EXHIBIT 1.1
CONTANGO OIL & GAS COMPANY
800,000 Depositary Shares
Each Representing 1/10 of a Share of
___% Convertible Cumulative Preferred Stock, Series C
UNDERWRITING AGREEMENT
June __, 2002
XXXXXX XXXXXX & COMPANY, INC.
Attention: ________
00 Xxxxx Xxxxxx
Xxxxxxx, Xxxxxxxxx 00000
Ladies and Gentlemen:
Contango Oil & Gas Company, a Delaware corporation (the "Company"), proposes to
issue and sell an aggregate of 800,000 shares (the "Firm Shares") of its
depositary shares (the "Depositary Shares"), each representing 1/10 of a share
of its ___% Convertible Cumulative Preferred Stock, Series C, par value $0.04
per share (the "Preferred Stock"), to you (the "Underwriter").
Solely for the purpose of covering over-allotments in the sale of the Firm
Shares, the Company grants to the Underwriter the right to purchase up to an
additional 120,000 Depositary Shares (the "Option Shares"), which option shall
be exercisable in the manner set forth in Section 2(a) below. The Firm Shares
and Option Shares are herein sometimes referred to collectively as the "Shares."
The shares of Preferred Stock represented by the Shares (the "Preferred Shares")
will, when issued, be deposited by the Company against delivery of depositary
receipts ("Depositary Receipts") to be issued by The Bank of New York, as
depositary (the "Depositary"), under a deposit agreement (the "Deposit
Agreement") among the Company, the Depositary and the holders from time to time
of the Depositary Receipts issued thereunder. Each Depositary Receipt will
represent one or more Depositary Shares. The shares of Preferred Stock are
convertible, under certain circumstances, into shares of the Company's common
stock, par value $0.04 per share (the "Common Stock"). The Shares, the Preferred
Shares and the shares of Common Stock into which the Preferred Shares are
convertible (the "Common Shares") are referred to herein collectively as the
"Securities."
As part of the offering contemplated by this Agreement, the Underwriter has
agreed to reserve up to 40,000 Shares, out of the Firm Shares, for sale to the
Company's employees, officers, and directors and other persons with a
relationship to the Company (collectively, the "Participants"),
as set forth in the Prospectus under the heading "Underwriting" (the "Directed
Share Program"). The Shares to be sold by the Underwriter pursuant to the
Directed Share Program (the "Directed Shares") will be sold by the Underwriter
pursuant to this Agreement at the public offering price. Any Directed Shares not
orally confirmed for purchase by any Participants by the end of the business day
on which this Agreement is executed will be offered to the public by the
Underwriter as set forth in the Prospectus.
The Company wishes to confirm as follows its agreement with you, in connection
with the purchase of the Shares by you.
1. Representations and Warranties of the Company. The Company represents,
warrants and covenants to the Underwriter as set forth below.
Certain terms used in this Section 1 are defined in paragraph (cc) hereof.
(a) The Company has filed with the Securities and Exchange Commission (the
"Commission") a registration statement, registration number 333-88252, on Form
S-1, including any amendments thereto and the related preliminary prospectus
included therein (the "Registration Statement"), for the registration under the
Securities Act of 1933, as amended (the "Act"), of the offering and sale of the
Securities. Any registration statement filed pursuant to Rule 462(b) under the
Act is herein referred to as the "Rule 462(b) Registration Statement," and,
after such filing, the term "Registration Statement" shall include the Rule
462(b) Registration Statement. The Company has filed with, or shall promptly
after execution and delivery of this Agreement file with, the Commission a
prospectus relating to the Securities pursuant to Rule 424(b) and Rule 430A
under the Act.
(b) On the Effective Date, the Registration Statement did, and when the
Prospectus is first filed in accordance with Rule 424(b) and at the Closing Time
or any Date of Delivery, the Prospectus will, comply in all material respects
with the requirements of the Act and the rules thereunder; on the Effective
Date, the Registration Statement did not contain any untrue statement of a
material fact or omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not misleading; and, on the
date of any filing pursuant to Rule 424(b) and at the Closing Time or any Date
of Delivery, the Prospectus will not include any untrue statement of a material
fact or omit 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; provided, however, that the Company makes no representations or
warranties as to the information contained in or omitted from the Registration
Statement or the Prospectus in reliance upon and in conformity with information
furnished in writing to the Company by or on behalf of the Underwriter
specifically for inclusion in the Registration Statement or the Prospectus.
(c) The Registration Statement has become effective under the Act, and no
stop order suspending the effectiveness of the Registration Statement is in
effect and no proceedings for such purpose are, to the knowledge of the Company,
pending before or threatened by the Commission.
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(d) The only subsidiaries of the Company are the Subsidiaries (as defined
below). Each of the Company and Contango Operators, Inc., Contango Sundance,
Inc., XXX Offshore Corporation, MOE Offshore Corporation, Republic Exploration,
L.L.C. and Magnolia Offshore Exploration, L.L.C. (collectively, the
"Subsidiaries") has been duly organized and is validly existing as a corporation
or a limited liability company, as the case may be, in good standing under the
laws of the jurisdiction in which it is organized, with full power and authority
to own or lease and occupy its properties and conduct its business as described
in the Prospectus, and is duly qualified to do business, and is in good
standing, in each jurisdiction which requires such qualification, except where
the failure to so qualify would not, individually or in the aggregate, have a
material adverse effect on the business, operations, earnings, assets or
financial condition of the Company (a "Material Adverse Effect"). All of the
outstanding shares of capital stock of each of the Subsidiaries have been duly
authorized and validly issued, are fully paid and non-assessable, and are owned
by the Company directly, or indirectly through a Subsidiary, free and clear of
any lien, adverse claim, security interest, equity, or other encumbrance, except
that the Company owns, as of the date hereof, a 33 1/3% membership interest in
Republic Exploration, L.L.C. and a 50% membership interest in Magnolia Offshore
Exploration, L.L.C.
(e) The Company and each of the Subsidiaries have all requisite power and
authority, and all necessary material authorizations, approvals, orders,
licenses, certificates and permits of and from all regulatory or governmental
officials, bodies and tribunals, to own or lease their respective properties and
to conduct their respective businesses as now being conducted and as described
in the Prospectus; all such authorizations, approvals, licenses, certificates
and permits are in full force and effect, except where the failure to be in full
force and effect would not have a Material Adverse Effect; and the Company and
each of the Subsidiaries are in compliance with all applicable laws, the
violation of which could have a Material Adverse Effect.
(f) The Company and each Subsidiary have good and marketable title to their
properties, free and clear of all material liens, charges and encumbrances and
equities of record, except as set forth or reflected in the Prospectus.
(g) The Company and each Subsidiary maintain adequate insurance for the
conduct of their respective business as described in the Prospectus.
(h) The Company, either directly or through the Subsidiaries, owns or
licenses or otherwise has the right to use all patents, trademarks, trade names
and trade secrets material to the Company's business as described in the
Prospectus; other than routine proceedings which if adversely determined would
not materially affect the business (as described in the Prospectus) of the
Company and the Subsidiaries taken as a whole, no claims have been asserted by
any person with respect to the use of any such patents, trademarks, trade names
or trade secrets or challenging or questioning the validity or effectiveness of
any such patents, trademarks, trade names or trade secrets; to the best
knowledge of the Company, the use, in connection with the business and
operations of the Company and the Subsidiaries, of such patents, trademarks and
trade names does not infringe on the rights of any person.
(i) The Company's authorized capitalization is as set forth in the
Prospectus; the capital stock of the Company conforms in all material respects
to the description thereof contained in the Prospectus; the outstanding shares
of Common Stock, Series A Senior
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Convertible Cumulative Preferred Stock, par value $.04 per share, of the Company
(the "Series A Preferred Stock") and Series B Senior Convertible Cumulative
Preferred Stock, par value $.04 per share, of the Company (the "Series B
Preferred Stock") have each been duly and validly authorized and issued in
compliance with all Federal and state securities laws, and are fully paid and
non-assessable; the Shares and the Preferred Shares have been duly and validly
authorized and, when issued and delivered pursuant to this Agreement and, in the
case of the Shares, the Deposit Agreement, will be fully paid and
non-assessable; the Common Shares have been duly and validly authorized and,
when issued upon conversion of the Preferred Shares, will be fully paid and
non-assessable; the Shares have been approved for listing on the American Stock
Exchange, subject to notice of issuance; the form of depositary receipt
representing the Shares will be in valid and sufficient form in compliance with
the American Stock Exchange requirements; and the holders of outstanding shares
of capital stock of the Company are not entitled to preemptive or other rights
to subscribe for the Shares, the Preferred Shares or the Common Shares.
(j) There is no pending or, to the best knowledge of the Company,
threatened, action, suit, proceeding or investigation before any court,
governmental agency, authority or body or arbitrator involving the Company, any
of the Subsidiaries or any of their respective officers or any of their
respective properties, assets or rights of a character required to be disclosed
in the Registration Statement or Prospectus which is not adequately disclosed in
the Prospectus, and there is no franchise, contract or other document of a
character required to be described in the Registration Statement or Prospectus,
or to be filed as an exhibit to the Registration Statement, which is not
described or filed as required.
(k) The Company has full corporate power and authority to enter into and
perform its obligations under this Agreement and the Deposit Agreement and to
issue, sell and deliver the Shares and to issue and deliver the Preferred Shares
and the Common Shares; and this Agreement and the Deposit Agreement have been
duly authorized; and this Agreement has been, and the Deposit Agreement as of
the Closing Time, will have been, duly executed and delivered by the Company.
When so executed, the Deposit Agreement will constitute a valid and binding
obligation of the Company, enforceable against the Company in accordance with
its terms.
(l) No consent, approval, authorization or order of any court or
governmental agency, authority or body is required (and has not been received)
for the execution by the Company of this Agreement or the Deposit Agreement, the
performance by the Company of its obligations hereunder or thereunder or the
consummation by the Company of the transactions contemplated herein or therein,
except such as are required under the state securities or the Blue Sky laws of
any jurisdiction in connection with the purchase and distribution of the Shares
by the Underwriter.
(m) Neither the Company nor any of the Subsidiaries is in violation of, in
conflict with, in breach of or in default under (and no event has occurred which
with the giving of notice or the lapse of time or both would constitute a
default under) its charter, by-laws or other organizational documents, or any
loan, note or other evidence of indebtedness or any indenture, mortgage, deed of
trust or any other material agreement by which it or its properties are bound,
except for such violations, conflicts, breaches or defaults as could not,
individually or in the aggregate, have a Material Adverse Effect.
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(n) Neither the issue and sale of the Shares nor the consummation of any of
the other transactions herein contemplated (including without limitation the
execution, delivery and performance of the Deposit Agreement, the issuance and
deposit of the Preferred Shares in accordance with the Deposit Agreement and the
consummation of the transactions contemplated therein and the issuance of the
Common Shares upon conversion of the Preferred Shares) nor the fulfillment of
the terms hereof or thereof will conflict with, result in a breach or violation
of, or constitute a default under any law or the charter, by-laws or other
organizational documents of the Company or any of the Subsidiaries or the terms
of any indenture or other agreement or instrument to which the Company or any of
the Subsidiaries is a party or is bound or any judgment, order or decree
applicable to the Company or any of the Subsidiaries of any court, regulatory
body, administrative agency, governmental body or arbitrator having jurisdiction
over the Company or any of the Subsidiaries.
(o) Other than as described in the Prospectus, there are no outstanding
warrants or options to purchase any shares of capital stock of the Company and
there are no restrictions upon the voting or transfer of, or the declaration or
payment of any dividend or distribution on, any shares of capital stock of the
Company pursuant to the certificate of incorporation or by-laws of the Company,
any agreement or other instrument to which the Company is a party or by which
the Company is bound, or any order, law, rule, regulation or determination of
any court, governmental agency or body, or arbitrator having jurisdiction over
the Company.
(p) Neither the Company nor any of its officers, directors, or controlling
persons has taken, directly or indirectly, any action intended, or which might
reasonably be expected, to cause or result, under the Act or otherwise, in, or
which has constituted, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares in
violation of the Act.
(q) To the best of the Company's knowledge, the firm of accountants that
have certified or shall certify the applicable financial statements and
supporting schedules filed or to be filed with the Commission as part of the
Registration Statement and the Prospectus are independent public accountants
with respect to the Company and any other applicable entity, as required by the
Act. The financial statements, together with related schedules and notes,
included in the Prospectus and the Registration Statement comply as to form in
all material respects with the requirements of the Act. Such financial
statements fairly present (i) the consolidated financial position of the Company
and its consolidated subsidiaries at the respective dates indicated and the
results of their operations and their cash flows for the respective periods
indicated and (ii) the combined revenues and direct operating expenses of the
acquired oil and gas properties identified in the Prospectus for the periods
indicated, and, in each case, have been prepared in accordance with generally
accepted accounting principles, except as otherwise expressly stated therein, as
consistently applied throughout such periods. The pro forma financial statements
and the related notes thereto, and the other pro forma financial information,
included in the Prospectus and the Registration Statement present fairly the
information shown therein, have been prepared in accordance with the
Commission's rules and guidelines with respect to pro forma financial statements
and have been properly compiled on the bases described therein, in all material
respects, and the assumptions used in the preparation thereof are reasonable and
the adjustments used therein are appropriate to give effect to the transactions
and circumstances referred to therein. The other financial and statistical
information and data
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included in the Prospectus and in the Registration Statement are, in all
material respects, accurately presented and prepared on a basis consistent with
applicable financial statements and the books and records of the Company and the
Subsidiaries or, with respect to information and data relating to persons other
than the Company and the Subsidiaries, other information available to the
Company.
(r) Except as disclosed in the Registration Statement and the Prospectus,
subsequent to the respective dates as of which such information is given in the
Registration Statement and the Prospectus, neither the Company nor any of the
Subsidiaries has incurred any liability or obligation, direct or contingent, or
entered into any transaction, not in the ordinary course of business, that is
material to the Company and the Subsidiaries taken as a whole, and, since the
date of the most recent financial statements included in the Prospectus, there
has not been any material change in the capital stock, or material increase in
the short-term debt or long-term debt, of the Company or any Subsidiary, or any
event, occurrence, circumstance or development that has resulted in a Material
Adverse Effect or that may reasonably be expected to involve a prospective
Material Adverse Effect. (s) The Company has not distributed and, prior to the
later to occur of (i) the Closing Time and (ii) 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 the Registration Statement, the
Prospectus or other materials, if any, permitted by the Act.
(t) The Company maintains a system of internal accounting controls
sufficient to provide reasonable assurances that in all material respects (i)
transactions are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit preparation
of financial statements in conformity with generally accepted accounting
principles and to maintain accountability for assets; (iii) access to assets is
permitted only in accordance with management's general or specific
authorization; and (iv) the recorded accountability for assets is compared with
existing assets at reasonable intervals and appropriate action is taken with
respect to any differences.
(u) To the Company's knowledge, neither the Company nor any of its
Subsidiaries nor any employee or agent of the Company or any Subsidiary has made
any payment of funds of the Company or any Subsidiary or received or retained
any funds in violation of any law, rule or regulation, which payment, receipt or
retention of funds is of a character required to be disclosed in the Prospectus.
(v) The Company and each of the Subsidiaries have filed all tax returns
required to be filed (except to the extent extensions have been timely filed
related thereto), which returns are complete and correct in all material
respects, and neither the Company nor any Subsidiary is in default in the
payment of any taxes which were payable pursuant to said returns or any
assessments with respect thereto.
(w) Assuming due authorization, execution and delivery of the Deposit
Agreement by the Depositary, each Share will represent an interest in 1/10 of a
share of a validly issued, outstanding, fully paid and non-assessable share of
Preferred Stock; assuming due execution and delivery of the Depositary Receipts
by the Depositary pursuant to the Deposit Agreement, the
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Depositary Receipts will entitle the holders thereof to the benefits provided
therein and in the Deposit Agreement, and the Shares will conform in all
material respects to the description thereof contained in the Prospectus.
(x) The Company has been advised concerning the Investment Company Act of
1940, as amended (the "1940 Act"), and the rules and regulations thereunder, and
has in the past conducted, and intends in the future to conduct, its affairs in
such a manner as to ensure that it will not become an "investment company" or a
company "controlled" by an "investment company" within the meaning of the 1940
Act and such rules and regulations.
(y) Except as described in the Prospectus, each of the Company and its
Subsidiaries has (i) good and indefeasible title to all its interests in its oil
and gas properties, and title investigations have been carried out by or on
behalf of the Company and its Subsidiaries in accordance with good practice in
the oil and gas industry in the areas in which the Company and its Subsidiaries
operate and (ii) good and indefeasible title to all other real property and
marketable title to all other material properties and assets described in the
Prospectus as owned by the Company or such Subsidiary and valid, subsisting and
enforceable leases for all properties and assets, real or personal, described in
the Prospectus as leased by them, in each case free and clear of any
imperfections of title, security interests, mortgages, pledges, liens,
encumbrances or charges of any kind, other than those described in the
Prospectus and those that could not, individually or in the aggregate, have a
Material Adverse Effect.
(z) The information underlying the estimates of the reserves of the Company
and its subsidiaries, which was supplied by the Company to X.X. Xxx Xxxxxx & Co.
("Von Gonten") of Xxxxxxx X. Xxxx & Associates, Inc. ("Xxxx"), independent
petroleum engineers, for purposes of preparing the reserve reports referenced in
the Prospectus (the "Reserve Reports"), including, without limitation,
production, volumes, sales prices for production, contractual pricing provisions
under oil or gas sales or marketing contracts under hedging arrangements, costs
of operations and development, and working interest and net revenue information
relating to the Company's ownership interests in properties, was true and
correct in all material respects on the dates of such Reserve Reports; the
estimates of future capital expenditures and other future exploration and
development costs supplied to Von Gonten and Xxxx were prepared in good faith
and with a reasonable basis; the information provided to Von Gonten and Xxxx for
purposes of preparing the Reserve Reports was prepared in accordance with
customary industry practices; to the best of the Company's knowledge, Von Gonten
and Xxxx were, as of the dates of the Reserve Reports prepared by them, and are,
as of the date hereof, independent petroleum engineers with respect to the
Company; other than normal production of the reserves and intervening spot
market product price fluctuations described in the Prospectus, the Company is
not aware of any facts or circumstances that would result in a materially
adverse change in the reserves in the aggregate, or the aggregate present value
of future net cash flows therefrom, as described in the Prospectus and reflected
in the Reserve Reports; estimates of such reserves and the present value of the
future net cash flows therefrom as described in the Prospectus and reflected in
the Reserve Reports comply in all material respects to the applicable
requirements of Regulation S-X and Industry Guide 2 under the Act.
(aa) The Company and each of the Subsidiaries (i) is in compliance with any
and all applicable federal, state and local laws and regulations relating to the
protection of human health
7
and safety, the environment or hazardous or toxic substances or waste,
pollutants or contaminants ("Environmental Laws"), (ii) has received all
permits, licenses or other approvals required of it under applicable
Environmental Laws to conduct its business and (iii) is in compliance with all
terms and conditions of any such permit, license or approval, except for such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals that would not, singularly or in the
aggregate, have a Material Adverse Effect. There has been no storage, disposal,
generation, transportation, handling or treatment of hazardous substances or
solid wastes by the Company or any of the Subsidiaries (or to the knowledge of
the Company, any of its predecessors in interest) at, upon or from any of the
property now or previously owned or leased by the Company or any of the
Subsidiaries in violation of any applicable law, ordinance, rule, regulation,
order, judgment, decree or permit or which would require remedial action by the
Company or any of the Subsidiaries under any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit, except for any violation or
remedial action which would not result in, or which would not be reasonably
likely to result in, singularly or in the aggregate with all such violations and
remedial actions, a Material Adverse Effect; there has been no spill, discharge,
leak, emission, injection, escape, dumping or release of any kind onto such
property or into the environment surrounding such property of any solid wastes
or hazardous substances due to or caused by the Company or any of the
Subsidiaries, except for any such spill, discharge, leak, emission, injection,
escape, dumping or release which would not result in or would not be reasonably
likely to result in, singularly or in the aggregate with all such spills,
discharges, leaks, emissions, injections, escape, dumping or releases, a
Material Adverse Effect; and the terms "hazardous substances" and "solid wastes"
shall have the meanings specified in any applicable local, state and federal
laws or regulations with respect to environmental protection.
(bb) There are no persons with registration or similar rights to require
registration of any securities of the Company under the Act because of the
filing of the Registration Statement or the sale of the Shares by the Company to
the Underwriter, other than such rights as are described in the Prospectus and
have been duly and effectively waived.
(cc) The terms that follow, when used in this Agreement, shall have the
meanings indicated. The term "the Effective Date" shall mean each date that the
Registration Statement and any amendments thereto became effective. "Execution
Time" shall mean the date and time that this Agreement is executed and delivered
by the parties hereto. "Preliminary Prospectus" shall mean any preliminary
prospectus or preliminary prospectus supplement relating to the Securities, in
each case filed pursuant to Rule 424(b). "Prospectus" shall mean the prospectus
relating to the Securities that is filed pursuant to Rule 424(b) and Rule 430A
under the Act in accordance with the last sentence of Section 1(a) above.
"Registration Statement" shall mean the Registration Statement referred to in
paragraph (a) above, including exhibits and financial statements, as amended at
the Execution Time and, in the event any post-effective amendment thereto
becomes effective prior to the Closing Time or any Date of Delivery, shall also
mean such registration statement as so amended.
2. Agreements to Sell and Purchase.
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(a) On the basis of the representations, warranties and agreements of the
Company herein contained and subject to all the terms and conditions of this
Agreement, the Company agrees to sell to the Underwriter and the Underwriter
agrees to purchase from the Company the Firm Shares, at a purchase price of
$23.25 per Share (the "purchase price per share"). The option to purchase the
Option Shares granted hereby may be exercised by the Underwriter, in whole or in
part on one or more occasions, only for the purpose of covering over-allotments
that may be made in connection with the offering and distribution of the Firm
Shares, by giving written notice to the Company. The notice of exercise shall
set forth the number of Option Shares as to which the Underwriter is exercising
the option, and the time and date of payment and delivery thereof. Such time and
date of delivery (the "Date of Delivery") shall be determined by the Underwriter
but shall not be earlier than the second business day after the date on which
the notice of the exercise of the option shall have been given nor later than
seven full business days after the exercise of such option, nor in any event
prior to the Closing Time. The option granted hereby shall expire if not
exercised on or prior to the 30th day after the date hereof. If the option is
exercised as to all or any portion of the Option Shares, the Option Shares as to
which the option is exercised shall be purchased by the Underwriter.
(b) Payment of the purchase price for and delivery of the Firm Shares shall
be made at the offices of Xxxxxx Xxxxxx & Company, Inc., 00 Xxxxx Xxxxxx,
Xxxxxxx, Xxxxxxxxx 00000 or at such other place as shall be agreed upon by the
Company and you, at 9:00 a.m. (prevailing Eastern time), either (i) on the third
full business day after the Effective Date, or (ii) at such other time not more
than ten full business days thereafter as you and the Company shall determine
(such date and time of payment and delivery being herein called the "Closing
Time"). In addition, in the event that any or all of the Option Shares are
purchased by the Underwriter, payment of the purchase price for and delivery of
the Option Shares shall be made at the offices of the Underwriter in the manner
set forth above, or at such other place as you shall determine, on the Date of
Delivery as specified in the notice from you to the Company. Payment for the
Firm Shares and the Option Shares in immediately available funds shall be made
by wire transfer to the bank account designated by the Company against delivery
to the Underwriter of the Shares to be purchased by it. Delivery of the Shares
shall be made through the facilities of The Depository Trust Company unless the
Underwriter shall otherwise instruct.
(c) The Company has been advised by you that you propose to make a public
offering of their respective portions of the Shares as soon after this Agreement
has been entered into and the Registration Statement, and, if necessary, any
post-effective amendment to the Registration Statement, has become effective as
in your judgment is advisable and initially to offer the Shares upon the terms
set forth in the Prospectus.
3. Agreements of the Company. The Company agrees with the Underwriter as
follows:
(a) The Company will not, either prior to the Effective Date or thereafter
during such period as the Prospectus is required by law to be delivered in
connection with sales of the Shares by the Underwriter or any dealer, file any
amendment or supplement to the Registration Statement (including any filing
under Rule 462(b) under the Act) or the Prospectus, unless a copy thereof shall
first have been submitted to the Underwriter within a reasonable period of time
prior to the filing thereof and the Underwriter shall not have objected thereto
in good faith.
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(b) The Company will use its best efforts to cause the Rule 462(b)
Registration Statement, if any, and any post-effective amendment to the
Registration Statement to become effective, and will notify the Underwriter
promptly, and will confirm such advice in writing, (i) when any Rule 462(b)
Registration Statement and any post-effective amendment to the Registration
Statement become effective, (ii) of the receipt of any comments from or any
request by the Commission for amendments or supplements to the Registration
Statement or the Prospectus or for additional information, (iii) of the issuance
by the Commission of any stop order suspending the effectiveness of the
Registration Statement or the initiation of any proceedings for that purpose or
the threat thereof, (iv) of the happening of any event during the period
mentioned in the second sentence of Section 3(e) that in the judgment of the
Company makes any statement made in the Registration Statement or the Prospectus
untrue or that requires the making of any changes in the Registration Statement
or the Prospectus in order to make the statements therein, in the light of the
circumstances in which they are made, not misleading, and (v) of receipt by the
Company or any representative or attorney of the Company of any other
communication from the Commission relating to the Company, the Registration
Statement, any Preliminary Prospectus or the Prospectus. If at any time the
Commission shall issue any order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible moment.
(c) The Company will furnish to the Underwriter, without charge, as soon as
possible, copies of the signed copies of the Registration Statement and of any
post-effective amendment thereto, including financial statements and schedules,
and all exhibits thereto and will furnish to the Underwriter, without charge,
copies of the Registration Statement and any post-effective amendment thereto,
including financial statements and schedules but without exhibits.
(d) The Company will comply with all the provisions of any undertakings
contained in the Registration Statement.
(e) The Company will deliver to the Underwriter, without charge, as many
copies of the Prospectus or any supplement thereto as the Underwriter may
reasonably request. The Company consents to the use of the Prospectus or any
supplement thereto by the Underwriter and by all dealers to whom the Shares may
be sold, both in connection with the offering or sale of the Shares and for any
period of time thereafter during which the Prospectus is required by law to be
delivered in connection therewith. If during such period of time any event shall
occur which in the judgment of the Company or counsel to the Underwriter should
be set forth in the Prospectus in order to make any statement therein, in the
light of the circumstances under which it was made, not misleading, or if it is
necessary to supplement the Prospectus to comply with law, subject to the
provisions of Section 3(a) hereof, the Company will forthwith prepare and duly
file with the Commission an appropriate supplement or amendment thereto to the
Registration Statement, and will deliver to the Underwriter, without charge,
such number of copies thereof as the Underwriter may reasonably request.
(f) The Company will cooperate with the Underwriter and counsel to the
Underwriter in connection with the registration or qualification of the
Securities for offer and sale under the securities or Blue Sky laws of such
jurisdictions as the Underwriter may reasonably request; provided, that in no
event shall the Company be obligated to qualify to do business in any
10
jurisdiction where it is not now so qualified or to take any action which would
subject it to general service of process in any jurisdiction where it is not now
so subject.
(g) During the period of five years commencing on the date hereof, the
Company will furnish to the Underwriter copies of such financial statements and
other periodic and special reports as the Company may from time to time
distribute generally to the holders of any class of its capital stock, and will
furnish to the Underwriter a copy of each annual or other report it shall be
required to file with the Commission.
(h) For a period of 90 days from the date hereof (the "Lock-Up Period"),
the Company will not, without your prior written consent, (i) offer, pledge
contract to sell or sell any option or contract to purchase, purchase any option
or contract to sell, grant any option, right or warrant to purchase, lend or
otherwise transfer or dispose of, directly or indirectly, any shares of capital
stock or any securities convertible into or exercisable or exchangeable for any
shares of capital stock, (ii) enter into any swap or other agreement that
transfers all or a portion of the economic consequences associated with the
ownership of any capital stock, whether any such transaction described above is
to be settled by delivery of capital stock, in cash or otherwise or (iii) file
any registration statement for the registration of any shares of capital stock
or any securities convertible into or exercisable or exchangeable for shares of
capital stock, except for: the registration of the offer and sale of the Shares
and sales to the Underwriter pursuant to this Agreement; or the grant of
options, not exercisable during the Lock-Up Period, pursuant to the Company's
1999 Stock Incentive Plan in effect at the time of execution of this Agreement.
(i) The Company will make generally available to holders of its securities
as soon as may be practicable but in no event later than the last day of the
fifteenth full calendar month following the calendar quarter in which the
Effective Date falls, an earnings statement (which need not be audited but shall
be in reasonable detail), with respect to the Company and the Subsidiaries, for
a period of 12 months commencing after the Effective Date, and satisfying the
provisions of Section 11(a) of the Act (including Rule 158 thereunder) and will
file such earnings statement as an exhibit to the next periodic report required
by Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") covering the period when the earnings statement is released.
(j) If this Agreement shall terminate or shall be terminated after
execution pursuant to any provisions hereof or if this Agreement shall be
terminated by the Underwriter because of any failure or refusal on the part of
the Company to comply with the terms or fulfill any of the conditions of this
Agreement, the Company agrees to reimburse the Underwriter for all out-of-pocket
expenses (including fees and expenses of its counsel) reasonably incurred by you
in connection herewith.
(k) The Company will not at any time, directly or indirectly, take any
action intended, or which might reasonably be expected, to cause or result in,
or which will constitute, stabilization of the price of the Shares to facilitate
the sale or resale of any of the Shares in violation of the Act.
(l) The Company will apply the net proceeds from the offering and sale of
the Shares in the manner set forth in the Prospectus under "Use of Proceeds."
11
(m) In connection with the Directed Share Program, the Company will ensure
that the Directed Shares will be restricted to the extent required by the
National Association of Securities Dealers, Inc. (the "NASD") or the NASD rules
from sale, transfer, assignment, pledge or hypothecation for a period of three
months following the date of the effectiveness of the Registration Statement.
The Underwriter will notify the Company as to which Participants will need to be
so restricted. The Company will direct the removal of such transfer restrictions
upon the expiration of such period.
4. Expenses. The Company agrees to pay the following costs and expenses and
all other costs and expenses incident to the performance by it of its
obligations hereunder: (i) the preparation, printing or reproduction, and filing
with the Commission of the Registration Statement (including financial
statements and exhibits thereto), the Preliminary Prospectus, the Prospectus,
and each amendment or supplement to any of them; (ii) the printing (or
reproduction) and delivery (including postage, air freight charges and charges
for counting and packaging) of such copies of the Registration Statement, the
Preliminary Prospectus, the Prospectus, and all amendments or supplements to any
of them, as may be reasonably requested for use in connection with the offering
and sale of the Shares; (iii) the preparation, printing, authentication,
issuance and delivery of certificates for the Securities, including any stamp
taxes in connection with the original issuance and sale of the Shares and the
Preferred Shares; (iv) the printing (or reproduction) and delivery of this
Agreement, the Blue Sky Memoranda, the Deposit Agreement and all other
agreements or documents printed (or reproduced) and delivered in connection with
the offering of the Securities; (v) the fees and expenses of the Depositary,
including the fees and disbursements of counsel for the Depositary, if any; (vi)
the registration of the Shares under the Exchange Act and the listing of the
Shares on the American Stock Exchange; (vii) the registration or qualification
of the Securities for offer and sale under the securities or Blue Sky laws of
the several states as provided in Section 3(f) hereof (including the reasonable
fees, expenses and disbursements of counsel for the Underwriter relating to the
preparation, printing or reproduction, and delivery of the Blue Sky Memoranda
and such registration and qualification); (viii) the filing fees and the fees
and expenses of counsel for the Underwriter in connection with any filings
required to be made with the NASD; (ix) the transportation and other expenses
incurred by or on behalf of Company representatives in connection with
presentations to prospective purchasers of the Shares; and (x) the fees and
expenses of the Company's accountants and the fees and expenses of counsel
(including local and special counsel) for the Company.
5. Conditions of Underwriter's Obligations. The obligations of the
Underwriter to purchase the Shares hereunder are subject to the following
conditions:
(a) All of the representations and warranties of the Company contained in
this Agreement shall be true and correct at the Closing Time with the same force
and effect as if made on and as of the Closing Time.
(b) The Registration Statement (including any post-effective amendment
thereto) shall have become effective not later than 5:00 P.M. (and, in the case
of a Registration Statement filed under Rule 462(b) of the Act, not later than
10:00 p.m.), New York City time, on the date of this Agreement, or at such later
date and time as shall be consented to in writing by the Underwriter, and all
filings, if any, required by Rules 424 and 430A under the Act shall have
12
been timely made; and at the Closing Time no stop order suspending the
effectiveness of the Registration Statement shall have been issued and no
proceedings for that purpose shall have been instituted or, to the knowledge of
the Company or the Underwriter, contemplated by the Commission, and any request
of the Commission for additional information (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to the
satisfaction of the Underwriter.
(c) Subsequent to the date of the most recent financial statements included
in the Prospectus, there shall not have been any event, occurrence, circumstance
or development that has resulted in a Material Adverse Effect or that may
reasonably be expected to involve a prospective Material Adverse Effect. On the
Closing Time, the Underwriter shall have received a certificate dated the
Closing Time, signed by each of the President and Chief Financial Officer of the
Company confirming the matters set forth in Sections 5(a), (b) and (c).
(d) The Underwriter shall have received an opinion, dated the Closing Time
and satisfactory in form and substance to counsel for the Underwriter, from
counsel for the Company to the effect that:
(i) Each of the Company and the Subsidiaries has been duly organized
and is validly existing in good standing under the laws of the jurisdiction
in which it is organized, with full power and authority to own or lease and
occupy its properties and conduct its business as described in the
Prospectus, and is duly qualified to do business, and is in good standing,
in each jurisdiction which requires such qualification, except where the
failure to so qualify would not, individually or in the aggregate, have a
Material Adverse Effect;
(ii) The Company's authorized equity capitalization is as set forth in
the Prospectus; the capital stock of the Company conforms to the
description thereof contained in the Prospectus in all material respects;
the statements in the Prospectus under the caption "Description of Series C
Preferred Stock and Depositary Shares," insofar as such statements
constitute summaries of the documents referred to therein, have been
reviewed by such counsel and fairly summarize the matters referred to
therein in all material respects; the outstanding shares of Common Stock,
Series A Preferred Stock and Series B Preferred Stock have been duly and
validly authorized and issued and are fully paid and non-assessable; the
deposit of the Preferred Shares in accordance with the Deposit Agreement
has been duly authorized; the Shares and the Preferred Shares have been
duly and validly authorized, and, when issued and delivered pursuant to the
Agreement and the Deposit Agreement and, in the case of the Shares, paid
for by the Underwriter pursuant to the Agreement, will be fully paid and
non-assessable; the Common Shares have been duly and validly authorized and
issued and, when issued upon conversion of the Preferred Shares, will be
fully paid and non-assessable; the Shares have been duly authorized for
listing, subject to official notice of issuance, on the American Stock
Exchange; the forms of depositary receipts representing the Shares are in
valid and sufficient form in compliance with American Stock Exchange
requirements; and the holders of outstanding shares of capital stock of the
Company are not entitled to preemptive or other rights to subscribe for the
Shares, the Preferred Stock or Common Stock;
(iii) To the best of such counsel's knowledge, after due inquiry,
there is no pending or threatened action, suit or proceeding before any
court or governmental agency,
13
authority or body or arbitrator involving the Company or any of the
Subsidiaries of a character required to be disclosed in the Registration
Statement which is not adequately disclosed in the Prospectus, and there is
no franchise, contract or other document of a character required to be
described in the Registration Statement or Prospectus, or to be filed as an
exhibit, which is not described or filed as required;
(iv) The Registration Statement and the Prospectus and any amendment
or supplement thereto comply as to form in all material respects with the
requirements for the use of Form S-1 and the rules and regulations
thereunder, and the Registration Statement and the Prospectus and any
amendment or supplement thereto (other than the financial statements and
other financial information contained therein, as to which such counsel
need express no opinion) comply as to form in all material respects with
the requirements of the Act and the rules thereunder;
(v) The Company has full corporate power and authority to enter into
and perform its obligations under the Agreement and the Deposit Agreement
and to issue, sell and deliver the Shares and to issue and deliver the
Preferred Shares and the Common Shares; and this Agreement has been, and
the Deposit Agreement will have been as of the Closing Time, duly
authorized, executed and delivered by the Company;
(vi) No consent, approval, authorization or order of any court or
governmental agency, authority or body is required for the execution by the
Company of the Agreement or the Deposit Agreement, the performance by the
Company of its obligations hereunder or thereunder or the consummation of
the transactions contemplated herein or therein, except such as have been
obtained under the Act and the Exchange Act and such as may be required
under the Blue Sky laws of any jurisdiction in connection with the purchase
and distribution by the Underwriter of the Shares;
(vii) The Company and each of the Subsidiaries are not in violation of
its certificate of incorporation, by-laws or other organizational
documents, and to the best of the Company's knowledge, after due inquiry,
neither the Company nor any of the Subsidiaries is in default in the
performance of any obligation, agreement or condition contained in any
loan, note or other evidence of indebtedness or in any indenture, mortgage,
deed of trust or any other material agreement by which it or its properties
are bound, except for such defaults as could not, individually or the
aggregate, have a Material Adverse Effect;
(viii) Neither the issue and sale of the Shares nor the consummation
of any of the other transactions contemplated by the Agreement (including
without limitation the execution, delivery and performance of the Deposit
Agreement, the issuance and deposit of the Preferred Shares in accordance
with the Deposit Agreement and the consummation of the transactions
contemplated therein, including the issuance of the Common Shares upon
conversion of the Preferred Shares) nor the fulfillment of the terms hereof
or thereof will conflict with, result in a breach or violation of, or
constitute a default under any law or the articles of incorporation, bylaws
or other organizational documents of the Company or the Subsidiaries or the
terms of any indenture or other agreement or instrument to which the
Company or any of the Subsidiaries is a party or is bound or any judgment,
order or decree applicable to the Company or
14
any of the Subsidiaries of any court, regulatory body, administrative
agency, governmental body or arbitrator having jurisdiction over the
Company or any of the Subsidiaries;
(ix) No holders of securities of the Company have rights to the
registration of such securities under the Registration Statement, except as
provided therein;
(x) Any required filing of the Prospectus pursuant to Rule 424(b) has
been made in the manner and within the time period required by Rule 424(b);
and, to the best of such counsel's knowledge, no stop order suspending the
effectiveness of the Registration Statement has been issued and no
proceedings for that purpose have been instituted or threatened;
(xi) The statements in the Registration Statement and Prospectus,
insofar as they are descriptions of contracts, agreements or other legal
documents, or refer to statements of law or legal conclusions, are accurate
and present fairly the information required to be shown in all material
respects;
(xii) Except as described in the Prospectus, to the best of such
counsel's knowledge, there are no outstanding options, warrants or other
rights calling for the issuance of, and there are no commitments, plans or
arrangements to issue, any shares of capital stock of the Company or any
security convertible into or exchangeable or exercisable for capital stock
of the Company;
(xiii) Assuming due authorization, execution and delivery by the
Depositary, the Deposit Agreement constitutes the valid and binding
agreement of the Company, enforceable against the Company in accordance
with its terms, except to the extent that enforcement thereof may be
limited by (i) bankruptcy, insolvency, reorganization, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally and (ii) general principles of equity and (regardless of whether
a proceeding is considered at law or in equity);
(xiv) When the Shares evidenced by the Depositary Receipts are issued
and delivered in accordance with the terms of the Deposit Agreement against
the deposit of duly authorized and issued, fully paid and non-assessable
shares of Preferred Stock, the Depositary Receipts will entitle the holders
thereof to the benefits provided therein and in the Deposit Agreement.
In addition, such counsel shall state that it has participated in conferences
with representatives of the Underwriter, and with officers and other
representatives of the Company and representatives of the independent certified
public accountants of the Company, at which conferences the contents of the
Registration Statement and the Prospectus and related matters were discussed
and, although such counsel does not pass upon and does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Registration Statement and the Prospectus, on the basis of the
foregoing (relying as to certain factual matters on the information provided to
such counsel by the Company and not on an independent investigation, but in the
absence of information to the contrary), no facts have come to such counsel's
attention which leads such counsel to believe that the Registration Statement,
as of its effective date, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary to
make the statements therein not misleading, or that the Prospectus,
15
as of its date and as of the Closing Time, contained or contains an untrue
statement of a material fact or omitted or omits to state a material fact
necessary to make the statements therein, in the light of the circumstances
under which they were or are made, not misleading; provided that such counsel
need not express any comment with respect to the financial statements and other
financial data included in the Registration Statement or Prospectus.
(e) The Underwriter shall have received an opinion, dated the Closing Time
from Xxxxxxxxx & Xxxxxxxxx, L.L.P., counsel to the Underwriter, with respect to
the Registration Statement, the Prospectus and this Agreement, which opinion
shall be satisfactory in all respects to the Underwriter, and such counsel shall
have been provided by the Company with such documents and information as they
may reasonably request to enable them to pass on such matters.
(f) You shall have received "comfort" letters addressed to you, as
Underwriter, and dated the date hereof and the Closing Time from [Xxxxxx
Xxxxxxxx LLP], independent certified public accountants, substantially in the
forms heretofore approved by you.
(g) Von Gonten shall have delivered to you on the date of this Agreement a
letter (the "Reserve Letter"), in form and substance reasonably satisfactory to
you, stating, as of the date of this Agreement, the conclusions and findings of
such firm with respects to the oil and gas reserves of the Company.
(h) The Company shall not have failed at or prior to the Closing Time to
have performed or complied with any of its agreements herein contained or
contained in the Deposit Agreement and required to be performed or complied with
by it hereunder or thereunder at or prior to the Closing Time.
(i) Prior to the Closing Time the Shares shall have been listed, subject to
notice of issuance, on the American Stock Exchange.
(j) The Company shall have furnished or caused to be furnished to you such
further certificates and documents as you shall have requested.
All such opinions, certificates, letters and other documents will be in
compliance with the provisions hereof only if they are satisfactory in form and
substance to you and your counsel.
Any certificate or document signed by any officer of the Company and delivered
to you, as Underwriter, or to counsel for the Underwriter, shall be deemed a
representation and warranty by the Company to the Underwriter as to the
statements made therein.
(k) In the event that the Underwriter exercises its option provided in
Section 2(a) hereof to purchase all or any portion of the Option Shares, the
representations and warranties of the Company contained herein and the
statements in any certificates furnished by the Company or any subsidiary of the
Company hereunder shall be true and correct as of each Date of Delivery and, at
the relevant Date of Delivery, the Representatives shall have received:
(i) A certificate, dated such Date of Delivery, of the President or a
Vice President of the Company and of the chief financial or chief
accounting officer of the Company
16
confirming that the certificate delivered at the Closing Time pursuant to
Section 5(c) hereof remains true and correct as of such Date of Delivery.
(ii) The favorable opinion of counsel for the Company, in form and
substance satisfactory to counsel for the Underwriter, dated such Date of
Delivery, relating to the Option Shares to be purchased on such Date of
Delivery and otherwise to the same effect as the opinion required of such
counsel by Section 5(d) hereof.
(iii) The favorable opinion of Xxxxxxxxx & Xxxxxxxxx, L.L.P., counsel
for the Underwriter, dated such Date of Delivery, relating to the Option
Shares to be purchased on such Date of Delivery and otherwise to the same
effect as the opinion required by Section 5(e) hereof.
(iv) A letter from [Xxxxxx Xxxxxxxx LLP], in form and substance
satisfactory to the Underwriter and dated such Date of Delivery,
substantially in the same form and substance as the letter furnished to the
Underwriter at the Closing Time pursuant to Section 5(f) hereof, except
that the "specified date" in the letter furnished pursuant to this
paragraph shall be a date not more than three days prior to such Date of
Delivery.
6. Indemnification and Contribution.
(a) The Company agrees to indemnify and hold harmless the Underwriter, the
directors, officers, employees and agents of the Underwriter and any person who
controls the Underwriter within the meaning of Section 15 of the Act or Section
20 of the Exchange Act from and against any and all losses, claims, damages,
liabilities and expenses (including reasonable costs of investigation) arising
out of or based upon any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, any Preliminary
Prospectus or the Prospectus or in any amendment or supplement thereto, or
arising out of or based upon any omission or alleged omission to state therein a
material fact required to be stated therein or necessary to make the statements
therein not misleading, except insofar as such losses, claims, damages,
liabilities or expenses arise out of or are based upon any untrue statement or
omission or alleged untrue statement or omission which has been made therein or
omitted therefrom in reliance upon and in conformity with the information
relating to the Underwriter furnished in writing to the Company by or on behalf
of the Underwriter expressly for use in connection therewith; provided, however,
that the indemnification contained in this paragraph (a) with respect to any
Preliminary Prospectus shall not inure to the benefit of the Underwriter (or to
the benefit of any person controlling the Underwriter) on account of any such
loss, claim, damage, liability or expense arising from the sale of the Shares by
such Underwriter to any person if a copy of the Prospectus shall not have been
delivered or sent to such person within the time required by the Act and the
regulations thereunder, and the untrue statement or alleged untrue statement or
omission or alleged omission of a material fact contained in such Preliminary
Prospectus was corrected in the Prospectus, provided that the Company has
delivered the Prospectus to the Underwriter in requisite quantity on a timely
basis to permit such delivery or sending. The foregoing indemnity agreement
shall be in addition to any liability which the Company may otherwise have.
(b) The Company agrees to indemnify and hold harmless the Underwriter, the
directors, officers, employees and agents of the Underwriter and each person who
controls the
17
Underwriter, within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, from and against any and all losses, claims, damages, liabilities
and expenses (including reasonable costs of investigation) (i) caused by the
failure of any Participant to pay for and accept delivery of the Directed Shares
which immediately following the Effective Date of the Registration Statement,
were subject to a properly confirmed agreement to purchase or (ii) related to,
arising out of, or in connection with the Directed Share Program, provided that,
the Company will not be liable in any such case to the extent that any such
loss, claim, damage or liability arises out of or is based upon any such untrue
statement or alleged untrue statement or omission or alleged omission made in
the prospectus wrapper material in reliance upon and in conformity with written
information furnished to the Company by or on behalf of the Underwriter
specifically for inclusion therein.
(c) If any action, suit or proceeding shall be brought against the
Underwriter or any person controlling the Underwriter in respect of which
indemnity may be sought against the Company, the Underwriter or such controlling
person shall promptly notify the Company (but failure to so notify the Company
shall not relieve the Company from any liability hereunder to the extent it is
not materially prejudiced as a result thereof and in any event shall not relieve
it from any liability which it may have otherwise than on account of this
indemnity agreement) and the Company shall assume the defense thereof, including
the employment of counsel and payment of all fees and expenses; provided,
however, that if the defendants in any such action include both the indemnified
party and the indemnifying party and the indemnified party shall have reasonably
concluded that there may be one or more legal defenses available to it and/or
other indemnified parties which are different from or additional to those
available to the indemnifying party, the indemnifying party shall not have the
right to direct the defense of such action on behalf of such indemnified party
or parties and such indemnified party or parties shall have the right to select
separate counsel to defend such action on behalf of such indemnified party or
parties. The Underwriter or any such controlling person shall have the right to
employ separate counsel in any such action, suit or proceeding and to
participate in the defense thereof, but the fees and expenses of such counsel
shall be at the expense of the Underwriter or such controlling person unless (i)
the Company has agreed in writing to pay such fees and expenses, (ii) the
Company has failed promptly to assume the defense and employ counsel, or (iii)
the named parties to any such action, suit or proceeding (including any
impleaded parties) include both the Underwriter or such controlling person and
the Company and the Underwriter or such controlling person shall have been
advised by its counsel that representation of such indemnified party and the
Company by the same counsel would be inappropriate under applicable standards of
professional conduct (whether or not such representation by the same counsel has
been proposed) due to actual or potential differing interests between them (in
which case the Company shall not have the right to assume the defense of such
action, suit or proceeding on behalf of the Underwriter or such controlling
person). The Company shall not be liable for any settlement of any such action,
suit or proceeding effected without its written consent, but if settled with
such written consent, or if there be a final judgment for the plaintiff in any
such action, suit or proceeding, the Company agrees to indemnify and hold
harmless the Underwriter, to the extent provided in the preceding paragraph, and
any such controlling person from and against any loss, claim, damage, liability
or expense by reason of such settlement or judgment.
(d) The Underwriter agrees to indemnify and hold harmless the Company, its
directors, its officers who sign the Registration Statement, and any person who
controls the
18
Company within the meaning of Section 15 of the Act or Section 20 of the
Exchange Act, to the same extent as the foregoing indemnity from the Company to
the Underwriter, but only with respect to information relating to the
Underwriter furnished in writing by or on behalf of the Underwriter expressly
for use in the Registration Statement, the Prospectus, or any Preliminary
Prospectus, or any amendment or supplement thereto. If any action, suit or
proceeding shall be brought against the Company, any of its directors, any such
officer, or any such controlling person based on the Registration Statement, the
Prospectus, or any Preliminary Prospectus, or any amendment or supplement
thereto, and in respect of which indemnity may be sought against the Underwriter
pursuant to this paragraph (c), the Underwriter shall have the rights and duties
given to the Company by paragraph (b) above (except that if the Company shall
have assumed the defense thereof the Underwriter shall not be required to do so,
but may employ separate counsel therein and participate in the defense thereof,
but the fees and expenses of such counsel shall be at the Underwriter's
expense), and the Company, its directors, any such officer, and any such
controlling person shall have the rights and duties given to the Underwriter by
paragraph (b) above. The foregoing indemnity agreement shall be in addition to
any liability which the Underwriter may otherwise have.
(e) If the indemnification provided for in this Section 6 is unavailable to
an indemnified party under paragraph (a) or (c) hereof in respect of any losses,
claims, damages, liabilities or expenses referred to therein, then an
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, claims, damages, liabilities or expenses (i) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriter on the other hand from the offering of the
Shares, or (ii) 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 on the one hand and the Underwriter on the other in connection with
the statements or omissions that resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company on the one hand and the
Underwriter on the other shall be deemed to be in the same proportion as the
total net proceeds from the offering (before deducting expenses) received by the
Company bear to the total underwriting discounts and commissions received by the
Underwriter, in each case as set forth in the table on the cover page of the
Prospectus. The relative fault of the Company on the one hand and the
Underwriter on the other hand shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates to information
supplied by the Company on the one hand or by the Underwriter on the other hand
and the parties' relative intent, knowledge, access to information and
opportunity to correct or prevent such statement or omission.
(f) The Company and the Underwriter agree that it would not be just and
equitable if contribution pursuant to this Section 6 were determined by a pro
rata allocation or by any other method of allocation that does not take account
of the equitable considerations referred to in paragraph (d) above. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities and expenses referred to in paragraph (d) above shall be
deemed to include, subject to the limitations set forth above, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating any claim or defending any such action, suit or proceeding.
19
Notwithstanding the provisions of this Section 6, the Underwriter shall not be
required to contribute any amount in excess of the amount by which the total
price of the Shares underwritten by it and distributed to the public exceeds the
amount of any damages which the Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within the meaning
of Section 11(f) of the Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation.
(g) No indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement of any pending or threatened action,
suit or proceeding in respect of which any indemnified party is or could have
been a party and indemnity could have been sought hereunder by such indemnified
party, unless such settlement includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of
such action, suit or proceeding and does not include a statement as to or an
admission of fault, culpability or a failure to act by or on behalf of any
indemnified party.
(h) If at any time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party for fees and expenses of
counsel, such indemnifying party agrees that it shall be liable for any
settlement of the nature contemplated by Section 6(b) effected without its
written consent if (i) such settlement is entered into more than 45 days after
receipt by such indemnifying party of the aforesaid request, (ii) such
indemnifying party shall have received notice of the terms of such settlement at
least 30 days prior to such settlement being entered into and (iii) such
indemnifying party shall not have reimbursed such indemnified party in
accordance with such request prior to the date of such settlement.
Notwithstanding the immediately preceding sentence, if at any time an
indemnified party shall have requested an indemnifying party to reimburse the
indemnified party for fees and expenses of counsel, an indemnifying party shall
not be liable for any settlement of the nature contemplated by Section 6(b)
effected without its consent if such indemnifying party (i) reimburses such
indemnified party in accordance with such request to the extent such
indemnifying party considers such request to be reasonable and (ii) provides
written notice to the indemnified party substantiating the unpaid balance as
unreasonable, in each case prior to the date of such settlement.
(i) Any losses, claims, damages, liabilities or expenses for which an
indemnified party is entitled to indemnification or contribution under this
Section 6 shall be paid by the indemnifying party to the indemnified party as
such losses, claims, damages, liabilities or expenses are incurred. The
indemnity and contribution agreements contained in this Section 6 and the
representations and warranties of the Company set forth in this Agreement shall
remain operative and in full force and effect, regardless of (i) any
investigation made by or on behalf of the Underwriter or any person controlling
the Underwriter, the Company, its directors or officers, or any person
controlling the Company, (ii) acceptance of any Shares and payment therefore
hereunder, and (iii) any termination of this Agreement. A successor to the
Underwriter or any person controlling the Underwriter, or to the Company, its
directors or officers, or any person controlling the Company, shall be entitled
to the benefits of the indemnity, contribution and reimbursement agreements
contained in this Section 6.
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7. Termination. This Agreement shall be subject to termination in your
absolute discretion, without liability on the part of the Underwriter to the
Company by notice to the Company, if prior to the Closing Time (i) except as
disclosed in the Registration Statement and the Prospectus, since the date of
the most recent financial statements included in the Prospectus, there has been
any event, occurrence, circumstance or development that has resulted in a
Material Adverse Effect or that may reasonably be expected to involve a
prospective Material Adverse Effect, (ii) trading in any securities of the
Company or in securities generally on the New York Stock Exchange, the American
Stock Exchange or the Nasdaq National Market shall have been suspended or
materially limited, (iii) a general moratorium on commercial banking activities
in New York or Texas shall have been declared by either federal or state
authorities, or (iv) there shall have occurred any outbreak or escalation of
hostilities or other international or domestic calamity, crisis or change in
political, financial or economic conditions, the effect of which on the
financial markets of the United States is such as to make it, in your judgment,
impracticable or inadvisable to commence or continue the offering of the Shares
at the offering price to the public set forth on the cover page of the
Prospectus or to enforce contracts for the resale of the Shares by the
Underwriter.
Notice of such termination may be given to the Company by telegram, telecopy or
telephone and shall be subsequently confirmed by letter.
8. Information Furnished by the Underwriter. The statements set forth in
the first two paragraphs under the caption "Underwriting" in the Prospectus
constitute the only information furnished by or on behalf of the Underwriter as
such information is referred to in Sections 1(b) and 6 hereof.
9. Miscellaneous. Except as otherwise provided in Sections 3, 7 and 8
hereof, notice given pursuant to any provision of this Agreement shall be in
writing and shall be delivered (i) if to the Company, at the office of the
Company, Contango Oil & Gas Company, 0000 Xxxxxxx Xxxxxxxx, Xxxxx 000, Xxxxxxx,
Xxxxx 00000, Attention: Xxxxxxx X. Peak, or (ii) if to you, Xxxxxx Xxxxxx &
Company, Inc., 00 Xxxxx Xxxxxx, Xxxxxxx, Xxxxxxxxx 00000, Attention: ________.
This Agreement has been and is made solely for the benefit of the Underwriter,
the Company, its directors and officers and their respective successors and
assigns, to the extent provided herein, and no other person shall acquire or
have any right under or by virtue of this Agreement. Neither the term
"successor" nor the term "successors and assigns" as used in this Agreement
shall include a purchaser from the Underwriter of any of the Shares in his
status as such purchaser.
10. Applicable Law. This Agreement shall be governed by and construed in
accordance with the laws of the State of Tennessee.
11. Counterparts. This Agreement may be signed in various counterparts,
which together constitute one and the same instrument. If signed in
counterparts, this Agreement shall not become effective unless at least one
counterpart hereof shall have been executed and delivered on behalf of each
party hereto.
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Please confirm that the foregoing correctly sets forth the agreement between the
Company and the Underwriter.
Very truly yours,
CONTANGO OIL & GAS COMPANY
-------------------------------
Xxxxxxx X. Peak
President and Chief Executive Officer
Confirmed as of the date first above mentioned.
By: XXXXXX XXXXXX & COMPANY, INC.
By: __________________________
Name: __________________________
Title: ___________________________
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