ARMSTRONG ENERGY, INC. Shares of Common Stock UNDERWRITING AGREEMENT
Exhibit 1.1
XXXXXXXXX ENERGY, INC.
Shares of Common Stock
Shares of Common Stock
[ ], 2012
XXXXXXX XXXXX & ASSOCIATES, INC.
FBR CAPITAL MARKETS & CO.
as Representatives of the several Underwriters
c/o Raymond Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxx Xxxxxxxxxx, XX 00000
FBR CAPITAL MARKETS & CO.
as Representatives of the several Underwriters
c/o Raymond Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxx Xxxxxxxxxx, XX 00000
Dear Sirs:
Xxxxxxxxx Energy, Inc., a Delaware corporation (the “Company”), confirms its agreement with
each of the Underwriters listed on Schedule II hereto (collectively, the “Underwriters”), for whom
Xxxxxxx Xxxxx & Associates, Inc. and FBR Capital Markets & Co. are acting as representatives (in
such capacity, collectively, the “Representatives”), with respect to (i) the sale by the Company of
[ ] shares (the “Initial Shares”) of Common Stock, par value $0.01 per share, of the
Company (the “Common Stock”) in the number of shares set forth opposite the name of the Company in
Schedule I hereto, and the purchase by the Underwriters, acting severally and not jointly, of the
respective number of shares of Common Stock set forth opposite the names of the Underwriters in
Schedule II hereto, and (ii) the grant of the option described in Section 1(b) hereof to purchase
all or any part of [ ] additional shares of Common Stock to cover over-allotments
(the “Option Shares”), if any, from the Company in the number of shares of Common Stock set forth
opposite the name of the Company in Schedule I hereto, to the Underwriters, acting severally and
not jointly, in the respective numbers of shares of Common Stock set forth opposite the names of
each of the Underwriters listed in Schedule II hereto. The Initial Shares to be purchased by the
Underwriters and all or any part of the Option Shares subject to the option described in Section
1(b) hereof are hereinafter called, collectively, the “Shares.”
The Company understands that the Underwriters propose to make a public offering of the Shares
as soon as the Underwriters deem advisable after this Underwriting Agreement (the “Agreement”) has
been executed and delivered, and to offer the Shares on the terms set forth in the Prospectus (as
defined below).
The Company has filed with the Securities and Exchange Commission (the Commission”), a
registration statement on Form S-1 (No. 333-177259) including a related preliminary prospectus, for
the registration of the Shares under the Securities Act of 1933, as amended (the “Securities Act”),
and the rules and regulations thereunder (the
“Securities Act Regulations”). The Company has prepared and filed such amendments to
the
registration statement and such amendments or supplements to the related preliminary prospectus as
may have been required to the date hereof, and will file such additional amendments or supplements
as may hereafter be required under the Securities Act and the Securities Act Regulations. The
registration statement, as amended at the time it was declared effective by the Commission (and, if
the Company files a post-effective amendment to such registration statement which becomes effective
prior to the Closing Time (as defined below), such registration statement as so amended) and
including all information deemed to be a part of the registration statement pursuant to
incorporation by reference, Rule 430A of the Securities Act Regulations or otherwise, is
hereinafter called the “Registration Statement.” Any registration statement filed pursuant to Rule
462(b) of the Securities Act Regulations is hereinafter called the “Rule 462(b) Registration
Statement,” and after such filing the term “Registration Statement” shall include the 462(b)
Registration Statement. Each prospectus included in the Registration Statement before it was
declared effective by the Commission under the Securities Act, and any preliminary form of
prospectus filed with the Commission by the Company with the consent of the Underwriters pursuant
to Rule 424(a) of the Securities Act Regulations, including all information incorporated by
reference in either such prospectus, is hereinafter called the “Preliminary Prospectus.” The term
“‘Prospectus” means the final prospectus, as first filed with the Commission pursuant to paragraph
(1) or (4) of Rule 424(b) of the Securities Act Regulations, and any amendments thereof or
supplements thereto including all information incorporated by reference therein.
The term “Disclosure Package” means (i) the Preliminary Prospectus, as most recently amended
or supplemented immediately prior to the Initial Sale Time (as defined herein), (ii) the Issuer
Free Writing Prospectuses (as defined below), if any, identified in Schedule III(a) hereto, and
(iii) any other Free Writing Prospectus (as defined below) that the parties hereto shall hereafter
expressly agree to treat as part of the Disclosure Package.
The term “Issuer Free Writing Prospectus” means any issuer free writing prospectus, as defined
in Rule 433 of the Securities Act Regulations. The term “Free Writing Prospectus” means any free
writing prospectus, as defined in Rule 405 of the Securities Act Regulations; and any oral or
written communications with potential investors undertaken pursuant to Section 5(d) of the
Securities Act are hereinafter called “Section 5(d) Communications”.
The Company and the Underwriters agree as follows:
1. Sale and Purchase:
(a) Initial Shares. Upon the basis of the agreements, warranties and representations and
other terms and conditions herein set forth, at the purchase price per share of Common Stock of $[
], the Company agrees to sell to the Underwriters the number of Initial Shares set forth in
Schedule I opposite its name, and each Underwriter agrees, severally and not jointly, to purchase
from the Company the number of Initial Shares set forth in Schedule II opposite such Underwriter’s
name, plus any additional
number of Initial Shares which such Underwriter may become obligated to purchase
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pursuant to
the provisions of Section 8 hereof, subject in each case, to such adjustments among the
Underwriters as the Representatives in their sole discretion shall make to eliminate any sales or
purchases of fractional shares. The public offering price of the Shares is not in excess of the
price recommended by FBR Capital Markets & Co., acting as a “qualified independent underwriter”
within the meaning of Rule 5121 of the Financial Industry Regulatory Authority, Inc. (“FINRA”).
(b) Option Shares. In addition, upon the basis of the agreements, warranties and
representations and other terms and conditions herein set forth, at the purchase price per share of
Common Stock set forth in paragraph (a) above, the Company hereby grants an option to the
Underwriters, acting severally and not jointly, to purchase from the Company all or any part of the
Option Shares set forth in Schedule I, plus any additional number of Option Shares which such
Underwriter may become obligated to purchase pursuant to the provisions of Section 8 hereof. The
option hereby granted will expire 30 days after the date hereof and may be exercised in whole or in
part from time to time within such 30-day period only for the purpose of covering over-allotments
which may be made in connection with the offering and distribution of the Initial Shares upon
written notice by the Representatives to the Company setting forth the number of Option Shares as
to which the several Underwriters are then exercising the option and the time and date of payment
and delivery for such Option Shares. Any such time and date of delivery (an “Option Closing Time”)
shall be determined by the Representatives, but shall not be later than three full business days
(or earlier, without the consent of the Company, than two full business days) after the exercise of
such option and the delivery of notice of same to the Company, nor in any event prior to the
Closing Time, as hereinafter defined. If the option is exercised as to all or any portion of the
Option Shares, the Company will sell that number of Option Shares then being purchased, and each of
the Underwriters, acting severally and not jointly, will purchase that proportion of the total
number of Option Shares then being purchased which the number of Initial Shares set forth in
Schedule II opposite the name of such Underwriter bears to the total number of Initial Shares,
subject in each case to such adjustments among the Underwriters as the Representatives in their
sole discretion shall make to eliminate any sales or purchases of fractional shares.
2. Payment and Delivery
(a) Initial Shares. The Initial Shares to be purchased by each Underwriter hereunder in such
authorized denominations and registered in such names as the Representatives may request upon at
least forty-eight hours’ prior written notice to the Company shall be delivered by or on behalf of
the Company to the Representatives through the facilities of The Depository Trust Company (“DTC”)
for the account of such Underwriter, against payment by or on behalf of such Underwriter of the
purchase price therefor by wire transfer in immediately available funds to the account specified to
the Representatives by the Company upon at least forty-eight hours’ prior written notice. The
Company will cause the certificates representing the Initial Shares to be made available for
checking and packaging not later than 1:00 p.m. New York City time on the business day prior to the
Closing Time (as defined below) with respect thereto at the
office of DTC or its designated custodian, as the case may be (the “Designated Office”).
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The
time and date of such delivery and payment shall be 9:30 a.m., New York City time, on the third
(fourth, if the determination of the purchase price of the Initial Shares occurs after 4:30 p.m.,
New York City time) business day after the date hereof (unless another time and date shall be
agreed to by the Representatives and the Company). The time and date at which such delivery and
payment are actually made is hereinafter called the “Closing Time.”
(b) Option Shares. Any Option Shares to be purchased by each Underwriter hereunder in such
authorized denominations and registered in such names as the Representatives may request upon at
least forty-eight hours’ prior written notice to the Company shall be delivered by or on behalf of
the Company to the Representatives through the facilities of DTC for the account of such
Underwriter, against payment by or on behalf of such Underwriter of the purchase price therefor by
wire transfer in immediately available funds to the account specified to the Representatives by the
Company upon at least forty-eight hours’ prior written notice. The Company will cause the
certificates representing the Option Shares to be made available for checking and packaging at
least twenty-four hours prior to the Option Closing Time with respect thereto at the Designated
Office. The time and date of such delivery and payment shall be 9:30 a.m., New York City time, on
the date specified by the Representatives in the notice given by the Representatives to the Company
of the Underwriters’ election to purchase such Option Shares or on such other time and date as the
Company and the Representatives may agree upon in writing.
(c) Directed Shares. It is
understood that approximately
[ ] Initial Shares
(the “Directed Shares”) will initially be reserved by the several Underwriters for offer and sale
upon the terms and conditions to be set forth in the Prospectus and in accordance with the rules and regulations of
FINRA to directors, officers and employees of the Company and its subsidiary and persons having business relationships
with the Company and its subsidiary who have heretofore delivered to Xxxxxxx Xxxxx & Associates, Inc. offers or indications
of interest to purchase Initial Shares in form satisfactory to
Xxxxxxx Xxxxx & Associates, Inc. (“Directed Share Participants”) and that any allocation of such Initial
Shares among such persons will be made in accordance with timely directions received by Xxxxxxx Xxxxx & Associates, Inc.
from the Company (such program, the “Directed Share Program”); provided that under no circumstances
will Xxxxxxx Xxxxx & Associates, Inc. or any Underwriter be liable to the Company or to any such person for any action
taken or omitted in good faith in connection with such Directed Share Program. It is further understood that any
Directed Shares not affirmatively reconfirmed for purchase by any participant in the Directed Share Program by 9:30 a.m.,
New York City time, on the first business day following the date hereof or otherwise are not purchased by such persons
will be offered by the Underwriters to the public upon the terms and conditions set forth in the Disclosure Package and
Prospectus. The Company agrees to pay all fees and disbursements incurred by the Underwriters in connection with the
Directed Share Program and any stamp duties or other taxes incurred by the Underwriters in connection with the Directed
Share Program.
3. Representations and Warranties of the Company:
The Company represents and warrants to the Underwriters as of the date hereof, the Initial
Sale Time (as defined below), as of the Closing Time and as of any Option Closing Time (if any),
and agrees with each Underwriter, that:
(a) the Company has an authorized capitalization as set forth in both the Prospectus and the
Disclosure Package under the heading “Capitalization”; the outstanding shares of capital stock or
other equity interests, as applicable, of the Company and each subsidiary of the Company (each, a
“Subsidiary”) have been duly and validly authorized and issued and are fully paid and
non-assessable, and the outstanding shares of capital stock or other equity interests of the
Subsidiaries are directly or indirectly owned of record and beneficially by the Company are as set
forth in the Prospectus and the Disclosure Package; except as disclosed in both the Prospectus and
the Disclosure Package, there are no outstanding (i) securities or obligations of the Company or
any of the Subsidiaries convertible into or exchangeable for any capital stock or other equity
interests of the Company or any such Subsidiary, (ii) warrants, rights or options to subscribe for
or purchase from the Company or any such Subsidiary any such capital stock or other equity
interests or any such convertible or exchangeable securities or obligations, or (iii) obligations
of the Company or any such Subsidiary to issue any shares of capital stock or other equity
interests, any such convertible or exchangeable securities or obligation, or any such warrants,
rights or options;
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(b) each of the Company and the Subsidiaries (all of which are named in Exhibit 21 to the
Registration Statement) has been duly incorporated or organized and is validly existing as a
corporation, limited liability company or general or limited partnership in good standing under the
laws of its respective jurisdiction of incorporation or organization with all necessary corporate
power and authority to own or hold its respective properties and to conduct its respective
businesses as described in each of the Registration Statement, the Prospectus and the Disclosure
Package, and, in the case of the Company, to execute and deliver this Agreement and to consummate
the transactions contemplated herein;
(c) the Company and all of the Subsidiaries are duly qualified or licensed and are in good
standing in each jurisdiction in which they conduct their respective businesses or in which they
own or lease real property or otherwise maintain an office and in which the failure, individually
or in the aggregate, to be so qualified or licensed could have a material adverse effect on the
assets, business, operations, earnings, properties, rights or condition (financial or otherwise),
present or prospective, of the Company and the Subsidiaries taken as a whole, (any such effect or
change, where the context so requires, is hereinafter called a “Material Adverse Effect” or
“Material Adverse Change”); except as disclosed in both the Prospectus and the Disclosure Package,
no Subsidiary is prohibited or restricted, directly or indirectly, from paying dividends to the
Company, or from making any other distribution with respect to such Subsidiary’s capital stock or
other equity interests or from repaying to the Company or any other Subsidiary any amounts which
may from time to time become due under any loans or advances to such Subsidiary from the Company or
such other Subsidiary, or from transferring any such Subsidiary’s property, rights or assets to the
Company or to any other Subsidiary. The only Subsidiaries of the Company are the subsidiaries,
partnerships, joint ventures and other associations listed on Schedule IV hereto and Schedule IV
accurately sets forth whether each such Subsidiary is a corporation, limited or general partnership
or limited liability company and the jurisdiction of organization of each such Subsidiary and, in
the case of any Subsidiary which is a partnership or limited liability company, its general
partners and managing members, respectively.
(d) the Company and the Subsidiaries are in compliance in all respects with all applicable
laws, rules, regulations, orders, decrees and judgments, including those relating to transactions
with affiliates; except where the failure to be in compliance would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect;
(e) neither the Company nor any Subsidiary is in breach of or in default under (nor has any
event occurred which with notice, lapse of time, or both would constitute a breach of, or default
under), its respective organizational documents, or in the performance or observance of any
obligation, agreement, covenant or condition contained in any license, indenture, mortgage, deed of
trust, loan or credit agreement or other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them or their respective properties is bound, except for
such breaches or defaults which would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect;
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(f) the execution, delivery and performance of this Agreement, and consummation of the
transactions contemplated herein will not (A) conflict with, or result in any breach of, or
constitute a default under (nor constitute any event which with notice, lapse of time, or both
would constitute a breach of, or default under), (i) any provision of the organizational documents
of the Company or any Subsidiary, or (ii) any provision of any license, indenture, mortgage, deed
of trust, loan or credit agreement or other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them or their respective properties may be bound or
affected, or under any federal, state, local or foreign law, regulation or rule or any decree,
judgment or order applicable to the Company or any Subsidiary, except in the case of this clause
(ii) for such breaches or defaults which would not reasonably be expected to have, individually or
in the aggregate, a Material Adverse Effect; or (B) result in the creation or imposition of any
lien, charge, claim or encumbrance upon any property, right or asset of the Company or any
Subsidiary, except for such liens, charges, claims or encumbrances which would not reasonably be
expected to have, individually or in the aggregate, a Material Adverse Effect;
(g) this Agreement has been duly authorized, executed and delivered by the Company and is a
legal, valid and binding agreement of the Company enforceable in accordance with its terms, except
as may be limited by bankruptcy, insolvency, reorganization, moratorium or similar laws affecting
creditors’ rights generally, and by general equitable principles, and except to the extent that the
indemnification and contribution provisions of Section 9 hereof may be limited by federal or state
securities laws and public policy considerations in respect thereof;
(h) no approval, authorization, consent or order of or filing with any federal, state, local
or foreign governmental or regulatory commission, board, body, authority or agency is required in
connection with the Company’s execution, delivery and performance of this Agreement, its
consummation of the transactions contemplated herein, and its sale and delivery of the Shares,
other than (A) such as have been obtained, or will have been obtained at the Closing Time or the
relevant Option Closing Time, as the case may be, under the Securities Act and the Securities
Exchange Act of 1934 (the “Exchange Act”), (B) such approvals as have been obtained in connection
with the approval of the quotation of the Shares on the Nasdaq Global Market (the “Nasdaq”), (C)
any necessary qualification under the securities or blue sky laws of the various jurisdictions in
which the Shares are being offered by the Underwriters and (D) such approvals, authorizations,
consents, orders, filings, registrations or qualifications as may be required by the Financial
Industry Regulatory Authority (“FINRA”);
(i) Except as otherwise disclosed in the Prospectus and the Disclosure Package, each of the
Company and the Subsidiaries has all necessary licenses, authorizations, consents and approvals and
has made all necessary filings required under any federal, state, local or foreign law, regulation
or rule, and has obtained all necessary authorizations, consents and approvals from other persons,
required in order to conduct their respective businesses as described in both the Prospectus and
the Disclosure Package, except to the extent that any failure to have any such licenses,
authorizations, consents or approvals, to make any such filings or to obtain any such
authorizations,
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consents or approvals would not reasonably be expected to have, individually or in the
aggregate, a Material Adverse Effect; neither the Company nor any of the Subsidiaries is in
violation of, in default under, or has received any notice regarding a possible violation, default
or revocation of any such license, authorization, consent or approval or any federal, state, local
or foreign law, regulation or rule or any decree, order or judgment applicable to the Company or
any of the Subsidiaries the effect of which could result in a Material Adverse Change; and no such
license, authorization, consent or approval contains a materially burdensome restriction that is
not adequately disclosed in each of the Registration Statement, the Prospectus and the Disclosure
Package;
(j) each of the Registration Statement and any Rule 462(b) Registration Statement has become
effective under the Securities Act and no stop order suspending the effectiveness of the
Registration Statement or any Rule 462(b) Registration Statement has been issued under the
Securities Act and no proceedings for that purpose have been instituted or are pending or, to the
knowledge of the Company, are contemplated or threatened by the Commission; and the Company has
complied with any request on the part of the Commission for additional information;
(k) the Preliminary Prospectus when filed and the Registration Statement as of each effective
date and as of the date hereof complied or will comply, and the Prospectus and any further
amendments or supplements to the Registration Statement, the Preliminary Prospectus or the
Prospectus will, when they become effective or are filed with the Commission, as the case may be,
comply, in all material respects with the requirements of the Securities Act and the Securities Act
Regulations;
(l) the Registration Statement, as of its effective date and as of the date hereof, did not,
does not and will not contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein not misleading; and
the Preliminary Prospectus does not, and the Prospectus or any amendment or supplement thereto will
not, as of the applicable filing date, the date hereof and at the Closing Time and on each Option
Closing Time (if any), contain an untrue statement of a material fact or omit to state a material
fact necessary to make the statements therein, in the light of the circumstances under which they
were made, not misleading; provided, however, that the Company makes no warranty or representation
with respect to any statement contained in or omitted from the Registration Statement, the
Preliminary Prospectus or the Prospectus in reliance upon and in conformity with the information
concerning the Underwriters and furnished in writing by or on behalf of the Underwriters through
the Representatives to the Company expressly for use therein (that information being limited to
that described in the last sentence of the first paragraph of Section 9(b) hereof);
(m) as of [___]:00 [am] [pm] (Eastern time) on the date of this Agreement (the “Initial Sale
Time”), the Disclosure Package did not, and at the Closing Time and each Option Closing Time, the
Disclosure Package will not, contain any untrue statement of a material fact or omit to state any
material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading; as of its issue date or date of first use and at all
subsequent times through the Initial Sale
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Time, each Issuer Free Writing Prospectus and each written Section 5(d) Communication listed
on Schedule III(b) hereto did not, and at the Closing Time and each Option Closing Time, each such
Issuer Free Writing Prospectus and each written Section 5(d) Communication will not, contain any
untrue statement of a material fact or omit to state any material fact necessary in order to make
the statements therein, in the light of the circumstances under which they were made, not
misleading; provided, however, that the Company makes no warranty or representation with respect to
any statement contained in or omitted from the Disclosure Package in reliance upon and in
conformity with the information concerning the Underwriters and furnished in writing by or on
behalf of the Underwriters through the Representatives to the Company expressly for use therein
(that information being limited to that described in the last sentence of the first paragraph of
Section 9(b) hereof);
(n) each Issuer Free Writing Prospectus, as of its issue date and at all subsequent times
through the completion of the public offer and sale of the Shares did not, does not and will not
include any information that conflicted, conflicts or will conflict with the information contained
in the Registration Statement, as may be amended under this Agreement, including any document
incorporated by reference therein that has not been superseded or modified;
(o) the Company is eligible to use Free Writing Prospectuses in connection with this offering
pursuant to Rules 164 and 433 under the Securities Act; any Free Writing Prospectus that the
Company is required to file pursuant to Rule 433(d) under the Securities Act Regulations has been,
or will be, filed with the Commission in accordance with the requirements of the Securities Act and
the Securities Act Regulations; and each Free Writing Prospectus that the Company has filed, or is
required to file, pursuant to Rule 433(d) under the Securities Act Regulations or that was prepared
by or on behalf of or used by the Company complies or will comply in all material respects with the
requirements of the Securities Act and the Securities Act Regulations;
(p) except for the Issuer Free Writing Prospectuses identified in Schedule III(a) hereto, and
any electronic road show relating to the public offering of shares contemplated herein, the Company
has not prepared, used or referred to, and will not, without the prior consent of the
Representatives, which consent shall not be unreasonably withheld, prepare, use or refer to, any
Free Writing Prospectus;
(q) the Preliminary Prospectus, the Prospectus and any Issuer Free Writing Prospectuses (to
the extent any such Issuer Free Writing Prospectus was required to be filed with the Commission)
delivered to the Underwriters for use in connection with the public offering of the Shares
contemplated herein have been and will be identical to the versions of such documents transmitted
to the Commission for filing via the Electronic Data Gathering Analysis and Retrieval System
(“XXXXX”), except to the extent permitted by Regulation S-T;
(r) the Company filed the Registration Statement with the Commission before using any Issuer
Free Writing Prospectus; and each Issuer Free Writing Prospectus was
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preceded or accompanied by the
most recent Preliminary Prospectus satisfying the
requirements of Section 10 under the Securities Act, which Preliminary Prospectus included an
estimated price range.
(s) there are no actions, suits, proceedings, inquiries or investigations pending or, to the
knowledge of the Company, threatened against the Company or any Subsidiary or any of their
respective executive officers and directors, in such capacity, or to which the properties, assets
or rights of any such entity are subject, at law or in equity, before or by any federal, state,
local or foreign governmental or regulatory commission, board, body, authority, arbitral panel or
agency which would reasonably be expected to result in a judgment, decree, award or order having a
Material Adverse Effect;
(t) the financial statements, including the notes thereto, included in each of the
Registration Statement, the Prospectus and the Disclosure Package present fairly the consolidated
financial position of the entities to which such financial statements relate (the “Covered
Entities”) as of the dates indicated and the consolidated results of operations and changes in
financial position and cash flows of the Covered Entities for the periods specified; such financial
statements have been prepared in conformity with generally accepted accounting principles as
applied in the United States and on a consistent basis during the periods involved and in
accordance with Regulation S-X promulgated by the Commission; the financial statement schedules
included in the Registration Statement and the amounts in both the Prospectus and the Disclosure
Package under the captions “Prospectus Summary—Summary Historical and Pro Forma Consolidated
Financial and Operating Data” and “Selected Historical and Pro Forma Consolidated Financial and
Operating Data” fairly present the information shown therein and have been compiled on a basis
consistent with the financial statements included in each of the Registration Statement, the
Prospectus and the Disclosure Package; no other financial statements or supporting schedules are
required to be included in the Registration Statement, the Prospectus or the Disclosure Package;
the unaudited pro forma financial information (including the related notes) included in each of the
Registration Statement, the Prospectus and the Disclosure Package complies as to form in all
material respects with the applicable accounting requirements of the Securities Act and the
Securities Act Regulations, and management of the Company believes that the assumptions underlying
the pro forma adjustments are reasonable; such pro forma adjustments have been properly applied to
the historical amounts in the compilation of the information and such information fairly presents
with respect to the Company and the Subsidiaries, the financial position, results of operations and
other information purported to be shown therein at the respective dates and for the respective
periods specified; and no other pro forma financial information is required to be included in the
Registration Statement, the Prospectus or the Disclosure Package;
(u) Ernst & Young LLP, whose report on the consolidated financial statements of the Company
and the Subsidiaries is filed with the Commission as part of each of the Registration Statement,
the Prospectus and the Disclosure Package or is incorporated by reference therein, is, and was
during the periods covered by its reports, an independent public accountant as required by the
Securities Act and the Securities
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Act Regulations and are registered with the Public Company
Accounting Oversight Board;
(v) subsequent to the date of the most recent financial statements of the Company included in
each of the Registration Statement, the Prospectus and the Disclosure Package, and except as may be
otherwise stated in such documents, there has not been (A) any Material Adverse Change or any
development that would reasonably be expected to result in a Material Adverse Change or a
prospective Material Adverse Change, whether or not arising in the ordinary course of business, (B)
any transaction that is material to the Company and the Subsidiaries taken as a whole, contemplated
or entered into by the Company or any of the Subsidiaries, (C) any obligation, contingent or
otherwise, directly or indirectly incurred by the Company or any Subsidiary that is material to the
Company and Subsidiaries taken as a whole or (D) any dividend or distribution of any kind declared,
paid or made by the Company on any class of its capital stock;
(w) the Shares conform in all material respects to the description thereof contained in the
Registration Statement, the Prospectus and the Disclosure Package;
(x) except as disclosed in both the Prospectus and the Disclosure Package, there are no
persons with registration or other similar rights to have any equity or debt securities, including
securities which are convertible into or exchangeable for equity securities, registered pursuant to
the Registration Statement or otherwise registered by the Company under the Securities Act, except
for those registration or similar rights which have been waived with respect to the offering
contemplated by this Agreement, all of which registration or similar rights are fairly summarized
in both the Prospectus and the Disclosure Package;
(y) the Shares have been duly authorized and, when issued and duly delivered against payment
therefor as contemplated by this Agreement, will be validly issued, fully paid and non-assessable,
free and clear of any pledge, lien, encumbrance, security interest or other claim, and the issuance
and sale of the Shares by the Company is not subject to preemptive or other similar rights arising
by operation of law, under the organizational documents of the Company or under any agreement to
which the Company or any Subsidiary is a party or otherwise;
(z) the Shares have been, or will be as of the Closing Time, approved for listing on the
Nasdaq; the Company has taken all necessary actions to ensure that, upon and at all times after
Nasdaq shall have approved the Shares for listing, it will be in compliance with all applicable
corporate governance requirements set forth in the Nasdaq’s listing qualifications that are then in
effect and is taking such steps as are necessary to ensure that it will be in compliance with other
applicable corporate governance requirements set forth in the Nasdaq’s listing qualifications not
currently in effect upon the effectiveness of such requirements;
(aa) the Company 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
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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;
(bb) neither the Company nor any of its affiliates (i) is required to register as a “broker”
or “dealer” in accordance with the provisions of the Exchange Act, or the rules and regulations
thereunder (the “Exchange Act Regulations”), or (ii) directly, or indirectly through one or more
intermediaries, controls or has any other association with (within the meaning of Article I of the
By-laws of FINRA) any member firm of FINRA;
(cc) any certificate signed by any officer of the Company or any Subsidiary delivered to the
Representatives or to counsel for the Underwriters pursuant to or in connection with this Agreement
shall be deemed a representation and warranty by the Company to each Underwriter as to the matters
covered thereby;
(dd) the form of certificate used to evidence the Common Stock complies in all material
respects with all applicable statutory requirements, with any applicable requirements of the
organizational documents of the Company and the requirements of the Nasdaq;
(ee) the Company and the Subsidiaries have good and marketable title in fee simple to, or have
valid rights to lease or otherwise use, all real property and personal property that is material to
the business of the Company and its Subsidiaries, taken as a whole and as disclosed in both the
Prospectus and the Disclosure Package, in each case free and clear of all liens, security
interests, pledges, charges, encumbrances, mortgages and defects, except such as are disclosed in
both the Prospectus and the Disclosure Package or such as do not materially and adversely affect
the value of such property and do not materially and adversely interfere with the use made or
proposed to be made of such property by the Company and the Subsidiaries; and any real property and
buildings held under lease by the Company or any Subsidiary are held under valid, existing and
enforceable leases, with such exceptions as are disclosed in both the Prospectus and the Disclosure
Package or are not material and do not interfere with the use made or proposed to be made of such
property and buildings by the Company or such Subsidiary;
(ff) the descriptions in each of the Registration Statement, the Prospectus and the Disclosure
Package of the legal or governmental proceedings, contracts, leases and other legal documents
therein described present fairly the information required to be shown, and there are no legal or
governmental proceedings, contracts, leases, or other documents of a character required to be
described in the Registration Statement, the Prospectus or the Disclosure Package or to be filed as
exhibits to the Registration Statement which are not described or filed as required; all agreements
between the Company or any of the Subsidiaries and third parties expressly referenced in both the
Prospectus and the Disclosure Package are legal, valid and binding obligations of the Company or
one or more of the Subsidiaries, enforceable in accordance with their respective terms, except to
the extent enforceability may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting creditors’ rights generally and by general equitable principles;
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(gg) the Company and each Subsidiary owns or possesses the right to use all patents,
trademarks, service marks, trade names, copyrights (including software and design rights), trade
secrets, manufacturing processes and any and all other intellectual,
intangible and industrial property rights, wherever subsisting (collectively “Intellectual
Property”) that is material to the conduct each of its businesses as described in both the
Prospectus and the Disclosure Package. The conduct of the Company’s and each Subsidiary’s business
as currently conducted does not infringe or violate any Intellectual Property owned by any other
Person, and neither the Company nor any Subsidiary has received notice (including cease and desist
letters and invitations to take a patent license) of infringement of or conflict with (and the
Company knows of no basis for such infringement of or conflict with) Intellectual Property rights
of others that would reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect. To the knowledge of the Company, no person is infringing or violating any
Intellectual Property owned by the Company or any Subsidiary;
(hh) (x) the Company has established and maintains disclosure controls and procedures (as such
term is defined in Rule 13a-15(e) under the Exchange Act), which (i) are designed to ensure that
material information relating to the Company, including its consolidated subsidiaries, is made
known to the Company’s principal executive officer and its principal financial officer by others
within those entities, particularly during the periods in which the periodic reports required under
the Exchange Act are being prepared, (ii) have been evaluated for effectiveness as of the end of
the last fiscal period covered by the Registration Statement, and (iii) are effective in all
material respects to perform the functions for which they were established, and (y) the Company is
not aware of (a) any significant deficiency or material weakness in the design or operation of its
internal controls over financial reporting which are reasonably likely to adversely affect the
Company’s ability to record, process, summarize and report financial information to management and
the Board of Directors, or (b) any fraud, whether or not material, that involves management or
other employees who have a significant role in the Company’s internal control over financial
reporting. Since the most recent evaluation of the Company’s disclosure controls and procedures
described above, there have been no significant changes in internal control over financial
reporting or in other factors that could significantly affect internal control over financial
reporting;
(ii) the Company and each of the Subsidiaries maintain 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 as applied in the United States and to maintain asset accountability; (iii)
access to assets is permitted only in accordance with management’s general or specific
authorization; and (iv) the recorded accountability for assets is compared with the existing assets
at reasonable intervals and appropriate action is taken with respect to any differences;
(jj) each of the Company and the Subsidiaries has filed on a timely basis all necessary
federal, state, local and foreign tax returns required to be filed through the date hereof and all
such tax returns are true, correct and complete in all material
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respects; the Company and each of
its Subsidiaries have paid all taxes shown as due thereon (and any related assessments, fines or
penalties); no tax deficiency has been asserted against any such entity, nor does any such entity
know of any tax deficiency which is likely to be
asserted against any such entity which, if determined adversely to any such entity, would
reasonably be expected to have, individually or in the aggregate, a Material Adverse Effect; there
are no tax liens outstanding against any of the assets, properties or business of the Company or
any Subsidiary; and all tax liabilities are adequately provided for on the respective books of such
entities in conformity with generally accepted accounting principles as applied in the United
States;
(kk) The Company reasonably believes that it is, and expects it will continue to be, a United
States Real Property Holding Corporation within the meaning of Xxxxxxx 000 xx xxx Xxxxxx Xxxxxx
Internal Revenue Code of 1986;
(ll) each of the Company and the Subsidiaries maintains insurance of the types and in the
amounts generally deemed adequate for their respective businesses and consistent with insurance
coverage maintained by similar companies in similar businesses, including, but not limited to,
insurance covering real and personal property owned or leased by the Company and the Subsidiaries
against theft, damage, destruction, acts of vandalism and all other risks customarily insured
against, all of which insurance is in full force and effect;
(mm) the Company and the Subsidiaries have received all permits, licenses or other approvals
required of them under applicable federal and state occupational safety and health laws and
regulations to conduct their respective businesses, and the Company and the Subsidiaries are in
compliance with all terms and conditions of any such permit, license or approval, except any such
violation of law or regulation, failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits, licenses or approvals which would
not reasonably be expected to result in, individually or in the aggregate, a Material Adverse
Change;
(nn) neither the Company nor any Subsidiary is in violation of or has received notice of any
violation with respect to any federal or state law relating to discrimination in the hiring,
promotion or pay of employees, nor any applicable federal or state wages and hours law, nor any
state law precluding the denial of credit due to the neighborhood in which a property is situated,
the violation of any of which would not reasonably be expected to have, individually or in the
aggregate,, individually or in the aggregate, a Material Adverse Effect;
(oo) the Company and each of the Subsidiaries are in compliance in all material respects with
all presently applicable provisions of the Employee Retirement Income Security Act of 1974, as
amended, including the regulations and published interpretations thereunder (“ERISA”); no
“reportable event” (as defined in ERISA) has occurred with respect to any “pension plan” (as
defined in ERISA) for which the Company or any of the Subsidiaries would have any liability; the
Company and each of the Subsidiaries have not incurred and do not expect to incur liability under
(i) Title IV of ERISA with respect to termination of, or withdrawal from, any “pension plan” or
(ii)
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Section 412 or 4971 of the Internal Revenue Code of 1986, as amended, including the
regulations and published interpretations thereunder (“Code”); and each “pension plan” for which
the Company and each of its Subsidiaries would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act, which would cause the
loss of such qualification;
(pp) neither the Company nor any of the Subsidiaries nor, to the Company’s knowledge, any
officer or director purporting to act on behalf of the Company or any of the Subsidiaries has at
any time (i) made any contributions to any candidate for political office, or failed to disclose
fully any such contributions, in violation of law, (ii) made any payment to any state, federal or
foreign governmental officer or official, or other person charged with similar public or
quasi-public duties, other than payments required or allowed by applicable law, (iii) made any
payment outside the ordinary course of business to any investment officer or loan broker or person
charged with similar duties of any entity to which the Company or any of the Subsidiaries sells or
from which the Company or any of the Subsidiaries buys loans or servicing arrangements for the
purpose of influencing such agent, officer, broker or person to buy loans or servicing arrangements
from or sell loans to the Company or any of the Subsidiaries, or (iv) engaged in any transactions,
maintained any bank account or used any corporate funds except for transactions, bank accounts and
funds which have been and are reflected in the normally maintained books and records of the Company
and the Subsidiaries;
(qq) there are no outstanding loans, extensions of credit or advances or guarantees of
indebtedness by the Company or any of the Subsidiaries to or for the benefit of any of the officers
or directors of the Company or any of the Subsidiaries or any of the members of the families of any
of them;
(rr) all securities issued by the Company, any of the Subsidiaries or any trusts established
by the Company or any Subsidiary, have been or will be issued and sold in compliance with (i) all
applicable federal and state securities laws, (ii) the laws of the applicable jurisdiction of
incorporation of the issuing entity and, (iii) to the extent applicable to the issuing entity, the
requirements of the Nasdaq;
(ss) the Company and its Subsidiaries are, and at all times prior were, (i) in compliance with
any and all applicable federal, state, local and foreign laws, regulations, ordinances, rules,
orders, judgments, decrees, permits or other legal requirements relating to the protection of human
health and safety, the environment, natural resources, petroleum or hazardous or toxic substances
or wastes, pollutants or contaminants (“Environmental Laws”), which compliance includes obtaining,
maintaining and complying with all permits and authorizations and approvals required by
Environmental Laws to conduct their respective businesses, and (ii) have not received notice of nor
do they otherwise have knowledge of any actual or potential liability for the investigation or
remediation of any disposal or release of petroleum, hazardous or toxic substances or wastes,
pollutants or contaminants, except in the case of clause (i) or (ii) where such non-compliance with
or liability under Environmental Laws or investigations would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse
-14-
Effect; and neither the Company nor any of its
Subsidiaries has been named as a “potentially responsible party” under the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as amended, or any other similar
Environmental Law, except with respect to any matters that would not reasonably be expected to
have, individually or in the aggregate, a Material Adverse Effect. Except such as are disclosed in
both the Prospectus and the Disclosure Package, none of the Company and its Subsidiaries (A) is a
party to any proceeding under Environmental Laws in which a governmental authority is also a party,
other than such proceedings regarding which it is believed no monetary penalties of $100,000 or
more will be imposed, and (B) anticipates material capital expenditures relating to Environmental
Laws;
(tt) in connection with this offering, the Company has not offered and will not offer its
Common Stock or any other securities convertible into or exchangeable or exercisable for Common
Stock in a manner in violation of the Securities Act; and the Company has not distributed and will
not distribute any offering material in connection with the offer and sale of the Shares except for
the Preliminary Prospectus, the Prospectus, any Issuer Free Writing Prospectus or the Registration
Statement;
(uu) the Company has complied and will comply with all the provisions of Florida Statutes,
Section 517.075 (Chapter 92-198, Laws of Florida); and neither the Company nor any of its
Subsidiaries or other persons associated with or acting on behalf of such entities does business
with the government of Cuba or with any person or affiliate located in Cuba;
(vv) other than this Agreement, the Company has not incurred any liability for any finder’s
fees or similar payments in connection with the transactions herein contemplated;
(ww) no relationship, direct or indirect, exists between or among the Company or any of the
Subsidiaries on the one hand, and the directors, officers, stockholders, customers or suppliers of
the Company or any of the Subsidiaries on the other hand, which is required by the Securities Act
and the Securities Act Regulations to be described in the Registration Statement, the Prospectus or
the Disclosure Package, which is not so described;
(xx) 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”, as such terms are defined in the Investment Company Act of 1940, as amended
(the “Investment Company Act”);
(yy) there are no existing or, to the knowledge of the Company, threatened labor disputes with
the employees of the Company or any of the Subsidiaries which would reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
(zz) the Company, the Subsidiaries and any of the officers and directors of the Company and
the Subsidiaries, in their capacities as such, are, and at the Closing Time
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and any Option Closing
Time will be, in compliance in all material respects with the
provisions of the Xxxxxxxx-Xxxxx Act of 2002 and the rules and regulations promulgated
thereunder;
(aaa) none of the Company nor any of the Subsidiaries or, to the knowledge of the Company, any
director, officer, agent, employee or other persons associated with or acting on behalf of such
entities is aware of or has taken any action, directly or indirectly, that would result in a
violation by such persons of the Foreign Corrupt Practices Act of 1977, as amended, and the rules
and regulations thereunder (the “FCPA”), including, without limitation, making use of the mails or
any means or instrumentality of interstate commerce corruptly in furtherance of an offer, payment,
promise to pay or authorization of the payment of any money, or other property, gift, promise to
give, or authorization of the giving of anything of value to any “foreign official” (as such term
is defined in the FCPA) or any foreign political party or official thereof or any candidate for
foreign political office, in contravention of the FCPA and the Company and the Subsidiaries and, to
the knowledge of the Company, their affiliates have conducted their businesses in compliance with
the FCPA;
(bbb) neither the Company nor any of its Subsidiaries, nor, to the Company’s knowledge, any
director, officer, agent or employee of, or other persons associated with or acting on behalf of,
the Company, has violated the Bank Secrecy Act, as amended, the Uniting and Strengthening of
America by Providing Appropriate Tools Required to Intercept and Obstruct Terrorism Act (USA
PATRIOT ACT) of 2001 or the rules and regulations promulgated under any such law or any successor
law;
(ccc) the operations of the Company and its Subsidiaries are and have been conducted at all
times in compliance with applicable financial recordkeeping and reporting requirements of the
Currency and Foreign Transactions Reporting Act of 1970, as amended, the Money Laundering Control
Act of 1986, as amended, any other money laundering statutes of all jurisdictions, the rules and
regulations thereunder and any related or similar rules, regulations or guidelines, issued,
administered or enforced by any governmental agency (collectively, the “Money Laundering Laws”),
except for any such non-compliance as would not reasonably be expected to, singly or in the
aggregate, result in a Material Adverse Change, and no action, suit or proceeding by or before any
court or governmental agency, authority or body or any arbitrator involving the Company or any of
it Subsidiaries with respect to the Money Laundering Laws is pending or, to the Company’s
knowledge, threatened;
(ddd) each of the Company and its Subsidiaries, and, to the Company’s knowledge, any director,
officer, agent or employee of, or other persons associated with or acting on behalf of, the Company
has acted at all times in compliance with applicable Export and Import Laws (as defined below) and
there are no claims, complaints, charges, investigations or proceedings pending or expected or, to
the knowledge of the Company, threatened between the Company or any of its Subsidiaries and any
governmental authority under any Export or Import Laws. The term “Export and Import Laws” means
the Arms Export Control Act, the International Traffic in Arms Regulations, the Export
Administration Act of 1979, as amended, the Export
-16-
Administration Regulations, and all other laws
and regulations of the United States government regulating the provision of
services to non-U.S. parties or the export and import of articles or information from and to
the United States of America, and all similar laws and regulations of any foreign government
regulating the provision of services to parties not of the foreign country or the export and import
of articles and information from and to the foreign country to parties not of the foreign country;
(eee) neither the Company nor any of its Subsidiaries, nor, to the Company’s knowledge, any
director, officer, agent or employee of, or other persons associated with or acting on behalf of,
the Company, is currently subject to any United States sanctions administered by the Office of
Foreign Assets Control of the United States Treasury Department (“OFAC”); and the Company will not
directly or indirectly use the proceeds of the offering, or lend, contribute or otherwise make
available such proceeds to any Subsidiary, partner or joint venturer or other person or entity, for
the purpose of financing the activities of any person currently subject to any United States
sanctions administered by OFAC;
(fff) at the time of (i) filing the Registration Statement and any Rule 462(b) Registration
Statement and (ii) any Section 5(d) Communications, the Company was and on the date hereof, the
Company is, an “emerging growth company” as defined in
Section 2(a)(19) of the Securities Act;
(ggg) each Disclosure
Package, the Prospectus and each Issuer Free Writing Prospectus comply, and any further amendments or supplements thereto
will comply, with any applicable laws or regulations of jurisdictions in which such Disclosure Package, Prospectus or such
Issuer Free Writing Prospectus, as amended or supplemented, if applicable, are distributed in connection with the Directed
Share Program. No consent, approval, authorization or order of, or filing or registration with, any court or governmental
agency or body, other than such as have been obtained, is required under the securities laws and regulations of any
jurisdiction in which the Directed Shares are offered or sold outside the United States;
(hhh) the Company has not
offered, or caused the Underwriters to offer, Shares to any person pursuant to the Directed Share Program with the specific
intent to unlawfully influence (i) a customer or supplier of the Company to alter the customer’s or supplier’s level or
type of business with the Company or (ii) a trade journalist or publication to write or publish favorable information about
the Company, its business or its products; and
(iii) the Company has not
distributed and, prior to the later to occur of any Delivery Date and completion of the distribution of the Shares,
will not distribute any offering material in connection with the offering and sale of the Shares other than any Disclosure
Package, the Prospectus, any Issuer Free Writing Prospectus to which the Representatives have consented in accordance with
Section 4(e), (h) or (l), any Issuer Free Writing Prospectus set forth on Schedule III(a) hereto and, in connection with
the Directed Share Program described in Section 2, the enrollment materials prepared by Xxxxxxx Xxxxx & Associates, Inc.
4. Certain Covenants:
The Company hereby agrees with each Underwriter:
(a) to furnish such information as may be required and otherwise to cooperate in qualifying
the Shares for offering and sale under the securities or blue sky laws of such jurisdictions (both
domestic and foreign) as the Representatives may reasonably designate and to maintain such
qualifications in effect as long as reasonably requested by the Representatives for the
distribution of the Shares, provided that the Company shall not be required to qualify as a foreign
corporation or other entity or as a dealer in securities in any such jurisdiction or to consent to
the service of process under the laws of any such jurisdiction (except service of process with
respect to the offering and sale of the Shares) or subject itself to taxation in any such
jurisdiction if it is not otherwise so subject;
(b) if, at the time this Agreement is executed and delivered, it is necessary for a
post-effective amendment to the Registration Statement to be declared effective before the offering
of the Shares may commence, the Company will endeavor to cause such post-effective amendment, in a
form approved by the Representatives, to become effective as soon as possible and will advise the
Representatives promptly and, if requested by the Representatives, will confirm such advice in
writing, when such post-effective amendment has become effective;
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(c) to prepare the Prospectus in a form approved by the Underwriters and file such Prospectus
with the Commission pursuant to Rule 424(b) under the Securities Act
not later than 10:00 a.m. (New York City time), on the business day next succeeding the day
following the execution and delivery of this Agreement or on such other day as the parties may
mutually agree and to furnish promptly (and with respect to the initial delivery of such
Prospectus, not later than 10:00 a.m. (New York City time) on the business day next succeeding the
day following the execution and delivery of this Agreement or on such other day as the parties may
mutually agree to the Underwriters copies of the Prospectus (or of the Prospectus as amended or
supplemented if the Company shall have made any amendments or supplements thereto after the
effective date of the Registration Statement) in such quantities and at such locations as the
Underwriters may reasonably request for the purposes contemplated by the Securities Act
Regulations, which Prospectus and any amendments or supplements thereto furnished to the
Underwriters will be identical to the version transmitted to the Commission for filing via XXXXX,
except to the extent permitted by Regulation S-T;
(d) to advise the Representatives promptly and (if requested by the Representatives) to
confirm such advice in writing, when the Registration Statement has become effective and when any
post-effective amendment thereto becomes effective under the Securities Act Regulations;
(e) to furnish a copy of each proposed Free Writing Prospectus to the Representatives and
counsel for the Underwriters and obtain the consent of the Representatives prior to referring to,
using or filing with the Commission any Free Writing Prospectus pursuant to Rule 433(d) under the
Securities Act, other than the Issuer Free Writing Prospectuses, if any, identified in Schedule
III(a) hereto;
(f) to comply with the requirements of Rules 164 and 433 of the Securities Act Regulations
applicable to any Issuer Free Writing Prospectus, including timely filing with the Commission,
legending and record keeping, as applicable;
(g) to advise the Representatives promptly, confirming such advice in writing, of (i) the
receipt of any comments from, or any request by, the Commission for amendments or supplements to
the Registration Statement, the Preliminary Prospectus, the Prospectus or any Issuer Free Writing
Prospectus, or for additional information with respect thereto, (ii) the issuance by the Commission
of any stop order suspending the effectiveness of the Registration Statement or of any order
preventing or suspending the use of the Preliminary Prospectus, the Prospectus or any Issuer Free
Writing Prospectus, or of the suspension of the qualification of the Shares for offering or sale in
any jurisdiction, or of the initiation or threatening of any proceedings for any of such purposes
and, if the Commission or any other government agency or authority should issue any such order, to
make every reasonable effort to obtain the lifting or removal of such order as soon as possible,
(iii) any examination pursuant to Section 8(e) of the Securities Act concerning the Registration
Statement, or (iv) if the Company becomes subject to a proceeding under Section 8A of the
Securities Act in connection with the public offering of Shares contemplated herein;
-18-
(h) to advise the Representatives promptly of any proposal to amend or supplement the
Registration Statement, the Preliminary Prospectus, the Prospectus or
any Issuer Free Writing Prospectus and to not effect any amendment or supplement to the
Registration Statement, any Preliminary Prospectus, the Prospectus or any Issuer Free Writing
Prospectus without the Representatives’ consent, which shall not be unreasonably withheld;
(i) to furnish to the Underwriters for a period of three years from the date of this Agreement
(i) as soon as available, copies of all annual, quarterly and current reports or other
communications supplied to holders of shares of Common Stock, (ii) as soon as practicable after the
filing thereof, copies of all reports filed by the Company with the Commission, FINRA or any
securities exchange and (iii) such other information as the Underwriters may reasonably request
regarding the Company and the Subsidiaries, provided, the Company shall be deemed to have furnished
such reports, communications and information to the Representatives to the extent they are filed on
the Commission’s XXXXX system;
(j) to advise the Underwriters promptly of the happening of any event or development known to
the Company within the time during which a Prospectus relating to the Shares (or in lieu thereof
the notice referred to in Rule 173(a) under the Securities Act Regulations) is required to be
delivered under the Securities Act Regulations which, in the judgment of the Company or in the
reasonable opinion of the Representatives or counsel for the Underwriters, (i) would require the
making of any change in the Prospectus or the Disclosure Package so that the Prospectus or the
Disclosure Package would not include 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, (ii) as a result of which
any Issuer Free Writing Prospectus conflicted or would conflict with the information contained in
the Registration Statement relating to the Shares, or (iii) if it is necessary at any time to amend
or supplement the Prospectus or the Disclosure Package to comply with any law and, during such
time, to promptly prepare and furnish to the Underwriters copies of the proposed amendment or
supplement before filing any such amendment or supplement with the Commission and thereafter
promptly furnish at the Company’s own expense to the Underwriters and to dealers, copies in such
quantities and at such locations as the Representatives may from time to time reasonably request of
an appropriate amendment or supplement to the Prospectus or the Disclosure Package so that the
Prospectus or the Disclosure Package as so amended or supplemented will not, in the light of the
circumstances when it (or in lieu thereof the notice referred to in Rule 173(a) under the
Securities Act Regulations) is so delivered, be misleading or, in the case of any Issuer Free
Writing Prospectus, conflict with the information contained in the Registration Statement, or so
that the Prospectus or the Disclosure Package will comply with the law;
(k) to file, in a form approved by the Representatives, which approval shall not be
unreasonably withheld or delayed, promptly with the Commission any amendment or supplement to the
Registration Statement, any Preliminary Prospectus, the Prospectus or any Issuer Free Writing
Prospectus that may, in the reasonable
-19-
judgment of the Company or the Representatives, be required
by the Securities Act or requested by the Commission;
(l) prior to filing with the Commission any amendment or supplement to the Registration
Statement, any Preliminary Prospectus, the Prospectus or any Issuer Free Writing Prospectus, to
furnish a copy thereof to the Representatives and counsel for the Underwriters and obtain the
consent of the Representatives to the filing, which consent shall not be unreasonably withheld or
delayed;
(m) to furnish promptly to each Representative a signed copy of the Registration Statement, as
initially filed with the Commission, and of all amendments or supplements thereto (including all
exhibits filed therewith or incorporated by reference therein) and such number of conformed copies
of the foregoing as the Representatives may reasonably request;
(n) to furnish to each Representative, not less than one business day before filing with the
Commission, during the period referred to in paragraph (i) above, a copy of any document proposed
to be filed with the Commission pursuant to Section 13, 14, or 15(d) of the Exchange Act and during
the period of three years hereafter to file all such documents in the manner and within the time
periods required by the Exchange Act and the Exchange Act Regulations;
(o) to apply the net proceeds of the sale of the Shares in material accordance with its
statements under the caption “Use of Proceeds” in the Prospectus and the Disclosure Package;
(p) to make generally available to its security holders and to deliver to the Representatives
as soon as practicable, but in any event not later than the end of the fiscal quarter first
occurring after the first anniversary of the effective date of the Registration Statement an
earnings statement complying with the provisions of Section 11(a) of the Securities Act (in form,
at the option of the Company, complying with the provisions of Rule 158 of the Securities Act
Regulations,) covering a period of 12 months beginning after the effective date of the Registration
Statement;
(q) to use its commercially reasonable efforts to maintain the quotation of the Shares on the
Nasdaq and to file with the Nasdaq all documents and notices required by the Nasdaq of companies
that have securities that are traded and quotations for which are reported by the Nasdaq;
(r) to use its commercially reasonable efforts to engage and maintain, at its expense, a
registrar and transfer agent for the Shares;
(s) to refrain, from the date hereof until 180 days (the “Lock-Up Period”) after the date of
the Prospectus, without the prior written consent of the Representatives, from, directly or
indirectly, (i) offering, pledging, selling, contracting to sell, selling any option or contract to
purchase, purchasing any option or contract to sell, granting any option for the sale of, or
otherwise disposing of or transferring, (or entering into any transaction or device which is
designed to, or could be expected to, result in the
-20-
disposition by any person at any time in the
future of), any share of Common Stock or any securities convertible into or exercisable or
exchangeable for Common Stock, or
filing any registration statement under the Securities Act with respect to any of the
foregoing, or (ii) entering into any swap or any other agreement or any transaction that transfers,
in whole or in part, directly or indirectly, the economic consequence of ownership of the Common
Stock, whether any such swap or transaction described in clause (i) or (ii) above is to be settled
by delivery of Common Stock or such other securities, in cash or otherwise. The foregoing sentence
shall not apply to (A) the Shares to be sold hereunder, or (B) shares of Common Stock specifically
permitted to be transferred in a lock-up letter described in Section 4(u) hereof, (C) any shares of
Common Stock issued by the Company upon the exercise of an option outstanding on the date hereof
and referred to in the Prospectus; provided, however, that if (1) during the last 17 days of the
initial Lock-Up Period, the Company releases earnings results or announces material news or a
material event or (2) prior to the expiration of the initial Lock-Up Period, the Company announces
that it will release earnings results during the 16-day period following the last day of the
initial Lock-Up Period, then in each case the Lock-Up Period will be automatically extended until
the expiration of the 18-day period beginning on the date of release of the earnings results or the
announcement of the material news or material event, as applicable, unless the Representatives
waive, in writing, such extension; the Company will provide the Representatives and each
stockholder subject to the Lock-Up Period pursuant to the lock-up letters described in Section 4(u)
with prior notice of any such announcement that gives rise to an extension of the Lock-up Period;
if the Representatives, in their sole discretion, agree to release or waive the restrictions set
forth in a lock-up letter described in Section 4(u) hereof for an officer or director of the
Company and provides the Company with notice of the impending release or waiver at least three
business days before the effective date of the release or waiver substantially in the form of
Exhibit B hereto, and the Company agrees to announce the impending release or waiver by a press
release substantially in the form of Exhibit C hereto through a major news service at least two
business days before the effective date of the release or waiver.
(t) not to, and to use its commercially reasonable efforts to cause its officers, directors
and affiliates not to, (i) take, directly or indirectly prior to termination of the underwriting
syndicate contemplated by this Agreement, any action designed to stabilize or manipulate the price
of any security of the Company, or which may cause or result in, or which might in the future
reasonably be expected to cause or result in, the stabilization or manipulation of the price of any
security of the Company, to facilitate the sale or resale of any of the Shares, (ii) sell, bid for,
purchase or pay anyone any compensation for soliciting purchases of the Shares or (iii) pay or
agree to pay to any person any compensation for soliciting any order to purchase any other
securities of the Company;
(u) to cause each 1% or greater stockholder, officer and director of the Company to furnish to
the Representatives, prior to the Initial Sale Time, a letter or letters, substantially in the form
of Exhibit A hereto;
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(v) that the Company will comply with all of the provisions of any undertakings in the
Registration Statement;
(w) in connection with the
Directed Share Program, to ensure that the Directed Shares will be restricted from sale, transfer, assignment, pledge or
hypothecation to the same extent as sales and dispositions of Common Stock would be restricted pursuant to a letter
substantially in the form of Exhibit A hereto, and Xxxxxxx Xxxxx & Associates, Inc. will notify the Company as to which
Directed Share Participants will need to be so restricted. At the request of Xxxxxxx Xxxxx & Associates, Inc., the
Company will direct the transfer agent to place stop transfer restrictions upon such securities for such period of
time as is consistent with Exhibit A;
(x) to comply with all
applicable securities and other applicable laws, rules and regulations in each jurisdiction in which the Directed
Shares are offered in connection with the Directed Share Program;
(y) the Company represents and agrees that, without the prior consent of the Representatives,
(i) it did not make any Section 5(d) Communications prior to the initial filing of the Registration
Statement and (ii) it has not made and will not make any written Section 5(d) Communications that
contain “issuer information” as defined in Rule 433 under the Securities Act; each Underwriter
represents and agrees that, without the prior consent of the Company and the Representatives, (i)
it did not make any Section 5(d) Communications prior to the initial filing of the Registration
Statement and (ii) it has not made and will not make any written Section 5(d) Communications that
contain “issuer information” as defined in Rule 433 under the Securities Act; any written Section
5(d) Communication which has been consented to by the Company and the Representatives is listed on
Schedule III(b) hereto;
(z) The Company represents and agrees that any Section 5(d) Communications undertaken by it
were and will be with qualified institutional buyers as defined in Rule 144A under the Securities
Act and institutions that are accredited investors as defined in Rule 501(a) under the Securities
Act; and each Underwriter represents and agrees that any Section 5(d) Communications undertaken by
it were and will be with qualified institutional buyers as defined in Rule 144A under the
Securities Act and institutions that are accredited investors as defined in Rule 501(a) under the
Act; and
(aa) until the date that is 15 days after expiration of the Lock-Up Period, as may be extended,
to notify the Representatives on or prior to the date on which the Company is no longer and
“emerging growth company” as defined in Section 2(a)(19) of the Securities Act.
Each Underwriter hereby represents and agrees that it has not and will not use, authorize use
of, refer to, or participate in the planning for use of, any “free writing prospectus”, as defined
in Rule 405 under the Securities Act (which term includes use of any written information furnished
to the Commission by the Company and not incorporated by reference into the Registration Statement
and any press release issued by the Company) other than (i) a free writing prospectus that contains
no “issuer information” (as defined in Rule 433(h)(2) under the Securities Act) that was not
included in the Preliminary Prospectus or a previously filed Issuer Free Writing Prospectus, (ii)
any Issuer Free Writing Prospectus listed on Schedule III(a), or (iii) any free writing prospectus
prepared by such Underwriter and approved by the Company in advance.
5. Payment of Expenses:
(a) The Company agrees to pay or cause to be paid all costs and expenses incident to the
performance of its obligations under this Agreement, whether or not the transactions contemplated
hereunder are consummated or this Agreement is terminated, including without limitation (i) the
preparation and filing of the Registration Statement, each Preliminary Prospectus, the Prospectus,
any Issuer Free Writing Prospectus and
-22-
any amendments or supplements thereto, and the printing and
furnishing of copies of each thereof to the Underwriters and to dealers (including costs of mailing
and shipment), (ii)
the preparation, issuance and delivery of the certificates for the Shares to the Underwriters,
including any stock or other transfer taxes or duties payable upon the sale of the Shares to the
Underwriters, (iii) the qualification of the Shares for offering and sale under state laws that the
Company and the Representatives have mutually agreed are appropriate and the determination of their
eligibility for investment under state law as aforesaid (including the legal fees and filing fees
and other disbursements of counsel for the Underwriters and the printing and furnishing of copies
of any blue sky surveys or legal investment surveys to the Underwriters and to dealers, (iv) filing
for review of the public offering of the Shares by FINRA (including the legal fees and filing fees
and other disbursements of counsel and expenses of (a) FBR Capital Markets & Co. acting as
“qualified independent underwriter” within the meaning of the aforementioned FINRA Rule 5121 and
(b) the Underwriters), (v) the fees and expenses of any transfer agent or registrar for the Shares
and miscellaneous expenses referred to in the Registration Statement, (vi) the fees and expenses
incurred in connection with the inclusion of the Shares in the Nasdaq, (vii) making road show
presentations with respect to the offering of the Shares, (viii) preparing and distributing copies
(electronic or otherwise) of transaction documents for the
Representatives and its legal counsel, (ix) the offer and sale of Shares by the Underwriters in
connection with the Directed Share Program, including the reasonable fees and disbursements of counsel to the
Underwriters related thereto, the actual out-of-pocket costs and expenses of preparation, printing and distribution
of the Directed Share Program material and all stamp duties or other taxes incurred by the Underwriters in connection
with the Directed Share Program, and (x) the performance of the Company’s other obligations hereunder.
(b) If this Agreement shall be terminated by the Underwriters, or any of them, because of any
failure or refusal on the part of the Company to materially comply with the terms or to fulfill any
of the conditions of this Agreement, or if for any reason the Company shall be unable to perform
its obligations under this Agreement, the Company also will reimburse the Underwriters or such
Underwriters as have so terminated this Agreement with respect to themselves, severally, for all
out-of-pocket expenses (such as printing, facsimile, courier service, direct computer expenses,
accommodations, travel and the fees and disbursements of Underwriters’ counsel) and any other
advisors, accountants, appraisers, etc. reasonably incurred by such Underwriters in connection with
this Agreement or the transactions contemplated herein.
6. Conditions of the Underwriters’ Obligations:
The obligations of the Underwriters hereunder to purchase Shares at the Closing Time or on
each Option Closing Time, as applicable, are subject to the accuracy of the representations and
warranties on the part of the Company hereunder on the date hereof and at the Closing Time and on
each Option Closing Time, as applicable, the performance by the Company of its obligations
hereunder and to the satisfaction of the following further conditions at the Closing Time or on
each Option Closing Time, as applicable:
(a) The Company shall furnish to the Underwriters at the Closing Time and on each Option
Closing Time an opinion of Xxxxxxxxx Xxxxxxxx LLP, counsel for the Company and the Subsidiaries,
addressed to the Underwriters and dated the Closing
-23-
Time and each Option Closing Time and in form
and substance reasonably satisfactory to Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, counsel for the
Underwriters, stating that:
(i) the Company has an authorized capitalization as set forth in both the
Prospectus and the Disclosure Package under the caption “Capitalization”; the
outstanding shares of capital stock or other equity interests of the Company and
the Subsidiaries have been duly and validly authorized and issued and are fully
paid and non-assessable, and all of the outstanding shares of capital stock or
other equity interests of the Subsidiaries are directly or indirectly owned of
record and beneficially by the Company; except as disclosed in both the Prospectus
and the Disclosure Package, there are no outstanding (i) securities or obligations
of the Company or any of the Subsidiaries convertible into or exchangeable for any
capital stock or other equity interests of the Company or any such Subsidiary, (ii)
warrants, rights or options to subscribe for or purchase from the Company or any
such Subsidiary any such capital stock or other equity interests or any such
convertible or exchangeable securities or obligations, or (iii) obligations of the
Company or any such Subsidiary to issue any shares of capital stock or other equity
interests, any such convertible or exchangeable securities or obligation, or any
such warrants, rights or options;
(ii) each of the Company and the Subsidiaries (all of which are named in an
exhibit to the Registration Statement) is validly existing as a corporation,
limited liability company or limited partnership, as the case may be, in good
standing under the laws of its respective jurisdiction of incorporation with all
necessary corporate power and authority to own or hold its respective properties
and to conduct its respective businesses as described in each of the Registration
Statement, the Prospectus and the Disclosure Package, and, in the case of the
Company, to execute and deliver this Agreement and to consummate the transactions
described in this Agreement;
(iii) the Company and the Subsidiaries are duly qualified or licensed by each
jurisdiction in which they conduct their respective businesses and in which the
failure to be so licensed would reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect, and the Company and the Subsidiaries are
duly qualified, and are in good standing, in each jurisdiction in which they own or
lease real property or maintain an office and in which such qualification is
necessary except where the failure to be so qualified and in good standing would
not reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect; except as disclosed in both the Prospectus and the Disclosure
Package, no Subsidiary is prohibited or restricted, directly or indirectly, from
paying dividends to the Company, or from making any other distribution with respect
to such Subsidiary’s capital stock or other equity interests or from repaying to
the Company or any other Subsidiary
-24-
any amounts which may from time to time become
due under any loans or advances to such Subsidiary from the Company or such other
Subsidiary, or from transferring any such Subsidiary’s property or assets to the Company
or to any other Subsidiary;
(iv) to the knowledge of such counsel, the Company and the Subsidiaries are in
compliance in all respects with all applicable laws, orders, rules, regulations and
orders, including those relating to transactions with affiliates, except where the
failure to be in compliance would not reasonably be expected to have, individually
or in the aggregate, a Material Adverse Effect;
(v) to the knowledge of such counsel, neither the Company nor any of the
Subsidiaries is in violation of any term or provision of its organizational
documents, is in breach of, or in default under (nor has any event occurred which
with notice, lapse of time, or both would constitute a breach of, or default
under), any license, indenture, mortgage, deed of trust, loan or credit agreement
or any other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which any of them or their respective properties may
be bound or affected or under any law, regulation or rule or any decree, judgment
or order applicable to the Company or any of the Subsidiaries, except such breaches
or defaults which would not reasonably be expected to have a Material Adverse
Effect;
(vi) the execution, delivery and performance of this Agreement by the Company
and the consummation by the Company of the transactions contemplated by this
Agreement do not and will not (A) conflict with, or result in any breach of, or
constitute a default under (nor constitute any event which with notice, lapse of
time, or both would constitute a breach of or default under), (i) any provisions of
the certificate of incorporation, charter or by-laws of the Company or any
Subsidiary, (ii) any provision of any license, indenture, mortgage, deed of trust,
loan, credit or other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them or their respective properties,
rights or assets may be bound or affected, (iii) any law or regulation binding upon
or applicable to the Company or any Subsidiary or any of their respective
properties, rights or assets, or (iv) any decree, judgment or order applicable to
the Company or any Subsidiary; or (B) result in the creation or imposition of any
lien, charge, claim or encumbrance upon any property, rights or assets of the
Company or the Subsidiaries, except in the case of (A)(ii), (iii) and (iv) and (B)
where such conflict, breach or default would not reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect;
(vii) this Agreement has been duly authorized, executed and delivered by the
Company;
-25-
(viii) no approval, authorization, consent or order of or filing with any
federal or state governmental or regulatory commission, board, body, authority or
agency is required in connection with the execution, delivery and performance of
this Agreement, the consummation of the transactions contemplated herein, and the
sale and delivery of the Shares by the Company as contemplated herein, other than
registration of the Shares under the Securities Act and the Securities Act
Regulations and such consents, approvals, authorizations, registrations or
qualifications under the Exchange Act and Exchange Act Regulations, and except that
such counsel need express no opinion as to any necessary consents, approvals,
authorizations, registrations or qualification required by Nasdaq or FINRA, or
under the state securities or blue sky laws of the various jurisdictions in which
the Shares are being offered by the Underwriters;
(ix) to such counsel’s knowledge, each of the Company and the Subsidiaries has
all necessary material licenses, authorizations, consents and approvals and has
made all necessary filings required under any federal or state law, regulation or
rule, and has obtained all necessary authorizations, consents and approvals from
other persons, required to conduct their respective businesses, as described in
both the Prospectus and the Disclosure Package; to such counsel’s knowledge,
neither the Company nor any Subsidiary is in violation of, in default under, or has
received any notice regarding a possible violation, default or revocation of any
such material license, authorization, consent or approval or any federal, state or
foreign law, regulation or decree, order or judgment applicable to the Company or
any of the Subsidiaries;
(x) the Company is not subject to registration as an investment company under
the Investment Company Act of 1940, as amended, and the transactions contemplated
by this Agreement will not cause the Company to become an investment company
subject to registration under such Act;
(xi) the Shares have been duly authorized and when the Shares have been issued
and duly delivered against payment therefor as contemplated by this Agreement, the
Shares will be validly issued, fully paid and non-assessable, and the Underwriters
will acquire good and marketable title to the Shares, free and clear of any pledge,
lien, encumbrance, security interest, or other claim pursuant to (A) any provisions
of the certificate of incorporation, charter or by-laws of the Company or any
Subsidiary or (B) any provision of any material license, indenture, mortgage, deed
of trust, loan, credit or other agreement or instrument to which the Company or any
Subsidiary is a party or by which any of them or their respective properties,
rights or assets may be bound or affected;
-26-
(xii) except as has been waived with respect to the offering contemplated by
this Agreement and as is described in the Prospectus and the Disclosure Package,
the issuance and sale of the Shares by the Company is not subject to preemptive or
other similar rights arising by operation of law, under the certificate of
incorporation, charter or by-laws of the Company, or under any agreement filed as
exhibits to the Registration Statement or, to such counsel’s knowledge, otherwise;
(xiii) to the knowledge of such counsel, there are no persons with
registration or other similar rights to have any equity or debt securities,
including securities that are convertible into or exchangeable for equity
securities, registered pursuant to the Registration Statement or otherwise
registered by the Company under the Securities Act, except for those registration
or similar rights which have been waived with respect to the offering contemplated
by this Agreement;
(xiv) the Shares conform in all material respects to the descriptions thereof
contained or incorporated by reference in each of the Registration Statement, the
Prospectus and the Disclosure Package;
(xv) based on a review of the Commission’s website, that the Registration
Statement has become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement has been issued and, to
the best of such counsel’s knowledge, no proceedings with respect thereto have been
commenced or threatened;
(xvi) as of each effective date of the Registration Statement, the
Registration Statement and the Prospectus (except as to the financial statements,
notes and schedules thereto and other financial or accounting data contained
therein or any statistical data or information concerning coal reserves, as to
which such counsel need express no opinion) appear, on their face, to comply as to
form in all material respects with the requirements of the Securities Act, the
Exchange Act, the Securities Act Regulations and the Exchange Act Regulations;
(xvii) the statements under the captions “Business-Regulation and Laws”,
“Description of Capital Stock,” “Shares Eligible for Future Sale”, “Material United
States Federal Income and Estate Tax Consequences to Non-U.S. Holders” and “Certain
ERISA Considerations” in both the Prospectus and the Disclosure Package, insofar as
such statements constitute a summary of the legal matters referred to therein,
constitute accurate summaries thereof in all material respects;
(xviii) the 8-A Registration Statement, when filed with the Commission,
complied as to form in all material respects with the requirements of the Exchange
Act; the Form 8-A Registration Statement has become effective under the Exchange
Act; and the Initial Shares and the Option Shares have been validly registered under the Securities Act,
-27-
the Exchange Act and the Securities Act Regulations and the Exchange Act Regulations;
(xix) there are no actions, suits or proceedings, inquiries, or investigations
pending or, to such counsel’s knowledge, threatened against the Company or any of
the Subsidiaries or any of their respective executive officers and directors, in
such capacity, or to which the properties, assets or rights of any such entity are
subject, at law or in equity, before or by any federal, state or foreign
governmental or regulatory commission, board, body, authority, arbitral panel or
agency which are required to be described in the Registration Statement, the
Prospectus or the Disclosure Package but are not so described; and
(xx) to such counsel’s knowledge, there are no contracts or documents of a
character which are required to be filed as exhibits to the Registration Statement
or required to be described or summarized in the Registration Statement, the
Prospectus or the Disclosure Package which have not been so filed, summarized or
described, and all such summaries and descriptions, in all material respects,
fairly and accurately set forth the material provisions of such contracts and
documents.
In rendering such opinion, Xxxxxxxxx Xxxxxxxx LLP may rely upon the opinion of Xxxxxx Xxxxx
PLLC with respect to the corporate status and capitalization of the Subsidiaries and may include
customary assumptions, qualifications and limitations.
In addition, such counsel shall state that they have participated in conferences with officers
and other representatives of the Company, independent public accountants of the Company,
representatives of the Representatives, at which the contents of the Registration Statement, the
Prospectus and the documents constituting the Disclosure Package were discussed and, although such
counsel was not engaged to establish or confirm factual matters and has not independently verified
and is not passing upon and does not assume responsibility for the accuracy, completeness or
fairness of the statements contained in the Registration Statement, the Prospectus or the
Disclosure Package (except as and to the extent stated in subparagraphs (xiv), (xvi),
(xvii),(xviii), (xix) and (xx) above), nothing has come to their attention which would lead them to
believe that (i) either the Registration Statement, at the time of any effective date applicable
thereto, contained an untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary in order to make the statements in the Registration
Statement not misleading; or (ii) the Prospectus, as of its date or at the Closing Time or any
Option Closing Time, as the case may be, contained an untrue statement of a material fact or
omitted to state a material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading; or (iii) the Disclosure Package as of
the Initial Sale Time contained any untrue statement of a material fact or omitted to state any
material fact necessary in order to make the statements therein, in the light of circumstances
under which they were made, not misleading (it being understood that such counsel need express no
belief as to the
financial statements, notes or schedules or other financial or accounting data derived
-28-
therefrom, or any statistical data or any information concerning coal reserves, included in the
Registration Statement the Prospectus, the Disclosure Package or any amendments or supplements
thereto).
(b) On the date of this Agreement and at the Closing Time and each Option Closing Time (if
applicable), the Representatives shall have received from Ernst & Young LLP letters dated the
respective dates of delivery thereof and addressed to the Underwriters, in form and substance
satisfactory to the Representatives, containing statements and information of the type specified in
AU Section 634 “Letters for Underwriters and Certain other Requesting Parties” issued by the
American Institute of Certified Public Accountants with respect to the financial statements,
including any pro forma financial statements, and certain financial information of the Company and
the Subsidiaries included in the Registration Statement, the Prospectus and the Disclosure Package,
and such other matters customarily covered by comfort letters issued in connection with registered
public offerings; provided, that the letters delivered at the Closing Time and each Option Closing
Time (if applicable) shall use a “cut-off” date no more than three business days prior to such
Closing Time or such Option Closing Time, as the case may be.
In the event that the letters referred to above set forth any changes in indebtedness,
decreases in total assets or retained earnings or increases in borrowings, it shall be a further
condition to the obligations of the Underwriters that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the Representatives deems
such explanation unnecessary, and (B) such changes, decreases or increases do not, in the sole
judgment of the Representatives, make it impractical or inadvisable to proceed with the purchase
and delivery of the Shares as contemplated by the Registration Statement.
(c) The Representatives shall have received at the Closing Time and on each Option Closing
Time an opinion of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP, dated the Closing Time or such Option Closing
Time, addressed to the Underwriters and in form and substance satisfactory to the Representatives.
(d) The Registration Statement shall have become effective not later than 5:00 p.m., New York
City time, on the date of this Agreement, or such later time and date as the Representatives shall
approve.
(e) No amendment or supplement to the Registration Statement, the Prospectus or any document
in the Disclosure Package shall have been filed to which the Underwriters shall have objected in
writing.
(f) Prior to the Closing Time and each Option Closing Time (i) no stop order suspending the
effectiveness of the Registration Statement or any order preventing or suspending the use of the
Prospectus or any document in the Disclosure Package shall have been issued, and no proceedings for
such purpose shall have been initiated or threatened, by the Commission, and no suspension of the
qualification of the Shares for
offering or sale in any jurisdiction, or the initiation or threatening of any proceedings for
any of such purposes, has occurred; (ii) all requests for additional information on the
-29-
part of the
Commission shall have been complied with to the reasonable satisfaction of the Representatives;
(iii) the Registration Statement shall not contain an untrue statement of a material fact or omit
to state a material fact required to be stated therein or necessary to make the statements therein
not misleading; and (iv) the Prospectus and the Disclosure Package shall not contain an untrue
statement of a material fact or omit to state a material fact necessary to make the statements
therein, in the light of the circumstances under which they were made, not misleading.
(g) All filings with the Commission required by Rule 424 under the Securities Act to have been
filed by the Closing Time shall have been made within the applicable time period prescribed for
such filing by such Rule.
(h) Between the time of execution of this Agreement and the Closing Time or the relevant
Option Closing Time (i) there shall not have been any Material Adverse Change or any development
involving any prospective Material Adverse Change, and (ii) no transaction which is material and
unfavorable to the Company shall have been entered into by the Company or any of the Subsidiaries,
in each case, which in the Representatives’ sole judgment, makes it impracticable or inadvisable to
proceed with the public offering of the Shares as contemplated by the Registration Statement.
(i) The Shares shall have been approved for inclusion in the Nasdaq.
(j) FINRA shall not have raised any objection with respect to the fairness and reasonableness
of the underwriting terms and arrangements.
(k) The Representatives shall have received lock-up agreements from each officer, director and
1% or greater stockholder of the Company, in the form of Exhibit A attached hereto, and such letter
agreements shall be in full force and effect.
(l) The Company will, at the Closing Time and on each Option Closing Time, deliver to the
Underwriters a certificate of its Chairman of the Board, Chief Executive Officer, President, Chief
Operating Officer or Vice President and Chief Accounting Officer or Chief Financial Officer, to the
effect that:
(i) the representations and warranties of the Company and any affiliate in
this Agreement are true and correct, as if made on and as of the Closing Time or
any Option Closing Time, as applicable, and the Company has complied with all the
agreements and satisfied all the conditions on its part to be performed or
satisfied at or prior to the Closing Time or any Option Closing Time, as
applicable;
(ii) no stop order suspending the effectiveness of the Registration Statement
or any post-effective amendment thereto has been issued and no proceedings for that
purpose have been instituted or are pending or threatened under the Securities Act;
(iii) the signers of such certificate have carefully examined the Registration
Statement, the Prospectus, the Disclosure Package, any
-30-
amendment or supplement
thereto, and this Agreement, and that when the Registration Statement became
effective and at all times subsequent thereto up to the Closing Time or any Option
Closing Time, as applicable, the Registration Statement and the Prospectus and the
Preliminary Prospectus, and any amendments or supplements thereto, contained all
material information required to be included therein by the Securities Act or the
Exchange Act and the applicable rules and regulations of the Commission thereunder,
as the case may be, and in all material respects conformed to the requirements of
the Securities Act or the Exchange Act and the applicable rules and regulations of
the Commission thereunder, as the case may be; the Registration Statement and any
amendments thereto, did not and, as of the Closing Time or any Option Closing Time,
as applicable, does not contain an untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to make the
statements therein not misleading and the Prospectus and the Disclosure Package,
and any amendments or supplements thereto, did not and as of the Closing Time or
any Option Closing Time, as applicable, do not include any 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; and, since the effective date of the
Registration Statement, there has occurred no event required to be set forth in an
amendment or supplement to the Prospectus or the Disclosure Package which has not
been so set forth; and
(iv) subsequent to the respective dates as of which information is given in
the Registration Statement, the Prospectus and the Disclosure Package, there has
not been (a) any Material Adverse Change, (b) any transaction that is material to
the Company and the Subsidiaries considered as one enterprise, except transactions
entered into in the ordinary course of business, (c) any obligation, direct or
contingent, that is material to the Company and the Subsidiaries considered as one
enterprise, incurred by the Company or the Subsidiaries, except obligations
incurred in the ordinary course of business, (d) any change in the capital stock or
other equity interests or outstanding indebtedness of the Company or any Subsidiary
that is material to the Company and the Subsidiaries considered as one enterprise,
(e) any dividend or distribution of any kind declared, paid or made on the capital
stock or other equity interests of the Company or any Subsidiary, or (f) any loss
or damage (whether or not insured) to the property of the Company or any subsidiary
which has been sustained or will have been sustained which has a Material Adverse
Effect.
(m) On the date of this Agreement and on the Closing Date, Xxxx International, Inc. shall have
furnished to the Representatives, at the request of the
Company, letters, dated the respective dates of delivery thereof and addressed to the
Underwriters, in form and substance reasonably satisfactory to the Representatives,
-31-
containing statements and information with respect to the estimated coal reserves of the Company and its
subsidiaries contained in the Registration Statement, the Disclosure Package and the Prospectus.
(n) The Representatives shall have received on the date of this Agreement a certificate of the
Chief Financial Officer of the Company, substantially in the form of Exhibit D hereto.
(o) The Company shall have furnished to the Underwriters such other documents and certificates
as to the accuracy and completeness of any statement in the Registration Statement, the Prospectus
and the Disclosure Package, the representations, warranties and statements of the Company contained
herein, and the performance by the Company of its covenants contained herein, and the fulfillment
of any conditions contained herein, as of the Closing Time or any Option Closing Time, as the
Underwriters may reasonably request.
7. Termination:
The obligations of the several Underwriters hereunder shall be subject to termination in the
absolute discretion of the Representatives, at any time prior to the Closing Time or any Option
Closing Time, (i) if any of the conditions specified in Section 6 shall not have been fulfilled
when and as required by this Agreement to be fulfilled, or (ii) if there has been since the
respective dates as of which information is given in the Registration Statement, the Prospectus or
the Disclosure Package, any Material Adverse Change, or any development involving a prospective
Material Adverse Change, or material change in management of the Company or any Subsidiary, whether
or not arising in the ordinary course of business, or (iii) if there has occurred any outbreak or
escalation of hostilities or other national or international calamity or crisis or change in
economic, political or other conditions, the effect of which on the United States or international
financial markets is such as to make it, in the judgment of the Representatives, impracticable to
market the Shares or enforce contracts for the sale of the Shares, or (iv) if trading in any
securities of the Company has been suspended by the Commission or by the Nasdaq, or if trading
generally on the New York Stock Exchange or in the over-the-counter market has been suspended
(including an automatic halt in trading pursuant to market-decline triggers, other than those in
which solely program trading is temporarily halted), or limitations on prices for trading (other
than limitations on hours or numbers of days of trading) have been fixed, or maximum ranges for
prices for securities have been required, by such exchange or FINRA or the over-the-counter market
or by order of the Commission or any other governmental authority, or (v) any action has been taken
by any federal, state, local or foreign government or agency in respect of its monetary or fiscal
affairs which, in the reasonable opinion of the Representatives, could reasonably be expected to
have a material adverse effect on the securities markets in the United States.
If the Representatives elects to terminate this Agreement as provided in this Section 7, the
Company and the Underwriters shall be notified promptly by telephone, promptly confirmed by
facsimile.
-32-
If the sale to the Underwriters of the Shares, as contemplated by this Agreement, is not
carried out by the Underwriters for any reason permitted under this Agreement or if such sale is
not carried out because the Company shall be unable to comply in all material respects with any of
the terms of this Agreement, the Company shall not be under any obligation or liability under this
Agreement (except to the extent provided in Sections 5 and 9 hereof) and the Underwriters shall be
under no obligation or liability to the Company under this Agreement (except to the extent provided
in Section 9 hereof) or to one another hereunder.
8. Increase in Underwriters’ Commitments:
If any Underwriter shall default at the Closing Time or on any Option Closing Time in its
obligation to take up and pay for the Shares to be purchased by it under this Agreement on such
date, the Representatives shall have the right, within 36 hours after such default, to make
arrangements for one or more of the non-defaulting Underwriters, or any other underwriters, to
purchase all, but not less than all, of the Shares which such Underwriter shall have agreed but
failed to take up and pay for (the “Defaulted Shares”). Absent the completion of such arrangements
within such 36-hour period, (i) if the total number of Defaulted Shares does not exceed 10% of the
total number of Shares to be purchased on such date, each non-defaulting Underwriter shall take up
and pay for (in addition to the number of Shares which it is otherwise obligated to purchase on
such date pursuant to this Agreement) the portion of the total number of Shares agreed to be
purchased by the defaulting Underwriter on such date in the proportion that its underwriting
obligations hereunder bears to the underwriting obligations of all non-defaulting Underwriters; and
(ii) if the total number of Defaulted Shares exceeds 10% of such total, the Representatives may
terminate this Agreement by notice to the Company, without liability of any party to any other
party except that the provisions of Sections 5 and 9 hereof shall at all times be effective and
shall survive such termination.
Without relieving any defaulting Underwriter from its obligations hereunder, the Company
agrees with the non-defaulting Underwriters that it will not sell any Shares hereunder on such date
unless all of the Shares to be purchased on such date are purchased on such date by the
Underwriters (or by substituted Underwriters selected by the Representatives with the approval of
the Company or selected by the Company with the approval of the Representatives).
If a new Underwriter or Underwriters are substituted for a defaulting Underwriter in
accordance with the foregoing provision, the Company or the non-defaulting Underwriters shall have
the right to postpone the Closing Time or the relevant Option Closing Time for a period not
exceeding five business days in order that any necessary changes in the Registration Statement and
Prospectus and other documents may be effected.
The term “Underwriter” as used in this Agreement shall refer to and include any Underwriter
substituted under this Section 8 with the same effect as if such substituted Underwriter had
originally been named in this Agreement.
-33-
9. Indemnity and Contribution by the Company and the Underwriters:
(a) The Company agrees to indemnify, defend and hold harmless each Underwriter and any person
who controls any Underwriter within the meaning of Section 15 of the Securities Act or Section 20
of the Exchange Act, and the respective directors, officers, employees and agents of each
Underwriter from and against any loss, expense, liability, damage or claim (including the
reasonable cost of investigation) which, jointly or severally, any such Underwriter or controlling
person may incur under the Securities Act, the Exchange Act or otherwise, insofar as such loss,
expense, liability, damage or claim arises out of or is based upon (A) any breach of any
representation, warranty or covenant of the Company contained herein, (B) any failure on the part
of the Company to comply with any applicable law, rule or regulation relating to the offering of
securities being made pursuant to the Prospectus, (C) any untrue statement or alleged untrue
statement of a material fact contained in the Registration Statement (or any amendment), any Issuer
Free Writing Prospectus that the Company has filed or was required to file with the Commission or
is otherwise required retain, or the Prospectus (the term Prospectus for the purpose of this
Section 9 being deemed to include any Preliminary Prospectus, the Prospectus and the Prospectus as
amended or supplemented by the Company), or any written Section 5(d) Communication, (D) any
application or other document, or any amendment or supplement thereto, executed by the Company or
based upon written information furnished by or on behalf of the Company filed in any jurisdiction
(domestic or foreign) in order to qualify the Shares under the securities or blue sky laws thereof
or filed with the Commission or any securities association or securities exchange (each an
“Application”), (E) any omission or alleged omission to state a material fact required to be stated
in any such Registration Statement, or necessary to make the statements made therein not
misleading, (F) any omission or alleged omission from any such Issuer Free Writing Prospectus,
Prospectus, any written Section 5(d) Communication or any Application of a material fact necessary
to make the statements made therein, in the light of the circumstances under which they were made,
not misleading, (G) any untrue statement or alleged untrue statement of any material fact contained
in any audio or visual materials used in connection with the marketing of the Shares, including,
without limitation, slides, videos, films and tape recordings provided that in each case such
materials shall have been prepared or reviewed by and not objected to by the Partnership Parties;
except, in the case of (C), (E) and (F) above only, insofar as any such loss, expense, liability,
damage or claim arises out of or is based upon any untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in and in conformity with information
furnished in writing by the Underwriters through the Representatives to the Company expressly for
use in such Registration Statement, Prospectus, any written Section 5(d) Communication or
Application. The indemnity agreement set forth in this Section 9(a) shall be in addition to any
liability which the Company may otherwise have.
The Company also agrees to indemnify and hold harmless FBR Capital Markets & Co., its
affiliates, directors and officers and each person, if any, who controls FBR Capital Markets & Co.
within the meaning of Section 15 of the Securities Act or Section 20 of the Exchange Act, from and
against any and all losses, claims, damages and
-34-
liabilities incurred as a result of FBR Capital
Markets & Co.’s participation as a “qualified independent underwriter” within the meaning of FINRA
Rule 5121 in connection with the offering of the Shares.
The Company agrees to indemnify,
defend and hold harmless each Underwriter and any person who controls any Underwriter within the meaning of Section 15 of
the Securities Act or Section 20 of the Exchange Act, and the respective directors, officers, employees and agents of
each Underwriter (the “Entities”) from and against any loss, expense, liability, damage or claim (including the
reasonable cost of investigation) which, jointly or severally, any such Underwriter or controlling person may incur under
the Securities Act, the Exchange Act or otherwise, insofar as such loss, expense, liability, damage or claim (i) arises
out of, or is based upon, any untrue statement or alleged untrue statement of a material fact contained in any material
prepared by or with the approval of the Company for distribution to Directed Share Participants in connection with the
Directed Share Program or any omission or alleged omission to state therein a material fact required to be stated therein
or necessary to make the statements therein not misleading, (ii) arises out of, or is based upon, the failure of the
Directed Share Participant to pay for and accept delivery of Directed Shares that the Directed Share Participant agreed
to purchase or (iii) is otherwise related to the Directed Share Program; provided that the Company shall not
be liable under this clause (iii) for any loss, claim, damage, liability or action that is determined in a final
judgment by a court of competent jurisdiction to have resulted from the gross negligence or willful misconduct of the
Entities. The Company shall reimburse the Entities promptly upon demand for any legal or other expenses reasonably
incurred by them in connection with investigating or defending or preparing to defend against any such loss, claim,
damage, liability or action as such expenses are incurred.
If any action is brought against an Underwriter or controlling person in respect of which
indemnity may be sought against the Company pursuant to subsection (a) above, such Underwriter
shall promptly notify the Company in writing of the institution of such action, and the Company
shall assume the defense of such action, including the employment of counsel and payment of
expenses; provided, however that if indemnity may be sought pursuant to the second paragraph of
this Section 9(a) above in respect of such proceeding, then in addition to such separate firm of
the Underwriters, their affiliates and such control persons of the Underwriters the indemnifying
party shall be liable for the fees and expenses of not more than one separate firm (in addition to
any local counsel) for FBR Capital Markets & Co. in its capacity as a “qualified independent
underwriter”, its affiliates, directors, officers and all persons, if any, who control FBR Capital
Markets & Co. within the meaning of either Section 15 of the Securities Act or Section 20 of the
Exchange Act; provided further, however, that any failure or delay to so notify the Company will
not relieve the Company of any obligation hereunder, except to the extent that its ability to
defend is actually impaired by such failure or delay. Such Underwriter or controlling person shall
have the right to employ its or their own counsel in any such case, but the fees and expenses of
such counsel shall be at the expense of such Underwriter or such controlling person unless the
employment of such counsel shall have been authorized in writing by the Company in connection with
the defense of such action, or the Company shall not have employed counsel to have charge of the
defense of such action within a reasonable time or such indemnified party or parties shall have
reasonably concluded (based on the advice of counsel) that there may be defenses available to it or
them which are different from or additional to those available to the Company (in which case the
Company shall not have the right to direct the defense of such action on behalf of the indemnified
party or parties), in any of which events such fees and expenses shall be borne by the Company and
paid as incurred (it being understood, however, that the Company shall not be liable for the
expenses of more than one separate firm of attorneys for the Underwriters or controlling persons in
any one action or series of related actions in the same jurisdiction (other than local counsel in
any such jurisdiction) representing the indemnified parties who are parties to such action).
Anything in this paragraph to the contrary notwithstanding, the Company shall not be liable for any
settlement of any such claim or action effected without its consent, which consent shall not be
unreasonably withheld or delayed.
(b) Each Underwriter agrees, severally and not jointly, to indemnify, defend and hold harmless
the Company, the Company’s directors, the Company’s officers that signed the Registration
Statement, and any person who controls the Company within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, from and against any loss, expense, liability, damage or claim (including the reasonable cost of
investigation) which the Company or any such person may incur under the Securities Act, the
Exchange Act or otherwise, insofar as such loss, expense, liability, damage or claim arises out of
or is based upon (A) any untrue statement or alleged untrue statement of a material fact contained
in the Registration Statement (or any amendment), any
-35-
Issuer Free Writing Prospectus that the
Company has filed or was required to file with the Commission, or the Prospectus, or any written
Section 5(d) Communication or any Application, (B) any omission or alleged omission to state a
material fact required to be stated in any such Registration Statement, or necessary to make the
statements made therein not misleading, or (C) any omission or alleged omission from any such
Issuer Free Writing Prospectus, Prospectus, any written Section 5(d) Communication or any
Application of a material fact necessary to make the statements made therein, in the light of the
circumstances under which they were made, not misleading, but in each case only insofar as such
untrue statement or alleged untrue statement or omission or alleged omission was made in such
Registration Statement, Issuer Free Writing Prospectus, Prospectus, any written Section 5(d)
Communication or Application in reliance upon and in conformity with information furnished in
writing by the Underwriters through the Representatives to the Company expressly for use therein.
The statements set forth in the paragraphs identified by “Stabilization” under the caption
“Underwriting” and the fourth paragraph under the caption “Underwriting” in the Preliminary
Prospectus, the Disclosure Package and the Prospectus (to the extent such statements relate to the
Underwriters) constitute the only information furnished by or on behalf of any Underwriter through
the Representatives to the Company for purposes of Section 3(l) and Section 3(m) and this Section
9.
If any action is brought against the Company, or any such person in respect of which indemnity
may be sought against any Underwriter pursuant to the foregoing paragraph, the Company or such
person shall promptly notify the Representatives in writing of the institution of such action and
the Representatives, on behalf of the Underwriters, shall assume the defense of such action,
including the employment of counsel and payment of expenses. The Company or such person shall have
the right to employ its own counsel in any such case, but the fees and expenses of such counsel
shall be at the expense of the Company or such person unless the employment of such counsel shall
have been authorized in writing by the Representatives in connection with the defense of such
action or the Representatives shall not have employed counsel to have charge of the defense of such
action within a reasonable time or such indemnified party or parties shall have reasonably
concluded (based on the advice of counsel) that there may be defenses available to it or them which
are different from or additional to those available to the Underwriters (in which case the
Representatives shall not have the right to direct the defense of such action on behalf of the
indemnified party or parties), in any of which events such fees and expenses shall be borne by such
Underwriter and paid as incurred (it being understood, however, that the Underwriters shall not be
liable for the expenses of more than one separate firm of attorneys in any one action or series of
related actions in the same jurisdiction (other than local counsel in any such jurisdiction)
representing the indemnified parties who are parties to such action). Anything in this paragraph
to the contrary notwithstanding, no Underwriter shall be liable for any
settlement of any such claim or action effected without the written consent of the
Representatives, which consent shall not be unreasonably withheld or delayed..
(c) If the indemnification provided for in this Section 9 is unavailable or insufficient to
hold harmless an indemnified party under subsections (a) and (b) of this Section 9 in respect of
any losses, expenses, liabilities, damages or claims referred to
-36-
therein, then each applicable
indemnifying party, in lieu of indemnifying such indemnified party, shall contribute to the amount
paid or payable by such indemnified party as a result of such losses, expenses, liabilities,
damages or claims (i) in such proportion as is appropriate to reflect the relative benefits
received by the Company and the Underwriters or FBR Capital Markets & Co. in its capacity as a
“qualified independent underwriter”, as the case may be, from the offering of the Shares or (ii) if
(but only if) the allocation provided by clause (i) above is not permitted by applicable law, in
such proportion as is appropriate to reflect not only the relative benefits referred to in clause
(i) above but also the relative fault of the Company and of the Underwriters or FBR Capital Markets
& Co. in its capacity as a “qualified independent underwriter”, as the case may be, in connection
with the statements or omissions which resulted in such losses, expenses, liabilities, damages or
claims, as well as any other relevant equitable considerations. The relative benefits received by
the Company and the Underwriters or FBR Capital Markets & Co. in its capacity as a “qualified
independent underwriter”, as the case may be, shall be deemed to be in the same proportion as the
total proceeds from the offering (net of underwriting discounts and commissions but before
deducting expenses) received by the Company bear to the underwriting discounts and commissions
received by the Underwriters. The relative fault of the Company and of the Underwriters or FBR
Capital Markets & Co. in its capacity as a “qualified independent underwriter”, as the case may be,
shall be determined by reference to, among other things, whether the untrue statement or alleged
untrue statement of a material fact or omission or alleged omission relates to information supplied
by the Company or by the Underwriters or FBR Capital Markets & Co. in its capacity as a “qualified
independent underwriter”, as the case may be, and the parties’ relative intent, knowledge, access
to information and opportunity to correct or prevent such statement or omission. The amount paid
or payable by a party as a result of the losses, claims, damages and liabilities referred to above
shall be deemed to include any legal or other fees or expenses reasonably incurred by such party in
connection with investigating or defending any claim or action.
(d) The Company and the Underwriters agree that it would not be just and equitable if
contribution pursuant to this Section 9 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 in subsection (c)(i) and,
if applicable (ii), above. Notwithstanding the provisions of this Section 9, no Underwriter shall
be required to contribute any amount in excess of the underwriting discounts and commissions
applicable to the Shares purchased by such Underwriter. No person guilty of fraudulent
misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be entitled to
contribution from any person who was not guilty of such fraudulent misrepresentation. The Underwriters’ obligations to contribute pursuant to this Section 9 are
several in proportion to their respective underwriting commitments and not joint.
10. Survival:
The respective indemnity and contribution agreements and the covenants, warranties and
representations of the Company and the Underwriters contained in this
-37-
Agreement shall remain in
full force and effect regardless of any investigation made by or on behalf of any Underwriter, or
any person who controls any Underwriter within the meaning of Section 15 of the Securities Act or
Section 20 of the Exchange Act, and the respective directors, officers, employees and agents of
each Underwriter or by or on behalf of the Company, its directors and officers, or any person who
controls the Company within the meaning of Section 15 of the Securities Act or Section 20 of the
Exchange Act, and shall survive any termination of this Agreement or the sale and delivery of the
Shares. The Company and each Underwriter agree promptly to notify the others of the commencement
of any litigation or proceeding against it and, in the case of the Company, against any of the
Company’s officers and directors, in connection with the sale and delivery of the Shares, or in
connection with the Registration Statement or Prospectus.
11. Duties:
Nothing in this Agreement shall be deemed to create a partnership, joint venture or agency
relationship between the parties. The Underwriters undertake to perform such duties and
obligations only as expressly set forth herein. Such duties and obligations of the Underwriters
with respect to the Shares shall be determined solely by the express provisions of this Agreement,
and the Underwriters shall not be liable except for the performance of such duties and obligations
with respect to the Shares as are specifically set forth in this Agreement. The Company
acknowledges and agrees that: (i) the purchase and sale of the Shares pursuant to this Agreement,
including the determination of the public offering price of the Shares and any related discounts
and commissions, is an arm’s-length commercial transaction between the Company, on the one hand,
and the several Underwriters, on the other hand, and the Company is capable of evaluating and
understanding and understands and accepts the terms, risks and conditions of the transactions
contemplated by this Agreement; (ii) in connection with each transaction contemplated hereby and
the process leading to such transaction each Underwriter is and has been acting solely as a
principal and is not the financial advisor, agent or fiduciary of the Company or its affiliates,
stockholders, creditors or employees or any other party; (iii) no Underwriter has assumed or will
assume an advisory, agency or fiduciary responsibility in favor of the Company with respect to any
of the transactions contemplated hereby or the process leading thereto (irrespective of whether
such Underwriter has advised or is currently advising the Company on other matters); and (iv) the
several Underwriters and their respective affiliates may be engaged in a broad range of
transactions that involve interests that differ from those of the Company and that the several
Underwriters have no obligation to disclose any of such interests. The Company acknowledges that
the Underwriters disclaim any implied duties (including any fiduciary duty), covenants or
obligations arising from the Underwriters’ performance of the duties
and obligations expressly set forth herein. The Company hereby waives and releases, to the fullest
extent permitted by law, any claims that the Company may have against the several Underwriters with
respect to any breach or alleged breach of agency or fiduciary duty.
-38-
12. Research Analyst Independence:
The Company acknowledges that (a) the Underwriters’ research analysts and research
departments are required to be independent from their respective investment banking divisions and
are subject to certain regulations and internal policies and (b) the Underwriters’ research
analysts may hold views and make statements or investment recommendations and/or publish research
reports with respect to the Company, the value of the Common Stock and/or the offering that differ
from the views of their respective investment banking divisions. The Company hereby waives and
releases, to the fullest extent permitted by law, any claims that it may have against the
Underwriters with respect to any conflict of interest that may arise from the fact that the views
expressed by the Underwriters’ independent research analysts and research departments may be
different from or inconsistent with the views or advice communicated to the Company by any
Underwriter’s investment banking division. The Company acknowledges that each of the Underwriters
is a full service securities firm and as such, from time to time, subject to applicable securities
laws, may effect transactions for its own account or the account of its customers and hold long or
short positions in debt or equity securities of the companies that are the subject of the
transactions contemplated by this Agreement.
13. Notices:
Except as otherwise herein provided, all statements, requests, notices and agreements shall be
in writing or by telegram and, if to the Underwriters, shall be sufficient in all respects if
delivered to Xxxxxxx Xxxxx & Associates, Inc., 000 Xxxxxxxx Xxxxxxx, Xxxxx Xxxxxxxxxx, XX 00000,
Attention: ECM Counsel; and to FBR Capital Markets & Co., 0000 00xx Xxxxxx Xxxxx, Xxxxxxxxx,
Xxxxxxxx 00000, Attention: Syndicate Department and if to the Company, shall be sufficient in all
respects if delivered to the Company at the offices of the Company at 0000 Xxxxxxx Xxxxxxxxx, Xxxxx
0000, Xx. Xxxxx, Xxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxx.
14. Governing Law; Headings:
THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF NEW YORK, WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES. The section headings in this
Agreement have been inserted as a matter of convenience of reference and are not a part of this
Agreement.
15. Parties at Interest:
The Agreement herein set forth has been and is made solely for the benefit of the
Underwriters, the Company and the controlling persons, directors and officers referred to
in Sections 9 and 10 hereof, and their respective successors, assigns, executors and
administrators. No other person, partnership, association or corporation (including a purchaser,
as such purchaser, from any of the Underwriters) shall acquire or have any right under or by virtue
of this Agreement.
-39-
16. Counterparts and Facsimile Signatures:
This Agreement may be signed by the parties in counterparts which together shall constitute
one and the same agreement among the parties. A facsimile signature shall constitute an original
signature for all purposes.
-40-
If the foregoing correctly sets forth the understanding among the Company and the
Underwriters, please so indicate in the space provided below for the purpose, whereupon this
Agreement shall constitute a binding agreement among the Company and the Underwriters.
| Very truly yours, | ||||||
| XXXXXXXXX ENERGY, INC. | ||||||
| By: | ||||||
| Title: | ||||||
Accepted and agreed to as
of the date first above written:
of the date first above written:
| XXXXXXX XXXXX & ASSOCIATES, INC. | ||||
By: |
||||
| Title: | ||||
For itself and as Representative of the other
Underwriters named on Schedule II hereto.
Underwriters named on Schedule II hereto.
FBR CAPITAL MARKETS & CO.
By: |
||||
| Title: |
For itself and as Representative of the other
Underwriters named on Schedule II hereto.
Underwriters named on Schedule II hereto.
[Signature Page to the Underwriting Agreement]
Schedule I
| Number of Initial | Number of Option | |||
| Name of Party Selling Shares | Shares to be Sold | Shares to be Sold | ||
Xxxxxxxxx Energy, Inc.
|
[ ] | [ ] | ||
Total
|
[ ] | [ ] | ||
Schedule II
| Number of Initial | ||
| Underwriter | Shares to be Purchased | |
Xxxxxxx Xxxxx & Associates, Inc.
|
[ ] | |
FBR Capital Markets & Co.
|
[ ] | |
Xxxxxx, Xxxxxxxx & Company, Incorporated
|
[ ] | |
Total
|
[ ] | |
Schedule III
(a) Issuer Free Writing Prospectuses:
Free Writing Prospectus filed with the Securities and Exchange Commission 4/17/12
(b) Section 5(d) Communications
None
Schedule IV
Subsidiaries of the Company
Exhibit A
Form of Lock-Up Letter
Form of Lock-Up Letter
[ ], 2012
XXXXXXX XXXXX & ASSOCIATES, INC.
FBR CAPITAL MARKETS & CO.
as Representatives of the several Underwriters
c/o Raymond Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxx Xxxxxxxxxx, XX 00000
FBR CAPITAL MARKETS & CO.
as Representatives of the several Underwriters
c/o Raymond Xxxxx & Associates, Inc.
000 Xxxxxxxx Xxxxxxx
Xxxxx Xxxxxxxxxx, XX 00000
Dear Sirs:
The undersigned understands that Xxxxxxx Xxxxx & Associates, Inc. (“Xxxxxxx Xxxxx”) and FBR
Capital Markets & Co. (“FBRC”, and together with Xxxxxxx Xxxxx, the “Representatives”) and
potentially other underwriters (together with the Representatives, the “Underwriters”) propose to
enter into an Underwriting Agreement (the “Underwriting Agreement”) with Xxxxxxxxx Energy, Inc., a
Delaware corporation (the “Company”), providing for the public offering (the “Public Offering”) by
the Underwriters of shares (the “Shares”) of common stock of the Company (“Common Stock”).
To induce the Underwriters to continue their efforts in connection with the Public Offering,
the undersigned hereby irrevocably agrees that, without the prior written consent of the
Representatives on behalf of the Underwriters, the undersigned will not, directly or indirectly,
during the period commencing on the date hereof and ending on the day that is 180 days after the
date of the final prospectus relating to the Public Offering (the “Prospectus”), (i) offer, pledge,
sell, contract to sell, sell any option or contract to purchase, purchase any option or contract to
sell, grant any option, right or warrant to purchase or otherwise dispose of or transfer (or enter
into any transaction or device which is designed to, or would be expected to, result in the
disposition by any person at any time in the future of) any share of Common Stock or any security
convertible into, exercisable for or exchangeable for Common Stock (collectively, “Other
Securities”) (whether any such share or any such security is now owned by the undersigned or is
hereafter acquired) or (ii) enter into any swap or any other arrangement or transaction that
transfers to another person, in whole or in part, any of the economic consequences of ownership of
Common Stock, whether any such swap or transaction described in clause (i) or (ii) above is to be
settled by delivery of Common Stock or Other Securities, in cash or otherwise, or (iii) make any
demand for or exercise any right or cause to be filed a registration statement under the Securities
Act of 1933, as amended, including any amendment thereto, with respect to the registration of any
shares of Common Stock or securities convertible into, exercisable for or exchangeable for Common
Stock or any other security of the Company or (iv) publicly disclose the intention to do any of the
foregoing.
The 180-day restricted period described in the preceding paragraph will be extended if:
E-A-1
| • | during the last 17 days of the 180-day restricted period the Company issues an earnings release or material news or a material event relating to the Company occurs or | ||
| • | prior to the expiration of the 180-day restricted period, the Company announces that it will release earnings results during the 16-day period beginning on the last day of the 180-day restricted period; |
in which case the restrictions described in the preceding paragraph will continue to apply until
the expiration of the 18-day period beginning on the issuance of the earnings release or the
announcement of the material news or material event, unless such extension is waived in writing by
the Representatives.
In furtherance of the foregoing, the Company and its transfer agent are hereby authorized to
decline to make any transfer of securities owned or held by the undersigned if such transfer would
constitute a violation or breach of this Lock-Up Agreement.
Notwithstanding the foregoing, the undersigned may transfer Common Stock or Other Securities
of the Company without the prior written consent of the Representatives on behalf of the
Underwriters (i) as a bona fide gift or gifts, provided that prior to such transfer the donee or
donees thereof agree in writing to be bound by the restrictions set forth herein, (ii) to any
trust, partnership, corporation or other entity formed for the direct or indirect benefit of the
undersigned or the immediate family of the undersigned, provided that prior to such transfer a duly
authorized officer, representative or trustee of such transferee agrees in writing to be bound by
the restrictions set forth herein, and provided further that any such transfer shall not involve a
disposition for value or (iii) if such transfer occurs by operation of law (e.g., pursuant to the
rules of descent and distribution, statutes governing the effects of a merger or a qualified
domestic relations order), provided that prior to such transfer the transferee executes an
agreement stating that the transferee is receiving and holding the shares subject to the provisions
of this Lock-Up Agreement; (iv) [in connection with the tender to Yorktown Partners LLC of any
Shares granted pursuant to Unit Grants for the purpose of satisfying a tax liability incurred as a
result of such Unit Grants]; and provided, further, that in the case of any transfer or
distribution pursuant to clause (i), (ii) or (iii) that no filing by the undersigned or any
recipient of the shares transferred, in each case, under Section 16(a) of the Exchange Act, or
other public announcement shall be required or shall be made voluntarily in connection with such
transfer or distribution during the 180-day period referred to above (as such period may be
extended). For purposes hereof, “immediate family” shall mean any relationship by blood, marriage
or adoption, not more remote than first cousin.
No provision in this Lock-Up Agreement shall be deemed to restrict or prohibit the exercise or
exchange by the undersigned of any option or warrant to acquire the Shares, or securities
exchangeable or exercisable for or convertible into Shares, provided that the undersigned does not
transfer the Shares acquired on such exercise or exchange during the 180-day restricted period
unless otherwise permitted pursuant to this Lock-Up Agreement. In addition, no provision herein
shall be deemed to restrict or prohibit the establishment or modification of a so-called “10b5-1”
plan at any time (other than the entry into or modification of such a plan in such manner as to cause the sale of any Shares or any securities convertible
into
E-A-2
or exercisable or exchangeable for Shares within such 180-day restricted period; provided,
that no filing by the undersigned or any recipient of the shares transferred, in each case, under
Section 16(a) of the Exchange Act, or other public announcement shall be required or shall be made
voluntarily in connection with such transfer or distribution during the 180-day period referred to
above (as such period may be extended).
The undersigned understands that the Company and the Underwriters will proceed with the Public
Offering in reliance on this Lock-Up Agreement.
Whether or not the Public Offering actually occurs depends on a number of factors, including
market conditions. Any Public Offering will only be made pursuant to an Underwriting Agreement, the
terms of which are subject to agreement between the Company and the Underwriters. The terms of this
Lock-Up Agreement shall expire in the event the Public Offering of the Shares is not consummated on
or before [ ], 2012.
If the undersigned is an officer or director of the Company, (i) each of Xxxxxxx Xxxxx &
Associates, Inc. and FBR Capital Markets & Co., on behalf of the Underwriters agrees that, at least
three business days before the effective date of any release or waiver of the foregoing
restrictions in connection with a transfer of shares of Common Stock, each of Xxxxxxx Xxxxx &
Associates, Inc. and FBR Capital Markets & Co.., on behalf of the Underwriters will notify the
Company of the impending release or waiver, and (ii) the Company has agreed in the Underwriting
Agreement to announce the impending release or waiver by press release through a major news service
at least two business days before the effective date of the release or waiver. Any release or
waiver granted by each of Xxxxxxx Xxxxx & Associates, Inc. and FBR Capital Markets & Co. on behalf
of the Underwriters hereunder to any such officer or director shall only be effective two business
days after the publication date of such press release. The provisions of this paragraph will not
apply if (a) the release or waiver is effected solely to permit a transfer not for consideration
and (b) the transferee has agreed in writing to be bound by the same terms described in this letter
to the extent and for the duration that such terms remain in effect at the time of the transfer.
The undersigned hereby represents and warrants that the undersigned has full power and
authority to enter into this Lock-Up Agreement and that, upon request, the undersigned will execute
any additional documents necessary in connection with the enforcement hereof. Any obligations of
the undersigned shall be binding upon the heirs, personal representatives, successors and assigns
of the undersigned.
This Lock-up Agreement shall be governed by and construed in accordance with the laws of the
State of New York without regard to principles of conflict of laws.
This Lock-up Agreement may be executed in one or more counterparts and delivered by facsimile,
each of which shall be deemed to be an original but all of which shall constitute one and the same
agreement.
[Signature Page Follows]
E-A-3
IN WITNESS WHEREOF, the undersigned has executed this Lock-up Agreement, or caused this
Lock-up Agreement to be executed, as of the date first written above.
| Very truly yours, | ||
| Name: | ||
| Title: | ||
| (Address) |
Accepted and agreed to as
of the date first above written:
of the date first above written:
| XXXXXXX XXXXX & ASSOCIATES, INC. | ||||
By: |
||||
Title: |
||||
For itself and as Representative of
the other Underwriters
the other Underwriters
| FBR CAPITAL MARKETS & CO. | ||||
By: |
||||
Title: |
||||
For itself and as Representative of the
other Underwriters
other Underwriters
[Signature Page to the Lock-Up Agreement]
Exhibit B
Form of Waiver of Lock-up
Form of Waiver of Lock-up
XXXXXXX XXXXX & ASSOCIATES, INC.
FBR CAPITAL MARKETS & CO.
FBR CAPITAL MARKETS & CO.
Xxxxxxxxx Energy, Inc.
Public Offering of Common Stock
, 20__
Public Offering of Common Stock
, 20__
[Name and Address of
Officer or Director
Requesting Waiver]
Officer or Director
Requesting Waiver]
Dear Mr./Ms. [Name]:
This letter is being delivered to you in connection with the offering by Xxxxxxxxx Energy, Inc.
(the “Company”) of shares of common stock, $0.01 par value (the “Common Stock”), of the Company and
the lock-up letter dated , 2012 (the “Lock-up Letter”), executed by you in
connection with such offering, and your request for a [waiver] [release] dated , 20 , with respect
to shares of Common Stock (the “Shares”).
Xxxxxxx Xxxxx & Associates, Inc. and FBR Capital Markets & Co. hereby agree to [waive] [release]
the transfer restrictions set forth in the Lock-up Letter, but only with respect to the Shares,
effective , 20[ ]; provided, however, that such [waiver] [release] is conditioned on
the Company announcing the impending [waiver] [release] by press release through a major news
service at least two business days before effectiveness of such [waiver] [release]. This letter
will serve as notice to the Company of the impending [waiver] [release].
Except as expressly [waived] [released] hereby, the Lock-up Letter shall remain in full force and
effect.
| Yours very truly, | ||||||
| XXXXXXX XXXXX & ASSOCIATES, INC. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
| FBR CAPITAL MARKETS & CO. | ||||||
| By: | ||||||
| Name: | ||||||
| Title: | ||||||
cc: Xxxxxxxxx Energy, Inc.
E-B-5
Exhibit C
Form of Press Release
Form of Press Release
Xxxxxxxxx Energy, Inc.
[Date]
Xxxxxxxxx Energy, Inc. (the “Company”) announced today that announced today that Xxxxxxx Xxxxx &
Associates, Inc. and FBR Capital Markets & Co., the lead book-running managers in the Company’s
recent public sale of shares of common stock, is [waiving] [releasing] a lock-up restriction with
respect to shares of the Company’s common stock held by [certain officers or directors] [an officer
or director] of the Company. The [waiver] [release] will take effect on , 20 , and the shares may
be sold on or after such date.
This press release is not an offer for sale of the securities in the United States or in any other
jurisdiction where such offer is prohibited, and such securities may not be offered or sold in the
United States absent registration or an exemption from registration under the United States
Securities Act of 1933, as amended.
E-C-6
Exhibit D
Form of CFO Certificate
Form of CFO Certificate
CHIEF FINANCIAL OFFICER’S CERTIFICATE
[ ], 2012
[ ], 2012
The undersigned, J. Xxxxxxx Xxxx, the duly appointed Senior Vice President, Finance and
Administration and Chief Financial Officer of Xxxxxxxxx Energy, Inc., a Delaware corporation (the
“Company”), in connection with the initial public offering of the shares of common stock, par value
$0.01 per share (the “Common Stock”) of the Company, and pursuant to Section 6([n]) of the
Underwriting Agreement (the “Underwriting Agreement”), dated [ ], 2012, among the Company
Xxxxxxx Xxxxx & Associates, Inc. and FBR Capital Markets & Co. (the “Representatives”), as
representatives of the several underwriters named in Schedule II thereto (the “Underwriters”),
hereby certifies in his capacity as the chief financial officer on behalf of the Company, that, as
of the date hereof, the undersigned has specific knowledge of the Company’s financial matters, and,
based on his examination of the Company’s financial records and schedules undertaken by himself or
members of his staff who are responsible for the Company’s financial accounting matters, hereby
further certifies that:
| 1. | The undersigned has (i) reviewed the Preliminary Prospectus dated [ ], 2012 (the “Preliminary Prospectus”) relating to the offering of the Common Stock and the Prospectus dated [ ], 2012 (the “Prospectus”) relating to the offering of the Common Stock, (ii) supervised the compilation of the financial data and information included in the Preliminary Prospectus and the Prospectus and (iii) read the Company’s financial statements, books and records or schedules or analyses derived therefrom that the undersigned has deemed necessary to make the certifications and to perform the procedures set forth herein. | ||
| 2. | The financial and statistical data and information contained in the Preliminary Prospectus and the Prospectus (the “Financial Data”) (a) are derived from the internal accounting records of the Company, (b) are prepared on a basis substantially consistent with the audited financial statements of the Company included in the Preliminary Prospectus and the Prospectus, and (c) present fairly, in all material respects, the financial position, results of operations and operational performance of the Company as of and for the periods presented. | ||
| 3. | There were no changes in the Company’s internal control over financial reporting subsequent to the fiscal quarter and year ended December 31, 2010 that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting. | ||
| 4. | The undersigned has read the items identified on the attached selected pages of the Preliminary Prospectus attached hereto as Annex A, and has |
E-D-7
| performed the following procedures which were applied as indicated with respect to the letters explained below: |
| A. | Compared the ranges or numbers identified to the amounts included in the Company’s accounting records and found such amounts to be in agreement. | ||
| B. | Compared the ranges or numbers identified to the amounts included in a schedule prepared by the Company based on its accounting records and found such amounts to be in agreement. |
Capitalized terms not defined in this certificate have the meaning ascribed to them in the
Underwriting Agreement.
Each of Xxxxxxx Xxxxxxx & Xxxxxxxx LLP and Xxxxxxxxx Xxxxxxxx LLP is entitled to rely on this
certificate in connection with the opinion it is rendering pursuant to the Underwriting Agreement
and this certificate is being delivered to the Representatives to assist them and the Underwriters
in conducting and documenting their investigation of the affairs of the Company and its
subsidiaries in connection with the offering of the Common Stock.
All capitalized terms used but not defined herein shall have the meanings set forth in the
Underwriting Agreement.
[Signature Page Follows]
E-D-8
IN WITNESS WHEREOF, the undersigned has signed his name as of the date first written above.
| By: | ||||
| Name: J. Xxxxxxx Xxxx | ||||
| Title: Senior Vice President, Finance and
Administration and Chief Financial Officer |
[Signature Page to CFO Certificate]
Annex A
[Circle-up to be attached]
E-D-10
