will not include any untrue statement of a
material fact or omit to state any material fact necessary to make the
statements therein not misleading. When the Prospectus or any Term Sheet that
is a part thereof or any amendment or supplement to the Prospectus is filed
with the Commission pursuant to Rule 424(b) (or, if the Prospectus or part
thereof or such amendment or supplement is not required to be so filed, when
the Registration Statement or the amendment thereto containing such amendment
or supplement to the Prospectus was or is declared effective) and on the
Closing Date (defined below) and any date
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on which Option Shares are to be purchased, the Prospectus, as amended or
supplemented at any such time, (i) contained or will contain all statements
required to be contained therein and complied or will comply in all material
respects with the requirements of the Securities Act, the Rules and Regulations
and the Exchange Act Rules and Regulations and (ii) did not or will not include
any untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading. The foregoing
provisions of this paragraph (d) do not apply to statements or omissions made
in any Preliminary Prospectus, the Registration Statement or any amendment
thereto or the Prospectus or any amendment or supplement thereto in reliance
upon and in conformity with written information furnished to the Company by any
Underwriter through the Representative specifically for use therein.
(e) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus), there has not been any
material loss or interference with the business of the Company from fire,
explosion, flood or other calamity, whether or not covered by insurance, or
from any court or governmental action, order or decree, or any changes in the
capital stock or long-term debt of the Company, or any dividend or distribution
of any kind declared, paid or made on the capital stock of the Company, or any
material change, or a development known to the Company that might cause or
result in a material change, in or affecting the business, properties,
condition (financial or otherwise), results of operations or prospects of the
Company, whether or not arising from transactions in the ordinary course of
business, in each case other than as may be set forth in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), and since such dates, except in the
ordinary course of business, the Company has not entered into any material
transaction not described in the Registration Statement and the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary Prospectus).
(g) There is no agreement, contract, license, lease or other
document required to be described in the Registration Statement or the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus) or to be filed as an exhibit to the Registration
Statement which is not described or filed as required. All contracts described
in the Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus), if any, are in full force and effect on the date
hereof, and neither the Company nor, to the best knowledge of the Company, any
other party, is in material breach of or default under any such contract.
(h) The authorized and outstanding capital stock of the Company is
set forth in the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus), and the description of the Common Stock
therein conforms with and accurately describes the rights set forth in the
instruments defining the Common Stock. The Shares are duly authorized and
will, when issued in accordance with the terms of this Agreement and against
payment therefor, be validly issued, fully paid and non-assessable, and the
issuance of the Shares is not subject to any preemptive or similar rights.
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(i) All of the outstanding shares of capital stock of the Company
have been duly authorized and validly issued and are fully paid and
nonassessable, have been issued in compliance with all applicable federal and
state securities laws and were not issued in violation of or subject to any
preemptive rights or other rights to subscribe for or purchase securities. The
description of the Company's stock option, stock bonus and other stock plans or
arrangements, and the options or other rights granted or exercised thereunder,
set forth in the Prospectus (or, if the Prospectus is not in existence, in the
most recent Preliminary Prospectus), accurately and fairly present the
information required to be shown with respect to such plans, arrangements,
options and rights. Other than this Agreement, the "Warrant Agreement" (as
defined in Section 1(dd) below) and the options and warrants to purchase Common
Stock described in the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus), there are no options, warrants or
other rights outstanding to subscribe for or purchase any shares of the
Company's capital stock. There are no preemptive rights applicable to any
shares of capital stock of the Company. There are no restrictions upon the
voting or transfer of any of the Firm Shares or Option Shares pursuant to the
Company's Certificate of Incorporation, bylaws or other governing documents or
any agreement to which the Company is a party or by which it may be bound.
Except as is provided in the Warrant Agreement and for the Shares, neither the
filing of the Registration Statement nor the offering or sale of the Shares as
contemplated by this Agreement gives rise to any rights, other than those which
have been waived, for or relating to the registration of any securities (other
than the Shares) of or issued by the Company.
(j) The Company has full right, power and authority to enter into
and perform its obligations under this Agreement and the Warrant Agreement and
to issue, sell and deliver the Shares. This Agreement and the Warrant
Agreement have each been duly authorized, executed and delivered by the Company
and constitute the valid and binding agreements of the Company, and each is
enforceable against the Company in accordance with its terms except insofar as
enforceability may be affected by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights generally and except
insofar as the indemnification and contribution provisions of Section 7 and
Section 3(f) of the Warrant Agreement hereof may be affected by public policy
concerns.
(k) The Company is not, nor with the giving of notice or lapse of
time or both would it be, in violation of or in default under, nor will the
execution or delivery of this Agreement or the Warrant Agreement or the
consummation of the transactions contemplated by this Agreement or the Warrant
Agreement result in a violation of or constitute a breach of or a default
(including without limitation with the giving of notice, the passage of time or
otherwise) under the certificate of incorporation, bylaws or other governing
documents of the Company or any obligation, agreement, covenant or condition
contained in any bond, debenture, note or other evidence of indebtedness or in
any contract, indenture, mortgage, deed of trust, loan agreement, lease,
license, joint venture or other agreement or instrument to which the Company is
a party or by which any of its properties may be bound or affected. The
Company has not incurred any liability, direct or indirect, for any finders' or
similar fees payable on behalf of the Company or the Underwriters in connection
with the transactions contemplated by this Agreement. The performance by the
Company of its obligations under
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this Agreement and the Warrant Agreement will not violate any law, ordinance,
rule or regulation (provided that no representation or warranty is made hereby
with respect to the effect, if any, of public policy concerns on the
indemnification and contribution provisions of Section 7 hereof and Section
3(f) of the Warrant Agreement), or any order, writ, injunction, judgment or
decree of any governmental agency or body or of any court having jurisdiction
over the Company or any of its properties, or result in the creation or
imposition of any lien, charge, claim or encumbrance upon any property of the
Company. Except for permits and similar authorizations required under the
Securities Act, the Exchange Act or under state securities or Blue Sky laws and
for such permits and authorizations that have been obtained, no consent,
approval, authorization or order of any court, governmental agency or body,
financial institution or any other person is required in connection with the
consummation of the transactions contemplated by this Agreement or the Warrant
Agreement.
(l) The Company owns, or has valid rights to use, all items of real
and personal property which are material to the business of the Company, free
and clear, except as described in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), of all liens, encumbrances and claims that might materially
interfere with the business, properties, condition (financial or otherwise),
results of operations or prospects of the Company.
(m) The Company owns or possesses adequate rights to use all
material patents, patent rights, inventions, trade secrets, know-how,
trademarks, service marks, tradenames and copyrights described or referred to
in the Registration Statement and the Prospectus (or, if the Prospectus is not
in existence, the most recent Preliminary Prospectus) as owned by or used by
it, or which are necessary for the conduct of its business as described in the
Registration Statement and the Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus); and the Company has not
received any notice of infringement of or conflict with asserted rights of
others with respect to any patents, patent rights, inventions, trade secrets,
know-how, trademarks, service marks, tradenames or copyrights which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling or finding,
might have a material adverse effect on the business, properties, condition
(financial or otherwise), results of operations or prospects of the Company.
(n) There is no litigation or governmental proceeding to which the
Company is a party or to which any property of the Company is subject which is
pending or, to the best knowledge of the Company, is threatened or contemplated
against the Company that might have a material effect on, or might result in
any material adverse change in the business, properties, condition (financial
or otherwise), results of operations or prospects of the Company, that might
prevent consummation of the transactions contemplated by this Agreement or the
Warrant Agreement or that is required to be disclosed in the Registration
Statement or Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) and are not so disclosed.
(o) The Company is not in violation of any law, order, ordinance,
rule or regulation, or any order, writ, injunction, judgment or decree of any
governmental agency or body or of
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any court, to which it or its properties (whether owned or leased) may be
subject, which violation might have a material adverse effect on the business,
properties, condition (financial or otherwise), results of operations or
prospects of the Company.
(p) The Company has not taken and shall not take, directly or
indirectly, any action designed to cause or result in, or which has constituted
or which might reasonably be expected to cause or result in, under the Exchange
Act, the rules and regulations of the Commission under the Exchange Act or
otherwise, the stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the Shares. No bid or purchase
by the Company and, to the best knowledge of the Company, no bid or purchase
that could be attributed to the Company (as a result of bids or purchases by an
"affiliated purchaser" within the meaning of Rule 10b-6 under the Exchange Act)
for or of the Common Stock, any securities of the same class or series as the
Common Stock or any securities convertible into or exchangeable for or that
represent any right to acquire the Common Stock is now pending or in progress
or will have commenced at any time prior to the completion of the distribution
of the Shares.
(q) KPMG Peat Marwick LLP, whose report appears in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence, the
most recent Preliminary Prospectus) is, and during the periods covered by its
report in the Registration Statement was, independent accountants as required
by the Securities Act and the Rules and Regulations. The financial statements
and schedules included in the Registration Statement, each Preliminary
Prospectus and the Prospectus present fairly (or, if the Prospectus has not
been filed with the Commission, as to the Prospectus, will present fairly) the
financial condition, results of operations, cash flow and changes in
stockholders' equity of the Company at the dates and for the periods indicated,
and the financial statements and schedules included in the Registration
Statement present fairly the information required to be stated therein. Such
financial statements and schedules have been prepared in accordance with
generally accepted accounting principles applied on a consistent basis
throughout the periods presented, except as may be stated therein. The
selected and summary financial and statistical data included in the
Registration Statement and the Prospectus present fairly (or, if the Prospectus
has not been filed with the Commission, as to the Prospectus, will present
fairly) the information shown therein and have been compiled on a basis
consistent with the audited financial statements presented therein. No other
financial statements or schedules are required to be included in the
Registration Statement.
(r) Any pro forma financial or other information and related notes
included in the Registration Statement, each Preliminary Prospectus and the
Prospectus comply (or, if the Prospectus has not been filed with the
Commission, as to the Prospectus, will comply) in all material respects with
the requirements of the Securities Act and the Rules and Regulations and
present fairly the pro forma information shown, as of the dates and for the
periods covered by such pro forma information. Such pro forma information,
including any related notes and schedules, has been prepared on a basis
consistent with the historical financial statements and other historical
information, as applicable, included in the Registration Statement, the
Preliminary Prospectus and the Prospectus (if filed with the Commission),
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except for the pro forma adjustments specified therein, and give effect to
assumptions made on a reasonable basis to give effect to historical and, if
applicable, proposed transactions described in the Registration Statement, each
Preliminary Prospectus and the Prospectus (if filed with the Commission).
(s) The statements in the Registration Statement, each Preliminary
Prospectus and the Prospectus concerning the reserve information of the Company
are (or, if the Prospectus has not been filed with the Commission, will, when
the Prospectus is so filed, be) correct in all material respects and do not
and, if applicable, will not omit to state a material fact necessary to make
the statements made in the Registration Statement, each Preliminary Prospectus
and the Prospectus not misleading.
(t) The books, records and accounts of the Company accurately and
fairly reflect, in reasonable detail, the transactions in and dispositions of
the assets of the Company. The systems of internal accounting controls
maintained by the Company are sufficient to provide reasonable assurances that:
(i) transactions are executed in accordance with management's general or
specific authorization; (ii) transactions are recorded as necessary (x) to
permit preparation of financial statements in conformity with generally
accepted accounting principles and (y) to maintain accountability for assets;
(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.
(u) The Company has delivered to the Representative the written
agreement of each of its officers and directors and, to the knowledge of the
Company at the date of this Agreement, the beneficial owners of one percent or
more the of Common Stock (assuming for this purpose that all options and
convertible securities held by each beneficial owner, but not by any other
person, have been exercised or exchanged for or converted into Common Stock)
(collectively, "Material Holders"), other than _____________, _____________ to
the effect that each of the Material Holders will not, for a period of 180 days
following the date of this Agreement, without the prior written consent of the
Representative, offer, sell or contract to sell, or otherwise dispose of, or
announce the offer of, any Common Stock or options or convertible securities
exercisable or exchangeable for, or convertible into, Common Stock. In
addition and without limitation, to the extent the Company has the right, with
respect to its outstanding securities or registration statements (other than
the Registration Statement) to preclude sales of such securities or under such
registration statements, the Company has precluded such sales for the maximum
period(s) permitted (but not in excess of 75 days).
(v) No labor disturbance by the employees of the Company exists, is
imminent or, to the knowledge of the Company, is contemplated or threatened;
and the Company is not aware of an existing, imminent or threatened labor
disturbance by the employees of any principal suppliers, manufacturers,
contractors or others that might be expected to result in any material change
in the business, properties, condition (financial or otherwise), results of
operations or prospects of the Company. No collective bargaining agreement
exists with any of the
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Company's employees and, to the best knowledge of the Company, no such
agreement is imminent.
(w) The Company has filed all federal, state, local and foreign tax
returns which are required to be filed or has requested extensions thereof and
has paid all taxes, including withholding taxes, penalties and interest,
assessments, fees and other charges to the extent that the same have become due
and payable. No tax assessment or deficiency has been made or proposed against
the Company nor has the Company received any notice of any proposed tax
assessment or deficiency.
(x) Except as set forth in the Prospectus (or, if the Prospectus not
in existence, the most recent Preliminary Prospectus), there are no outstanding
loans, advances or guaranties of indebtedness by the Company to or for the
benefit of any of (i) its "affiliates," as such term is defined in the Rules
and Regulations or (ii) any of the members of the families of any of them.
(y) The Company has not, directly or indirectly, at any time: (i)
made any contributions to any candidate for political office, or failed to
disclose fully any such contribution, in violation of law; (ii) made any
payment to any local, 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 all applicable laws; or (iii)
violated any provision of the Foreign Corrupt Practices Act of 1977, as
amended.
(z) The Company has no liability, absolute or contingent, relating
to: (i) public health or safety; (ii) worker health or safety; (iii) product
defect or warranty (except, as to product defect or warranty, as is disclosed
in the Registration Statement and Prospectus (or, if the Prospectus is not in
existence, the most recent Preliminary Prospectus)); or (iv) pollution, damage
to or protection of the environment, including, without limitation, relating to
damage to natural resources, emissions, discharges, releases or threatened
releases of hazardous materials into the environment (including, further
without limitation, ambient air, surface water, groundwater, land surface or
subsurface strata) or otherwise relating to the manufacture, processing, use,
treatment, storage, generation, disposal, transport or handling of any
hazardous materials. As used herein, "hazardous material" includes chemical
substances, wastes, pollutants, contaminants, hazardous or toxic substances,
constituents, materials or wastes, whether solid, gaseous or liquid in nature.
(aa) The Company has not distributed and will not distribute prior
to the Closing Date or on or prior to any date on which the Option Shares are
to be purchased, as the case may be, any prospectus or other offering material
in connection with the offering and sale of the Shares other than the
Preliminary Prospectus(es), the Prospectus, the Registration Statement and any
other material which may be permitted by the Securities Act and the Rules and
Regulations.
(bb) The Common Stock is traded on and, subject to official notice
of issuance, the Shares have been approved for inclusion for quotation on the
Nasdaq National Market.
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(cc) The Company is not now, and intends to conduct its affairs in
the future in such a manner so that it will not become, an investment company
within the meaning of the Investment Company Act of 1940, as amended.
(dd) The "Warrants" (as defined in the Warrant Agreement, dated as
of December __, 1996, between the Company and Xxx Xxxxxx & Company (the
"Warrant Agreement")) have been duly and validly authorized by all requisite
corporate action of the Company and, when issued and delivered against payment
therefor as provided in Section 3(l) below, will be valid and binding
obligations of the Company in accordance with their terms; the "Warrant Shares"
(as defined in the Warrant Agreement) have been duly and validly authorized for
issuance upon exercise of the Warrants and when so issued against payment
therefor as provided in the Warrant Agreement will be validly issued, fully
paid and non-assessable; and no person has any preemptive rights with respect
to the Warrants or the Warrant Shares.
2. Purchase, Sale and Delivery of Shares.
(a) On the basis of the representations, warranties, covenants and
agreements of the Company contained in this Agreement and subject to the terms
and conditions set forth in this Agreement, the Company agrees to sell to the
several Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $___ per share,
the respective number of Firm Shares set forth opposite the name of such
Underwriter on Schedule I to this Agreement (subject to adjustment as provided
in Section 8 of this Agreement). (If a Pricing Agreement is used and the price
at which the Underwriters are to purchase the Firm Shares has not been agreed
upon and the Pricing Agreement has not been executed and delivered by all
parties thereto by the close of business on the fourth business day following
the date of this Agreement, this Agreement shall terminate forthwith, without
liability or other obligation of any party to the other party, provided that
the engagement letter, dated as of October 14, 1996, between the Company and
Xxx Xxxxxx & Company will remain in full force and effect to the extent stated
in the next to the last paragraph of such letter).
(b) On the basis of the several (and not joint) covenants and
agreements of the Underwriters contained in this Agreement and subject to the
terms and conditions set forth in this Agreement, the Company grants an option
to the several Underwriters to purchase from the Company, severally and not
jointly, all or any portion of the Option Shares at the same price per share as
the Underwriters are to pay for the Firm Shares. This option may be exercised
only to cover over-allotments in the sale of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time (but not more
than once) on or before the 45th day after the date of the Prospectus upon
written, telecopied or telegraphic notice by the Representative to the Company
setting forth the aggregate number of Option Shares as to which the several
Underwriters are exercising the option and the settlement date. The Option
Shares shall be purchased severally, and not jointly, by each Underwriter, if
purchased at all, in the same proportion that the number of Firm Shares set
forth opposite the name of the Underwriter in Schedule I to this Agreement
bears to the total number of Firm Shares to be
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purchased by the Underwriters under Section 2(a) above, subject to such
adjustments as the Representative in its absolute discretion shall make to
eliminate any fractional shares. Delivery of certificates for the Option
Shares, and payment therefor, shall be made as provided in Section 2(c) and
Section 2(d) below.
(c) Delivery of the Firm Shares and the Option Shares (if the option
granted by the Company in Section 2(b) above has been exercised not later than
6:30 a.m., San Francisco time, on the date two business days preceding the
Closing Date), and payment therefor, less the nonaccountable expense allowance
provided for in Section 4(a)(ii) of this Agreement, shall be made at the office
of Xxx Xxxxxx & Company, 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, at 6:30 a.m., San Francisco time, on December __, 1996, or at
such time on such other day, not later than seven full business days after such
date, as shall be agreed upon in writing by the Company and the Representative,
or as provided in Section 8 of this Agreement. The date and hour of delivery
and payment for the Firm Shares are referred to in this Agreement as the
"Closing Date." As used in this Agreement, "business day" means a day on which
the Nasdaq National Market is open for trading and on which banks in New York
and California are open for business and not permitted by law or executive
order to be closed.
(d) If the option granted by the Company in Section 2(b) above is
exercised after 6:30 a.m., San Francisco time, on the date two business days
preceding the Closing Date, delivery of the Option Shares and payment therefor,
less the applicable portion, if any, of the nonaccountable expense allowance
provided for in Section 4(a)(ii) of this Agreement, shall be made at the office
of Xxx Xxxxxx & Company, 000 Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx,
Xxxxxxxxxx 00000, at 6:30 a.m., San Francisco time, on the date specified by
the Representative (which shall be three or four, or fewer, business days after
the exercise of the option, but not in excess of the period of time specified
in the Rules and Regulations).
(e) Payment of the purchase price for the Shares by the several
Underwriters shall be made by certified or official bank check or checks drawn
in next-day funds, payable to the order of the Company. Such payment shall be
made upon delivery of certificates for the Shares to you for the respective
accounts of the several Underwriters. Certificates for the Shares to be
delivered to you shall be registered in such name or names and shall be in such
denominations as the Representative may request at least two business days
before the Closing Date, in the case of Firm Shares, and at least one business
day prior to the purchase of the Option Shares, in the case of the Option
Shares. Such certificates will be made available to the Underwriters for
inspection, checking and packaging at the offices of Xxxx Xxxxx & Sons, New
York, New York, not less than one full business day prior to the Closing Date
or, in the case of the Option Shares, by 3:00 p.m., New York time, on the first
business day preceding the date of purchase.
It is understood that the Representative, individually and not on
behalf of the Underwriters, may (but shall not be obligated to) make payment to
the Company for Shares to be purchased by any Underwriter whose check shall not
have been received by the Representative on the Closing Date or any later date
on which Option Shares are purchased for
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the account of such Underwriter. Any such payment shall not relieve such
Underwriter from any of its obligations hereunder.
(f) It is understood that the several Underwriters propose to offer
the Shares for sale to the public as soon as the Representative deem it
advisable to do so. The Firm Shares are to be initially offered to the public
at the public offering price set forth (or to be set forth) in the Prospectus.
The Representative may from time to time thereafter change the public offering
price and other selling terms.
(g) The information set forth in the last paragraph on the front
cover page (insofar as such information relates to the Underwriters), the
legend respecting stabilization set forth on the inside front cover page and
the statements set forth under the caption "Underwriting" in any Preliminary
Prospectus and in the final form of Prospectus filed pursuant to Rule 424(b)
constitute the only information furnished by the Underwriters to the Company
for inclusion in any Preliminary Prospectus, the Prospectus or the Registration
Statement.
3. Further Agreements of the Company. The Company covenants and
agrees with the several Underwriters as follows:
(a) The Company will use its best efforts to cause the Registration
Statement, and any amendment thereof, if not effective at the time of execution
of this Agreement, to become effective as promptly as possible. If the
Registration Statement has become or becomes effective pursuant to Rule 430A,
or filing of the Prospectus is otherwise required under Rule 424(b), the
Company will file the Prospectus, properly completed (and in form and substance
reasonably satisfactory to the Underwriters) pursuant to Rule 424(b) within the
time period prescribed and will provide evidence satisfactory to the
Representative of such timely filing. The Company will not file the
Prospectus, any amended Prospectus, any amendment (including post-effective
amendments) to the Registration Statement or any supplement to the Prospectus
without (i) advising the Representative of and, a reasonable time prior to the
proposed filing of such amendment or supplement, furnishing the Representative
with copies thereof and (ii) obtaining the prior consent of the Representative
to such filing. The Company will prepare and file with the Commission, promptly
upon the request of the Representative, any amendment to the Registration
Statement or supplement to the Prospectus that may be necessary or advisable in
connection with the distribution of the Shares by you and use its best efforts
to cause the same to become effective as promptly as possible.
(b) The Company will promptly advise the Representative (i) when the
Registration Statement becomes effective, (ii) when any amendment thereof
becomes effective, (iii) of any request by the Commission for any amendment of
or supplement to the Registration Statement or the Prospectus or for any
additional information, (iv) 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 (v) of the
receipt by the Company of any notification with respect to the suspension of
the registration, qualification or exemption from registration or qualification
of the Shares for sale in any jurisdiction or the initiation or threatening of
any proceeding for such purpose. The Company will use its best efforts to
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prevent the issuance of any such stop order or suspension and, if issued, to
obtain as soon as possible the withdrawal thereof.
(c) The Company will (i) on or before the Closing Date, deliver to
you and your counsel a signed copy of the Registration Statement as originally
filed and of each amendment thereto filed prior to the time the Registration
Statement becomes effective and, promptly upon the filing thereof, a signed
copy of each post-effective amendment, if any, to the Registration Statement
(together with, in each case, all exhibits thereto unless and to the extent
previously furnished to you) and all documents filed by the Company with the
Commission under the Exchange Act and deemed to be incorporated by reference
into any Preliminary Prospectus or the Prospectus and will also deliver to you,
for distribution to the several Underwriters, a sufficient number of additional
conformed copies of each of the foregoing (excluding exhibits) so that one copy
of each may be distributed to each Underwriter, (ii) as promptly as possible
deliver to each of you and send to the several Underwriters, at such office or
offices as you may designate, as many copies of the Prospectus as you may
reasonably request and (iii) thereafter from time to time during the period in
which a prospectus is required by law to be delivered by an Underwriter or a
dealer, likewise send to the Underwriters as many additional copies of the
Prospectus and as many copies of any supplement to the Prospectus and of any
amended Prospectus, filed by the Company with the Commission, as you may
reasonably request for the purposes contemplated by the Securities Act.
(d) If at any time during the period in which a prospectus is
required by law to be delivered by an Underwriter or a dealer any event shall
occur as a result of which it is necessary to supplement or amend the
Prospectus in order to make the Prospectus not misleading or so that the
Prospectus will not omit to state a material fact necessary to be stated
therein, in each case at the time the Prospectus is delivered to a purchaser of
the Shares, or if it shall be necessary to amend or to supplement the
Prospectus to comply with the Securities Act or the Rules and Regulations, the
Company will forthwith prepare and file with the Commission a supplement to the
Prospectus or an amended Prospectus so that the Prospectus as so supplemented
or amended will not contain any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements therein not
misleading and so that it then will otherwise comply with the Securities Act
and the Rules and Regulations. If, after the public offering of the Shares by
the Underwriters and during such period, the Underwriters propose to vary the
terms of offering thereof by reason of changes in general market conditions or
otherwise, you will advise the Company in writing of the proposed variation and
if, in the opinion either of counsel for the Company or counsel for the
Underwriters, such proposed variation requires that the Prospectus be
supplemented or amended, the Company will forthwith prepare and file with the
Commission a supplement to the Prospectus or an amended Prospectus setting
forth such variation. The Company authorizes the Underwriters and all dealers
to whom any of the Shares may be sold by the Underwriters to use the
Prospectus, as from time to time so amended or supplemented, in connection with
the sale of the Shares in accordance with the applicable provisions of the
Securities Act and the Rules and Regulations for such period.
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(e) The Company will cooperate with you and your counsel in the
qualification or registration of the Shares for offer and sale under the
securities or blue sky laws of such jurisdictions as you may designate and, if
applicable, in connection with exemptions from such qualification or
registration and, during the period in which a Prospectus is required by law to
be delivered by an Underwriter or a dealer, in keeping such qualifications,
registrations and exemptions in effect; provided, however, that the Company
shall not be obligated to file any general consent to service of process or to
qualify to do business as a foreign corporation in any jurisdiction in which it
is not so qualified. The Company will, from time to time, prepare and file
such statements, reports and other documents as are or may be required to
continue such qualifications, registrations and exemptions in effect for so
long a period as you may reasonably request for the distribution of the Shares.
(f) During a period of five years commencing with the date of this
Agreement, the Company will promptly furnish to you and to each Underwriter who
may so request in writing copies of (i) all periodic and special reports
furnished by it to shareholders of the Company, (ii) all information, documents
and reports filed by it with the Commission, Nasdaq National Market, any
securities exchange or the National Association of Securities Dealers, Inc.,
(iii) all press releases and material news items or articles in respect of the
Company, its products or affairs released or prepared by the Company (other
than promotional and marketing materials disseminated solely to customers and
potential customers of the Company in the ordinary course of business) and (iv)
any additional information concerning the Company or its business which the
Representative may reasonably request.
(g) As soon as practicable, but not later than the 45th day
following the end of the fiscal quarter first ending after the first
anniversary of the Effective Date, the Company will make generally available to
its securities holders and furnish to the Representative an earnings statement
or statements in accordance with Section 11(a) of the Securities Act and Rule
158 thereunder.
(h) The Company agrees that, without your prior written consent, the
Company will not and will cause the Material Holders to enter into agreements
with the Representative to the effect that they will not, in each case directly
or indirectly, sell, offer, contract to sell, grant any option to purchase or
otherwise dispose of any shares of Common Stock, or any securities convertible
into, exchangeable for or exercisable for Common Stock, or any rights to
purchase or acquire Common Stock, for a period of 180 days following the date
of this Agreement, excluding only (i) the sale of the Shares to be sold to the
Underwriters pursuant to this Agreement and (ii) the grant of options to
purchase Common Stock or the issuance of shares of Common Stock upon the
exercise of options granted under the Company's presently authorized employee
plans that are described in the Prospectus or in documents incorporated
therein, in accordance with the provisions of such plans as so authorized. In
addition and without limitation, to the extent the Company has the right, with
respect to its outstanding securities or registration statements (other than
the Registration Statement) to preclude sales of such securities or under such
registration statements, it has done so for the maximum period(s) permitted
(but not in excess of 75 days).
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(i) The Company will apply the net proceeds from the offering
received by it in the manner set forth under the caption "Use of Proceeds" in
the Prospectus.
(j) The Company will, and at all times for a period of at least five
years after the date of this Agreement, unless such securities are then listed
on a national securities exchange, cause the Common Stock (including the
Shares) to be included for quotation on the Nasdaq National Market, and the
Company will comply with all registration, filing, reporting and other
requirements of the Exchange Act and the Nasdaq National Market which may from
time to time be applicable to the Company.
(k) The Company will use its best efforts to maintain insurance of
the types and in the amounts which it deems adequate for its business
consistent with insurance coverage maintained by companies of similar size and
engaged in similar businesses including, but not limited to, general liability
insurance covering all real and personal property owned or leased by the
Company against theft, damage, destruction, acts of vandalism and all other
risks customarily insured against.
(l) In accordance with the Warrant Agreement, which the Company has
executed and delivered, the Company agrees, upon its receipt of the purchase
price therefor (as specified in the Warrant Agreement), to deliver to Xxx
Xxxxxx & Company (individually and not as the Representative of the
Underwriters) on the Closing Date and simultaneously with completion of the
purchase and sale of the Firm Shares and on the date the Option Shares are
purchased by the Underwriters pursuant to Section 2 of this Agreement, Warrants
(in the form attached as Exhibit A to the Warrant Agreement) representing the
right to purchase 125,000 shares and 5% of the number of Option Shares so
purchased, respectively, of Common Stock at a price equal to 120% of the
offering price per share to the public as set forth or to be set forth on the
Cover Page of the Prospectus or in the Term Sheet.
4. Fees and Expenses.
(a) The Company agrees with each Underwriter that:
(i) The Company will pay and bear all costs and expenses in
connection with: the preparation, printing and filing of the Registration
Statement (including financial statements, schedules and exhibits), Preliminary
Prospectuses and the Prospectus, any drafts of each of them and any amendments
or supplements to any of them; the duplication or, if applicable, printing
(including all drafts thereof) of this Agreement, the Agreement Among
Underwriters, any Selected Dealer Agreements, the Warrant Agreement, the
Preliminary Blue Sky Survey and any Supplemental Blue Sky Survey, the
Underwriters' Questionnaire and the Power of Attorney and the duplication and
printing (including of drafts thereof) of any other underwriting documents and
material (including but not limited to marketing memoranda and other marketing
material) in connection with the offering, purchase, sale and delivery of the
Shares; the issuance and delivery of the Shares under this Agreement to the
several Underwriters, including all expenses, taxes, duties, fees and
commissions on the purchase and sale of the Shares and Nasdaq National Market
brokerage and transaction levies with respect to
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the purchase and, if applicable, the sale of the Shares (x) incident to the
sale and delivery of the shares by the Company to the Underwriters and (y)
incident to the sale and delivery of the Shares by the Underwriters to the
initial purchasers thereof; the cost of printing all stock certificates; the
Transfer Agents' and Registrars' fees; the fees and disbursements of counsel
for the Company; all fees and other charges of the Company's independent public
accountants and independent petroleum engineers and any other experts named in
the Prospectus; the cost of furnishing to the several Underwriters copies of
the Registration Statement (including appropriate exhibits), Preliminary
Prospectus(es) and the Prospectus, the agreements and other documents and
instruments referred to above and any amendments or supplements to any of the
foregoing; NASD filing fees and the cost of qualifying or registering the
Shares (or obtaining exemptions from qualification or registration) under the
laws of such jurisdictions as you may designate (including filing fees in
connection with such NASD filings and filing fees and fees and disbursements of
Underwriters' counsel in connection with such state securities or Blue Sky
qualifications, registrations and exemptions); all fees and expenses in
connection with qualification of the Shares for inclusion for quotation on the
Nasdaq National Market; advertising and roadshow expenses; and all other
expenses incurred by the Company in connection with the performance of its
obligations hereunder.
(ii) In addition to its obligations under Section 4(a)(i) above,
the Company agrees to pay the Representative a non-accountable expense
allowance equal to 1.5% of the public offering price of the Shares (but not to
exceed $150,000 in the aggregate). Such allowance shall be paid to the
Representative as provided in Sections 2(c) and 2(d) of this Agreement.
(iii) In addition to its obligations under Section 7(a) of this
Agreement, the Company agrees that, as an interim measure during the pendency
of any claim, action, investigation, inquiry or other proceeding arising out of
or based upon any loss, claim, damage or liability described in Section 7(a) of
this Agreement, it will reimburse or advance to or for the benefit of the
Underwriters, and each of them, on a monthly basis (or more often, if
requested) for all legal and other expenses incurred in connection with
investigating or defending any such claim, action, investigation, inquiry or
other proceeding, notwithstanding the absence of a judicial determination as to
the propriety and enforceability of the Company's obligation to reimburse or
advance for the benefit of the Underwriters for such expenses or the
possibility that such payments might later be held to have been improper by a
court of competent jurisdiction. To the extent that any portion, or all, of
any such interim reimbursement payments or advances are so held to have been
improper, the Underwriters receiving the same shall promptly return such
amounts to the Company together with interest, compounded daily, at the prime
rate (or other commercial lending rate for borrowers of the highest credit
standing) announced from time to time by Bank of America, NT&SA, San Francisco,
California (the "Prime Rate"), but not in excess of the maximum rate permitted
by applicable law. Any such interim reimbursement payments or advances that
are not made to or for the Underwriters within 30 days of a request for
reimbursement or for an advance shall bear interest at the Prime Rate, but not
in excess of the maximum rate permitted by applicable law, from the date of
such request until the date paid.
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(b) In addition to their obligations under Section 7(b) of this
Agreement, the Underwriters severally and in proportion to their obligation to
purchase Firm Shares as set forth on Schedule I hereto, agree that, as an
interim measure during the pendency of any claim, action, investigation,
inquiry or other proceeding arising out of or based upon any loss, claim,
damage or liability described in Section 7(b) of this Agreement, they will
reimburse or advance to or for the benefit of the Company on a monthly basis
(or more often, if requested) for all legal and other expenses incurred by the
Company in connection with investigating or defending any such claim, action,
investigation, inquiry or other proceeding, notwithstanding the absence of a
judicial determination as to the propriety or enforceability of the
Underwriters' obligation to reimburse or advance for the benefit of the Company
for such expenses and the possibility that such payments or advances might
later be held to have been improper by a court of competent jurisdiction. To
the extent that any portion, or all, of any such interim reimbursement payments
or advances are so held to have been improper, the Company shall promptly
return such amounts to the Underwriters together with interest, compounded
daily, at the Prime Rate, but not in excess of the maximum rate permitted by
applicable law. Any such interim reimbursement payments or advances that are
not made to the Company within 30 days of a request for reimbursement or for an
advance shall bear interest at the Prime Rate, but not in excess of the maximum
rate permitted by applicable law, from the date of such request until the date
paid.
(c) It is agreed that any controversy arising out of the operation
of the interim reimbursement and advance arrangements set forth in Sections
4(a)(iii) and 4(b) above, including the amounts of any requested reimbursement
payments or advance, the method of determining such amounts and the basis on
which such amounts shall be apportioned among the indemnifying parties, shall
be settled by arbitration conducted under the provisions of the Constitution
and Rules of the Board of Governors of the New York Stock Exchange, Inc. or
pursuant to the Code of Arbitration Procedure of the NASD. Any such
arbitration must be commenced by service of a written demand for arbitration or
a written notice of intention to arbitrate, therein electing the arbitration
tribunal. If the party demanding arbitration does not make such designation of
an arbitration tribunal in such demand or notice, then the party responding to
the demand or notice is authorized to do so. Any such arbitration will be
limited to the interpretation and obligations of the parties under the interim
reimbursement and advance provisions contained in Sections 4(a)(iii) and 4(b)
above and will not resolve the ultimate propriety or enforceability of the
obligation to indemnify for or contribute to expenses that is created by the
provisions of Section 7 of this Agreement.
(d) If the sale of the Shares provided for herein is not consummated
because any condition to the obligations of the Underwriters set forth in
Section 5 of this Agreement is not satisfied, or because of any termination
pursuant to Section 9(b) of this Agreement, or because of any refusal,
inability or failure on the part of the Company to perform any covenant or
agreement set forth in this Agreement or to comply with any provision of this
Agreement other than by reason of a default by any of the Underwriters, the
Company agrees to reimburse the several Underwriters upon demand for all
out-of-pocket expenses (including fees and disbursements of counsel) that shall
have been incurred by any or all of them in connection
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with investigating, preparing to market or marketing the Shares or otherwise in
connection with this Agreement.
5. Conditions of Underwriters' Obligations. The several obligations
of the Underwriters to purchase and pay for the Shares shall be subject, in the
sole discretion of the Representative, to the accuracy as of the date of
execution of this Agreement, the Closing Date and the date on which the Option
Shares are to be purchased, as the case may be, of the representations and
warranties of the Company set forth in this Agreement, to the accuracy of the
statements of the Company and its officers made in any certificate delivered
pursuant to this Agreement, to the performance by the Company of all of its
obligations to be performed under this Agreement at or prior to the Closing
Date or any later date on which Option Shares are to be purchased, as the case
may be, to the satisfaction of all conditions to be satisfied or performed by
the Company at or prior to that date and to the following additional
conditions:
(a) The Registration Statement shall have become effective (or, if a
post-effective amendment is required to be filed pursuant to Rule 430A under
the Act, such post-effective amendment shall become effective and the Company
shall have provided evidence satisfactory to the Representative of such filing
and effectiveness) not later than 5:00 p.m., New York time, on the date of this
Agreement or at such later date and time as you may approve in writing and, at
the Closing Date or, with respect to the Option Shares, the date on which such
Option Shares are to be purchased; no stop order suspending the effectiveness
of the Registration Statement or any qualification, registration or exemption
from qualification or registration for the sale of the Shares in any
jurisdiction shall have been issued and no proceedings for that purpose shall
have been instituted or threatened; and any request for additional information
on the part of the Commission shall have been complied with to the reasonable
satisfaction of the Representative and their counsel.
(b) The Representative shall have received from Xxxxxx, Xxxx &
Xxxxxxxx LLP, counsel for the Underwriters, an opinion, dated the Closing Date,
with respect to the issuance and sale of the Shares and such other related
matters as the Representative may reasonably require, and the Company shall
have furnished such counsel with all documents which they may request for the
purpose of enabling them to pass upon such matters.
(c) You shall have received on the Closing Date and on any later
date on which Option Shares are purchased, as the case may be, the opinion of
Xxxxx, Xxxxxxxx & Xxxxx, counsel for the Company, addressed to the Underwriters
and dated the Closing Date or such later date, with reproduced copies or signed
counterparts thereof for each of the Underwriters, covering the matters set
forth in Annex A to this Agreement and in form and substance satisfactory to
you.
(d) You shall be satisfied that there has not been any material
change in the market for securities in general or in political, financial or
economic conditions as to render it impracticable in your sole judgment to make
a public offering of the Shares, or a material adverse change in market levels
for securities in general (or those of companies in particular) or financial or
economic conditions which render it inadvisable to proceed.
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(e) You shall have received on the Closing Date and on any later
date on which Option Shares are purchased a certificate, dated the Closing Date
or such later date, as the case may be, and signed by the President and the
Chief Financial Officer of the Company stating that:
(i) the representations and warranties of the Company set
forth in Section 1 of this Agreement are true and correct
with the same force and effect as if expressly made at and
as of the Closing Date or such later 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 the Closing Date or such later 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 are pending or
are threatened under the Securities Act; and
(iii) (A) the respective signers of the certificate have
carefully examined the Registration Statement in the form
in which it originally became effective and the Prospectus
and any supplements or amendments to any of them and, as
of the Effective Date, the statements made in the
Registration Statement and the Prospectus were true and
correct in all material respects and neither the
Registration Statement nor the Prospectus omitted to state
any material fact required to be stated therein or
necessary in order to make the statements therein not
misleading, (B) since the Effective Date, no event has
occurred that should have been set forth in an amendment
to the Registration Statement or a supplement or amendment
to the Prospectus that has not been set forth in such an
amendment or supplement, (C) since the respective dates as
of which information is given in the Registration
Statement in the form in which it originally became
effective and the Prospectus contained therein, there has
not been any material change or any development involving
a prospective material change in or affecting the
business, properties, condition (financial or otherwise),
results of operations or prospects of the Company, whether
or not arising from transactions in the ordinary course of
business, and, since such dates, except in the ordinary
course of business, the Company has not entered into any
material transaction not referred to in the Registration
Statement in the form in which it originally became
effective and the Prospectus contained therein, (D) there
are not any pending or known threatened legal proceedings
to which the Company is a party or of which property of
the Company is the subject which are material and which
are not disclosed in the Registration Statement and the
Prospectus and (E) there are not any license agreements,
contracts, leases or other documents that are required to
be filed as exhibits to the Registration Statement that
have not been filed as required.
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(f) You shall have received from KPMG Peat Marwick LLP a letter or
letters, addressed to the Underwriters and dated the Closing Date and any later
date on which Option Shares are purchased, confirming that they are independent
accountants with respect to the Company within the meaning of the Securities
Act and the applicable published Rules and Regulations thereunder and, based
upon the procedures described in their letter, referred to below, delivered to
you concurrently with the execution of this Agreement (the "Original Letter"),
but carried out to a date not more than five business days prior to the Closing
Date or such later date on which Option Shares are purchased, (i) confirming,
to the extent true, that the statements and conclusions set forth in the
Original Letter are accurate as of the Closing Date or such later date, as the
case may be, and (ii) setting forth any revisions and additions to the
statements and conclusions set forth in the Original Letter that are necessary
to reflect any changes in the facts described in the Original Letter since the
date of the Original Letter or to reflect the availability of more recent
financial statements, data or information. Such letters shall not disclose any
change, or any development involving a prospective change, in or affecting the
business, properties or condition (financial or otherwise), results of
operations or prospects of the Company which, in your sole judgment, makes it
impractical or inadvisable to proceed with the public offering of the Shares or
the purchase of the Option Shares as contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary Prospectus). In
addition, you shall have received from KPMG Peat Marwick LLP, on or prior to
the Closing Date, a letter addressed to the Company and made available to you
for the use of the Underwriters stating that their review of the Company's
system of internal controls, to the extent they deemed necessary in
establishing the scope of their examination of the Company's financial
statements as of December 31, 1995 or in delivering their Original Letter, did
not disclose any weaknesses in internal controls that they considered to be a
material weaknesses.
(g) Prior to the Closing Date, the Shares shall have been designated
national market system securities, duly authorized for quotation on the Nasdaq
National Market upon official notice of issuance.
(h) On or prior to the Closing Date, you shall have received from
all Material Holders executed agreements covering the matters described in
Section 3(l) of this Agreement.
(i) On or prior to the Closing Date, the Company shall have entered
into the Warrant Agreement, substantially in the form filed as Exhibit 4.3 to
the Registration Statement; and on the Closing Date, concurrently with the
purchase and sale of the Firm Shares and on the date any Option Shares are
purchased pursuant to this Agreement, the Company shall have issued, sold and
delivered the Warrants to Xxx Xxxxxx & Company.
(j) On or prior to the Closing Date and on the date the Option
Shares are purchased, the Representative shall have received, from the
independent petroleum engineers whose reports are referred to in the
Prospectus, letter(s) confirming that they prepared the reports referred to in
the Prospectus or the Registration Statement as having been prepared by them
and that the statements in the Prospectus relating to the reserve information
in question,
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specifying such information, in their opinion accurately present the
information in their respective report(s).
(k) The Company shall have furnished to you such further
certificates and documents as you shall reasonably request (including
certificates of officers of the Company), as to the accuracy of the
representations and warranties of the Company set forth in this Agreement, the
performance by the Company of its obligations under this Agreement and the
other conditions concurrent and precedent to the obligations of the
Underwriters under this Agreement.
All the agreements, opinions, certificates and letters mentioned
above or elsewhere in this Agreement will be in compliance with the provisions
of this Agreement only if they are reasonably satisfactory to the
Representative. The Company will furnish you with such number of conformed
copies of such opinions, certificates, letters and documents as you shall
reasonably request.
If any of the conditions specified in this Section 5 shall not have
been fulfilled in all material respects when and as provided in this Agreement,
time being of the essence, or if any of the opinions and certificates mentioned
above or elsewhere in this Agreement shall not be in all material respects
reasonably satisfactory in form and substance to the Representative and its
counsel, this Agreement and all obligations of the Underwriters hereunder may
be canceled by the Representative at, or at any time prior to, the Closing Date
or (with respect to the Option Shares) prior to the date upon which the Option
Shares are to be purchased, as the case may be. Notice of such cancellation
shall be given to the Company in writing or by telephone, telecopy or telegraph
confirmed in writing. Any such termination shall be without liability of the
Company to the Underwriters (except as provided in Section 4 or Section 7 of
this Agreement) and without liability of the Underwriters to the Company
(except to the extent provided in Section 7 of this Agreement).
6. Conditions of the Obligation of the Company. The obligations of
the Company to sell and deliver the Shares required to be delivered as and when
specified in this Agreement shall be subject to the condition that, at the
Closing Date or (with respect to the Option Shares) the date upon which the
Option Shares are to be purchased, no stop order suspending the effectiveness
of the Registration Statement shall be in effect and no proceedings therefor
shall be pending or threatened by the Commission.
7. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person (including each partner or officer thereof) who
controls any Underwriter within the meaning of Section 15 of the Securities Act
from and against any and all losses, claims, damages or liabilities, joint or
several, to which such indemnified parties or any of them may become subject
under the Securities Act, the Exchange Act or other federal or state statute,
law or regulation, at common law or otherwise, specifically including but not
limited to losses, claims, damages or liabilities (or actions in respect
thereof) related to negligence on the part of any Underwriter, and the Company
agrees to reimburse each such Underwriter and controlling
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person for any legal or other expenses (including, except as otherwise provided
below, settlement expenses and fees and disbursements of counsel) incurred by
the respective indemnified parties in connection with defending against any
such losses, claims, damages or liabilities or in connection with any
investigation or inquiry of, or other proceeding that may be brought against,
the respective indemnified parties, in each case insofar as such losses,
claims, damages or liabilities (or actions in respect thereof) arise out of or
are based upon, in whole or in part, (i) any breach of any representation,
warranty, covenant or agreement of the Company in this Agreement, (ii) any
untrue statement or alleged untrue statement of a material fact contained in
the Registration Statement in the form originally filed or in any amendment
thereto (including the Prospectus as part thereof) or any post-effective
amendment thereto, or the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading or (iii) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus or the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment thereof or supplement thereto) or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading or (iv) any untrue
statement or alleged untrue statement of a material fact contained in any
application or other document, or any amendment or supplement thereto, executed
by the Company or based upon written information furnished by or on behalf of
the Company filed in any jurisdiction in order to qualify or register the
Shares under the securities or Blue Sky laws thereof or to obtain an exemption
from such qualification or registration or filed with the Commission or any
securities association, the Nasdaq National Market, or any securities exchange,
or the omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein, in light of
the circumstances under which they were made, not misleading; provided,
however, that (1) the indemnity agreements of the Company contained in this
Section 7(a) shall not apply to any such losses, claims, damages, liabilities
or expenses if such statement or omission was made in reliance upon and in
conformity with information furnished in writing to the Company by or on behalf
of any Underwriter through the Representative specifically for use in the
Registration Statement, any Preliminary Prospectus or the Prospectus or any
such amendment thereof or supplement thereto and (2) the indemnity agreement
contained in this Section 7(a) with respect to any Preliminary Prospectus shall
not inure to the benefit of any Underwriter from whom the person asserting any
such losses, claims, damages, liabilities or expenses purchased the Shares that
are the subject thereof (or to the benefit of any person controlling such
Underwriter) if the Company can demonstrate that at or prior to the written
confirmation of the sale of such Shares a copy of the Prospectus (or the
Prospectus as amended or supplemented) (excluding the documents incorporated
therein by reference) was not sent or delivered to such person and the untrue
statement or omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus (or the Prospectus as amended or
supplemented), unless the failure is the result of noncompliance by the Company
with Section 3 of this Agreement. The indemnity agreements of the Company
contained in this Section 7(a) and the representations and warranties of the
Company contained in Section 1 of this Agreement shall remain
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23
operative and in full force and effect regardless of any investigation made by
or on behalf of any indemnified party and shall survive the delivery of and
payment for the Shares. This indemnity agreement shall be in addition to any
liabilities which the Company may otherwise have.
(b) Each Underwriter, severally and not jointly, agrees to indemnify
and hold harmless the Company, each of its officers who signs the Registration
Statement, each of its directors, each other Underwriter and each person
(including each partner or officer thereof) who controls the Company or any
such other Underwriter within the meaning of Section 15 of the Securities Act
from and against any and all losses, claims, damages or liabilities, joint or
several, to which such indemnified parties or any of them may become subject
under the Securities Act, the Exchange Act, or other federal or state statute,
law or regulation or at common law or otherwise and to reimburse each of them
for any legal or other expenses (including, except as otherwise hereinafter
provided, settlement expenses and fees and disbursements of counsel) incurred
by the respective indemnified parties in connection with defending against any
such losses, claims, damages or liabilities or in connection with any
investigation or inquiry of, or other proceeding that may be brought against,
the respective indemnified parties, in each case arising out of or based upon
(i) any breach of any representation, warranty, covenant or agreement of the
indemnifying Underwriter in this Agreement, (ii) any untrue statement or
alleged untrue statement of a material fact contained in the Registration
Statement (including the Prospectus as part thereof) or any post-effective
amendment thereto, or the omission or alleged omission to state therein 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 or (iii) any untrue statement or alleged untrue statement of a
material fact contained in any Preliminary Prospectus or the Prospectus (as
amended or as supplemented if the Company shall have filed with the Commission
any amendment thereof or supplement thereto) or the omission or alleged
omission to state therein a material fact required to be stated therein or
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading, but in each case
under clauses (i), (ii) and (iii) above, as the case may be, only if such
statement or omission was made in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of such
indemnifying Underwriter through the Representative specifically for use in the
Registration Statement, in any Preliminary Prospectus or the Prospectus or any
such amendment thereof or supplement thereto. The Company acknowledges and
agrees that the matters described in Section 2(g) of this Agreement constitute
the only information furnished in writing by or on behalf of the several
Underwriters for inclusion in the Registration Statement, any Preliminary
Prospectus or the Prospectus. The indemnity agreement of each Underwriter
contained in this Section 7(b) shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of any indemnified
party and shall survive the delivery of and payment for the Shares. This
indemnity agreement shall be in addition to any liabilities which each
Underwriter may otherwise have.
(c) Each person or entity indemnified under the provisions of
Sections 7(a) and 7(b) above agrees that, upon the service of a summons or
other initial legal process upon it in any
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action or suit instituted against it or upon its receipt of written
notification of the commencement of any investigation or inquiry of, or
proceeding against, it in respect of which indemnity may be sought on account
of any indemnity agreement contained in such Sections, it will, if a claim in
respect thereunder is to be made against the indemnifying party or parties
under this Section 7, promptly give written notice (the "Notice") of such
service or notification to the party or parties from whom indemnification may
be sought hereunder. No indemnification provided for in Sections 7(a) or 7(b)
above shall be available to any person who fails to so give the Notice if the
party to whom such Notice was not given was unaware of the action, suit,
investigation, inquiry or proceeding to which the Notice would have related,
but only to the extent such party was materially prejudiced by the failure to
receive the Notice, and the omission so to notify such indemnifying party or
parties shall not relieve such indemnifying party or parties from any liability
which it or they may have to the indemnified party for contribution or
otherwise than on account of Sections 7(a) and 7(b). Any indemnifying party
shall be entitled at its own expense to participate in the defense of any
action, suit or proceeding against, or investigation or inquiry of, an
indemnified party. Any indemnifying party shall be entitled, if it so elects
within a reasonable time after receipt of the Notice by giving written notice
(the "Notice of Defense") to the indemnified party, to assume (alone or in
conjunction with any other indemnifying party or parties) the entire defense of
such action, suit, investigation, inquiry or proceeding, in which event such
defense shall be conducted, at the expense of the indemnifying party or
parties, by counsel chosen by such indemnifying party or parties and reasonably
satisfactory to the indemnified party or parties; provided, however, that (i)
if the indemnified party or parties reasonably determine that there may be a
conflict between the positions of the indemnifying party or parties and of the
indemnified party or parties in conducting the defense of such action, suit,
investigation, inquiry or proceeding or that there may be legal defenses or
rights available to such indemnified party or parties different from or in
addition to those available to the indemnifying party or parties, then separate
counsel for and selected by the indemnified party or parties shall be entitled
to conduct the defense of the indemnified parties to the extent determined by
such counsel to be necessary to protect the interests of the indemnified party
or parties, and (ii) provided, further, that the indemnifying party shall not
be liable for the fees and expenses of more than one separate counsel,
reasonably approved by the indemnifying party, for all of the indemnified
parties, plus, if applicable, local counsel in each jurisdiction. In addition,
in any event, the indemnified party or parties shall be entitled to have
counsel selected by such indemnified party or parties participate in, but not
conduct, the defense. If, within a reasonable time after receipt of the
Notice, an indemnifying party gives a Notice of Defense and, unless separate
counsel is to be chosen by the indemnified party or parties as provided above,
the counsel chosen by the indemnifying party or parties is reasonably
satisfactory to the indemnified party or parties, the indemnifying party or
parties will not be liable under Sections 7(a) through 7(c) for any legal
expenses subsequently incurred by the indemnified party or parties in
connection with the defense of the action, suit, investigation, inquiry or
proceeding, except that (A) the indemnifying party or parties shall bear and
pay the legal and other expenses incurred in connection with the conduct of the
defense as referred to in clause (i) of the proviso to the preceding sentence
and (B) the indemnifying party or parties shall bear and pay such other
expenses as it or they have authorized to be incurred by the indemnified party
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or parties. If, within a reasonable time after receipt of the Notice, no
Notice of Defense has been given, the indemnifying party or parties shall be
responsible for any legal or other expenses incurred by the indemnified party
or parties in connection with the defense of the action, suit, investigation,
inquiry or proceeding.
(d) In order to provide for just and equitable contribution in any
action in which a claim for indemnification is made pursuant to this Section 7
but is judicially determined (by the entry of a final judgment or decree by a
court of competent jurisdiction and the expiration of time to appeal or the
denial of the last right to appeal) that such indemnification may not be
enforced in such case notwithstanding the fact that this Section 7 provides for
indemnification in such case, each indemnifying party shall contribute to the
amount paid or payable by such indemnified party as a result of the losses,
claims, damages, liabilities and expenses referred to in Section 7(a) or 7(b)
above (i) in such proportion as is appropriate to reflect the relative benefits
received by each indemnifying party from the offering of the Shares or (ii) 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 each party in
connection with the statements or omissions that resulted in such losses,
claims, damages or liabilities, or actions in respect thereof, as well as any
other relevant equitable considerations. The relative benefits received by the
Company and the Underwriters shall be deemed to be in the same respective
proportions as the total proceeds from the offering of the Shares, net of the
underwriting discounts, received by the Company and the total underwriting
discount retained by the Underwriters bear to the aggregate public offering
price of the Shares. Relative fault shall be determined by reference to, among
other things, whether the untrue or alleged untrue statement of a material fact
or the omission or alleged omission to state a material fact relates to
information supplied by a party and the party's relative intent, knowledge,
access to information and opportunity to correct or prevent such untrue
statement or omission.
The parties agree that it would not be just and equitable if
contribution pursuant to this Section 7(d) were to be 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 into account
the equitable considerations referred to in the first sentence of this Section
7(d) and to the considerations referred to in the third sentence of the first
paragraph of this Section 7(d). The amount paid by an indemnified party as a
result of the losses, claims, damages or liabilities, or actions in respect
thereof, referred to in the first sentence of this Section 7(d) shall be deemed
to include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating, preparing to defend or defending
against any action or claim which is the subject of this Section 7(d).
Notwithstanding the provisions of this Section 7(d), no Underwriter shall be
required to contribute any amount in excess of the underwriting discount
applicable to the Shares purchased by that Underwriter. For purposes of this
Section 7(d), each person who controls an Underwriter within the meaning of the
Securities Act shall have the same rights to contribution as such Underwriter,
and each person who controls the Company within the meaning of the Securities
Act, each officer of the Company who 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
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the immediately preceding and immediately following sentences. 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 in this Section 7(d) are several in proportion to their
respective underwriting obligations and not joint.
Each party or other entity entitled to contribution agrees that upon
the service of a summons or other initial legal process upon it in any action
instituted against it in respect of which contribution may be sought, it will
promptly give written notice of such service to the party or parties from whom
contribution may be sought, but the omission so to notify such party or parties
of any such service shall not relieve the party from whom contribution may be
sought from any obligation it may have hereunder or otherwise (except as
specifically provided in Section 7(c) above). This Section 7(d) shall not be
operative as to any Underwriter to the extent that the Company is entitled to
receive or has received indemnity under this Section 7.
(e) The Company shall not, without the prior written consent of each
Underwriter, settle or compromise or consent to the entry of any judgment in
any pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not such
Underwriter or any person who controls such Underwriter within the meaning of
Section 15 of the Securities Act is a party to such claim, action, suit or
proceeding) unless such settlement, compromise or consent includes an
unconditional release of each such Underwriter and each such controlling person
from all liability arising out of such claim, action, suit or proceeding.
(f) No Underwriter shall, without the consent of the Company, settle
or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
Company is a party to such claim, action, suit or proceeding), which consent
shall not be unreasonably withheld, unless such settlement, compromise or
consent includes an unconditional release of the Company, each of its officers
who signed the Registration Statement, each of its directors and each person
who controls the Company within the meaning of Section 15 of the Securities
Act, from all liability arising out of such claim, action, suit or proceeding.
(g) The parties to this Agreement hereby acknowledge that they are
sophisticated business persons who were represented by counsel during the
negotiations regarding the provisions of this Agreement, including, without
limitation, the provisions of Sections 4(a)(iii), 4(b) and 4(c) and this
Section 7 of this Agreement and that they are fully informed regarding all such
provisions. They further acknowledge that the provisions of Sections
4(a)(iii), 4(b) and 4(c) and this Section 7 of this Agreement fairly allocate
the risks in light of the ability of the parties to investigate the Company and
its business in order to assure that adequate disclosure is made in the
Registration Statement, each Preliminary Prospectus and the Prospectus as
required by the Securities Act, the Rules and Regulations, the Exchange Act and
the rules and regulations of the Commission under the Exchange Act. The
parties are advised that federal or state policy, as interpreted by the courts
in certain jurisdictions, may be
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contrary to certain provisions of Sections 4(a)(iii), 4(b) and 4(c) and this
Section 7 of this Agreement and, to the extent permitted by law, the parties
hereto hereby expressly waive and relinquish any right or ability to assert
such public policy as a defense to a claim under Sections 4(a)(iii), 4(b) or
4(c) or this Section 7 of this Agreement and further agree not to attempt to
assert any such defense.
8. Substitution of Underwriters. If for any reason one or more of
the Underwriters fails or refuses (otherwise than for a reason sufficient to
justify the termination of this Agreement under the provisions of Section 5 or
Section 9 of this Agreement) to purchase and pay for the number of Firm Shares
agreed to be purchased by such Underwriter or Underwriters, the Company shall
immediately give notice thereof to the Representative and the non- defaulting
Underwriters shall have the right within 24 hours after the receipt by the
Representative of such notice to purchase, or procure one or more other
Underwriters to purchase, in such proportions as may be agreed upon among the
Representative and such purchasing Underwriter or Underwriters and upon the
terms set forth herein, all or any part of the Firm Shares that such defaulting
Underwriter or Underwriters agreed to purchase. If the non-defaulting
Underwriters fail to make such arrangements with respect to all such Shares,
the number of Firm Shares that each non-defaulting Underwriter is otherwise
obligated to purchase under this Agreement shall be automatically increased on
a pro rata basis to absorb the remaining Shares that the defaulting Underwriter
or Underwriters agreed to purchase; provided, however, that the non-defaulting
Underwriters shall not be obligated to purchase the Shares that the defaulting
Underwriter or Underwriters agreed to purchase if the aggregate number of such
Shares exceeds 10% of the total number of Firm Shares that all Underwriters
agreed to purchase under this Agreement. If the total number of Firm Shares
that the defaulting Underwriter or Underwriters agreed to purchase shall not be
purchased or absorbed in accordance with the two preceding sentences, the
Company shall have the right, within 24 hours next succeeding the first 24-hour
period above referred to, to make arrangements with other underwriters or
purchasers satisfactory to you for purchase of such Shares on the terms set
forth in this Agreement. In any such case, either you or the Company shall
have the right to postpone the Closing Date determined as provided in Section
2(c) of this Agreement for not more than seven business days after the date
originally fixed as the Closing Date pursuant to said Section 2(c) in order
that any necessary changes in the Registration Statement, the Prospectus or any
other documents or arrangements may be made.
If neither the non-defaulting Underwriters nor the Company makes
arrangements within the time periods provided in the first three sentences of
the first paragraph of this Section 8 for the purchase of all the Firm Shares
that the defaulting Underwriter or Underwriters agreed to purchase hereunder,
this Agreement shall be terminated without further act or deed and without any
liability on the part of the Company to any non-defaulting Underwriter (except
as provided in Section 4 or Section 7 of this Agreement) and without any
liability on the part of any non-defaulting Underwriter to the Company (except
to the extent provided in Section 7 of this Agreement). Nothing in this
Section 8, and no action taken hereunder, shall relieve any defaulting
Underwriter from liability, if any, to the Company or any non-defaulting
Underwriter for damages occasioned by its default under this Agreement.
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The term "Underwriter" in this Agreement shall include any persons substituted
for an Underwriter under this Section 8.
9. Effective Date of Agreement and Termination.
(a) If the Registration Statement has not been declared effective
prior to the date of this Agreement, this Agreement shall become effective at
such time, after notification of the effectiveness of the Registration
Statement has been released by the Commission, as you and the Company shall
agree upon the public offering price and the purchase price of the Shares. If
the public offering price and the purchase price of the Shares shall not have
been determined prior to 5:00 p.m., New York time, on the fifth full business
day after the Registration Statement has become effective, this Agreement shall
thereupon terminate without liability on the part of the Company to the
Underwriters (except as provided in Section 4 or Section 7 of this Agreement)
or the Underwriters to the Company (except as set forth in Section 7 of this
Agreement). By giving notice before the time this Agreement becomes effective,
you, as Representative of the several Underwriters, may prevent this Agreement
from becoming effective without liability of any party to the other party,
except that the Company shall remain obligated to pay costs and expenses to the
extent provided in Section 4 and Section 7 of this Agreement. If the
Registration Statement has been declared effective prior to the date of this
Agreement, this Agreement shall become effective upon execution and delivery by
you and the Company.
(b) This Agreement may be terminated by you in your absolute
discretion by giving written notice to the Company at any time on or prior to
the Closing Date or, with respect to the purchase of the Option Shares, on or
prior to any later date on which the Option Shares are to be purchased, as the
case may be, if prior to such time any of the following has occurred or, in
your opinion, is likely to occur: (i) after the respective dates as of which
information is given in the Registration Statement and the Prospectus, any
material adverse change or development involving a prospective adverse change
in or affecting particularly the business, properties, condition (financial or
otherwise), results of operations or prospects of the Company, whether or not
arising in the ordinary course of business, occurs which would, in your sole
judgment, make the offering or the delivery of the Shares impracticable or
inadvisable; or (ii) if there shall have been the engagement in hostilities or
an escalation of major hostilities by the United States or the declaration of
war or a national emergency by the United States on or after the date hereof,
or any outbreak of hostilities or other national or international calamity or
crisis or change in economic or political conditions, if the effect of such
outbreak, calamity, crisis or change in economic or political conditions on the
financial markets of the United States would, in your sole judgment, make the
offering or delivery of the Shares impracticable or inadvisable; or (iii) if
there shall have been suspension of trading in securities generally or a
material adverse decline in value of securities generally on the New York Stock
Exchange, the American Stock Exchange, the Nasdaq National Market, or
limitations on prices (other than limitations on hours or numbers of days of
trading) for securities on either such exchange or system; or (iv) if there
shall have been the enactment, publication, decree or other promulgation of any
federal or state statute, regulation, rule or order of, or commencement of any
proceeding or investigation by, any court, legislative body,
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agency or other governmental authority which in your sole judgment materially
and adversely affects or may materially and adversely affect the business,
properties, condition (financial or other otherwise), results of operations or
prospects of the Company; or (v) if there shall have been the declaration of a
banking moratorium by federal, New York, California or Texas state authorities;
or (vi) if there shall have been the taking of any action by any federal, state
or local government or agency in respect of its monetary or fiscal affairs
which in your sole judgment has a material adverse effect on the securities
markets in the United States; or (vii) existing international monetary
conditions or oil and gas prices shall have undergone a material change which,
in your sole judgment, makes the offering or delivery of the Shares
impracticable or inadvisable. If this Agreement shall be terminated pursuant
to this Section 9, there shall be no liability of the Company to the
Underwriters (except pursuant to Section 4 and Section 7 of this Agreement) and
no liability of the Underwriters to the Company (except to the extent provided
in Section 7 of this Agreement).
10. Notices. Except as otherwise provided herein, all
communications hereunder shall be in writing and, if to the Underwriters, shall
be mailed, telecopied or telegraphed or delivered to Xxx Xxxxxx & Company, 000
Xxxxxxxxxx Xxxxxx, Xxxxx 0000, Xxx Xxxxxxxxx, Xxxxxxxxxx 00000, Attention:
Syndicate Manager (telecopier: (000) 000-0000); and if to the Company, shall
be mailed, telecopied or delivered to it at its office at 000 Xxxxx Xxxxxxxxxx
Xxxxxx, Xxx Xxxxxxxxxx Xxxxx, Xxxxx 000, Xxxxxxx, Xxxxx 00000 (telecopier:
(000) 000-0000) Attention: President. All notices given by telecopy or
telegraph shall be promptly confirmed by letter.
11. Persons Entitled to the Benefit of this Agreement. This
Agreement shall inure to the benefit of the Company and the several
Underwriters and, with respect to the provisions of Section 4 and Section 7 of
this Agreement, the several parties (in addition to the Company and the several
Underwriters) indemnified under the provisions of Section 4 and Section 7, and
their respective personal representatives, successors and assigns. Nothing in
this Agreement is intended or shall be construed to give to any other person,
firm or corporation any legal or equitable remedy or claim under or in respect
of this Agreement or any provision contained herein. The term "successors and
assigns" as herein used shall not include any purchaser, as such purchaser, of
any of the Shares from the several Underwriters.
12. General. Notwithstanding any provision of this Agreement to the
contrary, the reimbursement, indemnification and contribution agreements
contained in this Agreement and the representations, warranties, covenants and
agreements in this Agreement shall remain in full force and effect regardless
of (a) any termination of this Agreement, (b) any investigation made by or on
behalf of any Underwriter or controlling person thereof or by or on behalf of
the Company or their respective directors or officers and (c) delivery and
payment for the Shares under this Agreement; provided, however, that if this
Agreement is terminated prior to the Closing Date, the provisions of Sections
3(f), 3(g), 3(h), 3(i), 3(j) and 3(k) of this Agreement shall be of no further
force or effect.
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This Agreement may be executed in two or more counterparts, each of
which shall constitute an original, but all of which together shall constitute
one and the same instrument, and may be delivered by facsimile transmission.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH
THE INTERNAL LAWS, AND NOT THE LAWS PERTAINING TO CHOICE OR CONFLICT OF LAWS,
OF THE STATE OF CALIFORNIA.
13. Authority of the Representative. In connection with this
Agreement, the Representative will act for and on behalf of the several
Underwriters, and any action taken under this Agreement by the Representative,
as representative of the several Underwriters, will be binding on all the
Underwriters.
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If the foregoing correctly sets forth your understanding, please so
indicate by signing in the space provided below for that purpose, whereupon
this letter shall constitute a binding agreement among the Company and the
several Underwriters.
Very truly yours,
PARALLEL PETROLEUM CORPORATION
By:
---------------------------
Its:
--------------------------
The foregoing Agreement is hereby confirmed and accepted as of the date first
above written.
On their behalf and on behalf of each of the
several Underwriters named in Schedule I
hereto
XXX XXXXXX & COMPANY
By:
--------------------------
Authorized Signatory
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SCHEDULE I
UNDERWRITERS
Number of
Firm Shares to
Underwriters be Purchased
------------ --------------
Xxx Xxxxxx & Company . . . . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . . . . . . 2,500,000
=========
I-1
33
ANNEX A
MATTERS TO BE COVERED IN THE OPINION OF COUNSEL FOR THE COMPANY
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws
of Delaware;
(ii) The Company has the corporate power to own, lease and
operate its properties and to conduct its business as
described in the Prospectus;
(iii) The Company is duly qualified to do business as a foreign
corporation and is in good standing in all jurisdictions
in the United States, if any, in which the ownership or
leasing of its properties or the conduct of its business
requires such qualification, except where the failure so
to qualify would not have a material adverse effect on the
business, properties, condition (financial or otherwise),
results of operations or prospects of the Company;
(iv) The authorized, issued and outstanding capital stock of
the Company is as set forth in the Prospectus under the
caption "Capitalization" as of the dates stated therein;
the issued and outstanding shares of capital stock of the
Company have been duly and validly authorized and issued,
are fully paid and nonassessable and, to the best
knowledge of such counsel, have not been issued in
violation of any preemptive right or other rights to
subscribe for or purchase securities or in violation of
any applicable federal or state securities laws;
(v) The Shares will, upon issuance and delivery against
payment therefor in accordance with the terms of the
Agreement, be duly authorized, validly issued, fully paid
and nonassessable and, to the best knowledge of such
counsel, will not have been issued in violation of any
preemptive right or other rights to subscribe for or
purchase securities;
(vi) The Company has corporate power and authority to enter
into the Agreement and to issue, sell and deliver the
Shares to the Underwriters;
(vii) The Agreement has been duly authorized by all necessary
corporate action on the part of the Company and has been
duly executed and delivered by the Company and, assuming
its due authorization, execution and delivery by you, is
the valid and binding agreement of the Company,
enforceable against the Company in accordance with its
terms, except insofar as the indemnification and
contribution provisions of the Agreement may be limited by
public policy concerns and except as enforceability may be
limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights
generally or by general equitable principles;
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(viii) The Registration Statement has become effective under the
Securities Act and, to the best knowledge of such counsel,
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 or
threatened under the Securities Act;
(ix) The Registration Statement and the Prospectus, and each
amendment or supplement thereto (other than the financial
statements, financial and engineering data and supporting
schedules included therein, as to which such counsel need
express no opinion), as of the effective date of the
Registration Statement, complied as to form in all
material respects with the requirements of the Securities
Act and the applicable Rules and Regulations;
(x) The terms and provisions of the capital stock of the
Company conform in all material respects to the
description thereof contained in the Registration
Statement and Prospectus, and the information in the
Prospectus under the caption "Description of Capital
Stock" to the extent it constitutes matters of law or
legal conclusions, has been reviewed by such counsel and
is correct and the forms of certificates evidencing the
Common Stock comply with Delaware law;
(xi) The description in the Registration Statement and the
Prospectus of the charter and bylaws of the Company and of
statutes and contracts are accurate in all material
respects and fairly present in all material respects the
information required to be presented by the Securities Act
and the Rules and Regulations;
(xii) To the best knowledge of such counsel, there are no
agreements, contracts, licenses, leases or documents of a
character required to be described or referred to in the
Registration Statement or Prospectus or to be filed as an
exhibit to the Registration Statement that are not
described or referred to therein and filed as required;
(xiii) The performance of the Agreement and the Warrant Agreement
and the consummation of the transactions contemplated by
each of them will not violate or result in the breach of
or a default (including without limitation with the giving
of notice, the passage of time or otherwise) of any of the
terms and provisions of the Company's Certificate of
Incorporation or Bylaws or any contract, indenture,
mortgage, deed of trust, loan agreement, lease, license,
joint venture or, without limitation, other agreement or
instrument known to such counsel to which the Company is a
party or by which any of its properties are bound or
(other than performance of the Company's indemnification
and contribution obligations under the Agreement,
concerning which no opinion need be expressed), any law,
ordinance, rule or regulation or, to the best knowledge of
such counsel, any
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order, writ, injunction, judgment or decree of any
governmental agency or body or of any court having
jurisdiction over the Company or over any of its
properties; provided, however, that no opinion need be
rendered concerning state securities or Blue Sky laws;
(xiv) No authorization, approval or consent of any governmental
authority or agency is necessary in connection with the
consummation of the transactions contemplated by the
Agreement or the Warrant Agreement, except such as have
been obtained under the Securities Act, are necessary
under the Securities Act in connection with the
registration of the Warrant Shares or as may be required
under state securities or Blue Sky laws in connection with
the purchase and the distribution of the Shares by the
Underwriters or the registration and sale of the Warrant
Shares;
(xv) To the best knowledge of such counsel, there are no legal
or governmental proceedings pending or threatened against
the Company of a character which are required to be
disclosed in the Registration Statement or the Prospectus
by the Securities Act or the applicable Rules and
Regulations, other than those described therein;
(xvi) To the best knowledge of such counsel, the Company is not
presently in breach of, or in default under, any bond,
debenture, note or other evidence of indebtedness or any
contract, indenture, mortgage, deed of trust, loan
agreement, lease, license or, without limitation, other
agreement or instrument to which the Company is a party or
by which any of its properties are bound which is material
to the business, properties, condition (financial or
otherwise), prospects or results of operations or
prospects of the Company;
(xvii) To the best knowledge of such counsel, except as set forth
in the Registration Statement and Prospectus, no holders
of Common Stock or, except as is provided in the Warrant
Agreement, other securities of the Company have
unexercised registration rights with respect to any
securities of the Company;
(xviii) The Warrant Agreement has been duly authorized by all
necessary corporate action on the part of the Company and
has been duly executed and delivered by the Company and,
assuming due authorization, execution and delivery by Xxx
Xxxxxx & Company, is the valid and binding agreement of
the Company, enforceable against the Company in accordance
with its terms, except insofar as the indemnification and
contribution provisions of the Agreement may be limited by
public policy concerns and except as enforceability may be
limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting creditors' rights
generally or by general equitable principles;
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(xix) The Warrants have been duly and validly authorized and
constitute valid and binding obligations of the Company
enforceable in accordance with their terms (except as
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium or similar laws affecting
creditors' rights generally or by general equitable
principles); the Warrant Shares have been duly and validly
authorized for issuance upon exercise of the Warrants
against payment therefor as provided in the Warrant
Agreement (including, as provided in the Warrant
Agreement, by surrender of Warrants) and, when so issued,
will be validly issued, fully paid and nonassessable; and
to the best knowledge of such counsel no stockholder has
any preemptive rights or other rights to subscribe for or
purchase with respect to the Warrants or the Warrant
Shares;
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, the independent public accountants of the Company, the Representative
and counsel to the Underwriters, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were discussed
and, although they have not independently verified the accuracy, completeness
or fairness of the statements contained in the Registration Statement or the
Prospectus, nothing has come to the attention of such counsel that caused them
to believe that, at the time the Registration Statement became effective, the
Registration Statement (except as to financial statements, financial data and
supporting schedules contained therein, as to which such counsel need express
no opinion) 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 at the Closing Date or any later date on
which the Option Shares are to be purchased, as the case may be, the Prospectus
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, in light of the circumstances under which they were made, not
misleading.
Counsel rendering the foregoing opinion may rely as to questions of
law not involving the laws of the United States or the State of Texas on
opinions of local counsel (provided that such counsel states that they believe
they and the Underwriters are justified in relying thereon) and, as to
questions of fact, upon representations or certificates of officers of the
Company and government officials, in which case their opinion is explicitly to
state that they are so relying thereon and that they have no knowledge of any
material misstatement or inaccuracy in such opinions, representations or
certificate. Copies of any opinion, representation or certificate so relied
upon shall be delivered to you, as Representative of the Underwriters, and to
Underwriters' counsel. Insofar as the Underwriting Agreement is governed by
California law, counsel rendering the foregoing opinion may assume that
California and Texas law are the same.
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