NATURAL GAS SERVICES GROUP,
INC.
MORGAN KEEGAN
& COMPANY, INC.
50 N. Front Street
Memphis, Tennessee 38103
Natural Gas
Services Group, Inc., a Colorado corporation (the
“Company”), proposes to issue and sell to Morgan Keegan
& Company, Inc. (the “Underwriter”) an aggregate of
___shares (the “Primary Firm Shares”) of Common Stock
of the Company, par value $0.01 per share (the “Common
Stock”), and the stockholders of the Company named on
Exhibit A (each, a “Selling Stockholder” and,
collectively, the “Selling Stockholders”) propose
severally to sell to the Underwriter an aggregate of ___shares of
Common Stock (the “Secondary Shares”).
In addition, the
Company has granted an option, exercisable for 30 days from
and after the date hereof, to the Underwriter to purchase up to an
additional ___shares of Common Stock, as provided in Section 3(c)
(the “Overallotment Shares”). The Primary Firm Shares
and, if and to the extent such option is exercised, the
Overallotment Shares are collectively called the “Primary
Shares,” and the Primary Shares and the Secondary Shares are
collectively called the “Shares.” The Primary Firm
Shares and the Secondary Shares are collectively called the
“Firm Shares.”
The Company has
prepared and filed with the Securities and Exchange Commission (the
“Commission”) a registration statement on Form S-1
(File No. 333-130879). Such registration statement, as
amended, including the financial statements, exhibits and schedules
thereto, in the form in which it was declared effective by the
Commission under the Securities Act of 1933, as amended, and the
rules and regulations promulgated thereunder (collectively, the
“Securities Act”), including any information deemed to
be a part thereof at the time of effectiveness pursuant to Rule
430A under the Securities Act, is called the “Registration
Statement.” Any registration statement filed pursuant to Rule
462(b) under the Securities Act shall be referred to herein as the
“Rule 462(b) Registration Statement,” and the term
“Registration Statement” as used herein for all
purposes other than as set forth in Section 1(a) hereof shall
include any Rule 462(b) Registration Statement filed with the
Commission. The preliminary prospectus dated February ___, 2006
included in the Registration Statement is referred to herein as the
“Preliminary Prospectus,” and the final prospectus
relating to the Shares that is first filed pursuant to Rule 424(b)
after the date and time of the execution and delivery of this
Agreement by the parties hereto is referred to herein as the
“Prospectus.” All references in this Agreement to the
Registration Statement, the Rule 462(b) Registration Statement, the
Preliminary Prospectus, the Prospectus or any amendments or
supplements to any of the foregoing, shall include any copy thereof
filed with the Commission pursuant to its Electronic Data
Gathering, Analysis and Retrieval System
(“EDGAR”).
The Company and
the Selling Stockholders hereby confirm their agreements with the
Underwriter as follows:
SECTION 1.
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company hereby
represents and warrants to the Underwriter as follows:
(a) Compliance
with Registration Requirements.
The Registration
Statement and, if applicable, any Rule 462(b) Registration
Statement have become effective under the Securities Act. The
Company has complied with all requests of the Commission for
additional or supplemental information. No stop order suspending
the effectiveness of the Registration Statement or any Rule 462(b)
Registration Statement is in effect and no proceedings for such
purpose have been instituted or are pending or, to the knowledge of
the Company, are contemplated or threatened by the
Commission.
The Preliminary
Prospectus, as of its date and as of [___] [a.m.][p.m.], Central
time, on the date of this Agreement (the “Time of
Sale”), and the Prospectus, when first filed pursuant to Rule
424(b) under the Securities Act, on the First Closing Date and on
any Option Closing Date (each as defined below), complied, and will
comply, in all material respects with the Securities Act and, if
filed by electronic transmission pursuant to EDGAR (except as may
be permitted by Regulation S-T under the Securities Act), was
or will be identical to the copy thereof delivered to the
Underwriter for use in connection with the offer and sale of the
Shares. The Registration Statement and any Rule 462(b) Registration
Statement, at the time it became effective and as of the First
Closing Date and any Option Closing Date, complied and will comply
in all material respects with the Securities Act and did not and
will not contain any untrue statement of a material fact or omit to
state a material fact required to be stated therein or necessary to
make the statements therein not misleading. The Preliminary
Prospectus, as of its date and as of the Time of Sale, did not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading, except that the Preliminary Prospectus excludes
information relating to the public offering price of the Shares and
underwriting discounts and other disclosures directly relating
thereto that will be included in the Prospectus. The Prospectus and
any amendment or supplement thereto, as of its date and as of the
First Closing Date and any Option Closing Date, did not and will
not contain any untrue statement of a material fact or omit to
state a material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. The representations and warranties set forth
in the three immediately preceding sentences do not apply to
statements in or omissions from the Registration Statement, the
Preliminary Prospectus or the Prospectus or any amendments or
supplements thereto made in reliance upon and in conformity with
information relating to the Underwriter furnished to the Company in
writing by the Underwriter expressly for use therein, it being
understood and agreed that the only such information furnished by
the Underwriter consists of the information described as such in
Section 9(c) hereof. There are no contracts or other documents
required to be disclosed in the Preliminary Prospectus or in the
Prospectus or to be filed as exhibits to the Registration Statement
which have not been disclosed or filed as required.
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(b) Registration
Statement Furnished to Underwriter.
The Company has
delivered to the Underwriter one conformed copy of the Registration
Statement and each amendment thereto.
(c) Distribution
of Offering Material By the Company.
The Company has
not distributed and will not distribute, prior to the completion of
the Underwriter’s distribution of the Shares, any written
offering material, including without limitation any free writing
prospectus (as defined in Rule 405 under the Securities Act),
in connection with the offering and sale of the Shares other than
the Preliminary Prospectus, the Prospectus or the Registration
Statement.
(d) The
Underwriting Agreement.
This Agreement has
been duly authorized, executed and delivered by the Company and
constitutes the valid and binding agreement of the Company,
enforceable against the Company in accordance with its
terms.
(e) Authorization
of the Shares.
The Primary Shares
have been duly authorized for issuance and sale pursuant to this
Agreement and, when issued and delivered by the Company against
payment therefor pursuant to this Agreement, will be validly
issued, fully paid and nonassessable. The Secondary Shares have
been duly authorized and validly issued and are fully paid and
nonassessable.
(f) No
Applicable Registration or Other Similar Rights.
No persons possess
registration or other similar rights to have any equity or debt
securities registered for sale under the Registration Statement or
included in the offering contemplated by this Agreement, except for
such rights as have been duly waived.
(g) No
Material Adverse Change.
Except as
otherwise disclosed in the Preliminary Prospectus and in the
Prospectus, subsequent to December 31, 2004: (i) there
has been no material adverse change in or effect on, or any
development that would reasonably be expected to result in a
material adverse change in or effect on, the condition, financial
or otherwise, or the earnings, business, operations or business
prospects, whether or not arising from transactions in the ordinary
course of business, of the Company and its subsidiaries, considered
as one entity (any such change or effect is called a
“Material Adverse Change”); (ii) the Company and
its subsidiaries, considered as one entity, have not incurred any
material liability or obligation, indirect, direct or contingent,
not in the ordinary course of business or entered into any material
transaction or agreement not in the ordinary course of business;
and (iii) there has been no dividend or distribution of any
kind declared, paid or made by the Company or, except for dividends
paid to the Company or other subsidiaries of the Company, any of
its subsidiaries on any class of capital stock or repurchase or
redemption by the Company or any of its subsidiaries of any class
of capital stock.
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(h) Independent
Accountants.
Hein &
Associates LLP, who has expressed its opinion with respect to
certain financial statements (which term as used in this Agreement
includes the related notes thereto) and supporting schedules filed
with the Commission as a part of the Registration Statement and
included in the Preliminary Prospectus and in the Prospectus, is an
independent registered public accounting firm as required by the
Securities Act.
(i) Preparation
of the Financial Statements.
The historical
financial statements of the Company included in the Preliminary
Prospectus and in the Prospectus present fairly in all material
respects the consolidated financial position of the Company and its
subsidiaries at the dates indicated and the consolidated results of
their operations, cash flows and changes in stockholders’
equity for the periods specified. The supporting schedules included
in the Registration Statement present fairly the information
required to be stated therein. Such financial statements and
supporting schedules have been prepared in conformity with
generally accepted accounting principles applied on a consistent
basis throughout the periods involved, except as may be expressly
stated in the related notes thereto. The historical financial
statements of Screw Compression Systems, Inc., (“SCS”)
included in the Preliminary Prospectus and in the Prospectus
present fairly in all material respects the consolidated financial
position of such entity at the dates indicated and the results of
its operations, cash flows and changes in stockholders’
equity for the periods specified, and such financial statements
have been prepared in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods
involved, expect as may be expressly stated in the related notes
thereto. No other financial statements or supporting schedules are
required to be included in the Registration Statement. The pro
forma financial statements and the related notes thereto, and the
other pro forma financial information, included in the Preliminary
Prospectus and in the Prospectus and in the Registration Statement
present fairly the information shown therein, have been prepared in
accordance with the Commission’s rules and guidelines with
respect to pro forma financial statements and have been properly
compiled on the bases described therein, in all material respects,
and the assumptions used in the preparation thereof are reasonable
and the adjustments used therein are appropriate to give effect to
the transactions and circumstances referred to therein. The other
financial and statistical information and data included in the
Preliminary Prospectus and in the Prospectus and in the
Registration Statement are, in all material respects, accurately
presented and prepared on a basis consistent with the applicable
financial statements and the books and records of the Company and
its subsidiaries.
(j) Incorporation
and Good Standing of the Company and its Subsidiaries.
Each of the
Company and its subsidiaries has been duly incorporated and is
validly existing as a corporation in good standing under the laws
of the jurisdiction of its incorporation and has corporate power
and authority to own, lease and operate its properties and to
conduct its business as described in the Preliminary Prospectus and
in the Prospectus and, in the case of the Company, to enter into
and perform its obligations under this Agreement. Each of the
Company and its subsidiaries is duly qualified as a foreign
corporation to transact business and is in good standing in each
jurisdiction in which the ownership or lease of property or the
conduct of its
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business
requires such qualification, except for such jurisdictions where
the failure to so qualify or to be in good standing would not,
individually or in the aggregate, result in a Material Adverse
Change. Except as is disclosed in the Preliminary Prospectus and in
the Prospectus, all of the issued and outstanding capital stock of
each subsidiary of the Company has been duly authorized and validly
issued, is fully paid and nonassessable and is owned by the
Company, directly or through one or more of its subsidiaries, free
and clear of any security interest, mortgage, pledge, lien,
encumbrance or claim. The Company does not own or control, directly
or indirectly, any interest in any corporation, association or
other entity other than SCS.
(k) Capitalization
and Other Capital Stock Matters.
As of the date
hereof, the authorized, issued and outstanding capital stock of the
Company is as set forth in the Preliminary Prospectus and in the
Prospectus in the column entitled “Actual” under the
caption “Capitalization” (except for issuances
subsequent to December 31, 2005, if any, pursuant to this
Agreement or pursuant to reservations, agreements or employee
benefit plans referred to in the Preliminary Prospectus and in the
Prospectus or pursuant to the exercise of convertible securities,
warrants or options referred to in the Preliminary Prospectus and
in the Prospectus). The Common Stock (including the Shares)
conforms in all material respects to the description thereof
contained in the Preliminary Prospectus and in the Prospectus. All
of the issued and outstanding shares of Common Stock have been duly
authorized and validly issued, are fully paid and nonassessable and
have been issued in compliance in all material respects with
federal and state securities laws. None of the outstanding shares
of Common Stock were issued in violation of any preemptive rights,
rights of first refusal or other similar rights to subscribe for or
purchase securities of the Company. There are no authorized or
outstanding options, warrants, preemptive rights, rights of first
refusal or other rights to purchase, or equity or debt securities
convertible into or exchangeable or exercisable for, any capital
stock of the Company or any capital stock, partnership interests or
membership interests of any of its subsidiaries other than those
disclosed in the Preliminary Prospectus and in the
Prospectus.
(l) American
Stock Exchange Listing.
The Company has
filed with the American Stock Exchange an Additional Listing
Application with respect to the Primary Shares and has been
notified by the American Stock Exchange that the Primary Shares
have been approved for listing on the American Stock Exchange,
subject only to notice of issuance. The Company has not been
informed of any withdrawal, revocation, cancellation or
conditioning of such listing.
(m) Non-Contravention
of Existing Instruments; No Further Authorizations or Approvals
Required.
Neither the
Company nor any of its subsidiaries is in violation of its charter
or by-laws, and none of the Company and its subsidiaries is in
default (or, with the giving of notice or lapse of time, would be
in default) (“Default”) under any indenture, mortgage,
loan or credit agreement, note, contract, franchise, lease or other
agreement or instrument to which the Company or any of its
subsidiaries is a party or by which the Company or any of its
subsidiaries is bound or to which any of the property or assets of
the Company or any of its subsidiaries is
-5-
subject (each,
an “Existing Instrument”), except for such Defaults as
would not, individually or in the aggregate, result in a Material
Adverse Change. The Company’s execution, delivery and
performance of this Agreement and consummation of the transactions
contemplated hereby and by the Preliminary Prospectus and the
Prospectus (i) have been duly authorized by all necessary
corporate action and will not result in any violation of the
provisions of the charter or by-laws of the Company or any
subsidiary, (ii) will not conflict with or constitute a breach
of, or Default under, or result in the creation or imposition of
any lien, charge or encumbrance upon any property or assets of the
Company or any of its subsidiaries pursuant to, or require the
consent of any other party to, any Existing Instrument, and
(iii) will not result in any violation of any applicable law,
administrative regulation or administrative or court decree
applicable to the Company or any subsidiary. No consent, approval,
authorization or other order of, or registration or filing with,
any court or other governmental or regulatory authority or agency,
is required for the Company’s execution, delivery and
performance of this Agreement and consummation of the transactions
contemplated hereby and by the Preliminary Prospectus and the
Prospectus, except such as (i) have been obtained or made by
the Company and are in full force and effect under the Securities
Act, and (ii) may be required by applicable state securities
or blue sky laws and from the National Association of Securities
Dealers, Inc. (the “NASD”).
(n) No
Material Actions or Proceedings.
Except as
disclosed in the Preliminary Prospectus and in the Prospectus,
there are no legal or governmental actions, suits or proceedings
pending or, to the Company’s knowledge, threatened (i)
against or affecting the Company or any of its subsidiaries or
(ii) which has as the subject thereof property owned or leased
by, the Company or any of its subsidiaries, where in any such case
(A) there is a reasonable possibility that such action, suit
or proceeding might be determined adversely to the Company or such
subsidiary and (B) any such action, suit or proceeding, if so
determined adversely, would reasonably be expected to result in a
Material Adverse Change or adversely affect the consummation of the
transactions contemplated by this Agreement. No labor dispute with
the employees of the Company or any of its subsidiaries exists or,
to the Company’s knowledge, is threatened or imminent which,
if determined adversely to the Company would reasonably be expected
to result in a Material Adverse Change.
(o) Intellectual
Property Rights.
The Company and
its subsidiaries own or possess sufficient trademarks, trade names,
patent rights, copyrights, domain names, licenses, approvals, trade
secrets and other similar rights (collectively, “Intellectual
Property Rights”) reasonably necessary to conduct their
businesses as described in the Preliminary Prospectus and in the
Prospectus; and the expected expiration of any of such Intellectual
Property Rights if not renewed or replaced would not result in a
Material Adverse Change. Neither the Company nor any of its
subsidiaries has received any notice of infringement or conflict
with asserted Intellectual Property Rights of others, which
infringement or conflict, if the subject of an unfavorable
decision, would result in a Material Adverse Change. To the
Company’s knowledge, none of the technology employed by the
Company and/or any of its subsidiaries has been obtained or is
being used by the Company and/or any of its subsidiaries in
violation of any contractual obligation binding on the Company, any
of its subsidiaries or any of their officers, directors or
employees or otherwise in violation of the rights of any
persons.
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(p) All
Necessary Permits, etc.
Except as
disclosed in the Preliminary Prospectus and in the Prospectus, the
Company and/or a subsidiary possess such valid and current
certificates, authorizations or permits issued by the appropriate
state, federal or foreign regulatory agencies or bodies necessary
to conduct their respective businesses as currently conducted, and
neither the Company nor any subsidiary has received any notice of
proceedings relating to the revocation or modification of, or
non-compliance with, any such certificate, authorization or permit
which, singularly or in the aggregate, if the subject of an
unfavorable decision, ruling or finding, would reasonably be
expected to result in a Material Adverse Change.
Except as
disclosed in the Preliminary Prospectus and in the Prospectus, the
Company and each of its subsidiaries have good and marketable title
to all the properties and assets owned by them, in each case free
and clear of any security interests, mortgages, liens,
encumbrances, equities, claims and other defects, except
(i) such as would not materially and adversely affect the
value of such property and (ii) such as would not materially
interfere with the current use of such property by the Company or
such subsidiary, as the case may be. The real property,
improvements, equipment and personal property held under lease by
the Company or any subsidiary are held under valid and enforceable
leases, with such exceptions as would not materially interfere with
the current use of such real property, improvements, equipment or
personal property by the Company or such subsidiary, as the case
may be.
The Company and
each of its subsidiaries have accurately prepared and timely filed
all federal, state, foreign and other tax returns that are required
to be filed by it and have paid or made provision for the payment
of all taxes, assessments, governmental or other similar charges,
including without limitation, all sales and use taxes, fines,
penalties, and all taxes which the Company and each of its
subsidiaries is obligated to withhold from amounts owing to
employees, creditors and third parties, with respect to the periods
covered by such tax returns (whether or not such amounts are shown
as due on any tax return), except, in all cases, for any such tax,
assessment or similar charge that the Company is contesting in good
faith and except in any case in which the failure to so file or pay
would not in the aggregate result in a Material Adverse Change. The
Company has made adequate charges, accruals and reserves in the
applicable financial statements referred to in Section 1(i) above
in respect of all federal, state and foreign income and franchise
taxes for all periods as to which the tax liability of the Company
or any of its subsidiaries has not been finally determined, except
where failure to make such charges, accruals and reserves would not
result in a Material Adverse Change. No deficiency assessment with
respect to a proposed adjustment of the Company’s or any of
its subsidiaries’ federal, state, or other taxes is pending
or, to the best of the Company’s knowledge, threatened which
would reasonably be expected in the aggregate to result in a
Material Adverse Change. There is no tax lien, whether imposed by
any federal, state, or other taxing authority, outstanding against
the assets, properties or business of the Company or any of its
subsidiaries.
(s) Company
Not an “Investment Company.”
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The Company has
been advised of the rules and requirements under the Investment
Company Act of 1940, as amended (the “Investment Company
Act”). The Company is not, and after receipt of payment for
the Primary Shares and the application of such funds in the manner
described in the Preliminary Prospectus and in the Prospectus will
not be, an “investment company” within the meaning of
Investment Company Act and intends to conduct its business in a
manner so that it will not become subject to the Investment Company
Act.
Except as
disclosed in the Preliminary Prospectus and in the Prospectus, each
of the Company and its subsidiaries are insured by recognized,
financially sound and reputable institutions with policies in such
amounts and with such deductibles and covering such risks as are
generally deemed adequate and customary for their businesses
including, but not limited to, policies covering real and personal
property owned or leased by the Company and/or its subsidiaries
against theft, damage, destruction, acts of vandalism and natural
disasters. Except as disclosed in the Preliminary Prospectus and in
the Prospectus, the Company has no reason to believe that it or any
subsidiary will not be able to renew its existing insurance
coverage as and when such policies expire.
(u) No
Price Stabilization or Manipulation.
The Company has
not taken and will not take, directly or indirectly, any action
designed to or that might be reasonably expected to cause or result
in stabilization or manipulation of the price of any security of
the Company to facilitate the sale or resale of the
Shares.
(v) Related
Party Transactions.
No relationship,
direct or indirect, exists between or among any of the Company or
any affiliate of the Company, on the one hand, and any director,
officer, stockholder, customer or supplier of the Company or any
affiliate of the Company, on the other hand, which is required by
the Securities Act to be described in the Preliminary Prospectus or
the Prospectus which has not been described in the Preliminary
Prospectus and in the Prospectus.
(w) No
Unlawful Contributions or Other Payments.
Neither the
Company nor any of its subsidiaries nor, to the Company’s
knowledge, any employee or agent of the Company or any subsidiary,
has made any contribution or other payment to any official of, or
candidate for, any federal, state or foreign office in violation of
any applicable law or of the character required to be disclosed in
the Preliminary Prospectus or the Prospectus.
(x) Company’s
Accounting System and Internal Controls.
The Company
maintains a system of accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in
accordance with management’s general or specific
authorization; (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with
generally accepted accounting principles and to maintain
accountability for assets; (iii) access to assets is permitted
only in accordance with management’s
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general or
specific authorization; and (iv) the recorded accountability
for assets is compared with existing assets at reasonable intervals
and appropriate action is taken with respect to any
differences.
The Company has
established and maintains disclosure controls and procedures (as
such term is defined in Rule 13a-15(e) under the Securities
Exchange Act of 1934, as amended (the “Exchange Act”),
which (i) are designed to ensure that material information
required to be disclosed by the Company in the reports that it
files or submits under the Exchange Act is recorded, processed,
summarized, and reported within the time periods specified by the
Commission, particularly during the periods in which the periodic
reports required under the Exchange Act are being prepared; (ii)
have been evaluated for effectiveness as of September 30, 2005
and (iii) were effective in all material respects to provide
reasonable assurance regarding the functions for which they were
established. Based on the evaluation of its disclosure controls and
procedures as of September 30, 2005, the Company is not aware
of (i) any significant deficiency or material weakness in the
design or operation of internal controls which would adversely
affect the Company’s ability to record, process, summarize,
and report financial data; or (ii) any fraud, whether or not
material, that involves management or other employees who have a
significant role in the Company’s internal control over
financial reporting. Since September 30, 2005, the most recent
date as of which the Company evaluated its disclosure controls and
procedures, there have been no significant changes in the
Company’s internal control over financial reporting (as
defined in Rule 13a-15) or in other factors that have
materially affected, or are reasonably likely to materially affect,
the Company’s internal control over financial reporting,
including any corrective actions with regard to significant
deficiencies and material weaknesses in the Company’s
internal controls.
(y) Compliance
with Environmental Laws.
Except as
otherwise disclosed in the Preliminary Prospectus and in the
Prospectus, (i) neither the Company nor any of its
subsidiaries is in violation of any federal, state, local or
foreign law or regulation relating to pollution or protection of
human health or the environment (including, without limitation,
ambient air, surface water, groundwater, land surface or subsurface
strata), including without limitation, laws and regulations
relating to emissions, discharges, releases or threatened releases
of chemicals, pollutants, contaminants, wastes, toxic substances,
hazardous substances, petroleum and petroleum products
(collectively, “Materials of Environmental Concern”),
or otherwise relating to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
Materials of Environment Concern (collectively,
“Environmental Laws”), which violation includes, but is
not limited to, noncompliance with any environmental permits or
other environmental governmental authorizations required for the
operation of the business of the Company or its subsidiaries under
applicable Environmental Laws, or noncompliance with the terms and
conditions thereof except where such violation would not cause a
Material Adverse Change, nor has the Company or any of its
subsidiaries received any written communication from a governmental
authority that alleges that the Company or any of its subsidiaries
is in violation in any material respect of any Environmental Law;
(ii) there is no claim, action or cause of action filed with a
court or governmental authority or investigation with respect to
which the Company has received notice alleging potential material
liability for investigatory costs, cleanup costs, governmental
responses costs, natural resources damages, property damages,
personal injuries, attorneys’ fees or penalties
-9-
arising out of,
based on or resulting from the presence, or release into the
environment, of any Materials of Environmental Concern at any
location or alleging a potential or actual violation of
Environmental Laws (collectively, “Environmental
Claims”), pending or, to the Company’s knowledge,
threatened against the Company or any of its subsidiaries; and
(iii) to the Company’s knowledge, there are no past or
present actions, activities, circumstances, conditions, events or
incidents, including, without limitation, the release, emission,
discharge, presence or disposal of any Materials of Environmental
Concern, that reasonably would result in a material violation of
any Environmental Law or form the basis of a potential material
Environmental Claim against the Company or any of its subsidiaries
or against any person or entity whose liability for any
Environmental Claim the Company or any of its subsidiaries has
retained or assumed either contractually or by operation of law
which would be reasonably likely to result in a Material Adverse
Change.
The Company and
its subsidiaries and any “employee benefit plan” (as
defined under the Employee Retirement Income Security Act of 1974,
as amended, and the regulations and published interpretations
thereunder (collectively, “ERISA”)) established or
maintained by the Company, its subsidiaries or their “ERISA
Affiliates” (as defined below) are in compliance in all
material respects with ERISA. “ERISA Affiliate” means,
with respect to the Company or a subsidiary, any member of any
group of organizations described in Sections 414(b),(c),(m) or
(o) of the Internal Revenue Code of 1986, as amended, and the
regulations and published interpretations thereunder (the
“Code”) of which the Company or such subsidiary is a
member. No “reportable event” (as defined under ERISA)
has occurred with respect to any “employee benefit
plan” established or maintained by the Company, its
subsidiaries or any of their ERISA Affiliates. No “employee
benefit plan” (as defined in ERISA Section 3(3))
established or maintained by the Company, its subsidiaries or any
of their ERISA Affiliates, if such “employee benefit
plan” were terminated, would have any “amount of
unfunded benefit liabilities” (as defined in ERISA
Section 4001(a)(18)). Neither the Company, its subsidiaries
nor any of their ERISA Affiliates has incurred any liability under
(i) Title IV of ERISA with respect to termination of, or
withdrawal from, any “employee benefit plan” or (ii)
Sections 412, 4971, 4975 or 4980B of the Code. Each
“employee benefit plan” established or maintained by
the Company, its subsidiaries or any of their ERISA Affiliates that
is intended to be qualified under Section 401(a) of the Code is so
qualified and nothing has occurred, whether by action or failure to
act, which would cause the loss of such qualification.
Except as
otherwise disclosed in the Preliminary Prospectus and in the
Prospectus, there is no broker, finder or other party that is
entitled to receive from the Company any brokerage or
finder’s fee or other fee or commission as a result of any
transactions contemplated by this Agreement.
(bb) No
Outstanding Loans or Other Indebtedness.
There are no
outstanding loans, advances (except normal advances for business
expenses in the ordinary course of business) or guarantees of
indebtedness by the Company to or for the
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benefit of any
of the officers or directors of the Company, except as disclosed in
the Preliminary Prospectus and in the Prospectus.
(cc) Compliance
with Laws.
The Company has
not been advised, and has no knowledge, that it and each of its
subsidiaries are not conducting business in compliance with all
applicable laws, rules and regulations of the jurisdictions in
which it is conducting business, except where failure to be so in
compliance would not result, individually or in the aggregate, in a
Material Adverse Change.
The Company is in
compliance, in all material respects, with all applicable
provisions of the Sarbanes-Oxley Act of 2002, including the related
rules and regulations promulgated thereunder by the Commission or
the American Stock Exchange.
(ee) Underwriter
Not a Fiduciary.
The Company
acknowledges and agrees that (i) the purchase and sale of the
Shares pursuant to this Agreement is an arm’s-length
commercial transaction between the Company and the Selling
Stockholders, on the one hand, and the Underwriter, on the other,
(ii) in connection therewith, the Underwriter is acting as a
principal and not the agent or fiduciary of the Company or any
Selling Stockholder, and (iii) the Underwriter has not assumed
any advisory responsibility in favor of the Company or any Selling
Stockholder with respect to the offering contemplated hereby or the
process leading thereto (irrespective of whether the Underwriter
has advised or is currently advising the Company on other matters)
or any other obligation to the Company or any Selling Stockholder
except the obligations expressly set forth in this
Agreement.
Any certificate
signed by an officer of the Company and delivered to the
Underwriter or to counsel for the Underwriter shall be deemed to be
a representation and warranty by the Company to the Underwriter as
to the matters set forth therein.
The Company
acknowledges that the Underwriter and, for purposes of the opinions
to be delivered pursuant to Section 6 hereof, counsel to the
Company and counsel to the Underwriter, will rely upon the accuracy
and truthfulness of the foregoing representations and hereby
consents to such reliance.
SECTION 2.
REPRESENTATIONS AND WARRANTIES OF THE SELLING
STOCKHOLDERS
Each Selling
Stockholder hereby severally, and not jointly, represents and
warrants to the Underwriter as follows:
(a) The
Underwriting Agreement.
This Agreement has
been duly authorized, executed and delivered by or on behalf of
such Selling Stockholder and is a valid and binding agreement of
such Selling Stockholder, enforceable against such Selling
Stockholder in accordance with its terms.
-11-
(b) Power
of Attorney and Custody Agreement.
The Power of
Attorney and Custody Agreement, in the form heretofore furnished to
the Underwriter (the “Power of Attorney and Custody
Agreement”), has been duly authorized, executed and delivered
by such Selling Stockholder and is a valid and binding agreement of
such Selling Shareholder, enforceable against such Selling
Stockholder in accordance with its terms.
(c) Title
to Shares to be Sold; All Authorizations Obtained.
Such Selling
Stockholder has, and on the First Closing Date will have, and upon
payment of the purchase price therefor and delivery thereof
pursuant to this Agreement the Underwriter will acquire, good and
marketable title to all of the Secondary Shares which may be sold
by such Selling Stockholder pursuant to this Agreement free and
clear of all security interests, claims, liens, equities or other
encumbrances. Such Selling Stockholder has the legal right and
power, and all authorizations and approvals required by law and
under its organizational documents, if applicable, to enter into
this Agreement and the Power of Attorney and Custody Agreement, to
sell, transfer and deliver all of the Secondary Shares which may be
sold by such Selling Stockholder pursuant to this Agreement and to
comply with its other obligations hereunder and under the Power of
Attorney and Custody Agreement.
(d) Certificates
Suitable for Transfer.
The Secondary
Shares to be sold by such Selling Stockholder pursuant to this
Agreement are certificated securities in registered form and are
not held in any securities account or by or through any securities
intermediary within the meaning of the Uniform Commercial Code as
in effect in the State of Texas (the “UCC”).
Certificates for all of the Secondary Shares to be sold by such
Selling Stockholder pursuant to this Agreement, in suitable form
for transfer by delivery or accompanied by duly executed
instruments of transfer or assignment in blank with signatures
guaranteed, have been placed in custody with the Custodian named in
the Power of Attorney and Custody Agreement with irrevocable
conditional instructions to deliver such Secondary Shares to the
Underwriters pursuant to this Agreement.
(e) Delivery
of Securities.
Upon the
Underwriter’s acquiring possession of the Secondary Shares to
be sold by such Selling Stockholder and paying the purchase price
therefor pursuant to this Agreement, the Underwriter (assuming that
the Underwriter does not have notice of any adverse claim, within
the meaning of Section 8-105 of the UCC
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