EXHIBIT 1.1
SUPERIOR WELL SERVICES, INC.
UNDERWRITING AGREEMENT
July 28, 2005
KeyBanc Capital Markets, a division of
McDonald Investments Inc.
As Representative of the several Underwriters
▇▇▇▇▇▇▇▇ Investment Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Superior Well Services, Inc., a Delaware corporation (the
"Company"), together with the stockholders of the Company listed in Schedule A
hereto (the "Selling Stockholders"), severally propose, subject to the terms and
conditions stated herein, to sell 5,620,000 shares (the "Firm Securities") of
common stock of the Company, par value $0.01 per share (the "Common Stock"), to
the several underwriters named in Schedule B hereto (the "Underwriters"), for
whom you are acting as Representative (the "Representative"). The Firm
Securities consist of 4,433,193 authorized but unissued shares of Common Stock
to be issued and sold by the Company and 1,186,807 outstanding shares of Common
Stock to be sold by the Selling Stockholders.
In addition, the Company also proposes to grant the
Underwriters an option to purchase up to 840,000 additional shares of Common
Stock, respectively (the "Optional Securities"). The Firm Securities and the
Optional Securities are hereinafter collectively referred to as the
"Securities." The Company and the Selling Stockholders hereby confirm the
agreement with you, acting as the Representative of the Underwriters.
On or prior to the First Delivery Date (as defined below), the
Company will complete a series of transactions (the "Formation Transactions")
described in the Prospectus (as defined below) under the caption "Certain
Relationships and Related Party Transactions--The Contribution Agreement." As
part of the Formation Transactions, certain persons and entities will contribute
interests in certain limited partnerships and limited liability companies to the
Company in exchange for shares of Common Stock in the Company. For the purpose
of this Agreement, "Formation Transaction Agreements" shall mean, collectively,
(i) the Contribution Agreement filed as Exhibit 1.2 to the Registration
Statement (the "Contribution Agreement") and (ii) the Registration Rights
Agreement filed as Exhibit 4.2 to the Registration Statement (the "Registration
Rights Agreement").
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters
that:
(a) The Company has prepared and filed with the
Securities and Exchange Commission (the "Commission") a
registration statement on Form S-1 (No. 333-124674) covering
the registration of the Securities under the Securities Act of
1933, as amended (the "Securities Act"), including the
preliminary prospectus relating to the Securities. Such
registration statement, including the exhibits thereto and
schedules thereto, at the time it became effective, is herein
called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the rules and
regulations of the Commission under the Securities Act (the
"Securities Act Regulations") is herein referred to as the
"Rule 462(b) Registration Statement," and after such filing
the term "Registration Statement" shall be deemed to include
the Rule 462(b) Registration Statement. Any preliminary
prospectus, included in such registration statement or filed
with the Commission pursuant to Rule 424(a) of the Securities
Act Regulations before a prospectus in final form is filed
with the Commission pursuant to Rule 424(b) of the Securities
Act Regulations is herein called a "Preliminary Prospectus."
The final prospectus, in the form first filed with the
Commission pursuant to Rule 424(b) of the Securities Act
Regulations is herein called the "Prospectus." For purposes of
this Agreement, all references to the Registration Statement,
any Preliminary Prospectus, the Prospectus or any amendment or
supplement to any of the foregoing shall be deemed to refer to
and include the copy filed with the Commission pursuant to its
Electronic Data Gathering, Analysis and Retrieval system
("▇▇▇▇▇").
(b) Each of the Registration Statement and any Rule
462(b) Registration Statement has been declared effective by
the Commission under the Securities Act. The Company has
complied to the Commission's satisfaction with all requests of
the Commission for additional or supplemental information. No
stop order suspending the effectiveness of the Registration
Statement or any Rule 462(b) Registration Statement is in
effect and no proceedings for such purpose have been initiated
or are pending or, to the Company's knowledge, are
contemplated by the Commission.
(c) The Preliminary Prospectus and the Registration
Statement comply, and the Prospectus and any further
amendments or supplements thereto will comply, in all material
respects, with the Securities Act and the Securities Act
Regulations. The Registration Statement, and any
post-effective amendment thereto, does not and will not
contain, as of the applicable effective date, 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. The Prospectus, and any
supplements thereto, as of its date or the date of such
supplement and on each Delivery Date, does not and 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
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misleading. The representations and warranties set forth in
the two immediately preceding sentences do not apply to
statements in or omissions from the Registration Statement,
any post-effective amendment thereto or the Prospectus or any
supplement thereto made in reliance upon and in conformity
with written information furnished to the Company by an
Underwriter expressly for inclusion therein, which information
consists solely of the information in the letter referred to
in Section 6(e). There are no contracts or other documents
required to be described in the Prospectus or filed as
exhibits to the Registration Statement that have not been
described or filed as required.
(d) The Preliminary Prospectus was, and the Prospectus
delivered to the Underwriters for use in connection with this
offering will be, identical to the versions of the Preliminary
Prospectus and Prospectus created to be transmitted to the
Commission for filing via ▇▇▇▇▇, except to the extent
permitted by Regulation S-T.
(e) The Company has been duly incorporated and is validly
existing and in good standing as a corporation under the
Delaware General Corporation Law (the "DGCL"), with the
requisite power and authority to own and lease its properties
and conduct its business as described in the Prospectus. The
Company is duly qualified to do business as a foreign
corporation in good standing in all jurisdictions in which its
ownership or lease of property or the conduct of its business
requires such qualification, except where the failure to be so
qualified would not, individually or in the aggregate, have a
material adverse effect on the financial condition, business,
properties, business prospects (other than as a result of an
event, circumstance or condition applicable to the oil and gas
or oilfield services industries as a whole) or results of
operations of the Company and the Subsidiaries (as defined
below) taken as a whole (a "Material Adverse Effect").
(f) As of the First Delivery Date, the Company will not
own or control, directly or indirectly, any corporation,
association or other entity other than those described in the
Prospectus under the caption "Certain Relationships and
Related Party Transactions--The Contribution Agreement" (each,
a "Subsidiary" and collectively, the "Subsidiaries"). All of
the outstanding limited partner interests or limited liability
company interests, as applicable, of each Subsidiary have been
duly authorized and validly issued, are fully paid (except to
the extent required under the respective limited partnership
agreements and limited liability company agreements of the
Subsidiaries, as applicable) and nonassessable (except as may
be limited by Section 18-607 of the Delaware Limited Liability
Company Act (the "Delaware LLC Act") and, as of the First
Delivery Date, will be owned by the Company, directly or
indirectly through subsidiaries, free and clear of all liens,
encumbrances, equities or claims,
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other than those arising under the respective limited
liability company agreements and limited partnership
agreements of the Subsidiaries.
(g) Each Subsidiary has been duly formed or organized, as
applicable, and is validly existing and in good standing as a
limited liability company or limited partnership, as
applicable, under the laws of the jurisdiction of its
formation or organization, as applicable, with the requisite
power and authority (limited liability company or limited
partnership, as applicable) to own and lease its properties
and conduct its business as described in the Prospectus. Each
Subsidiary is duly qualified to do business as a foreign
limited liability company or limited partnership, as
applicable, in good standing in all jurisdictions in which its
ownership or lease of property or the conduct of its business
requires such qualification, except where the failure to be so
qualified would not, individually or in the aggregate, have a
Material Adverse Effect.
(h) This Agreement has been duly authorized, executed and
delivered by the Company; and the Contribution Agreement and
the Registration Rights Agreement have been, duly authorized,
executed and delivered by the Company and each of the
Contribution Agreement and the Registration Rights Agreement
constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, except as
enforceability hereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting enforcement of creditors' rights or by general
equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law).
(i) The duly authorized, issued and outstanding
capitalization of the Company is as set forth under the
caption "Capitalization" in the Prospectus as of the date set
forth therein; all of the issued and outstanding shares of
capital stock of the Company are duly authorized and validly
issued, fully paid and nonassessable, are free of any
preemptive rights, rights of first refusal or similar rights,
were issued and sold in compliance with applicable federal and
state securities laws and conform in all material respects to
the description thereof in the Prospectus; except as described
in the Prospectus, there are no outstanding options, warrants
or other rights calling for the issuance of, and there are no
commitments, plans or arrangements to issue any shares of
capital stock of the Company or any security convertible or
exchangeable or exercisable for capital stock of the Company.
(j) The Common Stock conforms in substance in all
material respects to all statements in relation thereto
contained in the Registration Statement and the Prospectus;
the Securities to be sold by the Company pursuant to this
Agreement have been duly authorized and (i) when issued and
delivered pursuant to this Agreement, will be validly issued,
fully paid and nonassessable and (ii) will conform to the
description thereof contained in
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the Prospectus. All corporate action required to be taken for
the issuance of the Securities by the Company pursuant to this
Agreement has been validly taken. No preemptive rights of
security holders of the Company exist with respect to the
issuance and sale of the Common Stock by the Company pursuant
to this Agreement. The certificates for the Common Stock of
the Company are in due and legal form under Delaware law.
(k) Other than as described in the Prospectus, there are
no contracts, agreements or understandings between the Company
and any person granting such person the right to require the
Company to file a registration statement under the Securities
Act with respect to any shares of Common Stock or any other
securities of the Company owned or to be owned by such person
or to require the Company to include such Common Stock or
other securities in the Registration Statement. To the extent
any person has such registration or offer similar rights, such
rights have been waived with respect to the registration of
securities in connection with the Registration Statement.
(l) No consent, approval, authorization, or order of, or
filing or registration with, any governmental agency or body
or any court is required for the consummation of the
transactions contemplated by this Agreement and the Formation
Transaction Agreements, except such as (i) has been obtained
or made under the Securities Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act") or as may be
required by state securities or "blue sky" laws, (ii) may be
required by the bylaws and rules of the National Association
of Securities Dealers, Inc. (the "NASD") or NASD Regulation,
Inc. ("NASDR"), (iii) has been obtained under the
▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended (the "HSR Act") or (iv) is otherwise expressly
contemplated by the Contribution Agreement.
(m) The issuance and sale of the Securities and the
compliance by the Company with all of the provisions of this
Agreement and the Formation Transaction Agreements and the
consummation of the transactions contemplated herein and
therein will not conflict with, or result in a breach or
violation of any of the terms and provisions of, or constitute
a default under (i) the certificate of incorporation, by-laws,
limited partnership agreement, limited liability company
agreement or similar organizational documents of the Company
or any of the Subsidiaries, as applicable, (ii) any indenture,
mortgage, deed of trust, lease, loan agreement or other
agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the
Subsidiaries is bound or to which any of the property or
assets of the Company or any of the Subsidiaries is subject,
or (iii) any statute, law, order, rule or regulation of any
governmental agency or body or any court applicable to the
Company or any of the Subsidiaries or any of their property,
assets or operations, except, with respect to clause (ii), for
such conflicts, breaches, violations
5
or defaults that have been waived or as would not,
individually or in the aggregate, have a Material Adverse
Effect.
(n) None of the Company nor any of the Subsidiaries is in
violation of its certificate of incorporation, by-laws,
limited partnership agreement, limited liability company
agreement or similar organizational documents, as applicable,
or in default (or, with the giving of notice or lapse of time
or both, would be in default) under any indenture, mortgage,
deed of trust, lease, loan agreement or other agreement or
instrument to which the Company or any of the Subsidiaries is
a party or by which the Company or any of the Subsidiaries is
bound or to which any of the property or assets of the Company
or any of the Subsidiaries is subject, except for such
violations or defaults as would not, individually or in the
aggregate, have a Material Adverse Effect.
(o) Upon consummation of the Formation Transactions, the
Company and the Subsidiaries will have good and marketable
title in fee simple to all real property owned by them, and
good and marketable title to all other property owned by them,
in each case free from mortgages, pledges, liens, security
interests, claims, restrictions, encumbrances and defects of
any kind, except as (i) are described in the Prospectus or
(ii) such would not, individually or in the aggregate,
materially affect the value of such property or materially
interfere with the use made or to be made of such property by
them. All of the leases and subleases material to the business
of the Company and the Subsidiaries, and under which the
Company or any of its Subsidiaries holds the properties
described in the Prospectus, are in full force and effect, and
neither the Company nor any Subsidiary has any notice of any
material claim of any sort that has been asserted by anyone
adverse to the rights of the Company or any of its
Subsidiaries under any such leases or subleases, or affecting
or questioning the rights of the Company or such Subsidiary to
the continued possession of the leased or subleased property
under any such lease or sublease.
(p) The Company and the Subsidiaries possess such
certificates, permits, licenses, approvals, consents and other
authorizations (collectively, "Governmental Licenses") issued
by appropriate federal, state or local governmental or
regulatory agencies or bodies necessary to conduct the
businesses now operated by them; and the Company and the
Subsidiaries are in compliance with the terms and conditions
of all such Governmental Licenses, except where the failure to
so possess or comply would not, individually or in the
aggregate, have a Material Adverse Effect; all of the
Governmental Licenses are valid in full force and effect,
except where the invalidity of such Governmental Licenses or
the failure of such Governmental Licenses to be in full force
and effect would not have a Material Adverse Effect; and
neither the Company nor any of the Subsidiaries have received
any notice of proceedings relating to the revocation or
modification of any such Governmental Licenses that, if
6
determined adversely to the Company or any of the
Subsidiaries, would, individually or in the aggregate, have a
Material Adverse Effect.
(q) Except as disclosed in the Prospectus, there are no
legal or governmental actions, suits, arbitrations or other
proceedings pending as to which the Company or any of the
Subsidiaries is a party or of which any property of the
Company or any of the Subsidiaries is the subject that, if
determined adversely to the Company or any of the
Subsidiaries, could reasonably be expected to individually or
in the aggregate, have a Material Adverse Effect or could
reasonably be expected to materially and adversely affect the
ability of the Company to perform its obligations under this
Agreement; and no such actions, suits or proceedings are
threatened or, to the Company's knowledge, contemplated. No
labor dispute with the employees of the Company or any of the
Subsidiaries exists or, to the knowledge of the Company, is
threatened or imminent that could reasonably be expected to
have, individually or in the aggregate, a Material Adverse
Effect.
(r) The Company and the Subsidiaries own, possess or can
acquire on reasonable terms, adequate trademarks, trade names
and other rights to inventions, know-how, patents, copyrights,
confidential information and other intellectual property
(collectively, "intellectual property rights") necessary to
conduct the business now operated by them, or presently
employed by them, and have not received any notice of
infringement of or conflict with asserted rights of others
with respect to any intellectual property rights that, if
determined adversely to the Company or any of the
Subsidiaries, could reasonably be expected to, individually or
in the aggregate, have a Material Adverse Effect.
(s) Except as would not, individually or in the
aggregate, have a Material Adverse Effect, (i) neither the
Company nor any of the Subsidiaries is in violation of any
federal, state or local statute, rule, regulation, ordinance,
code, policy or rule of common law or any judicial or
administrative interpretation thereof, including any judicial
or administrative order, consent, decree or judgment, of any
governmental agency or body or any court relating to the
pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water,
groundwater, land surface, or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating
to the release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, "Hazardous
Materials") or to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, "Environmental Laws") and
(ii) the Company and its Subsidiaries have all permits,
authorizations and approvals required under any applicable
Environmental Laws and are each in compliance with their
requirements. There are no pending or, to the
7
knowledge of the Company, threatened administrative,
regulatory or judicial actions, suits, demands, demand
letters, claims, liens, notices of noncompliance or violation,
investigation or proceedings relating to any Environmental Law
against the Company or any of its Subsidiaries. To the
knowledge of the Company, there are no events or circumstances
that might reasonably be expected to form the basis of an
order for clean-up or remediation, or an action, suit or
proceeding by any private party or governmental body or
agency, against or affecting the Company or any of its
Subsidiaries relating to any Hazardous Materials or the
violation of any Environmental Laws that would, individually
or in the aggregate, have a Material Adverse Effect.
(t) [Intentionally omitted.]
(u) The Company and the Subsidiaries have (i) filed on a
timely basis all necessary federal, state, local and foreign
income and franchise tax returns required to be filed or have
duly requested extensions thereof; and (ii) paid all taxes
shown as due on such tax returns (including any related
assessments, fines or penalties), except for taxes being
contested in good faith for which reserves in accordance with
generally accepted accounting principles have been provided.
No tax deficiency has been asserted against the Company or any
of the Subsidiaries which has had, nor does the Company know
of any tax deficiency that is likely to be asserted against
the Company or any of the Subsidiaries which, if determined
adversely to the Company or any of the Subsidiaries, would
have, a Material Adverse Effect.
(v) The Company and each of the Subsidiaries maintain
insurance of the types and in the amounts generally deemed
adequate for their respective businesses and, to the Company's
knowledge, consistent with insurance coverage maintained by
similar companies in similar businesses.
(w) The Company and each of the Subsidiaries are in
compliance in all respects with all applicable provisions of
the Occupational Safety and Health Act of 1970, as amended,
including all applicable regulations thereunder, except for
such noncompliance as would not, individually or in the
aggregate, have a Material Adverse Effect.
(x) Except as described in the Prospectus, none of the
Subsidiaries is currently restricted, directly or indirectly,
from (i) paying any dividends or distributions to the Company,
(ii) repaying to the Company any loans or advances to such
Subsidiary from the Company or (iii) transferring any property
or assets to the Company or any other Subsidiary of the
Company.
(y) The pro forma consolidated financial statements of
the Company, the balance sheet of the Company and the
historical combined financial
8
statements of Superior Well Services, Ltd. ("Superior Ltd.")
and Bradford Resources, Ltd. ("Bradford Ltd.") included in the
Registration Statement and the Prospectus, together with the
related schedules and notes, fairly present in all material
respects the financial condition of the Company and of
Superior Ltd. and Bradford Ltd. on a pro forma consolidated or
historical combined basis, as applicable, as of the respective
dates indicated and the pro forma consolidated statements of
income of the Company and the combined statements of income,
cash flows and changes in partners' capital of Superior Ltd.
and Bradford Ltd. for the respective periods specified, in
each case in conformity with generally accepted accounting
principles applied on a consistent basis throughout the
periods involved (except as otherwise indicated in the notes
thereto) and in accordance with Regulation S-X promulgated by
the Commission. No other financial statements or supporting
schedules are required to be included in the Registration
Statement. The summary and selected pro forma consolidated
financial data of the Company and historical combined
financial data of Superior Ltd. and Bradford Ltd. included in
the Registration Statement and the Prospectus fairly present
in all material respects the information shown therein and
have been compiled on a basis consistent with that of the pro
forma consolidated financial statements of the Company and the
combined interim or audited financial statements of Superior
Ltd. and Bradford Ltd. included in the Registration Statement
and the Prospectus. The other financial information included
in the Registration Statement and the Prospectus has been
derived from the accounting records of the Company and the
Subsidiaries and present fairly, in all material respects, the
information shown thereby. The Company and the Subsidiaries do
not have any material liabilities or obligations, direct or
contingent (including any off-balance sheet obligations), not
disclosed in the Registration Statement and the Prospectus.
(z) Neither the Company nor any of the Subsidiaries has
sustained since the date of the last audited financial
statements included in the Registration Statement and the
Prospectus any loss or interference with its business material
to the Company and the Subsidiaries considered as a whole,
otherwise than as set forth or contemplated in the Prospectus.
Since the respective dates as of which information is given in
the Registration Statement and the Prospectus, there has not
been any (i) material change in the capitalization of the
Company or the Subsidiaries, (ii) material increase in the
aggregate in the consolidated short-term or long-term debt of
the Company, (iii) any transaction that is material to the
Company and the Subsidiaries contemplated or entered into by
the Company or any of the Subsidiaries, (iv) any obligation,
contingent or otherwise, directly or indirectly incurred by
the Company or any Subsidiary that is material to the Company
and its Subsidiaries taken as a whole or (v) any dividend or
distribution of any kind declared, paid or made by the Company
on any class of its capital stock, in each case
9
otherwise than as set forth or contemplated in the
Registration Statement and the Prospectus.
(aa) ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc., as of December 31, 2004
and during the periods covered by the balance sheet of the
Company and the combined financial statements of Superior Ltd.
and Bradford Ltd. and the related schedules and notes thereto
included in the Registration Statement and the Prospectus on
which they reported are independent registered public
accountants as required by the Securities Act and the
Securities Act Regulations. ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc. is
registered with the Public Company Accounting Oversight Board.
(bb) Each of the Company and the Subsidiaries maintains a
system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in
accordance with management's general or specific
authorization, (ii) transactions are recorded as necessary to
permit preparation of financial statements in accordance with
generally accepted accounting principles and to maintain
accountability for assets, (iii) access to its assets is
permitted only in accordance with management's general or
specific authorization and (iv) the recorded accountability
for assets is compared with the existing assets at reasonable
intervals and appropriate action is taken with respect to any
differences.
(cc) As of the date hereof, the Company is not aware of
(i) any "significant deficiency" or "material weakness" (in
each case, as defined in Public Company Oversight Board
Standard No. 2) in the Company's internal control over
reporting (as defined in Rule 13a-15(f)), whether or not
subsequently remediated, or (ii) any fraud, whether or not
material, that involves management or other employees who have
a significant role in the Company's internal control over
financial reporting.
(dd) Neither the Company or any Subsidiary, nor any of
their respective directors, manager, or partners, as
applicable, or officers, in their capacities as such, is in
material breach or violation of any provision of the Sarbanes
Oxley Act of 2002 and the rules and regulations promulgated in
connection therewith.
(ee) The statistical and market-related data included in
the Registration Statement and the Prospectus are based on or
derived from sources that the Company believes to be reliable
and accurate or represent the Company's good faith estimates
that are made on the basis of data derived from such sources.
(ff) The Company's class of common stock has been
registered under Section 12(g) of the Exchange Act, and the
Securities have been authorized for trading on the Nasdaq
National Market (the "Nasdaq").
10
(gg) Neither the Company, the Subsidiaries nor any of
their respective officers or directors has taken or will take,
directly or indirectly, any action designed to cause or result
in, or which has constituted or which might reasonably be
expected to constitute, the stabilization or manipulation of
the price of the Securities in order to facilitate the sale or
resale of the Securities or otherwise.
(hh) The Company is not, and after giving effect to the
offering and sale of the Securities and the application of the
proceeds thereof as described in the Prospectus will not be,
required to register as an "investment company" as such term
is defined under the Investment Company Act of 1940, as
amended (the "Investment Company Act").
(ii) As of or immediately prior to the First Delivery
Date, the Formation Transactions shall have become effective
in all respects as described in the Prospectus under the
caption "Certain Relationships and Related Party
Transactions--The Contribution Agreement."
2. Representations and Warranties of the Selling Stockholders.
Each Selling Stockholder, severally and not jointly, represents and
warrants to, and agrees with, the several Underwriters as follows:
(a) As of the First Delivery Date and the Optional
Delivery Date, as applicable, such Selling Stockholder will be
the record and beneficial owner of the Securities to be sold
by such Selling Stockholder under this Agreement, free and
clear of all adverse claims, except for those arising under
this Agreement; and upon delivery of and payment for such
Securities hereunder in accordance with the provisions of
Section 3(d) hereof, the several Underwriters will acquire a
security entitlement (as that term is defined in the Uniform
Commercial Code as in effect in the State of New York (the
"New York UCC") with respect to the Securities, and no action
based on an adverse claim (as that term is defined under the
New York UCC) to the Securities may be asserted against any of
the Underwriters, provided that each such Underwriter does not
have notice of any adverse claim (within the meaning of
Section 8-105 of the New York UCC). Such Selling Stockholder
is selling the Securities to be sold by such Selling
Stockholder for such Selling Stockholder's own account and is
not selling such Securities, directly or indirectly, for the
benefit of the Company, and no part of the proceeds of such
sale received by such Selling Stockholder will inure, either
directly or indirectly, to the benefit of the Company other
than as described in the Registration Statement and
Prospectus.
(b) Such Selling Stockholder has duly authorized,
executed and delivered a Custody Agreement ("Custody
Agreement"), which Custody Agreement is a valid and binding
obligation of such Selling Stockholder,
11
to the Company, as Custodian (the "Custodian"); pursuant to
the Custody Agreement the Selling Stockholder will, on or
prior to the First Delivery Date, place in custody with the
Custodian, for delivery under this Agreement, the certificates
representing the Securities to be sold by such Selling
Stockholder; as of the First Delivery Date, such certificates
will represent validly issued, outstanding, fully paid and
nonassessable shares of Common Stock; and, as of the First
Delivery Date, such certificates will be duly and properly
endorsed in blank for transfer, or will be accompanied by all
documents duly and properly executed that are necessary to
validate the transfer of title thereto, to the Underwriters,
free of any legend, restriction on transferability, proxy,
lien or claim, whatsoever.
(c) Such Selling Stockholder has the power and authority
to enter into this Agreement and each of the Formation
Transaction Agreements to which such Selling Stockholder is a
party, and to sell, transfer and deliver the Securities to be
sold by such Selling Stockholder pursuant to this Agreement;
and such Selling Stockholder has duly authorized, executed and
delivered to ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ and ▇▇▇▇ ▇.
▇▇▇▇▇▇, each as attorney-in-fact (the "Attorneys-in-Fact"), an
irrevocable power of attorney (a "Power of Attorney")
authorizing and directing the Attorneys-in-Fact to effect the
sale and delivery of the Securities being sold by such Selling
Stockholder, to enter into this Agreement and to take all such
other action as may be necessary hereunder.
(d) This Agreement, the Custody Agreement and the Power
of Attorney have each been duly authorized, executed and
delivered by or on behalf of such Selling Stockholder and each
of the Formation Transaction Agreements to which such Selling
Stockholder is a party constitutes a valid and binding
agreement of such Selling Stockholder, enforceable in
accordance with its terms, except as rights to indemnity
thereunder may be limited by federal or state securities laws
and except as enforceability hereof may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting enforcement of creditors' rights or by general
equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or at
law). The execution and delivery of this Agreement, the
Custody Agreement, the Power of Attorney and each of the
Formation Transaction Agreements to which such Selling
Stockholder is a party and the performance of the terms hereof
and thereof and the consummation of the transactions herein
and therein contemplated will not result in a breach or
violation of any of the terms and provisions of, or constitute
a default under, any agreement or instrument to which such
Selling Stockholder is a party or by which such Selling
Stockholder is bound, or any law, regulation, order or decree
applicable to such Selling Stockholder. No consent, approval,
authorization or order of, or filing with, any court or
governmental agency or body is required for the execution,
delivery and performance of this
12
Agreement, the Custody Agreement, the Power of Attorney and
each of the Formation Transaction Agreements to which such
Selling Stockholder is a party or for the consummation of the
transactions contemplated hereby and thereby, including the
sale of the Securities being sold by such Selling Stockholder,
except such as (i) has been obtained or made under the
Securities Act or the Exchange Act or as may be required by
state securities or "blue sky" laws, (ii) may be required by
the bylaws and rules of the NASD or NASDR, (iii) has been
obtained under the HSR Act, or (iv) is otherwise expressly
contemplated by the Contribution Agreement.
(e) Such Selling Stockholder has not distributed and will
not distribute any prospectus or other offering material in
connection with the offering and sale of the Securities other
than any Preliminary Prospectus or the Prospectus or other
materials permitted by the Securities Act to be distributed by
such Selling Stockholder.
(f) Other than as contemplated by this Agreement and
except as disclosed in the Registration Statement and
Prospectus, there is no broker, finder or other party that is
entitled to receive from such Selling Stockholder any
brokerage or finder's fee or any other fee, commission or
payment as a result of the transactions contemplated by this
Agreement.
3. Sale, Purchase and Delivery of Securities.
(a) On the basis of the representations, warranties and
agreements herein contained, but subject to the terms and
conditions herein set forth, (i) the Company agrees to issue
and sell 4,433,193 Firm Securities, and each Selling
Stockholder agrees, severally and not jointly, to sell the
number of Firm Securities set forth opposite the name of such
Selling Stockholder in Schedule A hereto, to the several
Underwriters, and each Underwriter agrees, severally and not
jointly, to purchase from the Company and the Selling
Stockholders the respective number of Firm Securities set
forth opposite the Underwriter's name in Schedule B hereto, at
a purchase price per share of $13.00, and (ii) in the event
and to the extent that the Underwriters shall exercise their
option to purchase Optional Securities as provided in Section
3(b) below, the Company agrees to issue and sell up to 840,000
Optional Securities. The number of Optional Securities to be
purchased by each Underwriter shall be the same percentage of
the total number of Optional Securities to be purchased by the
several Underwriters as the number of Firm Securities to be
purchased by such Underwriter is of the total number of Firm
Securities to be purchased by the several Underwriters, as
adjusted by the Representative in such manner as the
Representative deem advisable to avoid fractional shares. The
purchase price per share of the Optional Securities shall be
the same as that of the Firm Securities.
13
(b) The Company hereby grants to the Underwriters the
right to purchase, at their election the number of Optional
Securities indicated with respect to the Company in Section
3(a) above, at a purchase price per share equal to the
purchase price per share of the Firm Securities, for the sole
purpose of covering any over-allotments in connection with the
sale and distribution of the Firm Securities. Any such
election to purchase Optional Securities may be exercised only
by written notice from the Representative to the Company,
given within a period of 30 calendar days after the date of
this Agreement and setting forth the aggregate number of
Optional Securities to be purchased and the date on which such
Optional Securities are to be delivered, as determined by the
Representative but in no event earlier than the First Delivery
Date (as defined below) or, unless the Representative and the
Company otherwise agree in writing, no earlier than two or
later than ten business days after the date of such notice.
(c) The several Underwriters propose to offer the
Securities for sale upon the terms and conditions and in the
manner set forth in the Prospectus.
(d) The Securities to be purchased by each Underwriter
hereunder, in definitive form, and in such authorized
denominations and registered in such names as the
Representative may request upon at least forty-eight hours'
prior notice to the Company and the Custodian, shall be
delivered by or on behalf of the Company and the Custodian to
the Underwriters, through the facilities of the Depository
Trust Company ("DTC"), for the accounts of such Underwriters,
against payment by or on behalf of the Underwriter of the
purchase price therefor by wire transfer of federal (same-day)
funds to the account specified by the Company and the
Custodian to McDonald Investments Inc. at least forty-eight
hours in advance. The Company and the Custodian will cause the
certificates representing the Securities to be made available
for checking and packaging at least twenty-four hours prior to
the Delivery Date (as defined below) with respect thereto at a
location in New York, New York as may be designated by you or
at the office of DTC or its designated custodian. The date of
such delivery and payment shall be, with respect to the Firm
Securities, August 3, 2005 or such other time and date as the
Representative, the Company and the Custodian may agree upon
in writing, and, with respect to the Optional Securities, on
the date specified by the Representative in the written notice
given by the Representative of its election to purchase such
Optional Securities, or such date as the Representative, the
Company and the Custodian may agree upon in writing. Such date
for delivery of the Common Stock is herein called the "First
Delivery Date," such date for delivery of the Optional
Securities, if not the First Delivery Date, is herein called
an "Optional Delivery Date," and each such time and date for
delivery is herein called a "Delivery Date."
14
(e) Time shall be of the essence, and delivery at the
time and place specified pursuant to this Agreement is a
further condition of the obligations of the Underwriters
hereunder.
4. Certain Agreements of the Company. The Company covenants and
agrees with each of the Underwriters:
(a) To furnish such information as may be required and
otherwise to cooperate in qualifying the Securities for
offering and sale under the securities or blue sky laws of
such jurisdictions (both domestic and foreign) as the
Representative may designate and to maintain such
qualifications in effect as long as requested by the
Representative for the distribution of the Securities,
provided that the Company shall not be required to qualify as
a foreign corporation or to consent to the service of process
under the laws of any such state (except service of process
with respect to the offering and sale of the Securities).
(b) If, after the time this Agreement is executed and
delivered, it is necessary for a post-effective amendment to
the Registration Statement to be declared effective before the
offering of the Securities may commence, the Company will
endeavor to cause such post-effective amendment to become
effective as soon as possible and will advise the
Representative promptly and, if requested by the
Representative, will confirm such advice in writing, when such
post-effective amendment has become effective.
(c) To prepare the Prospectus in a form approved by the
Representative and to file such Prospectus pursuant to Rule
424(b) under the Securities Act Regulations not later than the
Commission's close of business on the second business day
following the execution and delivery of this Agreement, or, if
applicable, such earlier time as may be required by Rule
430A(a)(3) under the Securities Act Regulations; during the
period beginning on the date hereof and ending on the date,
which in the opinion of counsel for the Underwriters, a
prospectus is no longer required by law to be delivered in
connection with the offering and sales of the Securities, to
make no further amendment or any supplement to the
Registration Statement or Prospectus which shall be
disapproved by the Representative promptly after reasonable
notice thereof; to advise the Representative, promptly after
it receives notice thereof, of the time when any amendment to
the Registration Statement has been filed or becomes effective
or any supplement to the Prospectus or any amended Prospectus
has been filed and to furnish the Representative with copies
thereof; to file promptly, and in any event within the time
periods specified, all reports and any definitive proxy or
information statements required to be filed by the Company
pursuant to Sections 13(a), 13(c), 14 or 15(d) of the Exchange
Act subsequent to the date of the Prospectus for so long as
the delivery of a prospectus is required in connection with
the offering or sale of the Securities; to advise the
Representative, promptly after it receives
15
notice thereof, of the issuance by the Commission of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus, of the suspension of
the qualification of the Securities for offering or sale in
any jurisdiction, of the initiation or threatening of any
proceeding for any such purpose, or of any request by the
Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional
information; and, in the event of the issuance of any stop
order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or suspending any
such qualification, promptly to use its reasonable best
efforts to obtain the withdrawal of such order.
(d) No later than 12:00 p.m., New York City time, on the
second business day succeeding the date of this Agreement, and
from time to time, to furnish the Underwriters with written
and electronic copies of the Prospectus in such quantities as
the Representative may reasonably request, and, if the
delivery of a prospectus is required at any time prior to the
expiration of nine months after the time of issue of the
Prospectus in connection with the offering or sale of the
Securities and if at such time any events shall have occurred
as a result of which the Prospectus as then amended or
supplemented would include an untrue statement of a material
fact or omit to state any material fact necessary in order to
make the statements therein, in the light of the circumstances
under which they were made when such Prospectus is delivered,
not misleading, or, if for any other reason it shall be
necessary during such period to amend or supplement the
Prospectus in order to comply with the Securities Act, to
notify the Representative and upon its request to prepare and
furnish without charge to each Underwriter and to any dealer
in securities as many written and electronic copies as the
Representative may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which
will correct such statement or omission or effect such
compliance, and in case any Underwriter is required by law,
rule or regulation to deliver a prospectus in connection with
sales of any of the Securities at any time nine months or more
after the time of issue of the Prospectus, upon the request of
the Representative but at the expense of such Underwriter, to
prepare and deliver to such Underwriter as many written and
electronic copies as the Representative may reasonably request
of an amended or supplemented Prospectus complying with
Section 10(a)(3) of the Securities Act.
(e) To make generally available to its securityholders
via ▇▇▇▇▇ within the required time periods after the effective
date of the Registration Statement (as the term "effective
date" is defined in Rule 158(c) under the Securities Act), an
earnings statement of the Company and its consolidated
subsidiaries (which need not be audited) complying with the
provisions of Section 11(a) of the Securities Act and the
Securities Act
16
Regulations (including, at the option of the Company, Rule 158
under the Securities Act).
(f) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date
of the Prospectus, except as provided hereunder, not to,
directly or indirectly, offer, sell, contract to sell, pledge
or otherwise dispose of (or enter into any transaction or
device which is designed to, or could be expected to, result
in the disposition of) any shares of Common Stock or any
securities that are substantially similar to the Common Stock
or securities convertible into or exchangeable for Common
Stock or any securities that are substantially similar to the
Common Stock, or sell or grant options, rights or warrants
with respect to any shares of Common Stock or any securities
that are substantially similar to Common Stock or securities
convertible into or exchangeable for Common Stock or any
securities that are substantially similar to Common Stock, or
publicly announce the intention to do any of the foregoing
(other than pursuant to employee option plans existing on the
date of this Agreement), without the prior written consent of
McDonald Investments Inc., provided, however, that,
notwithstanding the foregoing, if (i) during the last 17 days
of the 180 day restricted period, the Company issues an
earnings release or material news or a material event relating
to the Company occurs or (ii) prior to the expiration of the
180 day restricted period, the Company announces that it will
release earnings results during the 16 day period beginning on
the last day of the 180 day period, the restrictions imposed
in this Section 4(f) shall continue to apply until the
expiration of the 18 day period beginning on the issuance of
the earnings release or the occurrence of the material news or
material event. The foregoing sentence shall not prohibit the
issuance of (i) any shares of Common Stock issued or options
to purchase Common Stock or other Common Stock-based awards,
in each case granted pursuant to any equity compensation plan
or agreement referred to in the Prospectus or (ii) any shares
of Common Stock that are issued pursuant to the transactions
contemplated by the Contribution Agreement.
(g) During a period of two years from the effective date
of the Registration Statement, to deliver or to make available
via ▇▇▇▇▇ to the Representative promptly after they become
available, copies of any reports and financial statements
furnished by the Company to its stockholders or filed with the
Commission, the NASD or any national securities exchange on
which the Common Stock is listed.
(h) To use the net proceeds received by it from the sale
of the Securities pursuant to this Agreement in the manner
specified in the Prospectus under the caption "Use of
Proceeds."
(i) To use its best efforts to list, subject to official
notice of issuance, the Securities on the Nasdaq prior to the
First Delivery Date and to
17
maintain such listing and to file with the Nasdaq all
documents and notices required in connection therewith.
(j) To engage and maintain, at its expense, a registrar
and transfer agent for the Securities.
(k) Not to, and to use its best efforts to cause its
officers, directors and affiliates not to, (i) take, directly
or indirectly prior to termination of the underwriting
syndicate contemplated by this Agreement, any action designed
to stabilize or manipulate the price of any security of the
Company, or which may cause or result in, or which might in
the future 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 any of the
Securities, (ii) sell, bid for, purchase or pay anyone any
compensation for soliciting purchases of the Securities or
(iii) pay or agree to pay any person any compensation for
soliciting any order to purchase any other securities of the
Company.
(l) To cause each person listed on Schedule D hereto to
furnish to the Representative, prior to the First Delivery
Date, a letter or letters, substantially in the form of
Schedule C hereto, pursuant to which each such person shall
agree not to, except as provided by this Agreement, directly
or indirectly (1) offer for sale, sell, pledge or otherwise
dispose of (or enter into any transaction or device which is
designed to, or could be expected to, result in the
disposition by any person at any time in the future of) any
shares of Common Stock or securities convertible into or
exchangeable for Common Stock or (2) enter into any swap or
other derivatives transaction that transfers to another, in
whole or in part, any of the economic benefits or risks of
ownership of such shares of Common Stock, whether any such
transaction described in clause (1) or (2) above is to be
settled by delivery of Common Stock or other securities, in
cash or otherwise, in each case for a period of 180 days from
the date of the Prospectus, without the prior written consent
of the Representative on behalf of the Underwriters.
Notwithstanding the foregoing, each person listed on Schedule
D hereto shall be entitled to transfer and assign shares of
Common Stock (i) in the case of any such person that is a
corporation, partnership, limited liability company or other
entity (an "Entity"), to any other Entity that controls, is
controlled by or is under common control with such Entity or
to any equity holder of such Entity and (ii) in the case of
any such person that is an individual, to a trust or limited
partnership for the benefit of such person's spouse or members
of such person's immediate family; provided that, in each
case, such transferee or assignee of shares of Common Stock
shall furnish to the Representative a letter substantially in
the form of Schedule C hereto prior to any such transfer.
(m) To comply with all of the provisions of any
undertakings in the Registration Statement.
18
5. Certain Agreements of the Selling Stockholders
Each Selling Stockholder, severally and not jointly, covenants and
agrees with each of the Underwriters as follows:
(a) Such Selling Stockholder will pay all taxes, if any,
on the transfer and sale, respectively, of the Securities
being sold by such Selling Stockholder and the fees of such
Selling Stockholder's counsel.
(b) [Intentionally omitted.]
(c) The Securities to be sold by such Selling
Stockholder, represented by the certificates to be deposited
with the Custodian pursuant to the Custody Agreement of such
Selling Stockholder, will be subject to the interest of the
several Underwriters and the other Selling Stockholders; the
arrangements made for such custody are, except as specifically
provided in the Custody Agreement, irrevocable; and the
obligations of such Selling Stockholder hereunder shall not be
terminated, except as provided in this Agreement or in the
Custody Agreement, by any act of such Selling Stockholder, by
operation of law, whether by the liquidation, dissolution or
merger of such Selling Stockholder, by the death of such
Selling Stockholder, or by the occurrence of any other event.
If any Selling Stockholder should liquidate, dissolve or be a
party to a merger or if any other such event should occur
before the delivery of the Securities hereunder, certificates
for the Securities deposited with the Custodian shall be
delivered by the Custodian in accordance with the terms and
conditions of this Agreement as if such liquidation,
dissolution, merger or other event had not occurred, whether
or not the Custodian shall have received notice thereof.
(d) During the period beginning from the date hereof and
continuing to and including the date 180 days after the date
of the Prospectus, except as provided in this Agreement, such
Selling Stockholder will not, directly or indirectly, offer,
sell, contract to sell, pledge or otherwise dispose of (or
enter into any transaction or device which is designed to, or
could be expected to, result in the disposition of) any shares
of Common Stock or any securities that are substantially
similar to the Common Stock or securities convertible into or
exchangeable for Common Stock or any securities that are
substantially similar to the Common Stock, or sell or grant
options, rights or warrants with respect to any shares of
Common Stock or any securities that are substantially similar
to Common Stock or securities convertible into or exchangeable
for Common Stock or any securities that are substantially
similar to Common Stock, or publicly announce the intention to
do any of the foregoing, without the prior written consent of
McDonald Investments Inc., provided, however, that,
notwithstanding the foregoing, if (i) during the last 17 days
of the 180 day restricted period, the Company issues an
earnings release or material news
19
or a material event relating to the Company occurs or (ii)
prior to the expiration of the 180 day restricted period, the
Company announces that it will release earnings results during
the 16 day period beginning on the last day of the 180 day
period, the restrictions imposed in this Section 5(d) shall
continue to apply until the expiration of the 18 day period
beginning on the issuance of the earnings release or the
occurrence of the material news or material event.
(e) The Selling Stockholder will not, without the prior
written consent of McDonald Investments Inc., within 180 days
after the date of the Prospectus, make any demand for or
exercise any right with respect to, the registration of any
shares of Common Stock or any security convertible into or
exercisable or exchangeable for Common Stock.
(f) Such Selling Stockholder has not taken and will not
take, directly or indirectly, any action designed to or which
might reasonably be expected to cause or result in
stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the
Securities, and has not effected any sales of Common Stock
which, if effected by the Company, would be required to be
disclosed in response to Item 701 of Regulation S-K.
(g) Such Selling Stockholder shall immediately notify you
if such Selling Stockholder has knowledge of any event that
occurs, or of any change in information relating to such
Selling Stockholder, which results in the Prospectus (as
supplemented) including an untrue statement of a material fact
or omitting to state any material fact necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading.
6. Expenses. The Company will pay or cause to be paid: (a) the
fees, disbursements and expenses of the Company's counsel and
accountants in connection with the registration of the Securities under
the Securities Act and all other expenses in connection with the
preparation, printing and filing of the Registration Statement, any
Preliminary Prospectus and the Prospectus and amendments and
supplements thereto and the mailing and delivering of copies thereof to
the Underwriters and dealers; (b) the cost of printing or producing of
a reasonable number of each of this Agreement, any underwriting and
selling group documents, a Blue Sky Memorandum, closing documents
(including any compilations thereof) and any other documents in
connection with the offering, purchase, sale and delivery of the
Securities; (c) all expenses in connection with the qualification of
the Securities for offering and sale under state securities laws as
provided in Section 4(a) hereof, including the reasonable fees and
disbursements of counsel for the Underwriters in connection with such
qualification and in connection with the Blue Sky Memorandum; (d) all
fees and expenses in connection with listing the Securities on the
Nasdaq; (e) the filing fees incident to, securing any required review
by the National Association of
20
Securities Dealers, Inc. of the terms of the sale of the Securities;
(f) the cost of preparing share certificates; (g) the cost and charges
of any transfer agent or registrar; and (h) all other costs and
expenses incident to the performance of its obligations hereunder which
are not otherwise specifically provided for in this Section. Except as
specifically provided in clause (c) above, the Company shall have no
liability for fees or disbursements of counsel for the Underwriters in
connection with the transactions contemplated by this Agreement.
7. Conditions of the Obligation of the Underwriters. The
obligations of the several Underwriters hereunder shall be subject to
the accuracy, when made and on each Delivery Date, of the
representations and warranties of the Company contained herein, to the
performance by the Company of its obligations hereunder, and to each of
the following additional conditions:
(a) The Prospectus shall have been filed with the
Commission pursuant to Rule 424(b) within the applicable time
period prescribed for such filing by the Securities Act
Regulations and in accordance with Section 4(c) hereof; no
stop order suspending the effectiveness of the Registration
Statement or any part thereof shall have been issued and no
proceedings for that purpose shall have been initiated or
threatened by the Commission; and all requests for additional
information on the part of the Commission shall have been
complied with to the reasonable satisfaction of the
Representative.
(b) The Underwriters shall not have discovered and
disclosed to the Company prior to or on such Delivery Date
that the Registration Statement, any Preliminary Prospectus or
the Prospectus or any amendment or supplement thereto contains
any untrue statement of fact that, in the opinion of counsel
for the Underwriters, is material or omits to state a fact
that is material and is required to be stated therein or is
necessary to make the statements therein not misleading.
(c) ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, counsel for the Company, shall
have furnished to the Representative their written opinion,
dated such Delivery Date, in form and substance satisfactory
to the Representative, to the effect that:
(i) The Company has been duly incorporated and
is validly existing and in good standing as a
corporation under the laws of the State of Delaware,
with the requisite power and authority to own and
lease its properties and conduct its business as
described in the Prospectus; and the Company is duly
qualified to do business as a foreign corporation in
good standing in each jurisdiction and as of the
dates listed on Exhibit A attached to such opinion.
21
(ii) Each Subsidiary of the Company has been duly
formed or organized, as applicable, and is validly
existing and in good standing as a limited liability
company or limited partnership, as applicable, under
the laws of the jurisdiction of its formation or
organization, as applicable, with the requisite power
and authority (limited liability company or limited
partnership, as applicable) to own and lease its
properties and conduct its business as described in
the Prospectus; and each Subsidiary is duly qualified
to do business as a foreign limited liability company
or limited partnership, as applicable, in good
standing in each jurisdiction and as of the dates
listed on Exhibit B attached to such opinion.
(iii) The Company's authorized, issued and
outstanding shares of Common Stock are as described
in the Prospectus in the first paragraph under the
caption "Description of Capital Stock." Except as
described in the Prospectus, there are no outstanding
options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights
to convert any obligation into or exchange any Common
Stock or other ownership interests in the Company or
any security convertible or exchangeable or
exercisable for Common Stock or other ownership
interests in the Company. All of the outstanding
limited partner interests or limited liability
company interests, as applicable, of each Subsidiary
have been duly authorized and validly issued, are
fully paid (except to the extent required under the
respective limited liability company agreements and
limited partnership agreements of the Subsidiaries,
as applicable) and nonassessable (except as may be
limited by Section 18-706 of the Delaware LLC Act)
and are owned by the Company, directly or indirectly
through Subsidiaries, to such counsel's knowledge,
free and clear of all liens, encumbrances, equities
or claims, other than those arising under the
respective limited liability company agreements and
limited partnership agreements of the Subsidiaries,
and are free of any preemptive rights or similar
rights.
(iv) Each of the Selling Stockholders is the sole
record and beneficial owner of the Securities to be
sold by such Selling Stockholder pursuant to this
Agreement.
(v) Upon (i) payment for the Securities to be
sold by each Selling Stockholder pursuant to this
Agreement, (ii) physical delivery of the certificates
representing the Securities to the American Stock
Transfer & Trust Company in its capacity as the
Company's transfer agent (the "Transfer Agent"), and
registration of the Securities in the name of The
Depository Trust Company ("DTC") or its nominee upon
registration of the transfer by the Transfer Agent
acting on behalf of the Company, on the
22
Company's share registry, and (iii) appropriate
crediting on the books of DTC to the securities
account of the Underwriters in accordance with the
New York UCC, (A) DTC will be a "protected purchaser"
of such Securities within the meaning of Section
8-303 of the New York UCC (assuming that DTC does not
have notice of any adverse claim to such securities),
(B) under Section 8-501 of the New York UCC, the
Underwriters will acquire a valid security
entitlement of such security entitlements and (C) no
action based on any "adverse claim" (within the
meaning of Section 8-102(a)(l) of the New York UCC)
to such Securities may be asserted against the
Underwriters with respect to such securities
entitlements (assuming that the Underwriters acquire
such security entitlement without notice of any
adverse claims).
(vi) The Custody Agreement and the Power of
Attorney are valid and binding agreements of the
Selling Stockholders, enforceable in accordance with
their respective terms (except as rights to indemnity
hereunder or thereunder may be limited by federal or
state securities laws and except as such
enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting
creditors' rights generally and subject to general
principles of equity).
(vii) This Agreement has been duly authorized,
executed and delivered by the Company.
(viii) Each of the Formation Transaction Agreements
has been duly authorized, executed and delivered by
the Company and constitutes a valid and binding
obligation of the Company enforceable in accordance
with its terms, except as enforceability thereof may
be limited by bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting enforcement of
creditors' rights or by general equitable principles
(regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(ix) The Securities have been duly authorized by
the Company and, when issued and delivered against
payment therefor in accordance with this Agreement,
will be validly issued, fully paid and nonassessable
and free and clear of all liens, encumbrances,
equities or claims. The issuance and sale of the
Securities will not be subject to any preemptive or
similar rights and the Securities will conform in all
material respects to the description thereof in the
Prospectus under the caption "Description of Capital
Stock."
(x) The Registration Statement has been declared
effective by the Commission under the Securities Act;
to the knowledge of such
23
counsel, no stop order suspending the effectiveness
of the Registration Statement has been issued under
the Securities Act and no proceedings for such
purpose have been initiated or are pending or are
contemplated or threatened by the Commission; and the
Registration Statement and the Prospectus and each
amendment or supplement to the Registration Statement
and the Prospectus (other than the financial
statements, including the notes and schedules thereto
and the auditors' reports thereon, included therein
or omitted therefrom, as to which such counsel need
express no opinion) comply as to form in all material
respects with the applicable requirements of the
Securities Act and the Securities Act Regulations.
(xi) To such counsel's knowledge, other than as
described in the Prospectus, there are no contracts,
agreements or understandings between the Company and
any person granting such person the right to require
the Company to file a registration statement under
the Securities Act with respect to any shares of
Common Stock or any other securities of the Company
owned or to be owned by such person or to require the
Company to include such Common Stock or other
securities in the Registration Statement, and to the
extent any person has such registration or other
similar rights, such rights have been waived with
respect to registration of securities in connection
with the Registration Statement.
(xii) To such counsel's knowledge, there are no
contracts or documents of a character which are
required to be filed as exhibits to the Registration
Statement or required to be described or summarized
in the Prospectus which have not been so filed,
summarized or described, and all such summaries and
descriptions fairly and accurately set forth the
material provisions of such contracts and documents.
(xiii) No consent, approval, authorization, or
order of, or filing or registration under the DGCL,
the Delaware LLC Act or federal law is required for
the consummation of the transactions contemplated by
this Agreement and the Formation Transaction
Agreements, except such as (i) has been obtained or
made under the Securities Act or the Exchange Act or
as may be required by state securities or "blue sky"
laws, (ii) may be required by the bylaws and rules of
the NASD or NASDR, (iii) has been obtained under the
HSR Act, or (iv) is otherwise expressly contemplated
by the Contribution Agreement.
(xiv) The issuance and sale of the Securities and
the compliance by the Company with all of the
provisions of this Agreement and
24
the Formation Transaction Agreements and the
consummation of the transactions contemplated herein
and therein will not constitute a breach or violation
of any of the terms and provisions of, or constitute
a default under (A) the certificate of incorporation,
by-laws, limited partnership agreement, limited
liability company agreement or similar organizational
documents of the Company or any of the Subsidiaries,
as applicable, (B) any indenture, mortgage, deed of
trust, lease, loan agreement or other agreement or
instrument which is listed on Exhibit C to such
opinion, or (C) the DGCL, the Delaware LLC Act or
federal law, except, with respect to clause (B), for
such conflicts, breaches, violations or defaults as
would not, individually or in the aggregate, have a
Material Adverse Effect.
(xv) To such counsel's knowledge, there are no
actions, suits, proceedings, inquiries or
investigations pending or threatened against the
Company or any of the Subsidiaries or any of their
respective officers and directors or to which the
properties, assets or rights of any such entity are
subject that are required to be described in the
Prospectus but are not so described.
(xvi) The Company is not, and after giving effect
to the offering and sale of the Securities and the
application of the proceeds thereof as described in
the Prospectus will not be, required to register as
an "investment company" as such term is defined under
the Investment Company Act.
(xvii) The statements contained in (i) the
Prospectus under the captions,
"Business--Environmental Regulation," "Description of
Capital Stock," and "Shares Eligible For Future Sale"
and (ii) in Item 14 of the Registration Statement,
insofar as such statements purport to summarize legal
matters or provisions of the documents referred to
therein, present accurate and fair summaries of such
legal matters and provisions.
Such counsel shall state that, although such counsel has not
independently verified, is not passing upon, and does not assume any
responsibility for, the accuracy or completeness (except as and to the extent
set forth in paragraph (xiv) above) of the information contained in the
Registration Statement and the Prospectus, they have participated in the
preparation of the Registration Statement and the Prospectus; from time to time,
such counsel has had discussions with officers, directors and employees of the
Company, with representatives of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ & Co., Inc., the independent
accountants who examined the financial statements of the Company contained in
the Registration Statement and the Prospectus, with representatives of the
Underwriters and with counsel to the Underwriters; and, on the basis of the
foregoing (relying as to the facts upon which determinations of materiality are
made upon statements of fact made by officers and other representatives of the
Company that such counsel has deemed
25
necessary or appropriate for the purpose of such letter), such counsel advises
you that nothing has come to such counsel's attention which would lead them to
believe that the Registration Statement, at the time it became effective,
contained an untrue statement of a material fact or omitted to state a material
fact required to be stated therein or necessary to make the statements therein
not misleading (it being understood that such counsel need express no opinion
with respect to the financial statements, including the notes and schedules
thereto and the auditors' reports thereon, or other financial or statistical
data contained in the Registration Statement) or that the Prospectus, as of its
date or at the First Delivery Date or the Optional Delivery Date, as the case
may be, contained an untrue statement of a material fact or omitted to state a
material fact necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading (it being
understood that such counsel need express no opinion with respect to the
financial statements, including the notes and schedules thereto and the
auditors' reports thereon, or other financial or statistical data contained in
the Prospectus).
In rendering such opinion, such counsel may rely (i) as to
matters involving the application of laws of any jurisdiction other than the
States of New York, Texas and Delaware or the federal laws of the United States,
to the extent they deem proper and specified in such opinion, upon the opinion
(which shall be dated the First Delivery Date or the Optional Delivery Date, as
the case may be, shall be in form and substance satisfactory to the Underwriter,
shall expressly state that the Underwriter may rely on such opinion as if it
were addressed to it 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 and (ii) as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the Company and public
officials.
(d) Each of ▇▇▇▇ ▇▇▇▇▇ and ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., counsel
for the Selling Stockholders, shall have furnished to the
Representative their written opinion, dated such Delivery
Date, in form and substance satisfactory to the
Representative, to the effect that:
(i) Each of the Selling Stockholders has the
power and authority to enter into the Custody
Agreement, the Power of Attorney and this Agreement
and to perform and discharge such Selling
Stockholder's obligations thereunder and hereunder;
and this Agreement, the Custody Agreements and the
Powers of Attorney have been duly and validly
authorized, executed and delivered by (or by the
Attorneys-in-Fact, or either of them, on behalf of)
the Selling Stockholders.
(ii) The execution and delivery of this
Agreement, the Custody Agreement and the Power of
Attorney and the performance of the terms hereof and
thereof and the consummation of the transactions
herein and therein contemplated will not result in a
breach or violation of any of the terms and
provisions of, or constitute a
26
default under, any statute, rule or regulation, or
any agreement or instrument known to such counsel to
which such Selling Stockholder is a party or by which
such Selling Stockholder is bound or to which any of
its property is subject, any such Selling
Stockholder's charter, by-laws or other governing
document, or any order or decree known to such
counsel of any court or government agency or body
having jurisdiction over such Selling Stockholder or
any of its respective properties; and no consent,
approval, authorization or order of, or filing with,
any court or governmental agency or body is required
for the execution, delivery and performance of this
Agreement, the Custody Agreement and the Power of
Attorney or for the consummation of the transactions
contemplated hereby and thereby, including the sale
of the Securities being sold by such Selling
Stockholder, except such as may be required under the
Act or state securities laws or blue sky laws.
In rendering such opinion such counsel may rely as to matters
of fact, to the extent such counsel deems reasonable upon certificates of
officers of the Selling Stockholders provided that the extent of such reliance
is specified in such opinion.
(e) ▇▇▇▇▇ Day, counsel for the Underwriters, shall have
furnished to the Representative their written opinion, dated
such Delivery Date, in form and substance satisfactory to the
Representative.
(f) The Underwriters shall have received, on each of the
date hereof and each Delivery Date, a letter dated the date
hereof or such Delivery Date, as the case may be, in form and
substance satisfactory to the Representative, from ▇▇▇▇▇▇▇▇▇
Downs & Co., Inc., containing statements and information of
the type ordinarily included in accountants' "comfort letters"
to underwriters with respect to the financial statements and
certain financial information of the Company and its
consolidated subsidiaries contained in and incorporated by
reference in the Registration Statement and the Prospectus,
provided that the letter delivered on the First Delivery Date
shall use a "cut-off date" not earlier than the third day
prior to the First Delivery Date.
(g) The Company will, on each Delivery Date, deliver to
the Underwriters a certificate of its Chief Executive Officer
and Chief Financial Officer, to the effect that:
(i) The representations and warranties of the
Company in this Agreement are true and correct, as if
made on and as of the date thereof and provided that
any reference therein to the First Delivery Date
shall be deemed to refer to the applicable Delivery
Date on which such certificate is delivered; and the
Company has complied with all the agreements and
satisfied all the conditions on
27
its part to be performed or satisfied at or prior to
such Delivery Date;
(ii) No stop order suspending the effectiveness
of the Registration Statement or any post-effective
amendment thereto has been issued and no proceedings
for that purpose have been instituted or are pending
or threatened under the Securities Act;
(iii) When the Registration Statement became
effective and at all times subsequent thereto up to
the date hereof, the Registration Statement and the
Prospectus, and any amendments or supplements thereto
contained all material information required to be
included therein by the Securities Act or the
Exchange Act and the applicable rules and regulations
of the Commission thereunder, as the case may be, and
in all material respects conformed to the
requirements of the Securities Act or the Exchange
Act and the applicable rules and regulations of the
Commission thereunder, as the case may be; the
Registration Statement and the Prospectus, and any
amendments or supplements thereto, did not and do not
include 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,
in the light of the circumstances under which they
were made, not misleading; and, since the effective
date of the Registration Statement, there has
occurred no event required to be set forth in an
amendment or supplemented Prospectus which has not
been so set forth; and
(iv) Subsequent to the respective dates as of
which information is given in the Registration
Statement and Prospectus, except as set forth in the
Prospectus, there has not been any (a) transaction or
event which has a Material Adverse Effect, (b) change
in the capitalization of the Company or any
Subsidiary that is material to the Company and the
Subsidiaries taken as a whole, (c) any obligation,
contingent or otherwise, directly or indirectly
incurred by the Company or any Subsidiary that is
material to the Company and the Subsidiaries taken as
a whole or (d) any dividend or distribution of any
kind declared, paid or made by the Company on any
class of its capital stock.
(h) On each Delivery Date, there shall have been
furnished to you, as Representative of the several
Underwriters, a certificate or certificates, dated such
Delivery Date and addressed to you, signed by each of the
Selling Stockholders or such Selling Stockholder's
Attorneys-in-Fact to the effect that the representations and
warranties of such Selling Stockholder contained in this
Agreement are true and correct as if made on and as of the
date thereof, and that such Selling
28
Stockholder has complied with all the agreements and satisfied
all the conditions on such Selling Stockholder's part to be
performed or satisfied at or prior to such Delivery Date.
(i) (i) Neither the Company nor any of the Subsidiaries
shall have sustained since the date of the latest audited
financial statements included in the Prospectus any loss or
interference with its business, otherwise than as set forth or
contemplated in the Prospectus and (ii) since the respective
dates as of which information is given in the Prospectus,
there shall not have been any change in the capitalization of
the Company or any change, or any development or event
involving a prospective change, on the condition (financial or
otherwise), business, properties, business prospects (other
than as a result of an event, circumstance or condition
applicable to the oil and gas or oilfield services industries
as a whole) or results of operations of the Company and the
Subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any
such case described in clause (i) or (ii), is in the judgment
of the Representative so material and adverse as to make it
impracticable or inadvisable to proceed with the public
offering or the delivery of the Securities being delivered on
such Delivery Date on the terms and in the manner contemplated
in the Prospectus.
(j) On or after the date hereof, there shall not have
occurred any of the following: (i) a suspension or material
limitation in trading in securities generally on the New York
Stock Exchange, the American Stock Exchange or the Nasdaq,
(ii) a suspension or material limitation in trading in the
Company's securities on the Nasdaq, (iii) a general moratorium
on commercial banking activities declared by United States
federal or New York or Ohio state authorities or a material
disruption in commercial banking or securities settlement or
clearance services in the United States, (iv) the outbreak or
escalation of hostilities involving the United States or the
declaration by the United States of a national emergency or
war or (v) the occurrence of any other calamity or crisis or
any change in financial, political or economic conditions in
the United States or elsewhere, if the effect of any such
event specified in clause (iv) or (v) in the judgment of the
Representative makes it impracticable or inadvisable to
proceed with the public offering or the delivery of the
Securities being delivered on such Delivery Date on the terms
and in the manner contemplated in the Prospectus.
(k) The Representative shall have received from each
person listed on Schedule D hereto an executed lock-up letter
agreement substantially to the effect set forth in the form
attached hereto as Schedule C.
(l) The Company shall have furnished to the
Representative such further information, certificates and
documents as the Representative may reasonably request.
29
All opinions, certificates, letters and documents mentioned
above or elsewhere in this Agreement shall be deemed to be compliance with the
provisions hereof only if they are in form and substance satisfactory to counsel
for the Underwriters.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Underwriter, its affiliates, their respective officers,
directors, employees and agents, and each person, if any, who
controls any Underwriter within the meaning of Section 15 of
the Securities Act, against any losses, claims, damages or
liabilities, joint or several, to which the Underwriter may
become subject, under the Securities Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in
respect thereof) arise out of or are based upon an untrue
statement or alleged untrue statement of a material fact
contained in the Registration Statement, any Preliminary
Prospectus or the Prospectus, or in any amendment or
supplement thereto, or arise out of or are based upon the
omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the
statements therein not misleading, and will reimburse each
Underwriter for any legal or other expenses reasonably
incurred by such Underwriter in connection with investigating
or defending against any such loss, claim, damage, liability
or action as such expenses are incurred; provided, however,
that the Company shall not be liable in any such case to the
extent that any such loss, claim, damage or liability arises
out of or is based upon an untrue statement or alleged untrue
statement or omission or alleged omission made in any
Preliminary Prospectus, the Registration Statement or the
Prospectus or any such amendment or supplement made in
reliance upon and in conformity with written information
furnished to the Company by an Underwriter expressly for
inclusion therein, which information consists solely of the
information set forth in the letter referred to in Section
8(f); and provided further, that with respect to any
Preliminary Prospectus, the indemnity set forth in this
Section 8(a) shall not inure to the benefit of any Underwriter
on account of any loss, claim, damage or liability arising
from the sale of Securities to any person by such Underwriter
if such Underwriter failed to send or give a copy of the
Prospectus, as the same may be amended or supplemented, to
such person within the time required by the Securities Act and
the Securities Act Rules, and the untrue or alleged untrue
statement of a material fact or omission or alleged omission
of a material fact in the Preliminary Prospectus was corrected
in the Prospectus, unless such failure resulted from
non-compliance by the Company with Section 4(d) hereof.
(b) Each Selling Stockholder, severally and not jointly,
shall indemnify and hold harmless each Underwriter, its
affiliates, their respective officers, directors, employees
and agents, and each person, if any, who controls such
Underwriter within the meaning of Section 15 of the Securities
Act, against any losses, claims, damages or liabilities, joint
30
or several, to which such Underwriter may become subject,
under the Securities Act or otherwise, insofar as such losses,
claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon an untrue statement or alleged
untrue statement of a material fact contained in the
Registration Statement, any Preliminary Prospectus or the
Prospectus, or in any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus or the Prospectus or any
such amendment or supplement made in reliance upon and in
conformity written information furnished to the Company by
such Selling Stockholder expressly for inclusion therein,
which information consists solely of the information set forth
with respect to such Selling Stockholder in the Prospectus in
the table under the caption "Principal and Selling
Stockholders," and will reimburse each Underwriter for any
legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending
against any such loss, claim, damage, liability or action as
such expenses are incurred; provided, however, that with
respect to any Preliminary Prospectus, the indemnity set forth
in this Section 8(b) shall not inure to the benefit of any
Underwriter on account of any loss, claim, damage or liability
arising from the sale of Securities to any person by such
Underwriter if such Underwriter failed to send or give a copy
of the Prospectus, as the time may be amended or supplemented,
to such person within the time required by the Securities Act
and the Securities Act Rules, and the untrue or alleged untrue
statement of a material fact or omission or alleged omission
of a material fact in the Preliminary Prospectus was corrected
in the Prospectus, unless such failure resulted from
non-compliance by the Company with Section 4(d) hereof.
Notwithstanding anything in this Agreement to the contrary,
the liability of each Selling Stockholder under this Section
8(b) shall be limited to the total proceeds received by such
Selling Stockholder from the sale of Securities (net of
underwriting discounts and commissions, but before deducting
expenses) pursuant to this Agreement.
(c) Each Underwriter, severally and not jointly, shall
indemnify and hold harmless the Company, its affiliates, their
respective officers, directors, employees and agents, and each
person, if any, who controls the Company within the meaning of
Section 15 of the Securities Act, and each Selling
Stockholder, against any losses, claims, damages or
liabilities to which the Company or such Selling Stockholder
may become subject, under the Securities Act or otherwise,
insofar as such losses, claims, damages or liabilities (or
actions in respect thereof) arise out of or are based upon an
untrue statement or alleged untrue statement of a material
fact contained in the Registration Statement, any Preliminary
Prospectus
31
or the Prospectus, or in any amendment or supplement thereto,
or arise out of or are based upon the omission or alleged
omission to state therein a material fact required to be
stated therein or necessary to make the statements therein not
misleading, in each case to the extent, but only to the
extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus or the Prospectus or any
such amendment or supplement made in reliance upon and in
conformity with written information furnished to the Company
by such Underwriter expressly for inclusion therein, which
information consists solely of the information set forth in
the letter referred to in Section 8(f), and will reimburse the
Company and each Selling Stockholder for any legal or other
expenses reasonably incurred by the Company in connection with
investigating or defending against any such loss, claim,
damage, liability or action as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under
this Section of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to
be made against the indemnifying party under subsection (a),
(b) or (c) above, notify the indemnifying party in writing of
the commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability
which it may have to any indemnified party otherwise than
under subsection (a), (b) or (c) above. In case any such
action is brought against any indemnified party and it
notifies the indemnifying party of the commencement thereof,
the indemnifying party shall be entitled to participate
therein and, to the extent that it may wish, jointly with any
other indemnifying party similarly notified, to assume the
defense thereof, with counsel satisfactory to such indemnified
party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and,
except as provided in the following sentence, after notice
from the indemnifying party to such indemnified party of its
election so to assume the defense thereof, the indemnifying
party will not be liable to such indemnified party under this
Section for any legal or other expenses subsequently incurred
by such indemnified party in connection with the defense
thereof other than reasonable costs of investigation. After
notice from the indemnifying party to the indemnified party of
the indemnifying party's election to assume the defense of
such action, the indemnified party shall have the right to
employ its own counsel in any such action, but the fees and
expenses of such counsel shall be at the expense of such
indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention
of such counsel, (ii) if the named parties in any such action
include both the indemnifying party and the indemnified party
and the indemnified party shall have reasonably concluded that
there is an actual or potential conflict between the positions
of the indemnifying party and the indemnified party in
conducting the defense of any such action or that there may be
legal defenses available to
32
it or other indemnified parties that are different from or
additional to those available to the indemnifying party or
(iii) the indemnifying party shall not have employed counsel
to assume the defense of such action within a reasonable time
after notice of commencement thereof, in each of which cases
the fees and expenses of such counsel shall be at the expense
of the indemnifying party (it being understood, however, that
the indemnifying party shall not be liable for the fees and
expenses of more than one separate counsel in addition to any
counsel). No indemnifying party shall, without the prior
written consent of the indemnified party, effect any
settlement or compromise of, or consent to the entry of any
judgment with respect to, any pending or threatened action or
claim in respect of which indemnification or contribution may
be sought hereunder (whether or not the indemnified party is
an actual or potential party to such action or claim) unless
such settlement, compromise or judgment (i) includes an
unconditional release of the indemnified party from all
liability arising out of such action or claim and (ii) does
not include a statement as to or an admission of fault,
culpability or failure to act by or on behalf of any
indemnified party.
(e) If the indemnification provided for in this Section
is unavailable to or insufficient to hold harmless an
indemnified party under subsection (a), (b) or (c) above in
respect of any losses, claims, damages or liabilities (or
actions in respect thereof) referred to therein, then each
indemnifying party shall contribute to the amount paid or
payable by such indemnified party as a result of such losses,
claims, damages or liabilities (or actions in respect thereof)
in such proportion as is appropriate to reflect the relative
benefits received by the Company, the Selling Stockholders and
the Underwriters, respectively, from the offering of the
Securities. If, however, the allocation provided by the
immediately preceding sentence is not permitted by applicable
law, then each indemnifying party shall contribute to such
amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only the relative
benefits but also the relative fault of the Company, the
Selling Stockholders and the Underwriters, respectively, in
connection with the statements or omissions which resulted in
such losses, claims, damages or liabilities (or actions in
respect thereof), as well as any other relevant equitable
considerations. The relative benefits received by the Company,
the Selling Stockholders and the Underwriters, respectively,
shall be deemed to be in the same proportion as the total net
proceeds from the offering (net of underwriting discounts and
commissions but before deducting expenses) received by the
Company and the Selling Stockholders, respectively, bear to
the total underwriting discounts and commissions received by
the Underwriters, in each case as set forth in the table on
the cover page of the Prospectus. The relative fault shall be
determined by reference to, among other things, whether the
untrue or alleged untrue statement of a material fact or the
omission or alleged omission to state a material fact relates
to information supplied by the Company, the Selling
Stockholders or the
33
Underwriters and the parties' relative intent, knowledge,
access to information and opportunity to correct or prevent
such untrue statement or omission. The Company, the Selling
Stockholders and the Underwriters agree that it would not be
just and equitable if contributions pursuant to this
subsection (e) were determined by pro rata allocation or by
any other method of allocation which does not take account of
the equitable considerations referred to above in this
subsection (e). The amount paid or payable by an indemnified
party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above
in this subsection (e) shall be deemed to include any legal or
other expenses reasonably incurred by such indemnified party
in connection with investigating or defending any such action
or claim based upon any such untrue or alleged untrue
statement or omission or alleged omission. Notwithstanding the
provisions of this subsection (e), (i) no Underwriter shall be
required to contribute any amount in excess of the amount by
which the underwriting discounts and commissions applicable to
the Securities purchased by such Underwriter exceeds the
amount of any damages that such Underwriter has otherwise been
required to pay by reason of any such untrue or alleged untrue
statement or omission or alleged omission and (ii) no Selling
Stockholder shall be required to contribute any amount in
excess of the amount by which the total proceeds to such
Selling Stockholder from the sale of the Securities sold by
such Selling Stockholder pursuant to this Agreement exceed the
amount of any damages that such Selling Stockholder has
otherwise been required to pay by reason of any such untrue or
alleged untrue statement or omission or alleged omission. No
person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(f) Prior to the First Delivery Date, the Underwriters
shall deliver a letter to the Company and the Selling
Stockholders identifying the statements furnished by them in
writing expressly for inclusion in the Registration Statement,
any Preliminary Prospectus and the Prospectus. The Company and
the Selling Stockholders hereby acknowledge that the only
information that the Underwriters have furnished to the
Company expressly for inclusion in the Registration Statement,
any Preliminary Prospectus and the Prospectus are the
statements to be contained in such letter.
9. Default of the Several Underwriters. If, on any Delivery Date,
any one or more of the several Underwriters shall fail or refuse to
purchase Securities that it or they have agreed to purchase hereunder
on such date, and the aggregate number of Securities which such
defaulting Underwriter or Underwriters agreed but failed or refused to
purchase does not exceed 10% of the aggregate number of the Securities
to be purchased on such date, the other Underwriters shall be
obligated, severally, in the proportions that the number of shares of
Common
34
Stock set forth opposite their respective names on Schedule B bears to
the aggregate number of shares of Common Stock set forth opposite the
names of all such non-defaulting Underwriters, or in such other
proportions as may be specified by the Representative with the consent
of the non-defaulting Underwriters, to purchase the Securities which
such defaulting Underwriter or Underwriters agreed but failed or
refused to purchase on such date. If, on any Delivery Date, any one or
more of the Underwriters shall fail or refuse to purchase Securities
and the aggregate number of Securities with respect to which such
default occurs exceeds 10% of the aggregate number of Securities to be
purchased on such date, and arrangements satisfactory to the
Representative and the Company for the purchase of such Securities are
not made within forty-eight hours after such default, this Agreement
shall terminate without liability of any party to any other party
except that the provisions of Section 6, Section 8 and Section 11 shall
at all times be effective and shall survive such termination. In any
such case, either the Representative or the Company shall have the
right to postpone the Delivery Date but in no event for longer than
seven days in order that the required changes, if any, to the
Registration Statement and the Prospectus or any other documents or
arrangements may be effected.
10. Termination. The obligations of the Underwriters hereunder may
be terminated by the Underwriters by notice given to and received by
the Company prior to delivery of and payment for the Common Stock or
the Optional Securities, respectively, if, prior to that time, any of
the events described in Sections 7(i) or (j) shall have occurred or if
the Underwriters shall decline to purchase such Securities for any
reason permitted under this Agreement. In such case, the Company shall
have no liability hereunder except as provided by Sections 6, 8 and 11
hereof.
11. Reimbursement of Underwriters' Expenses. If (a) the Company or
any Selling Stockholder shall fail to tender the Securities for
delivery to the Underwriters for any reason under this Agreement other
than a breach by the Underwriters of their representations herein or
obligations hereunder or (b) the Underwriters shall decline to purchase
the Securities for any reason permitted under this Agreement (including
the termination of this Agreement pursuant to Section 10, other than by
reason of the occurrence of any event specified in Sections 7(j)(i),
(iii), (iv) or (v), but excluding the failure of any of the conditions
herein to be satisfied as a result of a breach by the Underwriters of
their representations herein), the Company shall reimburse the
Underwriters for the reasonable fees and expenses of their counsel and
for such other out-of-pocket expenses as shall have been reasonably
incurred by them in connection with this Agreement and the proposed
purchase of the Securities, and upon demand, the Company shall pay the
full amount thereof to the Underwriters. If this Agreement is
terminated pursuant to Section 9 hereof by reason of the default of one
or more Underwriters, the Company shall not be obligated to reimburse
any defaulting Underwriter on account of those expenses.
35
12. Default by the Company. If the Company shall fail at the First
Delivery Date to sell and deliver the number of Securities which it is
obligated to sell hereunder, then this Agreement shall terminate
without any liability on the part of any non-defaulting party. No
action taken pursuant to this Section 12 shall relieve the Company from
liability, if any, in respect of such default.
13. Notices. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) If to the Underwriters, shall be delivered or sent by
mail, telex or facsimile transmission to KeyBanc Capital
Markets, KeyBanc Tower, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇, ▇▇▇▇
▇▇▇▇▇, Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇; and with a copy (which shall
not constitute notice) to ▇▇▇▇▇ Day, ▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
(Facsimile: ▇▇▇-▇▇▇-▇▇▇▇; Telephone: ▇▇▇-▇▇▇-▇▇▇▇);
(b) if to the Company, shall be delivered or sent by
mail, telex or facsimile transmission to it at ▇▇▇▇ ▇▇. ▇▇▇
▇▇▇▇, ▇▇▇▇▇ #▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Attention:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇; with a copy (which shall not constitute
notice) to ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP, First City Tower, ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, Attention: T.
▇▇▇▇ ▇▇▇▇▇, Esq. (Facsimile: ▇▇▇-▇▇▇-▇▇▇▇; Telephone:
713-758-4592.);
(c) if to any of the Selling Stockholders, shall be
delivered or sent by mail, telex or facsimile transmission to
the address of the Attorney-in-Fact as set forth in the Powers
of Attorney.
Any notice of a change of address or facsimile transmission
number must be given by the Company or the Underwriters, as the case maybe, in
writing at least three days in advance of such change.
14. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the
Company, the Selling Stockholders and their respective successors. This
Agreement and the terms and provisions hereof are for the sole benefit
of only those persons, except that (a) the representations, warranties,
indemnities and agreements of the Company and the Selling Stockholders
contained in this Agreement shall also be deemed to be for the benefit
of the officers and employees of the Underwriters and the person or
persons, if any, who control the Underwriters within the meaning of
Section 15 of the Securities Act and (b) the representations and
warranties of the Underwriters in this Agreement and the indemnity
agreement of the Underwriters contained in Section 8(c) of this
Agreement shall be deemed to be for the benefit of directors, officers
and employees of the Company and the Selling Stockholders, and any
person controlling the Company and the Selling Stockholders within the
meaning of Section 15 of the Securities Act. Nothing contained in this
Agreement is intended or shall be construed to give any person, other
than the persons referred
36
to in this Section 14, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained
herein.
15. Survival. The respective indemnities, representations,
warranties and agreements of the Company and the Underwriters contained
in this Agreement or made by or on behalf of them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment
for the Securities and shall remain in full force and effect,
regardless of any termination or cancellation of this Agreement or any
investigation made by or on behalf of any of them or any person
controlling any of them.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF OHIO, WITHOUT
GIVING EFFECT TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the
executed counterparts shall each be deemed to be an original but all
such counterparts shall together constitute one and the same
instrument.
18. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the
meaning or interpretation of, this Agreement.
[Signature Page Follows.]
37
If the foregoing correctly sets forth the agreement between
the Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
SUPERIOR WELL SERVICES, INC.
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: CEO
SELLING STOCKHOLDERS
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Attorney-in-Fact
Accepted and agreed by:
KeyBanc Capital Markets, a division of
McDonald Investments Inc.
Acting as Representative of the
Several Underwriters named
in attached Schedule B
McDonald Investments Inc.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
-----------------------------------
Name: ▇▇▇▇▇ ▇▇▇▇▇▇
Title: Managing Director
38
SCHEDULE A
SELLING STOCKHOLDERS
Number of Firm
Name Securities to be Sold
---- ---------------------
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 119,880
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 119,880
▇▇▇▇ ▇. ▇▇▇▇▇▇ 50,000
▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 115,924
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ 115,804
▇.▇. ▇▇▇▇▇▇, ▇▇. Grantor
Retained Annuity Trust 119,880
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ 181,773
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ 181,893
Rhys ▇. ▇▇▇▇▇ 181,773
A-1
SCHEDULE B
NUMBER OF
FIRM SECURITIES
TO BE
UNDERWRITER PURCHASED
----------- ---------------
KeyBanc Capital Markets, a division of
McDonald Investments Inc. ............................... 2,810,000
▇.▇. ▇▇▇▇▇▇▇ & Sons Inc. .................................... 1,124,000
RBC Capital Markets Corp. ................................... 843,000
▇▇▇▇▇▇▇ & Company International ............................. 843,000
Total ............................................... 5,620,000
=========
B-1
SCHEDULE C
FORM OF LOCK-UP LETTER AGREEMENT
_________ ____, 2005
KeyBanc Capital Markets, a division of
McDonald Investments Inc.
As Representative of the several Underwriters
c/▇ ▇▇▇▇▇▇▇▇ Investments Inc.
▇▇▇▇▇▇▇▇ Investment Center
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
The undersigned understands that you, as representative (the
"Representative"), propose to enter into an
Underwriting Agreement (the
"
Underwriting Agreement") on behalf of the several Underwriters named in
Schedule B to such agreement (the "Underwriters"), with
Superior Well Services,
Inc., a Delaware corporation (the "Company") and the Selling Stockholders named
therein (the "Selling Stockholders") providing for a public offering (the
"Offering") of shares of the common stock of the Company, par value $0.01 per
share (the "Common Stock"). The undersigned recognizes that the Offering will be
of benefit to the undersigned and will benefit the Company and the Selling
Stockholders. The undersigned acknowledges that the Company, the Selling
Stockholders, you and the other Underwriters will proceed with the Offering in
reliance of this Lock-Up Letter Agreement.
In consideration of the foregoing, the undersigned hereby
agrees that the undersigned will not (and will cause any spouse or immediate
family member of the spouse or the undersigned living in the undersigned's
household not to), without the prior written consent of McDonald Investments
Inc. (which consent may be withheld in its sole discretion), directly or
indirectly, sell, offer, contract or grant any option to sell (including,
without limitation, any short sale), pledge, transfer, establish an open "put
equivalent position" within the meaning of Rule 16a-1(h) under the Securities
Exchange Act of 1934, as amended, or otherwise dispose of any shares of Common
Stock, options or warrants to acquire shares of Common Stock, or securities
exchangeable or exercisable for or convertible into shares of Common Stock
currently or hereafter owned either of record or beneficially (as defined in
Rule 13d-3 under the Securities Exchange Act of 1934, as amended) by the
undersigned (or such spouse or family member), or publicly announce an intention
to do any of the foregoing, for a period commencing on the date of execution of
this Lock-Up Letter Agreement and continuing through the close of trading on the
date 180 days after the date of the Prospectus (the "Lock-Up Period").
Notwithstanding the foregoing, during the Lock-Up Period the undersigned shall
be
C-1
entitled to transfer and assign shares of Common Stock [if the undersigned is a
corporation, partnership, limited liability company or other entity: to any
corporation, partnership, limited liability company or other entity that
controls, is controlled by or is under common control with the undersigned or to
any equity holder of the undersigned] [if the undersigned is an individual: to a
trust or limited partnership for the benefit of the undersigned's spouse or
members of the undersigned's immediate family]; provided that such transferee or
assignee of shares of Common Stock shall furnish to the Representative a Lock-Up
Letter substantially in the form of Schedule C to the
Underwriting Agreement
prior to any such transfer.
Notwithstanding the foregoing, (1) during the last 17 days of
the initial Lock-Up Period, the Company issues an earnings release or material
news or a material event relating to the Company occurs or (2) prior to the
expiration of the initial Lock-Up Period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day of
the initial Lock-Up Period, then in each case the Lock-Up Period will be
extended until the expiration of the 18-day period beginning on the date of the
issuance of the earnings release or the occurrence of the material news or
material event, as applicable, unless McDonald Investments Inc. waives, in
writing, such extension.
The undersigned hereby acknowledges and agrees that written
notice of any extension of the Lock-Up Period pursuant to the previous paragraph
will be delivered by McDonald Investments Inc. to the Company and that any such
notice properly delivered will be deemed to have given to, and received by, the
undersigned. The undersigned further agrees that, prior to engaging in any
transaction or taking any other action that is subject to the terms of this
Lock-Up Agreement during the period from the date of this Lock-Up Agreement to
and including the 34th day following the expiration of the initial Lock-Up
Period, it will give notice thereof to the Company and will not consummate such
transaction or take any such action unless it has received written confirmation
from the Company that the Lock-Up Period (as may have been extended pursuant to
the previous paragraph) has expired.
The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent and registrar against
the transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for shares of Common Stock held by the undersigned
except in compliance with the foregoing restrictions.
With respect to the Offering only, the undersigned waives any
registration rights relating to registration under the Securities Act of 1933 of
any shares of Common Stock owned either of record or beneficially by the
undersigned, including any rights to receive notice of the Offering.
If for any reason the
Underwriting Agreement is terminated
prior to the First Delivery Date (as defined in the
Underwriting Agreement)
pursuant to the provisions thereof, then the agreements set forth herein shall
likewise be terminated.
C-2
This Lock-Up Letter Agreement is irrevocable and will be
binding on the undersigned and the respective successors, heirs, personal
representatives, and assigns of the undersigned.
Very truly yours,
By:
-----------------------------
Name:
Title:
C-3
SCHEDULE D
PERSONS TO EXECUTE LOCK-UP LETTER AGREEMENTS:
▇.▇. ▇▇▇▇▇▇, ▇▇.
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
▇▇▇▇▇▇ Associated Companies
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Rhys ▇. ▇▇▇▇▇
Allegheny Mineral Corp.
▇▇▇▇▇▇▇▇▇ Cement & Supply Corp.
▇.▇. ▇▇▇▇▇▇, ▇▇. Grantor Retained Annuity Trust
D-1
