SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13D-A
Under the Securities Exchange Act of 1934
(Amendment No. 1)*
Cairn Energy USA, Inc.
(Name of Issuer)
Common Stock
(Title of Class of Securities)
127762102
(CUSIP Number)
Verne O. Sedlacek Copy to: Christopher A. Klem, Esq.
Harvard Management Company, Inc. Ropes & Gray
600 Atlantic Avenue One International Place
Boston, MA 02210 Boston, MA 02110
(617) 523-4400 (617) 951-7410
(Name, Address and Telephone Number of Person Authorized to
Receive Notices and Communications)
September 19, 1995
(Date of Event which Requires Filing of this Statement)
If the filing person has previously filed a statement on Schedule 13G to report
the acquisition which is the subject of this Schedule 13D, and is filing this
schedule because of Rule 13d-1(b)(3) or (4), check the following box.
Check the following box if a fee is being paid with the statement. (A fee is
not required only if the reporting person: (1) has a previous statement on
file reporting beneficial ownership of more than five percent of the class of
securities described in Item 1; and (2) has filed no amendment subsequent
thereto reporting beneficial ownership of five percent or less of such class.)
(See Rule 13d-7.)
Note: Six copies of this statement, including all exhibits, should be filed
with the Commission. See Rule 13d-1(a) for other parties to whom copies are to
be sent.
*The remainder of this cover page shall be filled out for a reporting person's
initial filing on this form with respect to the subject class of securities,
and for any subsequent amendment containing information which would alter
disclosures provided in a prior cover page.
The information required on the remainder of this cover page shall not be
deemed to be "filed" for the purpose of Section 18 of the Securities Exchange
Act of 1934 ("Act") or otherwise subject to the liabilities of that section of
the Act but shall be subject to all other provisions of the Act (however, see
the Notes).
PAGE 1
SCHEDULE 13D
CUSIP No. 127762102 Page 2
1. NAME OF REPORTING PERSON
S.S. OR I.R.S. IDENTIFICATION NO. OF ABOVE PERSON
Phemus Corporation
2. (a)
CHECK THE APPROPRIATE BOX IF A MEMBER OF A GROUP*
(b) X
3. SEC USE ONLY
4. SOURCE OF FUNDS*
WC
5. CHECK BOX IF DISCLOSURE OF LEGAL PROCEEDINGS IS
REQUIRED PURSUANT TO ITEMS 2(d) OR 2(e)
6. CITIZENSHIP OR PLACE OF ORGANIZATION
Massachusetts
7. SOLE VOTING POWER
NUMBER OF 2,750,000
SHARES
BENEFICIALLY 8. SHARED VOTING POWER
OWNED BY ----
EACH 9. SOLE DISPOSITIVE POWER
REPORTING 2,750,000
PERSON 10. SHARED DISPOSITIVE POWER
----
11. AGGREGATE AMOUNT BENEFICIALLY OWNED BY EACH REPORTING
PERSON
2,750,000
12. CHECK BOX IF THE AGGREGATE AMOUNT IN ROW (11) EXCLUDES
CERTAIN SHARES*
13. PERCENT OF CLASS REPRESETED BY AMOUNT IN ROW (11)
16.2%
14. TYPE OF REPORTING PERSON*
CO
*SEE INSTRUCTIONS BEFORE FILLING OUT!
PAGE TWO
<PAGE>
SCHEDULE 13D-A
Cairn Energy USA, Inc.
Item 1. Security and Issuer.
This statement relates to the Common Stock, $.01 par value (the
"Common Stock"), of Cairn Energy USA, Inc., a Delaware corporation (the
"Issuer"), which has its principal executive offices at 8235 Douglas Ave.,
Suite 1221, Dallas, TX 75225.
Item 2. Identity and Background.
This statement is filed by Phemus Corporation ("Phemus"), a
Massachusetts corporation that is solely controlled by The President and
Fellows of Harvard College, a Massachusetts educational corporation ("Harvard")
and title-holding company for the endowment fund of Harvard University. The
principal executive offices of Phemus are located at 600 Atlantic Avenue, 26th
Floor, Boston, Massachusetts 02210.
Phemus is a charitable company holding a portion of the endowment
fund of Harvard University.
Phemus's activities are carried on from its offices located at 600
Atlantic Avenue, Boston, Massachusetts.
Information relating to the directors and executive officers of
Phemus is contained in Exhibit A which was previously filed with this Schedule
13D and which is incorporated herein by reference. All of the executive
officers and directors of Phemus are citizens of the United States of America.
None of Phemus or, to the best of Phemus's knowledge or belief, any
of the persons listed in Exhibit A has, during the past five years, been
convicted in a criminal proceeding (excluding traffic violations and similar
misdemeanors). Neither Phemus nor, to the best of Phemus's knowledge and
belief, any of the persons listed in Exhibit A has, during the past five years,
been a party to a civil proceeding of a judicial or administrative body of
competent jurisdiction and as a result of such proceeding was or is subject to
a judgment, decree or final order enjoining future violations of, or
prohibiting or mandating activities subject to, federal or state securities
laws or finding any violation with respect to such laws.
Item 3. Source and Amount of Funds or Other Consideration.
The source of funds or other consideration used to purchase the
securities of the Issuer to which this Statement relates held by Phemus have
been general funds (and income received therefrom) of Phemus and the Assets (as
defined in Item 5) of Smith Offshore Exploration Company II, a Delaware
corporation ("Smith") and wholly-owned subsidiary of Phemus. The amount
expended to date, including the Smith Assets valued at $33,750,000, to acquire
beneficial ownership of Common Stock held by Phemus is approximately
$52,650,000.
PAGE THREE
Item 4. Purpose of Transaction.
Item 4 is hereby amended in its entirety to read as follows:
Phemus has purchased the shares of Common Stock it beneficially
owns as of the date of this Statement for investment purposes. Phemus intends
to review its investment in the Issuer on a continuing basis and, depending on
various factors, including the Issuer's business, affairs and financial
position, other developments concerning the Issuer, the price level of the
Common Stock, conditions in the securities markets and general economic and
industry conditions, as well as other investment opportunities available to
Phemus, may in the future take such actions with respect to its investment in
the Issuer as it deems appropriate in light of the circumstances existing from
time to time. Such actions may include the purchase of additional Common Stock
in the open market, in privately negotiated transactions or otherwise, or the
sale at any time of all or a portion of the Common Stock now owned or hereafter
acquired by Phemus to one or more purchasers.
Phemus is party to a Voting Agreement dated October 10, 1994 (the
"Voting Agreement") with Cairn Energy PLC, a Scottish corporation ("Cairn PLC")
relating to the election of directors of the Issuer. The Voting Agreement
provides that Phemus and Cairn PLC will vote all of their securities of the
Issuer carrying the right to vote (the "Voting Securities") and use their best
efforts (a) to fix the number of directors of the Issuer at seven and (b) to
elect to the Board of Directors of the Issuer (i) two members designated by
Phemus, (ii) two outside directors designated by mutual agreement between Cairn
PLC and Phemus, (iii) one director designated by Cairn PLC (so long as Cairn
PLC holds more than 5% of the Voting Securities), and (iv) two representatives
of the management of the Issuer; provided, however, that whenever Cairn PLC
owns a greater number of shares of Common Stock than does Phemus, Cairn PLC
will be entitled to designate two directors, and Phemus will be entitled to
designate one director. Phemus and Cairn PLC will each also be entitled to
nominate a replacement director to fill any vacancy in the Board of Directors
of the Issuer created by the resignation, removal, incapacity or death of any
director who had been designated by Phemus or Cairn PLC, respectively. Michael
McMahon and John Halsted, Phemus's designees to the Company's Board of
Directors were elected to the Board of Directors on October 10, 1994. A copy
of the Voting Agreement was previously filed as Exhibit B to this Schedule 13D
and is incorporated herein by reference. The foregoing description of the
Voting Agreement is qualified in its entirety by reference to the Voting
Agreement previously filed as Exhibit B to this Schedule 13D.
On the basis of preliminary engineering valuations of the Assets
(as defined in Item 5 hereof), Phemus and the Issuer agreed that Phemus would
pay $3.9 million to the Issuer and return to the Issuer 1,000,000 shares of
Common Stock which are referred to in Item 5 hereof as the Escrow Shares.
Consequently, Phemus is not entitled to receive any warrants to acquire
additional shares of Common Stock.
Except as described above, Phemus does not have any plans or
proposals which relate to or would result in any of the actions set forth in
Parts (b) through (j) of Item 4. Phemus disclaims any intention to influence
control of management of the Issuer.
PAGE FOUR
Item 5. Interest in Securities of the Issuer.
Item 5 is hereby amended in its entirety to read as follows:
(a), (b). Phemus is the beneficial owner of 2,750,000 shares of
Common Stock (approximately 16.2% of the shares of Common Stock based upon the
most recent filing of the Issuer with the Securities and Exchange Commission).
The shares of Common Stock reported herein as beneficially owned by Phemus
include shares of Common Stock owned by Smith (the "Smith Shares") which were
distributed to Phemus pursuant to Smith's Plan of Liquidation on October 10,
1994, a copy of which was previously filed as Exhibit G to this Schedule 13D.
Phemus is the beneficial owner of all of the shares of Common Stock
to which this Statement relates held in its name, and has sole power to vote
and dispose of all such shares, other than as provided in the Voting Agreement
as described in Item 4.
As a result of entering into the Voting Agreement, Phemus and Cairn
PLC may be deemed to comprise a "group" within the meaning of Section 13(d)(3)
of the Securities Exchange Act of 1934, as amended. On June 19, 1995, Cairn
PLC completed a public sale of 2,623,000 shares of Common Stock of the Issuer.
As a result of such sale, Cairn PLC is no longer a stockholder of the Issuer.
(c). On October 10, 1994 Phemus acquired 2,000,000 shares of
Common Stock from Cairn PLC for an aggregate consideration of $15,000,000 in
cash pursuant to the terms of a Common Stock Purchase Agreement dated as of
July 12, 1994 (the "Common Stock Purchase Agreement") between Phemus and Cairn
PLC.
On October 10, 1994 Phemus also acquired, through Smith, 4,500,000
shares of Common Stock in exchange for assets of Smith (the "Assets") valued at
$33,750,000 pursuant to a Purchase and Sale Agreement dated July 12, 1994 among
the Issuer, Smith and Phemus (the "Purchase Agreement") a copy of which was
previously filed as Exhibit E to this Schedule 13D. The number of shares of
Common Stock acquired by Smith was subject to adjustment pursuant to the
revaluation provisions set forth in the Purchase Agreement. Of the 4,500,000
shares, 3,500,000 shares were issued to Smith at closing and 1,000,000 shares
(the "Escrow Shares") were placed in escrow pending the determination of the
valuation (the "Valuation") of the Assets as provided in the Purchase
Agreement. The foregoing description of the Purchase Agreement is qualified in
its entirety by reference to the Purchase Agreement which was previously filed
as Exhibit E to the Schedule 13D.
On the basis of preliminary engineering valuations of the Assets,
Phemus and the Issuer agreed, as of August 1, 1995, that Phemus would pay $3.9
million in cash to the Issuer and return to the Issuer the 1,000,000 Escrow
Shares. Consequently, Phemus is not entitled to receive any warrants to
acquire additional shares of Common Stock.
On September 19, 1995, Phemus completed a public sale of 2,750,000
shares of Common Stock of the Issuer at a price per share of $11.25. The sale
was made pursuant to Phemus's first exercise of its Form S-3 registration right
under the Registration Rights Agreement dated October 10, 1994 (the
"Registration Rights Agreement") between Phemus and the Issuer. The terms of
the Registration Rights Agreement are more fully described in Item 6.
PAGE FIVE
Except for the transactions described in this Item 5(c), Phemus has
not engaged in any transactions in the Common Stock of the Issuer during the
60-day period ended September 19, 1995. To the best of Phemus's knowledge and
belief, none of the directors or executive officers of Phemus has engaged in
any transactions in the Common Stock during the 60-day period ended September
19, 1995.
(d). Harvard Management Company, Inc. ("HMC") has full discretion
to direct the receipt of dividends from and vote the shares of the Issuer held
by Phemus. HMC is a charitable membership corporation operated for the benefit
of Harvard.
(e). Not applicable.
Item 6. Contracts, Arrangements, Understandings or Relationships
with Respect to the Securities of the Issuer
Item 6 is hereby amended in its entirety to read as follows:
(i) HMC has full discretion to direct the receipt of dividends
from and vote the shares of the Issuer held by Phemus.
(ii)For a description of the Voting Agreement, see Item 4.
(iii) For a description of the Purchase Agreement, see Item 5.
(iv)On October 11, 1994, Smith distributed all of the shares of
Common Stock held by Smith to Phemus pursuant to the terms of its Plan of
Liquidation which was previously filed as Exhibit G to this Schedule 13D.
(v) Phemus (as successor to Smith) and the Issuer were party to an
Escrow Release Agreement dated October 10, 1994 (a copy of which is was
previously filed as Exhibit F to this Schedule 13D) relating to the Escrow
Shares as hereinbefore defined.
(vi)Phemus was party to a Lock-Up Agreement with Petrie Parkman &
Co. dated October 12, 1994 (the "Lock-Up Agreement") whereby Phemus had agreed
not to dispose of any Common Stock for a period of 120 days from the date of
the Prospectus relating to the Lock-Up Agreement other than to any wholly-
owned affiliate of Harvard. The foregoing description of the Lock-Up Agreement
is qualified in its entirety by reference to the Lock-Up Agreement which was
previously filed as Exhibit H to this Schedule 13D.
(vii) Phemus entered into a Registration Rights Agreement dated
October 10, 1994 with the Issuer (the "Registration Rights Agreement") which
was previously filed as Exhibit D to this Schedule 13D. Pursuant to the
Registration Rights Agreement the Issuer agreed to provide Phemus certain
demand and piggy-back registration rights for the 6,500,000 shares of Common
Stock acquired pursuant to the Purchase Agreement and the Common Stock Purchase
Agreement, and any Warrant Shares (collectively, the "Phemus Registrable
Securities").
PAGE SIX
Phemus has the right to two demand registrations on any
registration form that Phemus chooses and which the Issuer is eligible to use;
provided, however, that the request is not within six months after the
effective date of a registration statement for an underwritten public offering
of securities of the Issuer and further provided that the request covers at
least the lesser of (i) twenty percent (20%) of the Phemus Registrable
Securities outstanding as of the Closing (which would exclude the Escrow Shares
and the Warrant Shares); (ii) the number of Phemus Registrable Securities whose
aggregate offering price is expected to be at least $20,000,000; or (iii)
1,000,000 shares of Common Stock.
The Issuer is not obligated to effect any Securities Act
registration (i) during the 180 days following the effective date of an
underwritten public offering of securities for the account of the Issuer, (ii)
if the Issuer is conducting or will be conducting within 90 days an
underwritten public offering of equity securities (or securities convertible
into equity securities) for its own account and has been advised in writing by
its managing underwriter that such offering would in its opinion be materially
adversely affected by the Phemus requested registration (in which event the
Issuer shall have the right to defer such filing for a period of not more than
120 days after receipt of the registration request), or (iii) if in the good
faith judgment of the Board of Directors of the Issuer, it would not be in the
best interests of the Issuer and its stockholders generally for such
registration statement to be filed at that time (in which event the Issuer
shall have the right to defer such filing for a period of not more than 120
days after receipt of the registration request). The Issuer may not defer the
registration based on the reasons set forth in clauses (ii) or (iii) of the
preceding sentence more than once in any twelve-month period.
Phemus also has the right to request the registration of the Phemus
Registrable Securities on Form S-3 at any time; provided, however, that the
Issuer is not be obligated to effect any such registrations if (i) Form S-3 is
not available to the Issuer; (ii) the aggregate net offering proceeds (after
deduction of underwriting discounts and commissions) of the securities
specified in such request is not at least $2,000,000; (iii) the Issuer has
already effected two registrations on Form S-3 within the previous 12-month
period; or (iv) if in the good faith judgment of the Board of Directors of the
Issuer it would not be in the best interest of the Issuer and stockholders for
such Form S-3 registration to be effected at such time, in which event the
Issuer shall have the right to defer the filing of the Form S-3 registration
for a period of not more than 120 days after receipt of the Phemus registration
request; provided further that the Issuer shall not utilize this right more
than once in the 12-month period.
In addition, Phemus has certain piggy-back registration rights to
include its shares of Common Stock in an Issuer registration of its capital
stock or other securities under the Securities Act (including for this purpose
a registration effected by the Issuer for stockholders other than Phemus)
solely for cash (other than pursuant to a registration on Form S-8 or on Form
S-4). In connection with an underwritten offering by the Issuer, the Issuer is
not required to include any shares of Common Stock owned by Phemus in such
underwriting selected by the Issuer. Furthermore, if the managing underwriter
for the offering shall advise the Issuer in writing that the total number of
securities, including Phemus Registrable Securities, requested by stockholders
to be included in such offering, exceeds the amount of securities to be sold
other than by the Issuer that can be successfully offered, then the Issuer
shall be required to include in the offering only that number of such
securities, including Phemus Registrable Securities, that the managing
underwriter believes will not jeopardize the success of the offering. The
number of shares held by Phemus and other stockholders that may be included in
the underwriting shall be reduced pro rata among Phemus and the other
stockholders in accordance with the number of shares entitled to such
registration rights held by Phemus and such other stockholders.
PAGE SEVEN
All expenses other than the underwriting discounts and commissions
relating to the sale of securities by Phemus shall be paid for by the Issuer;
provided, however, that the Issuer will not be required to pay for any expenses
of the Form S-3 registrations of Phemus Registrable Securities after the first
four such registrations. If reasonably requested by the Issuer and the
managing underwriter, Phemus will agree to enter into lockup agreements
pursuant to which Phemus will not, for a period of ninety days following the
effective date of a registration statement, offer, sell or otherwise dispose of
Phemus Registrable Securities.
Phemus may transfer its rights under the Registration Rights
Agreement to (i) an affiliate of Phemus or (ii) in connection with the sale or
other transfer to a holder holding, immediately after such transfer, at least
25% of the Phemus Registrable Securities outstanding as of the Closing Date.
Notwithstanding the foregoing, holders of less than 25% of the Registrable
Securities outstanding as of the Closing Date shall be permitted to exercise
the rights under the Phemus Registration Rights Agreement if they appoint
Phemus as their representative to accept notices on their behalf.
The Registration Rights Agreement prohibits the Issuer from and
after the Closing Date from granting registration rights to other persons that
would permit such persons to include their shares of Common Stock or other
Issuer securities in any Phemus demand registration unless the inclusion of
such securities of such other parties will not reduce the amount of Phemus
Registrable Securities that would otherwise be included. In addition, without
the consent of Phemus, the Issuer is prohibited from granting piggy-back
registration rights to other persons unless such agreements provide that such
prospective holder may include such securities in such registration only to the
extent that inclusion of its securities will not reduce the amount of Phemus
Registrable Securities that would otherwise be included in the registration
below an amount equal to the number of Phemus Registrable Securities then
outstanding multiplied by the quotient of (x) the number of Phemus Registrable
Securities then outstanding divided by (y) the number of shares of Common stock
held by all those holders (including Phemus) of the Common Stock seeking to
include securities in the piggyback registration.
(viii) Phemus entered into an Underwriting Agreement dated
September 13, 1995 (the "Underwriting Agreement") with the Issuer and S.G.
Warburg & Co. Inc., Howard Weil, Labouisse, Fredrichs Incorporated and Petrie
Parkman & Co., Inc. (collectively, the "Underwriters"). The Underwriters have
agreed to purchase from the Issuer and Phemus and the Issuer and Phemus have
agreed to sell to the Underwriters an aggregate of 3,750,000 shares of Common
Stock of the Issuer. Subject to certain conditions, the Underwriters are
obligated to take and pay for all such shares if any shares are taken. The
foregoing description of the Underwriting Agreement is qualified in its
entirety by reference to the Underwriting Agreement attached hereto as Exhibit
I.
(ix)Phemus is a party to a Lock-Up Agreement with the Underwriters
dated September 19, 1995 (the "1995 Lock-Up Agreement") whereby Phemus has
agreed that, without the prior written consent of the Underwriters, it will not
sell or otherwise dispose of any shares of Common Stock of the Issuer for a
period of 180 days after the date of the Prospectus relating to the 1995 Lock-
Up Agreement, other than transfers to wholly-owned affiliates. The foregoing
description of the 1995 Lock-Up Agreement is qualified in its entirety by
reference to the 1995 Lock-Up Agreement attached hereto as Exhibit J.
PAGE EIGHT
Item 7. Material to be Filed as Exhibits.
Item 7 is hereby amended in its entirety to read as follows:
Exhibit A* -- Information concerning Reporting Person's officers,
directors and others.
Exhibit B* -- Voting Agreement dated as of October 10, 1994 between
Phemus and Cairn PLC.
Exhibit C* -- Common Stock Purchase Agreement dated as of July 12,
1994 among Cairn PLC and Phemus.
Exhibit D* -- Registration Rights Agreement dated October 10, 1994
between the Issuer and Phemus.
Exhibit E* -- Purchase Agreement dated as of July 12, 1994 among
Smith, Phemus and the Issuer.
Exhibit F* -- Escrow Release Agreement dated October 10, 1994
among the Issuer and Smith.
Exhibit G* -- Smith Offshore Exploration Company II Plan of
Liquidation.
Exhibit H* -- Lock-Up Agreement dated October 12, 1994 between
Phemus and Petrie Parkman & Co.
Exhibit I -- Underwriting Agreement dated September 13, 1995
between the Issuer, Phemus and the Underwriters.
Exhibit J -- Lock-Up Agreement dated September 19, 1995 between
Phemus, the Issuer and the Underwriters.
*Previously filed as an Exhibit to this Schedule 13D.
PAGE 9
<PAGE>
Signature
After reasonable inquiry and to the best of its knowledge and
belief, the undersigned certifies that the information set forth in this
statement is true, complete and correct.
Dated: September 20, 1995
PHEMUS CORPORATION
By: /s/ Michael R. Eisenson
Name: Michael R. Eisenson
Title: President
PAGE 10
<PAGE>
EXHIBIT INDEX
Exhibit
Number Description
I Underwriting Agreement
J 1995 Lock-Up Agreement
EXHIBIT I
3,750,000 Shares
CAIRN ENERGY USA, INC.
Common Stock
UNDERWRITING AGREEMENT
September 13, 1995
S.G.WARBURG & CO. INC.
HOWARD, WEIL, LABOUISSE, FRIEDRICHS INCORPORATED
PETRIE PARKMAN & CO., INC.
c/o S.G.WARBURG & CO. INC.
277 Park Avenue
New York, New York 10172
Dear Sirs:
Cairn Energy USA, Inc., a Delaware corporation (the
"Company"), and Phemus Corporation, a Massachusetts
membership corporation (the "Selling Stockholder"),
propose to sell an aggregate of 3,750,000 shares of common
stock, par value $.01 per share, of the Company (the
"Common Stock"), of which 1,000,000 shares of Common Stock
are to be issued and sold by the Company and 2,750,000
shares of Common Stock are to be sold by the Selling
Stockholder, in each case to you and the several
underwriters named in Schedule I hereto (the
"Underwriters"). The 3,750,000 shares of Common Stock
being sold to the several Underwriters by the Company and
the Selling Stockholder are herein called the "Firm
Shares." The Company also proposes to sell to the several
Underwriters not more than 562,500 additional shares of
Common Stock (the "Additional Shares") if requested by the
Underwriters as provided in Section 2 hereof. The Firm
Shares and the Additional Shares are herein collectively
called the "Shares."
1. Registration Statement and Prospectus. The
Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") in accordance with
the provisions of the Securities Act of 1933, as amended
(the "Securities Act"), and the rules and regulations of
the Commission thereunder (collectively, the "Rules and
Regulations"), a registration statement on Form S-3
including a prospectus relating to the Shares, which may
be amended. The registration statement as amended at the
time when it becomes effective, including information (if
any) deemed to be part of the registration statement at
the time of effectiveness pursuant to Rule 430A under the
Securities Act, is hereinafter referred to as the
"Registration Statement;" and the prospectus in the form
first used to confirm sales of Shares is hereinafter
referred as the "Prospectus." For purposes hereof, the
term "Prospectus" shall include the consolidated financial
statements of the Company and the notes thereto included
therein. Any reference in this Agreement to the
Registration Statement or any Prospectus shall be deemed
to refer to and include the documents incorporated by
reference therein pursuant to Item 12 of Form S-3 under
the Securities Act, as of the date of the Registration
Statement or any Prospectus, as the case may be, and any
reference to any amendment or supplement to the
Registration Statement or any Prospectus shall be deemed
to refer to and include any documents filed after such
date under the Securities Exchange Act of 1934, as amended
(the "Exchange Act"), which, upon filing, are incorporated
by reference therein, as required by paragraph (b) of
Item 12 of Form S-3. As used herein, the term
"Incorporated Documents" means the documents which at the
time are incorporated by reference in the Registration
Statement, any Prospectus or any amendment or supplement
thereto, but does not include any documents incorporated
by reference in the Registration Statement, any Prospectus
or any amendment or supplement thereto subsequent to the
Closing Date (as defined in Section 4 hereof).
2. Agreements to Sell and Purchase. The Selling
Stockholder and the Company, severally and not jointly,
hereby agree, subject to all the terms and conditions set
forth herein, to sell 2,750,000 shares of Common Stock and
1,000,000 shares of Common Stock, respectively, to the
Underwriters and, upon the basis of the representations,
warranties and agreements of the Company and the Selling
Stockholder herein contained and subject to all of the
terms and conditions set forth herein, each of the
Underwriters, severally and not jointly, agrees to
purchase from the Selling Stockholder and the Company the
respective number of Firm Shares set forth opposite that
Underwriter's name in Schedule I hereto, at a purchase
price of $10.6875 per share (the "Purchase Price").
On the basis of the representations and warranties
contained in this Agreement, and subject to its terms and
conditions, the Company also agrees to issue and sell to
the several Underwriters up to 562,500 Additional Shares,
and the Underwriters shall have a one-time right to
purchase up to an aggregate of 562,500 Additional Shares
from the Company at the Purchase Price. Additional Shares
may be purchased as provided in Section 4 hereof solely
for the purpose of covering over-allotments made in
connection with the offering of the Firm Shares. If any
Additional Shares are to be purchased, each Underwriter,
severally and not jointly, agrees to purchase from the
Company the number of Additional Shares (subject to such
adjustments to eliminate fractional shares as you may
determine) which bears the same proportion to the total
number of Additional Shares to be purchased from the
Company as the number of Firm Shares set forth opposite
the name of such Underwriter in Schedule I bears to the
total number of Firm Shares.
The Company and the Selling Stockholder hereby agree
to, and the Company and the Selling Stockholder shall,
concurrently with the execution of this Agreement, deliver
agreements executed by (i) each of the directors and
officers of the Company, (ii) the Company and (iii) the
Selling Stockholder pursuant to which each such person
agrees, except as provided in the Prospectus, not to
offer, sell, contract to sell, grant any option to
purchase, or otherwise dispose of any common stock of the
Company or any securities convertible into or exercisable
or exchangeable for such common stock (or, in the case of
the Company, file any registration statement under the
Securities Act with respect to any of the foregoing),
except to the several Underwriters pursuant to this
Agreement, for a period of 180 days after the date of the
Prospectus without the prior written consent of
S.G.Warburg & Co. Inc. Notwithstanding the foregoing,
during such period the Company may issue shares of Common
Stock or grant options to purchase shares of Common Stock
pursuant to employee benefit plans and issue shares of
Common Stock upon the exercise of an option or warrant or
the conversion of a security outstanding on the date
hereof.
3. Terms of Public Offering. The Company and the
Selling Stockholder are advised by you that the
Underwriters propose to make a public offering of the
Shares as soon after the Registration Statement and this
Agreement have become effective as in your judgment is
advisable. The Company and the Selling Stockholder are
further advised by you that the Shares are to be offered
to the public initially at U.S. $11.25 per share (the
public offering price) and to certain dealers selected by
you at a price that represents a concession not in excess
of U.S. $0.3375 per share under the public offering price,
and that the Underwriters may allow, and such dealers may
reallow, a concession, not in excess of U.S. $0.10 per
share, to certain other dealers.
4. Delivery and Payment. Delivery to the
Underwriters of and payment for the Firm Shares shall be
made by certified or official bank check or checks payable
to the order of the Company (in the case of Shares sold by
the Company) and the Selling Stockholder (in the case of
Shares sold by the Selling Stockholder), in New York
Clearing House or similar next day funds, at the offices
of S.G.Warburg & Co. Inc., 277 Park Avenue, New York, New
York, at 9:00 a.m. (New York City time), on September 18,
1995, or at such other time on the same or such other
date, not later than September 19, 1995, or such other
place as shall be designated in writing by you. The time
and date of such payment are hereinafter referred to as
the Closing Date.
Delivery to the Underwriters and payment for any
Additional Shares shall be made by certified or official
bank check or checks or wire transfer payable to the order
of the Company, in each case in New York Clearing House or
similar next day funds, at the offices of S.G.Warburg &
Co. Inc., 277 Park Avenue, New York, New York, at
9:00 a.m. (New York City time), on such date (which may be
the same as the Closing Date but shall in no event be
earlier than the Closing Date nor later than 10 business
days after the giving of the notice hereinafter referred
to) as shall be designated in a written notice from
S.G.Warburg & Co. Inc. to the Company of its
determination to purchase a number, specified in said
notice, of Additional Shares, or on such other date, in
any event not later than October 18, 1995, or at such
other place as shall be designated in writing by you. The
time and date of such payment are hereinafter referred to
as the Option Closing Date. The notice of the
determination to exercise the option to purchase
Additional Shares and of the Option Closing Date may be
given at any time within 30 days after the date of this
Agreement.
Certificates for the Firm Shares and Additional
Shares shall be in definitive form and registered in such
names and issued in such denominations as you shall
request in writing not later than two full business days
prior to the Closing Date or the Option Closing Date, as
the case may be. Such certificates shall be made
available to you for inspection not later than 9:30 A.M.
(New York City time) on the business day next preceding
the Closing Date or the Option Closing Date, as the case
may be. Certificates in definite form evidencing the
Shares shall be delivered to you on the Closing Date or
the Option Closing Date, as the case may be, with any
transfer or similar taxes thereon duly paid by the Company
or the Selling Stockholder, as appropriate, for the
respective accounts of the several Underwriters.
5. Covenants of the Company. In further
consideration of the agreements of the Underwriters herein
contained, the Company covenants to each Underwriter as
follows:
(a) If, at the time this Agreement is executed
and delivered, it is necessary for the Registration
Statement or a post-effective amendment thereto to be
declared effective before the offering of the Shares
may commence, to use its best efforts to cause the
Registration Statement or such post-effective
amendment to become effective at the earliest
possible time. The Company will comply in a timely
manner with the applicable provisions of Rules 424
and 430A under the Securities Act prior to the
Closing Date.
(b) To advise you promptly and, if requested by
you, to confirm such advice in writing, (i) when the
Registration Statement has become effective and when
any post-effective amendment to it becomes effective,
(ii) of any request by the Commission for amendments
to the Registration Statement or amendments or
supplements to the Prospectus or for additional
information with respect thereto, (iii) of the
issuance by the Commission of any stop order
suspending the effectiveness of the Registration
Statement or of the suspension of qualification of
the Shares for offering or sale in any jurisdiction,
or the initiation of any proceeding for such
purposes, and (iv) of the happening of any event
during the period referred to in paragraph (e) below
which makes any statement of a material fact made in
the Registration Statement or the Prospectus untrue
or which requires the making of any additions to or
changes in the Registration Statement or the
Prospectus in order to make the statement therein, in
light of the circumstances under which made, not
misleading. If at any time the Commission shall
issue any stop order suspending the effectiveness of
the Registration Statement, the Company will make
every reasonable effort to obtain the withdrawal or
lifting of such order at the earliest possible time.
(c) To furnish to you, without charge, two
signed copies of the Registration Statement as first
filed with the Commission and of each subsequent
amendment to the Registration Statement, including
all exhibits, and to furnish to you and each
Underwriter designated by you, (i) such number of
conformed copies of the Registration Statement as so
filed and of each such amendment to it, without
exhibits, as you may reasonably request, and
(ii) such number of the Incorporated Documents, and
the exhibits thereto, as you may reasonably request.
(d) Not to file (i) any amendment or supplement
to the Registration Statement (other than an
amendment or supplement made through the filing of
Incorporated Documents), whether before or after the
time when it becomes effective, or to make any
amendment or supplement to the Prospectus of which
you shall not previously have been advised or to
which you shall reasonably object, or (ii) so long
as, in the reasonable opinion of counsel to the
Underwriters, a prospectus is required to be
delivered in connection with sales by any Underwriter
or dealer, any document which, upon filing, becomes
an Incorporated Document without delivering a copy of
such documents to you prior to or concurrently with
such filing.
(e) Promptly after the Registration Statement
becomes effective, and from time to time thereafter
for such period as in the reasonable opinion of
counsel for the Underwriters a prospectus is required
by law to be delivered in connection with sales by an
Underwriter or a dealer, to furnish to each
Underwriter and dealer as many copies of the
Prospectus (and of any amendment or supplement to the
Prospectus) as such Underwriter or dealer may
reasonably request.
(f) If during the period specified in
paragraph (e) any event shall occur as a result of
which, in the reasonable opinion of counsel for the
Underwriters, it becomes necessary to amend or
supplement the Prospectus in order to make the
statements therein, in the light of the circumstances
when the Prospectus is delivered to a purchaser, not
misleading, or if it is necessary to amend or
supplement the Prospectus to comply with any law,
forthwith to prepare and file with the Commission an
appropriate amendment or supplement to the Prospectus
so that the statements in the Prospectus, as so
amended or supplemented, will not in the light of the
circumstances when it is so delivered, be misleading,
or so that the Prospectus will comply with law, and
to furnish to each Underwriter and to such dealers as
you shall specify, such number of copies thereof as
such Underwriter or dealers may reasonably request.
(g) Prior to any public offering of the Shares,
to cooperate with you and counsel for the
Underwriters in connection with the registration or
qualification of the Shares for offer and sale by the
several Underwriters and by dealers under the state
securities or blue sky laws of such jurisdictions as
you may request, to continue such qualification in
effect so long as required for distribution of the
Shares and to file such consents to service of
process or other documents as may be necessary in
order to effect such registration or qualification;
provided, however, that the Company shall not be
required to qualify as a foreign corporation or to
take any action that would subject it to service of
process in suits other than as to matters relating to
the offer and sale of the Shares or subject itself to
taxation in respect of doing business in any
jurisdiction where it is not now so subject.
(h) To make generally available to its
stockholders as soon as reasonably practicable a
consolidated earnings statement covering a period of
at least twelve months beginning after the "effective
date" (as defined in Rule 158 under the Act) of the
Registration Statement (but in no event commencing
later than 90 days after such effective date) which
shall satisfy the provisions of Section 11(a) of the
Act (including, at the option of the Company,
Rule 158 promulgated thereunder).
(i) During the period of five years hereafter,
to furnish to you as soon as available a copy of each
report or other publicly available information of the
Company mailed to the holders of Common Shares and a
copy of each report (including related financial
statements) filed with the Commission, the NASDAQ
National Market System and such other publicly
available information concerning the Company and its
subsidiaries as you may reasonably request.
(j) To pay all costs, expenses, fees and taxes
incident to (i) the preparation, printing, filing and
distribution under the Securities Act of the
Registration Statement (including financial
statements and exhibits), each Prospectus and all
amendments and supplements to any of them prior to or
during the period specified in paragraph (e),
(ii) the printing and delivery of the Prospectus and
all amendments or supplements to it during the period
specified in paragraph (e), (iii) the copying and
delivery of this Agreement, the Preliminary and
Supplemental Blue Sky Memoranda (including in each
case any reasonable disbursements of counsel for the
Underwriters relating to such copying and delivery),
(iv) the registration or qualification of the Shares
for offer and sale under the securities or blue sky
laws of the several states (including in each case
the reasonable fees and disbursement of counsel for
the Underwriters relating to such registration or
qualification and memoranda relating thereto),
(v) filing and clearance with the National
Association of Securities Dealers, Inc. (the "NASD")
in connection with the offering, (vi) the listing of
the Shares on the NASDAQ National Market System,
(vii) furnishing such copies of the Registration
Statement, the Prospectus and all amendments and
supplements thereto as may be requested for use in
connection with the offering or sale of the Shares by
the Underwriters or by dealers to whom Shares may be
sold as described herein and (viii) the performance
by the Company of its other obligations under this
Agreement.
(k) In accordance with the Cuba Act and without
limitation to the provisions of Section 9 hereof, the
Company agrees to indemnify and hold harmless the
Underwriters from and against any and all losses,
claims, damages and liabilities (including, without
limitation, any legal or other expenses reasonably
incurred), arising out of any violation by the
Company of the Cuba Act.
(l) Except as stated in this Agreement and in
the Prospectus, to not take, directly or indirectly,
any action designed to or that might reasonably be
expected to cause or result in stabilization or
manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares.
(m) To use its best efforts to do and perform
all things required or necessary to be done and
performed under this Agreement by the Company prior
to the Closing Date or the Option Closing Date, as
the case may be, and to satisfy all conditions
precedent to the delivery of the Shares.
(n) To apply its net proceeds from the sale of
the Shares in accordance with the description set
forth in the Prospectus under "Use of Proceeds."
6. Covenants of the Selling Stockholder. In
further consideration of the agreements of the
Underwriters herein contained, the Selling Stockholder
covenants to each Underwriter as follows:
(a) To cooperate to the extent necessary to
cause the Registration Statement or any
post-effective amendment thereto to become effective
at the earliest possible time.
(b) To do or perform all things reasonably
required to be done or performed by the Selling
Stockholder before the Closing Date or the Option
Closing Date, as the case may be, to satisfy all
conditions precedent to the delivery of the Shares to
be sold by the Selling Stockholder to the
Underwriters pursuant to this Agreement.
(c) Except as stated in this Agreement and in
the Prospectus, to not take, directly or indirectly,
any action designed to or that might reasonably be
expected to cause or result in stabilization or
manipulation of the price of the Common Stock to
facilitate the sale or resale of the Shares.
(d) To advise you promptly, and if requested by
you, to confirm such advice in writing, within the
period of time referred to in Section 5(e) hereof, of
any change in information relating to the Selling
Stockholder or any new information relating to the
Selling Stockholder stated in the Prospectus or any
amendment or supplement thereto which comes to the
attention of the Selling Stockholder that suggests
that any statement made in the Registration Statement
or the Prospectus (as then amended or supplemented,
if amended or supplemented) is or may be untrue in
any material respect or that the Registration
Statement or Prospectus (as then amended or
supplemented, if amended or supplemented) omits or
may omit to state a material fact or a fact necessary
to be stated therein in order to make the statements
therein not misleading in any material respect, or of
the necessity to amend or supplement the Prospectus
(as then amended or supplemented, if amended or
supplemented) in order to comply with the Securities
Act and the Rules and Regulations or any other law.
(e) Prior to any public offering of the Shares,
to cooperate with you and counsel for the
Underwriters in connection with the registration or
qualification of the Shares for offer and sale by the
Underwriters and by dealers under the state
securities or blue sky laws of such jurisdictions as
you may request, to continue such qualification in
effect so long as required for distribution of the
Shares and to file such consents to service of
process or other documents as may be necessary to
effect such registration or qualification; provided,
however, that the Selling Stockholder shall not be
required to qualify as a foreign corporation or to
take any action that would subject it to service of
process in suits other than as to matters relating to
the offer and sale of the Shares or subject itself to
taxation in respect of doing business in any
jurisdiction where it is not now subject.
7. Representations and Warranties of the Company.
The Company represents and warrants to, and covenants and
agrees with, each Underwriter as follows:
(a) The Registration Statement has become
effective; no stop order suspending the effectiveness
of the Registration Statement is in effect, and no
proceedings for such purpose are pending before or,
to the best knowledge of the Company, threatened by
the Commission.
(b) (i) The Company and the offering and sale
of shares contemplated by this Agreement meet the
requirements for using Form S-3 under the Act,
(ii) each part of the Registration Statement, when
such part became effective, did not contain and each
such part, as amended or supplemented, if applicable,
will not contain any untrue statement of a material
fact or omit to state a material fact required to be
stated therein or necessary to make the statements
therein not misleading, (iii) the Registration
Statement and the Prospectus comply in all material
respects and, as amended or supplemented, if
applicable, will comply in all material respects with
the Securities Act and the Rules and Regulations and
(iv) the Prospectus does not contain and, as amended
or supplemented, if applicable, will not contain any
untrue statement of a material fact or omit to state
a material fact necessary in order to make the
statements therein, in the light of the circumstances
under which they were made, not misleading, except
that the representations and warranties set forth in
this Section 7(b) do not apply to statements or
omissions in the Registration Statement or the
Prospectus based upon information relating to (x) the
Underwriters furnished to the Company in writing by
the Underwriters expressly for use therein or (y) the
Selling Stockholder furnished to the Company in
writing by the Selling Stockholder expressly for use
therein.
(c) Each preliminary prospectus filed as part
of the Registration Statement as originally filed or
as part of any amendment thereto, or filed pursuant
to Rule 424 of the Rules and Regulations, complied
when so filed in all material respects with the
Securities Act and the Rules and Regulations.
(d) All of the Company's subsidiaries are
listed, to the extent such listing is required under
the Securities Act and the Rules and Regulations, in
an exhibit to the Company's Annual Report on
Form 10-K which is incorporated by reference into the
Registration Statement. Each of the Company and its
subsidiaries has been duly incorporated, is validly
existing as a corporation in good standing under the
laws of its jurisdiction of incorporation and has the
corporate power and authority to own, lease and
operate its properties and conduct its business as
described in the Prospectus and to enter into and
perform its obligations under this Agreement, and
each is duly qualified and is in good standing as a
foreign corporation authorized to do business in each
jurisdiction in which the nature of its business or
its ownership or leasing of property requires such
qualification, except where the failure to be so
qualified would not have a material adverse effect on
the Company and its subsidiaries, taken as a whole.
(e) The Incorporated Documents heretofore
filed, when they were filed (or, if any amendment
with respect to any such document was filed, when
such amendment was filed), conformed in all material
respects with the requirements of the Exchange Act
and the rules and regulations thereunder; any further
Incorporated Documents so filed will, when they are
filed, conform in all material respects with the
requirements of the Exchange Act and the rules and
regulations thereunder; no such document when it was
filed (or, if any amendment with respect to any such
document was filed, when such amendment was filed)
contained an untrue statement of a material fact or
omitted to state a material fact required to be
stated therein or necessary in order to make the
statements therein, in light of the circumstances
when made, not misleading; and no such further
document, when it is filed, will contain an untrue
statement of a material fact or will omit to state a
material fact required to be stated therein or
necessary in order to make the statements therein, in
light of the circumstances when made, not misleading.
(f) All of the outstanding shares of capital
stock of the Company's subsidiaries have been duly
authorized and validly issued and are fully paid and
non-assessable, and are owned by the Company, free
and clear of any security interest, claim, lien,
encumbrance or adverse interest of any nature, except
for the security interest granted to International
Nederlanden (U.S.) Capital Corporation ("INCC") and
MeesPierson, N.V. ("MeesPierson") pursuant to the
Credit Agreement dated September 8, 1993, as amended
on October 15, 1993 and May 10, 1994 and amended and
restated on December 20, 1994 (the "Credit
Agreement") between the Company, INCC and
MeesPierson, a copy of which (without exhibits) has
been filed with the Commission as an exhibit to the
Company's registration statement on Form S-3, filed
with the Commission on June 21, 1994 which is
incorporated by reference into the Registration
Statement.
(g) (i) All the outstanding shares of capital
stock of the Company have been duly authorized and
validly issued and are fully paid, non-assessable and
not subject to any preemptive or similar rights and
have been issued in compliance with all federal and
state securities laws and (ii) the Shares to be
issued and sold by the Company hereunder have been
duly authorized and, when issued and delivered to the
Underwriters against payment therefor as provided by
this Agreement, will have been validly issued and
will be fully paid and non-assessable, and the
issuance of such Shares will not be subject to any
preemptive rights.
(h) The authorized and outstanding capital
stock of the Company conforms as to legal matters in
all material respects to the description thereof
contained in the Prospectus. Except as described in
the Prospectus, there are no outstanding rights
(including, without limitation, preemptive rights),
warrants or options to acquire, or instruments
convertible into or exchangeable for, any capital
stock of the Company or its subsidiaries or other
equity interest in the Company or its subsidiaries,
in each case, issued by the Company or its
subsidiaries, or any contract, commitment, agreement,
understanding or arrangement of any kind of which the
Company or its subsidiaries is a party relating to
the issuance of capital stock of the Company or its
subsidiaries, any such convertible or exchangeable
securities or any such rights, warrants or options.
(i) Except as otherwise stated in the
Prospectus, subsequent to the respective dates as of
which information is given in the Prospectus:
(i) there has been no material adverse change, or any
development that would reasonably be expected to
result in a material adverse change, in the
condition, financial or otherwise, or in the
earnings, business or operations of the Company and
its subsidiaries, taken as a whole, whether or not
arising from transactions in the ordinary course of
business, (ii) the Company and its subsidiaries,
taken as a whole, have not incurred any material
liability or obligation, direct or contingent, not in
the ordinary course of business nor entered into any
material transaction not in the ordinary course of
business, and (iii) there has been no dividend or
distribution of any kind declared, paid or made by
the Company or, except for dividends paid to the
Company, its subsidiaries on any class of capital
stock or repurchase or redemption by the Company or
its subsidiaries of any class of capital stock.
(j) Neither the Company nor any of its
subsidiaries is in violation of its respective
charter or bylaws or in default in the performance or
observance of any obligation, agreement, covenant or
condition contained in any indenture, mortgage, loan
agreement, covenant, note, contract, lease or other
instrument to which the Company or its subsidiary is
a party or by which it or any of them may be bound
(including the Credit Agreement) or to which any of
the property or assets of the Company or its
subsidiaries is subject, except for such defaults as
would not, singly or in the aggregate, have a
material adverse effect on the Company and its
subsidiaries, taken as a whole.
(k) This Agreement has been duly authorized,
executed and delivered by the Company and is a valid
and binding agreement of the Company enforceable in
accordance with its terms, except to the extent that
rights to indemnification thereunder may be limited
by federal or state securities laws and policies
embodied therein, or to the extent that such
obligations are subject to or affected or limited by
(i) applicable liquidation, conservatorship,
bankruptcy, insolvency, reorganization, fraudulent
conveyance, moratorium or other laws affecting
creditors' rights or in the collection of debtors'
obligations generally from time to time in effect, or
(ii) general principles of equity (whether
enforceability is considered in a proceeding in
equity or at law). The execution, delivery and
performance of this Agreement, compliance by the
Company with all the provisions hereof and the
consummation of the transactions contemplated hereby
will not require any consent, approval, authorization
or other order of any court, regulatory body,
administrative agency or other governmental body
(except as has been previously obtained and except as
may be required under the securities or blue sky laws
of the various states) and will not conflict with or
constitute a breach of any of the terms or provisions
of, or a default under, the charter or bylaws of the
Company or its subsidiaries or any agreement,
indenture or other instrument to which the Company or
its subsidiaries is a party or by which the Company
or its subsidiaries or their respective property is
bound, or violate or conflict with any laws,
administrative regulations or rulings or court
decrees applicable to the Company, its subsidiaries
or their respective property, except for any such
conflict, breach, violation or default as will not
have a material adverse effect on the Company and its
subsidiaries taken as a whole.
(l) There is no action, suit or proceeding
before or by any court or governmental agency or
body, domestic or foreign, now pending, or, to the
best knowledge of the Company, threatened, against or
affecting the Company or its subsidiaries, (i) which
is required to be disclosed in the Registration
Statement (other than as disclosed therein), or
(ii) in which there is a reasonable possibility of a
determination adverse to the Company or its
subsidiaries and which, if determined adversely to
the Company and its subsidiaries, would reasonably be
expected to (A) result in any material adverse change
in the condition, financial or otherwise, or in the
earnings, business or operations of the Company and
its subsidiaries, taken as a whole, or (B) materially
and adversely affect the properties or assets thereof
or (C) materially and adversely affect the
consummation of this Agreement; all pending legal or
governmental proceedings to which the Company or its
subsidiaries is a party or of which any of their
respective properties or assets is the subject which
are not described in the Registration Statement,
including ordinary routine litigation incidental to
the business, are, considered in the aggregate, not
material; and there are no contracts or documents of
the Company or its subsidiaries which are required to
be filed as exhibits to the Registration Statement or
incorporated by reference therein by the Securities
Act or the Rules and Regulations which have not been
so filed or incorporated.
(m) The Company and its subsidiaries have
obtained all licenses, permits and other
authorizations required under any Environmental Law
(as defined below) necessary for their respective
operations, except to the extent that failure to have
such license, permit or authorization would not
reasonably be expected to have a material adverse
effect on the Company and its subsidiaries, taken as
a whole; the business and operations of the Company
and its subsidiaries comply with the terms and
conditions of such licenses, permits and
authorizations and comply with all Environmental
Laws, except to the extent that failure to comply
would not reasonably be expected to have a material
adverse effect on the Company and its subsidiaries
taken as a whole; the Company and its subsidiaries
are in compliance with all Environmental Laws, except
to the extent that any noncompliance would not
reasonably be expected to have a material adverse
effect on the Company and its subsidiaries, taken as
a whole; neither the Company nor its subsidiaries has
received any written communication, whether from a
governmental authority, citizens group, employee or
otherwise, that alleges that the Company or its
subsidiaries is not in compliance with any
Environmental Law, except to the extent that such
noncompliance would not reasonably be expected to
have a material adverse effect on the Company and its
subsidiaries, taken as a whole; there is no
Environmental Claim (as defined below) pending or, to
the Company's knowledge, threatened against the
Company or its subsidiaries or, to the Company's
knowledge, against any person or entity whose
liability for any Environmental Claim the Company or
its subsidiary has retained or assumed either
contractually or by operation of law, except to the
extent that such Environmental Claim would not
reasonably be expected to have a material adverse
effect on the Company and its subsidiaries, taken as
a whole; the Company is not aware of any condition or
circumstance that is reasonably likely to give rise
to an Environmental Claim that, if made, would have a
material adverse effect on the Company and its
subsidiaries, taken as a whole. As used in this
Agreement, "Environmental Laws" means any and all
federal, state and local statutes, laws, regulations,
ordinances, grants, franchises, licenses, agreements,
or governmental restrictions relating to pollution,
human health or the environment or the release of any
materials into the environment, including, but not
limited to, emissions, discharges, releases or
threatened releases of pollutants, contaminants,
wastes, toxic substances, hazardous substances,
petroleum or petroleum products; and "Environmental
Claim" means any claim, action, cause of action,
investigation or notice by any person or entity
alleging potential liability (including, without
limitation, potential liability for investigatory
costs, cleanup costs, governmental response costs,
natural resources damages, property damages, personal
injuries, or penalties) arising out of, based on or
resulting from (a) the presence, or release into the
environment, of any pollutants, contaminants, wastes,
toxic substances, hazardous substances, petroleum and
petroleum products at any location, whether or not
owned or operated by the Company or any of its
subsidiaries or (b) circumstances forming the basis
of any violation, or alleged violation, of any
Environmental Law.
(n) Except as otherwise set forth in the
Prospectus, the title of the Company and its
subsidiaries to their oil and gas properties and
assets is consistent with industry standards.
Certain of the Company's and its subsidiaries' assets
are subject to liens and pledges in connection with
the Company's financings. Except as otherwise set
forth in the Prospectus, the Company has no notice of
any material claim of any sort that has been asserted
by anyone adverse to the rights of the Company or its
subsidiaries to the continued possession of their
leased or subleased premises or property under such
leases or subleases, where such claim would have a
material adverse effect upon the Company's or its
subsidiaries' business or assets, taken as a whole.
(o) The Company and its subsidiaries are
insured by recognized financially sound and reputable
insurance companies in such amounts with such
deductibles and covering such losses and risks as are
prudent and customary in the businesses in which they
are engaged; and neither the Company nor its
subsidiaries believes that it will not be able to
renew its existing insurance coverage as and when
such coverage expires or to obtain similar coverage
from similar insurers as may be necessary to continue
its business at a cost that would not materially and
adversely affect the condition, financial or
otherwise, or the earnings, business or operations of
the Company and its subsidiaries, taken as a whole,
except as described in or contemplated by the
Prospectus.
(p) The accountants who certified the financial
statements and supporting schedules included in the
Registration Statement are independent public
accountants as required by the Securities Act and the
Rules and Regulations.
(q) The financial statements, together with
related schedules and notes forming part of the
Registration Statement and the Prospectus (and any
amendment or supplement thereto), present fairly the
consolidated financial position, results of
operations and changes in financial position of the
Company and its subsidiaries on the basis stated in
the Registration Statement at the respective dates or
for the respective periods to which they apply; such
financial statements and related schedules and notes
have been prepared in accordance with generally
accepted accounting principles consistently applied
throughout the periods involved, except as disclosed
therein; the other financial and statistical
information and data set forth in the Registration
Statement and the Prospectus (and any amendment or
supplement thereto) is, in all material respects,
accurately presented and prepared on a basis
consistent with such financial statements and the
books and records of the Company; and the supporting
schedules included in the Registration Statement
present fairly the information required to be stated
therein.
(r) The Ryder Scott Company ("Ryder Scott"),
who has taken such actions with respect to the
Company's estimates of its oil and gas reserves as is
set forth in the Prospectus, are independent
petroleum engineers with respect to the Company. The
factual data provided to Ryder Scott in the
preparation of their estimates of the Company's oil
and gas reserves were accurate in all material
respects with the applicable requirements of
Rule 4-10 of Regulations S-X and Securities Act
Industry Guide 2. The projections and assumptions
provided to Ryder Scott by the Company were
reasonable based upon the information available to
the Company at the time such information was so
provided.
(s) Except as disclosed in the Prospectus, the
Company and its subsidiaries have such permits,
licenses, franchises and authorizations of
governmental or regulatory authorities ("permits"),
including, without limitation, under any applicable
Environmental Laws, as are necessary to own, lease
and operate their respective properties and to
conduct their businesses as described in the
Prospectus, except where the failure to have such
permits would not have a material adverse effect on
the Company and its subsidiaries taken as a whole;
the Company and its subsidiaries have fulfilled and
performed all of their material obligations due to be
performed with respect to such permits and, except as
disclosed in the Prospectus, no event has occurred
which allows, or after notice or lapse of time would
allow, revocation or termination thereof or result in
any other material impairment of the rights of the
holder of any such permit; and, except as described
in the Prospectus, such permits contain no
restrictions that are materially burdensome to the
Company or its subsidiary.
(t) In the ordinary course of its business, the
Company conducts a periodic review of the effect of
Environmental Laws on the business, operations and
properties of the Company and its subsidiaries. As
of the date of this Agreement, the associated costs
and liabilities to the Company and its subsidiaries
relating to such Environmental Laws (including,
without limitation, any capital or operating
expenditures required for clean-up, closure of
properties or compliance with Environmental Laws or
any permit, license or approval, any related
constraints on operating activities and any potential
liabilities to third parties) would not, singly or in
the aggregate, have a material adverse effect on the
Company and its subsidiaries, taken as a whole.
(u) No holder of any security of the Company
has any right to require registration of shares of
Common Stock or any other security of the Company
except as set forth in the Prospectus, and no
security holders of the Company that have rights to
require registration of any shares of Common Stock or
other securities of the Company are being excluded
from participating in the filing of the Registration
Statement and the consummation of the transactions
contemplated therein except with their express
written consent.
(v) The Shares are listed on the NASDAQ Stock
Market National Market.
(w) Except as described in the Prospectus, the
Company, its subsidiaries which have been or are
consolidated with the Company for the purpose of
filing income tax returns (the "Consolidated Tax
Subsidiaries") and any group of which the Company or
any of its Consolidated Tax Subsidiaries is or was a
member for income tax purposes have filed all
foreign, federal, state and local tax returns that
are required to be filed or have requested extensions
thereof and have paid all taxes required to be paid
by any of them and any related or similar assessment,
fine or penalty levied against any of them, to the
extent that any of the foregoing is due and payable,
except for any such tax, assessment, fine or penalty
that is currently being contested in good faith and
by appropriate proceedings; and adequate charges,
accruals and reserves have been made in the
applicable financial statements referred to in
Section 7(p) above in respect of all foreign,
federal, state and local taxes for all periods as to
which the tax liability of the Company, its
Consolidated Tax Subsidiaries and any group of which
the Company or any of its Consolidated Tax
Subsidiaries is or was a member for income tax
purposes has not been finally determined.
(x) Neither the Company nor its subsidiaries
have violated any federal or state law relating to
discrimination in the hiring, promotion or pay of
employees nor any applicable federal or state wages
and hours laws, nor any provisions of the Employee
Retirement Income Security Act or the rules and
regulations promulgated thereunder, which in each
case would reasonably be expected to result in any
material adverse change in the business, prospects,
financial condition or results of operation of the
Company and its subsidiaries, taken as a whole.
(y) The Company is not an "investment company"
or an entity "controlled" by an "investment company"
as such terms are defined in the Investment Company
Act of 1940, as amended (the "Investment Company
Act").
(z) The Company has complied with, and is and
will be in compliance with, the provisions of that
certain Florida act relating to disclosure of doing
business with Cuba, codified as Section 517.075 of
the Florida statutes, and the rules and regulations
thereunder (collectively, the "Cuba Act") or is
exempt therefrom.
(aa) Except for the consent of the Selling
Stockholder to the number of Shares to be sold by it
pursuant to Section 2 of this Agreement, no vote or
consent of any stockholder of the Company, and no
consent, approval or waiver of any party to or any
person entitled to any right or benefit under the
Company's charter or amended by-laws or any other
instrument or agreement to which the Company is a
party or by which it is bound or under which it is
entitled to any right or benefit, is required in
connection with the offering, sale or purchase by the
Underwriters of any of the Shares under this
Agreement or the consummation of any of the other
transactions contemplated hereby.
(bb) The Company has not taken, directly or
indirectly, any action designed to cause or to result
in, or that has constituted or which might reasonably
be expected to cause or result in, the stabilization
or manipulation of the price of any security of the
Company to facilitate the sale or resale of the
Shares.
(cc) Except as described in the Prospectus under
"Underwriting" and on the cover page, there are no
claims, payments, issuances, arrangements or
understandings for services in the nature of a
finder's or origination fee with respect to the sale
of the Shares hereunder.
8. Representations and Warranties of the Selling
Stockholder. The Selling Stockholder represents and
warrants to, and covenants and agrees with, each
Underwriter as follows:
(a) The Selling Stockholder has been duly
incorporated and is validly existing as a corporation
under the laws of its jurisdiction of incorporation
and has full legal right, corporate power and
authority to enter into and perform its obligations
under this Agreement.
(b) This Agreement has been duly authorized,
executed and delivered by or on behalf of the Selling
Stockholder.
(c) The execution and delivery by the Selling
Stockholder of, and the performance by the Selling
Stockholder of its obligations under, this Agreement
will not contravene or conflict with, result in a
breach of, or constitute a default under, the charter
or by-laws or other organization documents of the
Selling Stockholder or, to the best knowledge of the
Selling Stockholder, the terms of any agreement or
instrument to which the Selling Stockholder is a
party or by which it is bound or under which it is
entitled to any right or benefit, any provision of
applicable law or any judgment, order, decree or
regulation applicable to the Selling Stockholder of
any court, regulatory body, administrative agency,
governmental body or arbitrator having jurisdiction
over the Selling Stockholder.
(d) The Selling Stockholder has, and on the
Closing Date will have, valid title to all of the
Shares which may be sold by the Selling Stockholder
under this Agreement and the legal right and power,
and all authorizations and approvals required by law
and under its charter or by-laws or other
organization documents, to sell, transfer and deliver
all of the Shares which may be sold by the Selling
Stockholder under this Agreement and to comply with
its other obligations hereunder and thereunder.
(e) Assuming that the Underwriters purchase the
Shares which are sold by the Selling Stockholder
pursuant to this Agreement for value, in good faith
and without notice of any adverse claim, the delivery
of the Shares which are sold by the Selling
Stockholder pursuant to this Agreement will pass
title to such Shares, free and clear of any security
interests, claims, liens, equities and other
encumbrances.
(f) To the best knowledge of the Selling
Stockholder, no authorization, approval, consent or
order of, or qualification, registration or filing
with, any court or governmental authority or agency
is required for the consummation by the Selling
Stockholder of the transactions contemplated in this
Agreement, except such as have been obtained under
the Securities Act and the Rules and Regulations and
except such as may be required under the securities
or blue sky laws of any jurisdiction in connection
with the purchase and distribution of Shares by the
Underwriters.
(g) The Selling Stockholder does not have any
registration or other similar rights to have any
securities (debt or equity) registered under the
Securities Act by the Company except for such rights
as are described in the Prospectus under "Shares
Eligible for Future Sale."
(h) Except for the consent of the Selling
Stockholder to the number of Shares to be sold by the
Selling Stockholder pursuant to Section 2 of this
Agreement, to the best knowledge of the Selling
Stockholder, no consent, approval or waiver under any
instrument or agreement to which such Selling
Stockholder is a party or by which it is bound or
under which it is entitled to any right or benefit,
is required in connection with the offering, sale or
purchase by the Underwriters of any of the Shares
which may be sold by such Selling Stockholder under
this Agreement or the consummation by the Selling
Stockholder of any of the other transactions
contemplated hereby; and the Selling Stockholder
hereby consents to the offering and sale by the
Selling Stockholder of the number of Shares to be
sold by it pursuant to this Agreement and to the
consummation of the other transactions contemplated
hereby and, to the extent that any of the foregoing
might conflict with, result in a breach of, or
constitute a default under any instrument or
agreement to which the Selling Stockholder is a party
or by which it is bound or under which it is entitled
to any right or benefit, the Selling Stockholder
hereby waives such conflict, breach or default.
(i) All information furnished by or on behalf
of the Selling Stockholder in writing expressly for
use in the Registration Statement and Prospectus is,
and on the Closing Date will be, true, correct and
complete in all material respects, and does not, and
on the Closing Date will not, contain any untrue
statement of a material fact or omit to state any
material fact necessary to make such information not
misleading; and the Selling Stockholder confirms as
accurate the number of shares of Common Stock set
forth opposite the Selling Stockholder's name in the
Prospectus under the caption "Principal
Stockholders," as of the date of the Prospectus and
on the date hereof, prior to the sale of any Shares.
(j) The Selling Stockholder has not taken,
directly or indirectly, any action designed to cause
or to result in, or that has constituted or which
might reasonably be expected to cause or result in,
the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or
resale of the Shares.
9. 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 Securities Act or Section 20 of the
Exchange Act, from and against any and all losses,
claims, damages, liabilities and judgments caused by
any untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement
or the Prospectus (as amended or supplemented if the
Company shall have furnished any amendments or
supplements thereto) or any preliminary prospectus,
or caused by any omission or alleged omission to
state therein a material fact required to be stated
therein or necessary to make the statement therein
not misleading, except insofar as such losses,
claims, damages, liabilities or judgments are caused
by any untrue statement or omission or alleged untrue
statement or omission based upon information relating
to (x) any Underwriter furnished in writing to the
Company by such Underwriter expressly for use therein
or (y) the Selling Stockholder furnished in writing
to the Company by the Selling Stockholder expressly
for use therein; provided, however, that the
foregoing indemnity agreement with respect to any
preliminary prospectus shall not inure to the benefit
of any Underwriter from whom the person asserting any
such losses, claims, damages or liabilities purchased
Shares, or any person controlling such Underwriter,
if a copy of the Prospectus (as then amended or
supplemented if the Company shall have furnished any
amendments or supplements thereto) was not sent or
given by or on behalf of such Underwriter to such
person, if required by law so to have been delivered,
at or before the written confirmation of the sale of
the Shares to such person, and if the Prospectus (as
so amended or supplemented) would have cured the
defect giving rise to such loss, claim, damage or
liability.
(b) In case any action shall be brought against
any Underwriter or any person controlling such
Underwriter, based upon any preliminary prospectus,
the Registration Statement or the Prospectus or any
amendment or supplement thereto and with respect to
which indemnity may be sought against the Company,
such Underwriter shall promptly notify the Company in
writing and the Company shall assume the defense
thereof, including the employment of counsel
reasonably satisfactory to such indemnified party and
payment of all reasonable fees and expenses. Such
Underwriter or any such controlling person shall have
the right to employ separate counsel in any such
action and participate in the defense thereof, but
the fees and expenses of such counsel shall be at the
expense of such Underwriter or such controlling
person unless (i) the employment of such counsel
shall have been specifically authorized in writing by
the Company, (ii) the Company shall have failed to
assume the defense and employ counsel or (iii) the
named parties to any such action (including any
impleaded parties) include both such Underwriter or
such controlling person and the Company and such
Underwriter or such controlling person shall have
been advised by such counsel that there may be one or
more legal defenses available to it which are
different from or in addition to those available to
the Company (in which case the Company shall not have
the right to assume the defense of such action on
behalf of such Underwriter or such controlling
person, it being understood, however, that the
Company shall not, in connection with any one such
action or separate but substantially similar or
related actions in the same jurisdiction arising out
of the same general allegations or circumstances, be
liable for the fees and expenses of more than one
separate firm of attorneys for such Underwriter and
controlling persons, which firm shall be designated
in writing by S.G. Warburg & Co. Inc., and that all
such fees and expenses shall be reimbursed as they
are incurred). The Company shall not be liable for
any settlement of any such action effected without
its written consent but if settled with the written
consent of the Company, the Company agrees to
indemnify and hold harmless such Underwriter and any
such controlling person from and against any loss or
liability by reason of such settlement.
Notwithstanding the foregoing sentence, if at any
time an indemnified party shall have requested an
indemnifying party to reimburse the indemnified party
for fees and expenses of counsel as contemplated by
the second sentence of this paragraph, the
indemnifying party agrees that it shall be liable for
any settlement of any proceeding effected without its
written consent if (i) such settlement is entered
into more than 60 business days after receipt by such
indemnifying party of the aforesaid request and
(ii) such indemnifying party shall not have
reimbursed the indemnified party in accordance with
such request before the date of such settlement. No
indemnifying party shall, without the prior written
consent of the indemnified party, effect any
settlement of any pending or threatened proceeding in
respect of which any indemnified party is or could
have been a party and indemnity could have been
sought hereunder by such indemnified party, unless
such settlement includes unconditional release of
such indemnified party from all liability on claims
that are the subject matter of such proceeding. The
Company's obligations under this paragraph (b) shall
not impair the Company's right to indemnification
under Sections 9(c) and 9(d).
(c) Each Underwriter agrees, severally and not
jointly, to indemnify and hold harmless the Company,
its directors, its officers who sign the Registration
Statement, the Selling Stockholder and any person
controlling the Company or the Selling Stockholder
within the meaning of Section 15 of the Securities
Act or Section 20 of the Exchange Act, to the same
extent as the foregoing indemnity from the Company to
the Underwriters but only with reference to
information relating to such Underwriter furnished in
writing by such Underwriter expressly for use in the
Registration Statement, the Prospectus or any
preliminary prospectus. In case any action shall be
brought against the Selling Stockholder, the Company,
any of its directors, any such officer or any person
controlling the Company or the Selling Stockholder
based on the Registration Statement, the Prospectus
or any preliminary prospectus and in respect of which
indemnity may be sought against an Underwriter, such
Underwriter shall have the rights and duties given to
the Company (except that if the Company shall have
assumed the defense thereof, such Underwriter shall
not be required to do so, but may employ separate
counsel therein and participate in the defense
thereof but the fees and expenses of such counsel
shall be at the expense of such Underwriter), and the
Company, its directors, any such officers and any
person controlling the Company shall have the rights
and duties given to each Underwriter by Section 9(b)
hereof.
(d) The Selling Stockholder agrees to indemnify
and hold harmless the Company, its directors, its
officers who sign the Registration Statement, each
Underwriter and any person controlling the Company or
any such Underwriter within the meaning of Section 15
of the Securities Act or Section 20 of the Exchange
Act, to the same extent as the foregoing indemnity
from the Company to each Underwriter but only with
reference to information relating to the Selling
Stockholder furnished in writing by the Selling
Stockholder expressly for use in the Registration
Statement, the Prospectus or any preliminary
prospectus. In case any action shall be brought
against any Underwriter, the Company, any of its
directors, any of its officers or any person
controlling the Company or such Underwriter based on
the Registration Statement, the Prospectus or any
preliminary prospectus and in respect of which
indemnity may be sought against the Selling
Stockholder, the Selling Stockholder shall have the
rights and duties given to the Company (except that
if the Company shall have assumed the defense
thereof, the Selling Stockholder shall not be
required to do so, but may employ separate counsel
therein and participate in the defense thereof but
the fees and expenses of such counsel shall be at the
expense of the Selling Stockholder), and the Company
and such Underwriter, their respective directors, any
such officers and any persons controlling the Company
or such Underwriter shall have the rights and duties
given to each Underwriter by Section 9(b) hereof;
provided, however, that the aggregate amount the
Selling Stockholder shall be liable for under this
Section 9(d) shall not exceed the amount of the
aggregate gross proceeds of the Shares offered and
sold pursuant to the terms of this Agreement on
behalf of the Selling Stockholder to the public.
(e) If the indemnification provided for in this
Section 9 is unavailable or insufficient to an
indemnified party in respect of any losses, claims,
damages, liabilities or judgments referred to herein,
then each indemnifying party, in lieu of indemnifying
such indemnified party, shall contribute to the
amount paid or payable by such indemnified party as a
result of such losses, claims, damages, liabilities
and judgments (i) such proportion as is appropriate
to reflect the relative benefits received by the
Company and Selling Stockholder on the one hand and
of the Underwriters on the other hand from the
offerings of the Shares or (ii) if the allocation
provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate
to reflect not only the relative benefits referred to
in clause (i) above but also the relative fault of
the Company and the Selling Stockholder on the one
hand and of the Underwriters on the other hand in
connection with the statements or omissions which
resulted in such losses, claims, damages, liabilities
or judgments, as well as any other relevant equitable
considerations. The relative benefits received by
the Company and the Selling Stockholder on the one
hand and the Underwriters on the other hand in
connection with the offering of the Shares shall be
deemed to be in the same respective proportions as
the net proceeds from the offering of the Shares
(before deducting expenses) received by the Company
and the Selling Stockholder and the total
underwriting discounts and commissions received by
the Underwriters, in each case as set forth in the
table (including the footnotes thereto) on the cover
of the Prospectus, bear to the aggregate public
offering price of the Shares. The relative fault of
the Company and the Selling Stockholder on the one
hand and the Underwriters on the other hand shall be
determined by reference to, among other things,
whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to
state a material fact relates to information supplied
by the Company or the Selling Stockholder or by the
Underwriters and the parties' relative intent,
knowledge, access to information and opportunity to
correct or prevent such statement or mission. The
Underwriters' respective obligations to contribute
pursuant to this Section 9 are several in proportion
to the respective number of Shares they have purchase
hereunder, and not joint.
(f) The Company, the Selling Stockholder and
the Underwriters agree that it would not be just or
equitable if contribution pursuant to this Section 9
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 that
does not take account of the equitable considerations
referred to in the immediately preceding paragraph.
The amount paid or payable by an indemnified party as
a result of the losses, claims, damages and
liabilities referred to in the immediately preceding
paragraph shall be deemed to include, subject to the
limitations set forth above, 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 Section 9, (i) 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 and (ii) the Selling Stockholder shall not
be required to contribute any amount in excess of the
aggregate gross proceeds of the Shares offered and
sold pursuant to the terms of this Agreement on
behalf of the Selling Stockholder to the public.
Notwithstanding the provisions of the Section 9, no
person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act)
shall be entitled to contribution from any person who
was not guilty of such fraudulent misrepresentation.
The remedies provided for in this Section 9 are not
exclusive and shall not limit any right or remedies
which may otherwise be available to any indemnified
party at law or in equity.
(g) Any losses, claims, damages, liabilities or
expenses for which an indemnified party is entitled
to indemnification or contribution under this
Section 9 shall be paid by the indemnifying party to
the indemnified party as such losses, claims,
damages, liabilities or expenses are incurred.
(h) To the extent that both the Company and the
Selling Stockholder are subject to any losses,
claims, damages, liabilities or expenses as
indemnifying parties under this Section 9, their
obligations under this Section 9 shall be several and
not joint.
10. Conditions of Underwriters' Obligations. The
several obligations of the Underwriters to purchase the
Firm Shares under this Agreement are subject to the
satisfaction of each of the following conditions:
(a) The Underwriter shall have received on the
Closing Date a certificate, dated the Closing Date
and signed by the President or Senior Vice President
and the principal financial or accounting officer of
the Company, to the effect that the representations
and warranties of the Company contained in this
Agreement are true and correct on and as of the
Closing Date and that the Company has complied with
all of the agreements and satisfied all of the
conditions on its part to be performed or satisfied
hereunder on or before the Closing Date.
(b) (i) Since the date of the latest balance
sheet included in the Registration Statement and the
Prospectus, there shall not have been any material
adverse change, or any development involving a
prospective material adverse change, in the
condition, financial or otherwise, or in the
earnings, affairs or business prospects, whether or
not arising in the ordinary course of business, of
the Company, (ii) since the date of the latest
balance sheet included in the Registration Statement
and the Prospectus there shall not have been any
change, or any development involving a prospective
material adverse change, in the capital stock or in
the long-term debt of the Company from that set forth
in the Registration Statement and Prospectus,
(iii) the Company and its subsidiaries shall have no
liability or obligation, direct or contingent, which
is material to the Company and its subsidiaries,
taken as a whole, other than those reflected in the
Registration Statement and the Prospectus and (iv) on
the Closing Date the Underwriters shall have received
a certificate dated the Closing Date, signed by the
President or Senior Vice President and the principal
financial or accounting officer of the Company,
confirming the matters set forth in this paragraph
(b) of this Section 10.
(c) You shall have received on the Closing Date
an opinion (satisfactory to you and counsel for the
Underwriters), dated the Closing Date, of Jenkens &
Gilchrist, a Professional Corporation, counsel for
the Company, to the effect that:
(i) The Company is a corporation duly
incorporated and validly existing in good
standing under the laws of the State of Delaware
with requisite corporate power and authority to
own, lease and operate its properties and to
conduct its business as described in the
Registration Statement and the Prospectus (and
any amendment or supplement thereto) and to
enter into and perform its obligations under
this Agreement, and is duly registered and
qualified to conduct its business and is in good
standing in each jurisdiction or place where the
nature of its properties or the conduct of its
business requires such registration or
qualification, except where the failure so to
register or qualify does not have a material
adverse effect on the condition (financial or
other), business, properties, net worth or
results of operations of the Company and its
subsidiary taken as a whole.
(ii) The Company's subsidiary is a
corporation duly incorporated and validly
existing in good standing under the laws of the
jurisdiction of its organization, with requisite
corporate power and authority to own, lease, and
operate its properties and to conduct its
business as described in the Registration
Statement and the Prospectus (and any amendment
or supplement thereto); and all the outstanding
shares of capital stock of the Company's
subsidiary have been duly authorized and validly
issued, are fully paid and nonassessable, and,
to the knowledge of such counsel, are owned by
the Company directly, free and clear of any
security interest, or lien, adverse claim,
equity or other encumbrance except for the
security interest granted to INCC pursuant to
the Credit Agreement.
(iii) The Shares to be issued and sold
by the Company hereunder, when issued and
delivered to the Underwriters against payment
therefore as provided by this Agreement, will
have been validly issued and will be fully paid
and non-assessable, and the issuance of such
Shares is not subject to any statutory, charter
or, to the knowledge of such counsel,
contractual preemptive or similar rights; the
form of certificates used to evidence the Common
Stock is in due and proper form and complies
with all applicable requirements of the charter
and by-laws of the Company and the General
Corporation Law of the State of Delaware; the
authorized capital stock of the Company is as
set forth under the caption "Capitalization" in
the Prospectus; the authorized capital stock of
the Company conforms in all material respects as
to legal matters to the description thereof
contained in the Prospectus under the caption
"Description of Capital Stock;" the four million
shares of Common Stock issued in the Company's
public offering that closed on August 6, 1993
and the shares of Common Stock owned by the
Selling Stockholder have been duly issued and
are fully paid, non-assessable and not subject
to any preemptive or, to the knowledge of such
counsel, contractual preemptive rights or
similar rights.
(iv) The Shares to be sold by the Selling
Stockholder to the several Underwriters
hereunder have been duly authorized, and when
delivered to the Underwriters against payment
therefor as provided by this Agreement, will
have been validly issued and will be fully paid
and non-assessable, and are not subject to any
preemptive, or to the knowledge of such counsel,
contractual preemptive or similar rights.
(v) This Agreement has been duly
authorized, executed and delivered by the
Company and is a valid and binding agreement of
the Company enforceable against the Company in
accordance with its terms, except to the extent
that rights to indemnification thereunder may be
limited by federal or state securities laws and
policies embodied therein, or to the extent that
such obligations are subject to or affected or
limited by (i) applicable liquidation,
conservatorship, bankruptcy, insolvency,
reorganization, fraudulent conveyance,
moratorium or other laws affecting creditors'
rights or in the collection of debtors'
obligations generally from time to time in
effect, or (ii) general principles of equity
(whether enforceability is considered in a
proceeding in equity or at law), including the
qualification that the availability of the
remedy of specific performance or injunction
relief or other equitable remedies is subject to
the discretion of the court before which any
such proceeding therefor may be brought and
including standards of good faith, fair dealing
and reasonableness that may be applied by a
court to the exercise of certain rights and
remedies.
(vi) The Registration Statement has become
effective under the Securities Act; to such
counsel's knowledge, any required filings of the
Prospectus, and any supplements thereto,
pursuant to Rule 424(b) of the Rules and
Regulations have been made in the manner and
within the time period required by such
Rule 424(b); and, to such counsel's knowledge,
no stop order suspending its effectiveness has
been issued and no proceedings for that purpose
are, to the knowledge of such counsel, pending
before or contemplated by the Commission.
(vii) To such counsel's knowledge,
there are no legal or governmental proceedings
pending or threatened which are required to be
disclosed in the Registration Statement, other
than those disclosed therein.
(viii) The statements in the Prospectus
under "Risk Factors--Shares Eligible for Future
Sale," "Management's Discussion and Analysis of
Financial Condition and Results of Operations of
the Company--Capital Resources and Liquidity,"
"Business-- Regulation," "Business--Title to
Properties," "Selling Stockholder," "Shares
Eligible for Future Sale," "Description of
Capital Stock," and "Underwriting," in each case
insofar as such statements constitute summaries
of the legal matters, documents or proceedings
referred to therein, when read together with
related information contained in the
Incorporated Documents, fairly present, in all
material respects, the information called for
with respect to such legal matters, documents
and proceedings referred to therein and fairly
summarize, in all material respects, the matters
referred to therein (it being understood that
such counsel expresses no opinion as to factual
matters or as to the financial statements or
schedules or other financial, statistical or
reserve data included in the Registration
Statement or Prospectus or any amendments or
supplements thereto specifically).
(ix) To such counsel's knowledge, there
are no contracts, indentures, mortgages, loan
agreements, notes, leases or other instruments
required to be described or referred to in the
Registration Statement or to be filed as
exhibits thereto other than those described or
referred to therein or filed as exhibits
thereto, and the descriptions thereof and
references thereto are correct in all material
respects.
(x) To such counsel's knowledge, neither
the Company nor its subsidiary is in violation
of its respective charter or bylaws and, to such
counsel's knowledge, neither the Company nor any
of its subsidiaries is in default in the
performance of any obligation, debenture, note
or any other evidence of indebtedness or in any
other agreement, indenture or instrument, except
for any default which will not have a material
adverse effect to the Company and its subsidiary
taken as a whole.
(xi) The execution, delivery and
performance of this Agreement by the Company,
the issuance and the sale of the Shares to be
sold to the several Underwriters by the Company
and the sale of the Shares to be sold to the
several Underwriters by the Selling Stockholder
hereunder will not require the Company to obtain
any consent, approval, authorization or other
order of any court, regulatory body,
administrative agency or other governmental body
(except as such has been obtained or may be
required under the Securities Act and the Rules
and Regulations or other securities or blue sky
laws) and will not conflict with or constitute a
breach of any of the terms or provisions of, or
a default under, the charter or bylaws of the
Company or its subsidiary or, to such counsel's
knowledge, any agreement indenture or other
instrument or, to such counsel's knowledge,
violate or conflict with any laws,
administrative regulations or rulings or court
decrees applicable to the Company or its
subsidiaries or their respective properties
except for any such conflict, breach, violation
or default that is not material to the business
of the Company and its subsidiary taken as a
whole.
(xii) Such counsel does not know of any
legal or governmental proceedings pending or
threatened to which the Company or its
subsidiary is a party or to which any of their
respective property is subject which is required
to be described in the Registration Statement or
the Prospectus and is not so described.
(xiii) To such counsel's knowledge,
(1) except as described in the Prospectus, no
holder of any security of the Company has any
right to require registration of shares of
Common Stock or any other security of the
Company and (2) there are no rights of any
security holders of the Company to require
registration of any shares of Common Stock or
other securities of the Company because of the
filing of the Registration Statement and the
consummation of the transactions contemplated
therein, except such rights as have been
effectively waived.
(xiv) Except for the consent of the
Selling Stockholder to the number of Shares to
be sold by it pursuant to Section 2 of this
Agreement, no vote or consent of any stockholder
of the Company, and no consent, approval or
waiver of any party to or any person entitled to
any right or benefit under the Company's charter
or by-laws or, to such counsel's knowledge, any
other instrument or agreement to which the
Company is a party or by which it is bound
or under which it is entitled to any right or
benefit, is required in connection with the
offering, sale or purchase by the Underwriter of
any of the Shares under this Agreement or the
consummation of any of the other transactions
contemplated by this Agreement.
(xv) To such counsel's knowledge, there
are no persons with registration or other
similar rights to have any securities (debt or
equity) (A) registered pursuant to the
Registration Statement or included in the
offerings contemplated by this Agreement except
for the Selling Stockholder or (B) except for
such rights as are accurately described, in all
material respects, in the Prospectus under
"Shares Eligible for Future Sale", except such
rights as have been waived.
(xvi) The Company is not an "investment
company" or an entity "controlled" by an
"investment company," as such terms are defined
in the Investment Company Act.
(xvii) Each of the Incorporated
Documents (except for the financial statements,
schedules and notes thereto and other financial,
statistical and reserve data, as amended,
included therein, as to which counsel need not
express any opinion), when they were filed (or,
if an amendment with respect to any Incorporated
Document was filed, when such amendment was
filed) complied as to form in all material
respects with the Exchange Act and the rules and
regulations promulgated thereunder.
(xviii) The Registration Statement and
the Prospectus and any supplement or amendment
thereto (except for financial statements,
schedules and other financial, statistical and
reserve data, as to which no opinion need be
expressed) comply as to form in all material
respects with the Securities Act and the Rules
and Regulations.
(xix) Such counsel has participated in
conferences with officers and other
representatives of the Company and
representatives of the independent public
accountants for the Company and with your
representatives at which the contents of the
Registration Statement and the Prospectus, and
any supplements or amendments thereto, and
related matters were discussed and, although
such counsel is not passing upon and does not
assume any responsibility for the accuracy,
completeness or fairness of the statements
contained in the Registration Statement or the
Prospectus (other than as specified above in
clause viii), and any supplements or amendments
thereto, on the basis of the foregoing, nothing
has come to such counsel's attention that would
lead them to believe that either the
Registration Statement or any amendments thereto
at the time the Registration Statement or such
amendments became effective, contained an untrue
statement of a material fact necessary in order
to make the statements therein, in the light of
the circumstances under which they were made,
not misleading (it being understood that such
counsel need express no belief as to the
financial statements or schedules or other
financial, statistical or reserve data included
in the Registration Statement or the Prospectus
or any amendments or supplements thereto).
In rendering such opinion, such counsel may rely
(A) as to matters involving the application of laws
of any jurisdiction other than the State of Texas,
the General Corporation Law of the State of Delaware,
or the federal law of the United States, to the
extent they deem proper and specified in such
opinion, upon the opinion (which shall be dated the
Closing Date, shall be satisfactory in form and
substance to the Underwriter, shall expressly state
that the Underwriter may rely on such opinion as if
it were address to them and shall be furnished to the
Underwriter) of other counsel of good standing whom
they believe to be reliable and who are satisfactory
to counsel for the Underwriter, provided that
Jenkens & Gilchrist, a Professional Corporation,
shall further state that they believe that they and
the Underwriters are justified in relying upon such
opinion of other counsel, and (B) as to matters of
fact, to the extent they deem proper, on certificates
of responsible officers of the Company and public
officials.
The opinion described in this paragraph (c)
shall be rendered to you at the request of the
Company and shall so state therein. References to
the Prospectus in this paragraph (c) include any
supplements thereto at the Closing Date.
(d) You shall have received on the Closing Date
the opinion of Ropes & Gray, counsel for the Selling
Stockholder, dated the Closing Date, to the effect
that:
(i) The Selling Stockholder has full
right, power and authority to enter into this
Agreement. The execution, delivery and
performance of this Agreement by the Selling
Stockholder and the consummation by the Selling
Stockholder of the transactions contemplated
thereby will not conflict with or result in a
breach or violation of any of the terms or
provisions of, or constitute a default under,
any statute, any indenture, mortgage, deed of
trust, loan agreement or other agreement or
instrument known to such counsel to which the
Selling Stockholder is a party or by which the
Selling Stockholder is bound or to which any of
the property or assets of the Selling
Stockholder is subject, nor will such actions
result in any violation of the provisions of the
Selling Stockholder's charter or by-laws or any
statute or any order, rule or regulation known
to such counsel of any court or governmental
agency or body having jurisdiction over the
Selling Stockholder or the property or assets of
the Selling Stockholder; and, except for the
registration of the Shares under the Securities
Act of 1933 and such consents, approvals,
authorizations, registrations, qualifications,
filings or registrations as may be required
under the Securities Exchange Act of 1934, as
amended and applicable state securities laws in
connection with the purchase and distribution of
the Shares by the Underwriters, no consent,
approval, authorization or order of, or filing
or registration with, any such court or
governmental agency or body is required for the
execution, delivery and performance of this
Agreement by the Selling Stockholder and the
consummation by the Selling Stockholder of the
transactions contemplated hereby.
(ii) This Agreement has been duly authorized,
executed and delivered by or on behalf of the
Selling Stockholder.
(iii) Immediately prior to the delivery of
certificates for the Shares by the Selling
Stockholder to the Underwriters, the Selling
Stockholder was the sole beneficial owner of the
Shares to be sold by the Selling Stockholder
under this Agreement, and such Shares were free
and clear of all liens in favor of the issuer
and any adverse claims. Upon completion of the
sale of the Shares by the Selling Stockholder to
the Underwriters, assuming that each of the
several Underwriters has purchased such Shares
in good faith and without notice of any such
lien or adverse claim or any other adverse claim
within the meaning of the Uniform Commercial
Code, such Underwriters will have all acquired
all rights of the Selling Stockholder in such
Shares free of any adverse claim.
In rendering such opinions, such counsel may
rely (A) as to matters involving the application of
laws of any jurisdiction other than the Commonwealth
of Massachusetts, the general corporation law of the
State of Delaware, the federal law of the United
States, to the extent such counsel deems proper and
specified in such opinion, upon the opinion (which
shall be dated the Closing Date, shall be
satisfactory in form and substance to the
Underwriter, shall be addressed to or shall expressly
state that the Underwriter may rely upon such opinion
as if it were addressed to them and shall be
furnished to the Underwriter) of other counsel of
good standing whom they believe to be reliable and
who are satisfactory to counsel for the Underwriter,
provided that such counsel shall further state that
they believe that they and the Underwriter are
justified in relying upon such opinion of other
counsel, and (B) as to matters of fact, to the extent
they deem proper, on representations of the Selling
Stockholder contained herein and on certificates of
the Selling Stockholder and public officials.
The opinions of such counsel described in this
paragraph (d) above shall be rendered to you at the
request of the Selling Stockholder and shall so state
therein.
(e) The Underwriters shall have received on the
Closing Date an opinion, dated the Closing Date, of
Holme Roberts & Owen LLC, counsel for the
Underwriters, as to the matters referred to in
clauses (v), (vi), (viii) (but only with respect to
the statements under the caption "Underwriting") and
(xviii) of the foregoing Section 10(c). In giving
such opinion with respect to the matters covered by
clause (xviii)(2) such counsel may state that their
opinion and belief are based upon their participation
in the preparation of the Registration Statement and
Prospectus and any amendments or supplements thereto
and review and discussion of the contents thereof,
but are without independent check or verification
except as specified.
(f) The Underwriters shall have received
letters dated as of the date hereof and as of the
Closing Date, in form and substance satisfactory to
you, from Ernst & Young LLP, independent public
accountants, with respect to the financial statements
and certain financial information relating to the
Company contained in the Registration Statement and
the Prospectus.
(g) The Underwriters shall have received
letters dated as of the date hereof and as of the
Closing Date, in form and substance satisfactory to
you, from Ryder Scott, with respect to the oil and
gas reserve information contained in the Registration
Statement and the Prospectus.
(h) The Underwriters shall have received from
the Company and the Selling Stockholder the lock-up
agreements specified in Section 2 hereof.
(i) The Underwriters shall have received on the
Closing Date a certificate, dated the Closing Date
and signed by the Selling Stockholder, to the effect
that the representations and warranties of the
Selling Stockholder set forth in this Agreement are
true and correct on and as of the Closing Date and
that the Selling Stockholder has complied with all of
the agreements and satisfied all of the conditions on
its part to be performed or satisfied hereunder on or
before the Closing Date.
(j) At the date of this Agreement and at the
Closing Date, the Company shall have furnished to the
Underwriters a certificate of the Company, signed by
the principal financial or accounting officer of the
Company, in form and substance satisfactory to the
Underwriters, to the effect that the signer of such
certificate has performed (or members of his staff
acting under his supervision have performed) certain
specified procedures as a result of which such signer
has determined that certain numerical and statistical
information set forth in the Registration Statement
and the Prospectus, and any supplements to the
Prospectus (and not covered by the letter or letters
delivered pursuant to Section 10(f) above) specified
by the Underwriters, has been derived from, and
agrees with, the records of the Company.
(k) The Company and the Selling Stockholder
shall not have failed at or before the Closing Date
to perform or comply with any of the agreements
herein contained and required to be performed or
complied with by the Company and the Selling
Stockholder at or before the Closing Date.
The obligation of the Underwriters to purchase
Additional Shares hereunder is subject to the satisfaction
on and as of the Option Closing Date of the conditions set
forth in this Section 10, except that, if the Option
Closing Date is other than the Closing Date, the
certificates, opinions and letters referred to in
Section 10 shall be dated as of the Option Closing Date
and the opinions called for by Sections 10(c), 10(d) and
(e) shall be revised to reflect the sale of the Additional
Shares.
11. Effective Date of Agreement and Termination.
This Agreement shall become effective upon the later of
(i) execution of this Agreement and (ii) when notification
of the effectiveness of the Registration Statement has
been released by the Commission.
This Agreement may be terminated at any time before
the Closing Date by you by written notice to the Company
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 adverse
change or development involving a prospective adverse
change in the condition, financial or otherwise, of the
Company or its subsidiary or the earnings, affairs, or
business prospects of the Company or its subsidiary,
whether or not arising in the ordinary course of business,
which would, in your reasonable judgment, make it
impracticable to market the Shares on the terms and in the
manner contemplated in the Prospectus, (ii) any outbreak
or escalation of hostilities or other national or
international calamity or crisis or change in economic
conditions or in the financial markets of the United
States or elsewhere that, in your reasonable judgment, is
material and adverse and would, in your reasonable
judgment, make it impracticable to market the Shares on
the terms and in the manner contemplated in the
Prospectus, (iii) the suspension or material limitation of
trading in securities on the New York Stock Exchange, the
American Stock Exchange or the NASDAQ Stock Market
National Market or limitation on prices for securities on
any such exchange or the National Market System, (iv) the
enactment, publication, decree or other promulgation of
any federal or state statute, regulation, rule or order of
any court or other governmental authority which in your
reasonable opinion materially and adversely affects, or
will materially and adversely affect, the business or
operations of the Company or its subsidiary, (v) the
declaration of a banking moratorium by either federal or
New York authorities or (vi) the taking of any action by
any federal, state or local government or agency in
respect of its monetary or fiscal affairs which in your
reasonable opinion has a material adverse effect on the
financial markets in the United States.
12. Miscellaneous. Notices given pursuant to any
provision of this Agreement shall be addressed as follows;
(a) if to the Company, to Cairn Energy USA, Inc.
8235 Douglas Avenue, Suite 1221, Dallas, Texas 75225,
Attention: Michael R. Gilbert, (b) if to the Selling
Stockholder, the Phemus Corporation, c/o John Halsted,
Harvard Management Company, 600 Atlantic Avenue, Boston,
Massachusetts 02203, with a copy to Larry Jordan Rowe,
Ropes & Gray, One International Place, Boston,
Massachusetts 02110, and (c) if to any Underwriter,
S.G.Warburg & Co. Inc., Attention: Syndicate Department,
277 Park Avenue, New York, New York 10172, with a copy to
Steven A. Cohen, Holme Roberts & Owen LLC, 1700 Lincoln
Street, Suite 4100, Denver, Colorado 80203, or in any
case to such other address as the person to be notified
may have requested in writing.
The respective indemnities, contribution agreements,
representations, warranties and other statements of the
Company, its officers and directors, the Selling
Stockholders and of the Underwriters set forth in or made
pursuant to this Agreement shall remain operative and in
full force and effect, and will survive delivery of and
payment of the Shares, regardless of (i) any
investigation, or statement as to the results thereof made
by or on behalf of the Underwriters or by or on behalf of
the Company or the Selling Stockholder, the officers or
directors of the Company or the Selling Stockholder or any
controlling person of the Company or the Selling
Stockholder, (ii) acceptance of the Shares and payment for
them hereunder and (iii) termination of this Agreement.
If this Agreement shall be terminated by the
Underwriters because of any failure or refusal on the part
of the Company or the Selling Stockholder to comply with
the terms or to fulfill any of the conditions of this
Agreement, the Company agrees to reimburse the
Underwriters for all out-of-pocket expenses (including the
fees and disbursements of counsel) reasonably incurred by
them.
Except as otherwise provided herein, this Agreement
has been and is made solely for the benefit of and shall
be binding upon the Company, the Selling Stockholder, the
Underwriters, any controlling persons referred to herein
and their respective successors and assigns, all as and to
the extent providing in this Agreement, and no other
person shall acquire or have any right under or by virtue
of this Agreement. The term "successors and assigns"
shall not include a purchaser of any of the Shares from
any of the several Underwriter merely because of such
purchase.
This Agreement shall be governed and construed in
accordance with the laws of the State of New York.
This Agreement may be signed in various counterparts
which together shall constitute one and the same
instrument.
[SIGNATURE PAGE(S) FOLLOW]
<PAGE>
Please confirm that the foregoing correctly sets
forth the agreement between the Company and the Selling
Stockholder and the Underwriters.
Very truly yours,
CAIRN ENERGY USA, INC.
By: __________________________
Name:
Title:
PHEMUS CORPORATION,
the Selling Stockholder
By: _________________________
Name:
Title:
By: _________________________
Name:
Title:
<PAGE>
The foregoing Agreement is hereby confirmed and accepted
as of the date first above written.
S.G.Warburg & Co. Inc.
Howard, Weil, Labouisse, Friedrichs
Incorporated
Petrie Parkman & Co., Inc.
Acting severally on behalf of themselves and the
several Underwriters named in Schedule I hereto.
S.G.WARBURG & CO. INC.
By:_____________________________
EXHIBIT J
PHEMUS CORPORATION
600 Atlantic Avenue
Boston, MA 02110
September 19, 1995
S.G. Warburg & Co. Inc.
277 Park Avenue
New York, New York 10172
Howard, Weil, Labouisse,
Friedrichs Incorporated
Energy Centre
1100 Poydras Street, Suite 900
New Orleans, Louisiana 70163
Petrie Parkman & Co., Inc.
475 Seventeenth Street, Suite 1100
Denver, Colorado 80202
Re: Agreement Not to Sell Stock
Dear Sirs:
This letter is being delivered to you in connection with the proposed
Underwriting Agreement (the "Underwriting Agreement") among Cairn Energy USA,
Inc., a Delaware corporation (the "Company"), Phemus Corporation, a
Massachusetts membership corporation (the "Selling Stockholder"), and S.G.
Warburg & Co. Inc., Howard, Weil, Labouisse, Friederichs Incorporated and
Petrie Parkman & Co., Inc. (collectively, the "Underwriters"), relating to an
underwritten public offering of shares (the "Shares") of Common Stock, par
value $.01 per share (the "Common Stock"), of the Company.
In order to induce you to enter into the Underwriting Agreement, and in
recognition of the benefits of the contemplated Common Stock offering to the
Company, the undersigned hereby covenants and agrees with the Underwriters, the
Company and the Selling Stockholder, and shall be deemed to represent and
warrant to the Underwriters on the date on which the Underwriting Agreement is
executed and on each date on which any Shares are sold under the Underwriting
Agreement, as follows:
The undersigned will not, without the prior written consent of S.G.
Warburg & Co. Inc. for a period of 180 days following the date of the
prospectus first used to confirm sales of Shares (the "Prospectus") (x)
directly or indirectly sell, offer or contract to sell, grant any option
for the sale of, or otherwise dispose of or transfer, or announce any
offering of the shares of Common Stock or any securities (debt or equity)
convertible into or exchangeable or exercisable for Common Stock other
than transfers to wholly-owned affiliates, or (y) cause to be filed any
registration statement under the Securities Act of 1933, as amended, with
respect to any of the foregoing.
If for any reason the Underwriting Agreement shall be terminated prior to
the Closing Date (as defined in the Underwriting Agreement), the agreement set
forth above shall likewise be terminated.
Yours very truly,
PHEMUS CORPORATION
By _________________________
Authorized Signatory
By _________________________
Authorized Signatory
