3,000,000 Shares
Bronco Drilling Company,
Inc.
Common Stock
UNDERWRITING
AGREEMENT
March
, 2006
JEFFERIES & COMPANY,
INC.
JOHNSON RICE & COMPANY
L.L.C.
As Representatives of the several
Underwriters
c/o JEFFERIES & COMPANY,
INC.
520 Madison Avenue
New York, New York 10022
Ladies and Gentlemen:
Introductory.
Bronco Drilling Company, Inc., a
Delaware corporation (the “ Company ”), proposes
to issue and sell to the several underwriters named in
Schedule 1 (the “ Underwriters ”) an
aggregate of 1,700,000 shares of its common stock, par value $0.01
per share (the “ Shares ”), and Bronco Drilling
Holdings, L.L.C., a Delaware limited liability company (the “
Selling Stockholder ”), proposes to sell to the
Underwriters an aggregate of 1,300,000 Shares. The 1,700,000 Shares
to be sold by the Company and the 1,300,000 Shares to be sold by
the Selling Stockholder are collectively called the “ Firm
Shares .” In addition, the Selling Stockholder has
granted to the Underwriters an option to purchase up to an
additional 450,000 shares (the “ Optional Shares
”), as provided in Section 2. The Firm Shares and, if
and to the extent such option is exercised, the Optional Shares are
collectively called the “ Offered Shares .”
Jefferies & Company Inc. (“ Jefferies
”) and Johnson Rice & Company L.L.C. have agreed to
act as representatives of the several Underwriters (in such
capacity, the “ Representatives ”) in connection
with the offering and sale of the Offered Shares.
The Company has prepared and filed
with the Securities and Exchange Commission (the “
Commission ”) a registration statement on
Form S-1 (File No. 333-131420), which contains a form of
prospectus to be used in connection with the public offering and
sale of the Offered Shares. 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 by the Company pursuant to Rule 462(b) under the Securities
Act is called the “ Rule 462(b) Registration Statement
,” and from and after the date and time of
filing of the Rule 462(b) Registration Statement
the term “Registration Statement” shall include the
Rule 462(b) Registration Statement. Such prospectus, in the form
first used by the Underwriters to confirm sales of the Offered
Shares or in the form first made available to the Underwriters by
the Company to meet requests of purchasers pursuant to Rule 173
under the Securities Act, is called the “ Prospectus.
” As used herein, “ free writing prospectus
” has the meaning set forth in Rule 405 under the Securities
Act, and “ Time of Sale Prospectus ” means the
preliminary prospectus together with the free writing prospectuses,
if any, identified on Schedule 3 . As used herein, the terms
“Registration Statement,” “preliminary
prospectus,” “Time of Sale Prospectus” and
“Prospectus” shall include the documents, if any,
incorporated by reference therein. The terms
“supplement,” “amendment,” and
“amend” as used herein with respect to the Time of Sale
Prospectus or any free writing prospectus shall include all
documents subsequently filed by the Company with the Commission
pursuant to the Securities Exchange Act of 1934, as amended (the
“ Exchange Act ”), that are incorporated by
reference therein. All references in this Agreement to (i) the
Registration Statement, 462(b) Registration Statement, a
preliminary prospectus, or 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
”) and (ii) the Prospectus shall be deemed to include
the “ electronic Prospectus ” provided for use
in connection with the offering of the Offered Shares as
contemplated by Section 3(A)(n) of this Agreement.
The Company and the Selling
Stockholder hereby confirm their engagement of Jefferies as, and
Jefferies hereby confirms its agreement with the Company and the
Selling Stockholder to render services as, a “ qualified
independent underwriter ,” within the meaning of Section
(b)(15) of Rule 2720 of the National Association of Securities
Dealers, Inc. (the “ NASD ”) with respect to the
offering and sale of the Shares. Jefferies, solely in its capacity
as the qualified independent underwriter and not otherwise, is
referred to herein as the “ QIU .” The price at
which the Shares will be sold to the public shall not be higher
than the maximum price recommended by the QIU.
Section 1. Representations and
Warranties.
A. Representations and
Warranties of the Company . The Company hereby represents, warrants and
covenants to each Underwriter as follows:
(a) Compliance with Registration
Requirements . The Registration Statement and any
Rule 462(b) Registration Statement have been declared
effective by the Commission 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 best
knowledge of the Company, are contemplated or threatened by the
Commission.
Each preliminary prospectus and the
Prospectus when filed complied in all material respects with the
Securities Act and, if filed by electronic transmission pursuant to
EDGAR (except as may be permitted by Regulation S-T under the
Securities Act), was identical to the copy thereof delivered to the
Underwriters for use in connection with the offer and sale of the
Offered Shares. Each of the Registration Statement, any
Rule 462(b) Registration Statement and any post-effective
amendment thereto, at the time it became effective complied and, as
amended or supplemented, if applicable, will, as of the date of
such amendment or supplement, as applicable, comply in all material
respects with the Securities Act and did not
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and, as amended or supplemented, if applicable,
will not, as of the date of such amendment or supplement, as
applicable, 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 Time of Sale
Prospectus does not, and at the time of each sale of the Shares in
connection with the offering and at the First Closing Date (as
defined in Section 2), the Time of Sale Prospectus, as then
amended or supplemented by the Company, if applicable, will not,
contain any untrue statement of a material fact or omit to state a
material fact necessary to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The Prospectus, as of its date, did not and, as amended
or supplemented, if applicable, will not, as of the date of such
amendment or supplement, as applicable, 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 any Rule 462(b) Registration
Statement, or any post-effective amendment thereto, or the
Prospectus or Time of Sale Prospectus, or any amendments or
supplements thereto, made in reliance upon and in conformity with
information relating to any Underwriter furnished to the Company in
writing by the Representatives expressly for use therein, it being
understood and agreed that the only such information furnished by
the Representatives to the Company consists of the information
described in Section 9(c) below. There are no contracts or
other documents required to be described in the Prospectus or to be
filed as exhibits to the Registration Statement which have not been
described or filed as required.
The Company is not an
“ineligible issuer” (as defined in Rule 405) in
connection with the offering pursuant to Rules 164, 405 and 433
under the Securities Act. Any free writing prospectus that the
Company is required to file pursuant to Rule 433(d) under the
Securities Act has been, or will be, filed with the Commission in
accordance with the requirements of the Securities Act and the
applicable rules and regulations of the Commission thereunder. Each
free writing prospectus that the Company has filed, or is required
to file, pursuant to Rule 433(d) under the Securities Act or that
was prepared by or on behalf of or used or referred to by the
Company complies or will comply in all material respects with the
requirements of the Securities Act and the applicable rules and
regulations of the Commission thereunder. Except for the free
writing prospectuses, if any, and electronic road shows, if any,
furnished to you before first use, the Company has not prepared,
used or referred to, and will not, without your prior consent,
prepare, use or refer to, any free writing prospectus.
(b) Offering Materials Furnished
to Underwriters . The Company has delivered to each of the
Representatives one complete manually signed copy of the
Registration Statement and of each consent and certificate of
experts filed as a part thereof, and conformed copies of the
Registration Statement (without exhibits) and preliminary
prospectuses, Time of Sale Prospectus, and the Prospectus, as
amended or supplemented, in such quantities and at such places as
the Representatives have reasonably requested for each of the
Underwriters.
(c) Distribution of Offering
Material By the Company . The Company has not distributed and
will not distribute, prior to the later of (i) the expiration
or termination of the option granted to the several Underwriters in
Section 2 and (ii) the completion of the
Underwriters’ distribution of the Offered Shares, any
offering material in connection with the offering and sale of the
Offered Shares other than a preliminary prospectus, Time of Sale
Prospectus, the Prospectus or the Registration Statement or any
other document not constituting a prospectus pursuant to
Section 2(a)(10)(a) of the Securities Act or Rule 134 under
the Securities Act.
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(d) Independent Accountants .
Grant Thornton LLP (i) was listed as an independent registered
public accounting firm with the Public Company Accounting Oversight
Board as of the date hereof and, to the knowledge of the Company,
continues to hold this status and (ii) to the knowledge of the
Company, is, with respect to the Company, in compliance with
subsections (g) through (l) of Section 10A of the
Exchange Act. Freemon Shapard & Story, to the knowledge of
the Company, is, with respect to the Company, in compliance with
subsections (g) through (l) of Section 10A of the
Exchange Act. Clinton R. Kindell, CPA P.C., to the knowledge of the
Company, is, with respect to the Company, in compliance with
subsections (g) through (l) of Section 10A of the
Exchange Act.
(e) Financial Statements .
The financial statements filed with the Commission as a part of the
Registration Statement and included in the Prospectus and Time of
Sale Prospectus present fairly in all material respects the
financial condition of (i) the Company and its consolidated
subsidiaries at the dates indicated, and the consolidated
statements of operations and members’/stockholders’
equity and consolidated statements of cash flows of the Company for
the periods specified, (ii) Strata Drilling, L.L.C., an
Oklahoma limited liability company (“ Strata ”),
and its affiliate at the dates indicated, and the combined
statements of operations and members’ equity and combined
statements of cash flows of Strata for the periods specified,
(iii) Thomas Drilling Company, an Oklahoma corporation
(“ Thomas ”), at the dates indicated, and the
statements of operations and shareholders’ equity and
statements of cash flows of Thomas for the periods specified, and
(iv) Eagle Drilling, L.L.C., an Oklahoma limited liability
company (“ Eagle ”), and its combined affiliates
at the dates indicated, and the combined statements of operations
and members’ equity and combined statements of cash flows of
Eagle for the periods specified, such financial statements have
been prepared in conformity with generally accepted accounting
principles in the United States of America (“ GAAP
”) applied on a consistent basis throughout the periods
involved except to the extent disclosed in the notes thereto. The
selected historical financial data and the summary financial data
included in the Prospectus present fairly, in all material
respects, the information shown therein and have been compiled on a
basis consistent with that of the audited financial statements
included in the Registration Statement. The pro forma financial
statements included in the Registration Statement and Prospectus
comply as to form in all material respects with the applicable
accounting requirements of Regulation S-X of the Commission
(“ Regulation S-X ”) and the assumptions used in
the preparation of such pro forma financial statements and data are
reasonable, the pro forma adjustments used therein are appropriate
to give effect to the transactions or circumstances described
therein and the pro forma adjustments have been properly applied to
the historical amounts in the compilation of those statements. The
other financial and statistical data set forth in the Registration
Statement and included in either the Prospectus or the Time of Sale
Prospectus are accurately presented and prepared on a basis
consistent with the financial statements and books and records of
the Company. There are no financial statements (historical or pro
forma) that are required to be included in the Registration
Statement and either the Prospectus or the Time of Sale Prospectus
that are not included as required. Neither the Company nor any of
its subsidiaries has engaged in or effected any transaction or
arrangement that would constitute an “off-balance sheet
arrangement” (as defined in Item 303 of Regulation S-K
of the Commission (“ Regulation S-K ”)). All
non-GAAP financial measures (as defined in Regulation G of the
Commission) and ratios derived using non-GAAP financial measures
have been presented in compliance with Item 10 of Regulation
S-K.
(f) No Material Adverse Change in
Business . Except as disclosed in the Time of Sale Prospectus,
subsequent to the respective dates as of which information is given
in the Time of Sale Prospectus, there has been no (i) material
adverse change in the condition, financial or
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otherwise, results of operations or prospects of
the Company and its subsidiaries taken as a whole (the “
Enterprise ”), whether or not arising in the ordinary
course of business (a “ Material Adverse Change
”), (ii) transaction which is material to the
Enterprise, (iii) any obligation, direct or contingent
(including any off-balance sheet obligations), incurred by the
Company or its subsidiaries, which is material to the Enterprise,
(iv) change in the capital stock of the Company or its
subsidiaries, (v) material change in the outstanding
indebtedness of the Company or its subsidiaries or
(vi) dividend or distribution of any kind declared, paid or
made on the capital stock of the Company.
(g) Good Standing of the
Company . The Company has been duly organized and is validly
existing as a corporation in good standing under the laws of the
State of Delaware and has the requisite corporate power and
authority to own, lease and operate its properties and to conduct
its business as described in the Registration Statement and Time of
Sale Prospectus and to enter into and perform its obligations under
this Agreement. The Company is duly qualified as a foreign
corporation to transact business and is in good standing in each
other jurisdiction in which such qualification is required, whether
by reason of the ownership or leasing of property or the conduct of
business, except where the failure to so qualify or to be in good
standing would not result in a Material Adverse Change.
(h) Good Standing of
Subsidiaries . Each subsidiary (as such term is defined in Rule
1-02 of Regulation S-X) of the Company is identified in Schedule 2
to this Agreement. Each subsidiary has been duly organized and is
validly existing as a business entity in good standing under the
laws of the jurisdiction of its organization, has all requisite
power and authority to own, lease and operate its properties and to
conduct its business as described in the Time of Sale Prospectus,
and is duly qualified as a foreign business entity (corporate or
otherwise) to transact business and is in good standing in each
jurisdiction in which such qualification is required, whether by
reason of the ownership or leasing of property or the conduct of
business, except where the failure so to qualify or to be in good
standing would not result in a Material Adverse Change. All of the
issued and outstanding equity interests of each of its subsidiaries
has been duly authorized and validly issued, and are fully paid and
non-assessable; except as otherwise disclosed in the Time of Sale
Prospectus, all such shares are wholly owned by the Company,
directly or through its subsidiaries, free and clear of any
security interest, mortgage, pledge, lien, encumbrance, claim or
equity, and none of the outstanding equity interests of any
subsidiary was issued in violation of the preemptive or similar
rights of any security holder of such subsidiary.
(i) Capitalization . The
authorized capital stock of the Company, and the issued and
outstanding capital stock of the Company as of the date hereof, is
as set forth in the Time of Sale Prospectus under the caption
“Capitalization” under the “Pro Forma”
column (other than for subsequent issuances, if any, pursuant to
employee benefit plans described in the Time of Sale Prospectus or
upon exercise of outstanding options described in the Time of Sale
Prospectus). The shares of issued and outstanding capital stock of
the Company have been duly authorized and validly issued and are
fully paid and non-assessable and none of the outstanding shares of
capital stock of the Company was issued in violation of the
preemptive or similar rights of any security holder of the Company.
The description of the Company’s stock option, stock bonus
and other stock plans or arrangements, and the options or other
rights granted thereunder, as described in the Registration
Statement or in the Time of Sale Prospectus accurately and fairly
present in all material respects the information required to be
shown with respect to such plans, arrangements, options and
rights.
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(j) Other Securities . Except
as disclosed in the Time of Sale Prospectus, there are no
outstanding (i) securities or obligations of the Company or
any of its subsidiaries convertible into or exchangeable for any
equity interests of the Company or any of its subsidiaries,
(ii) warrants, rights or options to subscribe for or purchase
from the Company or any of its subsidiaries any equity interests or
any such convertible or exchangeable securities or obligations, or
(iii) obligations of the Company or any of its subsidiaries to
issue any equity interests, any such convertible or exchangeable
securities or obligations, or any such warrants, rights or
options.
(k) Stock Exchange Listing .
The Shares are registered pursuant to Section 12(g) of the
Exchange Act and are listed on the Nasdaq National Market and the
Company has taken no action designed to, or likely to have the
effect of, terminating the registration of the Shares under the
Exchange Act or delisting the Shares from the Nasdaq National
Market, nor has the Company received any notification that the
Commission or the Nasdaq National Market is contemplating
terminating such registration of listing.
(l) Authorization of Agreement
and Binding Effect . This Agreement has been duly authorized,
executed and delivered by the Company and constitutes a valid and
binding obligation of the Company enforceable in accordance with
its terms except as enforcement may be limited by bankruptcy,
insolvency or other laws or court decisions relating to or
affecting creditor’s rights generally, and except to the
extent that enforcement of the indemnification and contribution
obligations provided for herein may be limited by federal or state
securities laws or the public policies underlying such
laws.
(m) Authorization and Description
of Offered Shares . The Offered Shares of the Company have been
duly authorized for issuance and sale to the Underwriters pursuant
to this Agreement. When the Company issues and delivers its Offered
Shares pursuant to this Agreement against payment of the
consideration set forth herein, such Offered Shares will be validly
issued, fully paid and non-assessable; the capital stock of the
Company conforms in all material respects to the description
thereof contained in the Time of Sale Prospectus, and such
descriptions conform in all material respects to the rights set
forth in the instruments defining the same; the issuance by the
Company of its Offered Shares is not subject to preemptive or other
similar rights of any security holder of the Company; and the
Company has authorized and available a sufficient number of shares
of its common stock for issuance of its Offered Shares pursuant to
this Agreement and for issuance upon the exercise, conversion or
exchange of all outstanding options and other securities of the
Company that are convertible into or exchangeable for common stock
of the Company.
(n) Absence of Defaults and
Conflicts . Neither the Company nor any of its subsidiaries is
(i) in violation of its charter, by-laws or similar
organizational documents, or (ii) in default in the
performance or observance of any obligation, agreement, covenant or
condition contained in any contract, indenture, mortgage, deed of
trust, loan or credit agreement, note, lease or other agreement or
instrument to which it is a party or by which it may be bound, or
to which any of the property or assets of the Company or any of its
subsidiaries is subject (collectively, “ Agreements and
Instruments ”) except, in the case of clause (ii), for
any defaults which, singularly or in the aggregate, would not
result in a Material Adverse Change; and the execution, delivery
and performance of this Agreement, the consummation of the
transactions contemplated by this Agreement and in the Time of Sale
Prospectus including the issuance and sale of the Offered Shares
and the use of the proceeds from the sale of the Offered Shares as
described therein, and the compliance by the Company with its
obligations under this Agreement (except as contemplated by the
Time of Sale Prospectus) do not and
6
will not, whether with or without the giving of
notice or passage of time or both, conflict with or constitute a
breach of, or default or Repayment Event (as defined below) under,
or result in the creation or imposition of any lien, charge or
encumbrance upon any of the properties or assets of the Company or
any of its subsidiaries pursuant to the Agreements and Instruments
except for such conflicts, breaches, defaults, liens, charges or
encumbrances which, singularly or in the aggregate, would not
result in a Material Adverse Change, nor will such action result in
any violation of the provisions of the charter, by-laws, or similar
organizational documents, of the Company or any of its subsidiaries
or any applicable law, statute, rule, regulation, judgment, order,
writ or decree of any government, government instrumentality or
court, domestic or foreign, having jurisdiction over the Company or
any of its subsidiaries or any of their respective assets,
properties or operations. As used herein, a “ Repayment
Event ” means any event or condition which gives the
holder of any note, debenture or other evidence of indebtedness (or
any person acting on such holder’s behalf) the right to
require the repurchase, redemption or repayment of all or a portion
of such indebtedness by the Company or any of its
subsidiaries.
(o) Absence of Labor Dispute
. No labor dispute with the employees of the Company or any of its
subsidiaries exists or to the knowledge of the Company is imminent,
and the Company is not aware of any existing or imminent labor
disturbance by the employees of any of its or any of its
subsidiaries principal operators, contractors, suppliers or
customers, which, in either case, would result in a Material
Adverse Change. The Company is not aware that any key employee or
significant group of employees of the Company or any of its
subsidiaries plans to terminate employment with such
entity.
(p) Absence of Proceedings .
There is no action, suit, proceeding, inquiry or investigation
before or brought by any court or governmental agency or body,
domestic or foreign, now pending, or, to the knowledge of the
Company, threatened, against or affecting the Company or any of its
subsidiaries, which is required to be disclosed in the Registration
Statement (other than as disclosed in the Time of Sale Prospectus),
or which might result in a Material Adverse Change, or which might
materially and adversely affect the properties or assets of the
Enterprise or the consummation of the transactions contemplated in
this Agreement or the performance by the Company of its obligations
hereunder; the aggregate of any and all pending legal or
governmental proceedings to which the Company and its subsidiaries
are a party or of which any of their respective property or assets
is the subject which are not described in the Time of Sale
Prospectus, including ordinary routine litigation incidental to the
business, could not result in a Material Adverse Change.
(q) Accuracy of Exhibits .
There are no contracts or documents which are required to be
described in the Registration Statement or the Prospectus pursuant
to Form S-1 or to be filed as exhibits to the Registration
Statement pursuant to Item 601 of Regulation S-K which have
not been so described and filed as required.
(r) Possession of Intellectual
Property . The Company and each of its subsidiaries own or
possess, or can acquire on reasonable terms, adequate patents,
patent rights, licenses, inventions, copyrights, know-how
(including trade secrets and other unpatented and/or unpatentable
proprietary or confidential information, systems or procedures),
trademarks, service marks, trade names or other intellectual
property (collectively, “ Intellectual Property
”) necessary to carry on the business now operated by them,
except where the failure to own or possess, or have the ability to
acquire on reasonable terms such Intellectual Property would not,
singularly or in the aggregate, cause a Material Adverse Change.
Neither the Company nor any of its subsidiaries has received any
notice or is otherwise aware of any
7
infringement of or conflict with asserted rights
of others with respect to any Intellectual Property or of any facts
or circumstances which would render any Intellectual Property
invalid or inadequate to protect the interest of the Company or any
of its subsidiaries therein, and which infringement or conflict (if
the subject of any unfavorable decision, ruling or finding) or
invalidity or inadequacy, singly or in the aggregate, would result
in a Material Adverse Change.
(s) Absence of Further
Requirements . No filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of,
any court or governmental authority or agency is necessary or
required for the performance by the Company of its obligations
hereunder, or in connection with the offering, issuance or sale of
the Offered Shares under this Agreement or the consummation of the
transactions contemplated by this Agreement except such as have
been already obtained or as may be required under the Securities
Act or the regulations promulgated thereunder or state securities
laws or by the NASD.
(t) No Price Stabilization or
Manipulation; Compliance with Regulation M . The Company has
not taken, directly or indirectly, any action designed to or that
would be reasonably expected to cause or result in stabilization or
manipulation of the price of the Shares or any other “
reference security ” (as defined in Rule 100 of
Regulation M under the Exchange Act ( “Regulation
M” )) whether to facilitate the sale or resale of the
Offered Shares or otherwise, and has taken no action which would
directly or indirectly violate Regulation M. The Company
acknowledges that the Underwriters may engage in passive market
making transactions in the Offered Shares on the Nasdaq National
Market in accordance with Regulation M.
(u) Possession of Licenses and
Permits . The Company and each of its subsidiaries possess such
permits, licenses, certificates, approvals, consents and other
authorizations (collectively, “ Governmental Licenses
”) issued by appropriate federal, state, local or foreign
regulatory bodies necessary for the ownership of their respective
assets and to conduct the business now operated by them, except
where the failure to have obtained the same would not cause a
Material Adverse Change; the Company and its subsidiaries are in
compliance with the terms and conditions of all such Governmental
Licenses, except where the failure to so comply would not singly or
in the aggregate cause a Material Adverse Change; all of the
Governmental Licenses are valid and in full force and effect,
except where the invalidity or the failure to be in full force and
effect would not singly or in the aggregate cause a Material
Adverse Change; and neither the Company nor any of its subsidiaries
has received any notice of proceedings relating to the revocation
or modification of any such Governmental Licenses which, singly or
in the aggregate, if the subject of an unfavorable decision, ruling
or finding would result in a Material Adverse Change.
(v) Title to Property . The
Company and each of its subsidiaries have good and marketable title
to all real property reflected in the financial statements
hereinabove described as owned by them and good title to all other
properties reflected in the financial statements hereinabove
described as owned by them, in each case, free and clear of all
mortgages, pledges, liens, security interests, claims, restrictions
or encumbrances of any kind except such as (i) are described
in the Time of Sale Prospectus or (ii) do not, singly or in
the aggregate, materially affect the value of such property and do
not materially interfere with the use made or to be made of such
property by the Company or any of its subsidiaries, as applicable;
and all of the leases and subleases material to the business of the
Enterprise, and under which the Company or any of its subsidiaries
holds properties described in the Time of Sale
Prospectus,
8
are in full force and effect, and neither the
Company nor any of its subsidiaries has any notice of any material
claim of any sort that has been asserted by anyone adverse to the
rights of the Company or any of its subsidiaries under any of the
leases or subleases mentioned above, or affecting or questioning
the rights of the Company or any of its subsidiaries to the
continued possession of the leased or subleased premises under any
such lease or sublease.
(w) Insurance . The Company
and each of its subsidiaries is insured by insurers of recognized
financial responsibility against such losses and risks and in such
amounts as are adequate for the conduct of their respective
businesses and as are customary for the businesses in which they
are engaged; all such policies of insurance insuring the Company or
any of its subsidiaries are in full force and effect and neither
the Company nor any of its Subsidiaries has any reason to believe
that any of them will not be able to renew its existing insurance
coverage as and when such coverage expires or to obtain similar
coverage from similar insurers as may be necessary to continue its
business.
(x) Taxes . The Company and
each of its subsidiaries has filed on a timely basis all foreign,
federal, state and local tax returns that are required to be filed
or have requested extensions thereof (except in any case in which
the failure so to file would not cause a Material Adverse Change)
and has paid all taxes required to be paid by it and any other
assessment, fine or penalty levied against it to the extent due and
payable, except for any such assessment, fine or penalty that is
currently being contested in good faith or would not cause a
Material Adverse Change.
(y) Investment Company Act .
Neither the Company nor any of its subsidiaries is required, and
upon the issuance and sale of the Offered Shares as herein
contemplated and the application of the net proceeds therefrom as
described in the Time of Sale Prospectus will not be required, to
register as an “investment company” within the meaning
of such term under the Investment Company Act of 1940, as amended,
and the rules and regulations of the Commission promulgated
thereunder.
(z) Environmental Laws .
There has been no storage, disposal, generation, manufacture,
refinement, transportation, handling or treatment of hazardous
substances or hazardous wastes by the Company or any of its
subsidiaries (or, to the knowledge the Company or any of its
predecessors in interest), at, upon or from any of the property now
or previously owned, leased or operated by the Company or any of
its subsidiaries in violation of any applicable law, ordinance,
rule, regulation, order, judgment, decree or permit that would
require the Company or any of its subsidiaries to undertake any
remedial action under any applicable law, ordinance, rule,
regulation, order, judgment, decree or permit, except for any
violation or remedial action that would not, individually or in the
aggregate with all such violations and remedial actions, cause a
Material Adverse Change. Except for abandonment and similar costs
incurred or to be incurred in the ordinary course of business of
the Company and any of its subsidiaries, there has been no material
spill, discharge, leak, emission, injection, escape, dumping or
release of any kind onto any property now or previously owned,
leased or operated by the Company or any of its subsidiaries or
into the environment surrounding such property of any hazardous
substances or hazardous wastes due to or caused by the Company or
any of its subsidiaries (or, to the knowledge of the Company, any
of its predecessors in interest), except for any such spill,
discharge, leak, emission, injection, escape, dumping or release
that would not, singularly or in the aggregate with all such
spills, discharges, leaks, emissions, injections, escapes, dumpings
and releases, result in a Material Adverse Change; and the terms
“hazardous substances,” and “hazardous
wastes” shall be construed broadly to include such terms and
similar terms, all of which shall have the meanings specified in
any
9
applicable local, state and federal laws or
regulations with respect to environmental protection. Except as set
forth in the Time of Sale Prospectus, neither the Company nor any
of its subsidiaries has been named as a “potentially
responsible party” under the Comprehensive Environmental
Response, Compensation, and Liability Act of 1980, as
amended.
(aa) Registration Rights .
There are no persons with registration rights or other similar
rights to have any securities of the Company registered pursuant to
the Registration Statement or sold in the offering contemplated by
this Agreement, other than the Selling Stockholder with respect to
the Offered Shares included in the Registration Statement, except
for such rights as have been duly waived.
(bb) Internal Accounting .
Subject to such exceptions, if any, as could not reasonably be
expected to cause a Material Adverse Change, the Company maintains
a system of internal accounting controls sufficient to provide
reasonable assurances that (i) transactions are executed in
accordance with management’s general or specific
authorizations, (ii) transactions are recorded as necessary to
permit preparation of financial statements in conformity with GAAP
and to maintain accountability for assets, (iii) access to
assets is permitted only in accordance with management’s
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.
(cc) Disclosure Controls and
Procedures . The Company has no reason to believe that, on or
prior to the date first required by the Exchange Act, (i) the
Company will not have established the requisite disclosure controls
and procedures (as such term is defined in Rule 13a-15 and 15d-15
under the Exchange Act); (ii) such disclosure controls and
procedures shall not have been designed to ensure that material
information relating to the Company, including its consolidated
subsidiaries, is made known to the Company’s Chief Executive
Officer or its Chief Financial Officer by others within those
entities, and (iii) such disclosure controls and procedures
shall not be effective to perform the functions for which they were
established.
(dd) Certain Relationships and
Related Transactions . 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, which is required to be described in the
Prospectus and which is not so described. The Time of Sale
Prospectus contains in all material respects the same description
of the matters set forth in the preceding sentence contained in the
Prospectus.
(ee) Brokers . Neither the
Company nor any of its subsidiaries is a party to any contract,
agreement or understanding with any person that would give rise to
a valid claim against the Company or the Underwriters for a
brokerage commission, finder’s fee or like payment in
connection with the offering and sale of the Offered
Shares.
(ff) Sarbanes-Oxley Act of
2002 . The Company is in compliance, in all material respects,
with all applicable provisions of the Sarbanes-Oxley Act of 2002
and all rules and regulations promulgated thereunder or
implementing the provisions thereof.
(gg) Certain Payments . None
of the Company, any of its subsidiaries or, to the best knowledge
of the Company, any director, officer, agent, employee or other
person associated with or acting on behalf of the Company or any of
its subsidiaries, (i) has used any corporate
10
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, (ii) violated or is in violation of any provisions of
the Foreign Corrupt Practices Act of 1977, or (iii) made any
bribe, rebate, payoff, influence payment, kickback or other
unlawful payment.
(hh) ERISA . The minimum
funding standard under Section 302 of the Employee Retirement
Income Security Act of 1974, as amended, and the regulations and
published interpretations thereunder (“ ERISA
”), has been satisfied by each “pension plan” (as
defined in Section 3(2) of ERISA) which has been established
or maintained by the Company and/or one or more of its
subsidiaries, and the trust forming part of each such plan which is
intended to be qualified under Section 401 of the Internal
Revenue Code of 1986, as amended, is so qualified; each of the
Company and its subsidiaries has fulfilled its obligations, if any,
under Section 515 of ERISA; neither the Company nor any of its
subsidiaries maintains or is required to contribute to a
“welfare plan” (as defined in Section 3(1) of
ERISA) which provides retiree or other post-employment welfare
benefits or insurance coverage (other than “continuation
coverage” (as defined in Section 602 of ERISA)); each
pension plan and welfare plan established or maintained by the
Company and/or one or more of its subsidiaries is in compliance
with the currently applicable provisions of ERISA, except where the
failure to comply would not cause a Material Adverse Change; and
neither the Company nor any of its subsidiaries has incurred or
could reasonably be expected to incur any withdrawal liability
under Section 4201 of ERISA, any liability under
Section 4062, 4063, or 4064 of ERISA, or any other liability
under Title IV of ERISA.
(ii) Corporate Records . The
minute books of the Company and each of its subsidiaries have been
made available to the Underwriters and counsel for the
Underwriters, and such books (i) reflect all meetings and
actions of the board of directors (including each board committee)
and stockholders (or analogous governing bodies and interest
holders, as applicable) of the Company and each of its subsidiaries
since the time of its respective organization through the date of
the latest meeting and action, and (ii) accurately in all
material respects reflect all transactions referred to in such
minutes.
(jj) Margin Securities .
Neither the Company nor any of its subsidiaries owns any
“margin securities” as that term is defined in
Regulation U of the Board of Governors of the Federal Reserve
System (the “ Federal Reserve Board ”), and none
of the proceeds of the sale of the Offered Shares will be used,
directly or indirectly, for the purpose of purchasing or carrying
any margin security, for the purpose of reducing or retiring any
indebtedness which was originally incurred to purchase or carry any
margin security or for any other purpose which might cause any of
the Offered Shares to be considered a “purpose credit”
within the meanings of Regulation T, U or X of the Federal Reserve
Board.
(kk) Prospectus Statements .
The statements set forth in the Time of Sale Prospectus under the
captions “Risk Factors,” “Prospectus
Summary” and “Business,” insofar as they purport
to describe the provisions of the laws and documents referred to
therein, are accurate and complete in all material
respects.
(ll) Transfer Taxes . There
are no transfer taxes or other similar fees or charges under
federal law or laws of any state or any political subdivision
thereof, required to be paid in connection with the execution and
delivery of this Agreement or the issuance by the Company or the
sale by the Company of the Offered Shares.
11
Any certificate signed by any
officer of the Company or any of its subsidiaries that is delivered
to the Representatives or to counsel for the Underwriters pursuant
to this Agreement shall be deemed a representation and warranty by
the Company to each Underwriter as to the matters covered
thereby
B. Representations and
Warranties of the Selling Stockholder The Selling Stockholder represents, warrants and
covenants to each Underwriter as follows:
(a) Authorization of Agreement
and Binding Effect . This Agreement has been duly authorized,
executed and delivered by or on behalf of the Selling Stockholder
and constitutes a valid and binding obligation of the Selling
Stockholder enforceable in accordance with its terms except as
enforcement may be limited by bankruptcy, insolvency or other laws
or court decisions relating to or affecting creditor’s rights
generally, and except to the extent that enforcement of the
indemnification and contribution obligations provided for herein
may be limited by federal or state securities laws or the public
policies underlying such laws.
(b) Ownership of Offered
Shares . The Selling Stockholder is the record and beneficial
owner of the Shares to be sold by it hereunder free and clear of
all liens, encumbrances, equities and claims and has duly endorsed
such Shares in blank, and, assuming that each Underwriter acquires
its interest in the Offered Shares it has purchased from the
Selling Stockholder without notice of any adverse claim (within the
meaning of Section 8-105 of the Delaware Uniform Commercial
Code (“ UCC ”)), each Underwriter that has
purchased such Offered Shares delivered on the First Closing Date
or the Option Closing Date, if any (as defined in Section 2),
to The Depository Trust Company or other securities intermediary by
making payment therefor as provided herein, and that has had such
Offered Shares credited to the securities account or accounts of
such Underwriters maintained with The Depository Trust Company or
such other securities intermediary will have acquired a security
entitlement (within the meaning of Section 8-102(a)(17) of the
UCC) to such Offered Shares purchased by such Underwriter, and no
action based on an adverse claim (within the meaning of
Section 8-105 of the UCC) may be asserted against such
Underwriter with respect to such Offered Shares.
(c) Delivery of the Offered
Shares to be Sold . Delivery of the Offered Shares which are
sold by such Selling Stockholder pursuant to this Agreement will
pass good and valid title to such Offered Shares, free and clear of
any security interest, mortgage, pledge, lien, encumbrance or other
adverse claim.
(d) No Price Stabilization or
Manipulation; Compliance with Regulation M . The Selling
Stockholder has not taken, directly or indirectly, any action
designed to or that would be reasonably expected to cause or result
in stabilization or manipulation of the price of the Shares or any
other reference security, whether to facilitate the sale or resale
of the Offered Shares or otherwise, and has taken no action which
would directly or indirectly violate any provision of Regulation
M.
(e) Absence of Further
Requirements . No filing with, or authorization, approval,
consent, license, order, registration, qualification or decree of,
any court or governmental authority or agency is necessary or
required for the performance by the Selling Stockholder of its
obligations hereunder, or in connection with the offering or sale
of the Offered Shares under this Agreement or the consummation of
the transactions contemplated by this Agreement except such as have
been already obtained or as may be required under the
12
Securities Act or the regulations promulgated
thereunder, state securities laws or by the NASD.
(f) Absence of Defaults and
Conflicts . Neither the sale of the Shares being sold by the
Selling Stockholder nor the consummation of any other of the
transactions herein contemplated by the Selling Stockholder or the
fulfillment of the terms hereof by the Selling Stockholder will
conflict with, result in a breach or violation of, or constitute a
default under any law or the charter, by-laws or similar
organizational documents of the Selling Stockholder or the terms of
any indenture or other agreement or instrument to which the Selling
Stockholder is a party or bound, or any judgment, order or decree
applicable to the Selling Stockholder of any court, regulatory
body, administrative agency, governmental body or arbitrator having
jurisdiction over the Selling Stockholder.
(g) Selling Stockholder
Information . In respect of any statements in or omissions from
the Registration Statement or the Time of Sale Prospectus or any
supplements thereto made in reliance upon and in conformity with
information furnished in writing to the Company by the Selling
Stockholder specifically for use in connection with the preparation
thereof, such information does not contain any untrue statement of
a material fact or omit to state any material fact required to be
stated therein or necessary in order to make such statements not
misleading. The parties acknowledge that the only information
furnished by or on behalf of the Selling Stockholder in writing
expressly for use in connection with the preparation of the
Registration Statement or the Time of Sale Prospectus or any
supplements thereto is the information as to its name, address, the
information set forth under the caption “Prospectus
Summary—Our Equity Sponsor” and the amount of shares of
the Company held by the Selling Stockholder prior to the offering
and to be offered for the Selling Stockholder’s
account.
(h) No Registration, Pre-emptive,
Co-Sale or Other Similar Rights . The Selling Stockholder
(i) does not have any registration or other similar rights to
have any equity or debt securities registered for sale by the
Company under the Registration Statement or included in the
offering contemplated by this Agreement, except for such rights as
are described in the Time of Sale Prospectus under
“Securities Eligible for Future Sale,” (ii) does
not have any preemptive right, co-sale right or right of first
refusal or other similar right to purchase any of the Offered
Shares that are to be sold by the Company to the Underwriters
pursuant to this Agreement, except for such rights as the Selling
Stockholder has waived prior to the date hereof and as have been
described in the Registration Statement and Time of Sale
Prospectus, and (iii) does not own any warrants, options or
similar rights to acquire, and does not have any right or
arrangement to acquire, any capital stock, right, warrants, options
or other securities from the Company, other than those described in
the Registration Statement and the Time of Sale
Prospectus.
(i) No Transfer Taxes or Other
Fees . There are no transfer taxes or other similar fees or
charges under Federal law or the laws of any state, or any
political subdivision thereof, required to be paid in connection
with the execution and delivery of this Agreement or the sale by
the Selling Stockholder of the Offered Shares.
(j) Distribution of Offering
Materials by the Selling Stockholder . The Selling Stockholder
has not distributed and will not distribute, prior to the later of
(i) the expiration or termination of the option granted to the
several Underwriters under Section 2 and (ii) the
completion of the Underwriters’ distribution of the Offered
Shares, any offering material in
13
connection with the offering and sale of the
Offered Shares other than a preliminary prospectus, the Time of
Sale Prospectus or the Registration Statement.
The Selling Stockholder acknowledges
that the Underwriters and, for purposes of the opinion to be
delivered pursuant to Section 6 hereof, counsel to the Selling
Stockholder and counsel to the Underwriters, will rely upon the
accuracy and truthfulness of the foregoing representations and
hereby consents to such reliance.
Section 2. Purchase, Sale and
Delivery of the Offered Shares.
(a) The Firm Shares . Upon
the terms herein set forth, (i) the Company agrees to issue
and sell to the several Underwriters an aggregate of 1,700,000 Firm
Shares and (ii) the Selling Stockholder agrees to sell to the
several Underwriters an aggregate of 1,300,000 Firm Shares. On the
basis of the representations, warranties and agreements herein
contained, and upon the terms but subject to the conditions herein
set forth, the Underwriters agree, severally and not jointly, to
purchase from the Company and the Selling Stockholder the
respective number of Firm Shares set forth opposite their names on
Schedule A . The purchase price per Firm Share to be
paid by the several Underwriters to the Company and the Selling
Stockholder s
