ALLIS-CHALMERS ENERGY INC. Common Stock UNDERWRITING AGREEMENT dated January 23, 2007
January 23, 2007
RBC Capital Markets Corporation
As Representative of the several Underwriters
Listed in Schedule A hereto c/o
As Representative of the several Underwriters
Listed in Schedule A hereto c/o
RBC Capital Markets Corporation
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
As more fully described in the Registration Statement (as defined below), the Company
purchased substantially all of the assets of Oil & Gas Rental Services, Inc. (“Oil & Gas
Rental”) on December 18, 2006. The purchase by the Company of substantially all of the assets
of Oil & Gas Rental, as described in the Registration Statement, is referred to herein as the
“Acquisition.” In connection with the Acquisition, the Company (a) received a limited
waiver of certain provisions of Sections 2.04, 7.01 and 7.04 of the Company’s $25 million senior
secured credit facility among the Company, each lender from time to time party thereto, and Royal
Bank of Canada (the “Bank Credit Facility”) and (b) will (i) offer and sell the Shares
contemplated by this Agreement and (ii) offer and sell the Company’s Senior Notes due 2017 (the
“Notes”) pursuant to a purchase agreement dated January 24, 2007, among the Company, the
guarantors and the initial purchasers named therein. The proceeds of this offering, together with
the proceeds from the offering of the Notes, will be used to repay the debt outstanding under the
Company’s $300 million bridge loan facility, which the Company incurred to finance the Acquisition.
The aforementioned transactions are collectively referred to herein as the “Transactions.”
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Section 1. Representations and Warranties of the Company.
The Company hereby represents and warrants to, and covenants with each Underwriter as follows:
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and no proceedings for such purpose have been instituted or are pending or, to the knowledge of the
Company, are contemplated or threatened by the Commission.
Each preliminary prospectus and the Prospectus when filed complied in all material respects
with the Securities Act, and if filed by electronic transmission pursuant to XXXXX (except as may
be permitted by Regulation S-T under the Securities Act), was identical in content to the copy
thereof delivered to the Underwriters for use in connection with the offer and sale of the Shares,
other than with respect to any artwork and graphics that were not filed. Each of the Registration
Statement and any post-effective amendment thereto, at the time it became effective and at the date
hereof, complied and will comply in all material respects with the Securities Act and did not and
will not contain any untrue statement of a material fact or omit to state a material fact required
to be stated therein or necessary in order to make the statements therein not misleading. The
Prospectus (including any Prospectus wrapper), as amended or supplemented, as of its date, at the
time of any filing pursuant to Rule 424(b), at the Closing Date (as defined herein) and at any
Subsequent Closing Date (as defined herein), did 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 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 or any post-effective amendment thereto, or the
Prospectus, or any amendments or supplements thereto, made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in writing by the Representative
expressly for use therein, it being understood and agreed that the only such information furnished
by the Representative consists of the information described as such in Section 8(b) hereof. There
is no contract or other document required to be described in the Prospectus or to be filed as an
exhibit to the Registration Statement that has not been described or filed as required.
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Disclosure Package did not contain any 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, not misleading. The preceding sentence does not apply to
statements in or omissions from the Disclosure Package based upon and in conformity with written
information furnished to the Company by any Underwriter through the Representative specifically for
use therein, it being understood and agreed that the only such information furnished by or on
behalf of any Underwriter consists of the information described as such in Section 8(b) hereof.
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(i) The Underwriting Agreement. This Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of the Company, enforceable against the Company
in accordance with its terms, except as rights to indemnification hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the rights and remedies
of creditors or by general equitable principles.
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Subsidiaries, any of its Subsidiaries on any class of capital stock or repurchase or redemption by
the Company or any of its Subsidiaries of any class of capital stock.
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adjustments used therein are appropriate to give effect to the transactions and circumstances
referred to therein.
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knowledge, is threatened or imminent which, if determined adversely to the Company would reasonably
be expected to result in a Material Adverse Change.
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(z) Company not an “Investment Company”. The Company has been advised of the rules and
requirements under the Investment Company Act of 1940, as amended (the “Investment Company
Act”). The Company is not, and after receipt of payment for the Shares and the application of
the proceeds thereof as contemplated under the caption “Use of Proceeds” in the preliminary
prospectus and the Prospectus will not be, an “investment company” within the meaning of the
Investment Company Act and the Company intends to conduct its business in a manner so that it will
not become subject to the Investment Company Act.
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with management’s general or specific authorization; and (D) the recorded accountability for
assets is compared with the existing assets at reasonable intervals and appropriate action is taken
with respect to any differences.
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Laws”), which violation includes, but is not limited to, noncompliance with any
permits or other governmental authorizations required for the operation of the business of the
Company or its Subsidiaries under applicable Environmental Laws, or noncompliance with the terms
and conditions thereof, nor has the Company or any of its Subsidiaries received any written
communication, whether from a governmental authority, citizens group, employee or otherwise, that
alleges that the Company or any of its Subsidiaries is in violation of any Environmental Law; (ii)
there is no claim, action or cause of action filed with a court or governmental authority, no
investigation with respect to which the Company has received written notice, and no written notice
by any person or entity alleging potential liability for investigatory costs, cleanup costs,
governmental responses costs, natural resources damages, property damages, personal injuries,
attorneys’ fees or penalties arising out of, based on or resulting from the presence, or release
into the environment, of any Material of Environmental Concern at any location owned, leased or
operated by the Company or any of its Subsidiaries, now or in the past (collectively,
“Environmental Claims”), pending or, to the best of the Company’s knowledge, threatened
against the Company or any of its Subsidiaries or any person or entity whose liability for any
Environmental Claim the Company or any of its Subsidiaries has retained or assumed either
contractually or by operation of law; and (iii) to the best of the Company’s knowledge, there are
no past or present actions, activities, circumstances, conditions, events or incidents, including,
without limitation, the release, emission, discharge, presence or disposal of any Material of
Environmental Concern, that reasonably could result in a violation of any Environmental Law or form
the basis of a potential Environmental Claim against the Company or any of its Subsidiaries or
against any person or entity whose liability for any Environmental Claim the Company or any of its
Subsidiaries has retained or assumed either contractually or by operation of law.
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loss of such qualification, that has given or would give rise to any tax, penalty or other
liability that could reasonably be expected to result in a Material Adverse Change.
Any certificate signed by an officer of the Company and delivered to the Representative or to
counsel for the Underwriters shall be deemed to be a representation and warranty by the Company to
each Underwriter as to the matters set forth therein.
Section 2. Purchase, Sale and Delivery of the Shares.
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representations, warranties and agreements herein contained, and upon the terms but subject to
the conditions herein set forth, the Underwriters agree, severally and not jointly, to purchase
from the Company the respective number of Firm Shares set forth opposite their names on Schedule A.
The purchase price per Firm Common Share to be paid by the several Underwriters to the Company
shall be $16.7675 per share.
(b) The Closing Date. Delivery of certificates for the Firm Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of Shearman & Sterling LLP, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (or such other place as may be agreed to by the Company
and the Representative) at 9:00 a.m. New York time, on January 29, 2007, or such other time and
date as the Representative shall designate by notice to the Company (the time and date of such
closing are called the “Closing Date”).
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It is understood that the Representative has been authorized, for its own account and the
accounts of the several Underwriters, to accept delivery of and receipt for, and make payment of
the purchase price for, the Firm Shares and any Optional Shares the Underwriters have agreed to
purchase. RBC Capital Markets Corporation, individually and not as the Representative of the
Underwriters, may (but shall not be obligated to) make payments for any Shares to be purchased by
any Underwriter whose funds shall not have been received by RBC Capital Markets Corporation by the
Closing Date or any Subsequent Closing Date, as the case may be, for the account of such
Underwriter, but any such payment shall not relieve such Underwriter from any of its obligations
under this Agreement.
(i) European Economic Area. In relation to each Member State of the European
Economic Area which has implemented the Prospectus Directive (each, a “Relevant
Member State”) it has not made and will not make an offer of the shares of
Common Stock to the public in that Relevant Member State except that it may, with
effect from and including the Relevant Implementation Date, make an offer of shares
of Common Stock to the public in that Relevant Member State:
(A) in (or in Germany, where the offer starts within) the period
beginning on the date of publication of a prospectus in relation to those
shares of Common Stock which have been approved by the competent authority
in that Relevant Member State or, where appropriate, approved in another
Relevant Member State and notified to the competent authority in that
Relevant Member State, all in accordance with the Prospectus Directive and
ending on the date which is 12 months after the date of such publication;
(B) at any time to legal entities which are authorized or regulated to
operate in the financial markets or, if not so authorized or regulated,
whose corporate purpose is solely to invest in securities;
(C) at any time to any legal entity which has two or more of (1) an
average of at least 250 employees during the last financial year; (2) a
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total
balance sheet of more than €43,000,000 and (3) an annual net
turnover of more than €50,000,000 as shown in its last annual or
consolidated accounts; or
(D) at any time in any other circumstances which do not require the
publication by the issuer of a prospectus pursuant to Article 3 of the
Prospectus Directive.
For the purposes of this provision, the expression an “offer of shares
Common Stock to the public” in relation to any shares of Common Stock in any
Relevant Member State means to communication in any form and by any means of
sufficient information on the terms of the offer and the shares of Common
Stock to be offered so as to enable an investor to decide to purchase or
subscribe for the shares, as the same may be varied in that Member State by
any measure implementing the Prospectus Directive in that Member State and
the expression “Prospectus Directive” means Directive 2003/71/EC and
includes any relevant implementing measure in each Relevant Member State.
(ii) United Kingdom. (A) No deposit taking: (1) is a person whose ordinary
activities involve it in acquiring, holding, managing or disposing of investments
(as principal or agent) for the purposes of its business; and (2) it has not offered
or sold and will not offer or sell any shares of Common Stock other than to persons
whose ordinary activities involve them in acquiring, holding, managing or disposing
of investments (as principal or agent) for the purposes of their businesses or who
it is reasonable to expect will acquire, hold, manage or dispose of investments (as
principal or agent) for the purposes of their businesses where the
issue of the shares of Common Stock would otherwise constitute a contravention of Section 19 of
the Financial Services and Markets Act of 2000, or the FSMA, by the Company.
(B) Financial promotion: it has only communicated or caused to be
communicated and will only communicate or cause to be communicated an
invitation or inducement to engage in investment activity (within the
meaning of Section 21 of the FSMA) received by it in connection with the
issue or sale of any shares of Common Stock in circumstances in which
Section 21(1) of the FSMA does not, or in the case of the Company, would
not, if it was not an authorized institution, apply to the Company; and
(C) General compliance: it has complied and will comply with all
applicable provisions of the FSMA with respect to anything done by it in
relation to any shares of Common Stock in, from or otherwise involving the
United Kingdom.
(iii) Switzerland. The shares of Common Stock may not and will not be publicly
offered, distributed or redistributed on a professional basis in or from
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Switzerland and neither the Prospectus nor any other solicitation for
investments in the shares of Common Stock may be communicated or distributed in
Switzerland in any way that could constitute a public offering within the meaning of
Articles 1156 or 652a of the Swiss Code of Obligations or of Article 2 of the
Federal Act on Investment Funds of March 18, 1994. The Prospectus is not a
prospectus within the meaning of Articles 1156 and 652a of the Swiss Code of
Obligations or a listing prospectus according to article 32 of the Listing Rules of
the Swiss exchange and may not comply with the information standards required
thereunder.
Section 3. Covenants of the Company. The Company covenants and agrees with each
Underwriter as follows:
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many copies of the Prospectus and any amendments and supplements thereto (including any
documents incorporated or deemed incorporated by reference therein) and the Disclosure Package as
the Representative may reasonably request.
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Company and its consolidated subsidiaries certified by independent public accountants) and, as
soon as practicable after the end of each of the first three quarters of each fiscal year
(beginning with the fiscal quarter ending after the effective date of the Registration Statement),
to make available to its stockholders consolidated summary financial information of the Company and
its subsidiaries for such quarter in reasonable detail.
The Representative, on behalf of the several Underwriters, may, in its sole discretion, waive
in writing the performance by the Company of any one or more of the foregoing covenants or extend
the time for their performance. Notwithstanding the foregoing, the Representative, for the benefit
of each of the other Underwriters, agrees not to consent to any action proposed to be taken by the
Company or any other holder of the Company’s securities that would otherwise be prohibited by, or
to waive compliance by the Company or any such other security holder with the provisions of,
Section 3(n) above or any lock-up agreement delivered pursuant to Section 5(h) below without giving
each of the other Underwriters at least 17 days’ prior notice (or such shorter notice as each of
the other Underwriters may deem acceptable to permit compliance with applicable provisions of NASD
Conduct Rule 2711(f) restricting publication and distribution of research and public appearances by
research analysts before and after the expiration, waiver or termination of a lock-up agreement).
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Section 4. Payment of Expenses. The Company agrees to pay all costs, fees and
expenses incurred in connection with the performance of its obligations hereunder and in connection
with the transactions contemplated hereby, including without limitation (i) all expenses incident
to the issuance and delivery of the Shares (including all printing and engraving costs), (ii) all
fees and expenses of the registrar and transfer agent of the Common Stock, (iii) all necessary
issue, transfer and other stamp taxes in connection with the issuance and sale of the Shares to the
Underwriters, (iv) all fees and expenses of the Company’s counsel, independent public or certified
public accountants and other advisors, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration Statement (including
financial statements, exhibits, schedules, consents and certificates of experts), each Issuer Free
Writing Prospectus, each preliminary prospectus and the Prospectus, and all amendments and
supplements thereto, and this Agreement, (vi) all filing fees, attorneys’ fees and expenses
incurred by the Company or the Underwriters in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part of the Shares for
offer and sale under the state securities or blue sky laws or the provincial securities laws of
Canada, and, if requested by the Representative, preparing and printing a “Blue Sky Survey” or
memorandum, and any supplements thereto, advising the Underwriters of such qualifications,
registrations and exemptions, (vii) the filing fees incident to, and the reasonable fees and
expenses of counsel for the Underwriters in connection with, the NASD’s review and approval of the
Underwriters’ participation in the offering and distribution of the Shares, (viii) the fees and
expenses associated with listing of the Shares on the American Stock Exchange, (ix) all
transportation and other expenses incurred in connection with presentations to prospective
purchasers of the Shares, except that the Company and the Underwriters will each pay 50% of the
cost of privately chartered airplanes used for such purposes and (x) all other fees, costs and
expenses referred to in Item 13 of Part II of the Registration Statement. Except as provided in
this Section 4, Section 6, Section 8 and Section 9 hereof, the Underwriters shall pay their own
expenses, including the fees and disbursements of their counsel.
Section 5. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Shares as provided herein on the Closing Date
and, with respect to the Optional Shares, any Subsequent Closing Date, shall be subject to the
accuracy in all material respects of the representations and warranties on the part of the Company
set forth in Section 1 hereof that are not qualified by materiality as of the date hereof and as of
the Closing Date as though then made and, with respect to the Optional Shares, as of any Subsequent
Closing Date as though then made, to the accuracy of the representations and warranties on the part
of the Company set forth in Section 1 hereof that are qualified by materiality as of the date
hereof and as of the Closing Date as though then made and, with respect to the Optional Shares, as
of any Subsequent Closing Date as though then made, to the accuracy of the statements of the
Company made in any certificates pursuant to the provisions hereof, to the timely performance by
the Company of its covenants and other obligations hereunder, and to each of the following
additional conditions:
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accountants’ “comfort letters” to underwriters, delivered according to Statement of Auditing
Standards No. 72 (or any successor bulletin), with respect to the audited and unaudited financial
statements and certain financial information contained in the Registration Statement and the
Prospectus, and the specified date referred to therein for the carrying out of procedures shall be
no more than three days prior to the date hereof.
(i) the Company shall have filed the Prospectus with the Commission (including the
information required by Rule 430A under the Securities Act) in the manner and within the
time period required by Rule 424(b) under the Securities Act; or the Company shall have
filed a post-effective amendment to the Registration Statement containing the information
required by such Rule 430A, and such post-effective amendment shall have become effective;
(ii) all material required to be filed by the Company pursuant to Rule 433(d) under the
Securities Act shall have been filed with the Commission within the applicable time periods
prescribed for such filings under such Rule 433;
(iii) no stop order suspending the effectiveness of the Registration Statement, or any
post-effective amendment to the Registration Statement, shall be in effect and no
proceedings for such purpose shall have been instituted or threatened by the Commission; and
(iv) the NASD shall have raised no objection to the fairness and reasonableness of the
underwriting terms and arrangements.
(i) there shall not have occurred any Material Adverse Change; and
(ii) there shall not have occurred any downgrading, nor shall any notice have been
given of any intended or potential downgrading or of any review for a possible change that
does not indicate the direction of the possible change, in the rating accorded any
securities of the Company or any of its subsidiaries by any “nationally recognized
statistical rating organization” as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act.
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(i) for the period from and after the date of this Agreement and prior to such Closing
Date, there has not occurred any Material Adverse Change;
(ii) the representations, warranties and covenants of the Company set forth in Section
1 of this Agreement not qualified by materiality are true and correct in all material
respects and those representations, warranties and covenants of the Company set forth in
Section 1 of this Agreement qualified by materiality are true and correct on and as of the
Closing Date with the same force and effect as though expressly made on and as of such
Closing Date; and
(iii) the Company has complied with all the agreements hereunder and satisfied all the
conditions on its part to be performed or satisfied hereunder at or prior to such Closing
Date.
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If any condition specified in this Section 5 is not satisfied when and as required to be
satisfied, this Agreement may be terminated by the Representative by notice to the Company at any
time on or prior to the Closing Date and, with respect to the Optional Shares, at any time prior to
the applicable Subsequent Closing Date, which termination shall be without liability on the part of
any party to any other party, except that Section 4, Section 6, Section 8 and Section 9 shall at
all times be effective and shall survive such termination.
Section 6. Reimbursement of Underwriters’ Expenses. If this Agreement is terminated
by the Representative pursuant to Section 5, Section 7, or Section 11, or if the sale to the
Underwriters of the Shares on the Closing Date is not consummated because of any refusal, inability
or failure on the part of the Company to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse the Representative and the other Underwriters (or
such Underwriters as have terminated this Agreement with respect to themselves), severally, upon
demand for all out-of-pocket expenses that shall have been reasonably incurred by the
Representative and the Underwriters in connection with the proposed purchase and the offering and
sale of the Shares, including but not limited to fees and disbursements of counsel, printing
expenses, travel expenses, postage, facsimile and telephone charges.
Section 7. Effectiveness of this Agreement. This Agreement shall not become
effective until the later of (i) the execution of this Agreement by the parties hereto and (ii)
notification by the Commission to the Company and the Representative of the effectiveness of the
Registration Statement under the Securities Act.
Prior to such effectiveness, this Agreement may be terminated by any party by notice to each
of the other parties hereto, and any such termination shall be without liability on the part of (a)
the Company to any Underwriter, except that the Company shall be obligated to reimburse the
expenses of the Representative and the Underwriters pursuant to Sections 4 and 6 hereof or (b) of
any Underwriter to the Company.
Section 8. Indemnification.
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expense (or actions in respect thereof as contemplated below) arises out of or is based (i)
upon any untrue statement or alleged untrue statement of a material fact contained in the
Registration Statement, or any amendment thereto, or the omission or alleged omission therefrom of
a material fact required to be stated therein or necessary to make the statements therein not
misleading; or (ii) upon any untrue statement or alleged untrue statement of a material fact
contained in any Issuer Free Writing Prospectus, any preliminary prospectus or the Prospectus (or
any amendment or supplement thereto), or the omission or alleged omission therefrom of a material
fact necessary in order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, and to reimburse each Underwriter, its officers, directors,
employees, agents and each such controlling person for any and all expenses (including the fees and
disbursements of counsel chosen by the Representative) as such expenses are reasonably incurred by
such Underwriter or its officers, directors, employees, agents or such controlling person in
connection with investigating, defending, settling, compromising or paying any such loss, claim,
damage, liability, expense or action; provided, however, that the foregoing indemnity agreement
shall not apply to any loss, claim, damage, liability or expense to the extent, but only to the
extent, arising out of or based upon any untrue statement or alleged untrue statement or omission
or alleged omission made in reliance upon and in conformity with written information furnished to
the Company by the Representative expressly for use in the Registration Statement, any Issuer Free
Writing Prospectus, any preliminary prospectus or the Prospectus (or any amendment or supplement
thereto). The indemnity agreement set forth in this Section 8(a) shall be in addition to any
liabilities that the Company may otherwise have.
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preliminary prospectus and the Prospectus and as further set forth in the table in the first
paragraph under the caption “Underwriting” and (ii) the statements set forth in the table in the
fourth paragraph, in the sixth paragraph and tenth, eleventh and twelfth paragraphs under the
caption “Underwriting” in the preliminary prospectus and the Prospectus; and the Underwriters
confirm that such statements are correct. The indemnity agreement set forth in this Section 8(b)
shall be in addition to any liabilities that each Underwriter may otherwise have.
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plaintiff, the indemnifying party agrees to indemnify the indemnified party against any loss,
claim, damage, liability or expense by reason of such settlement or judgment. Notwithstanding the
foregoing sentence, if at any time an indemnified party shall have requested an indemnifying party
to reimburse the indemnified party for fees and expenses of counsel as contemplated by Section 8(c)
hereof, the indemnifying party agrees that it shall be liable for any settlement of any proceeding
effected without its written consent if (i) such settlement is entered into more than 30 days after
receipt by such indemnifying party of the aforesaid request and (ii) such indemnifying party shall
not have reimbursed the indemnified party in accordance with such request prior to the date of such
settlement. No indemnifying party shall, without the prior written consent of the indemnified
party, effect any settlement, compromise or consent to the entry of judgment in any pending or
threatened action, suit or proceeding in respect of which any indemnified party is or could have
been a party and indemnity was or could have been sought hereunder by such indemnified party,
unless such settlement, compromise or consent (x) includes an unconditional release of such
indemnified party from all liability on claims that are the subject matter of such action, suit or
proceeding and (y) does not include a statement as to or an admission of fault, culpability or a
failure to act, by or on behalf of any indemnified party.
Section 9. Contribution. If the indemnification provided for in Section 8 is for
any reason unavailable to or otherwise insufficient to hold harmless an indemnified party in
respect of any losses, claims, damages, liabilities or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified
party, as incurred, as a result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Underwriters, on the other hand, from the offering of the Shares
pursuant to this Agreement 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, on the one hand, and
the Underwriters, on the other hand, in connection with the statements or omissions or inaccuracies
in the representations and warranties herein which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and the Underwriters, on the other hand, in
connection with the offering of the Shares pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the Shares pursuant to
this Agreement (before deducting expenses) received by the Company, and the total underwriting
discount received by the Underwriters, in each case as set forth on the front cover page of the
Prospectus bear to the aggregate initial public offering price of the Shares as set forth on such
cover. The relative fault of the Company, on the one hand, and the Underwriters, on the other
hand, shall be determined by reference to, among other things, whether any such untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a material fact or any
such inaccurate or alleged inaccurate representation or warranty relates to information supplied by
the Company, on the one hand, or the Underwriters, on the other hand, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent such statement or
omission.
The amount paid or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the limitations set
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forth in Section 8(c), any legal or other fees or expenses reasonably incurred by such party
in connection with investigating or defending any action or claim.
The Company and the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, no Underwriter shall be required to
contribute any amount in excess of the underwriting commissions received by such Underwriter in
connection with the Shares underwritten by it and distributed to the public. 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 pursuant to this Section 9 are several, and not joint,
in proportion to their respective underwriting commitments as set forth opposite their names in
Schedule A. For purposes of this Section 9, each director, officer, employee and agent of an
Underwriter and each person, if any, who controls an Underwriter within the meaning of the
Securities Act and the Exchange Act shall have the same rights to contribution as such Underwriter,
and each director of the Company, each officer of the Company who signed the Registration Statement
and each person, if any, who controls the Company within the meaning of the Securities Act and the
Exchange Act shall have the same rights to contribution as the Company.
Section 10. Default of One or More of the Several Underwriters. If, on the Closing
Date or a Subsequent Closing Date, as the case may be, any one or more of the several Underwriters
shall fail or refuse to purchase Shares that it or they have agreed to purchase hereunder on such
date, and the aggregate number of Shares which such defaulting Underwriter or Underwriters agreed
but failed or refused to purchase does not exceed 10% of the aggregate number of the Shares to be
purchased on such date, the other Underwriters shall be obligated, severally, in the proportions
that the number of Firm Shares set forth opposite their respective names on Schedule A bears to the
aggregate number of Firm Shares 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 Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such date. If, on the
Closing Date or a Subsequent Closing Date, as the case may be, any one or more of the Underwriters
shall fail or refuse to purchase Shares and the aggregate number of Shares with respect to which
such default occurs exceeds 10% of the aggregate number of Shares to be purchased on such date, and
arrangements satisfactory to the Representative and the Company for the purchase of such Shares are
not made within 48 hours after such default, this Agreement shall terminate without liability of
any party to any other party, except that the provisions of Section 4, Section 6, Section 8 and
Section 9 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 Closing Date or a
Subsequent Closing Date, as the case may be, 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.
29
As used in this Agreement, the term “Underwriter” shall be deemed to include any person
substituted for a defaulting Underwriter under this Section 10. Any action taken under this
Section 10 shall not relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
Section 11. Termination of this Agreement. Prior to the Closing Date, this
Agreement may be terminated by the Representative by notice given to the Company if at any time:
(i) trading or quotation in any of the Company’s securities shall have been suspended or limited by
the Commission or by the American Stock Exchange, or trading in securities generally on the
American Stock Exchange, the Nasdaq Stock Market or the New York Stock Exchange shall have been
suspended or limited, or minimum or maximum prices shall have been generally established on any of
such stock exchanges by the Commission or the NASD; (ii) a general banking moratorium shall have
been declared by any of federal or New York authorities; (iii) there has been a material disruption
in commercial banking or securities settlement, payment or clearance services in the United States;
(iv) there shall have occurred any outbreak or escalation of national or international hostilities
or any crisis or calamity, or any change in the United States or international financial markets,
or any substantial change or development involving a prospective substantial change in United
States’ or international political, financial or economic conditions, as in the judgment of the
Representative is material and adverse and makes it impracticable to market the Shares in the
manner and on the terms described in the Prospectus or to enforce contracts for the sale of
securities; (v) in the reasonable judgment of the Representative there shall have occurred any
Material Adverse Change; or (vi) the Company shall have sustained a loss by strike, fire, flood,
earthquake, accident or other calamity of such character as in the judgment of the Representative
would reasonably be expected to result in a Material Adverse Change. Any termination pursuant to
this Section 11 shall be without liability on the part of (i) the Company to any Underwriter,
except that the Company shall be obligated to reimburse the expenses of the Representative and the
Underwriters pursuant to Sections 4 and 6 hereof, (ii) any Underwriter to the Company or (iii) any
party hereto to any other party except that the provisions of Section 8 and Section 9 shall at all
times be effective and shall survive such termination.
Section 12. No Advisory or Fiduciary Responsibility. The Company acknowledges and
agrees that: (i) the purchase and sale of the Shares pursuant to this Agreement, including the
determination of the public offering price of the Shares and any related discounts and commissions,
is an arm’s-length commercial transaction between the Company, on the one hand, and the several
Underwriters, on the other hand, and the Company is capable of evaluating and understanding and
understands and accepts the terms, risks and conditions of the transactions contemplated by this
Agreement; (ii) in connection with each transaction contemplated hereby and the process leading to
such transaction each Underwriter is and has been acting solely as a principal and is not the
financial advisor, agent or fiduciary of the Company or its affiliates, stockholders, creditors or
employees or any other party; (iii) no Underwriter has assumed or will assume an advisory, agency
or fiduciary responsibility in favor of the Company with respect to any of the transactions
contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has
advised or is currently advising the Company on other matters) and no Underwriter has any
obligation to the Company with respect to the offering contemplated hereby except the obligations
expressly set forth in this Agreement; (iv) the several Underwriters and their respective
affiliates may be engaged in a broad range of transactions that involve
30
interests that differ from those of the Company and that the several Underwriters have no
obligation to disclose any of such interests by virtue of any advisory, agency or fiduciary
relationship; and (v) the Underwriters have not provided any legal, accounting, regulatory or tax
advice with respect to the offering contemplated hereby and the Company has consulted its own
legal, accounting, regulatory and tax advisors to the extent it deemed appropriate.
This Agreement supersedes all prior agreements and understandings (whether written or oral)
between the Company and the several Underwriters, or any of them, with respect to the subject
matter hereof. The Company hereby waives and releases, to the fullest extent permitted by law, any
claims that the Company may have against the several Underwriters with respect to any breach or
alleged breach of agency or fiduciary duty.
Section 13. Representations and Indemnities to Survive Delivery. The respective
indemnities, agreements, representations, warranties and other statements of the Company, of its
officers and of the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any (i) investigation made by or on behalf of any
Underwriter, the officers or employees of any Underwriter, or any person controlling the
Underwriter, the Company, the officers or employees of the Company, or any person controlling the
Company, as the case may be, or (ii) acceptance of the Shares and payment for them hereunder, and
will survive delivery of and payment for the Shares sold hereunder and any termination of this
Agreement.
Section 14. Notices. All communications hereunder shall be in writing and shall be
mailed, hand delivered or telecopied and confirmed to the parties hereto as follows:
If to the Representative:
RBC Capital Markets Corporation
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx
If to the Company:
Xxxxx-Xxxxxxxx Energy Inc.
0000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Pound III, Esq.
0000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Pound III, Esq.
with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxxx LLP
000 Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
000 Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
31
Any party hereto may change the address for receipt of communications by giving written notice
to the others in accordance with this Section 14.
Section 15. Successors and Assigns. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Underwriters pursuant to Section 10
hereof, and to the benefit of (i) the Company, its directors, any person who controls the Company
within the meaning of the Securities Act and the Exchange Act and any officer of the Company who
signs the Registration Statement, (ii) the Underwriters, the officers, directors, employees and
agents of the Underwriters, and each person, if any, who controls any Underwriter within the
meaning of the Securities Act and the Exchange Act, and (iii) the respective successors and assigns
of any of the above, all as and to the extent provided in this Agreement, and no other person
shall acquire or have any right under or by virtue of this Agreement. The term “successors and
assigns” shall not include a purchaser of any of the Shares from the Underwriters merely because of
such purchase.
Section 16. Partial Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity or enforceability
of any other Section, paragraph or provision hereof. If any Section, paragraph or provision of
this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to make it valid and
enforceable.
Section 17. Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 18. General Provisions. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter hereof. This
Agreement may be executed in two or more counterparts, each one of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same instrument. This
Agreement may not be amended or modified unless in writing by all of the parties hereto, and no
condition herein (express or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit. The section headings herein are for the convenience of the parties
only and shall not affect the construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated business person who was
adequately represented by counsel during negotiations regarding the provisions hereof, including,
without limitation, the indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties hereto further
acknowledges that the provisions of Sections 8 and 9 hereto fairly allocate the risks in light of
the ability of the parties to investigate the Company, its affairs and its business in order to
assure that adequate disclosure has been made in the Registration Statement, any preliminary
prospectus and the Prospectus (and any amendments and supplements thereto), as required by the
Securities Act and the Exchange Act.
32
If the foregoing is in accordance with your understanding of our agreement, kindly sign and
return to the Company the enclosed copies hereof, whereupon this instrument, along with all
counterparts hereof, shall become a binding agreement in accordance with its terms.
Very truly yours, XXXXX-XXXXXXXX ENERGY INC. |
||||
By: | /s/ Xxxxxx X. Xxxxx | |||
Name: | Xxxxxx X. Xxxxx | |||
Title: | Chief Financial Officer | |||
33
The foregoing Underwriting Agreement is hereby confirmed and accepted by the Representative as
of the date first above written.
RBC CAPITAL MARKETS CORPORATION
Acting as Representative of the several
Underwriters named in the attached
Schedule A.
By:
|
/s/ Xxxxxx X Xxxxx
|
|||
Title: Managing Director |
34
SCHEDULE A
Number of Firm Shares to | ||||
Underwriters | be Purchased | |||
RBC Capital Markets Corporation |
3,300,000 | |||
Xxxxxx Xxxxxx & Company, Inc. |
1,200,000 | |||
Xxxxxxx, Xxxx & Company L.L.C |
1,200,000 | |||
Xxxxxxxxx Capital Partners, LLC |
300,000 | |||
Total |
6,000,000 |
Sch. A
SCHEDULE B
Schedule of Free Writing Prospectuses
None
Sch B
SCHEDULE C
Number and Price of Shares
Public Offering Price |
$ | 17.65 | ||
Underwriting Discounts |
$ | 0.88250 | ||
Number of Shares being sold to the public |
6,000,000 | |||
Proceeds to the Company before expenses |
$ | 100,605,000 |
Sch C
SCHEDULE D
Securityholder Parties to Lock-Up Agreements
1. | Xxxx X. Xxxxx | |
2. | Ali X. X. Xxxxxx | |
3. | Xxxxx X. Xxxxx | |
4. | Xxxxxxxxx X. Xxxxxxxxxx | |
5. | Xxxxxx X. Bulgheroni | |
6. | Xxxxxx Xxxxxxx | |
7. | Xxxxx Xxxxx | |
8. | Xxxx Xxxxxxx | |
9. | Xxxxxxx X. Xxxxxxxx | |
10. | Xxxxxx X. Xxxxxxx | |
11. | Xxxxxxx X. Xxxxxxxxxxxx | |
12. | Xxxxxxxx X. Xxxxx | |
13. | Xxxx X. XxXxxxxxxxx, Xx. | |
14. | Xxxxxx X. Xxxxxxxxxxx | |
15. | Xxxxxx X. Xxxxx | |
16. | Xxxxxxxx X. Pound III | |
17. | Xxxxx Xxxxxx | |
18. | Xxxxxxx Xxxxxxxx |
Sch D
SCHEDULE E
Name of Accountants | Name of Entity | |
UHY Xxxx Frankfort Xxxxx & Xxxx CPAs, LLP
|
Xxxxx-Xxxxxxxx Energy Inc. | |
Specialty Rental Tools, Inc. | ||
UHY LLP
|
Xxxxx-Xxxxxxxx Energy Inc. | |
Oil & Gas Rental Services, Inc. | ||
Xxxxxx, Xxxxxx and Banks, LLP
|
Xxxxx-Xxxxxxxx Energy Inc. | |
Accounting & Consulting Group, LLP
|
W. T. Enterprises, Inc. | |
Xxxxxx, Moore, Dehart, Xxxxxx & Xxxxxxxxxx, LLC
|
Delta Rental Service, Inc. | |
Xxxxxx Xxxxxxx & Co., PC
|
Capcoil Tubing Services, Inc. | |
Xxxxxxx (la firma argentina miembro de KPMG
|
DLS Drilling, Logistics & Services Corporation | |
International, una cooperativa suiza) |
||
Broussard, Poche, Xxxxx & Xxxxxx, L.L.P.
|
Petro-Rentals, Inc. |
Sch E
SCHEDULE F
The Company’s Quarterly Report on Form 10-Q for the quarterly period ended September 30, 2006
(the “Third Quarter 2006 Form 10-Q”), as originally filed with the Commission on November
8, 2006, did not include each of the following documents as exhibits thereto, each of which was
subsequently filed with the Commission on December 29, 2006 as an exhibit to Amendment No. 1 on
Form 10-Q/A to the Third Quarter 2006 Form 10-Q:
• | Strategic Agreement dated July 1, 2003 (the “Strategic Agreement”) between Pan American Energy LLC Sucursal Argentina and DLS Argentina Limited Sucursal Argentina; | |
• | Amendment No. 1 dated May 18, 2005 to the Strategic Agreement; and | |
• | Amendment No. 2 dated January 1, 2006 to the Strategic Agreement |
Sch F
EXHIBIT A
Form of Opinion of Counsel for the Company
Exh. A
EXHIBIT B
[Date]
RBC Capital Markets Corporation
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
As Representative of the Several Underwriters
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
As Representative of the Several Underwriters
Re: Xxxxx-Xxxxxxxx Energy Inc. (the “Company”)
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of Common Stock of
the Company (“Common Stock”) or securities convertible into or exchangeable or
exercisable for Common Stock. The Company proposes to carry out a public offering of Common
Stock (the “Offering”) for which you will act as the representative (the
“Representative”) of the syndicate of underwriters. The undersigned recognizes that the
Offering will be of benefit to the undersigned and will benefit the Company. The undersigned
acknowledges that you are relying on the representations and agreements of the undersigned
contained in this letter in carrying out the Offering and in entering into underwriting
arrangements with the Company with respect to the Offering.
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 your prior written consent (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” or liquidate or decrease a “call equivalent position” within the
meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended, or otherwise
dispose of or transfer (or enter into any transaction which is designed to, or might reasonably
be expected to, result in the disposition of) including the filing (or participation in the
filing of) of a registration statement with the Shares and Exchange Commission in respect 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
Exh. B-1
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 hereof and continuing through the close of
trading on the date 90 days after the date of the Prospectus (the “Lock-Up Period”). In
addition, the undersigned agrees that, without your prior written consent, it will not, during
the Lock-Up Period, 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.
If (i) the Company issues an earnings release or material news, or a material event
relating to the Company occurs, during the last 17 days of the lock-up period, or (ii) prior to
the expiration of the lock-up period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of the lock-up period, the
restrictions imposed by this agreement 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, unless you waive, in writing, such extension; provided,
however, that such restrictions shall not be so extended solely by virtue of the publishing or
distribution by any Underwriter of any research regarding any earnings release, material news or
a material event, if such research report complies with Rule 139 of the Securities Act and the
Common Stock is “actively traded,” as defined in Rule 101(c)(1) of Regulation M under the
Exchange Act. The undersigned hereby acknowledges that the Company has agreed in the
Underwriting Agreement to provide written notice of any event that would result in an extension
of the Lock-Up Period pursuant to the previous paragraph to the undersigned (in accordance with
Section 14 of the Underwriting Agreement) and agrees that any such notice properly delivered
will be deemed to have given to, and received by, the undersigned. The undersigned hereby
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 such 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 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 any Common Stock owned either of record or
beneficially by the undersigned, including any rights to receive notice of the Offering.
Exh. B-2
This agreement is irrevocable and will be binding on the undersigned and the respective
successors, heirs, personal representatives, and assigns of the undersigned.
By: | ||||
Signature | ||||
(and indicate capacity of person signing if
signing as custodian, trustee, or on behalf of an
entity)
Exh. B-3
ANNEX A
SUBSIDIARIES OF THE COMPANY
Name | Jurisdiction of Organization | |
Allis-Xxxxxxxx XX, LLC
|
Delaware | |
Xxxxx-Xxxxxxxx LP, LLC
|
Delaware | |
Xxxxx-Xxxxxxxx Management LP
|
Texas | |
Xxxxx-Xxxxxxxx Production Services, Inc.
|
Texas | |
Xxxxx-Xxxxxxxx Rental Services, Inc.
|
Texas | |
Xxxxx-Xxxxxxxx Tubular Services, Inc.
|
Texas | |
Aircomp, L.L.C.
|
Delaware | |
DLS Drilling, Logistics & Services Corporation
|
British Virgin Islands | |
DLS Argentina Limited
|
British Virgin Islands | |
Mountain Compressed Air Inc.
|
Texas | |
OilQuip Rentals, Inc.
|
Delaware | |
Petro-Rentals, Incorporated
|
Louisiana | |
Strata Directional Technology, Inc.
|
Texas |
Annex A-1