SUPERIOR WELL SERVICES,
INC.
4,600,000 Shares of Common
Stock
KeyBanc Capital
Markets, a division of
McDonald Investments Inc.
As Representative of the several Underwriters
McDonald Investment Center
800 Superior Avenue
Cleveland, Ohio 44114
Superior
Well Services, Inc., a Delaware corporation (the
“Company”), together with the stockholders of the
Company listed in Schedule A hereto (the “Selling
Stockholders”), severally propose, subject to the terms and
conditions stated herein, to sell 4,600,000 shares (the “Firm
Securities”) of common stock of the Company, par value $0.01
per share (the “Common Stock”), to the several
underwriters named in Schedule B hereto (the
“Underwriters”), for whom you are acting as
Representative (the “Representative”). The Firm
Securities consist of 3,000,000 authorized but unissued shares of
Common Stock to be issued and sold by the Company and 1,600,000
outstanding shares of Common Stock to be sold by the Selling
Stockholders.
In
addition, the Company also proposes to grant the Underwriters an
option to purchase up to 690,000 additional shares of Common Stock
(the “Optional Securities”). The Firm Securities and
the Optional Securities are hereinafter collectively referred to as
the “Securities.” The Company and the Selling
Stockholders hereby confirm the agreement with you, acting as the
Representative of the Underwriters.
1.
Representations and Warranties of the Company . The Company
represents and warrants to, and agrees with, each of the
Underwriters that:
(a) The
Company has prepared and filed with the Securities and Exchange
Commission (the “Commission”) a registration statement
on Form S-3 (No. 333-134541) covering the registration of
the Securities under the Securities Act of 1933, as amended (the
“Securities Act”), including the preliminary prospectus
relating to the Securities. At the time of the filing of Amendment
No. 2 to the registration statement and at the time the
registration statement became effective, the Company met the
requirements for use of Form S-3 under the Securities Act. Such
registration statement, including the exhibits thereto, schedules
thereto, if any, and the documents incorporated or deemed
incorporated by reference therein pursuant to Item 12 of Form
S-3 under the Securities Act, at the time it became effective, is
herein called the “Registration
Statement.” Any registration statement
filed pursuant to Rule 462(b) of the rules and regulations of the
Commission under the Securities Act (the “Securities Act
Regulations”) is herein referred to as the
“Rule 462(b) Registration Statement,” and after
such filing the term “Registration Statement” shall be
deemed to include the Rule 462(b) Registration Statement. Any
preliminary prospectus included in such registration statement or
filed with the Commission pursuant to Rule 424(a) of the Securities
Act Regulations before a prospectus in final form is filed with the
Commission pursuant to Rule 424(b) of the Securities Act
Regulations is herein called a “Preliminary
Prospectus.” The Preliminary Prospectus relating to the
Securities that was included in the Registration Statement
immediately prior to the Applicable Time (as defined below) is
herein called the “Time of Sale Prospectus.” The final
prospectus, in the form first filed with the Commission pursuant to
Rule 424(b) of the Securities Act Regulations, is herein called the
“Prospectus.” Any “issuer free writing
prospectus” (as defined in Rule 433 of the Securities
Act Regulations) is herein called an “Issuer Free Writing
Prospectus.” For purposes of this Agreement, all references
to the Registration Statement, any Preliminary Prospectus, the
Prospectus or any amendment or supplement to any of the foregoing
shall be deemed to refer to and include the copy filed with the
Commission pursuant to its Electronic Data Gathering, Analysis and
Retrieval system (“EDGAR”). For purposes of this
Agreement, the “Applicable Time” is 7:00 p.m. (Eastern
time) on the date of this Agreement. As used herein, the terms
“Registration Statement,” “Rule 462(b)
Registration Statement,” “Preliminary
Prospectus,” “Time of Sale Prospectus” and
“Prospectus” shall include the documents incorporated
and deemed to be incorporated by reference therein.
All
references in this Agreement to financial statements and schedules
and other information which is “contained,”
“included” or “stated” in the Registration
Statement, the Rule 462(b) Registration Statement, any Preliminary
Prospectus, the Time of Sale Prospectus or the Prospectus (or other
references of like import) shall be deemed to mean and include all
such financial statements and schedules and other information that
is or is deemed to be incorporated by reference in the Registration
Statement, the Rule 462(b) Registration Statement, any Preliminary
Prospectus, the Time of Sale Prospectus or the Prospectus, as the
case may be; and all references in this Agreement to amendments or
supplements to the Registration Statement, the Rule 462(b)
Registration Statement, any Preliminary Prospectus, the Time of
Sale Prospectus or the Prospectus shall be deemed to mean and
include the filing of any document under the Securities Exchange
Act of 1934 (the “Exchange Act”) that is incorporated
by reference in the Registration Statement, such Preliminary
Prospectus, the Time of Sale Prospectus or the Prospectus, as the
case may be.
(b) No
order preventing or suspending the use of any Preliminary
Prospectus or any Issuer Free Writing Prospectus has been issued by
the Commission. Each Preliminary Prospectus, at the time of filing
thereof, complied, and any further amendments or supplements
thereto will comply, in all material respects, with the Securities
Act and the Securities Act Regulations, and did not contain an
untrue statement of a material fact or omit to state any material
fact necessary in order to make the statements therein, in the
light of the circumstances under which they were made, not
misleading. The representation and warranty set forth in the
immediately preceding
2
sentence does
not apply to statements or omissions made in reliance upon and in
conformity with written information furnished to the Company by an
Underwriter expressly for inclusion therein, which information
consists solely of the information in the letter referred to in
Section 9(f).
(c) The
Time of Sale Prospectus, as supplemented by those Issuer Free
Writing Prospectuses and other documents and information listed in
Schedule C hereto, taken together (collectively, the
“Disclosure Package”) as of the Applicable Time, did
not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. Each Issuer Free Writing Prospectus listed on
Schedule C or Schedule D hereto does not
conflict with the information contained in the Registration
Statement, the Time of Sale Prospectus or the Prospectus, and each
such Issuer Free Writing Prospectus, as supplemented by and taken
together with the Disclosure Package as of the Applicable Time, did
not include any untrue statement of a material fact or omit to
state any material fact necessary in order to make the statements
therein, in the light of the circumstances under which they were
made, not misleading. The representation and warranty set forth in
the immediately preceding sentence does not apply to statements or
omissions made in reliance upon and in conformity with written
information furnished to the Company by an Underwriter expressly
for inclusion therein, which information consists solely of the
information in the letter referred to in
Section 9(f).
(d) Each
of the Registration Statement and any Rule 462(b) Registration
Statement has been declared effective by the Commission under the
Securities Act. The Company has complied to the Commission’s
satisfaction 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 initiated or are pending or, to the
Company’s knowledge, are contemplated by the
Commission.
(e) The
Registration Statement complies, and the Prospectus and any further
amendments or supplements thereto will comply, in all material
respects, with the Securities Act and the Securities Act
Regulations. The Registration Statement, and any post-effective
amendment thereto, does not and will not contain, as of the
applicable effective date, 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
Prospectus, and any supplements thereto, as of its date or the date
of such supplement and on each Delivery Date, does not and will not
contain any untrue statement of a material fact or omit to state a
material fact necessary in order to make the statements therein, in
the light of the circumstances under which they were made, not
misleading. The representations and warranties set forth in the two
immediately preceding sentences do not apply to statements or
omissions made in reliance upon and in conformity with written
information furnished to the Company by an Underwriter expressly
for inclusion therein, which information consists solely of the
information in the letter referred to in Section 9(f). There
are no contracts or other documents required
3
to be described
in the Time of Sale Prospectus or the Prospectus or filed as
exhibits to the Registration Statement that have not been described
or filed as required.
(f) The
Time of Sale Prospectus was, and the Prospectus delivered to the
Underwriters for use in connection with this offering will be,
identical to the versions of the Time of Sale Prospectus and
Prospectus created to be transmitted to the Commission for filing
via EDGAR, except to the extent permitted by
Regulation S-T.
(g) At
the time of filing the Registration Statement and at the date of
this Agreement, the Company was not and is not an “ineligible
issuer” (as defined in Rule 405 of the Securities Act
Regulations).
(h) The
documents incorporated by reference or deemed to be incorporated by
reference in the Time of Sale Prospectus and the Prospectus, when
they were filed with the Commission, conformed in all material
respects to the requirements of the Exchange Act and the rules and
regulations of the Commission thereunder (the “Exchange Act
Regulations”), and do not contain an 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; and any further
documents so filed and incorporated by reference or deemed to be
incorporated by reference in the Time of Sale Prospectus or the
Prospectus or any supplement thereto, when such documents are filed
with the Commission, will conform in all material respects to the
requirements of the Exchange Act and the Exchange Act Regulations
and will not contain an 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.
(i) The
Company has been duly incorporated and is validly existing and in
good standing as a corporation under the General Corporation Law of
the State of Delaware (the “DGCL”), with the requisite
power and authority to own and lease its properties and conduct its
business as described in the Time of Sale Prospectus and the
Prospectus. The Company is duly qualified to do business as a
foreign corporation in good standing in all jurisdictions in which
its ownership or lease of property or the conduct of its business
requires such qualification, except where the failure to be so
qualified would not, individually or in the aggregate, have a
material adverse effect on the financial condition, business,
properties, business prospects (other than as a result of an event,
circumstance or condition applicable to the oil and gas or oilfield
services industries as a whole) or results of operations of the
Company and the Subsidiaries (as defined below) taken as a whole (a
“Material Adverse Effect”).
(j) The
Company does not own or control, directly or indirectly, any
corporation, association or other entity other than the
subsidiaries listed in Exhibit 21.1 to the Company’s
Annual Report on Form 10-K for the year ended December 31,
2005 (each, a “Subsidiary” and collectively, the
“Subsidiaries”). All of the outstanding limited partner
interests or limited liability company interests, as applicable, of
each Subsidiary have been duly authorized and validly issued, are
fully paid (except to the extent required under the respective
limited partnership agreements and limited liability
company
4
agreements of
the Subsidiaries, as applicable) and nonassessable (except as may
be limited by Section 18-607 of the Delaware Limited Liability
Company Act (the “Delaware LLC Act”) and are owned by
the Company, directly or indirectly through subsidiaries, free and
clear of all liens, encumbrances, equities or claims, other than
those arising under the respective limited liability company
agreements and limited partnership agreements of the
Subsidiaries.
(k) Each
Subsidiary has been duly formed or organized, as applicable, and is
validly existing and in good standing as a limited liability
company or limited partnership, as applicable, under the laws of
the jurisdiction of its formation or organization, as applicable,
with the requisite power and authority (limited liability company
or limited partnership, as applicable) to own and lease its
properties and conduct its business as described in the Time of
Sale Prospectus and the Prospectus. Each Subsidiary is duly
qualified to do business as a foreign limited liability company or
limited partnership, as applicable, in good standing in all
jurisdictions in which its ownership or lease of property or the
conduct of its business requires such qualification, except where
the failure to be so qualified would not, individually or in the
aggregate, have a Material Adverse Effect.
(l) This
Agreement has been duly authorized, executed and delivered by the
Company.
(m) The
duly authorized, issued and outstanding capitalization of the
Company is as set forth under the caption
“Capitalization” in the Time of Sale Prospectus and the
Prospectus as of the date set forth therein; all of the issued and
outstanding shares of capital stock of the Company are duly
authorized and validly issued, fully paid and nonassessable, are
free of any preemptive rights, rights of first refusal or similar
rights, were issued and sold in compliance with applicable federal
and state securities laws and conform in all material respects to
the description thereof in the Time of Sale Prospectus and the
Prospectus; except as described in the Time of Sale Prospectus and
the Prospectus, there are no outstanding options, warrants or other
rights calling for the issuance of, and there are no commitments,
plans or arrangements to issue any shares of capital stock of the
Company or any security convertible or exchangeable or exercisable
for capital stock of the Company.
(n) The
Common Stock conforms in substance in all material respects to all
statements in relation thereto contained in the Registration
Statement, the Time of Sale Prospectus and the Prospectus; the
Securities to be sold by the Company pursuant to this Agreement
have been duly authorized and (i) when issued and delivered
pursuant to this Agreement, will be validly issued, fully paid and
nonassessable and (ii) will conform to the description thereof
contained in the Time of Sale Prospectus and the Prospectus. All
corporate action required to be taken for the issuance of the
Securities by the Company pursuant to this Agreement has been
validly taken. No preemptive rights of security holders of the
Company exist with respect to the issuance and sale of the Common
Stock by the Company pursuant to this Agreement. The certificates
for the Common Stock of the Company are in due and legal form under
Delaware law.
5
(o) Other
than as described in the Time of Sale Prospectus and the
Prospectus, 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
Securities Act with respect to any shares of Common Stock or any
other securities of the Company owned or to be owned by such person
or to require the Company to include such Common Stock or other
securities in the Registration Statement. To the extent any person
has such registration or offer similar rights, such rights have
been waived with respect to the registration of securities in
connection with the Registration Statement, other than the sale of
the Securities by the Selling Stockholders in connection with the
transactions contemplated by this Agreement.
(p) No
consent, approval, authorization, or order of, or filing or
registration with, any governmental agency or body or any court is
required for the consummation of the transactions contemplated by
this Agreement, except such as has been obtained or made under the
Securities Act or the Exchange Act or as may be required by state
securities or “blue sky” laws.
(q) The
issuance and sale of the Securities and the compliance by the
Company with all of the provisions of this Agreement and the
consummation of the transactions contemplated herein will not
conflict with, or result in a breach or violation of any of the
terms and provisions of, or constitute a default under (i) the
certificate of incorporation, by-laws, limited partnership
agreement, limited liability company agreement or similar
organizational documents of the Company or any of the Subsidiaries,
as applicable, (ii) any indenture, mortgage, deed of trust,
lease, loan agreement or other agreement or instrument to which the
Company or any of the Subsidiaries is a party or by which the
Company or any of the Subsidiaries is bound or to which any of the
property or assets of the Company or any of the Subsidiaries is
subject, or (iii) any statute, law, order, rule or regulation
of any governmental agency or body or any court applicable to the
Company or any of the Subsidiaries or any of their property, assets
or operations, except, with respect to clause (ii), for such
conflicts, breaches, violations or defaults that have been waived
or as would not, individually or in the aggregate, have a Material
Adverse Effect.
(r) None
of the Company nor any of the Subsidiaries is in violation of its
certificate of incorporation, by-laws, limited partnership
agreement, limited liability company agreement or similar
organizational documents, as applicable, or in default (or, with
the giving of notice or lapse of time or both, would be in default)
under any indenture, mortgage, deed of trust, lease, loan agreement
or other agreement or instrument to which the Company or any of the
Subsidiaries is a party or by which the Company or any of the
Subsidiaries is bound or to which any of the property or assets of
the Company or any of the Subsidiaries is subject, except for such
violations or defaults as would not, individually or in the
aggregate, have a Material Adverse Effect.
(s) The
Company and the Subsidiaries have good and marketable title in fee
simple to all real property owned by them, and good and marketable
title to all other property owned by them, in each case free from
mortgages, pledges, liens, security
6
interests,
claims, restrictions, encumbrances and defects of any kind, except
as (i) are described in the Time of Sale Prospectus and the
Prospectus or (ii) such would not, individually or in the
aggregate, materially affect the value of such property or
materially interfere with the use made or to be made of such
property by them. All of the leases and subleases material to the
business of the Company and the Subsidiaries, and under which the
Company or any of its Subsidiaries holds the properties described
in the Time of Sale Prospectus and the Prospectus, are in full
force and effect, and neither the Company nor any Subsidiary 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 such leases or subleases, or affecting or
questioning the rights of the Company or such Subsidiary to the
continued possession of the leased or subleased property under any
such lease or sublease.
(t) The
Company and the Subsidiaries possess such certificates, permits,
licenses, approvals, consents and other authorizations
(collectively, “Governmental Licenses”) issued by
appropriate federal, state or local governmental or regulatory
agencies or bodies necessary to conduct the businesses now operated
by them; and the Company and the Subsidiaries are in compliance
with the terms and conditions of all such Governmental Licenses,
except where the failure to so possess or comply would not,
individually or in the aggregate, have a Material Adverse Effect;
all of the Governmental Licenses are valid in full force and
effect, except where the invalidity of such Governmental Licenses
or the failure of such Governmental Licenses to be in full force
and effect would not have a Material Adverse Effect; and neither
the Company nor any of the Subsidiaries have received any notice of
proceedings relating to the revocation or modification of any such
Governmental Licenses that, if determined adversely to the Company
or any of the Subsidiaries, would, individually or in the
aggregate, have a Material Adverse Effect.
(u) Except
as disclosed in the Time of Sale Prospectus and the Prospectus,
there are no legal or governmental actions, suits, arbitrations or
other proceedings pending as to which the Company or any of the
Subsidiaries is a party or of which any property of the Company or
any of the Subsidiaries is the subject that, if determined
adversely to the Company or any of the Subsidiaries, could
reasonably be expected to individually or in the aggregate, have a
Material Adverse Effect or could reasonably be expected to
materially and adversely affect the ability of the Company to
perform its obligations under this Agreement; and no such actions,
suits or proceedings are threatened or, to the Company’s
knowledge, contemplated. No labor dispute with the employees of the
Company or any of the Subsidiaries exists or, to the knowledge of
the Company, is threatened or imminent that could reasonably be
expected to have, individually or in the aggregate, a Material
Adverse Effect.
(v) The
Company and the Subsidiaries own, possess or can acquire on
reasonable terms, adequate trademarks, trade names and other rights
to inventions, know-how, patents, copyrights, confidential
information and other intellectual property (collectively,
“intellectual property rights”) necessary to conduct
the business now operated by them, or presently employed by them,
and have not received any notice of infringement of or conflict
with asserted rights of others with respect to any
intellectual
7
property rights
that, if determined adversely to the Company or any of the
Subsidiaries, could reasonably be expected to, individually or in
the aggregate, have a Material Adverse Effect.
(w) Except
as would not, individually or in the aggregate, have a Material
Adverse Effect, (i) neither the Company nor any of the Subsidiaries
is in violation of any federal, state or local statute, rule,
regulation, ordinance, code, policy or rule of common law or any
judicial or administrative interpretation thereof, including any
judicial or administrative order, consent, decree or judgment, of
any governmental agency or body or any court relating to the
pollution or protection of human health, the environment
(including, without limitation, ambient air, surface water,
groundwater, land surface, or subsurface strata) or wildlife,
including, without limitation, laws and regulations relating to the
release or threatened release of chemicals, pollutants,
contaminants, wastes, toxic substances, hazardous substances,
petroleum or petroleum products (collectively, “Hazardous
Materials”) or to the manufacture, processing, distribution,
use, treatment, storage, disposal, transport or handling of
Hazardous Materials (collectively, “Environmental
Laws”) and (ii) the Company and its Subsidiaries have
all permits, authorizations and approvals required under any
applicable Environmental Laws and are each in compliance with their
requirements. There are no pending or, to the knowledge of the
Company, threatened administrative, regulatory or judicial actions,
suits, demands, demand letters, claims, liens, notices of
noncompliance or violation, investigation or proceedings relating
to any Environmental Law against the Company or any of its
Subsidiaries. To the knowledge of the Company, there are no events
or circumstances that might reasonably be expected to form the
basis of an order for clean-up or remediation, or an action, suit
or proceeding by any private party or governmental body or agency,
against or affecting the Company or any of its Subsidiaries
relating to any Hazardous Materials or the violation of any
Environmental Laws that would, individually or in the aggregate,
have a Material Adverse Effect.
(x) The
Company and the Subsidiaries have (i) filed on a timely basis
all necessary federal, state, local and foreign income and
franchise tax returns required to be filed or have duly requested
extensions thereof; and (ii) paid all taxes shown as due on
such tax returns (including any related assessments, fines or
penalties), except for taxes being contested in good faith for
which reserves in accordance with generally accepted accounting
principles have been provided. No tax deficiency has been asserted
against the Company or any of the Subsidiaries which has had, nor
does the Company know of any tax deficiency that is likely to be
asserted against the Company or any of the Subsidiaries which, if
determined adversely to the Company or any of the Subsidiaries,
would have, a Material Adverse Effect.
(y) The
Company and each of the Subsidiaries maintain insurance of the
types and in the amounts generally deemed adequate for their
respective businesses and, to the Company’s knowledge,
consistent with insurance coverage maintained by similar companies
in similar businesses.
(z) The
Company and each of the Subsidiaries are in compliance in all
respects with all applicable provisions of the Occupational Safety
and Health Act of
8
1970, as
amended, including all applicable regulations thereunder, except
for such noncompliance as would not, individually or in the
aggregate, have a Material Adverse Effect.
(aa) Except
as described in the Time of Sale Prospectus and the Prospectus,
none of the Subsidiaries is currently restricted, directly or
indirectly, from (i) paying any dividends or distributions to
the Company, (ii) repaying to the Company any loans or
advances to such Subsidiary from the Company or
(iii) transferring any property or assets to the Company or
any other Subsidiary of the Company.
(bb) The
consolidated financial statements of the Company (including its
predecessors) included in the Registration Statement, the Time of
Sale Prospectus and the Prospectus, together with the related
schedules and notes, fairly present in all material respects the
financial condition of the Company and the Subsidiaries as of the
respective dates indicated and the consolidated statements of
income of the Company, cash flows and changes in
stockholders’ equity for the respective periods specified, in
each case in conformity with generally accepted accounting
principles applied on a consistent basis throughout the periods
involved (except as otherwise indicated in the notes thereto) and
in accordance with Regulation S-X promulgated by the
Commission. No other financial statements or supporting schedules
are required to be included in the Registration Statement. The
summary and selected consolidated financial data of the Company
(including its predecessors) included in the Registration
Statement, the Time of Sale Prospectus and the Prospectus fairly
present in all material respects the information shown therein and
have been compiled on a basis consistent with that of the
consolidated financial statements of the Company included in the
Registration Statement, the Time of Sale Prospectus and the
Prospectus. The other financial information included in the
Registration Statement, the Time of Sale Prospectus and the
Prospectus has been derived from the accounting records of the
Company and the Subsidiaries and present fairly, in all material
respects, the information shown thereby. The Registration
Statement, the Time of Sale Prospectus, the Disclosure Package and
the Prospectus include all financial and other information required
to be included in connection with the presentation of
“non-GAAP financial measures” (as defined in
Item 10 of Regulation S-K) therein, and the presentation
of such non-GAAP financial measures therein complies with
Regulation G and Item 10 of Regulation S-K, as
applicable. The Company and the Subsidiaries do not have any
material liabilities or obligations, direct or contingent
(including any off-balance sheet obligations), not disclosed in the
Registration Statement, the Time of Sale Prospectus and the
Prospectus.
(cc) Neither
the Company nor any of the Subsidiaries has sustained since the
date of the last audited financial statements included in the
Registration Statement, the Time of Sale Prospectus and the
Prospectus any loss or interference with its business material to
the Company and the Subsidiaries considered as a whole, otherwise
than as set forth or contemplated in the Time of Sale Prospectus
and the Prospectus. Since the respective dates as of which
information is given in the Registration Statement, the Time of
Sale Prospectus and the Prospectus, there has not been any (i)
material change in the capitalization of the Company or the
Subsidiaries, (ii) material increase in the aggregate in the
consolidated short-term or long-term debt of the
9
Company,
(iii) any transaction that is material to the Company and the
Subsidiaries contemplated or entered into by the Company or any of
the Subsidiaries, (iv) any obligation, contingent or
otherwise, directly or indirectly incurred by the Company or any
Subsidiary that is material to the Company and its Subsidiaries
taken as a whole or (v) any dividend or distribution of any
kind declared, paid or made by the Company on any class of its
capital stock, in each case otherwise than as set forth or
contemplated in the Registration Statement, the Time of Sale
Prospectus and the Prospectus.
(dd) Schneider
Downs & Co., Inc., as of December 31, 2005 and during the
periods covered by the consolidated financial statements of the
Company (including its predecessors) and the related schedules and
notes thereto included in the Registration Statement, the Time of
Sale Prospectus and the Prospectus on which they reported were, as
of such dates and during such periods, and are independent
registered public accountants as required by the Securities Act and
the Securities Act Regulations. Schneider Downs & Co., Inc. is
registered with the Public Company Accounting Oversight
Board.
(ee) Each
of the Company and the Subsidiaries 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 authorization,
(ii) transactions are recorded as necessary to permit
preparation of financial statements in accordance with generally
accepted accounting principles and to maintain accountability for
assets, (iii) access to its assets is permitted only in
accordance with management’s general or specific
authorization and (iv) the recorded accountability for assets
is compared with the existing assets at reasonable intervals and
appropriate action is taken with respect to any
differences.
(ff) The
Company maintains a system of internal control over financial
reporting (as defined in Rule 13a-15(f) under the Exchange
Act) that complies with the requirements of the Exchange Act and
has been designed by the Company’s principal executive
officer and principal financial officer, or under their
supervision, to provide reasonable assurance regarding the
reliability of financial reporting and the preparation of financial
statements for external purposes in accordance with generally
accepted accounting principles. As of the date hereof, the Company
is not aware of (i) any “significant deficiency” or
“material weakness” (in each case, as defined in Public
Company Oversight Board Standard No. 2) in the Company’s
internal control over reporting, whether or not subsequently
remediated, except as described in the Time of Sale Prospectus and
the Prospectus, 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.
(gg) The
Company maintains disclosure controls and procedures (as defined in
Rule 13a-15(e) under the Exchange Act) that comply with the
requirements of the Exchange Act, which controls and procedures
(i) are designed to ensure that material information relating
to the Company, including its consolidated subsidiaries, is made
known to the Company’s principal executive officer and its
principal financial officer by others within those entities,
particularly during the periods in which the periodic
reports
10
required under
the Exchange Act are being prepared and (ii) are effective in
all material respects to perform the functions for which they were
established.
(hh) Neither
the Company or any Subsidiary, nor any of their respective
directors, manager, or partners, as applicable, or officers, in
their capacities as such, is in material breach or violation of any
provision of the Sarbanes-Oxley Act of 2002 and the rules and
regulations promulgated in connection therewith.
(ii) The
statistical and market-related data included in the Registration
Statement, the Time of Sale Prospectus and the Prospectus are based
on or derived from sources that the Company believes to be reliable
and accurate or represent the Company’s good faith estimates
that are made on the basis of data derived from such
sources.
(jj) The
Common Stock has been registered under Section 12(g) of the
Exchange Act, and the Securities have been authorized for trading
on the Nasdaq Global Select Market (the
“Nasdaq”).
(kk) Neither
the Company, the Subsidiaries nor any of their respective officers
or directors has taken or will take, directly or indirectly, any
action designed to cause or result in, or which has constituted or
which might reasonably be expected to constitute, the stabilization
or manipulation of the price of the Securities in order to
facilitate the sale or resale of the Securities or
otherwise.
(ll) The
Company is not, and after giving effect to the offering and sale of
the Securities and the application of the proceeds thereof as
described in the Time of Sale Prospectus and the Prospectus will
not be, required to register as an “investment company”
as such term is defined under the Investment Company Act of 1940,
as amended (the “Investment Company Act”).
2.
Representations and Warranties of the Selling Stockholders
.
Each Selling
Stockholder, severally and not jointly, represents and warrants to,
and agrees with, the several Underwriters as follows:
(a) As
of the First Delivery Date, such Selling Stockholder will be the
record and beneficial owner of the Securities to be sold by such
Selling Stockholder under this Agreement, free and clear of all
adverse claims, except for those arising under this Agreement; and
upon delivery of and payment for such Securities hereunder in
accordance with the provisions of Section 3(d) hereof, the several
Underwriters will acquire a security entitlement (as that term is
defined in the Uniform Commercial Code as in effect in the State of
New York (the “New York UCC”) with respect to the
Securities, and no action based on an adverse claim (as that term
is defined under the New York UCC) to the Securities may be
asserted against any of the Underwriters, provided that each such
Underwriter does not have notice of any adverse claim (within the
meaning of Section 8-105 of the New York UCC). Such Selling
Stockholder is selling the Securities to be sold by such Selling
Stockholder for such Selling Stockholder’s own account and is
not selling such Securities, directly or indirectly, for the
benefit of the Company, and no part of the proceeds of such sale
received by such
11
Selling
Stockholder will inure, either directly or indirectly, to the
benefit of the Company other than as described in the Registration
Statement, the Time of Sale Prospectus and the
Prospectus.
(b) Such
Selling Stockholder has duly authorized, executed and delivered a
Custody Agreement (“Custody Agreement”), which Custody
Agreement is a valid and binding obligation of such Selling
Stockholder, to the Company, as Custodian (the
“Custodian”); pursuant to the Custody Agreement the
Selling Stockholder will, on or prior to the First Delivery Date,
place in custody with the Custodian, for delivery under this
Agreement, the certificates representing the Securities to be sold
by such Selling Stockholder; as of the First Delivery Date, such
certificates will represent validly issued, outstanding, fully paid
and nonassessable shares of Common Stock; and, as of the First
Delivery Date, such certificates will be duly and properly endorsed
in blank for transfer, or will be accompanied by all documents duly
and properly executed that are necessary to validate the transfer
of title thereto, to the Underwriters, free of any legend,
restriction on transferability, proxy, lien or claim,
whatsoever.
(c) Such
Selling Stockholder has the power and authority to enter into this
Agreement and to sell, transfer and deliver the Securities to be
sold by such Selling Stockholder pursuant to this Agreement; and
such Selling Stockholder has duly authorized, executed and
delivered to Thomas W. Stoelk, David E. Wallace and Mark A. Snyder,
each as attorney-in-fact (the “Attorneys-in-Fact”), an
irrevocable power of attorney (a “Power of Attorney”)
authorizing and directing the Attorneys-in-Fact to effect the sale
and delivery of the Securities being sold by such Selling
Stockholder, to enter into this Agreement and to take all such
other action as may be necessary hereunder.
(d) This
Agreement, the Custody Agreement and the Power of Attorney have
each been duly authorized, executed and delivered by or on behalf
of such Selling Stockholder. The execution and delivery of this
Agreement, the Custody Agreement and the Power of Attorney and the
performance of the terms hereof and thereof and the consummation of
the transactions herein and therein contemplated will not result in
a breach or violation of any of the terms and provisions of, or
constitute a default under, any agreement or instrument to which
such Selling Stockholder is a party or by which such Selling
Stockholder is bound, or any law, regulation, order or decree
applicable to such Selling Stockholder. No consent, approval,
authorization or order of, or filing with, any court or
governmental agency or body is required for the execution, delivery
and performance of this Agreement, the Custody Agreement and the
Power of Attorney or for the consummation of the transactions
contemplated hereby and thereby, including the sale of the
Securities being sold by such Selling Stockholder, except such as
has been obtained or made under the Securities Act or the Exchange
Act or as may be required by state securities or “blue
sky” laws.
(e) Such
Selling Stockholder has not distributed and will not distribute any
prospectus or other offering material in connection with the
offering and sale of the Securities other than any Preliminary
Prospectus, the Time of Sale Prospectus or the Prospectus or other
materials permitted by the Securities Act to be distributed by such
Selling Stockholder.
12
(f) The
Disclosure Package, as of the Applicable Time, and the Registration
Statement, any Preliminary Prospectus and the Time of Sale
Prospectus did not include, and the Prospectus and any further
amendments or supplements to the Registration Statement and the
Prospectus, when they become effective or are filed with the
Commission, as the case may be, will not include, any untrue
statement of a material fact or omit to state any material fact
necessary in order to make the statements therein, in the light of
the circumstances under which they were made, not misleading. The
representation and warranty set forth in the immediately preceding
sentence only applies to statements or omissions made in reliance
upon and in conformity with written information about such Selling
Stockholder furnished to the Company by such Selling Stockholder
expressly for use therein, which information consists solely of the
information set forth with respect to such Selling Stockholder in
the Time of Sale Prospectus and the Prospectus in the table under
the caption “Selling Stockholders.”
(g) Other
than as contemplated by this Agreement and except as disclosed in
the Registration Statement, the Time of Sale Prospectus and the
Prospectus, there is no broker, finder or other party that is
entitled to receive from such Selling Stockholder any brokerage or
finder’s fee or any other fee, commission or payment as a
result of the transactions contemplated by this
Agreement.
(h) Such
Selling Stockholder has not taken and will not take, directly or
indirectly, any action designed to cause or result in, or which has
constituted or which might reasonably be expected to constitute,
the stabilization or manipulation of the price of the Securities in
order to facilitate the sale or resale of the Securities or
otherwise.
3. Sale,
Purchase and Delivery of Securities .
(a) On
the basis of the representations, warranties and agreements herein
contained, but subject to the terms and conditions herein set
forth, (i) the Company agrees to issue and sell 3,000,000 Firm
Securities, and each Selling Stockholder agrees, severally and not
jointly, to sell the number of Firm Securities set forth opposite
the name of such Selling Stockholder in Schedule A
hereto, to the several Underwriters, and each Underwriter agrees,
severally and not jointly, to purchase from the Company and the
Selling Stockholders the respective number of Firm Securities set
forth opposite the Underwriter’s name in
Schedule B hereto, at a purchase price per share of
$24.225, and (ii) in the event and to the extent that the
Underwriters shall exercise their option to purchase Optional
Securities as provided in Section 3(b) below, the Company agrees to
issue and sell up to 690,000 Optional Securities. The number of
Optional Securities to be purchased by each Underwriter shall be
the same percentage of the total number of Optional Securities to
be purchased by the several Underwriters as the number of Firm
Securities to be purchased by such Underwriter is of the total
number of Firm Securities to be purchased by the several
Underwriters, as adjusted by the Representative in such manner as
the Representative deem advisable to avoid fractional shares. The
purchase price per share of the Optional Securities shall be the
same as that of the Firm Securities.
(b) The
Company hereby grants to the Underwriters the right to purchase, at
their election the number of Optional Securities indicated with
respect to the
13
Company in
Section 3(a) above, at a purchase price per share equal to the
purchase price per share of the Firm Securities, for the sole
purpose of covering any over-allotments in connection with the sale
and distribution of the Firm Securities. Any such election to
purchase Optional Securities may be exercised only by written
notice from the Representative to the Company, given within a
period of 30 calendar days after the date of this Agreement and
setting forth the aggregate number of Optional Securities to be
purchased and the date on which such Optional Securities are to be
delivered, as determined by the Representative but in no event
earlier than the First Delivery Date (as defined below) or, unless
the Representative and the Company otherwise agree in writing, no
earlier than two or later than ten business days after the date of
such notice.
(c) The
several Underwriters propose to offer the Securities for sale upon
the terms and conditions and in the manner set forth in the
Prospectus.
(d) The
Securities to be purchased by each Underwriter hereunder, in
definitive form, and in such authorized denominations and
registered in such names as the Representative may request upon at
least forty-eight hours’ prior notice to the Company and the
Custodian, shall be delivered by or on behalf of the Company and
the Custodian to the Underwriters, through the facilities of the
Depository Trust Company (“DTC”), for the accounts of
such Underwriters, against payment by or on behalf of the
Underwriter of the purchase price therefor by wire transfer of
federal (same-day) funds to the account specified by the Company
and the Custodian to McDonald Investments Inc. at least forty-eight
hours in advance. The Company and the Custodian will cause the
certificates representing the Securities to be made available for
checking and packaging at least twenty-four hours prior to the
Delivery Date (as defined below) with respect thereto at a location
in New York, New York as may be designated by you or at the office
of DTC or its designated custodian. The date of such delivery and
payment shall be, with respect to the Firm Securities,
December 12, 2006 or such other time and date as the
Representative, the Company and the Custodian may agree upon in
writing, and, with respect to the Optional Securities, on the date
specified by the Representative in the written notice given by the
Representative of its election to purchase such Optional
Securities, or such date as the Representative, the Company and the
Custodian may agree upon in writing. Such date for delivery of the
Common Stock is herein called the “First Delivery
Date,” such date for delivery of the Optional Securities, if
not the First Delivery Date, is herein called an “Optional
Delivery Date,” and each such time and date for delivery is
herein called a “Delivery Date.”
(e) Time
shall be of the essence, and delivery at the time and place
specified pursuant to this Agreement is a further condition of the
obligations of the Underwriters hereunder.
4.
Certain Agreements of the Company . The Company covenants
and agrees with each of the Underwriters:
(a) To
furnish such information as may be required and otherwise to
cooperate in qualifying the Securities for offering and sale under
the securities or blue sky laws of such jurisdictions (both
domestic and foreign) as the Representative may
14
designate and
to maintain such qualifications in effect as long as requested by
the Representative for the distribution of the Securities, provided
that the Company shall not be required to qualify as a foreign
corporation or to consent to the service of process under the laws
of any such state (except service of process with respect to the
offering and sale of the Securities).
(b) If,
after the time this Agreement is executed and delivered, it is
necessary for a post-effective amendment to the Registration
Statement to be declared effective before the offering of the
Securities may commence, the Company will endeavor to cause such
post-effective amendment to become effective as soon as possible
and will advise the Representative promptly and, if requested by
the Representative, will confirm such advice in writing, when such
post-effective amendment has become effective.
(c) To
prepare the Prospectus in a form approved by the Representative and
to file such Prospectus pursuant to Rule 424(b) under the
Securities Act Regulations not later than the Commission’s
close of business on the second business day following the
execution and delivery of this Agreement, or, if applicable, such
earlier time as may be required by Rule 430A(a)(3) under the
Securities Act Regulations; during the period beginning on the date
hereof and ending on the date, which in the opinion of counsel for
the Underwriters, a prospectus is no longer required by law to be
delivered in connection with the offering and sales of the
Securities, to make no further amendment or any supplement to the
Registration Statement or Prospectus (including any amendment or
supplement through incorporation of any report filed under the
Exchange Act) which shall be disapproved by the Representative
promptly after reasonable notice thereof; to advise the
Representative, promptly after it receives notice thereof, of the
time when any amendment to the Registration Statement has been
filed or becomes effective or any supplement to the Prospectus or
any amended Prospectus has been filed and to furnish the
Representative with copies thereof; to file promptly, and in any
event within the time periods specified, all reports and any
definitive proxy or information statements required to be filed by
the Company pursuant to Sections 13(a), 13(c), 14 or 15(d) of
the Exchange Act subsequent to the date of the Prospectus for so
long as the delivery of a prospectus (or in lieu thereof, the
notice referred to in Rule 173(a) under the Securities Act
Regulations) is required in connection with the offering or sale of
the Securities; to advise the Representative, promptly after it
receives notice thereof, of the issuance by the Commission of any
stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or any other prospectus in
respect of the Securities, of the suspension of the qualification
of the Securities for offering or sale in any jurisdiction, of the
initiation or threatening of any proceeding for any such purpose,
or of any request by the Commission for the amending or
supplementing of the Registration Statement or Prospectus or for
additional information; and, in the event of the issuance of any
stop order or of any order preventing or suspending the use of any
Preliminary Prospectus or the Prospectus or other prospectus or
suspending any such qualification, promptly to use its reasonable
best efforts to obtain the withdrawal of such order.
15
(d) No
later than 12:00 p.m., New York City time, on the second
business day succeeding the date of this Agreement, and from time
to time, to furnish the Underwriters with written and electronic
copies of the Prospectus in such quantities as the Representative
may reasonably request, and, if the delivery of a prospectus (or in
lieu thereof, the notice referred to in Rule 173(a) under the
Securities Act Regulations) is requ
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