EXHIBIT 1.1
2,100,000 Shares
MIDCOAST ENERGY RESOURCES, INC.
Common Stock
(par value $.01 per share)
UNDERWRITING AGREEMENT
July ___, 1997
Xxxxxxxxxxx & Co., Inc.
X. X. Xxxxxxx & Sons, Inc.
Xxxxxxx and Company Securities, Inc.
c/o Oppenheimer & Co., Inc.
Xxxxxxxxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
On behalf of the
Several Underwriters
named on Schedule I
attached hereto.
Ladies and Gentlemen:
Midcoast Energy Resources, Inc., a Nevada corporation (the
"Company"), and the selling stockholder named on Schedule II attached hereto
(the "Selling Stockholder") propose, subject to the terms and conditions stated
herein, to issue and 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 2,100,000 shares (the
"Firm Shares") of the Company's common stock, $0.01 par value (the "Common
Stock"). In addition, the Company proposes to grant to the Underwriters an
option to purchase up to an additional 315,000 shares (the "Option Shares") of
Common Stock from it for the purpose of covering over-allotments in connection
with the sale of the Firm Shares. The Firm Shares and the Option Shares are
together called the "Shares."
1. SALE AND PURCHASE OF THE SHARES. On the basis of the
representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement:
(a) FIRM SHARES. The Company and the Selling Stockholder agree to
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 on Schedule I to this
Agreement.
(b) OPTION SHARES. The Company grants to the several Underwriters an
option to purchase, severally and not jointly, at their election up to
315,000 Option Shares at the Initial Price. The number of Option Shares to
be purchased by each Underwriter shall be 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. Such option may be exercised only to cover
over-allotments in the sales of the Firm Shares by the Underwriters. Such
option 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 only once thereafter within 30 days
after the date of this Agreement, in each case upon written or telegraphic
notice, or verbal or telephonic notice confirmed by written or telegraphic
notice, by the Representatives to the Company 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.
2. DELIVERY AND PAYMENT. Delivery by the Company and the Selling
Stockholder of the Firm Shares to the Representatives for the respective
accounts of the Underwriters, and payment of the purchase price by certified or
official bank check or checks or wire transfer payable or by wire transfer of
Federal funds in immediately available funds to the Company and the Selling
Stockholder, shall take place at the offices of Xxxxxx & Xxxxxx, L.L.P., 000
Xxxxxxxxx, 00xx Xxxxx, Xxxxxxx, Xxxxx 00000, at 10:00 a.m., New York City time,
(a) on the third full business day following the first day the Shares are
traded, (b) if this Agreement is executed and delivered after 4:30 p.m. New York
City time, on the fourth business day following the date of this Agreement, or
(c) at such other time or date, but not later than the fourth full business day
following the Effective Date (as hereinafter defined), 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 the event the option with respect to the Option Shares is
exercised, delivery by the Company of the Option Shares to the Representatives
for the respective accounts of the Underwriters and payment of the purchase
price by certified or official bank check or checks or by wire transfer of
Federal funds payable in immediately available funds to the Company shall take
place at the offices of Xxxxxx & Xxxxxx, L.L.P. specified above at the time and
on the date (which may be the same date as, but in no event shall be earlier
than, the Firm Shares Closing Date) specified in the notice referred to in
Section 1(b) (such time and date of delivery and
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payment are called the "Option Shares Closing Date"). The Firm Shares Closing
Date and the Option Shares Closing Date are called, individually, a "Closing
Date" and, together, the "Closing Dates."
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 l(b) and shall be made available to the Representatives for checking and
packaging, at such place as is designated by the Representatives, on the full
business day before the Firm Shares Closing Date (or the Option Shares Closing
Date in the case of the Option Shares).
3. REGISTRATION STATEMENT AND PROSPECTUS; PUBLIC OFFERING. The
Company has prepared 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 on Form S-1 (No.
333-27885), including a preliminary prospectus relating to the Shares, and has
filed with the Commission the Registration Statement (as hereinafter defined)
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 have heretofore been
delivered by the Company to you. The Company may also file a related
registration statement with the Commission pursuant to Rule 462(b) under the
Securities Act for the purpose of registering additional Shares, which
registration shall be effective upon filing with the Commission. The term
"Registration Statement" means the Registration Statement as amended at the time
and on the date it becomes effective (the "Effective Date"), including all
exhibits and information, if any, deemed to be part of the Registration
Statement pursuant to Rule 424(b), Rule 430A, Rule 434 and Rule 462(b) of the
Rules. The term "preliminary prospectus" means any preliminary prospectus (as
described in Rule 430 of the Rules) included at any time as a part of the
Registration Statement. The term "Prospectus" means the prospectus in the form
first used to confirm sales of the Shares (whether such prospectus was included
in the Registration Statement at the time of effectiveness or was subsequently
filed with the Commission pursuant to Rule 424(b) of the Rules) or the
preliminary prospectus forming part of the Registration Statement at the time it
was declared effective together with the term sheet permitted under Rule 434(b)
and filed with the Commission pursuant to Rule 424(b), as applicable.
The Company understands 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).
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4. REPRESENTATIONS AND WARRANTIES. (a) REPRESENTATIONS AND
WARRANTIES BY THE COMPANY. The Company represents and warrants to each
Underwriter as of the date hereof and as of each Closing Date, and agrees with
each Underwriter, as follows:
(i) COMPLIANCE WITH REGISTRATION REQUIREMENTS. The Registration
Statement (including, if applicable, any Rule 462(b) Registration
Statement) has become effective under the Securities Act and no stop order
suspending the effectiveness of the Registration Statement (including, if
applicable, any Rule 462(b) Registration Statement) has been issued under
the Securities Act and no proceedings for that purpose have been
instituted or are pending or, to the knowledge of the Company, are
contemplated by the Commission, and any request on the part of the
Commission for additional information has been complied with. On the
Effective Date the Registration Statement complied, and on the date of the
Prospectus, on the date any post-effective amendment to the Registration
Statement shall become effective, on the date any supplement or amendment
to the Prospectus is filed with the Commission and on 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; the Registration
Statement and the Prospectus do not, as of the Effective Date, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary in order to make the statements
therein, in the light of the circumstances under which they were made, not
misleading; and on the other dates referred to above neither the
Registration Statement nor the Prospectus, nor any amendment thereof or
supplement thereto, will contain an untrue statement of a material fact or
will omit to state a material fact required to be stated therein or
necessary in order to make the statements therein not misleading. When any
related preliminary prospectus 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 the light of the circumstances
under which they were made, not misleading. Notwithstanding the foregoing,
the Company makes no representation or warranty as to (i) the paragraph
with respect to stabilization on the inside front cover page of the
Prospectus and (ii) certain statements contained under the caption
"Underwriting" in the Prospectus furnished in writing to the Company by an
Underwriter through the Representatives expressly for use therein. The
Company acknowledges that the statements referred to in the previous
sentence constitute the only information furnished in writing by the
Representatives on behalf of the several Underwriters specifically for
inclusion in the Registration Statement, any preliminary prospectus or the
Prospectus.
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Each preliminary prospectus and the prospectus filed as part of the
Registration Statement as originally filed or as part of any amendment
thereto, or filed pursuant to Rule 424 under the Securities Act, complied
when so filed in all material respects with the Rules. 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 the Commission's Electronic Data Gathering, Analysis and
Retrieval System ("XXXXX"), except to the extent permitted by Regulation
S-T under the Rules.
(ii) FINANCIAL STATEMENTS. The consolidated financial statements of
the Company (including all notes and schedules thereto) included in the
Registration Statement and Prospectus present fairly the consolidated
financial position, the results of operations and cash flows and the
shareholders' equity and the other information purported to be shown
therein of the Company at the respective dates and for the respective
periods to which they apply; and such consolidated financial statements
have been prepared in conformity with generally accepted accounting
principles, consistently applied throughout the periods involved, and all
adjustments necessary for a fair presentation of the results for such
periods have been made, except in the case of the unaudited consolidated
financial statements presented, for which (A) normal year-end audit
adjustments may not have been made and (B) footnote disclosure necessary
for generally accepted accounting purposes may not have been presented.
The summary and selected historical consolidated financial data included
in the Prospectus present fairly the information shown therein as at the
respective dates and for the respective periods specified, and the summary
and selected financial data have been presented on a basis consistent with
the consolidated financial statements in the Prospectus from which such
information has been derived. The unaudited pro forma consolidated
financial data included in the Registration Statement and the Prospectus
present fairly the information shown therein, comply in all material
respects with the requirements of the Securities Act and the Rules with
respect to pro forma financial statements, have been properly compiled on
the pro forma basis described therein and the assumptions used in
preparation thereof are reasonable and the adjustments used therein are
appropriate to give effect to the transactions or circumstances referred
to therein.
(iii) INDEPENDENT ACCOUNTANTS. Xxxx + Associates LLP, whose reports
are filed with the Commission as a part of the Registration Statement, are
and, during the respective periods covered by their reports were,
independent public accountants as required by the Securities Act and the
Rules.
(iv) GOOD STANDING OF THE COMPANY. The Company has been duly
incorporated and is validly existing as a corporation in good standing
under the laws of the State of Nevada. The Company is duly qualified and
in good standing as a foreign corporation in each jurisdiction in which
the character or location of its assets or properties (owned, leased or
licensed) or the nature of its business makes such qualification necessary
except
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where the failure to so qualify would not have a material adverse effect
on the condition (financial or other) assets or properties, business or
results of operations of the Company and its subsidiaries, taken as a
whole, whether or not occurring in the ordinary course of business (a
"Material Adverse Effect"). The Company has all requisite corporate power
and authority, to own and lease its assets and properties and conduct its
businesses as now being conducted and as described in the Registration
Statement and the Prospectus. Except as disclosed in the Registration
Statement and the Prospectus, the Company does not own, lease or license
any asset or property or conduct any business outside the United States of
America.
(v) GOOD STANDING OF SUBSIDIARIES. The Company does not own,
directly or indirectly, any capital stock of any corporation, any interest
in any partnership or limited liability company or any other equity
interest or participation in any other person, other than as described in
the Prospectus and in Exhibit 21.1 to the Registration Statement (each of
which, except for the Arcadia/Midcoast Pipeline Company of New York
L.L.C., Pan Grande Pipeline, L.L.C. and Starr County Gathering System, A
Joint Venture, a "Subsidiary"). Each Subsidiary has been duly chartered
and organized and is existing in good standing under the laws of its
jurisdiction of incorporation or organization, as the case may be, and has
full corporate power and authority to own or lease its property and
conduct its business as now being conducted and as proposed to be
conducted as described in the Registration Statement and the Prospectus
(and, if the Prospectus is not in existence, the most recent Preliminary
Prospectus), except where the failure to so qualify would not have a
Material Adverse Effect. All of the issued and outstanding capital stock
of each such Subsidiary has been duly authorized and validly issued, is
fully paid and non-assessable and, except as otherwise disclosed in the
Registration Statement, is owned by the Company, directly or indirectly,
free and clear of any security interest, mortgage, pledge, lien,
encumbrance, claim or equity. None of the outstanding shares of capital
stock of any Subsidiary was issued in violation of the preemptive rights
of any security holder of such Subsidiary.
(vi) AUTHORIZATION OF AGREEMENT. The Company has all requisite
corporate power and authority to enter into, deliver and perform this
Agreement and to issue and sell the Shares, and this Agreement has been
duly executed and delivered by the Company.
(vii) INTANGIBLES. The Company and each Subsidiary owns or possesses
adequate and enforceable rights to use all intellectual property,
including all U.S. and foreign patents, patent applications, licenses,
trademarks, trademark applications, trade names, service marks,
copyrights, copyright applications, licenses, inventions, trade secrets,
know-how and other similar rights and proprietary knowledge (collectively,
"Intangibles") necessary for the conduct of its business as described in
the Registration Statement and the Prospectus. The Company has not
received any notice of, or to the best of its knowledge is not aware of,
any infringement of or conflict with asserted rights of others with
respect to any Intangibles which, singly or in the aggregate, if the
subject of an unfavorable
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decision, ruling or finding, would individually or in the aggregate have a
Material Adverse Effect. All such patents, licenses (and the patents
underlying those licenses as applicable), trademarks, service marks, trade
names and copyrights are (i) valid and enforceable and (ii) to the best
knowledge of the Company, not being infringed by any third parties.
(viii)TITLE TO PROPERTY. The Company and each Subsidiary has good
and marketable title to each of the items of personal property which are
reflected in the financial statements referred to in Section 4(c) or are
referred to in the Registration Statement and the Prospectus as being
owned by it and valid and enforceable leasehold interests in each of the
items of real and personal property which are referred to in the
Registration Statement and the Prospectus as being leased by it, in each
case free and clear of all liens, mortgages, pledges, encumbrances,
claims, charges, security interests and defects, other than (A) those
described in the Registration Statement and the Prospectus and (B) those
which do not and will not, singly or in the aggregate, materially affect
the value of such property and do not materially interfere with the use
made and proposed to be made of such property by the Company or any
Subsidiary. The Company has no knowledge of any challenge to the
underlying fee title of any lease, easement, right-of-way or license held
by the Company or any Subsidiary or to the title of the Company or any
Subsidiary to any lease, easement, right-of-way or permit that would have
a Material Adverse Effect and to the Company's knowledge it and all of its
Subsidiaries have satisfactory title to all of their material leases,
easements, rights-of-way and licenses.
(ix) ABSENCE OF PROCEEDINGS. There is no action, suit, proceeding,
inquiry or investigation before or brought by any court or governmental
agency or body, domestic or foreign, now pending or, to the knowledge of
the Company, threatened against or affecting the Company or any
subsidiary, which is required to be disclosed in the Registration
Statement (other than as disclosed therein), or which might reasonably be
expected to result in a Material Adverse Effect, or which might reasonably
be expected to materially and adversely affect the properties or assets
thereof or the consummation of this Agreement or the performance by the
Company of its obligations hereunder; the aggregate of all pending legal
or governmental proceedings to which the Company or any subsidiary is a
party or of which any of their respective property or assets is the
subject which are not described in the Registration Statement, including
ordinary routine litigation incidental to the business, could not
reasonably be expected to result in a Material Adverse Effect.
(x) POSSESSION OF LICENSES AND PERMITS. The Company and its
subsidiaries possess such permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued by the
appropriate Federal, state, local or foreign regulatory agencies or bodies
necessary to conduct the business now operated by them, except for such
Governmental Licenses which the failure by the Company to possess would
not, singly or in the aggregate, have a Material Adverse Effect; the
Company and its subsidiaries are in compliance with the terms and
conditions of all such Governmental
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Licenses, except where the failure so to comply would not, singly or in
the aggregate, have a Material Adverse Effect; all of the Governmental
Licenses are valid and in full force and effect, except where the
invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not, singly or
in the aggregate, have a Material Adverse Effect; and neither the Company
nor any of its subsidiaries has received any notice of proceedings
relating to the revocation or modification of any such Governmental
Licenses which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a Material
Adverse Effect.
(xi) NO MATERIAL ADVERSE CHANGE IN BUSINESS. Subsequent to the
respective dates as of which information is given in the Registration
Statement and the Prospectus, except as otherwise stated therein, (i)
there has been no material adverse change in the assets or properties,
business, results of operations, earnings, business affairs, business
prospects or condition (financial or otherwise), of the Company and the
subsidiaries, taken as a whole, whether or not arising from transactions
in the ordinary course of business; (ii) the Company has not sustained any
material 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;
and (iii) and since the date of the latest balance sheet included in the
Registration Statement and the Prospectus, except as reflected therein,
the Company has not (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) declared or paid any dividend or made any distribution on any shares
of any class of its capital stock or redeemed, purchased or otherwise
acquired or agreed to redeem, purchase or otherwise acquire any shares of
any class of its capital stock.
(xii) ACCURACY OF EXHIBITS. There is no document or contract of a
character required to be described in the Registration Statement or
Prospectus or to be filed as an exhibit to the Registration Statement
which is not described or filed as required. Each agreement described in
the Registration Statement and the 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 in accordance with its terms except
as the enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting creditors' rights generally and by general principles of equity
(regardless of whether enforcement is considered in a proceeding in equity
or at law), assuming the due authorization, execution and delivery thereof
by each of the other parties thereto.
(xiii)ABSENCE OF DEFAULTS AND CONFLICTS. Neither the Company and the
subsidiaries nor, to the Company's knowledge, any other party is in
default in the
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observance or performance of any term or obligation to be performed by it
under any agreement applicable to (xii) above, and no event has occurred
which with the notice or lapse of time or both would constitute such a
default, in any such case which default or event 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 observation of any term, covenant, or condition, by the
Company or any subsidiary of any other agreement or instrument to which
the Company or a subsidiary is a party or by which it or its properties or
business may be bound or affected which default or event would have a
Material Adverse Effect.
(xiv) CAPITALIZATION. The authorized, issued and outstanding capital
stock of the Company is as set forth under the caption "Capitalization" in
the Prospectus. All of the issued and outstanding shares of Common Stock,
including the Shares to be purchased by the Underwriters from the Selling
Stockholder, have been duly authorized and validly issued and are fully
paid and non-assessable, and none of the outstanding shares of capital
stock of the Company, including the Shares to be purchased by the
Underwriters from the Selling Stockholder, was issued in violation of any
preemptive or other similar rights of any securityholder of the Company
arising by operation of law, under the charter or bylaws of the Company or
under any agreement to which the Company or any of its subsidiaries is a
party or by which it is bound. The Shares, when issued and sold pursuant
to this Agreement, will be duly authorized and validly issued, fully paid
and non-assessable and none of them will be issued in violation of any
preemptive or other similar rights of any securityholder of the Company
arising by operation of law, under the charter or bylaws of the Company or
under any agreement to which the Company or any of its subsidiaries is a
party or by which it is bound. 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 or sell, any share of Common Stock or other
securities of the Company or any security convertible into, or exercisable
or exchangeable for, Common Stock or other securities of the Company. 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.
(xv) AUTHORIZATION AND DESCRIPTION OF SHARES; LOCK-UP. No holder of
any security of the Company has the right to have any security owned by
such holder included in the Registration Statement or to demand
registration of any security owned by such holder during the period ending
180 days after the date of this Agreement. Each stockholder, director and
executive officer of the Company set forth on Schedule III hereto has
delivered to the Representatives his enforceable written agreement that he
will not, directly or indirectly, offer, sell, contract to sell, make a
short sale, pledge or otherwise dispose of, or exercise any registration
rights with respect to, any shares of Common Stock (or any securities
convertible into or exchangeable or exercisable for any other rights to
purchase or acquire shares of Common Stock) owned by him, other than for
sales of Common Stock to the Underwriters pursuant to this Agreement, for
a period of 180
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days after the date of this Agreement, without the prior written consent
of Oppenheimer. In addition, the Company hereby agrees that it will not
consent to the sale, distribution, pledge or other disposition or
encumbrance of, or exercise any registration right with respect to, any
shares of Common Stock subject to the above-referenced lock-ups, without
the prior written consent of Oppenheimer.
(xvi) ENFORCEABILITY. 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, 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 their respective terms, except (A) as the
enforceability thereof may be limited by bankruptcy, insolvency,
reorganization, fraudulent conveyance, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by general
equitable principles (regardless of whether enforcement is considered in a
proceeding in equity or at law), and (B) to the extent that rights to
indemnity or contribution under this Agreement may be limited by Federal
and state securities laws or the public policy underlying such laws.
(xvii)ABSENCE OF LABOR DISPUTES. No labor dispute with the employees
of the Company or any subsidiary exists or, to the knowledge of the
Company, is imminent, and the Company is not aware of any existing or
imminent labor disturbance by the employees of any of its or any
subsidiary's principal suppliers, manufacturers, customers or contractors,
which, in either case, might reasonably be expected to result in a
Material Adverse Effect.
(xviii) TAXES. Each of the Company and the subsidiaries has filed
all Federal, state and local income, franchise and other tax returns which
have been required to be filed and has paid all taxes shown as due
thereon. All such returns, as amended if applicable, are complete,
accurate and correct in all material respects. Neither the Company nor any
of the subsidiaries has any knowledge of any tax deficiency which might be
asserted against it which would have a Material Adverse Effect. The
provisions and reserves on the books of the Company in respect of Federal,
state, local and other taxes for any taxable period as to which the
Company's liability for taxes has not been finally determined are, in the
opinion of the Company, adequate.
(xix) RELATED PARTY TRANSACTIONS. No transaction has occurred
between or among the Company and any of its officers or directors or any
affiliate or affiliates of any such officer or director that is required
to be described in and is not described in the Registration Statement and
the Prospectus.
(xx) ABSENCE OF MANIPULATION. The Company has not taken, nor will it
take, directly or indirectly, any action designed to or which might
reasonably be expected to
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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 to facilitate the sale or resale of any of the Shares.
(xxi) AMEX LISTING. The Shares have been duly authorized for listing
on American Stock Exchange (the "AMEX").
(xxii)COMPLIANCE WITH CUBA ACT. The Company has complied with, and
is and will be in compliance with, the provisions of that certain Florida
act relating to disclosure of doing business with Cuba, codified as
Section 517.075 of the Florida statutes, and the rules and regulations
thereunder (collectively, the "Cuba Act") or is exempt therefrom.
(xxiii) NO FINDERS FEES. No person has acted as a finder in
connection with the transactions contemplated herein and the Company will
indemnify the several Underwriters with respect to any claim for finder's
fees in connection herewith. Except as set forth in the Registration
Statement and the Prospectus (or, if the Prospectus is not in existence,
the most recent Preliminary Prospectus), the Company has no management or
financial consulting agreement with anyone. No promoter, officer, director
or stockholder of the Company is, directly or indirectly, associated with
a member of the National Association of Securities Dealers, Inc. ("NASD").
(xxiv)INSURANCE COVERAGE. The Company and each Subsidiary is insured
by insurers of recognized financial responsibility against such losses and
risks and in such amounts as are prudent and customary in the businesses
in which it is engaged. Neither the Company nor any Subsidiary has been
refused any insurance coverage sought or applied for, and the Company has
no 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 would not have a Material Adverse Effect.
(xxv) INVESTMENT COMPANY ACT OF 1940. The Company is not subject to
registration as an "investment company" under the Investment Company Act
of 1940.
(b) REPRESENTATIONS AND WARRANTIES BY THE SELLING STOCKHOLDER. The Selling
Stockholder represents and warrants to each Underwriter as of the date hereof,
and as of the Closing Time, and agrees with each Underwriter, as follows:
(i) ACCURATE DISCLOSURE. The Selling Stockholder has reviewed and is
familiar with the Registration Statement and the Prospectus, and, to the
knowledge of the Selling Stockholder, the Prospectus does not contain any
untrue statement of a material fact or omit to state a material fact
necessary in order to make the statements therein, in the light of the
circumstances under which they were made, not misleading; provided,
however, that the representations and warranties in this subsection shall
not apply to statements in or omissions
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from the Registration Statement or Prospectus made in reliance upon and in
conformity with information furnished to the Company in writing by any
Underwriter through Xxxxxxxxxxx expressly for use in the Registration
Statement or Prospectus. The Selling Stockholder is not prompted to sell
the Shares to be sold by the Selling Stockholder hereunder by any
information concerning the Company or any subsidiary of the Company which
is not set forth in the Prospectus.
(ii) CAPACITY TO ENTER INTO AGREEMENT. The Selling Stockholder has
the full right, power and capacity to execute and deliver this Agreement
and to sell, assign, transfer and deliver the Shares to be sold by the
Selling Stockholder hereunder.
(iii) GOOD AND VALID TITLE. The Selling Stockholder now has, and
will at the Firm Shares Closing Time have, good and valid title to the
Shares to be sold by the Selling Stockholder hereunder, free and clear of
any security interest, mortgage, pledge, lien, charge, claim, equity or
encumbrance of any kind, including, without limitation, any restriction on
transfer other than the lock-up arrangements that are in effect as a
result of the Company's August 1996 public offering of Common Stock, other
than pursuant to this Agreement; and upon delivery of and payment of the
purchase price for such Shares as herein contemplated, each of the
Underwriters will acquire good and valid title to the Shares purchased by
it from the Selling Stockholder, free and clear of any security interest,
mortgage, pledge, lien, charge, claim, equity or encumbrance of any kind
(other than any security interest, mortgage, pledge, lien, charge, claim,
equity or encumbrance that may be imposed by, or may arise through or
under, the Underwriters) or restriction on transfer, other than those
arising under Federal or state securities laws.
(iv) ABSENCE OF CONFLICTS, DEFAULTS AND VIOLATIONS. The execution
and delivery of this Agreement and the sale and delivery of the Shares to
be sold by the Selling Stockholder and the consummation of the
transactions contemplated herein and compliance by the Selling Stockholder
with its obligations hereunder do not and will not, whether with or
without the giving of notice or passage of time or both, 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, any contract, indenture, mortgage, deed of trust,
loan or credit agreement, note, license, lease or other 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, nor will such action result
in any violation of the provisions of any applicable treaty, law, statute,
rule, regulation, judgment, order, writ or decree of any government,
government instrumentality or court, domestic or foreign, having
jurisdiction over the Selling Stockholder or any of its properties.
(v) ENFORCEABILITY. This Agreement has been duly executed and
delivered by or on behalf of the Selling Stockholder and is the valid and
binding agreement of the Selling Stockholder enforceable against the
Selling Stockholder in accordance with its terms, except
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(i) the enforceability hereof and thereof may be limited by bankruptcy,
insolvency, reorganization, fraudulent conveyance, moratorium or other
similar laws now or hereafter in effect relating to creditors' rights
generally, (ii) the remedy of specific performance and other forms of
equitable relief may be subject to certain equitable defenses and to the
discretion of the court before which the proceedings may be brought
(regardless of whether enforcement is considered in a proceeding in equity
or at law), and (iii) rights to indemnity and contribution hereunder may
be limited by Federal or state securities laws or the public policy
underlying such laws.
(vi) ABSENCE OF FURTHER REQUIREMENTS. No filing with, or consent,
approval, authorization, order, registration, qualification or decree of,
any court or governmental authority or agency, domestic or foreign, is
necessary or required for the performance by the Selling Stockholder of
its obligations hereunder or in connection with the sale and delivery of
the Shares hereunder or the consummation of the transactions contemplated
by this Agreement, except such as may have previously been made or
obtained or as may be required under the Securities Act and the Securities
Exchange Act of 1934 as amended (the "Exchange Act") or state securities
Blue Sky laws.
(vii) ABSENCE OF MANIPULATION. The Selling Stockholder has not
taken, and will not take, directly or indirectly, any action which is
designed to, which has constituted, or which might reasonably be expected
to cause or result in, stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the Shares.
(viii)RESTRICTION ON SALE OF SHARES. During a period of 180 days
from the date of the Prospectus, the Selling Stockholder will not, without
the prior written consent of Xxxxxxxxxxx, (i) offer, pledge, sell,
contract to sell, sell any option or contract to purchase, purchase any
option or contract to sell, grant any option, right or warrant to purchase
or otherwise transfer or dispose of, directly or indirectly, any share of
Common Stock or any securities convertible into ro exercisable or
exchangeable for Common Stock or cause any registration statement to be
filed under the Securities Act with respect to any of the foregoing or
(ii) enter into any swap or any other agreement or any transaction that
transfers, in whole or in part, directly or indirectly, the economic
consequence of ownership of the Common Stock, whether any such swap or
transaction described in clause (i) or (ii) above is to be settled by
delivery of Common Stock or such other securities, in cash or otherwise.
The foregoing sentence shall not apply to the Shares to be sold hereunder.
(ix) CERTIFICATES SUITABLE FOR TRANSFER. Certificates for all of the
shares to be sold by the Selling Stockholder pursuant to this Agreement,
in suitable form for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank with signatures guaranteed,
will be delivered to the Underwriters at the Firm Shares Closing Date
pursuant to this Agreement.
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(x) NO ASSOCIATION WITH NASD. Neither the Selling Stockholder nor
any of this affiliates directly, or indirectly through one or more
intermediaries, controls, or is controlled by, or is under common control
with, or has any other association with (within the meaning of Article I,
Section 1(m) of the By-laws of the NASD), any member firm of the NASD.
(c) OFFICER'S CERTIFICATES. Any certificate signed by any officer of
the Company or any subsidiary delivered to the Representatives or to counsel for
the Underwriters shall be deemed a representation and warranty by the Company to
each Underwriter as to the matters covered thereby. Any certificate signed by
the Selling Stockholder as such and delivered to the Representatives or to
counsel for the Underwriters pursuant to the terms of this Agreement shall be
deemed a representation and warranty by the Selling Stockholder to the
Underwriters as to the matters covered thereby. Counsel for the Underwriters and
counsel for the Company and the Selling Stockholder shall be entitled to rely on
any certificate delivered by the Company or the Selling Stockholder for purposes
of delivering such counsel's opinion pursuant to Sections 5(h), (i) and (j)
hereunder.
(d) AGREEMENT TO EXECUTE W-9. The Selling Stockholder agrees to
deliver to the Representatives, on or prior to the Firm Shares Closing Date a
properly completed and executed United States Treasury Department Form W-9 (or
other applicable form or statement specified by Treasury Department regulations
in lieu thereof).
5. 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) The Prospectus shall have been timely filed with the Commission
in accordance with Section 6(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, and any requests for additional information
on the part of the Commission (to be included in the Registration
Statement or the Prospectus or otherwise) shall have been complied with to
the satisfaction of the Representatives.
(c) The representations and warranties of the Company and the
Selling Stockholder contained in this Agreement and in the certificates
delivered pursuant to Section 5(e) shall be true and correct (in the case
of representations and warranties that are qualified as to materiality) or
true and correct in all material respects (in the case of representations
and warranties that are not so qualified) when made and on and as of each
Closing Date as if made on such date; and the Company shall have performed
all
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covenants and agreements and satisfied all conditions contained in this
Agreement required to be performed or satisfied by it at or prior to such
Closing Date.
(d) Subsequent to the respective dates as of which information is
given in the Registration Statement and the Prospectus, there shall not
have been any changes which would have a Material Adverse Effect, or any
development involving a prospective Material Adverse Effect, except in
each case as described in or contemplated by the Prospectus (exclusive of
any amendment or supplement thereto).
(e) 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 the
signers of such certificate have carefully examined the Registration
Statement, the Prospectus and this Agreement and to the effect set forth
in subparagraphs (b) through (d) above.
(f) The Representatives shall have received on the Firm Shares
Closing Date a certificate, addressed to the Representatives and dated
such Closing Date, of the Selling Stockholder stating that (i) the
representations and warranties made by the Selling Stockholder in this
Agreement are true and correct in all material respects on the Firm Shares
Closing Date, and (ii) the Selling Stockholder has complied with each
obligation which is required to be performed on his part at or prior to
the Firm Shares Closing Date.
(g) The Representatives shall have received on the Effective Date,
at the time this Agreement is executed and on each Closing Date a signed
letter from Xxxx + Associates LLP addressed to the Representatives and
dated, respectively, the Effective Date, the date of this Agreement and
each such Closing Date, in form and substance reasonably satisfactory to
the Representatives, confirming that they are independent accountants
within the meaning of the Securities Act and the Rules, that the response
to Item 10 of the Registration Statement is correct insofar as it relates
to them and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included in the Registration Statement
and the Prospectus and reported on by them comply as to form in all
material respects with the applicable accounting requirements of the
Securities Act and the Rules;
(ii) on the basis of a reading of the amounts included in the
Registration Statement and the Prospectus under the headings
"Summary Historical Consolidated Financial and Operating Data" and
"Selected Historical Consolidated Financial Data," carrying out
certain procedures (but not an examination in accordance with
generally accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments set
forth in
- 15 -
such letter, a reading of the minutes of the meetings of the
stockholders and directors of the Company, and inquiries of certain
officials of the Company who have responsibility for financial and
accounting matters of the Company as to transactions and events
subsequent to the date of the latest audited financial statements,
except as disclosed in the Registration Statement and the
Prospectus, nothing came to their attention which caused them to
believe that:
(A) the amounts in "Summary Historical Consolidated
Financial and Operating Data" and "Selected Historical
Consolidated Financial Data," included in the Registration
Statement and the Prospectus do not agree with the
corresponding amounts in the audited and unaudited financial
statements from which such amounts were derived; or
(B) with respect to the Company, there were, at a
specified date not more than five business days prior to the
date of the letter, any increases in the current liabilities
and long-term liabilities of the Company or any decreases in
net income or in working capital or the shareholders' equity
in the Company, as compared with the amounts shown on the
Company's audited balance sheet for the fiscal year ended
December 31, 1996 and the three months ended March 31, 1997
included in the Registration Statement; and
(iii) they have performed certain other procedures as a result
of which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general
accounting records of the Company) set forth in the Registration
Statement and the Prospectus and reasonably specified by the
Representatives agrees with the accounting records of the Company.
References to the Registration Statement and the Prospectus in this
paragraph (g) are to such documents as amended and supplemented at
the date of the letter.
(h) The Representatives shall have received on each Closing Date
from Xxxxxx & Xxxxxx, L.L.P., counsel for the Company, an opinion,
addressed to the Representatives and dated such Closing Date, in
substantially the same form as set forth on EXHIBIT A hereto.
(i) The Representatives shall have received on the Firm Shares
Closing Date from counsel to the Selling Stockholder an opinion, addressed
to the Representatives and dated such Closing Date, in substantially the
same form as set forth on EXHIBIT B hereto.
(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
- 16 -
substance to the Representatives and their counsel and the Underwriters
shall have received from Xxxxxxx & Xxxxx 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 Xxxxxxx & Xxxxx L.L.P. such documents
as they may reasonably request for the purpose of enabling them to pass
upon such matters.
6. COVENANTS OF THE COMPANY. The Company covenants and agrees with
each Underwriter as follows:
(a) COMPLIANCE WITH FEDERAL SECURITIES REGULATIONS AND COMMISSION
REQUESTS. 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 Rule
430A(a)(3) under the Securities Act. The Company shall promptly advise the
Representatives after the Company receives notice thereof (i) when any
amendment to the Registration Statement shall have become effective, (ii)
of any request by the Commission for any amendment of the Registration
Statement or the Prospectus or for any additional information, (iii) of
the prevention or suspension of the use of any preliminary prospectus or
the Prospectus or of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that purpose and (iv) 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.
(b) AMENDMENTS AND SUPPLEMENTS. If, at any time 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 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 (a) of this Section 6, an amendment or supplement
which shall correct such statement or omission or an amendment which shall
effect such compliance.
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(c) EARNING STATEMENTS. The Company shall make generally available
to its security holders and to the Representatives as soon as 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.
(d) COPIES OF REGISTRATION STATEMENT AND PROSPECTUS. 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.
(e) COMPLIANCE WITH STATE SECURITIES REGULATIONS. The Company shall
cooperate with the Representatives and their counsel in endeavoring to
qualify the Shares for offer and sale 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.
(f) PERIODIC REPORTS. For a period of five years after the date of
this Agreement, the Company shall supply to the Representatives, and to
each other Underwriter who may so request in writing, copies of such
consolidated financial statements and other periodic and special reports
as the Company may from time to time distribute generally to the holders
of any class of its capital stock and to furnish to the Representatives a
copy of each annual or other report it shall be required to file with the
Commission.
(g) COMPANY LOCK-UP. Without the prior written consent of the
Representatives, for a period of 180 days after the date of this
Agreement, the Company shall not, directly or indirectly, offer, issue,
sell or register with the Commission (other than on Form X-0, Xxxx X-0 or
on any successor form), or otherwise dispose of, any equity securities of
the Company (or any securities convertible into or exercisable or
exchangeable for equity securities of the Company), except for (i) the
issuance and sale of the Shares by the Company pursuant to the
Registration Statement, (ii) the issuance of shares upon the exercise of
options granted under the Company's existing stock option plans, (iii) the
issuance of options pursuant to the Company's existing stock option plans,
- 18 -
(iv) the issuance of shares upon the exercise of warrants described in the
Prospectus and outstanding as of the date hereof and (v) the issuance of
unregistered shares in connection with the Company's acquisition of a
business; provided, in the event that during this period, (A) any shares
are issued pursuant to the Company's existing stock option plans or (B)
any registration is effected on Form X-0, Xxxx X-0 or on any successor
form, or in connection with an acquisition of a business, the Company
shall obtain the written agreement of such grantee or purchaser or holder
of such registered securities that, for a period of 180 days after the
date of this Agreement, such person will not, without the prior written
consent of the Representatives, offer for sale, sell, distribute, grant
any option for the sale of, or otherwise dispose of, directly or
indirectly, or exercise any registration rights with respect to, any
shares of Common Stock (or any securities convertible into or exercisable
or exchangeable for any shares of Common Stock) owned by such person.
(h) AMEX LISTING. On or before completion of this offering, the
Company shall make all filings required under applicable securities laws
and by the AMEX.
(i) PAYMENT AND REIMBURSEMENT OF CERTAIN EXPENSES. 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 pursuant to Section 9 hereof, 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 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 6(e),
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) the
furnishing (including costs of shipping and mailing) to the
Representatives and to the Underwriters of copies of all reports and
information required by Section 6(f); (vii) inclusion of the Shares for
listing on the AMEX; and (viii) 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 9, 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
- 19 -
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.
7. INDEMNIFICATION.
(a) INDEMNIFICATION OF UNDERWRITERS BY THE COMPANY. The Company
agrees 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, expenses 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, expenses 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, expenses 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 or supplement, 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. This
indemnity agreement will be in addition to any liability which the Company may
otherwise have.
(b) INDEMNIFICATION OF UNDERWRITERS BY THE SELLING STOCKHOLDER. The
Selling Stockholder agrees 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, or 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 the Selling Stockholder 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, expenses 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 statement 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, expenses or
liabilities arising from the
- 20 -
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 or
supplement, 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. Notwithstanding the other provisions of this
Section 7, the liability of the Selling Stockholder under this Section 7 shall
be limited to the total proceeds (net of underwriting discounts and commissions,
but before deducting expenses) received by the Selling Stockholder from the
offering of the Shares by the Selling Stockholder under this Agreement.
(c) INDEMNIFICATION OF THE COMPANY AND THE SELLING STOCKHOLDER. Each
Underwriter agrees, severally and not jointly, to indemnify and hold harmless
the Company, the Selling Stockholder, each person, if any, who controls the
Company 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, to the same extent as the foregoing
indemnity from the Company and the Selling Stockholder to each Underwriter, but
only insofar as such losses, claims, damages or liabilities arise out of or are
based upon any untrue statement or omission or alleged untrue statement or
omission which was made in any preliminary prospectus, the Registration
Statement or the Prospectus, or any amendment thereof or supplement thereto,
contained in the last paragraph of the cover page, in the paragraph relating to
stabilization on the inside front cover page of the Prospectus, the fifth
paragraph relating to over-allotment, stabilizing transactions, syndicate
covering transactions and penalty bids, and the final paragraph relating to
Xxxxxxx and Company Securities, Inc. contained under the caption "Underwriting"
in the Prospectus; provided, however, that the obligation of each Underwriter to
indemnify the Company (including any controlling person, director or officer
thereof) or the Selling Stockholder, respectively, shall be limited to the net
proceeds received by the Company or the Selling Stockholder, as the case may be,
from such Underwriter.
(d) Any party that proposes to assert the right to be indemnified
under this Section 7 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 indemnifying party or parties under this Section 7, notify
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 7(a), (b) or 7(c) shall be available to any party who shall fail
to give notice as provided in this Section 7(d) 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 to so
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
- 21 -
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 reasonably concluded that there
may be a conflict of interest between the indemnifying parties and the
indemnified party in the conduct of the defense of such action (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. An indemnifying party shall not be liable for any settlement of any
action, suit, proceeding or claim effected without its written consent.
8. CONTRIBUTION. In order to provide for just and equitable
contribution in circumstances in which the indemnifications provided for in
Sections 7(a), (b) and (c) are due in accordance with their terms but for any
reason is held to be unavailable from the Company or the Selling Stockholder,
the Company, the Selling Stockholder, and the Underwriters shall contribute to
the aggregate losses, claims, damages and liabilities (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 the Company or
the Selling Stockholder from persons other than the Underwriters, such as
persons who control the Company within the meaning of the Securities Act,
officers of the Company who signed the Registration Statement and directors of
the Company, who may also be liable for contribution) to which the Company, the
Selling Stockholder and one or more of the Underwriters may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Company and the Selling Stockholder on the one hand and the Underwriters on the
other from the offering of the Shares or, if such allocation is not permitted by
applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided in Section 7 hereof,
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
Stockholder on the one hand and the Underwriters on the other in connection with
the statements or omissions which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations.
The relative benefits received by the Company, the Selling Stockholder and the
Underwriters shall be deemed to be in the same proportion as (x) the total
proceeds from the offering (net of underwriting discounts but before deducting
expenses) received by the Company and the Selling Stockholder, as the case may
be, as set forth in the table on the cover page of the Prospectus, bear to (y)
the underwriting discounts received by the Underwriters, as set forth in the
table on the cover page of the Prospectus. The relative fault of the Company and
the Selling Stockholder or the Underwriters shall be determined by reference to,
among other
- 22 -
things, whether the untrue or alleged untrue statement of a material fact
related to information supplied by the Company and the Selling Stockholder or
the Underwriters and the parties' relative intent, knowledge, access to
information and opportunity to correct or prevent such statement or omission.
The Company, the Selling Stockholder and the Underwriters agree that it would
not be just and equitable if contribution pursuant to this Section 8 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. Notwithstanding
the provisions of this Section 8, (i) in no case shall any Underwriter (except
as may be provided in the Master Agreement Among Underwriters) be liable or
responsible for any amount in excess of the underwriting discount applicable to
the Shares purchased by such Underwriter hereunder, and (ii) the Company and/or
the Selling Stockholder, as the case may be, shall be liable and responsible for
any amount in excess of such underwriting discount applicable to the Shares sold
by each hereunder; provided, however, that 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 8, 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 person, if any, who controls the
Company within the meaning of the Section 15 of the Securities Act or Section 20
of the Exchange Act, each officer of the Company who shall have signed the
Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i) and
(ii) in the immediately preceding sentence of this Section 8. 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,
notify 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. No party shall be liable for contribution with respect to any action,
suit, proceeding or claim settled without its written consent. The Underwriters'
obligations to contribute pursuant to this Section 8 are several in proportion
to their respective underwriting commitments and not joint. The Company's and
the Selling Stockholder's obligations to contribute in this Section 8 are
several and not joint.
9. TERMINATION. (a) TERMINATION; GENERAL. This Agreement may be
terminated with respect to the Shares to be purchased on a Closing Date by the
Representatives by notifying the Company at any time:
(i) in the absolute discretion of the Representatives at or before
any Closing Date: (A) if on or prior to such date, any domestic or
international event or act or occurrence has materially disrupted, or in
the opinion of the Representatives will in the immediate future materially
disrupt, the securities markets; (B) if there has occurred any new
outbreak or material escalation of hostilities or other calamity or crisis
the effect of
- 23 -
which on the financial markets of the United States is such as to make it,
in the judgment of the Representatives, inadvisable to proceed with the
offering; (C) if 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 is such as to
make it, in the judgment of the Representatives, inadvisable or
impracticable to market the Shares; (D) if trading in the Shares has been
suspended by the Commission or trading generally on the New York Stock
Exchange, Inc. or on the AMEX has been suspended or 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 such exchange or
by order of the Commission, the NASD, or any other governmental or
regulatory authority; or (E) if a banking moratorium has been declared by
any state or Federal authority, or
(ii) at or before any Closing Date, that any of the conditions
specified in Section 5 shall not have been fulfilled when and as required
by this Agreement.
(b) TERMINATION LIABILITIES. If this Agreement is terminated
pursuant to any of its provisions, the Company and the Selling Stockholder shall
not be under any liability to any Underwriter, and no Underwriter shall be under
any liability to the Company or the Selling Stockholder, except that (A) 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
Stockholder to comply with the terms or to fulfill any of the conditions of this
Agreement, the Company will reimburse the Underwriters for all 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 (B) 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, to the Selling Stockholder or to
the other Underwriters for damages occasioned by its failure or refusal.
10. SUBSTITUTION OF UNDERWRITERS. If one or more of the Underwriters
shall fail (other than for a reason sufficient to justify the cancellation or
termination of this Agreement under Section 9) to purchase on any Closing Date
the Shares agreed to be purchased on such Closing Date by such Underwriter or
Underwriters, the Representatives may find one or more substitute underwriters
to purchase such Shares or make such other arrangements as the Representatives
may deem advisable or one or more of the remaining Underwriters may agree to
purchase such Shares in such proportions as may be approved by the
Representatives, in each case upon the terms set forth in this Agreement. If no
such arrangements have been made by the close of business on the business day
following such Closing Date,
(a) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall not exceed 10% of the Shares that
all the Underwriters are obligated to purchase on such Closing Date, then
each of the non-defaulting Underwriters
- 24 -
shall be obligated to purchase such Shares on the terms herein set forth
in proportion to their respective obligations hereunder; provided, that in
no event shall the maximum number of Shares that any Underwriter has
agreed to purchase pursuant to Section 1 be increased pursuant to this
Section 10 by more than one-ninth of such number of Shares without the
written consent of such Underwriter, or
(b) if the number of Shares to be purchased by the defaulting
Underwriters on such Closing Date shall exceed 10% of the Shares that all
the Underwriters are obligated to purchase on such Closing Date, then the
Company shall be entitled to an additional business day within which it
may, but is not obligated to, find one or more substitute underwriters
reasonably satisfactory to the Representatives to purchase such Shares
upon the terms set forth in this Agreement.
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 five business days in order that necessary changes and arrangements
(including any necessary amendments or supplements to the Registration Statement
or Prospectus) may be effected by the Representatives and the Company. If the
number of Shares to be purchased on such Closing Date by such defaulting
Underwriter or Underwriters shall exceed 10% of the Shares that all the
Underwriters are obligated to purchase on such Closing Date, and none of the
non-defaulting Underwriters or the Company shall make arrangements pursuant to
this Section within the period stated for the purchase of the Shares that the
defaulting Underwriters agreed to purchase, this Agreement shall terminate with
respect to the Shares to be purchased on such Closing Date without liability on
the part of any non-defaulting Underwriter to the Company and without liability
on the part of the Company, except in both cases as provided in Sections 6(B),
7, 8 and 9. The provisions of this Section shall not in any way affect the
liability of any defaulting Underwriter to the Company or the non-defaulting
Underwriters arising out of such default. A substitute underwriter hereunder
shall become an Underwriter for all purposes of this Agreement.
11. DEFAULT BY SELLING STOCKHOLDER. If on the Firm Shares Closing
Date the Selling Stockholder fails to sell the Shares which the Selling
Stockholder has agreed to sell on such date as set forth on Schedule II hereto,
the Company agrees that it will sell or arrange for the sale of that number of
shares of Common Stock to the Underwriters which represents the Shares which the
Selling Stockholder has failed to so sell, as set forth in Schedule II hereto,
or such fewer number of shares of Common Stock as may be requested by the
Underwriters.
12. MISCELLANEOUS. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers or
the Selling Stockholder and of the Underwriters set forth in or made pursuant to
this Agreement shall remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company, the
Selling Stockholder or any of the officers, directors or controlling persons
referred to in Sections 7 and 8 hereof, and shall survive delivery of and
payment for the Shares. The provisions of Sections 6(i), 7, 8 and 9(b) shall
survive the termination or cancellation of this Agreement.
- 25 -
This Agreement has been and is made for the benefit of the
Underwriters, the Company and the Selling Stockholder and their respective
successors and assigns, and, to the extent expressed herein, for the benefit of
persons controlling any of the Underwriters, 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, telegraph or facsimile if subsequently
confirmed in writing, (a) if to the Representatives, c/o Oppenheimer & Co.,
Inc., Xxxxxxxxxxx Xxxxx, Xxxxx Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000
Attention: Xxxxxxx X. Xxxxx, (b) if to the Company, to its agent for service as
such agent's address appears on the cover page of the Registration Statement,
and (c) if to the Selling Stockholder, Xxxxxxx X. Xxxxxx, Xx., 000 Xxxxxxx,
Xxxxx 000, Xxxxxx Xxxxxxx, Xxxxx 00000.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflict of
laws.
This 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,
MIDCOAST ENERGY RESOURCES, INC.
By:
Name: Xxx X. Xxxxxxx
Title: President
XXXXXXX X. XXXXXX, XX.
By:
Xxxxxxx X. Xxxxxx
- 26 -
Confirmed:
XXXXXXXXXXX & CO., INC.
X.X. XXXXXXX & SONS, INC.
XXXXXXX AND COMPANY SECURITIES, INC.
Acting severally on behalf of themselves and as Representatives of the several
Underwriters named in Schedule I annexed hereto.
By: XXXXXXXXXXX & CO., INC.
By:
Name:
Title:
- 27 -
SCHEDULE I
Underwriters
NUMBER OF
FIRM SHARES TO
NAME BE PURCHASED
Xxxxxxxxxxx & Co., Inc...................................
X. X. Xxxxxxx & Sons, Inc................................
Xxxxxxx and Company Securities, Inc......................
--------
Total........................... 2,100,000
=========
- 28 -
SCHEDULE II
Selling Stockholder
NUMBER OF
FIRM SHARES TO
NAME BE SOLD
Xxxxxxx X. Xxxxxx, Xx.................................... 100,000
-------
Total........................... 100,000
=======
- 29 -
SCHEDULE III
Persons Delivering Lock-Up Letters
Magic Gas Corp.
Xxxxxxx X. Xxxxxx
Xxx X. Xxxxxxx
X.X. Xxxxxxxxx, XX
Xxxxxxx X. Xxxxxx
Xxxxx X. Xxxxxx
X.X. Xxxxxxx
Xxxxxxx X. Xxxxxxxx
Xxxx X. Xxxx
Xxxx X. Xxxxx
- 30 -
EXHIBIT A
MATTERS TO BE COVERED IN THE OPINION OF COUNSEL FOR THE COMPANY
(i) The Company has been duly incorporated and is validly
existing as a corporation in good standing under the laws of the
State of Nevada. The Company is duly qualified to do business and in
good standing as a foreign corporation in each jurisdiction in which
the character or location of its assets or properties (owned,
leased, licensed or operated) or the nature of its businesses makes
such qualification necessary, except where the failure to so qualify
would not have a Material Adverse Effect.
(ii) Each Subsidiary has been duly incorporated or organized,
as the case may be, and is validly existing and in good standing
under the laws of the jurisdiction of its formation, and is in good
standing as a foreign corporation in each jurisdiction in which the
character or location of its assets or properties (owned, leased,
licensed or operated) or the nature of its businesses makes such
qualification necessary, except where the failure to so qualify
would not have a Material Adverse Effect. Except as otherwise
disclosed in the Registration Statement, all of the issued and
outstanding capital stock of each Subsidiary has been duly
authorized and validly issued, is fully paid and non-assessable and,
to the best of our knowledge, is owned by the Company, directly or
indirectly, free and clear of any security interest, mortgage,
pledge, lien, encumbrance, claim or equity; none of the outstanding
shares of capital stock of any Subsidiary was issued in violation of
the preemptive or similar rights of any security holder of such
Subsidiary.
(iii) The Company and each Subsidiary has all requisite
corporate power and authority to own or lease its assets and
properties and conduct its business as now being conducted, in each
case as described in the Registration Statement and the Prospectus.
The Company has all requisite corporate power and authority to enter
into, deliver and perform its obligations under this Agreement and
to issue and sell the Shares.
(iv) The Company has authorized and issued capital stock as
set forth in the Registration Statement and 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 outstanding shares of Common Stock of the Company have been duly
authorized and validly issued and are fully paid and nonassessable,
and none of the outstanding shares of capital stock of the Company
was issued in violation of any preemptive or other similar right of
any security holder of the Company.
- 31 -
(v) The Shares, when issued and sold pursuant to this
Agreement, will be duly and validly issued, outstanding, fully paid
and nonassessable and none of them will have been issued in
violation of any preemptive or other similar right of any security
holder of the Company.
(vi) To the best of such counsel's knowledge, 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 no commitment, plan or arrangement to issue, any
share of stock of the Company or any security convertible into,
exercisable for, or exchangeable for stock of the Company. The
Common Stock and the Shares conform in all material respects to the
descriptions thereof contained in the Registration Statement and the
Prospectus. No person or entity is entitled to have securities
registered by the Company under the Registration Statement or
otherwise under the Act other than as described in the Prospectus.
All prior sales by the Company of the Company's securities have been
made in compliance with or under an exemption from registration
under the Act and applicable state securities laws and no
shareholders of the Company have any rescission rights with respect
to Company securities other than those that have been effectively
waived or satisfied.
(vii) The agreement of the Company's directors and officers
stating that for a period of 180 days from the date of this
Agreement they will not, without the Representatives' prior written
consent, sell, grant any option for the sale of, or otherwise
dispose of, directly or indirectly, any shares of Common Stock (or
any securities convertible into, exercisable for, or exchangeable
for any shares of Common Stock) owned by them has been duly and
validly delivered by such persons and constitutes the legal, valid
and binding obligation of each such person enforceable against each
such person in accordance with its terms, except as the
enforceability thereof may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by
general equitable principles.
(viii)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 their respective terms except
(A) as such enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and by
general equitable principles and (B) to the extent that rights to
indemnity or contribution under this Agreement may be limited by
Federal or state securities laws or the public policy underlying
such laws.
- 32 -
(ix) 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 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 or encumbrance upon any properties or
assets of the Company pursuant to the terms of any indenture,
mortgage, deed trust, note or other agreement or instrument of which
such counsel is aware and to which the Company or any of the
Subsidiaries is a party or by which it or any of its properties or
businesses is bound, or any franchise, license, permit, judgment,
decree, order, statute, rule or regulation of which such counsel is
aware, where the consequences of such violation would have a
Material Adverse Effect, or violate any provision of the charter or
by-laws of the Company.
(x) To the best of such counsel's knowledge, 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
any of the Subsidiaries of any indenture, mortgage, deed of trust,
note or any other agreement or instrument to which the Company is a
party or by which it or any of its assets or properties or
businesses may be bound or affected, where the consequences of such
default might reasonably be expected to result in a Material Adverse
Effect.
(xi) To the best of such counsel's knowledge, neither the
Company nor any of the Subsidiaries is in violation of any term or
provision of its charter or by-laws or any franchise, license,
permit, judgment, decree, order, statute, rule or regulation, where
the consequences of such violation would have a Material Adverse
Effect.
(xii) No consent, approval, authorization or order of any
court or governmental agency or body is required for the 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 in connection with the
purchase and distribution of the Shares by the several Underwriters.
(xii) To the best of such counsel's knowledge, except as
described in the Prospectus, there is no action, suit, proceeding,
inquiry or investigation before or by any court or governmental
agency or body, domestic or foreign, now pending or threatened,
against or affecting the Company or any Subsidiary which is
- 33 -
required to be disclosed in the Registration Statement and the
Prospectus, or which might reasonably be expected to result in a
Material Adverse Effect, or which might reasonably be expected to
materially and adversely affect the properties or assets thereof or
the consummation of the transactions contemplated in the Agreement
or the performance by the Company of its obligations thereunder.
(xiv) The statements in the Prospectus under the captions
"Description of Capital Stock," "Management's Discussion and
Analysis of Financial Condition and Results of Operations -- Capital
Resources and Liquidity," "Business and Properties," "Shares
Eligible for Future Sale," and "Management -- Certain Transactions,"
insofar as such statements constitute a summary of documents
referred to therein, matters of law or legal conclusions, has been
reviewed by us, are fair summaries in all material respects and
accurately present the information called for with respect to such
documents and matters. 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.
(xv) The Registration Statement, all preliminary prospectuses
and the Prospectus and each amendment or supplement thereto (except
for the financial statements and schedules and other financial data
included therein, as to which such counsel expresses no opinion)
comply as to form in all material respects with the requirements of
the Securities Act and the Rules.
(xvi) The Registration Statement has become effective under
the Securities Act, any required filing of the Prospectus pursuant
to Rule 424(b) has been made in the manner and within the time
period required by Rule 424(b), and 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.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Representatives as to matters which are governed by laws other than the laws of
the State of Nevada, the laws of the State of Texas, the General Corporation Law
of the State of Delaware and the Federal laws of the United States; provided
that such counsel shall state that in their opinion the Underwriters and they
are justified in relying on such other opinions. Copies of such certificates and
other opinions shall be furnished to the Representatives and counsel for the
Underwriters.
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 and representatives of the
independent certified public accountants of the
- 34 -
Company, at which conferences the contents of the Registration Statement and the
Prospectus and related matters were discussed and, although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus (except as specified in the foregoing opinion), on
the basis of the foregoing, no facts have come to the attention of such counsel
which lead such counsel to believe that the Registration Statement at the time
it became effective (except with respect to the financial statements and notes
and schedules thereto and other financial data, as to which such counsel need
express no belief) 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 with respect to the financial statements and notes
schedules thereto and other financial data, as to which such counsel need make
no statement) on the date thereof contained any untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading.
- 35 -
EXHIBIT B
MATTERS TO BE COVERED IN THE OPINION OF COUNSEL FOR THE SELLING STOCKHOLDER
1. The Agreement has been duly executed and delivered by or on behalf of the
Selling Stockholder.
2. To such counsel's knowledge the Selling Stockholder has full legal right,
power and capacity, and any approval required by law (other than any approved
required by the applicable federal or state securities and Blue Sky laws) to
sell, assign, transfer and deliver the Shares to be sold by him in the manner
provided in the Agreement.
3. Upon delivery to the Underwriters of the certificate representing the
Shares, indorsed to the Underwriters or in blank,by the Selling Stockholder and
payment for the Shares by the Underwriters, the Underwriters will acquire all of
the rights of such Selling Stockholder in the Shares free of any adverse
interest (within the meaning of Section 8-303 of the Texas Business and Commerce
Code).
- 36 -
