ALLIS-CHALMERS ENERGY INC. Common Stock UNDERWRITING AGREEMENT dated August 8, 2006
Exhibit
1.1
EXECUTION
COPY
XXXXX-XXXXXXXX ENERGY INC.
Common Stock
dated August 8, 2006
August 8, 2006
RBC Capital Markets Corporation
As Representative of the several Underwriters
Listed in Schedule A hereto c/o
As Representative of the several Underwriters
Listed in Schedule A hereto c/o
RBC Capital Markets Corporation
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Ladies and Gentlemen:
As more fully described in the Registration Statement (as defined below), the Company has
agreed to purchase all of the outstanding capital stock of DLS Drilling, Logistics & Services
Corporation (“DLS”), pursuant to a stock purchase agreement dated April 27, 2006. The
acquisition by the Company of all of the outstanding capital stock of DLS, as described in the
Registration Statement, is referred to herein as the “Acquisition.” With respect to the
representations, warranties and agreements made by the Company in this Agreement concerning its
subsidiaries, such representations, warranties and agreements shall be deemed to include DLS. In
connection with the Acquisition, the Company will (i) offer and sell the Securities contemplated by
this Agreement; (ii) offer and sell the Notes pursuant to a purchase agreement dated August 8,
2006, among the Company, the guarantors and the initial purchaser named therein; and (iii) enter
into an amendment of its $25.0 million senior secured credit facility (the “Bank Credit
Facility”). These transactions (but not including the offering of the Securities contemplated
by this Agreement and the Registration Statement) are collectively referred to herein as the
“Transactions.”
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Section 1. Representations and Warranties of the Company.
The Company hereby represents and warrants to, and covenants with each Underwriter as follows:
Each Preliminary Prospectus and the Prospectus when filed complied in all material respects
with the Securities Act, and if filed by electronic transmission pursuant to XXXXX
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(except as may be permitted by Regulation S-T under the Securities Act), was identical in content
to the copy thereof delivered to the Underwriters for use in connection with the offer and sale of
the Shares, other than with respect to any artwork and graphics that were not filed. Each of the
Registration Statement, any Rule 462(b) Registration Statement and any post-effective amendment
thereto, at the time it became effective and at the date hereof, complied and will comply in all
material respects with the Securities Act and did not and will not contain any untrue statement of
a material fact or omit to state a material fact required to be stated therein or necessary in
order to make the statements therein not misleading. The Prospectus (including any Prospectus
wrapper), as amended or supplemented, as of its date, at the time of any filing pursuant to Rule
424(b), at the Closing Date (as defined herein) and at any Subsequent Closing Date (as defined
herein) did not and will not contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in the light of the circumstances
under which they were made, not misleading. The representations and warranties set forth in the
two immediately preceding sentences do not apply to statements in or omissions from the
Registration Statement, any Rule 462(b) Registration Statement, or any post-effective amendment
thereto, or the Prospectus, or any amendments or supplements thereto, made in reliance upon and in
conformity with information relating to any Underwriter furnished to the Company in writing by the
Representative expressly for use therein, it being understood and agreed that the only such
information furnished by the Representative consists of the information described as such in
Section 8 hereof. There is no contract or other document required to be described in the
Prospectus or to be filed as an exhibit to the Registration Statement that has not been described
or filed as required.
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Representative specifically for use therein, it being understood and agreed that the only such
information furnished by any Underwriter consists of the information described as such in Section 8
hereof.
(h) The Underwriting Agreement. This Agreement has been duly authorized, executed and
delivered by, and is a valid and binding agreement of, the Company, enforceable against the Company
in accordance with its terms, except as rights to indemnification hereunder may be limited by
applicable law and except as the enforcement hereof may be limited by bankruptcy, insolvency,
reorganization, moratorium or other similar laws relating to or affecting the rights and remedies
of creditors or by general equitable principles.
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paid in connection with the execution and delivery of this Agreement or the issuance by the
Company or sale by the Company of the Shares.
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involved, except as may be expressly stated in the related notes thereto. The Registration
Statement contains all financial statements or supporting schedules that are required to be
included or incorporated by reference therein. The financial data set forth in the Preliminary
Prospectus and the Prospectus under the captions “Prospectus Summary—Summary Historical and Pro
Forma Consolidated Financial Information”, “Selected Historical Consolidated Financial Information”
and “Capitalization” fairly present the information set forth therein on a basis consistent with
that of the audited financial statements contained in the Registration Statement. The pro forma
consolidated financial statements of the Company and its Subsidiaries and DLS Drilling Logistics
and Services Corporation and the related notes thereto included under the captions “Prospectus
Summary—Summary Historical and Pro Forma Consolidated Financial Information” and “Unaudited Pro
Forma As Adjusted Consolidated Financial Information”, and elsewhere in the Preliminary Prospectus
and the Prospectus and in the Registration Statement or incorporated by reference in the
Preliminary Prospectus, the Prospectus and the Registration Statement, present fairly the
information contained therein, have been prepared in accordance with the Commission’s rules and
guidelines with respect to pro forma financial statements and have been properly presented on the
basis described therein, and the assumptions used in the preparation thereof are reasonable and the
adjustments used therein are appropriate to give effect to the transactions and circumstances
referred to therein.
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authorized and validly issued, are fully paid and nonassessable and have been issued in
compliance with federal and state securities laws. None of the outstanding shares of Common Stock
were issued in violation of any preemptive rights, rights of first refusal or other similar rights
to subscribe for or purchase securities of the Company. There are no authorized or outstanding
options, warrants, preemptive rights, rights of first refusal or other rights to purchase, or
equity or debt securities convertible into or exchangeable or exercisable for, any capital stock of
the Company or any of its Subsidiaries other than those accurately described in the Preliminary
Prospectus and the Prospectus. The description of the Company’s stock option, stock bonus and
other stock plans or arrangements, and the options or other rights granted thereunder, set forth or
incorporated by reference in the Preliminary Prospectus and the Prospectus, accurately and fairly
presents the information required to be shown with respect to such plans, arrangements, options and
rights.
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(the “NASD”). As used herein, a “Debt Repayment Triggering Event” means any event
or condition which gives, or with the giving of notice or lapse of time would give, the holder of
any note, debenture or other evidence of indebtedness (or any person acting on such holder’s
behalf) the right to require the repurchase, redemption or repayment of all or a portion of such
indebtedness by the Company or any of its Subsidiaries.
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property held under lease by the Company or any Subsidiary are held under valid and enforceable
leases, with such exceptions as are not material and do not materially interfere with the current
or currently proposed use of such real property, improvements, equipment or personal property by
the Company or such Subsidiary.
(y) Company not an “Investment Company”. The Company has been advised of the rules and
requirements under the Investment Company Act of 1940, as amended (the “Investment Company
Act”). The Company is not, and after receipt of payment for the Shares and the application of
the proceeds thereof as contemplated under the caption “Use of Proceeds” in the Preliminary
Prospectus and the Prospectus will not be, an “investment company” within the meaning of the
Investment Company Act and the Company intends to conduct its business in a manner so that it will
not become subject to the Investment Company Act.
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or result in stabilization or manipulation of the price of any security of the Company to
facilitate the sale or resale of the Shares.
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will not directly or indirectly use the proceeds of the offering, or lend, contribute or
otherwise make available such proceeds, to any Subsidiary, joint venture partner or other person or
entity, for the purpose of financing the activities of any person currently subject to any U.S.
sanctions administered by OFAC.
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of 1986, as amended, and the regulations and published interpretations thereunder (the
“Code”) of which the Company or such Subsidiary is a member. No “reportable event” (as
defined under ERISA) has occurred or is reasonably expected to occur with respect to any “employee
benefit plan” established or maintained by the Company, its Subsidiaries or any of their ERISA
Affiliates. No “employee benefit plan” (as defined in ERISA Section 3(3)) established or
maintained by the Company, its Subsidiaries or any of their ERISA Affiliates, if such “employee
benefit plan” were terminated, would have any “amount of unfunded benefit liabilities” (as defined
under ERISA) that could reasonably be expected to result in a Material Adverse Change. Neither the
Company, its Subsidiaries nor any of their ERISA Affiliates has incurred or reasonably expects to
incur any liability under (i) Title IV of ERISA with respect to termination of, or withdrawal from,
any “employee benefit plan” or (ii) Sections 412, 4971, 4975 or 4980B of the Code that could
reasonably be expected to result in a Material Adverse Change. Each “employee benefit plan”
established or maintained by the Company, its Subsidiaries or any of their ERISA Affiliates that is
intended to be qualified under Section 401(a) of the Code is so qualified and nothing has occurred,
whether by action or failure to act, which would cause the loss of such qualification, that has
given or would give rise to any tax, penalty or other liability that could reasonably be expected
to result in a Material Adverse Change.
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Any certificate signed by an officer of the Company and delivered to the Representative or to
counsel for the Underwriters shall be deemed to be a representation and warranty by the Company to
each Underwriter as to the matters set forth therein.
(b) The Closing Date. Delivery of certificates for the Firm Shares to be purchased by the
Underwriters and payment therefor shall be made at the offices of Shearman & Sterling LLP, 000
Xxxxxxxxx Xxxxxx, Xxx Xxxx, Xxx Xxxx 00000 (or such other place as may be agreed to by the Company
and the Representative) at 9:00 a.m. New York time, on August 14, 2006, or such other time and date
not later than 1:30 p.m. New York time, on August 14, 2006, as the Representative shall designate
by notice to the Company (the time and date of such closing are called the “Closing Date”).
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It is understood that the Representative has been authorized, for its own account and the
accounts of the several Underwriters, to accept delivery of and receipt for, and make payment of
the purchase price for, the Firm Shares and any Optional Shares the Underwriters have agreed to
purchase. RBC Capital Markets Corporation, individually and not as the Representative of the
Underwriters, may (but shall not be obligated to) make payments for any Shares to be purchased by
any Underwriter whose funds shall not have been received by RBC Capital Markets Corporation by the
Closing Date or any Subsequent Closing Date, as the case may be, for the account of such
Underwriter, but any such payment shall not relieve such Underwriter from any of its obligations
under this Agreement.
Section 3. Covenants of the Company. The Company covenants and agrees with each
Underwriter as follows:
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of, or requests for additional or supplemental information from, the Commission, (iii) of the
time and date of any filing of any post-effective amendment to the Registration Statement or any
amendment or supplement to any Preliminary Prospectus or the Prospectus, (iv) of the time and date
that any post-effective amendment to the Registration Statement becomes effective and (v) of the
issuance by the Commission of any stop order suspending the effectiveness of the Registration
Statement or of any order or notice preventing or suspending the use of the Registration Statement,
any Preliminary Prospectus or the Prospectus, or of any proceedings to remove, suspend or terminate
from listing or quotation the Common Stock from any securities exchange upon which it is listed for
trading or included or designated for quotation, or of the threatening or initiation of any
proceedings for any of such purposes. The Company shall use its best efforts to prevent the
issuance of any such stop order or notice of prevention or suspension of such use. If the
Commission shall enter any such stop order or issue any such notice at any time, the Company will
use its best efforts to obtain the lifting or reversal of such order or notice at the earliest
possible moment, or, subject to Section 3(a), will file an amendment to the Registration Statement
or will file a new registration statement and use its best efforts to have such amendment or new
registration statement declared effective as soon as practicable. Additionally, the Company agrees
that it shall comply with the provisions of Rules 424(b) and 430A, as applicable, under the
Securities Act, including with respect to the timely filing of documents thereunder, and will use
its reasonable efforts to confirm that any filings made by the Company under such Rule 424(b) were
received in a timely manner by the Commission.
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Prospectus as so amended or supplemented, in the light of the circumstances under which they
were made or then prevailing, as the case may be, not misleading or so that the Registration
Statement, the Preliminary Prospectus or the Prospectus, as amended or supplemented, will comply
with applicable law.
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not be so extended solely by virtue of the publishing or distribution by any Underwriter of
any research regarding any earnings release, material news or a material event, if such research
report complies with Rule 139 of the Securities Act and the Common Stock is “actively traded,” as
defined in Rule 101(c)(1) of Regulation M under the Exchange Act. The Company will provide the
Representative and any co-managers and each individual subject to the restricted period pursuant to
the lockup letters described in Section 5(h) with prior notice of any such announcement that gives
rise to an extension of the restricted period and (ii) file a registration statement to register
for resale the shares of Common Stock issued to the owners of DLS Drilling Logistics and Services
Corporation as described in the Preliminary Prospectus and the Prospectus.
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The Representative, on behalf of the several Underwriters, may, in its sole discretion, waive
in writing the performance by the Company of any one or more of the foregoing covenants or extend
the time for their performance. Notwithstanding the foregoing, the Representative, for the benefit
of each of the other Underwriters, agrees not to consent to any action proposed to be taken by the
Company or any other holder of the Company’s securities that would otherwise be prohibited by, or
to waive compliance by the Company or any such other security holder with the provisions of,
Section 3(n) above or any lock-up agreement delivered pursuant to Section 5(h) below without giving
each of the other Underwriters at least 17 days’ prior notice (or such shorter notice as each of
the other Underwriters may deem acceptable to permit compliance with applicable provisions of NASD
Conduct Rule 2711(f) restricting publication and distribution of research and public appearances by
research analysts before and after the expiration, waiver or termination of a lock-up agreement).
Section 4. Payment of Expenses. The Company agrees to pay all costs, fees and
expenses incurred in connection with the performance of its obligations hereunder and in connection
with the transactions contemplated hereby, including without limitation (i) all expenses incident
to the issuance and delivery of the Shares (including all printing and engraving costs), (ii) all
fees and expenses of the registrar and transfer agent of the Common Stock, (iii) all necessary
issue, transfer and other stamp taxes in connection with the issuance and sale of the Shares to the
Underwriters, (iv) all fees and expenses of the Company’s counsel, independent public or certified
public accountants and other advisors, (v) all costs and expenses incurred in connection with the
preparation, printing, filing, shipping and distribution of the Registration Statement (including
financial statements, exhibits, schedules, consents and certificates of experts), each Issuer Free
Writing Prospectus, each Preliminary Prospectus and the Prospectus, and all amendments and
supplements thereto, and this Agreement, (vi) all filing fees, attorneys’ fees and expenses
incurred by the Company or the Underwriters in connection with qualifying or registering (or
obtaining exemptions from the qualification or registration of) all or any part of the Shares for
offer and sale under the state securities or blue sky laws or the provincial securities laws of
Canada, and, if requested by the Representative, preparing and printing a “Blue Sky Survey” or
memorandum, and any supplements thereto, advising the Underwriters of such qualifications,
registrations and exemptions, (vii) the filing fees incident to, and the reasonable fees and
expenses of counsel for the Underwriters in connection with, the NASD’s review and approval of the
Underwriters’ participation in the offering and distribution of the Shares, (viii) the fees and
expenses associated with listing of the Shares on the American Stock Exchange, (ix) all
transportation and other expenses incurred in connection with presentations to prospective
purchasers of the Shares, except that the Company and the Underwriters will each pay 50% of the
cost of privately chartered airplanes used for such purposes and (x) all other fees, costs and
expenses referred to in Item 13 of Part II of the Registration Statement. Except as provided in
this Section 4, Section 6, Section 8 and Section 9 hereof, the Underwriters shall pay their own
expenses, including the fees and disbursements of their counsel.
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Section 5. Conditions of the Obligations of the Underwriters. The obligations of
the several Underwriters to purchase and pay for the Shares as provided herein on the Closing Date
and, with respect to the Optional Shares, any Subsequent Closing Date, shall be subject to the
accuracy in all material respects of the representations and warranties on the part of the Company
set forth in Section 1 hereof that are not qualified by materiality as of the date hereof and as of
the Closing Date as though then made and, with respect to the Optional Shares, as of any Subsequent
Closing Date as though then made, to the accuracy of the representations and warranties on the part
of the Company set forth in Section 1 hereof that are qualified by materiality as of the date
hereof and as of the Closing Date as though then made and, with respect to the Optional Shares, as
of any Subsequent Closing Date as though then made, to the accuracy of the statements of the
Company made in any certificates pursuant to the provisions hereof, to the timely performance by
the Company of its covenants and other obligations hereunder, and to each of the following
additional conditions:
(i) the Company shall have filed the Prospectus with the Commission (including the
information required by Rule 430A under the Securities Act) in the manner and within the
time period required by Rule 424(b) under the Securities Act; or the Company shall have
filed a post-effective amendment to the Registration Statement containing the information
required by such Rule 430A, and such post-effective amendment shall have become effective;
(ii) all material required to be filed by the Company pursuant to Rule 433(d) under the
Securities Act shall have been filed with the Commission within the applicable time periods
prescribed for such filings under such Rule 433;
(iii) no stop order suspending the effectiveness of the Registration Statement, or any
post-effective amendment to the Registration Statement, shall be in effect and no
proceedings for such purpose shall have been instituted or threatened by the Commission; and
(iv) the NASD shall have raised no objection to the fairness and reasonableness of the
underwriting terms and arrangements.
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(i) there shall not have occurred any Material Adverse Change; and
(ii) there shall not have occurred any downgrading, nor shall any notice have been
given of any intended or potential downgrading or of any review for a possible change that
does not indicate the direction of the possible change, in the rating accorded any
securities of the Company or any of its subsidiaries by any “nationally recognized
statistical rating organization” as such term is defined for purposes of Rule 436(g)(2)
under the Securities Act.
(i) for the period from and after the date of this Agreement and prior to such Closing
Date, there has not occurred any Material Adverse Change;
(ii) the representations, warranties and covenants of the Company set forth in Section
1 of this Agreement not qualified by materiality are true and correct in all material
respects and those representations, warranties and covenants of the Company set forth in
Section 1 of this Agreement qualified by materiality are true and correct on and as of the
Closing Date with the same force and effect as though expressly made on and as of such
Closing Date; and
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(iii) the Company has complied with all the agreements hereunder and satisfied all the
conditions on its part to be performed or satisfied hereunder at or prior to such Closing
Date.
If any condition specified in this Section 5 is not satisfied when and as required to be
satisfied, this Agreement may be terminated by the Representative by notice to the Company at any
time on or prior to the Closing Date and, with respect to the Optional Shares, at any time prior to
the applicable Subsequent Closing Date, which termination shall be without liability on the part of
any party to any other party, except that Section 4, Section 6, Section 8 and Section 9 shall at
all times be effective and shall survive such termination.
Section 6. Reimbursement of Underwriters’ Expenses. If this Agreement is terminated
by the Representative pursuant to Section 5, Section 7, or Section 11, or if the sale to the
Underwriters of the Shares on the Closing Date is not consummated because of any refusal, inability
or failure on the part of the Company to perform any agreement herein or to comply with any
provision hereof, the Company agrees to reimburse the Representative and the other Underwriters (or
such Underwriters as have terminated this Agreement with respect to themselves), severally, upon
demand for all out-of-pocket expenses that shall have been reasonably incurred by the
Representative and the Underwriters in connection with the proposed
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purchase and the offering and sale of the Shares, including but not limited to fees and
disbursements of counsel, printing expenses, travel expenses, postage, facsimile and telephone
charges.
Section 7. Effectiveness of this Agreement. This Agreement shall not become
effective until the later of (i) the execution of this Agreement by the parties hereto and (ii)
notification by the Commission to the Company and the Representative of the effectiveness of the
Registration Statement under the Securities Act.
Prior to such effectiveness, this Agreement may be terminated by any party by notice to each
of the other parties hereto, and any such termination shall be without liability on the part of (a)
the Company to any Underwriter, except that the Company shall be obligated to reimburse the
expenses of the Representative and the Underwriters pursuant to Sections 4 and 6 hereof or (b) of
any Underwriter to the Company.
Section 8. Indemnification.
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indemnifying party and the indemnified party in conducting the defense of any such action or
that there may be legal defenses available to it and/or other indemnified parties that are
different from or additional to those available to the indemnifying party, the indemnified party or
parties shall have the right to select separate counsel to assume such legal defenses and to
otherwise participate in the defense of such action on behalf of such indemnified party or parties.
Upon receipt of notice from the indemnifying party to such indemnified party of such indemnifying
party’s election so to assume the defense of such action and approval by the indemnified party of
counsel, which such approval shall not be unreasonably withheld, the indemnifying party will not be
liable to such indemnified party under this Section 8 for any legal or other expenses subsequently
incurred by such indemnified party in connection with the defense thereof unless (i) the
indemnified party shall have employed separate counsel in accordance with the proviso to the
preceding sentence (it being understood, however, that the indemnifying party shall not be liable
for the expenses of more than one separate counsel (other than local counsel), reasonably approved
by the indemnifying party (or by the Representative in the case of Section 8(b)), representing the
indemnified parties who are parties to such action) or (ii) the indemnifying party shall not have
employed counsel satisfactory to the indemnified party to represent the indemnified party within a
reasonable time after notice of commencement of the action, in each of which cases the fees and
expenses of counsel shall be at the expense of the indemnifying party.
Section 9. Contribution. If the indemnification provided for in Section 8 is for
any reason unavailable to or otherwise insufficient to hold harmless an indemnified party in
respect of any losses, claims, damages, liabilities or expenses referred to therein, then each
indemnifying party shall contribute to the aggregate amount paid or payable by such indemnified
party, as incurred, as a result of any losses, claims, damages, liabilities or expenses referred to
therein (i) in such proportion as is appropriate to reflect the relative benefits received by the
Company, on the one hand, and the Underwriters, on the other hand, from the offering of the Shares
pursuant
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to this Agreement or (ii) if the allocation provided by clause (i) above is not permitted by
applicable law, in such proportion as is appropriate to reflect not only the relative benefits
referred to in clause (i) above but also the relative fault of the Company, on the one hand, and
the Underwriters, on the other hand, in connection with the statements or omissions or inaccuracies
in the representations and warranties herein which resulted in such losses, claims, damages,
liabilities or expenses, as well as any other relevant equitable considerations. The relative
benefits received by the Company, on the one hand, and the Underwriters, on the other hand, in
connection with the offering of the Shares pursuant to this Agreement shall be deemed to be in the
same respective proportions as the total net proceeds from the offering of the Shares pursuant to
this Agreement (before deducting expenses) received by the Company, and the total underwriting
discount received by the Underwriters, in each case as set forth on the front cover page of the
Prospectus bear to the aggregate initial public offering price of the Shares as set forth on such
cover. The relative fault of the Company, on the one hand, and the Underwriters, on the other
hand, shall be determined by reference to, among other things, whether any such untrue or alleged
untrue statement of a material fact or omission or alleged omission to state a material fact or any
such inaccurate or alleged inaccurate representation or warranty relates to information supplied by
the Company, on the one hand, or the Underwriters, on the other hand, and the parties’ relative
intent, knowledge, access to information and opportunity to correct or prevent such statement or
omission.
The amount paid or payable by a party as a result of the losses, claims, damages, liabilities
and expenses referred to above shall be deemed to include, subject to the limitations set forth in
Section 8(c), any legal or other fees or expenses reasonably incurred by such party in connection
with investigating or defending any action or claim.
The Company and the Underwriters agree that it would not be just and equitable if contribution
pursuant to this Section 9 were determined by pro rata allocation (even if the Underwriters were
treated as one entity for such purpose) or by any other method of allocation that does not take
account of the equitable considerations referred to in this Section 9.
Notwithstanding the provisions of this Section 9, no Underwriter shall be required to
contribute any amount in excess of the underwriting commissions received by such Underwriter in
connection with the Shares underwritten by it and distributed to the public. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Securities Act) shall be
entitled to contribution from any person who was not guilty of such fraudulent misrepresentation.
The Underwriters’ obligations to contribute pursuant to this Section 9 are several, and not joint,
in proportion to their respective underwriting commitments as set forth opposite their names in
Schedule A. For purposes of this Section 9, each director, officer, employee and agent of an
Underwriter and each person, if any, who controls an Underwriter within the meaning of the
Securities Act and the Exchange Act shall have the same rights to contribution as such Underwriter,
and each director of the Company, each officer of the Company who signed the Registration Statement
and each person, if any, who controls the Company within the meaning of the Securities Act and the
Exchange Act shall have the same rights to contribution as the Company.
Section 10. Default of One or More of the Several Underwriters. If, on the Closing
Date or a Subsequent Closing Date, as the case may be, any one or more of the several
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Underwriters shall fail or refuse to purchase Shares that it or they have agreed to purchase
hereunder on such date, and the aggregate number of Shares which such defaulting Underwriter or
Underwriters agreed but failed or refused to purchase does not exceed 10% of the aggregate number
of the Shares to be purchased on such date, the other Underwriters shall be obligated, severally,
in the proportions that the number of Firm Shares set forth opposite their respective names on
Schedule A bears to the aggregate number of Firm Shares set forth opposite the names of all such
non-defaulting Underwriters, or in such other proportions as may be specified by the Representative
with the consent of the non-defaulting Underwriters, to purchase the Shares which such defaulting
Underwriter or Underwriters agreed but failed or refused to purchase on such date. If, on the
Closing Date or a Subsequent Closing Date, as the case may be, any one or more of the Underwriters
shall fail or refuse to purchase Shares and the aggregate number of Shares with respect to which
such default occurs exceeds 10% of the aggregate number of Shares to be purchased on such date, and
arrangements satisfactory to the Representative and the Company for the purchase of such Shares are
not made within 48 hours after such default, this Agreement shall terminate without liability of
any party to any other party, except that the provisions of Section 4, Section 6, Section 8 and
Section 9 shall at all times be effective and shall survive such termination. In any such case
either the Representative or the Company shall have the right to postpone the Closing Date or a
Subsequent Closing Date, as the case may be, but in no event for longer than seven days in order
that the required changes, if any, to the Registration Statement and the Prospectus or any other
documents or arrangements may be effected.
As used in this Agreement, the term “Underwriter” shall be deemed to include any person
substituted for a defaulting Underwriter under this Section 10. Any action taken under this
Section 10 shall not relieve any defaulting Underwriter from liability in respect of any default of
such Underwriter under this Agreement.
Section 11. Termination of this Agreement. Prior to the Closing Date, this
Agreement may be terminated by the Representative by notice given to the Company if at any time:
(i) trading or quotation in any of the Company’s securities shall have been suspended or limited by
the Commission or by the American Stock Exchange, or trading in securities generally on the
American Stock Exchange, the Nasdaq Stock Market or the New York Stock Exchange shall have been
suspended or limited, or minimum or maximum prices shall have been generally established on any of
such stock exchanges by the Commission or the NASD; (ii) a general banking moratorium shall have
been declared by any of federal or New York authorities; (iii) there has been a material disruption
in commercial banking or securities settlement, payment or clearance services in the United States;
(iv) there shall have occurred any outbreak or escalation of national or international hostilities
or any crisis or calamity, or any change in the United States or international financial markets,
or any substantial change or development involving a prospective substantial change in United
States’ or international political, financial or economic conditions, as in the judgment of the
Representative is material and adverse and makes it impracticable to market the Shares in the
manner and on the terms described in the Prospectus or to enforce contracts for the sale of
securities; (v) in the reasonable judgment of the Representative there shall have occurred any
Material Adverse Change; or (vi) the Company shall have sustained a loss by strike, fire, flood,
earthquake, accident or other calamity of such character as in the judgment of the Representative
would reasonably be expected to result in a Material Adverse Change. Any termination pursuant to
this Section 11 shall be without liability on the part of (i) the Company to any Underwriter,
except that the Company shall be obligated to
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reimburse the expenses of the Representative and the Underwriters pursuant to Sections 4 and 6
hereof, (ii) any Underwriter to the Company or (iii) any party hereto to any other party except
that the provisions of Section 8 and Section 9 shall at all times be effective and shall survive
such termination.
Section 12. No Advisory or Fiduciary Responsibility. The Company acknowledges and
agrees that: (i) the purchase and sale of the Shares pursuant to this Agreement, including the
determination of the public offering price of the Shares and any related discounts and commissions,
is an arm’s-length commercial transaction between the Company, on the one hand, and the several
Underwriters, on the other hand, and the Company is capable of evaluating and understanding and
understands and accepts the terms, risks and conditions of the transactions contemplated by this
Agreement; (ii) in connection with each transaction contemplated hereby and the process leading to
such transaction each Underwriter is and has been acting solely as a principal and is not the
financial advisor, agent or fiduciary of the Company or its affiliates, stockholders, creditors or
employees or any other party; (iii) no Underwriter has assumed or will assume an advisory, agency
or fiduciary responsibility in favor of the Company with respect to any of the transactions
contemplated hereby or the process leading thereto (irrespective of whether such Underwriter has
advised or is currently advising the Company on other matters) and no Underwriter has any
obligation to the Company with respect to the offering contemplated hereby except the obligations
expressly set forth in this Agreement; (iv) the several Underwriters and their respective
affiliates may be engaged in a broad range of transactions that involve interests that differ from
those of the Company and that the several Underwriters have no obligation to disclose any of such
interests by virtue of any advisory, agency or fiduciary relationship; and (v) the Underwriters
have not provided any legal, accounting, regulatory or tax advice with respect to the offering
contemplated hereby and the Company has consulted its own legal, accounting, regulatory and tax
advisors to the extent it deemed appropriate.
This Agreement supersedes all prior agreements and understandings (whether written or oral)
between the Company and the several Underwriters, or any of them, with respect to the subject
matter hereof. The Company hereby waives and releases, to the fullest extent permitted by law, any
claims that the Company may have against the several Underwriters with respect to any breach or
alleged breach of agency or fiduciary duty.
Section 13. Representations and Indemnities to Survive Delivery. The respective
indemnities, agreements, representations, warranties and other statements of the Company, of its
officers and of the several Underwriters set forth in or made pursuant to this Agreement will
remain in full force and effect, regardless of any (i) investigation made by or on behalf of any
Underwriter, the officers or employees of any Underwriter, or any person controlling the
Underwriter, the Company, the officers or employees of the Company, or any person controlling the
Company, as the case may be, or (ii) acceptance of the Shares and payment for them hereunder, and
will survive delivery of and payment for the Shares sold hereunder and any termination of this
Agreement.
Section 14. Notices. All communications hereunder shall be in writing and shall be
mailed, hand delivered or telecopied and confirmed to the parties hereto as follows:
28
If to the Representative:
RBC Capital Markets Corporation
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Facsimile: (000) 000-0000
Attention: Xxx Xxxxx
If to the Company:
Xxxxx-Xxxxxxxx Energy Inc.
0000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Pound III, Esq.
0000 Xxxxxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxxxx X. Pound III, Esq.
with a copy (which shall not constitute notice) to:
Xxxxxxx Xxxxx LLP
000 Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
000 Xxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
Attention: Xxxxxx X. Xxxxxx
Any party hereto may change the address for receipt of communications by giving written notice
to the others in accordance with this Section 14.
Section 15. Successors and Assigns. This Agreement will inure to the benefit of and
be binding upon the parties hereto, including any substitute Underwriters pursuant to Section 10
hereof, and to the benefit of (i) the Company, its directors, any person who controls the Company
within the meaning of the Securities Act and the Exchange Act and any officer of the Company who
signs the Registration Statement, (ii) the Underwriters, the officers, directors, employees and
agents of the Underwriters, and each person, if any, who controls any Underwriter within the
meaning of the Securities Act and the Exchange Act, and (iii) the respective successors and assigns
of any of the above, all as and to the extent provided in this Agreement, and no other person
shall acquire or have any right under or by virtue of this Agreement. The term “successors and
assigns” shall not include a purchaser of any of the Shares from the Underwriters merely because of
such purchase.
Section 16. Partial Unenforceability. The invalidity or unenforceability of any
Section, paragraph or provision of this Agreement shall not affect the validity or enforceability
of any other Section, paragraph or provision hereof. If any Section, paragraph or provision of
this Agreement is for any reason determined to be invalid or unenforceable, there shall be deemed
to be made such minor changes (and only such minor changes) as are necessary to make it valid and
enforceable.
29
Section 17. Governing Law Provisions. THIS AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND INTERPRETED IN ACCORDANCE WITH, THE LAW OF THE STATE OF NEW YORK.
Section 18. General Provisions. This Agreement constitutes the entire agreement of
the parties to this Agreement and supersedes all prior written or oral and all contemporaneous oral
agreements, understandings and negotiations with respect to the subject matter hereof. This
Agreement may be executed in two or more counterparts, each one of which shall be an original, with
the same effect as if the signatures thereto and hereto were upon the same instrument. This
Agreement may not be amended or modified unless in writing by all of the parties hereto, and no
condition herein (express or implied) may be waived unless waived in writing by each party whom the
condition is meant to benefit. The section headings herein are for the convenience of the parties
only and shall not affect the construction or interpretation of this Agreement.
Each of the parties hereto acknowledges that it is a sophisticated business person who was
adequately represented by counsel during negotiations regarding the provisions hereof, including,
without limitation, the indemnification provisions of Section 8 and the contribution provisions of
Section 9, and is fully informed regarding said provisions. Each of the parties hereto further
acknowledges that the provisions of Sections 8 and 9 hereto fairly allocate the risks in light of
the ability of the parties to investigate the Company, its affairs and its business in order to
assure that adequate disclosure has been made in the Registration Statement, any Preliminary
Prospectus and the Prospectus (and any amendments and supplements thereto), as required by the
Securities Act and the Exchange Act.
30
If the foregoing is in accordance with your understanding of our agreement, kindly sign and
return to the Company the enclosed copies hereof, whereupon this instrument, along with all
counterparts hereof, shall become a binding agreement in accordance with its terms.
Very truly yours, | ||||
XXXXX-XXXXXXXX ENERGY INC. | ||||
By: | /s/ Xxxxx Xxxxx | |||
Name: Xxxxx Xxxxx | ||||
Title: President and Chief Operation Officer |
31
The foregoing Underwriting Agreement is hereby confirmed and accepted by the Representative as
of the date first above written.
RBC CAPITAL MARKETS CORPORATION | ||||
Acting as Representative of the several | ||||
Underwriters named in the attached | ||||
Schedule A. | ||||
By: |
/s/ Xxxxxxx Xxxxxxxxxx | |||
Title: Managing Director |
32
SCHEDULE A
Number of Firm Shares | ||||
Underwriters | to be Purchased | |||
RBC Capital Markets Corporation |
1,800,000 | |||
X.X. Xxxxxxx & Sons, Inc. |
600,000 | |||
Xxxxxxx,
Xxxx & Company L.L.C. |
600,000 | |||
Total |
3,000,000 |
Sch. A-1
SCHEDULE B
Schedule of Free Writing Prospectuses
None
Sch B
SCHEDULE C
Securityholder Parties to Lock-Up Agreements
1. | Xxxxx X. Xxxxx | |
2. | Xxxxxx Xxxxxxx | |
3. | Xxxxx Xxxxx | |
4. | Xxxx Xxxxxxx | |
5. | Xxxxxxx X. Xxxxxxxx | |
6. | Xxxxxx X. Xxxxxxx | |
7. | Xxxxxxx X. Xxxxxxxxxxxx | |
8. | Xxxxxxxx X. Xxxxx | |
9. | Xxxxxx X. Xxxxx | |
10. | Xxxx X. XxXxxxxxxxx, Xx. | |
11. | Xxxx X. Xxxxxxxxx, Xx. | |
12. | Xxxxxx X. Xxxxxxxxxxx | |
13. | Xxxxxx X. Xxxxx | |
14. | Xxxxxxxx X. Pound III | |
15. | Xxxxx Xxxxxx | |
16. | Xxxxxxx Xxxxxxxx | |
17. | Xxxxxx X. Xxxxxxxx, Xx. | |
18. | Xxxxx Xxxxx |
Sch C
SCHEDULE D
Name of Accountants | Name of Entity | |
UHY Xxxx Frankfort Xxxxx & Xxxx CPAs, LLP
|
Xxxxx-Xxxxxxxx Energy Inc. Specialty Rental Tools, Inc. |
|
Xxxxxx, Xxxxxx and Banks, LLP
|
Xxxxx-Xxxxxxxx Energy Inc. | |
Accounting & Consulting Group, LLP
|
W. T. Enterprises, Inc. | |
Xxxxxx, Moore, Dehart, Xxxxxx & Xxxxxxxxxx, LLC
|
Delta Rental Service, Inc. | |
Xxxxxx Xxxxxxx & Co., PC
|
Capcoil Tubing Services, Inc. | |
Xxxxxxx (la firma argentina miembro de KPMG International, una cooperativa suiza) |
DLS Drilling, Logistics & Services Corporation |
Sch D
EXHIBIT A
Form of Opinion of Counsel for the Company
Exh. A-1
EXHIBIT B
[Date]
RBC Capital Markets Corporation
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
As Representative of the Several Underwriters
Xxx Xxxxxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
As Representative of the Several Underwriters
Re: | Xxxxx-Xxxxxxxx Energy Inc. (the “Company”) |
Ladies and Gentlemen:
The undersigned is an owner of record or beneficially of certain shares of Common Stock of
the Company (“Common Stock”) or securities convertible into or exchangeable or
exercisable for Common Stock. The Company proposes to carry out a public offering of Common
Stock (the “Offering”) for which you will act as the representative (the
“Representative”) of the syndicate of underwriters. The undersigned recognizes that the
Offering will be of benefit to the undersigned and will benefit the Company. The undersigned
acknowledges that you are relying on the representations and agreements of the undersigned
contained in this letter in carrying out the Offering and in entering into underwriting
arrangements with the Company with respect to the Offering.
In consideration of the foregoing, the undersigned hereby agrees that the undersigned will
not, (and will cause any spouse or immediate family member of the spouse or the undersigned
living in the undersigned’s household not to), without your prior written consent (which consent
may be withheld in its sole discretion), directly or indirectly, sell, offer, contract or grant
any option to sell (including without limitation any short sale), pledge, transfer, establish an
open “put equivalent position” or liquidate or decrease a “call equivalent position” within the
meaning of Rule 16a-1(h) under the Securities Exchange Act of 1934, as amended, or otherwise
dispose of or transfer (or enter into any transaction which is designed to, or might reasonably
be expected to, result in the disposition of) including the filing (or participation in the
filing of) of a registration statement with the Shares and Exchange Commission in respect of,
any shares of Common Stock, options or warrants to
Exh. B-1
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 hereof and continuing through the close of
trading on the date 90 days after the date of the Prospectus (the “Lock-Up Period”). In
addition, the undersigned agrees that, without your prior written consent, it will not, during
the Lock-Up Period, make any demand for or exercise any right with respect to, the registration
of any shares of Common Stock or any security convertible into or exercisable or exchangeable
for Common Stock.
If (i) the Company issues an earnings release or material news, or a material event
relating to the Company occurs, during the last 17 days of the lock-up period, or (ii) prior to
the expiration of the lock-up period, the Company announces that it will release earnings
results during the 16-day period beginning on the last day of the lock-up period, the
restrictions imposed by this agreement shall continue to apply until the expiration of the
18-day period beginning on the issuance of the earnings release or the occurrence of the
material news or material event, unless you waive, in writing, such extension; provided,
however, that such restrictions shall not be so extended solely by virtue of the publishing or
distribution by any Underwriter of any research regarding any earnings release, material news or
a material event, if such research report complies with Rule 139 of the Securities Act and the
Common Stock is “actively traded,” as defined in Rule 101(c)(1) of Regulation M under the
Exchange Act. The undersigned hereby acknowledges that the Company has agreed in the
Underwriting Agreement to provide written notice of any event that would result in an extension
of the Lock-Up Period pursuant to the previous paragraph to the undersigned (in accordance with
Section 14 of the Underwriting Agreement) and agrees that any such notice properly delivered
will be deemed to have given to, and received by, the undersigned. The undersigned hereby
further agrees that, prior to engaging in any transaction or taking any other action that is
subject to the terms of this Lock-Up Agreement during the period from the date of this Lock-Up
Agreement to and including the 34th day following the expiration of the initial Lock-Up Period,
it will give notice thereof to the Company and will not consummate such transaction or take any
such action unless it has received written confirmation from the Company that the Lock-Up Period
(as such may have been extended pursuant to the previous paragraph) has expired. The
undersigned also agrees and consents to the entry of stop transfer instructions with the
Company’s transfer agent and registrar against the transfer of shares of Common Stock or
securities convertible into or exchangeable or exercisable for Common Stock held by the
undersigned except in compliance with the foregoing restrictions.
With respect to the Offering only, the undersigned waives any registration rights relating
to registration under the Securities Act of any Common Stock owned either of record or
beneficially by the undersigned, including any rights to receive notice of the Offering.
Exh. B-2
This agreement is irrevocable and will be binding on the undersigned and the respective
successors, heirs, personal representatives, and assigns of the undersigned.
Printed Name of Holder
|
By: | ||||
Signature | ||||
Printed Name of Person Signing
|
||
(and indicate capacity of person signing if
signing as custodian, trustee, or on behalf of
an entity) |
Exh. B-3
ANNEX A
SUBSIDIARIES OF THE COMPANY
Name | State of Organization | |||
AirComp LLC |
Delaware | |||
Mountain Compressed Air Inc. |
Texas | |||
Strata Directional Technology, Inc. |
Texas | |||
Xxxxx-Xxxxxxxx Tubular Services, Inc. |
Texas | |||
Xxxxx-Xxxxxxxx Rental Tools, Inc. |
Texas | |||
Xxxxx-Xxxxxxxx Production Services, Inc. |
Texas | |||
OilQuip Rentals, Inc. |
Delaware | |||
Target Energy Inc. |
Delaware | |||
Xxxxx-Xxxxxxxx Management LP |
Texas | |||
Xxxxx-Xxxxxxxx LP, LLC |
Delaware | |||
Allis-Xxxxxxxx XX, LLC |
Delaware | |||
Xxxxxx Oil Tool Services, Inc. |
Louisiana |
Annex A-1