EXECUTION COPY
KEY ENERGY SERVICES, INC.
$175,000,000
8 3/8% SENIOR NOTES
DUE 2008
PURCHASE AGREEMENT
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March 1, 2001
▇▇▇▇▇▇ BROTHERS INC.
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
C/▇ ▇▇▇▇▇▇ BROTHERS INC.
THREE WORLD FINANCIAL CENTER
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Ladies and Gentlemen:
Key Energy Services, Inc., a Maryland corporation (the "COMPANY"),
proposes, upon the terms and conditions set forth herein, to issue and sell to
you, as the initial purchasers (the "INITIAL PURCHASERS"), $175,000,000 in
aggregate principal amount of its 8 3/8% Senior Notes due 2008 (the "SERIES A
NOTES"), subject to the terms and conditions set forth herein. The Series A
Notes are to be issued pursuant to an Indenture (the "INDENTURE"), to be dated
as of the Closing Date (as defined below), among the Company, the Guarantors (as
defined below) and The Chase Manhattan Bank, a New York banking corporation, as
trustee (the "TRUSTEE"). The Company's obligations under the Series A Notes,
including the due and punctual payment of interest on the Notes, will be
unconditionally guaranteed by Yale E. Key, Inc., a Texas corporation; Key Energy
Drilling Inc., a Delaware corporation; WellTech Eastern, Inc., a Delaware
corporation; Odessa Exploration Incorporated, a Delaware corporation; Kalkaska
Oilfield Services, Inc., a Michigan corporation; Well-Co Oil Service, Inc., a
Nevada corporation; ▇▇▇▇▇▇▇ Well Service, Inc., a Kansas corporation; Ram Oil
Well Service, Inc., a New Mexico corporation; ▇▇▇▇▇▇▇ Trucking Co., Inc., a New
Mexico corporation; Landmark Fishing & Rental, Inc., an Oklahoma corporation;
▇▇▇▇▇▇ Well Service, Inc., a Colorado corporation; Frontier Well Service, Inc.,
a Wyoming corporation; Key Rocky Mountain, Inc., a Delaware corporation; Key
Four Corners, Inc., a Delaware corporation; ▇▇▇▇▇ Service Co., an Oklahoma
corporation; ▇▇▇▇▇ Well Service, Inc., an Oklahoma corporation; ▇▇▇▇▇
Transportation, Inc., an Oklahoma corporation; Industrial Oilfield Supply, Inc.,
an Oklahoma corporation; ▇▇▇▇▇▇ Well Servicing, Inc., a Delaware corporation;
▇▇▇▇▇▇ Brothers, Inc., a Wyoming corporation; ▇.▇. ▇▇▇▇▇▇ Well Service Company,
a Delaware corporation; Key Energy Services-- South Texas, Inc., a Delaware
corporation; Key Energy Services-- California, Inc., a Delaware corporation;
▇▇▇▇▇▇ Oilfield Service & Supply, Inc., a Delaware corporation; WellTech
Mid-Continent, Inc., a Delaware corporation; ▇▇▇▇▇▇ Production Management, Inc.,
a Delaware corporation; ▇▇▇▇▇▇ Production ▇▇▇▇▇▇, Inc., a Delaware corporation;
▇▇▇▇▇▇ Production Acquisition Corp., a Delaware corporation; and ▇▇▇▇▇▇
Production Partners, L.P., a Delaware limited partnership (the "GUARANTORS").
The Company's obligations under the Series B Notes (as defined), including the
due and punctual payment of interest on the Series B Notes, will be
unconditionally guaranteed by the Guarantors. The Series A Notes and the Series
B Notes issuable in exchange therefor are collectively referred to herein as the
"Notes." As used herein, the term Notes shall include the subsidiary guarantees
thereof by the Guarantors, unless the context otherwise requires. This is to
confirm the agreement concerning the purchase of the Series A Notes from the
Company by the Initial Purchasers. Capitalized terms used but not defined herein
shall have the meanings given to such terms in the Indenture.
The Series A Notes will be offered and sold to the Initial Purchasers
pursuant to an exemption from the registration requirements under the Securities
Act of 1933, as amended (the "Act"). The Company has prepared a preliminary
offering memorandum, dated February 23, 2001 (the "PRELIMINARY OFFERING
MEMORANDUM"), and an offering memorandum, dated the date hereof (the "OFFERING
MEMORANDUM"), setting forth information regarding the Company and relating to
the Series A Notes. The terms "Preliminary Offering Memorandum" and "Offering
Memorandum," in each case, include the information incorporated by reference
therein. Any references herein to the Preliminary Offering Memorandum and the
Offering Memorandum shall be deemed to include all amendments and supplements
thereto. The Company hereby confirms that it has authorized the use of the
Preliminary Offering Memorandum and the Offering Memorandum in connection with
the offering and resale of the Series A Notes by the Initial Purchasers.
It is understood and acknowledged that upon original issuance thereof,
and until such time as the same is no longer required under the applicable
requirements of the Act, the Series A Notes (and all securities issued in
exchange therefor or in substitution thereof) shall bear the following legend:
"THE SECURITIES EVIDENCED HEREBY HAVE NOT BEEN REGISTERED UNDER THE
SECURITIES ACT OF 1933, AS AMENDED (THE "SECURITIES ACT"), AND THIS
NOTE MAY NOT BE OFFERED, SOLD, PLEDGED OR OTHERWISE TRANSFERRED EXCEPT
PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT OR IN ACCORDANCE WITH
AN APPLICABLE EXEMPTION FROM THE REGISTRATION REQUIREMENTS OF THE
SECURITIES ACT (SUBJECT TO THE DELIVERY OF SUCH EVIDENCE, IF ANY,
REQUIRED UNDER THE INDENTURE PURSUANT TO WHICH THIS NOTE IS ISSUED) AND
IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS OF ANY STATE OF THE
UNITED STATES OR ANY OTHER JURISDICTION. EACH PURCHASER OF THE
SECURITIES EVIDENCED HEREBY IS HEREBY NOTIFIED THAT THE SELLER MAY BE
RELYING ON THE EXEMPTION FROM THE PROVISIONS OF SECTION 5 OF THE
SECURITIES ACT PROVIDED BY RULE 144A THEREUNDER OR ANOTHER EXEMPTION
UNDER THE SECURITIES ACT. THE HOLDER OF THE SECURITIES EVIDENCED HEREBY
AGREES FOR THE BENEFIT OF THE COMPANY THAT (A) SUCH SECURITIES MAY BE
RESOLD, PLEDGED OR OTHERWISE TRANSFERRED ONLY (1) (A) TO A PERSON WHO
THE SELLER REASONABLY BELIEVES IS A QUALIFIED INSTITUTIONAL
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BUYER (AS DEFINED IN RULE 144A UNDER THE SECURITIES ACT) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144A, (B) IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 144 UNDER THE SECURITIES
ACT, (C) OUTSIDE THE UNITED STATES TO A FOREIGN PERSON IN A
TRANSACTION MEETING THE REQUIREMENTS OF RULE 904 UNDER THE SECURITIES
ACT OR (D) IN ACCORDANCE WITH ANOTHER EXEMPTION FROM THE REGISTRATION
REQUIREMENTS OF THE SECURITIES ACT (AND BASED UPON AN OPINION OF
COUNSEL IF THE COMPANY SO REQUESTS), AS LONG AS THE REGISTRAR
RECEIVES A CERTIFICATION OF THE TRANSFEROR AND AN OPINION OF COUNSEL
THAT SUCH TRANSFER IS IN COMPLIANCE WITH THE SECURITIES ACT, (2) TO
THE COMPANY OR (3) PURSUANT TO AN EFFECTIVE REGISTRATION STATEMENT
AND, IN EACH CASE, IN ACCORDANCE WITH ANY APPLICABLE SECURITIES LAWS
OF ANY STATE OF THE UNITED STATES OR ANY OTHER APPLICABLE
JURISDICTION AND (B) THE HOLDER WILL AND EACH SUBSEQUENT HOLDER IS
REQUIRED TO NOTIFY ANY PURCHASER FROM IT OF THE SECURITIES EVIDENCED
HEREBY OF THE RESALE RESTRICTION SET FORTH IN (A) ABOVE."
In addition, it is understood and acknowledged that upon original
issuance thereof, and until such time as the same is no longer required under
the applicable requirements of the Act, the Series A Notes (and all notes issued
in exchange therefor or in substitution thereof) sold by you in reliance on
Regulation S under the Act ("REGULATION S") shall bear the following legend:
HEDGING TRANSACTIONS INVOLVING THIS SECURITY MAY NOT BE CONDUCTED
UNLESS IN COMPLIANCE WITH THE SECURITIES ACT.
You have represented and warranted to the Company that you will make
offers (the "EXEMPT RESALES") of the Series A Notes purchased by you hereunder
on the terms set forth in the Offering Memorandum solely to (i) persons whom you
reasonably believe to be "qualified institutional buyers" as defined in Rule
144A under the Act ("QIBS") and (ii) to persons other than U.S. persons in
offshore transactions meeting the requirements of Rule 903 or 904 of Regulation
S (such persons specified in clauses (i) and (ii) being referred to herein as
the "ELIGIBLE PURCHASERS"). As used herein, the terms "OFFSHORE TRANSACTION" and
"U.S. PERSON" have the respective meanings given to them in Regulation S. You
will offer the Series A Notes to Eligible Purchasers initially at a price equal
98% of the principal amount of maturity thereof. Such price may be changed at
any time without notice.
Holders (including subsequent transferees) of the Series A Notes, will
have the registration rights set forth in the registration rights agreement (the
"REGISTRATION RIGHTS AGREEMENT"), to be dated the Closing Date, in form and
substance reasonably satisfactory to the Initial Purchasers, for so long as such
Series A Notes constitute "TRANSFER RESTRICTED SECURITIES" (as defined in the
Registration Rights Agreement). Pursuant to the Registration Rights Agreement,
the Company will agree to file with the Securities and Exchange Commission (the
"COMMISSION") under the circumstances set forth therein (i) a registration
statement under the
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Act (the "EXCHANGE OFFER REGISTRATION STATEMENT") relating to the Company's 8
3/8% Series B Notes to be offered in exchange for the Series A Notes (the
"SERIES B NOTES") (such offer to exchange being referred to as the "EXCHANGE
OFFER") and (ii) if applicable, a shelf registration statement pursuant to
Rule 415 under the Act (the "SHELF REGISTRATION STATEMENT" and, together with
the Exchange Offer Registration Statement, the "REGISTRATION STATEMENTS")
relating to the resale by certain holders of the Series A Notes, and to use
their reasonable best efforts to cause such Registration Statements to be
declared and remain effective and usable for the periods specified in the
Registration Rights Agreement and to consummate the Exchange Offer.
1. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE COMPANY AND THE
GUARANTORS. The Company and each of the Guarantors represents, warrants and
agrees that:
(a) The Preliminary Offering Memorandum and Offering
Memorandum with respect to the Series A Notes have been prepared by the
Company for use by the Initial Purchasers in connection with the Exempt
Resales. No order or decree preventing the use of the Preliminary Offering
Memorandum or the Offering Memorandum, or any order asserting that the
transactions contemplated by this Agreement are subject to the registration
requirements of the Act has been issued and no proceeding for that purpose has
commenced or is pending or, to the knowledge of the Company, is contemplated.
(b) The Preliminary Offering Memorandum and the Offering
Memorandum as of their respective dates and the Offering Memorandum as of the
Closing Date, did not or will not contain an untrue statement of a material
fact or omit to state a material fact necessary in order to make the
statements made therein, in light of the circumstances under which they were
made, not misleading.
(c) The market-related and customer-related data and
estimates included in the Preliminary Offering Memorandum and the Offering
Memorandum concerning the Company's market share, competitors' equipment,
customer needs and the oil and gas industry, are based on or derived from
sources that the Company believes to be reliable and accurate in all material
respects.
(d) The Company and the Guarantors and the Company's
Argentine and Canadian subsidiaries have been duly organized and are validly
existing in good standing under the laws of their respective jurisdictions of
organization, are duly qualified to do business and are in good standing as
foreign corporations in each jurisdiction in which their respective ownership
or lease of property or the conduct of their respective businesses requires
such qualification, except where the failure to so register or qualify or to
be in good standing would not reasonably be expected to have a material
adverse effect on the consolidated financial condition, business, properties
or results of operations of the Company and its subsidiaries taken as a whole
(a "Material Adverse Effect"), and have all power and authority necessary to
own or hold their respective properties and to conduct the businesses in which
they are engaged.
(e) The Company has an authorized capitalization as set forth
in the Offering Memorandum, and all of the issued shares of capital stock of
the Company have been duly and validly authorized and issued, are fully paid
and non-assessable; and all of the issued shares of
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capital stock of each Guarantor of the Company have been duly and validly
authorized and issued and are fully paid and non-assessable and (except for
directors' qualifying shares and except as set forth in the Offering
Memorandum) are owned directly or indirectly by the Company, free and clear of
all liens, encumbrances, equities or claims (except liens held pursuant to the
Credit Facilities, as defined in the Offering Memorandum).
(f) The Company has all requisite power and authority to
execute, deliver and perform its obligations under the Notes.
(g) The Company and each of the Guarantors has all requisite
power and authority to execute, deliver and perform its obligations under this
Agreement, the Indenture and the Registration Rights Agreement.
(h) The Indenture has been duly and validly authorized by the
Company and each of the Guarantors, and upon its execution and delivery and,
assuming due authorization, execution and delivery by the Trustee, will
constitute the valid and binding agreement of the Company and each of the
Guarantors, enforceable against the Company and each of the Guarantors in
accordance with its terms, subject to the qualification that the
enforceability of the Company's and the Guarantors' obligations thereunder may
be limited by bankruptcy, fraudulent conveyance, insolvency, reorganization,
moratorium, and other laws relating to or affecting creditors' rights
generally and by general equitable principles; no qualification of the
Indenture under the Trust Indenture Act of 1939, as amended (the "1939 Act")
is required in connection with the offer and sale of the Series A Notes
contemplated hereby or in connection with the Exempt Resales. The Offering
Memorandum contains an accurate summary, in all material respects, of the
terms of the Indenture.
(i) The Series A Notes have been duly and validly authorized
by the Company, and when duly executed by the Company in accordance with the
terms of the Indenture and, assuming due authentication of the Series A Notes
by the Trustee, upon delivery to the Initial Purchasers against payment
therefor in accordance with the terms hereof, will have been validly issued
and delivered, and will constitute valid and binding obligations of the
Company entitled to the benefits of the Indenture, enforceable against the
Company in accordance with their terms, subject to the qualification that the
enforceability of the Company's obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium, and
other laws relating to or affecting creditors' rights generally and by general
equitable principles. On the Closing Date, the Series A Notes will conform as
to legal matters, in all material respects, to the description thereof
contained in the Offering Memorandum.
(j) The Series B Notes have been duly and validly authorized
by the Company, and if and when duly issued and authenticated in accordance
with the terms of the Indenture and delivered in accordance with the
Registration Rights Agreement, will constitute valid and binding obligations
of the Company entitled to the benefits of the Indenture, enforceable against
the Company in accordance with their terms, subject to the qualification that
the enforceability of the Company's obligations thereunder may be limited by
bankruptcy,
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fraudulent conveyance, insolvency, reorganization, moratorium, and other laws
relating to or affecting creditors' rights generally and by general equitable
principles. On the Closing Date, the Series B Notes will conform as to legal
matters, in all material respects, to the description thereof contained in the
Offering Memorandum.
(k) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors, and (assuming due
execution and delivery by the Initial Purchasers) will constitute a valid and
binding agreement of the Company and each of the Guarantors, enforceable
against the Company and each of the Guarantors in accordance with its terms,
subject to the qualification that the enforceability of the Company's or the
Guarantors' obligations hereunder may be limited by bankruptcy, fraudulent
conveyance, insolvency, reorganization, moratorium, and other laws relating to
or affecting creditors' rights generally and by general equitable principles.
(l) The Registration Rights Agreement has been duly and
validly authorized by the Company and each of the Guarantors, and when
executed and delivered by the Company and each of the Guarantors in accordance
with its terms (assuming due execution and delivery by the Initial
Purchasers), will constitute the valid and binding obligation of the Company
and each of the Guarantors enforceable against the Company and each of the
Guarantors in accordance with its terms, subject to the qualification that
enforceability of the Company's obligations thereunder may be limited by
bankruptcy, fraudulent conveyance, insolvency, reorganization, moratorium and
other similar laws relating to or affecting creditor's rights generally and by
general equitable principles.
(m) The execution, delivery and performance of this
Agreement, the Registration Rights Agreement and the Indenture and the
issuance of the Notes by the Company, and the execution, delivery and
performance of this Agreement, the Registration Rights Agreement and the
Indenture and the issuance of the Guarantees by the Guarantors and the
consummation of the transactions contemplated hereby and thereby will not
conflict with or result in a breach or violation of any of the terms or
provisions of, or constitute a default under, (i) any indenture, mortgage,
deed of trust, loan agreement or other agreement or instrument to which the
Company or any of its subsidiaries is a party or by which the Company or any
of its subsidiaries is bound or to which any of the property or assets of the
Company or any of its subsidiaries is subject, that would have a Material
Adverse Effect, (ii) the provisions of the charter or by-laws of the Company
or any of its subsidiaries, or (iii) any statute or any order, rule or
regulation of any court or governmental agency or body having jurisdiction
over the Company or any of its subsidiaries or any of their properties or
assets, that would have a Material Adverse Effect; and except for the
registration of the Series B Notes under the Act and such consents, approvals,
authorizations, registrations or qualifications as may be required under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), and
applicable state securities laws, no consent, approval, authorization or order
of, or filing or registration with, any such court or governmental agency or
body is required for the execution, delivery and performance of this
Agreement, the Registration Rights Agreement, the Subsidiary Guarantees or the
Indenture by the Company and the Guarantors and the consummation of the
transactions contemplated hereby and thereby.
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(n) There are no contracts, agreements or understandings
between the Company and any person granting such person the right to require
the Company to file a registration statement under the Act with respect to any
securities of the Company owned or to be owned by such person that would
require the Company to include such securities in the securities registered
pursuant to the Registration Statement or to include the Notes in any other
registration statement filed by the Company under the Act.
(o) Neither the Company nor any of its subsidiaries nor any
agent thereof acting on the behalf of them has taken, and none of them will
take, any action that might cause this Agreement or the issuance or sale of
the Notes to violate, Regulation T (12 C.F.R. Part 220), Regulation U (12
C.F.R. Part 221) or Regulation X (12 C.F.R. Part 224) of the Board of
Governors of the Federal Reserve System.
(p) Other than as set forth in the Offering Memorandum, (i)
neither the Company nor any of its subsidiaries has sustained, since the date
of the latest audited financial statements included in the Offering
Memorandum, any loss or interference with its business from fire, explosion,
flood or other calamity, whether or not covered by insurance, or from any
labor dispute or court or governmental action, order or decree; that would
have a Material Adverse Effect and, (ii) since the date of the latest audited
financial statements included in the Offering Memorandum, there has not been
any material change in the capital stock or long-term debt of the Company or
any of its subsidiaries or any Material Adverse Effect.
(q) The consolidated historical financial statements
(including the related notes and supporting schedules) included in the
Offering Memorandum present fairly, in all material respects, the financial
condition and results of operations and cash flows of the entities purported
to be shown thereby, at the dates and for the periods indicated, and have been
prepared in conformity with generally accepted accounting principles ("GAAP")
applied on a consistent basis throughout the periods involved, except as
otherwise stated therein and in the case of unaudited financial statements,
subject to year-end audit adjustments.
(r) The consolidated historical financial statements together
with the related notes thereto set forth in the Offering Memorandum comply as
to form in all material respects with the requirements of Regulation S-X under
the Act (other than Section 3-10(f) of Regulation S-X) applicable to
registration statements under the Act. The other financial information and
data included in the Offering Memorandum are, in all material respects,
accurately presented and prepared on a basis consistent with such financial
statements and the books and records of the Company.
(s) KPMG LLP, who has certified certain financial statements
of the Company, whose report appears in the Offering Memorandum and who have
delivered the initial letter referred to in Section 7(f) hereof, are
independent public accountants as required by the Act and the rules and
regulations thereunder.
(t) The Company and each of its subsidiaries have good and
marketable title in fee simple to all real property and good and marketable
title to all personal property owned by them, in each case free and clear of
all liens (except liens, encumbrances and defects permitted
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by the Indenture) except such as are described in the Offering Memorandum or
such as do not result in a Material Adverse Effect and do not materially
interfere with the use made and proposed to be made of such property by the
Company and its subsidiaries; and all real property and buildings held under
lease by the Company and its subsidiaries are held by them under valid,
subsisting and enforceable leases, with such exceptions as do not interfere
with the use made and proposed to be made of such property and buildings by
the Company and its subsidiaries or as would not result in a Material Adverse
Effect.
(u) The Company and each of its subsidiaries carry, or are
covered by, insurance in such amounts and covering such risks that the Company
believes is adequate for the conduct of their respective businesses and the
value of their respective properties and as is customary for companies engaged
in similar businesses in similar industries.
(v) The Company and each of its subsidiaries own or possess
adequate rights to use all material patents, patent applications, trademarks,
service marks, trade names, trademark registrations, service ▇▇▇▇
registrations, copyrights and licenses necessary for the conduct of their
respective businesses, except to the extent that the failure to own or possess
any such rights would not have a Material Adverse Effect and have no reason to
believe that the conduct of their respective businesses will conflict with,
and have not received any notice of any claim of conflict with, any such
rights of others.
(w) There are no legal or governmental proceedings pending to
which the Company or any of its subsidiaries is a party or of which any
property or assets of the Company or any of its subsidiaries is the subject
which, if determined adversely to the Company or any of its subsidiaries,
would have a Material Adverse Effect; and to the best of the Company's
knowledge, no such proceedings are threatened or contemplated by governmental
authorities or threatened by others.
(x) There are no contracts or other documents that would be
required to be described in the Offering Memorandum by the Act or by the rules
and regulations thereunder if such rules and regulations were applicable to
the Offering Memorandum that have not been described in the Offering
Memorandum or filed in one of the Company's filings made under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act.
(y) No relationship, direct or indirect, exists between or
among the Company on the one hand, and the directors, officers, stockholders,
customers or suppliers of the Company on the other hand, that would be
required to be described in the Offering Memorandum pursuant to Regulation S-K
of the Act if Regulation S-K were applicable to the Offering Memorandum, which
is not so described or filed in one of the Company's filings made under
Sections 13(a), 13(c), 14 or 15(d) of the Exchange Act.
(z) No labor disturbance by the employees of the Company or
any of its subsidiaries exists or, to the knowledge of the Company, is
imminent which would have a Material Adverse Effect.
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(aa) The Company and its subsidiaries are in compliance in all
material respects with all presently applicable provisions of the Employee
Retirement Income Security Act of 1974, as amended, including the regulations
and published interpretations thereunder ("ERISA"); no "reportable event" (as
defined in ERISA) has occurred with respect to any "pension plan" (as defined
in ERISA) for which the Company or its subsidiaries would have any liability;
the Company and its subsidiaries have not incurred and do not expect to incur
liability under (i) Title IV of ERISA with respect to termination of, or
withdrawal from, any "pension plan" or (ii) Sections 412 or 4971 of the
Internal Revenue Code of 1986, as amended, including the regulations and
published interpretations thereunder (the "CODE"); and each "pension plan" for
which the Company or its subsidiaries would have any liability that is
intended to be qualified under Section 401(a) of the Code is so qualified in
all material respects and, to the Company's knowledge, nothing has occurred,
whether by action or by failure to act, which would cause the loss of such
qualification.
(bb) The Company has filed all federal, state and local income
and franchise tax returns required to be filed through the date hereof and has
paid all taxes due thereon other than those being contested in good faith and
for which reserves have been provided in accordance with GAAP, those currently
payable without penalty or interest, or the nonpayment of which would not have
a Material Adverse Effect. No tax deficiency has been determined adversely to
the Company or any of its subsidiaries which has had a Material Adverse Effect
on the Company and its subsidiaries (nor does the Company have any knowledge
of any tax deficiency which, if determined adversely to the Company or any of
its subsidiaries, would have such a Material Adverse Effect).
(cc) Since the date of the Preliminary Offering Memorandum
through the date hereof, and except as may otherwise be disclosed in the
Offering Memorandum or pursuant to the 1992 reorganization of the Company, the
Company has not (i) issued or granted any securities, other than common stock
issued upon the exercise of outstanding options, warrants or convertible
securities of the Company (ii) incurred any material liability or obligation,
direct or contingent, other than liabilities and obligations which were
incurred in the ordinary course of business, (iii) entered into any material
transaction not in the ordinary course of business or (iv) declared or paid
any dividend on its capital stock.
(dd) The Company (i) makes and keeps accurate books and
records and (ii) maintains internal accounting controls that provide
reasonable assurance that (A) transactions are executed in accordance with
management's authorization and (B) transactions are recorded as necessary to
permit preparation of its financial statements and to maintain accountability
for its assets.
(ee) To the knowledge of the Company after due inquiry,
neither the Company nor any of its subsidiaries, nor any director, officer,
agent, employee or other person associated with or acting on behalf of the
Company or any of its subsidiaries, has used any corporate funds for any
unlawful contribution, gift, entertainment or other unlawful expense relating
to political activity; made any direct or indirect unlawful payment to any
foreign or domestic government official or employee from corporate funds;
violated or is in violation of any provision of the
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Foreign Corrupt Practices Act of 1977; or made any bribe, rebate, payoff,
influence payment, kickback or other unlawful payment.
(ff) There has been no storage, disposal, generation,
manufacture, refinement, transportation, handling or treatment of toxic
wastes, medical wastes, hazardous wastes or hazardous substances by the
Company or any of its subsidiaries (or, to the knowledge of the Company, any
of their predecessors in interest) at, upon or from any of the property now or
previously owned or leased by the Company or its subsidiaries in violation of
any applicable law, ordinance, rule, regulation, order, judgment, decree or
permit or which would require remedial action under any applicable law,
ordinance, rule, regulation, order, judgment, decree or permit, except for any
violation or remedial action that would not have, or could not be reasonably
likely to have, singularly or in the aggregate with all such violations and
remedial actions, a Material Adverse Effect; there has been no material spill,
discharge, leak, emission, injection, escape, dumping or release of any kind
onto such property or into the environment surrounding such property of any
toxic wastes, medical wastes, solid wastes, hazardous wastes or hazardous
substances due to or caused by the Company or any of its subsidiaries or with
respect to which the Company or any of its subsidiaries have knowledge, except
for any such spill, discharge, leak, emission, injection, escape, dumping or
release that would not have or would not be reasonably likely to have,
singularly or in the aggregate with all such spills, discharges, leaks,
emissions, injections, escapes, dumpings and releases, a Material Adverse
Effect; and the terms "hazardous wastes", "toxic wastes", "hazardous
substances" and "medical wastes" shall have the meanings specified in any
applicable local, state, federal and foreign laws or regulations with respect
to environmental protection.
(gg) Neither the Company nor any subsidiary is an "investment
company" within the meaning of such term under the Investment Company Act of
1940 and the rules and regulations of the Commission thereunder.
(hh) The Company does not own more than 1% of the capital
stock or other equity interests of any corporation or entity other than its
subsidiaries or as disclosed in the Offering Memorandum.
(ii) Neither the Company nor any affiliate (as defined in Rule
501(b) of Regulation D ("REGULATION D") under the Act) of the Company, other
than the Initial Purchasers, has directly, or through any agent (provided that
no representation is made as to the Initial Purchasers or any person acting on
their behalf), (i) sold, offered for sale, solicited offers to buy or
otherwise negotiated in respect of, any security (as defined in the Act) that
is or could be integrated with the offering and sale of the Series A Notes in
a manner that would require the registration of the Series A Notes under the
Act or (ii) engaged in any form of general solicitation or general advertising
(within the meaning of Regulation D, including, but not limited to,
advertisements, articles, notices or other communications published in any
newspaper, magazine, or similar medium or broadcast over television or radio,
or any seminar or meeting whose attendees have been invited by any general
solicitation or general advertising) in connection with the offering of the
Series A Notes. No securities of the same class as the Series A Notes have
been issued and sold by the Company that were the subject of any general
10
solicitation of the type described in clause (ii) above, within the six-month
period immediately before the date hereof.
(jj) Except as permitted by the Act, the Company has not
distributed and, before the Closing Date will not distribute, any offering
material in connection with the offering and sale of the Series A Notes other
than the Preliminary Offering Memorandum and Offering Memorandum.
(kk) When the Series A Notes and the Guarantees thereof are
issued and delivered pursuant to this Agreement, such Series A Notes and the
Guarantees thereof will not be of the same class (within the meaning of Rule
144A under the Act) as securities of the Company that are listed on a national
securities exchange registered under Section 6 of the Securities Exchange Act
of 1934, as amended (the "Exchange Act") or that are quoted in a United States
automated inter-dealer quotation system.
(ll) None of the Company, the Guarantors or any of its or
their affiliates or any person acting on its or their behalf has engaged or
will engage during the applicable Distribution Compliance Period (as defined
in Section 2(c) below) in any directed selling efforts within the meaning of
Rule 902(c) of Regulation S with respect to the Series A Notes, and the
Company, the Guarantors and its and their affiliates and all persons acting on
its or their behalf have complied with and will comply with the offering
restrictions requirements of Regulation S in connection with the offering of
the Series A Notes outside of the United States; PROVIDED, HOWEVER, that no
representation or covenant is made as to the Initial Purchasers or any person
acting on their behalf.
(mm) The execution and delivery of this Agreement, the
Registration Rights Agreement and the Indenture and the sale of the Series A
Notes to be purchased by the Eligible Purchasers will not involve any
prohibited transaction within the meaning of Section 406 of ERISA or Section
4975 of the Code. The representation made by the Company in the preceding
sentence is made in reliance upon and subject to the accuracy of, and
compliance with, the representations and covenants made or deemed made by the
Eligible Purchasers as set forth in the Offering Memorandum under the section
entitled "NOTICE TO INVESTORS."
2. REPRESENTATIONS, WARRANTIES AND AGREEMENTS OF THE INITIAL
PURCHASERS. Each of the Initial Purchasers represents and warrants that:
(a) It is a QIB with such knowledge and experience in
financial and business matters as are necessary in order to evaluate the
merits and risks of an investment in the Series A Notes.
(b) It (i) is not acquiring the Series A Notes with a view to
any distribution thereof or with any present intention of offering or selling
any of the Series A Notes in a transaction that would violate the Act or the
securities laws of any State of the United States or any other applicable
jurisdiction; (ii) in connection with the Exempt Resales, will solicit offers
to buy the Series A Notes only from, and will offer to sell the Series A Notes
only to, the Eligible Purchasers in accordance with this Agreement and on the
terms contemplated by the Offering
11
Memorandum; and (iii) will not offer or sell the Series A Notes pursuant to,
nor has it offered or sold the Series A Notes by, or otherwise engaged in, any
form of general solicitation or general advertising (within the meaning of
Regulation D, including, but not limited to, advertisements, articles, notices
or other communications published in any newspaper, magazine, or similar
medium or broadcast over television or radio, or any seminar or meeting whose
attendees have been invited by any general solicitation or general
advertising) in connection with the offering of the Series A Notes.
(c) It understands that the Series A Notes have not been and
will not be registered under the Act and may not be offered or sold within the
United States or to, or for the account or benefit of, U.S. persons except
pursuant to an exemption from the registration requirements of the Act or
outside the U.S. or to, or for the account or benefit of non-U.S. persons in
accordance with Regulation S. Each Initial Purchaser represents that it has
not offered, sold or delivered the Series A Notes, and will not offer, sell or
deliver the Series A Notes (i) as part of its distribution at any time or (ii)
otherwise until one year after the later of the commencement of the offering
and the Closing Date or such longer period as may then be applicable under
Regulation S (such period, the "DISTRIBUTION COMPLIANCE PERIOD"), within the
United States or to, or for the account or benefit of U.S. persons, except in
accordance with Rule 144A under the Act or another applicable exemption.
Accordingly, each Initial Purchaser represents and agrees that neither it, its
affiliates nor any persons acting on its or their behalf has engaged or will
engage in any directed selling efforts within the meaning of Rule 902(c) of
Regulation S with respect to the Series A Notes, and it, its affiliates and
all persons acting on its behalf have complied and will comply with the
offering restriction requirements of Regulation S.
(d) Each Initial Purchaser agrees that at or before
confirmation of all sales of the Series A Notes pursuant to Regulation S, it
will have sent to each distributor, dealer or person receiving a selling
concession, fee or other remuneration that purchases Series A Notes from it
during the Distribution Compliance Period a confirmation or notice
substantially to the following effect:
"The Notes covered hereby have not been registered under the
U.S. Securities Act of 1933, as amended (the "Act"), and may not
be offered and sold within the United States or to, or for the
account or benefit of, U.S. persons (i) as part of their
distribution at any time or (ii) otherwise until 40 days after
the later of the commencement of the offering or the closing
date, except in either case in accordance with Regulation S (or
Rule 144A if available) under the Act. Terms used above have the
meanings assigned to them in Regulation S."
Each Initial Purchaser further agrees that it has not entered and will
not enter into any contractual arrangement with respect to the distribution or
delivery of the Series A Notes, except with its affiliates or with the prior
written consent of the Company.
(e) Each Initial Purchaser agrees not to cause any
advertisement of the Series A Notes to be published in any newspaper or
periodical or posted in any public place and not to
12
issue any circular relating to the Series A Notes, except such advertisements
as may be permitted by Regulation S.
(f) The sales of the Series A Notes pursuant to Regulation S
are "offshore transactions" and are not part of a plan or scheme to evade the
registration provisions of the Act.
(g) Each Initial Purchaser understands that the Company and,
for purposes of the opinions to be delivered to you pursuant to Section 7
hereof, counsel to the Company and counsel to the Initial Purchasers will rely
upon the accuracy and truth of the foregoing representations and each of you
hereby consent to such reliance.
The terms used in this Section 2 that have meanings assigned to them in
Regulation S are used herein as so defined.
3. PURCHASE OF THE NOTES BY THE INITIAL PURCHASERS. The Company
hereby agrees, on the basis of the representations, warranties and agreements
of the Initial Purchasers contained herein and subject to all the terms and
conditions set forth herein, to issue and sell to the several Initial
Purchasers and, upon the basis of the representations, warranties and
agreements of the Company and the Guarantors herein contained and subject to
all the terms and conditions set forth herein, each Initial Purchaser agrees,
severally and not jointly, to purchase from the Company, the principal amount
of Series A Notes set forth opposite the name of such Initial Purchaser in
Schedule I hereto at a purchase price equal to $980 per $1,000 principal
amount Series A Note (the "PURCHASE PRICE"). The Company shall not be
obligated to deliver any of the Series A Notes to be delivered hereunder
except upon payment for all of the Series A Notes to be purchased as provided
herein.
4. DELIVERY OF THE NOTES AND PAYMENT THEREFOR.
(a) Delivery to the Initial Purchasers of and payment for the
Series A Notes shall be made at the office of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇, at 9:00 a.m., New York City time, on March 6, 2001
(the "CLOSING DATE"), or at such other time on the same date or such other
date as shall be agreed upon by the Initial Purchasers and the Company.
(b) The Series A Notes will be delivered to the Initial
Purchasers against payment of the purchase price therefor in immediately
available funds. The Series A Notes will be evidenced by one or more global
securities in definitive form (the "GLOBAL NOTE") and/or by additional
definitive securities, and will be registered, in the case of the Global Note,
in the name of Cede & Co. as nominee of The Depository Trust Company ("DTC"),
and in the other cases, in such names and in such denominations as the Initial
Purchasers shall request before 9:30 A. M., New York City time, on the second
business day preceding the Closing Date. The Series A Notes to be delivered to
the Initial Purchasers shall be made available to the Initial Purchasers in
New York City for inspection and packaging not later than 9:30 A.M., New York
City time, on the business day next preceding the Closing Date.
13
(c) Time shall be of the essence, and delivery at the time
and place specified pursuant to this Agreement is a further condition of the
obligation of the Initial Purchaser hereunder.
5. AGREEMENTS OF THE COMPANY. The Company agrees with each Initial
Purchaser as follows:
(a) The Company will furnish to the Initial Purchasers,
without charge, as of the date of the Offering Memorandum, such number of
copies of the Offering Memorandum, and any amendments or supplements thereto,
as they may reasonably request.
(b) The Company will not make any amendment or supplement to
the Preliminary Offering Memorandum or to the Offering Memorandum of which the
Initial Purchasers shall not previously have been advised or to which they
shall reasonably object after being so advised.
(c) Before the execution and delivery of this Agreement, the
Company shall have delivered or will deliver to the Initial Purchasers,
without charge, in such quantities as the Initial Purchasers shall have
requested or may hereafter reasonably request, copies of the Preliminary
Offering Memorandum.
(d) The Company and each of the Guarantors consent to the
use, in accordance with the securities or Blue Sky laws of the jurisdictions
in which the Series A Notes are offered by the Initial Purchasers and by
dealers, before the date of the Offering Memorandum, of each Preliminary
Offering Memorandum so furnished by the Company and the Guarantors. The
Company and each of the Guarantors consent to the use of the Offering
Memorandum in accordance with the securities or Blue Sky laws of the
jurisdictions in which the Series A Notes are offered by the Initial
Purchasers and by all dealers to whom Series A Notes may be sold in connection
with the offering and sale of the Series A Notes.
(e) If, at any time before completion of the distribution of
the Series A Notes by the Initial Purchasers to Eligible Purchasers, any event
shall occur that in the judgment of the Company or in the opinion of counsel
for the Initial Purchasers should be set forth in the Offering Memorandum in
order to make the statements therein, in the light of the circumstances under
which they were made, not misleading, or if it is necessary to supplement or
amend the Offering Memorandum in order to comply with any law, the Company
will forthwith prepare an appropriate supplement or amendment thereto, and
will expeditiously furnish to the Initial Purchasers and dealers a reasonable
number of copies thereof.
(f) The Company and each of the Guarantors will cooperate
with the Initial Purchasers and with their counsel in connection with the
qualification of the Series A Notes and the Guarantees thereof for offering
and sale by the Initial Purchasers and by dealers under the securities or Blue
Sky laws of such jurisdictions as the Initial Purchasers may designate and
will file such consents to service of process or other documents necessary or
appropriate in order to effect such qualification; PROVIDED, that in no event
shall the Company or any of the Guarantors be obligated to qualify to do
business in any jurisdiction where it is not now so qualified or to
14
take any action that would subject it to service of process in suits, other
than those arising out of the offering or sale of the Series A Notes and the
Guarantees thereof, in any jurisdiction where it is not now so subject.
(g) So long as any of the Notes are outstanding, the Company
and the Guarantors at the request of the Initial Purchasers will furnish to
the Initial Purchasers (i) as soon as available, a copy of each report of the
Company mailed to stockholders generally or filed with any stock exchange or
regulatory body and (ii) from time to time such other information concerning
the Company and/or the Guarantors as the Initial Purchasers may reasonably
request.
(h) The Company will apply the net proceeds from the sale of
the Series A Notes to be sold by it hereunder substantially in accordance with
the description set forth in the Offering Memorandum under the caption "Use of
Proceeds."
(i) Except as stated in this Agreement and in the Preliminary
Offering Memorandum and Offering Memorandum, the Company and the Guarantors
have not taken, nor will any of them take, directly or indirectly, any action
designed to or that might reasonably be expected to cause or result in
stabilization or manipulation of the price of the Notes to facilitate the sale
or resale of the Notes. Except as permitted by the Act, the Company and the
Guarantors will not distribute any offering material in connection with the
Exempt Resales.
(j) The Company will use its reasonable best efforts to
permit the Series A Notes to be designated for trading in the Private
Offerings, Resales and Trading through Automated Linkages ("PORTAL") market
securities in accordance with the rules and regulations adopted by the
National Association of Securities Dealers, Inc. relating to trading in the
PORTAL market and to permit the Series A Notes to be eligible for clearance
and settlement through DTC.
(k) From and after the Closing Date, so long as any of the
Notes are outstanding and are "restricted securities" within the meaning of
the Rule 144(a)(3) under the Act or, if earlier, until two years after the
Closing Date, and during any period in which the Company is not subject to
Section 13 or 15(d) of the Exchange Act, the Company and the Guarantors will
furnish to holders of the Notes and prospective purchasers of Notes designated
by such holders, upon request of such holders or such prospective purchasers,
the information required to be delivered pursuant to Rule 144A(d)(4) under the
Act to permit compliance with Rule 144A in connection with resale of the
Securities.
(l) The Company and the Guarantors agree not to sell, offer
for sale or solicit offers to buy or otherwise negotiate in respect of any
security (as defined in the Act) that would be integrated with the sale of the
Series A Notes in a manner that would require the registration under the Act
of the sale to the Initial Purchasers or the Eligible Purchasers of the Series
A Notes.
(m) The Company and the Guarantors agree to comply in all
material respects with all the terms and conditions of the Indenture, the
Registration Rights Agreement, and all
15
agreements set forth in the representation letters of the Company and the
Guarantors to DTC relating to the approval of the Notes by DTC for
"book-entry" transfer.
(n) The Company and the Guarantors agree to cause the
Exchange Offer, if available, to be made in the appropriate form, as
contemplated by the Registration Rights Agreement, to permit registration of
the Series B Notes to be offered in exchange for the Series A Notes, and to
comply with all applicable federal and state securities laws in connection
with the Exchange Offer.
(o) The Company and the Guarantors agree that before any
registration of the Series B Notes pursuant to the Registration Rights
Agreement, or at such earlier time as may be required, the Indenture shall be
qualified under the 1939 Act and any necessary supplemental indentures will be
entered into in connection therewith.
(p) The Company and the Guarantors will not voluntarily
claim, and will resist actively all attempts to claim, the benefit of any
usury laws against holders of the Notes.
(q) The Company and the Guarantors will do and perform all
things required or necessary to be done and performed under this Agreement by
them before the Closing Date, and to satisfy all conditions precedent to the
Initial Purchasers' obligations hereunder to purchase the Series A Notes.
6. EXPENSES. Whether or not the transactions contemplated by this
Agreement are consummated or this Agreement becomes effective or is
terminated, the Company agrees to pay all costs, expenses, fees and taxes
incident to and in connection with: (i) the preparation, printing, filing and
distribution of the Preliminary Offering Memorandum and the Offering
Memorandum (including, without limitation, financial statements) and all
amendments and supplements thereto (but not, however, legal fees and expenses
of your counsel incurred in connection therewith), (ii) the preparation,
printing (including, without limitation, word processing and duplication
costs) and delivery of this Agreement, the Indenture, all Blue Sky Memoranda
and all other agreements, memoranda, correspondence and other documents
printed and delivered in connection herewith and with the Exempt Resales (but
not, however, legal fees and expenses of your counsel incurred connection with
any of the foregoing other than fees of such counsel plus reasonable
disbursements incurred in connection with the preparation, printing and
delivery of such Blue Sky Memoranda), (iii) the issuance and delivery by the
Company of the Series A Notes, (iv) the qualification of the Series A Notes
for offer and sale under the securities or Blue Sky laws of the several states
(including, without limitation, the reasonable fees and disbursements of your
counsel relating to such registration or qualification), (v) furnishing such
copies of the Preliminary Offering Memorandum and the Offering Memorandum, and
all amendments and supplements thereto, as may be reasonably requested for use
in connection with the Exempt Resales, (vi) the preparation of certificates
for the Series A Notes, (including, without limitation, printing and engraving
thereof), (vii) the fees, disbursements and expenses and listing fees in
connection with the application for quotation of the Series A Notes in PORTAL,
(ix) all fees and expenses (including fees and expenses of counsel) of the
Company and the Guarantors in connection with approval of the Notes by DTC
16
for "book-entry" transfer and (x) the performance by the Company and the
Guarantors of their other obligations under this Agreement.
7. CONDITIONS OF THE INITIAL PURCHASERS' OBLIGATIONS. The respective
obligations of the Initial Purchasers hereunder are subject to the accuracy,
when made and on the Closing Date (as if made again on and as of such date),
of the representations and warranties of the Company contained herein, to the
performance by the Company and the Guarantors of their respective obligations
hereunder, and to each of the following additional terms and conditions:
(a) The Offering Memorandum shall have been printed and
copies made available to you not later than 6:00 p.m., New York City time, on
the Business Day following the date of this Agreement, or at such later date
and time as you may approve in writing.
(b) No Initial Purchaser shall have discovered and disclosed
to the Company on or before such Closing Date that the Offering Memorandum or
any amendment or supplement thereto contains an untrue statement of a fact
which, in the opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, counsel for the Initial Purchasers,
is material or omits to state a fact which, in the opinion of such counsel, is
material and is required to be stated therein or is necessary in order to make
the statements made therein, in light of the circumstances under which they
were made, not misleading.
(c) All corporate proceedings and other legal matters
incident to the authorization, form and validity of this Agreement and the
Offering Memorandum, and all other legal matters relating to this Agreement
and the transactions contemplated hereby shall be reasonably satisfactory in
all material respects to counsel for the Initial Purchasers, and the Company
and the Guarantors shall have furnished to such counsel all documents and
information that they may reasonably request to enable them to pass upon such
matters.
(d) ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P. shall have furnished to the
Initial Purchasers its written opinion, as counsel to the Company, addressed
to the Initial Purchasers and dated such Closing Date, in form and substance
reasonably satisfactory to the Initial Purchasers, to the effect that:
(i) The Company and each of the Guarantors have been duly
incorporated and are validly existing as corporations in good standing
under the laws of their respective jurisdictions of incorporation, are
duly qualified to do business and are in good standing as foreign
corporations in each jurisdiction in which their respective ownership or
lease of property or the conduct of their respective businesses requires
such qualification, except where the failure to so register or qualify
or to be in good standing would not have a Material Adverse Effect, and
have all power and authority necessary to own or hold their respective
properties and conduct the businesses in which they are engaged;
(ii) This Agreement has been duly authorized, executed and
delivered by the Company and each of the Guarantors and (assuming due
execution and delivery by the Initial Purchasers) constitutes a valid
and legally binding agreement of the Company and each of the Guarantors,
enforceable against each of them in accordance with its terms,
17
except as such enforceability may be limited by bankruptcy, insolvency,
reorganization, moratorium and other similar laws relating to or
affecting creditors' rights generally and by general equitable
principles;
(iii) The Indenture has been duly authorized, executed and
delivered by the Company and each of the Guarantors and (assuming due
authentication, execution and delivery by the Trustee) constitutes a
valid and legally binding agreement of the Company and each of the
Guarantors, enforceable against each of them in accordance with its
terms, except as such enforceability may be limited by bankruptcy,
insolvency, reorganization, moratorium and other similar laws relating
to or affecting creditors' rights generally and by general equitable
principles;
(iv) The Registration Rights Agreement has been duly
authorized, executed and delivered by the Company and each of the
Guarantors and (assuming due execution and delivery by the Initial
Purchasers) constitutes a valid and legally binding agreement of the
Company and each of the Guarantors, enforceable against each of them in
accordance with its terms, except as such enforceability may be limited
by bankruptcy, insolvency, reorganization, moratorium and other similar
laws relating to or affecting creditors' rights generally and by general
equitable principles;
(v) The Series A Notes have been duly authorized, executed,
authenticated, issued and delivered by the Company as provided in the
Indenture, and constitute valid and legally binding obligations of the
Company, entitled to the benefits of the Indenture and enforceable in
accordance with their terms, except as such enforceability may be
limited by bankruptcy, insolvency, reorganization, moratorium and other
similar laws relating to or affecting creditors' rights generally and by
general equitable principles;
(vi) The Series B Notes have been duly authorized by the
Company, and when executed, authenticated, issued and delivered by the
Company as provided in the Indenture, will constitute valid and legally
binding obligations of the Company, entitled to the benefits of the
Indenture and enforceable in accordance with their terms, except as such
enforceability may be limited by bankruptcy, insolvency, reorganization,
moratorium and other similar laws relating to or affecting creditors'
rights generally and by general equitable principles;
(vii) When the Series A Notes are issued and delivered, such
Series A Notes will not be of the same class (within the meaning of Rule
144A under the Act) as securities of the Company or any Guarantor that
are listed on a national securities exchange registered under Section 6
of the Exchange Act or that are quoted in a United States automated
inter-dealer quotation system;
(viii) No registration under the Act of the Series A Notes is
required for the sale of the Series A Notes to you as contemplated
hereby or for the Exempt Resales, assuming (i) that the Eligible
Purchasers who buy the Series A Notes in the Exempt Resales are QIBs or
persons who are neither (a) U.S. Persons (as defined in Rule 902 under
the Act) nor (b) persons who purchase the Series A Notes for the benefit
of such U.S. persons and (ii)
18
the accuracy of your representations and those of the Company regarding
the absence of general solicitation in connection with the Exempt Resales
contained herein;
(ix) Each of the Preliminary Offering Memorandum and the
Offering Memorandum, as of its date, and each amendment or supplement
thereto, as of its date (except for the financial statements and the
notes thereto and schedules and other financial and accounting data
included therein, as to which no opinion need be expressed), complied
with the requirements of Rule 144A of the Act;
(x) The Company has an authorized capitalization as set
forth in the Offering Memorandum, and all of the issued shares of
capital stock of the Company have been duly and validly authorized and
issued, are fully paid and non-assessable and conform to the description
thereof contained in the Offering Memorandum;
(xi) The Indenture and the Notes conform in all material
respects to the descriptions thereof contained in the Offering Memorandum;
(xii) Other than as contained in (i) the Subordinated
Convertible Notes (as defined in the Indenture), (ii) stock options
issued to employees and directors and (iii) warrants that were issued in
connection with the Company's acquisition of WellTech, Inc., there are
no preemptive or other rights to subscribe for or to purchase, nor any
restriction upon the voting or transfer of, any securities pursuant to
the Company's charter or by-laws or any agreement or other instrument
known to such counsel;
(xiii) The statements contained in the Offering Memorandum
under the caption "Certain United States Federal Income Tax
Consequences", insofar as they describe federal statutes, rules and
regulations, constitute a fair summary thereof;
(xiv) The issue and sale of the Series A Notes being
delivered on the Closing Date by the Company and the compliance by the
Company with all of the provisions of this Agreement, the Registration
Rights Agreement and the Indenture, the compliance by the Guarantors
with all of the provisions of this Agreement, the Indenture and the
Registration Rights Agreement and the consummation of the transactions
contemplated hereby and thereby will not conflict with or result in a
material breach or violation of any of the terms or provisions of, or
constitute a material default under, any indenture, mortgage, deed of
trust, loan agreement or other agreement or instrument known to such
counsel to which the Company or any of its subsidiaries is a party or by
which the Company or any of its subsidiaries is bound or to which any of
the property or assets of the Company or any of its subsidiaries is
subject, nor will such actions result in any violation of the provisions
of the charter or by-laws of the Company or any of its subsidiaries or
any statute or any order, rule or regulation known to such counsel of
any court or governmental agency or body having jurisdiction over the
Company or any of its subsidiaries or any of their properties or assets;
and, except for the registration of the Series B Notes under the Act and
such consents, approvals, authorizations, registrations or
qualifications as may be required under the Exchange Act and applicable
state securities laws in connection with the purchase and distribution
of the Series A Notes by the Initial Purchasers no consent, approval,
19
authorization or order of, or filing or registration with, any such
court or governmental agency or body is required for the execution,
delivery and performance of this Agreement, the Registration Rights
Agreement or the Indenture by the Company, the execution, delivery and
performance of this Agreement, the Indenture and the Registration Rights
Agreement and the consummation of the transactions contemplated hereby
and thereby; and
(xv) To the best of such counsel's knowledge, there are no
contracts, agreements or understandings between the Company and any
person granting such person the right to require the Company to file a
registration statement under the Act with respect to any securities of
the Company owned or to be owned by such person or to require the
Company to include such securities in the Notes registered pursuant to
the Registration Statement or in any other securities being registered
pursuant to any other registration statement filed by the Company under
the Act.
In rendering such opinion, such counsel may (i) state that their
opinion is limited to matters governed by the Federal laws of the United States
of America and the laws of the States of New York, Texas, Maryland and Delaware,
and that such counsel is not admitted in Colorado, Kansas, Louisiana, Michigan,
Nevada, New Mexico, Oklahoma and Wyoming, (ii) rely (to the extent such counsel
deems proper and specifies in their opinion), as to matters involving the
application of the laws of Colorado, Kansas, Louisiana, Michigan, Nevada, New
Mexico, Oklahoma and Wyoming upon a review of the relevant statutory law of such
states, the Company and Guarantor board of directors and shareholder minutes,
certificates provided by officers of the Company and the Guarantors and
certificates or comparable documents issued by the Secretary of State and other
public officials of such states, PROVIDED that such counsel shall state that
they believe that both the Initial Purchasers and they are justified in relying
upon such statutes and certificates and (iii) rely as to matters involving the
application of the laws of Maryland upon the opinion of ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇ &
▇▇▇▇▇, P.C., special Maryland counsel to the Company.
Such counsel shall also have furnished to the Initial Purchasers
a written statement, addressed to the Initial Purchasers and dated such Closing
Date, in form and substance satisfactory to the Initial Purchasers, to the
effect that (x) such counsel has acted as counsel to the Company on a regular
basis (although the Company is also represented by its General Counsel and
certain other matters, by other outside counsel), has acted as counsel to the
Company in connection with previous acquisitions by the Company and financing
transactions and has acted as counsel to the Company in connection with the
preparation of the Offering Memorandum, and (y) based on the foregoing, no facts
have come to the attention of such counsel which lead it to believe that, as of
its date and as of the date of such opinion that the Offering Memorandum
contained or contains any untrue statement of a material fact or omitted or
omits to state a material fact required to be stated therein or necessary in
order to make the statements therein, in light of the circumstances under which
they were made, not misleading. The foregoing opinion and statement may be
qualified by a statement to the effect that such counsel does not assume any
responsibility for the accuracy, completeness or fairness of the statements
contained in the Offering Memorandum except for the statements made in the
Offering Memorandum under the caption "CERTAIN UNITED STATES FEDERAL INCOME TAX
CONSEQUENCES", insofar as such statements relate to the Notes and concern legal
matters; and it being understood that such counsel need
20
express no belief as to the financial statements or other financial data
included in the Offering Memorandum.
(e) The Initial Purchasers shall have received from ▇▇▇▇▇▇ &
▇▇▇▇▇▇▇, counsel for the Initial Purchasers, such opinion or opinions, dated
such Closing Date, with respect to the issuance and sale of the Series A
Notes, the Offering Memorandum and other related matters as the Initial
Purchasers may reasonably require, and the Company shall have furnished to
such counsel such documents as they reasonably request for the purpose of
enabling them to pass upon such matters.
(f) At the time of execution of this Agreement, the Initial
Purchasers shall have received from KPMG LLP a letter, in form and substance
satisfactory to the Initial Purchasers, addressed to the Initial Purchasers
and dated the date hereof (i) confirming that they are independent public
accountants within the meaning of the Act and are in compliance with the
applicable requirements relating to the qualification of accountants under
Rule 2-01 of Regulation S-X of the Commission, (ii) stating, as of the date
hereof (or, with respect to matters involving changes or developments since
the respective dates as of which specified financial information is given in
the Offering Memorandum, as of a date not more than three days before the date
hereof), the conclusions and findings of such firm with respect to the
financial information and other matters ordinarily covered by accountants'
"comfort letters" to initial purchasers in connection with securities
offerings.
(g) With respect to the letter of KPMG LLP referred to in the
preceding paragraph and delivered to the Initial Purchasers concurrently with
the execution of this Agreement (the "initial letter"), the Company shall have
furnished to the Initial Purchasers a letter (the "bring-down letter") of such
accountants, addressed to the Initial Purchasers and dated such Closing Date
(i) confirming that they are independent public accountants within the meaning
of the Act and are in compliance with the applicable requirements relating to
the qualification of accountants under Rule 2-01 of Regulation S-X of the
Commission, (ii) stating, as of the date of the bring-down letter (or, with
respect to matters involving changes or developments since the respective
dates as of which specified financial information is given in the Offering
Memorandum, as of a date not more than three days before the date of the
bring-down letter), the conclusions and findings of such firm with respect to
the financial information and other matters covered by the initial letter and
(iii) confirming in all material respects the conclusions and findings set
forth in the initial letter.
(h) The Company shall have furnished to the Initial
Purchasers a certificate, dated such Closing Date, of its Chairman of the
Board, its President or a Vice President and its chief financial officer
stating that:
(i) The representations, warranties and agreements of the
Company and the Guarantors in Section 1 are true and correct as of such
Closing Date; the Company has complied with all its agreements contained
herein; and the conditions set forth in Sections 7(i) and 7(j) have been
fulfilled; and
21
(ii) They have carefully examined the Offering Memorandum
and, in their opinion (A) as of its date and as of the Closing Date, the
Offering Memorandum did not include any untrue statement of a material
fact and did not omit to state a material fact required to be stated
therein or necessary in order to make the statements made therein, in
light of the circumstances under which they were made, not misleading,
and (B) since the date hereof no event has occurred that should have
been set forth in a supplement or amendment to the Offering Memorandum.
(i) (A) Neither the Company nor any of its subsidiaries shall
have sustained since the date of the latest audited financial statements
included in the Offering Memorandum any loss or interference with its business
from fire, explosion, flood or other calamity, whether or not covered by
insurance, or from any labor dispute or court or governmental action, order or
decree, otherwise than as set forth or contemplated in the Offering Memorandum
or (B) since such date there shall not have been any change in the capital
stock or long-term debt of the Company or any of its subsidiaries or any
change, or any development involving a prospective change, in or affecting the
general affairs, management, financial position, stockholders' equity or
results of operations of the Company and its subsidiaries, taken as a whole,
otherwise than as set forth or contemplated in the Offering Memorandum, the
effect of which, in any such case described in clause (A) or (B), is, in the
judgment of the Initial Purchasers, so material and adverse as to make it
impracticable or inadvisable to proceed with the delivery of the Series A
Notes being delivered on such Closing Date on the terms and in the manner
contemplated in the Offering Memorandum.
(j) After the execution and delivery of this Agreement (i) no
downgrading shall have occurred in the rating accorded the Company's debt
securities by any "nationally recognized statistical rating organization", as
that term is defined by the Commission for purposes of Rule 436(g)(2) of the
rules and regulations under the Act and (ii) no such organization shall have
publicly announced that it has under surveillance or review, with possible
negative implications, its rating of any of the Company's debt securities.
(k) After the execution and delivery of this Agreement there
shall not have occurred any of the following: (i) trading in securities
generally on the New York Stock Exchange or the American Stock Exchange or in
the over-the-counter market, or trading in any securities of the Company on
any exchange or in the over-the-counter market, shall have been suspended or
minimum prices shall have been established on any such exchange or such market
by the Commission, by such exchange or by any other regulatory body or
governmental authority having jurisdiction, (ii) a banking moratorium shall
have been declared by Federal or state authorities, (iii) the United States
shall have become engaged in hostilities, there shall have been an escalation
in hostilities involving the United States or there shall have been a
declaration of a national emergency or war by the United States, or (iv) there
shall have occurred such a material adverse change in general economic,
political or financial conditions (or the effect of international conditions
on the financial markets in the United States shall be such) as to make it, in
the judgment of a majority in interest of the several Initial Purchasers,
impracticable or inadvisable to proceed with the delivery of the Series A
Notes being delivered on such Closing Date on the terms and in the manner
contemplated in the Offering Memorandum.
22
(l) The Company and each Guarantor shall have furnished a
Secretary's Certificate in form and substance satisfactory to the Initial
Purchasers.
(m) ▇▇▇▇▇▇ & ▇▇▇▇▇▇▇ shall have been furnished with such
other documents and opinions, in addition to those set forth above, as they
may reasonably require for the purpose of enabling them to review or pass upon
the matters referred to in this Agreement and in order to evidence the
accuracy, completeness or satisfaction in all material respects of any of the
representations, warranties or conditions herein contained.
All opinions, letters, evidence and certificates mentioned above
or elsewhere in this Agreement shall be deemed to be in compliance with the
provisions hereof only if they are in form and substance reasonably satisfactory
to counsel for the Initial Purchasers.
8. INDEMNIFICATION AND CONTRIBUTION.
(a) The Company and each Guarantor, jointly and severally,
shall indemnify and hold harmless each Initial Purchaser, its officers and
employees and each person, if any, who controls any Initial Purchaser within
the meaning of the Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof (including, but not limited
to, any loss, claim, damage, liability or action relating to purchases and
sales of Notes), to which that Initial Purchaser, officer, employee or
controlling person may become subject, under the Act or otherwise, insofar as
such loss, claim, damage, liability or action arises out of, or is based upon,
(i) any untrue statement or alleged untrue statement of a material fact
contained (A) in any Preliminary Offering Memorandum or the Offering
Memorandum or in any amendment or supplement thereto or (B) in any blue sky
application or other document prepared or executed by the Company (or based
upon any written information furnished by the Company) specifically for the
purpose of qualifying any or all of the Notes under the securities laws of any
state or other jurisdiction (any such application, document or information
being hereinafter called a "BLUE SKY APPLICATION"), (ii) the omission or
alleged omission to state in any Preliminary Offering Memorandum or the
Offering Memorandum, or in any amendment or supplement thereto, or in any Blue
Sky Application any material fact required to be stated therein or necessary
to make the statements therein not misleading or (iii) any act or failure to
act or any alleged act or failure to act by any Initial Purchaser in
connection with, or relating in any manner to, the Notes or the offering
contemplated hereby, and which is included as part of or referred to in any
loss, claim, damage, liability or action arising out of or based upon matters
covered by clause (i) or (ii) above (PROVIDED that the Company and the
Guarantors shall not be liable under this clause (iii) to the extent that it
is determined in a final judgment by a court of competent jurisdiction that
such loss, claim, damage, liability or action resulted directly from any such
acts or failures to act undertaken or omitted to be taken by such Initial
Purchaser through its gross negligence or willful misconduct), and shall
reimburse each Initial Purchaser and each such officer, employee or
controlling person promptly upon demand for any legal or other expenses
reasonably incurred by that Initial Purchaser, officer, employee or
controlling person in connection with investigating or defending or preparing
to defend against any such loss, claim, damage, liability or action as such
expenses are incurred; PROVIDED, HOWEVER, that the Company shall not be liable
in any such case to the extent that any such loss, claim, damage, liability or
action arises out of, or is based
23
upon, any untrue statement or alleged untrue statement or omission or alleged
omission made in any Preliminary Offering Memorandum or the Offering
Memorandum, or in any such amendment or supplement, or in any Blue Sky
Application, in reliance upon and in conformity with written information
concerning such Initial Purchaser furnished to the Company through the Initial
Purchasers by or on behalf of any Initial Purchaser specifically for inclusion
therein; and PROVIDED FURTHER that with respect to any such untrue statement
or omission made in the Preliminary Offering Memorandum, the foregoing
indemnity shall not inure to the benefit of the Initial Purchasers (or any
person who controls an Initial Purchaser or any officer or director thereof)
from whom the person asserting such loss, claim, damage, liability or action
purchased the Notes, to the extent that such sale was an initial resale by the
Initial Purchasers and any such loss, claim, damage, liability or action of
the Initial Purchasers is a result of the fact that both (i) to the extent
required by applicable law, a copy of the Offering Memorandum was not sent or
given to such person at or prior to the written confirmation of the sale of
such securities to such person, and (ii) the untrue statement or omission in
the Preliminary Offering Memorandum was corrected in the Offering Memorandum
unless, in either case, such failure to deliver the Offering Memorandum was
corrected in the Offering Memorandum and unless, in either case, such failure
to deliver the Offering Memorandum was a result of noncompliance by the
Company. The foregoing indemnity agreement is in addition to any liability
which the Company or the Guarantors may otherwise have to any Initial
Purchaser or to any officer, employee or controlling person of that Guarantors.
(b) Each Initial Purchaser, severally and not jointly, shall
indemnify and hold harmless the Company, its officers and employees, each of
its directors, and each person, if any, who controls the Company within the
meaning of the Act, from and against any loss, claim, damage or liability,
joint or several, or any action in respect thereof, to which the Company or
any such director, officer, employee or controlling person may become subject,
under the Act or otherwise, insofar as such loss, claim, damage, liability or
action arises out of, or is based upon, (i) any untrue statement or alleged
untrue statement of a material fact contained (A) in any Preliminary Offering
Memorandum or the Offering Memorandum or in any amendment or supplement
thereto, or (B) in any Blue Sky Application or (ii) the omission or alleged
omission to state in any Preliminary Offering Memorandum or the Offering
Memorandum, or in any amendment or supplement thereto, or in any Blue Sky
Application any material fact required to be stated therein or necessary to
make the statements therein not misleading, but in each case only to the
extent that the untrue statement or alleged untrue statement or omission or
alleged omission was made in reliance upon and in conformity with written
information concerning such Initial Purchaser furnished to the Company by or
on behalf of that Initial Purchaser specifically for inclusion therein, and
shall reimburse the Company and any such director, officer, employee or
controlling person for any legal or other expenses reasonably incurred by the
Company or any such director, officer, employee or controlling person in
connection with investigating or defending or preparing to defend against any
such loss, claim, damage, liability or action as such expenses are incurred.
The foregoing indemnity agreement is in addition to any liability which any
Initial Purchaser may otherwise have to the Company or any such director,
officer, employee or controlling person.
24
(c) Promptly after receipt by an indemnified party under this
Section 8 of notice of any claim or the commencement of any action, the
indemnified party shall, if a claim in respect thereof is to be made against
the indemnifying party under this Section 8, notify the indemnifying party in
writing of the claim or the commencement of that action; PROVIDED, HOWEVER,
that the failure to notify the indemnifying party shall not relieve it from
any liability which it may have under this Section 8 except to the extent it
has been materially prejudiced by such failure and, PROVIDED FURTHER, that the
failure to notify the indemnifying party shall not relieve it from any
liability which it may have to an indemnified party otherwise than under this
Section 8. If any such claim or action shall be brought against an indemnified
party, and it shall notify the indemnifying party thereof, the indemnifying
party shall be entitled to participate therein and, to the extent that it
wishes, jointly with any other similarly notified indemnifying party, to
assume the defense thereof with counsel reasonably satisfactory to the
indemnified party. After notice from the indemnifying party to the indemnified
party of its election to assume the defense of such claim or action, the
indemnifying party shall not be liable to the indemnified party under this
Section 8 for any legal or other expenses subsequently incurred by the
indemnified party in connection with the defense thereof other than reasonable
costs of investigation; PROVIDED, HOWEVER, that the Initial Purchasers shall
have the right to employ counsel to represent jointly the Initial Purchasers
and their respective officers, employees and controlling persons who may be
subject to liability arising out of any claim in respect of which indemnity
may be sought by the Initial Purchasers against the Company under this Section
8 if, in the reasonable judgment of the Initial Purchasers, it is advisable
for the Initial Purchasers and those officers, employees and controlling
persons to be jointly represented by separate counsel, and in that event the
fees and expenses of such separate counsel shall be paid by the Company. No
indemnifying party shall (i) without the prior written consent of the
indemnified parties (which consent shall not be unreasonably withheld), settle
or compromise or consent to the entry of any judgment with respect to any
pending or threatened claim, action, suit or proceeding in respect of which
indemnification or contribution may be sought hereunder (whether or not the
indemnified parties are actual or potential parties to such claim or action)
unless such settlement, compromise or consent includes an unconditional
release of each indemnified party from all liability arising out of such
claim, action, suit or proceeding, or (ii) be liable for any settlement of any
such action effected without its written consent (which consent shall not be
unreasonably withheld), but if settled with the consent of the indemnifying
party or if there be a final judgment of the plaintiff in any such action, the
indemnifying party agrees to indemnify and hold harmless any indemnified party
from and against any loss or liability by reason of such settlement or
judgment.
(d) If the indemnification provided for in this Section 8
shall for any reason be unavailable to or insufficient to hold harmless an
indemnified party under Section 8(a) or 8(b) in respect of any loss, claim,
damage or liability, or any action in respect thereof, referred to therein,
then each indemnifying party shall, in lieu of indemnifying such indemnified
party, contribute to the amount paid or payable by such indemnified party as a
result of such loss, claim, damage or liability, or action in respect thereof,
(i) in such proportion as shall be appropriate to reflect the relative
benefits received by the Company, the Guarantors on the one hand and the
Initial Purchaser on the other from the offering of the Series A Notes or (ii)
if the allocation provided by clause (i) above is not permitted by applicable
law, in such proportion as is appropriate to reflect
25
not only the relative benefits referred to in clause (i) above but also the
relative fault of the Company, the Guarantors, on the one hand and the Initial
Purchaser on the other with respect to the statements or omissions which
resulted in such loss, claim, damage or liability, or action in respect
thereof, as well as any other relevant equitable considerations. The relative
benefits received by the Company, the Guarantors, on the one hand and the
Initial Purchaser on the other with respect to such offering shall be deemed
to be in the same proportion as the total net proceeds from the offering of
the Series A Notes purchased under this Agreement (before deducting expenses)
received by the Company, the Guarantors on the one hand, and the total
underwriting discounts and commissions received by the Initial Purchaser with
respect to the Series A Notes purchased under this Agreement, on the other
hand, bear to the total gross proceeds from the offering of the Series A Notes
under this Agreement, in each case as set forth in the table on the cover page
of the Offering Memorandum. The relative fault shall be determined by
reference to whether the untrue or alleged untrue statement of a material fact
or omission or alleged omission to state a material fact relates to
information supplied by the Company, the Guarantors or the Initial Purchaser,
the intent of the parties and their relative knowledge, access to information
and opportunity to correct or prevent such statement or omission. The Company
and the Initial Purchasers agree that it would not be just and equitable if
contributions pursuant to this Section were to be determined by pro rata
allocation (even if the Initial Purchasers were treated as one entity for such
purpose) or by any other method of allocation which does not take into account
the equitable considerations referred to herein. The amount paid or payable by
an indemnified party as a result of the loss, claim, damage or liability, or
action in respect thereof, referred to above in this Section shall be deemed
to include, for purposes of this Section 8(d), any legal or other expenses
reasonably incurred by such indemnified party in connection with investigating
or defending any such action or claim. Notwithstanding the provisions of this
Section 8(d), no Initial Purchasers shall be required to contribute any amount
in excess of the amount by which the total price at which the Series A Notes
purchased by it and sold to the Eligible Purchasers was sold to the Eligible
Purchasers exceeds the amount of any damages which such Initial Purchaser has
otherwise paid or become liable to pay by reason of any untrue or alleged
untrue statement or omission or alleged omission. No person guilty of
fraudulent misrepresentation (within the meaning of Section 11(f) of the Act)
shall be entitled to contribution from any person who was not guilty of such
fraudulent misrepresentation. The Initial Purchasers' obligations to
contribute as provided in this Section 8(d) are several in proportion to their
respective underwriting obligations and not joint.
(e) The Initial Purchasers severally confirm and the Company
acknowledges that the statements with respect to the offering of the Series A
Notes by the Initial Purchasers set forth in the third sentence of the fourth
paragraph and the sixth paragraph under "Plan of Distribution" in the Offering
Memorandum constitute the only information concerning such Initial Purchasers
furnished in writing to the Company by or on behalf of the Initial Purchasers
specifically for inclusion in the Offering Memorandum.
9. DEFAULTING INITIAL PURCHASERS. If, on the Closing Date, any
Initial Purchaser defaults in the performance of its obligations under this
Agreement, the remaining non-defaulting Initial Purchaser shall be obligated
to purchase the Series A Notes that the defaulting Initial Purchaser agreed
but failed to purchase on such Closing Date in the proportion which the amount
of Series
26
A Notes set opposite the name of the remaining non-defaulting Initial
Purchaser in Schedule 1 hereto bears to the total amount of Series A Notes set
opposite the names of all the remaining non-defaulting Initial Purchasers in
Schedule 1 hereto; PROVIDED, HOWEVER, that the remaining non-defaulting
Initial Purchaser shall not be obligated to purchase any of the Series A Notes
on such Closing Date if the total amount of Series A Notes that the defaulting
Initial Purchaser agreed but failed to purchase on such date exceeds 10% of
the total amount of Series A Notes to be purchased on such Closing Date, and
any remaining non-defaulting Initial Purchaser shall not be obligated to
purchase more than 110% of the amount of Series A Notes that it agreed to
purchase on such Closing Date pursuant to the terms of Section 3. If the
foregoing maximums are exceeded, the remaining non-defaulting Initial
Purchaser, or those other Initial Purchasers satisfactory to the remaining
non-defaulting Initial Purchaser, shall have the right, but shall not be
obligated, to purchase, in such proportion as may be agreed upon among them,
all the Series A Notes to be purchased on such Closing Date. If the remaining
Initial Purchaser or other Initial Purchasers satisfactory to the remaining
Initial Purchaser do not elect to purchase the Series A Notes that the
defaulting Initial Purchaser agreed but failed to purchase on such Closing
Date, this Agreement shall terminate without liability on the part of any
non-defaulting Initial Purchaser or the Company or the Guarantors, except that
the Company will continue to be liable for the payment of expenses to the
extent set forth in Sections 6 and 11.
Nothing contained herein shall relieve a defaulting Initial
Purchaser of any liability it may have to the Company for damages caused by its
default. If other Initial Purchasers are obligated or agree to purchase the
Series A Notes of a defaulting or withdrawing Initial Purchaser, the Company may
postpone the Closing Date for up to seven full business days in order to effect
any changes that in the opinion of counsel for the Company or counsel for the
Initial Purchasers may be necessary in the Offering Memorandum or in any other
document or arrangement.
10. TERMINATION. The obligations of the Initial Purchasers hereunder
may be terminated by the Initial Purchasers by notice given to and received by
the Company prior to delivery of and payment for the Series A Notes if, before
that time, any of the events described in Sections 7(i), 7(j) and 7(k) shall
have occurred or if the Initial Purchasers shall decline to purchase the
Series A Notes for any reason permitted under this Agreement.
11. REIMBURSEMENT OF INITIAL PURCHASERS' EXPENSES. If the Company
shall fail to tender the Series A Notes for delivery to the Initial Purchasers
by reason of any failure, refusal or inability on the part of the Company to
perform any agreement on its part to be performed, or because any other
condition of the obligations hereunder required to be fulfilled by the Company
is not fulfilled, or if this Agreement shall terminate or shall be terminated
after execution and delivery pursuant to any provisions hereof (otherwise than
by notice given by the Initial Purchasers terminating this Agreement pursuant
to Section 10 hereof) or if this Agreement shall be terminated by the Initial
Purchasers because of any failure or refusal on the part of the Company or any
of the Guarantors to comply with the terms or fulfill any of the conditions of
this Agreement, the Company and the Guarantors will reimburse the Initial
Purchasers for all reasonable out-of-pocket expenses (including the reasonable
fees and disbursements of counsel) incurred by the Initial Purchasers in
connection with this Agreement and the proposed purchase
27
of the Series A Notes, and upon demand the Company shall pay the full amount
thereof to the Initial Purchasers, but without any further obligation on the
part of the Company or any of the Guarantors for loss of profits or otherwise.
If this Agreement is terminated pursuant to Section 9 by reason of the default
of one or more Initial Purchasers, the Company shall not be obligated to
reimburse any Initial Purchaser on account of those expenses.
12. NOTICES, ETC. All statements, requests, notices and agreements
hereunder shall be in writing, and:
(a) if to the Initial Purchasers, shall be delivered or sent
by mail, telex or facsimile transmission to ▇▇▇▇▇▇ Brothers Inc., Three World
Financial Center, New York, New York 10285, Attention: Syndicate Department
(Fax: ▇▇▇-▇▇▇-▇▇▇▇), with a copy, in the case of any notice pursuant to
Section 8(c), to the Director of Litigation, Office of the General Counsel,
▇▇▇▇▇▇ Brothers Inc., ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇;
(b) if to the Company or the Guarantors shall be delivered or
sent by mail, telex or facsimile transmission to the address of the Company
set forth in the Offering Memorandum, Attention: General Counsel (Fax:
▇▇▇-▇▇▇-▇▇▇▇);
PROVIDED, HOWEVER, that any notice to an Initial Purchaser
pursuant to Section 8(c) shall be delivered or sent by mail, telex or facsimile
transmission to such Initial Purchaser at its address set forth in its
acceptance telex to the Initial Purchasers, which address will be supplied to
any other party hereto by the Initial Purchasers upon request. Any such
statements, requests, notices or agreements shall take effect at the time of
receipt thereof. The Company shall be entitled to act and rely upon any request,
consent, notice or agreement given or made on behalf of the Initial Purchasers
by ▇▇▇▇▇▇ Brothers Inc.
13. PERSONS ENTITLED TO BENEFIT OF AGREEMENT. This Agreement shall
inure to the benefit of and be binding upon the Initial Purchasers, the
Company, the Guarantors and their respective successors. This Agreement and
the terms and provisions hereof are for the sole benefit of only those
persons, except that (a) the representations, warranties, indemnities and
agreements of the Company contained in this Agreement also shall be deemed to
be for the benefit of the person or persons, if any, who control any Initial
Purchaser within the meaning of Section 15 of the Act and (b) the indemnity
agreement of the Initial Purchasers contained in Section 8(b) of this
Agreement shall be deemed to be for the benefit of directors of the Company,
officers and employees of the Company and any person controlling the Company
within the meaning of Section 13 of the Act. Nothing in this Agreement is
intended or shall be construed to give any person, other than the persons
referred to in this Section 13, any legal or equitable right, remedy or claim
under or in respect of this Agreement or any provision contained herein.
14. SURVIVAL. The respective indemnities, representations, warranties
and agreements of the Company, the Guarantors and the Initial Purchasers
contained in this Agreement or made by or on behalf on them, respectively,
pursuant to this Agreement, shall survive the delivery of and payment for the
Series A Notes and shall remain in full force and effect, regardless of any
investigation made by or on behalf of any of them or any person controlling
any of them.
28
15. DEFINITION OF THE TERMS "BUSINESS DAY" AND "SUBSIDIARY". For
purposes of this Agreement, (a) "business day" means any day on which the New
York Stock Exchange, Inc. is open for trading and (b) "subsidiary" has the
meaning set forth in Rule 405 of the Rules and Regulations.
16. GOVERNING LAW. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
17. COUNTERPARTS. This Agreement may be executed in one or more
counterparts and, if executed in more than one counterpart, the executed
counterparts shall each be deemed to be an original but all such counterparts
shall together constitute one and the same instrument.
18. HEADINGS. The headings herein are inserted for convenience of
reference only and are not intended to be part of, or to affect the meaning or
interpretation of, this Agreement.
29
If the foregoing correctly sets forth the agreement among the
Company, the Guarantors and the Initial Purchasers, please indicate your
acceptance in the space provided for that purpose below.
Very truly yours,
KEY ENERGY SERVICES, INC.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Sr. VP & General Counsel
YALE E. KEY, INC., KEY ENERGY DRILLING, INC., WELLTECH EASTERN, INC.,
ODESSA EXPLORATION INCORPORATED, KALKASKA OILFIELD SERVICES, INC.,
WELL-CO OIL SERVICE, INC., ▇▇▇▇▇▇▇ WELL SERVICE, INC., RAM OIL WELL
SERVICE, INC., ▇▇▇▇▇▇▇ TRUCKING CO., INC., LANDMARK FISHING & RENTAL,
INC., ▇▇▇▇▇▇ WELL SERVICE, INC., FRONTIER WELL SERVICE, INC., KEY ROCKY
MOUNTAIN, INC., KEY FOUR CORNERS, INC., ▇▇▇▇▇ SERVICE CO., ▇▇▇▇▇ WELL
SERVICE, INC., ▇▇▇▇▇ TRANSPORTATION, INC., INDUSTRIAL OILFIELD SUPPLY,
INC., ▇▇▇▇▇▇ WELL SERVICING, INC., ▇▇▇▇▇▇ BROTHERS, INC., ▇.▇. ▇▇▇▇▇▇
WELL SERVICE COMPANY, KEY ENERGY SERVICES--SOUTH TEXAS, INC., KEY
ENERGY SERVICES--CALIFORNIA, INC., ▇▇▇▇▇▇ OILFIELD SERVICE & SUPPLY,
INC., WELLTECH MID-CONTINENT, INC., ▇▇▇▇▇▇ PRODUCTION MANAGEMENT, INC.,
▇▇▇▇▇▇ PRODUCTION ▇▇▇▇▇▇, INC., ▇▇▇▇▇▇ PRODUCTION ACQUISITION CORP.,
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Vice President
▇▇▇▇▇▇ PRODUCTION PARTNERS, L.P.
BY ▇▇▇▇▇▇ PRODUCTION MANAGEMENT INC., ITS SOLE GENERAL PARTNER.
By /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
-----------------------------------------
Name: ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Title: Vice President
S-1
Accepted:
▇▇▇▇▇▇ BROTHERS INC.
By /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Title: Managing Director
BEAR, ▇▇▇▇▇▇▇ & CO. INC.
By /s/ ▇▇▇▇ ▇▇▇▇▇▇▇
---------------------------------------
Name: ▇▇▇▇ ▇▇▇▇▇▇▇
Title: Senior Managing Director
S-2
SCHEDULE I
INITIAL PURCHASERS AMOUNT OF SERIES A NOTES
PURCHASED
▇▇▇▇▇▇ Brothers Inc.......................... $87,500,000
Bear, ▇▇▇▇▇▇▇ & Co. Inc...................... 87,500,000
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$175,000,000
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I-1