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3,000,000 Shares
XXXXXXXXX ENERGY, INC.
Common Stock
BOUGHT DEAL UNDERWRITING AGREEMENT
September 11, 2000
CIBC World Markets Corp.
Xxxxxx Xxxxxx & Company, Inc.
Xxxxxxx Xxxxx & Associates, Inc.
c/o CIBC World Markets Corp.
Xxx Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Xxxxxxxxx Energy, Inc., a Delaware corporation (the "Company"), proposes,
subject to the terms and conditions contained herein, to sell to CIBC World
Markets Corp., Xxxxxx Xxxxxx & Company, Inc. and Xxxxxxx Xxxxx & Associates,
Inc. (the "Underwriters"), an aggregate of 3,000,000 shares (the "Shares") of
the Company's Common Stock, $0.01 par value (the "Common Stock").
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 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 a price of
$33.00 per share (the "Initial Price"), the number of Shares set forth opposite
the name of such Underwriter under the column "Number of Shares to be Purchased
from the Company" on Schedule I to this Agreement, subject to adjustment in
accordance with Section 9 hereof.
2. Delivery and Payment. Delivery by the Company of the Shares
to the Underwriters for their respective accounts, and payment of the purchase
price by certified or official
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bank check or checks payable in New York Clearing House (same day) funds drawn
to the order of the Company for the shares purchased from the Company, against
delivery of certificates therefor to the Underwriters, shall take place at the
offices of CIBC World Markets Corp., Xxx Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx
Xxxx 00000, at 10:00 a.m., New York City time, on the third business day
following the date of this Agreement, or at such time 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 CIBC (such time and date of delivery and payment are
called the "Closing Date").
Certificates evidencing the Shares shall be registered in such
names and shall be in such denominations as the Underwriters shall request at
least two full business days before the Closing Date and shall be made available
to the Underwriters for checking and packaging, at such place as is designated
by CIBC, on the full business day before the Closing Date.
3. Representations and Warranties of the Company. The Company
hereby represents and warrants to each Underwriter as follows:
(a) The Company meets the requirements for use of Form S-3 for
the primary offering of the Shares under the Securities Act of 1933, as
amended (the "Securities Act") and the rules and regulations (the
"Rules") of the Securities and Exchange Commission (the "Commission")
thereunder. A Registration Statement on Form S-3 (File No. 333-89885),
with respect to the Shares, including a Prospectus (as defined below),
have been carefully prepared by the Company in conformity with the
requirements of the Securities Act, and have been filed with the
Commission and declared effective. Such Registration Statement and
Prospectus may have been amended or supplemented prior to the date of
this Underwriting Agreement; any such amendment of such Registration
Statement or supplement was so prepared and filed, and any such
amendment filed after the effective date of such Registration Statement
(the "Effective Date") has been declared effective. No stop order
suspending the effectiveness of the Registration Statement has been
issued, and no proceeding for that purpose has been instituted or
threatened by the Commission. A prospectus supplement (the "Prospectus
Supplement") setting forth the terms of the offering, sale and plan of
distribution of the Shares (the "Offering") and additional information
concerning the Company and its business has been or will be so prepared
and will be filed pursuant to Rule 424(b) of the Rules on or before the
second business day after the date hereof (or such earlier time as may
be required by the Rules). Copies of such Registration Statement and
Prospectus, any such amendments or supplements and all documents
incorporated by reference therein that were filed with the Commission
on or prior to the date of this Underwriting Agreement (including one
fully executed copy of the Registration Statement and of each amendment
thereto for the Underwriters and their counsel) have been, or will be,
delivered to the Underwriters and their counsel. The Registration
Statement, as it may have heretofore been amended, is referred to
herein as the "Registration Statement," and the final form of
Prospectus included in the Registration Statement, as supplemented by
the Prospectus Supplement, is referred to herein as the "Prospectus."
Any
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reference herein to the Registration Statement, the Prospectus or any
amendment or supplement thereto shall be deemed to refer to and include
the documents incorporated by reference therein, and any reference
herein to the terms "amend," "amendment" or "supplement" with respect
to the Registration Statement or Prospectus shall be deemed to refer to
and include the filing after the execution hereof of any document with
the Commission deemed to be incorporated by reference therein. For
purposes of this Underwriting Agreement, all references to the
Registration Statement and Prospectus or to any amendment or supplement
thereto shall be deemed to include any copy filed with the Commission
pursuant to its Electronic Data Gathering Analysis and Retrieval System
(XXXXX), and such copy shall be identical in content to any Prospectus
delivered to the Underwriters for use in connection with the offering
of the Shares.
(b) Each part of the Registration Statement, when such part
became or becomes effective and the Prospectus and any amendment or
supplement thereto, on the date of filing thereof with the Commission
and at the Closing Date conformed or will conform in all material
respects with the requirements of the Securities Act and the Rules;
each part of the Registration Statement, when such part became or
becomes effective, or when such part was filed with the Commission, did
not or will 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 not misleading; the Prospectus and any
amendment or supplement thereto, on the date thereof and at the Closing
Date, did not or will not include an untrue statement of a material
fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made,
not misleading; except that the foregoing shall not apply to statements
in, or omissions from, any such document in reliance upon, and in
conformity with, written information concerning the Underwriters that
was furnished to the Company by each Underwriter specifically for use
in the preparation thereof.
(c) The documents incorporated by reference in the
Registration Statement, the Prospectus, any amendment or supplement
thereto, when they became or become effective under the Securities Act
or were or are filed with the Commission under the Securities Act or
the Securities Exchange Act of 1934, as amended (the "Exchange Act"),
as the case may be, conformed or will conform in all material respects
with the requirements of the Securities Act, the Rules, the Exchange
Act and/or the rules and regulations of the Commission thereunder (the
"Exchange Rules"), as applicable.
(d) The consolidated financial statements of the Company
together with the related schedules and notes thereto, set forth or
included or incorporated by reference in the Registration Statement and
Prospectus fairly present the financial condition of the Company as of
the dates indicated and the results of operations, changes in financial
position, shareholders' equity and cash flows for the periods therein
specified, in conformity with generally accepted accounting principles
consistently applied throughout the periods
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involved (except as otherwise stated therein). The summary and/or
selected financial and statistical data included or incorporated by
reference in the Registration Statement and the Prospectus present
fairly the information shown therein and, to the extent based upon or
derived from the financial statements, have been compiled on a basis
consistent with the financial statements presented therein. In
addition, any pro forma financial statements of the Company, and the
related notes thereto, included or incorporated by reference in the
Registration Statement and the Prospectus present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial
statements and have been properly compiled on the basis described
therein, and the assumptions used in the preparation thereof are
reasonable and the adjustments used therein are appropriate to give
effect to the transactions and circumstances referred to therein. No
other financial statements are required to be set forth or incorporated
by reference in the Registration Statement or the Prospectus under the
Securities Act or the Rules, including any financial statements
required by Rule 3-05 or Rule 3-14 of Regulation S-X.
(e) PricewaterhouseCoopers LLP, whose reports are incorporated
by reference in the Registration Statement, are and, during the periods
covered by their reports, were to the knowledge of the Company
independent public accountants as required by the Securities Act and
the Rules.
(f) The Company and each of its subsidiaries or other entities
directly or indirectly controlled by the Company (the "Subsidiaries")
have been duly organized and are validly existing as corporations,
limited liability companies or limited partnerships, as the case may
be, in good standing under the laws of their respective jurisdictions
of incorporation or formation and are duly qualified to transact
business as foreign corporations, limited liability companies or
limited partnerships, as the case may be, and are in good standing
under the laws of all other jurisdictions where the ownership or
leasing of their respective properties or the conduct of their
respective businesses requires such qualification, except where the
failure to be so qualified does not amount to a material liability or
disability to the Company and its Subsidiaries, taken as a whole. The
Company and each of its Subsidiaries have full power (corporate and
other) to own or lease their respective properties and conduct their
respective businesses as described in the Registration Statement and
the Prospectus and the Company has full power (corporate and other) to
enter into this Agreement and to carry out all the terms and provisions
hereof to be carried out by it. The Company does not own, lease or
license any asset or property or conduct any business outside the
United States of America.
(g) The issued shares of capital stock of each of the
Company's Subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable and, except for directors' qualifying
shares and as otherwise set forth in the Prospectus are owned
beneficially by the Company free and clear of any security interests,
liens, encumbrances, equities or claims.
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(h) The Company has an authorized, issued and outstanding
capitalization as set forth in the consolidated balance sheet of the
Company dated June 30, 2000 included in the Company's Quarterly Report
on Form 10-Q for the three-month period ended June 30, 2000 (the "Form
10-Q") incorporated by reference in the Prospectus, except for (i)
issuances of Common Stock pursuant to outstanding employee stock
options and (ii) issuances of Common Stock after June 30, 2000 which
is, or will be, described in documents incorporated by reference in the
Prospectus or in the Prospectus Supplement. All of the issued shares of
capital stock of the Company have been duly authorized and validly
issued and are fully paid and nonassessable. The Shares have been duly
authorized and at the Closing Date, after payment therefor in
accordance herewith, will be validly issued, fully paid and
nonassessable. No holders of outstanding shares of capital stock of the
Company are entitled as such to any preemptive or other rights to
subscribe for any of the Shares, and no holder of securities of the
Company has any right which has not been fully exercised or waived to
require the Company to register the offer or sale of any securities
owned by such holder under the Securities Act in the public offering
contemplated by this agreement or within the period ending 90 days
after the date of this Agreement.
(i) The capital stock of the Company conforms to the
description incorporated by reference in the Prospectus.
(j) Except as disclosed in the Prospectus or as will be
described in the Prospectus Supplement, there are no outstanding (A)
securities or obligations of the Company or any of its Subsidiaries
convertible into or exchangeable for any capital stock of the Company
or any such Subsidiary, (B) warrants, rights or options to subscribe
for or purchase from the Company or any such Subsidiary any such
capital stock or any such convertible or exchangeable securities or
obligations, or (C) obligations of the Company or any such Subsidiary
to issue any shares of capital stock, any such convertible or
exchangeable securities or obligations, or any such warrants, rights or
options.
(k) The execution and delivery of this Agreement have been
duly authorized by the Company and this Agreement has been duly
executed and delivered by the Company, and is the valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms.
(l) No litigation or governmental proceedings are pending to
which the Company or any of its Subsidiaries is a party or to which the
property of the Company or any of its Subsidiaries is subject that (i)
are required to be described in the Registration Statement or the
Prospectus and are not described therein or in the documents
incorporated by reference thereto or (ii) might reasonably be expected
to have a material adverse effect on the condition (financial or
otherwise), assets, net worth, business prospects or results of
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operations of the Company and its Subsidiaries, taken as a whole (a
"Material Adverse Effect"), and no such proceedings have been
threatened against the Company or any of its Subsidiaries or with
respect to any of their respective properties; and no contract or other
document is required to be described in the Registration Statement or
the Prospectus or to be filed as an exhibit to the Registration
Statement or in the documents incorporated by reference thereto, that
is not described therein or filed as required.
(m) The issuance, offering and sale of the Shares to the
Underwriters by the Company pursuant to this Agreement, the compliance
by the Company with the other provisions of this Agreement and the
consummation of the other transactions herein contemplated do not (i)
require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as
have been obtained, such as may be required under state securities or
blue sky laws and, if the registration statement filed with respect to
the Shares (as amended) is not effective under the Securities Act as of
the time of execution hereof, such as may be required (and shall be
obtained as provided in this Agreement) under the Securities Act, or
(ii) conflict with or result in a breach or violation of any of the
terms and provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, lease or other agreement or instrument to
which the Company or any of its Subsidiaries is a party or by which the
Company or any of its Subsidiaries or any of their respective
properties are bound, or the charter documents or by-laws of the
Company or any of its Subsidiaries, or any statute or any judgment,
decree, order, rule or regulation of any court or other governmental
authority or any arbitrator applicable to the Company or any of its
Subsidiaries.
(n) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus, neither the
Company nor any of its Subsidiaries has sustained any material loss or
interference with their respective businesses or properties from fire,
flood, hurricane, accident or other calamity, whether or not covered by
insurance, or from any labor dispute or any legal or governmental
proceeding and there has not been any material adverse change, or any
development involving a prospective material adverse change, in the
condition (financial or otherwise), management, business prospects, net
worth, or results of the operations of the Company or any of its
Subsidiaries, except in each case as described in or contemplated by
the Prospectus.
(o) The Company has not, directly or indirectly, (i) taken any
action designed to cause or to result in, or that has constituted or
which might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company to facilitate
the sale or resale of the Shares or (ii) since the filing of the
Registration Statement (A) sold, bid for, purchased, or paid anyone any
compensation for soliciting purchases of, the Shares (except for the
sale of the Shares by the Company under this Agreement) or (B) paid or
agreed to pay to any person any compensation for soliciting another to
purchase any other Shares of the Company.
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(p) Except as disclosed in documents incorporated by reference
in the Registration Statement or the Prospectus, the Company and each
of its Subsidiaries have (i) good and defensible title to their
interests in oil and gas properties owned by them, (ii) good and
marketable title in fee simple to all other real property owned by them
and (iii) good and marketable title to all personal property owned by
them, in each case free and clear of any security interests, liens,
encumbrances, equities, claims and other defects, except such as do not
materially and adversely affect the value of such property and do not
interfere with the use made or proposed to be made of such property by
the Company or such Subsidiary, and any real property and buildings
held under lease by the Company or any such Subsidiary are held under
valid, subsisting and enforceable leases, with such exceptions as are
not material and do not interfere with the use made and proposed to be
made of such property and buildings by the Company or such Subsidiary,
in each case except as described in or contemplated by the Prospectus.
(q) The participation agreements, joint development
agreements, joint operating agreements, farm-out agreements and other
agreements described in the Prospectus or in the documents incorporated
by reference therein, relating to the Company's rights with respect to
the ownership, lease or operation of oil and gas properties, the
acquisition of interests in oil and gas properties or the exploration
for, development of or production of oil and gas reserves thereon
constitute valid and binding agreements of the Company and its
Subsidiaries that are parties thereto and, to the best knowledge of the
Company, of the other parties thereto, enforceable in accordance with
their terms, except as enforceability may be subject to bankruptcy,
insolvency, reorganization and other laws of general applicability
relating to or affecting creditors' rights and to general equity
principles.
(r) The information underlying the estimates of the proved
reserves of the Company and its Subsidiaries as of December 31, 1999,
which was supplied by the Company to M. Xxxxx Xxxxxxx ("Xxxxxxx"), an
independent petroleum engineer, for purposes of auditing the reserve
reports and estimates of the Company, including, without limitation,
production, costs of operation and development, current prices for
production, agreements relating to current and future operations and
sales of production, was true and correct in all material respects on
the dates such estimates were made and such information was supplied
and was prepared in accordance with customary industry practices; to
the knowledge of the Company, Xxxxxxx is an independent petroleum
engineer with respect to the Company; other than normal production of
the reserves and intervening spot market product price fluctuations
described in the Prospectus or in the documents incorporated by
reference therein, the Company is not aware of any facts or
circumstances that would result in a material adverse change in the
reserves, or the present value of future net cash flows therefrom, as
described in the Prospectus or in the documents incorporated by
reference therein; estimates of such reserves and present values as
described in the Prospectus or in the documents incorporated by
reference therein comply in all material respects to the applicable
requirements of Regulation S-X and Industry Guide 2 under the Act.
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(s) Except as described in the Prospectus, as of the date
hereof, (i) all royalties, rentals, deposits and other amounts due on
the oil and gas properties of the Company have been properly and timely
paid, and no proceeds from the sale or production attributable to the
oil and gas properties of the Company 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 on the
financial condition or results of operations of the Company and its
Subsidiaries taken as a whole and (ii) 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 in its oil and gas
properties, except where such claims would not, singly or in the
aggregate, have a Material Adverse Effect.
(t) As of the date hereof, the aggregate undiscounted monetary
liability of the Company for petroleum 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 in any petroleum or to receive cash or
other payments to balance any disproportionate allocation of petroleum
would not, in the aggregate, have a Material Adverse Effect.
(u) Subsequent to the respective dates as of which information
is given in the Registration Statement and the Prospectus or included
in the documents incorporated by reference therein, (1) the Company and
its Subsidiaries have not incurred any material liability or
obligation, direct or contingent, nor entered into any material
transaction not in the ordinary course of business; (2) the Company has
not purchased any of its outstanding capital stock, nor declared, paid
or otherwise made any dividend or distribution of any kind on its
capital stock; and (3) there has not been any material change in the
capital stock, short-term debt or long-term debt of the Company and its
consolidated Subsidiaries, except in each case as described in or
contemplated by the Prospectus and, with respect to clause (3), except
for the conversion of the Subsidiaries from corporations to limited
liability limited partnerships effective December 29, 1999.
(v) No labor dispute with the employees of the Company or any
of its Subsidiaries exists or is threatened or imminent that could
reasonably be expected to have a Material Adverse Effect, except as
described in or contemplated by the Prospectus or in the documents
incorporated by reference therein.
(w) The Company and each of its Subsidiaries are insured by
insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; neither the Company nor any such
Subsidiary has been refused any insurance coverage sought or applied
for; and neither the Company nor any such Subsidiary has any reason to
believe that it will not be
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able to renew its existing insurance coverage as and when such coverage
expires or to obtain similar coverage from similar insurers as may be
necessary to continue its business at a cost that would not have a
Material Adverse Effect , except as described in or contemplated by the
Prospectus.
(x) Except as described in documents incorporated by reference
in the Registration Statement or the Prospectus, no Subsidiary of the
Company is currently prohibited, directly or indirectly, from paying
any dividends to the Company, from making any other distribution on
such Subsidiary's capital stock, from repaying to the Company any loans
or advances to such Subsidiary from the Company or from transferring
any of such Subsidiary's property or assets to the Company or any other
Subsidiary of the Company, except (i) for restrictions imposed by
general corporate law of the jurisdiction in which any such Subsidiary
may be organized or (ii) as described in or contemplated by the
Prospectus or (iii) restrictions which would not, singly or in the
aggregate, have a Material Adverse Effect.
(y) The Company and its Subsidiaries possess all certificates,
authorizations and permits issued by the appropriate federal, state or
foreign regulatory authorities necessary to conduct their respective
businesses, except where a failure to possess any such items would not
have a Material Adverse Effect, and neither the Company nor any such
Subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would have a Material Adverse
Effect, except as described in or contemplated by the Prospectus or in
the documents incorporated by reference therein.
(z) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file
would not have a Material Adverse Effect) and has paid all taxes
required to be paid by it and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due and
payable, except for any such assessment, fine or penalty that is
currently being contested in good faith, or as described in or
contemplated by the Prospectus.
(aa) Neither the Company nor any of its Subsidiaries is in
violation of any federal or state law or regulation relating to
occupational safety and health; the Company and its Subsidiaries have
received all permits, licenses or other approvals required of them
under applicable federal and state occupational safety and health laws
and regulations to conduct their respective businesses; and the Company
and each such Subsidiary is in compliance with all terms and conditions
of any such permit, license or approval, except in each case any such
violation, failure to receive required permits, licenses or other
approvals or failure to comply with the terms and conditions of such
permits, licenses or approvals which would
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not, singly or in the aggregate, have a Material Adverse Effect except
as described in or contemplated by the Prospectus.
(bb) Each certificate signed by any officer of the Company and
delivered to the Underwriters or counsel for the Underwriters shall be
deemed to be a representation and warranty by the Company to the
Underwriters as to the matters covered thereby.
(cc) Except (i) for the limited and general partnership
interests of each of the Subsidiaries owned by the Company, (ii) as
described in or contemplated by the Prospectus, and (iii) for
investments that are not material to the Company and its Subsidiaries
taken as a whole, neither the Company nor any such Subsidiary owns any
shares of stock or any other equity securities of any corporation or
has any equity interest in any firm, partnership, association or other
entity.
(dd) No default exists, and no event has occurred which, with
notice or lapse of time or both, would constitute a default in the due
performance and observance of any term, covenant or condition of any
indenture, mortgage, deed of trust, lease or other agreement or
instrument to which the Company or any of its Subsidiaries is a party
or by which the Company or any of its Subsidiaries or any of their
respective properties is bound or may be affected, except for any such
default or event that will not, individually or in the aggregate, have
a Material Adverse Effect.
(ee) The Company has not distributed any offering material in
connection with the offering and sale of the Shares other than the
Registration Statement or any amendment thereto, any preliminary
prospectus or the Prospectus or any amendment or supplement thereto, or
other materials, if any, permitted by the Act.
(ff) The Company and each of its Subsidiaries owns or
possesses adequate and enforceable rights to use all trademarks,
trademark applications, trade names, service marks, copyrights,
copyright applications, licenses, know-how and other similar rights and
proprietary knowledge (collectively, "Intangibles") described in or
incorporated by reference in the Registration Statement and the
Prospectus as being owned by it necessary for the conduct of its
business. Neither the Company nor any of its Subsidiaries has received
any notice of, or is not aware of, any infringement of or conflict with
asserted rights of others with respect to any Intangibles.
(gg) Except for such transactions as are disclosed in the
Company's Proxy Statement filed with the SEC in connection with the
Company's annual meeting of shareholders for 2000, no transaction has
occurred between or among the Company and any of its officers or
directors or five percent shareholders or any affiliate or affiliates
of any such officer or director or five percent shareholders that is
required to be described in and is not described in or incorporated by
reference in the Registration Statement and the Prospectus.
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(hh) A registration statement has been filed on Form 8-A
pursuant to the Exchange Act, which registration statement complies in
all material respects with the Exchange Act.
(ii) The books, records and accounts of the Company and its
Subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its Subsidiaries. The Company and each
of its Subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurances 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 accordance with generally
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(jj) There are no affiliations with the NASD among the
Company's officers, directors or, to the best of the knowledge of the
Company, any five percent or greater stockholder of the Company, except
as set forth in the Registration Statement or otherwise disclosed in
writing to the Underwriters.
(kk) (i) Each of the Company and its Subsidiaries is in
compliance in all material respects with all rules, laws and regulation
relating to the use, treatment, storage and disposal of toxic
substances and protection of health or the environment ("Environmental
Law") which are applicable to its business except where such
non-compliance would not, individually or in the aggregate, have a
Material Adverse Effect on the Company and its Subsidiaries, taken as a
whole; (ii) neither the Company nor its Subsidiaries has received any
notice from any governmental authority or third party of an asserted
claim under Environmental Laws; (iii) each of the Company and its
Subsidiaries has received all permits, licenses or other approvals
required of it under applicable Environmental Laws to conduct its
business and is in compliance with all terms and conditions of any such
permit, license or approval, except where the failure to have such
permit, license or approval or to so comply would not, individually or
in the aggregate, have a Material Adverse Effect on the Company and its
Subsidiaries, taken as a whole; (iv) to the Company's knowledge, no
facts currently exist that will require the Company or its Subsidiaries
to make future material capital expenditures to comply with
Environmental Laws; and (v) no property which is or has been owned,
leased or occupied by the Company or its Subsidiaries has been
designated as a Superfund site pursuant to the Comprehensive
Environmental Response, Compensation of Liability Act of 1980, as
amended (42 U.S.C. Section 9601, et. seq.) ("CERCLA") or otherwise
designated as a
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contaminated site under applicable state or local law. Neither the
Company nor any of its Subsidiaries has been named as a "potentially
responsible party" under CERCLA.
(ll) The Company is not and, after giving effect to the
offering and sale of the Shares and the application of proceeds thereof
as described in the Prospectus, will not be an "investment company"
within the meaning of the Investment Company Act of 1940, as amended
(the "Investment Company Act").
(mm) The Company, its Subsidiaries or any other person
associated with or acting on behalf of the Company or its Subsidiaries
including, without limitation, any director, officer, agent or employee
of the Company or its Subsidiaries has not, directly or indirectly,
while acting on behalf of the Company or its Subsidiaries (i) used any
corporate funds for unlawful contributions, gifts, entertainment or
other unlawful expenses relating to political activity; (ii) made any
unlawful payment to foreign or domestic government officials or
employees or to foreign or domestic political parties or campaigns from
corporate funds; (iii) violated any provision of the Foreign Corrupt
Practices Act of 1977, as amended; or (iv) made any other unlawful
payment.
(nn) The Company has reviewed its operations and that of its
Subsidiaries and evaluated the extent to which the business or
operations of the Company or any of its Subsidiaries has been affected
by the Year 2000 Problem (that is, any significant risk that computer
hardware or software applications used by the Company and its
Subsidiaries have not, in the case of dates or time periods occurring
after December 31, 1999, function at least as effectively as in the
case of dates or time periods occurring prior to January 1, 2000); as a
result of such review and experience, (i) the Company has no reason to
believe, and does not believe, that (A) there are any issues related to
the Company's response to the Year 2000 Problem that are of a character
required to be described or referred to in the Registration Statement
or Prospectus which have not been accurately described in the
Registration Statement or Prospectus and (B) the Year 2000 Problem has
had, or will have, a Material Adverse Effect, or result in any material
loss or interference with the business or operations of the Company and
its Subsidiaries, taken as a whole; and (ii) the Company reasonably
believes, after due inquiry, that the suppliers, vendors, customers or
other material third parties used or served by the Company and such
Subsidiaries have adequately addressed the Year 2000 Problem, except to
the extent that a failure to address the Year 2000 by a supplier,
vendor, customer or material third party would not have a Material
Adverse Effect.
(oo) No holder of any security of the Company has the right to
have any security owned by such holder included in the Registration
Statement or to demand registration of any security owned by such
holder during the period ending 90 days after the date of this
Agreement. Each director and executive officer of the Company (other
than Messrs. Rossi and Gist) has delivered to the Underwriters his
enforceable written lock-up agreement in the form attached to this
Agreement ("Lock-Up Agreement").
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4. 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 is subject
to each of the following terms and conditions:
(a) Notification that the Registration Statement has become
effective shall have been received by the Underwriters and the
Prospectus Supplement shall have been timely filed with the Commission
in accordance with Section 5(a) of this Agreement.
(b) No order preventing or suspending the use of 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 Commission and the
Underwriters.
(c) The representations and warranties of the Company
contained in this Agreement and in the certificates delivered pursuant
to Section 4(d) shall be true and correct when made and on and as of
the Closing Date as if made on such date. 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
them at or before the Closing Date.
(d) The Underwriters shall have received on the Closing Date a
certificate, addressed to the Underwriters and dated the Closing Date,
of the chief executive or chief operating officer and the chief
financial officer or chief accounting officer of the Company to the
effect that (i) the signers of 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 the Closing Date with the same effect as
if made on the 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 the Closing
Date, and (ii) no stop order suspending the effectiveness of the
Registration Statement has been issued and to the best of their
knowledge, no proceedings for that purpose have been instituted or are
pending under the Securities Act.
(e) The Underwriters shall have received, at the time this
Agreement is executed and on the Closing Date a signed letter from
PricewaterhouseCoopers LLP addressed to the Underwriters and dated,
respectively, the date of this Agreement and the Closing Date, in form
and substance reasonably satisfactory to the Underwriters and their
counsel, confirming that they are independent accountants of the
Company within the meaning of the Securities Act and the Rules, that
the response to Item 10 of the Registration Statement is correct
insofar as it relates to them and stating in effect that:
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(i) in their opinion the audited financial statements
and financial statement schedules included or incorporated by
reference in the Registration Statement and the Prospectus and
reported on by them comply as to form in all material respects
with the applicable accounting requirements of the Securities
Act and the Rules;
(ii) on the basis of a reading of the amounts
included in the Company's Annual Report on Form 10-K, as
amended (the "1999 Form 10-K," which is incorporated by
reference in the Registration Statement and the Prospectus),
under the heading "Selected Financial Data," carrying out
certain procedures (but not an examination in accordance with
generally accepted auditing standards) which would not
necessarily reveal matters of significance with respect to the
comments set forth in such letter, a reading of the minutes of
the meetings of the stockholders and directors of the Company,
and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the
Company 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 "Selected Financial Data"
included in the 1999 Form 10-K (which is
incorporated by reference into 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 do not
comply as to the form in all material
respects with the applicable accounting
requirements of the Securities Act and the
Rules or that the information set forth
therein is not fairly stated in relation to
the financial statements included in the
Registration Statement or Prospectus from
which certain of such data were derived;
(B) any material modifications should be made to
the unaudited consolidated financial
statements included or incorporated by
reference in the Registration Statement or
the Prospectus for them to be in conformity
with Generally Acceptable Auditing
Standards;
(C) that the unaudited consolidated financial
statements included or incorporated by
reference in the Registration Statement or
the Prospectus do not comply as to form in
all material respects with the applicable
requirements of the Securities Act and the
Rules;
(D) with respect to the Company, there were, at
a specified date not more than three
business days prior to the date of the
letter, and based upon the most recently
available consolidated financial statements
of the Company, any increases in the current
liabilities and long-term liabilities of the
Company or any decreases in working capital
or the
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stockholders' equity in the Company, as
compared with the amounts shown on the
Company's audited balance sheet for the
fiscal year ended December 31, 1999 and the
Company's unaudited balance sheet as of June
30, 2000 (included in the Form 10-Q and
incorporated by reference in the
Registration Statement and the Prospectus),
or any decreases in net income (or increases
in net loss), as compared to a comparable
period during the last fiscal year; and
(iii) they have performed certain other procedures as
may be permitted under Generally Acceptable Auditing Standards
as a result of which they determined that certain information
of an accounting, financial or statistical nature (which is
limited to accounting, financial or statistical information
derived from the general accounting records of the Company)
set forth in the Registration Statement and the Prospectus (or
in documents incorporated by reference therein) and reasonably
specified by the Underwriters 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 the letter.
(f) The Underwriters shall have received on the Closing Date
from Xxxxx & Xxxxxxxxx LLP, counsel for the Company, an opinion,
addressed to the Underwriters and dated the Closing Date, and stating
in effect that:
(i) the Company and each of the Subsidiaries have
been duly incorporated or formed and are validly existing as
corporations, limited liability companies or limited liability
limited partnerships, as the case may be, in good standing
under the laws of their respective jurisdictions of
incorporation or formation and are duly qualified to transact
business as foreign corporations or limited liability
companies, limited liability limited partnerships or limited
partnerships, as the case may be, and are in good standing
under the laws of all other jurisdictions where the ownership
or leasing of their respective properties or the conduct of
their respective businesses requires such qualification,
except where the failure to be so qualified does not amount to
a material liability or disability to the Company and the
Subsidiaries, taken as a whole;
(ii) the Company and each of the Subsidiaries have
corporate or partnership power to own or lease their
respective properties and conduct their respective businesses
as described in the Registration Statement and the
Prospectus, and the Company has corporate power to enter into
this Agreement and to carry out all the terms and provisions
hereof to be carried out by it;
(iii) the limited and general partner interests of
each of the Subsidiaries are beneficially owned (directly or
indirectly) by the Company free and clear of any
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perfected security interests or, to the best knowledge of such
counsel, any other security interests, liens, encumbrances,
equities or claims;
(iv) the Company has an authorized, issued and
outstanding capital stock as set forth in the Form 10-Q; all
of the issued shares of capital stock of the Company have been
duly authorized and validly issued and are fully paid and
nonassessable, and to the knowledge of such counsel have been
issued in compliance with all applicable federal and state
securities laws and were not issued in violation of or subject
to any preemptive rights contained in the Certificate of
Incorporation or other rights to subscribe for or purchase
securities known to such counsel; the Shares have been duly
authorized by all necessary corporate action of the Company
and, when issued and delivered to and paid for by the
Underwriters pursuant to this Agreement, will be validly
issued, fully paid and nonassessable; the Shares have been
duly included for trading on the Nasdaq National Market; to
the knowledge of such counsel, except for such rights as have
been waived as of the date hereof, no holders of outstanding
shares of capital stock of the Company are entitled as such to
any preemptive rights contained in the Certificate of
Incorporation or other rights to subscribe for any of the
Shares known to such counsel; and, assuming that the Company
has sent written notice to all holders of securities of the
Company who have the right to register the offer or sale of
any securities owned by such holders under the Act in
connection with the public offering contemplated by this
Agreement, there is no holder of such securities who has not
waived such registration rights or failed to exercise such
registration rights within the time permitted by the notice;
(v) the statements set forth under the "Description
of Capital Stock" incorporated by reference in the Prospectus,
insofar as such statements purport to summarize certain
provisions of the capital stock of the Company, provide a fair
summary of such provisions; and the statements set forth under
the heading "Business and Properties--Government Regulation
and Environmental" in the Company's 1999 Form 10-K
incorporated by reference into the Prospectus, insofar as such
statements constitute a summary of the legal matters,
documents or proceedings referred to therein, provide a fair
summary in all material respects of such legal matters,
documents and proceedings;
(vi) the execution and delivery of this Agreement
have been duly authorized by all necessary corporate action of
the Company and this Agreement has been duly executed and
delivered by the Company;
(vii) to such counsel's knowledge (A) no legal or
governmental proceedings are pending to which the Company or
any of the Subsidiaries is a party or to which the property of
the Company or any of the Subsidiaries is subject that are
required to be described in the Registration Statement or the
Prospectus and are not described therein, and no such
proceedings have been threatened against the
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Company or any of the Subsidiaries or with respect to any of
their respective properties and (B) no contract or other
document is required to be described in the Registration
Statement or the Prospectus or to be filed as an exhibit to
the Registration Statement that is not described therein or
filed as required;
(viii) the issuance, offering and sale of the Shares
to the Underwriters by the Company pursuant to this Agreement,
the compliance by the Company with the other provisions of
this Agreement and the consummation of the other transactions
herein contemplated do not (A) require the consent, approval,
authorization, registration or qualification of or with any
governmental authority other than as may be required by
federal and state securities laws, or (B) conflict with or
result in a breach or violation of any of the terms and
provisions of, or constitute a default under, any indenture,
mortgage, deed of trust, lease or other agreement or
instrument, known to such counsel, to which the Company or any
of the Subsidiaries is a party or by which the Company or any
of the Subsidiaries or any of their respective properties are
bound, or the charter documents or by-laws of the Company or
any of the Subsidiaries, or any statute or any judgment,
decree, order, rule or regulation of any court or other
governmental authority or any arbitrator known to such counsel
and applicable to the Company or the Subsidiaries, except that
no opinion is expressed as to state securities or blue sky
laws for purposes of this subparagraph;
(ix) the Registration Statement is effective under
the Act; any required filing of the Prospectus, or the
Prospectus Supplement, pursuant to Rule 424(b) has been made
in the manner and within the time period required by 424(b);
and, to the knowledge of such counsel, no stop order
suspending the effectiveness of the Registration Statement or
any amendment thereto has been issued, and no proceedings for
that purpose have been instituted or threatened or are
contemplated by the Commission; and
(x) the Registration Statement and the Prospectus
Supplement (in each case, other than the financial statements
and other financial information contained therein, as to which
such counsel need express no opinion) comply as to form in all
material respects with the applicable requirements of the Act
and the rules and regulations of the Commission thereunder.
To the extent deemed advisable by such counsel, they may rely
as to matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Underwriters as to matters which are governed by laws other than the laws of the
State of Colorado, the General Corporation Law of the State of Delaware and the
Federal laws of the United States; provided that such counsel shall state that
in their opinion the Underwriters and they are justified in relying on such
other opinions. Copies of such certificates and other opinions shall be
furnished to the Underwriters and counsel for the Underwriters.
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Such counsel shall also state that they have no reason to
believe that the Registration Statement at the time it became effective (except
with respect to the financial statements and notes and schedules thereto and
other financial and oil and gas reserve data, as to which such counsel need
express no belief) contained any untrue statement of a material fact or omitted
to state a material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus as amended or
supplemented (except with respect to the financial statements, notes and
schedules thereto and other financial and oil and gas reserve data, as to which
such counsel need make no statement) on the date thereof contained any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(g) All proceedings taken in connection with the sale of the
Shares as herein contemplated shall be reasonably satisfactory in form
and substance to the Underwriters, and counsel and the Underwriters
shall have received from Xxxxxxx & Xxxxx L.L.P., a favorable opinion,
addressed to the Underwriters and dated the Closing Date, with respect
to the Shares, the Registration Statement and the Prospectus, and such
other related matters, as the Underwriters may reasonably request, and
the Company shall have furnished to Xxxxxxx & Xxxxx L.L.P., such
documents as they may reasonably request for the purpose of enabling
them to pass upon such matters.
(h) The Underwriters shall have received copies of the Lock-up
Agreements executed by each entity or person described in Section
3(oo).
(i) The Company shall have furnished or caused to be furnished
to the Underwriters such further certificates or documents as the
Underwriters shall have reasonably requested.
5. Covenants of the Company.
(a) The Company covenants and agrees as follows:
(i) The Company will cause the Prospectus Supplement
to be filed (but only if the Underwriters or their counsel has
not reasonably objected thereto by notice to the Company after
having been furnished a copy a reasonable time prior to
filing) and will notify the Underwriters promptly of such
filing.
(ii) The Company shall promptly advise the
Underwriters in writing (i) when any amendment to the
Registration Statement shall have become effective or any
subsequent supplement to the Prospectus has been filed, (ii)
of any request by the Commission for any amendment of the
Registration Statement or the Prospectus or for any additional
information, (iii) of the issuance of any stop order
suspending the effectiveness of the Registration Statement or
the institution or threatening of any proceeding for that
purpose and (iv) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or
the initiation or
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threatening of any proceeding for such purpose. The Company
shall not file any amendment of the Registration Statement or
supplement to the Prospectus unless the Company has furnished
the Underwriters a copy for their review prior to filing and
shall not file any such proposed amendment or supplement to
which the Underwriters reasonably object. The Company shall
use its best efforts to prevent the issuance of any such stop
order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(iii) If, at any time when a prospectus relating to
the Shares is required to be delivered under the Securities
Act and the Rules, any event occurs 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 Securities Act or the Rules,
the Company promptly shall prepare and file with the
Commission, subject to the second sentence of paragraph (ii)
of this Section 7(a), an amendment or supplement which shall
correct such statement or omission or an amendment which shall
effect such compliance.
(iv) The Company shall make generally available to
its security holders and to the Underwriters 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 occurs (or 90 days
if such 12-month period coincides with the Company's fiscal
year), an earning 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 Securities Act or Rule
158 of the Rules.
(v) The Company shall furnish to CIBC and counsel for
the Underwriters, without charge, signed copies of the
Registration Statement (including all exhibits thereto and
amendments thereof) 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 Securities Act
or the Rules, as many copies of the Prospectus and any
amendments thereof and supplements thereto as the Underwriter
may reasonably request.
(vi) The Company shall cooperate with the
Underwriters and their counsel in endeavoring to qualify the
Shares for offer and sale in connection with the offering
under the laws of such jurisdictions as the Underwriters 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
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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.
(vii) Without the prior written consent of the
Underwriters, for a period of 90 days after the date of this
Agreement, the Company and each of its individual directors
and executive officers shall not issue, sell or register with
the Commission (other than on Form S-8 or on any successor
form), or otherwise dispose of, directly or indirectly, any
equity securities of the Company (or any securities
convertible into, exercisable for or exchangeable for equity
securities of the Company), except for the issuance of the
Shares pursuant to the Registration Statement and the issuance
of shares pursuant to the Company's existing stock option plan
or bonus plan as described in the Registration Statement and
the Prospectus. In the event that during this period any
person or entity requests the Company to file a registration
statement under the Act to cover the resale by such person or
entity of shares of Common Stock, the Company may do so, but
only consistent with or pursuant to the terms of existing
registration rights.
(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 (including
any required registration under the Exchange Act).
(ix) The Company will apply the net proceeds from the
offering of the Shares in the manner set forth under "Use of
Proceeds" in the Prospectus.
(b) The Company agrees to pay, or reimburse if paid by any of
the Underwriters, whether or not the transactions contemplated hereby
are consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of
the obligations of the Company under this Agreement including those
relating to: (i) the preparation, printing, filing and distribution of
the Registration Statement including all exhibits thereto, the
Prospectus, all amendments and supplements to the Registration
Statement and the Prospectus, and the printing, filing and distribution
of this Agreement; (ii) the preparation and delivery of certificates
for the Shares to the Underwriters; (iii) the furnishing (including
costs of shipping and mailing) to the Underwriters of copies of 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; (iv) inclusion of the Shares for quotation on the NASDAQ
National Market; and (v) all transfer taxes, if any, with respect to
the sale and delivery of the Shares by the Company to the Underwriters.
Subject to the provisions of Section 8, the Underwriters agree to pay,
whether or not the transactions contemplated hereby are consummated or
this Agreement is terminated, all costs and expenses incident to the
performance of the obligations of the Underwriter under this Agreement
not payable by the Company pursuant to the
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preceding sentence, including, without limitation, the fees and
disbursements of counsel for the Underwriters.
6. 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 Securities 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
Securities Act, the Exchange Act or other Federal or state law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon (i) any untrue
statement or alleged untrue statement of a material fact contained in
the Registration Statement or the Prospectus or any amendment thereof
or supplement thereto, or in any Blue Sky application or other
information or other documents executed by the Company filed in any
state or other jurisdiction to qualify any or all of the Shares under
the securities laws thereof (any such application, document or
information being hereinafter referred to as a "Blue Sky Application")
or arise out of or are based upon any omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, (ii) in whole
or in part upon any breach of the representations and warranties set
forth in Section 3 hereof, or (iii) in whole or in part upon any
failure of the Company to materially perform any of its obligations
hereunder or under law; provided, however, that such indemnity shall
not inure to the benefit of any Underwriter (or any person controlling
such Underwriter) on account of any losses, claims, damages or
liabilities arising from the sale of the Shares to any person by such
Underwriter if such untrue statement or omission or alleged untrue
statement or omission was made in the Registration Statement or the
Prospectus, or such amendment or supplement thereto, or in any Blue Sky
Application in reliance upon and in conformity with information
furnished in writing to the Company by an Underwriter on behalf of such
Underwriter specifically for use therein. 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 and each person, if any, who
controls the Company within the meaning of Section 15 of the Securities
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
omission or alleged untrue statement or omission which was made in the
Registration Statement or the Prospectus, or any amendment thereof or
supplement thereto, contained in the (i) the public pricing information
set forth in the fourth paragraph of the cover page of the Prospectus
Supplement and (ii) the
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information contained in the fourth and fifth paragraphs under the
caption "Underwriting" in the Prospectus; 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 net proceeds received by the Company from such Underwriter.
(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 6(a) or
6(b) shall be available to any party who shall fail to give notice as
provided in this Section 6(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 been advised by counsel
that there may be one or more legal defenses available to it which are
different from or in addition to those available to the indemnifying
party (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
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, which consent shall not be unreasonably withheld
or delayed.
7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 6(a) or 6(b) is due in accordance with its terms but for any reason is
held to be unavailable to or insufficient to hold harmless an indemnified party
under Section 6(a) or 6(b), then each indemnifying party shall contribute to the
aggregate losses, claims, damages and liabilities (including any investigation,
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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 any person entitled hereunder
to contribution from any person who may be liable for contribution) to which the
indemnified party 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 6 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 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, as set forth
in the table on the cover page of the Prospectus supplement, bear to (y) the
underwriting discounts received by the Underwriters. For purposes of this
Agreement, the term "underwriting discount(s)" shall mean the excess of the
aggregate sales price of the Shares to the public over the aggregate price paid
for the Shares by the Underwriters pursuant to this Agreement. The relative
fault of the Company or 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 7 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 7, (i) in no case shall any
Underwriter (except as may be provided in the Agreement Among Underwriters) be
liable or responsible for any amount in excess of the underwriting discount
applicable to the Shares purchased by such Underwriter hereunder, and (ii) the
Company shall be liable and responsible for any amount in excess of such
underwriting discount; provided, however, that no person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. For purposes of this Section 7, each person, if
any, who controls an Underwriter within the meaning of Section 15 of the
Securities 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 Securities 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 7. Any party entitled
to contribution will, promptly after receipt 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
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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 7 are several in proportion
to their respective underwriting commitments and not joint.
8. Termination. This Agreement may be terminated with respect
to the Shares to be purchased on the Closing Date by the Underwriters by
notifying the Company at any time:
(a) in the absolute discretion of the Underwriters at or
before the 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 Underwriters will in the future materially
disrupt, the securities markets; (ii) if there has occurred any new
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 Underwriters,
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 is such as to make it, in the judgment of
the Underwriters, 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., on 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 (vi) if, in the
judgment of the Underwriters, there has occurred a Material Adverse
Effect, or
(b) at or before the Closing Date, that any of the conditions
specified in Section 4 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 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 all out-of-pocket expenses (including the reasonable 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
for damages occasioned by its failure or refusal.
9. Substitution of Underwriters. If any Underwriter other than
CIBC shall fail (other than for a reason sufficient to justify the cancellation
or termination of this Agreement
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under Section 8) to purchase on the Closing Date the Shares agreed to be
purchased on the Closing Date by such Underwriter, CIBC shall purchase such
Shares or make such other arrangements as CIBC may deem advisable upon the terms
set forth in this Agreement. 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.
10. 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 the Underwriter or the Company or any of the officers, directors or
controlling persons referred to in Sections 6 and 7 hereof, and shall survive
delivery of and payment for the Shares. The provisions of Sections 5(b), 6, 7
and 8 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 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 telephone or telegraph if subsequently confirmed
in writing, (a) if to the Underwriters, c/o CIBC World Markets Corp., 0000 Xxxxx
Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 Attention: Xxxxxx Xxxxxx, with a copy
to CIBC World Markets Corp., Xxx Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000 Attention: Xxxxxxxx Xxxxxxx, and (b) if to the Company, to its agent for
service as such agent's address appears on the cover page of the Registration
Statement with a copy to Xxxxxx Xxxxxxxx, Xxxxx & Xxxxxxxxx, 000 X. 00xx Xxxxxx,
Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000-0000.
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.
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Please confirm that the foregoing correctly sets forth the
agreement among us.
Very truly yours,
XXXXXXXXX ENERGY, INC.
By: /s/ Xxxxxx X. Xxxxxxx
----------------------------
Title: Chief Executive Officer
-------------------------
Confirmed:
CIBC WORLD MARKETS CORP.
By: /s/ Xxxxxx Xxxxxx
------------------------------
Title: Managing Director
---------------------------
XXXXXX XXXXXX & COMPANY, INC.
By: /s/ L. Xxxx Xxxxxx
------------------------------
Title: Managing Director
---------------------------
XXXXXXX XXXXX & ASSOCIATES, INC.
By: /s/ Xxxxxx X. Xxxxx
------------------------------
Title: Managing Director
---------------------------
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SCHEDULE I
NUMBER OF
SHARES TO BE
NAME PURCHASED
---- -------------
CIBC WORLD MARKETS CORP. 2,000,000
XXXXXX XXXXXX & COMPANY, INC. 500,000
XXXXXXX XXXXX & ASSOCIATES, INC. 500,000
-------------
TOTAL 3,000,000
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