1
EXHIBIT 1.1
Draft of 7/25/97
2,100,000 Shares
Continental Natural Gas, Inc.
Common Stock
UNDERWRITING AGREEMENT
_________________, 1997
Xxxxxxxxxxx & Co., Inc.
c/o Oppenheimer & Co., Inc.
Xxxxxxxxxxx Xxxxx
Xxxxx Xxxxxxxxx Xxxxxx
Xxx Xxxx, Xxx Xxxx 00000
Southwest Securities, Inc.
0000 Xxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
On behalf of the Several
Underwriters named on
Schedule I attached hereto.
Ladies and Gentlemen:
Continental Natural Gas, Inc., an Oklahoma corporation (the
"Company"), proposes to sell to you and the other underwriters named on
Schedule I to this Agreement (the "Underwriters"), for whom you are acting as
Representatives, an aggregate of 1,800,000 shares (the "Company Shares") of the
Company's Common Stock, $0.01 par value (the "Common Stock"). Xxxxx
Affiliates, Inc., an Oklahoma corporation (the "Selling Shareholder"), proposes
to sell an aggregate of 300,000 shares (the "Selling Shareholder Shares") of
Common Stock to the Underwriters. The Company Shares and the Selling
Shareholder Shares are sometimes collectively called the "Firm Shares." In
addition, the Company proposes to grant to the Underwriters an option to
purchase up to an additional 315,000 shares (the "Option Shares") of Common
Stock from it for the purpose of covering over-allotments in connection with
the sale of the Firm Shares. The Firm Shares and the Option Shares are
together called the "Shares."
1. Sale and Purchase of the Shares. On the basis of
the representations,
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warranties and agreements contained in, and subject to the terms and conditions
of, this Agreement:
(a) The Company and the Selling Shareholder agree to
sell to each of the Underwriters, and each of the Underwriters
agrees, severally and not jointly, to purchase from the Company and
the Selling Shareholder, at $_____ per share (the "Initial Price"),
the number of Firm Shares set forth opposite the name of such
Underwriter on Schedule I to this Agreement.
(b) The Company grants to the several Underwriters an
option to purchase, severally and not jointly, all or any part of
the Option Shares at the Initial Price. The number of Option
Shares to be purchased by each Underwriter shall be the same
percentage (adjusted by the Representatives to eliminate fractions)
of the total number of Option Shares to be purchased by the
Underwriters as such Underwriter is purchasing of the Firm Shares.
Such option may be exercised only to cover over-allotments in the
sales of the Firm Shares by the Underwriters and may be exercised
in whole or in part at any time on or before 12:00 noon, New York
time, on the business day before the Firm Shares Closing Date (as
defined below), and only once thereafter within 30 days after the
date of this Agreement, in each case upon written or telegraphic
notice, or verbal or telephonic notice confirmed by written or
telegraphic notice, by the Representatives to the Company no later
than 12:00 noon, New York time on the business day before the Firm
Shares Closing Date or at least two business days before the Option
Shares Closing Date (as defined below), as the case may be, setting
forth the number of Option Shares to be purchased and the time and
date (if other than the Firm Shares Closing Date) of such purchase.
2. Delivery and Payment. Delivery by the Company and
the Selling Shareholder of the Firm Shares to the Representatives for the
respective accounts of the Underwriters, and payment of the purchase price by
certified or official bank check or checks payable in New York Clearing House
(next day) funds to the Company and the Selling Shareholder, shall take place
at the offices of_________________________________________________________, at
10:00 a.m., New York time, on the third business day following the date of this
Agreement, or at such time on such other date, not later than 10 business days
after the date of this Agreement, as shall be agreed upon by the Company, the
Selling Shareholder and the Representatives (such time and date of delivery and
payment are called the "Firm Shares Closing Date").
In the event the option with respect to the Option Shares
is exercised, delivery by the Company of the Option Shares to the
Representatives for the respective accounts of the Underwriters and payment of
the purchase price by certified or official bank check or checks payable in New
York Clearing House (next day) funds to the Company and the Selling Shareholder
shall take place at the offices of____________________________________________
specified above at the time and on the date (which may be the same date as, but
in no event shall be earlier than, the Firm Shares Closing Date) specified in
the notice referred to in Section 1(b) (such time and date of delivery and
payment are
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called the "Option Shares Closing Date"). The Firm Shares Closing Date and the
Option Shares Closing Date are called, individually, a "Closing Date" and,
together, the "Closing Dates."
Certificates evidencing the Shares shall be registered in
such names and shall be in such denominations as the Representatives shall
request at least two full business days before the Firm Shares Closing Date or,
in the case of Option Shares, on the day of notice of exercise of the option as
described in Section l(b) and shall be made available to the Representatives
for checking and packaging, at such place as is designated by the
Representatives, on the full business day before the Firm Shares Closing Date
(or the Option Shares Closing Date in the case of the Option Shares).
Certificates in negotiable form for the total number of
Selling Shareholder Shares have been placed in custody with BankBoston, N.A. as
custodian (the "Custodian") pursuant to a Selling Shareholder Power of Attorney
and a Custody Agreement (collectively, the "Custodian Agreement") executed by
the Selling Shareholder for delivery of the Selling Shareholder Shares. The
Selling Shareholder specifically agrees that the Selling Shareholder Shares to
be sold hereunder by the Selling Shareholder, represented by the certificates
held in custody for the Selling Shareholder under the Custodian Agreement, are
subject to the interest of such Underwriters hereunder, that the arrangements
made by the Selling Shareholder for such custody are to that extent
irrevocable, and that the obligations of the Selling Shareholder hereunder
shall not be terminable by any act or deed of the Selling Shareholder, or by
any other person, firm or corporation, including the Company or the
Underwriters, or by the occurrence of any other event or events, except as set
forth in the Custodian Agreement. If any such event should occur prior to the
delivery to the Underwriters of the Selling Shareholder Shares to be sold
hereunder by the Selling Shareholder, certificates for such Selling Shareholder
Shares shall be delivered by the Custodian in accordance with the terms and
conditions of this Agreement as if such event had not occurred. The Custodian
is authorized to receive and acknowledge receipt of the proceeds of sale of the
Selling Shareholder Shares against delivery of such Selling Shareholder Shares.
3. Registration Statement and Prospectus; Public
Offering. The Company has prepared in conformity with the requirements of the
Securities Act of 1933, as amended (the "Securities Act"), and the published
rules and regulations thereunder (the "Rules") adopted by the Securities and
Exchange Commission (the "Commission") a registration statement on Form S-1
(No. 333-25719), including a preliminary prospectus relating to the Shares, and
has filed with the Commission the Registration Statement (as hereinafter
defined) and such amendments thereof as may have been required to the date of
this Agreement. Copies of such Registration Statement (including all
amendments thereof) and of the related preliminary prospectus have heretofore
been delivered by the Company to you. The term "preliminary prospectus" means
any preliminary prospectus (as described in Rule 430 of the Rules) included at
any time as a part of the Registration Statement. The Registration Statement
as amended at the time and on the date it becomes effective (the "Effective
Date"), including all exhibits and information, if any, deemed to be part of
the Registration Statement pursuant to Rule 424(b) and Rule 430A of the Rules,
is called the "Registration Statement." The term "Prospectus" means the
prospectus in the form first used to
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confirm sales of the Shares (whether such prospectus was included in the
Registration Statement at the time of effectiveness or was subsequently filed
with the Commission pursuant to Rule 424(b) of the Rules).
The Company understands that the Underwriters propose to
make a public offering of the Shares, as set forth in and pursuant to the
Prospectus, as soon after the Effective Date and the date of this Agreement as
the Representatives deem advisable. The Company hereby confirms that the
Underwriters and dealers have been authorized to distribute or cause to be
distributed each preliminary prospectus and are authorized to distribute the
Prospectus (as from time to time amended or supplemented if the Company
furnishes amendments or supplements thereto to the Underwriters).
4. Representations and Warranties of the Company.
(a) The Company hereby represents and warrants to each
Underwriter as follows:
(i) On the Effective Date the Registration Statement
complied, and on the date of the Prospectus, on the date any
post-effective amendment to the Registration Statement shall become
effective, on the date any supplement or amendment to the
Prospectus is filed with the Commission and on each Closing Date,
the Registration Statement and the Prospectus (and any amendment
thereof or supplement thereto) will comply, in all material
respects, with the applicable provisions of the Securities Act and
the Rules and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission
thereunder; the Registration Statement did not, as of the Effective
Date, contain any untrue statement of a material fact or omit to
state any material fact required to be stated therein or necessary
in order to make the statements therein not misleading; and on the
other dates referred to above neither the Registration Statement
nor the Prospectus, nor any amendment thereof or supplement
thereto, will contain any untrue statement of a material fact or
will omit to state any material fact required to be stated therein
or necessary in order to make the statements therein not
misleading. When any related preliminary prospectus was first
filed with the Commission (whether filed as part of the
Registration Statement or any amendment thereto or pursuant to Rule
424(a) of the Rules) and when any amendment thereof or supplement
thereto was first filed with the Commission, such preliminary
prospectus as amended or supplemented complied in all material
respects with the applicable provisions of the Securities Act and
the Rules and did not contain any untrue statement of a material
fact or omit to state any material fact required to be stated
therein or necessary in order to make the statements therein not
misleading. Notwithstanding the foregoing, the Company makes no
representation or warranty as to the paragraph with respect to
stabilization on the inside front cover page of the Prospectus and
the statements contained under the caption "Underwriting" in the
Prospectus. The Company acknowledges that the statements referred
to in the previous sentence constitute the only information
furnished in writing
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by the Representatives on behalf of the several Underwriters
specifically for inclusion in the Registration Statement, any
preliminary prospectus or the Prospectus.
(ii) The financial statements of the Company (including
all notes and schedules thereto) included in the Registration
Statement and Prospectus present fairly the financial position, the
results of operations and cash flows and the shareholders' equity
and the other information purported to be shown therein of the
Company at the respective dates and for the respective periods to
which they apply; and such financial statements have been prepared
in conformity with generally accepted accounting principles,
consistently applied throughout the periods involved, and all
adjustments necessary for a fair presentation of the results for
such periods have been made.
(iii) Coopers & Xxxxxxx L.L.P., whose reports are filed
with the Commission as a part of the Registration Statement, are
and, during the periods covered by their reports, were independent
public accountants as required by the Securities Act and the Rules.
(iv) The Company has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the State of Oklahoma. The Company has no subsidiary or
subsidiaries and does not control, directly or indirectly, any
corporation, partnership, joint venture, limited liability company,
association or other business organization, except as disclosed in
Exhibit 21 to the Registration Statement (and for purposes of this
Section 4, the term "the Company" shall, where appropriate, include
such entities). Except as disclosed in Exhibit 21 to the
Registration Statement, all of the issued and outstanding equity
interests of each of such entities are owned directly by the
Company; all such interests have been duly authorized and validly
issued and are fully paid and nonassessable and are owned free and
clear of any pledge, lien, encumbrance, security interest or other
claim (other than the pledge of the same to ING Capital Corporation
under the Company's principal loan facility); there are no
outstanding rights, subscriptions, warrants, calls, preemptive
rights, options or other agreements of any kind with respect to the
equity interests of such entities. The Company is duly qualified
and in good standing as a foreign corporation in each jurisdiction
in which the character or location of its assets or properties
(owned, leased or licensed) or the nature of its business makes
such qualification necessary except for such jurisdictions where
the failure to so qualify would not have a material adverse effect
on the assets or properties, business, results of operations or
financial condition of the Company. Except as disclosed in the
Registration Statement and the Prospectus, the Company does not
own, lease or license any asset or property or conduct any business
outside the United States of America. The Company has all
requisite corporate power and authority, and all necessary
authorizations, approvals, consents, orders, licenses, certificates
and permits of and from all governmental or regulatory bodies or
any other person or entity, to own, lease and license its assets
and properties and conduct its businesses as now being conducted
and
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as described in the Registration Statement and the Prospectus
except for such authorizations, approvals, consents, orders,
material licenses, certificates and permits the failure to so
obtain would not have a material adverse effect upon the assets or
properties, business, results of operations, prospects or condition
(financial or otherwise) of the Company; no such authorization,
approval, consent, order, license, certificate or permit contains a
materially burdensome restriction other than as disclosed in the
Registration Statement and the Prospectus; and the Company has all
such corporate power and authority, and such authorizations,
approvals, consents, orders, licenses, certificates and permits to
enter into, deliver and perform this Agreement and to issue and
sell the Shares (except as may be required under the Securities Act
and state and foreign Blue Sky laws).
(v) The Company owns or possesses adequate and
enforceable rights to use all trademarks, trademark applications,
trade names, service marks, copyrights, copyright applications,
licenses, know-how and other similar rights and proprietary
knowledge (collectively, "Intangibles") necessary for the conduct
of its business as described in the Registration Statement and the
Prospectus. The Company has not received any notice of, or to its
best knowledge is not aware of, any infringement of or conflict
with asserted rights of others with respect to any Intangibles
which, singly or in the aggregate, if the subject of an unfavorable
decision, ruling or finding, would have a material adverse effect
upon the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company.
(vi) The Company has good title to each of the items of
personal property which are reflected in the financial statements
referred to in Section 4(a)(iii) or are referred to in the
Registration Statement and the Prospectus as being owned by it and
valid and enforceable leasehold interests in each of the items of
real and personal property which are referred to in the
Registration Statement and the Prospectus as being leased by it, in
each case free and clear of all liens, encumbrances, claims,
security interests and defects, other than those described in the
Registration Statement and the Prospectus and those which do not
and will not have a material adverse effect upon the assets or
properties, business, results of operations or financial condition
of the Company.
(vii) Except as described in the Registration Statement
and the Prospectus, there is no litigation or governmental or other
proceeding or investigation before any court or before or by any
public body or board pending or, to the Company's best knowledge,
threatened (and the Company does not know of any basis therefor)
against, or involving the assets, properties or business of, the
Company which would materially adversely affect the value or the
operation of any such assets or properties or the business, results
of operations, prospects or condition (financial or otherwise) of
the Company.
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(viii) Subsequent to the respective dates as of which
information is given in the Registration Statement and the
Prospectus, except as described therein, (i) there has not been
any material adverse change in the assets or properties, business,
results of operations, prospects or condition (financial or
otherwise), of the Company, whether or not arising from
transactions in the ordinary course of business; (ii) the Company
has not sustained any material loss or interference with its
assets, businesses or properties (whether owned or leased) from
fire, explosion, earthquake, flood or other calamity, whether or
not covered by insurance, or from any labor dispute or any court or
legislative or other governmental action, order or decree; and
(iii) and since the date of the latest balance sheet included in
the Registration Statement and the Prospectus, except as reflected
therein, the Company has not (a) issued any securities or incurred
any liability or obligation, direct or contingent, for borrowed
money, except such liabilities or obligations incurred in the
ordinary course of business, (b) entered into any transaction not
in the ordinary course of business or (c) declared or paid any
dividend or made any distribution on any shares of its stock or
redeemed, purchased or otherwise acquired or agreed to redeem,
purchase or otherwise acquire any shares of its stock.
(ix) All contracts and other documents required to be
filed as exhibits to the Registration Statement have been filed
with the Commission as exhibits to the Registration Statement.
There is no document or contract of a character required to be
described in the Registration Statement or Prospectus or to be
filed as an exhibit to the Registration Statement which is not
described or filed as required. Each agreement listed in the
Exhibits to the Registration Statement is in full force and effect
and is valid and enforceable by and against the Company in
accordance with its terms, assuming the due authorization,
execution and delivery thereof by each of the other parties
thereto. Neither the Company, nor to the best of the Company's
knowledge, any other party is in default in the observance or
performance of any term or obligation to be performed by it under
any such agreement, and no event has occurred which with notice or
lapse of time or both would constitute such a default, in any such
case which default or event would have a material adverse effect on
the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company. No
default exists, and no event has occurred which with notice or
lapse of time or both would constitute a default, in the due
performance and observance of any term, covenant or condition, by
the Company of any other agreement or instrument to which the
Company is a party or by which it or its properties or business may
be bound or affected which default or event would have a material
adverse effect on the assets or properties, business, results of
operations, prospects or condition (financial or otherwise) of the
Company.
(x) The Company is not in violation of any term or
provision of its charter or bylaws or of any franchise, license,
permit, judgment, decree, order, statute, rule or regulation, where
the consequences of such violation would have a material adverse
effect on the assets or properties, business, results of
operations, prospects or condition
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(financial or otherwise) of the Company.
(xi) Neither the execution, delivery and performance of
this Agreement by the Company nor the consummation of any of the
transactions contemplated hereby (including, without limitation,
the issuance and sale by the Company of the Shares) will give rise
to a right to terminate or accelerate the due date of any payment
due under, or conflict with or result in the breach of any term or
provision of, or constitute a default (or an event which with
notice or lapse of time or both would constitute a default) under,
or require any consent or waiver under, or result in the execution
or imposition of any lien, charge or encumbrance upon any
properties or assets of the Company pursuant to the terms of, any
indenture, mortgage, deed of trust or other agreement or instrument
to which the Company is a party or by which it or any of its
properties or businesses is bound, or any franchise, license,
permit, judgment, decree, order, statute, rule or regulation
applicable to the Company or violate any provision of the charter
or bylaws of the Company, except for such consents or waivers which
have already been obtained and are in full force and effect.
(xii) The Company has an authorized and outstanding
capital stock as set forth under the caption "Capitalization" in
the Prospectus. All of the outstanding shares of Common Stock have
been duly and validly issued and are fully paid and nonassessable
and none of them was issued in violation of any preemptive or other
similar right. The Shares, when issued and sold pursuant to this
Agreement, will be duly and validly issued, fully paid and
nonassessable and none of them will be issued in violation of any
preemptive or other similar right. Except as disclosed in the
Registration Statement and the Prospectus, there is no outstanding
option, warrant or other right calling for the issuance of, and
there is no commitment, plan or arrangement to issue, any share of
stock of the Company or any security convertible into, or
exercisable or exchangeable for, such stock. The Common Stock and
the Shares conform in all material respects to all statements in
relation thereto contained in the Registration Statement and the
Prospectus.
(xiii) No holder of any security of the Company has the
right to have any security owned by such holder included in the
Registration Statement or to demand registration of any security
owned by such holder during the period ending 180 days after the
date of this Agreement. Each shareholder, director and executive
officer of the Company has delivered to the Representatives his
enforceable written agreement that he will not, for a period of 180
days after the date of this Agreement, offer for sale, sell,
distribute, grant any option for the sale of, or otherwise dispose
of, directly or indirectly, or exercise any registration rights
with respect to, any shares of Common Stock (or any securities
convertible into, exercisable for, or exchangeable for any shares
of Common Stock) owned by him, without the prior written consent of
the Representatives; provided, that, such shareholder, director or
executive officer shall be permitted under such agreement to make
gifts of shares of Common Stock so long as the donee of the shares
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acquires and holds them subject to the restrictions of such
agreement.
(xiv) All necessary corporate action has been duly and
validly taken by the Company to authorize the execution, delivery
and performance of this Agreement and the issuance and sale of the
Shares by the Company. This Agreement has been duly and validly
authorized, executed and delivered by the Company and constitutes
legal, valid and binding obligations of the Company enforceable
against the Company in accordance with their respective terms,
except (A) as the enforceability thereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights generally and
by general equitable principles and (B) to the extent that rights
to indemnity or contribution under this Agreement may be limited by
Federal and state securities laws or the public policy underlying
such laws.
(xv) The Company has not violated any foreign, federal,
state or local law or regulation relating to the protection of
human health and safety, the environment or hazardous or toxic
substances or wastes, pollutants or contaminants ("Environmental
Laws"). The Company reasonably has concluded that the costs and
liabilities associated with compliance by the Company with
Environmental Laws are not likely to have, singly or in the
aggregate, a material adverse effect on the properties, assets,
operations, business, business prospects or financial condition of
the Company.
(xvi) The Company is not involved in any labor dispute
nor, to the knowledge of the Company, is any such dispute
threatened, which dispute would have a material adverse effect on
the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the Company.
(xvii) No transaction has occurred between or among the
Company and any of its officers or directors or any affiliate or
affiliates of any such officer or director that is required to be
described in and is not described in the Registration Statement and
the Prospectus.
(xviii) The Company has not taken, nor will it take,
directly or indirectly, any action designed to or which might
reasonably be expected to cause or result in, or which has
constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of the Common Stock
to facilitate the sale or resale of any of the Shares.
(xix) The Company has filed all Federal, state, local
and foreign tax returns which are required to be filed through the
date hereof, or has received extensions thereof, and has paid all
taxes shown on such returns and all assessments received by it to
the extent that the same are material and have become due.
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(xx) The Shares have been duly authorized for quotation
on the National Association of Securities Dealers Automated
Quotation ("NASDAQ") National Market.
(xxi) The Company has complied with all of the
requirements and filed the required forms as specified in Florida
Statutes Section 517.075.
(b) The Selling Shareholder hereby represents and warrants to
each Underwriter as follows:
(i) To the best knowledge of the Selling Shareholder,
the representations and warranties of the Company contained in
Section 4(a) hereof are true and correct; the Selling Shareholder
has reviewed and is familiar with the Registration Statement as
originally filed with the Commission and the Prospectus and has no
knowledge of any material fact, condition or information not
disclosed in such Prospectus that has adversely affected or could
adversely affect the condition (financial or otherwise), earnings,
business affairs or business prospects of the Company; to the best
knowledge of the Selling Shareholder, the Prospectus does not
include an untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading; and the Selling Shareholder is not prompted to sell the
Selling Shareholder Shares to be sold hereunder by the Selling
Shareholder by any information concerning the Company that is not
set forth in the Prospectus.
(ii) When the Registration Statement shall become
effective, and at all times subsequent thereto up to the Closing
Date (and if any Option Shares are purchased, on the Second Closing
Date), such parts of the Registration Statement and any amendments
and supplements thereto and the Prospectus as specifically refer to
the Selling Shareholder will not contain an untrue statement of a
material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading.
(iii) Each of this Agreement and the Custodian Agreement
is a legal, valid and binding agreement of the Selling Shareholder,
enforceable against the Selling Shareholder in accordance with
their respective terms except as such enforceability may be limited
by bankruptcy, reorganization, insolvency, moratorium and other
similar laws affecting creditors' rights generally or by the
application of equitable principles.
(iv) Neither the execution, delivery and performance of
this Agreement and the Custodian Agreement, the consummation of the
transactions contemplated herein and therein, including the
issuance, sale and delivery of the Selling Shareholder Shares nor
compliance with the terms and provisions hereof, will (i) conflict
with or result in a breach of any of the terms and provisions of,
or constitute a default (or an event which
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with notice or lapse of time, or both, would constitute a default)
or require consent under, or result in the creation or imposition
of, any lien, encumbrance, security interest, claim or other
restriction of any nature whatsoever upon any property or assets of
the Selling Shareholder, pursuant to the terms of any agreement,
instrument or permit to which the Selling Shareholder is a party or
by which any of the Selling Shareholder's properties or assets may
be bound; (ii) violate or conflict with any provisions of any
permit, judgment, decree, order, statute, rule or regulation of any
court or any public, governmental or regulatory agency or body
having jurisdiction over the Selling Shareholder or any of the
Selling Shareholder's properties or assets. No permit of or with
any court or any public, governmental or regulatory agency or body
having jurisdiction over the Selling Shareholder or any of the
Selling Shareholder's properties or assets is required for the
execution, delivery and performance of this Agreement and the
consummation of the transactions contemplated herein, including the
sale and delivery of the Selling Shareholder Shares, except the
registration under the Securities Act of the Selling Shareholder
Shares and such permits as may be required under state or foreign
securities or "Blue Sky" laws in connection with the purchase and
distribution of the Selling Shareholder Shares by the Underwriters.
(v) The Selling Shareholder now has, and at the
Closing Date will have good and marketable title to the Selling
Shareholder Shares to be sold hereunder by the Selling Shareholder,
free and clear of any pledge, lien, security interest, charge,
claim, equity or encumbrance of any kind, other than pursuant to
this Agreement; the Selling Shareholder has full right, power and
authority to sell, transfer and deliver such Selling Shareholder
Shares; the Selling Shareholder Shares have been duly and validly
authorized and issued, are fully paid and non-assessable, conform
to the description thereof in the Prospectus, and have not been
issued in violation of or subject to any preemptive right or other
right to subscribe for or purchase such securities; and, upon
delivery of such Selling Shareholder Shares to be sold hereunder by
the Selling Shareholder and payment of the purchase price therefor
as contemplated in this Agreement, each of the Underwriters will
receive good and marketable title to the Selling Shareholder
Shares, free and clear of any pledge, lien, security interest,
charge, claim, equity or encumbrance of any kind.
(vi) No person has any right to acquire from the
Selling Shareholder any Shares to be sold hereunder and the Selling
Shareholder is under no obligation, whether absolute or contingent,
to sell any such Shares to any person, except as disclosed in the
Prospectus.
(vii) The Selling Shareholder has not taken and will not
take, directly or indirectly, any action designed to, or which
might be reasonably expected to, cause or result in stabilization
or manipulation of the price of the Common Stock, or any other
securities convertible into or exchangeable or exercisable for
shares of Common Stock.
5. Conditions of the Underwriters' Obligations. The
obligations of the
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Underwriters under this Agreement are several and not joint. The
respective obligations of the Underwriters to purchase the Shares
are subject to each of the following terms and conditions:
(a) The Prospectus shall have been timely filed with
the Commission in accordance with Section 6(A)(i) of this
Agreement.
(b) No order preventing or suspending the use of any
preliminary prospectus or the Prospectus shall have been or shall
be in effect and no order suspending the effectiveness of the
Registration Statement shall be in effect and no proceedings for
such purpose shall be pending before or threatened by the
Commission, and any requests for additional information on the part
of the Commission (to be included in the Registration Statement or
the Prospectus or otherwise) shall have been complied with to the
satisfaction of the Representatives.
(c) The representations and warranties of the Company
contained in this Agreement and in the certificates delivered
pursuant to Section 5(d) shall be true and correct when made and on
and as of each Closing Date as if made on such date and the Company
shall have performed all covenants and agreements and satisfied all
the conditions contained in this Agreement required to be performed
or satisfied by it at or before such Closing Date.
(d) The Representatives shall have received on each
Closing Date a certificate, addressed to the Representatives and
dated such Closing Date, of the chief executive or chief operating
officer and the chief financial officer or chief accounting officer
of the Company to the effect that the signers of such certificate
have carefully examined the Registration Statement, the Prospectus
and this Agreement and that the representations and warranties of
the Company in this Agreement are true and correct on and as of
such Closing Date with the same effect as if made on such Closing
Date and the Company has performed all covenants and agreements and
satisfied all conditions contained in this Agreement required to be
performed or satisfied by it at or prior to such Closing Date.
(e) The Representatives shall have received on the
Effective Date, at the time this Agreement is executed and on each
Closing Date a signed letter from Coopers & Xxxxxxx L.L.P.,
addressed to the Representatives and dated, respectively, the
Effective Date, the date of this Agreement and each such Closing
Date, in form and substance reasonably satisfactory to the
Representatives, confirming that they are independent accountants
within the meaning of the Securities Act and the Rules, that the
response to Item 10 of the Registration Statement is correct
insofar as it relates to them and stating in effect that:
(i) in their opinion the audited financial
statements and financial statement schedules included in
the Registration Statement and the Prospectus and reported
on by them comply as to form in all material respects with
the applicable
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accounting requirements of the Securities Act and the
Rules;
(ii) on the basis of a reading of the amounts
included in the Registration Statement and the Prospectus
under the headings "Summary Financial Information" and
"Selected Financial Data," carrying out certain procedures
(but not an examination in accordance with generally
accepted auditing standards) which would not necessarily
reveal matters of significance with respect to the comments
set forth in such letter, a reading of the minutes of the
meetings of the shareholders and directors of the Company,
and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the
Company as to transactions and events subsequent to the
date of the latest audited financial statements, except as
disclosed in the Registration Statement and the Prospectus,
nothing came to their attention which caused them to
believe that:
(A) the amounts in "Summary Financial
Information," and "Selected Financial Data"
included in the Registration Statement and the
Prospectus do not agree with the corresponding
amounts in the audited and unaudited financial
statements from which such amounts were derived;
or
(B) with respect to the Company, there
were, at a specified date not more than five
business days prior to the date of the letter, any
increases in the current liabilities and long-term
liabilities of the Company or any decreases in net
income or in working capital or the shareholders'
equity in the Company, as compared with the
amounts shown on the Company's audited balance
sheet for the fiscal year ended December 31, 1996
and the three months ended March 31, 1997 included
in the Registration Statement; and
(iii) they have performed certain other
procedures as a result of which they determined that
certain information of an accounting, financial or
statistical nature (which is limited to accounting,
financial or statistical information derived from the
general accounting records of the Company) set forth in the
Registration Statement and the Prospectus and reasonably
specified by the Representatives agrees with the accounting
records of the Company.
References to the Registration Statement and the Prospectus
in this paragraph (e) are to such documents as amended and
supplemented at the date of the letter.
(f) The Representatives shall have received on each
Closing Date from Xxxxxxxx & Xxxxxx, a Professional Corporation,
counsel for the Company and the Selling Shareholder, an opinion,
addressed to the Representatives and dated such Closing Date,
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and stating in effect that:
(i) The Company has been duly organized and is
validly existing as a corporation in good standing under
the laws of the State of Oklahoma. To the best of such
counsel's knowledge, except as provided in Exhibit 21 to
the Registration Statement, the Company has no subsidiaries
and does not control, directly or indirectly, any
corporation, partnership, joint venture, association or
other business organization. Each of the entities listed
on Exhibit 21 to the Registration Statement (the
"Subsidiaries") has been duly organized and is validly
existing in good standing under the laws of its state of
organization. The Company and each Subsidiary is duly
qualified and in good standing as a foreign corporation in
each jurisdiction in which the character or location of its
assets or properties (owned, leased or licensed) or the
nature of its businesses makes such qualification
necessary, except for such jurisdictions where the failure
to so qualify would not have a material adverse effect on
the assets or properties, business, results of operations,
prospects or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole.
(ii) The Company and each Subsidiary has all
requisite corporate power and authority to own, lease and
license its assets and properties and conduct its business
as now being conducted and as described in the Registration
Statement and the Prospectus; and the Company has all
requisite corporate power and authority and all necessary
authorizations, approvals, consents, orders, licenses,
certificates and permits to enter into, deliver and perform
this Agreement and to issue and sell the Shares other than
those required under the Securities Act and state and
foreign Blue Sky laws.
(iii) The Company has authorized and issued
capital stock as set forth in the Registration Statement
and the Prospectus; the certificates evidencing the Shares
are in due and proper legal form and have been duly
authorized for issuance by the Company; all of the
outstanding shares of Common Stock of the Company have been
duly and validly authorized and have been duly and validly
issued and are fully paid and nonassessable and none of
them was issued in violation of any preemptive or other
similar right. The Shares when issued and sold pursuant to
this Agreement will be duly and validly issued,
outstanding, fully paid and nonassessable and none of them
will have been issued in violation of any preemptive or
other similar right. To the best of such counsel's
knowledge, except as disclosed in the Registration
Statement and the Prospectus, there is no outstanding
option, warrant or other right calling for the issuance of,
and no commitment, plan or arrangement to issue, any share
of stock of the Company or any security convertible into,
exercisable for, or exchangeable for stock of the Company.
The Common Stock and the Shares conform in all material
respects
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to the descriptions thereof contained in the Registration
Statement and the Prospectus.
(iv) The agreement of the Company's
shareholders, directors and officers stating that for a
period of 180 days from the date of this Agreement they
will not, without the Representatives' prior written
consent, sell, grant any option for the sale of, or
otherwise dispose of, directly or indirectly, any shares of
Common Stock (or any securities convertible into,
exercisable for, or exchangeable for any shares of Common
Stock) owned by them has been duly and validly delivered by
such persons and constitutes the legal, valid and binding
obligation of each such person enforceable against each
such person in accordance with its terms, except as the
enforceability thereof may be limited by applicable
bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights
generally and by general equitable principles.
(v) All necessary corporate action has been duly
and validly taken by the Company to authorize the
execution, delivery and performance of this Agreement and
the issuance and sale of the Shares. This Agreement has
been duly and validly authorized, executed and delivered by
the Company and this Agreement constitutes the legal, valid
and binding obligation of the Company enforceable against
the Company in accordance with its terms except (A) as such
enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar
laws affecting the enforcement of creditors' rights
generally and by general equitable principles and (B) to
the extent that rights to indemnity or contribution under
this Agreement may be limited by Federal or state
securities laws or the public policy underlying such laws.
(vi) Neither the execution, delivery and
performance of this Agreement by the Company nor the
consummation of any of the transactions contemplated hereby
(including, without limitation, the issuance and sale by
the Company of the Shares) will give rise to a right to
terminate or accelerate the due date of any payment due
under, or conflict with or result in the breach of any term
or provision of, or constitute a default (or any event
which with notice or lapse of time, or both, would
constitute a default) under, or require consent or waiver
under, or result in the execution or imposition of any
lien, charge or encumbrance upon any properties or assets
of the Company or any Subsidiary pursuant to the terms of
any indenture, mortgage, deed trust, note or other
agreement or instrument of which such counsel is aware and
to which the Company or any Subsidiary is a party or by
which it or any of its properties or businesses is bound,
or any franchise, license, permit, judgment, decree, order,
statute, rule or regulation of which such counsel is aware
or violate any provision of the charter or bylaws of the
Company or any Subsidiary.
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(vii) To the best of such counsel's knowledge, no
default exists, and no event has occurred which with notice
or lapse of time, or both, would constitute a default, in
the due performance and observance of any term, covenant or
condition by the Company or any Subsidiary of any
indenture, mortgage, deed of trust, note or any other
agreement or instrument to which the Company or any
Subsidiary is a party or by which it or any of its assets
or properties or businesses may be bound or affected, where
the consequences of such default would have a material and
adverse effect on the assets, properties, business, results
of operations, prospects or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a
whole.
(viii) To the best of such counsel's knowledge,
neither the Company nor any Subsidiary is in violation of
any term or provision of its charter or bylaws or any
franchise, license, permit, judgment, decree, order,
statute, rule or regulation, where the consequences of such
violation would have a material and adverse effect on the
assets or properties, businesses, results of operations,
prospects or condition (financial or otherwise) of the
Company and the Subsidiaries, taken as a whole.
(ix) No consent, approval, authorization or order
of any court or governmental agency or body is required for
the performance of this Agreement by the Company or the
consummation of the transactions contemplated hereby or
thereby, except such as have been obtained under the
Securities Act and such as may be required under state
securities or Blue Sky laws in connection with the purchase
and distribution of the Shares by the several Underwriters.
(x) To the best of such counsel's knowledge,
except as disclosed in the Registration Statement and
Prospectus, there is no litigation or governmental or other
proceeding or investigation, before any court or before or
by any public body or board pending or threatened against,
or involving the assets, properties or businesses of, the
Company or any Subsidiary which would have a material
adverse effect upon the assets or properties, business,
results of operations, prospects or condition (financial or
otherwise) of the Company and the Subsidiaries, taken as a
whole.
(xi) The statements in the Prospectus under the
captions "Description of Capital Stock," "Management's
Discussion & Analysis of Financial Condition and Results of
Operations - Liquidity and Capital Resources," "Business,"
"Shares Eligible for Future Sale,", "Management," and
"Certain Transactions," insofar as such statements
constitute a summary of documents referred to therein or
matters of law, are fair summaries in all material respects
and accurately present the information called for with
respect to such documents and matters. To the best
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knowledge of such counsel, all contracts and other
documents required to be filed as exhibits to, or described
in, the Registration Statement have been so filed with the
Commission or are fairly described in the Registration
Statement, as the case may be.
(xii) The Agreement has been duly executed and
delivered by or on behalf of the Selling Shareholder.
(xiii) To the best knowledge of such counsel, the
Selling Shareholder has good and valid title to the Selling
Shareholder Shares, free and clear of any pledge, lien,
security interest, charge, claim, equity or encumbrance of
any kind and has full right, power and authority to sell,
transfer and deliver the Selling Shareholder Shares. By
delivery of a certificate or certificates therefor, the
Selling Shareholder will transfer good and valid title to
such Selling Shareholder Shares free and clear of any
pledge, lien, security interest, charge, claim, equity or
encumbrance of any kind.
(xiv) The Custody Agreement executed and
delivered by the Selling Shareholder is a valid,
irrevocable instrument, and except as rights to indemnity
thereunder may be limited under applicable law, is binding
and enforceable against the Selling Shareholder in
accordance with its terms, subject to bankruptcy,
insolvency, and similar laws governing the rights of
creditors generally and to the discretion of courts in
granting equitable remedies. The attorneys-in-fact
appointed under the Selling Shareholder's Power of Attorney
have the power and authority to sell, on behalf of the
Selling Shareholder, such of the Shares as are to be sold
by the Selling Shareholder on the terms set forth in the
Underwriting Agreement.
To the extent deemed advisable by such counsel, they may
rely as to matters of fact on certificates of responsible officers of the
Company and public officials and on the opinions of other counsel satisfactory
to the Representatives as to matters which are governed by laws other than the
laws of the State of Oklahoma and the Federal laws of the United States;
provided that such counsel shall state that in their opinion the Underwriters
and they are justified in relying on such other opinions. Copies of such
certificates and other opinions shall be furnished to the Representatives and
counsel for the Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent certified public accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the
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Registration Statement and the Prospectus (except as specified in the foregoing
opinion), on the basis of the foregoing, no facts have come to the attention of
such counsel which lead such counsel to believe that the Registration Statement
at the time it became effective (except with respect to the financial
statements and notes and schedules thereto and other financial data, as to
which such counsel need express no belief) contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or necessary to make the statements therein not misleading, or that the
Prospectus as amended or supplemented (except with respect to the financial
statements and notes schedules thereto and other financial data, as to which
such counsel need make no statement) on the date thereof contained any untrue
statement of a material fact or omitted to state a material fact necessary in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading.
(g) The Representatives shall have received on each
Closing Date from Hall, Estill, Hardwick, Gable, Golden & Xxxxxx,
P.C., counsel for the Company, an opinion, addressed to the
Representatives and dated such Closing Date, and stating in effect
that:
(i) The Registration Statement, all preliminary
prospectuses and the Prospectus and each amendment or
supplement thereto (except for the financial statements and
schedules and other financial and statistical data included
therein, as to which such counsel expresses no opinion)
comply as to form in all material respects with the
requirements of the Securities Act and the Rules.
(ii) The Registration Statement has become
effective under the Securities Act, and no stop order
suspending the effectiveness of the Registration Statement
has been issued and no proceedings for that purpose have
been instituted or are threatened, pending or contemplated.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Representatives and representatives of the
independent certified public accountants of the Company, at which conferences
the contents of the Registration Statement and the Prospectus and related
matters were discussed and, although such counsel is not passing upon and does
not assume any responsibility for the accuracy, completeness or fairness of the
statements contained in the Registration Statement and the Prospectus (except
as specified in the foregoing opinion), on the basis of the foregoing, no facts
have come to the attention of such counsel which lead such counsel to believe
that the Registration Statement at the time it became effective (except with
respect to the financial statements and notes and schedules thereto and other
financial data, as to which such counsel need express no belief) contained any
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, or that the Prospectus as amended or supplemented (except with
respect to the financial statements and notes schedules thereto and other
financial data, as to which such counsel need make no statement) on the date
thereof contained any untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light
of the circumstances
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under which they were made, not misleading.
(h) All proceedings taken in connection with the sale
of the Firm Shares and the Option Shares as herein contemplated
shall be reasonably satisfactory in form and substance to the
Representatives and their counsel and the Underwriters shall have
received from Xxxxxxx Xxxxxx L.L.P., a favorable opinion, addressed
to the Representatives and dated such Closing Date, with respect to
the Shares, the Registration Statement and the Prospectus, and such
other related matters, as the Representatives may reasonably
request, and the Company shall have furnished to Xxxxxxx Xxxxxx
L.L.P. such documents as they may reasonably request for the
purpose of enabling them to pass upon such matters.
(i) The Representatives shall have received on each
Closing Date a certificate, addressed to the Representatives, and
dated such Closing Date, of an executive officer of the Company to
the effect that the signer of such certificate has reviewed and
understands the provisions of Section 517.075 of the Florida
Statutes, and represents that the Company has complied, and at all
times will comply, with all provisions of Section 517.075 and
further, that as of such Closing Date, neither the Company nor any
of its affiliates does business with the government of Cuba or with
any person or affiliate located in Cuba.
(j) The Representatives shall have received the
certificate of each Selling Shareholder dated the Firm Shares
Closing Date that the representations and warranties of such
Selling Shareholder made in this Agreement are the true and correct
on and as of such Firm Shares Closing Date as if made on such Firm
Shares Closing Date, and that to the best of such Selling
Shareholder's knowledge the representations and warranties of the
Company made in this Agreement are true and correct and as of such
Firm Shares Closing Date as if made on such Firm Shares Closing
Date.
6. Covenants.
(A) The Company covenants and agrees as follows:
(i) The Company shall prepare the Prospectus
in a form approved by the Representatives and file such
Prospectus pursuant to Rule 424(b) under the Securities Act
not later than the Commission's close of business on the
second business day following the execution and delivery of
this Agreement, or, if applicable, such earlier time as may
be required by Rule 430A(a)(3) under the Securities Act,
and shall promptly advise the Representatives (i) when any
amendment to the Registration Statement shall have become
effective, (ii) of any request by the Commission for any
amendment of the Registration Statement or the Prospectus
or for any additional information, (iii) of the prevention
or suspension of the use of any preliminary prospectus or
the Prospectus or of the
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issuance by the Commission of any stop order suspending the
effectiveness of the Registration Statement or the
institution or threatening of any proceeding for that
purpose and (iv) of the receipt by the Company of any
notification with respect to the suspension of the
qualification of the Shares for sale in any jurisdiction or
the initiation or threatening of any proceeding for such
purpose. The Company shall not file any amendment of the
Registration Statement or supplement to the Prospectus
unless the Company has furnished the Representatives a copy
for its review prior to filing and shall not file any such
proposed amendment or supplement to which the
Representatives reasonably object. The Company shall use
its best efforts to prevent the issuance of any such stop
order and, if issued, to obtain as soon as possible the
withdrawal thereof.
(ii) If, at any time when a prospectus relating
to the Shares is required to be delivered under the
Securities Act and the Rules, any event occurs as a result
of which the Prospectus as then amended or supplemented
would include any untrue statement of a material fact or
omit to state any material fact necessary to make the
statements therein in the light of the circumstances under
which they were made not misleading, or if it shall be
necessary to amend or supplement the Prospectus to comply
with the Securities Act or the Rules, the Company promptly
shall prepare and file with the Commission, subject to the
second sentence of paragraph (a) of this Section 6(A), an
amendment or supplement which shall correct such statement
or omission or an amendment which shall effect such
compliance.
(iii) The Company shall make generally available
to its security holders and to the Representatives as soon
as practicable, but not later than 45 days after the end of
the 12-month period beginning at the end of the fiscal
quarter of the Company during which the Effective Date
occurs (or 90 days if such 12-month period coincides with
the Company's fiscal year), an earning statement (which
need not be audited) of the Company, covering such 12-month
period, which shall satisfy the provisions of Section 11(a)
of the Securities Act or Rule 158 of the Rules.
(iv) The Company shall furnish to the
Representatives and counsel for the Underwriters, without
charge, signed copies of the Registration Statement
(including all exhibits thereto and amendments thereof) and
to each other Underwriter a copy of the Registration
Statement (without exhibits thereto) and all amendments
thereof and, so long as delivery of a prospectus by an
Underwriter or dealer may be required by the Securities Act
or the Rules, as many copies of any preliminary prospectus
and the Prospectus and any amendments thereof and
supplements thereto as the Representatives may reasonably
request.
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(v) The Company shall cooperate with the
Representatives and their counsel in endeavoring to qualify
the Shares for offer and sale under the laws of such
jurisdictions as the Representatives may designate and
shall maintain such qualifications in effect so long as
required for the distribution of the Shares; provided,
however, that the Company shall not be required in
connection therewith, as a condition thereof, to qualify as
a foreign corporation or to execute a general consent to
service of process in any jurisdiction or subject itself to
taxation as doing business in any jurisdiction.
(vi) For a period of five years after the date
of this Agreement, the Company shall supply to the
Representatives, and to each other Underwriter who may so
request in writing, copies of such financial statements and
other periodic and special reports as the Company may from
time to time distribute generally to the holders of any
class of its capital stock and to furnish to the
Representatives a copy of each annual or other report it
shall be required to file with the Commission (including
the Report on Form SR required by Rule 463 of the Rules).
(vii) Without the prior written consent of the
Representatives, for a period of 180 days after the date of
this Agreement, the Company shall not issue, sell or
register with the Commission (other than on Form S-8 or on
any successor form), or otherwise dispose of, directly or
indirectly, any equity securities of the Company (or any
securities convertible into or exercisable or exchangeable
for equity securities of the Company), except for the
issuance of the Shares pursuant to the Registration
Statement and the issuance of shares pursuant to the
Company's existing stock option plans or bonus plans. In
the event that during this period, (i) any shares are
issued pursuant to the Company's existing stock option
plans or bonus plans or (ii) any registration is effected
on Form S-8 or on any successor form, the Company shall
obtain the written agreement of such grantee or purchaser
or holder of such registered securities that, for a period
of 180 days after the date of this Agreement, such person
will not, without the prior written consent of the
Representatives, offer for sale, sell, distribute, grant
any option for the sale of, or otherwise dispose of,
directly or indirectly, or exercise any registration rights
with respect to, any shares of Common Stock (or any
securities convertible into, exercisable for, or
exchangeable for any shares of Common Stock) owned by such
person.
(viii) On or before completion of this offering,
the Company shall make all filings required under
applicable securities laws and by the NASDAQ National
Market (including any required registration under the
Exchange Act).
(B) The Selling Shareholder covenants and agrees with
each of the Underwriters that:
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(i) without the prior written consent of the
Representatives, the Selling Shareholder will not sell or
offer or contract to sell, except to the Underwriters
pursuant to this Agreement, any securities of the Company
before the close of business on the 180th day after the
commencement of the public offering of the Shares by the
Underwriters.
(ii) the Selling Shareholder will cooperate with
the Representatives in endeavoring to qualify the Shares
for sale under the securities laws of such jurisdictions as
the Representatives may reasonably designate in writing and
will make such applications, file such documents, and
furnish such information as may be reasonably required for
that purpose.
(C) The Company agrees to pay, or reimburse if paid by
the Representatives, whether or not the transactions contemplated hereby are
consummated or this Agreement is terminated, all costs and expenses incident to
the public offering of the Shares and the performance of the obligations of the
Company under this Agreement including those relating to: (i) the preparation,
printing, filing and distribution of the Registration Statement including all
exhibits thereto, each preliminary prospectus, the Prospectus, all amendments
and supplements to the Registration Statement and the Prospectus, and the
printing, filing and distribution of this Agreement; (ii) the preparation and
delivery of certificates for the Shares to the Underwriters; (iii) the
registration or qualification of the Shares for offer and sale under the
securities or Blue Sky laws of the various jurisdictions referred to in Section
6(A)(e), including the reasonable fees and disbursements of counsel for the
Underwriters in connection with such registration and qualification and the
preparation, printing, distribution and shipment of preliminary and
supplementary Blue Sky memoranda; (iv) the furnishing (including costs of
shipping and mailing) to the Representatives and to the Underwriters of copies
of each preliminary prospectus, the Prospectus and all amendments or
supplements to the Prospectus, and of the several documents required by this
Section to be so furnished, as may be reasonably requested for use in
connection with the offering and sale of the Shares by the Underwriters or by
dealers to whom Shares may be sold; (v) the filing fees of the National
Association of Securities Dealers, Inc. in connection with its review of the
terms of the public offering; (vi) the furnishing (including costs of shipping
and mailing) to the Representatives and to the Underwriters of copies of all
reports and information required by Section 6(A)(f); (vii) inclusion of the
Shares for quotation on the NASDAQ National Market; and (viii) all transfer
taxes, if any, with respect to the sale and delivery of the Shares by the
Company to the Underwriters. The Selling Shareholder agrees to reimburse the
Company for 14.29% of such costs promptly after request therefor by the
Company. Subject to the provisions of Section 9, the Underwriters agree to
pay, whether or not the transactions contemplated hereby are consummated or
this Agreement is terminated, all costs and expenses incident to the
performance of the obligations of the Underwriters under this Agreement not
payable by the Company pursuant to the preceding sentence, including, without
limitation, the fees and disbursements of counsel for the Underwriters.
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7. Indemnification.
(a) The Company and the Selling Shareholder, jointly
and severally, agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Securities Act or Section
20 of the Exchange Act against any and all losses, claims, damages
and liabilities, joint or several (including any reasonable
investigation, legal and other expenses incurred in connection
with, and any amount paid in settlement of, any action, suit or
proceeding or any claim asserted) (collectively, "Losses"), to
which they, or any of them, may become subject under the Securities
Act, the Exchange Act or other Federal or state law or regulation
(a "Statute"), at common law or otherwise, insofar as such losses,
claims, damages or liabilities arise out of or are based upon any
untrue statement or alleged untrue statement of a material fact
contained in any preliminary prospectus, the Registration Statement
or the Prospectus or any amendment thereof or supplement thereto,
or arise out of or are based upon any omission or alleged omission
to state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading; provided,
however, that such indemnity shall not inure to the benefit of any
Underwriter (or any person controlling such Underwriter) on account
of any losses, claims, damages or liabilities arising from the sale
of the Shares to any person by such Underwriter if such untrue
statement or omission or alleged untrue statement or omission was
made in such preliminary prospectus, the Registration Statement or
the Prospectus, or such amendment or supplement, in reliance upon
and in conformity with information furnished in writing to the
Company by the Representatives on behalf of any Underwriter
specifically for use therein; and provided further that the
foregoing indemnity agreement with respect to any preliminary
prospectus shall not inure to the benefit of any Underwriter from
whom the person asserting any such Losses purchased Shares, or any
person controlling such Underwriter, if a copy of the Prospectus
(as then amended or supplemented if the Company shall have
furnished any amendments or supplements thereto) was not sent or
given by or on behalf of such Underwriter to such person, if
required by law so to have been delivered, at or prior to the
written confirmation of the sale of the Shares to such person, and
if the Prospectus (as so amended or supplemented) would have cured
the defect giving rise to such Loss; and provided further that the
Selling Shareholder will not be liable in any case for any amount
in excess of the aggregate proceeds received by the Selling
Shareholder. THE COMPANY AND THE SELLING SHAREHOLDER WILL BE
RESPONSIBLE UNDER THIS AGREEMENT FOR ANY AND ALL LOSSES WHETHER OR
NOT IT IS ALLEGED OR PROVEN THAT THE LOSSES AROSE OUT OF OR
RESULTED FROM THE SOLE OR CONCURRENT NEGLIGENCE OR GROSS NEGLIGENCE
OF ANY UNDERWRITER, OR THE SOLE OR CONCURRENT STRICT LIABILITY
IMPOSED ON ANY UNDERWRITER, OR THE SOLE OR CONCURRENT LIABILITY
IMPOSED VICARIOUSLY ON ANY UNDERWRITER, UNDER A STATUTE, AT COMMON
LAW OR OTHERWISE. This indemnity agreement will be in addition to
any liability which the Company and the Selling Shareholder may
otherwise have.
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(b) Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company, the Selling
Shareholder, each person, if any, who controls the Company and the
Selling Shareholder within the meaning of Section 15 of the
Securities Act or Section 20 of the Exchange Act, each director of
the Company, and each officer of the Company who signs the
Registration Statement, to the same extent as the foregoing
indemnity from the Company to each Underwriter, but only insofar as
such losses, claims, damages or liabilities arise out of or are
based upon any untrue statement or omission or alleged untrue
statement or omission which was made in any preliminary prospectus,
the Registration Statement or the Prospectus, or any amendment
thereof or supplement thereto, contained in the last paragraph of
the cover page, in the paragraph relating to stabilization on the
inside front cover page of the Prospectus and the statements
contained under the caption "Underwriting" in the Prospectus;
provided, however, that the obligation of each Underwriter to
indemnify the Company, the Selling Shareholder, as the case may be,
(including any controlling person, director or officer thereof)
shall be limited to the net proceeds received by the Company or the
Selling Shareholder, as the case may be, from such Underwriter.
(c) Any party that proposes to assert the right to be
indemnified under this Section will, promptly after receipt of
notice of commencement of any action, suit or proceeding against
such party in respect of which a claim is to be made against an
indemnifying party or parties under this Section, notify each such
indemnifying party of the commencement of such action, suit or
proceeding, enclosing a copy of all papers served. No
indemnification provided for in Section 7(a) or 7(b) shall be
available to any party who shall fail to give notice as provided in
this Section 7(c) if the party to whom notice was not given was
unaware of the proceeding to which such notice would have related
and was prejudiced by the failure to give such notice but the
omission so to notify such indemnifying party of any such action,
suit or proceeding shall not relieve it from any liability that it
may have to any indemnified party for contribution or otherwise
than under this Section. In case any such action, suit or
proceeding shall be brought against any indemnified party and it
shall notify the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate in, and, to
the extent that it shall wish, jointly with any other indemnifying
party similarly notified, to assume the defense thereof, with
counsel reasonably satisfactory to such indemnified party, and
after notice from the indemnifying party to such indemnified party
of its election so to assume the defense thereof and the approval
by the indemnified party of such counsel, the indemnifying party
shall not be liable to such indemnified party for any legal or
other expenses, except as provided below and except for the
reasonable costs of investigation subsequently incurred by such
indemnified party in connection with the defense thereof. The
indemnified party shall have the right to employ its counsel in any
such action, but the fees and expenses of such counsel shall be at
the expense of such indemnified party unless (i) the employment of
counsel by such indemnified party has been authorized in
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writing by the indemnifying parties, (ii) the indemnified party
shall have reasonably concluded that there may be a conflict of
interest between the indemnifying parties and the indemnified party
in the conduct of the defense of such action (in which case the
indemnifying parties shall not have the right to direct the defense
of such action on behalf of the indemnified party) or (iii) the
indemnifying parties shall not have employed counsel to assume the
defense of such action within a reasonable time after notice of the
commencement thereof, in each of which cases the fees and expenses
of counsel shall be at the expense of the indemnifying parties. An
indemnifying party shall not be liable for any settlement of any
action, suit, proceeding or claim effected without its written
consent.
8. Contribution. In order to provide for just and
equitable contribution in circumstances in which the indemnification provided
for in Section 7(a) is due in accordance with its terms but for any reason is
held to be unavailable from the Company or the Selling Shareholder, the
Company, the Selling Shareholder and the Underwriters shall contribute to the
aggregate losses, claims, damages and liabilities (including any investigation,
legal and other expenses reasonably incurred in connection with, and any amount
paid in settlement of, any action, suit or proceeding or any claims asserted,
but after deducting any contribution received by the Company or the Selling
Shareholder, from persons other than the Underwriters, such as persons who
control the Company within the meaning of the Securities Act, officers of the
Company who signed the Registration Statement and directors of the Company, who
may also be liable for contribution) to which the Company or the Selling
Shareholder and one or more of the Underwriters may be subject in such
proportion as is appropriate to reflect the relative benefits received by the
Company or the Selling Shareholder, on the one hand and the Underwriters on the
other from the offering of the Shares or, if such allocation is not permitted
by applicable law or indemnification is not available as a result of the
indemnifying party not having received notice as provided in Section 7 hereof,
in such proportion as is appropriate to reflect not only the relative benefits
referred to above but also the relative fault of the Company or the Selling
Shareholder, on the one hand and the Underwriters on the other in connection
with the statements or omissions which resulted in such losses, claims,
damages, liabilities or expenses, as well as any other relevant equitable
considerations. The relative benefits received by the Company, the Selling
Shareholder and the Underwriters shall be deemed to be in the same proportion
as (x) the total proceeds from the offering (net of underwriting discounts but
before deducting expenses) received by the Company and the Selling Shareholder,
as set forth in the table on the cover page of the Prospectus, bear to (y) the
underwriting discounts received by the Underwriters, as set forth in the table
on the cover page of the Prospectus. The relative fault of the Company, the
Selling Shareholder or the Underwriters shall be determined by reference to,
among other things, whether the untrue or alleged untrue statement of a
material fact related to information supplied by the Company, the Selling
Shareholder or the Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent such statement or
omission. The Company, the Selling Shareholder and the Underwriters agree that
it would not be just and equitable if contribution pursuant to this Section 8
were determined by pro rata allocation (even if the Underwriters were treated
as one entity for such purpose) or by any other
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26
method of allocation which does not take account of the equitable
considerations referred to above. Notwithstanding the provisions of this
Section 8, (i) in no case shall any Underwriter (except as may be provided in
the Agreement Among Underwriters) be liable or responsible for any amount in
excess of the underwriting discount applicable to the Shares purchased by such
Underwriter hereunder, and (ii) the Company shall be liable and responsible for
any amount in excess of such underwriting discount; provided, however, that no
person guilty of fraudulent misrepresentation (within the meaning of Section
11(f) of the Securities Act) shall be entitled to contribution from any person
who was not guilty of such fraudulent misrepresentation. For purposes of this
Section 8, each person, if any, who controls an Underwriter within the meaning
of Section 15 of the Securities Act or Section 20(a) of the Exchange Act shall
have the same rights to contribution as such Underwriter, and each person, if
any, who controls the Company within the meaning of the Section 15 of the
Securities Act or Section 20(a) of the Exchange Act, each officer of the
Company who shall have signed the Registration Statement and each director of
the Company shall have the same rights to contribution as the Company, subject
in each case to clauses (i) and (ii) in the immediately preceding sentence of
this Section 8. Any party entitled to contribution will, promptly after
receipt of notice of commencement of any action, suit or proceeding against
such party in respect of which a claim for contribution may be made against
another party or parties under this Section, notify such party or parties from
whom contribution may be sought, but the omission so to notify such party or
parties from whom contribution may be sought shall not relieve the party or
parties from whom contribution may be sought from any other obligation it or
they may have hereunder or otherwise than under this Section. No party shall
be liable for contribution with respect to any action, suit, proceeding or
claim settled without its written consent. The Underwriter's obligations to
contribute pursuant to this Section 8 are several in proportion to their
respective underwriting commitments and not joint.
9. Termination. This Agreement may be terminated
with respect to the Shares to be purchased on a Closing Date by the
Representatives by notifying the Company and the Selling Shareholder at any
time
(a) in the absolute discretion of the Representatives
at or before any Closing Date: (i) if on or prior to such date, any
domestic or international event or act or occurrence has materially
disrupted, or in the opinion of the Representatives will in the
future materially disrupt, the securities markets; (ii) if there
has occurred any new outbreak or material escalation of hostilities
or other calamity or crisis the effect of which on the financial
markets of the United States is such as to make it, in the judgment
of the Representatives, inadvisable to proceed with the offering;
(iii) if there shall be such a material adverse change in general
financial, political or economic conditions or the effect of
international conditions on the financial markets in the United
States is such as to make it, in the judgment of the
Representatives, inadvisable or impracticable to market the Shares;
(iv) if trading in the Shares has been suspended by the Commission
or trading generally on the New York Stock Exchange, Inc. or on the
American Stock Exchange, Inc. has been suspended or limited, or
minimum or maximum ranges for prices for securities shall have been
fixed, or maximum ranges for prices for securities have been
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27
required, by said exchanges or by order of the Commission, the
National Association of Securities Dealers, Inc., or any other
governmental or regulatory authority; or (v) if a banking
moratorium has been declared by any state or Federal authority, or
(b) at or before any Closing Date, that any of the
conditions specified in Section 5 shall not have been fulfilled
when and as required by this Agreement.
If this Agreement is terminated pursuant to any of its
provisions, the Company shall not be under any liability to any Underwriter,
and no Underwriter shall be under any liability to the Company, except that (y)
if this Agreement is terminated by the Representatives or the Underwriters
because of any failure, refusal or inability on the part of the Company to
comply with the terms or to fulfill any of the conditions of this Agreement,
the Company will reimburse the Underwriters for all out-of-pocket expenses
(including the reasonable fees and disbursements of their counsel) incurred by
them in connection with the proposed purchase and sale of the Shares or in
contemplation of performing their obligations hereunder and (z) no Underwriter
who shall have failed or refused to purchase the Shares agreed to be purchased
by it under this Agreement, without some reason sufficient hereunder to justify
cancellation or termination of its obligations under this Agreement, shall be
relieved of liability to the Company or to the other Underwriters for damages
occasioned by its failure or refusal.
10. Substitution of Underwriters. If one or more of
the Underwriters shall fail (other than for a reason sufficient to justify the
cancellation or termination of this Agreement under Section 9) to purchase on
any Closing Date the Shares agreed to be purchased on such Closing Date by such
Underwriter or Underwriters, the Representatives may find one or more
substitute underwriters to purchase such Shares or make such other arrangements
as the Representatives may deem advisable or one or more of the remaining
Underwriters may agree to purchase such Shares in such proportions as may be
approved by the Representatives, in each case upon the terms set forth in this
Agreement. If no such arrangements have been made by the close of business on
the business day following such Closing Date,
(a) if the number of Shares to be purchased by the
defaulting Underwriters on such Closing Date shall not exceed 10%
of the Shares that all the Underwriters are obligated to purchase
on such Closing Date, then each of the nondefaulting Underwriters
shall be obligated to purchase such Shares on the terms herein set
forth in proportion to their respective obligations hereunder;
provided, that in no event shall the maximum number of Shares that
any Underwriter has agreed to purchase pursuant to Section 1 be
increased pursuant to this Section 10 by more than one-ninth of
such number of Shares without the written consent of such
Underwriter, or
(b) if the number of Shares to be purchased by the
defaulting Underwriters on such Closing Date shall exceed 10% of
the Shares that all the Underwriters are obligated
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to purchase on such Closing Date, then the Company shall be
entitled to an additional business day within which it may, but is
not obligated to, find one or more substitute underwriters
reasonably satisfactory to the Representatives to purchase such
Shares upon the terms set forth in this Agreement.
In any such case, either the Representatives or the Company
shall have the right to postpone the applicable Closing Date for a period of
not more than five business days in order that necessary changes and
arrangements (including any necessary amendments or supplements to the
Registration Statement or Prospectus) may be effected by the Representatives
and the Company. If the number of Shares to be purchased on such Closing Date
by such defaulting Underwriter or Underwriters shall exceed 10% of the Shares
that all the Underwriters are obligated to purchase on such Closing Date, and
none of the nondefaulting Underwriters or the Company shall make arrangements
pursuant to this Section within the period stated for the purchase of the
Shares that the defaulting Underwriters agreed to purchase, this Agreement
shall terminate with respect to the Shares to be purchased on such Closing Date
without liability on the part of any nondefaulting Underwriter to the Company
and without liability on the part of the Company, except in both cases as
provided in Sections 6(B), 7, 8 and 9. The provisions of this Section shall
not in any way affect the liability of any defaulting Underwriter to the
Company or the nondefaulting Underwriters arising out of such default. A
substitute underwriter hereunder shall become an Underwriter for all purposes
of this Agreement.
11. Miscellaneous. The respective agreements,
representations, warranties, indemnities and other statements of the Company or
its officers and of the Underwriters set forth in or made pursuant to this
Agreement shall remain in full force and effect, regardless of any
investigation made by or on behalf of any Underwriter or the Company or any of
the officers, directors or controlling persons referred to in Sections 7 and 8
hereof, and shall survive delivery of and payment for the Shares. The
provisions of Sections 6(B), 7, 8 and 9 shall survive the termination or
cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters and the Company and their respective successors and assigns, and,
to the extent expressed herein, for the benefit of persons controlling any of
the Underwriters, or the Company, and directors and officers of the Company,
and their respective successors and assigns, and no other person shall acquire
or have any right under or by virtue of this Agreement. The term "successors
and assigns" shall not include any purchaser of Shares from any Underwriter
merely because of such purchase.
All notices and communications hereunder shall be in
writing and mailed or delivered or by telephone or telegraph if subsequently
confirmed in writing, (a) if to the Representatives, c/o Oppenheimer & Co.,
Inc. at the address set forth above, (b) if to the Company, to its agent for
service as such agent's address appears on the cover page of the Registration
Statement, and (c) if to the Selling Shareholder in care of the Company.
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This Agreement shall be governed by and construed in
accordance with the laws of the State of _____________________ without regard
to principles of conflict of laws.
This Agreement may be signed in any number of counterparts,
each of which shall be an original, with the same effect as if the signatures
thereto and hereto were upon the same instrument.
Please confirm that the foregoing correctly sets forth the agreement among us.
Very truly yours,
CONTINENTAL NATURAL GAS, INC.
By
------------------------------------
Title:
Selling Shareholder:
XXXXX AFFILIATES, INC.
By
------------------------------------
Title:
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Confirmed:
XXXXXXXXXXX & CO., INC.
SOUTHWEST SECURITIES, INC.
Acting severally on behalf of itself
and as representatives of the several
Underwriters named in Schedule I annexed
hereto.
By XXXXXXXXXXX & CO., INC.
By
---------------------------------------
Title:
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SCHEDULE I
Number of
Firm Shares to
Name Be Purchased
---- ---------------
Xxxxxxxxxxx & Co., Inc.
Southwest Securities, Inc.
---------------
Total
==========
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SCHEDULE II
Number of
Selling Shareholder Shares
Selling Shareholder To Be Sold
------------------- --------------------------
Xxxxx Affiliates, Inc.
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