EXHIBIT 1.1
SUPERIOR WELL SERVICES, INC.
UNDERWRITING AGREEMENT
July [ ], 2005
KeyBanc Capital Markets, a division of
McDonald Investments Inc.
As Representative of the several Underwriters
XxXxxxxx Investment Center
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Ladies and Gentlemen:
Superior Well Services, Inc., a Delaware corporation (the
"Company"), together with the stockholders of the Company listed in Schedule A
hereto (the "Selling Stockholders"), severally propose, subject to the terms and
conditions stated herein, to sell 5,000,000 shares (the "Firm Securities") of
common stock of the Company, par value $0.01 per share (the "Common Stock"), to
the several underwriters named in Schedule B hereto (the "Underwriters"), for
whom you are acting as Representative (the "Representative"). The Firm
Securities consist of 3,813,193 authorized but unissued shares of Common Stock
to be issued and sold by the Company and 1,186,807 outstanding shares of Common
Stock to be sold by the Selling Stockholders.
In addition, the Company also proposes to grant the Underwriters an
option to purchase up to 750,000 additional shares of Common Stock, respectively
(the "Optional Securities"). The Firm Securities and the Optional Securities are
hereinafter collectively referred to as the "Securities." The Company and the
Selling Stockholders hereby confirm the agreement with you, acting as the
Representative of the Underwriters.
On or prior to the First Delivery Date (as defined below), the
Company will complete a series of transactions (the "Formation Transactions")
described in the Prospectus (as defined below) under the caption "Certain
Relationships and Related Party Transactions -- The Contribution Agreement." As
part of the Formation Transactions, certain persons and entities will contribute
interests in certain limited partnerships and limited liability companies to the
Company in exchange for shares of Common Stock in the Company. For the purpose
of this Agreement, "Formation Transaction Agreements" shall mean, collectively,
(i) the Contribution Agreement filed as Exhibit 1.2 to the Registration
Statement (the "Contribution Agreement") and (ii) the Registration Rights
Agreement filed as Exhibit 4.2 to the Registration Statement (the "Registration
Rights Agreement").
1. Representations and Warranties of the Company. The Company
represents and warrants to, and agrees with, each of the Underwriters
that:
(a) The Company has prepared and filed with the Securities and
Exchange Commission (the "Commission") a registration statement on
Form S-1 (No. 333-124674) covering the registration of the
Securities under the Securities Act of 1933, as amended (the
"Securities Act"), including the preliminary prospectus relating to
the Securities. Such registration statement, including the exhibits
thereto and schedules thereto, at the time it became effective, is
herein called the "Registration Statement." Any registration
statement filed pursuant to Rule 462(b) of the rules and regulations
of the Commission under the Securities Act (the "Securities Act
Regulations") is herein referred to as the "Rule 462(b) Registration
Statement," and after such filing the term "Registration Statement"
shall be deemed to include the Rule 462(b) Registration Statement.
Any preliminary prospectus, included in such registration statement
or filed with the Commission pursuant to Rule 424(a) of the
Securities Act Regulations before a prospectus in final form is
filed with the Commission pursuant to Rule 424(b) of the Securities
Act Regulations is herein called a "Preliminary Prospectus." The
final prospectus, in the form first filed with the Commission
pursuant to Rule 424(b) of the Securities Act Regulations is herein
called the "Prospectus." For purposes of this Agreement, all
references to the Registration Statement, any Preliminary
Prospectus, the Prospectus or any amendment or supplement to any of
the foregoing shall be deemed to refer to and include the copy filed
with the Commission pursuant to its Electronic Data Gathering,
Analysis and Retrieval system ("XXXXX").
(b) Each of the Registration Statement and any Rule 462(b)
Registration Statement has been declared effective by the Commission
under the Securities Act. The Company has complied to the
Commission's satisfaction with all requests of the Commission for
additional or supplemental information. No stop order suspending the
effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement is in effect and no proceedings for such
purpose have been initiated or are pending or, to the Company's
knowledge, are contemplated by the Commission.
(c) The Preliminary Prospectus and the Registration Statement
comply, and the Prospectus and any further amendments or supplements
thereto will comply, in all material respects, with the Securities
Act and the Securities Act Regulations. The Registration Statement,
and any post-effective amendment thereto, does not and will not
contain, as of the applicable effective date, any untrue statement
of a material fact or omit to state a material fact required to be
stated therein or necessary to make the statements therein not
misleading. The Prospectus, and any supplements thereto, as of its
date or the date of such supplement and on each Delivery
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Date, does not and will not contain any untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they
were made, not misleading. The representations and warranties set forth in
the two immediately preceding sentences do not apply to statements in or
omissions from the Registration Statement, any post-effective amendment
thereto or the Prospectus or any supplement thereto made in reliance upon
and in conformity with written information furnished to the Company by an
Underwriter expressly for inclusion therein, which information consists
solely of the information in the letter referred to in Section 6(e). There
are no contracts or other documents required to be described in the
Prospectus or filed as exhibits to the Registration Statement that have
not been described or filed as required.
(d) The Preliminary Prospectus was, and the Prospectus delivered to the
Underwriters for use in connection with this offering will be, identical
to the versions of the Preliminary Prospectus and Prospectus created to be
transmitted to the Commission for filing via XXXXX, except to the extent
permitted by Regulation S-T.
(e) The Company has been duly incorporated and is validly existing and
in good standing as a corporation under the Delaware General Corporation
Law (the "DGCL"), with the requisite power and authority to own and lease
its properties and conduct its business as described in the Prospectus.
The Company is duly qualified to do business as a foreign corporation in
good standing in all jurisdictions in which its ownership or lease of
property or the conduct of its business requires such qualification,
except where the failure to be so qualified would not, individually or in
the aggregate, have a material adverse effect on the financial condition,
business, properties, business prospects (other than as a result of an
event, circumstance or condition applicable to the oil and gas or oilfield
services industries as a whole) or results of operations of the Company
and the Subsidiaries (as defined below) taken as a whole (a "Material
Adverse Effect").
(f) As of the First Delivery Date, the Company will not own or control,
directly or indirectly, any corporation, association or other entity other
than those described in the Prospectus under the caption "Certain
Relationships and Related Party Transactions -- The Contribution
Agreement" (each, a "Subsidiary" and collectively, the "Subsidiaries").
All of the outstanding limited partner interests or limited liability
company interests, as applicable, of each Subsidiary have been duly
authorized and validly issued, are fully paid (except to the extent
required under the respective limited partnership agreements and limited
liability company agreements of the Subsidiaries, as applicable) and
nonassessable (except as may be limited by Section 18-607 of the Delaware
Limited Liability Company Act (the "Delaware LLC Act") and, as of the
First Delivery
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Date, will be owned by the Company, directly or indirectly through
subsidiaries, free and clear of all liens, encumbrances, equities or
claims, other than those arising under the respective limited liability
company agreements and limited partnership agreements of the Subsidiaries.
(g) Each Subsidiary has been duly formed or organized, as applicable,
and is validly existing and in good standing as a limited liability
company or limited partnership, as applicable, under the laws of the
jurisdiction of its formation or organization, as applicable, with the
requisite power and authority (limited liability company or limited
partnership, as applicable) to own and lease its properties and conduct
its business as described in the Prospectus. Each Subsidiary is duly
qualified to do business as a foreign limited liability company or limited
partnership, as applicable, in good standing in all jurisdictions in which
its ownership or lease of property or the conduct of its business requires
such qualification, except where the failure to be so qualified would not,
individually or in the aggregate, have a Material Adverse Effect.
(h) This Agreement has been duly authorized, executed and delivered by
the Company; and the Contribution Agreement and the Registration Rights
Agreement have been, duly authorized, executed and delivered by the
Company and each of the Contribution Agreement and the Registration Rights
Agreement constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, except as enforceability hereof
may be limited by bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting enforcement of creditors' rights or by general
equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law).
(i) The duly authorized, issued and outstanding capitalization of the
Company is as set forth under the caption "Capitalization" in the
Prospectus as of the date set forth therein; all of the issued and
outstanding shares of capital stock of the Company are duly authorized and
validly issued, fully paid and nonassessable, are free of any preemptive
rights, rights of first refusal or similar rights, were issued and sold in
compliance with applicable federal and state securities laws and conform
in all material respects to the description thereof in the Prospectus;
except as described in the Prospectus, there are no outstanding options,
warrants or other rights calling for the issuance of, and there are no
commitments, plans or arrangements to issue any shares of capital stock of
the Company or any security convertible or exchangeable or exercisable for
capital stock of the Company.
(j) The Common Stock conforms in substance in all material respects to
all statements in relation thereto contained in the Registration Statement
and the Prospectus; the Securities to be sold by the Company pursuant to
this Agreement have been duly authorized and (i) when issued and
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delivered pursuant to this Agreement, will be validly issued, fully paid
and nonassessable and (ii) will conform to the description thereof
contained in the Prospectus. All corporate action required to be taken for
the issuance of the Securities by the Company pursuant to this Agreement
has been validly taken. No preemptive rights of security holders of the
Company exist with respect to the issuance and sale of the Common Stock by
the Company pursuant to this Agreement. The certificates for the Common
Stock of the Company are in due and legal form under Delaware law.
(k) Other than as described in the Prospectus, there are no contracts,
agreements or understandings between the Company and any person granting
such person the right to require the Company to file a registration
statement under the Securities Act with respect to any shares of Common
Stock or any other securities of the Company owned or to be owned by such
person or to require the Company to include such Common Stock or other
securities in the Registration Statement. To the extent any person has
such registration or offer similar rights, such rights have been waived
with respect to the registration of securities in connection with the
Registration Statement.
(l) No consent, approval, authorization, or order of, or filing or
registration with, any governmental agency or body or any court is
required for the consummation of the transactions contemplated by this
Agreement and the Formation Transaction Agreements, except such as (i) has
been obtained or made under the Securities Act or the Securities Exchange
Act of 1934, as amended (the "Exchange Act") or as may be required by
state securities or "blue sky" laws, (ii) may be required by the bylaws
and rules of the National Association of Securities Dealers, Inc. (the
"NASD") or NASD Regulation, Inc. ("NASDR"), (iii) has been obtained under
the Xxxx-Xxxxx-Xxxxxx Antitrust Improvements Act of 1976, as amended (the
"HSR Act") or (iv) is otherwise expressly contemplated by the Contribution
Agreement.
(m) The issuance and sale of the Securities and the compliance by the
Company with all of the provisions of this Agreement and the Formation
Transaction Agreements and the consummation of the transactions
contemplated herein and therein will not conflict with, or result in a
breach or violation of any of the terms and provisions of, or constitute a
default under (i) the certificate of incorporation, by-laws, limited
partnership agreement, limited liability company agreement or similar
organizational documents of the Company or any of the Subsidiaries, as
applicable, (ii) any indenture, mortgage, deed of trust, lease, loan
agreement or other agreement or instrument to which the Company or any of
the Subsidiaries is a party or by which the Company or any of the
Subsidiaries is bound or to which any of the property or assets of the
Company or any of the Subsidiaries is subject, or (iii) any statute, law,
order, rule or regulation of any governmental agency or body or any court
applicable to the Company
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or any of the Subsidiaries or any of their property, assets or operations,
except, with respect to clause (ii), for such conflicts, breaches,
violations or defaults that have been waived or as would not, individually
or in the aggregate, have a Material Adverse Effect.
(n) None of the Company nor any of the Subsidiaries is in violation of
its certificate of incorporation, by-laws, limited partnership agreement,
limited liability company agreement or similar organizational documents,
as applicable, or in default (or, with the giving of notice or lapse of
time or both, would be in default) under any indenture, mortgage, deed of
trust, lease, loan agreement or other agreement or instrument to which the
Company or any of the Subsidiaries is a party or by which the Company or
any of the Subsidiaries is bound or to which any of the property or assets
of the Company or any of the Subsidiaries is subject, except for such
violations or defaults as would not, individually or in the aggregate,
have a Material Adverse Effect.
(o) Upon consummation of the Formation Transactions, the Company and the
Subsidiaries will have good and marketable title in fee simple to all real
property owned by them, and good and marketable title to all other
property owned by them, in each case free from mortgages, pledges, liens,
security interests, claims, restrictions, encumbrances and defects of any
kind, except as (i) are described in the Prospectus or (ii) such would
not, individually or in the aggregate, materially affect the value of such
property or materially interfere with the use made or to be made of such
property by them. All of the leases and subleases material to the business
of the Company and the Subsidiaries, and under which the Company or any of
its Subsidiaries holds the properties described in the Prospectus, are in
full force and effect, and neither the Company nor any Subsidiary has any
notice of any material claim of any sort that has been asserted by anyone
adverse to the rights of the Company or any of its Subsidiaries under any
such leases or subleases, or affecting or questioning the rights of the
Company or such Subsidiary to the continued possession of the leased or
subleased property under any such lease or sublease.
(p) The Company and the Subsidiaries possess such certificates, permits,
licenses, approvals, consents and other authorizations (collectively,
"Governmental Licenses") issued by appropriate federal, state or local
governmental or regulatory agencies or bodies necessary to conduct the
businesses now operated by them; and the Company and the Subsidiaries are
in compliance with the terms and conditions of all such Governmental
Licenses, except where the failure to so possess or comply would not,
individually or in the aggregate, have a Material Adverse Effect; all of
the Governmental Licenses are valid in full force and effect, except where
the invalidity of such Governmental Licenses or the failure of such
Governmental Licenses to be in full force and effect would not have a
Material Adverse Effect; and neither the Company nor any of the
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Subsidiaries have received any notice of proceedings relating to the
revocation or modification of any such Governmental Licenses that, if
determined adversely to the Company or any of the Subsidiaries, would,
individually or in the aggregate, have a Material Adverse Effect.
(q) Except as disclosed in the Prospectus, there are no legal or
governmental actions, suits, arbitrations or other proceedings pending as
to which the Company or any of the Subsidiaries is a party or of which any
property of the Company or any of the Subsidiaries is the subject that, if
determined adversely to the Company or any of the Subsidiaries, could
reasonably be expected to individually or in the aggregate, have a
Material Adverse Effect or could reasonably be expected to materially and
adversely affect the ability of the Company to perform its obligations
under this Agreement; and no such actions, suits or proceedings are
threatened or, to the Company's knowledge, contemplated. No labor dispute
with the employees of the Company or any of the Subsidiaries exists or, to
the knowledge of the Company, is threatened or imminent that could
reasonably be expected to have, individually or in the aggregate, a
Material Adverse Effect.
(r) The Company and the Subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights to
inventions, know-how, patents, copyrights, confidential information and
other intellectual property (collectively, "intellectual property rights")
necessary to conduct the business now operated by them, or presently
employed by them, and have not received any notice of infringement of or
conflict with asserted rights of others with respect to any intellectual
property rights that, if determined adversely to the Company or any of the
Subsidiaries, could reasonably be expected to, individually or in the
aggregate, have a Material Adverse Effect.
(s) Except as would not, individually or in the aggregate, have a
Material Adverse Effect, (i) either the Company nor any of the
Subsidiaries is in violation of any federal, state or local statute, rule,
regulation, ordinance, code, policy or rule of common law or any judicial
or administrative interpretation thereof, including any judicial or
administrative order, consent, decree or judgment, of any governmental
agency or body or any court relating to the pollution or protection of
human health, the environment (including, without limitation, ambient air,
surface water, groundwater, land surface, or subsurface strata) or
wildlife, including, without limitation, laws and regulations relating to
the release or threatened release of chemicals, pollutants, contaminants,
wastes, toxic substances, hazardous substances, petroleum or petroleum
products (collectively, "Hazardous Materials") or to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of Hazardous Materials (collectively, "Environmental Laws") and
(ii) the Company and its Subsidiaries have all permits, authorizations and
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approvals required under any applicable Environmental Laws and are each in
compliance with their requirements. There are no pending or, to the
knowledge of the Company, threatened administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices
of noncompliance or violation, investigation or proceedings relating to
any Environmental Law against the Company or any of its Subsidiaries. To
the knowledge of the Company, there are no events or circumstances that
might reasonably be expected to form the basis of an order for clean-up or
remediation, or an action, suit or proceeding by any private party or
governmental body or agency, against or affecting the Company or any of
its Subsidiaries relating to any Hazardous Materials or the violation of
any Environmental Laws that would, individually or in the aggregate, have
a Material Adverse Effect.
(t) [Intentionally omitted.]
(u) The Company and the Subsidiaries have (i) filed on a timely basis
all necessary federal, state, local and foreign income and franchise tax
returns required to be filed or have duly requested extensions thereof;
and (ii) paid all taxes shown as due on such tax returns (including any
related assessments, fines or penalties), except for taxes being contested
in good faith for which reserves in accordance with generally accepted
accounting principles have been provided. No tax deficiency has been
asserted against the Company or any of the Subsidiaries which has had, nor
does the Company know of any tax deficiency that is likely to be asserted
against the Company or any of the Subsidiaries which, if determined
adversely to the Company or any of the Subsidiaries, would have, a
Material Adverse Effect.
(v) The Company and each of the Subsidiaries maintain insurance of the
types and in the amounts generally deemed adequate for their respective
businesses and, to the Company's knowledge, consistent with insurance
coverage maintained by similar companies in similar businesses.
(w) The Company and each of the Subsidiaries are in compliance in all
respects with all applicable provisions of the Occupational Safety and
Health Act of 1970, as amended, including all applicable regulations
thereunder, except for such noncompliance as would not, individually or in
the aggregate, have a Material Adverse Effect.
(x) Except as described in the Prospectus, none of the Subsidiaries is
currently restricted, directly or indirectly, from (i) paying any
dividends or distributions to the Company, (ii) repaying to the Company
any loans or advances to such Subsidiary from the Company or (iii)
transferring any property or assets to the Company or any other Subsidiary
of the Company.
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(y) The pro forma consolidated financial statements of the Company, the
balance sheet of the Company and the historical combined financial
statements of Superior Well Services, Ltd. ("Superior Ltd.") and Bradford
Resources, Ltd. ("Bradford Ltd.") included in the Registration Statement
and the Prospectus, together with the related schedules and notes, fairly
present in all material respects the financial condition of the Company
and of Superior Ltd. and Bradford Ltd. on a pro forma consolidated or
historical combined basis, as applicable, as of the respective dates
indicated and the pro forma consolidated statements of income of the
Company and the combined statements of income, cash flows and changes in
partners' capital of Superior Ltd. and Bradford Ltd. for the respective
periods specified, in each case in conformity with generally accepted
accounting principles applied on a consistent basis throughout the periods
involved (except as otherwise indicated in the notes thereto) and in
accordance with Regulation S-X promulgated by the Commission. No other
financial statements or supporting schedules are required to be included
in the Registration Statement. The summary and selected pro forma
consolidated financial data of the Company and historical combined
financial data of Superior Ltd. and Bradford Ltd. included in the
Registration Statement and the Prospectus fairly present in all material
respects the information shown therein and have been compiled on a basis
consistent with that of the pro forma consolidated financial statements of
the Company and the combined interim or audited financial statements of
Superior Ltd. and Bradford Ltd. included in the Registration Statement and
the Prospectus. The other financial information included in the
Registration Statement and the Prospectus has been derived from the
accounting records of the Company and the Subsidiaries and present fairly,
in all material respects, the information shown thereby. The Company and
the Subsidiaries do not have any material liabilities or obligations,
direct or contingent (including any off-balance sheet obligations), not
disclosed in the Registration Statement and the Prospectus.
(z) Neither the Company nor any of the Subsidiaries has sustained since
the date of the last audited financial statements included in the
Registration Statement and the Prospectus any loss or interference with
its business material to the Company and the Subsidiaries considered as a
whole, otherwise than as set forth or contemplated in the Prospectus.
Since the respective dates as of which information is given in the
Registration Statement and the Prospectus, there has not been any (i)
material change in the capitalization of the Company or the Subsidiaries,
(ii) material increase in the aggregate in the consolidated short-term or
long-term debt of the Company, (iii) any transaction that is material to
the Company and the Subsidiaries contemplated or entered into by the
Company or any of the Subsidiaries, (iv) any obligation, contingent or
otherwise, directly or indirectly incurred by the Company or any
Subsidiary that is material to the Company and its Subsidiaries taken as a
9
whole or (v) any dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock, in each case
otherwise than as set forth or contemplated in the Registration Statement
and the Prospectus.
(aa) Xxxxxxxxx Xxxxx & Co., Inc., as of December 31, 2004 and during the
periods covered by the balance sheet of the Company and the combined
financial statements of Superior Ltd. and Bradford Ltd. and the related
schedules and notes thereto included in the Registration Statement and the
Prospectus on which they reported are independent public accountants as
required by the Securities Act and the Securities Act Regulations.
Xxxxxxxxx Xxxxx & Co., Inc. is registered with the Public Company
Accounting Oversight Board.
(bb) Each of the Company and the Subsidiaries maintains a system of
internal accounting controls sufficient to provide reasonable assurances
that (i) transactions are executed in accordance with management's general
or specific authorization, (ii) transactions are recorded as necessary to
permit preparation of financial statements in accordance with generally
accepted accounting principles and to maintain accountability for assets,
(iii) access to its assets is permitted only in accordance with
management's general or specific authorization and (iv) the recorded
accountability for assets is compared with the existing assets at
reasonable intervals and appropriate action is taken with respect to any
differences.
(cc) As of the date hereof, the Company is not aware of (i) any
"significant deficiency" or "material weakness" (in each case, as defined
in Public Company Oversight Board Standard No. 2) in the Company's
internal control over financing reporting (as defined in Rule 13a-15(f)),
whether or not subsequently remediated, or (ii) any fraud, whether or not
material, that involves management or other employees who have a
significant role in the Company's internal control over financial
reporting.
(dd) Neither the Company or any Subsidiary, nor any of their respective
directors, manager, or partners, as applicable, or officers, in their
capacities as such, is in material breach or violation of any provision of
the Sarbanes Oxley Act of 2002 and the rules and regulations promulgated
in connection therewith.
(ee) The statistical and market-related data included in the Registration
Statement and the Prospectus are based on or derived from sources that the
Company believes to be reliable and accurate or represent the Company's
good faith estimates that are made on the basis of data derived from such
sources.
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(ff) The Company's class of common stock has been registered under
Section 12(g) of the Exchange Act, and the Securities have been
authorized for trading on the Nasdaq National Market (the "Nasdaq").
(gg) Neither the Company, the Subsidiaries nor any of their
respective officers or directors has taken or will take, directly or
indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of the Securities in
order to facilitate the sale or resale of the Securities or
otherwise.
(hh) The Company is not, and after giving effect to the offering and
sale of the Securities and the application of the proceeds thereof
as described in the Prospectus will not be, required to register as
an "investment company" as such term is defined under the Investment
Company Act of 1940, as amended (the "Investment Company Act").
(ii) As of or immediately prior to the First Delivery Date, the
Formation Transactions shall have become effective in all respects
as described in the Prospectus under the caption "Certain
Relationships and Related Party Transactions -- The Contribution
Agreement."
2. Representations and Warranties of the Selling Stockholders.
Each Selling Stockholder, severally and not jointly, represents and
warrants to, and agrees with, the several Underwriters as follows:
(a) As of the First Delivery Date and the Optional Delivery Date, as
applicable, such Selling Stockholder will be the record and
beneficial owner of the Securities to be sold by such Selling
Stockholder under this Agreement, free and clear of all adverse
claims, except for those arising under this Agreement; and upon
delivery of and payment for such Securities hereunder in accordance
with the provisions of Section 3(d) hereof, the several Underwriters
will acquire a security entitlement (as that term is defined in the
Uniform Commercial Code as in effect in the State of New York (the
"New York UCC") with respect to the Securities, and no action based
on an adverse claim (as that term is defined under the New York UCC)
to the Securities may be asserted against any of the Underwriters,
provided that each such Underwriter does not have notice of any
adverse claim (within the meaning of Section 8-105 of the New York
UCC). Such Selling Stockholder is selling the Securities to be sold
by such Selling Stockholder for such Selling Stockholder's own
account and is not selling such Securities, directly or indirectly,
for the benefit of the Company, and no part of the proceeds of such
sale received by such Selling Stockholder will inure, either
directly or indirectly, to the benefit of the Company other than as
described in the Registration Statement and Prospectus.
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(b) Such Selling Stockholder has duly authorized, executed and
delivered a Letter of Transmittal and Custody Agreement ("Custody
Agreement"), which Custody Agreement is a valid and binding
obligation of such Selling Stockholder, to the Company, as Custodian
(the "Custodian"); pursuant to the Custody Agreement the Selling
Stockholder will, on or prior to the First Delivery Date, place in
custody with the Custodian, for delivery under this Agreement, the
certificates representing the Securities to be sold by such Selling
Stockholder; as of the First Delivery Date, such certificates will
represent validly issued, outstanding, fully paid and nonassessable
shares of Common Stock; and, as of the First Delivery Date, such
certificates will be duly and properly endorsed in blank for
transfer, or will be accompanied by all documents duly and properly
executed that are necessary to validate the transfer of title
thereto, to the Underwriters, free of any legend, restriction on
transferability, proxy, lien or claim, whatsoever.
(c) Such Selling Stockholder has the power and authority to enter
into this Agreement and each of the Formation Transaction Agreements
to which such Selling Stockholder is a party, and to sell, transfer
and deliver the Securities to be sold by such Selling Stockholder
pursuant to this Agreement; and such Selling Stockholder has duly
authorized, executed and delivered to Xxxxxx X. Xxxxxx, Xxxxx X.
Xxxxxxx and Xxxx X. Xxxxxx, each as attorney-in-fact (the
"Attorneys-in-Fact"), an irrevocable power of attorney (a "Power of
Attorney") authorizing and directing the Attorneys-in-Fact to effect
the sale and delivery of the Securities being sold by such Selling
Stockholder, to enter into this Agreement and to take all such other
action as may be necessary hereunder.
(d) This Agreement, the Custody Agreement and the Power of Attorney
have each been duly authorized, executed and delivered by or on
behalf of such Selling Stockholder and each of the Formation
Transaction Agreements to which such Selling Stockholder is a party
constitutes a valid and binding agreement of such Selling
Stockholder, enforceable in accordance with its terms, except as
rights to indemnity thereunder may be limited by federal or state
securities laws and except as enforceability hereof may be limited
by bankruptcy, insolvency, reorganization, moratorium or similar
laws affecting enforcement of creditors' rights or by general
equitable principles (regardless of whether such enforceability is
considered in a proceeding in equity or at law). The execution and
delivery of this Agreement, the Custody Agreement, the Power of
Attorney and each of the Formation Transaction Agreements to which
such Selling Stockholder is a party and the performance of the terms
hereof and thereof and the consummation of the transactions herein
and therein contemplated will not result in a breach or violation of
any of the terms and provisions of, or constitute a default under,
any agreement or instrument to which such Selling Stockholder is a
party or by which such Selling Stockholder is bound, or any law,
regulation, order or decree
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applicable to such Selling Stockholder. No consent, approval,
authorization or order of, or filing with, any court or governmental
agency or body is required for the execution, delivery and
performance of this Agreement, the Custody Agreement, the Power of
Attorney and each of the Formation Transaction Agreements to which
such Selling Stockholder is a party or for the consummation of the
transactions contemplated hereby and thereby, including the sale of
the Securities being sold by such Selling Stockholder, except such
as (i) has been obtained or made under the Securities Act or the
Exchange Act or as may be required by state securities or "blue sky"
laws, (ii) may be required by the bylaws and rules of the NASD or
NASDR, (iii) has been obtained under the HSR Act, or (iv) is
otherwise expressly contemplated by the Contribution Agreement.
(e) Such Selling Stockholder has not distributed and will not
distribute any prospectus or other offering material in connection
with the offering and sale of the Securities other than any
Preliminary Prospectus or the Prospectus or other materials
permitted by the Securities Act to be distributed by such Selling
Stockholder.
(f) Other than as contemplated by this Agreement and except as
disclosed in the Registration Statement and Prospectus, there is no
broker, finder or other party that is entitled to receive from such
Selling Stockholder any brokerage or finder's fee or any other fee,
commission or payment as a result of the transactions contemplated
by this Agreement.
3. Sale, Purchase and Delivery of Securities.
(a) On the basis of the representations, warranties and agreements
herein contained, but subject to the terms and conditions herein set
forth, (i) the Company agrees to issue and sell 3,813,193 Firm
Securities, and each Selling Stockholder agrees, severally and not
jointly, to sell the number of Firm Securities set forth opposite
the name of such Selling Stockholder in Schedule A hereto, to the
several Underwriters, and each Underwriter agrees, severally and not
jointly, to purchase from the Company and the Selling Stockholders
the respective number of Firm Securities set forth opposite the
Underwriter's name in Schedule B hereto, at a purchase price per
share of $[ ], and (ii) in the event and to the extent that the
Underwriters shall exercise their option to purchase Optional
Securities as provided in Section 3(b) below, the Company agrees to
issue and sell up to 750,000 Optional Securities. The number of
Optional Securities to be purchased by each Underwriter shall be the
same percentage of the total number of Optional Securities to be
purchased by the several Underwriters as the number of Firm
Securities to be purchased by such Underwriter is of the total
number of Firm Securities to be purchased by the several
Underwriters, as adjusted by the Representative in such manner as
the Representative deem advisable to avoid fractional
13
shares. The purchase price per share of the Optional Securities
shall be the same as that of the Firm Securities.
(b) The Company hereby grants to the Underwriters the right to
purchase, at their election the number of Optional Securities
indicated with respect to the Company in Section 3(a) above, at a
purchase price per share equal to the purchase price per share of
the Firm Securities, for the sole purpose of covering any
over-allotments in connection with the sale and distribution of the
Firm Securities. Any such election to purchase Optional Securities
may be exercised only by written notice from the Representative to
the Company, given within a period of 30 calendar days after the
date of this Agreement and setting forth the aggregate number of
Optional Securities to be purchased and the date on which such
Optional Securities are to be delivered, as determined by the
Representative but in no event earlier than the First Delivery Date
(as defined below) or, unless the Representative and the Company
otherwise agree in writing, no earlier than two or later than ten
business days after the date of such notice.
(c) The several Underwriters propose to offer the Securities for
sale upon the terms and conditions and in the manner set forth in
the Prospectus.
(d) The Securities to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and registered
in such names as the Representative may request upon at least
forty-eight hours' prior notice to the Company and the Custodian,
shall be delivered by or on behalf of the Company and the Custodian
to the Underwriters, through the facilities of the Depository Trust
Company ("DTC"), for the accounts of such Underwriters, against
payment by or on behalf of the Underwriter of the purchase price
therefor by wire transfer of federal (same-day) funds to the account
specified by the Company and the Custodian to McDonald Investments
Inc. at least forty-eight hours in advance. The Company and the
Custodian will cause the certificates representing the Securities to
be made available for checking and packaging at least twenty-four
hours prior to the Delivery Date (as defined below) with respect
thereto at a location in New York, New York as may be designated by
you or at the office of DTC or its designated custodian. The date of
such delivery and payment shall be, with respect to the Firm
Securities, ___________ __, 2005 or such other time and date as the
Representative, the Company and the Custodian may agree upon in
writing, and, with respect to the Optional Securities, on the date
specified by the Representative in the written notice given by the
Representative of its election to purchase such Optional Securities,
or such date as the Representative, the Company and the Custodian
may agree upon in writing. Such date for delivery of the Common
Stock is herein called the "First Delivery Date," such date for
delivery of the Optional Securities, if not the First Delivery Date,
is herein called an "Optional Delivery Date,"
14
and each such time and date for delivery is herein called a
"Delivery Date."
(e) Time shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the
obligations of the Underwriters hereunder.
4. Certain Agreements of the Company. The Company covenants and agrees
with each of the Underwriters:
(a) To furnish such information as may be required and otherwise to
cooperate in qualifying the Securities for offering and sale under
the securities or blue sky laws of such jurisdictions (both domestic
and foreign) as the Representative may designate and to maintain
such qualifications in effect as long as requested by the
Representative for the distribution of the Securities, provided that
the Company shall not be required to qualify as a foreign
corporation or to consent to the service of process under the laws
of any such state (except service of process with respect to the
offering and sale of the Securities).
(b) If, after the time this Agreement is executed and delivered, it
is necessary for a post-effective amendment to the Registration
Statement to be declared effective before the offering of the
Securities may commence, the Company will endeavor to cause such
post-effective amendment to become effective as soon as possible and
will advise the Representative promptly and, if requested by the
Representative, will confirm such advice in writing, when such
post-effective amendment has become effective.
(c) To prepare the Prospectus in a form approved by the
Representative and to file such Prospectus pursuant to Rule 424(b)
under the Securities Act Regulations not later than the Commission's
close of business on the second business day following the execution
and delivery of this Agreement, or, if applicable, such earlier time
as may be required by Rule 430A(a)(3) under the Securities Act
Regulations; during the period beginning on the date hereof and
ending on the date, which in the opinion of counsel for the
Underwriters, a prospectus is no longer required by law to be
delivered in connection with the offering and sales of the
Securities, to make no further amendment or any supplement to the
Registration Statement or Prospectus which shall be disapproved by
the Representative promptly after reasonable notice thereof; to
advise the Representative, promptly after it receives notice
thereof, of the time when any amendment to the Registration
Statement has been filed or becomes effective or any supplement to
the Prospectus or any amended Prospectus has been filed and to
furnish the Representative with copies thereof; to file promptly,
and in any event within the time periods specified, all reports and
any definitive proxy or information statements required to be filed
by the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of the
15
Exchange Act subsequent to the date of the Prospectus for so long as
the delivery of a prospectus is required in connection with the
offering or sale of the Securities; to advise the Representative,
promptly after it receives notice thereof, of the issuance by the
Commission of any stop order or of any order preventing or
suspending the use of any Preliminary Prospectus or the Prospectus,
of the suspension of the qualification of the Securities for
offering or sale in any jurisdiction, of the initiation or
threatening of any proceeding for any such purpose, or of any
request by the Commission for the amending or supplementing of the
Registration Statement or Prospectus or for additional information;
and, in the event of the issuance of any stop order or of any order
preventing or suspending the use of any Preliminary Prospectus or
the Prospectus or suspending any such qualification, promptly to use
its reasonable best efforts to obtain the withdrawal of such order.
(d) No later than 12:00 p.m., New York City time, on the second
business day succeeding the date of this Agreement, and from time to
time, to furnish the Underwriters with written and electronic copies
of the Prospectus in such quantities as the Representative may
reasonably request, and, if the delivery of a prospectus is required
at any time prior to the expiration of nine months after the time of
issue of the Prospectus in connection with the offering or sale of
the Securities and if at such time any events shall have occurred as
a result of which the Prospectus as then amended or supplemented
would include an untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made when such Prospectus is delivered, not misleading, or, if for
any other reason it shall be necessary during such period to amend
or supplement the Prospectus in order to comply with the Securities
Act, to notify the Representative and upon its request to prepare
and furnish without charge to each Underwriter and to any dealer in
securities as many written and electronic copies as the
Representative may from time to time reasonably request of an
amended Prospectus or a supplement to the Prospectus which will
correct such statement or omission or effect such compliance, and in
case any Underwriter is required by law, rule or regulation to
deliver a prospectus in connection with sales of any of the
Securities at any time nine months or more after the time of issue
of the Prospectus, upon the request of the Representative but at the
expense of such Underwriter, to prepare and deliver to such
Underwriter as many written and electronic copies as the
Representative may reasonably request of an amended or supplemented
Prospectus complying with Section 10(a)(3) of the Securities Act.
(e) To make generally available to its securityholders via XXXXX
within the required time periods after the effective date of the
Registration Statement (as the term "effective date" is defined in
Rule 158(c) under the Securities Act), an earnings statement of the
Company and its
16
consolidated subsidiaries (which need not be audited) complying with
the provisions of Section 11(a) of the Securities Act and the
Securities Act Regulations (including, at the option of the Company,
Rule 158 under the Securities Act).
(f) During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus,
except as provided hereunder, not to, directly or indirectly, offer,
sell, contract to sell, pledge or otherwise dispose of (or enter
into any transaction or device which is designed to, or could be
expected to, result in the disposition of) any shares of Common
Stock or any securities that are substantially similar to the Common
Stock or securities convertible into or exchangeable for Common
Stock or any securities that are substantially similar to the Common
Stock, or sell or grant options, rights or warrants with respect to
any shares of Common Stock or any securities that are substantially
similar to Common Stock or securities convertible into or
exchangeable for Common Stock or any securities that are
substantially similar to Common Stock, or publicly announce the
intention to do any of the foregoing (other than pursuant to
employee option plans existing on the date of this Agreement),
without the prior written consent of McDonald Investments Inc.,
provided, however, that, notwithstanding the foregoing, if (i)
during the last 17 days of the 180 day restricted period, the
Company issues an earnings release or material news or a material
event relating to the Company occurs or (ii) prior to the expiration
of the 180 day restricted period, the Company announces that it will
release earnings results during the 16 day period beginning on the
last day of the 180 day period, the restrictions imposed in this
Section 4(f) shall continue to apply until the expiration of the 18
day period beginning on the issuance of the earnings release or the
occurrence of the material news or material event. The foregoing
sentence shall not prohibit the issuance of (i) any shares of Common
Stock issued or options to purchase Common Stock or other Common
Stock-based awards, in each case granted pursuant to any equity
compensation plan or agreement referred to in the Prospectus or (ii)
any shares of Common Stock that are issued pursuant to the
transactions contemplated by the Contribution Agreement.
(g) During a period of two years from the effective date of the
Registration Statement, to deliver or to make available via XXXXX to
the Representative promptly after they become available, copies of
any reports and financial statements furnished by the Company to its
stockholders or filed with the Commission, the NASD or any national
securities exchange on which the Common Stock is listed.
(h) To use the net proceeds received by it from the sale of the
Securities pursuant to this Agreement in the manner specified in the
Prospectus under the caption "Use of Proceeds."
17
(i) To use its best efforts to list, subject to official notice of
issuance, the Securities on the Nasdaq prior to the First Delivery
Date and to maintain such listing and to file with the Nasdaq all
documents and notices required in connection therewith.
(j) To engage and maintain, at its expense, a registrar and transfer
agent for the Securities.
(k) Not to, and to use its best efforts to cause its officers,
directors and affiliates not to, (i) take, directly or indirectly
prior to termination of the underwriting syndicate contemplated by
this Agreement, any action designed to stabilize or manipulate the
price of any security of the Company, or which may cause or result
in, or which might in the future reasonably be expected to cause or
result in, the stabilization or manipulation of the price of any
security of the Company, to facilitate the sale or resale of any of
the Securities, (ii) sell, bid for, purchase or pay anyone any
compensation for soliciting purchases of the Securities or (iii) pay
or agree to pay any person any compensation for soliciting any order
to purchase any other securities of the Company.
(l) To cause each person listed on Schedule D hereto to furnish to
the Representative, prior to the First Delivery Date, a letter or
letters, substantially in the form of Schedule C hereto, pursuant to
which each such person shall agree not to, except as provided by
this Agreement, directly or indirectly (1) offer for sale, sell,
pledge or otherwise dispose of (or enter into any transaction or
device which is designed to, or could be expected to, result in the
disposition by any person at any time in the future of) any shares
of Common Stock or securities convertible into or exchangeable for
Common Stock or (2) enter into any swap or other derivatives
transaction that transfers to another, in whole or in part, any of
the economic benefits or risks of ownership of such shares of Common
Stock, whether any such transaction described in clause (1) or (2)
above is to be settled by delivery of Common Stock or other
securities, in cash or otherwise, in each case for a period of 180
days from the date of the Prospectus, without the prior written
consent of the Representative on behalf of the Underwriters.
Notwithstanding the foregoing, each person listed on Schedule D
hereto shall be entitled to transfer and assign shares of Common
Stock (i) in the case of any such person that is a corporation,
partnership, limited liability company or other entity (an
"Entity"), to any other Entity that controls, is controlled by or is
under common control with such Entity or to any equity holder of
such Entity and (ii) in the case of any such person that is an
individual, to a trust or limited partnership for the benefit of
such person's spouse or members of such person's immediate family;
provided that, in each case, such transferee or assignee of shares
of Common Stock shall furnish to the Representative a letter
substantially in the form of Schedule C hereto prior to any such
transfer.
18
(m) To comply with all of the provisions of any undertakings in the
Registration Statement.
5. Certain Agreements of the Selling Stockholders
Each Selling Stockholder, severally and not jointly, covenants and agrees
with each of the Underwriters as follows:
(a) Such Selling Stockholder will pay all taxes, if any, on the
transfer and sale, respectively, of the Securities being sold by
such Selling Stockholder and the fees of such Selling Stockholder's
counsel.
(b) [Intentionally omitted.]
(c) The Securities to be sold by such Selling Stockholder,
represented by the certificates to be deposited with the Custodian
pursuant to the Custody Agreement of such Selling Stockholder, will
be subject to the interest of the several Underwriters and the other
Selling Stockholders; the arrangements made for such custody are,
except as specifically provided in the Custody Agreement,
irrevocable; and the obligations of such Selling Stockholder
hereunder shall not be terminated, except as provided in this
Agreement or in the Custody Agreement, by any act of such Selling
Stockholder, by operation of law, whether by the liquidation,
dissolution or merger of such Selling Stockholder, by the death of
such Selling Stockholder, or by the occurrence of any other event.
If any Selling Stockholder should liquidate, dissolve or be a party
to a merger or if any other such event should occur before the
delivery of the Securities hereunder, certificates for the
Securities deposited with the Custodian shall be delivered by the
Custodian in accordance with the terms and conditions of this
Agreement as if such liquidation, dissolution, merger or other event
had not occurred, whether or not the Custodian shall have received
notice thereof.
(d) During the period beginning from the date hereof and continuing
to and including the date 180 days after the date of the Prospectus,
except as provided in this Agreement, such Selling Stockholder will
not, directly or indirectly, offer, sell, contract to sell, pledge
or otherwise dispose of (or enter into any transaction or device
which is designed to, or could be expected to, result in the
disposition of) any shares of Common Stock or any securities that
are substantially similar to the Common Stock or securities
convertible into or exchangeable for Common Stock or any securities
that are substantially similar to the Common Stock, or sell or grant
options, rights or warrants with respect to any shares of Common
Stock or any securities that are substantially similar to Common
Stock or securities convertible into or exchangeable for Common
Stock or any securities that are substantially similar to Common
Stock, or publicly announce the intention to do any of the
foregoing, without the prior
19
written consent of McDonald Investments Inc., provided, however,
that, notwithstanding the foregoing, if (i) during the last 17
days of the 180 day restricted period, the Company issues an
earnings release or material news or a material event relating to
the Company occurs or (ii) prior to the expiration of the 180 day
restricted period, the Company announces that it will release
earnings results during the 16 day period beginning on the last
day of the 180 day period, the restrictions imposed in this
Section 5(d) shall continue to apply until the expiration of the
18 day period beginning on the issuance of the earnings release or
the occurrence of the material news or material event.
(e) The Selling Stockholder will not, without the prior written
consent of McDonald Investments Inc., within 180 days after the
date of the Prospectus, make any demand for or exercise any right
with respect to, the registration of any shares of Common Stock or
any security convertible into or exercisable or exchangeable for
Common Stock.
(f) Such Selling Stockholder has not taken and will not take, directly
or indirectly, any action designed to or which might reasonably be
expected to cause or result in stabilization or manipulation of
the price of any security of the Company to facilitate the sale or
resale of the Securities, and has not effected any sales of Common
Stock which, if effected by the Company, would be required to be
disclosed in response to Item 701 of Regulation S-K.
(g) Such Selling Stockholder shall immediately notify you if such
Selling Stockholder has knowledge of any event that occurs, or of
any change in information relating to such Selling Stockholder,
which results in the Prospectus (as supplemented) including an
untrue statement of a material fact or omitting to state any
material fact necessary to make the statements therein, in light
of the circumstances under which they were made, not misleading.
6. Expenses. The Company will pay or cause to be paid: (a) the fees,
disbursements and expenses of the Company's counsel and accountants in
connection with the registration of the Securities under the Securities
Act and all other expenses in connection with the preparation, printing
and filing of the Registration Statement, any Preliminary Prospectus and
the Prospectus and amendments and supplements thereto and the mailing and
delivering of copies thereof to the Underwriters and dealers; (b) the
cost of printing or producing of a reasonable number of each of this
Agreement, any underwriting and selling group documents, a Blue Sky
Memorandum, closing documents (including any compilations thereof) and
any other documents in connection with the offering, purchase, sale and
delivery of the Securities; (c) all expenses in connection with the
qualification of the Securities for offering and sale under state
securities laws as provided in Section 4(a) hereof, including the
reasonable fees and disbursements of counsel for the Underwriters in
connection with such
20
qualification and in connection with the Blue Sky Memorandum; (d) all
fees and expenses in connection with listing the Securities on the
Nasdaq; (e) the filing fees incident to, securing any required review by
the National Association of Securities Dealers, Inc. of the terms of the
sale of the Securities; (f) the cost of preparing share certificates; (g)
the cost and charges of any transfer agent or registrar; and (h) all
other costs and expenses incident to the performance of its obligations
hereunder which are not otherwise specifically provided for in this
Section. Except as specifically provided in clause (c) above, the Company
shall have no liability for fees or disbursements of counsel for the
Underwriters in connection with the transactions contemplated by this
Agreement.
7. Conditions of the Obligation of the Underwriters. The obligations of the
several Underwriters hereunder shall be subject to the accuracy, when
made and on each Delivery Date, of the representations and warranties of
the Company contained herein, to the performance by the Company of its
obligations hereunder, and to each of the following additional
conditions:
(a) The Prospectus shall have been filed with the Commission pursuant
to Rule 424(b) within the applicable time period prescribed for
such filing by the Securities Act Regulations and in accordance
with Section 4(c) hereof; no stop order suspending the
effectiveness of the Registration Statement or any part thereof
shall have been issued and no proceedings for that purpose shall
have been initiated or threatened by the Commission; and all
requests for additional information on the part of the Commission
shall have been complied with to the reasonable satisfaction of
the Representative.
(b) The Underwriters shall not have discovered and disclosed to the
Company prior to or on such Delivery Date that the Registration
Statement, any Preliminary Prospectus or the Prospectus or any
amendment or supplement thereto contains any untrue statement of
fact that, in the opinion of counsel for the Underwriters, is
material or omits to state a fact that is material and is required
to be stated therein or is necessary to make the statements
therein not misleading.
(c) Xxxxxx & Xxxxxx LLP, counsel for the Company, shall have furnished
to the Representative their written opinion, dated such Delivery
Date, in form and substance satisfactory to the Representative, to
the effect that:
(i) The Company has been duly incorporated and is validly
existing and in good standing as a corporation under the
laws of the State of Delaware, with the requisite power and
authority to own and lease its properties and conduct its
business as described in the Prospectus; and the Company is
duly qualified to do business as a foreign corporation in
good standing in each
21
jurisdiction and as of the dates listed on Exhibit A
attached to such opinion.
(ii) Each Subsidiary of the Company has been duly formed or
organized, as applicable, and is validly existing and in
good standing as a limited liability company or limited
partnership, as applicable, under the laws of the
jurisdiction of its formation or organization, as
applicable, with the requisite power and authority (limited
liability company or limited partnership, as applicable) to
own and lease its properties and conduct its business as
described in the Prospectus; and each Subsidiary is duly
qualified to do business as a foreign limited liability
company or limited partnership, as applicable, in good
standing in each jurisdiction and as of the dates listed on
Exhibit B attached to such opinion.
(iii) The Company's authorized, issued and outstanding shares of
Common Stock are as described in the Prospectus in the
first paragraph under the caption "Description of Capital
Stock." Except as described in the Prospectus, there are no
outstanding options, warrants or other rights to purchase,
agreements or other obligations to issue, or rights to
convert any obligation into or exchange any Common Stock or
other ownership interests in the Company or any security
convertible or exchangeable or exercisable for Common Stock
or other ownership interests in the Company. All of the
outstanding limited partner interests or limited liability
company interests, as applicable, of each Subsidiary have
been duly authorized and validly issued, are fully paid
(except to the extent required under the respective limited
liability company agreements and limited partnership
agreements of the Subsidiaries, as applicable) and
nonassessable (except as may be limited by Section 18-706
of the Delaware LLC Act) and are owned by the Company,
directly or indirectly through Subsidiaries, to such
counsel's knowledge, free and clear of all liens,
encumbrances, equities or claims, other than those arising
under the respective limited liability company agreements
and limited partnership agreements of the Subsidiaries, and
are free of any preemptive rights or similar rights.
(iv) Each of the Selling Stockholders is the sole record and
beneficial owner of the Securities to be sold by such
Selling Stockholder pursuant to this Agreement.
(v) Upon (i) payment for the Securities to be sold by each
Selling Stockholder pursuant to this Agreement, (ii)
physical delivery of the certificates representing the
Securities to the American Stock Transfer & Trust Company
in its capacity as the Company's transfer agent (the
"Transfer Agent"), and registration
22
of the Securities in the name of The Depository Trust
Company ("DTC") or its nominee upon registration of the
transfer by the Transfer Agent acting on behalf of the
Company, on the Company's share registry, and (iii)
appropriate crediting on the books of DTC to the securities
account of the Underwriters in accordance with the New York
UCC, (A) DTC will be a "protected purchaser" of such
Securities within the meaning of Section 8-303 of the New
York UCC (assuming that DTC does not have notice of any
adverse claim to such securities), (B) under Section 8-501
of the New York UCC, the Underwriters will acquire a valid
security entitlement of such security entitlements and (C)
no action based on any "adverse claim" (within the meaning
of Section 8-102(a)(l) of the New York UCC) to such
Securities may be asserted against the Underwriters with
respect to such securities entitlements (assuming that the
Underwriters acquire such security entitlement without
notice of any adverse claims).
(vi) The Custody Agreement and the Power of Attorney are
valid and binding agreements of the Selling Stockholders,
enforceable in accordance with their respective terms
(except as rights to indemnity hereunder or thereunder may
be limited by federal or state securities laws and except
as such enforceability may be limited by bankruptcy,
insolvency, reorganization or similar laws affecting
creditors' rights generally and subject to general
principles of equity).
(vii) This Agreement has been duly authorized, executed and
delivered by the Company.
(viii) Each of the Formation Transaction Agreements has been
duly authorized, executed and delivered by the Company and
constitutes a valid and binding obligation of the Company
enforceable in accordance with its terms, except as
enforceability thereof may be limited by bankruptcy,
insolvency, reorganization, moratorium or similar laws
affecting enforcement of creditors' rights or by general
equitable principles (regardless of whether such
enforceability is considered in a proceeding in equity or
at law).
(ix) The Securities have been duly authorized by the
Company and, when issued and delivered against payment
therefor in accordance with this Agreement, will be validly
issued, fully paid and nonassessable and free and clear of
all liens, encumbrances, equities or claims. The issuance
and sale of the Securities will not be subject to any
preemptive or similar rights and the Securities will
conform in all material respects to the description thereof
in the Prospectus under the caption "Description of Capital
Stock."
23
(x) The Registration Statement has been declared
effective by the Commission under the Securities Act; to
the knowledge of such counsel, no stop order suspending the
effectiveness of the Registration Statement has been issued
under the Securities Act and no proceedings for such
purpose have been initiated or are pending or are
contemplated or threatened by the Commission; and the
Registration Statement and the Prospectus and each
amendment or supplement to the Registration Statement and
the Prospectus (other than the financial statements,
including the notes and schedules thereto and the auditors'
reports thereon, included therein or omitted therefrom, as
to which such counsel need express no opinion) comply as to
form in all material respects with the applicable
requirements of the Securities Act and the Securities Act
Regulations.
(xi) To such counsel's knowledge, other than as described
in the Prospectus, there are no contracts, agreements or
understandings between the Company and any person granting
such person the right to require the Company to file a
registration statement under the Securities Act with
respect to any shares of Common Stock or any other
securities of the Company owned or to be owned by such
person or to require the Company to include such Common
Stock or other securities in the Registration Statement,
and to the extent any person has such registration or other
similar rights, such rights have been waived with respect
to registration of securities in connection with the
Registration Statement.
(xii) To such counsel's knowledge, there are no contracts
or documents of a character which are required to be filed
as exhibits to the Registration Statement or required to be
described or summarized in the Prospectus which have not
been so filed, summarized or described, and all such
summaries and descriptions fairly and accurately set forth
the material provisions of such contracts and documents.
(xiii) No consent, approval, authorization, or order of, or
filing or registration under the DGCL, the Delaware LLC Act
or federal law is required for the consummation of the
transactions contemplated by this Agreement and the
Formation Transaction Agreements, except such as (i) has
been obtained or made under the Securities Act or the
Exchange Act or as may be required by state securities or
"blue sky" laws, (ii) may be required by the bylaws and
rules of the NASD or NASDR, (iii) has been obtained under
the HSR Act, or (iv) is otherwise expressly contemplated by
the Contribution Agreement.
24
(xiv) The issuance and sale of the Securities and the
compliance by the Company with all of the provisions of
this Agreement and the Formation Transaction Agreements and
the consummation of the transactions contemplated herein
and therein will not constitute a breach or violation of
any of the terms and provisions of, or constitute a default
under (A) the certificate of incorporation, by-laws,
limited partnership agreement, limited liability company
agreement or similar organizational documents of the
Company or any of the Subsidiaries, as applicable, (B) any
indenture, mortgage, deed of trust, lease, loan agreement
or other agreement or instrument which is listed on Exhibit
C to such opinion, or (C) the DGCL, the Delaware LLC Act or
federal law, except, with respect to clause (B), for such
conflicts, breaches, violations or defaults as would not,
individually or in the aggregate, have a Material Adverse
Effect.
(xv) To such counsel's knowledge, there are no actions,
suits, proceedings, inquiries or investigations pending or
threatened against the Company or any of the Subsidiaries
or any of their respective officers and directors or to
which the properties, assets or rights of any such entity
are subject that are required to be described in the
Prospectus but are not so described.
(xvi) The Company is not, and after giving effect to the
offering and sale of the Securities and the application of
the proceeds thereof as described in the Prospectus will
not be, required to register as an "investment company" as
such term is defined under the Investment Company Act.
(xvii) The statements contained in (i) the Prospectus under
the captions, "Business -- Environmental Regulation,"
"Description of Capital Stock," and "Shares Eligible For
Future Sale" and (ii) in Item 14 of the Registration
Statement, insofar as such statements purport to summarize
legal matters or provisions of the documents referred to
therein, present accurate and fair summaries of such legal
matters and provisions.
Such counsel shall state that, although such counsel has not
independently verified, is not passing upon, and does not assume any
responsibility for, the accuracy or completeness (except as and to the extent
set forth in paragraph (xiv) above) of the information contained in the
Registration Statement and the Prospectus, they have participated in the
preparation of the Registration Statement and the Prospectus; from time to time,
such counsel has had discussions with officers, directors and employees of the
Company, with representatives of Xxxxxxxxx Downs & Co., Inc., the independent
accountants who examined the financial statements of the Company contained in
the Registration Statement and the Prospectus, with representatives of the
Underwriters and with counsel to the Underwriters; and, on the basis of the
foregoing (relying as to the
25
facts upon which determinations of materiality are made upon statements of fact
made by officers and other representatives of the Company as such counsel has
deemed necessary or appropriate for the purpose of this letter), such counsel
advises you that nothing has come to such counsel's attention which would lead
them to believe that the Registration Statement, at the time it became
effective, contained an untrue statement of a material fact or omitted to state
a material fact required to be stated therein or necessary to make the
statements therein not misleading (it being understood that such counsel need
express no opinion with respect to the financial statements, including the notes
and schedules thereto and the auditors' reports thereon, or other financial or
statistical data contained in the Registration Statement) or that the
Prospectus, as of its date or at the First Delivery Date or the Optional
Delivery Date, as the case may be, contained an untrue statement of a material
fact or omitted to state a material fact necessary in order to make the
statements therein, in the light of the circumstances under which they were
made, not misleading (it being understood that such counsel need express no
opinion with respect to the financial statements, including the notes and
schedules thereto and the auditors' reports thereon, or other financial or
statistical data contained in the Prospectus).
In rendering such opinion, such counsel may rely (i) as to matters
involving the application of laws of any jurisdiction other than the States of
New York, Texas and Delaware or the federal laws of the United States, to the
extent they deem proper and specified in such opinion, upon the opinion (which
shall be dated the First Delivery Date or the Optional Delivery Date, as the
case may be, shall be in form and substance satisfactory to the Underwriter,
shall expressly state that the Underwriter may rely on such opinion as if it
were addressed to it and shall be furnished to the Underwriter) of other counsel
of good standing whom they believe to be reliable and who are satisfactory to
counsel for the Underwriter and (ii) as to matters of fact, to the extent they
deem proper, on certificates of responsible officers of the Company and public
officials.
(d) Each of Xxxx Xxxxx and Xxxxx & Xxxxxx, P.C., counsel for the
Selling Stockholders, shall have furnished to the Representative
their written opinion, dated such Delivery Date, in form and
substance satisfactory to the Representative, to the effect that:
(i) Each of the Selling Stockholders has the power and
authority to enter into the Custody Agreement, the Power of
Attorney and this Agreement and to perform and discharge
such Selling Stockholder's obligations thereunder and
hereunder; and this Agreement, the Custody Agreements and
the Powers of Attorney have been duly and validly
authorized, executed and delivered by (or by the
Attorneys-in-Fact, or either of them, on behalf of) the
Selling Stockholders.
(ii) The execution and delivery of this Agreement, the
Custody Agreement and the Power of Attorney and the
performance of the terms hereof and thereof and the
consummation of the transactions herein and therein
contemplated will not result in a breach or
26
violation of any of the terms and provisions of, or
constitute a default under, any statute, rule or
regulation, or any agreement or instrument known to such
counsel to which such Selling Stockholder is a party or by
which such Selling Stockholder is bound or to which any of
its property is subject, any such Selling Stockholder's
charter, by-laws or other governing document, or any order
or decree known to such counsel of any court or government
agency or body having jurisdiction over such Selling
Stockholder or any of its respective properties; and no
consent, approval, authorization or order of, or filing
with, any court or governmental agency or body is required
for the execution, delivery and performance of this
Agreement, the Custody Agreement and the Power of Attorney
or for the consummation of the transactions contemplated
hereby and thereby, including the sale of the Securities
being sold by such Selling Stockholder, except such as may
be required under the Act or state securities laws or blue
sky laws.
In rendering such opinion such counsel may rely as to matters of
fact, to the extent such counsel deems reasonable upon certificates of officers
of the Selling Stockholders provided that the extent of such reliance is
specified in such opinion.
(e) Xxxxx Day, counsel for the Underwriters, shall have
furnished to the Representative their written opinion, dated such
Delivery Date, in form and substance satisfactory to the
Representative.
(f) The Underwriters shall have received, on each of the date
hereof and each Delivery Date, a letter dated the date hereof or
such Delivery Date, as the case may be, in form and substance
satisfactory to the Representative, from Xxxxxxxxx Downs & Co.,
Inc., containing statements and information of the type ordinarily
included in accountants' "comfort letters" to underwriters with
respect to the financial statements and certain financial
information of the Company and its consolidated subsidiaries
contained in and incorporated by reference in the Registration
Statement and the Prospectus, provided that the letter delivered
on the First Delivery Date shall use a "cut-off date" not earlier
than the third day prior to the First Delivery Date.
(g) The Company will, on each Delivery Date, deliver to the
Underwriters a certificate of its Chief Executive Officer and
Chief Financial Officer, to the effect that:
(i) The representations and warranties of the Company in
this Agreement are true and correct, as if made on and as
of the date thereof and provided that any reference therein
to the First Delivery Date shall be deemed to refer to the
applicable Delivery Date on which such certificate is
delivered; and the Company has
27
complied with all the agreements and satisfied all the
conditions on its part to be performed or satisfied at or
prior to such Delivery Date;
(ii) No stop order suspending the effectiveness of the
Registration Statement or any post-effective amendment
thereto has been issued and no proceedings for that purpose
have been instituted or are pending or threatened under the
Securities Act;
(iii) When the Registration Statement became effective and
at all times subsequent thereto up to the date hereof, the
Registration Statement and the Prospectus, and any
amendments or supplements thereto contained all material
information required to be included therein by the
Securities Act or the Exchange Act and the applicable rules
and regulations of the Commission thereunder, as the case
may be, and in all material respects conformed to the
requirements of the Securities Act or the Exchange Act and
the applicable rules and regulations of the Commission
thereunder, as the case may be; the Registration Statement
and the Prospectus, and any amendments or supplements
thereto, did not and do not include any untrue statement of
a material fact or omit to state a material fact required
to be stated therein or necessary to make the statements
therein, in the light of the circumstances under which they
were made, not misleading; and, since the effective date of
the Registration Statement, there has occurred no event
required to be set forth in an amendment or supplemented
Prospectus which has not been so set forth; and
(iv) Subsequent to the respective dates as of which
information is given in the Registration Statement and
Prospectus, except as set forth in the Prospectus, there
has not been any (a) transaction or event which has a
Material Adverse Effect, (b) change in the capitalization
of the Company or any Subsidiary that is material to the
Company and the Subsidiaries taken as a whole, (c) any
obligation, contingent or otherwise, directly or indirectly
incurred by the Company or any Subsidiary that is material
to the Company and the Subsidiaries taken as a whole or (d)
any dividend or distribution of any kind declared, paid or
made by the Company on any class of its capital stock.
(h) On each Delivery Date, there shall have been furnished to
you, as Representative of the several Underwriters, a certificate
or certificates, dated such Delivery Date and addressed to you,
signed by each of the Selling Stockholders or such Selling
Stockholder's Attorneys-in-Fact to the effect that the
representations and warranties of such Selling Stockholder
contained in this Agreement are true and correct as if made on and
as of the date thereof, and that such Selling Stockholder has
complied
28
with all the agreements and satisfied all the conditions on such
Selling Stockholder's part to be performed or satisfied at or
prior to such Delivery Date.
(i) (i) Neither the Company nor any of the Subsidiaries shall
have sustained since the date of the latest audited financial
statements included in the Prospectus any loss or interference
with its business, otherwise than as set forth or contemplated in
the Prospectus and (ii) since the respective dates as of which
information is given in the Prospectus, there shall not have been
any change in the capitalization of the Company or any change, or
any development or event involving a prospective change, on the
condition (financial or otherwise), business, properties, business
prospects or results of operations of the Company and the
Subsidiaries, taken as a whole, otherwise than as set forth or
contemplated in the Prospectus, the effect of which, in any such
case described in clause (i) or (ii), is in the judgment of the
Representative so material and adverse as to make it impracticable
or inadvisable to proceed with the public offering or the delivery
of the Securities being delivered on such Delivery Date on the
terms and in the manner contemplated in the Prospectus.
(j) On or after the date hereof, there shall not have occurred
any of the following: (i) a suspension or material limitation in
trading in securities generally on the New York Stock Exchange,
the American Stock Exchange or the Nasdaq, (ii) a suspension or
material limitation in trading in the Company's securities on the
Nasdaq, (iii) a general moratorium on commercial banking
activities declared by United States federal or New York or Ohio
state authorities or a material disruption in commercial banking
or securities settlement or clearance services in the United
States, (iv) the outbreak or escalation of hostilities involving
the United States or the declaration by the United States of a
national emergency or war or (v) the occurrence of any other
calamity or crisis or any change in financial, political or
economic conditions in the United States or elsewhere, if the
effect of any such event specified in clause (iv) or (v) in the
judgment of the Representative makes it impracticable or
inadvisable to proceed with the public offering or the delivery of
the Securities being delivered on such Delivery Date on the terms
and in the manner contemplated in the Prospectus.
(k) The Representative shall have received from each person
listed on Schedule D hereto an executed lock-up letter agreement
substantially to the effect set forth in the form attached hereto
as Schedule C.
(l) The Company shall have furnished to the Representative such
further information, certificates and documents as the
Representative may reasonably request.
29
All opinions, certificates, letters and documents mentioned above
or elsewhere in this Agreement shall be deemed to be compliance with the
provisions hereof only if they are in form and substance satisfactory to counsel
for the Underwriters.
8. Indemnification and Contribution.
(a) The Company shall indemnify and hold harmless each
Underwriter, its affiliates, their respective officers, directors,
employees and agents, and each person, if any, who controls any
Underwriter within the meaning of Section 15 of the Securities
Act, against any losses, claims, damages or liabilities, joint or
several, to which the Underwriter may become subject, under the
Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement, any Preliminary Prospectus or the Prospectus, or in any
amendment or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, and will reimburse each Underwriter for
any legal or other expenses reasonably incurred by such
Underwriter in connection with investigating or defending against
any such loss, claim, damage, liability or action as such expenses
are incurred; provided, however, that the Company shall not be
liable in any such case to the extent that any such loss, claim,
damage or liability arises out of or is based upon an untrue
statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Prospectus, the Registration
Statement or the Prospectus or any such amendment or supplement
made in reliance upon and in conformity with written information
furnished to the Company by an Underwriter expressly for inclusion
therein, which information consists solely of the information set
forth in the letter referred to in Section 8(f); and provided
further, that with respect to any Preliminary Prospectus, the
indemnity set forth in this Section 8(a) shall not inure to the
benefit of any Underwriter on account of any loss, claim, damage
or liability arising from the sale of Securities to any person by
such Underwriter if such Underwriter failed to send or give a copy
of the Prospectus, as the same may be amended or supplemented, to
such person within the time required by the Securities Act and the
Securities Act Rules, and the untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material
fact in the Preliminary Prospectus was corrected in the
Prospectus, unless such failure resulted from non-compliance by
the Company with Section 4(d) hereof.
(b) Each Selling Stockholder, severally and not jointly, shall
indemnify and hold harmless each Underwriter, its affiliates,
their respective officers, directors, employees and agents, and
each person, if any, who controls such Underwriter within the
meaning of Section 15 of the Securities Act, against any losses,
claims, damages or liabilities, joint
30
or several, to which such Underwriter may become subject, under
the Securities Act or otherwise, insofar as such losses, claims,
damages or liabilities (or actions in respect thereof) arise out
of or are based upon an untrue statement or alleged untrue
statement of a material fact contained in the Registration
Statement, any Preliminary Prospectus or the Prospectus, or in any
amendment or supplement thereto, or arise out of or are based upon
the omission or alleged omission to state therein a material fact
required to be stated therein or necessary to make the statements
therein not misleading, in each case to the extent, but only to
the extent, that such untrue statement or alleged untrue statement
or omission or alleged omission was made in the Registration
Statement, any Preliminary Prospectus or the Prospectus or any
such amendment or supplement made in reliance upon and in
conformity written information furnished to the Company by such
Selling Stockholder expressly for inclusion therein, which
information consists solely of the information set forth with
respect to such Selling Stockholder in the Prospectus in the table
under the caption "Principal and Selling Stockholders," and will
reimburse each Underwriter for any legal or other expenses
reasonably incurred by such Underwriter in connection with
investigating or defending against any such loss, claim, damage,
liability or action as such expenses are incurred; provided,
however, that with respect to any Preliminary Prospectus, the
indemnity set forth in this Section 8(b) shall not inure to the
benefit of any Underwriter on account of any loss, claim, damage
or liability arising from the sale of Securities to any person by
such Underwriter if such Underwriter failed to send or give a copy
of the Prospectus, as the time may be amended or supplemented, to
such person within the time required by the Securities Act and the
Securities Act Rules, and the untrue or alleged untrue statement
of a material fact or omission or alleged omission of a material
fact in the Preliminary Prospectus was corrected in the
Prospectus, unless such failure resulted from non-compliance by
the Company with Section 4(d) hereof. Notwithstanding anything in
this Agreement to the contrary, the liability of each Selling
Stockholder under this Section 8(b) shall be limited to the total
proceeds received by such Selling Stockholder from the sale of
Securities (net of underwriting discounts and commissions, but
before deducting expenses) pursuant to this Agreement.
(c) Each Underwriter, severally and not jointly, shall indemnify
and hold harmless the Company, its affiliates, their respective
officers, directors, employees and agents, and each person, if
any, who controls the Company within the meaning of Section 15 of
the Securities Act, and each Selling Stockholder, against any
losses, claims, damages or liabilities to which the Company or
such Selling Stockholder may become subject, under the Securities
Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are
based upon an untrue statement or alleged untrue statement of a
material fact contained in the Registration Statement, any
Preliminary Prospectus
31
or the Prospectus, or in any amendment or supplement thereto, or
arise out of or are based upon the omission or alleged omission to
state therein a material fact required to be stated therein or
necessary to make the statements therein not misleading, in each
case to the extent, but only to the extent, that such untrue
statement or alleged untrue statement or omission or alleged
omission was made in the Registration Statement, any Preliminary
Prospectus or the Prospectus or any such amendment or supplement
made in reliance upon and in conformity with written information
furnished to the Company by such Underwriter expressly for
inclusion therein, which information consists solely of the
information set forth in the letter referred to in Section 8(f),
and will reimburse the Company and each Selling Stockholder for
any legal or other expenses reasonably incurred by the Company in
connection with investigating or defending against any such loss,
claim, damage, liability or action as such expenses are incurred.
(d) Promptly after receipt by an indemnified party under this
Section of notice of the commencement of any action, such
indemnified party shall, if a claim in respect thereof is to be
made against the indemnifying party under subsection (a), (b) or
(c) above, notify the indemnifying party in writing of the
commencement thereof; but the omission so to notify the
indemnifying party will not relieve it from any liability which it
may have to any indemnified party otherwise than under subsection
(a), (b) or (c) above. In case any such action is brought against
any indemnified party and it notifies the indemnifying party of
the commencement thereof, the indemnifying party shall be entitled
to participate therein and, to the extent that it may wish,
jointly with any other indemnifying party similarly notified, to
assume the defense thereof, with counsel satisfactory to such
indemnified party (who shall not, except with the consent of the
indemnified party, be counsel to the indemnifying party), and,
except as provided in the following sentence, after notice from
the indemnifying party to such indemnified party of its election
so to assume the defense thereof, the indemnifying party will not
be liable to such indemnified party under this Section for any
legal or other expenses subsequently incurred by such indemnified
party in connection with the defense thereof other than reasonable
costs of investigation. After notice from the indemnifying party
to the indemnified party of the indemnifying party's election to
assume the defense of such action, the indemnified party shall
have the right to employ its own counsel in any such action, but
the fees and expenses of such counsel shall be at the expense of
such indemnified party unless (i) the indemnifying party and the
indemnified party shall have mutually agreed to the retention of
such counsel, (ii) if the named parties in any such action include
both the indemnifying party and the indemnified party and the
indemnified party shall have reasonably concluded that there is an
actual or potential conflict between the positions of the
indemnifying party and the indemnified party in conducting the
defense of any such action or that there may be legal defenses
available to
32
it or other indemnified parties that are different from or
additional to those available to the indemnifying party or (iii)
the indemnifying party shall not have employed counsel to assume
the defense of such action within a reasonable time after notice
of commencement thereof, in each of which cases the fees and
expenses of such counsel shall be at the expense of the
indemnifying party (it being understood, however, that the
indemnifying party shall not be liable for the fees and expenses
of more than one separate counsel in addition to any counsel). No
indemnifying party shall, without the prior written consent of the
indemnified party, effect any settlement or compromise of, or
consent to the entry of any judgment with respect to, any pending
or threatened action or claim in respect of which indemnification
or contribution may be sought hereunder (whether or not the
indemnified party is an actual or potential party to such action
or claim) unless such settlement, compromise or judgment (i)
includes an unconditional release of the indemnified party from
all liability arising out of such action or claim and (ii) does
not include a statement as to or an admission of fault,
culpability or failure to act by or on behalf of any indemnified
party.
(e) If the indemnification provided for in this Section is
unavailable to or insufficient to hold harmless an indemnified
party under subsection (a), (b) or (c) above in respect of any
losses, claims, damages or liabilities (or actions in respect
thereof) referred to therein, then each indemnifying party shall
contribute to the amount paid or payable by such indemnified party
as a result of such losses, claims, damages or liabilities (or
actions in respect thereof) in such proportion as is appropriate
to reflect the relative benefits received by the Company, the
Selling Stockholders and the Underwriters, respectively, from the
offering of the Securities. If, however, the allocation provided
by the immediately preceding sentence is not permitted by
applicable law, then each indemnifying party shall contribute to
such amount paid or payable by such indemnified party in such
proportion as is appropriate to reflect not only the relative
benefits but also the relative fault of the Company, the Selling
Stockholders and the Underwriters, respectively, in connection
with the statements or omissions which resulted in such losses,
claims, damages or liabilities (or actions in respect thereof), as
well as any other relevant equitable considerations. The relative
benefits received by the Company, the Selling Stockholders and the
Underwriters, respectively, shall be deemed to be in the same
proportion as the total net proceeds from the offering (net of
underwriting discounts and commissions but before deducting
expenses) received by the Company and the Selling Stockholders,
respectively, bear to the total underwriting discounts and
commissions received by the Underwriters, in each case as set
forth in the table on the cover page of the Prospectus. The
relative fault shall be determined by reference to, among other
things, whether the untrue or alleged untrue statement of a
material fact or the omission or alleged omission to state a
material fact relates to information supplied by the Company, the
Selling Stockholders or the
33
Underwriters and the parties' relative intent, knowledge, access
to information and opportunity to correct or prevent such untrue
statement or omission. The Company, the Selling Stockholders and
the Underwriters agree that it would not be just and equitable if
contributions pursuant to this subsection (e) were determined by
pro rata allocation or by any other method of allocation which
does not take account of the equitable considerations referred to
above in this subsection (e). The amount paid or payable by an
indemnified party as a result of the losses, claims, damages or
liabilities (or actions in respect thereof) referred to above in
this subsection (e) shall be deemed to include any legal or other
expenses reasonably incurred by such indemnified party in
connection with investigating or defending any such action or
claim based upon any such untrue or alleged untrue statement or
omission or alleged omission. Notwithstanding the provisions of
this subsection (e), (i) no Underwriter shall be required to
contribute any amount in excess of the amount by which the
underwriting discounts and commissions applicable to the
Securities purchased by such Underwriter exceeds the amount of any
damages that such Underwriter has otherwise been required to pay
by reason of any such untrue or alleged untrue statement or
omission or alleged omission and (ii) no Selling Stockholder shall
be required to contribute any amount in excess of the amount by
which the total proceeds to such Selling Stockholder from the sale
of the Securities sold by such Selling Stockholder pursuant to
this Agreement exceed the amount of any damages that such Selling
Stockholder has otherwise been required to pay by reason of any
such untrue or alleged untrue statement or omission or alleged
omission. No person guilty of fraudulent misrepresentation (within
the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of
such fraudulent misrepresentation.
(f) Prior to the First Delivery Date, the Underwriters shall
deliver a letter to the Company and the Selling Stockholders
identifying the statements furnished by them in writing expressly
for inclusion in the Registration Statement, any Preliminary
Prospectus and the Prospectus. The Company and the Selling
Stockholders hereby acknowledge that the only information that the
Underwriters have furnished to the Company expressly for inclusion
in the Registration Statement, any Preliminary Prospectus and the
Prospectus are the statements to be contained in such letter.
9. Default of the Several Underwriters. If, on any Delivery Date, any
one or more of the several Underwriters shall fail or refuse to purchase
Securities that it or they have agreed to purchase hereunder on such
date, and the aggregate number of Securities which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase does
not exceed 10% of the aggregate number of the Securities to be purchased
on such date, the other Underwriters shall be obligated, severally, in
the proportions that the number of shares of Common
34
Stock set forth opposite their respective names on Schedule B bears to
the aggregate number of shares of Common Stock set forth opposite the
names of all such non-defaulting Underwriters, or in such other
proportions as may be specified by the Representative with the consent of
the non-defaulting Underwriters, to purchase the Securities which such
defaulting Underwriter or Underwriters agreed but failed or refused to
purchase on such date. If, on any Delivery Date, any one or more of the
Underwriters shall fail or refuse to purchase Securities and the
aggregate number of Securities with respect to which such default occurs
exceeds 10% of the aggregate number of Securities to be purchased on such
date, and arrangements satisfactory to the Representative and the Company
for the purchase of such Securities are not made within forty-eight hours
after such default, this Agreement shall terminate without liability of
any party to any other party except that the provisions of Section 6,
Section 8 and Section 11 shall at all times be effective and shall
survive such termination. In any such case, either the Representative or
the Company shall have the right to postpone the Delivery Date but in no
event for longer than seven days in order that the required changes, if
any, to the Registration Statement and the Prospectus or any other
documents or arrangements may be effected.
10. Termination. The obligations of the Underwriters hereunder may be
terminated by the Underwriters by notice given to and received by the
Company prior to delivery of and payment for the Common Stock or the
Optional Securities, respectively, if, prior to that time, any of the
events described in Sections 7(i) or (j) shall have occurred or if the
Underwriters shall decline to purchase such Securities for any reason
permitted under this Agreement. In such case, the Company shall have no
liability hereunder except as provided by Sections 6, 8 and 11 hereof.
11. Reimbursement of Underwriters' Expenses. If (a) the Company or any
Selling Stockholder shall fail to tender the Securities for delivery to
the Underwriters for any reason under this Agreement other than a breach
by the Underwriters of their representations herein or obligations
hereunder or (b) the Underwriters shall decline to purchase the
Securities for any reason permitted under this Agreement (including the
termination of this Agreement pursuant to Section 10, other than by
reason of the occurrence of any event specified in Sections 7(j)(i),
(iii), (iv) or (v), but excluding the failure of any of the conditions
herein to be satisfied as a result of a breach by the Underwriters of
their representations herein), the Company shall reimburse the
Underwriters for the reasonable fees and expenses of their counsel and
for such other out-of-pocket expenses as shall have been reasonably
incurred by them in connection with this Agreement and the proposed
purchase of the Securities, and upon demand, the Company shall pay the
full amount thereof to the Underwriters. If this Agreement is terminated
pursuant to Section 9 hereof by reason of the default of one or more
Underwriters, the Company shall not be obligated to reimburse any
defaulting Underwriter on account of those expenses.
35
12. Default by the Company. If the Company shall fail at the First
Delivery Date to sell and deliver the number of Securities which it is
obligated to sell hereunder, then this Agreement shall terminate without
any liability on the part of any non-defaulting party. No action taken
pursuant to this Section 12 shall relieve the Company from liability, if
any, in respect of such default.
13. Notices. All statements, requests, notices and agreements hereunder
shall be in writing, and:
(a) If to the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission to KeyBanc Capital Markets,
KeyBanc Tower, 000 Xxxxxx Xxxxxx, Xxxxxxxxx, Xxxx 00000,
Attention: Xxxxxx Xxxxxxx; and with a copy (which shall not
constitute notice) to Xxxxx Day, 000 Xxxxxxxx Xxxxxx, Xxxxxxxxx,
Xxxx 00000, Attention: Xxxxxxxxxxx X. Xxxxx, Esq. (Facsimile:
000-000-0000; Telephone: 000-000-0000);
(b) if to the Company, shall be delivered or sent by mail, telex
or facsimile transmission to it at 0000 Xx. 000 Xxxx, Xxxxx #000,
Xxxxxxx, Xxxxxxxxxxxx 00000, Attention: Xxxxx X. Xxxxxxx; with a
copy (which shall not constitute notice) to Xxxxxx & Xxxxxx LLP,
First City Tower, 0000 Xxxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx
00000-0000, Attention: T. Xxxx Xxxxx, Esq. (Facsimile:
000-000-0000; Telephone: 000-000-0000.);
(c) if to any of the Selling Stockholders, shall be delivered or
sent by mail, telex or facsimile transmission to the address of
the Attorney-in-Fact as set forth in the Powers of Attorney.
Any notice of a change of address or facsimile transmission number
must be given by the Company or the Underwriters, as the case maybe, in writing
at least three days in advance of such change.
14. Persons Entitled to Benefit of Agreement. This Agreement shall
inure to the benefit of and be binding upon the Underwriters, the
Company, the Selling Stockholders and their respective successors. This
Agreement and the terms and provisions hereof are for the sole benefit of
only those persons, except that (a) the representations, warranties,
indemnities and agreements of the Company and the Selling Stockholders
contained in this Agreement shall also be deemed to be for the benefit of
the officers and employees of the Underwriters and the person or persons,
if any, who control the Underwriters within the meaning of Section 15 of
the Securities Act and (b) the representations and warranties of the
Underwriters in this Agreement and the indemnity agreement of the
Underwriters contained in Section 8(c) of this Agreement shall be deemed
to be for the benefit of directors, officers and employees of the Company
and the Selling Stockholders, and any person controlling the Company and
the Selling Stockholders within the meaning of Section 15 of the
Securities Act. Nothing contained in this Agreement is intended or shall
be construed to give any person, other than the persons referred
36
to in this Section 14, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
15. Survival. The respective indemnities, representations, warranties
and agreements of the Company and the Underwriters contained in this
Agreement or made by or on behalf of them, respectively, pursuant to this
Agreement, shall survive the delivery of and payment for the Securities
and shall remain in full force and effect, regardless of any termination
or cancellation of this Agreement or any investigation made by or on
behalf of any of them or any person controlling any of them.
16. Governing Law. THIS AGREEMENT SHALL BE GOVERNED BY, AND CONSTRUED
IN ACCORDANCE WITH, THE LAWS OF THE STATE OF OHIO, WITHOUT GIVING EFFECT
TO THE PRINCIPLES OF CONFLICTS OF LAWS THEREOF.
17. Counterparts. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such
counterparts shall together constitute one and the same instrument.
18. Headings. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the
meaning or interpretation of, this Agreement.
[Signature Page Follows.]
37
If the foregoing correctly sets forth the agreement between the
Company and the Underwriters, please indicate your acceptance in the space
provided for that purpose below.
Very truly yours,
SUPERIOR WELL SERVICES, INC.
By:_____________________________________
Name:
Title:
SELLING STOCKHOLDERS
By:_____________________________________
Name:
Attorney-in-Fact
Accepted and agreed by:
KeyBanc Capital Markets, a division of
McDonald Investments Inc.
Acting as Representative of the
Several Underwriters named
in attached Schedule B
McDonald Investments Inc.
By:__________________________________
Name:
Title:
SCHEDULE A
SELLING STOCKHOLDERS
Number of Firm
Name Securities to be Sold
----------------------- ---------------------
Xxxxxx X. Xxxxxx 119,880
Xxxxxxx X. Xxxxxx 119,880
Xxxx X. Xxxxxx 50,000
Xxxxx X. Xxxxxx 115,924
Xxxxxx X. Xxxxxx 115,804
X.X. Xxxxxx, Xx. Grantor
Retained Annuity Trust 119,880
Xxxxx X. Xxxxxxx 181,773
Xxxxx X. Xxxxxxxxxx 181,893
Rhys X. Xxxxx 181,773
A-1
SCHEDULE B
NUMBER OF
FIRM SECURITIES
TO BE
UNDERWRITER PURCHASED
----------- ---------------
KeyBanc Capital Markets, a division of
McDonald Investments Inc. ..........................
X.X. Xxxxxxx & Sons Inc. ...............................
RBC Capital Markets Corp................................
Xxxxxxx & Company International.........................
Total..........................................
===============
B-1
SCHEDULE C
FORM OF LOCK-UP LETTER AGREEMENT
_________ ____, 2005
KeyBanc Capital Markets, a division of
McDonald Investments Inc.
As Representative of the several Underwriters
c/x XxXxxxxx Investments Inc.
XxXxxxxx Investment Center
000 Xxxxxxxx Xxxxxx
Xxxxxxxxx, Xxxx 00000
Ladies and Gentlemen:
The undersigned understands that you, as representative (the
"Representative"), propose to enter into an Underwriting Agreement (the
"Underwriting Agreement") on behalf of the several Underwriters named in
Schedule B to such agreement (the "Underwriters"), with Superior Well Services,
Inc., a Delaware corporation (the "Company") and the Selling Stockholders named
therein (the "Selling Stockholders") providing for a public offering (the
"Offering") of shares of the common stock of the Company, par value $0.01 per
share (the "Common Stock"). The undersigned recognizes that the Offering will be
of benefit to the undersigned and will benefit the Company and the Selling
Stockholders. The undersigned acknowledges that the Company, the Selling
Stockholders, you and the other Underwriters will proceed with the Offering in
reliance of this Lock-Up Letter Agreement.
In consideration of the foregoing, the undersigned hereby agrees
that the undersigned will not (and will cause any spouse or immediate family
member of the spouse or the undersigned living in the undersigned's household
not to), without the prior written consent of McDonald Investments Inc. (which
consent may be withheld in its sole discretion), directly or indirectly, sell,
offer, contract or grant any option to sell (including, without limitation, any
short sale), pledge, transfer, establish an open "put equivalent position"
within the meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934,
as amended, or otherwise dispose of any shares of Common Stock, options or
warrants to acquire shares of Common Stock, or securities exchangeable or
exercisable for or convertible into shares of Common Stock currently or
hereafter owned either of record or beneficially (as defined in Rule 13d-3 under
the Securities Exchange Act of 1934, as amended) by the undersigned (or such
spouse or family member), or publicly announce an intention to do any of the
foregoing, for a period commencing on the date of execution of this Lock-Up
Letter Agreement and continuing through the close of trading on the date 180
days after the date of the Prospectus (the "Lock-Up Period"). Notwithstanding
the foregoing, during the Lock-Up Period the undersigned shall be
C-1
entitled to transfer and assign shares of Common Stock [if the undersigned is a
corporation, partnership, limited liability company or other entity: to any
corporation, partnership, limited liability company or other entity that
controls, is controlled by or is under common control with the undersigned or to
any equity holder of the undersigned] [if the undersigned is an individual: to a
trust or limited partnership for the benefit of the undersigned's spouse or
members of the undersigned's immediate family]; provided that such transferee or
assignee of shares of Common Stock shall furnish to the Representative a Lock-Up
Letter substantially in the form of Schedule C to the Underwriting Agreement
prior to any such transfer.
Notwithstanding the foregoing, (1) during the last 17 days of the
initial Lock-Up Period, the Company issues an earnings release or material news
or a material event relating to the Company occurs or (2) prior to the
expiration of the initial Lock-Up Period, the Company announces that it will
release earnings results during the 16-day period beginning on the last day of
the initial Lock-Up Period, then in each case the Lock-Up Period will be
extended until the expiration of the 18-day period beginning on the date of the
issuance of the earnings release or the occurrence of the material news or
material event, as applicable, unless McDonald Investments Inc. waives, in
writing, such extension.
The undersigned hereby acknowledges and agrees that written notice
of any extension of the Lock-Up Period pursuant to the previous paragraph will
be delivered by McDonald Investments Inc. to the Company and that any such
notice properly delivered will be deemed to have given to, and received by, the
undersigned. The undersigned further agrees that, prior to engaging in any
transaction or taking any other action that is subject to the terms of this
Lock-Up Agreement during the period from the date of this Lock-Up Agreement to
and including the 34th day following the expiration of the initial Lock-Up
Period, it will give notice thereof to the Company and will not consummate such
transaction or take any such action unless it has received written confirmation
from the Company that the Lock-Up Period (as may have been extended pursuant to
the previous paragraph) has expired.
The undersigned also agrees and consents to the entry of stop
transfer instructions with the Company's transfer agent and registrar against
the transfer of shares of Common Stock or securities convertible into or
exchangeable or exercisable for shares of Common Stock held by the undersigned
except in compliance with the foregoing restrictions.
With respect to the Offering only, the undersigned waives any
registration rights relating to registration under the Securities Act of 1933 of
any shares of Common Stock owned either of record or beneficially by the
undersigned, including any rights to receive notice of the Offering.
If for any reason the Underwriting Agreement is terminated prior to
the First Delivery Date (as defined in the Underwriting Agreement) pursuant to
the provisions thereof, then the agreements set forth herein shall likewise be
terminated.
C-2
This Lock-Up Letter Agreement is irrevocable and will be binding on
the undersigned and the respective successors, heirs, personal representatives,
and assigns of the undersigned.
Very truly yours,
By:
____________________________________
Name:
Title:
C-3
SCHEDULE D
PERSONS TO EXECUTE LOCK-UP LETTER AGREEMENTS:
X.X. Xxxxxx, Xx.
Xxxxxx X. Xxxxxx
Xxxxxxx X. Xxxxxx
Xxxx X. Xxxxxx
Xxxxx X. Xxxxxx
Xxxxxx X. Xxxxxx
Xxxxxx Associated Companies
Xxxxx X. Xxxxxxxxxx
Xxxxx X. Xxxxxxx
Rhys X. Xxxxx
Allegheny Mineral Corp.
Xxxxxxxxx Cement & Supply Corp.
X.X. Xxxxxx, Xx. Grantor Retained Annuity Trust
D-1
