1
EXHIBIT 1.1
Form of Underwriting Agreement
2,300,000 SHARES*
XXXXXX RESOURCES CORPORATION
COMMON STOCK
UNDERWRITING AGREEMENT
________________ , 1997
ABN AMRO CHICAGO CORPORATION
XXXXXX, XXXXXXX INC.
As Representatives of the
several Underwriters named
in Schedule I hereto
c/o ABN AMRO Chicago Corporation
000 Xxxxx XxXxxxx Xxxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Pursuant to the terms of this Underwriting Agreement (this
"Agreement"), Xxxxxx Resources Corporation, a Colorado corporation (the
"Company"), proposes, subject to the terms and conditions set forth herein, to
issue and sell an aggregate of 2,300,000 shares of Common Stock, par value $.01
per share (the "Common Stock"), of the Company to the several underwriters
named in Schedule I hereto (collectively, the "Underwriters"). The Company has
agreed to sell to the several Underwriters, upon the terms and conditions set
forth in Section 2 hereof, up to an additional 345,000 shares of Common Stock.
The aggregate of 2,300,000 shares to be sold by the Company are herein called
the "Firm Shares" and the aggregate of 345,000 additional shares to be sold by
the Company are herein called the "Additional Shares." The Firm Shares and the
Additional Shares are hereinafter collectively referred to as the "Shares."
ABN AMRO Chicago Corporation and Xxxxxx, Xxxxxxx Inc. are acting individually
and as representatives of the several Underwriters and in such capacity are
hereinafter referred to as the "Representatives."
Prior to the purchase and public offering of the Shares by the
several Underwriters, the Company and the Representatives shall enter into an
agreement substantially in the form of Exhibit A hereto (the "Pricing
Agreement"). The Pricing Agreement may take the form of an exchange of any
standard form of written telecommunication between the Company and the
Representatives and shall specify such applicable information as is indicated
in Exhibit A hereto.
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* Plus an option to purchase up to 345,000 Additional Shares to cover
over-allotments.
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The offering of the Shares will be governed by this Agreement, as supplemented
by the Pricing Agreement. From and after the date of the execution and
delivery of the Pricing Agreement, this Agreement shall be deemed to
incorporate the Pricing Agreement.
The Company is advised by the Representatives that the Underwriters
have agreed to make a public offering of their respective portions of the
Shares as soon after the Registration Statement has become effective and the
Pricing Agreement has been executed as in the judgment of the Representatives
is advisable and to first offer the Shares upon the terms set forth in the
Prospectus.
The Company, the Representatives and the other Underwriters hereby
agree to the following matters with respect to the purchase and sale of the
Shares:
SECTION 1. (a) REPRESENTATIONS AND WARRANTIES OF THE COMPANY. The
Company represents and warrants to each Underwriter that:
(i) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with the provisions of the
Securities Act of 1933, as amended, and the rules and regulations of the
Commission thereunder (collectively, the "Act"), a registration statement on
Form S-2 (File No. 333-______), including a preliminary prospectus, relating to
the Shares and certain amendments thereto. The Company will next file with the
Commission one of the following: (A) prior to effectiveness of such
registration statement, a further amendment thereto, including the form of
final prospectus, (B) a final prospectus in accordance with Rules 430A and
424(b) under the Act or (C) a term sheet (the "Term Sheet") as described in and
in accordance with Rules 434 and 424(b) under the Act. As filed, the final
prospectus, if one is used, or the Term Sheet and the latest Preliminary
Prospectus, if a final prospectus is not used, shall include all Rule 430A
Information (as defined below). There have been or will promptly be delivered
to you three signed copies of such registration statement and amendments,
together with three copies of all documents incorporated by reference therein,
three copies of each exhibit filed therewith, and conformed copies of such
registration statement and amendments (but without exhibits) and of the related
preliminary prospectus or prospectuses and final forms of prospectus or Term
Sheet, if a Term Sheet is used, for each of the Underwriters. The term
"Registration Statement" as used in this Agreement shall mean such registration
statement at the time such registration statement becomes effective and, in the
event any amendment thereto becomes effective prior to the Closing Date (as
hereinafter defined), shall also mean such registration statement as so
amended; provided, however, that such term shall also include all Rule 430A
Information deemed to be included in such registration statement at the time
such registration statement becomes effective as provided by Rule 430A and, if
a Term Sheet is used, shall also include all information deemed to be included
in such registration statement at the time such registration statement becomes
effective as provided by Rule 434; provided, further, that if the Company files
a registration statement under the Act to register a portion of the Shares and
relies on Rule 462(b) for such registration statement to become effective upon
filing with the Commission (the "Rule 462 Registration Statement"), then any
reference to "Registration Statement" herein shall be deemed to be to both the
registration statement referred to above (No. 333-_______) and the Rule 462
Registration Statement, as each such registration statement may be amended
pursuant to the Act. The term "Preliminary Prospectus" as used in this
Agreement shall mean any preliminary prospectus relating to the Shares filed
with the Commission under the Act and
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the rules and regulations thereunder, including any preliminary prospectus
included in the Registration Statement at the time it becomes effective that
omits Rule 430A Information. The term "Prospectus" as used in this Agreement
shall mean: (X) the prospectus relating to the Shares in the form in which it
is first filed with the Commission pursuant to Rule 424(b) under the Act; (Y)
if a Term Sheet is not used and no filing pursuant to Rule 424(b) under the Act
is required, the form of final prospectus included in the Registration
Statement at the time the Registration Statement becomes effective; or (Z) if a
Term Sheet is used in lieu of a prospectus, the Term Sheet in the form in which
it is first filed with the Commission pursuant to Rule 424(b) under the Act,
together with the latest Preliminary Prospectus included in the Registration
Statement at the time it becomes effective (such Term Sheet and Preliminary
Prospectus are sometimes collectively referred to herein as the "Rule 434
Prospectus"). The term "Rule 430A Information" as used in this Agreement shall
mean information with respect to the Shares and the offering thereof permitted
to be omitted from the Registration Statement when it becomes effective
pursuant to Rule 430A under the Act. The Securities Exchange Act of 1934, as
amended, and the rules and regulations of the Commission thereunder are
hereinafter collectively referred to as the "Exchange Act." Any reference
herein to any Preliminary Prospectus or the Prospectus shall be deemed to refer
to and include the documents incorporated by reference therein pursuant to Form
S-2 under the Act ("Incorporated Documents"), as of the date of such
Preliminary Prospectus or Prospectus, as the case may be. The Incorporated
Documents, when they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act and none of such documents
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading.
(ii) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus, and each Preliminary
Prospectus complied in all material respects when so filed with the
requirements of the Act (except to the extent that, in conformity with the Act,
such Preliminary Prospectus is subject to completion).
(iii) The Registration Statement in the form in which it becomes
effective and also in such form as it may be when the Pricing Agreement is
executed or any post-effective amendment to the Registration Statement shall
become effective, and the Prospectus when and in the form last filed with the
Commission as part of the Registration Statement prior to effectiveness or, if
applicable, first filed pursuant to Rule 424(b) under the Act, and when any
supplement or amendment thereto is filed with the Commission, each will comply
in all material respects with the requirements of the Act, will not at any such
time contain an untrue statement of a material fact or omit to state a material
fact required to be stated therein or necessary to make the statements therein,
in light of the circumstances under which they were made, not misleading. This
representation and warranty does not apply to statements in or omissions from
the Registration Statement or the Prospectus (or any supplement or amendment
thereto) made in reliance upon and in conformity with information relating to
any Underwriter furnished to the Company in writing by or on behalf of such
Underwriter through the Representatives specifically for use in the
Registration Statement.
(iv) There is no contract or other document of a character required
to be described in the Registration Statement or Prospectus or to be filed as
an exhibit to the Registration Statement which is not described or filed as
required.
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(v) The accountants who have expressed their opinions with respect
to certain of the financial statements of the Company included or incorporated
by reference in the Registration Statement and the Prospectus, are independent
public accountants as required by the Act.
(vi) The consolidated financial statements, together with the notes
thereto, of the Company included or incorporated by reference in the
Registration Statement and the Prospectus comply in all material respects with
the Act and present fairly the consolidated financial position of the Company
as of the dates indicated, and the consolidated results of operations, cash
flows and changes in financial position of the Company for the periods
specified. Such financial statements have been prepared in conformity with
generally accepted accounting principles applied on a consistent basis
throughout the entire period involved except to the extent disclosed therein.
(vii) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Colorado, with
full corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement and Prospectus.
The Company is duly qualified to do business as a foreign corporation and in
good standing in each jurisdiction in which the ownership or leasing of its
properties or the conduct of its business requires such qualification, except
in any such case in which the failure to so qualify or be in good standing
would not have a material adverse effect upon the business of the Company and
its subsidiaries, taken as a whole; and no proceeding of which the Company has
knowledge has been instituted in any such jurisdiction, revoking, limiting or
curtailing, or seeking to revoke, limit or curtail, such power and authority or
qualification.
(viii) Each of the Company's subsidiaries has been duly incorporated
and is validly existing as a corporation in good standing under the laws of its
jurisdiction of incorporation, with full corporate power and authority to own,
lease and operate its properties and conduct its business as described in the
Registration Statement and Prospectus. Each of the Company's subsidiaries is
duly qualified to do business as a foreign corporation in good standing in each
jurisdiction in which the ownership or leasing of its properties or the conduct
of its business requires such qualification, except in any such case in which
the failure to so qualify or be in good standing would not have a material
adverse effect on the business of the Company and its subsidiaries, taken as a
whole. Each of the Company's subsidiaries has all authorizations, approvals,
orders, certificates and permits of and from all state, federal and other
regulatory officials and bodies necessary to own its properties and to conduct
its business as described in the Registration Statement and Prospectus, except
where the failure to have any such authorization, approval, order, certificate
or permit would not have a material adverse effect on the business affairs,
business prospects, properties, financial condition or results of operations of
the Company and its subsidiaries, taken as a whole. Except for the capital
stock of the subsidiaries and except as otherwise described in the Prospectus,
the Company does not own any capital stock of, or other securities evidencing
an equity interest in, any corporation, partnership or other entity. Except as
described in the Prospectus, all of the issued and outstanding shares of
capital stock of the Company's subsidiaries have been duly and validly
authorized and issued, are fully paid and non-assessable, and except as
described in the Prospectus, are owned by the Company, free and clear of any
security interest, claim, lien, encumbrance or adverse interest of any nature.
Except as described in the Prospectus, there are no outstanding subscriptions,
rights, warrants or options to acquire, or instruments
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convertible into or exchangeable for, any shares of capital stock of any of the
Company's subsidiaries.
(ix) The Company has an authorized and outstanding capitalization as
set forth in the Prospectus and the Shares conform to the description thereof
contained in the Prospectus. All of the issued and outstanding shares of
Common Stock have been duly authorized, validly issued and fully paid and
non-assessable and free of preemptive or other similar rights and there are no
options, agreements, contracts or other rights in existence to acquire from the
Company any shares of Common Stock, except as set forth in the Prospectus.
(x) The Shares to be sold by the Company pursuant to this Agreement
and the Pricing Agreement have been duly authorized and, when issued and paid
for in accordance with this Agreement and the Pricing Agreement, will be
validly issued, fully paid and non-assessable; the holders of the Shares will
not be subject to personal liability by reason of being such holders; there are
no holders of securities of the Company having rights, contractual or
otherwise, to registration thereof or preemptive rights to purchase Common
Stock; all corporate actions required to be taken for the authorization, issue
and sale of the Shares have been validly and sufficiently taken; and upon
delivery of and payment for such Shares hereunder, the Underwriters will
acquire valid and marketable title thereto, free and clear of any security
interest, claim, lien, encumbrance or adverse interest of any nature.
(xi) Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, except as otherwise stated or
contemplated therein, there has not been (A) any material adverse change in the
condition (financial or otherwise), earnings, affairs, business or prospects of
the Company and its subsidiaries, taken as a whole, whether or not arising in
the ordinary course of business, (B) any material transaction entered into, or
any material liability or obligation incurred, by the Company or its
subsidiaries other than in the ordinary course of business, (C) any change in
the capital stock, or material increase in the short-term debt or long-term
debt of the Company or its subsidiaries, or (D) any dividend or distribution of
any kind declared, paid or made by the Company or its subsidiaries on its
capital stock.
(xii) Except as described in the Prospectus, the Company and each of
its subsidiaries have (1) good and indefeasible title to all its interests in
its oil and gas properties, title investigations having been carried out by or
on behalf of such person in accordance with good practice in the oil and gas
industry in the areas in which the Company and each of its subsidiaries
operate, (2) good and indefeasible title to all other real property and good
and marketable title to all other material properties and assets described in
the Prospectus as owned by the Company or any of the subsidiaries and (3)
valid, subsisting and enforceable leases for all of the properties and assets,
real or personal, described in the Prospectus as leased by them, in each case
free and clear or any security interests, mortgages, pledges, liens,
encumbrances or charges of any kind, other than those described in the
Prospectus and those that could not individually or in the aggregate, have a
material adverse effect.
(xiii) Except as described in the Prospectus, as of the date hereof,
(1) all royalties, rentals, deposits and other amounts due on the oil and gas
properties of the Company and each of its subsidiaries have been properly and
timely paid, and no proceeds from the sale or production attributable to the
oil and gas properties of the Company or any of its subsidiaries
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are currently being held in suspense by any purchaser thereof, except where
such amounts due could not, singly or in the aggregate, have a material adverse
effect and (2) there are no claims under take-or-pay contracts pursuant to
which natural gas purchasers have any make-up rights affecting the interest of
the Company or any of its subsidiaries in its oil and gas properties, except
where such claims could not, singly or in the aggregate, have a material
adverse effect.
(xiv) Neither the Company nor any of its subsidiaries is in default
in the observance of any provision of its Certificate or Articles of
Incorporation or by-laws, or in the performance or observance of any
obligation, agreement, covenant or condition contained in any contract,
indenture, mortgage, loan agreement, note, lease or other instrument to which
it is a party or by which it or any of its properties may be bound, the effect
of which could be materially adverse to the condition (financial or otherwise),
earnings, affairs, business or prospects of the Company and its subsidiaries,
taken as a whole.
(xv) The execution and delivery of this Agreement and the Pricing
Agreement, the issuance and delivery of the Shares, the consummation of the
transactions contemplated herein and in the Registration Statement and
compliance with the terms of this Agreement and the Pricing Agreement have been
duly authorized by all necessary corporate action and will not result in any
violation of the Certificate or Articles of Incorporation or by-laws of the
Company or any of its subsidiaries, and will not conflict with or result in a
breach of any of the terms or provisions of, or constitute a default under, or
result in the creation or imposition of any lien, charge, encumbrance or
restriction of any kind upon any property or assets of the Company or any of
its subsidiaries under any contract, indenture, mortgage, loan agreement, note,
lease or other agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its subsidiaries, or
any of their respective properties, is bound, or any existing applicable law,
rule, regulation, judgment, order or decree of any government, governmental
instrumentality or court, domestic or foreign, having jurisdiction over the
Company or any of its subsidiaries or any of their respective properties. No
approval, authorization or consent of any court, regulatory body,
administrative agency or other governmental body having jurisdiction over the
Company or any of its subsidiaries is required in connection with the sale of
the Shares to the Underwriters, except such as may be required under the Act,
state securities or Blue Sky laws or from the clearance of the offering with
the National Association of Securities Dealers, Inc. (the "NASD").
(xvi) There is no action, suit or proceeding before or by any court
or governmental agency or body, domestic or foreign, or any arbitrator or
arbitration panel, now pending or, to the knowledge of the Company, threatened
against or affecting the Company or any of its subsidiaries which could result
in any material adverse change to the condition (financial or otherwise),
earnings, affairs, business or prospects of the Company and its subsidiaries,
taken as whole; and there is no decree, judgment or order of any kind in
existence against or restraining the Company or any of its subsidiaries, or any
of their respective officers, employees or directors, from taking any actions
of any kind in connection with the business of the Company or any such
subsidiary.
(xvii) The Company and each of its subsidiaries own or possess or
have obtained all material governmental licenses, permits, consents, orders,
approvals and other authorizations necessary to lease or own, as the case may
be, and to operate their properties and to carry on their businesses as
presently conducted, and neither the Company nor any such subsidiary
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has received any notice of proceedings related to revocation or modification of
any such licenses, permits, consents, orders, approvals or authorizations which
singly or in the aggregate, if the subject of an unfavorable ruling or finding,
would be materially adverse to the condition (financial or otherwise),
earnings, affairs, business or prospects of the Company and its subsidiaries,
taken as a whole.
(xviii) The conduct of the business of the Company and each of its
subsidiaries is in compliance with all applicable federal, state and local
laws and regulations that regulate or are concerned in any way with the
business of the Company or such subsidiaries, where the effect of the failure
to comply would be materially adverse to the condition (financial or
otherwise), earnings, affairs, business or prospects of the Company and its
subsidiaries, taken as a whole.
(xviii) The Company has filed all tax returns required to be filed
and has paid all taxes which were payable pursuant to said returns or any
assessments with respect thereto, other than any taxes which the Company is
contesting in good faith or which are not material to the Company and there is
no tax deficiency that has been, or to the knowledge of the Company might be,
asserted against the Company or any of its properties or assets that would or
could be expected to have a material adverse affect upon the condition
(financial or otherwise) or results of operations of the Company and its
subsidiaries, taken as a whole.
(xix) This Agreement has been duly executed and delivered by the
Company.
(xx) A registration statement relating to the Common Stock has been
declared effective by the Commission pursuant to the Exchange Act and the
Common Stock is duly registered thereunder.
(xxi) The Company is not, and does not intend to conduct its
business in a manner in which it would become, an "investment company" as
defined in Section 3(a) of the Investment Company Act of 1940, as amended (the
"Investment Company Act").
(xxii) All offers and sales of the Company's capital stock prior to
the date hereof were at all relevant times exempt from the registration
requirements of the Act and were duly registered with, or the subject of an
available exemption from, the registration requirements of the applicable state
securities or Blue Sky laws.
(xxiii) The Company has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or that has constituted
or might reasonably be expected to constitute, the stabilization or
manipulation of the price of any security of the Company.
(xxiv) Except as disclosed in the Registration Statement and the
Prospectus, no transaction has occurred between or among the Company, on the
one hand, and any of its officers or directors or any affiliate or affiliates
of any such officer or director, on the other hand, that is required to be so
disclosed, including, but not limited to, any outstanding loans, advances or
guaranties of indebtedness by the Company to or for the benefit of any
affiliates of the Company, or any of the officers or directors of the Company,
or any family member of any of them.
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(xxv) The Company has not, directly or indirectly, at any time (A)
made any contributions to any candidate for foreign political office, or if
made, failed to disclose fully any such contribution made in violation of law,
or (B) made any payment to any state, federal or foreign governmental officer
or official, or other person charged with similar public or quasi-public
duties, other than payments or contributions required or allowed by applicable
law. The Company's internal accounting controls and procedures are sufficient
to cause the Company to comply in all material respects with the Foreign
Corrupt Practices Act of 1977, as amended.
(xxvi) Xxxxx Xxxxx Company Petroleum Engineers, whose report appears
in the Prospectus, and GeoQuest Reservoir Technologies, Inc., information from
whose report is incorporated by reference therein, was, as of the date of such
report, and is, as of the date hereof, independent petroleum engineers with
respect to the Company.
(xxvii) The Company and each of its subsidiaries (a) are in
compliance with any and all applicable foreign, federal, state and local laws
and regulations relating to the protection of human health and safety, the
environment or hazardous or toxic substances or wastes, pollutants or
contaminants ("Environmental Laws"), (b) have received all permits, licenses or
other approvals required of them under applicable Environmental Laws to conduct
their respective businesses and (c) are in compliance with all terms and
conditions of any such permit, license or approval, except where such
noncompliance with Environmental Laws, failure to receive required permits,
licenses or other approvals or failure to comply with the terms and conditions
of such permits, licenses or approvals would not, singly or in the aggregate,
have a material adverse effect on the Company and its subsidiaries, taken as a
whole.
(xxviii) In the ordinary course of its business, the Company
conducts a periodic review of the effect of Environmental Laws on the business,
operations and properties of the Company and its subsidiaries, in the course of
which if identifies and evaluates associated costs and liabilities (including,
without limitation, any capital or operating expenditures required for
clean-up, closure of properties or compliance with Environmental Laws of any
permit, license or approval, any related constraints on operating activities
and any potential liabilities to third parties). On the basis of such review,
the Company has reasonably concluded that such associated costs and liabilities
would not, singly or in the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
SECTION 2. AGREEMENT TO SELL AND PURCHASE.
(a) Subject to such adjustments to eliminate any fractional share
sales or purchases as the Representatives in their discretion may make, (i) the
Company hereby agrees to issue and sell to the Underwriters an aggregate of
2,300,000 Firm Shares, and (ii) on the basis of the representations,
warranties and agreements of the Company herein contained and subject to the
terms and conditions set forth herein, each Underwriter agrees, severally and
not jointly, to purchase from the Company, at the purchase price per Share set
forth in the Pricing Agreement (the "Purchase Price per Share"), the number of
Firm Shares set forth opposite the name of such Underwriter in Schedule I
hereto (or such number of Firm Shares as such Underwriter shall be obligated to
purchase pursuant to the provisions of Section 9 hereof).
(b) The Company agrees to sell to the Underwriters and, on the basis
of the representations, warranties and agreements of the Company set forth
herein and subject to the
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terms and conditions set forth herein, the Underwriters shall have the right to
purchase, severally and not jointly, from the Company up to 345,000 Additional
Shares, at the Purchase Price per Share upon delivery to the Company of the
notice hereinafter referred to. Such Additional Shares may be purchased solely
for the purpose of covering over- allotments made in connection with the
offering of the Firm Shares. If any Additional Shares are to be purchased,
each Underwriter, severally and not jointly, agrees to purchase from the
Company the number of Additional Shares (subject to such adjustments to
eliminate fractional Shares as the Representatives may determine) which bears
the same proportion to the total number of Additional Shares to be purchased
from the Company as the number of Firm Shares set forth opposite such
Underwriter's name in Schedule I (or such number of Firm Shares increased
pursuant to the terms set forth in Section 9 hereof) bears to the total number
of Firm Shares.
SECTION 3. DELIVERY OF THE SHARES AND PAYMENT THEREFOR.
(a) Delivery to the Underwriters of the Firm Shares shall be made
against payment therefor at 9:00 a.m., Chicago, Illinois time, on the third
full business day following the date of the Pricing Agreement (the "Closing
Date") at the offices of ABN AMRO Chicago Corporation, 000 Xxxxx XxXxxxx
Xxxxxx, Xxxxxxx, Xxxxxxxx 00000. The place of the closing and the Closing Date
may be varied by agreement among the Representatives and the Company.
(b) Delivery to the Underwriters of any Additional Shares to be
purchased by the several Underwriters shall be made in Chicago, Illinois
against payment therefor at the offices of ABN AMRO Chicago Corporation, 000
Xxxxx XxXxxxx Xxxxxx, Xxxxxxx, Xxxxxxxx 00000 at such time on such date (the
"Option Closing Date"), which may be the same as the Closing Date, but shall in
no event be earlier than the Closing Date nor earlier than three nor later than
ten business days after the giving of the notice hereinafter referred to, as
shall be specified in written notice from the Representatives to the Company of
the determination to purchase a number, specified in said notice, of Additional
Shares. Said notice may be given at any time within 30 days after the date of
the execution of the Pricing Agreement. The place of the closing and the
Option Closing Date may be varied by agreement among the Representatives and
the Company.
(c) If the Representatives and the Company have elected to enter
into the Pricing Agreement after the Registration Statement is effective, the
Purchase Price per Share to be paid by the several Underwriters for the Shares
shall be an amount equal to the initial public offering price, less an amount
to be determined by agreement between the Representatives and the Company. The
initial public offering price per Share of the Shares shall be a fixed price to
be determined by agreement between the Representatives and the Company. The
initial public offering price and the Purchase Price per Share, when so
determined, shall be set forth in the Pricing Agreement. If such prices have
not been agreed upon and the Pricing Agreement has not been executed and
delivered by all parties thereto by the close of business on the fourth
business day following the date of this Agreement, this Agreement shall
terminate forthwith, without liability of any party to any other party, unless
otherwise agreed to by the Company and the Representatives and except as
otherwise provided in Section 5 hereof. If the Representatives and the Company
have elected to enter into the Pricing Agreement prior to the Registration
Statement becoming effective, the initial public offering price and the
Purchase Price per Share to be paid by the several Underwriters for the Shares
having each been determined and set forth in the Pricing Agreement, the Company
agrees to file an amendment
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to the Registration Statement and the Prospectus before the Registration
Statement becomes effective.
(d) Certificates for the Firm Shares and for the Additional Shares
shall be registered in such names and in such denominations as the
Representatives shall request upon at least 48 hours prior notice to the
Company preceding the Closing Date or the Option Closing Date, as the case may
be. Such certificates shall be made available to the Representatives at the
office of The Depository Trust Company, New York, New York, for inspection and
packaging not later than at least 24 hours prior to the Closing Date or the
Option Closing Date, as the case may be. The certificates evidencing the Firm
Shares and the Additional Shares shall be delivered to the Representatives on
the Closing Date or the Option Closing Date, as the case may be, with any
transfer taxes thereon duly paid by the Company, for the respective accounts of
the several Underwriters, against payment of the purchase price therefor by
wire or other immediately available funds or, at the option of the Company, by
wire transfer in federal (same day) funds for which the Company will pay one
day's interest at the broker call rate as reported in The Wall Street Journal
on the business day immediately prior to the Closing Date or the Option Closing
Date, as the case may be, subject to change by written agreement of the Company
and the Representatives. It is understood by the Company that each of the
Underwriters has authorized the Representatives, for its account, to accept
delivery of, receipt for and make payment of the purchase price for, the Shares
it has agreed to purchase.
SECTION 4. AGREEMENTS OF THE COMPANY. The Company covenants and agrees
with the several Underwriters that:
(a) The Company will endeavor to cause the Registration Statement to
become effective and will advise the Representatives promptly and, if requested
by the Representatives, will confirm such advice in writing, (i) when the
Registration Statement has become effective and when any post-effective
amendment to it becomes effective, and of the filing of any final prospectus or
supplement or amendment to the Prospectus, (ii) of any request by the
Commission for amendments or supplements to the Registration Statement or
Prospectus or any Preliminary Prospectus or for additional information, (iii)
of the issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or of the suspension of
qualification of the Shares for offering or sale in any jurisdiction, or the
initiation or contemplation of any proceeding for such purposes, and (iv)
within the period of time referred to in paragraph (f) below, of the happening
of any event which makes any statement made in the Registration Statement or
Prospectus (as then amended or supplemented) untrue in any material respect or
which requires the making of any additions to or changes in the Registration
Statement or Prospectus (as then amended or supplemented) in order to make the
statements therein not misleading or the necessity to amend or supplement the
Prospectus to comply with the Act or any other law. If at any time the
Commission shall issue any stop order suspending the effectiveness of the
Registration Statement, the Company will make every reasonable effort to obtain
the withdrawal of such order at the earliest possible moment. If the Company
elects to rely on Rule 434 of the Act, the Company will prepare a Term Sheet
that complies with the requirements of Rule 434 of the Act and will provide the
Representatives with copies of the form of Rule 434 Prospectus in such numbers
as you may reasonably request and file or transmit for filing with the
Commission the form of Prospectus complying with Rule 434(c)(2) of the Act in
accordance with Rule 424(b) of the Act by the close of business in Chicago on
the business day immediately succeeding the date hereof. If the Company elects
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not to rely on Rule 434, the Company will provide you with copies of the form
of Prospectus in such numbers as you may reasonably request and file or
transmit for filing with the Commission such Prospectus in accordance with Rule
424(b) of the Act, by the close of business in Chicago on the business day
immediately succeeding the date hereof.
(b) If, at the time that the Registration Statement becomes
effective, any information shall have been omitted therefrom in reliance upon
Rule 430A under the Act, then promptly following the execution of the Pricing
Agreement, the Company will prepare and file with the Commission, in accordance
with Rule 430A and Rule 424(b) under the Act, copies of an amended Prospectus,
or, if required by Rule 430A, a post-effective amendment to the Registration
Statement (including an amended Prospectus) containing all information so
omitted.
(c) Neither the Company nor any of its subsidiaries will, prior to
the earlier of the Option Closing Date or termination or expiration of the
related option, incur any liability or obligation, direct or contingent, or
enter into any material transaction, other than in the ordinary course of
business, except as contemplated in the Prospectus.
(d) The Company will not file any amendment to the Registration
Statement or make any amendment or supplement to the Prospectus of which the
Representatives shall not previously have been advised or to which the
Representatives shall promptly after being so advised reasonably object in
writing.
(e) Prior to the effective date of the Registration Statement, the
Company has delivered or will deliver to each of the Underwriters, without
charge, copies of each form of Preliminary Prospectus in such quantities as
they have reasonably requested or may hereafter reasonably request. The
Company consents to the use, in accordance with the provisions of the Act and
with the securities or Blue Sky laws of the jurisdictions in which the Shares
are offered by the several Underwriters and by dealers, prior to the effective
date of the Registration Statement, of each Preliminary Prospectus so furnished
by the Company.
(f) On the effective date of the Registration Statement and
thereafter from time to time during such period as in the opinion of counsel
for the Underwriters a prospectus relating to the Shares is required by law to
be delivered in connection with offers or sales of the Shares by an Underwriter
or a dealer, the Company will deliver to each Underwriter and dealer, without
charge, as many copies of the Registration Statement, the Prospectus and each
Preliminary Prospectus and the Incorporated Documents (and of any amendment or
supplement to such documents) as they may reasonably request. During such
period, if any event occurs which in the judgment of the Company, or in the
opinion of counsel for the Underwriters, should be set forth in the Prospectus
in order to ensure that no part of the Prospectus includes an untrue statement
of a material fact or omits to state a material fact necessary in order to make
the statements therein, in the light of the circumstances at the time the
Prospectus is delivered to a purchaser, not misleading, the Company will
forthwith prepare, submit to the Representatives, file with the Commission and
deliver, without charge to the several Underwriters and dealers (whose names
and addresses will be furnished by the Representatives to the Company) to whom
shares have been sold by the Underwriters or to other dealers any amendments or
supplements to the Prospectus so that the statements in the Prospectus, as so
amended or supplemented, will comply with the standards set forth in this
sentence. The Company consents to the use of such Prospectus (and of any
amendments or supplements thereto) in
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accordance with the provisions of the Act and with the securities or Blue Sky
laws of the jurisdictions described in the preliminary Blue Sky memorandum in
which the Shares are lawfully offered by the several Underwriters and by all
dealers to whom Shares may be sold, both in connection with the offering or
sale of the Shares and for such period of time thereafter as the Prospectus is
required by law to be delivered in connection therewith. In case any
Underwriter is required to deliver a Prospectus (and any amendment or
supplement thereto) more than nine months after the first date upon which the
Shares are offered to the public, the Company will, upon request, but at the
expense of such Underwriter, promptly prepare and furnish such Underwriter with
reasonable quantities of a Prospectus complying with Section 10(a)(3) of the
Act.
(g) The Company will cooperate with the Representatives and counsel
for the Underwriters in connection with the registration or qualification of
the Shares for offer and sale by the several Underwriters and by dealers under
the securities or Blue Sky laws of such jurisdictions as the Representatives
may designate, will continue such registrations or qualifications in effect so
long as reasonably required for the distribution of the Shares and will file
such consents to service of process or other documents as may be necessary in
order to effect such registration or qualification; provided that in no event
shall the Company be obligated (i) to qualify to do business in any
jurisdiction where it is not now so qualified, (ii) to file any general consent
to service of process, or (iii) take any action that would subject it to income
taxation in any jurisdiction where it is not so qualified.
(h) For a period of five years after the date of the Pricing
Agreement:
(i) the Company will furnish to the Representatives (A) as soon as
available, a copy of each report of the Company of general interest mailed
to any class of its security holders (B) copies of all annual reports and
current reports filed with the Commission on Forms 10-K, 10-Q and 8-K and
any amendment thereto or such other similar forms as may be designated by
the Commission and (C) from time to time, such other information
concerning the Company as the Representatives may reasonably request;
(ii) if at any time during such five year period, the Company shall
cease filing with the Commission the annual reports and current reports on
Forms 10-K, 10-Q and 8-K or other similar forms referred to in clause (i)
above, the Company will forward to its stockholders generally and the
Representatives and upon request to each of the other Underwriters (A) as
soon as practicable after the end of each fiscal year, copies of a balance
sheet and statements of income and retained earnings of the Company as of
the end of and for such fiscal year, certified by independent public
accountants, and (B) as soon as practicable after the end of each
quarterly fiscal period, except for the last quarterly fiscal period in
each fiscal year, a summary statement (which need not be certified) of
income and retained earnings of the Company for such period, which shall
also be made publicly available; and
(iii) the Company will furnish to the Representatives and to the
NASD, and by issuance of a press release, on the date of declaration,
notice of all dividends, including the amount and medium of payment, the
record date (which shall be not less than ten days subsequent to the
declaration date) and the payment date (which shall be not less than ten
days subsequent to the record date).
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(i) The Company will make generally available to its security
holders an earnings statement of the Company, which need not be audited,
covering a twelve-month period commencing after the effective date of the
Registration Statement and ending not later than 15 months thereafter, as soon
as practicable after the end of such period, which earnings statement shall
satisfy the provisions of Section 11(a) of the Act and the rules and
regulations of the Commission thereunder (including Rule 158).
(j) If this Agreement shall be terminated pursuant to any of the
provisions hereof (otherwise than by notice given by the Representatives'
termination of this Agreement pursuant to Section 10 hereof), or if this
Agreement shall be terminated by the several Underwriters because of any
failure or refusal on the part of the Company to comply with the terms or
fulfill any of the conditions of this Agreement, the Company agrees to
reimburse the several Underwriters for all out-of-pocket expenses (including
reasonable fees and expenses of counsel for the Underwriters) reasonably
incurred by them in connection herewith but without any further obligation of
the Company for lost profits or otherwise. If this Agreement is terminated
pursuant to Section 10 hereof, the several Underwriters shall themselves bear
any such out-of-pocket expenses incurred by them.
(k) The Company will not sell, contract to sell or otherwise dispose
of any Common Stock or rights to purchase Common Stock for a period of 90 days
after the date of the Pricing Agreement without the prior written consent of
the Representatives. The Company will also obtain similar agreements from each
of its officers and directors.
(l) The Company will apply the net proceeds from the sale of the
shares to be sold by it under this Agreement and the Pricing Agreement for the
purposes set forth in the Prospectus under the caption "Use of Proceeds."
(m) The Company will use its best efforts, subject to notice of
issuance, to cause the Shares to be approved for quotation on the National
Market System of The Nasdaq Stock Market, Inc.
SECTION 5. PAYMENT OF EXPENSES. The Company will pay, or reimburse if
paid by the Representatives, whether or not the transactions contemplated
hereby are consummated or this Agreement is terminated, all costs and expenses
incident to the performance by it of its obligations under this Agreement and
the Pricing Agreement, including, without limiting the generality of the
foregoing, (a) preparation, printing, filing and distribution (including
postage, air freight charges and charges for counting and packaging) of the
original registration statement, the Registration Statement, each Preliminary
Prospectus, the Prospectus (including any Incorporated Documents, exhibits and
financial statements and any Term Sheet delivered by the Company pursuant to
Rule 434 of the Act), each amendment and/or supplement to any of the foregoing,
and this Agreement, the Pricing Agreement, the Agreement Among Underwriters,
Selected Dealers Agreement, Powers of Attorney and Underwriters' Powers of
Attorney and Questionnaires, (b) furnishing to the several Underwriters and
dealers copies of the foregoing materials (provided, however, that any such
copies furnished by the Company more than nine months after the first date upon
which the Shares are offered to the public shall be at the expense of the
several Underwriters or dealers so requesting as provided in Section 4(f)
above), (c) the registrations or qualifications referred to in Section 4(g)
above (including filing fees and fees and disbursements of counsel in
connection therewith) and expenses of
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printing and delivering to the several Underwriters copies of the preliminary
and final Blue Sky memoranda, (d) the review of the terms of the public
offering of the Shares by the NASD (including the filing fees paid to the NASD
in connection therewith) and the reasonable fees and disbursements of counsel
for the Underwriters in connection therewith, (e) the performance by the
Company of its other obligations under this Agreement, including the fees of
the Company's counsel and accountants, (f) the issuance of the Shares and the
preparation and printing of the stock certificates representing the Shares,
including any stamp taxes payable in connection with the original issuance of
the Shares, (g) furnishing to the several Underwriters copies of all reports
and information required by Section 4(h) above, including reasonable costs of
shipping and mailing, and (h) the designation of the Common Stock as a Nasdaq
National Market security.
SECTION 6. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The several
obligations of the Underwriters to purchase the Firm Shares hereunder are
subject to the following conditions:
(a) That the Registration Statement shall have become effective not
later than 1:00 p.m., Chicago time, on the first full business day after the
date of this Agreement, or at such later date and time as shall be consented to
in writing by the Representatives, and, if the Representatives and the Company
have elected to rely upon Rule 430A, the price of the Shares and any
price-related or other information previously omitted from the effective
Registration Statement pursuant to such Rule 430A shall have been transmitted
to the Commission for filing pursuant to Rule 424(b) within the prescribed time
period, and, if the Representatives and the Company have elected to rely upon a
Term Sheet, such Term Sheet shall have been transmitted to the Commission for
filing pursuant to Rule 434 and Rule 424(b) within the prescribed time period,
and on or prior to the Closing Date, the Company shall have provided evidence
satisfactory to the Representatives of such timely filing, or a post-effective
amendment providing such information shall have been promptly filed and
declared effective in accordance with the requirements of Rule 430A. No stop
order suspending the effectiveness of the Registration Statement shall have
been issued and no proceedings for the purpose shall have been instituted or
shall be pending or, to the knowledge of the Company, shall be contemplated by
the Commission and there shall not have come to the attention of the
Representatives any facts that would cause them to believe that the Prospectus,
at the time it was required to be delivered to purchasers of the Shares,
contained any untrue statement of material fact or omitted to state any
material fact necessary in order to make the statements therein, in light of
the circumstances under which there were made, not misleading.
(b) That subsequent to the effective date of the Registration
Statement, (i) there shall not have occurred any change, or any development
involving a prospective change, in or affecting particularly the business or
properties of the Company or its subsidiaries not contemplated by the
Prospectus, which, in the Representatives' opinion, as Representatives of the
several Underwriters, would materially adversely affect the market for the
Shares or make it impracticable or inadvisable to proceed with the offering or
the delivery of the Shares, as contemplated herein and in the Prospectus, or to
attempt to enforce contracts for the purchase of Shares, and (ii) the business
and operations of the Company shall not have been adversely affected by strike,
fire, flood, accident or other calamity (whether or not insured).
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(c) The Representatives shall have received from Holme Xxxxxxx &
Xxxx LLP, counsel for the Company, a favorable opinion dated the Closing Date
and satisfactory to the Representatives and the Underwriters' counsel to the
effect that:
(i) The Company has been duly incorporated and is validly existing
as a corporation in good standing under the laws of the State of Colorado,
with full corporate power and authority to own, lease and operate its
properties and conduct its business as described in the Registration
Statement. The Company is duly qualified to do business as a foreign
corporation and in good standing in each jurisdiction where the ownership
or leasing of its properties or the conduct of its business requires such
qualification, except in any such case where the failure to so qualify or
be in good standing would not have a material adverse effect on the
condition (financial or otherwise) or results of operations of the Company
and its subsidiaries, taken as a whole.
(ii) Each direct and indirect subsidiary of the Company has been
duly incorporated and is validly existing as a corporation in good
standing under the laws of the state of its incorporation, with full
corporate power and authority to own, lease and operate its properties and
conduct its business as described in the Registration Statement. Each
direct and indirect subsidiary of the Company is duly qualified to do
business as a foreign corporation and in good standing in each
jurisdiction where the ownership or leasing of its properties or the
conduct of its business requires such qualification, except in any such
case where the failure to so qualify or be in good standing would not have
a material adverse effect on the condition (financial or otherwise) or
results of operations of the Company and its subsidiaries, taken as a
whole.
(iii) All of the issued and outstanding capital stock of the
subsidiaries of the Company has been duly authorized and validly issued
and is fully paid and non-assessable, and except as disclosed in the
Registration Statement, the Company owns directly or indirectly 100
percent of the outstanding capital stock of each subsidiary and, to the
best knowledge of such counsel, such stock is owned free and clear of any
security interests, claims, liens, encumbrances or adverse interests of
any nature.
(iv) The issued and outstanding capital stock of the Company has
been duly authorized and validly issued and is fully paid and
non-assessable and free of preemptive rights.
(v) The authorized capitalization of the Company consists entirely
of 25,000,000 shares of Common Stock, of which __________ were issued and
outstanding on the date of the Prospectus, and 500,000 shares of Preferred
Stock, of which 135,200 were issued and outstanding on the date of the
Prospectus, and all of which conforms to the description thereof in the
Registration Statement and the Prospectus.
(vi) The certificates for the Shares to be delivered hereunder are
in due and proper form, and when duly countersigned by the Company's
transfer agent and delivered to the Representatives against payment of the
agreed consideration therefor in accordance with the provisions of this
Agreement and the Pricing Agreement, the Shares represented thereby will
be duly authorized and validly issued, fully paid and
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nonassessable and free of preemptive rights and, to the knowledge of such
counsel, will be free of any security interest, claim, lien, encumbrance
or adverse interest of any nature, or rights of first refusal in favor of,
stockholders with respect to any of the Shares or the issuance or sale
thereof, pursuant to the Articles of Incorporation or by-laws of the
Company and, to such counsel's knowledge, there are no contractual
preemptive rights, rights of first refusal, rights of co-sale or other
similar rights which exist with respect to any of the Shares or the
issuance and sale thereof; and the Shares to be sold hereunder have been
duly and validly authorized and qualified for inclusion on The Nasdaq
National Market, subject to notice of issuance.
(vii) This Agreement and the Pricing Agreement have been duly and
validly authorized, executed and delivered by the Company and are legal,
valid and binding obligations of the Company, enforceable in accordance
with their terms, except as enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity, and
except that such counsel need express no opinion as to those provisions
relating to indemnities for liabilities under the Act.
(viii) No authorization, approval, order or consent of any
governmental authority or agency is required for the valid issuance and
sale of the Shares, except such as may be required under the Act or state
securities laws as to which such counsel need express no opinion.
(ix) The execution, delivery and performance of this Agreement and
the Pricing Agreement by the Company, the issue and sale of the Shares,
and the consummation of the transactions contemplated hereby and thereby
will not conflict with or result in a breach of any of the provisions of,
or constitute a default under (A) the Company's Articles of Incorporation
or by-laws or any agreement, franchise, license, indenture, mortgage, deed
of trust or other instrument or agreement known to such counsel to which
the Company or any of its subsidiaries is a party or by which Company or
any of its subsidiaries is bound or to which any of its their respective
properties is subject or (B) so far as known to such counsel, any statute,
order, rule or regulation applicable to the Company or any of its
subsidiaries of any court or other governmental authority or body having
jurisdiction over the Company or any of its subsidiaries or any of its
properties.
(x) All documents incorporated by reference in the Prospectus, when
they were filed with the Commission, complied as to form in all material
respects with the requirements of the Exchange Act; and such counsel have
no reason to believe that any of such documents, when they were so filed,
contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made when such documents
were so filed, not misleading; such counsel need express no opinion as to
the financial statements or other financial or statistical data contained
in any such document.
(xi) The Registration Statement has become effective under the Act,
and, to the knowledge of such counsel, no stop order suspending the
effectiveness of the
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Registration Statement has been issued and no proceedings for that purpose
have been instituted or are pending or contemplated under the Act.
(xii) The Registration Statement (including the information deemed
to be part of the Registration Statement at the time of effectiveness
pursuant to Rule 430A(b), if applicable) as amended or supplemented
(except for the financial statements and notes thereto, the financial
statement schedules and other statistical or financial data included
therein as to which such counsel need express no opinion) and the
Prospectus and any supplements or amendments thereto (except for the
financial statements and notes thereto, the financial statement schedules
and other statistical or financial data included therein, as to which such
counsel need express no opinion) comply as to form in all material
respects with the requirements of the Act and the rules of the Commission
thereunder and nothing has come to the attention of such counsel that
would cause such counsel to believe that the Registration Statement
(including the information deemed to be part of the Registration Statement
at the time of effectiveness pursuant to Rule 430A(b), if applicable) as
amended or supplemented (except for the financial statements and notes
thereto, the financial statement schedules and other statistical or
financial data included therein as to which such counsel need express no
opinion) at the time it became effective, at the time the Pricing
Agreement was executed and at the Closing Date, contained any untrue
statement of a material fact or omitted or omits to state any material
fact required to be stated therein or necessary to make the statements
therein not misleading, or that, as of its date, the Prospectus or any
amendment or supplement thereto (except for the financial statements and
notes thereto, the financial statement schedules and other statistical or
financial data included therein as to which such counsel need express no
opinion) included or includes any untrue statement of a material fact or
omitted or omits to state any material fact necessary to make the
statements therein, in light of the circumstances under which they were
made, not misleading. The Rule 434 Prospectus conforms to the
requirements of Rule 434 of the Act.
(xiii) The statements in the Prospectus in the sections captioned
"Description of Capital Stock and Other Securities," and "Transactions
with Related Parties" in each case insofar as such statements reflect a
summary of the material legal matters or the documents referred to
therein, fairly and accurately present the information called for by the
Act and the applicable rules and regulations promulgated thereunder.
(xiv) To the knowledge of such counsel there are no statutes or
regulations, provisions of the Colorado Business Corporation Act or any
pending or threatened litigation or governmental proceedings against the
Company required to be described in the Prospectus which are not so
described, nor of any contracts or documents of a character required to be
described in or filed as a part of the Registration Statement which are
not described or filed as required.
(xv) To such counsel's knowledge, except as disclosed in the
Prospectus, no person has the right, contractual or otherwise, to cause
the Company to register pursuant to the Act any shares of capital stock of
the Company, upon the issuance and sale of the Shares to be sold by the
Company to the Underwriters pursuant to this Agreement.
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(xvi) Neither the Company nor any of its subsidiaries is an
"investment company" or a person "controlled by" an "investment company"
within the meaning of the Investment Company Act.
(xvii) To such counsel's knowledge, all offers and sales of the
Company's and each of its subsidiaries capital stock prior to the date
hereof were at all relevant times exempt from the registration
requirements of the Act and were duly registered or the subject of an
available exemption from the registration requirements of the applicable
state securities or blue sky laws.
In rendering such opinion, such counsel may state that they are
relying upon the certificate of the officers of the Company and the transfer
agent for the Common Stock, as to the number of shares of Common Stock at any
time or times outstanding, and that insofar as their opinion under clause (xii)
above relates to the accuracy and completeness of the Prospectus and
Registration Statement, it is based upon a general review with the Company's
representatives and independent accountants of the information contained
therein, without independent verification by such counsel of the accuracy or
completeness of such information. Such counsel may also rely upon the opinions
of other competent counsel and, as to factual matters, on certificates of
officers of the Company and of state officials, in which case their opinion is
to state that they are so doing and copies of such opinions or certificates are
to be attached to the opinion unless such opinions or certificates (or, in the
case of certificates, the information therein) have been furnished to the
Representatives otherwise.
(d) That the Representatives shall have received on the Closing Date
a favorable opinion dated the Closing Date from Xxxxxx & Xxxxxx L.L.P., counsel
for the Underwriters, as to such matters as the Representatives may reasonably
require.
(e) That the Representatives shall have received letters addressed
to the Representatives and dated the date hereof and the Closing Date from
Xxxxxx Xxxxxxxx LLP, independent public accountants for the Company, to the
effect set forth in Schedule II. There shall not have been any change or
decrease specified in the letters referred to in this subparagraph which makes
it impractical or inadvisable in the judgment of the Representatives to proceed
with the public offering or purchase of the Shares as contemplated hereby.
(f) That (i) no stop order suspending the effectiveness of the
Registration Statement shall have been issued and no proceedings for that
purpose shall have been taken or, to the knowledge of the Company, shall be
contemplated by the Commission at or prior to the Closing Date; (ii) there
shall not have been any change in the capital stock of the Company nor any
material increase in the short or long-term debt of the Company from that set
forth or contemplated in the Registration Statement; (iii) there shall not have
been, since the respective dates as to which information is given in the
Registration Statement and the Prospectus, except as may otherwise be set forth
or contemplated in the Registration Statement and the Prospectus, any material
adverse change in the financial condition or results of operations of the
Company; (iv) the Company shall not have incurred any material liabilities or
obligations, direct or contingent (whether or not in the ordinary course of
business), other than those reflected in the Registration Statement, and (v)
all of the representations and warranties of the Company contained in this
Agreement shall be true and correct on and as of the date hereof and the
Closing Date as if made on and as of each such date, and the Representatives
shall
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have received a certificate, dated the Closing Date and signed by the chief
executive officer and the principal financial officer (or such other officers
as are acceptable to the Representatives) to the effect set forth in this
Section 6(f) and in Section 6(g) hereof.
(g) That the Company shall not have failed at or prior to the
Closing Date to have performed or complied in all material respects with any of
the agreements herein contained and required to be performed or complied with
by it at or prior to the Closing Date.
(h) Within 24 hours after the Registration Statement becomes
effective, or within such longer period as to which the Representatives shall
have consented, the Shares shall have been qualified for sale or exempted from
such qualification under the securities laws of such jurisdictions as the
Representatives shall have designated prior to the time of execution of the
Pricing Agreement and such qualification or exemption shall continue in effect
to and including the Closing Date.
The several obligations of the Underwriters to purchase Additional
Shares hereunder are subject to the satisfaction on and as of the Option
Closing Date of the conditions set forth in paragraphs (a) through (h); except
that the opinions called for in paragraphs (c) and (d) shall be revised to
reflect the sale of Additional Shares and shall be dated the Option Closing
Date, if different from the Closing Date.
SECTION 7. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company agrees to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of the Act or the Exchange Act from and against any and all losses,
claims, damages or liabilities, joint or several, whatsoever (including any
investigation, legal or other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claim
asserted) to which such Underwriter, or such controlling person may become
subject, arising out of or based upon any untrue statement or alleged untrue
statement of a material fact contained in any Preliminary Prospectus or the
Registration Statement or the Prospectus or in any amendment or supplement
thereto or arising out of or based upon any omission or alleged omission to
state therein a material fact required to be stated therein or necessary to
make the statements therein not misleading, and will reimburse each Underwriter
for any legal or other expenses reasonably incurred by such Underwriter in
connection with investigating or defending any such action or claim as such
expenses are incurred, except insofar as such losses, claims, damages or
liabilities arise out of or are based upon any such untrue statement or
omission or allegation thereof which has been made therein or omitted therefrom
in reliance upon and in conformity with information relating to such
Underwriter furnished in writing to the Company by or on behalf of any
Underwriter through the Representatives expressly for use therein; provided,
however, that the indemnification contained in this paragraph with respect to
any Preliminary Prospectus shall not inure to the benefit of any Underwriter
(or of any person controlling such Underwriter) with respect to any action or
claim arising from the sale of the Shares by such Underwriter brought by any
person who purchased Shares from such Underwriter if (i) a copy of the
Prospectus (as amended or supplemented if any amendments or supplements thereto
shall have been furnished to the Underwriter prior to the written confirmation
of the sale involved) shall not have been given or sent to such person by or on
behalf of the Underwriter with or prior to the written confirmation of the sale
involved and (ii) the untrue statement or omission of a
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material fact contained in such Preliminary Prospectus was corrected in the
Prospectus (as amended or supplemented if amended or supplemented as
aforesaid).
(b) If any action or claim shall be brought against any Underwriter
or any person controlling such Underwriter, in respect of which indemnity may
be sought against the Company, such Underwriter shall promptly notify the
Company in writing, and the Company shall assume the defense thereof, including
the employment of counsel and payment of all fees and expenses. Any
Underwriter or any such person controlling such Underwriter shall have the
right to employ separate counsel in any such action and participate in the
defense thereof, but the fees and expenses of such counsel shall be at the
expense of such Underwriter or such controlling person and shall be reimbursed
as they are incurred unless (i) the Company has agreed in writing to pay such
fees and expenses, (ii) the Company has failed to assume the defense and employ
counsel, or (iii) the named parties to any such action (including any impleaded
party) included such Underwriter or controlling person and the Company and such
Underwriter or controlling person shall have been advised by such counsel that
there may be one or more legal defenses available to it which are different
from or additional to those available to the Company and which may also result
in a conflict of interest (in which case if such Underwriter or controlling
person notifies the Company, the Company shall not have the right to assume the
defense of such action on behalf of such Underwriter or controlling person, it
being understood, however, that the Company shall not, in connection with any
one such action or separate but substantially similar or related actions in the
same jurisdiction arising out of the same general allegations or circumstances,
be liable for the reasonable fees and expenses of more than one separate firm
of attorneys for all such Underwriters and controlling persons, which firm
shall be designated in writing by the Representatives). The Company shall not
be liable for any settlement or any such action effected without the written
consent of the Company, but if settled with the written consent of the Company,
or if there shall be a final judgment for the plaintiff in any such action and
the time for filing all appeals has expired, the Company agrees to indemnify
and hold harmless any Underwriter and any such controlling person from and
against any loss or liability by reason of such settlement or judgment.
(c) Each Underwriter will severally indemnify and hold harmless the
Company, its directors, its officers who sign the Registration Statement and
any person controlling the Company within the meaning of the Act or the
Exchange Act to the same extent as the foregoing indemnity from the Company to
each Underwriter, but only with respect to information relating to such
Underwriter furnished in writing to the Company by or on behalf of such
Underwriter through the Representatives expressly for use in the Registration
Statement, the Prospectus or any Preliminary Prospectus. If any action or
claim shall be brought or asserted against the Company, any of its directors,
any such officer or any such controlling person based on the Registration
Statement, the Prospectus or any Preliminary Prospectus and in respect of which
indemnity may be sought against any Underwriter, such Underwriter shall have
the rights and duties given to the Company pursuant to Section 7(b) hereof
(except that if the Company shall have assumed the defense thereof, such
Underwriter shall not be required to do so, but may employ separate counsel
therein and participate in the defense thereof but the fees and expenses of
such counsel shall be at the expense of such Underwriter), and the Company, its
directors, any such officer and any such controlling person shall have the
rights and duties given to the Underwriters by Section 6(b) hereof.
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(d) (i) If the indemnification provided for in this Section 7 is
unavailable as a matter of law to any indemnified party under this Section 7 in
respect of any losses, claims, damages, liabilities or expenses referred to
therein, then the indemnifying party in lieu of indemnifying such indemnified
party thereunder, shall contribute to the amount paid or payable by damages,
liabilities or expenses (A) in such proportion as is appropriate to reflect the
relative benefits received by the Company and the Underwriters from the
offering of the Shares or (B) if the allocation provided by clause (A) above is
not permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (A) above but also
the relative fault of the Company and the Underwriters 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 respective relative benefits received by the Company and
the Underwriters shall be deemed to be in the same proportion in the case of
the Company, as the total price paid to the Company for the Shares by the
Underwriters (net of underwriting discount but before deducting expenses), and
in the case of the Underwriters as the underwriting discount received by them
bears to the total of such amounts paid to the Company and received by the
Underwriters as underwriting discount, in each case as contemplated by the
Prospectus. The relative fault of the Company and the Underwriters shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company or by the
Underwriters and the parties' relative intent, knowledge, access to information
and opportunity to correct or prevent such statement or omission. The amount
paid or payable by an indemnified party as a result of the losses, claims,
damages, liabilities and expenses referred to in this Section shall be deemed
to include, subject to the limitations set forth in this Section, any legal or
other expenses reasonably incurred by such indemnified party in connection with
investigating or defending any such action or claim.
(ii) The Company and the Underwriters agree that the
determination of contribution pursuant to this Section based on pro rata
allocation or by any other method of allocation which does not take account of
the equitable considerations referred to in the immediately preceding paragraph
would not be just and equitable (even if the several Underwriters were treated
as one entity for such purpose). Notwithstanding the provisions of this
Section, no Underwriter shall be required to contribute any amount in excess of
the amount by which the total price at which the Shares underwritten by it and
distributed to the public exceeds the amount of any damages which such
Underwriter has otherwise been required to pay by reason of such untrue or
alleged untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Underwriters' obligations to contribute
pursuant to this Section are several in proportion to their respective
underwriting commitments and not joint.
(e) The indemnity and contribution agreements contained in this
Section and the representations and warranties of the Company set forth in this
Agreement shall remain operative and in full force and effect, regardless of
(i) any investigation made by or on behalf of any Underwriter or any person
controlling any Underwriter, the Company or its directors or officers, (or any
person controlling the Company), (ii) acceptance of any Shares and payment
therefor hereunder and (iii) any termination of this Agreement. A successor or
assign of an Underwriter, the Company or its directors or officers, and their
legal and personal
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representatives (or of any person controlling an Underwriter, or the Company)
shall be entitled to the benefits of the indemnity, contribution and
reimbursement agreements contained in this Section.
SECTION 8. EFFECTIVE DATE OF AGREEMENT. This Agreement shall become
effective immediately as to Sections 5, 7, 10 and 11 and as to all other
provisions at 10:00 A.M., Chicago Time, on the day following the date upon
which the Pricing Agreement is executed and delivered, unless such a day is a
Saturday, Sunday or holiday (and in that event this Agreement shall become
effective at such hour on the business day next succeeding such Saturday,
Sunday or holiday); but this Agreement shall nevertheless become effective at
such earlier time after the Pricing Agreement is executed and delivered as you
may determine on and by notice to the Company or by release of any Shares for
sale to the public. For the purposes of this Section, the Shares shall be
deemed to have been so released upon the release for publication of any
newspaper advertisement relating to the Shares or upon the release by you of
telegrams (i) advising Underwriters that the Shares are released for public
offering, or (ii) offering the Shares for sale to securities dealers, whichever
may occur first.
SECTION 9. DEFAULT OF UNDERWRITERS. If any one or more of the
Underwriters shall fail or refuse to purchase Firm Shares which it or they have
agreed to purchase under this Agreement and the Pricing Agreement and the
aggregate number of Firm Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase is not more than
one-tenth of the aggregate number of Firm Shares, each non-defaulting
Underwriter shall be obligated, severally, in the proportion which the number
of Firm Shares set forth opposite its name in Schedule I bears to the aggregate
number of Firm Shares set forth opposite the names of all non-defaulting
Underwriters or in such other proportion as the Representatives may specify in
accordance with the Agreement Among Underwriters to purchase the Firm Shares
which such defaulting Underwriter or Underwriters agreed but failed or refused
to purchase. If any Underwriter or Underwriters shall fail or refuse to
purchase Firm Shares and the aggregate number of Firm Shares with respect to
which such default occurs is more than one-tenth of the aggregate number of
Firm Shares and arrangements satisfactory to the Representatives and the
Company for the purchase of such Firm Shares are not made within 36 hours after
such default, this Agreement will terminate without liability on the part of
any non-defaulting Underwriter or the Company. In any such case which does not
result in termination of this Agreement, either the Representatives or the
Company shall have the right to postpone the Closing Date, but in no event for
longer than seven days, in order that the required changes, if any, in the
Registration Statement and the Prospectus or any other documents or
arrangements may be effected. Any action taken under this paragraph shall not
relieve any defaulting Underwriter from liability in respect of any such
default of any such Underwriter under this Agreement.
(b) Any notice under this Section 9 may be made by telecopy or
telephone but shall be subsequently confirmed by letter.
SECTION 10. TERMINATION OF AGREEMENT. This Agreement and the Pricing
Agreement shall be subject to termination by notice given by you to the
Company, if (a) after the execution and delivery of this Agreement and the
Pricing Agreement and prior to the Closing Date (and with respect to the
Additional Shares, the Option Closing Date) (i) trading generally shall have
been suspended or materially limited on or by, as the case may be, any of the
New York Stock
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Exchange, the American Stock Exchange, the National Association of Securities
Dealers, Inc., the Chicago Board of Options Exchange, the Chicago Mercantile
Exchange or the Chicago Board of Trade, (ii) trading of any securities of the
Company shall have been suspended on any exchange or in any over-the-counter
market, (iii) a general moratorium on commercial banking activities in New York
or in Chicago shall have been declared by either Federal, New York or Illinois
State authorities or (iv) there shall have occurred any outbreak or escalation
of hostilities or any change in financial markets or any calamity or crisis
that, in your judgment, is material and adverse and (b) in the case of any of
the events specified in clauses (a)(i) through (iv), such event, singly or
together with any other such event, makes it, in your judgment, impracticable
to market the Shares on the terms and in the manner contemplated in the
Prospectus. Notice of such cancellation shall be given to the Company by
telecopy or telephone but shall be subsequently confirmed by letter.
SECTION 11. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the sale to the
Underwriters of the Shares on the Closing Date is not consummated because any
condition to the Underwriters' obligations hereunder is not satisfied or
because of any refusal, inability or failure on the part of the Company to
perform any agreement herein or to comply with any provision hereof, unless
such failure to satisfy such condition or to comply with any provision hereof
is due to the default or omission of any Underwriter, the Company agrees to
reimburse you and the other Underwriters upon demand for all out-of-pocket
expenses (including reasonable fees and disbursements of counsel) that shall
have been reasonably incurred by you and them in connection with the proposed
purchase and the sale of the Shares. Any such termination shall be without
liability of any party to any other party except that the provisions of this
Section, Section 5 and Section 7 shall at all times be effective and shall
apply.
SECTION 12. NOTICES. Except as otherwise provided in Sections 9 and 10
hereof, notice given pursuant to any of the provisions of this Agreement shall
be in writing and shall be delivered (a) if to the Company, at the office of
the Company at 000 00xx Xxxxxx, Xxxxx 0000, Xxxxxx, Xxxxxxxx 00000, Attention:
General Counsel, with a copy to Holme Xxxxxxx & Xxxx LLP, 0000 Xxxxxxx, Xxxxx
0000, Xxxxxx, Xxxxxxxx 00000, Attention: Xxxxxx X. Xxxxxxxxxx or (b) if to the
Representatives, at the offices of ABN AMRO Chicago Corporation, 000 Xxxxx
XxXxxxx Xxxxxx, 0xx Xxxxx, Xxxxxxx, Xxxxxxxx 00000, Attention: Corporate
Finance Department, with a copy to Xxxxxx & Xxxxxx L.L.P., 2500 First City
Tower, 0000 Xxxxxx, Xxxxxxx, Xxxxx 00000, Attention: Xxxx X. Xxxxx, or in any
case to such other address as the person to be notified may have requested in
writing.
SECTION 13. SUCCESSORS. The Agreement and the Pricing Agreement are
made solely for the benefit of the several Underwriters, the Company, their
directors and officers and other controlling persons referred to in Section 7
hereof, and their respective successors and assigns, and no other person shall
acquire or have any right under or by virtue of this Agreement or the Pricing
Agreement. The term "successors and assigns" as used in this Agreement shall
not include a purchaser from any of the several Underwriters of any of the
Shares in his status as such purchaser.
SECTION 14. REPRESENTATION OF UNDERWRITERS. The Representatives will act
for the several Underwriters in connection with the purchase, offering and sale
of the Shares, and any action taken by the Representatives will be binding upon
all the Underwriters.
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SECTION 15. PARTIAL UNENFORCEABILITY. If any section, paragraph or
provision of this Agreement is for any reason determined to be invalid or
unenforceable, such determination shall not affect the validity or
enforceability of any other section, paragraph or provision hereof.
SECTION 16. APPLICABLE LAW. This Agreement and the Pricing Agreement
shall be governed by and construed in accordance with the laws of the State of
Illinois.
SECTION 17. COUNTERPARTS. This Agreement may be signed in various
counterparts which together shall constitute one and the same instrument.
Please confirm that the foregoing correctly sets forth the agreement
among the Company and the several Underwriters.
Very truly yours,
XXXXXX RESOURCES CORPORATION
BY:
-------------------------------------
XXXXXX X. XXXXXX XX.
CHAIRMAN OF THE BOARD AND PRESIDENT
ACCEPTED AND DELIVERED AS OF
THE DATE FIRST WRITTEN ABOVE.
ABN AMRO CHICAGO CORPORATION
XXXXXX, XXXXXXX INC.
ACTING AS REPRESENTATIVES OF
THE SEVERAL UNDERWRITERS NAMED
IN SCHEDULE I HERETO.
BY: ABN AMRO CHICAGO CORPORATION
BY:
-------------------------------
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XXXXXX RESOURCES CORPORATION
SCHEDULE I
UNDERWRITERS
NUMBER OF
NAME FIRM SHARES
---- -----------
ABN AMRO Chicago Corporation . . . . . . . . . . . .
Xxxxxx, Xxxxxxx Inc. . . . . . . . . . . . . . . . .
TOTAL . . . . . . . . . . . . . . . .
===========
26
XXXXXX RESOURCES CORPORATION
SCHEDULE II
COMFORT LETTER OF XXXXXX XXXXXXXX LLP
(1) They are independent public accountants with respect to the Company
and its subsidiaries within the meaning of the Act.
(2) In their opinion the consolidated financial statements of the Company
and its subsidiaries included or incorporated by reference in the Registration
Statement and the consolidated financial statements of the Company from which
the information presented under the caption "Selected Consolidated Financial
Data" has been derived which are stated therein to have been examined by them
comply as to form in all material respects with the applicable accounting
requirements of the Act and the Exchange Act.
(3) On the basis of specified procedures (but not an examination in
accordance with generally accepted auditing standards), including inquiries of
certain officers of the Company and its subsidiaries responsible for financial
and accounting matters as to transactions and events subsequent to ______,
19__, a reading of minutes of meetings of the stockholders and directors of the
Company and its subsidiaries since ___________, 19__, a reading of the latest
available interim unaudited consolidated financial statements of the Company
and its subsidiaries (with an indication of the date thereof) and other
procedures as specified in such letter, nothing came to their attention which
caused them to believe that (i) the unaudited consolidated financial statements
of the Company and its subsidiaries included or incorporated by reference in
the Registration Statement do not comply as to form in all material respects
with the applicable accounting requirements of the Act and the Exchange Act or
that such unaudited financial statements are not fairly presented in accordance
with generally accepted accounting principles applied on a basis substantially
consistent with that of the audited financial statements included in the
Registration Statement, and (ii) at a specified date not more than five days
prior to the date thereof in the case of the first letter and not more than two
business days prior to the date thereof in the case of the second and third
letters, there was any change in the capital stock or long-term debt or
short-term debt (other than normal payments) of the Company and its
subsidiaries on a consolidated basis or any decrease in consolidated net
current assets or consolidated stockholders' equity as compared with amounts
shown on the latest unaudited balance sheet of the Company included in the
Registration Statement or for the period from the date of such balance sheet to
a date not more than five days prior to the day thereof in the case of the
first letter and not more than two business days prior to the date thereof in
the case of the second and third letters, there were any decreases, as compared
with the corresponding period of the prior year, in consolidated net sales,
consolidated income before income taxes or in the total or per share amounts of
consolidated net income except, in all instances, for changes or decreases
which the Prospectus discloses have occurred or may occur or which are set
forth in such letter.
(4) They have carried out specified procedures, which have been agreed to
by the Representatives, with respect to certain information in the Prospectus
specified by the
27
Representatives, and on the basis of such procedures, they have found such
information to be in agreement with the general accounting records of the
Company and its subsidiaries.
3
28
EXHIBIT A
2,3000,000 SHARES*
XXXXXX RESOURCES CORPORATION
COMMON STOCK
PRICING AGREEMENT
____________, 1997
ABN AMRO CHICAGO CORPORATION
XXXXXX, XXXXXXX INC.
Individually and as Representatives of the
Several Underwriters Named in Schedule I
to the Underwriting Agreement
c/o ABN AMRO Chicago Corporation
000 Xxxxx XxXxxxx Xxxxxx
0xx Xxxxx
Xxxxxxx, Xxxxxxxx 00000
Ladies and Gentlemen:
Reference is made to the Underwriting Agreement, dated ___________,
1997 (the "Underwriting Agreement"), relating to the purchase by the several
Underwriters named in Schedule I thereto (collectively, the "Underwriters"),
for whom you are acting individually and as representatives (the
"Representatives"), of the above referenced Common Stock (the "Shares") of
Xxxxxx Resources Company (the "Company").
Pursuant to Section 3 of the Underwriting Agreement, the Company
agrees with each of the Underwriters as follows:
1. The public offering price per share of the Shares determined as
provided in said Section 3 shall be $_______.
2. The purchase price per share of the Shares to be paid by the
several Underwriters shall be $________, being an amount equal to the initial
public offering price set forth above, less $_______ per Share.
If the foregoing is in accordance with your understanding of our
agreement, please sign and return to the Company a counterpart hereof,
whereupon this instrument, along with all counterparts, will become a binding
agreement among the Underwriters and the Company in accordance with its terms.
-------------------
* Plus an option to purchase up to 345,000 Additional Shares to cover
over-allotments.
29
VERY TRULY YOURS,
XXXXXX RESOURCES CORPORATION
BY:
-----------------------------------
XXXXXX X. XXXXXX XX.
CHAIRMAN OF THE BOARD AND PRESIDENT
CONFIRMED AND ACCEPTED, AS OF THE DATE
FIRST ABOVE WRITTEN FOR THEMSELVES AND
AS REPRESENTATIVES OF THE OTHER UNDERWRITERS
NAMED IN THE UNDERWRITING AGREEMENT:
ABN AMRO CHICAGO CORPORATION
XXXXXX, XXXXXXX INC.
ACTING AS REPRESENTATIVES OF THE SEVERAL
UNDERWRITERS NAMED IN SCHEDULE I TO
THE UNDERWRITING AGREEMENT
BY: ABN AMRO CHICAGO CORPORATION
BY:
-------------------------------------
2
