EXHIBIT 1.1
1,125,000 UNITS
GMX RESOURCES INC.
UNDERWRITING AGREEMENT
February __, 2001
▇▇▇▇▇▇▇ Investment Company, Inc.
As Representative of the
Several Underwriters
▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇
Gentlemen:
GMX RESOURCES INC., an Oklahoma corporation (the "Company"),
proposes to sell to the several underwriters (the "Underwriters") named in
Schedule I hereto for whom you are acting as Representative (the
"Representative") an aggregate of 1,125,000 Units (the "Firm Units"). Each
Unit will consist of one share of the Company's Common Stock ("Common Stock")
and one Class A Warrant and one Class B Warrant, each substantially in the
form filed as an exhibit to the Registration Statement (hereinafter defined.)
The Class A Warrants included in the Units are herein referred to,
collectively, as the "Class A Warrants" and the Class B Warrants included in
the Units are herein referred to, collectively, as the "Class B Warrants".
The respective number of the Firm Units to be so purchased by the several
Underwriters are set forth opposite their names in Schedule I hereto. The
Company also proposes to grant to the Representative an option to purchase in
aggregate up to 187,500 additional Units, identical to the Firm Units (the
"Option Units"), as set forth below.
As the Representative, you have advised the Company (a) that you are
authorized to enter into this Agreement for yourself as Representative and on
behalf of the several Underwriters, and (b) that the several Underwriters are
willing, acting severally and not jointly, to purchase the numbers of Firm
Units set forth opposite their respective names in Schedule I. The Firm Units
and the Option Units (to the extent the aforementioned option is exercised)
are herein collectively called the "Units."
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In consideration of the mutual agreements contained herein and of
the interests of the parties in the transactions contemplated hereby, the
parties hereto agree as follows:
1. REPRESENTATIONS AND WARRANTIES OF THE COMPANY.
The Company represents and warrants to each of the Underwriters as
follows:
(a) A registration statement on Form SB-2
(File No. 333-49328) with respect to the Units has been prepared by the
Company in conformity with the requirements of the Securities Act of 1933, as
amended (the "Act"), and the Rules and Regulations (the "Rules and
Regulations") of the Securities and Exchange Commission (the "Commission")
thereunder and has been filed with the Commission. Copies of such
registration statement, including any amendments thereto, the preliminary
prospectuses (meeting the requirements of the Rules and Regulations)
contained therein and the exhibits, financial statements and schedules, as
finally amended and revised, have heretofore been delivered by the Company to
you. Such registration statement, together with any registration statement
filed by the Company pursuant to Rule 462 (b) of the Act, herein referred to
as the "Registration Statement," which shall be deemed to include all
information omitted therefrom in reliance upon Rule 430A and contained in the
Prospectus referred to below, has become effective under the Act and no
post-effective amendment to the Registration Statement has been filed as of
the date of this Agreement. "Prospectus" means (a) the form of prospectus
first filed with the Commission pursuant to Rule 424(b) or (b) the last
preliminary prospectus included in the Registration Statement filed prior to
the time it becomes effective or filed pursuant to Rule 424(a) under the Act
that is delivered by the Company to the Underwriters for delivery to
purchasers of the Units, together with the term sheet or abbreviated term
sheet filed with the Commission pursuant to Rule 424(b)(7) under the Act.
Each preliminary prospectus included in the Registration Statement prior to
the time it becomes effective is herein referred to as a "Preliminary
Prospectus."
(b) The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the State of
Oklahoma, with corporate power and authority to own or lease its properties
and conduct its business as described in the Registration Statement. Except
as described in the Registration Statement, the Company does not own and
never has owned a controlling interest in any other corporation or other
business entity that has or ever has had any material assets, liabilities or
operations. If the Registration Statement discloses the existence of any
corporation or other business entity that is or has been owned or controlled
by the Company, (each a "Subsidiary and, collectively, the "Subsidiaries")
references in this Section 1 to the Company include reference to each
Subsidiary unless the context clearly indicates otherwise and all
representations with respect to the Company are deemed to be given with
respect to the Company and each Subsidiary with such changes as are
reasonably required to reflect the nature of such Subsidiary. The Company is
duly qualified to transact business in all jurisdictions in which the conduct
of its business requires such qualification.
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(c) The outstanding shares of each class or series of
capital stock of the Company have been duly authorized and validly issued and
are fully paid and non-assessable and, except as disclosed in the
Registration Statement, have been issued and sold by the Company in
compliance in all material respects with applicable securities laws; the
issuance and sale of the Units have been duly authorized by all necessary
corporate action and, when issued and paid for as contemplated herein, the
Units will be validly issued, fully paid and non-assessable; and no
preemptive rights of shareholders exist with respect to any security of the
Company or the issue and sale thereof. Except as set forth in the
Registration Statement, neither the filing of the Registration Statement nor
the offering or sale of the Units as contemplated by this Agreement gives
rise to any rights, other than those which have been waived or satisfied, for
or relating to the registration of any shares of Common Stock or other
securities of the Company.
(d) The information set forth under the caption
"Capitalization" in the Prospectus is true and correct. The Common Stock
conforms and the Class A Warrants, the Class B Warrants and the
Representative's Warrant will conform to the description thereof contained in
the Registration Statement. The forms of certificates for the above
securities conform to the requirements of the corporate law of Oklahoma.
(e) The Commission has not issued an order preventing or
suspending the use of any Prospectus relating to the proposed offering of the
Units nor instituted proceedings for that purpose. The Registration Statement
contains, and the Prospectus and any amendments or supplements thereto will
contain, all statements which are required to be stated therein by, and will
conform to, the requirements of the Act and the Rules and Regulations. The
Registration Statement and any amendment thereto do not contain, and will not
contain, any untrue statement of a material fact and do not omit, and will
not omit, to state any material fact required to be stated therein or
necessary to make the statements therein not misleading. The Prospectus and
any amendments and supplements thereto do not contain, and will not contain,
any untrue statement of material fact; and do not omit, and will not omit, 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; PROVIDED, HOWEVER, that the Company makes no
representations or warranties as to information contained in or omitted from
the Registration Statement or the Prospectus, or any such amendment or
supplement, in reliance upon, and in conformity with, written information
furnished to the Company by or on behalf of any Underwriter through the
Representative, specifically for use in the preparation thereof.
(f) The financial statements of the Company, together with
related notes and schedules as set forth in the Registration Statement,
present fairly the financial position and the results of operations and cash
flows of the Company at the indicated dates and for the indicated periods.
Such financial statements and related schedules have been prepared in
accordance with generally accepted principles of accounting, consistently
applied throughout the periods involved, except as disclosed herein and in
the Registration Statement, and all adjustments necessary for a fair
presentation of results for such periods have been made. The summary
financial and statistical data of the Company included in the Registration
Statement presents fairly the information shown therein
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and such data has been compiled on a basis consistent with the financial
statements presented therein and the books and records of the Company.
(g) KPMG LLP and ▇▇▇▇▇▇ & McAfee, who have certified
certain of the financial statements filed with the Commission as part of the
Registration Statement, are each independent public accountants as required
by the Act and the Rules and Regulations.
(h) There is no action, suit, claim or proceeding pending
or, to the knowledge of the Company, threatened against the Company before
any court or administrative agency or otherwise which if determined adversely
to the Company might result in any material adverse change in the earnings,
business, management, properties, assets, rights, operations, condition
(financial or otherwise) or prospects of the Company or prevent the
consummation of the transactions contemplated hereby, except as set forth in
the Registration Statement.
(i) The Company has good and marketable title to all
personal properties and assets, tangible and intangible, reflected in the
financial statements (or as described in the Registration Statement)
hereinabove described, subject to no lien, mortgage, pledge, charge or
encumbrance of any kind except those reflected in such financial statements
(or as described in the Registration Statement) or which are not material.
The Company's ownership rights in its patents, patent licenses and other
material technology is consistent with (i) the description thereof in the
Registration Statement, and (ii) the business needs of the Company. All of
the leases and subleases under which the Company holds properties are in full
force and effect (with only such exceptions as are commonly accepted by
prudent companies engaged in the Company's business) and the Company has not
received notice of any claim that is materially adverse to the rights of the
Company under any of such leases or subleases.
(j) The Company has filed all federal, state, local and
foreign income tax returns which have been required to be filed and has paid
all taxes indicated by said returns and all assessments received by it to the
extent that such taxes have become due and are not being contested in good
faith. All tax liabilities have been adequately provided for in the financial
statements of the Company.
(k) Since the respective dates as of which information is
given in the Registration Statement, as it may have been amended or
supplemented, there has not been any material adverse change or any
development involving a prospective material adverse change in or affecting
the earnings, business, management, properties, assets, rights, operations,
condition (financial or otherwise), or prospects of the Company, whether or
not occurring in the ordinary course of business, and there has not been any
material transaction entered into or any material transaction that is
probable of being entered into by the Company, other than transactions in the
ordinary course of business and changes and transactions described in the
Registration Statement, as it may be amended or supplemented. The Company has
no material contingent obligations which are not disclosed in the Company's
financial statements or elsewhere in the Prospectus which are included in the
Registration Statement.
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(l) The Company is not, nor, with the giving of notice or
lapse of time or both, will it be, in violation of or in default under its
Certificate of Incorporation or Bylaws or under any agreement, lease,
contract, indenture or other instrument or obligation to which it is a party
or by which it, or any of its properties, is bound and which default is of
material significance in respect of the condition, financial or otherwise of
the Company or the business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company.
The execution and delivery of this Agreement and the consummation of the
transactions herein contemplated and the fulfillment of the terms hereof will
not conflict with or result in a breach of any of the terms or provisions of,
or constitute a default under, any indenture, mortgage, deed of trust or
other agreement or instrument to which the Company is a party, or of the
Certificate of Incorporation or Bylaws of the Company or any order, rule or
regulation applicable to the Company of any court or of any regulatory body
or administrative agency or other governmental body having jurisdiction.
(m) Each approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative
or other governmental body necessary in connection with the execution and
delivery by the Company of this Agreement and the consummation of the
transactions herein contemplated (except such additional steps as may be
required by the Commission, the National Association of Securities Dealers,
Inc. (the "NASD") or such additional steps as may be necessary to qualify the
Units for public offering by the Underwriters under state securities or Blue
Sky laws) has been obtained or made and is in full force and effect.
(n) The Company holds all material patents, patent rights
trademarks, trade names, copyrights, trade secrets and licenses of any of the
foregoing (collectively, "Intellectual Property Rights") that are necessary
to the conduct of its businesses; there is no claim pending or, to the best
knowledge of the Company, threatened against the Company or any of its
officers, directors or employees, in their capacities as such, alleging any
infringement of Intellectual Property Rights, or any violation of the terms
of any license relating to Intellectual Property Rights, nor does the Company
know of any basis for any such claim. The Company knows of no material
infringement by others of Intellectual Property Rights owned by or licensed
to the Company. The Company has obtained, is in compliance in all material
respect with and maintains in full force and effect all material licenses,
certificates, permits, orders or other, similar authorizations granted or
issued by any governmental agency (collectively "Government Permits")
required to conduct its business as it is presently conducted. No proceeding
to revoke, limit or otherwise materially change any Government Permit has
been commenced or, to the Company's best knowledge, is threatened against the
Company, and the Company has no reason to anticipate that any such proceeding
will be commenced against the Company. Except as disclosed or contemplated in
the Prospectus, the Company has no reason to believe that any pending
application for a Government Permit will be denied or limited in a manner
inconsistent with the Company's business plan as described in the Prospectus.
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(o) The Company is in all material respects in compliance
with all applicable Environmental Laws. The Company has no knowledge of any
past, present or, as anticipated by the Company, future events, conditions,
activities, investigation, studies, plans or proposals that (i) would
interfere with or prevent compliance with any Environmental Law by the
Company or (ii) could reasonably be expected to give rise to any common law
or other liability, or otherwise form the basis of a claim, action, suit,
proceeding, hearing or investigation, involving the Company and related to
Hazardous Substances or Environmental Laws. Except for the prudent and safe
use and management of Hazardous Substances in the ordinary course of the
Company's business, (i) no Hazardous Substance is or has been used, treated,
stored, generated, manufactured or otherwise handled on or at any Facility
and (ii) to the Company's best knowledge, no Hazardous Substance has
otherwise come to be located in, on or under any Facility. No Hazardous
Substances are stored at any Facility except in quantities necessary to
satisfy the reasonably anticipated use or consumption by the Company. No
litigation, claim, proceeding or governmental investigation is pending
regarding any environmental matter for which the Company has been served or
otherwise notified or, to the knowledge of the Company, threatened or
asserted against the Company, or the officers or directors of the Company in
their capacities as such, or any Facility or the Company's business. There
are no orders, judgments or decrees of any court or of any governmental
agency or instrumentality under any Environmental Law which specifically
apply to the Company, any Facility or any of the Company's operations. The
Company has not received from a governmental authority or other person (i)
any notice that it is a potentially responsible person for any Contaminated
site or (ii) any request for information about a site alleged to be
Contaminated or regarding the disposal of Hazardous Substances. There is no
litigation or proceeding against any other person by the Company regarding
any environmental matter. The Company has disclosed in the Prospectus or made
available to the Underwriters and their counsel true, complete and correct
copies of any reports, studies, investigations, audits, analyses, tests or
monitoring in the possession of or initiated by the Company pertaining to any
environmental matter relating to the Company, its past or present operations
or any Facility.
For the purposes of the foregoing paragraph, "Environmental Laws"
means any applicable federal, state or local statute, regulation, code, rule,
ordinance, order, judgment, decree, injunction or common law pertaining in
any way to the protection of human health or the environment, including
without limitation, the Resource Conservation and Recovery Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Toxic Substances Control Act, the Clean Air Act, the Federal Water Pollution
Control Act and any similar or comparable state or local law; "Hazardous
Substance" means any hazardous, toxic, radioactive or infectious substance,
material or waste as defined, listed or regulated under any Environmental
Law; "Contaminated" means the actual existence on or under any real property
of Hazardous Substances, if the existence of such Hazardous Substances
triggers a requirement to perform any investigatory, remedial, removal or
other response action under any Environmental Laws or if such response action
legally could be required by any governmental authority; "Facility" means any
property currently owned, leased or occupied by the Company.
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(p) Neither the Company, nor to the Company's best
knowledge, any of its affiliates, has taken or intends to take, directly or
indirectly, any action which is designed to cause or result in, or which
constitutes or 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 Units.
(q) The Company is not an "investment company" within the
meaning of such term under the Investment Company Act of 1940 and the rules
and regulations of the Commission thereunder.
(r) The Company maintains a system of internal accounting
controls sufficient to provide reasonable assurances that (i) transactions
are executed in accordance with management's general or specific
authorization; (ii) transactions are recorded as necessary to permit
preparation of financial statements in conformity with generally accepted
accounting principles and to maintain accountability for assets; (iii) access
to assets is permitted only in accordance with management's general or
specific authorization; and (iv) the recorded accountability for assets is
compared with existing assets at reasonable intervals and appropriate action
is taken with respect to any differences.
(s) The Company carries, or is covered by, insurance in
such amounts and covering such risks as is adequate for the conduct of their
respective businesses and the value of their respective properties and as is
customary for companies engaged in similar industries.
(t) The Company is in compliance in all material respects
with all presently applicable provisions of the Employee Retirement Income
Security Act of 1974, as amended, including the regulations and published
interpretations thereunder ("ERISA"); no "reportable event" (as defined in
ERISA) has occurred with respect to any "pension plan" (as defined in ERISA)
for which the Company would have any liability; the Company has not incurred
and does not expect to incur liability under (i) Title IV of ERISA with
respect to termination of, or withdrawal from, any "pension plan" or (ii)
Sections 412 or 4971 of the Internal Revenue Code of 1986, as amended,
including the regulations and published interpretations thereunder (the
"Code"); and each "pension plan" for which the Company would have any
liability that is intended to be qualified under Section 401(a) of the Code
is so qualified in all material respects and nothing has occurred, whether by
action or by failure to act, which would cause the loss of such qualification.
(u) The Company is in material compliance with all laws,
rules, regulations, orders of any court or administrative agency, operating
licenses or other requirements imposed by any governmental body applicable to
it, including, without limitation, all applicable laws, rules, regulations,
licenses or other governmental standards applicable to the its business; and
the conduct of the business of the Company, as described in the Prospectus,
will not cause the Company to be in violation of any such requirements.
(v) Each of the Class A Warrants, the Class B Warrants and
the Representative's Warrants (as defined in Paragraph (d) of Section 2
hereof) have been authorized for issuance to the purchasers thereof or to the
Representative or its designees, as the case may be, and will, when
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issued, possess rights, privileges, and characteristics as represented in the
most recent form of Class A Warrants, Class B Warrants or Representative's
Warrants, as the case may be, filed as an exhibit to the Registration
Statement; the securities to be issued upon exercise of the Class A Warrants,
Class B Warrants and the Representative's Warrants, when issued and delivered
against payment therefor in accordance with the terms thereof, will be duly
and validly issued, fully paid, nonassessable and free of preemptive rights,
and all corporate action required to be taken for the authorization and
issuance of the Class A Warrants, Class B Warrants and the Representative's
Warrants, and the securities to be issued upon their exercise, have been
validly and sufficiently taken.
(w) Except as disclosed in the Prospectus, neither the
Company nor any of its officers, directors or affiliates have caused any
person, other than the Underwriters, to be entitled to reimbursement of any
kind, including, without limitation, any compensation that would be
includable as underwriter compensation under the NASD's Corporate Financing
Rule with respect to the offering of the Units, as a result of the
consummation of such offering based on any activity of such person as a
finder, agent, broker, investment adviser or other financial service provider.
(x) Except as described in the Prospectus, the Company does
not directly or indirectly control or have a material interest in any other
business entity.
(y) The Units, the Common Stock and the Class A and Class B
Warrants have been approved for listing on the NASDAQ SmallCap Market
("NASDAQ") upon the effectiveness of the Registration Statement and the
Company has satisfied all of the requirements of NASDAQ for such listing and
for the trading of its Units, Common Stock and Class A and Class B Warrants
on NASDAQ.
(z) ▇▇▇▇▇▇▇ Associates, Inc., which has rendered its report
with respect to the net proved oil and gas reserves and the estimated future
net revenues from proved oil and gas reserves (the "Reserve Information"), is
professionally qualified to issue a report with respect to the Reserve
Information and has no material relationship with the Company or any
Subsidiary; the Reserve Information is fairly presented in a manner
consistent with industry practice with respect to such information;
subsequent to the date of the Reserve Information, and except as disclosed in
the Prospectus, there has been no material adverse change in the net proved
oil and gas reserves and the estimated future net revenues from proved oil
and gas reserves of the Company.
(aa) The Company has title that is defendable or customary
in the oil and gas industry to all properties and assets, tangible and
intangible, reflected in the Financial Statements, or as otherwise described
in the Registration Statement, subject to no material lien, mortgage, pledge,
charge or encumbrance of any kind except those reflected in the Financial
Statements or as otherwise described in the Registration Statement. All of
the material leases and subleases under which the Company holds properties
are in full force and effect (with only such exceptions as are commonly
accepted by prudent companies in the oil and gas business) and the Company
has not received notice of any material claim of any sort that has been
asserted by anyone materially adverse to the rights of the Company under any
of such leases or subleases, or affecting or questioning the rights of the
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Company to the continued possession of the leased or subleased premises or
property under any such lease or sublease.
2. PURCHASE, SALE AND DELIVERY OF THE UNITS.
(a) On the basis of the representations, warranties and
covenants herein contained, and subject to the conditions herein set forth,
the Company agrees to sell to the Underwriters and each Underwriter agrees,
severally and not jointly, to purchase, at a price of $____ per Unit, the
number of Firm Units set forth opposite the name of each Underwriter in
Schedule I hereof, subject to adjustments in accordance with Section 9 hereof.
(b) Payment for the Firm Units to be sold hereunder is to
be made in New York Clearing House funds and, at the option of the
Representative, by bank wire to an account specified by the Company,
certified or bank cashier's checks drawn to the order of the Company, against
either uncertificated delivery of Firm Units or of certificates therefor
(which delivery, if certificated, shall take place in such location in New
York, New York as may be specified by the Representative) to the
Representative for the several accounts of the Underwriters. Such payment is
to be made at the offices of the Representative at the address set forth on
the first page of this agreement, at 7:00 a.m., Pacific time, on the third
business day after the date of this Agreement or at such other time and date
not later than five business days thereafter as you and the Company shall
agree upon, such time and date being herein referred to as the "Closing
Date." (As used herein, "business day" means a day on which the New York
Stock Exchange is open for trading and on which banks in New York are open
for business and not permitted by law or executive order to be closed.)
Except to the extent uncertificated Firm Units are delivered at closing, the
certificates for the Firm Units will be delivered in such denominations and
in such registrations as the Representative requests in writing not later
than the second full business day prior to the Closing Date, and will be made
available for inspection by the Representative at least one business day
prior to the Closing Date.
(c) In addition, on the basis of the representations and
warranties herein contained and subject to the terms and conditions herein
set forth, the Company hereby grants an option to the Underwriters to
purchase the Option Units at the price per Unit as set forth in Section 2(a).
The option granted hereby may be exercised in whole or in part by giving
written notice (i) at any time before the Closing Date and (ii) only once
thereafter within 45 days after the date of this Agreement, by the
Representative to the Company setting forth the number of Option Units as to
which the Underwriters are exercising the option, the names and denominations
in which the Option Units are to be registered and the time and date at which
certificates representing such Units are to be delivered. The time and date
at which certificates for Option Units are to be delivered shall be
determined by the Representative but shall not be earlier than three nor
later than 10 full business days after the exercise of such option, nor in
any event prior to the Closing Date (such time and date being herein referred
to as the "Option Closing Date"). If the date of exercise of the option is
three or more days before the Closing Date, the notice of exercise shall set
the Closing Date as the Option Closing Date. The option with respect to the
Option Units granted hereunder may be exercised only
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to cover over-allotments in the sale of the Firm Units by the Underwriters.
The Representative may cancel such option at any time prior to its expiration
by giving written notice of such cancellation to the Company. To the extent,
if any, that the option is exercised, payment for the Option Units shall be
made on the Option Closing Date in New York Clearing House funds and, at the
option of the Representative, by bank wire to an account specified by the
Company, or certified or bank cashier's check drawn to the order of the
Company for the Option Units to be sold by the Company in consideration
either of uncertificated delivery of Option Units or delivery of certificates
therefor (which delivery, if certificated, shall take place in such location
in New York, New York as may be specified by the Representative) to the
Representative for the several accounts of the Underwriters. Except to the
extent uncertificated Option Units are delivered at closing, the certificates
for the Option Units will be delivered in such denominations and in such
registrations as the Representative requests in writing not later than the
second full business day prior to the Option Closing Date, and will be made
available for inspection by the Representative at least one business day
prior to the Option Closing Date.
(d) In addition to the sums payable to the Representative
as provided elsewhere herein, the Underwriters shall be entitled to receive
at the Closing, for itself alone and not as Representative of the
Underwriters, as additional compensation for its services, purchase warrants
(the "Underwriters' Warrants") for the purchase of up to 125,000 Units at a
price of $___ per Unit, upon the terms and subject to adjustment and
conversion as described in the form of Representative's Warrants filed as an
exhibit to the Registration Statement.
3. OFFERING BY THE UNDERWRITERS.
It is understood that the several Underwriters are to make
a public offering of the Firm Units as soon as the Representative deems it
advisable to do so. The Firm Units are to be initially offered to the public
at the initial public offering price set forth in the Prospectus. The
Representative may from time to time thereafter change the public offering
price and other selling terms. To the extent, if at all, that any Option
Units are purchased pursuant to Section 2 hereof, the Representative will
offer them to the public on the foregoing terms.
It is further understood that you will act as the
Representative for the Underwriters in the offering and sale of the Units in
accordance with an Agreement Among Underwriters entered into by you and the
several other Underwriters.
4. COVENANTS OF THE COMPANY.
The Company covenants and agrees with the several Underwriters that:
(a) The Company will (A) use its best efforts to cause the
Registration Statement to become effective or, if the procedure in Rule 430A
of the Rules and Regulations is followed, to prepare and timely file with the
Commission under Rule 424(b) of the Rules and Regulations a
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Prospectus in a form approved by the Representative containing information
previously omitted at the time of effectiveness of the Registration Statement
in reliance on Rule 430A of the Rules and Regulations, and (B) not file any
amendment to the Registration Statement or supplement to the Prospectus of
which the Representative shall not previously have been advised and furnished
with a copy or to which the Representative shall have reasonably objected in
writing or which is not in compliance with the Rules and Regulations.
(b) The Company will advise the Representative promptly (A)
when the Registration Statement or any post-effective amendment thereto shall
have become effective, (B) of receipt of any comments from the Commission,
(C) of any request of the Commission for amendment of the Registration
Statement or for supplement to the Prospectus or for any additional
information, and (D) of the issuance by the Commission of any stop order
suspending the effectiveness of the Registration Statement or the use of the
Prospectus or of the institution of any proceedings for that purpose. The
Company will use its best efforts to prevent the issuance of any such stop
order preventing or suspending the use of the Prospectus and to obtain as
soon as possible the lifting thereof, if issued.
(c) The Company will cooperate with the Representative in
endeavoring to qualify the Units for sale under the securities laws of such
jurisdictions as the Representative may reasonably have designated in writing
and will make such applications, file such documents, and furnish such
information as may be reasonably required for that purpose, provided the
Company shall not be required to qualify as a foreign corporation or to file
a general consent to service of process in any jurisdiction where it is not
now so qualified or required to file such a consent. The Company will, from
time to time, prepare and file such statements, reports, and other documents,
as are or may be required to continue such qualifications in effect for so
long a period as the Representative may reasonably request for distribution
of the Units.
(d) The Company will deliver to, or upon the order of, the
Representative, from time to time, as many copies of any Preliminary
Prospectus as the Representative may reasonably request. The Company will
deliver to, or upon the order of, the Representative during the period when
delivery of a Prospectus is required under the Act, as many copies of the
Prospectus in final form, or as thereafter amended or supplemented, as the
Representative may reasonably request. The Company will deliver to the
Representative at or before the Closing Date, four signed copies of the
Registration Statement and all amendments thereto including all exhibits
filed therewith, and will deliver to the Representative such number of copies
of the Registration Statement (including such number of copies of the
exhibits filed therewith that may reasonably be requested), and of all
amendments thereto, as the Representative may reasonably request.
(e) The Company will comply with the Act and the Rules and
Regulations, and the Securities Exchange Act of 1934, as amended (the
"Exchange Act"), and the rules and regulations of the Commission thereunder,
so as to permit the completion of the distribution of the Units as
contemplated in this Agreement and the Prospectus. If during the period in
which a prospectus is required by law to be delivered by an Underwriter or
dealer, any event shall occur as a result of
11
which, in the judgment of the Company or in the reasonable opinion of the
Underwriters, it becomes necessary to amend or supplement the Prospectus in
order to make the statements therein, in the light of the circumstances
existing at the time the Prospectus is delivered to a purchaser, not
misleading, or, if it is necessary at any time to amend or supplement the
Prospectus to comply with any law, the Company promptly will prepare and file
with the Commission an appropriate amendment to the Registration Statement or
supplement to the Prospectus so that the Prospectus as so amended or
supplemented will not, in the light of the circumstances existing at the time
the Prospectus is so delivered, be misleading, or so that the Prospectus will
comply with the law.
(f) The Company will make generally available to its
security holders, as soon as it is practicable to do so, but in any event not
later than 15 months after the effective date of the Registration Statement,
an earning statement (which need not be audited) in reasonable detail,
covering a period of at least 12 consecutive months beginning after the
effective date of the Registration Statement, which earning statement shall
satisfy the requirements of Section 11(a) of the Act and Rule 158 of the
Rules and Regulations and will advise you in writing when such statement has
been so made available.
(g) The Company will, for a period of five years from the
Closing Date, deliver to the Representative copies of annual reports and
copies of all other documents, reports and information furnished by the
Company to its stockholders or filed with any securities exchange pursuant to
the requirements of such exchange or with the Commission pursuant to the Act
or the Exchange Act. The Company will deliver to the Representative similar
reports with respect to significant subsidiaries, as that term is defined in
the Rules and Regulations, which are not consolidated in the Company's
financial statements.
(h) No offering, sale, short sale or other disposition of
any shares of Common Stock of the Company or other securities convertible
into or exchangeable or exercisable for shares of Common Stock or derivatives
of Common Stock (or agreement therefor) will be made for a period of one year
after the date of this Agreement, directly or indirectly, by the Company
otherwise than hereunder, or pursuant to contractual obligations existing on
the date hereof or pursuant to employee benefit plans in effect on the date
hereof, or with the prior written consent of the Representative, which
consent will not be unreasonably withheld.
(i) The Company will use its best efforts to list, subject
to notice of issuance, the Common Stock, the Class A Warrants and the Class B
Warrants on NASDAQ SmallCap Market and to cause such listing to remain in
effect with respect to each such security unless and until (i) such security
expires; (ii) such security is listed on another exchange of at least
comparable reputation; or (iii) the Company is no longer required to file
reports under Section 12 of the Exchange Act.
(j) The Company has caused each officer and director and
each person who owns, beneficially or of record, shares of the Common Stock
outstanding immediately prior to the date hereof to furnish to you, on or
prior to the date of this agreement, a letter or letters, in form and
substance satisfactory to the Underwriters ("Lockup Agreements"), pursuant to
which each such
12
person shall agree (A) not to offer, sell, sell short or otherwise dispose of
any shares of Common Stock or other capital stock of the Company, or any
other securities convertible, exchangeable or exercisable for Common Stock or
derivatives of Common Stock owned by such person or request the registration
for the offer or sale of any of the foregoing (or as to which such person has
the right to direct the disposition) for a period of one year after the date
of this Agreement, directly or indirectly, except with the prior written
consent of the Representative; and (B) to give prior written notice to the
Representative for a period of two years from the effective date of the
Registration Statement, with respect to any sales of Common Stock of the
Company pursuant to Rule 144 under the Securities Act or any similar rule.
(k) The Company shall apply the net proceeds of its sale of
the Units as set forth in the Prospectus and shall file such reports with the
Commission with respect to the sale of the Units and the application of the
proceeds therefrom as may be required in accordance with Rule 463 under the
Act.
(l) The Company shall not invest, or otherwise use the
proceeds received by the Company from its sale of the Units in such a manner
as would require the Company to register as an investment company under the
Investment Company Act of 1940, as amended (the "1940 Act").
(m) The Company will maintain a transfer agent and, if
necessary under the jurisdiction of incorporation of the Company, a registrar
for the Common Stock and a Warrant Agent for the Class A Warrants and the
Class B Warrants.
(n) The Company will not take, directly or indirectly, any
action designed to cause or result in, or that has constituted or might
reasonably be expected to constitute, the stabilization or manipulation of
the price of any securities of the Company.
5. COSTS AND EXPENSES.
(a) The Representative shall be entitled to reimbursement
from the Company, for itself alone and not as Representative of the
Underwriters, to a non-accountable expense allowance equal to 2% of the
aggregate initial public offering price of the Firm Units and any Option
Units purchased by the Underwriters. The Representative shall be entitled to
withhold this allowance on the Closing Date related to the purchase of the
Firm Units or the Option Units, as the case may be.
(b) In addition to the payment described in Paragraph (a)
of this Section 5, the Company will pay all costs, expenses and fees incident
to the performance of the obligations of the Company under this Agreement,
including, without limiting the generality of the foregoing, the following:
accounting fees of the Company; the fees and disbursements of counsel for the
Company; the cost of printing and delivering to, or as requested by, the
Underwriters copies of the Registration Statement, Preliminary Prospectuses,
the Prospectus, this Agreement, the NASDAQ listing application, the costs of
due diligence investigation of the principals of the Company, the Blue Sky
and any supplements or amendments thereto; the filing fees of the Commission;
the filing fees and
13
expenses (including any fees and disbursements) incident to securing the
required review by the NASD Regulation, Inc.) of the underwriting terms and
arrangements; the NASDAQ National Market listing fee; and the expenses,
including the fees and disbursements of counsel for the Underwriters,
incurred in connection with the qualification of the Units under state
securities or Blue Sky laws. Any transfer taxes imposed on the sale of the
Units to the several Underwriters will be paid by the Company. The Company
agrees to pay all costs and expenses of the Underwriters, including the fees
and disbursements of counsel for the Underwriters, incident to the offer and
sale of directed Units by the Underwriters to employees and persons having
business relationships with the Company. The Company shall not, however, be
required to pay for any of the Underwriters' expenses (other than those
related to qualification under NASD regulation and state securities or Blue
Sky laws) except that, if this Agreement shall not be consummated, then the
Company shall reimburse the several Underwriters for accountable
out-of-pocket expenses, including fees and disbursements of counsel,
reasonably incurred in connection with investigating, marketing and proposing
to market the Units or in contemplation of performing their obligations
hereunder; but the Company shall not in any event be liable to any of the
several Underwriters for damages on account of loss of anticipated profits
from the sale by them of the Units.
6. CONDITIONS OF OBLIGATIONS OF THE UNDERWRITERS.
The several obligations of the Underwriters to purchase the
Firm Units on the Closing Date and the Option Units, if any, on the Option
Closing Date are subject to the accuracy, as of the Closing Date or the
Option Closing Date, as the case may be, of the representations and
warranties of the Company contained herein, and to the performance by the
Company of their covenants and obligations hereunder and to the following
additional conditions:
(a) The Registration Statement and all post-effective
amendments thereto shall have become effective and any and all filings
required by Rule 424 and Rule 430A of the Rules and Regulations shall have
been made, and any request of the Commission for additional information (to
be included in the Registration Statement or otherwise) shall have been
disclosed to the Representative and complied with to their reasonable
satisfaction. No stop order suspending the effectiveness of the Registration
Statement, as amended from time to time, shall have been issued and no
proceedings for that purpose shall have been taken or, to the knowledge of
the Company, shall be contemplated by the Commission and no injunction,
restraining order, or order of any nature by a Federal or state court of
competent jurisdiction shall have been issued as of the Closing Date which
would prevent the issuance of the Units.
(b) The Representative shall have received on the Closing
Date or the Option Closing Date, as the case may be, the opinion of ▇▇▇▇▇ &
▇▇▇▇▇▇▇, A Professional Corporation, counsel for the Company, dated the
Closing Date or the Option Closing Date, as the case may be, addressed to the
Underwriters (and stating that it may be relied upon by counsel to the
Underwriters) to the effect that:
14
(i) (a) The Company has been duly organized and is
validly existing as a corporation in good standing under the laws of the
State of Oklahoma, with corporate power and authority to own or lease its
properties and conduct its business as described in the Registration
Statement.
(b) Each Subsidiary has been duly organized and is
validly existing as a business entity in good standing under the laws of its
jurisdiction of formation with all requisite corporate power and authority
under the laws governing such entities to own or lease its properties and
conduct its business as described in the Registration Statement.
(c) the Company and each Subsidiary is duly
qualified to transact business in all jurisdictions in which the failure to
qualify would have a material adverse effect upon the business of the Company.
(ii) The Company has authorized and outstanding
capital stock as set forth under the caption "Capitalization" in the
Prospectus; the outstanding shares of Common Stock have been duly authorized
and validly issued and are fully paid and non-assessable; all of the
securities of the Company conform to the description thereof contained in the
Prospectus; the certificates for the Common Stock, the Class A Warrants and
the Class B Warrants are in due and proper form; the shares of Common Stock
to be sold by the Company pursuant to this Agreement, including shares of
Common Stock to be sold as a part of the Option Units, have been duly
authorized and, upon issuance and delivery thereof as contemplated in this
Agreement and the Registration Statement, will be validly issued, fully paid
and non-assessable; no preemptive rights of shareholders exist with respect
to any of the Common Stock or the issuance or sale thereof pursuant to any
applicable statute or the provisions of the Company's Certificate of
Incorporation or Bylaws or, to such counsel's best knowledge, pursuant to any
contractual obligation. The Class A Warrants, Class B Warrants and the
Representative's Warrants have been authorized for issuance to the purchasers
of Units or the Representative, as the case may be, and will, when issued,
possess rights, privileges, and characteristics as represented in the most
recent form of Class A Warrants, Class B Warrants or Representative's
Warrants, as the case may be, filed as an exhibit to the Registration
Statement; the securities to be issued upon exercise of the Class A Warrants,
the Class B Warrants and the Representative's Warrants, as the case may be,
when issued and delivered against payment therefor in accordance with the
terms of the Representative's Warrants, will be duly and validly issued,
fully paid, nonassessable and free of preemptive rights, and all corporate
action required to be taken for the authorization and issuance of the Class A
Warrants, the Class B Warrants, the Representative's Warrants, and the
securities to be issued upon their exercise, has been validly and
sufficiently taken. The Company's ownership interest in each Subsidiary is,
in all material respects, as described in the Registration Statement.
(iii) Except as described in or contemplated by
the Prospectus, to the knowledge of such counsel, there are no outstanding
securities of the Company convertible or exchangeable into or evidencing the
right to purchase or subscribe for any shares of capital stock of the Company
and there are no outstanding or authorized options, warrants or rights of any
character obligating the Company to issue any shares of its capital stock or
any securities convertible or
15
exchangeable into or evidencing the right to purchase or subscribe for any
shares of such stock; and except as described in the Prospectus, to the
knowledge of such counsel, no holder of any securities of the Company 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 Units
or the right to have any Common Stock or other securities of the Company
included in the Registration Statement or the right, as a result of the
filing of the Registration Statement, to require registration under the Act
of any shares of Common Stock or other securities of the Company.
(iv) The Registration Statement has become
effective under the Act and, to the best of the knowledge of such counsel, no
stop order proceedings with respect thereto have been instituted or are
pending or threatened under the Act.
(v) The Registration Statement, the Prospectus and
each amendment or supplement thereto comply as to form in all material
respects with the requirements of the Act and the applicable rules and
regulations thereunder (except that such counsel need express no opinion as
to the financial statements and related schedules therein).
(vi) The statements under the captions "Shares
Eligible for Future Sale" and "Description of Securities" in the Prospectus
and in Items __ and __ of the Registration Statement, insofar as such
statements constitute a summary of documents referred to therein or matters
of law, fairly summarize in all material respects the information called for
with respect to such documents and matters.
(vii) Such counsel does not know of any contracts
or documents required to be filed as exhibits to the Registration Statement
or described in the Registration Statement or the Prospectus which are not so
filed or described as required, and such contracts and documents as are
summarized in the Registration Statement or the Prospectus are fairly
summarized in all material respects.
(viii) Such counsel knows of no material legal or
governmental proceedings pending or threatened against the Company or any
Subsidiary.
(ix) The execution and delivery of this Agreement
and the consummation of the transactions herein contemplated do not and will
not conflict with or result in a breach of any of the terms or provisions of,
or constitute a default under, the Certificate of Incorporation or Bylaws of
the Company, or any agreement or instrument known to such counsel to which
the Company is a party or by which the Company may be bound.
(x) Each of this Agreement and the Warrant
Agreement by and among the Company, the Warrantholders (defined therein) and
UMB Bank, n.a., as Warrant Agent, has been duly authorized, executed and
delivered by the Company.
16
(xi) No approval, consent, order, authorization,
designation, declaration or filing by or with any regulatory, administrative
or other governmental body is necessary in connection with the execution and
delivery of this Agreement and the consummation of the transactions herein
contemplated (other than as may be required by the NASD or state securities
commissions, as to which such counsel need express no opinion) except such as
have been obtained or made, specifying the same.
(xii) The Company is not, and will not become, as
a result of the consummation of the transactions contemplated by this
Agreement, and application of the net proceeds therefrom as described in the
Prospectus, required to register as an investment company under the 1940 Act.
In rendering such opinion, such counsel may rely as to
matters governed by the laws of states other than Oklahoma or Federal laws on
local counsel in such jurisdictions, provided that in each case such counsel
shall state that they believe that they and the Underwriters are justified in
relying on such other counsel. In addition to the matters set forth above,
the opinion of ▇▇▇▇▇ & ▇▇▇▇▇▇▇ shall also include a statement to the effect
that nothing has come to the attention of such counsel that has caused them
to believe that (i) the Registration Statement, at the time it became
effective under the Act (but after giving effect to any modifications
incorporated therein pursuant to Rule 430A under the Act) and as of the
Closing Date or the Option Closing Date, as the case may be, contained an
untrue statement of a material fact or omitted to state a material fact
required to be stated therein or necessary to make the statements therein not
misleading, and (ii) the Prospectus, or any supplement thereto, on the date
it was filed pursuant to the Rules and Regulations and as of the Closing Date
or the Option Closing Date, as the case may be, contained an untrue statement
of a material fact or omitted to state a material fact necessary in order to
make the statements, in the light of the circumstances under which they are
made, not misleading (except that such counsel need express no view as to
financial statements, schedules and statistical information therein).
(c) The Representative shall have received from Stoel Rives
LLP, counsel for the Underwriters, an opinion dated the Closing Date or the
Option Closing Date, as the case may be, substantially to the effect
specified in subparagraphs (i), (iv) and (v) of Paragraph (b) of this Section
6. In rendering such opinion Stoel Rives LLP may rely as to all matters
governed other than by the laws of the State of Oregon or Federal laws on the
opinion of counsel referred to in Paragraph (b) of this Section 6. In
addition to the matters set forth above, such opinion shall also include a
statement to the effect that nothing has come to the attention of such
counsel that has caused them to believe that (i) the Registration Statement,
or any amendment thereto, as of the time it became effective under the Act
(but after giving effect to any modifications incorporated therein pursuant
to Rule 430A under the Act) and as of the Closing Date or the Option Closing
Date, as the case may be, contained an untrue statement of a material fact or
omitted to state a material fact required to be stated therein or necessary
to make the statements therein not misleading, and (ii) the Prospectus, or
any supplement thereto, on the date it was filed pursuant to the Rules and
Regulations and as of the Closing Date or the Option Closing Date, as the
case may be, contained an untrue statement of a material fact or omitted to
state a material fact necessary in order to make the statements, in the
17
light of the circumstances under which they are made, not misleading (except
that such counsel need express no view as to financial statements, schedules
and statistical information therein). With respect to such statement, Stoel
Rives LLP may state that their belief is based upon the procedures set forth
therein, but is without independent check and verification.
(d) The Representative shall have received at or prior to
the Closing Date from Stoel Rives LLP a memorandum or summary, in form and
substance satisfactory to the Representative, with respect to the
qualification for offering and sale by the Underwriters of the Units under
the state securities or Blue Sky laws of such jurisdictions as the
Representative may reasonably have designated to the Company.
(e) The Representative, on behalf of the several
Underwriters, shall have received, on each of the dates hereof, the Closing
Date and the Option Closing Date, as the case may be, a letter dated the date
hereof, the Closing Date or the Option Closing Date, as the case may be, in
form and substance satisfactory to the Representative, of each of KPMG LLP
and ▇▇▇▇▇▇ & McAfee confirming that they are independent public accountants
within the meaning of the Act and the applicable published Rules and
Regulations thereunder and stating that in their opinion the financial
statements and schedules examined by them and included in the Registration
Statement comply in form in all material respects with the applicable
accounting requirements of the Act and the related published Rules and
Regulations and containing such other statements and information as is
ordinarily included in accountants' "comfort letters" to Underwriters with
respect to the financial statements and certain financial and statistical
information contained in the Registration Statement and Prospectus.
(f) The Representative shall have received on the Closing
Date or the Option Closing Date, as the case may be, a certificate or
certificates of the Chief Executive Officer and the Chief Financial Officer
of the Company to the effect that, as of the Closing Date or the Option
Closing Date, as the case may be, each of them severally represents as
follows:
(i) The Registration Statement has become
effective under the Act and no stop order suspending the effectiveness of
the Registration Statement has been issued, and no proceedings for such
purpose have been taken or are, to his knowledge, contemplated by the
Commission;
(ii) The representations and warranties of the
Company contained in Section 1 hereof are true and correct as of the Closing
Date or the Option Closing Date, as the case may be;
(iii) All filings required to have been made
pursuant to Rules 424 or 430A under the Act have been made;
(iv) He has carefully examined the Registration
Statement and the Prospectus and, in his opinion, as of the effective date of
the Registration Statement, the statements contained in the Registration
Statement were true and correct, and such Registration Statement and
18
Prospectus did not omit to state a material fact required to be stated
therein or necessary in order to make the statements therein not misleading,
and since the effective date of the Registration Statement, no event has
occurred which should have been set forth in a supplement to or an amendment
of the Prospectus which has not been so set forth in such supplement or
amendment; and
(v) Since the respective dates as of which
information is given in the Registration Statement and Prospectus, there has
not been any material adverse change or any development involving a
prospective material adverse change in or affecting the condition, financial
or otherwise, of the Company or the earnings, business, management,
properties, assets, rights, operations, condition (financial or otherwise) or
prospects of the Company, whether or not arising in the ordinary course of
business.
(g) The Company shall have furnished to the Representative
such further certificates and documents confirming the representations and
warranties, covenants and conditions contained herein and related matters as
the Representative may reasonably have requested.
(h) The Common Stock and Class A Warrants have been
approved for listing upon notice of issuance on NASDAQ National Market.
(i) The Lockup Agreements described in Section 4(j) are in
full force and effect.
The opinions and certificates mentioned in this Agreement
shall be deemed to be in compliance with the provisions hereof only if they
are in all material respects satisfactory to the Representative and to Stoel
Rives LLP, counsel for the Underwriters.
If any of the conditions hereinabove provided for in this
Section 6 shall not have been fulfilled when and as required by this
Agreement to be fulfilled, the obligations of the Underwriters hereunder may
be terminated by the Representative by notifying the Company of such
termination in writing or by telegram at or prior to the Closing Date or the
Option Closing Date, as the case may be.
In such event, the Company and the Underwriters shall not
be under any obligation to each other (except to the extent provided in
Sections 5 and 8 hereof).
7. CONDITIONS OF THE OBLIGATIONS OF THE COMPANY.
The obligations of the Company to sell and deliver the
portion of the Units required to be delivered as and when specified in this
Agreement are subject to the conditions that at the Closing Date or the
Option Closing Date, as the case may be, no stop order suspending the
effectiveness of the Registration Statement shall have been issued and in
effect or proceedings therefor initiated or threatened.
19
8. 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 the Act, against any losses, claims, damages or liabilities to
which such Underwriter or any such controlling person may become subject
under the Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) arise out of or
are based upon (i) any untrue statement or alleged untrue statement of any
material fact contained in the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement thereto, or (ii)
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;
and will reimburse each Underwriter and each such controlling person upon
demand for any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating or
defending any such loss, claim, damage or liability, action or proceeding or
in responding to a subpoena or governmental inquiry related to the offering
of the Units, whether or not such Underwriter or controlling person is a
party to any action or proceeding; provided, however, that the Company will
not be liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue statement or
alleged untrue statement, or omission or alleged omission made in the
Registration Statement, any Preliminary Prospectus, the Prospectus, or such
amendment or supplement, in reliance upon and in conformity with written
information furnished to the Company by or through the Representative
specifically for use in the preparation thereof. This indemnity agreement
will be in addition to any liability which the Company may otherwise have.
(b) Each Underwriter severally and not jointly will
indemnify and hold harmless the Company, each of its directors, each of its
officers who have signed the Registration Statement and each person, if any,
who controls the Company within the meaning of the Act, against any losses,
claims, damages or liabilities to which the Company or any such director,
officer or controlling person may become subject under the Act or otherwise,
insofar as such losses, claims, damages or liabilities (or actions or
proceedings in respect thereof) arise out of or are based upon (i) any untrue
statement or alleged untrue statement of any material fact contained in the
Registration Statement, any Preliminary Prospectus, the Prospectus or any
amendment or supplement thereto, or (ii) the omission or the alleged omission
to state therein a 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; and will reimburse any legal or other
expenses reasonably incurred by the Company or any such director, officer or
controlling person in connection with investigating or defending any such
loss, claim, damage, liability, action or proceeding; provided, however, that
each Underwriter will be liable in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement or omission or
alleged omission has been made in the Registration Statement, any Preliminary
Prospectus, the Prospectus or such amendment or supplement, in reliance upon
and in conformity with written information furnished to the Company by or
through the Representative specifically for use in the preparation thereof.
This indemnity agreement will be in addition to any liability which such
Underwriter may otherwise have.
20
(c) In case any proceeding (including any governmental
investigation) shall be instituted involving any person in respect of which
indemnity may be sought pursuant to this Section 8, such person (the
"indemnified party") shall promptly notify the person against whom such
indemnity may be sought (the "indemnifying party") in writing. No
indemnification provided for in Section 8(a) or (b) shall be available to any
party who shall fail to give notice as provided in this Section 8(c) if the
party to whom notice was not given was unaware of the proceeding to which
such notice would have related and was materially prejudiced by the failure
to give such notice, but the failure to give such notice shall not relieve
the indemnifying party or parties from any liability which it or they may
have to the indemnified party for contribution or otherwise than on account
of the provisions of Section 8(a) or (b). In case any such proceeding shall
be brought against any indemnified party and it shall notify the indemnifying
party of the commencement thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it shall wish, jointly with
any other indemnifying party similarly notified, to assume the defense
thereof, with counsel satisfactory to such indemnified party and shall pay as
incurred the fees and disbursements of such counsel related to such
proceeding. In any such proceeding, any indemnified party shall have the
right to retain its own counsel at its own expense. Notwithstanding the
foregoing, the indemnifying party shall pay as incurred (or within 30 days of
presentation) the fees and expenses of the counsel retained by the
indemnified party in the event (i) the indemnifying party and the indemnified
party shall have mutually agreed to the retention of such counsel, (ii) the
named parties to any such proceeding (including any impleaded parties)
include both the indemnifying party and the indemnified party and
representation of both parties by the same counsel would be inappropriate due
to actual or potential differing interests between them or (iii) the
indemnifying party shall have failed to assume the defense and employ counsel
acceptable to the indemnified party within a reasonable period of time after
notice of commencement of the action. It is understood that the indemnifying
party shall not, in connection with any proceeding or related proceedings in
the same jurisdiction, be liable for the reasonable fees and expenses of more
than one separate firm for all such indemnified parties. Such firm shall be
designated in writing by you in the case of parties indemnified pursuant to
Section 8(a) and by the Company in the case of parties indemnified pursuant
to Section 8(b). The indemnifying party shall not be liable for any
settlement of any proceeding effected without its written consent but if
settled with such consent or if there be a final judgment for the plaintiff,
the indemnifying party agrees to indemnify the indemnified party from and
against any loss or liability by reason of such settlement or judgment. In
addition, the indemnifying party will not, without the prior written consent
of the indemnified party, settle or compromise or consent to the entry of any
judgment in any pending or threatened claim, action or proceeding of which
indemnification may be sought hereunder (whether or not any indemnified party
is an actual or potential party to such claim, action or proceeding) unless
such settlement, compromise or consent includes an unconditional release of
each indemnified party from all liability arising out of such claim, action
or proceeding.
(d) If the indemnification provided for in this Section 8
is unavailable to or insufficient to hold harmless an indemnified party under
Section 8(a) or (b) above in respect of any losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) referred to
therein,
21
then each indemnifying party shall contribute to the amount paid or payable
by such indemnified party as a result of such losses, claims, damages or
liabilities (or actions or proceedings in respect thereof) in such proportion
as is appropriate to reflect the relative benefits received by the Company on
the one hand and the Underwriters on the other from the offering of the
Units. If, however, the allocation provided by the immediately preceding
sentence is not permitted by applicable law then each indemnifying party
shall contribute to such amount paid or payable by such indemnified party in
such proportion as is appropriate to reflect not only such relative benefits
but also the relative fault of the Company on the one hand and the
Underwriters on the other in connection with the statements or omissions
which resulted in such losses, claims, damages or liabilities, (or actions or
proceedings in respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company on the one hand
and the Underwriters on the other shall be deemed to be in the same
proportion as the total net proceeds from the offering (before deducting
expenses) received by the Company bears to the total underwriting discounts
and commissions received by the Underwriters, in each case as set forth in
the table on the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the untrue or alleged
untrue statement of a material fact or the omission or alleged omission to
state a material fact relates to information supplied by the Company on the
one hand or the Underwriters on the other and the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission.
The Company and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this Section 8(d) 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 in this
Section 8(d). The amount paid or payable by an indemnified party as a result
of the losses, claims, damages or liabilities (or actions or proceedings in
respect thereof) referred to above in this Section 8(d) shall be deemed to
include any legal or other expenses reasonably incurred by such indemnified
party in connection with investigating or defending any such action or claim.
Notwithstanding the provisions of this subsection (d), (i) no Underwriter
shall be required to contribute any amount in excess of the underwriting
discounts and commissions applicable to the Units purchased by such
Underwriter, 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. The Underwriters' obligations in this Section 8(d) to
contribute are several in proportion to their respective underwriting
obligations and not joint.
(e) In any proceeding relating to the Registration
Statement, any Preliminary Prospectus, the Prospectus or any supplement or
amendment thereto, each party against whom contribution may be sought under
this Section 8 hereby consents to the jurisdiction of any court having
jurisdiction over any other contributing party, agrees that process issuing
from such court may be served upon him or it by any other contributing party
and consents to the service of such process and agrees that any other
contributing party may join him or it as an additional defendant in any such
proceeding in which such other contributing party is a party.
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(f) Any losses, claims, damages, liabilities or expenses
for which an indemnified party is entitled to indemnification or contribution
under this Section 8 shall be paid by the indemnifying party to the
indemnified party as such losses, claims, damages, liabilities or expenses
are incurred. The indemnity and contribution agreements contained in this
Section 8 and the representations and warranties of the Company set forth in
this Agreement shall remain operative and in full force and effect,
regardless of (i) any investigation made by or on behalf of any Underwriter
or any person controlling any Underwriter, the Company, its directors or
officers or any persons controlling the Company, (ii) acceptance of any Units
and payment therefor hereunder, and (iii) any termination of this Agreement.
A successor to any Underwriter, or to the Company, its directors or officers,
or any person controlling the Company, shall be entitled to the benefits of
the indemnity, contribution and reimbursement agreements contained in this
Section 8.
9. DEFAULT BY UNDERWRITERS.
If on the Closing Date or the Option Closing Date, as the
case may be, any Underwriter shall fail to purchase and pay for the portion
of the Units which such Underwriter has agreed to purchase and pay for on
such date (otherwise than by reason of any default on the part of the
Company), you, as Representative of the Underwriters, shall use reasonable
efforts to procure within 36 hours thereafter one or more of the other
Underwriters, or any others, to purchase from the Company such amounts as may
be agreed upon and upon the terms set forth herein, the Firm Units or Option
Units, as the case may be, which the defaulting Underwriter or Underwriters
failed to purchase. If during such 36 hours you, as such Representative,
shall not have procured such other Underwriters, or any others, to purchase
the Firm Units or Option Units, as the case may be, agreed to be purchased by
the defaulting Underwriter or Underwriters, then (a) if the aggregate number
of Units with respect to which such default shall occur does not exceed 10%
of the Firm Units or Option Units, as the case may be, covered hereby, the
other Underwriters shall be obligated, severally, in proportion to the
respective numbers of Firm Units or Option Units, as the case may be, which
they are obligated to purchase hereunder, to purchase the Firm Units or
Option Units, as the case may be, which such defaulting Underwriter or
Underwriters failed to purchase, or (b) if the aggregate number of Firm Units
or Option Units, as the case may be, with respect to which such default shall
occur exceeds 10% of the Firm Units or Option Units, as the case may be,
covered hereby, the Company or you as the Representative of the Underwriters
will have the right, by written notice given within the next 36-hour period
to the parties to this Agreement, to terminate this Agreement without
liability on the part of the non-defaulting Underwriters or of the Company
except to the extent provided in Section 8 hereof. In the event of a default
by any Underwriter or Underwriters, as set forth in this Section 9, the
Closing Date or Option Closing Date, as the case may be, may be postponed for
such period, not exceeding seven days, as you, as Representative, may
determine in order that the required changes in the Registration Statement or
in the Prospectus or in any other documents or arrangements may be effected.
The term "Underwriter" includes any person substituted for a defaulting
Underwriter. Any action taken under this Section 9 shall not relieve any
defaulting Underwriter from liability in respect of any default of such
Underwriter under this Agreement.
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10. NOTICES.
All communications hereunder shall be in writing and,
except as otherwise provided herein, will be mailed, delivered, telecopied or
telegraphed and confirmed as follows: if to the Underwriters, to ▇▇▇▇▇▇▇
Investment Company, Inc., ▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇ ▇▇▇▇▇,
Attention: ▇▇▇▇▇▇▇ ▇.▇. ▇▇▇▇▇▇▇; with a copy, which shall not constitute
notice, to Stoel Rives LLP, ▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇ ▇. ▇▇▇▇▇; if to the Company, to GMX RESOURCES INC., at
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, Oklahoma City, Oklahoma,
Attention: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇, ▇▇.; with copy, which shall not constitute
notice, to ▇▇▇▇▇ & ▇▇▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇.
11. TERMINATION.
This Agreement may be terminated by you by notice to the
Company as follows:
(a) at any time prior to the earlier of (i) the time the
Units are released by you for sale by notice to the Underwriters, or (ii)
11:30 a.m. on the first business day following the date of this Agreement;
(b) at any time prior to the Closing Date if any of the
following has occurred: (i) since the respective dates as of which
information is given in the Registration Statement and the Prospectus, any
material adverse change or any development involving a prospective material
adverse change in or affecting the condition, financial or otherwise, of the
Company, the earnings, business, management, properties, assets, rights,
operations, condition (financial or otherwise) or prospects of the Company,
whether or not arising in the ordinary course of business, (ii) any outbreak
or escalation of hostilities or declaration of war or national emergency or
other national or international calamity or crisis or change in economic or
political conditions if the effect of such outbreak, escalation, declaration,
emergency, calamity, crisis or change on the financial markets of the United
States would, in your reasonable judgment, make it impracticable to market
the Units or to enforce contracts for the sale of the Units, (iii) the Dow
▇▇▇▇▇ Industrial Average shall have fallen by 15 percent or more from its
closing price on the day immediately preceding the date that the Registration
Statement is declared effective by the Commission, (iv) suspension of trading
in securities generally on the New York Stock Exchange or the American Stock
Exchange or limitation on prices (other than limitations on hours or numbers
of days of trading) for securities on either such Exchange, (v) the
enactment, publication, decree or other promulgation of any statute,
regulation, rule or order of any court or other governmental authority which
in your opinion materially and adversely affects or may materially and
adversely affect the business or operations of the Company, (vi) declaration
of a banking moratorium by United States or New York State authorities, (vii)
any downgrading in the rating of the Company's debt securities by any
"nationally recognized statistical rating organization" (as defined for
purposes of Rule 436(g) under the Exchange Act); (viii) the
24
suspension of trading of the Common Stock or the Class A Warrants by the
Commission or NASDAQ, or (ix) the taking of any action by any governmental
body or agency in respect of its monetary or fiscal affairs which in your
reasonable opinion has a material adverse effect on the securities markets in
the United States; or
(c) as provided in Sections 6 and 9 of this Agreement.
12. SUCCESSORS.
This Agreement has been and is made solely for the benefit
of the Underwriters, the Company and their respective successors, executors,
administrators, heirs and assigns, and the officers, directors and
controlling persons referred to herein, and no other person will have any
right or obligation hereunder. No purchaser of any of the Units from any
Underwriter shall be deemed a successor or assign merely because of such
purchase.
13. INFORMATION PROVIDED BY UNDERWRITERS.
The Company and the Underwriters acknowledge and agree that
the only information furnished or to be furnished by any Underwriter to the
Company for inclusion in the Prospectus or the Registration Statement
consists of the information set forth in the last paragraph on the front
cover page (insofar as such information relates to the Underwriters), legends
required by Item 502(b) of Regulation S-B under the Act and the information
under the caption "Underwriting" in the Prospectus.
14. MISCELLANEOUS.
The reimbursement, indemnification and contribution
agreements contained in this Agreement and the representations, warranties
and covenants in this Agreement shall remain in full force and effect
regardless of (a) any termination of this Agreement, (b) any investigation
made by or on behalf of any Underwriter or controlling person thereof, or by
or on behalf of the Company or its directors or officers and (c) delivery of
and payment for the Units under this Agreement.
This Agreement may be executed in two or more counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
This Agreement shall be governed by, and construed in
accordance with, the laws of the State of Oregon. All disputes relating to
this Underwriting Agreement shall be adjudicated before a court located in
Multnomah County, Oregon to the exclusion of all other courts that might have
jurisdiction.
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If the foregoing letter is in accordance with your understanding of
our agreement, please sign and return to us the enclosed duplicates hereof,
whereupon it will become a binding agreement among the Company and the
several Underwriters in accordance with its terms.
Very truly yours,
GMX RESOURCES INC.
By:
------------------------
------------, ----------
The foregoing Underwriting Agreement is hereby confirmed and accepted as of the
date first above written.
▇▇▇▇▇▇▇ INVESTMENT COMPANY, INC.
As Representative of the several
Underwriters listed on Schedule I
By:
-----------------------------------
Authorized Officer
26
SCHEDULE I
SCHEDULE OF UNDERWRITERS
Number of Firm Units
Underwriter to be Purchased
----------- --------------------
▇▇▇▇▇▇▇ Investment Company, Inc.
---------
Total 1,250,000
=========
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