Exhibit 1.1
5,700,000 Shares
CARRIZO OIL & GAS, INC.
Common Stock
UNDERWRITING AGREEMENT
February __, 2004
CIBC World Markets Corp.
First Albany Capital, Inc.
Hibernia Southcoast Capital, Inc.
Xxxxxxx Xxxx & Company L.L.C.
as Representatives of the several
Underwriters named in Schedule I hereto
c/o CIBC World Markets Corp.
000 0xx Xxxxxx, 0xx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
Carrizo Oil & Gas, Inc., a Texas corporation (the "Company"),
and the persons listed on Schedule II hereto (the "Selling Stockholders"),
propose severally, subject to the terms and conditions contained herein, to sell
to you and the other underwriters named on Schedule I to this Agreement (the
"Underwriters"), for whom you are acting as Representatives (the
"Representatives"), an aggregate of 5,700,000 shares (the "Firm Shares") of the
Company's common stock, $0.01 par value per share (the "Common Stock"). Of the
5,700,000 Firm Shares, 3,420,000 are to be issued and sold by the Company and
2,280,000 are to be sold severally by the Selling Stockholders. The respective
amounts of the Firm Shares to be purchased by each of the several Underwriters
are set forth opposite their names on Schedule I hereto. In addition, the
Company proposes to grant to the Underwriters an option to purchase up to an
additional 256,500 shares (the "Company Option Shares") of Common Stock from the
Company, and the Selling Stockholders propose to grant to the Underwriters an
option to purchase up to an additional 598,500 shares (the "Selling Stockholder
Option Shares" and, together with the Company Option Shares, the "Option
Shares") of Common Stock from the Selling Stockholders for the purpose of
covering over-allotments in connection with the sale of the Firm Shares. The
Firm Shares and the Option Shares are collectively called the "Shares."
The Company represents that it has prepared and filed in
conformity with the requirements of the Securities Act of 1933, as amended (the
"Securities Act"), and the published
rules and regulations thereunder (the "Rules") adopted by the Securities and
Exchange Commission (the "Commission") a Registration Statement (as hereinafter
defined) on Form S-2 (No. 333-111475), including a preliminary prospectus
relating to the Shares, and such amendments thereof as may have been required to
the date of this Agreement. Copies of such Registration Statement (including all
amendments thereof) and of the related Preliminary Prospectus (as hereinafter
defined) have heretofore been delivered by the Company to you. The term
"Preliminary Prospectus" means any preliminary prospectus included at any time
as a part of the Registration Statement or filed with the Commission by the
Company pursuant to Rule 424(a) of the Rules. The term "Registration Statement"
as used in this Agreement means the initial registration statement (including
all exhibits, financial schedules and all documents and information deemed to be
a part of the Registration Statement through incorporation by reference or
otherwise), as amended at the time and on the date it becomes effective (the
"Effective Date"), including the information (if any) contained in the form of
final prospectus filed with the Commission pursuant to Rule 424(b) of the Rules
and deemed to be part thereof at the time of effectiveness pursuant to Rule 430A
of the Rules. If the Company has filed an abbreviated registration statement to
register additional Shares pursuant to Rule 462(b) under the Rules (the "462(b)
Registration Statement"), then any reference herein to the Registration
Statement shall also be deemed to include such 462(b) Registration Statement.
The term "Prospectus" as used in this Agreement means the prospectus in the form
included in the Registration Statement at the time of effectiveness or, if Rule
430A of the Rules is relied on, the term Prospectus shall also include the final
prospectus filed with the Commission pursuant to Rule 424(b) of the Rules.
Reference made herein to any Preliminary Prospectus or to the Prospectus shall
be deemed to refer to and include any documents incorporated by reference
therein pursuant to Item 12 of Form S-2 under the Securities Act, as of the date
of such Preliminary Prospectus or the Prospectus, as the case may be, and any
reference to any amendment or supplement to any Preliminary Prospectus or the
Prospectus shall be deemed to refer to and include any document filed under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), after the date
of such Preliminary Prospectus or the Prospectus, as the case may be, and
incorporated by reference in such Preliminary Prospectus or the Prospectus, as
the case may be.
The Company and the Selling Stockholders understand that the
Underwriters propose to make a public offering of the Shares, as set forth in
and pursuant to the Prospectus, as soon after the Effective Date and the date of
this Agreement as the Representatives deem advisable. The Company hereby
confirms that the Underwriters and dealers have been authorized to distribute or
cause to be distributed each Preliminary Prospectus and are authorized to
distribute the Prospectus (as from time to time amended or supplemented if the
Company furnishes amendments or supplements thereto to the Underwriters).
1. Sale, Purchase, Delivery and Payment for the Shares. On the
basis of the representations, warranties and agreements contained in, and
subject to the terms and conditions of, this Agreement:
(a) The Company agrees to issue and sell to each of the
Underwriters, and each of the Underwriters agrees, severally and not
jointly, to purchase from the Company, at a purchase price of $_____
per share (the "Initial Price"), the number of Firm Shares set forth
opposite the name of such Underwriter under the column "Number of Firm
Shares to be Purchased from the Company" on Schedule I to this
Agreement,
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subject to adjustment in accordance with Section 9 hereof. Each of the
Selling Stockholders agrees, severally and not jointly, to sell to each
of the Underwriters the number of Firm Shares set forth opposite the
name of such Selling Stockholder under the column "Number of Firm
Shares to be Sold" on Schedule II to this Agreement, and each of the
Underwriters agrees, severally and not jointly, to purchase from the
Selling Stockholders, at the Initial Price, the number of Firm Shares
set forth opposite the name of such Underwriter under the column
"Number of Firm Shares to be Purchased from the Selling Stockholders"
on Schedule I to this Agreement, subject to adjustment in accordance
with Section 9 hereof.
(b) The Company and the Selling Stockholders, severally and
not jointly, hereby grant to the several Underwriters an option to
purchase, severally and not jointly, all or any part of the Option
Shares at the Initial Price as described below. The number of Option
Shares to be purchased by each Underwriter shall be purchased in the
same percentage (adjusted by the Representatives to eliminate
fractions) of the total number of Option Shares to be purchased by the
Underwriters as such Underwriter is purchasing of the Firm Shares, and
the number of Selling Stockholder Option Shares to be purchased from
each Selling Stockholder shall be as set forth opposite the name of
such Selling Stockholder under the column "Number of Option Shares to
be Sold" on Schedule II to this Agreement; provided however, that if
the option is exercised by the Underwriters in part but not in full,
the amount of Option Shares purchased by the Underwriters from the
Company and the Selling Stockholders shall be in exact proportion to
the amount of option shares purchased by the Underwriters from the
Company and the Selling Stockholders had the option been exercised by
the Underwriters in full. Such option may be exercised only to cover
over-allotments in the sales of the Firm Shares by the Underwriters and
may be exercised in whole or in part at any time on or before 12:00
noon, New York City time, on the business day before the Firm Shares
Closing Date (as defined below), and from time to time thereafter
within 30 days after the date of this Agreement, in each case upon
written, facsimile or telegraphic notice by the Representatives to the
Company delivered no later than 12:00 noon, New York City time, on the
business day before the Firm Shares Closing Date or at least two
business days before the Option Shares Closing Date (as defined below),
as the case may be, setting forth the number of Option Shares to be
purchased and the time and date (if other than the Firm Shares Closing
Date) of such purchase. The Company and the Selling Stockholders agree,
severally and not jointly, to sell to the Underwriters, the number of
Option Shares specified in such notice, and the Underwriters agree,
severally and not jointly, to purchase such Option Shares.
(c) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the offices of CIBC
World Markets Corp., Xxx Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx
00000, at 10:00 a.m., New York City time, on the third business day
following the date of this Agreement or at such time on such other
date, not later than ten (10) business days after the date of this
Agreement, as shall be agreed upon by the Company and the
Representatives (such time and date of delivery and payment are called
the "Firm Shares Closing Date"). In addition, in the event that any or
all of the Option Shares are purchased by the Underwriters, payment of
the purchase price, and delivery of the certificates, for such Option
Shares shall be made at the above-
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mentioned offices, or at such other place as shall be agreed upon by
the Representatives and the Company, on each date of delivery as
specified in the notice from the Representatives to the Company (such
time and date of delivery and payment are called the "Option Shares
Closing Date"). The Firm Shares Closing Date and any Option Shares
Closing Date are called, individually, a "Closing Date" and, together,
the "Closing Dates."
(d) Payment shall be made to the Company and the Selling
Stockholders by wire transfer of immediately available funds or by
certified or official bank check or checks payable in New York Clearing
House (same day) funds drawn to the order of the Company and to the
Selling Stockholders for the shares purchased from the Company and the
Selling Stockholders, against delivery of the respective certificates
to the Representatives for the respective accounts of the Underwriters
of the respective certificates for the Shares to be purchased by them.
(e) Certificates evidencing the Shares shall be registered in
such names and shall be in such denominations as the Representatives
shall request at least two full business days before the Firm Shares
Closing Date or, in the case of Option Shares, on the day of notice of
exercise of the option as described in Section 1(b) and shall be
delivered by or on behalf of the Company to the Representatives through
the facilities of the Depository Trust Company ("DTC") for the account
of such Underwriter.
2. Representations and Warranties of the Company. The Company
represents and warrants to each Underwriter as of the date hereof, as of the
Firm Shares Closing Date and as of each Option Shares Closing Date (if any), as
follows:
(a) On the Effective Date, the Registration Statement
complied, and on the date of the Prospectus, the date any
post-effective amendment to the Registration Statement becomes
effective, the date any supplement or amendment to the Prospectus is
filed with the Commission and each Closing Date, the Registration
Statement and the Prospectus (and any amendment thereof or supplement
thereto) will comply, in all material respects, with the requirements
of the Securities Act and the Rules and the Exchange Act and the rules
and regulations of the Commission thereunder. The Registration
Statement did not, as of the Effective Date, 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 Effective Date and the
other dates referred to above neither the Registration Statement nor
the Prospectus, nor any amendment thereof or supplement thereto, will
contain any untrue statement of a material fact or will omit to state
any material fact required to be stated therein or necessary in order
to make the statements therein not misleading. When the preliminary
prospectus dated January 20, 2004 was first filed with the Commission
(whether filed as part of the Registration Statement or any amendment
thereto or pursuant to Rule 424(a) of the Rules) and when any amendment
thereof or supplement thereto was first filed with the Commission, such
preliminary prospectus as amended or supplemented complied in all
material respects with the applicable provisions of the Securities Act
and the Rules and 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, in
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light of the circumstances under which they were made, not misleading.
If applicable, each Preliminary Prospectus and the Prospectus delivered
to the Underwriters for use in connection with this offering was
identical to the electronically transmitted copies thereof filed with
the Commission pursuant to XXXXX, except to the extent permitted by
Regulation S-T. Notwithstanding the foregoing, none of the
representations and warranties in this paragraph 2(a) shall apply to
statements in, or omissions from, the Registration Statement or the
Prospectus made in reliance upon, and in conformity with, information
herein or otherwise furnished in writing by the Representatives on
behalf of the several Underwriters for use in the Registration
Statement or the Prospectus. With respect to the preceding sentence,
the Company acknowledges that the only information furnished in writing
by the Representatives on behalf of the several Underwriters for use in
the Registration Statement or the Prospectus is the statements
contained in the fourth and twelfth paragraphs under the caption
"Underwriting" in the Prospectus.
(b) The Registration Statement is effective under the
Securities Act and no stop order preventing or suspending the
effectiveness of the Registration Statement or suspending or preventing
the use of the Prospectus has been issued by the Commission and, to the
knowledge of the Company, no proceedings for that purpose have been
instituted or are threatened under the Securities Act. Any required
filing of the Prospectus and any supplement thereto pursuant to Rule
424(b) of the Rules has been or will be made in the manner and within
the time period required by such Rule 424(b).
(c) The documents incorporated by reference in the
Registration Statement and the Prospectus, at the time they became
effective or were filed with the Commission, as the case may be,
complied in all material respects with the requirements of the
Securities Act or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder, and none of such documents,
when read together with the other information in the Prospectus,
contained an untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to
make the statements therein, in the light of the circumstances under
which they were made, not misleading, and any further documents so
filed and incorporated by reference in the Registration Statement and
the Prospectus, when such documents become effective or are filed with
the Commission, as the case may be, will conform in all material
respects to the requirements of the Securities Act or the Exchange Act,
as applicable, and the rules and regulations of the Commission
thereunder and will not, when read together with the other information
in the Prospectus, 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 are made, not misleading.
(d) The financial statements of the Company (including all
notes and schedules thereto) included or incorporated by reference in
the Registration Statement and Prospectus present fairly in all
material respects the financial position of the Company and its
consolidated subsidiaries at the dates indicated and the statement of
operations, stockholders' equity and cash flows of the Company and its
consolidated subsidiaries for the periods specified; and such financial
statements and related schedules and notes thereto, and the unaudited
financial information filed with the Commission as part of the
Registration Statement, have been prepared in conformity with generally
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accepted accounting principles, consistently applied throughout the
periods involved. The summary and selected financial data included in
the Prospectus present fairly in all material respects the information
shown therein as at the respective dates and for the respective periods
specified and have been presented on a basis consistent with the
consolidated financial statements set forth in the Prospectus and other
financial information.
(e) Ernst & Young LLP, whose reports are filed with the
Commission as a part of the Registration Statement, are and, during the
periods covered by their reports, were independent public accountants
as required by the Securities Act and the Rules.
(f) The Company and each of its subsidiaries, including each
entity (corporation, partnership, joint venture, association or other
business organization) controlled directly or indirectly by the
Company, is duly organized, validly existing and in good standing under
the laws of their respective jurisdictions of incorporation or
organization. The Company and each of its subsidiaries is duly
qualified to do business and is in good standing as a foreign
corporation in each jurisdiction in which the nature of the business
conducted by it or location of the assets or properties owned, leased
or licensed by it requires such qualification, except for such
jurisdictions where the failure to so qualify individually or in the
aggregate would not have a material adverse effect on the assets,
properties, condition, financial or otherwise, or in the results of
operations, business affairs or business prospects of the Company and
its subsidiaries considered as a whole (a "Material Adverse Effect");
and to the Company's knowledge, no proceeding has been instituted in
any such jurisdiction revoking, limiting or curtailing, or seeking to
revoke, limit or curtail, such power and authority or qualification.
(g) The Company and each of its subsidiaries has all requisite
corporate power and authority, and all necessary authorizations,
approvals, consents, orders, licenses, certificates and permits of and
from all governmental or regulatory bodies or any other person or
entity (collectively, the "Permits"), to own, lease and license its
assets and properties and conduct its business, all of which are valid
and in full force and effect, except where the lack of such Permits,
individually or in the aggregate, would not have a Material Adverse
Effect. The Company and each of its subsidiaries has fulfilled and
performed in all material respects all of its material obligations with
respect to such Permits and no event has occurred that allows, or after
notice or lapse of time would allow, revocation or termination thereof
or results in any other material impairment of the rights of the
Company thereunder.
(h) Except as disclosed in the Registration Statement and the
Prospectus, the Company and each of its subsidiaries has (i) defensible
title to all their interests in the oil and gas properties described in
the Prospectus as being owned or leased by them, title investigations
having been carried out by the Company in accordance with customary
practice in the oil and gas industry, and (ii) good and marketable
title to all other real property and all personal property described in
the Prospectus as being owned by them, in each case free and clear of
all liens, encumbrances, claims, security interests and defects, except
(A) such as would not have a Material Adverse Effect, (B) security
interests securing loans under the Company's senior
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credit facility and senior subordinated notes, (C) royalties,
overriding royalties and other burdens under oil and gas leases, (D)
easements, restrictions, rights-of-way and other matters that commonly
affect oil and gas properties and (E) liens and encumbrances under gas
sales contracts, geophysical exploration agreements, operating
agreements, farmout agreements, participation agreements, unitization,
pooling and commutation agreements, declarations and orders and gas
sales contracts, securing payment of amounts not yet due and payable
and of a scope and nature customary in the oil and gas industry. All
property held under lease by the Company and its subsidiaries is held
by them under valid, existing and enforceable leases, free and clear of
all liens, encumbrances, claims, security interests and defects, except
such as would not have a Material Adverse Effect.
(i) There are no litigation or governmental proceedings to
which the Company or any of its subsidiaries are subject or which is
pending or, to the knowledge of the Company, threatened, against the
Company or any of its subsidiaries, which, individually or in the
aggregate, might have a Material Adverse Effect, affect the
consummation of this Agreement or which are required to be disclosed in
the Registration Statement and the Prospectus that are not so
disclosed.
(j) Subsequent to the respective dates as of which information
is given in the Registration Statement or the Prospectus, except as
described therein, (i) there has not been any Material Adverse Effect;
(ii) neither the Company nor any of its subsidiaries has sustained any
loss or interference with its assets, businesses or properties (whether
owned or leased) from fire, explosion, earthquake, flood or other
calamity, whether or not covered by insurance, or from any labor
dispute or any court or legislative or other governmental action, order
or decree which would have a Material Adverse Effect; and (iii) since
the date of the latest balance sheet included or incorporated by
reference in the Registration Statement and the Prospectus, neither the
Company nor its subsidiaries has (A) issued any securities or incurred
any liability or obligation, direct or contingent, for borrowed money,
except such liabilities or obligations incurred in the ordinary course
of business, (B) entered into any transaction not in the ordinary
course of business or (C) except for regular dividends on the shares of
the Company's Series B Preferred Stock in amounts per share that are
consistent with past practice, declared or paid any dividend or made
any distribution on any shares of its stock or redeemed, purchased or
otherwise acquired or agreed to redeem, purchase or otherwise acquire
any shares of its capital stock.
(k) There is no document, contract or other agreement 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 by the Securities Act or Rules. Each
description of a contract, document or other agreement in the
Registration Statement and the Prospectus accurately reflects in all
material respects the terms of the underlying contract, document or
other agreement. Each contract, document or other agreement described
in the Registration Statement and Prospectus or listed in the Exhibits
to the Registration Statement is in full force and effect and is valid
and enforceable by and against the Company or its subsidiary, as the
case may be, in accordance with its terms except as the enforceability
thereof may be limited by bankruptcy, insolvency, reorganization,
fraudulent conveyance, moratorium or other similar laws relating to or
7
affecting the enforcement of creditors' rights generally and by general
principles of equity or public policy (regardless of whether
enforcement is sought in a proceeding at law or in equity). Neither the
Company nor any of its subsidiaries, if a subsidiary is a party, nor to
the Company's knowledge, any other party is in default in the
observance or performance of any term or obligation to be performed by
it under any such agreement, and no event has occurred which with
notice or lapse of time or both would constitute such a default, in any
such case which default or event, individually or in the aggregate,
would have a Material Adverse Effect. No default exists, and no event
has occurred which with notice or lapse of time or both would
constitute a default, in the due performance and observance of any
term, covenant or condition, by the Company or its subsidiary, if a
subsidiary is a party thereto, of any other agreement or instrument to
which the Company or any of its subsidiaries is a party or by which
Company or its properties or business or a subsidiary or its properties
or business may be bound or affected which default or event,
individually or in the aggregate, would have a Material Adverse Effect.
(l) Neither the Company nor any of its subsidiaries is in
violation of any term or provision of its charter or by-laws or of any
franchise, license, permit, judgment, decree, order, statute, rule or
regulation, where the consequences of such violation, individually or
in the aggregate, would have a Material Adverse Effect.
(m) Neither the execution, delivery and performance of this
Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation, the
issuance and sale by the Company of the Shares) will give rise to a
right to terminate or accelerate the due date of any payment due under,
or conflict with or result in the breach of any term or provision of,
or constitute a default (or an event which with notice or lapse of time
or both would constitute a default) under, or require any consent or
waiver under, or result in the execution or imposition of any lien,
charge or encumbrance upon any properties or assets of the Company or
its subsidiaries pursuant to the terms of, any indenture, mortgage,
deed of trust or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which either the Company or
its subsidiaries or any of their properties or businesses is bound, or
any franchise, license, permit, judgment, decree, order, statute, rule
or regulation applicable to the Company or any of its subsidiaries or
violate any provision of the charter or by-laws of the Company or any
of its subsidiaries, except for such consents or waivers which have
already been obtained and are in full force and effect and except as
would not have a Material Adverse Effect.
(n) The Company has authorized and outstanding capital stock
as set forth under the captions "Capitalization" and "Description of
Capital Stock" in the Prospectus. The certificates evidencing the
Shares are in due and proper legal form and have been duly authorized
for issuance by the Company. All of the issued and outstanding shares
of Common Stock have been duly and validly issued and are fully paid
and nonassessable. There are no statutory preemptive or other similar
rights to subscribe for or to purchase or acquire any of the Shares or
any such rights pursuant to its Articles of Incorporation or By-laws or
any agreement or instrument to or by which the Company or any of its
subsidiaries is a party or bound. The Shares, when issued and sold
pursuant to this
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Agreement, will be duly and validly issued, fully paid and
nonassessable and none of them will be issued in violation of any
preemptive or other similar right. Except as disclosed in the
Registration Statement and the Prospectus, there is no outstanding
option, warrant or other right calling for the issuance of, and there
is no commitment, plan or arrangement to issue, any share of stock of
the Company or any of its subsidiaries or any security convertible
into, or exercisable or exchangeable for, such stock. The Common Stock
and the Shares conform in all material respects to all statements in
relation thereto contained in the Registration Statement and the
Prospectus. All outstanding shares of capital stock of each of the
Company's subsidiaries have been duly authorized by all necessary
corporate action and validly issued, and are fully paid and
nonassessable and are owned directly by the Company or by another
wholly-owned subsidiary of the Company free and clear of any security
interests, liens, encumbrances, equities or claims, other than those
described in the Prospectus.
(o) No holder of any security of the Company has any right,
which has not been waived or satisfied, to have any security owned by
such holder included in the Registration Statement or to demand
registration of any security owned by such holder for a period of 90
days after the date of this Agreement. Each director and executive
officer of the Company and each stockholder of the Company listed on
Schedule III has delivered to the Representatives his enforceable
written lock-up agreement in the form attached to this Agreement as
Exhibit A hereto ("Lock-Up Agreement").
(p) All necessary corporate action has been duly and validly
taken by the Company to authorize the execution, delivery and
performance of this Agreement and the issuance and sale of the Shares
by the Company. This Agreement has been duly and validly authorized by
all necessary corporate action, executed and delivered by the Company
and constitutes and will constitute legal, valid and binding
obligations of the Company enforceable against the Company in
accordance with its terms, except as the enforceability thereof may be
limited by bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other similar laws relating to or affecting
the enforcement of creditors' rights generally and by general
principles of equity or public policy (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(q) Neither the Company nor any of its subsidiaries is
involved in any labor dispute nor, to the knowledge of the Company, is
any such dispute threatened, which dispute would have a Material
Adverse Effect. The Company is not aware of any existing or imminent
labor disturbance by the employees of any of its principal suppliers or
contractors which would have a Material Adverse Effect. The Company is
not aware of any threatened or pending litigation between the Company
or its subsidiaries and any of its executive officers which, if
adversely determined, could have a Material Adverse Effect and has no
reason to believe that such officers will not remain in the employment
of the Company.
(r) No transaction has occurred between or among the Company
and any of its officers or directors, shareholders or any affiliate or
affiliates of any such officer or director or shareholder that is
required to be described in and is not described in the Registration
Statement and the Prospectus.
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(s) The Company has not taken, nor will it take, directly or
indirectly, any action designed to or which might reasonably be
expected to cause or result in, or which has constituted or which might
reasonably be expected to constitute, the stabilization or manipulation
of the price of the Common Stock or any security of the Company to
facilitate the sale or resale of any of the Shares.
(t) The Company and each of its subsidiaries has filed all
Federal, state, local and foreign tax returns which are required to be
filed through the date hereof, except where the failure to so file
would not have a Material Adverse Effect, which returns are true and
correct in all material respects or has received timely extensions
thereof, and has paid all taxes shown on such returns and all
assessments received by it to the extent that the same are material and
have become due, except for such taxes as are being contested in good
faith and except as would not result in a Material Adverse Effect.
There are no tax audits or investigations pending, which if adversely
determined would have a Material Adverse Effect; nor are there any
material proposed additional tax assessments against the Company or any
of its subsidiaries.
(u) The Shares have been duly authorized for quotation on the
National Association of Securities Dealers Automated Quotation
("Nasdaq") National Market System, subject to official notice of
issuance.
(v) The Company has taken no action designed to, or likely to
have the effect of, terminating the registration of the Common Stock
under the Exchange Act or the quotation of the Common Stock on the
Nasdaq National Market, nor has the Company received any notification
that the Commission or the Nasdaq National Market is contemplating
terminating such registration or quotation.
(w) The books, records and accounts of the Company and its
subsidiaries accurately and fairly reflect, in reasonable detail, the
transactions in, and dispositions of, the assets of, and the results of
operations of, the Company and its subsidiaries. The Company and each
of its subsidiaries maintains a system of internal accounting controls
sufficient to provide reasonable assurances that (i) transactions are
executed in accordance with management's general or specific
authorizations, (ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally
accepted accounting principles and to maintain asset accountability,
(iii) access to assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to
any differences.
(x) The written engineering reports prepared by Xxxxx Xxxxx
Company, L.P., Petroleum Consultants and Xxxxxxxxx & Xxxxx, Inc.,
Independent Petroleum Engineers (collectively, the "Independent
Petroleum Engineers"), as of December 31, 2002, setting forth the
engineering values attributed to the oil and gas properties of the
Company and its subsidiaries accurately reflect in all material
respects the ownership interests of the Company and its subsidiaries in
the properties therein as of December 31, 2002, except as otherwise
disclosed in the Registration Statement and the Prospectus. The
information
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furnished by the Company to the Independent Petroleum Engineers for
purposes of preparing their reports, including, without limitation,
production, costs of operation and development, current prices for
production, agreements relating to current and future operations and
sales of production, was true, correct and complete in all material
respects on the date supplied and was prepared in accordance with
customary industry practices; each of the Independent Petroleum
Engineers, who prepared estimates of the extent and value of proved oil
and natural gas reserves, are independent with respect to the Company.
(y) The Company and its subsidiaries are insured by insurers
of recognized financial responsibility against such losses and risks
and in such amounts as are customary in the businesses in which they
are engaged or propose to engage after giving effect to the
transactions described in the Prospectus; all policies of insurance and
fidelity or surety bonds insuring the Company or any of its
subsidiaries or the Company's or its subsidiaries' respective
businesses, assets, employees, officers and directors are in full force
and effect; the Company and each of its subsidiaries are in compliance
with the terms of such policies and instruments in all material
respects; and neither the Company nor any subsidiary of the Company has
any reason to believe that it will not be able to renew its existing
insurance coverage as and when such coverage expires or to obtain
similar coverage from similar insurers as may be necessary to continue
its business at a cost that is not materially greater than the current
cost, except as would not have a Material Adverse Effect.
(z) Each approval, consent, order, authorization, designation,
declaration or filing of, by or with any regulatory, administrative or
other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated required to be obtained or performed
by the Company (except such additional steps as may be required by the
National Association of Securities Dealers, Inc. (the "NASD") or may be
necessary to qualify the Shares for public offering by the Underwriters
under the state securities or Blue Sky laws) has been obtained or made
and is in full force and effect, except as would not have a Material
Adverse Effect.
(aa) There are no affiliations with the NASD among the
Company's officers, directors or, to the best of the knowledge of the
Company, any five percent or greater stockholder of the Company, except
as set forth in the Registration Statement or otherwise disclosed in
writing to the Representatives.
(bb) Except as described in the Prospectus, (i) each of the
Company and each of its subsidiaries is in compliance in all material
respects with all rules, laws and regulations relating to the use,
treatment, storage and disposal of toxic substances and protection of
health or the environment ("Environmental Law") which are applicable to
its business; (ii) neither the Company nor its subsidiaries has
received any notice from any governmental authority or third party of
an asserted claim under Environmental Laws, which claim if determined
adverse to the Company or any subsidiary could have a Material Adverse
Effect; (iii) each of the Company and each of its subsidiaries has
received all material permits, licenses or other approvals required of
it under applicable
11
Environmental Laws to conduct its business and is in compliance with
all terms and conditions of any such permit, license or approval,
except where the absence of such permit, license, approval or
compliance would not result in a Material Adverse Effect; (iv) to the
Company's knowledge, no facts currently exist that will require the
Company or any of its subsidiaries to make future material capital
expenditures to comply with Environmental Laws; (v) no property which
is or has been owned, leased or occupied by the Company or its
subsidiaries has been designated as a Superfund site pursuant to the
Comprehensive Environmental Response, Compensation of Liability Act of
1980, as amended (42 U.S.C. Section 9601, et. seq.) ("CERCLA") or
otherwise designated as a contaminated site under applicable state or
local law; (vi) neither the Company nor any of its subsidiaries has
been named as a "potentially responsible party" under CERCLA; (vii)
there has been no storage, disposal, generation, transportation,
handling or treatment of hazardous substances or solid wastes by the
Company (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 in violation of any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit or which would
require remedial action by the Company 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; and (viii) 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, except
for any 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 will all such spills,
discharges, leaks, emissions, injections, escapes, dumpings and
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.
(cc) In the ordinary course of its business, the Company
periodically reviews the effect of Environmental Laws on the business,
operations and properties of the Company and its subsidiaries, in the
course of which the Company identifies and evaluates associated costs
and liabilities (including, without limitation, any capital or
operating expenditures required for clean-up, closure of properties 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, singly or in the aggregate, have a Material Adverse Effect.
(dd) The Company is not and, after giving effect to the
offering and sale of the Shares and the application of proceeds thereof
as described in the Prospectus, will not be an "investment company"
within the meaning of the Investment Company Act of 1940, as amended
(the "Investment Company Act").
(ee) The principal executive officer and principal financial
officer of the Company have made all certifications required by the
Xxxxxxxx-Xxxxx Act or any related
12
rules and regulations promulgated by the Commission, and the statements
contained in any such certification are true and correct in all
material respects. The Company maintains "disclosure controls and
procedures" (as defined in Rule 13a-14(c) under the Exchange Act), and
such controls and procedures are designed (i) to ensure that
information required to be disclosed by the Company in the reports that
it files or submits under the Exchange Act is recorded, processed,
summarized and reported, within the time periods specified in the
Commission's rules and forms and (ii) to ensure that information
required to be disclosed by the Company in the reports that it files or
submits under the Exchange Act is accumulated and communicated to the
Company's management, including its principal executive officer and
principal financial officer, as appropriate to allow timely decisions
regarding required disclosure. The Company does not have any material
weaknesses in internal controls, and there has been no material fraud
that involves management or other employees who have a significant role
in the Company's internal controls. The Company is otherwise in
compliance in all material respects with all applicable effective
provisions of the Xxxxxxxx-Xxxxx Act and the rules and regulations
promulgated by the Commission (and intends to comply with all
applicable provisions that are not yet effective upon effectiveness).
(ff) The Company or any other person associated with or acting
on behalf of the Company including, without limitation, any director,
officer, agent or employee of the Company or its subsidiaries, has not,
directly or indirectly, while acting on behalf of the Company or its
subsidiaries (i) used any corporate funds for unlawful contributions,
gifts, entertainment or other unlawful expenses relating to political
activity; (ii) made any unlawful payment to foreign or domestic
government officials or employees or to foreign or domestic political
parties or campaigns from corporate funds; (iii) violated any provision
of the Foreign Corrupt Practices Act of 1977, as amended; or (iv) made
any other unlawful payment.
(gg) Except as described in the Prospectus or in the documents
incorporated by reference into the Prospectus, the Company has not sold
or issued any shares of Common Stock during the six-month period
preceding the date of the Prospectus, including any sales pursuant to
Rule 144A under, or Regulations D or S of, the Securities Act, other
than shares issued pursuant to employee benefit plans, qualified stock
options plans or other employee compensation plans or pursuant to
outstanding options, rights or warrants.
(hh) The Company has fulfilled its obligations, if any, under
the minimum funding standards of Section 302 of the U.S. Employee
Retirement Income Security Act of 1974 ("ERISA") and the regulations
and published interpretations thereunder with respect to each "plan" as
defined in Section 3(3) of ERISA and such regulations and published
interpretations in which its employees are eligible to participate and
each such plan is in compliance in all material respects with the
presently applicable provisions of ERISA and such regulations and
published interpretations. No "Reportable Event" (as defined in 12
ERISA) has occurred with respect to any "Pension Plan" (as defined in
ERISA) for which the Company could have any liability.
13
(ii) Each of the Company, its directors and officers has not
distributed and will not distribute prior to the later of (i) the Firm
Shares Closing Date, or the Option Shares Closing Date, and (ii)
completion of the distribution of the Shares, any offering material in
connection with the offering and sale of the Shares other than any
Preliminary Prospectus, the Prospectus, the Registration Statement and
other materials, if any, permitted by the Securities Act.
3. Representations and Warranties of the Selling Stockholders.
Each Selling Stockholder hereby severally and not jointly represents and
warrants to each Underwriter as of the date hereof, as of the Firm Shares
Closing Date and, if such Selling Stockholder is selling Option Shares, as of
each such Option Shares Closing Date (if any), as to itself only, as follows:
(a) Except in the case of Shares issuable upon the exercise of
warrants (the "Warrants") previously issued by the Company (the
"Warrant Shares"), the Selling Stockholder has caused certificates for
the number of Shares to be sold by such Selling Stockholder hereunder
to be delivered to Computershare Trust Company, Inc. (the "Custodian"),
endorsed in blank or with blank stock powers duly executed, with a
signature appropriately guaranteed, such certificates to be held in
custody by the Custodian for delivery, pursuant to the provisions of
this Agreement and an agreement among the Custodian and the Selling
Stockholder (the "Custody Agreement"). Each Selling Stockholder selling
Warrant Shares has (i) delivered to the Company an exercise notice for
the exchange of the Warrants, in whole or in part, as the case may be,
for the Warrant Shares; (ii) instructed the Company to deliver the
Warrant Shares to the persons named in the Power of Attorney (as
defined below) to be held on behalf of such Selling Stockholder; and
(iii) instructed the persons named in the Power of Attorney to deliver
such Warrant Shares to the Custodian, endorsed in blank or with blank
stock powers duly executed, with a signature appropriately guaranteed,
such certificates to be held in custody by the Custodian for delivery,
pursuant to the provisions of this Agreement and the Custody Agreement.
The Selling Stockholder delivering Warrant Shares for sale under this
Agreement has taken all action required to exercise the Warrants in an
amount necessary such that, when combined with other Shares represented
by certificates delivered to the Custodian, the Selling Stockholder can
deliver the specified number of Shares sold pursuant to this Agreement
by such Selling Shareholder on the Firm Shares Closing Date.
(b) The Selling Stockholder has granted an irrevocable power
of attorney (the "Power of Attorney") to the persons named therein, on
behalf of the Selling Stockholder, to execute and deliver this
Agreement and any other document necessary or desirable in connection
with the transactions contemplated hereby and to deliver the shares to
be sold by the Selling Stockholder pursuant hereto.
(c) This Agreement and the transactions contemplated herein
have been duly authorized by the Selling Stockholder, and upon
execution and delivery of this Agreement by one of the Attorneys (as
defined in the Power of Attorney) on behalf of such Selling Stockholder
in accordance with the Power of Attorney, this Agreement will have been
duly executed and delivered by such Selling Stockholder.
14
(d) Each of the Custody Agreement, the Power of Attorney, the
Lock-Up Agreement, and the transactions contemplated in each, have been
duly authorized, by or on behalf of the Selling Stockholder, and each
of the Custody Agreement, Power of Attorney and the Lock-Up Agreement
has been duly executed and delivered by or on behalf of the Selling
Stockholder, and, assuming due authorization, execution and delivery by
the other parties thereto, constitutes the valid and legally binding
agreement of the Selling Stockholder, enforceable against the Selling
Stockholder in accordance with its terms, except as such enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
fraudulent transfer, moratorium or other similar laws relating to or
affecting the enforcement of creditors' rights generally and by general
principles of equity and public policy (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(e) The execution and delivery by the Selling Stockholder of
this Agreement and the performance by the Selling Stockholder of its
obligations under this Agreement, do not and will not, whether with or
without the giving of notice or the passage of time or both, (i)
violate or contravene any provision of the limited partnership
agreement, limited liability company agreement, trust agreement or
declaration, charter or by-laws or other organizational instrument of
the Selling Stockholder, if applicable, or any applicable law, statute,
regulation, or any agreement or other instrument binding upon the
Selling Stockholder or any judgment, order or decree of any
governmental body, agency or court having jurisdiction over the Selling
Stockholder, (ii) conflict with or constitute a breach of, or default
under, or result in the creation or imposition of any tax, lien, charge
or encumbrance upon the shares to be sold by the Selling Stockholder or
any property or assets of the Selling Stockholder pursuant to the terms
of any agreement or instrument to which the Selling Stockholder is a
party or by which the Selling Stockholder may be bound or to which any
of the property or assets of the Selling Stockholder is subject or
(iii) require any consent, approval, authorization or order of or
registration or filing with any court or governmental agency or body
having jurisdiction over it, except such as may be required by the
federal securities laws or the Blue Sky laws of the various states or
under the rules of the NASD in connection with the offer and sale of
the Shares which have been or will be effected in accordance with this
Agreement, and, with respect to each of (i), (ii) and (iii) above,
except where such breach, violation, default, creation, imposition or
contravention or failure to obtain such consent, approval,
authorization or order, individually or in the aggregate, would not
have a material adverse effect on the consummation by the Selling
Stockholder of the transactions contemplated by this Agreement.
(f) Except in the case of the Warrant Shares, the Selling
Stockholder is, and on the Firm Shares Closing Date and the Option
Share Closing Date, if applicable, will be the lawful record owner of
the Shares to be sold by such Selling Stockholder at the Firm Shares
Closing or the Option Shares Closing, as applicable, free and clear of
any lien, claim, security interest or other encumbrance, including,
without limitation, any restriction on transfer, except as otherwise
described in the Registration Statement and Prospectus or pursuant to
the Power of Attorney or Custody Agreement. Each Selling Stockholder
selling Warrant Shares on the Firm Shares Closing Date and the Option
Share Closing Date, if applicable, will be the lawful record owner of
the Warrant Shares
15
to be sold by such Selling Stockholder at the Firm Shares Closing or
the Option Shares Closing, as applicable, free and clear of any lien,
claim, security interest or other encumbrance, including, without
limitation, any restriction on transfer, except as otherwise described
in the Registration Statement and Prospectus or pursuant to the Power
of Attorney or Custody Agreement.
(g) If the certificates for the Shares to be sold by the
Selling Stockholder were delivered to the Underwriters in the State of
New York and assuming the Underwriters purchase the Shares to be sold
by such Selling Stockholder in good faith and without "notice of
adverse claim" (as such phrase is used in Section 8-105 of the New York
Uniform Commercial Code as currently in effect in the State of New York
(the "NY UCC"), upon (i) delivery (as defined in Section 8-301(a) of
the NY UCC) to the Underwriters of the certificates representing such
Shares endorsed in blank by an effective endorsement (within the
meaning of Section 8-107 of the NY UCC), and (ii) payment therefore in
accordance with the terms of this Agreement and the Custody Agreement,
the Underwriters would become "protected purchasers" (as defined in
Section 8-303(a) of the NY UCC) of such Shares, and will acquire such
Shares free and clear of "adverse claims" (as defined in Section 8-102
of the NY UCC) except for any such adverse claims created by or at the
request of the Underwriters.
(h) All information relating to the Selling Stockholder
furnished in writing by the Selling Stockholder to the Company
expressly for use in the Registration Statement and Prospectus is, and
on each Closing Date will be, true, correct, and complete in all
material respects, and does not, and on each Closing Date will not,
contain any untrue statement of a material fact or omit to state any
material fact required to be stated therein or necessary to make such
information not misleading.
(i) Each Selling Stockholder who is an officer of the Company
has reviewed the Registration Statement and Prospectus and, although
the Selling Stockholder has not independently verified the accuracy or
completeness of all the information contained therein, nothing has come
to the attention of the Selling Stockholder that would lead the Selling
Stockholder to believe that (i) on the Effective Date, the Registration
Statement contained any untrue statement of a material fact or omitted
to state any material fact required to be stated therein in order to
make the statements made therein not misleading and (ii) on the
Effective Date the Prospectus contained and, on each Closing Date
contains, no untrue statement of a material fact or omitted or omits to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
misleading.
(j) The sale of Shares by the Selling Stockholder pursuant to
this Agreement is not prompted by the Selling Stockholder's knowledge
of any material non-public information concerning the Company or any of
its subsidiaries which is not set forth in the Prospectus.
(k) The Selling Stockholder has not taken and will not take,
directly or indirectly, any action designed to or that might reasonably
be expected to cause or result
16
in stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Shares.
4. Conditions of the Underwriters' Obligations. The
obligations of the Underwriters under this Agreement are several and not joint.
The respective obligations of the Underwriters to purchase the Shares are
subject to each of the following terms and conditions:
(a) Notification that the Registration Statement has become
effective shall have been received by the Representatives and the
Prospectus shall have been timely filed with the Commission in
accordance with Section 5(a) of this Agreement.
(b) No order preventing or suspending the use of any
preliminary prospectus or the Prospectus shall have been or shall be in
effect and no order suspending the effectiveness of the Registration
Statement shall be in effect and no proceedings for such purpose shall
be pending before or threatened by the Commission. If the Company has
elected to rely upon Rule 430A, Rule 430A information previously
omitted from the effective Registration Statement pursuant to Rule 430A
shall have been transmitted to the Commission for filing pursuant to
Rule 424(b) within the prescribed time period and the Company shall
have provided evidence satisfactory to the Underwriters of such timely
filing, or a post-effective amendment providing such information shall
have been promptly filed and declared effective in accordance with the
requirements of Rule 430A.
(c) The representations and warranties of the Company and the
Selling Stockholders contained in this Agreement and in the
certificates delivered pursuant to Section 4(d) shall be true and
correct when made and on and as of each Closing Date as if made on such
date. The Company and the Selling Stockholders shall have performed in
all material respects all covenants and agreements and satisfied all
the conditions contained in this Agreement required to be performed or
satisfied by them at or before such Closing Date.
(d) The Representatives shall have received on each Closing
Date a certificate, addressed to the Representatives and dated such
Closing Date, of the chief executive or chief operating officer and the
chief financial officer or chief accounting officer of the Company to
the effect that: (i) the representations, warranties and agreements of
the Company in this Agreement were true and correct when made and are
true and correct as of such Closing Date; (ii) the Company has
performed in all material respects all covenants and agreements and
satisfied all conditions contained herein; (iii) they have carefully
examined the Registration Statement and the Prospectus and, in their
opinion (A) as of the Effective Date and as of the Closing Date, the
Registration Statement and Prospectus did not include any untrue
statement of a material fact and did not 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 (B) since the Effective Date no event has occurred
which should have been set forth in a supplement or otherwise required
an amendment to the Registration Statement or the Prospectus; and (iv)
no stop order suspending the effectiveness of the Registration
Statement has been issued and, to their knowledge, no proceedings for
that purpose have been instituted or are pending under the Securities
Act.
17
(e) The Representatives shall have received on each Closing
Date a certificate, addressed to the Representatives and dated such
Closing Date, of each Selling Stockholder, to the effect that: (i) the
representations and warranties of such Selling Stockholder in this
Agreement were true and correct when made and are true and correct as
of such Closing Date and (ii) such Selling Stockholder has performed in
all material respects all of its covenants and agreements and satisfied
all conditions pertaining to it contained herein.
(f) The Representatives shall have received, at the time this
Agreement is executed and on each Closing Date a signed letter from
Ernst & Young LLP addressed to the Representatives and dated,
respectively, the date of this Agreement and each such Closing Date, in
form and substance reasonably satisfactory to the Representatives
containing statements and information of the type ordinarily included
in accountants' "comfort letters" to underwriters with respect to the
financial statements and certain financial information contained in the
Registration Statement and the Prospectus.
(g) The Representatives shall have received on each Closing
Date a letter from each of the Independent Petroleum Engineers in form
and substance satisfactory to the Underwriters confirming certain
matters concerning their engagement and the use of their reserve
reports and information derived from their reserve reports in the
Prospectus.
(h) The Representatives shall have received on each Closing
Date from Xxxxx Xxxxx L.L.P., counsel for the Company, an opinion,
addressed to the Representatives and dated such Closing Date, and
stating in effect that:
(i) Each of the Company and CCBM, Inc. has been duly
organized and is validly existing as a corporation in good
standing under the laws of the state of its incorporation.
CCBM, Inc. is duly qualified to transact business and is in
good standing as a foreign corporation in the State of Texas.
(ii) Each of the Company and CCBM, Inc. has all
requisite corporate power and authority to own, lease and
operate its properties and to conduct its business as now
being conducted and as described in the Registration Statement
and the Prospectus and with respect to the Company to enter
into and perform its obligations under this Agreement and to
issue and sell the Shares.
(iii) The authorized capital stock of the Company is
as set forth in the Registration Statement and the Prospectus
under the caption "Capitalization" as of the dates stated
therein and, since such dates, there has been no change in the
authorized capital stock of the Company. The Shares to be sold
by the Selling Stockholders have been duly and validly
authorized and issued and are fully paid and nonassessable.
The Shares to be issued and sold by the Company pursuant to
this Agreement have been duly authorized by all necessary
corporate action for issuance and sale to the Underwriters
pursuant to this Agreement and, when issued and delivered by
the Company pursuant to this Agreement against payment of the
consideration set forth herein, will be validly issued, fully
paid and nonassessable. The issuance and sale of the Shares by
the Company and the sale
18
of the shares by the Selling Stockholders is not subject to
any preemptive or other similar rights of any securityholder
of the Company under the Company's Articles of Incorporation
or By-laws or, to the best of such counsel's knowledge, any
agreement. To the best of such counsel's knowledge, except as
disclosed in the Registration Statement and the Prospectus,
there are no preemptive or other rights to subscribe for or to
purchase or any restriction upon the voting or transfer of any
securities of the Company pursuant to the Company's Articles
of Incorporation or By-laws or any agreements known to such
counsel. The Common Stock and the Shares conform in all
material respects to the descriptions thereof contained in the
Registration Statement and the Prospectus. The form of
certificate used to evidence the Common Stock complies in all
material respects with all applicable statutory requirements,
with any applicable requirements of the Articles of
Incorporation or By-laws of the Company and the requirements
of the Nasdaq National Market. To the best of such counsel's
knowledge, there are no persons with registration rights or
other similar rights to have any securities registered
pursuant to the Registration Statement or otherwise registered
by the Company under the Securities Act, other than as
described or as have been waived or satisfied.
(iv) All necessary corporate action has been duly and
validly taken by the Company to authorize the execution,
delivery and performance of this Agreement and the issuance
and sale of the Shares. This Agreement has been duly and
validly authorized, executed and delivered by the Company, and
this Agreement constitutes the legal, valid and binding
obligation of the Company enforceable against the Company in
accordance with its terms except as such enforceability may be
limited by applicable bankruptcy, insolvency, fraudulent
conveyance, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and
by general principles of equity or public policy (regardless
of whether enforcement is sought in a proceeding at law or in
equity).
(v) Neither the execution, delivery and performance
of this Agreement by the Company nor the consummation of any
of the transactions contemplated hereby (including, without
limitation, the issuance and sale by the Company of the
Shares) will, to the best of such counsel's knowledge, (a)
give rise to a right to terminate or accelerate the due date
of any payment due under, or conflict with or result in the
breach of any term or provision of, or constitute a default
(or any event which with notice or lapse of time, or both,
would constitute a default) under, or require consent or
waiver under, or result in the execution or imposition of any
lien, charge, claim, security interest or encumbrance upon any
properties or assets of the Company or any of its subsidiaries
pursuant to the terms of, any indenture, mortgage, deed trust,
note or other agreement or instrument filed as an exhibit to
the Registration Statement and to which the Company or any of
its subsidiaries is a party or by which either the Company or
any of its subsidiaries or any of its assets or properties or
businesses is bound, or any franchise, license, permit,
judgment, decree, order, statute, rule or regulation binding
on the Company or any of its subsidiaries or properties, known
to such
19
counsel of the United States or the State of Texas (provided,
however, that such counsel need express no opinion with
respect to compliance with any Federal or State securities or
anti-fraud law, rule or regulation except as otherwise
expressly stated in the opinion of such counsel) or (b)
violate any provision of the charter or by-laws of the Company
or any of its subsidiaries, except in the case of clause (a)
as would not reasonably be expected to have a Material Adverse
effect.
(vi) No consent, approval, authorization, license,
registration, qualification or order of any court or
governmental agency or regulatory body of the United States or
the State of Texas is required for the due authorization,
execution, delivery or performance of this Agreement by the
Company or the consummation of the transactions contemplated
hereby or thereby, except such as have been obtained under the
Securities Act and such as may be required under state
securities or Blue Sky laws or under the rules of the National
Association of Securities Dealers (the "NASD") in connection
with the purchase and distribution of the Shares by the
several Underwriters, except as would not reasonably be
expected to have a Material Adverse Effect.
(vii) To the best of such counsel's knowledge, there
is no action, suit, proceeding or other investigation, before
any court or before or by any public body or board pending or
threatened against, or involving the assets, properties or
businesses of, the Company which is required to be disclosed
in the Registration Statement and the Prospectus and is not so
disclosed or which could reasonably be expected to have a
Material Adverse Effect.
(viii) The statements in the Prospectus under the
captions "Description of Capital Stock," insofar as such
statements constitute a summary of documents referred to
therein or matters of law, are accurate in all material
respects and accurately present the information with respect
to such documents and matters.
(ix) To such counsel's knowledge, all contracts and
other documents required to be filed as exhibits to, or
described in, the Registration Statement have been so filed
with the Commission or are fairly described in the
Registration Statement, as the case may be.
(x) The Registration Statement and the Prospectus and
each amendment or supplement thereto (except for (i) the
financial statements and schedules contained therein or
omitted therefrom (including the notes thereto and the
auditor's report thereon), (ii) the summary reserve reports of
each of the Independent Petroleum Engineers included therein,
(iii) the other accounting, financial or reserve engineering
data contained therein or omitted therefrom or (iv) the
exhibits thereto, as to which such counsel has not been asked
to comment) appear on their face to comply as to form in all
material respects with the requirements of the Securities Act
and the Rules and the documents incorporated by reference in
the Registration Statement and the Prospectuses and any
further amendment or supplement to any such incorporated
document made by the
20
Company (except for (i) the financial statements and schedules
contained therein or omitted therefrom (including the notes
thereto and the auditor's report thereon), (ii) the summary
reserve reports of each of the Independent Petroleum Engineers
included therein, (iii) the other accounting, financial or
reserve engineering data contained therein or omitted
therefrom or (iv) the exhibits thereto, as to which such
counsel has not been asked to comment) when they became
effective or were filed with the Commission, as the case may
be, appeared on their face to comply as to form in all
material respects with the requirements of the Securities Act
or the Exchange Act, as applicable, and the rules and
regulations of the Commission thereunder (excluding those
portions of filings which have been amended in subsequent
filings made prior to the date hereof).
(xi) The Registration Statement is effective under
the Securities Act, and to 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 are threatened or pending. Any
required filing of the Prospectus and any supplement thereto
pursuant to Rule 424(b) under the Securities Act has been made
in the manner and within the time period required by such Rule
424(b).
(xii) The Company has filed all applications and
other documents necessary for the Shares to be quoted on the
Nasdaq National Market, subject only to official notice of
issuance.
(xiii) The capital stock of the Company conforms in
all material respects to the description thereof contained in
the Prospectus under the caption "Description of Capital
Stock."
(xiv) The Company is not 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.
To the extent deemed advisable by such counsel, such counsel
may (a) state that their opinion is limited to matters governed by the
Federal laws of the United States, the laws of the State of Texas, the
State of Delaware and the contract laws of the State of New York, (b)
rely as to matters of fact on certificates of responsible officers of
the Company and public officials and other sources believed by them to
be responsible, (c) assume that the signatures on all documents
examined by them are genuine, all documents submitted to them are
authentic, and all documents submitted as certified or photographic
copies or translations conform with the originals, (d) state that their
letter is furnished as counsel for the Company to the Underwriters and
is solely for the benefit of the several Underwriters and (e) state
that in the foregoing opinions, phrases such as "to the knowledge of
such counsel," "known to such counsel" and those with equivalent
wording refer to the conscious awareness of information by the lawyers
of such firm who have prepared such opinion, signed such opinion or
been actively involved in assisting and advising the Company in
connection with the preparation of the Registration
21
Statement, the execution and delivery of this Agreement and any
transactions contemplated herein.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of
the Company, representatives of the Representatives, counsel for the
representatives 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 did not independently verify such
information and is not passing upon and does not assume any
responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus
(except as specified in clauses (viii) and (xiii) of the foregoing
opinion), such counsel advises you that on the basis of the foregoing,
(relying as to materiality to the extent such counsel deems appropriate
upon factual statements of officers and other representatives of the
Company and representatives of the Representatives), in the course of
acting as counsel to the Company in this transaction, no facts have
come to the attention of such counsel which lead such counsel to
believe that the Registration Statement (except for (i) the financial
statements and schedules contained therein or omitted therefrom
(including the notes thereto and the auditor's report thereon), (ii)
the summary reserve reports of each of the Independent Petroleum
Engineers included therein, (iii) the other accounting, financial,
statistical or reserve engineering data contained therein or omitted
therefrom or (iv) the exhibits thereto, as to which such counsel has
not been asked to comment) at the time it became effective contained
any untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements
therein not misleading, or that the Prospectus as amended or
supplemented (except for (i) the financial statements and schedules
contained therein or omitted therefrom (including the notes thereto and
the auditor's report thereon), (ii) the summary reserve reports of each
of the Independent Petroleum Engineers included therein, (iii) the
other accounting, financial, statistical or reserve engineering data
contained therein or omitted therefrom or (iv) the exhibits thereto, as
to which such counsel has not been asked to comment) on the date
thereof contained any untrue statement of a material fact or omitted to
state a material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not misleading.
(i) The Representatives shall have received on the Firm Shares
Closing Date from one or more counsel for each of the Selling
Stockholders reasonably acceptable to the Representatives, an opinion,
addressed to the Representatives and dated such Closing Date, and
stating substantially to the effect that:
(i) With respect to any Selling Stockholder that is
an entity, this Agreement and the transactions contemplated
herein have been duly authorized by the Selling Stockholder,
and upon execution and delivery by one of the Attorneys (as
defined in the Power of Attorney) on behalf of such Selling
Stockholder in accordance with the Power of Attorney, will
have been duly executed and delivered by such Selling
Stockholder.
22
(ii) With respect to any Selling Stockholder that is
an entity, each of the Custody Agreement, the Power of
Attorney and the Lock-Up Agreement, and the transactions
contemplated therein, have been duly authorized by all
necessary corporate or partnership action on the part of such
Selling Stockholder and has been duly executed and delivered
by or on behalf of the Selling Stockholder.
(iii) Each of the Custody Agreement, the Power of
Attorney and the Lock-Up Agreement constitutes the legally
valid and binding obligation of such Selling Stockholder
enforceable against such Selling Stockholder in accordance
with its respective terms, except as such enforceability may
be limited by applicable bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other
similar laws relating to or affecting the enforcement of
creditors' rights generally and by general principles of
equity and public policy, including, without limitation,
concepts of materiality, reasonableness, good faith and fair
dealing and the possible unavailability of specific
performance or injunctive relief (regardless of whether
enforcement is sought in a proceeding at law or in equity).
(iv) The execution, delivery and performance of this
Agreement, the Power of Attorney, the Custody Agreement and
the Lock-Up Agreement and the sale and delivery by such
Selling Stockholder of the Shares to be sold by such Selling
Stockholder as contemplated by this Agreement and the
consummation of the transactions contemplated in this
Agreement and in the Registration Statement and the Prospectus
and compliance by such the Selling Stockholder with its
obligations hereunder do not and will not (i) violate or
contravene (A) with respect to any Selling Stockholder that is
an entity, any provision of the limited partnership agreement,
limited liability company agreement, trust agreement or
declaration, charter or by-laws or other organizational
instrument of the Selling Stockholder, if applicable, or (B)
any applicable law, statute, regulation, or any agreement or
other instrument binding upon the Selling Stockholder or any
judgment, order or decree of any governmental body, agency or
court having jurisdiction over the Selling Stockholder known
to such counsel of the United States or the laws of the state
of residence or principal place of business of such Selling
Stockholder or the state laws governing the formation or
organization of any Selling Stockholder that is an entity
(provided, however, that such counsel need express no opinion
with respect to compliance with any Federal or State
securities or anti-fraud law, rule or regulation except as
otherwise expressly stated in the opinion of such counsel), or
(ii) require any consent, approval, authorization or order of
or registration or filing with any court or governmental
agency or body having jurisdiction over it that such counsel
has, in the exercise of customary professional diligence,
recognized as applicable to such Selling Stockholder or to
transactions of the type contemplated by this Agreement is
required in connection with the performance of this Agreement,
except such as may be required by the federal securities laws
or the Blue Sky laws of the various states or under the rules
of the NASD in connection with the offer and sale of the
Shares which have been or will be effected in accordance with
this Agreement,
23
and, with respect to each of (i) and (ii) above, except where
such violations or contravention or failure to obtain such
consent, approval, authorization or order, individually or in
the aggregate, would not have a material adverse effect on the
consummation by the Selling Stockholder of the transactions
contemplated by this Agreement.
(v) If the certificates for the Shares to be sold by
the Selling Stockholder were delivered to the Underwriters in
the State of New York and assuming the Underwriters purchase
the Shares to be sold by such Selling Stockholder in good
faith and without "notice of adverse claim" (as such phrase is
used in Section 8-105 of the NY UCC, upon (i) delivery (as
defined in Section 8-301(a) of the NY UCC) to the Underwriters
of the certificates representing such Shares endorsed in blank
by an effective endorsement (within the meaning of Section
8-107 of the NY UCC), and (ii) payment therefore in accordance
with the terms of this Agreement and the Custody Agreement,
the Underwriters would become "protected purchasers" (as
defined in Section 8-303(a) of the NY UCC) of such Shares, and
will acquire such Shares free and clear of "adverse claims"
(as defined in Section 8-102 of the NY UCC) except for any
such adverse claims created by or at the request of the
Underwriters.
To the extent deemed advisable by such counsel, such counsel
may (a) state that their opinion is limited to matters governed by the
Federal laws of the United States, the laws of the States of Texas or
New York, as applicable, (b) rely as to matters of fact on certificates
of responsible officers of the Selling Stockholder and public officials
and other sources believed by them to be responsible, (c) assume that
the signatures on all documents examined by them are genuine, all
documents submitted to them are authentic, and all documents submitted
as certified or photostatic copies or translations conform with the
originals, (d) state that their letter is furnished as counsel for the
Selling Stockholder to the Underwriters and is solely for the benefit
of the several Underwriters and (e) state that in the foregoing
opinions, phrases such as "to the knowledge of such counsel," "known to
such counsel" and those with equivalent wording refer to the conscious
awareness of information by the lawyers of such firm who have prepared
such opinion, signed such opinion or been actively involved in
assisting and advising such Selling Stockholder in connection with the
preparation of the Registration Statement, the execution and delivery
of this Agreement and any transactions contemplated herein.
(j) All proceedings taken in connection with the sale of the
Firm Shares and the Option Shares as herein contemplated shall be
reasonably satisfactory in form and substance to the Representatives,
and their counsel and the Underwriters shall have received from Xxxxxx
& Xxxxxx L.L.P. a favorable opinion, addressed to the Representatives
and dated such Closing Date, with respect to the Shares, the
Registration Statement and the Prospectus, and such other related
matters, as the Representatives may reasonably request, and the Company
shall have furnished to Xxxxxx & Xxxxxx L.L.P. such documents as they
may reasonably request for the purpose of enabling them to pass upon
such matters.
24
(k) The Representatives shall have received copies of the
Lock-up Agreements executed by each entity or person listed on Schedule
III hereto.
(l) The Company shall have filed all applications and other
documents necessary for the Shares to be quoted on the Nasdaq National
Market, subject only to official notice of issuance.
(m) The Company and each of the Selling Stockholders shall
have furnished or caused to be furnished to the Representatives such
further certificates or documents as the Representatives shall have
reasonably requested.
5. Covenants of the Company.
(a) The Company covenants and agrees as follows:
(i) The Company will use its best efforts to cause
the Registration Statement, if not effective at the time of
execution of this Agreement, and any amendments thereto, to
become effective as promptly as possible. The Company shall
prepare the Prospectus in a form approved by the
Representatives and file such Prospectus pursuant to Rule
424(b) under the Securities Act not later than the
Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by the Rules.
(ii) The Company shall promptly advise the
Representatives in writing (A) when any post-effective
amendment to the Registration Statement shall have become
effective or any supplement to the Prospectus shall have been
filed, (B) of any request by the Commission for any amendment
of the Registration Statement or the Prospectus or for any
additional information, (C) of the issuance by the Commission
of any stop order suspending the effectiveness of the
Registration Statement or of any order preventing or
suspending the use of any preliminary prospectus or the
institution or threatening of any proceeding for that purpose
and (D) of the receipt by the Company of any notification with
respect to the suspension of the qualification of the Shares
for sale in any jurisdiction or the initiation or threatening
of any proceeding for such purpose. The Company shall not file
any amendment of the Registration Statement or supplement to
the Prospectus unless the Company has furnished the
Representatives a copy for its review prior to filing and
shall not file any such proposed amendment or supplement to
which the Representatives reasonably object. The Company shall
use its best efforts to prevent the issuance of any such stop
order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(iii) If, at any time prior to the expiration of nine
months after the effective date of the Registration Statement,
when a prospectus relating to the Shares is required to be
delivered under the Securities Act and the Rules, any event
occurs as a result of which the Prospectus as then amended or
supplemented would include any untrue statement of a material
fact or omit to state any material
25
fact necessary to make the statements therein in the light of
the circumstances under which they were made not misleading,
or if it shall be necessary to amend or supplement the
Prospectus to comply with the Securities Act or the Rules, the
Company promptly shall prepare and file with the Commission,
subject to the second sentence of paragraph (ii) of this
Section 5(a), an amendment or supplement which shall correct
such statement or omission or an amendment which shall effect
such compliance; and in case any Underwriter is required to
deliver the Prospectus nine months or more after the effective
date of the Registration Statement, the Company, upon your
request and at the expense of such Underwriter will prepare
promptly such amendment or supplement to the Prospectus as may
be necessary to permit compliance with the requirements of
Section 10(a)(3) of the Act.
(iv) The Company shall make generally available to
its security holders and to the Representatives as soon as
reasonably practicable, but not later than 45 days after the
end of the 12-month period beginning at the end of the fiscal
quarter of the Company during which the Effective Date occurs
(or 90 days if such 12-month period coincides with the
Company's fiscal year), an earning statement (which need not
be audited) of the Company, covering such 12-month period,
which shall satisfy the provisions of Section 11(a) of the
Securities Act or Rule 158 of the Rules.
(v) The Company shall furnish to the Representatives
and counsel for the Underwriters, without charge, signed
copies of the Registration Statement (including all exhibits
thereto and amendments thereof) and to each other Underwriter
a copy of the Registration Statement (without exhibits
thereto) and all amendments thereof and, so long as delivery
of a prospectus by an Underwriter or dealer may be required by
the Securities Act or the Rules, as many copies of any
preliminary prospectus and the Prospectus and any amendments
thereof and supplements thereto as the Representatives may
reasonably request. If applicable, the copies of the
Registration Statement and Prospectus and each amendment and
supplement thereto furnished to the Underwriters will be
identical to the electronically transmitted copies thereof
filed with the Commission pursuant to XXXXX, except to the
extent permitted by Regulation S-T.
(vi) The Company shall cooperate with the
Representatives and their counsel in endeavoring to qualify
the Shares for offer and sale in connection with the offering
under the laws of such jurisdictions as the Representatives
may designate and shall maintain such qualifications in effect
so long as required for the distribution of the Shares;
provided, however, that the Company shall not be required in
connection therewith, as a condition thereof, to qualify as a
foreign corporation or to execute a general consent to service
of process in any jurisdiction or subject itself to taxation
as doing business in any jurisdiction or qualify as a dealer
in securities in any jurisdiction.
(vii) The Company, during the period when the
Prospectus is required to be delivered under the Securities
Act and the Rules or the Exchange
26
Act, will file all reports and other documents required to be
filed with the Commission pursuant to Section 13, 14 or 15 of
the Exchange Act within the time periods required by the
Exchange Act and the regulations promulgated thereunder.
(viii) Without the prior written consent of CIBC
World Markets Corp., for a period of 90 days after the date of
this Agreement, the Company shall not issue, sell or register
with the Commission (other than on Form S-8 or on any
successor form), or otherwise dispose of, directly or
indirectly, any equity securities of the Company (or any
securities convertible into, exercisable for or exchangeable
for equity securities of the Company), except for (i) the
issuance of the Shares pursuant to the Registration Statement,
(ii) the issuance of securities pursuant to the Company's
existing stock option plan or bonus plan as described in the
Registration Statement and the Prospectus, (iii) securities
issued pursuant to the Company's outstanding warrants,
preferred stock and options as described in the Registration
Statement and the Prospectus, (iv) securities issued as
dividends on the Company's outstanding preferred stock and (v)
securities issued in connection with acquisitions and private
placements by the Company; provided, however, that the
recipients of such securities agree in writing to be bound by
the restrictions contained in this paragraph with respect to
such securities.
(ix) On or before completion of this offering, the
Company shall make all filings required under applicable
securities laws and by the Nasdaq National Market (including
any required registration under the Exchange Act).
(x) Prior to the Closing Date, the Company will issue
no press release or other communications directly or
indirectly and hold no press conference with respect to the
Company, the condition, financial or otherwise, or the
earnings, business affairs or business prospects of any of
them, or the offering of the Shares without the prior written
consent of the Representatives unless in the judgment of the
Company and its counsel, and after notification to the
Representatives, such press release or communication is
required by law.
(xi) The Company will apply the net proceeds from the
offering of the Shares in the manner set forth under "Use of
Proceeds" in the Prospectus.
(b) The Company agrees to pay, or reimburse if paid by the
Representatives, whether or not the transactions contemplated hereby
are consummated or this Agreement is terminated, all costs and expenses
incident to the public offering of the Shares and the performance of
the obligations of the Company under this Agreement including those
relating to: (i) the preparation, printing, filing and distribution of
the Registration Statement including all exhibits thereto, each
preliminary prospectus, the Prospectus, all amendments and supplements
to the Registration Statement and the Prospectus and any document
incorporated by reference therein, and the printing, filing and
distribution of this Agreement; (ii) the preparation and delivery of
certificates for the Shares to the Underwriters; (iii) the registration
or qualification of the Shares for offer and sale under the securities
or Blue Sky laws of the various jurisdictions referred to in Section
5(a)(vi),
27
including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such registration and qualification and
the preparation, printing, distribution and shipment of preliminary and
supplementary Blue Sky memoranda; (iv) the furnishing (including costs
of shipping and mailing) to the Representatives and to the Underwriters
of copies of each preliminary prospectus, the Prospectus and all
amendments or supplements to the Prospectus, and of the several
documents required by this Section to be so furnished, as may be
reasonably requested for use in connection with the offering and sale
of the Shares by the Underwriters or by dealers to whom Shares may be
sold; (v) the filing fees of the NASD in connection with its review of
the terms of the public offering; (vi) inclusion of the Shares for
quotation on the Nasdaq National Market; and (vii) all transfer taxes,
if any, with respect to the sale and delivery of the Shares by the
Company to the Underwriters. Subject to the provisions of Section 8,
the Underwriters agree to pay, whether or not the transactions
contemplated hereby are consummated or this Agreement is terminated,
all costs and expenses incident to the performance of the obligations
of the Underwriters under this Agreement not payable by the Company
pursuant to the preceding sentence, including, without limitation, the
fees and disbursements of counsel for the Underwriters.
(c) The Selling Stockholders, severally and not jointly, or,
pursuant to any agreements with the Selling Stockholders, the Company,
will pay all expenses incident to the performance of the Selling
Stockholders' respective obligations under, and the consummation of the
transactions contemplated by, this Agreement, including (i) any stamp
duties, capital duties and stock transfer taxes, if any, payable upon
the sale of the Shares to the Underwriters, and (ii) the fees and
disbursements of the Selling Stockholders' respective counsel and
accountants.
6. Indemnification.
(a) The Company and each of the Selling Stockholders,
severally and not jointly, agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act or Section 20 of
the Exchange Act against any and all losses, claims, damages and
liabilities, joint or several (including any reasonable investigation,
legal and other expenses incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claim
asserted), to which they, or any of them, may become subject under the
Securities Act, the Exchange Act or other Federal or state law or
regulation, at common law or otherwise, insofar as such losses, claims,
damages or liabilities arise out of or are based upon any untrue
statement or alleged untrue statement of a material fact contained in
any preliminary prospectus, the Registration Statement or the
Prospectus or any amendment thereof or supplement thereto, or arise out
of or are based upon any omission or alleged omission to state therein
a material fact required to be stated therein or necessary to make the
statements therein not misleading; provided, however, that such
indemnity shall not inure to the benefit of any Underwriter (or any
person controlling such Underwriter) on account of any losses, claims,
damages or liabilities arising from the sale of the Shares to any
person by such Underwriter if such untrue statement or omission or
alleged untrue statement or omission was made in such preliminary
prospectus, the Registration Statement or the Prospectus, or such
amendment
28
or supplement thereto in reliance upon and in conformity with
information furnished in writing to the Company by the Representatives
on behalf of any Underwriter specifically for use therein; provided
further, that no Selling Stockholder who is not an officer of the
Company as of the date of this Agreement shall be responsible, pursuant
to this indemnity for losses, claims, expenses, damages or liability
arising out of or based upon information other than information
furnished in writing by such Selling Stockholder specifically for
inclusion in a preliminary prospectus, the Registration Statement or
the Prospectus, or any amendments or supplements thereto; provided
further, that the foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit of any
Underwriter from whom the person asserting any such losses, claims,
damages or liabilities purchased Shares, or any person controlling such
Underwriter, if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any amendments or
supplements thereto) was not sent or given by or on behalf of such
Underwriter to such person, if required by law so to have been
delivered, at or prior to the written confirmation of the sale of the
Shares to such person, and if the Prospectus (as so amended or
supplemented) would have cured the defect giving rise to such loss,
claim, damage or liability. Notwithstanding the foregoing, the
liability of each Selling Stockholder pursuant to the provisions of
this Section 6(a) shall be limited to an amount equal to the aggregate
net proceeds received by such Selling Stockholder from the sale of the
Shares sold by such Selling Stockholder hereunder. This indemnity
agreement will be in addition to any liability which the Company and
Selling Stockholders may otherwise have, including any liability of a
Selling Stockholder in such Selling Stockholder's capacity as a
director or executive officer of the Company.
(b) Each Underwriter agrees to indemnify and hold harmless the
Company, the Selling Stockholders, the Selling Stockholders' respective
partners or members and each person, if any, who controls the Company
or the Selling Stockholders within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each director of the
Company, and each officer of the Company who signs the Registration
Statement, against any losses, claims, damages or liabilities to which
such party may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue statement or
alleged untrue statement of a material fact contained in any
preliminary prospectus, the Registration Statement or the Prospectus,
or any amendment or supplement thereto, or arise out of or are based
upon the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or
omission or alleged omission was made in any preliminary prospectus,
the Registration Statement or the Prospectus or any such amendment or
supplement in reliance upon and in conformity with written information
furnished to the Company by such Underwriter through the Representative
expressly for use therein.
(c) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of notice
of commencement of any action, suit or proceeding against such party in
respect of which a claim is to be made against an
29
indemnifying party or parties under this Section, notify in writing
each such indemnifying party of the commencement of such action, suit
or proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 6(a) or 6(b) shall be available
to any party who shall fail to give notice as provided in this Section
6(c) if the party to whom notice was not given was unaware of the
proceeding to which such notice would have related and was prejudiced
by the failure to give such notice but the omission so to notify such
indemnifying party of any such action, suit or proceeding shall not
relieve it from any liability that it may have to any indemnified party
for contribution or otherwise than under this Section. In case any such
action, suit or proceeding shall be brought against any indemnified
party and it shall notify the indemnifying party of the commencement
thereof, the indemnifying party shall be entitled to participate in,
and, to the extent that it shall wish, jointly with any other
indemnifying party similarly notified, to assume the defense thereof,
with counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party of
its election so to assume the defense thereof and the approval by the
indemnified party of such counsel, the indemnifying party shall not be
liable to such indemnified party for any legal or other expenses,
except as provided below and except for the reasonable costs of
investigation subsequently incurred by such indemnified party in
connection with the defense thereof. The indemnified party shall have
the right to employ its counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such indemnified
party unless (i) the employment of counsel by such indemnified party
has been authorized in writing by the indemnifying parties, (ii) the
indemnified party shall have been advised by counsel that there may be
one or more legal defenses available to it which are in conflict with
those available to the indemnifying party (in which case the
indemnifying parties shall not have the right to direct the defense of
such action on behalf of the indemnified party) or (iii) the
indemnifying parties shall not have employed counsel to assume the
defense of such action within a reasonable time after notice of the
commencement thereof, in each of which cases the fees and expenses of
counsel shall be at the expense of the indemnifying parties; provided
that in no event shall the indemnifying parties be liable for fees and
expenses of more than one counsel separate from their own counsel for
all indemnified parties in connection with any one action or separate
but similar or related actions in the same jurisdiction arising out of
the same general allegations or circumstances. An indemnifying party
shall not be liable for any settlement of any action, suit, and
proceeding or claim effected without its written consent, which consent
shall not be unreasonably withheld or delayed.
7. Contribution. In order to provide for just and equitable
contribution in circumstances in which the indemnification provided for in
Section 6(a) or 6(b) is due in accordance with its terms but for any reason is
unavailable to or insufficient to hold harmless an indemnified party in respect
to any losses, liabilities, claims, damages or expenses referred to therein,
then each indemnifying party shall contribute to the aggregate losses,
liabilities, claims, damages and expenses (including any investigation, legal
and other expenses reasonably incurred in connection with, and any amount paid
in settlement of, any action, suit or proceeding or any claims asserted, but
after deducting any contribution received by any person entitled hereunder to
contribution from any person who may be liable for contribution) incurred by
such indemnified party, as incurred, in such proportion as is appropriate to
reflect the relative benefits received by the Company and the Selling
Stockholders on the one hand and the Underwriters on the other
30
hand from the offering of the Shares pursuant to this Agreement or, if such
allocation is not permitted by applicable law, in such proportion as is
appropriate to reflect not only the relative benefits referred to above but also
the relative fault of the Company and the Selling Stockholders on the one hand
and the Underwriters on the other hand in connection with the statements or
omissions which resulted in such losses, liabilities, claims, damages or
expenses, as well as any other relevant equitable considerations. The Company,
the Selling Stockholders and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 7 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of the
equitable considerations referred to above. The aggregate amount of losses,
liabilities, claims, damages and expenses incurred by an indemnified party and
referred to above shall be deemed to include any legal or other expenses
reasonably incurred by such indemnified party in investigating, preparing or
defending against any litigation, or any investigation or proceeding by any
governmental agency or body, commenced or threatened, or any claim whatsoever
based upon any such untrue or alleged untrue statement or omission or alleged
omission. Notwithstanding the provisions of this Section 7, (i) no Underwriter
(except as may be provided in the Agreement Among Underwriters) shall be
required to contribute any amount in excess of the amount by which the total
price at which the shares underwritten by it and distributed to the public were
offered to the public exceeds the amount of damages which such underwriter has
otherwise been required to pay by reason of any such untrue or alleged untrue
statement or omission or alleged omission; and (ii) no Selling Stockholder shall
be required to contribute any amount in excess of the aggregate net proceeds of
the sale of Shares received by such Selling Stockholder. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the
Securities Act) shall be entitled to contribution from any person who was not
guilty of such fraudulent misrepresentation. For purposes of this Section 7,
each person, if any, who controls an Underwriter within the meaning of Section
15 of the Securities Act or Section 20 of the Exchange Act shall have the same
rights to contribution as such Underwriter, and each director of the Company,
each officer of the Company who signed the Registration Statement, and each
person, if any, who controls the Company or any of the Selling Stockholders
within the meaning of the Section 15 of the Securities Act or Section 20 of the
Exchange Act, shall have the same rights to contribution as the Company or any
of the Selling Stockholders, as the case may be. 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 7,
notify in writing such party or parties from whom contribution may be sought,
but the omission so to notify such party or parties from whom contribution may
be sought shall not relieve the party or parties from whom contribution may be
sought from any other obligation it or they may have hereunder or otherwise than
under this Section 7. No party shall be liable for contribution with respect to
any action, suit, proceeding or claim settled without its written consent. The
Underwriter's obligations to contribute pursuant to this Section 7 are several
in proportion to their respective underwriting commitments and not joint. The
provisions of this Section 7 shall not affect any agreement among the Company
and the Selling Stockholders with respect to contribution.
8. Termination.
(a) This Agreement may be terminated with respect to the
Shares to be purchased on a Closing Date by the Representatives by
notifying the Company and the
31
Selling Stockholders at any time at or before a Closing Date in the
reasonable discretion of the Representatives if: (i) there has occurred
any material adverse change in the securities markets or any event, act
or occurrence that has materially disrupted, or in the reasonable
opinion of the Representatives, will in the future materially disrupt,
the securities markets or there shall be such a material adverse change
in general financial, political or economic conditions or the effect of
international conditions on the financial markets in the United States,
including, without limitation, as a result of terrorist activities, is
such as to make it, in the judgment of the Representatives, inadvisable
or impracticable to market the Shares or enforce contracts for the sale
of the Shares; (ii) there has occurred since the time of the execution
of this Agreement any outbreak or material escalation of hostilities,
acts of terrorism or other calamity or crisis the effect of which on
the financial markets of the United States is such as to make it, in
the judgment of the Representatives, inadvisable or impracticable to
market the Shares or enforce contracts for the sale of the Shares;
(iii) trading in the Shares or any securities of the Company has been
suspended or materially limited by the Commission or trading generally
on the New York Stock Exchange, Inc., the American Stock Exchange, Inc.
or the Nasdaq National Market has been suspended or materially limited,
or minimum or maximum ranges for prices for securities shall have been
fixed, or maximum ranges for prices for securities have been required,
by any of said exchanges or by such system or by order of the
Commission, the National Association of Securities Dealers, Inc., or
any other governmental or regulatory authority; or (iv) a banking
moratorium has been declared by any New York, Texas or Federal
authority; or (v) in the judgment of the Representatives, there has
been, since the time of execution of this Agreement or since the
respective dates as of which information is given in the Prospectus,
any material adverse change in the assets, properties, condition,
financial or otherwise, or in the results of operations, business
affairs or business prospects of the Company and its subsidiaries
considered as a whole, whether or not arising in the ordinary course of
business.
(b) If this Agreement is terminated pursuant to any of its
provisions, neither the Company nor the Selling Stockholders shall be
under any liability to any Underwriter, and no Underwriter shall be
under any liability to the Company or a Selling Stockholder, except
that (y) if this Agreement is terminated by the Representatives or the
Underwriters because of any failure, refusal or inability on the part
of the Company or the Selling Stockholders to comply with the terms or
to fulfill any of the conditions of this Agreement, the Company will
reimburse the Underwriters for all reasonable out-of-pocket expenses
(including the reasonable fees and disbursements of their counsel)
incurred by them in connection with the proposed purchase and sale of
the Shares or in contemplation of performing their obligations
hereunder and (z) no Underwriter who shall have failed or refused to
purchase the Shares agreed to be purchased by it under this Agreement,
without some reason sufficient hereunder to justify cancellation or
termination of its obligations under this Agreement, shall be relieved
of liability to the Company, the Selling Stockholders or to the other
Underwriters for damages occasioned by its failure or refusal.
9. Substitution of Underwriters. If any Underwriter shall
default in its obligation to purchase on any Closing Date the Shares agreed to
be purchased hereunder on such Closing Date, the Representatives shall have the
right, within 36 hours thereafter, to make
32
arrangements for one or more of the non-defaulting Underwriters, or any other
underwriters, to purchase such Shares on the terms contained herein. If,
however, the Representatives shall not have completed such arrangements within
such 36-hour period, then the Company shall be entitled to a further period of
thirty-six hours within which to procure another party or other parties
satisfactory to the Underwriters to purchase such Shares on such terms. If,
after giving effect to any arrangements for the purchase of the Shares of a
defaulting Underwriter or Underwriters by the Representatives and the Company as
provided above, the aggregate number of Shares which remains unpurchased on such
Closing Date does not exceed one-eleventh of the aggregate number of all the
Shares that all the Underwriters are obligated to purchase on such date, then
the Company shall have the right to require each non-defaulting Underwriter to
purchase the number of Shares which such Underwriter agreed to purchase
hereunder at such date and, in addition, to require each non-defaulting
Underwriter to purchase its pro rata share (based on the number of Shares which
such Underwriter agreed to purchase hereunder) of the Shares of such defaulting
Underwriter or Underwriters for which such arrangements have not been made; but
nothing herein shall relieve a defaulting Underwriter from liability for its
default. In any such case, either the Representatives or the Company shall have
the right to postpone the applicable Closing Date for a period of not more than
seven days in order to effect any necessary changes and arrangements (including
any necessary amendments or supplements to the Registration Statement or
Prospectus or any other documents), and the Company agrees to file promptly any
amendments to the Registration Statement or the Prospectus which in the opinion
of the Company and the Underwriters and their counsel may thereby be made
necessary.
If, after giving effect to any arrangements for the purchase
of the Shares of a defaulting Underwriter or Underwriters by the Representatives
and the Company as provided above, the aggregate number of such Shares which
remains unpurchased exceeds one-eleventh of the aggregate number of all the
Shares to be purchased at such date, then this Agreement, or, with respect to a
Closing Date which occurs after the First Closing Date, the obligations of the
Underwriters to purchase and of the Company or the Selling Stockholders, as the
case may be, to sell the Option Shares to be purchased and sold on such date,
shall terminate, without liability on the part of any non-defaulting Underwriter
to the Company, and without liability on the part of the Company or any Selling
Stockholder except as provided in Sections 5(b), 6, 7 and 8. The provisions of
this Section 9 shall not in any way affect the liability of any defaulting
Underwriter to the Company or the nondefaulting Underwriters arising out of such
default. The term "Underwriter" as used in this Agreement shall include any
person substituted under this Section 9 with like effect as if such person had
originally been a party to this Agreement with respect to such Shares.
10. Miscellaneous. The respective agreements, representations,
warranties, indemnities and other statements of the Company, the several Selling
Stockholders and the several Underwriters, as set forth in this Agreement or
made by or on behalf of them pursuant to this Agreement, shall remain in full
force and effect, regardless of any investigation (or any statement as to the
results thereof) made by or on behalf of any Underwriter or the Company or the
Selling Stockholders or any of their respective officers, directors or
controlling persons referred to in Sections 6 and 7 hereof, and shall survive
delivery of and payment for the Shares. In addition, the provisions of Sections
5(b), 6, 7 and 8 shall survive the termination or cancellation of this
Agreement.
33
This Agreement has been and is made for the benefit of the
Underwriters, the Company and the Selling Stockholders and their respective
successors and assigns, and, to the extent expressed herein, for the benefit of
persons controlling any of the Underwriters, any of the Selling Stockholders or
the Company, and directors and officers of the Company, and their respective
successors and assigns, and no other person shall acquire or have any right
under or by virtue of this Agreement. The term "successors and assigns" shall
not include any purchaser of Shares from any Underwriter merely because of such
purchase.
All notices and communications hereunder shall be in writing
and mailed or delivered or by telephone or telegraph if subsequently confirmed
in writing, (a) if to the Representatives, c/o CIBC World Markets Corp., 000 0xx
Xxxxxx, 0xx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000 Attention: Xxx Xxxxxx, with a copy
to Xxxxxx & Xxxxxx L.L.P., 2300 First City Tower, 0000 Xxxxxx, Xxxxxxx, Xxxxx
00000, Attention: Xxxxx X. Xxxxxx and (b) if to the Company, to its agent for
service as such agent's address appears on the cover page of the Registration
Statement with a copy to Xxxxx Xxxxx L.L.P., 3000 One Shell Plaza, 000
Xxxxxxxxx, Xxxxxxx, Xxxxx 00000, Attention: Xxxx X. Xxxxxx and (c) if to the
Selling Stockholders to the address of such Selling Stockholder set forth on
Schedule IV hereto with a copy to the address specified with respect to such
Selling Stockholder on Schedule IV.
THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the
agreement among us.
Very truly yours,
CARRIZO OIL & GAS, INC.
By:
---------------------------------
Name:
Title:
SELLING STOCKHOLDERS
By:
---------------------------------
Name:
Title:
34
Confirmed:
CIBC WORLD MARKETS CORP.
-----------------------------------
Acting severally on behalf of itself
and as representative of the several
Underwriters named in Schedule I annexed
hereto.
By: CIBC WORLD MARKETS CORP.
By
---------------------------------
Name:
Title:
35
SCHEDULE I
Number of Firm Shares to be Number of Firm Shares to be
Purchased from Purchased from the Selling
Name the Company Stockholders
------------------------------------ ------------------------------- -------------------------------
CIBC World Markets Corp.
First Albany Capital Inc.
Hibernia Southcoast Capital, Inc.
Xxxxxxx Xxxx & Company L.L.C.
------------------------------- -------------------------------
Total 3,420,000 2,280,000
Sch I - 1
SCHEDULE II
Number of Firm Shares Number of Option Shares
Name of Selling Stockholder to be Sold to be Sold*
------------------------------------------ ------------------------- ----------------------------
------------------------- ----------------------------
Total 2,280,000 598,500
*If the Underwriters exercise their over-allotment option in full.
Sch II - 1
SCHEDULE III
Lock-up Signatories
Sch III - 1
SCHEDULE IV
Selling Stockholders Notice Addresses
Sch IV - 2
Exhibit A
FORM OF LOCK-UP AGREEMENT
_____, 2004
CIBC World Markets Corp.
As Representative of the Several Underwriters
c/o CIBC World Markets Corp.
CIBC World Markets Tower
World Financial Center
000 Xxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Re: Public Offering of Common Stock of Carrizo Oil & Gas, Inc.
Gentlemen:
The undersigned, a holder of common stock ("Common Stock") or rights to
acquire Common Stock, of Carrizo Oil & Gas, Inc. (the "Company") understands
that the Company has filed a Registration Statement on Form S-2, File No.
333-111475 (the "Registration Statement"), and amendments thereto, with the
Securities and Exchange Commission (the "Commission") for the registration of
approximately 6,555,000 shares (the "Shares") of Common Stock (including 855,000
shares subject to an over-allotment option on the part of the Underwriters) (the
"Offering"). The undersigned further understands that you are contemplating
entering into an
Underwriting Agreement with the Company and the Selling
Stockholders named therein in connection with the Offering (the "
Underwriting
Agreement"). Capitalized terms used herein and not otherwise defined shall have
the meanings assigned to them in the
Underwriting Agreement.
In order to induce the Company, you and the other Underwriters to enter
into the
Underwriting Agreement and to proceed with the Offering, the
undersigned agrees, for the benefit of the Company, you and the other
Underwriters, that should the Offering be effected the undersigned will not,
without your prior written consent, directly or indirectly, make any offer,
sale, assignment, transfer, encumbrance, contract to sell, grant of an option to
purchase or other disposition of any Common Stock beneficially owned (within the
meaning of Rule 13d-3 under the Securities Exchange Act of 1934, as amended, but
excluding any shares so beneficially owned solely as a result of the application
of clause (1) of paragraph (a) of such Rule 13d-3) by the undersigned on the
date hereof or hereafter acquired for a period of 90 days subsequent to the date
of the
Underwriting Agreement, other than Common Stock (i) to be sold in the
Offering, (ii) acquired in open market transactions by the undersigned after the
date hereof, (iii) transferred as a gift or gifts or as intra-family transfers
or transfers to trusts or family limited partnerships for
A - 1
estate planning purposes (provided that any donee thereof agrees in writing to
be bound by the terms hereof); provided that the foregoing restriction shall not
apply to (i) bona fide pledges of securities either (A) existing on the date of
this letter or (B) subsequent pledges if the pledgee of such securities agrees
in writing to be bound by the restrictions contained in this letter with respect
to such securities or (iv) transfers pursuant to a sale of 100% of the
outstanding Common Stock of the Company, whether pursuant to a merger or
otherwise, to a third party or group of third parties, provided that the third
party or group of third parties agree to be bound in writing by the restrictions
set forth herein until such time as such third party or group of third parties
have acquired 100% of the outstanding Common Stock of the Company.
In addition, notwithstanding the foregoing, the undersigned may
transfer, distribute or otherwise dispose of shares of Common Stock, in whole or
in part, to any of the undersigned's affiliates (as this term is defined in Rule
144(a)(i) under the Securities Act of 1933, as amended) including, but not
limited to the following: (a) if the undersigned is a corporation, the
corporation may transfer any shares of Common Stock to any wholly-owned
subsidiary of such corporation, (b) if the undersigned is a partnership or
limited liability company (an "LLC"), the partnership or LLC, as the case may
be, may distribute any shares of Common Stock to a partner or partners of such
partnership or to a member or members of such LLC, as applicable, or (c) the
undersigned may grant a participation interest or otherwise transfer, directly
or indirectly, the economic consequences of ownership of shares of Common Stock
to any of the undersigned's affiliates in the ordinary course; provided however,
that in any such case, it shall be a condition to any such transfer or
distribution that the transferee or distributee, as applicable, execute an
agreement stating that the transferee or distributee is receiving and holding
such shares of Common Stock subject to the provisions of this letter and there
shall be no further transfer of such shares of Common Stock except in accordance
with this letter.
It is understood that, if the Company notifies you that it does not
intend to proceed with the Offering, if the
Underwriting Agreement does not
become effective, if the Company or any of the Underwriters are in violation or
breach of the
Underwriting Agreement, or if the
Underwriting Agreement (other
than the provisions thereof which survive termination) shall terminate or be
terminated prior to payment for and delivery of the Shares, the undersigned
shall be released from all obligations under this letter.
The undersigned, whether or not participating in the Offering, confirms
that he, she or it understands that the Underwriters and the Company will rely
upon the representations set forth in this agreement in proceeding with the
Offering. This agreement shall be binding on the undersigned and his, her or its
respective successors, heirs, personal representatives and assigns. The
undersigned agrees and consents to the entry of stop transfer instructions with
the Company's transfer agent against the transfer of Common Stock or securities
convertible into or exchangeable or exercisable for Common Stock held by the
undersigned except in compliance with this agreement.
A - 2
Very truly yours,
Dated: , 2004
--------------------
Signature
Printed Name and Title (if applicable)
A - 3
