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EXHIBIT 1.1
2,000,000 DEPOSITARY SHARES
EACH REPRESENTING A ONE-TENTH INTEREST
IN A SHARE OF
______% CONVERTIBLE PREFERRED STOCK, SERIES F
NATIONAL ENERGY GROUP, INC.
UNDERWRITING AGREEMENT
December ____, 1997
Xxxxxxx Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
Xx. Xxxxxxxxxx, Xxxxxxx 00000
Forum Capital Markets L.P.
00 Xxxxxx Xxxxxx
Xxx Xxxxxxxxx, Xxxxxxxxxxx 00000
Ladies and Gentlemen:
National Energy Group, Inc., a Delaware corporation (the "COMPANY"),
proposes to deliver and sell to Xxxxxxx Xxxxx & Associates, Inc. and Forum
Capital Markets L.P. (the "UNDERWRITERS") 2,000,000 Depositary Shares (each a
"DEPOSITARY SHARE" and collectively, the "DEPOSITARY SHARES"), each Depositary
Share representing a one-tenth (1/10) interest in a share of ________%
Convertible Preferred Stock, Series F, par value $1.00 per share (the
"PREFERRED STOCK"). Such 2,000,000 Depositary Shares are hereinafter referred
to as the "FIRM SHARES" and the 200,000 shares of Preferred Stock represented
by the Firm Shares are hereinafter referred to as the "FIRM PREFERRED SHARES."
Upon the request of the Underwriters, as provided in Section 2(b) of this
Agreement, the Company shall also deliver and sell to the Underwriters up to an
additional 300,000 Depositary Shares. Such 300,000 Depositary Shares are
hereinafter referred to as the "OPTION SHARES." The 45,000 shares of Preferred
Stock represented by the Option Shares are hereafter referred to as the "OPTION
PREFERRED SHARES." The Firm Preferred Shares and the Option Preferred Shares
will be issued by the Company and deposited with _______________ (the
"DEPOSITARY") under a Deposit Agreement (the "DEPOSIT AGREEMENT") among the
Company, the Depositary and the holders of certificates evidencing the
Depositary Shares. The Firm Shares and the Option Shares collectively
constitute all of the "SHARES." The Preferred Stock will be convertible into
shares of the Company's common stock, par value $.01 per share (the "COMMON
STOCK"). The Shares, the Preferred Stock and the shares of Common Stock
issuable upon conversion of the Preferred Stock (the "CONVERSION SHARES") are
hereinafter referred to sometimes collectively as the "SECURITIES." The
Company hereby confirms its agreement with the Underwriters with respect to the
sale by the Company and the purchase by the Underwriters of the Shares, as set
forth herein.
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The Shares will be offered and sold to the Underwriters pursuant to a
Registration Statement filed with the Securities and Exchange Commission (the
"COMMISSION") under the Securities Act of 1933, as amended (the "SECURITIES
ACT"). The Company has prepared a preliminary prospectus dated
________________ ___, 1997, and a final prospectus dated
______________________________, 1997, setting forth information regarding the
Company and the Securities. The Company hereby confirms that it has authorized
the use of such preliminary prospectus and such final prospectus in connection
with the offering and sale of the Preferred Stock (the "OFFERING").
Capitalized terms used herein without definition have the respective
meanings specified therefor in the Prospectus. For purposes hereof, "RULES AND
REGULATIONS" means the rules and regulations adopted by Commission under the
Securities Act or the Securities Exchange Act of 1934, as amended (the
"EXCHANGE ACT"), as applicable.
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters as of the
date hereof, and as of the Closing Date and each Option Closing Date (as
defined in Section 2(b) hereof), if any, as follows:
(a) A registration statement on Form S-3 (File No. 333-_______),
and any amendment or amendments thereto, in respect of the registration of the
Securities under the Securities Act has been filed with the Commission; the
Company will not, without the prior consent of the Underwriters (which consent
will not be unreasonably withheld), file any amendment thereto or make any
change in the form of final prospectus included therein; such registration
statement and any post-effective amendment thereto, have been declared
effective by the Commission in such form; no other document with respect to
such registration statement has heretofore been filed with the Commission; and
no stop order suspending the effectiveness of such registration statement has
been issued and no proceeding for that purpose has been initiated or threatened
by the Commission or any "BLUE SKY" or securities authority of any
jurisdiction; such registration statement, including the prospectus, financial
statements and schedules, exhibits and all other documents filed as a part
thereof, at the time of effectiveness of the registration statement, including
any information to be a part thereof as of the time of effectiveness pursuant
to paragraph (b) of Rule 430A or Rule 434 of the Rules and Regulations is
herein called the "REGISTRATION STATEMENT" and the prospectus, in the form
first filed with the Commission pursuant to Rule 424(b) of the Regulations or
filed as part of the Registration Statement at the time of effectiveness if no
Rule 424(b) or Rule 434 filing is required, is herein called the "PROSPECTUS;"
the term "PRELIMINARY PROSPECTUS" as used herein means a preliminary prospectus
as described in Rule 430 of the Regulations. If the Company has filed an
abbreviated registration statement to register additional shares of Common
Stock pursuant to Rule 462(b) of the Rules and Regulations (the "RULE 462
REGISTRATION STATEMENT"), then any reference herein to the term "REGISTRATION
STATEMENT" shall be deemed to include such Rule 462 Registration Statement. Any
reference herein to the Registration Statement, any Preliminary Prospectus or
the Prospectus shall be deemed to refer to and include the documents
incorporated by reference therein pursuant to Item 12 of Form S-3 which were
filed under the Exchange Act, on or before the effective date of the
Registration Statement, the date of such Preliminary Prospectus or the date of
the Prospectus, as the case may be, and any reference herein to the terms
"AMEND," "AMENDMENT" or "SUPPLEMENT"
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with respect to the Registration Statement, any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include (i) the filing of any
document under the Exchange Act after the effective date of the Registration
Statement, the date of such Preliminary Prospectus or the date of the
Prospectus, as the case may be, and prior to the termination of the Offering to
which the Registration Statement relates, which is incorporated therein by
reference and (ii) any such document so filed.
(b) No order preventing or suspending the use of any Preliminary
Prospectus has been issued by the Commission or any "BLUE SKY" or securities
authority of any jurisdiction, and each Preliminary Prospectus, at the time of
filing thereof, conformed in all material respects to the requirements of the
Securities Act and the Rules and Regulations, and did not contain an untrue
statement of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any statements or
omissions made in reliance upon and in conformity with information furnished in
writing to the Company by the Underwriters expressly for use therein (the
"UNDERWRITERS' INFORMATION"). The parties acknowledge and agree that the
Underwriters' Information consists solely of the last paragraph at the bottom
of the front cover page concerning the terms of the offering by the
Underwriters, the legends concerning over-allotment and trading activities of
the Underwriters and their affiliates on the inside front cover page and the
paragraphs under the caption "UNDERWRITING" in the Prospectus. No order
suspending or preventing the sale of the Securities in any jurisdiction has
been issued or threatened or, to the knowledge of the Company, is contemplated.
(c) The Registration Statement conforms, and the Prospectus and
any further amendments or supplements to the Registration Statement or the
Prospectus will conform, in all material respects to the requirements of the
Securities Act and the Rules and Regulations and do not and will not, as of the
applicable effective date as to the Registration Statement and any amendment
thereto and as of the Closing Date and any Option Closing Date as to the
Prospectus and any amendment or supplement thereto, contain an untrue statement
of a material fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not misleading; provided,
however, that this representation and warranty shall not apply to the
Underwriters' Information.
(d) The Company is subject to Section 13 of the Exchange Act.
The documents incorporated by reference into the Registration Statement and the
Prospectus (the "INCORPORATED DOCUMENTS"), when they were filed with the
Commission (or, if any amendment with respect to any such document was filed,
when such amendment was filed), complied in all material respects with the
applicable requirements of the Exchange Act and did not, as of such date,
contain an untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein not misleading; and any Incorporated Documents filed subsequent to the
date of the Prospectus shall, when filed with the Commission, conform in all
material respects to the applicable requirements of the Securities Act, the
Rules and Regulations and the Exchange Act, as applicable. All reports and
statements required to be filed by the Company under the Securities Act and the
Exchange Act (the "SEC DOCUMENTS") have been filed,
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together with all exhibits required to be filed therewith. The documents and
agreements so filed which are described in the Prospectus are in full force and
effect on the date hereof (unless noted otherwise in the Prospectus) and
neither the Company or its subsidiary (the "SUBSIDIARY"), nor, to the knowledge
of the Company, any other party thereto is in breach of or default under a
material provision of any such document or agreement, which breach or default,
if left uncured, would have a material adverse effect on the condition,
financial or otherwise, results of operations, assets, business or prospects of
the Company and the Subsidiary, taken as a whole (a "MATERIAL ADVERSE EFFECT").
The descriptions in the Prospectus of agreements, contracts and other documents
to which the Company or the Subsidiary is a party or by which any of them is
bound fairly present in all material respects the information that would be
required to be presented with respect thereto under United States federal
securities laws.
(e) The Company and the Subsidiary have been duly organized and
each is validly existing as a corporation in good standing under the laws of
the jurisdiction of its incorporation. Each of the Company and the Subsidiary
is duly qualified and licensed and in good standing as a foreign corporation in
each jurisdiction in which its ownership or leasing of any properties or the
character of its operations require such qualification or licensing, except
where the failure to be so qualified or licensed would not have a Material
Adverse Effect. The Company does not own or control, directly or indirectly,
any corporation, association or other entity other than the Subsidiary, and the
Subsidiary does not own or control directly or indirectly, any corporation,
association or other entity. The Company owns all of the outstanding capital
stock of the Subsidiary, in each case free and clear of all liens, charges,
claims, encumbrances, pledges, security interests, defects or other
restrictions or equities of any kind whatsoever; and all outstanding capital
stock of the Subsidiary has been duly authorized and validly issued and is
fully paid and non-assessable and not issued in violation of any preemptive
rights or applicable securities laws. Each of the Company and the Subsidiary
has all requisite power and authority (corporate and other), and has obtained
any and all requisite authorizations, approvals, orders, licenses,
certificates, franchises and permits of and from all governmental or regulatory
officials and bodies, to own or lease its properties and conduct its business
as described in the Prospectus, except where the failure to have any such
power, authority, authorization, approval, order license, certificate,
franchise or permit would not have a Material Adverse Effect; each of the
Company and the Subsidiary is and has been doing business in compliance with
all such authorizations, approvals, orders, licenses, certificates, franchises
and permits and all federal, foreign, state and local laws, rules and
regulations, except where the failure to be in compliance would not have a
Material Adverse Effect; and neither the Company nor the Subsidiary has
received any notice of proceedings relating to the revocation or modification
of any such authorization, approval, order, license, certificate, franchise or
permit which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a Material Adverse Effect.
(f) The Company has an authorized capitalization as set forth in
the Prospectus and will have the adjusted capitalization as of the period
indicated therein, based upon the assumptions set forth therein. Neither the
Company nor the Subsidiary is a party to or bound by any instrument, agreement
or other arrangement, including, but not limited to, any voting trust
agreement, stockholders' agreement or other agreement or instrument, affecting
the securities or rights or obligations of security holders of the Company or
the Subsidiary or providing for either
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of them to issue, sell, transfer or acquire any capital stock, rights,
warrants, options or other securities of the Company or the Subsidiary, except
for this Agreement and as set forth in the Prospectus. The Company's capital
stock and the Securities conform in all material respects to all statements
with respect thereto contained in the Prospectus. All issued and outstanding
equity securities of the Company or the Subsidiary have been duly authorized
and validly issued and are fully paid and non-assessable, as applicable; the
holders thereof have no rights of rescission with respect thereto and are not
subject to personal liability by reason of being such holders; none of such
securities were issued in violation of the preemptive rights of any security
holder of the Company or the Subsidiary or similar contractual rights granted
by the Company or the Subsidiary and, except as described in the Prospectus,
there are no outstanding securities convertible into or exchangeable for, or
warrants, rights or options to purchase from the Company, or obligations of the
Company to issue, shares of Common Stock or any other class of capital stock of
the Company; and, except as set forth in the Prospectus, there are no
restrictions on subsequent transfers of the Preferred Stock under the laws of
the United States (other than sales of Preferred Stock owned by the Company and
its affiliates).
(g) The Depositary Shares have been duly authorized and, when
issued, delivered and paid for in the manner contemplated by this Agreement,
will be duly authorized, validly issued, fully paid and non-assessable. The
Preferred Stock issued to the Depositary as contemplated hereby and in
accordance with the Deposit Agreement will, upon such issuance, be duly
authorized, validly issued, fully paid and non-assessable. The shares of
Common Stock issuable upon conversion of the Preferred Stock will, upon such
issuance, in accordance with the terms of the Certificate of Designations, be
duly authorized, validly issued, fully paid and non-assessable, and the Company
has duly authorized and reserved for issuance upon conversion of the Preferred
Stock the shares of Common Stock issuable upon such conversion. The Depositary
Shares, the Preferred Stock and the Conversion Shares are not and will not be
subject to any preemptive or other similar rights of any security holder of the
Company or the Subsidiary; all corporate action required to be taken for the
authorization, issue and sale of the Depositary Shares, the Preferred Stock and
the Conversion Shares has been duly and validly taken; and the certificates
representing the Depositary Shares, the Preferred Stock and the Conversion
Shares will be in due and proper form. Upon the issuance and delivery pursuant
to the terms of this Agreement and the Deposit Agreement of the Preferred Stock
hereunder, the Depositary will acquire good and marketable title thereto free
and clear of any lien, charge, claim, encumbrance, pledge, security interest,
defect or other restriction or equity of any kind whatsoever. Upon issuance
and delivery pursuant to the terms of this Agreement and the Deposit Agreement
of the Depositary Shares to be issued by the Depositary, delivered to the
Company and then delivered to the Underwriters hereunder, the Underwriters will
acquire good and marketable title thereto free and clear of any lien, charge,
claim, encumbrance, pledge, security interest, defect or other restriction or
equity of any kind whatsoever.
(h) The financial statements of the Company together with the
related notes thereto included in the Preliminary Prospectus and the Prospectus
fairly present the financial position, income, changes in stockholders' equity,
cash flow and results of operations of the Company at the respective dates and
for the respective periods to which they apply and such historical financial
statements have been prepared in conformity with generally accepted accounting
principles and
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the Rules and Regulations, consistently applied throughout the periods
involved; the pro forma financial information incorporated by reference in each
Preliminary Prospectus and the Prospectus presents fairly the information shown
therein in accordance with Article 11 of Regulation S-X. Except as described
in or contemplated by the Prospectus, (i) there has been no material adverse
change or development involving a prospective material adverse change in the
condition, financial or otherwise, or in the earnings, business, assets,
prospects or results of operations of the Company and the Subsidiary, whether
or not arising in the ordinary course of business, since the date of the latest
financial statements included in the Prospectus and (ii) the outstanding debt,
the property, both tangible and intangible, and the businesses of each of the
Company and the Subsidiary conform in all material respects to the descriptions
thereof contained in the Prospectus. Financial information set forth in the
Prospectus under the headings "Prospectus Summary -- Summary Historical and Pro
Forma Combined Financial, Operating and Reserve Data," "Capitalization,"
"Selected Financial Data," and "Management's Discussion and Analysis of
Financial Condition and Results of Operations" fairly present, on the basis
stated in the Prospectus, the information set forth therein and have been
derived from or compiled on a basis consistent with that of the financial
statements included or incorporated by reference in the Prospectus.
(i) Each of the Company and the Subsidiary has filed all income
and franchise tax returns required to be filed through the date hereof by it in
any jurisdiction, and has paid all taxes shown to be due on such returns or
claimed to be due from such entities, other than those being contested in good
faith, except where the failure to so file or pay would not have a Material
Adverse Effect. All tax liabilities, including those being contested by the
Company or the Subsidiary are adequately reserved for in the Company's
financial statements (in accordance with generally accepted accounting
principles). No tax deficiency has been asserted and no tax proceedings are
pending or, to the knowledge of the Company, are threatened against the Company
or the Subsidiary which, if adversely determined would have a Material Adverse
Effect, and to the knowledge of the Company, no such deficiency or proceeding
is contemplated.
(j) No transfer tax, stamp duty or other similar tax is payable
by or on behalf of the Underwriters in connection with (i) the issuance by the
Company of the Securities, (ii) the purchase by the Underwriters of the
Depositary Shares from the Company or (iii) the consummation by the Company of
any of its obligations under this Agreement.
(k) Each of the Company and the Subsidiary maintains liability,
casualty and other insurance (subject to customary deductions and retentions)
with responsible insurance companies against such risk of the types and in the
amounts customarily maintained by independent oil and gas companies of
comparable size to the Company engaged in the acquisition, development and
exploration of oil and natural gas properties and related assets (which may
include self-insurance in comparable form to that maintained by such
responsible companies); neither the Company nor the Subsidiary has received
notice from any insurer or agent of such insurer that substantial capital
improvements or other expenditures will have to be made in order to continue
such insurance; all such insurance is outstanding and in full force and effect.
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(l) There is no action, suit, proceeding, litigation or
governmental proceeding pending or, to the knowledge of the Company, threatened
or contemplated against (or circumstances that are reasonably likely to give
rise to the same), or involving the properties or businesses of, the Company or
the Subsidiary which (i) questions the validity of the capital stock of the
Company or the Subsidiary, this Agreement, the Deposit Agreement, or of any
action taken or to be taken by the Company or the Subsidiary pursuant to or in
connection with this Agreement or the Deposit Agreement or (ii) except as
disclosed in or contemplated by the Prospectus, would have a Material Adverse
Effect.
(m) The Company has full legal right, power, and authority to
(i) authorize, issue and deliver the Preferred Stock, (ii) deliver and sell the
Depositary Shares, (iii) to authorize, issue, deliver and sell the Conversion
Shares upon conversion of the Preferred Stock, and (iv) enter into this
Agreement and the Deposit Agreement and consummate the transactions contained
herein and in the Deposit Agreement; and this Agreement and the Deposit
Agreement have been duly and properly authorized, executed and delivered by the
Company and constitute legal, valid and binding agreements of the Company
enforceable against the Company in accordance with their respective terms.
None of the Company's issue and sale of the Preferred Stock, delivery and sale
of the Depositary Shares and issue and sale of the Conversion Shares upon the
conversion of the Preferred Stock, the execution or delivery of this Agreement
and the Deposit Agreement or the Company's performance hereunder or thereunder,
its consummation of the transactions contemplated herein or therein or the
conduct by it and the Subsidiary of their businesses as described in the
Prospectus or any amendments or supplements thereto conflicts or will conflict
with or results or will result in any breach or violation of any of the terms
or provisions of, or constitutes or will constitute a default under, or results
or will result in the creation or imposition of any lien, charge, claim,
encumbrance, pledge, security interest, defect or other restriction or equity
of any kind whatsoever upon any property or assets of the Company or the
Subsidiary pursuant to the terms of, (i) the certificate of incorporation or
by-laws of the Company or the Subsidiary, (ii) any license, contract,
indenture, mortgage, deed of trust, voting trust agreement, stockholders'
agreement, note, loan or credit agreement or other agreement or instrument to
which the Company or the Subsidiary is a party or by which it or the Subsidiary
is or may be bound or to which its or the Subsidiary's properties or assets is
or may be subject, or any indebtedness, or (iii) any statute, judgment, decree,
order, rule or regulation directly applicable to the Company or the Subsidiary
of any arbitrator, court, regulatory body or administrative agency or other
governmental agency or body, having jurisdiction over the Company or the
Subsidiary or any of their respective activities or properties.
(n) Neither the Company nor the Subsidiary (i) is in violation
of its certificate of incorporation or by-laws, (ii) is in default in the
performance of any obligation, agreement or condition contained in any license,
contract, indenture, mortgage, installment sale agreement, lease, deed of
trust, voting trust agreement, stockholders' agreement, note, loan or credit
agreement, purchase order, agreement or instrument evidencing an obligation for
borrowed money or other agreement or instrument to which the Company or the
Subsidiary is a party or by which the Company or the Subsidiary may be bound or
to which the property or assets of the Company or the Subsidiary is subject or
affected or (iii) is in violation in any respect of any law, ordinance,
governmental rule, regulation or court decree to which it or its property or
assets may be subject,
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except any violation or default under the foregoing clauses (ii) or (iii) as
would not have a Material Adverse Effect.
(o) No consent, approval, authorization or order of, and no
filing with, any court, arbitrator, regulatory body, government agency or other
body, domestic or foreign, is required for the execution, delivery or
performance of this Agreement or the Deposit Agreement or the transactions
contemplated hereby or thereby (including the issue and sale of the Depositary
Shares and the Conversion Shares or the issue and delivery of the Preferred
Stock), except such as have been or may be obtained under the Securities Act,
rules and regulations of the National Association of Securities Dealers, Inc.
or may be required under state securities or Blue Sky laws.
(p) Subsequent to the respective dates as of which information
is set forth in the Prospectus, and except as may otherwise be indicated or
contemplated herein or therein, neither the Company nor the Subsidiary has (i)
issued any securities, or incurred any material liability or obligation, direct
or contingent, for borrowed money not in the ordinary course of business, (ii)
entered into any material transaction other than in the ordinary course of
business, (iii) declared or paid any dividend or made any other distribution on
or in respect of its capital stock of any class, and there has not been any
change in the capital stock or long term debt of the Company or (iv) suffered
any material adverse change in or affecting the general affairs, business,
management, financial condition, stockholders' equity or results of operations
of the Company.
(q) The Company and the Subsidiary are in material compliance
with all applicable federal, state, local and foreign laws and regulations
respecting employment and employment practices, terms and conditions of
employment and wages and hours. To the knowledge of the Company, there are no
pending investigations involving the Company or the Subsidiary by the U.S.
Department of Labor or any other governmental agency responsible for the
enforcement of such federal, state, local or foreign laws and regulations.
There is no unfair labor practice charge or complaint against the Company or
the Subsidiary pending before the National Labor Relations Board or any strike,
picketing, boycott, dispute, slowdown or stoppage pending or, to the knowledge
of the Company, threatened against or involving the Company or the Subsidiary.
Neither the Company nor the Subsidiary are or ever have been a party to any
collective bargaining agreement, and no collective bargaining agreement is
currently being negotiated by the Company or the Subsidiary. No material labor
dispute with the employees of the Company or the Subsidiary exists or, to the
knowledge of the Company, is imminent.
(r) No "employee pension benefit plan," "employee welfare
benefit plan" or "multi-employer plan" of the Company ("ERISA PLANS") as such
terms are defined in Sections 3(2), 3(1) and 3(37), respectively, of the
Employee Retirement Income Security Act of 1974, as amended ("ERISA"), or any
trust created thereunder has engaged in a "prohibited transaction" within the
meaning of Section 406 of ERISA or Section 4975 of the Internal Revenue Code of
1986, as amended (the "CODE") which could subject the Company or the Subsidiary
to any tax penalty on prohibited transactions and which has not adequately been
corrected. No "accumulated funding deficiency" (as defined in Section 302 of
ERISA) or any of the events set forth in Section 4043(b) of ERISA (other than
events with respect to which the 30-day notice under Section 4043 of ERISA has
been waived) has occurred with respect to any employee benefit plan which might
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reasonably be expected to have a Material Adverse Effect. Each ERISA Plan is
in compliance with all material reporting, disclosure and other requirements of
the Code and ERISA as they relate to such ERISA Plan. Determination letters
have been received from the Internal Revenue Service with respect to each ERISA
Plan which is intended to comply with Code Section 401(a) stating that such
ERISA Plan and the attendant trust are qualified thereunder. Neither the
Company nor the Subsidiary has ever completely or partially withdrawn from a
"multi-employer plan" as so defined.
(s) None of the Company, the Subsidiary or any of its affiliates
has taken or will take, directly or indirectly, any action designed to or which
has constituted or which might be expected to cause or result in, under the
Exchange Act or otherwise, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Securities or
otherwise.
(t) Each of the Company and the Subsidiary (i) owns or has the
right to use, free and clear of all liens, claims, encumbrances, pledges,
security interests, and other adverse interests of any kind whatsoever, all
patents, trademarks, service marks, trade names, copyrights, technology, and
all licenses and rights with respect to the foregoing, owned or licensed by the
Company and the Subsidiary and used in the conduct of its business as now
conducted or proposed to be conducted without, to the best knowledge of the
Company and the Subsidiary, infringing upon or otherwise acting adversely to
the right or claimed right of any person, corporation or other entity, except
those disclosed in the Prospectus or those which are not material in amount and
do not materially adversely affect the use made or proposed to be made of such
property, (ii) is not obligated or under any liability whatsoever to make any
payments by way of royalties, fees or otherwise to any owner or licensee of, or
other claimant to, any patent, trademark, service xxxx, trade name, copyright,
know-how, technology or other intangible asset, with respect to the use thereof
or in connection with the conduct of its business or otherwise and (iii) has
not received any notice of infringement of or conflict with asserted rights of
others with respect to any of the foregoing which, singly or in the aggregate,
if the subject of an unfavorable decision, ruling or finding, might have a
Material Adverse Effect.
(u) Each of the Company and the Subsidiary has good and
marketable title to, or valid and enforceable leasehold estates in, all items
of real and personal property which are material to its business and are
reflected as owned or leased by it in the financial statements included in the
Prospectus, in each case free and clear of all liens, charges, claims,
encumbrances, pledges, security interests, defects and other restrictions
except those disclosed in the Prospectus or those which are not material in
amount and do not materially adversely affect the use made or proposed to be
made of such property.
(v) Ernst & Young LLP are independent certified public
accountants of the Company as required by the Securities Act and the Rules and
Regulations.
(w) The Common Stock is registered pursuant to Section 12(g) of
the Exchange Act and is approved for listing on the Nasdaq National Market
under the symbol "NEGX." The Company has taken no action that was designed to
terminate, or that is likely to have the affect
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of terminating, trading of the Common Stock on the Nasdaq National Market, nor
has the Company received any notification that the Commission or the Nasdaq
National Market is contemplating terminating such trading.
(x) Neither the Company nor the Subsidiary has, nor, to the
knowledge of the Company, has any officer, director or employee of the Company
or the Subsidiary or, to the knowledge of the Company, any other person acting
on behalf of the Company or the Subsidiary, for the benefit of the Company or
the Subsidiary at any time during the last five years, (i) made any unlawful
gift or contribution to any candidate for federal, state, local or foreign
political office, or failed to disclose fully any such gift or contribution in
violation of law, or (ii) made any payment to any federal, state, local or
foreign governmental officer or official, which would be reasonably likely to
subject the Company or the Subsidiary to any damage or penalty in any civil,
criminal or governmental litigation or proceeding (domestic or foreign). Each
of the Company's and the Subsidiary's internal accounting controls are
sufficient to cause the Company and the Subsidiary to comply in all material
respects with the Foreign Corrupt Practices Act of 1977, as amended.
(y) Except as set forth in the Prospectus or the Incorporated
Documents, no officer, director or 5% or greater stockholder of the Company or
the Subsidiary, or any "affiliate" or "associate" (as these terms are defined
in Rule 405 promulgated under the Rules and Regulations) of any of the
foregoing persons or entities, has or has had, either directly or indirectly,
(i) a material interest in any person or entity which (A) furnishes or sells
services or products which are furnished or sold or are proposed to be
furnished or sold by the Company or the Subsidiary or (B) purchases from or
sells or furnishes to the Company or the Subsidiary any goods or services or
(ii) a material beneficiary interest in any contract or agreement to which the
Company or the Subsidiary is a party or by which the Company or the Subsidiary
may be bound or affected.
(z) The minute books of the Company and the Subsidiary have been
made available to the Underwriters, contain a complete summary of all meetings
and actions of the directors and stockholders of the Company and the Subsidiary
since the time of their respective incorporation and reflect all transactions
referred to in such minutes accurately in all respects.
(aa) Neither the Company nor the Subsidiary has been notified in
writing that it is liable with respect to obligations under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, or
any applicable existing federal, state, local or international laws and
regulations relating to protection of human health or the environment or
imposing liability or standards of conduct concerning any "Hazardous Material"
("ENVIRONMENTAL LAWS"), except for any liability as would not have a Material
Adverse Effect, and it is not aware of any facts or circumstances which could
reasonably be expected to result in any such liability. The Company and the
Subsidiary are in compliance with all applicable existing Environmental Laws,
except for such instances of noncompliance which would not have a Material
Adverse Effect. The term "Hazardous Material" means (i) any "hazardous
substance" as defined by the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, (ii) any "hazardous waste" as defined by
the Resource Conservation and Recovery Act, as amended, (iii) any petroleum or
petroleum product, (iv) any polychlorinated biphenyl and (v)
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any pollutant or contaminant or hazardous or toxic chemical, material, waste or
substance regulated under or within the meaning of any other Environmental Law.
No disposal, release or discharge of "Hazardous Material" has occurred on, in,
at or about any of the facilities or properties of the Company or the
Subsidiary, except for any such disposal, release or discharge which is in
compliance with Environmental Laws or which would not have a Material Adverse
Effect. Except as described in the Prospectus: (i) there has been no storage,
disposal, generation, transportation, handling or treatment of hazardous
substances or solid wastes by the Company or the Subsidiary (or to the
knowledge of the Company, any of its predecessors in interest) at, upon or from
any of the property now or previously owned or leased by the Company or the
Subsidiary in violation of any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit or which would require remedial action which
has not been taken, under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for such violations and failures to
take remedial action which would not result in, singularly or in the aggregate,
a Material Adverse Effect; and (ii) there has been no spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such property
or into the environment surrounding such property by the Company or the
Subsidiary of any Hazardous Materials, except for such spills, discharges,
leaks, emissions, injections, escapes, dumping or releases which would not
result in, singularly or in the aggregate, a Material Adverse Effect.
(bb) The Company is not, and following the Offering will not be,
an "investment company" or a company controlled by an "investment company" or,
an "affiliated person" of, or "promoter" or "principal underwriter" for, an
"investment company" as such terms are defined in the Investment Company Act of
1940, as amended.
(cc) Except as to its interests in oil and gas leases, each of
the Company and the Subsidiary has good and marketable title to, or valid and
enforceable leasehold estates in, all items of real and personal property which
are material to its business and/or reflected as owned by it in the financial
statements included in the Prospectus, in each case free and clear of all liens,
mortgages, charges, claims, encumbrances, pledges, security interests, defects
and other restrictions except those disclosed in the Prospectus or those which
are not material in amount and do not materially adversely affect the use made
or proposed to be made of such property. Each of the Company and the Subsidiary
has good and defensible title to its interests in oil and gas leases, free and
clear of any liens, mortgages, charges, claims, encumbrances, pledges, security
interests, defects and other restrictions of any kind, liens and encumbrances
under operating agreements, unitization and pooling arrangements and crude oil
and gas sales contracts that secure payment of amounts not yet due and payable
and which are of a nature and scope customary in connection with similar oil and
gas drilling and producing operations, and except those which, individually or
in the aggregate, are not material in amount and do not materially adversely
affect the use made and proposed to be made of such oil and gas leases. Except
to the extent described in the Prospectus, the leases, options to lease,
drilling concessions or other arrangements held by the Company and the
Subsidiary reflect in all material respects the right of the Company and the
Subsidiary to develop, exploit and explore their properties. Each of the
Company and the Subsidiary has conducted such title investigations and
has acquired its interest in oil and gas leases in such manner as is customary
in the oil and gas industry for the respective regions in which the property
subject to such leases is located. Each of the Company and the Subsidiary has
complied in all
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material respects with the terms of oil and gas leases in which each purports
to own an interest, and, to the knowledge of the Company, no claim of any sort
has been asserted by any person or entity adverse to the rights of the Company
or the Subsidiary as lessee or sublessee under any of such leases or
questioning its rights to the continued possession of the leased premises under
any such lease, except with respect to claims which do not materially adversely
affect the use made and proposed to be made of such oil and gas leases by the
Company or the Subsidiary. The concessions, reservations, licenses, permits
and rights to hydrocarbons held by the Company and the Subsidiary are valid,
subsisting and enforceable with such exceptions which do not materially
adversely affect the use made and proposed to be made of such oil and gas
leases. Except as set forth in the Prospectus, the Company and the Subsidiary
(i) do not own or lease any real or personal property, the loss of which would
have a Material Adverse Effect and (ii) own or lease or have the right to use
or enjoy the benefits of all properties as are necessary to its respective
operations as now conducted.
(dd) The information provided by the Company to the Petroleum
Consultants (as hereinafter defined) for the preparation of the estimates of
reserves in the reserve reports for the oil and gas properties of the Company
prepared by Netherland, Xxxxxx & Associates, Inc., independent petroleum
consultants (the "PETROLEUM CONSULTANTS"), were at the respective times of
delivery thereof to the Petroleum Consultants complete and accurate in all
material respects. The Underwriters have received from the Petroleum
Consultants a true and correct copy of its reserve reports with respect to the
Company's interests as of December 31, 1995 and 1996 (collectively, the
"RESERVE REPORTS"), and the Reserve Reports and the letters from the Petroleum
Consultants to the Company with respect thereto have been reviewed, and
accepted as having a reasonable basis, by the Company and has been included in
the Prospectus in good faith by the Company. Except as expressly stated in the
Preliminary Prospectus and the Prospectus, information in the Preliminary
Prospectus and in the Prospectus regarding estimates of reserves, future net
cash flows and present values of proved reserves comply in all material
respects with the applicable requirements of Rule 4-10 of Regulation S-X and
Industry Guide 2 under the Securities Act.
(ee) Neither the Company nor the Subsidiary has sustained since
the date of the latest audited financial statements included in the Prospectus
any loss or interference with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any labor dispute or
court or governmental action, order or decree, otherwise than as set forth or
contemplated in the Prospectus, which would have a Material Adverse Effect;
and, since the respective dates as of which information is given in the
Registration Statement and the Prospectus.
(ff) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurance that (i) transactions are
executed in accordance with management's general or specific authorizations;
(ii) transactions are recorded as necessary to permit preparation of financial
statements in conformity with generally accepted accounting principles and to
maintain accountability for assets; (iii) access to financial assets is
permitted only in accordance with management's general or specific
authorization and (iv) the recorded accountability for assets is
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compared with the existing assets at reasonable intervals and appropriate
action is taken with respect thereto.
(gg) No person has any right to the registration of any security
of the Company by reason of the filing of the Registration Statement with the
Commission or the consummation of the transactions contemplated hereby that has
not been waived or lapsed.
(hh) As of the date of the Prospectus, neither the Company nor
the Subsidiary is currently planning any probable acquisitions for which
disclosure of pro forma financial information would be required by the
Securities Act.
(ii) The Company has complied and will comply with the
provisions of Florida Statutes Section 517.075 (Chapter 92-198, Laws of
Florida). Neither the Company, nor any affiliate thereof, does business with
the government of Cuba or with any person or affiliate located in Cuba.
2. Purchase and Sale by the Underwriters.
(a) Subject to the terms and conditions herein set forth, (i)
the Company agrees to issue and deposit with the Depositary the Firm Preferred
Shares, to take receipt of the Firm Shares issued therefor by the Depositary
and sell to each of the Underwriters, and each of the Underwriters agrees,
severally and not jointly, to purchase from the Company, at a purchase price
per Firm Share of $50.00, the number of Firm Shares (to be adjusted by the
Underwriters so as to eliminate fractional shares) as set forth opposite their
respective names in Schedule I and (ii) in the event and to the extent that the
Underwriters shall exercise the election to purchase Option Shares as provided
below, the Company agrees to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company,
at the purchase price per Share set forth in clause (i) of this Section 2, that
portion of the number of Option Shares as to which such election shall have
been exercised (to be adjusted by the Underwriters so as to eliminate
fractional shares) determined by multiplying such number of Option Shares by a
fraction the numerator of which is the maximum number of Option Shares which
such Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of Option Shares that all of the Underwriters are entitled to purchase
hereunder.
(b) The Company hereby grants to the Underwriters the right to
purchase at their election up to an aggregate of 300,000 Option Shares, at the
purchase price per Share set forth in the paragraph above, for the sole purpose
of covering over-allotments in the sale of the Firm Shares. In conjunction with
delivery and sale of Option Shares to the Underwriters, the Company agrees to
issue and deposit with the Depositary the Option Preferred Shares, to take
receipt of the Option Shares issued therefor by the Depositary and sell to the
Underwriters said Option shares. Any such election to purchase Option Shares
may be exercised only by written notice from the Underwriters to the Company,
given within a period of 30 calendar days after the date of this Agreement and
setting forth the aggregate number of Option Shares to be purchased and the
date on which such Option Shares are to be delivered, as determined by the
Underwriters but in no
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event earlier than the First Time of Delivery (as defined in Section 3 hereof)
or, unless the Underwriters and the Company otherwise agree in writing, earlier
than two or later than ten business days after the date of such notice.
(c) Upon the authorization by the Underwriters of the release of
the Firm Shares, the several Underwriters propose to offer the Firm Shares for
sale upon the terms and conditions set forth in the Prospectus.
3. Deliveries.
(a) The Shares to be purchased by each Underwriter hereunder,
in definitive form, and in such authorized denominations and registered in such
names as Xxxxxxx Xxxxx & Associates, Inc. may request upon at least forty-eight
hours' notice to the Company prior to Time of Delivery (as defined below) (the
"NOTIFICATION TIME"), shall be delivered by or on behalf of the Company to
Xxxxxxx Xxxxx & Associates Inc., for the account of such Underwriter, against
payment by or on behalf of such Underwriter of the purchase price therefor by
wire transfer payable to the order of the Company, in immediately available
funds. The Company will cause the certificates representing the Shares to be
made available for checking and packaging at least twenty-four hours prior to
the Time of Delivery with respect thereto at the office of Xxxxxxx Xxxxx &
Associates, Inc., 000 Xxxxxxxx Xxxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000 or such
other designated location (the "DESIGNATED OFFICE").
(b) The time and date of such delivery and payment shall be,
with respect to the Firm Shares, 9:30 a.m., Central Standard Time, on December
____, 1997 or such other time and date as Xxxxxxx Xxxxx & Associates, Inc. and
the Company may agree upon in writing, and, with respect to the Option Shares,
9:30 a.m., Central Standard Time, on the date specified by Xxxxxxx Xxxxx &
Associates, Inc. in the written notice given by Xxxxxxx Xxxxx & Associates,
Inc. of the Underwriters' election to purchase such Optional Shares, or such
other time and date as Xxxxxxx Xxxxx & Associates, Inc. and the Company may
agree upon in writing. Such time and date for delivery of the Firm Shares is
herein called the "FIRST TIME OF DELIVERY", such time and date for delivery of
the Optional Shares, if not the First Time of Delivery, is herein called the
"SECOND TIME OF DELIVERY", and each such time and date for delivery is herein
called a "TIME OF DELIVERY."
(c) The documents to be delivered at each Time of Delivery by
or on behalf of the parties hereto pursuant to Section 6 hereof, including the
cross-receipt for the Shares, will be delivered at the offices of Xxxxxx and
Xxxxx, LLP, 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 (the "CLOSING
LOCATION"), and the Shares will be delivered as specified in Section 3 above,
all at such Time of Delivery. A meeting will be held at the Closing Location
at 1:00 p.m., Central Standard Time, on the New York Business Day next
preceding such Time of Delivery, at which meeting the final drafts of the
documents to be delivered pursuant to the preceding sentence will be available
for review by the parties hereto. For the purposes of this Section 3, "NEW
YORK BUSINESS DAY" shall mean each Monday, Tuesday, Wednesday, Thursday and
Friday which is not a day on which banking institutions in New York are
generally authorized or obligated by law or executive order to close.
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4. Covenants and Agreements of the Company. The Company covenants
and agrees with the Underwriters as follows:
(a) If the Registration Statement has not yet been declared
effective, the Company will use its best efforts to cause the Registration
Statement and any amendments thereto to become effective as promptly as
possible; to prepare the Prospectus in a form approved by the Underwriters
(such approval not to be unreasonably withheld or delayed) and to file such
Prospectus pursuant to Rule 424(b) under the Securities Act not later than the
Commission's close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Securities Act; to file
promptly all reports required to be filed by the Company with the Commission
pursuant to Section 13(a), 13(c) or 15(d) of the Exchange Act subsequent to the
date of the Prospectus and for so long as the delivery of a prospectus is
required in connection with the offering or sale of the Preferred Stock; to
advise the Underwriters, promptly after it receives notice thereof, of the
issuance by the Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or prospectus, of the
suspension of the qualification of the Depositary Shares for offering or sale
in any jurisdiction, of the initiation or threatening of any proceeding for any
such purpose, or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for additional
information; and to use its reasonable best efforts to prevent the issuance of
any such order preventing or suspending the use of the Preliminary Prospectus
or of the Prospectus or suspending any such qualification and, if any such
suspension is issued, to use its reasonable best efforts to obtain the lifting
thereof at the earliest possible time; the Company will not file any amendment
to the Registration Statement or any amendment of or supplement to the
Prospectus (including the prospectus required to be filed pursuant to Rule
424(b)) that differs from the prospectus on file at the time of the
effectiveness of the Registration Statement before or after the effective date
of the Registration Statement or file any document under the Exchange Act if
such document would be deemed to be incorporated by reference into the
Prospectus to which the Underwriters shall reasonably object in writing after
being timely furnished in advance a copy thereof.
(b) To advise the Underwriters promptly, and, if requested by
the Underwriters confirm such advice in writing, of the issuance by any state
securities commission of any stop order suspending the qualification or
exemption of any of the Depositary Shares for offering or sale in any
jurisdiction, or the initiation of any proceeding for such purpose by any state
securities commission or other regulatory authority, and to use its best
efforts to prevent the issuance of any stop order or order suspending the
qualification or exemption of any of the Depositary Shares under any state
securities or Blue Sky laws, and if, at any time, any state securities
commission or other regulatory authority shall issue an order suspending the
qualification or exemption of any of the Depositary Shares under any state
securities or Blue Sky laws, to use its best efforts to obtain the withdrawal
or lifting of such order at the earliest possible time.
(c) To promptly deliver to the Underwriters three signed copies
of the Registration Statement, including exhibits and all documents
incorporated by reference therein and all amendments thereto; to furnish the
Underwriters and counsel for the Underwriters, without charge, with copies of
the Prospectus in such quantities as the Underwriters may from time to time
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reasonably request, and, if the delivery of a prospectus is required at any
time prior to the expiration of nine months after the time of issue of the
Prospectus in connection with the offering or sale of the Shares by the
Underwriters and if at such time any events shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an 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 when such Prospectus is delivered, not misleading, or, if
for any other reason it shall be necessary during such period to amend or
supplement the Prospectus in order to comply with the Securities Act, to notify
the Underwriters (and, if requested, to confirm such notification in writing)
and upon the Underwriters' request to prepare and furnish without charge to
each Underwriter and to any dealer in securities as many copies as the
Underwriters may from time to time reasonably request of an amended Prospectus
or a supplement to the Prospectus which will correct such statement or omission
or effect such compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Shares at any time after nine
months or more after the time of issue of the Prospectus, upon the
Underwriters' request but at the expense of such Underwriters, to prepare and
deliver to such Underwriters as many copies as the Underwriters may request of
an amended or supplemented Prospectus complying with Section 10(a)(3) of the
Securities Act;
(d) During the three-year period following the Closing Date,
provided any of the Preferred Stock remain outstanding, to furnish to the
Underwriters all reports, documents, information and financial statements filed
by the Company with the Commission pursuant the Exchange Act or the Rules and
Regulations.
(e) To use the proceeds from the sale of the Preferred Stock in
the manner described in the Prospectus under the caption "Use of Proceeds."
(f) In connection with the Offering, to make its officers,
employees, independent accountants and legal counsel reasonably available upon
request by the Underwriters.
(g) To use its reasonable best efforts to do and perform all
things required to be done and performed under this Agreement by it that are
within its control prior to or after the Closing Date and to use its reasonable
best efforts to satisfy all conditions precedent on its part to the delivery of
the Securities.
(h) To not, so long as the Preferred Stock or the Common Stock
is outstanding, be or become (and use its best efforts not to be or become
owned by) an open-end investment company, unit investment trust or face-amount
certificate company that is or is required to be registered under Section 8 of
the Investment Company Act, and to not be or become (and use its best efforts
not to be or become owned by) a closed-end investment company required to be
registered, but not registered thereunder.
(i) To cooperate with the Underwriters and counsel for the
Underwriters to qualify the Preferred Stock for offering and sale under the
securities laws of such jurisdictions as the Underwriters may reasonably
request and to comply with such laws so as to permit the
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continuance of sales and dealings therein in such jurisdictions for as long as
may be necessary to complete the distribution of the Preferred Stock; provided,
however, that in connection therewith the Company shall not be required to
qualify as a foreign corporation or to file a general consent to service of
process or to subject it to taxation in any jurisdiction where it is not so
qualified or so subject.
(j) In connection with the Offering, until the Underwriters
shall have notified the Company of the completion of the Offering, to not and
use reasonable efforts to not permit any affiliated purchasers (as defined in
Regulation M under the Exchange Act), either alone or with one or more other
persons, to bid for or purchase, for any account in which it or any of its
affiliated purchasers has a beneficial interest, any Depositary Shares,
Preferred Stock or Common Stock, or attempt to induce any person to purchase
any Depositary Shares, Preferred Stock or Common Stock; and to not and use
reasonable efforts to not permit any of its affiliated purchasers to make bids
or purchases for the purpose of creating actual, or apparent, active trading in
or of raising the price of the Depositary Shares, Preferred Stock or Common
Stock.
(k) Prior to the Closing Date, to not issue any press release or
other communication directly or indirectly or hold any press conference with
respect to the Company, its condition, financial or otherwise, or earnings,
business affairs or business prospects, without prior consultation with the
Underwriters, unless in the judgment of the Company and its counsel, and after
notification to the Underwriters, such press release or communication is
required by law.
(l) To not take any action prior to the Closing Date which in
the Company's reasonable judgment would require the Prospectus to be amended or
supplemented pursuant to Section 4(c) hereof.
(m) To maintain a transfer agent and, if necessary under the
laws of the jurisdiction of incorporation of the Company, a registrar (which
may be the same entity as the transfer agent) for the Depositary Shares, the
Preferred Stock and the Common Stock.
(n) To make generally available to its securityholders as soon
as practicable, but in any event not later than twelve months after the
effective date of the Registration Statement (as defined in Rule 158(c) under
the Securities Act), an earnings statement of the Company including the
Subsidiary (which need not be audited) complying with Section 11(a) of the
Securities Act and the Regulations (including, at the option of the Company,
Rule 158).
(o) To list, subject to notice of issuance, the Common Stock
issuable upon conversion of the Preferred Stock on the Nasdaq National Market.
5. Payment of Expenses.
(a) The Company hereby agrees to pay all of the following
expenses and fees incident to the performance of the obligations of the Company
under this Agreement, including, regardless of whether any sale of the
Depositary Shares to the Underwriters is consummated: (i) the fees and expenses
of accountants and counsel for the Company, (ii) all costs and expenses
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incurred in connection with the preparation, duplication, printing (including
mailing and handling charges), delivery and mailing (including the payment of
postage with respect thereto) of each Preliminary Prospectus and the Prospectus
and any amendments and supplements thereto, in quantities as hereinabove
stated, (iii) the printing, engraving, issuance and delivery of the
certificates representing the Depositary Shares and the Preferred Stock, (iv)
costs and expenses of travel, food and lodging of Company personnel in
connection with the "road show," information meetings and presentations, (v)
fees and expenses of the Depositary, transfer agent and registrar, (vi) the
fees payable to the NASD CUSIP Service Bureau, and DTC incurred in connection
with the sale of the Depositary Shares, (vii) the fees payable to the
Commission and the Nasdaq National Market in connection with the filing of a
registration statement with respect to the Depositary Shares, the Preferred
Stock and the Conversion Shares and the listing of the Conversion Shares on the
Nasdaq National Market, and (viii) all other costs and expenses incident to the
performance of its obligations hereunder which are not specifically otherwise
provided for in this Section; provided that the Underwriters shall pay their
own costs and expenses, including the costs and expenses of their counsel.
(b) If this Agreement is terminated for any reason, the Company
shall reimburse and indemnify the Underwriters for their actual accountable and
reasonable out-of-pocket expenses, up to the limits and subject to the
conditions set forth in the preceding paragraph.
6. Conditions of the Underwriters' Obligations. The obligations of
the Underwriters hereunder shall be subject to the continuing accuracy of the
representations and warranties of the Company herein as of the date hereof and
as of the First Time of Delivery and the Second Time of Delivery, if any, as if
they had been made on and as of the First Time of Delivery and the Second Time
of Delivery, as the case may be; and the performance by the Company on and as
of the First Time of Delivery and Second Time of Delivery, if any, of its
covenants and obligations hereunder and to the following further conditions:
(a) The Registration Statement shall have become effective not
later than 5:30 P.M., New York time, on the date of this Agreement, or at such
later time and date as shall have been consented to in writing by the
Underwriters; the Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for such filing by
the Rules and Regulations and in accordance with Section 4(a) hereof; no stop
order suspending the effectiveness of the Registration Statement or any part
thereof shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission and all requests for additional
information on the part of the Commission shall have been complied with to the
Underwriters' reasonable satisfaction;
(b) The Underwriters shall not have advised the Company that the
Prospectus, or any supplement or amendment thereto, contains an untrue
statement of fact which, in the Underwriters' reasonable opinion, is material,
or omits to state a fact which, in the Underwriters' reasonable opinion, is
material and is required to be stated therein or is necessary to make the
statements, in light of the circumstances under which they were made when the
Prospectus is delivered, not misleading. No order suspending the sale of the
Securities in any jurisdiction shall
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have been issued on either the First Time of Delivery or the Second Time of
Delivery, if any, and no proceedings for that purpose shall have been
instituted or shall be contemplated.
(c) On or prior to the Closing Date and each Option Closing
Date, if any, the Underwriters shall have received from Xxxxxx and Xxxxx, LLP
such opinion or opinions with respect to the incorporation of the Company, the
validity of the Securities, the Prospectus and other related matters as the
Underwriters may request.
(d) Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., counsel for the
Company, shall have furnished to the Underwriters their written opinion, dated
such Time of Delivery, containing customary assumptions and qualifications and
in form and substance satisfactory to the Underwriters, to the effect that:
(i) This Agreement has been duly executed and delivered
by the Company under the laws of the State of Texas;
(ii) All of the issued shares of capital stock of the
Company (including the Preferred Stock being delivered to the
Depositary at the First Time of Delivery or the Second Time of
Delivery, as the case may be, against indirect payment therefor
in accordance with the Agreement) have been duly authorized and
validly issued, are fully paid and nonassessable. The Preferred
Stock being delivered to the Depositary by the Company are free
and clear of any liens, charges, claims, pledges, security
interests or encumbrances of any kind whatsoever other than as
disclosed in the Prospectus. The Shares being delivered to the
Underwriters at the First Time of Delivery or the Second Time of
Delivery, as the case may be, against payment therefor in
accordance with this Agreement, have been duly authorized and
validly issued, fully paid and non-assessable. The Conversion
Shares issuable upon conversion of the Preferred Stock, upon
conversion thereof in accordance with the terms of the
Certificate of Designation, have been duly authorized and will be
validly issued, fully paid and non-assessable. The Depositary
Shares being delivered to the Underwriters by the Company are
free and clear of any liens, charges, claims, pledges, security
interest or encumbrances of any kind whatsoever other than as
disclosed in the Prospectus.
(iii) The execution and delivery by the Company of this
Agreement and the Deposit Agreement, the performance by the
Company hereunder and thereunder, the compliance by the Company
with the provisions hereof and thereof and the consummation of
the transactions contemplated hereby and thereby, in accordance
with its terms, do not and will not conflict with or result in
any breach or violation of, constitute a default under or result
in the creation or imposition of any lien, charge, claim, pledge,
security interest or other encumbrance upon any property or
assets of the Company or the Subsidiary pursuant to the terms of
(A) the charter documents and bylaws of the Company and the
Subsidiary, (B) any license, contract, indenture, mortgage, deed
of trust, voting trust agreement, stockholders' agreement, note,
loan or credit agreement or other agreement or instrument filed
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as an exhibit to any of the Incorporated Documents, or (C) any
federal, Delaware or Texas statute, rule or regulation or, to the
best of such counsel's knowledge, any judgment, decree or order
applicable to the Company or the Subsidiary of any arbitrator,
court, regulatory body or administrative agency or other
governmental agency or body having jurisdiction over the Company
or the Subsidiary or any of their respective activities or
properties, except with respect to this clause (C) for such
conflicts, breaches, violations, defaults and creations or
impositions which in the aggregate would not have a Material
Adverse Effect. Such counsel need express no opinion in this
paragraph (iii) as to (A) state securities or Blue Sky laws or
(B) with respect to matters of fact relating to compliance with
any financial covenants, ratios or tests or any aspect of the
financial condition or results of operations of the Company.
(iv) No consent, permit, license, exception, approval,
authorization, order, registration or qualification (hereinafter
referred to as "GOVERNMENT AUTHORIZATION") of or with any such
federal, state and local governmental authority, arbitrator,
court, tribunal regulatory body or administrative agency or other
governmental agency or body or any stock exchange authorities
having jurisdiction over the Company or the Subsidiary or any of
their properties is required for the issue and sale of the
Shares, the Preferred Stock or the Conversion Shares by the
Company or the consummation by the Company of the transactions
contemplated by this Agreement and the Deposit Agreement, except
the registration under the Securities Act of the Shares, the
Preferred Stock or the Conversion Shares, and such consents,
approvals, authorizations, registrations or qualifications as may
be required under state securities or Blue Sky laws or the
Bylaws, rules and regulations of the National Association of
Securities Dealers, Inc. in connection with the purchase and
distribution of the Shares by the Underwriters.
(v) The securities when issued will conform in all
material respects to the description thereof contained in the
"Description of the Series F Preferred Stock" and "Description
of Depositary Shares," and the disclosure contained in "Certain
Federal Income Tax Consequences," and in the Registration
Statement in Item 15 fairly present the information called for
with respect to such terms of the Securities, legal matters,
documents or proceedings in all material respects.
(vi) The Company has the corporate power and authority
to execute, deliver and perform this Agreement and the Deposit
Agreement and to consummate the transactions provided for herein
and therein; the execution and delivery of this Agreement and the
Deposit Agreement have been duly authorized by all requisite
corporate action on the part of the Company, and this Agreement
and the Deposit Agreement have been duly executed and delivered
by the Company, and, assuming due authorization, execution and
delivery by each other party hereto and thereto, constitute
legal, valid and binding agreements of the Company enforceable
against the Company in accordance with their respective terms;
except to the extent that enforcement hereof and thereof may be
limited by (A) bankruptcy, insolvency,
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reorganization, moratorium or other similar laws now or hereafter
in effect relating to creditors' rights generally and (B) general
principles of equity (regardless of whether enforceability is
considered in a proceeding at law or in equity) and except to the
extent that rights to indemnification and contribution contained
in this Agreement may be limited by federal or state securities
laws or public policy relating thereto.
(vii) The certificates evidencing the Preferred Stock
and the Common Stock comply as to form with the requirements of
the Delaware General Corporation Law.
(viii) The Shares being delivered to the Underwriters
by the Company, the Preferred Stock being issued to the
Depositary and the Conversion Shares have not been or will not
have been issued in violation of or subject to any preemptive
rights arising under the Company's Certificate of Incorporation
or Bylaws or under the laws of the State of Delaware, or similar
rights that entitle or will entitle any person to acquire any
shares of Common Stock upon issuance of such shares of capital
stock by the Company.
(ix) The Registration Statement has become effective
under the Securities Act, and, to such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued and no proceedings
for that purpose have been instituted or are pending under the
Securities Act.
(x) The Registration Statement and the Prospectus and
any further amendments and supplements thereto made by the
Company prior to such Time of Delivery (other than the reserve
data, the financial statements and related schedules and
statistical information, as to which such counsel need express no
opinion) comply as to form in all material respects with the
requirements of the Securities Act and the Rules and Regulations.
Such counsel may state that because the primary purpose of their
engagement was not to establish or confirm factual matters or reserve,
financial, accounting or statistical matters and because of the wholly or
partially non-legal character of many of the statements contained in the
Registration Statement and the Prospectus, such counsel is not passing upon
and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement or the
Prospectus (except to the extent expressly set forth in paragraphs (vi) and
(vii) above), and they have not independently verified the accuracy,
completeness or fairness of such statements (except as aforesaid). Without
limiting the foregoing, such counsel may state that they assume no
responsibility for and have not independently verified the accuracy,
completeness or fairness of the reserve data or the financial statements
included in the Registration Statement and the Prospectus and they have not
examined the reserve information or the accounting or financial records
from which such statements and data are derived. Such
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counsel may state that although certain portions of the
Registration Statement and the Prospectus have been included
therein on the authority of "experts" within the meaning of the
Securities Act, they are not experts with respect to any portion
of the Registration Statement or the Prospectus. However, such
counsel may state that they have participated in conferences with
officers, legal counsel and other representatives of the Company,
representatives of the independent accountants of the Company,
and with representatives of, and legal counsel for, the
Underwriters, at which the contents of the Registration Statement
and Prospectus and related matters were discussed. Such counsel
may state that they have also reviewed certain corporate
documents furnished to them by the Company. Based on such
participation and review (relying as to materiality to a certain
extent upon the officers and the other representatives of the
Company), and subject to the limitations described above, such
counsel may state that they advise the Underwriters that no facts
have come to their attention that causes them to believe that the
Registration Statement at the time it became effective, contained
an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make
the statements therein not misleading, or that the Prospectus, as
of its date or as of the date hereof, contained or contains an
untrue statement of a material fact or omitted or omits to state
a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading.
In rendering such opinion, such counsel may state that they
express no opinion as to the laws of any jurisdiction other than
the United States, the State of Delaware, the State of New York
and the State of Texas.
(e) Xxxxxx X. Xxxxxx, General Counsel for the Company,
shall have furnished to the Underwriters his written opinion,
dated such Time of Delivery, containing customary assumptions and
qualifications and in form and substance satisfactory to the
Underwriters, to the effect that:
(i) The Company and the Subsidiary have been duly
incorporated and is validly existing as a corporation in
good standing under the laws of its jurisdiction of
incorporation or formation, with corporate or other power
and authority to own its properties and conduct its
business as described in the Prospectus;
(ii) The Company and the Subsidiary have been duly
qualified as a foreign corporation for the transaction of
business and is in good standing under the laws of each
other jurisdiction in which it owns or leases properties,
or conducts any business, so as to require such
qualification, other than where the failure to be so
qualified or in good standing would not reasonably be
expected to have a Material Adverse Effect;
(iii) Except as disclosed in the Prospectus, there
were as of the date of the Prospectus, and are as of the
date set forth herein, no outstanding subscriptions,
rights, warrants, options, calls, convertible securities,
commitments of sale or liens
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related to or entitling any person to purchase or
otherwise to acquire any shares of the capital stock of,
or other ownership interest in, the Company or the
Subsidiary;
(iv) The authorized, the issued and the issued and
outstanding capital stock of the Company set forth in the
Prospectus is true and correct in all material respects as
of the date set forth therein and the authorized capital
stock of the Company conforms as to legal matters in all
material respects to the description thereof contained in
the section of the Prospectus entitled "Description of
Capital Stock."
(v) There is no action, arbitration, suit, or
other proceeding pending or threatened in writing or any
judgments outstanding against the Company, the Subsidiary,
or involving the properties or business of the Company or
the Subsidiary which (A) questions the validity of the
capital stock of the Company or the Subsidiary or of this
Agreement or the Deposit Agreement or of any action taken
or to be taken by the Company or the Subsidiary pursuant
to or in connection with such capital stock or this
Agreement or the Deposit Agreement or (B) except as
disclosed in the Prospectus, could have a Material Adverse
Effect;
(vi) No holders of securities of the Company have
rights to the registration thereof under the Registration
Statement or, if any such holders have such rights, such
holders have waived such rights; and
(vii) The Company and the Subsidiary are not in
violation of their Constituent Documents; neither the
Company nor the Subsidiary is in breach of, or in default
with respect to, any provisions of any license, contract,
indenture, mortgage, deed of trust, voting trust
agreement, stockholders' agreement, note, loan or credit
agreement or other agreement or instrument known to such
counsel to which the Company or the Subsidiary is a party
or by which any of them is or may be bound or to which any
of their respective properties or assets is or may be
subject, except for such breaches or defaults as would not
have a Material Adverse Effect, and to the knowledge of
such counsel, the Company and the Subsidiary are in
material compliance with all laws, rules and regulations
and all judgments, decrees and orders of any judicial or
governmental authority to which the Company or the
Subsidiary or by which any of them is or may be bound or
to which any of their respective properties or assets is
or may be subject, except for such noncompliance as would
not have a Material Adverse Effect.
In rendering such opinion, such counsel may state that
they express no opinion as to the laws of any jurisdiction other
than the United States, the State of Texas and the State of
Delaware;
(f) On or prior to the First Time of Delivery and the
Second Time of Delivery, if any, Xxxxxx and Xxxxx, LLP shall have been
furnished such documents and certificates as they may reasonably require for
the purpose of enabling them to review or pass upon the matters
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referred to in Section 6(c) above or in order to evidence the accuracy,
completeness or satisfaction of any of the representations, warranties or
conditions of the Company herein contained.
(g) On and as of the First Time of Delivery and the Second Time
of Delivery, if any: (i) there shall have been no material adverse change in
the condition, financial or otherwise, prospects, stockholders' equity or the
business activities of the Company and the Subsidiary taken as a whole, whether
or not in the ordinary course of business, from the latest dates as of which
such condition is set forth in the Prospectus; (ii) there shall have been no
transaction, not in the ordinary course of business, entered into by the
Company or the Subsidiary, from the latest date as of which the financial
condition of the Company and the Subsidiary is set forth in the Prospectus
which is materially adverse to the Company and the Subsidiary taken as a whole;
(iii) neither the Company nor the Subsidiary shall be in default under any
provision of any instrument relating to any material outstanding indebtedness;
(iv) no material amount of the assets of the Company or the Subsidiary shall
have been pledged or mortgaged, except as set forth in the Prospectus; (v) no
action, suit or proceeding, at law or in equity, shall have been pending or, to
the knowledge of the Company, threatened or contemplated against the Company or
the Subsidiary, or affecting any of their respective properties or businesses,
before or by any court or federal, state or foreign commission, board or other
administrative agency wherein an unfavorable decision, ruling or finding may
have a Material Adverse Effect, except as set forth in the Prospectus; and (vi)
no order suspending or preventing the sale of the Securities shall have been
issued under the Securities Act and no proceedings therefor shall have been
initiated or threatened or, to the knowledge of the Company, contemplated by
the Commission or any state regulatory authority.
(h) At the First Time of Delivery and the Second Time of
Delivery, if any, the Underwriters shall have received a certificate of the
Company signed on behalf of the Company by the principal executive officer and
by the chief financial or chief accounting officer of the Company, in their
capacities as such, dated the First Time of Delivery or the Second Time of
Delivery, as the case may be, to the effect that each of such persons has
carefully examined the Prospectus, this Agreement and the Deposit Agreement,
and that:
(i) the representations and warranties of the Company in
this Agreement and the Deposit Agreement are true and correct in all
material respects, as if made on and as of the First Time Delivery or the
Second Time Delivery, as the case may be, and the Company has complied
with all agreements and covenants and satisfied all conditions contained
in this Agreement on its part to be performed or satisfied at or prior to
the First Time of Delivery or the Second Time of Delivery, as the case
may be;
(ii) no stop order suspending the qualification or
exemption from qualification of the Securities shall have been issued
and no proceedings for that purpose shall have been commenced or, to the
knowledge of the Company, be contemplated;
(iii) since the date of the most recent financial
statements included in the Prospectus, there has been no material adverse
change in the condition, financial or
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otherwise, business, prospects or results of operation of the Company and
the Subsidiary, taken as a whole, except as set forth in the Prospectus;
(iv) none of the Registration Statement, Prospectus
or any amendment or supplement thereto includes any untrue statement of a
material fact or omits to state any material fact required to be stated
therein or necessary to make the statements therein, in light of the
circumstances under which they were made when the Prospectus is
delivered, not misleading; and
(v) subsequent to the respective dates as of which
information is given in the Prospectus: (a) neither the Company nor the
Subsidiary has incurred up to and including the First Time of Delivery
and the Second Time of Delivery, as the case may be, other than in the
ordinary course of its business, any material liabilities or obligations,
direct or contingent, except as disclosed in the Prospectus; (b) neither
the Company nor the Subsidiary has paid or declared any dividends or
other distributions on its capital stock; (c) neither the Company nor the
Subsidiary has entered into any material transactions not in the ordinary
course of business, except as disclosed in the Prospectus; (d) there has
not been any change in the capital stock or the long term debt of the
Company or the Subsidiary; (e) neither the Company nor the Subsidiary has
sustained any material loss or damage to its property or assets, whether
or not insured; (f) there is no litigation which is pending or, to the
Company's knowledge, threatened or contemplated against the Company, the
Subsidiary or any affiliated party of any of the foregoing which would,
if decided adversely, have a Material Adverse Effect and which is
required to be set forth in an amended or supplemented Prospectus which
has not been set forth; and (g) there has occurred no event which would
be required to be set forth in an amended or supplemented prospectus
included in a registration statement on Form S-3, which has not been set
forth in an amendment or supplement to the Prospectus.
(i) On or before the date hereof the Underwriters shall have
received a letter, dated such date, addressed to the Underwriters in form and
substance satisfactory in all respects to the Underwriters and Xxxxxx and
Xxxxx, LLP, from Ernst & Young LLP.
(j) At the First Time of Delivery and the Second Time of
Delivery, if any, the Underwriters shall have received from Ernst & Young LLP a
letter, dated as of the First Time of Delivery or the Second Time of Delivery,
as the case may be, to the effect that they reaffirm their statements made in
the letter furnished pursuant to Section 6(h), except that the specified date
referred to shall be a date not more than five days prior to the First Time of
Delivery or the Second Time of Delivery, as the case may be, and to the further
effect that they have carried out procedures as specified in their letter
furnished pursuant to Section 6(h) with respect to certain amounts, percentages
and financial information as specified by the Underwriters and deemed to be a
part of the Prospectus and have found such amounts, percentages and financial
information to be in agreement with the records specified in their letter
furnished pursuant to Section 6(h).
(k) On the First Time of Delivery and the Second Time of
Delivery, if any, there shall have been duly tendered to the Underwriters the
appropriate number of Depositary Shares
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and the Company shall have tendered to the Depositary the appropriate number of
shares of Preferred Stock.
(l) Trading in the Common Stock shall not have been suspended by
the Nasdaq National Market at any time.
(m) Subsequent to the execution and delivery of this Agreement
there shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange, the American Stock Exchange or the
over-the-counter market shall have been suspended, or minimum prices shall have
been established on either of such exchanges or such market by the Commission,
by such exchange or by any other regulatory body or governmental authority
having jurisdiction, or trading in securities of the Company on any exchange or
in the over-the-counter market shall have been suspended or (ii) any moratorium
on commercial banking activities shall have been declared by Federal or New York
State authorities or (iii) an outbreak or escalation of hostilities or a
declaration by the United States of a national emergency or war or such a
material adverse change in general economic, political or financial conditions
(or the effect of international conditions on the financial markets in the
United States shall be such) as to make it, in the judgment of the Underwriters,
impracticable or inadvisable to proceed with the offering or the delivery of the
Preferred Stock on the terms and in the manner contemplated in the Prospectus.
(n) The Certificate of Designations shall have been duly
executed and filed by the Company with the Secretary of State of the State of
Delaware.
(o) If any event shall have occurred that requires the Company
under Section 4(c) hereof to prepare an amendment or supplement to the
Prospectus, such amendment or supplement shall have been prepared, the
Underwriters shall have been given a reasonable opportunity to comment thereon,
and copies thereof delivered to the Underwriters.
(p) On or prior to the First Time of Delivery and the Second
Time of Delivery, if any, the Underwriters shall have received a certificate
signed on behalf of the Company by the secretary of the Company, in his capacity
as such, dated the First Time of Delivery or the Second Time of Delivery, as the
case may be, as to:
(i) the absence of any contemplated proceeding for the
merger, consolidation, liquidation or dissolution of the Company or the
Subsidiary, as the case may be, or the sale of all or substantially all of
its assets;
(ii) the due adoption and full force and effect of the
by-laws of the Company (with a copy of the by-laws attached);
(iii) resolutions adopted by the Board of Directors of
the Company and/or a committee thereof authorizing the Offering and the
consummation of the transactions contemplated by this Agreement, the
Deposit Agreement and the Certificate of Designations (with copies of such
resolutions attached); and
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(iv) the incumbency, authorization and signatures of
those officers of the Company signing this Agreement and/or any
certificate delivered at Closing.
(q) The NASD, upon review of the terms of the public offering of
the Firm Shares and the Option Shares, shall not have objected to the
Underwriters' participation in the Offering.
(r) The Company and the Depositary shall have each executed and
delivered the Depositary Agreement.
All opinions, letters, evidence and certificates mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably
satisfactory to the Underwriters.
If any condition to the Underwriters' obligations hereunder to be
fulfilled prior to or at the First Time of Delivery or the Second Time of
Delivery, as the case may be, is not so fulfilled, the Underwriters may
terminate their obligations pursuant to Section 9 or, if the Underwriters so
elect, they may waive any such conditions which have not been fulfilled or
extend the time for their fulfillment.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless the
Underwriters (for purposes of this Section 7, "Underwriters" shall include the
officers, directors, partners, employees and agents, and each person, if any,
who controls the Underwriters ("CONTROLLING PERSON") within the meaning of
Section 15 of the Securities Act or Section 20(a) of the Exchange Act), from
and against any and all losses, claims, damages, expenses or liabilities, joint
or several (and actions, proceedings, suits and litigation in respect thereof),
whatsoever, as the same are incurred, to which the Underwriters or any such
controlling person may become subject, under the Securities Act, the Exchange
Act or any other statute or at common law or otherwise insofar as such losses,
claims, damages, expenses or liabilities arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus or the Prospectus (as from time to time amended and
supplemented) or arise out of or are based upon the omission or alleged
omission therefrom of 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 at the time such Preliminary Prospectus or
Prospectus is delivered, not misleading; provided, however, that the Company
shall not be liable in any such case to the extent that any such loss, claim,
damage, expense or liability arises out of or is based upon any untrue
statement or alleged untrue statement or omission or alleged omission made in
any Preliminary Prospectus or the Prospectus or any such amendment or
supplement in reliance upon and in conformity with Underwriters' Information
and provided, further, that the Company shall not be liable to the Underwriters
under the indemnity agreement in this subsection (a) (i) with respect to any
Preliminary Prospectus to the extent that any such loss, liability, claim,
damage or expense of the Underwriters arises out of a sale of the Preferred
Stock by the Underwriters to a person to whom there was not sent or given, at
or prior to the written confirmation of such sale, a copy of the Prospectus (or
of the Prospectus as then amended or supplemented) if the Company has
previously
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furnished requested copies thereof to the Underwriters a reasonable time in
advance and the loss, liability, claim, damage or expense of the Underwriters
results from an untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in the Preliminary Prospectus
which was corrected in the Prospectus (or the Prospectus as amended or
supplemented) or (ii) to the extent that any such loss, claim, damage, expense
or liability arises out of or is based upon any action or failure to act by the
Underwriters that is found in a final judicial determination (or a settlement
tantamount thereto) to constitute bad faith, willful misconduct or gross
negligence on the part of the Underwriters. The indemnity agreement in this
subsection (a) shall be in addition to any liability which the Company may have
at common law or otherwise.
(b) The Underwriters agree severally and not jointly to
indemnify and hold harmless the Company, each of its directors, each of its
officers and each other person, if any, who controls the Company within the
meaning of the Securities Act, to the same extent as the foregoing indemnity
from the Company to the Underwriters, with respect to any Preliminary
Prospectus to the extent that any such loss, liability, claim, damage or
expense of the Underwriters arises out of a sale of the Preferred Stock by the
Underwriters to a person to whom there was not sent or given, at or prior to
the written confirmation of such sale, a copy of the Prospectus (or of the
Prospectus as then amended or supplemented) if the Company has previously
furnished requested copies thereof to the Underwriters a reasonable time in
advance and the loss, liability, claim, damage or expense of the Underwriters
results from an untrue statement or alleged untrue statement or omission or
alleged omission of a material fact contained in the Preliminary Prospectus
which was corrected in the Prospectus (or the Prospectus as amended or
supplemented), but only with respect to statements or omissions, if any, made
as part of the Underwriters' Information.
(c) Promptly after receipt by an indemnified party under this
Section 7 of notice of the commencement of any action, suit or proceeding, such
indemnified party shall, if a claim in respect thereof is to be made against one
or more indemnifying parties under this Section 7, notify each party against
whom indemnification is to be sought in writing of the commencement thereof (but
the failure to notify an indemnifying party shall not relieve it from any
liability which it may have under Sections 7(a) or (b) unless and to the extent
that it has been prejudiced in a material respect by such failure or from the
forfeiture of substantial rights and defenses). In case any such action, suit
or proceeding is brought against any indemnified party, and it notifies an
indemnifying party or parties of the commencement thereof, the indemnifying
party or parties will be entitled to participate therein, and to the extent it
may elect by written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume the
defense thereof with counsel reasonably satisfactory to such indemnified party,
which may be the same counsel as counsel to the indemnifying party.
Notwithstanding the foregoing, the indemnified party or parties shall have the
right to employ its or their own counsel in any such case but the fees and
expenses of such counsel shall be at the expense of such indemnified party or
parties unless (i) the employment of such counsel shall have been authorized in
writing by the indemnifying parties in connection with the defense of such
action at the expense of the indemnifying party, (ii) the indemnifying parties
shall not have employed counsel reasonably satisfactory to such indemnified
party to take charge of the defense of such action within a reasonable time
after notice of commencement of the action or (iii) such indemnified party or
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parties shall have reasonably concluded, upon advice of counsel to such
indemnified party or parties, that a conflict of interest exists which makes
representation by counsel chosen by the indemnifying party not advisable (in
which case the indemnifying parties shall not have the right to direct the
defense of such action on behalf of the indemnified party or parties), in any
of which events such fees and expenses of one additional counsel shall be borne
by the indemnifying parties. In no event shall the indemnifying parties be
liable for reasonable fees and expenses of more than one counsel (in addition
to any local counsel) separate from their own counsel for all indemnified
parties in connection with any one action or separate but similar or related
actions in the same jurisdiction arising out of the same general allegations or
circumstances. Anything in this Section 7 to the contrary notwithstanding, an
indemnifying party shall not be liable for any settlement of any claim or
action effected without its written consent.
(d) In order to provide for just and equitable contribution in
any case in which (i) an indemnified party makes a claim for indemnification
pursuant to this Section 7, but it 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 of appeal) that such
indemnification may not be enforced in such case notwithstanding the fact that
the express provisions of this Section 7 provide for indemnification in such
case, or (ii) contribution under the Securities Act may be required, then each
indemnifying party, in lieu of indemnifying such indemnified party, shall
contribute to the amount paid as a result of such losses, claims, damages,
expenses or liabilities (or actions, suits, proceedings or litigation in respect
thereof) (A) in such proportion as is appropriate to reflect the relative
benefits received by each of the contributing parties, on the one hand, and the
party to be indemnified on the other hand, from the offering of the Preferred
Stock or (B) if the allocation provided by clause (A) 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 of the contributing parties, on the one hand, and the party to be
indemnified, on the other hand, in connection with the statements or omissions
that resulted in such losses, claims, damages, expenses or liabilities, as well
as any other relevant equitable considerations. The relative benefits received
by the Company, on the one hand, and the Underwriters, on the other, shall be
deemed to be in the same proportion as the total net proceeds from the offering
of the Preferred Stock (before deducting expenses) bear to the total discounts
received by the Underwriters hereunder, in each case as set forth in the table
on the cover page of the Prospectus. Relative fault shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a material fact
relates to information supplied by the Company or by the Underwriters, and the
parties' relative intent, knowledge, access to information and opportunity to
correct or prevent such untrue statement or omission. The amount paid or
payable by an indemnified party as a result of the losses, claims, damages,
expenses or liabilities (or actions, suits, proceedings or litigation in respect
thereof) referred to above in this subsection (d) shall be deemed to include any
legal or other expenses reasonably incurred by such indemnified party in
connection with investigating, preparing or defending any such action, claim,
suit, proceeding or litigation. Notwithstanding the provisions of this
subsection (d), the Underwriters shall not be required to contribute any amount
in excess of the discount applicable to the Preferred Stock purchased by the
Underwriters hereunder. No person guilty of fraudulent misrepresentation
(within the meaning of Section 12(f) of the Securities Act) shall be entitled to
contribution from
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any person who was not guilty of such fraudulent misrepresentation. For
purposes of this Section 7, each person, if any, who controls the Company
within the meaning of the Securities Act, each executive officer of the Company
and each director of the Company shall have the same rights to contribution as
the Company, subject in each case to this subsection (d). Any party entitled
to contribution will, promptly after receipt of notice of commencement of any
action, suit, proceeding or litigation against such party in respect to which a
claim for contribution may be made against another party or parties under this
subsection (d), notify such party or parties from whom contribution may be
sought, but the omission so to notify such party or parties shall not relieve
the party or parties from whom contribution may be sought from any obligation
it or they may have hereunder or otherwise than under this subsection (d), or
to the extent that such party or parties were not adversely affected by such
omission. The contribution agreement set forth above shall be in addition to
any liabilities which any indemnifying party may have at common law or
otherwise.
8. Representations and Agreements to Survive Delivery. All
representations, warranties and agreements contained in this Agreement or
contained in certificates of officers of the Company submitted pursuant hereto
shall be deemed to be representations, warranties and agreements at the First
Time of Delivery and the Second Time of Delivery, as the case may be, and the
agreements of the Company and the provisions with respect to the payment of
expenses contained in Sections 5 and 9 and the respective indemnity agreements
contained in Section 7 hereof shall remain operative and in full force and
effect regardless of any investigation made by or on behalf of the
Underwriters, the Company, the Subsidiary or any controlling person, and shall
survive termination of this Agreement or the issuance and delivery of the
Depositary Shares to the Underwriters.
9. Termination.
(a) Subject to subsection (b) of this Section 9, the
Underwriters shall have the right to terminate this Agreement (i) if any
domestic or international event or act or occurrence has disrupted, or in the
Underwriters' reasonable and good faith opinion will in the immediate future
disrupt the United States financial markets; or (ii) if any material adverse
change in the United States financial markets shall have occurred; or (iii) if
trading on the New York Stock Exchange, the American Stock Exchange or in the
over-the-counter market shall have been suspended, or minimum or maximum prices
for trading shall have been fixed, or maximum ranges for prices for securities
shall have been required on the over-the-counter market by the NASD or by order
of the Commission or any other government authority having jurisdiction; or
(iv) if the United States shall have become involved in a war or major
hostilities, or there shall have been an escalation in an existing war or major
hostilities, or a national emergency shall have been declared in the United
States; or (v) if a banking moratorium has been declared by a state or federal
authority; or (vi) if a moratorium in foreign exchange trading has been
declared; or (vii) if the Company or the Subsidiary shall have sustained a loss
material to the Company or the Subsidiary by fire, flood, accident, hurricane,
earthquake, theft, sabotage or other calamity or malicious act which, whether
or not such loss shall have been insured, will, in the Underwriters' opinion,
make it inadvisable to proceed with the delivery of the Securities; or (viii)
if there shall have been such a material adverse change in the general market,
political or economic conditions in the United States or
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elsewhere, as in the Underwriters' judgment would make it inadvisable to
proceed with the offering, sale and/or delivery of the Depositary Shares.
(b) If this Agreement is terminated by the Underwriters in
accordance with the provisions of Section 9(a) or 10 hereof or if this Agreement
shall not be carried out within the time specified herein, or any extension
thereof granted to the Underwriters, by reason of any failure on the part of the
Company to perform any undertaking in this Agreement or satisfy any condition of
this Agreement by it to be performed or satisfied (including, without
limitation, pursuant to Section 6, 9 or 10 hereof), then the Company shall
promptly reimburse and indemnify the Underwriters for all of its reasonable
out-of-pocket expenses, including the fees and disbursements of counsel for the
Underwriters. Notwithstanding any contrary provision contained in this
Agreement, any election hereunder or any termination of this Agreement
(including, without limitation, pursuant to Sections 6, 9 and 10 hereof), and
whether or not this Agreement is otherwise carried out, the provisions of
Section 5 and Section 7 shall not be in any way affected by such election or
termination or failure to carry out the terms of this Agreement or any part
hereof.
10. Default by the Company. If the Company shall fail at the
First Time of Delivery or the Second Time of Delivery, as applicable, to sell
and deliver the number of Securities which it is obligated to sell hereunder on
such date against payment therefor, then the obligations of the Underwriters
under this Agreement shall terminate (or, if such default shall occur with
respect to any Option Shares to be purchased on the First Time of Delivery or
the Second Time of Delivery, the Underwriters may, at their option, by notice
from the Underwriters to the Company, terminate the Underwriters' obligation to
purchase Option Shares from the Company on such date) without any liability on
the part of any non-defaulting party other than pursuant to Sections 5, 7 and 9
hereof. No action taken pursuant to this Section 10 shall relieve the Company
from liability, if any, in respect of such default.
11. Effective Time of Agreement. This Agreement shall become
effective (i) if Rule 430A under the Securities Act is not used, when the
Underwriters and the Company shall have received notification of the
effectiveness of the Registration Statement, or (ii) if Rule 430A under the Act
is used, when the parties hereto have executed and delivered this Agreement.
If either the initial public offering price or the purchase price per Share has
not been agreed upon prior to 5:00 p.m., New York time, on the fifteenth full
business day after the Registration Statement shall have become effective, this
Agreement shall thereupon terminate without liability to the Company or the
Underwriters except as herein expressly provided. Until this Agreement becomes
effective as aforesaid, it may be terminated (A) by the Company by notifying
the Underwriters, or (B) by the Underwriters by notifying the Company.
Notwithstanding the foregoing, the provisions of this Section 11 and of
Sections 5, 7 and 9 hereof shall at all times be in full force and effect.
12. Notices. All notices and communications hereunder, except as
herein otherwise specifically provided, shall be given in writing and shall be
deemed to have been duly given if mailed or transmitted by any standard form of
telecommunication and shall be effective upon actual receipt. Notices to the
Underwriters shall be directed to them at Xxxxxxx Xxxxx & Associates, Inc., 000
Xxxxxxxx Xxxxxxx, Xx. Xxxxxxxxxx, Xxxxxxx 00000, Attention: [Xxxxxx B.
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Xxxxx] and Forum Capital Markets L.P., 00 Xxxxxx Xxxxxx, Xxx Xxxxxxxxx,
Xxxxxxxxxxx 00000, Attention: [Xxxxx X. Xxxxxxxxx], with a copy to Xxxxxx and
Xxxxx, LLP, 000 Xxxx Xxxxxx, Xxxxxx, Xxxxx 00000, Attention: Xxxxxxx X. Boeing.
Notices to the Company shall be directed to the Company at 0000 Xxxxxxxxxx
Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000, Attention: Xxxxxx X. Xxxxxx, with a
copy to Akin, Gump, Strauss, Xxxxx & Xxxx, L.L.P., 0000 Xxxxxxx Xxxxxx, Xxxxx
0000, Xxxxxx, Xxxxx 00000, Attention: Xxxxx X. Xxxx.
13. Parties. This Agreement shall inure solely to the benefit of and
shall be binding upon the Underwriters, the Company and the controlling persons,
directors and officers referred to in Section 7 hereof, and their respective
successors, legal representatives and assigns, and no other person shall have or
be construed to have any legal or equitable right, remedy or claim under or in
respect of or by virtue of this Agreement or any provisions herein contained.
No purchaser of Preferred Stock from the Underwriters shall be deemed to be a
successor by reason merely of such purchase.
14. Construction. This Agreement shall be governed by and
construed and enforced in accordance with the laws of the State of Texas
without giving effect to choice of law or conflict of laws principles.
15. Counterparts. This Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
taken together shall be deemed to be one and the same instrument.
16. Entire Agreement; Amendments. This Agreement constitutes the
entire agreement of the parties hereto and supersedes all prior written or oral
agreements, understandings and negotiations with respect to the subject matter
hereof. This Agreement may not be amended except in a writing signed by the
Underwriters and the Company.
* * *
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If the foregoing correctly sets forth the understanding between the
Underwriters and the Company, please so indicate in the space provided below
for that purpose, whereupon this letter shall constitute a binding agreement
among us.
Very truly yours,
NATIONAL ENERGY GROUP, INC.
By:
---------------------------
Name:
----------------------
Title:
---------------------
Confirmed and accepted as of
the date first above written.
XXXXXXX XXXXX & ASSOCIATES, INC.
By:
---------------------------
Name:
----------------------
Title:
---------------------
FORUM CAPITAL MARKETS L.P.
By:
---------------------------
Name:
----------------------
Title:
---------------------
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SCHEDULE I
Number of
Option Shares
Number of Firm to be Purchased
Shares to be if Maximum
Purchased from Option
Underwriter Company Exercised
----------- --------------- -----------------
Xxxxxxx Xxxxx & Associates, Inc. ..........
Forum Capital Markets, L.P. ...............
--------- -------
2,000,000 300,000
========= =======
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ANNEX I
Subsidiaries
Jurisdictions in
Ownership which Qualified to
Name Jurisdiction of Incorporation Percentage Conduct Business
------------ ------------------------------ ----------------- -------------------
