Exhibit 1.1
CANARGO ENERGY CORPORATION
57,500,000 SHARES OF COMMON STOCK
FORM OF PLACEMENT AGENT AGREEMENT
(U.S. Version)
July __, 2004
ABG Sundal ▇▇▇▇▇▇▇ Inc.
As Representative of the several
Agents named in
Schedule I attached hereto
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▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned, CanArgo Energy Corporation, a Delaware corporation
(the "Company"), proposes to issue and sell up to 57,500,000 shares (the
"Securities") of common stock, par value $0.10 per share, of the Company
("Common Stock"), in the United States and Canada. The Securities are more fully
described in the Prospectus referred to below. The Securities will be sold by
two separate groups of placement agents, the "U.S. Syndicate" consisting of you
as lead U.S. placement agent and the agents set forth on Schedule I hereto (you
and these agents are collectively referred to as the "Agents") and the
"International Syndicate" consisting of ABG Sundal ▇▇▇▇▇▇▇ Norge ASA as lead
non-U.S. placement agent (the "International Representative") and Orion
Securities Inc. (the "Canadian Agent"), Aton Financial Holdings, and Terra
Securities ASA.
It is understood by all the parties that the Company is concurrently
entering into this agreement (the "Agreement") and a substantially identical
agreement (the "International Placement Agent Agreement") providing for the sale
by the Company of Common Stock outside the United States through arrangements
with the International Syndicate (the "International Agents"), for which the
International Representative is acting as representative outside the United
States; provided however, that the aggregate amount of Common Stock sold by the
International Syndicate outside the United States and the U.S. Syndicate in the
United States shall not exceed 75,000,000. Anything herein or therein to the
contrary notwithstanding, the respective closings under this Agreement and the
International Placement Agent Agreement are hereby made conditional on one
another.
The U.S. Syndicate will offer shares solely in the United States,
and the International Syndicate will offer shares solely in Norway, Canada,
Russia, Germany, Switzerland, Sweden and the United Kingdom, provided that the
Securities offered and sold by
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the International Agents shall be offered and sold on the same economic terms as
set forth herein. The aggregate amount of Securities available for sale in the
United States by the Agents and in Canada by the Canadian Agent will be up to
57,500,000. The U.S. Syndicate and the International Syndicate are
simultaneously herewith entering into an Agreement between them (the "Agreement
between Syndicates"), which provides, among other things, that the International
Representative shall act as global arranger and coordinator for the offering of
Securities, and the procedures to be followed by the International
Representative in connection therewith.
One U.S. form and several international forms of prospectuses are to
be used in connection with the offering and sale of the Securities contemplated
by the foregoing, the former relating to the Securities to be offered and sold
by the Agents in the United States and the Securities sold by the International
Syndicate in Canada (when used in connection with Securities offered and sold in
Canada, such prospectus shall include such annexes, additional cover pages and
substitute pages as required by local law), and the latter relating to the
Securities to be offered and sold by the International Syndicate other than in
Canada. The international forms of prospectus (collectively, the "International
Prospectus") will be substantially identical to the U.S. prospectus, except for
certain annexes, additional cover pages and substitute pages as included or
referred to in the registration statement and amendments thereto mentioned below
and required by local law. Except as used in Sections 1, 4, 5 and 11 herein, and
except as the context may otherwise require, reference herein to the Securities
shall include all of the Securities which may be offered and sold pursuant to
either this Agreement or the International Placement Agent Agreement. References
herein to any prospectus, whether in preliminary or final form, and whether as
amended or supplemented, shall include the U.S. and international versions
thereof.
The Company hereby confirms its agreement with each of you and the
other Agents as follows:
1. Introductory. Subject to the terms and conditions contained in
this Agreement, the Company hereby appoints each of the Agents as its agent for
the purpose of soliciting offers to purchase, and each of the Agents agrees to
use its reasonable best efforts to solicit, offers to purchase the Securities
upon terms acceptable to the Company and in compliance with all applicable laws,
rules and regulations. You will be acting, and have been appointed by the
Agents, as selling agent for the Agents in connection with this Agreement and
the transactions contemplated thereby. The Securities shall be sold on a best
efforts basis, any and all, in accordance with the provisions of Section 4
hereof, with you placing such Securities with purchasers or permitting other
Agents to sell on behalf of the Company such Securities to their customers.
2. Definitions. As used herein:
"ACT" shall mean the Securities Act of 1933, as amended.
"REGISTRATION STATEMENT" shall mean a registration statement on Form
S-3 (Registration No. 333-115645) in respect of the Securities, prepared and
filed with the SEC by the Company, including the prospectus, prospectus
supplement, Part II, any documents
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incorporated by reference therein and all financial schedules and exhibits
thereto, as amended at the time when it shall become effective and including any
Rule 462 Registration Statement filed by the Company and any documents filed
after the date of the Pre-Effective Prospectus, Effective Prospectus or the
Final Prospectus , as the case may be , and incorporated by reference under the
Exchange Act.
"EFFECTIVE PROSPECTUS" shall mean the prospectus and any prospectus
supplement included as part of the Registration Statement on the date when the
Registration Statement became effective if the procedure in Rule 430A is
followed.
"EXCHANGE ACT" shall mean the Securities Exchange Act of 1934.
"FINAL PROSPECTUS" shall mean the prospectus and any prospectus
supplement included as part of the Registration Statement on file with the SEC
when it shall become effective or, if the procedure in Rule 430A of the Rules
and Regulations is followed, the prospectus and any prospectus supplement that
discloses all the information that was omitted from the prospectus and any
prospectus supplement on the effective date pursuant to such Rule 430A, and in
either case, together with any changes contained in any prospectus and
prospectus supplement filed with the SEC by the Company after the effective date
of the Registration Statement.
"PRE-EFFECTIVE PROSPECTUS" shall mean any prospectus and prospectus
supplement included in the Registration Statement and in any amendments thereto
prior to the effective date of the Registration Statement.
"RULE 462 REGISTRATION STATEMENT" shall mean an abbreviated
registration statement to register additional Securities pursuant to Rule 462(b)
under the Act (including the exhibits thereto).
"RULES AND REGULATIONS" shall mean the rules and regulations adopted
by the SEC under either the Act or the Exchange Act, as applicable.
"SEC" shall mean the Securities and Exchange Commission.
"SUBSIDIARY" and collectively, "SUBSIDIARIES," shall mean each
subsidiary listed on Schedule II hereto.
3. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, the several Agents that:
(a) A registration statement on Form S-3 (Registration No.
333-115645) in respect of the Securities has been prepared by the Company
in conformity with the requirements of the Act and the Rules and
Regulations and filed with the SEC; such registration statement and any
amendment(s) thereto, each in the form heretofore delivered to you and,
excluding exhibits to such registration statement, but including all
documents incorporated by reference in the prospectus and prospectus
supplement contained therein, have been declared effective by the SEC in
such form; no other
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document with respect to such registration statement or document
incorporated by reference therein has heretofore been filed or transmitted
for filing with the SEC.
(b) No order preventing or suspending the use of any
Pre-Effective Prospectus has been issued by the SEC and to the Company's
knowledge no proceeding for that purpose has been initiated or threatened
by the SEC.
(c) The documents which are incorporated by reference in the
Effective and Final Prospectus, when they became effective or were filed
with the Commission, as the case may be, conformed in all material
respects to the requirements of the Act or the Exchange Act, as
applicable, and the Rules and Regulations, and none of such documents when
they were filed (or, if amendments with respect to such documents were
filed, when such amendments were filed) 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, in light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by any Agent expressly for
use in the Effective Prospectus as amended or supplemented to relate to a
particular issuance of Securities.
(d) The Registration Statement and the Effective and Final
Prospectus conform, and at any time that the Pre-Effective Prospectus was
required to be delivered in connection with the solicitation of offers by
the Agents or the International Agents or a dealer, in all material
respects to the requirements of the Act, and the Rules and Regulations
thereunder and do not, as of the applicable effective date as to the
Registration Statement and any amendment thereto and as of the applicable
filing date as to the Prospectus and any amendment or supplement thereto,
contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements
therein, in light of the circumstances under which they were made, not
misleading; provided, however, that this representation and warranty shall
not apply to any statements or omissions made in reliance upon and in
conformity with information furnished in writing to the Company by any
Agent expressly for use in any Pre-Effective, Effective or Final
Prospectus as amended or supplemented to relate to a particular issuance
of Securities.
(e) Neither the Company nor any of its subsidiaries has
sustained since the date of the latest audited financial statements
included or incorporated by reference in the Effective and Final
Prospectus any material loss or interference with its business from fire,
explosion, flood or other calamity, whether or not covered by insurance,
or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Effective and
Final Prospectus; and, since the respective dates as of which information
is given in the Registration Statement and the Effective and Final
Prospectus, there has not been any material adverse change, or any
development involving a prospective material adverse change, in or
affecting the general affairs, management, financial position,
shareholders' equity or results of operations or, to the Company's
knowledge, future prospects of the Company and its subsidiaries, taken as
a whole, otherwise than as set forth or contemplated in the Effective and
Final Prospectus.
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(f) The Company and each of its consolidated subsidiaries has
been duly incorporated and is validly existing as a corporation in good
standing under the laws of the jurisdiction of its incorporation, with
full power and authority (corporate and other) to own its properties and
conduct its business as described in the Effective and Final Prospectus,
and has been duly qualified as a foreign corporation for the transaction
of business and is in good standing under the laws of each other
jurisdiction in which it owns or leases properties, or conducts any
business so as to require such qualification (except where the failure so
to qualify will not subject it to material liability or disability).
(g) The Company has an authorized capitalization as set forth
in the Effective and Final Prospectus and such authorized capital stock
conforms as to legal matters to the description thereof set forth in the
Effective and Final Prospectus, and all of the issued shares of capital
stock of the Company have been duly and validly authorized and issued and
are fully paid and non-assessable; all of the issued shares of capital
stock of each consolidated subsidiary have been duly and validly
authorized and issued, are fully paid and non-assessable and are owned
directly or indirectly by the Company, free and clear of all liens,
encumbrances, equities or claims, and there are no outstanding rights
(including, without limitation, pre-emptive rights), warrants or options
to acquire, or instruments convertible into or exchangeable for, any
shares of capital stock or other equity interest in the Company or any of
its consolidated subsidiaries, or any contract, commitment, agreement,
understanding or arrangement of any kind relating to the issuance of any
capital stock of the Company or any such consolidated subsidiary, any such
convertible or exchangeable securities or any such rights, warrants or
options and there are no restrictions on subsequent transfers of the
Securities.
(h) The Securities have been duly and validly authorized by
all necessary corporate action; other than as set forth on Schedule III
hereto, no consent, authorization, order, license or approval of any
governmental authority is required by the Company to execute, issue, sell
or deliver the Securities, except for any consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities or "blue sky" laws in connection with the distribution of
the Securities in the manner contemplated hereby; and, when issued and
delivered against payment therefor pursuant to this Agreement and the
International Placement Agent Agreement, will be duly and validly issued
and fully paid and non-assessable, and will be substantially in the form
filed as an exhibit to the Registration Statement and will conform in all
respects to the descriptions thereof contained in the Effective and Final
Prospectus as amended or supplemented; and the Securities are duly listed
for trading on the American Stock Exchange.
(i) The Company and each of its subsidiaries have conducted
their businesses and are in compliance in all material respects with all
applicable United States federal and state laws and regulations,
including, without limitation, all requirements under the Exchange Act and
all Rules and Regulations, any noncompliance of which would not have a
material adverse effect on the Company and its subsidiaries considered as
a whole.
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(j) Neither the Company nor any subsidiary is in breach or
violation of, and the issue and sale of the Securities, the compliance by
the Company with this Agreement and the International Placement Agent
Agreement, and the consummation of the transactions herein and therein
contemplated will not conflict with or result in a breach or violation of
any of the terms or provisions of, or constitute a default under, (A) any
material indenture, mortgage, deed of trust, loan agreement or other
material agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries
is bound or to which any of the material property or assets of the Company
or any of its subsidiaries is subject (each, a "Material Contract"); (B)
any provisions of the certificate or articles of incorporation or the
by-laws or other similar organizational documents of the Company or any
subsidiary or (C) any applicable statute or any order, rule or regulation
of any court or governmental agency or body having jurisdiction over the
Company or any of its material properties, in each case (other than in a
case under clause B of this subsection (j)) the conflict, breach,
violation or default of which would have a material adverse effect on the
Company and its subsidiaries considered as a whole, and no consent,
approval, authorization, order, registration or qualification of or with
any court or governmental agency or body or party to any Material Contract
is required for the execution, delivery and performance by the Company of
this Agreement and the International Placement Agent Agreement, for the
solicitation of offers to purchase Securities, the issue and sale of the
Securities or the consummation by the Company of the other transactions
contemplated by this Agreement and the International Placement Agent
Agreement, except such as have been, or will have been prior to the
commencement date of the offering of the Securities, obtained under the
Act and the Rules and Regulations thereunder and such consents, approvals,
authorizations, registrations or qualifications as may be required under
state securities or "blue sky" laws in connection with the distribution of
the Securities in the manner contemplated hereby. Each Material Contract
is in full force and is the legal, valid, and binding obligation of the
Company or its subsidiaries and to the Company's knowledge, the other
parties thereto and is enforceable as to them in accordance with its
terms, subject to bankruptcy, insolvency, reorganization, moratorium and
other laws of general applicability relating to or affecting creditors'
rights and to general principles of equity and such unenforceability of
Material Contracts which would not have a material adverse effect on the
Company and its subsidiaries considered as a whole.
(k) Other than as set forth in the Effective Prospectus and
Final Prospectus, there are no legal, governmental or other proceedings,
formal or informal, pending to which the Company or any of its
subsidiaries is a party or to which any material property of the Company
or any of its subsidiaries is subject, which are of a character which are
required to be disclosed in the Effective Prospectus or Final Prospectus
or the existence of which has a material adverse effect on the Company and
its subsidiaries considered as a whole which have not been properly
disclosed therein; and, to the best of the Company's knowledge, no such
proceedings are threatened or contemplated by governmental authorities or
threatened by others.
(l) Immediately after any sale of Securities by the Company
hereunder, the aggregate amount of Securities which shall have been issued
and sold by the Company hereunder and of any securities of the Company
(other than such Securities)
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that shall have been issued and sold pursuant to the Registration
Statement will not exceed the amount of securities registered under the
Registration Statement.
(m) The consolidated financial statements of the Company and
its consolidated subsidiaries included in the Registration Statement and
the Effective Prospectus and Final Prospectus fairly present in all
material respects with respect to the Company and its consolidated
subsidiaries the consolidated financial position and the consolidated
results of operations and cash flows at the respective dates and for the
respective periods to which they apply in accordance with generally
accepted accounting principles (except to the extent that certain footnote
disclosures regarding any stub period may have been omitted in accordance
with applicable Rules and Regulations under the Exchange Act) consistently
applied (except as stated therein) throughout the periods involved. The
accountants whose report on the audited financial statements is filed with
the SEC as a part of the Registration Statement are, and during the
periods covered by their report(s) included in the Registration Statement
and the Effective Prospectus and Final Prospectus were, independent
certified public accountants with respect to the Company and its
consolidated subsidiaries within the meaning of the Act and the Rules and
Regulations. No other financial statements are required by Form S-3 or
otherwise to be included in the Registration Statement or the Effective
and Final Prospectus. The above-referenced accountants are registered with
the Public Company Accounting Oversight Board.
(n) Neither the Company nor any subsidiary has, to the
Company's knowledge, infringed, is infringing, or has received notice of
infringement with respect to asserted intangibles of others which in each
case is reasonably likely to have a material adverse effect on the Company
and its subsidiaries considered as a whole. To the knowledge of the
Company or any subsidiary, there is no infringement of others which has
had or is reasonably likely to have a material adverse effect on the
financial condition, results of operations, business, properties, assets,
liabilities, or future prospects of the Company and the subsidiaries taken
as a whole.
(o) The Company has all requisite power and authority to
execute, deliver, and perform this Agreement and the International
Placement Agent Agreement and any agreement entered into and executed in
connection therewith, and to issue, sell and deliver the Securities in
accordance with and upon the terms and conditions set forth in this
Agreement and the International Placement Agent Agreement. All necessary
corporate proceedings of the Company or any subsidiary have been duly
taken to authorize the execution, delivery, and performance by the Company
of this Agreement and the International Placement Agent Agreement, and the
issuance, sale, and delivery of the Securities in accordance herewith.
This Agreement and the International Placement Agent Agreement has been
duly authorized, executed, and delivered by the Company, is the legal,
valid, and binding obligation of the Company, and is enforceable as to the
Company in accordance with its terms, subject to bankruptcy, insolvency,
reorganization, moratorium and other laws of general applicability
relating to or affecting creditors' rights and to general principles of
equity.
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(p) In addition to and not in limitation of Section 3(aa),
neither the Company nor any of its officers, directors, or affiliates (as
defined in the Rules and Regulations) has taken or will take, directly or
indirectly, prior to the termination of the selling group contemplated by
this Agreement, any action in violation of any applicable law or
regulation designed to stabilize or manipulate the price of any security
of the Company, or which has caused or resulted in, or which might in the
future reasonably be expected to cause or result in, stabilization or
manipulation of the price of any security of the Company, to facilitate
the sale or resale of any of the Securities.
(q) The conditions for use of Form S-3 have been satisfied
with respect to the Registration Statement.
(r) No stamp or other issuance or transfer taxes and no
capital gains, income, withholding or other taxes are payable by or on
behalf of the Agents or the International Agents to any government or any
political subdivision or taxing authority in connection with the sale and
delivery by the Company and the Agents and the International Agents of the
Securities to the purchasers thereof.
(s) The Company is not and, after giving effect to the
offering and sale of the Securities, will not be an "investment company"
or an entity controlled by an "investment company" as such terms are
defined in the Investment Company Act of 1940, as amended.
(t) The Company and its consolidated subsidiaries have good
and marketable title in fee simple to all items of real property and good
and marketable title to all personal property owned by them, in either
case that is material to the Company and its consolidated subsidiaries
taken as a whole, in each case free and clear of all liens, encumbrances
and defects except such as are described or referred to in the Effective
Prospectus and Final Prospectus or such as do not materially interfere
with the use made or proposed to be made of such property by the Company
and its consolidated subsidiaries.
(u) No relationship, direct or indirect, exists between or
among the Company or any of its consolidated subsidiaries on the one hand,
and the directors, officers, stockholders, customers or suppliers of the
Company or any of its consolidated subsidiaries on the other hand, which
is required by the Securities Act to be described in the Registration
Statement and the Effective Prospectus and Final Prospectus which is not
so described.
(v) Except as described in the Effective Prospectus and Final
Prospectus and as described in Schedule IV hereto, no person has the right
to require the Company to register any securities for offering and sale
under the Act by reason of the filing of the Registration Statement with
the SEC or the issue and sale of the Securities.
(w) Other than as previously disclosed through a filing with
the SEC or in the Effective Prospectus and Final Prospectus, the Company
and its consolidated subsidiaries have filed all federal, state, local and
foreign tax returns which have been required to be filed and have paid all
taxes shown thereon and all assessments received by
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them or any of them to the extent that such taxes have become due and are
not being contested in good faith; and, except as disclosed in the
Registration Statement and the Effective Prospectus and Final Prospectus,
there is no tax deficiency which has been or might reasonably be expected
to be asserted or threatened against the Company or any subsidiary.
(x) There are no existing or, to the best knowledge of the
Company, threatened labor disputes with the employees of the Company or
any of its subsidiaries which are likely to have a material adverse effect
on the Company and its subsidiaries taken as a whole.
(y) The Company and its consolidated subsidiaries (i) are in
compliance in all material respects with any and all applicable foreign,
federal, provincial, state and local laws and regulations relating to the
protection of human health and safety, the environment or hazardous or
toxic substances or wastes, pollutants or contaminants ("ENVIRONMENTAL
LAWS"), (ii) have received all permits, licenses or other approvals
required of them under applicable Environmental Laws to conduct their
respective businesses and (iii) are in compliance with all terms and
conditions of any such permit, license or approval, except where 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 would not,
individually or in the aggregate, have a material adverse effect on the
Company and its consolidated subsidiaries, taken as a whole. In the
ordinary course of its business, the Company conducts a periodic review of
the effect of Environmental Laws on the business, operations and
properties of the Company and its consolidated subsidiaries, in the course
of which it identifies and evaluates associated costs and liabilities
(including, without limitation, any capital or operating expenditures
required for clean-up or compliance with Environmental Laws or any permit,
license or approval, any related constraints on operating activities and
any potential liabilities to third parties). On the basis of such review,
the Company has reasonably concluded that such associated costs and
liabilities would not, individually or in the aggregate, have a material
adverse effect on the Company and its consolidated subsidiaries, taken as
a whole.
(z) The Company and its consolidated subsidiaries (i) are in
compliance in all material respects with any and all applicable foreign,
federal, provincial, state and local laws and regulations relating to the
underground and ground surface extraction of minerals (including but not
limited to oil and gas) ("MINERAL LAWS"), (ii) have received all permits,
licenses or other approvals required of them under applicable Mineral Laws
to conduct their respective businesses as they are currently conducted,
(iii) have entered into valid and legally binding contracts with the
appropriate government agencies and other third parties to conduct their
mineral extraction activities as they are currently conducted, and (iv)
are in compliance with all terms and conditions of any such contract,
permit, license or approval, except where such noncompliance with Mineral
Laws, failure to receive required permits, licenses or other approvals,
failure to enter into appropriate contracts, or failure to comply with the
terms and conditions of such contracts, permits, licenses or approvals
would not, individually or in the aggregate, have a material adverse
effect on the Company and its consolidated subsidiaries, taken as a whole.
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(aa) There is and has been no failure on the part of the
Company or any of the Company's directors or officers, in their capacities
as such, to comply in all material respects with any provision of the
▇▇▇▇▇▇▇▇-▇▇▇▇▇ Act of 2002 and the rules and regulations promulgated in
connection therewith, including, without limitation, Section 402 related
to loans and other extensions of credit and Sections 302 and 906 related
to certifications.
4. Offering, Sale and Delivery of the Securities. On the basis of
the representations, warranties, covenants, and agreements of the Company herein
contained, but subject to the terms and conditions herein set forth, the Company
agrees to permit (i) you as the Representative of the several Agents and (ii)
the several Agents, and you and the Agents agree, severally and not jointly, to
solicit offers on a best efforts basis, any and all, to purchase Securities up
to an aggregate amount set forth opposite the name(s) of the Agents on Schedule
I hereto upon the terms and conditions set forth herein and in the Prospectus at
a purchase price per share of $_______ (net of commissions payable to the Agents
of _% or $______ per share); provided that subject to the sale of the aggregate
amount of the Securities listed in Schedule I the aggregate amount of
commissions to be earned under this Agreement by you and the Agents shall be
$_______.
Each sale of Securities shall be made by you or the other Agents as
agent for the Company and shall be made in accordance with the terms of this
Agreement. The offering of the Securities by the Company hereunder and your and
the other Agents' agreement to solicit offers for the purchase and sale of the
Securities shall be deemed to have been made on the basis of the
representations, warranties and agreements of the Company herein and shall be
subject to the terms and conditions herein.
Payment for the Securities sold by the Agents on behalf of the
Company shall be made by wire transfer in immediately available funds to the
account specified by the Company to you on _____, 2004, or at such other time on
the same or such other date, not later than the third Business Day thereafter,
as you and the Company may agree upon in writing. The time and date of such
payment for the Securities sold by you on behalf of the Company is referred to
herein as the "Closing Date". As used herein, the term "Business Day" means any
day other than a day on which banks are permitted or required to be closed in
▇▇▇ ▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇▇ and Oslo, Norway.
Payment for the Securities to be purchased on the Closing Date shall
be made against delivery to you for the account of the Agents of the Securities
to be purchased on such date registered in such names and in such denominations
as you shall request in writing not later than two full Business Days prior to
the Closing Date with any transfer taxes payable in connection with the transfer
to you and the Agents of the Securities sold by the Agents duly paid by the
Company. The certificates for the Securities will be made available for
inspection and packaging by you at the office of _______________ not later than
1:00 P.M., New York City time, on the Business Day prior to the Closing Date.
5. Offering. The Agents are to solicit offers for the Securities
utilizing the Pre-Effective Prospectus as then amended or supplemented which has
been most recently delivered to the Agents by the Company, and the Agents will
solicit offers to purchase only as permitted
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under the Act and the Rules and Regulations and permitted or contemplated in the
Pre-Effective Prospectus as then amended or supplemented and herein. The Agents
are not authorized to give any information or to make any representation not
contained in the Pre-Effective Prospectus or the documents incorporated by
reference or specifically referred to therein and upon the Registration
Statement becoming effective, the Effective Prospectus and the Final Prospectus,
in connection with the offer and sale of the Securities. The Agents will not use
any additional marketing materials in connection with any offer or sale of the
Securities other than materials approved by the Company. If an Agent elects to
distribute these additional marketing materials under the so called "free
writing" exemption embodied in Section 2(10)(a) of the Act (any such marketing
materials, "Free Writing Materials"), the Agent will first allow the Company to
review and approve such materials and then ensure that any intended recipients
of such Free Writing Materials receive an Effective Prospectus and the Final
Prospectus either prior to or concurrently with their receipt of the Free
Writing Materials.
The Agents are not authorized to appoint subagents or to engage the
services of any other broker or dealer in connection with the offer or sale of
the Securities without your and our prior written consent. Unless otherwise
instructed by the Company, you shall communicate to the Company, orally or in
writing, each offer to purchase Securities. The Company shall have the sole
right to accept offers to purchase Securities and may reject any proposed offers
to purchase Securities in whole or in part, and any such rejection shall not be
deemed a breach of its agreement contained herein. The Company agrees to pay to
you for soliciting offers to purchase Securities, a commission in the amount of
_% or $_____ per share sold (a "Commission"). The actual aggregate amount of
Commissions with respect to which the offering of Securities may entail will be
set forth in the Prospectus Supplement included in the Final Prospectus. You and
the other Agents will share in the above-mentioned Commissions in such
proportions and upon such terms as you and they may agree.
6. Covenants of the Company. The Company covenants that it will:
(a) File the Final Prospectus within the time periods
specified by the Act and to furnish copies of the Final Prospectus to you
in New York City prior to 10:00 A.M., New York City time, on the Business
Day next succeeding the date of this Agreement in such quantities as you
may request and notify you or your counsel immediately (i) of the
effectiveness of any post-effective amendment to the Registration
Statement, (ii) of the transmittal to the SEC for filing of any supplement
to the Final Prospectus, (iii) of the receipt of any comments from the SEC
with respect to the Registration Statement or each Pre-Effective
Prospectus (other than with respect to documents which were incorporated
by reference therein), (iv) of any request by the SEC for any amendment to
the Registration Statement or any amendment or supplement to the
Pre-Effective Prospectus (other than with respect to documents which were
incorporated by reference therein), and (v) of the issuance by the SEC of
any stop order suspending the effectiveness of the Registration Statement
or the initiation of any proceedings for that purpose. The Company will
make every reasonable effort to prevent the issuance of any stop order
and, if any stop order is issued, to obtain the lifting thereof as soon as
practicable.
11
(b) During the time when a prospectus relating to the
Securities is required to be delivered hereunder or under the Act or the
Rules and Regulations, comply so far as it is able with all requirements
imposed upon it by the Act and the Exchange Act, as now existing and as
hereafter amended, and by the Rules and Regulations, as from time to time
in force, so far as necessary to permit the continuance of sales of or
dealings in the Securities in accordance with the provisions hereof and
the Final Prospectus. If, at any time when a prospectus relating to the
Securities is required to be delivered hereunder or under the Act or the
Rules and Regulations, any event shall have occurred as a result of which,
in the reasonable opinion of counsel for the Company or counsel for the
Agents, the Registration Statement or the Effective Prospectus or Final
Prospectus as then amended or supplemented contains any untrue statement
of a material fact or omits to state any material fact required to be
stated therein or necessary to make the statements therein, in light of
the circumstances under which made, not misleading, or if, in the opinion
of either of such counsel, it is necessary at any time to amend or
supplement the Registration Statement or the Effective Prospectus or Final
Prospectus to comply with the Act or the Rules and Regulations, the
Company will immediately notify you and promptly prepare and file with the
SEC an appropriate amendment or supplement (in form and substance
reasonably satisfactory to you) which will correct such statement or
omission or which will effect such compliance and will use its best
efforts to have any such amendment declared effective as soon as possible.
(c) The documents which are incorporated by reference in the
Effective or Final Prospectus, when they become effective or will be filed
with the SEC, as the case may be, will conform in all material respects to
the requirements of the Act or the Exchange Act, as applicable, and the
Rules and Regulations, and none of such documents when they will be filed
(or, if amendments with respect to such documents will be filed, when such
amendments will be filed) will contain an untrue statement of a material
fact or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in light of the circumstances
under which they were made, not misleading; and any further documents so
filed and incorporated by reference in the Final Prospectus, or any
further amendment or supplement thereto, when such documents become
effective or are filed with the SEC, as the case may be, will conform in
all material respects to the requirements of the Act or the Exchange Act,
as applicable, Rules and Regulations 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, in light of
the circumstances under which they were made, not misleading; provided,
however, that this covenant shall not apply to any statements or omissions
made in reliance upon and in conformity with information furnished in
writing to the Company by any Agent expressly for use in the Effective or
Final Prospectus as amended or supplemented to relate to a particular
issuance of Securities.
(d) The Registration Statement and the Effective and Final
Prospectus will conform, in all material respects to the requirements of
the Act, and the Rules and Regulations and will not, as of the applicable
effective date as to the Registration Statement and any amendment thereto
and as of the applicable filing date as to the Effective and Final
Prospectus and any amendment or supplement thereto, contain an untrue
statement of a material fact or omit to state a material fact required to
be stated
12
therein or necessary to make the statements therein, in light of the
circumstances under which they were made, not misleading; provided,
however, that this representation and warranty shall not apply to any
statements or omissions made in reliance upon and in conformity with
information furnished in writing to the Company by any Agent expressly for
use in the Effective and Final Prospectus as amended or supplemented to
relate to a particular issuance of Securities.
(e) Deliver without charge to you one signed copy of any
post-effective amendment to the Registration Statement (including exhibits
and documents which are incorporated by reference therein filed with such
post-effective amendment, which exhibits and documents which are
incorporated by reference therein need not be signed) other than
post-effective amendments effected through the filing of documents which
are incorporated by reference therein, and one signed copy of any
supplement to the Effective Prospectus and Final Prospectus when such
post-effective amendment or supplement is filed with the SEC, and deliver
without charge to each of the several Agents such number of copies of the
Effective Prospectus and Final Prospectus, the Registration Statement,
amendments and supplements thereto, if any (without exhibits or documents
which are incorporated by reference therein).
(f) Use its best efforts to maintain the qualification of, and
to further qualify, the Securities for offering and sale under the "blue
sky" or securities laws of such jurisdictions as you may designate. In
each jurisdiction where such qualification shall be effected, the Company
will, unless you agree in writing that such action is not at the time
necessary or advisable, file and make such statements or reports at such
times as are or may be required by the laws of such jurisdiction.
(g) Make generally available (within the meaning of Section
11(a) of the Act and the Rules and Regulations) to its security holders or
provide them with access (including, without limitation, through the ▇▇▇▇▇
system) as soon as practicable but in any event no later than the date
upon which the Company's first annual report on Form 10-K or quarterly
report on Form 10-Q containing the information required by Rule 158 under
the Act is due to be filed with the SEC (including any extension of such
date after having properly filed a Form 12b-25 under the Exchange Act in
respect thereof) an earnings statement (which need not be certified by
independent certified public accountants unless required by the Act or the
Rules and Regulations, but which shall satisfy the provisions of Section
11(a) of the Act and the Rules and Regulations) covering a period of at
least twelve months ending on the last day of the period covered thereby.
(h) During a period of three years from the effective date of
the Registration Statement, to furnish to you or provide you access
(including, without limitation, through the ▇▇▇▇▇ system) copies of all
reports or other communications (financial or other) furnished or required
to be furnished to holders of the Securities, and copies of any reports
and financial statements furnished to or filed with the SEC or any
national securities exchange.
(i) Apply the net proceeds received by it from the offering in
the manner set forth under "Use of Proceeds" in the Final Prospectus.
13
(j) File no amendment or supplement to the Registration
Statement or the Effective or Final Prospectus at any time, unless such
filing shall in all respects comply with the Act and the Rules and
Regulations and unless you shall previously have been advised of such
filing and furnished with a copy thereof, and you and counsel for the
Agents shall have approved such filing in writing; provided however, that
the provisions of this Section 6(j) shall not apply to the filing of
documents which are incorporated by reference therein or pricing
supplements to the Effective Prospectus or Final Prospectus or any other
document relating to an offering of securities that are not Securities.
(k) For so long as a prospectus relating to the Securities is
required to be delivered, comply in all respects with all registration,
filing, and reporting requirements of the Exchange Act, which may from
time to time be applicable to the Company, and maintain the Company's
eligibility for use of Form S-3.
(l) Comply in all respects with all provisions of all
undertakings contained in the Registration Statement.
(m) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date of the
Effective Prospectus or Final Prospectus, not to offer, sell, contract to
sell or otherwise dispose of, except as provided hereunder and under the
International Placement Agent Agreement, any securities of the Company
that are substantially similar to the Securities, including but not
limited to any securities that are convertible into or exchangeable for,
or that represent the right to receive, Securities or any such
substantially similar securities (other than pursuant to stock option
plans or the conversion or exchange of convertible or exchangeable
securities outstanding as of the date of this Agreement or any Securities
or any such substantially similar securities the offer and sale of which
may be integrated with the offering of the Securities hereunder), without
your prior written consent which shall not be unreasonably withheld or
delayed.
7. Payment of Expenses. The Company hereby agrees to pay all
expenses in connection with (a) the preparation, printing, producing, filing,
distribution, and mailing of the Registration Statement, the Pre-Effective
Prospectus, the Effective Prospectus and the Final Prospectus and any amendments
or supplements thereto and the printing, filing, distribution, and mailing of
this Agreement and the International Placement Agent Agreement and related
documents, including the cost of all copies thereof and of the Pre-Effective
Prospectus, the Effective Prospectus and the Final Prospectus and any amendments
or supplements thereto and this Agreement, the International Placement Agent
Agreement, the Agreement between Syndicates and any other agreement among agents
supplied to the Agents or the International Agents in quantities as hereinabove
stated, (b) the issuance, sale, and delivery of the Securities, including any
transfer or other taxes payable thereon (other than any transfer or other taxes
payable thereon in connection with any transfers thereof by the subscribers
therefor), and (c) the qualification of the Securities under state or foreign
"blue sky" or securities laws, if any, including the costs of printing and
mailing the preliminary and final "Blue Sky Survey" and the fees of counsel for
the Agents and the International Agents and the disbursements in connection
therewith. The Company also hereby agrees to pay (d) the fees and expenses of
your firms of counsel, Holland & Knight LLP and ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, (e) the
filing fees payable to the
14
SEC, the National Association of Securities Dealers, Inc. (the "NASD"), if any,
and the jurisdictions in which such qualification is sought, (f) the fees of
counsel for the Agents and the disbursements in connection therewith relating to
all filings with the NASD, if any, (g) the cost of preparing stock certificates,
(h) the cost and charges of any transfer agent or registrar, (i) all fees and
expenses in connection with listing the Securities and making them eligible for
trading on the American Stock Exchange and the fees and expenses of any
specialist firm therefor, (j) all reasonable out-of-pocket expenses incurred by
you in connection with marketing of the Company (such as travel accommodations
and other expenses) and marketing materials for the Securities, and (k) all
other costs and expenses incident to the performance of the Company's
obligations hereunder which are not otherwise specifically provided for in this
Section.
8. Conditions of Agents' Obligations. The obligations of the several
Agents to solicit offers for the Securities, as provided herein, shall be
subject, in their discretion, to the continuing accuracy of the representations
and warranties of the Company contained herein and in each certificate and
document contemplated under this Agreement and the International Placement Agent
Agreement to be delivered to you, as of the date hereof, to the performance by
the Company of its obligations hereunder, and to the following conditions:
(a) As of the date hereof, you shall have received the
favorable opinion of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & ▇▇▇▇▇ LLP, special U.S.
securities counsel for the Company, dated the date of delivery, addressed
to you as representative of the Agents, and in form and scope satisfactory
to counsel for the Agents, with reproduced copies or signed counterparts
thereof for each of the Agents, to the effect that:
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing (meaning it has filed its
most recent annual report, paid any applicable state taxes and fees,
and has not filed articles of dissolution) under the laws of the
State of Delaware, with the corporate power and authority to own its
properties and conduct its business as described in the Final
Prospectus as amended or supplemented;
(ii) The Company has an authorized capitalization as set forth
in the Final Prospectus as amended or supplemented;
(iii) The Company has been duly qualified as a foreign
corporation for the transaction of business and is in good standing
under the laws of each other jurisdiction in which it owns or leases
properties, or conducts any business so as to require such
qualification or is subject to no material liability or disability
by reason of the failure to be so qualified in any jurisdiction;
(iv) To the knowledge of such counsel, other than as set forth
in the Final Prospectus, there is no legal, governmental or other
proceeding, formal or informal, pending or, to such counsel's
knowledge, threatened to which the Company or any of its
Subsidiaries is a party or to which any property of the Company or
any of its Subsidiaries is subject which is reasonably likely to
have a material adverse effect on the consolidated financial
position, shareholders' equity or results of operations of the
Company and its Subsidiaries, taken as a whole;
15
(v) This Agreement has been duly authorized, executed and
delivered by the Company and constitutes the legal, valid and
binding obligation of the Company, and is enforceable against the
Company in accordance with its terms, subject to bankruptcy,
insolvency, reorganization, moratorium and other laws of general
applicability relating to or affecting creditors' rights and to
general principles of equity (regardless of whether such
enforceability is considered in a proceeding in equity or in law),
and except insofar as the enforceability of the indemnity and
contribution provisions contained in this Agreement may be limited
by federal and state securities laws;
(vi) The Securities have been duly authorized and, when duly
and executed, issued and delivered by the Company, and the Company
receives payment therefor as contemplated in the Final Prospectus,
will be duly and validly issued and fully paid and non-assessable
and the Securities will conform in all respects to the descriptions
thereof in the Final Prospectus as amended or supplemented; and the
Securities to be sold by the Company will be listed and eligible for
trading on the American Stock Exchange;
(vii) The issue and sale of the Securities, the compliance by
the Company with all of the provisions of this Agreement and the
consummation of the transactions herein contemplated will not result
in any violation of the provisions of the Certificate of
Incorporation or the By-Laws of the Company, as amended, or any
United States federal or State of Delaware statute or any order,
rule or regulation of any United States federal law or corporate law
of the State of Delaware or United States federal or State of
Delaware court or governmental agency or body;
(viii) Except such as have been obtained under the Act and the
Rules and Regulations thereunder or such consents, approvals,
authorizations, registrations or qualifications as may be required
under state securities or "blue sky" laws in connection with the
distribution of the Securities in the manner contemplated hereby, no
consent, approval, authorization, order, registration or
qualification of or with any United States federal or State of
Delaware court or governmental agency or body is required for the
solicitation of offers to purchase Securities, the issue and sale of
the Securities or the consummation by the Company of the other
transactions contemplated by this Agreement;
(ix) To the knowledge of such counsel, none of the employee
stock option benefit plans set forth in Schedule V hereto contains
any terms or provisions that prohibit, conflict with, trigger a
default thereunder, or entitle any party thereto to terminate the
agreement as a result of the issue and sale of the Securities and
the granting and performance by the Company of its indemnification
obligations hereunder.
(x) The documents incorporated by reference in the Final
Prospectus (other than the financial statements, schedule, and other
financial, engineering and statistical data therein or excluded
therefrom, as to which such counsel need
16
express no opinion), when they became effective or were filed with
the SEC (or, if amendments with respect to such documents were
filed, such documents as so amended when such amendments were
filed), as the case may be, complied as to form in all material
respects with the requirements of the Act or the Exchange Act, as
applicable, and the Rules and Regulations; and nothing has come to
their attention that would lead them to believe that any of such
documents, when they became effective or were so filed (or, if
amendments with respect to such documents were filed, such documents
as so amended when such amendments were filed), as the case may be,
contained, in the case of the Final Prospectus, an untrue statement
of a material fact or omitted to state a material fact necessary in
order to make the statements made therein, in light of the
circumstances under which they were made, not misleading;
(xi) The Registration Statement is effective under the Act,
and to the knowledge of such counsel, no stop order has been issued
and no proceeding for that purpose has been instituted or
threatened. The Registration Statement and the Final Prospectus as
amended and supplemented and any further amendments and supplements
thereto made by the Company prior to the date of such opinion (other
than the financial statements, schedules, and other financial,
engineering and statistical data therein or excluded therefrom, 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
and Regulations thereunder; and
(xii) Nothing has come to their attention that would lead them
to believe that, as of the effective date, the Registration
Statement or any further amendment or supplement thereto made by the
Company prior to the date of such opinion (other than the financial
statements, schedules, and other financial, engineering and
statistical data therein or excluded therefrom, as to which such
counsel need express no opinion) 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 made therein, in
light of the circumstances under which they were made, not
misleading or that, as of the date of such opinion, the Final
Prospectus as amended or supplemented or any further amendment or
supplement thereto made by the Company prior to the date of such
opinion (other than the financial statements, schedules, and other
financial, engineering and statistical data therein or excluded
therefrom, as to which such counsel need express no opinion)
contained an untrue statement of a material fact or omitted to state
a material fact necessary to make the statements made therein, in
light of the circumstances in which they were made, not misleading.
In rendering such opinion, (A) as to matters of fact, such counsel
may rely, to the extent they deem proper, on certificates of responsible
officers of the Company and public officials and representations and warranties
of the Company set forth herein, (B) with respect to the description of the
distribution of Common Stock by the International Syndicate in "Plan of
Distribution" in the Final Prospectus and any matters which involve Norwegian
law, such counsel may rely on the opinion of Advokatfimaet Selmer DA and (C),
with respect its opinion
17
set forth in (xii) above, such counsel may rely on the opinion of McGrigors
Solicitors and Advokatfimaet Selmer DA.
(b) As of the date hereof, you shall have received the
favorable opinion of McGrigors Solicitors, counsel to the Company, dated
the date of delivery, addressed to you as representative of the Agents,
and in form and scope satisfactory to counsel for the Agents, with
reproduced copies or signed counterparts thereof for each of the Agents,
to the effect that:
(i) To the knowledge of such counsel, other than as set forth
in the Final Prospectus, there is no legal, governmental or other
proceeding, formal or informal, pending or, to such counsel's
knowledge, threatened to which the Company or any of its
Subsidiaries is a party or to which any property of the Company or
any of its Subsidiaries is subject which is reasonably likely to
have a material adverse effect on the consolidated financial
position, shareholders' equity or results of operations of the
Company and its Subsidiaries, taken as a whole.
(ii) To the knowledge of such counsel, none of the agreements
set forth in Schedule VI hereto contains any terms or provisions
that prohibit, conflict with, trigger a default thereunder, or
entitle any party thereto to terminate the agreement as a result of
the issue and sale of the Securities and the granting and
performance by the Company of its indemnification obligations
hereunder.
(iii) To the knowledge of such counsel, as a matter of fact
the written descriptions contained in the Registration Statement or
the Prospectus (such descriptions being identified by page number in
Schedule VII ) of the agreements set out in Schedule VII are
accurate in all material respects..
In rendering such opinion, (A) as to matters of fact, such counsel
may rely, to the extent they deem proper, on certificates of responsible
officers of the Company and public officials and the representations and
warranties on the Company set forth herein and (B), with respect to its opinion
set forth in (iii) above, on the opinion of Ernst & Young (Georgia) with respect
to the agreements addressed in the opinion of Ernst & Young (Georgia).
(c) On or prior to the date hereof, the Agents shall have been
furnished such information, documents, certificates, and opinions as they
may reasonably require for the purpose of enabling them to review the
matters referred to in Section 8(a), and in order to evidence the
accuracy, completeness, or satisfaction of any of the representations,
warranties, covenants, agreements, or conditions herein contained, or as
you may reasonably request.
(d) On the date hereof, you shall have received a certificate
of the President, any Vice President or Treasurer or Assistant Treasurer
or any other authorized officer of the Company, dated as of the date
hereof, to the effect that the signer of such certificate has examined the
Registration Statement, the Final Prospectus and this Agreement and the
International Placement Agent Agreement and that to the best of his or her
knowledge (i) since the respective dates as of which information is given
in the
18
Registration Statement and the Final Prospectus, there has not been any
material adverse change in the financial condition, earnings or cash flow
of the Company and its subsidiaries considered as one enterprise or any
development reasonably likely to have a material adverse effect on the
financial condition of the Company and its subsidiaries considered as one
enterprise, whether or not arising in the ordinary course of business,
except as set forth or contemplated in the Final Prospectus, as
supplemented or amended, (ii) the other representations and warranties of
the Company contained in this Agreement and the International Placement
Agent Agreement are true and correct in all material respects with the
same force and effect as though expressly made at and as of the date of
such certificate(except for those representations and warranties which are
given as of a certain date, in which case they were true and correct in
all material respects as of such date), (iii) the Company has performed or
complied with all agreements and satisfied all conditions on its part to
be performed or satisfied hereunder at or prior to the date of such
certificate in all material respects, (iv) there is no legal or
governmental proceeding pending or, to the best of such officer's
knowledge, threatened, which is required to be disclosed in the
Registration Statement other than any disclosed therein and (v) no stop
order suspending the effectiveness of the Registration Statement has been
issued and no proceedings for that purpose have been instituted or
threatened by the SEC.
(e) On the effective date of the Registration Statement and as
of the date hereof, you shall have received a letter, addressed to the
Agents, and in form and substance reasonably satisfactory to you, with
reproduced copies or signed counterparts thereof for each of the Agents,
from ▇▇ ▇▇▇▇▇▇▇▇▇ Associates LLC, dated the date of delivery:
(i) confirming that they are independent certified public
accountants with respect to the Company and its subsidiaries within
the meaning of the Act and the applicable rules and regulations
thereunder adopted by the SEC;
(ii) stating that, in their opinion, the audited financial
statements included or incorporated by reference in each Prospectus
Supplement which shall be filed as a supplement to the Prospectus
and reported on by them (including but not limited to the audited
financial statements contained in the Company's Annual Report on
Form 10-K for the fiscal year ended December 31, 2003) comply in
form in all respects with the accounting requirements of the
Exchange Act and the related published rules and regulations of the
SEC thereunder that apply to a prospectus filed in connection with a
registration statement on Form S-3 under the Act (except that
certain supporting schedules are omitted);
(iii) based upon a reading of the latest unaudited financial
statements made available by the Company, the procedures of the
AICPA for a review of interim financial information as described in
Statement of Auditing Standards No. 71, reading of minutes and
inquiries of certain officials of the Company who have
responsibility for financial and accounting matters and certain
other limited procedures requested by you and described in detail in
such letter, nothing has come to their attention that causes them to
believe that the information included under the headings "
Prospectus Supplement Summary," "Ratio of Earnings to
19
Fixed Charges" and "Description of Capital Stock" is not in
conformity with the disclosure requirements of Regulation S-K that
apply to a prospectus as filed in connection with a registration
statement on Form S-3 under the Securities Act;
(iv) based upon the procedures detailed in such letter with
respect to the period subsequent to the date of the last available
balance sheet, including reading of minutes and inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters, nothing has come to their attention that causes
them to believe that (A) at a specified date not more than three
business days prior to the date of such letter, there was any change
in capital stock, increase in long-term debt or decrease in net
current assets as compared with the amounts shown in the latest
balance sheet included or incorporated by reference in the
Prospectus Supplement; (B) for the period from December 31, 2003 to
a specified date not more than three business days prior to the date
of such letter, there were any decreases, as compared with the
corresponding period in the preceding year, in net sales, income
from operations, except in all instances for changes, increases or
decreases that the Prospectus Supplement discloses have occurred or
which are set forth in such letter, in which case the letter shall
be accompanied by an explanation by the Company as to the
significance thereof unless said explanation is not deemed necessary
by the Agents; and
(v) they have performed certain other specified procedures as
a result of which they determined that certain information of an
accounting, financial or statistical nature (which is limited to
accounting, financial or statistical information derived from the
general accounting records of the Company) set forth in the
Prospectus Supplement agrees with the accounting records of the
Company, excluding any questions of legal interpretation.
(f) All proceedings taken in connection with the issuance,
sale, transfer, and delivery of the Securities shall be reasonably
satisfactory in form and substance to you and to counsel for the Agents,
and the Agents shall have received from such counsel for the Agents a
favorable opinion, dated as of the date hereof, with respect to such of
the matters set forth under Section 8(a), and with respect to such other
related matters, as you may reasonably request, provided that counsel to
the Agents shall be expressly permitted to rely on the opinions from
counsel to the Company delivered hereunder or any other counsel that the
counsel to the Agents deems necessary to render its opinion if required by
the Agents.
(g) The NASD shall not have objected to the Agents'
participation in such offering.
Any certificate or other document signed by any officer of the
Company and delivered to you or to counsel for the Agents or the International
Agents shall be deemed a representation and warranty by the Company hereunder to
the Agents and the International Agents as to the statements made therein. If
any condition to the Agents' or the International Agents' obligations hereunder
or under the International Placement Agent Agreement to be fulfilled prior to or
at the date hereof is not so fulfilled, you may on behalf of the several Agents
20
terminate this Agreement or, if you so elect, in writing waive any such
conditions which have not been fulfilled or extend the time for their
fulfillment.
9. Indemnification and Contribution.
(a) Subject to the conditions set forth below, the Company
agrees to indemnify and hold harmless each Agent, its officers, directors,
partners, employees, counsel and agents, and each person, if any, who
controls any Agent within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, against any and all loss, liability, claim,
damage, and expense whatsoever (which shall include, for all purposes of
this Section 9, but not be limited to counsel fees and any and all expense
whatsoever incurred in investigating, preparing, or defending against any
litigation, commenced or threatened, or any claim whatsoever and any and
all amounts paid in settlement of any claim or litigation) as and when
incurred arising out of, based upon, or in connection with (i) any untrue
statement or alleged untrue statement of a material fact contained (A) in
the Registration Statement, or the Pre-Effective, the Effective Prospectus
or Final Prospectus (as from time to time amended and supplemented), or
any amendment or supplement thereto or (B) in any application or other
document or communication (collectively called an "application") executed
by or on behalf of the Company or based upon written information furnished
by or on behalf of the Company filed in any jurisdiction in order to
qualify the Securities under the "blue sky" or securities laws thereof or
filed with the SEC or any securities exchange; or any omission or alleged
omission to state a material fact required to be stated therein or
necessary to make the statements therein not misleading in light of the
circumstances under which they were made, unless such statement or
omission was made in reliance upon and in conformity with written
information furnished to the Company as stated in Section 9(b) with
respect to any Agent by or on behalf of such Agent expressly for inclusion
in the Registration Statement, or the Pre-Effective, the Effective
Prospectus or Final Prospectus, or any amendment or supplement thereto, or
in any application, as the case may be, or (ii) any breach of any
representation, warranty, covenant, or agreement of the Company contained
in this Agreement or the International Placement Agent Agreement. The
foregoing agreement to indemnify shall be in addition to any liability the
Company may otherwise have, including liabilities arising under this
Agreement or the International Placement Agent Agreement.
If any action is brought against an Agent or any of its
officers, directors, partners, employees, agents, or counsel, or any
controlling persons of an Agent (an "indemnified party") in respect of
which indemnity may be sought against the Company pursuant to the
foregoing paragraph, such indemnified party or parties shall promptly
notify the Company in writing of the institution of such action (but the
failure so to notify shall not relieve the Company from any liability it
may have other than pursuant to this Section 9(a) unless the Company'
defense of any such action is actually prejudiced) and the Company shall
promptly assume the defense of such action, including the employment of
counsel (reasonably satisfactory to such indemnified party or parties) and
payment of expenses. Such indemnified party or parties 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 indemnified
party or parties unless (i) the employment of such
21
counsel shall have been authorized in writing by the Company, (ii) the
Company shall not have promptly employed counsel satisfactory to such
indemnified party or parties to have charge of the defense of such action
or (iii) such indemnified party or parties shall have reasonably concluded
that there may be one or more legal defenses available to it or them or to
other indemnified parties which are different from or additional to those
available to the Company and the representation of the indemnified party
by counsel chosen by the Company would be inappropriate due to actual or
potential differing interests among the parties represented by such
counsel, in any of which events such fees and expenses shall be borne by
the Company (provided, however, that in connection with any claim by one
or more indemnified parties relating to the same action or proceeding, the
Company shall be liable only for the fees and expenses of one separate
firm of attorneys in each jurisdiction in which such action or proceeding
shall be brought or is pending, in each case selected by you in your sole
discretion and representing all similarly affected indemnified parties)
and the Company shall not have the right to direct the defense of such
action on behalf of the indemnified party or parties. 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
written consent. The Company agrees promptly to notify the Agents of the
commencement of any litigation or proceedings against the Company or any
of its officers or directors in connection with the sale of the
Securities, the Registration Statement, or the Pre-Effective, the
Effective Prospectus or Final Prospectus, or any amendment or supplement
thereto, or any application. With respect to any untrue statement or
alleged untrue statement made in, or omission or alleged omission from,
the Pre-Effective, the Effective Prospectus or Final Prospectus, the
indemnity agreement contained in this Section 9(a) with respect to such
prospectus shall not inure to the benefit of such Agent (or to the benefit
of any of its officers, directors, partners, employees and agents, or any
person controlling such Agent) if the such prospectus (or such prospectus
as amended or supplemented if the Company shall have filed with the SEC
any amendment or supplement thereto) which shall have been furnished to
such Agent prior to the time it sent written confirmation of such sale to
such person does not contain such statement, alleged statement, omission,
or alleged omission and a copy of the Pre-Effective, the Effective
Prospectus or Final Prospectus (or such prospectus as amended or
supplemented if the Company shall have filed with the SEC any amendment or
supplement thereto) shall not have been sent or given to such person and
such person shall not otherwise have received a copy thereof at or prior
to the written confirmation of such sale to such person.
(b) Each Agent severally agrees to indemnify and hold harmless
the Company, each director of the Company, each officer of the Company who
shall have signed the Registration Statement, and each other person, if
any, who controls the Company within the meaning of Section 15 of the Act
or Section 20(a) of the Exchange Act, to the same extent as the foregoing
indemnity from the Company to the several Agents in Section 9(a), but only
with respect to statements or omissions, if any, made in the Registration
Statement, or the Pre-Effective, the Effective Prospectus or Final
Prospectus, or any amendment or supplement thereto, or in any application
in reliance upon and in conformity with written information furnished to
the Company as stated in this Section 9(b) with respect to any Agent by or
on behalf of such Agent expressly for inclusion in the Registration
Statement, or the Pre-Effective, the Effective Prospectus or
22
Final Prospectus, or any amendment or supplement thereto, or in any
application, as the case may be or which arise solely from the use by such
Agent of Free Writing Materials that are not preceded by or accompanied
with a copy of the Final Prospectus. For all purposes of this Agreement,
the amounts of the Commissions set forth in the Final Prospectus and
information contained in the Final Prospectus including Prospectus
Supplement included therein that the Agents have agreed to sell on behalf
of the Company the Securities constitute the only information furnished in
writing by or on behalf of any Agent expressly for inclusion in the
Registration Statement, or the Final Prospectus (as from time to time
amended or supplemented), or any amendment or supplement thereto, or in
any application, as the case may be. If any action shall be brought
against the Company or any other person so indemnified based on the
Registration Statement, or the Pre-Effective, the Effective Prospectus or
Final Prospectus, or any amendment or supplement thereto, or in any
application, and in respect of which indemnity may be sought against any
Agent pursuant to this Section 9(b), such Agent shall have the rights and
duties given to the Company, and the Company and each other person so
indemnified shall have the rights and duties given to the indemnified
parties, by the provisions of Section 9(a).
(c) To provide for just and equitable contribution, if (i) an
indemnified party makes a claim for indemnification pursuant to Section
9(a) or 9(b) (subject to the limitations thereof) but it is found in a
final judicial determination, not subject to further appeal, that such
indemnification may not be enforced in such case, even though this
Agreement expressly provides for indemnification in such case or (ii) any
indemnified or indemnifying party seeks contribution under the Act, the
Exchange Act, or otherwise, then the Company (including for this purpose
any contribution made by or on behalf of any director of the Company, any
officer of the Company who signed the Registration Statement, and any
controlling person of the Company) as one entity and the Agents, in the
aggregate (including for this purpose any contribution by or on behalf of
an indemnified party) as a second entity, shall contribute to the losses,
liabilities, claims, damages, and expenses whatsoever to which any of them
may be subject, so that the Agents are responsible for the proportion
thereof equal to the percentage which the total Commissions received by
such Agents bears to the total sales price for the sale of Securities sold
to or through the Agents to the date of such liability and the Company is
responsible for the remaining portion; provided, however, that if
applicable law does not permit such allocation, then other relevant
equitable considerations such as the relative fault of the Company and the
Agents in the aggregate in connection with the facts which resulted in
such losses, liabilities, claims, damages, and expenses shall also be
considered. The relative fault, in the case of an untrue statement,
alleged untrue statement, omission, or alleged omission, shall be
determined by, among other things, whether such statement, alleged
statement, omission, or alleged omission relates to information supplied
by the Company or by the Agents, and the parties' relative intent,
knowledge, access to information, and opportunity to correct or prevent
such statement, alleged statement, omission, or alleged omission. The
Company and the Agents agree that it would be unjust and inequitable if
the respective obligations of the Company and the Agents for contribution
were determined by pro rata or per capita allocation of the aggregate
losses, liabilities, claims, damages, and expenses (even if the Agents and
the other indemnified parties were treated as one entity for such purpose)
or by any other
23
method of allocation that does not reflect the equitable considerations
referred to in this Section 9(c). Notwithstanding the provisions of this
Section 9(c), in no case shall any Agent be responsible for a portion of
the contribution obligation imposed on all Agents in excess of the
Commissions received by such Agent in connection with the Securities from
which such losses, liabilities, claims, damages and expenses arise. No
person guilty of a fraudulent misrepresentation (within the meaning of
Section 11(f) of the Act) shall be entitled to contribution from any
person who is not guilty of such fraudulent misrepresentation. For
purposes of this Section 9(c), each person, if any, who controls an Agent
within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act and each officer, director, partner, employee, agent, and
counsel of an Agent shall have the same rights to contribution as such
Agent and each person, if any, who controls the Company within the meaning
of Section 15 of the Act or Section 20(a) of the Exchange Act, each
officer of the Company who shall have signed the Registration Statement,
and each director of the Company shall have the same rights to
contribution as the Company, subject in each case to the provisions of
this Section 9(c). This Section 9(c) is intended to supersede any right to
contribution under the Act, the Exchange Act, or otherwise. Any party
entitled to contribution will, promptly after receipt of notice of
commencement of any action, suit or proceeding against such party in
respect of which a claim for contribution may be made against another
party or parties under this Section 9(c), notify such party or parties
from whom contribution may be sought, but the omission to so notify such
party or parties shall not relieve the party or parties from whom
contribution may be sought from any other obligation it or they may have
hereunder or otherwise than under this Section 9(c).
10. Representations and Agreements to Survive Delivery. All
representations, warranties, covenants, and agreements contained in this
Agreement shall be deemed to be representations, warranties, covenants, and
agreements at the date hereof, and such representations, warranties, covenants,
and agreements of the Agents and the Company, including the indemnity and
contribution agreements contained in Section 9, shall remain operative and in
full force and effect regardless of any investigation made by or on behalf of
any Agent or any indemnified person, or by or on behalf of the Company or any
person or entity which is entitled to be indemnified under Section 9(b), and
shall survive termination of this Agreement.
11. Effective Date of This Agreement and Termination Thereof.
(a) This Agreement shall become effective upon execution and
delivery hereof by the parties hereto.
(b) If you elect to terminate this Agreement, you shall notify
the Company promptly by telephone, telex, or telegram, confirmed by
letter. If, as so provided, the Company elects to terminate this
Agreement, the Company shall notify you promptly by telephone, telex, or
telegram, confirmed by letter.
(c) The Company may elect to suspend or terminate the offering
of Securities under this Agreement at any time; the Company also (as to
any one or more of the Agents, including you) or any Agent (as to itself)
may terminate the appointment and
24
arrangements described in this Agreement. Such actions may be taken, in
the case of the Company, by giving prompt written notice of suspension to
all of the Agents and by giving not less than five days' written notice of
termination to the affected party and the other parties to this Agreement,
or in the case of an Agent, by giving not less than five days' written
notice of termination to the Company and except that, if at the time of
termination an offer for the purchase of Securities shall have been
accepted by the Company but the time of delivery to the purchaser or his
agent of the Securities relating thereto shall not yet have occurred, the
Company shall have the obligations provided herein with respect to such
Securities. The Company shall promptly notify the other parties in writing
of any such termination.
(d) You may, and, upon the request of an Agent with respect to
any Securities sold by such Agent shall, terminate any agreement hereunder
by you to sell such Securities, immediately upon notice to the Company at
any time at or prior to the settlement date relating thereto, (i) if there
has been, since the date of such agreement or since the respective dates
as of which information is given in the Registration Statement, any
material adverse change in the financial condition, earnings or cash flow
of the Company and its Subsidiaries, considered as one enterprise, or any
development reasonably likely to have a material adverse effect on the
financial condition of the Company and its Subsidiaries, considered as one
enterprise, whether or not arising in the ordinary course of business, or
(ii) if there has occurred any outbreak or escalation of hostilities or
other calamity or crisis or any change in financial, political or economic
conditions in the United States or elsewhere, the effect of which on the
financial markets of the United States or the international financial
markets is such as to make it, in the reasonable judgment of you or such
Agent or Agents, impracticable or inadvisable to market the Securities or
enforce contracts for the sale of the Securities, or (iii) if trading in
any securities of the Company has been suspended by the SEC or a national
securities exchange, or if trading generally on either the American Stock
Exchange or the New York Stock Exchange has been suspended, or minimum or
maximum prices for trading have been fixed, or maximum ranges for prices
for securities have been required, by either of said exchanges or by order
of the SEC or any other governmental authority, or if a banking moratorium
has been declared by either Federal or New York authorities, or if a
material disruption in commercial banking or securities settlement or
clearance services in the United States has occurred, or (iv) if there
shall have come to the attention of you or such Agent or Agents any facts
that would cause them to believe that the Pre-Effective, the Effective
Prospectus or Final Prospectus, at the time it was required to be
delivered to a purchaser of Securities, included an untrue statement of a
material fact or omitted to state a material fact necessary in order to
make the statements therein, in light of the circumstances existing at the
time of such delivery, not misleading.
(e) The termination of this Agreement or the International
Placement Agent Agreement shall not require termination of any agreement
by you, and the termination of any such agreement shall not require
termination of this Agreement or the International Placement Agent
Agreement.
(f) Anything in this Agreement to the contrary notwithstanding
other than Section 11(g), if this Agreement shall terminate or shall
otherwise not be carried out
25
within the time specified herein by reason of any failure on the part of
the Company to perform any covenant or agreement or satisfy any condition
of this Agreement by it to be performed or satisfied, the sole liability
of the Company to the several Agents, in addition to the obligations the
Company assumed pursuant to Section 7, will be to reimburse the several
Agents for such reasonable out-of-pocket expenses (including the
reasonable fees and disbursements of their counsel) as shall have been
incurred by them in connection with this Agreement or the proposed
issuance, sale and delivery of the Securities and upon demand the Company
agrees to pay promptly the full amount thereof to you for the respective
accounts of the Agents.
(g) Notwithstanding any termination of this Agreement, and
whether or not this Agreement is otherwise carried out, the provisions of
Sections 6(a), 7, 9, 10, 12, 13 and 14 shall not be in any way affected by
such election or termination or failure to carry out the terms of this
Agreement or any part hereof and shall survive termination of this
Agreement.
12. Notices. All communications hereunder, except as may be
otherwise specifically provided herein, shall be in writing and, if sent to any
Agent, shall be mailed, delivered, or telexed or telecopied and confirmed by
letter, to such Agent at the address set forth below, or if sent to the Company,
shall be mailed, delivered, or telexed or telegraphed and confirmed by letter,
to the Company, ▇.▇. ▇▇▇ ▇▇▇, ▇▇. ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇, British Isles,
Attention: _______________. All notices hereunder shall be effective upon
receipt by the party to which it is addressed.
If to you:
ABG Sundal ▇▇▇▇▇▇▇ Inc.
▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attn:
If to Aton Securities, Inc.
If to Orion Securities (USA) Inc.
13. Parties. You represent that you are authorized to act on behalf
of the several Agents named in Schedule I hereto, and the Company shall be
entitled to act and rely on any request, notice, consent, waiver, or agreement
purportedly given on behalf of the Agents when the same shall have been given by
you on such behalf. This Agreement shall inure solely to the benefit of, and
shall be binding upon, the several Agents (and any affiliate of an Agent that
assists the Agent in the placement of Securities) and the Company and the
persons and entities referred to in Section 9 who are entitled to
indemnification or contribution, and their respective successors, legal
representatives, and assigns (which shall not include any purchaser, as such, of
the Securities), and no other person shall have or be construed to have any
legal or equitable right, remedy, or claim under or in respect of or by virtue
of this Agreement or any provision
26
herein contained. Notwithstanding anything contained in this Agreement to the
contrary, all of the obligations of the Agents hereunder are several and not
joint.
14. Construction. This Agreement shall be construed in accordance
with the laws of the State of New York, without giving effect to conflict of
laws. Time is of the essence in this Agreement.
15. This Agreement may be signed in counterparts, each of which
shall be an original and all of which together shall constitute one and the same
instrument.
27
If the foregoing correctly sets forth the understanding between you
and the Company, please so indicate in the space provided below for that
purpose, whereupon this letter shall constitute a binding agreement between us.
Very truly yours,
CanArgo Energy Corporation
By
----------------------------
Accepted as of the date first above written.
ABG Sundal ▇▇▇▇▇▇▇ Inc.
By
---------------------------------
On behalf of itself and the other several
Agents named in Schedule I hereto.
28
SCHEDULE I
AGENTS
Lead Placement Agent:
ABG Sundal ▇▇▇▇▇▇▇ Inc. shares
Agents:
Aton Securities, Inc. shares
Orion Securities (USA) Inc. shares
Canadian Agent:
Orion Securities, Inc. shares
29
SCHEDULE II
MATERIAL SUBSIDIARIES
30
SCHEDULE III
CONSENTS
31
SCHEDULE IV
REGISTRATION RIGHTS
32
SCHEDULE V
EMPLOYEE STOCK OPTION BENEFIT PLANS
33
SCHEDULE VI
MATERIAL AGREEMENTS
34
SCHEDULE VII
AGREEMENTS DESCRIBED IN REGISTRATION STATEMENT
35
