1
EXHIBIT 1.1
UTI ENERGY CORP.
5,915,500 Shares(1)
Common Stock
UNDERWRITING AGREEMENT
_____________, 1997
PRUDENTIAL SECURITIES INCORPORATED
XXXXXX BROTHERS INC.
XXXXXXXX XXXXXX REFSNES, INC.
XXXXXXX & COMPANY INTERNATIONAL
As a Representatives of the several Underwriters
c/o Prudential Securities Incorporated
Xxx Xxx Xxxx Xxxxx
Xxx Xxxx, Xxx Xxxx 00000
Dear Sirs:
Each of UTI Energy Corp., a Delaware corporation (the
"Company"), the selling securityholders set forth in Schedule 1-A hereto (the
"Selling Securityholders"), and the selling securityholders set forth on
Schedule 1-B hereto (the "Additional Securityholders"), hereby confirms its
agreement with the several underwriters named in Schedule 2 hereto (the
"Underwriters"), for whom you have been duly authorized to act as
representatives (in such capacities, the "Representatives"), as set forth
below. If you are the only Underwriters, all references herein to the
Representatives shall be deemed to be to the Underwriters.
1. Securities. Subject to the terms and conditions herein
contained, the Company proposes to issue and sell, and each Selling
Securityholder proposes to sell, to the several Underwriters an aggregate of
1,575,000 shares and 4,340,500 shares, respectively (the "Firm Securities"), of
the Company's Common Stock, par value $.001 per share ("Common Stock"). The
Company also proposes to issue and sell to the several Underwriters not more
than 414,825 additional shares of Common Stock and the Additional Selling
Securityholders propose to sell to the several Underwriters not more than
112,500 additional shares of Common Stock and warrants to purchase 360,000
shares of Common Stock having an exercise price of $1 43/48 per share (the
"Warrants"), if requested by the Representatives as provided in Section 4 of
this Agreement. Any and all shares of Common Stock to be purchased by the
Underwriters pursuant to such options, including the shares of Common Stock
__________________________________
(1) Plus options to purchase from the Company up to 414,825 additional shares
and from the Additional Selling Securityholders up to 112,400 additional shares
and warrants to purchase 360,000 shares to cover over-allotments.
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Draft Dated September 26, 1997
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issuable upon the exercise of the Warrants, are referred to herein as the
"Option Securities", and the Firm Securities and any Option Securities are
collectively referred to herein as the "Securities".
2. Representations and Warranties of the Company and Drum. The
Company and Xxxxxx X. Drum ("Drum") jointly and severally represent and warrant
to, and agree with, each of the several Underwriters that:
(a) The Company meets the requirements for use of Form
S-3 under the Securities Act of 1933, as amended (the "Act"). A
registration statement on such Form (File No. 333-35109) with respect
to the Securities, including a prospectus subject to completion, has
been filed by the Company with the Securities and Exchange Commission
(the "Commission") under the Act, and one or more amendments to such
registration statement may have been so filed. After the execution of
this Agreement, the Company will file with the Commission either (i)
if such registration statement, as it may have been amended, has been
declared by the Commission to be effective under the Act, either (A)
if the Company relies on Rule 434 under the Act, a Term Sheet (as
hereinafter defined) relating to the Securities, that shall identify
the Preliminary Prospectus (as hereinafter defined) that it
supplements and, if required to be filed pursuant to Rules 434(c)(2)
and 424(b), an Integrated Prospectus (as hereinafter defined), in
either case, containing such information as is required or permitted
by Rule 434, 430A and 424(b) under the Act or (B) if the Company does
not rely on Rule 434 under the Act, a prospectus in the form most
recently included in an amendment to such registration statement (or,
if no such amendment shall have been filed, in such registration
statement), with such changes or insertions as are required by Rule
430A under the Act or permitted by Rule 424(b) under the Act, and in
the case of clause (i)(A) or (i)(B) of this sentence as have been
provided to and approved by the Representatives prior to the execution
of this Agreement, or (ii) if such registration statement, as it may
have been amended, has not been declared by the Commission to be
effective under the Act, an amendment to such registration statement,
including a form of prospectus, a copy of which amendment has been
furnished to and approved by the Representatives prior to the
execution of this Agreement. The Company may also file a related
registration statement with the Commission pursuant to Rule 462(b)
under the Act for the purpose of registering certain additional
Securities. As used in this Agreement, the term "Original
Registration Statement" means the registration statement initially
filed relating to the Securities, as amended at the time when it was
or is declared effective, including (A) all financial schedules and
exhibits thereto, (B) all documents incorporated by reference therein
filed under the Securities Exchange Act of 1934, as amended (the
"Exchange Act") and (C) any information omitted therefrom pursuant to
Rule 430A under the Act and included in the Prospectus (as hereinafter
defined) or, if required to be filed pursuant to Rule 434(c)(2) and
424(b), in the Integrated Prospectus; the term "Rule 462(b)
Registration Statement" means any registration statement filed with
the Commission pursuant to Rule 462(b) under the Act (including the
Registration Statement and any Preliminary Prospectus or Prospectus
incorporated therein at the time such Registration Statement becomes
effective); the term "Registration Statement" includes both the
Original Registration Statement and any Rule 462(b) Registration
Statement; the term "Preliminary Prospectus" means each prospectus
subject to completion filed with such registration statement or any
amendment thereto
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(including the prospectus subject to completion, if any, included in
the Registration Statement or any amendment thereto at the time it was
or is declared effective), including all documents incorporated by
reference therein filed under the Exchange Act the term "Prospectus"
means:
(A) if the Company relies on Rule 434 under the Act, the
Term Sheet relating to the Securities that is first filed
pursuant to Rule 424(b)(7) under the Act, together with the
Preliminary Prospectus identified therein that such Term Sheet
supplements:
(B) if the Company does not rely on Rule 434 under the
Act, the prospectus first filed with the Commission pursuant
to Rule 424(b) under the Act; or
(C) if the Company does not rely on Rule 434 under the
Act and if no prospectus is required to be filed pursuant to
Rule 424(b) under the Act, the prospectus included in the
Registration Statement, including, in the case of clauses (A),
(B) or (C) of this sentence, all documents incorporated by
reference therein filed under the Exchange Act; the term
"Integrated Prospectus" means a prospectus first filed with
the Commission pursuant to Rules 434(c)(2) and 424(b) under
the Act; and the Term "Term Sheet" means any abbreviated term
sheet that satisfies the requirements of Rule 434 under the
Act. Any reference in this Agreement to an "amendment or
supplement" to any Preliminary Prospectus, the Prospectus or
any Integrated Prospectus or an "amendment" to any
registration statement (including the Registration Statement)
shall be deemed to include any document incorporated by
reference therein that is filed with the Commission under the
Exchange Act after the date of such Preliminary Prospectus,
Prospectus, Integrated Prospectus or registration statement,
as the case may be; any reference herein to the "date" of a
Prospectus that includes a Term Sheet shall mean the date of
such Term Sheet. For purposes of the preceding sentence, any
reference to the "effective date" of an amendment to a
registration statement shall, if such amendment is effected by
means of the filing with the Commission under the Exchange Act
of a document incorporated by reference in such registration
statement, be deemed to refer to the date on which such
document was so filed with the Commission.
(b) The Commission has not issued any order preventing or
suspending the use of any Preliminary Prospectus. When any
Preliminary Prospectus and any amendment or supplement thereto was
filed with the Commission, it (i) contained all statements required to
be stated therein in accordance with, and complied in all material
respects with the requirements of, the Act, the Exchange Act and the
respective rules and regulations of the Commission thereunder, and
(ii) did not include any untrue statement of a material fact or omit
to state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. When the Registration Statement or any amendment
thereto was or is declared effective, it (i) contained or will contain
all statements required to be stated therein in accordance with, and
complied or will comply in all material respects with the requirements
of, the Act, the Exchange Act and the respective rules and regulations
of the Commission thereunder and (ii) did not or will not include any
untrue statement of a material fact or omit to state any material fact
necessary to make the statements
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therein not misleading. When the Prospectus or any Term Sheet that is
a part thereof or any Integrated Prospectus or any amendment or
supplement to the Prospectus is filed with the Commission pursuant to
Rule 424(b) (or, if the Prospectus or part thereof or such amendment
or supplement is not required to be so filed, when the Registration
Statement or the amendment thereto containing such amendment or
supplement to the Prospectus was or is declared effective), on the
date when the Prospectus is otherwise amended or supplemented and on
the Firm Closing Date and any Option Closing Date (both as hereinafter
defined), each of the Prospectus, and, if required to be filed
pursuant to Rules 434(c)(2) and 424(b) under the Act, the Integrated
Prospectus as amended or supplemented at any such time, (i) contained
or will contain all statements required to be stated therein in
accordance with, and complied or will comply in all material respects
with the requirements of, the Act, the Exchange Act and the respective
rules and regulations of the Commission thereunder and (ii) did not or
will not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were made,
not misleading. The foregoing provisions of this paragraph (b) do not
apply to statements or omissions made in any Preliminary Prospectus or
any amendment or supplement thereto, the Registration Statement or any
amendment thereto the Prospectus or, if required to be filed pursuant
to Rules 434(c)(2) and 424(b) and the Act, the Integrated Prospectus
or any amendment or supplement thereto in reliance upon and in
conformity with written information furnished to the Company by any
Underwriter through the Representatives specifically for use therein.
(c) If the Company has elected to rely on Rule 462(b) and
the Rule 462(b) Registration Statement has not been declared effective
(i) the Company has filed a Rule 462(b) Registration Statement in
compliance with and that is effective upon filing pursuant to Rule
462(b) and has received confirmation of its receipt and (ii) the
Company has given irrevocable instructions for transmission of the
applicable filing fee in connection with the filing of the Rule 462(b)
Registration Statement, in compliance with Rule 111 promulgated under
the Act or the Commission has received payment of such filing fee.
(d) Schedule 3 hereto is a complete and accurate schedule
of (i) the names and jurisdictions of organization of all
corporations, partnerships and joint ventures (the "Subsidiaries") in
which the Company has a direct or indirect majority equity interest
and which is required to be listed on Exhibit 21 to an Annual Report
on Form 10-K of the Company if such report were to be filed with the
Commission at the time of the execution and delivery of this
Agreement. The Company and each of the Subsidiaries have been duly
organized and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation and
are duly qualified to transact business as foreign corporations and
are in good standing under the laws of all other jurisdictions where
the ownership or leasing of their respective properties or the conduct
of their respective businesses requires such qualification, except
where the failure to do so or qualify or be in good standing would not
have a material adverse effect on the business, financial condition or
results of operations of the Company and the Subsidiaries, taken as a
whole (a "Material Adverse Effect").
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Draft Dated September 26, 1997
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(e) The Company and each of its subsidiaries have full
corporate power to own or lease their respective properties and
conduct their respective businesses as described in the Registration
Statement, each of the Prospectus and any Integrated Prospectus or, if
the Prospectus and any required Integrated Prospectus are not in
existence, the most recent Preliminary Prospectus; and the Company has
full corporate power to enter into this Agreement and to carry out all
the terms and provisions hereof to be carried out by it.
(f) The issued shares of capital stock of each of the
Company's subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable and are owned beneficially by the
Company free and clear of any security interests, liens, encumbrances,
equities or claims except as set forth on Schedule 3 hereto.
(g) The Company has an authorized, issued and outstanding
capitalization as set forth in each of the Prospectus and any
Integrated Prospectus or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus. All of the issued shares of capital stock of
the Company have been duly authorized and validly issued and are fully
paid and nonassessable. The Firm Securities and the Option Securities
have been duly authorized and at the Firm Closing Date or the related
Option Closing Date (as the case may be), after payment therefor in
accordance herewith and the exercise of the Warrants by the
Underwriters in accordance with the terms of the Warrants, will be
validly issued, fully paid and nonassessable. No holders of
outstanding shares of capital stock of the Company are entitled as
such to any preemptive or other rights to subscribe for any of the
Securities, and no holder of securities of the Company has any right
which has not been fully exercised or waived to require the Company to
register the offer or sale of any securities owned by such holder
under the Act in the public offering contemplated by this Agreement.
(h) The capital stock of the Company conforms to the
description thereof contained in each of the Prospectus and any
Integrated Prospectus or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus.
(i) Except as described or specifically referred to in
each of the Prospectus and any Integrated Prospectus (or, if the
Prospectus and any required Integrated Prospectus are not in
existence, the most recent Preliminary Prospectus), there are not
outstanding (A) securities or obligations of the Company or any of its
subsidiaries convertible into or exchangeable for any capital stock of
the Company or any such subsidiary, (B) warrants, rights or options to
subscribe for or purchase from the Company or any such subsidiary any
such capital stock or any such convertible or exchangeable securities
or obligations, or (C) obligations of the Company or any such
subsidiary to issue any shares of capital stock, any such convertible
or exchangeable securities or obligations, or any such warrants,
rights or options.
(j) The historical consolidated financial statements and
schedules of the Company and its consolidated subsidiaries included in
the Registration Statement and the Prospectus or any Integrated
Prospectus (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary
Prospectus) fairly present the financial position of the
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Company and its consolidated subsidiaries and the results of
operations and the cash flows of the Company and its consolidated
subsidiaries at the respective dates and for the respective periods to
which they apply. Such financial statements and schedules have been
prepared in accordance with generally accepted accounting principles
consistently applied throughout the periods involved (except as
otherwise noted therein). The selected financial data set forth under
the caption "Selected Consolidated Financial Data" in each of the
Prospectus and any Integrated Prospectus or, if the Prospectus and any
required Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus, fairly present, on the basis stated in each of
Prospectus and any Integrated Prospectus (or such Preliminary
Prospectus), the information included therein.
(k) Ernst & Young, LLP, who have certified certain
financial statements of the Company and its consolidated subsidiaries
and delivered their reports with respect to the audited consolidated
financial statements and schedules included in the Registration
Statement and each of the Prospectus and any Integrated Prospectus
(or, if the Prospectus and any required Integrated Prospectus are not
in existence, the most recent Preliminary Prospectus), are independent
public accountants within the meaning of the Act, the Exchange Act and
the related published rules and regulations thereunder.
(l) Coopers & Xxxxxxx L.L.P., who have certified certain
financial statements of Xxxxxxx Drilling Company and delivered their
report with respect to such financial statements included or
incorporated by reference in the Registration Statement and each of
the Prospectus and any Integrated prospectus (or, if the Prospectus
and any required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus), are independent public accountants
within the meaning of the Act, the Exchange Act and the related
published rules and regulations thereunder.
(m) The execution and delivery of this Agreement have
been duly authorized by the Company and this Agreement has been duly
executed and delivered by the Company, and is the valid and binding
agreement of the Company, enforceable against the Company in
accordance with its terms, except as rights to indemnity and
contribution may be limited under applicable law.
(n) No legal or governmental proceedings are pending to
which the Company or any of its subsidiaries is a party or to which
the property of the Company or any of its subsidiaries is subject that
are required to be described in the Registration Statement or each of
the Prospectus and any Integrated Prospectus (or, if the Prospectus
and any required Integrated Prospectus are not in existence, the most
recent Preliminary Prospectus), and no such proceedings have been
threatened against the Company or any of its subsidiaries or with
respect to any of their respective properties; and no contract or
other document is required to be described in the Registration
Statement or the Prospectus or any Integrated Prospectus or to be
filed as an exhibit to the Registration Statement that is not
described therein (or, if the Prospectus and any required Integrated
Prospectus are not in existence, the most recent Preliminary
Prospectus) or filed as required.
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(o) The issuance, offering and sale of the Securities to
the Underwriters by the Company pursuant to this Agreement, the
compliance by the Company with the other provisions of this Agreement
and the consummation of the other transactions herein contemplated do
not (i) require the consent, approval, authorization, registration or
qualification of or with any governmental authority, except such as
have been obtained, such as may be required under state securities or
blue sky laws and, if the Registration Statement is not effective
under the Act as of the time of execution hereof, such as may be
required (and shall be obtained as provided in this Agreement) under
the Act, or (ii) conflict with or result in a breach or violation of
any of the terms and provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, lease or other agreement or
instrument to which the Company or any of its subsidiaries is a party
or by which the Company or any of its subsidiaries or any of their
respective properties are bound, or the charter documents or by-laws
of the Company or any of its subsidiaries, or any statute or any
judgment, decree, order, rule or regulation of any court or other
governmental authority or any arbitrator applicable to the Company or
any of its subsidiaries except for such conflicts, defaults,
violations, creations or impositions that would not affect the
consummation of the Agreement or the issuance of the Securities or
have a Material Adverse Effect.
(p) Subsequent to the respective dates as of which
information is given in the Registration Statement the Prospectus or
any Integrated Prospectus (or, if the Prospectus and any required
Integrated Prospectus are not in existence, the most recent
Preliminary Prospectus), neither the Company nor any of its
subsidiaries has sustained any loss that is material to the Company
and its subsidiaries taken as a whole or interference with their
respective businesses or properties from fire, flood, hurricane,
accident or other calamity, whether or not covered by insurance, or
from any labor dispute or any legal or governmental proceeding and
there has not been any material adverse change, or any development
involving a prospective material adverse change, in the condition
(financial or otherwise), management, business prospects, net worth,
or results of operations of the Company and its subsidiaries taken as
a whole, except in each case as described in or contemplated by the
each of the Prospectus and any Integrated Prospectus (or, if the
Prospectus and any required Integrated Prospectus are not in
existence, the most recent Preliminary Prospectus).
(q) The Company has not, directly or indirectly, (i)
taken any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities or (ii)
since the filing of the Registration Statement (A) sold, bid for,
purchased, or paid anyone any compensation for soliciting purchases
of, the Securities or (B) paid or agreed to pay to any person any
compensation for soliciting another to purchase any other securities
of the Company (except for the sale of Securities by the Selling
Securityholders and Additional Selling Securityholders under this
Agreement and except in connection with acquisitions by the Company or
its subsidiaries of assets or businesses in the oilfield services
industry).
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(r) The Company has not distributed and, prior to the
later of (i) the Closing Date and (ii) the completion of the
distribution of the Securities, will not distribute any offering
material in connection with the offering and sale of the Securities
other than the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or other materials, if any, permitted by the Act.
(s) Subsequent to the respective dates as of which
information is given in the Registration Statement and the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus): (1) the Company and its subsidiaries, prior
to the Firm Closing Date, have not entered into any transaction not in
the ordinary course of business that is material to the Company and
its subsidiaries taken as a whole; (2) the Company has not purchased
any of its outstanding capital stock, nor declared, paid or otherwise
made any dividend or distribution of any kind on its capital stock;
and (3) there has not been any material change in the capital stock,
short-term debt or long-term debt of the Company and its consolidated
subsidiaries, except in each case as described in or contemplated by
the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus).
(t) The Company and each of its subsidiaries have good
title in fee simple to all items of real property and good title to
all personal property owned by each of them, in each case free and
clear of any security interests, liens, encumbrances, equities, claims
and other defects, except such as do not materially and adversely
affect the value of such property and do not interfere with the use
made or proposed to be made of such property by the Company or such
subsidiary, and any real property and buildings held under lease by
the Company or any such subsidiary are held under valid, subsisting
and enforceable leases, with such exceptions as are not material to
the Company and its subsidiaries taken as a whole and do not
materially interfere with the use made or proposed to be made of such
property and buildings by the Company or such subsidiary, in each case
except as described in or contemplated by the Prospectus (or, if the
Prospectus is not in existence, the most recent Preliminary
Prospectus).
(u) The Company and each of its subsidiaries are insured
by insurers of recognized financial responsibility against such losses
and risks and in such amounts as are prudent and customary in the
businesses in which they are engaged; neither the Company nor any such
subsidiary has been refused any insurance coverage sought or applied
for; and neither the Company nor any such subsidiary has any reason to
believe that it will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business at a cost that would not materially and adversely affect the
condition (financial or otherwise), business prospects, net worth or
results of operations of the Company and its subsidiaries taken as a
whole, except as described in or contemplated by the Prospectus (or,
if the Prospectus is not in existence, the most recent Preliminary
Prospectus).
(v) The Company and its subsidiaries possess all material
certificates, authorizations and permits issued by the appropriate
federal, state or foreign regulatory authorities necessary to conduct
their respective businesses, and neither the Company nor any
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such subsidiary has received any notice of proceedings relating to the
revocation or modification of any such certificate, authorization or
permit which, singly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would result in a material
adverse change in the condition (financial or otherwise), business
prospects, net worth or results of operations of the Company and its
subsidiaries taken as a whole, except as described in or contemplated
by the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus) .
(w) The Company is not an "investment company" within the
meaning of the Investment Company Act of 1940, as amended (the "1940
Act"), and is not subject to regulation as an investment company under
the 1940 Act. This transaction will not cause the Company to become
an investment company subject to registration under such Act.
(x) The Company has filed all foreign, federal, state and
local tax returns that are required to be filed or has requested
extensions thereof (except in any case in which the failure so to file
would not have a Material Adverse Effect) and has paid all taxes
required to be paid by it and any other assessment, fine or penalty
levied against it, to the extent that any of the foregoing is due and
payable, except for any such assessment, fine or penalty that would
not have a Material Adverse Effect that is currently being contested
in good faith or as described in or contemplated by the Prospectus
(or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
(y) Neither the Company nor any of its subsidiaries is in
violation of any federal or state law or regulation relating to
occupational safety and health or to the storage, handling or
transportation of hazardous or toxic materials and the Company and its
subsidiaries have received all permits, licenses or other approvals
required of them under applicable federal and state occupational
safety and health and environmental laws and regulations to conduct
their respective businesses, and the Company and each such subsidiary
is in compliance with all terms and conditions of any such permit,
license or approval, except any such violation of law or regulation,
failure to receive required permits, licenses or other approvals or
failure to comply with the terms and conditions of such permits,
licenses or approvals which would not, singly or in the aggregate,
have a Material Adverse Effect, except as described in or contemplated
by the Prospectus (or, if the Prospectus is not in existence, the most
recent Preliminary Prospectus).
(z) Each certificate signed by any officer of the Company
and delivered to the Representatives or counsel for the Underwriters
pursuant to this Agreement or in connection with the payment of the
purchase price and delivery of the certificates for the Firm
Securities or the Option Securities shall be deemed to be a
representation and warranty by the Company to each Underwriter as to
the matters covered thereby.
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3. Representations and Warranties of the Selling Securityholders.
Each Selling Securityholder represents and warrants to, and
agrees with, each of the several Underwriters that:
(a) Such Selling Securityholder has full power (corporate
and other) to enter into this Agreement and to sell, assign, transfer
and deliver to the Underwriters the Securities to be sold by such
Selling Securityholder hereunder in accordance with the terms of this
Agreement; the execution and delivery of this Agreement have been duly
authorized by all necessary corporate and other action of such Selling
Securityholder; and this Agreement has been duly executed and
delivered by such Selling Securityholder.
(b) Such Selling Securityholder has duly executed and
delivered a power of attorney and custody agreement (with respect to
such Selling Securityholder, the "Power-of-Attorney" and the "Custody
Agreement", respectively), each in the form heretofore delivered to
the Representatives, appointing Xxxx X. Xxxxxx, Xxxxxx X. Drum and P.
Xxxxx Xxxxxx, and each of them, as such Selling Securityholder's
attorney-in-fact (the "Attorney-in-Fact") with authority to execute,
deliver and perform this Agreement on behalf of such Selling
Securityholder and appointing Xxxxx Xxxxxx Shareholder Services as
custodian thereunder (the "Custodian"). Certificates in negotiable
form, endorsed in blank or accompanied by blank stock powers duly
executed, with signatures appropriately guaranteed, representing the
Securities to be sold by such Selling Securityholder hereunder have
been deposited with the Custodian pursuant to the Custody Agreement
for the purpose of delivery pursuant to this Agreement. Such Selling
Securityholder has full power (corporate and other) to enter into the
Custody Agreement and the Power-of-Attorney and to perform its
obligations under the Custody Agreement. The execution and delivery of
the Custody Agreement and the Power-of-Attorney have been duly
authorized by all necessary corporate and other action of such Selling
Securityholder; the Custody Agreement and the Power-of-Attorney have
been duly executed and delivered by such Selling Securityholder and,
assuming due authorization, execution and delivery by the Custodian,
are the legal, valid, binding and enforceable instruments of such
Selling Securityholder. Such Selling Securityholder agrees that each
of the Securities represented by the certificates on deposit with the
Custodian is subject to the interests of the Underwriters hereunder,
that the arrangements made for such custody, the appointment of the
Attorney-in-Fact and the right, power and authority of the
Attorney-in-Fact to execute and deliver this Agreement, to agree on
the price at which the Securities (including such Selling
Securityholder's Securities) are to be sold to the Underwriters, and
to carry out the terms of this Agreement, are to that extent
irrevocable and that the obligations of such Selling Securityholder
hereunder shall not be terminated, except as provided in this
Agreement or the Custody Agreement, by any act of such Selling
Securityholder, by operation of law or otherwise, whether in the case
of any individual Selling Securityholder by the death or incapacity of
such Selling Securityholder, in the case of a trust or estate by the
death of the trustee or trustees or the executor or executors or the
termination of such trust or estate, or in the case of a corporate or
partnership Selling Securityholder by its liquidation or dissolution
or by the occurrence of any other event. If any individual Selling
Securityholder, trustee or
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executor should die or become incapacitated or any such trust should
be terminated, or if any corporate or partnership Selling
Securityholder shall liquidate or dissolve, or if any other event
should occur, before the delivery of such Securities hereunder, the
certificates for such Securities deposited with the Custodian shall be
delivered by the Custodian in accordance with the respective terms and
conditions of this Agreement as if such death, incapacity,
termination, liquidation or dissolution or other event had not
occurred, regardless of whether or not the Custodian or the
Attorney-in-Fact shall have received notice thereof.
(c) Such Selling Securityholder has valid title to the
Securities to be sold by such Selling Securityholder hereunder and
upon sale and delivery of, and payment for, such Securities, as
provided herein, and the payment of the exercise price with respect to
any Securities issuable on exercise of the Warrants, the Underwriters
will receive valid title to such Securities free and clear of any
adverse claims, assuming that the Underwriters have acquired such
Securities for value, in good faith and without notice of any adverse
claim.
(d) Such Selling Securityholder has not, directly or
indirectly, (i) taken any action designed to cause or result in, or
that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities or (ii) since the filing of the Registration Statement (A)
sold, bid for, purchased, or paid anyone any compensation for
soliciting purchases of, the Securities or (B) paid or agreed to pay
to any person any compensation for soliciting another to purchase any
other securities of the Company (except for the sale of Securities by
the Selling Securityholders under this Agreement).
(e) To the extent that any statements or omissions are
made in the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement thereto in reliance upon and
in conformity with written information furnished to the Company by
such Selling Securityholder specifically for use therein, such
Preliminary Prospectus did, and the Registration Statement and the
Prospectus and any amendments or supplements thereto, when they become
effective or are filed with the Commission, as the case may be, will,
with respect to such information, conform in all material respects to
the requirements of the Act, the Exchange Act and the respective rules
and regulations of the Commission thereunder and will, with respect to
such information, not contain any untrue statement of a material fact
or omit to state any material fact required to be stated therein or
necessary to make the statements therein, in the light of the
circumstances under which they are made, not misleading. Such Selling
Securityholder has reviewed the Prospectus (or, if the Prospectus is
not in existence, the most recent Preliminary Prospectus) and the
Registration Statement, and the information regarding such Selling
Securityholder set forth therein under the caption "Principal and
Selling Stockholders" is complete and accurate.
(f) The sale by such Selling Securityholder of Securities
pursuant hereto is not prompted by any adverse information concerning
the Company that is not set forth in the Registration Statement or the
Prospectus (or, if the Prospectus is not in existence, the most recent
Preliminary Prospectus).
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Draft Dated September 26, 1997
12
(g) The sale of the Securities to the Underwriters by
such Selling Securityholder pursuant to this Agreement, the compliance
by such Selling Securityholder with the other provisions of this
Agreement, the Custody Agreement and the consummation of the other
transactions herein contemplated do not (i) require the consent,
approval, authorization, registration or qualification of or with any
governmental authority, except such as have been obtained, such as may
be required under state securities or blue sky laws and, if the
registration statement filed with respect to the Securities (as
amended) is not effective under the Act as of the time of execution
hereof, such as may be required (and shall be obtained as provided in
this Agreement) under the Act and the Exchange Act, or (ii) conflict
with or result in a breach or violation of any of the terms and
provisions of, or constitute a default under any indenture, mortgage,
deed of trust, lease or other agreement or instrument to which such
Selling Securityholder or any of its subsidiaries is a party or by
which such Selling Securityholder or any of its subsidiaries or any of
such Selling Securityholder's properties are bound, or the charter
documents or by-laws of such Selling Securityholder or any of its
subsidiaries or any statute or any judgment, decree, order, rule or
regulation of any court or other governmental authority or any
arbitrator applicable to such Selling Securityholder or any of its
subsidiaries."
(h) The Selling Securityholders have not distributed and,
prior to the later of (i) the Closing Date and (ii) the completion of
the distribution of the shares, will not distribute any offering
material in connection with the offering and sale of the Securities
other than the Registration Statement or any amendment thereto, any
Preliminary Prospectus or the Prospectus or any amendment or
supplement thereto, or other materials, if any, permitted by the Act.
4. Purchase, Sale and Delivery of the Securities. (a) On the
basis of the representations, warranties, agreements and covenants herein
contained and subject to the terms and conditions herein set forth, the Company
agrees to issue and sell, and each of the Selling Securityholders, severally
and not jointly, agrees to sell, to each of the Underwriters, and each of the
Underwriters, severally and not jointly, agrees to purchase from the Company,
at a purchase price of $_______ per share, the number of Firm Securities set
forth opposite the name of such Underwriter in Schedule 2 hereto. One or more
certificates in definitive form for the Firm Securities that the several
Underwriters have agreed to purchase hereunder, and in such denomination or
denominations and registered in such name or names as the Representatives
request upon notice to the Company at least 48 hours prior to the Firm Closing
Date, shall be delivered by or on behalf of the Company and each of the Selling
Securityholders to the Representatives for the respective accounts of the
Underwriters, against payment by or on behalf of the Underwriters of the
purchase price therefor by wire transfer in same-day funds (the "Wired Funds")
to the account designated by the Company and each of the Selling
Securityholder. Such delivery of and payment for the Firm Securities shall be
made at the offices of Xxxxx & Xxxxx, L.L.P., Xxx Xxxxx Xxxxx, 000 Xxxxxxxxx,
Xxxxxxx, Xxxxx 00000 at 9:30 A.M., New York City time, on ____________, 1997,
or at such other place, time or date as the Representatives and the Company may
agree upon or as the Representatives may determine pursuant to Section 11
hereof, such time and date of delivery against payment being herein referred to
as the "Firm Closing Date". The Company and each of the Selling
Securityholders will make such certificate or certificates for the Firm
Securities available for checking and packaging by the Representatives at the
offices in New York, New York of the Company's transfer
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Draft Dated September 26, 1997
13
agent or registrar or of Prudential Securities Incorporated at least 24 hours
prior to the Firm Closing Date.
(b) For the purpose of covering any over-allotments in connection
with the distribution and sale of the Firm Securities as contemplated by the
Prospectus, the Company and Drum hereby grant to the several Underwriters an
option to purchase, severally and not jointly, the Option Securities to be sold
by them. The purchase price to be paid for any Option Securities shall be the
same price per share as the price per share for the Firm Securities set forth
above in paragraph (a) of this Section 4, plus if the purchase and sale of any
Option Securities takes place after the Firm Closing Date and after the Firm
Securities are trading "ex-dividend", an amount equal to the dividend payable
on such Option Securities. For purposes of covering any over-allotments in
connection with the distribution and sale of Option Securities as contemplated
by the Prospectus, Remy Capital Partners III, L.P. ("Remy"), Remy Investors and
Consultants, Incorporated ("Remy Consultants") and Xxxxxxx X. Xxxxx hereby
grant to the several underwriters an option to purchase, severally and not
jointly, Warrants to purchase 165,000, 165,000 and 30,000 shares of Common
Stock, respectively, at an exercise price of $1 43/48 per share. The purchase
price to be paid for such Warrants shall be at a price per Warrant to purchase
one share of Common Stock equal to the price per share for the Firm Securities
set forth above in paragraph (a) of this Section 4 less the warrant exercise
price, plus, if the purchase and sale of any Option Securities takes place
after the Firm Closing Date and after the Firm Securities are trading
"ex-dividend", an amount equal to the dividend payable on such Option
Securities. The options granted hereby may be exercised as to all or any part
of the Option Securities, including for this purpose, the Warrants, from time
to time within 30 days after the date of the Prospectus (or, if such 30th day
shall be a Saturday or Sunday or a holiday, on the next business day thereafter
when the New York Stock Exchange is open for trading). The Underwriters shall
not be under any obligation to purchase any of the Option Securities prior to
the exercise of such options. The Representatives may from time to time
exercise the options granted hereby by giving notice in writing or by telephone
(confirmed in writing) to the Company and the Additional Selling
Securityholders as to the number of Option Securities (including the number of
Warrants pursuant to which Securities may be issuable) as to which the several
Underwriters are then exercising the options and the date and time for delivery
of and payment for such Option Securities or Warrants. The exercise of such
options shall be effected on a pro rata basis between the Company and the
Additional Selling Securityholders. Any such date of delivery shall be
determined by the Representatives but shall not be earlier than two business
days or later than five business days after such exercise of the option and, in
any event, shall not be earlier than the Firm Closing Date. The time and date
set forth in such notice, or such other time on such other date as the
Representatives and the Company may agree upon or as the Representatives may
determine pursuant to Section 11 hereof, is herein called the "Option Closing
Date" with respect to such Option Securities and Warrants. Upon the exercise
of the options as provided herein, the Company and the Additional Selling
Securityholders shall become obligated to sell to each of the Underwriters and,
subject to the terms and conditions set forth herein, each of the Underwriters
(severally and not jointly) shall become obligated to purchase from the Company
and such Additional Selling Securityholders, the same percentage of the total
number of the Option Securities (including for this purpose the number of
Warrants to purchase Securities) as to which the several Underwriters are then
exercising the options as such Underwriter is obligated to purchase of the
aggregate number of Firm Securities, as adjusted by the Representatives in such
manner as they deem advisable to avoid fractional Shares. If the options
-13-
Draft Dated September 26, 1997
14
are exercised as to all or a portion of the Option Securities, one or more
certificates in definitive form for such Option Securities, and payment
therefor shall be delivered on the related Option Closing Date in the manner,
and upon the terms and conditions, set forth in paragraph (a) of this Section
4, except that reference therein to the Firm Securities and the Firm Closing
Date shall be deemed, for purposes of this paragraph (b), to refer to such
Option Securities and Option Closing Date, respectively. With respect to the
exercise of the options as to all or a portion of the Warrants to purchase
Option Securities, such Warrants shall be assigned to the Underwriters on the
same percentage of the total number of the Option Securities as to which the
several Underwriters are then exercising the options as such Underwriter is
obligated to purchase the aggregate number of Firm Securities, as adjusted by
the Representatives in such manner as they deem advisable to avoid fractional
Shares. The Company agrees to issue the shares of Common Stock subject to such
Warrants, upon payment by the Underwriters to the Company of the Exercise Price
with respect to such Warrants.
(c) The Company, each Selling Securityholder and each Additional
Selling Securityholder acknowledge that the wire transfer by or on behalf of
the Underwriters of the purchase price for any Securities or Warrants does not
constitute a closing of a purchase and sale of the Securities or Warrants.
Only execution and delivery of a receipt for Securities or Warrants, as the
case may be, by the Underwriters indicates completion of the closing of a
purchase of the Securities or Warrants as the case may be, from the Company and
each Selling Securityholder or Additional Selling Securityholder. Furthermore,
in the event that the Underwriters wire funds to the Company prior to the
completion of the closing of a purchase of Securities or Warrants, as the case
may be, the Company, each Selling Securityholder and each Additional Selling
Securityholder acknowledge that until the Underwriters execute and deliver a
receipt for the Securities or Warrants as the case may be, by facsimile or
otherwise, the Company and each Selling Securityholder will not be entitled to
the wired funds and shall return the wired funds to the Underwriters as soon as
practicable (by wire transfer of same-day funds) upon demand. In the event
that the closing of a purchase of Securities or Warrants is not completed and
the wire funds are not returned by the Company and each Selling Securityholder
or Additional Selling Securityholder to the Underwriters on the same day the
wired funds were received by the Company, the Company and each Selling
Securityholder and Additional Selling Securityholder agree to pay to the
Underwriters in respect of each day the wire funds are not returned by the
Company or any Selling Securityholder or Additional Selling Securityholder, as
the case may be, in same-day funds, interest on the amount of such wire funds
in an amount representing the Underwriters' cost of financing as reasonably
determined by Prudential Securities Incorporated.
(d) It is understood that any of you, individually and not as one
of the Representatives, may (but shall not be obligated to) make payment on
behalf of any Underwriter or Underwriters for any of the Securities or Warrants
to be purchased by such Underwriter or Underwriters. No such payment shall
relieve such Underwriter or Underwriters from any of its or their obligations
hereunder.
5. Offering by the Underwriters. Upon your authorization of the
release of the Firm Securities, the several Underwriters propose to offer the
Firm Securities for sale to the public upon the terms set forth in the
Prospectus.
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Draft Dated September 26, 1997
15
6. Covenants of the Company. The Company covenants and agrees
with each of the Underwriters that:
(a) The Company will use its best efforts to cause the
Registration Statement, if not effective at the time of execution of
this Agreement, and any amendments thereto to become effective as
promptly as possible. If required, the Company will file the
Prospectus or any Term Sheet that constitutes a part thereof and any
amendment or supplement thereto with the Commission in the manner and
within the time period required by Rule 434 and 424(b) under the Act.
During any time when a prospectus relating to the Securities is
required to be delivered under the Act, the Company (i) will comply
with all requirements imposed upon it by the Act and the Exchange Act
and the respective rules and regulations of the Commission thereunder
to the extent necessary to permit the continuance of sales of or
dealings in the Securities in accordance with the provisions hereof
and of each of the Prospectus and any Integrated Prospectus, as then
amended or supplemented, and (ii) will not file with the Commission
the Prospectus or the amendment referred to in the third sentence of
Section 2(a) hereof, any amendment or supplement to such prospectus or
any amendment to the Registration Statement or any Rule 462(b)
Registration Statement of which the Representatives shall not
previously have been advised and furnished with a copy for a
reasonable period of time prior to the proposed filing and as to which
filing the Representatives shall not have given their consent;
provided, that the foregoing provision of this clause (ii) does not
prohibit the Company from making filings with the Commission of
statements and reports that it reasonably believes are required to be
made under the Exchange Act. The Company will prepare and file with
the Commission, in accordance with the rules and regulations of the
Commission, promptly upon request by the Representatives or counsel
for the Underwriters, any amendments to the Registration Statement or
amendments or supplements to the Prospectus and any Integrated
Prospectus that may be necessary or advisable in connection with the
distribution of the Securities by the several Underwriters, and will
use its best efforts to cause any such amendment to the Registration
Statement to be declared effective by the Commission as promptly as
possible. The Company will advise the Representatives, promptly after
receiving notice thereof, of the time when the Registration Statement
or any amendment thereto has been filed or declared effective or the
Prospectus and any Integrated Prospectus or any amendment or
supplement thereto has been filed and will provide evidence
satisfactory to the Representatives of each such filing or
effectiveness.
(b) The Company will advise the Representatives, promptly
after receiving notice or obtaining knowledge thereof, of (i) the
issuance by the Commission of any stop order suspending the
effectiveness of the Original Registration Statement or any Rule
462(b) Registration Statement or any post-effective amendment thereto
or any order directed at any document incorporated by reference in the
Registration Statement or the Prospectus and any required Integrated
Prospectus or any amendment or supplement thereto or any order
preventing or suspending the use of any Preliminary Prospectus, or the
Prospectus and any Integrated Prospectus or any amendment or
supplement thereto, (ii) the suspension of the qualification of the
Securities for offering or sale in any jurisdiction, (iii) the
institution, threatening or contemplation of any proceeding for any
such purpose or (iv) any request made
-15-
Draft Dated September 26, 1997
16
by the Commission for amending the Original Registration Statement or
any Rule 462(b) Registration Statement, for amending or supplementing
any Preliminary Prospectus the Prospectus and any Integrated
Prospectus or for additional information. The Company will use its
best efforts to prevent the issuance of any such stop order and, if
any such stop order is issued, to obtain the withdrawal thereof as
promptly as possible.
(c) The Company will arrange for the qualification of the
Securities for offering and sale under the securities or blue sky laws
of such jurisdictions as the Representatives may reasonably designate
and will continue such qualifications in effect for as long as may be
necessary to complete the distribution of the Securities, provided,
however, that in connection therewith the Company shall not be
required to qualify as a foreign corporation or to execute a general
consent to service of process in any jurisdiction.
(d) If, at any time prior to the later of (i) the final
date when a prospectus relating to the Securities is required to be
delivered under the Act or (ii) the Option Closing Date, any event
occurs as a result of which the Prospectus as then amended or
supplemented, would include 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, or if for any other reason it is necessary
at any time to amend or supplement, the Prospectus to comply with the
Act, the Exchange Act or the respective rules or regulations of the
Commission thereunder, the Company will promptly notify the
Representatives thereof and, subject to Section 6(a) hereof, will
prepare and file with the Commission, at the Company's expense, an
amendment to the Registration Statement or an amendment or supplement
to the Prospectus or any Integrated Prospectus that corrects such
statement or omission or effects such compliance.
(e) The Company will, without charge, provide (i) to the
Representatives and to counsel for the Underwriters a conformed copy
of the registration statement originally filed with respect to the
Securities and each amendment thereto (in each case including exhibits
thereto) or any Rule 462(b) Registration Statement and (ii) so long as
a prospectus relating to the Securities is required to be delivered
under the Act, as many copies of each Preliminary Prospectus or the
Prospectus or any Integrated Prospectus or any amendment or supplement
thereto as the Representatives may reasonably request; without
limiting the application of clause (iii) of this sentence, the
Company, not later than (A) 6:00 P.M., New York City time, on the date
of determination of the public offering price, if such determination
occurred at or prior to 10:00 A.M., New York City time on such date of
(B) 2:00 P.M., New York City time, on the business day following the
date of determination of the public offering price, if such
determination occurred after 10:00 A.M., New York City time, on such
date, will deliver to the Underwriters, without charge, as many copies
of the Prospectus and any amendment or supplement thereto as the
Representatives may reasonably request for purposes of confirming
orders that are expected to settle on the Firm Closing Date.
(f) The Company, as soon as practicable when required,
will make generally available to its securityholders and to the
Representatives a consolidated earnings statement of
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Draft Dated September 26, 1997
17
the Company and its subsidiaries that satisfies the provisions of
Section 11(a) of the Act and Rule 158 thereunder.
(g) The Company will apply the net proceeds to the
Company from the sale of the Securities as set forth under "Use of
Proceeds" in the Prospectus or any Integrated Prospectus.
(h) The Company will not, directly or indirectly, without
the prior written consent of Prudential Securities Incorporated, on
behalf of the Underwriters, offer, sell, offer to sell, contract to
sell, pledge, grant any option to purchase or otherwise sell or
dispose (or announce any offer, sale, offer of sale, contract of sale,
pledge, grant of any option to purchase or other sale or disposition)
of any shares of Common Stock or any securities convertible into, or
exchangeable or exercisable for, shares of Common Stock for a period
of 90 days after the date hereof, except pursuant to this Agreement
and except for issuances pursuant to the exercise of warrants
outstanding on the date hereof and for the grant of options pursuant
to the Company's employee stock option plans existing on the date
hereof and the issuance of Common Stock upon the exercise of such
options and except for issuances of additional shares of Common Stock
or rights to acquire Common Stock in connection with acquisitions of
businesses or assets or other business combinations, provided that the
Company will not grant any demand registration rights covering any
shares issued in connection with any such acquisition or business
combination that are exercisable prior to 90 days following the date
of this Agreement.
(i) The Company will not, directly or indirectly, (i)
take any action designed to cause or to result in, or that has
constituted or which might reasonably be expected to constitute, the
stabilization or manipulation of the price of any security of the
Company to facilitate the sale or resale of the Securities or (ii) (A)
sell, bid for, purchase, or pay anyone any compensation for soliciting
purchases of, the Securities or (B) pay or agree to pay to any person
any compensation for soliciting another to purchase any other
securities of the Company (except for the sale of Securities by the
Selling Securityholders and Additional Selling Securityholders under
this Agreement and except in connection with acquisitions by the
Company or its subsidiaries of assets or businesses in the oilfield
services industry).
(j) The Company will obtain the agreements described in
Section 9(f) hereof prior to the Firm Closing Date.
(k) If at any time during the 30-day period after the
Registration Statement becomes effective or the period prior to the
Option Closing Date, any rumor, publication or event relating to or
affecting the Company shall occur as a result of which in your opinion
the market price of the Common Stock has been or is likely to be
materially affected (regardless of whether such rumor, publication or
event necessitates a supplement to or amendment of the Prospectus and
any Integrated Prospectus), the Company will, after notice from you
advising the Company to the effect set forth above, consult with you
concerning the necessity and substance of a press release or other
public statement responding to or commenting on such rumor,
publication or event.
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Draft Dated September 26, 1997
18
(l) If the Company elects to rely on Rule 462(b), the
Company shall file a Rule 462(b) Registration Statement with the
Commission in compliance with Rule 462(b) and pay the applicable fees
in accordance with Rule 111 promulgated under the Act.
(m) The Company will use its best efforts to cause the
Securities to be duly authorized for listing by the American Stock
Exchange.
7. Covenants of Selling Securityholders and Additional Selling
Securityholders.
(a) Each Selling Securityholder and Additional Selling
Securityholders will not, directly or indirectly, without the prior
written consent of Prudential Securities Incorporated, offer, sell,
offer to sell, contract to sell, pledge, grant any option to purchase
or otherwise sell or dispose (or announce any offer, sale, offer of
sale, contract of sale, pledge, grant of any option to purchase or
other sale or disposition) of any Securities legally or beneficially
owned by such Selling Securityholder or any securities convertible
into, or exchangeable or exercisable for, Securities for a period of
90 days after the date hereof except in connection with any transfer
of any Securities to a related party that agrees to be bound by this
restriction.
(b) Such Selling Securityholder will not, directly or
indirectly, (i) take any action designed to cause or result in, or
that has constituted or which might reasonably be expected to
constitute, the stabilization or manipulation of the price of any
security of the Company to facilitate the sale or resale of the
Securities or (ii) sell, bid for, purchase, or pay anyone any
compensation for soliciting purchases of, the Securities (except for
the sale of Securities by the Selling Securityholders under this
Agreement).
(c) Each Selling Securityholder agrees to deliver to you
prior to or at the Firm Closing Date a properly completed and executed
United States Treasury Department Form W-9 (or other applicable form
or statement specified by Treasury Department regulation in lieu
thereof).
8. Expenses. The Company will pay all costs and expenses
incident to the performance of its obligations under this Agreement, whether or
not the transactions contemplated herein are consummated or this Agreement is
terminated pursuant to Section 13 hereof, including all costs and expenses
incident to (i) the printing or other production of documents with respect to
the transactions, including any costs of printing the registration statement
originally filed with respect to the Securities and any amendment thereto, any
Rule 462(b) Registration Statement, any Preliminary Prospectus, the Prospectus
and any Integrated Prospectus and any amendment or supplement thereto, this
Agreement and any blue sky memoranda, (ii) all arrangements relating to the
delivery to the Underwriters of copies of the foregoing documents, (iii) the
fees and disbursements of the counsel, accountants and any other experts or
advisors retained by the Company, (iv) preparation, issuance and delivery to
the Underwriters of any certificates evidencing the Securities, including
transfer agent's and registrar's fees, (v) the qualification of the Securities
under state securities and blue sky laws, including filing fees and reasonable
fees and disbursements of counsel for the Underwriters relating thereto, (vi)
the filing fees of the Commission (and the National Association of Securities
Dealers, Inc.) relating to the Securities,
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Draft Dated September 26, 1997
19
(vii) the listing of the Securities on the American Stock Exchange,
(viii) meetings with prospective investors in the Securities (other
than shall have been arranged by the Representatives or specifically
approved by the Representatives to be paid for by the Underwriters)
and (ix) advertising relating to the offering of the Securities (other
than shall have been specifically approved by the Representatives to
be paid for by the Underwriters). If the sale of the Securities
provided for herein is not consummated because any condition to the
obligations of the Underwriters set forth in Section 9 hereof is not
satisfied, because this Agreement is terminated pursuant to Section 13
hereof or because of any failure, refusal or inability on the part of
the Company to perform all obligations and satisfy all conditions on
its part to be performed or satisfied hereunder other than by reason
of a default by any of the Underwriters, the Company will reimburse
the Underwriters severally upon demand for all out-of-pocket expenses
(including fees and disbursements of counsel) that shall have been
incurred by them in connection with the proposed purchase and sale of
the Securities. The Company shall not in any event be liable to any
of the Underwriters for the loss of anticipated profits from the
transactions covered by this Agreement.
9. Conditions of the Underwriters' Obligations. The obligations
of the several Underwriters to purchase and pay for the Firm Securities shall
be subject, in the Representatives' sole discretion, to the accuracy of the
representations and warranties of the Company and each Selling Securityholder
contained herein as of the date hereof and as of the Firm Closing Date, as if
made on and as of the Firm Closing Date, to the accuracy of the statements of
the Company's and each Selling Securityholder's officers made pursuant to the
provisions hereof, to the performance by the Company and each Selling
Securityholder of its covenants and agreements hereunder and to the following
additional conditions:
(a) If the Original Registration Statement or any
amendment thereto filed prior to the Firm Closing Date has not been
declared effective as of the time of execution hereof, the Original
Registration Statement or such amendment and, if the Company has
elected to rely upon Rule 462(b), the Rule 462(b) Registration
Statement shall have become effective not later than the earlier of
(i) 11:00 A.M., New York time, on the date on which the amendment to
the registration statement originally filed with respect to the
Securities or to the Registration Statement, as the case may be,
containing information regarding the initial public offering price of
the Securities has been filed with the Commission and (ii) the time
confirmations are sent or given as specified by Rule 462(b)(2), or
with respect to the Original Registration Statement, or such later
time and date as shall have been consented to by the Representatives;
if required, the Prospectus or any Term Sheet that constitutes a part
thereof and any Integrated Prospectus and any amendment or supplement
thereto shall have been filed with the Commission in the manner and
within the time period required by Rule 434 and 424(b) under the Act;
no stop order suspending the effectiveness of the Registration
Statement or any post-effective amendment thereto and no order
directed at any document incorporated by reference in the Registration
Statement or the Prospectus or any Integrated Prospectus or any
amendment or supplement thereto shall have been issued and no
proceedings for that purpose shall have been instituted or threatened
or, to the knowledge of the Company or the Representatives, shall be
contemplated by the Commission; and the Company shall have complied
with any request of
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Draft Dated September 26, 1997
20
the Commission for additional information (to be included in the
Registration Statement, or the Prospectus or any Integrated Prospectus
or otherwise).
(b) The Representatives shall have received an opinion,
dated the Firm Closing Date, of Fulbright & Xxxxxxxx, L.L.P., counsel
for the Company, to the effect that:
(i) the Company and each of its subsidiaries
listed in Schedule 3 hereto (the "Subsidiaries") have been
duly incorporated and are validly existing as corporations in
good standing under the laws of their respective jurisdictions
of incorporation;
(ii) the Company and each of the Subsidiaries have
corporate power to own or lease their respective properties
and conduct their respective businesses as described in the
Registration Statement and the Prospectus or any Integrated
Prospectus, and the Company has corporate power to enter into
this Agreement and to carry out all the terms and provisions
hereof and thereof to be carried out by it;
(iii) the issued shares of capital stock of each of
the Subsidiaries have been duly authorized and validly issued,
are fully paid and nonassessable and, except as noted in such
opinion, to such counsel's knowledge, are owned beneficially
by the Company free and clear of any perfected security
interest;
(iv) the Company has an authorized, capitalization
as set forth in the Prospectus; the Securities, other than the
Securities issuable on exercise of the Warrants, have been
duly authorized and validly issued and are fully paid and
nonassessable; the Firm Securities have been duly authorized
by all necessary corporate action of the Company and, when
issued and delivered to and paid for by the Underwriters
pursuant to this Agreement, will be validly issued, fully paid
and nonassessable; the Securities have been duly authorized
for listing, subject to official notice of issuance, on the
American Exchange; no holders of outstanding shares of capital
stock of the Company are entitled as such to any preemptive or
other rights to subscribe for any of the Securities under the
Delaware General Corporation Law or the Company's Certificate
of Incorporation or by-laws; and to such counsel's knowledge,
except as disclosed in the Prospectus, no holders of
securities of the Company are entitled to have such securities
registered under the Registration Statement or to any
preemptive or other rights to subscribe for any of the
Securities that are contained in any agreements described in
clause (viii) (B) of this Section 9(b);
(v) the Common Stock conforms in all material
respects to the description thereof set forth under the
heading "Description of Capital Stock" in the Prospectus;
(vi) the execution and delivery of this Agreement
have been duly authorized by all necessary corporate action of
the Company and this Agreement has been duly executed and
delivered by the Company;
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Draft Dated September 26, 1997
21
(vii) to such counsel's knowledge, there are no
legal or governmental proceedings pending or threatened to
which the Company or any of the Subsidiaries is a party or to
which the property of the Company or any of the Subsidiaries
is subject that are required to be described in the
Registration Statement and any Integrated Prospectus and are
not described therein; and, to such counsel's knowledge, no
contract or other document is required to be filed as an
exhibit to the Registration Statement that is not described
therein or filed as required;
(viii) the issuance, offering and sale of the
Securities to the Underwriters by the Company pursuant to this
Agreement, the compliance by the Company with the other
provisions of this Agreement and the consummation of the other
transactions herein contemplated do not: (A) require the
consent, approval, authorization, registration or
qualification of or with any governmental authority having
jurisdiction over the Company, except such as have been
obtained or such as may be required under state securities or
blue sky laws; (B) conflict with or result in a breach of the
terms and provisions of, or constitute a default under, any
indenture, mortgage, deed of trust, lease or other instrument
relating to the borrowing of money known to such counsel to
which the Company or any Subsidiary is bound or any other
agreement identified to such counsel by the Company as being
material to the Company and the Subsidiaries, taken as a
whole; or (C) violate the certificate of incorporation or
by-laws of the Company or the charter documents or by-laws of
any of the Subsidiaries; or (D) violate any statute or
judgment, decree, order, rule or regulation of any court or
other governmental authority or arbiter known to such counsel
to be applicable to the Company or any of the Subsidiaries;
(ix) the Registration Statement has become
effective under the Act and, to such counsel's knowledge, and
no stop order suspending the effectiveness of the Registration
Statement or any post- effective amendment thereto and no
order directed at any document incorporated by reference in
the Registration Statement, the Prospectus and any Integrated
Prospectus or any amendment or supplement thereto has been
issued, and, to such counsel's knowledge, no proceedings for
that purpose have been instituted or threatened or are
contemplated by the Commission; and
(x) the Registration Statement and the Prospectus
(excluding the financial statements and other financial or
statistical information contained or incorporated by reference
therein and any information furnished by the Underwriters, the
Selling Securityholders or the Additional Selling
Securityholders, as to which such counsel need express no
opinion) comply or their face as to form in all material
respects with the applicable requirements of the Act and the
respective rules and regulations of the Commission thereunder.
Such counsel shall also state that it has participated in conferences with
officers and other representatives of the Company, the Underwriters, the
Selling Securityholders and the Additional Selling Securityholders, counsel to
the Underwriters and representatives of the independent public
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Draft Dated September 26, 1997
22
accountants of the Company and with your representatives, at which conferences
the contents of the Registration Statement and the Prospectus were discussed.
Although such counsel need not pass upon and does not assume any responsibility
for the accuracy, completeness or fairness of the statements contained in the
Registration Statement or the Prospectus and need not make any representation
that it has independently verified the accuracy, completeness or fairness of
such statements, such counsel shall state that on the basis of the foregoing
and the information disclosed to it (relying as to materiality to a large
extent upon the officers and other representatives of the Company, the
Underwriters, Selling Securityholders and Additional Selling Securityholders),
(i) no facts came to its attention that lead it to believe that the
Registration Statement, as of the time it was declared effective under the Act,
contained any untrue statement of a material fact or omitted to state a
material fact required to be stated therein or necessary in order to make the
statements therein not misleading (it being understood that such counsel need
not express any view with respect to the financial statements, including the
notes and schedules thereto and the auditor's report thereon, or any other
information of a financial, numerical, statistical or accounting nature set
forth or referred to in the Registration Statement or any document incorporated
therein by reference or any exhibits thereto), and (ii) no facts have come to
such counsel's attention that lead it to believe that the Prospectus, as of the
time it was filed with the Commission, contained any untrue statement of a
material fact or omitted to state a material fact required to be stated therein
or 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 not express any view with respect to the financial
statements, including the notes and schedules thereto and the auditor's report
thereon, or any other information or a financial, numerical, statistical or
accounting nature set forth or referred to in the Prospectus or any document
incorporated therein by reference).
In rendering any such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials.
References to the Registration Statement and the Prospectus in
this paragraph (b) shall include any amendment or supplement thereto at the
date of such opinion.
(c) The Selling Securityholders shall have furnished to
the Representatives the opinion of ________________________, counsel
for the Selling Securityholder[s], dated the Closing Date, to the
effect that:
(i) each Selling Securityholder has full
corporate and other power to enter into this Agreement, the
Custody Agreement and the Power-of-Attorney and to sell,
transfer and deliver the Securities being sold by such Selling
Securityholder hereunder in the manner provided in this
Agreement and to perform its obligations under the Custody
Agreement; the execution and delivery of this Agreement, the
Custody Agreement and the Power-of-Attorney have been duly
authorized by all necessary corporate and other action of each
Selling Securityholder; this Agreement, the Custody Agreement
and the Power-of-Attorney have been duly executed and
delivered by each Selling Securityholder; assuming due
authorization, execution and delivery by the Custodian, the
Custody Agreement and the Power-of-Attorney are the legal,
valid,
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Draft Dated September 26, 1997
23
binding and enforceable instruments of such Selling
Securityholder, subject to applicable bankruptcy, insolvency
and similar laws affecting creditors' rights generally and
subject, as to enforceability, to general principles of equity
(regardless of whether enforcement is sought in a proceeding
in equity or at law);
(ii) the delivery by each Selling Securityholder
to the several Underwriters of certificates for the Securities
being sold hereunder by such Selling Securityholder against
payment therefor as provided herein, will convey valid title
to such Securities to the several Underwriters, free and clear
of all security interests, liens, encumbrances, equities,
claims or other defects;
(iii) the sale of the Securities to the
Underwriters by such Selling Securityholder pursuant to this
Agreement, the compliance by such Selling Securityholder with
the other provisions of this Agreement the Custody Agreement
and the consummation of the other transactions herein
contemplated do not (i) require the consent, approval,
authorization, registration or qualification of or with any
governmental authority, except such as have been obtained and
such as may be required under state securities or blue sky
laws, or (ii) conflict with or result in a breach or violation
of any of the terms and provisions of the charter documents or
by-laws of such Selling Securityholder or any of its
subsidiaries or any statute or any judgment, decree, order,
rule or regulation of any court or other governmental
authority or any arbitrator applicable to such Selling
Securityholder or any of its subsidiaries.
In rendering such opinion, such counsel may rely, as to
matters of fact, to the extent such counsel deems proper, on certificates of
responsible officers of the Company and public officials.
References to the Registration Statement and the Prospectus in
this paragraph (c) shall include any amendment or supplement thereto at the
date of such opinion.
(d) The Representatives shall have received an opinion,
dated the Firm Closing Date, of Xxxxx & Xxxxx, L.L.P., Xxx Xxxxx
Xxxxx, 000 Xxxxxxxxx, Xxxxxxx, Xxxxx 00000, counsel for the
Underwriters, with respect to the issuance and sale of the Firm
Securities, the Registration Statement, the Prospectus or any
Integrated Prospectus, and such other related matters as the
Representatives may reasonably require, and the Company shall have
furnished to such counsel such documents as they may reasonably
request for the purpose of enabling them to pass upon such matters.
(e) The Representatives shall have received from Ernst &
Young LLP a letter or letters dated, respectively, the date hereof and
the Firm Closing Date, in form and substance satisfactory to the
Representatives, to the effect that:
(i) they are independent accountants with respect
to the Company and its consolidated subsidiaries within the
meaning of the Act, and the Exchange Act and the applicable
rules and regulations thereunder;
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Draft Dated September 26, 1997
24
(ii) in their opinion, the audited consolidated
financial statements and schedules examined by them and
included in the Registration Statement, the Prospectus and any
Integrated Prospectus comply in form in all material respects
with the applicable accounting requirements of the Act, the
Exchange Act and the related published rules and regulations
thereunder;
(iii) on the basis of a reading of the latest
available interim unaudited consolidated condensed financial
statements of the Company and its consolidated subsidiaries,
carrying out certain specified procedures (which do not
constitute an examination made in accordance with generally
accepted auditing standards) that would not necessarily reveal
matters of significance with respect to the comments set forth
in this paragraph (iii), a reading of the minute books of the
shareholders, the board of directors and any committees
thereof of the Company and each of its consolidated
subsidiaries, and inquiries of certain officials of the
Company and its consolidated subsidiaries who have
responsibility for financial and accounting matters, nothing
came to their attention that caused them to believe that:
(A) the unaudited condensed consolidated
financial statements of the Company and its
consolidated subsidiaries included or incorporated by
reference in the Registration Statement, the
Prospectus and any Integrated Prospectus do not
comply in form in all material respects with the
applicable accounting requirements of the Act, the
Exchange Act and the related published rules and
regulations thereunder, or are not in conformity with
generally accepted accounting principles applied on a
basis substantially consistent with that of the
audited consolidated financial statements included in
the Registration Statement, the Prospectus and any
Integrated Prospectus; and
(B) at a specific date not more than
five business days prior to the date of such letter,
there were any changes in the capital stock or
long-term debt of the Company and its consolidated
subsidiaries or any decreases in net current assets
or stockholders' equity of the Company and its
consolidated subsidiaries, in each case compared with
amounts shown on the June 30, 1997 unaudited
condensed consolidated balance sheet included in the
Registration Statement, the Prospectus and any
Integrated Prospectus, or for the period from July 1,
1997 to such specified date there were any decreases,
as compared with the corresponding period in the
preceding year and with a period of corresponding
length ending on June 30, 1997, in net revenues, net
income before income taxes or total or per share
amounts of net income of the Company and its
consolidated subsidiaries, except in all instances
for changes, decreases or increases set forth in such
letter;
(iv) they have carried out certain specified
procedures, not constituting an audit, with respect to certain
amounts, percentages and financial information that are
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Draft Dated September 26, 1997
25
derived from the general accounting records of the Company and
its consolidated subsidiaries and are included or incorporated
by reference in the Registration Statement, the Prospectus and
any Integrated Prospectus and have compared such amounts,
percentages and financial information with such records of the
Company and its consolidated subsidiaries and with information
derived from such records and have found them to be in
agreement, excluding any questions of legal interpretation;
and
(v) on the basis of a reading of the unaudited
pro forma condensed consolidated financial statements included
in the Registration Statement, the Prospectus and any
Integrated Prospectus, carrying out certain specified
procedures that would not necessarily reveal matters of
significance with respect to the comments set forth in this
paragraph (v), inquiries of certain officials of the Company
and its consolidated subsidiaries who have responsibility for
financial and accounting matters and proving the arithmetic
accuracy of the application of the pro forma adjustments to
the historical amounts in the unaudited pro forma consolidated
condensed financial statements, nothing came to their
attention that caused them to believe that the unaudited pro
forma consolidated condensed financial statements do not
comply in form in all material respects with the applicable
accounting requirements of Rule 11-02 of Regulation S-X or
that the pro forma adjustments have not been properly applied
to the historical amounts in the compilation of such
statements.
In the event that the letters referred to above set forth any
such changes, decreases or increases, it shall be a further condition to the
obligations of the Underwriters that (A) such letters shall be accompanied by a
written explanation of the Company as to the significance thereof, unless the
Representatives deem such explanation unnecessary, and (B) such changes,
decreases or increases do not, in the sole judgment of the Representatives,
make it impractical or inadvisable to proceed with the purchase and delivery of
the Securities as contemplated by the Registration Statement, as amended as of
the date hereof.
References to the Registration Statement, the Prospectus and
any Integrated Prospectus in this paragraph (d) with respect to either letter
referred to above shall include any amendment or supplement thereto at the date
of such letter.
(f) The Representatives shall have received from Coopers
& Xxxxxxx, L.L.P. a letter or letters dated, respectively, the date
hereof and the Firm Closing Date, in form and substance satisfactory
to the Representatives, to the effect that:
(i) they are independent accountants with respect
to the Company and its consolidated subsidiaries and Xxxxxxx
Drilling Corporation within the meaning of the Act, and the
Exchange Act and the applicable rules and regulations
thereunder;
(ii) in their opinion, the financial statements
examined by them and included or incorporated by reference in
the Registration Statement, the Prospectus and any Integrated
Prospectus comply in form in all material respects with the
applicable
-25-
Draft Dated September 26, 1997
26
accounting requirements of the Act, the Exchange Act and the
related published rules and regulations thereunder;
(g) The Representatives shall have received a
certificate, dated the Firm Closing Date, of the principal executive
officer and the principal financial or accounting officer of the
Company 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 Firm Closing Date; the Registration Statement,
as amended as of the Firm Closing Date, does not include any
untrue statement of a material fact or omit to state any
material fact necessary to make the statements therein not
misleading, and the Prospectus and any Integrated Prospectus,
as amended or supplemented as of the Firm Closing Date, does
not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the
statements therein, in the light of the circumstances under
which they were made, not misleading; and the Company has
performed all covenants and agreements and satisfied all
conditions on its part to be performed or satisfied at or
prior to the Firm Closing Date;
(ii) no stop order suspending the effectiveness of
the Registration Statement or any post- effective amendment
thereto and no order directed at any document incorporated by
reference in the Registration Statement or the Prospectus or
any amendment or supplement thereto has been issued, and no
proceedings for that purpose have been instituted or
threatened or, to the best of the Company's knowledge, are
contemplated by the Commission; and
(iii) subsequent to the respective dates as of
which information is given in the Registration Statement, the
Prospectus and any Integrated Prospectus, neither the Company
nor any of its Subsidiaries has sustained any material loss or
interference with their respective businesses or properties
from fire, flood, hurricane, accident or other calamity,
whether or not covered by insurance, or from any labor dispute
or any legal or governmental proceeding, and there has not
been any material adverse change, or any development involving
a prospective material adverse change, in the condition
(financial or otherwise), management, business prospects, net
worth or results of operations of the Company or any of its
subsidiaries, except in each case as described in or
contemplated by the Prospectus and any Integrated Prospectus.
(h) The Representatives shall have received from each
person who is a director or officer of the Company an agreement to the
effect that such person will not, directly or indirectly, without the
prior written consent of Prudential Securities Incorporated, on behalf
of the Underwriters, offer, sell, offer to sell, contract to sell,
pledge, grant any option to purchase or otherwise sell or dispose (or
announce any offer, sale, offer of sale, contract of sale, pledge,
grant of an option to purchase or other sale or disposition) of any
shares of Common Stock or any securities convertible into, or
exchangeable or exercisable for, shares of Common Stock
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Draft Dated September 26, 1997
27
for a period of 90 days after the date of this Agreement except in
connection with any transfer of any Securities to a related party that
agrees to be bound by this restriction.
(i) On or before the Firm Closing Date, the
Representatives and counsel for the Underwriters shall have received
such further certificates, documents or other information as they may
have reasonably requested from the Company.
(j) Prior to the commencement of the offering of the
Securities, the Securities shall have been approved for listing on the
Stock Exchange, subject to official notice of issuance.
All opinions, certificates, letters and documents delivered
pursuant to this Agreement will comply with the provisions hereof only if they
are reasonably satisfactory in all material respects to the Representatives and
counsel for the Underwriters. The Company shall furnish to the Representatives
such conformed copies of such opinions, certificates, letters and documents in
such quantities as the Representatives and counsel for the Underwriters shall
reasonably request.
The respective obligations of the several Underwriters to
purchase and pay for any Option Securities shall be subject, in their
discretion, to each of the foregoing conditions to purchase the Firm
Securities, except that all references to the Firm Securities and the Firm
Closing Date shall be deemed to refer to such Option Securities and the related
Option Closing Date, respectively.
10. Indemnification and Contribution.
(a) The Company and, subject to the provisions of Section 10(e),
Drum jointly and severally agree to indemnify and hold harmless each
Underwriter and each person, if any, who controls any Underwriter within the
meaning of Section 15 of the Act or Section 20 of the Exchange Act against any
losses, claims, damages or liabilities, joint or several, to which such
Underwriter or such controlling person may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon:
(i) any untrue statement or alleged untrue statement made
by the Company in Section 2 of this Agreement,
(ii) any untrue statement or alleged untrue statement of
any material fact contained in (A) the Registration Statement or any
amendment thereto, any Preliminary Prospectus, the Prospectus and any
Integrated Prospectus or any amendment or supplement thereto or (B)
any application or other document, or any amendment or supplement
thereto, executed by the Company or based upon written information
furnished by or on behalf of the Company filed in any jurisdiction in
order to qualify the Securities under the securities or blue sky laws
thereof or filed with the Commission or any securities association or
securities exchange (each an "Application");
(iii) the omission or alleged omission to state in the
Registration Statement or any amendment thereto, any Preliminary
Prospectus the Prospectus and any Integrated Prospectus
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Draft Dated September 26, 1997
28
or any amendment or supplement thereto, or any Application a material
fact required to be stated therein or necessary to make the statements
therein not misleading; or
(iv) any untrue statement or alleged untrue statement of
any material fact contained in any audio or visual materials used in
connection with the marketing of the Securities, including without
limitation, slides, videos, films and tape recordings,
and will reimburse, as incurred, each Underwriter and each such
controlling person for any legal or other expenses reasonably incurred by such
Underwriter or such controlling person in connection with investigating,
defending against or appearing as a third-party witness in connection with any
such loss, claim, damage, liability or action; provided, however, that the
Company will 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 any untrue statement
or alleged untrue statement or omission or alleged omission made in such
registration statement or any amendment thereto, any Preliminary Prospectus,
the Prospectus or any amendment or supplement thereto, or any Application in
reliance upon and in conformity with written information furnished to the
Company by such Underwriter through the Representatives specifically for use
therein; and provided, further, that the Company will not be liable to any
Underwriter or any person controlling such Underwriter with respect to any such
untrue statement or omission made in any Preliminary Prospectus that is
corrected in the Prospectus (or any amendment or supplement thereto) if the
person asserting any such loss, claim, damage or liability purchased Securities
from such Underwriter but was not sent or given a copy of the Prospectus (as
amended or supplemented), other than the documents incorporated by reference
therein, at or prior to the written confirmation of the sale of such Securities
to such person in any case where such delivery of the Prospectus (as amended or
supplemented) is required by the Act, unless such failure to deliver the
Prospectus (as amended or supplemented) was a result of noncompliance by the
Company with Section 6(d) and (a) of this Agreement. This indemnity agreement
will be in addition to any liability which the Company may otherwise have. The
Company will not, without the prior written consent of the Underwriter or
Underwriters purchasing, in the aggregate, more than fifty percent (50%) of the
Securities, settle or compromise or consent to the entry of any judgment in any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any such Underwriter or
any person who controls any such Underwriter within the meaning of Section 15
of the Act or Section 20 of the Exchange Act is a party to such claim, action,
suit or proceeding), unless such settlement, compromise or consent includes an
unconditional release of all of the Underwriters and such controlling persons
from all liability arising out of such claim, action, suit or proceeding.
(b) Each Selling Securityholder, severally and not jointly, agrees
to indemnify and hold harmless the Company, each of its directors, each of its
officers who signs the Registration Statement or any amendment thereto, each
Underwriter and each person who controls the Company or any Underwriter within
the meaning of Section 15 of the Act or Section 20 of the Exchange Act against
any losses, claims, damages or liabilities, joint or several, to which the
Company, any such director, officer, such Underwriter or any such controlling
person may become subject under the Act, the Exchange Act or otherwise, insofar
as such losses, claims, damages or liabilities (or actions in respect thereof)
arise out of or are based upon (i) any untrue statement or alleged untrue
statement of any
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Draft Dated September 26, 1997
29
material fact contained in the Registration Statement or any amendment thereto,
any Preliminary Prospectus, the Prospectus or any Integrated Prospectus or any
amendment or supplement thereto, or (ii) the omission or the alleged omission
to state therein a material fact required to be stated in the Registration
Statement or any amendment thereto, any Preliminary Prospectus, the Prospectus
or any Integrated Prospectus or any amendment or supplement thereto, 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 reliance upon and in
conformity with the written information furnished to the Company by such
Selling Securityholder for use therein. Subject to the limitations set forth
in the immediately preceding sentence, each Selling Securityholder, severally
and not jointly, will reimburse, as incurred, any legal or other expenses
reasonably incurred by the Company, any such director, officer, such
Underwriter or any such controlling person in connection with investigating or
defending any such loss, claim, damage, liability or any action in respect
thereof. This indemnity agreement will be in addition to any liability which
any Selling Securityholder may otherwise have. Each Selling Securityholder
will not, without the prior written consent of the Underwriter or Underwriters
purchasing, in the aggregate, more than fifty percent (50%) of the Securities,
settle or compromise or consent to the entry of any judgment in any pending or
threatened claim, action, suit or proceeding in respect of which
indemnification may be sought hereunder (whether or not any such Underwriter or
any person who controls any such Underwriter within the meaning of Section 15
of the Act or Section 20 of the Exchange Act is a party to such claim, action,
suit or proceeding), unless such settlement, compromise or consent includes an
unconditional release of all of the Underwriters and such controlling persons
from all liability arising out of such claim, action, suit or proceeding.
(c) Each Underwriter, severally and not jointly, will indemnity
and hold harmless the Company, each of its directors, each of its officers who
signed the Registration Statement, each Selling Securityholder and each
Additional Selling Securityholder and each person, if any, who controls the
Company, such Selling Securityholder or such Additional Selling Securityholder
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act
against any losses, claims, damages or liabilities to which the Company or any
such director, officer, Selling Securityholder, Additional Selling
Securityholder or controlling person may become subject under the Act, the
Exchange Act or otherwise, insofar as such losses, claims, damages or
liabilities (or actions in respect thereof) arise out of or are based upon (i)
any untrue statement or alleged untrue statement of any material fact contained
in the Registration Statement or any amendment thereto, any Preliminary
Prospectus, the Prospectus or any Integrated Prospectus or any amendment or
supplement thereto, or any Application or (ii) the omission or the alleged
omission to state therein a material fact required to be stated in the
Registration Statement or any amendment thereto, any Preliminary Prospectus,
the Prospectus or any amendment or supplement thereto, or any Application 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 reliance upon and in
conformity with written information furnished to the Company by such
Underwriter through the Representatives specifically for use therein; and,
subject to the limitation set forth immediately preceding this clause, will
reimburse, as incurred, any legal or other expenses reasonably incurred by the
Company or any such director, officer, Selling Securityholder, Additional
Selling Securityholder or controlling person in connection with
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Draft Dated September 26, 1997
30
investigating or defending any such loss, claim, damage, liability or any
action in respect thereof. This indemnity agreement will be in addition to any
liability which such Underwriter may otherwise have.
(d) Promptly after receipt by an indemnified party under this
Section 10 of notice of the commencement of any action, such indemnified party
will, if a claim in respect thereof is to be made against the indemnifying
party under this Section 10, notify the indemnifying party 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 this Section 10. In case any such action is brought against any
indemnified party, and it notifies the indemnifying party of the commencement
thereof, the indemnifying party will 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; provided, however, that if the defendants in any such
action include both the indemnified party and the indemnifying party and the
indemnified party shall have reasonably concluded that there may be one or more
legal defenses available to the indemnified party and/or other indemnified
parties which are different from or additional to those available to the
indemnifying party and would make the representation of all such parties
inappropriate, the indemnifying party shall not have the right to direct the
defense of such action on behalf of such indemnified party or parties and such
indemnified party or parties shall have the right to select separate counsel to
defend such action on behalf of such indemnified party or parties. After
notice from the indemnifying party to such indemnified party of its election so
to assume the defense thereof and approval by such indemnified party of counsel
appointed to defend such action, the indemnifying party will not be liable to
such indemnified party under this Section 10 for any legal or other expenses,
other than reasonable costs of investigation, 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 next preceding sentence (it being understood, however, that in
connection with such action the indemnifying party shall not be liable for the
expenses of more than one separate counsel (in addition to local counsel) in
any one action or separate but substantially similar actions in the same
jurisdiction arising out of the same general allegations or circumstances,
designated by the Representatives in the case of paragraph (a) of this Section
10, representing the indemnified parties under such paragraph (a) who are
parties to such action or actions) or (ii) the indemnifying party does not
promptly retain counsel satisfactory to the indemnified party or (iii) the
indemnifying party has authorized the employment of counsel for the indemnified
party at the expense of the indemnifying party. After such notice from the
indemnifying party to such indemnified party, the indemnifying party will not
be liable for the costs and expenses of any settlement of such action effected
by such indemnified party without the consent of the indemnifying party.
(e) The indemnification obligations of Drum pursuant to Section
10(a) are subject to the following provision: Drum shall not have any
liability under this Agreement in an amount exceeding the amount of cash
received by him upon the sale of his Common Stock.
(f) In circumstances in which the indemnity agreement provided for
in the preceding paragraphs of this Section 10 is unavailable or insufficient,
for any reason, to hold harmless an indemnified party in respect of any losses,
claims, damages or liabilities (or actions in respect thereof), each
indemnifying party, in order to provide for just and equitable contribution,
shall contribute to the
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Draft Dated September 26, 1997
31
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 (i) the relative benefits received by
the indemnifying party or parties on the one hand and the indemnified party or
parties on the other from the offering of the Securities or (ii) if the
allocation provided by the foregoing clause (i) is not permitted by applicable
law, not only such relative benefits but also the relative fault of the
indemnifying party or parties on the one hand and the indemnified party or
parties on the other in connection with the statements or omissions or alleged
statements or omissions that 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 and
the Selling Securityholders on the one hand and the Underwriters on the other
shall be deemed to be in the same proportion as the total proceeds from the
offering (before deducting expenses) received by the Company and the Selling
Securityholders bear to the total underwriting discounts and commissions
received by the Underwriters. The relative fault of the parties 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 Securityholders or the Underwriters, the parties' relative intent,
knowledge, access to information and opportunity to correct or prevent such
statement or omission, and any other equitable considerations appropriate in
the circumstances. The Company, the Selling Securityholders and the
Underwriters agree that it would not be equitable if the amount of such
contribution were determined by pro rata or per capita allocation (even if the
Underwriters were treated as one entity for such purpose) or by any other
method of allocation that does not take into account the equitable
considerations referred to above in this paragraph (d). Notwithstanding any
other provision of this paragraph (d), no Underwriter shall be obligated to
make contributions hereunder that in the aggregate exceed the total public
offering price of the Securities purchased by such Underwriter under this
Agreement, less the aggregate amount of any damages that such Underwriter has
otherwise been required to pay in respect of the same or any substantially
similar claim, and no person guilty of fraudulent misrepresentation (within the
meaning of Section 11(f) of the Act) shall be entitled to contribution from any
person who was not guilty of such fraudulent misrepresentation. The
Underwriters' obligations to contribute hereunder are several in proportion to
their respective underwriting obligations and not joint, and contributions
among Underwriters shall be governed by the provisions of the Prudential
Securities Incorporated Master Agreement Among Underwriters. For purposes of
this paragraph (d), each person, if any, who controls an Underwriter within the
meaning of Section 15 of the Act or Section 20 of 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 or any Selling Securityholder
within the meaning of Section 15 of the Act or Section 20 of the Exchange Act,
shall have the same rights to contribution as the Company or such Selling
Securityholder, as the case may be.
11. Default of Underwriters. If one or more Underwriters default
in their obligations to purchase Firm Securities or Option Securities hereunder
and the aggregate number of such Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase is ten percent or less of the
aggregate number of Firm Securities or Option Securities to be purchased by all
of the Underwriters at such time hereunder, the other Underwriters may make
arrangements satisfactory to the Representatives for the purchase of such
Securities by other persons (who may include one or more
-31-
Draft Dated September 26, 1997
32
of the non-defaulting Underwriters, including the Representatives), but if no
such arrangements are made by the Firm Closing Date or the related Option
Closing Date, as the case may be, the other Underwriters shall be obligated
severally in proportion to their respective commitments hereunder to purchase
the Firm Securities or Option Securities that such defaulting Underwriter or
Underwriters agreed but failed to purchase. If one or more Underwriters so
default with respect to an aggregate number of Securities that is more than ten
percent of the aggregate number of Firm Securities or Option Securities, as the
case may be, to be purchased by all of the Underwriters at such time hereunder,
and if arrangements satisfactory to the Representatives are not made within 36
hours after such default for the purchase by other persons (who may include one
or more of the non-defaulting Underwriters, including the Representatives) of
the Securities with respect to which such default occurs, this Agreement will
terminate without liability on the part of any non-defaulting Underwriter or
the Company other than as provided in Section 12 hereof. In the event of any
default by one or more Underwriters as described in this Section 11, the
Representatives shall have the right to postpone the Firm Closing Date or the
Option Closing Date, as the case may be, established as provided in Section 4
hereof for not more than seven business days in order that any necessary
changes may be made in the arrangements or documents for the purchase and
delivery of the Firm Securities or Option Securities, as the case may be. As
used in this Agreement, the term "Underwriter" includes any person substituted
for an Underwriter under this Section 11. Nothing herein shall relieve any
defaulting Underwriter from liability for its default.
12. Survival. The respective representations, warranties,
agreements, covenants, indemnities and other statements of the Company, its
officers, the Selling Securityholders and the several Underwriters set forth
in this Agreement or made by or on behalf of them, respectively, pursuant to
this Agreement shall remain in full force and effect, regardless of (i) any
investigation made by or on behalf of the Company, any of its officers or
directors, and Selling Securityholder any Underwriter or any controlling
person referred to in Section 10 hereof and (ii) delivery of and payment for
the Securities. The respective agreements, covenants, indemnities and other
statements set forth in Sections 8 and 10 hereof shall remain in full force and
effect, regardless of any termination or cancellation of this Agreement.
13. Termination. (a) This Agreement may be terminated with
respect to the Firm Securities or any Option Securities in the sole discretion
of the Representatives by notice to the Company given prior to the Firm Closing
Date or the related Option Closing Date, respectively, in the event that the
Company or any Selling Securityholder shall have failed, refused or been unable
to perform all obligations and satisfy all conditions on its part to be
performed or satisfied hereunder at or prior thereto or, if at or prior to the
Firm Closing Date or such Option Closing Date, respectively;
(i) the Company or any of its subsidiaries shall have, in
the sole judgment of the Representatives, sustained any material loss
or interference with their respective businesses or properties from
fire, flood, hurricane, accident or other calamity, whether or not
covered by insurance, or from any labor dispute or any legal or
governmental proceeding or there shall have been any material adverse
change, or any development involving a prospective material adverse
change (including without limitation a change in management or control
of the Company), in the condition (financial or otherwise), business
prospects, net worth or results
-32-
Draft Dated September 26, 1997
33
of operations of the Company and its subsidiaries, except in each case
as described in or contemplated by the Prospectus (exclusive of any
amendment or supplement thereto);
(ii) trading in the Common Stock shall have been suspended
by the Commission or the American Stock Exchange or trading in
securities generally on the New York or American Stock Exchange shall
have been suspended or minimum or maximum prices shall have been
established on either any such exchange;
(iii) a banking moratorium shall have been declared by New
York or United States authorities; or
(iv) there shall have been (A) an outbreak or escalation
of hostilities between the United States and any foreign power, (B) an
outbreak or escalation of any other insurrection or armed conflict
involving the United States or (C) any other calamity or crisis or
material adverse change in general economic, political or financial
conditions having an effect on the U. S. financial markets that, in
the sole judgment of the Representatives, makes it impractical or
inadvisable to proceed with the public offering or the delivery of the
Securities as contemplated by the Registration Statement, as amended
as of the date hereof.
(b) Termination of this Agreement pursuant to this Section 13
shall be without liability of any party to any other party except as provided
in Section 12 hereof.
14. Information Supplied by Underwriters. The statements set
forth in the last paragraph on the front cover page and under the heading
"Underwriting" in any Preliminary Prospectus, the Prospectus or any Integrated
Prospectus (to the extent such statements relate to the Underwriters)
constitute the only information furnished by any Underwriter through the
Representatives to the Company for the purposes of Sections 2(b) and 10 hereof.
The Underwriters confirm that such statements (to such extent) are correct.
15. Notices. All communications hereunder shall be in writing
and, if sent to any of the Underwriters, shall be delivered or sent by mail,
telex or facsimile transmission and confirmed in writing to Prudential
Securities Incorporated, Xxx Xxx Xxxx Xxxxx, Xxx Xxxx, Xxx Xxxx 00000,
Attention: Equity Transactions Group, (facsimile: (000) 000-0000); and if sent
to the Company, shall be delivered or sent by mail, telex or facsimile
transmission and confirmed in writing to the Company at 00000 Xxxxxxxxxxx Xxxx,
Xxxxx 000X, Xxxxxxx, Xxxxx 00000, (facsimile: (000) 000-0000); and if to the
Selling Securityholders, shall be delivered or sent by mail, telex or facsimile
transmission and confirmed in writing to the Selling Securityholders c/o Xxxxxx
X. Drum at 00000 Xxxxxxxxxxx Xxxx, Xxxxx 000X, Xxxxxxx, XX 00000, (facsimile:
(000) 000-0000).
16. Successors. This Agreement shall inure to the benefit of and
shall be binding upon the several Underwriters, the Company, the Selling
Securityholders the Additional Selling Securityholders and their respective
successors and legal representatives, and nothing expressed or mentioned in
this Agreement is intended or shall be construed to give any other person any
legal or equitable right, remedy or claim under or in respect of this
Agreement, or any provisions herein contained, this
-33-
Draft Dated September 26, 1997
34
Agreement and all conditions and provisions hereof being intended to be and
being for the sole and exclusive benefit of such persons and for the benefit of
no other person except that (i) the indemnities of the Company contained in
Section 10 of this Agreement shall also be for the benefit of any person or
persons who control any Underwriter within the meaning of Section 15 of the Act
or Section 20 of the Exchange Act and (ii) the indemnities of the Underwriters
contained in Section 8 of this Agreement shall also be for the benefit of the
Selling Securityholders, the Additional Selling Securityholders, directors of
the Company, the officers of the Company who have signed the Registration
Statement and any person or persons who control the Company within the meaning
of Section 15 of the Act or Section 20 of the Exchange Act. No purchaser of
Securities from any Underwriter shall be deemed a successor because of such
purchase.
17. APPLICABLE LAW. THE VALIDITY AND INTERPRETATION OF THIS
AGREEMENT, AND THE TERMS AND CONDITIONS SET FORTH HEREIN, SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK, WITHOUT
GIVING EFFECT TO ANY PROVISIONS RELATING TO CONFLICTS OF LAWS.
18. Consent to Jurisdiction and Service of Process. All judicial
proceedings arising out of or relating to this Agreement may be brought in any
state or federal court of competent jurisdiction in the State of New York, and
by execution and delivery of this Agreement, each Selling Securityholder
accepts for itself and in connection with its properties, generally and
unconditionally, the nonexclusive jurisdiction of the aforesaid courts and
waives any defense of forum non conveniens and irrevocably agrees to be bound
by any judgment rendered thereby in connection with this Agreement. Each
Selling Securityholder designates and appoints Xxxxxx X. Drum and such other
persons as may hereafter be selected by each Selling Securityholder irrevocable
agreeing in writing to so serve, as its agent to receive on its behalf service
of all process in any such proceedings in any such court, such service being
hereby acknowledged by the Selling Shareholder to be effective and binding
service in every respect. A copy of any such process so served shall be mailed
by registered mail to the Selling Securityholder at its address provided in
Section 15 hereof; provided, however, that, unless otherwise provided by
applicable law, any failure to mail such copy shall not affect the validity of
service of such process. If any agent appointed by a Selling Shareholder
refuses to accept service, such Selling Securityholder hereby agrees that
service of process sufficient for personal jurisdiction in any action against
each Selling Securityholder in the State of New York may be made by registered
or certified mail, return receipt requested, to the Selling Shareholder at its
address provided in Section 15 hereof, and each Selling Securityholder hereby
acknowledges that such service shall be effective and binding in every respect.
Nothing herein shall affect the right to serve process in any other manner
permitted by law or shall limit the right of any Underwriter to bring
proceedings against the Selling Securityholder in the courts of any other
jurisdiction.
19. Counterparts. This Agreement may be executed in two or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
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Draft Dated September 26, 1997
35
If the foregoing correctly sets forth our understanding,
please indicate your acceptance thereof in the space provided below for that
purpose, whereupon this letter shall constitute an agreement binding the
Company and each of the several Underwriters.
Very truly yours,
UTI ENERGY CORP.
By
------------------------------------
Name:
Title:
SELLING SECURITYHOLDERS
By
------------------------------------
Name:
Attorney-in-Fact for
Selling Securityholders
The foregoing Agreement is hereby
confirmed and accepted as of the
date first above written.
PRUDENTIAL SECURITIES INCORPORATED
XXXXXX BROTHERS INC.
XXXXXXXX XXXXXX REFSNES, INC.
XXXXXXX & COMPANY INTERNATIONAL
By PRUDENTIAL SECURITIES INCORPORATED
By
--------------------------------------
Xxxx-Xxxxxx Canfin
Managing Director
For itself and on behalf of the Representatives.
-35-
Draft Dated September 26, 1997
36
SCHEDULE 1-A
SELLING SECURITYHOLDERS
Number of
Firm Securities
Selling Securityholders: to be Sold
----------
Remy Capital Partners III, L.P. . . . . . . . . . . . . . . . . . 1,588,388
Remy Investors and Consultants, Incorporated . . . . . . . . . . ____
Xxxxxxx Drilling Corporation . . . . . . . . . . . . . . . . . . 733,779
Shamrock Holdings of California, Inc. . . . . . . . . . . . . . . 533,333
Xxx X. Xxxxxxx Family Foundation, Inc. . . . . . . . . . . . . . 200,000
The Xxx X. Xxxxxxx Trust dated September 9, 1986,
as Amended and Restated on May 11, 1994 . . . . . . . . . . . 400,000
Canpartners Investments IV, L.L.C. . . . . . . . . . . . . . . . 720,000
Four Flags Drilling Company . . . . . . . . . . . . . . . . . . . 60,000
Xxxx X. Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . 31,800
Xxxxx X. Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Xxxx X. Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . 14,400
Xxxx X. Xxxxxx . . . . . . . . . . . . . . . . . . . . . . . . . 28,800
Xxxxxxx X. Xxxxx . . . . . . . . . . . . . . . . . . . . . . . . ____
Xxxxxx X. Drum . . . . . . . . . . . . . . . . . . . . . . . . . ---------
4,340,500
=========
S-1A
Draft Dated September 26, 1997
37
SCHEDULE 1-B
ADDITIONAL SELLING SECURITYHOLDERS
Number of Option
Securities to be
sold if Maximum
Additional Selling Securityholders: Option Exercised
----------------
Remy Capital Partners III, L.P. . . . . . . . . . . . . . . . . . 165,000
Remy Investors and Consultants, Incorporated . . . . . . . . . . 165,000
Xxxxxxx X. Xxxxx . . . . . . . . . . . . . . . . . . . . . . . . 30,000
Xxxxxx X. Drum . . . . . . . . . . . . . . . . . . . . . . . . . 112,500
-------
472,500
=======
S-1B
Draft Dated September 26, 1997
38
SCHEDULE 2
UNDERWRITERS
Number of Firm
Securities to
Underwriter be Purchased
----------- -------------
Prudential Securities Incorporated . . . . . . . . . . . . . . . .
Xxxxxx Brothers Inc. . . . . . . .. . . . . . . . . . . . . . . .
Xxxxxxxx Xxxxxx Refsnes, Inc. . . .. . . . . . . . . . . . . . . .
Xxxxxxx & Company International . .. . . . . . . . . . . . . . . . ________
Total . . . . . . . . . .. . . . . . . . . . . . . . . . 5,915,500
=========
S-2
Draft Dated September 26, 1997
39
SCHEDULE 3
SUBSIDIARIES
Name Jurisdiction of Incorporation
---- -----------------------------
S-3
Draft Dated September 26, 1997
