1,437,500 SHARES
XXXXXXX XXXXXXXX ENERGY, INC.
COMMON STOCK
UNDERWRITING AGREEMENT
_____________, 1996
Xxxxxx & Xxxxxxx, Inc.
Xxxxxxx, Xxxxxx Inc.
c/o Rodman & Xxxxxxx, Inc.
Two World Financial Center
000 Xxxxxxx Xx., 00xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of the Several
Underwriters named in
SCHEDULE I attached hereto.
Ladies and Gentlemen:
Xxxxxxx Xxxxxxxx Energy, Inc., a Delaware corporation (the "COMPANY")
proposes to sell to you and the other underwriters named in SCHEDULE I attached
hereto (the "UNDERWRITERS"), for whom you are acting as the representatives (the
"REPRESENTATIVES"), 1,250,000 shares (the "FIRM SHARES") of the Company's Common
Stock, par value $0.10 per share (the "COMMON STOCK"), to be issued and sold by
the Company. In addition, the Company proposes to grant to the Underwriters an
option to purchase up to an additional 187,500 shares (the "OPTION SHARES"), of
Common Stock for the purpose of covering over-allotments in connection with the
sale of the Firm Shares. The Firm Shares and the Option Shares are together
called the "SHARES."
1. SALE AND PURCHASE OF THE SHARES. On the basis of the representations,
warranties and agreements contained in, and subject to the terms and conditions
of, this Agreement:
(a) The Company agrees to issue and sell the Firm Shares to the
several Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase at the purchase price per share of Common Stock of
$______ (the "INITIAL PRICE"), the aggregate number of Firm Shares set
forth opposite such Underwriter's name in SCHEDULE I attached hereto.
(b) The Company grants to the several Underwriters an option to
purchase up to an additional 187,500 shares at the Initial Price. Pursuant
to such option, the Company agrees to issue and sell the Option Shares to
the several Underwriters, and each of the Underwriters agrees, severally
and not jointly, to purchase at the Initial Price the same percentage
(adjusted by the Representatives to eliminate fractions) of the total
number of Option Shares to be purchased by the Underwriters as such
Underwriter is purchasing of the Firm Shares. Such option may be exercised
only to cover over-allotments in the sales of the Firm Shares by the
Underwriters and may be exercised in whole or in part at any time on or
before 12:00 noon, New York City time, on the business day before the Firm
Shares Closing Date (as defined below) and from time-to-time thereafter
within 30 days after the date of this Agreement, upon verbal or telephonic
notice by the Representatives to the Company setting forth the number of
Option Shares to be purchased and the time and date (if other than the Firm
Shares Closing Date) of such purchase.
2. DELIVERY AND PAYMENT. Delivery by the Company of the Firm Shares to
the Representatives for the respective accounts of the Underwriters, and payment
of the purchase price by certified or official bank check or checks payable in
New York Clearing House (next day) funds to the Company, shall take place at the
offices of Xxxxxx & Xxxxxxx, Inc., at Two World Financial Center, 000 Xxxxxxx
Xx., 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx, 00000, at 10:00 a.m., New York City time,
on the third business day following the date on which the public offering of the
Shares commences (unless such date is postponed in accordance with the
provisions of Section 10(b)), or at such time and place on such other date, not
later than 10 business days after the date of this Agreement, as shall be agreed
upon by the Company and the Representatives (such time and date of delivery and
payment are called the "FIRM SHARES CLOSING DATE"). The public offering of the
Shares shall be deemed to have commenced at the time, which is the earlier of
(a) the time, after the Registration Statement (as defined in Section 4 below)
becomes effective, of the release by you for publication of the first newspaper
advertisement which is subsequently published relating to the Shares or (b) the
time, after the Registration Statement becomes effective, when the Shares are
first released by you for offering by the Underwriters or dealers by letter,
facsimile transmission or telegram.
In the event the option with respect to the Option Shares is exercised,
delivery by the Company of the Option Shares to the Representatives for the
respective accounts of the Underwriters, and payment of the purchase price by
certified or official bank check or checks payable in New York, Clearing House
(next day) funds to the Company shall take place at the offices of Xxxxxx &
Xxxxxxx, Inc. specified above at the time and on the date (which may be the same
date as, but in no event shall be earlier than, the Firm Shares Closing Date)
specified in the notice referred to in Section 1(b) (such time and date of
delivery and payment is called the "OPTION SHARES CLOSING DATE"). The Firm
Shares Closing Date and the Option Shares Closing Date are called, individually,
a "CLOSING DATE" and, together, the "CLOSING DATES."
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Certificates evidencing the Shares shall be registered in such names and
shall be in such denominations as the Representatives shall request at least two
full business days before the Firm Shares Closing Date or the Option Shares
Closing Date, as the case may be, and shall be made available to the
Representatives for checking and packaging, at such place as is designated by
the Representatives, on the full business day before the Firm Shares Closing
Date or the Option Shares Closing Date, as the case may be.
The documents to be delivered at each Closing Date by or on behalf of the
parties hereto, including the cross receipt for the Shares and any additional
documents requested by the Underwriters, will be delivered at the offices of
Xxxxxx & Xxxxxx L.L.P., 2300 First City Tower, 0000 Xxxxxx, Xxxxxxx, Xxxxx 00000
(the "CLOSING LOCATION"). A meeting will be held at the Closing Location at
2:00 p.m., Houston 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. "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.
3. PUBLIC OFFERING. The Company understands that the Underwriters
propose to make a public offering of the Shares, as set forth in and pursuant to
the Prospectus (as defined in Section 4 below), as soon after the effective date
of the Registration Statement and the date of this Agreement as the
Representatives deems advisable. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed each preliminary prospectus and are authorized to distribute the
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters).
4. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to, and agrees with, the several
Underwriters that:
(i) The Company has filed with the Securities and Exchange
Commission (the "COMMISSION") a registration statement, and may have
filed one or more amendments thereto, on Form S-2 (Registration No.
333-13441), including in such registration statement and each such
amendment a related preliminary prospectus (a "PRELIMINARY
PROSPECTUS"), for the registration of the Shares and the Option
Shares, in conformity with the requirements of the Securities Act of
1933, as amended (the "ACT"). In addition, the Company has filed or
will promptly file a further amendment to such registration statement,
in the form heretofore delivered to you. Other than a registration
statement, if any, increasing the size of the offering
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(a "RULE 462(b) REGISTRATION STATEMENT"), filed pursuant to Rule
462(b) under the Act, which became effective upon filing, no other
document with respect to the registration statement referred to
above has heretofore been filed with the Commission. As used in
this Agreement, the term "REGISTRATION STATEMENT" means such
registration statement and the Rule 462(b) Registration Statement,
if any, as amended, on file with the Commission at the time such
registration statement becomes effective (including the prospectus,
financial statements, exhibits and all other documents filed as a
part thereof or incorporated by reference directly or indirectly
therein), provided that such Registration Statement, at the time it
becomes effective, may omit such information as is permitted to be
omitted from the Registration Statement when it becomes effective
pursuant to Rule 430A of the General Rules and Regulations
promulgated under the Act (the "REGULATIONS"), which information
("RULE 430 INFORMATION") shall be deemed to be included in such
Registration Statement when a final prospectus is filed with the
Commission in accordance with Rules 430A and 424(b)(1) or (4) of
the Regulations; the term "PRELIMINARY PROSPECTUS" means each
prospectus included in the Registration Statement, or any
amendments thereto, before it becomes effective under the Act, the
form of prospectus omitting Rule 430A Information included in the
Registration Statement when it becomes effective, if applicable
(the "RULE 430A PROSPECTUS"), and any prospectus filed by the
Company with your consent pursuant to Rule 424(a) of the
Regulations; and the term "PROSPECTUS" means the final prospectus
included as part of the Registration Statement, except that if the
prospectus relating to the securities covered by the Registration
Statement in the form first filed on behalf of the Company with the
Commission pursuant to Rule 424(b) of the Regulations shall differ
from such final prospectus, the term "PROSPECTUS" shall mean the
prospectus as filed pursuant to Rule 424(b) from and after the date
on which it shall have first been used.
(ii) When the Registration Statement becomes effective, and at
all times subsequent thereto to and including the Closing Dates and
during such longer period as the Prospectus may be required to be
delivered in connection with sales by the Underwriters or a dealer,
and during such longer period until any post-effective amendment
thereto shall become effective, the Registration Statement (and any
post-effective amendment thereto) and the Prospectus (as amended or as
supplemented if the Company shall have filed with the Commission any
amendment or supplement to the Registration Statement or the
Prospectus) will contain all statements which are required to be
stated therein in accordance with the Act and the Regulations, will
comply with the Act and the Regulations, and will not contain any
untrue statement of a material fact or omit to state any material fact
required to be stated therein or necessary to make the statements
therein not misleading, and no
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event will have occurred which should have been set forth in an
amendment or supplement to the Registration Statement or the
Prospectus which has not then been set forth in such an amendment
or supplement; if a Rule 430A Prospectus is included in the
Registration Statement at the time it becomes effective, the
Prospectus filed pursuant to Rules 430A and 424(b)(1) or (4) will
contain all Rule 430A Information: and each Preliminary Prospectus,
as of the date filed with the Commission, did not include any
untrue statement of a material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading; except that no representation or
warranty is made in this Section 4(a)(ii) with respect to
statements or omissions made in reliance upon and in conformity
with written information furnished to the Company as stated in
Section 7(b) with respect to any Underwriter by or on behalf of
such Underwriter through the Representatives expressly for
inclusion in any Preliminary Prospectus, the Registration Statement
or the Prospectus, or any amendment or supplement thereto.
(iii) Neither the Commission nor the "blue sky" or securities
authority of any jurisdiction have issued an order (a "STOP ORDER")
suspending the effectiveness of the Registration Statement, preventing
or suspending the use of any Preliminary Prospectus, the Prospectus,
the Registration Statement, or any amendment or supplement thereto,
refusing to permit the effectiveness of the Registration Statement or
suspending the registration or qualification of the Firm Shares or the
Option Shares, nor has any of such authorities instituted or, to the
knowledge of the Company, threatened to institute any proceedings with
respect to a Stop Order.
(iv) Any contract, agreement, instrument, lease or license
required to be described in the Registration Statement or the
Prospectus has been properly described therein. Any contract
agreement, instrument, lease or license required to be filed as an
exhibit to the Registration Statement has been filed with the
Commission as an exhibit to or has been incorporated as an exhibit by
reference into the Registration Statement.
(v) The Company has no subsidiary or subsidiaries and does not
control, directly or indirectly, any corporation, partnership, joint
venture, association or other business organization, except for those
set forth on SCHEDULE II hereto (each such corporation singly a
"SUBSIDIARY" and collectively the "SUBSIDIARIES"). Each Subsidiary is
a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction of its incorporation, with full
corporate power and authority and all necessary consents,
authorizations, approvals, orders, licenses, certificates and permits
of and from, and declarations and filings with, all federal, state,
foreign, local and other governmental authorities and all courts and
other
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tribunals, to own, lease, license and use its properties and assets
and to carry on its business as now being conducted and in the
manner described in the Prospectus, except where such failure would
not have a material adverse effect upon the operations, business,
properties, assets, stockholder's equity, results of operations or
financial condition of the Company or any of the Subsidiaries
("MATERIAL ADVERSE EFFECT"). Each Subsidiary has been duly
qualified to do business and is in good standing in each
jurisdiction in which its respective ownership, leasing, licensing
or character, location or use of property and assets or the conduct
of its respective business makes such qualification necessary,
except where the failure to so qualify would not have a Material
Adverse Effect.
(vi) The Company has an authorized capitalization as set forth in
the Prospectus, and all of the issued shares of capital stock of the
Company have been duly and validly authorized and issued, and are
fully paid and nonassessable, without any personal liability attaching
to the ownership thereof, have not been issued and are not owned or
held in violation of any preemptive rights of shareholders,
optionholders, warrantholders or other persons. The Company owns all
of the shares of capital stock of the Subsidiaries, free and clear of
all liens, claims, security interests, restrictions, stockholders'
agreements, voting trusts and any other encumbrances whatsoever,
except as described in the Prospectus. There is no commitment, plan,
preemptive right or arrangement to issue, and no outstanding option,
warrant or other right calling for the issuance of, shares of capital
stock of the Company or any of the Subsidiaries or any security or
other instrument which by its terms is convertible into, exercisable
for or exchangeable for capital stock of the Company or any of the
Subsidiaries, except as described in the Prospectus. There is
outstanding no security or other instrument which by its terms is
convertible into or exchangeable for capital stock of the Company or
any of the Subsidiaries, except as described in the Prospectus.
(vii) The consolidated financial statements of the Company
included in the Registration Statement and the Prospectus fairly
present in all material respects, with respect to the Company, the
consolidated financial position, the consolidated results of
operations and the other information purported to be shown therein at
the respective dates and for the respective periods to which they
apply. Such financial statements have been prepared in accordance
with generally accepted accounting principles consistently applied
throughout the periods involved, are correct and complete and are in
accordance with the books and records of the Company. The accountants
whose reports on the audited financial statements are filed with the
Commission as a part of the Registration Statement are, and during the
periods covered by their reports included in the Registration
Statement and the Prospectus
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were, independent certified public accountants with respect to the
Company within the meaning of the Act and the Regulations. No
other financial statements are required by Form S-2 or otherwise to
be included in the Registration Statement or the Prospectus. There
has at no time been a material adverse change in the financial
condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company or any of the
Subsidiaries from the latest information set forth in the
Registration Statement or the Prospectus.
(viii) There is no litigation, arbitration, claim,
governmental or other proceeding (formal or informal) or investigation
before any court or before any public body or board pending, or, to
the knowledge of the Company, threatened or in prospect (or any basis
therefor) with respect to the Company or any of the Subsidiaries, or
any of their respective operations, business, properties or assets,
except as may be properly described in the Prospectus or such as
individually or in the aggregate do not now have and could not
reasonably be expected in the future to have a material adverse effect
upon the operations, business, properties, assets or financial
condition of the Company or any of the Subsidiaries. Neither the
Company nor any of the Subsidiaries is involved in any labor dispute
nor, to the knowledge of the Company, is such dispute threatened,
which dispute could reasonably be expected to have a Material Adverse
Effect. Neither the Company nor any of the Subsidiaries is in
violation of, or in default with respect to, the provisions of its
articles of incorporation or by-laws or any law, rule, regulation,
order, judgment or decree which could reasonably be expected to have a
material adverse effect on the Company or any of the Subsidiaries; nor
is the Company or any of the Subsidiaries required to take any action
in order to avoid any such violation or default with respect thereto.
(ix) Except as described in the Prospectus, the Company and each
of the Subsidiaries have (1) good and indefeasible title to all its
interests in its oil and gas properties, title investigations having
been carried out by or on behalf of such person in accordance with
good practice in the oil and gas industry in the areas in which the
Company and each of the Subsidiaries operate, (2) good and
indefeasible title to all other real property and good and marketable
title to all other material properties and assets described in the
Prospectus as owned by the Company or any of the Subsidiaries and (3)
valid, subsisting and enforceable leases for all of the properties and
assets, real or personal, described in the Prospectus as leased by
them, in each case free and clear of any security interests,
mortgages, pledges, liens, encumbrances or charges of any kind, other
than those described in the Prospectus and those that could not,
individually or in the aggregate, have a Material Adverse Effect.
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(x) Except as described in the Prospectus, as of the date
hereof, (1) all royalties, rentals, deposits and other amounts due on
the oil and gas properties of the Company and each of the Subsidiaries
have been properly and timely paid, and no proceeds from the sale or
production attributable to the oil and gas properties of the Company
or any of the Subsidiaries are currently being held in suspense by any
purchaser thereof, except where such amounts due could not, singly or
in the aggregate, have a Material Adverse Effect and (2) there are no
claims under take-or-pay contracts pursuant to which natural gas
purchasers have any make-up rights affecting the interest of the
Company or any of the Subsidiaries in its oil and gas properties,
except where such claims could not, singly or in the aggregate, have a
Material Adverse Effect.
(xi) As of the date hereof, the aggregate undiscounted monetary
liability of the Company and each of the Subsidiaries for natural gas
or oil taken or received under any operating or gas balancing and
storage agreement relating to its oil and gas properties that permits
any person to receive any portion of the interest of the Company or
any of the Subsidiaries in any natural gas or oil or to receive cash
or other payments to balance any disproportionate allocation of
natural gas or oil could not, singly or in the aggregate, have a
Material Adverse Effect.
(xii) The Company and each of the Subsidiaries, and to the
knowledge of the Company, any other party, is not now and is not
expected by the Company to be in violation or breach of, or in default
with respect to, complying with any term, obligation or provision of
any contract, agreement, instrument, lease, license, indenture,
mortgage, deed of trust, note, arrangement or understanding which is
material to the Company or any of the Subsidiaries and no event has
occurred which with notice or lapse of time or both would constitute
such a default, and each such contract, agreement, instrument, lease,
license, indenture, mortgage, deed of trust, note, arrangement or
understanding is in full force and is the legal, valid and binding
obligation of the parties thereto and is enforceable as to the
Company, each of the Subsidiaries and, to the knowledge of the
Company, each other party thereto, in accordance with its terms,
subject to applicable bankruptcy, insolvency and other laws affecting
the enforceability of creditor's rights generally and the effects of
general principles of equity. The Company and each of the
Subsidiaries enjoys peaceful and undisturbed possession under all
property leases and licenses under which it is operating, the loss of
any of which would not have a Material Adverse Effect. Neither the
Company nor any of the Subsidiaries is in violation or breach of, or
in default with respect to, any term of its certificate of
incorporation (or other charter document) or by-laws or of any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation, which breach or default of such franchise, license,
8
permit, judgment, decree, order, statute, rule or regulation could
reasonably be expected to have a Material Adverse Effect.
(xiii) The Company and the Subsidiaries have filed all
federal, state, local and foreign tax returns which are required to be
filed through the date hereof, or have received extensions thereof,
and have paid all taxes shown on such returns and all assessments
received by them to the extent that the same are material and have
become due.
(xiv) None of the Company, any Subsidiary, director, officer,
agent, employee or other person associated with or acting on behalf of
the Company and the Subsidiaries has, directly or indirectly: used any
corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; made any
unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns
from corporate funds; violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment. No transaction
has occurred between or among the Company or the Subsidiaries and any
officers or directors or any affiliates or affiliates of any such
officer or director, except as described in the Prospectus.
(xv) The Company and each of the Subsidiaries (A) are in
compliance with any and all applicable federal, state and local laws
and regulations relating to the protection of human health and safety,
the environment or hazardous or toxic substances or waste, pollutants
or contaminants ("ENVIRONMENTAL LAWS"), (B) have received all permits,
licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and (C) are in compliance
with all terms and conditions of any such permit, license or approval,
except for such noncompliance with Environmental Laws, failure to
receive required permits, licenses or other approvals or failure to
comply with the terms and conditions of such permits, licenses or
approvals that would not, singly or in the aggregate, have a Material
Adverse Effect. There has been no storage, disposal, generation,
transportation, handling or treatment of hazardous substances or solid
wastes by the Company or any of the Subsidiaries (or to the knowledge
of the Company, any of their predecessors in interest) at, upon or
from any of the property now or previously owned or leased by the
Company or any of the Subsidiaries in violation of any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit or
which would require remedial action by the Company or any of the
Subsidiaries under any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit, except for any violation or
remedial action which would not result in, or
9
which would not be reasonably likely to result in, singularly or in
the aggregate with all such violations and remedial actions, a
Material Adverse Effect; 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 of
any solid wastes or hazardous substances due to or caused by the
Company or any of the Subsidiaries, except for any such spill,
discharge, leak, emission, injection, escape, dumping or release
which would not result in or would not be reasonably likely to
result in, singularly or in the aggregate with all such spills,
discharges, leaks, emissions, injections, escapes, dumpings and
releases, a Material Adverse Effect; and the terms "HAZARDOUS
SUBSTANCES" and "SOLID WASTES" shall have the meanings specified in
any applicable local, state and federal laws or regulations with
respect to environmental protection;
(xvi) The Company have all requisite corporate power and
authority to execute, deliver and perform this Agreement. All
necessary corporate proceedings of the Company have been duly taken to
authorize the execution, delivery and performance of this Agreement.
This Agreement has been duly authorized, executed and delivered by the
Company, is the legal, valid and binding obligation of the Company and
is enforceable as to the Company in accordance with its terms, subject
to applicable bankruptcy, insolvency and other laws affecting the
enforceability of creditor's rights generally and the effects of
general principles of equity. No consent, authorization, approval,
order, license, certificate or permit of or from, or declaration or
filing with, any federal, state, local, foreign or other governmental
authority or any court or other tribunal is required by the Company or
the Subsidiaries for the execution, delivery or performance by the
Company of this Agreement (except filings under the Act which have
been or will be made before the applicable Closing Date and such
consents consisting only of consents under "blue sky" or securities
laws which have been obtained at or prior to the date of this
Agreement). No consent of any party to any contract, agreement,
instrument, lease, license, indenture, mortgage, deed of trust, note,
arrangement or understanding to which the Company or the Subsidiaries
is a party, or to which any of their respective properties or assets
are subject, is required for the execution, delivery or performance of
this Agreement, and the execution, delivery and performance of this
Agreement will not violate, result in a breach of, conflict with,
accelerate the due date of any payments under, or (with or without the
giving of notice or the passage of time or both) entitle any party to
terminate or call a default under any such contract, agreement,
instrument, lease, license, indenture, mortgage, deed of trust, note,
arrangement or understanding, or violate or result in a breach of any
term of the certificate of incorporation (or other charter document)
or by-laws of the Company or any of the Subsidiaries, or violate,
result in a breach of or conflict with any law, rule, regulation,
order, judgment or
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decree binding on the Company or any of the Subsidiaries or to
which any of their respective operations, business, properties or
assets are subject.
(xvii) The Shares have been duly and validly authorized. The
Firm Shares, when issued and delivered in accordance with this
Agreement, and the Option Shares, when issued and delivered in
accordance with this Agreement, will be duly and validly issued, fully
paid and nonassessable, without any personal liability attaching to
the ownership thereof, and will not be issued in violation of any
preemptive rights of shareholders, optionholders, warrantholders and
any other persons.
(xviii) All types and series of capital stock of the Company,
the Firm Shares and the Option Shares conform to all statements
relating thereto contained in the Registration Statement or the
Prospectus.
(xix) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
and except as may otherwise be properly described therein, there has
not been any material adverse change in the assets or properties,
business or results of operations or financial condition of the
Company or the Subsidiaries, whether or not arising from transactions
in the ordinary course of business; neither the Company nor the
Subsidiaries have sustained any material loss or interference with its
respective business or properties from fire, explosion, earthquake,
flood or other calamity, whether or not covered by insurance; since
the date of the latest balance sheet included in the Registration
Statement and the Prospectus, except as reflected in the Registration
Statement, neither the Company nor the Subsidiaries, have undertaken
any liability or obligation, direct or contingent, except for
liabilities or obligations undertaken in the ordinary course of
business; and neither the Company nor the Subsidiaries have (A) issued
any securities or incurred any liability or obligation, primary or
contingent, for borrowed money, (B) entered into any transaction not
in the ordinary course of business or (C) declared or paid any
dividend or made any distribution on any of its capital stock or
redeemed, purchased or otherwise acquired or agreed to redeem,
purchase or otherwise acquire any shares of its capital stock.
(xx) The Company and each Subsidiary maintain insurance covering
their properties, operations, personnel and businesses that, in the
Company's reasonable judgment, insures against such losses and risks
as are adequate in accordance with customary industry practice to
protect the Company and the Subsidiaries and their businesses.
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(xxi) The Company and each Subsidiary maintain a system of
internal accounting controls sufficient to provide reasonable
assurance that (a) transactions are executed in accordance with
management's general or specific authorizations, (b) transactions are
recorded as necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability, (c) access to assets is permitted only
in accordance with management's general or specific authorization and
(d) the recorded accountability for assets is compared with the
existing assets at reasonable intervals and appropriate action is
taken with respect to any differences.
(xxii) Neither the Company nor its Subsidiaries or any of
their respective officers, directors or affiliates (as defined in the
Regulations), have taken or will take, directly or indirectly, prior
to the termination of the underwriting syndicate contemplated by this
Agreement, any action designed to stabilize or manipulate the price of
any security of the Company, or which has caused or resulted in, or
which might in the future reasonably be expected to cause or result
in, stabilization or manipulation of the price of any security of the
Company, to facilitate the sale or resale of any of the Firm Shares or
the Option Shares.
(xxiii) The Company has obtained from each of its executive
officers and directors, their enforceable written agreement, in form
and substance satisfactory to counsel for the Underwriters, that for a
period of 180 days from the date on which the public offering of the
Shares commences they will not, without your prior written consent,
offer, pledge, sell, contract to sell, grant any option for the sale
of or otherwise dispose of, directly or indirectly, any shares of
Common Stock or other securities of the Company (or any security or
other instrument which by its terms is convertible into, exercisable
for or exchangeable for shares of Common Stock or other securities of
the Company, including, without limitation, any shares of Common Stock
issuable under any employee stock options), beneficially owned by
them, except with respect to Shares being sold in connection herewith
or their being a beneficial owner of any such Shares.
(xxiv) The Company and Subsidiary are not, and after giving
effect to the offering and sale of the shares, will not be an
"investment company" or an entity "controlled" by an "investment
company," as such terms are defined in the Investment Company Act of
1940, as amended (the "INVESTMENT COMPANY ACT").
(xxv) Xxxxxx Xxxxxxxx LLP, who have certified certain
financial statements of the Company, are independent public
accountants as required by the Act and the rules and regulations of
the Commission thereunder.
12
(xxvi) Xxxxxxxx Petroleum Consultants, Inc. (the "ENGINEERING
CONSULTANTS") are independent petroleum engineers with respect to the
Company.
(xxvii) No person or entity has the right to require
registration of shares of Common Stock or other securities of the
Company because of the filing or effectiveness of the Registration
Statement, other than such rights as described in the Prospectus and
which have been duly and effectively waived.
(xxviii) Except as may be set forth in the Prospectus, the Company
has not incurred any liability for a fee, commission or other
compensation on account of the employment of a broker or finder in
connection with the transactions contemplated by this Agreement.
(xxix) No transaction has occurred between or among the
Company, the Subsidiaries or any of their officers or directors or any
affiliates of any such officers or directors that is required to be
described in and is not described in the Registration Statement and
the Prospectus.
(xxx) The Common Stock, including the Shares, are authorized for
quotation on the Nasdaq National Market.
(xxxi) Neither the Company nor any of the Subsidiaries or any
of their respective affiliates is presently doing business with the
government of Cuba or with any person or affiliate located in Cuba.
If, at any time after the date that the Registration Statement is
declared effective with the Commission or with the Florida Department
of Banking and Finance (the "FLORIDA DEPARTMENT"), whichever date is
later, and prior to the end of the period referred to in the first
clause of Section 4(ii) hereof, the Company commences engaging in
business with the government of Cuba or with any person or affiliate
located in Cuba, the Company will so inform the Florida Department
within ninety days after such commencement of business and during the
period referred to in Section 4(ii) hereof will inform the Florida
Department within ninety days after any change occurs with respect to
previously reported information.
5. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The obligations of the
Underwriters under this Agreement are several and not joint. The respective
obligations of the Underwriters to purchase the Shares are subject to each of
the following terms and conditions:
(a) The Prospectus shall have been timely filed with the Commission
in accordance with Section 6(a)(i) of this Agreement.
13
(b) No order preventing or suspending the use of any preliminary
prospectus or the Prospectus shall have been or shall be in effect and no
order suspending the effectiveness of the Registration Statement shall be
in effect and no proceedings for such purpose shall be pending before or
threatened by the Commission, and any requests for additional information
on the part of the Commission (to be included in the Registration Statement
or the Prospectus or otherwise) shall have been complied with to the
satisfaction of the Representatives.
(c) The representations and warranties of the Company contained in
this Agreement and in the certificates delivered pursuant to Section 5(d)
shall be true and correct when made and on and as of each Closing Date as
if made on such date and the Company shall have performed all covenants and
agreements and satisfied all the conditions contained in this Agreement
required to be performed or satisfied by it at or before such Closing Date.
(d) The Representatives shall have received on each Closing Date a
certificate, addressed to the Representatives and dated such Closing Date,
of the chief executive officer and the chief financial officer of the
Company to the effect that the persons executing such certificate have
carefully examined the Registration Statement, the Prospectus and this
Agreement and that the representations and warranties of the Company in
this Agreement are true and correct on and as of such Closing Date with the
same effect as if made on such Closing Date and the Company has performed
all covenants and agreements and satisfied all conditions contained in this
Agreement required to be performed or satisfied by it at or prior to such
Closing Date.
(e) The Representatives shall have received at the time this
Agreement is executed and on each Closing Date, signed letters from Xxxxxx
Xxxxxxxx LLP, addressed to the Representatives and dated, respectively, the
date of this Agreement and each such Closing Date, in the form and scope
reasonably satisfactory to the Representatives, with reproduced copies or
signed counterparts thereof for each of the Underwriters confirming that
they are independent accountants within the meaning of the Act and the
Regulations, that the response to Item 10 of the Registration Statement is
correct in so far as it relates to them and stating in effect that:
(i) in their opinion the audited financial statements included
in the Registration Statement and the Prospectus (including the
related schedules and notes) and reported on by them comply as to form
in all material respects with the applicable accounting requirements
of the Act, the Exchange Act and the related published rules and
regulations thereunder;
(ii) On the basis of specified procedures as of a specified date
not more than five days prior to the date of their letter (which
procedures do not constitute an
14
examination made in accordance with generally accepted accounting
principles) and which include a reading of the latest available
unaudited interim consolidated financial statements of the Company
and the Subsidiaries, a reading of the minutes of the meetings of
the shareholders and directors of the Company and inquiries of
certain officials of the Company and the Subsidiaries who have
responsibility for financial and accounting matters of the Company
and the Subsidiaries as to transactions and events subsequent to the
date of the latest audited financial statements, except as disclosed
in the Registration Statement and the Prospectus, nothing came to
their attention which caused them to believe that:
(A) the amounts in "Summary Financial Data," and included
in the Registration Statement and the Prospectus do not agree
with the corresponding amounts in the audited financial
statements from which such amounts were derived; or
(B) there were any decreases in net sales, income before
income taxes and net income or any increases in long-term debt of
the Company or any decreases in the capital stock, working
capital or the shareholders' equity in the Company, as compared
with the amounts shown on the Company's audited Balance Sheet for
the fiscal year ended December 31, 1995 included in the
Registration Statement or the audited Statement of Operations,
for such year; and
(iii) information of an accounting, financial or statistical
nature (which is limited to accounting, financial or statistical
information derived from the general accounting records of the
Company) set forth in the Registration Statement and the Prospectus
and reasonably specified by the Representatives agrees with the
accounting records of the Company.
References to the Registration Statement and the Prospectus in this
paragraph (e) are to such documents as amended and supplemented at the date of
such letter.
(f) The Engineering Consultants shall have delivered to you on the
date of this Agreement a letter (the "RESERVE LETTER") and also on the
Closing Date a letter dated the Closing Date, in each case in form and
substance reasonably satisfactory to you and substantially in the form
heretofore approved by you, stating, as of the date of such letter (or,
with respect to matters involving changes or developments since the
respective dates as of which specified information with respect to the oil
and gas reserves is given or incorporated in the Prospectus as of the date
not more than five days prior to the date of such letter), the conclusions
and findings of such firm with respect to the Company's oil and gas
reserves.
15
(g) The Representatives shall have received on each Closing Date from
Cotton, Xxxxxxx, Xxxxx & Xxxxxx, a Professional Corporation, counsel for
the Company, an opinion, addressed to the Representatives and dated such
Closing Date, and in form and scope satisfactory to counsel for the
Underwriters, with reproduced copies or signed counterparts thereof for
each of the Underwriters, to the effect that:
(i) The Company and each of the Subsidiaries is a corporation
duly organized, validly existing and in good standing under the laws
of the state of its incorporation, with full corporate power and
authority to own, lease, license and use its properties and assets and
to conduct its business in the manner described in the Prospectus.
The Company and each of the Subsidiaries has all necessary consents,
authorizations, approvals, orders, certificates and permits of and
from, and declarations and filings with, all federal, state, foreign,
local and other governmental authorities and all courts and other
tribunals, to own, lease, license and use its properties and assets
and to conduct its business in the manner described in the Prospectus.
The Company has no subsidiary or subsidiaries and does not control,
directly or indirectly, any corporation, partnership, joint venture,
association or other business organization, except for those set forth
on SCHEDULE II hereto.
(ii) The Company and each of the Subsidiaries 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 or is subject to no material liability or
disability by reason of failure to be so qualified in any such
jurisdiction (such counsel being entitled to rely in respect of the
opinion in this clause upon opinions of local counsel and in respect
of matters of fact upon certificates of officers of the Company or the
Subsidiaries, provided that such counsel shall state that they believe
that both you and they are justified in relying upon such opinions and
certificates);
(iii) The Company has authorized, issued and outstanding
capital stock as set forth in the "actual" column of the
capitalization table under the caption "Capitalization" in the
Prospectus. The certificates evidencing the shares are in due and
proper legal form. Each outstanding share of Common Stock has been
duly and validly authorized and issued and is fully paid and
nonassessable, without any personal liability attaching to the
ownership thereof, and has not been issued and is not owned or held in
violation of any preemptive right of shareholders. The Company owns
all of the shares of capital stock of the Subsidiaries, except as
disclosed in the Prospectus, and to the knowledge of such counsel,
such shares have been duly and validly authorized and issued, are
fully paid and non-assessable, and (except as set forth in the
Prospectus) are owned directly or indirectly by the
16
Company, and are owned by the Company free and clear of all liens,
claims, security interests, restrictions, shareholders' agreements,
voting trusts and any other encumbrances whatsoever. There is no
commitment, plan or arrangement to issue, and no outstanding option,
warrant or other right calling for the issuance of, any share of
capital stock of the Company or any security or other instrument
which by its terms is convertible into, exercisable for or
exchangeable for capital stock of the Company, except as described
in the Prospectus. There is outstanding no security or other
instrument which by its terms is convertible into, exercisable for or
exchangeable for capital stock of the Company or any of the
Subsidiaries, except as described in the Prospectus.
(iv) There is no litigation, arbitration, claim, governmental or
other proceeding (formal or informal) or investigation before any
court or before any public body or board pending, or to the best of
such counsel's knowledge threatened or in prospect (or any basis
therefor) with respect to the Company, any of the Subsidiaries or any
of their respective operations, businesses, properties, assets or
financial condition except as may be properly described in the
Prospectus or such as individually or in the aggregate do not now have
and could not reasonably be expected in the future to have a Material
Adverse Effect.
(v) Neither the Company nor any of the Subsidiaries or any other
party is now or is expected by the Company to be in violation or
breach of, or in default with respect to, complying with any term,
obligation or provision of any contract, agreement, instrument, lease,
license, indenture, mortgage, deed of trust, note, arrangement or
understanding which is material to the Company and known to such
counsel, and to the knowledge of such counsel, no event has occurred
which with notice or lapse of time or both would constitute such a
default.
(vi) Neither the Company nor any of the Subsidiaries is in
violation or breach of, or in default with respect to, any term of its
certificate of incorporation (or other charter document) or bylaws.
(vii) The Company has all requisite power and authority to
execute, deliver and perform this Agreement and to issue and sell the
Shares. All necessary corporate proceedings of the Company have been
taken to authorize the execution, delivery and performance by the
Company of this Agreement. This Agreement has been duly authorized,
executed and delivered by the Company is the legal, valid and binding
obligation of the Company and (subject to applicable bankruptcy,
insolvency and other laws affecting the enforceability of creditor's
rights generally and the effects of general principles of equity) is
enforceable as to the Company in accordance with
17
its terms. No consent, authorization, approval, order, license,
certificate or permit of or from, or declaration or filing with, any
federal, state, foreign, local or other governmental authority or any
court or other tribunal is required by the Company for the execution,
delivery or performance by the Company of this Agreement (except
filings under the Act which have been made prior to the Closing Date
and consents consisting only of consents under "blue sky" or
securities laws). No consent of any party to any contract, agreement,
instrument, lease, license, indenture, mortgage, deed of trust, note,
arrangement or understanding to which the Company or any of the
Subsidiaries is a party, or to which any of their respective
properties or assets are subject, is required for the execution,
delivery or performance of this Agreement; and the execution, delivery
and performance of this Agreement will not violate, result in a breach
of, conflict with or (with or without the giving of notice or the
passage of time or both) entitle any party to terminate or call a
default under any such contract, agreement, instrument, lease,
license, indenture, mortgage, deed of trust, note, arrangement or
understanding, or violate or result in a breach of any term of the
certificate of incorporation (or other charter document) or by-laws
of the Company or any of the Subsidiaries, or violate, result in a
breach of, or conflict with any law, rule, regulation, order,
judgment, or decree binding on the Company or any of the Subsidiaries
or to which any of their respective operations, businesses,
properties or assets are subject.
(viii) The Shares are duly and validly authorized. Such
opinion delivered at each of the Closing Dates shall state that each
Share, as the case may be, to be delivered on that date is duly and
validly issued, fully paid and non-assessable, with no personal
liability attaching to the ownership thereof, and is not issued in
violation of any preemptive rights of shareholders. The Shares and
all series of capital stock conform to all statements relating thereto
contained in the Registration Statement or the Prospectus.
(ix) Any contract, agreement, instrument, lease or license
required to be described in the Registration Statement or the
Prospectus has been properly described therein. Any contract,
agreement, instrument, lease or license required to be filed as an
exhibit to the Registration Statement has been filed with the
Commission as an exhibit to or has been incorporated as an exhibit by
reference into the Registration Statement.
(x) Insofar as statements in the Prospectus purport to summarize
the status of litigation or the provisions of laws, rules,
regulations, orders, judgments, decrees, contracts agreements,
instruments, leases or licenses, such statements have been prepared or
reviewed by such counsel and to the knowledge of such counsel,
18
accurately reflect the status of such litigation and provisions
purported to be summarized and are correct in all material respects.
(xi) Neither the Company nor any of the Subsidiaries is an
"investment company" as defined in Section 3(a) of the Investment
Company Act and, if the Company and the Subsidiaries conduct their
businesses as set forth in the Prospectus, will not become an
"investment company" and will not be required to be registered under
the Investment Company Act.
(xii) No person or entity has the right to require
registration of shares of Common Stock or other securities of the
Company because of the filing or effectiveness of the Registration
Statement, other than such rights as described in the Prospectus and
which have been duly and effectively waived.
(xiii) The Registration Statement has become effective under
the Act. No Stop Order has been issued and no proceedings for that
purpose have been instituted or are threatened, pending or
contemplated.
(xiv) The Registration Statement, any Rule 430A Prospectus
and the Prospectus, and any amendment or supplement thereto (other
than financial statements and other financial data and schedules which
are or should be contained in any thereof, as to which such counsel
need express no opinion), comply as to form in all material respects
with the requirements of the Act and the Regulations. The conditions
for the use of Form S-2 have been satisfied with respect to the
Registration Statement.
(xv) Since the effective date of the Registration Statement, no
event has occurred which should have been set forth in an amendment or
supplement to the Registration Statement or the Prospectus which has
not been set forth in such an amendment or supplement.
In addition, such counsel shall state that such counsel has
participated in the preparation of the Registration Statement and the Prospectus
and in conferences with officers and other Representatives of the Company,
representatives of the Representatives and representatives of the independent
accountants of the Company, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were discussed
and, although such counsel has not independently verified and is not passing
upon and does not assume any responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement and the
Prospectus (except as specified in the foregoing opinion), on the basis of the
foregoing and relying as to materiality upon the representations of executive
officers of the
19
Company after conferring with such executive officers, no facts have come to
the attention of such counsel which lead such counsel to believe that the
Registration Statement at the time it became effective contained any untrue
statement of a material fact or omitted to state a material fact required to
be stated therein or necessary to make the statements therein not misleading,
or that the Prospectus, except for the financial statements and other financial
and statistical data included therein as to which counsel need express no
opinion, as amended or supplemented on the date thereof contained any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading.
In rendering their opinion as aforesaid, such counsel may rely, as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company, provided that executed copies of such
certificates are provided to the Representatives.
(h) All proceedings taken in connection with the sale of the Firm
Shares and the Option Shares as herein contemplated shall be satisfactory
in form and substance to the Representatives and its counsel, and the
Underwriters shall have received from Xxxxxx & Xxxxxx L.L.P., a favorable
opinion, addressed to the Representatives and dated such Closing Date, with
respect to such matters as the Representatives may reasonably request, and
the Company shall have furnished to Xxxxxx & Xxxxxx L.L.P., such documents
as they may reasonably request for the purpose of enabling them to pass
upon such matters.
(i) The Company shall not have 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, and (ii) since the respective dates as
of which information is given in the Prospectus there shall not have been
any change in the capital stock, short-term debt or long-term debt of the
Company or any change, or any development involving a prospective change,
in or affecting the general affairs, management, financial position,
stockholders' equity or results of operations of the Company, otherwise
than as set forth or contemplated in the Prospectus, the effect of which,
in any such case described in Clause (i) or (ii), in the judgment of the
Representatives, makes it impracticable or inadvisable to proceed with the
public offering or the delivery of the Shares being delivered at such Time
of Delivery on the terms and in the manner contemplated in the Prospectus.
(j) The Company has obtained and delivered to the Underwriters
executed copies of an agreement from each of its officers and directors,
substantially to the effect set forth in Subsection 6(a)(viii) hereof in
form and substance satisfactory to you.
20
6. COVENANTS OF THE COMPANY.
(a) The Company covenants and agrees as follows:
(i) The Company shall use its best efforts to cause the
Registration Statement to become effective as promptly as possible.
If the Registration Statement has become or becomes effective with a
form of prospectus omitting Rule 430A information, or filing of the
Prospectus is otherwise required under Rule 424(b), the Company will
file the Prospectus, properly completed, pursuant to Rule 424(b)
within the time period prescribed and will provide evidence
satisfactory to you of such timely filing. The Company shall notify
you immediately, and confirm such notice in writing, (A) when the
Registration Statement and any post-effective amendment thereto become
effective, (B) of the receipt of any comments from the Commission or
the "blue sky" or securities authority of any jurisdiction regarding
the Registration Statement, any posteffective amendment thereto, the
Prospectus or any amendment or supplement thereto and (C) of the
receipt of any notification with respect to a Stop Order. The Company
shall not file any amendment of the Registration Statement or
supplement to the Prospectus unless the Company has furnished the
Representatives a copy for their review prior to filing and shall not
file any such proposed amendment or supplement to which the
Representatives reasonably object. The Company shall use its best
efforts to prevent the issuance of any Stop Order and, if issued, to
obtain as soon as possible the withdrawal thereof.
(ii) During the time when a prospectus relating to the Shares is
required to be delivered hereunder or under the Act or the
Regulations, comply so far as it is able with all requirements imposed
upon it by the Act, as now existing and as hereafter amended, and by
the Regulations, as from time to time in force, so far as necessary to
permit the continuance of sales of or dealings in the Shares in
accordance with the provisions hereof and the Prospectus. If, at any
time when a prospectus relating to the Shares is required to be
delivered under the Act and the Regulations, any event as a result of
which the Prospectus as then amended or supplemented would include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements therein in the light of the
circumstances under which they were made not misleading, or if it
shall be necessary to amend or supplement the Prospectus to comply
with the Act or the Regulations, the Company promptly shall prepare
and file with the Commission, subject to the third sentence of
paragraph (i) of this Section 6(a), an amendment or supplement which
shall correct such statement or omission or an amendment which shall
effect such compliance.
21
(iii) Prior to 10:00 a.m., New York City Time, on the New
York Business Day next succeeding the date of this Agreement and from
time to time, to furnish the Underwriters with copies of the
Prospectus in New York City in such quantities as you may reasonably
request. The Company shall make generally available to its security
holders and to the Representatives as soon as practicable, but not
later than 45 days after the end of the 12-month period beginning at
the end of the fiscal quarter of the Company during which the
Effective Date (or 90 days if such 12-month period coincides with the
Company's fiscal year), an earnings statement (which need not be
audited) of the Company, covering such 12-month period, which shall
satisfy the provisions of Section 11(a) of the Act or Rule 158 of the
Regulations.
(iv) If the Company elects to rely upon Rule 462(b), the Company
shall file a Rule 462(b) Registration Statement with the Commission in
compliance with Rule 462(b) by 10:00 p.m., Washington, D.C. time, on
the date of this Agreement, and the Company shall at the time of
filing either pay to the Commission the filing fee for the Rule 462(b)
Registration Statement or give irrevocable instructions for the
payment of such fee pursuant to Rule 111(b) under the Act.
(v) The Company shall furnish to the Representatives and counsel
for the Underwriters, without charge, signed copies of the
Registration Statement (including all exhibits and amendments thereto)
and to each other Underwriter a copy of the Registration Statement
(without exhibits thereto) and all amendments thereof and, so long as
delivery of a prospectus by an Underwriter or dealer may be required
by the Act or the Regulations, as many copies of any preliminary
prospectus and the Prospectus and any amendments thereof and
supplements thereto as the Representatives may reasonably request.
(vi) The Company shall cooperate with the Representatives and
their counsel in endeavoring to qualify the Shares for offer and sale
under the laws of such jurisdictions as the Representatives may
designate and shall maintain such qualifications in effect so long as
required for the distribution of the Shares; provided, however, that
the Company shall not be required in connection therewith, as a
condition thereof, to qualify as a foreign corporation or to execute a
general consent to service of process in any jurisdiction or subject
itself to taxation as doing business in any jurisdiction.
22
(vii) Without the prior written consent of the
Representatives, for a period of 180 days from the date on which a
public offering of the Shares commences, the Company shall not issue,
sell or register with the Commission or otherwise dispose of, directly
or indirectly, any securities of the Company (or any securities
convertible into or exercisable or exchangeable for securities of the
Company), except for the issuance of the Shares pursuant to the
Registration Statement, shares issuable upon exercise of currently
outstanding options and warrants issued by the Company as of the date
of this Agreement or the issuance, sale or other disposition of
shares and options by the Company pursuant to the Company's existing
employee benefit plans; and that it will deliver to the
Representatives agreements of the Company's officers and directors
to the same effect.
(viii) On or before completion of this offering, the Company
shall make all filings required under applicable securities laws
and by the Nasdaq National Market.
(ix) During a period of five years from the effective date of
the Registration Statement, to furnish to you copies of all reports or
other communications (financial or other) furnished to stockholders,
and to deliver to you (i) as soon as they are available, copies of any
reports and financial statements furnished to or filed with the
Commission or any national securities exchange on which any class of
securities of the Company is listed; and (ii) such additional
information concerning the business and financial condition of the
Company as you may from time to time reasonably request (such
financial statements to be on a consolidated basis to the extent the
accounts of the Company and its subsidiaries are consolidated in
reports furnished to its stockholders generally or to the Commission).
(x) To use the net proceeds received by it from the sale of the
Shares pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds."
(xi) Prior to each Closing Date and for a period of 25 days
thereafter, you shall be given reasonable written prior notice of any
press release or other direct or indirect communication and of any
press conference with respect to the Company, the financial
conditions, results of operations, business, properties, assets,
liabilities of the Company, or this offering.
23
(b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses
relating to the registration and public offering of the Shares including
those relating to: (i) the preparation, printing, filing and distribution
of the Registration Statement including all exhibits thereto, each
preliminary prospectus, the Prospectus, all amendments and supplements to
the Registration Statement and the Prospectus, and any documents required
to be delivered with any Preliminary Prospectus or the Prospectus, and the
printing, filing and distribution of the Agreement Among Underwriters, this
Agreement and related documents; (ii) the preparation and delivery of
certificates for the Shares to the Underwriters; (iii) the registration or
qualification of the Shares for offer and sale under the securities or Blue
Sky laws of the various jurisdictions referred to in Section 6(a)(v),
including the fees and disbursements of counsel for the Underwriters in
connection with such registration and qualification and the preparation,
printing, distribution and shipment of preliminary and supplementary Blue
Sky memoranda; (iv) the furnishing (including costs of shipping and
mailing) to the Representatives and to the Underwriters of copies of each
preliminary prospectus, the Prospectus and all amendments or supplements to
the Prospectus, and of the several documents required by this Section to be
so furnished, as may be reasonably requested for use in connection with the
offering and sale of the Shares by the Underwriters or by dealers to whom
Shares may be sold; (v) the filing fees of the National Association of
Securities Dealers, Inc. in connection with its review of the terms of the
public offering; (vi) the furnishing (including costs of shipping and
mailing) to the Representatives and to the Underwriters of copies of all
reports and information required by Section 6(a)(vi); (vii) inclusion of
the Shares for quotation on the Nasdaq National Market; (viii) the cost and
charges of any transfer agent or registration;
24
and (ix) all transfer taxes, if any, with respect to the sale and
delivery of the Shares by the Company to the Underwriters. Except as
otherwise contemplated by Section 9 hereof, the Underwriters will pay
their own counsel fees and expenses to the extent not otherwise
covered by clause (iii) above, and their own travel and travel-related
expenses in connection with the distribution of the Shares.
7. INDEMNIFICATION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act
against any and all losses, claims, damages and liabilities, joint or
several (including any reasonable investigation, legal and other expenses
incurred in connection with, and any amount paid in settlement of, any
action, suit or proceeding or any claim asserted), to which they, or any of
them, may become subject under the Act, the Exchange Act or other federal,
state or foreign law or regulation, at common law or otherwise, insofar as
such losses, claims, damages 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, the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto, or arise out of
or are based upon any omission or alleged omission to state therein such
fact required to be stated therein or necessary to make such statements
therein not misleading. This indemnity agreement will be in addition to
any liability which the Company may otherwise have.
(b) Each Underwriter agrees, severally and not jointly, to indemnify
and hold harmless the Company, each person, if any, who controls the
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, each director of the Company, and each officer of the Company
who signs the Registration Statement, to the same extent as the foregoing
indemnity from the Company to each Underwriter, but only insofar as such
losses, claims, damages or liabilities arise out of or are based upon any
untrue statement or mission or alleged untrue statement or omission which
was made in any Preliminary Prospectus, any Rule 430A Prospectus, the
Registration Statement or the Prospectus, or any amendment thereof or
supplement thereto, which were made in reliance upon and in conformity with
information furnished in writing to the Company by the Representatives on
behalf of any Underwriter for specific use therein; PROVIDED, HOWEVER, that
the obligation of each Underwriter to indemnify the Company (including any
controlling person, director or officer thereof) shall be limited to the
excess of the net proceeds received by such Underwriter from the offering
of Shares and all expenses, penalties and other damages incurred by such
Underwriter by reason of such untrue statement or omission or alleged
25
untrue statement or omission. For all purposes of this Agreement the
amounts of the selling concession and reallowance set forth in the
Prospectus constitute the only information furnished in writing by or on
behalf of any Underwriter expressly for inclusion in any Preliminary
Prospectus, any Rule 430A Prospectus, the Registration Statement or the
Prospectus or any amendment or supplement thereto.
(c) Any party that proposes to assert the right to be indemnified
under this Section will, promptly after receipt of notice of commencement
of any action, suit or proceeding against such party in respect of which a
claim is to be made against an indemnifying party or parties under this
Section, notify each such indemnifying party of the commencement of such
action, suit or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 7(a) or 7(b) shall be available to
any party who shall fail to give notice as provided in this Section 7(c) if
the party to whom notice was not given was unaware of the proceeding to
which such notice would have related and was prejudiced by the failure to
give such notice but the omission so to notify such indemnifying party of
any such action, suit or proceeding shall not relieve it from any liability
that it may have to any indemnified party for contribution or otherwise
than under this Section. In case any such action, suit or proceeding shall
be brought against any indemnified party and it shall notify the
indemnifying party of the commencement thereof, the indemnifying party
shall be entitled to participate in, and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to assume the
defense thereof, with counsel reasonably satisfactory to such indemnified
party, and after notice from the indemnifying party to such indemnified
party of its election so to assume the defense thereof and the approval by
the indemnified party of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses, except as
provided below and except for the reasonable costs of investigation
subsequently incurred by such indemnified party in connection with the
defense thereof. The indemnified party shall have the right to employ its
counsel in any such action, but the fees and expenses of such counsel shall
be at the expense of such indemnified party unless (i) the employment of
counsel by such indemnified party has been authorized in writing by the
indemnifying parties, (ii) the indemnified party shall have reasonably
concluded that there may be a conflict of interest between the indemnifying
parties and the indemnified party in the conduct of the defense of such
action (in which case the indemnifying parties shall not have the right to
direct the defense of such action on behalf of the indemnified party) or
(iii) the indemnifying parties shall not have employed counsel to assume
the defense of such action within a reasonable time after notice of the
commencement thereof, in each of which cases the reasonable fees and
expenses of counsel shall be at the expense of the indemnifying parties.
An indemnifying party shall not be liable for any settlement of any action,
suit, proceeding or claim effected without its written consent.
26
8. CONTRIBUTION. In order to provide for just and equitable contribution
in circumstances in which the indemnification provided for in Sections 7(a) and
(b) is due in accordance with its terms but for any reason is held to be
unavailable from the Company or the Underwriters, the Company and the
Underwriters shall contribute to the aggregate losses, claims, damages and
liabilities (including any investigation, legal and other expenses reasonably
incurred in connection with, and any amount paid in settlement of, any action,
suit or proceeding or any claims asserted, but after deducting any contribution
received by the Company from persons other than the Underwriters, such as
persons who control the Company within the meaning of the Act, officers of the
Company who signed the Registration Statement and directors of the Company, who
may also be liable for contribution) to which the Company and one or more of the
Underwriters may be subject in such proportion as is appropriate to reflect the
relative benefits received by the Company on the one hand and the Underwriters
on the other from the offering of the Shares or, if such allocation is not
permitted by applicable law or indemnification is not available as a result of
the indemnifying party not having received notice as provided in Section 7
hereof, in such proportion as is appropriate to reflect not only the relative
benefits referred to above but also the relative fault of the Company on the one
hand and the Underwriters on the other in connection with the statements or
omissions which resulted in such losses, claims, damages, liabilities or
expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company and the Underwriters shall be deemed to be in
the same proportion as (x) the total proceeds from the Offering (net of
underwriting discounts but before deducting expenses) received by the Company
from the sale of the Shares, as set forth in the table on the cover page of the
Prospectus (but not taking into account the use of the proceeds of such sale of
Shares by the Company), bear to (y) the underwriting discount received by the
Underwriters, as set forth in the table on the cover page of the Prospectus.
The relative fault of the Company and the Underwriters shall be determined by
reference to, among other things, whether the untrue or alleged untrue statement
of a material fact related to information supplied by the Company or the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 8 were determined by pro rata allocation
(even if the Underwriters were treated as one entity for such purpose) or by any
other method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
Section 8, no person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 8, each person, if any, who controls an Underwriter within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act shall have the
same rights to contribution as such Underwriter, and each person, if any, who
controls the Company within the meaning of the Section 15 of the Act or
Section 20(a) of the Exchange Act, each officer of the Company who shall have
signed the Registration Statement and each director of the Company shall have
the same rights to contribution as the Company, subject in each case to clauses
(i) and (ii) in the immediately preceding sentence of this Section 8. Any party
entitled to contribution will, promptly after receipt
27
of notice of commencement of any action, suit or proceeding against such
party in respect of which a claim for contribution may be made against
another party or parties under this Section, notify such party or parties
from whom contribution may be sought, but the omission so to notify such
party or parties from whom contribution may be sought shall not relieve the
party or parties from whom contribution may be sought from any other
obligation it or they may have hereunder or otherwise than under this
Section. No party shall be liable for contribution with respect to any
action, suit, proceeding or claim settled without its written consent. The
Underwriters' obligations to contribute pursuant to this Section 8 are
several in proportion to their respective underwriting commitments and not
joint.
9. TERMINATION. This Agreement may be terminated with respect to the
Shares to be purchased on any Closing Date by the Representatives by notifying
the Company at any time prior to the purchase of the Shares:
(a) in the absolute discretion of the Representatives at or before
any Closing Date: (i) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or in
the opinion of the Representatives will in the future materially disrupt,
the securities markets; (ii) if there has occurred any outbreak or material
escalation of hostilities or other calamity or crisis the effect of which
on the financial markets of the United States is such as to make it, in the
judgment of the Representatives, inadvisable to proceed with the Offering;
(iii) if there shall be such a material adverse change in, general
financial, political or economic conditions or the effect of international
conditions on the financial markets in the United States such as to make
it, in the judgment of the Representatives, inadvisable or impracticable to
market the Shares; (iv) if trading in the Shares has been suspended by the
Commission or trading generally on the New York Stock Exchange, Inc., the
American Stock Exchange, Inc. or the Nasdaq National Market has been
suspended or limited, or minimum or maximum ranges for prices for
securities shall have been fixed, or maximum ranges for prices for
securities have been required, by said exchanges or by order of the
Commission, the National Association of Securities Dealers, Inc., or any
other governmental or regulatory authority; or (v) if a banking moratorium
has been declared by any state or federal authority, or
(b) at or before any Closing Date, if any of the conditions specified
in Section 5 shall not have been fulfilled when and as required by this
Agreement.
If this Agreement is terminated pursuant to any of its provisions, the
Company shall not be under any liability to any Underwriter, and no Underwriter
shall be under any liability to the Company, except that (y) if this Agreement
is terminated by the Representatives or the Underwriters because of any failure,
refusal or inability on the part of the Company to comply with the terms or to
fulfill any of the conditions of this Agreement, the Company will reimburse the
Underwriters for
28
all out-of-pocket expenses (including the fees and disbursements of their
counsel) incurred by them in connection with the proposed purchase and sale
of the Shares or in contemplation of performing their obligations hereunder
and (z) no Underwriter who shall have failed or refused to purchase the
Shares agreed to be purchased by it under this Agreement, without some reason
sufficient hereunder to justify cancellation or termination of its
obligations under this Agreement, shall be relieved of liability to the
Company or to the other Underwriters for damages occasioned by its failure or
refusal.
10. SUBSTITUTION OF UNDERWRITERS. If one or more of the Underwriters
shall fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 9) to purchase on any Closing Date
the Shares agreed to be purchased on such Closing Date by such Underwriter or
Underwriters, the Representatives may find one or more substitute underwriters
to purchase such Shares or make such other arrangements as the Representatives
may deem advisable or one or more of the remaining Underwriters may agree to
purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date:
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, then
each of the nondefaulting Underwriters shall be obligated to purchase such
Shares on the terms herein set forth in proportion to their respective
obligations hereunder; PROVIDED, that in no event shall the maximum number
of Shares that any Underwriter has agreed to purchase pursuant to Section 1
be increased pursuant to this Section 10 by more than one-ninth of such
number of Shares without the written consent of such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then the
Company shall be entitled to an additional business day within which it
may, but is not obligated to, find one or more substitute underwriters
reasonably satisfactory to the Representatives to purchase such Shares upon
the terms set forth in this Agreement.
In any such case, either the Representatives or the Company shall have the
right to postpone the applicable Closing Date for a period of not more than five
business days in order that necessary changes and arrangements (including any
necessary amendments or supplements to the Registration Statement or Prospectus)
may be effected by the Representatives and the Company. If the number of Shares
to be purchased on such Closing Date by such defaulting Underwriter or
Underwriters shall exceed 10% of the Shares that all the Underwriters are
obligated to purchase on such Closing
29
Date, and none of the nondefaulting Underwriters or the Company shall make
arrangements pursuant to this Section within the period stated for the
purchase of the Shares that the defaulting Underwriters agreed to purchase,
this Agreement shall terminate with respect to the Shares to be purchased on
such Closing Date without liability on the part of any nondefaulting
Underwriter to the Company and without liability on the part of the Company,
except in both cases as provided in Sections 6(b), 7, 8 and 9. The provisions
of this Section shall not in any way affect the liability of any defaulting
Underwriter to the Company or the nondefaulting Underwriters arising out of
such default. A substitute underwriter hereunder shall become an Underwriter
for all purposes of this Agreement.
11. MISCELLANEOUS. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers and
of the Underwriters set forth in or made pursuant to this Agreement shall remain
in full force and effect, regardless of any investigation made by or on behalf
of any Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Sections 7 and 8 hereof, and shall survive
delivery of and payment for the Shares. The provisions of Sections 6(b), 7, 8
and 9 shall survive the termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the Underwriters and
the Company and their respective successors and assigns and, to the extent
expressed herein, for the benefit of persons controlling any of the
Underwriters, or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Shares from any Underwriter merely
because of such purchase.
All notices and communications hereunder shall be in writing and mailed or
delivered, or by telefax or telegraph if subsequently confirmed by letter, (a)
if to the Representatives, to Xxxxxx & Xxxxxxx, Inc., Two World Financial
Center, 000 Xxxxxxx Xxxxxx, 00xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000, Attention:
Xxxxx Xxxx, Managing Director, telecopy: (000) 000-0000 and (b) if to the
Company, to the Company's agent for service as such agent's address appears on
the cover page of the Registration Statement.
This Agreement shall be governed by and construed in accordance with the
laws of the State of New York without regard to principles of conflict of laws.
This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument.
All pronouns and any variations thereof shall be deemed to refer to the
masculine, feminine, or neuter, singular or plural, as the identity of the
person or persons or entity or entities require.
30
All section headings herein are for convenience of reference only and are
not part of this Agreement, and no construction or inference shall be derived
therefrom.
Please confirm that the foregoing correctly sets forth the agreement among
us.
Very truly yours,
XXXXXXX XXXXXXXX ENERGY, INC.
By:
----------------------------------
L. Xxxx Xxxxxx
Executive Vice President and
Chief Operating Officer
Confirmed on behalf of itself and as the
Representatives of the several Underwriters
named in SCHEDULE I annexed hereto:
XXXXXX & XXXXXXX, INC.
By:
---------------------------------
Xxxxx X. Xxxx
Managing Director
31
SCHEDULE I
Number of Firm
Shares to be
NAME OF UNDERWRITER Purchased
------------------- --------------
Xxxxxx & Xxxxxxx, Inc. . . . . . . . . . . . . . . . .
Xxxxxxx, Xxxxxx Inc. . . . . . . . . . . . . . . . . .
Total . . . . . . . . . . . . . . . . . . . . . . . .
----------
32
SCHEDULE II
SUBSIDIARIES
33
