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EXHIBIT 1
3,450,000 Shares of Common Stock
▇▇▇▇▇▇▇ EXPLORATION COMPANY
UNDERWRITING AGREEMENT
May __, 1997
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
HOWARD, WEIL, LABOUISSE,
▇▇▇▇▇▇▇▇▇▇ INCORPORATED
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ REFSNES, INC.
As Representatives of the
several Underwriters named in
Schedule I attached hereto
c/o Bear, ▇▇▇▇▇▇▇ & Co. Inc.
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇
Dear Sirs:
▇▇▇▇▇▇▇ Exploration Company, a corporation organized and existing
under the laws of Delaware (the "Company"), proposes, subject to the terms and
conditions stated herein, to issue and sell to the several underwriters named
in Schedule I hereto (the "Underwriters") an aggregate of
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3,000,000 shares (the "Firm Shares") of its common stock, par value $.01 per
share (the "Common Stock"). In addition, for the sole purpose of covering
over-allotments in connection with the sale of the Firm Shares, the Company and
the undersigned selling stockholders of the Company named in Schedule II hereto
(the "Selling Stockholders") propose to sell to the Underwriters, at the option
of the Underwriters, up to an additional 450,000 shares of Common Stock (the
"Additional Shares"). The respective amounts of the Firm Shares to be so
purchased by the Underwriters are set forth opposite their names in Schedule I
hereto. The number of Additional Shares to be sold by the Company and each
Selling Stockholder is set forth opposite its name in Schedule II hereto. The
Firm Shares and any Additional Shares purchased by the Underwriters are herein
referred to as the "Shares."
The Shares are more fully described in the Registration Statement
referred to hereafter.
1. Representations and Warranties of the Company and the Selling
Stockholders.
A. The Company and each of the Selling Stockholders
jointly and severally represent and warrant to, and agree with, the
Underwriters that:
(a) The Company has filed with the Securities and
Exchange Commission (the "Commission") a registration statement, and
may have filed an amendment or amendments thereto, on Form S-1 (No.
333- 22491), for the registration of the Shares under the Securities
Act of 1933 (the "Act"). Such registration statement, including the
prospectus, financial statements and schedules, exhibits and all other
documents filed as a part thereof, as amended at the time of
effectiveness of the registration statement, including any information
deemed to be a part thereof as of the time of effectiveness pursuant
to paragraph (b) of Rule 430A or Rule 434 of the Rules and Regulations
of the Commission under the Act (the "Regulations"), and any
additional related registration statement filed pursuant to Rule
462(b) of the Act, is herein called the "Registration Statement," and
the prospectus, in the form first filed with the Commission pursuant
to Rule 424(b) of the Regulations, or filed as part of the
Registration Statement at the time of effectiveness if no Rule 424(b)
or Rule 434 filing is required, is herein called the "Prospectus."
The term "preliminary prospectus" as used herein means a preliminary
prospectus as described in Rule 430 of the Regulations.
(b) At the time of effectiveness of the Registration
Statement or the effectiveness of any post-effective amendment to the
Registration Statement, when the Prospectus is first filed with the
Commission pursuant to Rule 424(b) or Rule 434
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of the Regulations, when any supplement to or amendment of the
Prospectus is filed with the Commission, and at the Closing Date and
the Additional Closing Date, if any (as hereinafter respectively
defined), the Registration Statement and the Prospectus and any
amendments thereof and supplements thereto complied or will comply in
all material respects with the applicable provisions of the Act and
the Regulations and do not or will not contain an untrue statement of
a material fact and does not or will not omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein (i) in the case of the Registration Statement, not
misleading, and (ii) in the case of the Prospectus, in light of the
circumstances under which they were made, not misleading. When any
related preliminary prospectus was first filed with the Commission
(whether filed as part of the registration statement for the
registration of the Shares or any amendment thereto or pursuant to
Rule 424(a) of the Regulations) and when any amendment thereof or
supplement thereto was first filed with the Commission, such
preliminary prospectus and any amendments thereof and supplements
thereto complied in all material respects with the applicable
provisions of the Act and the Regulations and did not contain an
untrue statement of a material fact and did not omit to state any
material fact required to be stated therein or necessary in order to
make the statements therein in light of the circumstances under which
they were made not misleading. No representation and warranty is made
in this subsection (b), however, with respect to any information
contained in or omitted from the Registration Statement or the
Prospectus or any related preliminary prospectus or any amendment
thereof or supplement thereto in reliance upon and in conformity with
information furnished in writing to the Company by or on behalf of any
Underwriter through you as herein stated or by or on behalf of any
Selling Stockholder insofar as it relates to such Selling Stockholder,
in each case expressly for use in connection with the preparation
thereof. If Rule 434 is used, the Company will comply with the
requirements of Rule 434.
(c) Price Waterhouse LLP, which has certified the
financial statements and supporting schedules included in the
Registration Statement, are independent public accountants with regard
to the Company as required by the Act and the Regulations.
(d) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus,
except as set forth in the Registration Statement and the Prospectus,
there has been no material adverse change or any development involving
a prospective material adverse change in the business,
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prospects, properties, operations, condition (financial or other) or
results of operations of the Company and its Subsidiaries (as defined
below) taken as a whole, whether or not arising from transactions in
the ordinary course of business, and since the date of the latest
balance sheet presented in the Registration Statement and the
Prospectus, neither the Company nor any of its Subsidiaries has
incurred or undertaken any liabilities or obligations, direct or
contingent, which are material to the Company and its subsidiaries
taken as a whole, except for liabilities or obligations which are
reflected in the Registration Statement and the Prospectus. Except as
disclosed in or contemplated by the Prospectus, since the date of the
last audited financial statements included in the Prospectus, there
has been no dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock.
(e) This Agreement and the transactions contemplated
herein have been duly and validly authorized by the Company, and this
Agreement has been duly and validly executed and delivered by the
Company. This Agreement is a valid and binding obligation of the
Company, enforceable against the Company in accordance with its terms.
(f) The execution, delivery, and performance of this
Agreement and the consummation of the transactions contemplated hereby
do not and will not (i) conflict with or result in a breach of any of
the terms and provisions of, or constitute a default (or an event
which 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, charge or encumbrance upon any property or
assets of the Company or any of its Subsidiaries, pursuant to the
terms of any agreement, instrument, franchise, license or permit to
which the Company or any of its Subsidiaries is a party or by which
any of such corporations or their respective properties or assets may
be bound or (ii) violate or conflict with any provision of the
organizational documents of the Company or any of its Subsidiaries or
any judgment, decree, order, statute, rule or regulation of any court
or any public, governmental or regulatory agency or body, domestic or
foreign, having jurisdiction over the Company or any of its
Subsidiaries or any of their respective properties or assets. No
consent, approval, authorization, order, registration, filing,
qualification, license or permit of or with any court or any public,
governmental or regulatory agency or body having jurisdiction over the
Company or any of its Subsidiaries or any of their respective
properties or assets is required for the execution, delivery and
performance of this Agreement or the consummation of the transactions
contemplated hereby, including the issuance, sale
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and delivery of the Shares to be issued, sold and delivered by the
Company hereunder, except the registration under the Act of the Shares
and such consents, approvals, authorizations, orders, registrations,
filings, qualifications, licenses and permits as may be required under
state securities or Blue Sky laws in connection with the purchase and
distribution of the Shares by the Underwriters. The Company has full
power and authority to authorize, issue and sell the Shares as
contemplated by this Agreement.
(g) All of the outstanding shares of Common Stock,
including all shares to be sold by the Selling Stockholders, are duly
and validly authorized and issued, fully paid and nonassessable and
were not issued and are not now in violation of or subject to any
preemptive rights. The Shares, when delivered and sold in accordance
with this Agreement, will be duly and validly issued and outstanding,
fully paid and nonassessable, and will not have been issued in
violation of or subject to any preemptive rights. The Company has an
authorized and outstanding capitalization as set forth in the
Registration Statement and the Prospectus. The Common Stock, the Firm
Shares and the Additional Shares conform to the descriptions thereof
contained in the Registration Statement and the Prospectus.
(h) Each of the Company and its corporate subsidiaries
has been duly organized and is validly existing as a corporation in
good standing under the laws of its jurisdiction of incorporation.
Each of the Company's subsidiaries that is a limited partnership has
been duly formed and is validly existing as a limited partnership
under the laws of the state of its formation. Each of the Company's
subsidiaries that is a limited liability company has been duly formed
and is validly existing as a limited liability company under the laws
of the state of its formation. (The corporate subsidiaries,
partnership subsidiaries and limited liability company subsidiaries
are hereinafter sometimes referred to as "Subsidiaries.") Each of the
Company and its Subsidiaries is duly qualified and in good standing as
a foreign corporation, limited partnership or limited liability
company in each jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or conduct of its
business makes such qualification necessary, except for those failures
to be so qualified or in good standing which will not in the aggregate
have a material adverse effect on the Company and its Subsidiaries
taken as a whole. Each of the Company and its Subsidiaries has all
requisite power and authority, and all necessary consents, approvals,
authorizations, orders, registrations, qualifications, licenses and
permits of and from all public, regulatory or governmental agencies
and bodies, to own, lease and operate its properties and conduct its
business as now being conducted and as
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described in the Registration Statement and the Prospectus, and no
such consent, approval, authorization, order, registration,
qualification, license or permit contains a materially burdensome
restriction not adequately disclosed in the Registration Statement and
the Prospectus. All of the issued and outstanding shares of capital
stock of each corporate subsidiary of the Company have been duly
authorized and validly issued and are fully paid and nonassessable and
are owned by the Company, directly or through its Subsidiaries, free
from liens, encumbrances, claims, security interests, restrictions on
transfer, stockholders' agreement, voting trust and any other defects
of title. All of the partnership interests of each partnership
subsidiary of the Company have been duly and validly authorized and
issued in accordance with the terms of the governing partnership
agreement and are owned by the Company, directly or through its
Subsidiaries, free from liens, encumbrances, claims, security
interests, restrictions on transfer, voting trusts or similar
agreements, and any other defect of title. All of the membership
interests of each limited liability company subsidiary of the Company
have been duly and validly authorized and issued in accordance with
the terms of the governing limited liability company agreement (or
regulations) and are owned by the Company, directly or through its
Subsidiaries, free from liens, encumbrances, claims, security
interests, restrictions on transfer, voting trusts or similar
agreements, and any other defect of title, with the exception of Quest
Resources, Inc., in which the Company holds a 99.55% interest in all
profits and losses and General Atlantic Partners III, L.P. holds a
0.45% interest.
(i) Except as described in or contemplated by the
Prospectus, there are no outstanding securities of the Company or any
Subsidiary convertible or exchangeable into or evidencing the right to
purchase or subscribe for any shares of Common Stock of the Company or
shares of capital stock, partnership interests or membership interests
of any Subsidiary, respectively, and there are no outstanding options,
warrants, or rights of any character obligating the Company or any
Subsidiary to issue any shares of its capital stock, any partnership
interests or any membership interests, as applicable, or any
securities convertible or exchangeable or evidencing the right to
purchase or subscribe therefor; and except as described in the
Prospectus, no holder of securities of the Company or any Subsidiary
or any other person has the right, contractual or otherwise, which has
not been satisfied or effectively waived, to cause the Company to sell
or otherwise issue to them, or to permit them to underwrite the sale
of, any of the Shares.
(j) Except as disclosed in the Prospectus, the Company
and its Subsidiaries have good and marketable title to all the oil and
gas properties described
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as being owned by them in the Prospectuses, free and clear of any
liens, encumbrances, equities, or claims of any nature, except for the
liens for taxes not yet due, liens, claims and encumbrances under gas
sales contracts, operating agreements, geophysical exploration
agreements, farm-out and farm-in agreements, participation agreements,
unitization and pooling agreements, and such other agreements as are
customarily found in connection with comparable exploration, drilling,
producing and marketing operations, or in connection with the
acquisition of properties, and other liens, claims, contracts,
encumbrances and title defects that are, singly and in the aggregate,
not material in amount and do not materially interfere with the
Company's or such Subsidiary's use and enjoyment of its oil and gas
properties.
(k) The written engineering reports prepared by ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ & Associates, Inc. ("▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇"), an oil and gas
engineering consulting firm, as of December 31, 1996, setting forth
the engineering values attributed to the oil and gas properties of the
Company and its Subsidiaries accurately reflect in all material
respects the ownership interests of the Company and its Subsidiaries
in the properties therein as of December 31, 1996, except as otherwise
disclosed in the Prospectus. The information furnished to ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ upon which ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ based its reports was, at the
time of delivery thereof, complete and accurate in all material
respects. No facts have arisen of which the Company has knowledge
that might cause a reasonable person to believe that any of the
information supplied to ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ was incorrect or incomplete
in any material respect.
(l) Except as disclosed in the Prospectus, the Company
and its Subsidiaries possess adequate certificates, authorities or
permits issued by appropriate governmental agencies or bodies
necessary to conduct the business now operated by them, except for
such certificates, authorities or permits the failure of which to
obtain would not have a material adverse effect on the Company or any
of its Subsidiaries taken as a whole, and have not received any notice
of proceedings relating to the revocation or modification of any such
certificate, authority or permit that, if determined adversely to the
Company or any of its Subsidiaries, would individually or in the
aggregate have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
(m) No labor dispute with the employees of the Company or
any Subsidiary exists or, to the knowledge of the Company, is imminent
that might have a material adverse effect on the Company and its
Subsidiaries taken as a whole.
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(n) The Company and its Subsidiaries own, possess or
license adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information
and other intellectual property (collectively, "intellectual property
rights") necessary to conduct the business now operated by them, or
presently employed by them, and have not received any notice of
termination of any license or notice of infringement of or conflict
with asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Company or any of
its Subsidiaries, would individually or in the aggregate have a
material adverse effect on the Company and its Subsidiaries taken as a
whole.
(o) Except as disclosed in the Prospectus, neither the
Company nor any of its Subsidiaries is in violation of any statute,
any rule, regulation, decision or order of any governmental agency or
body or any court, domestic or foreign, relating to the use, disposal
or release of hazardous or toxic substances or relating to the
protection or restoration of the environment or human exposure to
hazardous or toxic substances (collectively, "environmental laws"),
owns or operates any real property contaminated with any substance
that is subject to any environmental laws, is liable for any off-site
disposal or contamination pursuant to any environmental laws, or is
subject to any claim relating to any environmental laws, which
violation, contamination, liability or claim would individually or in
the aggregate have a material adverse effect on the Company and its
Subsidiaries taken as a whole; and the Company is not aware of any
pending investigation which might lead to such a claim.
(p) Except as described in the Prospectus, there is no
litigation or governmental proceeding to which the Company or any of
its Subsidiaries is a party or to which any property of the Company or
any of its Subsidiaries is subject or which is pending or, to the
knowledge of the Company, contemplated against the Company or any of
its Subsidiaries which might result in any material adverse change or
any development involving a material adverse change in the business,
prospects, properties, operations, condition (financial or other) or,
results of operations of the Company and its Subsidiaries taken as a
whole or which is required to be disclosed in the Registration
Statement and the Prospectus.
(q) The Company has not taken and will not take, directly
or indirectly, any action designed to cause or result in, or which
constitutes or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the shares of Common
Stock to facilitate the sale or resale of the Shares.
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(r) The financial statements, including the notes
thereto, and supporting schedules included in the Registration
Statement and the Prospectus present fairly the financial position of
the Company and its Subsidiaries as of the dates indicated and the
results of its operations and cash flows for the periods specified;
except as otherwise stated in the Registration Statement, the
financial statements have been prepared in conformity with generally
accepted accounting principles applied on a consistent basis; and the
supporting schedules included in the Registration Statement present
fairly the information required to be stated therein; and the
assumptions used in preparing the pro forma financial statements
included in the Registration Statement and the Prospectus provide a
reasonable basis for presenting the significant effects directly
attributable to the transactions or events described therein, the
related pro forma adjustments give appropriate effect to those
assumptions, and the pro forma columns therein reflect the proper
application of those adjustments to the corresponding historical
financial statement amounts.
(s) Except as described in the Prospectus, no holder of
securities of the Company has any rights to the registration of
securities of the Company because of the filing of the Registration
Statement or otherwise in connection with the sale of the Shares
contemplated hereby.
(t) The Company is not, and upon consummation of the
transactions contemplated hereby will not be, subject to registration
as an "investment company" under the Investment Company Act of 1940.
(u) The Shares have been approved for listing on the
Nasdaq National Market ("NASDAQ") subject to notice of issuance.
(v) The Company has obtained and delivered to you before
the date hereof the written agreements of each of its directors,
officers and securityholders (excluding those persons to whom, in
March 1997, (i) ▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ made gifts
aggregating 12,000 shares of Common Stock and (ii) ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
made gifts aggregating 9,000 shares of Common Stock) that, for a
period of 180 days after the date of the final Prospectus filed with
the Commission pursuant to Rule 424(b), such persons will not offer,
sell, contract to sell, pledge or otherwise dispose of, directly or
indirectly, or file with the Commission a registration statement under
the Act relating to, any additional shares of the Company's Securities
or securities convertible into or exchangeable or exercisable for any
shares of the Company's Securities, or publicly disclose the intention
to make any such offer, sale,
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pledge, disposal or filing, without the prior written consent of Bear,
▇▇▇▇▇▇▇ & Co. Inc.
(w) Except as disclosed in the Prospectus, there are no
contracts, agreements or understandings between the Company and any
person that would give rise to a valid claim against the Company or
any Underwriter for a brokerage commission, finder's fee or other like
payment.
(y) There are no outstanding options, warrants, or rights
of any character obligating the Company to issue any shares of Common
Stock that are currently exercisable or will become exercisable within
180 days of the Closing Date or any Additional Closing Date.
B. Each Selling Stockholder represents and warrants to,
and agrees with, the several Underwriters that:
(a) Such Selling Stockholder has (i) caused a certificate
or certificates for the number of Additional Shares to be sold by such
Selling Stockholder hereunder to be delivered to ▇▇▇▇▇▇▇ Exploration
Company (the "Custodian"), endorsed in blank or with blank stock
powers duly executed, with signatures appropriately guaranteed, such
certificate or certificates to be held in escrow by ▇▇▇▇▇▇▇
Exploration Company, in accordance with the terms of a custodian
agreement, for delivery pursuant to the provisions hereof on the
Closing Date, and (ii) granted an irrevocable power of attorney to ▇▇▇
▇. ▇▇▇▇▇▇▇, ▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, or any of them, as
such Selling Stockholder's attorney- in-fact (each, an
"Attorney-In-Fact") in the form heretofore delivered to you (the
custodian agreements, together with the irrevocable powers of
attorney, executed by all Selling Stockholders being hereinafter
collectively referred to as the "Custodian Agreement").
(b) The execution, delivery and performance of this
Agreement and the Custodian Agreement by or on behalf of such Selling
Stockholder and the consummation of the transactions contemplated
hereby and thereby will not (i) conflict with or result in the breach
of any of the terms and provisions of, or constitute a default (or an
event which 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, charge or encumbrance upon any property or
assets of such Selling Stockholder pursuant to the terms of any
agreement, instrument, franchise, license
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or permit to which such Selling Stockholder is a party or by which
such Selling Stockholder or any of such Selling Stockholder's property
or assets may be bound, or (ii) violate or conflict with any judgment,
decree, order, statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction over
such Selling Stockholder or such Selling Stockholder's properties or
assets.
(c) Such Selling Stockholder has, and at the time of
delivery of the Shares to be sold by such Selling Stockholder such
Selling Stockholder will have, full legal right, power, authority and
capacity, and, except as required under the Act and state securities
and Blue Sky Laws, all necessary consents, approvals, authorizations,
orders, registrations, filings, qualifications, licenses and permits
of and from all public, regulatory or governmental agencies and
bodies, as are required for the execution, delivery and performance of
this Agreement and the Custodian Agreement and the consummation of the
transactions contemplated hereby and thereby, including the sale,
assignment, transfer and delivery of the Shares to be sold, assigned,
transferred and delivered by such Selling Stockholder hereunder.
(d) Each of this Agreement and the Custodian Agreement
has been duly and validly authorized, executed and delivered by such
Selling Stockholder and is a valid and binding obligation of such
Selling Stockholder, enforceable against such Selling Stockholder in
accordance with its terms, except to the extent that rights to
indemnity hereunder may be limited by applicable federal or state
securities laws or the public policy underlying such laws.
(e) Such Selling Stockholder has good, valid and
marketable title to the Shares to be sold by such Selling Stockholder
pursuant to this Agreement, free and clear of all liens, encumbrances,
claims, security interests, restrictions on transfer, stockholders'
agreements, voting trusts and other defects in title whatsoever, with
full power to deliver such Shares hereunder, and, upon the delivery of
and payment for such Shares as herein contemplated, each of the
Underwriters will receive good, valid and marketable title to the
Shares purchased by it from such Selling Stockholder, free and clear
of all liens, encumbrances, claims, security interests, restrictions
on transfer, stockholders agreements, voting trusts and other defects
in title whatsoever.
(f) Such Selling Stockholder has not taken and will not
take, directly or indirectly, any action which has constituted or
which was designed to constitute or
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which might be reasonably expected to cause or result in stabilization
or manipulation of the price of the shares of Common Stock.
(g) When the Registration Statement shall become
effective, when any amendment to the Registration Statement becomes
effective, when the Prospectus is first filed with the Commission
pursuant to Rule 424(b) of the Regulations, when any amendment of or
supplement to the Prospectus is filed with the Commission and at the
Closing Date, such parts of the Registration Statement and the
Prospectus and any amendments thereof and supplements thereto as
relate to such Selling Stockholder and are based upon information
furnished in writing to the Company by or on behalf of such Selling
Stockholder expressly for use therein will not contain an untrue
statement of a material fact and will not omit to state any material
fact required to be stated therein or necessary in order to make the
statements therein not misleading; and when any related preliminary
prospectus was first filed with the Commission (whether filed as part
of the registration statement for the registration of the Shares or
any amendment thereto or pursuant to Rule 424(a) of the Regulations)
and when any amendment thereof or supplement thereto was first filed
with the Commission, such parts of such preliminary prospectus and any
amendments thereof and supplements thereto as relate to such Selling
Stockholder and are based on information furnished in writing to the
Company by or on behalf of such Selling Stockholder expressly for use
therein did not contain an untrue statement of a material fact and did
not omit to state any material fact required to be stated therein or
necessary in order to make the statements therein not misleading.
(h) The sale of the Shares by the Selling Stockholder
pursuant hereto is not prompted by any information concerning the
Company which is not set forth in the Registration Statement. The
information pertaining to the Selling Stockholder under the caption
"Principal Stockholders" in the Prospectus is complete and accurate in
all material respects. If there is any change in such information
with respect to the Selling Stockholder, the Selling Stockholder will
immediately notify you of such change.
2. Purchase, Sale and Delivery of the Shares.
(a) On the basis of the representations, warranties,
covenants and agreements herein contained, but subject to the terms
and conditions herein set forth, the Company agrees to sell to the
several Underwriters and the Underwriters, severally and not jointly,
agree to purchase from the Company, at a purchase price
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of $____ per share, the number of Firm Shares set forth opposite the
respective names of the Underwriters in Schedule I hereto, in each
case plus any additional number of Shares that the Underwriter may
become obligated to purchase pursuant to the provisions of Section 9
hereof.
(b) Payment of the purchase price for, and delivery of
certificates for, the Firm Shares shall be made at the office of
▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇,
▇▇▇▇▇, or such other place as shall be agreed upon by you and the
Company, at 9:00 A.M., Dallas, Texas time, on the third or fourth
business day (as permitted under Rule 15c6-1 under the Exchange Act)
(unless such time and date are postponed in accordance with the
provisions of Section 9 hereof) following the date the Registration
Statement becomes effective (or, if the Company has elected to rely
upon Rule 430A of the Regulations, the third or fourth business day
(as permitted under Rule 15c6-1 under the Exchange Act) after the
determination of the initial public offering price of the Shares), or
at such other time not later than ten business days after such date as
shall be agreed upon by you and the Company (such time and date of
payment and delivery being herein called the "Closing Date").
Delivery of the certificates for the Firm Shares shall be made to you
for the respective accounts of the several Underwriters against
payment by the several Underwriters through the Representatives of the
purchase price for the Firm Shares by wire transfer of federal (same
day) funds, to the account(s) designated by the Company.
(c) Certificates for the Firm Shares shall be registered
in such name or names and in such authorized denominations as you may
request in writing at least two full business days prior to the
Closing Date. The Company will permit you to examine and package such
certificates for delivery at least one full business day prior to the
Closing Date.
(d) In addition, the Company and the Selling Stockholders
hereby grant to the several Underwriters the option to purchase up to
450,000 Additional Shares at the same purchase price per share to be
paid by the several Underwriters to the Company for the Firm Shares as
set forth in this Section 2, for the sole purpose of covering
over-allotments in the sale of Firm Shares by the several
Underwriters. The maximum number of Additional Shares to be sold by
the Company and each Selling Stockholder is set forth opposite its
name on Schedule II hereto. This option may be exercised at any time
in whole or in part on or before the thirtieth day following the
effective date of the Registration Statement, by written notice by you
to the Company and the Custodian. Such notice shall set forth the
aggregate number of Additional
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Shares as to which the option is being exercised and the
date and time, as reasonably determined by you, when the Additional
Shares are to be delivered (each such date and time being herein
sometimes referred to as an "Additional Closing Date"); provided,
however, that the Additional Closing Date shall not be earlier than
the Closing Date or earlier than the second full business day after
the date on which the option shall have been exercised nor later than
the tenth full business day after the date on which the option shall
have been exercised (unless such time and date are postponed in
accordance with the provisions of Section 9 hereof). If the option is
exercised in part, the respective number of Additional Shares to be
sold by the Company and each Selling Stockholder listed on Schedule II
hereto shall be determined as follows: (i) first, the number of
Additional Shares being purchased shall be sold by the Selling
Stockholders, on a pro rata basis in accordance with the percentages
set forth opposite their names on Schedule II hereto, until each
Selling Stockholder has sold that number of Additional Shares set
forth opposite its name on Schedule II hereto, and (ii) then, the
Company shall sell that number of Additional Shares as may be needed
to satisfy the exercise of the option, in each case as adjusted by you
in such manner as to avoid fractional shares. Certificates for the
Additional Shares shall be registered in such name or names and in
such authorized denominations as you may request in writing at least
two full business days prior to the Additional Closing Date. The
Company and the Custodian will permit you to examine and package such
certificates for delivery at least one full business day prior to the
Additional Closing Date.
The number of Additional Shares to be sold to each Underwriter
shall be the number which bears the same ratio to the aggregate number
of Additional Shares being purchased as the number of Firm Shares set
forth opposite the name of such Underwriter in Schedule I hereto (or
such number increased as set forth in Section 9 hereof) bears to
3,000,000, subject, however, to such adjustments to eliminate any
fractional shares as you in your sole discretion shall make.
Payment for the Additional Shares shall be made by wire
transfer of federal (same day) funds, to the accounts designated by
the Company and the Custodian, upon delivery of the certificates for
the Additional Shares to you for the respective accounts of the
Underwriters at the offices of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., ▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇, or such other place as shall be
agreed upon by you and the Company.
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(e) Certificates in negotiable form for the total number
of the Additional Shares that may be sold hereunder by each Selling
Stockholder have been placed in escrow with the Company as Custodian
pursuant to the Custodian Agreement executed by each Selling
Stockholder for delivery of all Additional Shares to be sold hereunder
by such Selling Stockholder. Each Selling Stockholder specifically
agrees that the Additional Shares represented by the certificates held
in custody for the Selling Stockholder under the Custodian Agreement
are subject to the interests of the Underwriters hereunder, that the
arrangements made by the Selling Stockholder for such escrow are to
that extent irrevocable, and that the obligations of the Selling
Stockholder hereunder shall not be terminable by any act or deed of
the Selling Stockholder (or by any other person, firm or corporation
including the Company, the Custodian or the Underwriters) or by
operation of law (including the death of an individual Selling
Stockholder or the dissolution of a corporate Selling Stockholder) or
by the occurrence of any other event or events, except as set forth in
the Custodian Agreement. If the Underwriters exercise their option,
in whole or in part, to acquire any or all of the Additional Shares
and any such event should occur prior to the delivery to the
Underwriters of the Additional Shares hereunder, certificates for the
Additional Shares shall be delivered by the Custodian in accordance
with the terms and conditions of this Agreement as if such event has
not occurred. The Custodian is authorized to receive and acknowledge
receipt of the proceeds of sale of the Shares held by it against
delivery of such Shares.
(f) If on the Additional Closing Date, a Selling
Stockholder fails to sell the Additional Shares that such Selling
Stockholder has agreed to sell on such date as set forth in Schedule
II hereto, the Company agrees that it will sell or arrange for the
sale of the number of shares of Common Stock to the Underwriters that
represents the Additional Shares which such Selling Stockholder has
failed to so sell, as set forth in Schedule II hereto, or such lesser
number as may be requested by the Representatives. In no event shall
this Section be construed to excuse the Selling Stockholder from the
full performance of its obligations under this Agreement.
3. Offering. Upon your authorization of the release of
the Firm Shares, the several Underwriters propose to offer the Firm Shares for
sale to the public upon the terms set forth in the Prospectus. To the extent,
if at all, that any Additional Shares are purchased pursuant to Section 2
hereof, the Underwriters will offer them to the public on the foregoing terms.
4. Covenants of the Company and the Selling
Stockholders.
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A. The Company covenants and agrees with the several
Underwriters that:
(a) If the Registration Statement has not yet been
declared effective, the Company will use its best efforts to cause the
Registration Statement and any amendments thereto to become effective
as promptly as possible, and if Rule 430A is used or the filing of the
Prospectus is otherwise required under Rule 424(b) or Rule 434, the
Company will file the Prospectus (properly completed if Rule 430A has
been used) pursuant to Rule 424(b) or Rule 434 within the prescribed
time period and will provide evidence satisfactory to you of such
timely filing. If the Company elects to rely on Rule 434, the Company
will prepare and file a term sheet that complies with the requirements
of Rule 434.
The Company will notify you immediately (and, if requested by
you, will confirm such notice in writing) (i) when the Registration
Statement and any amendments thereto become effective, (ii) of any
request by the Commission for any amendment of or supplement to the
Registration Statement or the Prospectus or for any additional
information, (iii) of the mailing or delivery to the Commission for
filing of any amendment of or supplement to the Registration Statement
or the Prospectus, (iv) of the issuance by the Commission of any stop
order suspending the effectiveness of the Registration Statement or
any post-effective amendment thereto or of the initiation, or the
threatening, of any proceedings therefor, (v) of the receipt of any
comments from the Commission, and (vi) 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 that purpose. If the
Commission shall propose or enter a stop order at any time, the
Company will make every reasonable effort to prevent the issuance of
any such stop order and, if issued, to obtain the lifting of such
order as soon as possible. The Company will not file any amendment to
the Registration Statement or any amendment of or supplement to the
Prospectus (including the prospectus required to be filed pursuant to
Rule 424(b) or Rule 434) that differs from the prospectus on file at
the time of the effectiveness of the Registration Statement before or
after the effective date of the Registration Statement to which you
shall reasonably object in writing after being timely furnished in
advance a copy thereof.
(b) If at any time when a prospectus relating to the
Shares is required to be delivered under the Act any event shall have
occurred as a result of which the Prospectus as then amended or
supplemented would, in the judgment of the Underwriters or the
Company, include an untrue statement of a material fact or omit
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to state any material fact required to be stated therein or 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 at any time to amend or supplement the Prospectus or
Registration Statement to comply with the Act or the Regulations, the
Company will notify you promptly and prepare and file with the
Commission an appropriate amendment or supplement (in form and
substance satisfactory to you) which will correct such statement or
omission and will use its best efforts to have any amendment to the
Registration Statement declared effective as soon as possible.
(c) The Company will promptly deliver to you four signed
copies of the Registration Statement, including exhibits and all
amendments thereto, and the Company will promptly deliver to each of
the several Underwriters such number of copies of any preliminary
prospectus, the Prospectus, the Registration Statement, and all
amendments of and supplements to such documents, if any, as you may
reasonably request. The Prospectus shall be furnished on or prior to
3:00 P.M., New York time, on the second business day following the
later of the execution and delivery of this Agreement or the effective
time of the Registration Statement.
(d) The Company will endeavor in good faith, in
cooperation with you, at or prior to the time the Registration
Statement becomes effective, to qualify the Shares for offering and
sale under the securities laws relating to the offering or sale of the
Shares of such jurisdictions as you may designate and to maintain such
qualification in effect for so long as required for the distribution
thereof, except that in no event shall the Company be obligated in
connection therewith to qualify as a foreign corporation or to execute
a general consent to service of process.
(e) The Company will make generally available (within the
meaning of Section 11(a) of the Act) to its security holders and to
you as soon as practicable, but not later than 45 days after the end
of its fiscal quarter in which the first anniversary date of the
effective date of the Registration Statement occurs, an earnings
statement (in form complying with the provisions of Rule 158 of the
Regulations) covering a period of at least twelve consecutive months
beginning after the effective date of the Registration Statement.
(f) During the period of 180 days from the date of the
Prospectus, the Company will not, without your prior written consent,
issue, sell, offer or agree to sell, grant any option for the sale of,
or otherwise dispose of, directly or indirectly, any Common Stock (or
any securities convertible into, exercisable for or
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18
exchangeable for Common Stock), and the Company will obtain the
undertaking of each of its officers, directors and securityholders,
all of which are listed on Schedule III hereto, not to engage in any
of the aforementioned transactions on their own behalf, other than the
Company's sale of Shares hereunder, and the Company's issuance of
Common Stock upon the exercise of presently outstanding stock options.
(g) During the period of three years from the effective
date of the Registration Statement, the Company will furnish to the
Representatives copies of (i) all reports to its stockholders; and
(ii) all reports, financial statements and proxy or information
statements filed by the Company with the Commission or any national
securities exchange.
(h) The Company will apply the proceeds from the sale of
the Shares as set forth under "Use of Proceeds" in the Prospectus.
(i) The Company will file with the Commission such
reports on Form SR as may be required pursuant to Rule 463 of the
Regulations.
(j) The Company agrees that it will not accelerate the
vesting or exercisability of any options, warrants, or rights of any
character obligating the Company to issue any shares of Common Stock
so that any such options, warrants, or rights shall become exercisable
within 180 days of the Closing Date or any Additional Closing Date.
B. Each Selling Stockholder covenants and agrees with
the several Underwriters that:
(a) During a period of 180 days from the date of the
Prospectus, such Selling Stockholder will not, without your prior
written consent, sell, offer or agree to sell, grant any option for
the sale of, or otherwise dispose of, directly or indirectly, any
Common Stock (or any securities convertible into, exercisable for or
exchangeable for Common Stock), except for sales to the Underwriters
as provided in this Agreement.
(b) In order to document the Underwriters' compliance
with the reporting and withholding provisions of the Tax Equity and
Fiscal Responsibility Act of 1982 and Dividend Tax Compliance Act of
1983 with respect to the transactions herein contemplated, such
Selling Stockholder shall deliver to you prior to or at the Closing
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Date a properly completed and executed United States Treasury
Department Form W-9 (or other applicable form or statement specified
by the Treasury Department regulations in lieu thereof).
(c) Such Selling Stockholder shall 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 securities of the
Company, and other than as permitted by the Act, the Selling
Stockholder shall not distribute any prospectus or other offering
material in connection with the offering of the Shares.
5. Payment of Expense. Whether or not the transactions
contemplated in this Agreement are consummated or this Agreement is terminated,
the Company hereby agrees to pay all reasonable costs and expenses incident to
the performance of the obligations of the Company and the Selling Stockholders
hereunder, including those in connection with (i) preparing, printing,
duplicating, filing and distributing the Registration Statement, as originally
filed and all amendments thereof (including all exhibits thereto), any
preliminary prospectus, the Prospectus and any amendments thereof or
supplements thereto (including, without limitation, fees and expenses of the
Company's accountants and counsel), the underwriting documents (including this
Agreement, and the Agreement Among Underwriters) and all other documents
related to the public offering of the Shares (including those supplied to the
Underwriters in quantities as hereinabove stated), (ii) the travel expenses of
the Company's officers and employees and any other expenses of the Company in
connection with attending or hosting meetings with prospective purchasers of
the Shares, (iii) the issuance, transfer and delivery of the Shares to the
Underwriters, including any transfer or other taxes payable thereon, (iv) the
qualification of the Shares under state or foreign securities or Blue Sky Laws,
including the costs of printing and mailing a preliminary and final "Blue Sky
Survey" and the fees of counsel for the Underwriters and such counsel's
disbursements in relation thereto, (v) quotation of the Shares on the NASDAQ,
(vi) filing fees of the Commission and the National Association of Securities
Dealers, Inc., (vii) the cost of printing certificates representing the Shares,
and (viii) the cost and charges of any transfer agent or registrar.
6. Conditions of Underwriters' Obligations. The
obligations of the several Underwriters to purchase and pay for the Firm Shares
and the Additional Shares, as provided herein, shall be subject to the accuracy
of the representations and warranties of the Company and the Selling
Stockholders herein contained, as of the date hereof and as of the Closing Date
(or in the case of the Additional Shares as of the Additional Closing Date), to
the absence from any certificates, opinions, written statements or letters
furnished to you or to ▇▇▇▇▇▇ & ▇▇▇▇▇▇ L.L.P. ("Underwriters' Counsel")
pursuant to this Section 6 of any material misstatement or omission, to the
performance
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20
by the Company and the Selling Stockholders of their respective obligations
hereunder, and to the following additional conditions:
(a) The Registration Statement, including any related
registration statement filed pursuant to Rule 462(b) under the Act,
shall have become effective not later than 5:30 P.M., New York time,
on the date of this Agreement or at such later time and date as shall
have been consented to in writing by you; if the Company shall have
elected to rely upon Rule 430A or Rule 434 of the Regulations, the
Prospectus shall have been filed with the Commission in a timely
fashion in accordance with Section 4(a) hereof; and, at or prior to
the Closing Date and Additional Closing Date, as the case may be, no
stop order suspending the effectiveness of the Registration Statement
or any post-effective amendment thereof shall have been issued and no
proceedings therefor shall have been initiated or threatened by the
Commission.
(b) At the Closing Date and each Additional Closing Date,
you shall have received the opinion of ▇▇▇▇▇▇▇▇ & Knight, a
Professional Corporation, counsel for the Company, dated the Closing
Date or the Additional Closing Date, as the case may be, addressed to
the Underwriters and in form and substance satisfactory to
Underwriters' Counsel, to the effect that:
(i) Each of the Company and its Subsidiaries has
been duly organized and is validly existing as a corporation,
limited partnership or limited liability company in good
standing under the laws of its jurisdiction of incorporation
or formation. Each of the Company and its Subsidiaries is
duly qualified and in good standing as a foreign corporation,
limited partnership or limited liability company in each
jurisdiction in which the character or location of its
properties (owned, leased or licensed) or the nature or
conduct of its business makes such qualification necessary,
except for those failures to be so qualified or in good
standing which will not in the aggregate have a material
adverse effect on the Company and its Subsidiaries taken as a
whole. Each of the Company and its Subsidiaries has all
requisite power and authority to own, lease and license its
respective properties and conduct its business as now being
conducted and as described in the Registration Statement and
the Prospectus. All of the issued and outstanding capital
stock of each corporate subsidiary of the Company has been
duly and validly issued and is fully paid and nonassessable
and, to such counsel's knowledge, was not issued in violation
of, and is free of, preemptive rights
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21
and is owned directly or indirectly by the Company, free and
clear of any lien, encumbrance, claim, security interest,
restriction on transfer, stockholders' agreement, voting trust
or other defect of title whatsoever. All of the partnership
interests of each partnership subsidiary of the Company have
been duly and validly authorized and issued in accordance with
the terms of the governing partnership agreement, and, to such
counsel's knowledge, are owned by the Company, directly or
through its Subsidiaries, free and clear of any lien,
encumbrance, claim, security interest, restriction on
transfer, voting agreement, voting trust or other defect of
title whatsoever. All of the membership interests of each
limited liability company subsidiary of the Company have been
duly and validly authorized and issued in accordance with the
terms of the governing limited liability company agreement (or
regulations), and, to such counsel's knowledge, are owned by
the Company, directly or through its Subsidiaries, free and
clear of any lien, encumbrance, claim, security interest,
restriction on transfer, voting agreement, voting trust or
other defect of title whatsoever, with the exception of Quest
Resources, L.L.C., in which the Company holds a 99.55%
interest in all profits and losses and General Atlantic
Partners III, L.P. holds a .45% interest.
(ii) The Company has authorized capital stock as
set forth under the caption "Capitalization" in the
Registration Statement and the Prospectus. All of the
outstanding shares of Common Stock are duly and validly
authorized and issued, are fully paid and nonassessable and
were not issued in violation of or subject to any preemptive
rights. The Shares to be delivered by the Company on the
Closing Date or Additional Closing Date, as the case may be,
have been duly and validly authorized and, when delivered in
accordance with this Agreement, will be duly and validly
issued, fully paid and nonassessable and will not have been
issued in violation of or subject to any preemptive rights.
Each of the Underwriters will receive good, valid and
marketable title to the Firm Shares and the Additional Shares
being sold by the Company hereunder, free and clear of all
liens, encumbrances, claims, security interests, restrictions
on transfer, stockholders' agreements, voting trusts and other
defects of title whatsoever. The Common Stock, the Firm
Shares and the Additional Shares conform to the descriptions
thereof contained in the Registration Statement and the
Prospectus under the caption "Description of Capital Stock",
and, assuming the certificates for the Common Stock are in the
form filed with the Commission, are in due and proper form
and comply with the requirements of Delaware law,
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the Company's certificate of incorporation and by-laws, and
the requirements of the NASDAQ.
(iii) Except as described in or contemplated by the
Prospectus, to the knowledge of such counsel, there are no
outstanding securities of the Company or any Subsidiary
convertible or exchangeable into or evidencing the right to
purchase or subscribe for any shares of Common Stock of the
Company or shares of capital stock, partnership interests or
membership interests of any Subsidiary, respectively, and
there are no outstanding options, warrants, or rights of any
character obligating the Company or any Subsidiary to issue
any shares of its capital stock, any partnership interests or
any membership interests, as applicable, or any securities
convertible or exchangeable or evidencing the right to
purchase or subscribe therefor; and except as described in the
Prospectus, to the knowledge of counsel, no holder of
securities of the Company or any Subsidiary or any other
person has the right, contractual or otherwise, which has not
been satisfied or effectively waived, to cause the Company to
sell or otherwise issue to them, or to permit them to
underwrite the sale of, any of the Shares.
(iv) This Agreement has been duly and validly
authorized, executed and delivered by the Company.
(v) To such counsel's knowledge, there is no
litigation or governmental or other action, suit, proceeding
or investigation before any court or before or by any public,
regulatory or governmental agency or body pending or
threatened against, or involving the properties or business
of, the Company or any of its Subsidiaries, which, if resolved
against the Company or such Subsidiary, individually or, to
the extent involving related claims or issues, in the
aggregate, is of a character required to be disclosed in the
Registration Statement and the Prospectus which has not been
properly disclosed therein.
(vi) The execution, delivery, and performance of
this Agreement and the consummation of the transactions
contemplated hereby do not and will not (A) to such counsel's
knowledge, conflict with or result in a breach of any of the
terms and provisions of, or constitute a default (or an event
which 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,
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charge or encumbrance upon any property or assets of the
Company or any of its Subsidiaries pursuant to the terms of
any agreement, instrument, franchise, license or permit known
to such counsel to which the Company or any of its
Subsidiaries is a party or by which any of such corporations
or their respective properties or assets may be bound or (B)
violate or conflict with any provision of the organizational
documents of the Company or any of its Subsidiaries, or, to
the knowledge of such counsel, any judgment, decree, order,
statute, rule or regulation of any court or any public,
governmental or regulatory agency or body having jurisdiction
over the Company or any of its Subsidiaries or any of their
respective properties or assets. To such counsel's knowledge,
no consent, approval, authorization, order, registration,
filing, qualification, license or permit of or with any court
or any public, governmental, or regulatory agency or body
having jurisdiction over the Company or any of its
Subsidiaries or any of their respective properties or assets
is required for the execution, delivery and performance of
this Agreement or the consummation of the transactions
contemplated hereby, except for (1) such as may be required
under foreign securities laws or state securities or Blue Sky
laws in connection with the purchase and distribution of the
Shares by the Underwriters (as to which such counsel need
express no opinion) and (2) such as have been made or obtained
under the Act.
(vii) The Registration Statement and the Prospectus
and any amendments thereof or supplements thereto (other than
the financial statements and schedules and other financial and
petroleum engineering data included therein, as to which no
opinion need be rendered) comply as to form in all material
respects with the requirements of the Act and the Regulations.
(viii) The Registration Statement is effective under
the Act, and, to the best knowledge of such counsel, no stop
order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereof has been
issued and no proceedings therefor have been initiated or
threatened by the Commission, and all filings required by Rule
424(b) of the Regulations have been made.
(ix) Except as disclosed in the Prospectus, there
are no contracts, agreements or understandings known to such
counsel between the Company and any person granting such
person the right to require the Company to file a registration
statement under the Act with respect to any securities of the
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24
Company owned or to be owned by such person or to require the
Company to include such securities in the securities
registered pursuant to the Registration Statement or in any
securities being registered pursuant to any other registration
statement filed by the Company under the Act; and all rights
to require registration of any securities under that agreement
have been waived with respect to the offering contemplated
hereby and for 180 days after the date of the initial public
offering of the Shares.
(x) In addition, such opinion shall also contain
a statement that such counsel has participated in conferences
with officers and representatives of the Company,
representatives of the independent public accountants for the
Company and the Underwriters at which the contents and the
Prospectus and related matters were discussed, and no facts
have come to the attention of such counsel which would lead
such counsel to believe that either the Registration Statement
at the time it became effective (including the information
deemed to be part of the Registration Statement at the time of
effectiveness pursuant to Rule 430A or Rule 434, if
applicable), or any amendment thereof made prior to the
Closing Date or Additional Closing Date, as the case may be,
as of the date of such amendment, contained an untrue
statement of a material fact or omitted to state any material
fact required to be stated therein or necessary to make the
statements therein not misleading or that the Prospectus as of
its date (or any amendment thereof or supplement thereto made
prior to the Closing Date or the Additional Closing Date, as
the case may be, as of the date of such amendment or
supplement) contained or contains an 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, in light of the circumstances under which
they were made, not misleading (it being understood that such
counsel need express no belief or opinion with respect to the
financial statements and schedules and other financial and
petroleum engineering data included therein).
(xi) The Shares to be sold under this Agreement
have been approved for quotation on the NASDAQ upon notice of
issuance.
(xii) Based on current law, the holding periods for
the holders of the Company's unregistered securities for
purposes of Rule 144 of the Act are
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25
as stated under the caption "Shares Eligible for Future Sale"
in the Prospectus.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the
United States and jurisdictions in which they are admitted, to the
extent such counsel deems proper and to the extent specified in such
opinion, if at all, upon an opinion or opinions, (in form and
substance reasonably satisfactory to Underwriters' Counsel) of other
counsel reasonably acceptable to Underwriters' Counsel, familiar with
the applicable laws; (B) as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the Company
and certificates or other written statements of officers of
departments of various jurisdictions having custody of documents
respecting the corporate existence or good standing of the Company and
its Subsidiaries, provided that copies of any such statements or
certificates shall be delivered to Underwriters' Counsel. The opinion
of such counsel for the Company shall state that the opinion of any
such other counsel is in form satisfactory to such counsel and, in
their opinion, you and they are justified in relying thereon.
(c) At the Closing Date you shall have received the
favorable opinions of ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel for the Selling
Stockholders, dated the Closing Date, addressed to the Underwriters
and in form and substance satisfactory to Underwriters' Counsel, with
respect to each Selling Stockholder, to the effect that:
(i) Each of this Agreement and the Custodian
Agreement has been duly and validly authorized, executed and
delivered by or on behalf of that Selling Stockholder. The
Custodian Agreement is a valid and binding obligation of that
Selling Stockholder, enforceable against such Selling
Stockholder in accordance with its terms.
(ii) To the knowledge of such counsel, each
Selling Stockholder has all requisite power and authority, and
all necessary consents, approvals, authorizations, orders,
registrations, filings, qualifications, licenses and permits
of and from all courts and all public, governmental or
regulatory agencies and bodies as are required for the
execution, delivery and performance of this Agreement and the
Custodian Agreement and the consummation of the transactions
contemplated hereby and thereby except for (1) such as may be
required under state securities or Blue Sky Laws in connection
with the purchase and distribution of the Shares by the
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26
Underwriters (as to which such counsel need express no
opinion) and (2) such as have been made or obtained under the
Act.
(iii) Upon the delivery of and payment for the
Additional Securities as contemplated hereby, each of the
Underwriters who has acquired Additional Securities from the
Selling Stockholder in good faith and without notice of any
adverse claim within the meaning of the Uniform Commercial
Code will acquire the Additional Securities being sold by each
Selling Stockholder on the Closing Date, free of any adverse
claim. The owner of such Additional Securities, if other than
the Selling Stockholder, is precluded from asserting against
the Underwriters the ineffectiveness of any authorized
endorsement or instruction, assuming the Underwriters
purchased such Additional Securities for value in good faith
and without notice of any adverse claim.
(iv) The execution, delivery and performance of
this Agreement and the Custodian Agreement by that Selling
Stockholder and the consummation of the transactions
contemplated hereby and thereby will not violate or conflict
with, to the best knowledge of such counsel, any judgment,
decree, order, statute, rule or regulation of any court or any
public, governmental or regulatory agency or body having
jurisdiction over any of that Selling Stockholder or any of
its properties or assets.
(v) The statements in the Prospectus under the
caption "Principal Stockholders," insofar as such statements
relate to the Selling Stockholders, fairly present the
information called for with respect to such matters.
In rendering such opinion, such counsel may rely (A) as to
matters involving the application of laws other than the laws of the
United States and jurisdictions in which they are admitted, to the
extent such counsel deems proper and to the extent specified in such
opinion, if at all, upon an opinion or opinions (in form and substance
reasonably satisfactory to Underwriters' Counsel) of other counsel
reasonably acceptable to Underwriters' Counsel, familiar with the
applicable laws; (B) as to matters of fact, to the extent they deem
proper, on certificates of the Selling Stockholders, provided that
copies of any such Statements or certificates shall be delivered to
Underwriters' Counsel. The opinions of such counsel for the Selling
Stockholders shall state that the opinion of any such other counsel is
in form
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satisfactory to such counsel and, in their opinion, you and they are
justified in relying thereon.
(d) At the Closing Date and Additional Closing Date, you
shall have received a certificate of the Chief Executive Officer and
the Chief Financial Officer of the Company, dated the Closing Date or
Additional Closing Date, as the case may be, to the effect that (i)
the condition set forth in subsection (a) of this Section 6 has been
satisfied, (ii) as of the date hereof and as of the Closing Date or
Additional Closing Date, as the case may be, the representations and
warranties of the Company set forth in Section 1 hereof are accurate,
(iii) as of the Closing Date or the Additional Closing Date, as the
case may be, the obligations of the Company to be performed hereunder
on or prior thereto have been duly performed, and (iv) subsequent to
the respective dates as of which information is given in the
Registration Statement and the Prospectus, (A) the Company and its
Subsidiaries have not sustained any material loss or interference with
their respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding, and
(B) there has not been any material adverse change, or any development
involving a material adverse change, in the business prospects,
properties, operations, condition (financial or otherwise), or results
of operations of the Company and its Subsidiaries taken as a whole,
except in each case as described in or contemplated by the Prospectus.
(e) At the Closing Date, you shall have received a
certificate executed by or on behalf of each Selling Stockholder,
dated the Closing Date, to the effect that the representations and
warranties of such Selling Stockholder set forth in Section 1 hereof
are accurate, and that as of the Closing Date, the obligations of such
Selling Stockholder to be performed hereunder on or prior thereto have
been duly performed.
(f) At the time this Agreement is executed and at the
Closing Date (and Additional Closing Date), you shall have received a
letter, from Price Waterhouse LLP, independent accountants for the
Company, dated, respectively, as of the date of this Agreement and as
of the Closing Date or Additional Closing Date, as the case may be,
addressed to the Underwriters and in form and substance satisfactory
to you, to the effect that: (i) they are independent accountants with
respect to the Partnership and Company within the meaning of the Act
and the Regulations; (ii) stating that, in their opinion, the
financial statements of the Partnership and the Company audited by
them and included in the Registration Statement and the Prospectus
comply as to
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form in all material respects with the applicable accounting
requirements of the Act and the Regulations with respect to
registration statements on Form S-1; (iii) on the basis of procedures
(but not an audit in accordance with generally accepted auditing
standards) consisting of a reading of the minutes of meetings of the
management committee of the Partnership subsequent to December 31,
1996 and of the minutes of meetings and consents of the stockholders
and boards of directors of the Company and its Subsidiaries and the
committees of such boards subsequent to December 31, 1996 as set forth
in the minutes books through a specified date not more than five
business days prior to the date of delivery of such letter, inquiries
of officers and other employees of the Company and its Subsidiaries
who have responsibility for financial and accounting matters of the
Company and its Subsidiaries with respect to transactions and events
subsequent to December 31, 1996 to a date not more than five days
prior to the date of such letter, nothing has come to their attention
that would cause them to believe that: (A) with respect to the period
subsequent to December 31, 1996, there were, as of a specified date
not more than five days prior to the date of such letter, any changes
in long-term indebtedness of the Partnership or the Company or any
decrease in the net current assets of the Partnership or the Company,
partners' capital, capital stock of the Company, or stockholders'
equity of the Company, in each case as compared with the amounts shown
in the most recent balance sheet of the Partnership or the Company, as
applicable, included in the Registration Statement and the Prospectus,
except for changes or decreases which the Registration Statement and
the Prospectus disclose have occurred or may occur or which are set
forth in such letter, or (B) that during the period from January 1,
1997 to a specified date not more than five days prior to the date of
such letter, there was any decrease, as compared with the
corresponding period in the prior fiscal year, in total revenues or
net income, except for decreases which the Registration Statement and
the Prospectus disclose have occurred or may occur or which are set
forth in such letter; (iv) they have read the unaudited pro forma
financial statements included in the Registration Statement and
inquired of officials of the Company about the basis for their
determination of the pro forma adjustments, and whether the unaudited
pro forma financial statements included in the Registration Statement
comply as to form in all material respects with the applicable
accounting requirements of rule 11-02 of Regulation S-X; (v) they have
proved the arithmetic accuracy of the application of the pro forma
adjustments to the historical amounts in the unaudited pro forma
financial statements; (vi) on the basis of the review referred to in
(iv) and (v) above, nothing came to their attention that caused them
to believe that the unaudited pro forma financial statements included
in the Registration Statement do not comply as to form in all material
respects with the applicable accounting requirements of rule
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11-02 of Regulation S-X and that the pro forma adjustments have not
been properly applied to the historical amounts in the compilation of
those statements; and (vii) stating that they have compared specific
dollar amounts, numbers of shares, percentages of revenues and
earnings, and other financial information pertaining to the
Partnership and the Company and its Subsidiaries set forth in the
Registration Statement and the Prospectus, which have been specified
by you prior to the date of this Agreement, and they (Price Waterhouse
LLP) are willing to perform to the extent that such amounts, numbers,
percentages, and information may be derived from the general
accounting and financial records of the Company and its Subsidiaries
which are subject to the internal controls of the Company's accounting
system, and excluding any questions requiring an interpretation by
legal counsel, with the results obtained from the application of
specified readings, inquiries, and other appropriate procedures
specified by you (which procedures do not constitute an examination in
accordance with generally accepted auditing standards) set forth in
such letter.
(g) All proceedings taken in connection with the sale of
the Firm Shares and the Additional Shares as herein contemplated shall
be satisfactory in form and substance to you and to Underwriters'
Counsel, and the Underwriters shall have received from Underwriters'
Counsel a favorable opinion, dated as of the Closing Date and the
Additional Closing Date, as the case may be, with respect to the
issuance and sale of the Shares, the Registration Statement and the
Prospectus and such other related matters, as you may reasonably
require, and the Company and the Selling Stockholders shall have
furnished to Underwriters' Counsel such documents as they reasonably
request for the purpose of enabling them to pass upon such matters.
(h) You shall have received from each person who is a
director, officer or shareholder of the Company, all of which are
listed on Schedule III hereto, an agreement to the effect that such
person will not, directly or indirectly, without your prior written
consent, offer, sell, offer or agree to sell, grant any option to
purchase or otherwise dispose (or announce any offer, sale, grant of
an option to purchase or other disposition) of any shares of Common
Stock (or any securities convertible into, exercisable for or
exchangeable or exercisable for shares of Common Stock) for a period
of 180 days after the date of the Prospectus.
(i) At the Closing Date, the Shares shall have been
approved for quotation on the NASDAQ.
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(j) At the time of execution of this Agreement, the
Closing Date and the Additional Closing Date, you shall have received
a letter of Cawley, Gillespie, dated respectively the date hereof, the
Closing Date or the Additional Closing Date, substantially in the
forms heretofore approved by the Representatives.
(k) Prior to the Closing Date and the Additional Closing
Date, the Company and the Selling Stockholders shall have furnished to
you such further information, certificates and documents as you may
reasonably request.
If any of the conditions specified in this Section 6 shall not
have been fulfilled when and as required by this Agreement, or if any of the
certificates, opinions, written statements or letters furnished to you or to
Underwriters' Counsel pursuant to this Section 6 shall not be in all material
respects reasonably satisfactory in form and substance to you and to
Underwriters' Counsel, all obligations of the Underwriters hereunder may be
cancelled by you at, or at any time prior to, the Closing Date and the
obligations of the Underwriters to purchase the Additional Shares may be
cancelled by you at, or at any time prior to, the Additional Closing Date.
Notice of such cancellation shall be given to the Company and the Selling
Stockholders in writing, or by telephone, telex or telegraph, confirmed in
writing.
7. Indemnification.
(a) The Company agrees to indemnify and hold harmless
each Underwriter and each person, if any, who controls any Underwriter
within the meaning of Section 15 of the Act or Section 20(a) of the
Securities Exchange Act of 1934 (the "Exchange Act"), against any and
all losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become
subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the
registration statement for the registration of the Shares, as
originally filed or any amendment thereof (including any registration
statement filed pursuant to Rule 462(b)), or any related preliminary
prospectus or the Prospectus, or in any supplement thereto or
amendment thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein
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not misleading; provided, however, that the Company will not be liable
in any such case to the extent but only to the extent that any such
loss, liability, claim, damage or expense arises out of or is based
upon any such untrue statement or alleged untrue statement or omission
or alleged omission made therein in reliance upon and in conformity
with written information furnished to the Company by or on behalf of
any Underwriter through you, in each case expressly for use therein.
This indemnity agreement will be in addition to any liability which
the Company may otherwise have including under this Agreement.
(b) Each Selling Stockholder, severally and not jointly,
agrees to indemnify and hold harmless each Underwriter and each
person, if any, who controls any Underwriter within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against
any and all losses, liabilities, claims, damages and expenses
whatsoever as incurred (including but not limited to reasonable
attorneys' fees and any and all reasonable expenses incurred in
investigating, preparing or defending against any litigation,
commenced or threatened, or any claim whatsoever, and any and all
amounts paid in settlement of any claim or litigation), joint or
several, to which they or any of them may become subject under the
Act, the Exchange Act or otherwise, insofar as such losses,
liabilities, claims, damages or expenses (or actions in respect
thereof) arise out of or are based upon any untrue statement or
alleged untrue statement of a material fact contained in the
registration statement for the registration of the Shares, as
originally filed or any amendment thereof (including any registration
statement filed pursuant to Rule 462(b)), or any related preliminary
prospectus or the Prospectus, or in any supplement thereto or
amendment thereof, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading; provided however, that the Selling Stockholders will not
be liable in any such case to the extent but only to the extent that
any such loss, liability, claim, damage or expense arises out of or is
based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of any Underwriter through you, in each case expressly for use
therein. Notwithstanding any other provision of this Agreement, the
aggregate liability of any Selling Stockholder pursuant to all
provisions of this Agreement shall be limited to an amount equal to
the aggregate public offering price of the shares sold by such Selling
Stockholder, less commissions received by the Underwriters. This
indemnity agreement will be in addition to any liability which the
Selling Stockholder may otherwise have including under this Agreement.
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Notwithstanding the foregoing, the Underwriters agree that, in
the case of any loss, liability, claim, damage or expense for which
they may claim indemnification hereunder, they will first make demand
for indemnification from the Company, and will not seek to enforce any
right or remedy granted under this Section 7 against the Selling
Stockholders, unless and until (i) the Underwriters shall have
delivered a written demand for indemnification hereunder to the
Company and (ii) the Company shall have failed to observe or comply in
all materials respects with any of its obligations hereunder in
respect of such loss, liability, claim, damage or expense for a period
of at least 30 days following the delivery of such written demand. In
the event that the Company and the Selling Stockholders shall have
failed to comply with their obligations in respect of any loss,
liability, claim, damage or expense, the Underwriters further agree
that (x) they will not commence any legal proceeding against the
Selling Stockholders to recover such loss, claim, damage, liability or
expenses unless, prior to or concurrently therewith, they shall have
commenced a legal proceeding against the Company to recover the same,
(y) they will diligently and in good faith prosecute any such legal
proceeding against the Company for as long as the Selling Stockholders
are a party thereto, and (z) in the event that judgments are entered
in favor of the Underwriters against both the Company and the Selling
Stockholders in any such legal proceeding, (1) during the period of 15
days following the date on which the judgment against the Company
becomes final and is not subject to appeal, the Underwriters will take
commercially reasonable steps to enforce the judgment entered against
the Company and will not seek to enforce the judgment entered against
the Selling Stockholders, and (2) after the expiration of such period,
the Underwriters may seek to enforce the judgment entered against the
Selling Stockholders, but will continue to take commercially
reasonable steps to enforce the judgment entered against the Company
for so long as they are seeking to enforce the judgment entered
against the Selling Stockholders.
(c) Each Underwriter severally, and not jointly, agrees
to indemnify and hold harmless the Company, each Selling Stockholder,
each of the directors of the Company, each of the officers of the
Company who shall have signed the Registration Statement, and each
other person, if any, who controls the Company within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act, against
any losses, liabilities, claims, damages and expenses whatsoever as
incurred (including but not limited to attorneys' fees and any and all
expenses whatsoever incurred in investigating, preparing or defending
against any litigation, commenced or threatened, or any claim
whatsoever, and any and all amounts paid in settlement of any claim or
litigation), joint or several, to which they or any of them may become
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subject under the Act, the Exchange Act or otherwise, insofar as such
losses, liabilities, claims, damages or expenses (or actions in
respect thereof) arise out of or are based upon any untrue statement
or alleged untrue statement of a material fact contained in the
Registration Statement for the registration of the Shares, as
originally filed or any amendment thereof, or any related preliminary
prospectus or the Prospectus, or in any amendment thereof or
supplement thereto, or arise out of or are based upon the omission or
alleged omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the extent, that
any such loss, liability, claim, damage or expense arises out of or is
based upon any such untrue statement or alleged untrue statement or
omission or alleged omission made therein in reliance upon and in
conformity with written information furnished to the Company by or on
behalf of any Underwriter through you expressly for use therein;
provided, however, that in no event shall any Underwriter be liable or
responsible for any amount in excess of the underwriting discount
applicable to the Shares purchased by such Underwriter hereunder.
This indemnity will be in addition to any liability which any
Underwriter may otherwise have including under this Agreement. The
Company and each Selling Stockholder acknowledge that the statements
set forth in the last paragraph of the cover page and in the third,
fifth and ninth paragraphs under the caption "Underwriting" in the
Prospectus constitute the only information furnished in writing by or
on behalf of any Underwriter expressly for use in the registration
statement relating to the Shares as originally filed or in any
amendment thereof, any related preliminary prospectus or the
Prospectus or in any amendment thereof or supplement thereto, as the
case may be.
(d) Promptly after receipt by an indemnified party under
subsection (a), (b) or (c) above of notice of the commencement of any
action, such indemnified party shall, if a claim in respect thereof is
to be made against the indemnifying party under such subsection,
notify each party against whom indemnification is to be sought in
writing of the commencement thereof (but the failure so to notify an
indemnifying party shall not relieve it from any liability which it
may have under this Section 7 except to the extent that it has been
prejudiced in any material respect by such failure or from any
liability which it may have otherwise). In case any such action is
brought against any indemnified party, and it notifies an indemnifying
party of the commencement thereof, the indemnifying party will be
entitled to participate therein, and to the extent it may elect by
written notice delivered to the indemnified party promptly after
receiving the aforesaid notice from such indemnified party, to assume
the defense thereof with counsel satisfactory to such indemnified
party.
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Notwithstanding the foregoing, the indemnified party or parties shall
have the right to employ its or their own counsel in any such case,
but the fees and expenses of such counsel shall be at the expense of
such indemnified party or parties unless (i) the employment of such
counsel shall have been authorized in writing by one of the
indemnifying parties in connection with the defense of such action,
(ii) the indemnifying parties shall not have employed counsel to have
charge of the defense of such action within a reasonable time after
notice of commencement of the action, or (iii) such indemnified party
or parties shall have reasonably concluded that there may be defenses
available to it or them which are different from or additional to
those available to one or all of the indemnifying parties (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 parties,
it being understood, however, that the Company and the Stockholders
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 fees and expenses of more than one separate firm of
attorneys (in addition to any local counsel) for all the Underwriters
and their controlling persons, which firm shall be designated in
writing by Bear, ▇▇▇▇▇▇▇ & Co. Inc. and that the reasonable fees and
expenses of such counsel shall be reimbursed as they are incurred), in
any of which events such fees and expenses shall be borne by the
indemnifying parties. No indemnifying party shall, without the prior
written consent of the indemnified parties, settle or compromise or
consent to the entry of any judgment with respect to any litigation,
or any investigation or proceeding by any governmental agency or body,
commenced or threatened, or any claim whatsoever in respect of which
indemnification or contribution could be sought under this Section 6
or Section 7 hereof (whether or not the indemnified parties are actual
or potential parties thereto), unless such settlement, compromise or
consent (i) includes an unconditional release of each indemnified
party from all liability arising out of such litigation,
investigation, proceeding or claim and (ii) does not include a
statement as to or an admission of fault, culpability or a failure to
act by or on behalf of any indemnified party.
(e) If at any time an indemnified party shall have
requested an indemnifying party to reimburse the indemnified party for
fees and expenses of counsel, such indemnifying party agrees that it
shall be liable for any settlement of the nature contemplated by
Section 7(a) or (b) effected without its written consent if (i) such
settlement is entered into more than 45 days after receipt by such
indemnifying party of the aforesaid request, (ii) such indemnifying
party shall have
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received notice of the terms of such settlement at least 30 days prior
to such settlement being entered into, and (iii) such indemnifying
party shall not have reimbursed such indemnified party in accordance
with such request prior to the date of such settlement.
(f) The provisions of this Section shall not affect any
agreement among the Company and the Selling Shareholder(s) with
respect to indemnification.
8. Contribution. In order to provide for contribution
in circumstances in which the indemnification provided for in Section 7(a) and
(b) hereof is for any reason held to be unavailable from the Company or any
Selling Stockholder or is insufficient to hold harmless a party indemnified
thereunder, the Company, the Selling Stockholders and the Underwriters shall
contribute to the aggregate losses, claims, damages, liabilities and expenses
of the nature contemplated by such indemnification provisions (including any
investigation, legal and other expenses incurred in connection with, and any
amount paid in settlement of, any action, suit or proceeding or any claims
asserted, but after deducting in the case of losses, claims, damages,
liabilities and expenses suffered by the Company and any Selling Stockholder
any contribution received by the Company or such Selling Stockholder from
persons, other than the Underwriters, who may also be liable for contribution,
including persons who control the Company within the meaning of Section 15 of
the Act or Section 20(a) of the Exchange Act, officers of the Company who
signed the Registration Statement and directors of the Company) as incurred to
which the Company, one or more of the Selling Stockholders and one or more of
the Underwriters may be subject, in such proportions as is appropriate to
reflect the relative benefits received by the Company, the Selling Stockholders
and the Underwriters 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, the
Selling Stockholders 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 relative
benefits received by the Company, the Selling Stockholders and the Underwriters
shall be deemed to be in the same proportion as (x) the total proceeds from the
offering (net of underwriting discounts and commissions but before deducting
expenses) received by the Company and (y) the total proceeds from the offering
(net of underwriting discounts and commissions but before deducting expenses)
received by the Selling Stockholders and (z) the underwriting discounts and
commissions received by the Underwriters, respectively, in each case as set
forth in the table on the cover page of the Prospectus (and as each such amount
may be similarly determined to give effect to the sale of the Additional
Shares, if any). The relative fault of the Company, the Selling Stockholders
and of the Underwriters shall be determined by reference
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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, the Selling Stockholders 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 Stockholders and the Underwriters agree that it would not be just
and equitable if contribution pursuant to this Section 8 were determined by pro
rata allocation (even if the Underwriters were treated as one entity for such
purpose) or by any other method of allocation which does not take account of
the equitable considerations referred to above. The Company and each Selling
Stockholder shall be jointly and severally liable for the amounts to be
contributed by any of them pursuant to the provisions of this Section 8.
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) 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. Notwithstanding the provisions of
this Section 8, 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 were offered to the public exceeds the
amount of any damages that such Underwriter has otherwise been required to pay
by reason of such untrue or alleged untrue statement or omission or alleged
omission. For purposes of this Section 8, each person, if any, who controls an
Underwriter within the meaning of Section 15 of the Act or Section 20(a) of the
Exchange Act shall have the same rights to contribution as such Underwriter,
each person, if any, who controls a Selling Stockholder within the meaning of
Section 15 of the Act or Section 20(a) of the Exchange Act shall have the same
rights to contribution as such Selling Stockholder, and each person, if any,
who controls the Company within the meaning of Section 15 of the Act or Section
20(a) of the Exchange Act, each officer of the Company who shall have signed
the Registration Statement and each director of the Company shall have the same
rights to contribution as the Company, subject in each case to clauses (i) and
(ii) 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 8, notify such party or
parties from whom contribution may be sought, but the omission to so notify
such party or parties shall not relieve the party or parties from whom
contribution may be sought from any obligation it or they may have under this
Section 8 or otherwise.
The obligations of the Selling Stockholders to contribute to this
Section 8 shall be subject to the limitation contained in paragraph 7(b) above
with respect to the maximum aggregate liability of the Selling Stockholders
under or in connection with this Agreement.
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9. Default by an Underwriter.
(a) If any Underwriter or Underwriters shall default in
its or their obligation to purchase Firm Shares or Additional Shares
hereunder, and if the Firm Shares or Additional Shares with respect to
which such default relates do not (after giving effect to
arrangements, if any, made by you pursuant to subsection (b) below)
exceed in the aggregate 10% of the number of shares of Firm Shares or
Additional Shares, as the case may be, which all Underwriters have
agreed to purchase hereunder, then such Firm Shares or Additional
Shares to which the default relates shall be purchased by the non-
defaulting Underwriters in proportion to the respective proportions
which the numbers of Firm Shares set forth opposite their respective
names in Schedule I hereto bear to the aggregate number of Firm Shares
set forth opposite the names of the non-defaulting Underwriters.
(b) In the event that such default relates to more than
10% of the Firm Shares or Additional Shares, as the case may be, you
may in your discretion arrange for yourself or for another party or
parties (including any non-defaulting Underwriter or Underwriters who
so agree) to purchase such Firm Shares or Additional Shares, as the
case may be, to which such default relates on the terms contained
herein. In the event that within five calendar days after such a
default you do not arrange for the purchase of the Firm Shares or
Additional Shares, as the case may be, to which such default relates
as provided in this Section 9, this Agreement or, in the case of a
default with respect to the Additional Shares, the obligations of the
Underwriters to purchase and of the Company to sell the Additional
Shares shall thereupon terminate, without liability on the part of the
Company or the Selling Stockholders with respect thereto (except in
each case as provided in Sections 5, 7(a) and (b) and 8 hereof) or the
several Underwriters, but nothing in this Agreement shall relieve a
defaulting Underwriter or Underwriters of its or their liability, if
any, to the other several Underwriters, the Company and the Selling
Stockholders for damages occasioned by its or their default hereunder.
(c) In the event that the Firm Shares or Additional
Shares to which the default relates are to be purchased by the
non-defaulting Underwriters, or are to be purchased by another party
or parties as aforesaid, you or the Company shall have the right to
postpone the Closing Date or Additional Closing Date, as the case may
be, for a period, not exceeding five business days, in order to effect
whatever changes may thereby be made necessary in the Registration
Statement or the Prospectus or in any other documents and
arrangements, and the Company agrees to file promptly any
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amendment or supplement to the Registration Statement or the
Prospectus which, in the opinion of Underwriters' Counsel, may thereby
be made necessary or advisable. The term "Underwriter" as used in
this Agreement shall include any party substituted under this Section
9 with like effect as if it had originally been a party to this
Agreement with respect to such Firm Shares and Additional Shares.
10. Survival of Representations and Agreements. All
representations and warranties, covenants and agreements of the Underwriters,
the Selling Stockholders and the Company contained in this Agreement, including
the agreements contained in Section 5, the indemnity agreements contained in
Section 7 and the contribution agreements contained in Section 8, shall remain
operative and in full force and effect regardless of any investigation made by
or on behalf of any Underwriter or any controlling person thereof or by or on
behalf of the Company, any of its officers and directors or any Selling
Stockholder or any controlling person thereof, and shall survive delivery of
and payment for the Shares to and by the several Underwriters. The
representations contained in Section 1 and the agreements contained in Sections
5, 7, 8 and 11(d) hereof shall survive the termination of this Agreement
including pursuant to Sections 9 or 11 hereof.
11. Effective Date of Agreement; Termination.
(a) This Agreement shall become effective upon the later
of (i) when you and the Company shall have received notification of
the effectiveness of the Registration Statement, or (ii) the execution
of this Agreement. Until this Agreement becomes effective as
aforesaid, it may be terminated by the Company by notifying you and
the Selling Stockholders or by you by notifying the Company and the
Attorney-in-Fact. Notwithstanding the foregoing, the provisions of
this Section 11 and of Sections 1, 5, 7 and 8 hereof shall at all
times be in full force and effect.
(b) You shall have the right to terminate this Agreement
at any time prior to the Closing Date or the obligations of the
Underwriters to purchase the Additional Shares at any time prior to
the Additional Closing Date, as the case may be, if (A) any domestic
or international event or act or occurrence has materially disrupted,
or in your opinion will in the immediate future materially disrupt,
the market for the Company's securities or securities in general; or
(B) if trading on the New York Stock Exchange or on the NASDAQ
generally or with respect to securities of the Company shall have been
suspended, or minimum or maximum prices for trading shall have been
fixed, or maximum ranges for prices for securities shall have been
required, on the New York Stock Exchange or on the NASDAQ by order of
the New York Stock Exchange or the NASDAQ or by order of the
Commission or any other
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governmental authority having jurisdiction; or (C) if a banking
moratorium has been declared by a state or federal authority or if any
new restriction materially adversely affecting the distribution of the
Firm Shares or the Additional Shares, as the case may be, shall have
become effective; or (D) if a moratorium in foreign exchange trading
by major international banks or persons has been declared; or (E) if
the United States becomes engaged in hostilities or there is an
escalation of hostilities involving the United States or there is a
declaration of a national emergency or war by the United States; or
(F) if there shall have been such change in the market for the
Company's securities or securities in general or in political,
financial or economic conditions, if the effect of any such event as
in your judgment makes it inadvisable to proceed with the offering,
sale and delivery of the Firm Shares or the Additional Shares, as the
case may be, on the terms contemplated by the Prospectus.
(c) Any notice of termination pursuant to this Section 11
shall be by telephone, telex, or telegraph, confirmed in writing by
letter.
(d) If this Agreement shall be terminated pursuant to any
of the provisions hereof (otherwise than pursuant to (i) notification
by you as provided in Section 11(a) hereof or (ii) Sections 9(b) or
11(b) hereof), or if the sale of the Shares provided for herein is not
consummated because any condition to the obligations of the several
Underwriters set forth herein is not satisfied or because of any
refusal, inability or failure on the part of the Company or any
Selling Stockholder to perform any agreement herein or comply with any
provision hereof, the Company agrees subject to demand by you, to
reimburse the Underwriters for all out-of-pocket expenses (including
the fees and expenses of their counsel), incurred by the several
Underwriters in connection herewith.
12. Notice. All communications hereunder, except as may
be otherwise specifically provided herein, shall be in writing and, if sent to
any Underwriter, shall be mailed, delivered, or telexed or telegraphed and
confirmed in writing, to such Underwriter c/o Bear, ▇▇▇▇▇▇▇ & Co., ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇.▇. ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. ▇▇▇▇; if sent to the
Company or any Selling Stockholder, shall be mailed, delivered, or telegraphed
and confirmed in writing, in the case of the Company, to the Company, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇, and,
in the case of any Selling Stockholder, to ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
13. Parties. You represent that you are authorized to
act on behalf of the several Underwriters named in Schedule I hereto, and the
Company and the Selling Stockholders shall be
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entitled to act and rely on any request, notice, consent, waiver or agreement
purportedly given on behalf of the Underwriters when the same shall have been
given by you on such behalf. This Agreement shall inure solely to the benefit
of, and shall be binding upon, the several Underwriters, the Selling
Stockholders and the Company and the controlling persons, directors, officers,
employees and agents referred to in Sections 7 and 8, and their respective
successors and assigns, and no other person shall have or be construed to have
any legal or equitable right, remedy or claim under or in respect of or by
virtue of this Agreement or any provision herein contained. The term
"successors and assigns" shall not include a purchaser, in its capacity as
such, of Shares from any of the Underwriters.
14. Governing Law. This Agreement shall be governed by
and construed in accordance with the laws of the State of New York, but without
regard to principles of conflict of law.
15. Counterparts. This Agreement may be executed in any
number of counterparts, each of which shall be deemed to be an original, but
all such counterparts shall together constitute one and the same Agreement.
16. JURISDICTION OF DISPUTES. THE COMPANY AND THE
SELLING STOCKHOLDERS HEREBY SUBMIT TO THE NON- EXCLUSIVE JURISDICTION OF THE
FEDERAL AND STATE COURTS IN THE BOROUGH OF MANHATTAN IN THE CITY OF NEW YORK IN
ANY SUIT OR PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
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If the foregoing correctly sets forth the understanding among
you, the Company and the Selling Stockholders, please so indicate in the space
provided below for that purpose, whereupon this letter shall constitute a
binding agreement among us.
Very truly yours,
THE COMPANY:
▇▇▇▇▇▇▇ EXPLORATION COMPANY, a
Delaware corporation
By
---------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇,
President
SELLING STOCKHOLDERS:
-----------------------------------
▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------
▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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Accepted as of the date first above written.
BEAR, ▇▇▇▇▇▇▇ & CO. INC.,
HOWARD, WEIL, LABOUISSE,
▇▇▇▇▇▇▇▇▇▇ INCORPORATED
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ REFSNES, INC.
BY BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By
----------------------------
General Partner
On behalf of themselves and the other several
Underwriters named in Schedule I hereto.
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SCHEDULE I
Number of Firm
Shares to be
Name of Underwriter Purchased
--------------------- ---------------
Bear, ▇▇▇▇▇▇▇ & Co. Inc.
Howard, Weil, Labouisse,
▇▇▇▇▇▇▇▇▇▇ Incorporated
▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇ Refsnes, Inc.
Total.............................. 3,000,000
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SCHEDULE II
Additional Shares to be sold by the
Company and the Selling Stockholders
Percentage of
Number of Additional Additional Shares
Shares to be Sold Shares to be Sold
----------------- ------------------
The Company 354,762 ---
▇▇▇ ▇. ▇▇▇▇▇▇▇ 47,619 50%
▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 47,619 50%
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SCHEDULE III
Lockup List of Stockholders
45
