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EXHIBIT 1.1
MAGNUM HUNTER RESOURCES, INC.
2,000,000 SHARES
COMMON STOCK
(PAR VALUE $0.002 PER SHARE)
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UNDERWRITING AGREEMENT
November ____, 1997
XXXXXXXX XXXXXX REFSNES, INC.
XXXXXXXXXXX & CO., INC.
XXXXXXX XXXX & COMPANY L.L.C.
XXX XXXXXX & COMPANY
As representatives of the several Underwriters
named in Schedule I hereto,
c/o Xxxxxxxx Xxxxxx Refsnes, Inc.
0000 X. Xxxxxxx Xxx., Xxxxx 0000
Xxxxxx, Xxxxx 00000-0000
Ladies and Gentlemen:
Magnum Hunter Resources, Inc., a Nevada corporation (the "Company"),
proposes, subject to the terms and conditions stated herein, to issue and sell
to the Underwriters named in Schedule I hereto (the "Underwriters") an
aggregate of 6,500,000 shares of the Company's common stock, par value $0.002
per share (the "Common Stock") and, at the election of the Underwriters, up to
997,500 additional shares of Common Stock, and Xxxx X. Xxxxx (the "Selling
Shareholder"), proposes, subject to the terms and conditions stated herein, to
sell to the Underwriters an aggregate of 150,000 shares of Common Stock. The
aggregate of 6,650,000 shares of Common Stock to be sold by the Company and the
Selling Shareholder is herein called the "Firm Shares" and the 997,500
additional shares of Common Stock to be sold by the Company are herein called
the "Optional Shares." The Firm Shares and the Optional Shares that the
Underwriters elect to purchase pursuant to Section 2 hereof are herein
collectively called the "Shares."
1. (a) The Company represents and warrants to, and agrees with, each of
the Underwriters that:
(i) A registration statement on Form S-3 (File No.
333-_____) in respect of the Shares has been filed with the
United States Securities and Exchange Commission (the
"Commission"); such registration statement and any
post-effective amendment thereto, each in the form heretofore
delivered
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to you, and, excluding exhibits thereto, to you for each of
the other Underwriters, have been declared effective by the
Commission in such form; no other document with respect to
such registration statement has heretofore been filed with the
Commission; and no stop order suspending the effectiveness of
such registration statement has been issued and no proceeding
for that purpose has been initiated or threatened by the
Commission (any preliminary prospectus included in such
registration statement or filed with the Commission pursuant
to Rule 424(a) of the rules and regulations of the Commission
under the Securities Act of 1933, as amended (the "Securities
Act"), is hereinafter called a "Preliminary Prospectus"); the
various parts of such registration statement, including all
exhibits thereto and including the information contained in
the form of final prospectus filed with the Commission
pursuant to Rule 424(b) under the Securities Act in accordance
with Section 5(a) hereof and deemed by virtue of Rule 430A
under the Securities Act to be part of the registration
statement at the time it was declared effective, each as
amended at the time such part of the registration statement
became effective, are hereinafter collectively called the
"Registration Statement"; and such final prospectus, in the
form first filed pursuant to Rule 424(b) under the Securities
Act, is hereinafter called the "Prospectus"; if the Company
has filed an abbreviated registration statement pursuant to
Rule 462(b) under the Securities Act (the "Rule 462
Registration Statement"), then reference herein to the term
"Registration Statement" shall be deemed to include such Rule
462 Registration Statement;
(ii) No order preventing or suspending the use of
any Preliminary Prospectus has been issued by the Commission,
and each Preliminary Prospectus, at the time of filing
thereof, conformed in all material respects to the
requirements of the Securities Act and the rules and
regulations of the Commission thereunder, and did not contain
an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in
conformity with information furnished in writing to the
Company by an Underwriter through Xxxxxxxx Xxxxxx Refsnes,
Inc. expressly for use therein;
(iii) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus will conform, in all
material respects to the requirements of the Securities Act
and the rules and regulations of the Commission thereunder and
do not and will not, as of the applicable effective date as to
the Registration Statement and any amendment thereto and as of
the applicable filing date as to the Prospectus and any
amendment or supplement thereto, contain an untrue statement
of a material fact or omit
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to state a material fact required to be stated therein or
necessary to make the statements therein not misleading;
provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon
and in conformity with information furnished in writing to the
company by an Underwriter through Xxxxxxxx Xxxxxx Refsnes,
Inc. expressly for use therein (the "Underwriters'
Information"). The parties acknowledge and agree that the
Underwriters' Information consists solely of the last
paragraph at the bottom of the front cover page concerning the
terms of the offering by the Underwriters, the legends
concerning over-allotment and trading activities of the
Underwriters and their affiliates on the inside front cover
page and the paragraphs under the caption "Underwriting" in
the Prospectus;
(iv) The Company is subject to Section 13 or 15(d)
of the Securities Exchange Act of 0000 (xxx "Xxxxxxxx Xxx").
The documents incorporated by reference into the Prospectus
(the "Incorporated Documents"), when they were filed with the
Commission (or, if any amendment with respect to any such
document was filed, when such amendment was filed), complied
in all material respects with the requirements of the Exchange
Act and did not contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein
or necessary in order to make the statements therein not
misleading; and any Incorporated Documents filed subsequent to
the date of the Prospectus shall, when filed with the
Commission, conform in all respects to the requirements of the
Securities Act and the rules and regulations thereunder and
the Exchange Act and the rules and regulations thereunder, as
applicable. All reports and statements required to be filed
by the Company under the Securities Act and the Exchange Act
have been filed, together with all exhibits required to be
filed therewith. The documents and agreements so filed which
are described in the Prospectus are in full force and effect
on the date hereof and neither the Company nor any of the
Subsidiaries (as defined below), nor, to the knowledge of the
Company, any other party thereto is in breach of or default
under a material provision of any such document or agreement;
(v) The only subsidiaries (as defined in the rules
and regulations of the Commission under the Securities Act,
referred to hereinafter as the "Securities Act Regulations")
of the Company are the subsidiaries listed on Schedule II
hereto (collectively, the "Subsidiaries"). Each of the
Subsidiaries (other than Xxxxxx Xxxxxxx International) is a
corporation duly organized and validly existing in good
standing in the jurisdiction of its incorporation with full
corporate power and authority to own, lease and operate its
properties and to conduct its business as described in the
Registration Statement and the Prospectus. Xxxxxx Xxxxxxx
International Limited Liability Company ("Xxxxxx Xxxxxxx") is
a limited liability company duly organized under the laws of
the State of Wyoming. Each of the Subsidiaries is duly
registered and qualified to conduct its business and is in
good
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standing in each jurisdiction or place where the nature or
location of its properties (owned or leased) or the conduct of
its business requires such registration or qualification,
except where the failure so to register or qualify could not
have a material adverse effect on (a) the validity of the
capital stock of the Company, (b) this Agreement and the
transactions contemplated hereby and (c) the condition,
financial or otherwise, or on the earnings, business affairs
or business prospects of the Company (such an adverse effect
to be hereinafter referred to as a "Material Adverse Effect");
(vi) Neither the Company nor any of the Subsidiaries
has sustained since the date of the latest audited financial
statements included in the Prospectus any loss or interference
with its business from fire, explosion, flood or other
calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the
Prospectus, which is material to the Company and the
Subsidiaries, taken as a whole; and, since the respective
dates as of which information is given in the Registration
Statement and the Prospectus, and except as may otherwise be
indicated or contemplated herein or therein, neither the
Company nor any of the Subsidiaries has (i) issued any
securities (other than upon exercise of options outstanding on
the date hereof pursuant to the Company's 1996 Incentive Stock
Option Plan or upon conversion of the convertible preferred
stock or the exercise of warrants, each as described in the
Prospectus and outstanding on such respective dates), or
incurred any material liability or obligation, direct or
contingent, for borrowed money not in the ordinary course of
business other than as described in the Prospectus, (ii)
entered into any material transaction other than in the
ordinary course of business other than as described in the
Prospectus or (iii) declared or paid any dividend or made any
other distribution on or in respect of its capital stock of
any class and there has not been any change in the capital
stock (excluding changes contemplated by clause (i) hereof) or
long term debt of the Company and the Subsidiaries taken as a
whole or any material adverse change in or affecting the
general affairs, business, management, financial conditions,
stockholders' equity or results of operation of the Company or
any of the Subsidiaries;
(vii) Except as to its interests in oil and gas
leases, each of the Company and the Subsidiaries has good and
marketable title to, or valid and enforceable leasehold
estates in, all items of real and personal property which are
material to its business and/or reflected as owned by it in
the financial statements included in the Prospectus, in each
case free and clear of all liens, mortgages, charges, claims,
encumbrances, pledges, security interests, defects and other
restrictions except those disclosed in the Prospectus or those
which do not have a material adverse effect or do not
materially adversely affect the use made or proposed to be
made of such property. Each of the Company and the
Subsidiaries has good and
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defensible title to its interests in oil and gas leases, free
and clear of any liens, mortgages, charges, claims,
encumbrances, pledges, security interests, defects and other
restrictions of any kind, except liens and encumbrances under
operating agreements, unitization and pooling arrangements and
crude oil and gas sales contracts that secure payment of
amounts not yet due and payable and which are of a nature and
scope customary in connection with similar oil and gas
drilling and producing operations, and except those which,
individually or in the aggregate, are not material in amount
and do not materially adversely affect the use made and
proposed to be made of such oil and gas leases. Except to the
extent described in the Prospectus, the leases, options to
lease, drilling concessions or other arrangements held by the
Company and the Subsidiaries reflect in all material respects
the right of the Company and the Subsidiaries to develop,
exploit and explore their properties. The Company and each of
the Subsidiaries has conducted such title investigations and
has acquired its interest in oil and gas leases in such manner
as is customary in the oil and gas industry for the respective
regions in which the property subject to such leases is
located. The Company and each of the Subsidiaries has
complied in all material respects with the terms of oil and
gas leases in which each purports to own an interest, and no
claim of any sort has been asserted by any person or entity
adverse to the rights of the Company or any of the
Subsidiaries as lessee or sublessee under any of such leases
or questioning its rights to the continued possession of the
leased premises under any such lease, except with respect to
claims which do not materially adversely affect the use made
and proposed to be made of such oil and gas leases by the
Company or any of the Subsidiaries. The concessions,
reservations, licenses, permits and rights to hydrocarbons
held by the Company and each of the Subsidiaries are valid,
subsisting and enforceable with such exceptions which do not
materially adversely affect the use made and proposed to be
made of such oil and gas leases. Except as set forth in the
Prospectus, the Company and each of the Subsidiaries (i) do
not own or lease any real or personal property, the loss of
which would have a Material Adverse Effect and (ii) own or
lease or have the right to use or enjoy the benefits of all
properties as are necessary to its respective operations as
now conducted;
(viii) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of the State of Nevada, with power and authority
(corporate and other) to own its properties and conduct its
business as described in the Prospectus, and has 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
the failure to be so qualified in any such jurisdiction; and
each of the Subsidiaries has been duly incorporated and is
validly existing as a corporation in good standing under the
laws of its jurisdiction of incorporation;
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(ix) The authorized, the issued and the issued and
outstanding capital stock of the Company set forth in the
Prospectus is true and correct in all respects, and all of the
issued shares of Common Stock of the Company have been duly
and validly authorized and issued, are fully paid and
non-assessable and conform to the description of the Common
Stock contained in the Prospectus; and all of the issued
shares of capital stock of each of the Subsidiaries 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 Company, free and clear of
all liens, encumbrances, equities or claims; the holders of
outstanding shares of capital stock of the Company are not
entitled to preemptive or other rights to acquire the Shares
which have not been complied with; except as set forth in the
Prospectus, neither the Company nor any of the Subsidiaries is
a party to or bound by any instrument, agreement or other
arrangement, including, but not limited to, any voting trust
agreement, stockholders' agreement or other agreement or
instrument, affecting any securities or rights or obligations
of security holders of the Company or any of the Subsidiaries
and there are no outstanding securities convertible into or
exchangeable for, or warrants, rights or options to purchase
from the Company, or obligations of the Company to issue,
shares of Common Stock or any other class of capital stock of
the Company; and, except as set forth in the Prospectus, there
are no restrictions on subsequent transfers of the Shares
under the laws of the United States (other than sales of
Shares owned by the Company and its affiliates);
(x) The Shares have been duly and validly authorized
and, when issued and delivered against payment therefor as
provided herein, will be duly and validly issued and fully
paid and non-assessable and will conform to the description of
the Shares contained in the Prospectus;
(xi) The Company has full legal right, power and
authority to authorize, issue, deliver and sell the Shares, to
execute, deliver and perform its obligations under this
Agreement and to consummate the transactions provided for
herein. This Agreement has been duly and properly authorized,
executed and delivered by the Company and constitutes a legal,
valid and binding agreement of the Company enforceable against
the Company in accordance with its terms;
(xii) The issue and sale of the Shares to be sold by
the Company hereunder, the compliance by the Company with all
of the provisions of this Agreement and the consummation of
the transactions contemplated by this Agreement will not
conflict with or result in a breach or violation of any of the
terms or provisions of, or constitute a default under, any
license, contract, indenture, mortgage, installment sale
agreement, lease, deed of trust, voting trust agreement,
stockholders' agreement, note, loan or credit agreement,
purchase order, agreement or instrument evidencing an
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obligation for borrowed money or other material agreement or
instrument (hereinafter "Contract") to which the Company or
any of the Subsidiaries is a party or by which the Company or
any of the Subsidiaries is bound or to which any of the
property or assets of the Company or any of the Subsidiaries
is subject, nor will such action result in any violation of
the provisions of the Articles of Incorporation and Bylaws of
the Company, the charter documents of any of the Subsidiaries
or any statute or any law, ordinance, statute, judgment,
decree, order, rule or regulation ("Law") of any Federal,
state and local governmental authority, arbitrator, court,
tribunal regulatory body or administrative agency or other
governmental agency or body or any stock exchange authorities
having jurisdiction over the Company or any of the
Subsidiaries or any of their properties (hereinafter
"Governmental Agency"); and no consent, approval,
authorization, order, registration or qualification
(hereinafter referred to as "Government Authorization") of or
with any such Governmental Agency is required for the issue
and sale of the Shares or the consummation by the Company of
the transactions contemplated by this Agreement, except (A)
the registration under the Securities Act of the Shares, (B)
such Governmental Authorizations as have been duly obtained
and are in full force and effect and copies of which have been
furnished to you and (C) such Governmental Authorizations as
may be required under state securities or Blue Sky laws or the
Bylaws, rules and regulations of the National Association of
Securities Dealers, Inc.;
(xiii) Except as set forth in the Prospectus, no
officer, director or 5% or greater stockholder of the Company
or any of the Subsidiaries, or any "affiliate" or "associate"
(as these terms are defined in Rule 405 promulgated under the
Rules and Regulations) of any of the foregoing persons or
entities, has or has had, either directly or indirectly, (i) a
material interest in any person or entity which (A) furnishes
or sells services or products which are furnished or sold or
are proposed to be furnished or sold by the Company or any of
the Subsidiaries or (B) purchases from or sells or furnishes
to the Company or any of the Subsidiaries any goods or
services or (ii) a material beneficiary interest in any
contract or agreement to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the
Subsidiaries may be bound or affected. There are no existing
agreements, arrangements, understandings or transactions, or
proposed agreements, arrangements, understandings or
transactions, between or among the Company or any of the
Subsidiaries and any such officer, director, 5% or greater
stockholder, "affiliate" or "associate." For the purpose of
this subsection (__), interests which may be excluded from
disclosure pursuant to the instructions to items of Regulation
S-K shall be deemed to be per se not material;
(xiv) The Company and the Subsidiaries are in
compliance with all federal, state, local and foreign laws and
regulations respecting employment
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and employment practices, terms and conditions of employment
and wages and hours. There are no pending investigations
involving the Company or any of the Subsidiaries by the U.S.
Department of Labor or any other governmental agency
responsible for the enforcement of such federal, state, local
or foreign laws and regulations. There is no unfair labor
practice charge or complaint against the Company or any of the
Subsidiaries pending before the National Labor Relations Board
or any strike, picketing, boycott, dispute, slowdown or
stoppage pending or threatened against or involving the
Company or any of the Subsidiaries. No representation
question exists respecting the employees of the Company or any
of the Subsidiaries, and no collective bargaining agreement or
modification thereof is currently being negotiated by the
Company or any of the Subsidiaries. No grievance or
arbitration proceeding is pending under any expired or
existing collective bargaining agreements of the Company or
any of the Subsidiaries. No material labor dispute with the
employees of the Company or any of the Subsidiaries exists or,
to the knowledge of the Company, is imminent;
(xv) Except as identified on Schedule II attached
hereto, neither the Company nor any of the Subsidiaries
maintains, sponsors or contributes to any program or
arrangement that is an "employee pension benefit plan" an
"employee welfare benefit plan" or a "multi-employer plan"
("ERISA Plans") as such terms are defined in Sections 3(2),
3(1) and 3(37), respectively, of the Employee Retirement
Income Security Act of 1974, as amended ("ERISA"). Except as
identified on Schedule II attached hereto, neither the Company
nor any of the Subsidiaries maintains or contributes to, now
or at any time previously, a defined benefit plan as defined
in Section 3(35) of ERISA. No ERISA Plan (or any trust
created thereunder) has engaged in a "prohibited transaction"
within the meaning of Section 406 of ERISA or Section 4975 of
the Internal Revenue Code of 1986, as amended (the "Code")
which could subject the Company or any of the Subsidiaries to
any tax penalty on prohibited transactions and which has not
adequately been corrected. No "accumulated funding
deficiency" (as defined in Section 302 of ERISA) or any of the
events set forth in Section 4043(b) of ERISA (other than
events with respect to which the 30-day notice under Section
4043 of ERISA has been waived) has occurred with respect to
any employee benefit plan which might reasonably be expected
to have a Material Adverse Effect. Each ERISA Plan is in
compliance with all material reporting, disclosure and other
requirements of the Code and ERISA as they relate to such
ERISA Plan. Determination letters have been received from the
Internal Revenue Service with respect to each ERISA Plan which
is intended to comply with Code Section 401(a) stating that
such ERISA Plan and the attendant trust are qualified
thereunder. Neither the Company nor any of the Subsidiaries
has ever completely or partially withdrawn from a
"multi-employer plan" as so defined;
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(xvi) Neither the Company nor any of the
Subsidiaries is in violation of its articles of incorporation,
bylaws or any Laws of any Governmental Agency or in default in
the performance or observance of any material obligation,
agreement, covenant or condition contained in any Contract to
which it is a party or by which it or any of its properties
may be bound;
(xvii) Neither the Company nor any of the
Subsidiaries has taken, directly or indirectly, any action
which was designed to or which has constituted or which might
reasonably be expected to cause or result in, under the
Exchange Act or otherwise, stabilization or manipulation of
the price of any security of the Company to facilitate the
sale or resale of the Shares;
(xviii) No consent, approval, authorization or order
of, and no registration, filing or qualification with, any
Governmental Agency, domestic or foreign, is required for the
execution, delivery or performance of this Agreement, the
issuance and sale of the Shares, or the transactions
contemplated hereby or thereby, except such as have been or
may be obtained under the Securities Act or may be required
under state securities or Blue Sky laws;
(xix) The statements set forth in the Prospectus
under the caption "Description of Capital Stock," insofar as
they purport to constitute a summary of the terms of the
Common Stock, and under the captions "Underwriting,"
"Management's Discussion and Analysis of Financial Condition
and Results of Operations -- Liquidity and Capital Resources,"
"Description of Indebtedness" and "_____________________,"
insofar as they purport to describe the provisions of the
laws, agreements, contracts, indentures, leases or other
documents or instruments referred to therein, are accurate,
complete and fair;
(xx) Other than as set forth in the Prospectus,
there are no legal or governmental proceedings pending to
which the Company or any of the Subsidiaries is a party or of
which any property of the Company or any of the Subsidiaries
is the subject which, if determined adversely to the Company
or any of the Subsidiaries, could, singly or in the aggregate,
have a Material Adverse Effect; and, to the best of the
Company's knowledge, no such proceedings are threatened or
contemplated by any Governmental Agency or threatened by
others;
(xxi) Neither the Company nor any of the Subsidiaries
is and, after giving effect to the offering and sale of the
Shares, will be an "investment company" or an entity
"controlled" by an "investment company," or an "affiliated
person" of, or "promoter" for, or "principal underwriter" for,
an "investment company," as such terms are defined in the
Investment Company Act of 1940, as amended (the "Investment
Company Act");
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(xxii) Except as disclosed in the Prospectus, the
Company and each of the Subsidiaries owns or possesses, or has
the right to use, free and clear of all liens, claims,
encumbrances, pledges, security interests and other adverse
interests of any kind whatsoever, or has applied for or can
acquire on reasonable terms, the patents, patent rights,
licenses, inventions, copyrights, technology, knowhow
(including trade secrets and other unpatented and/or
unpatentable proprietary or confidential information, systems
or procedures), trademarks, service marks, trade names and all
licenses and rights with respect to the foregoing
(collectively, "Patent and Proprietary Rights") used in the
conduct of business as now conducted or proposed to be
conducted, except where the failure to apply for or acquire
any such Patent and Proprietary Rights would not, singly or in
the aggregate, result in a Material Adverse Effect, and
neither the Company nor any of the Subsidiaries has received
any notice or is otherwise aware of any infringement of or
conflict with asserted rights of any person, corporation or
other entity with respect to any Patent and Proprietary
Rights, or of any facts which would render any Patent and
Proprietary Rights invalid or inadequate to protect the
interests of the Company therein, and which infringement or
conflict (if the subject of any unfavorable decision, ruling
or finding) or invalidity or inadequacy, singly or in the
aggregate, could have a Material Adverse Effect nor is aware
of any obligation or liability to make any payments by way of
royalties, fees or otherwise to any owner or licensee of, or
other claimant to, any Intellectual Property or other
intangible asset, with respect to the use thereof or in
connection with the conduct of its business or otherwise;
(xxiii) Except as would not, individually or in the
aggregate, have a Material Adverse Effect, (i) the Company and
each of the Subsidiaries has all certificates, consents,
exemptions, orders, permits, licenses, authorizations, or
other approvals (each, an "Authorization") of and from, and
has made all declarations and filings with, all Governmental
Agencies, necessary or required to engage in the business
currently conducted by it in the manner described in the
Prospectus, (ii) all such Authorizations are valid and in full
force and effect and (iii) the Company and each of the
Subsidiaries is in compliance in all material respects with
the terms and conditions of all such Authorizations and with
the rules and regulations of the regulatory authorities and
governing bodies having jurisdiction with respect thereto;
(xxiv) Neither the Company nor any of the
Subsidiaries has been notified or is otherwise aware that it
is liable with respect to obligations under the Comprehensive
Environmental Response, Compensation and Liability Act of
1980, as amended, any applicable existing federal, state,
local or international laws and regulations relating to
protection of human health or the environment or imposing
liability or standards of conduct concerning any "Hazardous
Material" ("Environmental Laws"), and it is not aware of
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any facts or circumstances which could reasonably be expected
to result in any such liability. The Company and the
Subsidiaries are in substantial compliance with all applicable
existing Environmental Laws, except for such instances of
non-compliance which would not have a Material Adverse Effect.
The term "Hazardous Material" means (i) any "hazardous
substance" as defined by the Comprehensive Environmental
Response, Compensation and Liability Act of 1980, as amended,
(ii) any "hazardous waste" as defined by the Resource
Conservation and Recovery Act, as amended, (iii) any petroleum
or petroleum product, (iv) any polychlorinated biphenyl and
(v) any pollutant or contaminant or hazardous, dangerous or
toxic chemical, material, waste or substance regulated under
or within the meaning of any other Environmental Law. To the
best of the Company's knowledge, no disposal, release or
discharge of "Hazardous Material" has occurred on, in, at or
about any of the facilities or properties of the Company or
any of the Subsidiaries. Except as described in the
Prospectus to the best of the Company's knowledge: (i) 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 its 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 which
has not been taken, under any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit, except for such
violations and failures to take remedial action which would
not result in, singularly or in the aggregate, a Material
Adverse Effect; (ii) there has been no material spill,
disposal, discharge, leak, emission, injection, escape,
dumping or release of any kind onto such property or into the
environment surrounding such property by the Company or any of
the Subsidiaries of any solid waste or Hazardous Materials,
except for such spills, disposals, discharges, leaks,
emissions, injections, escapes, dumping or releases which
would not result in, singularly or in the aggregate, a
Material Adverse Effect;
(xxv) Deloitte & Touche LLP and Xxxx + Associates
LLP, who have audited certain financial statements of the
Company and the Subsidiaries, are, and as of the time of the
audits were, independent public accountants of the Company as
required by the Securities Act and the rules and regulations
of the Commission thereunder;
(xxvi) The consolidated financial statements and
related notes and schedules included in the Registration
Statement, a Preliminary Prospectus or in the Prospectus
present fairly the financial position of the Company and the
Subsidiaries, on the basis stated in the Registration
Statement, as of the respective dates thereof and the results
of operations and cash flows of the Company and the
Subsidiaries, for the respective periods covered thereby, all
in conformity with generally accepted accounting principles
applied on a
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consistent basis throughout the entire period involved, except
as otherwise disclosed in the Registration Statement,
Preliminary Prospectus or the Prospectus. The selected
financial information included in the Registration Statement,
a Preliminary Prospectus or the Prospectus presents fairly the
information shown therein and has been compiled on a basis
consistent with that of the audited financial statements of
the Company included therein. The pro forma financial
information included in the Registration Statement, a
Preliminary Prospectus or in the Prospectus presents fairly
the information shown therein, and the assumptions used in the
preparation thereof are reasonable and the adjustments used
therein are appropriate to give effect to the transactions or
circumstances referred to therein. No other financial
statements or schedules of the Company and the Subsidiaries
are required by the Securities Act, the Exchange Act or the
Securities Act Regulations to be included in the Registration
Statement, Preliminary Prospectus or Prospectus;
(xxvii) The information provided by the Company or
any of the Subsidiaries to the Petroleum Consultants (as
hereinafter defined) for the preparation of the estimates of
reserves in the reserve reports for the oil and gas properties
of the Company prepared by Xxxxxxx, Xxxxx & Associates Inc.,
Xxxxx Xxxxxxxx Petroleum Consultants, Inc., Xxxxx Xxxxx
Company and Xxxxx X. Xxxxxxx, Xx., independent petroleum
consultants (collectively the "Petroleum Consultants"), were
at the respective times of delivery thereof to the Petroleum
Consultants complete and accurate in all material respects.
The Underwriters have received from each Petroleum Consultant
a true and correct copy of its reserve report with respect to
the Company's interests at December 31, 1996 and December 31,
1995 and the property to be acquired from Burlington in the
Permian Basin Acquisition (each a "Reserve Report"), and each
of the Reserve Reports and the letters from each of the
Petroleum Consultants to the Company with respect thereto have
been reviewed, and accepted as having a reasonable basis, by
the Company and has been included in the Prospectus in good
faith by the Company. Except as expressly stated in the
Preliminary Prospectus and the Prospectus, information in the
Preliminary Prospectus and in the Prospectus regarding
estimates of reserves, future net cash flows and present
values of proved reserves comply in all material respects with
the applicable requirements of Rule 4-10 of Regulation S-X and
Industry Guide 2 under the Securities Act;
(xxviii) Each of the Company and the Subsidiaries
maintains liability, casualty and other insurance (subject to
customary deductions and retentions) with responsible
insurance companies against such risk of the types and in the
amounts customarily maintained by independent oil companies of
comparable size to the Company engaged in the acquisition,
development and exploration of oil and gas properties and
related assets (which may include self-insurance in comparable
form to that maintained by such responsible companies);
neither the Company nor any of the
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Subsidiaries has received notice from any insurer or agent of
such insurer that substantial capital improvements or other
expenditures will have to be made in order to continue such
insurance; all such insurance is outstanding and in full force
and effect;
(xxix) The Company maintains a system of internal
accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with
management's general or specific authorizations; (ii)
transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for
assets; (iii) access to financial assets is permitted only in
accordance with management's general or specific authorization
and (iv) the recorded accountability for assets is compared
with the existing assets at reasonable intervals and
appropriate action is taken with respect thereto;
(xxx) Neither the Company nor any of the
Subsidiaries has, nor to the knowledge of the Company, has any
officer, director or employee of the Company or any of the
Subsidiaries or any other person acting on behalf of the
Company or any of the Subsidiaries, for the benefit of the
Company or any of such Subsidiaries at any time during the
last five years, (i) made any unlawful gift or contribution to
any candidate for federal, state, local or foreign political
office, or failed to disclose fully any such gift or
contribution in violation of law, or (ii) made any payment to
any federal, state, local or foreign governmental officer or
official, which would be reasonably likely to subject the
Company or any of the Subsidiaries to any damage or penalty in
any civil, criminal or governmental litigation or proceeding
(domestic or foreign). Each of the Company's and the
Subsidiaries' internal accounting controls are sufficient to
cause the Company and the Subsidiaries to comply with the
Foreign Corrupt Practices Act of 1977, as amended;
(xxxi) No person has any right to the registration
of any security of the Company by reason of the filing of the
Registration Statement with the Commission or the consummation
of the transactions contemplated hereby that has not been
waived or lapsed;
(xxxii) As of the date of the Prospectus, neither
the Company nor any of the Subsidiaries is currently planning
any probable acquisitions for which disclosure of pro forma
financial information would be required by the Securities Act;
(xxxiii) The minute books of each of the Company and
the Subsidiaries have been made available to the Underwriters,
contain a complete summary of all meetings and actions of the
directors and stockholders of each of the Company and the
Subsidiaries since the time of
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their respective incorporation and reflect all transactions
referred to in such minutes accurately in all respects; and
(xxxiv) Each of the Company and the Subsidiaries has
filed all tax returns required to be filed by it in any
jurisdiction, and has paid all taxes shown to be due on such
returns or claimed to be due from such entities, other than
those being contested in good faith. All tax liabilities,
including those being contested by the Company or the
Subsidiaries are adequately reserved for in the Company's
financial statements (in accordance with generally accepted
accounting principles). No tax deficiency has been asserted
and no tax proceedings are pending or are threatened against
the Company or any of the Subsidiaries, and to the knowledge
of the Company, no such deficiency or proceeding is
contemplated.
(b) The Selling Shareholder represents and warrants to, and agrees
with, each of the Underwriters and the Company that:
(i) Each Preliminary Prospectus, at the time of
filing thereof, conformed in all material respects to the
requirements of the Securities Act and the rules and
regulations of the Commission thereunder, and did not contain
an untrue statement of a material fact or omit to state a
material fact required to be stated therein or necessary to
make the statements therein, in the light of the circumstances
under which they were made, not misleading; provided, however,
that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in
conformity with information furnished in writing to the
Company by an Underwriter through Xxxxxxxx Xxxxxx Refsnes,
Inc. expressly for use therein;
(ii) The Registration Statement conforms, and the
Prospectus and any further amendments or supplements to the
Registration Statement or the Prospectus will conform, in all
material respects to the requirements of the Securities Act
and the Securities Act Regulations and do not and will not, as
of the applicable effective date as to the Registration
Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or
supplement thereto, contain an untrue statement of a material
fact or omit to state a material fact required to be stated
therein or necessary to make the statements therein not
misleading, provided, however, that this representation and
warranty shall not apply to any statements or omissions made
in reliance upon and in conformity with information furnished
in writing to the company by an Underwriter through Xxxxxxxx
Xxxxxx Refsnes, Inc. expressly for use therein;
(iii) All Governmental Authorizations required for
the sale and delivery of the Shares to be sold by the Selling
Shareholder hereunder have been obtained, except (A) the
registration under the Securities Act of the
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Shares, (B) such Governmental Authorizations as have been duly
obtained and are in full force and effect and copies of which
have been delivered to you and (C) such Governmental
Authorizations as may be required under state securities or
Blue Sky laws or the Bylaws, rules and regulations of the
National Association of Securities Dealers, Inc.; and the
Selling Shareholder has full authority to sell, assign,
transfer and deliver the Shares to be sold by the Selling
Shareholder hereunder;
(iv) No Government Authorization of or with any
Governmental Agency is required for the issue and sale of the
Shares, effecting the consummation by the Company and the
Selling Shareholder of the transactions contemplated by this
Agreement, except (A) the registration under the Securities
Act of the Shares, (B) such Governmental Authorizations as
have been duly obtained and are in full force and effect and
copies of which have been furnished to you and (C) such
Governmental Authorizations as may be required under state
securities or Blue Sky laws or the Bylaws, rules and
regulations of the National Association of Securities Dealers,
Inc.;
(v) No Government Authorization of or with any
Governmental Agency is required for the consummation by the
Company and the Selling Shareholder of the transactions
contemplated by the Offering, except such Governmental
Authorizations as have been duly obtained and are in full
force and effect and copies of which have been furnished to
you;
(vi) The execution and delivery of, and the
performance by the Selling Shareholder, of its obligations
hereunder, constitute the valid and legally binding agreement
of the Selling Shareholder enforceable against the Selling
Shareholder in accordance with its terms, except insofar as
the enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights
generally and may be subject to general principles of equity,
regardless of whether such enforceability is considered in a
preceding in equity or at law;
(vii) The sale of the Shares to be sold by the
Selling Shareholder hereunder, the compliance by the Selling
Shareholder with all of the provisions of this Agreement and
the consummation of the transactions herein contemplated will
not conflict with or result in a breach or violation of any of
the terms or provisions of, or constitute a default under, any
statute, indenture, mortgage, deed of trust, loan agreement or
other agreement or instrument to which the Selling Shareholder
is a party or by which the Selling Shareholder is bound, or to
which any of the property or assets of the Selling Shareholder
is subject, and no Government Authorization of or with any
Governmental Agency is required for the sale of the Shares or
the consummation by the Selling Shareholder of the
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transactions contemplated by this Agreement, except (A) the
registration under the Securities Act of the Shares, (B) such
Governmental Authorizations as have been duly obtained and are
in full force and effect and copies of which have been
furnished to you and (C) such Governmental Authorizations as
may be required under state securities or Blue Sky laws or the
Bylaws, rules and regulations of the National Association of
Securities Dealers, Inc.;
(viii) The Selling Shareholder has, and immediately
prior to each Time of Delivery (as defined in Section 4
hereof) the Selling Shareholder will have, good and valid
title to the Shares to be sold by the Selling Shareholder
hereunder, free and clear of all liens, encumbrances, equities
or claims; and, upon delivery of such Shares and payment
therefor pursuant hereto and thereto, good and valid title to
such Shares, free and clear of all liens, encumbrances,
equities or claims, will pass to the several Underwriters;
(ix) The Selling Shareholder has not taken and will
not take, directly or indirectly, any action which is designed
to or which has constituted or which might 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 the Shares;
(x) In order to document the Underwriters'
compliance with the reporting and withholding provisions of
the Tax Equity and Fiscal Responsibility Act of 1982 with
respect to the transaction herein contemplated, the Selling
Shareholder will deliver to you prior to the first Time of
Delivery (as hereinafter defined) a properly completed and
executed United States Treasury Department Form [W-9] or Form
[W-8] (or other applicable form or statement specified by
Treasury Department regulations in lieu thereof);
(xi) Certificates in negotiable form representing
all of the Shares to be sold by the Selling Shareholder
hereunder have been prepared and will be delivered to you in
accordance with the instructions in accordance with Section 4
of this Agreement; and
(xii) The Shares to be sold by the Selling
Shareholder are subject to the interests of the Underwriters
hereunder; the obligations of the Selling Shareholder
hereunder shall not be terminated by operation of law, whether
by dissolution, or by the occurrence of any other event; if
the Selling Shareholder should be dissolved, or if any other
such event should occur, before the delivery of the Shares
hereunder, certificates representing the Shares shall be
delivered by or on behalf of the Selling Shareholder in
accordance with the terms and conditions of this Agreement.
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2. Subject to the terms and conditions herein set forth, (a) the
Company and the Selling Shareholder agree, severally and not jointly, to sell
to each of the Underwriters, and each of the Underwriters agrees, severally and
not jointly, to purchase from the Company and the Selling Shareholder, at a
purchase price per Share of $____________, the number of Firm Shares (to be
adjusted by you so as to eliminate fractional shares) determined by multiplying
the aggregate number of Firm Shares to be sold by the Company and the Selling
Shareholder as set forth opposite their respective names in Schedule II hereto
by a fraction, the numerator of which is the aggregate number of Firm Shares to
be purchased by such Underwriter as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the aggregate
number of Firm Shares to be purchased by all of the Underwriters from the
Company and the Selling Shareholder hereunder and (b) in the event and to the
extent that the Underwriters shall exercise the election to purchase Optional
Shares as provided below, the Company and the Selling Shareholder agree,
severally and not jointly, to sell to each of the Underwriters, and each of the
Underwriters agrees, severally and not jointly, to purchase from the Company,
at the purchase price per Share set forth in clause (a) of this Section 2, that
portion of the number of Optional Shares as to which such election shall have
been exercised (to be adjusted by you so as to eliminate fractional shares)
determined by multiplying such number of Optional Shares by a fraction the
numerator of which is the maximum number of Optional Shares which such
Underwriter is entitled to purchase as set forth opposite the name of such
Underwriter in Schedule I hereto and the denominator of which is the maximum
number of Optional Shares that all of the Underwriters are entitled to purchase
hereunder.
The Company hereby grants to the Underwriters the right to purchase at
their election up to an aggregate of 997,500 Optional Shares, at the purchase
price per Share set forth in the paragraph above, for the sole purpose of
covering over-allotments in the sale of the Firm Shares. Any such election to
purchase Optional Shares may be exercised only by written notice from you to
the Company, given within a period of 30 calendar days after the date of this
Agreement and setting forth the aggregate number of Optional Shares to be
purchased and the date on which such Optional Shares are to be delivered, as
determined by you but in no event earlier than the First Time of Delivery (as
defined in Section 4 hereof) or, unless you and the Company otherwise agree in
writing, earlier than two or later than ten business days after the date of
such notice.
3. Upon the authorization by you of the release of the Firm
Shares, the several Underwriters propose to offer the Firm Shares for sale upon
the terms and conditions set forth in the Prospectus.
4. (a) The Shares to be purchased by each Underwriter hereunder,
in definitive form, and in such authorized denominations and
registered in such names as Xxxxxxxx Xxxxxx Refsnes, Inc. may request
upon at least forty-eight hours' notice to the Company and the Selling
Shareholder prior to Time of Delivery (as defined below) (the
"Notification Time"), shall be delivered by or on behalf of the
Company and the Selling Shareholder to Xxxxxxxx Xxxxxx Refsnes, Inc.,
for the account of such Underwriter, against payment by or on behalf
of such Underwriter of the
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purchase price therefor by wire transfer payable to the order of the
Company or the Selling Shareholder, as the case may be, in immediately
available funds. The Company and the Selling Shareholder will cause
the certificates representing the Shares to be made available for
checking and packaging at least twenty-four hours prior to the Time of
Delivery (as defined blow) with respect thereto at the office of
Xxxxxxxx Xxxxxx Refsnes, Inc., 0000 X. Xxxxxxx Xxx., Xxxxx 0000,
Xxxxxx, Xxxxx 00000-0000 or such other designated location (the
"Designated Office").
The time and date of such delivery and payment shall be, with
respect to the Firm Shares, 9:30 a.m., Central Standard Time, on
November ____, 1997 or such other time and date as Xxxxxxxx Xxxxxx
Refsnes, Inc. and the Company and the Selling Shareholder may agree
upon in writing, and, with respect to the Optional Shares, 9:30 a.m.,
Central Standard Time, on the date specified by Xxxxxxxx Xxxxxx
Refsnes, Inc. in the written notice given by Xxxxxxxx Xxxxxx Refsnes,
Inc. of the Underwriters' election to purchase such Optional Shares,
or such other time and date as Xxxxxxxx Xxxxxx Refsnes, Inc. and the
Company may agree upon in writing. Such time and date for delivery of
the Firm Shares is herein called the "First Time of Delivery", such
time and date for delivery of the Optional Shares, if not the First
Time of Delivery, is herein called the "Second Time of Delivery", and
each such time and date for delivery is herein called a "Time of
Delivery."
(b) The documents to be delivered at each Time of Delivery by
or on behalf of the parties hereto pursuant to Section 7 hereof,
including the cross-receipt for the Shares and any additional
documents requested by the Underwriters pursuant to Section 7(k)
hereof, will be delivered at the offices of Xxxxxx and Xxxxx, LLP, 000
Xxxx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxx 00000 (the "Closing
Location"), and the Shares will be delivered as specified in Section 4
above, all at such Time of Delivery. A meeting will be held at the
Closing Location at 2:00 p.m., Central Standard Time, on the New York
Business Day next preceding such Time of Delivery, at which meeting
the final drafts of the documents to be delivered pursuant to the
preceding sentence will be available for review by the parties hereto.
For the purposes of this Section 4, "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.
5. The Company and, with respect to clauses (f) and (l) below,
the Selling Stockholder agree with each of the Underwriters:
(a) To prepare the Prospectus in a form approved by you (such
approval not to be unreasonably withheld or delayed) and to file such
Prospectus pursuant to Rule 424(b) under the Securities Act not later
than the Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule 430A(a)(3)
under the Securities Act; to advise you promptly of the necessity to
make, and to make further amendments or supplements to the
Registration
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Statement or Prospectus in such form as has been previously approved
by you (such approval not to be unreasonably withheld or delayed); to
advise you, promptly after it receives notice thereof, of the time
when any amendment to the Registration Statement has been filed or
becomes effective or any supplement to the Prospectus or any amended
Prospectus has been filed and to furnish you copies thereof; to file
promptly all reports required to be filed by the Company with the
Commission pursuant to Section 13(a), 13(c) or 15(d) of the Exchange
Act subsequent to the date of the Prospectus and for so long as the
delivery of a prospectus is required in connection with the offering
or sale of the Shares; to advise you, promptly after it receives
notice thereof, of the issuance by the Commission of any stop order or
of any order preventing or suspending the use of any Preliminary
Prospectus or prospectus, of the suspension of the qualification of
the Shares for offering or sale in any jurisdiction, of the initiation
or threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional information;
and, to advise the Underwriters promptly of any order preventing or
suspending the use of the Preliminary Prospectus or the Prospectus, of
the suspension of the qualification of the Common Stock for offering
or sale in any jurisdiction and of the initiation or threatening of
any proceeding for any such purpose; and to use its reasonable best
efforts to prevent the issuance of any such order preventing or
suspending the use of the Preliminary Prospectus or of the Prospectus
or suspending any such qualification and, if any such suspension is
issued, to use its reasonable best efforts to obtain the lifting
thereof at the earliest possible time;
(b) To advise the Underwriters promptly, and, if requested by
the Underwriters confirm such advice in writing, of the issuance by
any state securities commission of any stop order suspending the
qualification or exemption of any of the Common Stock for offering or
sale in any jurisdiction, or the initiation of any proceeding for such
purpose by any state securities commission or other regulatory
authority, and to use its best efforts to prevent the issuance of any
stop order or order suspending the qualification or exemption of any
of the Common Stock under any state securities or Blue Sky laws, and
if, at any time, any state securities commission or other regulatory
authority shall issue an order suspending the qualification or
exemption of any of the Common Stock under any state securities or
Blue Sky laws, to use its best efforts to obtain the withdrawal or
lifting of such order at the earliest possible time;
(c) Promptly from time to time to take such action as you may
reasonably request to qualify the Shares for offering and sale under
the securities laws of the United States and such other jurisdictions
as the Underwriters may reasonably request and to comply with such
laws so as to permit the continuance of sales and dealings therein in
such jurisdictions for as long as may be necessary to complete the
distribution of the Shares; provided that in connection therewith the
Company shall not be required to qualify as a foreign corporation or
to file a general consent to service of process in any jurisdiction;
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(d) To furnish the Underwriters and counsel for the
Underwriters, without charge, with copies of the Prospectus in such
quantities as you may from time to time reasonably request, and, if
the delivery of a prospectus is required at any time prior to the
expiration of nine months after the time of issue of the Prospectus in
connection with the offering or sale of the Shares by the Underwriters
and if at such time any events shall have occurred as a result of
which the Prospectus as then amended or supplemented would include an
untrue statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made when such Prospectus is
delivered, not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the Prospectus in
order to comply with the Securities Act, to notify you (and, if
requested, to confirm such notification in writing) and upon your
request to prepare and furnish without charge to each Underwriter and
to any dealer in securities as many copies as you may from time to
time reasonably request of an amended Prospectus or a supplement to
the Prospectus which will correct such statement or omission or effect
such compliance, and in case any Underwriter is required to deliver a
prospectus in connection with sales of any of the Shares at any time
after nine months or more after the time of issue of the Prospectus,
upon your request but at the expense of such Underwriter, to prepare
and deliver to such Underwriter as many copies as you may request of
an amended or supplemented Prospectus complying with Section 10(a)(3)
of the Securities Act;
(e) To make generally available to its securityholders as
soon as practicable, but in any event not later than twelve months
after the effective date of the Registration Statement (as defined in
Rule 158(c) under the Securities Act), an earnings statement of the
Company and the Subsidiaries (which need not be audited) complying
with Section 11(a) of the Securities Act and the rules and regulations
of the Commission thereunder (including, at the option of the Company,
Rule 158);
(f) During the period beginning from the date hereof and
continuing to and including the date 90 days after the date of the
Prospectus, not, directly or indirectly, to offer to sell, sell,
pledge, contract to sell, grant any option for the sale of or
otherwise dispose of, except as provided hereunder, any securities of
the Company that are substantially similar to the Shares, including
but not limited to any securities that are convertible into or
exchangeable for, or that represent the right to receive, Common Stock
or any such substantially similar securities (other than pursuant to
employee stock incentive plans existing on, or upon the conversion or
exchange of convertible or exchangeable securities outstanding as of,
the date of this Agreement, without the prior written consent of
Xxxxxxxx Xxxxxx Refsnes, Inc.;
(g) During a period of five years from the effective date of
the Registration Statement, to furnish to the Company's stockholders
(i) as soon as practicable after the end of each fiscal year, but in
no event later than 90 days after the end of the applicable fiscal
year, an annual report (including statements of financial position,
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earnings and retained earnings and cash flows of the Company and its
consolidated subsidiaries certified by independent public accountants
and prepared in conformity with generally accepted accounting
principles in the U.S. ("GAAP")) and to file such annual report on
Form 10-K with the Commission and (ii) as soon as practicable after
the end of each of the first three quarters of each fiscal year but in
no event later than 45 days after the end of the applicable fiscal
quarter prepared in accordance with GAAP (beginning with the fiscal
quarter ending after the effective date of the Registration
Statement), a quarterly report (including a statement of financial
position, earnings and retained earnings and cash flows of the
Company) and its consolidated subsidiaries and to file such quarterly
report on Form 10-Q with the Commission;
(h) 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 shareholders of
the Company, and to deliver to you as soon as they are available,
copies of any reports and financial statements of the Company
furnished to or filed with the Commission or any securities exchange
on which any class of securities of the Company is listed;
(i) To maintain a transfer agent and, if necessary under the
laws of the jurisdiction of incorporation of the Company, a registrar
(which may be the same entity as the transfer agent) for the Common
Stock;
(j) 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";
(k) To use its reasonable best efforts to do and perform all
things required to be done and performed under this Agreement by it
that are within its control prior to or after the Closing Date and to
use reasonable efforts to satisfy all conditions precedent on its part
to the delivery of the Securities;
(l) Not to (and to cause each of the Subsidiaries not to)
take, directly or indirectly, any action which is designed to or which
constitutes or which might reasonably be expected to cause or result
in stabilization or manipulation of the price of any security of the
Company or facilitate the sale or resale or the Shares;
(m) Prior to the Closing Date, to not issue any press release
or other communication directly or indirectly or hold any press
conference with respect to the Company, its condition, financial or
otherwise, or earnings, business affairs or business prospects,
without the prior consent of the Underwriters, unless in the judgment
of the Company and its counsel, and after notification to the
Underwriters, such press release or communication is required by law,
and then, only after consultation with the Underwriters;
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(n) To list, subject to notice of issuance, the Shares on the
American Stock Exchange;
(o) In connection with the Offering, to make its officers,
employees, independent accountants and legal counsel reasonably
available upon request by the Underwriters;
(p) In connection with the Offering, to make its officers,
employees, independent accountants and legal counsel reasonably
available upon request by the Underwriters; and
(q) To not take any action prior to the Closing Date which in
the Company's reasonable judgment would require the Prospectus to be
amended or supplemented.
6. The Company covenants and agrees with the several Underwriters
that (a) the Company will pay or cause to be paid, to the extent not otherwise
previously paid by the Selling Shareholder, the following: (i) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Shares under the Securities Act and all
other expenses in connection with the preparation, printing and filing of the
Registration Statement, any Preliminary Prospectus and the Prospectus and
amendments and supplements thereto and the mailing and delivering of copies
thereof to the Underwriters and dealers; (ii) the cost of printing or producing
any Agreement among Underwriters, this Agreement, the Selling Agreements, the
Blue Sky Memorandum, closing documents (including compilations thereof) and any
other documents in connection with the offering, purchase, sale and delivery of
the Shares; (iii) all expenses in connection with the qualification of the
Shares for offering and sale under state securities laws as provided in Section
5 hereof, including the fees and disbursements of counsel for the Underwriters
in connection with such qualification and in connection with the Blue Sky
survey; (iv) all fees and expenses in connection with listing the Shares on the
American Stock Exchange; (v) the filing fees incident to, and the fees and
disbursements of counsel for the Underwriters in connection with, securing any
required review by the National Association of Securities Dealers, Inc. of the
terms of the sale of the Shares; (vi) the fees and expenses of the Authorized
Agent (as defined in Section 15 hereof); (vii) the cost of preparing share
certificates; (viii) the cost and charges of any transfer agent or registrar;
(ix) all other costs and expenses incident to the performance of its
obligations hereunder which are not otherwise specifically provided for in this
Section; (x) any fees and expenses of counsel for the Selling Shareholder and
(xi) all expenses and taxes incident to the sale and delivery of the Shares to
be sold by the Selling Shareholder to the Underwriters hereunder. In
connection with clause (xi) of the preceding sentence, Xxxxxxxx Xxxxxx Refsnes,
Inc. agrees to pay [NEW YORK STATE STOCK TRANSFER TAX], and the Selling
Shareholder agrees to reimburse Xxxxxxxx Xxxxxx Refsnes, Inc. for associated
carrying costs if such tax payment is not rebated on the day of payment and for
any portion of such tax payment not rebated. It is understood, however, that
the Company shall bear, and the Selling Shareholder shall not be required to
pay or to reimburse the Company for, the cost of any other matters not directly
relating to the sale and purchase of the Shares pursuant to this Agreement, and
that, except as provided in
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this Section, and Sections 8 and 11 hereof, the Underwriters will pay all of
their own costs and expenses, including the fees of their counsel, stock
transfer taxes on resale of any of the Shares by them, and any advertising
expenses connected with any offers they may make.
7. The obligations of the Underwriters hereunder, as to the
Shares to be delivered at each Time of Delivery shall be subject, in their
discretion, to the condition that all representations and warranties and other
statements of the Company and of the Selling Shareholder herein are, at and as
of such Time of Delivery, true and correct, the condition that the Company and
the Selling Shareholder shall have performed all of its and their obligations
hereunder theretofore to be performed, and the following additional conditions:
(a) The Prospectus shall have been filed with the Commission
pursuant to Rule 424(b) within the applicable time period prescribed
for such filing by the rules and regulations under the Securities Act
and in accordance with Section 5(a) hereof; no stop order suspending
the effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceeding for that purpose shall have
been initiated or threatened by the Commission and all requests for
additional information on the part of the Commission shall have been
complied with to your reasonable satisfaction;
(b) Xxxxxx and Xxxxx, LLP, counsel for the Underwriters, shall
have furnished to you such opinion or opinions, dated such Time of
Delivery, in form and substance satisfactory to you, and such counsel
shall have received such papers and information as they may reasonably
request to enable them to pass upon such matters;
(c) Xxxxxxxx & Knight, P.C., counsel for the Company and the
Selling Shareholder, shall have furnished to you their written
opinion, dated such Time of Delivery, in form and substance
satisfactory to you, to the effect that:
(i) The Company and each of its Subsidiaries has
been duly incorporated and is validly existing as a
corporation (or, with respect to Xxxxxx Xxxxxxx, as a limited
liability company) in good standing under the laws of its
jurisdiction of incorporation or formation, with corporate or
other power and authority to own its properties and conduct
its business as described in the Prospectus;
(ii) The Company and each of its Subsidiaries has
been duly qualified as a foreign corporation (or, with respect
to Xxxxxx Xxxxxxx, as a foreign limited liability company) for
the transaction of business and is in good standing under the
laws of each other jurisdiction in which it owns or leases
properties, or conducts any business, so as to require such
qualification, other than where the failure to be so qualified
or in good standing would not result in a material adverse
change in or affecting the general affairs, management,
prospects, current or future consolidated financial position,
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stockholders' equity or results of operations of the Company
and the Subsidiaries, taken as a whole;
(iii) This Agreement has been duly executed and
delivered by the Company and the Selling Shareholder under the
laws of the State of Texas;
(iv) All of the issued shares of capital stock of
the Company (including the Shares being delivered to the
Underwriters on the Closing Date or the Additional Closing
Date, as the case may be, against payment therefor in
accordance with the Agreement) have been duly authorized and
validly issued, are fully paid and nonassessable are owned by
the Company, directly or through one or more Subsidiaries, in
either case free and clear of any liens, charges, claims,
pledges, security interests or encumbrances of any kind
whatsoever other than as disclosed in the Prospectus and have
not been issued in violation of or subject to any preemptive
rights arising under the Company's Articles of Incorporation
or Bylaws or under the laws of the state of Nevada or, to the
knowledge of such counsel, similar rights that entitle or will
entitle any person to acquire any shares of Common Stock upon
issuance of such shares of capital stock by the Company;
(v) All offers and sales of the Company's capital
stock prior to the date hereof were made in compliance with or
were the subject of an available exemption from the
registration provisions of the Securities Act and the
registration provisions of the State of Nevada and all other
applicable federal laws or regulations or any actions under
the Securities Act or any federal laws or regulations or laws
or regulations of the State of Nevada in respect of any such
offers or sales are effectively barred by effective waivers or
statutes of limitation;
(vi) Except as disclosed in the Prospectus, to the
best of such counsel's knowledge, there are no outstanding
subscriptions, rights, warrants, options, calls, convertible
securities, commitments of sale or liens related to or
entitling any person to purchase or otherwise to acquire any
shares of the capital stock of, or other ownership interest
in, the Company or any of the Subsidiaries;
(vii) The execution and delivery by the Company of
this Agreement, the performance by the Company hereunder or
thereunder, the compliance by the Company with the provisions
hereof and thereof and the consummation of the transactions
contemplated hereby and thereby, each in accordance with its
terms, do not and will not conflict with or result in any
breach or violation of, constitute a default under or result
in the creation or imposition of any lien, charge, claim,
pledge, security interest or other encumbrance upon any
property or assets of the Company, the Subsidiaries or the
Selling Shareholder pursuant to the terms of (A) the charter
or by-laws of the Company or any of the Subsidiaries, (B) any
license, contract,
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indenture, mortgage, deed of trust, voting trust agreement,
stockholders' agreement, note, loan or credit agreement or
other agreement or instrument known to such counsel to which
the Company, any of the Subsidiaries or the Selling
Shareholder is a party or by which any of them is or may be
bound or to which any of their respective properties or assets
is or may be subject, except for such conflicts, breaches,
violations, defaults and creations or impositions which in the
aggregate would not have a Material Adverse Effect, or (C) any
statute, rule or regulation or, to the best of such counsel's
knowledge, any judgment, decree or order applicable to the
Company, any of the Subsidiaries or the Selling Shareholder of
any arbitrator, court, regulatory body or administrative
agency or other governmental agency or body having
jurisdiction over the Company, any of the Subsidiaries or the
Selling Shareholder or any of their respective activities or
properties, except with respect to this clause (C) for such
conflicts, breaches, violations, defaults and creations or
impositions which in the aggregate would not have a Material
Adverse Effect. Such counsel need express no opinion in this
paragraph (vi) as to (A) state securities or Blue Sky laws or
(B) with respect to matters of fact relating to compliance
with any financial covenants, ratios or tests or any aspect of
the financial condition or results of operations of the
Company;
(viii) The descriptions in the Prospectus and the
Registration Statement of any of the agreements and documents
to which the Company or any of the Subsidiaries is a party or
by which any of them or their respective properties are bound,
including any such agreement or document incorporated by
reference into the Prospectus, or of any statutes, are
accurate in all material respects and fairly present the
subject matter thereof;
(ix) No Governmental Authorization is required for
the issue and sale of the Shares by the Company or the sale of
the Shares by the Selling Shareholder or the consummation by
the Company or the Selling Shareholder of the transactions
contemplated by this Agreement, except the registration under
the Securities Act of the Shares, and such consents,
approvals, authorizations, registrations or qualifications as
may be required under state securities or Blue Sky laws or the
Bylaws, rules and regulations of the National Association of
Securities Dealers, Inc. in connection with the purchase and
distribution of the Shares by the Underwriters;
(x) The authorized, the issued and the issued and
outstanding capital stock of the Company set forth in the
Prospectus is true and correct in all material respects and
the authorized capital stock of the Company conforms as to
legal matters in all material respects to the description
thereof contained in the Prospectus;
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(xi) The statements in the Prospectus under the
captions "Description of Capital Stock," "Risk Factors --
Shares Eligible for Future Sale" and "Underwriting," and in
the Registration Statement in Items ____ and, insofar as such
statements constitute a summary of the terms of the Common
Stock, legal matters or documents or proceedings referred to
therein, fairly present the information called for with
respect to such terms, legal matters, documents or proceedings
in all material respects;
(xii) Such counsel has reviewed all agreements,
contracts, indentures, leases or other documents or
instruments described in the Registration Statement and the
Prospectus under the captions "Management's Discussion and
Analysis of Financial Condition and Results of Operations --
Liquidity and Capital Resources," "Description of
Indebtedness," "Risk Factors -- Shares Eligible for Future
Sale," and "____________________" and such agreements,
contracts, indentures, leases or other documents or
instruments are fairly summarized or described therein in all
material respects, and filed as exhibits to the Registration
Statement as required;
(xiii) To the best of such counsel's knowledge,
there is no action, arbitration, suit, or other proceeding
pending or threatened in writing or any judgments outstanding
against the Company, any of the Subsidiaries, or the Selling
Shareholder or involving the properties or business of the
Company or any of the Subsidiaries which (A) questions the
validity of the capital stock of the Company or any of the
Subsidiaries or of this Agreement or of any action taken or to
be taken by the Company or any of the Subsidiaries pursuant to
or in connection with any of the foregoing or (B) except as
disclosed in the Prospectus, could have a Material Adverse
Effect;
(xiv) To the knowledge of such counsel, no holders
of securities of the Company have rights to the registration
thereof under the Registration Statement or, if any such
holders have such rights, such holders have waived such
rights;
(xv) Neither the Company nor the Selling Shareholder
is an "investment company" or an entity "controlled" by an
"investment company", as such terms are defined in the
Investment Company Act;
(xvi) The Company has the corporate power and
authority to execute, deliver and perform this Agreement and
to consummate the transactions provided for herein; the
execution and delivery of this Agreement has been duly
authorized by all requisite corporate action on the part of
the Company and this Agreement has been duly executed and
delivered by the Company, and, assuming due authorization,
execution and delivery by each other party thereto,
constitutes a legal, valid and binding agreement of the
Company enforceable against the Company in accordance with its
terms; except to the extent that enforcement thereof may be
limited by (A) bankruptcy,
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insolvency, reorganization, moratorium or other similar laws
now or hereafter in effect relating to creditors' rights
generally and (B) general principles of equity (regardless of
whether enforceability is considered in a proceeding at law or
in equity) and except to the extent that rights to
indemnification and contribution contained in this Agreement
may be limited by federal or state securities laws or public
policy relating thereto;
(xvii) The Selling Shareholder has full right, power
and authority to sell, assign, transfer and deliver such
Shares hereunder;
(xviii) Assuming that the Selling Shareholder
acquired its interest in the Shares in good faith and without
notice of any adverse claims, upon delivery of the Shares
registered in its name to the Underwriters in the State of
[NEW YORK], the Underwriters will acquire all of the Selling
Shareholder's rights in the Shares free of any adverse claims
[(WITHIN THE MEANING OF SECTION 8-302 OF THE NEW YORK UCC)];
(xix) To the knowledge of such counsel, the Company
and the Subsidiaries are not in violation of their charters or
bylaws; neither the Company nor any of the Subsidiaries is in
breach of, or in default with respect to, any provisions of
any license, contract, indenture, mortgage, deed of trust,
voting trust agreement, stockholders' agreement, note, loan or
credit agreement or other agreement or instrument known to
such counsel to which the Company or any of the Subsidiaries
is a party or by which any of them is or may be bound or to
which any of their respective properties or assets is or may
be subject, except for such breaches or defaults as would not
have a Material Adverse Effect, and to the knowledge of such
counsel, the Company and the Subsidiaries are in material
compliance with all laws, rules and regulations and all
judgments, decrees and orders of any judicial or governmental
authority to which the Company or any of the Subsidiaries or
by which any of them is or may be bound or to which any of
their respective properties or assets is or may be subject,
except for such noncompliance as would not have a Material
Adverse Effect;
(xx) The Registration Statement has become effective
under the Securities Act, and, to such counsel's knowledge, no
stop order suspending the effectiveness of the Registration
Statement or any part thereof has been issued and no
proceedings for that purpose have been instituted or are
pending under the Securities Act;
(xxi) The Registration Statement and the Prospectus
and any further amendments and supplements thereto made by the
Company prior to such Time of Delivery (other than the
financial statements and related schedules , as to which such
counsel need express no opinion) comply as to form in all
material respects with the requirements of the Securities Act
and the rules and regulations thereunder; such counsel may
state that because the
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primary purpose of their engagement was not to establish or
confirm factual matters or financial, accounting or
statistical matters and because of the wholly or partially
non-legal character of many of the statements contained in the
Registration Statement and the Prospectus, such counsel is not
passing upon and does not assume any responsibility for the
accuracy, completeness or fairness of the statements contained
in the Registration Statement or the Prospectus (except to the
extent expressly set forth in paragraphs (x) and (xi) above),
and they have not independently verified the accuracy,
completeness or fairness of such statements (except as
aforesaid). Without limiting the foregoing, such counsel may
state that they assume no responsibility for and have not
independently verified the accuracy, completeness or fairness
of the financial statements included in the Registration
Statement and the Prospectus and they have not examined the
accounting or financial records from which such statements and
data are derived. Such counsel may state that although
certain portions of the Registration Statement and the
Prospectus have been included therein on the authority of
"experts" within the meaning of the Securities Act, they are
not experts with respect to any portion of the Registration
Statement or the Prospectus. However, such counsel may state
that they have participated in conferences with officers,
legal counsel and other representatives of the Company,
representatives of the independent accountants of the Company,
and with representatives of, and legal counsel for, the
Underwriters, at which the contents of the Registration
Statement and Prospectus and related matters were discussed.
Such counsel may state that they have also reviewed certain
corporate documents furnished to them by the Company. Based
on such participation and review (relying as to materiality to
a certain extent upon the officers and the other
representatives of the Company), and subject to the
limitations described above, such counsel may state that they
advise the Underwriters that no facts have come to their
attention that causes them to believe that the Registration
Statement at the time it became effective, contained an untrue
statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus, as
of its date or as of the date hereof, contained or contains an
untrue statement of a material fact or omitted or omits to
state a material fact necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; and such counsel may state that to
their knowledge there are no contracts or other documents of a
character required to be filed as an exhibit to the
Registration Statement which are not filed as required.
In rendering such opinion, such counsel may state that they express no
opinion as to the laws of any jurisdiction outside the United States;
(d) On the date of the Prospectus of a time prior to the
execution of this Agreement, at 9:30 a.m., Central Standard Time, on
the effective date of any post-
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effective amendment to the Registration Statement filed subsequent to
the date of this Agreement and also at each Time of Delivery, Deloitte
& Touche LLP and Xxxx + Associates LLP shall have furnished to you a
letter or letters, dated the respective dates on delivery thereof, in
form and substance satisfactory to you, to the effect set forth in
Annex I hereto;
(e) (i) Neither the Company nor any of the Subsidiaries
shall have sustained since the date of the latest audited financial
statements included in the Prospectus any material 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
or any increase in long-term debt of the Company or any of the
Subsidiaries, taken as a whole, or any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, prospects, current or
future consolidated financial position, stockholders' equity or
results of operations of the Company and the Subsidiaries, taken as a
whole, otherwise than as set forth or contemplated in the Prospectus,
the effect of which, in any such case described in Clause (i) or (ii),
is in the judgment of the Representatives so material and adverse as
to make 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;
(f) On or after the date hereof there shall not have occurred
any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange,
American Stock Exchange, the Nasdaq National Market or any other
nationally recognized exchange; (ii) a suspension or material
limitation in trading in the Company's securities on the American
Stock Exchange; (iii) a general moratorium on commercial banking
activities in New York, Texas or Japan declared by the relevant
authorities; or (iv) the outbreak or escalation of hostilities
involving the United States, or the declaration by the United States
of a national emergency or war, if the effect of any such event
specified in this Clause (iv) 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;
(g) The Shares to be sold by the Company and the Selling
Shareholder at such Time of Delivery shall have been duly listed on
the American Stock Exchange;
(h) The Company shall have furnished or caused to be
furnished to you at such Time of Delivery certificates of officers of
the Company, in their respective capacities as such, satisfactory to
you as to the accuracy of the representations and warranties of the
Company and the Selling Shareholder, respectively, herein at and
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as of such Time of Delivery, as to the performance by the Company and
the Selling Shareholder of all of their respective obligations
hereunder to be performed at or prior to such Time of Delivery, and as
to such other matters as you may reasonably request, and the Company
shall have furnished or caused to be furnished certificates as to the
matters set forth in subsections (a) and (g) of this Section, and as
to such other matters as you may reasonably request;
(i) The Company has obtained and delivered to the
Underwriters executed copies of an agreement from each of the
executive officers and directors of the Company, substantially to the
effect set forth in Subsection 5(e) hereof in form and substance
satisfactory to you; and
8. (a) The Company, the Selling Shareholder, jointly and
severally, will indemnify and hold harmless each Underwriter against
any losses, claims, damages or liabilities, joint or several, to which
such Underwriter may become subject, under the Securities Act or
otherwise, insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact contained in
any Preliminary Prospectus, the Registration Statement or the
Prospectus, any amendment or supplement thereto, or arise out of or
are based upon the omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending any such
action or claim as such expenses are incurred; provided, however, that
the Company, the Selling Shareholder shall not be liable in any such
case to the extent that any such loss, claim, damage or liability
arises out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any Preliminary
Prospectus, the Registration Statement or the Prospectus or any such
amendment or supplement in reliance upon and in conformity with
written information furnished to the Company by any Underwriter
through Xxxxxxxx Xxxxxx Refsnes, Inc. expressly for use therein;
provided, further, that the liability of the Selling Shareholder
pursuant to this subsection (a) shall not exceed the product of the
number of Shares sold by the Selling Shareholder including any
Optional Shares and the initial public offering price of the Shares as
set forth in the Prospectus.
(b) Each Underwriter will indemnify and hold harmless the
Company and the Selling Shareholder against any losses, claims,
damages or liabilities to which the Company or the Selling Shareholder
may become subject, under the Securities Act or otherwise, insofar as
such losses, claims, damages or liabilities (or actions in respect
thereof) arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in any Preliminary
Prospectus, the Registration Statement or the Prospectus, or any
amendment or supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact required
to be stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the
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extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any Preliminary Prospectus,
the Registration Statement or the Prospectus or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through Xxxxxxxx Xxxxxx
Refsnes, Inc. expressly for use therein; and will reimburse the
Company and the Selling Shareholder for any legal or other expenses
reasonably incurred by the Company or the Selling Shareholder in
connection with investigating or defending any such action or claim as
such expenses are incurred.
(c) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against an indemnifying party under such subsection, notify
the indemnifying party in writing of the commencement thereof; but the
omission so to notify the indemnifying party shall not relieve it from
any liability which it may have to any indemnified party otherwise
than under such subsection. In case any such action 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 therein and, to the extent that it shall wish,
jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such
indemnified party (which shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and, after
notice from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying party
shall not be liable to such indemnified party under such subsection
for any legal expenses of other counsel or any other expenses, in each
case subsequently incurred by such indemnified party, in connection
with the defense thereof other than reasonable costs of investigation.
No indemnifying party shall, without the written consent of the
indemnified party, effect the settlement or compromise of, or consent
to the entry of any judgment with respect to, any pending or
threatened action or claim in respect of which indemnification or
contribution may be sought hereunder (whether or not the indemnified
party is an actual or potential party to such action or claim) unless
such settlement, compromise or judgment (i) includes an unconditional
release of the indemnified party from all liability arising out of
such action or claim and (ii) does not include a statement as to or an
admission of fault, culpability or a failure to act, by or on behalf
of any indemnified party.
(d) If the indemnification provided for in this Section 8 is
unavailable to or insufficient to hold harmless an indemnified party
under subsection (a), (b) or (c) above in respect of any losses,
claims, damages or liabilities (or actions in respect thereof)
referred to therein, then each indemnifying party shall contribute to
the amount paid or payable by such indemnified party as a result of
such losses, claims, damages or liabilities (or actions in respect
thereof) in such proportion as is appropriate to reflect the relative
benefits received by the Company and the Selling Shareholder on the
one hand and the Underwriters on the other from the offering
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of the Shares. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable law or
if the indemnified party failed to give the notice required under
subsection (d) above, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only such relative
benefits but also the relative fault of the Company and the Selling
Shareholder on the one hand and the Underwriters on the other in
connection with the statements or omissions which resulted in such
losses, claims, damages or liabilities (or actions in respect
thereof), as well as any other relevant equitable considerations. The
relative benefits received by the Company and the Selling Shareholder
on the one hand and the Underwriters on the other shall be deemed to
be in the same proportion as the total net proceeds from the offering
of the Shares purchased under this Agreement (before deducting
expenses) received by the Company and the Selling Shareholder bear to
the total underwriting discounts and commissions received by the
Underwriters with respect to the Shares purchased under this
Agreement, in each case as set forth in the table on the cover page of
the Prospectus. The relative fault shall be determined by reference
to, among other things, whether the untrue or alleged untrue statement
of a material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company or the
Selling Shareholder on the one hand or the Underwriters on the other
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission. The
Company, the Selling Shareholder and the Underwriters agree that it
would not be just and equitable if contributions pursuant to this
subsection (e) 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 in this subsection (e).
The amount paid or payable by an indemnified party as a result of the
losses, claims, damages or liabilities (or actions in respect thereof)
referred to above in this subsection (e) shall be deemed to include
any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or
claim. Notwithstanding the provisions of this subsection (e), no
Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Shares underwritten
by it and distributed to the public were offered to the public exceeds
the amount of any damages which such Underwriter has otherwise been
required to pay by reason of such untrue or alleged untrue statement
or omission or alleged omission. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations in this subsection (e) to contribute are
several in proportion to their respective underwriting obligations and
not joint.
(e) The obligations of the Company, the Selling Shareholder
under this Section 8 shall be in addition to any liability which the
Company, the Selling Shareholder may otherwise have and shall extend,
upon the same terms and conditions, to each person, if any, who
controls any Underwriter within the
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meaning of the Securities Act; and the obligations of the Underwriters
under this Section 8 shall be in addition to any liability which the
respective Underwriters may otherwise have and shall extend, upon the
same terms and conditions, to each officer and director of the Company
(including any person who, with his or her consent, is named in the
Registration Statement as about to become a director of the Company)
and to each person, if any, who controls the Company within the
meaning of the Securities Act.
9. (a) If any Underwriter shall default in its obligation to
purchase the Shares which it has agreed to purchase hereunder at a
Time of Delivery, you may in your discretion arrange for you or
another party or other parties to purchase such Shares on the terms
contained herein. If within thirty-six hours after such default by
any Underwriter you do not arrange for the purchase of such Shares,
then the Company and the Selling Shareholder shall be entitled to a
further period of thirty-six hours within which to procure another
party or other parties satisfactory to you to purchase such Shares on
such terms. In the event that, within the respective prescribed
periods, you notify the Company and the Selling Shareholder that you
have so arranged for the purchase of such Shares, or the Company and
the Selling Shareholder notify you that they have so arranged for the
purchase of such Shares, you or the Company and the Selling
Shareholder shall have the right to postpone such Time of Delivery for
a period of not more than seven days, in order to effect whatever
changes may thereby be made necessary in the Registration Statement or
the Prospectus, or in any other documents or arrangements, and the
Company agrees to file promptly any amendments to the Registration
Statement or the Prospectus which in your opinion may thereby be made
necessary. The term "Underwriter" as used in this Agreement shall
include any person substituted under this Section with like effect as
if such person had originally been a party to this Agreement with
respect to such Shares.
(b) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by
you and the Company and the Selling Shareholder as provided in
subsection (a) above, the aggregate number of such Shares which
remains unpurchased does not exceed one-tenth of the aggregate number
of all of the Shares to be purchased at such Time of Delivery, then
the Company and the Selling Shareholder shall have the right to
require each non-defaulting Underwriter to purchase the number of
Shares which such Underwriter agreed to purchase hereunder at such
Time of Delivery and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of
Shares which such Underwriter agreed to purchase hereunder) of the
Shares of such defaulting Underwriter or Underwriters for which such
arrangements have not been made; but nothing herein shall relieve a
defaulting Underwriter from liability for its default.
(c) If, after giving effect to any arrangements for the
purchase of the Shares of a defaulting Underwriter or Underwriters by
you and the Company and the Selling Shareholder as provided in
subsection (a) above, the aggregate number of
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such Shares which remains unpurchased exceeds one-tenth of the
aggregate number of all of the Shares to be purchased at such Time of
Delivery, or if the Company and the Selling Shareholder shall not
exercise the right described in subsection (b) above to require
non-defaulting Underwriters to purchase Shares of a defaulting
Underwriter or Underwriters, then this Agreement (or, with respect to
the Second Time of Delivery, the obligations of the Underwriters to
purchase and of the Selling Shareholder to sell the Optional Shares)
shall thereupon terminate, without liability on the part of any
non-defaulting Underwriter or the Company or the Selling Shareholder,
except for the expenses to be borne by the Company and the Selling
Shareholder and the Underwriters as provided in Section 6 hereof and
the indemnity and contribution agreements in Section 8 hereof; but
nothing herein shall relieve a defaulting Underwriter from liability
for its default.
10. The respective indemnities, agreements, representations,
warranties and other statements of the Company, the Selling Shareholder and the
several Underwriters, as set forth in this Agreement or made by or on behalf of
them, respectively, pursuant to this Agreement, shall remain in full force and
effect, regardless of any investigation (or any statement as to the results
thereof) made by or on behalf of any Underwriter or any controlling person of
any Underwriter or the Company, or any officer or director or controlling
person of the Company, and shall survive delivery of and payment for the
Shares.
11. If this Agreement shall be terminated pursuant to Section 9
hereof, neither the Company nor the Selling Shareholder shall then be under any
liability to any Underwriter except as provided in Sections 6 and 8 hereof;
but, if for any other reason any Shares are not delivered by or on behalf of
the Company and the Selling Shareholder as provided herein, the Company and the
Selling Shareholder pro rata (based on the number of Shares to be sold by the
Company and the Selling Shareholder hereunder) will reimburse the Underwriters
through you for all out-of-pocket expenses approved in writing by you,
including fees and disbursements of counsel, reasonably incurred by the
Underwriters in making preparations for the purchase, sale and delivery of the
Shares not so delivered, but the Company and the Selling Shareholder shall then
be under no further liability to any Underwriter in respect of the Shares not
so delivered except as provided in Sections 6 and 8 hereof.
12. In all dealings hereunder, you shall act on behalf of each of
the Underwriters, and the parties hereto shall be entitled to act and rely upon
any statement, request, notice or agreement on behalf of any Underwriter made
or given by you jointly or by Xxxxxxxx Xxxxxx Refsnes, Inc. on behalf of you as
the representatives; and in all dealings with the Selling Shareholder
hereunder, you and the Company shall be entitled to act and rely upon any
statement, request, notice or agreement on behalf of Selling Shareholder made
or given by the Selling Shareholder.
All statements, requests, notices and agreements hereunder shall be in
writing, and if to the Underwriters shall be delivered or sent by mail, telex
or facsimile transmission to you in care of Xxxxxxxx Xxxxxx Refsnes, Inc., 0000
X. Xxxxxxx Xxx., Xxxxx 0000, Xxxxxx,
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Texas 75204-2936, Attention: [REGISTRATION DEPARTMENT]; if to the Selling
Shareholder shall be delivered or sent by mail, telex or facsimile transmission
to the Selling Shareholder at Magnum Hunter Resources, Inc., 000 Xxxx Xxx
Xxxxxxx Xxxx., Xxxxx 0000, Xxxxxx, Xxxxx 00000; and if to the Company shall be
delivered or sent by mail, telex or facsimile transmission to the address of
the Company set forth in the Registration Statement, Attention: Secretary;
provided, however, that any notice to an Underwriter pursuant to Section 8(d)
hereof shall be delivered or sent by mail, telex or facsimile transmission to
such Underwriter at its address set forth in its Underwriters' Questionnaire or
telex constituting such Questionnaire, which address will be supplied to the
Company or the Selling Shareholder by you upon request. Any such statements,
requests, notices or agreements shall take effect upon receipt thereof.
13. This Agreement shall be binding upon, and inure solely to the
benefit of, the Underwriters, the Company and the Selling Shareholder and, to
the extent provided in Sections 8 and 10 hereof, the officers and directors of
the Company and each person who controls the Company or any Underwriter, and
their respective heirs, executors, administrators, successors and assigns, and
no other person shall acquire or have any right under or by virtue of this
Agreement. No purchaser of any of the Shares from any Underwriter shall be
deemed a successor or assign by reason merely of such purchase.
14. Each of the parties hereto irrevocably (i) agrees that any
legal suit, action or proceeding against the Company or the Selling Shareholder
brought by any Underwriter or by any person who controls any Underwriter
arising out of or based upon this Agreement or the transactions contemplated
hereby may be instituted in any [NEW YORK COURT], (ii) waives, to the fullest
extent it may effectively do so, any objection which it may now or hereafter
have to the laying of venue of any such proceeding and (iii) submits to the
jurisdiction of such courts in any such suit, action or proceeding. Each of
the Company and the Selling Shareholder has appointed [CT CORPORATION SYSTEM,
NEW YORK, NEW YORK], as its authorized agent (the "Authorized Agent") upon whom
process may be served in any such action arising out of or based on this
Agreement or the transactions contemplated hereby which may be instituted in
any [NEW YORK COURT] by any Underwriter or by any person who controls any
Underwriter, expressly consents to the jurisdiction of any such court in
respect of any such action, and waives any other requirements of or objections
to personal jurisdiction with respect thereto. Such appointment shall be
irrevocable. Each of the Company and the Selling Shareholder represents and
warrants that the Authorized Agent has agreed to act as such agent for service
of process and agrees to take any and all action, including the filing of any
and all documents and instruments, that may be necessary to continue such
appointment in full force and effect as aforesaid. Service of process upon the
Authorized Agent and written notice of such service to the Company and the
Selling Shareholder, as the case may be, shall be deemed, in every respect,
effective service of process upon the Company and the Selling Shareholder as
the case may be.
15. In respect of any judgment or order given or made for any
amount due hereunder that is expressed and paid in a currency (the "judgment
currency") other than United States dollars, the Company and the Selling
Shareholder, as the case may be, will
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indemnify each Underwriter against any loss incurred by such Underwriter as a
result of any variation as between (i) the rate of exchange at which the United
States dollar amount is converted into the judgment currency for the purpose of
such judgment or order and (ii) the rate of exchange at which an Underwriter is
able to purchase United States dollars with the amount of the judgment currency
actually received by such Underwriter. The foregoing indemnity shall
constitute a separate and independent obligation of the Company and the Selling
Shareholder and shall continue in full force and effect notwithstanding any
such judgment or order as aforesaid. The term "rate of exchange" shall include
any premiums and costs of exchange payable in connection with the purchase of
or conversion into United States dollars.
16. Time shall be of the essence of this Agreement. As used
herein, the term "business day" shall mean any day when the Commission's office
in Washington, D.C. is open for business.
17. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS.
18. This Agreement may be executed by any one or more of the
parties hereto in any number of counterparts, each of which shall be deemed to
be an original, but all such counterparts shall together constitute one and the
same instrument.
* * * * *
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If the foregoing is in accordance with your understanding, please sign
and return to us eight (8) counterparts hereof, and upon the acceptance hereof
by you, on behalf of each of the Underwriters, this letter and such acceptance
hereof shall constitute a binding agreement among each of the Underwriters, the
Company and the Selling Shareholder. It is understood that your acceptance of
this letter on behalf of each of the Underwriters is pursuant to the authority
set forth in a form of Agreement among Underwriters, the form of which shall be
submitted to the Company and the Selling Shareholder for examination upon
request, but without warranty on your part as to the authority of the signers
thereof.
Very truly yours,
MAGNUM HUNTER, RESOURCES, INC.
("COMPANY")
By:
----------------------------------
Name:
--------------------------------
Title:
-------------------------------
-------------------------------------
XXXX X. XXXXX ("SELLING SHAREHOLDER")
Accepted as of the date hereof at Dallas, Texas
XXXXXXXX XXXXXX REFSNES, INC.
XXXXXXXXXXX & CO., INC.
XXXXXXX RICE & COMPANY L.L.C.
XXX XXXXXX & COMPANY
By:
----------------------------
(Xxxxxxxx Xxxxxx Refsnes, Inc.)
On behalf of each of the Underwriters
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SCHEDULE I
Total Number of Firm Number of Optional Shares
Shares to be to be Purchased if
Underwriter Purchased Maximum Option Exercised
----------- --------- ------------------------
Xxxxxxxx Xxxxxx Refsnes, Inc. . . . . . . . . . . . . . . . .
Xxxxxxxxxxx & Co., Inc. . . . . . . . . . . . . . . . . . . .
Xxxxxxx Xxxx & Company L.L.C. . . . . . . . . . . . . . . . .
Xxx Xxxxxx & Company . . . . . . . . . . . . . . . . . . . .
--------- ---------
6,650,000 997,500
========= =========
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ANNEX I
Pursuant to Section 7(f) of the Underwriting Agreement, the
accountants shall furnish letters to the Underwriters to the effect that:
(i) They are independent certified public
accountants with respect to the Company and the Subsidiaries
within the meaning of the Securities Act and the applicable
published rules and regulations thereunder;
(ii) In their opinion, the financial statements and
any supplementary financial information and schedules (and, if
applicable, financial forecasts and/or pro forma financial
information) examined by them and included in the Prospectus
or the Registration Statement comply as to form in all
material respects with the applicable accounting requirements
of the Securities Act and the related published rules and
regulations thereunder; and, if applicable, they have made a
review in accordance with standards established by the
American Institute of Certified Public Accountants of the
unaudited consolidated interim financial statements, selected
financial data, pro forma financial information, financial
forecasts and/or condensed financial statements derived from
audited financial statements of the Company for the periods
specified in such letter, as indicated in their reports
thereon, copies of which have been separately furnished to the
representatives of the Underwriters (the "Representatives");
(iii) They have made a review in accordance with
standards established by the American Institute of Certified
Public Accountants of the unaudited condensed consolidated
statements of income, consolidated balance sheets and
consolidated statements of cash flows included in the
Prospectus as indicated in their reports thereon copies of
which have been separately furnished to the Representatives;
and on the basis of specified procedures including inquiries
of officials of the Company who have responsibility for
financial and accounting matters regarding whether the
unaudited condensed consolidated financial statements referred
to in paragraph (vi)(A)(i) below comply as to form in all
material respects with the applicable accounting requirements
of the Securities Act and the related published rules and
regulations, nothing came to their attention that caused them
to believe that the unaudited condensed consolidated financial
statements do not comply as to form in all material respects
with the applicable accounting requirements of the Securities
Act and the related published rules and regulations;
(iv) The unaudited selected financial information
with respect to the consolidated results of operations and
financial position of the Company for the five most recent
fiscal years included in the Prospectus agrees with the
corresponding amounts (after restatements where applicable) in
the audited consolidated financial statements for such five
fiscal years;
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(v) They have reviewed the information in the
Prospectus under selected captions with the disclosure
requirements of Regulation S-B, carried out limited procedures
specified in such letter with respect to such information, and
compared such information with the accounting records of the
Company nothing came to their attention as a result of the
foregoing procedures that caused them to believe that this
information does not conform;
(vi) On the basis of limited procedures, not
constituting an examination in accordance with generally
accepted auditing standards, consisting of a reading of the
unaudited financial statements and other information referred
to below, a reading of the latest available interim financial
statements of the Company and the Subsidiaries, inspection of
the minute books of the Company and the Subsidiaries since the
date of the latest audited financial statements included in
the Prospectus, inquiries of officials of the Company and the
Subsidiaries responsible for financial and accounting matters
and such other inquiries and procedures as may be specified in
such letter, nothing came to their attention that caused them
to believe that:
(A) (i) the unaudited consolidated statements of
income, consolidated balance sheets and consolidated
statements of cash flows included in the Prospectus do not
comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the related
published rules and regulations, or (ii) any material
modifications should be made to the unaudited condensed
consolidated statements of income, consolidated balance sheets
and consolidated statements of cash flows included in the
Prospectus for them to be in conformity with generally
accepted accounting principles;
(B) any other unaudited income statement data and
balance sheet items included in the Prospectus do not agree
with the corresponding items in the unaudited consolidated
financial statements from which such data and items were
derived, and any such unaudited data and items were not
determined on a basis substantially consistent with the basis
for the corresponding amounts in the audited consolidated
financial statements included in the Prospectus;
(C) the unaudited financial statements which were
not included in the Prospectus but from which were derived any
unaudited condensed financial statements referred to in Clause
(A) and any unaudited income statement data and balance sheet
items included in the Prospectus and referred to in Clause (B)
were not determined on a basis substantially consistent with
the basis for the audited consolidated financial statements
included in the Prospectus;
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(D) any unaudited pro forma consolidated
condensed financial statements included in the Prospectus do
not comply as to form in all material respects with the
applicable accounting requirements of the Securities Act and
the published rules and regulations thereunder or the pro
forma adjustments have not been properly applied to the
historical amounts in the compilation of those statements;
(E) as of a specified date not more than five
days prior to the date of such letter, there have been any
changes in the consolidated capital stock (other than
issuances of capital stock upon exercise of options and stock
appreciation rights, upon earn-outs of performance shares and
upon conversions of convertible securities, in each case which
were outstanding on the date of the latest financial
statements included in the Prospectus) or any increase in the
consolidated long-term debt of the Company and the
Subsidiaries, or any decreases in consolidated net current
assets or stockholders' equity or other items specified by the
Representatives, or any increases in any items specified by
the Representatives, in each case as compared with amounts
shown in the latest balance sheet included in the Prospectus,
except in each case for changes, increases or decreases which
the Prospectus discloses have occurred or may occur or which
are described in such letter; and
(F) for the period from the date of the latest
financial statements included in the Prospectus to the
specified date referred to in Clause (E) there were any
decreases in consolidated net revenues or operating profit or
the total or per share amounts of consolidated net income or
other items specified by the Representatives, or any increases
in any items specified by the Representatives, in each case as
compared with the comparable period of the preceding year and
with any other period of corresponding length specified by the
Representatives, except in each case for decreases or
increases which the Prospectus discloses have occurred or may
occur or which are described in such letter; and
(vii) In addition to the examination referred to in
their report(s) included in the Prospectus and the limited
procedures, inspection of minute books, inquiries and other
procedures referred to in paragraphs (iii) and (vi) above,
they have carried out certain specified procedures, not
constituting an examination in accordance with generally
accepted auditing standards, with respect to certain amounts,
percentages and financial information specified by the
Representatives, which are derived from the general accounting
records of the Company and the Subsidiaries, which appear in
the Prospectus, or in Part II of, or in exhibits and schedules
to, the Registration Statement specified by the
Representatives, and have compared certain of such amounts,
percentages and financial information with the accounting
records of the Company and the Subsidiaries and have found
them to be in agreement.
3
