Exhibit 1.1
EXECUTION COPY
KEY ENERGY SERVICES, INC.
$100,000,000
8 3/8% Senior Notes due 2008
UNDERWRITING AGREEMENT
February 22, 2002
Xxxxxx Brothers Inc.
Bear, Xxxxxxx & Co. Inc.
First Albany Corporation
c/x Xxxxxx Brothers Inc.
000 Xxxxxx Xxxxxx
Xxxxxx Xxxx, Xxx Xxxxxx 00000
Ladies and Gentlemen:
Key Energy Services, Inc., a Maryland corporation (the "COMPANY"),
proposes, subject to the terms and conditions contained herein, to sell to
Xxxxxx Brothers Inc., Bear, Xxxxxxx & Co. Inc. and First Albany Corporation
(each an "UNDERWRITER", and together, the "UNDERWRITERS"), $100,000,000 in
aggregate principal amount of its 8 3/8% Senior Notes due 2008 (the "SERIES C
NOTES") subject to the terms and conditions set forth herein. The Series C Notes
are to be issued pursuant to an indenture, dated as of March 31, 1999 (the "BASE
INDENTURE"), as supplemented by the First Supplemental Indenture thereto, to be
dated as of the Delivery Date (as defined herein) (the "SUPPLEMENTAL INDENTURE"
and, together with the Base Indenture, the "INDENTURE"), between the Company and
U.S. Bank National Association, a national banking association, as trustee (the
"TRUSTEE"). The form of the Supplemental Indenture will be filed on Form 8-K and
incorporated by reference as exhibit to the registration statement referred to
below. The Company's obligations under the Series C Notes, including the due and
punctual payment of interest on the Series C Notes, will be unconditionally
guaranteed by Yale E. Key, Inc., a Texas corporation; Key Energy Drilling Inc.,
a Delaware corporation; WellTech Eastern, Inc., a Delaware corporation; Odessa
Exploration Incorporated, a Delaware corporation; Kalkaska Oilfield Services,
Inc., a Michigan corporation; Well-Co Oil Service, Inc., a Nevada corporation;
Key Rocky Mountain, Inc., a Delaware corporation; Key Four Corners, Inc., a
Delaware corporation; Xxxxxx Well Servicing, Inc., a Delaware corporation; Key
Energy Services - South Texas, Inc., a Delaware corporation; Key Energy Services
- California, Inc., a Delaware corporation; Xxxxxx Oilfield Service & Supply,
Inc., a Delaware corporation; WellTech Mid-Continent, Inc., a Delaware
corporation; Xxxxxx Production Management, Inc., a Delaware corporation; Xxxxxx
Production Xxxxxx, Inc., a Delaware corporation; Xxxxxx Production Acquisition
Corp., a Delaware corporation; and Xxxxxx Production Partners, L.P., a Delaware
limited partnership (the "GUARANTORS"). As used herein, the term Series C Notes
shall include the subsidiary guarantees thereof by the Guarantors, unless the
context otherwise requires. Capitalized terms used but not defined herein shall
have the meanings given to such
terms in the Indenture. This is to confirm the agreement concerning the
purchase of the Series C Notes from the Company by the Underwriters.
The Company has $175,000,000 in aggregate principal amount of its
8 3/8% Senior Notes due 2008 issued and outstanding (the "SERIES B NOTES"). The
Company will offer holders of the Series B Notes the ability to exchange their
Series B Notes (the "EXCHANGE OFFER") for additional 8 3/8% Series C Notes due
2008 (the "ADDITIONAL SERIES C NOTES" and together with the Series C Notes, the
"NOTES").
The Company has filed with the Securities and Exchange Commission
(the "COMMISSION"), a registration statement on Form S-3 (No. 333-67665) and a
prospectus for the registration of the issuance of Series C Notes under the
Securities Act of 1933, as amended (the "SECURITIES ACT"), and the rules and
regulations thereunder (the "SECURITIES ACT REGULATIONS"). The Company has
prepared and filed such amendments thereto, if any, and such prospectus
supplements, if any, as may have been required to the date hereof, and will file
such additional amendments thereto and such prospectus supplements as may
hereafter be required in connection with the offering and sale of the Series C
Notes. The registration statement has been declared effective under the
Securities Act by the Commission. The registration statement as amended at the
time it became effective (including all information deemed (whether by
incorporation by reference or otherwise) to be a part of the registration
statement at the time it became effective pursuant to Rule 430A(b) of the
Securities Act Regulations) is hereinafter called the "REGISTRATION STATEMENT,"
except that, if the Company files a post-effective amendment to such
registration statement which becomes effective prior to the Delivery Date (as
defined below), "Registration Statement" shall refer to such registration
statement as so amended. As used herein, the term "PROSPECTUS" means the
prospectus included in the Registration Statement in the form filed with the
Commission on April 16, 1999 pursuant to Rule 424(b) under the Securities Act
Regulations, except that, subject to Section 5(a) below, if any revised
prospectus or prospectus supplement shall be provided to the Underwriters by the
Company for use in connection with the offering and sale of the Series C Notes
which differs from the Prospectus (whether or not such revised prospectus or
prospectus supplement is required to be filed by the Company pursuant to Rule
424(b) of the Securities Act Regulations), the term "Prospectus" shall refer to
the Prospectus as revised or supplemented by such revised prospectus or
prospectus supplement, as the case may be, from and after the time it is first
provided to the Underwriters for such use. The Commission has not issued any
order preventing or suspending the use of the Prospectus.
1. SALE AND PURCHASE OF THE SERIES C NOTES. On the basis of the
representations, warranties and agreements contained in, and subject to the
terms and conditions of, this Agreement, the Company agrees to sell to the
Underwriters, and each Underwriter agrees, severally and not jointly, to
purchase from the Company, the principal amount of Series C Notes set forth
opposite the name of such Underwriter in Schedule 1 hereto at a purchase price
equal to $999.775 per $1,000 principal amount Series C Note (the "PURCHASE
PRICE").
The Company shall not be obligated to deliver any of the Series C
Notes to be delivered on the Delivery Date (as hereinafter defined), except upon
payment for all the Series C Notes to be purchased on such Delivery Date as
provided herein.
2. DELIVERY AND PAYMENT. Delivery by the Company of the Series C
Notes to the Underwriters, and payment of the purchase price by wire transfer
payable in same day funds drawn to the order of the Company for the Series C
Notes purchased from the Company, against delivery of the respective
certificates therefor to the Underwriters, shall take place at the offices of
Xxxxxx & Xxxxxxx, 000 Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, at 10:00 a.m., New
York City time, on March 1, 2002, or at such time on such other date, not later
than 10 business days after the date of this Agreement, as shall be agreed upon
by the Company and the Underwriters (such time and date of delivery and payment
are sometimes referred to as the "DELIVERY DATE").
(a) The Series C Notes will be delivered to the Underwriters against
payment of the purchase price therefor in immediately available funds. The
Series C Notes will be evidenced by one or more global securities in
definitive form (the "GLOBAL NOTE") and/or by additional definitive
securities, and will be registered, in the case of the Global Note, in the
name of Cede & Co. as nominee of The Depository Trust Company ("DTC"), and
in the other cases, in such names and in such denominations as the
Underwriters shall request before 9:30 A. M., New York City time, on the
second business day preceding the Delivery Date. The Series C Notes to be
delivered to the Underwriters shall be made available to the Underwriters
in New York City for inspection and packaging not later than 9:30 A.M.,
New York City time, on the business day next preceding the Delivery Date.
(b) Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the
obligation of the Underwriters hereunder.
3. REPRESENTATIONS AND WARRANTIES OF THE COMPANY AND THE GUARANTORS.
The Company, and each of the Guarantors, hereby represents and warrants to the
Underwriters as follows:
(a) The Company and its subsidiaries have been duly organized and
formed and are validly existing in good standing under the laws of their
respective jurisdictions of organization with full power and authority to
own their properties, to conduct their business as described in the
Registration Statement and Prospectus and to execute and deliver this
Agreement and to consummate the transactions contemplated hereby, except
where the failure to be organized or validly existing or to have such
power or authority or to be in good standing would not reasonably be
expected to have a material adverse effect on the consolidated financial
condition, business, properties or results of operations of the Company
and its subsidiaries taken as a whole (a "MATERIAL ADVERSE EFFECT").
(b) The Company has an authorized capitalization as set forth in the
Prospectus, and all of the issued shares of capital stock of the Company
have been duly and validly authorized and issued, are fully paid and
non-assessable; and all of the issued shares of capital stock of each
Guarantor of the Company have been duly and validly authorized and issued
and are fully paid and non-assessable and (except for directors'
qualifying shares and except as set forth in the Prospectus) are owned
directly or
indirectly by the Company, free and clear of all liens, encumbrances,
equities or claims (except liens held pursuant to the Credit Facilities,
as defined in the Prospectus).
(c) The Company and all of its subsidiaries are duly qualified or
licensed by each jurisdiction in which their respective ownership or lease
of property or the conduct of their respective businesses requires such
qualification, except where the failure, individually or in the aggregate,
to be so qualified or licensed would not reasonably be expected to have a
Material Adverse Effect; except as disclosed in the Prospectus, no
Subsidiary (other than Odessa Exploration Incorporated) is prohibited or
restricted, directly or indirectly, from paying dividends to the Company,
or from making any other distribution with respect to such Subsidiary's
capital stock or from repaying to the Company or any other subsidiary any
amounts which may from time to time become due under any loans or advances
to such subsidiary from the Company or such other subsidiary, or from
transferring any such subsidiary's property or assets to the Company or to
any other subsidiary; other than the Company's interests in the Xxxxxx
Midstream 1995-2 Business Trust and the Xxxxxx Midstream 1997-1 Business
Trust and except as disclosed in the Prospectus, the Company does not own,
directly or indirectly, more than one percent of the capital stock or
other equity securities of any other corporation or any ownership interest
in any partnership, joint venture or other association.
(d) The Company has all requisite power and authority to execute,
deliver and perform its obligations under the Notes.
(e) The Company and each of the Guarantors has all requisite power
and authority to execute, deliver and perform its obligations under this
Agreement and the Indenture.
(f) The Base Indenture has been duly and validly authorized by the
Company and each of the Guarantors, and, assuming due authorization,
execution and delivery by the Trustee, will constitute the valid and
binding agreement of the Company and each of the Guarantors, enforceable
against the Company and each of the Guarantors in accordance with its
terms, subject to the qualification that the enforceability of the
Company's and the Guarantors' obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium,
and other laws relating to or affecting creditors' rights generally and by
general equitable principles; the Supplemental Indenture has been duly and
validly authorized by the Company and each of the Guarantors, and upon its
execution and delivery and, assuming due authorization, execution and
delivery by the Trustee, will constitute the valid and binding agreement
of the Company and each of the Guarantors, enforceable against the Company
and each of the Guarantors in accordance with its terms, subject to the
qualification that the enforceability of the Company's and the Guarantors'
obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors' rights generally and by general
equitable principles; and the Prospectus contains an accurate summary, in
all material respects, of the terms of the Indenture.
(g) The Series C Notes have been duly and validly authorized by the
Company, and when duly executed by the Company in accordance with the
terms of the Indenture and, assuming due authentication of the Series C
Notes by the Trustee, upon delivery to the Underwriters against payment
therefor in accordance with the terms hereof, will have been validly
issued and delivered, and will constitute valid and binding obligations of
the Company entitled to the benefits of the Indenture, enforceable against
the Company in accordance with their terms, subject to the qualification
that the enforceability of the Company's obligations thereunder may be
limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights
generally and by general equitable principles. On the Delivery Date, the
Series C Notes will conform as to legal matters, in all material respects,
to the description thereof contained in the Prospectus.
(h) The Additional Series C Notes have been duly and validly
authorized by the Company, and if and when duly issued and authenticated
in accordance with the terms of the Indenture will constitute valid and
binding obligations of the Company entitled to the benefits of the
Indenture, enforceable against the Company in accordance with their terms,
subject to the qualification that the enforceability of the Company's
obligations thereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors' rights generally and by general
equitable principles. On the Delivery Date, the Additional Series C Notes
will conform as to legal matters, in all material respects, to the
description thereof contained in the Prospectus.
(i) This Agreement has been duly authorized, executed and delivered
by the Company and each of the Guarantors, and (assuming due execution and
delivery by the Underwriters) will constitute a valid and binding
agreement of the Company and each of the Guarantors, enforceable against
the Company and each of the Guarantors in accordance with its terms,
subject to the qualification that the enforceability of the Company's or
the Guarantors' obligations hereunder may be limited by bankruptcy,
fraudulent conveyance, insolvency, reorganization, moratorium, and other
laws relating to or affecting creditors' rights generally and by general
equitable principles.
(j) The execution, delivery and performance of this Agreement and
the Indenture and the issuance of the Notes by the Company, and the
execution, delivery and performance of this Agreement and the Indenture
and the issuance of the Guarantees by the Guarantors and the consummation
of the transactions contemplated hereby and thereby will not conflict with
or result in a breach or violation of any of the terms or provisions of,
or constitute a default under, (i) any indenture, mortgage, deed of trust,
loan agreement or other agreement or instrument to which the Company or
any of its subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, that would have a Material
Adverse Effect, (ii) the provisions of the charter or by-laws of the
Company or any of its subsidiaries, or (iii) any statute or any order,
rule or regulation of any court or governmental agency or body having
jurisdiction over the Company or any of its subsidiaries or any of their
properties or assets, that would have a Material Adverse Effect; and
except for such consents, approvals, authorizations, registrations or
qualifications as may be required under the Securities Exchange Act of
1934, as amended (the "EXCHANGE ACT"), and applicable state securities
laws, no consent, approval, authorization or order of, or filing or
registration with, any such court or governmental agency or body is
required for the execution, delivery and performance of this Agreement,
the subsidiary guarantees or the Indenture by the Company and the
Guarantors and the consummation of the transactions contemplated hereby
and thereby.
(k) The Company and the Guarantors are in compliance in all material
respects with all applicable laws, rules, regulations, orders, decrees and
judgments, including those relating to transactions with affiliates,
except where the failure to be in compliance would not have a Material
Adverse Effect;
(l) Neither the Company nor any of the Guarantors is in breach of or
in default under (nor has any event occurred which with notice, lapse of
time, or both would constitute a breach of, or default under), its
respective articles of incorporation or charter or by-laws, or in the
performance or observance of any obligation, agreement, covenant or
condition contained in any license, indenture, mortgage, deed of trust,
loan or credit agreement or other agreement or instrument to which the
Company or any of the Guarantors is a party or by which any of them or
their respective properties is bound, except for such breaches or defaults
which would not reasonably be expected to have a Material Adverse Effect;
(m) No approval, authorization, consent or order of or filing with
any federal, state or local governmental or regulatory commission, board,
body, authority or agency is required in connection with the Company's and
the Guarantors' execution, delivery and performance of this Agreement, the
Indenture and the consummation of the transaction contemplated hereby and
thereby, and its sale and delivery of the Notes, other than such as have
been obtained, or will have been obtained at the Delivery Date;
(n) Each of the Company and its subsidiaries has all necessary
licenses, authorizations, consents and approvals and has made all
necessary filings required under any federal, state or local law,
regulation or rule, and has obtained all necessary authorizations,
consents and approvals from other persons, required in order to conduct
their respective businesses as described in the Prospectus, except to the
extent that any failure to have any such licenses, authorizations,
consents or approvals, to make any such filings or to obtain any such
authorizations, consents or approvals would not, individually or in the
aggregate, be reasonably expected to have a Material Adverse Effect;
neither the Company nor any of its subsidiaries is in violation of, in
default under, or has received any notice regarding a possible violation,
default or revocation of any such license, authorization, consent or
approval or any federal, state, local or foreign law, regulation or rule
or any decree, order or judgment applicable to the Company or any of its
subsidiaries which could reasonably be expected to have a Material Adverse
Effect; and such licenses, authorizations, consents or approvals do not,
individually or in the aggregate, contain any restriction sufficiently
burdensome as to have a Material Adverse Effect and which restriction is
not adequately disclosed in the Prospectus;
(o) The Registration Statement has become effective under the
Securities Act and no stop order suspending the effectiveness of the
Registration Statement has been issued under the Securities Act and no
proceedings for that purpose have been instituted or are pending or, to
the knowledge of the Company, are threatened by the Commission, and any
request on the part of the Commission for additional information has been
complied with;
(p) The Registration Statement complies, and the Prospectus and any
further amendments or supplements thereto will, when filed with the
Commission, comply in all material respects with the requirements of the
Securities Act and the Securities Act Regulations; the Registration
Statement did not, and any amendment thereto relating to this offering
will not, in each case as of the applicable effective date, contain an
untrue statement of a material fact or omit to state a material fact
required to be stated therein or necessary to make the statements therein
not misleading; and the Prospectus or any amendment or supplement thereto
at the time of its delivery, will not, as of the applicable filing date
and at the Delivery Date, contain an untrue statement of a material fact
or omit to state a material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they were made, not misleading; PROVIDED,
HOWEVER, that the Company makes no warranty or representation with respect
to any statement contained in the Registration Statement or the Prospectus
in reliance upon and in conformity with the information concerning the
Underwriters and furnished in writing by or on behalf of the Underwriters
to the Company expressly for use in the Registration Statement or the
Prospectus;
(q) The Prospectus delivered to the Underwriters for use in
connection with the offering of the Series C Notes will be identical in
all material respects to the version of the Prospectus created to be
transmitted to the Commission for filing via the Electronic Data Gathering
Analysis and Retrieval System ("XXXXX"), except to the extent permitted by
Regulation S-T;
(r) On or before the Delivery Date, all legal or governmental
proceedings, contracts or documents of a character required to be filed as
exhibits to the Registration Statement or to be summarized or described in
the Prospectus will have been so filed, summarized or described as
required;
(s) There are no actions, suits, proceedings, inquiries or
investigations pending or, to the knowledge of the Company, threatened
against the Company or any of its subsidiaries or any of their respective
officers and directors or to which the properties, assets or rights of any
such entity are subject, at law or in equity, before or by any federal,
state, local or foreign governmental or regulatory commission, board,
body, authority, arbitral panel or agency which could result in a
judgment, decree, award or order which, if determined adversely to the
Company, would reasonably be expected to have a Material Adverse Effect;
(t) The consolidated historical financial statements, including the
notes thereto, filed or incorporated by reference as part of the
Registration Statement or included in the Prospectus present fairly, in
all material respects, the consolidated
financial position of the entities to which such financial statements
relate (the "COVERED ENTITIES") as of the dates indicated and the
consolidated results of operations and changes in financial position
and cash flows of the Covered Entities for the periods specified; such
financial statements have been prepared in conformity, in all material
respects, with generally accepted accounting principles applied on a
consistent basis during the periods involved and in accordance with
Regulation S-X promulgated by the Commission; and the amounts in the
Company's Form 10-K, for the year ended June 30, 2001, under the
caption "Selected Financial Data" incorporated by reference into the
Prospectus fairly present, in all material respects, the information
shown therein and have been compiled on a basis consistent with the
financial statements included in the Prospectus;
(u) KPMG LLP, whose reports on the consolidated financial statements
of the Company and its subsidiaries are filed with the Commission as part
of the Prospectus, are and were during the periods covered by their
reports, independent public accountants as required by the Securities Act
and the Securities Act Regulations;
(v) Subsequent to the most recent dates as of which information is
given in the Registration Statement and the Prospectus, and except as may
be otherwise stated in the Registration Statement or Prospectus, there has
not been (A) any material adverse change in the assets, business,
operations, earnings, prospects, properties or condition (financial or
otherwise), present or prospective, of the Company and the Guarantors,
whether or not arising in the ordinary course of business, (B) any
transaction, which is material to the Company and the Guarantors taken as
a whole, entered into by the Company or any of the Guarantors that is not
in the ordinary course of business, (C) any obligation, contingent or
otherwise, directly or indirectly incurred by the Company or any of the
Guarantors, which is material to the Company and the Guarantors taken as a
whole other than those that were incurred in the ordinary course of
business or (D) any dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock;
(w) The Notes, when issued, will conform in all material respects to
the description thereof contained in the Prospectus;
(x) Except 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 securities of the
Company owned or to be owned by such person or to require the Company to
include such securities in the securities registered pursuant to the
Registration Statement;
(y) Neither the Company nor any of its subsidiaries nor any agent
thereof acting on the behalf of them has taken, and none of them will
take, any action that might cause this Agreement or the issuance or sale
of the Notes to violate, Regulation T (12 C.F.R. Part 220), Regulation U
(12 C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of
Governors of the Federal Reserve System.
(z) The Company has not taken, and will not take, directly or
indirectly, any action which is designed to or which has constituted 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 Series C Notes;
(aa) Except with respect to the blue sky survey, the Company has not
relied upon the Underwriters or legal counsel for the Underwriters for any
legal, tax or accounting advice in connection with the offering and sale
of the Series C Notes;
(bb) Any certificate signed by any officer of the Company or any
Guarantor delivered to the Underwriters or to counsel for the Underwriters
pursuant to or in connection with this Agreement shall be deemed a
representation and warranty by the Company or such Guarantor to the
Underwriters as to the matters covered thereby;
(cc) The Company and each of the Guarantors have good and marketable
title in fee simple to all real property, if any, and good title to all
personal property owned by them, in each case free and clear of all liens,
security interests, pledges, charges, encumbrances, mortgages and defects,
except such as are disclosed in the Prospectus or permitted by the
indenture for the Company's 14% Senior Subordinated Notes due 2009 or such
as do not result in a Material Adverse Effect and do not interfere with
the use made or proposed to be made of such property by the Company and
the Guarantors; and any real property and buildings held under lease by
the Company or any of the Guarantors are held under valid, existing and
enforceable leases, with such exceptions as are disclosed in the
Prospectus or which would not reasonably be expected to have a Material
Adverse Effect;
(dd) The descriptions in the Prospectus of the contracts, leases and
other legal documents therein described present fairly the information
required to be shown, and there are no contracts, leases, or other
documents of a character required to be described in the Prospectus or to
be filed as exhibits to the Registration Statement which are not described
or filed as required;
(ee) The Company and each subsidiary owns or possesses adequate
license or other rights to use all patents, trademarks, service marks,
trade names, copyrights, software and design licenses, trade secrets,
manufacturing processes, other intangible property rights and know-how
(collectively "INTANGIBLES") necessary to entitle the Company and each
subsidiary to conduct its business as described in the Prospectus, except
to the extent that the failure to own or possess any such Intangibles
would not have a Material Adverse Effect, and neither the Company, nor any
subsidiary, has received notice of infringement of or conflict with (and
the Company knows of no such infringement of or conflict with) asserted
rights of others with respect to any Intangibles which could reasonably be
expected to have a Material Adverse Effect;
(ff) The Company and each of the Guarantors maintain a system of
internal accounting controls sufficient to provide reasonable assurance
that (i) transactions are executed in accordance with management's general
or specific authorizations; and (ii) transactions are recorded as
necessary to permit preparation of financial statements in
conformity with generally accepted accounting principles and to
maintain asset accountability;
(gg) Each of the Company and the Guarantors has filed on a timely
basis all necessary federal, state, local and foreign income and franchise
tax returns required to be filed through the date hereof, except for
failures to file that would not have a Material Adverse Effect, and have
paid all taxes shown as due thereon other than those being contested in
good faith and for which reserves have been provided in accordance with
generally accepted accounting principles, those currently payable without
penalty or interest, or the nonpayment of which would not have a Material
Adverse Effect; and no tax deficiency has been asserted or determined
adversely to the Company or any of the Guarantors which has had a Material
Adverse Effect (nor does the Company have any knowledge of any tax
deficiency which, if determined adversely to the Company or any of the
Guarantors, would have such a Material Adverse Effect).
(hh) Each of the Company and the Guarantors carries, or is covered
by, insurance in such amounts and covering such risks that the Company
believes is adequate for the conduct of their respective businesses and
the value of their respective properties, and is customary for companies
engaged in similar businesses in similar industries;
(ii) Since the date of the Prospectus, neither the Company nor any
of the Guarantors has violated, or received notice of any violation with
respect to: (i) any federal or state law relating to discrimination in the
hiring, promotion or pay of employees; or (ii) any applicable federal or
state wages and hours law, the violation of any of which would reasonably
be expected to have a Material Adverse Effect;
(jj) Except as would not, individually or in the aggregate, have a
Material Adverse Effect: (i) the Company and the Guarantors are in
compliance with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the
regulations and published interpretations thereunder ("ERISA"); (ii) no
"REPORTABLE EVENT" (as defined in ERISA) has occurred with respect to any
"PENSION PLAN" (as defined in ERISA) for which the Company and the
Guarantors would have any liability; (iii) the Company and the Guarantors
have not incurred and do not expect to incur liability under (A) Title IV
of ERISA with respect to termination of, or withdrawal from, any "pension
plan" or (B) Sections 412 or 4971 of the Internal Revenue Code of 1986, as
amended, including the regulations and published interpretations
thereunder (the "CODE"); and (iv) each "pension plan" for which the
Company and the Guarantors would have any liability that is intended to be
qualified under Section 401(a) of the Code is so qualified in all material
respects and nothing has occurred, whether by action or by failure to act,
which would cause the loss of such qualification;
(kk) There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of toxic wastes, medical
wastes, hazardous wastes or hazardous substances by the Company or any of
its subsidiaries (or, to the knowledge of the Company, any of their
predecessors in interest) at, upon or from any of the property now or
previously owned or leased by the Company or its subsidiaries in violation
of any applicable law, ordinance, rule, regulation, order, judgment,
decree or permit or which would require remedial action under any
applicable law, ordinance, rule, regulation, order, judgment, decree or
permit, except for any violation or remedial action which would not have,
or could not be reasonably expected to have, singularly or in the
aggregate with all such violations and remedial actions, a Material
Adverse Effect; there has been no material spill, discharge, leak,
emission, injection, escape, dumping or release of any kind onto such
property or into the environment surrounding such property of any toxic
wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or any of its subsidiaries or
with respect to which the Company or any of its subsidiaries have
knowledge, except for any such spill, discharge, leak, emission,
injection, escape, dumping or release which would not have or would not be
reasonably expected to have, singularly or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings and
releases, a Material Adverse Effect; and the terms "hazardous wastes",
"toxic wastes", "hazardous substances" and "medical wastes" shall have the
meanings specified in any applicable local, state, federal and foreign
laws or regulations with respect to environmental protection;
(ll) To the knowledge of the Company, neither the Company nor any of
its subsidiaries, nor any director, officer, agent, employee or other
person associated with or acting on behalf of the Company or any of its
subsidiaries, has used any corporate funds for any unlawful contribution,
gift, entertainment or other unlawful expense relating to political
activity; made any direct or indirect unlawful payment to any foreign or
domestic government official or employee from corporate funds; violated or
is in violation of any provision of the Foreign Corrupt Practices Act of
1977; made any bribe, rebate, payoff, influence payment, kickback or other
unlawful payment; or engaged in any transactions, maintained any bank
account or used any corporate funds except for transactions, bank accounts
and funds which have been and are reflected in the normally maintained
books and records of the Company and its subsidiaries;
(mm) There are no material outstanding loans or advances or material
guarantees of indebtedness by the Company or any of its subsidiaries to or
for the benefit of any of the officers or directors of the Company or any
of its subsidiaries or any of the members of the families of any of them
that are required to be disclosed in the Prospectus that are not so
disclosed;
(nn) Since the 1992 reorganization of the Company, all securities
issued by the Company have been issued and sold in compliance with (i) all
applicable federal and state securities laws, (ii) the laws of the
applicable jurisdiction of incorporation of the issuing entity and, (iii)
to the extent applicable to the issuing entity, the requirements of the
New York Stock Exchange;
(oo) Except for the December 2001 offering by the Company of
5,400,000 shares of its common stock and in connection with certain
acquisitions and except as described in the Registration Statement or the
Prospectus, the Company has not sold or issued any shares of common stock
during the six-month period preceding the date of the Prospectus,
including any sales pursuant to Rule 144A under, or Regulations D or S of,
the Securities Act, other than shares issued pursuant to employee benefit
plans, qualified
stock options plans or other employee compensation plans or pursuant to
outstanding options, rights or warrants. The Company has not
distributed and will not distribute any other offering material in
connection with the offer and sale of the Series C Notes other than the
Registration Statement and the Prospectus;
(pp) Other than as described in the Prospectus, the Company has not
incurred any liability for any finder's fees or similar payments in
connection with the transactions herein contemplated;
(qq) No relationship, direct or indirect, exists between or among
the Company or any of the Guarantors on the one hand, and the directors,
officers, stockholders, customers or suppliers of the Company or any of
the Guarantors on the other hand, which is required to be described in the
Registration Statement or the Prospectus and which is not so described;
(rr) Neither the Company nor any of the subsidiaries is and, after
giving effect to the offering and sale of the Notes, will be an
"investment company" or an entity "controlled" by and "investment
company", as such terms are defined in the Investment Company Act of 1940,
as amended; and
(ss) There are no existing or, to the knowledge of the Company,
threatened labor disputes with the employees of the Company or any of its
subsidiaries which are likely to have, individually or in the aggregate, a
Material Adverse Effect.
4. CONDITIONS OF THE UNDERWRITERS' OBLIGATIONS. The respective
obligations of the Underwriters to purchase the Series C Notes are subject to
each of the following terms and conditions:
(a) Notification that the Registration Statement remains effective
shall have been received by the Underwriters and the Prospectus shall have
been timely filed with the Commission in accordance with Section 5(a) of
this Agreement.
(b) No order preventing or suspending the use of the Prospectus
shall have been or shall be in effect and no order suspending the
effectiveness of the Registration Statement shall be in effect and no
proceedings for such purpose shall be pending before or threatened by the
Commission, and any requests by the Commission for additional information
(to be included in the Registration Statement or the Prospectus or
otherwise) shall have been complied with to the satisfaction of the
Commission and the Underwriters.
(c) The representations and warranties of the Company and the
Guarantors contained in this Agreement and in the certificates delivered
pursuant to Section 4(d), 4(e) and 4(n) shall be true and correct, in all
material respects, when made and on and as of the Delivery Date as if made
on such date. The Company and the Guarantors shall have materially
performed all covenants and agreements and satisfied all the conditions
contained in this Agreement required to be performed or satisfied by them
at or before the Delivery Date.
(d) The Underwriters shall have received on the Delivery Date a
certificate, addressed to the Underwriters and dated such Delivery Date,
of the chief executive and the chief financial officer of the Company to
the effect that (i) the signers of such certificate have carefully
examined the Registration Statement, the Prospectus and this Agreement and
that the representations and warranties of the Company in this Agreement
are materially true and correct on and as of the Delivery Date with the
same effect as if made on the Delivery Date and the Company has performed,
in all material respects, all covenants and agreements and satisfied, in
all material respects, all conditions contained in this Agreement required
to be performed or satisfied by it at or prior to the Delivery Date, and
(ii) no stop order suspending the effectiveness of the Registration
Statement has been issued and to the best of their knowledge, no
proceedings for that purpose have been instituted or are pending under the
Securities Act.
(e) The Underwriters shall have received on the Delivery Date a
certificate, addressed to the Underwriters and dated such Delivery Date,
of the vice-president of each Guarantor to the effect that the
representations and warranties of such Guarantor in this Agreement are
materially true and correct on and as of the Delivery Date with the same
effect as if made on the Delivery Date and such Guarantor has performed,
in all material respects, all covenants and agreements and satisfied, in
all material respects, all conditions contained in this Agreement required
to be performed or satisfied by it at or prior to the Delivery Date,
(f) The Underwriters shall have received, on the date hereof, a
signed letter from KPMG LLP addressed to the Underwriters and dated the
Delivery Date, in form and substance reasonably satisfactory to the
Underwriters confirming that they are independent accountants within the
meaning of the Securities Act and the Securities Act Regulations, and are
in compliance with the applicable requirements relating to the
qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission and stating in effect that:
(i) in their opinion the audited financial statements and
financial statement schedules included or incorporated by reference
in the Registration Statement and the Prospectus and reported on by
them comply as to form in all material respects with the applicable
accounting requirements of the Securities Act and the Securities Act
Regulations;
(ii) on the basis of carrying out certain procedures but not
an examination in accordance with generally accepted auditing
standards which would not necessarily reveal matters of significance
with respect to the comments set forth in such letter, a reading of
the minutes of the meetings of the stockholders and directors of the
Company, and inquiries of certain officials of the Company who have
responsibility for financial and accounting matters of the Company
as to transactions and events subsequent to the date of the latest
audited financial statements, except as disclosed in the
Registration Statement and the Prospectus, nothing came to their
attention which caused them to believe that:
(A) with respect to the Company, there were, at a
specified date not more than three business days prior to the
date of the letter, any increases in the current liabilities
and long-term liabilities of the Company or any decreases in
net income or in working capital or the stockholders' equity
in the Company, as compared with the amounts shown on the
Company's audited balance sheet for the fiscal year ended June
30, 2001 and the unaudited balance sheet for the three months
ended December 31, 2001 incorporated by reference in the
Registration Statement; and
(iii) they have performed certain other procedures as may be
permitted under generally accepted auditing standards as a result of
which they determined that certain information of an accounting,
financial or statistical nature (which is limited to accounting,
financial or statistical information derived from the general
accounting records of the Company) set forth or incorporated by
reference in the Registration Statement and the Prospectus and
reasonably specified by the Underwriters agrees with the accounting
records of the Company.
References to the Registration Statement and the Prospectus in
this paragraph (f) are to such documents as amended and supplemented
at the date of the letter.
(g) With respect to the letter of KPMG LLP referred to in the
preceding paragraph and delivered to the Underwriters concurrently with
the execution of this Agreement (the "initial letter"), KPMG LLP shall
have furnished to the Underwriters and dated the Delivery Date a letter
(the "bring-down letter") of such accountants, addressed to the
Underwriters (i) confirming that they are independent public accountants
within the meaning of the Securities Act and are in compliance with the
applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the
date of the bring-down letter (or, with respect to matters involving
changes or developments since the respective dates as of which specified
financial information is given in the Prospectus, as of a date not more
than three days before the date of the bring-down letter), the conclusion
and findings of such firm with respect to the financial information and
other matters covered by the initial letter and (iii) confirming in all
material respects the conclusions and findings set forth in the initial
letter.
(h) The Company shall furnish to the Underwriters at the Delivery
Date an opinion of Xxxxxx & Xxxxxx, L.L.P., counsel for the Company and
its subsidiaries, addressed to the Underwriters and dated the Delivery
Date and in form and substance reasonably satisfactory to Xxxxxx &
Xxxxxxx, counsel for the Underwriters, stating that:
(i) The Company and each of the Guarantors has been duly
organized and is validly existing in good standing under the laws of
its respective jurisdiction of organization with full corporate
power and authority to own its respective properties and to conduct
its respective business as described in the Registration Statement
and Prospectus and, in the case of the Company and the Guarantors,
to execute and deliver this Agreement and to consummate the
transactions described in this Agreement, except where the failure
by any of such subsidiaries to be organized, validly existing and in
good standing, or the failure to have such power or authority would
not reasonably be expected to have a Material Adverse Effect;
(ii) The Company and each of the Guarantors are duly qualified
or licensed by each jurisdiction in which their respective ownership
or lease of property or the conduct of their respective businesses
requires such qualification, except where the failure to be so
qualified or licensed would not reasonably be expected to have a
Material Adverse Effect. Except as disclosed in the Prospectus, no
subsidiary of the Company is prohibited or restricted, directly or
indirectly, from paying dividends to the Company, or from making any
other distribution with respect to such subsidiary's capital stock
or from repaying to the Company or any other subsidiary any amounts
which may from time to time become due under any loans or advances
to such subsidiary from the Company or such other subsidiary, or
from transferring any such subsidiary's property or assets to the
Company or to any other subsidiary;
(iii) The Company has an authorized capitalization as set
forth in the Prospectus, and all of the issued shares of capital
stock of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and conform to the
description thereof contained in the Registration Statement and the
Prospectus;
(iv) To such counsel's knowledge, neither the Company nor any
of its subsidiaries is in breach of, or in default under (nor has
any event occurred which with notice, lapse of time, or both would
constitute a breach of, or default under), any license, indenture,
mortgage, deed of trust, loan or credit agreement or any other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which any of them or their respective
properties may be bound or affected or under any law, regulation or
rule or any decree, judgment or order applicable to the Company or
any of its subsidiaries, except such breaches or defaults which
would not reasonably be expected to have a Material Adverse Effect;
(v) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors;
(vi) The Indenture has been duly authorized, executed and
delivered by the Company and each of the Guarantors and (assuming
due authentication, execution and delivery by the Trustee)
constitutes a valid and legally binding agreement of the Company and
each of the Guarantors, enforceable against each of them in
accordance with its terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally and by general equitable principles;
(vii) The Series C Notes have been duly authorized, executed,
authenticated, issued and delivered by the Company as provided in
the Indenture, and constitute valid and legally binding obligations
of the Company, entitled to the benefits of the Indenture and
enforceable in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally and by general equitable
principles;
(viii) The Additional Series C Notes have been duly authorized
by the Company, and when executed, authenticated, issued and
delivered by the Company as provided in the Indenture, will
constitute valid and legally binding obligations of the Company,
entitled to the benefits of the Indenture and enforceable in
accordance with their terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditors' rights
generally and by general equitable principles;
(ix) No approval, authorization, consent or order of or filing
with any federal or state governmental or regulatory commission,
board, body, authority or agency is required in connection with the
execution, delivery and performance of this Agreement, the
Indenture, the consummation of the transaction contemplated hereby,
the consummation of the Exchange Offer and the sale and delivery of
the Notes by the Company as contemplated hereby, other than such as
have been obtained or made under the Securities Act and the
Securities Act Regulations;
(x) The execution, delivery and performance of this Agreement
and the Indenture and the consummation by the Company of the
transactions contemplated thereby, including the Exchange Offer, do
not and will not (A) conflict with, or result in any breach of, or
constitute a default under (nor constitute any event which with
notice, lapse of time, or both would constitute a breach of or
default under), (i) any provisions of the articles of incorporation,
charter or by-laws of the Company or any Guarantor, (ii) any
provision of any material license, indenture, mortgage, deed of
trust, loan, credit or other agreement or instrument known to such
counsel and to which the Company or any Guarantor is a party or by
which any of them or their respective properties or assets may be
bound or affected, (iii) any law or regulation binding upon or
applicable to the Company or any Guarantor or any of their
respective properties or assets, or (iv) any decree, judgment or
order known to such counsel to be applicable to the Company or any
Guarantor; (B) result in the creation or imposition of any lien,
charge, claim or encumbrance upon any property or assets of the
Company or the Guarantors; (C) accelerate the right of any holder of
a security or obligation of the Company or the Guarantors to receive
a payment prior to maturity; or (D) trigger a change in control
provision under any obligation, agreement, covenant or condition
contained in any license, indenture, mortgage, deed of trust, loan
or credit agreement or other agreement or instrument known to such
counsel which the Company or any of the Guarantors is a party or by
which any of them or their respective properties is bound, except in
the case of
an event described in clauses (A) through (D) that would not result
in a Material Adverse Effect;
(xi) To such counsel's knowledge, there are no persons with
registration or other similar rights to have any equity securities,
including securities which are convertible into or exchangeable for
equity securities, registered pursuant to the Registration
Statement;
(xii) The Indenture and the Notes conform in all material
respects to the description thereof contained in the Registration
Statement and Prospectus;
(xiii) There are no preemptive or other rights to subscribe
for or to purchase, nor any restriction upon the voting or transfer
of, any of the Company's securities pursuant to the Company's
charter or by-laws or any agreement or other instrument known to
such counsel;
(xiv) The Registration Statement has become effective under
the Securities Act, the Prospectus was filed with the Commission
pursuant to the subparagraph of rule 424(b) of the Securities Act
Regulations specified in such opinion on the date specified in such
opinion and no stop order suspending the effectiveness of the
Registration Statement has been issued and, to such counsel's
knowledge, no proceedings with respect thereto have been commenced
or threatened;
(xv) As of the effective date of the Registration Statement
and the date of filing of the Prospectus (including any amendment or
supplement thereto), respectively, the Registration Statement and
the Prospectus (except as to the financial statements and other
financial data contained therein, as to which such counsel need
express no opinion) complied as to form in all material respects
with the requirements of the Securities Act, the Trust Indenture Act
and the Securities Act Regulations;
(xvi) The Indenture has been qualified under the Trust
Indenture Act;
(xvii) The statements under the caption "Description of Debt
Securities" in the Registration Statement and under the captions
"Description of Notes" and "Certain United States Federal Income Tax
Consequences" in the Prospectus, insofar as such statements
constitute a summary of the legal matters referred to therein,
constitute accurate summaries thereof in all material respects; and
(xviii) 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, in
all material respects, fairly and accurately set forth the material
provisions of such contracts and documents.
To the extent deemed advisable by such counsel, they may rely as to
matters of fact on certificates of responsible officers of the Company and
public officials and on the opinions of other counsel satisfactory to the
Underwriters as to matters which are governed by laws other than the laws
of the States of New York and Texas, the General Corporation Law of the
State of Delaware and the Federal laws of the United States; provided that
such counsel shall state that in their opinion the Underwriters and they
are justified in relying on such other opinions. Copies of such
certificates and other opinions shall be furnished to the Underwriters and
counsel for the Underwriters.
In addition, such counsel shall state that such counsel has
participated in conferences with officers and other representatives of the
Company, representatives of the Underwriters and representatives of the
independent certified public accountants of the Company, at which
conferences the contents of the Registration Statement and the Prospectus
and related matters were discussed and, although such counsel is not
passing upon and does not assume any responsibility for the accuracy,
completeness or fairness of the statements contained in the Registration
Statement and the Prospectus (except as specified the foregoing opinion),
on the basis of the foregoing, no facts have come to the attention of such
counsel which lead such counsel to reasonably believe that the
Registration Statement at the time it became effective (except with
respect to the financial statements and notes and schedules thereto and
other financial data, as to which such counsel need express no belief)
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary to make the
statements therein not misleading, or that the Prospectus as amended or
supplemented (except with respect to the financial statements, notes and
schedules thereto and other financial data, as to which such counsel need
make no statement) on the date thereof contained any untrue statement of a
material fact or omitted to state a material fact necessary in order to
make the statements therein, in the light of the circumstances under which
they were made, not misleading.
The foregoing opinion shall be rendered to the Underwriters at the
request of the Company and shall so state therein.
(i) All corporate proceedings required to be taken in connection
with the sale of the Series C Notes as herein contemplated shall be
reasonably satisfactory in form and substance to the Underwriters and its
counsel and the Underwriters shall have received from Xxxxxx & Xxxxxxx a
favorable opinion, addressed to the Underwriters and dated the Delivery
Date, with respect to certain matters covered in paragraphs (v), (vi) and
(vii) relating to those Guarantors that are organized under the laws of
the State of Delaware and (xv) of Section 4(h) hereof, and such other
related matters as the Underwriters may reasonably request, and the
Company shall have furnished to Xxxxxx & Xxxxxxx such documents as they
may reasonably request for the purpose of enabling them to pass upon such
matters.
(j) Neither the Company nor any of its subsidiaries shall have
sustained since the date of the latest audited financial statements
included in the Prospectus (A) any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action,
order or decree, otherwise than as set forth or contemplated in the
Prospectus or (B) any change in the capital stock or long-term debt of the
Company or any of its subsidiaries or any change, or any development
involving a prospective change, in or affecting the general affairs,
management, financial position, stockholders' equity or results of
operations of the Company and its subsidiaries, otherwise than as set
forth or contemplated in the Prospectus, the effect of which, in any such
case described in clause (A) or (B), is, in the judgment of Xxxxxx
Brothers Inc., so material and adverse as to make it impracticable or
inadvisable to proceed with the public offering or the delivery of the
Series C Notes being delivered on such delivery date on the terms and in
the manner contemplated in the Prospectus.
(k) Subsequent to the execution and delivery of this Agreement (i)
no downgrading shall have occurred in the rating accorded the Company's
debt securities by any "nationally recognized statistical rating
organization", as that term is defined by the Commission for purposes of
Rule 436(g)(2) of the Securities Act Regulations and (ii) no such
organization shall have publicly announced that it has under surveillance
or review, with possible negative implications, its rating of any of the
Company's debt securities.
(l) Subsequent to the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the Nasdaq National Market or
in the over-the-counter market, or trading in any securities of the
Company on any exchange or in the over-the-counter market, shall have been
suspended or the settlement of such trading generally shall have been
materially disrupted or minimum prices shall have been established on any
such exchange or such market by the Commission, by such exchange or by any
other regulatory body or governmental authority having jurisdiction, (ii)
a banking moratorium shall have been declared by Federal or state
authorities of the United States, (iii) the United States shall have
become engaged in hostilities, there shall have been a significant
escalation in hostilities involving the United States or there shall have
been a declaration of a national emergency or war by the United States or
(iv) there shall have occurred such a material adverse change in general
domestic or international economic, political or financial conditions,
including without limitation as a result of terrorist activities after the
date hereof, or the effect of international conditions on the financial
markets in the United States shall be such, as to make it in the case of
(iii) or (iv), in the reasonable judgment of a majority in interest of the
Underwriters, impracticable or inadvisable to proceed with the public
offering or delivery of the Series C Notes being delivered on such
Delivery Date on the terms and in the manner contemplated in the
Prospectus.
(m) The Company and the Guarantors agree that the Base Indenture and
the Supplemental Indenture shall be qualified under the Trust Indenture
Act of 1939, as amended (the "TRUST INDENTURE ACT") and any necessary
supplemental indentures will be entered into in connection therewith.
(n) The Company and the Guarantors shall have furnished or caused to
be furnished to the Underwriters such further certificates or documents
customarily furnished in connection with an underwritten public offering
of debt securities, as the Underwriters shall have reasonably requested.
5. COVENANTS OF THE COMPANY AND THE GUARANTORS.
(a) The Company and the Guarantors covenant and agree as follows:
(i) The Company will cause a prospectus supplement to be filed
(but only if the Underwriters or their counsel has not reasonably
objected thereto by notice to the Company after having been
furnished a copy a reasonable time prior to filing) in connection
with the offering of the Series C Notes and will notify the
Underwriters promptly of such filing.
(ii) Until the completion of the distribution of the Series C
Notes, the Company shall promptly advise the Underwriters in writing
(i) when any amendment to the Registration Statement shall have
become effective or any supplement to the Prospectus has been filed,
(ii) of any request by the Commission for any amendment of the
Registration Statement or the Prospectus or for any additional
information, (iii) of the issuance of any stop order suspending the
effectiveness of the Registration Statement or the institution or
threatening of any proceeding for that purpose and (iv) of the
receipt by the Company of any notification with respect to the
suspension of the qualification of the Series C Notes for sale in
any jurisdiction or the initiation or threatening of any proceeding
for such purpose. For a period of 60 days after the Delivery Date,
the Company shall not file any amendment of the Registration
Statement or supplement to the Prospectus, in each case, relating to
the offering of the Series C Notes unless the Company has furnished
the Underwriters a copy for its review prior to filing and shall not
file any such proposed amendment or supplement to which the
Underwriters reasonably object. The Company shall use its best
efforts to prevent the issuance of any stop order and, if issued, to
obtain as soon as possible the withdrawal thereof.
(iii) Until the completion of the distribution of the Series C
Notes, the Company shall deliver promptly to the Underwriters such
number of the following documents as the Underwriters shall
reasonably request: (i) conformed copies of the Registration
Statement as originally filed with the Commission and each amendment
thereto (in each case excluding exhibits) and (ii) the Prospectus
and any amended or supplemented Prospectus; and, if the delivery of
a prospectus is required at any time after the filing of the
Prospectus in connection with the offering or sale of the Series C
Notes 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 to amend or supplement the Prospectus in order
to comply with the Securities Act, to notify the Underwriters and,
upon its request, to prepare and furnish without charge to the
Underwriters as many copies as the Underwriters may from time to
time reasonably request of an amended or supplemented Prospectus
which will correct such statement or omission or effect such
compliance.
(iv) The Company shall make generally available to its
security holders and to the Underwriters as soon as practicable, but
not later than 45 days after the end of the 12-month period
beginning at the end of the fiscal quarter of the Company during
which the effective date of the Registration Statement occurs (or 90
days if such 12-month period coincides with the Company's fiscal
year), an earning statement (which need not be audited) of the
Company, covering such 12-month period, which shall satisfy the
provisions of Section 11(a) of the Securities Act and Rule 158 of
the Rules.
(v) The Company shall furnish to the Underwriters and counsel
for the Underwriters, upon request and without charge, copies of the
Registration Statement (including all exhibits thereto and
amendments thereof) and all amendments thereof and, so long as
delivery of a prospectus by an Underwriter or dealer may be required
by the Securities Act or the Securities Act Regulations, as many
copies of the Prospectus and any amendments thereof and supplements
thereto as the Underwriters may reasonably request.
(vi) The Company shall reasonably cooperate with the
Underwriters and counsel for the Underwriters in endeavoring to
qualify the Series C Notes for offer and sale in connection with the
offering under the laws of such jurisdictions as the Underwriters
and the Company have mutually agreed are appropriate and shall
maintain such qualifications in effect so long as required for the
distribution of the Series C Notes; PROVIDED, HOWEVER, that the
Company shall not be required in connection therewith to qualify as
a foreign corporation or to execute a general consent to service of
process in any jurisdiction or subject itself to taxation as doing
business in any jurisdiction.
(vii) On or before completion of this offering, the Company
shall make all filings required under applicable securities laws
including any required registration under the Exchange Act.
(viii) The Company will apply the net proceeds from the
offering of the Series C Notes in the manner set forth under "Use of
Proceeds" in the Prospectus.
(ix) Except as stated in this Agreement and in the Prospectus,
the Company and the Guarantors have not taken, nor will any of them
take, directly or indirectly, any action designed to or that might
reasonably be expected to cause or result in stabilization or
manipulation of the price of the Series C Notes to facilitate the
sale or resale of the Series C Notes.
(x) The Company and the Guarantors agree to comply in all
material respects with all the terms and conditions of the Indenture
and all agreements set forth in the representation letters of the
Company and the Guarantors to DTC relating to the approval of the
Notes by DTC for "book-entry" transfer.
(xi) The Company and the Guarantors will not voluntarily
claim, and will resist actively all attempts to claim, the benefit
of any usury laws against holders of the Notes.
(xii) The Company and the Guarantors will do and perform all
things required or necessary to be done and performed under this
Agreement by them before the Delivery Date, and to satisfy all
conditions precedent to the Underwriters' obligations hereunder to
purchase the Series C Notes.
(b) The Company agrees to pay (a) the costs incident to the
authorization, issuance, sale and delivery of the Series C Notes and any
taxes payable in that connection; (b) the costs incident to the
preparation, printing and filing under the Securities Act of the
Prospectus and any amendments and exhibits thereto; (c) the costs of
distributing the Prospectus as originally filed and each amendment thereto
and any post-effective amendments thereof (including, in each case,
exhibits), the Prospectus and any amendment or supplement to the
Prospectus, all as provided in this Agreement; (d) any applicable listing
or other fees; (e) the fees and expenses (not in excess, in the aggregate,
of $10,000, including related fees and expenses of counsel to the
Underwriter) of qualifying the Series C Notes under the securities laws of
the several jurisdictions as provided in Section 5(a)(vi) and of
preparing, printing and distributing a Blue Sky Memorandum; (f) the costs
and expenses of the Company relating to investor presentations on any
"road show" undertaken in connection with the marketing of the offering of
the Series C Notes, including, without limitation, expenses associated
with the production of road show slides and graphics, fees and expenses of
any consultants engaged in connection with the road show presentations
with the prior approval of the Company, travel and lodging expenses of the
representatives and officers of the Company and any such consultants, and
one-half of the cost of any aircraft chartered in connection with the road
show; (g) all fees and expenses (including fees and expenses of counsel)
of the Company and the Guarantors in connection with approval of the Notes
by DTC for "book-entry" transfer; (h) all expenses in connection with the
Exchange Offer, including the issuance of the Additional Series C Notes
and (i) all other costs and expenses incident to the performance of the
obligations of the Company under this Agreement; provided that, except as
provided in this Section 5 and in Section 9 the Underwriters shall pay its
own costs and expenses.
6. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and each Guarantor, jointly and severally, shall
indemnify and hold harmless each Underwriter, its officers and employees
and each person, if any, who controls any Underwriter within the meaning
of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof (including,
but not limited to, any loss, claim, damage, liability or action relating
to purchases and sales of Series C Notes), to which that Underwriter,
officer, employee or controlling person may become subject, under the
Securities Act or otherwise, insofar as such loss, claim, damage,
liability or action arises out of, or is based upon, (i) any untrue
statement or alleged untrue statement of a material fact contained (A) the
Registration Statement or the Prospectus or in any amendment or supplement
thereto, or (B) in any
materials or information provided to investors by, or with the approval
of, the Company in connection with the marketing of the offering of the
Series C Notes ("MARKETING MATERIALS"), including any roadshow or
investor presentations made to investors by the Company (whether in
person or electronically), (ii) the omission or alleged omission to
state in the Registration Statement or the Prospectus, or in any
amendment or supplement thereto, or in any Marketing Materials, any
material fact required to be stated therein or necessary to make the
statements therein not misleading or (iii) any act or failure to act or
any alleged act or failure to act by any Underwriter in connection
with, or relating in any manner to, the Series C Notes or the offering
contemplated hereby, and which is included as part of or referred to in
any loss, claim, damage, liability or action arising out of or based
upon matters covered by clause (i) or (ii) above (provided that the
Company and the Guarantors shall not be liable under this clause (iii)
to the extent that it is determined in a final judgment by a court of
competent jurisdiction that such loss, claim, damage, liability or
action resulted directly from any such acts or failures to act
undertaken or omitted to be taken by such Underwriter through its gross
negligence or willful misconduct), and shall reimburse each Underwriter
and each such officer, employee or controlling person promptly upon
demand for any legal or other expenses reasonably incurred by that
Underwriter, officer, employee or controlling person in connection with
investigating or defending or preparing to defend 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, liability or
action arises out of, or is based upon, any untrue statement or alleged
untrue statement or omission or alleged omission made in the
Registration Statement or the Prospectus, or in any such amendment or
supplement, in reliance upon and in conformity with written information
concerning such Underwriter furnished to the Company through the
Underwriters by or on behalf of any Underwriter specifically for
inclusion therein which information consists solely of the information
specified in Section 6(e).
(b) Each Underwriter, severally and not jointly, shall indemnify and
hold harmless the Company, its officers and employees, each of its
directors, and each person, if any, who controls the Company within the
meaning of the Securities Act, from and against any loss, claim, damage or
liability, joint or several, or any action in respect thereof, to which
the Company or any such director, officer or controlling person may become
subject, under the Securities Act or otherwise, insofar as such loss,
claim, damage, liability or action arises out of, or is based upon, (i)
any untrue statement or alleged untrue statement of a material fact
contained in the Registration Statement or the Prospectus or in any
amendment or supplement thereto, or (ii) the omission or alleged omission
to state in the Registration Statement or the Prospectus, or in any
amendment or supplement thereto, any material fact required to be stated
therein or necessary to make the statements therein not misleading, but in
each case only to the extent that the untrue statement or alleged untrue
statement or omission or alleged omission was made in reliance upon and in
conformity with written information concerning such Underwriter furnished
to the Company by or on behalf of that Underwriter specifically for
inclusion therein, and shall reimburse the Company and any such director,
officer or controlling person for any legal or other expenses reasonably
incurred by the Company or any such director, officer or controlling
person in connection with investigating or defending or preparing to
defend against any such loss, claim, damage, liability or action as such
expenses are incurred. The foregoing indemnity agreement is in addition to
any liability which any Underwriter may otherwise have to the Company or
any such director, officer, employee or controlling person.
(c) Promptly after receipt by an indemnified party under this
Section 6 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made
against the indemnifying party under this Section 6, notify the
indemnifying party in writing of the claim or the commencement of that
action; PROVIDED, HOWEVER, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have under this
Section 6 except to the extent it has been materially prejudiced by such
failure and, PROVIDED FURTHER, that the failure to notify the indemnifying
party shall not relieve it from any liability which it may have to an
indemnified party otherwise than under this Section 6. If any such claim
or action shall be brought against an indemnified party, and it shall
notify the indemnifying party thereof, the indemnifying party shall be
entitled to participate therein and, to the extent that it wishes, jointly
with any other similarly notified indemnifying party, to assume the
defense thereof with counsel reasonably satisfactory to the indemnified
party. After notice from the indemnifying party to the indemnified party
of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 6 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than
reasonable costs of investigation; PROVIDED, HOWEVER, that the
Underwriters shall have the right to employ counsel to represent jointly
the Underwriters and their respective officers, employees and controlling
persons who may be subject to liability arising out of any claim in
respect of which indemnity may be sought by the Underwriters against the
Company under this Section 6 if, in the reasonable judgment of the
Underwriters, it is advisable for the Underwriters and those officers,
employees and controlling persons to be jointly represented by separate
counsel, and in that event the fees and expenses of such separate counsel
shall be paid by the Company. No indemnifying party shall (i) without the
prior written consent of the indemnified parties (which consent shall not
be unreasonably withheld), settle or compromise or consent to the entry of
any judgment with respect to any pending or threatened claim, action, suit
or proceeding in respect of which indemnification or contribution may be
sought hereunder (whether or not the indemnified parties are actual or
potential parties to such claim or action) unless such settlement,
compromise or consent includes an unconditional release of each
indemnified party from all liability arising out of such claim, action,
suit or proceeding, or (ii) be liable for any settlement of any such
action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with the consent of the
indemnifying party or if there be a final judgment of the plaintiff in any
such action, the indemnifying party agrees to indemnify and hold harmless
any indemnified party from and against any loss or liability by reason of
such settlement or judgment.
(d) If the indemnification provided for in this Section 6 shall for
any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 6(a) or 6(b) in respect of any loss,
claim, damage or liability, or any action in respect thereof, referred to
therein, then each indemnifying party shall, in lieu of indemnifying such
indemnified party, contribute to the amount paid or payable by such
indemnified party as
a result of such loss, claim, damage or liability, or action in respect
thereof, (i) in such proportion as shall be appropriate to reflect the
relative benefits received by the Company and the Guarantors on the one
hand and the Underwriters on the other from the offering of the Series
C Notes or (ii) if the allocation provided by clause (i) above is not
permitted by applicable law, in such proportion as is appropriate to
reflect not only the relative benefits referred to in clause (i) above
but also the relative fault of the Company and the Guarantors on the
one hand and the Underwriters on the other with respect to the
statements or omissions which resulted in such loss, claim, damage or
liability, or action in respect thereof, as well as any other relevant
equitable considerations. The relative benefits received by the Company
and the Guarantors on the one hand and the Underwriters on the other
with respect to such offering shall be deemed to be in the same
proportion as the total net proceeds from the offering of the Series C
Notes purchased under this Agreement (before deducting expenses)
received by the Company and the Guarantors, on the one hand, and the
total underwriting discounts and commissions received by the
Underwriters with respect to the Notes purchased under this Agreement,
on the other hand, bear to the total gross proceeds from the offering
of the Notes under this Agreement. The relative fault shall be
determined by reference to whether the untrue or alleged untrue
statement of a material fact or omission or alleged omission to state a
material fact relates to information supplied by the Company, the
Guarantors or the Underwriters, the intent of the parties and their
relative knowledge, access to information and opportunity to correct or
prevent such statement or omission. The Company, the Guarantors and the
Underwriters agree that it would not be just and equitable if
contributions pursuant to this Section were to be determined by pro
rata allocation or by any other method of allocation which does not
take into account the equitable considerations referred to herein. The
amount paid or payable by an indemnified party as a result of the loss,
claim, damage or liability, or action in respect thereof, referred to
above in this Section shall be deemed to include, for purposes of this
Section 6(d), any legal or other expenses reasonably incurred by such
indemnified party in connection with investigating or defending any
such action or claim. Notwithstanding the provisions of this Section
6(d), no Underwriter shall be required to contribute any amount in
excess of the amount by which the total price at which the Notes
underwritten by it and distributed to the public was offered to the
public exceeds the amount of any damages which the Underwriter has
otherwise paid or become liable to pay by reason of any 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. The
Underwriters' obligations to contribute as provided in this Section
6(d) are several in proportion to their respective underwriting
obligations and not joint.
(e) The Underwriters severally confirm and the Company acknowledges
that the statements with respect to the public offering of the Series C
Notes by the Underwriters set forth on the cover page of the Prospectus
and the disclosure concerning the concession and reallowance figures
appearing under the caption "Underwriting" in the Prospectus are correct
and constitute the only information concerning such Underwriters furnished
in writing to the Company by or on behalf of the Underwriters specifically
for inclusion in the Registration Statement and the Prospectus.
7. DEFAULTING UNDERWRITERS. If, on the Delivery Date, any
Underwriter defaults in the performance of its obligations under this Agreement,
the remaining non-defaulting Underwriters shall be obligated to purchase the
Series C Notes that the defaulting Underwriter agreed but failed to purchase on
such Delivery Date in the proportion which the amount of Series C Notes set
opposite the names of the remaining non-defaulting Underwriters in Schedule 1
hereto bears to the total amount of Series C Notes set opposite the names of all
the remaining non-defaulting Underwriters in Schedule 1 hereto; PROVIDED,
HOWEVER, that the remaining non-defaulting Underwriters shall not be obligated
to purchase any of the Series C Notes on such Delivery Date if the total amount
of Series C Notes that the defaulting Underwriter agreed but failed to purchase
on such date exceeds 10% of the total amount of Series C Notes to be purchased
on such Delivery Date, and any remaining non-defaulting Underwriter shall not be
obligated to purchase more than 110% of the amount of Series C Notes that it
agreed to purchase on such Delivery Date pursuant to the terms of Section 2. If
the foregoing maximums are exceeded, the remaining non-defaulting Underwriters
shall have the right, but shall not be obligated, to purchase, in such
proportion as may be agreed upon among them, all the Series C Notes to be
purchased on such Delivery Date. If the remaining Underwriters or other
underwriters satisfactory to the remaining Underwriters do not elect to purchase
the Series C Notes that the defaulting Underwriter agreed but failed to purchase
on such Delivery Date, this Agreement shall terminate without liability on the
part of any non-defaulting Underwriter or the Company or the Guarantors, except
that the Company will continue to be liable for the payment of expenses to the
extent set forth in Sections 5 and 9.
Nothing contained herein shall relieve a defaulting Underwriter of
any liability it may have to the Company for damages caused by its default. If
the other Underwriters are obligated or agree to purchase the Series C Notes of
a defaulting or withdrawing Underwriter, the Company may postpone the Delivery
Date for up to seven full business days in order to effect any changes that in
the opinion of counsel for the Company or counsel for the Underwriters may be
necessary in the Prospectus or in any other document or arrangement.
8. 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 Series C Notes if, prior to that time,
any of the events described in Sections 4(j), 4(k) or 4(l), shall have occurred
or if the Underwriters shall decline to purchase the Series C Notes for any
reason permitted under this Agreement.
9. REIMBURSEMENT OF UNDERWRITERS' EXPENSES. If the Company shall
fail to tender the Series C Notes for delivery to the Underwriters by reason of
any failure, refusal or inability on the part of the Company to perform any
agreement on its part to be performed, or because any other condition of the
Underwriters' obligations hereunder required to be fulfilled by the Company
(including, without limitation, with respect to the transactions contemplated by
this Agreement) is not fulfilled, the Company will reimburse the Underwriters
for all reasonable out-of-pocket expenses (including fees and disbursements of
counsel) incurred by the Underwriters in connection with this Agreement and the
proposed purchase of the Series C Notes, and upon demand the Company shall pay
the full amount thereof to the Underwriters.
10. MISCELLANEOUS. The respective agreements, representations,
warranties, indemnities and other statements of the Company or its officers and
of the Underwriters set forth
in or made pursuant to this Agreement shall remain in full force and effect,
regardless of any investigation made by or on behalf of the Underwriters or
the Company or any of the officers, directors or controlling persons referred
to in Section 6 hereof, and shall survive delivery of and payment for the
Series C Notes. The provisions of Sections 5(b), and 6 shall survive the
termination or cancellation of this Agreement.
This Agreement has been and is made for the benefit of the
Underwriters, the Company and their respective successors and assigns, and, to
the extent expressed herein, for the benefit of persons controlling the
Underwriters, or the Company, and directors and officers of the Company, and
their respective successors and assigns, and no other person shall acquire or
have any right under or by virtue of this Agreement. The term "successors and
assigns" shall not include any purchaser of Series C Notes from the Underwriters
merely because of such purchase.
All notices and communications hereunder shall be in writing and
mailed or delivered or by telephone or telegraph if subsequently confirmed in
writing, (a) if to the Underwriters, c/x Xxxxxx Brothers Inc., 000 Xxxxxx
Xxxxxx, Xxxxxx Xxxx, Xxx Xxxxxx 00000, Attention: Syndicate Department,
facsimile (000) 000-0000 with a copy to Xxxxxxx X. Xxx, Xxxxxx & Xxxxxxx, 000
Xxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000, and (b), if to the Company, to the
offices of the Company at Key Energy Services, Inc., 000 Xxxxx Xxxxx Xxxx, Xxx
Xxxx, Xxxxxxxxxxxx 00000, Attention: General Counsel, with a copy to Xxxxxx X.
Xxxxx, Xxxxxx & Xxxxxx, L.L.P., 000 Xxxxxxxxx Xxxxxx, Xxxxxxx, Xxxxx 00000.
This Agreement shall be governed by and construed in accordance with
the laws of the State of New York without regard to principles of conflict of
laws.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument.
If the foregoing correctly sets forth the agreement among the
Company, the Guarantors and the Underwriters, please indicate your acceptance in
the space provided for that purpose below.
Very truly yours,
KEY ENERGY SERVICES, INC.
By /s/ Xxxx X. Xxxxxx, Xx.
----------------------------------
Name: Xxxx X. Xxxxxx, Xx.
Title: Sr. Vice President, General Counsel and Secretary
YALE E. KEY, INC., KEY ENERGY DRILLING, INC., WELLTECH EASTERN, INC.,
ODESSA EXPLORATION INCORPORATED, KALKASKA OILFIELD SERVICES, INC., WELL-CO
OIL SERVICE, INC., KEY ROCKY MOUNTAIN, INC., KEY FOUR CORNERS, INC.,
XXXXXX WELL SERVICING, INC., KEY ENERGY SERVICES-SOUTH TEXAS, INC., KEY
ENERGY SERVICES-CALIFORNIA, INC., XXXXXX OILFIELD SERVICE & SUPPLY, INC.,
WELLTECH MID-CONTINENT, INC., XXXXXX PRODUCTION MANAGEMENT, INC., XXXXXX
PRODUCTION XXXXXX, INC., XXXXXX PRODUCTION ACQUISITION CORP.,
By /s/ Xxxx X. Xxxxxx, Xx.
----------------------------------
Name: Xxxx X. Xxxxxx, Xx.
Title: Vice President
XXXXXX PRODUCTION PARTNERS, L.P.
BY XXXXXX PRODUCTION MANAGEMENT INC., ITS SOLE GENERAL PARTNER.
By /s/ Xxxx X. Xxxxxx, Xx.
----------------------------------
Name: Xxxx X. Xxxxxx, Xx.
Title: Vice President
Accepted:
XXXXXX BROTHERS INC.
By /s/ Xxxxx Xxxxxxxxx
----------------------------------
Name: Xxxxx Xxxxxxxxx
Title: Vice President
BEAR, XXXXXXX & CO. INC.
By /s/ Xxxxxxx Xxxxxx
----------------------------------
Name: Xxxxxxx Xxxxxx
Title: Sr. Managing Director
FIRST ALBANY CORPORATION
By /s/ Xxxxxxxx X. Xxxxxxxx
----------------------------------
Name: Xxxxxxxx X. Xxxxxxxx
Title: Managing Director
SCHEDULE 1
UNDERWRITERS AMOUNT OF SERIES C NOTES
PURCHASED
Xxxxxx Brothers Inc......................... $57,500,000
Bear, Xxxxxxx & Co. Inc..................... $37,500,000
First Albany Corporation.................... $5,000,000
------------
$100,000,000
============
